SALES

Course outline

I.

CONTRACT OF SALE, CONCEPTS (NCC 1458)

A. Characteristics ( consensual, bilateral, onerous, commutative,
nominate, principal)
B. Essential requisites ( CASE: Leabres vs. Court of Appeals,
December 12, 1986)
C. Sale as distinguished from other contracts
1. Barter (NCC, 1638 & 1468)
2. Donation
3. Contract for piece of work ( NCC,1467; CASES: Co vs. CIR,
99phil 841 ; CIR vs Arnoldus Carpentry ,159 SCRA
199 )
4. Agency to Sell ( NCC 1466 ; CASES :Quiroga vs. Parsons,
38 Phil 501 ; Gonzalo Puyat & Sons, Inc. vs. Arco
Amusement, 72 Phil 402)
5. Lease
D. Kinds of sale
1. Absolute
2. Conditional
- Contract to sell as distinguished from contract of sale
( NCC 1466 ; CASES: Dignos vs CA, 158 SCRA
375;Rayos vs. CA, 434 SCRA 365;Clemeno, Jr. vs.
Lobregat, 09 September 2004)

II.

III.

OBJECT OF SALE ( NCC 1306)

A. Subject matter must be licit ( NCC 1459)
B. Subject matter must be determinate ( NCC 1460)
C. Sale of things having potential existence ( NCC 1461)
D. Sale of hope or expectancy ( NCC 1461)
1. emptio rei speratae
2. emptio spei
PRICE
A. Certainty of price ( NCC 1469)
B. Who may determine price ( NCC 1469,1473-74)
C. Effect of gross inadequacy of price ( NCC 1470)
D. Effect where price is simulated ( NCC 147; CASE: Bayongayong
vs. CA, 430 SCRA 210)
E. Certainly of price of securities , grains, liquids, etc. ( NCC 1472)

F. Effect of failure to determine price ( NCC 1474)

G. Meeting of minds as to price ( CASES: Mapalo vs. Mapalo, 17
SCRA 114; Velasco vs. Court of Appeals, 51 SCRA 439;
Villanueva vs. CA, 267 SCRA 89; Sweldish Match vs. Court
of Appeals, 20 October 2004)
IV.

FORMATION/ PERFECTION OF CONTRACT OF SALE (NCC 1475)

A. Option contract (NCC 1479; CASES: Adelfa Properties vs. Ca,
January 25, 1995; Atkins , kroll & Co. VS. Cua Hian Tek,
102 Phil 948; Sanchez vs. Rigos, 45 SCRA 368: Ang Yu
Asuncion vs. CA, December 2, 1994, Abalos vs.
Macatangay, Jr. 30 September 2004; Riviera Filipina Inc.
vs. CA, 380 SCRA 245; Equatorial Realty Development vs.
Mayfair Theater Inc. 264 SCRA 483; Bible Baptist Church
vs. CA, 26 November 2004)
-Option contract distinguished from contract of sale

B.
C.

Mutual promise to buy and sell (NCC,1497)

Status of advertisement (NCC 1325 & 1326)
D. Acceptance by letter or telegram (NCC 1476)
E. Perfection of sale by auction (NCC 1476)
F.
Earnest money (NCC 1482); distinguished from option money
(CASES :
Limson vs. CA, 357 SCRA 209; San Miguel Properties vs.
Huang, 336 SCRA 2000)
G. Form of sales ( NCC 1483, 1874, 1581, 1403 [2,a,d,e])
V.

PARTIES TO A CONTRACT OF SALE (NCC 1327,1489)

A. Sale by a minor (NCC 1489)
B. Sale between spouces (NCC 1490;CASE:Matabuena vs.
Cervantes, 38 SCRA 284)
C. Special incapacity
1. Guardians ,agents, and administrators
2. Judges
3. Lawyers
4. Public officers and employees (NCC1491-92; CASES:
Rubias vs. Batiller, 51 SCRA 120;Olaguer vs. Puruganan, G.R. No.
158907,
12 february 2007;Valencia vs. Cabanteng, 196 SCRA302;Ramos vs.
Ngaseo , 445SCRA 529)
VI. OBLIGATION OF THE SELLER
A. Preservation of the object of sale (NCC 1163)
B. Transfer of ownership delivery of the object

