- IMPT!

The existence of these elements will depend on the

autonomy of the wills of the parties. (Art. 1306 –
stipulation of parties)
Sales – Y2S1  Rules on a simulated COS: (see page 16)
Midterms Reviewer
1. Absolutely stimulated contract/fictitious contract is
(MEMORIZE!) null and void.
Article 1458. By the contract of sales / one of the contracting parties / 2. No independent action to rescind or annul the
obligates himself to transfer ownership / and to deliver a determinate contract is necessary. It is treated as non-existent.
thing / and the other to pay / therefore a price certain / in money or it’s
equivalent.  Characteristics of a COS:

 A sale is a transaction – when to persons negotiate about a 1. Nominate – Sale has its own individuality and is
determinate thing; come into an agreement and perform their governed by its own set of rules
respective obligations under such agreement. 2. Principal –
 A sale is a contract – whereby a person transfers ownership 3. Consensual - perfected by mere meeting of the
of a thing to another for a price certain. minds
 A sale is a special contract – there is a specific set of 4. Bilateral -
provisions under the CC that defines/enumerates the rights 5. Onerous -
and obligations of the parties/provides for remedies in cases 6. Commutative – characteristic of a sale is not
of breach. affected by the mere fact that the price is
 A sale is a source of obligation – since obligations arising inadequate because the mere inadequacy of the
from contracts have the force of law and should be complied price does not affect the validity of the contract of
with by the parties in good faith, the existence of a valid sale when both parties are in a position to form
contact of sale means there is a reciprocal obligation for the an independent judgment. E! fraud, mistake,
seller and the buyer. undue influence, defect of consent
 Parties to a contract of sale: 7. Title – ownership of the thing sold is not
1. Vendor/seller – who binds himself to transfer transferred by mere perfection of the contract of
ownership of and deliver a determinate thing sale, but by delivery.
2. Vendee/buyer – who pays for the price 8. Aleatory –
 Elements of a contract of sale:  Recio v. Heirs of Spouses Altamirano – absent the consent of
1. Consent or meeting of the minds; consent to the co-owners, the sale between the latter and the
transfer ownership in exchange for the price subsequent buyer is null and void. The sale between
2. Determinate subject matter petitioner who is the subsequent buyer and the one who
3. Price certain in money or its equivalent consented to the sale is valid insofar his aliquot share is
concerned. Being a co-owner, he can validly and legally
- dispose of his share even without the consent of all the other.
- The absence of any of these elements will render the  Absolute Stimulation (void) v. Relative Stimulation (colorable
contract of sale void. contract; false clause; terms)
  Suntay v. CA – the most prominent index of simulation is the  Barter – one of the parties binds himself to give one thing n
complete absence of an attempt on the part of the vendee to consideration of the other’s promise to give another thing.
assert his rights of ownership over the property. After the sale, - IMPT! If the consideration of the contract consists partly
the vendee should have entered the land and occupied the in money and partly in another thing, the transaction shall
premises. The absence of any attempt to assert its right of be characterized by the manifest intention of the parties.
dominion over the property is a clear badge of fraud.
 Contract of Sale v. Contract to Sell (Ace Foods c, MPTC) E! If the intention does not clearly appear:
COS is a consensual contract, which means that the sale is
perfected by mere consent. Upon perfection of the contract, 1. If the thing is more valuable than money, the
parties may reciprocally demand performance; the buyer may transaction is barter
compel transfer of ownership of the object of the sale, and the 2. If the thing and money are of equal value, the
vendor may require the vendee to pay the thing sold. transaction is sale
3. If the thing is less valuable than money, the transaction
CTS is a bilateral contract, whereby the prospective seller, is sale
while expressing reserving the ownership of the property
despite delivery thereof to the prospective buyer, binds  Conditional Sale v. CTS
himself to sell the property exclusively to the prospective - In a conditional contract of sale, the first element of
buyer upon fulfillment of the condition, which is the full consent is present, although it is conditioned upon the
payment of purchase price. happening of a contingent event which may or may not
occur; the buyer automatically acquires title to the
- Title; Ownership; Effect of Non-Payment; Remedy of the property upon full payment of the purchase price; transfer
Seller in case of Default of title is by operation of law without any further act having
to be performed by the seller.
COS differentiated from other contracts
 MIDTERMS: If such transfer puts the transferee in the attitude In a CTS, transfer of title is not automatic. The prospective
or position of an owner, and makes him liable to the transferor seller must convey title to the property through a deed of
as a debtor the agreed price, the transaction is a contract of conditional sale.
sale.
 COS v. Agency to Sell  Dacion en Pago / dation in payment – delivery and
In an agency, the principal retains ownership and control over transmission of ownership of a thing by the debtor to the
the property and the agent merely acts on the principal’s creditor as an accepted equivalent of the performance of the
behalf and under his instructions in furtherance of which the obligation. It is a mode of extinguishing an obligation and
agency was established. partakes the nature of a sale as the creditor is really buying
 Contract for a Piece of Work – goods are to be manufactured the property of the debtor, the payment of which is to be
especially for the customer and upon his special order, and charged against the debtor’s debt.
not for the general market, it is a contract for a piece of work.
GR: DIP extinguishes the obligation to the extent of the value
The thing transferred is not one in existence, and which would of the thing delivered.
never have existed but for the order of the person desiring it. E! Unless the parties by agreement, express or implied, or by
their silence, consider the thing as equivalent to the obligation,
 in which case the obligation is totally extinguished. (if the
creditor accepts the thing without any protest) Requisites of a valid object of sale:

 Donation – essence(transfer the ownership of the determinate 1. It must be determinate – see above
thing out of liberality[gratuitous]); consideration; perfection 2. Licit – must not be contrary to law, morals, public order, public
and validity(donor knows of the acceptance) policy, must not be outside the commerce of men. Otherwise, the COS
 Lease – essence(transfer of use or enjoyment of a is void. Must not be illicit; there is a law that makes it illegal.
determinate thing for a price certain); right to transfer(the 3. It must not be impossible
lessor does not need to be the owner of the thing at the time
it is delivered to the lessee while in a COS the vendor needs Sale of Things Having a Potential Existence (emptio rae speratae) vs..
to be the owner of the determinate thing at the time of Sale of Hope (Emptio Spei)
delivery); period of transfer (not permanent, lease for a period
of more than 99 years is void); consideration  SOTHPE may be the object of a contract of sale, these are
future things since they are not yet in existence at the time of
GR: The seller does not need to be the owner of a determinate thing the sale. The sale is subject to a suspensive condition that
before or during the perfection of the contract of sale. thing will exist and come into being, at the risk of the seller.
E! The right to transfer ownership becomes relevant during the Otherwise, its non-existence is a resolutary condition that will
consummation stage of the perfected contract of sale; because the extinguish the sale.
seller must deliver the thing sold to the buyer in order to transfer
ownership thereof. E! if the future thing never takes it deliverable form, then the
thing has not come into being. In this situation, the suspensive
Rationale: if the seller cannot transfer ownership over the thing sold at condition has not been met and the buyer cannot be
the time of the delivery because he is not the owner thereof, he shall compelled to accept it.
be liable for breach of contract. Nemo dat quod non habet.  Sale of Hope – a mere hope or expectancy may be the object
of a contract of sale, such are present things. The sale is still
CURE: If later on the seller acquires title over the thing, such title valid and produces its effects even if the hope never comes
passes to the buyer by operation of law. (Art. 1434) to be or the expectancy never comes into existence.
 The sale of a vain hope or expectancy is void.
OBJECT OF SALE

A thing is determinate – when it is particularly designated or physically

segregated from all other of the same class.

The requisite is satisfied if at the time the contract is entered into, the
thing is capable of being made determinate without the necessity of a
new or a further agreement.