Minds As To The Price, Despite The: Katrina Veronica Raymundo For The Best Block in Da World

CHAPTER 1 GENERAL PRINCIPLES A. Art. 1458.
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. (1445a)

Art. 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. (1124) Art. 1355. (Commutative) 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. (n) Art. 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. (n)
Nominate and Principal o It is given a particular name by law o Leads to the doctrine that in determining the real character of the contract, the title is not as significant as the substance; Courts look at the INTENT of the parties and NOT at the nomenclature. Consensual o Perfected by mere consent, at the moment there is a meeting of the minds upon the thig which is the object and upon the price o Buenaventura v CA Sale is not a real contract, but a consensual contract, which becomes valid and binding upon the meeting of the minds as to the price, despite the manner of its actual payment or even when theres a breach thereof If price is not stated in the contract, subject to reformation If there is no meeting of the minds as to the price, because the price has been simulated, then the contract is VOID. o Art 1475 of CC From the moment of perfection, parties may reciprocally demand performance even when parties have not affixed their signatures to the written form of the sale Actual delivery and payment of the price are NOT NECESSARY components to establish the existence of a valid sale Non-performance does not render sale void Basis for specific performance or rescission, with damages o Fule v CA Being consensual, a contract of sale has the force of law between contracting parties Formal requirements are for the benefit of THIRD parties Non-compliance therewith does not adversely affect the validity of the contract nor the contractual rights and obligations of the parties thereunder. Commutative o Thing of value is exchanged for equal value, ideally, value of the thing sold is considered equivalent to the price paid o All that is required is for seller to believe that what was received was of commutative value for what he gave o INADEQUACY OF PRICE May be a ground for setting aside an EXECUTION of sale but not a sufficient ground for the cancellation of a voluntary contract of sale otherwise free from invalidating effects May show vice in consent (in which case the sale can be annulled), but such annulment is not for inadequacy of the price but rather for vitiation in consent
DEFINITION OF SALE
A contract of sale may be absolute or conditional.

Obligations of the Seller o Transfer the ownership o Deliver the possession of the subject matter Obligation of the buyer o Pay the Price
Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 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.
Both sets of obligations are real obligations "to give." Real obligations o can be the proper subject of action for specific performance Personal Obligations to do or not to do o Cannot be subject of action for specific performance because of public policy against involuntary servitude.
Elements of a contract of sale

a) b) c) consent or meeting of the minds determinate or determinable subject matter price certain in money or its equivalent
Characteristics of Sale
Art. 1475. (Consensual) 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. (1450a) Art. 1169. (Bilateral and Reciprocal) 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. (1100a)
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Bilateral and Reciprocal o Correlative obligations o Obligation or promise of each party is the cause or consideration for the obligation or promise of the other o Those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent on the obligation of the other o LEGAL EFFECTS & CONSEQUENCES Power to rescind is implied Neither party incurs in delay if the other party does not comply or is not ready to comply in the proper manner with what is incumbent upon him From the moment one of the parties fulfills his obligation, default by the other begins, without need of prior demand o Polytechnic University v CA General requisite for the existence of a valid and enforceable contract of sale that it be mutually obligatory: There should be a CONCURRENCE of the promise of the vendor to sell a determinate thing and the promise of the vendee to receive and pay for the property o Carrascoso v CA Rescission of a party to an obligation is predicated on a breach of faith by the other party who violates the reciprocity between them Onerous o The thing sold is conveyed in consideration of the price and vice versa o Imposes a valuable consideration as a prestation, which ideally is a price certain in money or its equivalent Aleatory o in the case of emptio spei (Tolentino)
2.
Contract for a Piece of 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. (n)
a. b. manufacturing in the ordinary course of business and manufacturing upon special order of customers.
Art. 1713. By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material. (1588a) Art. 1714. If the contractor agrees to produce the work from material furnished by him, he shall deliver the thing produced to the employer and transfer dominion over the thing. This contract shall be governed by the following articles as well as by the pertinent provisions on warranty of title and against hidden defects and the payment of price in a contract of sale. (n) Art. 1715. The contract shall execute the work in such a manner that it has the qualities agreed upon and has no defects which destroy or lessen its value or fitness for its ordinary or stipulated use. Should the work be not of such quality, the employer may require that the contractor remove the defect or execute another work. If the contract fails or refuses to comply with this obligation, the employer may have the defect removed or another work executed, at the contractor's cost. (n)
Sale Constitutes real obligation (to give) Failure to comply w obligation: Rescission or Specific Performance Piece-of-work Personal obligation (to doservice) Failure to comply w obligation: Contractor be required to remove defect; require another work at contractors cost According to Tolentino: Parties intended that at some future One of the parties accepts the date and object has to be delivered, undertaking on the basis of some without considering the work or plan, taking into account the work labor of the party bound to deliver he will employ personally or through another
Note: a sale is not a mode of transferring ownership but a title. MODE o is the legal means by which ownership is created, transferred or destroyed. TITLE o only constitutes the legal basis by which to affect the dominion or ownership.
Wholesale vs. retail sale- It is not the bulk or quantity of the goods sold, but rather the use to which the goods sold is put by the buyer that should control. It is wholesale when: If it be resale at a profit the goods being unaltered when resold the quantity of the goods sold being large not to be used by the purchaser or in excess of the requirements of his business the merchant selling the goods being habitually engaged in the sale of such goods in large quantities
STAGES IN THE LIFE OF SALE 1. Policitacion or Negotiation o From the tome prospective contracting parties indicate their interests in the contract to the time the contract is perfected Perfection or Conception or Birth o Takes place upon the concurrence of the essential elements of the sale which are the meeting of the minds of the parties as to the object of the contract and upon the price Consummation or Death o When the parties perform their respective undertaking culminating in the extinguishment of the contract of sale
Celestino Co & Co v Collector

A factory which habitually makes sash, windows and doors, and sells the goods to the public is a manufacturer. The fact that the windows and doors are made by it only when customers place their orders and according to such form or combination as suit the fancy of the purchasers does not alter the nature of the establishment. Contract for a piece of work is the sale of service Contract of sale the essence is sale of an object
2.
3.
Commissioner v Engineering Equipment and Supply Co.

The distinction between a contract of sale and one for work, labor and materials is tested by the inquiry whether the thing transferred is one not in existence and which never would have existed but for the order of the party desiring to acquire it, or a thing which would have existed but has been the subject of sale to some other persons even if the order had not been given. If the article ordered by the purchaser is exactly such as the seller makes and keeps on hand for sale to anyone, and no change or modification of it is made at purchaser's request, it is a contract of sale even though it may be entirely made after, and in consequence of the purchaser's order for it. The word "contractor" is used with special reference to a person who, in the pursuit of the independent business, undertakes to do a specific job or piece of work for other persons, using his own means and methods without submitting himself to control as to the petty details. The test of a contractor is that he renders service in the course of an independent occupation, representing the will of his employer only as to the result of his work, and not as to the means by which it is accomplished.
B. SALE DISTINGUISHED FROM OTHER CONTRACT

1. Art. 725. Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it. (618a) Art. 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or some other act or contract. (n) Donation
3.
Contract of lease
Art. 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies: (1) Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee's failure to pay cover two or more installments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void. (1454-A-a) Art. 1485 The preceding article shall be applied to contracts purporting to be leases of personal property with option to buy, when the lessor has deprived the lessees of the possession and enjoyment of the thing.
Lease contemplates only the use of thing for a price and to return the same upon the expiration of the period agreed upon. Contracts of lease with an option to the buy (stipulation: if the rent throughout the term is paid title shall vest in the lessee) this is a contract of sale.
Art. 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. (1538a) Art. 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)
Differentiating the two is that important since the title on barter shall be governed by the rules on sales anyway except for the rule on eviction and damages when the thing exchanged in barter was not owned by the one who exchanged it.
Rules to determine whether it is a barter or a sale: a) b) manifest intention of the parties when the intention does not appear and the consideration consists partly in money and partly in another thing barter where the value of the thing given as part of the consideration exceeds the amount of money given or its equivalent sale value of the thing given as part of the consideration equals or is less than the amount of money given.
6.
DACION EN PAGO
4.
AGENCY TO BUY OR SELL
Art. 1245. Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in money, shall be governed by the law of sales. (n) Art. 1934. An accepted promise to deliver something by way of commodatum or simple loan is binding upon parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract. (n)
Essentially involves the transfer of ownership of a subject matter REQUISITES 1. Performance of the prestation in lieu of payment 2. Some difference between the prestation due and that which is given in substitution 3. Agreement between creditor and debtor that obligation immediately extinguished by performance of the prestation Special mode of payment o Debtor offers another thing to creditor who accepts is as equivalent of the payment of an outstanding debt o Requires delivery and transmission of ownership of thing/property
Art. 1466. 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. (n)
In construing the contract consider the essential clauses! Agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. o Because it covers an underlying fiduciary relationship, it is unilaterally revocable even in the presence fo an irrevocable clause A contract of sale is not unilaterally revocable unlike agency. Agency agent is not obliged to pay the price and is merely obliged to deliver the price which he received from the buyer Agent receives the goods of the principal who retains ownership and right to fix price Can return in case not sold Agent must act and is bound to instructions of principal
Sale
buyer himself pays for the price of the object Buyer reserves the goods as owner Generally no return Buyer can deal with the thing sold as he pleases
Lo v KJS Eco-Formwork System Phil

