2015 Sales Review

SALES
REVIEW
[TAKEN FROM LAW ON SALES, OUTLINE, AND LECTURES OF

DEAN CESAR L. VILLANUEVA]
By A9y. Alexander C. Dy
NATURE OF SALE
DeniCon/Elements: (Art. 1458)
ParCes ObligaCons

Object
1. Seller
To Transfer Ownership Subject Ma9er

To Deliver Possession
[Consent]
2. Buyer
To Pay

Price

Thus, Sale creates real obligaCons to give (Art. 1165)

NATURE OF SALE
EssenCal CharacterisCcs of Sales:
1. Nominate

vs. Innominate
2. Principal

vs. Accessory
3. Consensual (Art. 1475) vs. Solemn
vs.
4. Bilateral/Reciprocal vs. Unilateral
(Arts. 1169 and 1191)
5. Onerous

vs. Gratuitous
6. CommutaCve
vs. Aleatory
7. Title

vs. Mode
Real
NATURE OF SALE
Sales vs. DonaCons: (Arts. 725 and 1471)
1. Both involve the transfer of ownership/possession
of subject ma9er
2. Sale is Consensual, while DonaCon is Solemn
3. Sale is Onerous, while DonaCon is Gratuitous

NATURE OF SALE
Sales vs. Barter: (Arts. 1468, 1638-1641)
1. Barter is Sale, since it involves the transfer of
ownership/possession of subject ma9er
Therefore, Barter governed by Law on Sales
2. Price is replaced with obligaCon to transfer
ownership/possession of another subject ma9er

NATURE OF SALE
Sales vs. Dacion en Pago: (Arts. 1245 and 1934)
1. Dacion is process of exCnguishment of contracts
2. Dacion novates original contractual relaCons into a
fully executed Sale, therefore, delivery is required
3. The results of Dacion governed by Law on Sales

NATURE OF SALE
Sales vs. Contracts for Piece-of-Work:
(Arts. 1467, 1713-1715)
1. Both involve transfer of ownership/possession of

object for valuable consideraCon
2. In Contract for Piece-of-Work, main moCvaCon is
the reputaCon, skill, mastery, of contractor
(Commissioner of Internal Revenue v. Engineering Equipment

& Supply Co., 64 SCRA 590 [1975])
Therefore, Contract for Piece-of-Work involves a

personal obligaCon to do (not for past service)
NATURE OF SALE
Sales vs. Agency to Sell/Buy: (Art. 1466)
1. Agency: RepresentaCve (essenCally revocable) and
Fiduciary (fruits/income for benet of principal)
2. Therefore, Agent:
a. Not personally liable
b. Not obliged to pay price (since no transfer of
ownership (Quiroga v. Parsons, 38 Phil. 501 [1918])
c. Does not assume risks of ownership (Puyat v. Arco
Amusement Co., 72 Phil. 402 [1941])
NATURE OF SALE
Sales vs. Leases: (Arts. 1484 and 1485)
1. Sales involves transfer of ownership/possession;
Lease involves temporary enjoyment of possession
2. Otherwise, contract treated as Sale on Installments
PARTIES TO CONTRACT OF SALE

General Rule: (Art. 1489) All parCes having capacity to

contract can be valid parCes

ExcepCons:

1. Minors, Demented, Deaf-Mutes (To Sell To/To Buy)
(Arts. 1327, 1397 and 1399) Merely Voidable

a. But Sale of Necessaries to Minors Valid (Art.
1489; Art. 194, Family Code)

2. Spouses (To Sell)
a. Sale of community/conjugal property to third
parCes without consent of both spouses Void
(Arts. 73, 96, and 124, Family Code)
b. Sale to one another, Void unless governed by
compete separaCon of property regime
(Arts. 133, 1490, 1492; Sec. 87, Family Code)
Note: prohibiCon applies to common-law wife
(Calimlim-Canullas v. Fortun, 129 SCRA 675 [1984])

3. RelaCve DisqualicaCons (To Buy)
(Arts. 1491 and 1492)
a. Guardians property of their Wards

(Philippine Trust Co. v. Roldan, 99 Phil. 392 [1956])
b. Agents property of their Principal

(Except: if agent granted express power to buy)
c. Administrators/Executors property of Estate
under their administraCon


3. RelaCve DisqualicaCons (To Buy) [Contd]
d. Public Ocers vis-a-vis property of Government
under their jurisdicCon
e. Judges/JusCces/Court Ocers property
within their judicial jurisdicCon
f. Lawyers Clients property in liCgaCon, only
while liCgaCon is pending, even on appeal, even
if non-adversarial, but only if counsel of record
(Rubias v. BaTller, 51 SCRA 120 [1973]); ExcepCon:
conCngency fee (Fabillo v. IAC, 195 SCRA 28 [1991])
SUBJECT MATTER
Requisites of Subject Ma9er:
1. Possible Thing

vs.
Impossible
(Arts. 1347, 1348, 1461, 1462 and 1465)
2. Licit
vs.
Illicit
vs.

