Professional Documents
Culture Documents
Chapter 1
Nature and Form of the Contract
Article 1458
Definition of sale: Sale is a contract where one
party (seller or vendor) obligates himself to
transfer the ownership of and to deliver a
determinate thing, while the other party (buyer
or vendee) obligates himself to pay for said
thing a price certain in money or its equivalent
2.
3.
4.
5.
6.
2.
3.
Distinctions from
1.
2.
3.
4.
1
SALES[
Bilateral
promise to sell a determinate thing coupled with a
correlative promise to buy at a specified price; it is
binding as an executory
agreement
Unilateral
given only by one by one party
can be accepted but you dont promise to buy
binding only once option money is paid
(consideration distinct from the purchase price)
EARNEST MONEY
It is part of the purchase price
(sort of a down payment)
Proof of the perfection of the
contract (parties are already
bound)
given when there is already a
sale
Buyer is bound to pay the
balance
2
SALES[
CONTRACT OF SALE
The
title
to
the
property passes to the
vendee
upon
the
delivery of the thing
sold. The vendor loses
ownership over the
property and cannot
recover it until and
unless the contract is
resolved or
rescinded
The non-payment of
price is a resollutory
The payment of the purchase condition
price is a positive suspensive
condition, the failure of
which is not a breach, but a
situation that prevents the
obligation of the vendor to
convey title from acquiring
an obligatory force
Absolute
a.
ownership is transferred to the buyer upon
delivery regardless of when payment of price is
made (note: it is not payment of the price that
transfers ownership, it is the delivery of the
thing which may be real or constructive)
b. there is no stipulation in the contract that title to
the property remains with the seller until full
payment of the purchase price
c.
there is no stipulation giving the vendor the
right to cancel unilaterally the contract the
moment the vendee fails to pay within a fixed
period
2.
Conditional
- may either be an executed contract or an
executory contract and usually a contract to sell
a.
Executed Contract
- which property (ownership) in the thing is
transferred from seller to buyer, and
nonpayment of the price is a negative
resolutory condition which entitles the seller to
the rescission or cancellation of the contract
- ownership is already transferred
- one of the party has performed his part (ex.
Partial payment; earnest money is already
paid)
b. Executory Contract
3
SALES[
a.
b.
c.
d.
e.
f.
g.
CONTRACT TO SELL
Generation or negotiation
Perfection meeting of the minds
Consummation when the object is delivered
and the price is paid
Kinds of Sales
h.
i.
Article 1459
2 rules to take into consideration:
1. The object must be licit lawful; within the
commerce of man
2. The vendor must have the RIGHT to transfer
OWNERSHIPS at the time the object is delivered
Transferability of Ownership
-
Article 1460
A thing is determinate when it is particularly
designated or physically segregated form all
others of the same class
The object of sale must be determinate or is
capable of being determinate without need of
any new agreement
Article 1462
Goods may be
o
Future goods still to be manufactured
or raised or acquired by seller after the
perfection of the contract
(like land which the seller
expects to buy) o Existing goods
Article 1463
The sole owner of a thing may sell an undivided
interest therein
Ex. Selling a portion of your house to somebody
else in which case the two parties become coowners
Ex. A full owner may sell the usufruct of his land
leaving the naked ownership to himself
Article 1464
Sale of Share in a Specific Mass
Ex. In a stock of rice, the exact number of
cavans oh which is still unknown, Jose buys 100
cavans. If there are really 150, Jose becomes
the co-owner of the whole lot, his own share
being 2/3
thereof (read paras pg. 23)
Article 1461
Sale of a thing having a potential existence: this
is a future thing that may be sold
Sale of an expected thing or Emptio Rei Sperati
If the expected thing does not materialize, the
sale is not effective
Sale of the Hope itself or Emptio Spei
It does not matter whether the expected thing
materialized or not; what is important is that the
hope itself validly existed
Ex. Sale of a valid sweepstakes ticket. Whether
the ticket wins or not, the sale itself is valid
If the hope or expectancy itself is vain, the sale
is itself void
Article 1465
Things subject to a resolutory condition may be
the object of the contract of sale
Article 1466
In distinguishing a contract of sale and an
agency to sell, the essential clauses of the whole
instrument shall be considered
CONTRACT OF SALE vs. AGENCY TO SELL
CONTRACT OF
SALE
The buyer
pays the price
The
buyer
after
delivery
becom
es the owner
AGENCY TO SELL
The agent delivers the price which in
turn he got from his buyer
The agent who is supposed to sell
does not become the owner, even if
the property has
already been delivered to him
6
SALES[
The seller
warrants
Article 1467
Distinguishes contract of sale and contract for a
piece of work - Rules
to
determine
the
difference:
o
If ordered in the ordinary course of
business SALE o If manufactured
specially and not for the market;
specially done at the order of another
PIECE OF WORK CONTRACT
If 50-50 SALE
(par.4)
3. In the cases provided for under article 1472, Civil
Code
Marina
2.
