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CH. 1 – CONTRACT OF SALE V. CONTRACT OF SALE – One of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. A contract of sale may be absolute or conditional. Contract of Sale Absolute Real obligation – obligation to give Title passes to the buyer upon delivery Contract to Sell Conditional Personal obligation – obligation to do Ownership is reserved in the seller and will pass to the buyer only upon full payment of the price Full payment is a positive suspensive condition, the failure of which is not a breach but prevents the obligation of the vendor to convey title to arise remedies available: 1. resolution 2. damages DISTINGUISHED FROM OTHER CONTRACTS Donation Sale Gratuitous or onerous Onerous Formal contract Consensual contract Governed by law on Governed by law on sale donation
Non-payment of the price is a negative resolutory condition
Barter Sale Consideration: giving of a Consideration: giving of thing money as payment Governed by law on sales: species of the genus sales If consideration consists party in money and partly by thing – look at manifest intention; If intention is not clear: If intention is not clear: value of thing is more value of thing is equal than amount of money – or less than amount of barter money – sale Contract for piece of work Goods are to be manufactured specially for a customer and upon special order and not for the general market Sale Contract for delivery of an article which the vendor in the ordinary course of business manufactures or procures for general market (whether on hand or not) Essence is object
remedies available: 1. specific performance 2. rescission 3. damages I.
ELEMENTS OF A CONTRACT OF SALE 1. Consent 2. Determinate subject matter 3. Price certain in money or its equivalent STAGES IN LIFE OF CONTRACT OF SALE 1. Negotiation 2. Perfection 3. Consummation
III. OBLIGATIONS CREATED - 2 sets of real obligations to give QuickTime™ and a
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CHARACTERISTICS OF CONTRACT OF SALE: 1. Nominate 2. Principal 3. Consensual 4. Bilateral 5. Reciprocal 6. Onerous 7. Commutative 8. Title and not a mode
Essence is service Jurisprudence: 1. Timing test under art 1467: whether the thing transferred would have never existed but for the order 2. Habituality test if manufacturer engages in activity with need to employ extraordinary skills and equipment (Celestino v CIR) 3. Nature of the object test each product’s nature of execution differs from the others; products are
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not ordinary products of manufacturer (EEI v CIR) Agency to Sell Agent not obliged to pay for price, merely obliged to deliver price received from buyer. Principal remains owner even if object delivered to agent Agent assumes no risk/liability as long as within the authority given May be revoked unilaterally because fiduciary and even if revoked w/o ground Agent not allowed to profit Personal Contract; Rescission is not available Dation in Payment Pre-existing credit Obligations are extinguished Debtor’s consideration: extinguishment of the debt Creditor’s consideration: acquisition of the object offered in lieu of the original credit Less freedom in determining the price Payment is received by the debtor before the contract is perfected Sale Buyer pays for price of object Buyer becomes owner of thing; in agency Seller warrants Not unilaterally revocable NOTE: GENERAL RULE - All persons who are authorized in this Code to obligate themselves may enter into a contract of sale I. MINORS, INSANE AND DEMENTED PERSONS, AND DEAF-MUTES 1. Contracts are voidable, subject to annulment or ratification 2. Also includes: - State of drunkenness - Hypnotic spell - Where necessaries are those sold and delivered to a minor or other person without capacity to act, he must pay a reasonable price therefore
Seller receives profit Real Contract
II. SPOUSES - A spouse may, without the consent of the other spouse, enter into sales transactions in the regular pursuit of their profession, vocation, or trade Art. 1490. The husband and the wife cannot sell property to each other, except: (1) When a separation of property was agreed upon in the marriage settlements; or (2) When there has been a judicial separation or property under Article 191. NOTE: Prohibition likewise applies to common-law spouses III. OTHERS - TRUST RELATIONSHIPS 1. Art. 1491 Two groups of parties prohibited from acquiring by purchase certain properties: a. Guardian/Agent/Executors and Administrators i. Direct or indirect ii. May be ratified since only private wrong is involved b. Public Officers and employees/Officers of the Court i. Cannot be ratified since public wrong is involved ii. Requisites for the prohibition to apply to attorneys: 1. existence of attorney client relationship; 2. property is the subject matter in litigation;
Sale No pre-existing credit Obligations are created Consideration of seller: price Consideration of buyer: acquisition of the object
Greater freedom in determining the price Buyer still has to pay the price
Lease Sale Use of thing is for a Obligation to absolutely specified period only with transfer ownership of an obligation to return thing QuickTime™ and a TIFF decompressor Consideration is rent ar(Uncompressed) this picture. Consideration is price e needed to see Lessor need not be Seller needs to be owner owner of thing to transfer ownership NOTE: Lease with option to buy: really a contract of sale but designated as lease in name only; it is a sale by installments CH. 2 - PARTIES TO A CONTRACT OF SALE
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by third persons ii. consideration for a valid contract of sale can be the price and other valuable consideration. there is every intention on the buyer to pay the price. Voidable (civil code) – agent. Real a.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 3. III. if it does not.existing. Determinate or determinable i. not outside the commerce of man ii. if illicit. future inheritance b. 3 . future. The prohibitions in the two preceding articles are applicable to sales in legal redemption. a true contract of sale must have price as part of its consideration 3.SUBJECT MATTER OF SALE 1. unless it is a vain hope The uncertainty is with regard to the existence of the thing Object is a present thing which is the hope or expectancy NOTE: Quantity of subject matter is not essential for perfection. without QuickTime™ and a the necessity TIFF (Uncompressed) decompressor e this picture. Void (case law) – guardian/ executor/public officers / officers of the court 2. Legal Status of Contract 1. VALID if with consent CH. there is no contract Uncertainty is with regard to the quantity and quality of the thing and not the existence of the thing Object is a future thing sale of the hope itself Sale is effective even if the thing does not come into existence. 1492. exception: foreclosure sale CH. In money or its equivalent a. contract is void c. except: a. thing is capable of being made determinate 2. certain: expressed and agreed in terms of specific pesos and/or centavos b. by reference to a definite day. by the courts – in cases where the third person fixes the price in bad faith or by mistake iii. Licit i. must determine nature and quality of subject matter NOTE: Seller need not be the owner of the subject matter at the time of perfection: sufficient that he is the owner at the time of delivery. REQUISITES: 1. whether the subject matter is of a type and nature that exists or could be made to exist to allow the seller reasonable certainty of being able to comply with his obligations b. and every expectation on the part of the seller to receive such price as the value of the subject matter he obligates himself to deliver 2. Certain or ascertainable a.PRICE I. determinate: particularly designated or physically segregated from all others of the same class ii. ascertainable: i. Sale is subject to the condition. particular exchange or market iv. that the thing will exist. Things a. determinable: 1. by reference to another thing certain Page 132 of 297 . at the very least. while in litigation (from filing of complaint to final judgment) NOTE: Exception to the prohibition against attorneys: contingent fee arrangement where the amount of legal fees is based on a value of property involved in litigation Art. Rights – must be transmissible. when at the perfection of the contract of sale. 4 . are needed to seof a new further contract 2. service Emptio rei speratae Sale of an expected thing Emptio spei Sale of a mere hope or expectancy that the thing will come to existence. REQUISITES: 1. compromises and renunciations. “Possible” . and contingent i.
