ESSENTIAL ELEMENTS OF CONTRACT
Article 1318. There is no contract unless the following requisites concur:

1. CONSENT
   (1) Consent of the contracting parties;
2. OBJECT
   (2) Object certain which is the subject matter of the contract;
3. CAUSE
   (3) Cause of the obligation which is established. (1261)

CONSENT:
MEETING OF OFFER + ACCEPTANCE
UPON THE THING & CAUSE
Article 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.

OFFER: CERTAIN
ACCEPTANCE: ABSOLUTE
The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.x x x

ACCEPTANCE BY LETTER = BINDS OFFEROR FROM TIME OF KNOWLEDGE
Acceptance made by letter or telegram does not bind the offerer except from the time it came to his knowledge.

BEFORE ACCEPTANCE IS CONVEYED
OFFER BECOMES INEFFECTIVE UPON
EITHER PARTY'S:

1. DEATH
2. INSOLVENCY
3. INSANITY
4. CIVIL INTERDICTION
   Article 1323. An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of EITHER PARTY before acceptance is conveyed. (n)

IF OFFEROR HAS ALLOWED A CERTAIN PERIOD TO ACCEPT:

1. OFFER MAY BE WITHDRAWN
2. ANY TIME BEFORE ACCEPTANCE by
3. COMMUNICATING WITHDRAWAL
   Article 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal,

BUSINESS ADS =
MERE INVITATIONS TO MAKE AN OFFER
Article 1325. Unless it appears otherwise, business advertisements of things for sale are not definite offers, but mere invitations to make an offer. (n)

ADS FOR BIDDERS:
MERE INVITATIONS TO MAKE PROPOSALS
Article 1326. Advertisements for bidders are simply invitations to make proposals, and

PRESUMED ENTERED INTO:
WHERE OFFER WAS MADE
The contract, in such a case, is presumed to have been entered into in the place where the offer was made. (1262a)

ADVERTISER NOT BOUND TO ACCEPT HIGHEST or LOWEST BIDDER
the advertiser is not bound to accept the highest or lowest bidder,

ALL THINGS ARE or MAY BE THE OBJECT OF APPROPRIATION ARE EITHER:

1. IMMOVABLE or REAL
2. MOVABLE or PERSONAL
   Article 414. All things which are or may be the object of appropriation are considered either:
   
   

(1) Immovable or real property; or

(2) Movable or personal property. (333)

DEEMED PERSONAL PROPERTY:
Article 416. The following things are deemed to be personal property:

1. MOVABLES
   a. SUSCEPTIBLE OF APPROPRIATION
   b. NOT INCLUDED IN PRECEDING ARTICLE
   (1) Those movables susceptible of appropriation which are not included in the preceding article;
2. REAL DEEMED PERSONAL BY LAW
   (2) Real property which by any special provision of law is considered as personalty;
3. FORCES OF NATURE BROUGHT UNDER CONTROL BY SCIENCE
   (3) Forces of nature which are brought under control by science; and
4. ALL THINGS WHICH CAN BE TRANSPORTED

• WITHOUT IMPAIRMENT TO REAL PROPERTY TO WHICH THEY ARE FIXED
  (4) In general, all things which can be transported from place to place without impairment of the real property to which they are fixed. (335a)

PROPERTY IS EITHER OF:

1. PUBLIC DOMINION
2. PRIVATE OWNERSHIP
   Article 419. Property is either of public dominion or of private ownership. (338)

OF PUBLIC DOMINION:
Article 420. The following things are property of public dominion:

1. INTENDED FOR PUBLIC USE
   (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character;
2. BELONGS TO THE STATE
   a. EVEN IF NOT BEING FOR PUBLIC USE
   b. INTENDED FOR:
   -PUBLIC SERVICE
   -DEVELOPMENT OF NATIONAL WEALTH
   (2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth. (339a)

IMMOVABLE PROPERTY:
Article 415. The following are immovable property:

1. LAND, BLDGS, ROADS & CONSTRUCTIONS OF ALL KINDS ADHERED TO SOIL
   (1) Land, buildings, roads and constructions of all kinds adhered to the soil;
2. TREES, PLANTS, AND GROWING FRUITS

• WHILE THEY ARE ATTACHED TO LAND;
  OR
• FORM AN INTEGRAL PART OF AN IMMOVABLE
  (2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable;

