UNIVERSITY OF THE PHILIPPINESCOLLEGE OF LAW

SALES

I. INTRODUCTION

Textbook: BAVIERA, Araceli, Sales

DEFINITION OF SALE – Art. 1458

ESSENTAIL REQUISITES OF A CONTRACT OF SALE

1. Consent

2. Subject Matter

3. Price

Dizon v. CA 302 SCRA 288 (1999)

STAGES OF CONTRACT OF SALE

1. Negotiation

2. Perfection

3. Consummation

OBLIGATIONS CREATED - Art. 1165

CHARACTERISTICS OF A CONTRACT OF SALE

1. Nominate

2. Principal

2. Consensual – Art. 1475

Fule v. CA 286 SCRA 698 (1998)

3. Bilateral and Reciprocal – Arts. 1169 and 1191

4. Onerous

5. Commutative –Arts. 1355 and 1470

SALE IS TITLE AND NOT MODE

SALE DISTINGUISHED FROM OTHER CONTRACTS

1. Donation – Arts. 725 and 1471

2. Barter – Arts. 1468, 1638 to 1641

Fule v. CA 286 SCRA 698 (1998)

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

Celestino v. Collector 99 Phil 841 (1956)

Commissioner v. Engineering 64 SCRA 590 (1975)

4. Agency to Buy or Sell – Art. 1466, 1868

Quiroga v. Parsons 38 Phil 501 (1918)

Puyat v. Arco 72 Phil 402 (1941)

5. Dacion en Pago – Art. 1245

Dao Heng Bank v. Sps. Lilia & Reynaldo Laigo 571 SCRA 4343 (2008)

6. Lease – Arts. 1484 and 1485

CONTRACT OF SALE/CONTRACT TO SELL

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

Dignos v. CA 158 SCRA 375 (1988)

II. PARTIES TO A CONTRACT OF SALE

CAPACITY OF PARTIES – Arts. 1489 – 1492

ABSOLUTE INCAPACITY – Arts. 1327, 1397, 1399

Necessaries – Art. 1489, 290

RELATIVE INCAPACITY: Married Persons

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

2. Between Spouses – Arts. 133, 1490 and 1492

3. Applicability to Common-Law Spouses – Art. 133

Calimlim Canullas v. Fortun 129 SCRA 675 (1984)

Cruz v. CA 281 SCRA 491 (1997)

SPECIAL DISQUALIFICATIONS – Arts. 1491 –1492

1. Guardians, Agents and Administrators

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

2. Lawyers

Rubias v. Batiller 51 SCRA 120 (1973)

3. Judges

Macariola v. Asuncion 114 SCRA 77 (1982)

III. SUBJECT MATTER

REQUISITES OF A VALID SUBJECT MATTER – Arts. 1459 to 1465

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

Martinez v. CA 56 SCRA 647 (1974)

2. Must be determinate or determinable – Art. 1460

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 – Arts. 1461 and 1347

Pichel v. Alonzo 111 SCRA 34 (1981)

Emptio spei – Art. 1461

Subject to resolutory condition – Art. 1465

Quantity of subject matter not essential for perfection – Art. 1349

PARTICULAR KINDS

1. Generic things – Arts. 1246 and 1409 (6)

Yu Tek v. Gonzales 29 Phil 384 (1915)

2. Future goods – Art. 1461

3. Sale of undivided interest or share – Arts. 1463-1464

4. Sale of things in litigation – Arts. 1381 (4), 1358 (2)

5. Things subject to resolutory cohdition – Art. 1406

IV. OBLIGATION OF THE SELLER TO TRANSFER OWNERSHIP

SALE BY A PERSON NOT THE OWNER AT TIME OF DELIVERY – Arts. 1462,

1505, 1459

EXCEPTIONS: When ownership transfers by non-owner

1. Estoppel – Arts. 1434

Hernaez v. Hernaez 32 Phil 214 (1915)

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

Jalbuena v. Lizarraga 33 Phil 77 (1915)

2. Recording Laws; Torrens System – PD 1529

3. Statutory Sale/ Order of Courts

4. Sale in Merchant’s Store, Market or Fair

Sun Bros. V. Velasco 54 OG 5143 Aug 1958

Masiclat v. Centeno GR No 8420, May 21, 1956

SALE BY A PERSON HAVING A VOIDABLE TITLE – Arts. 1506, 559

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

De Garcia v. CA 37 SCRA 129 (1971

EDCA Publishing v. Santos 184 SCRA 614 (1990)

