COLLEGE OF LAW: LAW ON SALES OUTLINE
WITH WELL CITED REFERENCES DOWNLOAD
TO SCORE A
LAW ON SALES OUTLINE
I. THE NATURE OF SALE
A. DEFINITION (Art. 1458)
Sale is a contract whereby one party [the seller] obligates himself to
transfer the ownership2 and to deliver the possession, of a determinate
thing, and the other party [the buyer] obligates himself to pay therefor a
price certain in money or its equivalent. xCruz v. Fernando, 477 SCRA 173
(2005); xDantis v. Maghinang, Jr., 695 SCRA 599 (2013). 3
1. Elements of Sale
Elements of sale: (a) consent or meeting of the minds; (b)
determinate subject matter; and (c) price certain in money or its
equivalent. xNavarra v. Planters Dev. Bank, 527 SCRA 562 (2007).4
Absence of any essential elements negates the existence of a
perfected contract of sale. xDizon v. CA, 302 SCRA 288 (1999), 5 even
when earnest money (downpayment) has been paid. xManila Metal
Container Corp. v. PNB, 511 SCRA 444 (2006). xDel Prado v. Caballero, 614
SCRA 102 (2010); xMontecalvo v. Heirs of Eugenia T. Primero, 624 SCRA
575 (2010); xDavid v. Misamis Occidental II Electric Cooperative, Inc., 676
SCRA 367 (2012); xDantis v. Maghinang, Jr., 695 SCRA 599 (2013).
Sale being a consensual contract, its essential elements must be
proven. xVillanueva v. CA, 267 SCRA 89 (1997). But once all elements
are proven, its validity is not affected by a previously executed
fictitious deed of sale. xPeñalosa v. Santos, 363 SCRA 545 (2001); and
the burden is on the other party to prove otherwise. xHeirs of Ernesto
Biona v. CA, 362 SCRA 29 (2001).
An Extrajudicial Settlement of Estate with Absolute Sale partakes of
the nature of a contract [of sale], hence, for its validity, each must
comply with the requisites prescribed in Article 1318 of the Civil Code,
namely (a) consent of the contracting parties; (b) object certain,
which is the subject matter of the contract; and (c) cause of the
obligation which is established. It would be immaterial that the
buyer’s signature does not appear on the Extrajudicial Settlement of
Estate with Absolute Sale—a contract of sale is perfected the moment
there is a meeting of the minds upon the thing which is the object of
the contract and upon the price. Baladad v. Rublico, 595 SCRA 125
(2009).
2. Stages of Contract of Sale
Policitacion covers the period from the time the prospective
contracting parties indicate interest in the contract to the time the
contract is perfected. Perfection takes place upon the concurrence of
, COLLEGE OF LAW: LAW ON SALES OUTLINE
WITH WELL CITED REFERENCES DOWNLOAD
TO SCORE A
the essential elements, which are the meeting of the minds of the
parties as to the object of the contract and upon the price.
Consummation begins when the parties perform their respective
undertakings, culminating in the extinguishment thereof. xSan Miguel
Properties Philippines, Inc. v. Huang, 336 SCRA 737 (2000).6
The stages of a contract of sale are: (1) negotiation, starting from the
time the prospective contracting parties indicate interest in the
contract to the time the contract is perfected; (2) perfection, which
takes place upon the concurrence of the essential elements of the sale;
and (3) consummation, which commences when the parties perform
their respective undertakings under the contract of sale, culminating in
the extinguishment of the contract. In the present case, the parties
never got past the negotiation stage. Nothing shows that the parties
had agreed on any final arrangement containing the
1
The Outline presents the manner by which the Law on Sales will be taken-up in
class. The x's and those footnoted in the Outline represent cases or topics
which need no extended discussions, either because the essence of the rulings
are already summarized in the Outline or they contain similar rulings or doctrines
as other cases to be discussed. Unless otherwise indicated, the numbered
articles refer to articles of the Civil Code.
2
Ownership is the independent and general power of a person over a thing
for purposes recognized by law and within the limits established thereby,
which includes the right to enjoy and dispose of a thing, without other
limitations than those established by law.
. . . Aside from the jus utendi and the jus abutendi inherent in the right to enjoy
the thing, the right to dispose, or the jus disponendi, is the power of the owner
to alienate, encumber, transform and even destroy the thing owned. Flancia
v. CA, 457 SCRA 224 (2005). 3Alfredo v. Borras, 404 SCRA 145 (2003); Manila
Metal Container Corp. v. PNB, 511 SCRA 444 (2006); Roberts v. Papio, 515 SCRA
346 (2007); Hyatt Elevators and Escalators Corp. v. Cathedral Heights Building
Complex Assn., 636 SCRA 401 (2010);
Dantis v. Maghinang, Jr., 695 SCRA 599 (2013).
