CONTRACT OF SALE

• One of the contracting parties obligates himself to transfer OWNERSHIP

• And to deliver
• A determinate thing
• And the other to pay a price certain in money or its equivalents

BY DEFINITION

Contract of sale is a consensual contract and is perfected upon mere meeting of the minds.

- There should be an offer and an acceptance

- If not perfected, it cannot serve as a binding juridical relation between the parties

THE THING

- The thing to be delivered must be licit

- The vendor must have the right o transfer the ownership
- The thing must be determinate
- The thing must be capable of being made determinate without creating further agreement
- The thing having a potential existence may be an object of sale
Efficacy of a sale of a mere hope or expectancy
There be a condition that the thing will come into existence

SUBJECT OF A CONTRACT OF SALE

1. Existing goods
2. Owned or possessed by the seller
3. Goods to be manufactured, raised or acquired by the seller in case of future goods

THE CONSIDERATION OF A SALE

• Inadequacy – does not affect a contract of sale

• Defect in the consent mainly affects validity
• SIMULATED PRICE. Shall render the sale as void and the act may be shown to have been in reality a donation, or
some other act or contract.
• FIXING OF PRICE. Can never be left to the discretion of one of the contracting parties, UNLESS, the price fixed by
one party is accepted by the other.
• If THE PRICE CANNOT BE DETERMINED by all circumstances, the contract is rendered inefficacious.

REMEDIES AGAINST PARTY IN FAULT. The seller or the buyer may so be allowed to fix the price when a third person is
prevented by a seller or buyer.

INORDER TO CONSIDER AS A SALE

• It should be characterized by the manifest intention of the parties

1. The consideration be partly in money
2. The consideration be partly in another thing
• If no manifest intention, the transaction shall be considered as BARTER, when:
1. The value of the thing as consideration exceeds the amount of money or its equivalent.

A SALE BY AUCTION

• Each lot is the subject of a separate contract of sale.

 • PERFECTED. When the auctioneer announces its perfection by the fall of the hammer or other customary
manner.
• ALLOWABLE RETRACT OF A BIDDER FROM HIS BID.
Until announcement for the perfection has been made, any bidder may retract his bid
The auctioneer may withdraw the goods, unless it has been announced to be without reserve.
• NOTICE TO BID FOR THE SELLER
GR. Where notice has not been given, it shall not be lawful for the seller to bid himself or to employ or
induce any person to bid
Right to bid may be reserved expressly by or on behalf of the seller, unless otherwise provide

RIGHT OF THE SELLER TO BID IN THE AUCTION

1. Right was reserved

2. Notice was given that the sale is subject to a right to bid on behalf of the seller
3. Right to bid by the seller is not prohibited by the law

FRAUDULENT BID BY THE SELLER

1. To bid for himself

2. To induce any person to bid on his behalf
3. To employ any person on behalf of the seller
4. Knowingly take any bid from the seller

TRANSFER OF OWNERSHIP

1. Upon the actual, or

2. Constructive delivery
3. MAY STIPULATE, that ownership be transferred until the price has been fully paid.

ABSENCE OF PRICE OR NON – PAYMENT

1. There can be no sale without price

2. Non – payment of the purchase price is a resolutory condition for which the remedy is either rescission or
specific performance.

TRANSFER OF TITLE

• A promise to buy and sell a determinate thing for a price certain is reciprocally demandable
• The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery
thereof.
• The parties may stipulate that the ownership in the thing shall not pass to the purchaser until he has fully paid
the price.

GOODS BY DESCRIPTION OR BY SAMPLE

• The contract may be rescinded if the bulk of the goods DO NOT correspond with the description or sample

GOODS BY SAMPLE AND BY DESCRIPTION

• Action for rescission. It is not sufficient that the bulk of goods corresponds with the sample but not with the
description.
• The buyer shall have the reasonable opportunity of comparing the bulk with the description or the sample

PERSONAL PROPERTY IN INSTALLMENT AS WELL AS LEASING WITH AN OPTION TO BUY

1. Upon vendee’s failure to pay, vendor may demand for the exact fulfillment of the obligation
 2. Upon failure to pay 2 or more installments, vendor may cancel the sale
3. Upon failure to pay 2 or more installments, vendor may so institute FORECLOSURE of the CHATTEL MORTGAGE,
and shall no longer have further right to institute actions against the vendee to recover any unpaid balances.
Any agreement to the contrary shall be void

• Upon lease with an option to buy, remedies may be applied when lessor is deprived of the possession or
enjoyment of the thing or property.
• In the case when there is a stipulation that the installments or rents paid shall not be returned to the vendee or
lessee shall be valid insofar as the same may not be unconscionable under the circumstances.
• The expenses for the execution and registration of the sale shall be borne by the vendor, unless there is a
stipulation to the contrary.

