SALES Chapter 1: The Nature of Sale Even if consensual, not all contracts of sale become automatically and immediately

y effective (9) Test of COMMUTATIVENESS is not objective but rather SUBJECTIVE; so long as the party believes in all honesty that he is receiving value for what he transferred (12) however the subjective test must not be pushed to absurdity Waiver of right to inheritance in favor of 3rd party is not a proper mode and does not affect title (15) Perfection does NOT affect the OWNERSHIP not effect the TRANSFER thereof to the buyer Celestino Co v CIR: Special order is not one of timing or habit but actually must be drawn from the nature of the work to be performed and the products to be made. Products must not be ordinary products to be made but those that would require extraordinary skills or equipment CIR V Engineering Equipment and Supply: abandons the timing application and adopts the test of necessity -the core test is that each product must be unique and always different from other orders that it cannot be mass produced If the essence is the OBJECT, irrespective of the party giving it = SALE If the essence is the SERVICE, KNOWLEDGE or even REPUTATION of the person who executes it = PIECE OF WORK Warranties of PoW same as sale Lo v KJS Eco Framework: DACION EN PAGO partakes of the nature of the sale. As such, the vendor in good faith shall be responsible for the existence and legality of the credit at the time of the sale Execution by the borrower-mortgagor of dacion en pago over the mortgaged property in favor of the lender-mortgagee effectively constitute a waiver by the mortgagor-transferor of the redemption period normally given to a mortgagor CONDITIONAL SALE may be made in the form of a lease with option to buy to circumvent Recto Law.

Chapter 2: Parties to a Contract of Sale In order for the sale of necessaries to minors may be valid and not merely voidable, two elements must be present: 1. Perfection of the sale 2. Delivery of the subject necessaries Paragas v Heirs of Dominador Balacano: a sale executed by one who is already of advanced age and senile to be null and void Sales between spouses = VOID and can be assailed by: 1. Heirs who are prejudiced 2. State 3. Creditors prior to sale EXCEPT: Judicial separation of property/ Complete separation Donations between spouses = VOID Art. 1491 EXCEPT FOR AGENT; in all cases covered under article 1491, consent or knowledge by the persons who is sought to be protected by the law, cannot validate any of the transactions covered. Rubias v Batiller: those prohibited by law are VOID contracts not merely voidable. Thus, purchaser by a lawyer of the property of a client in litigation, in which the purchasing lawyer appeared as counsel of record is VOID Contracts entered into by guardians, agent, executors and administrators can be ratified by executing a new contract after the causes of nullity cease Any person may invoke the non-existence of a contract whenever judicial effects found thereon are asserted against him Art. 1491 Rationale: relationship is founded on trust Phil Trust co v Roldan: even a court approved sale would not stand against the inhibition provided in Art. 1491, even without proof that 3rd party buyer is merely intermediary, the sale can be avoided Hereditary right must be included in Art. 1491 Fabillo v IAC: As long as the lawyer does not exert undue influence on his client, that no fraud is committed or imposition applied, or that the compensation is clearly not excessive as to amount to extortion, a contract for contingent fee is valid and enforceable.

Chapter 3: Subject Matter Subject Matter: 1. Possible Thing 2. Licit 3. Determinate or at least determinable Emptio Rei Speratae: contract of sale covering future thing; subject to a suspensive condition. It covers only specific/determinate things cause it if it generic it should be existing already Sale of future inheritance is void Sale of animals suffering from contagious diseases Sale of friar lands without consent of DA is void Atilano v Atilano: one selling or buys the property as he sees it in its actual setting and by its physical metes and bounds and not by the mere lot number assigned to it in the Cert of title. National Grains Authority: quantity of subject matter is not important when it is still possible to determine the quantity w/o need of a new contract between the parties and therefore complies with the requisite of being determinable Johannes Schuback: quantity is immaterial in the perfection of a sales contract. What is of importance is the meeting of the minds as to the object and cause Supply agreement: the underlying obligation of the seller and the buyer is to enter into a series of contracts of sale based thereon when they come to agree on the quantity - to do hence specific performance is not a remedy the courts therefore have the power to set the appropriate quantity of the subject matter of a sale when the same is determinable or generic contract of sale cannot be declared null and void for failure of the seller to reveal the fact that he was not the owner of the property sold.

Chapter 4: Price and other consideration Mate v CA: even when undoubtedly the price stipulated in the covering instrument is simulated the underlying sale would still be valid and enforceable provided there is another consideration to support the sale When the contract of sale is fictitious, and therefore void and inexistent, as there was no consideration for the same, no title over the subject matter of sale can be conveyed. The consideration is generally agreed upon as a whole even if it consists of several parts and even if it is contained in one or more instruments Fixing of the price CANNOT be left to the will of one party because it violates the concept of mutuality or obligatory force Fixing of price by 3rd party: valid but condition When can courts fix the price? Designated 3rd party fixes price in BAD FAITH Designated 3rd party fixes price by MISTAKE Designated 3rd party was prevented by any of the parties from fixing the price If the 3rd party is Unwilling Unable To fix the price, the court CANNOT fix price. The non-happening extinguishes the contract The designation as to the subject matter cannot be left to the will of a 3rd party because he may choose a subject matter beyond the capacity of the seller to comply with his obligation to deliver the same GR: PRICE IS DEMANDABLE AT ONCE Art. 1474: Valid even without price requisites: There was a meeting of the minds of the parties of sale and purchase as to the subject matter There was an agreement that price would be paid which fails the criteria of being certain or ascertainable There was delivery by the seller and appropriation by the buyer of the subject matter of the sale Concept of appropriation under Art. 1474 does not apply to real estate

Lesion or inadequacy of price shall not invalidate a contract, UNLESS there has been FRAUD, MISTAKE or UNDUE INFLUENCE. It may indicate defect in the consent The test of commutativeness is met when parties believe honestly that they received good value for what they have given Inadequacy of price may be a ground for setting aside an execution sale EXCEPT if it comes with buy back agreement Sale is void because illegal motive predetermined the purpose of the contract If the motive predetermines the cause, the motive may be regarded as the cause Although illegal, the motives neither determines nor takes the place of the consideration

Chapter 5: Formation of contract of sale An option to purchase attached to a contract of lease when not exercised within the original period, is extinguished and cannot be deemed to have been included in the implied renewal of the lease even under the principle of tactita reconduccion Notice of the exercise of option need not be coupled with actual payment of the price, so long as it is delivered to the owner of the property upon performance of his part of the agreement Carceller v CA: Concept of substantial compliance; failure of the offeror to comply can be a ground for specific performance