ARTICLE 1476 TO 1488 o Seller cant withdraw/EXCEPT:

the auction has been

SALE BY AUCTION: announced without reserve
• In this case, the seller
Art 1476 can only withdraw if
there is no bid.
(1) Where goods are put up for sale by auction
in lots, each lot is the subject of a separate Why can one withdraw or retracts before
contract perfection?
• Since, EVERY BIDDING IS A MERE OFFER
• Discussion
(3) A right to bid may be reserved expressly by
Lot refers to properties, eg car, books, jewelries or on behalf of the seller, unless otherwise
provided by law or by stipulation
• In cases where different lot is sold by
the same seller and bought by the same (4) Where notice has not been given that a sale
buyer, there is still a separate contract by auction is subject to a right to bid on behalf
per each lot bought. of the seller, it shall not be lawful for the seller
to bid himself or to employ or induce any
Example person to bid at such sale on his behalf or for
the auctioneer, to employ or induce any
A has 2 cars. He can auction the 2 cars as one person to bid at such sale on behalf of the
lot or 2 lots. seller knowingly to take any bid from the seller
or any person employed by him. Any sale
• If 2 lots, each should be subject of a contravening this rule may be treated as
separate contract of sale fraudulent by the buyer.

(2) A sale by auction is perfected when the Discussion

auctioneer announces its perfection by the fall
of the hammer, or in other customary manner. 1. The seller can bid, provided,
Until such announcement is made, any bidder a. such right to bid was reserved
may retract his bid; and the auctioneer may b. and notice was given that the
withdraw the goods from the sale unless the sale by auction is subject to a
auction has been announced to be without right to bid on behalf of the
reserve. seller.

• Discussion 2. Seller may employ others to bid for him

or her
PERFECTION: When auctioneer announces its o Notice to the publics that the
perfection by the fall of the hammer or in other auction is subject to the right to
customary manner. bid on behalf of the seller

1. Before the hammer falls, the bidder can 3. By-bidders of Puffers

retract his or her bud o Persons who bid for the seller,
2. Before the hammer falls, the seller may but are not themselves bound
withdraw the goods from the sale
ACTUAL AND CONSTRUCTIVE DELIVERY MUTUAL AND UNILATERAL PROMISE

Art. 1477 Art 1479:

The ownership of the thing sold shall be A promise to buy and sell a determinate thing
transferred to the vendee upon the actual or for a price certain is reciprocally demandable.
constructive delivery thereof. (GENERAL RULE) (refers to mutual promise)

• Only have the right to demand the

Art 1478. The parties may stipulate that fulfillment of the promise (technically
ownership in the thing shall not pass to the not perfected yet)
purchaser until he has fully paid the price. • BUT ACCORDING TO ATTY FROM THE
(EXCEPTION TO 1477) VID, it is good as a perfected contracted

