Part One: SALES NATURE OF CONTRACT (11 Basic Concepts: [1.1] Definition: 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.’ (1.2) Nature and characteristics of the contract: [1.2.11 Ibis consenaual contract: A contract of sale is a consensual contraet, which means that the sale is perfected by mere consent’ or is perfected at the moment there is a meeting of minds upon the thing which is the object of the contraet and upon the price.* Delivery of the thing bought or payment of the price is nat necessary for the per- fection of the contract; and failure of the vendee to pay the price ater the execution of the con- tract does not make the sale null and void for lack of consideration but results at most in de- fault on the part of the vende, for which the vendor may exercise his legal remedies. Sub- Ject to the provisions of the Statute of Frauds, ‘a formal document is not necessary for the sale ‘Art. 1458, NCC. *Dalion v. CA, 182 SCRA 872, 877 (1990); Balathat v. CA, 261 SCRA 128 (1996y, Acap v. CA, 251 SCRA 30: Fule v. CA. 288 SCRA 698: Quijada v. CA, 209 SCRA 695; Buenaventura v. CA, 416 SCRA 263. Province of Cebu v. Heirs of Rufina Morales, C-R. No. 170115, February 19, 2008, “Balatbat v. CA, 261 SCRA 128, 198-199 (1996). 309vw [1.2.2] 0.2.3] 348 SCRA 450 (2000). —————EEEax~ transaction to acquire binding effect. For as long as the essential elements of a contract of sale are proved to exist in a given transaction, the contract is deemed perfected regardless of the absence of a formal deed evidencing the same. inuadal 3 js obligations: A contract of sale creates reciprocal obligations, where the seller obligates itself to transfer the ownership of and deliver a determi- nate thing, and the buyer obligates itself to pay therefor a price certain in money or its equiva- lent’ As already discussed, reciprocal obliga- tions are those which arise from the same cause, and in which each party is a debtor and a eredi- tor of the other, such that the obligation of one is dependent upon the obligation of the other.’ ‘They are to be performed simultancously such that the performance of one is conditioned upon the simultaneous fulfillment of the other.* It_is_normally commutative and onerous: A contract of sale is normally commutative and ‘onerous: not only does each one of the parties assume a correlative obligation (the seller to de- liver and transfer ownership of the thing sold and the buyer to pay the price), but each party anticipates performance by the other from the very start. However, in a sale the obligation of one party can be lawfully subordinated to an uncertain event, so that the other understands that he assumes the risk of receiving nothing for what he gives (as in the case of a sale of hopes or expectations, emptio spei), which makes the contract aleatory and not commutative. But the latter case is not the usual course of business; "Province of Cebu v. Heirs of Rufina Morales, supra. “Carrascoso, Jr. v. CA, 477 SCRA 666 (2005); Agro Conglomerates, Ine. v. CA, “Fd., citing Ong ¥. CA, 310 SCRA 1, 9 (1999). *Gaite v. Fonacier, 2 SCRA 890, 837 (1961), hence, the contingent character of the obligation must clearly appear." (1.2.4) Itisnot a mode for acquisition or transmission of ownership, but merely a title: In relation to the acquisition and transfer of ownership, it should be noted that sale is not a mode, but merely a title. A mode is the legal means by which domin- ion or ownership is created, transferred or de- stroyed, but title is only the legal basis by which to affect dominion or ownership. Under Article 712 of the Civil Code, “ownership and other real rights over property are acquired and transmit- ted by law, by donation, by testate and intestate succession, and in consequence of certain con- tracts, by tradition.” Contracts only constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing the same. Therefore, sale by itself does not transfer or affect ownership; the most that sale does is to create the obligation to transfer ownership. It is tradition or delivery, asa consequence of sale, that actually transfers ownership." (1.2.5) Nominate and principal contract: It ia nominate because it has @ special name under the Civil Code. It is also a principal contract because it does not depend upon another contract for its ex- istence. [2] Distinguished From Other Contracts and Transactions: (2.11 Distinguished from barter: By the contract of barter or exchange, one of the parties binds himself to give one thing in consideration of the other's promise to give another thing." Thus, barter is essentially an exchange of thing for a thing; while sale is an exchange of a thing ‘*Gaite v. Fonacier, 2 SCRA 630, "San Lorenzo Development Corp. v. CA. G.R. No. 124242, January 21, 2005; Equatorial Realty Development, Inc. v. Meyfair Theater, Inc, 370 SCRA 56; Norkia Distributors, Inc. v. CA, 193 SCRA 634; Aznar v. Yapdiangeo, 13 SCRA 486. "Art. 1638, NCC,aia CIVIL LAW REVIEWER for money or its equivalent. The former is not governed by the Statute of Frauds, while the latter is (2.1.1) wh iaaraesaes . ty inanother thing: If the consideration of the contract consists partly in money, and partly in another thing, it may either be a sale or barter, based on the following rules — 2) The transaction is to be characterized by the manifest intention of the parties; b) Ifsuch intention does not clearly appear, the contract is considered — Barter — if the value of the thing given as a part of the consideration exceeds the amount of the money or its equiva- lent; or Sale — if the amount of the money or its equivalent exceeds the value of the thing given as a part of the consideration. [2.2] Distinguished from contract for a piece of work: [2.2.1] Definition: 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.” [2.2.2] Distinctions between the two contracts: They are distinguished, as follows — 1) The contract of sale is within the pur- view of the Statute of Frauds, while the contract for a piece of work is not. 2) The first essentially involves sale of a thing or right, while the other involves lease of service. 3) In the first, the obligation of the seller is a real obligation (or an obligation to art, 1713, NCC. CHAPTERTWO ais ‘SALES give), while in the other the obligation of the contractor is a personal obligation (or an obligation to do). [2.2.3] Test in determining whether the contract is for apiece of work or aale: If the thing transferred is one not in existence and which would never have existed but for the order of the person de- siring it, the contract is one for a piece of work, not a sale. But if the thing subject of the con- tract would have existed and been the subject of a sale to some other person even if the order had not been given then the contract is one of sale." However, even if the products were made only when customers placed their orders but if the order accepted is one which the manufac- turer habitually makes, the contract is still one of sale and not one for piece of work. Thus, 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. On the other hand, if the job accepted requires the use of extraordinary or additional equipment, or in- volves services not generally performed by it, the contract is for a piece of work." But in the end, the distinction between the two contracts depends on the intention of the parties. Thus, if the parties intended that at some future date an object has to be delivered, without consider- ing the work or labor of the party bound to de- liver, the contract is one of sale. But if one of the Parties accepts the undertaking on the basis of some plan, taking into aecount the work he will “Bogineering & Machinery Corp. v. CA, 252 SCRA 156 (1996), cited in Dino ¥. CA, 359 SCRA 91, G.R. No, 113564, June 29, 2001; sve aloo Inchausti & Co. v Cromwoit, 20 Phil. 245 (1911) and Art. 1487, NCC. ‘*Celestino Co de Company v. Collector of Internal Revenue, 99 Phil. 641 (1956). art. 1467, NCC. "Celestino Co & Company v. Collector of Internal Revenue, supra.