SALES | A T T Y .

D U J U N C O

CHAPTER 1 o The seller is bound to deliver and transfer the

NATURE AND FORM OF THE CONTRACT ownership of the thing sold
o The buyer is bound to accept it and pay the price
Article 1458. By the contract of sale one of the contracting therefor.
parties obligates himself to transfer the ownership and to  In case either of them can not comply with what is
deliver a determinate thing, and the other to pay therefor a incumbent upon him, the injured party may choose
price certain in money or its equivalent. between the fulfillment and the rescission of the
A contract of sale may be absolute or conditional. obligation, with the payment of either case. (Art. 1191,
NCC)
TRANSANCTION
PARTIES
 Sale is a transaction – constituted when two persons
 Vendor (or the seller) – the one who binds himself to
negotiate about a determinate thing come into an
transfer ownership of and deliver a determinate thing
agreement whereby one of them (vendor or seller)
 Vendee (the buyer or purchase) – one who pays for the
obligates himself to transfer ownership and to deliver
price.
such determinate thing to the other party (vendee, buyer,
or purchaser) who, in return, binds himself to pay C H A RA C TE RI ST IC S O F A C ON T RA C T O F SA LE
therefor a sum of money or its equivalent(price); and
perform their respective obligations under such  Nominate – sale has its own individuality and is governed
agreement by its own set of rules
SPECIAL CONTRACT  Principal – its existence and validity do not depend upon
another contract
 Contract – Art. 1305 (NCC) – a meeting of minds between  Consensual – perfected by mere consent. Upon
two persons whereby one binds himself, with respect to perfection of the contract, the parties may reciprocally
the other, to give something or to render some service. demand performance
o Requisites (Art. 1318)
 Consent of the contracting parties Article 1475. The contract of sale is perfected at the
 Object certain which is the subject moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price.
matter of the contract
 Cause of the obligation which is From that moment, the parties may reciprocally
established. demand performance, subject to the provisions of the
 A sale is a contract whereby a person transfers ownership law governing the form of contracts.
of a thing to another for a price in money.
 The very essence of a contract of sale is the transfer of  Bilateral – it creates and imposes reciprocal rights and
ownership in exchange for a price paid or promised. obligations on both contracting parties
 Requisites of a contract of sale o Vendor – he is entitled to the purchase price but
o Meeting of minds of the parties to transfer he is bound to deliver and transfer ownership of
ownership of the thing sod in exchange for a the determinate things sold
price o Vendee – entitled to receive the thing sold but
o The determinate thing, which is the subject he has to pay therefor the price
matter or object of the contract
o The price certain in money or its equivalent, Article 1169. Those obliged to deliver or to do
which is the cause or consideration something incur in delay from the time the obligee
 Sale is a special contract because there is a specific set of judicially or extrajudicially demands from them the
provisions under the Civil Code that defines it, fulfillment of their obligation.
enumerates the rights and obligations of the parties However, the demand by the creditor shall not be
therein, and provides for remedies in case of any breach necessary in order that delay may exist:
thereof. (1) When the obligation or the law expressly so
SOURCE OF OBLIGATIONS declare; or
(2) When from the nature and the circumstances of the
 Reciprocal Obligations – to be performed simultaneously obligation it appears that the designation of the time
such that the performance of one is conditioned upon the when the thing is to be delivered or the service is to be
simultaneous fulfillment of the other. rendered was a controlling motive for the
 The existence of a valid contract of sale means that there establishment of the contract; or
is a source of reciprocal obligations for the seller and the
buyer
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(3) When demand would be useless, as when the  Aleatory (Sale of hope) – one of the parties or both
obligor has rendered it beyond his power to perform. reciprocally bind themselves to give or to do something in
In reciprocal obligations, neither party incurs in delay consideration of what the other shall give or do upon the
if the other does not comply or is not ready to comply happening of an event which is uncertain, or which is to
in a proper manner with what is incumbent upon him. occur at an indeterminate time.
From the moment one of the parties fulfills his o the fulfillment of the obligation of one of the
obligation, delay by the other begins. parties in a contract of sale of hope depends on
the happening of an event which is uncertain
Article 1191. The power to rescind obligations is
o the buyer assumes a certain risk.
implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.
E LE ME NT S
The injured party may choose between the fulfillment
and the rescission of the obligation, with the payment ESSENTIAL ELEMENTS
of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should  the absence of any of these elements will render the
become impossible. contract of sale null and void.
The court shall decree the rescission claimed, unless
(1) Consent or meeting of the minds; consent to transfer
there be just cause authorizing the fixing of a period.
ownership in exchange for the price
This is understood to be without prejudice to the rights (2) Determinate subject matter
of third persons who have acquired the thing, in (3) Price certain in money or its equivalent
accordance with articles 1385 and 1388 and the
Mortgage Law. NATURAL ELEMENTS

