THE LAW ON

SALES
Articles 1458-1637
GOVERNING
LAW
 The provisions of the Civil Code on Obligations
(Title I, Arts. 1156-1304) and Contracts (Title II,
Arts. 1305-1422) are applicable to the contract
of sale, but Articles 1458 to 1637 are special
rules which are peculiar to sales alone.
 WHAT IS  Art. 1458. By the contract of sale one of the contracting
parties obligates himself to transfer the ownership and to
CONTRACT deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent. A contract of sale
OF SALE? may be absolute or conditional.
TWO KINDS OF A CONTRACT
OF SALE

1. Absolute- There are no conditions

attached to the contract.
2. Conditional- There are certain
conditions attached to the contract.
STAGES OF A
CONTRACT OF SALE
The stages of a contract of sale are:
1. Negotiation- It covers the period from the time the
prospective contracting parties indicate interest in
the contract to the time the contract is perfected.
2. Perfection- It takes place upon the concurrence of
the essential elements of the sale, which is the
meeting of the minds of the parties as to the object
of the contract and upon the price.
3. Consummation- It begins when the parties
perform their respective undertakings under the
contract of sale, culminating in the extinguishment
thereof.
SALE IS A TITLE
The perfection of a contract of sale should not, however, be
confused with its consummation. In relation to the
acquisition and transfer of ownership, it should be noted
that sale is not a mode, but merely a title. A mode is the
legal means by which ownership is created, transferred or
destroyed, but title is only the legal basis by which to effect
ownership.
CHARACTERISTICS OF A
CONTRACT OF SALE
1. Consensual- The contract is perfected by mere consent.
2. Bilateral- The seller and the buyer are bound by obligations dependent upon each other.
3. Onerous- It imposes a valuable consideration, which is a price certain in money or its
equivalent.
4. Commutative- The thing of value is exchanged for equal value.
5. Nominate- The Civil Code refers to it by a special name, “Contract of Sale”.
6. Principal- It can stand on its own and does not depend on another contract for its validity.
 The law on contracts in general are applicable to
sales. Like every contract, “Sale” has the following
requisites:

ESSENTIAL 1. Consent or meeting of the minds. This refers

to the consent on the part of the seller to transfer
REQUISITES 2.
and deliver and on the part of the buyer to pay.
Object or Subject Matter. This refers to the
determinate thing which is the object of the
contract.
3. Price (cause or consideration). This refers to
the price certain in money or its equivalent.
  Consent or meeting of the minds. This refers
to the consent on the part of the seller to
transfer and deliver and on the part of the
buyer to pay. (See Art. 1475)
 The parties must have legal capacity to give
consent and to obligate themselves. The
essence of consent is the conformity of the
parties on the terms of the contract, the
CONSENT acceptance by one of the offer made by the
other.
 The contract to sell is a 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.
  This refers to the determinate thing which is
the object of the contract. (Ar. 1460). The
thing must be determinate or at least capable
OBJECT 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.
 SUBJECT MATTER MUST BE
DETERMINATE

1. When thing is determinate- A thing is

determinate or specific (not generic) when it is
particularly designate or physically segregated
OBJECT form all others of the same class. This requisite
that the object of a contract of sale must be
determinate is in accordance with the general
rule that the object of every contract must be
determinate as to its kind (Ar. 1349). A
determinate thing is identified by its
individuality, e.g. the watch I am wearing, the
smart phone that I’m using.
 SUBJECT MATTER MUST BE
DETERMINATE
2. Sufficient if subject matter capable of being
made determinate.
OBJECT It is not necessary that the thing sold must be in
sight at the time the contract is entered into. It is
sufficient that the thing is determinable or
capable of being made determinate without the
necessity of a new or further agreement between
the parties.
 Requisites concerning Object
1. Things- a. determinate (Arts. 1458, 1460)
b. licit or lawful, i.e., it should not be
contrary to law, morals, good customs,
public order, or public policy (Arts. 1347,
1409); c. Not impossible (Art. 1348. In
other words, like any other object of a
contract, the thing must be within the
commerce of men.
OBJECT
2. Rights. All rights which are not
intransmissible or personal may also be the
object of sale (Art. 1347), like the right of
usufruct (Art. 572), the right of
conventional redemption (Art. 1601), credit
(Art. 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. (Art. 1347)
OBJECT  While services may be the object of contract
(Art. 1347), they cannot be the object of a
contract of sale. (Art. 1458; see Art. 1467).
 KINDS OF ILLICIT THINGS

The thing may be illicit per se (of its nature) or

per accidens (because of some provisions of
OBJECT law declaring it illegal).
Decayed food unfit for consumption is illicit per
se, while lottery tickets (Art. 195, Revised Penal
Code.) are illicit per accidens. Land sold to an
alien is also per accidens because the sale is
prohibited by the Constitution.
 Sale of things having potential existence.

