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Sales reviewer

Sales reviewer

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Published by Vicka Marie Tamayao
sales and lease reviewer
sales and lease reviewer

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Published by: Vicka Marie Tamayao on Mar 02, 2014
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02/03/2015

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I.
T
HE
 N
ATURE
 
OF
 S
ALE
 
A.
 
D
EFINITION
 
(Art. 1458)
 Sale is a contract by which one of the contracting parties [the seller] obligates himself to transfer the ownership
1
 and to deliver possession, of a determinate thing, and the other [the buyer] to pay therefor a price certain in money or its equivalent.
Cruz v. Fernando
, 477 SC! "7# $%&&'(.
2
1. Elements of Sle
)lements of sale* $a( consent or meeting of the minds+ $b( determinate subect matter+ and $c( price certain in money or its equivalent.
Navarra v. Planters Dev. Bank 
, '%7 SC! '-% $%&&7(.
#
  !bsence of any essential elements negates a sale
 xDizon v. CA
, #&% SC! % $"///(,
4
 even when earnest money has been paid.
Manila Metal Container Corp. v. PNB
, '"" SC! 444 $%&&-(. Sale being a consensual contract, its essential elements must be proven
 xVillanueva v. CA
, %-7 SC! / $"//7(+ but once proven, a sale0s validity is not affected by a previously e1ecuted fictitious deed of sale
 xPeñalosa v. Santos,
#-# SC! '4' $%&&"(+ and the burden is on the other party to prove otherwise. 1
Heirs o !rnesto Biona v. CA,
 #-% SC! %/ $%&&"(.)ven an )1traudicial Settlement of )state with !bsolute Sale must comply with the requisites prescribed in !rticle "#" of the Civil Code for all three elements of sale.
Baladad v. "u#li$o
, '/' SC! "%' $%&&/(.
2. St!es of "ontr#t of Sle
Policitacion
 covers the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected.
Perfection
 ta2es place upon the concurrence of the essential elements, which are the meeting of the minds of the parties as to the obect of the contract and upon the price.
Consummation
 begins when the parties perform their respective underta2ings, culminating in the e1tinguishment thereof. 1
San Mi%uel Properties P&ilippines, 'n$. v. Huan%,
 ##- SC! 7#7 $%&&&(.
'
$.
 
