Sales – Hector de leon text book – Sales

Read first 200 pages – focus on nature and form of COS 1458 - 1494

Personally write digests to be specified – required to be submitted at the end of the semester – individual yellow sheets

25% recit

25% mt

50% finals

Sales – De Leon Notes

Chapter 1 Nature and Form of the Contract

Article 1458. By the contract of sale one of the contracting parties obligates himself to transfer the
ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or
its equivalent.

A contract of sale may be absolute or conditional. (1445a)

characteristics of a contract of sale.

1. Consensual – perfected by mere consent

2. Bilateral – Both contracting parties are bound to fulfill correlative obligations toward each other.
a. The seller – to deliver and transfer ownership of the determinate thing sold
b. The Buyer – to pay the price
i. Delivery and payment in a contract of sale are so interrelated and intertwined with each other
that without delivery of the goods there is no corresponding obligation to pay.
3. Onerous – the thing sold is conveyed in consideration of the price and vice versa
4. Commutative – the thing sold is considered the equivalent of the price paid and vice versa
a. However, the contract may be aleatory as in the case of the Sale of a hope (i.e. sweepstakes ticket)
5. Nominate – Special name in the CC
6. Principal – does not depend for its existence and validity upon another contract

Essential requisites of a contract of sale

1. Consent or meeting of the minds - Consent on the part of the seller to transfer and deliver AND on the part of
the buyer to pay
a. Article 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the
thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of
the law governing the form of contracts
b. The Parties must have Legal capacity to give consent and to obligate themselves (Arts. 1489 – 1491)
c. Where there is merely an offer but no acceptance, then there is no perfected COS
d. Acceptance of payment by a party is an indication of his consent to the COS.
e. Sale where consent is not needed:
i. Expropriation (Art. 1488)
ii. Ordinary Execution Sale (R39 Sec15
iii. Judicial Foreclosure Sale (R68)
iv. Extrajudicial foreclosure sale (Act No. 3135)
f. Sale of conjugal property requires the consent of both spouses. Void if wala
 2. Object or subject matter – Refers to the determinate thing which is the object of the contract

a. Article 1460. A thing is determinate when it is particularly designated or physical segregated from all
others of the same class.

The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the
thing is capable of being made determinate without the necessity of a new or further agreement
between the parties.

b. The thing to be sold must be determinate because if the buyer and seller differ in regard to the thing
sold, then there is no meeting of the minds

3. Cause or consideration – refers to the “price certain in money or its equivalent”

a. Could be a check or promissory note, which is the consideration for the things sold.

b. If the consideration is a thing then the contract could be barter. However, the words “its equivalent”
have been interpreted to mean that:

i. Payment need not be in money, so long as the thing given as token of payment has “been
assessed and evaluated and its price equivalent in terms of money has been determined”
(Republic v. Phi. Resources Dev. Corp, 102 Phil. 968)

c. The price must be real

i. Article 1471. If the price is simulated, the sale is void, but the act may be shown to have
been in reality a donation, or some other act or contract. 

Natural and accidental elements

1. Natural elements or those which are deemed to exist in certain contracts, in the absence of any contrary
stipulations, like warranty against evicetion (art. 1548) or hidden defects (Art. 1561)

2. Accidental elements or those which may be present or absent depending on the stipulations of the partlies, like
conditions, interest, penalty, time or place of payment

Effect of non-payment of price/Absence of price

There can be no sale without a price. (Art. 1474). No price = Contract is inefficacious

Where the figures referred to by the buyer as prices are mere estimates given them by the seller of a condo unit, the
transaction lacks an essential requisites for the perfection of the contract of sale

Non-payment of the purchase price is a resolutory condition for which the remedy is either rescission or specific
performance under Art. 1191. Simple reason = violates the very essence of a sale.
 But the failure to pay the price in full within a fixed period does not, by itself, dissolve a contract of sale in the
absence of any agreement that payment on time is essential. The vendee merely defaults, and the vendor has
legal remedies.

Article 1410. The action or defense for the declaration of the inexistence of a contract does not prescribe.

