TITLE VI – SALES another.

The seller will deliver and

transfer a determinate thing to the
INTRODUCTION
buyer and the latter will pay an
Sources of the Law of Sales ascertained price for equivalent
therefor.
1. Spanish Civil Code 2. Consensual – it is perfected by mere
2. Uniform Sales Law adopted in the consent
majority of the states in US. 3. Commutative – the thing sold is
3. Code of Commerce considered the equivalent price paid
4. Supreme Court decisions and the price paid is the equivalent of
5. Special laws the thing sold.
ART. 1458. By the contract of sale, one of NOTE: Its opposite is aleatory contract
the contracting parties obligates himself to where the consideration is not equivalent
transfer the ownership of and to deliver a of what has been received like the
determinate thing, and the other to pay purchase of a lotto ticket.
therefor a price certain in money or its
equivalent. 4. Onerous – the thing sold is conveyed
in consideration of the purchase price
A contract of sale may be absolute or and the purchase price is paid in
conditional. consideration of the conveyance of
NOTE: The Civil Code provision on sale is, the thing delivered.
in effect a “catch all” provision which 5. Principal – its existence does not
effectively brings within its grasp a whole depend upon the existence and
gamut of transfers whereby ownership of a validity of another contract
thing is ceded for a consideration. 6. Nominate – it has a specific name
given by law – “sale”
Phases or Stages of a Contract of Sale
1. Preparation, conception or
generation – the period of negotiation Absolute and Conditional Sales; Concepts;
and bargaining, ending at the moment Distinctions
of agreement of the parties NOTE: A Deed of Conditional Sale and a
2. Perfection or birth of the contract Deed of Absolute Sale cannot co-exist
3. Consummation or death – the
fulfillment or performance of the Absolute sale
terms agreed upon in the contract
o When no condition is imposed and
NOTE: Ownership is transferred not by ownership passes to the vendee upon
contract but by tradition or delivery. delivery of the thing subject of the
sale
Characteristics of Features of Contract of o There is no stipulation in the deed that
Sale title to the property sold is reserved in
1. Bilateral – both oarties are obliged to the seller until the full payment of the
fulfill reciprocal obligations to one price
 o There is no stipulation in the deed a. Meeting of the minds of the
giving the vendor the right to seller and buyer, that is, the
unilaterally resolve the contract the seller will deliver and the
moment the buyer fails to pay within buyer will pay the purchase
a fixed period price therefor (consent)
b. Object which is certain and
Conditional Sale
determinate
o When the sale is made subject to a c. Price certain. This is the cause
certain contingency or condition or the consideration. It can be
o The ownership is not to vest in the in money or its equivalent.
buyer until the happening of a
NOTE: Goods and merchandise cannot be
condition (usually full payment of the
the equivalent of money because that will
price)
constitute barter.
o A common form of conditional sale is
the so-called “contract to sell” where NOTE: Manner of payment of the purchase
it is the transfer of ownership, not the price is an essential element of a contract
perfection of the contract that is
No Price Paid, Effect
subjected to a condition
- it makes the sale void
NOTE:
o Failure to comply with the condition
imposed on the perfection of a 2. Natural Elements – those which are
contract will result in the failure of a inherent in the contract and are
contract deemed to exist in the contract of sale
o Failure to comply with the condition in the absence of clear contrary
imposed on the performance of an agreement
obligation gives the other party the a. Warranty against eviction
option either to refuse to proceed with b. Warranty against hidden defects
the sale or waive the condition
Absence of Notarization, Effect
When Conditional Sale is Considered and
Absolute Sale - from a civil law perspective, the
absence of notarization of a deed of sale
- a deed of sale is absolute in nature would not necessarily invalidate the
although denominated a “conditional sale” transaction evidenced therein
absent such stipulations reserving title to the
vendor until full payment of the purchase - a deed of sale validly notarized
price, nor any stipulation giving them the would still be classified as a private
right to unilaterally rescind the contract in document where it was not properly
case of non-payment. acknowledged but merely subscribed and
sworn to by the jurat.
Elements of Contract of Sale
1. Essential elements
Failure to Pay Consideration Contract To Sell, meaning
Distinguished from Lack of Consideration
- a bilateral contract whereby the
o Failure to pay consideration results in prospective seller, while expressly reserving
a right to demand fulfillment or the ownership of the subject property despite
cancellation of the obligation under delivery thereof to the prospective buyer,
an existing valid contract binds himself to sell the said property
o Lack of consideration prevents the exclusively to the prospective buyer upon
existence of a valid contract fulfillment of the condition agreed upon.
