SALES

ATTY. KLINTON M. TORRALBA

UST COLLEGE OF LAW

I. Nature and Form of the Contract

A. Article 1458
 Riosa v. Tabaco La Suerte Corporation, G.R. No. 203786, 23 October 2013
 Deganos v. People of the Philippines, G.R. No. 162826, 14 October 2013
 Manuel Uy & sons, Inc. v. Valbueco, Inc., G.R. No. 179594
 Pilipino Telephone Corp. v. Radiomarine Network (Smartnet) Phil., Inc., G.R. No.
160322, 24 August 2011
 Tan v. Benolirao, G.R. No. 153820, 16 October 2009

B. Article 1459
 Heirs of Reyes v. Socco-Beltran, G.R. No. 176474, 27 November 2008
 Daclag, et. al. v. Macahilig, et. al., G.R. No. 159578, 28 July 2008

C. Article 1461
 Heirs of del Rosario v. Santos, G.R. No. L-46892, 30 September 1981

D. Article 1461 (2nd par)

 Javier v. Court of Appeals, G.R. No. 48194, 15 March 1990

E. Article 1462
 Danguilan v. Intermediate Appellate Court, G.R. No. L-69970, 28 November 1988

F. Sales Distinguished from Other Contracts

1. Agency to Buy and Sell – Article 1466 & 1868

2. Contract for a Piece of Work – Articles 1467, 1713 to 1715

3. Barter and Exchange – Articles 1468, 1638 & 1641

4. Dacion en Pago – Articles 1245

 Dao Heng Bank, Inc. v. Spouses Laigo, G.R. No. 173856, 20 November 2008

G. Article 1484 to 1486 (Recto Law)

 PCI Leasing and Finance, Inc. v. Giraffe-X Creative Imaging, Inc., G.R. No. 142618, 12
July 2007
 Elisco Tool Manifacturing Corp. v. Court of Appeals, G.R. No. 109966, 31 May 1999
 People’s Industrial and Commercial Corp. v. Court of Appeals, G.R. No. 112733, 24
October 1997
 H. Republic Act 6552 (Maceda Law)
 Royal Plains View, Inc. v. Mejia, G.R. No. 230832, 12 November 2018

II. Parties to a Contract of Sale

A. Capacity of Parties - Articles 44, 46, 1489

B. Absolute Incapacity – Articles 1327, 1390, 1393, 1397, 1399, & 1489; Article 194, Family
Code

C. Relative Incapacity : Married Persons

1. Contract with Third Parties – Articles 73, 96, & 124, Family Code

2. Between Spouses – Articles 1490 & 1492

 Medina v. Collector of Internal Revenue, G.R. No. L-15113, 28 January 1961

3. Applicability to Common Law Spouses – Articles 147 & 148, Family Code

D. Special Disqualifications
1. Article 1491
 Daroy v. Abecia, AC No. 3046, 26 October 1998
 Arcenio v. Pagorogon, AM MTJ-89-270, 05 July 1993
 Valencia v. Cabanting, AC Nos. 1302, 1391, & 1543, 26 April 1991
 Fabillo v. Intermediate Appellate Court, G.R. No. 68838, 11 March 1991
 Mananquil v. Villegas, AC no. 2430, 30 August 1990
 Bautista v. Gonzales, AM No. 1625, 12 February 1990
 Canlas v. Court of Appeals, G.R. No. L-77691, 09 August 1988

2. Article 1492
 In Re: Atty. Leon G. Manquera, BM 793, 30 July 2004

III. Subject Matter of the Sale

A. Requisites of a Valid Subject Matter – Articles 1459, 1347, 1306, 1409, 1411 & 1416

1. Must be Existing, Future, or Contingent – Article 1347,1348 & 1462

a. Emptio Rei Speratae / Emptio Spei – Articles 1461 & 1347
b. Subject to a Resolutory Condition – Articles 1465 & 1608

2. Must be Licit – Articles 1347, 1459, 1575

3. Must be Determinate or Determinable – Articles 1460, 1349

B. Particular Kinds

1. Generic Things
 2. Future Goods – Article 1461 & 1462

3. Undivided Interest / Shares – Articles 1463, 1464, & 493

4. Thing in Litigation – Articles 1381(4), & 1385(2); Section 14, Rule 13, Rules of Court
 Laroza v. Guia, G.R. No. L-45252, 31 January 1985

