NOTES ON SALES
Important definitions in Sales
Prince Jan Ronald D. Wacnang
Saint Louis University School of Law
14 June 2017
I. INTRODUCTION TO SALES
A. Review of Contracts
Concept of a contract
Article 1305. A contract is a meeting of minds
between two persons whereby one binds himself,
with respect to the other, to give something or to
render some service. (1254a)
Freedom to contract; General limitations
Article 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)
Essential Requisites of Contracts
Article 1318. There is no contract unless the
following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of
the contract; [and]
(3) Cause of the obligation which is established.
(1261)
(see notes under Art. 1458 in application to Sales)
Form of contracts
Article 1356. Contracts shall be obligatory, in
whatever form they may have been entered into,
provided all the essential requisites for their validity
are present. However, when the law requires that a
contract be in some form in order that it may be valid
or enforceable, or that a contract be proved in a
certain way, that requirement is absolute and
indispensable. In such cases, the right of the parties
stated in the following article cannot be exercised.
(1278a)
B.
1. Contract of Sale
Article 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)
Essence of Sale Transfer of Ownership
The very essence of a contract of sale is the
transfer of ownership in exchange for a price paid or
promised. (Ace Foods, Inc. v. Micro Pacific
Technologies Co., Ltd., G.R. No. 200602, 11 December
2013)
Characteristics of Sale
The contract of sale is consensual, bilateral,
onerous, commutative (although in some cases it may
be aleatory), nominate, and principal.
(1) Consensual perfected by mere consent without
any further act.
(2) Bilateral both contracting parties are bound to
fulfill obligations reciprocally towards each other
the seller, to deliver and transfer ownership of
the thing sold and the buyer, to pay the price.
It gives rise to reciprocal obligations between
seller and buyer, since each party assumes
obligations conditioned upon those of the other,
and the obligation of both are derived from a
common origin the perfected contract. (5
Tolentino 1 citing Ramirez v. Court of Appeals, 52
O.G. 779)
(3) Onerous the thing sold is conveyed in
consideration of the price and vice versa.
(4) Commutative the thing sold is considered the
equivalent of the price paid and By an aleatory
vice versa.
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2
However, the contract may be aleatory as in
the case of emptio spei (sale of hope), e.g.,
sweepstakes ticket.
By an aleatory contract, one of the parties
or both reciprocally bind themselves to give
or to do something in consideration of what
the other shall give or do upon the happening
of an event which is uncertain, or which is to
occur at an indeterminate time. (Art. 2010)
(5) Nominate the contract is given a
designation in the Civil Code, namely Sale.
(6) Principal it does not depend for its
existence and validity upon another contract.
(H. De Leon, The Law on Sales, Agency and
Credit Transactions [2010], pp. 1-2)
Essential requisites of contact as applied to
Sales
(1) Consent refers to the consent on the part of
the seller or vendor to transfer and deliver on
the and on the part of the buyer or vendee to
pay (Art. 1458)
Parties must have legal capacity to give
consent and obligate themselves. (see Arts.
1489-1491)
If the option is given without a
consideration, it is a mere offer of a contract
of sale, which is not binding until accepted. If,
however, acceptance is made before a
withdrawal, it constitutes a binding contract
of sale, even though the option was not
supported by a sufficient consideration
(Sanchez v. Rigos, G.R. No. L-25494 , 14 June
1972)
The rule is that except where a formal
acceptance is so required, although the
acceptance must be affirmatively and clearly
made and must be evidenced by some acts or
conduct communicated to the offeror, it may
be made either in a formal or an informal
manner, and may be shown by acts, conduct,
or words of the accepting party that clearly
manifest a present intention or
determination to accept the offer to buy or
sell. Thus, acceptance may be shown by the
acts, conduct, or words of a party recognizing
the existence of the contract of sale. (Robern
Development Corporation v. People's Landless
Association, G.R. No. 173622, 11 March 2013)
For instance, the acceptance of payment by
the seller is an indication of his consent to a
contract of sale.
However, there may be a sale against the
will of the owner as in the case of
expropriation of property, execution sale to
enforce a judgment of a court, and
foreclosure sale of mortgage or pledged
property.
(2) Object refers to the determinate thing
which is the object of the contract (Art. 1458)
The thing must be determinate or at least
capable of being made determinate because
if the seller and buyer differ with regard to
the thing sold, there is no meeting of minds;
therefore, there is no sale.
The subject matter may be real or personal.
The thing must be licit and the vendor must
have a right to transfer ownership thereof at
the time it is delivered. (Art. 1459) Hence, the
object of a valid sales contract must be
owned by the seller. If the seller is not the
owner, the seller must be authorized by the
owner to sell the object. (Cabrera v. Ysaac,
G.R. No. 166790, 19 November 2014)
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3

(1) Natural elements those which are deemed

(3) Cause refers to the price certain in money
or its equivalent (Art. 1458) such as a check
or a promissory note, or the assumption by
the buyer of the mortgage debt of the seller,
which is the consideration for the thing sold.
It does not include goods or merchandise
and other things although they have their
own value in money.
Technically, the cause in sale is, as to the
seller, the buyers promise to pay the price,
and as to the buyer, the sellers promise to
deliver the thing sold. (H. De Leon, supra. at
pp. 2-3)
Contract of Sale compared to Agency to Sell
to exist in certain contracts, in the absence of
any contrary stipulations like warranty
against eviction (Art. 1458) or hidden defects
(Art. 1561).
(2) Accidental elements those which may be
present or absent depending on the
stipulations of the parties, like conditions,
interest, penalty, time or place of payment,
etc. (H. De Leon, supra. at p. 3-4)
Wholesale and Retail Sale, Distinguished
To distinguish between wholesale and 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.

The decisions say the transfer of title or

If it be for resale at a profit, the goods being
agreement to transfer it for a price paid or
unaltered when resold, the quantity of the goods
promised is the essence of sale. If such transfer
sold being large, not to be used by the purchaser
puts the transferee in the attitude or position of
or in excess of the requirements of his business
an owner and makes him liable to the transferor
and the merchant selling the goods being
as a debtor for the agreed price, and not merely
habitually engaged in the sale of such goods in
as an agent who must account for the proceeds of
large quantities to his customers, then it may be
a resale, the transaction is a sale; while the
deemed wholesale, otherwise, it is retail. (5
essence of an agency to sell is the delivery to an
Tolentino 2)
agent, not as his property, but as the property of
the principal, who remains the owner and has
CASES ON THE CONTRACT OF SALE:
the right to control sales, fix the price, and terms,
demand and receive the proceeds less the agent's
Filinvest Credit Corp. v. Court of Appeals,
commission upon sales made. (Commissioner of
178 SCRA 188 (1989).
Internal Revenue v. Constantino, G.R. No. L-25926,
27 February 1970 citing Salisbury v. Brooks, 94 SE
Contracts in the form of lease with an option
117, 118-119)
to the buyer to purchase for a small
consideration at the end of the term provided all
Natural and accidental elements
installments are paid, with a stipulation that if
the rent throughout the term is paid title shall
These elements have to be distinguished from
vest in the lessee, are leases in name only.
the essential elements without which the
Contracts of this nature are actually contracts of
contract of sale cannot validly exist.
sale. (as summarized in 5 Tolentino 2)
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Spouses Herrera v. Caguiat,

G.R. No. 139173, 28 February 2007.

Nabus v. Pacsan,
G.R. No. 161318, 25 November 2009.

Reyes v. Tuparan,
G.R. No. 188064, 1 June 2011.

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