SALES

Sale contract where one party obligates himself to transfer ownership of and to deliver a determinate thing, while the other party obligates himself to pay for said thing a price certain in money When a person buys a property from another the mode of acquiring ownership is tradition or delivery, not sale. A thing is determinate when it is particularly designated or physically segregated from all others of the same class If one of the parties binds himself to give something in consideration of the others promise to give another thing, the contract is barter or exchange Ownership on real property by prescription 10 years if in good faith, 30 years if in bad faith Personal property, 4 years if in good faith, 8 years if in bad faith Essential Characteristics of Contract of Sale 1. Consensual 2. Bilateral reciprocal 3. Onerous 4. Commutative 5. Principal 6. Nominate Sale of piece of land is not a formal or solemn contract, because sale is a consensual contract which is perfected by mere consent Oral contract of piece of land is valid, because there is no provision in the Civil Code which requires a contract of sale of piece of land to be in writing to be valid Oral contract of sale of a piece of land is unenforceable if the contract is still executory, meaning there is no delivery yet, and there is no payment yet Oral contract of sale of piece of land is enforceable if partly executed, meaning there is already delivery even if no payment yet or there is already payment without delivery yet Formal or solemn contract is one which is perfected by the execution of the formalities and solemnities required by law such as 1. Donation of real property which must be in public document; 2. Donation of personal property the value of which is more than P5K which must be in writing 3. Contract of antichresis which must be in writing Elements of the Contract of Sale 1. Essential elements those without which there can be no valid sale a. Consent b. Determinate subject matter c. Price certain in money or its equivalent 2. Natural elements those which are inherent in the contract, and which in the absence of any contrary provision, are deemed to exist in the contract a. Warranty against eviction, seller not liable for eviction is stipulated as such

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b. Warranty against hidden defects Accidental elements those which may be present or absent in the contract a. Place or time of payment

Stages in the Contract of Sale 1. Generation or negotiation 2. Perfection 3. Consummation Kinds of Sales 1. Nature of Subject Matter a. Sale of real property b. Sale of personal property 2. Value of things exchanged a. Commutative b. Aleatory 3. Whether object is tangible or intangible a. Sale of property (chose in possession) b. Sale of right (chose in action) 4. As to validity or defect of transaction a. Valid b. Rescissible c. Voidable d. Unenforceable e. Void 5. Legality of object a. Sale of licit object b. Sale of an illicit object 6. Presence or absence of condition a. Absolute sale b. Conditional sale e.g. pacto de retro sale, right to repurchase or redeem; sale with suspensive condition Deed of sale is absolute in nature though denominated conditional sale absent such stipulation 7. 8. Whether whole sale or retail Proximate inducement for the sale a. Sale by description b. Sale by sample c. Sale by description and sample As to when price is tendered a. Cash sale b. Sale on installment

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The law does not require that the seller be the owner of the thing sold at the time of the perfection of the contract Licit, must be be lawful and within the commerce of man Future inheritance cannot be an object of a contract of sale (Article 1347) A thing is determinate (or specific) when it is particularly designated or physically segregated from all others of the same class The requisite that a thing is determinate is satisfied if at the time the contract is entered into, the thing is capable of being made determinate without necessity of a new or further agreement between the parties The sole owner of a thing may sell an undivided interest therein. This is an exception to the rule that the thing or portion sold must be determinate or specific Things having a potential existence may be the object of the contract of sale

The efficacy of the sale of an expected thing or things having potential existence is deemed subject to the condition that the thing will come into existence The sale of a mere hope or expectancy is effective even if the hope or expectancy does not materialize such as sale of sweepstakes or lotto tickets (emptio rei sperati) Future goods goods which from the subject of a contract of sale may be whether existing goods (finished products), owned or possessed (such as goods in the possession of the consignee) by the seller or goods to be manufactured, raised, or acquired (or purchased or imported) by the seller after the perfection of the contract The sole owner of a thing may sell an undivided interest therein. This is an exception to the rule that the thing or portion sold must be determinate or specific Undivided interest or aliquot share or spiritual share or pro-indiviso share Usufruct, the right to use and the right to the fruits of the property belonging to another While the land owner is the sole owner of the naked title, hence, there is no co-ownership Things subject to resolutory condition may be the object of the contract of sale Resolutory condition, the happening of which extinguishes an obligation Sale vs. Agency 1. sale, buyer after delivery become the owner; agent who is supposed to sell does not become the owner, even if the property has already been delivered 2. sale, seller warrants; agent who sells assumes no personal liability as long as he acts within his authority Contract for a piece of work goods are to be manufactured specially for the customer and upon his special order In contract of sale, ownership passes to the buyer upon delivery; in contract for a piece of work, ownership passes to customer upon notice to the latter that the work has already been competed If the consideration of the contract consists partly money, and partly in another thing, the transaction shall be characterized by the manifest intention of the parties If such intention does not clearly appear, it shall be considered a barter if the value of the thing given as a part of the consideration exceeds the amount of the money or its equivalent; otherwise, it is a sale The price must be certain; otherwise, there is no true meeting of the minds If no specific amount has been agreed upon, the price is still considered certain: 1. if it be certain with reference to another thing certain 2. if the determination of the price is left to the judgment of a specified person or persons 3. In the cases provided in Article 1472

The price of securities, grain, liquids, and other things shall also be considered certain, when the price fixed is that which the thing sold would have on a definite date, or in particular date or market, or below the price on such day, or in such exchange or market, provided said amount be certain The fixing of the price can never be left to the discretion of one of the contracting parties (because contract of sale is consensual and bilateral) But if the price fixed by one of the parties is accepted by the other, the sale is perfected A contract of sale of a piece of land orally constituted is valid provided, the three essential elements of the contract are present Contract of sale is perfected at the moment there is meeting of minds (consensual) upon the thing which is the object of the contract and upon the price From the perfection, parties may reciprocally demand (enforce) performance, subject to the provisions of the law governing the forms of contracts e.g Statute of Frauds under Article 1403 (2) Formalities for Enforceability Under the Statute of Frauds, the sale of 1. real property (regardless of the amount or price)

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personal property if P500 or more must be in writing to be enforceable If orally made, the sale is valid but it cannot be enforced by a judicial action, except: 1. If it has been completely or partially executed, or 2. If the defense of Statute of Frauds is waived

General Rule: The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof Exception: 1. Conditional sale; 2. Sale on approval

Kinds of Delivery 1. Actual 2. Constructive 3. Quasi-tradition e.g. delivery of check Promise to buy and sell a determinate thing for a price certain is reciprocally demandable An accepted unilateral promise (or offer) to buy or to sell a determinate thing for a price certain is binding upon the promissory if the promise is supported by a consideration (option money) distinct from the price Problem: A offered to sell his residential lot to B at a price of P2M. B accepted the offer of A and requested that he be given a period of 60 days within which to decide whether he will buy the lot or not and at the same time to produce the P2M. 30 days later, A withdrew his offer on the ground that he already found a buyer who is willing to buy the lot at P2.2M Is A allowed to withdrew his offer even before the expiration of the 60-day option period? Answer Yes, the unilateral offer to sell not being supported by a consideration distinct from the

price is not binding upon the promissor, hence, he can withdraw his offer at anytime. The same facts in number 1, except that B gave A P20K in consideration of the 60-day option period granted by the latter to the former. Is A allowed to withdraw his offer before the expiration of the said period? Answer No, since the unilateral