1458-1470(Pineda)

Absolute and Conditional Sales

-both can be a perfected contract
Absolute
-no condition
no stipulation in the deed of sale that it will be
reserved if may full payment
deed of sale is absoule in nature
a condition of sale considered as absolute sale in
the absence of stipulations full payment. In ths
case, constructive or actual delivery thereof
Conditional
contingency
common form contract to sell
not passed to the vendee until there is full
oayment of the purchase price
condition imposed on the performance of an
obligation
Concept of condition in sale
compliance by one party of an undertaking for
the fulfillment of a reciprocal prestation
ex:remove the squatters first
Elements of Contract of sale
1) Essential elements-necessary for the validity of sale
a.Meeting of the mind
b.Object which is certain and determinate
c. Price certain-money or its equivalent

No Price Paid effect contract of sale will be poid if in
fact never have been paid
2. Natural Elements-inherent in the contract and are
deemed to exist
a.Warranty against eviction
b. Warranty against hidden defects
3. Accidental Elements-not essential or natural

Significance of notarization of adeed of sale-sale is
undoubtedly a true conveyance. Presumption of
regularity. Bidning legal effect

Absence of Notarization-not invalidate the transaction. It
is to be considered as a private document subject to
requirement of proof

Deed sale validitly notarized-classified as a private
document
-notarized by not a real notary public does not affect the
validity thereof

Failure to pay considereation distinguished from lack of
considereation-failurre to pay the consideration results in
a right to deman the fulfillment or cancellation of the
obligation

Contract of sale
Title over the prop passes
to the buyer upon
delivery unless there is
contrary agreement

Nonpayment-resolutory
condition

After delivery the seller
loses ownership. Unless
the contract is set aside
Contrtact to sell
Ownership is retained by
the seller. Passes
ownership only upon FULL
PAUMENT

NP-suspensive condioton

Whether there is delivery
or not, the seller retains
the ownership of the
object

Promise to Execute a deed of sale significance
Contract to sell is akin to a conditional sale. Subordinated
to the happening of a future and uncertain event
-a bilateral contract
Contract of sale effect
-ownership is vested on the buyer WON full payment is
made. The seller has lost and connot recovere ownership
until and unless the contract is resolved and rescinded

Failure of buyer to pay price in contract of sale
Does not in law cause the ownership to revert to the seller
UNLESS the bilateral contract of sale is first rescinded
Contract to sell-entered into so as to protect the seller
against a buyer who intends to buy the prop in
installments

Effect of absence of proviso
Deed of sale is absolute in nature, although denominated
as deed of condition sale

Doubt0
Suspensive condition-doubt shall be settled in favor of the
greatest reciprocity of interests

Sale with repurchase or an equitable mortgage=equitable
mortgage

Contract of sale in the form lease-title shall vest in lessee
such lease in name only
Can there be a valid sale against the will of the owner of
the property
Yes.
Expropriation, ordinary execution sale, judicial foreclosre
sale, extrajudicial foreclosure
*case above involuntary exceptions to the rule regarding
free consent

Effect of reluctant consent-not vitiated

Forged deed of sale may be the root of a good title-forged
deed is null and void and no effect as bet. The parties, it
MAY nevertheless be the root of a good title

Perfection of a contract-failure of contract
Condition imposed on the performance of an obligation-
only gives the other party the option to either refuse to
proceed with the sale or to waive the condition

1459 The thing must be licit and the vendor must have
the right to transfer the ownership at the time it is
delivered.

Object of Contracts in general
All things which are not outside the commerce of men
including things may be the object of a contract

All rights which are not intransmissible may also be the
object of contract

Object of a contract of sale-the object of a contract is its
subject matter

Object must be licit or lawful
a.things
b.rights

classification of illicit things(void)
1.illicit per se-heinous, immoral, and wrongful ex house of
prosti
2.illicit per accidens-illegal only bec. There is a law
prohibiting it, ex sale of parcel of land to aliens

Transmissible Rights
Right to usufruct, right to redemption, assignment or sale
of cred, right to inheritance already acquired but not
future inheritance

Intransmissible rights-cannot be transmitted:right of
suffrage, right to hold a public position, right to support,
rmarital rights

Can services be the object of sale
-may be the object of certain contracts like contract for a
piece of work
-but services as object bawal because NOT DETERMINATE
THINGS thus, no transfer of ownership

Pari delicto-a void cantract due to the illegality of the
object shall be determined
-no action arises in equity or at law
-no affirmative relief of any kind will be given to one
against the other

