Subject Matter and Parties to a Contract of Sale

SUBJECT MATTER OF SALE

What may be objects of sale?

1. Existing Goods – owned/ possessed by seller at the time of perfection

2. Future Goods – goods to be manufactured, raised, acquired by seller after perfection of the contract or whose acquisition by seller depends upon a contingency (Art. 1462)

Note: Sale of future goods is valid only as an executory contract to be fulfilled by the acquisition & delivery of goods specified.

3. Sale of Undivided Interest or Share

     a. Sole owner may sell an undivided interest. (Art. 1463) Ex. A fraction or percentage of such property

     b. Sale of an undivided share in a specific mass of fungible goods makes the buyer a co-owner of the entire mass in proportion to the amount he bought. (Art. 1464)

     c. A co-­‐owner cannot sell more than his share (Yturralde v. CA)

4. Sale of Things in Litigation

     a. Sale of things under litigation is rescissible if entered into by the defendant , without the approval of the litigants or the court (Art. 1381)

     b. No rescission is allowed where the thing is legally in the possession of a 3rd person who did not acted in bad faith.

5. Things subject to Resolutory Condition.

Ex. Things acquired under legal or conventional right of redemption, or subject to reserva troncal. (Art. 1465)

6. Indeterminate Quantity of Subject Matter

The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract provided it is possible to determine the same, without need of a new contract. (Art. 1349)

PARTIES TO A CONTRACT OF SALE

What is the status of the following contracts of sale?

1. That entered into by minors:

a. Merely voidable, subject to annulment or ratification

b. Action for annulment cannot be instituted by the person who is capacitated since he is disqualified from alleging the incapacity of the person with whom he contracts (with partial restitution in so far as the minor is benefited) where necessaries are sold and delivered to a minor or other person without capacity to act, he must pay a reasonable price (Art. 1489)

2. Sale by & between spouses (Art. 1490):

a. Status of prohibited sales between spouses:

General Rule: Null and void

Exception: In case of sale between spouses:

i. When a separation of property was agreed upon in the marriage settlements; or

ii. When there has been a judicial separation of property agreed upon between them Reasons:

A. Prevent defrauding creditors

B. Avoid situation where dominant spouse takes advantage over the weaker spouse

C. Avoid circumvention on prohibition of donation between spouses

b. Contract of sale with 3rd parties:

General Rule: Under the law on sales, it would seem that a spouse may, without the consent of the other spouse, enter into sales transactions in the regular or normal pursuit of their profession, vocation or trade. (in relation with Art. 73, Family Code)

Exception: Even when the property regime prevailing was the conjugal partnership of gains, the Supreme Court held the sale by the husband of a conjugal property without the consent of the wife is void, not merely voidable under Art. 124 of the Family Code since the resulting contract lack one of the essential elements of full consent. (Guiang v. CA, G.R. No. 125172, June 26, 1998)

3. Between Common Law Spouses -also null and void. In Calimlim-Canullas v. Fortun, the Court decided that sale between common law spouses is null and void because Art. 1490 prohibits sales between spouses to prevent the exercise of undue influence by one spouse over the other, as well as to protect the institution of marriage. The prohibition applies to a couple living as husband and wife without the benefit of marriage, otherwise, the condition of those incurred guilt would turn out to be better than those in legal union. (Calimlim-Canullas v. Fortun, et. al., G.R. No. L-­‐57499, June 22, 1984) But when the registered property has been conveyed subsequently to a third-party buyer in good faith and for value, then reconveyance is no longer available to common-­‐law spouse-­‐ seller, since under the Torrens system every buyer has a right to rely upon the title of his immediate seller. (Cruz v. CA, G.R. No. 120122, Nov. 6, 1997)