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Quiroga v Parsons
Quiroga granted Parsons the right to sell as an agent in Visayas. Parsons was obliged to pay for the beds w/in a specified period after delivery even when not sold, at a discount. Quiroga claims he can rescind the contract invoking the essential revocability of agency as his legal basis. For the classification of contracts, due regard must be paid to their essential clauses. In the contract in the instant case, what was essential, constituting its cause and subject matter, was that the plaintiff was to furnish the defendant with the beds which the latter might order, at the stipulated price, and that the defendant was to pay this price in the manner agreed upon. These are precisely the essential features of a contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the beds, and, on that of the defendant, to pay their price.
Partakes in one sense of the nature of sale Creditor really is buying the thing or property of the debtor, payment for which is to be charged against the debtors debt.
7.
CHATTEL MORTGAGE
Art 2140. By a chattel mortgage, personal property is recorded in the Chattel Mortgage Register as a security for the performance of an obligation. If the movable, instead of being recorded, is delivered to the creditor or third person, the contract is a pledge and not a chattel mortgage. Sec 3 of the Chattel Mortgage Law. Chattel Mortgage is a conditional sale of personal property as security for the payment of a debt or the performance of an obligation, the condition being that the sale shall be void upon the seller paying to the purchaser a sum of money or doing some other act named. If the condition is performed according to its terms, the mortgage and sale is void.
5.
BARTER OR EXCHANGE
Art. 1468. If the consideration of the contract consists partly in money, and partly in another thing, the transaction shall be characterized by the manifest intention of the parties. If such intention does not clearly appear, it shall be considered a barter 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. (1446a)
II. PARTIES TO A CONTRACT OF SALE

Art. 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. (1457a) A. CAPACITY OF PARTIES
Domingo v CA
However, when such age or infirmities have impaired the mental faculties so as to prevent the person from properly, intelligently, and firmly protecting her property rights then she is undeniably incapacitated Villanuevas view: Shouldnt have been void ab initio since a. the incapacity to give consent constitutes only VICE in consent b. Price was never paid or received which gives rise only to an action for rescission or specific performance and c. The consideration was grossly shocking and inadequate which does not affect the contract of sale, except it may indicate a defect in the consent.
Art. 1332. (Protection for the Illiterate) When one of the parties is unable to read, or if 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 the former. (n)
1.
Minors, Insane or Demented Persons, Deaf-mutes who do not know how to write
Art. 1327. The following cannot give consent to a contract: a. Unemancipated minors; b. Insane or demented persons, and deaf-mutes who do not know how to write Art. 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. (1457a) Art. 1397. The action for the annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily. However, persons who are capable cannot allege the incapacity of those with whom they contracted; nor can those who exerted intimidation, violence, or undue influence, or employed fraud, or caused mistake base their action upon these flaws of the contract. (1302a) Art. 1399. When the defect of the contract consists in the incapacity of one of the parties, the incapacitated person is not obliged to make any restitution except insofar as he has been benefited by the thing or price received by him. (1304)
General Rule any person who is authorized under the law to obligate himself or itself, may enter into a contract of sale, whether as party seller or as party buyer Contracts entered into by such legally incapacitated persons are not void, but merely voidable, subject to annulment and ratification. However, the action for annulment cannot be instituted by the person who is capacitated. Necessaries- everything that is indispensable for sustenance, dwelling, clothing and medical attendance, according to the social position of the family also includes education of the person entitled to be supported.
3.
Married Persons
a. Contract with Third Parties
Under the present Family Code: In relation to the Law on Sales o The spouses may, without the consent of the other spouse, enter into sale transactions in the regular or normal pursuit of their profession, vocation, or trade. Art. 96 and 124 o The administration and enjoyment of the community property or conjugal property, as the case may be, shall belong to both spouses JOINTLY. o In case of disagreement, the husbands decision shall prevail SUBJECT to the wife seeking remedy from the courts, which must be availed of within 5 years from the date of the contract. o Disposition or encumbrance of community/conjugal property shall be VOID w/o authority of the court or written consent of the other spouse In one case, sale by husband of conjugal property w/o wifes consent was VOID and not merely voidable since lacks one of the essential elements of FULL CONSENT EXCEPTION: husband may dispose of conjugal property w/o consent of the wife if such sale is necessary to answer for conjugal liabilities mentioned in 161 & 162 of CC
Art. 133.
b.
Between spouses
Every donation between the spouses during the marriage shall be void. This prohibition does not apply when the donation takes effect after the death of the donor. Neither does this prohibition apply to moderate gifts which the spouses may give each other on the occasion of any family rejoicing. (1334a) Replaced by Art. 87 of FC, added: Prohibition shall also apply to persons living together as husband and wife without a valid marriage
This included in the prohibition parties in a common law marriage
Sale of necessaries to minors are valid and not voidable only when there is perfection and delivery. If only perfection is arrived at by the time the case reaches litigation, the sale of course is not void, but voidable for vitiation of consent. An incapacitated person is not obliged to make any restitution except insofar as he has been benefited by the thing or price received by him
Art. 1490. The husband and the wife cannot sell property to each other, except: 1. When a separation of property was agreed upon in the marriage settlements; or 2. When there has been a judicial separation or property under Article 191. (1458a)
Rationale given for relative incapacity: 1. to prevent a spouse from defrauding his creditors by transferring his properties to the other spouse 2. to avoid a situation where the dominant spouse would unduly take advantage of the weaker spouse 3. to avoid an indirect violation of the prohibition against donations between spouses The only persons who can question the sale: 1. the heirs of either one of the spouses 2. prior creditors 3. government when it comes to taxes
2.
Art. 24.
Senility and Serious Illness
In all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection.
General rule person is not incompetent to contract merely because of advanced years or by reason of physical infirmities
Medina v CIR
Petitioner argues that the prohibition to sell expressed under Article 1490 of the Civil Code has no application to the sales made by said petitioner to his wife, because said transactions are contemplated and allowed by the provisions of Articles 7 and 10 of the Code of Commerce. But said provisions merely state, under certain conditions, a presumption that the wife is authorized to engage in business and for the incidents that flew therefrom when she so engages therein. But the transactions permitted are those entered into with strangers, and do not constitute exceptions to the prohibitory provisions of Article 1490 against sales between spouses. Petitioner's contention that the respondent Collector cannot assail questioned sales, he being a stranger to said transactions, is likewise untenable. The government, as correctly pointed out by the Tax Court, is always an interested party to all matters involving taxable transactions and, needless to say, qualified to question their validity or legitimacy whenever necessary to block tax evasion. Contracts violative of the provisions of Article 1490 of the Civil Code are null and void. Being void transactions, the sales made by the petitioner to his wife were correctly disregarded by the Collector in his tax assessments that considered as the taxable sales those made by the wife through the spouses' common agent, Mariano Osorio.
Agent
B. Special Disqualifications Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another: 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 entrusted to them, unless the consent of the principal has been given; 3. Executors and administrators, the property of the estate under their administration; 4. Public officers and employees, the property of the State or of any subdivision thereof, or of any GOCC, or institution, the administration of which has been entrusted 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 superior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon and execution before the court within whose jurisdiction or territory they exercise their respective function; 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. Made to apply in sales in legal redemption, compromises, and renunciations (1492)
One who accepts another's representation to perform in his name certain acts of more or less transcendency. The agent's incapacity to buy his principal's property rests on the fact that greed might get the better of the sentiments of loyalty and disinterestedness which should animate an administrator or agent. Brokers do not come within the prohibition. They merely look for a buyer or a seller and bring them together to consummate the transaction (middleman). Judges and public officers It is intended to remove fraud and to surround them with the prestige necessary to carry out their functions by freeing htem from all suspicion which tends to discredit the institution by putting into question the honor of said functionaries. Lawyers In view of the fiduciary relationship involved, to curtail any undue influence over client. PROHIBITION only applies during the period the litigation is pending. (Also during certiorari proceeding pending) Exception to the rule: contingent fee arrangements because the transfer or assignment of the property in litigation takes effect only after the finality of a favorable judgment. o Contingent upon the success of case. o LIMITATIONS As long as lawyer does not exert undue influence on client No fraud is committed or imposition applied Compensation is clearly not excessive as to amount to extortion o CORE OF REASONING TIMING of the effectivity of obligation to pay attorneys fees o Obligation subject to a suspensive condition o CLIENT Disadvantaged by fact that he must rely on the lawyer for legal assessment of the case and he legal battle that must be fought o LAWYER Takes a risk since by contingent fee arrangement he would get nothing for all his efforts and trouble, by the loss of the case o PERMITTED WHY? Redound to the benefit of the poor client and the lawyer especially in cases where client has meritorious cause of action, but no means with which to pay for legal services unless he can, w/the sanction of law, make a contract for a contingent fee to be paid out of the proceeds of the litigation Always subject to supervision of courts
Phil Trust Co. v Roldan
Even if the person sought to be protected by law consented to the sale, it is still void except for par 2.
The functional difference between the two groups of contracts declared void in 1491 is that: In nos. 1, 2, 3: o After the inhibition has ceased, the only real wrong that subsists is the private wrong to the ward, principal or estate; and therefore if private parties wish to condone the private wrongs among themselves, the State would not stand in the way. o May be ratified by entering into a new contract Causes of nullity which ceased to exist cannot impair validity of new contract. Does NOT retroact to the date of the first contract Nos. 4 & 5: W o When it comes to the second group, even when the inhibition ceased, there exists not only the private wrong, but a public one. Even when the private parties seek to ratify the private wrong by executing a new contract between them such cannot validate a relationship which continues to be tainted with a public wrong. o Grounded on public policy Guardians, agents and administrators Executors do not administer the hereditary rights of any heir. This right is vested entirely in the heirs who retain/ transmit it, independent of the executor for administration. Guardianship is a trust of the highest order; the trustee cannot be allowed to have any inducement or neglect his ward's interest.
Remembering the general doctrine that guardianship is a trust of the highest order, and the trustee cannot be allowed to have any inducement to neglect his ward's interest and in line with the court's suspicion whenever the guardian acquires the ward's property we have no hesitation to declare that in this case, in the eyes of the law, Socorro Roldan took by purchase her ward's parcels thru Dr. Ramos, and that Article 1459 of the Civil Code applies. WON she acted without malice, the stubborn fact remains that she acquired her protege's properties, through her brother-in-law. That she planned to get them for herself at the time of selling them to Dr. Ramos, may be deduced from the very short time between the two sales (one week). The temptation which naturally besets a guardian so circumstanced, necessitates the annulment of the transaction, even if no actual collusion is proved (so hard to prove) between such guardian and the intermediate purchaser. This would uphold a sound principle of equity and justice.
Valera v Velasco
The conclusion is reached that the disagreements between an agent and his principle with respect to the agency, the filing of the civil action by the former against the latter for the collection of the balance in favor of the agent, resulting from a liquidation of the agency accounts, are facts showing a rupture of relations, and the complaint is equivalent to an express renunciation of the agency, and is more expressive than if the agent had merely said, "I renounce the agency."
Naval v Enriquez
Executors, even in those cases in which they administer the property pertaining to the estate, do not administer the hereditary rights of any heir. The right is vested entirely in the heirs, who retain it or transmit it in whole or in part, as they may deem convenient, to some other person absolutely independent of the executor, whose authority, whatever powers the testator may have desired to confer upon him, do not and cannot under any circumstances in the slightest degree limit the power of the heirs to dispose of the said right at will. The right does not form part of the property delivered to the executor for administration. This conclusion having been reached, we are of the opinion that article 1459 of the Civil Code, cited by the plaintiffs to show the alleged incapacity of Don Francisco Enriquez as executor of the will of Don Antonio Enriquez, to acquire by purchase the hereditary right of Jorge Enriquez, has
no application to the present case. The prohibition which paragraph 3 of that article imposes upon executors refers to the property confided to their care, and does not extend, therefore, to property not falling within this class. Legal provisions of a prohibitive character must be strictly construed, and should not be extended to cases not expressly comprised within their text.
Art. 1575. The sale of animals suffering from contagious diseases shall be void. A contract of sale of animals shall also be void if the use or service for which they are acquired has been stated in the contract, and they are found to be unfit therefor. (1494a) Art. 1416. When the agreement is not illegal per se but is merely prohibited, and the prohibition by the law is designated for the protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid or delivered.
When the nullity proceeds from illegality of the cause or object of the contract (1411) & the act constitutes a crime, the doctrine of pari delicto applies. But when agreement is not illegal per se (1416) but merely prohibited & the prohibition is for protection of the plaintiff, he may recover what he has paid or delivered.
Gan Tingco v Pabinguit
Article 1459, No. 5, of the Civil Code, prohibits judges from acquiring by purchase, even at public or judicial sale, either in person or by an agent, any property or rights litigated in the court in the jurisdiction or territory within which they exercise their respective duties; this prohibition includes the taking of property by assignment. It appears to be as delicate a matter for a judge to take part in the sale of property that had been the subject of litigation in his court, as to intervene in the auction of property which, though not directly litigated in his court, is nevertheless levied upon and sold as the result of a writ of execution issued by him. What the law intends to avoid is the improper interference with and interest of a judge in a thing levied upon and sold by his order.
Municipality v Evangelista
The assignment of the amount of a judgment made by a person to his attorney who has not taken any part in the case wherein said judgment was rendered made in payment of services does not contravene Art 1459.
Rubias v Batiller
1491 of our Civil Code expressly prohibits lawyers from acquiring property of their clients. The nullity of such prohibited contracts is definite and permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification. In this aspect, the permanent disqualification of public and judicial officers and lawyers grounded on public policy differs from the first three cases of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions, it has been opined that they may be "ratified" by means of and in "the form of a new contract, in which case its validity shall be determined only by the circumstances at the time of execution of such new contract.
Sale of Lands to Aliens In the 1935 Constitution it said that: The disposition, exploitation, development or utilization of natural resources, including agricultural, timber and mineral lands belonging to the State, to Filipinos or to corporations or association at least 60% of the capital of which is owned by the citizens SAVE in cases of hereditary succession. The 1973 Constitution continued the same prohibition but private corporations and associations were prohibited from acquiring lands except by lease. Sale to American nationals Titles to private lands acquired by US citizens under the parity agreement shall be valid as against other private persons only. PD 713 allows citizens of the US who became permanent residents or who have resided continuously for 20 years and acquired private residential lands not exceeding 5,000 square meters for family dwelling, to continue to hold said land. Sale of Lands by Homestead/ Free Patent These shall not be subject to encumbrance or alienation for a term of five years from the date of the issuance of the patent or grant nor shall they be liable to the satisfaction of debt contracted prior to the expiration of the period, except improvements or crops on the land. The right may not be waived and pari delicto does not apply. The action to recover the property does not prescribe. A sale is void if the land was snxold to satisfy a debt contracted within five years from the contract even if the land was sold after 6 years.
III. SUBJECT MATTER OF SALE

