RFBT – OBLIGATIONS
NATURE AND FORM OF THE CONTRACT
Article 1458
3. Sales
It is a contract whereby one of the
contracting parties (seller or vendor), obligates
himself to transfer ownership of and to deliver a
determinate thing, and the other party (buyer or
vendee) to pay therefore a price certain in money or
its equivalent.
4. Essential Elements of a Contract of Sale
These are those without which a contract of
sale would not exist.
a. Consent of the contracting parties;
b. Subject matter which should be a
determinate thing; and
c. Price certain in money or its equivalent.
5. Natural Elements of a Contract of Sale
These are those inherent in a contract of
sale, which in the absence of stipulation excluding
them are deemed to exist.
a. Warranty against eviction; and
b. Warranty against hidden defects and
encumbrances.
6. Accidental Elements of a Contract of Sale
They prefer to particular stipulations of the
parties (e.g., terms, place and time of payment, and
other conditions agreed upon).
Characteristics of a Contract of Sale
8. Consensual
A contract of sale is perfected by mere
consent of the parties.
9. Principal
A contract of sale can exist by itself without
being dependent upon another contract.
10. Bilateral
The parties in a contract of sale are bound
by reciprocal obligations.
11. Onerous
In a contract of sale, valuable
considerations are given by both parties to acquire
rights.
12. Commutative
The parties in a contract of sale exchange
almost equivalent values.
13. Nominate
The contract of sale has a special name
given to it by law.
14. Sale and Dacion en Pago Distinguished
a. Sale – There is no pre-existing credit.
Dacion en pago – There is a pre-existing
credit.
b. Sale – creates obligations.
Dacion en pago – extinguishes
obligations.
c. Sale – The cause or consideration is the
price, from the seller’s point of view; and
the delivery of the object, from the
buyer’s point of view.
Dacion en pago – The cause or
consideration is the extinguishment of
the obligation, from the debtor’s point of
view; and the delivery of the object, from
the creditor’s point of view.
d. Sale – There is greater freedom in fixing
the price.
Dacion en pago – There is less freedom
in fixing the price because the amount
of the pre-existing credit the parties
seek to extinguish.
15. Sale and Payment by Cession Distinguished
a. Sale – There is no pre-existing credit.
Payment by cession – There are
pre-existing credits.
b. Sale – creates obligations.
Payment by cession – extinguishes
obligations.
c. Sale – The cause or consideration is the
price, from the seller’s point of view; and
the delivery of the object, from the
buyer’s point of view.
 RFBT – OBLIGATIONS
Payment by cession – The cause or
consideration is the extinguishment of
the obligation, from the debtor’s point of
view; and the assignment of the things
to be sold, from the creditor’s point of
view.
d. Sale – There is greater freedom in fixing
the price.
Payment by cession – There is less
freedom in fixing the price because of
the fixed amount of the pre-existing
credit which the parties seek to
extinguish.
e. Sale – The ownership of the thing is
transferred to the buyer.
Payment by cession – The creditors do
not become owners of the properties
assigned to them but are merely given
the right to sell such properties and
apply the proceeds to their claims.
16. Sale and Contract for a Piece of Work
Distinguished
a. A sale is a contract for the delivery at a
certain price of an article which the
vendor in the ordinary course of
business manufactures or procures for
the general market, whether the same is
on hand or not.
b. A contract for a piece of work is where
the goods are to be manufactured
specially for the customer and upon his
special order, and not for the general
market.
17. Sale and Barter Distinguished
a. In sale, the cause or consideration is in
money.
b. In barter, the cause or consideration is
another thing.
18. Rules if the Consideration is Partly in Money
and Partly in Another Thing
a. The contract shall be one of sale or
barter depending on the manifest
intention of the parties.
b. If the intention of the parties does not
clearly appear:
● Barter: value of thing > monetary
consideration
● Sale: monetary consideration > value
of thing
19. Sale and Contract to Sell Distinguished
a. Sale – The title to the property passes to
the vendee upon the delivery of the thing
sold.
Contract to sell – Ownership is, by
agreement, reserved to the vendor and
is not passed to the vendee until full
payment of the purchase price.
b. Sale – Non-payment of the price is a
negative resolutory condition (i.e., the
vendor loses the ownership of the
property and cannot be recovered until
and unless the contract of sales is
resolved or rescinded.
Contract to sell – Full payment of the
purchase price is a positive suspensive
condition (i.e., the title remains in the
vendor if the vendee does not comply
with the condition precedent of making
payment at the time specified in the
contract.
c. Sale – The risk of loss is on the buyer.
Contract to sell – The risk of loss is on
the seller.
20. Sale and Agency to Sell Distinguished
a. Sale – Title to the goods is transferred
to the buyer upon delivery of the thing
sold.
Agency to sell – Title to the goods is
retained by the owner despite the
delivery of the goods to the agent.
b. Sale – The buyer is required to pay the
price.
Agency to sell – The agent is required to
turn over to the principal the price of the
goods which he received from the buyer.
 RFBT – OBLIGATIONS
c. Sale – The recipient (buyer) of the
property may do with the property as he
pleases.
Agency to sell – The principal retains
control of the property.
Kinds of Contract of Sale as to Presence of
Condition
Article 1459
22. Requisites of the Object of a Contract of Sale
a. The thing must be within the commerce
of men.
b. The thing must be licit (i.e., not contrary
to law, morals, good customs, public
order, or public policy).
c. The thing must be determinate or
determinable.
23. Things Outside the Commerce of Men
These refer to things that may not be
subjects of sale or other contracts (e.g., public
streets, the sun, etc.)
Kinds of Illicit Things
25. Illicit per Se
It refers to things that are illegal because of
their nature (e.g., sale of decayed food unfit for
consumption).
26. Illicit per Accidens
It refers to things that are considered illicit
because of some provisions of law declaring them
illegal (e.g., prohibited drugs).
***
27. Vendor’s Right to Transfer
The vendor must have the right to transfer
the ownership of the ting at the time it is delivered.
Thus, it is not necessary that the vendor must be
the owner at the time of sale.
Article 1460
29. Determinate Thing
It refers to a thing that is particularly
designated or physically segregated from all others
of the same class (e.g., my only car, the property at
a specific address, my dog named Bella).
30. Determinable Thing
It refers to a thing that is capable of being
made determinate without the necessity of a new
or further agreement between the parties to
ascertain its identity, quantity or quality (e.g.,
Determinable – obligation to sell all the cattle in a
particular farm; Not determinable – if no farm has
been specified or the vendor owns several farms).
Article 1461
32. Emptio Rei Speretae
It is the sale of a future thing where the
thing sold must come into existence; otherwise, the
sale will not be effective.
33. Emptio Spei
It deals with the sale of hope or expectancy
(present thing) where the sale produces effects
even if the thing hoped for does not come into
existence. However, the sale of vain hope or
expectancy is void (e.g., sale of a losing
sweepstake ticket already drawn).
Article 1462
35. Existing Goods
These refer to goods owned or possessed
by the seller.
36. Future Goods
These refer to goods to be manufactured,
raised, or acquired.
37. Effect If Future Goods Are Sold
It renders the sale valid only as an executory
contract to be fulfilled by the acquisition and
delivery of the goods specified.
Article 1463
39. Aliquot
It means a portion of a larger whole.
40. Sale of Undivided Interest in a Thing by a Sole
Owner
It has the legal effect of making the buyer a
co-owner of the thing allowing him or her to sell
further the portion allotted to him in the division of
the property upon the termination of the
co-ownership..
 RFBT – OBLIGATIONS