3. EVERYTHING ATTACHED TO IMMOVABLE
   a. IN A FIXED MANNER
   b. IN SUCH A WAY IT CANNOT BE SEPARATED THEREFROM
   c. WITHOUT BREAKING THE MATERIAL/DETERIORATION OF THE OBJECT
   (3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object;

4. ORNAMENTS
   a. PLACED IN A MANNER REVEALING INTENTION TO ATTACH THEM PERMANENTLY
   (4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements;
5. MACHINERY, RECEPTACLES, INSTRUMENTS, OR IMPLEMENTS
   a. INTENDED FOR AN INDUSTRY
   b. CARRIED ON IN A BUILDING/LAND
   c. TENDS TO DIRECTLY MEET THE NEEDS OF SAID INDUSTRY/WORKS
   (5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;

2. GENERAL REQUIREMENTS

3. TYPES OF THINGS THAT MAY BE SOLD

c. WITHIN COMMERCE OF MEN

e. THING MUST EXIST or HAVE A
POTENTIAL EXISTENCE

OBJECT CERTAIN
ARTICLE 1318. There is no contract unless the following requisites concur: (2) Object certain which is the subject matter of the contract;

KIND
ARTICLE 1349. The object of every contract must be determinate as to its kind.

VOID:
INTENTION CANNOT BE ASCERTAINED
ARTICLE 1409. The following contracts are inexistent and void from the beginning:

(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;

SEGREGATED:
DETERMINATE IF:

1. PARTICULARLY DESIGNATED
2. PHYSICALLY SEGREGATED
   -FROM ALL OTHERS OF THE SAME CLASS
   ARTICLE 1460. A thing is determinate when it is particularly designated or physically segregated from all others of the same class.

SEGREGATED
DETERMINABLE

1. DETERMINABLE
2. AT TIME CONTRACT IS ENTERED INTO
3. WITHOUT NECESSITY OF A:
   a. NEW/FURTHER AGREEMENT
   b. BETWEEN PARTIES
   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. (n)

LICIT

1. THING MUST BE LICIT
2. VENDOR'S RIGHT TO TRANSFER OWNERSHIP
   -AT TIME IT IS DELIVERED ⏰
   Article 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. (n)

VOID CONTRACT:

• CAUSE/OBJECT/PURPOSE IS
  CONTRARY TO LAW, MORALS, GOOD CUSTOMS, PUBLIC ORDER or PUBLIC POLICY
  ARTICLE 1409. The following contracts are inexistent and void from the beginning:
  (1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;

MAY BE OBJECT OF A CONTRACT

1. NOT OUTSIDE COMMERCE OF MEN =
   ARTICLE 1347. All things which are not outside the commerce of men, including future things, may be the object of a contract.
2. NOT INTRANSMISSIBLE
   All rights which are not intransmissible may also be the object of contracts. No contract may be entered into upon future inheritance except in cases expressly authorized by law.
3. NOT CONTRARY TO LMGcPoPp
   All services which are not contrary to law, morals, good customs, public order or public policy may likewise be the object of a contract.

VOID CONTRACTS:
OUTSIDE COMMERCE OF MEN
ARTICLE 1409. The following contracts are inexistent and void from the beginning: (4) Those whose object is outside the commerce of men;

FUTURE THINGS MAY BE OBJECT OF A CONTRACT

MAY NOT BE OBJECT OF CONTRACTS:
FUTURE INHERITANCE
No contract may be entered into upon future inheritance...

EXCEPT IF EXPRESSLY! AUTHORIZED BY LAW
...except in cases expressly authorized by law.

OPTION CONTRACT = UNACCEPTED OFFER
A contract of option is a continuing offer or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a time certain, or under, or in compliance with, certain terms and conditions. It is also called an "unaccepted offer"
(Limson v. CA)

OPTION MONEY MAY BE
FORFEITED BY BUYER
Buyer is bound to pay the balance, while when the would-be buyer gives option money, he is not required to buy, but may even forfeit it depending on the terms of the option.
(This might pertain to Contract to Sell)

RATIO: PRIVILEGE, NOT A CONTRACT
The option not of itself a purchase, but merely secures the privilege to buy; it is not a sale of property but a sale of the right to purchase ○ a contract by which the owner of property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time. It imposes no binding obligation on the person holding the option, aside from the consideration for the offer.

