Sales San Beda 2005

8/11/2019 Sales San Beda 2005

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San Beda College of Law113

MEMORYAIDINCIVILLAW

SALES

SALE

A nominate contract whereby one ofthe contracting parties obligateshimself to transfer the ownership ofand to deliver a determinate thingand the other to pay therefor a pricecertain in money or its equivalent.

NOTES: Delivery and payment in acontract of sale are so interrelated andintertwined with each other that withoutdelivery of the goods there is nocorresponding obligation to pay. Thetwo complement each other. It is clear

that the two elements cannot bedissociated, for the contract of purchaseand sale is essentially a bilateralcontract, as it gives rise to reciprocalobligations. (Pio Barretto Sons, Inc. vs.Compania Maritima, 62 SCRA 167).

Neither is the delivery of the thing

bought nor the payment of the pricenecessary for the perfection of thecontract of sale. Being consensual,it is perfected by mere consent.

Elements:a. ssential elements ! those without

which, there can be no valid sale"1. #onsent or meeting of minds2. A Determinable sub$ect matter3. %rice certain in money or its

equivalentb. Natural elements ! inherent in the

contract, and which in the absenceof any contrary provision, aredeemed to e&ist in the contract"1. 'arranty against eviction2. 'arranty against hidden defects

c. Accidental elements ! may bepresent or absent depending on thestipulation of the parties (e.g.:conitions, interest, pena!t", timeor p!ace o# pa"ment, etc.)

Characteristics:

1. %rincipal2. #onsensual(3. Bilateral(4. Nominate(

5. #ommutative( In some cases,

aleatory )emptio spei*(6. +nerous.

Aleatory contract" one of the parties orboth reciprocally bind themselves to giveor to do something in consideration ofwhat the other shall give or do upon thehappening of an event which isuncertain, or which is to occur at anindeterminate time. ($%: Sa!e o# s&eepsta'es tic'et)

Contract to sell

e&clusive right and privilege topurchase an ob$ect.

a bilateral contract whereby the

prospective seller, while e&presslyreserving the ownership of thesub$ect property despite deliverythereof to the prospective buyerbinds himself to sell the saidproperty e&clusively to theprospective buyer upon fulfilment ofthe condition agreed upon, that is,full payment of the purchase price.

NOTE: Absent a proviso in the contractthat the title to the property is reservedin the vendor until full payment of thepurchase price or a stipulation giving thevendor the right to unilaterally rescindthe contract the moment the vendeefails to pay within the fi&ed period, thetransaction is an absolute contract ofsale and not a contract to sell. (ignosvs. CA 1*++) The contract of sale by itself is not amode of acquiring ownership. The

contact transfers no real rights( itmerely causes certain obligations toarise.

Contract ofSale

Contract toSell

-. Title passes to t-e/"er upon deliveryof the thing sold

-. +wnership isreserved in theseller and is not topass until fullpayment of thepurchase price

. Non/payment of . 0ull payment is a

CIVILLAWCOMMITTEECHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP : Alnaia Ha!!iman, Doro"#y $ayon S%BJECT HEADS: C#ri!"oer Rey 'ara!i(an )Per!on! and *amily Rela"ion!+, Aleandro Ca!a-ar)Pro&er"y+, 'a.

R#odora*errer)ill! and Succe!!ion+, Ian Dominic Pua)O-li(a"ion! and Con"rac"!+, S#a Elia# Dumama)Sale! and /ea!e+,Jo#n S"een0uiam-ao)PAT+, C#ri!"oer Ca-i(ao)Credi" Tran!ac"ion!+, /i(aya Ali&ao)Tor"! and Dama(e!+, An"#onyPur(anan)/TD+,'a. Rica!ion Tu(adi )Con1ic"! o2 /a3+


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114 2005CENTRALIZEDBAROPERATIONS

the price is anegative resolutorycondition and theremedy of the selleris to e&act fulfilmentor to rescind thecontract

positive suspensivecondition, thefailure of which isnot a breach !casual or serious

but simplyprevents theobligation of thevendor to conveytitle from havingbinding force

1. 2endor loses andcannot recoverownership of thething sold anddelivered until thecontract of sale isresolved and setaside

1. Title remains inthe vendor if thevendee does notcomply with thecondition

preceent ofma3ing payment atthe time specified

in the contract

Conditional Sale Contract toSell

As to reservation of title to the subjectproperty

In both cases the seller may reserve thetitle to the sub$ect property untilfulfillment of the suspensive condition i.e.full payment of the price

As to effect of fulfillment of suspensivecondition

-. 4pon fulfillment of

the suspensivecondition, thecontract of sale isthereby perfected,such that if there hadbeen previous deliveryof the sub$ectproperty to the buyer,ownership theretoautomaticallytransfers to thebuyer by operationof law without anyfurther act by the

seller.

-. 4pon

fulfillment of thesuspensivecondition, whichis the fullpayment of thepurchase price,ownership willnotautomaticallytransfer to thebuyer althoughthe property mayhave beenpreviously

delivered to him.The prospectiveseller still hasto convey titleto the

prospectivebuyer byentering into acontract ofabsolute sale.

As to effect of sale of the subjectproperty to 3rdpersons

-. #onstructive5actual 3nowledge onthe part of the nd

buyer of the defect inthe seller6s title

renders him not aregistrant in goodfaith. 7uch secondbuyer cannot defeatthe first buyer6s title.Ratio" 0ulfilment ofthe suspensiveconditions affects theseller6s title to theproperty and previousdelivery of thepropertyautomaticallytransfers

ownership5title to thebuyer.

-. Third personbuying theproperty despitefulfilment of thesuspensive

condition cannotbe deemed abuyer in badfaith andprospectivebuyer cannotsee3 the relief ofreconveyance ofproperty.Exception: IfThere was noprevious sale ofthe property.

OBJECTS OF SALEReqisites:-. T8IN97"

a* determinate or determinable)Arts. -:;*b* lawful )Arts -1:?, -:>@ -,:c* should not be impossible )Art.-1:


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MEMORYAIDINCIVILLAW

NOTE: In case of doubt the presumptionis in favor of emptio rei speratae whichis more in 3eeping with the commutativecharacter of the contract

!oods "hich ma# $e O$%ect of Salea. &isting goods ! goods owned or

possessed by the seller.b. 0uture goods ! goods to be

manufactured, raised or acquired bythe seller after the perfection of thecontract.

NOTES:

A sale of future goods is valid only as

an e&ecutory contract to be fulfilledby the acquisition and delivery ofgoods specified.

'hile there can be sale of future

property, there can generally be nodonation of future property )Artic!e701 Civi! Coe*

0uture inheritance cannot be sold.

A contract of sale or purchase of

goods to be delivered at a futuretime, if entered into without theintention of having any goods passfrom one party to another, but withan understanding that at theappointed time, the purchaser is

merely to receive or pay thedifference between the contract andthe mar3et prices, is illegal. 7uchcontract falls under the definition offuturesE in which the partiesmerely gamble on the rise or fall inprices and is declared null and voidby law. )Art. >-


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Rles to determine if the contract isone of Sale or *iece of "or,:

a. If ordered in the ordinary course ofbusiness ! sale

b. If manufactured specially for thecustomer and upon his special order,and not for the mar3et ! piece ofwork

SCHOOLS OF HO!"H#a* Fassachusetts rule" If

specifically done at the order ofanother, this is a contract for apiece of wor3. )%hilippineapplication*

b* New Gor3 rule" If thing alreadye&ists/7AH( if not/'+C

c* nglish rule" If material is morevaluable/7AH( if s3ill is morevaluable/'+C

BARTER

contract whereby one of the parties

binds himself to give one thing inconsideration of the otherJs promiseto give another thing.

NOTE: The only point difference

between contract of sale and barter is inthe element which is present in sale butnot in barter, namely" price certain inmone" or its e3/iva!ent

NOTE: If the consideration is partly inmone" and partly in anot-er t-ing,determine"

a. The manifest intention of theparties

b. If the intent is not clear, applythe following rules"1. If the thing is more valuable

than money ! barter2. If the money and the thing

are of equal value ! sale3. If the thing is less valuable

than money ! sale

Sale -ation in *a#ment-. No pre/e&isting

credit-. %re/e&isting credit

. +bligations arecreated

. +bligations aree&tinguished

1. #onsideration onthe part of the seller

1. #onsideration ofthe debtor is the

is the price( on thepart of the buyer isthe acquisition ofthe ob$ect

e&tinguishment ofthe debt( on the partof the creditor, it isthe acquisition ofthe ob$ect offered inlieu of the originalcredit

4. 9reater freedomin determiningthe price

:. Hess 0reedom indetermining theprice

5. Buyer still has topay the price

;. The payment isreceived by thedebtor beforethe contract isperfected.

