Sales Trust

8/12/2019 Sales Trust

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SALES

Articles / Laws to Remember: 1458, 1467,1477 transfer of ownership, 1505, 559 whocan transfer xxx, 1504, 1544, 1484 Recto

Law, R.A. 6552, 1602, 1606, 1620, 1623,Redeption xxx

Q: A obliged himself to deliver a certainthing to B. Upon delivery, B would pay asum of money to A. Is that a contract ofsale?

A! "ot necessari#$. %&en if there is ano'#i(ation to de#i&er, if there is no o'#i(ationto transfer ownership, it wi## not 'e acontract of sa#e. )t a$ 'e a contact of#ease.

Memorize:Art. 1458

Note: *a#e is a contract, so the (enera#princip#es in o'#icon are app#ica'#e to sa#e'+t note that there are pro&isions which arecontrar$.

Characteristics of Contract of Sale (COS)1. Consensal (1!"#) -* isconsens+a#, it is perfected '$ ere eetin(of the inds of the parties as to the o'/ectand price.Note: here is 1 specia# #aw which re+iresa partic+#ar for for the &a#idit$ of a contractof sa#e in that sa#e, it can 'e said that indof sa#e is a fora# contract -att#eRe(istration ecree. )n a sa#e of #ar(ecatt#e, the #aw pro&ides that the contract ofsa#e of #ar(e catt#e +st 'e! in a p+'#icinstr+ent, re(istered and a certificate oftit#e sho+#d 'e o'tained in order for the sa#eto 'e &a#id. +t otherwise, the othercontracts are perfected '$ ere consent orere eetin( of the inds.

$. %rinci&al sa#e is a principa# contract, itcan stand on its own. )t does not depend onother contracts for its existence and &a#idit$.

'. ilateral (1!#) necessari#$ in a -*,'oth parties wi## 'e o'#i(ated. )t is notpossi'#e that on#$ 1 part$ is o'#i(ated

'eca+se a contract of sa#e is essentia##$onero+s.

!. Oneros (1'#*) -* is essentia##$onero+s. therwise, it a$ 'e anothercontract or an$ other act #ie it a$ 'e a

donation if there is no copensation for thetransfer of ownership to the other part$.

#. Commtati+e ($*1*) eanin( there ise+i&a#enc$ in the &a#+e of the prestation to'e perfored '$ 'oth parties. "ora##$, thethin( so#d wo+#d 'e e+a# to the price paid'$ the other part$ '+$er.

%xception! a contract of sa#e which is ana#eator$ contract #ie sa#e of hope. )n sa#e ofhope, the o'#i(ation of 1 part$ wi## arise

+pon the happenin( of a certain e&ent orcondition.

Example Sale of Hope:*a#e of a #otto ticet,-* wi## ha&e the o'#i(ation to pa$ $o+on#$ if $o+ (ot a## the 4 or 6 n+'ers whichare drawn

Another Example of Aleatory:)ns+rance

,. Nominate (1!#)

Classification of Contract of Sale1. As to Natre of Sb-ect Matter

a. o&a'#e'. )o&a'#e

Q: hy there is a need to determine?A! eca+se soe concepts wi## app#$ if theo'/ect is o&a'#e or soe #aws wi## app#$ ifthe o'/ect is io&a'#e.

Examples::nder the *tat+te of ;ra+ds, $o+ha&e to deterine if the o'/ect if o&a'#e or

io&a'#e in order that stat+te of fra+ds wi##app#$. he Recto #aw wi## app#$ if the o'/ectis o&a'#e. he aceda #aw wi## app#$ if theo'/ect is rea#t$. Artic#e 1544 or o+'#e *a#ewi## re+ire $o+ to deterine the nat+re ofthe s+'/ect atter.

$. As to Natrea. hin(

;a$e arie -. artine< -hato -a'i(as =essica A. Lope< ian Rosapapan "o&e'er 20081


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'. Ri(ht

Q: hy there is a need to determine?A! Re#e&ant in the ode of de#i&er$

istinctions

1. eed of A'so#+te *a#e A* &s.-onditiona# *a#e -* &s. -ontract to *e##-*2. ation in a$ent ) &s. -*3. -ontract for a iece of >or -> &s.-*4. arter &s. -*5. A(enc$ to *e## A* &s. -*

ee of Absolte Sale (AS) +s.Conitional Sale (CS) +s. Contract to Sell(C0S)

AS se##er does not reser&e his tit#e o&erthe thin( so#d and th+s, +pon de#i&er$ of thethin(, ownership passes re(ard#ess ofwhether or not the '+$er has paid.

CS ? condition@s are iposed '$ the se##er'efore ownership wi## pass. "ora##$, thecondition is the f+## pa$ent of the price. )n-*, ownership a+toatica##$ passes to the'+$er fro the oent the conditionhappens. here is no need for anothercontract to 'e entered into.

B!: "eceipt was issued by A to B. #hereceipt$s tenor %&ate of the receipt '''"eceived from B the sum of ()*,+++.++as partial payment for the car ''' thebalance to be paid at the end of themonth '''. -ontract to ell?*A! "o. )t does not pertain to a -*'eca+se in a -* ownership is reser&ed '$the se##er despite de#i&er$ to the '+$er. he'+$er does not ac+ire ownership. his isan A'so#+te *a#e.

Q: In a -#, upon the happening of thecondition/s imposed by the seller, wouldownership automatically pass to buyer?

A! "o. >hi#e a -* is considered a specia#ind of conditiona# sa#e, it is a pec+#iar indof sa#e 'eca+se despite the happenin( ofthe condition and act+a# de#i&er$, the '+$erdoes not a+toatica##$ ac+ire ownership.

)n -*, if condition@s happen, the ri(ht ofthe '+$er is to cope# the se##er to exec+tea fina# deed of sa#e. *o ownership does nota+toatica##$ pass.

ation in %ament (2%) +s. COS

2% (1$!#) where'$ propert$ is a#ienatedto the creditor. )t is pro&ided that the #aw onsa#es sha## (o&ern s+ch transaction. )t isspecifica##$ pro&ided that the pre?existin(o'#i(ation +st 'e in one$. )f not in one$and there is ), it wi## not 'e (o&erned '$the #aw on sa#es '+t '$ the #aw on no&ation'eca+se practica##$ there is a chan(e in theo'/ect of the contract.

Example 1: )f A owes 100,000.00instead of pa$in( 100,000, he offers and

accepts the car of A as an e+i&a#entperforance this is ) and wi## 'e(o&erned '$ the #aw on sa#es.

Example 2:)f the pre?existin( o'#i(ation is tode#i&er a specific horse '+t instead ofde#i&erin( the horse, the de'tor to#d hiscreditor and the creditor accepted, that hewi## instead de#i&er his car it is sti## )'+t it wi## not fa## on 1245 '+t on no&ation'eca+se there is a chan(e in the o'/ect ofthe o'#i(ation which wo+#d extin(+ish the

o'#i(ation.

Note: A (+ide to distin(+ish one conceptfro another is to now the nat+re,re+isites and effects.

1. As to Natre2%a specia# for of pa$entCOS ? it is a contract

$. As to Re3isites2% with a pre?existin( o'#i(ation

COS not a re+ireent

'. As to 4ffect2% to extin(+ish the o'#i(ation eitherwho##$ or partia##$.COS o'#i(ation wi## arise instead of 'ein(extin(+ished.



