SALESARTICLE 1458: By 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 equivalent.

A contract of sale may be absolute or conditional.

NOTES:

A catch-all provision which effectively brings within its grasp a whole gamut of transfers whereby ownership of a thing is ceded for a consideration.By the contract of sale, one of the contracting parties obligates himself to:1. Transfer the ownership of and deliver a determinate thing

2. And the other, to pay therefore a price certain in money or its equivalent

-ABSENCE of any of the essential elements will NEGATE the existence of a perfected contract of sale.

PHASES OR STAGES OF A CONTRACT OF SALE

1. Preparation, conception or generation- period of negotiation and bargaining, ending at the moment of agreement of agreement of the parties.2. PERFECTION birth of the contract

3. CONSUMMATION OR DEATH fulfilment or performance of the terms agreed upon in the contract

- It is TRADITION or DELIVERY that the buyer acquires the real right of ownership over the thing sold.

-ownership is transferred NOT by contract but by TRADITION OR DELIVERY. ( Alcantara-Daus vs De Leon)

-Execution of Deed of Sale is conclusive presumption of delivery of possession of a piece of real estate (Ten Forty Realty and Development Corp vs Cruz).

CHARACTERISTICS OR FEATURES OF CONTRACT OF SALE

1. BILATERAL both parties are obliged to fulfil reciprocal obligations toone another.

- the seller will deliver and transfer a determinate thing to the buyer and the later will pay an ascertained price (or equivalent) therefor.

2. CONSENSUAL perfected by MERE CONSENT.

-manifested by the meeting of the minds as to the offer and acceptance thereof. (Castillo vs Reyes , Amado vs Salvador)

3. COMMUTATIVE thing sold is considered the equivalent of the price paid and the price paid is the equivalent of the thing sold.

- it is the OPPOSITE of ALEATORY consideration is NOT equivalent of what has been received (example lotto ticket price vs the amount to be given if the ticket wins)

4. ONEROUS thing sold is conveyed in consideration of the purchase price and the purchase price is paid in consideration of the conveyance of the thing delivered.

5. PRINCIPAL its existence DOESNOT depend upon the existence and validity of another contract.

6. NOMINATE specific name given by law sale

ABSOLUTE SALES VS CONDITIONAL SALE:

-depend whether the agreement is devoid of, or subject to, any condition of the passing of title of the thing to be conveyed or on the obligation of a party thereto.

- Deed of Conditional sale and the Deed of Absolute Sale CANNOT co-exist as these are of different nature and provide for separate and distinct obligations.

ABSOLUTE SALE:

1. No condition is imposed and ownership passes to the vendee upon delivery of the thing subject of the sale.

2. Neither a stipulation in the Deed that Title in the property sold is reserved in the seller until the full payment of the price, nor one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period ( Peoples Industrial and Commercial Corporation vs CA)

3. Absence of any stipulation reserving title to the vendor until full payment of the purchase price.

- The absence of a stipulation the agreement which expressly provides that the seller retains title or ownership of the property until full payment of the purchase price, coupled with the fact that the buyer took possession of the property upon execution of the agreement.

CONDITIONAL SALE

1. It is made subject to a certain contingency or condition.

2. Ownership is NOT to vest in the buyer until the happening of the condition, usually full payment of theprice.

3. Common form is CONTRACT TO SELL the transfer of ownership, NOT the perfection of the contract, that is subjected to a condition.

4. Ownership or Title over the property sold is RETAINED by the vendor , and is not passed to the vendee UNLESS and until there is full payment of the purchase price and/or faithful compliance with the other terms and conditions that may be stipulated.

CONDITION IMPOSED ON THE PERFECTION OF THE CONTRACT VS CONDITION IMPOSED ON THE PERFORMANCE OF AN OBLIGATION:

1. Failure to comply with - CONDITION IMPOSED ON THE PERFECTION OF THE CONTRACT results in the FAILURE OF A CONTRACT,

2. Failure to comply with CONDITION IMPOSED ON THE PERFORMANCE OF AN OBLIGATION only gives the other party the OPTION to REFUSE TO PROCEED with the sale or WAIVE the condition ( Lim vs CA ; Romero vs CA)

CONDITIONAL SALE CONSIDRED AN ABSOLUTE SALE -A deed of Sale is absolute in nature although denominated a CONDITIONAL SALE absent such stipulations reserving title to the vendor until FULL PAYMENT of the purchase price, nor any stipulation giving them the right to unilaterally RESCIND the contract in case of non-payment.

