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SALES

AY 2014-2015 Atty. Santiago


Frances Estipona
2A, ALS2017

CHAPTER 3: SUBJECT MATTER

Valid Subject Matter (at time of perfection):
1) Possible Thing (existing/having potential existence/future thing/contingent or subject to resolutory
condition)
- exisitng/non-existing at time of perfection
- depends upon contingency which may/not happen
- subject to a condition (capacity of coming into existence-suspensive/already
exists but may cease to exist-resolutory)
- future goods (to be manufactured/raised/acquired by seller after perfection)
- proper consideration: whether of type & nature, taking into consideration state of technology
and science at time of perfection, that it exists/could be made to exist to allow seller
reasonable certainty of being able to comply with obligations
- VOID and INEXISTENT from beginning when cause/object did not exist/cannot come to existence at
time of transaction
- seller: right to transfer ownership at time of delivery

a) Emptio Rei Speratae
- contract covering future things, subject to suspensive condition that subject
matter will come into existence
- covers only contracts of sale whose subject matter are determinate/specific
b) Emptio Spei
- efficacy of sale of mere hope/expectancy deemed subject to condition that thing
will come into existence
- condition: possibility of subject matter
- commutative nature not complied with
c) Sale of Things Subject to Resolutory Condition
- may be the object of the contract
- resolutory condition happens to extinguish thing parties to return to each what
they received
- retoroact to day of constitution of obligation
- fruits & interest during pendency of condition deemed mutually
compensated
d) Subject Matter is Nexus of Sale
- subject matter must be existing/must come to existence to be delivered to buyer
- otherwise, VOID/EXTINGUISHED (seller to return price received)

Polytechnic University v. CA (2001)










2) Licit
- not outside commerce of man + all rights transmissible
- VOID sale if subject matter is:
- Illicit
- Sale of future inheritance (presumes existence of contract)
- vs. Waiver of acquired hereditary rights (mode of extinction of
ownership, intentional relinquishment of known right with knowledge of
existence and intention to relinquish)
- Illegal

a) Sales Declared Illegal by Law
- Special laws where subject matter prohibited

3) Determinate/at least Determinable
- Lack of any requisite NO contract situation (non-existent sale)
- Purpose of legal requisites of subject matter: To safeguard realizability and enforceability of
primary obligations of seller (transfer ownership and deliver possession of subject matter)

a) Determinate Subject Matter
- particularly designated/physically segregated from all others of same class
- basis to enforce sellers obligation to deliver/upon which to demonstrate breach
- defense of FORCE MAJEURE applicable
b) Determinable Subject Matter
- 2 Requisites (reqt that sale must be determinate thing is fulfilled):
- Capacity to segregate test (at perfection, capable of being made
determinate)
- w/o necessity of new/further agreement between parties
- generic object (not physically segregated/particularly designated at perfection)
- court uses formula w/c does not require for it to get back to any/both parties of
object of intention
- if formula requires court to have to go back to parties to determine
confirmation, VOID sale
- counter to mutuality/obligatory force

Melliza v. City of Iloilo (1968)


c) Test of Determinability is Meeting of Minds of Parties and Not the Covering Deed
- true contract of sale intangible/a legal concept
- Deed of sale is merely evidence of contract
- fails to cover real contract/true meeting of minds of parties, must give
way to real contract (defect would not invalidate where all essential
elements for validity are present and can be proven)

Atilano v. Atilano (1969)


SALES
AY 2014-2015 Atty. Santiago
Frances Estipona
2A, ALS2017

d) When Quantity of Subject Matter Not Essential for Perfection
- certain generic objects may be proper object of contract, provided that they fulfill
characteristic of being deterninable at perfection
- even when exact quantity of subject matter has not been agreed upon, but
parties have come into agreement as to quality and price, and terms of payment
VALID & BINDING

NGA v. IAC (1989)


Johannes Schuback & Sons Phil Trading Corp v. CA (1993)


e) Generic Non-Determinable Objects
- even generic things that fall within definition of determinable objects can validly
support contract of sale
- obligation to deliver can only be complied with when subject matter
has been made determinate (physical segregation/particular
designation)

Yu Tek & Co. v. Gonzales (1915)


f) Status of Sale Not Complying with 3rd Requisite (determinate/determinable)
- contract VOID (enforceablity/demandability of obligation of seller to deliver is at
great risk)
g) Sale of Undivided Interest
- sole owner of thing may do this co-ownership over subject matter
h) Sale of Undivided Share in Mass
- sale of fungible goods
- buyer becomes co-owner to such share of mass as the number, weight, or
measure bought bears to the number, weight, or measure of the mass.
- mass < number/weight/measure bought buyer becomes owner of
whole mass, seller bound to make good deficiency from goods of same
kind & quality
i) Sale of Mortgaged Property
- prior mortgage of property does not prevent mortgagor from selling property
- mortgage : merely encumbrance on property, does not extinguish title of debtor
as owner to dispose of property
- stipulation forbidding owner of property fomr alienating mortgaged immovable
VOID.







Sellers Obligation to Transfer Ownership Required at Time of Delivery
GR: perfected contract cannot be challenged on ground that seller had no ownership of thing sold at
time of perfection
- Seller need not be owner at time of perfection, sufficient that he be the owner at time of
delivery
- otherwise, liable for breach of warranty against eviction

a) Conflicting Rulings
- ownership by seller on thing sold at time of perfection is not an element for its
perfection

Nool v. CA (1997)


b) Exception: When Seller Must Be Owner at Time of Sale
- Judicial Sale
- Foreclosure Sale
c) Subsequent Acquisition of Title by Seller
- when at time of perfection, seller sells subject matter over which he is not the
owner, subsequent acquisition of title VALIDATES the sale and title PASSES to buyer by operation of
law
- provided, previous delivery of subject matter by seller to buyer
- Valid Sale + previous physical delivery
- applies not only to sale of goods, but also to other kinds of property, including
real property.

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