Subject matter of the sale must be: 1) POSSIBLE THING existing, having potential existence, a future thing, or even contingent or subject to a resolutory condition 2) Licit 3) Determinate or at least determinable Failure to meet any one of the requisites: no contract of sale (not even a void one) It is not part of the requisite that at the time of perfection of the contract of sale, that the seller is the owner of the thing sold. It is only required that he must have a right to transfer the ownership at the time of delivery.
A.
Must be Possible Thing
Art. 1409. The following contracts are inexistent and void from the beginning: 1. Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; 2. Those which are absolutely simulated or fictitious; 3. Those whose cause or object did not exist at the time of the transaction; 4. Those whose object is outside the commerce of men; 5. Those which contemplate an impossible service; 6. Those where the intention of the parties relative to the principal object of the contract cannot be ascertained; 7. Those expressly prohibited or declared void by law. These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived. Art. 1411. When the nullity proceeds from the illegality of the cause or object of the contract, and the act constitutes a criminal offense, both parties being in pari delicto, they shall have no action against each other, and both shall be prosecuted. Moreover, the provisions of the Penal Code relative to the disposal of effects or instruments of a crime shall be applicable to the things or the price of the contract. This rule shall be applicable when only one of the parties is guilty; but the innocent one may claim what he has given, and shall not be bound to comply with his promise. (1305)
Art. 1462 The goods which form the subject of a contract of sale may be wither existing goods, owned or possessed by the seller, or goods to be manufactured, raised, or acquired by the seller after the perfection of the contract of sale, in this Title called future goods. There may be a contract of sale of goods , whose acquisition by the seller depends upon a contingency which may or may not happen.
The proper consideration of the first requisite is to consider whether the subject matter is of a type and nature, taking into consideration the state of technology and science at the time the sale is perfected, that it exists or could be made to exist to allow seller reasonable certainty of being able to comply with his obligations under the contract Under 1409 (3) contracts are void when cause or object did not exist at the time of the transaction o Not warranted in contracts of sale because the seller assumes the OBLIGATION to transfer the ownership of and to deliver a determinate thing o Thus, whether such an obligation exists or not, and NOT the existence of the subject matter, is the ESSENCE of sale. o Sale is NOT a real contract, but a CONSENSUAL one.
Art. 1461 Things having a potential existence may be the object of the contract of sale. The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence. The sale of a vain hope or expectancy is void.
EMPTIO REI SPERATAE Strictly a contract covering future things Subject to the suspensive condition that the subject matter will come into existence o When it does not come into existence, contract deemed extinguished as soon as: Time expires It has become indubitable that the event will not take place Covers only contracts of sale whose subject matter is DETERMINATE or SPECIFIC o Generic things are never lost ESSENCE OF A CONTRACT OF SALE Meeting of the minds that bring about the obligation to transfer the ownership, and deliver the possession, of subject matter EMPTIO SPEI Sale of hope o Requisite of possibility of the subject matter Example: Sale of sweepstakes o Object: Ticket. The CHANCE to win. If the ticket does not win, the sale is still valid. Buyer has no right to recover what he paid for the ticket.
Art. 1246. When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and circumstances have not been stated, the creditor cannot demand a thing of superior quality. Neither can the debtor deliver a thing of inferior quality. The purpose of the obligation and other circumstances shall be taken into consideration. (1167a) Art. 1458. 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. A contract of sale may be absolute or conditional. (1445a)
It must be determinate or at least determinable. o Particularly designated or physically segregated from all others of the same class o This entitles seller to avail of force majeure.
Art. 1465 Things subject to resolutory condition may be the object of a contract of sale
1190: When the conditions have for their purpose the extinguishment of an obligation to give, the parties, upon fulfillment of those conditions, shall return to each other what they have received.
DETERMINABLE If at perfection of sale, subject matter is capable of being made determinate (capacity to segregate) Without the necessity of a new or further agreement between parties
Melliza v City of Iloilo
B.
Must be Licit
Art. 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. Art. 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. (1271a) Art. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. (1255a)
Illegality of the subject matter, even though determinate and existing and capable of actual delivery, undermines the demandability of the underlying obligation of the seller to deliver, and renders the sale void
The requirement of the law that a sale must have for its object a determinate thing, is fulfilled as long as, at the time the contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the parties (Art. 1460, New Civil Code). The statement that the lots object of the sale are the ones needed for city hall site, avenues and parks according to the Arellano Plan, which was then in existence, sufficiently provides a basis, as of the time of the execution of the contract, for rendering determinate said lots without the need of a new and further agreement of the parties.
SALE OF UNDIVIDED INTEREST OR SHARE