*R&CE

The sum stipulated as the equivalentof the thing sold and also everyincident ta3en into consideration forthe fi&ing of the price, put to thedebit of the vendee and agreed to byhim.

Reqisites:

1. #ertainty or ascertainable at thetime of perfection

2. Ceal, not fictitious3. In some cases, must not be

grossly inferior to the value ofthe thing sold.4. %aid in money or its equivalent

Certaint#

It is not necessary that the certainty

of the price be actual or determinedat the time of the e&ecution of thecontract. The price is certain in thefollowing cases"-. If the parties have fi&ed or

agreed upon a definite amount(NOTE: The fi&ing of the price can

never be left to the discretion of oneof the contracting parties. 8oweverif the price fi&ed by one of theparties is accepted by the other, thesale is perfected.. If it be certain with reference to

another thing certain1. If the determination of the price

is left to the $udgment of aspecified person or persons evenbefore such determination

:. In the cases provided under Art.-:? N##

200 CENTRALI!EDBARO"ERATIONSE#EC$TIVECOMMITTEEANDS$B%ECTC&AIR"ERSONS

Ma'()el A*a'en+o, )O4er5all C#air&er!on+, Ronald %al-an.a' )O4er5all Vice C#air+, YolandaTolen+(no)VC5Acad!+, Jenn(fe' Ang)VC5 Secre"aria"+,%o/ Ind)+(o)VC5*inance+, Ela(ne Ma,a+ )VC5EDP+, Anna Ma'ga'(+a E'e,)VC5/o(i!"ic!+.%ona+an

Mangnda/ao )Poli"ical /a3+, 'an)(, Bened()+ Reo++a' )/a-or /a3+, Ro-ald "ad(lla )Ci4il /a3+,Ca'-a(ne To''e, )Ta6a"ion /a3+, Ma' Da(d Ma'+(ne. )Criminal /a3+, 5a'n/ L(,a Aleg'e )Commercial/a3+,%(n/ Ann $/)Remedial /a3+,%a)(e Lo Ba+(,+a)/e(al E"#ic!+


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MEMORYAIDINCIVILLAW

Effect "hen the price is fixed $# the

third person desi(nated:4$5$RA R$:%rice fi&ed by a thirdperson designated by the parties isbinding upon them.$8C$P9I5S:

-. 'hen the third person acts inbad faith or by mista3e

. 'hen the third person disregardsthe specific instructions or theprocedure mar3ed out by theparties

Effect "hen the price is not fixed $#

the third person desi(nated:-. If the third person refuses or

cannot fi& the price, thecontract shall becomeineffective, unless the partiessubsequently agree upon theprice

. If the third person is preventedfrom fi&ing the price by the faultof the seller or buyer, the partynot in fault may obtain redressagainst the party in fault

Effect of !ross &nadeqac# of *rice:./ 0olntar# sales4$5$RA R$: Fere inadequacy ofthe price does not affect validity of thesale.

A valuable consideration, however

small or nominal, if given orstipulated in good faith is, in theabsence of fraud, sufficient.(Rorig/e vs. CA, 2;7 SCRA 00


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NOTE: 7ale is a consensual contract(8ence, delivery and payment are notessential for its perfection$8C$P9I5: 'hen the sale is sub$ect

to a suspensive condition by virtue oflaw or stipulation. The terms and conditions of paymentare merely accidental, not essentialelements of the contract of sale e&ceptwhere the partied themselves stipulatethat in addition to the sub$ect/matterand the price, they are essential ormaterial to the contract.

Reqirements for perfectiona$ %hen parties are face to face 'hen an offer is accepted without

conditions or qualificationsNOTES:

A conditional acceptance is a

counter/offer

when negotiated thru phone it is

as if it is negotiated face to faceb$ %hen contract is thru

correspondence or thru tele&ram 'hen the offeror receives or has

3nowledge of the acceptance by theoffereeNOTE: If the buyer has already

accepted but the seller does not3now yet of the acceptance, theseller may still withdraw

c$ %hen a sale is subject to asuspensive condition

0rom the moment the condition isfulfilled

TRANSFER OF O+NERS3&*4$5$RA R$: 'hile a contract ofsale is consensual, ownership of thething sold is acquired only upon itsdelivery, actual or constructive, to the

buyer. (a/s vs. Sps. e eon, 16 >/ne2;;a!&inor Man/#act/rers,Inc. *< SCRA 2;)

Nonpayment only creates a right

to demand payment or to rescindthe contract, or to criminalprosecution in the case of

bouncing chec3s. ($CAP/!is-ing an istri/tingCorp. vs. Santos, 1+ SCRA 61)

$8C$P9I5S:

1. Contrar" stip/!ation or 'actumreservati dominii )contractualreservation of title* ! a stipulation,usually in sales by installment,whereby, despite delivery of theproperty sold, ownership remainswith the seller until full payment ofthe price is made.

2. Contract to se!!


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MEMORYAIDINCIVILLAW

does not bind the promissor even if

accepted and may be withdrawnanytime.

NOTE: %ending notice of its withdrawal,

the accepted promise parta3es thenature of an offer to sell which ifaccepted, results in a perfected contractof sale )Sanc-e vs. Rigos 0 SCRA< 6+*.In other words, if the acceptance ismade before withdrawal, it constitutes abinding contract of sale although theoption is given without consideration.

if the promise is supported by a

consideration istinct an separatefrom the price )option money*, itsacceptance will give rise to aperfected contract.

2. Bilateral promise to $# and sell

+ne party accepts the other6s

promise to buy and the latter, theformer6s promise to sell adeterminate thing for a price certain

it is reciprocally demandable

It requires no consideration distinct

from the selling priceNOTE" this is as good as a perfectedsale. No title of dominion istransferred as yet, the parties beinggiven only the right to demandfulfillment or damages.

'olicitation

An unaccepted unilateral promise to

buy or sell. ven if accepted by theother party, it does not bind thepromissor and maybe withdrawnanytime. This is a mere offer, andhas not yet been converted into acontract.

Option contract A contract granting a privilege in one

person, for which he has paid aconsideration, which gives him theright to buy certain merchandise, atanytime within the agreed period, ata fi&ed price.

An option without consideration is

void and the effect is the same as ifthere was no option

? 8owever, in Sanc-e vs. Rigos (1*72*,even though the option was not

supported by a consideration, themoment it was accepted, a perfectedcontract of sale resulted, applying Art.-1: of the N##. In view of the ruling of

the 7upreme #ourt, the only importanceof the consideration for an option is thatthe option cannot be withdrawn by thegrantor after acceptance. In an option to buy, the party who hasan option may validly and effectivelye&ercise his right by merely notifying theowner of the former6s decision to buyand e&pressing his readiness to pay thestipulated price.

Ri(ht of First Refsal

It is a right of first priority all things

and conditions being equal( thereshould be identity of the terms andconditions to be offered to theoptionee and all other prospectivebuyers, with optionee to en$oy theright of first priority. A deed of salee&ecuted in favor of a third partywho cannot be deemed a purchaserin good faith, and which is inviolation of the of the right of firstrefusal granted to the optionee isN+T voidable under the 7tatute of0rauds, such contract is valid B4Trescissible under Article -1 to-1


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the sub$ect property. It was acomponent of the consideration ofthe lease. The option was by nomeans an independent right which

can be e&ercised by the lessee. Ifthe lessee is barred by the contractfrom assigning her right to lease thesub$ect property to any other party,the lessee is similarly barred toassign her first option to buy theleased property to another.)Banga"an et.a! vs. CA an im 4R5o.12


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MEMORYAIDINCIVILLAW

remaining part, paying itsproportionate price

Sale $# description

A sale where a seller sells things asbeing of a certain 3ind, buyer merelyrelying on the seller6srepresentations or descriptions.

There is warranty that the thing sold

corresponds to the representationsor descriptions.

Sale $# sample

A sale where a small quantity of a

commodity is e&hibited by the selleras a fair specimen of the bul3, which

is not present and as to which thereis no opportunity to inspect ore&amine.NOTE: The mere e&hibition of thesample does not necessarily ma3e ita sale by sample. This e&hibitionmust have been the sole basis orinducement of the sale.

There is warranty that the bul3 of

the commodity will correspond in3ind, quality, and character with thesample e&hibited.

NOTE" In a sale by sample and bydescription, there is a two/fold warranty.

