>​Definition of Sale ​(1458)

● A contract whereby one of the contracting parties obligates himself to transfer the
ownership, and to deliver the possession of a determinate thing, and the other party
obligates himself to pay therefor a price certain in money or its equivalent.
● Nature of Obligations Created in a Sale
○ Obligations of the seller:
■ Transfer of ownership
■ Deliver the possession of the subject matter
○ Obligation of the buyer
■ Pay the price
○ Both sets of obligations are real obligations or “obligations to give”
○ Obligations “to do” and “not to do” cannot be enforced through actions of specific
performance because of the public policy against involuntary servitude.
○ Defaulting party in a sale cannot insist on just paying damages when the
non-defaulting party demands performance (1165)
● Subject Matter of Sale
○ Generic objects which are at least determinable at the time the contract is entered
into; capable of being determinate at the point of perfection (1460)
● Essential Elements of Contract of Sale
○ 3 elements
■ Consent - meeting of the minds to transfer ownership in exchange for the
price
■ Subject Matter
■ Price- certain money or its equivalent
○ The absence any of the elements negates the existence of a perfected contract of
sale
○ When all elements are present, but there is a defect or illegality in any of the
elements, the resulting contract is either:
■ Voidable- when defect constitutes a vitiation of consent
■ Void
● Natural Elements
○ 2 elements
■ Warranty against eviction
■ Warranty against hidden defects
○ Those which are inherent in the contract and which in the absence of any contrary
provision are deemed to exist in the contract
● Accidental elements
○ Those which may be present or absent in the stipulation
 ● There can be a valid sale against the will of one of the parties in expropriation and
foreclosure proceedings. Even if there is no meeting of the minds, the other party is
compelled by law to enter into a contract.
● Stages in the Life of Sale
○ Policitacion/ negotiation or preparation
■ Indication of interests in the contract
○ Perfection
■ Until a sale is perfected, it cannot serve as an independent source of
obligation
■ Concurrence of the essential elements
○ Consummation
■ Begins when parties perform their respective undertaking under the
contract of sale.
>​Essential Characteristics of Sale
● Nominate and Principal
○ Given a particular name by law “Law on Sale”
○ Can stand on its own without depending on another contract for its validity
● Consensual
○ Perfected by mere consent
○ From the moment of perfection of the sale, the parties may reciprocally demand
performance (1475)
○ Non-performance merely becomes the legal basis for the remedies of either
specific performance or rescission with damages in either case
○ Party who alleges it must show its existence by competent proof
○ If one of the parties is unable to read or if contract is in a language not understood
by him, and the person enforcing the contract must show that the terms thereof
have been fully explained to the former (1332)
○ Even the delivery and taking possession of the subject matter by the buyer with
the knowledge of the seller, there is no perfected contract of sale when meeting of
the minds is incomplete, there being no agreement yet on the final price
● Bilateral and Reciprocal
○ Imposes obligations on both parties to the relationship
○ Obligation of one is dependent on the other
○ Performed simultaneously
○ Right of rescission of a party to an obligation is predicated on a breach of faith by
the other party who violates the reciprocity between them
● Onerous
○ Imposes a valuable consideration as a prestation
● Commutative
○ Thing of value is exchanged for equal value
 ○ No requirement that the price be equal to the exact value
○ Required is that seller believes that what was received was of the commutative
value of what he gave
○ Gross inadequacy of price does not affect ordinary sale (1470)
○ aleatory
■ By way of exception
■ Thing may not be equivalent of consideration (lottery ticket)
● Sale is Title and Not Mode
○ Sale creates obligation to transfer ownership and deliver possession
○ On its own, sale is not a mode that transfers ownership
○ Delivery of subject matter transfers ownership
Kinds of Sale as to the nature of the subject
● Sale of real property
○ Cannot be moved, and anything attached to the land
● Sale of personal property
○ Can be moved and is subject to ownership
Kinds of Sale as to Quantity
● Wholesale
○ Large in quantity
○ Resold unaltered for a profit
○ Purchaser has no use of the goods or it is in excess of his requirement
○ Seller must be habitually engaged in selling a large number of quantities
● Retail
Kinds of sale based on validity
● Valid
● Recissible
○ Art. 1381.​ The following contracts are rescissible:
○ (1) Those which are entered into by guardians whenever the wards whom they
represent suffer lesion by more than one-fourth of the value of the things which
are the object thereof;
○ (2) Those agreed upon in representation of absentees, if the latter suffer the
lesion stated in the preceding number;
○ (3) Those undertaken in fraud of creditors when the latter cannot in any other
manner collect the claims due them;
○ (4) Those which refer to things under litigation if they have been entered into
by the defendant without the knowledge and approval of the litigants or of
competent judicial authority;
○ (5) All other contracts specially declared by law to be subject to rescission.”
● Voidable - ​“An agreement which is enforceable by law at the option of one or more of
the parties thereto, but not at the option of the other or others, is a voidable contract.”
 ● Unenforceable
● Void-The section 2(j) of the Act defines a void contract as “A contract which ceases to be
enforceable by law becomes void when it ceases to be enforceable”. This makes all those
contracts that are not enforceable by a court of ​law​ as void.

