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HIGHLIGHTS OF READING ASSIGNMENT

CIVIL LAW REVIEW II, June 19, 2021

A. Sale - Nature and Form

1. Art. 1458-See definition- two (2) elements

a. Obligation to transfer ownership and obligation to deliver a determinate thing

b. Obligation to pay a price certain in money or equivalent

Article 1458. By the contract of sale one of the contracting

parties obligates himself to transfer the ownership of
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.

2. See Bar Question - 2 schools of thought, under # 8, Comment

(8) Bar Question

A has sold a baby grand piano to B, by private instrument
for P500,000. In that contract of sale, which is the
object, and which is the cause?

ANS.: There are at least two viewpoints here, the latter

of which appears preferable.

First view –– The object (subject

matter) of the sale is the piano, while the cause (consideration)
is P500,000 (or, as one authority puts it, the giving of
the P500,000, at least insofar as the seller A is concerned).
Insofar as the buyer B is concerned, the object is the
P500,000, while the cause (the consideration for which he
parted with his money) is the piano (or, as the same authority
puts it, the giving of the piano).

Second view –– Insofar as both the seller and the buyer

are concerned, there is only one subject matter, namely, the
piano. The cause or consideration for the seller is the price
paid; for the buyer, it is the delivery to him of the piano.

3. Art. 1470- Gross Inadequacy of Price -

a.General rule - it does not affect the contract of sale

b. Exception
i) It may indicate defect in the consent
ii) Partìes really intended donation or some other act or contract
Art. 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.

4. Art. 1471 - if the price is simulated - legal effect, the sale is void

Art. 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.

5. Art. 1475 - sale is perfected by meeting of the minds on the following:

a. Thing which is the object of the contract

b. The price

Both items b) and c) above equals consent, sale contract is consensual

Art. 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.

6. Art. 1479- consists of the following:

a. Mutual promise - a bilateral reciprocal contract

b. Accepted unilateral promise - is binding upon promissor if promise is supported by a
consideration distinct from the price

Art. 1479. A promise to buy and sell a determinate thing

for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or to sell a

determinate thing for a price certain is binding upon the
promissor if the promise is supported by a consideration
distinct from the price.

7. See Example of option founded upon a consideration under #1, Comment

Example:
B, interested in a particular car at a car exchange,
asked A for the price. A said “P500,000.” B, however, could
not make up his mind whether to buy or not. So A told him,
“B, I’ll give you a week to make up your mind.” B accepted,
and gave A P10,000 for the option — the opportunity to make
up his mind. The contract of option here is valid, because it
was supported by a consideration distinct from the selling
price. If A reneges on his word and disposes of the property
in favor of another before the end of the week, B can sue
him for damages. Upon the other hand, B is not obliged to
buy the car at the end of the week. He may or he may not.
After all, he did not promise to buy. He merely accepted a
unilateral promise of A to sell. (See Filipinas College, Inc. v.
Timbang, et al., [C.A.] 52 O.G. 3624).

[NOTE: In the example given, if there had been no

cause or consideration for the option, the option would not be
a valid contract and therefore, A cannot be blamed for selling
the car to another before the end of the stipulated week. (See
Cavada v. Diaz, 37 Phil. 982). (Of course, had the option been
given out of liberality or generosity, there would be a valid
consideration, the option having been given as a donation).]

8. Who bears risk of loss

a. If object was lost before perfection - the seller bears the loss (Reason - no contract)
b. If object was lost after delivery to the buyer- the buyer bears the loss (Reason- Res
perit domino, the owner bears the loss)
c. If object is lost after perfection, but before delivery-buyer bears the loss read in
relation to Art. 1262 – if the thing is lost without fault of debtor and before he has
incurred in delay - legal effect
i) Obligation to deliver the determinate thing is extinguished
ii) Obligation to pay is not extinguished

d. Exception to rule under item c) when the buyer bears the loss-
i) Object consist of fungibles sold for a price fixed according to weight, number of
measure
ii) Seller is guilty of fraud, negligence, default or violation of contractual term
iii) When the object sold is generic

B. Earnest Money
1. Art. 1482 - Earnest money or "arras" defined – it is given and considered as part of the price
and as proof of perfection of the contract

Art. 1482. Whenever earnest money is given in a contract

of sale, it shall be considered as part of the price and
as proof of the perfection of the contract.