how exercised: notice of acceptance should be communicated to offeror without actual payment as long as there is delivery of payment in consummation stage II. but can be attached to other principal contracts d. meeting of the minds. Banco Filipino Savings and Mortgage Bank) II. 1474. offer is floated prior to acceptance. 20. right to withdraw must not be arbitrary otherwise. Where the price cannot be determined in accordance with the preceding articles. Policitacion 1. OPTION CONTRACT . commutative f. may be withdrawn at will by offeror Page 133 of 297 . to buy a certain object within an agreed period 1. or undue influence indicative of a defect in consent is present.offer is floated. offer is floated and there is counter-offer 6. III. not the contract of sale by itself.concurrence of all requisites. EFFECT WHERE PRICE IS SIMULATED 1. or some other act or contract 2. liable to damage under Art 19. extinguished when period has ended and maybe withdrawn at will by offeror. CH. are needed to see 2. offer floated with a period without acceptance. needs to be proven 2.parties perform their QuickTime™ and a TIFF (Uncompressed) decompressor respective undertakings this picture. if the thing or any part thereof has been delivered to and appropriated by the buyer he must pay a reasonable price therefore. for which he has paid a separate consideration. unilateral – versus contract of sale which is bilateral San Miguel Philippines v Cojuangco consideration in an option contract may be anything of value. The act may be shown to have been in reality a donation. Perfection . If not and neither party had any intention whatsoever that the amount will be paid (absolutely simulated): the sale is void 3. no presumption of consideration. 3 STAGES IN LIFE OF A CONTRACT OF SALE 1. the time when parties indicate their interest but no concurrence of offer and acceptance. What is a reasonable price is a question of fact dependent on the circumstances of each particular case. mistake.FORMATION OF A CONTRACT OF SALE I. 21 of Civil Code extinguished by happening/nonhappening of condition continues to be valid depending upon circumstances of time. onerous e. there is a new offer. Jurisprudence: Manner of payment must be agreed upon (Marnelego v. However. offer is floated 7. offer floated w/ condition 4. acceptance is floated but they do not meet. (2)When it shows that the parties really intended a donation or some other act or contract. If there is a real price but what is stated in the contract is not the one intended to be paid (only relatively simulated): the contract of sale is valid but subject to reformation Art. Consummation . Policitacion/Negotiation Stage . 2. separate and distinc b. nominate c. or in any other manner.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 v. place and person original offer is destroyed. EFFECT OF GROSS INADEQUACY OF PRICE NOTE: Mere inadequacy of the price does not affect the validity of the sale. except (1) When there is fraud. but never by one party to the contract 4. offer accepted absolutely III. 3. unlike in sale where it must be price certain in money 3. offer floated without period/without condition 5. characteristics of Option Contract: a.a contract granting an exclusive right in one person. RULES: 1. 5 . the contract is inefficacious. can not go back to original offer no authority of offeror to modify offer proceed to perfected stage 3. principal.
NEW RULE: Right of first refusal recognized Option Contract Principal contract. New concept: can not be forfeited – part of purchase price. Qualification: if old concept is stipulated – VALID 7. Acceptance is the proof that contract of sale exists 3. principal contract (e. Recognizes recovery of damage based on abuse of rights doctrine CH. with separate consideration i. When parties are face to face – when there is absolute acceptance of an offer that is certain 2. creates a promise to enter into a contract of sale and it has no separate consideration. Effect of new doctrine: turned the world of policitacion upside down because while valid option contract is not subject to specific performance. but option contract is void and not subject to rescission. 6 . the right of first refusal is only subject to specific QuickTime™ and a performance insofar as it(Uncompressed) decompressor TIFF is attached to a valid written are needed to see this picture. consensual contract Exception: When the sale is subject to a suspensive condition I. damages but not to specific performance because this is not an obligation to give b. RIGHT OF FIRST REFUSAL: 1. Nothing in law prevents parties from treating earnest money differently 4. New doctrine: may be subject to specific performance. offeror can not withdraw offer until after expiry period iii. When the sale is subject to a suspensive condition – from the moment the condition is fulfilled NOTES: Qualified acceptance: mere counter-offer which needs to be absolutely accepted to give rise to perfected contract of sale Business ads are mere invitations to make an offer except when it appears to be otherwise II. Money given as part of purchase price 2. not subject to specific performance because there is no contractual relationship here and it is not an obligation to give (not a real contract) 2. can not stand on its own Does not need separate consideration There must be subject matter but price not important Conditional Subject to specific performance 4. Seller has the right to bid at the auction provided such right was reserved and notice was given to that effect EARNEST MONEY 1. When thru correspondence or telegram – when the offeror receives or had knowledge of the acceptance 3. RFR becomes one of the considerations in the contract. lease).] 3. Presumption of perfection of contract of sale and such earnest money as part of purchase price is disputable EARNEST MONEY IV.PERFECTION OF SALE GENERAL RULE: A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price.offer is still valid. stands on its own Needs separate consideration Subject matter and price must be valid Not conditional Not subject to specific performance Right of First Refusal Accessory. OPTION MONEY Page 134 of 297 . SITUATIONS IN AN OPTION CONTRACT: a. without separate consideration i. must be restored 6. Equatorial realty Dev’t Inc. RULES GOVERNING AUCTION SALES: 1. ubject to rescission.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 4.g. damages ii. Sale is perfected by the fall of the hammer 3. option contract is valid ii. Old concept: subject to forfeiture when BUYER backs out 5. right of first refusal which does not even have a separate consideration may be subject to specific performance III. Sales of separate lots by auction are separate contracts of sale 2. REQUIREMENTS: 1. v Mayfair Theater. OLD RULE .
at the moment of sale.CONSUMMATION STAGE/PERFORMANCE STAGE NOTE: Stage where parties both comply with their obligation. Inc. exception by specific provision of law. Felix. a contract of sale may be made in writing. Nature of diligence required: diligence of a good father of the family unless other requirement is stipulated Consequence: Seller will be guilty of breach if thing is lost through his fault I.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 Money given as distinct consideration for an option contract Applies to a sale not perfected Not required to buy Part of the purchase price Given only when there is already a sale When given. 38 Phil. it is necessary that the vendor have such control over the thing sold that.can take several forms and may be any manner signifying an agreement that the possession is transferred from the vendor to the vendee. TIFF (Uncompressed) decompressor are needed sale of goods. or by word of mouth. Delivery of the Thing . to transfer the ownership. EXCEPTIONS TO COVERAGE OF STATUTE IN SALES CONTRACTS: 1. or partly in writing and partly by word of mouth. Legal or Constructive. When there has been partial performance/execution (seller delivers with intent to transfer title/receives price) 3.when thing sold is placed in the control and possession of the buyer 2. When there is a note or memorandum in writing and subscribed to by party or his Page 135 of 297 . and A sale of real property or of an interest therein. Sale being consensual. Reason: purposes of convenience only and not for validity and enforceability. chattels An agreement for the to see this picture. a. II. or things in action. b. Ling. But to be effective. 7 . III. Subject to the provisions of the Statute of Frauds and of any other applicable statute. b. (n) FORM OF SALES I. If particular form is required under the statute of frauds: i. Form not important in validity of sale a. a. When sales are effected through electronic commerce CH. Different kinds of delivery: 1. cause of action is granted to sue and compel other party to execute the document When form is important for validity. Actual or real. Art. When there has been failure to object to presentation of evidence (oral) 4. CA 195 SCRA 694 The act of delivery must be coupled with the intention of delivering the thing and putting the buyer under control Addison vs. must also be registered with Municipal treasurer – otherwise VOID Sale of land by non-Christian if not approved by Governor– VOID When form is important for enforceability (STATUTE OF FRAUDS Article 1403 (2)) A sale agreement which by its terms is not to be performed within a year from the making QuickTime™ and a thereof. its material delivery could have been made II. buyer is bound to pay the balance agent (contains essential terms of the contract) 2. IV. at a price not less than P500. 404 The execution of a public instrument is equivalent to delivery. may be oral or written.Transfer ownership (tradicion) covers a twin obligations of the seller which are: 1. and 2. perfected by mere consent as to price and subject matter b. 69 Phil. valid and binding between parties but not binding to 3rd persons c. 1483. Power to sell a piece of land granted to an agent – otherwise VOID Sale of large cattle. or may be inferred from the conduct of the parties. c. vs. c. marks the consummation of the contract of sale Norkis Distributor. to deliver a determinate thing PNB vs.00. 611 Delivery of the thing together with the payment of the price.
