CHAPTER 1: NATURE AND FORM OF THE 1.

Absolute – where the sale is not subject to any

CONTRACT condition whatsoever and where title or ownership passes to
Article 1458. By the contract of sale one of the contracting the buyer upon delivery of the thing sold; or
parties obligates himself to transfer the ownership of and to 2. Conditional – where the sale contemplates a contingency, and
deliver a determinate thing, and the other to pay therefore a in general, where the contract is subject to certain conditions,
price certain in money or its equivalent. 2. Rights – all rights which are not instrasmissible or
A contract of sale may be absolute or personal may also be the object of sale, like the right of usufruct, the
conditional. right of conventional redemption, etc.
Elements of a Contract of Sale
Kinds of Contract of Sale
I. Essential elements/requisites – Those without which a contract of sale
would not exist
1. Absolute - This refers to a contract of sale that is not subject
to any condition or does not require any condition for the transfer a. Consent of the contracting parties
of ownership. b. Subject matter which should be a determinate thing
c. Price certain in money or its equivalent
2. Conditional - This refers to a contract of sale that
II. Natural elements – Those inherent in a contract of sale, which in the
contemplates contingency, or is subject to a condition. It follows
absence of stipulation excluding them, are deemed to exist
then that the delivery of the determinate thing does not
necessarily transfer ownership, unless the contingency or a. Warranty against eviction b. Warranty against hidden defects and
condition is fulfilled. encumbrances
III. Accidental elements – They refer to particular stipulations of the
CONTRACT OF SALE – is a contract whereby one of the parties parties such as terms, place and time of payment, and other conditions
(called the seller or vendor) obligates himself to deliver something to the agreed upon
other (called the buyer or purchaser or vendee) who, on his part, binds KINDS OF ILLICIT
himself to pay therefor a sim of money or its equivalent (known as the THINGS
price). 1. Illicit per se (of its nature)
2. Illicit per accidens (because of some provisions of
is a contract whereby one of the parties (called the seller or vendor) law declaring it illegal)
obligates himself, na maideliver yung item to the other parties (called the RIGHTS OF VENDOR TO TRANSFER
buyer or purchaser) na siya namang obligado na magbayad sa seller ng OWNERSHIP
pera o katumbas nito. 1. One can sell only what he owns – principle of law that
nobody can dispose of that which he does not have.
CHARACTERISTICS OF A 2. Sufficient if right exists at time of delivery –Article
CONTRACT OF SALE 1459, however, does not require that the vendor must have the
1. Consensual – because it is perfected by mere consent without right to transfer ownership of the property sold at the time of
any further act; the perfection of the contract. The reason is obvious, since
2. Bilateral – because both contracting parties are bound to future goods or goods whose acquisition by the seller depends
fulfill obligations reciprocally towards each other – the seller, upon a contingency may be the subject matter of sale.
to deliver and transfer ownership of the thing sold and
the buyer, to pay the price; Article 1460. A thing is determinate when it is particularly designated
3. Onerous – because the thing sold is conveyed in consideration or physically segregated from all others of the same class.
of the price and vice versa; The requisite that a thing be determinate is satisfied if at
4. Commutative – because the thing sold is considered the the time the contract is entered into, the thing is capable of
equivalent of the price paid and vice versa. However, the being made determinate without the necessity of a new or
contract may be aleatory as in the case of the sale of a hope, further agreement between the parties.
e.g., sweepstakes ticket;
5. Nominate – because it is given special name or designation in SUBJECT MATTER MUST BE
the Civil Code, namely “Sale”; and DETERMINATE
6. Principal – because it does not depend for its existence a. When it is particularly designated or physically segregated
and validity upon another contract. from all others of the same class.
Article 2010. By an aleatory contract, one of the parties or both reciprocally b. The thing is capable of being made determinate, at the time
bind
themselves to give or to do something in consideration of what the other shall give or
the contract is entered into, without the necessity of a new or
do upon the happening of an event which is uncertain, or which is to occur further agreement between the parties. If it cannot be known
at an indeterminate time. what may have been sold, the contract is null and void.
When not otherwise indicated, refers to article in the Civil
Code.
Article 1461. Things having a potential existence may be the object of
the contract of sale.
ESSENTIAL REQUISITES OF A The efficacy of the sale of a mere hope or expectancy
CONTRACT OF SALE is deemed subject to the condition that the thing will come
1. Consent or meeting of the minds – this refers to the consent on into existence.
the part of the seller of vendor to transfer and deliver and on The sale of a vain hope or expectancy is void.
the part of the buyer or vendee to pay.
2. Object or subject matter – this refers to the determinate thing
which is the object of the contract. The thing must
Article 1462. The goods which form the subject of a contract of
be determinate or at least capable of being made
sale may be either existing goods owned or possessed by the seller or
determinate because if the seller and the buyer differ in regard
goods to be manufactured, raised, or acquired by the seller
to the thing sold, there is no meeting of the minds; therefore,
after the perfection of the contract of sale, in this Title called “future
there is no sale; the subject matter may be real or personal
goods”.
property; and
There may be a contract of sale of goods, whose acquisition
3. Cause or consideration – this refers to the “price certain
by the seller depends upon a contingency which may or may
in money or its equivalent” such as a check or a promissory
not happen.
note, or the assumption by the buyer of the mortgage debt of
the seller, which is the consideration for the thing sold.
Technically, the cause in sale is, as to seller, the buyer’s promise to pay the price, and as GOODS WHICH MAY BE THE OBJECT
to the buyer, the seller’s promise to deliver the thing sold. OF SALE
1. Existing Goods – or goods owned or possessed by the seller;
NATURAL AND ACCIDENTAL or
ELEMENTS 2. Future Goods – or goods to be manufactured (like the sale of
1. Natural Elements – or those which are deemed to exist milk to be manufactured with the name of the buyer pressed in
in certain contracts, in the absence of any contrary the glass), raised (like the sale of the future harvest of palay
stipulations like warranty against eviction or hidden defects; from a ricefield), or acquired (like the sale of a definite parcel
and of land the seller expects to buy).
2. Accidental Elements – or those which may be present or
absent depending on the stipulations of the parties,
like conditions, interest, penalty, time or place of payment, etc. Article 1466. In construing a contract containing
provisions characteristic of both the contract of sale and of the
TWO KINDS OF CONTRACT contract of agency to sell, the essential clauses of the whole
OF SALE instrument shall be considered.

