SALES 9/21/2016 | elc

Sale contract whereby one of the contracting parties (seller) obligates consideration of the others consideration of the others
himself to transfer the ownership and to deliver the possession of a promise to give another thing undertaking to pay the price in
determinate thing; and the other party (buyer) obligates himself to pay money or its equivalent
therefor a price certain in money or its equivalent - value of the thing given as part - value of the thing given as part
of the consideration exceeds the of the consideration equals or is
Obligations of the seller amount of money given or its less than the amount of money
Transfer the ownership equivalent given
Deliver the possession of the subject matter - Statute of Frauds not applicable - Statute of Frauds applicable

Obligations of the buyer Contract of piece-of-work the contractor binds himself to execute a piece of
Pay the price work to the employer in consideration of a certain price or compensation; the
contractor may either employ only his labor or skill or also furnish the
Elements of a contract of sale material
1. Consent
2. Subject matter Contract of piece-of-work Sale
3. Price - a transfer of ownership is involved and a party necessarily walks away
with an object
Stages in the life of sales - essence is the service, - essence is object
1. Policitacion/negotiation reputation, or knowledge of the
2. Perfection person who executes and
3. Consummation manufactures the object
- specific performance not - can be compelled by specific
Essential characteristics of sale allowable performance
1. Nominate and principal - Statute of Frauds not applicable - Statute of Frauds applicable
2. Consensual
3. Bilateral and reciprocal
Celestino Co v. Collector of Internal Revenue
a. Power to rescind is implied Commissioner of Internal Revenue v. Engineering Equipment and Supply
b. Neither party incurs delay if the other party does not comply or is
Company
not ready to comply in a proper manner what is incumbent upon
him
Agency to Sell and Buy Sale
c. From the moment one of the parties fulfils his obligation, the
- essentially revocable - not unilaterally revocable
default by the other begins without need of prior demand
4. Onerous (valuable consideration = something of equal value) - agent is not obliged to pay the - buyer himself pays for the price
5. Commutative price and is merely obliged to of the object (main obligation)
6. Sale is a title and not a mode of acquiring ownership deliver the price which he may
receive from the buyer
Donation Sale - agent does not become the - buyer becomes the owner of the
owner of the thing even if it be subject matter
- Gratuitous - Onerous
delivered to him
- Solemn contract - Perfected by mere consent
- agent assumes no personal - seller warrants
liability as long as he acts within
Barter (art. 1468, 1641) Sale
his authority and in the name of
- exchange; one of the parties - one of the parties binds himself the principal
binds himself to give one thing in to deliver a thing in
- agent is disqualified from
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receiving any personal profit
from the transaction covered by
the agency
Requisites of a valid dation in payment
1. Performance of the prestation in lieu if payment which may consist in
the delivery of a corporeal thing or a real right of credit against the
third person
2. Some difference between the prestation due and that which is given
in substitution
3. An agreement between the creditor and debtor that the obligation is
immediately extinguished by reason of the performance of a
prestation different from that due
Lease the lessor binds himself to give to the lessee the enjoyment or use of
a thing for a price certain and for a period which may be definite or indefinite
Parties to a sale
- Any person who has capacity to actor do acts with legal effects
- Persons who have no legal capacity to contract
o Minors, insane and demented persons, deaf mutes who do not know
how to write
o Contracts they enter into voidable
o Action for annulment cannot be instituted by the party capacitated
since he is disqualified from alleging the incapacity of the person
with whom he contracts
o During lucid intervals contract valid
o State if drunkenness or hypnotic spell voidable
o Serious illness or old age are considered only if they affect the
mental faculties of a party (Domingo v.CA)
Necessaries
- everything indispensable for sustenance, dwelling, clothing, medical
assistance, education, transportation, etc
- where necessaries are sold and delivered to a minor or other person
without capacity to act, he must pay a reasonable price therefore and the
resulting sale is valid
- elements to be considered valid sale
o perfection of the sale
o delivery of subject necessaries
Sale and spouses
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- a spouse may, without the consent of the other spouse, enter into sale
transaction in the regular and normal pursuit of his or her profession,
vocation, or trade
- Art. 96, 124, Family Code the disposition or encumbrance of conjugal
property shall be void if without the authority of the court or the consent
of the other spouse it will be considered as a continuing offer
