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SALES

ARTICLE 1458: By contract of sale one


of the contracting parties obligates
himself to transfer the ownership of
and to deliver a determinate thing,
and the other to pay therefor a price
certain in money or equivalent.
A contract of sale may be absolute or
conditional.
NOTES:
A
catch-all
provision

which
effectively brings within its grasp a
whole gamut of transfers whereby
ownership of a thing is ceded for a
consideration.
By the contract of sale, one of the
contracting parties obligates himself
to:
1. Transfer the ownership of and
deliver a determinate thing
2. And the other, to pay therefore
a price certain in money or its
equivalent
-ABSENCE of any of the essential
elements will NEGATE the existence of
a perfected contract of sale.
PHASES OR STAGES OF A CONTRACT
OF SALE
1. PREPARATION, CONCEPTION OR
GENERATIONperiod
of
negotiation
and
bargaining,
ending at the moment of
agreement of agreement of the
parties.

2. PERFECTION
contract

birth

of

the

3. CONSUMMATION OR DEATH
fulfilment or performance of the
terms agreed upon in the
contract

- It is TRADITION or DELIVERY that the


buyer acquires the real right of
ownership over the thing sold.
-ownership is transferred NOT by
contract but by TRADITION OR
DELIVERY. ( Alcantara-Daus vs De
Leon)
-Execution of Deed of Sale is
conclusive presumption of delivery of
possession of a piece of real estate
(Ten Forty Realty and Development
Corp vs Cruz).
CHARACTERISTICS OR FEATURES OF
CONTRACT OF SALE
1. BILATERAL both parties are
obliged
to
fulfil
reciprocal
obligations toone another.
- the seller will deliver and
transfer a determinate thing to
the buyer and the later will pay
an
ascertained
price
(or
equivalent) therefor.

2. CONSENSUAL perfected by
MERE CONSENT.
-manifested by the meeting of
the minds as to the offer and
acceptance thereof. (Castillo vs
Reyes , Amado vs Salvador)

3. COMMUTATIVE thing sold is


considered the equivalent of the
price paid and the price paid is
the equivalent of the thing sold.

1. No condition is imposed and


ownership passes to the vendee
upon delivery of the thing
subject of the sale.

- it is the OPPOSITE of
ALEATORY consideration is
NOT equivalent of what has
been received (example lotto
ticket price vs the amount to be
given if the ticket wins)

2. Neither a stipulation in the Deed


that Title in the property sold is
reserved in the seller until the
full payment of the price, nor
one giving the vendor the right
to unilaterally resolve the
contract the moment the buyer
fails to pay within a fixed period
(
Peoples
Industrial
and
Commercial Corporation vs CA)

4. ONEROUS thing sold is


conveyed in consideration of
the purchase price and the
purchase price is paid in
consideration of the conveyance
of the thing delivered.
5. PRINCIPAL

its
existence
DOESNOT depend upon the
existence
and
validity
of
another contract.
6. NOMINATE specific
given by law sale

name

ABSOLUTE SALES VS CONDITIONAL


SALE:

3. Absence of any stipulation


reserving title to the vendor
until full payment of the
purchase price.
- The absence of a stipulation
the agreement which expressly
provides that the seller retains
title or ownership of the
property until full payment of
the purchase price, coupled
with the fact that the buyer took
possession of the property upon
execution of the agreement.

-depend whether the agreement is


devoid of, or subject to, any condition
of the passing of title of the thing to
be conveyed or on the obligation of a
party thereto.

CONDITIONAL SALE

- Deed of Conditional sale and the


Deed of Absolute Sale CANNOT coexist as these are of different nature
and provide for separate and distinct
obligations.

2. Ownership is NOT to vest in the


buyer until the happening of the
condition, usually full payment
of theprice.

ABSOLUTE SALE:

3. Common form is CONTRACT TO


SELL

the
transfer
of
ownership, NOT the perfection

1. It is made subject to a certain


contingency or condition.

of
the
contract,
that
subjected to a condition.

is

4. Ownership or Title over the


property sold is RETAINED by
the vendor , and is not passed
to the vendee UNLESS and until
there is full payment of the
purchase price and/or faithful
compliance with the other terms
and conditions that may be
stipulated.

any stipulation giving them the right


to unilaterally RESCIND the contract in
case of non-payment.
- OWNERSHIP of the thing sold passes
to the vendee upon the constructive or
actual delivery thereof.
-In determining the real character of
the contract, the title GIVEN to it by
the parties is NOT as much significant
as its SUBSTANCE.
CONDITIONAL SALE