- OWNERSHIP of the thing sold passes to the vendee upon the constructive or actual delivery thereof.

-In determining the real character of the contract, the title GIVEN to it by the parties is NOT as much significant as its SUBSTANCE.

CONDITIONAL SALE

CONDITION (in the context of a perfected contract of sale) pertains to the compliance by one party of an undertaking the fulfilment of which would beckon in turn the demandability of the reciprocal prestation of the other party.

PERFECTION OF CONTRACT parties are bound NOT ONLY to the fulfilment of what has been expressly stipulated but ALSO to all consequences which according to their nature may be in keeping with good faith, usage and law.ELEMENTS OF CONTRACT OF SALE: ( E-N-A)

ESSENTIAL ELEMENTS

Necessary for the validity of the sale.

-if ABSENT, no valid sale can be generated. Intended sale is VOID.

Essential ELEMENTS: (M-O-P)

1. Meeting of the Minds

2. OBJECT certain and determinate

3. PRICE CERTAIN cause or consideration.

=need not be in money, money or its equivalent

=Goods or merchandise CANNOT be the equivalent of money because that will constitute BARTER.

MANNER OF PAYMENT OF THE PURCHASE PRICE IS AN ESSENTIAL ELEMENT OF A CONTRACT

=disagreement on the manner of payment is tantamount to a failure to agree on the price.

NATURAL ELEMENTS (WEW-HI)= Inherent in the contract and are deemed to exist in the contract and are deemed to exist in the contract of sale in the absence of clear contrary agreement.

1. Warranty against EVICTION ( Art 1548)

2. Warranty against HIDDEN DEFECTS ( Art 1561)

ACCIDENTAL ELEMENTS

=they MAY or MAY NOT exist depending on the stipulations of the parties like CONDITIONS, PAYMENT of interest, PLACE and TIME of payment and the like.

SIGNIFICANCE OF NOTARIZATION OF A DEED OF SALE

=does NOT necessarily justify the conclusion that the said sale is undoubtedly a true conveyance to which the parties thereto are irrevocably and undeniably bound.ABSENCE OF NOTARIZATION

=would NOT necessarily invalidate the transaction.=An invalidly notarized deed of sale is NOT a public document but it is to be considered merely as private document. In which case, NOT only the due execution of the document must be proven but also its authenticity.

FAILURE TO PAY CONSIDERATION VS LACK OF CONSIDERATION

FAILURE TO PAY CONSIDERATION

=results in a right to demand the fulfilment or cancellation of the obligation under an existing valid contract.LACK OF CONSIDERATION

=prevents the existence of a valid contract.

CONTRACT OF SALE VS CONTRACT TO SELL

CONTRACT OF SALE1. Title over the property passes to the buyer UPON delivery unless there is a contrary agreement.

2. Non-payment of the purchase price is a NEGATIVE RESOLUTORY CONDITION- the sale becomes ineffective upon the happening of such condition (non-payment).

= seller may RESCIND the contractor exact fulfilment

3. After DELIVERY of the object the seller loses ownership over it. Unless, the contract is set aside , he cannot recover the object.

CONTRACT TO SELL

1. Ownership is RETAINED by seller whether or not there is delivery. Ownership passes to buyer ONLY UPON FULLPAYMENT OF PRICE.2. The payment in FULL is a POSITIVE SUSPENSIVE CONDITION if the price is NOT PAID, the obligation to deliver and to transfer ownership on the part of the seller does NOT become effective.

=Non-payment prevents the existence of the contract.

3. Whether there is delivery or not , the seller RETAINS the ownership of the object.

=if the seller, due to the non-payment of the price is ousting the buyer from the property, the seller is NOT rescinding the contract of sale but is precisely ENFORCING it.

