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• ARTICLE. 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 2. CONCEPT OF CONTRACT OF SALE • Agreement whereby one of the parties (called the seller or vendor) obligates himself to deliver something to the other (called the buyer or purchaser or vendee) who, on his part, binds himself to pay therefore a sum of money or its equivalent

BILATERAL

ONEROUS COMMUTATIVE

NOMINATE PRINCIPAL

Perfected the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price (Art. 1475) Both the contracting parties are bound to fulfill correlative obligations towards each other The thing sold is conveyed in consideration of the price and vice versa The thing sold is considered the equivalent of the price paid and vice versa However, the contract may be aleatory as in the case of the sale of a hope Special name or designation in the Civil Code namely, “sale” It does not depend for its existence and validity upon another contract

ESSENTIAL REQUISITES OF A CONTRACT OF SALE 1.

CONSENT OR MEETING OF THE MINDS •

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General Contract: Consent is the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract (Art. 1319) Contract of Sale: Consent on the part of the seller or vendor to transfer ownership of, and deliver, a determinate thing, and the consent on the part of the buyer or vendee to pay the price certain (Art. 1475) The contract to sell is a bilateral contract A person is not incompetent to contract merely because of advanced years or by reason of physical infirmities

DE LEON SALES REVIEWER

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OBJECT OR SUBJECT MATTER • • • • • •

6 CHARACTERTISTIC OF CONTACT OF SALE CONSENSUAL

E: When such age or infirmities have impaired the mental faculties so as to prevent a person from intelligibly protecting his property rights, then such person is undeniably incapacitated There may however be a sale against the will of the owner in case of expropriation, ordinary execution sale, judicial foreclosure sale and extrajudicial foreclosure sale o

CHAPTER 1 NATURE AND FORM OF CONTRACT

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Refers to the determinate thing which is the object of the contract May be personal or real property Subject matter may be present or future Subject matter must be licit and must be within the commerce of men An impossible thing cannot be the object of a contract = void The civil code allows: o Sale of credit o Sale of the whole of certain rights, rents or products o Sale if inheritance already acquired (but not future inheritance) o Sale of possession It prohibits: o Sale of easements independent of the estate to which they belong o Sale of contagious animals

CAUSE OR CONSIDERATION • • •

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This refers to the “price certain in money or its equivalent” In onerous contract = the cause is the prestation or promise of a thing or service by the other (Art. 1350) Contract of Sale = the cause as far as the vendor is concerned is the acquisition of the price certain in money or its equivalent, and the cause as far as the vendee is concerned, is the acquisition of the thing which is the object of the contract Price: The cost at which something is obtained, or something which one ordinarily accepts voluntarily in exchange for something else, or the consideration given for the purchase of a thing Price must be certain, real and pecuniary Tantum valet res quantum vendi potest – a thing is worth only what someone else will pay for it Gross inadequacy of the price does not affect a contract of sale “It’s equivalent” – payment need not be in money, so that there can be a sale where the thing given as token of payment has been “assessed and evaluated and its price equivalent in terms of money has been determine” Conveyances by virtue of forged signature are void ab initio and inexistent for absence of consent and cause or consideration Presumption is that a contract has sufficient consideration

Absence of any of the 3 essential elements negates the existence of a perfected contract of sale 1 ! ! ! ! © Michelle Duguil,

• Burden of proof is upon the person who alleges existence of sale NATURAL AND ACCIDENTAL ELEMENTS NATURAL Deemed to exist in certain contracts, in the absence of any contrary stipulation Warranty against eviction (1548) Hidden defects (1561)

ACCIDENTAL Those which may be present or absent depending on the stipulations of the parties Conditions, Interest, Penalty Time or place of payment, etc.

Contract of sale has correlative duty: • Of the seller to deliver the property • Obligation of the buyer to pay the agreed price 1.

OBLIGATION TO DELIVER AND PAY • • •

STAGES OF CONTRACT OF SALE 1.