Classifications of illicit objects

● Illicit per se- of its nature
● Illicit per accidens- made illegal by provision of law
Sale based on proximate inducement
● Sale by description- relies on depiction of seller
● Sale by sample- bulk is the same quality as the sample
● Sale by sample and description- combination of both

>if the seller fails to deliver the sale, remedy is action for damages based on breach of warranty
against eviction
>Services cannot be the object of a contract of sale because there can be no transfer of ownership
>Article 1461: things having potential existence (based on intention)
● Emptio spei- sale of the hope itself
● Emptio rei sperati- sale of an expected future thing
● Sale of vain hope or expectancy is void
● Valid- if intention is whether or not thing will exist
● Void- if intention is dependent upon the existence of a thing with potential existence
>Article 1462: Kinds of future goods
● Manufactured
● raised/acquired
>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 based on intention
● Fungible- capable of substitution
● non-fungible
>Test whether one is a sale or an agency to sell
● Test of ownership
● Test of relationship
>Requisites of valid price
● Real
● Certain
● Not gravely inferior

>Cession
 ● that which consists in the abandonment of all the property of the debtor for the benefit of
his creditors in order that the latter may apply the proceeds thereof to the satisfaction of
their credits.
● Mode of payment whereby the debtor assigns his property to his creditors on the matter
of which to acquire the right on the thing and to apply the proceeds to the debt of the
debtor
● After the sale, the proceeds shall be applied to the debt
● There must be 2 or more creditors
● All the debtors properties are conveyed
● Takes place only when debtor is insolvent
○ Presumption is that the asset of the debtor is less than his liabilities
○ Insolvency is a requirement for the abandonment of all one’s property
● Releases debtor for the net profits of things ceded or assigned
● Creditors do not become owners
>Dation in payment
● One creditor is sufficient
● Not all properties are conveyed
○ One of the properties is enough for as long as the value of the property is
sufficient to answer for the debts
● Insolvency is immaterial
● Creditor becomes the owner
>Contract to sell
● Bilateral agreement
● Seller, while reserving the right on ownership of the property, binds himself to sell the
property upon payment of the purchase price by the prospective buyer
● Obligation of the prospective seller is not to get the transfer of ownership, but the
obligation to sell
● Upon compliance of the prospective buyer to the purchase price, the seller is bound to
enter into a contract of sale which requires transfer of ownership
>seller may be held liable for estafa if he is guilty of deceit in selling a thing which he cannot
own or which belongs to someone else
● There is no deceit or fraud if one honestly believes that he can acquire ownership of the
property with sufficient time before the delivery
>determinate thing
● Particularly designated or physically segregated from all others of the same class
● Satisfied if at the time the contract is entered into, the thing is capable of being made
determinate without the need of a new agreement between the parties
>money of legal tender in the Philippines cannot be subject of goods because the law does not
consider it as a good
>contract of a piece of work- if it is specially manufactured for the buyer and not readily
available in the general market, should not be available for general consumption
>only licit things can be a subject of a contract of sale
>rights can be subject of sale
● Transmissible rights
○ Inheritance- only when already made. Future inheritance cannot be transferred
>Kinds of goods that may be an object of a contract of sale
● Existing goods
○ Presumed that seller has possession of the object
● Future goods
○ Goods to be manufactured
○ Thoses which are to be raised
○ Goods to be acquired by the seller after the perfection of the contract
■ Anything promised which the seller did not yet have ownership
■ Anything seller may acquire after the perfection of the contract
○ Thing whose acquisition depends upon a contingency which may or may not
happen
>Kinds of delivery
● Actual- physical delivery of actual object to buyer
● constructive - symbolic delivery (giving of title)
>basis of the distinction between a consumable and non-consumable is the nature of the thing
>basis of the distinction between fungible and non-fungible is the intention
>real property is non-consumable but may be considered fungible
>a consumable thing may be non-fungible if the intention of the parties are for them to be
returned (exhibition)
>there may be sale of undivided share of specific mass although the seller purports to sell and
the buyer (?) [cavans of rice example]

>sale v agency
sale agency

Seller receives purchase price Agent receives payment in trust for the seller.
It is his obligation to deliver the price to the
seller

Buyer becomes owner upon delivery Delivery to the agent does not make the agent
the owner of the object

If object is defective, buyer cannot return Agent can return goods

object, his remedy is indemnity for damages

>test to determine whether contact is sale or agency

 ● Determination of whether there is acquisition of ownership
● Resulting relationship from contact of transaction
○ Sale resulting in a debtor creditor relationship
○ Agent is not liable to the seller because he merely acts on his behalf
>characterization of a contract if consideration is partly in money, and partly in kind
● First determine intention
● ^ if cannot be determined, Determine the value of goods

>when price to be considered certain is sufficient:

● Determinable by making reference to another thing which is certain
● Determination is left to the judgement of a specified person or persons
● Certain with reference to certain fact or facts
○ Securities, grains and liquids
>determination of the price can be left to one of the parties only if there is consent. If none then
there is no contract because there is no meeting of the minds
>facts that make price certain
● Certain on a definite day or on a particular exchange or market
● Price is fixed above or below the price on that definite day
>Price
● Sum stipulated as the equivalent of the thing sold and 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
>Requisites of valid price
● Certain
● Unconscionable or grossly inferior to the value of the thin subject of the contract
● Real and not fictitious
>you can ask the court to impugn the fixed price on the grounds of
● Bad faith
● Mistake
● Violation of the instruction or standards set by the parties to fix the price
>inadequate price
● Insufficient to satisfy the actual value of the thing subject of the contract