Professional Documents
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Sales: San Beda College of Law
Sales: San Beda College of Law
SALES
SALE 6. Onerous.
A nominate contract whereby one of
the contracting parties obligates * Aleatory contract: one of the parties or
himself to transfer the ownership of both reciprocally bind themselves to give
and to deliver a determinate thing or to do something in consideration of
and the other to pay therefor a price what the other shall give or do upon the
certain in money or its equivalent. happening of an event which is
uncertain, or which is to occur at an
NOTES: Delivery and payment in a indeterminate time. (Ex: Sale of
contract of sale are so interrelated and sweepstakes ticket)
intertwined with each other that without
delivery of the goods there is no Contract to sell
corresponding obligation to pay. The exclusive right and privilege to
two complement each other. It is clear purchase an object.
that the two elements cannot be a bilateral contract whereby the
dissociated, for the contract of purchase prospective seller, while expressly
and sale is essentially a bilateral reserving the ownership of the
contract, as it gives rise to reciprocal subject property despite delivery
obligations. (Pio Barretto Sons, Inc. vs. thereof to the prospective buyer
Compania Maritima, 62 SCRA 167). binds himself to sell the said
Neither is the delivery of the thing property exclusively to the
bought nor the payment of the price prospective buyer upon fulfilment of
necessary for the perfection of the the condition agreed upon, that is,
contract of sale. Being consensual, full payment of the purchase price.
it is perfected by mere consent.
NOTE: Absent a proviso in the contract
Elements: that the title to the property is reserved
a. Essential elements – those without in the vendor until full payment of the
which, there can be no valid sale: purchase price or a stipulation giving the
1. Consent or meeting of minds vendor the right to unilaterally rescind
2. A Determinable subject matter the contract the moment the vendee
3. Price certain in money or its fails to pay within the fixed period, the
equivalent transaction is an absolute contract of
b. Natural elements – inherent in the sale and not a contract to sell. (Dignos
contract, and which in the absence vs. CA [1988])
of any contrary provision, are * The contract of sale by itself is not a
deemed to exist in the contract: mode of acquiring ownership. The
1. Warranty against eviction contact transfers no real rights; it
2. Warranty against hidden defects merely causes certain obligations to
c. Accidental elements – may be arise.
present or absent depending on the
stipulation of the parties (e.g.: Contract of Contract to
conditions, interest, penalty, time Sale Sell
or place of payment, etc.) 1. Title passes to the 1. Ownership is
buyer upon delivery reserved in the
Characteristics: of the thing sold seller and is not to
1. Principal pass until full
payment of the
2. Consensual;
purchase price
3. Bilateral;
2. Non-payment of 2. Full payment is a
4. Nominate; the price is a positive suspensive
5. Commutative; In some cases, negative resolutory condition, the
aleatory (emptio spei); condition and the failure of which is
BARTER Requisites:
contract whereby one of the parties 1. Certainty or ascertainable at the
binds himself to give one thing in time of perfection
consideration of the other's promise 2. Real, not fictitious
to give another thing. 3. In some cases, must not be
NOTE: The only point difference grossly inferior to the value of
between contract of sale and barter is in the thing sold.
the element which is present in sale but 4. Paid in money or its equivalent
not in barter, namely: price certain in
money or its equivalent Certainty
It is not necessary that the certainty
NOTE: If the consideration is partly in of the price be actual or determined
money and partly in another thing, at the time of the execution of the
determine: contract. The price is certain in the
a. The manifest intention of the following cases:
parties 1. If the parties have fixed or
b. If the intent is not clear, apply agreed upon a definite amount;
the following rules: NOTE: The fixing of the price can
1. If the thing is more valuable never be left to the discretion of one
than money – barter of the contracting parties. However
2. If the money and the thing if the price fixed by one of the
are of equal value – sale parties is accepted by the other, the
3. If the thing is less valuable sale is perfected.
than money – sale 2. If it be certain with reference to
another thing certain
Sale Dation in Payment 3. If the determination of the price
1. No pre-existing 1. Pre-existing credit is left to the judgment of a
credit specified person or persons even
2. Obligations are 2. Obligations are before such determination
created extinguished 4. In the cases provided under Art.