Sle "retes Rel O%l&!t&ons 'To &e*
 $!rt. ""-'(
4. Essent&l "+r#ter&st&#s of Sle,. Nom&nte n- r&n#&/l
 ! contract of sale is what the law defines it to be, ta2ing into consideration its essential elements, and not what the contracting parties call it.
 xSantos v. Court o Appeals
, ##7 SC! -7 $%&&&(.
-
%. "onsens0l
 $!rt. "47'(  ! contract of sale is not a real, but a consensual contract, and becomes valid and binding upon the meeting of the minds of the parties as to the obect and the price
7
, that*
"
3wnership is the independent and general power of a person over a thing for purposes recognied by law and within the limits established thereby. !ccording to !rt. 4% of the Civil Code, this means that* 5he owner has the right to enoy and dispose of a thing, without other limitations than those established by law. 1 1 1 !side from the
 (us utendi
and the
 (us a#utendi
inherent in the right to enoy the thing, the right to dispose, or the
 (us disponendi 
, is the power of the owner to alienate,
en#0m%er 
, transform and even destroy the thing owned.
Flan$ia v. Court o Appeals
, 4'7 SC! %%4 $%&&'(.
%
 Alredo v. Borras
, 4&4 SC! "4' $%&&#(+
Manila Metal Container Corp. v. PNB
, '"" SC! 444 $%&&-(+
"o#erts v. Papio
, '"' SC! #4- $%&&7(.
#
)ovan *and, 'n$. v. CA
, %- SC! "-& $"//7(+
+ui(ada v. CA
, %// SC! -/' $"//(+
Co v. CA
, #"% SC! '% $"///(+
San  Andres v. "odri%uez 
, ##% SC! 7-/ $%&&&(+
"o#le v. Ar#asa,
#-% SC! -/ $%&&"(+
Polte$&ni$ -niversit v. CA
, #- SC! -/" $%&&"(+
atipunan v. atipunan
, #7' SC! "// $%&&%(+
*ondres v. CA,
 #/4 SC! "## $%&&%(+
Manon%son% v. !sti/o
, 4&4 SC! -# $%&&#(+
)i/enez, )r. v. )ordana
, 444 SC! %'& $%&&4(+
San *orenzo Dev. Corp. v. CA
, 44/ SC! // $%&&'(+
0ason v. Ar$ia%a
, 44/ SC! 4' $%&&'(+
"o#erts v. Papio
, '"' SC! #4- $%&&7(+
Navarra v. Planters Dev. Bank 
, '%7 SC! '-% $%&&7(+
"epu#li$ v. Florendo
, '4/ SC! '%7 $%&&(+
1S'S v. *opez 
, '/% SC! 4'- $%&&/(+
Baladad v. "u#li$o
, '/' SC! "%' $%&&/(.
4
"o#erts v. Papio
, '"' SC! #4- $%&&7(+
 20S3 Corp. v. DMC -r#an Properties Dev., 'n$.
, '/4 SC! '/ $%&&/(.
'
*i/ketkai Sons Millin%, 'n$. v. Court o Appeals
, %'& SC! '%# $"//'(+
)ovan *and, 'n$. v. CA
, %- SC! "-& $"//7(+
Bu%atti v. Court o Appeals
, #4# SC! ##' $%&&&(+
Moreno, )r. v. Private Mana%e/ent 4i$e
, '&7 SC! -# $%&&-(+
Manila Metal Container Corp. v. PNB
, '"" SC! 444 $%&&-(+
 Navarra v. Planters Dev. Bank 
, '%7 SC! '-% $%&&7(+
Provin$e o Ce#u v. Heirs o "uina Morales
, '4- SC! #"' $%&&(+
1S'S v. *opez 
, '/% SC! 4'- $%&&/(+
 20S3 Corp. v. DMC -r#an Properties Dev., 'n$.
, '/4 SC! '/ $%&&/(.
-
Bo5e v. CA
, %%& SC! "' $"//#(+
 "o/ero v. CA
, %'& SC! %%# $"//'(+
*ao v. CA
, %7' SC! %#7 $"//7(+
Cavite Develop/ent Bank v. *i/
, #%4 SC! #4- $%&&&(.
7
"o/ero v. CA
, %'& SC! %%# $"//'(+
 Balat#at v. CA,
 %-" SC! "% $"//-(+
Coronel v. CA
, %-# SC! "' $"//-(+
Cit o Ce#u v. Heirs o Candido "u#i,
#&- SC! 4& $"///(+
 A%asen v. CA
, #%' SC! '&4 $%&&&(+
*aorteza v. Ma$&u$a,
 ### SC! -4# $%&&&(+
 *ondres v. Court o Appeals
, #/4 SC! "## $%&&%(+
 Al$antara6Daus v. de *eon
, 4&4 SC! 74 $%&&#(+
Buenaventura v. Court o Appeals
, 4"- SC! %-# $%&&#(+
San *orenzo Dev. Corp. v. CA
, 44/ SC! // $%&&'(+
0ason v. Ar$ia%a
, 44/ SC! 4' $%&&'(+
 Ainza v. Padua
, 4-% SC! -"4 $%&&'(+
"o#erts v. Papio
, '"' SC! #4- $%&&7(+
MCC 'ndustrial Sales Corp. v. Ssan%on%
 
6pon its perfection, the parties may reciprocally demand performance. 1
Heirs o Venan$io Be(entin% v. Bañez 
, '&% SC! '#" $%&&-(+
 subect only to the provisions of the law governing the form of contracts.
 xCruz v. Fernando
, 477 SC! "7# $%&&'(.
t remains valid even if parties have not affi1ed their signatures to its written form 1
1a#elo v. CA,
#"- SC! #- $"///(, or the manner of payment is breached.
 xPilipinas S&ell Petroleu/ Corp v. 1o#onsen% 
, 4/- SC! #&' $%&&-(.
5he failure of the subdivision developer to obtain a license to sell the subdivision lots does not render the sales void on that ground alone especially that the parties have impliedly admitted that there was already a meeting of the minds as to the subect of the sale and price of the contract.
Cante/prate v. C"S "ealt Dev. Corp
. '7 SC! 4/% $%&&/(.
5he contract of sale constituted in an )1traudicial Settlement of )state with !bsolute Sale would be valid even if the buyer0s signature does not appear thereon8a contract of sale is perfected the moment there is a meeting of the minds upon the thing which is the obect of the contract and upon the price.
 xBaladad v. "u#li$o
, '/' SC! "%' $%&&/(.
5he binding effect of sale is based on the principle that the obligations arising therefrom have the force of law between the parties. 1
Veterans Federation o t&e P&ilippines v. Court o Appeals
, #4' SC! #4 $%&&&(.
Perfection Distinguished from Demandabilit
 