CONDITION
IMPOSED
ON
THE
PERFECTION OF THE CONTRACT VS
CONDITION
IMPOSED
ON
THE
PERFORMANCE OF AN OBLIGATION:
1. Failure
to comply with CONDITION IMPOSED ON THE
PERFECTION OF THE CONTRACT
results in the FAILURE OF A
CONTRACT,
2. Failure
to
comply
with
CONDITION IMPOSED ON THE
PERFORMANCE
OF
AN
OBLIGATION only gives the
other party the OPTION to
REFUSE TO PROCEED with the
sale or WAIVE the condition
( Lim vs CA ; Romero vs CA)
CONDITIONAL SALE CONSIDRED AN
ABSOLUTE SALE
-A deed of Sale is absolute in nature
although denominated a CONDITIONAL
SALE
absent
such
stipulations
reserving title to the vendor until FULL
PAYMENT of the purchase price, nor

CONDITION (in the context of a


perfected contract of sale) pertains
to the compliance by one party of an
undertaking the fulfilment of which
would
beckon
in
turn
the
demandability
of
the
reciprocal
prestation of the other party.
PERFECTION OF CONTRACT parties
are bound NOT ONLY to the fulfilment
of what has been expressly stipulated
but ALSO to all consequences which
according to their nature may be in
keeping with good faith, usage and
law.
ELEMENTS OF CONTRACT OF SALE:
( E-N-A)
ESSENTIAL ELEMENTS
Necessary for the validity of the sale.
-if ABSENT, no valid sale can be
generated. Intended sale is VOID.
Essential ELEMENTS: (M-O-P)
1. Meeting of the Minds
2. OBJECT

determinate

certain

and

3. PRICE CERTAIN
consideration.

cause

or

=need not be in money, money


or its equivalent
=Goods
or
merchandise
CANNOT be the equivalent of
money
because
that
will
constitute BARTER.
MANNER OF PAYMENT OF THE
PURCHASE
PRICE
IS
AN
ESSENTIAL ELEMENT OF A
CONTRACT
=disagreement on the manner
of payment is tantamount to a
failure to agree on the price.
NATURAL ELEMENTS (WEW-HI)
= Inherent in the contract and are
deemed to exist in the contract and
are deemed to exist in the contract of
sale in the absence of clear contrary
agreement.

1. Warranty against EVICTION ( Art


1548)
2. Warranty
against
DEFECTS ( Art 1561)

HIDDEN

ACCIDENTAL ELEMENTS
=they MAY or MAY NOT exist
depending on the stipulations of the
parties like CONDITIONS, PAYMENT of
interest, PLACE and TIME of payment
and the like.
SIGNIFICANCE OF NOTARIZATION OF A
DEED OF SALE

=does NOT necessarily justify the


conclusion that the said sale is
undoubtedly a true conveyance to
which
the
parties
thereto
are
irrevocably and undeniably bound.

ABSENCE OF NOTARIZATION
=would NOT necessarily invalidate the
transaction.
=An invalidly notarized deed of sale is
NOT a public document but it is to be
considered
merely
as
private
document. In which case, NOT only
the due execution of the document
must
be
proven
but also
its
authenticity.
FAILURE TO PAY CONSIDERATION VS
LACK OF CONSIDERATION
FAILURE TO PAY CONSIDERATION
=results in a right to demand the
fulfilment or cancellation of the
obligation under an existing valid
contract.
LACK OF CONSIDERATION
=prevents the existence of a valid
contract.
CONTRACT OF SALE VS CONTRACT TO
SELL
CONTRACT OF SALE
1. Title over the property passes to the
buyer UPON delivery unless there is a
contrary agreement.
2. Non-payment of the purchase price
is
a
NEGATIVE
RESOLUTORY
CONDITIONthe
sale
becomes

ineffective upon the happening of such


condition (non-payment).
= seller may RESCIND the contractor
exact fulfilment
3. After DELIVERY of the object the
seller loses ownership over it. Unless,
the contract is set aside , he cannot
recover the object.

CONTRACT TO SELL
1. Ownership is RETAINED by seller
whether or not there is delivery.
Ownership passes to buyer ONLY
UPON FULLPAYMENT OF PRICE.
2. The payment in FULL is a POSITIVE
SUSPENSIVE CONDITION if the price
is NOT PAID, the obligation to deliver
and to transfer ownership on the part
of the seller does NOT become
effective.
=Non-payment prevents the existence
of the contract.
3. Whether there is delivery or not ,
the seller RETAINS the ownership of
the object.