IV. Price or Consideration (Articles 1469 to 1474 & 1350 to 1355)

A. Must be Real – Article 1471

1. Adequacy of Price – Articles 1355 & 1470

 Spouses Buenaventura and Joaquin v. Court of Appeals, G.R. No. 126376, 20
November 2003

2. False Consideration – Articles 1353, 1354 & 1471

 Ting Ho, et. al. v. Teng Gui, G.R. No. 130115, 16 July 2008
 Labagala v. Santiago, G.R. No. 1322305, 04 December 2001

3. Must be in Money or its Equivalent – Articles 1458 & 1468

4. Must be Certain or Ascertainable at the Time of Perfection – Article 1469

B. Fixing of Price – Article 1473

 Hyatt Elevators and Escalators Corp. v. Cathedral Heights Building Complex
Association, Inc., G.R. No. 173881, 01 December 2010
 Boston Bank of the Philippines v. Manalo, G.R. No. 158149, 09 February 2006.

V. Formation of the Contract of Sale (Articles 1475 to 1488)

A. Preparatory – Article 1479 in relation to 1324

 Tuazon v. del Rosario-Suarez, et. al., G.R. No. 168325, 13 December 2010 in relation
to Equatorial Realty Development v. Mayfair Theatre, G.R. No. 106063, 21
November 1996

1. Offer – Article 1475

 San Andres v. Rodriguez, G.R. No. 135634, 31 May 2000
 Dizon v. Court of Appeals, G.R. No. 122544, 28 January 1999
 Co v. Court of Appeals, G.R. No. 123908, 09 February 1998
 Coronel v. Court of Appeals, G.R. No. 103577, 07 October 1996
 Limketkai Sons Milling, Inc. v. Court of Appeals, G.R. No. 118509, 29 March 1996

a. Forms of Offer – Article 1319, 1325, 1326

 b. Forms of Acceptance – Article 1319

2. Vices of Consent – Articles 1330, 1331 & 1338

 Vda. De Ape v. Court of Appeals, G.R. No. 133638, 15 April 2005

3. Option Contract – Article 1479 in relation to 1324

 Equatorial Realty Development v. Mayfair Theatre, G.R. No. 106063, 21 November
1996

a. Meaning of Consideration
 Sanchez v. Rigos, G.R. No. L-25494, 14 June 1972

4. Right of First Refusal

 Ang Yu Asuncion v. Court of Appeals, G.R. No. 109125, 02 December 1994
 Equatorial Realty Development v. Mayfair Theatre, G.R. No. 106063, 21 November
1996

5. Mutual Promise to Buy or Sell

B. Perfection – Articles 1475, 1319, 1325, 1326, 1330, 1338, 1476, 1479
 Coronel v. Court of Appeals, G.R. No. 103577, 07 October 1996
 Manila Metal Container Corp. v. PNB, G.R. No.

1. When deviation allowed

 Villonco Realty Company v. Bormaheco, Inc., G.R. No. L-26872, 25 July 1975

2. Sale by Auction – Articles 1476, 1403 (d), & 1326

3. Earnest Money vs. Option Money – Article 1482

 Spouses Serrano v. Caguiat, G.R. No. 139173, 28 February 2007
 San Miguel Properties Phil. V. Huang, G.R. No. 137290, 31 July 2000
 Goldenrod, Inc. v. Court of Appeals, G.R. No. 126812, 24 November 1998

C. Formalities of the Contract

1. GR: Form, Not Important – Articles 1483 & 1358

2. XPNS: When Form Important

a. For Enforceability

a1. Statute of Frauds – Articles 1403 & 1405

 Asia Production Co., Inc. v. Pano, G.R. No. L-51058, 27 January 1992
 Averia v. Averia, G.R. No. 141877, 13 August 2004
 Clemeno v. Lobregat, G.R. No. 137845, 09 September 2004

b. For Validity
 b1. Sale of Realty through an Agent – Article 1874

b2. Sale of Large Cattle – Article 1581 in relation to Section 529, Revised
Administrative Code

b3. Secondary Evidence – Sections 5 & 9, Rule 130, Rules of Court

b4. Electronic Commerce Act – Sections 7, 8 & 11, R.A. 8792

VI. Obligation of the Vendor (Articles 1495 to 1506; 1536 to 1543)

A. Transfer Ownership to the Vendee (Articles 1459, 1477, 1478, 1487, 1496 to 1501, see also Article
1164)

1. General Rule – Articles 1477, 1496, 1497

2. Exceptions

a. Sale on Approval, Acceptance, Trial, or Satisfaction – Article 1502

 Vallarta v. Court of Appeals, et. al., G.R. No. L-40195, 29 May 1987

b. Executory Sales
b.1 Express Reservation – Article 1478
b.2 Implied Reservation – Article 1503 (1)

