UNIVERSITY OF THE PHILIPPINES

COLLEGE OF LAW

SALES

INTRODUCTION

Definition of Sale Art. 1458

Nature of the Obligations

Essential requisites of a contract of sale

1. Consent

2. Determinate subject matter

3. Price

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Stages of contract of sale

1. Negotiation

2. Perfection

3. Consummation

Characteristics of a contract of sale

1. Nominate

2. Principal

3. Consensual Art. 1475

4. Bilateral and Reciprocal

5. Onerous

6. Commutative

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Sale distinguished from other contracts

1. Donation Arts. 745 and 1471

2. Barter or Exchange Arts. 1468, 1638 to 1641

3. Contract for Piece of Work Arts. 1467, 1713 to 1715

Celestino v. Collector 99 Phil 841 (1956)

Commissioner v. Engineering Equipment 65 SCRA 590 (1975)

4. Agency to Buy or Sell Arts. 1466, 1868

Quiroga v. Parsons 38 Phil 501 (1918)

Puyat v. Arco 72 Phil 402 (1941)

5. Dacion en Pago Art. 1245

6. Lease Arts. 1643

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Contract of sale Art. 1458

Dignos v. CA 158 SCRA 375 (1988)

Spouses Herrera v. Caguiat GR No. 139173, Feb. 28, 2007

Nabus v. Pacson GR No. 161318 Nov. 25, 2009

Reyes v. Tuparan GR No. 188064 June 1, 2011

Contract to sell Art. 1478

Luzon Brokerage v. Maritime Building 43 SCRA 93 (1972)

Salazar v. CA GR No. 118203 July 5, 1996

Castillo v. Reyes 539 SCRA 193 (2007)

United Muslim and Christian Urban Poor Association v. BRYC-V

Development Corporation GR No. 179653 , July 31, 2009

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Conditional Contract of Sale Art. 1461, 1462, 1465, 1503

Peoples Homesite and Housing Cor. V. CA 133 SCRA 777

(1984)

Lim v. CA 182 SCRA 566 (1990)

Pingol v. CA 226 SCRA 118 (1993)

PARTIES TO A CONTRACT OF SALE

Capacity of parties Arts. 1489 1492

Absolute incapacity Arts. 1327, 1397, 1399

Relative incapacity: Married Persons

1. Contracts with Third Parties Arts. 73, 96 and 124 Family Code

2. Between Spouses Arts. 1490 and 1492

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 Medina v. CIR 1 SCRA 302 (1961)

3. Applicability to Common-Law Spouses Arts. !33, 147-148 Family Code

Calimlim-Canullas v. Fortun 129 SCRA 675 (1984)

Cruz v. CA 281 SCRA 491 (1997)

Ching v. Goyangko 506 SCRA 735 (2006)

Special disqualifications Arts. 1491 1492

1. Guardians, Agents and Administrators

Philippine Trust Co. v. Roldan 99 Phil 392 (1956)

2. Judges and Lawyers

Macariola v. Asuncion 114 SCRA 77 (1982)

Rubias v. Batiller 51 SCRA 120 (1973)

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 SUBJECT MATTER

Requisites of a valid subject matter Arts. 1459, 1347, 1306, 1409, 1411,

1416

1. Must be licit Arts. 1347, 1459, 1575, 1409

Martinez v. CA 56 SCRA 647 (1974)

2. Must be determinate or at least determinable Art. 1460, 1349

Melliza v. City of Iloilo 23 SCRA 477 (1968)

Atilano v. Atilano 28 SCRA 231 (1969)

3. Must be existing, future or contingent Arts. 1347, 1348 and 1462

Emption rei speratae/ Emptio spei Arts. 1461 and 1347

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 Pichel v. Alonzo 111 SCRA 34 (1981)

Things subject to resolutory condition Art. 1465, 1608

4 Particular Kind

Generic Things

Yu Tek v. Gonzales 29 Phil 384 (1915)

Future Goods Arts 1461, 1462

Undivided Interest/ Share Art. 1463-1464

PRICE

Arts. 1469-1474, 1350-1355

Requisites for a valid price

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1. Must be real Art. 1471

Adequacy of Price Arts. 1355, 1470

Bagnas v. CA 176 SCRA 159 (1989)

Vda. De Gordon v. CA 109 SCRA 88 (1981)

When price is false Art. 1353 1355, 1471

Mapalo v. Mapalo 17 SCRA 114 (1966)

Ong v. Ong 139 SCRA 133 (1985)

Morales v. CA 27 SCRA 484 (1969)

