Atty. Dimayuga

Question 1

What is a contract of sale?

Answer 1

By the 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. (1458)

The contract of sale is an agreement whereby one of the parties (called the seller or vendor) obligates himself to deliver something to the other (called the buyer or purchaser or vendee) who, on his part, binds himself to pay therefor a sum of money or its equivalent (known as the price).

Question 2

Essential requisites of a contract of sale

Answer 2

a. consent
- parties
- legal capacity whether absolute or relative

b. object or subject matter
- things
- rights

c. consideration or price

Question 3

What is consent?

Answer 3

Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.

1319

Question 4

Gross inadequacy of price can make a contract of sale void. T or F.

Answer 4

True.

Question 5

Why is a contract of sale not a real contract?

Answer 5

A real contract requires the delivery of a thing. In a contract of sale, the contract is deemed perfected by mere consent.

Question 6

Requisites for price

Answer 6

1. It must be real.
2. It must be certain.
3. In certain cases, the price must not be grossly inferior to the value of the thing (V Tolentino, 1992 ed., 13).

Question 7

Art. 1347

Answer 7

Article 1347. All things which are not outside the commerce of men, including future things, may be the object of a contract. All rights which are not intransmissible may also be the object of contracts.

No contract may be entered into upon future inheritance except in cases expressly authorized by law.

All services which are not contrary to law, morals, good customs, public order or public policy may likewise be the object of a contract.

Question 8

Requisites for subject matter or object of contract

Answer 8

1. Subject matter must have possibility of existence;
2. Subject matter must be determinate or, at least, determinable;
3. Subject matter must be licit; and
4. Vendor must have the right to transmit ownership at the time of delivery.

Question 9

Things having potential existence may be the object of a contract of sale. T or F.

Answer 9

True. Such a sale is subject to the condition that the thing will come into existence. If the thing does not come into existence, the contract is deemed extinguished.

Question 10

Things subject to a resolutory condition may be the object of the contract of sale. T or F.

Answer 10

True

Question 11

What is a determinate thing?

Answer 11

A thing is determinate when it is particularly designated or physically segregated from all others of the same class (Art. 1460, 1st par., NCC).

Question 12

The requisite that a thing be determinate 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 further agreement between the parties. T or F.

Answer 12

True.

Question 13

My car as the object of a contract of sale. Is this determinate?

Answer 13

It depends. If the seller only has one car, it is determinate. If the seller has many cars,
Art. 1460 contemplates a thing among many other things - several things of the same class - applies only to a multiple # of the same class but in the problem given, it was not stated. Answer is dependent on the # of objects.

Assuming that there are a lot of cars involved, but the contract only mentioned “my car.” What is the status of the contract?
Art. 1349 and 1409 (6)
VOID - another contract will necessitate the specificity of the object

Question 14

The thing must be seen first before a thing is considered determinate. T or F.

Answer 14

False.

Question 15

In a contract of sale, if the subject matter is determinate, the defense of force majeure is applicable to relieve the seller from the consequences of delivering the object of the contract.

Answer 15

True.

1174

Question 16

Stages of a Contract of Sale

Answer 16

1. Negotiation - starting from the time the prospective contracting parties indicate interest in the contract
2. Perfection - concurrence of the essential elements
3. Consummation - performance of respective undertakings resulting to the extinguishment of obligation

Question 17

May the sale be perfected if the agreement of the parties was for one of them to fix the price?

Answer 17

Yes. Only if the other party accepts it.

If offer pa lang, wala pa perfection. Negotiation pa lang.

Question 18

When can ownership be transmitted?

Answer 18

It is not required at the time of the perfection of the contract, but only at the time of the delivery.

Question 19

A perfected contract of sale cannot be challenged on the ground of the seller’s non-ownership of the thing sold at the time of the perfection of the contract. T or F.

Answer 19

True. Ownership matters during consummation stage.