Art. 1463. The sole owner of a thing may sell an undivided interest therein. Art. 1464. In the case of fungible goods, there may be a sale of an undivided share of a specific mass, though the seller purports to sell and the buyer to buy a definite number, weight or measure of the goods in the mass, and though the number, weight or measure of the goods in the mass is undetermined. By such a sale the buyer becomes owner in common of such a share of the mass as the number, weight or measure bought bears to the number, weight or measure of the mass. If the mass contains less than the number, weight or measure bought, the buyer becomes the owner of the whole mass and the seller is bound to make good the deficiency from goods of the same kind and quality, unless a contrary intent appears. (n) The sale of an undivided share in a specific mass of fungible goods results in making the buyer a co-owner of the entire mass in proportion to the amount bought by him. A co-owner cannot sell more than his share.
Yturralde v. CA (1972)
The pacto de retro sale executed by Margarita expressly stipulates that she only sold all her rights, interests and participation in the lot. Margarita therefore, could not, for she had no right to, sell the entire lot, which is registered "in the name of Francisco Yturralde married to Margarita de los Reyes." Said lot is acknowledge by herein petitioners as the conjugal property of Francisco and Margarita. What she validly disposed of under the aforesaid pacto de retro sale was only her conjugal share in the lot plus her successional right as heir in the conjugal share of her deceased husband Francisco. Consequently, the vendee a retro, Rebollos, cannot legally petition for the consolidation of his ownership over the entire lot.
The object of the sale must be licit and within the commerce of men. Properties belonging to the State are outside the commerce of men. The law prohibits the sale of future inheritance. o The rights to succession are transmitted from the moment of the death of the decedent. OUTSIDE THE COMMERCE OF MEN Those which cannot be appropriated, such as the open seas and the heavenly bodies
C.
MUST BE DETERMINATE
Gaite v Fonacier
Art. 1460. A thing is determinate when it is particularly designated or physical segregated from all other of the same class. The requisite that the thing be determinate is satisfied if a t 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.
The sale between the parties is a sale of a specific mass of iron ore because no provision was made in their contract for the measuring or weighing of the ore sold in order to complete or perfect the sale, nor was the price of P75,000 agreed upon by the parties based upon any such measurement (see Art. 1480, second par., New Civil Code). The subjectmatter of the sale is, therefore, a determinate object, the mass, and not the actual number of units or tons contained therein, so that all that was required of the seller Gaite was to deliver in good faith to his buyer all of the ore found in the mass, notwithstanding that the quantity delivered is less than the amount estimated by them. There is no charge in this case that Gaite did not deliver to appellants all the ore found in the stockpiles in the
mining claims in question; Gaite had, therefore, complied with his promise to deliver, and appellants in turn are bound to pay the lump price.
SALE OF THINGS IN LITIGATION

Art. 1381. The following contracts are rescissible: (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; Art. 1385. Neither shall rescission take place when the things which are the object of the contract legally in the possession of third persons who did not act in bad faith. In an action affecting the title or the right of possession of real property, the plaintiff may record in the office of the registrar or deeds of the province in which the property is situated, a notice of the pendency of the action.
Atkins, Kroll & Co. v. Domingo (1924)
The filing of the lis pendens was intended to affect third persons with notice of the claim which Santiago had asserted in his explanatory report in the proceedings over the estate of Buenaventura. But the efforts of Santiago to get his claim recognized in those proceedings completely failed of effect. For this reason, the lis pendens must be considered to have lost its efficacy. The effect of notice by lis pendens is, of course, to charge the stranger with notice of the particular litigation referred to in the notice, and if the notice is effective, the stranger who acquires the property affected by the lis pendens takes subject to the eventuality of the litigation. But when the adverse right fails in such litigation, the lis pendens becomes innocuous. SALE OF MORTGAGED PROPERTY
was the one brother was living on. Brothers heirs filed an action seeking possession of lot A which had a bigger area. Court held that object of the sale was Lot B, although deed of sale referred to lot A, because there was only a mistake in designating the lot IN THE INSTRUMENT, which was deemed to be only pro forma and did not vitiate the consent of the parties or affect the validity and binding effect of the sale.
NOTE: When one seeks to sell or buy property, one does it as he sees it in ITS ACTUAL SETTING and by its physical metes and bounds, and not by the mere lot no. assigned to it in the COT NOTE: The true contract of sale is intangible or a LEGAL CONCEPT. The deed of sale is merely an EVIDENCE of the contract When fails to cover real contract, deed must give way to the real contract
Art. 1349. 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.
WHEN QUANTITY NOT ESSENTIAL Even when the exact quantity o the subject matter of the contract of sale has not been agreed upon, but the parties have in fact agreed upon quality and price, and terms of payment, there is already a valid and binding contract Even when the exact quantity of the subject matter has not been agreed upon but the parties have in fact come into an agreement as to the quality, price and terms of payment, there is a valid contract of sale Although the quantity ordered was made determinate only after the purchase order, quantity is immaterial in the perfection of sales contract What is of importance is the meeting of the minds as to the OBJECT and CAUSE
National Grains Authority v IAC, 1989.
Johannes Schuback v CA, 1993

Pineda v CA
Prior mortgage of property does not prevent mortgagor from selling property Mortgage merely an encumbrance, does not extinguish title of debtor, who does not lose his principal attribute as owner to dispose of the property
TEST WHETHER SUBJECT MATTER IS DETERMINATE Whether the subject matter has been physically segregated or particularly designated TEST OF BEING DETERMINABLE At the time of perfection, could it be physically segregated or particularly designated without further agreement between the parties?
Art. 1505 Subject to the provisions of this Title, where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer requires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the sellers authority to sell. Nothing in this Title, however, shall affect: 1. The provisions of any factors' act, recording laws, or any other provision of law enabling the apparent owner of goods to dispose of them as if he were the true owner thereof; 2. The validity of any contract of sale under statutory power of sale or under the order of a court of competent jurisdiction; 3. Purchases made in a merchant's store, or in fairs, or markets, in accordance with the Code of Commerce and special laws. (n)
SELLER must be owner at the time of DELIVERY, not at the time of perfection Nobody can dispose of that which does not belong to him EXCEPTION Judicial sale!! SUBSEQUENT ACQUISITION Art. 1434 CC When at the time of perfection the seller sells a subject matter over which he is not the owner, the subsequent acquisition of title by a seller validates the sale and title passes to the buyer by operation of law, provided there has been previous delivery of the subject matter to the buyer o Valid sale o Prior delivery TEST OF DETERMINABILITY IS THE MEETING OF THE MINDS OF PARTIES
IV. PRICE AND OTHER CONSIDERATION

Art. 1352. Contracts without cause, or with unlawful cause, produce no effect whatever. The cause is unlawful if it is contrary to law, morals, good customs, public order or public policy. (1275a) Art. 1353. The statement of a false cause in contracts shall render them void, if it should not be proved that they were founded upon another cause which is true and lawful. (1276) Art. 1354. (Relative Simulation) Although the cause is not stated in the contract, it is presumed that it exists and is lawful, unless the debtor proves the contrary Art. 1468. If the consideration of the contract consists partly in money, and partly in another thing, the transaction shall be characterized by the manifest intention of the parties. If such intention does not clearly appear, it shall be considered a barter 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. (1446a)
Atilano v Atilano
Eulogio subdivided his land into 5, executed deed of sale in favor of his brother for lot A. The brother thereafter obtained TCT in his name. Prior to execution of sale, brother had been in the possession of said lot and had built his house thereon. Years later after survey, they discovered Lot B
Art. 1469. (Price must be Certain or Acertainable) In order that the price may be considered certain, it shall be sufficient that it be so with reference to another thing certain, or that the determination thereof be left to the judgment of a special person or persons. Should such person or persons be unable or unwilling to fix it, the contract shall be inefficacious, unless the parties subsequently agree upon the price. If the third person or persons acted in bad faith or by mistake, the COURTS MAY FIX THE PRICE. Where such third person or persons are prevented from fixing the price or terms by fault of the seller or the buyer, the party not in fault may have such remedies against the party in fault as are allowed the seller or the buyer, as the case may be. Art. 1470. (Inadequacy of price) 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 Art. 1471. (Simulation of Price) If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or some other act or contract. (n)
3.
Functions merely as the model of prestation, cause or consideration that would promote the onerous nature of the contract of sale CERTAIN or ASCERTAINABLE o At the point of perfection by reference to to another thing certain, such as to certain invoices then in existence and clearly identified by the agreement, or known factors or stipulated formula o PRICE NOT CERTAIN Contract inefficacious Not void contract valid albeit conditional
PRICE SIMULATED Sale VOID Neither party had any intention whatsoever that the amount will be paid Boils down to contractual intent: o If there was no intent by the parties at the time of perfection to pay and to receive the price stipulated. VOID for lack of consideration SC: There is colorable contract but without any substance May be shown to be a donation or some other contract RELATIVE SIMULATION Parties to a sale state a false cause in the contract to conceal their agreement o The parties real agreement binds them PRICE FALSE When there is a real price upon which the minds of the parties had met, but not declared, and what is stated in the deed is not the one intended to be paid. Sale is VALID o SUBJECT to reformation to indicate the real price o REFORMATION May not be allowed when the interest of the government or third parties would be adversely affected
Art. 1472. (Ascertainable in reference to others) The price of securities, grain, liquids, and other things shall also be considered certain, when the price fixed is that which the thing sold would have on a definite day, or in a particular exchange or market, or when an amount is fixed above or below the price on such day, or in such exchange or market, provided said amount be certain. (1448) Art. 1473. (Price at discretion of one party) The fixing of the price can never be left to the discretion of one of the contracting parties. However, if the price fixed by one of the parties is accepted by the other, the sale is perfected. (1449a) Art. 1474. (Price not certain) (EXCEPTION to invalid sale when no price) Where the price cannot be determined in accordance with the preceding articles, or in any other manner, the contract is inefficacious. However, if the thing or any part thereof has been delivered to and appropriated by the buyer he must pay a reasonable price therefor. What is a reasonable price is a question of fact dependent on the circumstances of each particular case. (n)
CONSIDERATION More properly denominated as CAUSE, can take different forms, such as prestation or promise of a thing or service by another PRICE Sum stipulated as the equivalent of the thing sold
Mapalo v Mapalo
Spouses Mapalo were illiterate farmers made to sign a deed of sale over their registered land although they were told that they were signing a donation for the eastern half of said property in favor of the brother. Deed of sale stated a consideration of P500.00 but no such consideration was paid. This was a contract with NO consideration as opposed to a contract with a false consideration where the price stated is different from the real agreed upon price. EFFECT OF NON-PAYMENT OF PRICE Does not render a sale inexistent or invalid REMEDY: CAUSE for seller to either: o Demand specific performance o Rescission of contract
Vda de Catindig v Heirs of Catalina Roque