Transfer of ownership is essential in sale
-seller must have THE RIGHT to transfer the ownership of
the thing.
-delivery may be actual or constructive
By implication-AT THE TIME OF THE DELIVERY,he is already
the owner of the thing or right
-if not punishment WARRANTY AGAINST EVICTION
-nobody can dispose of thing which does not belong to
him

Why seller in GF need not be required to be the owner of
the object of sale
-because kung required na owner of the object of the sale
at the perfection of the contract. Future goods could no
longer be the subject matter of sale
-no impediment, if abelonged to another person especially
if the seller is in good faith

Rule in Donation
Future prop cannot be the subject of donation unlike in
rule in sale

Art 1460. A thing is determinate when it particularly
designated or physically segrated from all others of the
same class.
The requisite that a thing to be determinate is satisfied at
the contract entered into, the thing is capable of being
made determinate without the necessity of a new or
further agreement bet. The parties

Object must be determinate, not generic-possible to
determinate the same without the need of anew contract
bet. Parties

Determinate thing
-particularly designated or phusically segregated from all
others
-ex specific lot consisting of a certain number of square
meters

Relaxation fo the rule determinate character of the thing
or object-as long as the object capable of being made
determinate without the need for entering into a new or
supplemental contract

1461 Things having a 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

Things with potential existence
Future fruits-expected to harvest
Wine-produced from the indicated existing vineyard
Sugar-harvested from a sugar plantation

Status of sale of things with potential existence
-depends upon the INTENTION of the parties
1.contract of sale is made dependent upon the existence
of things-contract is not effective
Emptio Rei Speratae
-a purchase of an
expected thing subject to
the condition the thing
will come to existence
-in case of doubt sa
emptio rei spate
commutative character of
the contract of sale

Emptio spei
-intended the contract of
sale to exist AT ALL
EVENTS
-WON the expected thing
will come into existence.
The contract becomes
aleatory in nature.
-purchase of hope or
expectancy
Ex: sale of genuine lotto

Void-fake pala yung lotto
ticket- this is called a vain
or impossible hope

Sale of a mere hope or expectancy when not valid
a.the hope or expectancy is vain
b. the parties intended that if the hope or expectancy will
not materialize the sale is void
ex. Use bingo Pagcor ticket

Art. 1462. The goods which form the subject of a contract
of sale may be 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.

Goods- chattels personal BUT NOT MONEY OR LEGAL
TENDER kahit REAL PROP
-includes fruits or crops

Kinds of Goods
a.existing goods-actually existing at the time of the
perfection of the contract
b. future goods-do not exist yet but have potential
existence

Ex:Goods to be manufactured like magazines or
newspapers, copra, goods acquired after the perfection of
the contract, Goods the acquisition of which is dependent
upon a contingency which may or may not happen

Delivery is understood-w/o delivery of the future goods at
the appointed time, the sale is not valied
-merely speculation w.o delivery

Art. 1463. The sole owner of a thing may sell an
undivided interest therein
-sole owner can sell an undivided interest therein like one-
half or any other aliquot part thereof
-co-ownership will result from the sale of an alquot part to
another person

Can a co owner of athing alienate his share or a portion of
his share in the co-ownerhip
-like the sole owner he can have full ownership of his
aliquot part. He may alienate, assign or mortgage it.

Selling prop to a dead person effect
-cannot transfer a lot, through deed of absolute sale bec
dead thus no civil personality or juridciacal capacticity

Art. 1464. In the case of fungible goods, there may be a
sale of an undivided share of a specific mass, though the
seller purports to sell and the buyer to buy a definite
number, weight or measure of the goods in the mass, and
though the number, weight or measure of the goods in
the mass is undetermined. By such a sale the buyer
becomes owner in common of such a share of the mass
as the number, weight or measure bought bears to the
number, weight or measure of the mass. If the mass
contains less than the number, weight or measure
bought, the buyer becomes the owner of the whole mass
and the seller is bound to make good the deficiency from
goods of the same kind and quality, unless a contrary
intent appears

FUNGIBLE AND TO NON FUNGIBLE GOODS
Purchase of an undivided share in specific mass of fungible
goods
FG-cannot be used w/o being consumed ex flour, wine and
gasoline

Sale of fungible goods-DEFINITE NUMBER, WEIGHT OR
MEASURE OF GOODS IN AN UNDETERMINED MASS OR
STOCK

If the aliquot part purchased from the seller is more than
the whole undetermined mass after it had been weighed
or emasures, then the buyer becomes the owner of the
entire mass.

FI the qliqout part is purchased LESS THAN the whole
undetermined mass, the purchaser will become the co
owner of the whole mass in the proportion

Art. 1465. Things subject to a resolutory condition may
be the object of the contract of sale.

