Sales

• Contract of sale

  One of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent
• Characteristics of a Contract of Sale

  • Purpose: to transfer of ownership
  • Perfection: by mere consent, since one of the parties "obligates" himself, as such, he already bound himself, a contract is already perfected even before delivery of the thing
  • Subject Matter: determinate thing
  • Cause: the contract of sale is onerous, since the other party has the obligation to pay
  • Bilateral Contract: both parties have their respective obligations
  • Nominate Contract: there are specific rules provided by law to govern the rights and obligations of the parties, after stipulations
  • Commutative: there is equivalence in the prestation of the parties
  • Aleatory: there is also a sale of hope where there is no equivalence in the value of prestations
• Things having a potential existence may be the object of the contract of sale
• The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence. The sale of a vain hope or expectancy is void
• Kinds of Sale as to Nature of the Subject Matter

  • Real or Personal
  • Thing (corporeal or tangible) or Rights (incorporeal or intangible)
• Conditional sale

  Ownership automatically transfers to the buyer upon fulfillment of the condition, without need of a new agreement or to execute a new contract
• Absolute sale

  Ownership transfers upon delivery, actual or constructive, even if no total payment yet. If no payment happened, the buyer becomes a debtor as far as the price is concerned
• Contract to Sell

  A special kind of conditional sale where ownership does not automatically pass upon fulfillment of the condition. It will only give the buyer the right to demand the execution of a deed of sale or to compel the seller to sell. Ownership transfers only upon execution of the deed of sale or some other mode of delivery
• Contract for a piece of work

  If the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work
• Contract of sale

  If the thing to be delivered by the obligor is manufactured in the ordinary course of business, and being offered to the general market, even if not at hand at the time the order is made, it is a contract of sale
• Dacion en pago


  Upon delivery, ownership passes. There is always transfer of ownership
• Barter

  If the consideration of the contract consists partly in money, and partly in another thing, the transaction shall be characterized by the manifest intention of the parties. If such intention does not clearly appear, it shall be considered a barter if the value of the thing given as a part of the consideration exceeds the amount of the money or its equivalent; otherwise, it is a sale
• Contract of agency to sell

  In construing a contract containing provisions characteristic of both the contract of sale and of the contract of agency to sell, the essential clauses of the whole instrument shall be considered
• Elements of a contract of sale

  • Natural - those which are deemed part of the contract even if not stipulated or even if the parties are unaware
  • Accidental - present only because the parties so stipulated
  • Essential - required for validity
• Essential elements of a contract of sale

  Consent of the contracting parties, i.e., the buyer and the seller
• Absolute Incapacity

  The party cannot give consent to any and all contract, which may result in the contract being voidable or void
• Relative Incapacity

  The party is prohibited from entering some specific transactions with some persons and sometimes over specific things
• Examples of Relative Incapacity

  • Husband and wife cannot sell property to each other, except when a separation of property was agreed upon in the marriage settlements or when there has been a judicial separation or property
  • The guardian cannot acquire the property of the person or persons who may be under his guardianship
  • Agents cannot acquire the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given
  • Executors and administrators cannot acquire the property of the estate under administration
  • Public officers and employees cannot acquire 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
  • Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice cannot acquire the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions
  • Aliens are prohibited by the Constitution from acquiring lands in the Philippines, except by succession or in case of a former natural born Filipino citizen who has lost his citizenship
• Vitiated consent: by force, intimidation, violence, mistake or fraud - the contract is voidable
• Consent by a party given by another without authority: the contract is unenforceable as to the supposed principal
• The seller need not be the owner for validity of the contract
• The seller need not be the owner to transfer ownership
• If the seller had no authority to sell: the buyer acquires no better title to the goods than the seller had, except in cases of estoppel
• Sale of an Apparent Owner: the sale of an apparent owner will give the buyer a better right provided there is apparent ownership, the buyer is in good faith and for value, and there is a law
• Valid Sale by Statutory or Judicial Authority: such as sales made by guardians, executors, administrators, sheriffs, etc.
• Purchase from a Merchant Store, Market or Fair in good faith and for value: the purpose of this exception is to facilitate commercial transactions so as not to degrade the trust in sales made through such stores
• One who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same. If the possessor of a movable lost or which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid thereof
• Cause

  As to each contracting party is the prestation or promise to be performed by the other party. For the buyer, it is the delivery of the object, while for the seller, it is the payment of the price
• Rules as to price

  • It must be certain
  • With reference to another thing certain
  • The determination thereof be left to the judgment of a special person or persons
• Gross inadequacy of price does not affect a contract of sale, EXCEPT as it may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract
• The price of securities, grain, liquids, and other things shall also be considered certain, when the price fixed is that which the thing sold would have on a definite day, in a particular exchange or market, or when an amount is fixed above or below the price on such day, or in such exchange or market, provided said amount be certain
• 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
• Where the price cannot be determined in accordance with the preceding rules, or in any other manner, the contract is inefficacious
• However, if the thing or any part thereof has been delivered to and appropriated by the buyer he must pay a reasonable price therefor
• Object

  The subject matter which may be things or rights. Service cannot be a valid subject since no person acquires ownership over service, and transfer of ownership is the purpose of a contract of sale
• Rules as to Objects of Contracts of Sale

  • It must be licit or within the commerce of men
  • The vendor must have a right to transfer the ownership thereof at the time it is delivered
  • It must be determinate
• In the case of fungible goods, there may be a sale of an undivided share of a specific mass, even though the number, weight or measure of the goods in the mass is undetermined
• The object 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
• The sole owner of a thing may sell an undivided interest therein
• There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which may or may not happen