Source: https://www.scribd.com/document/229914140/Sales-PowerPoint-in-Doc
Timestamp: 2019-09-16 12:57:21
Document Index: 366664014

Matched Legal Cases: ['Art. 1489', 'Art. 1490', 'Art. 1458', 'Art.\n1462', 'Art. 1459', 'Art. 1460', 'Art. 1347', 'Art. 1460', 'Art. 1474', 'Art.1381', 'Art.1386', 'Art. 1305', 'Art. 1458', 'Art. 1544', 'Art 1403', 'Art. 1544', 'Art. 559', 'Art 1506', 'Art 1390', 'Art 1392', 'Art 1398', 'Art 1506']

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Sales Law Review for Seniors –PowerPoint Presentations and Lectures of Atty. Maria Christina S. Sagmit
(PowerPoint Presentations in Bold Letters; Additional Notes based on 4 th Year Lectures not in Bold Letters )
PART ONE: CONCEPT OF SALE
By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional.
Take note: A conditional sale is not the same as a contract to sell
Sale vs. Other Contracts
Donation – an act of liberality which is gratuitous in
character Main consideration: love and affection
A donation is a transfer of ownership of one’s property wherein the main consideration is not money. It is an act of liberality of the donor. Main consideration of a contract of sale: purchase price
Sale v. Barter
Barter – contract where majority of the consideration is in the form of another thing and a minor part of the consideration is in money
Sale v. Contract for a Piece of Work Contract for a piece of work –
contractor binds himself
to execute a piece of work for the employer, in consideration of a certain price or compensation.
manufactured for the customer and upon his special order (Dino v. CA, June 20, 2001) Sale – if the article is manufactured or procured for
the general market in the ordinary course of business, WHETHER THE SAME IS ON HAND AT THE TIME OR NOT Test: thing is manufactured in the ordinary course of business (1467)
This means that the “thing is specially manufactured for you”.
Quantity will not determine if it is a piece of work. If anyone can buyt it, it is a contract of sale. If it is exclusive, it
is a contract for a piece of work. sale.
If it is displayed thereafter, it is a
ARTICLE 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufacture specially for the customer and upon his speciar order, and not for the general market, it s a contract for a piece of work. (n)
Example: A cake which has a face of you on it – contract for a piece of work
Sale v. Dacion en Pago Dacion En Pago / Dation in payment –
alienated to the creditor in satisfaction of a debt in money.
This contract is governed by the law on sales (1245)
ARTICLE 1245. Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in money, shall be governed by the law on sales. (n)
This is different from pactum commissorium, wherein there is automatic appropriation. Be able to distinguish it dacion en pago from pactum commissorium.
SSS v. AG&P, April 30, 2008
is the delivery and transmission of
ownership of a thing by the
debtor to the
creditor as an
accepted equivalent of the performance of the obligation. Special mode of payment where the debtor offers
another thing to the creditor who accepts it as equivalent of payment of an outstanding debt. Partakes in one sense of the nature of sale, that is the
creditor is really buying the thing or property of the debtor, payment for which is to be charged against the debtor’s debt. The essential elements of a contract of sale, namely,
consent, object certain, and cause or consideration must be present. In its modern concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price. In any case, common consent is an essential prerequisite, be it sale or novation, to have the effect of totally extinguishing the debt or obligation.
Rules on sale will apply.
SSS vs. AGP (April 30, 2008)
FACTS: Plaintiff informed the SSS in writing of its premiums and loan amortization delinquencies. AG&P chose to settle its obligation with the SSS through dacion en pago. AG&P was, thereafter, directed by the defendant to submit certain documents, such as Transfer Certificate of Title, Tax Declaration covering the subject lot, and the proposed subdivision plan, which requirements AG&P immediately complied. SSS approved AG&P’s proposal to settle its and SEMIRARA’s delinquencies through dacion en pago. A Deed of Assignment has to be executed between the plaintiffs and the defendant. Because of SSS failure to come up with the required Deed of Assignment to effect said transfer, AG&P prepared the draft and submitted it to the Office of the Vice-President. Unfortunately, the defendant failed to take any action on said Deed of Assignment causing AG&P to re- submit it to the same office. More than a year after the approval of AG&P’s proposal, defendant sent the revised copy of the Deed of Assignment to AG&P. However, the amount of the plaintiffs’ obligation appearing in the approved Deed of Assignment has ballooned allegedly because of the additional interests and penalty charges assessed on plaintiffs’ outstanding obligation from April 2001, the date of approval of the proposal, up to January 2003. AG&P demanded for the waiver and deletion of the additional interests on the ground that delay in the approval of the deed and the subsequent delay in conveyance of the property in defendant’s name was solely attributable to the defendant. Defendant, however, refused to accept the payment through dacion en pago, unless plaintiffs also pay the additional interests and penalties being charged. SSS moved for the dismissal of the complaint for lack of jurisdiction and non-exhaustion of administrative remedies.
ISSUE: Which body has jurisdiction to entertain a controversy arising from the non-implementation of a dacion en pago agreed upon by the parties as a means of settlement of private respondents’ liabilities.
HELD: The action then is one for specific performance which case law holds is an action incapable of pecuniary estimation falling under the jurisdiction of the Regional Trial Court, and does not fall within the jurisdiction of the Social Security Commission. Dacion en pago is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. It is a special mode of payment where the debtor offers another thing to the creditor who accepts it as equivalent of payment of an outstanding debt. The undertaking really partakes in one sense of the nature of sale, that is the creditor is really buying the thing or property of the debtor, payment for which is to be charged against the debtor?s debt. As such, the essential elements of a contract of sale, namely, consent, object certain, and cause or consideration must be present. In its modern concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price. In any case, common consent is an essential prerequisite, be it sale or novation, to have the effect of totally extinguishing the debt or obligation. The controversy, instead, lies in the non-implementation of the approved and agreed dacion en pago on the part of the SSS. As such, respondents filed a suit to obtain its enforcement which is, doubtless, a suit for specific performance and one incapable of pecuniary estimation beyond the competence of the Commission.
(Jazzie Sarona )
Sale v. Lease Lease- use of thing for a price and return of the same after the period
Prepared by: Jazzie M. Sarona (for 4-Manresa 2008-2009)
RENT TO OWN - When the lease gives the lessee the option to buy for a small consideration at the end of the term, after crediting to the price all the so-called rents, such contract may be regarded a contract of sale on installments. Articles 1484 and 1485 will apply (Filinvest v. CA, 178 SCRA 188)
FILINVEST CREDIT vs. CA 178 SCRA 188
FACTS: Private respondents spouses Jose and Iluminada are engaged in the sale of gravel and acquired the services of Gemini Motor Sale to look for a rock crusher. Private respondents applied for financial assitance from Filinvest Credit with the conditions that the machinery be purchased in the name of Filinvest and that it be leased for 2 years with option to purchase upon the termination of the lease period to private respondent. Filinvest foreclosed the mortgaged property executed by private respondent. Private respondent filed a complaint for the rescission of the contract of lease.
HELD: Contracts in the form of lease, either with an option for the buyer to purchase for a small consideration at the end of the term provided all installments are paid or with stipulation that if the rent throught the term is paid, title shall vest in the lessee, are loans in name only. Contracts of this nature are actually contracts of sale. The intent of the parties to the subject contract is for the so- called rentals to be the installment payments. Upon completion of payment, the machinery would become the property of the private respondent.
ARTICLE 1484 In a contract of sale of personal property the price
of which is payable in instalments, the vendor may exercise any of the following remedies:
Exact fulfilment of the obligation, should the vendee fail to pay;
Cancel the sale, should the vendee’s failure to pay cover two
or more instalments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee’s failure to pay cover two or more instalments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void. (1454-A-a)
ARTICLE 1485. The preceding article shall be applied to contract purporting to be leases of personal property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing.
1484 and 1485
 1484 – relief available to an unpaid installment seller
1485- 1484 is applicable if there is lease of personal property and lessor deprives the lessee of possession or enjoyment of the SM
PART TWO: ELEMENTS OF A CONTRACT OF SALE
consent or meeting of the minds;
determinate subject matter; and
1st element: CONSENT Basic premise: Only capacitated parties can give their consent to buy or sell
Art. 1489 : any person who is authorized in the Civil Code to obligate himself
ARTICLE 1489. All persons who are authorized in the Code to obligate themselves, may enter into a contract of sale, saving the modifications contained in the following articles. Where necessaries are sold and delivered to a minor or other person without capacity to act, he must pay a reasonable price therefore. Necessaries are those referred to in Article 290. (1457 a)
Incapacitated Parties  GENERAL RULE: Contracts entered into by minors, insane and demented persons, deafmutes who cannot read and write are VOIDABLE (1327)
The voidable contract cannot be avoided by capacitated party (1397)
 EXCEPTION: If contracts of these incapacitated persons are for NECESSARIES or those things which are indispensable for his support, they must pay a reasonable price therefor (1489)
Sale between spouses
General rule: NO (Article 1490), UNLESS
when a separation of property was agreed upon in the
marriage settlements; OR  when there has been a judicial separation of property under Article 191 (when spouse is sentenced to a penalty which carries with it civil interdiction or has been declared absent or in case of legal separation)
If the spouses are separated only in fact, apply the general rule that they cannot sell property to each other.
If they are not legally separated, can they still sell to each other?
Yes, if they go for a voluntary separation of property.
