SALES ELEMENTS:

A. Essential Elements:
Contract of Sale 1. Consent or meeting of the minds
Essential Elements: 2. Determinate subject matter
1. Consent 3. Price certain in money or its equivalent
2. Object
3. Consideration  Absence of any of these elements will render the contract of sale null and void

Stages: B. Natural Elements:

1. Negotiation - Integral part of a contract of sale unless there are provisions in the law on sales or stipulations to
2. Perfection the contrary (Built-in elements)
3. Consummation - Ex: Warranty against eviction and warranty against hidden defects

Sources of the law on sales: C. Accidental Elements:

1. Constitution - Depend on the autonomy of the wills of the parties (Art 1306, CC)
- Art 7 (CC) – When the courts declared a law to be inconsistent with the Constitution, the former - Stipulations that vendor and vendee can agree (Ex. Manner, time, place of delivery or payment)
shall be void and the latter shall govern.
2. Civil Code D. Simulated Contract of Sale (Art 1345 – 1346)
- Gen provisions: Art 1156-1422
- Specific: Art 1458-1637 1. Absolute simulation – parties have no intention to be bound by it (Void)
3. Other Statutes - does not convey any right but for reasons of public policy, the subsequent nullification is not a
- Generalia Specialibus Non Derogant – “A general law does not nullify a specific or special ground to annul the contractual right which may have been derived by other transferees who
law” acted in good faith
4. Judicial decisions
2. Relative simulation – false cause in the contract to conceal their real agreement (binding unless with
prejudice to third persons and contrary to law, morals, good customs, pubic order, or public policy)
NATURE AND FORM OF THE CONTRACT

A. Definition CHARACTERISTICS OF A CONTRACT OF SALE

Article 1458. By the contract of sale one of the contracting parties obligates himself to transfer the 1. NOMINATE
ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its - Own individuality and governed by its own set of rules
equivalent. A contract of sale may be absolute or conditional.
2. PRINCIPAL
Concept of Sale: - Can stand on its own two feet, its existence and validity do not depend upon another contract

1. Sale is a TRANSACTION 3. CONSENSUAL

- Two persons negotiate about a determinate thing - Perfected by mere consent.
- No particular form required for its validity
2. Sale is a SPECIAL CONTRACT - Art 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the
- No valid contract unless there is consent, object, or cause thing which is the object of the contract and upon the price. From the moment, the parties may
- Special contract because there is a specific set of provisions under the CC reciprocally demand performance, subject to the provisions of the law governing the form of
contracts.
3. Sale is a SOURCE OF OBLIGATIONS
- Contracts have the force of law between the contracting parties and should be 4. BILATERAL
complied with in good faith - Creates and imposes reciprocal rights and obligations on both contracting parties
- There is a source of reciprocal obligations (performed simultaneously such that the - Art 1169 and Art 1191
performance of one is conditioned upon the simultaneous fulfillment of the other)
- Injured party may choose between fulfillment and rescission, with payment of 5. ONEROUS
damages in either case - The determinate thing is sold in consideration of another valuable consideration

Parties to a contract of sale: 6. COMMUTATIVE

Vendor (seller) and vendee (buyer or purchaser) - Value of the determinate thing is considered or assumed to be the equivalent of the price
- Mere inadequacy does not affect validity when both parties are in a position to form an
independent judgment, unless fraud, mistake or undue influence indicative of a defect in consent
is present

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 a. Sale of Movable of Personal Property – can be transported from place to place without
7. TITLE impairment of the real property to which they are fixed.
- Ownership not transferred by mere perfection of contract of sale, but by tradition or delivery. b. Sale of Immovable or Real Property – Adhered to the soil, attached to or form an integral part of an
- Contract of sale only constitutes title or right – delivery is the mode of accomplishing the same immovable in a fixed or permanent manner. It cannot be moved or carried away.
- Contract of sale provides for a just cause or ground in demanding the transfer of ownership

8. ALEATORY SALE DISTINGUISHED FROM OTHER CONTRACTS

- Sale of hope – Parties bind themselves to give or to do something in consideration of what the
other shall give or do upon the happening of an event which is uncertain, or which is to occur at RULE: It is not the title of the contract, but the express terms or stipulations that determine the kind of
an indeterminate time contact entered into by the parties

