SALES
makes it VOIDABLE.
CHAPTER 1: NATURE AND FORM OF
CONTRACT
Article 1458 – By the contract of sale one of
the contracting parties obligates himself to
transfer the ownership of and to deliver the
determinate thing, and the other to pay
therefore for a price certain in money or its
equivalent.
 Can be absolute or conditonal
Characteristics of a contract of sale
1. Consensual – perfected by mere
consent
2. Bilateral- both parties are bound
3. Onerous – the thing sold is conveyed in
consideration of the price
4. Commutative – the thing sold is
considered equivalent of the price paid
XPN: aleatory contract – one of
the parties or both reciprocally
bind themselves to give or to do
something in consideration of
what the other shall give or do
upon the happening of an event
which is uncertain, or which is to
occur at an indeterminate time.
5. Nominate – given a special name or
designation in the Civil Code; “sale”
6. Principal – it does not depend for its
existence and validity upon another
contract.
Essential Requisites:
1. Consent or meeting of the minds
XPN:
 ART. 1488 - sale against
the will of the owner in case
of expropriation (forced
sale)
 Three kinds of sale under
the law:
1. Ordinary execution sale
2. Judicial foreclosure sale
3. Extra judicial
foreclosure sale
 Sale of conjugal property – requires the
consent of both the husband and wife.
Absence of consent of one renders the
sale NULL or VOID; Vitiation thereof
2. Object or subject matter – refers to the
determinate thing of which is the object
of the contract.
May be:
 Immovable or Personal
property
 Real property
 Movable Property
 Tangible Assets

 Intangible Assets
3. Cause or consideration – “price certain
in money or its equivalent (check or
promissory note)”. NOT GOODS OR
MERCHANDISE
 Price must be real, not fictitious;
otherwise sale is VOID
ABSENCE OF ANY ABOVE ESSENTIAL
ELEMENTS NEGATES THE EXISTENCE OF A
PERFECTED CONTRACT OF SALE.
Natural and accidental elements
1. Natural elements – those which are
deemed to exist in certain contract
in the absence of any contrary
stipulations. (hidden defects or
warranty against eviction)
2. Accidental elements – those which
may be present or absent
depending on the stipulations of the
parties. (conditions, penalty, time or
place of payment)
Effect of absence of price/non-payment of
price
1. THERE CAN BE NO SALE WITHOUT A
PRICE. – Contract of sale is void
2. NONPAYMENT OF PURCHASE PRICE
- Remedy is rescission or specific
performace
 Failure to pay the price in full within
a fixed period does not dissolve a
contract of sale in the absence of
any agreement that payment on
time is essential.
 Transfer of title to property for a
price, essence of sale
- The transfer of title to property or
agreement to transfer title for a price
actually paid or promised, not a mere
physical transfer of the property, is the
essence of sale.
- But neither is the delivery of the thing
bought nor the payment of the price
necessary for the perfection of the
contract of sale.
Kinds of contract of sale
1. As to presence or absence of conditions
a. Absolute – ownership passes to the
buyer upon delivery of the things
sold.
b. Conditional – contract is subject to
certain conditions; delivery of the
thing sold DOES NOT transfer
ownership until the condition is
fulfilled.
ARTICLE 1459
The thing must be licit (not forbidden or
conforming to the requirements of the law)
and the vendor must have a right to transfer
the ownership thereof at the time it is
delivered.
REQUISITES CONCERNING OBJECT
1. Things – determinate; the subject matter
must be licit or lawful; not impossible.
- If the subject matter of the sale
is illicit, THE CONTRACT IS VOID.
2. Rights – all rights which are
transmissible may also be the object of
sale. Ex: Right to usufruct, right of
conventional redemption
- services cannot be the object
of a contract of sale.
