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Law On Sales: Case Digest
Law On Sales: Case Digest
Law On Sales: Case Digest
LAW ON SALES
I. Nature and Form of the Contract
A. Definition (Article 1458)
B. Subject Matter of Sale (Articles 1459-1465, 1466-1468)
C. Price (Articles 1469-1474)
D. Perfection of Contract (Articles 1475-1478)
E. Option to Buy or Sell (Article 1479-1481)
F. Earnest Money (Article 1482, Article 1483, Article 1484-1486)
G. Maceda Law (RA No. 6552)
H. Legality of Sale
LAW ON SALES
II. Capacity to Buy or Sell (Articles 1489-1492)
ARTICLE 1458
By the contract of sale, one of the contracting parties obligates himself to transfer the
ownership of & to deliver a determinate thing, & the other to pay therefor a price
certain in money or its equivalent.
A contract of sale may be absolute or conditional.
ARTICLE 1458
Characteristics of a contract of sale:
1. Consensual –perfected by mere consent
2. Bilateral –parties are bound to fulfill correlative obligations toward each other
3. Onerous – the thing sold is conveyed in consideration of the price & vice versa
4. Commutative – thing sold is considered equivalent of the price paid & vice versa
5. Nominate – given a special name & designation
6. Principal –its existence & validity does not depend upon another contract
ARTICLE 1458
Essential requisites of sale:
1. Consent or meeting of the minds (1475)
2. Object or subject matter (1460)
3. Cause or consideration (1458)
Kinds of contract of sale:
1. Absolute – not subject to condition. Ownership is transferred upon constructive or
actual delivery.
2. Conditional – subject to a contingency. Ownership is reserved until fulfillment of a
suspensive condition or extinguished upon the happening of a resolutory condition.
ARTICLE 1458
ARTICLE 1458
ARTICLE 1458. CORONEL VS CA GR NO. 103577, OCTOBER 7, 1996
Facts:
Romulo Coronel executed a document entitled ‘Receipt of Downpayment´ in favor
of Ramona Patricia Alcaraz for P50,000 downpayment of the amount of P1.24M as
purchase price for an inherited house and lot, without reservation to withhold the
transfer of such property until full payment. The purpose of such downpayment was
for the heirs to transfer the title to their name. Upon the registration of the property
to name of the heirs, the Coronels sold the same property to Catalina B.
Mabanag for P1.58M. The Coronels rescinded the contract with Alcaraz by
depositing the downpayment amount in a bank account in favor of Alcaraz. Alcaraz
filed acomplaint for specific performance, which the trial and the appellate court
ruled in her favor.
Issue:
Whether or not the “Receipt of Down payment” embodied a perfected contract of
sale and not a mere contract to sell?
ARTICLE 1458. CORONEL VS CA GR NO. 103577, OCTOBER 7, 1996
Held:
Yes. The agreement is a contract of sale as there was no express reservation of
ownership or title to the subject parcel of land. Petitioners did not merely promise to
sell the property to private respondent upon the fulfillment of the suspensive condition
but on the contrary, having already agreed to sell the subject property, they
undertook to have the certificate of title changed to their names and immediately
thereafter, to execute the written deed of absolute sale. The suspensive condition was
fulfilled on 6 February 1985 and thus, the conditional contract of sale between the
parties became obligatory, the only act required for the consummation thereof being
the delivery of the property by means of the execution of the deed of absolute sale
in a public instrument, which petitioners unequivocally committed themselves to do as
evidenced by the ‘Receipt of Down Payment.´
ARTICLE 1458 . TOYOTA SHAW VS CA GR NO. 116650 MAY 23, 1995
Facts:
Sometime in June of 1989, private respondent Sosa wanted to purchase a Toyota Lite Ace.