KINDS OF SALE 1. AGENCY TO SELL

1. As to the Presence of Absence of Condition – Absolute Sale and Conditional Sale AGENCY CONTRACT OF SALE
Principal retains ownership over the property subject Delivery of the property will effect a relinquishment
of the contract of title
ABSOLUTE SALE CONDITIONAL SALE Agent merely acts on the principal’s behalf and
No stipulation that title to the property remains with Ownership remains with vendor until full payment under his instructions
the seller until full payment
No stipulation giving the vendor the right to cancel Full payment partakes of a suspensive condition, 2. CONTRACT FOR A PIECE OF WORK
unilaterally and non-fulfillment of the condition prevents the
obligation to sell from arising CONTRACT FOR A PIECE OF WORK CONTRACT OF SALE
Goods are to be manufactured specially for the Delivery at a certain price of an article which the
2. As to the Standing or Status of the Sale customer and upon his special order and not for the vendor in the ordinary course of his business
general market manufactures or procures for the general market,
VALID SALE All the essential elements for validity are present whether the same is on hand at the time or not
and produces the desired legal effect
RESCISSIBLE SALE Valid because all essential elements are present 3. BARTER
- But it has an extrinsic effect because of the:
1. Economic and financial injury or prejudice to BARTER CONTRACT OF SALE
either of the seller or buyer, or to a third person The consideration is the giving of another The consideration is the giving of the price certain in
(Ex: Sale of things under litigation, sale entered into determinate thing money or its equivalent
by guardian and ward suffers lesion by more than ¼
of value of thing) Rule in case the Consideration is Partly in Money and Partly in Another Thing:
VOIDABLE SALE Valid until annulled
- Presupposes a defect in the consent of either party Barter Sale
- Can be cleansed through ratification Thing is more valuable than money Money and thing are of equal value
1. Incapable of giving consent Thing is less valuable than money
2. Consent vitiated by mistake, violence,
intimidation, undue influence, or fraud Other provisions: Art 1639 – 1640
(Ex: Sale by minors and other incapacitated persons)
UNENFORCEABLE SALE Cannot be enforced by proper action in court unless 4. CONTRACT TO SELL
it is ratified
1. Without or in excess of authority - defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of
2. Does not comply with Statute of Fraud the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively
3. Both parties do not possess legal capacity to the prospective buyer upon fulfillment of the condition agreed upon
(Ex. Sale of land for principal without authority,
oral sale of house and lot) CONTRACT OF SALE CONTRACT TO SELL
VOID SALE Any of essential elements Is lacking or when cause, TITLE Seller conveys title upon Seller reserves the transfer of the
object, or purpose contrary to LaMoGPuPu, or perfection of the contract title until the happening of an
prohibited by law, or declared by law to be void event (full payment)
- Produces no legal effect OWNERSHIP Ownership passes to the buyer Ownership retained by seller
(Ex. Sale of illegal drugs, sale of conjugal property upon delivery despite delivery
by one spouse)
EFFECT OF NON-PAYMENT Negative resolutory condition Full payment: Positive suspensive
- Cannot recover ownership condition
3. As to Nature of the Object of Sale unless he takes action to set aside - Title simply remains with the
contract of sale seller if the buyer does not
 comply with the condition SALE LEASE
REMEDY OF THE SELLER Either sue for collection or have Seller can only sue for damages ESSENCE Transfer of ownership of a Transfer of use or enjoyment of a
IN CASE OF DEFAULT IN the contract judicially resolved or determinate thing in exchange of determinate thing for a price
PAYMENT set aside a price certain certain
CONDITIONAL SALE VS CONTRACT TO SELL
RIGHT TO TRANSFER IN Vendor has the right to transfer Lessor does not need to be the
CONDITIONAL CONTRACT OF SALE CONTRACT TO SELL THE CONCEPT OF AN ownership of the determinate owner, like in the case of a sub-
Consent is present, although conditioned upon the OWNER thing at the time it is delivered lessor
happening of a contingent event which may or may OBJECT OF THE Determinate thing or a right May be things, work, or service
not occur CONTRACT
Buyer automatically acquires title to the property Seller must convey title to the property through a PERIOD OF TRANSFER Not covered by a specific period For a definite or indefinite period
upon full payment deed of conditional sale since it is perpetual but not permanently because no
Transfer of title is by operation of law Transfer is not automatic lease for more than 99 years shall
Laws on sales under CC apply Laws under conditional obligations under CC be valid
Art 1191 (reciprocal obligations) does not apply CONSIDERATION Price certain Price certain
Failure to fully pay merely prevent conveyance of - “Price / Purchase price” - “Rent”
title

5. DATION IN PAYMENT (DACION EN PAGO)

- delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted
equivalent of the performance of the obligation
- mode of extinguishing an existing obligation and partakes the nature of sale
- objective novation of the obligation where the thing offered as an accepted equivalent of the
performance of the obligation is considered as the object of the contract of sale, while the debt is
considered as the purchase price
- analogous to sale

6. DONATION
- Art 1470, 1471, 1472
- Art 475 – “an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another,
who accepts it”

Elements of a valid donation:

1. Reduction of the patrimony of the donor
2. Increase in the patrimony of the done
3. Intent to do an act of liberality or animus donandi

SALE DONATION
ESSENCE Transfer of ownership of a Transfer of ownership of a
determinate thing in exchange of determinate thing out of liberality
a price certain - Gratuitous
- Onerous
GOVERNING LAW Law on sales on CC (Art 1458- Law on donation (Art 725-773)
1637)
CONSIDERATION Price certain in money or its Purely the liberality or generosity
equivalent of the donor
PERFECTION AND Meeting of minds upon object Formal contract - Perfected from
VALIDITY and price the moment the donor knows of
Consensual contract – perfected the acceptance by the done
and valid upon consent

7. LEASE
- A contract of lease is consensual, bilateral, onerous, and commutative, the owner temporarily grants the
use of his or her property to another who undertakes to pay rent therefor

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