A.

Sale distinguished from other contracts

1. DONATION

Donation Art. 725. DONATION is an act of

liberality whereby a person disposes gratuitously
of a thing or right in favor of another person,
who accepts it.

3. Contract for a Piece of Work

Contract for a Piece of Work

Art. 1713. By the CONTRACT FOR A PIECE-

OF-WORK, the contractor binds himself to
execute a piece of work for the employer, in
consideration of a certain price or compensation.
The contractor may either employ only his labor
or skill, or also furnish the material
Notes:
Contract of Sale or Contract for a Piece of
 When the price of a sale is simulated, the sale
Work
itself may be void, “but the act may be shown to
have been in reality a donation or some other act Article 1467. A contract for the delivery at a
or contract. (Art. 1471) certain price of an article which the vendor in
the ordinary course of his business manufactures
 Even when the donor imposes upon the donee or procures for the general market, whether the
a burden, but which is less than the value of the same is on hand at the time or not, is a contract
thing given, there is still a donation. (Art. 726) of SALE,

but if the goods are to be manufactured

specially for the customer and upon his special
2. Barter and Exchange
order, and not for the general market, it is a
Barter Article 1638. By the contract of barter or CONTRACT FOR A PIECE OF WORK.
exchange one of the parties binds himself to give
Tests for Distinguishing Sale from Contract
one thing in consideration of the other's promise
for a Piece-of-Work (Art. 1467)
to give another thing.
(a) Manufacturing in the ordinary course of
Sale Article 1458. By the contract of sale one of
business to cover sales contracts; and
the contracting parties obligates himself to
transfer the ownership and to deliver a (b) Manufacturing upon spe ecial order of
determinate thing, and the other to pay therefor a customers, to cover contracts for piece-of-work.
price certain in money or its equivalent.
Case in sarona file

4. Agency to Buy and Sell

Art. 1868. By the contract of agency, a person

binds himself to render some service or to do
something in representation or on behalf of the
principal, with the consent or authority of the
latter.
Statutory Rule
 A contract of agency is one that essentially
In construing a contract containing provisions
establishes a representative capacity in the
characteristic of both the sale and of the contract
person of the agent on behalf of the principal,
of agency to sell, the essential clauses of the
and one characterized as highly fiduciary.
whole instrument shall be considered. (Art.
1466)

5. Dacion en Pago

Dation in payment

 one whereby property is alienated to the

creditor in full satisfaction of a debt in money

 constitutes the delivery and transmission of a

thing by the debtor to the creditor as an accepted
equivalent of the performance of the obligation

 governed by the Law on Sales, since it

essentially involves the transfer of ownership of
a subject matter
6. Lease 8. Chattel Mortgage

In a contract of lease, the lessor binds himself to

give to another (the lessee) the enjoyment of use
of a thing for a price certain, and for a period
which may be definite or indefinite. (Article
1643)

A conditional sale may be made in the form of a

“ease with option to buy” as a device to
circumvent the provisions of the Recto Law
governing the sale of personal property on
installments. It may be stipulated in such
contract that the lessee has the option to buy the
leased property for a small consideration at the
end of the term of the lease, provided that the
rent has been duly paid; or if the rent throughout
the term had been paid, title shall vest in the
lessee. Such contract are really conditional sales
and are deemed leases in name only.

Discussion:; However, no lease for more than

ninety-nine years shall be valid.

7. DISTINGUISHED FROM CONTRACT TO

SELL

A contract to sell is akin to a conditional sale

where the efficacy or obligatory force of the
vendor's 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. The suspensive condition is commonly
full payment of the purchase price.

In a contract to sell, the ownership is reserved

in the seller and is not to pass until full payment
of the purchase price is made. Full payment is a
positive suspensive condition. However, the title
remains in the vendor if the vendee does not
comply with the condition precedent of making
payment at the time specified in the contract.
B. ELEMENTS OF A CONTRACT OF Article 46. Juridical persons may acquire and
SALE possess property of all kinds, as well as
incurobligations and bring civil or criminal
Elements of a Contract of Sale actions, in conformity with
1) Consent Incapacity in relation to a contract of sale There
are 2 kinds of capacity: 1) Absolutely
2) Subject Matter or Object
incapacitated persons and 2) relatively
3) Consideration or Price incapacitated persons

1. CONSENT PAGE 56

CONSENT  is the first essential element in a

contract of sale. Every person having legal
2. SM OR OBJECT (PAGE 80)
capacity to obligate himself may validly enter
into a contract of sale whether as seller or Requisites of a Valid Subject Matter:
buyer. When we say capacity to act, obviously,
we refer to the person who has the power to do  It must be existing (having a potential
acts with legal effect or the power to obligate existence), a future thing, or een contingent
himself. (subject to a resolutory condition).

Article 1489. All persons who are authorized in  It must be licit.

this Code to obligate themselves, may enter
into a contract of sale, saving the modifications  It must be determinate or at least
contained in the following articles. x x x determinable.

So all those who are authorized by the civil

code may enter into a contract of sale. So not
1 REQUISITE
just natural persons, but even juridical persons.

 Even juridical persons may enter into a

contract of sale. It can be a buyer, it can be a
seller, it can own even the estate properties.

Article 44. The following are juridical persons:

(1) The State and its political subdivisions; (2)
Other corporations, institutions and entities for
public interest or purpose, created by law; their
personality begins as soon as they have been
constituted according to law; (3) Corporations,
partnerships and associations for private
interest or purpose to which the law grants a
juridical personality, separate and distinct from
that of each shareholder, partner or member
 Article 1347. All things which are not outside
the commerce of men, including future things,
may be the object of a contract. All rights which
are not intransmissible may also be the object of
contracts.

