SALES AND LEASE 4% Semester, AY 2019-2020 Prof. R. R. Dujunco Grading System Recitation 40% Midterms 30% Finals 30% Prescribed Text Law on Sales by Cyrus Victor T. Sualog, 2016 ed. Nature and Form of Contract, A. Definition - Art. 1458 8. Characteristics Nominate and Principal Consensual ~ Art, 1475 Bilateral and Reciprocal - Arts. 1169 and 1191 Onerous Commutative ~Arts, 1355 and 1470 C. Essential Requisites 1. Consent 2. Subject Matter 3. Price ‘+ Dizon v. CA 302 SCRA 288 (1999) + Formaran v. Ong, G.R. No. 186264, 2013 D. Kinds E. Distinguished from other contracts 1. Contract to Sell ‘+ Luzon Brokerage v. Maritime Building, 43 SCRA 93 (1972) + Dignos v. CA, 158 SORA 375 (1988) * Heirs of Ventura v. Heirs of Sps. Eustacio, G.R. No. 190016, 2013 2, Donation ~ Arts. 725-726, 745-749 and 1471 3. Dacion en pago ~ Arts. 1245 and 1619 4, Barter — Arts, 1468, 1638 to 1641 5. Contract for a Piece of Work Arts. 1467, 1713 10 1715 + Celestino and Co v. Collector, 92 Phil 841 (1956) * Commissioner v. Engineering Equipment, 65 SCRA 590 (1975) 6. Agency to Buy or Sell — Art. 1486, 1868 + Quiroga v. Parsons, 38 Phil 501 (1918) + G. Puyat and Sons v. Arco Amusement, 72 Phil 402 (1941) Page 1 of 101 Kerand Co. v. Lingad, 38 SCRA 524 (1971) 7. Dacion en Pago ~ Ad. 1245 ion ao Heng Bank v. Sps. Lilia & Reynaldo Laigo, $71 SCRA 4343 (2008) 8, Lease ~ Arts. 1484 to 1485, 1643 Bachrach Motor Co. v. Mendoze, G.R, No. L-17651 (1922) Manila Trading and Supplying Co. v. Reyes, 62 Phil 461 (1935) I Object of the Contract 'A. Requisites of a Valid Subject Matter ~ Arts. 1459 to 1465 4. Must be licit— Arts. 1347, 1489, 1575, 1409 ‘+ Martinez v. CA 56 SCRA 647 (1974) 2, Must be determinate or determinable ~ Arts. 1349, 1460 ‘+ Meliza v. City of loilo 23 SCRA 477 (1968) + Atilano v. Atlano 28 SCRA 231 (1969) + Yu Tov. Gonzales, 29 Phil 364 (1915) + Gaite v. Fonacier, 2 SCRA 630 (1961) 3, Must be existing, future or contingent — Arts. 1347, 1348 and 1462 a. Emplion rei speratae vs, emptio spei~ Arts. 1461, 1462 and 1347 + Pichel v. Alonzo 111 SCRA 34 (1981) b. Undivided interest - Arts. 1463-1464 ©. Subject to resolutory condition — Art. 1465 + Arsenal v. IAC, 143 SCRA 40 (1986) d._ Things in litigation ~ Art. 1381 and 1385 4, Quantity of subject matter not essential for perfection ~ Art. 1349, I, The Price |A. Existence of Price, not simulated ~ Arts. 1318, 1489 to 1471, 1353-1355 * Ong v. Ong 139 SCRA 133 (1985) ‘© Bagnas v. CA 176 SCRA 159 (1989) + Sta. Fe Realty v. Sison, G.R. No. 199431, 2016 B. Certain or ascertainable ~ Arts. 1469, 1472-1474, 1174 © Tan Tiah v. Yu Jose, G.R. No. 45969 (1939) |. By a third person - Art, 1469 . By the courts — Art 1469 |. By reference - Art. 1472 + Velasco v. CA, 51 SCRA 438 (1973) + Toyota Shaw v. CA, 244 SCRA 320 (1995) 4, By reference to another thing certain 5. Never by one party — Arts. 1473, 1182 + Robern Dev. Comp. v. People's Landless Assoc., G.R. No. 173622, 2013 C. Payable in money or its equivalent — Arts. 1245, 1468, 1482 ‘= Republic v. Phil Resources Dev, 102 Phil 960 (1958) Page 2 of 10D. Option money v. Eamest money ~ Art. 1482 «First Optima Realty v. Securitron Security Services, G.R. No. 