CIVIL LAW REVIEW SALES

Formalities of Perfection; Statute of Frauds (1405) (for enforceability)

SALE - the sale of the following must be in writing:
By the contract of sale one of the contracting parties obligates himself to 1. Real property (regardless of amount) (public instrument)
transfer the ownership of and to deliver a determinate thing, and the other to 2. Personal property with a value of Php500.00 or more
pay therefor a price certain in money or its equivalent. (Art, 1458) 3. Sales to be performed only after more than 1 year form the time the
agreement is entered into (regardless if real/personal, regardless of
- vendor need not be the owner at the time the sale is perfected; it is sufficient value)
that he is the owner at the time the thing sold is delivered
*no need for the contract itself to be in writing; e.g. letters, notes,
Characteristics memorandum signifying offer and acceptance
1. Consensual - perfected by mere consent * the Statute of Frauds refers only to executory contracts; if the contract has
2. Bilateral - both parties are bound by obligations already been executed, a party may not claim a violation of the statute
3. Onerous - valuable consideration must be given * the remedy of Art. 1357 (compel a party to observe the form of the contract)
4. Commutative - the values exchanged are almost equivalent to each other is only available if the contract is valid and enforceable
*exc: some sale are aleatory, i.e. what one receives is greater/lesser than *mere perfection does not transfer ownership; delivery transfers ownership
what is given, sale of sweepstakes * effect of perfection : party must comply with their obligations to deliver and to
5. Principal - not dependent upon another contract pay
6. Nominate - has a special designation * a sale by auction is perfected when the auctioneer announces its perfection by
the fall of the hammer
Elements
Essential Sale of land or any interest therein through an agent (1874)
1. Consent or meeting of the minds - the authority of the agent must be in writing (for validity, not mere
2. Determinate subject matter (object) enforceability)
3. Price certain in money or its equivalent (cause/consideration)
*price need not be in money Stages
Natural (inherent; deemed to exist in the contract even in the absence of 1. Generation/negotiation
provision) 2. Perfection - meeting of the minds
1. Warranty against eviction 3. Consummation - when the object is delivered and the price is paid
2. Warranty against hidden defects
Kinds
Object Sale of property - tangible/corporeal (chose in possession
- determinate (particularly designated or physically segregated from all others of Sale of a right - intangible (chose in action) e.g. assignment of a right or credit,
the same class);(if at the time the contract is entered into, the thing is capable copyright, trademark, goodwill
of being made determinate without the necessity of a new further agreement Absolute sale - no condition
between the parties) (1460) Conditional sale - e.g. pacto de retro (right to repurchase or redeem),
- licit, within the commerce of man (1459) suspensive conditions (e.g. future harvest)
- owned by the seller at the time of delivery; nemo dat quad non habet (no one *a promise to sell a homestead within the 5-year period is void, even if
can dispose of that which does not belong to him) sale takes place after the 5-year period
- future things or goods may be sold; things having potential existence; *sale of particular portions of yet undivided real property is valid
conditional sale (condition that the thing will come into existence) (1461)
e.g. young animals not yet in existence, still ungrown fruits, expected Sale v Dacion in Payment (Adjudicacion en Pago/ Dacion en Pago/ Dacion en
goodwill of a business Solutum)
*emptio rei speratae (sale of an expected thing)
