SalesRev_JMP 1
I. Nature of Sales
SALES (Definition)
Art. 1458 By the contract of sale, one of the contracting parties
(seller or vendor) obligates himself to transfer the ownership of
and to deliver a determinate thing, and the other ( buyer or
vendee) to pay therefor a price certain in money or its
equivalent. A contract of sale may be absolute of conditional.
A. ELEMENTS of SALE
(a) Essential Elements (those without which there can
be no valid sale) (CSP)
1. Consent or the meeting of the minds
2. Determinate or Subject matter (Object) -
generally, there can be no sale of generic thing;
if parties differ as to the object-no meeting of
the minds)
3. Price certain in money or its equivalent (cause
or consideration) the price NEED NOT be in
MONEY.
(b) Natural Elements inherent in the contract; deemed
existing in the absence of any provision
1. Warranty against eviction deprivation of the
property bought
2. Warranty against hidden defects
(c) Accidental Elements those which may be present
or absent in the stipulation, such as the place or
time of payment, or the presence of conditions.
B. STAGES OF CONTRACT OF SALE
(a) Policitation or negotiation-parties indicate their
interest - perfection
(b) Perfection, conception or birth- concurrence of
the essential elements of sale
(c) Consummation or death- performance to the
contract of sale
C. Sale Creates Real Obligations To Give
Art. 1165- When what is to be delivered is a determinate
thing, the creditor, in addition to the right granted him
by Art 1170, may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that
the obligation be complied with at the expense of the
debtor.
If the obligor delays, or has promised to deliver the same
thing to two or more persons who do not have the same
interest, he shall be responsible for fortuitous event until
he has effected the delivery.
D. Essential Characteristic of Sale
(a) Nominate or Principal
Nominate for it has a name given by law and its
nature and consequences are goverened by a set of
rules in the Civil Code
Principal (not accessory or preparatory) because it
can stand on its own and does not depend on another
contract for its validity or existence; parties enter into
this contract NOT in preparation for other contracts.
/: In determining the nature of the contract, the
courts look at the INTENT OF THE PARTIES and
NOT at the NOMENCLATURE used to describe it.
Intent can be identified by their conduct, words,
actions and deeds prior to, during and
immediately after executing the contract
Contracts are NOT defined by PARTIES but by
principles of LAW.
All other contracts which have the OBJECTIVE to
transfer ownership and delivery of possession of
DETERMINATE subject matter for a valuable
consideration, it is governed by LAW on SALES.

(b) CONSENSUAL (contrasted from Solemn and real
contracts) because it is perfected by the mere consent
at the moment there is the meeting of the mind as to the
object and price of the contract.
(c) BILATERAL and RECIPROCAL (as distinguished from
Art. 1475 the contract of sale is perfected at the
moment there is a meeting of the minds upon the
thing which is the object of the contract and upon
the price.
From that moment, the parties may reciprocally
demand performance, subject to the provisions of the
law governing the form of contracts.
:/ Sale is valid as long as there is a meeting of the
mind as to the object and price of the contract
regardless:
a. Manner of actual payment
b. Breach of payment
c. Parties have no signature on the written form
d. No actual delivery of the subject matter or
payment of the price
e. Non performance (only a remedy, for either
specific performance or rescission)
BUT, even when there is meeting of the minds,
when one of the contracting parties is unable to
read or the contract is in a language not
understood by him, and mistake or fraud is
alleged, the person enforcing the contract must
show that the terms thereof have been fully
explained to him.
Modalities that affect the Characteristic of
Consensuality
a. Suspensive term or condition of the contract
even if consensual, not all sales is
automatically and immediately effective like
in the sales with assumption to mortgage, the
assumption of mortgage is precedent to the
sellers consent and therefore, without
approval of the mortgagee, the sale is not
perfected.
SalesRev_JMP 2
b. If no agreement yet on the final price-meeting
of the mind is incomplete, hence the sale is
not perfected.
unilateral contract) because it imposes obligations on
both parties to the relationship and whereby the
obligation or promise of each party is the cause or
consideration for the obligation or promise of the other.
Article 1169. Those obliged to deliver or to do
something incur in delay from the time the
obligee judicially or extrajudicially demands from
them the fulfillment of their obligation.
However, the demand by the creditor shall not be
necessary in order that delay may exist:
(1) When the obligation or the law expressly so
declare; or
(2) When from the nature and the circumstances
of the obligation it appears that the designation
of the time when the thing is to be delivered or
the service is to be rendered was a controlling
motive for the establishment of the contract; or
(3) When demand would be useless, as when the
obligor has rendered it beyond his power to
perform.
In reciprocal obligations, neither party incurs in
delay if the other does not comply or is not ready
to comply in a proper manner with what is
incumbent upon him. From the moment one of
the parties fulfills his obligation, delay by the
other begins.
/: GR- No demand, no delay

