Part I Essential characteristics of Sale

Nature of Sale 1.) Sale is Nominate and Principal

I. What is Sale? A sale is what the law defines it to be,
taking into consideration its essential
A contract where one party (seller)
elements and not what the contracting
obligate himself to transfer an
parties call it.
ownership and deliver the possession
of determinate, and the other party 2.) Consensual
(buyer) obligates himself to pay the
It is perfected, valid and binding upon
price certain in money or its
meeting of the minds on the subject
equivalent.
matter and the consideration.
II. What are the Elements of Sale?
3.) Sale Gives Rise to Reciprocal
a.) Consent or the Meeting of Mind Obligation
b.) Subject Matter Which arise from the same cause
where each party being a debtor and
c.) Consideration which is the price
creditor of the other. The obligation of
certain or money or its equivalent.
one is dependent upon the obligation
Note: Absent of any of these essential of the other. They are to be performed
elements negates the existence of a bilaterally and simultaneously. So that
contract of sale even if down payment the performance of one is conditioned
has been paid. upon the simultaneous fulfillment of
III. The Following are stages of sale another.

1.) Negotiation- Starts from the time 4.) Contract of sale is Onerous and
the perspective contracting parties Commutative
indicates a interest in the contract to There is no requirement that the price
the time the contract is perfected. should be equal value to the exact
2.) Perfection- takes place upon value of the sale. All that is requires is
concurrence of elements of sale that the parties believed that they will
receive good value in exchange for
3.) Consummation- when parties what they will give.
perform their respective undertaking
in contract of sale. Culminating in the 5.) Sale is Title not Mode
extinguishment of the contract of sale.
A mode is a legal means by which 3.) Barter
ownership is created, transferred or
Similar to sale, but instead of money,
destroyed.
another thing is given in lieu of the
Title is the legal basis to affect purchase price.
dominion or ownership.
What if what is given is partly in
Sale by itself does not affect or money or partly in another thing?
transfer ownership. Sales only create
a.) Intention- their true purpose in
obligation to transfer ownership. It is
entering the contract. This can be
tradition or delivery as a consequence
gleamed from the conduct, words,
of sale that transfers ownership.
action, or deeds prior to, during and
Distinguish Sale from other immediately executing in the
contracts agreement.
1.) Donation When intention does not appear?
Unlike Donation, sale is a disposition It is barter if value of thing given as
for valuable consideration with no part in consideration exceeds the
diminution of seller’s estate but amount money given or its equivalent.
merely substitution of values.
It is sale where the value of the thing
Property sold replaced by equivalent
given is part of the consideration
monetary consideration, and therefore
equals or less than the amount given.
cannot have legal effect of
compulsory heirs of their legitimes. 4.) Agency Sell
2.) Contract of Work One factor that distinguish agency
from sale is control. One person or the
If the thing is special done only upon
agent agrees to act under the control
specific order of another it is a
or direction of another, the principal.
contract piece of work.
5.) Dacion En Pago
If it is manufactured or procured for
the general market in the ordinary Dacion En Pago is a transaction that
course of business, it is a contract of takes palce when property is alienated
sale. to the creditor in full satisfaction of a
debt or in money. This not so in the
contract of sale.
6.) Lease -This contract is valid thus the
incapacitated person must pay a
When the rentals in a lease or meant
reasonable price therefore
to be installment payments in an
underlying sale of contract. Despite -In order of this contract to be valid
the nomenclature given by the parties there must be a perfection of sale and
it is sale by installments and governed delivery of subject necessaries. If
by Recto law. there is no delivery then the contract
is voidable
Part II
Sales by One of the spouses
Parties to the sale
-Say a husband sold a conjugal
What is the General rule?
property to a 3rd person without the
Every person having the legal wife’s consent, that contract is void.
capacity to obligate himself may
-The husband may dispose conjugal
validly enter into a contract of sale
property without wife’s consent when
whether as a seller or as a buyer.
necessary to answer to answer for
Contracts entered by legally conjugal liabilities. In that case, the
incapacitated persons contract is valid.
-Minors, insane and demented, deaf- -If the wife signs as a witness in a
mute deed of sale she is deemed to have
-These contracts are voidable thus given her consent. Making the
subject to annulment or ratification contract valid.