Transfer of title to property for a price, essence of a sale

 1. Obligations to deliver and to pay – The agreement to transfer title for a price ACTUALLY paid or PROMISED, not
a mere physical transfer of the property, is the ESSENCE of a COS.
a. However, where the seller can no longer delivery the thing because the buyer actually acquired title and
delivery thereof from the RIGHTFUL owner, then, by analogy, under Article 1409 (5) “those which
contemplate an impossible service” and thus void ab initio
b. Only upon the existence of the COS (perfection) that the seller is obligated to transfer and deliver
ownership and the buyer to pay
Kinds of contract of sale
1. As to presence or absence of conditions – A sale may either be:
a. Absolute - Sale is not subject to any conditions. Title passes to the buyer upon delivery of the thing
sold.
i. Payment of the purchase price is not essential to the transfer of ownership as long as the
property sold has been delivered. Such delivery operates to divest the vendor of title to the
property which may not be recovered until and unless the contract is resolved or rescinded in
accordance with law.
1. Article 1497. The thing sold shall be understood as delivered, when it is placed in
the control and possession of the vendee
b. Conditional – Sale contemplates a contingency (Arts 1461, 1452 (2), 1465, 1503, par.1). The delivery of
the thing sold does not transfer title until the condition is fulfilled.
i. When the condition is imposed, instead, upon the perfection of the contract the failure of such
condition would prevent such perfection
2. Other kinds – other kinds of sale like:
a. Nature of the subject matter: real, personal, tangible, or intangible
b. Manner of payment: cash or installment
c. Validity: valid, rescissible, unenforceable, void

Contract of sale (Absolute sale) and contract to sell with reserved title distinguished

1. Transfer of title –
a. Contract of sale – title passes to the buyer upon the delivery of the thing sold
b. Contract to sell - Article 1478. The parties may stipulate that ownership in the thing shall not pass to
the purchaser until he has fully paid the price.
2. Payment of price
a. COS – non-payment of the price is a negative resolutory condition. Remedy is to exact fulfillment or to
rescind the contract
b. CTS – Full payment is a positive suspensive condition, the failure of which is not a breach of the contract
but simply an event that prevents the obligation of the vendor to convey title from acquiring binding
force.
i. I.E. where the seller promises to execute a deed of absolute sale upon full payment of the
purchase price, the agreement is a CTS
3. Ownership of vendor –
a. COS – Vendor has lost and cannot recovery the ownership of the thing sold and delivered until and
unless the COS itself is resolved and set aside
b. CTS – Title remains in the vendor if the buyer does not comply with the condition precedent of making
payment at the time specified in the contract.

Contract to Sell and Conditional Sale distinguished

Contract to sell – a biletaral contract whereby the prospective seller, while expressly reserving the ownership of the
property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the
prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.

1. Transfer of title to the buyer

 a. CTS – upon fulfillment of the suspensive condition, which is the full payment of the purchase price,
ownership will not automatically transfer to the buyer although the property may have been previously
deliver to him. THE PROSPECTIVE SELLER still has to convey title to the prospective buyer by entering
into a Contract of absolute sale to consummate the transaction
b. CCOS – There is also a suspensive condition, but the element of consent is present although it is
conditioned upon the happening of a contingent event which may or may not happen. If the suspensive
condition will not happen, then the perfection of the COS is completely abated. But if the suspensive
condition happens, the COS is perfected. If there was already previous delivery of the property subject
of the sale, the buyer automatically has ownership
i. Unlike in a CTS, when the condition is fulfilled, there is a need to enter into a COS
2. sale of subject property to a third person

a. CTS - there being no previous sale of the property, a third person buying such property despite the
fulfillment of the suspensive condition such as the full payment of the purchase price, for instance,
cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of
reconveyance of the property. Remedy of prospective buyer = damages

b. CCOS - however, upon the fulfillment of the suspensive condition, the sale becomes absolute and this
will definitely affect the seller’s title thereto. In case a title is issued to the second buyer, the first buyer
may seek reconveyance of the property subject of the sale.

Other cases of Contract TO sell (CTS)

1. Subject matter is not determinate

2. Price not certain

3. Sale of future goods (Art. 1462)

4. Stipulation that deed of sale and corresponding certificate of sale would be issued only after full payment of the
purchase price

However, in a different case, it has been held that the act of the seller of delivering the possession of the property (land)
to the buyer together with the contract (deed of sale in a private instrument) was an indication that an absolute contract
of sale was intended by the parties and NOT a CTS (Dignos v. CA, 158 SCRA 375)

Article 1459. The thing must be licit and the vendor must have a right to transfer the ownership
thereof at the time it is delivered. (n)

When the thing is delivered, the vendor must have the RIGHT to transfer ownership

Requisites concerning the object of the contract

1. Things –

a. Determinate

b. licit (not contrary to law, morals, good customs, public order, or public policy)

c. not be impossible - Article 1348. Impossible things or services cannot be the object of contracts. (1272)
If the subject matter is illicit, the contract is void

Article 1411. When the nullity proceeds from the illegality of the cause or object of the contract, and the act constitutes a criminal offense, both parties
being in pari delicto, they shall have no action against each other, and both shall be prosecuted. Moreover, the provisions of the Penal Code relative to
the disposal of effects or instruments of a crime shall be applicable to the things or the price of the contract.

