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Uribe Notes Part 2

Uribe Notes Part 2

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Published by: Maria Victoria Z. Matillano on Sep 14, 2012
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SALES Articles / Laws to Remember: 1458, 1467, 1477 transfer of ownership, 1505, 559 who can transfer xxx

, 1504, 1544, 1484 Recto Law, R.A. 6552, 1602, 1606, 1620, 1623, Redemption xxx Q: A obliged himself to deliver a would pay a sum of money to A. Is A: Not necessarily. Even if there obligation to transfer ownership, contact of lease. Memorize: Art. 1458 Note: Sale is a contract, so the general principles in oblicon are applicable to sale but note that there are provisions which are contrary. Characteristics of Contract of Sale (COS) 1. Consensual (1475) COS is consensual, it is perfected by mere meeting of the minds of the parties as to the object and price. Note: There is 1 special law which requires a particular form for the validity of a contract of sale in that sale, it can be said that kind of sale is a formal contract . Cattle Registration Decree. In a sale of large cattle, the law provides that the contract of sale of large cattle must be: in a public instrument, registered and a certificate of title should be obtained in order for the sale to be valid. But otherwise, the other contracts are perfected by mere consent or mere meeting of the minds. 2. Principal sale is a principal contract, it can stand on its own. It does not depend on other contracts for its existence and validity. 3. Bilateral (1458) necessarily in a COS, both parties will be obligated. It is not possible that only 1 party is obligated because a contract of sale is essentially onerous. 4. Onerous (1350) COS is essentially onerous. Otherwise, it may be another contract or any other act like it may be a donation if there is no compensation for the transfer of ownership to the other party. 5. Commutative (2010) meaning there is equivalency in the value of the prestation to be performed by both parties. Normally, the thing sold would be equal to the price paid by the other party (buyer). Exception: a contract of sale which is an aleatory contract like sale of hope. In sale of hope, the obligation of 1 party will arise upon the happening of a certain event or condition. Example Sale of Hope: Sale of a lotto ticket, PCSO will have the obligation to pay you only if you got all the 4 or 6 numbers which are drawn Another Example of Aleatory: Insurance 6. Nominate (1458) Classification of Contract of Sale 1. As to Nature of Subject Matter a. Movable b. Immovable Q: Why there is a need to determine? A: Because some concepts will apply if the object is movable or some laws will apply if the object is immovable. Examples: Under the Statute of Frauds, you have to determine if the object certain thing to B. Upon delivery, B that a contract of sale? is an obligation to deliver, if there is no it will not be a contract of sale. It may be a

if movable or immovable in order that statute of frauds will apply. The Recto law will apply if the object is movable. The Maceda law will apply if the object is realty. Article 1544 or Double Sale will require you to determine the nature of the subject matter. 2. As to Nature a. Thing b. Right Q: Why there is a need to determine? A: Relevant in the mode of delivery Distinctions 1. Deed of Absolute Sale (DAS) vs. Conditional Sale (CS) vs. Contract to Sell (CTS) 2. Dation in Payment (DIP) vs. COS 3. Contract for a Piece of Work (CPW) vs. COS 4. Barter vs. COS 5. Agency to Sell (ATS) vs. COS Deed of Absolute Sale (DAS) vs. Conditional Sale (CS) vs. Contract to Sell (CTS) DAS seller does not reserve his title over the thing sold and thus, upon delivery of the thing, ownership passes regardless of whether or not the buyer has paid. CS -condition/s are imposed by the seller before ownership will pass. Normally, the condition is the full payment of the price. In CS, ownership automatically passes to the buyer from the moment the condition happens. There is no need for another contract to be entered into. BE: Receipt receipt xxx for the car Contract to was issued by A to B. The receipt s tenor Date of the Received from B the sum of P75,000.00 as partial payment xxx the balance to be paid at the end of the month xxx . Sell?

SA: No. It does not pertain to a CTS because in a CTS ownership is reserved by the seller despite delivery to the buyer. The buyer does not acquire ownership. This is an Absolute Sale. Q: In a CTS, upon the happening of the condition/s imposed by the seller, would ownership automatically pass to buyer? A: No. While a CTS is considered a special kind of conditional sale, it is a peculiar kind of sale because despite the happening of the condition and actual delivery, the buyer does not automatically acquire ownership. In CTS, if condition/s happen, the right of the buyer is to compel the seller to execute a final deed of sale. So ownership does not automatically pass. Dation in Payment (DIP) vs. COSDIP (1245) whereby property is alienated to the c reditor. It is provided that the law on sales shall govern such transaction. It is specifically provided that the pre-existing obligation must be in money. If not in money and there is DIP, it will not be governed by the law on sales but by the law on novation because practically there is a change in the object of the contract. Example 1: If A owes B P100,000.00 instead of paying P100,000, he offers B and B accepts the car of A as an equivalent performance . this is DIP and will be governed by the law on sales. Example 2: If the pre-existing obligation is to deliver a specific horse but instead of delivering the horse, the debtor told his creditor and the creditor accepted, that he will instead deliver his car . it is still DIP but it will not fall

on 1245 but on novation because there is a change in the object of the obligation which would extinguish the obligation. Note: A guide to distinguish one concept from another is to know the nature, requisites and effects. 1. As to Nature DIP a special form of payment COS - it is a contract 2. As to RequisitesDIP with a pre-existing obligation COS not a requirement 3. As to Effect DIP to extinguish the obligation either wholly or partially. COS obligation will arise instead of being extinguished. Contract for a Piece of Work (CPW) vs. COS BE: A team if basketball players went to a store to buy shoes and out of the 10 members, 5 of them were able to choose the shoes. Theyagreed to pay th e price upon delivery. The other 4 members were able to choose but the shoes were not available at that time but they arenormally man ufactured. The last member could not find shoes that could fit his 16 inches feet and therefore he has to order for such kind of shoes. What transactions were entered into by these players? SA: 1467 . the first 2 transactions involving a total of 9 players would be considered a COS because the shoes which they ordered are being manufactured or procured in the ordinary course of business for the general market. However, the last transaction which will be manufactured only because of the special order of the player and is not ordinarily manufactured for the general market will be considered a CPW which is known as the Massachusetts rule. Faye Marie C. Martinez November 2008 Chato Cabigas Jessica A. Lopez Dian Rosapapan

Massachusetts rule CPW. Barter vs. COS

rule in determining whether the contract is a COS or a

Q: A obliged himself to deliver a determinate car with a market value of P250,000.00. B obliged himself to deliver his watch and P150,000.00 in cash. What kind of contract? A: First, you have to consider the intention of the parties. They may want this transaction to be considered as a sale or barter and that will prevail. But if the intention of the parties is not clear from their agreement then the nature of the contract will depend on the value of the watch. If the value of the watch is greater than P150,000 then this is barter. If the value of the watch is equal or less than P150,000 then this is sale. The value of the car is irrelevant. What is only relevant is the value of the thing (watch) in relation to the cash to be given by one of the parties. Agency to Sell (ATS) vs. COS BE: A gave B the exclusive right to sell his maong pants (he has his own brand of maong pants) in Isabela. It was stipulated in the contractthat B ha s to pay the price of maong within 30 days from delivery to B. It was stipulated that B will receive 20% commission (discount) on sale. The maong pants were delivered to B. However, before B could sell the goods, the store was burned without fault of anyone. Can B be compelled to pay the price? From the wordings of the problem you may have an idea that this is an agency to sell. If this is an ATS, the fact that the agent has not yet sold the maong pants when they were burned will not result in a liability on his part, there being no negligence on his part because with the delivery of the thing from the principal to the agent, ownership does not pass. Under the principle in the Civil Code res perit domino it will be the seller (owner) who will bear the loss. But if this transaction is sale then with the delivery o f the maong pants to B, ownership passed to B because he did not reserve ownership over the pants despite the fact that the other party has not paid the price. So when the pants were burned, it would now be B as the owner who will bear the loss. SA: This is exactly the case of Quiroga vs. Parsons. Article 1466 in construing a contract containing provisions characteristics of both a COS and ATS, you have to go into the essential clauses of the whole instrument. In this problem, one of the clauses B has to pay the price within 30 days . That would make the contract COS and not ATS because in 30 days from delivery, whether or not B has already sold those pants to other persons, he is already obliged to pay a price. That is not an ATS. Being a COS, therefore, after having been delivered, ownership passed to the buyer and hence under res perit domino rule, the buyer bears the loss and therefore he can be compelled to pay the price. Essential Elements of a Contract of Sale 1. Consent of the Contracting Parties 2. Object or Subject Matter which is a determinate thing or right Note: Service cannot be the subject matter of sale. 3. Cause or Consideration as far as seller is concerned, it is the price in money or the equivalent of the payment of the price. CONSENT OF THE CONTRACTING PARTIES

A. No consent of one or both of the parties . the contract is void. Under the law on sales, it is a fictitious contract where the signature of one of the parties was forged. Normally, the seller s signature is forged. If the signature of the seller is forged, that would be a fictitious contract. The alleged seller will not have participation in the execution of the contract. But another kind of contract recognized in the Civil Code is a simulated contract. Simulated parties to this contract actually would have participation. They would voluntarily sign in the deed of sale. However, they do not intend to be bound at all or they may intend to be bound to another contract but they executed a deed of sale. Thus, the law would ratify these contracts considering there is a simulated sale. Kinds of Simulated Contracts 1. Absolutely Simulated they do not intend to be bound at all. Q: Why would they enter into this kind of sale? A: To defraud creditors 2. Relatively Simulated sale where they actually intended another contract which normally would be a donation. B. If consent was given . If consent was given, it does not necessarily mean that the COS is valid. The consent may be given by an incapacitated person or one with capacity to give consent. If given by an incapacitated person, consider the nature of the incapacity. It may be: a. Absolute Incapacity the party cannot give consent to any and all contracts. b. Relative Incapacity the party is prohibited from entering sometimes with specific persons and sometimes over specific things. Kind of Capacity 1. Juridical Capacity it is the fitness to be the subject of legal relations. If a party to a sale has no juridical capacity, the contract is void. Note that all natural living persons have juridical capacity. Even if he is a 1 day old baby, he has juridical capacity. The baby can be the subject of donation. Even if he is conceived, he has provisional personality. Example: One example of a party to a sale without juridical capacity would be a corporation not registered with the SEC. The contract entered by this corporation is a void contract because one of the parties has no juridical capacity to enter into that contract. 2. Capacity to Act it is the power to do acts with legal effects. If the incapacity only pertains to capacity to act, the contract would normally be voidable. Without capacity to act or there are restrictions with one s capacity to act such as minority, insanity, deaf mute and does not know how to write and civil interdiction. Note: Under R.A. 6809 (December 1989) there is no more creature known as unemancipated minor . Before 1989, the age of majority was 21. C. If both parties are incapacitated . not only voidable but unenforceable. Q: What if one of the parties in a COS is a minor and the minor actively misrepresented as to his age? A: The SC said that the minor will be bound to such contract under the principle of estoppel.