Sale against public policy
 Persons who cannot acquire by purchase, even at a
public or judicial auction the following property: (Article
guardians, property of his ward
agents, property whose administration or sale has been entrusted to him, unless principal
administration  public officers & employees, property of the state or subdivision or GOCC entrusted to them includes JUDGES and GOV’T EXPERTS
(may naisip na question si ma’am dito na part ) justices, judges, prosecuting attorneys, clerks of inferior and superior courts, other officers and employees connected with the administration of justice, property and rights in litigation / levied within their jurisdiction. Shall apply to lawyers contracts violative of Art. 1490 & 1491 are null and
void (Medina v. Collector, 1 SCRA 302)
Agents, the property whose administration or sale may have
sales of logs to his wife could not be considered as the original taxable
been entrusted to them, unless the consent of the principal has been given; Executors and administrators, the property of the estate
sales was because of the express prohibition found in Article 1490 of the Civil Code of sales between spouses married under a community system; yet it was not until July of 1954 that he alleged, for the first
under administration; Public officers and employees, the property of the State or of
time, the existence of the supposed property separation agreement. Finally, the Day Book of the Register of Deeds on which the agreement
any subdivision thereof, or of any government-owned or controlled corporation, or institution, the administration of which has been intrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the sale; Justices, judges, prosecuting attorneys, clerks of superior and
would have been entered did not show that the document in question was among those recorded therein. Petitioner's contention that the respondent Collector cannot assail the questioned sales, he being a stranger to said transactions, is likewise untenable. The government, as correctly pointed out by the Tax Court, is always an interested party to all matters involving taxable
inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession. Any others specially disqualified by law. (1459a)
transactions and, needless to say, qualified to question their validity or legitimacy whenever necessary to block tax evasion. Contracts violative of the provisions of Article 1490 of the Civil Code are null and void (Uy Sui Pin vs. Cantollas, 70 Phil. 55; Uy Coque vs. Sioca, 45 Phil. 43). Being void transactions, the sales made by the petitioner to his wife were correctly disregarded by the Collector in his tax assessments that considered as the taxable sales those made by the wife through the spouses' common agent, Mariano Osorio. In upholding that stand, the Court below committed no error.
Take note: “unless with consent” only applies to agent and principal; others are considered null and void
2nd ELEMENT: SUBJECT MATTER
Sale made in violation of Articles 1490 and 1492
MEDINA vs. COLLECTOR OF INTERNAL REVENUE and THE COURT OF TAX APPEALS. (January 28, 1961)
FACTS: Petitioning taxpayer Antonio Medina married Antonia Rodriguez. Before 1946, the spouses had neither property nor business of their own. Later, however, petitioner, acquired forest concessions in the municipalities of San Mariano and Palanan in the Province of Isabela. From 1946 to 1948, the logs cut and removed by the petitioner from his concessions were sold to different persons in Manila through his agent, Mariano Osorio. Some time in 1949, Antonia R. Medina, petitioner's wife, started to engage in business as a lumber dealer, and up to around 1952, petitioner sold to her almost all the logs produced in his San Mariano concession. Mrs. Medina, in turn, sold in Manila the logs bought from her husband through the same agent, Mariano Osorio. The proceeds were, upon instructions from petitioner, either received by Osorio for petitioner or deposited by said agent in petitioner's current account with the Philippine National Bank. On the thesis that the sales made by petitioner to his wife were null and void pursuant to the provisions of Article 1490 of the Civil Code of the Philippines (formerly, Art. 1458, Civil Code 1889), the Collector considered the sales made by Mrs. Medina as the petitioner's original sales taxable under Section 186 of the National Internal Revenue Code and, therefore, imposed a tax assessment on petitioner. Petitioner protested the assessment; however, respondent Collector insisted on his demand. Petitioner filed a petition for reconsideration, revealing for the first time the existence of an alleged premarital agreement of complete separation of properties between him and his wife, and contending that the assessment for the years 1946 to 1952 had already prescribed. Petitioner appealed to the Court of Tax Appeals, which rendered judgment upholding a tax assessment of the Collector of Internal Revenue except with respect to the imposition of so-called compromise penalties.
ISSUE: Whether or not the sales made by the petitioner to his wife could be considered as his original taxable sales.
RULING: Circumstantial evidence is against petitioner's claim. It appears that at the time of the marriage between the petitioner and his wife, they neither had any property nor business of their own, as to have really urged them to enter into the supposed property agreement. Secondly, the testimony that the separation of property agreement was recorded in the Registry of Property three months before the marriage, is patently absurd, since such a pre-nuptial agreement could not be effective before marriage is celebrated, and would automatically be cancelled if the union was called off. In the third place, despite their insistence on the existence of the ante- nuptial contract, the couple, strangely enough, did not act in accordance with its alleged covenants. It was proved that even during their taxable years, the ownership, usufruct, and administration of their properties and business were in the husband. And even when the wife was engaged in lumber dealing, and she and her husband contracted sales with each other as aforestated, the proceeds she derived from her alleged subsequent disposition of the logs — incidentally, by and through the same agent of her husband, Mariano Osorio — were either received by Osorio for the petitioner or deposited by said agent in petitioner's current account with the Philippine National Bank. Fourth, although petitioner, a lawyer by profession, already knew that the primary reason why the
existing, or it may be future or even contingent (Art.
1462);
licit (Art. 1459); and
determinate or at least determinable (Art. 1460).
ARTICLE 1462. The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured, raised, or acquired by the seller after the perfection of the contract of sale, in this Title called "future goods." There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which may or may not happen.
ARTICLE 1460. A thing is determinate when
designated or physical segregated from all other of the same class. The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being made determinate without the necessity of a new or further agreement between the parties. (n)
FUTURE: Do not view as to physical existence or non-existence
BUT check if Science and technology will allow
said SM to come into existence things subject to a resolutory condition may
be a valid SM e.g. property in a reserva troncal, SM under legal redemption
Emptio Rei Speratae v. Emptio Spei
Emptio Rei – subject has potential existence and the
uncertainty lies in the quantity or quality of the thing. If
thing comes into existence, there is a VALID
Emptio Spei-
expectancy and the uncertainty lies in the existence of
the thing. The contract is VOID
SM must be LICIT: (Art. 1347)
not outside the commerce of
includes all rights which are transmissible sale of future inheritance, sale of animals suffering from contagious disease ARE void
ARTICLE 1347. All things which are not outside the commerce of men, including future things, may be the object of a contract. All rights which are not intransmissible may also be the object of contracts. No contract may be entered into upon future inheritance except in cases expressly authorized by law.
SM must be determinate OR at least determinable (Art. 1460)
determinate – particularly designated or
physically segregated from all others of the same class DETERMINABLE – capable of being made determinate without the necessity of a new or further agreement between the parties
DETERMINATE: generic objects, undivided interested of a sole owner (1463), undivided share of a specific mass (1464)
ARTICLE 1464. In the case of fungible goods, there may be a sale of an undivided share of a specific mass, though the seller purports to sell and the buyer to buy a definite number, weight or measure of the goods in the mass, and though the number, weight or measure of the goods in the mass is undetermined. By such a sale the buyer becomes owner in common of such a share of the mass as the number, weight or measure bought bears to the number, weight or measure of the mass. If the mass contains less than the number, weight or measure bought, the buyer becomes the owner of the whole mass and the seller is bound to make good the deficiency from goods of the same kind and quality, unless a contrary intent appears.
Determinable  Atilano v. Atilano – wrong designation of a lot does not vitiate the sale since the parties before entering into the contract saw the actual setting and metes and bounds of the subject matter
ATILANO vs. ATILANO (May 21, 1969)
FACTS: In 1916, Eulogio Atilano I acquired, by purchase from one Gerardo Villanueva, lot No. 535 of the then municipality of Zamboanga cadastre. In 1920 he had the land subdivided into five parts. Eulogio Atilano I, for the sum of P150.00, executed a deed of sale covering lot No. 535-E in favor of his brother Eulogio Atilano II, who thereupon obtained transfer certificate of title No. 3129 in his name. Three other portions were likewise sold to other persons, the original owner, Eulogio Atilano I, retaining for himself only the remaining portion of the land. Upon his death the title to this lot passed to Ladislao Atilano. On December 6, 1952, Eulogio Atilano II having become a widower upon the death of his wife Luisa Bautista, he and his children obtained transfer certificate of title No. 4889 over lot No. 535-E in their names as co-owners. They had the land resurveyed so that it could properly be subdivided; and it was then discovered that the land they were actually occupying on the strength of the deed of sale executed in 1920 was lot No. 535-A and not lot 535-E, as referred to in the deed, while the land which remained in the possession of the vendor, Eulogio Atilano I, and which passed to his successor, defendant Ladislao Atilano, was lot No. 535-E and not lot No. 535-A. The heirs of Eulogio Atilano II , filed the present action in the Court of First Instance of Zamboanga, alleging, inter alia, that they had offered to surrender to the defendants the possession of lot No. 535-A and demanded in return the possession of lot No. 535-E, but that the defendants had refused to accept the exchange. The trial court rendered judgment for the plaintiffs on the sole ground that since the property was registered under the Land Registration Act the defendants could not acquire it through prescription.
ISSUE: Whether or not the heirs of Atilano II are entitled to Lot No 535-E, the bigger lot.