NEGOTIATION • Covering the period from the time the prospective contracting parties indicate interest in the contact to the time the contract is perfected

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PERFECTION • Takes place upon the concurrence of the essential elements of the sale which are the meeting of the minds of the parties as to the object of the contract and upon the price; and

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CONSUMMATION • Begins when the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment thereof

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The transfer of title to property or agreement to transfer title for a price actually paid, NOT mere physical transfer of the property = essence of sale GR: Being consensual, it is perfected by mere consent o E: Impossible service – delivery of ownership is no longer possible Payment of purchase price is NOT essential to the transfer of ownership as long as the property sold has been delivered

WHERE TRANSFER OF OWNERSHIP NOT INTENDED BY THE PARTIES •

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A contract for the sale or purchase of goods/commodity to be delivered at a future time, entered into without the intention of having any goods/commodity pass from one party to another, but with the understanding that at the appointed time, the purchaser is merely to receive or pay the difference between the contract and the market prices = illegal “Futures” – Parties merely gamble on the rise or fall of prices = null and void ! the loser may recover what he paid (2018)

KINDS OF CONTRACT OF SALE Presence or absence of Condition

ABSENCE OF PRICE/NON-PAYMENT OF PRICE

Absolute

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SALE INEXISTENT AND VOID • A contract of sale is void and produces no effect where the same is without cause or consideration in that the purchase price, which appears thereon as paid, has, in fact, never been paid by the buyer to the seller • X mere estimates

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SALE SUBJECT TO RESCISSION OR SPECIFIC PERFORMANCE • Non-payment of the purchase price = resolutory condition ! judicial rescission or specific performance (1191) • Failure to pay within a fixed period, in the absence of any express agreement that payment on time is essential, does not dissolve the contract of sale ! results at most in DEFAULT which the vendor may exercise his legal remedies • A stipulation in a contract providing for automatic rescission upon nonpayment within the stipulated period = valid • A notarized document is evidence of high character for proving payment of purchase price by the vendee

Conditional

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TRANSFER OF TITLE TO PROPERTY FOR A PRICE, ESSENCE OF SALE •

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Not subject to any condition Title to the property passes to the purchaser upon delivery of the thing sold Ownership of the property sold passes upon actual or constructive delivery thereof Sale contemplates a contingency Where the contract us subject to certain conditions Usually in the case of the vendee, the full payment of the agreed purchase price In the case of the © Michelle Duguil,

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vendor, the fulfillment of certain warranties Other kinds

Nature of the subject matter Manner of payment of the price Validity

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Real or Personal Tangible or Intangible Cash Installment Valid Rescissible Unenforceable Void

CONTRACT OF SALE VS. CONTRACT TO SELL WITH RESERVED TITLE CONTRACT TO SELL • Commonly entered into so as to protect the seller against a buyer who intends to buy a property in installments by withholding ownership over the property until the buyer effects full payment therefor

CONTRACT TO SELL Title is reserved • Ownership X automatic transfer • Must execute another instrument – contract of absolute sale rd 3 person X deemed in BF and prospective buyer cannot seek relief or conveyance of property • X double sale • ✓Sue for damages seller

CONDITIONAL SALE If suspensive condition is fulfilled = contract is perfect • Automatic transfer by operation of law rd 3 person who had actual or constructive knowledge of first sale = BF = X defeat first buyer’s title = ✓seek reconveyance

ART. 1459. The thing must be licit and the vendor must have a right to transfer ownership thereof at the time of delivery REQUISITES CONCERNING OBJECT

TRANSFER OF TITLE

OWNERSHIP VENDOR

OF

TYPE OF CONDITIONS

RESCISSION OF THE CONTRACT SPECIFIC PERFORMANCE EXECUTION OF SALE DOCUMENT

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CONTRACT OF SALE Title passes to the buyer upon delivery of the thing sold

CONTRACT TO SELL Ownership is reserved in the seller and is not to pass until the fulfillment of certain conditions, such as full payment of the purchase price

The vendor has lost and cannot recover the ownership of the thing sold and delivered, actually or constructively, until and unless the contract of sale itself is resolved and set aside Negative resolutory condition -Remedy: exact fulfillment or rescind contract

