Law On Sales, Agency and Credit Transactions

ARTICLE 147

A promise to buy and sell a determinate thing for a price certain is reciprocally
demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price
certain
is
binding
upon
the
promisor
if
the promise is supported by a consideration distinct from the price.

OPTION MONEY VS. EARNEST MONEY

1. Earnest money is part of the purchase price, while option money is the
money given as distinct consideration for the option contract,
2. Earnest money is given only where there is already a sale, while option
money applies to a sale not yet perfected, and
3. When earnest money is given, the buyer is bound to pay the balance, while
when the would-be buyer gives option money, he is not required to buy.
But option money may become earnest money if the parties so agreed.
ARTICLE 1484
In a contract of sale of personal property, the price of which is payable in
installments, the vendor may exercise any of the following remedies:
1. Exact fulfillment of the obligation, should the vendee fail to pay;
2. Cancel the sale, should the vendee's failure to pay cover two or more
installments;
3. Foreclose the chattel mortgage on 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.
ARTICLE 1490
The husband and the wife cannot sell property to each other, except:
1. When a separation of property was agreed upon in the marriage settlements;
or
2. When there has been a judicial separation or property under Article 191
(Now, ARTICLE 135, Family Code).
ARTICLE 1491
The following persons cannot acquire by purchase, even at a public or judicial
auction, either in person or through the mediation of another:
1. The guardian, the property of the person or persons who may be under his
guardianship;
2. Agents, the property whose administration or sale may have been entrusted
to them, unless the consent of the principal 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 entrusted 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.
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.
ARTICLE 1495
The vendor is bound to transfer the ownership of and deliver, as well as warrant
the thing which is the object of the sale.
WAYS OF EFFECTING CONSTRUCTIVEE DELIVERY

1. Equivalent to actual delivery. Constructive or legal delivery is equivalent to
actual delivery. It may be effected in any of the following ways:
a. By the execution of a public instrument;
b. By symbolical tradition or traditio symbolica;
c. By traditio longa manu;
d. By traditio brevi manu;
e. By traditio constitutum possessorium; or
f. By quasi-delivery or quasi-traditio.
2. Contrary may be stipulated. The parties, however, may stipulate that
ownership in the thing shall pass to the purchases only after he has fully paid
the price or fulfilled certain conditions. In a contract of absolute sale,
ownership is transferred simultaneously with the delivery of the thing sold.
SALE OR RETURN DISTINGUISHED FROM SALE ON TRIAL

The distinctions are the following:
1. Sale or return is a sale subject to a resolutory condition, while sale on trial
is subject to suspensive condition;
2. Sale or return depends entirely on the will of the buyer, while sale on trial
depends on the character or quality of the goods;
3. In sale or return, the ownership of the goods passes to the buyer on
delivery and subsequent return of the goods reverts ownership in the seller,
while in sale on trial, the ownership remains in the seller until the buyer
signifies his approval or acceptance to the seller; and
4. In sale or return, the risk of loss or injury rests upon the buyer, while in sale
on approval, the risk still remains with the buyer.
DEFINE LEGAL EVICTION

Eviction may be defined as the judicial process whereby the vendee is deprived
of the whole or part of the thing purchased by virtue of a final judgement based
on a right prior to the sale or an act imputable to the vendor.
REQUISITES FOR WARRANTY AGAINST HIDDEN DEFECTS

The following requisites must occur for the existence of the warranty against
hidden defects:
1.
2.
3.
4.
The defect must be important or serious;

It must be hidden;
It must exist at the time of the sale;
The vendee must give notice of the defect to the vendor within a reasonable
time;
5. The action for rescission or reduction of the price must be brought within the
proper period six (6) months from the delivery of the thing sold or within
forth (40) days from the date of the delivery in case of animals; and
6. There must be no waiver of warranty on the part of the vendee.
DIFFERENTIATE WARRANTY VS. OPINION

Warranty is any representation made by the seller of the thing with respect to its
character, quality, or ownership, by which he induces the buyer to purchase the
same relying on said representation.
A mere expression of opinion, no matter how positively asserted, does not

import a warranty unless the seller is an expert and the opinion was relied upon
by the buyer. Thus, assertions that things are fine or valuable or better than
products of rival manufacturers are in their nature so dependent on individual
opinion that no matter how positive the sellers assertion may be, they are not
held to create a warranty.

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ARTICLE 147

OPTION MONEY VS. EARNEST MONEY

WAYS OF EFFECTING CONSTRUCTIVEE DELIVERY

SALE OR RETURN DISTINGUISHED FROM SALE ON TRIAL

DEFINE LEGAL EVICTION

REQUISITES FOR WARRANTY AGAINST HIDDEN DEFECTS

The defect must be important or serious;

DIFFERENTIATE WARRANTY VS. OPINION

A mere expression of opinion, no matter how positively asserted, does not

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