UNIVERSITY OF THE PHILIPPINES

COLLEGE OF LAW
SALES
I.

INTRODUCTION

Textbook: BAVIERA, Araceli, Sales

Definition of Sale Art. 1458

Nature of the Obligations
Essential requisites of a contract of sale
1. Consent
2. Determinate subject matter
3. Price

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
Sale is title and not mode
Sale distinguished from other contracts
1. Donation Arts. 745 and 1471
2. Barter 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
Filinvest Credit Corp. v. CA 178 SCRA 188 (1989)
Contract of sale/Contract to sell
Kinds of Contract of Sale
1. Absolute
2. Conditional
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
Kinds of Incapacity
1. Absolute incapacity
2. Relative incapacity
3. Specific incapacity/Special disqualifications
Absolute incapacity Arts. 1327, 1397, 1399
Necessaries Arts. 1489, 290 Family Code
Relative incapacity: Married Persons
1.

Contracts with Third Parties Arts. 73, 96 and 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)
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. 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 at least determinable Art. 1460
a. Determinate Subject Matter
b. Determinable Subject Matter
Melliza v. City of Iloilo 23 SCRA 477 (1968)
Atilano v. Atilano 28 SCRA 231 (1969)
c. Generic Non-Determinable Objects
Yu Tek v. Gonzales 29 Phil 384 (1915)
d. Sale of Undivided Interest Arts. 1463 - 1464
e. Sale of Undivided Share in Mass
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
Things subject to resolutory condition Art. 1465
4 Quantity of subject matter not essential for perfection Art. 1349

IV. OBLIGATION OF THE SELLER TO TRANSFER OWNERSHIP

Obligations of the Seller to transfer ownership

Sale by the owner of the subject matter - Arts. 1459, 1505
Sale by the owner at the time of perfection Arts. 1459, 1461, 1465, 1475, 1477
Sale by the owner at the time of consummation - Art. 1505
Exceptions: Sale by a non-owner:
1. Estoppel- Art. 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
..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)
Rules applicable to immovables
Property Registration Decree - PD 1529, Sec. 113

Heirs of Spouses Benito Gavino v. CA 291 SCRA 495 (1998)

V. PRICE
Meaning of Price Arts. 1458, 1469 1474
Requisites for a valid price
1. Must be real Art. 1471
a. When price simulated
b. When price is false Art. 1353 1355
Mapalo v. Mapalo 17 SCRA 114 (1966)
Ong v. Ong 139 SCRA 133 (1985)
Morales v. CA 27 SCRA 484 (1969)
c. Effect of Non-payment of price
Montecillo v. Reynes 385 SCRA 244 (2002)
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
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
Bagnas v.CA 176 SCRA 159 (1989)
When no price agreed Art. 1474
Manner of payment must be agreed upon
Velasco v. CA 51 SCRA 439 (1973)
San Miguel Properties v. Huang 336 737 (2000)
Earnest money v. option money Art. 1482
Limson v. CA 357 SCRA 209 (2001)

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 Art. 1319
National Grains /authority v. IAC (1989)
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 separate 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
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)
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
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 Arts. 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)
Requirements in Sale of Immovables Art. 1358
Santos v. Manalili 476 SCRA 679 (2005)
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
d. Value of Business Forms

VII. TRANSFER OF OWNERSHIP

Manner of transfer Arts. 1477, 1496-1501

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 or actual 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. 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
Board of Liquidator v. Floro 110 Phil 482 (1960)
c. Tradition Brevi Manu Art. 1499
Heirs of Pedro Escanlar v. CA 281 SCRA 176 (1997)
d. Traditio Constitutom Possessorium Art. 1500
Bautista v. Sioson 39 Phil 615 (1919)
e. Symbolic Delivery Art. 1498, 1513
f. 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 Prius tempore, prius 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. 1544 par. 2
Carbonell v. CA 69 SCRA 99 (1976)
a. Sale by virtue of execution and attachment Art. 1544
Carumba v. CA 31 SCRA 558 (1970)
b. Meaning of Better Right
Hanopol v. Pilapil 7 SCRA 452 (1963)
c. Sale of Unregistered land PD 1529 sec. 113
Dagupan v. Macam 14 SCRA 179 (1965)
7. When one sale is forgery
Espiritu v. Valerio 9 SCRA 761 (1963)
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 Arts. 1262, 1263, 1189, 1504, 1496
When loss occurred before perfection of contract
Roman v. Grimalt 6 Phil 96 (1906)
When loss occurred at time of perfection of contract Arts. 1493 and 1494
Norkis v. CA 193 SCRA 694 (1991)
When loss occurred after perfection but before delivery Arts. 1262, 1460, 1452,
1496, 1504, 1538, 1189
When ownership is transferred Arts. 1504, 1502
Bean v. Cadwallader 10 Phil 606 (1908)
Norkis v. CA 193 SCRA 694 (1991)
Exceptions:
1. Stipulation to the contrary
Sun Bros. V. Perez 7 SCRA 977 (1963)
2. Security title
Lawyers Coop v. Tabora 13 SCRA 762 (1965)
3. Delay
IX.

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
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

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

Obligations of the seller:

Delivery of the thing sold
1. Place, time and manner of delivery Arts. 1521, 1169, 1524
Smith Bell v. Matti 44 Phil 874 (1922)
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. When seller not bound to deliver Arts. 1524, 1536,1198
5. Sale of Movables Arts. 1522, 1537, 1480
a. Delivery by installments Art. 1583
b. Delivery of wrong quantity Art. 1522
6. Sale of Immovables Arts. 1539, 1540
a.

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

Cebu Windland Dev. Corp. v. Ong Siao Hua 588 SCRA 120 (2009)
b. Sale for a lump sum Art. 1542
Obligations of the buyer:
1. 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 Arts. 1587 1589

La Fuerza v. CA 23 SCRA 1217 (1968)

2. Payment of the price Art. 1582

3. Liability for interest Art. 1589
3. Suspension of payments Arts. 1590, 1560, 1664
Bareng v. CA 107 Phil 641 (1960)
4.

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)
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. 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
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. 68
Effects of Warranties
Effects of Waivers
Buyers Option in case of breach of warranty Art. 1599
Ong v. CA 567 SCRA 53 (2008)
RA 7394, Sec. 68

XIII.

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)
When goods cannot readily be sold Art. 1595 (3)
2. Action for damages Art. 1596
3. Right of Rescission Arts. 1597, 1593, 1191
Recto Law: Sale of Movables on Installment 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
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
Legarda v. Saldana 55 SCRA 324 (1974)
2. Failure of buyer to pay price
a. Rescission under Article 1592
b. Contracts to sell not covered by Art. 1592
Legarda Hermanos v. Saldana 55 SCRA 324 (1974)
Luzon Brokerage v. Maritime 43 SCRA 93 (1972)
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
When ownership has not passed Art. 1586
When ownership has passed Arts. 1599, 1192
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. MACEDA LAW RA 6552- Sale of Immovables on Installment
Luzon Brokerage v. Maritime Bldg. 86 SCRA 305 (1978)
Active Realty v. Daroya 382 SCRA 152 (2002)

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 to redeem
1. When no period agreed 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)
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

A. Coverage of Bulk Sales

People v. Wong CA O.G. 4867 (1954)
B. Not covered by the law
Sec. 2 (a) (b)
C. Obligations of seller when transaction is a Bulk Sale Secs. 3, 4, 5, 7
D. Effects of non-compliance Secs. 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
2014-2015 clj