R&!3TS OF B4ER:-* Ceturn the thing and recover themoney paid, or* Cetain the thing and sue for thebreach of warranty.

*4RC3ASE B 5&NORS: #ontract isgenerally voidable but in case ofnecessaries, where necessaries are soldand delivered to a minor or other personwithout capacity to act, he must pay areasonable price therefore. Necessariesare those in Art. @>.E

FOR5AL&T&ES OF CONTRACT OF SALE4$5$RA R$: 7ale is a consensualcontract and is perfected by mereconsent.$8C$P9I5S: In order to beenforceable by action, the followingmust be in writing"

1. 7ale of personal property at aprice not less than %;>>

2. 7ale of real property or aninterest therein

3. 7ale of property not to beperformed within a year fromthe date thereof

4. Applicable statuteE requiresthat the contract of sale be in acertain form

NOTE: 7tatute of 0rauds is applicableonly to e&ecutory contracts and not tocontracts which are totally or partiallyperformed.

CA*AC&T TO B4 OR SELL4$5$RA R$: All persons who canbind themselves also have legal capacityto buy and sell.$8C$P9I5S:

1. Absolute incapacity )minors,demented persons, imbeciles,deaf and dumb, prodigals, civilinterdictees* / party cannot bindthemselves in any case.

2. Celative incapacity ! incapacitye&ists only with reference tocertain persons or a certain classof property

Relati'e &ncapacit#A/ 3s$and and "ife ;Art/ .68


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2. agents, with respect to theproperty whose administration orsale may have been entrusted tothem, unless the consent of the

principal has been given(3. e&ecutor or administrator, with

respect to the property of theestate under administration(

4. public officers and employees,with respect to the properties ofthe government, its politicalsubdivisions, or 9+##s, that areentrusted to them(

5. %udges, $ustices, prosecutingattorneys, cler3s of courts, etc.,with respect to the property incustogia legis( and

6. any other person speciallydisqualified by law.Examples of persons especiall#disqalified $# la":a. Aliens who are disqualified topurchase agricultural landsb. An unpaid seller having a rightof lien or having stopped thegoods in transitu, who isprohibited from buying the goodseither directly or indirectly inthe resale of the same, at public

or private sale which he mayma3ec. The officer holding thee&ecution, or his deputy.NOTE: 'hile those disqualifiedunder Arts. -:@> and -:@- maynot become lessees )Art. -=:=*,still aliens may become lesseeseven if they cannot buy lands.

Effect of 'iolation:a* 'ith respect to nos. . to ?" the

sale is )O*+A,L-.Reason: only private rights,which are sub$ect to ratificationare violatedNOTE: In the case of Lao vs$"enato( .3/ SC0A //, the7upreme #ourt found that thesale by the administrator ofcertain properties of the estatein order to settle the e&istingobligations of the estate wasmae to t-e aministratorDs son

#or a gross!" !o& price.

0urthermore, the said sa!e &asnot s/mitte to t-e proateco/rt #or approva! as manate" t-e orer a/t-oriing t-e

aministrator to se!!. The salewas indubitably illegal, irregularand fictitious, and the court6sapproval of the assailedcompromise agreement violatedArticle -:@- and cannot wor3 toratify a fictitious contract whichis non1e2istent and void fromthe very beginning

b* 'ith respect to nos. 6 to @" thesale is !LL A+ )O*+.Reason: violation of publicpolicy cannot be sub$ect to

ratification

OBL&!AT&ONS OF T3E 0EN-OR: )'%D/TT*1. Transfer ownership (cannot e

&aive)2. -eliver the thing sold (cannot e

&aive)3. +arrant against eviction and against

hidden defects (can e &aive ormoi#ie since &arrant" is not anessentia! e!ement o# t-e contract o#sa!e)

4. Ta3e care of the thing, pendingdelivery, with proper diligence)Artic!e 116


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MEMORYAIDINCIVILLAW

insufficient. (5or'is istri/tor,Inc. vs. CA, 1*0 SCRA 6*)

9inds:

1. Actual or real ! placing the thingunder the control and possession ofthe buyer.

2. Hegal or constructive ! delivery isrepresented by other signs or actsindicative thereofa. delivery by the e%ec/tion o# a

p/!ic instr/ment.NOTE: 9ives rise only to a primafacie presumption of delivery whichis destroyed when actual delivery isnot effected because of a legalimpediment (9en ort" Rea!t" vs.

Cr/, 1; Sept. 2;;


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refusal to accept is not $ustified,seller may still sue.

=. 9enerally, the sale and delivery to abuyer who is an e&pert on the ob$ect

purchased is not a sale on approval,trial, or satisfaction.

Sale or retrn Sale on Trial-. 7ub$ect to aresolutory condition

-. 7ub$ect to asuspensive condition

. Depends entirelyon the will of thebuyer

. Depends on thecharacter or quality ofthe goods

1. +wnershippasses to the buyeron delivery andsubsequent returnreverts ownershipin the seller

1. +wnership remainsin the seller until buyersignifies his approval oracceptance to theseller

:. Cis3 of loss orin$ury rests uponthe buyer

:. Cis3 of loss remainswith the seller

&nstances "here Seller is still theO"ner despite -eli'er#:-. 7ale on trial, approval or satisfaction. #ontrary intention appears by the

term of the contract(1. Implied reservation of ownership

)Article -;>1*a. If under the bill of lading, the

goods are deliverable to seller or

agent or their order(b. If the bill of lading, although

stating that the goods are to bedelivered to the buyer or hisagent, is 3ept by the seller or hisagent(

a. 'hen the buyer, although thegoods are deliverable to order ofbuyer, and although the bill oflading is given to him, does nothonor the bill of e&change sentalong with it.

Transfer of o"nership "here (oods solddeli'ered to carrier!eneral Rle: Delivery to the carrier isdeemed to be delivery to the buyerException: 'here the right ofpossession or ownership of specific goodssold is reserved

SALE OF !OO-S B A NON>O+NER4$5$RA R$:Buyer acquires no titleeven if in good faith and for value underthe ma&im emo dat 4uid non habet

)Gou cannot give what you do nothaveE*.$8C$P9I5S: )7FC27*

1. +wner is estopped or precluded

by his conduct2. 'hen sale is made by the

registered owner or apparentowner in accordance withrecording or registration laws

3. 7ales sanctioned by $udicial orstatutory authority

4. %urchases in a merchantJs store,fairs or mar3ets

5. 'hen a person who is not theowner sells and delivers a thing,subsequently acquires titlethereto )Art. -:1:*

6. 'hen the seller has a 'oidabletitle which has not been avoidedat the time of the sale )Art.-;>=*

4nlawful deprivationE is no longerlimited to a criminal act. There is4nlawful Deprivation where there is novalid transmission of ownership.

*lace of deli'er# of (oods1. =-ere t-ere is an agreement, place

of delivery is that agreed upon2. =-ere t-ere is no agreement, place

of delivery determined by usage oftrade

3. =-ere t-ere is no agreement an nopreva!ent /sage, place of delivery isthe seller6s place

4. In an" ot-er case, place of deliveryis the seller6s residence

5. In case o# speci#ic goos, which tothe 3nowledge of the parties at thetime the contract was made were insome other place, that place is theplace of delivery, in the absence ofagreement or usage of trade to thecontrary

Time of deli'er# of (oods1. 7tipulated time2. In the absence thereof, within a

reasonable time

NE!OT&ABLE -OC45ENT OF T&TLE;N-T=

A document of title in which it is

stated that the goods referred totherein will be delivered to the





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MEMORYAIDINCIVILLAW

bearer, or to the order of any personnamed in such document.

Fay be negotiated by delivery or

indorsement.

The docment is ne(otia$le if:-. The goods are deliverable to the

bearer( or. If the goods are deliverable to the

order of a certain person

*ersons "ho ma# ne(otiate N-T:1. The owner( or2. Any person to whom the possession

or custody thereof has beenentrusted by the owner, if by theterms of the document the bailee

issuing the document underta3es todeliver the goods to the order of theperson to whom the possession orcustody of the document has beenentrusted or if at the time of suchentrusting the document in suchform that it may be negotiated bydelivery.

If the holder of a negotiable documentof title )deliverable to bearer* entruststhe document to a friend for deposit,but the friend betrays the trust andnegotiates the document by delivering itto another who is in good faith, the saidowner cannot impugn the validity of thenegotiation. As between two innocentpersons, he who made the loss possibleshall bear the loss, without pre$udice tohis right to recover from the wrongdoer.