*emption spei (sale of the hope itself) (e.g. sale of a valid sweepstakes SALE DACION EN PAGO
ticket) No pre-existing credit There is pre-existing credit
exc: sale of vain hope/expectancy (e.g. sale of ticket for sweepstakes Gives rise to obligations Extinguishes obligations
already run) The cause is the price (viewpoint of Cause is the extinguishment of debt
- existing goods or goods to be manufactured, raised, or acquired by seller after seller) or the obtaining of the object (viewpoint of debtor) or the
perfection of the contract (future goods) (1462) (viewpoint of buyer) acquisition of the object offered in
- things subject to a resolutory condition (1465) lieu of the original credit (viewpoint
e.g. property subject to reserva troncal, usufruct, property a retro of creditor0
There is greater freedom in Less freedom in determining the price
e.g. right of redemption, usufruct, literary, artistic, and scientific works determination of the price
X homestead (for a period of 5 years), vain hope/expectancy Giving of the price may generally end Giving of the object in lieu of the
the obligation of the buyer credit may extinguish
Consideration (Price) completely/partially the credit
- certain
(a) With reference to another thing certain; Dacion en Pago
(b) Determination by a third person - the debtor alienates in favor of the creditor, property for the satisfaction of
(c) Agreement by the parties monetary debt
(d) Determination by the court - e.g. I owe Maria Php1M but I offer her my gold Rolex watch instead of the
money
- if the price is simulated (fictitious), the sale is void
Exc: shown that it really is a donation or some other contract (1471) Contract of Sale v Contract to Sell
- price must not be left to the sole discretion of one party
Exc: other party accepted CONTRACT OF SALE CONTRACT TO SELL
The nonpayment of the price is a Payment in full of the price is a
* if the price is fixed but later on remitted or condoned, the sale is still valid resolutory condition positive suspensive condition; if the
since there was a price. price is not paid, its is as if the
* if the money paid is counterfeit, the sale is still valid; the real consideration is obligation of the seller to deliver and
the value or price agreed upon to transfer ownership never became
* if the contract does not specify the forex, it shall be that at the time of delivery effective
of the goods Title over the property passes to the Ownership is retained by the seller,
* GR: gross inadequacy of the price does not affect the contract of sale, buyer upon delivery regardless of delivery and is not to
Exc: (a) defect in the consent ; (b) parties really intended a donation or pass until full payment of the price
some other contract (1470) After delivery has been made, the Since the seller retains ownership,
Remedy : reformation of the instrument seller has lost ownership and cannot despite delivery, he is enforcing and
recover it unless the contract is not rescinding the contract if he seeks
Consent (Meeting of the minds; perfection) resolved/rescinded to oust the buyer for failure to pay
- meeting of the minds as to the object and consideration
- delivery or payment is not essential for perfection *a sale of shares of stock is valid between the parties but will not bind the
corporation unless it is recorded in the books of the corporation
*sale of forex or foreign currency is perfected from the time the contract is *a deed of exchange of property (land and shares of stock) does not constitute a
executed contract of sale fort there is no actual transfer of ownership; by the ownership
* if the condition precedent for the sale fails to materialize, there is no of shares of stock, control of the corporation is acquired, hence, ownership of
perfected sale the land remained in the same hands.

