SALES

PRE-WEEK 2019
ATTY. MYRA ANGELI A.
GALLARDO-BATUNGBAKAL
Definition of Contract of Sale
Art. 1458. By the contract of sale, one of
the contracting parties obligates himself to
transfer the ownership of and to delivery of
a determinate thing, and the other to pay,
therefor, a price certain in money or its
equivalent. A contract of sale may be
absolute of conditional.
Characteristics
 1. Consensual
 2. Bilateral
 3. Onerous
 4. Commutative
 5. Principal
 6. Nominate
Elements

 Consent or Meeting of the Minds

 Determinate subject matter
 Price certain in money or its equivalent
Formation of Contract of Sale

 1. Negotiation/Preparatory Offer;

 2. Perfection; and

 3. Consummation
Dacion en pago

As a special mode of payment, the debtor

offers a thing thing to the creditor who
accepts it as equivalent of payment of an
outstanding debt.

Lo vs. KJS Eco-Formwork System Phil, Inc., 413 SCRA 182

(2003)
SALE vs. DACION EN PAGO
Sale Dacion en pago
 There is no pre-  There is a pre-existing
existing credit. credit.
 Obligations are
 Obligations arise. extinguished.
 Cause:
 Cause: price for extinguishment of
obligation for the
the seller, object buyer, acquisition of
for the buyer object for the seller
 SALE vs. CESSION
Sale Cession
 There is a transfer  Assignee does not
acquire ownership of
of ownership the thing assigned
 Buyer becomes the  Assignee has the
owner of the thing right to sell the
property and apply
bought/sold proceeds to the
payment of the
credit
 Option Money vs.
Earnest Money
Option Money Earnest Money

 Does not form part of  Forms

part of the
the purchase price; purchase price;

 Gives right to the

 Proofof perfection
buyer to exercise the
option to buy
of the contract
 RACELIS vs. JAVIER, G.R. No.
189609, January 29, 2018
Facts: Before the death of Pedro Nacu, Sr. (Nacu), he
appointed his daughter Racelis to administer his
properties, among which was his property in
Marikina. It was initially up for sale.

In August of 2001, the spouses Javier offered to buy

the property, but since they did not have enough
money with which to buy the property for P3.5M
purchase price, they offered to rent the same while
they raise the said amount.

The parties agreed on a month-to-month P10k rental,

that was thereafter increased to P11K. They spouses
Javier tendered total amount of P78K as earnest
money by the end of 2003. The property was used as
their residence and a tutorial center.
Later, Racelis realized that the spouses
Javier never really intended to buy the
property. Hence, she demanded that
they vacate the property by May 20,2004,
informing the spouses that the P78K would
be forfeited after the lapse of a specified
period. As a consideration to the spouses,
Racelis undertook to return the P78K after
the property is sold to the prospective
buyer.
The spouses refused to vacate the property,
and contended that the amount of P78K
be considered as advanced rent while
they stay in said property.

Issue: W/N the P78K is to be considered

advanced rent.
Held: No, the P78K did not constitute
advanced rent. Said amount was
considered earnest money. Records
reveal that the receipt for said money
was “initial payment or good will money.”

The SC ruled that the parties entered into a

contact to sell, where full payment of the
price was a suspensive condition. The
parties likewise agreed on earnest money
of 100K although only P78K was paid.
In a contract to sell,
earnest money is Opportunity
generally intended
to compensate the cost is
seller for the
opportunity cost of
not looking for any
defined as
other buyers. It is a
show of
“the cost of
commitment on the
part of the party the foregone
that intimates his or
her willingness to go alternative.”
through with the
sale after a
specified period or There is no unjust enrichment
upon compliance on the part of the seller should
with the conditions the initial payment be deemed
stated in the forfeited.
contract to sell.
 Contract of Sale vs.
Contract to Sell
Contract to
Contract of Sale Sell/Promise to Sell

 Deliveryof the  Deliveryof the

thing transfers thing does not
ownership to the transfer ownership.
buyer even if the
price has not been
paid.
 Contract of Sale Contract to Sell

 Remedy of the  Unpaid seller can

Seller if unpaid: sell property to
Rescission plus another
damages
 Obligations of the Seller
1. To deliver the determinate thing
(including future or potential things);