-The action for annulment cannot be Sales between spouses

instituted by the person who is -Sales between spouses who are not
capacitated since he is disqualified governed by a complete separation of
from alleging the incapacity of the property regime are void. This rule
person whom he contracts. also applies to common-law
Necessaries that are sold to legally relationships.
incapacitated person -What if the husband sold a conjugal
Example: Sustenance, Dwelling, property to his concubine? That
clothing, medicines, books for contract is considered void for being
education and transportation services subversive of the stability of the
family.
Buyers who are relatively valid objects of sale under Emptio
disqualified to enter into a contract Rei Separatae.
of sale
Such sale is subject to a suspensive
Administrator or executor - with condition that a subject matter will
respect to the property of the estate of come to an existence. It covers only
the deceased. Hereditary rights are not determinate or specific thing.
included in the prohibition.
Let’s say a person bought lotto ticket
Agent- with respect to the property of for chance to win 1,000,000 but the
the principal entrusted to him, if the chance to win. If ticket does not win
principal consents to the sale of the the sale is still valid under the concept
agent then the prohibition no longer of sale Emptio Spei.
applies.
If ticket is fraud making the chance to
Lawyer - with respect to the property win a vain hope, this makes the sale
which may be the object of the void.
litigation. If the lawyer bought the
Subject Matter must be Licit
property prior to the time he
intervened as counsel then the Let’s say John’s father is still alive
prohibition does not apply. and sold his future inheritance to a
third person. The sale is void because
Judge- with respect to the property in
future inheritance cannot be subject of
litigation before his court. If he
sale. This does not cover a waiver of
bought the property after the
hereditary rights which is in favor of
judgment became final then the
co heirs and is not equivalent to sale.
prohibition no longer applies.
If a person mortgage his house, he can
Part III
still sell his house because a mortgage
Subject Matter is an encumbrance that does not affect
his principal attribute as an owner.
Subject Matter
The law even consider a stipulation
Must be existing, a future thing, or forbidding owner alienating
contingent to a resolutory condition. mortgaged immovable as void.
Example: Subject Matter must be
A person planted a crops which have determinate or at least
potential existence. The crops are determinable.
Where the sold lot is described to An alien who purchases land in the
adjoined previously paid lot on three name of his Filipina lover has no
sides thereof. It can be determined standing to recover the property or the
without need of new contract. Even if purchase price paid since the
the exact area of adjoining lot is transaction is void for violation of
subject to the result of the survey. constitutional prohibition.
Where the quoted portion of the Part IV
Kasunduan gave reference to the area,
Price and Consideration
the locality, and vicinity with
reference to old trees, this is also Price and other consideration
considered as determinable. Price signifies the sum
An undivided of interest in a parcel of stipulated as the equivalent of the
land or undivided share a mass of thing sold, and also every incident
fungible good can be a subject of a taken into consideration for the fixing
contract of sale. This may result in co- of the price put to the debit of the
ownership. buyer and agreed to by him.
Seller’s obligation to transfer title Under the doctrine of
to buyer Obligatory Force, the seller cannot
unilaterally increase the price
Seller need not be the owner at the
previously agreed upon with the
time of perfection of sale. It is at the
buyer.
delivery that the law requires the
seller to have the ownership of the Price must be real
thing sold. When the consideration is
This stems from the principle that simulated, the contract of sale is void.
nobody can dispose of that which But what about the principle of in
belong to him. NEMO DAT QUOD pari delicto which provides that when
NON HABET two parties are equally at fault, the
law leaves them as they are and
Illegality of the Subject Matter.
denies recovery by either one of them.
Objects such as narcotics, wild birds, Well, this principle does not apply
wild mammals, rare wild plants, and with respect to inexistent and void
explosive has been declared by contracts.
special laws as illegal subjects of
Price is false
contract of sale.
 What happens when the price is repairs of their elevators. Take note,
false, such as when the parties however, that there is no
intended to be bound by the sale but appropriation to speak of when it
the deed did not reflect the actual comes to land.
price agreed upon? Here, there is only
Manner of Payment of Price is
a relative simulation of the contract
Essential
which remains valid and enforceable
but subject to reformation. A definite agreement on the
manner of payment of price is an
But what if the price was
essential element in the formation of
undervalued in the contract to avoid
a binding and enforceable contract of
payment of higher capital gains taxes?
sale. Without which, the sale is void
In this case, the price stated is false
and an action for specific performance
but the sale is still valid and binding
must fail. When the manner of
on the real terms agreed upon.
payment of the price is discussed after
Effect of Non-Payment of Price acceptance, then such acceptance did
not produce a binding and enforceable
Sale being consensual in
contract of sale.
nature, the failure of the buyer to pay
the price does not make the contract Inadequacy of Price
void for lack of consideration or
A simple inadequacy of price
simulation. But, results in buyer’s
does not affect the validity of ordinary
default for which the seller may
sales. When fraud, mistake, or undue
exercise his legal remedies either
influence is present, the contract may
specific performance or rescission.
be annulled for vitiated consent but
Price is neither Certain or not due to inadequacy of price.
Ascertainable
Gross inadequacy of price
When price is neither certain or may:
ascertainable, the sale is
1. Raise the presumption
inefficacious. But if the buyer
of equitable mortgage
appropriates the object, he must pay a
2. Render voidable a
reasonable price. In one case, there
judicial sale
was no meeting of the minds of the
a. When it is
price. Yet, to deny the claim of the
shocking to the
Elevator Service Company would
conscience of
unjustly enrich the owner of the
man; and
building, who had benefitted from the
 b. There is showing is formally initiated by offer which
that in the event of must be certain.
a resale, a better
Example
price can be
obtained. Unless, John offers Mark a house worth 2.5
there is a right of million, Mark counter offers the price
redemption, in for 2 million. Lower price is a counter
which case the offer and not an acceptance. At any
proper remedy is time prior to the perfection of
to redeem. contract, either party may stop the
However, when negotiation. At this stage the offer can
the right of be withdrawn. The withdrawal is
redemption has effective immediately after its
been lost, where manifestation.
the inadequacy of Option contract
the price is purely
shocking to the Preparatory contract where one party
conscience, such grants to another for a fixed period
that the mind under a specified conditions, the
revolts at it and power to decide whether or not to
such that a enter into a principal contract. It binds
reasonable man the party who has given the option not
would neither to enter into a principal contract with
directly or any other person during period
indirectly be designated, and within that period, to
likely to consent enter into such contract with the one
to it, the same will whom the option is granted If he
be set aside. should decide to use the option.