2. An agent cannot buy without the consent of the principal a property which he was supposed to sell or administer. Lopez Dian Rosapapan . d. Public officers. Martinez November 2008 Chato Cabigas Jessica A. The sale of necessaries will bind the minor and he will be compelled to pay not really the contract price but only to reasonable price. they may have obtained judicial declaration of separation of property. It is just that he cannot be the buyer of a property of his ward. the minor has to pay a reasonable price. c. clerk of court. it is void. Those mentioned in Article 1491 a. After that. Faye Marie C. de Leon the first 3 are voidable and the last 3 are void. Then they can sell to each other. A guardian cannot buy the property of the ward. Q: What is the status of the contracts under 1491? A: Prof. Relative Incapacity (Articles 1490 and 1491) 1. This contract is not voidable. b. Under Article 1409. The spouses executed a marriage settlement and in the marriage settlement they agreed for a complete separation of property regime. The guardian is not actually prohibited from entering into any and all contracts. The better answer is void because these persons are prohibited from entering into these contracts. Baviera void Prof. clothing and medicine to a minor. The executors and administrators of the estate cannot buy a property which is part of the estate. Pineda & Prof. judges. b. Uribe s Comment: Estoppel is not a good ground because the minor is not aware. Tolentino voidable Justice Vitug & Prof. if the contract is prohibited. Sale between spouses it is void except: a. stenographers and lawyers are prohibited from buying those properties which are the subject of litigation during the pendency of the case. Sale of Necessaries In sale of necessaries such as food. If no marriage settlement.Atty. they can sell to each other. their staff.

3. The thing must be within the commerce of men Examples: sale of a navigable river is void. by express provision of law. Take b. What is the status of the sale? b. things which are not appropriated like air is void but if appropriated it can be the object of a valid sale. Even if consent was given by one with capacity to give consent but if the consent is vitiated . But if the reason of the seller is because of his negligence. Aliens are prohibited from acquiring by purchase private lands note acquiring which means buying not selling. b. sale of wild flowers or wild animals is void 3. OBJECT OR SUBJECT MATTER The requisites in sale as to thing would almost be the same as the requisites of contracts in general. sale of human organs is void. As long as these 3 were complied. sale of things having potential existence (emptio rei sperati) is valid. Example of authorized by law: notary public has the right to sell in pledge because he has the authority to sell under the law. Former natural born Filipino citizen. 1. 2. However. They can sell. there is a valid sale. Take note may be authorized by the person or by law. on the 9th month. Not necessarily because there are excuses to non-performance such as pestilence. Exceptions / when aliens can buy: a. What if by May 2008. flood and therefore his failure to comply is an excuse. Sale of Hope (Emptio Spei) Example: Sale of a lotto ticket Q: Sale of a land to B with a right to repurchase within 1 year which A delivered. sale of a cadaver is void but donation of a cadaver is allowed. In fact. If the party gave such consent in the name of another without authority of that person or no authority of law . The thing must be licit not contrary to law Examples: sale of prohibited drugs or shabu is void. (a) What is the status of the sale between A and C? (b) Who will have a better right over the land? . sale of marijuana is void. unenforceable. On the 3rd month. Another way of acquiring is by succession but this is not a sale D. B sold the land to C. no palay was harvested? a. voidable. Always consider that in a COS there are only 3 requisites. 1174. he cannot find support under Art. typhoon. Under the Constitution they are allowed to buy small land which they can use for residential purpose. A offered to repurchase the land. FIVUM E. May the seller A be held liable for damages for failure to comply with his obligation? A: a. Must be determinate Read Article 1460 RULES AS TO OBJECT OF COS Q: A obliged himself to deliver and transfer ownership over the palay that will be harvested from a specific parcel of rice land in May 2008.

If COS was entered before R.R. If that is the case. Price Must be Certain Q: Who can fix the price? . If A exercises the right to repurchase and such would be a valid exercise of such right then the ownership of B would be extinguished.(Sale with a right to repurchase) A: (a) Be guided by the fact that a COS is a consensual contract. If parties failed to stipulate as to which currency. Example: maybe the right to repurchase was not annotated at the back of the title of the land and he has no actual knowledge. C may have a better right if he can claim that he is an innocent purchaser for value. Examples of right: credit. it would be A as a seller a retro because he has the right to repurchase assuming his repurchase is valid. 8183 which repealed R. this is a valid sale even if the object of the sale is a sale with a right to repurchase. Uribe: Mas tamang sabihin since the ownership thereof is subject to a resolutory condition.A.A. The payment has to be made in Philippine money. The exercise of the right is considered a resolutory condition as to the ownership of B. SALE OF RIGHT / ASSIGNMENT OF RIGHT Assignment of right is not necessarily a sale. Consider the date of the sale. (b) If the contract was entered into today. Exceptions: 1. Article 1465 provides that things subject to a resolutory condition may be the object of a COS. 8183. 529 in 1996. it is the ownership over the thing. (a) May that be a valid sale? (b) Can the seller compel the buyer to pay in yen? A: (a) Yes. (b) As a rule. the seller cannot compel even though the contract is valid. it has to be in Philippine currency. C may have a better right. Atty. yes it is valid because of R. Intransmissible because of Stipulation 3. Intransmissible by Nature 2. it is a sale. then there is a valid and perfected sale. it is valid. the only requirement is that the right must not be intransmissible G.A. The fact that the object of the sale is subject to a repurchase will not affect the validity of the sale.: As a rule. shares of stock Requisite of a right . Intransmissible because of Law CAUSE OR PRICE CERTAIN IN MONEY OR ITS EQUIVALENT Q: A deed of sale was entered into by A and B. Hence. If there is no valuable consideration. Even Japanese yen is in money. rights and obligations arising from contracts are transmissible. The mere meeting of the minds as to the object and the price. Hindi naman yung thing is the subject of resolutory condition. it may be a donation or dacion en pago. The price agreed upon was 1M yen. The law states that it may not even be in money. Basis is Article 1458 because the only requirement of the law is in money . it may be equivalent like promissory notes whether or not negotiable or letters of credit. If there is a valuable consideration for the assignment.

Q: What if a 3rd person was asked to fix the price A and B agreed that X will fix the price. there was no meeting of the minds. If there is gross inadequacy. Lopez Dian Rosapapan . Example: The value of the property is P1M but only P10. It is not presumed. Lesion must be proven as a fact. Q: May the sale be perfected if the agreement of the parties was forone of them to fix the price? A: Yes. If not accepted. Martinez November 2008 Chato Cabigas Jessica A. it may be perfected only if the price fixed by the party who was asked to fix the price was accepted by the other party. Note: Under the law on sales. may the sale be void? A: Yes.A: (1) The best way is for the parties to agree as to the price. Note: Lesion or gross inadequacy of the price does not as a rule invalidate a contract unless otherwise specified by law. Hence. TIME OF THE PERFECTION OF THE CONTRACT Faye Marie C. Q: If the 3rd person fixed the price but it was too high or too low or maybe there was fraud committed by the 3rd person or he was in connivance with one of the parties. there was no meeting of the minds. if there is gross inadequacy. may the sale be void? A: No. the sale may be void if the third person does not want to fix the price or unable to fix the price. Exception: when otherwise provided by law. (2) They may agree that one of them will fix the price.000 was written in the contract because they intended it to be a donation . because the remedy of the other party is to go to court for the court to fix the price. void. it maybe because actually they intended another contract and that would make the sale a simulated sale and therefore the sale is void. Note: The perfection will only be considered at the time of the acceptance of the price fixed by the other party not from the time of the first agreement of the parties. it may reflect vitiation of consent so the SC would normally enjoin the lower courts to be warned of the possibility of fraud in case of lesion. Example: Article 1381.

may that action prosper there being option money given? A: Yes. an action for specific performance will not prosper because when he said he will but there was not more offer to be considered. Rigos Facts: Mrs. Held: Since Sanchez accepted the offer and decided to buy within the period before the offer was withdrawn. (b) No. it is a proof of the perfection of the contract. In this case. an option contract is perfected. Note: Iba pag may option money Q: 2 years within which to decide assuming there was option money. 2 years within which to decide and failure to that he is liable not based on perfected COS but on perfected contract of option. the offeror withdraw on the 6th month. . there is one contract which maybe perfected. According to Rigos. Before perfection meaning in the negotiation stage . this contract is known as the option contract. there was no option contract because it was merely an option agreement. (a) Can the offeree on the 10th month say I would like to buy ? (b) Can the buyer compel the seller to sell? A: (a) No. Rigos gave Sanchez 2 years within which to decide. the offeror is bound to give the offeree. Before the lapse of 2 years. Sanchez told Rigos that he is buying and offered the price agreed upon but Rigos refused claiming that she was not bound by the written option agreement because no option money (consideration) was given by Sanchez. Option Contract Sanchez vs. before the fall of the hammer in an auction sale. Earnest Money (EM) OM is not part of the price while EM is part of the price and at the same time. yes because the sale has not been perfected at the moment unless the bidding or auction has been announced to be without reserve. Sanchez has the option. Otherwise. Q: If the offeree files an action for damages. In this case. Na-withdraw na eh. the option contract is void. the bidder even if he has already made a bid. Thus. regardless of whether option money was given and in this case no option money was given. he can still withdraw the bid as long as he would do that before the fall of the hammer. (if after the fall of the hammer). there is already a perfected sale. Q: Can the auctioneer withdraw the goods before the fall of the hammer? A: As a rule. a perfected COS was created even without option money. Rigos offered to sell her land to Sanchez for a certain price. because with the option money. Note: Before perfection. a perfected COS was created. (Note: The optionee or promisee or offeree is not bound to purchase but he has the option to buy or purchase).Auction Sale Auction sale is perfected upon the fall of the hammer or any other customary manner. there was merely an offer on the part of Rigos and once the offer was accepted before it was withdrawn. Therefore. Option Money (OM) vs. before the offeree could decide to buy.

It is not void. that the deed of sale will be executed upon the arrival of Paredes in Palawan. If the price is at least P500 and the sale is not in writing. Concretely. the defendant wrote a letter with his signature on it.: A COS may be in any form. Paredes is from Northern Luzon. Exceptions: The law may require a particular form for its validity. To deliver 3. His contention was sustained by the trial court. RIGHTS AND OBLIGATIONS OF THE VENDOR In a deed of sale (DOS). Espino Facts: Paredes was a prospective buyer. In this case. But then again even Article 1356 just like Article 1475 would provide for exceptions. the sale of a parcel of land if not in writin g is valid but unenforceable. the sale of a land for P300 is valid and enforceable even if not in writing. there can be hundreds of obligations of the vendor but those obligations would be because of the stipulation. He contended that under the statute of frauds it is unenforceable. Example: Before. If the object of the sale is movable. This provision is exactly the same as Article 1356 in contracts which provides that contracts may be obligatory in whatever form they may have been entered into provided all the essential requisites are present. You can sell a thing worth P1. Espino owns a land in Palawan. you have to consider not the value of the thing but the price agreed upon. But there are only few obligations imposed by law. But the law may require particular form for its enforceability of the sale and that would be 1403 or the statute of frauds.000 for P400 but the law provides for the price. When Paredes arrived. Espino sent a letter to Paredes stating that he and his wife agreed to sell the land to Paredes. To warrant the thing . it will be unenforceable. To transfer ownership 2. Paredes vs. The value may be different from the price. The price is still irrelevant. Note that the price of the land is irrelevant if immovable.G. Espino said he is no longer interested in selling. Their negotiation was thru letters and telegrams. Held: This contract is no longer covered by the statute of frauds because there was a letter. Article 1403 provides that a note or memorandum signed by the part charged would be sufficient to take that contract out of the operation of the statute of frauds. Paredes filed a case to compel Espino to sell the land. But presently. The 3 most important: 1. Espino contended that the contract is unenforceable because it is not in writing. The letter took that contract out of the operation of the statute of frauds and therefore he may be compelled to execute the final deed of sale.R. The Cattle Registration Decree is an example -where the law itself provides for a particular form for the validity of the sale. partly in writing xxx. it has to be in writing to be enforceable. Article 1483 provides that a COS may be in writing.