• Ownership (2nd para): An accepted unilateral promise to

o Transfer at deliver not in buy or to sell a determinate thing for a price
perfection certain is binding upon the promisor if the
promise is supported by a consideration
• GR: Payment is not necessary for the distinct from the price. (only one promised and
transfer of ownership the other accepted)
• Exception: 1478, parties can stipulate
that ownership will only transfer after Example
full payment
(1) B promised A to sell his dog, and A
• Kinds of delivery accepted such promise
a. Actual delivery (Art 1497)
b. Constructive (Art 1498 - 1601) Q: IS the promise binding to B, in other words
i. Any other manner can A compel B to fulfill his promise?
signifying that the A: YES, if supported by a consideration distinct
possession is from the price
transferred (1496)
(2) Y is an Agent of a Mitsubishi branch, X
Example an customer planned to buy a car. So X
ask for the price of an Estrada, which is
(1) A sold his car to B for 1000 pesos. A 1.5 million. Y saw how X still reluctant
delivered the car the day of the perfection but to buy the car, so he offer him a
they contemplated that the delivery should be discount of 200,000 pesos. Still not sure
done next week. (X), Y said that I'll give it to you for 1.3
million and 1 week to think. SO X gave Y
Q: Who is the owner of the car if it is still 1k as a consideration.
unpaid?
A: B is the owner bcs there is already a delivery Q: SO can Y withdraw the offer?
A: NO, bcs it is an option contract
Q: Same situation with (1), but instead B paid
first, when the delivery will still occur next week
A: A is still the owner, bcs there is no delivery
What is an Option contract?
Should fungible things be sold for a price fixed
• A contract granting a privilege in one according to weight, number, or measure, the
person, for which he has paid a risk shall not be imputed to the vendee until
consideration, which gives him the right they have been weighted, counted, or
to buy certain merchandise or specified measured, and delivered, unless the latter has
property, from another person, at any incurred in delay.
time within the agreed period, at a fixed
price. Discussion
o Object: the option to decide
within a week (base on the • Who bears the loss
example)
o Consideration: the price or a. If SELLER BEARS THE LOSS
consideration given in case of o Buyer need not to pay
the example it's the 1k
o X can enforce only the option b. If BUYER BEARS THE LOSS
contract NOT THE CONTRACT o Buyer still need to pay
OF SALE Seller

• Who bears the loss (in each stages of a

Policitiacion contract): OWNER BEARS THE LOSS
• A unilateral promise to buy or to sell
which is not accepted a. BEFORE PERFECTION
• Produces no juridical effect and creates o Seller, since he is still the
no legal bond. owner (no contract of sale
yet)
Bilateral promise to buy or sell
• Gives to the contracting parties b. AT PERFECTION
personal rights o Contract of Sale has NO EFFECT
• No need for a consideration which is o Seller
separate and distinct from the selling b.1. AT PERFECTION; PARTIALLY
price LOSS (THE THING)
• Buyer
▪ Can withdraw the
OWNER BEARS THE LOST contract
▪ Can continue by
Art. 1480 demanding the
remaining part and
Any injury to or benefit from the thing sold, pay the proportion
after the contract has been perfected, from the to the total sum
moment of the perfection of the contract to agreed upon
the time of delivery, shall be governed by c. DELIVERY
Articles 1163 to 1165, and 1262 o Buyer

This rule shall apply to the sale of fungible d. AFTER PERFECTION, AFTER DELIVERY
things, made independently and for a single o Buyer
price, or without consideration of their weight,
number, or measure.
 • Who Bears the lost; AFTER • Articles shown in para 1; from
PERFECTION; BEFORE DELIVERY perfection to delivery; injury or benefit

