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SALES SESSION 5

2. SUBJECT MATTER (THINGS AND RIGHTS)



ART. 1347. All things which are not outside the commerce of me, including
future things, may be the object of a contract. All rights which are not
intransmissible may also be the object of contracts.

No contract may be entered upon into upon future inheritance except in
cases expressly authorized by law.

All services which are not contrary to law, morals, good customs, public order,
or public policy may likewise be the object of a contract.

ART. 1311. Contracts take effect only between the parties, their assigns and
heirs, except in case where the rights and obligations arising from the contract
are not transmissible by their nature, or by stipulation or by provision of law. The
heir is not liable beyond the value of the property he received from the
decedent.

If a contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptanceto the
obligor before its revocation. A mere incidental benefit or interest of a person
is not sufficient. The contracting parties must have clearly and deliberately
conferred a favor upon a third person.

ART. 1636. In the preceding articles in this Title governing the sale of goods,
unless the context or subject matter otherwise requires:

(1) "Document of title to goods" includes any bill of lading, dock warrant,
"quedan," or warehouse receipt or order for the delivery of goods, or any
other document used in the ordinary course of business in the sale or transfer
of goods, as proof of the possession or control of the goods, or authorizing or
purporting to authorize the possessor of the document to transfer or receive,
either by endorsement or by delivery, goods represented by such document.
"Goods" includes all chattels personal but not things in action or money of
legal tender in the Philippines. The term includes growing fruits or crops.
"Order" relating to documents of title means an order by endorsement on the
documents.
"Quality of goods" includes their state or condition.
"Specific goods" means goods identified and agreed upon at the time a
contract of sale is made.
An antecedent or pre-existing claim, whether for money or not, constitutes
"value" where goods or documents of title are taken either in satisfaction
thereof or as security therefor. commenced or not.
(3) Goods are in a "deliverable state" within the meaning of this Title when they
are in such a state that the buyer would, under the contract, be bound to
take delivery of them. (n)
REQUISITES

Art. 1458. By the contract of sale one of the contracting parties obligates
(2) A person is insolvent within the meaning of this Title who either has ceased
to pay his debts in the ordinary course of business or cannot pay his debts as
they become due, whether insolvency proceedings have been
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)
Art. 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)
Art. 1460. A thing is determinate when it is particularly designated or physical
segregated from all other 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. (n)
Art. 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. (n)
Art. 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. (n)

Art. 1347. All things which are not outside the commerce of men, including
future things, may be the object of a contract. All rights which are not
intransmissible may also be the object of contracts. No contract may be
entered into upon future inheritance except in cases expressly authorized by
law.
All services which are not contrary to law, morals, good customs, public order
or public policy may likewise be the object of a contract. (1271a)
Art. 1348. Impossible things or services cannot be the object of contracts.
(1272)
Art. 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. (1273)

A. Must be Licit
- must be licit and within the commerce of men
- Outside of commerce of men : Properties belonging to the state,
churches
FUTURE INHERITANCE
- The law prohibits the sale of future inheritance
- The rights to succession are transmitted from the moment of the
death of the decedent
- One cannot sell or promise to sell what he expects to inherit from
a living person
- i.e. when an heir sold his interest in a land registered in the name
of his deceased parents during the pendency of the settlement of
the estate of the decedent, such sale is subject to the outcome
of the administration proceedings, as the law allows and heir to
sell his interests in an inheritance.
B. MUST BE DETERMINATE
Determinate when it is particulary designated or physically
segregated from all others of the same class or is capable of being
made determinate without the necessity of a further agreement
between the parties.
- to cover generic things, future goods and undivided interests
FUTURE GOODS
- A thing not yet owned by the vendor at the time of the sale but
which he may acquire later can be validly sold.
- Sale of a mere hope or expectancy is deemed subject to the
condition that the thing will come into existence.
SALE OF UNDIVIDED INTEREST OR SHARE
- The sole owner of a thing may sell and undivided interest therein.
- The sale of an undivided share in a specific mass of fungible
goods results in making the buyer a co-owner of the entire mass in
proportion to the amount bought by him, and if the mass contains
less than the amount bought, the seller is bound to make good
the deficiency from goods of the same kind and quality, unless a
contrary intent appears.
- A co-owner can not sell more than his share.
SALE OF THINGS IN LITIGATION
- Sales of things under litigation entered into by the defendant
without the knowledge and approval of the litigants or of the
court are resciissible.
- Rescission cannot take place when the things are legally in the
possession of third persons who did not act in bad faith.