Indeterminable
Generics
(Arts. 1347, 1459 and 1575)
3. Determinate/
Determinable
(Arts. 1460, 1246, 1409[6] and 1463)
4. QuanCty?
PRICE AND OTHER CONSIDERATION

Requisites of Price: (Arts. 1469-1474)
1. Real/True

vs. Simulated/False
(Arts. 1471; 1353 and 1354)
2. Valuable ConsideraCon vs. Liberality/Nominal/

Money or its equivalent
Inadequacy
(Arts. 1458; 1468; 1355 and 1470; 1381; 1602)
3. Certain/Ascertainable vs. Cannot be Ascertained

(Arts. 1469, 1472 to 1474)
4. Manner of Payment (Art. 1179)

When Price Ascertainable: (Art. 1469)
1. Third party designated to x Price (Art. 1469)
Price can never be lej to discreCon of one party,
unless accepted by the other (Arts. 1473, 1182)
2. In reference to another thing certain (Art. 1469)
3. In reference to an exchange or market (Art. 1472)

Otherwise: Sale is inecacious (Art. 1474)

When Court Can Fix Price: (Art. 1469)
1. When designated party xes Price by:
a. mistake; or
b. fraud or bad faith
But NOT if third party fails/refuses to x Price
2. When Subject Ma9er has been:
a. delivered to; and
b. appropriated by the Buyer (Art. 1474)
STAGES OF CONTRACT OF SALE

1. NegoCaCon/Policitacion (Art. 1479)
Covers period from Cme prospecCve contracCng
parCes indicate interest to Cme of perfecCon
2. PerfecCon (Arts. 1475, 1319, 1325 and 1326)
Takes place when essenCal elements concur, i.e.,
meeCng of minds of parCes as to object and price
3. ConsummaCon (Arts. 1493-1506, 1536-1544, 1582-1590)
Begins when parCes perform their obligaCons and
culminates in the exCnguishment of contract
POLICITACION STAGE
1. Proposals (InvitaCons to make Oers)
2. Oers
3. Acceptances
4. OpCon Contracts
5. Rights of First Refusal
6. Agreements to Enter into Sales
7. Mutual Promises to Buy and Sell
POLICITACION STAGE: OFFERS

Rules on Oers:
1. Oer is at the complete will of the Oeror,
who may destroy it at will prior to acceptance (i.e.,
when Oeror has knowledge of acceptance)
2. Oer will lapse upon:
a. happening of condiCon/period placed upon it
b. passage of reasonable period, if no condiCon
3. Oer cannot be accepted parCally or substanCally,
as counter-oer legally exCnguishes original oer

POLICITACION STAGE: OFFERS

When Oer is Certain:
a. Contains a Clear Promise to Sell/to Buy
b. Covers a Subject Ma9er which is:
(1) Possible; (2) Licit; and (3) Determinate/
Determinable
c. Covers a Price or ConsideraCon which is:
(4) Real; (5) Valuable; (6) Certain/Ascertainable;
and (7) With Manner of Payment/Performance
POLICITACION STAGE: ACCEPTANCE

When Acceptance is Absolute:
a. No CondiCon on, or Amendment to, the Terms
of the Oer
b. May clarify on terms and language
c. But Never Touch on: (1) the Subject Ma9er; or
(2) the ConsideraCon [any of the seven items]

POLICITACION STAGE: OPTION CONTRACT

Elements of OpCon Contract: (Art. 1479)
1. Acceptance of Oer: Oer of OpCon to Buy/Sell
2. Subject Ma9er:
OpCon/Privilege to Buy/Sell:

an Object (Possible; Licit; and

Determinate/Determinable)

at a Price (Real; Valuable;

Certain/Ascertainable)
3. ConsideraCon:
Anything Separate and

DisCnct from Purchase Price

Rules on OpCon Contracts:
(Ang Yu Asuncion v. CA, 238 SCRA 602 [1994])
1. If there is NO separate consideraCon:

a. OpCon Contract void, but consCtutes an oer
which can be withdrawn by Oeror, but if
accepted before withdrawal, would give rise to
a valid sale (Sanchez v. Rigos, 45 SCRA 368 [1972])
b. If withdrawal of oer is whimsical/arbitrary,
could give rise to damage claim under Art. 19 of
Civil Code

Rules on OpCon Contracts: (Ang Yu Asuncion) [Contd]
2. If there is separate consideraCon:
a. OpCon Contract perfected, if opCon exercised
within opCon period, would give rise to a sale
which can be enforced by specic performance
b. If oer is withdrawn within opCon period,
withdrawal is breach of OpCon Contract


Rules on OpCon Contracts: (Ang Yu Asuncion) [Contd]
2. If there is separate consideraCon: [Contd]
c. But if oer is withdrawn before acceptance,
(i) OpConee-Oeree may not sue for

specic performance on the Sale since it
failed to reach its own stage of perfecCon
(ii) OpConer-Oeror renders himself liable

for damages for breach of opCon

POLICITACION STAGE: ROFR

Elements of Rights of First Refusal:
1. Oeror binds himself to rst oer Subject Ma9er to
Oeree for Sale
2. In the event Oeror ever decides to sell it
3. Subject Ma9er:
a. Possible Thing;
b. Licit; and

c. Determinate/Determinable
4. For Price that will then be agreed upon


Doctrines on Right of First Refusal:
1. Ang Yu Asuncion v. CA, 238 SCRA 602 (1994)
a. Generally, ROFR Contracts would be void for
lack of cause or consideraCon, or failure to
carry the valid price for the expectant contract
b. Cannot be enforced by specic performance
c. Breach allows recovery of damages based on
Art. 19 of Civil Code for abuse of right

2. Equatorial Realty Dev., Inc. v. Mayfair Theater, Inc.
264 SCRA 483 (1996)
a. If a9ached to principal contract (e.g., lease),
ROFR is valid, its enforcement takes its vitality
from obligatory force of main contract
b. Such ROFR, if breached, may be enforced at
Price at which Subject Ma9er sold to third party
c. Third partys purchase may be rescinded under
accion pauliana (entered into in breach and
in fraud of OpConees contract)


3. Paranaque Kings Enterprises, Inc. v. CA, 268 SCRA
727 (1997)
a. ROFR is complied with by rst oering Subject
Ma9er to OpConee and negoCaCng for a sale
b. Only when negoCaCon does not ripen to a sale
can Subject Ma9er be oered to third-party
buyer, but at the same Price asked of OpConee

POLICITACION STAGE: AGREEMENTS

Agreements to Enter Into Future Sale or Series of Sale:
1. Quotas (NaTonal Grains Authority v. IAC, 171 SCRA 131
[1989])
2. Supply Agreements (Johannes Schuback & Sons Phil.