Contract of Sale, effect
. - in a contract of sale, ownership is
vested on the buyer whether or not
full payment is made
Failure of Buyer to Pay Price in Contract
of Sale, effect
- it does not cause the ownership to
revert to the seller unless bilateral contract of
sale is first rescinded or resolved
Remedy of the seller in case of
nonpayment of price in a contract of sale
o Demand fulfillment; or
o Rescission of the contract there being
a breach of the obligation
NOTE: Simulated contract stating there is
consideration where there is none is void ab
initio
Effects of Absence of Proviso
- a 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 Objects of Contracts in General
- if there is doubt whether the parties - all things which are not outside the
intended a suspensive condition or a commerce of man, including future things
suspensive period for the payment of the
- all rights which are not
agreed price, the doubt shall be settled in
intransmissible may also be the object of
favor of the greatest reciprocity of interest
contracts
Contracts of Sale in the Form of Lease
Object of a Contract of Sale
- where in a contract of lease, the
- the object of contract is its subject
lessee is given the option to buy the property
matter
for a small consideration at the end of the
term provided all installments are paid, with NOTE: object must be licit or lawful
a stipulation that if the rent be paid
throughout the term, title shall vest in the Classification of Illicit Things
lessee, such contract is a lease in name only. 1. Illicit per se – a thing is illicit per se
Actually, it is a contract of sale. when by its nature it is heinous,
Can there be a valid sale against the will of immoral and wrongful. Ex: a house of
the owner of the property? Yes, prostitution
2. Illicit per accident – when it is illegal
1. When property is subjected to only because there is a law
expropriation prohibiting it. Ex: the sale of parcel of
2. In case of ordinary execution sale land to a disqualified alien is void
conducted under Section 15, Rule 39. because it is prohibited by the
1997 Revised Rules of Civil Constitution
Procedure
3. In case of judicial foreclosure sale NOTE: No contract may be entered into upon
under Rule 68 future inheritance except in cases expressly
4. In case of extra-judicial foreclosure authorized by law
sale under Act 3135 as amended Can services be the subject of sale?
NOTE: Consent when reluctantly given is not No. Services are not determinate things and
vitiated consent. no transfer of ownership is available in
Forged Deed – may be defined as an services
instrument which purports to have been Object is Illicit, effect
executed by the person or person whose
signatures appear thereon, but which, in fact, - the contract is void
was not executed, and the signatures thereon NOTE: One can sell only what he owns or is
has been merely imitated so as to give them authorized to sell, and the buyers can acquire
the deceptive appearance of genuineness. no more than what the seller can transfer
ART. 1459. The thing must be licit and the legally
vendor must have a right to transfer the
ownership thereof at the time it is delivered.
Reason why seller in good faith need not be The sale of vain hope or expectancy
owner of the object of sale is void.
- if the seller is required to be the Things with potential existence – a thing,
owner of the object of the sale at the although not yet in actual existence but which
perfection of the contract, “future goods” may reasonably come into existence for
could no longer be the subject matter of sale. being the natural increment of something
There is no impediment for the sale of a thing already in existence is said to have a potency
which at the time of the perfection of the to exist which can be the subject matter of
contract belonged to another person sale
especially if the seller is in good faith.
Illustrations of Things with Potential
BOTTOMLINE: What matters is that the Existence
seller owns the object of sale at the time of
1. Future fruits expected to be harvested
delivery, not at the time of the perfection of
from existing fruit-bearing trees like
the contract.
mangoes, lanzones, durian, etc.
ART. 1460. A thing is determinate when it is 2. Wine expected to be produced from
particularly designated or physically an indicated existing vineyard
segregated from all others of the same class. 3. All the forthcoming chicks hatched
from a particular poultry farm
The requisite that a thing be
4. Sugar expected to be harvested from
determinate is satisfied if at the time the
a sugar cane plantation
contract is entered into the thing is capable of
5. Expected goodwill of a business
being made determinate without the necessity
enterprise
of a new or further agreement between
parties. Status of Sale of Things with Potential
Existence
Thing or Object must be determinate, Not
generic 1. If a contract of sale is made dependent
upon the existence of the things such
- the object of every contract must be
that if it did not come into existence,
determinate as to its kind. However, the fact
the contract is not effective and the
that the quantity is not determinate shall not
buyer will have no obligation to pay
be an obstacle to the existence of the contract,
the price
provided it is possible to determine the same
without the need of a new contract between Emptio rei speratae – a purchase of an
the parties expected thing subject to the condition that
the thing will exist
ART. 1461. Things having a potential
existence may be the object of the contract of 2. If the contracting parties intended the
sale. contract of sale to exist at all events,
i.e., whether or not the expected thing
The efficacy of the sale of a mere
will come into existence such that the
hope or expectancy is deemed subject to the
buyer will have to pay the purchase
condition that the thing will come into
existence.