3. Consideration on 3. Consideration of
1472 NCC
the part of the seller the debtor is the
is the price; on the extinguishment of
part of the buyer is the debt; on the
the acquisition of part of the creditor,
binding contract of sale although the and expressing his readiness to pay the
option is given without consideration. stipulated price.
if the promise is supported by a
consideration distinct and separate Right of First Refusal
from the price (option money), its It is a right of first priority all things
acceptance will give rise to a and conditions being equal; there
perfected contract. should be identity of the terms and
conditions to be offered to the
2. Bilateral promise to buy and sell optionee and all other prospective
One party accepts the other’s buyers, with optionee to enjoy the
promise to buy and the latter, the right of first priority. A deed of sale
former’s promise to sell a executed in favor of a third party
determinate thing for a price certain who cannot be deemed a purchaser
it is reciprocally demandable in good faith, and which is in
It requires no consideration distinct violation of the of the right of first
from the selling price refusal granted to the optionee is
NOTE: this is as good as a perfected NOT voidable under the Statute of
sale. No title of dominion is Frauds, such contract is valid BUT
transferred as yet, the parties being rescissible under Article 1380 to
given only the right to demand 1381(3) of the New Civil Code
fulfillment or damages. (Guzman Bocaling & Co. vs.
Bonnavie; Riviera Filipina, Inc vs. CA
Policitation et.al. GR No. 117355, April 5, 2002).
An unaccepted unilateral promise to The basis of the right of first refusal
buy or sell. Even if accepted by the must be the current offer to sell of
other party, it does not bind the the seller or offer to purchase of any
promissor and maybe withdrawn prospective buyer. Only after the
anytime. This is a mere offer, and optionee fails to exercise its right of
has not yet been converted into a first priority under the same terms
contract. and within the period contemplated
could the owner validly offer to sell
Option contract the property to a third person,
again, under the same terms as
A contract granting a privilege in one offered to the optionee (Paranaque
person, for which he has paid a
Kings Enterprises, Inc. vs. CA GR No.
consideration, which gives him the
111538, February 26, 1997)
right to buy certain merchandise, at
anytime within the agreed period, at The lessee’s right of first option to
a fixed price. buy the leased property in case of its
sale is but a part of the bigger right
An option without consideration is to lease the said property from the
void and the effect is the same as if
lessor. The option was given to the
there was no option
lessee because she was the lessee of
* However, in Sanchez vs. Rigos (1972),
the subject property. It was a
even though the option was not
component of the consideration of
supported by a consideration, the
the lease. The option was by no
moment it was accepted, a perfected
means an independent right which
contract of sale resulted, applying Art.
can be exercised by the lessee. If
1324 of the NCC. In view of the ruling of
the lessee is barred by the contract
the Supreme Court, the only importance
from assigning her right to lease the
of the consideration for an option is that
subject property to any other party,
the option cannot be withdrawn by the
the lessee is similarly barred to
grantor after acceptance.
assign her first option to buy the
* In an option to buy, the party who has
leased property to another.
an option may validly and effectively
(Bangayan et.al vs. CA and Lim GR
exercise his right by merely notifying the
No.123581, August 29, 1997)
owner of the former’s decision to buy
creates a lien on the land, and a EFFECT IF BUYER HAS ALREADY SOLD
purchaser on execution sale is not THE GOODS:
required to go behind the registry to General Rule: The unpaid seller’s right
determine the conditions of the to lien or stoppage in transitu remains
property. Exception: Where the even if buyer has sold the goods.
purchaser had knowledge, prior to or Except:
at the time of the levy, of such 1) When the seller has given consent
previous lien or encumbrance, his thereto, or
knowledge is equivalent to 2) When the buyer is a purchaser in good
registration. faith for value of a negotiable document
of title.