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Contract of Sale v Agency to Sell Sale by sample or by description
- if the bulk of the goods delivered do not correspond with the description or
CONTRACT OF SALE AGENCY TO SELL (e.g. consignment) the sample, the buyer may rescind the contract
Buyer pays the price Agent delivers the price which in turn
he got from the buyer Earnest money (“arras”)
Buyer becomes owner after delivery Agent does not become the owner, - something of value to show that the buyer was really in earnest, and given to
even if the property has already been the seller to bind the bargain
delivered to him - considered as part of the purchase price (arras must be deducted from the
Seller warrants Agent assumes no personal liability as purchase price; only the balance should be paid)
long as he acts within his authority - considered as proof of the perfection of the contract
and in the name of the principal
Sale of personal property on installments (Recto Law; Art. 1484)
*purchasing a booklet of sweepstakes tickets constitutes a contract of sale (not Remedy of vendor if vendee fails to pay:
an agency to sell), even if bought on a discount; ownership is transferred to the 1. Exact fulfillment of the obligation
purchaser upon delivery and he is not allowed to recover from the PCSO upon 2. Cancel the sale, if the nonpayment covers 2/more installments. Here,
failure to re-sell. there must be mutual restitution of whatever had been received by either
* purchase of Quiroga beds by P from Q at a discount (commission) with a party unless there is stipulation to the contrary
stipulation that payment must be made whether the beds are resold, is a 3. Foreclose the chattel mortgage, if nonpayment covers 2/more
contract of sale; the concept of an agent is that, he is not obliged to pay unsold installments. In this case, vendor shall have no more further remedy
goods but returns them to seller; the phrase “commission on sales” means against the vendee to recover any unpaid balance.
nothing more than a mere discount and the word “agent” simply means that the
P was the only one who could sell Q’s beds in the Visayas *remedies are aslo applicable to Lease of personal property with option to buy
* the contract is what the law defines it to be, not what it is called by the
contracting parties Sale of real property in installments
- governed by the Maceda Law (RA 6552)
Contract of Sale v Contract for a Piece of Work (1467)
Expenses in execution(of the deed of sale) and registration
CONTRACT OF SALE CONTRACT FOR A PIECE OF WORK - GR: borne by the seller
Ordered in the ordinary course of Manufactured specially and not for - exc: conrary stipulation
business the market
Capacity to Buy or Sell
Contract of Sale v Barter (1468) Absolute Incapacity
*GR: if the consideration of the contract consist partly in money, and partly in - unemancipated minors, insane, demented, deaf-mute who do not know how
another thing, intention of the parties govern; Exc: to write
CONTRACT OF SALE BARTER *sale of necessaries to a minor or incapacitated person obliges him to pay the
50-50 Thing is more valuable than money price therefor.
Thing is less valuable than money
Relative incapacity
Promise to buy, sell - certain circumstances; voidable
Mutual Promise to buy and sell - reciprocally demandable; each party may sue 1. Husband and Wife (1490)
for damages in case of breach GR: husband and wife cannot sell property to each other
Accepted Unilateral Promise to buy or to sell - binding upon the promisor if the EXC: (a) regime of separation of property; (b) judicial separation of property
promise is supported by a consideration distinct from the price (option (Art.135, FC)
money) - who can assail validity of sale?: (a) heirs of either spouse; (b) creditors at the
e.g. (a) B cannot decide to buy a car from A as of the moment and gave A time of transfer (prior to the sale)
an option money for him to decide within 1week; if A sells the car to 2. Special disqualification (1491) - cannot purchase even at a public or
another within the week, B may claim damages; B may or may not buy the judicial auction
car at the end of the week a) Guardian - property of his ward
(b) A offered to sell for Php10M his house and lot to B and gave B a period b) Agents - property entrusted to him (exc: consent of the principal)
of 1month to raise the amount. One week before expiration of the period, c) Executors and administrators - estate
A told B he is increasing the price to Php15M. B cannot compel A to d) Public officers and employees; judges and gov’t experts who take
accept Php10M because B never accepted the contract, and assuming he part in the sale - property of the state or of any subdivision
did, there was a mere accepted unilateral promise to sell and A is not thereof, GOCC entrusted to the public officers/employees
bound because there was no valid option(with separate consideration) e) Justices, judges, prosecuting attorneys, clerks, other officers and
* an option is a distinct contract which must have its own consideration employees connected with the administration of justice, lawyers -
Policitation - a unilateral promise to buy or to sell which is not accepted; no legal property and rights in litigation or levied upon an execution within
effect their jurisdiction; properties in custodia legis
f) Others specially disqualified by law
* a contract or promise to sell is not a contract of sale; ownership is retained by
the seller until full payment; the payment is a positive suspensive condition; the *these persons cannot, as well, exercise legal redemption, compromise, and
failure to pay is not a breach of the contract but merely prevents the obligation renunciation
of the seller to convey title.
Loss of the Thing
Risk of Loss (1480) Before/At perfection
Res perit domino - owner bears the loss 1. Total - void contract
2. Partial - vendee may
Seller a) Withdraw from the contract; or
1. Object has been lost before perfection - seller is still the owner b) Demand the remaining part + pay the price (specific performance)
*the same remedies are available for the loss of specific goods (1494)
Buyer
1. Object was lost after delivery to the buyer - delivery transfers ownership Obligations of Vendor(Seller)
2. Object was lost after perfection but before delivery - exception to res 1. To transfer ownership (cannot be waived)
perit domino 2. To deliver (cannot be waived)
* (1583, 1189) - “If the thing is lost without the fault of the debtor, the 3. To warrant the object sold (can be waived/modified since warranty is not
obligation is extinguished” an essential element of the contract of sale)
* at this interval of time, buyer is entitled to the benefits(e.g. 4. To preserve the thing form perfection to delivery, otherwise he can be
improvements) so he must also bear the loss held for damages
* remedy of buyer - go after the wrongdoer for damages * vendor is bound to deliver the thing sold and its accessions and
*exc: (a) object consists of fungibles sold for a fixed price according to accessories in the condition they were upon the perfection of the
weight, number, or measure; (b) seller is guilty of fraud, negligence, contract
default, or violation of term; (c) object is generic, genus nunquam perit, * all the fruits shall pertain to the vendee from the day on when the
genus does not perish contract was perfected (1537)
*fungibles - personal property which may be replaced with equivalent
things