199648, 2015 ‘Ang Limson v. CA, 357 SCRA 209 (2001) E, Effect of failure - Art 1474 Parties to a Contract of Sale ‘A. Capacity of Parties — Arts, 1489-1492, 44 and 46 . Absolute Incapacity — Arts, 1327-1328, 1390, 1993 1997, 1999: Family Code Arts. 194, 234-237 4. Necessaries ~ Art. 1489, 20 = Lagabala v. Santiago, 371 SCRA 360 (2001) C. Relative Incapacity 4. Contracts with Third Parties ~ Ars. 73, 96 and Family Code 2, Between Spouses — Arts. 133, 1490 and 1492 3, Applicability to Common-Law Spouses — Art. 133 4. Minors — Arts. 1327,1399,1489, 290, 399 and 1397 * Calimlin-Canullas v. Fortun, 129 SCRA 675 (2002) + Maharika Pub. Corp v. Tagle, 142 SCRA 553 (1986) 2 Director of Land v. Ababa, 85 SCRA 513 (1978) D. Special Disqualifications ~ Arts. 1491 ~1492 4. Guardians, Agents and Administrators 2 Lawyers 3. Judges Philippine Trust Co. v. Roldan 99 Phil 392 (1956) + Rubias v. Batiler 51 SCRA 120 (1973) = Macariola v. Asuncion 114 SCRA 77 (1982) Formation of the Contract of Sale A. Preparatory — Art. 1479 1. Offer Ant, 1475 ‘+ Villonco v. Bormaheco 65 SCRA 352 (1975) a. Forms of offer ~Arts, 1319, 1325, 1326 + Zayco v. Serra 44 Phil 326 (1923) b. Forms of acceptance ~ Arts. 1319 c. Vices vitiating consent ~ Arts. 1330-1334, 1338, 1390 2. Option Contract — Arts. 1479, 1924 + Dele Cavada v.Diaz 37 Phil 962 (1918) = Carcellar v. CA 302 SCRA 718 (1999) SI Hours ie ‘Sta. Monica Industrial and Development, G.R. No. 154156 ‘a, Meaning of Consideration + Vilamor v. CA 202 SCRA 607 (1991) Page 30f 10b. Anoption to buy is not @ contract of purchaso and sale Without consideration void as option but valid as offer d, Proper axercise of option fe. Thore must be accoptance of option 3, Right of First Refusal fair 264 SCRA 483 (1996) + Equitorial Roalty v. May 2 Paranaque Kings v. CA 268 SORA 727 (1997) aay Asuncion v. CA 238 SCRA 602 (1994), GR: NO- Rosencor v. Inquing 354 SCRA 119 (2001) 109125 (1994) 4, Mutual Promise to Buy and Sell ~ Art, 1479 . Potfection of Contract - Ais. 1305, 1476, 1319, 1925, 1326 4, Effect of perfection ~ Arts. 1475, 1478, 1483, 1874 = Ortega v. Leonardo, 103 Phit 870 (1958) 2, Bilateral promise to buy and sel option to buy = Arts. 1479 and 1324 Dela Cavada v. Diaz, 37 Phil 982 (1918) 3. When deviation allowed ‘= Villonco v. Bormaheco 65 SCRA 352 (1975) 4, Place of Perfection — Art, 1391 5. Expenses of Execution and Registration ~ Art. 1487, 1521 | . 6. Special sales ‘a. Sale by auction ~ Art. 1476, 1403 (d), 1326 b._ Sale by sample or description ~ Arts. 1481 and 1665 Leases with option to buy ~ Arts. 1485-1487 4d. Expropriation ~ Art. 1488 . Formalties of the Contract 4. Formation of the contract — Arts. 1483, 1956, 1357, 1958, 1874 University of the Philippines v. PHILAB, G.R. No. 152411, 2004 ‘© Dalion v. CA, 182 SCRA 872 (1990) ‘ + Gity Lite v. CA, 325 SCRA 385 (2000) 2. Statue of frauds ~ Arts. 1403, 1405 + Inigo v. Maloto, 21 SCRA 246 (1967) + Paredes v. Espino, 22 SCRA 1000 (1968) © Duarte v. Duran, G.R. No. 173038, 2011 Exeromison =A. 488 leone Commerce Act RA6792 Sec. 7,8 an Rules on Electronic Evidence: me Rls of Cour Not Low and Rules Page 4 of 10vi Risk of Loss ‘A, In goneral - Arts. 1480, 1163-1165, 1262, 147, 1263, 1189, 1493, 1494 4. Loss by fault of a party — Arts. 1480, 1504. 