2. Must be in money or its equivalent Arts. 1458, 1468

Republic v. Phil. Resources 102 Phil 960 (1958)

3. Must be certain or ascertainable at time of perfection Art. 1469

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 Toyota Shaw v. CA 244 SCRA 320 (1995)

Velasco v. CA 51 SCRA 43 (1973)

How price is determined

1. By third person Art. 1469

2. By the courts Art. 1469

3. By reference to a definite day Art. 1472

4. By reference to another thing certain

5. Never by one party Arts. 1473, 1182

When no price agreed Art. 1474

Effect of non-payment of price

Montecillo v. Reynes 385 SCRA 244 (2002)

Manner of payment must be agreed upon

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 Velasco v. CA 51 SCRA 439 (1973)

San Miguel Properties v. Huang 336 737 (2000)

FORMATION OF CONTRACT OF SALE

Preparatory Art. 1479 cf Art. 1324

1. Offer Art. 1475, 1319

Villonco v. Bormaheco 65 SCRA 352 (1975)

a. Forms of offer Arts. 1319, 1325, 1326

Zayco v. Serra 44 Phil 326 (1923)

b. Forms of acceptance Art. 1319

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 c. Vices vitiating consent Arts. 1330, 1338, 1331

2. Option Contract Arts. 1479 (2) , 1324

De la Cavada v.Diaz 37 Phil 962 (1918)

Carcellar v. CA 302 SCRA 718 (1999)

a. Meaning of consideration

Villamor v. CA 202 SCRA 607 (1991)

Soriano v. Bautista 6 SCRA 946 (1962)

b.. An option to buy is not a contract of sale

Adelfa Properties v. CA 310 Phil 623 (1995)

c. Without consideration void as option but valid as offer

Sanchez v. Rigos 45 SCRA 368 ( 1972)

d. Proper exercise of option

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 Nietes v. CA 46 SCRA 654 (1972)

e.. Period of Exercise of Option

Villamor v. CA 202 SCRA 607 (1991)

f. There must be acceptance of option

Vasquez v. CA 199 SCRA 102 (1991)

g. Effects of exercise of option

Limson v. CA 357 SCRA 209 (2001)

3. Right of First Refusal

Equatorial Realty v. Mayfair 264 SCRA 483 (1996)

Paranaque Kings v. CA 268 SCRA 727 (1997)

Ang Yu v. CA 238 SCRA 602 (1994)

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 Rosencor v. Inquing 354 SCRA 119 (2001)

Guerrero v. Ynigo 96 Phil 37 (1950)

Guzman Bocaling v. Bonnevie 206 SCRA 675 (1992)

4. Mutual Promise to Buy and Sell Art. 1479

Coronel v. CA 263 SCRA 15 (1996)

Perfection - Arts. 1475, 1319, 1325, 1326, 1330, 1338, 1476, 1479

1. When deviation allowed

Villonco v. Bormaheco 65 SCRA 352 (1975)

2. Sale by Auction Arts. 1476, 1403 (d), 1326

3. Earnest Money vs. Option Money - Art. 1482

Cifra v. CA 198 SCRA 91 (19910

Laforteza v. Machuca 333 SCRA 643 (2000)

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 Limson v. CA 357 SCRA 209 (2001)

San Miguel Properties v. Huang 336 SCRA 737 (2000)

4. Perfection Art. 1475

5. Place of Perfection Art. 1391

Formalities of the contract

1. General Rule: Form not important Arts. 1483, 1356, 1357, 1358

Dalion v. CA 182 SCRA 872 (1990)

Secuya v. vda de Selma 326 SCRA 244 (2000)

Requirements in Sale of Immovables Art. 1358

Santos v. Manalili 476 SCRA 679 (2005)

2. Exceptions: When form important

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A. Form important for enforceability

a. Statute of Frauds Arts. 1403, 1405

Paredes v. Espino 22 SCRA 1000 (1968)

Baretto v. Manila 46 Phil 964 (1924)

Inigo v. Estate of Maloto 21 SCRA 246 (11967)

B. Form important for validity

a. Sale of realty through an agent Art. 1874

City Lite v. CA 325 SCRA 385 (2000)

b. Sale of large cattle Art. 1581, sec. 529 Revised Adm. Code

c. Electronic Commerce Act RA 8792 sec. 7, 8, 11

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 TRANSFER OF OWNERSHIP

General Rule - Arts. 1477, 1496, 1497

Kuenzle v. Macke 14 Phil 610 (1909)

Ocejo Perez v. International Bank 37 Phil 631 (1918)