Price on a Given Day at a Particular Market

41. Sale of Undivided Interest in a Thing by a Article 1473
Co-Owner Fixing of Price by One of the Contracting Parties
He or she may pursue the sale even without Article 1474
the consent of the other co-owners. The effect of Executory Contract
the alienation shall be limited to the portion which Effect of Failure to Determine Price When Contract
may be allotted to the vendor in the division of the Is Executory
property upon termination of the co-ownership. Effect of Failure to Determine Price When Delivery
Has Been Made
Article 1464 Article 1475
Stages of a Contract of Sale
43. Fungible Goods Negotiation
It means goods of which any unit is, from its Perfection
nature by mercantile usage, treated as the Consummation
equivalent of any other unit (e.g., grain, oil, wine, Right of Owner to Fix His Own Price
gasoline, etc.) Effect of Failure to Pay Stipulated Price
Effect of Failure to Stipulate Price
44. Sale of an Undivided Share of a Specific Mass Article 1476
of Fungible Goods Auction
45. Discrepancy Regarding the Sale of an Lot
Undivided Share of a Specific Mass of Fungible Perfection of Sale in an Auction
Goods Right of Bidder to Retract His Bid
46. Risk of Loss Regarding Mass of Fungible Right of Auctioneer to Withdraw the Goods
Goods an Undivided Share of Which Was Sold Auction with Reserve
Article 1465 Auction without Reserve
48. Resolutory Condition Right of the Seller to Bid
49. Sale of Thing Subject to a Resolutory Condition Article 1477 & 1478
Article 1466 Delivery
51. Agency Transfer of Ownership to the Vendee
52. Rule on Classification of Contracts Article 1479
53. Move 20 Here Promise
Article 1467 Kinds of Promise
Move 16 Here – Get info from De Leon Effect of Unaccepted Unilateral Promise
Article 1468 Option
Move 17 and 18 Here Effect of Accepted Unilateral Promise
Article 1469 Effect of Bilateral Promise to Buy and Sell
Money Article 1480
Cases When Price Is Considered Certain Risk of Loss of Thing Before Perfection
Fixing of Price by a Third Person Designated Risk of Loss of Thing at the Time of Perfection
Inability to Fix the Price by a Third Person Risk of Loss of Thing After Perfection but Before
Designated Its Delivery
Article 1470 Risk of Loss of Thing After Delivery
Voluntary Sales Risk of Loss of Fungible Things Sold
Effect of Inadequacy of Price in Voluntary Sales Article 1481
General rule: Sale by Description
Exception: Sale by Sample
Involuntary or Execution Sales Sale by Description and Sample
Effect of Inadequacy of Price in Involuntary Sales Article 1482
Article 1471 Earnest Money
Simulated Price Earnest Money and Option Money Distinguished
Effect of Presence of Simulated Price Article 1483
Article 1472 Form of Contract
 RFBT – OBLIGATIONS

Required Form of Contract of Sale for Validity

Required Form of Contract of Sale for Convenience
of the Parties
Sale of Real Property or an Interest Therein
Through an Agent
Applicability of Statute of Frauds to Executory
Contracts
Article 1484
Article 1485
Article 1486
Article 1487
Article 1488