1. Concept of delivery or tradion

a. Ways of effecting delivery (NCC 1494-1501)
(1)Actual or real (NCC 1497)
(2)Constructive or legal (NCC 1498-1501; CASES:Phil.
Suburban Development Corp. vs. Auditor General,
63 SCRA 397)
(i)
Public instrument
(ii)
Tradition longa manu
(iii) Tradition brevi manu
(iv) Tradition constitution possessorium
(v)
Quasi-traditio
(3)Special rules on:
(i)
Contract of sale or return (NCC 1502)
(ii)
Contract of sale on trial or approval (NCC 1502)
(iii) Sale of specific goods with reserved title (NCC
1503)
(iv) Delivery to carrier on behalf of the buyer (NCC
1503)
(Shipping terms : [C.O.D; F.O.B; C.I.F.])
(v)
When person selling is not the owner (NCC1505)
(vi) Sellers title is voidable (NCC 1506)
(CASES: Edu vs. Gomez, 129 SCRA 601; Duran vs.
IAC,
CASES:Addison vs. Felix, 38 Phil 404;Pasagui vs.
Villablanca, 68 SCRA 18;Banzon vs. Cruz, 45 SCRA
475;EDCA Publishing vs. 184 SCRA 614;Alliance
Tobacco Corporation vs. Phillipine Virginia
Tobacco, 179 SCRA 336)
b. Other rules on delivery:
(1) Sale of real property by unit of measure or number
(NCC1539-41: Sta. Ana Jr. vs. Hernandez, 18 SCRA 973)
(2) Sale of real estate made for a lump sum (NCC 1542:
Semira vs. CA, 230 SCRA 557: Balantakbo vs. CA,249
SCRA 323; Roble vs. Arbasa, 362 SCRA 69)
(3) Rules in case of double sale (NCC 1544;
CASES:Paylago vs. Jarabe 22 SCRA 1247;Hanopol
vs. Pilapil, 7 SCRA 452;Agricultural & Home
Extension Development Group vs. CA, 213 SCRA
563;Balatbat vs. CA August 28, 1996;Caram vs.
Laureta 103 SCRA 7;Tanedo vs. CA, 213 SCRA
563;Tanongon vs. Samson, 382 SCRA
130;Consolidated vs. GSIS, 365 SCRA 1;San
Lorenzo Development Corp. vs. CA, 449 SCRA
99;Carumba vs. CA, 31 SCRA 558)
C. Delivery of fruits and accessories (NCC 1537)

D. Payment of expenses for execution and registration (NCC 1487)

E. Condition and Warranties
1. Condition; concept ( NCC 1545)
2. Warranty
(1)
Express warranty (NCC 1546)
(2)
Implied warranties (NCC 1547)
(i)
Warranty on sellers title; liability in case of eviction
( NCC , 1548-1559; CASES:JM Tuazon & Co., Inc.
vs. CA, 94 SCRA 413;Escaler vs. CA, 138 SCRA
1)
(ii) Warranty against hidden defects of, or encumbrances
upon the thing sold; vendors responsibility in case of
breach (NCC 1560 -1561, 1566; CASES:Moles vs.
IAC 169 SCRA 777; Philippine Manufacturing Co.
Merchantability and fitness distinguished
Rule in case of sale under a patent or trade name
(NCC 1563)
Effect of usage of trade (NCC 1564)
Rule in case of goods sold by sample( NCC 1565)
(iii) Alternative remedies of buyer to enforce the
warranties under 1561, 1562, 1564,1565 & 1566;
prescriptive period (NCC 1567 & 1571)
(iv) Loss of thing sold due to hidden defects (NCC 156769)
(v)
Applicability of warranty on judicial sales (NCC 1570)
(vi) Prescriptive period of action ( NCC 1571)
(vii) Rule on sale of animals ( NCC 1572-1581)
VII.