Reason: Sale only creates title; it is delivery which serves as the mode of transferring ownership

Question 20

Effect of perfection

Answer 20

From that moment on, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. (Art. 1475, 2nd par., NCC).

Exception: In conditional sales, the obligations of the parties are subject to the general law of obligations with respect to conditional ones. Accordingly, the acquisition of the rights of the vendor and the vendee, as well as the extinguishment of those already acquired, depends upon the event which constitutes the condition.

Question 21

Exceptions to the general rule that sale is perfected by mere consent.

Answer 21

In order to be enforceable by action, the following must be in writing:

a. sale of property at a price not less than P500
b. sale of real property or an interest therein
c. sale of property not to be performed within a year from the date thereof
d. applicable statute

Question 22

On June 1, 2o14, S offered to sell his only car to B for P100,000. B accepted the offer by mailing his letter of acceptance on June 10, 2014. On June 12, 2014, B revoked his previous acceptance and mailed his letter of revocation on the same date. S received the letter of acceptance on June 14, 2014 and the letter of revocation on June 15, 2014.

Answer 22

The contract was not perfected because of the time the acceptance was received, the parties were no longer of one mind.

Question 23

Sergio is the registered owner of a 500-square meter land. His friend, Marcelo, who has long
been interested in the property, succeeded in persuading Sergio to sell it to him. On June 2, 2012, they agreed on the purchase price of P600,000 and that Sergio would give Marcelo up to June 30, 2012 within which to raise the amount. Marcelo, in a light tone usual between them, said that they should seal their agreement through a case of Jack Daniels Black and P5,000 “pulutan” money which he immediately handed to Sergio and which the latter accepted. The friends then sat down and drank the first bottle from the case of bourbon.

On June 15, 2013, Sergio learned of another buyer, Roberto, who was offering P800,000 in
ready cash for the land. When Roberto confirmed that he could pay in cash as soon as Sergio could get the documentation ready, Sergio decided to withdraw his offer to Marcelo, hoping to just explain matters to his friend. Marcelo, however, objected when the withdrawal was communicated to him, taking the position that they have a firm and binding agreement that Sergio cannot simply walk away from because he has an option to buy that is duly supported by a duly accepted valuable consideration.

a. Does Marcelo have a cause of action against Sergio?
b. Can Sergio claim that whatever they might have agreed upon cannot be enforced because any agreement relating to the sale of real property must be supported by evidence in writing and they never reduced their agreement to writing?

Answer 23

a. Yes, Marcelo has a cause of action against Sergio. As a rule, an offer can be withdrawn at any time before acceptance by communicating such withdrawal (Art. 1324) except when the option is founded upon a consideration as something paid or promised. In this case, although there was no separate consideration for the option, the offer had already been accepted and thus, it resulted into a perfected contract of sale between Marcelo and Sergio. Sale being a consensual contract is perfected by mere consent.

b. No, Sergio cannot claim that the agreement cannot be enforced because it was not reduced into writing. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. (Art. 1356) In fact when the law requires a document or other special form, as in the acts and enumerated by law, the contracting parties may compel each other to observe that form, once the contract has been perfected, and this right may be exercised simultaneously with the action upon the contract. (Art. 1357) Even an oral sale of a parcel of land is valid between the parties.
- option contract lang kasi kaya valid. pero hindi pa naman yan sale of real property eh.

• the bottle and the pulutan are valid options for a consideration
• the law does not demand that option money shall be actual money

Question 24

The contract of sale is perfected at the moment there is a meeting of 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.

Answer 24

Art. 1475

Question 25

In a contract of sale, perfection of the contract will not automatically transfer to the buyer ownership over the property. T or F.

Answer 25

True.

Question 26

A consensual contract is always valid. T or F.

Answer 26

False.

Despite consensuality, there may be forms required for the VALIDITY of a contract. It is not different to say that contract is valid and contract is perfected.

