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Subject Matter

-Refers to the determinate thing which is the object of the contract


a) The subject matter may be personal or real property
b) The subject matter of the sale may be present or future property
c) The subject matter must be licit and must be within the commerce of man
d) An impossible thing cannot be the object of a contract
e) CC allows, among others, the sale or credit, the sale of the whole of certain rights, rents or products, the sale
of inheritance already acquired. CC, on the other hand, prohibits, among others, the sale of easements
independent of the estate to which they belong, and the sale of contagious animals

Art 1459
Requisites:

Things
a) Determinate
b) Licit or lawful
c) Should not be impossible
(if the subject matter of the sale is illicit, the contract is void and cannot, therefore, be ratified.)

Rights
-All right which are not intransmissible or personal may also be the object of sale, like the right of usufruct, the
right of conventional redemption, and credit

Kinds of Illicit things


The thing may be illicit per se (of its nature) or per accidens (because some provisions of law declaring it
illegal). Art 1459 refers to both

Examples of illicit per accidents


1) Art. 1575, the sale of an animal suffering from a contagious disease is void;
2) Art 1347 (2). No contract may be entered into upon future inheritance except in cases expressly authorized
by law. The provision characterizes a contract entered into upon future inheritance as void
3) Pursuant to the Public Land Act, a contract which purports to alienate, transfer, convey, or encumber any
homestead within the prohibitory period of 5 years from the date of the issuance of the patent is void from its
execution
4) Land sol to an alien is also per accidens because the sale is prohibited by the Constitution

Right of Vendor to Transfer Ownership

Seller must be owner or authorized by owner of thing sold


It is essential in order for a sale to be valid that the vendor must be able to transfer ownership and, therefore,
he must be the owner or at least be authorized by the owner of the thing sold
Nemo dat quod non habet one cannot transmit or dispose of that which does not belong to him

Right must exist at time of delivery

Art. 1460.
Subject matter must be determinate
-A thing is determinate or specific (not generic) when it is particularly designated or physically segregated from all
others of the same class. (Art. 1636 [1]).
-It is sufficient that the thing is determinable or capable of being made determinate without the necessity of a new or
further agreement between the parties to ascertain its identity, quantity, or quality.

Art. 1461
Under general contract law, the object of the contract must exist at the time of the transaction. Contracts whose
object did not exist at the time of the transaction are inexistent and void from the beginning.
Exemption:
CC allows the sale of things having the potential existence as well as future goods (Arts. 1461-1462)

A future thing, as the object of the contract mat work in 2 different ways:
1. Its coming into existence is a condition for the effectivity of the contract;
2. The contract is effective and the buyer has to pay the purchase price whether or not the thing comes into
existence.

A sale may be made of a thing


which, though not yet actually in
existence is reasonably certain to
come into existence as the natural
increment or usual incident of
something in existence already
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will vest in the buyer the moment
Emptio rei speratae (sale of the thing expected)
-is the sale of a thing not yet in existence subject ot the condition that the thing will exist. If the thing does not come
into existence, the contract of sale will not become effective; as such, the buyer will have no obligation to pay the
price.
-example:
Next years harvest from a specific field could be sold, even if the seed had not yet been sown
-the sale was taken to be subject to a condition. Only if it eventually transpired that there was an
object did the contract of sale became effective

Emptio rei Spei (Sale of a mere hope of expectancy)


-is the sale of the hope itself that the thing will come into existence, where it is agreed that the buyer will pay the price
even if the thing does not eventually exist.
-CC:
-the efficacy of the sale of a mere hope or expectancy is made subject to the condition that the thing
contemplated or expected will come into existence
-the sale of a vain hope or expectancy is void
-example:
S. binds himself to sell for a specified price to B a parcel of land if he wins a case for the recovery of said land
pending in the SC

Emptio rei speratae Emptio Spei

1. the sale is subject 1. it is not certain that


to the condition that the thing itself will
the thing will come exist, much less its
into existence, quantity and quality.
whatever its quantity
or quality

2. the contract deals 2. the contract relates


with the sale of a to the sale of the hope
future thing or expectancy

3. produces effect
3. the sale is subject even though the thing
to the condition that does not come into
the thing should exist. existence because the
So that if it does not, object of the contract
there will be no is the hope itself,
contract by reasons of unless it is a vain
the absence of an hope or expectancy
essential element

In case of doubt, the presumption is in favor of emptio rei speratae which is more in keeping with the commutative
character of the contract.

Art. 1462
-The article contemplates a contract of sale of specific goods where one of the contracting parties binds himself to
transfer the ownership of and deliver a determinate thing and the other to pay therefor a price certain in money or its
equivalent.
-the article requires that there be delivery of goods, actual or constructive, to be applicable

Goods which may be the object of sale:


1. Existing goods or goods owned or possessed by the seller;
2. Future goods or goods to be manufactured, raised or acquired.

Sale of Future Goods


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-A sale of future goods, even though the contract is in the form of a present sale, is valid only as an
executor to be fulfilled by the acquisition and delivery of the goods specified.