https://www.coursehero.com/file/89029651/Article-1458-to-
Sale vs. Agency SALE
AGENCY
usually to full payment of the purchase price. The delivery of The buyer pays for the price of The agent does not pay for the
the thing sold does not transfer ownership until the conditions the goods/property purchased price. He merely accounts for
is fulfilled. the proceeds of the sale.
The buyer becomes the owner of The agent does not become the
Article 1459. The thing muse be licit and the vendor must have a the goods/property purchased owner of the goods/property
right to transfer the ownership thereof at the time it is delivered. delivered to him for sale.
Buyer cannot return the The agent returns the
REQUISITES CONCERNING OBJECT goods/property when the sale is goods/property if he was not
1. Thing – aside from being (a) determinate, the law defective able to sell the same
requires that the subject matter must be (b) licit or lawful, The seller warrants The agent does not make any
that is, it should not be contrary to law, morals, good the goods/property sold warranty as long as he acts within
customs, public order, or public policy, and should be (c) not his authority and in the name of
be impossible. In other words, like any other object of a the principal
contract, the thing must be within the commerce of men. If the The agent must follow the
The seller has full freedom
subject of the sale is illicit, the contract is void and cannot, instructions of the principal
to enter into any terms or
therefore be ratified.
conditions on the contract of sale