1522. when SELLER points to the property without need of actually delivering 2.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 III. 5. 1542. When there are needed to see this picture.Right to fruits and accessions/accessories accrue from time sale is perfected but no real right over it until it is delivered Delivery Through Carrier . delivery to the carrier is delivery to the buyer. there is already delivery to buyer. there is already delivery to the buyer (twin effects deemed fulfilled) 2. Such capacity should subsist for a reasonable time after execution of instrument (reasonable time depends on circumstances of persons.FREE ON BOARD . 10 Sept. When at the time of execution of instrument. Cruz. IV. there is delivery to the buyer 3. CIF – COST. Quasi-tradition − Delivery of rights.2. the would be buyer was already in possession of the would be subject matter of sale (ex: as lessee) 3. Allowing buyer to make use of rights 6. COMPLETENESS OF DELIVERY 1. Placing titles of ownership in the hands of the buyer b. Delivery of Fruits and Accessions/ Accessories .When goods delivered alongside the ship. 1540. Different forms of Constructive Delivery Constructive delivery has same legal effect as actual or physical delivery 4. FAS – FREE ALONG SIDE . Tradition by operation of law V. Symbolic delivery − As to movables – ex: delivery of the keys to a car 4. See Arts. seller continues to hold physical possession no longer in the concept of an owner but as a lessee or any other form of possession other than in the concept of owner. 1503 1. 1543. 2003 Gives rise only to a prima facie presumption of delivery which is destroyed when actual delivery is not effected because of a legal impediment 1. seller had possession of the subject matter in the concept of owner and pursuant to the contract. made by: a. INSURANCE. Traditio Brevi Manu − Before contract of sale. subject matter was not subject to control of the seller 3. is stipulation execution does not produce effect of delivery 2. WHEN EXECUTION OF PUBLIC INSTRUMENT DOES NOT PRODUCE THE EFFECTS OF DELIVERY and a QuickTime™ TIFF (Uncompressed) decompressor 1. 1539.3 of Art. 1. FOB . buyer has the option to reject or accept it. Exceptions: a contrary intention appears or implied reservation of ownership under pars. MOVABLES a. Constitutum possessarium − When at the time of the perfection of the contract of sale. Subject matter should be within control of seller. delivery to carrier is delivery to buyer.Shipment – when goods are delivered at ship at point of shipment. to contrary. carrier is agent of the buyer − When buyer pays seller the price – from moment the vessel is at port of destination. delivery to carrier by placing goods on vessel is delivery to buyer − Destination – when goods reach the port even if not disembarked yet from the vessel. 1541. FREIGHT − When buyer pays for services of carrier – VI.General Rule: Where the seller is authorized or required to send the goods to the buyer. When accepts with knowledge that seller is not going to perform Page 136 of 297 . When the seller delivers to the buyer a quantity of goods LESS than he contracted to sell. he should have capacity to deliver at the time of execution of public instrument when he wants to effect actual delivery VII. a. credits or incorporeal property. delivery of thing plus accessories and accessions in the condition in which they were upon the perfection of the contract including the fruits b. places and things) Ten Forty Realty vs. Traditio Longa Manu − Delivery of thing by mere agreement.
1. accept good w/c are in accordance with contract and reject the rest ii. Description – goods must correspond with description or sample 3. liable only for fair value of goods delivered c. OBLIGATIONS OF BUYER 1. deliver all that may have been stated in the contract if impossible. or Follow usage in trade.General Rule: The ownership of the thing sold shall be transferred to the buyer upon the actual or constructive delivery thereof. 5. When the seller delivers to the buyer the goods he contracted to sell. When seller delivers to the buyer a quantity of goods LARGER than he contracted to sell the buyer has the following options: i.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 contract in full. 4. Pay the price a. 2. if amount of interest not mentioned – apply legal rate c.rescission . He intimates to seller that he has accepted Page 137 of 297 . Effect if there is no compliance: RESCISSION may be availed of by the buyer 1. Where to accept: at time and place stipulated in the contract. Except when the contrary is stipulated such in the cases of: 1. buyer has 2 options: i. If the sale should be made with statement of its area. rate at certain price. sale or return NOTE: Who Bears Expenses of Delivery? Seller X. sale on acceptance/approval 3. or Seller’s place of business or his residence Specific goods – place where the thing is At reasonable hour IX. Accept delivery of thing sold a. When buyer defaults – constitutes breach: subject to specific performance/rescission and damages. eject whole if subject matter is indivisible d. if none specified – at the time and place of delivery goods. IMMOVABLES a. Buyer is obligated to pay price according to terms agreed upon regarding time. he must pay at price stipulated b. contract to sell 2.needed to see thiswhole accept picture. reject goods entirely – if indivisible will not be accordingly VIII. place and amount b. If Less in area: . Sold for lump sum When price per unit not indicated If area delivered is either greater or lesser – price XI. If payment of interest is stipulated – must pay. EFFECTS OF DELIVERY . 3. Sold per unit or number i. When accepts and consumes before knowledge that buyer will not perform contract in full.Not applicable to judicial sales iv. there is acceptance when: i. 2.proportional reduction of price – LACK IN AREA SHLD NOT BE LESS THAN 1/10 OF AREA AGREED UPON iii. are at contract rate . adjusted TIME AND PLACE OF DELIVERY Follow stipulation in contact. If Greater in area: . remedies of buyer: ii. SALE BY DESCRIPTION/SAMPLE Sample – goods must correspond with sample shown 2. MIXED with goods of a different description not included in the contract.accept per stipulation and reject the rest QuickTime™ and a TIFF (Uncompressed) decompressor area – pay . interest to be paid also from default 2. accept the whole – pay price stipulated iii. accept per contract and reject the rest ii.
Should it be immovable property. LIS PENDENS – notice that subject matter is in litigation IV. Art. No inscription and no possession in good faith – Person who presents oldest title in good faith d. absent contrary express stipulation. and even marginal notes. Two or more sales transactions must constitute valid sales. and cancellation. and 4. and. 3. . When not examined by buyer – not accepted until examined or at least had reasonable time to examine 4. ADVERSE CLAIM – notice that somebody is claiming better right V. RULES ACCORDING TO 1544: 1. I. 1. POSSESSION Both actual or constructive REGISTRATION: any entry made in the books of the registry. Two or more buyers must each have bought from the very same seller. Good Faith . It is the entry made in the registry which records solemnly and permanently the right of ownership and other real rights. Owner is first to posses in good faith 2. PRIORITY IN RIGHT When does it apply: when not all requisites embodied in 1544 concur. Consolidated Rural Bank (Cagayan Valley_ vs. registered under Torrens system 1544 applies Page 138 of 297 5. (1473) DOUBLEQuickTime™ and a SALE General Rule: FIRST IN TIME. 1544 to aply. the ownership shall be transferred to the person who may have first taken possession thereof in good faith. 17. Two or more buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests. Two or more sales transactions must pertain to the same object or subject matter. Undisputably. no need to return. he is a purchaser in good faith because at the time he bought the real property. the priniciple of prior tempore. 2. annotation. except when stipulated b. does not discharge seller from liability in case of breach of warranties (unless no notice or failure to give it within reasonable time) When buyer has a right to refuse goods. No inscription. provided there is good faith. MOVABLE a. REQUISITES FOR DOUBLE SALES TO EXIST: (VOCS) 1. Sale of Goods on installment a. first to possess in good faith c. shall be considered as depositary.one who buys property without notice that another person has a right or interest in such property. one who has paid price before notice that another has claim or interest III.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 When delivered and does any act inconsistent with ownership of seller iii. VI. If the same thing should have been sold to different vendees. IMMOVABLE a. potior jure or simply “he who is first in time is preferred in right” should apply. there was still no sale to as a second vendee. in the absence thereof. 1544. if it should be movable property. Should there be no inscription. First to register in good faith b. to the person who presents the oldest title. Goods must be delivered in full. 2005] If not all the elements are present for Art. unless there is stipulation to the contrary 3. CA [Jan. TIFF (Uncompressed) decompressor are needed to see this picture. including both registration in its ordinary and strict sense. Retains without intimating to seller that he has rejected ii. Acceptance of goods in general. the ownership shall pertain to the person who in good faith was first in the possession. II. the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.