Aznar v. Yapdiangco 13 SCRA 486 (1965)

V. PRICE

MEANING OF PRICE – Arts. 1469 – 1474

REQUISITES FOR A VALID PRICE

1. Must be real – Arts. 1471

a. When price simulated

b. Effects when price simulated

c. False consideration – Art. 1353 and 1354, 1355

Mapalo v. Mapalo 17 SCRA 114 (1966)

Ong v. Ong 139 SCRA 133 (1985)

Bagnas v. CA 176 SCRA 159 (1989)

Morales v. CA 27 SCRA 484 (1969)

d. Non-payment of price

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 – Arts. 1469

Toyota Shaw v. CA 244 SCRA 320 (1995)

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

INADEQUACY OF PRICE – Arts. 1355, 1470

WHEN NO PRICE AGREED – Art. 1474

MANNER OF PAYMENT MUST BE AGREED UPON

Velasco v. CA 51 SCRA 439 (1973)

EARNEST MONEY V. OPTION MONEY – Art. 1482

Limson v. CA 357 SCRA 209 (2001)

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

VI. FORMATION OF CONTRACT OF SALE

PREPARATORY – Art. 1479

1. Offer – Art. 1475

Villonco v. Bormaheco 65 SCRA 352 (1975)

Traders Royal Bank v. Cuison Lumber Co. 588 SCRA 690 (2009)

XYST Corp. v. DMC Urban Properties 594 SCRA 598 (2009)

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

Zayco v. Serra 44 Phil 326 (1923)

b. Forms of acceptance – Arts. 1319

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

2. Option Contract – Arts. 1479 , 1324

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

Soriano v. Bautista 6 SCRA 946 (1962)

Carcellar v. CA 302 SCRA 718 (1999)

Tuazon v. del Rosario GR No. 168325 Dec. 8, 2010

a. Meaning of Consideration:

Villamor v. CA 202 SCRA 607 (1991)

Sanchez v. Rigos 45 SCRA 368 (1972)

3. Right of First Refusal

Equitorial Realty v. Mayfair 264 SCRA 483 (1996)

Paranaque Kings v. CA 268 SCRA 727 (1997)

Ang Yu v. CA 238 SCRA 602 (1994)

Rosencor v. Inquing 354 SCRA 119 (2001)

4. Mutual Promise to Buy and Sell – Art. 1479

De la Cavada v. Diaz 37 Phil 982 (1918)

PERFECTION - Arts. 1475, 1319, 1325, 1326

Fule v. CA 286 SCRA 698 (1998)

1. When deviation allowed

Villonco v. Bormaheco 65 SCRA 352 (1975)

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

3. Place of Perfection – Art. 1391

4. Expenses of Execution and Registration – Art. 1487

FORMALITIES OF THE CONTRACT

1. Form not important – Arts. 1483, 1356, 1357, 1358

Dalion v. CA 182 SCRA 872 (1990)

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

2. Exceptions: When form important

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

VII. TRANSFER OF OWNERSHIP

MANNER OF TRANSFER – Arts. 1477, 1496

Kuenzle v. Macke 14 Phil 610 (1909)

WHEN DELIVERY DOES NOT TRANSFER TITLE

1. Sale on return

2. Sale on approval, trial or satisfaction – Art. 1502

3. Express Reservation – Art. 1478

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

4. Implied Reservation – Art. 1503

5. When sale not valid

6. When seller is not the owner

KINDS OF DELIVERY

1. Real delivery – Art. 1497

Bean v. Cadwallader 10 Phil 606 (1908)

Ocejo v. International Bank 37 SCRA 631 (1918)

2. Constructive Delivery

a. Symbolic Delivery – 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)

b Traditio Longa Manu – Art.s 1498, 1499, 1513, 1514

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

c. Tradition Brevi Manu – Art. 1499

Abuan v. Garcia 14 SCRA 759 (1965)

d. Traditio Constitutom Possessorium – Art. 1500

Bautista v. Sioson 39 Phil 615 (1919)

e. Delivery to a Common Carrier – Arts. 1523

“FOB Sales”

Behn Meyer v. Yangco 38 Phil 602 (1918)

“CIF Sales”

General Food v. Nacoco 100 Phil 637 (1956)

“FAS”

Effect of form of bill of lading – Art. 1503

DOUBLE SALES – Art. 1544

1. General Rule – Prior tempore, prior jure

Carbonell v. CA 69 SCRA 99 (1976)

2. Requisites for Double Sale

Cheng v. Genato 300 SCRA 722 (1998)