It is not the fact of payment of the price that determines the validity of a contract of sale. Sale is a CONSENSUAL contract, and it becomes binding and valid upon meeting of the minds. ACCOMODATION
Mate v CA
Mate, in order to accommodate Josefina who was threatened to be criminally sued by Tan for issuance of bouncing checks, executed a deed of sale with a right of repurchase in favor of Tan, and for which Josefina gave post-dated checks to Mate which covers amount necessary for Mate to repurchase the property plus interests income for accommodation. Checks bounced. Invalid sale? Court ruled bouncing of checks did not render sale void for having fictitious consideration. There was consideration, his receipt of P420,000 from Josefina which impelled him to execute the contract. FICTITIOUS CONTRACT OF SALE No consideration, no title over the subject matter of the sale can be conveyed DELIVERY OF SUBJECT MATTER o Does not transfer ownership to the buyer There was never any real price agreed upon
REQUISITES 1. Must be REAL o When at the perfection of sale, there is legal intention on the part of the buyer to pay the price legal expectation on part of seller to receive such price as value of the subject matter he obligates himself to deliver 2. Must be in MONEY or ITS EQUIVALENT (must be VALUABLE CONSIDERATION) o Other forms of cause or consideration which are VALUABLE would support a valid contract of sale o MONEY Highest form of representation of commercial value in society
Note: Different from failure to price which does not affect efficacy of delivery of subject matter, because there was a valid consideration.
VALUABLE CONSIDERATION
Ong v Ong

Considered the validity of a sale of real property where consideration stated in the deed was P1.00 AND OTHER VALUABLE CONSIDERATIONS No evidence was adduced to show that the consideration stated in the deed was not paid or was simulated. Under 1354, consideration is presumed to exist.
Bagnas v. CA (1989)
ESSENCE OF RULING: o It is possible for parties to a sale to agree on an adequate consideration, and though they will state a false or nominal consideration in their deed, it wouldnt affect the validity of the sale, provided that consideration WAS IN FACT agreed upon.
ABSENCE OF STIPULATION OF OTHER TERMS OF PAYMENT Price deemed by operation of law immediately demandable upon perfection of contract
SALE EVEN IF NO PRICE AGREED UPON (1474) If the thing or any part thereof has been delivered to and appropriated by the buyer, he must pay a reasonable price therefor COURTS have authority to fix reasonable price Based on doctrine of unjust enrichment o Even if no agreement between seller and buyer, if buyer knows sellers price, he has to pay that price Actually meant to cover all sale contract situations where there must have been at least a meeting of the minds or an agreement to buy and sell. It is meant to be a remedy clause in favor of the seller who has already delivered in accordance w an agreement w the buyer who received and appropriated it. GRAVAMAN o Lack of an agreement as to the price or defect in the agreement as to price, there would nevertheless be a valid contract of sale upon which an action for specific performance would prosper for the recovery of the price ELEMENTS 1. Meeting of the minds of sale and purchase as to subject matter 2. Agreement that price would be paid which fails to meet the criteria of being certain or ascertainable 3. There was already delivery by seller and appropriation by buyer APPROPRIATION o Would necessarily mean a transformation of subject matter which can no longer be returned to its original state, as to warrant the fixing of reasonable price to prevent unjust enrichment
Upon the consideration alone that the apparent gross, not to say enormous, disproportion between the stipulated price (in each deed) of P1 .00 plus unspecified and unquantilled services and the undisputably valuable real estate allegedly sold - worth at least P10,500.00 going only by assessments for tax purposes which, it is well-known, are notoriously low indicators of actual value - plainly and unquestionably demonstrates that they state a false and fictitious consideration, and no other true and lawful cause having been shown, the Court finds both said deeds, insofar as they purport to be sales, not merely voidable, but void ab initio. HOW PRICE DETERMINED TO BE ASCERTAINABLE 1. Set by third person appointed at perfection 2. Set by courts 3. By reference to a definite day, particular exchange or market
1474
Art. 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall take effect in conformity with the provisions of this Code. (1115)
ROLE OF THIRD PARTIES Fix the price o VALID o A contract of sale deemed perfected and existing, albeit conditional. This prevents unilateral withdrawal from the contract. o UNABLE or UNWILLING Parties do not have a cause of action to seek from the court the fixing of the price, because in a manner of speaking, the condition imposed on the contract did NOT happen, which extinguished the contract. o PREVENTED by fault of either seller/buyer Party NOT AT FAULT may Demand court to fix price When a party prevents a condition from happening, that condition can be deemed fulfilled by the other party. Fix subject matter o NOT ALLOWED
INNEFICACIOUS Provide for sales which are not void because the price, though not certain, is ascertainable Inability to produce effect wanted Includes void sale Includes valid conditional contracts of sale in the same group of void contracts, from the focal point of price
Toyota Shaw v. CA (1995)

A definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. This is so because the agreement as to the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. Definiteness as to the price is an essential element of a binding agreement to sell personal property.
MANNER OF PAYMENT
Goes into the essence of what makes price certain or ascertainable Terms of payment essential part of the concept of price because of the TIME VALUE of money o Example: Seller may allow comparatively lower price if paid over a short time. May demand higher price if payment over a long stretch of time. HIGHER SUM o Allowed, to compensate vendor for waiting a long time before receiving total amount of value
INADEQUACY OF PRICE
Art. 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. (n) Art. 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. (n)
While in ordinary sales, for reasons of equity, a transaction may be invalidated on the ground of inadequacy of price, or when such inadequacy shock ones conscience as to justify the courts to interfere, such does not follow when the law gives to the owner the right to redeem as when a sales is made at an execution sale upon the theory that the lesser the price, the easier it is for the owner to effect the redemption.
INVALID SALE for NON-AGREEMENT in MANNER OF PAYMENT Navarro v Sugar Producers Corp o When manner of payment is discussed after acceptance, then such acceptance did not produce a binding and enforceable contract of sale Velasco v CA o Even though buyer paid downpayment Leabres v CA o Receipt acknowledged of sum P1,000 with ni indication of total purchase price or installments to be paid Both parties in each case knew and expected that certain negotiations still had to be made w respect to the manner of payment. ESSENCE OF RULINGS OF COURT AS TO MANNER OF PAYMENT Terms of payment would have the same requisites that the law imposes on price to support a valid contract of sale: o Certain or at least ascertainable
Art. 1179. Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, is demandable at once. Every obligation which contains a resolutory condition shall also be demandable, without prejudice to the effects of the happening of the event. (1113)
Although sale is onerous and commutative, there is no requirement that the price given is exactly the value of the subject matter delivered. The contract of sale is onerous is met whenever the consideration is valuable consideration; and the test for its commutativeness is met when parties believer honestly that they received good value for what they gave up in exchange. Inadequacy of price may be a ground for setting aside an execution sale but it is not sufficient ground fOR the cancellation of a voluntary one. (Tayengco v CA)
COURTS
Operate because one person has been defeated or overcome ILLEGALLY o Law furnishes no protection to the inferior simply because he is inferior o Courts cannot constitute themselves guardians of persons who are not legally incompetent There must be a violation of the law, an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it Simulate Price/Contract Parties to an alleged contract do not really intent to be bound by it No legal effect whatsoever because there is no real agreement between parties
PERFECTION Takes place upon the concurrence of essential elements of sale (consent, object, and price) CONSUMMATION When parties perform their undertakings under the contract culminating in the extinguishment thereof
POLICITACION
Deals w legal matters arising BEFORE to perfection Merely an offer by an offeror to an offeree Does not give rise to any obligation or right Creates no privity between purported seller and buyer Not considered binding commitments PRIOR to perfection o Either party may stop negotiation and walk away, generally w/o legal consequences There is FREEDOM TO CONTRACT o Right to choose with whom to contract and o Right to choose what to contract Main object of existence: o Fervent hope of becoming or effecting into a realization, a valid and binding sale
Inadequacy of Price Will not result in a void contract Does not affect validity of sale, UNLESS signifies a defect in the consent parties actually intended donation or some other contract
RESCISSIBILE CONTRACTS OF SALE (1381) (Due to Inadequacy of Price) 1. 2. Those entered into by guardians whenever the ward whom they represent suffer lesion by more than of the value of the object of sale Those agreed upon in representation of absentees, if the latter should suffer lesion by more than of the value of object Shall not take pale with respect to sales approved by the courts
Judicial Sale Gross inadequacy of price may avoid judicial sale of real property. The difference is because THIS contract of sale is not the result of negotiations and bargaining; in fact, the property of the supposed seller would be sold at public auction without his intervention. In such a case, the courts must be allowed to come in to protect the supposed seller from a bad bargain and that is really not of his own doing. However, for a judicial sale to be set aside on the ground of inadequacy of price it has to be: o Unconscionable; and o There is showing that in the event of a resale, a better price can be obtained UNLESS there is a right of redemption, in which case the proper remedy is to redeem
ADVERTISEMENTS AND INVITATIONS Not definite offers MERE INVITATIONS to make an offer Authors view o Even when the advertisement contains a certain offer, it remains legally a mere INVITATION so long as it is addressed to the public AT LARGE o EXCEPTION Comes in whenever it expressly provides that the first absolute acceptance shall be binding Or when it is addressed to a particular offeree
Art 1321 The person making the offer may fix the time, place, and manner of acceptance, all of which must be complied with Art. 1323 (Offer ineffective) An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed Art. 1324 (Offer withdrawn) When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon a consideration, as something paid or promised.
Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases: (1) When the price of a sale with right to repurchase is unusually inadequate; **** In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws.
SALES W RIGHT TO REPURCHASE Gross inadequacy of price raises a presumption of equitable mortgage SELLERS REMEDY o Have it reformed or declared a mortgage contract o Pay off the indebtedness which is secured o NOT RESCIND BUYERs REMEDY o Foreclose equitable mortgage o NOT APPROPRIATE, because that would be pactum
OFFERS
Prior to its o o OFFEROR o acceptance, subject to will of the offeror May be withdrawn or destroyed by offeror Not necessary offeree learns of the withdrawal Has right to: attach to an offer any term or condition he desires fix tme, place and manner of acceptance
commissorium
OFFEREE o
V. FORMATION OF SALE
STAGES IN THE LIFE OF SALE 1. Policitacion o Negotiation, preparation, conception or generation stage o Period of negotiation and bargaining, ending at the moment of perfection 2. Perfection o birth of the contract o Point in time when the parties come into an agree on terms of sale 3. Consummation o death of the contract o Process of fulfillment or performance of the terms agreed upon in the contract NEGOTIATION From time the prospective contracting parties indicate INTEREST in the contract to the time contract is concluded (perfected)
No authority to treat it as consisting of separate and distinct parts o Must accept and comply w all the requirements provided in the offer o CHOICE to accept or reject in its ENTIRETY o May also counter-offer Replace and repeal original offer o COUNTER-OFFER Rejection of original offer Effect of extinguishing original offer OFFER EXINGUISHED o By the happening of resolutory condition o Certainty that suspensive condition will not happen o After the lapse of the period o IN ALL CASES: without need fo further action on part of offeror. OFFER INEFFECTIVE o Upon Death, Civil Interdiction, Insanity or Insolvency of either offeror or offeree o BEFORE acceptance is conveyed and received by offeror
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. (1451a) Art. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon a consideration, as something paid or promised. (n)
NO PERIOD STIPULATED 1144 will apply o Actions upon written contract must be brought w/in 10 years, and thereafter, the right of option prescribes o Also applies to actions for specific performance when option exercised Option attached to contract of lease o When lease renewed, option not included therein and does not extend RULES WHEN OPTION GRANTED TO PROMISEE 1. If period no consideration, offeror still free to withdraw offer before acceptance, or if acceptance made, before offeror knew of it, by communicating withdrawal to offeree 2. Right to withdraw must not be arbitrary or whimsical, else would give rise to damage claim under Art 19 3. If separate consideration, contract of option deemed perfectedbreach of contract if withdrawn 4. Option an independent contract. If breach of option contract, cannot demand specific performance. 5. Care should be given to REAL NATURE OF CONSIDERATION o If part of consideration for main contract, specific performance can prosper SEPARATE CONSIDERATION Guarantees w/in option period acceptance by optionee would give rise to valid and binding sale o Before optioner breaches obligation No valid and binding sale o If optioner withdraws option An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. o This was considered as an exception to the general rule on contracts that an offer, once accepted, cannot be withdrawn, regardless of whether it is supported or not by a consideration. Option contracts are not covered by the Statute of Frauds and can be proved by parol evidence. An option contract essentially covers a unilateral obligation to enter into a contract of sale which is a personal obligation and cannot be the subject of an action for specific performance.
OPTION CONTRACTS
When offer founded upon a proper consideration, offer may not be withdrawn at any time during the option period Essentially become a contracted offer, bounded by principles of mutuality and obligatory force o Privilege existing in one person, for which he had PAID a consideration, and which give him the RIGHT TO BUY certain thing, from another person if he chooses, AT ANY TIME within agreed period at fixed price. Secures a PRIVILEGE TO BUY Sale of RIGHT TO PURCHASE, not of property Person HOLDING THE OPTION o No binding obligation aside from consideration of offer Separate agreement distinct from contract
ONEROUS CONTRACT It must have separate consideration from the purchase price to be valid May be anything of value CONSENSUAL Meeting of minds as to subject matter and price, even though price not paid yet Something paid or PROMISED UNILATERAL CONTRACT Essentially Only one has an obligationthe one who gave the option OBLIGATION OF OFFEROR Personal obligation not to offer to any 3rd party the sale of the object of the option during the option period Personal obligation not to withdraw the offer or option during option period Obligationn to hold subject matter for sale to offeree in the event offeree exercises his option during period Sale SM: Object itself Offer and acceptance CONCURRENT Option Contract SM: Option to buy object Unaccepted offer
Sanchez v Rigos
In order that a unilateral promise may be "binding" upon the promisor, Article 1479 requires the concurrence of a condition namely, that the promise be "supported by a consideration distinct from the price." Accordingly, the promisee can not compel the promisor to comply with the promise, unless the former establishes the existence of said distinct consideration. In other words, the promisee has the burden of proving such consideration. The Court saw no distinction between Articles 1324 and 1479 of the Civil Code and applied the former where a unilateral promise to sell similar to the one sued upon was involved, treating such promise as an option which, although not binding as a contract in itself for lack of a separate consideration, nevertheless generated a bilateral contract of purchase and sale upon acceptance. In other words, since there may be no valid contract without a cause or consideration promisor is not bound by his promise and may, accordingly withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale.
ELEMENTS 1. Consent 2. Subject matter o Option right to an unaccepted unilateral offer to sell/accepted promise to sell, or unaccepted unilateral offer to buy/accepted promise to buy Determinate/determinable object For a price certain, including manner of payment 3. Prestation o A consideration separate and distinct from purchase price for option given
Limson v CA
An option, as used in the law of sales, is a continuing offer or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a time certain, or under, or in compliance with, certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale. It is not a sale of property but a sale of the right to purchase. Its distinguishing characteristic is that it imposes no binding obligation on the person holding the option, aside from the consideration for the offer. Until acceptance it is not, properly speaking, a contract, and does not vest, transfer, or agree to transfer, any title to, or any interest or right in the subject matter. On the other hand, a contract, like a contract to sell, involves the meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.
Villamor v CA
Buyers previously bought of land at an agreed price higher than appraised market value, w deed of option over other half that buyers bought it at that price because sellers promised to sell other half at the same price. Consideration of option is the WHY of the contract, the essential reason which moves the contracting parties to enter into the contract WHEN WITHOUT SEPARATE CONSIDERATION Option contract is void as a CONTRACT o Offeror not bound to his promise not to sell Even if option is accepted Constitutes valid offer o Such that if option exercised, will result in to valid and binding sale EXCEPTION to 1354 which presumes existence of consideration for every contract
Soriano v Bautista
The stipulation in a deed of mortgage which renders the mortgagor's right to redeem defeasible at the election of the mortgagee is not illegal or immoral, being merely an option to buy sanctioned by Article 1479 of the Civil Code, when supported by a consideration distinct from the purchase price. In this case the mortgagors' promise to sell is supported by the same consideration as that of the mortgage itself, which is distinct from that which would support the sale, an additional amount having been agreed upon, to make up the entire price of P3,900.00, should the option be exercised. The mortgagors' promise was in the nature of a continuing offer, non-withdrawable during a period of two years, which upon acceptance by the mortgagees gave rise to a perfected contract of purchase and sale
RIGHT OF FIRST REFUSAL

Promise on part of owner that if he decides to sell property in the future, he would first negotiate its sale to the promissee When the right of first refusal is included in a contract of lease, it is not correct to say that there is no consideration in an agreement of right of first refusal since in reciprocal contracts, the obligation or promise of each party is the consideration for that of the other. Must be contained in written contract
MUTUAL PROMISES TO BUY AND SELL

C. BILATERAL PROMISE TO BUY AND SELL
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. (1451a)
Both parties are bound by his promise although nothing has been paid or delivered. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. The promise made by one party is the consideration for the promise made by the other. A bilateral promise to buy and sell has the same effect as a contract of purchase and sale.
Equatorial Realty v Mayfair

To rule that par 8 (on the lessee's exclusive option to purchase and in the event that the property is sold to someone else the buyer shall recognize the lease) is governed by Article 1324 on withdrawal of the offer on Article 1479 on promise to buy and sell would render ineffectual or "inutile" the provisions on right of first refusal. The Court of Appeals is correct in stating that Paragraph 8 was incorporated into the contracts of lease for the benefit of Mayfair which wanted to be assured that it shall be given the first crack or the first option to buy the property at the price which Carmelo is willing to accept. It is not also correct to say that there is no consideration in an agreement of right of first refusal. The stipulation is part and parcel of the entire contract of lease. The consideration for the lease includes the consideration for the right of first refusal. Since Mayfair has a right of first refusal, it can exercise the right only if the fraudulent sale is first set aside or rescinded. The facts of the case and considerations of justice and equity require that rescission be ordered. Rescission is a relief allowed for the protection of one of the contracting parties and even third persons from all injury and damage the contract may cause or to protect some incompatible and preferred right by the contract. Where right of refusal found in valid lease contract was violated and the property was sold to a buyer who knew of the existence of that right, contract is RESCISSIBLE by person who held right o Price same that of paid by 3rd party
Ang Yu Asuncion
As long as the object is made determinate and the price is fixed, can be obligatory on the parties, and compliance therewith may be accordingly exacted Specific performance available
PERFECTION STAGE: OFFER AND ACCEPTANCE