=where the seller has promised to


execute a deed of sale upon full
payment of the purchase price ,the
agreement is a CONTRACT TO SELL.
CONTRACT TO SELL
=akin to a conditional sale where the
efficacy or obligatory force of the
vendors obligation to transfer title is
subordinated to the happening of a
future and uncertain event, so that if
the suspensive condition does not take
place, the parties would stand as if the
conditional obligation had never
existed.
=DEFINITION:
bilateral
contract
whereby the prospective seller , while
expressly reserving the ownership of
the subject property despite delivery
thereof to the prospective buyer ,binds
himself to sell the said property
EXCLUSIVELY to the prospective buyer
upon fulfilment of the condition agreed
upon full payment of the purchase
price.
CONTRACT OF SALE; EFFECT
1. Ownership is vested on the buyer
whether or not full payment is made.

=if the seller, due to the non-payment


of the price is ousting the buyer from
the property, the seller is NOT
rescinding the contract of sale but is
precisely ENFORCING it.

2. The seller has lost and cannot


recover ownership until unless the
contract is resolved and rescinded.

PROMISE TO EXECUTE A DEED OF


SALE

FAILURE OF BUYER TO PAY PRICE IN


CONTRACT OF SALE

3. When a party asks for the resolution


or cancellation of a contract it is
implied
that
he
recognizes
its
existence a non-existent contract
CANNOT be cancelled.

= The of the buyer to make good the


price does not in law, cause the
ownership to revert to the seller
unless the bilateral contract of sale is
first rescinded or resolved pursuant to
Article 1191 of NCC.
=A contract to sell is commonly
entered into as to protect the seller
against a buyer who intends to buy
the property in instalments by
withholding
ownership
over
the
property until the buyer effects full
payment therefor.
REMEDY: to demand fulfilment or
rescission of the contract there being
a breach of the obligation.
When consideration is absent,
=this prevents the existence of a valid
contract.
=seller has no obligation to deliver.
= lack of consideration makes
contract of sale fictitious and
fictitious sale is void ab initio.

a
a

SIMULATED
CONTRACT
STATING
THERE IS CONSIDERATION WHERE
THERE IS NONE IS VOID AB INITIO
=sale is null and void and produces no
effect whatsoever where the same is
without cause or consideration in that
the purchase price which appears
thereon as paid has in effect never
been paid by the purchaser to the
vendor.
EFFECT OF ABSENCE OF PROVISO
=Deed of sale is absolute in nature,
although denominated as DEED OF
CONDITIONAL SALE in the absence of

a proviso that the title to the property


sold is reserved in the vendor until full
payment of the purchase price nor a
stipulation giving the vendor the right
to unilaterally rescind the contract the
moment the vendee fails to pay within
a fixed period.

RULE IF THERE IS DOUBT (SUSPENSIVE


CONDITION VS SUSPENSIVE PERIOD)
FOR THE PAYMENT OFNTHE AGREED
PRICE
=shall be settled in favour of the
greatest reciprocity of interests, which
will obtain if the buyers obligation is
deemed to be actually existing, with
only its maturity postponed or
deferred.
IN CASE OF
REPURCHASE
MORTGAGE:

DOUBT,
VS

SALE WITH
EQUITABLE

=shall be construed as an equitable


mortgage.
CONTTRACT OF SALE IN THE FORM OF
LEASE
=the lessee is given the option to buy
the property for a small consideration
at the end of the term provided all
instruments
are
paid,
with
a
stipulation that if the rent be paid
throughout the term, title shall vest in
the lessee, such contract is a lease in
NAME ONLY ( actually,it is a contract of
sale).
CAN THERE BE A VALID SALE AGAINST
THE WILL OF THE OWNER OF THE
PROPERTY?
YES, under the following situations:

(Involuntary in nature and constitute


exceptions to the rule)

had been procured by the presentation


of forged instrument.

1.
Property
is
subjected
expropriation ( Art 435 & 1488)

DISTINCTION BETWEEN CONDITION


UPON
THE
PERFECTION
OF
A
CONTRACT VS CONDITION IMPOSED
ON THE PERFORMANCE OF AN
OBLIGATION

to

2. In case of ordinary execution sale


conducted under sec 15, rule 39, 1997
revised rules of civil procedure
3. In case of judicial foreclosure sale
under rule 68
4.In case of extra-judicial foreclosure
sale under Act 3135.
EFFECT OF RELUCTANT CONSENT

CONDITION UPON THE PERFECTION OF


A CONTRACT
=results in the failure of a contract.
CONDITION
IMPOSED
ON
THE
PERFORMANCE OF AN OBLIGATION

=It is not considered as VITIATED


CONSENT.

=gives the other party the option


either to refuse to proceed with the
sale or to waive the condition.

=There is no difference in law where a


person gives his consent reluctantly
and even against his good sense and
judgment as when he acts voluntarily
and freely.

