LAW on SALES To be a valid sale, it must have:

(1) Consent – There must be a clear agreement between

ART. 1458 By the contract of sale one of the seller and buyer.
contracting parties obligates himself to  Both must have the legal ability (or capacity) to
transfer the ownership of and to deliver a enter into a contract.
determinate thing, and the other to pay  No consent = no sale.
therefor a price certain in money or its  Payment or acceptance of payment is a sign of
equivalent. consent.
A contract of sale may be absolute or  In some cases (like expropriation or foreclosure),
conditional. sale can happen even without the owner's will.
 If the item is conjugal (owned by both spouses),
What is a Contract of Sale? both spouses must agree to the sale.
Under Article 1458, a contract of sale is an agreement (2) Object (Thing Sold) – What is being sold must be:
between two parties where:  Specific or identifiable (called “determinate”).
 One party (called the seller or vendor) agrees to:  Can be real or personal property (e.g., land, car,
o Transfer ownership of something (a laptop, etc.).
specific item or thing)  If the buyer and seller do not agree on what is
o And deliver it to the buyer. being sold, there’s no sale.
 The other party (called the buyer or vendee)  Incorporeal rights (like credit or shares) can also
agrees to: be sold under certain rules.
o Pay a fixed price in money or something (3) Cause or Consideration (Price) – This is the money or
that is equivalent to money (e.g., check, money equivalent the buyer agrees to pay.
promissory note).  Must be a real, agreed amount.
 Can be paid in cash, check, promissory note, or
Kinds of Contract of Sale something valued in money.
 Absolute Sale – No conditions. As long as there’s  Cannot be imaginary or fake; otherwise, the sale is
consent, object, and price, the sale is binding. void.
 Conditional Sale – There are conditions to be  If the transaction appears to be a sale but has no
fulfilled (e.g., payment over time, clearance of title, real price, it might be a donation instead.
etc.). ❌ Without any one of the above elements, there is no valid
contract of sale.
Key Concepts Explained
1. Concept of Contract of Sale 🧾 Examples and Case Notes
 It is a mutual agreement where:  If there is only an offer but no acceptance, no
o The seller commits to deliver a thing, contract exists.
o The buyer commits to pay a price.  A person cannot deny a sale after accepting
payment.
 The sale of land needs proper description and
2. Characteristics of a Contract of Sale
matching of title and actual property.
A contract of sale has these features:
 A title can be corrected by court if it doesn't
1. Consensual – It becomes valid once both parties
match what was really sold.
agree, no need for writing or delivery yet.
2. Bilateral – Both parties have obligations:
o Seller: deliver and transfer ownership. Natural and Accidental Elements of a Contract of Sale
o Buyer: pay the price. When we talk about a contract of sale, we focus mainly on
3. Onerous – It involves exchange of value (thing vs. the essential elements — without them, the sale does not
money). exist. But there are also other elements, called natural and
4. Commutative – The values exchanged are accidental, which we should understand:
supposed to be equal.
o But it may be aleatory (based on chance), 1. Natural Elements
like buying a lottery ticket (a “sale of a These are features of a sale that the law assumes are part of
hope”). the contract even if the parties don’t specifically agree to
5. Nominate – It has a specific name: “sale”, as them, unless they clearly agree to remove or change them.
recognized by law.
6. Principal – It stands on its own; it is not 2. Accidental Elements
dependent on another contract to be valid. These are optional parts of a sale contract. They are not
required but can be added based on the agreement of the
3. Essential Elements (Requirements) of a Sale parties.
 Important: The condition must be clearly stated in the
Effect of No Price or Nonpayment of Price contract. If not, courts might still treat the sale as absolute.
(1) No price = No sale
A contract of sale requires a price. If there is no real price B. Other Classifications
(i.e., no actual payment or promise to pay), then: You can also classify sales based on:
 The contract is void.  Nature of the object: Real or personal property;
 It is considered as nonexistent. tangible or intangible.