EFFECTS WHEN A THING IS LOST

• Upon perfection, thing is entirely lost, contract shall have no effect

• Upon perfection, thing is lost in parts, may:
1. Withdraw and demand the remaining and shall pay the portion to the total sum agreed.

LOST OF SPECIFIC GOODS

• Parties agreed of a specific goods

• Goods have perished without knowledge of the seller
• The lost is in part or in whole or such of material part have deteriorated.
1. As sale be avoided, or
2. As valid in all existing goods or as to parts as have not deteriorated.
3. And if divisible, buyer shall pay the agreed price for the goods on which ownership will pass.

OBLIGATION OF THE VENDOR

• Shall be bound to transfer the ownership

• To deliver
• To warrant the thing

DELIVERY OF THE THING SOLD

• When placed in the control and possession of the buyer

• When made through a public instrument, the execution thereof is equivalent to delivery
• Regards to movable things, delivery of the keys or depository of the thing sold where it is stored or kept or by
mere consent or agreement of the contracting parties

DOUBLE SALE
 1. If the same thing should have been sold to DIFFERENT vendees
a. The ownership shall be transferred to the person who may have FIRST taken possession thereof in GOOD
FAITH
b. That the thing sold should be a movable property

2. Sale of an Immovable property

a. The ownership shall belong to the person ACQUIRING it who in GOOD FAITH,
b. FIRST recorded it in the Registry of Property

3. No Inscription,
a. The ownership shall pertain to the person who IN GOOD FAITH was the first in POSSESSION.
b. Or, in the absence thereof, ownership shall belong to the person who presents the OLDEST TITLE, provided
there is good faith

CONDITIONS AND WARRANTIES

Obligation of the parties to a contract of sale is subject to any condition

a. Provided the condition was not performed

b. Such party may refuse to proceed with the contract
c. Or he may waive performance of the condition

If the other party has promised that

a. The condition should happen

b. Or be performed
c. Such first mentioned party may also treat the non – performance of the condition as a BREACH OF
WARRANTY

Where the ownership of the thing has not been passed

a. The buyer may treat the fulfillment by the seller of his obligation to deliver the same as:
- Described
- Warranted expressly
- Or by implication in the contract of sale as a condition of the obligation of the buyer to perform his
promise to accept and pay for the thing
Presence of Conditions and Warranties

a. Conditions may be waived

b. Conditions may be considered as warranties

WARRANTY INCASE OF EVICTION

Eviction

1. The vendee shall be deprived of the whole or of a part of the things purchased whenever there is final
Judgement based on:
a. Right prior to the sale
b. An act imputable to the vendor

2. The vendor shall answer for the eviction even though nothing has been said in the contract on the subject

3. The parties may:

a. Increase
b. Diminish
c. Or suppress this legal obligation of the vendor

Take Note. The warranty cannot be enforced until a final judgement has been rendered, whereby the
vendee loses the thing acquired of a part thereof
The vendee shall not be obliged to make good the proper warranty, unless he is summoned in the suit for
eviction at the instance of the vendee

Vendor’s Liability / Vendors be liable for eviction

A. The vendee need not to appeal from the decision in order that the vendor may become liable for the eviction
B. If the property is sold for non – payment of taxes due
C. The purpose of sale for non – payment of taxes not made known to the vendee before the sale
D. Any stipulation exempting him from Liability is VOID if he acted in bad faith

Exception to the Vendor’s Liability. The vendor shall not be liable for the eviction:

1. When adverse possession had been commenced before the sale

2. Prescriptive period is completed after the transfer

Liability of Judgement Debtor.

1. Judgement debtor is also responsible for eviction in judicial sales

2. Unless, it is otherwise decreed in the judgement

Vendee Renounces the right to warranty.