https://www.coursehero.com/file/89029651/Article-1458-to-
 Exceptions: (meaning, sale is set aside)
Article 1467. A contract for the delivery at a certain price of an 1. If consent is vitiated, such as VIMFU (Violence, Intimidation, Mistake,
article which the vendor in the ordinary course of his business Fraud, Undue influence)
manufactures or procures for the general market, whether the same 2. If the parties intended a donation or some other act or contract
is on hand at the time or not, is a contract of sale, but if 3. If the price is so low as to be shocking to the conscience
the goods are to be manufactured specially for the customer
and upon his special order, and not for the general market, it is a Effect of Simulated Price. Sale is void, unless it could be shown that the
contract for a piece of work. parties intended a donation or some other act of liberality.
o Price Simulated- No price to support a contract of sale, such
Contract for a Piece of Work— The article sold is specially that neither party had any intention that the amount will be paid—void
manufactured and upon the special order of the customer. Article is o Price is False- there is a real price not declared—contract is valid, but
not sold in the ordinary course of business. the underlying deed is subject to reformation to indicate the real
Contract for a piece of work Contract of
Sale
The thing transferred is one The thing transferred is one price upon which the minds of the parties have met.
not in existence and w/c which would have existed and would
never would have existed but have been the subject of sale to Article 1475. The contract of sale is perfected at the moment there
for the order of the party some other person, even if the order is a meeting of minds upon the thing which is the object of the
desiring to acquire it had not been given contract and upon the price.
The services dominate the The primary objective of From that moment, the parties may reciprocally
contract even though there is a the contract is a sale of demand performance, subject to the provisions of the law
sale of goods involved the manufactured item; it is a sale governing the form of contracts.
of goods even though the item
is manufactured by labor furnished PERFECTION OF CONTRACT OF SALE. Meeting of the minds
by the seller and upon previous upon the thing and price.
order of the customer Effect: Parties may reciprocally demand performance
Not w/in the Statute of Frauds Governable by the Statute of Frauds
GENERAL RULE: A contract of sale is perfected at the moment there is
Article 1468. If the consideration of the contract consists partly a meeting of the minds upon the thing which is the object of the contract
in money, and partly in another thing, the transaction shall and upon the price; consensual contract
be characterized by the manifest intention of the parties. If such Exception: When the sale is subject to a suspensive condition
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 REQUIREMEN
amount of the money or its equivalent; otherwise, it is a sale. TS:
1. When parties are face to face – when there is absolute acceptance of
Sale an offer that is certain
Barter 2. When thru correspondence or telegram – when the offer or receives
Consideration: giving of money as Consideration: giving of a thing or had knowledge of the acceptance
payment 3. When the sale is subject to a suspensive condition – from the
Governed by law on sales: species of the genus sales moment the condition is fulfilled
If consideration consists party in money and partly by thing – look NOTES: Qualified acceptance: mere counter-offer which needs to
at manifest intention; be absolutely accepted to give rise to perfected contract of sale.
Business
ads are mere invitations to make an offer except when it appears to be
If intention is not clear: value If intention is not clear: value of
of thing is equal otherwise.
thing is more
or less than amount of money – than amount of money – barter
sale Article 1477. The ownership of the thing sold shall be transferred to
the vendee upon the actual or constructive delivery thereof.
Rules if Consideration is partly Money and Partly 3. If there is a real price but what is stated in the contract is not the one
Goods intended to be paid (only relatively simulated): the contract of sale
1. Determine the intention of the parties. is valid but subject to reformation
2. If intention could not be determined, consider the value of the thing
given: Effect of Gross Inadequacy of Price. No
a. If value of the thing more than value of the money, it is effect.
BARTER
b. If value of the thing less than value of the money, it is
SALE
c. If both values are the same,
SALE

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.

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.

EFFECT OF GROSS INADEQUACY

OF PRICE

NOTE: Mere inadequacy of the price does not affect the validity of the
sale, except
(1) When there is fraud, mistake, or undue influence indicative of a
defect in consent is present,
(2)When it shows that the parties really intended a donation or
some other act or contract.

EFFECT WHERE PRICE IS

SIMULATED

1. The act may be shown to have been in reality a donation, or

some other act or contract
2. If not and neither party had any intention whatsoever that the
amount will be paid (absolutely simulated): the sale is void

https://www.coursehero.com/file/89029651/Article-1458-to-
 specific or determinate subject matter, the risk of loss deterioration and
Article 1478. The parties may stipulate that ownership in the thing the benefits of fruits and improvements, were fro the account of the
shall not pass to the purchaser until he has fully paid the price. buyer.