not registered under the Torrens system 1544 still applies Jurisprudence if 2nd sale is a judicial sale (by way of levy on execution). or o When the buyer is a purchaser in good faith for value of a negotiable document of title. NEGOTIABLE a.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 2. Mabanta. Outside of such situation – must apply to conflicting sales over the same unregistered parcel of land If sale 1 occurs when land is not yet registered and sale 2 is done when land is already registered – apply FIRST IN TIME. Effect of Non-Fulfillment of Condition The other party may a. accident. evidence of existence and possession of goods described therein ii. refuse to proceed with the contract b. he has knowledge of no fact which would impair the validity or worth of the document 4. If order instrument and no endorsement was made – equivalent to assignment 2.  Good faith must concur with registration. he has right to transfer title to goods and goods are merchantable/fit Page 139 of 297 . limiting words does not destroy negotiability ii. buyer merely steps into the shoes of the judgment debtor. Pertains to specific type of movables only : GOODS a. i. proceed with the contract. the second purchaser must not only establish prior recording of his deed. NEGOTIABLE DOCUMENTS OF TITLE See Article 1636 1. Obligation of bailee – bailee is immediately bound to the document Warranties on Negotiation 1. Important Considerations 1. NON-NEGOTIABLE EFFECTS OF UNAUTHORIZED NEGOTIATION The validity of the negotiation of a negotiable document is not impaired by the fact that negotiation was done in breach of duty or that the owner of the document was deprived of the same by loss. it is still NEGOTIABLE. deliver to bearer (negotiation by mere delivery) b. Assignee takes document with defects of the assignor 3. 2. waiving the performance of the condition If the condition is in the nature of a promise that it should happen. Negotiation gives better right than assignment 2. medium by which seller is able to transfer possession of goods 3. the document is genuine 2. Documents of title serve two (2) functions: QuickTime™ and a TIFF (Uncompressed) decompressor are needed to see this picture. deliver to specific person or his order (negotiation by endorsement + delivery) i. et al. theft. A document of title which states that the goods referred to therein will be delivered to the bearer. Not creation of law but by merchants to allow them to deal with merchandise without having to physically carry them around 2. Negotiable by delivery or indorsement TYPES 1. fraud. but must have acted in good faith. the non-performance of such condition may be treated by the other party as breach of warranty. even if face of instrument says NONNEGOTIABLE. mistake if the person to whom the document is delivered is in good faith and without notice of the said irregularities. or to the order of any person named in such document 4. To be entitled to priority. PRIORITY IN RIGHT Gabriel v. CONDITION 1. Effect if buyer has already sold the goods General Rule: The unpaid seller’s right to lien or stoppage in transitu remains even if buyer has sold the goods Exception: o When the seller has given consent thereto. he has legal right to negotiate or transfer it 3.
action improper. Sale of co-owner of whole property or definite portion GENERAL RULE: i. has exclusive claim over remaining land. PERFECTION STAGE a. SALE BY NON-OWNER 1. c. Sale is made under statutory power of sale or under order of a court of competent jurisdiction 4. Reason why both sales are valid: ownership is necessary only at time when transfer title to goods. there is already a perfected contract 2. unless: b. Notification is operative act to transfer title/possession of goods in favor assignee b. PERFECTION STAGE a. Document is first surrendered c.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 Rules of Levy/Garnishment of Goods Covered by Documents of Title 2. 2. SALE BY SELLER WITH VOIDABLE TITLE 1. Sale is made in a merchant’s store in accordance with code of commerce and special laws IV.to annul is valid. 1505. Subject matter is indivisible in nature or by intent. RULES ON LEGAL EFFECTS OF SALE BY A NON-OWNER GENERAL RULE: Sale by non-owner. no obligation on part of seller to transfer ownership d. buyer acquires no better title than seller had. What is void is the transfer of title/ ownership did not pass c. Effect: buyer acquired no better right than transferor d. Sale by owner – VALID b. Sale by non-owner – VALID. CONSUMMATION STAGE a. co-owner sells definite portion to partition – sale is void as to other coowner but valid as to his spiritual share if the buyer would have still bought such spiritual share had he known that the definite portion sold would not be acquired by him. by law and equity. III. Document is pounded by court d. Co-owner sells 1 of 2 commonly-owned lands and does not turn over ½ of the proceeds. Since are needed to see this picture. NEGOTIABLE: a. Negotiation is enjoined ASSIGNMENT acquires title to goods against transferor acquires right to notify bailee so that he acquires obligation of bailee to hold goods for him NEGOTIATION transferor/holder acquires title to goods bailee has direct obligation to holder as if directly dealt with him b. NON NEGOTIABLE: a. Legal effect: CAVEAT EMPTOR – BUYER BEWARE e. Contract of sale is valid because it has passed perfected stage. Before notification – can still be garnished 3. EXCEPTIONS: 1. Sale of a particular portion of a property is with consent of other co-owners. 1506 I. Can not be levied or garnished when documents are already with purchaser in good faith. other co-owner. Valid sale – buyer acquires title of goods Page 140 of 297 . Law on estoppel further bolsters it: title passes by operation of law to grantee when person who is not owner of the goods sold delivers it and later onQuickTime™ and title thereto acquires a TIFF (Uncompressed) decompressor e. 1477. Contrary is provided for in recording laws (PD 1529) 3. SALE BY NON-OWNER OR BY ONE HAVING VOIDABLE TITLE See Articles 1475. 3. EXCEPTIONS TO THE RULE ON THE EFFECT OF SALE OF A DEFINITE PORTION OBY A COOWNER 1. Owner by his conduct is precluded from denying seller’s authority (ESTOPPEL) 2. despite seller not being the owner or seller having no authority to sell II. at perfection stage. co-owner sells whole property prior to partition – sale of property itself is void but valid as to his spiritual share ii.
1484-1486. buyer buys goods under following condition: o in good faith o for value o without notice of seller’s defect of title V. TITLE AS TO MOVABLE PROPERTIES GENERAL RULE: Possession is equivalent to title Requisites: Possession of movable and Good Faith EXCEPTIONS: Owner lost movable – owner can recover w/o reimbursing price Owner is unlawfully deprived – owner can recover w/o reimbursing price EXCEPTIONS TO THE EXCEPTIONS: − movable is bought at public sale – owner Seller cannot anymore comply with obligation so buyer cannot anymore be compelled 3. the risk of loss deterioration and the benefits of fruits and improvements. Possessory Lien 1. Seller not bound to deliver if buyer has not paid him the price Page 141 of 297 can only recover after reimbursing price − acquired in good faith and for value from auction LOSS. AFTER PERFECTION BUT BEFORE DELIVERY o Loss – confused state o Paras: BUYER o Tolentino: SELLER o Deterioration and fruits Buyer bears loss. Res perit domino b.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 o 2.only when unpaid seller has exercised possessory lien or stoppage in transitu can the seller proceed with his other special rights of resale or to rescind. Valid sale – if title has not yet been avoided. VIII. possessory lien 2. 1. 2. Owner is seller so seller bears risk of QuickTime™ and a decompressor loss TIFF (Uncompressed) this picture. 1592 SUBJECT MATTER: MOVABLES (IN GENERAL) Remedies of Unpaid Seller GENERAL RULE: Any man may not take law in his own hands. AFTER DELIVERY o Res perit domino o Delivery extinguishes ownership visa-vis the seller and creates a new one in favor of the buyer VII. 4. Physical possession is with seller The following are the special remedies of unpaid seller 1. AT PERFECTION o Res perit domino o Contract is merely inefficacious because loss of the subject matter does not affect the validity of the sale . are needed to see 2. CONSUMMATION STAGE a. stoppage in transitu 3. Subject matter – goods 2. FRUITS and OTHER BENEFITS See Articles 1493 and 1494 Legal consequences from point of perfection are the same in both legal systems: upon perfection of an unconditional contract of sale involving specific or determinate subject matter. special right of re-sale 4. WHO BEARS RISK OF LOSS/ DETERIORATION/ FRUITS: 1. BEFORE PERFECTION a. REMEDIES OF PARTIES FOR BREACH OF CONTRACT OF SALE See Articles 1594-1596. I. DETERIORATION. Seller is unpaid – not completely paid or received negotiable instrument under a condition and condition has been breached by reason of dishonor 3. were fro the account of the buyer. must seek remedy through courts EXCEPTION: − DOCTRINE OF SELF HELP − SPECIAL REMEDIES Requisites: 1. special right to rescind NOTE: Hierarchical Application .
