SALES

Articles / Laws to Remember: 1458, 1467, 1477 transfer of ownership, 1505, 559 who can transfer xxx, 1504, 1544, 1484 Recto Law, R.A.
6552, 1602, 1606, 1620, 1623, Redemption xxx
Q: A obliged himself to deliver a certain thing to B. Upon delivery, B would pay a sum of money to A. Is that a contract of sale?
A: Not necessarily. Even if there is an obligation to deliver, if there is no obligation to transfer ownership, it will not be a contract of sale. It
may be a contact of lease.
Memorize: Art. 1458
Note: Sale is a contract, so the general principles in oblicon are applicable to sale but note that there are provisions which are contrary.
Characteristics of Contract of Sale (COS)
1. Consensual (1475) COS is consensual, it is perfected by mere meeting of the minds of the parties as to the object and price.
Note: There is 1 special law which requires a particular form for the validity of a contract of sale in that sale, it can be said that kind of sale
is a formal contract Cattle Registration Decree. In a sale of large cattle, the law provides that the contract of sale of large cattle must be: in
a public instrument, registered and a certificate of title should be obtained in order for the sale to be valid. But otherwise, the other contracts
are perfected by mere consent or mere meeting of the minds.
2. Principal sale is a principal contract, it can stand on its own. It does not depend on other contracts for its existence and validity.
3. Bilateral (1458) necessarily in a COS, both parties will be obligated. It is not possible that only 1 party is obligated because a contract of
sale is essentially onerous.
4. Onerous (1350) COS is essentially onerous. Otherwise, it may be another contract or any other act like it may be a donation if there is
no compensation for the transfer of ownership to the other party.
5. Commutative (2010) meaning there is equivalency in the value of the prestation to be performed by both parties. Normally, the thing
sold would be equal to the price paid by the other party (buyer).
Exception: a contract of sale which is an aleatory contract like sale of hope. In sale of hope, the obligation of 1 party will arise upon the
happening of a certain event or condition.
Example Sale of Hope: Sale of a lotto ticket, PCSO will have the obligation to pay you only if you got all the 4 or 6 numbers which are drawn
Another Example of Aleatory: Insurance
6. Nominate (1458)
Classification of Contract of Sale
1. As to Nature of Subject Matter
a. Movable
b. Immovable
Q: Why there is a need to determine?
A: Because some concepts will apply if the object is movable or some laws will apply if the object is immovable.
Examples: Under the Statute of Frauds, you have to determine if the object if movable or immovable in order that statute of frauds will apply.
The Recto law will apply if the object is movable. The Maceda law will apply if the object is realty. Article 1544 or Double Sale will require you
to determine the nature of the subject matter.
2. As to Nature
a. Thing
b. Right
Q: Why there is a need to determine?
A: Relevant in the mode of delivery
Distinctions
1. Deed of Absolute Sale (DAS) vs. Conditional Sale (CS) vs. Contract to Sell (CTS)
2. Dation in Payment (DIP) vs. COS
3. Contract for a Piece of Work (CPW) vs. COS
4. Barter vs. COS
5. Agency to Sell (ATS) vs. COS
Deed of Absolute Sale (DAS) vs. Conditional Sale (CS) vs. Contract to Sell (CTS)
DAS seller does not reserve his title over the thing sold and thus, upon delivery of the thing, ownership passes regardless of whether or not
the buyer has paid.
CS - condition/s are imposed by the seller before ownership will pass. Normally, the condition is the full payment of the price. In CS,
ownership automatically passes to the buyer from the moment the condition happens. There is no need for another contract to be entered
into.

BE: Receipt was issued by A to B. The receipts tenor Date of the receipt xxx Received from B the sum of P75,000.00 as partial
payment for the car xxx the balance to be paid at the end of the month xxx. Contract to Sell?
SA: No. It does not pertain to a CTS because in a CTS ownership is reserved by the seller despite delivery to the buyer. The buyer does not
acquire ownership. This is an Absolute Sale.
Q: In a CTS, upon the happening of the condition/s imposed by the seller, would ownership automatically pass to buyer?
A: No. While a CTS is considered a special kind of conditional sale, it is a peculiar kind of sale because despite the happening of the
condition and actual delivery, the buyer does not automatically acquire ownership. In CTS, if condition/s happen, the right of the buyer is to
compel the seller to execute a final deed of sale. So ownership does not automatically pass.
Dation in Payment (DIP) vs. COS
DIP (1245) whereby property is alienated to the creditor. It is provided that the law on sales shall govern such transaction. It is specifically
provided that the pre-existing obligation must be in money. If not in money and there is DIP, it will not be governed by the law on sales but by
the law on novation because practically there is a change in the object of the contract.
Example 1: If A owes B P100,000.00 instead of paying P100,000, he offers B and B accepts the car of A as an equivalent performance
this is DIP and will be governed by the law on sales.
Example 2: If the pre-existing obligation is to deliver a specific horse but instead of delivering the horse, the debtor told his creditor and the
creditor accepted, that he will instead deliver his car it is still DIP but it will not fall on 1245 but on novation because there is a change in
the object of the obligation which would extinguish the obligation.
Note: A guide to distinguish one concept from another is to know the nature, requisites and effects.
1. As to Nature
DIP a special form of payment
COS - it is a contract
2. As to Requisites
DIP with a pre-existing obligation
COS not a requirement
3. As to Effect
DIP to extinguish the obligation either wholly or partially.
COS obligation will arise instead of being extinguished.
Contract for a Piece of Work (CPW) vs. COS
BE: A team if basketball players went to a store to buy shoes and out of the 10 members, 5 of them were able to choose the shoes.
They agreed to pay the price upon delivery. The other 4 members were able to choose but the shoes were not available at that time
but they are normally manufactured. The last member could not find shoes that could fit his 16 inches feet and therefore he has to
order for such kind of shoes. What transactions were entered into by these players?
SA: 1467 the first 2 transactions involving a total of 9 players would be considered a COS because the shoes which they ordered are
being manufactured or procured in the ordinary course of business for the general market. However, the last transaction which will be
manufactured only because of the special order of the player and is not ordinarily manufactured for the general market will be considered a
CPW which is known as the Massachusetts rule.
Massachusetts rule rule in determining whether the contract is a COS or a CPW.