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Contract for a %iece of 5or6 (C%5) +s.COSB!: A team if bas0etball players went toa store to buy shoes and out of the 1+members, * of them were able to choosethe shoes. #hey agreed to pay the price

upon delivery. #he other 2 memberswere able to choose but the shoes werenot available at that time but they arenormally manufactured. #he lastmember could not find shoes that couldfit his 13 inches feet and therefore hehas to order for such 0ind of shoes.hat transactions were entered into bythese players?*A! 1467 the first 2 transactions in&o#&in(a tota# of 9 p#a$ers wo+#d 'e considered a-* 'eca+se the shoes which the$ ordered

are 'ein( an+fact+red or proc+red in theordinar$ co+rse of '+siness for the (enera#aret. owe&er, the #ast transaction whichwi## 'e an+fact+red on#$ 'eca+se of thespecia# order of the p#a$er and is notordinari#$ an+fact+red for the (enera#aret wi## 'e considered a -> which isnown as the assach+setts r+#e.assach+setts r+#e r+#e in deterinin(whether the contract is a -* or a ->.

arter +s. COS

Q: A obliged himself to deliver adeterminate car with a mar0et value of(4*+,+++.++. B obliged himself to deliverhis watch and (1*+,+++.++ in cash. hat0ind of contract?

A! ;irst, $o+ ha&e to consider the intentionof the parties. he$ a$ want thistransaction to 'e considered as a sa#e or'arter and that wi## pre&ai#. +t if theintention of the parties is not c#ear fro theira(reeent then the nat+re of the contractwi## depend on the &a#+e of the watch. )f the

&a#+e of the watch is (reater than 150,000then this is 'arter. )f the &a#+e of the watchis e+a# or #ess than 150,000 then this issa#e. he &a#+e of the car is irre#e&ant. >hatis on#$ re#e&ant is the &a#+e of the thin(watch in re#ation to the cash to 'e (i&en '$one of the parties.

A7enc to Sell (A0S) +s. COS

B!: A gave B the e'clusive right to sellhis maong pants 5he has his own brandof maong pants6 in Isabela. It wasstipulated in the contract that B has to

pay the price of maong within 7+ daysfrom delivery to B. It was stipulated that

B will receive 4+8 commission5discount6 on sale. #he maong pantswere delivered to B. 9owever, before Bcould sell the goods, the store wasburned without fault of anyone. -an B becompelled to pay the price?;ro the wordin(s of the pro'#e $o+ a$ha&e an idea that this is an a(enc$ to se##. )fthis is an A*, the fact that the a(ent hasnot $et so#d the aon( pants when the$were '+rned wi## not res+#t in a #ia'i#it$ onhis part, there 'ein( no ne(#i(ence on his

part 'eca+se with the de#i&er$ of the thin(fro the principa# to the a(ent, ownershipdoes not pass. :nder the princip#e in the-i&i# -ode res perit doino it wi## 'e these##er owner who wi## 'ear the #oss. +t ifthis transaction is sa#e then with the de#i&er$of the aon( pants to , ownership passedto 'eca+se he did not reser&e ownershipo&er the pants despite the fact that the otherpart$ has not paid the price. *o when thepants were '+rned, it wo+#d now 'e asthe owner who wi## 'ear the #oss.

*A! his is exact#$ the case of 8iro7a +s.%arsons.Artic#e 1466 in constr+in( acontract containin( pro&isionscharacteristics of 'oth a -* and A*, $o+ha&e to (o into the essentia# c#a+ses of thewho#e instr+ent. )n this pro'#e, one ofthe c#a+ses B has to pa$ the price within 30da$sC. hat wo+#d ae the contract -*and not A* 'eca+se in 30 da$s frode#i&er$, whether or not has a#read$ so#dthose pants to other persons, he is a#read$

o'#i(ed to pa$ a price. hat is not an A*.ein( a -*, therefore, after ha&in( 'eende#i&ered, ownership passed to the '+$erand hence +nder res perit doino r+#e, the'+$er 'ears the #oss and therefore he can'e cope##ed to pa$ the price.

4ssential 4lements of a Contract of Sale1. Consent of the Contractin7 %arties



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$. Ob-ect or Sb-ect Matter which is adeterinate thin( or ri(htNote:*er&ice cannot 'e the s+'/ect atterof sa#e.'. Case or Consieration as far asse##er is concerned, it is the price in

one$ or the e+i&a#ent of the pa$ent ofthe price.

CONS4N0 O9 04 CON0RAC02N;%AR024SA. No consent of one or both of the&arties the contract is &oid. :nder the #aw onsa#es, it is a fictitio+s contract where thesi(nat+re of one of the parties was for(ed."ora##$, the se##erDs si(nat+re is for(ed. )fthe si(nat+re of the se##er is for(ed, that

wo+#d 'e a fictitio+s contract. he a##e(edse##er wi## not ha&e participation in theexec+tion of the contract. +t another indof contract reco(ni


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Att. =ribe>s Comment:%stoppe# is not a(ood (ro+nd 'eca+se the inor is notaware.

Sale of Necessaries

)n sa#e of necessaries s+ch as food, c#othin(and edicine to a inor, the inor has topa$ a reasona'#e price. his contract is not&oida'#e. he sa#e of necessaries wi## 'indthe inor and he wi## 'e cope##ed to pa$not rea##$ the contract price '+t on#$ toreasona'#e price.

Relati+e 2nca&acit (Articles 1!?* an1!?1)1. *a#e 'etween spo+ses it is &oid except!

a. he spo+ses exec+ted a arria(e

sett#eent and in the arria(esett#eent the$ a(reed for acop#ete separation of propert$re(ie. hen the$ can se## to eachother.

'. )f no arria(e sett#eent, the$ a$ha&e o'tained /+dicia# dec#aration ofseparation of propert$. After that,the$ can se## to each other.

2. hose entioned in Artic#e 1491a. A (+ardian cannot '+$ the propert$

of the ward. he (+ardian is notact+a##$ prohi'ited fro enterin( intoan$ and a## contracts. )t is /+st thathe cannot 'e the '+$er of a propert$of his ward.

'. An a(ent cannot '+$ witho+t theconsent of the principa# a propert$which he was s+pposed to se## oradinister.

c. he exec+tors and adinistrators ofthe estate cannot '+$ a propert$which is part of the estate.

d. +'#ic officers, /+d(es, their staff,c#er of co+rt, steno(raphers and#aw$ers are prohi'ited fro '+$in(those properties which are thes+'/ect of #iti(ation d+rin( thependenc$ of the case.

Q: hat is the status of the contractsunder 12;1?

A! rof. o#entino &oida'#e=+stice Eit+( F rof. a&iera &oidrof. ineda F rof. de Leon thefirst 3 are &oida'#e and the #ast 3 are&oid.

he 'etter answer is &oid 'eca+se these

persons are prohi'ited fro enterin( intothese contracts. :nder Artic#e 1409, if thecontract is prohi'ited, it is &oid.

3. A#iens are prohi'ited fro ac+irin( '$p+rchase pri&ate #ands ae noteBac+irin(C which eans '+$in( not se##in(.he$ can se##.%xceptions @ when a#iens can '+$!

a. ;orer nat+ra# 'orn ;i#ipino citi


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Examples:sa#e of prohi'ited dr+(s or sha'+is &oid, sa#e of ari/+ana is &oid, sa#e of wi#df#owers or wi#d ania#s is &oid

3. +st 'e deterinateRead Artic#e 1460

R=L4S AS 0O O@4C0 O9 COSQ: A obliged himself to deliver andtransfer ownership over the palay thatwill be harvested from a specific parcelof rice land in


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Q: A deed of sale was entered into by Aand B. #he price agreed upon was 1hen the date arri&ed, despitedeand fro the '+$er, there was node#i&er$ on the part of the se##er. %&en if the(oods are destro$ed the next da$ d+e tofort+ito+s e&ent, tae note an( owner a$an( '+$er na '+t who will bear the loss?he se##er 'eca+se he was in de#a$ inde#i&erin( the (oods.