CONDITION
Effect of Non-fulfillment of WARRANTY
Condition a statement or representation made
1. If the obligation of either party by the seller of goods,
is subject to any condition and contemporaneously and as a part of
such condition is not fulfilled, the contract of sale, having
such party may either: reference to the character, quality,
a. refuse to proceed with the or title of the goods, and by which
contract he promises or undertakes to insure
b. proceed with the contract , that certain facts are or shall be as
waiving the performance of he then represents.
the condition.
2. If the condition is in the nature
Kinds:
of a promise that it should
1. EXPRESS – any affirmation of fact or
happen, the non-performance of
any promise by the seller relating to
such condition may be treated
the thing if the natural tendency of
by the other party as breach of
such affirmation or promise is to
warranty.
induce the buyer to purchase the
same and if the buyer purchases the
NOTE: A distinction must be made
thing relying thereon
between a condition imposed on the
perfection of a contract and a condition
NOTE: A mere expression of opinion, no
imposed merely on the performance of
matter how positively asserted, does not
an obligation. The failure to comply with
import a warranty unless the seller is an
the first condition would prevent the
expert and his opinion was relied upon
juridical relation itself from coming into
by the buyer.
existence, while failure to comply with
the second merely gives the option
2. IMPLIED - that which the law
either to refuse or proceed with the sale
derives by implication or inference
or to waive the condition.
from the nature of the transaction or
the relative situation or
The mere fact that the second circumstances of the parties,
contract of sale was perfected in irrespective of any intention of the
good faith is not sufficient if, before seller to create it.
title passes, the second vendee a. Warranty against eviction
acquires knowledge of the first b. Warranty against hidden defects
transaction. The good faith or c. Warranty as to Fitness and
innocence of the posterior vendee Merchantability
needs to continue until his contract NOTE: An implied warranty is a natural,
ripens into ownership by tradition or not an essential element of a contract,
registration. (Palanca vs. Dir. Of and is deemed incorporated in the
Lands, 46 PHIL 149) contract of sale. It may however, be
waived or modified by express
stipulation. (De Leon)
reasonably fit for the general contract, and they are found to be unfit
purpose for which they are sold therefor
It requires identity between what is 4. Limitation of the action: 40 days
described in the contract AND what from the date of their delivery to the
is tendered, in the sense that the vendee
latter is of such quality to have some 5. Vendor shall be liable if the animal
value should die within 3 days after its
purchase if the disease which caused the
Instances where implied warranties are death existed at the time of the contract
inapplicable:
1. As is and where is sale - vendor OBLIGATIONS OF THE VENDEE:
makes no warranty as to the quality A. Principal Obligations:
or workable condition of the goods, 1. To accept delivery
and that the vendee takes them in 2. To pay the price of the thing sold in
the condition in which they are legal tender unless another mode
found and from the place where they has been agreed upon
are located. NOTE: A grace period granted the
2. Sale of second-hand articles vendee in case of failure to pay the
3. Sale by virtue of authority in fact or amount/s due is a right not an
law obligation. The grace period must not
be likened to an obligation, the non-
Caveat Venditor (“Let the seller payment of which, under Article 1169 of
beware”): the vendor is liable to the the Civil Code, would still generally
vendee for any hidden faults or defects require judicial or extra-judicial demand
in the thing sold, even though he was before “default” can be said to arise
not aware thereof. (Bricktown Dev’t Corp vs. Amor Tierra
Dev’t Corp. 57SCRA437)
Caveat Emptor (“Let the buyer
beware”): requires the purchaser to be B. Other Obligations
aware of the supposed title of the 1. To take care of the goods without
vendor and one who buys without the obligation to return, where the
checking the vendor’s title takes all the goods are delivered to the buyer and
risks and losses consequent to such he rightfully refuses to accept
failure.
