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LAW ON SALES

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Treshia Mae Arimado

on 23 November 2016

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Transcript of LAW ON SALES

LAW ON SALES
"ARTICLE 1461-1478"
Article 1464
Sale of an undivided share of a specific mass.
What are fungible goods?
What is the 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. (Art. 1460)
(a) By such sale, the buyer becomes a co-owner with the seller of the whole mass in proportion in which the definite share brought bears to the mass. It must follow that the aliquot of each owner can be determined only by the measurement of the entire mass.
(b) If later on it be discovered that the mass of the fungible goods contains less than what was sold, the seller shall supply whatever is lacking from the goods of the same kinds and quality.
What is the Risk of loss?
If the buyer becomes a co-owner, with the seller, or other owners of the remainder of the mass, it follows that the whole mass is at the risk of all the parties interested in it, in proportion to their various holdings.
Subject matter
In the sale of an undivided share, either of a thing (Art. 1463) or that of goods (Art. 1464), the subject matter is an incorporeal or intangible right. (Art. 1501) Here, ownership passes to the buyer by the intention of the parties
Article 1465
Sale of thing subject to a Resolutory
What is a Resolutory condition?
An uncertain event upon the happening of which the obligation (or right) subject to it is extinguished. Hence the right acquired in virtue of the obligation is extinguished (Art 1181)
Article 1466
Sale distinguished from agency to sell
Scenario
Quiroga v. Parsons Hardware Co.
G.R. No. L-11491, 23 August 1918
Andres Quiroga executed a contract of exclusive right to sell “Quiroga beds” in the Visayas in favor of Parsons Hardware Co. For failure to meet the conditions in the contract by Parsons, Quiroga filed a complaint for the rescission of the contract claiming that Parsons was an agent who failed to comply with his obligations.
Goods of which any unit is, from its nature or by mercantile usage, treated as the equivalent of any other unit such as grain, oil, wine, gasoline, etc.
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. (Art. 1868)
Sale may be distinguished from an agency
(see Art. 1868) to sell, as follows:
Answer
Quiroga v. Parsons Hardware Co.
G.R. No. L-11491, 23 August 1918
Parsons is a purchaser and not an agent. Parsons bought the bed. He did not act as agent. He bought the “Quiroga beds” and resold the same.
Article 1467
Sale distinguished from a contract for a piece of work
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 piece or compensation. The contractor may either employ his labor or skill, or also furnish the material. (Art. 1713)
Example
Commissioner of Internal Revenue v. Engineering Equipment and Supply Company
G.R. No. L-27044, 30 June 1975
Engineering Equipment and Supply Company is engaged in setting up air conditioning in buildings. It claims that it was a contractor in order to lessen tax imposition by the Commissioner of Internal Revenue. The latter opined otherwise.
Engineering is a contractor. The services for installation of a central system offered by Engineering were tailored to the building. Hence, no two buildings have the same set-up. Consequently, their services depend on the contract.
Article 1471
X and Y entered into a contract in which they made it appear that X sold his laptop to Y for P20, 000.00. In reality however, Y did not give X P20,000.00.
EXAMPLE
The sale here is considered as void due to the reason of the absence of the essential requisite which is the price.
Effect where price is simulated:
1. 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 donation.
2. If the contract is not shown to be a donation or any other act or contract transferring ownership because the parties do not intent to be bound at all, the ownership of the thing is not transferred.
Kinds of Simulated Price:
Absolute
RelativE
Both parties do not intent to be bound at all
when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order, or public policy binds the parties to their real agreement.
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.
Article 1472
The price of securities, grain, liquids, and other things shall also be considered certain, when the price fixed is that which the things sold would have been 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.
A sells to B 700 shares of stocks of Metro Corporation at the price equivalent to the closing price of the shares on November 05, 2016 at the Philippine Stock Exchange.

EXAMPLE
 This is of course on the condition that there will be trading of the said shares on the day agreed upon; otherwise the sale has no effect.
 This article is especially applicable to fungible things like securities, grain, liquids, etc., the prices of which are subject to fluctuations of the market.
 Though the price varies on the said date, it will not affect the contract so long as the buyer accepts the offered price.
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.
Y decided to sell his Montero Car and Z decided to purchase it with the agreed price of P500, 000. 00.
example
 Where the price fixed by one party accepted by the other, the contract is deemed perfected because in this case, there exists a true meeting of minds upon the price.
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 thereof. What is a reasonable price is a question of fact dependent on the circumstances of each particular case.
Effect of failure to determine price
1. Where contract executory
If the price cannot be determined, the contract is without effect. There is no obligation on the part of the vendor to deliver the thing and on the part of the vendee to pay
2. Where delivery has been made
If the thing or any part thereof has been already been delivered and appropriated by the buyer, the latter must pay a reasonable price. The reasonable price or value of goods is generally the market price at the time and place fixed by the contract or by law for the delivery of the goods.
Effect of failure to determine price
ARTICLE 1475
Perfection of Contract of Sale
ARTICLE 1476
In the case of Sale of Auction
ARTICLE 1477
The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof
ARTICLE 1478
THe parties may stipulate that ownership in the thing shall not pass to the purchaser he has fully paid the price
Follows the general rule that contracts are perfected my mere consent
Right of Owner to fix his own price
Effect of Failure to pay/absence of price
Price stipulated
No Price stipulated
AUCTION
A public sale at which things are sold to the people who offer to pay the most
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 the existence.
The sale of a vain hope or expectancy is void.
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 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.
Article 1463
The sole owner of a thing may sell an undivided interest therein.
Rules Governing Auction of Sale
1. Sales of separate lots by auction are separate sales
2. Sale by auction is perfected
3. Right of seller to bid in the auction
The Seller may bid at the auction provided the ff.
a. The right to bid must have been reserved by or behalf of the seller
b. His right to bid must not be prohibited by law or stipulation
c. Notice must be given that the sale is subject to a right to bid on behalf of the seller
Ownership of thing transferred by delivery
Kinds of Delivery
Actual (1497)
Constructive (1498-1501)
Exception to the rule
Non-payment of the price, after the thing has been delivered, prevents the transfer of ownership only if such is the stipulation of the parties.
ARTICLE 1470
ARTICLE 1469
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 us a part of the consideration exceeds the amount of the money or its equivalent; otherwise, it is a 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.
THANK
YOU
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