RULES ON THE OBJECT OF A CONTRACT OF SALE

Art. 1463
SALE OF UNDIVIDED INTEREST IN A THING

By sole owner
-the sole owner of a thing may sell the entire thing; or only a specific portion thereof; or an undivided interest therein
and such interest may be designated as an aliquot part of the whole.
-the legal effect of the sale of an undivided interest in a thing is to make the buyer a co-owner in the
thing sold.

By a co-owner
-the co-owners can dispose of their shares even without the consent of the other co-owners
-the effect of the alienation shall be limited to the portion which may be allotted to the vendor in the
division of the property upon the termination of the co-ownerhip.

Art. 1464
SALE OF AN UNDIVIDED SHARE OF A SPECIFIC MASS

Fungible Goods
-It means 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.

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
The buyer becomes a co-owner with the seller of the whole mass in the proportion in which the
definite share brought bears to the mass
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
the subject matter is an incorporeal right. Here, ownership passes to the buyer by the intention of the
parties

Art. 1465
SALE OF A THING SUBJECT TO A RESOLUTORY CONDITION

Resolutory Condition
-an uncertain event upon the happening of which the obligation (or right) subject to it is extinguished.
-if the resolutory condition attaching to the object of the contract, which object may include things as
well as rights, should happen, then the vendor cannot transfer the ownership of what he sold since there
is no object.

ART. 1624
ASSIGNMENT OF CREDIT AND OTHER INCORPOREAL RIGHTS

Assignment of credit
-is a contract by which the owner (assignor/creditor) of a credit and other incorporeal rights transfers, either onerously
or gratuitously, to another (assignee) his rights and actions against a third person (debtor)

Nature of Assignment of Credit

-Assignment of credit and other incorporeal rights is a consensual, bilateral, generally onerous, and
commutative or aleatory contract HOWEVER, THE ASSIGNEE WILL ACQUIRE OWNERSHIP ONLY UPON
DELIVERY.
-The assignment merely effects the transfer of rights which the assignor has at the time to the assignee.
-It may be done gratuitously (i.e., by donation) or onerously. If done onerously, whatever may be the legal cause, it is
really a sale.
-As a general rule, all principles governing sales also apply to this transaction
-Consent of the debtor is not necessary in order that the assignment may fully reproduce the legal notice. required:
mere notice to him as the assignment takes effect only from the time he has knowledge thereof.

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Art. 1625
-REFERS TI ASSIGNMENT OF CREDITS AND OTHER INCORPOREAL RIGHTS. It does not apply where theres no
assignment but sale of property.
-As between parties, the assignment is valid although it appears only in a private document so long as the law does not
require a specific form for its validity. (Art. 1356)

Art. 1356
-In general, from does not matter for the
validity of the contract
-It is enough there be CONSENT,
SUBJECT MATTER, AND CAUSE
-When form is important: When form is
important: VALIDTY, ENFORCEABILITY,
and CONVENIENCE
-Contract of Sale = Consensual Contract
>if it involves real property if
requires written instrument for

-to affect 3rd persons, the assignment must appear in a public instrument, and in case it involves real property, it is
indispensable that it be recorded in the Registry of Property

ASSIGNEE
-merely steps into the shoes of the assigner the former acquiring the credit subject to defenses available to the debtor
against the assignor
-is deemed subrogated to the rights as well as to the obligations of the seller
-cannot acquire greater rights than those pertaining to the assignor

-See Art. 1403 (2)(d) Statute of Frauds

Art. 1626
-Consent of debtor to assignment not required (not essential for its perfection)
-the law speaks not of consent but of notice to the debtor
the purpose of the notice by the assignee is to inform the debtor that from the date of the assignment he should
make payment to the assignee and not to the original creditor
the notice is for the protection of the assignee because before the said notice, payment to the
original creditor is valid
absence of notice: burden of proof that the debtor had knowledge of the assignment rests on the assignee
Payment by the debtor to the original creditor after the former had received notice of the assignment, WON he
consented, is not valid against the assignee. HE CAN BE MADE TO PAY AGAIN BY THE ASSIGNEE

Art. 1627

-NECESSARY FOLLOWS THE PRINCIPAL


>The assignment of credit includes not only the credit itself but also all rights accessory thereof (Art. 1537)
>parties may stipulate that the accessory rights shall not be included in the assignment

Art. 1628
-An assignment credit which is in the nature of sale of personal property produces the effects of dation in payment
which may extinguish the obligation
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Dacion en pago

-debtor offers another thing to the creditor who


accepts it as equivalent of payment of an
outstanding debt (Art. 1245)
-the undertaking really partakes of the nature
of sale
-As such, the vendor in good faith shall be
responsible for the existence and legality of
-still
thebound
creditby certain warranties
-Take note:
When a creditor assigns his credit, he warrants only the EXISTENCE and LEGALITY of the credit at the
perfection of the contract, unless the credit had been sold as doubtful
THERE IS NO WARRANTY AS TO THE SOLVENCY OF THE DEBTOR unless it is expressly stipulated or unless
the insolvency was already existing prior to the sale and of public knowledge at the time of the assignment

In case of breach of warranties, the assignor-vendor is liable for:


Assignor in Good faith: limited to the price received and to the expenses of the contract, and any other
legitimate payments by reason of the assignment (Art. 1616, par. 1)
Assignor in bad faith:
o liable not only for the payment of the price and all expenses, but also for damages.