2. To transfer ownership;

3. To warrant against eviction and hidden

defects; and

4. To pay for expenses for the deed of sale

 Emptio Rei Sperati vs.
Emptio Spei
Emptio Rei Sperati Emptio Spei

 Saleof an  Sale of hope itself

expected thing  If the thing does
not materialize,
 Ifthe thing does sale is still valid (ex.
not materialize, Sale of a valid lotto
sale is not effective ticket)
 What is sold here is
the hope itself
Sale of Vain Hope

VOID (ex. Sale of an

expired lotto ticket)
Kinds of Delivery
1. Actual or real (Art. 1497)
2. Legal or constructive
a. Legal formalities (Art. 1498)
b. Traditio symbolica (Art. 1498, par. 2)
c. Tradition longa manu (Art. 1499) –
by mere consent if the movable
sold cannot still be transferred
to the buyer at the time of the
sale
d. Tradio brevi manu (buyer already
has the possession even before
the sale or purchase,
ex. Lessee of the car buys the
car, tenant of the house buys
the house)
DOUBLE SALES (ART. 1544)

Double Sale of Personal

Property:

- ownership is transferred
to the 1st possessor in
good faith
Double Sale of Real Property

 Ownership is transferred to the

1) 1st registrant in good faith (first who
registers the sale in the Registry of
Property)
2) 1ST possessor in good faith
3) With oldest title in good faith

 Mnemonic Device: Recover possession old

man.
Rights of an Unpaid Seller
1) Right of possessory lien

2) Right of stoppage in transitu

3) Right of resale (If seller resells and proceeds

exceed amount owed, seller keeps excess; if less,
he can sue for the outstanding balance)

4) Right to rescind the sale (Art. 1526)

Remedies

 1. Specific Performance;

 2. Rescission; or

 3. Damages
Better:

 1. Specific Performance + Damages;

 2. Rescission + Damages; or

 3. Damages
Warranties

 1. Warranty against hidden defects; and

 2. Warranty against eviction.

Performance of Contract

When the seller delivers goods,

lesser, than agreed upon, the
buyer may reject the goods
and delivered and the latter
shall have no liability. (Art.
1522, NCC)
When the seller delivers goods
greater than agreed upon:

 1. Buyer may accept only the goods

included in the contract and reject the
excess;

 2. Buyer may accept the entire goods

delivered and pay for them at the
contract rate
Mixed goods delivered

When the seller delivers mixed

goods of different description
not included in the contract,
the buyer may accept some or
those acceptable and reject
the rest.
Extinguishment of
Obligations
Payment
Condonation
Novation
Performance
Compensation
Merger
Loss of the thing due
Maceda Law
 1. Covers sale of real property in
installment;

 2. Does not cover:

 Industrial lots
 Commercial buildings
 Lands under CARP Law
Recto Law
 1. covers contract of sale by installment;

 2. applies to contracts pertaining to

leases of personal property with option to
buy, when the lessor has deprived the
lessee of the possession or enjoyment of
the thing (PCI vs. Giraffe X, G.R. No.
142618, July 12,2007)
Alternative and Exclusive
Remedies under Recto Law
 1. Specific Performance

- To exact payment should the buyer

fail to pay;

- Gen. rule: In case, seller avails of

this, he/she can no longer avail
of any other remedy

- Exception: If after choosing, it becomes

impossible for, rescission may be pursued.
 2. Rescission

– Seller may cancel the sale if buyer fails to

pay two (2) or more installments;

- It is deemed chosen when:

i) notice of rescission is sent;

ii) seller takes possession of subject
matter of sale; and
iii) files action for rescission
THE SUBDIVISION AND
CONDOMINIUM BUYERS’
PROTECTIVE DECREE (P.D. 957)

Purpose: The primary purpose of this

decree is to protect the buyers of
condominium projects and subdivision
developments against misrepresentations
and fraudulent activities of developers,
sellers, and operators.
Delayed turnover of the
project
 Incase of delay in the delivery of the
project, the buyer may:

1) Desist from further payment of

installment after due notice to the
developer; and
2) Choose to be reimbursed with the total
amount paid including amortization
interests but excluding delinquency
interests, with interest thereon at the legal
rate (Sec. 23 of the P.D.)
3. Foreclosure

– Seller forecloses on chattel

mortgage if buyer fails to pay
two (2) or more installments.
 GO ACE THE
BAR EXAMS
God Bless You All!