SALES

I. Basic Concepts
a. Essence of Contract: It is a contract involving the exchange of a thing or right in
consideration of the payment of a price certain in money or its equivalent.
b. Distinguished from Barter: The contract of barter involves the exchange of a thing for
another thing.
i. If the consideration for the delivery of a thing is partly in money and partly in
another thing:
1. The contract shall be characterized by the manifest intention of the
parties;
2. if such intention does not clearly appear, the contract shall be
considered a barter if the value of the thing given exceeds the amount
of the money or its equivalent; otherwise, it is sale.
ii. If the contract is sale, it is covered by the Statute of Frauds; if barter, it is not
covered by the Statute of Frauds
II. Nature and Characteristics:
a. It is a consensual contract: From the point of view of perfection, the contract of sale is a
consensual contract—which means that the sale is perfected by mere consent.
i. As to delivery;
1. The delivery of the thing bought or payment of the price is not
necessary for the perfection of the contract. Instead, upon perfection of
the contract it creates an obligation to make the delivery of the thing
bought.
2. It is not a mode, but only creates title: The contract of sale is not a mode
of transmitting ownership. Upon perfection, it does not transfer or
affect ownership. Instead, it only creates an obligation to transfer
ownership or it only creates title.
3. It is tradition or delivery, as a consequence of sale, that actually
transfers ownership.7
b. It creates reciprocal obligations: A contract of sale creates reciprocal obligations, where
the seller obligates himself to transfer the ownership of and deliver a determinate thing,
and the buyer obligates himself to pay therefor a price certain in money or its
equivalent.
c. It is ordinarily commutative and onerous: Ordinarily, the contract of sale is commutative
and onerous, in that each party assumes a correlative obligation—the seller to deliver
and transfer ownership of the thing sold and the buyer to pay the price.
i. As to sale of uncertain events;
1. The contract may also become aleatory when the sale is subordinated
to an uncertain event, as in the case of a sale of hope or expectation, or
emptio spei.'°
d. It is also a nominate and a principal contract.
i. Two Kinds of Contracts of Sale:
1. Absolute Sale: When the sale is devoid of any condition imposed on the
passing of title of the thing to be conveyed or on the obligation of a
 party thereto" and, hence, title to the property passes to the vendee
upon delivery of the thing sold;
2. Conditional Sale: When the sale is subject to any condition imposed on
the passing of title of the thing to be conveyed or on the obligation of a
party thereto.
a. Contract to Sell (CTS) Is Different from Conditional Contract of
Sale (CCS):
i. (1) Definition of CTS: It is a 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 subject property exclusively to the prospective
buyer upon fulfillment of the condition agreed upon,
such as the full payment of the purchase price.
ii. In a contract to sell, ownership is retained by the
vendor and is not to pass to the vendee until full
payment of the purchase price.
iii. Distinction Between CTS and CCS: A contract to sell may
not even be considered as a conditional contract of sale.
1. While in both contracts, title to the property
remains with the seller until the buyer fully pays
the purchase price and both contracts are
subject to such positive suspensive condition of
the buyer’s full payment of the purchase price,
they differ as follows:
a. As to when the title of ownership
passes to the buyer;
i. In a contract of conditional sale,
the buyer automatically
acquires title to the property
upon full payment of the
purchase price. This title
transfer is “by operation of law
without any further act having
to be performed by the seller.
ii. On the other hand, in a contract
to sell, transfer of title to the
prospective buyer is not
automatic because the
prospective seller must convey
title to the property through a
deed of absolute sale.
b. As to the laws applicable;
 i. In a contract of conditional sale,
our laws on sales under the Civil
Code of the Philippines apply.
ii. On the other hand, contracts
to sell are not governed by our
laws on sales but by the Civil
Code provisions on conditional
obligations.
c. Distinguishing Characteristic of CTS: The
stipulation to execute a deed of
absolute sale upon full payment of the
purchase price, is a unique and
distinguishing characteristic of a
contract to sell.
i. Hence, where the seller
promises to execute a deed of
absolute sale upon completion
by the buyer of the payment
ofthe price, the contract is only
a contract to sell, even if their
agreement is denominated as a
Deed of Conditional Sale.
ii. The agreement to execute a
deed of sale upon full payment
of the purchase price shows
that the vendors reserved title
to the subject property until full
payment of the purchase price.
iii. Prior to the execution of the
deed of absolute sale, the seller
is not obligated yet to transfer
the ownership to the buyer,
even if there is a contract to sell
between them.