Constructive delivery -brevi manu There would be no obligation on the part of the seller to take care of the thing from the time of perfection because at the time of perfection. During this period. dito hindi natutuloy ang sale dahil hindi magkasundo kung sino magbabayad ng tax. OBLIGATION TO TAKE CARE OF THE THING G. The vendor was able to deliver only after theother fr uits were harvested and sold to Y.: The thing sold should be determinate because if generic (1460. Is he entitled to the fruits after 6month period during the 1-month period prior to delivery? Yes. it would be the buyer who will pay xxx Normally. B demanded for the delivery. By agreement. Obligation to deliver the fruits which is related to the obligation to deliver the thing OBLIGATION TO DELIVER THE FRUITS BE: A sold a mango plantation to B but they stipulated that delivery will be after the signing of the deed of sale. he may have a problem on his obligation to transfer ownership. Obligation to take care of the thing sold with the diligence of a good father of a family prior to delivery. Exceptions: There are sales transactions wherein the vendor would not have this obligation: a. under 1537. then he cannot recover the fruits. OBLIGATION TO TRANSFER OWNERSHIP BE: May a person sell something which does not belong to him? Would the sale be valid? Would the buyer acquire ownership over the thing sold.R. the buyer was already in possession of the thing. 6. Maybe he borrowed the thing. if seller does not own the thing? SA: Yes. the vendor harvested mango fruits and sold them to X. Example: he borrowed the car and he decided to buy it the thing was already in his possession. in fact. Can B recover the mango fruits from Y during the 6th month period? SA: Determine first whether B is entitled to the fruits because if he is not entitled. 2nd paragraph) then there is nothing to be taken cared of. The vendor was able to deliver 1 month after the date when he was supposed to deliver themango plantati on. But if the seller does not own the thing. It will become determinate only upon delivery. After the expiration of the 6-month period. From the time of the perfection up to the time of delivery then there would be obligation to pay for the expenses for the execution and registration of the sale and obligation to pay the capital gains tax would be on the seller as a rule. Ownership over the thing sold is not an essential requisite for the sale to be valid. the fruits of the thing sold from the time of perfection shall pertain to the buyer. 5. OBLIGATION TO PAY EXPENSES / TAXES These obligations may be the subject of stipulation.There are other obligations: 4. The problem would be .

Martinez November 2008 Chato Cabigas Jessica A. Lopez Dian Rosapapan .Faye Marie C.

Exceptions: (When the buyer can acquire a better title than what the seller had. Purchases from a Merchant s Store xxx 1. liquidators. Q: Who would have the right to sell and therefore they can transfer ownership by way of sale? A: First. known as Statutory Power to Sell (Article 1505). 1434 would not apply because: . By Estoppel 2. automatically. Also known as Estoppel in Pais which is a kind of equitable estoppel because of the acts / representation of the owner. he may have the right to sell because: (1) He was given the authority by the owner. a person is precluded from denying that another person has authority to sell because of his acts. (3) Those who have the authority of the court. Sale by an Apparent Owner 5. If the seller is neither the owner nor does he have the authority to sell. However. he may not later on deny the authority of the 3rd person. 2. Example: Agent (2) He may be the owner but he may have the authority of the law to sell. guardians and receivers. is the owner. If he has no title then no title can be transferred to the buyer. Q: May a buyer acquire ownership over the thing sold if the seller has no right to sell? A: The answer by way of exception is yes. Examples: Notary public in pledge. Would Y be considered to have acquired ownership over the land? SA: Under 1434 which is considered as Estoppel by Deed (technical estoppel) when the seller who was not the ownerat the time of the sale. If his right is only as a lessee that is the most that can be transferred to the buyer. Even if he is not the owner. Article 1434 requires delivery to the buyer. Note: it is as if they have the authority of law because not even the judge can validly sell something if it is not consistent with the law. Even if the seller does not have the right to sell. the buyer acquires no better title than what the seller had. X subsequently sold the land to Y. But the general rule here is under 1505 the buyer acquires no better title than what the seller had.whether or not the buyer would acquire ownership over the thing sold if the person who sold the thing is not the owner. acquires ownership. Estoppel by Deed BE: A and B co-owners of land sold (sale is verbal) to X their land. ownership passes to the buyer by operation of law.) 1. And under the facts. the buyer may acquire ownership over the thing sold because the law so provides and not because the seller was able to transfer ownership to the buyer. By Estoppel by the principle of estoppel. Negotiable Document of Title 6. Estoppel by Record 4. Estoppel by Deed 3. Example: Sheriff.

I did not authorized my nephew .500. Estoppel by Record Jurisprudence: Sale by nephew of the owner of the land. he will be protected under the law. Lopez then sold the ref to Velasco. When Sun Brothers learned this transaction. Sun Brothers was engaged in the business of selling refrigerator. it filed an action to recover the ref from Ko Kang Chu. Mapalo 5. Binugbog nya yung owner ng goods. Sun Brothers sold a ref to Lopez on installment basis. BE: F lost her diamond ring in a hold-up. would that action prosper? A: SC said yes because he cannot be allowed now to claim that his nephew was not authorize to sell after he testified in court that he gave such authority. 4. However. Lopez only paid P300 out of P1. lalo na kung bearer document of title. As stipulated. Y likewise acquired ownership by way of estoppel by deed. Velasco Facts: Sun Brothers was the owner of a refrigerator. the nephew is acquitted. This is estoppel by record which is considered a technical estoppel. he asked his uncle to testify that he actually had the authority to sell. Sale by an Apparent Owner A. Velasco was the owner of a store. Q: Case was filed against the uncle. It cannot be said that by operation of law. Example: The seller may have acquired title by violence. For the accused to be acquitted. On the next day. then the buyer may acquire ownership even if the seller has no right to sell. Since the nephew could not deliver the land. 3. He will acquire ownership even if the seller did not have the right to sell. Any other provision of law enabling the apparent owner of the goods to dispose of them as if he was really the owner. 6. Q: Would Velasco acquire ownership? A: No because Article 1505 provides that the buyer acquired no better title than what the seller had. If the buyer bought it in good faith and for value.a) There was no showing there was payment b) No showing that there was delivery of the land to X. Factor s Act Even if agent has no right to sell. a third person may acquire ownership because he may rely on the power of attorney as written. After acquittal. Later on. Negotiable Document of Title If goods are covered by a negotiable document of title and it was thereafter negotiated. Pero kung negotiable document of title yan and properly negotiated. the buyer sued the nephew for estafa. Purchases from a Merchant s Store / Markets / Fairs Sun Brothers vs. this ring was anobject of a . A. Velasco sold the ref to Ko Kang Chu who paid in full. The balance to be paid on installment. B. When the uncle testified in court. the buyer demanded from the uncle the delivery of the land. claiming that sa totoo land. Recording Laws C. The uncle refused. Factor s Act B. Recording Laws *most common question in the bar exam Read: Mapalo vs. Sun Brothers reserved ownership until full payment.

public sale of one pawnshop. Lopez Dian Rosapapan . there can be no recovery as a matter of right. Example: Clauses in subscription magazine which says that you can return within 30 days without payment. Sale or Return Q: Ownership passes upon delivery? A: Yes. he may be considered to have accepted if he did an act wherein he would be considered to have adopted the transaction then ownership passed to him. Can F recover the ring from the buyer in that public sale? SA: Yes. Example: Even if he has 10 days within which to decide but on the 2nd day. Example: Perishable goods. BE: A car was sold for P150. the car was destroyed due to a fortuitous event or was burned xxx Can he still be compelled to pay the balance? Faye Marie C. as far as things are concerned. it is effected by delivery: (a) Actual (b) Constructive There can be no transfer of ownership without delivery. the buyer is given the right to revest the title back to the seller normally within a certain period. he is deemed to have accepted the thing because he did an act which is inconsistent with the ownership of the seller like he donated or destroyed the thing. before he could pay the balance.000. Martinez November 2008 Chato Cabigas Jessica A. The car was delivered to the buyer.000 was paid. purpose of the sale. However. (b) Even before the lapse of the period. (c) If there is no period agreed upon. he is deemed to have accepted (impliedly accepted) hence. the law says if he did not signify his acceptance he will be considered to have accepted after the lapse of a reasonable time. P75. Article 559 provides that even if the buyer is in good faith so long as the owner is willing to reimburse the buyer of the price paid in that sale. Note: Again in 1505. Notes: (a) There may be a period agreed upon by the parties within which the buyer would have to decide. he sold the car to another. Obviously. However. Reasonable time will depend on the circumstances of the sale. Q: How transfer of ownership is effected? A: Under the law. Even if he failed to signify his acceptance by the mere lapse of the period. ownership passes to him. nature of the thing sold. there is no right to recover as long as the buyer bought it in good faith from a merchant s store. P75.000 paid upon the execution of DOS. The balance payable on a monthly basis.

there was no delivery on the part of the seller. Note: Determination of when ownership passed is important because if at the time of the loss. despite demand from the buyer. Note: In 1544 (double sale). Despite such. Q: Who is the owner at that time? A: The seller but there was delay on the part of the buyer hence under 1504 it is the buyer who will bear the loss. Uribe: I fully agree with the UP Law Center s answer. Read Lawyers Cooperative vs. Under the principle of res perit domino Article 1504 the owner bears the loss and hence it can be compelled to pay the price. the seller demanded the buyer to get the goods.: Res perit domino 1504. Who would have a better right? SA: Atty.SA: Yes. Exceptions: 1. Upon the delivery of the car to the buyer. G. ownership passes to the buyer but physical possession is still with the seller. the buyer is not yet the owner. who would have the better right? . Thereafter. ownership passed to the buyer. the ownership has already passed to the buyer but the goods are still with the seller. the warehouse was destroyed due to fortuitous event. Therefore. On the date agreed upon. On the next day. Note that either buyer or seller may be at fault. the buyer will not bear the loss like in sale on approval and he has 10 days within which to decide and the thing was lost through a fortuitous event within the 10-day period without fault on his part. Q: If the thing is sold twice. Even if the goods are destroyed the next day due to fortuitous event. the seller will bear the loss.R. Delay in the Delivery When there is delay in the delivery due to the fault of one of the parties. take note ang owner ay ang buyer na but who will bear the loss? The seller because he was in delay in delivering the goods. It depends on whether or not C registered the sale in good faith. Tabora 2. If there was constructive delivery. because of constructive delivery. Can this happen? Yes. F sold the very same parcel of land to C who registered and obtained a new TCT in his name. as to which rule applies will depend on the thing sold if movable or immovable. Thus. as a rule. whoever was at fault will bear the loss. Registration is only one of the requirements good faith is equally an important requirement. he is in delay in delivering the goods to the buyer. the buyer failed to get the goods. (Note: Wala sa facts na na-retain ng seller and ownership). Example 2: The seller himself maybe the one at fault. They may have agreed this time that the seller will be the one to deliver the goods to the buyer at a certain date. When the date arrived. there being no retention of ownership by the seller. Q: Why would this be an exception to the res perit domino rule? A: Ang premise dito. Example 1: The buyer and the seller may have agreed that the goods are to be obtained by the buyer at the warehouse of the seller on a specific date. DOUBLE SALE (ARTICLE 1544) BE: F sold a registered parcel of land to R who did not register the sale.

