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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 Devt 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 Devt 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 Devt, 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 Merchants 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 Devt 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

Lawyers 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 Indl Corp. v. CA, 274 SCRA 597, June 20, 1997 Florendo v. Foz, 20 Phil 388, October 24, 1911 Philippine Suburban Devt. 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 dealers 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 Indl 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 Natl 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