NOTES:
RULES IN CASE OF SALE OF ANIMALS The buyer in such a case is in the
1. When two or more animals have been position of a bailee who has had
sold at the same time and the goods thrust upon him without
redhibitory defect is in one, or some of his assent. He has the obligation
them but not in all, the general rule is to take reasonable care of the
that the redhibition will not affect the goods but nothing more can be
others without it. It is immaterial demanded of him.
whether the price has been fixed for a The goods in the buyer’s
lump sum for all the animals or for a possession under these
separate price for each. circumstances are at the seller’s
2. No warranty against hidden defects risk
of animals sold at fairs or at public 2. To be liable as a depositary if he
auctions, or of livestock sold as voluntarily constituted himself as
condemned. This is based on the such
assumption that the defects must have 3. To pay interest for the period
been clearly known to the buyer. between delivery of the thing and
3. Sale of animals shall be void when: the payment of the price in the
a) animals sold are suffering from following cases:
contagious disease a. Should it have been stipulated
b) if the use or service for which
they are acquired has been stated in the
Remedy of Reformation: To correct the NOTE: Written notice under Article 1623
instrument so as to make it express the is mandatory for the right of redemption
true intent of the parties. to commence (PSC vs. Sps. Valencia 19
August 2003.)
Redemption Period
a. if there is an agreement: period BASIS OF LEGAL REDEMPTION: Not on
agreed upon cannot exceed 10 years any proprietary right, which after the
b. if no agreement as to the period: 4 sale of the property on execution, leaves
years from the date of the contract the judgment debtor and vests in the
c. the vendor who fails to repurchase purchaser, but on a bare statutory
the property within the period privilege to be exercised only by the
agreed upon may, however, exercise persons named in the statute.
the right to repurchase within 30
days FROM the time final judgment Tender of payment is not necessary;
was rendered in a civil action on the offer to redeem is enough.
basis that the contract was a true
sale with right of repurchase PRE-EMPTION REDEMPTION
This refers to cases involving a
1. arises before 1. arises after sale
transaction where one of the sale
parties contests or denies that 2. no rescission 2. there can be
the true agreement is one of sale because no sale as rescission of the
with right to repurchase; not to yet exists original sale
cases where the transaction is 3. the action is 3. action is directed
conclusively a pacto de retro directed against against the buyer
sale. Example: Where a buyer a the prospective
retro honestly believed that he seller
entered merely into an Equitable
Mortgage, not a pacto de retro Instances of legal redemption:
transaction, and because of such A. Under the Civil Code (legal
belief he had not redeemed redemption):
within the proper period. 1. Sale of a co-owner of his share
NOTE: Tender of payment is to a stranger (Article 1620)
sufficient to compel redemption, but 2. When a credit or other
is not in itself a payment that incorporeal right in litigation is
relieves the vendor from his liability sold (Article 1634)
to pay the redemption price (Paez 3. Sale of an heir of his hereditary
vs. Magno.) rights to a stranger (Article
1088)
4. Sale of adjacent rural lands not
LEGAL REDEMPTION exceeding one hectare (Article
The right to be subrogated, upon the 1621)
same terms and conditions stipulated 5. Sale of adjacent small urban
in the contract, in the place of one lands bought merely for
who acquires a thing by (1) purchase speculation (Article 1622)
or (2) dation in payment, or (3) by B. Under special laws:
any other transaction whereby 1. An equity of redemption in cases
ownership is transferred by onerous of judicial foreclosures
title. 2. A right of redemption in cases of
May be effected against movables or extra-judicial foreclosures
immovables. 3. Redemption of homesteads
It must be exercised within thirty 4. Redemption in tax sales
(30) days from the notice in writing 5. Redemption by an agricultural
by the vendor.\ tenant of land sold by the
landowner
2. the result is 2. the result is * Lease may be made orally, but if the
generally not generally lease of Real Property is for more than 1
important, important; year, it must be in writing under the
hence the generally, the price Statue of Frauds.