1. In case of eviction, and eviction shall take place:

a. Vendor, shall only pay the value which the thing sold had at the time of the eviction

2. Vendor Shall not be liable to the waiver when:

a. It was made with the knowledge of the risks
b. When the vendee assumes the consequences
Vendee to demand from the vendor in case of eviction:

a. Rights
1. The return of the value which the thing sold at the time of the eviction, be it greater or less than the
price of the sale
2. The income or fruits, if he has been ordered to deliver them to the party who won the suit against him
3. The costs of the suit which caused the eviction, and in proper case, those of the suit brought against the
vendor for the warranty
4. The expenses of the contract, if the vendee has paid them
5. The damage and interest and ornamental expenses, if the sale was made in bad faith

b. Requisites
1. When the warranty has been agreed upon
2. Or nothing has been stipulated on this point

Vendee’s action for rescission with the Contract:

• He may exercise this right of action, instead of enforcing the vendor’s liability for eviction

a. Requisites
1. That a part of the thing sold was lost by reason of the eviction
2. That the things had such important character in relation to the whole thing
3. That he would not have bought the thing without said part
Obligation
1. Return the thing without the other encumbrances than those which it had when he acquired it

b. May also apply when;

1. Two or more things have been jointly sold for a lump sum or for a separate price for each
2. That it should appear that the vendee would not have purchased one without the other

c. When an immovable is sold, unless he should prefer the appropriate indemnity;

1. Should be encumbered with any non – apparent burden or servitude
2. Such are not mentioned in the agreement
3. Of such nature presumed, that the vendee would not have acquired it had he been aware
Exception:
- The right cannot be exercised if the non – apparent burden or servitude is recorded in the Registry
of Property
- Unless there is an express warranty that the thing is free from all burdens and encumbrances
Period for Action:
1. Within one year from the execution of deed, may bring the action for rescission or sue damages
2. One Year having elapsed, he may only bring an action for damages within an equal period to be counted
from the date on which he discovered the burden or servitude.
WARRANTY AGAINST HIDDEN DEFECTS OF OR ENCUMBRANCES UPON THE THING SOLD

Vendor’s Responsibility.
1. For the warrant against the hidden defects which the thing sold may have
Requisites.
1. Should they render it unfit for the use which it is intended
2. Should they diminish its fitness for such use to an extent that, had the vendee been aware thereof, he would
not have acquired it or would have given a lower price for it
Exceptions.
1. Patent defect
2. Those which may be visible
3. For those which are not visible if the vendee is an expert thereof, who by the reason of his trade or
profession, should have known about it

Take Note. The VENDOR is responsible to the vendee for any hidden faults or defects in the thing sold, even though he
was not aware thereof. HOWEVER, this provision shall not apply if the contrary has been stipulated, and the vendor was
not aware of the hidden faults or defects in the thing sold.
Take Note. Remedies and obligations may therefore be applicable to:
1. Judicial Sales
2. Except that the JUDGEMENT DEBTOR shall not be liable for damages
Take Note. Actions arising from the Hidden Defects shall be BARRED AFTER SIX MONTHS, from the delivery of the thing
sold.

Implied Warranty or condition as to quality or fitness of goods sold:

1. Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the
goods are acquired and it appears, that the buyer relies on the seller’s skill or judgement, that the goods shall
be reasonably fit for such purpose
2. When the goods are bought by description from a seller who deals in goods of that description, that the
goods shall be of merchandise quality
Take Note. Implied warranty or condition as to the quality or fitness for a particular purpose may be annexed by the
usage of trade.

Implied Warranty as to sale by Sample:

1. That it should be a contract of sale by sample
2. That the seller is a dealer in goods of that kind
3. That the goods were not apparent on reasonable examination of the sample

No Warranty as to its Fitness for any Purpose

1. Contract of Sale of a Specified Article under its patent

2. Contract of Sale of a Specified Article under other trade name
Unless, there is a stipulation to the contrary.

Remedies:
1. May withdraw the contract
2. May demand a proportionate reduction of the price with
Damages shall apply in either of the cases

Vendor Aware of the Defect or Fault:

 1. Thing is lost in consequence of the hidden Default
2. Vendor should be aware of the default
3. He shall bear the loss
4. Shall be obliged to return the price
5. Refund the expenses for the contract
6. Award damages to the vendee
Vendor not Aware of the Defect or Fault:
1. Shall ONLY return the price and interest thereon
2. Reimburse the expense of the contract, which the VENDEE might have paid
Vendee lost the Thing:
1. Things sold had any hidden fault
2. Thereafter lost through a fortuitous event or through the fault of the vendee
3. May demand of the price paid less the value which the thing had when it was lost
4. Shall pay damages to the vendee, when the VENDOR acted in BAD FAITH

Sale of Animals

Redhibition. Defined.
The rescission of the sale of or a reduction in the purchase price of a thing that has redhibitory defect. It is the
nullification of a sale because of such nature as to make it totally r virtually unusable or as to have prevented the
purchase if known to the buyer.
Requisites.
1. Two or more animals are sold together
2. Paid through lump sum or for a separate price for each of them
3. Redhibitory defect of one shall only give rise to its redhibition, and not of the other
Unless, it should appear that the vendee would not have purchased the sound animal or animals without the
defective one, presumed upon a team, yoke, pair ro set, even if separate price has been fixed for each one of the
animals composing the same.
- Also Redhibitory. If the hidden defect of the animal, in case of professional inspection been made,
should be of such nature that expert knowledge IS NOT SUFFICIENT to discover it.
- Exception. If the veterinarian THROUGH IGNORANCE OR BAD FAITH should fail to discover or disclose
it, HE SHALL BE LAIBLE FOR DAMAGES