R&!3TS OF *ERSON TO +3O5-OC45ENT 3AS BEEN NE!OT&ATE-:-* The title of the person negotiating thedocument, over the goods covered by

the document(* The title of the person )depositor orowner* to whose order by the terms ofthe document the goods were to bedelivered, over such goods(1* The direct obligation of the bailee tohold possession of the goods for him, asif the bailee had contracted to himdirectlyNOTE Fere transferee does not acquiredirectly the obligation of the bailee )inArt. -;-1*. To acquire it, he must notifythe bailee.

+3O CAN -EFEAT R&!3TS OFTRANSFEREE:

-. #reditor of transferor

. Transferor1. 7ubsequent purchaser

R4LES +3EN 4ANT&T &S LESS T3ANA!REE- 4*ON:

1. Buyer may re$ect( or2. Buyer may accept what has been

delivered, at the contract rate

R4LES +3EN 4ANT&T &S 5ORE T3ANA!REE- 4*ON:

1. Buyer may re$ect all( or2. Buyer may accept the goods

agreed upon and re$ect the rest(or

3. Buyer may accept all and mustpay for them at the contractrate

NOTE:Acceptance, even if not e&pressmay be implied when the buyere&ercises acts of ownership over thee&cess goods.

R4LES +3EN !OO-S 5&DE- +&T3!OO-S OF -&FFERENT -ESCR&*T&ON:

Buyer may accept the goods which

are in accordance with the contractand re$ect the rest

NOTE: If the sub$ect matter isindivisible, in case of delivery of largerquantity of goods or of mi&ed goods, thebuyer may re$ect the whole of the goods

-EL&0ER TO T3E CARR&ER4$5$RA R$: 'here the seller isauthoriMed or required to send the goodsto the buyer, delivery to the carrier is

delivery to the buyer.$8C$P9I5S:1. 'hen a contrary intention

appears2. Implied reservation of ownership

under pars. -,,1 of Art. -;>1

9inds of -eli'er# to the Carrier

a. #.I.0. (cost, ins/rance, #reig-t) !signify that the price fi&edcovers not only the costs of thegoods, but the e&pense of the




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freight and the insurance to bepaid by the seller

b. 0.+.B. (#ree on oar) ! goodsare to be delivered free of

e&pense to the buyer to thepoint where they are 0.+.B. Thepoint of 0.+.B., either at thepoint of shipment or the point ofdestination, determines whenthe ownership passes.

NOTE: the terms #.I.0. and 0.+.B.merely ma3e rules of presumption

c. #.+.D. (co!!ect on e!iver")! thecarrier acts for the seller incollecting the purchase price,which the buyer must pay toobtain possession of the goods.

SELLERS -4T AFTER -EL&0ER TOCARR&ER-. To enter on behalf of buyer into suchcontract reasonable under thecircumstances. To give notice to buyer regardingnecessity of insuring the goods

*A5ENT OF T3E *4RC3ASE *R&CE4$5$RA R$:The seller is not boundto deliver the thing sold unless the

purchase price has been paid.$8C$P9I5: The seller is bound todeliver even if the price has not beenpaid, if a period of payment has beenfi&ed.

Sale of Real *ropert# $# 4nit

ntire area stated in the contract

must be delivered

'hen entire area could not be

delivered, vendee may"-. nforce the contract with the

corresponding decrease in price. Cescind the sale"

a. If the lac3 in area is at least-5-> than that stated orstipulated

b. If the deficiency in qualityspecified in the contracte&ceeds -5-> of the priceagreed upon

c. If the vendee would not havebought the immovable hadhe 3nown of its smaller areaof inferior quality

irrespective of the e&tent oflac3 of area or quality

Sale for a Lmp Sm 5A Cuerpo Cierto6

2endor is obligated to deliver all theland included within the boundaries,regardless of whether the real areashould be greater or smaller

+rdinarily, there can be no rescission

or reduction or increase whether thearea be greater or lesser, unlessthere is gross mista3e.

NOTE: The #ivil #ode presumes that thepurchaser had in mind a particular pieceof land and that he ascertained its areaand quality before the contract of salewas perfected. If he did not do so, or ifhaving done so he made no ob$ectionand consented to the transaction, he canblame no one but himself )9eran vs.Ei!!an/eva Ei/a e Riosa 06 P-i! 677*.

'hat is important is the deliveryof all the land included in theboundaries.

-O4BLE SALE ;Art/ .66=

Reqisites:2+#7

1. two or more transactions mustconstitute 'alid sales(

2. they must pertain e&actly to thesame ob$ect or sub$ect matter(

3. they must be bought from the sameor immediate seller( AND

4. two or more buyers who are at oddsover the rightful ownership of thesub$ect matter must representconflicting interests.

Rles of preference:-. %ersonal %roperty

a. first possessor in good faith

. Ceal %ropertya. first registrant in good faithb. first possessor in good faithc. person with oldest title in good

faith

NOTES:

*rchaser in !ood Faith ! one who

buys the property of another withoutnotice that some other person has aright to or interest in such propertyand pays a full and fair price for thesame at the time of such purchase or





15/37


MEMORYAIDINCIVILLAW

before he has notice of the claim orinterest of some other person in theproperty (Ee!oso vs. CA).

Cegistration requires actual

recording( if the property was neverreally registered as when theregistrar forgot to do so although hehas been handed the document,there is no registration.

%ossession is either actual or

constructive since the law made nodistinction )Sanc-e vs. Ramos ;P-i!61*

%ossession in Art.-;:: includes not

only material but also symbolicpossession (9en ort" Rea!t" vs.

Cr/, 1; Sept. 2;;


16/37


-. ED*RESS! any affirmation of fact orany promise by the seller relating tothe thing if the natural tendency ofsuch affirmation or promise is to

induce the buyer to purchase thesame and if the buyer purchases thething relying thereon

NOTE: A mere e&pression of opinion, nomatter how positively asserted, does notimport a warranty unless the seller is ane&pert and his opinion was relied uponby the buyer.

2. &5*L&E- / that which the lawderives by implication or inferencefrom the nature of the transaction or

the relative situation orcircumstances of the parties,irrespective o# an" intention o# t-ese!!er to create it.a. 'arranty against evictionb. 'arranty against hidden defectsc. 'arranty as to 0itness and

FerchantabilityNOTE: An implied warranty is a natural,not an essential element of a contract,and is deemed incorporated in thecontract of sale. It may however, bewaived or modified by e&press

stipulation.(e eon)There is no implied warranty as to thecondition, adaptation, fitness orsuitability or the quality of an articlesold as a second/hand article. But sucharticles might be sold under suchcircumstances as to raise an impliedwarranty. A certification issued by a vendor that asecond/hand machine was in A/-condition is an e&press warranty bindingon the vendor.(Mo!es vs. IAC 1*+*)

A/ +arrant# a(ainst e'iction 'arranty in which the seller

guarantees that he has the right tosell the thing sold and to transferownership to the buyer who shall notbe disturbed in his legal andpeaceful possession thereof.

Elements:

1. vendee is deprived, in whole orin part, of the thing purchased(

2. the deprivation is by virtue of afinal $udgment(

3. the $udgment is based on a priorright to the sale or an act

imputable to the vendor(4. the vendor was summoned in the

suit for eviction at the instanceof the vendee( AND

5. no waiver of warranty by thevendee.

0endorGs lia$ilit# shall consist of:

1. otal eviction# )2I#D*a. 0alue of the thing at the time of

eviction(b. &ncome or fruits if he has been

ordered to deliver them to the

party who won the suit(c. Costs of the suit(d. E&penses of the contract( AN-e. -amages and interests if the sale

was in bad faith.

2. 'artial eviction#a. to enforce vendor6s liability

for eviction )2I#D*( ORb. to demand rescission of

contract.

Kuestion" 'hy is rescission not a remedyin case of total evictionLAnswer" Cescission contemplates thatthe one demanding it is able to returnwhatever he has received under thecontract. 7ince the vendee can no longerrestore the sub$ect/matter of the sale tothe vendor, rescission cannot be carriedout.

The suit for the breach can be directedonly against the immediate seller, notsellers of the seller unless such sellers

had promised to warrant in favor of laterbuyers or unless the immediate sellerhas e&pressly assigned to the buyer hisown right to sue his own seller.NOTE: The disturbance referred to in thecase of eviction is a disturbance in lawwhich requires that a person go to thecourts of $ustice claiming the thing sold,or part thereof and invo3ing reasons.Fere trespass in fact does not give riseto the application of the doctrine ofeviction.