 9 :ot all contracts of sale become automatically and immediately effective. n sales with assumption of mortgage, there is a condition precedent to the seller0s consent and without the approval of the mortgagee, the sale is not perfected.
 xBiñan Steel Corp. v. Court o Appeals
, #/" SC! /& $%&&%(.
“No Contract Situation” versus “Void Contract” 
 9 !bsence of consent $
i.e., $o/plete /eetin% o /inds7
 negates the e1istence of a perfected sale.
 xFir/e v. Bukal !nterprises and Dev. Corp.
, 4"4 SC! "/& $%&&#(. 5he contract then is null and void
a# initio
, absolutely wanting in civil effects+ hence, it does not create, modify, or e1tinguish the uridical relation to which it refers.
 xCa#ota(e v. Pudunan
, 4#- SC! 4%# $%&&4(.;hen there is no meeting of the minds on price, the contract <is not perfected= and does not serve as a binding uridical relation between the parties. 1
Manila Metal Container Corp. v. PNB
, '"" SC! 444 $%&&-(,
/
 and should be more accurately denominated as ine1istent, as it did not pass the stage of generation to the point of perfection. 1
NHA v. 1ra$e Baptist C&ur$&
, 4%4 SC! "47 $%&&4(.
#. &lterl n- Re#&/ro#l
$!rts. ""-/ and ""/"( ! contract of sale gives rise to <reciprocal obligations=, which arise from the same cause with each party being a debtor and creditor of the other, such that the obligation of one is dependent upon the obligation of the other+ and they are to be performed simultaneously, so that the performance of one is conditioned upon the simultaneous fulfillment of the other.
Cortes v. Court o Appeals
, 4/4 SC! '7& $%&&-(.
 ! perfected contract of sale carries the correlative duty of the seller to deliver the property and the obligation of the buyer to pay the agreed price.
Con%re%ation o t&e "eli%ious o t&e Vir%in Mar v. 4rola
, ''# SC! '7 $%&&(.5he power to rescind is implied in reciprocal ones in case one of the obligors should not comply with what is incumbent upon him, and without need of prior demand.
 Al/o$era v. 4n% 
, '4- SC! "-4 $%&&(.
-. Onero0s
 $
Gaite v. Fonacier
2 S"RA 8$3 1617
(.
e. "omm0tt&e
$
!
"# 
 
S$$ 
%
 Arts. 1$55 n- 143
(n a contract of sale, there is no requirement that the price be equal to the e1act value of the subect matter of sale+ all that is required is that the parties believed that they will receive good value in e1change for what they will give.
 
!uenaventura v. C&
9 416 S"RA 26$ (233$)
.
 f. Sle Is T&tle n- Not :o-e
Sale is not a mode, but merely a title. ! mode is the legal means by which dominion or ownership is created, transferred or destroyed, but title is only the legal basis by which to affect dominion or ownership. Sale by itself does not transfer or affect ownership+ the most that sale does is to create the obligation to transfer ownership. t is tradition or delivery, as a consequence
Corp.
, '#- SC! 4& $%&&7(+
Castillo v. "ees
. '#/ SC! "/# $%&&7(+
 20S3 Corp. v. DMC -r#an Properties Dev., 'n$.
, '/4 SC! '/ $%&&/(.
Provin$e o Ce#u v. Heirs o "uina Morales
, '4- SC! #"' $%&&(.
/
"o#erts v. Papio
, '"' SC! #4- $%&&7(.
"&
4n% v. Court o Appeals
, #"& SC! " $"///(+
Mortel v. ASSC4
, #4 SC! #/" $%&&&(+
 A%ro Con%lo/erates, 'n$. v. CA
, #4 SC! 4'& $%&&&
 78 Velarde v. Court o Appeals
, #-" SC! '- $%&&"(+
Carras$oso, )r. v. Court o Appeals
, 477 SC! --- $%&&'(+
Heirs o Antonio F. Berna#e v. Court o Appeals
, ''/ SC! '# $%&&(+
Heirs o Antonio F. Berna#e v. Court o Appeals
, ''/ SC! '# $%&&(.
""
Vda. De +uirino v. Palar$a,
 %/ SC! " $"/-/(
2
 
of sale, that actually transfers ownership.
 xSan *orenzo Dev. Corp. v. CA
, 44/ SC! // $%&&'(,
$itin% 
 >
??!:6)>!
, @
A?@@:)
 ?
 !;
 
3:
 S
 !?)S
, "//' ed., at p. '.Seller0s ownership of the thing sold is not an element of perfection+ what the law requires is that seller has the right to transfer ownership at the time of delivery. 1
+ui(ada v. CA,
%// SC! -/' $"//(.
!
"# 
 S 
$$ 
,
1
3iton% v. CA,
%7 SC! "&% $"//(, which defined a <sale= as <
a $ontra$t transerrin% do/inion and ot&er real ri%&ts in t&e t&in% sold.
=
. S
ALE
 D
ISTINUISHED
 