No contract may be entered into upon future

inheritance except in cases expressly authorized
by law.

All services which are not contrary to law,

morals, good customs, public order or public
policy may likewise be the object of a contract.

3 REQUISITE
CONTINGENT
Article 1460. A thing is DETERMINATE when
it is particularly designated or physical
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
2 REQUISITE further agreement between the parties.

2) LICIT Determinate Subject Matter

Article 1459. The thing must be LICIT and the  A thing is DETERMINATE when it is
vendor must have a right to transfer the particularly designated or physical segregated
ownership thereof at the time it is delivered. from all others of the same class.
2 Requisites: Also take note that on the 2nd paragraph of
Article 1458, a contract of sale may be absolute
 Capacity to Segregate Test – If at the or conditional.
perfection of the sale, the thing is capable of
being made determinate ; and When we say conditional, it may be subject to a
suspensive or resolutory condition. The
 No Further Agreement Test – Without the condition that is referred to in 1458(2) refers to
necessity of a new or further agreement between the perfection of the contract. Conditions may
the parties. refer to the perfection of the contract or to the
performance of the obligations arising from the
contract. In 1458(2), the happening of the
condition would give rise to the perfection of the
contract of sale.

Natural Elements of a Contract

of Sale They may or may not exist depending on the
condition
We also have natural elements of a contract.
These are elements of a contract which exist
even in the absence of an agreement of the
parties, because the law provides that these Absolute and conditional sale
elements exist, nevertheless. In a contract of
sale, we have implied warranties against Gr 80645(1993)
division and implied warranties against hidden Gr 165881 (2006)
defects. Even if the parties did not agree to such,
the law deems it existent in every contract of Gr 118347 (1996) MUST READ
sale.
NABUS V. PECSON

CRUZ V. FERNANDO
Warranty against eviction
VEKARDE VS. CA
Warranty against hidden defects (1561)

OPTION MONEY VS. EARNEST MONEY

Accidental Elements of a Contract of Article 1545
Sale
We have accidental elements. These are
elements which are stipulated by the parties,
such as the existence of conditions, as well as
the stipulation on the payment of price.
 Where necessaries are those sold and
delivered to a minor or other person without
capacity to act, he must pay a reasonable
price therefor. Necessaries are those referred
to in article 290. (1457a)
CONTRACT OF SALE V. CONTRACT TO
SELL

In contracts of sale the vendor UPON RECIPT PF CERTIFICATE OF

loses ownership over the property INCPORPORATION

and cannot recover it unless and until

the contract is resolved or rescinded,
UPON BIRTH BUT ACQUIRE ACT AT 18
while in contracts to sell, title is YO
retained by the vendor until full
payment of the price.
2 KINDS OF INCAPACITY
In contracts to sell, full payment is a
-ABSOLUTE INCA
positive suspensive condition while
in contracts of sale, non-payment is a -RELATIVE INCAPACITY
negative resolutory condition.
WHEN PERSON CANNT BCUZ OF
CERTAIN PROHIBITION

ABSOLUTE SALE

An absolute sale takes place without A. Rules applicable to specific

conditions. The title is transferred by the sellers/buyers
seller to the buyer without any restrictions i. Minors (Art. 1327, 1390;
other than payment of an agreed-upon Family Code, art. 194)
amount of money. - Sale to and by minors:
rule and exceptions
CONDITIONAL SALE

 is a real estate transaction where the Article 1327. The following cannot give
parties have set conditions. consent to a contract:

(1) Unemancipated minors;

PARTIES TO THE CONTRACT OF SALE (2) Insane or demented persons, and

deaf-mutes who do not know how to
Article 1489. All persons who are authorized write.
in this Code to obligate themselves, may enter
into a contract of sale, saving the
modifications contained in the following ii. Old age and sickness (Art.24)
articles.
 - Sale to and by seniors, experts who, in any manner
sick persons, etc.: rule whatsoever, take part in the sale;
and exceptions
iii. Husband and wife (Art.1409, (5) Justices, judges, prosecuting
attorneys, clerks of superior and
1490, 1492) inferior courts, and other officers and
employees connected with the
administration of justice, the property
and rights in litigation or levied upon
an execution before the court within
Article 1490. The husband and the wife whose jurisdiction or territory they
cannot sell property to each other, except: exercise their respective functions;
this prohibition includes the act of
(1) When a separation of property was acquiring by assignment and shall
agreed upon in the marriage apply to lawyers, with respect to the
settlements; or property and rights which may be the
object of any litigation in which they
(2) When there has been a judicial may take part by virtue of their
separation of property under article profession;
191. (1458a)
(6) Any others specially disqualified by
SC RULED EQUALLY APPLIES TO law. (1459a)
COMMON

Article 1491. The following persons cannot

acquire by purchase, even at a public or
judicial auction, either in person or through the
mediation of another:

(1) The guardian, the property of the

person or persons who may be under
his guardianship;

(2) Agents, the property whose

administration or sale may have been
intrusted to them, unless the consent
of the principal has been given;

(3) Executors and administrators, the

property of the estate under
administration;

(4) Public officers and employees, the

property of the State or of any
subdivision thereof, or of any
government-owned or controlled
corporation, or institution, the
administration of which has been
intrusted to them; this provision shall
apply to judges and government