Trading Corp. v. CA, 227 SCRA 719 [1993])
3. DistribuCon/Licensing Agreements
POLICITACION STAGE: MUTUAL PROMISE

Mutual Promises to Buy and Sell (Art. 1479)
(True Contract to Sell)
1. CondiConal Contract of Sale where bilateral
obligaCons to buy and sell have been agreed upon,
but subject to condiCons
2. Agreement to enter into Contract of Sale upon
happening of the condiCons
PERFECTION STAGE
PerfecCon of Contract of Sale: (Art. 1475)
1. Comes about when a Certain Oer has been met by
an Unqualied Acceptance
2. Is the only point in Cme to determine the validity or
invalidity of a Contract of Sale
3. Establishes the contractual principles of:
a. Consensuality
b. RelaCvity
c. Mutuality or Obligatory Force
FORM OF SALE
Generally: None, because consensual contract

For Enforceability: (Art. 1403) Statute of Frauds covers
1. Sale which by its terms is not to be performed
within one (1) year
2. Sale of movables, at least P500
3. Sale of immovables, at any price
In which cases, contract of sale must be in wriCng,
signed by the party sought to be charged
FORM OF SALE
Even if sale not in wriCng, enforceable if: (Art. 1405)
1. Memorandum (Art. 1403) signed by party sought to
be charged and containing descripCon of Subject
Ma9er (Possible; Licit; Determinate/Determinable)
and Price (Real; Valuable; Certain/Ascertainable;
Manner of Payment Provided)
2. ParCally Executed by party sought to be charged
and must touch upon Subject Ma9er or Price
3. Waiver of adducement of oral evidence at trial
FORM OF SALE
For Validity: Sale of Realty Through Agent (Art. 1874)
1. Agents authority must be in wriCng
2. Otherwise, Sale is Void, even if:
a. Deed of Sale in wriCng/notarized
b. There has been parCal payment of Price
c. There has been delivery of Subject Ma9er
d. Sale is registered

FORM OF SALE
Sales of Immovables:
1. Private Document: (Arts. 1403 and 1405) Enforceability
between parCes, except parCal execuCon/waiver
2. Public Instrument: (Art. 1358)
a. mode of transferring ownership
b. authenCcity and due execuCon
c. registrability with Register of Deeds
3. RegistraCon: (P.D. No. 1529) to bind the whole world
CONSUMMATION STAGE
1. Performance Delivery of Subject Ma9er; Payment
of Price; Double Sales Rule
2. Risk of Loss
3. Remedies Specic Performance; Rescission;
Subdivision Lots & Condo Units Rules; Recto Law;
Maceda Law; Contract of Sale vs. Contract to Sell
4. CondiCons and WarranCes Eects of CondiCons;
Express WarranCes; Implied WarranCes
5. ExCnguishment ConvenConal RedempCon (Sale A
Retro); Equitable Mortgage; Legal RedempCon
CONSUMMATION STAGE: PERFORMANCE

ObligaCons of Seller
1. To preserve the thing with diligence of a good
father of the family (Art. 1163)
2. To deliver fruits, accessories and accessions (Arts.
1164, 1166, 1495 and 1537)
3. To deliver the Subject Ma9er (Art. 1477)

ObligaCons of Buyer
1. To pay the Price (Art. 1582)
2. To accept delivery of Subject Ma9er (Arts. 1582-1585)

Delivery of Subject Ma9er:
TradiCon as Mode to Transfer Ownership
1. Actual or Physical Delivery (Art. 1497)
2. ConstrucCve Delivery (Arts. 1498-1499, 1513-1514)
a. ExecuCon of Public Instrument, unless contrary
sCpulaCon/intenCon appears
Except when Buyer assumes risk, Seller must
have control which should remain within a
reasonable Cme (Addison v. Felix, 38 Phil 404 [1918];
Danguilan v. IAC, 168 SCRA 22[1988])

2. ConstrucCve Delivery [Contd]
b. ConsMtutum Possessorium (Art. 1500)
c. TradiMo Brevi Manu
d. TradiMo Longa Manu or Symbolic Delivery
e. Delivery for Intangibles (Arts. 1498 and 1501)
f. Delivery to Carrier (FAS/FOB/CIF) (Art. 1523)
g. Documents of Title (Arts. 1507-1520)


Special Rules on CompleCon of Delivery:
1. In case of movables (Art. 1522 and 1537, 1480)
a. Sale on approval, trial, or saCsfacCon vs. Sale or
return (Art. 1502)
b. Sale by descripCon and/or sample (Art. 1481)
2. In case of immovables
a. When sold per unit or number (Arts. 1539 and
1540)
b. When sold for a lump sum (Art. 1542)

Special Rules on Double Sales Under Art. 1544:
1. For Movables
a. First to possess, in good faith
b. Oldest Ctle, in good faith
2. For Immovables
a. First to register, in good faith
b. First to possess, in good faith
c. Oldest Ctle, in good faith
In either case, if none, rst in Cme, priority in right