 It might be treated as a donation or another type  Manner of payment: Full cash, or in installments.
of contract, but not a sale.  Validity: Valid, rescissible (valid but can be
(2) Non-payment after agreement = breach cancelled due to injury to a party), unenforceable
If the buyer agreed to pay but fails to do so, the sale is (lacking legal formality), or void (no legal effect).
valid but the seller can:
 Rescind (cancel) the contract, or 🔹 1. Contract of Sale vs. Contract to Sell (with Reserved
 Demand specific performance (force the buyer to Title)
pay), based on Article 1191. Contract to Sell (with
But failure to pay on time does not automatically cancel Aspect Contract of Sale
reserved title)
the sale unless:
Ownership passes
 The contract says payment on time is essential. Ownership is retained
to the buyer upon
 The seller takes legal action to cancel the contract. Transfer of by the seller until full
delivery, even
Ownership payment of the price is
without full
Transfer of Title Is the Essence of Sale made.
payment.
The core idea of a sale is that ownership (title) of
Non-payment is a Non-payment is the
property is transferred from the seller to the buyer in
Effect of resolutory non-fulfillment of a
exchange for a price.
Non- condition – seller suspensive condition –
 Actual payment or delivery is not needed to
payment may rescind or seller has no obligation
perfect the sale (it becomes binding when both
compel payment. to transfer ownership.
parties agree).
Legal Seller must file for Seller may eject buyer
 However, ownership passes only when the thing
Remedy of rescission in court without need to rescind
sold is actually delivered, unless agreed otherwise.
Seller (Art. 1191, 1592). – no sale was perfected.
In some cases, the contract may be void if it becomes
impossible to deliver what was sold (e.g., if someone else Usually with
Even with possession,
has already taken ownership). delivery, buyer has
Possession ownership is withheld
possession and
until full payment.
ownership.
Illegal or Fake Sales (Futures Contracts)
If the sale is not truly intended to transfer ownership (e.g., Executory
Conditional obligation;
it’s just betting on price changes), then: (obligation to
Nature of seller's obligation to sell
 It's not a genuine sale. deliver) becomes
Obligation becomes demandable
 It may be considered illegal gambling and void by fulfilled upon
only after payment.
law. delivery.
Generally shifts to Risk of loss remains
Kinds of Contract of Sale Risk of Loss buyer upon with seller until
A. Based on Conditions delivery. ownership passes.
(a) Absolute Sale
 No conditions. 🔹 2. Contract to Sell vs. Conditional Sale
 Title passes to the buyer upon delivery. Contract to
Aspect Conditional Sale
 Even if the contract is called “conditional,” it is Sell
still absolute if: No present
o There is no clause that reserves title for consent to
the seller. There is present consent, but
transfer
o There is no right for the seller to cancel the effectivity of the sale
Consent ownership; only
automatically if the buyer doesn’t pay. depends on a future
a promise to
(b) Conditional Sale condition.
sell upon
 Sale depends on a future event (like full payment condition.
or a specific action). Ownership Even after full Once the suspensive
 Title passes only if the condition is met. Transfer payment, condition is fulfilled,
 Example: Seller agrees to sell a house only if ownership does ownership transfers
buyer gets bank financing.
 Contract to 2. The seller must have the right to transfer
Aspect Conditional Sale
Sell ownership at the time of delivery (not necessarily
not transfer at the time of contract perfection).
automatically.
automatically, especially if
A separate deed 1. Requisite: The Thing Must Be Licit
possession was delivered.
(absolute sale)  What this means:
is still needed. The object of the sale must be lawful—not
Contract to sell contrary to law, morals, good customs, public
Legal order, or public policy.
becomes
Effect of Contract becomes absolute;  Consequences if not met:
demandable;
Fulfillment seller no longer owns the If the object is illicit, the contract is void ab initio
seller must now
of property. and cannot be ratified. The Civil Code provides
sell and execute
Condition guidance on the effects depending on whether the
deed.
Third party may cause is criminal (Art. 1411) or civil (Art. 1412).
Sale to still acquire Third party cannot claim title  Illicit objects can be:
Third ownership as if condition already fulfilled – o Illicit per se – inherently unlawful (e.g.,
Party no perfected title is with buyer. spoiled food, illegal drugs).
sale exists yet. o Illicit per accidens – rendered unlawful
by law or circumstances (e.g., land sold to
Remedy of Only damages
Reconversion/reconveyance aliens).