Title remains in the vendor and if the vendee does not comply with the condition precedent of making payment at the time specified in the contract

✓Rescission

Positive suspensive condition -failure X breach -Prevents obligation of vendor to convey title X rescission

✓ Specific performance

X specific performance

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✓Need to execute another document

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THING 1. Determinate 2. Licit • If illicit = void 3. Not impossible 4. Within the commerce of men RIGHTS • Must not be intransmissible o Example: 1. Right of usufruct 2. Right of Conventional Redemption NOTE: • •

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Intransmissible – right to vote, right to public office, marital and parental rights Personal – Right to be partner in parternship, right to act as agent of another, right of the baliee to use the thing loaned in a contract of commodatum Service = X object of contract of sale

KINDS OF ILLICIT THINGS 1. Illicit per se (of its nature) • Decayed food unfit for consumption 2. Illicit per accidens (because of some provision of law declaring it illegal) • Sale of animal suffering from contagious disease • Future inheritance

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Public land act – sale of homestead patent within 5 years prohibitory period

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RIGHT OF VENDOR TO TRANSFER OWNERSHIP 1. Seller must be owner or authorized by owner of thing sold • Nemo dat quod non habet – one cannot transmit or dispose of that which does not belong to him • Paraphernal property of deceased wife • Only share of co-owner can be validly acquired by the vendee even if he acted in GF • Fictitious sale as there was no consideration 2. Right must exist at the time of delivery • X require that vendor must have right to transfer ownership at the time of the perfection of the contract • Sufficient that seller has the right to transfer ownership at the time it is delivered • Ex. Sale of future good 3. Where the property sold registered in the name of seller who employed fraud in securing title • GR: Forged deed = void • E: Where the certificate of title has been transferred to the name of the true owner to the forger and sold to innocent purchaser for value 4. Where property sold in violation of a right of first refusal • GR: Valid BUT rescissible • E: If there is no BF = X rescissble ! remedy: action for damages against vendor 5. Where real property, subject of unrecorded sale, subsequently mortgaged by seller which mortgage was registered • Buyer’s unregistered right OVER mortgagee’s registered right

General Contract of law: object of contract must exist at the time of the transaction Contract of sale: The object of contract need not be existing at the time the contract is entered into

SALE OF THING HAVING POTENTIAL EXISTENCE • A future thing may work in 2 different ways: 1. Its coming into existence is a condition for the effectivity of the contract 2. The contract is effective and the buyer has to pay the purchase price w/n the thing comes into existence • Sale is subject to the condition that thing will come into existence SALE OF THING EXPECTED (EMPTIO REI SPERETAE) • Sale of a thing not yet in existence subject to the condition that the thing will exist • If X come into existence = contract X effective = buyer X obliged to pay • Ex. Wine a vine is expected to produce, grain a field may grow in a given time SALE OF MERE HOPE OR EXPECTANCY (EMPTIO REI SPEI) • Sale of HOPE ITSELF that the thing will come into existence where it is agreed that the buyer will pay the price even if the thing does not eventually exist • Ex. Sale of the catch of fishermen, fish or no fish • Condition that thing contemplated or expected will come into existence • Sale of vain hope or expectancy = void • Sale of mere hope or expectancy = valid = even if the thing hoped or expected does not come into existence o E: VAIN HOPE OR EXPECTENCY= VOID

1460. SUBJECT MATTER MUST BE DETERMINATE WHEN THING DETERMINATE • Particularly designated or physically segregated from all others of the same kind • A thing is determinate if its identified by its individuality

SALE OF THING EXPECTED Subject to the condition that thing will come into existence Sale of future thing IF X exist = X contract of sale because of absence of essential requisite

SALE OF HOPE X certain that the thing itself will exist Sale of hope or expectancy ✓ Exist even though the thing does not come into existence because the object of the contract is hope itself E: Vain hope or expectance (ex. Sale of falsified sweepstake ticket which can never win)

SUFFICIENT IF SUBJECT MATTER CAPABLE OF BEING MADE DETERMINATE • X necessary that the thing sold must be in sight at the time contract is entered into • Sufficient that thing is determinable or capable of being made determinate without the necessity of a new or further agreement between the parties to ascertain its identity, quantity or quality

PRESUMPTION IN CASE OF DOUBT • Presumption in favor of SALE OF THING EXPECTED • More in keeping with the COMMUTATIVE character of the contract

1461.

