Sales Syllabus

Course Title : SALES

Course Credit : Two (2) units

Pre-requisites : Obligations & Contracts

Pre-requisites to : None

Type of Course : Major Subject

Faculty : Atty. Crisostomo A. Uribe

Course Description :

Sales basically is covered by Book IV, Title VII of the Civil Code of the Philippines. It deals with the basic principles, rights and obligations of the parties to a contract of sale; remedies in case of breach and the modes of extinguishment of this contract.

Course Objectives :

1. Understand the basic principles applicable to contracts of sale

2. Identify the rights and obligations of parties to a contract of sale.

3. Appreciate and apply these fundamental principles to actual business transactions

4. Encourage diligence and the observance of honesty and fair dealings at all times

Course Outline

I.In General

Definition - Art. 1458(1)

Villonco Realty Company v. Bormaheco, Inc., 65 SCRA 352, July 25, 1975

Ang Yu Asuncion v. Court of Appeals, 238 SCRA 602, December 2, 1994

Vda. De Ape v. Court of Appeals, 456 SCRA 193, April 15, 2005

Torcuator v. Bernabe, 459 SCRA 439, June 8, 2005

History

Governing Law – RA No. 386 (August 30, 1950); Arts. 1488, 1637

Commercial & Civil Sales

Characteristics

consensual – Art. 1475

bilateral - Art. 1458

onerous – Art. 1350

commutative - Art. 2010

principal

nominate – Art. 1458

Gaite v. Fonacier, 2 SCRA 830, July 31, 1961

Stages

Negotiation

Perfection – Arts. 1315, 1475

Performance - Arts. 1191, 1403(2)

Consummation

Ainza v. Padua, 462 SCRA 614, June 30, 2005

Kinds of Sale - Arts. 1458(2), 1488, 1544, 1403,

Maceda Law, Recto Law, 1477, 1501)

As to the nature of the subject matter

Sale of real property

Sale of personal property

As to whether the object is tangible or intangible/corporeal or incorporeal

sale of thing

sale of right

As to validity or defect of the transaction

valid sale

rescissible

voidable

unenforceable

void

As to the presence or absence of condition

absolute sale

conditional sale [Art. 1458]

contract to sell

McCullough v. Berger, 43 Phil 823, September 26, 1922

Dichoso v. Roxas, 5 SCRA 781, July 31, 1962

Luzon Brokerage v. Maritime Building, 43 SCRA 93, January 21, 1972

Portic v. Cristobal, 456 SCRA 577, April 22, 2005

Heirs of Jesus M. Mascunana v. Court of Appeals, 461 SCRA 186, June 23, 2005

Ursal v. Court of Appeals, 473 SCRA 52, October 14, 2005

Carrascoso, Jr. v. Court of Appeals, 477 SCRA 666, December 14, 2005

Sacobia Hills Dev”t Corp. v. Ty, 470 SCRA 395, September 20, 2005

Keppel Bank V. Adao, 473 SCRA 372, October 19, 2005

Edrada v. Ramos, 468 SCRA 597, August 31, 2005

Distinguished from other transactions

1. Contract for a Piece of Work (Massachusetts Rule) - Art. 1467

2. “Contract of Lease with Option to Buy”

3. Dacion en Pago – Art. 1245

Barter or Exchange – Arts. 1468, 1638, 1954

Agency to Sell – Art. 1466

Heacock v. Buntal Manufacturing Co., 66 Phil 245, September 26, 1938

Quiroga v. Parsons Hardware, 38 Phil 501, August 23, 1918

Ker v. Lingad, 38 SCRA 524, April 30, 1971

Del Monte Phils. v. Aragones, 461 SCRA 139, June 23, 2005

II.Elements of a Contract of Sale

Essential Elements

Consent of the contracting parties

Parties to the Contract

Capacity of Parties- Arts. 1489, 1390, 1403

absolute - Arts. 1327-1328, Art. 234Family Code (FC) as amended by RA 6809

relative – Art. XII, Secs. 7 & 8, 1987 Constitution

Arts. 1490-1492, 1533(5), 1476(4), 124FC,

Rodriguez v. Mactal, 60 Phil 13, April 4, 1934

Rubias v. Batiller, 51 SCRA 120, May 29, 1973

Miguel v. Catalino, 26 SCRA 234, November 29, 1968

Estate of Salvador Serra Serra v. Heirs of Primitivo Hernaez, 466 SCRA 120, August 9, 2005