Question 27

Essential characteristics of contract of sale

Answer 27

a. Nominate and principal
- it is given a special name or designation in the Civil Code, namely, “sale”
- it does not depend for its existence and validity upon another contract

b. Consensual
- it is perfected by mere consent without any further act

c. Bilateral and reciprocal
- According to Paras, a contract of sale is a bilateral reciprocal contract because both parties are bound by obligations dependent upon each other. In other words, it is bilateral because both parties are obliged to perform an obligation (the seller delivers; the buyer pays). It is reciprocal because the one party’s obligation becomes demandable the moment the other party performs his obligation.
- Therefore, the moment the seller places the buyer in possession of the thing due, the latter, absent any stipulation to the contrary, should deliver the purchase price to the former. The same is true vice versa.

d. Onerous
- A contract of sale is onerous because, to acquire the rights, valuable consideration must be given. Cause or consideration is a general requirement for the existence of contract. What is referred to here is valuable consideration (in pecuniary terms). Compare a contract of sale with a deed of donation; the latter does not require, as a rule, a valuable consideration from the donee. Another example would be a gratuitous contract of deposit.
- By the way, the opposite of “onerous” is “gratuitous.”

e. Commutative
- the thing sold is considered the equivalent of the price paid and vice versa. However, the contract may be aleatory as in the case of the sale of a hope (e.g., sweepstakes ticket) gross inadequacy of price can make a contract of sale void

f. As a title, not a mode
- In relation to the acquisition and transfer of ownership, it should be noted that sale is not a mode, but merely a title. A mode is the legal means by which dominion or ownership is created, transferred or destroyed, but title is only the legal basis by which to affect dominion or ownership.

Question 28

Sale vs. Donation

Answer 28

Donation: an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another person, who accepts it.

(1) characteristic
S: onerous
D: gratuitous

(2) perfection
S: consent
D: consent and formalities

Question 29

What is a simulated contract?

Why do people enter into a simulated contract?

Answer 29

Real property in a contract. real value of property is bigger. to avoid paying higher taxes. Void

Question 30

Sale vs. Barter

Answer 30

In sale, the cause of the seller is money. In barter, it can be any thing or promise other than just money.

Question 31

In an agreement where A obliged himself to give to B a watch worth P800,000 and B obliged himself to give to A, his car and cash P350,000. What contract was entered into?

Answer 31

Art. 1468 - if party in money and thing, the parties shall determine if the contract is of sale or of barter. pero if no manifest intention, barter sya 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.

• if partly money or thing, depende sa parties
• if mas malaki yung value ng object to be paid than the value of the money to be paid, BARTER
• if mas malaki yung value ng money to be paid than the object to be paid, SALE

Question 32

Contract of Barter

Answer 32

Article 1638. By the contract of barter or exchange one of the parties binds himself to give one thing in consideration of the other’s promise to give another thing.

Question 33

Sale vs. Contract for a Piece of Work

Answer 33

Contract for a Piece of Work: When the subject good is manufactured especially for the customer or when it is requested to be customized for the buyer, and not just for the general market.

(1) Subject matter
The service rendered by the worker because there is work especially done to customize the said order

No longer just about timing but the very nature of the work.

Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but 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.

Question 34

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. T or F.

Answer 34

True.

Question 35

Sale vs. Agency to sell or agency to buy

Answer 35

(1)
s - the buyer receives the good as the owner
as - the agent receives the good and possesses temporary ownership until the principal owner gets the thing

(2)
s - buyer pays
as - agency to account for proceeds of the sale he may make on behalf of the principal

(3)
s - buyer cannot return the object
as - agent can return the object if he is unable to sell the same

(4)
s - there is warranty
a - agent makes no warranty

(5)
s - buyer can enjoy the thing according to his own terms
a - agent is responsible of taking care of the object according to the principal’s demands

(6)
s - there is transfer of ownership
a - there is only a transfer of authority

Question 36

A obliged himself to deliver a certain thing to B. Upon delivery, B would pay a sum of money to A. Is there a contract of sale?