Take Note. The provision on the sale for animals may so be applied as well with respect to the sale of other
things.
No Warranty:
1. Against Hidden Defects of animals sold at fairs or at a public auction or of Livestock sold as condemned
Void Sale.
1. For animals sold which are suffering from contagious diseases.
2. If the use or service for which they are acquired has been stated in the contract, and they are found to be
unfit

Prescriptive Period

• 40 days from the date of their delivery to the vendee. The redhibitory action must be brought within the
period, being based on the fault or defects of animals.
- Limited with respect to the faults and defects which are determined by law or by local customs

• Animal died within 3 days after its purchase. The vendor shall be liable if the disease which cause the
death existed at the time of the contract.

Case of Rescission
 • If the sale be rescinded.
a. The animal shall be returned in the condition in which it was sold and delivered
b. The vendee being answerable for any injury due to his negligence
c. The rescission must not arise from redhibitory fault or defect

• Rights of Vendee in a sale with redhibitory Effect

a. The vendee shall also enjoy the rights mentioned in 1567 [the vendee may elect between
withdrawing from the contract and demanding a proportionate reduction of the price, with damages
in either cases.
b. He must make use of the period been fixed for the exercise of redhibitory action

THE FORM OF SALE OF A LARGE CATTLE SHALL BE GOVERNED BY SPECIAL LAWS.

CLASS DISCUSSION

• Sale is a nominate contract – it requires that the seller transfers ownership.

- It is important that the definition should be one, that the object is determinate, and the seller obligates
himself to deliver and transfer ownership.

• The buyer pays the consideration or the price or its equivalent.

• [1475]. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which
is the object of the contract and upon the price.
• [1476]. Sale transaction, by virtue of an auction sale. The perfection is when the auctioneer, bangs the
hammer.
1. The banging should be intentional, because when it is accidental, it is not banging.
2. That is a sale where you cannot find a seller, because he places his object to the auctioneer, and
sells in his behalf.
3. The seller, will reserve his right to bid, and should be clearly announced to the prospective buyer,
that he reserves his right to bid. When it is not disclosed, the sale transaction will be affected. He
may authorize somebody, but must reserve his right to bid.
4. For reservation, it is important with respect to the ownership of the thing sold, can be exercised
by the seller.

Distinction of an absolute sale and a conditional sale.

When the sale transaction does not provide for any condition, that is an absolute sale
• [1478].The parties may stipulate that the ownership in the thing shall not pass to the purchaser until he
has fully paid the price.
- If not fully paid, and there is a contract to sell agreed upon, a transfer of ownership may only happen
upon the full payment of the price thereof.

• Sale is an agreement of the parties, the full payment of a price is not an exclusive obligation that will
make a contract, a contract to sell.
 • The parties may agree that the buyer should do, and characterized as a contract to sell.

- [1478]. With respect to the full payment of a price, it is not the only reason that there is a reservation
of ownership, the buyer may do acts to pursue transfer of ownership.
- The reason why the seller is selling his property is for the price, the money, or consideration.
- When we talk about a contract of sale and a contract to sell, there are conditions, where under Article
1458, absolute sale and conditional sale, conditional sale is agreed – if among the conditions therein
even if there is nonfulfillment of price, there is no reservation of ownership, then you have to classify
the agreement as contract of sale.

If in the conditional sale, the full payment becomes the condition before the transfer of ownership.
Important is the reservation of the ownership.
In a contract to sell – there is no obligation to transfer ownership,
Contract of sale – there is an obligation to transfer ownership.
- An so you have to seek in the agreement, that there is reservation of ownership, if not contained in the
document, you have to look at in the provision that there is no transfer of ownership until full payment,
if none, then it is a contract to sell.

While there is full payment, and sale is agreed, deliberate transferof ownership, look at in the acts, and in
the document, entered into, while there is delivery by agreement, delivery is important, then there is no
transfer of ownership.
Sale, there is this essential elements in a contract of sale, you have the object, the consent, and the price.
1458. The price for its equivalent.
The word equivalent, would be referring to this negotiable instruments. The bill of exchange or the
promissory note.

