ELEMENTS OF A CONTRACT OF SALE

1. Natural – those which are deemed part of the contract even if no stipulated or even if the parties are
unaware. Deemed part of the contract by law. Example: Implied warranties
2. Accidental – Present only because the parties so stipulated. Example: Obligation to pay interest. In a
contact of sale of a parcel of land, obligation of the seller to cause the registration of the land in the name
of buyer
3. Essential – required for validity

ESSENTIAL ELEMENTS OF A CONTRACT OF SALE

1. Consent of the contracting parties.

Incapacity: consent may have been given, but the one giving it is incapacitated.

a. Absolute Incapacity – the party cannot give consent to any and all contract, which may result in the
contract being voidable or void.

Minors and those without capacity to act: may enter into a valid contact of sale of “necessaries” as provided
under art. 1489. Necessaries are those which are indispensable for sustenance, dwelling, clothing and medical
attendance.

b. Relative Incapacity – the party is prohibited from entering some specific transactions with some persons
and sometimes over specific things.

Examples of Relative Incapacity:

a. Husband and wife cannot sell property to each other, except:

I. When a separation of property was agreed upon in the marriage settlements; or
II. When there has been a judicial separation of property

Reason why generally a husband and wife cannot sell to each other:

To avoid prejudice to third persons; to prevent one spouse from unduly influencing the other; to avoid by
indirection the violation of the prohibition against donations (Art. 133 of Civil Code).

Effect of Sale

Generally, a sale by one spouse to another is void (Uy Siu Pin v. Cantollas). However, not everybody can assail the
validity of the transaction. Thus, creditors who became such after the transaction cannot assail its validity for the
reason that they cannot be said to have been prejudiced. (Cook v. McMicking, 27 Phil. 10). But prior creditors
(creditors at the time of transfer) as well as the heirs of either spouse may invoke the nullity of the sale.

When the proper party brings the sale should be declared void by the courts. (Uy Siu Pin v Cantollas) The spouse
themselves since they are parties to an illegal act, cannot avail themselves since they are parties to an illegal act,
cannot avail themselves of the illegality of the sale (In pari delicto). The law will generally leave them as they are.

Under the two (2) exception under Art. 1490, the sale is generally valid, but of course, should there be vitiated
consent (as in the case of undue influence) the sale is voidable.
b. The following persons cannot acquire by purchase (or take possession via a contract of lease), even at a public
or judicial auction, either in person or through the mediation of another:

Prohibited from acquiring by purchase Nature of property

a. Guardian The property of the ward
b. Agents The property of the principal entrusted to them for
administration or sale, unless the consent of the
principal has been given
c. Executors and administrators The property of the estate under administration
d. Public officers and employees (applies The property of the State or of any subdivision
also to judges and government thereof, or of any GOCC, or institution, the
experts who in any manner administration of which has been entrusted to them.
whatsoever, take part in the sale)
e. Justices, judges, prosecuting The property and rights in litigation or levied upon an
attorneys, clerks of superior and execution before the court within whose jurisdiction
inferior courts, and other officer and or territory they exercise their respective functions.
employees connected with the This prohibition includes the act of acquiring by
administration of justice. 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.
f. Any other specially disqualified by law Example: Aliens are prohibited by the Constitution
from acquiring lands in the Philippines, except by
succession or in case of a former natural born Filipino
citizen who has lost his citizenship.
2. Cause – as to each contracting party, the cause or consideration is the prestation or promise to be performed
by the other party. For the buyer, it is the delivery of the object, while for the seller, it is the payment of the
price.

Rules as to PRICE:
a. It must be certain
i. With reference to another thing certain, or
ii. The determination thereof be left to the judgment of a special person or persons.

Remedies in case the special person or persons is/are:

1. Acted in bad faith or by mistake – the courts may fix the price.
2. 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.

If the special person/persons be unable or unwilling to fix it – the contract shall be inefficacious, unless the
parties subsequently agree upon the price

b. 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.
c. 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:
 i. On a definite day, or
ii. In a particular exchange or market, or
iii. When an amount is fixed above or below the price on such day, or in such exchange or market,
provided said amount be certain.
d. 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.

Where the price cannot be determined in accordance with the preceding rules, 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.

3. Object – is the subject matter which may be things or rights.

Service: unlike in contracts, in general, where "service" may be the object of the contract, in sales, service
cannot be a valid subject since the purpose of contract of sale is to transfer ownership and no person acquires
ownership over service. It, may, however, be another contract, such as a lease or agency.

Rules as to Objects of Contracts of Sale:

a. It must be licit or within the commerce of men.
b. The vendor must have a right to transfer the ownership thereof at the time it is delivered.
c. It must be determinate. A thing is determinate when:
i. It is particularly designated or
ii. Physical segregated from all other of the same class.

The requisite that a thing be determinate is satisfied if at 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.

d. In the case of fungible goods, there may be a sale of an undivided share of a specific mass, even though
i. The seller purports to sell and the buyer to buy a definite number, weight or measure of the
goods in the mass, and
ii. 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 of 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 contrary intent appears.

e. It may be either 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.
 i. Emptio rei speratae - sale of future thing: must come into existence otherwise the sale will not be
effective, e.g., wine, milk, butter.
ii. Emptio spei - sale of hope itself; produces effects even if the thing hoped does not come into
existence. E.g., lotto ticket
iii. Vain Hope - the sale of vain hope is void. E.g., lotto ticket that was already drawn.

Future inheritance: however, cannot be the valid object of a contract of sale.

f. The sole owner of a thing may sell an undivided interest therein. E.g., X owns a land, he may sell even just
one-half or one-fourth of it.
g. Things subject to a resolutory condition may be the object of the contract of sale.