Articles / Laws to Remember: 1458, 1467, 1477 transfer of ownership, 1505, 559 who can transfer xxx, 1504,

1544, 1484 Recto Law, R.A. 6552, 1602, 1606, 1620, 1623, Redemption xxx

Q: A obliged himself to deliver a certain thing to B. Upon delivery, B would pay a sum of money to A. Is
that a contract of sale?
A: Not necessarily. Even if there is an obligation to deliver, if there is no obligation to transfer ownership, it will
not be a contract of sale. It may be a contact of lease.

Memorize: Art. 1458

Articles / Laws to Remember: 1458, 1467, 1477 transfer of ownership, 1505, 559 who can transfer xxx, 1504,
1544, 1484 Recto Law, R.A. 6552, 1602, 1606, 1620, 1623, Redemption xxx

Q: A obliged himself to deliver a certain thing to B. Upon delivery, B would pay a sum of money to A. Is
that a contract of sale?
A: Not necessarily. Even if there is an obligation to deliver, if there is no obligation to transfer ownership, it will
not be a contract of sale. It may be a contact of lease.

Memorize: Art. 1458

Note: Sale is a contract, so the general principles in oblicon are applicable to sale but note that there are
provisions which are contrary.

Characteristics of Contract of Sale (COS)

1. Consensual (1475) – COS is consensual, it is perfected by mere meeting of the minds of the parties as to the
object and price.
Note: There is 1 special law which requires a particular form for the validity of a contract of sale – in that sale, it
can be said that kind of sale is a formal contract → Cattle Registration Decree. In a sale of large cattle, the law
provides that the contract of sale of large cattle must be: in a public instrument, registered and a certificate of title
should be obtained in order for the sale to be valid. But otherwise, the other contracts are perfected by mere
consent or mere meeting of the minds.

2. Principal – sale is a principal contract, it can stand on its own. It does not depend on other contracts for its
existence and validity.

3. Bilateral (1458) – necessarily in a COS, both parties will be obligated. It is not possible that only 1 party is
obligated because a contract of sale is essentially onerous.

4. Onerous (1350) – COS is essentially onerous. Otherwise, it may be another contract or any other

act like it may be a donation if there is no compensation for the transfer of ownership to the other party.

5. Commutative (2010) – meaning there is equivalency in the value of the prestation to be performed by both
parties. Normally, the thing sold would be equal to the price paid by the other party (buyer).

Exception: a contract of sale which is an aleatory contract like sale of hope. In sale of hope, the obligation of 1
party will arise upon the happening of a certain event or condition.

Example Sale of Hope: Sale of a lotto ticket, PCSO will have the obligation to pay you only if you got all the 4 or
6 numbers which are drawn
Another Example of Aleatory: Insurance

6. Nominate (1458)

Classification of Contract of Sale

1. As to Nature of Subject Matter
a. Movable
b. Immovable

Q: Why there is a need to determine?

A: Because some concepts will apply if the object is movable or some laws will apply if the object is immovable.

Examples: Under the Statute of Frauds, you have to determine if the object if movable or immovable in order that
statute of frauds will apply. The Recto law will apply if the object is movable. The Maceda law will apply if the
object is realty. Article 1544 or Double Sale will require you to determine the nature of the subject matter.

2. As to Nature
a. Thing
b. Right

Q: Why there is a need to determine?

A: Relevant in the mode of delivery

Distinctions
1. Deed of Absolute Sale (DAS) vs. Conditional Sale (CS) vs. Contract to Sell (CTS)
2. Dation in Payment (DIP) vs. COS
3. Contract for a Piece of Work (CPW) vs. COS
4. Barter vs. COS
5. Agency to Sell (ATS) vs. COS

Deed of Absolute Sale (DAS) vs. Conditional Sale (CS) vs. Contract to Sell (CTS)
DAS – seller does not reserve his title over the thing sold and thus, upon delivery of the thing, ownership passes
regardless of whether or not the buyer has paid.