Buyer if can be claimed;
of title is possible; buyer has  Legal implications:
Seller Sells no
equitable ownership. o If both parties are at fault, neither can
to Another reconveyance.
recover anything (in pari delicto).
o If only one is at fault, the innocent party
🔹 Other Instances of Contract to Sell
may recover what was given.
1. Indeterminate Object or Uncertain Price
o If subject matter is not determinate or
Right to Transfer Ownership at Time of Delivery
price is uncertain, the agreement is not
perfected – it is a contract to sell. 1. Must Be the Owner or Authorized
o Cases: Yu Tek vs. Gonzales; Ong & Jang  A person must own the thing or be authorized by
Chuan vs. Wise & Co. the owner to sell it.
 Legal principle: "nemo dat quod non habet" –
2. Sale of Future Goods
You can't give what you don't have.
o Treated as contract to sell, as the seller  If the seller doesn’t own it or isn’t authorized, the
cannot transfer ownership of something sale is invalid.
that doesn’t yet exist.
2. Right Must Exist at Delivery (Not at Signing)
o Art. 1462, Civil Code
 The law does not require the seller to own the item
3. Deed to be Issued Upon Full Payment when the contract is made.
o If the contract states that deed of sale will  Ownership must exist at the time of delivery.
be executed only after full payment, it is  This is because:
a contract to sell. o The sale of future goods is valid.
o Case: David vs. Tiongson o A person might be waiting for ownership
(e.g., court ruling), and the contract is still
4. Possession with No Title Transfer
valid as long as they can deliver it later.
o If buyer takes possession, but title is
expressly retained, this may still be a 3. Fraudulent Title and Innocent Buyers
contract to sell, unless intention is shown  Even if a title was obtained through fraud or
otherwise (e.g., Dignos case where forgery, an innocent buyer who relied on a clean
title is still protected.
delivery implied absolute sale).
 The Torrens system (land title system in the
Philippines) protects buyers who buy in good faith
and for value, based on the face of the certificate.
ART. 1459. The thing must be licit and the vendor The original owner’s remedy is to:
must have a right to transfer the ownership  Sue the fraudulent person for damages.
 If that person is insolvent, go to the Assurance
thereof at the time it is delivered. (n)
Fund (government compensation).

This provision of the Civil Code emphasizes two key 4. Violation of Right of First Refusal
requisites for a valid contract of sale  If a person has the right of first refusal (they
should be offered the sale first), and the seller
regarding the object (thing sold):
ignores that:
1. The thing must be licit (lawful).
 o The sale is valid, but rescissible (can be ART. 1461. Things having a potential existence may
cancelled). be the object of the contract of sale.
o If the buyer acted in good faith, the sale The efficacy of the sale of a mere hope
might stand, but the injured party can still or expectancy is deemed subject to the
claim damages.
condition that the thing will come into
5. Unregistered Sale vs. Registered Mortgage existence.
 If a buyer purchases property and doesn’t register The sale of a vain hope or expectancy is
the sale, but the seller later registers a mortgage void. (n)
over it:
o The buyer’s earlier (but unregistered)
This article talks about whether something that does not
sale prevails over the later mortgage.
o Why? Because the seller no longer owns it yet exist can be sold. The answer is: Yes, but only if there is
at the time of the mortgage. a real chance (a potential) that the thing will exist in the
future.

🔸1. What is a thing with "potential existence"?

ART. 1460. A thing is determinate when it is It is something that does not yet exist, but is expected to
particularly designated or physically exist later, because:
segregated from all others of the same class.  It naturally comes from something the seller
The requisite that a thing be already owns, or
determinate is satisfied if at the time the  It is reasonably certain to happen.
contract is entered into, the thing is capable 🟢 Examples of valid "potential existence":
of being made determinate without the  Grapes that a vine will grow next season.
necessity of a new or further agreement  Rice that a specific field is expected to produce.
between the parties. (n)  Milk a cow may yield this year.
 Fish from the next cast of a fishing net.
In a contract of sale, the thing (object) being sold must be  Wool that will grow on a sheep.
clearly identified. This is to avoid confusion and disputes.  Goodwill or customer base of a running business.
The law calls this kind of thing "determinate." 📌 These are valid because they are tied to something that
already exists (e.g., the vine, the field, the cow, etc.).