Exercisable only in following circumstances: a. Buyer is in default for unreasonable time 3. title accorded to buyer is destroyed even without court intervention IV. Rationale of the law: Buyer is lulled into thinking that he could afford because of small amounts per installment and at the same time remedy abuse of commercial houses 5. Stoppage In Transitu − Goods are in transit − Requisites when goods are in transit 1. no further action against buyer to recover any unpaid balance of the price 2.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 2. may still exercise right on goods undelivered Instances when possessory lien lost: 1. seller delivers goods to carrier for transmission to buyer without reserving ownership in goods or right to possess them 2. goods are perishable 2. When part of goods delivered. ownership is with buyer but seller can sell goods 2. Shown by seller that buyer is insolvent (failure to pay when debts become due ) why special? there are things which seller cannot do in ordinary sale: 1. Special Right to Rescind 1. III. Notice by seller to buyer is not required. Nature of remedies: alternative and not cumulative 6. From the time goods are delivered to carrier for purpose of transmission to buyer 2. Goods rejected by buyer and carrier continues to possess them When goods no longer in transit 1. waiver 4. Special Right to Resell the Goods 1. When is the law applicable? Sale on movables by installment o Sale on installment: payment by several partial payments in small amount 4. 2. notice to carrier is and a essential QuickTime™ TIFF (Uncompressed) decompressor are needed to see this picture. Expressly stipulated 2. Notice needed to be given by seller to buyer why special? – ownership of goods already with buyer but seller may still rescind. Right to retain. need to go to court to destroy transfer of ownership Remedies of Buyer When Seller fails to deliver. buyer may seek SPECIFIC PERFORMANCE WITHOUT GIVING SELLER OPTION TO RETAIN GOODS ON PAYMENT OF DAMAGES SALE OF MOVABLES ON INSTALLMENT Remedies of Unpaid Seller (1484) 1. If buyer chooses foreclosure. cannot be availed when seller does not have custody 3. notice by seller to buyer not essential II. Foreclose on chattel mortgage if buyer fails to pay 2 or more installments Incidents: 1. Reached point of destination 2. stipulated the right of resale in case buyer defaults in payment 3. buyer or his agent lawfully obtains possession of goods 3. goods sold without stipulation as to credit b. notice by seller to buyer not essential . Coverage: sale and financing transaction and contracts of lease with option to purchase 7. Goods are supposed to have been delivered to buyer but carrier refused 4. Cancel the sale if buyer fails to pay 2 or more installments. buyer obtains delivery of the goods 3. Before reaching destination. Obtain actual possession of goods 2. ownership is destroyed even without court intervention but in ordinary sale. Exact fulfillment should the buyer fail to pay. loses lien when he parts with goods (still has stoppage in transitu) 5. Action : Judicial and Extrajudicial Page 142 of 297 How is right exercised 1. Give notice of claim to carrier / bailee in possession thereof 3. buyer in default for unreasonable time 4. 3. goods sold on credit but term of credit has expired c. buyer becomes insolvent d.
there is correlative obligation to restitute . suspend payment. can cancel. Rescission . Extent of barring effect: purchase price iii. etc. CONDO – not defined space (w/ common areas) 3. it has become impossible.Deemed chosen when: o Notice of rescission is sent o Takes possession of subject matter of sale o Files action for rescission Barring effect on recovery of balance Foreclosure i.Protect buyers in installments against oppressive conditions Notice needed . o IMMOVABLES (IN GENERAL) Remedies of Seller Anticipatory breach 1. rescission may be pursued b. 2nd grace period of 30 days from notice of cancellation/demand for rescission buyer can still pay within the 30 day period with interest No payment after 30 day period. Sale to tenants under agrarian laws Rights Granted to Buyers: o Buyer paid at least 2 years installment 1. Pay without interest the balance within grace period of 1 month for every year of installment payment 2. Purpose of law . Exception: mortgagor refuses to deliver property to effect foreclosure. buyer entitled to 50% of what he has paid + if after 5 years of installments. Commercial c. sue for RESCISSION 2. recover also expenses incurred in attorneys fees.waiver thereof if oppressive Applies to contracts even before law was enacted − Stipulation to contrary is void Other rights: o Sell rights to another o Reinstate contract by updating during grace period and before actual cancellation o Deed of Sale to be done by notarial act Page 143 of 297 3. Barring effect on recovery of balance ii. sue for RESCISSION QuickTime™ and a TIFF (Uncompressed) decompressor are needed to see this picture.But stipulation that installments paid are forfeited are valid if not unconscionable . If real estate developer fails to comply with obligation according to approved plan: . When no payment . Seller has reasonable grounds to fear loss of immovable sold and its price. (Perverse BuyerMortgagor) IMMOVABLES (BY INSTALLMENT) Article 1592 – Applies only to contract of sale I.cancelled. Non–payment of price.SUSPEND PAYMENT UNTIL SELLER COMPLIES .Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 o Specific Performance i. Coverage: REAL ESTATE – defined space vs. Cancellation to be effected 30 days from notice and upon payment of cash surrender value Buyer paid less than 2 years installment 1. 2. applies to COS and CTS and Financing 2. Remedies of Buyer 1.RESCIND . can no longer choose other remedies Except: after choosing. Maceda Law 1. Industrial b. In case of subdivision or condo projects. 1st Grace period is 60 days from date installment became due 2. 5% for every year but not to exceed 90% of total payments made 4. Excluded: a. Grace to be exercised once every 5 years 3. If already chose specific performance.When chosen.