GR: Buyer bears the lost, if the thing is a. 1163

i. Non- fungible things • Seller obligated to take care
(irreplaceable; eg house and lot) of the thing with the due
ii. Fungible things w/o diligence of the father of
consideration weight, number the family
and measure b. 1164
• Buyer has the right to the
Exception: Seller bears the loss, if the fruits at perfection
thing is • But no real rights until
i. Fungible goods with consideration delivery
to weight, number and measure c. 1165
(suspensive condition) • The thing is determinate,
1. Exception to the 1st buyer can compel seller to
exception deliver
a. : if BUYER delays in • If generic, buyer can comply
terms of Weighing, the obligation by other at
counting and the expense of the seller
measure: Buyer ▪ But SELLER BEARS
bear the lost THE LOSS
• If he incurs
ii. Exception: Seller guilty of F, N, D, or DELAY
Violation of COS • Or promises
iii. Object is generic, generic thing never to deliver
perishes the thing to
2 or more
• Why Buyer bears the lost AFTER persons
PERFECTION BUT BEFORE DELIVERY with
different
a. Historically, Roman Law interest
• Risk if the thing sold passes (fortuitous
to the buyer even though he or not)
has not receive the thing
b. Art 1537 • Loss by fortuitous event; AFTER
• Fruits pertained to the PERFECTION, BEFORE DELIVERY
Buyer from perfection of the
contract as such he must a. Exception to GR: SELLER BEARS THE
shoulder the disadvantages LOSS
c. Object is specific • If he incurs DELAY
• Loss of the thing w/o the • Or promises to deliver the
fault of the seller thing to 2 or more persons
extinguishes the obligation with different interest
d. Price is generic
• Loss of generic thing does
not extinguish the
obligation
 a. 1262 Q: Who bears the loss?
• Obligation delivery of a A: SELLER, bcs the suspensive condition was
determinate thing Shall be not fulfilled yet that it need to be W,C and M
extinguished if to determine the price
▪ it should be lost or
destroy w/o fault of
the seller and
BEFORE DELAY SALE BY DESCRIPTION, SAMPLE, DESCRIPTION
AND SAMPLE
Example
Art: 1481
(1) A and B entered into a COS on Jan 1 and will
be deliver on June 1. A seller, B the buyer. But In the contract of sale of goods by description
on march 1,the house was set into fire by a or by sample, the contract may be rescinded if
third person. the bulk of the goods delivered do not
correspond with the description or the sample,
Fact Check: The house is a NON-FUNGIBLE and if the contract be by sample as well as by
GOOD description, it is not sufficient that the bulk of
goods correspond with the sample if they do
Q: Is A required to deliver the house? not correspond with the description.
A: NO OBLIGATION TO DELIVER
The buyer shall have a reasonable opportunity
Q: Is B required to pay the house? of comparing the bulk with the description or
A: He still need to pay AS HE BEARS THE LOST the sample.
AS THE BUYER
• How do we determine of the sale is of
description, of sample, or of
(2) A and B entered into a COS on Jan 1 and will description and sample?
be deliver on June 1. A seller, B the buyer. But
on march 1,the warehouse was set into fire by a First: Seller will introduce his product to
third person. buyer by either the 3

Fact Check: The RICE IS A FUNGIBLE GOOD a. Perfection happened BEFORE buyer
get to see the BULK OF GOODS
Q: Who bears the lost i. It is SALE OF DESCRIPTION,
A: BUYER SAMPLE, DESCRIPTION AND
SAMPLE
Q: Is A required to deliver the sack of rice? b. Perfection happened AFTER buyer
A: NO OBLIGATION TO DELIVER inspect the BULK OF GOODS
i. Not a SALE OF
Q: Is B required to pay the sack of rice? DESCRIPTION, SAMPLE,
A: He still need to pay AS HE BEARS THE LOST DESCRIPTION AND SAMPLE
AS THE BUYER ii. Contract of Sale
iii. Buyer did not rely on D, S,
(3) Same example with (2) D&A to enter into a
contract
Additional Info: The rice needed to be weighted
 • Sale by Description o Proof of perfection of the
o Seller describe the goods contract
o Buyer has not yet seen the good
• Earnest price must
• Sale by Sample o Return to the buyer when seller
o Buyer has seen a sample of the cannot deliver
good from the bulk o But buyer can exercise the right
o The bulk should agree with the to renounce
sample
o Should be the same in character
Earnest Option
and quality money money

• Sale by description and sample When paid? Contract is Contract is

o Describe and presented the perfected not perfected
sample to the buyer
o The bulk should agree to both D Promise to
and S sell and buy
o If the bulk did not agree with D
or S, then one can rescind the Part of the / X
contract purchase
price?
• Remedies when the good do not align Refund / X
with D, S or D&S
o Rescind/cancel the COS
i. Return the goods Example
ii. Return the money
o Keep the goods but conduct A sell his house to B for 1000. B gave 100 as an
legal action in the basis of earnest money.
breach of warranty
Q: How much does B need to pay A
A: Only 900 pesos
EARNEST MONEY