 Integral part of a contract unless there are provisions in

 Onerous – the determinate thins is sold in consideration the law on sales or stipulations of the parties to the
of another valuable consideration contrary.
o Vendor – payment of the purchase price  These are built in elements of the contract of sale, like
o Vendee – the delivery of the determinate thing warrant against eviction and warranty against hidden
and the transfer of the ownership thereof. defects.
 Commutative – the value of the determinate this is
considered or assumed to be the equivalent of the price. ACCIDENTAL ELEMENTS
o The amount of the price is considered or
 Existence of these elements will depend on the autonomy
assumed to be equivalent to the value of the
of the wills of the parties
determinate thing.
SIMULATE CONTRACT OF SALE
Article 1355. Except in cases specified by law, lesion or
inadequacy of cause shall not invalidate a contract,  Under Art 1346, an absolutely simulated or fictitious
unless there has been fraud, mistake or undue contract is void.
influence.
 A simulated contract of sale is without any cause or
Article 1470. Gross inadequacy of price does not affect consideration, and is, therefore, null and void.
a contract of sale, except as it may indicate a defect in
the consent, or that the parties really intended a KI ND S OF S A LE
donation or some other act or contract.
ABSOLUTE AND CONDITIONAL SALE

 Title – constitutes a just cause of exclusive right to ABSOLUTE CONDITIONAL

demand the transfer of ownership, or which is the When title to the property As in a contract to sell,
foundation of ownership of a determinate thing. passes to the vendee upon ownership remains with the
o only constitutes title or right to the transfer or delivery of the thing sold. vendor and does not pass to
acquisition of ownership, while delivery or the vendee until full payment
tradition is the mode of accomplishing the of the purchase price.
same, No stipulation in the contract The full payment of the
o Ownership of the thing sold is not transferred by that title the property remains purchase price partakes of a
mere perfection of the contract of sale, but by with the seller until full suspensive condition, and
payment of the purchase non-fulfillment of the
tradition or delivery.
price. condition prevents the
o A contract of sale provides for a just cause on
obligation to sell from arising.
ground in demanding the transfer of ownership
of the object of sale.
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No stipulation giving the C O NT RA C T T O SE LL