Requisites for Art. 1544 to Apply:
(Cheng v. Genato, 300 SCRA 722 [1998])
1. Two (or more) sales transacCons must be valid sales

2. Two (or more) sales transacCons must pertain to
exactly the same Subject Ma9er
3. Two (or more) Buyers at odds over righrul
ownership of Subject Ma9er must each represent
conicCng interests
4. Two (or more) Buyers at odds over righrul
ownership of Subject Ma9er must each have
bought from the very same Seller

Eects of Art. 1544 Requisites:
1. Not applicable where one of the Sales is Void
2. Not applicable to Contracts to Sell
3. Not applicable if rst sale is the property and the
second sale is the redempCon right to the same
property

Doctrines on Art. 1544 Double Sales Rules:
1. Carbonell v. Court of Appeals, 69 SCRA 99 (1976)
Rules under Art. 1544 are addressed to (directed at)
Second Buyer, which asks of him to do a posiCve
thing if he hopes to win at all.

2. Tanedo v. Court of Appeals, 252 SCRA 80 (1996)
a. First Buyer wins by virtue of greater doctrine of
rst in Cme, priority in rights
b. Second Buyer must register his purchase while
in good faith if he hopes to win
c. First Buyer, who is always in good faith, when
he registers ahead, wins
d. Even if Second Buyer is rst to possess in good
faith, subsequent registraCon by First Buyer
prevails


3. Cruz v. Cabana, 129 SCRA 656 (1984)
a. Knowledge of First Buyer of second sale does
not adversely aect First Buyer nor does it
consCtute registraCon in favor of Second Buyer
b. However, knowledge of Second Buyer of rst
sale would place him not only in bad faith but
would consCtute registraCon in favor of First
Buyer

4. Agricultural and Home Extension Dev. v. CA, 213
SCRA 536 (1992)
It seems that Second Buyer must have paid full
purchase price to gain benet under Art. 1544 as
Supreme Court has dened meaning of good faith
to include having paid full value

Global Rules on Double Sale for Real Estate:
1. For Registered Land under Torrens System,
registraCon is the operaCve act, so rst to register
in good faith and for value, wins
2. For Unregistered Land, as between a convenConal
prior purchase, and a second purchase at public
aucCon, rst convenConal buyer wins, since buyer
at public sale is bound by provisions of Rules of
Court that says he only takes whatever is the
remaining Ctle of the judgment debtor

3. If requisites under Cheng v. Genato are present,
Rules on Double Sale under Art. 1544 shall apply:
a. First to Register in good faith, or
b. First to Possess in good faith, or
c. Oldest Title in good faith
4. First in Cme, priority in rights apply

Sale and Delivery by Non-Owner
General Rule: Nemo Dat Quod Non Habet
Special Rules:

1. Sale and delivery, with subsequent acquisiCon of
Ctle by owner (Art. 1434)
2. Sale by co-owner (Art. 493)
a. ParCcular porCon
b. Whole property

Special Rules: [Contd]
3. Chain of Title Theory under Torrens System (P.D.
No. 1529)
4. Sales by court authority

5. Sales in merchant stores (Arts. 85 and 86, Code of
Commerce; City of Manila v. Bugsuk, 101 Phil 859 [1957])
6. Sales by one having voidable Ctle prior to

annulment (Art. 1506, as an excepMon to Art. 559)
7. Sale under documents of Ctle (Arts. 1507-1520)
CONSUMMATION STAGE: RISK OF LOSS

Rules for DeterioraCon, Fruits and Improvements:
1. Rules have no applicaCon if Subject Ma9er is
merely determinable (Art. 1263)
2. Roman Law Doctrine: Buyer bears consequences of
deterioraCon, but benets from improvements and
fruits (Arts. 1480, 1163-1165, 1262, 1189, 1537 and 1538)

Rules when Subject Ma9er is Lost:
1. Before PerfecCon: Res Perit Domino (Roman v.
Grimalt, 6 Phil. 96 [1906])
2. At Time of PerfecCon: Seller (Arts. 1493 and 1494)

3. Ajer PerfecCon But Before Delivery (Arts. 1164, 1189
and 1262)
a. General Rule: Res Perit Domino

b. By Fault of a Party (Arts. 1480, 1504, 1538)
c. By Fortuitous Event: Two schools of thought
(Arts. 1480, 1163-1165, 1504, 1538, 1189)

Rules when Subject Ma9er is Lost: [Contd]
4. Ajer Delivery: Buyer bears risk, under Res Perit
Domino Rule (Art. 1504)
Except: When retenCon of possession by Seller is
for purpose of securing payment of Purchase Price
CONSUMMATION STAGE: REMEDIES

Remedies of Seller
1. Specic Performance or Rescission plus Damages
(Art. 1191)
2. Remedies of Unpaid Seller of Goods (Art. 1525)

a. Possessory Lien (Arts. 1526-1529. 1503, 1535)
b. Stoppage in Transitu (Arts. 1530-1532, 1535,
1636[2])
c. Special Right of Resale (Art. 1533)

d. Special Right to Rescind (Art. 1534)

3. Recto Law: For Sale of Movables on Installments
(Arts. 1484-1486)
a. Meaning of Installment Sale (Levy v. Gervacio, 69

Phil. 52 [1939])
b. Contracts to Sell Movables Not Covered (Visayan

Sawmill Company, Inc. v. CA, 219 SCRA 378 [1993])
c.