Upon contacting Toyota Shaw, Inc., he was told that there was an available unit. So on 14 June
1989, Sosa and his son went to the Toyota office at Shaw, where they met Popong Bernardo,
a sales representative of Toyota. Bernardo assured Sosa that a unit would be ready for pick
up at 10AM on 17 June 1989. Bernardo then signed the “Agreements Between Mr. Sosa &
Popong Bernardo of Toyota Shaw, Inc.”/ Exhibit “A” P100,000 was the downpayment, but the
purchase price was not mentioned in the contract. It was also agreed upon by the parties that
the balance of the purchase price would be paid by credit financing through B.A. Finance.
Toyota contends, however, that the Lite Ace was not delivered to Sosa because of the
disapproval by B.A. Finance of the credit financing application of Sosa. It further alleged that
a particular unit had already been reserved and earmarked for Sosa but could not be
released due to the uncertainty of payment of the balance of the purchase price. Toyota then
gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa
refused. The financing corporation seemed to have not approved Sosa’s application.
Issue: Whether or not there was a perfected contract of sale?
ARTICLE 1458 . TOYOTA SHAW VS CA GR NO. 116650 MAY 23, 1995
Held:
No. Nothing was mentioned about the full purchase price and the manner the installments were
to be paid. A definite agreement on the manner of payment of the price is an essential
element in the formation of a binding and enforceable contract of sale. This is so because the
agreement as to the manner of payment goes into the price such that a disagreement on the
manner of payment is tantamount to a failure to agree on the price. Definiteness as to the
price is an essential element of a binding agreement to sell personal property.
Exhibit “A” shows the absence of a meeting of minds between Toyota and Sosa. For one thing,
Sosa did not even sign it. He was not dealing with Toyota but with Popong Bernardo. Bernardo
was only a sales representative of Toyota and hence a mere agent of the latter.
Exhibit “A” may be considered as part of the initial phase of the generation or negotiation
stage of a contract of sale. The Vehicle Sales Proposal was a mere proposal which was
aborted in lieu of subsequent events. It follows that the VSP created no demandable right in
favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any
legally indemnifiable injury.
ARTICLE 1458 . ALFREDO VS BORRAS 404 SCRA 145 JUNE 17, 2003
Facts:
A parcel of land measuring 81,524 square meters (“Subject Land”) in Barrio Culis,
Mabiga, Hermosa, Bataan is the subject of controversy in this case. Petitioners
(“Godofredo and Carmen”) had mortgaged the Subject Land for P7,000.00 with the
Development Bank of the Philippines (“DBP”). To pay the debt, Carmen and
Godofredo sold the Subject Land to private respondents (“Armando and Adelia”)
for P15,000.00, the buyers to pay the DBP loan and its accumulated interest, and the
balance to be paid in cash to the sellers. Armando and Adelia gave Godofredo and
Carmen the money to pay the loan to DBP which signed the release of mortgage. The
former subsequently paid the balance of the purchase price of the Subject Land for
which Carmen issued a receipt dated 11 March 1970. They then took possession of
the Subject Land. Subsequently, Armando and Adelia discovered that Godofredo
and Carmen had re-sold portions of the Subject Land to several persons. The private
respondents then filed a complaint for specific performance against petitioners.
Issue: Whether or not there was a perfected contract of sale between the parties?
ARTICLE 1458 . ALFREDO VS BORRAS 404 SCRA 145 JUNE 17, 2003
Held:
Yes. The contract of sale between the spouses Godofredo and Carmen and the
spouses Armando and Adelia was a perfected contract. A contract is perfected once
there is consent of the contracting parties on the object certain and on the cause of
the obligation. In the instant case, the object of the sale is the Subject Land, and the
price certain is P15,000.00. The trial and appellate courts found that there was a
meeting of the minds on the sale of the Subject Land and on the purchase price
of P15,000.00. The contract of sale of the Subject Land has also been consummated
because the sellers and buyers have performed their respective obligations under the
contract. In a contract of sale, the seller obligates himself to transfer the ownership
of the determinate thing sold, and to deliver the same, to the buyer who obligates
himself to pay a price certain to the seller. In the instant case, Godofredo and
Carmen delivered the Subject Land to Armando and Adelia, while Armando and
Adelia paid the full purchase price as evidenced by the receipt issued by Carmen.