Even a future thing (Arts. 1461, par. 1; 1347,

par. 1) not existing at the time the contract is
entered into may be the object of sale provided
OBJECT it has a potential or possible existence, that is, it
is reasonably certain to come into existence as
the natural increment or usual incident of
something in existence already belonging to the
seller and the title will vest in the buyer the
moment the thing comes into existence.
 Sale of things having potential existence.

Thus, a valid sale may be made of the “wine a

vine is expected to produce; or the grain a field
OBJECT may grow in a given time; or the milk a cow
may yield during the coming year; or the wool
that shall thereafter grow upon a sheep. The
thing sold, however, must be specified and
identified. They must be also owned by the
vendor at the time.
 Sale of Mere Hope or Expectancy
The efficacy of the sale of a mere hope or
expectancy is deemed subject to the condition
that the thing contemplated or expected will
come into existence. (Art.1461, par. 2).
The sale really refers to an “expected thing”
OBJECT which is not yet in existence, and not to the
hope or expectancy which already exists, in
view of the condition that the thing will come
into existence. But the sale of a mere hope or
expectancy is valid even if the thing hoped or
expected does not come into existence, unless
the hope or expectancy is vain in which case,
the sale is void.
 Emptio Rei Speratae Emptio Spei
Sale of a thing with Sale of a mere hope or
potential existence. expectancy that the thing
will come to existence. Sale
of the hope itself.
Sale is subject to the Sale is effective even if the
OBJECT condition that the thing will
exist; If it does not, there is
thing does not come into
existence unless it is a vain
no contract. hope.
The object is a future thing. The object is a present
thing which is hope or
expectancy.
 SUMMARY

General Rule: A person cannot sell or convey

what he does not have or own.

Exceptions:
OBJECT 1. Sale of a thing having potential existence;
2. Sale of a future goods; and
3. Contract for delivery at a certain price of an
article which the venor in the ordinary
course of business manufactures or
procures for the general market, whether
the same is on hand at the time or not.
 Price (cause or consideration) refers to the price
certain in money or its equivalent.

PRICE A definite agreement as to the price is an

essential element of a binding agreement to sell
personal or real property because it seriously
affects the rights and obligations of the parties.
 REQUISITES FOR A VALID PRICE
1. Real. The price is not simulated or not fictitious.
2. Certain or Ascertainable. It is certain if it is
expressed and agreed in terms of specific amount
of money or its equivalent. It is ascertainable if it
is sufficient that it be so with reference to another

PRICE 3.
thing certain, or that the determination thereof be
left to the judgment of a special person or persons.
In money or its equivalent.
4. Manner of payment must be agreed upon. The
agreement on 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.
 EFFECT OF ABSENCE OF PRICE
 There can be no sale without a price. (See Art.
1474). The consideration is, as to the seller,

PRICE 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 where the same is without
cause or consideration (Art. 1409 [3]).
 EFFECT OF THE ABSENCE OF PRICE
 But the failure to pay the price in full within a
fixed period does not , by itself, resolve a

PRICE
contract of sale in the absence of any
agreement that payment on time is essential ,
or make it null and 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.
 EFFECT OF THE ABSENCE OF PRICE
 Gross inadequacy of price does not nullify
an execution sale. In an ordinary sale, for
reason of equity, a transaction may be
invalidated on the ground of inadequacy of

PRICE price, or when such inadequacy shocks one’s

conscience as to justify the courts to interfere;
such does not follow when the law gives the
owner the right to redeem as when a sale is
made at public auction, upon the theory that
the lesser the price, the easier it is for the
owner to effect redemption.
WHAT IS
OPTION An option, sometimes called “unaccepted
offer”, as used in the law on sales, is a

OR continuing offer or contract by which the

owner stipulates with another that the latter
shall have the right to buy the property at a
“UNACCEP fixed price within a certain time.
An option is not of itself a purchase, but
TED merely secures the privilege to buy.

OFFER”?
WHAT IS
It is a statutory rule that whenever earnest
money is given in a contract of sale, it shall be
considered as part of the price and as proof of

EARNEST the perfection of the contract. It constitutes an

advance payment and must therefore, be
deducted from the total price. Also, earnest
MONEY? money is given by the buyer to the seller to
bind the bargain.
CONTRACT A contract for a piece of work, labor and
materials may be distinguished from a contract
FOR A PIECE of sale by the inquiry as to whether the thing
transferred is one not in existence and which
OF WORK would never have existed but for the order of
the person desiring it. In such case, the contract

VS. is one for a piece of work, not a sale. On the

other hand, if the thing subject of the contract
would have existed and been the subject of a
CONTRACT sale to some other person even if the order had
not been given the contract is one of sale.
OF SALE
DACION In dacion en pago, as a special mode of

EN PAGO payment, the debtor offers another thing to the

creditor who accepts it as equivalent of
payment of an outstanding debt.
VS. The undertaking really partakes in one sense of
the nature of sale, that is, the creditor is really

CONTRAC buying the thing or property of the debtor,

payment for which is to be charged against the
debtor’s debt.
T OF SALE
CONTRACT OF SALE VS.
AGENCY TO SELL
Contract of Sale Agency to Sell
The buyer receives the goods as owner. The agent receives the goods as goods of the
principal who retains his ownership over them.