vendor the right to cancel
unilaterally the contract the Contract to Sell – a bilateral contract whereby the prospective
moment the vendee fails to seller, while expressly reserving the ownership of the property
pay within a fixed period. despite delivery thereof to the prospective buyer, binds himself to
sell the property exclusively to the prospective buyer upon
AS TO THE STANDING OR STATUS OF THE SALE fulfillment of the condition agreed upon
 Valid Sale – the sale has al the essential elements for its
validity and produces the desired legal effect. Contract of Sale Contract to Sell
 Rescissible Sale – the sale is valid because all the essential As to Title The Seller conveys the The prospective seller
elements of a valid contract of sale are present, but the title to the property explicitly reserves the
upon the perfection of transfer of the title to
sale has an extrinsic defect because of the economic and
the contract the prospective buyer
financial injury or prejudice to either of the seller or
until the happening of
buyer, or to a third person. As a consequence, the sale an event.
may be rescinded. As to Ownership of the The ownership is, by
 Voidable Sale – the sale is valid until annulled. ownership property passes to the agreement, retained by
o It presupposes a defect on the consent of either buyer upon the delivery the seller despite
party. of the thing sold delivery and is not to
o the presence of a ground that vitiates the pass to the vendee until
consent of either party renders the contract of full payment of the
sale voidable. purchase price
 the defect can be cleansed by As to Buyer’s non-payment The buyer’s full
ratification. effect of of the price is a payment of the price is
o Contracts that are voidable or annullable: non negative resolutory a positive suspensive
payment condition condition to the coming
 those where one of the parties is
into effect of the
incapable of giving consent to a
The seller has lost and agreement
contract cannot recover the
 those where the consent is vitiated by ownership of the Title simply remains in
mistake, violence, intimidation, undue property unless he the seller if the buyer
influence, or fraud. takes action to set aside does not comply with
 Unenforceable Sale – the sale cannot be enforced by a the contract of sale condition precedent of
proper action in court unless it is ratified, because either making at the time
it is entered into without or in excess of authority or it specified in the
does not comply with the statute of fraud or both of the contract.
contracting parties do not possess the required legal As to Should the buyer If the buyer defaults in
capacity. remedy of default in the payment the payment thereof,
the seller of the purchase price, the seller can only sue
 Void Sale – arises when any of the essential elements of
in case of the seller may either for damages.
a valid sale is lacking; or when one of its elements is
default in sue for the collection
contrary to law, morals, good customs, public order, and payment thereof or have the
public policy, is prohibited by law or is declared by law to contract judicially
be void. It cannot be cured by ratification. resolved and set aside.
AS TO THE NATURE OF THE OBJECT OF SALE
Conditional Sale Contract to Sell
 Sale of movable or personal property The first element of consent is
 Sale of immovable or real or real property – adhered to present, although it is
the soil, attached to or form an integral part of an conditioned upon the
immovable in a fixed or permanent manner. happening of a contingent
event which may or may not
D IS TI N GU I SH E D F R O M O TH E R C O NT RA C T S occur
Title to the property remains with the seller until the buyer fully
 It is not the title of the contract, but its express terms or pays the purchase price. Both contracts are subject to the
stipulations that determine the kind of contract entered positive suspensive condition of the buyer’s full payment of the
purchase price
into by the parties.
The buyer automatically Transfer of title to the
acquires title to the property prospective byer is not
automatic. The prospective