3.
4.
-the fact that bargain was a hard one, coupled with mere
inadequacy of price when both parties are in a position
to from an independent judgment
concerning transaction, is not a sufficient ground for
cancellation of contract
Article 1471
If the PRICE IS SIMULATED, the sale is VOID,
but the act may be shown to have been in
reality a donation, or some other act or contract
A simulated price is fictitious. There being no
price, there is no cause or consideration; hence
the contract is void as a sale
Thus, price must be real (not fictitious)
It may only be valid as a donation if the
requirements of donations or other agreements
have been complied with
Article 1472
The price of securities, grain, liquids, and other
things shall also be considered certain, when
the price fixed is that which the thing sold
would have on a definite day, or in a
8
SALES[
Article 1475
Sale is a consensual contract thus it is perfected
by mere consent
Delivery or payment is not essential for
perfection
Effect of Perfection: the parties must now
comply with their mutual obligations
REQUIREMENTS FOR PERFECTION
1. When parties are face to face when an offer is
accepted without conditions and without
qualifications (no counter-offer)
2. When contract is thru correspondence or
telegram when the offeror receives or has
knowledge of the acceptance by the offeree
3. When a sale is made subject to a suspensive
condition, perfection is had from the moment
the condition is fulfilled
Article 1476
Discusses sale by AUCTION
Sales of separate lots are separate contracts of
sale
The sale by auction is perfected when the
auctioneer announces its perfection by the fall of
the hammer or in other customary manner
(Case: Dizon vs. Dizon Considering that the
auction sale has been perfected, a supplemental
sale with higher consideration at the instance of
only one party(herein petitioner) could no longer
be validly executed) - Before the hammer falls:
o
The bidder may retract his bid. The
reason behind this is that every bidder is
merely an offer and therefore, before it
is accepted, it may be withdrawn
o
The auctioneer may also withdraw the
goods from the sale EXCEPT if the
auction has been announced to be
WITHOUT RESERVE
In an execution sale:
9
SALES[
Article 1480
Provides for the rules of bears the risk of loss:
1. If the object has been lost before perfection, the
seller bears the loss (reason: for there was no
contract, for there was no cause or
consideration)
2. If the object was lost after delivery to the buyer,
clearly the buyer bears the loss (Res perit
domino the owner bears the loss)
SALE BY SAMPLE
The seller warrants that the bulk of the goods
(the good themselves) shall correspond with the
sample in kind, quality and character
Note: the mere exhibition of the sample does
not necessarily make it a sale by sample. This
exhibition must have been the sole basis or
inducement of the sale
SALE BY DESCRIPTION AND SAMPLE
Must satisfy the requirements in both, and not in
only one
Note: the remedy afforded by Article 1481 is rescission.
Technically, it should be annulment.
Article 1482
1
0
SALES[
Article 1483
Discusses the FORM of a contract of sale
(subject to the provisions of the Statute of
Frauds):
o
May be made in writing o
By word
of mouth
1
1
SALES[
Article 1486
There can be a valid stipulation that installments
or rents paid shall not be returned to the vendee
or lessee provided that the
same may not be unconscionable under the
circumstances
MACEDA LAW (RA 6552)
Q: When is this law applicable?
A:
An act to provide protection to buyers of REAL
ESTATE on installment payments
This
includes
residential
condominium
apartments but excluding industrial lots,
commercial buildings and sales to tenants
(under RA 3844/6379), where the buyer has
paid at least two years of
installments
It applies to both Contract of Sale and Contract
to Sell
Q: What are the Rules when the buyer has paid at least
two years of installments but defaults in the payment of
succeeding installments?
A:
Default in payment
To pay without additional interest, the
unpaid installments (cash surrender value)
within the grace period
1
2
SALES[
Q: What are the Rules when the buyer has paid less than
two years of installments? A:
Article 1487
Already discussed in EXPENSES
Article 1488
Generally, since expropriation is involuntary, it does
not result in a sale
It only becomes a transaction of sale if the property
owner voluntarily sells the property to the
government
Eminent Domain right given to the state
SALES[
SALES[