Resolutory condition
-uncertain the happening or fulfillment of which
extinguishes a subsisting obligation
Effect:
-Subject to a resolutory condition is NOT the thing itself
but the TRANSACTION OF SALE. If the condition happens,
te sale becomes ineffective.

rt. 1466. In construing a contract containing provisions
characteristic of both the contract of sale and of the
contract of agency to sell, the essential clauses of the
whole instrument shall be considered.
-sale and agency essential terms and conditions of the
entire document
-it is determined by WHAT THE LAW DEFINES IT TO BE
Sale
-buyer pays for the price
of goods
-buyer becomes the
owner
-buyer cannot return the
good when the sale is
defective
-the seller warrants the
goods/property sold
-the seller has full
freedom to enter into any
terms or conditons on the
contract of sales
Agency
-agent does not pay for
the price. But merely
accounts for the proceeds
-agent does not become
the owner upon delivery
-agen returns goods if he
was not able to sell the
same
-agent does not make any
warranty as long as he
acts within his authority
and in the name of the
principal

-the agent mhst follow
the instruction of the
principal

Primordial test- WON SALEs or agency=INTENTION
Whole scope or effect of the language used
Agency= principal retained the ownership and the price
subject to its control despite the delivery

Sale on Consignment
-sale of goods through a dealer or agency
-goods are received by the consignee for sale

What form should a contract of agency to sell be entered
itno:
Any form, however the law requires a particular form of
validity it must be followed

Intent prevails over form:TRUE intent

Art. 1467. A contract for the delivery at a certain price of
an article which the vendor in the ordinary course of his
business manufactures or procures for the general
market, whether the same is on hand at the time or not,
is a contract of sale, but if the goods are to be
manufactured specially for the customer and upon his
special order, and not for the general market, it is a
contract for a piece of work.
Sale-artice being manufactured in the ordinary course of
his business
-whether the article is already finished or not
Piece of work-manufactured upon special order of the
customer ex: personalized shoes
-not habitually performed

Art. 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.
Applicability of the artice:partly in money and partly in
kind

RULES TO FOLLOW
1. determine the intention of the parties-if different yung
name ng contract sa intention. The intention will prevail
2. intention could not be determined. Consider the value
of the thing
More than the value of money-barter
Less than the value of the by any amount-sale

Money exchange rule
Local currency+foreign=purchase and sale
Local currency+ other denominations=barter

Art. 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
Certainty of purchase price-
DEFINITENESS=ESSENTIAL ELEMENT of a binding
agreement to sell personal prop.
-if the price is not certain the contract of sale cannot exist.

Effect if there is no specific amount stipulated as purchase
price:
GR: specified sa contract
Xpn:
a.determinable by making a reference to another thing
which by itself is certain
b.determination is entrusted to the judgement of a
specified person or persons
c. by reference to certain fact or or facts

I sell my house for the same price I paid for it
DESIGNATED a third person as the arbitrator of the price
of goods
I sell my milagrosa rice at the price similar to the brand
exactly 3 mos ago.

Price based on mere estimates:
The transaction lacks the requisites essential for the
perfection of the contract

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

Inadequacy of price
-a price insufficient to satisfy the real or actual price of the
object of sale.
-negligble or gross
-mere inadequacy does not affect the validity of acontract
of sale if the parties are in a position to form on
INDEPENDENT JUDGEMENT concerning the transaction

GR: Gross inadequacy of price does not affect a contract of
sale
Xpn:
Vitiated FUMI
Donation:
Gross inadequacy of price will affect the validity of the
contract of sale, kung real contract is one of donation
which is onerous

-the done may explain that the inadequate price is
supported by the donors liberality to maintain the validity
of the donation

Shocking to the Conscience
Leesion- more than of the value of the thing are
rescissible unless approved by the court
-used as a standard in determining the gross inadequacy of
price.
Ex: prop sold 10 percent of the actual value it is shocking
to the conscience

Hard Bargain effect-When both parties are in a position to
form INDEPENDENT JUDGEMENT concerning the
transaction, is not a sufficient ground for cancellation of a
contract.