RIGHT OF REFUSAL
Under the right of first refusal, the obligor is

1. NOT TO SELL TO OTHERS
   -AT ANY PRICE
2. UNTIL AFTER OFFER TO OPTION HOLDER
   -AT A CERTAIN PRICE
   under a legal duty not to sell the property to anybody at any price until after:
   The owner has made an offer to sell to the option holder at a certain price +
3. FAILURE TO ACCEPT
   The option holder has FAILED to accept it.
   (Tanay Recreation v. Fausto)
4. SAME TERMS, IF EQUITABLE:
   a. OPTION HOLDER
   b. FINAL BUYER

MAY BE OBJECT OF A CONTRACT

1. NOT OUTSIDE COMMERCE OF MEN =
   ARTICLE 1347. All things which are not outside the commerce of men, including future things, may be the object of a contract.
2. TRANSMISSIBLE RIGHTS
   All rights which are not intransmissible may also be the object of contracts. No contract may be entered into upon future inheritance except in cases expressly authorized by law.
3. SERVICES NOT CONTRARY TO LMGcPoPp
   All services which are not contrary to law, morals, good customs, public order or public policy may likewise be the object of a contract.

VOID:
CAUSE/OBJECT DID NOT EXIST AT TIME OF TRANSACTION
ARTICLE 1409. The following contracts are inexistent and void from the beginning:
(3) Those whose cause or object did not exist at the time of the transaction;

OBJECT:
THINGS WITH POTENTIAL EXISTENCE
Article 1461. Things having a potential existence may be the object of the contract of sale.

GOODS MAY BE:

1. EXISTING GOODS
2. "FUTURE GOODS"
   -GOODS TO BE ACQUIRED BY SELLER
   Article 1462. The goods which form the subject of a contract of sale 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."

FUTURE THINGS MAY BE OBJECT OF A CONTRACT

MAY NOT BE OBJECT OF CONTRACTS:
FUTURE INHERITANCE
No contract may be entered into upon future inheritance...

SALE OF A MERE HOPE/EXPECTANCY:
SUBJECT TO EXISTENCE OF THING
The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence.

VAIN HOPE/EXPECTANCY = VOID
The sale of a vain hope or expectancy is void. (n)

"CONTINGENT GOODS"
ACQUISITION OF SELLER MAY
DEPEND ON A CONTINGENCY
There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which may or may not happen. (n)

"Future goods" vs Contingent Goods

1. "Future" - Future; certain IF it will happen
2. "Contingent" - Future; uncertain IF it will happen

"Future things" vs "Object did not exist at time of transaction"

1. Future things - Certain/uncertain to exist in future
2. Inexistent - Certain NOT to exist
   -Not a future thing
   -No potential existence
   -No hope/expectancy exists

5. REQUIREMENT: SELLER MUST HAVE THE RIGHT TO TRANSFER OWNERSHIP AT THE TIME OF DELIVERY

b. UNDIVIDED INTEREST/SHARE IN A THING

c. SUBJECT TO A RESOLUTORY CONDITION

GOODS MAY BE:

1. EXISTING GOODS
2. "FUTURE GOODS"
   - ACQUIRED AFTER PERFECTION
   Article 1462. The goods which form the subject of a contract of sale 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."

"CONTINGENT GOODS"
ACQUISITION OF SELLER MAY
DEPEND ON A CONTINGENCY
There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which may or may not happen. (n)

c. THINGS HAVING A POTENTIAL EXISTENCE

OBJECT:
THINGS WITH POTENTIAL EXISTENCE
Article 1461. Things having a potential existence may be the object of the contract of sale.

OBJECT:
MERE HOPE/EXPECTANCY:
SUBJECT TO EXISTENCE OF THING
The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence.

CERTAIN EXISTENCE
Future thing is certain as to itself, but uncertain as to its quantity and quality

UNCERTAIN EXISTENCE
Not certain that the thing itself will exist, much less its quantity and quality (Sale of a sweepstake ticket – winning is not guaranteed and also the quantity of the prize)

IF DOES NOT HAPPEN:
VOID
Produces no effect if the condition does not happen because of the absence of an essential element

IF DOES NOT HAPPEN:
VALID
Produces effect even if thing does not come into existence

OBJECT OF SALE:
THING
Sale of a thing not yet in existence subject to the condition that the thing will exist and on failure of the condition, contract becomes ineffective, hence, the buyer has no obligation to pay the price

OBJECT OF SALE:
HOPE
Sale of the hope itself that the thing will come into existence, where it is agreed that the buyer will pay the price even if the thing does not eventually exist

