SALES

Chapter 1 : Nature and Form of the Contract

1458. By the contract of sale one of the contracting parties
obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price
certain in money or its equivalent.
A contract of sale may be absolute or conditional.
1. 1st paragraph is the definition of sales.
2. Civil code requires not only delivery but also the
transfer of the ownership of the thing sold. However,
the vendor need not be the owner at the time the sale
is perfected; but must be so at the time of delivery.
Ownership transfer is a natural effect; the fundamental
aim of the contract.
3. Characteristics of a contract of sale:
a. Consensual perfected by mere consent. (as
distinguished by Real thats perfected by
delivery such as deposit or commodatum)
b. Bilateral/reciprocal both parties are bound
c. Onerous involved a valuable consideration for
the transfer of rights
d. Commutative values exchanged are almost
equivalent (By way of exception some contracts
are Aleatory, sweepstakes tickets)
e. Principal not an accessory, existence is not
dependent upon the validity of another
f. Nominate has a name, contract of sale
4. Elements of a contract of sale
a. Consent/MOM
b. Determinate subject matter (object)
c. Price certain in money or its equivalent (cause
or consideration)
5. Natural elements inherent, deemed to exist unless
stipulated
a. Warranty against eviction
b. Warranty against hidden defects
6. Accidental elements presence/absence does not
affect validity

a. Time, place, conditions

7. Stages
a. Generation/negotiation
b. Perfection mom
c. Consummation object is delivered and price is
paid
8. Kinds
a. Nature of subject matter
i. Real
ii. Personal
b. Value of things exchanged
i. Commutative
ii. Aleatory
c. Tangibility
i. Property/tangible/corporeal
ii. Right/intangible copyright
d. Validity
i. Valid
ii. Rescissible
iii. Voidable
iv. Unenforceable
v. Void
e. Legality
i. Licit object
ii. Illicit object
f. Presence/absence of conditions
i. Absolute sale
ii. Conditional sale
g. Wholesale/retail
i. Wholesale if to be resold for a profit the
goods being unaltered when resold, the
quantity being large
ii. Retail, otherwise
h. Proximate inducement for the sale
i. By description
ii. By sample
iii. Mix
i. Price
i. Cash
ii. Instalment
9. Sale and Dation

Sale
No pre-existing credit
Give rise to obligations
Cause or consideration is
the price for the seller,
object for the buyer
Greater freedom for price
determination
Giving of the price is the
end obligation of the buyer

Dation in Payment
Pre-existing credit
Extinguishes obligation
Cause offering the dation is
the extinguishment of the
debt, acquisition of object in
lieu of debt for the creditor.
Less freedom
Giving of the object in lieu of
the credit extinguishes
completely or partially the
debt depending on the
agreement.

10.Two view points

a. Object is the item of the seller, cause is price.
For buyer, object is price while the cause is the
item.
b. Only one object which is the item; the cause for
the seller is the price while for the buyer is the
delivery of the item.
11.COS vs CTS
a. COS, non-payment of the price is a resolutory
condition. CTS, payment of the price is a
positive suspensive condition
b. COS title of the property is transferred upon
delivery. CTS ownership is retained by seller,
delivery is immaterial, what is considered is the
full payment of the price.
c. COS, after delivery has been made, seller has
already lost ownership and cannot recover
unless contract is resolved or rescinded. CTS, to
oust the buyer for failure to pay, he may just
enforce the contract (specific performance)
12.Sale vs Assignment (cession)
a. Cession does not transfer ownership, only the
right to sell. And obtain credit payment from the
proceeds thereof.

b. Release of debt only up to net proceeds, unless

stipulated.
c. Governed by special laws (Cession)
13.Dation v Cession
Dation
One creditor is sufficient
Not all properties are
conveyed
Debtor may be
solvent/insolvent
Creditor becomes owner of
things conveyed

Cession
Must be 2 or more creditors
All debtors properties are
conveyed
Cession takes place only if
the debtor is insolvent
No ownership is conveyed;
only the right to sell

14.Sale v Loan
a. Loan, amount is substantially smaller than the
value of the security given. (Im the buyer of the
car, not the bank who gave the loan)
15.Sale v Lease
a. Lease transfer temporary possession or use, not
the title thereof.
1459. The thing must be licit and the vendor must have a
right to transfer the ownership thereof at the time it is
delivered.
1. Rules:
a. Object must be lawful
b. Vendor must have the right to transfer
ownership at the time the object is delivered.
2. Licit objects
a. Lawful
i. Per se nature (human flesh)
ii. Per accidens by law (land to alien)
b. If not, sale is void
c. Right of redemption, usufruct, and literary,
artistic and scientific works may be sold.
3. Transfer ownership
a. Ownership not necessary at the time of
perfection; future things may be sold (not
donated)

b. But must be owner at the time of delivery if

not, breaches warranty against eviction
c. A person who has right over thing (although not
owner) may sell such right. Hence usufructary
may sell his usufructuary right.
d. Owner of mortgaged property may legally sell,
but mortgagee may exercise right to foreclose
upon non-payment. Mortagee does not owe the
buyer anything.
1460. A thing is determinate when it is particularly
designated or physically 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
further agreement between the parties.
1. Determinate specific, but need not be specific at the
time of perfection. It is sufficient that it be capable of
being determinate without need of any new
agreement.
2. If lost prior to being determinate genus non quam
perit.
3. No perfection if new agreement is needed to
determine the amount and quality of the object sold.
1461. Things having a potential existence may be the object
of the contract of sale.
The efficacy of the sale of a mere hope or expectancy is
deemed subject to the condition that the thing will come into
existence.
The sale of a vain hope or expectancy is void.
1. Things with a potential existence
a. Future things can be sold.
b. Future inheritance cannot.
2. 2nd paragraph refers to that of an expected thing, not
to the hope/expectancy itself.