Article 1191. The power to rescind obligations is
implied in reciprocal ones, in case one of the
obligors should not comply with what is
incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the obligation,
with the payment of damages in either case. He
may also seek rescission, even after he has
chosen fulfillment, if the latter should become
impossible.
The court shall decree the rescission claimed,
unless there be just cause authorizing the fixing
of a period.
This is understood to be without prejudice to the
rights of third persons who have acquired the
thing, in accordance with articles 1385 and 1388
and the Mortgage Law.
Reciprocal Obligation- those which are arise from
the same cause, and which each party is a debtor
and creditor of other such that the obligation of
one is dependent upon the obligation of the
other. They are to be performed simultaneously
such that the obligation of one is conditioned
upon the simultaneous fulfillment of the other.
(d) ONEROUS (not gratuitous) theres a valuable
consideration as a prestation which is a price certain in
money or its equivalent.
Case 1. Gaite vs Fonacier
Case Doctrine: A contract of sale is normally
commutative and onerous: not only does each one of the
parties assume a correlative obligation (the seller to
deliver and transfer ownership of the thing sold and the
buyer to pay the price),but each party anticipates
performance by the other from the very start. While in a
sale the obligation of one party can be lawfully
subordinated to an uncertain event, so that the other
understands that he assumes the risk of receiving
nothing for what he gives (as in the case of a sale of hopes
or expectations, emptio spei), it is not in the usual course
of business to do so; hence, the contingent character of
the obligation must clearly appear.
SalesRev_JMP 3
If the contract is onerous, the doubt shall be settled in
favor of the greatest reciprocity of interests.
and there can be no question that greater reciprocity
obtains if the buyer' obligation is deemed to be actually
existing, with only its maturity (due date) postponed or
deferred, that if such obligation were viewed as non-
existent or not binding until the ore was sold.
(e) COMMUTATIVE (as distinguish from aleatory
contract) a thing of value is exchange from equal of
value. Inadequacy of price does not affect ordinary
sales.
Article 1355. Except in cases specified by law, lesion
or inadequacy of cause shall not invalidate a
contract, unless there has been fraud, mistake or
undue influence.
Article 1470. 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.
Case 2. Buenventura vs CA
Case Doctrine: A contract of sale is not a real
contract, but a consensual contract. As a consensual
contract, a contract of sale becomes a binding and valid
contract upon the meeting of the minds as to price. If
there is a meeting of the minds of the parties as to the
price, the contract of sale is valid, despite the manner of
payment, or even the breach of that manner of payment.
If the real price is not stated in the contract, then the
contract of sale is valid but subject to reformation. If
there is no meeting of the minds of the parties as to the
price, because the price stipulated in the contract is
simulated, then the contract is void.[14] Article 1471 of
the Civil Code states that if the price in a contract of sale
is simulated, the sale is void.
It is not the act of payment of price that determines the
validity of a contract of sale. Payment of the price has
nothing to do with the perfection of the contract. Payment
of the price goes into the performance of the contract.
 SalesRev_JMP 4

Failure to pay the consideration is different from lack of Article 725. Donation is an act of liberality whereby a
consideration. The former results in a right to demand person disposes gratuitously of a thing or right in favor
the fulfillment or cancellation of the obligation under an of another, who accepts it.
existing valid contract while the latter prevents the
existence of a valid contract Article 1471. If the price is simulated, the sale is void,
but the act may be shown to have been in reality a
(f) SALE IS TITLE AND NOT MODE Sale is merely a title donation, or some other act or contract
that creates obligation on the part of the seller to
transfer ownership and deliver possession but on its B. BARTER
own, sale is not a mode that transfers ownership.
Ownership and real rights are acquired only pursuant SALE BARTER
to a legal mode or process. While title (such as sale) -there is a price -no price consideration.
is the juridical justification, mode (like delivery) is consideration of the Purely exchange of
thing to be delivered. things.
the actual process of acquisition or transfer of
-Value of the thing Value of the thing given
ownership over a thing.
given as consideration as consideration > the
MODE is the legal means by which dominion or =< the amount of amount of money given
ownership is created, transferred or destroyed (e.g. money given
-Statute of Frauds of -Statute of Frauds of the
succession, donation, discovery, intellectual creation
the sale of real sale of real property
etc)
property bought at 500 bought at 500 or more do
TITLE only constitutes the legal basis by which or more shall apply not apply
affect dominion or ownership. -Right of legal - Right of legal
redemption granted by redemption granted by
Thus, sale by itself does not transfer or affect ownership, law adjoining owner of law adjoining owner of an
it just creates the obligation to transfer ownership. It is an urban land is a sale urban land does not
tradition or delivery, as a consequence of sale, that cover exchange of
properties
actually transfers ownership.

II. SALE DISTINGUSHED FROM SIMILAR CONTRACTS

Article 1468. If the consideration of the contract consists
A. DONATION partly in money, and partly in another thing, the
transaction shall be characterized by the manifest
SALE DONATION intention of the parties. If such intention does not clearly
-Gratuitous -Onerous appear, it shall be considered a barter if the value of the
-perfected by mere -solemn; must conform thing given as a part of the consideration exceeds the
consent with the formalities for amount of the money or its equivalent; otherwise, it is a
its validity sale.
-can be governed by -can be governed by Law
LAW on Donation if the on Sale if other Article 1638. By the contract of barter or exchange one of
price of the sale is considerations or the parties binds himself to give one thing in
simulated and the real burdens are place into consideration of the other's promise to give another thing.
intention is to donate the done which is greater (1538a)
than the value of the
thing given.
Article 1639. If one of the contracting parties, having
received the thing promised him in barter, should prove
that it did not belong to the person who gave it, he cannot
 SalesRev_JMP 5

be compelled to deliver that which he offered in exchange,

but he shall be entitled to damages. (1539a)

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. However, he can only make use of the right
to recover the thing which he has delivered while the same
remains in the possession of the other party, and without
prejudice to the rights acquired in good faith in the
meantime by a third person. (1540a)

Article 1641. As to all matters not specifically provided for

in this Title, barter shall be governed by the provisions of
the preceding Title relating to sales. (1541a)

C. CONTRACT FOR PIECE OF WORK