Remedies Available
i.
Specic Performance (one unpaid)
ii.
Rescission (two unpaid)
iii. Foreclosure (two unpaid)

3. Recto Law: [Contd]
d. Nature of Remedies of Unpaid Seller
i.
Remedies under Art. 1484 are not

cumulaCve but alternaCve and exclusive
(Borbon II v. Servicewide Specialists, Inc., 258
SCRA 634 [1996])
ii.

Seeking a writ of replevin consistent with

all three remedies (Universal Motors Corp. v.
Dy Hian Tat, 28 SCRA 161 [1969])


e. Specic Performance: No bar to full recovery
(Tajanglangit v. Southern Motors, 101 Phil. 606 [1957])
i.

Even if it is mortgaged property that is

sold on execuCon (Southern Motors v.
Moscoso, 2 SCRA 168 [1961])
ii.
Even with replevin and recovery of

subject property , acCon may sCll be for
specic performance (Industrial Finance Corp.
v. Ramirez, 77 SCRA 152 [1977])

f. Rescission: Has inherent barring eect
i.
Surrender of mortgaged property not

equivalent to rescission (Vda. de Quiambao
v. Manila Motors Co., Inc., 3 SCRA 444 [1961])
ii.
SCpulaCon on non-return of payments is

valid provided not unconscionable
(Delta Motor Sales Corp. v. Niu Kim Duan, 213

SCRA 259 (1992)

g. Rescission: Has H-V barring eect
i.
Third Party Mortgage covered (Ridad v.

Filipinas Investment, 120 SCRA 246 [1983])
ii.

iii.

Assignee (Financing TransacCon) covered

(Zayas v. Luneta Motors, 117 SCRA 726 [1982])
Foreclosure on Cha9el Mortgage bars
acCon on REM and vice-versa (Cruz v.
Filipinas Investment & Finance Corp., 23 SCRA 791

[1968]; Borbon II v. Servicewide Specialists, Inc.,
258 SCRA 634 [1996])

g. Rescission: [Contd]
iv. Amounts barred from recovery (Macondray

& Co. v. Eustaquio, 64 Phil. 446 [1937])
v.
Perverse buyer (Filipinas Investment & Finance
Corp. v. Ridad, 30 SCRA 564 [1969])
h. Purported Lease with OpCon to Buy (Art. 1485)

If lessor takes possession of subject movable,
treated as foreclosure

4. Maceda Law: Sales of ResidenCal Realty on
Installments (R.A. No. 6552)
a. Role of Maceda Law: Not applicable to
protect developer or one who succeeds him
(Lagandaon v. CA, 290 SCRA 463 (1998)
b. TransacCons Covered: Covers both opCon and

sale under P.D. No. 957 (Realty Exchange Venture
Corp. v. Sendino, 233 SCRA 665 [1994]), But curiously,
no applicaCon to a Contract to Sell (?) (Mortel v.
KASSCO, Inc., 348 SCRA 391, 398 [2000])

4. Maceda Law: [Contd]
c. How CancellaCon of Contract Eected
i.
Seller to give Buyer a 60-day grace period
ii.
At end of grace period, Seller to give

Buyer a notarial noCce of cancellaCon/
demand for rescission eecCve 30 days
from noCce
iii. For contracts with two years of payments

Seller to give Buyer cash surrender value

4. Maceda Law: [Contd]
d. Other Rights Granted to Buyer
i.
To sell/assign his rights to another person
ii.
To reinstate contract by updaCng account

during grace period, before cancellaCon
iii. To pay in advance installments or in full

unpaid balance of Price any Cme without

interest and have the same annotated
e. Any sCpulaCon contrary to Maceda Law is Void.


4. AnCcipatory Breach (Arts. 1591)
5. Rescission Sale of Non-ResidenCal Realty on
Installments (Arts. 1191 and 1592)

Remedies of Buyer
1. Specic Performance or Rescission with Damages
(Arts. 1191)
2. In case of movables (Art. 1598-1599)

3. In case of immovables (Secs. 23 and 24 of P.D. No. 957)
4. Suspension of Payment (Art. 1590)
CONSUMMATION STAGE: K TO SELL

Contracts to Sell vs. CondiConal Contracts of Sale:
SimilariCes
1. Art. 1458 denes a Sale to cover both absolute
and condiConal
2. Both contracts are usually bound by same
condiCon: Full payment of Price
3. Both contracts are consensual, onerous,
commutaCve and cover bilateral obligaCons

CONSUMMATION STAGE: K TO SELL

Contracts to Sell vs. Contracts of Sale: Dierences
1. In Contract to Sell, ownership is reserved by Seller,
while in Contract of Sale, ownership transfers to
Buyer upon delivery; hence, Contracts to Sell must
have express reservaCon of ownership
2. Rescission (CancellaCon) of Contract to Sell is a
ma9er of right upon non-happening of condiCon,
although wri9en noCce of cancellaCon required
(UP v. Delos Angeles, 35 SCRA 103 [1970]), while in
Contract of Sale, non-payment is substanCal
breach, so remedy is rescission (inherently judicial)
CONSUMMATION STAGE: CONDITIONS

CondiCons vs. WarranCes: (Power Commercial and
Industrial Corp. v. CA, 274 SCRA 597 [1997)
1. CondiCon goes into root of existence of obligaCon,

while warranty goes into performance of obligaCon
2. CondiCon must be expressly sCpulated by parCes,
while warranty may form part of obligaCon or
contract by provision of law, without prior contract
3. CondiCon may a9ach itself either to obligaCons of
Seller or Buyer, while warranty, express or implied,
relates to the Subject Ma9er itself or to obligaCons
of Seller as to the Subject Ma9er of the Sale
CONSUMMATION STAGE: CONDITIONS