 price, the contract becomes aleatory Example of Future Goods Contemplated
in nature. Under the Article
Emptio spei – the purchase of a hope or 1. Goods to be manufactured yet such as
expectancy subscription to future issues of
magazines or newspapers
NOTE: If there is doubt whether the sale is
2. Copra to be manufactured out of
emptio rei speratae or emptio spei, the
coconuts to be gathered from a
presumption is in favor of emptio rei speratae
specific coconut plantation
because it is more in keeping with the
3. Goods acquired after the perfection of
commutative character of the contract of sale
the contract like a realty which the
Sale of a mere hope or expectancy, When seller does not opt to own but which
not valid he expects to acquire
4. Goods the acquisition of which is
- The sale of a mere hope or dependent upon a contingency which
expectancy is valid even if the thing did not may or may not happen
materialize unless (a) the hope or expectancy
is vain; or (b) the parties intended that if the Delivery is understood
hope or expectancy will not materialize, the
- without the delivery of the future
sale is void.
goods at the appointed time, the sale is not
ART. 1462. The goods which form the valid
subject of a contract of sale may be either
ART. 1463. The sole owner of the thing may
existing goods, owned and possessed by the
sell an undivided interest therein.
seller, or goods to be manufactured, raised, or
acquired by the seller after the perfection of BOTTOMLINE: If you are the sole owner,
the contract of sale, in this Title called “future you may sell the entire thing
goods.”
Can a co-owner of a thing alienate his
There may be a contract of sale of share or a portion of his share in the co-
goods whose acquisition by the seller ownership?
depends upon a contingency which may or
- just like a sole-owner, a co-owner
may not happen.
shall have full ownership of his aliquot part.
Goods, definition He may aliquot, assign, or mortgage it except
only when personal rights are involved.
- all chattels personal but not things in
action or money of legal tender in the Selling property to a dead person, effect
Philippines. The term includes growing fruits
- a seller cannot transfer title over a
or crops. Real property is not included in the
lot, through a Deed of Absolute Sale, to a
term “goods”
person who has already died, as the deceased
Kinds of Goods has no more civil personality or judicial
capacity
o Existing goods owned or possessed
by the seller ART. 1464. In the case of fungible goods,
o Future goods there may be a sale of an undivided share of
a specific mass, though the seller purports to NOTE: What is really subject to a resolutory
sell and the buyer to buy a definite number, condition is not the thing itself but the
weight or measure of the goods in the mass, transaction of sale.
and though the number, weight or measure of
EXAMPLE:
the goods in the mass is undetermined. By
such a sale, the buyer becomes the owner in C got loan from B. As security, C mortgaged
common of such a share of the mass as the his land to B. The loan has matured but C
number, weight or measure bought bears to failed to settle his obligation. B foreclosed
the number, weight or measure of the mass. the mortgage extra-judicially under Act
If the mass contains less than the number, 3135. The property was sold at public auction
weight or measure bought, the buyer and B is the highest bidder. C has one year to
becomes the owner of the whole mass and the redeem the property from B from the date of
seller is bound to make good the deficiency the registration of the Sherriff’s sale (or
from goods of the same kind and quality, notary sale). If C redeems the property within
unless contrary intent appears. one year, the sale to B is automatically set
aside because the resolutory condition (to
Applicability: Theis Article applies to
redeem) was fulfilled.
fungible and not to non-fungible goods.
ART. 1466. In construing a contract
Fungible goods – those which cannot be
containing provisions characteristic of both
used without being consumed
the contract of sale and of the contract of the
SUMMARY: agency to sell, the essential clauses of the
whole instruments shall be considered.
