ARTICLE 1468.

If the consideration of the contract consists partly in money, and

partly in another thing, the transaction shall be characterized by the manifest
intention of the parties. If such intention does not clearly appear, it shall be
considered a barter if the value of the thing given as a part of the consideration
exceeds the amount of the money or its equivalent; otherwise, it is a sale

Sale Distinguished from Barter

Sale
The
vendor
gives
a
thing
in
consideration in consideration for a
price in money. (art. 1458)

Barter
One of the parties binds himself to give
one thing in consideration of others
promise to give another thing. (arts.
1638-1641)
Art. 1568 if the thing given in exchange consist partly of money and partly
in another thing determine:
a. The manifest intention of the parties
b. If the intent is not clear, apply the following rules:
1. If the thing is more valuable than money barter
2. If the money and the thing are of equal value sale
3. If the thing is less valuable than money sale

Examples:
Juana, a sugar miller, and Pedro, dealer of coffee beans, entered into an
agreement whereby Juana was to deliver sugar worth P20,000.00 to Pedro who was
to give 10 sacks of coffee bean worth also P10,000.00. This is contact of barter.
Juana and Pedro agreed that Juana would deliver sugar to Pedro, and Pedro
would give Juana 2 sacks of coffee bean or to pay P5,000.00 cash. If pedro instead
of 2 sacks of coffee bean paid P5, 000.00 cash, it is clear that the resulting contract
is that of sale, and not barter.

ARTICLE 1469. In order that the price may be considered certain, it shall be
sufficient that it be so with reference to another thing certain, or that the
determination thereof be left to the judgment of a special person or persons.
Should such person or persons be unable or unwilling to fix it, the contract shall be
inefficacious, unless the parties subsequently agree upon the price.

If the third person or persons acted in bad faith or by mistake, the courts may fix
the price.
Where such third person or persons are prevented from fixing the price or terms by
fault of the seller or the buyer, the party not in fault may have such remedies
against the party in fault as are allowed the seller or the buyer, as the case may be.
The price is certain when it is:
1. fixed by the agreement of the parties
NOTE: The fixing of price cannot be left to the discretion of one of the contracting
parties. However, if the price fixed by one of the parties is accepted by the other,
the sale is perfected [1473]
2. certain with reference to another thing certain[1469]
3. to be fixed by a third person [1469]
Effect when the price is fixed by the 3rd person designated
a. General Rule: It is binding upon the parties
b. Exceptions:
i. when the 3rd person acts in bad faith or by mistake; in which case the
courts may fix the price
ii. when the third person disregards the specific instructions or the procedure
marked out by the parties.
Example: Juana sold to Pedro a diamond necklace. The determination of the price
was left to Maria whom the parties thought was a jeweler.
If Maria acted by Mistake, as when she is incompetent to know the priceof the
diamond necklace, or in bad faith as when she connived with Juana, the cout may
fix the price.
Effect when the price is not fixed by the 3rd person
a. contract shall become ineffective, unless the parties subsequently agree
upon the price
b. if the 3rd person is prevented from fixing the price by the fault of the seller
or buyer, the party not in
fault may obtain redress against the party in fault(rescission or fulfillment of
damages in either case)
Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as it
may indicate a defect in the consent, or that the parties really intended a donation
or some other act or contract.
Effect of Gross Inadequacy of Price:
1. Voluntary sales

GENERAL RULE: Mere inadequacy of the price does not affect validity of the
sale.
EXCEPTION: inadequacy of price indicate a defect in the consent such as when
fraud, mistake, or undue influence is present in which case the contract may be
annulled not because of inadequacy of price but because the consent is vitiated or
where the price is so grossly inadequate.
Example: Juana sold to Pedro her land worth P100,000.00 for only P60,000.00.
This contract of sale is valid although the price is inadequate. However if it is shown
that Pedro induced Juana to sell that land through fraud, mistake, or undue
influence, the contract may be declared invalid on that ground.
2. Involuntary or Forced sales
GENERAL RULE: Mere inadequacy of the price is not a sufficient ground for the
cancellation of the sale if property is real.
EXCEPTIONS:
a. Where the price is so low as to be shocking to the moral conscience, judicial
sale of personal property will be set aside
b. In the event of a resale, a better price can be obtained.