Article 1480. Any injury to or benefit from the thing sold, after WHO BEARS RISK OF LOSS/
the contract has been perfected, from the moment of the perfection of DETERIORATION/ FRUITS:
the contract to the time of delivery, shall be governed by articles 1163 1. BEFORE
to PERFECTION
1165, and 1262. a. Res perit domino
b. Owner is seller so seller bears risk ofloss
This rule shall apply to the sale of fungible things, made independently 2. AT
and for a single price, or without consideration of their PERFECTION
weight, number, or measure. o Res perit domino
o Contract is merely inefficacious because loss of the subject matter
Should fungible things be sold for a price fixed according to does not affect the validity of the sale
weight, number, or measure, the risk shall not be imputed to the o Seller cannot anymore comply with obligation so buyer
vendee until they have been weighed, counted, or measured and cannot anymore be compelled
delivered, unless the latter has incurred in delay. 3. AFTER PERFECTION BUT BEFORE
DELIVERY
Legal consequences from point of perfection are the same in both legal o Loss – confused state
systems: upon perfection of an unconditional contract of sale involving
This study source was downloaded by 100000806377929 from CourseHero.com on 02-03-2022 02:02:19 GMT -06:00

https://www.coursehero.com/file/89029651/Article-1458-to-
o Paras: b. An agreement for the sale of goods, chattels or things in action, at a
BUYER price not less than P500.00; and
o Tolentino: c. A sale of real property or of an interest therein.
SELLER
o Deterioration and fruits – Buyer bears loss; IV. EXCEPTIONS TO COVERAGE OF STATUTE IN
4. AFTER SALES CONTRACTS:
DELIVERY 1. When there is a note or memorandum in writing and subscribed to by
o Res perit domino party or his agent (contains essential terms of the contract)
o Delivery extinguishes ownership visa-vis the seller and creates a new 2. When there has been partial performance/execution (seller
one in favor of the buyer delivers with intent to transfer title/receives price)
3. When there has been failure to object to presentation of evidence
Article 1481. In the contract of sale of goods by description or (oral)
by sample, the contract may be rescinded if the bulk of the 4. When sales are effected through electronic commerce
goods delivered do not correspond with the description or the sample,
and if the contract be by sample as well as description, it is not Article 1484. In a contract of sale of personal property the price
sufficient that the bulk of goods correspond with the sample if of which is payable in installments, the vendor may exercise any
they do not also correspond with the description. of the following remedies:
The buyer shall have a reasonable opportunity of comparing the bulk (1)Exact fulfillment of the obligation, should the vendee fail to
with the description or the sample. pay;
(2) Cancel the sale, should the vendee's failure to pay cover
Sale of Goods By Description- where a seller sells a thing as being of a two or more installments;
certain kind verbally describing them and the buyer simply relies on the (3) Foreclose the chattel mortgage on the thing sold, if one has been
seller’s descriptions of the things, not knowing whether the seller’s constituted, should the vendee's failure to pay cover two or
representations are true or not. more installments. In this case, he shall have no further action
against the purchaser to recover any unpaid balance of the price.
Sale by Sample- Where the seller warrants that the bulk of goods being Any agreement to the contrary shall be void.
sold correspond with the sample or samples exhibited not only in kind
but also in quality and character. Article 1485. The preceding article shall be applied to
contracts purporting to be leases of personal property with
Sale by Description and Sample- Where the seller has to satisfy option to buy, when the lessor has deprived the lessee of the
the requirements in sale by description and sample. There are two- possession or enjoyment of the thing.
fold warranty here:
(a) the goods purchased matched with the description and Article 1486. In the case referred to in the two preceding
(b) the goods also matched in kind, quality and character with that of the articles, a stipulation that the installments or rents paid
sample or samples exhibited to the buyer or his representative shall not be returned to the vendee or lessee shall be valid
insofar as the same may not be unconscionable under the
Article 1482. Whenever earnest money is given in a contract of sale, it circumstances.
shall be considered as part of the price and as proof of the perfection
of the contract. Article 1487. The expenses for the execution and registration of
the sale shall be borne by the vendor, unless there is a stipulation to
EARNEST MONEY vs. OPTION the contrary.
MONEY
Earnest Money Option Article 1488. The expropriation of property for public use is
Money governed by special laws.
It is part of the purchase price It is given as a distinct consideration
for an option contract which Article 1489. All persons who are authorized in this Code
gives the buyer a specific period to
within which to purchase the thing
It is given only when there It is given at a time when the obligate themselves, may enter into a contract of sale, saving the
is already a perfected sale sale had not yet been perfected. modifications contained in the following
What had been perfected only articles.
is the option contract Where necessaries are those sold and delivered to a minor or
When it is given, the buyer is Even if option money is paid by the other person without capacity to act, he must pay a reasonable
bound to pay the balance of the would-be-buyer he is not bound to price therefor. Necessaries are those referred to in article 290.
agreed purchase price buy the thing
If the sale does not materialize, If the buyer decides not to buy the Two Kinds of
the earnest money paid must be thing, he cannot recover the option Incapacity:
returned, unless a contrary money he paid as consideration for 1. Absolute Incapacity- Party cannot bind himself in any case.
agreement had been stipulated the contract of option 2. Relative Incapacity- Certain Persons under certain
circumstances cannot buy certain property.
** Minors in contract for necessaries must pay reasonable price.
III. When form is important for enforceability (STATUTE OF
Article 1483. Subject to the provisions of the Statute of Frauds and of FRAUDS Article 1403 (2))
any other applicable statute, a contract of sale may be made in a. A sale agreement which by its terms is not to be performed within a
writing, or by word of mouth, or partly in writing and partly by word year from the making thereof;
of mouth, or may be inferred from the conduct of the parties.

