NATURE AND FORM OF THE CONTRACT

By the 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 there for a price
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certain in money or its equivalent.

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

Concept of contract of sale

The contract of sale is an agreement whereby one of the parties (called the seller or vendor)
obligates himself to deliver something to the other (called the buyer or purchaser or vendee) who, on
his part, binds himself to pay there for a sum of money or its equivalent (known as the price).

Characteristics of a contract of sale

The contract of sale is:

Consensual because it is perfected by mere consent without any further act;

Bilateral because both the contracting parties are bound to fulfill correlative obligations towards
each other — the seller, to deliver and transfer ownership of the thing sold and the
buyer, to pay the price;
Onerous because the thing sold is conveyed in consideration of the price and vice versa
Commutative Because the thing sold is considered the equivalent of the price paid and vice versa.
However, the contract may be aleatory2 as in the case of the sale of a hope (e.g.,
sweepstakes ticket)
Nominate because it is given a special name or designation in the Civil Code, namely, “sale”
Principal Because it does not depend for its existence and validity upon another contract.

Essential requisites of a contract of sale

The rules of law governing contracts in general are applicable to sales. Like every contract,
“sale” has the following requisites or elements:

This refers to the consent on the part of the seller to transfer and deliver and
on the part of the buyer to pay. (1475) The parties must have legal capacity to
give consent and to obligate themselves. (1489, 1490, 1491) The essence of
consent is the conformity of the parties on the terms of the contract, the
(1) Consent or meeting
acceptance by one of the offer made by the other. The contract to sell is a
of the minds
bilateral contract. Where there is merely an offer by one party without the
acceptance of the other, there is no consent. The acceptance of payment by a
party is an indication of his consent to a contract of sale, thereby precluding
him from rejecting its binding effect.
 There may, however, be a sale against the will of the owner in case of
expropriation (1488) and the three different kinds of sale under the law,
namely: an ordinary execution sale, judicial foreclosure sale and extra-judicial
foreclosure sale. A different set of law applies to each class of sale mentioned.

This refers to the determinate thing which is the object of the contract. (1460)
The thing must be determinate or at least capable of being made determinate
because if the seller and the buyer differ in regard to the thing sold, there is
no meeting of the minds; therefore, there is no sale. The subject matter may
be personal or real property. The terms used in the law are “thing” (1458),
“article” (1467), “goods” (1462), “personal property” (1484), “property”
(1490), “movable property” (1498), “real estate” (1539), “immovable”
(2) Object or subject “immovable property” (1544), and “real property.” (1607)
matter
A buyer can only claim right of ownership over the object of the deed of sale
and nothing else. Where the parcel of land described in the transfer
certificate of title is not in its entirety the parcel sold, the court may decree
that the certificate of title be cancelled and a correct one be issued in favor of
the buyer, without having to require the seller to execute in favor of the
buyer an instrument to effect the sale and transfer of the property to the true
owner.
This refers to the “price certain in money or its equivalent” (1458) such as a
check or a promissory note, which is the consideration for the thing sold. It
does not include goods or merchandise although they have their own value in
money. (1468, 1638) However, the words “its equivalent” have been
interpreted to mean that payment need not be in money, so that there can be
a sale where the thing given as token of payment has “been assessed and
(3) Cause or evaluated and [its] price equivalent in terms of money [has] been
consideration determined.”
The price must be real, not fictitious; otherwise, the sale is void although the
transaction may be shown to have been in reality a donation or some other
contract. (1471) A seller cannot render invalid a perfected contract of sale by
merely contradicting the buyer’s allegation regarding the price and
subsequently raising the lack of agreement as to the price.

The absence of any of the above essential elements negates the existence of a perfected
contract of sale. Sale, being a consensual contract (1475), he who alleges it must show its existence by
competent proof.