When delivery does not transfer ownership

a. Sale on return transaction

b. Sale on approval, trial or satisfaction Art. 1502

c. Express reservation Art. 1478

d. Implied Reservation Art. 1503 (1)

e. When sale not valid

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 f. When seller is not the owner

Sale by a person not the owner at the time of delivery Art. 1462, 1459, 1505

Aznar v. Yapdiangco 13 SCRA 486 (1965)

Asset Privatization Trust v. TJ Enterprises GR No. 167195 May 8, 2009

Noel v. CA GR 59550, January 11, 1995

Exceptions: Sale by a non-owner

a. Estoppel Art. 1431, 1433, 1434 see also 1437, 1439 and 1911

Hernaez v. Hernaez 32 Phil 214 (1915)

Siy Cong Bien v. HSBC 56 Phil 598 (1932)

Jalbuena v. Lizarraga 33 Phil 77 (1915)

b. Recording Laws: Torrens System PD 1529

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 c. Statutory Sale Order of Courts

Sale in Merchants Store, Market or Fair Art.559, 1505 (3)

Sun Bros. v. Velasco 54 OG 5143, Jan. 13, 1958

Masiclat v. Centeno GR No. 8420 May 31, 1956

Sale by a person having a voidable title Arts. 1506, 559

Tagatac v. Jimenez 53 OG 3792 No. 12, June 12, 1957

De Garcia v. CA 37 SCRA 129 (1971)

EDCA Publishing v. Santos 184 SCRA 614 (1990)

Kinds of delivery

1. Real or Actual Delivery Art. 1497

Bean v. Cadwallader 10 Phil 606 (1908)

Ocejo v. International Bank 37 SCRA 631 (1918)

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 Cebu v. Borras 404 SCRA 145 (2003)

Cebu Winland Dev.Corp. v. Ong Siao Hua 588 SCRA 120 (2009)

2. Constructive Delivery (Symbolic)

a. Execution of a Public Instrument Art. 1498

Aviles v. Arcega 44 Phil 924 (1922)

Phil. Suburban v. Auditor General 63 SCRA 397 (1975)

Sarmiento v. Lesaca 108 Phil 900 (1960)

Florendo v. Foz 21 Phil 388 (1991)

Masallo v. Cesar 39 Phil 134 (1918)

Asset Privatization Trust v. T.J. Enterprises 587 SCRA 481 (2009)

b. Traditio Longa Manu Arts. 1498, 1499, 1513, 1514

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 Board of Liquidator v. Floro 110 Phil 482 (1960)

d. Tradition Brevi Manu Art. 1499

Heirs of Pedro Escanlar v. CA 281 SCRA 176 (1997)

e. Traditio Constitutom Possessorium Art. 1500

Amigo v. Teves 96 Phil 252 (1954)

Bautista v. Sioson 39 Phil 615 (1919)

f. Delivery to a Common Carrier Arts. 1523

Double Sales Art. 1544 (1), 526, 527

Express Credit v. Velasco 473 SCRA 590 (2005)

1. General Rule Prius tempore, prius jure

Carbonell v. CA 69 SCRA 99 (1976)

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 Tanglao v. Parungao 535 SCRA 123 (2007)

2. Requisites for Double Sale

Cheng v. Genato 300 SCRA 722 (1998)

3. Who is purchaser in good faith

Agricultural and Home Extension v. CA 213 SCRA 536 (1992)

Paylago v. Jarabe 22 SCRA 1247 (1968)

4. Sale of Movables Arts. 1544 , 1497 to 1501

Rivera v. Ong 37 Phil 355 (1917)

5. Sale of Immovables Art. 1544 par. 2

Carbonell v. CA 69 SCRA 99 (1976)

Consolidated v. CA 448 SCRA 347 (2005)

a. Sale by virtue of execution and attachment Art. 1544

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 Carumba v. CA 31 SCRA 558 (1970)

Dagupan v. Macam 14 SCRA 179 (1965)

b. Unregistered land PD1529, Section 113

Hanopol v. Pilapil 7 SCRA 452 (1963)

6. When one sale is forgery

Espiritu v. Valerio 9 SCRA 761 (1963)

7. First in possession in good faith

Quimson v. Rosete 87 Phil 159 (1950)

Sanchez v. Ramos 40 Phil 614 (1919)

Beatingo v. Gasis GR No. 179641 Feb 9 2011

8. Oldest title Art. 1544 pars. 3

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 RISK OF LOSS

1. General Rule Art. 1263

2. Loss before perfection

Roman v. Grimalt 6 Phil 96 (1906)