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upon full payment of the seller must convey title to the The acceptance may be made in the same deed of donation or
purchase price. property through a deed of in a separate public document, but it shall not take effect unless
conditional sale. it is done during the lifetime of the donor.
This transfer is by operation of
If the acceptance is made in a separate instrument, the donor
law without any further act
shall be notified thereof in an authentic form, and this step shall
having to be performed by the
be noted in both instruments.
seller.
Laws on Sales apply Provisions on conditional Article 1471. If the price is simulated, the sale is void, but the act
obligations may be shown to have been in reality a donation, or some other
Failure to fully pay the act or contract.
purchase price in contracts to
sell is not the breach of
Donation or gift is generally defined as a voluntary transfer of
contract under Art 1191.
Failure to fully pay the property by one to another without any consideration or
purchase price is merely an compensation therefor.
event which prevents the
Elements of a valid donation:
seller’s obligation to convey
the title from acquiring 1. The reduction of the patrimony of the donor
binding force. There can be no 2. The increase in the patrimony of the done
rescission of an obligation that
3. The intent to do an act of liberality or animus donandi
is still nonexistent, the
suspensive condition not Sale Donation
having happened. As to its Transfer of ownership Transfer of ownership
essence of a determinate of the determinate
D O NA T I ON thing in exchange of a thing out of the
price certain liberality
Article 725. Donation is an act of liberality whereby a person
disposes gratuitously of a thing or right in favor of another, who Onerous Gratuitous
accepts it. As to the Law on Sales of the Law on Donation of
governing NCC the NCC
Article 726. When a person gives to another a thing or right on
law
account of the latter's merits or of the services rendered by him
As to Price certain in money Purely the liberality or
to the donor, provided they do not constitute a demandable
consideration or its equivalent generosity of the
debt, or when the gift imposes upon the donee a burden which
donor
is less than the value of the thing given, there is also a donation.
As to its Perfected at the Perfected from the
Article 745. The donee must accept the donation personally, or perfection moment there is a moment the donor
through an authorized person with a special power for the and validity meeting of the minds knows of the
purpose, or with a general and sufficient power; otherwise, the upon the thing which acceptance by the
donation shall be void. (630) is the object of the donee. However, it
contract and upon the requires certain
Article 746. Acceptance must be made during the lifetime of the
price. formalities for the
donor and of the donee. (n)
donation to be valid.
Article 747. Persons who accept donations in representation of Consensual Formal Contract
others who may not do so by themselves, shall be obliged to
make the notification and notation of which article 749 speaks. D A C I O N E N PA G O
Article 748. The donation of a movable may be made orally or
in writing. Article 1245. Dation in payment, whereby property is alienated
to the creditor in satisfaction of a debt in money, shall be
An oral donation requires the simultaneous delivery of the thing governed by the law of sales.
or of the document representing the right donated.
Article 1619. Legal redemption is the right to be subrogated,
If the value of the personal property donated exceeds five upon the same terms and conditions stipulated in the contract,
thousand pesos, the donation and the acceptance shall be made in the place of one who acquires a thing by purchase or dation
in writing. Otherwise, the donation shall be void. (632a) in payment, or by any other transaction whereby ownership is
Article 749. In order that the donation of an immovable may be transmitted by onerous title.
valid, it must be made in a public document, specifying therein
the property donated and the value of the charges which the
Dacion en pago or dation in payment - the delivery and
donee must satisfy.
transmission of ownership of a thing by the debtor to the creditor
as an accepted equivalent of the performance of the obligation.

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- It is a mode of extinguishing an existing obligation and 1. If the thing is more valuable than money → BARTER
partakes the nature of sale as the creditor is really buying the 2. If the money and the thing are of equal value → SALE
thing or property of the debtor, the payment for which is to be 3. If the thing is less valuable than money → SALE
charged against the debtor’s debt.
- Dation in payment extinguishes the obligation to the extent of C O NT RA C T F O R A P IE C E O F W O RK
the value of the thing delivered, either as agreed upon by the
parties or as may be proved, unless the parties by agreement Article 1467. A contract for the delivery at a certain price of an
– express or implied, or by their silence – consider the thing as article which the vendor in the ordinary course of his business
manufactures or procures for the general market, whether the
equivalent to the obligation, in which case the obligation is
same is on hand at the time or not, is a contract of sale, but if
totally extinguished
the goods are to be manufactured specially for the customer
- What actually takes place in dacion en pago is an objective and upon his special order, and not for the general market, it is
novation of the obligation where the thing offered as an a contract for a piece of work.
accepted equivalent of the performance of an obligation is
considered as the object of the contract of sale, while the debt
is considered as the purchase price. Contract for a Piece of Work Sale
If the goods are to be A contract for the delivery at a
BA RTE R manufactured specially for the certain price of an articles
customer and upon his special which the vendor in the
Article 1468. If the consideration of the contract consists partly order and not for the general ordinary course of his business
in money, and partly in another thing, the transaction shall be market manufactures or procures for
characterized by the manifest intention of the parties. If such the general market, whether
intention does not clearly appear, it shall be considered a barter the same is on hand at the
if the value of the thing given as a part of the consideration time or not
exceeds the amount of the money or its equivalent; otherwise, The thing transferred is one If the thing subject of the
it is a sale. not in existence and which contract would have existed
would never have existed but and been the subject of a sale
Article 1638. By the contract of barter or exchange one of the for the order of the person to some other person even if
parties binds himself to give one thing in consideration of the desiring it the order had not been given
other's promise to give another thing. (1538a)
One of the parties accepts the The parties intended that at
Article 1639. If one of the contracting parties, having received undertaking on the basis of some future date an object
the thing promised him in barter, should prove that it did not some plan, taking into account has to be delivered, without
belong to the person who gave it, he cannot be compelled to the work he will employ considering the work or labor
deliver that which he offered in exchange, but he shall be personally or through another of the party bound to deliver
entitled to damages. (1539a)
A GE NC Y T O BU Y O R SE L L
Article 1640. One who loses by eviction the thing received in
barter may recover that which he gave in exchange with a right
to damages, or he may only demand an indemnity for damages. Article 1466. In construing a contract containing provisions
However, he can only make use of the right to recover the thing characteristic of both the contract of sale and of the contract of
which he has delivered while the same remains in the agency to sell, the essential clauses of the whole instrument
possession of the other party, and without prejudice to the shall be considered.
rights acquired in good faith in the meantime by a third person. Article 1868. By the contract of agency a person binds himself
Article 1641. As to all matters not specifically provided for in this to render some service or to do something in representation or
Title, barter shall be governed by the provisions of the preceding on behalf of another, with the consent or authority of the latter.
Title relating to sales.
Agency to Sell Sale
Barter Sale The agent receives the goods The buyer receives the goods
The consideration is the giving The consideration is the giving as the goods of the principal as owner
of another determinate thing of the price certain or its The agent delivers the The buyer pays the price
equivalent. proceeds of the sale
The agent can return the The buyer, as a general rule,
Barter or exchange – one of the parties binds himself to give one object in case he is unable to cannot return the object sold
thing in consideration of the other’s promise to give another thing. sell the same to a third person
The agent, in dealing with the The buyer can deal with the
Rules in case the consideration is partly in Money and Partly in thing received, is bound to act thing as he pleases, being the
another thing according to the instructions owner.
of his principal
If the parties’ intention does not clearly appear, consider the
following rules:

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Essence: idea of an Transfer of title to a thing from is not covered by a to the lessee is for a
appointment of one to act for one to another. specific period since it definite or indefinite
another is perpetual period but not
The principal retains Parties intended that the permanently because
ownership and control over delivery of the property will no lease for more
the property and the agent effect a relinquishment of the than 99 years shall be
merely acts on the principal’s title, control and ownership in valid.
behalf and under his such a way that the recipient As to Price or purchase Rent
instructions in furtherance of may do with the property as consideration price
the objectives for which the he pleases.
agency was established. “Price
certain”
LE A SE
OBJECT OF THE CONTRACT
Article 1484. In a contract of sale of personal property the price
of which is payable in installments, the vendor may exercise any Article 1460. A thing is determinate when it is particularly
of the following remedies: designated or physical segregated from all others of the same
class.
(1) Exact fulfillment of the obligation, should the vendee fail to
pay; The requisite that a thing be determinate is satisfied if at the
time the contract is entered into, the thing is capable of being
(2) Cancel the sale, should the vendee's failure to pay cover two
made determinate without the necessity of a new or further
or more installments;
agreement between the parties.
(3) Foreclose the chattel mortgage on the thing sold, if one has
been constituted, should the vendee's failure to pay cover two Kinds of Object of Sale
or more installments. In this case, he shall have no further action
against the purchaser to recover any unpaid balance of the  Thing – all things, movable or immovable, which are
price. Any agreement to the contrary shall be void. (1454-A-a) susceptible of ownership, may be sold unless expressly
prohibited by law.
Article 1485. The preceding article shall be applied to contracts
o All things which are not outside the commerce
purporting to be leases of personal property with option to buy,
when the lessor has deprived the lessee of the possession or of men, including future things
enjoyment of the thing.  Right – All rights which are transmissible may also be the
object of contracts even if they are intangible.
ARTICLE 1643. In the lease of things, one of the parties binds
himself to give to another the enjoyment or use of a thing for a REQUISITES OF A VALID SUBJECT MATTER
price certain, and for a period which may be definite or
indefinite. However, no lease for more than ninety-nine years 1. Must be licit
shall be valid. 2. Must be determinate or determinable
3. Must be existing, future or contingent
Sale Lease
As to its Transfer of ownership To transfer of use or MU S T BE LIC IT
essence of a determinate enjoyment of a
thing in exchange of a determinate thing for Article 1347. All things which are not outside the commerce of
price certain a price certain. men, including future things, may be the object of a contract. All
As to the Vendor must have a The lessor does not rights which are not intransmissible may also be the object of
right in the right to transfer the need to be the owner contracts.
concept of an ownership of the of the thing at the
No contract may be entered into upon future inheritance except
owner determinate thing at time it is delivered to
in cases expressly authorized by law.
the time it is the lessee, like in the
delivered. The vendor case of a sub-lessor All services which are not contrary to law, morals, good customs,
is the owner of the public order or public policy may likewise be the object of a
determinate thing at contract.
the time of the
Article 1459. The thing must be licit and the vendor must have a
delivery.
right to transfer the ownership thereof at the time it is
As to the Determinate thing or Things, work, or
delivered.
object of the a right service
contract Article 1575. The sale of animals suffering from contagious
As to period The transfer of The transfer of diseases shall be void.
of transfer ownership from the enjoyment or use of
vendor to the vendee thing from the lessor

