CIVIL LAW > VII. SPECIAL CONTRACTS > A. CONTRACT OF SALE
The Contract of Sale is governed by the provisions of the Philippine Civil Code, specifically under Articles 1458 to 1637. Below is a detailed and comprehensive discussion of the essential concepts, elements, and nuances of the contract of sale under Philippine law.
1. Definition of Sale
- Article 1458 defines a contract of sale as a contract where one of the parties (the seller) obligates himself to deliver a determinate thing, and the other (the buyer) to pay a price certain in money or its equivalent.
- Distinguishing Features:
- Bilateral: Both parties are bound reciprocally.
- Onerous: The obligation of each party is undertaken for a valuable consideration.
- Commutative: The values exchanged (thing and price) are generally of equivalent worth.
- Nominate: Recognized and regulated under the Civil Code.
2. Essential Elements
A. Consent
- Mutual agreement of the seller and buyer to the object and price.
- Consent must be free, voluntary, and not vitiated by fraud, mistake, undue influence, or intimidation.
B. Object of the Contract
- Must be a determinate thing, either existing or capable of coming into existence.
- Requisites:
- Must be licit (not contrary to law, morals, public order, or public policy).
- Must be within the commerce of men.
- Must be determinate or determinable.
- Types of Objects:
- Goods, chattels, and real property.
- Future goods can also be the object, as provided in Article 1462.
C. Price
- A certain amount in money or its equivalent.
- Requisites:
- Must be real and not fictitious.
- Must be certain or ascertainable at the time of the perfection of the contract.
3. Perfection of the Contract
- A contract of sale is perfected by mere consent concerning the object and the price.
- Perfection creates reciprocal obligations: the seller to deliver and transfer ownership, and the buyer to pay the price.
4. Types of Sale
A. Absolute Sale
- Transfer of ownership is not subject to any condition.
B. Conditional Sale
- Transfer of ownership is subject to the fulfillment of a condition (e.g., suspensive or resolutory conditions).
C. Sale by Description or by Sample
- Sale is made based on the description or sample of goods, binding the seller to deliver conforming items.
5. Obligations of the Seller
A. Deliver the Object
- Delivery can be actual or constructive.
- Constructive delivery includes symbolic delivery (e.g., delivery of keys or documents).
- Risk of loss transfers upon delivery unless otherwise stipulated.
B. Transfer Ownership
- The seller must ensure the buyer acquires ownership free from hidden defects and encumbrances unless otherwise agreed.
C. Warranties
- Warranty Against Eviction (Articles 1548-1556):
- The seller guarantees the buyer's legal possession and ownership against claims by third parties.
- Warranty Against Hidden Defects (Articles 1561-1571):
- The seller ensures the object is free from latent defects rendering it unfit for its intended use.
6. Obligations of the Buyer
A. Pay the Price
- Payment must be made at the time and place agreed upon, or as required by law.
B. Accept Delivery
- The buyer must take possession of the object and bear the expenses for receiving delivery, unless otherwise agreed.
7. Risk of Loss
- General Rule: The risk of loss is borne by the owner.
- Exception: When the thing is sold on approval or trial, risk remains with the seller until approval.
8. Modes of Extinguishing a Sale
- Mutual agreement.
- Fulfillment or resolution of a condition in a conditional sale.
- Rescission due to non-performance.
- Other legal modes such as prescription or novation.
9. Special Types of Sale
A. Sale of Real Property
- Governed by the Statute of Frauds if the price exceeds PHP 500 (requires a written contract).
- Delivery of title documents is crucial.
- Subject to specific registration requirements under the Torrens system.
B. Sale of Goods (Articles 1462-1525)
- Goods include tangible personal property.
- Sale by sample or description requires conformity to the sample or description.
C. Sale with Right to Repurchase (Pacto de Retro Sale)
- The seller reserves the right to repurchase within a stipulated period.
- Strictly construed due to its tendency to circumvent anti-usury laws.
D. Sale by Auction
- Governed by Articles 1476 to 1480.
- Ownership transfers upon the fall of the hammer unless a reserve price is not met.
10. Statute of Frauds
- Certain contracts of sale must be in writing to be enforceable:
- Sale of real property.
- Sale of goods valued at PHP 500 or more, unless there is part performance or receipt.
11. Remedies
A. For the Seller
- Action for Price: To recover the purchase price.
- Action for Rescission: Due to breach by the buyer.
B. For the Buyer
- Specific Performance: To compel delivery.
- Rescission: For non-conformity or breach of warranty.
This comprehensive analysis encapsulates the laws governing contracts of sale in the Philippines under the Civil Code. For specific cases, further research or legal consultation may be required.