O=L4 SAL4 (AR02CL4 1#!!)B!: F sold a registered parcel of land to

" who did not register the sale.#hereafter, F sold the very same parcelof land to - who registered and obtaineda new #-# in his name. ho would havea better right?*A! Att. =ribe: ) f+##$ a(ree with the :Law -enterDs answer. )t depends onwhether or not - re(istered the sa#e in (oodfaith. Re(istration is on#$ one of there+ireents (ood faith is e+a##$ aniportant re+ireent.

Note: )n 1544 do+'#e sa#e, as to whichr+#e app#ies wi## depend on the thin( so#d ifo&a'#e or io&a'#e.

Q: If the thing is sold twice, who wouldhave the better right?

A! )f o&a'#e, the '+$er who first toopossession in (ood faith wi## ha&e the 'etterri(ht. )f io&a'#e, the '+$er, who first

re(istered in (ood faith, wi## ha&e the 'etterri(ht. )f there was no re(istration, it wi## 'ethe first who too possession in (ood faith.)f no possession in (ood faith, the'+$er who has the o#dest tit#e in (ood faith.%&en the 1st'+$er is re+ired to 'e in (ood

faith. '&io+s#$, the first '+$er wo+#d ha&ethe o#dest tit#e. G+n( (ood faith dittoo'&io+s#$ wo+#d not pertain to a'sence ofnow#ed(e of the 2ndsa#e asi s$epre 1st

'+$er s$a. e is nonethe#ess re+ired toha&e 'o+(ht the thin( in (ood faith. oodfaith eans that he had no now#ed(e ofthe defect of the tit#e of the se##er.

5arnin7: Please be careful when yourecite you register the sale not the land!

Rea: Bautista vs. ioson

-arumba vs. -A;acts! *a#e of #and to who too ph$sica#possession '+t did not re(ister. e is thefirst '+$er. owe&er, the se##er A is a

/+d(ent de'tor in one case to a certaincreditor naed -. he #and 'ecae thes+'/ect of an exec+tion sa#e. he '+$er'ecae - who re(istered the sa#e.

Q: ho would have a better right

between - and B 5- had no 0nowledgeof the sale6?

A! *- *aid 'eca+se this #and was notre(istered +nder the orrens *$ste. 1544wo+#d not app#$ to +nre(istered #ands.

OL2;A02ON 0O 4L24R 04 O@4C0O9 04 SAL4

eterine the s+'/ect atter if it is athin( or a ri(ht 'eca+se there are differentodes of de#i&er$ as to thin( and as to ri(ht.

0hin7s


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Q: hat if the thing was delivered to a 7 rd

person?A! =+rispr+dence *- said $es, therea$'e act+a# de#i&er$ if the third person hasa+thorit$ to recei&e fro the &endee. h+s,ain( hi an a(ent of the &endee and that

wo+#d sti## 'e act+a# de#i&er$.

Note:hi#ippine #aw does not on#$ re+ireact+a# de#i&er$ constr+cti&e de#i&er$ a$res+#t in transfer of ownership.

2. -onstr+cti&e '$ the exec+tion of ap+'#ic instr+ent if the contrar$ intentiondoes not appear on the doc+ent. $ theere exec+tion of the p+'#ic instr+ent thatis e+i&a#ent to de#i&er$. ence, ownershippasses to the '+$er.

uen@le J treiff vs.


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Example:*a#e of shares of stocs the&endee a$ not a#wa$s ha&e the ri(ht toexercise his ri(hts +nder the shares ofstocs. -oncrete#$, if there is astocho#dersD eetin(, the 'oos of thecorporation wi## 'e c#osed for 30 da$s 'efore

the eetin(. h+s, if the sa#e occ+rredwhen the 'oos are a#read$ c#osed, no onewi## 'e reco(ni


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Note: )f there is no stip+#ation when to 'ede#i&ered, the se##er cannot 'e cope##ed tode#i&er.

Q: hat if at the time of the perfection ofsale, though the thing is determinate, it

was on board a ship while in transit.here will be the place of delivery?

A! ependin( on the shippin( arran(eenta(reed +pon '$ the parties.

9.O.. ;ree on oardC.2.9. -ost, )ns+rance, ;rei(ht

;... and -.).; are r+#es of pres+ptionwhich wo+#d ha&e to (i&e wa$ to the rea#intention of the parties. *o after a##, the;... or -.).;. arran(eents do not rea##$

deterine the p#ace of de#i&er$, the$ on#$ae r+#es of pres+ption.

*o in a -.).;. arran(eent, it is on#$pres+ed that the p#ace of de#i&er$ is theport of ori(in.

)n a ;... destination, it is on#$ pres+edthat the point of destination is the p#ace ofde#i&er$.

Q: hat really determines the place of

delivery?A! - said this indication as to theintention of the parties as to the p#ace ofde#i&er$ is the anner and p#ace ofpa$ent. )f there is an a(reeent as towhere and how the price is to 'e paid thatwo+#d 'e the p#ace considered for p+rposesof de#i&er$ and therefore for transfer ofownership.

Read 1582

Obli7ations which cannot be 5ai+e:1. '#i(ation to transfer2. '#i(ation to de#i&er

Obli7ation which can be 5ai+e:1. '#i(ation to warrant the thin(


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suit by the seller and the lapse of the 3month period, the sCuatters were stilloccupying the land. #he seller offers toreturn the (1++,+++ to the buyer. #hebuyer refused to accept the (1++,+++and told the seller %never mind even if

the sCuatters are still there. I will stillbuy the land. o the buyer offered to

pay the balance (;++,+++ and demandedthat a & be e'ecuted by the seller.#he seller refused to accept the(;++,+++. hat he did is to file an actionto rescind the contract. ould the action

prosper?*A! )f the answer is 'ased on rescission,the action wi## not prosper 'eca+serescission a$ on#$ 'e in&oed '$ thea((rie&ed part$. he se##er is not an

a((rie&ed part$.$. 2m&lie%rof. e Leon: 'eca+se of this ip#iedwarrant$, it cannot 'e said that hi#ippine#aw does not adopt ca&eat eptor B'+$er

'ewareC. ;a$eDs -a&eat ! #ease checthe 'oo of rof. e Leon re(ardin( this

stateent. hans

%&en if there is no stip+#ation as to thesewarranties, the #aw itse#f wo+#d pro&ide for

these warranties and hence if there arehidden defects he wo+#d ha&e reedies+nder the #aw or e&en if he was depri&ed ofthe thin( he 'o+(ht he wo+#d ha&e areed$ a(ainst the se##er. ence, it is notcorrect to sa$ that hi#ippine #aw hasadopted ca&eat eptor. +t there arecertain instances when there wo+#d 'e nos+ch ip#ied warrant$ a(ainst hiddendefects. here a$ 'e warrant$ as to tit#e ora(ainst e&iction '+t there is no warrant$a(ainst hidden defects +nder certain

circ+stances.

5arrant A7ainst 4+iction / 0itleQ: If the seller was able to transferownership to the buyer may the sellernonetheless be held liable for breach ofwarranty against eviction?

A! Ges. hese are 2 different o'#i(ations!the o'#i(ation to transfer ownership and theo'#i(ation to warrant the thin(.

Example: his warrant$ a(ainst e&ictionwo+#d inc#+de the warrant$ that the '+$er

fro the oent of the sa#e ha&e and en/o$the #e(a# and peacef+# possession o&er thethin( so#d.