17/37


MEMORYAIDINCIVILLAW

2endor6s liability is waivable but any

stipulation e&empting the vendorfrom the obligation to answer foreviction shall be void if he acted in

bad faith. 9inds of +ai'er:

a. Consciente ! voluntarilymade by the vendee withoutthe 3nowledge andassumption of the ris3s ofeviction

NOTE: vendor shall pay only thevalue which the thing sold had atthe time of evictionb. *ntencionada! made by the

vendee with 3nowledge ofthe ris3s of eviction andassumption of itsconsequences

EFFECT: vendor not liableNOTE: very waiver is presumed to beconsciente. To consider it intencionada,it must be accompanied by somecircumstance which reveals thevendor6s 3nowledge of the ris3s ofeviction and his intention to submit tosuch consequences.

+3ERE &55O0ABLE SOL- ENC45BERE-

+&T3 NON>A**ARENT B4R-EN./ Ri(ht of 'endeea* recission, orb* indemnity

1/ +hen ri(ht cannot $e exercised:a* if the burden or servitude is

apparentb* if the non/apparent burden or

servitude is registeredc* if vendee had 3nowledge of the

encumbrance, whether it is registeredor not

?/ +hen action mst $e $ro(ht/ within +N GAC from the

e&ecution of the deed of sale

B/ +arrant# a(ainst hidden defects

'arranty in which the seller

guarantees that the thing sold is freefrom any hidden faults or defects orany charge or encumbrance notdeclared or 3nown to the buyer.

Elements: )78N%'*

-. defect must be Serious orimportant(

. it must be 3idden(1. it must E&ist at the time of the

sale(:. vendee must give Notice of thedefect to the vendor within areasonable time(

;. action for rescission or reductionof price must be brought withinthe proper *eriod )within = mos.from delivery of the thing or :>days from date of delivery incase of animals*( and

=. no +aiver of the warranty.

Remedies of the 0endee:

a. Accionre-iitoria)rescission*b. Accion 3/anti minoris)reduction

of the price*NOTES:

8idden faults or defects pertain only

to those that ma3e the ob$ect unfitfor the use for which it was intendedat t-e time o# t-e sa!e.

This warranty in 7ales is applicable

in Hease )Gap vs. 9iao3/i 1


18/37


NOTE: the difference between theprice paid and the value of the thingat the time of its loss represents thedamage suffered by the vendee and

the amount which the vendorenriched himself at the e&pense ofthe vendee

If the vendor acted in bad faith"

vendor shall pay damages to thevendee

C/ &mplied +arranties of alit#+arrant# of Fitness


guarantees that the thing sold isreasonably fit for the 3nown

particular purpose for which it wasacquired by the buyer

4$5$RA R$: There is no impliedwarranty as to the quality or fitness forany particular purpose of goods under acontract of sale$8C$P9I5S:

1. 'here the buyer, e&pressly or byimplication manifests to theseller the particular purpose forwhich the goods are required

2. 'here the buyer relies upon the

seller6s s3ill or $udgment

+arrant# of 5erchanta$ilit#


guarantees, where the goods werebought by description, that they arereasonably fit for the generalpurpose for which they are sold

It requires identity between &-at is

escrie in t-e contractAND &-atis tenere, in the sense that thelatter is of such quality to have some

value

&nstances "here implied "arranties areinapplica$le:1. As is and where is sale / vendor

ma3es no warranty as to the qualityor wor3able condition of the goods,and that the vendee ta3es them inthe condition in which they arefound and from the place where theyare located.

2. 7ale of second/hand articles

3. 7ale by virtue of authority in fact orlaw

Caveat )enditor ;HLet the seller

$e"areI=: the vendor is liable to thevendee for any hidden faults or defectsin the thing sold, even though he was notaware thereof.

Caveat -mptor ;HLet the $#er$e"areI=:requires the purchaser to beaware of the supposed title of thevendor and one who buys withoutchec3ing the vendor6s title ta3es all theris3s and losses consequent to suchfailure.

R4LES &N CASE OF SALE OF AN&5ALS-. 'hen two or more animals have beensold at the same time and theredhibitory defect is in one, or some ofthem but not in all, the general rule isthat the redhibition will not affect theothers without it. It is immaterialwhether the price has been fi&ed for alump sum for all the animals or for aseparate price for each.. No warranty against hidden defects ofanimals sold at fairs or at publicauctions, or of livestoc3 sold as

condemned. This is based on theassumption that the defects must havebeen clearly 3nown to the buyer.1. 7ale of animals shall be void when" a* animals sold are suffering fromcontagious disease b* if the use or service for whichthey are acquired has been stated in thecontract, and they are found to be unfittherefor:. Himitation of the action" :> daysfrom the date of their delivery to thevendee;. 2endor shall be liable if the animalshould die within 1 days after itspurchase if the disease which caused thedeath e&isted at the time of the contract

OBL&!AT&ONS OF T3E 0EN-EE:A/ *rincipal O$li(ations:-. To accept delivery. To pay the price of the thing sold in

legal tender unless another mode hasbeen agreed upon

NOTE: A grace period granted the

vendee in case of failure to pay the 200 CENTRALI!EDBARO"ERATIONSE#EC$TIVECOMMITTEEANDS$B%ECTC&AIR"ERSONS




19/37


MEMORYAIDINCIVILLAW

amount5s due is a right not anobligation. The grace period must notbe li3ened to an obligation, the non/payment of which, under Article --=@ of

the #ivil #ode, would still generallyrequire $udicial or e&tra/$udicial demandbefore defaultE can be said to arise)Bric'to&n evDt Corp vs. Amor 9ierraevDt Corp. 07SCRA


20/37


buyer does not discharge the sellerfrom liability for damages or otherlegal remedy li3e for breach of anypromise or warranty

+hen 'endee ma# sspend pa#ment ofthe price:1. If he is disturbed in the possession or

ownership of the thing bought2. If he has well/grounded fear that his

possession or ownership would bedisturbed by a vindicatory action orforeclosure of mortgage

NOTES:

If the thing sold is in the possession

of the vendee and the price is

already in the hands of the vendor,the sale is a consummated contractand Article -;@> is no longerapplicable. Article -;@>,presupposes that the price or anypart thereof has not yet been paidand the contract is not yetconsummated.

4nder Article -;@>, the vendee has

no cause of action for rescissionbefore final $udgement, otherwisethe vendor might become a victim of

machinations between the vendeeand the third person

Disturbance must be in possession

and ownership of the thing acquired

If the disturbance is caused by the

e&istence of non/apparent servitude,the remedy of the buyer isrescission, not suspension ofpayment.

+hen 'endee cannot sspend pa#mentof the price e'en if there isdistr$ance in the possession oro"nership of the thin( sold:-. if the vendor gives security for the

return of the price in a proper case. if it has been stipulated that

notwithstanding any suchcontingency, the vendee must ma3epayment )see Artic!e 10+ par.


21/37


MEMORYAIDINCIVILLAW

4. 7pecial Cight to rescind the sale5. Action for the price6. Action for damages

?/ Article .66 or Recto La" Remeies o# venor in sa!e o#

persona! propert" " insta!!ments

Reqisites:

1. #ontract of sale2. %ersonal property3. %ayable in installments4. In the case of the second and

third remedies, that there hasbeen a failure to pay two ormore installments

NOTE: Apply li3ewise to contractspurporting to be leases of personalproperty with option to buy

Art/ .66 does not appl# to a sale:

1. %ayable on straight terms )partlyin cash and partly in one term*

2. +f Ceal property

Remedies:

1. 7pecific performance uponvendee6s failure to pay

NOTE:Does not bar full recovery for$udgment secured may be e&ecutedon all personal and real properties ofthe buyer which are not e&empt

from e&ecution (Pa!ma v. CA.)2. Cescission of the sale if vendee

shall have failed to pay two ormore installments

NOTES:

Nature of the remedy ! which

requires mutual restitution ! barsfurther action on the purchaseprice (5onato vs. IAC.)

4$5$RA R$: cancellation

of sale requires mutualrestitution, that is all partial

payments of price or rents mustbe returned$8C$P9I5S:a stipulation thatthe installments or rents paidshall not be returned to thevendee or lessee shall be validinsofar as the same may not beunconscionable under thecircumstan/ces )Artic!e 1+6*.

3. 0oreclosure of the chattelmortgage on the thing sold ifvendee shall have failed to pay

two or more installments. In thiscase, there shall be no furtheraction against the purchaser torecover unpaid balance of the

price.

NOTES:

0urther recovery barred only from

the time of actual sale at public auctionconducted pursuant to foreclosure(Maconra" vs. 9an.)