RULING: The logic and common sense of the situation lean heavily in favor of the defendants' contention. When one sells or buys real property — a piece of land, for example — one sells or buys the property as he sees it, in its actual setting and by its physical metes and bounds, and not by the mere lot number assigned to it in the certificate of title. In the particular case before us, the portion correctly referred to as lot No. 535-A was already in the possession of the vendee, Eulogio Atilano II, who had constructed his residence
therein, even before the sale in his favor even before the subdivision of the entire lot No. 535 at the instance of its owner, Eulogio Atillano I. In like manner the latter had his house on the portion correctly identified, after the subdivision, as lot No. 535-E, even adding to the area thereof by purchasing a portion of an adjoining property belonging to a different owner. The two brothers continued in possession of the respective portions the rest of their lives, obviously ignorant of the initial mistake in the designation of the lot subject of the 1920 until 1959, when the mistake was discovered for the first time. The mistake did not vitiate the consent of the parties, or affect the validity and binding effect of the contract between them. The new Civil Code provides a remedy for such a situation by means of reformation of the instrument. This remedy is available when, there having been a meeting of the funds of the parties to a contract, their true intention is not expressed in the instrument purporting to embody the agreement by reason of mistake, fraud, inequitable conduct on accident. In this case, the deed of sale executed in 1920 need no longer reformed. The parties have retained possession of their respective properties conformably to the real intention of the parties to that sale, and all they should do is to execute mutual deeds of
Determinable despite lack of specific quantity
National Grains v. IAC – subject matter was the rice to be harvested from seller’s farmland
The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract provided it is possible to determine the same without the need for a further agreement
NATIONAL GRAINS AUTHORITY, CABAL vs. IAC, SORIANO (March 8, 1989)
FACTS: National Grains Authority (now National Food Authority, NFA for short) is a government agency wherein one of its incidental functions is the buying of palay grains from qualified farmers. Soriano offered to sell palay grains to the NFA, through William Cabal, the Provincial Manager of NFA stationed at Tuguegarao, Cagayan. Private respondent Soriano's documents were processed and accordingly, he was given a quota of 2,640 cavans of palay. The quota noted in the Farmer's Information Sheet represented the maximum number of cavans of palay that Soriano may sell to the NFA. In the afternoon of August 23, 1979 and on the following day, August 24, 1979, Soriano delivered 630 cavans of palay. The palay delivered during these two days were not rebagged, classified and weighed. when Soriano demanded payment of the 630 cavans of palay, he was informed that its payment will be held in abeyance since Mr. Cabal was still investigating on an information he received that Soriano was not a bona tide farmer and the palay delivered by him was not produced from his farmland but was taken from the warehouse of a rice trader, Ben de Guzman. Cabal wrote Soriano advising him to withdraw from the NFA warehouse the 630 cavans Soriano delivered stating that NFA cannot legally accept the said delivery on the basis of the subsequent certification of the BAEX technician, Napoleon Callangan that Soriano is not a bona fide farmer. Soriano insisted that the palay grains delivered be paid. He then filed a complaint for specific performance and/or collection of money with damages. The trial court rendered judgment ordering petitioner National Food Authority, its officers and agents to pay respondent Soriano. The IAC upheld the findings of the trial court.
ISSUE: Whether or not there was a contract of sale in the case at bar.
RULING: The petition is not impressed with merit. In the case at bar, Soriano initially offered to sell palay grains produced in his farmland to NFA. When the latter accepted the offer by noting in Soriano's Farmer's Information Sheet a quota of 2,640 cavans, there was already
a meeting of the minds between the parties. The object of the contract, being the palay grains produced in Soriano's farmland and the NFA was to pay the same depending upon its quality. The fact that the exact number of cavans of palay to be delivered has not been determined does not affect the perfection of the contract. Article 1349
of the New Civil Code provides:
The fact that the quantity is not
determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties." In this case, there was no need for NFA and Soriano to enter into a new contract to determine the exact number of cavans of palay to be sold. Soriano can deliver so much of his produce as long as it does not exceed 2,640 cavans. The acceptance referred to which determines consent is the acceptance of the offer of one party by the other and not of the goods delivered as contended by petitioners. The reason why NFA initially refused acceptance of the 630 cavans of palay delivered by Soriano is that it (NFA) cannot legally accept the said delivery because Soriano is allegedly not a bona fide
farmer. The trial court and the appellate court found that Soriano was a bona fide farmer and therefore, he was qualified to sell palay
grains to NFA.
Illegal Sale due to Illegal Subject Matter
narcotics (RA 6425)
wild bird / mammal (Art No. 2950)
rare wild plants (Art No. 3893)
poisonous plants / fruits (RA 1288)
dynamited fish (RA 428)
gunpowder and explosives (Act No.2255)
firearms and ammunitions (PD#9)
3rd ELEMENT: PRICE  Price – sum stipulated as the equivalent of the thing sold and also every incident taken into consideration for the fixing of the price put to the debit of the buyer and agreed to by him
in money or its equivalent
certain or ascertainable at perfection by:
day/particular exchange or market reference to another thing certain
contract (VOID)
Mapalo v. Mapalo – illiterate farmers signed a contract which provided for P500 consideration when the amount was never paid. Since there was no real consideration, the contract is VOID
FACTS: Sps. Miguel and Candida Mapalo, (illiterate) farmers, were registered owners of a 1,635 square-meter residential land in Manaoag, Pangasinan with OCT No. 46503 They decided to donate the eastern half of the property to Maximo (brother of Miguel) who was about to get married. The OCT was delivered. As a result however, they were deceived into signing a deed of absolute sale over the entire land in his (maximo) favor. Their signature thereto were procured by fraud, that is, they were made to believe by Maximo Mapalo and the attorney who acted as notary public who "translated" the document, that the same was a deed of donation in Maximo's favor covering one half (the eastern half) of their land. Although the document of sale stated a consideration of Five Hundred (P500.00) Pesos, the aforesaid spouses did not receive anything of value for the land. Following the execution of the afore-stated document the spouses Miguel Mapalo and Candida Quiba immediately built a fence of permanent structure in the middle of their land segregating the eastern portion from its western portion.Not known to them, meanwhile, Maximo, on March 15, 1938, registered the deed of sale in his favor and obtained in his name Transfer Certificate of Title over the entire land. On October 20, 1951, he sold for P2,500.00 said entire land in favor the Narcisos, which was subsequently registered and a TCT issued in their name over the entire property. The Narcisos took possession only of the eastern portion of the land in 1951, after the sale. On February 7, 1952 they filed suit in the Court of First Instance of Pangasinanto be declared owners of the entire land; for possession of its western portion; for damages; and for rentals. It was brought against the Mapalo spouses as well as against Floro Guieb and Rosalia Mapalo Guieb who had a house on the western part of the land with the consent of the spouses Mapalo. CFI ruled in favor of spouses Mapalo but CA reversed the decision upon appeal, solely on the ground that the consent of the Mapalo sps. to the deed of sale having been obtained by fraud, was voidable, not void ab initio. Hence, the action to annul the same had long prescribed. It reckoned said notice of the fraud from the date of registration of the sale on March 15, 1938. The Court of First Instance and the Court of Appeals are therefore unanimous that the spouses Mapalo and Quiba were definitely the victims of fraud. It was only on prescription that they lost in the Court of Appeals.
ISSUE: W/N the sale (as to the western portion) was void or voidable
(Appelants contention
void for being absolutely
simulated) HELD: The sale is void. The Court of Appeals is right in that the element of consent is present as to the deed of sale of October 15, 1936. For consent was admittedly given, albeit obtained by fraud. Accordingly, said consent, although defective, did exist. In such case, the defect in the consent would provide a ground for annulment of a voidable contract, not a reason for nullity ab initio.The parties are agreed that the second element of object is likewise present in the deed of October 15, 1936, namely, the parcel of land subject matter of the same.Not so, however, as to the third element of cause or consideration. And on this point the decision of the Court of Appeals is silent. As to the sale of the eastern portion of the land, there is no question, it being admitted that said land was donated to Maximo. However, as regards the western portion, the question is whether or not there was a cause or consideration to support the existence of a contract of sale. The rule under the Civil Code, again be it the old or the new, is that contracts without a cause or consideration produce no effect whatsoever. Nonetheless, under the Old Civil Code, the statement of a false consideration renders the contract voidable, unless it is proven that it is supported by another real and licit consideration. And it is further provided by the Old Civil Code that the action for annulment of a contract on the ground of falsity of consideration shall last four years, the term to run from the date of the consummation of the contract. Accordingly, since the deed of sale of 1936 is governed by the Old Civil Code, it should be asked whether its case is one wherein there is no consideration, or one with a statement of a false consideration. If the former, it is void and inexistent; if the latter, only voidable, under the Old Civil Code. As observed earlier, the deed of sale of 1936 stated that it had for its consideration Five Hundred (P500.00) Pesos. In fact, however, said consideration was totally absent. The problem, therefore, is whether a deed which states a consideration that in fact did not exist is a contract without consideration, and therefore void ab initio, or a contract with a false consideration, and therefore, at least under the Old Civil Code, voidable. From the foregoing it can be seen that where, as in this case, there was in fact no consideration, the statement of one in the deed will not suffice to bring it under the rule of Article 1276 of the Old Civil Code as stating a false consideration.
(Hanniyah Sevilla )
Simulated – represented to have been paid BUT was
NOT in fact paid If price is SIMULATED, the sale is VOID but the contract may be shown to have been in reality a donation or some other contract (1471)
It is void because the third element (price) is lackin. For example: the contract in reality is a donation but it was simulated as a contract of sale to pay lesser taxes
Ong v. Ong - “P1.00 and other valuable considerations” – void sale but may be a donation
consideration stipulated and value of the thing shows that the price is false and fictitious. The contract is VOID
FACTS: Records show that on February 25, 1976 Imelda. Ong, for and in consideration of One (P1.00) Peso and other valuable considerations, executed in favor of private respondent Sandra Maruzzo, then a minor, a Quitclaim Deed whereby she transferred, released, assigned and forever quitclaimed to Sandra Maruzzo, her heirs and assigns, all her rights, title, interest and participation in the ONE-HALF (1/2) undivided portion of the parcel of land consisting of an area of 125 sq. m. On November 19, 1980, Imelda Ong revoked the aforesaid Deed of Quitclaim and, thereafter, on January 20, 1982 donated the whole property described above to her son, Rex Ong Jimenez. On June 20,1983, Sandra Maruzzo, through her guardian ad litem Alfredo Ong, filed with the Regional Trial Court of Makati, Metro Manila an action against petitioners, for the recovery of ownership/possession and nullification of the Deed of Donation over the portion belonging to her and for Accounting.
On December 12, 1983, the trial court rendered judgment in favor of respondent Maruzzo and held that the Quitclaim Dead is equivalent to a Deed of Sale and, hence, there was a valid conveyance in favor of the latter. Petitioners appealed to the respondent Intermediate Appellate Court. They reiterated their argument below and, in addition, contended that the One (P1.00) Peso consideration is not a consideration at all to sustain the ruling that the Deed of Quitclaim is equivalent to a sale. On June 20, 1984, respondent Intermediate Appellate Court promulgated its Decision affirming the appealed judgment and held that the Quitclaim Deed is a conveyance of property with a valid cause or consideration; that the consideration is the One (P1.00) Peso which is clearly stated in the deed itself; that the apparent inadequacy is of no moment since it is the usual practice in deeds of conveyance to place a nominal amount although there is a more valuable consideration given.