3. Who is purchaser in good faith

Leung Yee v. F. L. Machinery Co. 370 Phil 644 (1918)

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

Rivera v. Ong 37 Phil 355 (1917)

5. Sale of Immovables – Art.1 1544 par. 2

Carbonell v. CA 69 SCRA 99 (1976)

6. Sale by virtue of execution and attachment – Art. 1544

Carumba v. CA 31 SCRA 558 (1970)

7. Unregistered land – PD 1529 sec. 113

Hanopol v. Pilapil 7 SCRA 452 (1963)

Dagupan v. Macam 14 SCRA 179 (1965)

8. First in possession in good faith

Quimson v. Rosete 87 Phil 159 (1950)

Sanchez v. Ramos 40 Phil 614 (1919)

9. Oldest title – Art. 1544 pars. 3

VIII. RISK OF LOSS

GENERAL RULE – Art. 1263, 1189

WHEN LOSS OCCURRED BEFORE PERFECTION

Roman v. Grimalt 6 Phil 96 (1906)

WHEN LOSS OCCURRED AT TIME OF PERFECTION – Arts. 1493 and 1494

Norkis v. CA 193 SCRA 694 (1991)

WHEN LOSS OCCURRED AFTER PERFECTION BUT BEFORE DELIVERY –

Arts. 1164, 1262

General Rule: Res perit domino

Loss by fault of a party – Arts. 1480, 1504. 1538, 1636

Loss by fortuitous events – Arts. 1480, 1163, 1165, 1504, 1538, 1189

Fruits or improvements – Arts. 1537

WHEN OWNERSHIP IS TRANSFERRED – Arts. 1504

Sun Bros. V. Perez 7 SCRA 977 (1963)

Lawyer’s Coop v. Tabora 13 SCRA 762 (1965)

Song Fo v. Oria 33 Phil 3 (1915)

IX. DOCUMENTS OF TITLE

DEFINITION - Art. 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

2. Who can negotiate – Art. 1512

3. Rights acquired by negotiation – Art. 1505

4. Effects of Negotiation – Art. 1513

5. Unauthorized Negotiation – Art. 1518

NON-NEGOTIABLE DOCUMENTS OF TITLE

1. How transferred or assigned – Art. 1514

2. Effects of Transfer – Art. 1514

WARRANTIES OF SELLER OF DOCUMENTS OF TITLE - Art. 1516

RULES ON LEVY/GARNISHMENT OF GOODS – Arts. 1514, 1519, 1520

X. REMEDIES OF AN UNPAID SELLER

DEFINITION OF UNPAID SELLER – Art. 1525

REMEDIES OF UNPAID SELLER

1. Possessory Lien – Arts. 1526 – 1529, 1503, 1535

a. Partial delivery

b. Loss of lien

c. Revival of lien

2. Stoppage in transitu – Arts. 1530 – 1535, 1632 (2)

a. Requisites

b. When considered in transit

c. Sale of goods in transit

3. Right of Resale – Art. 1533

a. Time to resell

b. Right to sue buyer for damages

4. Right to Rescind – Art. 1534

XI. PERFORMANCE OF CONTRACT

DELIVERY OF THING SOLD

1. Place, time and manner of delivery – Arts. 1521, 1169, 1524

Smith Bell v. Matti 44 Phil 874 (19220

2. When time is of essence

Soler c. Chesky 43 Phil 52 (1922)

Republic v. Litton 94 Phil 52 (1953)

3. Effects of delivery – Art. 1477, 1478

4. When not bound to deliver – Arts. 1524, 1536,1198

5. Sale of Movables – Arts. 1522, 1537, 1480

a. Delivery by installment – Art. 1583

b. Delivery of wrong quantity – Art. 1522

6. Sale of Immovables – Arts. 1539, 1543

Azarraga v. Gay 52 Phil 599 (1928)

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

b. Sale for a lump sum – Art. 1542

Del Prado v. Sps. Caballero GR 148225 Mar. 3, 2010

7. Inspections and Acceptance

a. Right of inspection – Art. 1584

b. Manifestation of acceptance – Art. 1585

b. Breach of warranty – Art. 1586

c. Refusal to accept –Art. 1587 – 1589

La Fuerza v. CA 23 SCRA 1217 (1968)

PAYMENT OF PRICE

1. Liability for interest – Arts. 1582

2. Suspension of payments – Arts. 1590, 1560, 1664

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

Bareng v. CA 107 Phil 641 (1960)

