REVIEWER ON SALES

LECTURE OF ATTY A.P. MACMOD COMPILED BY NIR NOEL A. AQUNO ANGELES UNIVERSITY FOUNDATION

DEFINITION & CHARACTERISTICS OF Note:In commercial law sale of security by a

SALES AS CONTRACTS corporation without SEC registration under
Definition of Sale Securities Registration Code is void and
2 2 Obligations chargeable of Criminal Liability.
Parties
1.Deliver – SALE VERSUS SIMILAR CONTRACT
As a determinate
Contrac Kinds of Similar Contract
thing
t Vendor 1. Agency to Sell
– 2.Transfer VS
meetin ownership Sales Agency to Sell
.
g of
minds 1.Accept delivery 1. Buyer and Agent and Principal Relation
Vendee Seller Relation
2.Pay the price
2. Delivery by Despite delivery of Principal
– Buyer bears to Agent no ownership only
Characteristics ownership unless authority given.
stipulated.
1. Consensual
as a rule: 3. Sale of land Sale of Land by Agent whose
by owner if not in authority not written VOID.
 Any form, Except:
writing violation of
a. Sale of land though an agent (void; Statute of Fraud.
if authority not in writing)
b. Sale in Statute of Fraud
(unenforceable) 2. Barter
Sale of movable Personal VS
Sales Barter
Property* .
Sale of land/Real Property* –
1. Sell on S; Buy Exchange Purpose
immovable property not by B
through agent
2. Goods versus Goods versus Goods
*not in writing Money
2. Commutative
3. If mixed transactions exist intention and
as a rule: words will govern, if not clear
 Because not determined by risk unlike
Good < Php. Good > Php.
aleatory sales (Ex. Lotto).
Good = Php.
3. Bilateral – always both parties have
obligation
Reciprocal 3. Contract for a Piece of Work
VS Contract for a Piece of
as a rule: Sales
. Work
 Simultaneous performance (kaliwaan
hehe) unless stipulated. 1. Goods for Special order only
general public
4. Principal – always can stand alone
2. After Loss before delivery – shall
5. Nominate – named in civil code perfection but be borne by seller
6. Onerous – price is an essential before delivery –
element lost due to
7. Transmissive of ownership fortuitous event
born by buyer.
Date of delivery
seller
(rule)
must
transfer 4. Contract to Sell
Late if subject to
ownership condition Sales VS Contract to Sell

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 REVIEWER ON SALES
LECTURE OF ATTY A.P. MACMOD COMPILED BY NIR NOEL A. AQUNO ANGELES UNIVERSITY FOUNDATION

.  Buyer relies on the description of the

Seller.
1. As a rule: Conditional Agreement
Absolute contract –  Upon delivery goods must conform with
no condition unless the description, otherwise Buyer’s
stipulated, remedy to rescind the sale and damages.
2.Upon delivery, Despite delivery there is no 7. Sale by Sample and Description*
ownership obtained ownership transferred until
full payment.  Buyer relies on the sample and
description of the Seller.
 Upon delivery of goods must conform
5. Cession and Dacion with the description, otherwise Buyer’s
VS remedy to rescind the sale and damages.
Sales Cession and Dacion
. 8. Sale of Undivided Share of Specific
Mass of Fungible Goods*
Delivery by the debtor
extinguish obligation.  Can’t be used without consuming them.
 Example: A, B and C shares on a 1000 L
1. Sellers Cession Dacion
delivery is to create of Gas, subsequently B sold his share to
obligation to pay 2 or more 1 creditor Mr. X but without specifying the mass.
the price creditors, only debtor Thus, transaction is Void.
debtor is is solvent. *normal sale is at arms-length transactions.
insolvent.