ISSUE: w/n the quitclaim was a deed of sale, and if so w/n the same was valid. (YES)
HELD: A careful perusal of the subject deed reveals that the conveyance of the one-half (½) undivided portion of the above described property was for and in consideration of the One (Pl.00) Peso and the other valuable considerations paid by private respondent Sandra Maruzzo, through her representative, Alfredo Ong, to petitioner Imelda Ong. Stated differently, the cause or consideration is not the One Peso alone but also the other valuable considerations. As aptly stated by the Appellate Court "x x x although the cause is not stated in the contract it is presumed that it is existing unless the debtor proves the contrary (Article 1354 of the Civil Code). One of the disputable presumptions is that there is a sufficient cause of the contract (Section 5, (r), Rule 131, Rules of Court). It is a legal presumption of sufficient cause or consideration supporting a contract even if such cause is not stated therein. This presumption cannot be overcome by a simple assertion of lack of consideration especially when the contract itself states that consideration was given, and the same has been reduced into a public instrument with all due formalities and solemnities. To overcome the presumption of consideration the alleged lack of consideration must be shown by preponderance of evidence in a
BAGNAS vs. CA, RETONIL, ENCARNACION AND NAMBAYAN
FACTS: Hilario Mateum of Kawit, Cavite, died on March 11, 1964, single, without ascendants or descendants, and survived only by collateral relatives, of whom petitioners herein, his first cousins, were the nearest. Mateum left no will, no debts, and an estate consisting of twenty-nine parcels of land in Kawit and Imus, Cavite, ten of which are involved in this appeal. On April 3, 1964, the private respondents, themselves collateral relatives of Mateum though more remote in degree than the petitioners, registered with the Registry of Deeds for the Province of Cavite two deeds of sale purportedly executed by Mateum in their (respondents') flavor covering ten parcels of land. Both deeds were in Tagalog, save for the English descriptions of the lands conveyed under one of them; and each recited the consideration of P1.00 and services rendered to and for Mateum's benefit. On May 22, 1964 the petitioners commenced suit against the respondents in the Court of First Instance of Cavite, seeking annulment of the deeds of sale as fictitious, fraudulent or falsified, or, alternatively, as donations void for want of acceptance embodied in a public instrument. Claiming ownership pro indiviso of the lands subject of the deeds by virtue of being intestate heirs of Hilario Mateum, the petitioners prayed for recovery of ownership and possession of said lands, accounting of the fruits thereof and damages. Defendants aver that they were collateral relatives of Hilario Mateum and had done many good things for him, nursing him in his last illness, which services constituted the bulk of the consideration of the sales. Trial court dismissed the petition on the ground that the plaintiff's evidence of alleged fraud was insufficient, the fact that the deeds of sale each stated a consideration of only P1 .00 not being in itself evidence of fraud or simulation. Also on the ground (laid down in Armential vs. Patriarca) that the plaintiffs as mere collateral relatives could not legally question the disposition made by the deceased during his life time. CA affirmed the decision.
ISSUE: w/n the deeds of sale were void or inexistent from teh beginning or merely voidable. [f they were only voidable, then it is a correct proposition that since the vendor Mateum had no forced hairs whose legitimes may have been impaired, and the petitioners, his collateral relatives, not being bound either principally or subsidiarily to the terms of said deeds, the latter had and have no actionable right to question those transfers.
On the other hand, if said deeds were void ab initio because to all intents and purposes without consideration, then a different legal situation arises since if there has no cause or consideration, the property allegedly conveyed never really leaves the patrimony of the transferor, and upon the death without testament, such property would have passed to the transferors' heirs intestate and can be recoverable
by them, or by the Administrator of the transferor's estate case pwede ma-recover ng petitioners)]
(so in this
HELD: The deeds of sale are void and of no force or effect whatsoever. Upon the consideration alone that the apparent gross, not to say enormous, disproportion between the stipulated price (in each deed) of P1 .00 plus unspecified and unquantilled services and the undisputably valuable real estate allegedly sold - worth at least P10,500.00 going only by assessments for tax purposes which, it is well-known, are notoriously low indicators of actual value - plainly and unquestionably demonstrates that they state a false and fictitious
consideration, and no other true and lawful cause having been shown, the Court finds both said deeds, insofar as they purport to be sales, not merely voidable, but void ab initio.
The transfers in question being void, it follows as a necessary consequence and conformably to the concurring opinion in Armentia, with which the Court fully agrees, that the properties purportedly conveyed remained part of the estate of Hilario Mateum, said transfers notwithstanding, recoverable by his intestate heirs, the petitioners herein, whose status as such is not challenged.
Effect if Price is
reasonable price (Art. 1474) Manner of payment must be agreed upon
Inadequacy of price: Effect
Voluntary sale - does not affect the validity of sale
But the price must not be grossly disproportionate
Inadequacy of Price: Judicial Sale
General rule: may avoid the judicial sale when it is shocking to the conscience of man
Exception: when there’s a right of redemption
Inadequacy of Price: Sales A Retro
Raises the presumption of equitable mortgage
Inadequacy of Price: Wards and Guardians
sale by guardians
wards/persons represented suffer lesion of > ¼ of the
value of the things – rescissible contract unless approved by court (Art.1381, Art.1386)
(1) Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof; (2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; (3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them; (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; (5) All other contracts specially declared by law to be subject to rescission. (1291a)
Lesion as to wards and guardians: If the price is P 750,000 of P 1M,
it is still valid. Lesion suffered is equal (not more) to ¼ of the value of the thing.
FIRST PHASE: PREPARATORY
Emptio rei v. Emptio spei
Rules on inadequacy
Minors, insane, demented, deaf mute who can’t read and write
Guardians, judges,
period of negotiation and bargaining ending at the
moment of agreement of the parties
CONTRACTS IN THE FIRST PHASE
UNACCEPTED unilateral promise to buy or sell. Even if accepted by the other party, it is not binding upon the promissor and may be withdrawn at any time.
violation does not give rise to any relief on the part of the other party since there is no valid contract
There is no remedy in case of breach because there is lack of consent.
A promised to sell property to B if B passes the Bar Exam
A sold house to C before B passed the Bar
Is the sale VALID?
Is B entitled to rentals since he there was a promise to
Yes, the sale to C is valid. A merely made an unaccepted
unilateral promise to sell to B in the nature of a
policitacion. This contract does not give rise to any
obligation. It does not prevent the owner from selling
the thing to another.
No, B is not entitled to rentals. A's promise to sell was
unilateral and unaccepted. Hence, there was no
perfected contract of sale that will transfer ownership
over the thing to B. B is not entitled to rentals because he does not own the property.
determinate thing which is supported by a
consideration distinct from the price
if with consideration gives rise to a case for damages but NOT for specific performance
Option contract must have consideration separate and distinct from the purchase price. Otherwise, the option contract is VOID (Sugar Molasses case)
If there is no consideration, the contract is VOID BUT offer can still be accepted until it is withdrawn
(Sanchez v. Rigos)
 An option is a continuing offer or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a time certain, or under, or in compliance with, certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale. An option is not itself a purchase, but merely secures the privilege to buy. It is not a sale of property but a sale of right to purchase.
LIMSON VS C.A.( 357 s 209 )
FACTS: Petitioner Limson filed a complaint alleging that in July 1978, Spouses de Vera, through their agent Marcosa Sanchez, offered to sell to petitioner a parcel of land. Petitioner agreed to buy the property and gave P20k as earnest money. Respondent spouses signed a receipt and gave petitoner a 10-day option period to purchase the property and informed them that the property was mortgage to Ramoses, and asked Limson to pay the balance of the purchase price to enable to settle their obligation with Ramoses. On Aug. 5, 1978, Petitioner agreed to meet respondent spouses and the Ramoses to consummate the transaction but due to failure of respondent spouses and the Ramose to appear, no transaction was formalized. On Aug. 11,1978, petitioner claimed that she was willing to pay the balance but the transaction again did not materialized as respondent spouse failed to pay the back taxes. Subsequently, petitioner gave 3 checks (P36,170.00) for the settlement of the back taxes and for payment of the quitclaims of the 3 tenants. The amount was considered part of the purchase price with a receipt signed by respondent spouses. On Sept. 5 1978, petitioner was surprised to learn that the property was the subject of a negotiation for the sale to Sunvar Realty Dev’t Corp. represented by Cuenca. As a consequence, petitoner filed an affidavit of Adverse Claim with the Registry of Deeds and informed Cuenca of her contract to purchase the property. On Sept. 15 1978, the Deed of Sale was executed between respondent spouses and Sunvar, and a TCT was issued in favor of Sunvar with the adverse claim annotated therein.
ISSUE: WON there was perfected contract to sell between petitioner and respondent spouses? NO
HELD: The agreement between the parties was a contract of option and not a contract to sell. An option, is a continuing offer or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a time certain, or under certain terms and conditions or which gives to the owner the right to sell or demand a sale. It is also called an “unaccepted offer”. It is not itself a purchase, but merely secures the privilege to buy. It is not a sale of property but a sale of the right to purchase. An option imposes no binding obligation on the person holding the option, aside from the consideration for the offer. On the other hand, a contract, like a contract to sell, involves the meeting of minds between two persons whereby one binds himself with respect to the other, to give something or to render some service. Contracts, in general, are reflected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. In this case, the receipt readily shows that the parties entered into was a contract of option, which respondent spouses agreed with petitioner the right to buy the former’s property at a fixed price within 10-days, and did not sell their property; they did not also agree to sell it; but they sold something, and the agreement imposed no binding obligation on petitioner, aside from the consideration for the offer.
The consideration of P20k paid by petitioner to respondent spouses was not earnest money but option money. Earnest money and option money are not the same but distinguished thus:
Earnest money is part of the purchase price, while option money is the money given as a distinct consideration for an option contract; Earnest money is given only where there is already a sale, while option money applies to a sale not yet perfected; When earnest money is given, the buyer is bound to pay the balance, while when the would –be buyer gives option money, he is not required to buy, but may even forfeit it depending on the terms of the option. In this case, there is nothing in the receipt which indicates that the P20k was part of the purchase price. Moreover, it was not shown that there was a perfected sale between the parties where earnest money was given. Finally, the receipt did not reveal that petitioner was bound to pay the balance of the purchase price. In fact, respondent spouses could even forfeit the money given if the terms of the option were not met. The option period having expired and acceptance was not made by petitioner, the purchase of subject property by Sunvar was perfectly valid and entered into in good faith.