Re3isites of warrant a7ainst e+iction:1. here has to 'e fina# /+d(ent depri&in(hi of s+ch thin( either who##$ or partia##$.)n other words, a case was fi#ed '$ a 3 rd

person a(ainst the '+$er which res+#ted in afa&ora'#e decision as to the p#aintiffres+#tin( in the depri&ation of the propert$'$ the '+$er.

2. epri&ation +st 'e either!2.1 ased on a 3rd personDs prior ri(hto&er the thin( prior to the sa#e or2.2 ased on an act after the sa#e '+tip+ta'#e to the &endor.

3. here sho+#d 'e no &a#id wai&er

4. he action to ho#d the &endor #ia'#esho+#d 'e fi#ed within the period prescri'ed'$ #aw.

5ARRAN0B A;A2NS0 24N494C0SRe3isites:1. he defect +st exist at the tie of thesa#e. )f the defect started after the sa#e therecan 'e no s+ch #ia'i#it$.

2. he defect +st 'e hidden. )f the defectis patent and the '+$er nonethe#ess 'o+(htthe thin( then he can no #on(er ho#d these##er #ia'#e.

)f the se##er is not aware of the hiddendefects, he can 'e he#d #ia'#e. )f he wasaware, his #ia'i#it$ wi## 'e (reater 'eca+sethat aes hi a 'ad faith se##er.

Q: !ven if there is such a hidden defect,is it possible that the vendee cannothold the vendor liable despite the factthat there was hidden defect even if he



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was not informed because maybe theseller was not aware?

A! Ges, he a$ not 'e a'#e to ho#d the se##er#ia'#e if he is an expert on the thin(. e isexpected to now the defect.

3. he defect +st res+#t in the thin( 'ein(+nfit for the p+rpose of the '+$er or at #eastit diinish the fitness of the thin( s+ch thatthe '+$er wo+#d not ha&e 'o+(ht it at theprice had he nown of s+ch defect.

Q: If the thing which has a hidden defectwas lost or destroyed, can the vendeehold the vendor liable for this breach ofwarranty? &oes it matter if the loss wasdue to a fortuitous event or maybe theloss was due to the fault of the buyer

himself, nonetheless, can he hold thevendor liable?

A! Ges. he &endee can ho#d the &endor#ia'#e for 'reach of warrant$ a(ainst hiddendefects e&en if the thin( was #ost d+e tofort+ito+s e&ent or d+e to the fa+#t of the&endee hise#f 'eca+se of the hiddendefects. +t of co+rse, if the ca+se of the#oss was the defect itse#f, the #ia'i#it$ is(reater than if the ca+se of the #oss was afort+ito+s e&ent or fa+#t of the '+$er.

)f there wo+#d 'e a pro'#e here as to theextent of the #ia'i#it$ of the &endor, hesho+#d first consider the ca+se of the #oss,a$'e it was #ost d+e to the defect itse#f or#ost thro+(h fort+ito+s e&ent or #ost thro+(hthe fa+#t of the &endee. After that, he sho+#ddeterine whether the &endor was aware ofthe defects or he was not aware. A(ain, ifhe was aware, daa(es a$ 'e reco&ered.)f he was not aware, he a$ not 'e he#d#ia'#e for daa(es +n#ess he can on#$ 'ehe#d #ia'#e for interest.

)f the defect was the ca+se of the #oss, the&endor wo+#d 'e #ia'#e for the ret+rn of theprice, not on#$ the price #ess &a#+e '+t a#soto ref+nd the expenses and daa(es'eca+se the &endor was aware of thedefects.

)f the &endor was not aware of the defects,he cannot 'e he#d #ia'#e for daa(es '+t hewo+#d on#$ 'e he#d #ia'#e for the price.

)f the ca+se of the #oss of the thin( was afort+ito+s e&ent, he can on#$ 'e he#d #ia'#e

for the price #ess &a#+e.

ANB CAR;4 OR NON G A%%AR4N04NC=MRANC4 NO0 4CLAR4 OR apparent encumbrance?

A! f co+rse there are re+isites!1 he enc+'rance or easeent or

'+rden or the road ri(ht of wa$ has to'e non apparent.

Q: If there is an encumbrance, what arethe remedies of the buyer?

A! a e can see for the red+ction of theprice.

' Rescission ? the #aw re+ires that theaction for rescission +st 'e fi#ed within 1$ear fro the date of the contract. )f after 1$ear, no ore rescission.

c )f he 'ecae aware ore than a$ear, he a$ fi#e an action for daa(es, +tthe #aw re+ires that the action for daa(eshas to 'e fi#ed within 1 $ear a#so '+t frothe tie of the disco&er$ of enc+'rance. )fhe fi#ed it for exap#e, after 2 $ears frodisco&er$ no reco&er$ of daa(es.

5ARRAN0B O9 8=AL20B%rof. eleonH %rof. it7H %rof. a+iera:there is another warrant$ which is5ARRAN0B O9 8=AL20B which inc#+des!

1 >arrant$ of ;itness2 >arrant$ of erchanta'i#it$



19/37

o soe a+thors the warrant$ of +a#it$ isconsidered +nder the warrant$ of hiddendefects.Att. =ribe: ) cannot a(ree that thewarrant$ of +a#it$ is in the warrant$ ofhidden defects. ) a(ree with rof. e Leon,

rof. Eit+( and rof, a&iera that there is awarrant$ of +a#it$.

5ARRAN0B O9 920N4SS 9OR A%AR02C=LAR %=R%OS4he thin( 'o+(ht a$ not act+a##$ ha&e an$defect and for 1 i##ion '+$ers it wo+#d 'e fitfor their p+rpose. owe&er, it a$ not 'e fitfor the p+rpose of 1 '+$er and if a## there+isites for this warrant$ are present, thenhe a$ ho#d the se##er #ia'#e for 'reach ofwarrant$ of fitness for a partic+#ar p+rpose

a#tho+(h there is no hidden defect '+t it isnot fit for the p+rpose of the '+$er.)n order for the se##er a$ 'e he#d #ia'#e!

1. he '+$er has to infor the se##er ofthe partic+#ar p+rpose for which thethin( is to 'e +se and

2. he se##er anifested that the thin(wo+#d 'e fit for the p+rpose and the'+$er re#ied on s+ch representationof the se##er.

Note: )f the thin( is so#d +nder the trade

nae there can 'e no warrant$ of fitness fora partic+#ar p+rpose.

5ARRAN0B O9 M4RCAN0A2L20B)t pertains to the fact that it is fit for the(enera# p+rpose. )f the thin( was so#d '$description or '$ sap#e, it is consideredthat there is s+ch a thin( as warrant$ oferchanta'i#it$.

SAL4 O9 AN2MALS 520 494C0S GR=L4S:

1. he defect is a redhi'itor$ defect it iss+ch ind of defect that e&en '$exaination of expert it cannot 'edisco&ered.

Q: If one of the animals has redhibitorydefect, can the buyer rescind the entirecontract pertaining to all the animals?

A! ;.R.! "o. e can on#$ rescind thecontract pertainin( to the ania# withredhi'itor$ defect. e cannot rescind theentire contract pertainin( to a## ania#s.4ce&tion: )f he can pro&e that he wo+#dnot ha&e 'o+(ht the others had he nown

the defect of one then he can rescind theentire contract.

Q: ho has the burden of proof that hewould not have bought the others hadhe 0nown of the defect of one?

