Law on Sales

Topics: Contract, Contract law, Sales Pages: 657 (229203 words) Published: August 23, 2013
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CHAPTER 1

NATURE OF SALE
DEFINITION OF SALE
Article 1458 of the Civil Code defines “sale” as a contract whereby one of the contracting parties (Seller) obligates himself to transfer the ownership, and to deliver the possession, of a determinate thing; and the other party (Buyer) obligates himself to pay therefor a price certain in money or its equivalent.1 The Roman Law concept embodied in the old Civil Code2 that treated delivery of tangible property as the sole purpose of sale has been modified under the present Article 1458, which applies the common law concept of requiring the obligation to transfer the ownership of the subject matter of the sale as a principal obligation of the seller. 1. Nature of Obligations Created in a Sale The definition of the contract of sale under Article 1458 provides that its perfection brings about the creation of two sets of obligations: (a) Two OBLIGATIONS of the SELLER to: (i) Transfer the Ownership,3 and

1 Alfredo v. Borras, 404 SCRA 145 (2003); Cruz v. Fernando, 477 SCRA 173 (2005); Roberts v. Papio, 515 SCRA 346 (2007). 2 Art. 1445 of the old Civil Code. 3 Flancia v. Court of Appeals, 457 SCRA 224, 231 (2005), defines “ownership” as “the independent and general power of a person over a thing for purposes recognized by law and within the limits established thereby — aside form the jus utendi and the jus abutendi inherent in the right to enjoy the thing, the right to dispose, or the jus disponendi, is the power of the owner to alienate, encumber, transform and even destroy the thing owned.”

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LAW ON SALES

(ii) Deliver the Possession, of the SUBJECT MATTER; (b) An OBLIGATION for the BUYER to: (i) Pay the PRICE.4 Both sets of obligations, are real obligations or obligations “to give,” as contrasted from personal obligations “to do” and “not to do,” and can be the proper subject of actions for specific performance.5 In contrast, obligations to do or not to do, cannot be enforced through actions for specific performance because of the public policy against involuntary servitude;6 although the creditor can have the same executed by another at the cost of the obligor,7 and the obligor’s refusal to comply can be the basis for claims for damages.8 To illustrate, Article 1480 of the Civil Code, which crossrefers to Article 1165 thereof, provides that when what is to be delivered is a determinate thing, the buyer, in addition to the right to recover damages, may compel the seller to make the delivery. In other words, a defaulting party in a sale cannot insist on just paying damages when the non-defaulting party demands performance. 2. Subject Matter of Sale Although Article 1458, in defining sale, uses the word “determinate” to describe the subject matter of the sale, the present Law on Sales has expanded the coverage to include generic objects which are at least “determinable.” Article 1460 states that the “requisite that the thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of 4 Acap v. Court of Appeals, 251 SCRA 30 (1995); Velarde v. Court of Appeals, 361 SCRA 56 (2001). 5 Art. 1165 of the Civil Code: “When what is to be delivered is a determinate thing, the creditor . . . may compel the debtor to make the delivery. If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor.” 6 Sec. 18(2), Art. III, 1987 Constitution. 7 Art. 1167, Civil Code. 8 Art. 1170, Civil Code.

NATURE OF SALE

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being made determinate without the necessity of a new or further agreement between the parties,” which includes “determinable” albeit generic objects as valid subject matters of sale. Nonetheless, the use of the word “determinate” in the definition of sale under Article 1458 seems accurate since it pertains to the performance of the obligations of the seller to transfer ownership and to deliver possession. This would require that even if the subject matter of the sale was...
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