(from: Erwin Vicente)
BAR 1996, 1998 A gave B an option to purchase his apartment for P5M B offered to buy for P4.5 M Counter-offer was not acceptable to A A sold to C who bought it at P5 M Can B compel A to cancel sale to C and execute deed in his favor?
B cannot compel A to execute a deed in his favor because what B only had was an option contract. Said contract was not a valid one since it was not supported by a consideration distinct from the purchase price.
Even if with consideration, B can only sue A damages but not for specific performance
purchase price and the option K is not respected, can
the would-be-buyer ask for specific performance? Can the seller escape liability by saying honoring the option K would be financially disadvantageous to him?
An option contract with separate consideration will only
give rise to a case for damages and not for specific performance. Seller cannot escape liability by claiming economic lesion since seller who enters into an option contract has the obligation to sustain offer until the end of agreed period.
contract which grants a
property before it is offered to another. This doesn’t need a separate consideration since such stipulation is part and parcel of the entire contract
This is usually present if you are the lessee.
offeree and offerror’s terms are IDENTICAL
offeror violates the agreement
offeree and offerror’s terms are DIFFERENT
RIGHT OF FIRST REFUSAL  A owns a house which is leased to B  B was given the right of first refusal - P5M  B offered to buy for P4.5 M - not acceptable counter-offer  A sold the house to C for P5 M
 Can B compel A to cancel the sale with C and sell the house to him?
B cannot compel A to execute a deed of sale in his
favor because B’s counter-offer is not the same as A’s price. However, since there was a breach of the right of first refusal since the property was not sold to B as the lessee, B may file a case for damages.
CONTRACT TO SELL  Bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price
Take note again: Contract to sell is different from conditional sale
CONTRACT TO SELL IS NOT A CONTRACT OF SALE
The first essential element of consent of parties is ABSENT
The seller does not consent to transfer
ownership to the buyer
happening of an
event, which may be the full payment of price which
is a suspensive condition, the
which prevents the obligation from arising (Coronel
v. CA, Oct. 7,1996)
CORONEL vs CA (263 S 15 – October 7, 1996)
FACTS:This case has its roots in a complaint for specific performance to compel herein petitioners to consummate the sale of a parcel of land with its improvements located along Roosevelt Ave., QC entered in to by the parties sometime in January 1985 for the price of P1,240,000.00. On January 19, 1985, Coronel, et. al executed a document entitled “Receipt of Down Payment” in favor of plaintiff Ramona Patricia Alcaraz after plaintiff-appellee Concepcion Alcaraz, mother of Ramona, paid the down payment of P50,000.00. However, on February 18, 1985, the Coronels sold the property to intervenor- appellant Catalina Mabanag for P1,580,000.00 after the latter has paid P300,000.00. For this reason, Coronels cancelled and rescinded the contract with Ramona by depositing the down payment paid in the bank in trust for Ramona. On February 22, 1985, Concepcion, et.al filed a complaint for specific performance against the Coronels. RTC-QC rendered judgment favorable to Concepcion and ordered the cancellation of sale to Mabanag. Concepcion’s Motion for Reconsideration was denied; hence an appeal was made to Ca which affirmed RTC’s decision. Hence, this petition where Concepcion contended that the “Receipt of Down Payment” embodied a perfected contract of sale, while Coronels insisted that what the document signified was a mere executory contract to sell, subject to certain suspensive conditions, and because of the absence of Ramona, who left for the USA, said contract could not possibly ripen into a contract of absolute sale.
ISSUE: WON the “Receipt of Down Payment” was a binding contract of sale? (contract of sale vs. contract to sell; contract to sell and conditional contract of sale)
RULING: The document entitled “Receipt of Down Payment” which was offered in evidence by both the parties embodied the binding contract between Ramona and the Coronels, pertaining to a particular house and lot. Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or render some service. Art. 1458. by the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of a contract of sale are the following:
Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; Determinate subject matter; and Price certain in money or its equivalent. Contract to sell may not be considered as a Contract of Sale because the first essential element is lacking. In Contract to Sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of property subject of the contract to sell until the happening of an event, which for present
purposes we shall take as the full payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other words, the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer. A Contract to Sell may thus be defined as a bilateral contract whereby the prospective seller while expressly reserving the ownership of the subject property despite deliver thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is full payment of the purchase price. In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey the title to the prospective buyer by entering into a contract of absolute sale. In conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will definitely affect the seller’s title thereto. In fact, if there had been previous delivery of the subject property, the seller’s ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have nay title to transfer to any third person. Applying Art. 1544 of the CC, such second buyer of the property who may have had actual or constructive knowledge of such defect in the seller’s title, or atleast was charged with the obligation to discover such defect, cannot be a registrant in good faith. Such second buyer cannot defeat the first buyer’s title. In case the title is issued to the second buyer, the first buyer may seek reconveyance of the property subject of the sale. When the “Receipt of Down Payment” is considered in its entirety, it becomes more manifest that there was a clear intent on the part of petitioners to transfer title to the buyer, but since the Transfer Certificate of Title (TCT) was still in the name of petitioner’s father, they could not fully effect such transfer although the buyer was then willing and able to immediately pay the purchase price. The agreement could not have been a contract to sell because the seller herein made no express reservation of ownership or title to the subject parcel of land. What is clearly established by the plain language of the subject document is that when the said “Receipt of Down Payment” was prepared and signed by petitioners Romeo Coronel, et. al, the parties had agreed to a conditional contract of sale, consummation of which is subject only to the successful transfer of the certificate of title from the name of petitioner’s father, Constancio Coronel, to their names. Since the condition contemplated by the parties which is the issuance of a certificate of title in petitioner’s name was fulfilled on February 6,19854, the respective obligations of the parties under the contract of sale became mutually demandable, that is, petitioners, as sellers, were obliged to present the transfer certificate of title already in their names to private respondent Ramona Alcaraz, the buyer, and to immediately execute the Deed of Absolute Sale, while the buyer on her part, was obliged to forthwith pay the balance of the purchase price amounting to P1,190,000.00.
Title passes to the buyer upon delivery of SM
Vendor reserves ownership and will not pass until full payment of price
Non-payment is a negative resolutory condition
Full payment is a positive resolutory condition
Vendor has lost control and can recover only if K is rescinded
Title remains in the vendor and he can eject vendee for non-compliance with suspensive condition
A CONDITIONAL SALE In a conditional sale, the first element of consent is present although it is conditioned on the happening of an event.
There is no consent to transfer ownership in a contract to sell
“Receipt of Downpayment” contains the ff:
downpayment for a lot of Maria Since the lot is under the name of Maria’s father who is deceased, Maria will have the lot transferred under her name
will execute a deed of sale Juan will then pay the balance of P1,119,000
Maria sold the lot to Pedro
Contract to sell or conditional sale?
ANSWER: Conditional sale
Receipt shows that Maria intended to transfer title to Juan if not for the fact that lot was still under the name of Maria’s father
Maria did not reserve title to the lot and agreed to
execute a deed of absolute sale in the name of Juan Juan can sue for specific performance with damages
Compare a conditional sale from an absolute sale
An absolute sale is a contract where the seller has
transferred ownership over a property to the buyer and the latter has given the seller the full consideration for the sale A conditional sale is likewise a contract of sale where the seller agrees to transfer ownership to the buyer, however, subject to the happening of suspensive condition.
SECOND PHASE - PERFECTION
“meeting of the minds” “consent” – offer must be certain and acceptance absolute meeting of offer and acceptance
qualified acceptance is merely a counter-offer which in turn must be absolutely accepted to give rise to a valid and binding contract
If A is selling his property for P 5M and B is willing to pay P 4M for it, there is no meeting of the minds. The counter-offer has to be accepted by the seller before we can say that there is a meeting of the minds
acceptance by letter / telegram – becomes effective
from the time acceptance comes to the knowledge of offeror earnest money – considered part of the price and proof of the perfection of a K
If you sell your laptop for P 60T and buyer will inform you, through e-mail that he will buy it for P60T, there is perfection if you get the acceptance of the buyer. If you did not open your inbox to read the buyer’s acceptance, there is no perfection of the contract of sale.
SECOND PHASE: PERFECTION
Distinct and separate from the purchase price
Presupposes perfected contract of sale
No perfected contract of sale yet
Buyer is bound to pay the balance after the earnest money is paid
Optioner is not required to pay
BAR 2006  Biong and Linda are spouses who own real property.
 Ray prepared a deed of sale and a manager’s check for P2
 After receiving the P2M, Biong signed the deed of sale but Linda was abroad
 When Linda returned, she refused to sign since she changed her mind.
 Linda filed a case to nullify the sale and for damages against Ray
 Will the case prosper?
Linda’s case to annul the sale will not prosper since all the elements of a perfected contract of sale are present.
When the couple’s offer was accepted by Ray and the acceptance was made known to the couple, there was already a perfected contract of sale. Absent any ground to annul, Linda’s action will not prosper
General Rule: no form required
a) statute of frauds (Art 1403 and 1405)
b) sale of realty through agent
(1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted
beyond his powers; (2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum, thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents:
year from the making thereof;
(b) A special promise to answer for the debt, default, or
miscarriage of another;
(c) An agreement made in consideration of marriage, other than a
mutual promise to marry;
(d) An agreement for the sale of goods, chattels or things in
action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action or pay at the time some part of the purchase money; but when a sale is made by auction and entry
is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum;
(e) An agreement of the leasing for a longer period than one year,
or for the sale of real property or of an interest therein;
STATUTE OF FRAUDS 1403(2)
Sale agreement which is not to be performed
within 1 year from making of agreement Agreement for sale of goods, chattels or
movables valued at P500 or more
Sale of real property or any interest therein
THIRD PHASE: CONSUMMATION and PERFORMANCE
Sale by one having voidable title
Preserve the thing (1163)
Deliver the subject matter
Ownership is transferred to the buyer upon actual or constructive delivery (1477)
ownership of SM is acquired by the vendee from the moment it is delivered to him in any of the ways specified in articles 1497-1501 (1496)
ARTICLE 1497. The thing sold shall be understood as delivered,
the control and possession
of the vendee.