3. Sale by a Person Not the Owner at the Time of Delivery – Articles 1462, 1459, 1505

 Aznar v. Yapdiangco, G.R. No. L-18536, 31 March 1965

Exceptions:
a. Estoppel – Articles 1431, 1433, 1434; see also Articles 1437, 1439, 1911
b. Factors’ Act, Recording Laws, Torrens System
c. Validity of the Sale under Statutory Power or Court Order to Sell
d. Sale in Merchant’s Store, Market or Fair

4. Sale by a Person Having a Voidable Title – Articles 1506 and 559

B. Delivery of the Thing with Fruits and Accessions – Articles 1537, 1163, 1164, 1477, and 1495; see
also Article 1521

1. Place, Time, and Manner of Delivery – Articles 1524, 1169, 1521, 1523 (2), (3), 1537, 1164,
443

a. Reasonable Time
 b. When time is of the essence
c. When vendor not bound to deliver – Articles 1524, 1536, 1198
d. Acceptance not a condition to delivery
 La Fuerza, Inc. v. Court of Appeals, G.R. No. L-24069, 28 June 1968

2. Inspection and Acceptance

a. Right of Inspection – Article 1548 (2) (3)

b. Manifestation of Acceptance – Article 1585
c. Breach of Warranty – Article 1586
d. Refusal to Accept – Article 1587 to 1589

3. Kinds of Delivery

a. Real or Actual Delivery – Article 1497

b. Constructive Delivery

b1. Symbolic Delivery / Delivery by Public Instrument – Article 1498

 Santos v. Santos, G.R. No. 133895, 02 October 2001

b2. Traditio Longa Manu – Articles 1498, 1499, 1513, 1514

 Board of Liquidators v. Floro, G.R. No. L-15155, 29 December 1960

b3. Traditio Brevi Manu – Article 1499

 Heirs of Escanlar v. Court of Appeals, G.R. No. 119777, 23 October 1997

b4. Traditio Constitutum Possessorium – Article 1500

 Amigo v. Teves, G.R. No. L-6389, 29 November 1954

b5. Delivery to Common Carrier – Articles 1523 and 1503

 Meyer v. Yangco, G.R. No. 13203, 18 September 1918

C. Double Sale – Articles 1544 (1), 526, 527

1. General Rule – prior tempore, prior jure

 Tanglao v. Parungao, G.R. No. 166913, 05 October 2007
 Carbonell v. Court of Appeals, G.R. No. L-29972, 26 January 1976

2. Requisites
 Cheng v. Genato, et. al., G.R. No. 129760, 29 December 1998

3. Purchaser in Good Faith – Arts. 526, 527, 528

 Paylago v. Jarabe, G.R. No. L-20046, 27 March 1968
  Agricultural and Home Extension Development Group v. Court of Appeals, G.R. No.
92310, 03 September 1992

4. Sale of Movables – Arts. 1544, 1497-1501

5. Sale of Immovables – Art. 1544 (2)

 Consolidated Rural Bank, Inc. v. Court of Appeals, G.R. No. 132161, 17 January 2005

6. Sale by Virtue of Execution or Attachment

 Carumba v. Court of Appeals, G.R. No. L-27587, 18 February 1970

7. Unregistered Land – Section 113, PD 1529

 Radiowealth Finance Company v. Palileo, G.R. No. 83432, 20 May 1991

8. First Possession in Good Faith

 Beatingo v. Gasis, G.R. No. 179641, 09 February 2011.