A! "ora##$, it wo+#d 'e the '+$er. +t the#aw +nder certain circ+stances wo+#dpro&ide for this pres+ption that it ispres+ed that he wo+#d ha&e 'o+(ht theothers had he nown of the defect of one.Examples! e 'o+(ht the ania#s in teas

or in pairs then the pres+ption arises.? Lo&e 'irds An( (a #o&e 'irds,

apa( naata$ $+n( isa #ater onaata$ din $+n( isa. insan n(a(s+icide pa s$a pa( a( isa na#an( s$a. )++nto( n$a +#o n$a sa

ca(e n$a.

2nstances whether there wol be nowarrant a7ainst hien efects antherefore ca+eat em&tor ma be in+o6e:1. *a#e which is an Bas is where isC sa#e

which eans sa#e where it is fo+nd xxx'aha#a a sa '+ha$ o if $o+ want to '+$the thin( and $o+ cannot #ater on c#ai thatthere were hidden defects. ;a$e! p#s.research the cop#ete eanin( of Bas iswhere isC sa#e. Att$. :ri'e wi## as the

eanin(. 2. *a#e of 2ndhand ites3. *a#e of ania#s in fairs4. *a#e in p+'#ic a+ction

Note! here wo+#d sti## 'e warrant$ a(ainst

e&iction.Note: R+#es on warrant$ a#so app#$ to

/+dicia# sa#e.

Q: In sale by authority of law or ine'ecution sale, can there be breach ofwarranty against eviction?

A! Ges. he /+d(ent de'tor and not thesheriff sha## 'e #ia'#e.



20/37

he #aw wo+#d specifica##$ exept certainpersons fro #ia'i#it$ for 'reach of warrant$#ie sheriff, a+ctioneer, ort(a(ee, p#ed(eand other persons who se## '$ &irt+es of ana+thorit$ of #aw #ie notar$ p+'#ic 'eca+se

the$ are not rea##$ se##in( for these#&es,the$ are se##in( on 'eha#f of another person.

R2;0S AN OL2;A02ONS O9 044N44

1. '#i(ation to accept the thin(de#i&ered.

2. '#i(ation to pa$ the price ifwarranted, with interest

1. Obli7ation to acce&t the thin7eli+ere

Q: If the buyer received the goodsdelivered, does it mean that he alreadyaccepted?

A! "o 'eca+se recei&in( is pre#iinar$ toacceptin(. )n fact, this is consistent to theri(ht pro&ided '$ #aw to the '+$er which isthe ri(ht of inspection or the ri(ht ofexaination. hereafter, he a$ re/ect the(oods if defecti&e.

$. Obli7ation to &a the &rice

Q: hen?A! 1 As stip+#ated

2 )f there is no stip+#ation, it wo+#d'e at the tie and p#ace of de#i&er$.

Ri7ht to 2ns&ect / 4aminehis a$ 'e wai&ed.Example:-... arran(eent.

MAC4A LA5*t+d$ aceda Law and its essentia#feat+res see 'oo of rof. a&iera

Q: Are the remedies under the hen the thin( is de#i&ered to a

coon carrier and the se##erdid not prefer his ownership and

possession o&er the (oods.

S0O%%A;4 2N 0RANS20=Re3isites:

1 )nso#&enc$ of the '+$er2 he se##er +st ha&e parted

possession o&er the (oods3 he (oods +st 'e in transit



21/37

ow ri7ht is eercise:1 $ o'tainin( act+a# possession of

the (oods2 his a$ 'e exercised '$ ere

notice to the coon carrier

)f the se##er &a#id#$ exercised the ri(ht ofstoppa(e in transit+, he wi## 'e consideredto ha&e re(ained his possessor$ #ien.

R2;0 O9 R4SAL4Q: hen would the seller have thisright?

A!1 )f the (oods are perisha'#e2 he ri(ht is express#$

reser&ed in the contract3 he '+$er has 'een in

defa+#t for an +nreasona'#e tie.

Note:he se##er sho+#d send a notice of theintention to rese## to the '+$er.

Note:he resa#e a$ 'e a pri&ate sa#e or ap+'#ic sa#e. he on#$ #iitation here is thatthe se##er cannot '+$ direct#$ or indirect#$.

R4C0O LA5#s. read *a#es '$ rof. a&iera

4D02N;=2SM4N0 O9 SAL4#s. read *a#es '$ rof. a&iera

1. a$ent2. "o&ation3. Loss of the thin(

=ner the law on sales1. he exercise of the ri(ht of resa#e

wi## res+#t in the extin(+ishent ofthe 1stsa#e. he ownership of the 1st

'+$er wi## 'e terinated and s+ch

ownership wi## 'e &ested to the 2nd

'+$er2. Rescission or cance##ation wi##

extin(+ish -*3. Redeption


22/37

LEASE

Note: Read the efinition of Lease +nder

Artic#es 1643, 1644, 1713.

-onsider a#so on ;ora#ities! Artic#es

1647, 1724 in re#ation to 1403 on*tat+te of ;ra+ds and 1403, 1878 on

A(enc$ to Lease.

Assi(nent and *+'#ease! Artic#es

1649, 1650

)p#ied new #ease or tacita rec+nd+cion!Artic#e 1670 "important#

Ri(hts and '#i(ation of the Lessor and

Lessee! Artic#es 1673, 1678, 1680, 1723"ta$e note se%eral &uestions in the barha%e appeared under these pro%isions#

eriod of the Lease if the parties fai#ed

to ;ixed the eriod! Artic#es 1682, 1687

Ri(hts of hird erson! Artic#e 1729 "ex:

rights of owner of materials against theowner of the building#

"ote! he first thin( to consider in #ease isto consider the ind of #ease.

or or *er&ice3. Lease of Ri(ht

"ote! )n #ease of *er&ice, there are fo+r 4

of the '+t three 3 wi## not 'e co&ered '$-i&i# Law, which are o+seho#d *er&ice and-ontract of La'or co&ered '$ La'or Law,and -ontract of -arria(e co&ered '$-oercia# Law. he on#$ ind of Leaseof *er&ice that wi## 'e disc+ss +nder the-i&i# Law is the -ontract for a iece of>or.

efinition:

Q: If a party binds himself to giveanother the enHoyment or use of thing,does that ma0e the contract one of lease

of things?A! "o, the ost iportant distinction herewith that of coodat+ is that in #ease, it+st 'e for a price certain, otherwise ifthere is no &a#+a'#e consideration for the+se or en/o$ent of the thin( it wi## 'ecoodat+.

istin7ish a Contract for %iece of 5or6from Contract of A7encRea:Frensel vs.


23/37

ind as to the o'/ect and to theconsideration the contract is perfected.

Note: Lease of thin(s is not essentia##$persona#.

9eirs of Fausto &imaculangan vs. IA-.:pon the death of parties #ie death of#essee, the contract is not there'$terinated. he heirs of the #essee a$contin+e to occ+p$ the preises '$ &irt+e ofthe #ease 'eca+se it is not extin(+ish +pondeath of #essee.

Characteristic of Lease of thin7s

-onsens+a# -ontract nero+s i#atera# "oinate rincipa#.

4ssential Re3isites of Contract ofLease1. -"*%"2. =%-Q: In lease of things, may a consumablething be the subHect matter of lease?

A! "ora##$ when a cons+a'#e thin( is

+se in accordance with its nat+re it iscons+ed, as a r+#e therefore cons+a'#ethin(s cannot 'e the s+'/ect atter of #easeof thin(s. he exception is, when the +se ofthe thin(s is on#$ for exhi'ition, or whenthe$ are accessor$ to an ind+stria#esta'#ishent then it a$ 'e a s+'/ect of#ease.3. -A:*%

9ORMAL2024SLease of *er&ice there is no partic+#ar

for re+ired '$ #aw for the &a#idit$ of the#ease not e&en for the enforcea'i#it$ as ar+#e.Rea:onal +s. CA

Lease of hin(s certain pro&ision of the#aw which re+ires certain fors to 'eenforcea'#e.