Mapalo v. Mapalo, 17 SCRA 114, May 19, 1966

Subject matter (things & rights)- Arts. 1347, 1311, 1636(goods)

Requisites- Arts. 1458(1), 1459-1462, 1347-1349

Rules on the object of a contract of sale- Arts. 1463-1465

Assignment of Credit and Other Incorporeal Rights- Arts. 1624-1635

Martinez v. Court of Appeals, 56 SCRA 647, April 29, 1974

Melliza v. City of Iloilo, 23 SCRA 477, April 30, 1968

Cause - Arts. 1350, 1352-1353

Price certain in money- Arts. 1469, 1471-1474, 1308; RA 529, RA8183, PD72

Earnest Money- Art. 1482

Lesion - Arts. 1470, 1355

Villonco Realty Company v. Bormaheco, Inc., supra

Spouses Doromal , Sr. and Salas v. Court of Appeals, 66 SCRA 575, September 5, 1975

Goldenrod v. Court of Appeals, 299 SCRA 141, November 24, 1998

Edrada v. Ramos, 468 SCRA 597, August 31, 2005

Philippine Free Press, Inc. v. Court of Appeals, 473 SCRA 639, October 24, 2005

Cruz v. Fernando, Sr., 477 SCRA 173, December 9, 2005

Morales Dev’t Co. v. Court of Appeals, 27 SCRA 484, March 28, 1969

Laperal v. Rogers, 13 SCRA 26, January 30, 1965

De Leon v. Salvador, 36 SCRA 566, December 28, 1970

Velasco v. Court of Appeals, 51 SCRA 439, June 29, 1973

Natural Elements

warranties

subrogation

Accidental Elements

III.Perfection of the Contract

When perfected- Arts. 1475-1476, 1479(1)

Cruz v. Fernando, Sr., supra

Contract of Option- Arts. 1479, 1324

Sanchez v. Rigos, 145 SCRA 368, June 14, 1972

Equatorial Realty Dev’t, Inc. v. Mayfair Theater, Inc., 264 SCRA 483, November 21, 1996

Formalities of Contract of Sale (Statutes of Fraud) - Arts. 1483, 1403, 1625, 1356-1358, 1874; Sec. 22 Act 1147 (Cattle Registration Act)

Paredes v. Espino, 22 SCRA 1000, March 13, 1968

Inigo v. Maloto, 21 SCRA 246, September 28, 1967

Cuyugan v. Santos, 34 Phil 100, March 3, 1916

Dalion v. Court of Appeals, 182 SCRA 872, February 28, 1990

Yuvienco v. Dacuycuy, 104 SCRA 668, May 27, 1981

Vda. De Jomoc v. Court of Appeals, 200 SCRA 74, August 2, 1991

Santos v. Manalili, 475 SCRA 679, November 22, 2005

IV.Rights and Obligations of the Vendor - Art. 1495

To transfer ownership

Who can transfer ownership?

General Rule - Arts. 1505-1506, 1547

Cuison v. Remoto, 472 SCRA 274, October 11, 2005

Exceptions: Art. 1505

Estoppel- Arts. 1431, 1433-1434

Sale by an apparent owner

Purchase at Merchant’s Store, Market or Fair – Art. 559

Sun Bros. v. Velasco, 54 O.G. 5143, August 11, 1958

Salonga v. Concepcion, 470 SCRA 291, September 20, 2005

Sigaya v. Mayuga, 467 SCRA 341, August 18, 2005

Premiere Dev’t Bank v. Court of Appeals, 453 SCRA 630, March 18, 2005

Siy Cong Bieng and Co. v. HSBC, 56 Phil 598 [1932]

Masiclat v. Centeno, May 31, 1956

When/How transfer is effected? - Arts. 1477, 1459, 1496, 1547, 1588

General Rule:

Ilao-Quianay v. Mapile, 474 SCRA 246, October 25, 2005

Exceptions:

sale or return - Art. 1502(1)

sale on approval or trial Art. 1502(2)

conditional sales - Arts. 1478, 1503(1), 1458(2)

Vallarta v. Court of Appeals, 150 SCRA 336, May 29, 1987

Risk of Loss or Deterioration (Total/Partial)- Arts. 1504, 1480, 1493-1494, 1538(1189), 1163, 1174