DOCUMENTS OF TITLE
A. Concept & function
B. Common forms of documents of title
1. Dock warrant
2. Bill of lading
3. Warehouse receipt
4. Quedan
C. Classes of documents of title
1. Negotiation documents of title (NCC 1508-11)
a. How negotiation is made
b. Who may negotiate (NCC 1512)
c. Rights of person to whom document has been negotiated
(NCC 1513; 1519)
d. Transfer of order document without indorsement (NCC
1515)
2. Indorser not a guarantor (NCC1517)
3. Negotiation not impaired by fraud, mistake, etc. (NCC 1518)
4. Non-negotiable documents of title (NCC 1510)

Rights of person to whom document has been transfered

(NCC 1514)
5. Warranties of a person negotiating or transfering documents
(NCC1516)
6. Rules on levy/garnishment of documents of title
1. No obligation to accept delivery by installments (NCC1583)
2. Modes of manifesting acceptance (NCC 1585)
3. Effect of a wrongful refusal to accept (NCC 1588)
4. Liability for interest (NCC 1589)
VIII. Rights of vendee.
1. Right to examine the goods before delivery (NCC1584)
2. Acceptance not a bar to action for damages (NCC 1586)
3. No obligation to return goods wrongfully delivered (NCC 1587)
4. Right to suspension of payment of price (NCC 1590)
5. When rescission of sale of real property may be made (NCC
1591-92)
6. Rescission in case of sale of movable thing (NCC 1593)
CASES:Arra Realty Corporation vs. Spouse Arguelles, 20
September 2004;Iringan vs. CA, 366 SCRA 41;Laforteza vs.
Machuca, 333 SCRA 643;Vda. De Mistica vs. Naguiat , 418 SCRA
73; See also pertinent provisions of RA 6552)
IX.

ACTION FOR BREACH OF CONTRACT OF SALE OF GOODS

A. Available remedies on the part of the seller:
1. Action for payment of price (NCC 1595)
2. Action for damages in case of non- acceptance of
goods( NCC1596)
3. Action for rescission of contract (NCC1597)
4. Unpaid Seller
a. Concept (NCC1525)
b. Remedies of an unpaid seller (NCC 1526-1535)
(1) Lien on the goods
(2) Right of stoppage in transit
(3) Right of resale
(4) Right of rescind
B. Available remedies on the part of the buyer:
5. Action by buyer for specific performance (NCC1598)
6. Action by buyer for rescission or damages for breach of
warranty (NCC1599)
7. Rule in case of sale by description or by sample (NCC Article
1481)
C. Recto Law ( Sale of Movables on Installments) (NCC 148486;CASES;Levi Hermanos, Inc. vs. Gervacio, 69 Phil
52;Zayas vs. Luneta Motor Company, 117 SCRA
726;Borbon II vs. Servicewide specialists, Inc., July 11,

X.
XI.

1996;Bachrach Motor Co. vs. Millan, 61 Phil

409;Tajanlangit vs. Southern Motors, Inc. 101 Phil
606;Cruz vs. Filipinas Investment & Finance Corp., 23
RISK OF LOSS (NCC 1174, 1493-94; 1504,1538,1189)
EXISTINGUISHMENT OF SALE (NCC 1600)
A. Common Causes
B. Special Causes
C. Extra- special Causes
1. Conventional redemption ( NCC 1601 to 1616; CASES:
Catangcatang vs. Legayada, 84 SCRA 51;Villarica vs.
Court of Appeals, 26 SCRA 189;Diamante vs. CA, 206
SCRA 52;Vda. De Urban vs. GSIS, 367 SCRA
672;Legaspi vs. CA 142 SCRA 82)
a.
b.
c.
d.
e.

Definition
Distinguished from option to purchase
Period of redemption ( NCC 1606)
Effect when no redemption is made
Equitable mortgage (NCC, 1602 -06; CASES:San Pedro
vs. Lee, et al. 28 May 2004;Balatero vs. IAC, 154
SCRA 530; Lacorte vs. CA, 286 SCRA 24;Camus vs.
CA, 222 SCRA 612;Dapiton vs. CA 272 SCRA 95)
f. Right of the parties to the fruits of the land (NCC 1617)
g. Right of vendor a retro as to charges/encumbrances
(NCC1618)
2. Legal redemption; concept and instances (NCC1619-1623;
CASES: Legaspi vs. CA, 142 SCRA 82;Alonzo vs. IAC,
150 SCRA 703;Primary Structures Corporation vs. Sps.
Valencia, GR no. 150060, August 19, 2003;Lee Chuy
Realty Corporation vs. Court of Appeals, December 4
1995)