In case of sale of fungible goods,
when the purchase purports to be in definite
number, weight, or measure of goods in an
undetermined mass or stock, the rules to
follow are:
1. If the aliquot part purchased from the
seller is more than the whole
undetermined mass after it had been
weighed or measured, then the buyer
becomes the owner of the entire mass.
2. If the aliquot part purchased is less
than the whole undetermined mass,
the purchaser will become the co-
owner of the whole mass
ART. 1465. Things subject to a resolutory
condition may be the object of the contract of
sale.
Primordial Test be inefficacious, unless the parties
subsequently agree upon the price.
Sale – if the agent intended to acquire
ownership of the goods upon delivery to him If the third person or person acted in
bad faith or by mistake, the courts may fix the
Agency – if the principal remains the owner
price.
of the goods and has the right to control the
sales, fix the price and terms, demand and Where such third person or persons
receive the proceeds minus the agent’s are prevented from fixing the price or terms
commission 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
Sale on consignment – a sale of goods the buyer, as the case may be.
through a dealer or agency. Title of the goods
does not pass to the consignee
NOTE: Unless the price is certain, a contract
ART. 1467. A contract for the delivery at a
of sale cannot exist. The certainty of the price
certain price of an article which the vendor in
is an essential element of the contract of sale.
the ordinary course of his business
manufactures or procures for the general Even if there is no specific purchase rpice
market, whether the same is on hand at the stated in a contract of sale, it is sufficient
time or not, is a contract of sale, but if the
1. if it is determinable by making
goods are to be manufactured specially for
refernce to another thing which is
the customer and upon his special order, and
itself certain; or
not for the general market, it is a contract for
2. if the determination is entrusted to the
a piece of work.
judgment of a specified person or
ART. 1468. If the consideration of the persons; or
contract consists partly in money, and partly 3. by reference to a certain fact or facts
in another thing, the transaction shall be such as the one referred to in Art.
characterized by the manifest intention of the 1472.
parties. If such intention does not clearly
Price based on mere estimates, effect
appear, it shall be considered a barter if the
value of the thing given as a part of the - where the figures referred to as
consideration exceeds the amount of the prices are mere estimates, the transaction
money or its equivalent; otherwise, it is a lacks the requisites essential for the
sale. perfection of the contract
ART. 1469. In order that the price may be ART. 1470. Gross inadequacy of price does
considered certain, it shall be sufficient that it not affect a contract of sale, except as it may
be so with reference to another thing certain, indicate a defect in the consent, or that the
or that the determination thereof be left to the parties really intended a donation or some
judgment of a specified person or persons. other act or contract.
Should such person or persons be
unable or unwilling to fix it, the contract shall
Inadequacy of price – a price insufficient to If the contract is absolutely simulated, the
satisfy the rea or actual price of the object of contract is void.
the sale
If the simulation is merely relative, the
Exceptions to General Rule parties or any of them, may establish by proof
that the act is one of a donation or some other
1. if consent is vitiated such as by fraud,
act or contract. In which case, the concealed
mistake, violence, intimidation or
transaction will be binding
undue influence
2. If the parties intended a donation or ART. 1472. The price of securities, grain,
some other act or contract liquids, and other things shall also be
3. If the price is so low as to be shocking considered certain, when the price fixed is
to the conscience, the sale shall be put that which the thing sold would have on a
aside definite day, or in a particular exchange or
market, or when an amount is fixed above or
Time to Determine Adequacy or
below the price on such day, or in such
Inadequacy of Price
exchange or market, provided said amount be
- in determining the adequacy or certain.
inadequacy of price, the price obtaining at the
Price of securities, grains, liquids, and
time of the execution of the contract shall be
things, When Considered Certain
considered, and not the price obtaining
thereafter. 1. When the price fixed is that which the
thing would have on a definite day, or
When price paid is much higher, effect
in a particular exchange or market
- if the price paid is much higher than 2. When an amount is fixed above or
the assessed value of the property, and when below the price of such day, or in such
there is another consideration like liberality exchange or market, provided said
or filial love, as the sale of a property by the amount be certain.
father to his daughter where the latter paid
more, the price must not be construed as
inadequate as to shock the conscience of the
court.
ART. 1471. If the price is simulated, the sale
is void, but the act may be shown to have
been in reality a donation.
Simulated price, effects
- The Civil Code has classified
simulated contracts into
a. Absolute – when the parties do not
intend to be bound at all
b. Relative – when the parties conceal
their true agreement