🔹 What is a “determinate thing”?
A determinate thing is: 🔸2. What about "mere hope or expectancy"?
 Specifically named or identified, OR This refers to when the object of sale does not yet exist,
 Separated physically from similar items. and the parties are simply hoping that it will exist.
There are two kinds:
🔹 What is a “generic thing”? ✅ a. Valid "mere hope or expectancy"
A generic thing refers only to a kind or class, not a specific This is when the hope is real — there’s a reasonable
item. chance the thing will come into existence.
 The sale is subject to a condition: if the thing
appears, the sale is effective. If it doesn’t, no
🔹 When is a thing considered “sufficiently determinate”?
payment is required.
Even if the item is not specifically identified at the moment
 This is called emptio rei speratae (Latin for "sale
the contract is made, it is still valid if:
of a thing hoped for").
 The thing can be made determinate later, and
 This does NOT require a new or further ❌ b. Invalid (Vain) Hope or Expectancy
agreement. This is when the hope is unrealistic or impossible from the
In short: The identity, quantity, or quality of the item must beginning.
already be definable based on the original agreement.  If the thing has no chance of existing, then the sale
is void (legally non-existent).
 This protects buyers from being tricked into buying
something that can never exist.
🔹 Why is this important?
Because no valid contract can exist without a clear object. 🔸3. Emptio Rei Speratae vs. Emptio Spei
If the item being sold is not determinable, the contract is: These are Latin legal terms used to describe the two types
 ❌ Void under Article 1409 (specifically clause 3). of sales involving future things:
 This means it has no legal effect at all. Emptio Rei
Concept Emptio Spei
Speratae
Meaning Sale of a thing Sale of the hope
 Emptio Rei  Manufacture them (e.g., bottles to be made with
Concept Emptio Spei
Speratae the buyer’s name),
expected itself  Raise them (e.g., crops yet to be harvested or
animals to be raised),
The thing that
The hope of  Acquire them (e.g., land the seller plans to buy and
Object of sale may come into
obtaining the thing then sell to the buyer).
existence
These are called “future goods”.
Effect if thing Sale is not Sale is still valid —
doesn’t exist effective buyer still pays
🔸 Can you sell future goods?
"I will sell you the "I sell you the
Yes, but:
Example rice my field chance to win from
A sale of future goods is not considered a completed sale
produces" this ticket"
at the time the contract is made. Instead, it is considered a
Based on the Based on the hope, promise to sell and deliver the goods later, once the seller
Condition existence of the even if the thing gets or makes them.
thing never exists This kind of sale is called an executory contract — a
Only applies if contract that will only be fulfilled in the future.
Presumption (in Courts presume
parties clearly 📝 Key Point: If the seller doesn’t yet own the item, they
case of doubt) this applies
intended it cannot transfer ownership right away — because they don’t
have it yet.
🔸5. Legal Presumption:
If there’s doubt whether the parties meant to sell the actual 🔸 What if the seller’s acquisition depends on a
thing or just the hope, the law assumes they meant to sell the “contingency”?
thing expected to exist (emptio rei speratae). A contingency is something that may or may not happen.
This protects buyers and keeps the sale fair, since contracts Article 1462 allows a sale even when the seller’s ability to
are usually commutative — meaning both parties are get the goods depends on a chance event, like:
supposed to give and get something of value.  A seller planning to buy a certain parcel of land and
then resell it,
 A fisherman selling fish from a future catch that
ART. 1462. The goods which form the subject of a may or may not succeed.
contract of sale may be either existing This is legal, but risky for the seller.
goods, owned or possessed by the seller, or 💡 If the seller fails to acquire the goods, they might:
goods to be manufactured, raised, or  Be unable to fulfill the contract, and
acquired by the seller after the perfection  Be liable to the buyer for damages if the buyer
of the contract of sale, in this Title called loses something because of it.
“future goods.”
There may be a contract of sale of 🔸 Special Rule: When it’s not a “sale” but a contract for
goods, whose acquisition by the seller “work”
depends upon a contingency which may or If the goods are going to be custom-made especially for the
may not happen. (n) buyer (e.g., milk bottles with the buyer’s brand), and they
can’t be easily sold to others, then this is not a regular sale.