III. Essential Elements and Formalities
a. Three Essential Elements: Being a consensual contract, it only requires three essential
elements:
i. consent,
1. Perfection:
a. Consensual contract: A contract of sale is a consensual contract,
which means that the sale is perfected by mere consent, or 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.
b. Sale by Auction: A sale by auction is perfected when the
auctioneer announces its perfection by the fall of the hammer,
or in other customary manner.
i. Until such announcement is made, any bidder may
retract his bid;
ii. the auctioneer may withdraw the goods from the sale
unless the auction has been announced to be without
reserve.
c. Effect of Earnest Money: Whenever earnest money is given in a
contract of sale it shall be considered as part of the price and as
proof of the perfection of the contract.
i. Article 1482 speaks of earnest money given in a
contract of sale. The earnest money forms part of the
consideration only if the sale is consummated upon full
payment of the purchase price. If the earnest money is
given in a contract to sell, Article 1482, which speaks of
a contract of sale, does not apply.”
d. Effect of Loss of Thing Prior to Perfection:
i. For things other than “goods,” the contract is without
any effect” —it is a case of an inexistent contract;” and
ii. In case of “specific goods,” if they perished in part or
have wholly or in a material part so deteriorated in
quality as to be substantially changed in character
without the knowledge of the seller, the buyer may at
his option treat the sale either as:
1. avoided; or
2. valid as to all of the existing goods or in so much
thereof as have not deteriorated, and as
binding the buyer to pay the agreed price for
the goods in which the ownership will pass, if
the sale was divisible.
e. Capacities of Parties:
i. General Requirement: Same as ordinary contracts.
ii. Prohibited Sales: In all these contracts, the sale is void.
1. between husband and wife, unless their
property regime is complete separation
a. but only the heirs and the creditors can
question its nullity and not the spouses
themselves who executed the contract
with full knowledge of the prohibition;
b. the same prohibition also applies to
common-law relationships because of
policy considerations and the dictates
of morality; otherwise, the condition of
 those who incurred guilt would turn out
to be better than those in legal union;
c. the guardian cannot acquire by
purchase, even at a public auction or
judicial auction, either in person or
through the mediation of another, the
property of the ward under his
guardianship, so long as the
guardianship still exists;
d. the agent cannot acquire by purchase,
even at a public auction or judicial
auction, either in person or through the
mediation of another the property of
the principal whose administration or
sale may have been entrusted to him,
unless the principal consents to such
sale;
e. the executor or administrator cannot
acquire by purchase, even at a public
auction or judicial auction, either in
person or through the mediation of
another, the property of the estate
under his administration, so long as
there is no final settlement yet of the
estate;
f. Public officers and employees cannot
acquire by purchase, even at a public
auction or judicial auction, either in
person or through the mediation of
another, the property of the State or of
any subdivision thereof or of any
government-owned or controlled
corporation or institution, the
administration of which has been
entrusted to them;
i. justices, judges, prosecuting attorneys, and clerks of superior and
inferior courts, and other officers and employees connected with
the administration of justice, including attorneys or lawyers, cannot
acquire by purchase, even at a public auction or judicial auction,
either in person or through the mediation of another, the property
and rights in litigation or levied upon an execution before the
court within whose jurisdiction or territory they exercise their
respective jurisdiction.” object,
1. General rule: Anything that has a value that can be assessed
in money, whether immovable or movable, consumable or
non-consumable, corporeal or incorporeal, present or
future, and even a mere hope or expectancy, may be the
object of sale.