laborer is is not payable until
entitled to be the work is
paid even if completed, and Persons Disqualified to be Lessees
there is said price cannot be Because Disqualified to Buy
destruction of lawfully demanded 1. A husband and a wife cannot lease to
the work through if the work is each other their separate properties
fortuitous event destroyed before it except:
is finished and
a. if separation of property was
accepted
agreed upon
b. if there has been judicial
separation of property
Persons referred to in Art. 1491 are
Lease of Agency
Services
disqualified because of fiduciary
It is based on It is based on relationships
employment – representation –
the lessor of agent represents his SUBLEASE
services does not principal and enters A separate and distinct contract of
represent his into juridical acts. lease wherein the original lessee
employer nor becomes a sublessor to a sublessee.
does he execute
juridical acts.
Allowed unless expressly prohibited.
Principal Preparatory The sublessee is subsidiarily liable
contract contract for any rent due. The lessor has an
accion directa against the sublessee
Rule for Lease of Consumable Goods for unpaid rentals and improper use
GENERAL RULE: Consumable goods of the object.
cannot be the subject matter of a
contract of lease of things. SUBLEASE ASSIGNMENT OF
Why? To use or enjoy hem, they will LEASE
have to be consumed. This cannot be 1. there are two 1. there is only one
done by a lease since ownership over leases and two juridical
them is not transferred to him by the distinct juridical relationship, that of
relationships the lessor and the
contract of lease.
although assignee, who is
EXCEPTIONS: immediately converted into a
a. If they are merely exhibited connected and lessee
b. If they are accessory to an related to each
industrial establishment other
2. the 2. the personality of
RECORDING OF LEASE OF PERSONAL personality of the lessee
PROPERTY the lessee does disappears
GENERAL RULE: Lease of real property not disappear
is personal right 3.the lessee does 3. the lessee
not transmit transmits absolutely
EXCEPTIONS: Lease partakes of the
absolutely his his rights to the
nature of real right if: rights and assignee
a. Lease of real property is more obligations to the
than 1 year sublessee
b. Lease of real property is 4. the sublessee, 4. the assignee has
registered regardless of duration generally, does a direct action
not have any against the lessor
NOTE: Lease of personal property direct action
cannot be registered. To be binding against the lessor
against third persons, the parties must
execute a public instrument.
Rules on Alteration of the Form of the discharged at any given moment, but
Lease must be fulfilled all throughout the term
The Lessor can alter provided there of the contract. (Villaruel vs. Manila
is no impairment of the use to which Motor Co.)
the thing is devoted under the terms
of the lease Duration of Lease
Alteration can also be made by the 1. Lease made for a determinate time
Lessee so long as the value of the or fixed Period
property is not substantially Lease will be for the said period
impaired and it ends on the day fixed
without need of a demand
Rules in case of Urgent Repairs
The lessee is obliged to tolerate the 2. If there is no fixed period
work although it may be very A. For Rural Lands (Article 1680)
annoying to him and although during it shall be for all time necessary
the same time he may be deprived for the gathering of fruits which
of a part of the premises the whole estate may yield in 1
1. If repairs last for more than 40 days: year, or which it may yield once
Lessee cannot act for reduction of B. For Urban Lands (Article 1687)
rent or rescission a. If rent is paid daily: lease is
2. If 40 days or more: lessee can ask from day to day
for proportionate reduction b. If rent is paid weekly: lease is
NOTE: In either case, rescission may be from week to week
availed of if the main purpose is to c. If rent is paid monthly: lease is
provide a dwelling place and the from month to month
property becomes uninhabitable. d. If rent is paid yearly: lease is
from year to year
Effects if Lessor fails to make Urgent
Repairs RULES ON EXTENSION OF THE LEASE
1. Lessee may order repairs at the PERIOD:
lessor’s cost 1) If a lease contract for a definite term
2. Lessee may sue for damages allows lessee to extend the term, there
3. Lessee may suspend the payment of is no necessity for lessee to notify lessor
the rent of his desire to so extend the term,
4. Lessee may ask for rescission, in case unless the contrary is stipulated.
of substantial damage to him 2) “May be extended” as stipulation:
lessee can extend without lessor’s
TRESPASS IN LEASE: consent but lessee must notify lessor.
