UNIVERSITY OF THE PHILIPPINES

COLLEGE OF LAW
SALES
I.

INTRODUCTION

Textbook: BAVIERA, Araceli, Sales

Definition of Sale Art. 1458
a contract whereby one of the contracting parties (Seller) obligates himself to
transfer the ownership, and to deliver the possession, of a determinate thing; and
the other party (Buyer) obligates himself to pay therefor a price certain in money or
its equivalent.
Nature of the Obligation
real obligations or obligations to give can be the proper subject of actions for
specific performance.
Article 1165, provides that when what is to be delivered is a determinate thing, the
buyer, in addition to the right to recover damages, may compel the seller to make
the delivery. In other words, a defaulting party in a sale cannot insist on just paying
damages when the non-defaulting party demands performance.

Essential requisites of a contract of sale

1. Consent, or meeting of the minds to transfer ownership in exchange for the
price;
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
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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 vs. Parsons 38 Phil. 501 (1918)
Puyat v. Arco 72 Phil. 402 (1941)
5. Dacion en Pago Art. 1246
6. Lease Arts. 1643
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 159 SCRA 375 (1968)

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 and1492
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 vs. 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
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Martinez v. CA 56 SCR 647 (1974)

2. Must be determinate or at least determinable Art. 1460
a. Determinate Subject Matter
b. Determinable Subject Matter
Meliza 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. 1456
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 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)
Sy 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. vs. 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 SR 614 (1990)
Aznar v. Yapdiangco 13 SCRA 486 (1966)

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
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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 451 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 SCR 352 1975)
a. Forms of offer Arts. 1319, 1325, 1326
Zayco v. Serra 44 Phil. 327 (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)
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d. Proper exercise of option

Nietes v. CA 46 SCRA 368 (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 (1997)
3. Right of First Refusal
Equatorial Realty v. Mayfair 264 SCRA 483 (1996)
Paraaque 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 (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. 1438, 1356, 1357, 1358
Dalion v. CA 182 SCRA 872 (1990)
Secuya v. Vda. De Selma 326 SRA 244 (2000)
Requirements in Sale of Immovables Art. 1358
Santos v. Manalili 476 SCRA 679 (2005)
2. Exceptions important for enforceability
A. Form important for enforceability
a. Statute of Frauds Arts. 1403, 1405
Paredes v. Espino 22 SCRA 1000 (1968)
Baretto vs. Manila 46 Phil. 964 (1924)
Iigo v. Estate of Maloto 21 SCRA 246 (1967)
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 SCR 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. Tradito 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
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. 537 (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)
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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 par. 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. CA 192 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 (1995)
3. Delay
IX.

DOCUMENTS OF TITLE

Definition Arts.1507, 1636

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 Art. 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
3. 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 -1 535, 1632 (2)
a. Requisites
b. When considered in transit
c. Sale of goods in transit
3. Right to Resale Art. 1533
a. Time to resell
b. Right to sue 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 Phil. 874 (1922)
2. When time is of essence
Soler v. Chesky 43 Phil. 52 (1922)
Republic v. Litton94 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 quality 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
c. Breach of warranty Art. 1586
d. 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
4. Suspension of payments Arts. 1590,1560, 1662
Bareng v. CA 107 Phil. 641 (1960)
5. Sale of immovables - Arts. 1592, 1560
a. Effect of non-payment Art. 1991
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Laforteza v. Machuca 333 SCRA 643 (1992)

De la Cruz v. Legaspi 98 Phil. 43 (1992)
Luzon Brokerage v. Maritime 43 SCRA (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 opinion, dealers talk Arts. 1546, 1340, 1341
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 (2000)
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)
c. 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)
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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 (1974)
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. 1587
When ownership has passed Arts. 1599, 1192
2. Sale of Immmovables Art. 1191
a. Suspension of Payment Art. 1590
b. PD 957, Sec. 23 and 24
Casa Filipina Realty v. OP 241 SRA 165 (1996)
3. Sale of Immovables on Installment Maceda Law RA 6552
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 265 (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 there is a period of non-redemption
Anchuel v. IAC 147 SCRA 4343 (1987)
3. When there is a period of non-redemption
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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. 1616
3. Effect of redemption Arts. 1617, 1618
4. Effect of non-redemption Arts. 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 Art. 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 CAO.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. RETAL TRADE LIBERALIATION 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
SYLLABUS SALES

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