2. Requisites:
a. the thing must be licit;
b. the thing may or may not be existing at the time of
the perfection of the contract, so long as it has the
potential or possibility of existence at some future
time
i. the goods which form the subject of a
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
ii. emptio rei speratae -it is a sale of future
things in which the amount and the quality
of the thing is uncertain and the sale is
subject to the condition that the thing
should come into existence, such that if the
condition is not fulfilled or if the thing does
not come into existence, the contract
becomes ineffective; or
iii. emptio spei- it is the sale of hope or
expectancy which the law allows, but the
sale of a vain hope or expectancy is void;
c. the thing must be determinate, that is, it is already
particularly designated or physically segregated
from all others of the same class;
d. at least determinable, that is, the thing is capable
of being made determinate without the necessity of
a new or further agreement between the parties.
3. Contract of Sale Distinguished from Contract for Piece of
Work:
a. Since the contract of sale does not require the thing
to be already in existence at the time its perfection,
the contract may either be sale or contract for piece
of work if the subject matter is a thing still to be
made:
b. Contract for Piece of Work: By the 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 contractor may either employ only his labor or
skill, or also furnish the material.
c. Test in determining character of contract:
i. INTENTION OF THE PARTIES
1. if the parties intended that at some
future date an object has to be
delivered, without considering the
work or labor of the party bound to
deliver, the contract is one of sale;
but if one of the parties accepts the
undertaking on the basis of some
plan, taking into account the work
he will employ personally or
through another, there is a contract
for a piece of work;
2. if such intention is not clear but the
one who committed to deliver the
thing is habitually engaged in the
business of manufacturing or
making such thing, the contract is
one of sale; however, if the one
who committed to deliver the thing
is not habitually engaged in the
business of making such thing and
the same would never have existed
except for the order of the person
desiring it, the contract is one for a
piece of work, not a sale.
3. Importance of Distinctions:
a. In a contract of sale, the
obligation created is an
obligation to give; while the
obligation created in
contract for piece of work is
an obligation to do;
b. the contract of sale is
covered by the Statute of
Frauds, while the contract
for piece of work is not.
4. Requirement of Ownership:
a. Ownership by the seller of
the thing sold at the time of
the perfection of the
 contract of sale is not an
element for its perfection
and a perfected contract of
sale cannot be challenged
on the ground of non-
ownership on the part of
the seller at the time of its
perfection; hence, the sale
is still valid.
b. Instead, upon perfection of
the contract, it will create
an obligation on the part of
the seller to transfer
ownership to the buyer” —
if the seller will not be able
to do so, the same is merely
a breach of the contract of
sale.
c. If the seller is not the owner
but he was able to deliver
the thing sold to the buyer,
the latter does not acquire
ownership because no one
can give what one does not
have—nemo dat quod non
habet.
d. Exception: when the sale of
a person with a void title is
to a third person who
purchased it for value and
in good faith."
ii. cause.
1. With respect to cause:
a. as to the buyer, the cause is the delivery of the
thing sold;
b. as to the seller, it is the payment of the price in
money or its equivalent.
i. In relation to price, the parties must not
only agree on the amount of the price but
also on the manner of payment of the
price to give rise to a perfected contract of
sale.
ii. An agreement as to the manner of payment
goes into the price, such that a
 disagreement on the manner of payment is
tantamount to a failure to agree on the
price.
2. (a) Requisites:
a. The price must be real or true—if the price is
simulated, the contract is void, but the act may be
shown to have been in reality a donation, or some
other act or contract. Thus, a deed of sale, in which
the stated consideration had not in fact been paid,
is null and void.
i. On the other hand, if the price agreed upon
is true, the failure to pay the price does not
affect the validity of the contract but merely
results in a right to demand the fulfillment
or cancellation of the obligation under an
existing valid contract;
b. The consideration must be in money or its
equivalent
c. The price must be certain:
i. in order that the price may be considered
certain, it shall be sufficient that it be so
with reference to another thing certain, or
that the determination thereof be left to
the judgment of a specified person or
persons
ii. if such person or persons be unable or
unwilling to fix the price, the contract shall
be inefficacious, unless the parties
subsequently agree upon the price;
iii. if the third person or persons acted in bad
faith or by mistake, the courts may fix the
price;
iv. where such third person or persons are
prevented from fixing the price or terms by
fault of the seller or buyer, the party not in
fault may have such remedies against the
party in fault as are allowed the seller or the
buyer, as the case may be;
v. the fixing of the price can never be left to
the discretion of one of the contracting
parties; however, if the price fixed by one of
the parties is accepted by the other, the
sale is perfected;
 vi. where the price cannot be determined in
any other manner, the contract is
inefficacious.