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A contract of sale of animals shall also be void if the use or the issuance of the homestead patent is void
service for which they are acquired has been stated in the from the beginning.
contract, and they are found to be unfit therefor.
MU S T BE D E TE RM INA TE O R D E TE RM INA B LE
Article 1409. The following contracts are inexistent and void
from the beginning:
Article 1349. The object of every contract must be determinate
(1) Those whose cause, object or purpose is contrary to law, as to its kind. The fact that the quantity is not determinate shall
morals, good customs, public order or public policy; not be an obstacle to the existence of the contract, provided it
is possible to determine the same, without the need of a new
(2) Those which are absolutely simulated or fictitious;
contract between the parties.
(3) Those whose cause or object did not exist at the time of the
transaction;
 The thing must be determinate or determinable as to its
(4) Those whose object is outside the commerce of men; kind.
(5) Those which contemplate an impossible service;  When it is particularly designated or physically
segregated from all other of the same class.
(6) Those where the intention of the parties relative to the
 The requisite is satisfied if at the time of the contract is
principal object of the contract cannot be ascertained;
entered into, the thing is capable of being made
(7) Those expressly prohibited or declared void by law. determinate without the necessity of a new or further
These contracts cannot be ratified. Neither can the right to set agreement between the parties.
up the defense of illegality be waived.  Technical Description
o As long as land which is the object of the sale can
be identified in the deed of sale through the
 The object of the sale must not be contrary to law, morals, technical description specified therein.
good customs, public order, or public policy; and must not o The lot sold under the deed of sale is that which
be outside the commerce of men. matches the property whose metes and bounds
 The thing is illicit because of its very nature (sale of human are particularly described in the deed of sale.
organs), or there is a law that makes it illegal (sale of o To be valid, a contract of sale need not contain
marijuana) a technical description of the subject property.
Examples: What is important is that there is, in fact, an
object that is determinate or at least
1. Future inheritance cannot be the subject of a contract of determinable, as subject of the contract of sale.
sale because the seller owns no inheritance while his
predecessor lives. MU S T BE E X I S TI NG , FU TU RE O R C O NT I N GE N T
 Art. 1347 – no contract may be entered into
upon future inheritance except in cases Article 1347. All things which are not outside the commerce of
expressly authorized by law men, including future things, may be the object of a contract. All
rights which are not intransmissible may also be the object of
2. Animals suffering from contagious diseases cannot be the
contracts.
subject of the sale because the sale of animals suffering
from contagious diseases shall be void. (1575) No contract may be entered into upon future inheritance except
3. A contract of sale of animals shall also be void if the use in cases expressly authorized by law.
or service for which they are acquired has been stated in All services which are not contrary to law, morals, good customs,
the contract, and they are found to be unfit therefor. public order or public policy may likewise be the object of a
(1575) contract.
4. Any act of giving away any dangerous drugs and/or
Article 1348. Impossible things or services cannot be the object
controlled precursor and essential chemical whether for
of contracts.
money or any another consideration is punishable under
RA 9165 or Comprehensive Dangerous Drugs Act of 2012 Article 1462. The goods which form the subject of a contract of
5. Property of public dominion is outside the commerce of sale may be either existing goods, owned or possessed by the
man. (420) seller, or goods to be manufactured, raised, or acquired by the
6. Contract of sale over political rights is void seller after the perfection of the contract of sale, in this Title
called "future goods."
7. Sale, transfer, or conveyance of awarded lands under the
CARL within 10 years. There may be a contract of sale of goods, whose acquisition by
8. Sale in violation of Sec 11 of the Public Land Act the seller depends upon a contingency which may or may not
 The sale of land by a grantee of a homestead happen.
patent to another person within 5 years after