This rule shall be applicable when only one of the parties is guilty; but the innocent one may claim what he has given, and shall not be bound to comply
with his promise.

Article 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed:

(1) When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the
performance of the other's undertaking;

(2) When only one of the contracting parties is at fault, he cannot recover what he has given by reason of the contract, or ask for the fulfillment
of what has been promised him. The other, who is not at fault, may demand the return of what he has given without any obligation to comply
his promise

2. Rights – rights that are transmissible or not personal may be the subject of a sale (Art. 1347).

Kinds of illicit things

1. Illicit per se (of its nature) – i.e. sell of unfit food

2. Illicit per accidens (because of some provisions of law declaring it illegal) – sell of land to alien

Right to transfer ownership

1. Seller must be owner or authorized by owner to sell the thing

a. Vendor must have the right to transfer ownership

b. Nemo dat quod non-habet – one cannot transmit or dispose of that which he does not have

2. Right must exist at time of delivery

a. Art. 1459 does not require that the seller has the right to transfer ownership at the time of perfection.

i. Perfection in itself does not transfer ownership

b. It is sufficient that the seller has the “right to transfer the ownership of the thing at the time it is
delivered

3. A Forged or fraudulent deed may be the root of a valid title

a. When the certificate of title was already transferred from the REAL owner, and then to the forger, and
then the forger sold the LAND to an innocent purchaser for value.

b. Applies only to registered land under the torrens system. A purchaser need not look beyond the title.

4. Property sold in violation of a right of first refusal of another person

a. It is rescissible. Only after the grantee fails to exercise his right of first refusal within the period
contemplated can the owner validly offer to sell the property to third persons.
Article 1460. A thing is determinate when it is particularly designated or physically segregated
from all others of the same class.

The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the
thing is capable of being made determinate without the necessity of a new or further agreement
between the parties.

Subject matter must be determinate

1. When thing determinate – The thing must be particularly designated or physically segregated from all others
of the same class

a. If the thing subject of the COS is not determinate, then no meeting as the object could be had

2. Sufficient if subject matter is capable of being made determinate

a. It is sufficient that the thing is determinable or capable of being made determinate without the
necessity of a new or further agreement between the parties.

i. The fact that such an agreement is still necessary constitutes an obstacle to the existence of the
contract and renders it void.

ii. Article 1349. The object of every contract must be determinate as to its kind. The fact that the quantity is not
determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the
same, without the need of a new contract between the parties.

iii. Article 1409. The following contracts are inexistent and void from the beginning: (3) Those whose cause or
object did not exist at the time of the transaction;

Article 1461. Things having a potential existence may be the object of the contract of sale.

The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the
thing will come into existence.

The sale of a vain hope or expectancy is void. 

Sale of things having potential existence

A sale of a future thing (Arts 1461, 1347(1)) may be the object of sale provided that it has potential or possibility to
exist.

I.e. Grain of a filed may grow in time, milk of a cow, the wool of a sheep.

The thing sold however, must be specific and identified. And that the vendor be the owner thereof at the time of
delivery.

Sale of a mere hope or expectancy

It must be bound to exist. A plan whereby prizes can be obtained without any additional consideration is not a lottery
(i.e. when a product is purchased at the usual price PLUS the chance of winning a prize)

Examples:

S binds himself to sell for a specified price to B a parcel of land if he wins a case for the recovery of said land pending in
the SC. Here the obligation of S to sell will arise, if the “expected thing”, the land, will come into existence, i.e., if he
wins the case. Before a decision is rendered, there is only “the mere hope or expectancy” that the thing will come into
existence.

Sale of thing expected and sale of hope itself distinguished

Emptio rei speratae (Sale of thing expected) – Sale of a thing not yet in existence subject to the condition that the thing
will exist. If the thing does not come into existence the contract becomes ineffective, and hence the buyer has no
obligation to pay.

 In Emptio rei speratae – the future thing is certain as to itself but uncertain as to its quantity and quality.

 Deals with future things

 SALE is subject to the condition that the thing should exist.