+ther chattels given as security

cannot be foreclosed if they are notsub$ect of the installment sale )Ria vs.i!ipinas investment an inance Corp.4R an. 2+, 1*+


22/37


rescission upon $udicial or

notarial demand forrescission )Artic!e 10*2*

the vendee may pay, even

after the e&piration of theperiod, as long as no demandfor rescission has been madeupon him

NOTE: Article -;@ does notapply to"-* 7ale on instalment of real

estate* #ontract to sell1* #onditional sale:* #ases covered by CA =;;"

Cealty Installment buyerprotection act

1/ R/A/ No/ @1 or 5aceda La" An Act to %rovide %rotection to

buyers of Ceal state on Installment%ayments

Haw governing sale or financing ofreal estate on installment payments

Reqisites:

-. transactions or contractsinvolving the sale +C financing ofreal estate on installmentpayments, including residential

condominium apartments( and. buyer defaults in payment of

succeeding installments.

Ri(hts of the $#er:

A$ *f ,uyer has paid at least two586 years of installments

-. The buyer must pay, &it-o/taitiona! interest, the unpaidinstallments due within the totalgrace period earned by him.There shall be one )-* month

grace period for every one )-*year of installment paymentsmadeNOTE: This right shall bee&ercised by the buyer +NHGonce in every ; years of the lifeof the contract AND itse&tensions.

. Actual cancellation can only ta3eplace after 1> days from receiptby the buyer of the notice ofcancellation +C demand forrescission by a notarial act AND

upon full payment of the cashsurrender value to the buyer(!"mpia Fo/sing vs. Panasiatic,16 >an/ar" 2;; ofthe total payments made. Afterfive );* years of installments,there shall be an additional ;every year but not to e&ceed @>of the total payments made

1. The buyer shall have the rig-t tose!! -is rig-ts or assignthe sameto another person +C toreinstate t-e contract by

updating the account during thegrace period and before actualcancellation of the contract

:. The buyer shall have the right topay in advance any installmentor the full unpaid balance of thepurchase price any time withoutinterest and to have such fullpayment of the purchase priceannotated in the certificate oftitle covering the property.

,$ *f ,uyer has paid less than 8

years of installments-. The seller shall give the buyer a

grace period of N+T less than =>days from the date theinstallment became due. If thebuyer fails to pay theinstallments due at thee&piration of the grace period,the seller may cancel thecontract after 1> days fromreceipt by the buyer of thenotice of cancellation or thedemand for rescission ofcontract by a notarial act.

. Same o$ 3 and 9 para&raph Aabove

NOTE: Down payments, deposits oroptions on the contract shall be includedin the computation of the total numberof installment payments made

Remedies of 4npaid SellerI. *ossessor# Lien

+hen ma# $e exercised:





23/37


MEMORYAIDINCIVILLAW

-. 'here the goods have been soldwithout any stipulation as tocredit

. 'hen the goods have been sold

on credit, but the term of credithas e&pired1. 'here the buyer becomes

insolvent

+hen lost:

-. Delivery of the goods to a carrieror bailee for the purpose oftransmission to the buyerwithout reserving ownership orright of possession

. 'hen the buyer lawfully obtainspossession of the goods

1. By waiver of the lien

NOTE: %ossessory lien is lost after theseller loses possession but his lien as anunpaid seller remains( hence he is stillan unpaid creditor with respect to theprice of specific goods sold. 8ispreference can only be defeated by thegovernments claim to the specific ta& onthe goods themselves )Arts. 227 an221*.NOTE: The bringing of an action torecover the purchase price is not one ofthe ways of losing the possessory lien.An unpaid seller does not lose his lien byreason that he has obtained a money$udgement or decree for the price ofgoods )Art. 102*, !ast paragrap-*.

II. Stoppa(e of (oods in transitu

Reqisites:

-. 7eller must be unpaid. Buyer must be insolvent1. 9oods must be in transit:. 7eller must either"

a. actually ta3e possession ofthe goods sold +C

b. give notice of his claim tothe carrier or other person inpossession

;. 7eller must surrender thenegotiable document of title, ifany, issued by the carrier orbailee

=. 7eller must bear the e&penses ofdelivery of the goods after thee&ercise of the right

!OO-S ARE CONS&-ERE- &N TRANS&T4:

-. after delivery to a carrier or otherbailee and before the buyer or his agentta3es delivery of them( and. If the goods are re$ected by the

buyer, and the carrier or other baileecontinues in possession of them

!OO-S ARE NO LON!ER CONS&-ERE- &NTRANS&T4:-. after delivery to the buyer or hisagent in that behalf(. if the buyer or his agent obtainspossession of the goods at a point beforethe destination originally fi&ed(1. if the carrier or the baileeac3nowledges to hold the goods onbehalf of the buyer( and

:. if the carrier or bailee wrongfullyrefuses to deliver the goods to the buyer

Effects of the exercise of the ri(ht

-. The goods are no longer in transit.. The contract of carriage ends(

instead the carrier now becomes amere bailee, and will be liable assuch.

1. The carrier should not deliveranymore to the buyer or the latter6sagent( otherwise he will clearly beliable for damages.

:. The carrier must redeliver to, oraccording to the directions of theseller.

+AS OF EDERC&S&N! T3E R&!3T TOSTO*:-. By ta3ing actual possession of thegoods. By giving notice of his claim to thecarrier or bailee

III. Special Ri(ht of Resale

Fay be e&ercised only when theunpaid seller has either a right oflien +C has stopped the goods intransit/ AND under ANG of thefollowing conditions"-. 'here the goods are perishable

in nature. 'here the right to resell is

e&pressly reserved in case thebuyer should ma3e a default




24/37


1. 'here the buyer delays in thepayment of the price for anunreasonable time

IV. Rescission T#pes:

-. Specia! Rig-t to Rescin nerArt. 10


25/37


MEMORYAIDINCIVILLAW

e. the necessary and usefule&penses made on the thing sold(and

f. fulfills other stipulations which

may have been agreed upon.

A sale "ith con'entional redemption isdeemed to $e an e4uitable mort&a&ein an# of the follo"in( cases:)I%CT+D*

-. 4nusually &nadequate purchaseprice(

. *ossession by the vendor remains, aslessee or otherwise(

1. E&tension of redemption period aftere&piration(

:. Retention by the vendee of part ofthe purchase price(

;. 2endor binds himself to pay theTa&es of the thing sold(

=. Any Other case where the partiesreally intended that the transactionshould secure the payment of a debtor the performance of anyobligation( or

?. 'hen there is -oubt as to whethercontract is contract of sale with rightof repurchase or an equitablemortgage.

Eqita$le 5ort(a(e

+ne which lac3s the proper

formalities, form of words, or otherrequisites prescribed by law for amortgage, but shows the intention ofthe parties to ma3e the propertysub$ect of the contract as securityfor a debt and contains nothingimpossible or contrary to law)Cac-o!a vs. CA 2;+SCRA*6*

'hen can there be presumption as toquitable FortgageL-* %arties must have entered into acontract denominated as a contract ofsale* The intention of the parties was tosecure an e&isting debt by way ofmortgageNOTE: In the cases referred to in Arts.-=> and -=>:, the apparent vendor mayas3 for the reformation of theinstrument.

Cemedy of Ceformation" To correct theinstrument so as to ma3e it e&press thetrue intent of the parties.

Redemption *erioda. if there is an agreement" period

agreed upon cannot e&ceed -> yearsb. if no agreement as to the period" :

years from the date of the contractc. the vendor who fails to repurchase

the property within the periodagreed upon may, however, e&ercisethe right to repurchase within 1>days 0C+F the time final $udgmentwas rendered in a civil action on thebasis that the contract was a truesale with right of repurchase

This refers to cases involving atransaction where one of theparties contests or denies thatthe true agreement is one of salewith right to repurchase( not tocases where the transaction isconclusively a pacto de retrosale. &ample" 'here a buyer aretro honestly believed that heentered merely into an quitableFortgage, not a pacto de retrotransaction, and because of suchbelief he had not redeemed

within the proper period.N+T" Tender of payment issufficient to compel redemption, butis not in itself a payment thatrelieves the vendor from his liabilityto pay the redemption price (Paevs. Magno.)

LE!AL RE-E5*T&ON

The right to be subrogated, upon the

same terms and conditions stipulatedin the contract, in the place of one

who acquires a thing by )-* purchaseor )* dation in payment, or )1* byany other transaction wherebyownership is transferred by oneroustitle.

Fay be effected against movables or

immovables.