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Delivery - negotiable if the goods are deliverable to bearer (“to bearer) or the the order
- transfers ownership of a certain person (“to X or his order”, “to the order of X”)
Exc: (a) pactum reservati domini - intention that no transfer of ownership - negotiated by delivery : (a) bearer instrument (b) order instrument indorsed in
takes place until full payment of the price; contract to sell; installment blank or to the bearer; if these are subsequently negotiated by indorsement,
sale; (b) sale by trial/satisfaction (1502); (c) implied reservation of they can only be further negotiated by indorsement + delivery
ownership (1503)
Rights of an Unpaid Seller
Non delivery 1. Possessory lien (in the nature of a pledge); a lien on the goods or right to
- buyer may ask for rescission retain them for the price while he is in possession of them;
- judgment debtor in an execution sale is not required to deliver the property 2. Right of stoppage in transitu;
sold right away; 1 year redemption period; an action for forcible entry may be 3. Right of resale:
filed against buyer if he takes possession within 1year period 4. Right to rescind the sale
5. Right of withholding delivery (if possession has not yet passed to the
Actual delivery (1497) buyer.
- when the thing is placed in the control and possession of the vendee
Loss, Deterioration or Improvement Before Delivery (1538)
Legal or Constructive delivery 1. Loss without the fault of the vendor - the obligation to deliver shall be
1. Legal formalities (1498) - when the sale is made through a public extinguished;
instrument, the execution thereof is equivalent to delivery; but seller 2. Loss through the fault of the vendor - he shall be obliged to pay damages
must have control over the thing at the time of sale; this is a mere 3. Deterioration without the fault of the vendor - impairment is borne by
rebuttable presumption the vendee
2. Traditio simbolica (1498) - e.g. keys 4. Deterioration through fault of vendor - vendee may (a) rescind + damages
3. Traditio longa manu (long hand) - delivery by mere consent or the or (b) demand fulfillment + damages
pointing out of the object; e.g. pointing out the car which is the object of 5. Improvement by nature of the thing or by time - improvement shall inure
sale to the benefit of the vendee
4. Traditio brevi manu (short hand) - buyer is already in possession even 6. Improvement at the expense of the vendor - he shall have no other right
before the sale; e.g. tenant buys the rented property than that granted to the usufructuary
5. Traditio constitutum possessorium (opposite of brevi manu) - possessor
of a thing as an owner retains possession no longer as an owner, but in *lost - when the thing perishes, goes out of commerce, or disappears in such a
some other capacity; e.g. house owner selling the house but retains way that its existence is unknown or it cannot be recovered
possession as tenant
6. Tradition by the execution of legal forms and solemnities - e.g. execution Sale of Real Estate; Rules(1539, 1540, 1542)
of a public instrument selling parcel of land 1. Sale by the unit; remedy of buyer if delivery is less than or inferior in
7. Delivery to carrier (1523) - when the seller is authorized or required to quality than that in the contract
send the goods to the buyer, delivery of the goods to a carrier is deemed a) Buyer can demand delivery of all that has been stated in the
to be a delivery of the goods to the buyer. contract
b) Proportional reduction of the price; or
Delivery of Incorporeal Property (1501) c) Rescission (provided the deficiency is 1/10 or more of that stated in
- delivery of rights, credits, or incorporeal property is made by: the contract)
1. Execution of public instrument (constructive tradition) 2. Sale for lump sum