- A husband may dispose conjugal properties without the wifes consent if
such sale is necessary to answer for conjugal liabilities
- Spouses cannot sell to each other EXCEPT
o When a separation of property was agreed upon in marriage
settlements
o When there has been a judicial decree for the separation of property
- Sale between spouses void
- The only persons who can question the sale are: heirs of either spouses
who have been prejudiced, prior creditors, state when it comes to
payment of proper taxes
Specific incapacity mandated by law
1. Agent, with respect to the property whose administration or sale may
have been entrusted to him, unless the consent f the principal has
been given
2. Guardian with respect to the property of the person who is under his
guardianship
3. Executor or administrator with respect to the property of the estate
under his administration (hereditary rights not included)
4. Public officers and employees with respect to the property of the
state or its subdivision or any GOCC or institution the administration
of which has been entrusted to them; it includes judges and
government experts who in any manner whatsoever take part in such
sale
5. Justices, judges, prosecuting attorneys, clerks of court, and other
officers and employees connected with the administration of justice
with respect to rights in litigation or levied upon an execution before
the court within whose jurisdiction or territory they exercise their
respective functions (during the pendency of litigation involving the
property)
6. Lawyers with respect to property and rights which may be the object
of any litigation they may take part by virtue of their profession
(contingent fee not included subject to supervision of the courts)
- 1, 2, and 3 may be ratified but the ratification or second contract would
be valid from its execution and does not retroact to the date of the first
contract (Rubias v. Batiller)
Requisites of a valid subject matter
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1. Possible thing
2. Licit
3. Determinate or at least determinable
Sale of emptio rei speratae
- contract covering future things and subject to a suspensive condition
that the subject matter will come into existence
- if the subject matter does not come not existence, the contract is
extinguished
- applies only when subject matter is determinate or specific
sale of emptio spei void
determinate subject matter
- particularly designated
- physically segregated
determinable subject matter
- at the perfection of sale, the subject matter is capable of being made
determinate
- without the necessity of a new or further agreement between the parties
When it is possible to determine the quantity without need of a new contract,
the subject matter is determinable. (National Grains Authority v. IAC)
Even when the exact quantity of the subject matter has not been agreed upon,
but the parties has come into an agreement as of the quality thereof and the
price and its terms of payment, there is already a valid and binding contract.
(Johannes Schuback & Sons Phil. Trading Corp. v. CA)
When the kind and quality of a generic subject matter cannot be another thing, the transaction can still be considered a sale when this is a
determined, the contract is void. (Art. 1246)
A prior mortgage does not prevent the mortgagor to sell the property. (Pineda
v. CA)
The seller need not be the owner of the thing at the time of perfection.
However, he must be the owner at the time of delivery and he may be held
liable for the breach of warranty against eviction.
Transfer of ownership ipso jure to a buyer in good faith
1. there must be a valid sale
2. there must be physical delivery of the subject matter
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Price the sum stipulated as the equivalent of the thing sold and also every
incident taken into consideration for the fixing of the price put to the debit of
the buyer and agreed to by him
Requisites for a valid price
1. real
2. money or its equivalent (valuable consideration)
3. certain or ascertainable
Price is real when at the perfection of the sale, there is legal intention on the
part of the buyer to pay the price and the legal expectation on the part of the
seller to receive such price as the value of the subject matter he obligates
himself to deliver. Otherwise, it is simulated.
Price is false when there is a real price upon which the minds of the parties
had met but nit declared and what is stated in the covering deed is not the
one intended to be paid. In this case, reformation or estoppel, as the case
may be, may apply.
The non-payment of price does not render the contract of sale void or
inexistent. It may give rise to a right in favour of the seller to either demand
specific performance or recission of the contract of sale.
Delivery of subject matter made pursuant to a void sale for lack of
consideration does not transfer ownership to the buyer.
A contract of sale is not a true sale where the price consists of services or
performances.
If the consideration of a contract consists in partly money and partly in
manifest intention of the parties.
The fixing of the price cannot be left to the will of only one party but it can be