It must be e&ercised within thirty

)1>* days from the notice in writingby the vendor.O




26/37


NOTE:'ritten notice under Article -=1is mandator#for the right of redemptionto commence (PSC vs. Sps. Ea!encia 1*

A/g/st 2;;E5*T&ON RE-E5*T&ON-. arises beforesale

-. arises after sale

. no rescissionbecause no sale asyet e&ists

. there can berescission of theoriginal sale

1. the action isdirected againstthe prospectiveseller

1. action is directedagainst the buyer

&nstances of le(al redemption:A/ 4nder the Ci'il Code ;le(al

redemption=:1. 7ale of a co/owner of his share

to a stranger )Artic!e 162;*2. 'hen a credit or other

incorporeal right in litigation issold )Artic!e 16


27/37


MEMORYAIDINCIVILLAW

NOTE: The seller of an inheritancewarrants only the fact of his heirship butnot the ob$ects which ma3e up hisinheritance.

Lia$ilities of the assi(nor of credit for'iolation of his "arranties1. Assignor in goo #ait-

Hiability is limited only to the

price received and to thee&penses of the contract, andany other legitimate paymentsby reason of the assignment

2. Assignor in a #ait-

Hiable not only for the payment

of the price and all the e&pensesbut also for damages

Le(al Redemption in Sale or Credit orother incorporeal ri(ht in liti(ation Reqisites:-. There must be a sale or assignment

of credit. There must be a pending litigation at

the time of the assignment1. The debtor must pay the assignee"

a. price paid by himb. $udicial cost incurred by him(

AND

c. interest on the price from thedate of payment

:. The right must be e&ercised by thedebtor within 1> days from the datethe assignee demands )$udicially ore&tra/$udicially* payment from him

SALE OF CRE-&T OR OT3ER &NCOR*OREAL R&!3TS &N L&T&!AT&ON4$5$RA R$: Debtor has the right oflegal redemption in sale of credit orincorporeal rights in litigation

$8C$P9I5S:a. 7ale to a co/heir or co/ownerb. 7ale to a co/ownerc. 7ale to the possessor of property

in question

BARTER

BARTER

contract whereby one of the parties

binds himself to give one thing in

consideration of the otherJs promiseto give another thing )Artic!e 16


28/37


-. If the sale or transfer is in theordinary course of trade and theregular prosecution of business ofthe vendor(

. If it is made by one who producesand delivers a written waiver of theprovisions of the Bul3 7ales Act fromhis creditors

1. If it is made by an e&ecutor,administrator, receiver, assignee ininsolvency, or public officer, actingunder $udicial process )Section +*(and

:. If it refers to properties e&empt fromattachment or e&ecution )R/!es o#Co/rt, R/!e


29/37


MEMORYAIDINCIVILLAW

disposed of, or dealt with theproperty, so as to become personallyliable to creditors for value of it.

Acts *nished $# Bl, Sales La":

-. nowingly or wilfully ma3ing ordelivering a statement required bythe Act which does not include thenames of all the creditors of thevendor, etc. with the correct amountdue or to become due or whichcontains any false or untruestatement( and

. Transferring title to any stoc3 ofgoods, wares, merchandise,provisions or materials sold in bul3without consideration or for nominalconsideration )Section 7*

RETA&L TRA-E L&BERAL&KAT&ON ACT;RA 7@1=

Retail Trade

Any act occupation or calling of

habitually selling direct to thegeneral public merchandise,commodities or goods forconsumption, but the restrictions ofthis law shall not apply to thefollowing"

-. 7ales by manufacturer, processor,laborer, or wor3er, to the generalpublic the products manufactured,processed produced by him if hiscapital does not e&ceed %->>,>>>(

. 7ales by a farmer or agriculturalistselling the products of his farm

1. 7ales in restaurant operations by ahotel owner or inn/3eeperirrespective of the amount ofcapital( provided that the restaurantis incidental to the hotel business(and

:. 7ales which are limited only toproducts manufactured, processed orassembled by a manufacturerthrough a single outlet, irrespectiveof capitaliMation

3i(h>End or Lxr# !oods

9oods which are not necessary for

life maintenance and whose demandis generated in large part by thehigher income groups

7hall include but not limited to"

$ewelry, branded or designer clothingand footwear, wearing apparel,leisure and sporting goods,

electronics and other personaleffects

NOTE: A nat/ra!Korn citien o# t-eP-i!ippines who has lost his citiMenshipbut who resides in the %hilippines shallbe (ranted the same ri(hts as Filipinociti)ens

Forei(n Eqit# *articipation:

0oreign/owned partnerships,

associations and corporations formedand organiMed under the laws of the%hilippines may, upon registrationwith 7# and DTI, or in case of0oreign/owned single proprietorshipwith the DTI, engage or invest inretail trade business, sub$ect to the

followin& cate&ories#.$ Cate&ory A#

%aid/up capital of the equivalent

in %hilippine %eso of" M1


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nterprises specialiMing in high/

end or lu&ury products with paid/up capital of the equivalent in%hilippine %eso of" M1>> ma" p/rc-ase on!" /pto t-e ma%im/m o# 6;L o# t-e e3/it"t-ereo# &it-in t-e #irst 2 "ears, ant-erea#ter, t-e" ma" ac3/ire t-eremaining percentage consistent &it-t-e a!!o&a!e #oreign participation as-erein provie

NOTE: All retail Trade enterprises undercategories B and # in which foreignownership e&ceeds of equity s-a!!o##er a minim/m o#


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MEMORYAIDINCIVILLAW

National 8ousing authority )now8ousing and Hand 4se CegulatoryBoard* has the e&clusive $urisdiction

to regulate the real estate trade andbusiness.

License to sell 7uch owner or dealer to whom has

been issued a registration certificateshall not, however, be authoriMed tosell any subdivision lot orcondominium unit in the registeredpro$ect unless he shall have firstobtained a license to sell the pro$ectwithin two wee3s from theregistration of such pro$ect.

Exempt transactions A license to sell and performance

bond shall not be required in any ofthe following transactions"

-. 7ale of a subdivision lot resultingfrom the partition of land among co/owners and co/heirs.

. 7ale or transfer of a subdivision lotby the original purchaser thereof andany subsequent sale of the same lot.

1. 7ale of a subdivision lot or acondominium unit by or for theaccount of a mortgagee in theordinary course of business whennecessary to liquidate a bona fidedebt.

!ronds for Re'ocation of re(istrationcertificate and license to sell of o"nersor dealers-. Is insolvent( or. 8as violated any of the provisions of

this Decree or any applicable rule orregulation of the Authority, or any

underta3ing of his5its performancebond( or1. 8as been or is engaged or is about to

engage in fraudulent transactions( or:. 8as made any misrepresentation in

any prospectus, brochure, circular orother literature about thesubdivision pro$ect or condominiumpro$ect that has been distributed toprospective buyers( or

;. Is of bad business repute( or

=. Does not conduct his business inaccordance with law or soundbusiness principles.

LEASELEASE

consensual, bilateral, onerous, and

commutative contract by virtue ofwhich one person binds himself togrant temporarily the use of thething or to render some service toanother who underta3es to pay somerent.

9inds of Leases ;From the 'ie" point ofthe s$%ect matter

-. Hease of things. Hease of service1. Hease of wor3

NOTE: 7ince lease is consensual and isnot imposed by law, only the lessor hasthe right to fi& the rents. 8owever, theincreasing of the rent is not an absoluteright on the part of the lessor.

Characteristics or Reqisites for Leaseof Thin(s

-. #onsensual

. %rincipal1. Nominate:. %urpose is to allow en$oyment or

use of a thing )the person toen$oy is the lessee( the personallowing the en$oyment byanother is the lessor

;. 7ub$ect matter must be withinthe commerce of man

=. %urpose to which the thing willbe devoted should not beimmoral

?. +nerous )t-ere m/st rent orprice certain*


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If the term is #i%e /t

ine#inite, the court will fi& theterm under the law ofobligations and contracts

->. Hessor need not be the owner

NOTE: A usufructuary may thuslease the premises in favor of astranger, such lease to end at thetime that the usufruct itself ends

Rent

The compensation either in

money, provisions, chattels, orlabor, received by the lessorfrom the lessee.

NOTES:

'hen a student boards and lodges in

a dormitory, there is no contract oflease. The contract is notdesignated specifically in the #ivil#ode. It is an innominate contract.It is however, believed that thecontract can be denominated as thecontract of board and lodging.

There is a contract of lease when the

use and en$oyment of a safety

deposit bo& in a ban3 is given for aprice certain. This is certainly not acontract of deposit.

A lease of personal property with

option to buy )at a nominal amount*at the end of the lease can beconsidered a sale.