CondiCons: (Art. 1545)
1. Failure to comply with condiCon imposed on
perfecCon of contract results in a failure of
contract, while failure to comply with condiCon
imposed on performance of an obligaCon only gives
other party the opCon to either refuse to proceed
or waive it (Laforteza v. Machuca, 333 SCRA 643 [2000])
2. In Sale with AssumpCon of Mortgage, assumpCon
of mortgage is condiCon to Sellers consent, so
without approval by mortgagee, no sale is
perfected (Ramos v. CA, 279 SCRA 118 [1997])
CONSUMMATION STAGE: WARRANTIES

Express WarranCes: (Art. 1546)
1. Must be an armaCon of fact or any promise by
Seller relaCng to Subject Ma9er of Sale;
2. Natural tendency of such armaCon or promise is
to induce Buyer to purchase the thing; and
3. Buyer purchases the thing relying on such
armaCon or promise thereon
Note: Law allows considerable laCtude to Sellers
statements or dealers talk (Songco v. Sellner, 37
Phil. 254 [1917])

Implied WarranCes: (Art. 1547)
1. Seller has Right to Sell
2. Warranty Against EvicCon: Ajer nal judgment
(Arts. 1548-1559)
a. Buyer is deprived of whole or part of thing sold
b. EvicCon is by a nal judgment
c. Basis thereof is by virtue of right prior to Sale
d. Seller summoned and made co-defendant in
suit for evicCon at instance of Buyer (Ang v. Court
of Appeals, 567 SCRA 53 [2008])

Implied WarranCes: [Contd]
3. Warranty Against Hidden Defects: 6 months (Arts.
1561-1580; Nutrimix Feeds Corp. v. CA, 441 SCRA 357 [2004])
a.
b.
c.
d.
Defect must be hidden

Defect exists at Cme Sale was made
Defect is ordinarily excluded from the contract
Defect is important (renders the thing unt or
considerably decreases tness)
e. AcCon insCtuted within 6 months from delivery

4. Warranty Against Non-Apparent Servitudes: 1 year
from execuCon of Deed of Sale (Art. 1560)
5. Redhibitory Defects of Animals: 40 days from
delivery (Arts. 1572-1581)
a. Sale of a team, treated individually
b. NOT Animals Sold at Fairs or Public AucCons
c. Sale of Animals with Contagious Diseases Void
d. Sale of Unt Animals

6. Implied WarranCes in the Sale of Goods: 6 months
from delivery (Arts. 1564, 1565, 1568 and 1571)
a. Warranty as to Fitness or Quality
b. Sale of Goods by Sample
7. AddiConal WarranCes for Consumer Products (Arts.
68, Consumer Act, R.A. No. 7394)

Rules on WarranCes:
1. Eects of Breach of WarranCes/Buyers OpCons
a. Buyer may sue for rescission plus damages
b. If violaCon of warranCes against hidden
defects, redhibitory defects of animals, and
implied warranCes in sale of goods, Buyer may
elect between withdrawing from the contract
(accion rehibitoria) or demanding proporConate
reducCon of price (accion quanM minoris), with
damages in either case (Art. 1567)
2. Waivers: Allowed; As is, where is basis
CONSUMMATION STAGE: EXTINGUISH

ExCnguishment of Sale
1. Sale exCnguished by same modes applicable to all
contracts (Arts. 1231 and 1600)
2. RedempCon is mode of exCnguishment unique to
Sales:
a. ConvenConal RedempCon: Sale with Right to
Repurchase (Sale A Retro)
b. Legal RedempCon

ConvenConal RedempCon (Sale A Retro):
1. Reserved by Seller at point of perfecCon (Art. 1601)
2. Even though found in a separate instrument (Torres
v. CA, 216 SCRA 287 [1992])
3. Its validity is Ced to validity of Contract of Sale to

which appended (Nool v. CA, 276 SCRA 149 [1997])
4. When Sale covered by Deed, Right A Retro may be
proved by parol evidence (Mactan Cebu Intl Airport
Authority v. CA, 263 SCRA 736 [1996])

Right A Retro vs. OpCon Contract:
1. Right A Retro not a separate K, but part of K of Sale
while OpMon K generally a principal K, but may be
appended to another valid K
2. Right A Retro does not need separate consideraCon
while OpMon K requires consideraCon separate and
disCnct from Price in order to be valid
3. Right A Retro max period cannot exceed 10 years
while OpMon K period may be beyond 10 years

Right A Retro vs. OpCon Contract: [Contd]
4. Right A Retro requires tender of agreed amount,
including consignaCon when tender not possible,
while OpMon may be exercised by mere noCce to
Oeror

Salient Ma9ers on Right of RedempCon:
1. Period of RedempCon (Art. 1606)
a. When no period agreed upon: 4 years
b. When period agreed upon: maximum 10 years
c. Pendency of acCon tolls redempCon period
(Ong Chua v. Carr, 53 Phil. 975 [1929])
d. Non-payment of price does not aect running

of redempCon period (Catangcatang v. Legayada, 84
SCRA 51 [1978])

Salient Ma9ers on Right of RedempCon: [Contd]
2. How RedempCon Eected
a. Only tender of payment is sucient (Legaspi v.
CA, 142 SCRA 82 [1986])
b. ConsignaCon is not required ajer tender is

refused (Mariano v. CA, 222 SCRA 736 [1993])
c. But when tender not possible, consignaCon
should be made (Catangcatang v. Legayada, 84 SCRA
51 [1978])
d. Simply by judicial acCon (Lee Chuy Realty Corp. v.