FRO:
 S
I:ILAR
 "
ONTRA"TS
 ! contract is what the law defines it to be, ta2ing into consideration its essential elements, and the title given to it by the parties is not as much significant as its substance.
 5he transfer of ownership in e1change for a price paid or promised is the very essence of a contract of sale. 1
Santos v. Court o  Appeals,
 ##7 SC! -7 $%&&&(.n determining the real character of sale, courts loo2 at the intent of the parties, their true aim and purpose in entering into the contract, as well as <by their conduct, words, actions and deeds prior to, during and immediately after e1ecuting the agreement,= and not at the nomenclature used to describe it, 1
*ao v. Court o Appeals
, %7' SC! %#7 $"//7(.
1. Dont&on
$!rts. 7%' and "47"(6nli2e a donation, sale is a disposition for valuable consideration with no diminution of the estate but merely substitution of values, with the property sold replaced by the equivalent monetary consideration+ unli2e donation, a valid sale cannot have the legal effect of depriving the compulsory heirs of their legitimes.
 xManon%son% v. !sti/o
, 4&4 SC! -# $%&&#(.5he rules on double sales under !rt. "'44 find no relevance to contracts of donation. 1
He/edes v. Court o Appeals,
#"- SC! #47 $"///(.
2.
 
rter 
 $!rts. "4-, "-# to "-4"(
$.
 
"ontr#t for &e#e;of;<or=
 
$!rts. "4-7, "7"# to "7"'(
#he Cru'%
<neluctably, whether the contract be one of sale or one for a piece of wor2, a transfer of ownership is involved and a party necessarily wal2s away with an obect.= 1
Co//issioner o 'nternal "evenue v. CA
, %7" SC! -&' $"//7(,
$itin% 
 >
??!:6)>!
, ?
 !;
 
3:
 S
 !?)S
, pp. 7B/ $"//'(. n both provisions on warranty of title against hidden defects applies. 1
Diño v. CA
, #'/ SC! /" $%&&"(.;hen a person stipulates for the future sale of articles which he is habitually ma2ing, and which at the time are not made or finished, it is essentially a contract of sale and not a contract for labor 1
'n$&austi 9 Co. v. Cro/5ell 
, %& @hil. #4' $"/""(+ even when he e1ecutes production thereof only after an order is placed by customers.
Celestino ( Co. v. Collector 
9  +&l. 841 (156)
.f the thing is specially done only upon the specific order of another, this is a contract for a piece of wor2+ if the thing is manufactured or procured for the general mar2et in the ordinary course of business, it is a contract of sale.
Commissioner of )nternal *evenue v. $ngineering $+ui,ment ( Su,,ly Co.
9 64 S"RA 53 (15)
.
5o 5olentino,
t&e distin$tion depends on t&e intention o parties
* if parties intended that at some future date an obect has to be delivered, without considering the wor2 or labor of the party bound to deliver, the contract is one of sale+ but if one of the parties accepts the underta2ing on the basis of some plan, ta2ing into account the wor2 he will employ personally or through another, the contract is for a piece of wor2. 1
!n%ineerin% 9 Ma$&iner Corp. v. CA
, %'% SC! "'- $"//-(.
4.
 
A!en#> to Sell
 
$!rt. "4--( !ssumption by <agent= of the ris2 pertaining to the cost or price of the subect matter ma2es the relationship that of buyerBseller, for the agent does not assume ris2 with respect to the price or the property subect of the relationship. 1
er 9 Co., *td. v. *in%ad 
, # SC! '%4 $"/7"(. Consequently* $a( the contractual relationship is not inherently revocable.
-uiroga v. Parsons
9 $8 +&l. 531 (118)
+ or $b( the purported agent does not have to account for the profit margin earned from acquiring the property for the purported principal.
Puyat v. &rco &musement Co.
9 2 +&l. 432 (141)
.
"%
 A$ap v. CA
, %'" SC! #& $"//'(.
"#
!:uatorial "ealt Dev. 'n$. v. Maair 3&eater, 'n$.
, #7& SC! '- $%&&"(+
 Al$antara6Daus v. de *eon
, 4&4 SC! 74 $%&&#(+
Heirs o )esus M. Mas$uñana v. Court o Appeals
, 4-" SC! "- $%&&'(.
"4
"o/ero v. CA
, %'& SC! %%# $"//'(+
*ao v. Court o Appeals
, %7' SC! %#7 $"//7(+
4rden v. Aurea
, '-% SC! --& $%&&(+
Ver "ees v. Salvador, Sr.
, '-4 SC! 4'- $%&&(..
"'
Co//issioner o 'nternal "evenue v. Arnoldus Carpentr S&op
, "'/ SC! "// $"/(+
Del Monte P&ilippines, 'n$. v.  Ara%ones
, 4-" SC! "#/ $%&&'(.
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