4
Jovan Land, Inc. v. CA, 268 SCRA 160 (1997); Quijada v. CA, 299 SCRA 695
(1998); Co v. CA, 312 SCRA 528 (1999); San
Andres v. Rodriguez, 332 SCRA 769 (2000); Roble v. Arbasa, 362 SCRA 69
(2001); Polytechnic University v. CA, 368 SCRA 691
(2001); Katipunan v. Katipunan, 375 SCRA 199 (2002); Londres v. CA, 394 SCRA
133 (2002); Manongsong v. Estimo, 404 SCRA
683 (2003); Jimenez, Jr. v. Jordana, 444 SCRA 250 (2004); San Lorenzo Dev. Corp.
v. CA, 449 SCRA 99 (2005); Yason v. Arciaga,
449 SCRA 458 (2005); Roberts v. Papio, 515 SCRA 346 (2007); Navarra v.
Planters Dev. Bank, 527 SCRA 562 (2007); Republic v.
Florendo, 549 SCRA 527 (2008); GSIS v. Lopez, 592 SCRA 456 (2009); Baladad
v. Rublico, 595 SCRA 125 (2009); Del Prado v.
Caballero, 614 SCRA 102 (2010); Montecalvo v. Heirs of Eugenia T. Primero,
624 SCRA 575 (2010); Hyatt Elevators and Escalators Corp. v. Cathedral Heights
Building Complex Assn., 636 SCRA 401 (2010); David v. Misamis Occidental II
Electric
, essential elements of a contract of sale, namely, (1) consent or the
meeting of the minds of the parties;
(2) object or subject matter of the contract; and (3) price or
consideration of the sale. xGSIS v. Lopez, 592 SCRA 456 (2009).
Equally important are the three stages of a contract of sale: (1)
preparation or negotiation, (2) perfection, and (3) consummation.
Negotiation begins from the time the prospective contracting parties
manifest their interest in the contract and ends at the moment of
agreement of the parties. The perfection or birth of the contract takes
place when the parties agree upon the essential elements of the
contract. The last stage is the consummation of the contract wherein
the parties fulfill or perform the terms agreed upon in the contract,
culminating in the extinguishment thereof. xXYST Corp. v. DMC Urban
Properties Dev., Inc., 594 SCRA 598 (2009).
3. Sale Creates Real Obligations “To Give” (Art. 1165)
4. Essential Characteristics of Sale:
a.Nominate and Principal
A contract of sale is what the law defines it to be, taking into
consideration its essential elements, and not what the contracting
parties call it. xSantos v. CA, 337 SCRA 67 (2000).7
b.Consensual (Art. 1475)
A contract of sale is not a real, but a consensual contract, and becomes
valid and binding upon the meeting of the minds of the parties as to
the object and the price,8 and consequently:
Upon its perfection, the parties may reciprocally demand
performance. xHeirs of Venancio Bejenting v. Bañez, 502 SCRA 531
(2006);9 subject only to the provisions of the law governing the
form of contracts. xCruz v. Fernando, 477 SCRA 173 (2005).
It remains valid even if parties have not affixed their signatures
to its written form, xGabelo v. CA, 316 SCRA 386 (1999),10 or that
the perfected sale is not translated into written form, Duarte v.
Duran, 657 SCRA 607 (2011); or the manner of payment is
breached. xPilipinas Shell Petroleum Corp v. Gobonseng, 496 SCRA 305
(2006).
Failure of subdivision developer to obtain a license to sell does
not render the sales void especially that the parties have
admitted that there was already a meeting of the minds as to the
subject of the sale and price. xCantemprate v. CRS Realty Dev. Corp.,
587 SCRA 492 (2009)
When the contract of sale is not perfected, it cannot, as an
independent source of obligation, serve as a binding juridical
relation between the parties. xHeirs of Fausto C. Ignacio v. Home
Bankers Savings, 689 SCRA 173 (2013)
Binding effect of sale is based on the principle that the obligations
arising therefrom have the force of law between the parties. xVeterans
Federation of the Philippines v. CA, 345 SCRA 348 (2000).
Perfection Distinguished from Demandability – Not all contracts of sale
, become automatically and immediately effective. In sales with
assumption of mortgage, there is a condition precedent to the seller’s
consent and without the approval of the mortgagee, the sale is not
perfected. xBiñan Steel Corp. v. CA, 391 SCRA 90 (2002).