Art. 1482
ORAL & WRITTEN CONTRACT
Whenever earnest money is given in a contract
of sale, it shall be considered as part of the Art 1483
price and as proof of the perfection of the
contract. Subject to the provisions of the Statute of
Frauds and of any other applicable statute, a
• Earnest Money or Arras or Deposit, def contract of sale may be made in writing, or by
o To show that the Buyer is word of mouth, or partly in writing and partly
earnest by word of mount, or may be inferred from the
o And given to the seller to bind conduct of the parties.
the bargain
• Validity of COS
• Earnest Money, significance 1. Made in oral
o Part of the purchase price 2. Made in writing
 3. Partly oral, and partly writing Example

NOTE!! A valid contract does not mean that it is A sell his house to B for 5 million.
also enforceable

• For enforceability; the court can

Oral Written Oral w/ Oral agent; Written Written
compel the parties to do what is delivery cos public agent; cos agent; cos
stipulated and docu oral public docu
paymen
t
1. Real property and interest therein
i. Interest; e.g Easement, Valid / / / X / /

usufruct
ii. Must be in writing to be
Enforce X / / X X /
enforceable able
iii. Selling through agent, the (bcs
authorization COS is
already
1. Must be in writing, consum
otherwise, if oral, ated)
the COS is void even
if the contract itself
is written and
notarized Recto Law, sale on installment, remedies of
seller
2. Movable property
i. 500 above, must be in writing to Art 1484
be enforceable
ii. 500 below, can be done orally In a contract of sale of personal property the
price of which is payable in installments, the
3. Sale of Immovable property vendor may exercise any of the following
i. Must be in writing to be remedies:
enforceable and valid
ii. To be enforceable against a. Exact fulfillment of the obligation,
THIRD PARTY, COS should the vendee fail to pay;
1. must be a public b. Cancel the sale, should the vendee's
instrument (notarized) failure to pay cover two or more
2. Registered in the installments;
Registry of Property c. Foreclose the chattel mortgage or 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.
• Requisites • What does CANCEL THE SALE
1. Object must be MOVABLE CONSTITUTE?
PROPERTY o Seller must return the payment
2. Must be INSTALLMENTS (should o Buyer must return the object
not be straight payment or DP + o However, the parties can
SP) stipulate that the payment will
not be returned as long as the
• What does remedy by the seller thing is not unconsumable or
means? against conscience
• Example: they can
Situation: A sold his car to B for 500k. agree that the DP will
They agreed that B will pay the remaining not be returned
price by installment of 50k. B will pay 5k
each installment (50 installments) • What does FORECLOSE THE CHATTEL
MORTGAGE CONSTITUTE?
Problem: What if B will stop paying from o Applicable if the thing is entered
the 3rd installment and so on. What into a chattel mortgage
should the remedy of the seller? o CHATTEL MORTGAGE, DEF
• LOAN that naka sangla
Remedies: a personal property
1. Exact fulfillment o Seller will retrieve the property,
• Applied if 1 UNPAID but NOT NECESSARILY RETURN
INSTALLMENT THE PAYMENT ALREADY PAID
2. Cancel the sale BY THE BUYER.
• APPLIED IF 2 OR MORE UNPAID o Seller cannot recover any
INSTALLMENT unpaid payment from the buyer
3. Foreclose the mortgage
• APPLIED IF 2 OR MORE UNPAID Example
INSTALLMENT
(1) A sold his car to B for 500k, will be paid 50k
Note!! Remedies are alternative not per installment.
cumulative
Q: B did not paid in 3rd installment
• What contracts does this article R: A can choose option A or Exact fulfillment or
applies? sue A
1. Sale
2. Lease with option to buy (1485) Q: B did not paid 4th installment also
R: A can either cancel the sale or foreclose the
• What does EXACT FULFILLMENT chattel mortgage if the car is mortgage
CONSTITUTE?
o Seller has the RIGHT TO (2) A bought a car from Toyota. Bought under
DEMAND PAYMENT Toyota finance and chattel mortgage. A will pay
o Seller can sue Buyer to recover it in installment for 60 mos ,30k
the payment
• THE COURT then will Q: A did not paid on the 31st and 32nd
compel the buyer to pay installment. So Toyota foreclose the mortgage,
and resell it through an auction. A have still
unpaid 600k. And the Toyota resell the car for car after 1 year for 380k. The 120k installment
500k. Do you need to pay 100k will be applied.
A: NO A: It is a lease contract but the intention of the
party shows that it is a sale in installment,
Q: Same question to 2 but instead Toyota since the 120k is applied to the purchase price
cancel the sale and file a case against A as an
ordinary creditor. The court auction the car and (2) A sold his printer to B for 60k with a term 5k
retrieve 500k which has a deficiency of 100k. Do per month. The printer is in a chattel mortgage.
A need to pay the 100k? B failed to pay the 4th to 6th installment. A
A: Required to pay the 100k retrieve to the printer and file a case for the 3
uncollected installments.
(3) A sold his car to B, with an agreed term of
DP and the balance of 1 million will be paid for 1 Q: Will the case pass to court?
month. After 1 month, the 1 million is entered A: NO, because by retrieving the printer he is
into a chattel mortgage that is payable for 1 foreclosing the contract which is option 2.
month. B failed to paid 1M in one month. So the Note that the remedies is alternative, once the
car was regmata and A recovered 800k. Lessee chooses a remedy he cannot use the
other remaining options
Q: Does B need to pay the 200k unpaid?
A: Yes, because Art 1484 (option 3) does not
applied in this case. Chattel mortgage law is STIPULATION INSTALLMENTS NOT RETURN
applied instead.
Art. 1486