2. Placing title of ownership in the hands of a lawyer or allowing the buyer a) There shall be no increase or decrease of the price, although there
to make use of the rights (quasi-tradition) be a greater/less area or number than that stated in the contract;
b) Buyer has the same rights as that in (1)
Delivery on sale or return v Delivery on approval/trial/satisfaction e.g. If a contract states that the area is 1,000 sq m for Php10M , but the
land really contains 1,500 sq m, the seller is bound to deliver the extra
“on sale or return” “on approval/trial/satisfaction” 500 without increase in the price, or buyer may choose to rescind or
Buyer is given option to return the Sale with suspensive condition reduction of price
goods; resolutory condition
The sale becomes absolute upon the The sale becomes absolute depending * the buyer may bring these remedies within 6 months from the day of delivery.
will of the buyer on the quality of the goods
Buyer bears the loss upon delivery Seller bears the loss upon delivery Double Sale (1544)
Requisites:
Rules on Errors in Delivery (1522) a) Two or more contracts of sale;
1. Quantity is less than that agreed upon b) The same subject;
a) Buyer may reject c) Two or more buyers representing conflicting interest
b) Retain what has been delivered + pay @contract rate d) Purchased from one/ the same seller
c) Pay @fair value (if buyer has already disposed what has been
delivered before knowledge that the seller is not going to perform - the same thing sold to different vendees; who is entitled to ownership?
the contract in full) 1. Movable
2. Quantity is larger that that agreed upon a) Possessor in good faith
a) Accept the goods included in the contract and reject the excess 2. Immovable
b) Accept all + pay @contract price a) Person who in good faith first recorded it in the Registry of
c) Reject all (if the goods are indivisible) Property;
3. Mixed with goods not included in the contract b) Possessor in good faith; or
a) Accept the goods included in the contract and reject the excess c) Person who in good faith presents oldest title.
b) Reject all (if the goods are indivisible)
* Purchaser in good faith - one who buys property without notice that such
Nemo dat quod non habet property is subject to any right or interest by another party
GR: if seller is not the owner, the sale is void * GR: good faith is presumed
Exc:
1. Owner is estopped from denying the seller’s authority Warranty
E.g. A sells B’s property to C with B’s consent. B is estopped from denying
A’s authority to sell Express
2. Art. 1505 (1), (2), (3) - any affirmation of fact or any promise by the seller relating to the thing, if its
E.g. purchase made in a merchant’s store or in fairs or markets natural tendency is to induce the buyer to purchase the same and the buyer
3. Purchase at a public sale or auction (Art. 559) purchases the thing relying thereon
*Dealer’s talk is not warranty; caveat emptor (let the buyer beware)
- if seller has voidable title, buyer acquires good title provided he buys them in
good faith, for value, and without notice of the seller’s defect of title (1506) Implied
- deemed incorporated in every contract; imposed by law
*purchase from a thief is not valid, purchaser may be deprived by the owner 1. That seller has the right to sell the thing at the time when the ownership
without reimbursement is to pass
2. That the thing shall be free from any hidden faults or defects, or any
Document of Title charge or encumbrance not declared or known to the buyer
- document used as proof of possession or as authority to transfer the goods - remedy of vendee in case of hidden defects:
- bill of lading, dock warrant, quedan, warehouse receipt or order a) Withdrawal/rescission + damages
b) Proportionate reduction of the price + damages