1462.

REQUIREMENT THAT THING MUST EXIST

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DE LEON SALES REVIEWER

GOODS WHICH MAY BE THE OBJECT OF SALE

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1. 2.

EXISTING GOODS – Goods owned or possessed by the seller FUTURE GOODS – Goods to be manufactured, raised, acquired

SALE OF FUTURE GOODS 1. VALID AS AN EXECUTORY CONTRACT TO BE FULFILLED • Valid as an executor contract to be fulfilled by acquiring and delivering the goods specified in the contract, even though the acquisition of good by the seller depends upon a contingency that may or may not happen 2. SALE CONTEMPLATED BY ART 1462 • Contract of sale of specific goods • Requires that there be delivery of goods, actual or constructive, to be applicable • Paragraph X apply if contract is one for a piece of work = if goods are to be manufactured especially for the buyer and not readily saleable to other in the manufacturer’s regular course of business ART. 1463. The sole owner of a thing may sell an undivided interest therein SALE OF UNDIVIDED INTEREST IN A THING 1. BY SOLE OWNER • Sole owner of a thing may sell the ENTIRE thing; or only a SPECIFIC PORTION thereof; or an UNDIVIDED INTEREST THEREIN and such interest may be designated as an aliquot part of the whole • Legal effect of sale of undivided interest: o The buyer is made the co-owner of the thing sold o As co-owner, he acquires full ownership of his part and may sell it o Limited to the portion which may be allotted to him in the division of the thing upon the termination of co-ownership o Operates similarly to ownership of fungible goods 2. BY A CO-OWNER • Co-owners can dispose of their share even without the consent of the other co-owners • Effect of alienation is limited to the portion allotted to the vendor in the division of the property upon the termination of the co-ownership ART. 1464 SALE OF UNDIVIDED SHARE OF A SPECIFIC MASS 1. MEANING OF FUNGIBLE GOODS • Goods of which any unit is, from its nature or by mercantile usage, treated as the equivalent of any other unit • Those which cannot be used without being consumed • Ex. Grain, old, wine, gasoline 2. EFFECT OF SALE • Owner may sell only an undivided share thereof, provided that the mass is specific or cable of being made determinate

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DE LEON SALES REVIEWER

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Buyer becomes co-owner with the seller of the whole mass in proportion in which the definite share bought bears to the mass • Aliquot share of each owner can be determined only by the measurement of the entire mass o If mass of FG contains less than what was sold ! buyer comes owner of the whole mass ! seller shall supply whatever is lacking from the goods of same kind and quality, subject to any stipulation to the contrary RISK OF LOSS • Whole mass is at the risk of all the parties interested in it since buyer becomes co-owner • In proportion to their various holdings •

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SUBJECT MATTER • Subject matter is an incorporeal right • Ownership passed to the buyer by the intention of the parties APPLICABILITY OF ART 1464 TO NON-FUNGIBLE GOODS • It may also apply to goods not strictly fungible in nature • Ex: Barrels of flour, goods in barrels, bales of cotton, cattle, sheep

ART. 1465. Things subject to a resolutory condition may be the object of the contract of sale SALE OF THING SUBJECT TO RESOLUTORY CONDITION • Resolutory condition – an uncertain even upon the happening of which the obligation (or right) subject to it is extinguished. Hence, right acquired by virtue of the obligation is also extinguished • If the resolutory condition attaching to the object of the contract should happen ! vendor X transfer the ownership of what he sold since there is no object ART. 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 CONTRACT OF AGENCY • A person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter • A contract is what the law defined it to be and not what it is called by the contracting parties

CONTRACT OF SALE Buyer receives the goods a OWNER

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