FINAL EXAMINATION COVERAGE ON SALES

i. Contract of Sale Definition

ii. Distinctions of Absolute and Conditional Sale
iii. Elements of Contract of Sale
iv. Montecillo Vs. Reynes 385 SCRA 245
v. Article 1463
vi. Distinction between Sales and Agency
vii. Distinction between Earnest Money and Option Money
viii. Effect of False Notarization or Expiration of Commission of
Notary Public on a Deed of Sale (Heirs of Amparo del Rosario
Vs. Santos, 108 SCRA 43; Soriano Vs. Latono, 87 Phil.757)
ix. Effect of Unnotarized Deed of Sale(Heirs of Ernesto Biona Vs.
Court of Appeals)
x. Double Sale of Real Property
xi. Conventional Redemption (Article 1601)
xii. Article 1602
xiii. Article 1619(Legal Redemption
xiv. Distinction between Lease and Sale
xv. Republic Act 8179
xvi. Rights of the Lessor in case Lessee violates Prohibition to
Sublease
xvii. Barter ( Article 468)

1. Contract of Sale Definition

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Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the
ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or
its equivalent.

A contract of sale may be absolute or conditional. (1445a)

2. Distinctions of Absolute and Conditional Sale

A sale is absolute when no condition is imposed and ownership passes to the vendee upon delivery of
the thing subject of the sale. (Pineda pg. 5)

A sale is conditional when it is made subject to a certain contingency or condition. Here, ownership is
not to vest in the buyer until the happening of the condition, usually full payment of the price. (Pineda
pg. 6)

3. Elements of Contract of Sale

The elements of sale are classified into essential, natural and accidental elements distinguished as
follows:

(1) Essential Elements. - Those which are necessary for the validity of the sale. If they are absent, no
valid sale can be generated. The essential elements of sale are the following:

(a) Meeting of the minds of the seller and buyer, that is, the seller will deliver and the buyer will pay
the purchase price therefor (Art.1475);

(b) Object which is certain and determinate;

(c) Price certain. This is the cause or consideration. It need not be in money. (Pineda pg.8)

(2) Natural Elements.- Those which are inherent in the contract and are deemed to exist in the contract
of sale in the absence of clear contrary agreement. There are two natural elements

(a) Warranty against eviction (Art. 1548); and

(b) Warranty against hidden defects (Art. 1561).

(3) Accidental Elements.- Those which are not essential or natural. They may or may not exist
depending on the stipulations of the parties like conditions, payments of interest, place and time of
payment and the like. (Pineda pg. 10)

4. Montecillo vs. Reynes 385 SCRA 245

Simulated Contract Stating There Is Consideration Where There Is None Is Void Ab Initio.-

Montecillo vs. Reynes

385 SCRA 245

Held: Where the deed of sale states that the purchase price has been paid but in fact has
never been paid, the deed of sale is null and void ab initio for lack of consideration. (Pineda
pg. 15)

5. Art. 1463
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 Art. 1463. The sole owner of the thing may sell an undivided interest therein.

Applicability.- The Article apples to a sole owner of a property. The sole owner can sell an undivided
interest therein like one-half or any other aliquot part thereof.

Can A Co-owner Of a Thing Alienate His Share Or A Portion Of His Share In The Co-ownership?-
Just like a sole owner, a co-owner shall have full ownership of his aliquot part. He may alienate,
assign or mortgage it except only when personal rights are involved (Art. 493). There is no prohibition for
the co-owner to sell just part of his share in the co-ownership.

Selling Property To A Dead Person; Effect.- A seller cannot transfer title over a lot, through a Deed of
Absolute Sale, to a person who has already died, as the deceased has no more civil personality or
juridical capacity ( Dawson vs. Register of Deeds of Quezon City, 195 SCRA 733). (Pineda pg. 32-33)

6. Distinctions Between Sale and Agency (Pineda pg. 37)

Sale Agency
1. The buyer pays for the price of the The agent does not pay for the price. He merely
goods/property purchased. accounts for the proceeds of the sale.

2. The buyer becomes the owner of the goods/ The agent does not become the owner of the
property purchased. goods/property delivered to him for sale.

3. Buyer cannot return the goods/ property when The agent returns the goods/property if he
the sale is defective. was not able to sell the same.

7. Distinction between Earnest Money and Option Money (Pineda pg. 86)

Earnest Money Option Money

1. It is part of the purchase price. It is given as a distinct consideration for an option
contract which gives the buyer a specific period
within which to purchase the thing.

2. When it is given, the buyer is bound to pay the Even if option money is paid by the would-be-
balance of the agreed purchase price. buyer, he is not bound to buy the thing.