Answer 36

Not necessarily. The contract may also be resolved in a contract of agency or lease.

Question 37

Sale vs. Dacion en Pago

Answer 37

(1)
s - there is no preexisting credit
dep - there is

(2)
s - obligation is created
dep - obligation is extinguished

(3)
s - causes are price paid and the thing sold
dep - causes are extinguishment of debt and acquisition of object

(4)
more freedom in fixing the price in sale

(5)
s - buyer still has to pay
dep - debtor shall receive payment for the contract to be perfected

dacion en pago is a form of payment which presuposses debtor-creditor relationship

contract of sale - suspensive
dacion - resolutory

Question 38

Why is there pre-existing credit in dacion en pago?

Answer 38

Because it is a special form of payment wherein transmission or delivery of a thing is considered an equivalent of the outstanding debt to extinguish the obligation.

Question 39

Sale of right is governed by the contract of sale. T or F.

Answer 39

Not necessarily because it can also be governed by donation or dacion en pago.

Question 40

In the case of assignment of credit, a person is subrogated to the rights of the other. T or F.

Answer 40

False. Assignment is different from subrogation.

By sale, dacion en pago, exchange without the need of consent of creditors&raquo_space; assignment. Consent is needed in subrogation.

Question 41

Sale vs. Lease

Answer 41

Sale - transfer of ownership

Lease - temporary enjoyment or possession of a thing

Question 42

General rule as to the capacity to enter contract of sale

Answer 42

Article 1489. All persons who are authorized in this Code to obligate themselves, may enter into a contract of sale, saving the modifications contained in the following articles.

Where necessaries are those sold and delivered to a minor or other person without capacity to act, he must pay a reasonable price therefor. Necessaries are those referred to in article 290.

Question 43

What would be the status of the contract if one of the contracting parties has no juridical capacity?

Answer 43

Void

Question 44

Juridical Capacity v. Capacity to Act

Answer 44

Juridical capacity is the fitness to be the subject of legal relations; it is inherent in every natural person. Capacity to act is the power to do acts with legal effect; it may be acquired and it may also be lost; it is acquired upon the attainment of the age of majority.

Question 45

What if one of the parties has incapacity to contract?

Answer 45

Voidable

Question 46

Incapacity may be absolute or relative.
If the contract does not have all of the essential requisites, that is an absolute incapacity. If relative, only one of the contracting parties is prohibited from transacting for one reason or another. T or F.

Answer 46

True.

Question 47

Absolute incapacity

Answer 47

1. unemancipated minors

2. insane/demented/deaf-mute

Question 48

Relative Incapacity to Buy or Sell

Answer 48

1. Husband & wife
2. Guardian & ward
3. Agent & principal unless principal gives consent
4. Executors & administrators
5. Public officers & employees
6. Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice
7. Any others specially disqualified by law.
8. Seller (even on his behalf) in his own bid

Question 49

The husband and the wife cannot sell property to each other, except:

Rationale

Answer 49

(1) When a separation of property was agreed upon in the marriage settlements; or
(2) When there has been a judicial separation of property under article 191.

1490

a. To avoid Prejudice to 3rd Persons
b. To prevent one spouse from unduly influencing the other.
c. To avoid by indirection the violation of the prohibition against donations.

Question 50

The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another:

Answer 50

(1) The guardian, the property of the person or persons who may be under his guardianship;
(2) Agents, the property whose administration or sale may have been intrusted to them, unless the consent of the principal has been given;
(3) Executors and administrators, the property of the estate under administration;
(4) Public officers and employees, 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 intrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession;

(6) Any others specially disqualified by law.
- *aliens who are disqualified to purchase private agricultural lands; *an unpaid seller having a right of lien or having stopped the goods in transitu, who is prohibited from buying the goods either directly or indirectly in the resale of the same at a public or private sale w/c he may make. Art. 1533, par.5
- unpaid seller who has been prohibited from buying the resale
- officer conducting execution of sale

1491

Status:
1-3 Voidable
4-6 Void

Question 51

Necessaries

Answer 51

those things which are needed for sustenance, dwelling, clothing and medical attendance, in keeping with the financial capacity of the family of the incapacitated person

Question 52

Who may assail illegality in sale between H&W

Answer 52

a. Creditors prior to the sale

b. Heirs of either spouse.