STAGES
SPECIAL SALES (PAS6) Similar to Contracts
- Deviated from ordinary characters of sales.
1. Pacto de retro sales Prepar Perfec Consum
ation tion mation
 Sale with right to purchase (limited period
10 years) 1. Preparation
 Sale with resolutory period condition  negotiation stage/ conception/ bargaining
immediately demandable (obligation) stage
2. Aleatory sales – determined by risk.  offer and counter offer
Example: Lotto  no meeting of minds = no legal relation
3. Sale or return
 Upon delivery by seller, buyer obtains as a rule:
Offer can be withdrawn any time even by
ownership
sending letter only
 If transferred, but, can be returned later exception theory:
on even without defect buyer bears loss, Even unreceived by other party is
res perit domino (resolutory). cancelled.
4. Sale on Trial Approval or Satisfaction except:
 Despite delivery by Seller to Buyer When option money is given (reservation
ownership is not transferred until buyer fee).
informs seller for his approval. 2. Perfection
 Lost after delivery due to Fortuitous a. Face to Face – upon acceptance of the
Event, Seller will bear the Loss offer (complete and unconditional) =
(Suspensive) definite/clear.
5. Sale by Sample* b. Sale by Correspondence – cognition
 Buyer relies on the sample of the Seller theory (offeror learns of the acceptance
 Upon delivery, goods must conform with c. Sale with Suspensive Condition* –
the sample, otherwise, Buyer’s remedy to upon happening of condition
rescind the sale and damages. (demandable).
6. Sale by Description*

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 REVIEWER ON SALES
LECTURE OF ATTY A.P. MACMOD COMPILED BY NIR NOEL A. AQUNO ANGELES UNIVERSITY FOUNDATION

d. Sale by Public Auction - upon the fall c. Real/ Present/ Future if with
of the hammer or offer customary modes. potential existence
Puffers/By Bidders VS Emptio Rei
Emptio Spei
 Manipulate bid price . Speretae
 By making simulated bids only
Sale of Hope Sale of future good
 To increase price
Are Puffers/By Bidders allowed? No condition Conditional Sale
Not allowed unless publicly announced before
bidding status. Fixed price Price varies
*upon happening of condition - demandable
3. Consumation/ execution termination/  Consideration/cause (seller side)
death of a. Price – certain (can be
mathematically computed as to
 Parties performed respective obligation.
value) in money or its equivalent (can
be another thing provided specific).
b. Lesion
ELEMENTS
Price is < Fair Market Value – sale
1. Essential
still valid unless:
 Without them, no sale/void.
i. Simulated
 Consent
ii. Vitiated consent
a. Meeting of Minds
iii. Real agreement is donation – real
b. Perfection Stage
agreement will prevail (with
c. Face to face Acceptance of offer
proper limit) ex. Juan choose
d. Correspondence
between the two.
e. Review factors affecting
consent
Who is incapacitated?
c. Price care of
With capacity but vitiated consent rd
3 party – allowed, but effective
With capacity simulated contracts
upon proper communication among
f. Review also the defective contracts
the parties.
g. Sale
Sole will of 1 party – sale is void
Rescissible
unless later 1 party fixed the price
Voidable
and the other party accepted it.
Unenforceable
d. Price is
Void
False/uncertain/cannot be
Following prohibits sale (POGEAH)
determined/illegal (ex. Fake dollars)
a. Public officials* – can’t purchase
– sale is void, but before that ask if:
property under custody
i. Seller knows – void sale
b. Officers of the court* –
ii. Seller without knowledge – sale is
employees and judges under
valid but sue the Buyer - liable
litigation
criminally and civilly (fraud in the
c. Guardians of the wards**
performance)
d. Executor/Administrator Property of
2. Natural
Estate**
 Without them, still void, but with
e. Agents – property of Principal**
remedies.
(Agency)
f. House and Wife**  Example. Warranty vs. eviction, hidden
*absolutely void effects.
**void if with court approval 3. Accidental
 Object  Must be stipulated to be present
a. Licit (lawful)  Example. Pacto De Retro sale
b. Must be determinate can’t be
generic. OBLIGATION OF PARTIES

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 REVIEWER ON SALES
LECTURE OF ATTY A.P. MACMOD COMPILED BY NIR NOEL A. AQUNO ANGELES UNIVERSITY FOUNDATION