However. the buyer who first took possession in good faith will have the better right. Q: Who would have a better right between C and B (C had no knowledge of the sale)? A: SC Said . Because of a judgment in favor of Macke and Chandler. OBLIGATION TO DELIVER THE OBJECT OF THE SALE Determine the subject matter if it is a thing or a right because there are different modes of delivery as to thing and as to right. Thus. He is the first buyer. the seller (A) is a judgment debtor in one case to a certain creditor named C. Hence. Even the 1st buyer is required to be in good faith. If immovable. the properties . By the mere execution of the public instrument that is equivalent to delivery. the buyer. Constructive by the execution of a public instrument if the contrary intention does not appear on the document. it will be the first who to ok possession in good faith. Good faith means that he had no knowledge of the defect of the title of the seller. The properties under execution were questioned by Kuenzle and Streiff. Actual Delivery / Material Delivery / Physical Delivery / Real Delivery the thing is in the possession and control of the vendee. will have the better right. Q: What if the thing was delivered to a 3rd person? A: Jurisprudence SC said . The buyer became C who registered the sale.A: If movable. Macke and Chandler are judgment creditor of Stanley and Griffindor. If no possession in good faith. The land became the subject of an execution sale. Things Kinds of delivery of things as a consequence of sale known as tradition under the law: 1. If there was no registration. Kuenzle & Streiff vs. who first registered in good faith.) and the property involved here are fixtures of a saloon. yes. Read: Bautista vs. ownership passes to the buyer. Kuenzle and Streiff claimed that these things were sold to them prior to the levy. Sioson Carumba vs. Take note control . Warning: Please be careful when you recite you register the sale not the land. B because this land was not registered under the Torrens System. Take note to the vendee . 1544 would not apply to unregistered lands. 2. the buyer who has the oldest title in good faith. there maybe actual delivery if the third person has authority to receive from the vendee. the sheriff levied upon these properties which was still in the possession of Stanley and Griffindor. CA Facts: Sale of land to B who took physical possession but did not register. the first buyer would have the oldest title. He is nonetheless required to have bought the thing in good faith. making him an agent of the vendee and that would still be actual delivery. Note: Philippine law does not only require actual delivery constructive delivery may result in transfer of ownership. Macke & Chandler Facts: The original owner here Stanley and Griffindor (parang Harry Potter . Yung good faith ditto obviously would not pertain to absence of knowledge of the 2nd sale kasi syempre 1st buyer sya. If they claimed that the properties were sold to them. Obviously.

the thing cannot be delivered. Held: In order that ownership would pass. Sioson Because a lease agreement was entered into by the buyer and seller after the sale then the buyer became the lessor and the seller became lessee. Rights Kinds of Delivery of Incorporeal Property / Quasi 1. This is also known as tradition longa manu. 3. Take note that Stanley and Griffindor were still in possession of the goods physically. Therefore. Example 2: The thing was the subject matter of commodatum. Bautista vs. there was no actual delivery. Prof. Execution of Public Instrument Faye Marie C.should be in their possession. possession to the goods cannot be transferred to the buyer. As a rule. Lopez Dian Rosapapan . the lessee would continue with the possession no longer as an owner. De Leon: this also called as symbolic delivery. 4. Martinez Chato Cabigas November 2008 Tradition: Jessica A. So dati lessee lang sya that is why he was in possession or maybe depositary lang sya or maybe he was the agent at the time prior to the sale. Example 1: The thing was the subject matter of a lease with a 3rd person until the expiration of the lease. There must be a reason why it cannot be transferred at the time of the sale. period of commodatum has to be respected. Brevi Manu this is a kind of constructive delivery because the buyer was already in possession of the thing sold at the time of the perfection of the sale so he will continue to be in possession after the sale. no longer as a lessee but this time as the owner. By Mere Consent or Agreement of the Parties if at the time of the sale. Delivery of the Keys of the place where the goods are located like a warehouse. Constitutum Possessorium the seller will continue to be in the possession of the thing after the sale but no longer as an owner but in another capacity like lessee. Hence. 2. Kinds of Constructive Delivery 1. it has to be in a public instrument if that would be by constructive delivery.

2. SALE OF REALTY Q: Sale of a parcel of land. 800 was only delivered? A: The buyer cannot be compelled to receive 800 because partial performance is non-performance. hence. it is clear that those are Burmese rice that would not be considered as indivisible.000. The seller delivered 1. You cannot compel the creditor to accept partial fulfillment as a rule because it can be a subject of a stipulation that there can be partial delivery. is proportional reduction a remedy? A: It depends on whether the sale is considered as a sale with a statement of an area of a rate of a certain measure or if it is a lump sum sale. Siguro yung katabing lupa sa seller din. What are the remedies of the buyer? A: (1) Specific performance would be a remedy if the seller is still in the position to deliver the balance. He can be compelled to accept 1. RULES ON SALE AS TO QUANTITY / QUALITY OF THE THING SOLD Q: In a sale involving 1. Q: Under the facts. If the buyer refuses to receive the goods. May the buyer reject everything? A: Yes. 95 sqm was delivered. Price agreed upon is P1M. Q: May the buyer be considered in delay for his refusal to accept if .000. so out of 100 kung 85 lang ang nadeliver.200 pairs of shoes instead of only 1. More or less 100 sqm. if there is a stockholders meeting. if the sale occurred when the books are already closed. 3. Thus. then rescission is a matter of right. Milagrosa and Burmese rice were mixed. Q: What if instead of 1. Use by the Vendee of His Rights with the Vendor s Consent Example: Sale of shares of stocks . So if you are the buyer of those stocks.000 cavans of Milagrosa. Instead of delivering 1. PLACE OF DELIVERY Read 1524. He has the right to reject only the excess.000 sacks Milagrosa and he has the right to reject 100 sacks Burmese rice. if it is clear that per sack it is Milagrosa rice and the 100 sacks. he can afford to give additional 5 sqm. would rescission be a remedy? A: As a rule no because rescission would only be a remedy if the area lacking is more than 10% of that area agreed upon. The actual area delivered by the seller was only 95 sqm.100 cavans of both Milagrosa and Burmese rice. Placing the Title of Ownership in the Possession of Vendee a right would normally be covered by a certificate. if the goods are indivisible. dapat 11 sqm or 15 sqm ang kulang. Concretely. no one will be recognized except those registered owners.000 pairs of shoes with a specific design as agreed upon. the seller delivered 1. 1525 and 1198 The seller delivered the goods to the place of business of the buyer. the books of the corporation will be closed for 30 days before the meeting. However. Meaning each sack of rice. the vendee may not always have the right to exercise his rights under the shares of stocks. So kung 100 sqm. you can only use your right with the consent of the vendor. (2) Q: If specific performance is not possible. Example: delivery of the certificate of shares of stocks. Q: The obligation to deliver 1. Can the buyer reject everything? A: No. Reject the 200 but he can be compelled to accept the 1.000 cavans of Milagrosa rice.000. the buyer will be considered in delay and therefore will be liable to the seller because of unjust refusal.

O. Read 1582 Obligations which cannot be Waived: 1. the F. Q: What really determines the place of delivery? A: SC said this indication as to the intention of the parties as to the place of delivery is the manner and place of payment. arrangement. Cost.F.F.I. they only make rules of presumption. the law provides that it will be the place where the thing is located at the time of the perfection of the contract. the seller cannot be compelled to deliver. Requisites: (a) There is an affirmation of fact (b) The fact must pertain to the thing either to the quality. Obligation to warrant the thing Kinds of Warranties under the Law: 1. Free on Board C. arrangements do not really determine the place of delivery. destination. or C. and C.B.O. If the thing is determinate. character or title of the thing Any other matter may not be considered as an express warranty. So after all. Express any affirmation of fact or any promise by the seller relating to the thing. Determine if it is determinate or generic. Express 2. Note: If there is no stipulation when to be delivered. Freight F. If there is an agreement as to where and how the price is to be paid that would be the place considered for purposes of delivery and therefore for transfer of ownership. Q: What if the object of the sale is a generic thing? A: Seller s place of business or residence. Obligation to transfer 2. Q: What if at the time of the perfection of sale.F are rules of presumption which would have to give way to the real intention of the parties.I.B. So in a C. it was on board a ship while in transit.B.O. In a F. though the thing is determinate. it is only presumed that the point of destination is the place of delivery. the natural tendency is to induce to purchase the thing.F.O. Insurance. The use of the words / terminologies is not conclusive as to whether or not . Implied 1. it is only presumed that the place of delivery is the port of origin. Obligation to deliver Obligation which can be Waived: 1.there is no place stipulated in the contract? A: It depends on the kind of thing.B.I. Where will be the place of delivery? A: Depending on the shipping arrangement agreed upon by the parties.I. F.

000 and demanded that a DOS be executed by the seller. the seller should return the P100.000. As long as the seller is not an expert on that field.000 to the buyer. Example: These 10 sacks of fertilizer would result in 200 cavans of rice. As agreed upon P100. The seller offers to return the P100. it is an express warranty. if the affirmation of fact pertains to the quality of the thing. The buyer refused to accept the P100. that would be treated merely as an opinion and there can be no liability for breach of an express warranty. Despite the filing of an eviction suit by the seller and the lapse of the 6-month period. Example: This is the best piña cloth . It was so stipulated that if within 6 months. The seller refused to accept the P900. Would the action prosper? SA: If the answer is based on rescission. Lopez Dian Rosapapan . this does not result in an express warranty Again. the squatters have not yet been evicted. The balance will be paid within 30 days from the time the occupants (squatters) of the land are evicted. The statement of the seller s opinion is not as a rule considered an express warranty.there is an express warranty.000 .000 will be paid upon the signing of the DOS. Example: I guaranty / warranty you that you will be happy if you buy this car at P100. the value of the land doubled. Another stipulation states within the 6-month period. it may turn out that there are better piña cloth.000 and told the seller never mind even if the squatters are still there. What he did is to file an action to rescind the contract. BE: A sold a land to B for P1M in Antipolo. Martinez November 2008 Chato Cabigas Jessica A. the action will not prosper because rescission may only be invoked by the aggrieved party. The seller is not an aggrieved party. So the buyer offered to pay the balance P900. Implied Faye Marie C. I will still buy the land .000. the squatters were still occupying the land. 2.