FORM OF
SALES
I. Form not important in validity of
sale
a. Sale being consensual, may be oral or written, perfected by mere
consent as to price and subject matter
b. If particular form is required under the statute of frauds:
i. valid and binding between parties but not binding to 3rd persons
c. Reason: purposes of convenience only and not for validity and
enforceability; cause of action is granted to sue and compel other
party to execute the document

II. When form is important for validity; exception by specific

provision of law;
a. Power to sell a piece of land granted to an agent – otherwise VOID
b. Sale of large cattle; must also be registered with Municipal treasurer –
otherwise
VOID
c. Sale of land by non-Christian if not approved by Governor–
VOID

https://www.coursehero.com/file/89029651/Article-1458-to-
 b. To prevent one spouse from unduly influencing the other.
Necessaries—those things which are needed for sustenance, dwelling, c. To avoid by indirection the violation of the prohibition
clothing and medical attendance, in keeping with the financial capacity of against
the family of the incapacitated person. donations.

Article 1490. The husband and the wife cannot sell property to Who may assail
each other, except: illegality?
(1) When a separation of property was agreed upon in the a. Creditors prior to the sale
marriage settlements; or b. Heirs of either spouse.
(2) When there has been a judicial separation of property under article
191. ** Either spouse may not assail illegality because they are parties
thereto.
Prohibition against Husband and Wife. ** A spouse designated as agent of the other spouse may sell the latter’s
Exceptions. Rationale: PID exclusive property.
a. To avoid Prejudice to 3rd Persons
This study source was downloaded by 100000806377929 from CourseHero.com on 02-03-2022 02:02:19 GMT -06:00

https://www.coursehero.com/file/89029651/Article-1458-to-
 Article 1495. The vendor is bound to transfer the ownership
Article 1491. The following persons cannot acquire by purchase, of and deliver, as well as warrant the thing which is the object of
even at a public or judicial auction, either in person or the sale.
through the mediation of another:
(1) The guardian, the property of the person or persons Obligations of Vendor.
who may be under his guardianship; (TDWP)
(2) Agents, the property whose administration or sale may 1. Transfer Ownership (not
have been intrusted to them, unless the consent of the principal waivable)
has been given;
(3) Executors and administrators, the property of the
estate under administration;
(4) Public officers and employees, the property of the State or of
any subdivision thereof, or of any government-owned or
controlled corporation, or institution, the administration of
which has been intrusted to them; this provision shall apply to
judges and government experts who, in any manner whatsoever, take
part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior
and inferior courts, and other officers and employees
connected with the administration of justice, the property and
rights in litigation or levied upon an execution before the
court within whose jurisdiction or territory they exercise their
respective functions; this prohibition includes the act of
acquiring by assignment and shall apply to lawyers, with
respect to the property and rights which may be the object
of any litigation in which they may take part by virtue of their
profession;
(6) Any others specially disqualified by
law.