or title of the goods.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 o To pay in advance any installment or the full balance of price anytime without interest Have full payment annotated in certificate of title 4. and by which he promises or undertakes to insure that certain factsa are or shall be QuickTime™ and decompressor as he then representsTIFF (Uncompressed) this picture.buyer is evicted in whole or in part from the subject matter of sale . Damages and interests if the sale was in bad faith Partial Eviction 1. mortgagee. Maceda law applies. by operation of law 1. implied. buyer shall enjoy the legal and peaceful possession of the thing c.basis of eviction is a right prior to sale or an act imputable to vendor . the non-performance of which may be treated by parties as breach II. However. whether they were intended or not. it must be an affirmation of fact or any promise by seller relating to the subject matter of sale 2. When a contract contains a condition. auctioneer. court still has final say as to propriety of rescission c. or made 3rd party defendant through 3rd party complaint brought by buyer Vendor’s liability shall consists of (Total Eviction)(VICED) 1. it is where ownership is transferred by tradition o not applicable to sheriff. Income or fruits if he has been ordered to deliver the to the party who won the suit 3. when ownership is transferred. buyer purchases the subject matter relying thereon o o Page 144 of 297 .there is a final judgement . warranty against eviction a. if party to the sales contract has promised that the condition should happen or be performed. Expenses of the contract. no appeal needed nor a need for buyer to resist eviction for right to accrue. to enforce vendor’s liability for eviction (VICED). 2. Warranties A statement or representation made by the seller contemporaneously and as a part of the contract of sale. it is enough that the aforementioned requisites are complied with b. and 5. CONDITION and WARRANTIES See Articles 1545-1547 I. quality. natural tendency of affirmation or promise is to induce buyer to purchase subject matter 3. warranty that seller has a right to sell o refers to consummation stage since in consummation stage. having reference tot eh character. are needed to see Express Warranties ( requisites ): 1. unless contrary provision appears in contract b. Forfeiture of amounts valid being in nature of penal clause Contract of Sale – Rescission is Applicable Contract to Sell – Rescission not Applicable Non–payment of purchase price would automatically cancel even without further action for rescission Except: If subject matter is residential lots. warranty cannot be enforced until aforementioned requisites concur o REMEDY OF RESCISSION IN CONTRACTS COVERING IMMOVABLES See Articles 1191. allowed if stipulated. 1592 o o Nature: Judicial Extra judicial Rescission a.seller has been summoned in the suit for eviction at the instance of buyer. or 2. Cost of the suit 4. pledge 2. Value of the thing at the time of eviction. Condition 1. to demand rescission of contract. burden to sue shifts to party who does not like rescission b. a. seller is liable for damages Implied Warranties Deemed included in all contracts of sale whether parties are actually aware or not. Requisites of breach of warranty against eviction: . the non happening of which would not constitute a breach but extinguishes the obligation 2. law on rescission applies when there is substantial breach. when breached.
applicable to judicial sale except that judgment debtor not liable for damages g. warranty against hidden defects o SELLER does not warrant patent defect. subject matter may be movable or immovable 2. only one is redhibited and not the others exception: when it appears buyer would not have purchased the team without the defective one apply to sale of other things d. if vet fails to discover through ignorance or bad faith he is liable for damages c. sale of animals on teams (2 or more) when only one is defective. buyer shall answer for injury / loss due to his fault buyer may elect between withdrawing from sale and demanding proportionate reduction of price with damages in either case Specific Implied Warranties in the Sale of Goods Warranty as to fitness and quality. when breach of warranty exist: buyer may ask for rescission of indemnity d. he would not have acquired it or would have given a lower price a. seller is not liable b. animals to be returned in same condition when they were acquired.seller should return price and interest and refund expenses ( no damages ) e. seller is not aware . buyer may elect between withdrawing from contract or demanding proportionate reduction of price with damages in either case f. defects on animals a. nature of hidden defect is such that it should render the subject matter unfit for the use of which it was intended or should diminish QuickTime™ and a TIFF (Uncompressed) decompressor its fitness to see this picture. are needed 3. Buyer makes known to seller the particular purpose for which goods are acquired and it appears that the buyer relied on the seller’s skill or judgment Page 145 of 297 . warranty against encumbrances (nonapparent) o Requisites: a. warranty not applicable when non– apparent burden or servitude is recorded in the Registry of Property – unless there is express warranty that the thing is free from all burdens and encumbrances 4. requisites: 1. animals at fair or public auction no warranty against hidden defects e. even in the case of professional inspection but hidden defect is of such nature that expert knowledge is not sufficient to discover it . immovable sold is encumbered with non–apparent burden or servitude not mentioned in the agreement b. Rescission 2. judgment debtor responsible for eviction unless otherwise decreed in judgment d. when defect is visible or even if not visible but buyer is an expert by reason of his trade or profession. nature of non–apparent servitude or burden is such that it must be presumed that the buyer would not have acquired it had he been aware thereof c. caveat emptor o Except when hidden 1. Mutual restitution 3.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 c.defect shall be considered as REDHIBITORY b. obligation of seller for breach depends on whether he has knowledge of such defect or not c. applies to judicial sale. Rights of buyer when deprived of only part of the subject matter but would not have bought such part if not in relation for the whole: 1. sale of unfit animals void if use / service for which they are acquired has been stated in the contract and they are found to be unfit therefor o prescription of action:40 days from date of delivery to buyer o if sale is rescinded. had the buyer been aware. seller is aware – seller should return price and refund expenses of contract with damages d. vendor not liable for eviction if adverse possession had been commenced before sale but prescriptive period is completed after transfer e. action to prescribe 6 months from delivery of subject matter 5. sale of animals with contagious disease is void f.
buyer without knowledge of a particular risk. thus seller still liable Buyer’s Option in Case of Breach of Warranty II. Refuse to accept goods and maintain action against seller for damages 4. If there has TIFF (Uncompressed) this picture. only applies to contract of sale 2. Accept goods and set up breach of warranty by way of recoupment in diminution or extinction of the price. d.wipes out warranty as to that specific risk but not as to eviction caused by other reasons. Seller in bad faith and there is waiver against eviction – null and void 2. Goods are bought by description from seller who deals in goods of that description 3. but effect depends on good faith or bad faith on the part of the seller. c. annulment 8. other legitimate payments. buyer with knowledge of risk of eviction assumed its consequences and made a waiver – vendor not liable (applicable only to waiver of warranty against eviction) 4. expenses of contract. measure of damage: difference between value of goods at time of delivery and value they would have had if they had answered to the warranty Sale of Goods by sample If seller is a dealer in goods of that kind. if he fails to notify the seller within a reasonable time of his election to rescind 3. rescission 9. Rescind contract of sale and refuse to receive goods/return them when already received. novation 7. loss of the subject matter 3. and fulfills other stipulations which may have been agreed upon 3. 2. Accept goods and maintain action against seller for damages 3.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 2. there is an implied warranty that the goods shall be free from defect rendering them unmerchantable which would not be apparent on reasonable examination of the sample − Effects of Waiver o Waiver in Warranty against eviction - 1. he necessary and useful expenses made on the thing sold e. made general renunciation of warranty – not waiver but merely limits liability of seller in case of eviction (pay value of subject matter at time of eviction) 3. Waiver against Hidden Defects and a QuickTime™ 1. in case of sale of specified article under its patent or trade name. If seller not aware of hidden defects – loss of the thing due to such defect will not make seller liable 3. no warranty unless there is a stipulation to the contrary 4. compensation 6. prescription Conventional redemption 1. not extinguish contract itself. if he fails to return or offer to return the goods in substantially as good condition as they were in at the time of the transfer of ownership to him EXTINGUISHMENT See Arts. been ato see decompressor exempting stipulation are needed seller from hidden defects 2. 1. If seller aware – waiver is in bad faith. must be in the same contract Parties may increase or diminish implied warranty against eviction. 1600 -1623 I. Grounds (same grounds whereby obligations in general are extinguished) 1. When rescission by buyer not allowed: 1. fulfillment of a resolutory condition 10. payment or performance 2. waiver to a specific case of eviction . confusion or merger of rights of creditor and debtor 5. Page 146 of 297 . condonation or remission 4. b. if the buyer accepted the goods knowing the breach of warranty WITHOUT protest 2. The right is exercised only be seller in whom right is recognized in the contract or by any person to whom right was transferred. only extinguishes obligations pertaining to contract of sale. the price of the sale. The right which the vendor reserves to himself to reacquire the property sold provided he returns to the vendee: a.