3. Loss at the time of perfection Arts. 1493, 1494

Norkis v. CA 193 SCRA 694 (1991)

4. Loss after perfection but before delivery Arts. 1480 in relation to Art. 1163-

1165, 1189 and 1262

a. General Rule resperit domino

b. Loss by fault of a party Art. 1480, 1504,1538, 1636

c. Loss by fortuitous events Art. 1480, 1163, 1165, 1505, 1538, 1189

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 5. Loss after delivery Art. 1504

Sun Bros v. Perez 7 SCRA 977 (1963)

Lawyers Coop v. Tabora 13 SCRA 762 (1965)

Song Fo v. Oria 33 Phil 3 (1915)

DOCUMENTS OF TITLE

Definition - Arts. 1507, 1636

Purpose of documents of title

Siy Cong Bieng v. HSBC 56 Phil 598 (1932)

Negotiable documents of title

1. How negotiated Arts. 1508, 1509

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 2. Who may negotiate Art. 1512

3. Rights acquired by negotiation Arts. 1513

4. Implied Warranties Arts. 1516, 1517

5. Creditors Right Against the Goods Arts. 1919, 1520

Non-negotiable documents of title

1. How transferred or assigned Arts. 1514 (3)

2. Rights acquired by transfer of document of title Arts. 1514, 1515

2. Effects of Transfer Art. 1514

REMEDIES OF THE UNPAID SELLER

Remedies of unpaid seller Art. 1525-1526, 1533-1534

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 1. Possessory Lien - Art. 1527 1529

2. Stoppage in Transitu Art. 1531-1535,Art. 1532 (2)

3. Resale Art. 1533

Katigbak v. CA 4 SCRA 243 (1962)

4. Rescission Art. 1534

PERFORMANCE OF CONTRACT

OBLIGATIONS OF THE SELLER:

Delivery of the thing sold

1. Place, time and manner of delivery Arts. 1521, 1523 (2,3) 1537

Smith Bell v. Matti 44 Phil 874 (1922)

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2. When time is of essence

Soler c. Chesky 43 Phil 52 (1922)

Republic v. Litton 94 Phil 52 (1953)

3. Effects of delivery Arts. 1477, 1478

4. Acceptance not a condition to delivery

La Fuerza v. CA 23 SCRA 1217 (1968)

5. When seller not bound to deliver Arts. 1524, 1536, 1198

6. Sale of Movables Arts. 1522, 1537, 1480

a. Delivery by installments Art. 1583

b. Delivery of wrong quantity Art. 1522

7. Sale of Immovables Arts. 1471, 1543

a. Where price is at certain rate per unit Arts. 1539, 1540

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 Cebu Windland Dev. Corp. v. Ong Siao Hua 588 SCRA 120 (2009)

b. Sale for a lump sum Art. 15421471 (1)

OBLIGATIONS OF THE BUYER:

1. Inspections and Acceptance

a. Right of inspection Art. 1584 (2, 3)

b. Manifestation of acceptance Art. 1585

b. Breach of warranty Art. 1586

c. Refusal to accept Arts. 1587 1589

2. Payment of the price Art. 1582

3. Liability for interest Art. 1589

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4. Suspension of payments Arts. 1590, 1560, 1664

Bareng v. CA 107 Phil 641 (1960 )

Spouses Mahusay v. BE San Diego Inc. GR 179675 June 8, 2011

5.Sale of immovables Arts. 1592, 1560

a. Effect of non payment Art. 1191

Laforteza v. Machuca 333 SCRA 643 (1992)

De la Cruz v. Legaspi 98 Phil 43 (1955)

Luzon Brokerage v. Maritime 43 SCRA 93 (1972)

c. Maceda Law: RA 6552

Active Realty v. Daroya 382 SCRA 152 (2002)

WARRANTIES

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Express Warranties

1. Distinguished from condition Arts. 1545

2. Distinguished from opinion, dealers talk Arts. 1546, 1340, 1341

Songco v. Sellner 37 Phil 254 (1917)

3. Distinguished from false representation Art. 1342

Gochangco v. Dean 47 Phil 687 (1925)

PMC v. Gojuco 48 Phil 621 (1926)

Implied Warranties Art. 1547

1. Warranty that seller has right to sell

2. Warranty against eviction Arts. 1548 1560

3. Warranty against non-apparent servitudes Art. 1560

4. Warranty against hidden encumbrance or defects Arts. 1561 1580

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 5. Sale of goods by sample or description Arts. 1574, 1562 (2), 1481

