UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW SALES I.

Textbook: BAVIERA, Araceli, Sales INTRODUCTION

DEFINITION OF SALE Art. 1458 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 OBLIGATIONS CREATED - Art. 1165 CHARACTERISTICS OF A CONTRACT OF SALE 1. Nominate 2. Principal 2. Consensual Art. 1475 Fule v. CA 286 SCRA 698 (1998)

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 64 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 124 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) 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 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) 5. Things subject to resolutory cohdition Art. 1406

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) Traders Royal Bank v. Cuison Lumber Co. 588 SCRA 690 (2009) XYST Corp. v. DMC Urban Properties 594 SCRA 598 (2009) 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) Soriano v. Bautista 6 SCRA 946 (1962) Carcellar v. CA 302 SCRA 718 (1999) Tuazon v. del Rosario GR No. 168325 Dec. 8, 2010 a. Meaning of Consideration: Villamor v. CA 202 SCRA 607 (1991) Sanchez v. Rigos 45 SCRA 368 (1972)

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 Fule v. CA 286 SCRA 698 (1998) 1. When deviation allowed Villonco v. Bormaheco 65 SCRA 352 (1975) 2. Sale by Auction Arts. 1476, 1403 (d), 1326 3. Place of Perfection Art. 1391 4. Expenses of Execution and Registration Art. 1487 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)

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) b Traditio Longa Manu Art.s 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 Leung Yee v. F. L. Machinery Co. 370 Phil 644 (1918) 4. Sale of Movables Arts. 1544 , 1497 to 1501 Rivera v. Ong 37 Phil 355 (1917) 5. Sale of Immovables Art.1 1544 par. 2 Carbonell v. CA 69 SCRA 99 (1976) 6. Sale by virtue of execution and attachment Art. 1544 Carumba v. CA 31 SCRA 558 (1970) 7. Unregistered land PD 1529 sec. 113 Hanopol v. Pilapil 7 SCRA 452 (1963) Dagupan v. Macam 14 SCRA 179 (1965) 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 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, 1543 Azarraga v. Gay 52 Phil 599 (1928) a. Where price is at certain rate per unit Art. 1539, 1540 b. Sale for a lump sum Art. 1542 Del Prado v. Sps. Caballero GR 148225 Mar. 3, 2010 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) Legarda Hermanos v. Saldana 55 Phil 324 (19740 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. EXPRESS WARRANTIES

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 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

Levy Hermanos v. Gervacio 69 Phil 52 (1939) Borbon v. Servicewide 258 SCRA 634 (1996) Manila Trading v. Reyes 62 Phil 461 (1935) Cruz v. Filipinas 23 SCRA 791 (1968) Tajanlangit v. Southern Motors 101 Phil 606 (1957) Nonato v. IAC 140 SCRA 255 (1985) Delta Motor v. Nui Kim 213 SFRA 259 (1992) 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) 3. Maceda Law: Sale of Immovables on Installment Mclaughlin v. CA 144 SCRA 693 (1986) Sps. Garcia v. CA 172036 April 23, 2010 4. Rescission on sale on non-residential realty on installment Arts. 1191 and 1592 REMEDIES OF THE BUYER Sale of Movables 1. Specific performance Arts. 1598 1599 2. Breach of Warranty Arts. 1599, 1571 4. Rescission Art. 1599 Sale of Immovables

1. Art. 1191 2. Suspension of Payment Art. 1590 3. In case of Subdivision or Condominium

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 Art. 1606 Heirs of Arches v. Diaz 50 SCRA 440 (1973) 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. RA3952

BULK SALES LAW

People v. Wong 50 O.G. 4867 (Oct. 1954) People v. Mapoy 73 Phil 678 (1942)

XVI.

RETAIL TRADE LIBERALIZATION ACT OF 2000

King v. Hernaez 4 SCRA 792 (1962) 10-11 clj