Art. 1629
-does not apply to assignor in BF
-In case the assignor has expressly warranted the solvency of the debtor, the duration of the assignors liability shall be
as follows:
If theres stipulation, then for the term or period fixed;
If theres no stipulation:
o For 1 year from the assignment of the credit when the period for payment of the credit has expired
o For 1 year after its maturity, when such period for payment has not yet expired

The liability of the assignor under Art.


1629 is ex lege; it rests on the breach
of warranty of solvency.
When the liability is ex contractu, the
limiting period set out in Art. 1629 is
not applicable.
o Although the assignor
warrants the solvency of
the debtors under the
deed of assignment, it
also binds itself to become
solidarily liable with the
other respondents in case
of non-payment of debtors
o THE ASSIGNOR
BECOMES A SOLIDARY
DEBTOR UNDER THE
TERMS OF THE
RECEIVABLES COVERED
REASONS FOR THE RULE
1. To prevent fraud which may be committed by feigning the solvency of the debtor at the time of the
assignment when in fact he is insolvent
2. To oblige the assignee to exert efforts in the recovery of the credit and thereby avoid that by his oversight, the
assignor may suffer

Art 1630

Successional right (right to an inheritance before partition)


-the person concerned is an heir and may exercise his rights as such, from the very moment of the death of the
decedent
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*THERE IS NO LAW WHICH PROHIBITS AN HEIR FROM SELLING HIS INTERESTS IN AN INHERITANCE BEFORE
PARTITION, except that any such sale must be deemed subject to the result of the administration proceedings and
any pending litigation
However, the law prohibits the sale of future inheritance, upon which no contract can be made other than
those making a division inter vivos of an estate (Art. 1347)
-an inheritance may be sold either with specification of the properties to be alienated or without enumerating the
things comprising it
-the seller of hereditary right warrants only the fact of his heirship but he does not warrant the object which make up
his inheritance. (sale = sort of aleatory contract)

Sale of Hereditary Waiver of Hereditary


Rights Rights

1. presumes the 1. technically speaking,


existence of a contract of a mode of extinction of
sale between parties ownership where there is
an abdication or
intentional
relinquishment of a
known right with
knowledge of its
existence and intention
to relinquish it, in favor
of other persons who are
co-heirs in the
succession

Art. 1631
In the sale of the whole of certain rights, rents, or products for a lumpsum, THE SUBJECT MATTER IS THE TOTALITY
OF SUCH RIGHTS, RENTS, OR PRODUCTS
-Vendor warrants only the legitimacy of the whole and not the various parts of which it may be composed.

Art. 1632
LIABILITY OF VENDOR OF INHERITANCE FOR FRUITS RECEIVED
1. If the vendor merely received the fruits, he must deliver them to the vendee
2. If they have been consumed, he must reimburse the vendee
3. If they have been sold, he must deliver the price of the sale
4. The liability of the vendor for anything received from the inheritance sold is subject to any agreement to the
contrary

Art, 1633
-The vendee is required to reimburse the vendor for whatever the latter has paid for the debts of and charges on the
estate
-the liability of the vendee for the debts and charges is likewise subject to any contrary agreement

Art. 1634
Requisites for the exercise by the debtor of the right of legal redemption
1. There must be a sale or assignment of a credit or other incorporeal right. The concept of sake must be
understood in its restricted sense. The right cannot be exercised if the transaction is exchange or donation
2. The credit or other incorporeal right must be in litigation
3. There must be pending litigation at the time of the assignment. The complaint by the assignor must
have been filed and answered by the creditor before the sale of the credit
4. The assignee must have demanded payment from the debtor
5. The debtor must reimburse the assignee:
a. A price paid by him
b. Judicial costs incurred by him
c. Interest on the price a=from the date of the payment
6. The reimbursement must be made by the debtor within 30 days from the date the assignee
demands (judicially or extrajudicially) payment from him.

Purpose of the law


-to avoid the purchase by the 3rd person of credits in litigations merely for speculation.

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-an assignment of credit pedente lite does not extinguish the credit or accessory rights assigned, but simply changes
the bag into which the debtor must empty the money in payment

Art 1635
Instances of assignments or sales as exceptions to the provisions of Art. 1634
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

Arts. 1634 and 1635- debtor cannot redeem if the credit or other incorporeal right is not in litigation when the same is
sold.

Sale to a co-heir
-based on the desire to do away with co-ownership

Sale to a creditor
-lawful basis for the assignment as the assignee cannot be considered as a vendee of a right in litigation and
as a speculator.
-refers to dacion en pago

Sale to the possessor of property in question


-The reason for this exception is that the assignee is moved by a desire to preserve the property and not to
speculate at the expense of the debtor
-example: purchaser of a property under the attachment who subsequently acquires the credit giving rise to
the attachment

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