PROMISE TO EXECUTE A DEED OF SALE

=where the seller has promised to execute a deed of sale upon full payment of the purchase price ,the agreement is a CONTRACT TO SELL.

CONTRACT TO SELL

=akin to a conditional sale where the efficacy or obligatory force of the vendors obligation to transfer title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed.

=DEFINITION: bilateral contract whereby the prospective seller , while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer ,binds himself to sell the said property EXCLUSIVELY to the prospective buyer upon fulfilment of the condition agreed upon full payment of the purchase price.

CONTRACT OF SALE; EFFECT1. Ownership is vested on the buyer whether or not full payment is made.2. The seller has lost and cannot recover ownership until unless the contract is resolved and rescinded.

3. When a party asks for the resolution or cancellation of a contract it is implied that he recognizes its existence a non-existent contract CANNOT be cancelled.

FAILURE OF BUYER TO PAY PRICE IN CONTRACT OF SALE= The of the buyer to make good the price does not in law, cause the ownership to revert to the seller unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of NCC.=A contract to sell is commonly entered into as to protect the seller against a buyer who intends to buy the property in instalments by withholding ownership over the property until the buyer effects full payment therefor.

REMEDY: to demand fulfilment or rescission of the contract there being a breach of the obligation.

When consideration is absent,

=this prevents the existence of a valid contract.

=seller has no obligation to deliver.

= lack of consideration makes a contract of sale fictitious and a fictitious sale is void ab initio.

SIMULATED CONTRACT STATING THERE IS CONSIDERATION WHERE THERE IS NONE IS VOID AB INITIO=sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in effect never been paid by the purchaser to the vendor.

EFFECT OF ABSENCE OF PROVISO

=Deed of sale is absolute in nature, although denominated as DEED OF CONDITIONAL SALE in the absence of a proviso that the title to the property sold is reserved in the vendor until full payment of the purchase price nor a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period.RULE IF THERE IS DOUBT (SUSPENSIVE CONDITION VS SUSPENSIVE PERIOD) FOR THE PAYMENT OFNTHE AGREED PRICE

=shall be settled in favour of the greatest reciprocity of interests, which will obtain if the buyers obligation is deemed to be actually existing, with only its maturity postponed or deferred.

IN CASE OF DOUBT, SALE WITH REPURCHASE VS EQUITABLE MORTGAGE:

=shall be construed as an equitable mortgage.

CONTTRACT OF SALE IN THE FORM OF LEASE

=the lessee is given the option to buy the property for a small consideration at the end of the term provided all instruments are paid, with a stipulation that if the rent be paid throughout the term, title shall vest in the lessee, such contract is a lease in NAME ONLY ( actually,it is a contract of sale).

CAN THERE BE A VALID SALE AGAINST THE WILL OF THE OWNER OF THE PROPERTY?

YES, under the following situations:

(Involuntary in nature and constitute exceptions to the rule)

1. Property is subjected to expropriation ( Art 435 & 1488)

2. In case of ordinary execution sale conducted under sec 15, rule 39, 1997 revised rules of civil procedure

3. In case of judicial foreclosure sale under rule 68

4.In case of extra-judicial foreclosure sale under Act 3135.EFFECT OF RELUCTANT CONSENT

=It is not considered as VITIATED CONSENT.

=There is no difference in law where a person gives his consent reluctantly and even against his good sense and judgment as when he acts voluntarily and freely.

FORGED DEED OF SALE MAY BE THE ROOT OF A GOOD TITLE

*FORGED DEED = an instrument which purports to have been executed by the person or persons whose signatures appear thereon, but which, in fact, was not executed, and the signatures thereon has been merely imitated so as to give them the deceptive appearance of genuineness.

=forged title is null and void and of no effect as between parties, it may nevertheless be the ROOT OF A GOOD TITLE- so that the title of a registered owner who has taken it bona fide and for value, is NOT affected by reason of his claiming through someone, that the registration was void because it had been procured by the presentation of forged instrument.DISTINCTION BETWEEN CONDITION UPON THE PERFECTION OF A CONTRACT VS CONDITION IMPOSED ON THE PERFORMANCE OF AN OBLIGATION

CONDITION UPON THE PERFECTION OF A CONTRACT

=results in the failure of a contract.CONDITION IMPOSED ON THE PERFORMANCE OF AN OBLIGATION=gives the other party the option either to refuse to proceed with the sale or to waive the condition.