1. Trespass in fact (perturbacion de 3) “May be extended for 6 years agreed
mere hecho): upon by both parties” as stipulation: This
physical enjoyment is reduced must be interpreted in favor of the
Lessor will not be held liable. lessee. Hence, ordinarily the lessee at
2. Trespass in law (perturbacion de the end of the original period may
derecho): either:
a) leave the premises; or
A third person claims legal right b) remain in possession
to enjoy the premises
4) In co-ownership, assent of all is
Lessor will be held liable needed; otherwise, it is void or
ineffective as against non-consenting co-
NOTE: While the Japanese Occupation owners.
was a fortuitous event, the lessor is still 5) Where according to the terms of the
not excused from his obligation to contract, the lease can be extended only
warrant peaceful legal possession. Lease by the written consent of the parties
is a contract that calls for prestations thereto, no right of extension can rise
both reciprocal and repetitive; and the without such written consent.
obligations of either party are not
Rule if Lessor Objects to the Lessee’s which are by nature foreign to the right
continued Possession: of occupancy or enjoyment inherent in a
Requisites: contract of lease – such as an option to
1. Contract has expired purchase the leased premises (Dizon vs.
2. Lessee continued enjoying the thing Magsaysay GR No. 23399, May 31,1974)
3. Lessor Objected to this enjoyment
If the three requisites are present, Perpetual Lease
the lessee shall be considered a A lease contract providing that the
possessor in bad faith lessee can stay in the premises for as
long as he wants and for as long as
IMPLIED NEW LEASE (Tacita he can pay the rentals and its
Reconducion) increases.
lease which arises if at the end of This is not permissible; it is a purely
the contract the lessee should potestative condition because it
continue enjoying the thing leased leaves the effectivity and enjoyment
for 15 days with the acquiescence of of leasehold rights to the sole and
the lessor, unless a notice to the exclusive will of the lessee
contrary had previously been given
by either party. NOTE: In Jespajo Realty vs. CA, 27
Sept. 2002, the SC upheld a lease
Requisites: contract, which provides that “the lease
a. the term of the original contract contract shall continue for an indefinite
has expired period provided that the lessee is up-to-
b. the lessor has not given the date in the payment of his monthly
lessee a notice to vacate rentals” for the contract is one with a
c. the lessee continued enjoying period subject to a resolutory condition.
the thing leased for at least 15
days with the acquiescence of PURCHASE OF THE LEASED PROPERTY
the lessor GENERAL RULE: Purchaser of thing
leased can terminate lease.
When there is no implied new EXCEPTIONS:
lease: a. lease is recorded in Registry of
1. When before or after the Property
expiration of the term, there is a b. there is stipulation in the
notice to vacate given by either contract of sale that purchaser
party. shall respect the lease
2. When there is no definite fixed c. purchaser knows the existence of
period in the original lease contract the lease
as in the case of successive d. sale is fictitious
renewals. e. sale is made with right of
repurchase
Effects: GROUNDS FOR EJECTMENT UNDER ART.
a. The period of the new lease is
1673: (ELVU)
not that stated in the original
1. Expiration of the period agreed upon
contract but the time in Articles
or the period under Arts. 1682 and
1682 and 1687.
1687;
b. Other terms of the original
2. Lack of payment of the price
contract are revived.
stipulated;
3. Violation of any of the conditions
NOTE: Terms that are revived are only
agreed upon in the contract; and
those which are germane to the
4. Unauthorized use or service by the
enjoyment of possession, but not those
lessee of the thing leased.
with respect to special agreements
Lease duration:
1. If there is a fixed period, lease will be
for said period.
2. If no fixed period, apply the following
rules:
a. If rent is paid daily: day to day
b. If rent is paid weekly: week to
week
c. If rent is paid monthly: month to
month
d. If rent is paid yearly: year to
year