General Rule: Res perit domino

Exceptions:

Stipulation

Security Title

Delay

Lawyer’s Cooperative v. Tabora, 13 SCRA 762, April 30, 1965

De Lizardi v. Yaptico, 30 Phil 211, March 22, 1915

Sun Bros. Appliances v. Perez, 7 SCRA 977, April 30, 1963

Double Sales- Art.1544

Rule (Movables/Immovables)

Cuison v. Remoto, supra

Ulep v. Court of Appeals, 472 SCRA 274, October 11, 2005

Sigaya v. Mayuga, supra

Bautista v. Sioson, 39 Phil 615, February 11, 1919

Lichauco v. Berenguer, 39 Phil 643, February 27, 1919

Paylago v. Jarabe, 22 SCRA 1247, March 27, 1968

Quimson v. Rosete, 87 Phil 159, August 9, 1950

When not applicable?

unregistered lands

Carumba v. Court of Appeals, 31 SCRA 558, February 18, 1970

Vda. De Jomoc v. Court of Appeals, supra

Hanopol v. Pilapil, 7 SCRA 452, February 28, 1963

To deliver the object and its accessions - Art. 1537(1164)

Kinds of Delivery of Incorporeal Property (Quasi-tradition) - Arts. 1501, 2095

Kinds of Delivery of Corporeal Property (Tradition) - Art. 1477

Actual (Real or Material) - Art. 1497

Constructive (Symbolic or Formal)

delivery by the execution of a public instrument- Art. 498(1)

tradition longa manu- Arts. 1498(2), 1499

tradition brevi manu- Art. 1499

tradition constitutum possessorium- Art. 1500

delivery to a common carrier- Arts. 1503, 1523, 1582

when goods are in the possession of a third person- Art. 521(3)

Kuenzle & Streiff v. Macke & Chandler, 14 Phil 610, December 16, 1909

Addison v. Felix, 38 Phil 404, August 3, 1918

Daguilan v. IAC, 168 SCRA 22, November 28, 1988

Pasagui v. Villablanca, 68 SCRA 18, November 10, 1975

Dy, Jr. v. Court of Appeals, 198 SCRA 826, July 8, 1991

Power Commercial and Ind’l Corp. v. CA, 274 SCRA 597, June 20, 1997

Florendo v. Foz, 20 Phil 388, October 24, 1911

Philippine Suburban Dev’t. Corp. v. The Auditor General, 63 SCRA 397, April 18, 1975

Board of Liquidators v. Floro, 110 Phil 482, December 29, 1960

Quality/Quantity)- Arts. 1481, 1522, 1539-1543, 1630, 1632-1633

Rudolf Lietz, Inc. v. Court of Appeals, 478 SCRA 451, December 19, 2005

Santa Ana, Jr. v. Hernandez, 18 SCRA 973, December 17, 1966

Asiain v. Jalandoni, 45 Phil 296, October 23, 1923

Azarraga v. Gay, 52 Phil 599, December 29, 1928

Not bound to deliver when? - Arts. 1524, 1536(1198)

Visayan Distributors, Inc. v. Flores, 92 Phil 145, October 15, 1952

Place of Delivery - f.o.b., c.i.f., f.a.s. )- Arts. 1521(1), 1251, 1582

Behn, Meyer & Co. v. Yangco, 38 Phil 606, September 18, 1918

Bislig Bay Lumber Co. v. CIR, 1 SCRA 156, January 28, 1961

Time of Delivery - Art. 1521(2)

Republic v. Litton & Co., 94 Phil 52, November 28, 1953

Prescription- Art. 1543

Warranties - Arts. 1495, 1567, 1571, 1628, 1629, 1631

Express- Art. 1546

Carrascoso, Jr. v. Court of Appeals, supra

Philippine Manufacturing Co. v. Go Joco, 48 Phil 621, January 21, 1926

Distinguished from:

condition)- Art. 1545

dealer’s talk

false representation

Implied warranties

warranty against eviction (warranty of title) )- Arts. 1548-1559

warranty against hidden encumbrances or defects)- Arts. 1560, 1561, 1567-1581, 613, 615

warranty of quality)- Arts. 1562-1565, 1586, 1599(5)

Guinhawa v. People, 468 SCRA 278, August 25, 2005

Power Commercial and Ind’l Corp. v. CA, supra

Bautista v. Lasam, 72 Phil 506, June 27, 1941

Mendoza v. Caparros, 94 Phil 317, January 30, 1954

Others)- Arts. 1480, 1163, 1538, 1537, 1164, 1487, 1521 last par.