The buyer pays the price. The agent delivers the price, which he got from
his buyer, to his principal.
The buyer, as a general rule, cannot return the The agent can return the goods in case he is
object sold. unable to sell the same to a third person.
 Sale Barter
A thing is given in exchange A thing is given in exchange
of a price certain in money or of another thing.
its equivalent.

SALE VS. If the consideration is partly in money and partly in another

BARTER
thing:
1. The transaction is characterized by the manifest intention of
the parties.
2. If there is no manifest intention:
a. Barter if the value of the thing is more valuable than money.
b. Sale if the value of the thing is equal or less than the amount
of money.
 A bilateral contract whereby the prospective
seller, while expressly reserving the ownership

CONTRAC of the subject property despite delivery thereof

to the prospective buyer, binds himself to sell
the said property exclusively to the prospective

T TO SELL buyer upon fulfillment of the condition agreed

upon, that is, full payment of the purchase price.
CONTRACT TO SELL VS.
CONDITIONAL CONTRACT OF SALE
Contract to sell
Upon fulfillment of the suspensive condition
which is the full payment of the purchase
price, ownership will not automatically
transfer to the buyer although the property may
have been previously delivered to him. The
prospective seller still has to convey title to the
prospective buyer by entering into a contract
of absolute sale.
Conditional Contract of Sale
In a conditional contract of sale, the fulfillment
of the suspensive condition, the sale becomes
absolute and this will definitely affect the
seller’s title thereto. If there had been previous
delivery of the subject property, the seller’s
ownership of title to the property is
automatically transferred to the buyer.
RISK OF LOSS

Risk of Loss or Deterioration

(See Art. 1480)
1. If the thing is lost before perfection, the seller
and not the one who intends to purchase it bears
the loss in accordance with the principle that the
thing perishes with the owner (res perit domino).
RISK OF LOSS

Risk of Loss or Deterioration

(See Art. 1480)
2. Object is lost after delivery to the buyer
If the object was lost after delivery to the buyer,
the buyer bears the loss
RISK OF LOSS

Risk of Loss or Deterioration

(See Art. 1480)
3. Object is lost after perfection but before
delivery
If the object was lost after perfection but before
delivery, the buyer bears the loss. This is an
exception to the principle of res perit domino.
SALE BY SAMPLE OR DESCRIPTION

In the contract of sale of goods by

description or by sample the contract may
be rescinded if the bulk of the goods
delivered do not correspond with the
description or the sample, and if the
contract be by sample as well as
description, it is not sufficient tha the bulk
of goods correspond with the sample if they
do not also correspond with the
description.
The buyer shall have a reasonable
opportunity of comparing the bulk with the
description or the sample. (Article 1481)
SALE BY SAMPLE

There is a sale by sample when a small

quantity is exhibited by the seller as a fair
specimen of the bulk, which is not present
and there is no opportunity to inspect or
examine the same.
The parties have an understanding that the
product to be delivered would correspond
with the sample.
SALE BY DESCRIPTION

There is a sale of goods by description where

the buyer has not seen the article sold and
relies on the description given to him by the
seller.
A seller’s description of the goods which is
made part of the basis of the transaction
creates a warranty that the goods will
conform to that description.
A CONTRACT OF SALE MAY BE MADE IN WRITING OR BY
WORD OF MOUTH

Subject to the provisions of the Statute of

Frauds and of any other applicable statute,
a contract of sale may be made in writing,
or by word of mouth, or partly in writing
and partly by word of mouth, or may be
inferred from the conduct of the parties.
A CONTRACT OF SALE MAY BE MADE IN WRITING OR BY
WORD OF MOUTH

General Rule:
A contract of sale may be made in writing,
or by word of mouth, or partly in writing
and partly by word of mouth, or may be
inferred from the conduct of the parties.

Exceptions:
When a sale of a piece of land or any
interest therein is through an agent, the
authority of the latter shall be in writing;
otherwise, the sale shall be void.
A CONTRACT OF SALE MAY BE MADE IN WRITING OR BY
WORD OF MOUTH

Form is required for enforceability

Under the Statute of Frauds, the following
contract of sale must be in writing to be
enforceable:
1. Sale of real property
2. Sale of personal property at a price not
less than P500.00
3. Sale of property not to be performed
within a year from the date thereof.