Part V It is a separate agreement distinct

from contract of sale. Thus it must be
Formation of Contract of Sale supported with a consideration
Discussion separate from the price of sale.
1.) Policitation/ Negotiation- This Otherwise option is void but offer is
stage cover the doctrine freedom to valid for the given period.
contract. Where a Person has right to For option to rise to a contract of sale
choose whom to contract. This stage there must be a formal absolute
acceptance. Called the Double Perfection Stage
Acceptance rule.
Meeting of the minds upon the object
Here under the option contract, Mark and upon the price of the contract.
may validly and effectively exercise
Being a state of mind mutual consent
right by advising John of his decision
can be inferred from the confluence of
to buy and expressing readiness to
two acts of the parties.
pay the stipulated price as soon as
John is able to execute a deed of sale. First, an offer certain as to the object
of the contract and its consideration
Option not exercised in the given
period is extinguished. Second, an acceptance of the offer
which is absolute. Meaning it refers to
Right of First Refusal
the exact object and consideration in
If John is the owner lessor and Mark the said offer.
is lessee of John’s Property.
In the instance where the supposed
Right of first Refusal Means buyer merely placed the word
“Noted” and signed below the word is
If John decide to sell the property
not considered an absolute
during the term of lease. Such sale
acceptance.
should be offered to Mark and the
series of negotiation that transpire In the instance where the object is
between them and the basis of such required an approval from the higher
preference is already a compliance authorities , the object is not certain.
even there is no final purchase
Rule on Auction Sale
agreement is perfected between them.
Thereafter, John is at liberty to sell to The owner’s terms and conditions on
other third party. sale on property are binding in all
bidders whether or not they knew of
Let’s say Mark has a standing of right
it.
of first refusal as lessee and subleased
the property to Peter. The right of first It is perfected by fall of hammer or
refusal cannot be exercised by sub other customary manner
lessee. Earnest Money
Note also the right of first refusal Earnest Money given by the buyer is
cannot be subject to specific considered part of the price and proof
performance but breach of it will of perfection of contract.
allow for recovery damages.
It constitutes an advance payment to Notarization of one not a notary
be deducted on the total price. republic, does not affect the validity
of sale. It remains a private
If no provision of forfeiture of earnest
instrument.
money– and sale fails to materialize,
with rescission, it becomes incumbent The legal consequence of a sale not
upon seller to return earnest money as being a public instrument, both its due
legal consequence of mutual and execution must be proven
restitution. pursuant to the rules of court.
Where parties merely exchange of Instances where form is Important
offers and counter offers and no for Enforeceability such as those
contract of sale yet, money given as Statute of Frauds
deposit cannot be considered as
Statute of frauds refer to law
earnest money since such term is
provisions which requires enumerated
applied to perfected sale.
contracts such as agreements for sale
Form not Important for Validity of of property to be in writing and signed
Sale by parties.
Because of its consensual character For the purpose to prevent fraud and
form is not required for perfection of perjury in enforcement of obligation.
sale. It presupposes a valid contract of sale.
The law does not require that sale of Statute of Frauds does not apply to
land be in public instrument or contracts either partially or totally
notarize deed to perfect a contract but performed.
only to ensure its efficacy.
Contract that violate statute of frauds
Sale of land under private instrument is ratified by the acceptance of
is enforceable between the parties. benefits under the contract.
A notarized deed of sale does not Example
guarantee the validity of sale, it
Without a deed of sale, John accepted
merely enjoys presumption of
the payment of Mark for the house.
regularity and due execution. To