V.Rights and Obligations of the Vendee

Payment of Price) - Arts. 1582, 1590, 1593

Time and Place

Liability for interest)- Art. 1589

Right of Inspection/Examination)- Arts. 1584, 1481

Right to the fruits- Arts. 1537, 1164

Acceptance- Arts. 1582-1583, 1585-1588, 1593

The Maceda Law (RA 6552)– Sale of Immovables on Installment

Ramos v. Heruela, 473 SCRA 79, October 14, 2005

Fabrigas v. San Francisco del Monte, Inc. 476 SCRA 247, November 25, 2005

VI.Remedies for Breach of Contract

Remedies of an Unpaid Seller- Arts. 1525-1526

withhold delivery (possessory lien) - Arts.1527-1529, 1535, 2241(3)

stoppage in transitu )- Art. 1530-1532, 1535, 1636(2)

resell the goods- Art. 1533

rescission- Arts. 1534, 1597, 1591-1593, 1191, 1556, 1484, 1532, 1567, 1580

action for the price – specific performance- Art. 1595

action for damages- Art. 1596

Katigbak v. Court of Appeals, 4 SCRA 242, January 31, 1962

Song Fo & Co. v. Hawaiian-Phil. Co., 47 Phil 821, September 16, 1925

Weyerhauser Timber Co. v. First Nat’l Bank of Portland, 38 P2d 48

Remedies of the Buyer- Arts. 1539, 1542-1543, 1567, 1571, 1599

specific performance- Arts. 1598

damages

rescission- Arts. 1481

Recto Law – Sale of Movables on Installment- Arts. 1484-1486

Luneta Motor C. v. Salvador, 108 Phil 1037, July 26, 1960

Industrial Finance Corp. v. Ramirez, 77 SCRA 152, May 26, 1977

Northern Motors, Inc. v. Sapinoso, 33 SCRA 1970, May 29, 1970

UMC v. Dy Hian Tat, 28 SCRA 161, May 16, 1969

Cruz v. Filipinas Investment & Finance Corp., 23 SCRA 791, May 27, 1968

VII.Extinguishment of Sale

Causes- Arts. 1600, 1231, 1626, 1634-1635

Redemption

Conventional - Art. 1601

Pacto de Retro Sale- Arts. 1607, 1609, 1611-1518, 1676-1677

Equitable Mortgage- Arts. 1602-1605

Period to Redeem- Art. 1606

Who may exercise the right to redeem? - Arts. 1608, 1610, 1612, 1614-15

Cadungog v. Yap, 469 SCRA 561, September 12, 2005

Salonga v. Concepcion, supra

Go v. Bacaron, 472 SCRA 339, October 11, 2005

Gerardino, Sr. v. CFI Capiz Br. III, 80 SCRA 646, December 29, 1977

Yturralde v. CA, 43 SCRA 315, February 28, 1972

Marquez v. Valencia, 77 Phil 782, December 22, 1946

Quinga v. Court of Appeals, 3SCRA 66, September 19, 1961

Gloria-Diaz v. Court of Appeals, 84 SCRA, July 31, 1978

Heirs of Francisco Parco v. Haw Pia, 45 SCRA 164, May 30, 1972

Legal- Arts. 1619-1623

Spouses Doromal , Sr. and Salas v. Court of Appeals, supra

Almendrada v. Ngo, 471 SCRA 311, September 30, 2005

Aguilar v. Aguilar, 478 SCRA 187, December 16, 2005

Villasor v. Medel, 81 Phil 546, September 29, 1948

Ortega v. Orcine, 38 SCRA 276, March 31, 1971

Prescribed Textbook:

Hector S. De Leon, Comments and Cases on Sales and Lease, Sixth Edition, Rex Printing Company, Inc., 2005

References:

1. Araceli Baviera, SALES, UP Law Center, 1981

2. Arturo M. Tolentino, Commentaries & Jurisprudence on the Civil Code of the Philippines, Vol. 5, Central LawBook Pub., 1987