“No Contract Situation” versus “Void Contract” – Absence of consent
(i.e., complete meeting of minds) negates the existence of a perfected
sale. xFirme v. Bukal Enterprises and Dev. Corp., 414 SCRA 190 (2003).
The contract then is null and void ab initio, absolutely wanting in
civil effects; hence, it does not create, modify, or extinguish the
juridical relation to which it refers. xCabotaje v. Pudunan, 436 SCRA 423
(2004).
When there is no meeting of the minds on price, the sale “is not
perfected” and is not “a binding juridical relation between the parties.
xManila Metal Container Corp. v. PNB, 511 SCRA 444 (2006), 11 and should
be accurately denominated as “inexistent”, as it did not pass the stage
of generation to the point of perfection. xNHA v. Grace Baptist Church,
424 SCRA 147 (2004).
c.Bilateral and Reciprocal (Arts. 1169 and 1191)
A contract of sale gives rise to “reciprocal obligations”, which arise
from the same cause with each party being a debtor and creditor of
the other, such that the obligation of one is dependent upon the
7
Bowe v. CA, 220 SCRA 158 (1993); Romero v. CA, 250 SCRA 223 (1995); Lao
v. CA, 275 SCRA 237 (1997); Cavite Dev’t Bank
v.8 Lim, 324 SCRA 346 (2000).
Romero v. CA, 250 SCRA 223 (1995); Balatbat v. CA, 261 SCRA 128 (1996);
Coronel v. CA, 263 SCRA 15 (1996); City of Cebu
v. Heirs of Candido Rubi, 306 SCRA 408 (1999); Agasen v. CA, 325 SCRA 504
(2000); Laforteza v. Machuca, 333 SCRA 643 (2000); Londres v. CA, 394 SCRA
133 (2002); Alcantara-Daus v. de Leon, 404 SCRA 74 (2003); Buenaventura v. CA,
416 SCRA 263 (2003); San Lorenzo Dev. Corp. v. CA, 449 SCRA 99 (2005);
Yason v. Arciaga, 449 SCRA 458 (2005); Ainza v. Padua, 462 SCRA 614 (2005);
Roberts v. Papio, 515 SCRA 346 (2007); MCC Industrial Sales Corp. v.
Ssangyong Corp., 536 SCRA 408
WITH WELL CITED REFERENCES DOWNLOAD
TO SCORE A
LAW ON SALES OUTLINE
I. THE NATURE OF SALE
A. DEFINITION (Art. 1458)
Sale is a contract whereby one party [the seller] obligates himself to
transfer the ownership2 and to deliver the possession, of a determinate
thing, and the other party [the buyer] obligates himself to pay therefor a
price certain in money or its equivalent. xCruz v. Fernando, 477 SCRA 173
(2005); xDantis v. Maghinang, Jr., 695 SCRA 599 (2013). 3
1. Elements of Sale
Elements of sale: (a) consent or meeting of the minds; (b)
determinate subject matter; and (c) price certain in money or its
equivalent. xNavarra v. Planters Dev. Bank, 527 SCRA 562 (2007).4
Absence of any essential elements negates the existence of a
perfected contract of sale. xDizon v. CA, 302 SCRA 288 (1999), 5 even
when earnest money (downpayment) has been paid. xManila Metal
Container Corp. v. PNB, 511 SCRA 444 (2006). xDel Prado v. Caballero, 614
SCRA 102 (2010); xMontecalvo v. Heirs of Eugenia T. Primero, 624 SCRA
575 (2010); xDavid v. Misamis Occidental II Electric Cooperative, Inc., 676
SCRA 367 (2012); xDantis v. Maghinang, Jr., 695 SCRA 599 (2013).
Sale being a consensual contract, its essential elements must be
proven. xVillanueva v. CA, 267 SCRA 89 (1997). But once all elements
are proven, its validity is not affected by a previously executed
fictitious deed of sale. xPeñalosa v. Santos, 363 SCRA 545 (2001); and
the burden is on the other party to prove otherwise. xHeirs of Ernesto
Biona v. CA, 362 SCRA 29 (2001).
An Extrajudicial Settlement of Estate with Absolute Sale partakes of
the nature of a contract [of sale], hence, for its validity, each must
comply with the requisites prescribed in Article 1318 of the Civil Code,
namely (a) consent of the contracting parties; (b) object certain,
which is the subject matter of the contract; and (c) cause of the
obligation which is established. It would be immaterial that the
buyer’s signature does not appear on the Extrajudicial Settlement of
Estate with Absolute Sale—a contract of sale is perfected the moment
there is a meeting of the minds upon the thing which is the object of
the contract and upon the price. Baladad v. Rublico, 595 SCRA 125
(2009).