RESCISSIBLE CONTRACT:
THING UNDER LITIGATION

1. UNDER LITIGATION
2. ENTERED INTO BY DEFENDANT
3. WITHOUT KNOWLEDGE + APPROVAL of:
   -LITIGANTS/COMPETENT JUDICIAL AUTH
   ARTICLE 1381(4).
   The following contracts are rescissible:
   (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority;

SOLE OWNER MAY SELL
UNDIVIDED INTEREST
ARTICLE 1463. The sole owner of a thing may sell an undivided interest therein. (n)

RESCISSION OBLIGATION:
RETURN

• THING/PRICE
• FRUITS
• INTEREST
  ARTICLE 1385. Rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest;

FUNGIBLE GOODS SOLD AS:
UNDIVIDED SHARE of a SPECIFIC MASS
ARTICLE 1464. In the case of fungible goods, there may be a sale of an undivided share of a specific mass,

EVEN THOUGH
PURPORTEDLY THERE'S:

1. DEFINITE:
   a. NUMBER
   b. WEIGHT; or
   c. MEASURE
   though the seller purports to sell and the buyer to buy a definite number, weight or measure of the goods in the mass, and
2. UNDETERMINED MEASURE
   though the number, weight or measure of the goods in the mass is undetermined.

CO-OWNER'S RIGHTS OVER SHARE:

1. FULL OWNERSHIP
   -THING
   -FRUITS
   -BENEFITS
   

REQUIREMENTS OF SALE

1. LICIT THING
2. RIGHT TO TRANSFER OWNERSHIP
   -AT TIME OF DELIVERY! ⏰
   ARTICLE 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. (n)

CAUSE:

1. ONEROUS:
   -PRESTATION or PROMISE OF A THING/SERVICE BY THE OTHER
   ARTICLE 1350. In onerous contracts the cause is understood to be, for each contracting party, the prestation or promise of a thing or service by the other;
2. REMUNERATORY:
   -SERVICE/BENEFIT WHICH IS REMUNERATED
   in remuneratory ones, the service or benefit which is remunerated; and
3. PURE BENEFICENCE:
   -LIBERALITY
   in contracts of pure beneficence, the mere liberality of the benefactor. (1274)

PRESUMED EXISTENT CAUSE
ARTICLE 1354. Although the cause is not stated in the contract, it is presumed that it exists and is lawful,

4. FALSE CAUSE -> VOID
   ARTICLE 1353. The statement of a false cause in contracts shall render them void,

VOID:

1. NO CAUSE
2. UNLAWFUL CAUSE
3. CONTRARY TO LMGCPOPP
   ARTICLE 1352. Contracts without cause, or with unlawful cause, produce no effect whatever.
   The cause is unlawful if it is contrary to law, morals, good customs, public order or public policy. (1275a)

IMMOVABLE PROPERTY:

6. ANIMAL HOUSES & BREEDING PLACES
   a. PLACED THEM w/
   b. INTENTION TO HAVE THEM PERMANENTLY ATTACHED TO LAND
   c. FORMING A PERMANENT PART OF IT
   (6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in case their owner has placed them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of it; the animals in these places are included;
7. FERTILIZER ACTUALLY USED
   (7) Fertilizer actually used on a piece of land;
8. MINES, QUARRIES, & SLAG DUMPS, WHILE MATTER THEREOF FORMS PART OF THE BED AND WATERS (RUNNING/STAGNANT)
   (8) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant;
9. DOCKS AND STRUCTURES
   a. THOUGH FLOATING
   b. INTENDED BY NATURE & OBJECT TO REMAIN AT A FIXED PLACE
   c. on a RIVER/LAKE/COAST
   (9) Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast;
10. CONTRACTS FOR PUBLIC WORKS, AND SERVITUTES AND OTHER REAL RIGHTS OVER IMMOVABLE PROPERTY
    (10) Contracts for public works, and servitudes and other real rights over immovable property. (334a)

1. GENERAL REQUIREMENTS AS TO
PRICE

NO RESCISSION IF

1. DEMANDER CANNOT RESTORE
   consequently, it can be carried out only when he who demands rescission can return whatever he may be obliged to restore.
2. INNOCENT THIRD PURCHASER'S
   LEGAL POSSESSION
   Neither shall rescission take place when the things which are the object of the contract are legally in the possession of third persons who did not act in bad faith.

BUYER OWNS SHARE IN COMMON
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 or measure of the mass.