(1462a)
ARTICLE 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository where it is stored or kept. (1463a)
possessorium. (n)
Delivered but no transfer of ownership? 1478 – parties may stipulate that ownership shall not pass to the buyer until he has fully paid Types of Delivery
Physical Delivery (1497)
possession and control of the vendee
Constructive delivery- IMMOVABLES
sale through public instrument, execution of instrument = delivery if the contrary does not appear in the deed (1498)
Placing the title of ownership in vendee’s possession with vendor's consent (1501)
Constructive delivery-MOVABLES
keys or depository where it is stored (1498) delivery
consent of the parties if SM cannot be transferred to
buyer at the time of sale or the buyer possession before sale (1499)
whom negotiable document of title
negotiated acquires the
delivery shall be made by the terms of the document
Documents of Title  Bill of lading, dock warrant, quedan, warehouse receipt or any document used in the ordinary course of business in the sale or transfer of goods as proof of possession and control or authorizing or purporting to authorize the possessor of the document to transfer or receive either by endorsement or delivery the goods covered by the document (1636)
(1) "Document of title to goods" includes any bill of lading, dock warrant, "quedan," or warehouse receipt or order for the delivery of goods, or any other document used in the ordinary course of business in the sale or transfer of goods, as proof of the possession or control of the goods, or authorizing or purporting to authorize the possessor of the document to transfer or receive, either by endorsement or by delivery, goods represented by such document. "Goods" includes all chattels personal but not things in action or money of legal tender in the Philippines. The term includes growing fruits or crops. "Order" relating to documents of title means an order by endorsement on the documents. "Quality of goods" includes their state or condition. "Specific goods" means goods identified and agreed upon at the time a contract of sale is made. An antecedent or pre-existing claim, whether for money or not, constitutes "value" where goods or documents of title are taken either in satisfaction thereof or as security therefor. (2) A person is insolvent within the meaning of this Title who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due, whether insolvency proceedings have been commenced or not. (3) Goods are in a "deliverable state" within the meaning of this Title when they are in such a state that the buyer would, under the contract, be bound to take delivery of them. (n)
Documents of Title – Purpose Evidence of control and possession or control of goods described
Medium of transferring possession and control of goods described without having to undertake actual delivery Types of Documents of Title Negotiable – states that goods will be delivered to bearer or to the order of one person
Non-Negotiable- does not state that the goods referred to therein will be delivered to the bearer or the order of any person
ARTICLE 1523. Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer, except in the case provided for in Article 1503, first, second and third paragraphs, or unless a contrary intent appears. Unless otherwise authorized by the buyer, the seller must make such contract with the carrier on behalf of the buyer as may be reasonable, having regard to the nature of the goods and the other circumstances of the case. If the seller omit so to do, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself, or may hold the seller responsible in damages. Unless otherwise agreed, where goods are sent by the seller to the buyer under circumstances in which the seller knows or ought to know that it is usual to insure, the seller must give such notice to the buyer as may enable him to insure them during their transit, and, if the seller fails to do so, the goods shall be deemed to be at his risk during such transit. (n)
(1) Such title to the goods as the person negotiating the document
to him had or had ability to convey to a purchaser in good faith for value and also such title to the goods as the person to whose order the goods were to be delivered by the terms of the document had or had ability to convey to a purchaser in good faith for value; and (2) The direct obligation of the bailee issuing the document to hold possession of the goods for him according to the terms of the document as fully as if such bailee had contracted directly with him.
F.A.S. sales - seller pays all charges and is subject to all
risks until the goods are places alongside the vessel F.O.B. sales - “free on board” seller shall bear all
expenses until the goods are delivered whether at the point of shipment or the point of destination C.I.F. sales - “cost, insurance & freight” price covers cost of goods and freight and insurance costs paid by the seller
Special Modes of Delivery
perfection of the contract the seller held possession of the SM in the concept of an owner and after the contract, he continues to hold SM no longer in the concept of an owner tradition brevi manu - opposite of constitutum; before the contract, the would-be-buyer is already is possession of the SM but not in the concept of an owner and pursuant to the sale, he now holds possession of the SM in the concept of an owner tradition longa manu - delivery merely by agreement such as when the seller points the SM without actually delivering physical possession - e.g. 1499
Pay price of thing sold (1582)
Accept delivery of thing sold (1582-1585)
Pay expenses of delivery
ARTICLE 1582. The vendee is bound to accept delivery and to pay the price of the thing sold at the time and place stipulated in the contract. If the time and place should not have been stipulated, the payment must be made at the time and place of the delivery of the thing sold.
ARTICLE 1583. Unless otherwise agreed, the buyer of goods is not bound to accept delivery thereof by installments. Where there is a contract of sale of goods to be delivered by stated installments, which are to be separately paid for, and the seller makes defective deliveries in respect of one or more instalments, or the buyer neglects or refuses without just cause to take delivery of or pay for one more instalments, it depends in each case on the terms of the contract and the circumstances of the case, whether the breach of contract is so material as to justify the injured party in refusing to proceed further and suing for damages for breach of the entire contract, or whether the breach is severable, giving rise to a claim for compensation but not to a right to treat the whole contract as broken. (n)
ARTICLE 1584. Where goods are delivered to the buyer, which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract if there is no stipulation to the contrary. Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract. Where goods are delivered to a carrier by the seller, in accordance with an order from or agreement with the buyer, upon the terms that the goods shall not be delivered by the carrier to the buyer until he has paid the price, whether such terms are indicated by marking the goods with the words "collect on delivery," or otherwise, the buyer is not entitled to examine the goods before the payment of the price, in the absence of agreement or usage of trade permitting such examination. (n)
2 or more sales must be valid sales
2 or more sales must pertain to exactly the same
subject (possible question sa exam ) 2 buyers must each represent conflicting interests
2 buyers must each have bought from the same seller
if there's no inscription, who in good faith was first in
possession in absence thereof, to the person who presents the oldest title, provided there’s good faith
If not all elements of double sales are present PRINCIPLE:
Prior tempore, Prior Jure [First in time, stronger in right]
(pwede i-theme sa conflicts
haha )
not apply this
elements of double sale are
BAR 2001, 2005 A sold land to B - June 15, 1995
A sold same land to C - June 30, 1995
Who has a better right if:
B’s sale was registered before C’s sale but B
knew the sale to C C’s sale was registered before B’s sale but C
knew the sale to B
B has a better right because he was able to record the sale in good faith since he recorded before the sale to C happened
Even if B recorded the sale knowing of the subsequent sale to C, B is still in good faith since in double sale, what creates bad faith is knowledge of a prior sale, not of a later sale
C since C undertook
registration in bad faith having knowledge of the PRIOR
sale to B (Art. 1544, Civil Code)
ARTICLE 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. (1473)
BAR 2004 A sold a lot to B but the deed of sale was not registered.
One year later, A sold same lot to C and C was able to register the same and obtain a TCT over the lot in his name.
Who has the better right over the lot? Explain the legal basis for your answer.
C will have a better right to the lot provided that he was able to register the lot under his name in good faith.
Under the Civil Code, in case of double sale of real property, the one who was able to register the property in his name in good faith will be deemed the owner
SELLER IS NON-OWNER
STATUS-VOID Article 1505 - goods are sold by a non-owner or does not sell under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had
Status of the contract is void - DBP v. CA, Oct. 16, 1995
Q: What if spouses sell property to different persons? What if each spouse sells property to another set of spouse separately?
(Walay answer
baka related dito ang question
toynk! )
Double Sales – Movables
who has possession in
good faith shall
All elements of double sale must be present
Double Sales – Immovables
recorded in Registry of Property in good faith
ARTICLE 1505. Subject to the provisions of this Title, where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell. Nothing in this Title, however, shall affect:
(1) The provisions of any factors' act, recording laws, or any other provision of law enabling the apparent owner of goods to dispose of them as if he were the true owner thereof; (2) The validity of any contract of sale under statutory power of sale or under the order of a court of competent jurisdiction;
JURISPRUDENCE A takes B’s car without consent A sells it to C who does not know about the theft
C does not acquire good title to the car
B was unlawfully deprived of his car under
Art. 559 C is not an IPV since it is essential that A should have at least a voidable title to the car (Aznar v. Yapdiangco)
AZNAR vs. YAPDIANGCO (13 S 486)
FACTS: Buyer Marella was short of P2,000, so asked Santos to allow her to show the registration of the car on her name. Marella ran off with the registration and sold the car to Aznar. Santos now wants to recover the car from Aznar. Defense of Aznar:
“Article 1506: Where the seller of goods has a voidable title thereto, but his title has not been voided at the time of the sale, the buyer acquired a good title to the goods, provided he buys them in good faith, for value and without notice of the seller’s defect or title.”
HELD: there is unlawful deprivation since
Under Art 1506, it is essential that the seller should have a voidable title at least. It is very inapplicable where, as in this case, the seller had not title at all. Marella did not have any title to the property under litigation because the same was never delivered to him. He sought ownership or acquisition of it by virtue of the contract. Marella could have acquired ownership or title to the subject matter thereof by the delivery or tradition of the car to him. The car in question was never delivered to the vendee by the vendor as to complete or consummate the transfer of ownership by virtue of the contract. It should be recalled that while there was indeed a contract of sale between Santos and Marella, the latter as the vendee, took possession of the subject matter thereof by stealing the same while it was in the custody of the former’s son. (From Atty. Batacan’s Review Notes)
when the owner, by his conduct, is precluded from
denying seller’s authority when the contrary is provided for in recording laws (Torrens System)
when the sale is made under statutory power of sale
when the sale is made in a merchant’s store (Sun Bros. V. Velasco, 54 OG 5143)
For one to be considered an innocent purchaser for value (IPV), the seller should have a voidable title.
ESTOPPEL (1434) when a non-owner sells a thing and delivers it Later on, he becomes the owner Title passes to the buyer or grantee by operation of law
The taxi driver did not acquire good title to the lot because he forged the signature of the real owner.
