Article 1458 – By the contract of sale one of the contracting parties obligates
himself to transfer the ownership and deliver a determinate thing; and the
other to pay therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
Contract of sales is when one of the contracting parties obligates himself to transfer the
ownership of, and to deliver, a determinate thing, and the other to pay therefor a price certain
in money or its equivalent. A contract of sale is a consensual contract and, thus, is perfected by
mere consent which is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. Until the contract of sale is perfected,
it cannot, as an independent source of obligation, serve as a binding juridical relation between
the parties. The essential elements of a contract of sale are: a) consent or meeting of the minds,
that is, consent to transfer ownership in exchange for the price; b) determinate subject matter;
and c) price certain in money or its equivalent. The absence of any of the essential elements
shall negate the existence of a perfected contract of sale.
Stages of a contract of sale
1. Negotiation
-Prospective contracting parties indicate interest in the contract to the time the contract is
perfected.
2. Perfection
-It takes place when the essential elements of the contract of sale is present.
3. Consummation
-Begins when both parties perform their respective obligations under the contract of sales.
Sale is a title
Sale is not a mode, but merely a title. A mode is a 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. Under Article 712 of the Civil Code, “ownership and other real rights over
property are acquired and transmitted by law, by donation by estate and intestate succession,
and in consequence of certain contract, by tradition.”
Sale by itself does not transfer or affect ownership; the most that sales does is to create the
obligation to transfer ownership
Two kinds of a contract of sale
1. Absolute
- There are no conditions attached to the contract
2. Conditional
- There are certain conditions attached to the contract
A contract of sale may be absolute or conditional.
Under article 1458 of the New Civil Code, in a contract of sale whether absolute or conditional,
one of the contracting parties obliges himself to transfer the ownership of and deliver a
determinate thing, and the other to pay therefor a price certain in money or its equivalent. A
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 the price.
Note: A deed of sale is considered absolute in nature where there is neither a stipulation in the
deed that title to the property sold is reserved in the seller until the full payment of the price,
nor one giving the vender the right to unilaterally resolve the contract the moment the buyer
fails to pay within a fixed period.
Essential elements of a contract of sale
Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The
essential elements of a contract of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the
price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Contract to sell not a contract of sale
A contract of sale may not be considered as a contract of sale because the first essential
element is lacking. In a contract to sell, the prospective seller explicitly reserves the transfer of
title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent
to transfer ownership of the property subject matter of the contract to sell until the happening
of an event, which for present purposes we shall take as the full payment of the purchase price.
What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject
property when the entire amount of the purchase price is delivered to him. In other words, the
full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of
which prevents the obligation to sell from arising and thus, ownership is retained by the
prospective seller without further remedies by the prospective buyer.
I. Consent
Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the agreement.
Acceptance
As to the matter of acceptance the same may be evidenced by some acts, or conduct,
communicated to the offeror, either in a formal or an informal manner, that clearly manifest the
intention or determination to accept the offer to buy or sell.
II. Object
The object of every contract must be determinate as to its kind. The fact that the quantity is not
determinate shall not be an obstacle to the existence of the contract, provided it is possible to
determine the same, without the need of a new contract between the parties. A thing is determinate
when it is particularly designated and/or physically segregated from all others of the same class.
III. Price
A definite agreement as to the price is an essential element of a binding agreement to sell
personal or real property because it seriously affects the rights and obligations of the parties. Price is an
essential element in the formation of a binding and enforceable contract of sale. The fixing of the price
can never be left to the decision of one of the contracting parties. But a price fixed by one of the
contracting parties, if accepted by the other, gives rise to a perfected sale.
The parties must also agree on the manner of payment of the price of the property, any disagreement
on the manner of payment is tantamount to a failure to agree to the price.
Gross inadequacy of price does not nullify an execution sale. In an ordinary sale, for reason of equity, a
transaction may be invalidated on the ground of inadequacy of price, or when such inadequacy shocks
one’s conscience as to justify the courts to interfere; such does not follow when the law gives the owner
the right to redeem as when a sale is made at public auction, upon the theory that the lesser the price,
the easier it is for the owner to effect redemption.
Characteristics of a contract of sale
1. Consensual
- The contract is perfected by mere consent.
2. Bilateral
- The seller and the buyer are bound by obligations dependent upon each other.
3. Onerous
- It imposes a valuable consideration, which is a price certain in money or its equivalent.
4. Commutative
- The thing of value is exchanged for equal value.
5. Nominate
- The Civil Code refers to its by a special name, “contract of sale”
6. Principal
- IT can stand on its own and does not depend on another contract for its validity.
Problem:
On January 19, 1985, A, B, and C executed a document entitled Receipt of Down Payment in
favor of R which is reproduced hereunder:
P 1,190,000 – Balance
Received from Miss R, the sum of Fifty Thousand Pesos purchase price of our inherited house
and lot, in total amount of P1,240,000
We bind ourselves to affect the transfer in our names from our deceased father, the transfer
certificate of title immediately upon receipt of the down payment above-stated.
On our presentation of the TCT already in our name, we will immediately execute the deed of
absolute sale of said property and Miss R shall immediately pay the balance of P1,190,000.
On January 15, 1985, Q, mother of R, paid the down payment of P50,000
On February 6, 1985, the property originally registered in the name of A, B, and C’s father was
transferred in their names.
On February 18, 1985 A, B, and c sold the property to Y for P1,580,000 after the latter has paid
P300,000. For this reason, A, B, and C canceled and rescinded the contract with R by depositing the
down payment paid by Q in the bank in trust for R.
On February 22, 1985, Q filed a complaint for a specific performance against A, B, and C.
Is the Receipt of Down Payment a perfected contract of sale?