1. Effect of Gross Inadequacy of Price: It does not affect a contract
of sale. However, it may indicate a defect in the consent, or that
the parties really intended a donation or some other act or
contract.
b. Formalities in Contracts of Sale:
i. Requirement as to Validity: Whatever may be its subject matter, no particular
form is required in a contract of sale for its validity.
1. The only exception is the sale of large cattle which requires that the
same be recorded with the city/ municipal treasurer and that a
certificate of transfer be issued; otherwise, the sale is not valid."
2. Thus, an oral sale of a parcel of land is a valid contract.
c. Requirement as to Enforceability:
i. The sale of personal property at a price not less than P500 (hindi bababa ng
500), and the sale of real property must be in writing under the Statute of
Frauds; otherwise, the contract is unenforceable.
ii. Sale of Land Need Not Be in Public Document and Be Recorded: It is not a
requirement for the validity of a contract of sale of a parcel of land that this be
embodied in a public instrument. Thus, the non-appearance of the parties
before the notary public who notarized the deed does not necessarily nullify nor
render the parties’ transaction void ab initio.
1. Likewise, the non-recording of the instrument in the registry of property
does not affect the validity of the contract.
2. Remedy under Article 1357:
a. If the sale of a parcel of land is already enforceable under the
Statute of Frauds, either because the sale is in a private
instrument” or there has already been partial performance of
the contract, and a public document is necessary for the
registration in the registry of deeds, the parties may avail
themselves of the right granted under Article 1357 of the Civil
Code.
b. Requirement of Form in Agency to Sell Land: When the sale of a
piece of land or any interest thereon is through an agent, the
authority of the latter (agent) shall be in writing; otherwise, the
sale shall be void.
IV. Obligations of the Parties
a. Obligations of Seller:
i. In General:
1. Obligation to Deliver and Transfer Ownership:
a. Sale Not a Mode but Merely Title: The obligations of the seller
to deliver and to transfer ownership are intertwined. The sale
by itself does not transfer or affect ownership; the most that a
 sale does is to create the obligation to transfer ownership.
Tradition or delivery, as a consequence of the sale, actually
transfers ownership, unless the sale is conditional. 1
b. When to Deliver: In reciprocal obligations, as in a contract of
sale, the general rule is that the fulfillment of the parties’
respective obligations should be simultaneous. Thus, the vendor
is not bound to deliver the thing sold, if the vendee has not paid
him the price, or if no period for the payment has been fixed in
the contract.
i. Exception: Where a period for the payment of the price
has been fixed in the contract, the vendor is already
bound to deliver the thing sold, although the period has
not elapsed or, consequently, although he has not
collected the price.”
ii. Forms of Delivery:
1. Actual delivery:
a. in the case of a movable thing, it
consists in actually handing it over to
another; or
b. in the case of immovables, it consists of
material and possessory acts done by
the vendee in the presence of and with
the consent of the vendor.”
c. Constructive Delivery:
i. traditio simbolica (symbolic
delivery) - such as the delivery
of movable property may be
made by the delivery of the
keys of the place or depository
where it is stored or kept, or
the delivery of a negotiable
document of title,” or the
execution of a public
instrument; in the case of the
latter, however, there is no
transfer of ownership
notwithstanding the execution
of a public instrument when the
instrument itself expresses or
implies that it was not the
intention of the parties to effect
delivery or when there is an

1
In sales, the purpose of delivery is not only to transfer possession but precisely to transfer ownership to the
buyer.