Since the vendor was a non-owner, A did not acquire ownership or good title to the lot despite his registration. He acquires no better title than the non-owner who sold the lot to him. None of the exceptions is availing.
ELEMENTS (1506)
-Seller has a voidable title
-Title has not been avoided at the
-The buyer acquires a good title to the goods, provided he buys them
in good faith for value and without notice of seller’s defect of
What does “time of the sale” mean?
subject matter since it is the fact of DELIVERY which
SCENARIO 1 A and B already agreed on a sale A has voidable title, B does not know about it A’s title is annulled after perfection but BEFORE delivery = B does not obtain good title over the thing
SCENARIO 2 A and B already agreed on a sale
A has voidable title, B does not know about it
delivery B obtains good title over the thing as long as he is an innocent purchaser for value
One who buys property of another,
pays a full and fair price for the same
at the time of such purchase, or before
notice of the claim or interest of some other person in the property
A sold his car to B, B issued a check
C bought the car from B, in good faith and for value
C acquires good title to the car
A can only rescind but sale must be set aside by the court first before A can recover title
(Tagatac v. Jimenez)
What is the status of a sale by a non-owner?
TCT is left inside a taxi
Taxi driver gets it and drafts a deed of sale where the lot is sold to him.
Driver forges the signature of the owner and was able to register the lot in his name.
Driver sells it to A who is a buyer in good faith and for value who was also able to register the lot in his name.
Did driver get good title to the lot? Explain
Discuss the rights of A over the lot, if any.
TAGACTAC VS. JIMENEZ
FACTS: Tagactac sold the car to Feist, who sold it to Sanchez, who sold it to Jimenez. Feist failed to pay, so Tagactac wants to recover the
vehicle from Jimenez on the ground that she had been unlawfully deprived of it by reason of Feist’s deception.
HELD: no unlawful deprivation since there was delivery The point of inquiry is whether plaintiff-appellant Trinidad C. Tagactac has been unlawfully deprived of her car. At first blush, it would seem that she was unlawfully deprived thereof, considering that she was induced to part with it by reason of the chicanery practiced on her by Feist. Certainly, swindling, like robber is an illegal method of deprivation of property. In a manner of speaking, plaintiff-appellant was "illegally deprived' of her car, for the way by which Feist induced her to part with it is illegal and punishable by law. But does this “unlawful deprivation” come within the scope of Article 559 of the New Civil Code? The fraud and deceit practiced by Feist earmarks this sale as a voidable contract (Art 1390). Being a voidable contract, it is susceptible
of either ratification or annulment. If the contract is ratified, the action to annul it is extinguished (Art 1392) and the contract is cleansed from all its defects (Article 1396, NCC); if the contract is annulled, the contracting parties are restored to their respective situations before the contract and mutual restitution follows as a consequence (Art 1398). However, as long as no action is taken by the party entitled, either that of annulment or of ratification, the contract of sale remains valid and binding. When plaintiff-appellant Tagactac delivered the car to Feist by virtue of said voidable contract of sale, the title to the car passed to Feist. Of course, the title that Feist acquired was defective and voidable. Nevertheless, at the time he sold the car to Felix his title was avoided and he therefore conferred good title on the latter, provided he bought the car in good faith, for value and without notice of the defect in Feist’s title (Art 1506).
A sold car to B
B paid by using a falsified check
B registered the sale with LTO
B sold the car to C who knew nothing about the check
A can recover from C only when the court annuls the sale between B and C
case, B had a voidable title which was not yet
annulled at the time C purchased the car. C acquired the car for value, in good faith and without notice as to defect in B's title. Hence, C has good title to the car and A can only recover the car by reimbursing C the purchase price the latter paid.
A bought condominium from developer
A was not given CTC
developer mortgaged condominium to bank and mortgage was foreclosed, valid auction sale?
NO. Bank is not an IPV, a financial institution is unlike a normal buyer since SOP requires a bank to look beyond the title and investigate
Remember Credit Transactions: Mortgagor must be the owner
That they be constituted to secure the fulfillment of a principal
That the pledgor or mortgagor be the absolute owner of the
thing pledged or mortgaged; (3) That the persons constituting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose. Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property.
LOSS, DETERIORATION, FRUITS AND OTHER BENEFITS
CONSUMMATION BUYER
Remember: res perit domino (owner bears the loss)
PART FIVE: REMEDIES IN CASE OF BREACH
Breach by Seller:
-- Seller has
-- Non-
Accept goods Accept goods Don’t
plus damages accept plus refuse to
in possession payment of
To know that seller committed breach, know first the obligations of the seller (see previous discussion)
Recoupment – means to get everything back, restored to the place where you were before the contract
Arrow (mutally exclusive) means that you cannot do everything. You must choose your option.
BAR 2006 Spouses Biong and Linda are selling their house. Linda negotiated with Ray and they agreed on a fair price of P2 M Ray confirmed his intention of buying the house through a letter. Ray prepared a deed of sale and a manager’s check for P2 M. After receiving the P2M, Biong signed the deed of sale but Linda was abroad When Linda returned, she refused to sign since she changed her mind. Does Ray have any cause of action against Biong and Linda? Can he recover damages?
ANSWER Ray can file a case for specific performance or rescission with a claim for damages in each case considering that Linda committed a breach of a perfected contract of sale.
Be able to distinguish guaranty from warranty
Movable is
Delivery is accepted but no price is paid
Title is passed but price is not paid
Sue for price plus damages
of sale before delivery
Concept: Unpaid Seller whole of the price has not been paid or tendered negotiable document of title was received as conditional payment and condition was broken
Special Remedies Possessory Lien Stoppage in transitu Special right of resale Special right to rescind
Special Rights 3&4 (resale and rescind) can only be used when Right 1 or 2 has been exercised
As special rights, you must first choose either possessory lien or stoppage in transitu before you can choose between resale or rescind.
Possessory Lien (1526) ownership has been transferred to the buyer Seller is still unpaid
seller may retain goods for the price while still
in possession of the goods Can only be exercised when goods were sold without any stipulation as to
goods were sold on credit but term of credit
has expired OR buyer becomes insolvent
(1) A lien on the goods or right to retain them for the price while he is in possession of them; (2) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession of them; (3) A right of resale as limited by this Title; (4) A right to rescind the sale as likewise limited by this Title. Where the ownership in the goods has not passed to the buyer, the unpaid seller has, in addition to his other remedies a right of withholding delivery similar to and coextensive with his rights of lien and stoppage in transitu where the ownership has passed to the buyer.
Stoppage in Transitu (1526, 1530)
Seller no longer has possession of thing
Seller can stop
possession at any time while goods are in transit
Seller enjoys
possession with thing
Goods are deemed in transit
Period between delivery to the carrier for
transmission to the buyer until buyer claims them from the carrier Goods are rejected by the buyer and carrier continues to have possession even if the seller
refuses to take goods back
ARTICLE 1530. Subject to the provisions of this Title, when the buyer of goods is or becomes insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in
transitu, that is to say, he may resume possession of the goods at any time while they are in transit, and he will then become entitled to the same rights in regard to the goods as he would have had if he had never parted with the possession. (n)
Status of Sale Made by Buyer while in transitu If buyer sells thing without consent of seller while in
transitu, the seller's right of stoppage in transitu IS NOT AFFECTED (1535)  Right of stoppage DOES NOT defeat title of an innocent purchaser for value who is issued a negotiable
document of title (1535)
ARTICLE 1535. Subject to the provisions of this Title, the unpaid seller's right of lien or stoppage in transitu is not affected by any sale, or other disposition of the goods which the buyer may have made, unless the seller has assented thereto. If, however, a negotiable document of title has been issued for goods, no seller's lien or right of stoppage in transitu shall defeat the right of any purchaser for value in good faith to whom such document has been negotiated, whether such negotiation be prior or subsequent to the notification to the carrier, or other bailee who issued such document, of the seller's claim to a lien or right of stoppage in transitu. (n)
Special right to Resell Goods
Available only after exercise of either possessory lien
or stoppage in transitu Can be exercised when:
goods are perishable in nature
seller expressly reserves the right to resell in case of buyer’s default
unreasonable period of time
Special Right to Rescind – 1526, 1534
After exercise of possessory lien or stoppage
May hold buyer liable for damages
ARTICLE 1534. An unpaid seller having the right of lien or having stopped the goods in transitu, may rescind the transfer of title and resume the ownership in the goods, where he expressly reserved the right to do so in case the buyer should make default, or where the buyer has been in default in the payment of the price for an unreasonable time. The seller shall not thereafter be liable to the buyer upon the contract of sale, but may recover from the buyer damages for any loss occasioned by the breach of the contract. The transfer of title shall not be held to have been rescinded by an unpaid seller until he has manifested by notice to the buyer or by some other overt act an intention to rescind. It is not necessary that such overt act should be communicated to the buyer, but the giving or failure to give notice to the buyer of the intention to rescind shall be relevant in any issue involving the question whether the buyer had been in default for an unreasonable time before the right of rescission was asserted. (n)
Rescission of Sale of Immovable • 1592 - in the sale of immovables, even if it was stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period FOR AS LONG AS NO DEMAND FOR RESCISSION OF THE CONTRACT HAS BEEN MADE UPON HIM EITHER JUDICIALLY OR BY A NOTARIAL ACT
BAR 2003 X and Y agreed to a sale of land payment and delivery will be on February 1, 2002 CLAUSE: if no payment is done on February 1, 2002, the sale is AUTOMATICALLY RESCINDED Y did not pay on February 1, 2002 but offered to pay 3 days later Is the contract RESCINDED?