When a person (seller) obligates himself for a price certain, to deliver and to transfer ownership of a thing or right to another (buyer) over which the latter agrees
Paranaque Kings v CA
The basis of the right of first refusal must be the current offer to sell of the seller or offer to purchase of any prospective buyer. Only after the grantee fails to exercise its right of first priority under the same terms and within the period contemplated, could the owner validly offer to sell the property to a third person, again, under the same terms as offered to the grantee.
Art. 1330. A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable. (1265a) Art. 1331. In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract. Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such identity or qualifications have been the principal cause of the contract. A simple mistake of account shall give rise to its correction. (1266a) Art. 1338. There is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. (1269) Art. 1339. Failure to disclose facts when there is a duty to reveal them as when the parties are bound by confidential relations, constitutes fraud.
CONSENT May be vitiated by o Mistake, violence, fraud, undue influence, intimidation PERFECTS A SALE WHEN o Manifested by the meeting of the offer and the acceptance upon the thing and the casue which are to constitute the contract OFFER CERTAIN When it is floated by the offeror having w/in its terms: o the description of the subject matter (has all 3 requisites: possible, licit, and determinate/determinable) o a price (real, money or its equivalent; valuable consideration, certain or ascertainable) including terms of payment absence of one renders offer uncertain, will not give rise to valid sale ACCEPTANCE ABSOLUTE plain and unconditional in exact terms in which offers are made Negotiation o No acceptance yet
Asuncion v CA
In the law on sales, the so-called "right of first refusal" is an innovative juridical relation. Needless to point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code. Neither can the right of first refusal, understood in its normal concept, per se be brought within the purview of an option under the second paragraph of Article 1479, aforequoted, or possibly of an offer under Article 1319 of the same Code. An option or an offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract. In a right of first refusal, while the object might be made determinate, the exercise of the right, however, would be dependent not only on the grantor's eventual intention to enter into a binding juridical relation with another but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so described as merely belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements to establish the vinculum juris would still be indefinite and inconclusive) but by, among other laws of general application, the pertinent scattered provisions of the Civil Code on human conduct. Even on the premise that such right of first refusal has been decreed under a final judgment, like here, its breach cannot justify correspondingly an issuance of a writ of execution under a judgment that merely recognizes its existence, nor would it sanction an action for specific performance without thereby negating the indispensable element of consensuality in the perfection of contracts. It is not to say, however, that the right of first refusal would be inconsequential for, such as already intimated above, an unjustified disregard thereof, given, for instance, the circumstances expressed in Article 19 of the Civil Code, can warrant a recovery for damages. Applies to right of first refusal not contained in lease contract REMEDY o Damages ONLY and not specific performance
RIGHT OF FIRST REFUSAL IN LEASE AGREEMENT Rentals deemed to be consideration to support ROFR (Villanueva said Malabo cos previous rulings ROFR no need consideration to be enforceable, since stipulation lang sa principal contract) Sublessee not entitled to right Does not extend when lease extended Option Contract Separate and Distinct consideration Right of First Refusal Court: Bottom line: does not need a separate and distinct consideration Consideration included in the primary consideration Dependent on seller if he will sell property Obligation of seller to first negotiate w promissee if decides to sell
Dependent on buyer if he will exercise his option Obligation of seller to not sell to someone else during option period
WHEN DEVIATION ALLOWED
Villonco v Bormaheco
Villonco v Bormacheco
Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Vendor's acceptance of the vendee's offer to purchase the property indubitably proves that there was a meeting of the minds upon the subject and consideration of the sale. From that moment, the sale was perfected, and the vendor's acceptance of the part payment of one hundred thousand pesos shows that the sale was conditionally consummated or partly executed subject to the purchase by the vendor of another property. The non-consummation of that purchase would be a negative resolutory condition. Where the changes or qualifications made by the seller on the buyer's offer are not material or are mere clarifications of what the parties had previously agreed upon, such changes would not prevent a perfection of the contract. FORM OF ACCEPTANCE Express or Implied Letter/Telegram o Does not bind offeror until it came to his knowledge Subject to suspensive condition o Generally: hindi pa perfected o Authors view If condition not complied w, ede extinguished. Pero may contract na. Bahal na kayo Auction sales o By fall of the hammer (so to speak) o Until then, bidder may retract his bid, auctioneer may withdraw his goods
Acceptance of earnest money would prove that sale is conditionally consummated or partly executed SUBJECT to the fulfillment of the condition, thenon-fulfillment of which would be a negative resolutory condition.
Art. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. (1454a)
RESCISSION Need to give back earnest money. o Amount received as downpayment as part of purchase price cannot be forfeited ion case buyer fails to pay full price PLACE OF PERFECTION Meeting of offer and acceptance upon thing and cause which constitute contract Letter/telegram o In the place where offer was made EXPENSES of EXECUTION and REGISTRATION By seller, unless stipulation to the contrary PERFORMANCE NOT AFFECT PERFECCTION
Balatbat v CA
Non-payment of price does not render sale void Does not reverse effects of perfection of contract Only specific performance or rescission
Earnest Money
Art. 1468. If the consideration of the contract consists partly in money, and partly in another thing, the transaction shall be characterized by the manifest intention of the parties. If such intention does not clearly appear, it shall be considered a barter 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. (1446a)
In the absence of an express stipulation to the contrary, whenever earnest money or a token is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract, and not as a penal clause. The parties may, however, stipulate that the earnest money be regarded in both senses. Under the Spanish Code of Commerce, earnest money given in commercial sales was considered as paid on account of the price and as proof of the ratification of the contract unless there was agreement to the contrary. It is no more than a disputable presumption and prevails only when in the absence of contrary rebuttal evidence. The concept of earnest money is the preferred concept under the law, but nothing prevents the parties to the contract of sale to treat earnest money differently. Option money Given as distinct consideration for the option contract Sale is not yet perfected Buyer is not required to buy
EXCEPTION When seller not the owner of property at the time of delivery, contract is void. (impossible service) Authors view, misplace kasi under a valid sale, real obligation hindi personal obligation. Service is personal.
FORM OF SALES
FORM GENERALLY NOT IMPORTANT Sale is a consensual contract, upon meeting of the minds No form is required for its validity o Private instrument is valid Formalities are usually intended for greater efficacy or convenience or to bind third persons o If not done, does not affect validity of contract between contracting parties PUBLIC INSTRUMENT for IMMOVABLES Dalion v CA o Only for convenience, not for validity or enforceability Limketkai Sons v CA o The fact that deed of sale was not notarized did not mean that there was no contract perfected o Failure to comply does not affect validity and binding effect between parties Talusan v Tayag o Unregistered deed of sale no binding affect on THIRD PARTIES Santos v Manalili o Sale of land appearing only in private document cannot be considered binding on 3rd persons DEED OF SALE Formal or symbolic delivery of the property sold and authorizes the buyer to use document as proof of ownership PUBLIC INSTRUMENT o Must be properly subscribed and acknowledged before a notary public o ENJOYS presumption of regularity and due execution Needs clear and convincing evidence to overturn presumption (not merely preponderant evidence)
Earnest money Part of the purchase price Given only when there is a sale When earnest money is given the buyer is bound to pay the balance
Cifra v. CA (1991)
Under the addendum to the agreement, both parties are given the freedom to back out of the transaction provided that, in the case of the seller, he must return the earnest money in addition to being liable to the buyer for P20,00.00, plus attoyney's fees and other costs in case of litigation; and in case of the buyer, the earnest money forfeited, and he is liable to pay the seller P20,000.00 in damages plus attoneys fees and other costs in case of litigation tot he selle. This right which is aforded to both parties may be availed of by them, irrespective of whether or not the occupant of the premises had vacated the same. This stipulation is the law between the parties. Consequently, the action for specific performance must fail.
Salonga v Concepcion