ART 1459: The thing must be LICIT and the vendor must have a right to transfer the ownership thereof at the time it is delivered.OBJECT OF CONTRACTS (is its SUBJECT MATTER)

=ALL THINGS which are NOT outside the commerce of man, including future things.

=ALL RIGHT which are NOT instransmissible.

OBJECT MUST BE LICIT OR LAWFUL may either be:

1. Things

2. Rights

CLASSIFICATION OF ILLICIT THINGS

1. ILLICIT PERSE- by its nature it is heinous, immoral and wrongful (house of prostitution).

2. ILLICIT PER ACCIDENS it is illegal only because there is a law prohibiting it.

=sale of parcel of land to a disqualified alien is void (prohibited by constitution)

= sale of homestead before the lapse of 5 years.

= Reclaimed land (being a public domain) CANNOT be subject to sale WITHOUT congressional fiat.

RIGHTS AS OBJECTS OF SALE=while Articles 1458 & 1459 DID NOT expressly mention RIGHTS as objects of sale, if they are TRANSMISSIBLE, they can be subject matter of contracts of sale.

=Rights cannot be included within the term things which are tangible, because rights are intangible and can either be transmissible or intransmissible. In order to be subject matter of contract of sale it MUST be transmissible.

TRANSMISSIBLE RIGHT which can be transferred:

1. Right of Usufruct ( Art 572)

2. Right of Redemption ( Art 1601)

3. Assignment or sale of Credit ( Art 1627)4. Right to inheritance already acquired but NOT future inheritance.

INTRANSMISSIBLE RIGHTS :

1. Right to Suffrage

2. Right to hold a public position

3. Right to support

4. Marital rights

CAN SERVICES BE THE OBJECT OF SALE?

=YES, like contract for a piece of work BUT services CANNOT be the object of sale.

REASONS: services are NOT determinate things and NO transfer of ownership is available in services.

IN PARI DELICTO

=rights of the parties embroiled in a void contract due to the ILLEGALITY of the object shall be determined by:

ARTICLE 1411 ( Acts constitute criminal offense)

1. No action against each other and both shall be prosecuted2. Provisions of RPC in disposal of effects or instruments of a crime shall be applicable to the things or the price of the contract ( applicable when only one of the party is guilty; but the innocent one may claim what he has given, and shall not bound to comply with his promise).

ARTICLE 1412 (Acts does not constitute criminal offense)

1. Neither may recover what he has given by virtue of the contract, or demand performance of the others undertaking.

2. When only one of the contracting parties is at fault, he cannot recover he has given by reason of a contract or ask for fulfilment of what has been promised, the other who is NOT at fault, may demand the return of what he has given without any obligation to comply with his promise.

TRANSFER OF OWNERSHIP IS ESSENTIAL IN SALE =The seller must have the right to transfer the ownership of the thing or right sold to the buyer at the TIME OF DELIVERY. Delivery may be actual or constructive

=By implication, at the time of the perfection of the contract, the seller NEED not be the owner of the thing or right sold.what is important is at the TIME OF DELIVERY, he is already the owner of the thing or right- Otherwise, he can be liable for damages for breach of warranty against eviction.

NEMO DAT QUOD NON HABET

=nobody can dispose of a thing which does not belong to him.

FORECLOSURE SALE

=though essentially a FORCED SALE, is still a sale in accordance with Art 1458 under which the mortgagor in default, the forced seller, becomes obliged to transfer the ownership of the thing sold to the highest bidder who, in turn, is obliged to pay therefor the bid price in money or its equivalent.