Hence.Prof. a case was filed by a 3rd person against the buyer which resulted in a favorable decision as to the plaintiff resulting in the deprivation of the property by the buyer. There may be warranty as to title or against eviction but there is no warranty against hidden defects under certain circumstances. There should be no valid waiver 4. De Leon regarding this statement. his liability will be greater because that makes him a bad faith seller. In other words. WARRANTY AGAINST HIDDEN DEFECTS Requisites: 1. The action to hold the vendor liable should be filed within the period prescribed by law. De Leon: because of this implied warranty. can . There has to be final judgment depriving him of such thing either wholly or partially. Deprivation must be either: (2.: Please check the book of Prof. If the defect started after th e sale there can be no such liability. he can be held liable. He is expected to know the defect. If the seller is not aware of the hidden defects.1) Based on a 3rd person s prior right over the thing prior to the sale or (2. Requisites of warranty against eviction: 1. the law itself would provide for these warranties and hence if there are hidden defects he would have remedies under the law or even if he was deprived of the thing he bought he would have a remedy against the seller.) Even if there is no stipulation as to these warranties. If the defect is patent and the buyer nonetheless bought the thing then he can no longer hold the seller liable.2) Based on an act after the sale but imputable to the vendor. Thanks . Example: This warranty against eviction would include the warranty that the buyer from the moment of the sale have and enjoy the legal and peaceful possession over the thing sold. 3. These are 2 different obligations: the obligation to transfer ownership and the obligation to warrant the thing. it cannot be said that Philippine law does not adopt caveat emptor buyer beware . (Faye s Caveat . Q: Even if there is such a hidden defect. 2. The defect must exist at the time of the sale. 3. Warranty Against Eviction / Title Q: If the seller was able to transfer ownership to the buyer may the seller nonetheless be held liable for breach of warranty against eviction? A: Yes. If he was aware. Q: If the thing which has a hidden defect was lost or destroyed. But there are certain instances when there would be no such implied warranty against hidden defects. The defect must be hidden. is it possible that the vendee cannot hold the vendor liable despite the fact that there was hidden defect even if he was not informed because maybe the seller was not aware? A: Yes. The defect must result in the thing being unfit for the purpose of the buyer or at least it diminish the fitness of the thing such that the buyer would not have bought it at the price had he known of such defect. it is not correct to say that Philippine law has adopted caveat emptor. he may not be able to hold the seller liable if he is an expert on the thing. 2.

After that. (c) If he became aware more than a year. he may file an action for damages.the vendee hold the vendor liable for this breach of warranty? Does it matter if the loss was due to a fortuitous event or maybe the loss was due to the fault of the buyer himself. But the law requires that the action for damages has to be filed within 1 year also but from the time of the discovery of encumbrance. the liability is greater than if the cause of the loss was a fortuitous event or fault of the buyer. The vendee can hold the vendor liable for breach of warranty against hidden defects even if the thing was lost due to fortuitous event or due to the fault of the vendee himself because of the hidden defects. Q: If the buyer bought the land which turned out to have a road right 3rd of way in favor of a person. can he hold the vendor liable? A: Yes. he may not be held liable for damages unless he can only be held liable for interest. If there would be a problem here as to the extent of the liability of the vendor. he should determine whether the vendor was aware of the defects or he was not aware. If he was not aware. If the defect was the cause of the loss. Vitug. not only the price less value but also to refund the expenses and damages because the vendor was aware of the defects. Again. (b) Rescission -the law requires that the action for rescission must be filed within 1 year from the date of the contract. If the cause of the loss of the thing was a fortuitous event. what are the remedies of the buyer? A: (a) He can seek for the reduction of the price. If he filed it for example. if he was aware. If after 1 year. ANY CHARGE OR NON APPARENT ENCUMBRANCE NOT DECLARED OR KNOWN TO THE BUYER Q: Would there be an encumbrance over an immovable which is a form of easement or servitude? A: An example of this is a road right of way. no more rescission. the vendor would be liable for the return of the price. he cannot be held liable for damages but he would only be held liable for the price. after 2 years from discovery no recovery of damages. he can only be held liable for the price less value. if the cause of the loss was the defect itself. damages may be recovered. Baviera: there is another warranty which is WARRANTY OF QUALITY which includes: (1) . If the vendor was not aware of the defects. maybe it was lost due to the defect itself or lost through fortuitous event or lost through the fault of the vendee. Prof. can he claim breach of warranty against any charge or non apparent encumbrance? A: Of course there are requisites: (1) The encumbrance or easement or burden or the road right of way has to be non apparent. Q: If there is an encumbrance. Prof. he should first consider the cause of the loss. Deleon. But of course. WARRANTY OF QUALITY Prof. nonetheless.

Note: If the thing is sold under the trade name there can be no warranty of fitness for a particular purpose. The seller manifested that the thing would be fit for the purpose and the buyer relied on such representation of the seller. In order for the seller may be held liable: 1. SALE OF ANIMALS WITH DEFECTS RULES: 1. Uribe: I cannot agree that the warranty of quality is in the warranty of hidden defects. it may not be fit for the purpose of 1 buyer and if all the requisites for this warranty are present. Q: If one of the animals has redhibitory defect. then he may hold the seller liable for breach of warranty of fitness for a particular purpose although there is no hidden defect but it is not fit for the purpose of the buyer. De Leon. I agree with Prof. The defect is a redhibitory defect it is such kind of defect that even by examination of expert it cannot be discovered. can the buyer rescind the entire contract pertaining to all the animals? A: G. He cannot rescind the entire contract pertaining to all animals. Baviera that there is a warranty of quality.R. If the thing was sold by description or by sample. The buyer has to inform the seller of the particular purpose for which the thing is to be use and 2. Faye Marie C.Warranty of Fitness (2) Warranty of Merchantability To some authors the warranty of quality is considered under the warranty of hidden defects. Prof. He can only rescind the contract pertaining to the animal with redhibitory defect. WARRANTY OF MERCHANTABILITY It pertains to the fact that it is fit for the general purpose. Martinez Chato Cabigas Jessica A. However. it is considered that there is such a thing as warranty of merchantability. WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE The thing bought may not actually have any defect and for 1 million buyers it would be fit for their purpose. Vitug and Prof.: No. Lopez Dian Rosapapan November 2008 . Atty.

can there be breach of warranty against eviction? A: Yes. Sale of animals in fairs 4. it would be at the time and place of delivery. 2. . Q: Who has the burden of proof that he would not have bought the others had he known of the defect of one? A: Normally. Example: C. (Faye: pls. Examples: He bought the animals in teams or in pairs then the presumption arises. Uribe will ask the meaning. Q: In sale by authority of law or in execution sale. mortgagee. auctioneer. does it mean that he already accepted? A: No because receiving is preliminary to accepting. Sale in public auction Note: There would still be warranty against eviction.) Instances whether there would be no warranty against hidden defectsand therefore caveat emptor may be invoked: 1. they are selling on behalf of another person. Sale which is an as is where is sale which means sale where it is found xxx bahala ka sa buhay mo if you want to buy the thing and you cannot later on claim that there were hidden defects. In fact. Right to Inspect / Examine This may be waived.D. this is consistent to the right provided by law to the buyer which is the right of inspection or the right of examination. RIGHTS AND OBLIGATIONS OF THE VENDEE 1. arrangement. Obligation to pay the price (if warranted. Obligation to accept the thing delivered Q: If the buyer received the goods delivered. kapag namatay yung isa later on mamatay din yung isa.) 2.Exception: If he can prove that he would not have bought the others had he known the defect of one then he can rescind the entire contract. Note: Rules on warranty also apply to judicial sale. Obligation to accept the thing delivered. he may reject the goods if defective.O. The law would specifically exempt certain persons from liability for breach of warranty like sheriff. Obligation to pay the price Q: When? A: (1) As stipulated (2) If there is no stipulation. Minsan nga mgsuicide pa sya pag mag isa na lang sya. The judgment debtor and not the sheriff shall be liable. -Love birds (Ang mga love birds. Iuuntog nya ulo nya sa cage nya. pledge and other persons who sell by virtues of an authority of law like notary public because they are not really selling for themselves. . . But the law under certain circumstances would provide for this presumption that it is presumed that he would have bought the others had he known of the defect of one. it would be the buyer. 2. Thereafter. Sale of 2nd hand items 3. with interest) 1. research the complete meaning of as is where is sale. Atty.

STOPPAGE IN TRANSITU Requisites: (1) Insolvency of the buyer (2) The seller must have parted possession over the goods (3) The goods must be in transit How right is exercised: (1) By obtaining actual possession of the goods . REMEDIES FOR BREACH OF CONTRACT REMEDIES OF AN UNPAID SELLER (ARTICLE 1526) (1) Right to retain the thing in his possession (possessory lien) (2) Right of stoppage in transitu / right to resume possession of the goods (3) Right of resale (4) Right to rescind Q: Are there other remedies aside 1526? A: Yes. The right of resale and the right to rescind may only be exercised if the seller has possessory lien. Note: The buyer is not required to be insolvent. Baviera) Q: Are the remedies under the Maceda Law alternative? Can the buyer be able to exercise 2 or more remedies all at the same time? A: Yes.MACEDA LAW Study Maceda Law and its essential features (see book of Prof. This is the lien under the rules on concurrence and preference of credit. The seller may opt to file an action for specific performance or an action for damages. Remedies under the Maceda Law are cumulative. Q: When would the seller be considered to have lost his lien? A: (1) If he waives his right (2) If the buyer lawfully obtained possession over the goods (3) When the thing is delivered to a common carrier and the seller did not prefer his ownership and possession over the goods. Unpaid seller is one who has not been fully paif of the price. POSSESSORY LIEN Q: Why is it called possessory lien? A: because there another lien in the law. Note: remedies of the unpaid seller are not necessarily alternative.

RIGHT OF RESALE Q: When would the seller have this right? A: (1) If the goods are perishable (2) The right is expressly reserved in the contract (3) The buyer has been in default for an unreasonable time. Lopez November 2008 Dian Rosapapan . Loss of the thing Under the law on sales 1. read Sales by Prof. The exercise of the right of resale will result in the extinguishment of the 1st sale. 1713. 1644. Novation 3. Legal LEASE Note: · Read the Definition of Lease under Articles 1643. Note: The resale may be a private sale or a public sale. Note: The seller should send a notice of the intention to resell to the buyer. The ownership of the 1st buyer will be terminated and such ownership will be vested to the 2nd buyer 2. Baviera EXTINGUISHMENT OF SALE Pls. Rescission or cancellation will extinguish COS 3. Redemption Kinds of Redemption 1. The only limitation here is that the seller cannot buy directly or indirectly. read Sales by Prof. RECTO LAW Pls.(2) This may be exercised by mere notice to the common carrier If the seller validly exercised the right of stoppage in transitu. Faye Marie C. Conventional 2. he will be considered to have regained his possessory lien. Baviera 1. Payment 2. Martinez Chato Cabigas Jessica A.

deposit. to distinguish lease contract from other legal relationship you have to consider the characteristic of the contract.g. Aside from that it may be safe to consider as a rule all the other contract as consensual contract. 1678. therefore is a consensual contract by mere meeting of the mind as to the object and to the consideration the contract is . there are four (4) of them but three (3) will not be covered by Civil Law. donation). Mariano Note: In Agency. Note: Again. The only kind of Lease of Service that will be discuss under the Civil Law is the Contract for a Piece of Work. otherwise if there is no valuable consideration for the use or enjoyment of the thing it will be commodatum. Lease of Right Note: In lease of Service. Distinguish a Contract for Piece of Work from Contract of AgencyRead: Frensel vs . 1724 in relation to 1403 on Statute of Frauds and 1403. As a rule lease. the control of the principal over the agent is so pervasive that the principal can control not only the result but also the manner and method of the performance of the obligation which is not present in this case and therefore Merit was not considered an agent of Mariano. 1687 · Rights of Third Person: Article 1729 (ex: rights of owner of materials against the owner of the building) Note: The first thing to consider in lease is to consider the kind of lease. Lease of Work or Service 3. 1680. Q: As to the relationship of the taxi driver with his operator. pledge) and formal contract (antichresis. commodatum. 1723 (take note several questions in the bar have appeared under these provisions) · Period of the Lease if the parties failed to Fixed the Period: Articles 1682. ruled that this is in fact a lease but not a lease of thing. Definition: Q: If a party binds himself to give another the enjoyment or use of thing. is this a contract of lease? A: SC. sale of large cattle. 1878 on Agency to Lease. as to when. this is because of the control of the operator over the taxi driver. the most important distinction here with that of commodatum is that in lease. Lease of Things 2. but lease of service specifically an employment contract. Kinds of Lease: 1. does that make the contract one of lease of things? A: No. 1650 · Implied new lease or tacita recunducion: Article 1670 (important) · Rights and Obligation of the Lessor and Lessee: Articles 1673. it must be for a price certain. which are Household Service and Contract of Labor (covered by Labor Law). what time the drive operates the vehicle. and Contract of Carriage (covered by Commercial Law). The best way to remember the kinds of contract is to know by heart what are the real contract (mutuum.· Consider also on Formalities: Articles 1647. · Assignment and Sublease: Articles 1649. where no particular form is required except in exceptional case: e.