ANSWER  No. Under Article 1592, when an immovable is sold and there is a stipulation that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period FOR AS LONG AS NO DEMAND FOR RESCISSION OF THE CONTRACT HAS BEEN MADE UPON HIM EITHER JUDICIALLY OR BY A NOTARIAL ACT
RECTO LAW – 1484
Options when seller discontinues instalments
exact fulfillment of the obligation
pay TWO OR
➢ foreclose the chattel mortgage if the buyer fails to pay TWO OR MORE installments (without right to sue for unpaid balance)
Recto Law: Sale of Movables on Installments Remedies under 1484 are alternative and not cumulative. This is based on the principle that no one should enrich himself at the expense of another.
already enforced the
collecting the amount due, he can no longer rescind or cancel the
same. He cannot also foreclose the mortgage over the SM. For the exercise of one in full forecloses the right to exercise remedies (Nonato v. CA, Nov. 22, 1985)
Recto Law: Sale of Movables on Installments If the seller forecloses the chattel mortgage, it can no longer sue for deficiency/balance of purchase price
If the seller choses specific performance in a replevin suit for damages, seller is still entitled to alias writ of execution for unsatisfied balance (Industrial v. Ramirez)
Recall: In chattel mortgage, the general rule is that there is right to the balance and to the excess. The exception is the Recto law
Take note: Options are mutually exclusive
MACEDA LAW – RA 6552
financing of real estate on installment payments
residential condominium apartments
When the buyer defaults
Less than 2 annual
Grace period of 60 days
If no payment within grace period, sale will be cancelled within 30 days from receipt of notice of cancellation
Grace period: 1 month for every year of installment made
PLUS 5% for every year in excess of 5 years BUT
Grace period: used once every 5 years
NOT MORE THAN 90% of installments made
Installments include
Cash Surrender Value 4 years of installments at P100,000 per year = 50% of
P400,000 = P200,000 6 years of installments at P100,000 a year = 50% of P600,000 = P300,000 + 5% (P600,000) = P330,000
When developer commits breach of contract: PD 957 Buyer desists from paying further installments because Owner or developer fails to develop the subdivision or condominium according to approved plans and within the time limit • Buyer is entitled to reimbursement of all installments made
BAR 2005 A bought a residential subdivision lot A paid installments for 48 months Developer failed to develop the subdivision according to approved plans and specifications within the time frame. A wrote the developer that he will stop payment. Developer cancelled the sale and informed A that his payments are forfeited. Was the action of the developer proper? Discuss the rights of A under the circumstances.
• Supposing developer developed the subdivision but A after paying 48 months of installments stopped paying, discuss the rights and obligations of the parties.
NO. the action of the developer is wrong. Under PD 957, a buyer of a subdivision lot may desist from paying further installments when the developer fails to develop the subdivision according to the approved plans and within the period agreed on. The buyer may get all the installments he made and these are NOT deemed forfeited. Assuming the developer develops the subdivision but A refuses to pay after 48 monthly installments, he shall be entitled to pay without interest his installments in arrears within a grace period of 4 months or 1 month for every annual installment. • If he fails to pay within the grace period, he is entitled to be reimbursed 50% of his payments since he has made at least 2 annual installments.
PART SEVEN : EXTINGUISHMENT OF SALE
loss of SM
confusion/merger of rts of creditor & debtor
conventional/legal redemption (additional)
Recall: Pacto de Retro (sale with right to repurchase) – seller has right to redeem
Among Co-Owners (1620) If a co-owner sells his share to a third person
A co-owner may redeem from the third person
Rule in case of redemption by two or more co-owners:
Redemption shall be in proportion to the share they may have in the thing owned in common
ARTICLE 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common. (1522a)
BAR 2001, 2002 When can a co-owner legally redeem property?
Among Adjoining Owners Rural Land – area should not exceed 1 hectare unless grantee does not own rural land Urban Land – small urban land is situated that a major portion cannot be used for any practical purpose within a reasonable period
Sale of Credit in Litigation (1634) Creditor assigns his right to credit to a third person
Debtor may extinguish the credit by reimbursing the
assignee for the price he paid for the credit Debtor may reimburse within 30 days from time assignee demands payment from him
ARTICLE 1634. When a credit or other incorporeal right in litigation is sold, the debtor shall have a right to extinguish it by reimbursing the assignee for the price the latter paid therefore, the judicial costs incurred by him, and the interest on the price from the day on which the same was paid. A credit or other incorporeal right shall be considered in litigation from the time the complaint concerning the same is answered. The debtor may exercise his right within thirty days from the date the assignee demands payment from him. (1535)
A borrows P 1M from B.
B sues A to get P 1M plus interest.
B cannot wait and sells his right to C to get the P 1M for P 700,000.
paying P1M,
instead pay C
Take note: “assignment” in sales is different.
Right to redeem must already be incorporated in the contract of sale It must reduced in public instrument (Statute of Frauds)
Can you redeem if there is no period provided?
Yes, the law will automatically set it at 4 years
Among Co-Heirs (1088) An heir sells his hereditary rights to a stranger before
partition Any or all co-heirs may be subrogated to buyer's
rights by reimbursing him for the price Co-heirs must redeem within 1 month from time they were notified in writing of the sale
ARTICLE 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may be subrogated to the rights of purchaser by reimbursing him for th price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale by the vendor.
(1067a)
Right to redeem shall not be exercised except within 30
days from notice in writing by prospective seller or seller Deed of sale shall not be recorded in Registry of Property unless with seller's affidavit that he has sent written notices to all possible redemptioners (1623)
ARTICLE 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners. The right of redemption of co-owners excludes that of adjoining owners.
Seller is obligated to co-owner, adjoining owner, debtor, co-heir to said a written notice if he sells to a stranger. This is not strictly followed but it is nonetheless the law.
If you were not informed, you can file an action for breach of this provision. Redemption = repurchase
PARTY EIGHT – BULK SALE LAW
This is still good law – a favorite of Bar Examiners.
Transactions Covered Sale, transfer, mortgage or assignments of:
(a) all or substantially all stock of goods, wares, merchandise,
provisions or materials otherwise than in the ordinary course of trade
(b) all or substantially all of the business or trade thereto
conducted by the seller, mortgage, transferor or assignor and
(c) all or substantially all, of the fixtures and equipment used
in & about the business of the seller, mortgagor, transferor or assignor
Imprisonment = not less than 6 mos. OR Fine = not exceeding P5,000.00 OR both
BAR 2007 Seeking to streamline its operations and to bail out its losing ventures, the stockholders of X Corporation unanimously adopted a proposal to sell substantially all of the machineries and equipment used in and out its manufacturing business and to sink the proceeds of the sale for the expansion of its cargo transport services. • Would the transaction be covered by the provisions of the Bulk Sales Law?
ANSWER • Yes, the proposed sale is covered by the Bulk Sales Law. The sale involves all or substantially all, of the fixtures and equipment used in & about the business of the seller. Hence, X Corp must deliver a sworn statement of listing of creditors, make a pro-rata application of proceeds and a written advance disclosure to creditors
That is still the duty of the corporation despite the fact that there is no mention of creditors.
RA 8762 – RETAIL TRADE LIBERALIZATION ACT OF 2000
Retail Trade means any act, occupation or calling of habitually selling direct to the general public merchandise, commodities or good for consumption.
Q: Are sales of cars included? A: Not included because it is not for consumption (Ma’am asked Atty. Duremdes and this was his answer)
merchandise for consumption, commodities for consumption or good for consumption.
The restriction of this following::
(a) Sales by a manufacturer, processor, laborer, or worker, to the general public the products manufactured, processed or produced by him if his capital does not exceed P
(b) Sales by a farmer or agriculturist selling
the products of his farm; (c) Sales in restaurant operations by a hotel
owner or inn-keeper irrespective of the amount of capital: Provided, That the restaurant is incidental to the hotel business: and (d) Sales which are limited only to products manufactured, processed or assembled by a manufacturer through a single outlet, irrespective of capitalization.
“High-end or luxury goods” shall refer to goods which are not necessary for life maintenance and whose demand is generated in large part by the higher income groups. Luxury goods shall include, but are not limited to, products such as: jewelry, branded or designer clothing and footwear, wearing apparel, leisure and sporting goods, electronics and other personal effects
Treatment of Natural-Born Citizens Natural-born citizen of the Philippines who has lost his Philippine citizenship but who resides in the Philippines shall be granted the same rights as Filipino citizens for purposes of this Act.
< US$2.5 M
US$2.5M-
<US$7.5M
US$7.5 M or
US$830,
US$250,000 or
Maintenance of Capital Foreign investor must maintain the full amount of the prescribed minimum capital UNLESS foreign investor has notified the SEC and the DTI of its intention to repatriate its capital and cease operations in the Philippines. Failure to maintain the full amount of the prescribed minimum capital prior to notification of SEC and the DTI = penalties or restrictions on any future trading activities/business in the Philippines. Foreign retail stores shall secure a certification from the Bangko Sentral ng Pilipinas and the DTI, which will verify or confirm inward remittance of the minimum required capital investment.
Qualifications of Foreign Retailers (a) A minimum of US$200 Million net worth in its parent
corporation for Categories B and C, and US$50 Million net worth in its parent corporation for Category D; (b) Five retailing branches or franchises in operation
anywhere around the world unless such retailer has at least one store capitalized at a minimum of US$25 Million; (c) Five (5)-year track record in retailing; and
(d) Only nationals from, or juridical entities formed or incorporated in countries which allow the entry of Filipino retailers shall be allowed to engage in retail trade in the Philippines. (based on the principle of reciprocity)
These qualifications are cumulative.
Promotion of Locally-Manufactured Products
For 10 years after the effectivity of this Act, at least 30% of the aggregate cost of the stock inventory of foreign retailers falling under Categories B and C and 10% for Category D shall be made in the Philippines. • Qualified foreign retailers shall not be allowed to engage in certain retailing activities outside their accredited stores through the use of mobile or rolling stores or carts, the use of sales representatives, door-to-door selling, restaurants and sari-sari stores and such other similar retailing activities: Provided, That a detailed list of prohibited activities shall hereafter be formulated by the DTI.
Imprisonment of not less than 6 years and 1 day but
not more than 8 years, and a fine of not less than P1 Million but not more than 20 Million . In the case of associations, partnerships or
corporations – penalty imposed on partners, president, directors, manager and other officers responsible for the violation. Foreign offender - deported immediately after service
of sentence. Filipino public officer offender- penalty plus dismissal and permanent disqualification from public office.
Keep smiling - it makes people wonder what you've been up to. -- Author Unknown 
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