SELLER CAN SELL ONLY WHAT HE OWNS OR AUTHORIZED TO SELL

=buyers can acquire no more than what the seller can transfer legally.REASON WHY SELLER IN GOOD FAITH NEED NOT BE THE OWNER OF THE OBJECT OF SALE

= If the seller is required to be the owner of the object of the sale at the perfection of the contract, FUTURE GOODS could no longer be the subject matter of sale.

=The contract by itself, is not a mode of acquiring ownership but merely gives rise to obligations.

RULE IN DONATION IS DIFFERENT FROM RULE IN SALE:

GEN RULE: future property CANNOT be subject of donation

IN SALE, future things and goods may be the object of the contract

ARTICLE 1460: A thing is determinate when it is particularly designated or physically segregated from all others of the same class.

The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being made determinate without the necessity of a new or further agreement between the parties.

THING OR OBJECT MUST BE DETERMINATE NOT GENERIC

=the fact that the quantity is NOT determinate shall not be an obstacle to the existence of the contract- provided it is possible to determine the same, without the need of a new contract between the parties.EXAMPLE:

1. A specific lot consisting of certain number of square meters covered by an existing transfer certificate if title.

2.A particular car covered by a specific motor number and plate number.

RELAXATION OF THE RULE OF DETERMINATE CHARACTER OF THE THING OR OBJECT

=if at the time the contract was entered into, the thing or object is capable of being made determinate without the NEED for entering into a new or supplemental contract between the parties, the requirement that the thing be determinate is satisfied.

=If there is such a need, the contract is VOID, for then the intention of the parties CANNOT be ascertained.

ARTICLE 1461: Things having potential existence may be the object of the contract of sale.

The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence.

The sale of vain hope or expectancy is VOID.

THING WITH POTENTIAL EXISTENCE

-although not yet in actual existence but which may reasonably come into existence for being the natural increment of something already in existence is said to have potency to exist and which can be a subject matter of a contract of sale.

Illustrations of things with Potential Existence:

1. Future fruits expected to be harvested

2. Wine expected to be produced

3.All the forthcoming chicks hatched from a particular poultry

4.Sugar expected to be harvested from a sugar cane plantation.

5. Expected goodwill of a business enterprise

STATUS OF SALE OF THINGS WITH POTENTIAL EXISTENCE

= depends upon the intentions of the parties:

1. If the contract of sale is made dependent upon the existence of the things such that if it did not come into existence, the contract is NOT effective, and the buyer will have no obligation to pay the price.

* EMPTIO REI SPERATAE purchase of an expected thing subject to the condition that the thing will come to existence.

2. If the contracting parties intended the contract of sale to exist at all events ( whether or not the expected thing will come into existence) such that the buyer will have to pay the purchase price, the contract becomes aleatory in nature.

*EMPTIO SPEI purchase of hope or expectancy

Example: sale of genuine lotto ticket, whether the ticket wins or not, the sale is valid.

WHEN THERE IS DOUBT, whether the sale is EMPTIO REI SPERATAE or EMPTIO SPEI:

=the presumption is in favour of EMPTIO REI SPERATAE, because it is more in keeping with the commutative character of sale.

SALE OF MERE HOPE OR EXPECTANCY- WHEN NOT VALID

VALID even if the expected thing did not material UNLESS:

1. The hope or expectancy is vain.

2. The parties intended that if the hope or expectancy will not materialize, the sale is VOID.

Example of Void sale of a vain of hope or expectancy sale of used bingo ticket.ARTICLE 1462: The goods which form the subject of a contract of sale may either existing goods, owned or possessed by the seller, or goods to be manufactured, raised or acquired by the seller after the PERFECTION of the contract of sale, in this title called FUTURE GOODSThere may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which may or may not happen.

GOODS

=includes all chattels personal but not things in action or money of legal tender in the Philippines.

=includes growing fruits or crops.=Real property in NOT included in the term goods.

KINDS OF GOODS

1. Existing goods owned or possessed by the seller actually existing at the time of the perfection of the contract

2. Future goods those which do not exist yet but have potential existence.

EXAMPLES OF FUTURE GOODS:

1. Goods to be manufactured yet such as subscription to future issues of magazines2.Goods to be manufactured specially for the customer and not readily saleable to the general market. (contract for a piece of work)

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