CS - condition/s are imposed by the seller before ownership will pass. Normally, the condition is the full payment
of the price. In CS, ownership automatically passes to the buyer from the moment the condition happens. There
is no need for another contract to be entered into.

BE: Receipt was issued by A to B. The receipt’s tenor “Date of the receipt xxx Received from B the sum
of P75,000.00 as partial payment for the car xxx the balance to be paid at the end of the month xxx”.
Contract to Sell?
SA: No. It does not pertain to a CTS because in a CTS ownership is reserved by the seller despite delivery to
the buyer. The buyer does not acquire ownership. This is an Absolute Sale.

Q: In a CTS, upon the happening of the condition/s imposed by the seller, would ownership automatically
pass to buyer?
A: No. While a CTS is considered a special kind of conditional sale, it is a peculiar kind of sale because despite
the happening of the condition and actual delivery, the buyer does not automatically acquire ownership. In CTS,
if condition/s happen, the right of the buyer is to compel the seller to execute a final deed of sale. So ownership
does not automatically pass.

Dation in Payment (DIP) vs. COS

DIP (1245) – whereby property is alienated to the creditor. It is provided that the law on sales shall govern such
transaction. It is specifically provided that the pre-existing obligation must be in money. If not in money and there
is DIP, it will not be governed by the law on sales but by the law on novation because practically there is a change
in the object of the contract.
Example 1: If A owes B P100,000.00 instead of paying P100,000, he offers B and B accepts the car of A as an
equivalent performance → this is DIP and will be governed by the law on sales.

Example 2: If the pre-existing obligation is to deliver a specific horse but instead of delivering the horse, the
debtor told his creditor and the creditor accepted, that he will instead deliver his car → it is still DIP but it will not
fall on 1245 but on novation because there is a change in the object of the obligation which would extinguish the
obligation.

Note: A guide to distinguish one concept from another is to know the nature, requisites and effects.

1. As to Nature
DIP – a special form of payment
COS - it is a contract

2. As to Requisites
DIP – with a pre-existing obligation
COS – not a requirement

3. As to Effect
DIP – to extinguish the obligation either wholly or partially.
COS – obligation will arise instead of being extinguished.

Contract for a Piece of Work (CPW) vs. COS

BE: A team if basketball players went to a store to buy shoes and out of the 10 members, 5 of them were
able to choose the shoes. They agreed to pay the price upon delivery. The other 4 members were able to
choose but the shoes were not available at that time but they are normally manufactured. The last
member could not find shoes that could fit his 16 inches feet and therefore he has to order for such kind
of shoes. What transactions were entered into by these players?
SA: 1467 → the first 2 transactions involving a total of 9 players would be considered a COS because the shoes
which they ordered are being manufactured or procured in the ordinary course of business for the general market.
However, the last
0transaction which will be manufactured only because of the special order of the player and is not ordinarily
manufactured for the general market will be considered a CPW which is known as the Massachusetts rule.
Massachusetts rule – rule in determining whether the contract is a COS or a CPW.

Barter vs. COS

Q: A obliged himself to deliver a determinate car with a market value of P250,000.00. B obliged himself
to deliver his watch and P150,000.00 in cash. What kind of contract?
A: First, you have to consider the intention of the parties. They may want this transaction to be considered as a
sale or barter and that will prevail. But if the intention of the parties is not clear from their agreement then the
nature of the contract will depend on the value of the watch. If the value of the watch is greater than P150,000
then this is barter. If the value of the watch is equal or less than P150,000 then this is sale. The value of the car
is irrelevant. What is only relevant is the value of the thing (watch) in relation to the cash to be given by one of
the parties.

Agency to Sell (ATS) vs. COS

BE: A gave B the exclusive right to sell his maong pants (he has his own brand of maong pants) in
Isabela. It was stipulated in the contract that B has