This article explains what kinds of goods (things or Instead, it is a contract for a piece of work (See Article
property) can be the subject or object of a contract of sale. 1467).
It tells us that a seller can legally sell: 🛠 Example:
✅ 1. Existing Goods  A manufacturer agrees to make 10,000 jars with a
Goods that already exist at the time of the contract and are specific logo for a business.
either: Since those jars are customized and not useful to
 Owned by the seller, or others, this is not a sale of goods but a contract to
 Possessed (held or controlled) by the seller. do work.
Examples:
 A laptop the seller already owns. 🔸 Not Covered: Speculative or "Futures" Contracts
 A car the seller is currently using. Article 1462 does not apply to transactions where:
 A batch of rice already harvested.  There is no real intention to deliver the goods,
and
✅ 2. Future Goods  The parties are just betting on price movements
Goods that do not yet exist at the time the sale is made, but (like in gambling).
the seller plans to:
These are called “futures contracts”, and if they are done  But only has rights to their proportionate share,
just to speculate — without delivery — they are considered not the entire thing.
void under Article 2018 of the Civil Code.
🎰 Example: 📝 Important Rules:
 Two people agree that one will pay the other ✅ 1. Sale may be in portions or shares
depending on whether the price of rice goes up next The sole owner can:
month, but no rice is ever delivered or sold.  Sell the entire thing,
This is a form of gambling and is not valid.  Sell a specific physical portion (like the back half
of a lot), or
✅ Summary of Key Points:  Sell an undivided interest (like 1/3 of the total
Is It a Valid ownership).
Type of Goods Description
Sale? The last option is what Article 1463 talks about.
Already owned or
possessed by ✅ Yes, valid ✅ 2. Buyer becomes co-owner
Existing goods
seller at contract sale Once the sale is made:
time  The buyer becomes a co-owner,
To be made, ✅ Yes, but sale  The co-ownership continues until the thing is
raised, or is executory (to physically divided or partitioned.
Future goods
acquired after be fulfilled Until then, the buyer’s right is only to an ideal share, not to
contract later) any specific part of the property.
Valid if there's a
Goods dependent on a ✅ Yes, seller
real possibility of ✅ 3. Buyer can sell their share
contingency assumes risk
acquiring them As a co-owner, the buyer can:
Treated as a ✅ Yes, but  Sell their undivided share to someone else,
Custom goods not  But cannot sell more than the share they own.
contract for under different
saleable to others This is covered under Article 493 of the Civil Code.
work, not a sale legal rules
Speculative/futures
Just betting on ❌ No, void
contract with no intent ✅ 4. Applies to fungible goods too
price movements under the law
to deliver “Fungible goods” are things that can be measured,
counted, or weighed, and are interchangeable (e.g., rice,
sugar, oil).
The rule in Article 1463 also applies to these. A person can
ART. 1463. The sole owner of a thing may sell an
sell a portion (like 100 kilos) without specifying the exact
undivided interest therein. (n)
grains or units, and the buyer will be co-owner of the bulk
until the goods are divided.
Even if a person owns a thing completely (they are the sole
owner), the law allows them to sell just a part of it — not
necessarily a specific physical portion, but an undivided ART. 1464. In the case of fungible goods, there may
interest. 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
🧩 What is an “undivided interest”?
measure of the goods in the mass, and though
An undivided interest means the part being sold is not
the number, weight or measure of the goods in
separated physically. Instead, it is a share or portion of
the mass is undetermined. By such a sale the
the whole thing, without identifying which part.
buyer becomes owner in common of such a
📌 Think of it like owning a slice of a pie without picking
share of the mass as the number, weight or
which slice — you simply own a percentage of the whole
measure bought bears to the number, weight
pie.
or measure of the mass. If the mass contains
less than the number, weight or measure
🧑‍🤝‍🧑 What happens after the sale? bought, the buyer becomes the owner of the
When a sole owner sells an undivided share, the buyer whole mass and the seller is bound to make
becomes a co-owner with the seller. good the deficiency from goods of the same
The buyer: kind and quality, unless a contrary intent
 Owns a part of the thing (like 1/2, 1/3, or 1/4, appears. (n)
etc.),
 Can exercise rights as a co-owner (e.g., use,
possess, or sell their share),
This article deals with a special kind of sale involving
fungible goods — things that are interchangeable or ✅ 7. Can This Apply to Non-Fungible Goods?
uniform, such as rice, flour, oil, gasoline, sugar, or grain. Yes, sometimes.