IF MASS < MA$$ BOUGHT
THEN:

1. BUYER OWNS:
   WHOLE
   +
2. SELLER MUST MAKE GOOD: with
   SAME KIND & QUALITY
   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,

2. ALIENATE
3. ASSIGN
4. MORTGAGE
5. SUBSTITUTE
   ARTICLE 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, ...

LESION/INADEQUACY
INVALIDATION REQUIRES::

1. FRAUD
2. UNDUE INFLUENCE
3. MISTAKE
   ARTICLE 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence. (n)

CERTAIN
(vs uncertain)
If uncertain and cannot be determined under NCC rules contract is inefficacious

REAL
(vs simulated)
(Buyer truly has intention to pay the purchase price.)

PECUNIARY
Pecuniary consists of, or is measured in, money

CONTRACT OF SALE

3. PAY PRICE CERTAIN IN:

• MONEY
• EQUIVALENT
  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.

PRICE CERTAIN IF:

• REFERENCE TO ANOTHER THING CERTAIN
  Article 1469. In order that the price may be considered certain, it shall be sufficient that it be so with reference to another thing certain, or...

ONE-SIDED FIXING:
FIXING THE PRICE CAN NEVER BE LEFT TO THE DISCRETION OF ONE PARTY
Article 1473. The fixing of the price can never be left to the discretion of one of the contracting parties.

UNDETERMINABLE PRICE -> INEFFICACIOUS
Article 1474. Where the price cannot be determined in accordance with the preceding articles, or in any other manner, the contract is inefficacious.

PRESUMED EXISTENT CAUSE
ARTICLE 1354. Although the cause is not stated in the contract, it is presumed that it exists and is lawful,

VOID:
CAUSE/OBJECT DID NOT EXIST AT TIME OF TRANSACTION
ARTICLE 1409. The following contracts are inexistent and void from the beginning:
(3) Those whose cause or object did not exist at the time of the transaction;

"Future things" vs "Object did not exist at time of transaction"

1. Future things - Certain/uncertain to exist in future
2. Inexistent - Certain NOT to exist
   -Not a future thing
   -No potential existence
   -No hope/expectancy exists

INVALIDATION ON LESION REQUIRES:

• FRAUD
• MISTAKE
• UNDUE INFLUENCE; or
• SPECIFIED BY LAW
  ARTICLE 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence. (n)

SIMULATION MAY BE:
ABSOLUTE or RELATIVE
Article 1345. Simulation of a contract may be absolute or relative.

ABSOLUTE:
NO INTENT TO BE BOUND AT ALL
The former takes place when the parties do not intend to be bound at all;
[1345]

VOID CONTRACT:

• CAUSE/OBJECT/PURPOSE IS
  CONTRARY TO LAW, MORALS, GOOD CUSTOMS, PUBLIC ORDER or PUBLIC POLICY
  ARTICLE 1409. The following contracts are inexistent and void from the beginning:
  (1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;

RELATIVE:
CONCEALED TRUE AGREEMENT
the latter, when the parties conceal their true agreement. (n)
[1345]

PRICE CERTAIN IF:

• DETERMINATION LEFT TO JUDGMENT OF SPECIAL PERSON/S
  ... that the determination thereof be left to the judgment of a special person or persons.

COURTS MAY FIX PRICE IF
3RD PERSONS ACTED IN:

1. BAD FAITH
2. MISTAKE
   If the third person or persons acted in bad faith or by mistake, the courts may fix the price.

IF UNABLE OR WILLING TO FIX -> INEFFICACIOUS
Should such person or persons be unable or unwilling to fix it, the contract shall be inefficacious,...

GROSS INADEQUACY = DOES NOT AFFECT A CONTRACT OF SALE
Art. 1470. Gross inadequacy of price does not affect a contract of sale,

BUT IF ALREADY DELIVERED TO BUYER, MUST PAY REASONABLE PRICE
However, if the thing or any part thereof has been delivered to and appropriated by the buyer he must pay a reasonable price therefor.

CONTRACT OF SALE PERFECTED UPON:
MEETING OF MINDS ON THE THING:

1. OBJECT OF THE CONTRACT
2. PRICE
   Article 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.

2. NECESSITY FOR
   -PAYMENT or
   -DELIVERY OF THING

3. PAYMENT OF EARNEST MONEY AS PROOF OF PERFECTION

• EARNEST MONEY IN CONTRACT OF SALE
  =
• PART OF PRICE
• PROOF OF PERFECTION OF CONTRACT
  Article 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. (1454a)

IF AUCTION IN LOTS:
-EACH LOT NEEDS A SEPARATE CONTRACT OF SALE
Article 1476. In the case of a sale by auction:

(1) Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract of sale.