3. Sale of real property – Arts. 1592, 1560

a. Effect of non payment – Art. 1191

Laforteza v. Machuca 333 SCRA 643 (1992)

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

Legarda Hermanos v. Saldana 55 Phil 324 (19740

b. Maceda Law: Sales of Residential Realty on Installment (RA 6552)

Valarao v. CA 394 SCRA 155 (1999)

Active Realty v. Daroya 382 SCRA 152 (2002)

XII. WARRANTIES

EXPRESS WARRANTIES

1. Distinguish from condition – Arts. 1545

2. Distinguish from opinion, dealer’s talk – Art. 1546, 1340, 1341

Songco v. Sellner 37 Phil 254 (1917)

3. Distinguish from false representation – Art. 1342

Gochangco v. Dean 47 Phil 687 (1925)

PMC v. Gojuco 48 Phil 621 (1926)

IMPLIED WARRANTIES – Art. 1547

1. 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

5. Additional warranties for consumer products – RA 7394, Art. 68

6. Warranty in sale of animals – Art. 1568

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

8. Sale by sample or description – Art. 1574, 1562 (2), 1481

EFFECTS OF WARRANTIES

EFFECTS OF WAIVERS

BUYERS OPTIONS IN CASE OF BREACH OF WARRANTY – Art. 1599

Ong v. CA 567 SCRA 53 (2008)

XIII. BREACH OF CONTRACTS

REMEDIES OF THE SELLER – Art. 1636, 1594

Sale of Movables

1. Action for the price – Art. 1595

2. Action for damages – Art. 1596

3. Rescission – Art. 1597, 1534, 1593

RECTO LAW: Sale of Movables on Installment – Arts. 1484 – 1486

Levy Hermanos v. Gervacio 69 Phil 52 (1939)

Borbon v. Servicewide 258 SCRA 634 (1996)

Manila Trading v. Reyes 62 Phil 461 (1935)

Cruz v. Filipinas 23 SCRA 791 (1968)

Tajanlangit v. Southern Motors 101 Phil 606 (1957)

Nonato v. IAC 140 SCRA 255 (1985)

Delta Motor v. Nui Kim 213 SFRA 259 (1992)

Northern Motors v. Sapinoso 33 SCRA 356 (1970)

Sale of Immovables

1. Anticipatory Breach – Art. 1591

Legarda v. Saldana 55 SCRA 324 (1974)

2. PD 957 sec. 23, 24

Casa Filipina v. OP 241 SCRA 165 (1995)

3. Maceda Law: Sale of Immovables on Installment

Mclaughlin v. CA 144 SCRA 693 (1986)

Sps. Garcia v. CA 172036 April 23, 2010

4. Rescission on sale on non-residential realty on installment – Arts. 1191 and 1592

REMEDIES OF THE BUYER

Sale of Movables

1. Specific performance – Arts. 1598 – 1599

2. Breach of Warranty – Arts. 1599, 1571

4. Rescission – Art. 1599

Sale of Immovables

1. Art. 1191

2. Suspension of Payment – Art. 1590

3. In case of Subdivision or Condominium

XIV. EXTINGUISHMENT OF THE SALE

CAUSES – Arts. 1600, 1231

CONVENTIONAL REDEMPTION – Art. 1601

Villarica v. CA 26 SCRA 189 (1968)

Bautista v. Unangst 557 SCRA (2008)

EQUITABLE MORTGAGE – Arts. 1602 - 1604

1. Definition of Equitable Mortgage

Tan v. Valdehueza 66 SCRA 61 (1976)

2. Rationale of Equitable Mortgage

3. Badges of Equitable Mortgage

4. Pactum Commissorium – Art. 2088

DISTINGUISH FROM OPTION TO BUY– Art. 1602

Adiarte v. Tumaneng 88 Phil 333 (1951)

PERIOD OF REDEMPTION – Art. 1606

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

EXERCISE OF THE RIGHT TO REDEEM – Art. 1616

Gargollo v. Duero 1 SCRA 1311 (1961)

1. By whom exercised – Arts. 1610 - 1613

2. From whom to redeem – Art. 1615

3. Effect of redemption – Arts. 1617, 1618

4. 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)

Doromal v. CA 66 SCRA 575 (1975)

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

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

XV. BULK SALES LAW

RA3952

People v. Wong 50 O.G. 4867 (Oct. 1954)

People v. Mapoy 73 Phil 678 (1942)

XVI. RETAIL TRADE LIBERALIZATION ACT OF 2000

King v. Hernaez 4 SCRA 792 (1962)

10-11 clj