[You have this novation, where there is novation, on the cost of the contract, and among these novation is this
promissory note that is issued. This equivalent now, you have to look at this negotiable instrument, as this as a
common medium which is check, always payable at the bank by the bank.]

PROVISION ON BARTER
[ ] first you have to consider the intention of the parties, especially:
1. When what is paid by the buyer is in-kind and money in combination of the consideration.
2. When it is the intention is combination.
3. When kind is more than money, you have to look at the intention of the parties.
4. When the intention is not clear, you have to look at which one is greater from the combination.
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The sale includes the accessories of the object and also includes the accessions.

• Sales is a reciprocal or bilateral obligation, the first one would be the obligation to deliver the object and
the second would be the payment of the price. [1191] they may be delay, and there goes the exception
on demand. When demand is no longer needed.

[Please visit 1883] land sale, by agent, be in writing otherwise, otherwise it is void.

Forced sale – expropriation:

• Exercised by the government of the right to eminent domain, cover, is expressly given to an entity,
pursuant to the charter.
• Their charter provides that power to expropriate. You have these events called forced sale – no bidding,
or by virtue of foreclosure proceedings.
Property being used as Collateral
• When your personal properties are made collaterals and discovered by a real estate mortgage, and failure
to pay the amortization.
• When the mortgage given to itself, provides for extra judicial foreclosure, shall render a personal property
foreclosed, including the real properties.
• For this right to be entitled, the document must provide for his right that this creditor can extra judicially
foreclose the properties.
- If no provision in the document of extra judicial foreclosure, then you will find this in the rules of court.
File case, foreclosing the mortgage.
• When the collateral involves real properties, there are procedures to be followed, like these obligations:
1. Part of the debtor mortgagor to pay the property, within one year from the registration, the other
forced sale is by judicial sale, when there is a final judgement, and to satisfy these judgments,
properties are being sold, owned by the judgement debtor, sold in a pub auction, there is a
highest bidder. The property would be closed for the purpose of the satisfaction of the judgment
of debt.
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• THE PRICE IN INSTALLMENTS: When there is installment involving personal property [1484] the seller,
agreed 2 or 4 installments, made alternative remedies, and includes the others.
- The choice of one, excludes all

• There is also a provision of no recovery of deficiency, since the buyer uses the object of the sale
• There should be a balance of the right
1. specific performance – collect the balance
2. the rescission – buyer mortgages to the seller
3. Foreclose the mortgage – sold by the auction, have to determine, whether the proceeds would be less or more
than the balance, the situation falls when the object forfeits back to the seller.

• Sale by installment of real property – Maceda law

• Chattel mortgage – right to recover deficiency, and if there is an excess, it shall be given to the mortgager.
While there is foreclosure of chattel, 1484 is considered an exception to the foreclosure sale under the
chattel mortgage, because there is no right on the recovery of the deficiency, that this should be followed
under the sale by installment, and the object is mortgaged back to the seller.

• Read Maceda and Recto Law

• [1544] RULES ON DOUBLE SALE

1. You have a seller 1 and seller 2 involving one buyer, when you have one seller, and 2 buyers.
Rules:

a) Sale of personal properties in good faith:

Ex: Cars have cert of registration, you have to view 1544, in that manner, the first one in possession in
good faith. Where there is title, the first one to register on these personal properties shall have the better
right.
b) Real properties: involving land, it should have registration, good faith is also a factor to determine who
among the two buyers has the better right over the same object. Land – first one to register in good faith
while in building shall be granted to the person who first registered with a tax declaration in good faith
- Unregistered lands shall require a possession in good faith for the first one who possessed in good faith
- ALWAYS IN GOOD FAITH

TWO SELLERS:
 a) When it involves one object:
1. if the sale of the owner, it is then valid
2. when a non – owner is also valid
Reason: The time at the perfection of the sale, the ownership is immaterial, ownership is only
required upon the delivery.
Consent as the first essential element – it must be voluntary.

Please make time to distinguish:

<<<< make distinction of the two provisions [1324 - ] [1479 – contract of sale, there is an option money, that can be
withdrawn any time, the one who withdraws, will be liable]

Consent – be voluntary , but when you talk of capacity:

a) [1494 absolute and special disqua]
i. Minor – basic necessities, validity 1489
ii. Married – prohibition, have to remember, the relations, what would be the effect, entering in the
contract of sales when they are relatively disqualified
[Read the codal provision] legal effects for relatively disqualified, and must be able to see on each
one, particular situations, whether it fall on the enumerations.
By virtue of prenuptial agreement – spouses during the marriage can sell properties to each other
as an exception to the absolute disqualification of spouses