CA, 250 SCRA 596 [1995])

Equitable Mortgage: (Art. 1602-1604)
1. DeniCon/Elements: (Molina v. CA, 398 SCRA 97 [2003])
a. The contract entered into is denominated as a
sale (absolute or a retro)
b. The real intenCon was to secure an exisCng
debt by way of mortgage
2. RaConale of Equitable Mortgage Principle:
(Spouses Misea v. Rongavilla, 303 SCRA 749 [1999])
To prevent circumvenCon of law against usury and
rule against pactum commisorium

Equitable Mortgage: [Contd]
3. Badges of Equitable Mortgage: (Art. 1602)
a. Price is unusually inadequate
b. Seller remains in possession as lessee, etc.
c. Extension or granCng of new redempCon period
d. Buyer retains part of Price
e. Seller binds himself to pay taxes on property
f. Other cases showing real intent is that
transacCon is security for debt/obligaCon

4. Equitable Mortgage: Parol evidence competent and
admissible (Molina v. CA, 398 SCRA 97 [2003])
5. Pactum Commissorium sale is void, registraCon and
obtaining new Ctle by apparent buyer is also void
(Art. 2088; A. Francisco Realty v. CA, 298 SCRA 349 [1998])
6. Pactum Commissorium Principle Does Not Apply:

a. When security for a debt is also money in form
of Cme deposit (Consing v. CA, 177 SCRA 14 [1989])


6. Pactum Commissorium Principle Does Not Apply:
b. To arrangement that provides that if Borrower
fails to comply with new terms of payment,
agreement shall operate as dacion en pago (Solid
Homes, Inc. v. CA, 275 SCRA 267 [1997])
Contra: P/N sCpulaCon that upon makers

default, ownership of property is automaCcally
transferred and covering deed of sale registered
is pactum commissorium (A. Francisco Realty v. CA,
298 SCRA 349 [1998])

Remedies under Equitable Mortgage SituaCons:
1. Apparent Seller can seek reformaCon of instrument
(Art. 1605)
2. AcCon for consolidaCon of ownership (of purported

sale a retro) would be void; proper remedy is
foreclosure (Briones-Vasquez v. CA, 450 SCRA 644 [2005])
3. In case court nds sale was not equitable mortgage,
redempCon within 30 days, provided there is
honest belief that it was equitable mortgage
supported by convincing evidence (Art. 1606; Abilla v.
Gobonseng, 374 SCRA 51 [2002])

Legal RedempCon DeniCon and RaConale:
1. Privilege created by law for reasons of public policy
2. For benet and convenience of redempConer, to
aord him a way out of what might be a
disagreeable or inconvenient associaCon into which
he has been thrust
3. Intended to minimize co-ownership
(Fernandez v. Tarun, 391 SCRA 653 [2002])

Period of Legal RedempCon: Begins 30 days from
Wri9en NoCce (unless otherwise provided by law)

Rules on NoCce:
1. Wri9en noCce must cover perfected sale (Art. 1623)
2. NoCce must be given by Seller; noCce by Buyer or
even Register of Deeds insucient (Francisco v. Boiser,
332 SCRA 305 [2000])
3. Seller furnishing copies of deeds of sale to co-owner

sucient (Distrito v. CA, 197 SCRA 606 [1991])

Rules on NoCce: [Contd]
4. NoCce to minors may be served on parents even
without judicial appointment because benecial to
minors (Badillo v. Ferrer, 152 SCRA 407 [1987])
5. Deemed complied with when co-owners signed
Deed of Extrajudicial ParCCon embodying
disposiCon of part of property owned in common
(Fernandez v. Tarun, 391 SCRA 653 [2002])
6. Filing of ejectment suit or collecCon of rentals

against a co-owner dispenses with need for wri9en
noCce (Alonzo v. IAC, 150 SCRA 259 [1987])

Instances of Legal RedempCon:
1. Among Co-heirs (Art. 1088)
a. A co-heir cannot exercise right of redempCon
alone (De Guzman v. CA, 148 SCRA 75 [1987])
b. No legal redempCon for sale of property of
estate (Plan v. IAC, 135 SCRA 270 [1985])
c. Wri9en noCce inuCle because buyer took
possession of property in full view of others
(Pilapil v. CA, 250 SCRA 560 [1995])
d. NoCce by city treasurer will not suce (Verdad v.
CA, 256 SCRA 593 [1996])

Instances of Legal RedempCon: [Contd]
2. Among Co-owners (Art. 1620)
a. Right of legal redempCon arises only when
shares of other co-owners sold to third
person, not to another co-owner (Fernandez v.
Taun, 391 SCRA 653 [2002])
b. RegistraCon of sale does not estop a co-owner

(Cabrera v. Villanueva, 160 SCRA 627 [1988])
c. NoCce must be in wriCng, and redempCon by
co-owner redounds to benet of others (Mariano
v. CA, 222 SCRA 736 [1993])

2. Among Co-owners (Art. 1620)
d. No wri9en noCce required to co-owner who
acted as acCve intermediary in consummaCon
of sale (Distrito v. CA, 197 ASCRA 606 [1991])
e. RedempCon by-co-owner, even if he uses own
funds, inures to benet of all others (Annie Tan v.
CA, 172 SCRA 660 [1989])

3. Among Adjoining Owners (Arts. 1621-1622)
a. RedempCon covers only resale and does not
cover exchanges or barter of properCes (De
Santos v. City of Manila, 45 SCRA 409 [1972])
b. Requisite of speculaCon dropped (Legaspi v.