the request was merely verbal then the claim may not prosper. The heirs of the lessee may continue to occupy the premises by virtue of the lease because it is not extinguish upon death of lessee. however additional work was requested by a person who has the authority of a duly recognize representative of the owner of the plane and the request was merely verbal. the agreement for the additional work must be in writing and the changes should be authorized in writing SA: The suggested answer of UP will sustain the defense because of 1724. or when they are accessory to an industrial establishment then it may be a subject of lease. may a consumable thing be the subject matter of lease? A: Normally when a consumable thing is use in accordance with its nature it is consumed. CA Lease of Things certain provision of the law which requires certain forms to be enforceable. Note: the problem in lease would normally be a combination of an agency and lease. CAUSE FORMALITIES Lease of Service there is no particular form required by law for the validity of the lease not even for the enforceability as a rule. the defense raise was under 1724 in order that a claim for additional payment for the additional work. Upon the death of parties like death of lessee. Read: Donald Dy vs. such change not being authorized in writing. CONSENT 2. Note: Lease of things is not essentially personal. the one who rendered the work demanded additional payment. IAC.perfected. 3. The exception is. . Heirs of Fausto Dimaculangan vs. Characteristic of Lease of things ¨ Consensual Contract ¨ Onerous ¨ Bilateral ¨ Nominate ¨ Principal. OBJECT Q: In lease of things. Essential Requisites of Contract of Lease 1. RIGHTS AND OBLIGATION OF THE LESSOR As to necessary repairs of the thing lease. as a rule therefore consumable things cannot be the subject matter of lease of things. BE: Agreement for the repair of a private plane and for a certain sum of money. the contract is not thereby terminated. this is an obligation of the lessor. when the use of the things is only for exhibition. when the additional work was completed. under the law the lessor is oblige to make the necessary repairs.

agent and principal. Martinez November 2008 Chato Cabigas Jessica A. Salazar Frensel vs. Read: Malacat vs. Mateo RIGHTS AND OBLIGATIONS OF THE LESSEE Note: Two (2) favorite articles are 1649 pertaining to assignment of lease. Articles 1649 and 1650 would tell us that a lessee may not assign his right on the lease without the consent of the lessor however he may sublease the property in whole or in part even without the knowledge of the lessor as long as he was not prohibited from subleasing the premises. The question in the Bar may be as simple as may a lessee sublease the property without the consent of the lessor and what are the respective liabilities of the lessee and sublessee. death of the lessee does not terminate the contract. Mariano TERMINATION OF THE LEASE BE: Discuss the effect of death of lessee.Read: Gonzales vs. and 1650 on sublease. (Case: Heirs of Dimaculangan vs. IAC) IMPLIED NEW LEASE Note: one of the most favorite in the bar exam. SA: In a lease of thing. it may be continued until the expiration of period of the lease by the heirs. lessor. Requisites: Faye Marie C. Lopez Dian Rosapapan10 . A contract of lease is not essentially a personal contract therefore upon the death of the lessee.

AGENCY Definition 1868. Other provisions pertain to the right and obligations of commission agent or more importantly the guaranty commission agent-1907-1908 Effect of death-1919. The lessor refuse. there was an extension known was implied new lease. the implied new lease would only last for 30 days. However. 1930 and 1931 Either of the agent or principal Revocation-kind of agency. As to the option. If the payment is on annual basis. Was it correct to say that there was extension of the lease under the facts? SA: Yes. First as to the term. 1874 1892-pertain to appointment of the substitute-effect-may the agent nonetheless be held liable for the loss that incurred by the principle as the result of the appointment of the substitute.1. if B agreed to the request of A. The lease period has expired and 2. 81 up to 1984. Read: Quiroga vs Parsons Distinguishing contact of agency from other contract and other legal . It was stipulated that the lessee has the option to buy property at a certain price within a certain period (option to buy). This continued until June 1984 when the lessee stated that he would now buy the property in accordance with the option to buy. The lessee continues to be in possession of the lease for at least 15 days from the time of the expiration of the lease and 3. it was renews. the renewal would only be for a year and if monthly payment of rental is made. Was the lessor correct? Yes. Is there a nominate contract created between A and B? SA: Better answer. Despite the lapse of the 3year pe riod. a nominate contract has been created. but continued to be in possession of the property and paying the monthly rentals and the lessor accepting the same.formalities Coz a form is required for the validity or for the enforceability of the contrac t entered by the agent-1878. only those terms and conditions which are germane in a contract of lease are deemed renewed as to the rest like option to buy. BE: Pertain to contract of lease entered into for period of 3 years Jan 1. 1874 and 1878. No notice to the contrary from the lessor and the lessee. will not be considered renewed.agency coupled with interest-1927 BE: A asked her best friend to B buy for her certain items in a grocerystore. in an implied new lease. the term of the renewed lease would not be the term agreed upon but only be of a period depending on the manner the rentals are paid. Rentals were paid on monthly basis. an agency relationship has been created. Even in the facts of the case itself. it was stipulated that the option may be exercise within the period agreed upon (3 years). with the implied new lease it does not mean that all the terms and condition of the contract in the original lease continue also. under the law. SC held. claiming there was no more option. the lessee did not exercise the option.

The only defense raised by the owner was that Flores was not his agent. not by Flores. owned by Kang and in the administration of the restaurant he bought certain items from Mack. 1. abaca which goods will be sold by A. items needed for restaurant but a portion / price to be paid. Estoppel Kang case Facts: Flores appears to have full control of a restaurant. There is no problem with express agency. not concepts. the goods obtain by A from X remained unpaid. Read: Lepanto Mining case Mariano case Some authors would classify contract of agency into three. Apparent / dormant 3. eh kung verbal lang ang agreement dun. Estoppel 1. The defense of B was as of that moment from that certain period he has already revoked the authority of the agent and therefore be bound by any contract entered into by A in representation of B with 3rd person.relationship. 1873 so far as 3rd person are concern. informing X that A has the authority to enter into a contract with X specifically to obtain goods from X. Actual agency 2. 3. Express agency-it is a kind of agency the consent of both parties were expressly given. after the sale a portion can be deducted as a commission and the restaurant to be delivered to X. the owner of the restaurant can be held liable by estoppel because he cloth Flores with full power as if he has the authority to buy those items necessary for the administration of restaurant aside from that Mack was able to prove pieces of evidence like in the lease agreement over the building where restaurant was located and comes the owner of the restaurant as lessee and Flores sign as an agent of the lessee with all this the Held: The owner of the restaurant is liable under the Principle of Estoppel. after a certain period. Consider the characteristics of a contract of agency as a contract and as a legal relationship business organization. 2. X demanded payment from B. this notice itong letter nya kay X remain in full force and effect until it is rescinded in the same manner it was given. how would you be able to prove. 3 Actual agency The law itself classify actual agency into as manner of creation. Apparent / Ostensible Q: A letter was sent by B to X. . A did not deliver the proceeds of the sale. 4. In other words A will get the goods from X. Take note: it is very difficult to prove actual agency. because an agreement between 2 persons. so Mack ( seller ) went after the owner of the resto. express / implied. like copra. Is the claim of B tenable? SA: No.

When 2 parties are absent. Consent 2. one in Manila and the other one in Cebu Compensation As to the compensation in a contract of agency consider if the agency is gratuitous or onerous. As to form.1 is in Manila and the other is in Cebu. Execution of the juridical act. BE: Scope of authority of the agent whether it only pertains to theacts of admin istration or acts of anu yun dominion? SA: Under this provision 1877 if the agency is comes in general term this only comprise acts of administration even if the principal beholds power to the agent or it is stated that the agent may execute any act as may be deemed appropriate.present in the same conference hall (b) If 2 persons are in different place. When 2 parties are present.Implied agency-were the consent of one parties was only impliedly given on the part of principal-the leading case is Dela Pena vs. Hidalgo Q: If a person was asked to administer the property of another to sellthe proper ty. 1. ESSENTIAL ELEMENTS OF A CONTRACT OF AGENCY Read: Rallos case The SC enumerated the essential elements or the alleged essentials elements of a contract of agency. That will still be an agency pertaining to act of administration. okie! The law would say when the 2 parties are absent. Under the law. the law is clear that it may be oral however the law may require a particular form. Acts within the scope of authority 4. The acts must be in representation of the principal Chato Cabigas Jessica A. and he said nothing.by his silence.present in the same room (a) 2 persons present. Read: 1909 -the liability of the agent for damage to the principal due to his negligence or even bad faith or fraud committed against the principal may be mitigated if the agency is gratuitous in character. and when the 2 parties are present. Martinez November 2008 Dian Rosapapan11 . by his inactions may be deemed accept agency? A: Not necessarily. you have to make distinction to determine the scenario under which the said appointment was made.subject matter 3. Lopez Faye Marie C.

first there was nothing mention about the cause or consideration as a contract. does it mean that there was no agency at all? Of course not. however the sister did not remit the proceeds of th sale. well 1 author claims that there are 3 parties in a contract of agency that is totally wrong! There are only 2 parties in a contract of agency the principal and the agent.This are allegedly the essential element again some authors would discuss in their books with due respect to the ponente of this case. OBJECT As to the object of the contract of agency -this is the execution of juridical act. so when Jimenez went see codal . he was then in the province of North Luzon. the agent may be called attorney-infact. the agreement between the agent and the principal if it was only verbal will be in the contract entered into by the agent. lease or other contract and the 3rd person is not a party to this contract. this is the agency. medyo mali mali ang enumeration. It does not matter. representative. however any effect of the verbal authorization. a contract will never validly have a cause or consideration well it may be liberality pwede naman cause yan but there must have a cause if only for that the enumeration be defective more than that that last 2 mention that the agent act within the scope and that the agent must act in representation are not essential elements of a contract of agency they are actually obligations of agent which means they have been already perfected of contract of agency. PARTIES Going to the consent of the parties. however in problems involving agency there may be there would be normally three persons involve. there is a contract of agency. Rabot Facts: Jimenez was the owner of a certain parcels of land in Pangasinan. Under the rule the consequences if the agent did not act in the representation of the principal. FORM Agency may be oral. binulsa lng nya. Read 1874 Contracts which require a SPA Jimenez vs. they may be called in another names the principal-employer. once the contract is valid then the obligations will arise even if the agent acted outside the scope of authority does it mean that the contract of agency is void? Of course not. so essential elements are only those elements necessarily for the validity of the contract. the 3rd person is a party to a 2nd contract. proxy. the contract of agency would be valid but the parties even if it is by verbal agreement. no longer part of the concept agency. the contract entered into between by the principal and the agent. he can be held liable for acting outside the scope of authority or if he acted not in contemplation of the principal. constituent. no obligation will arise kung void ung kontrata kung wala pang valid contract. but when the agent entered into a contract it may be a sale. the third persons with whom the agent transacted. he sent a letter to his sister asking his sister to sell one of his parcels of land and with that letter the sister indeed sold one of his parcels of land to Rabot. chief. that again the parti es is the principal and the agent.