Velasco v. CA (1973)
A definite agreement on the manner of payment of the purchase price is an essential element in the formation of a binding and enforceable contract of sale. The fact, therefore, that the petitioners delivered to the respondent the sum of P10,000 as part of the downpayment that they had to pay cannot be considered as sufficient proof of the perfection of any purchase and sale agreement between the parties herein under Article 1482 of the new Civil Code, as the petitioners themselves admit that some essential matter - the terms of payment - still had to be mutually covenanted.
It is not the function of the notary public to validate an instrument that was never intended to have any binding effect Notarization is not conclusive of the nature of the transaction conferred by document, o not conclusive of the true agreement of parties Not conclusive presumption of delivery of possession, though form of constructive delivery On the other hand, buyers immediate possession of subject matter corroborates truthfulness and authenticity of deed of sale o Sellers continued possession makes dubious the sale
WHEN FORM AFFECTS VALIDITY 1. Power to sell a piece of land or interest therein must be in writing, otherwise, the sale thereof by the agent (even when sale itself is in writing) is void.
2. 3.
Sale of large cattle must be in writing, otherwise sale void; No sale of large cattle shall be valid unless registered w the municipal treasurer who shall issue a certificate of transfer Sale of land by non-muslim hill tribe cultural minorities all throughout the Phils is void if not approved by National Commission on Indigenous Peopls (NCIP)xxx
PARTIAL PERFORMANCE Must pertain to the subject matter or to the price of the purported sale Must amount to estoppels against the party sought to be charged
Cosmic Lumber v CA
Authority of an agent to execute a contract of sale must be conferred in writing and must give him SPECIFIC authority; In general, must expressly mention a sale or that includes a sale as a necessary ingredient of the act mentioned. Power granted to an agent to institute an action a suit and appear at pre-trial and enter into any stipulation of facts and/or compromise agreement does not include authority to sell land by way of compromise.
Claudel v CA
A sale of land once consummated is valid regardless of the form it may have been entered into. Court: However, in the event that a third party disputes the ownership of the property, the person against whom that claim is brought cannot present any proof of such sale and hence has no means to enforce the contract
Statute of Frauds
Ortega v Leonardo
A and B fighting over parcel of land, A said shell stop if once B obtains his title, B will sell to A a portion of the land, to which B agreed. Once B got his title, he refused to comply, despite the fact A already built improvements on said land. B refused to receive payment by A. Partial payment is not only the partial fulfillment contemplated by law. It includes other modes such as possession, making of improvements, rendition of services, etc. WAIVER OF PROVISIONS OF SOF When a party against whom such oral contract is sought to be proved, fails to object during trial to the presentation of oral evidence to prove the contract BSUINESS FORMS to prove sale By themselves, may be inadequate to establish case for vendor Their probative weight must be evaluated not in isolation but in conjunction w the other evidence adduced such as testimony of a witness and the demand letter. ELECTRIC COMMERCE Sec. 6 Information shall not be denied validity or enforceability solely on the ground that it is in the form of electronic data message purporting to give rise to such legal effect, or that it is merely incorporated therein ELECTRONIC DOCUMENT o Information or representation thereof by which a fact may be proved or affirmed, which Is received, recorded, transmitted, stored, processed, retrieved or produced electronically ELECTRONIC SIGNATURE o Any distinctive mark, characteristic and/or sound in electronic form, representing the identity of a person and attached to or logically associated with the electronic data message/document etc.
(Form is important for Enforceability) NATURE & PURPOSE Statutes which require certain classes of contracts to be in writing, purpose: to prevent fraud and perjury in the enforcement of obligations depending for their evidence upon the unassisted memory of witnesses Pressuposses existence of a perfected contract SALES COVERED Following agreements shall be unenforceable by action: o Sale agreement which by its terms is not to be performed w/in a year from the making thereof o Agreement for the sale of goods, chattels, or things in action, at a price not less than P500 o A sale of real property or of an interest therein EXCEPTION, following are ENFORCEABLE: o When there is a note or MEMORANDUM thereof in writing, and subscribed by the party charged or his agent PARTY CHARGED Would either be the seller or buyer against whom the sale is sought to be enforced MEMORANDUM It was held that various correspondences when taken together would constitute sufficient memorandum, since they include the name of the parties, terms and conditions of the contract, the price and a description of the property as object of the contract May be contained in two or more documents Must embody the essentials of the contract of sale o When there has been partial consummation of the same o When there has been failure to object to the presentation of evidence aliunde as to the existence of the contract o When sales are effected through electronic commerce
LEGAL RECOGNITION OF ELECTRONIC DOCUMENT (Considered as meeting requirement of being in writing) Sec. 7 If said electronic document maintains its integrity and reliability and can be authenticated so as to be usable for subsequent reference, in that o The electronic document has remained complete and unaltered, apart from the addition of any endorsement and any authorized change, or any change which arises in the normal course of communication, storage and display; and o The electronic document is reliable in the light of the purpose for which it was generated and in the light of all relevant circumstances. Paragraph (a) applies whether the requirement therein is in the form of an obligation or whether the law simply provides consequences for the document not being presented or or retained in its original form Where the law requires that a document be presented or retained in its original form, that requirement is met by an electronic document if o There exists a reliable assurance as to the integrity of the document from the time when it was first generated in its final from; and o That document is capable of being displayed to the person to whom it is to be presented: Provided, That no provision of this Act shall apply to vary any and all requirements of existing laws on formalities required in the execution of documents for their validity. For evidentiary purposes, an electronic document shall be functional equivalent of a written document under existing laws Does not modify any statutory rule regarding admissibility of EDM and EDs, except rules on authentication and best evidence In any legal proceedings, nothing in the application of the rules on evidence shall deny the admissibility of and EDM or ED in evidence o On the sole ground that it is in electronic form
Paredes v Espino
The Statute of Frauds does not require that the contract itself be in writing. The plain text of Art. 1403, paragraph (2) is clear that a written note or memorandum, embodying the essentials of the contract and signed by the party charged, or his agent, suffices to make the verbal agreement enforceable, taking it out of the operation of the statute. The letters sent by defendant constitute an adequate memorandum of the transaction. They are signed by the defendantappellee; refer to the property sold as a lot in Puerto Princesa, Palawan, covered by T.C.T. No. 62; give its area as 1026 square meters and the purchase price of four (P4) pesos per square meter payable in cash. We have in them, therefore, all the essential terms of the contract, and they satisfy the requirements of the Statute of Frauds. A sufficient memorandum may be contained in two or more documents.
Inigo v Estate of Maloto

Statute of Frauds is applicable only to executory contracts not to consummated or partially performed contracts. Thus, where the facts alleged in the complaint are constitutive of a consummated contract, it matters not that neither the receipt for the consideration nor the sale itself was in writing, because oral evidence of the alleged consummated sale of the land is not forbidden by the Statute of Frauds and may not be excluded in court.
Sec. 12
Baretto v Manila Railroad Co

The delivery of a deed to the agent of the vendee, with no intention to part with the title until purchase price paid, does not take the case out of the Statute of Frauds.
On the ground that it is not the standard written form, and the EDM and ED meeting, and complying w the requirements under sec 6 or 7 hereof shall be the best evidence of the agreement and transaction contained therein,
When EDMs or EDs are initially used, in order for a paper document to be valid to continue such transaction, it must be contained therein the termination of the use of EDMs or EDs.
WHEN SALE COMPLETELY SIMULATED

Completely void and non-existent When parties enter into a sale to which they did not intend to be legally bound, such is void and cannot be ratified SIMULATION o Declaration of a fictitious will, deliberately made by the agreement of the parties, in order to produce, for the purposes of deception the appearances of a juridical act which does not exist or is different from that which was really executed. o Apparent contract Not really desired Not really intended to produce legal effect Or in any way intended to alter the juridical situations of the parties Have no intention to be bound by contract
EVIDENCIARY WEIGHT Due regard to: o Reliability of the manner in which it was generated, stored or communicated o Reliability of the manner in which its originator was identified o Other relevant factors Sec. 16 Except as otherwise agreed upon by the parties o An offer, Acceptance of an offer, and such other elements required under existing laws for the formation of contracts may be expressed in, demonstrated and proved by means of EDMs or EDs and no contract shall be denied validity or enforceability on the sole ground that it is in the form of an EDM or ED, or that any or all elements required under existing laws for the formation of the contracts is expressed, demonstrated and proved by means of EDMs or EDs
Loyola v CA
LEGAL RECOGNITION of ELECTRONIC SIGNATURES Sec. 8 Equivalent to signature on a written document is proved that a prescribed procedure, not alterable by the parties interested in the ED, existed under which o Method used to identify party sought to be bound and to indicate said partys access to the ED necessary for his consent or approval through the electronic signature o Said method is reliable and appropriate for the purpose for which the ED was generated or communicated, in the light of all circumstances, including any relevant agreement o It is necessary for party sought to be bound, in order to proceed further w the transaction, to have executed or provided the electronic signature o Other party is authorized and enabled to verify the electronic signature and to make the decision to proceed w the transaction authenticated by the same PRESUMPTION o ES is the signature of the person to whom it correlates o ES was affixed by that person w the intention of signing or approving the ED unless the person relying on the electronically signed ED knows or has notice of defects in or unreliability of the signature or reliance on the ES is not reasonable under the circumstances
REQUISITES 1. Outward declaration of will different from will of the parties 2. False appearance must have been intended by mutual agreement 3. Purpose is to deceive third persons ACTION TO SET UP NULLITY May be set up by third persons whose interests are directly affected thereby IMPRESCRIPTIBLE Accion Pauliana o Available when subject matter is a conveyance, otherwise valid, undertaken in fraud of creditors.
CONSUMMATION of ELECTRONIC TRANSACTIONS Deemed consummated upon: o Actual dispensing of cash o Debit of one account and corresponding credit to another Whether initiated by depositor or authorized collecting party ELECTRONIC COMMERCE in CARRIAGE OF GOODS Includes but not limited to: Furnishing marks, number, quantity, or weight of goods; stating or declaring value of goods; issuing receipt for goods; and confirming goods have been loaded Notify person of terms and conditions of contract; giving instructions to carrier Claiming delivery of goods; authorizing release of goods; giving notice of loss of or damage to goods Any other notice/statement in connection w performance of contract Undertaking to deliver goods to named person or person authorized to claim delivery Granting, acquiring renouncing surrendering, transferring or negotiating rights in goods Acquiring or transferring rights and obligations under contract
TRANSPORT DOCUMENTS a. b. c. Subject to (c) law requires action referred be carried out in writing or by using a paper, it is met if carried out using EDMs or EDs (a) applies whether requirement therein is an obligation or whether law simply provides consequences for failing either to carry out action in writing or to use a paper document Right to one person only, law requires it to be conveyed by virtue of a paper document, this is satisfied when through use of EDMs or EDs (Provided, reliable method is used to render such EDMs or EDs unique)

Minds As To The Price, Despite The: Katrina Veronica Raymundo For The Best Block in Da World

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Minds As To The Price, Despite The: Katrina Veronica Raymundo For The Best Block in Da World

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CHAPTER 1 GENERAL PRINCIPLES A. Art. 1458.

A contract of sale may be absolute or conditional.

Elements of a contract of sale

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Contract for a Piece of Work

Celestino Co & Co v Collector

Commissioner v Engineering Equipment and Supply Co.

B. SALE DISTINGUISHED FROM OTHER CONTRACT

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AGENCY TO BUY OR SELL

Lo v KJS Eco-Formwork System Phil

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II. PARTIES TO A CONTRACT OF SALE

Senility and Serious Illness

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Phil Trust Co. v Roldan

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Gan Tingco v Pabinguit

III. SUBJECT MATTER OF SALE

Must be Possible Thing

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Melliza v City of Iloilo

SALE OF UNDIVIDED INTEREST OR SHARE

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SALE OF THINGS IN LITIGATION

National Grains Authority v IAC, 1989.

Johannes Schuback v CA, 1993

IV. PRICE AND OTHER CONSIDERATION

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Vda de Catindig v Heirs of Catalina Roque

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Toyota Shaw v. CA (1995)

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RIGHT OF FIRST REFUSAL

MUTUAL PROMISES TO BUY AND SELL

Equatorial Realty v Mayfair

PERFECTION STAGE: OFFER AND ACCEPTANCE

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WHEN DEVIATION ALLOWED

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Inigo v Estate of Maloto

Baretto v Manila Railroad Co

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WHEN SALE COMPLETELY SIMULATED

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