In the cases referred to in the two preceding

LEASE WITH OPTION TO BUY articles, a stipulation that the installments or
rents paid shall not be returned to the vendee
Art. 1485 or lessee shall be valid insofar as the same may
not be unconscionable under the
The preceding article shall be applied to circumstances.
contracts purporting to be leases of personal
property with option to buy, when the lessor • What option does this Art applies?
has deprived the lessee of the possession or o Only to option B, cancel the sale
enjoyment of the thing.
GR: Buyer will return the personal
property, Seller will return the payment
• Purporting, defined
o A contract that is pretending, in Exception: 1486, Seller can keep the
this case as a lease of personal installments or rents as long as it is not
property with option to buy UNCONSCIONABLE (di labag sa
despite its over interpretation konsensya)
showcase a COS
Example
Example: Lease contract = COS (installment)
A sold his phone to B for 5k on monthly
(1) A lease his car to B for 500k. A will collect installment 1k per month. B did not paid
10k per month. A also told B that he can buy the the 3rd installment and onwards. And A
retrieve his phone. And B returned it
 • Requisites of expropriation
Q: Does A required to return the 2k to B? 1. Taken by competent authority
A: YES, based on the general rule 2. Observance of the process of
law
Q: there is a stipulation that A will not 3. Taking for public use
returned the 2k to B, is it valid? 4. Payment of just compensation
A: Yes as long it is unconscionable: e.g
keeping the downpayment, returning the Note!! This is not a contract of sale since
installment with the reasonable amount expropriation is INVOLUNTARY. A COS must be
voluntary

PAYMENTS OF SALE & EXPROPRIATION

Art. 1487

The expenses for the execution and

registration of the sale shall be borne by the
vendor, unless there is stipulation to the
contrary.

• Execution/ deed of sale

• Registration
- GR: paid by the SELLER
- Exception: BUYER if the
stipulation said so

Art 1488

The expropriation of property for public use is

governed by special laws

• Expropriation, defined
o Involuntary in nature, the owner
may be compelled to surrender
the possession when all
essential requisites has been
complied with

Example

The government can compel the owner of the

house or the land to sell its property or remove
for road widening