UNIVERSITY OF THE PHILIPPINES

COLLEGE OF LAW
SALES
I.

INTRODUCTION

Textbook: BAVIERA, Araceli, Sales

DEFINITION OF SALE Art. 1458

NATURE OF THE OBLIGATIONS
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
CHARACTERISTICS OF A CONTRACT OF SALE
1. Nominate and Principal
2. Consensual Art. 1475
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 Equipment 65 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 Family Code

2. Between Spouses Arts. 133, 1490 and 1492

Medina v. Collector 1 SCRA 302 (1961)
3.

Applicability to Common-Law Spouses Art. 133

Matabuena v. Cervantes 38 Phil 284 (1971)
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
4. 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)

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 Merchants 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)

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)
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 purchase and 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
Nietes v. CA 46 SCRA 654 (1972)
e.

There must be acceptance of option

Vasquez v. CA 199 SCRA 102 (1991)

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
1. When deviation allowed
Villonco v. Bormaheco 65 SCRA 352 (1975)
2. Sale by Auction Arts. 1476, 1403 (d), 1326
3. Perfection Art. 1475
National Grains Authority v. IAC 171 SCRA 131 (1989)
Peoples Homesite and Housing v. CA 133 SCRA 777 (1984)
4. Place of Perfection Art. 1391
5. Expenses of Execution and Registration Art. 1487, 1521
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)
Cebu Winland Dev.Corp. v. Ong Siao Hua 588 SCRA 120 (2009)
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)
Asset Privatization Trust v. T.J. Enterprises 587 SCRA 481 (2009)
b Traditio Longa Manu Arts. 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
Agricultural and Home Extension v. CA 213 SCRA 536 (1992)
4. Priority of registration over possession
5. Sale of Movables Arts. 1544 , 1497 to 1501
Rivera v. Ong 37 Phil 355 (1917)
6. Sale of Immovables Art.1 1544 par. 2
Carbonell v. CA 69 SCRA 99 (1976)
7. Sale by virtue of execution and attachment Art. 1544
Carumba v. CA 31 SCRA 558 (1970)
8. Meaning of Better Right
Hanopol v. Pilapil 7 SCRA 452 (1963)
9. Unregistered land PD 1529 sec. 113
Dagupan v. Macam 14 SCRA 179 (1965)
10. When one sale is forgery
Espiritu v. Valerio 9 SCRA 761 (1963)
11. First in possession in good faith
Quimson v. Rosete 87 Phil 159 (1950)
Sanchez v. Ramos 40 Phil 614 (1919)
12. 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)
Lawyers 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, 1540
Azarraga v. Gay 52 Phil 599 (1928)
a.

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

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

b. Sale for a lump sum Art. 1542

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)
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, dealers 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- 1599

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
1. Meaning of Installment Sale
Levy Hermanos v. Gervacio 69 Phil 52 (1939)
2. Remedies available to the unpaid seller
Delta Motor Sales v. Niu Kim Duan 213 SCRA 259 (1992)
3. Remedy of specific performance
Tajanlangit v. Southern Motors 101 Phil 606 (1967)
4. Nature of the remedy of rescission
Nonato v. IAC 140 SCRA 255 (1985)
5. Meaning of action
Cruz v. Filipinas Investment and Finance Corp. 23 Corp 791 (1968)
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
Legarda v. Saldana 55 SCRA 324 (1974)
2. PD 957 sec. 23, 24

Casa Filipina v. OP 241 SCRA 165 (1995)

Relucio v. Brillante Garfin 187 SCRA 405 (1990)
3. Maceda Law: RA 6552 - Sale of Immovables on Installment
Mclaughlin v. CA 144 SCRA 693 (1986)
Luzon Brokerage v. Maritime 86 SCRA 305 (1978)
REMEDIES OF THE BUYER
1. In case of movables Arts. 1598 1599
2. In case of immovables Art. 1911 PD 957 Sec. 23, 24
3. Suspension of Payment Art. 1590

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
1. When no period agree upon Art. 1606
2. When period agreed upon
Anchuel v. IAC 147 SCRA 4343 (1987)
3. When there is a period of non-redemption
Tayao v. Dulay 13 SCRA 758 (1965)
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)
f. Under Public Land Act CA 141 sec. 118
g. Under Extrajudicial Foreclosure Act 3175 sec. 6
h. Under Agrarian Land Reform Code RA 6389 sec. 12

XV.

BULK SALES LAW

A. Scope
People v. Wong CA O>G> 4867 (1954)
B. Coverage of Bulk Sales
C. Compliance requirements under the law
D. Effects of non-compliance Sec. 4,7,11
People v. Mapoy 73 Phil 678 (1942)

XVI. RETAIL TRADE LIBERALIZATION ACT OF 2000

A. Constitutionality
Inchong v. Hernandes 101 Phil 1155 (1957)
B. Scope and definition
King v. Hernandez 4 SCRA 792 (1962)
C. Elements

D. Application of Grandfather Rule on 100% Filipino ownership of corporate

entity
E. Anti-Dummy Act CA No. 108 as amended by PD 715

2012 clj