KINDS OF ILLICIT THINGS
a. Illicit per se – (of its nature)
b. Illicit per accidens – (because of some
provisions of law declaring it illegal)
RIGHT OF VENDOR TO TRANSFER
OWNERSHIP
1. One can sell only what he owns
– he must be the owner or at
least be authorized by the
owner of the thing sold; “nobody
can dispose of that which he
cannot have.”
2. Sufficient if right exists at time of
delivery
– does not require that the
vendor must have the right to
transfer of ownership at the time
of perfection of contract.
– IT IS SUFFCIENT IF HE HAS
THE RIGHT TO SELL THE
THING AT THE TIME WHEN
THE OWNERSHIP TO PASS.
 An agreement yet to be adjudicated
by a court is thus valid and binding.
ARTICLE 1460
A thing is determinate when it is
particularly designated or physically
segregated from all the 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.
SUBJECT MATTER MUST BE DETERMINATE
1. When thing is determinate – when it is
particularly designated or physically
segregated from all other of the same
class.
GENERAL RULE: Object of every contract
must be determinate as to its kind.
 It is not necessary that the thing
sold must be in sight at the time the
contract id entered into.
 2. Sufficient if the subject matter capable of
being made determinate – the thing
being determinable or capable of being
made determinate without the necessity
of a new or further agreement between
the parties to ascertain its identity,
quality or quantity.
ARTICLE 1461
Things having a 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 od vain hope or expectancy is
void.
SALE OF THINGS HAVING POTENTIAL
EXISTENCE
 Even a future thing not existing at the
time the contract is entered into, may
be the object of sale provided it has
a potential or possible existence, that
is, it is reasonably certain to come
into existence as the natural
increment or usual incident of
something in existence already
belonging to the seller , and the title
will vest in the buyer the moment the
thing comes into existence.
Ex: The wine a vine is expected to produce, the
grain a field may grow in a given time.
SALE OF A MERE HOPE OR EXPECTANCY
- Valid even if the thing hoped or
expected does not come into existence
- UNLESS: the hope or expectancy is
vain. If so, sale is void.
Ex: (sale of falsified sweepstakes
ticket which can NEVER win)
ARTICLE 1462
The good which form the subject of the
contract of sale may be 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 goods.”
There may be a contract of sale of goods,
whose acquisition by the seller depends
upon ac contingency which may or may not
happen.
GOODS WHICH MAY BE THE OBJECT OF
SALE
1. Existing goods – owned or possessed
by the owner
2. Future goods – goods to be
manufactured, raised, or acquired by the
seller
XPN: the sale of goods that are to
be manufactured especially for the
buyer and not readily saleable to
other in the manufacturer’s regular
course of business.
 Sale of future goods – valid only as
an executory contract
 Property or goods which at the time
of the sale, are not owned by the
seller but which thereafter are to be
acquired by him, cannot be the
subject of an executed sale but may
be the subject of a contract for
future sale and delivery thereof.
ARTICLE 1463
The sole owner of a thing may sell an
undivided interest therein.
1. By the sole owner
– may sell the entire thing, a
specific portion, or an undivided
interest therein and such
interest may be designated as
an aliquot part of the whole.
 The legal effect of the sale of an
undivided interest in a thing is to
 make the buyer a co-owner of the
thing sold.
2. By co-owner – being the co-owner of his
undivided interest therein, can dispose
of his share even without the consent of
the other co-owner/s.
ARTICLE 1464
In the case of fungible goods, there may be a
sale of an undivided share of a specific mass,
though the seller purports to sell and the
buyer to buy a definite number, weight or
measure of the goods in the mass is
undetermined. By such a sale the buyer
becomes the owner in common of such a
share of the mass as the number, weight or
measure bought bears to the number, weight,
or measure of the mass. If the mass contains
less than the number, weight or measure
bought, the buyer becomes the owner of the
whole mass and the seller is bound to make
good the deficiency from goods of the same
kind and quality, unless a contrary intent
appears.