Natural and accidental elements

The above are the essential elements of a contract of sale or those without which no sale can
validly exist. They are to be distinguished from:

(1) Natural or those which are deemed to exist in certain contracts, in the absence of any contrary
elements stipulations, like warranty against eviction (1548) or hidden defects (1561)
 (2) Accidental or those which may be present or absent depending on the stipulations of the parties,
elements like conditions, interest, penalty, time or place of payment, etc.

Effect of absence of price/nonpayment of price

There can be no sale without a price. (1474) Technically, the cause in sale is, as to the seller, the
buyer’s promise to pay the price, and as to the buyer, the seller’s promise to deliver the thing sold.
A contract of sale is void and produces no effect whatsoever where the same is without cause or
consideration (1409[3]) in that the purchase price, which appears thereon as paid, has, in fact,
(1) never been paid by the buyer to the seller. Such sale is nonexistent and cannot be considered
consummated.
Where the figures referred to by the buyer as prices are mere estimates given them by the seller of
the condominium units in question, the transaction lacks an essential requisite for the perfection of
the contract of sale
Non-payment of the purchase price is a resolutory condition for which the remedy is either
rescission or specific performance under Article 1191 of the Civil Code. It constitutes a very good
reason to rescind a sale, for it violates the very essence of the contract of sale.
But the failure to pay the price in full within a fixed period does not, by itself, dissolve a contract of
sale in the absence of any agreement that payment on time is essential (1592), or make it null and
(2) void for lack of consideration, but results at most in default on the part of the vendee for which the
vendor may exercise his legal remedies. It is incumbent upon the party challenging the recital of a
notarized deed of sale that the vendor has received the purchase price to prove his claim with clear
and convincing evidence. A notarized document is evidence of high character.
An action to declare a contract void or inexistent does not prescribe. (1410)

Kinds of contract of sale

As to presence or absence of conditions — A sale may be either:

Where the sale is not subject to any condition whatsoever and where title passes to
the buyer upon delivery of the thing sold. Thus, it has been held that a deed of sale is
absolute in nature although denominated as a “Deed of Conditional Sale” in the
(1)Absolute absence of any stipulation 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.
Where the sale contemplates a contingency (1461, 1462, 1465), and in general, where
the contract is subject to certain conditions (1503) usually, in the case of the vendee,
(2)Conditional
the full payment of the agreed purchase price. The delivery of the thing sold does not
transfer title until the condition is fulfilled.
 ART. 1459. The thing must be licit and the vendor must have a right to transfer the
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ownership thereof at the time it is delivered. (n)

Requisites concerning object

(1) Things Aside from being (a) determinate (1458, 1460), the law requires that the subject
matter must be (b) licit or lawful, that is, it should not be contrary to law, morals,
good customs, public order, or public policy (1347, 1409[1, 4].), and should (c) not
be impossible. (1348) In other words, like any other object of a contract; the thing
must be within the commerce of men.
If the subject matter of the sale is illicit, the contract is void and cannot, therefore,
be ratified
(3) Rights All rights which are not intransmissible or personal may also be the object of sale
(1347), like the right of usufruct (572), the right of conventional redemption
(1601), credit (1624), etc
Examples of intransmissible rights are the right to vote, right to public office,
marital and parental rights, etc.
No contract may be entered upon future inheritance except in cases expressly
authorized by law. (1347)While services may be the object of a contract (1347)
they cannot be the object of a contract of sale. (1458; 1467)

Kinds of illicit things

The thing may be illicit per se (of its nature) or per accidens (because of some provisions of law
declaring it illegal).

Decayed food unfit for consumption is illicit per se, while lottery tickets are illicit per accidens.
Land sold to an alien is also per accidens because the sale is prohibited by the Constitution. The rule is
well-settled that the mortgagor (or pledgor) continues to be the owner of the property mortgaged, and,
therefore, has the power to alienate the same; however, he is obliged, under pain of penal liability, to
secure the consent of the mortgagee

A thing is determinate when it is particularly designated or physically segregated from all

others of the same class.
1460 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. (n)

Subject matter must be determinate