Time to determine adequacy or inadequacy of the price-at
TIME OF THE EXECUTION OF THE CONTRACT

Inadequacy of price must be proved-proven by sufficient
evidence

When price paid is much higher:
Price paid much higher than the assess value + another
consideration(this consideration is paid more)=price is not
considered as inadequate

Gross Inadequacy of price in judicial sale:
Prop more than 60,000 pero nabenta P877 void for
inadequacy of price

Rule when the seller is given the right to redeem
-pwede gawin sa public auction
-the reason why the price is lessen, so its easier for the
owner to redeem the prop sold

NOTES:

How do you characterize a contract if the consideration is
partly paid in money AND partly paid in kind?
1
st
determine the intention
2
nd
determine the value of the goods (if the 1

cannot be determined)
Value of thing in kind > value of money partly used
for payment barter otherwise sale

If the consideration is entirely in kind OR entirely in money
dont distinguish between the 2 contracts.

Only classify something sale and barter only the
consideration
is both in money AND in kind. Only if the consideration
partly
in kind and in money will you determine the value of the
thing in kind over the value of the money.
value of the money > value of the thing in kind sale
otherwise barter
same value sale because you exchange something in
money
or its equivalent

SALES 4

What is the rule for the price to be considered certain?
It shall be sufficient if
1. it is determinable by making reference to another
thing which is certain; or
2. determination is left to the judgment of a specified
person or persons
3. it is certain with reference to certain fact or facts

Can the determination of the price be left to one of the
parties?
Yes, if there is consent. If none, it cannot be, because

Still there is no meeting of the minds.


What if there is no meeting of the price but there is
knowledge of the price but w/o objection? Is it validated
by
estoppel or laches?
No. If there is no consent, there is no meeting of the
minds. It will not be validated by estoppel or laches
because at the time you are asked to pay the price
you can say that you did not give your consent. And,
according to the civil code the price is determined by
the by one of the parties can only be valid if the
other party consents to it because this amounts to
meeting of the mind. Without that, one of the
essential elements of the contract therefore the
contract is void.

it is certain with reference to certain fact or facts
i.e. securities grains and liquids

What is the rule? What are those facts that will make the
price certain?
If it is certain on a definite day or on a particular
exchange or market; OR
If the price is fixed above or below the price on that
definite day, or particular exchange or market

What is a price?
It signifies sum stipulated as the equivalent of the
thing sold and also all the considerations and
incidents taken to fix the price or the value of the
thing put to the debit of the vendee and agreed by
him.

What are the requisites of a valid price?
- it must be -
1) certain
2) unconscionable or grossly inferior to the value of the
thing subject of the contract
3) real and not fictitious (absolutely simulated)

How can you impugn the price fixed by a 3
You can ask to court to impugn it.

On what grounds?
rd
person?
1) Bad Faith
2) mistake
3) violation of the instruction or standards, set by the
parties, to accurately fix the price

Can you make the price certain by referring it to a pension
plan?
i.e. U r receiving P10 k a month. Seller said, I am selling
this
house and the price will be the same as ur pension plan
that
you will get from the government. Is this a valid price?
The price is based on the pension that your parents will
get
from the govt in next 10 yrs.
That is certain if they will survive that year.

They will get only a certain sum only up to the point of
their
life. Meaning, if they die, i.e. 3 after the contract they will
only get the equivalent. This is no longer certain.
The basis actually of pension is life itself. Since life is not
certain, you cannot base the price on life pension.
Any price referred to a life pension cannot be certain
because
life itself is not certain.

What is inadequate price?
If it insufficient to satisfy the actual value of the
thing subject of the contract

What are the kinds of inadequate price?
1. Gross
2. Negligible immaterial / diminimis

If the inadequacy of the price is negligible is a contract
valid?
Yes, because it is practically immaterial.

i.e. if the value of the thing is P50 K the price to be paid is
P49K.

If the inadequacy is gross is the contract valid?
GR - gross inadequacy will not invalidate the contract
EXCPs
1. defect in the consent resulting to a vitiated
consent. The status is of the contract is voidable
/annullable.
2. if it can be inferred that the intention of the
parties is that of donation or sine other contract
it is considered, not a contract of sale but a
donation if it complies with the requisites of a
donation
3. shocking to the conscience that it would result
to the invalidation of a contract of sale.
4. If the guardian sold the property for less than
25% of its value then the ward suffers lesion,
the court may invalidate the price and fix
another. This can be a gauge on how much is
inadequate.
If less than of its value it can be
considered as grossly inadequate to shock
the conscience of the court.

Can the court invalidate the sale?
Is the 3rd
No, because there is a price only that it is grossly
inadequate. The court will fix the price based on
what is acceptable under the prevailing
circumstance.
rule absolute?
No. The exception applies only in a judicial sale.
It does not apply to ordinary sale, because there is
freedom
to contract and whatever they stipulate will validate the

contract. The presumption is that they voluntary agreed
on
the inadequate price and the court has no power to
invalidate such law between the parties

How is ordinary sale different from judicial sale?
There is no voluntariness. The debtor is forced part
with his property or to enter into the contract of
sale. Since there is no freedom to contract, court
may step in and protect your rights. If it is now unfair
because you already parted with your property and
you are still made to pay for more than the value of
the deficiency in the auction sale. The court can
enter into the picture to protect your rights and fix
the price.