Persons Relatively Incapacitated to Buy.

(PAGEJO)
1. Public Officers and employees—Property Of
State.
2. Agents—Property of Principal unless with consent.
3. Guardian—Property of Ward.
4. Executors and administrators—Estate
5. Justices, Judges, Prosecuting Attorneys, Clerks and employees of court
—Property/Rights under litigation.
6. Others disqualified by law. (Ex. *aliens who are
disqualified to purchase private agricultural lands; *an unpaid
seller having a right of lien or having stopped the goods in transitu,
who is prohibited from buying the goods either directly or indirectly in
the resale of the same at a public or private sale w/c he may make. Art.
1533, par.5)

Rationale: Fiduciary
relationship
Status of Sale: Voidable (1-3); Void (4-
6)

Article 1492. The prohibitions in the two preceding articles

are applicable to sales in legal redemption, compromises
and renunciations.

Article 1493. If at the time the contract of sale is perfected, the thing
which is the object of the contract has been entirely lost, the
contract shall be without any effect.

But if the thing should have been lost in part only, the vendee may
choose between withdrawing from the contract and demanding the
remaining part, paying its price in proportion to the total sum
agreed upon.

Partial Loss
Rules:
1. Vendee may withdraw from the contract
2. Demand the remaining part, paying its price in proportion to
the total sum agreed upon

Article 1494. Where the parties purport a sale of specific goods, and
the goods without the knowledge of the seller have perished in part
or have wholly or in a material part so deteriorated in quality as to
be substantially changed in character, the buyer may at his option
treat the sale:
(1) As avoided;
or
(2) As valid in all of the existing goods or in so much thereof as
have not deteriorated, and as binding the buyer to pay the agreed
price for the goods in which the ownership will pass, if the sale was
divisible.

Loss/Substantial Deterioration of Specific Goods without

seller’s knowledge.
1. Buyer may avoid the sale or
2. May treat sale as valid w/ respect to the existing goods

https://www.coursehero.com/file/89029651/Article-1458-to-
2. Deliver (not waivable)
3. Warrant Object (waivable and may be modified) Article 1498. When the sale is made through a public
4. Preserve Thing from perfection to delivery (Art. 1163) instrument, the execution thereof shall be equivalent to the
5. Pay for the execution and registration of the sale unless there is a delivery of the thing which is the object of the contract, if
contrary agreement from the deed the contrary does not appear or cannot clearly be
inferred.
**Execution sales do not require the delivery of thing since a one year
period of redemption is available to seller. 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
Article 1496. The ownership of the thing sold is acquired by the stored or kept.
vendee from the moment it is delivered to him in any of the
ways specified in articles 1497 to 1501, or in any other manner Requirements:
signifying an agreement that the possession is transferred from the 1. Seller’s
vendor to the vendee. Control.
2. Seller’s Control transferred to buyer.
Article 1497. The thing sold shall be understood as delivered, 3. Intention to deliver for ownership.
when it is placed in the control and possession of the vendee.
Article 1499. The delivery of movable property may likewise be
Control and Possession necessary in made by the mere consent or agreement of the contracting
Delivery. parties, if the thing sold cannot be transferred to the possession of
Exception: Art. 1478. Stipulation as to full payment of price. the vendee at the time of the sale, or if the latter already had it in his
possession for any other reason.
Delivery- a mode of acquiring ownership as a consequence of a contract of
sale by virtue of which actually or constructively the object is placed in the Article 1500. There may also be tradition constitutum possessorium.
control and possession of the vendee.
Different forms of Constructive Delivery - Constructive delivery
KINDS OF
DELIVERY has
1. Actual or Real. (1497) same legal effect as actual or physical delivery
2. Legal or Constructive
a. Legal Formalities (1498); execution of public instrument. 1. Traditio Longa Manu − Delivery of thing by mere agreement;
b. Symbolical Tradition (1498 par 2)- keys delivered. when
c. Traditio Longa Manu- by mere consent /agreement. If SELLER points to the property without need of actually
the movable sold cannot yet be transferred to the possession of delivering
the buyer at the time of the sale. (1499) 2. Traditio Brevi Manu − Before contract of sale, the would be
d. Traditio Brevi Manu- if the buyer had already the possession the buyer was already in possession of the would be subject matter of sale
object even before the purchase. (lessee becomes owner) (ex: as lessee)
e. Traditio constitutum possessorium- possession as owner 3. Symbolic delivery − As to movables – ex: delivery of the keys to a
changed. (Owner becomes lessee) car
4. Constitutum possessarium − When at the time of the perfection
3. Quasi-Tradition- Delivery of Rights, credits or incorporeal property of the contract of sale, seller had possession of the subject matter in
made by: the concept of owner and pursuant to the contract, seller continues to hold
a. Execution of public instrument physical possession no longer in the concept of an owner but as a lessee
b. Placing titles of ownership in the hands of a lawyer. or any other form of possession other than in the concept of owner.
c. Allowing the buyer to make use of the rights (1501)
This study source was downloaded by 100000806377929 from CourseHero.com on 02-03-2022 02:02:19 GMT -06:00