9. if two or more adjacent lot owners desire to exercise right to redeem. any of the heirs sell his hereditary rights to stranger before partition ii. 4. rural land a. debtor shall have a right to extinguish it by reimbursing the assignee for the price the latter paid therefor plus judicial costs. in case of tax delinquency/failure to pay tax assessments. among adjoining owners i. two or more adjacent lit e owners desire to exercise right to redeem and both have same lot area. when piece of land is small and cannot be used for any practical purpose and bought merely for speculation. Redemption by judgment debtor . Other Instances When Right of Legal Redemption is Granted a. 3. 6.1 year from date of sale and registration Redemption in judicial foreclosure of mortgage . when a credit or other incorporeal right in litigation is sold. owner of adjoining land can redeem b. Public Land Act c. they may only do so in proportion to the share they respectively have in thing owned in common c. 7. any or all of co-owners sells their shares to 3rd person ii. co-heirs has 1 month from receipt of notice in writing b. and interest or purchase price. Legal redemption 1. one who first requested shall be granted ii.no right to redeem is granted to debtor mortgagor except when mortgagee is bank of a banking institution 90 days after finality of judgment When Period of Redemption Begins to Run . Land acquired under free patent homestead subject to repurchase by wife. . debtor may exercise right within 30 days from the date assignee demands payment from him d. 2. Types of Legal Redemption: a.Right of legal pre-emption of redemption Page 147 of 297 5. 2 or more owners of adjoining lot desire to exercise right to redeem. Only applies to contracts of sale. sale of credit in litigation i. adjoining owner has right to redeem unless grantee does not own a rural land b. in the place of one who acquires the thing by (1) purchase OR (2) by dation in payment OR (3) by other transaction whereby ownership is transmitted by onerous title.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 III. among co-owners i. owner whose intended use is best justified shall be preferred. need not be stipulated Redemption in tax sales a. property is foreclosed b. urban land a. among co-heirs i. legal heirs within 5 years from date of conveyance granted by law.1 year from date of registration of certificate of sale to redeem by paying purchaser at public auction with interest Redemption in extrajudicial foreclosure . delinquent payer has 1 year from date of sale to redeem by paying to the revenue District Officer the amount of tax delinquencies. arifneeded to see this picture. Redemption of homesteads b. The right to be subrogated upon the same terms and conditions stipulated in the contract. 8. interest ii. if 2 or more co-owners desire to exercise right of redemption. where piece of rural land has an area not exceeding 1 hectare. owner of adjoining lot with smaller area shall be preferred QuickTime™ and a TIFF (Uncompressed) decompressor c. any of the co-heirs may be subrogated to the rights of the purchaser by redeeming said hereditary right: reimburse buyer of the price of the sale iii. any co-owner may exercise right of redemption by paying reasonable price of property to the buyer iii.
et. or other requisites prescribed by law for a mortgage. Circumvention of prohibition against pactum commissorium – creditor cannot appropriate the things given by way of pledge or mortgage. a. Thus. 1. sale with pacto de retro is drawn up 5. When period to redeem has expired and there has been a previous suit on the nature of the contract – seller still has 30 days from final judgment on the basis that contract was a sale with pacto de retro: d. Etcuban vs. 2. What to Look for in Determining Nature of Contract a. written notice is still required Except when actual knowledge is acquired by co-heirs living in same land with purchaser. Hence. deeds of sale are not to be recorded in Register of Deeds unless accompanied by affidavit of seller that he has given notice to all possible redemptioners c. Valencia. 148 SCRA 507 – Art. it can either be through a formal tender with consignation of the redemption price within the prescribed period. another instrument extending the period of redemption or granting new period is executed buyer retains for himself a part of the purchase price seller binds himself to pay taxes on thing sold real intention of parties is to secure the payment of a debt or performance of other obligation d. There is no prescribed form for an offer to redeem to be properly effected. Rationale behind provision on Equitable Mortgage: a. Option to Purchase .tender of payment is not necessary. the General Rule is that actual knowledge notwithstanding. conduct of parties – to reveal real intent 3. No period agreed upon – 4 years from date of contract b. 208 SCRA 496 One which lacks the proper formalities. offer to redeem is enough. CA. 19 Aug. What is paramount is the availment of the fixed and definite period within which to exercise the right of legal redemption. 2003). Sps. price of sale with right to repurchase is unusually inadequate b. b. the sale shall be construed as an equitable mortgage. upon or after expiration of right to repurchase. The real intention of parties is that the pretended purchase price is money loaned and to secure payment of the loan. 1623 is mandatory for the right of redemption to commence (PSC vs. and contains a debt are needed to nothing impossible contrary to law. if it exceeded. Period of Redemption a. NOTE: In case of doubt – in determining whether it is an equitable mortgage or a sale a retro. Rationale: no redemption due to erroneous belief that it is equitable mortgage which can be extinguished by paying the loan. Period agreed upon – should not exceed 10 years. Remedy available to vendor: ask for reformation of contract 4. NOTE: Written notice under Art. remedy here is foreclosure. CA. seller remains in possession as lessee or otherwise Page 148 of 297 .Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 shall be exercised within 30 days from notice by the seller 10. A contract with right to repurchase is deemed to be an equitable mortgage if the following requisites concur (IPERTI): a. al. How exercised . valid only for the first 10 years. 1623 does not prescribe any distinctive method for notifying the redemptioner IV.Right to repurchase the thing sold granted to the vendor in a separate instrument from the deed of sale Equitable Mortgage V. f. but shows the intention of the parties to make the property subject QuickTime™ and a TIFF (Uncompressed) decompressor of the contract as security forsee this picture. form of words. e. language of the contract b. c. or co-owner was middleman in sale to 3rd party. Cachola vs. Circumvention of usury law b.
are insufficient f. at time of execution sale a retro there be no fruits but there are fruits at time of redemption – pro-rated between vendor a retro and vendee a retro giving the vendee a retro a part corresponding to the time he possessed the land. ASSIGNMENT: The owner of a credit transfers to another his rights and actions in consideration of a price certain in money or its equivalent Page 149 of 297 VIII. Seller a retro must first pay the following: a. vendee a retro may demand that they must come to an agreement first and may not be compelled to consent to a partial redemption 3. The action is directed against prospective seller REDEMPTION Arises after sale There can be rescission of the original sale Action is directed against buyer VI. but is not in itself a payment that relieves the vendor from his liability to pay the redemption price IX. When an undivided thing is sold by coowners / co-heirs. and because of such belief he had not redeemed within the proper period. No rescission because no sale exists yet 3. Arises before sale 2. Fruits 1. expenses of the contract and other legitimate payments made by reason of the sale c. Should one of the co-heirs/co-owners succeed in redeeming the property – such vendor a retro shall be considered as trustee with respect to the share of the other co-owners/co-heirs. if none: a. what controls is the stipulation between parties as regards the fruits. Valid tender of payment is sufficient e. Failure to pay useful and unnecessary expenses entitles vendee to retain land unless actual reimbursement is made In Case of Multi-Parties 1. PRE-EMPTION 1. not to cases where the transaction is conclusively a pacto de retro sale. NOTE: When period has expired and seller allowed the period of redemption to expire – seller is at fault for not having exercised his rights so should not be granted a new period Paez vs. Example: Where a buyer a retro honestly believed that he entered merely into an equitable mortgage. the price of the thing sold b.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 e. under present art 1607: there must be judicial order before ownership of real property is consolidated in the buyer a retro How is Redemption Effected 1. Effect when There is No Redemption Made 1. ASSIGNMENT See Arts . Magno Tender of payment is SUFFICIENT to compel redemption. necessary and useful expenses made on the thing sold d. jurisprudence before the NCC: buyer a retro automatically acquires full ownership 2. When an undivided thing is sold because co. vendors a retro may only exercise his right over his respective share. f. not a pacto de retro transaction. . When rights of co-owners over an undivided thing is sold as regards to their own share – vendee retro cannot compel one to redeem the whole property 4. 1624 – 1634 I. This refers to cases involving a transaction where one of the parties contests or denies that the true agreement is one of sale with the right to repurchase. Mere sending of notice without valid QuickTime™ and a TIFF (Uncompressed) decompressor tender is needed to see this picture.owners cannot agree that it be allotted to one of them – vendee a retro VII. may compel the vendor to redeem the whole thing 2. at time of execution of the sale a retro there are visible or growing fruits – there shall be no pro-rating at time of redemption if no indemnity was paid by the vendee a retro b.