ARTICLE 1471. If the price is simulated, the sale is void, but the act may be shown
to have been in reality a donation, or some other act or contract.
- If the price is simulated or false such as when the vendor really intended
to transfer the thing gratuitously, then the sale is void but the contract
shall be valid as a donation.
- If the contract is not shown to be a donation or any other act or contract
transferring ownership because the parties do not intend to be bound at
all, the ownership of the thing is not transferred. The contract is void an
inexistent.
ARTICLE 1472. The price of securities, grain, liquids, and other things shall also be
considered certain, when the price fixed is that which the thing sold would have on
a definite day, or in a particular exchange or market, or when an amount is fixed
above or below the price on such day, or in such exchange or market, provided said
amount be certain
-

When an amount is fixed above or below the price on a given day or in a

particular exchange or market, the said amount must be certain,
otherwise, the sale is invalid because the price cannot be ascertained.

ARTICLE 1473. The fixing of the price can never be left to the discretion of one of
the contracting parties. However, if the price fixed by one of the parties is accepted
by the other, the sale is perfected.
-

Consent is essential to a contract of sale, it cannot be said that the other

consented to a price he did not and could not previously know.
The validity or compliance of contract cannot be made to depend upon
the will of one party. (art. 1308)

ARTICLE 1474. Where the price cannot be determined in accordance with the
preceding articles, or in any other manner, the contract is inefficacious. However, if
the thing or any part thereof has been delivered to and appropriated by the buyer
he must pay a reasonable price therefor. What is a reasonable price is a question of
fact dependent on the circumstances of each particular case.
Effect of Failure to determine price:
1. Where contract executory
- The contract is INVALID.
2. Where the thing has been delivered to and appropriated by the buyer
- The buyer must pay a reasonable price therefore.
- The reasonable price or value of goods is generally the market value at
the time and place fixed by the contract or by law for the delivery of the
goods.
ARTICLE 1475. The contract of sale is perfected at the moment there is a meeting
of minds upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to
the provisions of the law governing the form of contracts.

GENERAL RULE: It is perfected at the moment there is meeting of the minds upon
a determinate thing (object), and a certain price (consideration), even if neither is
delivered.
NOTE: Sale is a consensual contract; Hence, delivery and payment are not
essential for its perfection
EXCEPTION: When the sale is subject to a suspensive condition by virtue of law or
stipulation.

ARTICLE 1476. In the case of a sale by auction:

(1) Where goods are put up for sale by auction in lots, each lot is the subject of a
separate contract of sale.
(2) A sale by auction is perfected when the auctioneer announces its perfection by
the fall of the hammer, or in other customary manner. Until such announcement is
made, any bidder may retract his bid; and the auctioneer may withdraw the goods
from the sale unless the auction has been announced to be without reserve.
(3) A right to bid may be reserved expressly by or on behalf of the seller, unless
otherwise provided by law or by stipulation.
(4) Where notice has not been given that a sale by auction is subject to a right to
bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to
employ or induce any person to bid at such sale on his behalf or for the auctioneer,
to employ or induce any person to bid at such sale on behalf of the seller or
knowingly to take any bid from the seller or any person employed by him. Any sale
contravening this rule may be treated as fraudulent by the buyer

RULES GOVERNING AUCTION SALES

1. Sales of separate lots by auction are separate contracts of sale.
- where separate lots are subject of separate bidding, there is a separate
contract in regard to each lot but the parties may consolidate all the
purchases in one transaction.
2. Sale is perfected by the fall of the hammer.
3. Seller has the right to bid in the auction, provided:
a) such right was reserved
b) notice was given that the sale was subject to a right to bid on behalf of the
seller
c) right is not prohibited by law or by stipulation

ARTICLE 1477. The ownership of the thing sold shall be transferred to the vendee
upon the actual or constructive delivery thereof.
-

It is only after the delivery of the thing sold that the buyer acquires real
right or ownership over it.

Kinds:
1. Actual or real placing the thing under the control and possession of the
buyer.
2. Legal or constructive delivery is represented by other signs or acts
indicative thereof
E.g. execution of the deed of sale

ARTICLE 1478. The parties may stipulate that ownership in the thing shall not pass
to the purchaser until he has fully paid the price.
-

If the thing has been delivered it prevents the transfer of ownership until
the price has been fully paid.