https://www.coursehero.com/file/89029651/Article-1458-to-
Article 1501. With respect to incorporeal property, the provisions
of the first paragraph of article 1498 shall govern. In any other
case wherein said provisions are not applicable, the placing of the
titles of ownership in the possession of the vendee or the use by the
vendee of his rights, with the vendor's consent, shall be understood as
a delivery.

Article 1502. When goods are delivered to the buyer "on sale
or return" to give the buyer an option to return the goods
instead of paying the price, the ownership passes to the buyer on
delivery, but he may revest the ownership in the seller by returning
or tendering the goods within the time fixed in the contract, or,
if no time has been fixed, within a reasonable time.

When goods are delivered to the buyer on approval or on trial

or on satisfaction, or other similar terms, the ownership
therein passes to the buyer:

(1) When he signifies his approval or acceptance to the seller or does

any other act adopting the transaction;
(2) If he does not signify his approval or acceptance to the seller, but
retains the goods without giving notice of rejection, then if a time has
been fixed for the return of the goods, on the expiration of such time,
and, if no time has been fixed, on the expiration of a reasonable time.
What is a reasonable time is a question of fact.

Transaction on Sale or Return. Subject to Resolutory Condition.

Difference with “Delivery with option to purchase”-
Ownership is transferred in Sale or Return

Transaction on Approval or Trial/Satisfaction. Subject to

Suspensive
Condition.
Rules:
1. Risk of loss to seller until the sale becomes absolute.
(Exceptions: Buyer in default; Buyer agreed to bear the loss)
2. Buyer must give goods a trial except when it is evident that it cannot
perform the work intended.
3. Period of signifying acceptance commences to run only when all the
parts essential for operation has been delivered.
4. A provision that a 3rd person must satisfy approval is valid but he must
be in Good faith.
5. Generally the Sale and Delivery to an expert buyer is not a sale
on approval/trial.

Sale or Return vs. Sale on

Approval
Basis Sale or Return Sale on
Approval
Condition Subject to Subject to suspensive
Resolutory condition condition
Premise It depends upon It depends upon the
the will of the buyer suitability, quality
or character of
the goods
Transfer of ownership Ownership Ownership does not
immediately passes immediately pass to
to the buyer on the buyer. It
delivery passes only upon
approval or
satisfaction of the
buyer
duly manifested after
trial
Revesting Ownership There is no
of ownership in is revested in the revesting of
the owner seller if the ownership because it
buyer so decides is retained by the
seller until the sale
Risk of loss The risk rests on the becomes absolute
or deterioration buyer before the The risk remains
revestment of in the seller while
ownership the goods are on trial

https://www.coursehero.com/file/89029651/Article-1458-to-
This study source was downloaded by 100000806377929 from CourseHero.com on 02-03-2022 02:02:19 GMT -06:00

https://www.coursehero.com/file/89029651/Article-1458-to-