Vendor 3. Quasi tradition from incorporeal

Vendee (Important intangible property
Character)
Cardinal obligation of
Double Sale
the seller
1. To deliver  Same object sold to 2 or more buyers.
1. Accept delivery determinate thing  Who acquires better title?
sold a. If Personal property
2. Transfer
ownership
i. 1st to possess in good faith (except cars
2. Pay principal + – through LTO registration)
interest (if it is 3.Warrant vs. Eviction b. Real Property (ex. Land – Registration)
stipulated due to & hidden defects i. 1ST to register in Good Faith
unreasonable delay by contracts ii. 1st to possess in Good Faith
the buyer)
iii. The one with oldest title
4.To pay expenses of
the sale
a.Capital Gains Tax WARRANTY VS. EVICTION
b.Documentary Deprivation of the thing brought (wholly or
Stamp Tax partly)
c. Other Related
Expenses
a. Requirements to hold seller liable
(F2D2)
Question: 1. Final judgement (no more appeal)
Why Seller must be the owner at the time of 2. Fault of seller
delivery not necessarily at the time of 3. Deprivation of thing bought
perfection of sale? 4. Due process given to seller – with
Answer: notice
As a rule, buyer acquires only the title of the b. What buyer can recover? (VICED)
seller at the time of delivery 1. Value of the thing bought (Present
Except, buyer acquire better title (MEC) Value)
1. Merchant Stole Sale 2. income thereof (present)
- John stole the Television Set of Dela 3. cost of suit (Legal Expenses)
Cruz and sold it to XYZ 4. expenses of the sale (if buyer paid)
- Protect commercial transaction 5. Other Damages
2. Estopped real owner
3. Court ordered sale WARRANTY VS HIDDEN
Seller is the transferor – if seller is thief what DEFECTS/FITNESS/MERCHANTIBILITY
to transfer? Anti-fencing law – 2nd hand goods Thing bought is fit for its intended use
(stolen) no good faith or bad faith as a c. Requirements to hold seller liable
defense. (HEEPU)
1. Defect must be hidden – also redhbitory
KINDS OF DELIVERY 2. Defect existing in time of sale
1. Actual/Physical/Real – from one 3. Defect excluded on the contract (not
hand/person to another as most common mentioned)
mode (movable) 4. Period to complain is not observed
Personal Property – 6 months
2. Constructive delivery Animals – 40 days vs. 3-day rule with
a. Execution of public/legal Instrument existing illness and died can be
(Deed of Sale/ Notarized) returned.
b. Traditio Symbolica - ex. Car keys 5. Defect render unfit to its intended use
c. Traditio longga manu – mere pointing d. What can buyer recover?
d. Traditio bres manu – from lessee 1. If defect minor only (easy to
becomes owner after buying it cure/repair) – actio quanti minoris
e. Constitutun possessorium – from owner
to lessee after selling it

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 REVIEWER ON SALES
LECTURE OF ATTY A.P. MACMOD COMPILED BY NIR NOEL A. AQUNO ANGELES UNIVERSITY FOUNDATION

(proportionate reduction on price or 3. Suspend

similar remedy). payment if
2. If defect is major (unfit – not easy to problems arise on
repair or rectify) – accioned hibitoria warranty (Check
(rescind the sale due to redhibitory issued by SPO
defect). bank)
4. detective
goods options –
Express Implied Buyer
Eviction √ X a. Accept
√ reduced price
WAIVE No
R VS. Hidden warranty –
due to damages
√ b. Reject +
Defects Hidden
defects damages
(ESPM)* c. Rescind the
sale + damages
*ESPM – primary
1. Expert buyer remedy called
vendee in court with the goods bought. resolution
Easy for him to detect defects
2. Second hand goods unless A.1
condition In sale of property installment of
3. Public auction sales in Buyer fails to pay
fairs/condemned goods Remedies of Seller
4. If Mentioned in the contract 1. Exactly fully of the old sue him in court
for collection of the price.
REMEDIES OF PARTIES IN GENERAL 2. Cancel the sale (repossess the
Contract of sale = reciprocal obligation property) if buyer fails 2 or more
Vendee Vendor installments,
(NRSD) 3. Foreclosure the chattel mortgage if:
1. No payment No delivery if no (RECTO LAW)
if no delivery payment a. Chattel Mortgage – personal Property
2. Reject Rights of an unpaid sold
improper delivery/ seller (Extrajudicial): b. Buyer fails 2 or more installment
wrong venue a. still on hand – Sell in Public Auction
Rights of a. Deficient – can recover? Yes (Seller)
possessory lien b. Excess – can get all? No, return to the
b. rights of stoppage buyer. If Recto Law applies.
in transitu
c. rights of 4 Requirements of RECTO LAW
rescission 1. Sale of personal property in
d. right of resale installment
(PUS) 2. Chattel mortgage (not another
Perishable property)
Goods 3. Buyer failed to pay 2 or more
Unreasonable installment
delay – Buyer 4. Seller remedy on foreclosure of the
Stipulated chattel mortgage
e. right of
repossession if
delivered already