2. The debtor must pay the assignee: a. IV. one who sells whole of certain rights for a lump sum. Payment to the original creditor is not valid as against the assignee b. VIII. compensation unless assignor was notified by debtor that he reserved his right to the compensation 5. What Makes Assignment Different From Species Sale? Technical term but basically a sale Sale of credits and other incorporeal things 1. Assignor in bad faith a. one who assigns inheritance right w/o enumerating rights shall be answerable for his character as an heir d. Without necessity of delivering the QuickTime™ and a document (Uncompressed) decompressor TIFF evidencing the credit. debtor has consented to assignment – cannot set up 4. There must be a sale or assignment of credit 2. This rule does not apply to negotiable documents and documents of title which are governed by special laws. mortgage. Liability is limited to price received. assignment of rights made w/o knowledge of debtor – debtor may set up against assignee the compensation w/c would pertain to him against assignor of all credits prior to assignment and of later ones until he had knowledge of the assignment 3. There must be a pending litigation 3. guaranty. a. debtor has knowledge but no consent may still set up compensation of debts previous to assignment but not the subsequent ones. He may be made to pay again by the assignee 2. Transfer of Ownership 1. price paid by him AND Page 150 of 297 VII. transfers the right to collect the full value of the credit. Effect of payment of debtor after assignment of credit 1. shall be answerable for legitimacy of the whole in general but not for each of the various parts Breach of Warranty: Liabilities of the assignor of credit for violation of his warranties 1.there is warranty except when expressly sold as a doubtful account a. Payment to the original creditor is valid and debtor shall be released from his obligation After Notice a. Effects of Assignment 1. 4. NO warranty as to the solvency of debtor unless it is expressly the stipulated OR unless insolvency was already existing and of public knowledge at the time of the assignment b. even if he paid a price less than such value transfers all the accessory rights (e. III. Liable ALSO for (expenses of contract and other legitimate payments plus useful and necessary expenses) damages Assignment of Credit or Incorporeal Right in Litigation . He warrants the existence and legality of credit . 3. V. Assignor in good faith a. warranty shall last for 1 year only c. preference) debtor can set up against the assignee all the defenses he could have set up against the assignor VI. NO warranty against hidden defect N/A because intangibles has no physical existence 2. expenses of the contract and other legitimate payments made by reason of the assessment 2. Before Notice of the Assignment Warranties of the assignor of credit 1. by execution of public instrument because intangibles cannot be physically transferred 3.g. by tradition and not by perfection 2. . II.Requisites: 1. 2. pledge. are needed to see this picture.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 1. lack of knowledge or consent of debtor not essential for validity but has legal effects 2.
Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 b. transferor. and 4. The remedy of the creditor is not against the goods but to prosecute the seller criminally Page 151 of 297 2. terms and conditions of the sale. assignee in insolvency. the law does not favor co-ownership assignment to creditor in payment for his credit a. acting under judicial process (Section 8). Purpose: stores. Rule 39. IX. may have been indebted together with the amount due or to be due (Section 3) 2. Protect creditor of merchant II. If it is made by an executor. VI. judicial costs incurred by him AND c. debtor has a right to extinguish it by reimbursing the assignee for the price the buyer paid plus interest V. law would rather benefit the debtor of such credits rather than the one who merely speculates for profit. or assignor to deliver to the vendee. The right must be exercised by the debtor within 30 days from the date the assignee demands (judicially or extrejudicially) payment from him NOTE: Presumption: buyer’s purpose is speculation and. transferor. assignment to make a full detailed inventory showing the quantity and the cost of the price. of goods otherQuickTime™in ordinary course than and a TIFF (Uncompressed) decompressor are needed to see this picture. 12) Protection accorded to creditors by Bulk Sales Law: 1. assignment is in the form of dacion en pago. presumption is that the assignment is above suspicion. If it refers to properties exempt from attachment or execution (ROC. of all or substantially all of fixtures and equipments Should cover only merchants because creditors cannot get adequate security because goods are sold ordinarily in course of business VII. It requires the vendor. delivery of sworn statement to buyer 3. . transfer. When sale or transfer in bulk? .Any sale. Sec. purpose is to presumably preserve the tenement IV. NOTE: When credit or incorporeal right in litigation is assigned or sold. 5) Duty of seller to perform the following when transaction is within the coverage of law 1. etc. apply the proceeds pro-rata to claims of creditors shown in verified statement 4. interest on the price from the date of payment 4. It requires the vendor. of all or substantially all of business 3. mortgage. mortgagee. BULK SALES LAW I. assignment of credit / incorporeal right to co-heir or co-owner. or assignor. etc. or public officer. Right to redeem by debtor not available in the following instances (not considered speculative 1. or to his or its agent or representative a sworn written statement of names and addresses of all creditors to whom said vendor. 3. If the transfer is in the ordinary course of trade and the regular prosecution of the business of the vendor 2. of business 2. mortgagor. mortgagor. (Sec. administrator. Without knowledge of buyer a. at least 10 days before the sale. If the statement is fair upon its face and the buyer has no knowledge of its incorrectness and nothing to put him on inquiry about it. When sale or transfer NOT covered by Bulk Sales Law: 1. If it is made by one who produces and delivers a written waiver of the provisions of the Bulk Sales Law from its creditors 3. III. receiver. transfer. thus perfectly legal assignment to possessor of tenement or piece of land which is subject to the right in litigation assigned a. written advance disclosure to creditors Effects of False Statements in the Schedule of Creditors 1. mortgage. make sworn statement of listing of creditors 2. he will be protected in its purchase b. or assignment 1.
or dealt with the property. As against creditors a. payment of them to the are needed the debt. as such. An IPV from the original purchaser is protected b. or by a proceeding in equity 2. operation as officers. III. whether the omission was fraudulent or not.Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 2. Page 152 of 297 . II. so as to become Void IX. the property will be liable in his hands to creditors of the original vendor personally liable to the creditors for value of it. Effects of violation of Law on Transfer 1. attachment. unless the purchaser has sold or otherwise disposed of. The sale is VOID as to such creditors. The sale is valid only as between the vendor and the vendee but void against the creditors With names of certain creditors without notice are omitted from the list a. The vendee accepts it at his peril b. However if the circumstances are such as to bind the subsequent purchaser with constructive notice that the sale to the vendor (original purchaser) was fraudulent. With knowledge or imputed knowledge of buyer a. employees or laborers. Management. Anti-Dummy Law I. Effects of Non-Compliance Failure to Prepare and deliver sworn listing of creditors Apply proceeds prorata to listed creditors Make advance written disclosure of transactions to creditors Register sworn statement with DTI Include or omit names of creditors and correct amount due in the statement Sale for no consideration On Transaction Fraudulent and void Fraudulent and void Not void On Seller Criminal Liability Criminal Liability No Criminal Liability No Criminal Liability Criminal Liability Criminal Liability 3. Penalizes Filipinos who permit aliens to use them as nominees or dummies to enjoy privileges reserved only for Filipinos. As between parties a. With respect to an innocent purchaser for value from the original purchaser a. A sale not in compliance with the Bulk Sales Law is valid against all persons other than creditors 2. A purchaser in violation of the law acquires no right in the property purchased as against the creditors of the seller b. X. such as execution. The Bulk Sales Law does NOT in any way affect the validity of the transfer as between the intermediate parties thereto b. Not void Void VIII. His status is that of a trustee or receiver for the benefit of the creditors of the seller. he is responsible for the disposition of the property Remedies available to creditors 1. garnishment. Includes Control or non-control positions. An ordinary action against the purchaser to obtain money judgment will NOT lie. The proper remedy is one against the QuickTime™ and a TIFF (Uncompressed) decompressor goods to subject to see this picture. 4.
Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 QuickTime™ and a TIFF (Uncompressed) decompressor are needed to see this picture. Page 153 of 297 .
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