ART 1459: The thing must be LICIT and


the vendor must have a right to
transfer the ownership thereof at the
time it is delivered.

FORGED DEED OF SALE MAY BE THE


ROOT OF A GOOD TITLE
*FORGED DEED = an instrument which
purports to have been executed by the
person or persons whose signatures
appear thereon, but which, in fact, was
not executed, and the signatures
thereon has been merely imitated so
as to give them the deceptive
appearance of genuineness.
=forged title is null and void and of no
effect as between parties, it may
nevertheless be the ROOT OF A GOOD
TITLE- so that the title of a registered
owner who has taken it bona fide and
for value, is NOT affected by reason of
his claiming through someone, that
the registration was void because it

OBJECT OF CONTRACTS (is its SUBJECT


MATTER)
=ALL THINGS which are NOT outside
the commerce of man, including future
things.
=ALL
RIGHT
which
instransmissible.

are

NOT

OBJECT MUST BE LICIT OR LAWFUL


may either be:
1. Things
2. Rights
CLASSIFICATION OF ILLICIT THINGS
1. ILLICIT PERSE- by its nature it is
heinous, immoral and wrongful (house
of prostitution).

2. ILLICIT PER ACCIDENS it is illegal


only because there is a law prohibiting
it.

2. Right to hold a public position

=sale of parcel of land to a disqualified


alien
is
void
(prohibited
by
constitution)

4. Marital rights

= sale of homestead before the lapse


of 5 years.

=YES, like contract for a piece of work


BUT services CANNOT be the object of
sale.

= Reclaimed land (being a public


domain) CANNOT be subject to sale
WITHOUT congressional fiat.
RIGHTS AS OBJECTS OF SALE
=while Articles 1458 & 1459 DID NOT
expressly mention RIGHTS as objects
of sale, if they are TRANSMISSIBLE,
they can be subject matter of
contracts of sale.
=Rights cannot be included within the
term things which are tangible,
because rights are intangible and can
either
be
transmissible
or
intransmissible. In order to be subject
matter of contract of sale it MUST be
transmissible.

3. Right to support

CAN SERVICES BE THE OBJECT OF


SALE?

REASONS:
services
are
NOT
determinate things and NO transfer of
ownership is available in services.
IN PARI DELICTO
=rights of the parties embroiled in a
void contract due to the ILLEGALITY of
the object shall be determined by:
ARTICLE 1411 (
criminal offense)

Acts

constitute

1. No action against each other and


both shall be prosecuted

2. Right of Redemption ( Art 1601)

2. Provisions of RPC in disposal of


effects or instruments of a crime shall
be applicable to the things or the price
of the contract ( applicable when only
one of the party is guilty; but the
innocent one may claim what he has
given, and shall not bound to comply
with his promise).

3. Assignment or sale of Credit ( Art


1627)

ARTICLE
1412
(Acts
does
constitute criminal offense)

4. Right to inheritance already


acquired but NOT future inheritance.

1. Neither may recover what he has


given by virtue of the contract, or
demand performance of the others
undertaking.

TRANSMISSIBLE RIGHT which can be


transferred:
1. Right of Usufruct ( Art 572)

INTRANSMISSIBLE RIGHTS :
1. Right to Suffrage

not

2. When only one of the contracting


parties is at fault, he cannot recover

he has given by reason of a contract


or ask for fulfilment of what has been
promised, the other who is NOT at
fault, may demand the return of what
he has given without any obligation to
comply with his promise.
TRANSFER
OF
OWNERSHIP
ESSENTIAL IN SALE

IS

=The seller must have the right to


transfer the ownership of the thing or
right sold to the buyer at the TIME OF
DELIVERY. Delivery may be actual or
constructive
=By implication, at the time of the
perfection of the contract, the seller
NEED not be the owner of the thing or
right sold.what is important is at the
TIME OF DELIVERY, he is already the
owner of the thing or right- Otherwise,
he can be liable for damages for
breach of warranty against eviction.
NEMO DAT QUOD NON HABET
=nobody can dispose of a thing which
does not belong to him.
FORECLOSURE SALE
=though essentially a FORCED SALE,
is still a sale in accordance with Art
1458 under which the mortgagor in
default, the forced seller, becomes
obliged to transfer the ownership of
the thing sold to the highest bidder
who, in turn, is obliged to pay therefor
the bid price in money or its
equivalent.
SELLER CAN SELL ONLY WHAT HE
OWNS OR AUTHORIZED TO SELL
=buyers can acquire no more than
what the seller can transfer legally.