1838, 1636 2. Loss by fortuitous events - Arts. 1480, 1163, 1165, 1504, 1538, 1189 = Chrysler Philippines v. CA, G.R. No. 55684 (1964) 3, Fruits or improvements ~ Arts. 1537 ‘* Norkis Distributors v. CA, 193 SCRA 694 (1991) + Roman v. Grimalt, 6 Phil 96 (1906) B. Effect of loss of thing sold ~ Arts. 1493,1494, 1504 and 1538 ‘+ Sun Bros, v, Perez, 7 SCRA 977 (1963) Rights and Obligations of the Vendor A, Transfer ownership and ttle ~ Arts. 1477, 1478, 1495, 1585, and 599 4, Sale by person not the owner — Arts, 1459, 1505, 1462, 1434 ‘© Aznar v. Yepdiangco, 13 SCRA 486 (1965) 2. Sale by one having voidable title - Art, 1508, 559 «De Garcia v. CA, 37 SCRA 129 (1971) «© EDCAy. Santos, 184 SCRA 614 (1990) + Siy Cong Bieng v. HSBC, 56 Phil 598 (1992) 3, Esloppel - Arts. 1505, 1431, 1434 ‘© Hernaez v. Hemaez, 32 Phil 214 (1915) 4, Judicial sales + Jalbuena v. Lizarraga, 33 Phil 77 (1915) 5, Sale in Merchant's Store, Market or Fair © Sun Bros. V. Velasco 54 OG 5143 Aug 1958 = Masiclal v. Centeno GR No 8420, May 21, 1956 B. Delivery of thing sold — Arts. 1165 4. Manner of transfer — Arts. 1477 and 1496 2. General obligation to deliver — Arts, 1496-1497 3. Kind of delivery ~ Arts, 1497-1501 ‘a. Real or physical + Bean v. Cadwallader 10 Phil 606 (1908) ‘© Ocejo v. International Bank 37 SCRA 631 (1918) b. Constructive Delivery i. Symbolic Delivery — Art. 1498 * Aviles v. Arcega 44 Phil 924 (1922) + Asset Privatization Trust v. T.J, Enlerprises 587 SCRA 481 (2009) Page 5 of 105. ji, Traditio Longa Manu Arts. 1498, 1499, 1513, 1514 + Board of Liquidator v. Floro, 110 Phil 482 (1960), G.R. No. L-15186 ii, Tradition Brevi Manu — Art. 1499 iv, Traditio Constitutom Possessorium ~ Art. 1500 ‘+ Baulista v. Sioson 39 Phil 615 (1919) v. Delivery to a Common Carrier ~ Aris. 1523, FOB, CIF, FAS = Behn Meyer v. Yangco 38 Phil 602 (1918) '* General Food v. Nacoco 100 Phil 637 (1956) vi. Effect of form of bill of lading — Art. 1503 Exceptions/special cases a, Sale or return — Art, 1502 par. 1 b. Sale on approval - Art. 1502 par. 2 Upon payment of price Reservation of ownership ~ Art. 1503, 1478 . Executory contract of sale Sale by lump sum + Arcaina v. Ingram, G.R. No. 196444, 2017 Accessory obligations ~ Arts. 1537-1543, 1163 and 1487 ©. Double Sales — Art. 1544 a b. k. L General Rule - Prior tempore, prior jure «Carbonell v. CA 69 SCRA 99 (1976) Requisites for Double Sale + Cheng v. Genato 300 SCRA 722 (1998) + Thelma Rodriguez v. Spouses Sioson, G.R. No. 199180, 2016 Who is purchaser in good faith Agricultural and Home Extension v. CA 213 SCRA 536 (1992) Priority of registration over possession Sale of Movables — Arts. 1544 , 1497 to 1501 » Rivera v. Ong 37 Phil 355 (1917) Sale of Immovables — Art.1 1544 par. 2 + Spouses Tanglao v. Spouses Parungao, G.R. No. 166913 (2007) = Spouses Pudadera v. Magallanes, G.R. No. 170073, 2010 Sale by virlue of execution and attachment = Art. 1544 + Carumba v. CA 31 SCRA 558 (1970) Meaning of “Better Right” ‘© Hanopolv. Pilapil 7 SCRA 452 (1963) Unregistered land — PD 1529 sec. 113 + Dagupan v. Macam 14 SCRA 179 (1965) When one sale is forgery + Espiritu v. Valerio 9 SCRA 764 (1963) First in possession in good faith + Quimson v. Rosete 87 Phil 159 (1950) Oldest tite — Art. 1544 par. 3 . Conditions and warranties ‘+ Filinvest Credit Corp v. CA, 178 SCRA 188 (1989) Page 6 of 104, Expross ~ Arts, 1545-1546 = Gayraseoco Jr. v. CA, G.R. No.123672 (2005) 1, Distinguish trom condition — Arts. 1545 b. Distinguish from opinion, dealer's talk ~ Art, 1546, 1340, 1941 «© Songco v. Seliner 37 Phil 254 (1917) . Distinguish from false representation ~ Art. 1342 + PMC v. Gojuco 48 Phil 621 (1926) 2, implied - Arts. 1547 and 1558 a, Seller has right to sell bb. Warranty against eviction - Arts. 1548 — 1860, 1590 + Bignay Ex-Im Philippines v. Union Bank, G.R. No. 171590, 2014 ¢. Warranty against non-apparent servitudes ~ Art, 1560 &. Warranty against hidden encumbrance or defects Aris. 1647, 1560-1561, 1566- 1971 fe. Additional warranties for consumer products ~ RA 7394, Art. 68 f. Warranty in sale of animals ~ Art. 1568, 1572-1581 4g. Implied Warcanty of Quality ~ Art, 1562 (1), 1564, 1565 hh. Sale by sample or description — Art. 1874, 1862 (2), 1565, 1481 3. Buyer's options in case of breach of warranty — Art, 1599 Vill, Documents of title — Arts. 1636, 1507-1522, and 1503 ‘+ Siy Cong Bieng v. HSBC 56 Phil 598 (1932) Compared with Negotiable Instruments Law How negotiated — Arts. 1508, 1509 | Who many negotiate ~ Art. 1512-1513 . Rights acquired by negotiation ~ Art. 1505 Rights acquired by transfer Implied warranties ~ Art. 1516-1520 Negotiation not impaired by fraud Creditors’ rights over goods covered by negotiable document Nor-negotiable documents of litle ~ Art. 1507, 1514 Zommoop> 1X. Remedies of unpaid seller ~ Arts, 1525-1536, 1514, 1519, 1520 Lien — Art, 1535, 1526-1529, 1503 Stoppage in transit ~ Arts. 1530-1535, 1532(2) Resale — Art, 1533 Rescission — Art. 1534, 1385, 1596 Withhold delivery + Kaligbak v. CA, 4 SCRA 243 (1962) X. Rights and Obligations of the Vendee ‘+ Azarraga v. Gay, 52 Phil 599 (1928) ‘A. Accept delivery ~ Arts, 1582-1589 and 1481 1. Right to examinelinspection ~ Arts. 1584-1589 2. Forms of acceptance 3, Remedies Page 7 of 10 i eet«Sta, Ana v, Hernandez, 18 SCRA 973 (1966) Balantakbo v. CA, 249 SCRA 323 (1995) B. Pay pricolremedios Liability for interest — Arts, 1582 2. Suspension of payments ~ Arts. 1589-1590, 1960, 1664 + Dela Cruz v. Legaspi 98 Phil 43 (1955) 3, Sale of real property - Arts. 1592, 1560 + Blas v. Angcles-Hutalla, G.R. No. 155594 (2004) 4, Effect of non payment — Art. 1191 + Laforteza v. Machuca 333 SCRA 643 (1992) 2 Luzon Brokerage v. Maritime Bldg. 43 SCRA 93 (1972) Maceda Law: Sales of Residential Realty on Installment (RA 6582) «Danan v, Spouses Serrano and Reyes, G.R. No. 195072, 2016 2 Spouses Go Chien v, Sta Lucia Really, G.R. No. 162090, 2007 Moldex Realty v. Saberon, G.R. No. 176289, 2013ev XI, Actions for Breach of Contract/Remedies ‘A, Sale of Goods ~ Art. 1594 4, Remedies of the Seller fa, Action for price — Art. 1595 b. Action for damages ~ Art. 1596 cc, Rescission - Arts. 1597, 1534 and 1591-1593 2, Remedies of the Buyer ‘Specific performance ~ Art. 1698-1599 . Breach of warranty — Art, 1191-1192, 1845, 1599 Rescission — An. 1599 Other laws ‘Song Fo and Co. v. Hawaiian Phil. Co., 47 Phil 821 (1925) Del Rosario v. CA, 267 SCRA 158 B, Sale of movables on installments - Recto Law, Arts. 1484-1486, = Cruz. Filipinas Investment, 23 SCRA 791 (1968) + Ridad v. Filipinas Investment, 120 SCRA 246 (1983) ©. Sele of immovable on installments ~ Arts, 1385, 1591-1692, Maceda Law 4. Subdivision and Condominium Buyer's Protective Decree P.D. 957 2, Really Property Buyer Protection Act R.A. 6552 ‘= Casa Filipina v. Office of the President, 24 SCRA 165 (1995) + Active Really v. Daroya, 382 SCRA 152 (2002) D. Barter - Arts. 1638-1641 Xil, _ Extinguishment of the Sale ‘A. Causes ~ Arts. 1600, 1231 B. Conventional Redemption ~ Art, 1601-1618, 1144, 1677 Page 8 of 10= Mistorio v. Cebu State Collage, G.R. No, 152199 (2005) 2 Gaudio v Traders Royal Bank, GR. No. 151098 (2006) 1, Equitable Mortgage ~ Arts, 1602-1604, 2066 Lustan v. CA. G.R, No, 111924, 1997 .s Larawan, G.R. No. 219638, 2016 = Repuela v. Estate of Spouses 2. Distinguish from Option to Buy ~ Art. 1602 + Adiarte v. Tumaneng 88 Phil 333 (1951) 3, Period of Redemption 2. When no period agree upon — Art. 1606 b. When period agreed upon ¢. When there is a period of non-redemption 4, Exercise of the right to redeem ~ Art. 1616 a, By whom exercised — Arts. 1610 - 1613 b. From whom lo redeem ~ Art. 1615 c. Effect of redemption ~ Arts. 1617, 1618 dd. Effect of non-redemption — Art. 1607 C. Legal Redemption — Art. 1619-1623, 1088 1. Period to redeem ~ Art. 1623 © Butte v. Manuel Uy — 4 SCRA 526 (1962) + Doromal v. CA 66 SCRA 575 (1975) 2. Instances of legal redemption Co-owners — Art. 1620 Co-heirs — Art. 1088 Adjoining landowners of rural land ~ Art. 1624 Adjoining landowners of urban land — Art. 1622 Under Public Land Act - CA 141 sec. 118 Under Extrajudicial Foreclosure — Act 3175 sec. 8 Under Agrarian Land Reform Code — RA 6389 sec. 11-12 Foreclosure and execution sales — Act. No. 3135, Rule 68 ROC, GBL Sec. 47 ‘Spouses Landrito and Edgatani v. CA, G.R. No. 1330179 (2005) ‘Spouses Rosales v. Spouses Alfonso, G.R. No. 137792 (2003) ‘Metrobank v. Spouses Tan, G.R. No. 178449 (2008) Banco Filipino Savings v. CA, G.R. No. 143896 (2005) Xill, Leases ~ Arts. 1642-1766 Estate of Lienado v. Llenado, G.R. No. 145736, 2009 Land Bank v. AMS Farming Corporation, G.R. No. 174971, 2008 ‘Sime Darby Pilipinas v. Goodyear Philippines, G.R. No. 182148, 2011 Yuki v. Wellington Co., G.R. No. 178527, 2009 ' Spouses Castro v, Palenzuela, G.R. No. 184698, 2013 Blas v. CA, G.R. No, 82813, 1989 Page 9 of 10Bulk Sales Law A. Scope + People v. Wong CA 0.G. 4867 (1954) B. Coverage of Bulk Sales C. Compliance requirements under the law D. Effects of non-compliance Sec. 4,7,14 + People v. Mapoy 73 Phil 678 (1942) XV. Retail Trade Liberalization Act of 2000 A. Constitutionality + Inchong v. Hernandes 101 Phil 1165 (1957) B. Scope and definition © King v. Hernandez 4 SCRA 792 (1962) Elements Application of Grandfather Rule on 100% Filipino ownership of corporate entity ‘Anti-Dummy Act - CA No, 108 as amended by PD 715 Page 10 of 10 eee |