In this kind of sale: Even though Article 1464 says "fungible goods," courts
 The seller owns a bulk or mass of these goods. have applied the same principle to goods not strictly
 The buyer purchases a portion of that bulk (e.g., fungible, like:
100 kilos of sugar from a 1,000-kilo pile).  Barrels of flour
 But that portion is not separated yet — it is still  Bales of cotton
part of the undivided whole.  Herds of cattle or flocks of sheep
This is called the sale of an undivided share of a specific In these cases, the parties treated the items as if they were
mass. uniform or interchangeable, so the rule still applied.
🧠 Why? Because what's important is not whether the items
🧾 Key Concepts Explained are truly identical, but whether the parties treated them
✅ 1. Fungible Goods that way in the sale.
These are goods where one unit is equal in value and
quality to another. They can be counted, measured, or
weighed. ✅ Summary Table
Key Point Explanation
✅ 2. Undivided Share of a Specific Mass Uniform, interchangeable goods like
The buyer purchases a portion of a larger mass, but the Fungible goods
rice or oil
actual goods are not yet separated.
Buyer gets a proportion of a larger
Undivided share
mass
✅ 3. Effect of the Sale Ownership Buyer becomes co-owner immediately
When this type of sale happens:
If there’s a Buyer gets whole remaining mass,
 The buyer immediately becomes co-owner of the
shortage seller makes up for the rest
mass in proportion to what they bought.
 The actual goods don’t need to be separated right Risk of loss Shared according to ownership shares
away. Applies to non-
Yes, if treated as fungible by the parties
 Ownership transfers even if the specific sacks, fungibles?
liters, or kilos aren’t yet identified. Sale of a right, not yet of specific
Legal nature
goods
✅ 4. What if the Mass Has Less than What Was Sold?
If it turns out that the mass has less than the amount sold,
then: ART. 1465. Things subject to a resolutory condition
 The buyer becomes the owner of the entire may be the object of the contract of sale. (n)
remaining mass.
 The seller must make up for the shortage using 🔍 What Is a Resolutory Condition?
goods of the same kind and quality, unless the A resolutory condition is a type of condition in a contract.
contract says otherwise. It means:
 There is an uncertain future event,
✅ 5. Risk of Loss  If that event happens, the right or obligation will
Since the buyer is now a co-owner of the mass: end (or be extinguished).
 If the goods are damaged or lost, each party (seller 📌 In simple terms:
and buyer) bears the risk based on their share. You can own or sell something for now, but if a certain
 Example: if a fire destroys half the mass, both event happens later, you lose that right.
seller and buyer lose half of their respective shares.
✅ What Does This Article Mean?
✅ 6. The Sale is of a Right, Not a Physical Portion Yet Even if a thing (or right) is subject to a resolutory
In this kind of sale, the subject matter is not physical sacks, condition, it can still be sold.
liters, or barrels — it’s an incorporeal right (a share or  The buyer gets the thing, but only for as long as
claim to part of a mass). That means: the condition hasn’t happened.
 Ownership is based on intention and agreement,  If the condition happens later, the sale is
 Actual physical separation isn’t needed for automatically canceled, and the buyer loses the
ownership to begin. thing.
✅ How It Works in Law:
1. The object (thing or right) must exist at the time
of the sale, even if it may later be lost or canceled
due to the condition.
2. Ownership or right is transferred, but only
temporarily — it is subject to being lost later if
the condition is fulfilled.
3. If the condition happens, ownership or the right is
extinguished, and the seller is no longer able to
transfer or keep it.
🧠 In legal terms:
“The right acquired is real, but it is not permanent.”

📝 Summary Table
Key Concept Explanation
A future, uncertain event that ends an
Resolutory
existing right or obligation when it
condition
happens
Yes, even if the thing is subject to a
Sale is valid?
resolutory condition
Effect if condition Ownership or right is extinguished;
happens buyer loses the thing or right
Can this apply to Yes, not just physical things but also
rights too? legal rights can be sold under this article