9. Oldest Title – Article 1544 (3)

D. Risk of Loss
1. General Rule – Article 1263

2. Loss Before Perfection

3. Loss at the Time of Perfection – Article 1493 and 1494

4. Loss After Perfection but Before Delivery – Article 1480 in rel. to Articles 1163 to 1165;
Articles 1189 and 1262

4a. General Ryle – res perit domino

4b. Loss by fault of part – Articles 1480, 1504, 1538, 1636

4c. Loss by fortuitous events – Articles 1480, 1163, 1165, 1504, 1538, 1189

4d. Fruits or Improvements – Article 1537

5. After Delivery – Article 1504

E. Warranties
 Ang v. Court of Appeals, G.R. No. 177874, 29 September 2008

1. Express Warranties
 1a. Distinguished from Opinion, Dealer’s Talk – Articles 1546 and 1341

2. Implied Warranties

2a. Implied Warranty of Title – Article 1590

a. Eviction by Judgment – Articles 1547, 1548, 1550, 1551, 1555, 1557

b. Waiver – Article 1554
c. Effects of Eviction – Article 1555, 548, 1556, 1599

2b. Implied Warranty Against Encumbrances or Defects – Articles 1561 to 1580

a. Hidden Encumbrances or Defects – Articles 1561 to 1580
b. Warranties in Sales of Animals / Redhibitory Defects – Articles 1574 to 1580
c. Sale by Sample or Description / Merchantable Quality – Articles 1574, 1481, 1562(2),
1565

2c. Implied Warranty of Quality

a. Fitness for a Particular Purpose – Articles 1562(1), 1564, 1563

VII. Obligation of the Vendee

A. Obligation to Accept Delivery – Articles 1524, 1169, 1521, 1536, 1198, 1522, 1584 to 1588

B. Obligation to Pay the Price

 Spouses Torcuator v. Spouses Bernabe, G.R. No. 134219, 08 June 2005

1. Liability for Interests – Articles 1582, 1589

2. Suspension of Payments – Articles 1590, 1560, 1664

VIII. Breach of Contract

A. Remedies of Unpaid Vendor – Articles 1525, 1526, 1533, 1534

1. Possessory Lien – Articles 1527 to 1529

2. Stoppage in Transitu – Articles 1531 to 1535, 1532(2)

3. Resale – Article 1533

 Katigbak v. Court of Appeals, G.R. No. L-16480, 31 January 1962

4. Rescission – Articles 1534

B. Sale of Movables
 1. Action for Price

a. When ownership has passed -Article 1595(1)

b. When ownership has not passed – Article 1595(2)

2. Action for Damages for Non-Acceptance – Article 1596

3. Rescission – Articles 1597, 1593

C. Sale of Movables on Installment (Recto Law) – see 1G above

D. Sale of Immovables

1. Anticipatory Breach – Article 1591

2. Sections 23 and 24, PD 957

3. Maceda Law (RA 6552) – see 1H above

4. Rescission of Sale of Non-Residential Realty on Installment – Articles 1191, 1560, 1592

IX. Extinguishment of Sale

A. Causes – Articles 1600, 1231

B. Conventional Redemption – Article 1601

 David v. David, G.R. No. 162365, 15 January 2014

1. Distinguished from Option to Buy – Article 1602

 Villarica v. Court of Appeals, G.R. No. L-19196, 29 November 1968

2. Period of Redemption – Article 1606

 Bandong v. Austria, G.R. No. 9785, 24 September 1915
 Bayquen v. Balaoro, G.R. No. L-28161, 13 August 1986

3. Exercise of Right to Redeem – Article 1616

 Gargollo v. Duero, G.R. No. L-15973, 29 April 1961

a. Who can exercise – Articles 1610 to 1613

b. From whom to Redeem.- Articles 1615

 c. Effect of Redemption – Article 1617 to 1618

d. Effect of Non-redemption – Article 1607

C. Legal Redemption – Article 1619

1. Period to Redeem – Article 1623

 Francisco v. Boiser, G.R. No. 137677, 31 May 2000

2. Instances of Legal Redemption

a. Co-owners – Article 1620

b. Co-heirs – Article 1088

c. Adjoining Landowners of Rural Land – Article 1621

d. Adjoining Landowners of Urban Land – Article 1622

e. Under the Public Land Act – Sections 118-119, CA 141

f. Under Extrajudicial Foreclosure – Section 6, Act 3175

g. Under Agrarian Land Reform Code – Section 12, RA 6389