made by a designated third party. If the third party fixes the price in bad faith
or by mistake, the parties may seek the aid of the court in fixing the price.
This is true only for price and not for subject matter.
When the price cannot be determined in any other manner, the contract of
sale is inefficacious. (Art. 1474) (inefficacious valid but could not be
executed)
In spite of the lack of an agreement as to the price or defect in the agreement
as to the price, there would be a valid contract of sale upon which an action
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for specific performance would prosper for the recovery of the price when the
following elements are present:
1. there was a meeting of the minds of the parties of sale and purchase
as to the subject matter
2. there was an agreement that price would be paid which fails to meet
the criteria of being ascertainable or certain
3. there was delivery by the seller and appropriation (transformation
such that it can no longer be returned to its original state) by the
buyer of the subject matter of the sale
Gross inadequacy of price does not affect a contract of sale except that it
may indicate a defect in consent or that the parties really intended a donation
or other contract.
Commutative when the parties honestly believe that they received good
value for what they have given up in exchange
Gross inadequacy of price may avoid judicial sale of real property if
1. the inadequacy is shocking to the conscience of man
2. in the event of resale, a better price can be obtained
However, a judicial sale will not be set aside by the court if there is a right of
redemption despite the presence of the two requisites.
When the primary motive is illegal, the sale is void because illegal motive
predetermined the purpose of the contract.
Advertisements are less than offers. They constitute as invitations to make an
offer or proposals EXCEPT when such advertisement specifies a determinate
subject matter and the price and terms of payment, then it can be considered
as an offer.
An offer must be certain. If not absolutely accepted, it is extinguished. An
offer becomes ineffective upon the death, civil interdiction, insanity,
insolvency of either the offeror or offeree before the acceptance is conveyed
and received by the offeror.
An accepted unilateral promise to buy or sell a determinate thing for a price
certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price. An option without a separate
consideration is void.
Elements of an option contract
1. consent
2. subject matter option right
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3. consideration separate from the purchase price for the option given
In option contract, the consideration may be embedded in the price of the
contract or sale. It could also be not valuable. (Villamor v. CA as explained by
Atty. Santiago)
Option contract to do
Contract of sale to give
Without a separate consideration, option contract would be void but would
still constitute a valid offer so that if the option is exercised prior to its
withdrawal, that is equivalent to an offer being accepted prior to withdrawal
and would give rise to a valid and binding sale. (Sanchez v. Rigos)
When period is granted to the promise:
1. If the period itself is not founded upon or supported by a separate
consideration, the offeror is still free and has the right to withdraw
the offer before its acceptance or if an acceptance has been made
before the offerors coming to know of such fact, by communicating
that withdrawal to the offeree
2. The right to withdraw must not be exercised whimsically or arbitrarily,
otherwise, it could give rise to a damage claim under Art. 19 of the
Civil Code
3. If the period has a separate consideration, an option contract is
deemed perfected and it would be a breach of that contract to
withdraw the offer during the agreed period
4. If, in fact, the offeror withdraws the offer before its acceptance by the
offeree, the offeree may not sue for a specific performance because
the proposed contract failed to reach perfection. The offeror,
however, renders himself liable for damages for breach of the option.
5. Care should be taken of the real nature of the consideration given,
for if in fact, it has been intended to be part of the consideration for
the main contract, with a right of withdrawal on the part optionee,
the main contract could could be deemed perfect.
The granting of a separate consideration merely guarantees that within the
option period, before any withdrawal and subsequent breach may happen, an
acceptance by the optionee would give rise to a valid sale; and that an
acceptance within the option period after the optioner shall have unlawfully
withdrawn the offer would not give rise to a sale. (Ang Yu Asuncion v. CA)
Ang Yu option or right of first refusal is separate from the main contract
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Equatorial Realty Development, Inc. v. Mayfair Theater, Inc. right of first
refusal is part of the main contract therefore an action for specific Before earnest money can be considered as part of the price and proof of the
performance can prosper perfection of the contract, there must first be a valid sale.