LEASE SALES-. only use oren$oyment istransferred

-. ownership istransferred

. transfer is

temporary

. transfer is

permanent1. lessor need notbe the owner

1. seller must bethe owner at thetime the propertyis delivered

:. the price of theob$ect,distinguished fromthe rent, is usuallynot mentioned

:. usually, theselling price ismentioned

Lease ofThin(s

Lease of Ser'ices

-. ob$ect ofcontract is athing

-. ob$ect is somewor3 or service

. lessor has todeliver the thingleased

. lessor has toperform some wor3or service

1. in case ofbreach, therecan be an actionfor specificperformance

1. in case ofbreach, no actionfor specificperformance

Lease ofSer'ices5locatio

operatum6

Contract for a*iece of +or,

5locatio operas6

1. theimportant ob$ect

is the laborperformed by thelessor

-. the importantob$ect is the wor3

done

. the result i sgenerally notimportant,hence thelaborer isentitled to bepaid even ifthere isdestruction ofthe wor3 throughfortuitous event

. the result isgenerallyimportant(generally, the priceis not payable untilthe wor3 iscompleted, and saidprice cannot belawfully demandedif the wor3 isdestroyed before it

is finished andaccepted

Lease ofSer'ices

A(enc#

It is based onemp!o"ment !the lessor ofservices doesnot representhisemployer nordoes he e&ecute

/riica! acts.

It is based onrepresentation !agent represents hisprincipal and entersinto $uridical acts.

%rincipalcontract

%reparatorycontract

Rle for Lease of Consma$le !oods4$5$RA R$: #onsumable goodscannot be the sub$ect matter of acontract of lease of things.=-"NTo use or en$oy hem, they will haveto be consumed. This cannot be done bya lease since ownership over them is nottransferred to him by the contract oflease.





33/37


34/37


OBL&!AT&ONS OF T3E LESSEE )CN4*a. to pay rentb. to se thing leased as a diligent

father of a family, devoting it tothe use stipulatedc. to pay e&penses for the deed of

leased. to notify the lessor of usurpation

or untoward actse. to notify the lessor of need for

repairsf. to return the property leased

upon termination of the lease

Effect of -estrction of the Thin(Leased:

1. 9ota! estr/ction " a #ort/ito/sevent

Hease is e&tinguished

2. Partia! estr/ction

a. %roportional reduction of therent, or

b. Cescission of the lease+hen lessee ma# sspend pa#ment of

rent:1. lessor fails to underta3e necessaryrepairs

2. lessor fails to maintain the lessee inpeaceful and adequate en$oyment ofthe property leased

NOTE: 7uspendE/ for the interveningperiod, the lessee does not have to paythe rent.

EFFECT&0&T OF T3E S4S*ENS&ON:The right begins"

a* In the case of repairs, from the timehe made the demand for said repairs,and the demand went unheeded.b* In the case of eviction, from the timethe final $udgment for eviction becomeseffective.

Alternati'e remedies of A((rie'edpart# ;LessorPLessee= in case of Non>flfillment of dties:-. Cescission and damages

. Damages only, allowing the contractto remain in force ! 7pecific%erformance

NOTE: Damages Cecoverable in

e$ectment cases are the rents or the fairrental value of the premises. Thefollowing cannot be successfullyclaimed"

-. %rofits plaintiff could haveearned were it not for thepossible entry or unlawfuldetainer

. Faterial in$ury to the premises1. Actual, moral, or e&emplary

damages

&mmediate termination of lease nder

Art/ .@@< applies:-. only to dwelling place or any other

building intended for humanhabitation

. even if at the time the contract wasperfected, the lessee 3new of thedangerous condition or waived theright to rescind on account of thiscondition

Rles on Alteration of the Form of theLease

The Lessorcan alter provided there

is no impairment of the use to whichthe thing is devoted under the termsof the lease

Alteration can also be made by the

Lessee so long as the value of theproperty is not substantiallyimpaired

Rles in case of 4r(ent Repairs

The lessee is obliged to tolerate the

wor3 although it may be veryannoying to him and although during

the same time he may be deprivedof a part of the premises-. If repairs last for more than :> days"

Hessee cannot act for reduction ofrent or rescission

. If :> days or more" lessee can as3for proportionate reduction

NOTE: In either case, rescission may beavailed of if the main purpose is toprovide a dwelling place and theproperty becomes uninhabitable.





35/37


MEMORYAIDINCIVILLAW

Effects if Lessor fails to ma,e 4r(entRepairs-. Hessee may order repairs at the

lessor6s cost

. Hessee may sue for damages1. Hessee may suspend the payment ofthe rent

:. Hessee may as3 for rescission, in caseof substantial damage to him

TRES*ASS &N LEASE:-. Trespass in fact (pert/racion e

mere -ec-o):

physical en$oyment is reduced

Hessor will not be held liable.

. Trespass in la" (pert/racion eerec-o):

A third person claims legal right

to en$oy the premises

Hessor will be held liable

NOTE: 'hile the Qapanese +ccupationwas a fortuitous event, the lessor is stillnot e&cused from his obligation towarrant peaceful legal possession. Heaseis a contract that calls for prestationsboth reciprocal and repetitive( and theobligations of either party are notdischarged at any given moment, but

must be fulfilled all throughout the termof the contract. (Ei!!ar/e! vs. Mani!aMotor Co.)

-ration of Lease.$ Lease made for a determinate

time or fi2ed 'eriod

Hease will be for the said period

and it ends on the day fi&edwithout need of a demand

8$ *f there is no fi2ed period

A$ For 0ural Lands 5Article .:;


36/37


b. the lessor has not given thelessee a notice to vacate

c. the lessee continued en$oyingthe thing leased for at least -;

days with the acquiescence ofthe lessor

+hen there is no implied ne"

lease:1. 'hen before or after thee&piration of the term, there is anotice to vacate given by eitherparty.2. 'hen there is no definite fi&edperiod in the original lease contractas in the case of successiverenewals.

Effects:

a. The period of the new lease isnot that stated in the originalcontract but the time in Articles-=


37/37


MEMORYAIDINCIVILLAW

2. Arrears in payment of rent for atotal of 1 months(

3. Hegitimate needs of the owner orlessor to repossess for his own use or

for the use of any immediatemember of his family as a residentialunit, pro'ided:a. owner or immediate member notbeing owner of any other availableresidential unit within the same cityor municipality(b. lease for a definite period hase&pired(c. lessor has given lessee formalnotice 1 months in advance( andd. owner or lessor is prohibitedfrom leasing the residential unit or

allowing its use by a third person forat least - year.

4. Absolute ownership by the lessee ofanother dwelling unit in the samecity or municipality which may belawfully used as his residenceprovided lessee is with formal notice1 months in advance(

5. Need of the lessor to ma3e necessaryrepairs in the leased premises whichis the sub$ect of an e&isting order ofcondemnation by appropriate

authorities concerned in order toma3e said premises safe andhabitable( and

6. E&piration of period of the leasecontract.

NOTE:

&cept when the lease is for a

definite period, the provisions of Art.-=?1)-* of the #ivil #ode )##*,insofar as they refer to residentialunits, shall be suspended during theeffectivity of C.A. @-=-, but other

provisions of the ## and the Cules of#ourt on lease contracts insofar asthey are not in conflict with theprovisions of C.A. No. @-=- shallapply.

No increase in monthly rental by

more than -> is allowed.

TER5&NAT&ON OF T3E LEASE

If made for a determinate time, it

ceases upon the day fi&ed withoutthe need of a demand.

-* By the e&piration of the period

* By the total loss of the thing1* By the resolution of the right of thelessor:* By the will of the purchaser ortransferee of the thing;* By rescission due to non/performanceof the obligation of one of the parties

Special *ro'isions for 0uralLands

Effect of loss de to fortitos

e'ent:1. +rdinary fortuitous event ! no

reduction2. &traordinary fortuitous event

a. if more than R of the fruits werelost, there shall be a reduction,unless there is a stipulation tothe contrary

b. if R or less, there shall be noreduction

Lease dration" If not fi&ed, it shall

be for all time necessary for thegathering of fruits which the wholeestate may yield in - year, or whichit may yield once.

Special *ro'isions for !rbanLands

0epairs for which urban lessor is

liable#-. special stipulation. if none, custom of the place1. in case of doubt, the repairs are

chargeable against him

Lease duration#

-. If there is a fi&ed period, lease will be

for said period.. If no fi&ed period, apply the followingrules"

a. If rent is paid daily" day to dayb. If rent is paid wee3ly" wee3 to

wee3c. If rent is paid monthly" month to

monthd. If rent is paid yearly" year to

year

CIVIL LAW COMMITTEE

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