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 A commodity futures contract which is the nature of a SALE OF HOPE (Emptio Spei)
gambling agreement and falls within the ambit of Art
2018  The hope and expectancy are present things
o Art 2018 – if a contract which purports to be for  The sale is still valid and produces its effects even if the
the delivery of goods, securities or shares of hope never comes to be, or the expectancy never comes
stock is entered into with the intention that the to existence.
difference between the price stipulated and the  The sale of hope is considered as an aleatory contract –
exchange or market price at the time of the one of the parties or both reciprocally bind themselves to
pretended delivery shall be paid by the loser to give or to do something in consideration of what the
the winner, the transaction is null and void. other shall give or do upon the happening of an event
 A contract for the sale of products for future delivery in which is uncertain, or which is to occur at an
which either seller or buyer may elect to make or demand indeterminate time.
delivery of goods agreed to be bought and sold, but  The sale of a vain hope or expectancy is void.
without any intention to make a delivery, is not a valid
Emptio Rei Speratae Emptio Spei
contract of sale.
A sale of thing having potential Sale of a mere hope or
EMPTION REI SPERATAE VS. EMPTIO SPEI existence expectancy
The object of the sale is a The object of the sale is a
future thing present thing
Article 1461. Things having a potential existence may be the The uncertainty is with regard The uncertainty is with regard
object of the contract of sale. to the quantity and quality of to the existence of the thing
the thing, but not with regard
The efficacy of the sale of a mere hope or expectancy is deemed
to the existence of the thing
subject to the condition that the thing will come into existence.
The contract produces no The sale produces effect even
The sale of a vain hope or expectancy is void. effect if the thing does not though the thing does not
come into existence because come into existence, unless it
Article 1347. All things which are not outside the commerce of
the sale is subject to the is a vain hope.
men, including future things, may be the object of a contract. All
condition that the thing
rights which are not intransmissible may also be the object of
should exist
contracts.
No contract may be entered into upon future inheritance except MONEY
in cases expressly authorized by law.
All services which are not contrary to law, morals, good customs,  As a general rule, money of legal tender in the Philippines
public order or public policy may likewise be the object of a cannot be an object of sale because they are not included
contract. as goods that can be an object of sale.
 As an exception, when the Philippine money is not being
considered and utilized as a medium for payment, but for
SALE OF THINGS HAVING A POTENTIAL EXISTENCE (Emptio Rei
another context (collector’s item).
Speratae)
 Foreign money can be an object of a contract of sale.
 These are future things since they are nit yet in existence o A foreign exchange transaction is a form of sale
at the time of sale. wherein the object of the transaction is the
 The sale is subject to a suspensive condition – that thing foreign money, and the medium that is being
will exist and come into being – at the risk of the seller used to pay for the price is the Philippine
 Otherwise, its non-existence is a resolutory condition that Money.
will extinguish the sale. UNDIVIDED INTEREST
 Examples:
o Future goods which are to be manufactured, Article 1463. The sole owner of a thing may sell an undivided
raised, or acquired by the seller after the interest therein.
perfection of the contract of sale
o Goods whose acquisition by the seller depends Article 1464. In the case of fungible goods, there may be a sale
of an undivided share of a specific mass, though the seller
upon a contingency which may or may not
purports to sell and the buyer to buy a definite number, weight
happen.
or measure of the goods in the mass, and though the number,
 In the sale of Empfuture thing with potential existence, weight or measure of the goods in the mass, and though the
the ownership of the thing may be transferred, after the number, weight or measure of the goods in the mass is
thing comes into existence pursuant to the agreement of undetermined. By such a sale the buyer becomes owner in
the parties or pursuant to the act od either party with the common of such a share of the mass as the number, weight or
assent of the other. measure bought bears to the number, weight or measure of the

