1458 1.

One can sell only what he owns

2. Sufficient if right exist at the time of
Contract of Sale – contract whereby the seller delivery
obligates himself to deliver something to the
buyer who binds himself to pay a price 1460

Characteristics:  Subject matter must be determinate

1. Consensual – perfected by mere consent 1461
2. Bilateral – parties are bound to fulfill
obligations reciprocally Things having potential existence
3. Onerous – price is considered in the thing  Even a future thing not existing in the
sold time of contract (potential/possible
4. Commutative – thing sold is equivalent to
existence) may be the object of sale
the price paid
 i.e. the wine a vine is expected to
5. Nominate – Sale is its special name in the
civil code produce
6. Principal – its existence and validity upon Sale of hope or expectancy
another contract
 Subject into condition that the thing
Requisites: contemplated will come into existence
1. Consent/Meeting of Minds  This is VALID even if this thing does not
2. Object/Subject Matter (Determinate thing) come into existence unless the hope of
3. Cause/Consideration (Price) expectancy is VAIN.
Natural Elements – elements deemed to exist in 1462
absence of any contrary stipulations
Goods which can be the object of the sale
Accidental Elements – elements which may be
1. Existing goods – possessed by the seller
present depending on the stipulations of the
2. Future goods – to be manufactured,
parties
raised or acquired
2 Kinds of Contract of Sale
Sale of future goods
1. Absolute – no subject to any condition
2. Conditional – sale contemplates  Sale of future goods cannot be the
contingency/condition subject of an executed sale but may be
the subject of an executory contract (that
1459 which is yet to be fully executed or
performed; opposite of executed sale)
Requisites Concerning Objects
1463
1. Determinate
2. Licit (lawful) Sale of undivided interest in a thing
3. Not impossible
 Rights which are not intransmissible or  Makes the buyer a co-owner in the thing
personal sold (i.e. land)
 Once became a co-owner, the buyer can
Kinds of Illicit Things dispose the thing (undivided portion of the
1. Per se – nature thing) even without the consent of his co-
2. Per accidens – provisions of law owners
declaring it illegal
1464
Right of vendor to transfer ownership
Sale of an undivided share of a specific mass
1. Fungible goods – goods of any unit is
equivalent to any other unit; a commodity
money (i.e. grain, oil, wine, gasoline)
2. Effect: may be a sale of undivided interest
if the mass is specific or capable of being
determinate
3. Risk of loss: whole mass is at risk of all
the parties interested in it, in proportion to
their various holdings
4. Subject Matter: incorporeal/intangible
right
1465
 Things subject to a resolutory condition
may be the object of the contract of sale
 Resolutory condition – uncertain event
upon the happening of which the
obligation subject to it is extinguished
1466
Contract of agency – person binds himself to
render some service or to do something in
representation of another, with the authority of
the latter
Differences between contract of sale and
agency
1. Sale, buyer receives the goods as owner
Agency, agent receives goods (but the
ownership retains to the principal)
2. Sale, buyer pays the price
Agency, only accounts for the proceeds in
the principal’s behalf
3. Sale, buyer cannot return the object sold
Agency, agent can return the object
4. Sale, seller warrants the thing sold
Agency, agent assumes no warranty
5. Sale, buyer can deal with the things sold
as he pleases
Agency, agent acts according to the
instructions of the principal
1467
Contract for a piece of work – contract binds
himself to execute a piece of work for the
employer
Differences between contract of sale and for
work
1. Sale, things would exist even the order
had not been given
Work, thing would never have existed but
for the order of the party desiring it
2. Sale, risk of loss is borne by the buyer
Work, risk of loss is borne by the
contractor/worker
3. Sale, within the Statute of Frauds
Work, not within the Statute of Frauds
1468
Contract of barter/exchange – one party gives
one thing in consideration of the other’s promise
to give another thing
Exchange partly in money and partly in thing
 Refer to the manifest intention of the
parties
 Determine which has greater value
1469
 No sale if price is not certain or
ascertainable
 When price is certain:
o Agreed definite amount
o Reference to another thing certain
o Price is left to the judgment of
specified person(s)
 Price fixed by third parties is binding upon
them, EXCEPT:
o Third person acts in bad faith r by
mistake
o Third person disregarding
instructions given by parties
 If third person cannot fix the price, the
contract shall be ineffective.
 If the third person is prevented for fixing
the price, the party not in fault may obtain
redress against the party at fault which
may be a choice between rescission or
fulfillment. Court fixes the price if the
party chooses fulfillment.
1470
Gross inadequacy of price (voluntary sales)
  Mere inadequacy of price does not affect
the contract of sale when both parties are
in a position to form an independent
judgment in the transaction
 If low price may indicate defect in the
consent, contract may be annulled
Gross inadequacy of price (involuntary sales)
 Judicial or execution sale – the court sells
the property of the debtor for the
satisfaction of his unpaid indebtedness.
 If the price is so low as to be shocking to
the conscience, of the court, a judicial
sale may be set aside
 The validity of the sale is not affected if
the law gives the owner the right to
redeem (sale in public auction)
1471
 If the sale is simulated, the sale is void
but the act may be shown to be a
donation.
1472
 The price of securities, grain, liquids shall
also be considered certain (although it is
subject to fluctuations on different days)
1473
 Fixing of price by one of the contracting
party is not allowed
 But if the price fixed by one is accepted
by the other, the contract is deemed
perfected
1474
 If price cannot be determined, the
contract is without effect (executory)
 When delivery has already been made,
the buyer must pay a reasonable price—
market price at the time and place fixed
by contract or law
1475
 Contracts are perfected by mere consent
 Owner has the right to fix his own price,
reasonable or unreasonable
 Failure to pay in cases where price is