2. Stages of Contract of Sale
Policitacion covers the period from the time the prospective
contracting parties indicate interest in the contract to the time the
contract is perfected. Perfection takes place upon the concurrence of
, COLLEGE OF LAW: LAW ON SALES OUTLINE
WITH WELL CITED REFERENCES DOWNLOAD
TO SCORE A
the essential elements, which are the meeting of the minds of the
parties as to the object of the contract and upon the price.
Consummation begins when the parties perform their respective
undertakings, culminating in the extinguishment thereof. xSan Miguel
Properties Philippines, Inc. v. Huang, 336 SCRA 737 (2000).6
The stages of a contract of sale are: (1) negotiation, starting from the
time the prospective contracting parties indicate interest in the
contract to the time the contract is perfected; (2) perfection, which
takes place upon the concurrence of the essential elements of the sale;
and (3) consummation, which commences when the parties perform
their respective undertakings under the contract of sale, culminating in
the extinguishment of the contract. In the present case, the parties
never got past the negotiation stage. Nothing shows that the parties
had agreed on any final arrangement containing the
1
The Outline presents the manner by which the Law on Sales will be taken-up in
class. The x's and those footnoted in the Outline represent cases or topics
which need no extended discussions, either because the essence of the rulings
are already summarized in the Outline or they contain similar rulings or doctrines
as other cases to be discussed. Unless otherwise indicated, the numbered
articles refer to articles of the Civil Code.
2
Ownership is the independent and general power of a person over a thing
for purposes recognized by law and within the limits established thereby,
which includes the right to enjoy and dispose of a thing, without other
limitations than those established by law.
. . . Aside from the jus utendi and the jus abutendi inherent in the right to enjoy
the thing, the right to dispose, or the jus disponendi, is the power of the owner
to alienate, encumber, transform and even destroy the thing owned. Flancia
v. CA, 457 SCRA 224 (2005). 3Alfredo v. Borras, 404 SCRA 145 (2003); Manila
Metal Container Corp. v. PNB, 511 SCRA 444 (2006); Roberts v. Papio, 515 SCRA
346 (2007); Hyatt Elevators and Escalators Corp. v. Cathedral Heights Building
Complex Assn., 636 SCRA 401 (2010);
Dantis v. Maghinang, Jr., 695 SCRA 599 (2013).
4
Jovan Land, Inc. v. CA, 268 SCRA 160 (1997); Quijada v. CA, 299 SCRA 695
(1998); Co v. CA, 312 SCRA 528 (1999); San
Andres v. Rodriguez, 332 SCRA 769 (2000); Roble v. Arbasa, 362 SCRA 69
(2001); Polytechnic University v. CA, 368 SCRA 691
(2001); Katipunan v. Katipunan, 375 SCRA 199 (2002); Londres v. CA, 394 SCRA
133 (2002); Manongsong v. Estimo, 404 SCRA
683 (2003); Jimenez, Jr. v. Jordana, 444 SCRA 250 (2004); San Lorenzo Dev. Corp.
v. CA, 449 SCRA 99 (2005); Yason v. Arciaga,
449 SCRA 458 (2005); Roberts v. Papio, 515 SCRA 346 (2007); Navarra v.
Planters Dev. Bank, 527 SCRA 562 (2007); Republic v.
Florendo, 549 SCRA 527 (2008); GSIS v. Lopez, 592 SCRA 456 (2009); Baladad
v. Rublico, 595 SCRA 125 (2009); Del Prado v.
Caballero, 614 SCRA 102 (2010); Montecalvo v. Heirs of Eugenia T. Primero,
624 SCRA 575 (2010); Hyatt Elevators and Escalators Corp. v. Cathedral Heights
Building Complex Assn., 636 SCRA 401 (2010); David v. Misamis Occidental II
Electric
, essential elements of a contract of sale, namely, (1) consent or the
meeting of the minds of the parties;
(2) object or subject matter of the contract; and (3) price or
consideration of the sale. xGSIS v. Lopez, 592 SCRA 456 (2009).
Equally important are the three stages of a contract of sale: (1)
preparation or negotiation, (2) perfection, and (3) consummation.
Negotiation begins from the time the prospective contracting parties
manifest their interest in the contract and ends at the moment of
agreement of the parties. The perfection or birth of the contract takes
place when the parties agree upon the essential elements of the
contract. The last stage is the consummation of the contract wherein
the parties fulfill or perform the terms agreed upon in the contract,
culminating in the extinguishment thereof. xXYST Corp. v. DMC Urban
Properties Dev., Inc., 594 SCRA 598 (2009).