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SALES | A T T Y . D U J U N C O

mass. If the mass contains less than the number, weight or (1) Those which are entered into by guardians whenever the
measure bought, the buyer becomes the owner of the whole wards whom they represent suffer lesion by more than one-
mass and the seller is bound to make good the deficiency from fourth of the value of the things which are the object thereof;
goods of the same kind and quality, unless a contrary intent
(2) Those agreed upon in representation of absentees, if the
appears.
latter suffer the lesion stated in the preceding number;
(3) Those undertaken in fraud of creditors when the latter
 A co-owner has the right to sell his undivided interest in cannot in any other manner collect the claims due them;
the property owned in common. However, he cannot
assert or claim title to any specific portion of the property (4) Those which refer to things under litigation if they have been
owned in common without an actual partition of the entered into by the defendant without the knowledge and
approval of the litigants or of competent judicial authority;
property being first done either by agreement or by
judicial decree. Until then, all that he has is an ideal or (5) All other contracts specially declared by law to be subject to
abstract share in the property owned in common. rescission.
 Consequently, the sale by a co-owner of his share is valid Article 1385. Rescission creates the obligation to return the
even without the consent of the other co-owners. things which were the object of the contract, together with their
 The vendee steps into the shoes of the vendor as co- fruits, and the price with its interest; consequently, it can be
owner and acquires a proportionate abstract share in the carried out only when he who demands rescission can return
property held in common. whatever he may be obliged to restore.
 A sale of the entire property by one co-owner will only Neither shall rescission take place when the things which are the
transfer the rights of said co-owner to the buyer, thereby object of the contract are legally in the possession of third
making the buyer a co-owner of the property persons who did not act in bad faith.
UNDIVIDED SHARE OF A SPECIFIC MASS OF FUNGIBLE GOODS In this case, indemnity for damages may be demanded from the
person causing the loss.
Fungible goods – those goods that cannot be used or utilized
without consuming them, and can be substituted by other goods of
the same kind and quality.  A thing that is under litigation may be the object of a
contract of sale. However, the contract is rescissible if it is
Rules: entered into by the defendant without the knowledge
and approval of the litigants or of the court,
1. The sale of an undivided share in a mass of fungible goods
will result in proportionate ownership – the buyer QU A N TI TY OF SU BJE C T M A TTE R N OT E S SE NTI A L
becomes a co-owner in the entire mass in proportion to F OR PE R FE C T I ON
the amount he bought
2. If the quantity is less than the amount estimated by the Article 1349. The object of every contract must be determinate
parties in a specific mass of fungible goods, the vendor is as to its kind. The fact that the quantity is not determinate shall
bound to deliver in good faith to the vendee all of the not be an obstacle to the existence of the contract, provided it
goods in the mass, who becomes the owner thereof; and is possible to determine the same, without the need of a new
to supply whatever is lacking from goods of the same kind contract between the parties.
and quality unless a contrary intention appears.

SUBJECT TO RESOLUTORY CONDITION

Article 1465. Things subject to a resolutory condition may be the

object of the contract of sale.

Resolutory Condition – one wherein the happening of the event

(condition) triggers the end of the litigation.

** Suspensive – Obligation shall only be effective upon the

fulfillment of the condition

THINGS IN LITIGATION

Article 1381. The following contracts are rescissible:

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