2. Definition - it is something of value to show that the buyer was really in earnest and given
to the seller to bind the bargain. (14 Words and Phrases 23)
3. See Examples under #3, Comment
(3) Example
B purchased S’s car for P900,000, payable after one
month. To show his earnestness, B, at the time of perfection,
gave S the sum of P50,000. At the end of one month, B has
to pay only the balance of P850,000. (Note: The earnest money
here of P50,000 must not be confused with the money given
as consideration for an option. Earnest money applies to a
perfected sale; the money is part of the purchase price; the
buyer is required to pay the balance. Upon the other hand,
option money applies to a sale not yet perfected; the money
is not part of the purchase price; the would-be buyer is not
required to buy.)

4. Two (2) elements of earnest money

a. Part of purchase price
b. Proof of perfection of contract

5. Art. 1484 - Remedies of a Vendor in Sale on Installment

а. Exact fulfillment of the obligation
b. Cause the sale in case of failure to pay 2 or more installments
c. Foreclose the chattel mortgage on the thing sold, in case of failure to pay 2 or more
installment

NOTE: The vendor has no action for deficiency in case there is still an unpaid balance
after he foreclose the sale.

Art. 1484. In a contract of sale of personal property the

price of which is payable in installments, the vendor may
exercise any of the following remedies:
(1) Exact fulfillment of the obligation, should the
vendee fail to pay;
(2) Cancel the sale, should the vendee’s failure to pay
cover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold,
if one has been constituted, should the vendee’s failure to
pay cover two or more installments. In this case, he shall
have no further action against the purchaser to recover any
unpaid balance of the price.

Any agreement to the contrary

shall be void.

6. Art. 1491 - Persons incapacitated to buy

a. Guardians
b. Agents
c. Executor and administrator
d. public officials and employess
e. justices, judges, prosecuting attorneys
f. any others specially disqualified by law

C. Obligations of Vendor

1. Art. 1495 - Obligations of vendor

а.To transfer ownership
b. To deliver and warrant the object of the sale
c. to warrant the object sold

Art. 1495. The vendor is bound to transfer the ownership

of and deliver, as well as warrant the thing which is
the object of the sale.

2. Art. 1496 - Ownership of the thing sold will be acquired from the moment it is delivered to
the vendee

Art. 1496. The ownership of the thing sold is acquired

by the vendee from the moment it is delivered to him in
any of the ways specifi ed in Articles 1497 to 1501, or in any
other manner signifying an agreement that the possession
is transferred from the vendor to the vendee.

3. Art. 1497 = Real or actual delivery- when the thing sold is placed in the control and
possession of the vendee

Art. 1497. The thing sold shall be understood as delivered,

when it is placed in the control and possession of
the vendee.

4. Art. 1498 - Two (2) kinds of constructive delivery

a. By legal formalities
b. Tradition simbolica (delivery of the key of the place or depository where the object is
kept or stored)

Art. 1498. When the sale is made through a public instrument,

the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract,
if from the deed the contrary does not appear or cannot
clearly be inferred.

With regard to movable property, its delivery may also

be made by the delivery of the keys of the place or depository
where it is stored or kept.

(1) Two Kinds of Constructive Delivery (Thru Legal Formalities

and Thru Traditio Simbolica)
Art. 1498 treats of two kinds of constructive delivery:
(a) by legal formalities (1st par.) applies to real and personal
property since the law does not distinguish. (See Puatu
v. Mendoza, 64 Phil. 457 and Buencamino v. Viceo, 13
Phil. 97).
(b) traditio simbolica. (2nd par.)