stipulated, does not make the contract
invalid. The seller may demand specific
performance or rescission with damages
 No price stipulated, sale is void and non-
existent
1476
 Sales of separate lots by auction are
separate sales
 Sale by auction is perfected when
auctioneer announces its perfection by
the fall of hammer. Until announcement is
made, bidder may retract his bid and
auctioneer may withdraw the goods from
the sale
 Seller may in auction sale if:
o Such right was reserved
o Notice was given the sale is
subject for bidding
o Right to bid is not prohibited by law
or stipulation
1477
 Delivery to the vendee means transfer of
ownership
1478
 Parties may stipulate the ownership is not
transferred unless price has been paid
1479
 Policitation – unaccepted unilateral
promise to sell or buy a thing which has
no juridical effect or legal bond
 Option – privilege of a person for which
he has paid a consideration which gives
him the right to buy or sell at any time
within the agreed period at a fixed price
 Kinds of promises
o Accepted unilateral promise to sell
(buy) in which the promise elects
to buy (sell)
  Does not bind the promisor
and may be withdrawn any
time
o Bilateral promise to buy or sell
reciprocally accepted
 Reciprocally demandable,
contract perfected
1480
Risk of loss or deterioration (Rules)
1. Thing lost before perfection – seller bears
the loss due to the principle of res perit
domino or the thing perishes with the
owner
2. Thing lost at the time of perfection –
contract is void or inexistent
3. Thing lost after perfection but before
delivery, even the buyer takes the
ownership – buyer bears the loss
(exception to res perit domino)
4. Thing lost after delivery – buyer bears the
loss
1481
 Sale by description – seller sells things
not yet seen by the buyer but the seller
describes it as being of a particular kind
o If the bulk of goods do not
correspond with the description,
contract may be rescinded
 Sale by sample – parties are contracted
solely with the reference to the sample,
with the understanding that the bulk was
like it.
o The thing to be delivered by the
seller must conform with the
sample in kind, character and
quality
 Sale by sample and description – goods
must satisfy all the warranties appropriate
to either kind
o It is not sufficient the goods
correspond with the sample if they
do not conform the description
given
1482
Earnest money – money given by the buyer to
the seller to bind the bargain; partial payment of
the purchase price; proof of the perfection of
contract; like an advance payment, thus,
deducted from total price.
Differences between earnest money and option
money
1. Earnest money, part of the purchase price
Option money, distinct consideration for
the option contract
2. Earnest money, there is already a sale
Option money, sale not yet perfected
3. Earnest money, when given, buyer is
bound to pay the balance
Option money, buyer is not required to
buy
1483
Form of contract – manner it is executed or
manifested
 Contracts may be entered into any form
provided it has the essential requisites
Contracts covered by Statute of Frauds – law
requires that it must be in writing
1. Sale of personal property at a price
greater equal to P500
2. Sale of real property or an interest therein
regardless of the price
3. Sale of property not to be performed from
the year of sale regardless of the nature
of the property and price
Stature of Frauds is applicable only to executory
contract
1484
Right of vendor tor recover unpaid balance of
the purchase price
1. Specific performance
2. Cancellation – vendee is unable to pay
two or more installments
3. Foreclosure (of the chattel mortgage)
1485
Lease of personal property with option to buy is
sales of the personal property payable in
installments
1486
The parties may stipulate that the installments or
rents paid are not to be returned.
1987
The expenses for execution and registration of
the sale shall be borne by the vendor
1489
All persons may enter into a contract of sale.
Exceptions are those with incapacities.
Kinds of incapacity
1. Absolute – persons who cannot bind
themselves
2. Relative – reference to certain persons or
certain classes of property
Necessaries -- things needed for sustenance,
dwelling, clothing and medical attendance in
keeping the financial capacity of the family or
incapacitated person
 Contracts entered by minors and other
incapacitated persons (e.g.
insane/demented person, deaf-mutes
who do not know how to write) are
voidable.
 Contract can be valid only when
necessaries are delivered to him, thus, he
must pay a reasonable price.
Sale by minors – valid when they pretended to
have reached their majority even if they have not
1490
Husband and wife CANNOT sell property to
each other except:
1. Separation of property was agreed upon
in marriage settlements
2. There has been a judicial separation of
the property
Also prohibited in making donations to each
other.
1491
Persons who are incapacitated to purchase a
property
 Guardians
 Agents
 Executors and administrators
 Public officers and employees
 Judicial officers and employees and
lawyers
Other persons disqualified by law
 Aliens, disqualified to purchase private
agricultural lands
 Unpaid seller
 Officer conducting execution sale of
property
Violation of prohibition
 Voidable (guardians, agents, executors
and administrators) only private interest
are affected
 Null and Void (Public officers and
employees, judicial officers and
employees and lawyers, other persons
disqualified by law)
1492
The prohibitions are applicable to sales by legal
redemption, compromise and renunciation
Compromise – contract whereby parties, by
reciprocal concessions, avoid litigation
Renunciation/Condonation/Remission – creditor
gratuitously abandons his right against his
creditors
1493
 Thing entirely lost at the time of
perfection, contract is void and inexistent
 Thing only partially lost – vendee may
elect between withdrawing from the
contract and demanding the remaining
part, paying its proportionate price
 A thing is lost when it perishes or goes 1494
out of commerce or disappears in such a
In sale of specific goods, ad goods without the
way that is existence is unknown or
knowledge of the seller have perished, the buyer
cannot be recovered
may at his option treat the sale:
 Perishes means that there has been a
material deterioration such that it loses its 1. As avoided
former utility 2. Valid in all of the existing goods