Is it an absolute rule that in a judicial sale and the price is
shocking?
No.

It does not apply if the debtor is given the right to
redemption because it gives more freedom to the debtor
to
redeem the property in a much lower price.

Is there an exception in ordinary sale?
Yes. If the court based on EQUITY says that the price
cannot be considered, it can enter into the picture
and fix the price.

If the guardian sold the property for less than 25% of its
value
then the ward suffers lesion, the court may invalidate the
price and fix another. This can be a gauge on how much is
inadequate.
If less than of its value it can be considered as
grossly inadequate to shock the conscience of the
court.

Are all lesions invalid?
Not if it is approved by the court.

How do you question gross inadequacy of the price? It is
enough that you allege in the court that is less than of
the
value of the property and it is grossly inadequate as to
shock
the conscience of the court?
No. You have to present proof or evidence to show
the court that the price is shocking.

What is the status of the contract if the price is simulated?

What is a simulated price?
It is a fictitious price.

What are the classifications of simulated price
1) absolutely simulated parties did not intend to be
bound at all
2) relatively simulated - parties conceal their true
Agreement

Is an absolutely simulated contract absolutely void?
Yes

Is a relatively simulated contract also void?
No. The concealed agreement is binding upon the
parties and is enforceable IF it does not prejudice 3

person AND is not intended for any purpose not
contrary to law, morals, good customs, public order
and public policy.

Why is a simulated is price void?
Simulated price is tantamount to lack of price or
consideration. If there is no consideration then there
is no valid contract.

If the price is not paid, is the contract valid?
Yes. There is a price only that it was not paid.

If the parties made it appear that price was agreed upon
but
there was none, is the contract valid or void?
Void

If a forfeited or counterfeited currency was used as
payment,
is contract valid or void?
Valid, because the price is certain, the price is valid.
Only the mode of payment is void.

What if the parties agreed that the consideration shall be
paid
in a counterfeit or forfeited currency?
Valid because the price is certain what was agreed is
the mode of payment.
It such was the agreement it does not mean that
there was no agreed price.
HOWEVER if it is to the effect that the agreement to
pay in a counterfeit currency results to an
agreement that there is actually no necessity for
payment of a price that may result to simulated
price which will invalidate the contract of sale.

What is the remedy/action to invalidate a null and void
contract?
Declaration of nullity

What is the prescriptive period for such action?
If the contract is not valid from the start it is
imprescriptible, meaning you can bring an action for
declaration of nullity anytime. No prescriptive
period.

What is the status of the contract if he price cannot be
determined?
It is inefficacious, meaning it is ineffective.

Rd
What will happen if the thing was already appropriated by
the buyer before it was determined that the contract was
inefficacious?
Buyer shall be obliged to pay reasonable price.

The object has already been delivered, and was later
appropriated by the buyer however the price is uncertain
and
not paid therefore the contract is invalid. What is the
remedy
of the seller?
To demand the buyer to pay a reasonable price.

What is the standard of reasonable price?
Fair market value- Reasonable sum which the
property would command in a fair sale by a man
willing sell but not obliged to sell and by buyer
willing to buy but not obliged to buy.

What if the goods are still intact?
Seller can demand the return of the object subject to
the ___(150) damages that the seller would demand
from the buyer.

If the seller delivers a thing to buyer which is different
from
what the buyer demand and the latter accepts the thing,
how
much should he pay?
i.e. Object A for 100 K. the seller delivers object B, which
the
buyer knows is P200 K, he accepts delivery, ownership is
transferred. How much the buyer obliged to pay?
P200 K. Knowledge of the price and acceptance of
delivery is tantamount to a new contract.
There is a price certain (P100 K) but is there a determinate
thing?
None there was a no delivery. It is a perfected
contract subject to damages. But how much can you
be compelled for the delivery? P200 K. It is a new
contract, it is new accepted offer for a definite thing.
So you are required to pay P200 K.

You can compel the buyer to pay because he accepted it.

He should have rejected delivery of object B because it is
not
the object of their contract, therefore there can never be
demand for P200 K.

But the point, the sale is valid because it is in effect an
accepted offer of a new thing. Since he accepted he can be
obliged to pay P200 K.

Is the seller released from his responsibility from the 1

contract?
No. The contract is perfected. The remedy is
damages.
st