PERFECTED BY:

• HAMMER FALL; or
• OTHER CUSTOMARY MANNER
  (2) A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in other customary manner.

RIGHT TO BID MAY BE
RESERVED EXPRESSLY

• BY SELLER; or
• ON BEHALF OF SELLER
  (3) A right to bid may be reserved expressly by or on behalf of the seller,

IF NO NOTICE THAT AUCTION IS SUBJECT TO RIGHT TO BID ON SELLER'S BEHALF, :
(4) Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the seller, it shall not be lawful
for the seller
SELLER CANNOT

1. BID HIMSELF
   to bid himself or
2. EMPLOY/INDUCE ANY PERSON TO BID
   -ON HIS BEHALF
   OR
   

AUCTIONEER CANNOT

1. EMPLOY/INDUCE ANY PERSON TO BID
   ON BEHALF OF THE SELLER
   to employ or induce any person to bid at such sale on his behalf or for the auctioneer,
   to employ or induce any person to bid at such sale on behalf of the seller or
2. KNOWINGLY TAKE ANY BID FROM THE SELLER/ANY PERSON EMPLOYED BY HIM
   knowingly to take any bid from the seller or any person employed by him.

BEFORE PERFECTION:

• ANY BIDDER MAY RETRACT HIS BID
• AUCTIONEER MAY WITHDRAW GOODS
  Until such announcement is made, any bidder may retract his bid; and the auctioneer may withdraw the goods from the sale

CONSENSUAL = PERFECTED UPON:
MEETING OF MINDS
The contract is perfected the moment there is the meeting of the minds, giving rise to the obligation to deliver the thing

CORRELATIVE DUTIES IN A SALE:

• BUYER PAYS
  SELLER DELIVERS
  A contract of sale carries the correlative duty of the seller to deliver the property and the obligation of the buyer to pay the agreed price.

VAIN HOPE/EXPECTANCY = VOID
The sale of a vain hope or expectancy is void. (n)

TERMS w/ OPTION HOLDER,
=
TERMS w/ FINAL BUYER
In Parañaque Kings Enterprises, Inc. v. CA, it was ruled that in order to have full compliance with the right of first refusal, there should be identity in the terms and conditions offered to the person holding a right of first refusal and to that offered to the final buyer. Otherwise, the right would be rendered illusory.

UNLESS INEQUITABLE
The circumstances of this case, however, dictate the application of a different ruling. An offer of the property to TRCDC under identical terms and conditions of the offer previously given to Pacunayen would be inequitable.
(Tanay Recreation v. Fausto)

PRICE NEED NOT BE EQUAL TO THE EXACT VALUE OF THE SUBJECT MATTER OF SALE
It is not required that the price be equal to the exact value of the subject matter of sale.
(Buenaventura v. CA)

GROSS INADEQUACY = DOES NOT AFFECT A CONTRACT OF SALE
Art. 1470. Gross inadequacy of price does not affect a contract of sale,

IF CONTRACT TO SELL (NOT SALE),
EARNEST MONEY IS:

FORFEIT: NO SALE +
NO SELLER'S FAULT
NO AGREEMENT TO CONTRARY
Absent proof of a clear agreement to the contrary, it is intended to be forfeited if the sale does not happen without the seller's fault. The potential buyer bears the burden of proving that the earnest money was intended other than as part of the purchase price and to be forfeited if the sale does not occur without the fault of the seller. Respondents were unable to discharge this burden.

OPPORTUNITY COST
In a contract to sell, the payment of earnest money represents the seller's opportunity cost of holding in abeyance the search for other buyers or better deals. Absent proof of a clear agreement to the contrary, it should be forfeited if the sale does not happen without the seller's fault. The potential buyer bears the burden of proving that the earnest money was intended other than as part of the purchase price and to be forfeited if the sale does not occur without the seller's fault.

"1 HECTARE OF LAND AS INHERITANCE" = DETERMINATE KIND
It cannot be disputed that the object is determinable as to its kind, i.e. 1 hectare of land as inheritance, and can be determined without need of a new contract or agreement. 6 Clearly, the Paknaan has all the earmarks of a valid contract.||| (Quiros v. Arjona, G.R. No. 158901, [March 9, 2004], 468 PHIL 1000-1011)