Civil Law Reviewer (Sales)/lau

 - remedy of vendee in case of non-apparent burden/servitude: - period: 4 years from the date of the contract (exc: stipulation but not
a) Recission or damages (brought withing 1year from execution of the exceeding 10yrs)
deed) - vendee is subrogated to the vendor’s righs and actions (e.g. right to mortgage,
b) Damages only (>1year) to receive fruits)
* no remedy if the burden is registered, excexc: there is express warranty - vendor’s creditors cannot make use of right of redemption until after they
against all burdens/encumbrances have exhausted the property of the vendor
*seller is liable even if he is not aware of the defects - vendor a retro shall redeem the thing sold free from all charges or mortgages
* there is no warranty against hidden defects of animals sold at (exc: lease in good faith)
fairs/public auctions or of livestock sold as condemned
Sale of Undivided Immovable with right to repurchase; How right is exercised
3. Warranty in case of eviction 1. Only a part was sold - vendee may compel the vendor to redeem the
- can only be enforced when (i) seller has been summoned in the suit for whole property
eviction; and (ii) final judgment of eviction against the buyer 2. Several vendors jointly and in the same contract sold it - each may only
- remedy of vendee : demand from vendor -- repurchase his respective share
a) Return of the value of the thing sold at the time of evection; - but vendee may demand that all vendors come to an agreement to
b) Income or fruits; repurchase the whole
c) Cost of the suit; 3. Several vendors sold their share separately - vendee cannot compel
d) Expenses of the contract, if vendee paid for them; repurchase of the whole; each vendor may only repurchase his share
e) Damages and interests, ornamental expenses.
f) Rescission or enforcement of the warranty (a-e), in case of partial Fruits
eviction 1. There are visible/growing fruits at time of sale and also at the time of
redemption - vendor a retro is not obliged to reimburse the vendee a
4. That the goods are reasonably fit for the purpose (if the buyer makes retro if the latter did not indemnify the vendor of the fruits pending at
known to the seller the particular purpose for which the goods are acquired and the time of sale
the buyer relies on the seller’s skill/judgment) 2. There are no visible/growing fruits at the time of sale but there are at the
5. That the goods shall be of merchantable quality (if the goods are bought time of redemption - the fruits shall be prorated between the vendor and
by description) vendee corresponding to the time the vendee possessed the land

*actions based on implied warranties prescribe in 10 years since these Legal Redemption
obligations are prescribed by law - right to be subrogated in the place of one who acquires a thing by:
(a) purchase;
Obligations of Vendee (b) dation in payment; or
1. Accept delivery (c) any other transaction whereby ownership is transmitted by onerous
* buyer is not bound to accept delivery by installment (exc: stipulation) title.
* not bound to accept unless he was given reasonable opportunity to - e.g.
examine the goods (exc: stipulation, C.O.D. (excexc: stipulation)) a) co-heirs may repurchase a property sold before partition to a
- when is there acceptance?: stranger by another heir
a) Express acceptance b) Co-owner may redeem share of a co-owner sold to a stranger
b) Buyer does an act which only an owner can do
c) Failure to return after reasonable lapse of time Assignment of Credits and Other Incorporeal Rights
*effects of just refusal to accept:
a) Buyer has no duty to return the goods; mere notification of - process of transferring gratuitously (donation; must comply with the
non-acceptance is sufficient formalities of a donation) or onerously the right of the assignor to the assignee,
b) Buyer may make himself a voluntary depository, in which case he who would them be allowed to proceed against the debtor
must safely take care of the goods in the meantime - debtor is released if he pays the creditor(assignor) before knowledge of
* effect of unjust refusal to accept: title passes to buyer and becomes assignment
owner
2. Pay the price Perfection
3. Pay interest - at the moment there is meeting of minds
a) If stipulated upon
b) The thing produce fruits/income Credit includes accessory rights:
c) If vendee is in default, from the time of judicial or extrajudicial - guarantee, mortgage, pledge, preference
demand for the payment of the price
Warranties
Actions for Breach of Contract fro Sale of Goods 1. As to the existence and legality of the credit
1. Specific performance 2. As to the solvency of the debtor but only if (a) expressly stipulated upon
2. Action for the price or (b) insolvency was prior to the sale and of common knowledge
3. Action for damages *duration of 2nd warranty:
4. Automatic rescission by giving notice to buyer (if buyer repudiated the a) Time agreed upon
contract or manifested his inability to perform his obligations) b) No time agreed upon
- one year from assignment if debt was already due
Actions for breach of warranty, in general (1599) - one year from maturity if debt was not yet due
1. Accept/keep the goods + demand diminution/extinction of price
2. Accept/keep the goods + action for damages
3. Refuse to accept + action for damages
4. Rescind the contract + (a) refuse to receive the goods or (b) return the
goods + recover the price

Extinguishment of Sale
1. Payment
2. Loss of the thing
3. Condonation or remission
4. Confusion or merger
5. Compensation
6. Novation
7. Redemption (conventional or legal)

Pacto de Retro Sale

Conventional redemption
- when the vendor reserves the right to repurchase the thing sold, provided that
he pays:
a) Price paid by the vendee;
b) Expenses of the contract and any other legitimate payments made
by reason of the sale;
c) Necessary and useful expenses made on the thing sold

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