The Statute of fraud does not apply.
overthrow this presumption, a clear
The contract is already enforceable.
and sufficient evidence is required.
Otherwise the document should be While a sale of land is written in a
upheld. private instrument it only binds the
parties. It does not bind in third
parties. It binds third parties only if - The failure of the payer to pay
written in public document and the price does not cost the
registered in registry of deeds. ownership to re-vest to the
seller unless the bilateral
contract of sale is first
VI rescinded.
Consummation of Sale DELIVERY MAY BE ACTUAL
A seller and a buyer entered into a OR CONSTRUCTIVE
contract of sale of a cow. Here the Constructive delivery
seller has the obligation to: 1.
Preserve the subject matter before - Is the execution of notarized
actual delivery. deed of sale of a parcel of land
w/c is a public instrument.
If the cow bears an offspring before Notwithstanding the presence
delivery, the seller has the obligation of illegal occupants of the
to deliver the offspring together with subject property, the transfer of
the cow, w/c is the subject matter of ownership by constructive
the sale. delivery, can still be effected
What is delivery? through a deed of sale.
- The buyer as the owner, has
- In sales, delivery or tradition several options among these:
refers to the concurrent transfer she can file ejectment suits
of two things, the session and against occupants or may
ownership. amicably secure the latter
- Absence of an agreement that evacuation of the premises.
ownership is retained by the - Whatever mode the buyer
seller until the buyer has fully chooses signifies her mode of
paid the price, her intention as an owner to
delivery/tradicion produces its obtain for herself or to
natural illegal effects. terminate said occupants actual
- Most important of w/c being possession thereof.
conveyance of ownership - However, when from the face
without prejudice to the right of of the instrument it is shown
the seller to claim the payment that the seller was not yet the
of price. owner of the property, such as
the seller was only expecting to
 inherit it from her father, the occupants other than the seller
execution of the notarized deed in the subject property but no
of sale cannot be considered a investigation was made.
constructive delivery. - It is a well settled rule that the
purchaser cannot close his eyes
DOUBLE SALES OF
to facts w/c should put a
IMMOVABLE PROPERTY
reasonable man upon his guard,
- EX: a vendor sells a parcel of - And then claim he acted in
land to two vendees . who has good faith under the belief that
the better right? there was no defect in the title
- Here, the one who has better of the vendor.
right is the : - Another istance: a sale to a
o First registrant in good daughter and a son will give
faith rise to a conclusion that the
o Should there be no entry, buyers are not third party and
the first in possession in knew of the sale cannot be
good faith considered in good faith. The
o Absence thereof, the buyers are deemed to have
buyer who presents the constructive knowledge in
oldest title in good faith. virtue of their relationship to
WHAT IS A PURCHASER the seller.
IN GOOD FAITH? - Note: the buyer to a registered
- A purchaser in good faith is land would be in bad faith if he
one who buys a property purchase it w/o asking to see if
WITHOUT NOTICE that some the owner’s copy of title and/or
other person has a right to, or w/o visiting the subject parcel
interest in such property of land .
- And pays a full and fair price OBLIGATION OF THE BUYER
for the same at the time of such
purchase, or before the has - The buyer must pay the price,
notice of claim or interest of but if seller cannot show title to
some other person in the the subject matter; seller cannot
property. compel the buyer to pay the
price.
INSTANCES IN BAD FAITH
- NOTE: unless the buyer agrees
- When a real estate corporation otherwise, payment to be
agent knew that there are effective must be made to the
 person in wose favor the
obligation has been
constituted, or his successor-
in-interest, or any person
authorized to receive it.
- NOTE: The delivery of the
subject matter is an obligation
in the part of the seller be
acceptance thereof by the
buyerm if it is not a condition
for the completeness of
delivery.