Emptio spei – the sale of the hope itself that the thing will come into existence, where it is agreed that the buyer will pay
the price even if the thing does not eventually exist.

 i.e. sale of sweepstake ticket. Not certain that the thing itself (winning a prize), will exist, much less its
quality/quantity

 Deals with things that already exists or is present (the HOPE or expectancy)

 SALE produces effect even though the thing does not come into existence because the object of the contract is
the HOPE itself, unless it is a vain hope or expectancy

Presumption in case of doubt

Presumption is in favor of emptio rei speratae

Article 1462. The goods which form the subject of a contract of sale may be either existing goods,
owned or possessed by the seller, or goods to be manufactured, raised, or acquired by the seller after
the perfection of the contract of sale, in this Title called "future goods."

There may be a contract of sale of goods, whose acquisition by the seller depends upon a
contingency which may or may not happen. 

Goods which may be the object of a sale

1. Existing Goods – goods owned or possessed by the seller

2. Future Goods – goods to be manufactured i.e. milk bottles, crop rice

Future goods as object of sale

the vendor assumes the risk of acquiring the title and making the conveyance, or responding in damages for the
vendee’s loss of his bargain

Article 1462(1) does not apply when the goods are to be manufactured especially for the buyer and not readily sellable
to others in the manufacturer’s regular course of business. The contract is one for a piece of work (Art. 1467)

Article 1463. The sole owner of a thing may sell an undivided interest therein. (n)

Sale of an undivided interest in a thing

The Sole Owner may do the following to his property:

1. Sell the entire thing

2. Sell only a specific portion thereof

3. Sell an undivided interest therein

a. Legal effect – make the buyer a co-owner of the thing sold.

Article 1464. In the case of fungible goods, there may be a sale of an undivided share of a specific
mass, though the seller purports to sell and the buyer to buy a definite number, weight or measure of
the goods in the mass, and though the number, weight or measure of the goods in the mass, and
though the number, weight or measure of the goods in the mass is undetermined.

By such a sale the buyer becomes owner in common of such a share of the mass as the number,
weight or measure bought bears to the number, weight or measure of the mass. If the mass contains
less than the number, weight or measure bought, the buyer becomes the owner of the whole mass
and the seller is bound to make good the deficiency from goods of the same kind and quality, unless
a contrary intent appears. 

Sale of an undivided share of a specific mass

Civil Code classifies movables into (1) consumables and (2) non-consumables (art. 418)
Fungible goods - goods which by its nature or by mercantile usage, treated as equivalent of any other unit such as grain,
oil, wine or gasoline. They are replaceable.

Effect of sale - The owner of a mass of goods may sell only an undivided share thereof, provided the mass is specific or
capable of being made determinate

- The buyer becomes a co-owner with the seller

Risk of loss – If the buyer becomes a co-owner, everyone in the co-ownership is at risk in proportion to their various
shares.

Subject matter - The subject matter here is an incorporeal right (the undivided share). (Art. 1463)

Example: S owns 1k cavans of palay. S sold to B 250 cavans or ¼. B becomes a co-owner of the said mass to the extent
of ¼. If the warehouse contains only 200 cavans, S must deliver the whole 200 plus the deficiency of 50 cavans

Although Article 1464 speaks of “fungible goods” it may also apply to goods not strictly fungible in nature.

Article 1465. Things subject to a resolutory condition may be the object of the contract of sale. (n)

Resolutory Condition – an uncertain event upon the happening of which the obligation (or right) subject to it is
extinguished.

Article 1466. In construing a contract containing provisions characteristic of both the contract of sale and of
the contract of agency to sell, the essential clauses of the whole instrument shall be considered.

Sale distinguished from agency to sell

Article 1868. By the contract of agency a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter.
Sale Agency to Sell
Buyer receives the goods as owner Agent receives the goods as the goods of the principal
who retains his ownership over them and has the right to
fix the price and the terms of the sale and receive the
proceeds less the agent’s commission upon the sales.
Buyer has to pay the price Agent has simply to account for the proceeds of the sale
he may make on the principal’s behalf
Buyer, as a rule, cannot return the object sold The agent can return the object in case he is unable to
sell the same to a third person
Seller warrants the thing sold (1547,1548, 1561) Agent makes no warranty as long as he acts within his
authority and in the name of the seller

Article 1467. A contract for the delivery at a certain price of an article which the vendor in the
ordinary course of his business manufactures or procures for the general market, whether the same
is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially
for the customer and upon his special order, and not for the general market, it is a contract for a
piece of work

Sale distinguished from contract for a piece of work

Article 1713. By the contract for a piece of work the contractor binds himself to execute a piece of work for the
employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or
skill, or also furnish the material. 