Note: the pro'#e in #ease wo+#d nora##$'e a co'ination of an a(enc$ and #ease.

B!: Agreement for the repair of a privateplane and for a certain sum of money,

however additional wor0 was reCuestedby a person who has the authority of aduly recogni@e representative of theowner of the plane and the reCuest wasmerely verbal, when the additional wor0was completed, the one who renderedthe wor0 demanded additional payment,the defense raise was under 1)42 inorder that a claim for additional paymentfor the additional wor0, the agreementfor the additional wor0 must be inwriting and the changes should be

authori@ed in writing*A! he s+((ested answer of : wi##s+stain the defense 'eca+se of 1724O s+chchan(e not 'ein( a+thori


24/37

howe&er he a$ s+'#ease the propert$ inwho#e or in part e&en witho+t the now#ed(eof the #essor as #on( as he was notprohi'ited fro s+'#easin( the preises.

Rea:


25/37

AGENCY

efinition 1868, 1874 and 1878? fora#ities

-o< a for is re+ired for the &a#idit$ or forthe enforcea'i#it$ of the contract entered '$the a(ent?1878, 1874

1892? pertain to appointent of thes+'stit+te? effect? a$ the a(entnonethe#ess 'e he#d #ia'#e for the #oss thatinc+rred '$ the princip#e as the res+#t of theappointent of the s+'stit+te.

ther pro&isions pertain to the ri(ht ando'#i(ations of coission a(ent or oreiportant#$ the (+arant$ coission a(ent?1907?1908

%ffect of death?1919, 1930 and 1931%ither of the a(ent or principa#

Re&ocation?ind of a(enc$? a(enc$ co+p#edwith interest?1927

4: A as6e her best frien to b forher certain items in a 7rocer store. 2sthere a nominate contract createbetween A an I*A! etter answer, if a(reed to there+est of A, an a(enc$ re#ationship has'een created, a noinate contract has 'eencreated.Rea:Quiroga vs (arsons

istin(+ishin( contact of a(enc$ fro othercontract and other #e(a# re#ationship.-onsider the characteristics of a contract ofa(enc$ as a contract and as a #e(a#re#ationship '+siness or(ani


26/37

authority of the agent and therefore bebound by any contract entered into by Ain representation of B with 7rdperson. Isthe claim of B tenable?*A! "o. 1873 so far as 3rd person areconcern, this notice iton( #etter n$a a$ I

reain in f+## force and effect +nti# it isrescinded in the sae anner it was (i&en.

' Actal a7enche #aw itse#f c#assif$ act+a# a(enc$ into asanner of creation, express @ ip#ied. hereis no pro'#e with express a(enc$.

3. %xpress a(enc$?it is a ind ofa(enc$ the consent of 'oth partieswere express#$ (i&en.

4. )p#ied a(enc$? were the consent ofone parties was on#$ ip#ied#$ (i&en

on the part of principa#? the #eadin(case is &ela (ena vs. 9idalgo

Q: If a person was as0ed to administerthe property of another to sell the

property, and he said nothing by hissilence, by his inactions may be deemedaccept agency?

A! "ot necessari#$. :nder the #aw, $o+ ha&eto ae distinction to deterine thescenario +nder which the said appointent

was ade, oieP he #aw wo+#d sa$ whenthe 2 parties are a'sent, and when the 2parties are present.>hen 2 parties are a'sent? 1 is in ani#aand the other is in -e'+.>hen 2 parties are present? present in thesae roo

a 2 persons present? present in thesae conference ha##' )f 2 persons are in different p#ace,one in ani#a and the other one in -e'+

Com&ensationAs to the copensation in a contract ofa(enc$ consider if the a(enc$ is (rat+ito+sor onero+s.

Rea:1909 ? the #ia'i#it$ of the a(ent fordaa(e to the principa# d+e to hisne(#i(ence or e&en 'ad faith or fra+d

coitted a(ainst the principa# a$ 'eiti(ated if the a(enc$ is (rat+ito+s incharacter.

B!: cope of authority of the agentwhether it only pertains to the acts of

administration or acts of anu yundominion?*A! :nder this pro&ision 1877 if the a(enc$is coes in (enera# ter this on#$ copriseacts of adinistration e&en if the principa#'eho#ds power to the a(ent or it is statedthat the a(ent a$ exec+te an$ act as a$'e deeed appropriate. hat wi## sti## 'e ana(enc$ pertainin( to act of adinistration.

As to for, the #aw is c#ear that it a$ 'eora# howe&er the #aw a$ re+ire a

partic+#ar for.

4SS4N02AL 4L4M4N0S O9 ACON0RAC0 O9 A;4NCBRea: "allos casehe *- en+erated the essentia# e#eentsor the a##e(ed essentia#s e#eents of acontract of a(enc$.

1. -onsent2. %xec+tion of the /+ridica# act?

s+'/ect atter3. Acts within the scope of a+thorit$

4. he acts +st 'e inrepresentation of the principa#

his are a##e(ed#$ the essentia# e#eenta(ain soe a+thors wo+#d disc+ss in their'oos with d+e respect to the ponente ofthis case, ed$o a#i a#i an(en+eration, first there was nothin(ention a'o+t the ca+se or considerationas a contract, a contract wi## ne&er &a#id#$ha&e a ca+se or consideration we## it a$'e #i'era#it$ pwede naan ca+se $an '+tthere +st ha&e a ca+se if on#$ for that the

en+eration 'e defecti&e ore than thatthat #ast 2 ention that the a(ent act withinthe scope and that the a(ent +st act inrepresentation are not essentia# e#eents ofa contract of a(enc$ the$ are act+a##$o'#i(ations of a(ent which eans the$ ha&e'een a#read$ perfected of contract ofa(enc$, no o'#i(ation wi## arise +n( &oid+n( ontrata +n( wa#a pan( &a#id contract,



27/37

so essentia# e#eents are on#$ thosee#eents necessari#$ for the &a#idit$ of thecontract, once the contract is &a#id then theo'#i(ations wi## arise e&en if the agentacted outside the scope of authoritydoes it mean that the contract of agency

is void? f co+rse not, he can 'e he#d#ia'#e for actin( o+tside the scope ofa+thorit$ or if he acted not in contep#ationof the principa#, does it mean that therewas no agency at all?f co+rse not, thereis a contract of a(enc$. :nder the r+#e theconse+ences if the a(ent did not act in therepresentation of the principa#.

%AR024Soin( to the consent of the parties, we## 1a+thor c#ais that there are 3 parties in a

contract of a(enc$ that is tota##$ wron(Phere are on#$ 2 parties in a contract ofa(enc$ the principa# and the a(ent, howe&erin pro'#es in&o#&in( a(enc$ there a$ 'ethere wo+#d 'e nora##$ three personsin&o#&e, the third persons with who thea(ent transacted, no #on(er part of theconcept a(enc$, this is the a(enc$, thecontract entered into 'etween '$ theprincipa# and the a(ent, '+t when the a(ententered into a contract it a$ 'e a sa#e,#ease or other contract and the 3rdperson is

not a part$ to this contract, the 3rdperson isa part$ to a 2nd contract, that a(ain theparties is the principa# and the a(ent, the$a$ 'e ca##ed in another naes theprincipa#? ep#o$er, constit+ent, chiefO thea(ent a$ 'e ca##ed attorne$?in?fact, prox$,representati&e.

O@4C0As to the o'/ect of the contract of a(enc$ ?this is the exec+tion of /+ridica# act.