3. Sale Creates Real Obligations “To Give” (Art. 1165)
4. Essential Characteristics of Sale:
a.Nominate and Principal
A contract of sale is what the law defines it to be, taking into
consideration its essential elements, and not what the contracting
parties call it. xSantos v. CA, 337 SCRA 67 (2000).7
b.Consensual (Art. 1475)
A contract of sale is not a real, but a consensual contract, and becomes
valid and binding upon the meeting of the minds of the parties as to
the object and the price,8 and consequently:
Upon its perfection, the parties may reciprocally demand
performance. xHeirs of Venancio Bejenting v. Bañez, 502 SCRA 531
(2006);9 subject only to the provisions of the law governing the
form of contracts. xCruz v. Fernando, 477 SCRA 173 (2005).
It remains valid even if parties have not affixed their signatures
to its written form, xGabelo v. CA, 316 SCRA 386 (1999),10 or that
the perfected sale is not translated into written form, Duarte v.
Duran, 657 SCRA 607 (2011); or the manner of payment is
breached. xPilipinas Shell Petroleum Corp v. Gobonseng, 496 SCRA 305
(2006).
Failure of subdivision developer to obtain a license to sell does
not render the sales void especially that the parties have
admitted that there was already a meeting of the minds as to the
subject of the sale and price. xCantemprate v. CRS Realty Dev. Corp.,
587 SCRA 492 (2009)
When the contract of sale is not perfected, it cannot, as an
independent source of obligation, serve as a binding juridical
relation between the parties. xHeirs of Fausto C. Ignacio v. Home
Bankers Savings, 689 SCRA 173 (2013)
Binding effect of sale is based on the principle that the obligations
arising therefrom have the force of law between the parties. xVeterans
Federation of the Philippines v. CA, 345 SCRA 348 (2000).
Perfection Distinguished from Demandability – Not all contracts of sale
, become automatically and immediately effective. In sales with
assumption of mortgage, there is a condition precedent to the seller’s
consent and without the approval of the mortgagee, the sale is not
perfected. xBiñan Steel Corp. v. CA, 391 SCRA 90 (2002).
“No Contract Situation” versus “Void Contract” – Absence of consent
(i.e., complete meeting of minds) negates the existence of a perfected
sale. xFirme v. Bukal Enterprises and Dev. Corp., 414 SCRA 190 (2003).
The contract then is null and void ab initio, absolutely wanting in
civil effects; hence, it does not create, modify, or extinguish the
juridical relation to which it refers. xCabotaje v. Pudunan, 436 SCRA 423
(2004).
When there is no meeting of the minds on price, the sale “is not
perfected” and is not “a binding juridical relation between the parties.
xManila Metal Container Corp. v. PNB, 511 SCRA 444 (2006), 11 and should
be accurately denominated as “inexistent”, as it did not pass the stage
of generation to the point of perfection. xNHA v. Grace Baptist Church,
424 SCRA 147 (2004).
c.Bilateral and Reciprocal (Arts. 1169 and 1191)
A contract of sale gives rise to “reciprocal obligations”, which arise
from the same cause with each party being a debtor and creditor of
the other, such that the obligation of one is dependent upon the
7
Bowe v. CA, 220 SCRA 158 (1993); Romero v. CA, 250 SCRA 223 (1995); Lao
v. CA, 275 SCRA 237 (1997); Cavite Dev’t Bank
v.8 Lim, 324 SCRA 346 (2000).
Romero v. CA, 250 SCRA 223 (1995); Balatbat v. CA, 261 SCRA 128 (1996);
Coronel v. CA, 263 SCRA 15 (1996); City of Cebu
v. Heirs of Candido Rubi, 306 SCRA 408 (1999); Agasen v. CA, 325 SCRA 504
(2000); Laforteza v. Machuca, 333 SCRA 643 (2000); Londres v. CA, 394 SCRA
133 (2002); Alcantara-Daus v. de Leon, 404 SCRA 74 (2003); Buenaventura v. CA,
416 SCRA 263 (2003); San Lorenzo Dev. Corp. v. CA, 449 SCRA 99 (2005);
Yason v. Arciaga, 449 SCRA 458 (2005); Ainza v. Padua, 462 SCRA 614 (2005);
Roberts v. Papio, 515 SCRA 346 (2007); MCC Industrial Sales Corp. v.
Ssangyong Corp., 536 SCRA 408