The test is: whether the thing transferred is one not in existence and which never would have existed but for
the order of the party desiring to acquire it, or a thing which would have existed and been the subject of sale
to some other person, even if the order had not been given.

Contract of sale Contract for a piece of work

One of sale One for work, labor, and materials
Primary objective is of a sale of a manufactured item Risk of loss before delivery is borne by the worker or
contractor, not by the employer
Not within the Statute of Frauds

Article 1468. If the consideration of the contract consists partly in money, and partly in another thing,
the transaction shall be characterized by the manifest intention of the parties. If such intention does
not clearly appear, it shall be considered a barter if the value of the thing given as a part of the
consideration exceeds the amount of the money or its equivalent; otherwise, it is a sale.

Sale distinguished from barter

Article 1638. By the contract of barter or exchange one of the parties binds himself to give one thing in
consideration of the other's promise to give another thing

The only point of difference between the two contracts is in the element which is present in sale but not in barter,
namely: “price certain in money or its equivalent”

Examples:

(1) S, a sugar miller, and B, a manufacturer and dealer of whisky, entered into an agreement whereby S was to deliver
sugar worth P20,000.00 to B who was to give 100 bottles of whisky worth also P20,000.00. This is a contract of barter.

(2) Suppose at the date of delivery, B had only 25 bottles of whisky. With the consent of S, S paid the difference of
P15,000 in cash. In this case, the contract is still barter. The consideration for the sugar is not cash but the whisky, and
the amount of P15,000.00 paid by B is in consideration for the 75 bottles of liquor.

(3) Suppose, in the same example, B had no whisky at the stipulated date of delivery and he paid S P20,000.00 instead of
giving whisky. Did the contract become one of sale? No, because the payment is in consideration of the value of the
whisky, and not of the sugar. The manifest intention of the parties was to enter into a contract of barter. But if B had
whisky at the date of delivery and he paid P20,000.00 with the consent of S, the contract would become one of sale.

(4) Assume now that the contract between S and B was for S to deliver sugar to B who agreed to give 100 bottles of
whisky or to pay P20,000.00 cash. If B, instead of whisky, paid P20,000.00 cash, it is clear that the resulting contract is
that of sale, and not barter.

(5) If the obligation of B is to deliver 50 bottles of whisky and pay P10,000.00 cash, or 75 bottles of whisky and P5,000.00
cash, or 25 bottles of whisky and P15,000.00 cash, the transaction shall be considered a barter or sale depending on the
manifest intention of the parties. Under Article 1468, if such intention does not clearly appear, the contract shall be
considered a barter, where the cash involved is P5,000.00, or a sale, in case it is P15,000.00, or either in case it is
P10,000.00.
Sale distinguished from lease

ARTICLE 1643. In the lease of things, one of the parties binds himself to give to another the enjoyment or use of a
thing for a price certain, and for a period which may be definite or indefinite. However, no lease for more than
ninety-nine years shall be valid. 

There is only a temporary transfer of possession and enjoyment but not the ownership (unlike in sale)

Sale distinguished from dation in payment

Dation in payment (or dacion en pago) is the alientation of property to the creditor in satisfaction of a debt in money
(art. 1619)
Contract of Sale Dation in payment
No pre-existing credit There is pre-existing credit or debt
Obligations are created Obligations are extinguished
Cause is the price paid (view point of seller) or the thing Extinguishment of the debt (view point of the debtor) or
sold (view point of the buyer) the object acquired in lieu of the credit (view point of the
creditor)
More freedom in fixing the price
Buyer has to pay the price Payment is received by the debtore before contract is
perfected

Article 1469. In order that the price may be considered certain, it shall be sufficient that it be so with reference to
another thing certain, or that the determination thereof be left to the judgment of a special person or persons.

Should such person or persons be unable or unwilling to fix it, the contract shall be inefficacious, unless the parties
subsequently agree upon the price.

If the third person or persons acted in bad faith or by mistake, the courts may fix the price.