later on he defaulted the question was can the bank go after the principal? A: Of course No. Obligations of the Agent: 1. so he filed an action against Rabot. the agent borrow for himself sya talaga.back to Pangasinan. you can demand the power of authority. he should always remember: a. my 2nd paragraph to the effect that the bank can at least foreclose the mortgage they can after the property of the principal. to act within the scope authority b. yun ay na kay Rabot na. also his authority to have the property to mortgage to secure a loan. would that mortgage be valid? A: Definitely not. When you sent a letter to your brothers or sisters you do not notarize first. he demanded the property. who will be bound in that such . di tinatanong ng examiner can the bank go after the principal as far as the thing is concerned. In fact as a 3rd person. Puno Read: Insular vs. To carry out the agency 2. would that be a valid and binding mortgage as against the principal? A: Also not. Q: On other hand even if the agent mortgaged the thing on behalf of the principal. The only question pertains to the payment of loan. Read: Linal vs. the law requires that the mortgagor must be the absolute owner of the thing mortgage. the principal is the mortgagor. If he mortgaged it as a mortgagor the mortgage is void. to act in behalf of the principal a. under the facts. Q: If indeed he mortgaged the land for a loan in his name. so that you will know whether in fact he had authority to enter into a contract but sa totoo lng there are some SPA which would be subject of the case up to the SC pertaining to the scope of authority of the agent. Q: If the agent acted within the scope of his authority and in representation of the principal. the defense raised by him that the letter would not be sufficient a power of attorney to bind him as a principal the sale of the parcels of land. under the facts. If you remember the question. the contract is between the agent and the bank only the principal has nothing to do with the contract. there are 2 obligations of the agent. Another thing of the suggested answer it is totally wrong. not to secure any other persons loan and that therefore it cannot be within the authority of the agent and therefore any foreclosure of such mortgage will not prosper. Acting within the scope of authority Q: how would you know if the agent was acting within the scope of authority? A: Be guided by the power of authority. however if you have read the suggested answer. Held: A letter suffices as a power of attorney. the principal authorize the agent to mortgage the property for the loan that will be obtain by the agent in the name of the principal. PNB BE: A authorize B to borrow sum of money from any bank and he also authorize B to mortgage specific property specific parcel of land to secure that loan what B did he borrow money for himself from a certain bank without disclosing his principal. In carrying out the agency.

it is possible for the agent himself to be bound in such contract be held liable under such contract? A: Yes. one if he expressly binds himself to that contract. 2. (1) Can the principal recover the car from the buyer if that car is already delivered to the buyer? (2)Any remedy provided by the law to the seller or to the principal? 1. Domingo Read: US vs. the description of the car was mention in the SPA at least 300k however before the agent would sell the car. instead of selling the car in QC IBP member chapter he sold the car in Manila not known by the principal for 300k. B filed an action to compel A to Faye Marie C. After 22 years. Sub Agent (Prof. It depends. B. Martinez November 2008 Chato Cabigas Jessica A. However. it will be the principal because again the agent merely representing the principal. however. De Leon s book) PARTNERSHIP BE: A. using all his savings in the total amount f Php2. Read: 1898 Appointment of Substitute Read: Substitute vs. Reyes Obligation to render an accounting If this time the principal authorize the agent to sell his car for 300k. 1900 so far as 3rd persons are concerned they only rely on the SPA as written they have no obligation to inquire on the special instructions made by the principal which are not mention in the SPA.000. eh wala naman dun sa SPA na it will be sold to an IBP member chapter in QC. decided t establish a restaurant. the principal called him by phone instructed him to sell the cart in QC to a member of IBP member chapter. As provided under Art. Go after the agent or damages if there is any damage sustain by him for his failure to follow the instructions of the principal. gave Php4.contract? A: Aside from the 3rd person. if that buyer has no knowledge of that instruction of the principal then he has all the right to retain the car and that sale will be valid and binding as against the principal.000 as financial assistance with the agreement that B will have 22% share of the profits of the business. Lopez Dian Rosapapan12 . Read: Domingo vs.

000 only as a financial assistance. two or more persons can form a partnership for the exercise of a profession. Q: What about the stipulation that B will have 22% share of the profits? A: The law on partnership is very clear that a sharing in the profits does not necessarily does not result in a partnership contract because the sharing of the profits may only be a way of compensating the other person. Thus. But mas maganda ang agreement na ito. Atty. A very important feature of partnership in relation to co-ownership. he actually became a creditor of A. wouldthat still be c onsidered a valid partnership contract? A: Yes. they have their respective personalities and no new personality will be created. friendly loan ito. WHY: In the alternative answer as can be seen from the facts. saka lang babayaran. by express provision of the law. The sharing in the profits as expressly provided by law does not necessarily result in a partnership contract. but it may also be created by operation of law.deliver to him his share in the profits claiming that he was a partner. As such. Di ba that s reasonable agreement. it has a juridical personality. Uribe: I do not agree with the answer. Co-ownership: Common enjoyment of the thing or right owned in common. it can be said that really B was not a partner but is actually a creditor of A. Kasi yung loan. PURPOSE Partnership: either to divide profits or exercise a profession. and under the law. supposedly pwede payable every month with a fixed amount. Kumbaga. In co-ownership. Therefore. Only kung may profit. In fact. separate and distinct from the individual partner which is obviously not present in co-ownership. in fact that can be a mode of payment of the loan. I d rather agree with the alternative answer. Partnership vs. merely to enjoy the property. Is B a partner of A? SA: Yes. the fact that there is co-ownership does not necessarily mean that there is a partnership existing between two persons. wala munang bayad. .: two persons may inherit a property from their father or mother. A denied that B was his partner. Co-ownership may be created by agreement. Co-ownership Consider the essential features: CREATION Partnership is obviously created by agreement. Ex. thus they may have different purposes. Definition of Partnership Q: What if two or more persons agreed to put up a partnership but they never intended to divide the profits among themselves. they may be considered as co-owners of the same property. B was a partner in the business because there was a contribution of money to a common fund and there was an agreement to divide the profit among themselves. B gave Php4. It was not a contribution to a common fund. he did not contribute to a common fund. Under the second paragraph of the article. so that if walang profit sa isang taon. 22% of the profits.

there are persons who are prohibited from entering into a contract of partnership. therefore there can be no partnership engaging in such business: banking and insurance.) Object: to engage to a lawful activity. property or industry. because the sharing in the profits may be stipulated upon by the parties. each partner is an agent of the other partners and of the partnership. Q: If the object is to engage in a lawful activity. the partnership is dissolved. Pero kung walang stipulation. whether a business or profession. Cause The promise of each partner to contribute either money. necessarily the partnership is valid? A: No. mas malaki ang interest. if it is a general partnership. just like in sales and lease. specifically the Corporation Code which provides that only corporation may engage in insurance and banking business. Co-ownership: As a rule. Kapag namatay ang isang co-owner. 3.POWERS OF THE MEMBERS Partnership: Unless otherwise agreed upon. PROFITS: Co-owner: Mas malaki ang profits. a co-owner cannot act as an agent of the other coowners unless otherwise agreed upon between the co-owners. his heirs will be the co-owners of the surviving co-owners at pwedeng tulou-tuloy lang yan. Formalities Q: If the agreement of the parties to a contract of partnership was only . property or industry Consent of the contracting parties: The rules in contract would be equally applicable but. it should have the three essential requisites: 1. However in partnership. There are specific business activities wherein the law would require particular business organization which may engage in such business activity. Q: Will death extinguish co-ownership? A: No. But not necessarily in partnership. Object To engage in a lawful activity. ESSENTIAL ELEMENTS OF PARTNERSHIP Like any other contract.) Consent 2. if one of the partners dies.) Cause or consideration: the promise of each partner to contribute money. it may be based on the capital contribution.

) It can own its properties. The 2nd paragraph of Art. After all. even in case of failure to comply with the requirements of Art. Read: Campos-Rueda vs. Even if under Art. it is clear that despite non-compliance with the requirements of the law as to form. shall be in a public instrument and must be registered with the SEC. the law provides that every contract of partnership. dissolved a partnership. yes. because this is without prejudice to the liability of the partnership (kung may partnership). 2.a verbal agreement.1.) Universal Partnership of Profit TERM OF PARTNERSHIP: Q: If the partners failed to fix a period. having a capital of more than Php3. because a partnership may be a partnership for a particular undertaking even if no period was fixed by the parties. it cannot be dissolved at will. the partnership has a juridical personality separate and distinct from that of each if the partners.) It may be found guilty of an act of insolvency. the partnership being involved in a bowling business. a partner. the law provides. would that be a valid and binding contract? Will there be a juridical personality created? A: As a rule. Art. 1772 provides that despite failure to comply with the requirements in the preceding paragraph. The SC ruled that even if the partners failed to fix a period.000 or more. Consequences: separate and distinct personality 1. Therefore. for the debts will have to be paid. par. after all. But more directly. 1768. claiming it to be a partnership at will. does it mean that the partnersagreed a partnership at will and may be dissolved at any time without any liability so long as they acted in good faith? A: No. a verbal partnership contract is valid and binding between the parties. 1772. Thus.) Universal Partnership of Property 2. there is a partnership created. the SC ruled that the said partnership is a partnership for a .) It may be dissolved for committing an act of insolvency. 1772. Pacific Commercial CLASSIFICATION OF PARTNERSHIP: As to the object of the partnership is only to determine whether a person may enter such partnership. 3. this is without prejudice to the liability of the partnership and the individual partners to thi rd persons. In one case. the partnership cannot be considered as a partnership at will because there was a stipulation in the partnership agreement that the debt of the partnership shall paid out of the profits that will be obtained by the bowling business. From that article alone. there is a need to distinguish whether a partnership is a UNIVERSAL or PARTICULAR partnership 2 Kinds of Universal Partnership: 1. 4.) It can sue and be sued.

CLASSIFICATION OF PARTNERS: According to the liability of the partners: Faye Marie C. Martinez November 2008 Chato Cabigas Jessica A.particular undertaking. Lopez Dian Rosapapan13 .