ARTICLE 1459
The thing must be licit and the vendor must have a right to
transfer the ownership thereof at the time it is delivered.
ARTICLE 1459
Requisites of Object:
1. It must be determinate
2. It must be licit
3. It must be w/in the commerce of men
4. As to rights, it must be transmissible or personal
2 kinds of illicit things: (relate w/ 1409)
1. Illicit per se 2. Illicit per accidents
Seller need not own the thing to be sold, all that is required of him is the right to
transfer ownership thereof at the time it is delivered.
ARTICLE 1459. HEIRS OF ENRIQUE ZAMBALES VS
COURT OF APPEALS GR NO. L-54070 FEBRUARY 28,
1983
Facts:
The spouses Enrique Zambales and Joaquina Zambales (the Zambaleses), who are illiterate, were the homestead patentees of
a parcel of land in the Municipality of Del Pilar, Roxas, Palawan, pursuant to Homestead Patent No. V-59502 dated
September 6, 1955. They claimed in November 1956 that respondent Nin Bay Mining Corporation (Corporation) had
removed silica sand from their land and destroyed the plants and other improvements thereon, to which said Corporation
denied to have done so. On October 29, 1959, the Zambaleses, duly assisted by their counsel, Atty. Perfecto de los Reyes,
and the Corporation, entered into a Compromise Agreement which state, among others, that the Zambaleses are giving the
Corporation full power and authority to sell, transfer and convey on September 10, 1960 or at any time thereafter the whole
or any part of herein subject property.
On September 10, 1960, the Corporation sold the disputed property to Joaquin B. Preysler for the sum of P8,923.70 fixed in
the Compromise Agreement. On December 6, 1969, or ten (10) years after the Trial Court's Decision based on the
Compromise Agreement, and nine (9) years after the sale to Preysler, the Zambaleses filed a civil action in the CFI of Palawan
for "Annulment of a Deed of Sale with Recovery of Possession and Ownership with Damages”, alleging that Atty. de los Reyes
and the Corporation induced them through fraud, deceit and manipulation to sign the Compromise Agreement.
The trial court declared null and void the deed of sale executed between Preysler and the Corporation, but the Court of
Appeals reversed the said decision after finding that the alleged fraud or misrepresentation in the execution of the
Compromise Agreement had not been substantiated by evidence.
Issue: Whether or not the compromise agreement and the subsequent deed of sale valid and legal?
ARTICLE 1459. HEIRS OF ENRIQUE ZAMBALES VS
COURT OF APPEALS GR NO. L-54070 FEBRUARY 28,
1983
Held:
No. The Compromise Agreement was held to be in violation of the Public Land Act,
which prohibits alienation and encumbrance of a homestead lot within five years from
the issuance of the patent. The bilateral promise to buy and sell the homestead lot at
a price certain, which was reciprocally demandable, was entered into within the five-
year prohibitory period and is therefore, illegal and void. Hence, the bilateral
promise to sell between the Zambaleses and the Corporation, and the subsequent
deed of sale between Preysler and the latter were declared null and void. As the
contract is void from the beginning, for being expressly prohibited by law the action
for the declaration of its inexistence does not prescribe.
ARTICLE 1460
A thing is determinate when it is particularly designated or
physically segregated from all others of the same class
ARTICLE 1461
Things having a potential existence may be the object of
the contract of sale. The efficacy of the sale of a mere
hope or expectancy is deemed subject to the condition that
the thing will come into existence.
The sale of a vain hope or expectancy is void.
ARTICLE 1461
‘Things having a potential existence’ – something that is
reasonably certain to come into existence as the natural
increment or usual incident of something in existence
already belonging to the seller
- The moment the thing does come into existence, title is
vested upon the buyer.
ARTICLE 1461