Question 53

A spouse designated as agent of the other spouse may sell the latter’s exclusive property. T or F.

Answer 53

True.

Question 54

Rationale behind Art. 1491

Answer 54

Fiduciary Relationship

Question 55

Contracts agreed to in a state of drunkenness or during a hypnotic spell are voidable. T or F.

Answer 55

True.

Question 56

Conditional Sale v. Contract to Sell

Answer 56

Conditional sale - there is a condition imposed by the seller before there can be a transfer of ownership despite delivery of the thing. Before there is transfer, condition must be fulfilled first. But once a condition is fulfilled, the buyer becomes the absolute owner of the thing.

Contract to sell - it is a special type of conditional sale where ownership does not automatically passes to the buyer upon fulfillment. Both the buyer and the seller must fulfill another agreement that will transfer ownership. Ex: Sale of a new car. If you buy a car through installment, hindi naman kayo agad ang owner ng car ah kasi di pa tapos bayaran. Pero once mabuo yun, mag eexecute ulit ng contract sa bank (if naka-mortgage sa bank) this time to transfer ownership from seller to buyer.

In a conditional sale, once the condition is fulfilled, no need to execute deed of sale.

Question 57

Absolute Sale v. Conditional Sale

Answer 57

Ordinary contract of sale, once there is delivery, there is also transfer of ownership. If there is no condition imposed > absolute contract of sale.

Question 58

Arthur gave Richard a receipt which states
“Receipt
Received from Richard as down payment for my 1995 Toyota Corolla with plate no. XYZ-123….P50,000
Balance Payable 12/30/01….P50,000
Sept. 15, 2001
Sgd. Arturo.

Answer 58

Contract of Sale. Why? The seller did not reserve or make a condition on the ownership of the thing sold. Nothing in the facts say that upon full payment, there will be transfer of ownership. This is an absolute sale or contract of sale.

Question 59

The assumption will always be that the contract is of sale if there is no condition clearly imposed. T or F.

Answer 59

True.

In a conditional sale or contract to sell, a condition must be clearly imposed. Otherwise, assumption is contract of sale because there is commutativeness or exchange of values. Ambiguity in contract is not appreciated so assumption will always be made that the contract is a contract of sale.

Question 60

What is the remedy for breach of contract of sale?

Answer 60

Rescission, not recovery of possession because there is no reservation of ownership.

Question 61

Nante, a registered owner of a parcel of land in QC sold the property to Monica under a Deed of Sale which reads as follows: “That for and in consideration of P500,000 to be delivered to me and receipt of which will be acknowledged by me, I hereby transfer, cede to Monica, a parcel of land covered by TCT No. 9138.”

After delivery of initial payment of P100,000, Monica took possession of the land but failed to pay the remaining balance. Nante filed an action to recover the property alleging that the contract is one to sell which was not perfected because of non-payment of the price in full. Is the contention of Nante tenable?

Answer 61

Contract of sale. No condition. No reservation.

Question 62

If there is consent in the contract, the same is valid?

Answer 62

Not necessarily. Art. 1327

Article 1327. The following cannot give consent to a contract:

(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not know how to write.

Question 63

If there is no consent in one or both of the contracting parties, what is the status of the contract?

Answer 63

Void

Question 64

If both of the contracting parties who gave consent are minors, what is the status of the contract?

Answer 64

Unenforceable. Art. 1403 (3)

Question 65

Does the law prohibit a lawyer from acquiring property made as payment for his professional services?

Answer 65

No, as long as the property was not the subject of litigation.