3. If the sale does not materialize, the earnest If the buyer decided not to buy the thing, he
money paid must be returned, unless a contrary cannot recover the option money he paid as
agreement had been stipulated. consideration for the contract of option

8. Effect of False Notarization or Expiration of Commission of Notary

Public on a Deed of Sale
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 Heirs of Amparo del Rosario vs. Santos, 108 SCRA 43
Same; Same; Sale; Statute of Frauds; A sale of real property to be enforceable need not be notarized.—As
correctly pointed out by the court a quo, the alleged false notarization of the deed of sale is of no
consequence. For a sale of real property or of an interest therein to be enforceable under the Statute of
Frauds, it is enough that it be in writing. It need not be notarized. But the vendee may avail of the right
under Article 1357 of the New Civil Code to compel the vendor to observe the form required by law in
order that the instrument may be registered in the Registry of Deeds. Hence, the due execution and
genuineness of the deed of sale are not really in issue in this case. Accordingly, assigned error I is without
merit. (Heirs of Amparo del Rosario vs. Santos, 108 SCRA 43)

Soriano vs. Latono, 87 Phil. 757

PURCHASE AND SALE; DEED OF SALE NOT NOTARIZED IS VALID BETWEEN PARTIES.—Although a deed of
sale of real property was not notarized the same was effective as between the parties under article 1261
of the old Civil Code in force at the time of the conveyance, provided that all the elements of a valid
contract were present: subject matter, capacity and consent of the parties, and lawful consideration.

9.Effect of Unnotarized Deed of Sale

Heirs of Ernesto Biona vs. Court of Appeals G.R. No. 105647

Same; Notarial Law; The fact that the deed of sale was not notarized does not render the agreement null
and void and without any effect—the provision of Article 1358 of the Civil Code on the necessity of a
public document is only for convenience, not for validity or enforceability.—We agree with the private
respondent that all the requisites for a valid contract of sale are present in the instant case. For a valuable
consideration of P4,500.00, Soledad Biona agreed to sell and actually conveyed the subject property to
private respondent. The fact that the deed of sale was not notarized does not render the agreement null
and void and without any effect. The provision of Article 1358 of the Civil Code on the necessity of a
public document is only for convenience, and not for validity or enforceability. The observance of which is
only necessary to insure its efficacy, so that after the existence of said contract had been admitted, the
party bound may be compelled to execute the proper document. Undeniably, a contract has been entered
into by Soledad Biona and the private respondent. Regardless of its form, it was valid, binding and
enforceable between the parties.

10. Double Sale of Real Property

Art. 1544.

If the same thing should have been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith
first recorded in it the Registry of Property. Should there be no inscription, the ownership shall pertain to
the person who in good faith was first in the possession; and, in the absence thereof, to the person who
represents the older title provided there is good faith.

11. Conventional Redemption

Article 1601

Conventional redemption shall take place when the vendor reserves the right to repurchase the thing
sold, with the obligation to comply with the provisions of Art. 1616 and other stipulations which may
have been agreed upon.

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*The article applies only if there is a stipulation in the contract of sale granting the seller the right to
redeemds the thing he has sold (Ordonez vs. Villaroman)

12. Article 1602

Article 1602 (Equitable Mortgage)

The contract shall be presumed to be an equitable mortgage, in any of the following cases:

(1) When the price of sale with right to repurchase is unusually inadequate;

(2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument extending the
period of redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the purchase price;

(5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that the real intention of the parties is that the
transaction shall secure the payment of a debt or the performance of any other obligation. In any of the
foregoing case, any money, fruits or other benefit to be received by the vendee as rent or otherwise shall
be considered as interest which shall be subject to the usury laws.

13. Article 1619

Article 1619(Legal Redemption) Legal redemption is the right to be subrogated, upon the same terms
and conditions stipulated in the contract, in the place of one who acquires a thing by purchase or dation
in payment, or by any other transaction whereby ownership is transmitted by onerous title.m

14. Distinctions between Lease and Sale

Lease Sale
LEASE, NO SUCH TRANSFER OF OWNERSHIP results In a CONTRACT OF SALE, the delivery of the thing
as the rights of the lessee are limited to the use sold TRANSFERS OWNERSHIP,
and enjoyment of the thing leased (Pickel v.
Alonzo)

In SALE, price must be in money or its equivalent. In LEASE, price may be money, fruits, or some
other useful things or other prestation.

15. Republic Act 8179

Republic Act 8179 Former Filipino citizens are now allowed to buy lands in the Philippines. The area,
however, is limited to three (3) hectares if the land is agricultural, and 5,000 square meters, if it is urban.
Spouses cannot have an aggregate area of more than the areas stated.

Foreigners are also allowed now to own condominiums in the country to attract foreign investments.

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16. Rights of the Lessor in case Lessee violates Prohibition to Sublease
If the lessee despite the express prohibition in the lease contract, has subleased the thing leased, the
lessor may file an action for rescission of the contract of lease and may also seek further indemnification
for the damages caused (Calis v. De Vera)

17. Barter
ART. 1638. By the 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.

Nature of Barter
However, there can still be a barter even if the consideration consists partly in money and partly in
another thing. Thus, Art. 468 states – if the consideration of the contract consists partly in 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.

And under Art. 1954, there is also a barter if one person transfers the ownership of non-fungible things
to another with the obligation on the part of the latter to give things of same kind, quantity and quality.

Perfection Of Barter.- The contract of barter is perfected from the moment there is a meeting of the
minds of the parties upon thins promised by each party in consideration of the other (Art. 1641; Art.
1475)

Consummation Of Barter.- The contract of barter is consummated from the time of mutual delivery by
the contracting parties of the things they have mutually promised to deliver to each other. In other
words, barter is consummated from the time the parties mutually took possession of the properties
exchanged. (Tagaytay Development Co. vs. Osorio, 69 Phil. 180)
( Pineda pg. 446-447)

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