Adad adad

Sale of an undivided share of a specific mass.

The Civil Code classifies movable goods into consumable or non-consumable (Art. 418.), thereby
discarding the old classification (Art. 334, old Civil Code.) into fungible and non-fungible.
This change of classification seems to be in name only as the definition of fungible goods as those which
cannot be used without being consumed under the old Civil Code is precisely that of consumable goods.
Article 1464, however, still speaks of fungible goods.

(1) Meaning of 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 (Uniform Sales Act, Sec. 76.), such as
grain, oil, wine, gasoline, etc.

(2) 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. (Art. 1460.)

(a) By such sale, the buyer becomes a co-owner with the seller of the whole mass in the proportion in
which the definite share bought bears to the mass.

(b) It must follow that the aliquot share of each owner can be determined only by the measurement of
the entire mass. If later on it be discovered that the mass of fungible goods contains less than what was
sold, the buyer becomes the owner of the whole mass and furthermore, the seller shall supply whatever is
lacking from goods of the same kind and quality, subject to any stipulation to the contrary.

(3) Risk of loss. — 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.

(4) Subject matter. — Take note that in the sale of an undivided share, either of a thing (Art. 1463.) or of
that of mass of goods (Art.1464.), the subject matter is an incorporeal right. (Art. 1501.) Here, ownership
passes to the buyer by the intention of the parties.

EXAMPLE:

S owns 1,000 cavans of palay stored in his warehouse. If S sells to B 250 cavans of such palay which cavans are not
segregated from the whole mass, B becomes a co-owner of the said mass to the extent of 1/4. If the warehouse
happens to contain only 200 cavans, S must deliver the whole 200 cavans and supply the deficiency of 50 cavans of
palay of the same kind and quality.

In the same example, the number of cavans in the warehouse may be unknown or undetermined and S may sell only
1/4 share of the contents. The legal effect of such a sale is to make B a co-owner in that proportion. It is obvious that
in such case, the obligation of the seller “to make good the deficiency” will not arise.

ART. 1465. Things subject to a resolutory condition may be the object of the contract of
sale. (n)

Sale of thing subject to a resolutory condition.

A resolutory condition is an uncertain event upon the happening of which the obligation (or right) subject
to it is extinguished.

Hence, the right acquired in virtue of the obligation is also extinguished. (see Arts. 1179, 1181.)

EXAMPLES:
(1) S (vendor a retro) sold a parcel of land to B (vendee a retro) subject to the condition that S can repurchase the
property within two years from the date of sale. If S exercises the right to repurchase, then the sale made by B to C
before the lapse of the two (2)-year period falls.

The rule, however, that a vendor cannot transfer to his vendee a better right than he had himself, suffers an exception
in case of property with Torrens title. (see Hernandez vs. Katigbak Vda. de Salas, 69 Phil. 748 [1940].)

(2) For failure to pay his debt, the land of S (mortgagor) was sold to B, the highest bidder and purchaser in an
extrajudicial foreclosure of a real estate mortgage.

Under the law (Act No. 3135, as amended.), the mortgagor may redeem the property at any time within one year
from and after the date of the registration of the sale. If S redeems the property, then the sale made to B is
extinguished.
One of the obligations of the vendor is to transfer the ownership of the thing object of the contract. (Art.
1458.) If the resolutory condition attaching to the object of the contract, which object may include things
as well as rights (Arts. 1427, 1347, par. 1.), should happen, then the vendor cannot transfer the ownership
of what he sold since there is no object.

Sale distinguished from agency to sell.

By the contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter. (Art. 1868.)

In order to classify a contract, due regard must be given to its essential clauses. A contract is what the law
defines it to be, and not what it is called by the contracting parties. (Quiroga vs. Parson
Hardware Co., 38 Phil. 501 [1918]; Baluran vs. Navarro, 79 SCRA 309 [1977].) Sale may be
distinguished from an agency to sell, as follows:

(1) In a sale, the buyer receives the goods as owner; in an agency to sell, the agent receives the goods
as the goods of the principal who retains his ownership over them and has the right to fix the
price and the terms of the sale and receive the proceeds less the agent’s commission upon the
sales made;

(2) In a sale, the buyer has to pay the price; in an agency to sell, the agent has simply to account for
the proceeds of the sale he may make on the principal’s behalf;

(3) In a sale, the buyer, as a general rule, cannot return the object sold; in an agency to sell, the agent
can return the object in case he is unable to sell the same to a third person;

(4) In a sale, the seller warrants the thing sold (see Arts. 1547, 1548, 1561.); in an agency to sell, the
agent makes no warranty for which he assumes personal liability as long as he acts within his
authority and in the name of the seller; and

(5) In a sale, the buyer can deal with the thing sold as he pleases being the owner; in an agency to
sell, the agent in dealing with the thing received, must act and is bound according to the
instructions of his principal.1

ILLUSTRATIVE CASES:
1. One given exclusive right to sell beds furnished by manufacturer, agreed to pay discounted invoice price at a
certain period.

Facts: S granted B the exclusive right to sell the former’s beds in Visayas. S was to furnish B with the beds which
the latter might order. The price agreed upon was the invoice price of the beds in Manila with a discount of from
20% to 25%. Payment was to be made at the end of sixty days.

Issue: S claimed that the contract was an agency to sell while B maintained that it was a sale.

Held: The stipulations are precisely the essential features of a contract of purchase and sale. There was the
obligation on the part of S to supply the beds and on the part of B, to pay their price.

These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent receives
the thing to sell it and does not pay its price but delivers to the principal the price he obtains from the sale of the
thing to a third person, and if he does not succeed in selling, he returns it.

By virtue of the contract between S and B, the latter, on receiving the beds was necessarily obliged to pay their price
within the terms fixed without any other consideration and regardless as to whether he had sold the beds. (Quiroga
vs. Parson Hardware Co., 38 Phil. 501 [1918].)
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2. Partial payments were made without mention of goods unsold and without stipulation for their return.

Facts: B received from S 350 pairs of shoes, the price of which is stated as P2,450.00 or P7.00 per pair. B made
partial payments on account thereof.
Issue: On the issue of the nature of the transaction, S claimed that it was an absolute sale and not a consignment.
Held: The transaction was an absolute sale. In making said partial payments, B made no mention whatsoever of the
number of shoes sold by him and the number of shoes remaining unsold which he should have done had the sale
been on the consignment basis. He merely mentioned the balance of the purchase price after deducting the several
payments made by him.

Piece of Work
EXAMPLE:

If B is buying a pair of shoes of a particular style and size from S which the latter ordinarily manufactures or
procures for the general market but the same is not available, an order for one would be a contract of sale, since the
article would have existed and been the subject of sale to some other person even if the order had not been given.

On the other hand, if B places an order for a pair of shoes of a particular shape because his feet are deformed, the
fact that such kind of shoes is not suitable for sale to others in the ordinary course of the seller’s business and is to
be manufactured especially for B and upon his special order, makes the contract one for a piece of work.