 impediment that may prevent
the passing of the property
from the hands of the vendor to
the vendee, as when a third
person was actually in
possession of the thing and
objecting thereto;™
ii. traditio longa manu - delivery is
effected by the vendor by
simply pointing to the vendee
the thing to be transferred and
which at that time must be
within sight;
iii. traditio brevi manu - the
vendee already had the thing
in his possession for any other
reason or by reason of another
distinct title and the mere
agreement of the parties that
the vendee shall now hold the
thing as its owner amounts to
delivery; and;
iv. tradition constitution
possessorium - the vendor
continues to be in possession of
the thing but in some other
capacity and no longer as an
owner, as when he, for
example, possesses the thing as
a lessee or a mere usufructuary,
iii. Intention to Deliver Important: In all forms of delivery, it
is necessary that the act of delivery, whether
constructive or actual, should be coupled with the
intention of delivering the thing. Without that intention,
there is no tradition.
iv. Delivery “On Sale or Return”: When goods are delivered
to the buyer "on sale or return " to give the buyer an
option to return the goods instead of paying the price,
the ownership passes to the buyer on delivery but he
may re-vest the ownership in the seller by returning or
tendering the goods within the time fixed in the
contract, or, if no time has been fixed, within a
reasonable time.
 v. Sales on approval or on trial or on satisfaction: When
goods are delivered to the buyer on approval or on trial
or on satisfaction, or other similar terms, the ownership
does not pass to the buyer upon delivery.
1. Ownership shall only pass:
a. when the buyer signifies his approval or
acceptance to the seller or does any
other act adopting the transaction; or
b. if he does not signify his approval or
acceptance to the seller, but retains the
goods without giving notice of
rejection, then if a time has been fixed
for the return of the goods, on the
expiration of such time, and, if no time
has been fixed, on the expiration of a
reasonable time.
vi. Double Sale:
1. Requisites:
a. that two (or more) sales transactions
must pertain to exactly the same
subject matter;
b. the two (or more) sales transactions
must constitute valid sales;
c. the two (or more) buyers at odds over
the rightful ownership of the subject
matter must each represent conflicting
interests;
d. the two (or more) buyers at odds over
the rightful ownership of the subject
matter must each have bought from
the very same seller
i. it is necessary that the
conveyance must have been
made by a party who has an
existing right in the thing and
the power to dispose of it;
ii. it cannot be invoked where the
two different contracts of sale
are made by two different
persons, one of them not being
the owner of the property sold
or, even if the sale was made by
the same person, if the second
sale was made when such
person was no longer the
owner of the property, because
it had been acquired by the first
purchaser in full dominion, the
second purchaser cannot
acquire any right,10* in which
case the non-owner cannot
validly sell;109 and (5) both
sales must be contracts ofsale
—ifone ofthe two contracts is a
contract to sell, there is no
double sale because in a
contract to sell, there being no
previous sale ofthe property, a
third person buying such
property despite the fulfillment
of the suspensive condition
such as the full payment of the
purchase price, for instance,
cannot be deemed a buyer in
bad faith and the prospective
buyer cannot seek the relief of
reconveyance of the property.
Title to the property will
transfer to the buyer (third
person) after registration
because there is no defect in
the owner-seller’s title per se,
but the latter, ofcourse, may be
sued for damages by the
prospective buyer in the
contract to sell.110 (b) Rules on
Double Sale: (1) in case of
movable property, the
ownership shall be transferred
to the person who may have
first taken possession thereof in
good faith, if it should be
movable property;1" (2) in case
ofimmovable property, the
ownership shall belong to the
person acquiring it who in good
faith first recorded it in the
Registry ofProperty. Should
 there be no inscription, the
ownership shall pertain to the
person who in good faith was
first in possession; and, in the
absence thereof, to the person
who presents the oldest title,
provided there is good faith.11-
The law on double sale
presumes title or ownership to
pass to the first buyer, unless
the second buyer is able to
successfully displace the first
buyer by doing the foregoing
acts enumerated in Article
1544."’ In other words. Article
1544 requires the second buyer
to acquire the immovable in
good faith and to register it in
good faith.11'1 Knowledge
gained by the second buyer of
the first sale defeats his rights
even if he is first to register the
second sale, since such
knowledge taints his
2. ; and
3. to warrant the following:
a. that he has the right to sell the thing at the time when the
ownership is to pass (warranty of ownership);
b. that the buyer shall enjoy the legal and peaceful possession of
the thing (warranty against eviction);
c. and that the thing sold is free from any hidden faults or defects
(warranty against hidden defects)