9ORMA(enc$ a$ 'e ora#. )t does not atter, thecontract of a(enc$ wo+#d 'e &a#id '+t theparties e&en if it is '$ &er'a# a(reeent,howe&er an$ effect of the &er'a#a+thorihen $o+ sent a #etter to $o+r'rothers or sisters $o+ do not notari


28/37

B!: A authori@e B to borrow sum ofmoney from any ban0 and he alsoauthori@e B to mortgage specific

property specific parcel of land tosecure that loan what B did he borrowmoney for himself from a certain ban0

without disclosing his principal, later onhe defaulted the Cuestion was can theban0 go after the principal?

A! f co+rse "o, the contract is 'etween thea(ent and the 'an on#$ the principa# hasnothin( to do with the contract, +nder thefacts, the a(ent 'orrow for hise#f s$ata#a(a, howe&er if $o+ ha&e read thes+((ested answer, $ 2ndpara(raph to theeffect that the 'an can at #east forec#osethe ort(a(e the$ can after the propert$ ofthe principa#. )f $o+ ree'er the +estion,

di tinatanon( n( exainer can the 'an (oafter the principa# as far as the thin( isconcerned. he on#$ +estion pertains tothe pa$ent of #oan. Another thin( of thes+((ested answer it is tota##$ wron(, +nderthe facts, the principa# a+thori


29/37

Rea: *+'stit+te &s. *+' A(ent rof. eLeonDs 'oo

PARTNERSHIP

B!: A, using all his savings in the totalamount f (hp4,+++, decided t establish arestaurant. B, however, gave (hp2,+++as %financial assistance with theagreement that B will have 448 share ofthe profits of the business. After 44years, B filed an action to compel A todeliver to him his share in the profitsclaiming that he was a partner. A deniedthat B was his partner. Is B a partner of

A?*A! Ges, was a partner in the '+siness'eca+se there was a contri'+tion of one$to a coon f+nd and there was ana(reeent to di&ide the profit aon(these#&es.

Att. =ribe: ) do not a(ree with the answer.)Dd rather a(ree with the a#ternati&e answer.>G! )n the a#ternati&e answer as can 'eseen fro the facts, (a&e hp4,000 on#$as a financia# assistance. )t was not acontri'+tion to a coon f+nd. As s+ch, heact+a##$ 'ecae a creditor of A. herefore,he did not contri'+te to a coon f+nd.

Q: hat about the stipulation that B willhave 448 share of the profits?

A! he #aw on partnership is &er$ c#ear thata sharin( in the profits does not necessari#$does not res+#t in a partnership contract'eca+se the sharin( of the profits a$ on#$'e a wa$ of copensatin( the other person,in fact that can 'e a ode of pa$ent of the#oan. Kasi $+n( #oan, s+pposed#$ pwedepa$a'#e e&er$ onth with a fixed ao+nt.+t as a(anda an( a(reeent na ito,22M of the profits, so that if wa#an( profit saisan( taon, wa#a +nan( 'a$ad. i 'athatDs reasona'#e a(reeent. n#$ +n(a$ profit, saa #an( 'a'a$aran. K+'a(a,friend#$ #oan ito. he sharin( in the profits as

express#$ pro&ided '$ #aw does notnecessari#$ res+#t in a partnership contract.h+s, it can 'e said that rea##$ was not apartner '+t is act+a##$ a creditor of A.

efinition of %artnershi&

Q: hat if two or more persons agreedto put up a partnership but they neverintended to divide the profits amongthemselves, would that still beconsidered a valid partnership contract?

A! Ges. :nder the second para(raph of theartic#e, two or ore persons can for apartnership for the exercise of a profession.

%artnershi& +s. CoJownershi&-onsider the essentia# feat+res!

CR4A02ONartnership is o'&io+s#$ created '$a(reeent. -o?ownership a$ 'e created'$ a(reeent, '+t it a$ a#so 'e created '$operation of #aw. )n fact, '$ expresspro&ision of the #aw, the fact that there is co?ownership does not necessari#$ ean thatthere is a partnership existin( 'etween twopersons.%x.! two persons a$ inherit a propert$ frotheir father or other, and +nder the #aw,the$ a$ 'e considered as co?owners of the

sae propert$.

%=R%OS4artnership! either to di&ide profits orexercise a profession.-o?ownership! -oon en/o$ent of thethin( or ri(ht owned in coonO ere#$ toen/o$ the propert$, th+s the$ a$ ha&edifferent p+rposes.

A &er$ iportant feat+re of partnership inre#ation to co?ownership, it has a /+ridica#

persona#it$, separate and distinct fro theindi&id+a# partner which is o'&io+s#$ notpresent in co?ownership. )n co?ownership,the$ ha&e their respecti&e persona#ities andno new persona#it$ wi## 'e created.

%O54RS O9 04 M4M4RS



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artnership! :n#ess otherwise a(reed +pon,each partner is an a(ent of the otherpartners and of the partnership.-o?ownership! As a r+#e, a co?owner cannotact as an a(ent of the other co?owners+n#ess otherwise a(reed +pon 'etween the

co?owners.R;)*!-o?owner! as a#ai an( profits, asa#ai an( interest. +t not necessari#$ inpartnership, 'eca+se the sharin( in theprofits a$ 'e stip+#ated +pon '$ theparties. ero +n( wa#an( stip+#ation, it a$'e 'ased on the capita# contri'+tion.

Q: ill death e'tinguish coownership?A! "o, Kapa( naata$ an( isan( co?owner,his heirs wi## 'e the co?owners of the

s+r&i&in( co?owners at pweden( t+#o+?t+#o$#an( $an. owe&er in partnership, if it is a(enera# partnership, if one of the partnersdies, the partnership is disso#&ed.

4SS4N02AL 4L4M4N0S O9%AR0N4RS2%Lie an$ other contract, it sho+#d ha&e thethree essentia# re+isites!

1. -onsent2. '/ect! to en(a(e to a #awf+# acti&it$,

whether a '+siness or profession.

3. -a+se or consideration! the proiseof each partner to contri'+te one$,propert$ or ind+str$

Consent of the contractin7 &arties:he r+#es in contract wo+#d 'e

e+a##$ app#ica'#e '+t, /+st #ie in sa#es and#ease, there are persons who are prohi'itedfro enterin( into a contract of partnership.

Ob-ecto en(a(e in a #awf+# acti&it$.

Q: If the obHect is to engage in a lawfulactivity, necessarily the partnership isvalid?

A! "o. here are specific '+siness acti&itieswherein the #aw wo+#d re+ire partic+#ar'+siness or(ani


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CLASS292CA02ON O9 %AR0N4RS2%:As to the o'/ect of the partnership is on#$ todeterine whether a person a$ enter s+chpartnership, there is a need to distin(+ishwhether a partnership is a :")E%R*AL or

AR)-:LAR partnership

2 Kinds of :ni&ersa# artnership!1. :ni&ersa# artnership of ropert$2. :ni&ersa# artnership of rofit

04RM O9 %AR0N4RS2%:Q: If the partners failed to fi' a period,does it mean that the partners agreed a

partnership at will and may be dissolvedat any time without any liability so longas they acted in good faith?

A! "o, 'eca+se a partnership a$ 'e apartnership for a partic+#ar +ndertain( e&enif no period was fixed '$ the parties.

)n one case, a partner, disso#&ed apartnership, c#aiin( it to 'e a partnershipat wi##, the partnership 'ein( in&o#&ed in a'ow#in( '+siness. he *- r+#ed that e&en ifthe partners fai#ed to fix a period, thepartnership cannot 'e considered as apartnership at wi## 'eca+se there was astip+#ation in the partnership a(reeent thatthe de't of the partnership sha## paid o+t of

the profits that wi## 'e o'tained '$ the'ow#in( '+siness. h+s, after a##, it cannot'e disso#&ed at wi##, for the de'ts wi## ha&eto 'e paid. herefore, the *- r+#ed that thesaid partnership is a partnership for apartic+#ar +ndertain(.