6. Warranty in sale of animals Art. 1568

7. Implied Warranty of Quality Arts. 1562 (1), 1564

8. Additional warranties for consumer products RA 7394, Art. 6

BREACH OF CONTRACTS

REMEDIES OF THE SELLER:

Sale of Movables

1. Action for the price Art. 1595

a. When ownership has passed Art. 1595

b. When ownership has not passed Art. 1595 (2)

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 When goods cannot readily be sold Art. 1595 (3)

2. Action for damages for non-acceptance Art. 1596

3. Right of Rescission Arts. 1597, 1593

Sale of Movables on Installment (Recto Law) Arts. 1484 1486

1. Rationale of Recto Law

Cruz v. Filipinas Investment and Finance Corp. 23 SCRA 791 (1968)

2. Meaning of Installment Sale

Levy Hermanos v. Gervacio 69 Phil 52 (1939)

3. Remedies available to the unpaid seller

Delta Motor Sales v. Niu Kim Duan 213 SCRA 259 (1992)

4. Remedy of specific performance

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 Tajanlangit v. Southern Motors 101 Phil 606 (1967)

5. Remedy of rescission

Nonato v. IAC 140 SCRA 255 (1985)

6. What constitutes foreclosure

Third party mortgage

Ridad v. Filipinas Investment 120 SCRA 246 (1983)

The barring effect of foreclosure

Northern Motors v. Sapinoso 33 SCRA 356 (1970)

Sale of Immovables

1. Anticipatory Breach Art. 1591

2. PD 957, Sections 23-24

Casa Filipina Realty v. OP 241 SCRA 165 (1995)

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 Luzon Development Bank v. Enriquez GR No. 168646 Jan 12, 2011

3. Maceda Law (RA6552) Sale of Immovables on Installment

Luzon Brokerage v. Maritime 43 SCRA 93 (1972)

Active Realty v. Daroya 382 SCRA 152 (2002)

Valarao v. CA 394 SCRA 155 (1999)

a. Rescission under Article 1592

b. Contracts to sell not covered by Art. 1592

REMEDIES OF THE BUYER:

1. Sale of movables Arts. 1598 1599

a. Right to enforce specific performance Art. 1598

b. Remedies for breach of warranty

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 c. Right of Rescission Art. 1599

2. Sale of immovables Art. 1191

a. Suspension of Payment Art. 1590

b. PD 957, Sec. 23 and 24

Casa Filipina Realty v. OP 241 SCRA 165 (1996)

3. Sale of Immovables on Installment - MACEDA LAW RA 6552-

Luzon Brokerage v. Maritime Bldg. 86 SCRA 305 (1978)

Active Realty v. Daroya 382 SCRA 152 (2002)

EXTINGUISHMENT OF SALE

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Causes Arts. 1600, 1231

Conventional redemption Art. 1601

Villarica v. CA 26 SCRA 189 (1968)

Bautista v. Unangst 557 SCRA (2008)

Distinguished from Equitable mortgage Arts. 1602 - 1604

1. Definition of Equitable Mortgage

Tan v. Valdehueza 66 SCRA 61 (1976)

Roberts v. Papio 515 Scra 346 (2007)

2. Distinguish from option to buy Art. 1602

Adiarte v. Tumaneng 88 Phil 333 (1951)

3. Period to redeem

Heirs of Arches v. Diaz 50 SCRA 440 (1973)

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 4. Exercise of the right to redeem Art. 1616

Gargollo v. Duero 1 SCRA 1311 (1961)

a. Who can exercise Art. 1610 1613

b. From whom to redeem Art. 1615

c. Effect of Redemption Arts. 1617 1618

d. Effect of Non-redemption Art. 1607

Legal redemption Art. 1619

1. Period to redeem Art. 1623

Conejero v. CA 16 SCRA 775 (1966)

Butte v. Manuel Uy 4 SCRA 526 (1962)

Castillo v. Samonte 106 Phil 1023 (1960)

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 Doromal v. CA 66 SCRA 575 (1975)

Francisco v. Boisier 332 SCRA 305 (2000)

Misterio v. Cebu State College of Science and Technology 461 SCRA 122

(2005)

2. Instances of legal redemption

a. Co-owners Art. 1620

b. Co-heirs Art. 1088

c. Adjoining landowners of rural land Art. 1621

d. Adjoining landowners of urban land Art. 1622

Ortega v. Orcine 38 Phil 276 (1971)

e. Under Public Land Act CA 141 sec. 118

f. Under Extrajudicial Foreclosure Act 3175 sec. 6

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 g. Under Agrarian Land Reform Code RA 6389 sec. 12

BULK SALES LAW Act. No. 3952

Clj 2017

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