THINGS SUBJECT TO RESOLUTORY CONDITION
- may be the object of contract of sale


RULES ON THE OBJECT OF A CONTRACT OF SALE


Art. 1463. The sole owner of a thing may sell an undivided interest therein. (n)
Art. 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 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. (n)
Art. 1465. Things subject to a resolutory condition may be the object of the
contract of sale. (n)

ASSIGNMENT OF CREDIT AND OTHER INCORPOREAL RIGHTS

Art. 1624. An assignment of creditors and other incorporeal rights shall be
perfected in accordance with the provisions of Article 1475. (n)
Art. 1625. An assignment of a credit, right or action shall produce no effect as
against third person, unless it appears in a public instrument, or the instrument
is recorded in the Registry of Property in case the assignment involves real
property. (1526)
Art. 1626. The debtor who, before having knowledge of the assignment, pays
his creditor shall be released from the obligation. (1527)
Art. 1627. The assignment of a credit includes all the accessory rights, such as a
guaranty, mortgage, pledge or preference. (1528)
Art. 1628. The vendor in good faith shall be responsible for the existence and
legality of the credit at the time of the sale, unless it should have been sold as
doubtful; but not for the solvency of the debtor, unless it has been so expressly
stipulated or unless the insolvency was prior to the sale and of common
knowledge.
Even in these cases he shall only be liable for the price received and for the
expenses specified in No. 1 of Article 1616.
The vendor in bad faith shall always be answerable for the payment of all
expenses, and for damages. (1529)
Art. 1629. In case the assignor in good faith should have made himself
responsible for the solvency of the debtor, and the contracting parties should
not have agreed upon the duration of the liability, it shall last for one year
only, from the time of the assignment if the period had already expired.
If the credit should be payable within a term or period which has not yet
expired, the liability shall cease one year after the maturity. (1530a)
Art. 1630. One who sells an inheritance without enumerating the things of
which it is composed, shall only be answerable for his character as an heir.
(1531)
Art. 1631. One who sells for a lump sum the whole of certain rights, rents, or
products, shall comply by answering for the legitimacy of the whole in
general; but he shall not be obliged to warrant each of the various parts of
which it may be composed, except in the case of eviction from the whole or
the part of greater value. (1532a)
Art. 1632. Should the vendor have profited by some of the fruits or received
anything from the inheritance sold, he shall pay the vendee thereof, if the
contrary has not been stipulated. (1533)
Art. 1633. The vendee shall, on his part, reimburse the vendor for all that the
latter may have paid for the debts of and charges on the estate and satisfy
the credits he may have against the same, unless there is an agreement to
the contrary. (1534)
Art. 1634. When a credit or other incorporeal right in litigation is sold, the
debtor shall have a right to extinguish it by reimbursing the assignee for the
price the latter paid therefor, the judicial costs
incurred by him, and the interest on the price from the day on which the same
was paid.
A credit or other incorporeal right shall be considered in litigation from the
time the complaint concerning the same is answered.
The debtor may exercise his right within thirty days from the date the assignee
demands payment from him. (1535)
Art. 1635. From the provisions of the preceding article shall be excepted the
assignments or sales made:
(1) To a co-heir or co-owner of the right assigned;
(2) To a creditor in payment of his credit;
(3) To the possessor of a tenement or piece of land which is subject to the right
in litigation assigned. (1536)
HOW PERFECTED
- Perfected at the moment there is a meeting of the minds upon
the object and the price.
- To be effective against third persons, the agreement must be
appear in a public instrument, and if it involves a real property,
the deed of assignment must be recorded in the Registry of
Deeds.
CASES:
1. Martinez vs. CA
2. Melliza v. City of Iloilo


CAUSE

Art. 1350. In onerous contracts the cause is understood to be, for each
contracting party, the prestation or promise of a thing or service by the other;
in remuneratory ones, the service or benefit which is remunerated; and in
contracts of pure beneficence, the mere liberality of the benefactor.
Art. 1352. Contracts without cause, or with unlawful cause, produce no effect
whatever. The cause is unlawful if it is contrary to law, morals, good customs,
public order or public policy. (1275a)
Art. 1353. The statement of a false cause in contracts shall render them void, if
it should not be proved that they were founded upon another cause which is
true and lawful. (1276)
PRICE CERTAIN IN MONEY
Art. 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. (1447a)


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. (n)
Art. 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. (1448)
Art. 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. (1449a)
Art. 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. (n)
Art. 1308. The contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them. (1256a)
EARNEST MONEY
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.

LESION
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. (n)

Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall
not invalidate a contract, unless there has been fraud, mistake or undue
influence. (n)