CLASS292CA02ON O9 %AR0N4RS:Accordin( to the #ia'i#it$ of the partners!

1. enera#2. Liited

his c#assification is re#e&ant on#$ in #iited

partnership.

"ote! A #iited partner cannot 'e he#dpersona##$ #ia'#e for partnership o'#i(ations'+t there are exceptions

As to the contri'+tion!1. capita#ist2. ind+stria#

Q: An industrial partner, may be ageneral partner?

A! Ges. A capita#ist partner a$ either 'e anind+stria# or (enera# partner.

Q:


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dispensed with. his is a#so nown asana(eent '$ consens+s.

3. )f there was ana(eentarran(eent a(reed +pon 'etween thepartners, each partner is considered as an

a(ent of the partnership.

)nto these arran(eents, if on#$ one partneris appointed as a ana(er, he can exec+tean$ acts of adinistration e&en if opposed'$ a## the other partners.%x. )n a partnership of which the '+siness isinto '+$in( and se##in( cars, the ana(in(partner decided to '+$ a &inta(e ercedesen


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1. *pecific perforance? the otherpartners can cope# hi to ae(ood his proised contri'+tion.

2. isso#+tion? a$ 'e an option '$the non?defa+#tin( partners, if thatis the on#$ ao+nt that the$ are

expectin( for the partnership.

. %ro&ert:)f a partner proised to contri'+te propert$,it +st 'e deterined as to what was rea##$contri'+ted! was it the propert$ itse#f or the+se of the propert$.

)f it was the ownership of thepropert$ that was contri'+ted then he wo+#dha&e the o'#i(ation to de#i&er and transferownership, aside fro that, +nder the #aw,

he wo+#d ha&e the o'#i(ation to warrant thethin(.

Q: Before the delivery of the thing to thepartnership, who will bear the loss?A! he partner wi## 'ear the #oss. hepartnership wi## 'ear the #oss when the thin(is a#read$ in its possession

C. 2nstrQ: If a partner fails to render service as

promised, will specific performance be a

remedy?A! efinite#$ not. )t wo+#d 'e a &io#ation ofhis ri(hts a(ainst in&o#+ntar$ ser&it+de. hereed$ wo+#d 'e to deand for the &a#+e ofthe ser&ice p#+s daa(es. )t can 'e easi#$done 'eca+se there is an ind+str$ rate.

9iciar ties:he d+t$ to o'ser&e +tost (ood

faith, honest$, fairness, inte(rit$ in 'ein(with each other. his d+t$ coences e&end+rin( the ne(otiation sta(e.

est to deterine whether there was a&io#ation of this d+t$!

>hether the partner has anad&anta(e hise#f at the expense of thepartnership. )f he has s+ch ad&anta(e at theexpense of the partnership, then there is a'reach of the fid+ciar$ d+t$. here need not'e a proof of e&i# oti&e so #on( as he has

this ad&anta(e at the expense of thepartnership.

his d+t$ #asts, nora##$, +nti# theterination of the partnership.

Q:


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whether the partner who represented thepartnership had the a+thorit$ to 'ind thepartnership.

"ora##$, if a partner wo+#d enterinto a contract, a partnership reso#+tion isnot necessar$. >hether or not a contract

wo+#d 'ind the partnership wo+#d depend onthe nat+re of the act of s+ch partner and thenat+re of the '+siness of the partnership.

Q: -oncretely, if a partner bought acomplete set of -"A in the name of the

partnership and signed by that partner,would that contract bind the partnershipfor the set was bought in the name of the

partnership?A! )t wo+#d depend on the nat+re of the actand the nat+re of the '+siness of the

partnership. )n this exap#e, the partner'o+(ht the set of *-RA, pero naan, and'+siness n( partnership a$ resta+rant, hindinaan ata na i?'ind n$a an( partnership tos+ch contract, an( ne(os$o ni#a resta+rant.

+t the se##er wo+#d raise thedefense, Bhindi o naan a#a naresta+rant $+n( '+siness, e an(na(represent n( partnership si Att$. A-,so aa#a #aw fir.C Is that a valid defense?

Ans.! "o. he *- wo+#d te## that the third

part$ contractin( with the partnership hasthe o'#i(ation to now at #east the nat+re ofthe '+siness of the partnership. )n fact, hecan deand for the presentation of theartic#es of partnership in order for the thirdpart$ to now the nat+re of the '+siness ofthe partnership. ;or, if this tie, thepartnership is a #aw office, and the partner'o+(ht a set of *-RA, that act of '+$in( aset of *-RA wi## 'e considered apparent#$for carr$in( the '+siness of the partnershipthe +s+a# wa$. herefore, that contract wi##

'ind the partnership.

2SSOL=02ONH 52N2N; =% AN04RM2NA02ONhese are three different concepts. :pondisso#+tion of the partnership, it is "%%% disso#&ed. )t wi## sti## ha&e to (othro+(h the process of windin( +p of theaffairs of the '+siness of the partnership

'efore the partnership itse#f wi## 'eterinated.

Q: hen would there be a dissolution ofa partnership?

:nder the #aw, there wi## 'e a

disso#+tion if there is a chan(e in there#ation of the partners ca+sed '$ an$ of thepartners ceasin( to 'e associated in thecarr$in( on of the '+siness of thepartnership. hat wi## res+#t in thedisso#+tion of the partnership. A(ain, if oneof the partners ceased to 'e associated inthe carr$in( on of the '+siness of thepartnership, that wi## res+#t in the disso#+tionof the partnership.

CA=S4S O9 04 2SSOL=02ON

1. %xtra/+dicia#O2. =+dicia#.

4tra-icial cases:1. &o#+ntar$O2. in&o#+ntar$.

=+dicia# ca+ses are necessari#$ &o#+ntar$'eca+se it is '$ app#ication.

2NOL=N0ARB CA=S4SQ: If one of the partners in a partnership

was elected a enator, would thisdissolve the partnership by operation oflaw?

Ans.! "o.

Q: !ven if it is a partnership of lawyersor a law office?

Ans.! "o.

@icial Cases: ;rons:1. )nsanit$ or incapacit$!

?he co+rts re+ire that it sho+#d 'e

peranent in characterO and?s+ch incapacit$ or insanit$ +st affectthe perforance of s+ch partner of hiso'#i(ations with respect to thepartnership '+siness. )n other words,+n( wa#a s$an( paia#a saana(eent n( '+siness n(partnership, insanit$ or incapacit$ is nota &a#id (ro+nd.



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2. ross iscond+ct!a. wron(f+# exp+#sionO'. if one partner wo+#d ref+se to

a##ow another partner in the ana(eent ofthe partnership '+siness, if he has s+ch

ri(ht to participate in the ana(eent Oc. if the ana(in( partner wo+#d

ref+se to distri'+te the profits of thepartnership when there is s+ch o'#i(ation todistri'+te the profitsO

d. isappropriation of the incoe ofthe partnership '+siness.

Q: Upon the dissolution of thepartnership, and there were assets left,how will these be distributed? #o whomthese assets be given?

A! As far as partnership assets areconcerned!

1. artnership creditors who are notpartners.

2. artnership creditors3. )f there are reainin( assets, to the

capita#ist partnersO4. %xcess profits ? 'ased on their

a(reeent as to profits.



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TRUST

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Documents

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