2.) the right of the partner to participate in the management of the business of the partnership. Note: A limited partner cannot be held personally liable for partnership obligations but there are exceptions As to the contribution: 1. The incapacity of one of the partners.) capitalist 2. Ex. Into these arrangements. unless.) Limited This classification is relevant only in limited partnership. PROPERTY RIGHTS 3 Major property rights of a partner: 1.) interest in the partnership.1. 2.: No.) right in specific partnership property. he can contribute both money and industry. In a partnership of which the business is into buying and selling cars. Q: May an industrial partner be a limited partner? A.) General 2.) Solidary Management: -without specification as to each other s duties or without stipulation that one of them shall act without the consent of all.) If there was management arrangement agreed upon between the partners. he can execute any acts of administration even if opposed by all the other partners. and 3. This is also known as management by consensus. 2. may be a general partner? A: Yes. each partner is considered as an agent of the partnership.) industrial Q: An industrial partner. Property rights considered as minor: 1. It has to be by unanimous consent. He cannot contribute service. . in obtaining his consent (he is absent or incapacitated) it would result in irreparable damage to the partnership. TYPES OF MANAGEMENT: 1.) Joint Management: -two or more managing partners with the stipulation that none of them shall act without the consent of all others. Q: But can a partner be both capitalist and industrial? A: Yes. or his absence will not be a valid ground not to obtain his consent to a contract.) right to demand for a formal accounting. A capitalist partner may either be an industrial or general partner. He can be both capitalist and industrial and there will be consequences to that. then the consent of the absent or incapacitated managing partner may be dispensed with. A limited partner can only contribute money or property.) right to have access to the books of the partnership. if only one partner is appointed as a manager. 3.

it must be known first what was promised by the partner. he cannot be validly removed.) To make good his promised contribution. If no rate was stipulated by the parties. he can never be removed. because this is forbearance in money. The question now is. for instance.) there has to be just cause. The requirements for the removal of a managing partner would depend on whether he was constituted as such in the articles of partnership or he was merely appointed as managing partners after the constitution of the partnership. can he be easily be removed? Ans.) To participate in the losses incurred by the partnership business. it will be the legal rate of 12%. and 3. which is unusual. If he was constituted as a managing partner in the articles f partnership.: No. Php1 Million will have to be divided into 4 or the respective contribution will be Php250. to the opposition of the other partners for they consider it bad investment. he can be held liable by the non-defaulting partners up to the amount promised plus interest. To make good his promised contribution: A. he may be removed as a managing partner. Thus. Absent one of these conditions. if the managing partner controls 51% of the partnership. not only will that defaulting party be . property or industry. if he was appointed as a managing partner only after the constitution of the partnership.) Fiduciary duties. In fact.000. he can only be validly removed under two conditions: 1.) by those partners having controlling interests. Aside from paying the interest. so long as it was done by those partners having controlling interests. 2. However. he can be validly removed even without just cause. because such act is merely an act of administration. in this example.: Yes. OBLIGATIONS OF THE PARTNERS AMONG THEMSELVES AND AS TO THE PARTNERSHIP AND IN CASE OF NON-PERFORMANCE OF THE OBLIGATION 3 Obligations of the partners: 1. whether he promised to contribute money. the law provides that they will have to share equally. even if there is just cause. If one partner failed to make good his promised contribution which is a sum of money. will the decision or the act of the managing partner in buying the said car bind the partnership? Ans. the partners agreed to contribute Php1 Million with 4 partners. Money: In order to know the remedies that may be availed of by the nondefaulting partners and the partnership. if the managing partner continues to not consider the sentiments of the other partners. If the partner promised to contribute money. without an agreement as to respective amount to be contributed.the managing partner decided to buy a vintage Mercedes Benz. The problem is. and 2.

he would have the obligation to warrant the thing. will specific performance be a remedy? A: Definitely not.) Specific performance-the other partners can compel him to make good his promised contribution. in obligations involving money.) Dissolution-may be an option by the non-defaulting partners. integrity in being with each other. not only will he be liable to pay interest. honesty. If he has such advantage at the expense of the partnership. 2. Remedies that may be invoked by the non-defaulting partners: 1. Industry Q: If a partner fails to render service as promised. normally. This duty lasts. then there is a breach of the fiduciary duty. Martinez Chato Cabigas Jessica A. that can still be considered as a breach of Faye Marie C.held liable to pay interest. he will also be liable to pay damages. Property: If a partner promised to contribute property. the liability will only be payment of interest. who will bear the loss? A: The partner will bear the loss. Normally. In partnership. The SC held that even if the act of a partner was made after the termination of the partnership. The remedy would be to demand for the value of the service plus damages. it must be determined as to what was really contributed: was it the property itself or the use of the property. under the law. Test to determine whether there was a violation of this duty: Whether the partner has an advantage himself at the expense of the partnership. B. but also of damages. if the foundation of that act was made during the existence of the partnership. aside from that. The partnership will bear the loss when the thing is already in its possession C. Lopez Dian Rosapapan14 . There need not be a proof of evil motive so long as he has this advantage at the expense of the partnership. Fiduciary Duties: The duty to observe utmost good faith. Q: Before the delivery of the thing to the partnership. It would be a violation of his rights against involuntary servitude. fairness. if that is the only amount that they are expecting for the partnership. This duty commences even during the negotiation stage. Q: May a partner may be held liable for breach of fiduciary duty even after the termination of the partnership? A: Yes. until the termination of the partnership. in case of damage incurred by another party. It can be easily done because there is an industry rate. If it was the ownership of the property that was contributed then he would have the obligation to deliver and transfer ownership.

November 2008 .

: Consider first whether there was a stipulation as to losses or there was no stipulation. ABC. hindi naman ata na i-bind nya ang partnership to such contract.: If a partner went to a furniture shop to buy furniture the of which is Php100. hindi ko naman alam na restaurant yung business.: No. the partner bought the set of SCRA. But the seller would raise the defense. can the seller demand payment from the partnership? A: It depends as to whether the contract was entered into in the name of the partnership. if a partner bought a complete set of SCRA in the nameof the part nership and signed by that partner. ang negosyo nila restaurant. for the account of the partnership. that partner should be held liable. pinaghandaan na nya yun act during the existence of the partnership. if a partner would enter into a contract. Is that a valid defense? Ans. for the furniture was not bought in the name of the partnership. e ang nagrepresent ng partnership si Atty. Participate in the Losses: Q: What will be the share of the partner in the losses incurred in the partnership? Ans. the partnership is a law office. WINDING UP AND TERMINATION . if in the agreement the buyer was the partner himself and not the partnership. a partnership resolution is not necessary. and business ng partnership ay restaurant. so akala law firm. that contract will bind the partnership. he can demand for the presentation of the articles of partnership in order for the third party to know the nature of the business of the partnership. then would be. pero naman. The SC would tell that the third party contracting with the partnership has the obligation to know at least the nature of the business of the partnership. OBLIGATIONS OF PARTNER RE: 3RD PERSONS Q: When would a contract entered into by a partner bind the partnership? Ex. and the partner bought a set of SCRA. Thus. under its signature. and such amount remained unpaid. if the contract would be binding in the partnership. if this time. For. The problem. . Therefore. by a partner who is authorized to enter into that contract to bind the partnership. whether the partner who represented the partnership had the authority to bind the partnership. Q: Concretely. that act of buying a set of SCRA will be considered apparently for carrying the business of the partnership the usual way.000. in this example. Whether or not a contract would bind the partnership would depend on the nature of the act of such partner and the nature of the business of the partnership. Normally. however.fiduciary duty. In other words. would that contract bind the partnership for the set was bought in the name of the partnership? A: It would depend on the nature of the act and the nature of the business of the partnership. In this example. it was executed only after the termination of the partnership. DISSOLUTION. In fact.

) wrongful expulsion. Judicial causes are necessarily voluntary because it is by application.) Insanity or incapacity: -The courts require that it should be permanent in character.: No. Extrajudicial causes: 1. and -such incapacity or insanity must affect the performance of such partner of his obligations with respect to the partnership business. Again.) if one partner would refuse to allow another partner in the management of the partnership business. c.) Gross misconduct: a.: No. Q: Even if it is a partnership of lawyers or a law office? Ans. kung wala syang pakialam sa management ng business ng partnership. would this dissolve the partnership by operation of law? Ans. 2. 2. In other words. if he has such right to participate in the management .These are three different concepts. CAUSES OF THE DISSOLUTION 1. 2. b. Judicial Causes: Grounds: 1.) involuntary. Q: When would there be a dissolution of a partnership? Under the law. it is NOT DEEMED dissolved. if one of the partners ceased to be associated in the carrying on of the business of the partnership. there will be a dissolution if there is a change in the relation of the partners caused by any of the partners ceasing to be associated in the carrying on of the business of the partnership. insanity or incapacity is not a valid ground. that will result in the dissolution of the partnership.) if the managing partner would refuse to distribute the profits of the partnership when there is such obligation to distribute the profits. INVOLUNTARY CAUSES Q: If one of the partners in a partnership was elected a Senator. Upon dissolution of the partnership. That will result in the dissolution of the partnership.) Judicial. .) voluntary. It will still have to go through the process of winding up of the affairs of the business of the partnership before the partnership itself will be terminated.) Extrajudicial.

) constructive trust The classification of trust into two kinds (express and implied) and implied trust into two kinds (resulting and constructive) would be relevant in two concepts: 1.) resulting trust.) If there are remaining assets. agreed to have the land registered in the name of A.) Implied Implied Trust: 2 Kinds: 1. This is specifically. may be proved by parole evidence. 1451 of the NCC.) Partnership creditors 3. Art. . TRUST 2 KINDS: 1. how will these be distributed? To whom these assets be given? A: As far as partnership assets are concerned: 1.) applicability of the parole evidence rule. acquisitive prescription.) prescription. specifically. EXPRESS TRUST Q: May an express trust over an immovable be proven by mere testimony of the witness? A: Yes. B. This means that implied trust over an immovable may be proven by parole evidence or express trust over a movable.B. However. Can B recover the land from the buyer? What would be the remedy of B? SA: This question clearly pertains to a resulting trust. if the lawyer of the other party did not object to the presentation of the witness. 4. inherited two identical parcels of land.based on their agreement as to profits.) Partnership creditors who are not partners. IMPLIED TRUST Resulting Trust BE: A and B.) misappropriation of the income of the partnership business. to the capitalist partners. A sold one of the parcels of land to a buyer in good faith and for value. sister of A. brother and sister respectively.d. Q: Upon the dissolution of the partnership. 2. and there were assets left.: An express trust over an immovable may not be proven by parole evidence. when the parcels of land were registered in the name of A.) Excess profits . and 2.) Express 2. N. For purposes of convenience. 2.

B cannot recover the land from the buyer. a buyer who had bought the property from a seller who has no right to sell. but he has apparent authority to sell. Martinez November 2008 Chato Cabigas Jessica A. who appears to be the owner and the buyer bought the property in good faith. Lopez Dian Rosapapan15 . he will acquire ownership over the thing even if the seller has no right to sell. Faye Marie C. As discussed in Sales.

he had the property registered in his (cousin) name. Martinez Chato Cabigas Jessica A. However.1454. Resulting trust includes Articles 1448.1453.. without repudiation? A: Yes. Lopez Dian Rosapapan16 November 2008 . he learned of what his cousin had done. When A returned to the Phils. may the trustee acquire the property by prescription by mere lapse of time. 1455. 1450. So. 1449. After which.: Art. N. he was called in New York to be a chef in a hotel.B. he sold the property to a thi4rd person who bought the land relying on the TCT. Faye Marie C. 1456. he asked his cousin to follow up his application for registration of landwhile he w as in New York. Q: In constructive trust.B s remedy would be to go after her brother for breach of trust in selling the property without her consent. 1451. Constructive Trust: BE: A applied for the registration of a parcel of land in his name. May A recover the parcel of land from the 3rd person who bought the property in good faith and for value? A: No. Instead of ensuring the registration of the property in the name of A.1452.

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