3. Sale of expected thing (emptio rei sperati) if the

thing expected did not materialize, no sale. Deals with
future thing (future property). If silent, presume this!
4. Sale of the hope itself (emtio spei) sale is valid even
if thing did not materialize, as long as the hope validly
existed. Deals with present thing (existing
hope/expectancy)
5. Vain hope/expectancy not a game of
chance/aleatory, since there is no chance at all!
(drawn tickets, except if a collectors item)
1462. The goods which form the subject of a contract of sale
may be either existing goods, owned or possessed by the
seller, or goods to be manufactured, raised, or acquired by
the seller after the perfection of the contract of sale, in this
Title called future goods.
There may be a contract of sale of goods, whose acquisition
by the seller depends upon a contingency which may or may
not happen.

1463. The sole owner of a thing may sell an undivided

interest therein.
1464. In the case of fungible goods, there may be a sale of
an undivided share of a specific mass, though the seller
purports to sell and the buyer to buy a definite number,
weight or measure of the goods in the mass, and though the
number, weight or measure of the goods in the mass is
undetermined. By such a sale the buyer becomes owner in
common of such a share of the mass as the number, weight
or measure bought bears to the number, weight or measure
of the mass. If the mass contains less than the number,
weight or measure bought, the buyer becomes the owner of
the whole mass and the seller is bound to make good the
deficiency from goods of the same kind and quality, unless a
contrary intent appears.
1465. Things subject to a resolutory condition may be the
subject of the contract of sale.

1466. In construing a contract containing provisions

characteristic of both the contract of sale and of the contract
of agency to sell, the essential clauses of the whole
instrument shall be considered.
1. CTS v Agency TS
a. Buyer pays the price; agent delivers price
b. Buyer becomes owner; agent does not become
owner
c. Seller warrants; agent assumes no liability as
long as he acts within his authority and in the
name of the principal

1467. A contract for the delivery at a certain price of an

article which the vendor in the ordinary course of his
business manufactures or procures for the general market,
whether the same is on hand at the time or not, is a contract
of sale, but if the goods are to be manufactured specially for
the customer and upon his special order, and not for the
general market, it is a contract for a piece of work.
1. Sale ordinary course of business
2. Piece of work manufactured specifically and not for
the market
3. Rules
a. Massachusetts Rule if specifically done at the
order of another; piece of work. This is followed
in the PH
b. New York Rule already exists, sale. If not, POW
c. English Rule material is more valuable, sale; if
skill is more valuable, POW
1468. If the consideration of the contract consists partly in
money, and partly in another thing, the transaction shall be
characterized by the manifest intention of the parties. If such
intention does not clearly appear, it shall be considered a
barter if the value of the thing given as a part of the
consideration exceeds the amount of the money or its
equivalent; otherwise, it is a sale.

1. Barter or Sale
a. Intent consider the contemporaneous and
consequent acts of the parties.
b. If intent is not clear
i. Thing is more valuable than money
barter
ii. 50:50 sale
iii. Thing is less valuable than money sale
1469. In order that the price may be considered certain, it
shall be sufficient that it be so with reference to another
thing certain, or that the determination thereof be let to the
judgment of a specified person or persons.
Should such person or persons be unable or unwilling to fix it,
the contract shall be inefficacious, unless the parties
subsequently agree upon the price.
If the third person or persons acted in bad faith or by
mistake, the courts may fix the price.
Where such third person or persons are prevented from fixing
the price or terms 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 the buyer, as the case
may be.
1. Price certain
a. If not, its as if there is no true consent between
the parties.
b. No sale if no price.
c. If the price is fixed, but later remitted or
condoned, sale is still valid. Consideration or
price is now liberality
d. Even if money paid is counterfeit, sale is still
valid, the real consideration or cause is still the
value or price agreed upon.
2. No specific amount is stated, still certain:
a. If it be certain with reference to another thing
certain.
b. If the determination of the price is left to the
judgment of a specified person or persons.

c. In the cases provided in Art. 1472 of CC.

1470. Gross inadequacy of price does not affect a contract of
sale, except as it may indicate a defect in the consent, or
that the parties really intended a donation or some other act
or contract.
1. Gross inadequacy of price
a. Sale remains valid even if the price is very low.
May only be annulled if gross inadequacy is a
product of vitiated consent
b. If it will shock the conscience of the court, sale
is void. (National Bank v Gonzales)

c. May be in substance, a loan with an equitable

mortgage.
d. May be in substance, a donation. Especially for
tax purposes.
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.
1. Price must not be fictitious, if not, void.