SALE OF AN UNDIVIDED SHARE OF A
SPECIFIC MASS
1. fungible goods – goods of which any
unit is, from its nature or by mercantile
usage, treated as the equivalent of any
other unit such as grain, oil, wine,
gasoline, etc.
2. Effect of sale
– the owner of a mass of goods
may sell only an undivided share
thereof, provided the mass is
specific or capable od being
made determinate.
a. The buyer becomes a co-owner
with the seller of the whole mass
in proportion in which the definite
share bought bears to the mass.
b. Must follow that the aliquot share
of each owner can be
determined only by the
measurement of the entire mass.
c. If later on it be discovered that
the mass of fungible goods
contains less than what was
sold, the buyer becomes the
owner of the whole mass; the
seller shall supply whatever is
lacking from goods of the same
kind and quality, subject to any
stipulation to the contrary.
3. Risk of loss
– If the buyer becomes the co-owner,
with the seller, or other owners of the
remainder of the mass, it follows that the
whole mass is at the risk of all the parties
interested in it, in proportion to their
various holdings.
4. Subject Matter – the sale of an
undivided share, either a thing or that of
goods, the subject matter is an
incorporeal or intangible right.
Ownership passes to the buyer by the
intention of the parties.
ARTICLE 1465
Things subject to a resolutory condition
may be the object of the contract of sale.
Resolutory condition – is an uncertain event
upon the happening of which the obligation
(or right) subject to it is extinguished.
 If a resolutory condition attaching to
the object of the contract, which
may include things as well as rights,
should happen, then the vendor
CANNOT TRANSFER the
ownership of what he sold since
there is no object.
Ex:
Sold a land with a right to
repurchase within a given time.
If the seller exercises the
repurchase, then the sale made
by the original buyer to the new
buyer falls.
ARTICLE 1466
In construing a contract containing
provisions characteristics of both the
contract of sale and of the contract of agency
to sell, the essential clauses of the whole
instrument shall be considered.
Sale vs Agency to sell
Contract to sell
– person binds himself to render service
or to do something in behalf of another,
with the consent or authority of the
latter.
– seller retains the ownership of the
thing and the agent must account for the
proceeds of the sales less commission
agreed upon
ARTICLE 1467
Sale vs Contract for a piece of work
Contract for a piece of work – the contractor
binds himself to execute a piece of work for the
employer, in consideration of a certain price or
compensation.
 The thing transferred is one
not in existence and which
would have existed but for
the order of the party
desiring to acquire it
 Not suitable for sale to
others in ordinary course of
business
 Manufactures especially
 Risk of loss before delivery
if borne by contractor
 Not within Statute of Frauds.
ARTICLE 1468
Sale distinguished from barter
Contract of barter or exchange – one of the
parties binds himself to give one thing in
consideration of the other’s promise to give
another thing.
Contract of sale – the vendor gives a thing in
consideration of a price in money.
 If the intention does not clearly appear, it
shall be considered barter if the value of
the thing given as a part of consideration
exceeds the amount of money or its
equivalent. Otherwise, it is a sale.
ARTICLE 1469
 No sale if price not certain or
ascertainable.
 Cases when price considered certain
a. Parties have fixed or agreed upon s
definite amount
b. *Certain with reference to another
thing certain.
c. *Determination of price is left to the
judgement of a specified person or
persons.
*applicable only when no specific
amount has been stipulated by
parties.
Effects where price fixed by third person
designated
GENERAL RULE: The price fixed by a third
person designated by the parties is binding upon
them.
XPN:
1. Third person acts in bad faith or by
mistake when the third person fixed the
price having in mind NOT THE THING
WHICH IS THE OBJECT OF THE
SALE, but another analogous or similar
thing. In which the court may fix the
price.
 Mere error in judgement cannot serve as
a basis for disregarding the price fixed.
2. When the third person disregarding
specific instructions or the procedure
laid down by the parties, or the data
given him, fixed an arbitrary price.