REASON WHY SELLER IN GOOD FAITH


NEED NOT BE THE OWNER OF THE
OBJECT OF SALE
= If the seller is required to be the
owner of the object of the sale at the
perfection of the contract, FUTURE
GOODS could no longer be the subject
matter of sale.
=The contract by itself, is not a mode
of acquiring ownership but merely
gives rise to obligations.
RULE IN DONATION
FROM RULE IN SALE:

IS

DIFFERENT

GEN RULE: future property CANNOT be


subject of donation
IN SALE, future things and goods may
be the object of the contract
ARTICLE 1460: A thing is determinate
when it is particularly designated or
physically segregated from all others
of the same class.
The requisite that a thing be
determinate is satisfied if at the time
the contract is entered into, the thing
is capable of being made determinate
without the necessity of a new or
further
agreement
between
the
parties.
THING
OR
OBJECT
MUST
DETERMINATE NOT GENERIC

BE

=the fact that the quantity is NOT


determinate shall not be an obstacle
to the existence of the contractprovided it is possible to determine
the same, without the need of a new
contract between the parties.
EXAMPLE:

1. A specific lot consisting of certain


number of square meters covered by
an existing transfer certificate if title.
2.A particular car covered by a specific
motor number and plate number.
RELAXATION
OF THE RULE
OF
DETERMINATE CHARACTER OF THE
THING OR OBJECT
=if at the time the contract was
entered into, the thing or object is
capable of being made determinate
without the NEED for entering into a
new
or
supplemental
contract
between the parties, the requirement
that the thing be determinate is
satisfied.
=If there is such a need, the contract
is VOID, for then the intention of the
parties CANNOT be ascertained.
ARTICLE 1461: Things having potential
existence may be the object of the
contract of sale.
The efficacy of the sale of a mere hope
or expectancy is deemed subject to
the condition that the thing will come
into existence.
The sale of vain hope or expectancy is
VOID.
THING WITH POTENTIAL EXISTENCE
-although not yet in actual existence
but which may reasonably come into
existence for being the natural
increment of something already in
existence is said to have potency to
exist and which can be a subject
matter of a contract of sale.

Illustrations of things with Potential


Existence:
1.
Future
harvested

fruits

expected

to

be

2. Wine expected to be produced


3.All the forthcoming chicks hatched
from a particular poultry
4.Sugar expected to be harvested
from a sugar cane plantation.
5. Expected goodwill of a business
enterprise
STATUS OF SALE OF THINGS WITH
POTENTIAL EXISTENCE
= depends upon the intentions of the
parties:
1. If the contract of sale is made
dependent upon the existence of the
things such that if it did not come into
existence, the contract is NOT
effective, and the buyer will have no
obligation to pay the price.
* EMPTIO REI SPERATAE purchase of
an expected thing subject to the
condition that the thing will come to
existence.
2. If the contracting parties intended
the contract of sale to exist at all
events ( whether or not the expected
thing will come into existence) such
that the buyer will have to pay the
purchase price, the contract becomes
aleatory in nature.
*EMPTIO SPEI purchase of hope or
expectancy

Example: sale of genuine lotto ticket,


whether the ticket wins or not, the
sale is valid.
WHEN THERE IS DOUBT, whether the
sale is
EMPTIO REI SPERATAE or
EMPTIO SPEI:
=the presumption is in favour of
EMPTIO REI SPERATAE, because it is
more in keeping with the commutative
character of sale.

GOODS
=includes all chattels personal but not
things in action or money of legal
tender in the Philippines.
=includes growing fruits or crops.
=Real property in NOT included in the
term goods.
KINDS OF GOODS
1. Existing goods owned or possessed
by the seller actually existing at the
time of the perfection of the contract

SALE OF MERE HOPE OR EXPECTANCYWHEN NOT VALID

2. Future goods those which do not


exist yet but have potential existence.

VALID even if the expected thing did


not material UNLESS:

EXAMPLES OF FUTURE GOODS:

1. The hope or expectancy is vain.


2. The parties intended that if the
hope
or
expectancy
will
not
materialize, the sale is VOID.
Example of Void sale of a vain of hope
or expectancy sale of used bingo
ticket.
ARTICLE 1462: The goods which form
the subject of a contract of sale may
either existing goods, owned or
possessed by the seller, or goods to be
manufactured, raised or acquired by
the seller after the PERFECTION of the
contract of sale, in this title called
FUTURE GOODS
There may be a contract of sale of
goods, whose acquisition by the seller
depends upon a contingency which
may or may not happen.

1. Goods to be manufactured yet


such as subscription to future issues of
magazines
2.Goods to be manufactured specially
for the customer and not readily
saleable to the general market.
(contract for a piece of work)