Generally, when you change the offer or terms of the offer with regard to Earnest money Option money
another buyer, you must offer it again to the person granted with the right of - Part of the purchase price - Money given as a distinct
first refusal. However, it the person granted with a right exhibits a take it or consideration for an option
leave it attitude, it need not be offered to him again. (Riviera Filipina Inc v. - Given only when there is a sale - Applies to a sale not yet
CA as explained by Atty. Santiago) perfected
- The buyer is bound to pay the - Buyer is not required to buy and
Sale entered into in violation of a persons right of first refusal is recissible. balance and seller must return it the seller may forfeit it
if the sale does not push through depending on the terms of the
Mutual promise to buy and sell = contract to sell absent an express stipulation option

Offer certain Place of perfection is where there is a meeting of the offer and the
Acceptance absolute and unconditional acceptance. In case of acceptance through letter or telegram it is presumed
Qualified acceptance counter offer that the contract was entered into in the place where the offer was made.

A perfect sale may arose from exchanges of correspondences even if there
was a correction or modification in the acceptance but said changes were not
substantial.
Acceptance may be express or implied. Acceptance made by letter or
telegram does not bind the offeror except from the time it came to his
knowledge.
Expenses for the execution and registration shall be borne by the seller
unless there is a stipulation to the contrary.
No form is required for the validity of a sale.
Deed of sale formal or symbolic delivery of the property sold and authorizes
the buyer to use the document as proof of ownership

Auction sales
- A sale by auction is perfected when the auctioneer announces its
perfection by the fall of the hammer or in other customary manner. Until
such announcement is made, any bidder may retract his bid and the
auctioneer may withdraw the goods from sale unless the auction has
been announced to be without reserve.
- When the goods are put up for sale by auction in lots, each lot is the
subject of a separate contract of sale.
- A right to bid may be reserved expressly by or on behalf of the seller.
Where notice has not been given that the sale by auction is subject to a
right to bid on behalf of the seller, it shall be unlawful for the seller to bid
himself or to employ or induce any person to bid at such sale on his
behalf. Also, it shall be unlawful for the auctioneer to employ or induce
any person to bid at such sale on his behalf or the seller, or knowingly to
take any bid from the seller or any person employed by him.
- The owner of the property sold at auction may provide the terms under
which the auction will proceed and the same are binding upon all bidders,
whether they knew of such conditions or not.
Notarized document > bare allegations but notarization does not guarantee
its validity
Just because the authority of the agent selling a land is written, it does not
mean that the actual sale will be exempted from the Statute of Frauds.
Form of sale important for it to be valid in the following instances
1. The power to sell a piece of land or interest therein must be in writing
otherwise the sale by the agent (even when the sale itself is in
writing) will be void
2. Sale of large cattle must be in writing otherwise it would be void; it
must also be registered with the municipal treasurer who shall issue
a certificate of transfer
3. Sake if land by a non-muslim hill tribe cultural minorities all
throughout the Philippines is void if not approved by the National
Commission on Indigenous People
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Sales covered by Statute of Frauds
1. Sale agreement which by its terms is not to be performed within a
year from the making thereof
2. Agreement for the sale of goods, chattels, or things in action at a
price not less than P 500
3. Sale of real property or an interest therein

Exceptions to the coverage of Statute of Frauds

1. When there is a note or memorandum thereof in writing and
subscribed by the party charged or his agent
2. When there has been partial consummation of the sale
3. When there has been a failure to object to the presentation of
evidence aliunde as to the existence of the contract
4. When the sale is effected through electronic commerce

Contents of memorandum
1. Names of the parties
2. Terms and conditions of the contract
3. Price
4. Description of the property as the object of the contract
- Memorandum can be in two or more separate documents

Sale of land appearing in a private deed is binding between the parties

thereof but not to third parties if it is not embodied in a public document and
recorded in the registry of deeds.

Waiver of provisions of Statute of Frauds

1. When a party failed to object to the presentation of evidence
2. When a party was cross-examined regarding the said contract