Where such third person or persons are prevented from fixing the price or terms by fault of the seller or the buyer,
the party not in fault may have such remedies against the party in fault as are allowed the seller or the buyer, as the
case may be

When price considered certain

The price should be settled for if there is no price, then there cannot be a perfected contract of sale (consent/meeting of
the minds)

It must be certain or capable of being ascertained in money or its equivalent

- Money – means currency

- Its equivalent – means promissory notes, checks, and other mercantile instruments generally accepted as
representing money.

Under this article, price is certain if:

1. Parties have fixed or agreed upon a definite amount

2. It be certain with reference to another thing certain (Art. 1472 - ***like what the price of that thing when
compared to the market***)
 3. Determination of the price is left to the judgment of a specified person.

a. GN: Price fixed by third person designed by the parties is binding upon them.

b. XPN:

i. Third person designated acted in bad fairth/mistake (as when he has in mind noth thing thing
which is the object of the sale but another analogous thing)

ii. Third person disregards specific instructions or the procedure marked out by the parties or the
data given him, thereby fixing an arbitraty price

1. Remedy in the above EXCEPTIONS is for the court to fix the price

Article 1470. Gross inadequacy of price does not affect a contract of sale, except as it may indicate a
defect in the consent, or that the parties really intended a donation or some other act or contract

Effect of gross inadequacy of price in voluntary sales

Low price can be a sign of defect in consent, as when the inadequacy of price may indicate defect in consent such as
when, Fraud, Mistake, Undue influence is there. Contract is voidable because cause was vitiated.

Article 1471. If the price is simulated, the sale is void, but the act may be shown to have been in
reality a donation, or some other act or contract

If the price is simulated or false such as when the vendor really intended to transfer the thing gratuitously, then the sale
is void but the contract shall be valid as a donation.

Article 1472. The price of securities, grain, liquids, and other things shall also be considered certain, when the price
fixed is that which the thing sold would have on a definite day, or in a particular exchange or market, or when an
amount is fixed above or below the price on such day, or in such exchange or market, provided said amount be
certain.

Reference to Article 1469

That a price is considered certain if it could be determined wit reference to another thing certain.

Article 1473. The fixing of the price can never be left to the discretion of one of the contracting parties. However, if
the price fixed by one of the parties is accepted by the other, the sale is perfected. 

The reason for this provision is CONSENT. The determination of the price cannot be left to the discretion of a party
because there would be no consent

Article 1474. Where the price cannot be determined in accordance with the preceding articles, or in any other
manner, the contract is inefficacious. However, if the thing or any part thereof has been delivered to and
appropriated by the buyer he must pay a reasonable price therefor. What is a reasonable price is a question of fact
dependent on the circumstances of each particular case

Always remember that PRICE CERTAIN is an essential element of the contract (1458). However, when delivery has been
made and appropriated by the buyer, the buyer must pay a reasonable sum therefor.
Reasonable price – Generally the market price at the time and place fixed by the contract or by law for the delivery of
the goods.

Fair market value – that “reasonable” sum which property would bring on a fair sale by a man willing but not obliged to
sell to a man willing but not oliged to buy

Article 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is
the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing
the form of contracts

Perfection of contract of sale

From the moment there is meetings of the minds upon the (1)thing which is the object of the contract, and upon the (2)
price, the reciprocal obligations of the parties arise even when neither has been delivered.

Transfer of ownership – Ownership is transferred when the thing is delivered. However, the parties may stipulate that
the ownership in the thing, notwithstanding its delivery, shall not pass to the buyer until after he has fully paid the
purchase price thereof.
***Where the parties, however, still have to meet and agree on how and when the down payment and installment
payments are to be made, it cannot be said that a contract of sale has been perfected.***

- No agreement yet as to the manner of payment of the purchase price.

Effect of failure to pay price

- Failure to pay the consideration of contract is different from LACK of consideration.

Failure to pay – There is a right to demand fulfillment of the obligation or cancellation

Lack of consideration - prevents the existence of a valid contract.

Article 1476. In the case of a sale by auction:

(1) Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract of sale.

(2) A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or
in other customary manner. Until such announcement is made, any bidder may retract his bid; and the
auctioneer may withdraw the goods from the sale unless the auction has been announced to be without
reserve.

(3) A right to bid may be reserved expressly by or on behalf of the seller, unless otherwise provided by law
or by stipulation.

(4) Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the seller,
it shall not be lawful for the seller to bid himself or to employ or induce any person to bid at such sale on his
behalf or for the auctioneer, to employ or induce any person to bid at such sale on behalf of the seller or
knowingly to take any bid from the seller or any person employed by him. Any sale contravening this rule
may be treated as fraudulent by the buyer.

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