CA, 69 SCRA 360 [1976])
c. Does not apply if one adjacent lot is not also

rural land (Primary Structures Corp. v. Valencia, 409
SCRA 371 [2003])

4. Sale of Credit in LiCgaCon (Art. 1634)
within 30 days from noCce of demand to pay
5. RedempCon of Homesteads (Sec. 119, C.A. No. 141)
a. Right to repurchase granted by law, need not
be provided in deed of sale (Berin v. CA, 194 SCRA
508 [1991])
b. RedempCon period is 5 years from date of sale

(execuCon of deed), not from registraCon (Lee
Chuy Realty Corp. v. CA, 250 SCRA 596 [1995]; Mata v.
CA, 318 SCRA 416 [1999])

6. RedempCon in Tax Sales (Sec. 215, NIRC of 1997)
7. RedempCon of Judgment Debtor (Sec. 27, Rule 39,
1997 Rules of Civil Procedure)
At any Cme within 1 year from date of registraCon

of cerCcate of sale (Ysmael v. CA, 318 SCRA 215 [1999])
8. RedempCon in Extrajudicial Foreclosure (Sec. 6, Act
3135)
Within 1 year from registraCon in Registry of Deeds

9. RedempCon in Judicial and Extrajudicial Foreclosure
of Mortgage By Banks (Sec. 47, General Banking Law of
2000, R. A. No. 8791)
a. General rule: 1 year from registraCon of

cerCcate of sale
b. Except: in cases of extrajudicial foreclosure of
property mortgaged by a juridical enCty, in
which case upon registraCon of cerCcate of
sale but in no case to exceed 3 months from
foreclosure sale

10. Legal Right to Redeem under Agrarian Reform
Code (Sec. 12, R.A. 3844, as amended)
a. Within 180 days from noCce in wriCng and at a
reasonable price and consideraCon (Quino v. CA,
291 SCRA 249 [1998])

THE END

2015 Sales Review

Diunggah oleh

Informasi Dokumen

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

2015 Sales Review

Diunggah oleh

Hak Cipta:

Format Tersedia

SALES

[TAKEN FROM LAW ON SALES, OUTLINE, AND LECTURES OF

1. Both involve transfer of ownership/possession of

(Commissioner of Internal Revenue v. Engineering Equipment

Therefore, Contract for Piece-of-Work involves a

PARTIES TO CONTRACT OF SALE

PARTIES TO CONTRACT OF SALE

PARTIES TO CONTRACT OF SALE

a. Guardians property of their Wards

(Philippine Trust Co. v. Roldan, 99 Phil. 392 [1956])

b. Agents property of their Principal

PARTIES TO CONTRACT OF SALE

(Arts. 1347, 1348, 1461, 1462 and 1465)

(Arts. 1347, 1459 and 1575)

(Arts. 1460, 1246, 1409[6] and 1463)

PRICE AND OTHER CONSIDERATION

2. Valuable ConsideraCon vs. Liberality/Nominal/

3. Certain/Ascertainable vs. Cannot be Ascertained

4. Manner of Payment (Art. 1179)

PRICE AND OTHER CONSIDERATION

PRICE AND OTHER CONSIDERATION

STAGES OF CONTRACT OF SALE

POLICITACION STAGE: OFFERS

POLICITACION STAGE: OFFERS

POLICITACION STAGE: ACCEPTANCE

POLICITACION STAGE: OPTION CONTRACT

POLICITACION STAGE: OPTION CONTRACT

1. If there is NO separate consideraCon:

POLICITACION STAGE: OPTION CONTRACT

POLICITACION STAGE: OPTION CONTRACT

POLICITACION STAGE: ROFR

POLICITACION STAGE: ROFR

POLICITACION STAGE: ROFR

POLICITACION STAGE: ROFR

POLICITACION STAGE: AGREEMENTS

2. Supply Agreements (Johannes Schuback & Sons Phil.

POLICITACION STAGE: MUTUAL PROMISE

CONSUMMATION STAGE: PERFORMANCE

3. To deliver the Subject Ma9er (Art. 1477)

CONSUMMATION STAGE: PERFORMANCE

CONSUMMATION STAGE: PERFORMANCE

CONSUMMATION STAGE: PERFORMANCE

b. When sold for a lump sum (Art. 1542)

CONSUMMATION STAGE: PERFORMANCE

CONSUMMATION STAGE: PERFORMANCE

1. Two (or more) sales transacCons must be valid sales

CONSUMMATION STAGE: PERFORMANCE

CONSUMMATION STAGE: PERFORMANCE

CONSUMMATION STAGE: PERFORMANCE

CONSUMMATION STAGE: PERFORMANCE

CONSUMMATION STAGE: PERFORMANCE

CONSUMMATION STAGE: PERFORMANCE

CONSUMMATION STAGE: PERFORMANCE

CONSUMMATION STAGE: PERFORMANCE

CONSUMMATION STAGE: PERFORMANCE

4. Sales by court authority

Commerce; City of Manila v. Bugsuk, 101 Phil 859 [1957])

6. Sales by one having voidable Ctle prior to

CONSUMMATION STAGE: RISK OF LOSS

CONSUMMATION STAGE: RISK OF LOSS

2. At Time of PerfecCon: Seller (Arts. 1493 and 1494)

a. General Rule: Res Perit Domino

CONSUMMATION STAGE: RISK OF LOSS

CONSUMMATION STAGE: REMEDIES