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UP Sales Reviewer 2007

UP Sales Reviewer 2007

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Published by: Anthony Rupac Escasinas on Jul 04, 2013
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12/02/2013

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Art 1469. Should such person or persons be
unable or unwilling to fix it, the contract shall be
inefficacious, unless the parties subsequently
agree upon the price.
If the third person or persons acted in bad faith or
by mistake, the courts may fix the price.

Where such third person or persons are
prevented from fixing the price or terms by fault
of the seller or the buyer, the party not in fault
may have such remedies against the party in fault
as are allowed the seller or the buyer, as the case
may be. (1447a)

Art. 1470. Gross inadequacy of price does not
affect a contract of sale, except as it may indicate
a defect in the consent, or that the parties really
intended a donation or some other act or
contract. (n)

13

DE GARCIA V. CA: Respondent Angelina D. Guevara,
having been unlawfully deprived of the diamond ring in
question, was entitled to recover it from petitioner Consuelo
S. de Garcia who was found in possession of the same.
The only exception the law allows is when there is
acquisition in good faith of the possessor at a public sale, in
which case the owner cannot obtain its return without
reimbursing the price. (Cruz v. Pahati; Aznar v.
Yapdiangco);
REBULLIDA V. BUSTAMANTE: It appearing that the ring
in question was lost or was stolen from the place where the
lawful owner deposited it, the case squarely falls under Art.
464 of the Civil Code, which provides that the “one who has
lost personal property or who has been unlawfully deprived
of it may recover it from whoever is possessing it.” The
mere fact that the possessor, even in good faith, ad
purchased the ring from another person would not bar the
right of the owner to recover it once the identity and the
owner’s deprivation are established.

14

INCHAUSTI V. CROMWELL: Price is the sum stipulated
as the equivalent of the thing sold and also every incident
taken into consideration for the fixing of the price put to the
debit of the buyer and agreed to by him

9

Art. 1471. If the price is simulated, the sale is void,
but the act may be shown to have been in reality a
donation, or some other act or contract. (n)

Art. 1472. The price of securities, grain, liquids, and
other things shall also be considered certain, when the
price fixed is that which the thing sold would have on
a definite day, or in a particular exchange or market,
or when an amount is fixed above or below the price
on such day, or in such exchange or market, provided
said amount be certain. (1448)

Art. 1473. The fixing of the price can never be left to
the discretion of one of the contracting parties.
However, if the price fixed by one of the parties is
accepted by the other, the sale is perfected. (1449a)

Art. 1474. Where the price cannot be determined in
accordance with the preceding articles, or in any other
manner, the contract is inefficacious. However, if the
thing or any part thereof has been delivered to and
appropriated by the buyer he must pay a reasonable
price therefor. What is a reasonable price is a question
of fact dependent on the circumstances of each
particular case. (n)

1.A contract of sale is null & void and produces no
effect whatsoever if the same is without cause or
consideration or that the price which appears to
have been paid has in fact never been paid.
2.The existence of a contract is permanent &
incurable.
3.The statement of a false cause in contracts shall
render them void if it should not be proven that
were founded upon another cause which is true &
lawful (1471, 1353)
4.If the price is simulated, the sale is void but the act
may be shown to have been in reality a donation, or
some other act or contract (1471)

A. Requisites of a valid price

1. must be real

Art. 1471. If the price is simulated, the sale is void,
but the act may be shown to have been in reality a
donation, or some other act or contract. (n)

Art. 1386. Rescission referred to in Nos. 1 and 2 of
Article 1381 shall not take place with respect to
contracts approved by the courts. (1296a)

Art. 1353. The statement of a false cause in
contracts shall render them void, if it should not be
proved that they were founded upon another cause
which is true and lawful. (1276)

Art. 1354. Although the cause is not stated in the
contract, it is presumed that it exists and is lawful,
unless the debtor proves the contrary. (1277)

Art. 1470. Gross inadequacy of price does not
affect a contract of sale, except as it may
indicate a defect in the consent, or that the
parties really intended a donation or some other
act or contract. (n)

Art. 1381. The following contracts are
rescissible:

(1) Those which are entered into by guardians
whenever the wards whom they represent suffer
lesion by more than one-fourth of the value of
the things which are the object thereof;

(2) Those agreed upon in representation of
absentees, if the latter suffer the lesion stated in
the preceding number;

(3) Those undertaken in fraud of creditors when
the latter cannot in any other manner collect the
claims due them;

(4) Those which refer to things under litigation if
they have been entered into by the defendant
without the knowledge and approval of the
litigants or of competent judicial authority;

(5) All other contracts specially declared by law
to be subject to rescission. (1291a)

1.False Price – there is a true price but it was
not written down or stipulated in the contract.
There was a consideration although it was not
found in the contract (Real consideration not
stated)
2.Simulated Price15

– There was no price paid.
The parties merely said there was a price and
“created” their own price (no consideration
but stated)

2. must be in money or its equivalent

Art. 1458. By the contract of sale one of the
contracting parties obligates himself to transfer

15

MAPALO V. MAPALO: a contract of purchase and sale
is null and void and produces no effect whatsoever where
the same is without cause or consideration in that the
purchase price which appears thereon as paid has in fact
never been paid by the purchaser to the vendor;
BAGNAS V. CA: upon the consideration alone that the
apparent gross, not to say enormous, disproportion
between the stipulated price (in each deed) of P1.00 plus
unspecified and unquantilled services and the undisputably
valuable real estate allegedly sold — worth at least
P10,500.00 going only by assessments for tax purposes
which, it is well-known, are noteriously low indicators of
actual value — plainly and unquestionably demonstrates
that they state a false and fictitious consideration, and no
other true and lawful cause having been shown, the Court
finds both said deeds, insofar as they purport to be sales,
not merely voidable, but void ab initio.

10

the ownership and to deliver a determinate thing, and
the other to pay therefor a price certain in money or
its equivalent.

A contract of sale may be absolute or conditional.
(1445a)

Art. 1468. If the consideration of the contract
consists partly in money, and partly in another thing,
the transaction shall be characterized by the manifest
intention of the parties. If such intention does not
clearly appear, it shall be considered a barter if the
value of the thing given as a part of the consideration
exceeds the amount of the money or its equivalent;
otherwise, it is a sale. (1446a)

1.

The price should be in money or its

equivalent16

(e.g. letters of credit & other
negotiable instruments). Otherwise, the
transaction might be barter or an innominate
contract.
2.Property given to the creditor in satisfaction of a
debt in money with the PRICE PAID IN ADVANCE is
a sale.

DATION IN PAYMENT

SALE

Presupposes a prior
existing credit &
extinguishes

the

obligation

Obligations

are
created from the
perfection of the
contract

3. Fixing of the price is more or less arrived at with
ample

contractual freedom than the value of the thing

given

in

dation.

3. Must be certain or ascertainable at time of
perfection17

16

REPUBLIC V. PHIL. RESOURCES: Although Art. 1458 of the
new Civil Code provides that price . . . is always paid in terms of
money and the supposed payment being in kind it is no payment
at all," yet the same article provides that the purchaser may pay
"a price certain in money or its equivalent" which means that
payment of the price need not be money.

17

TOYOTA SHAW V. CA: Article 1458 of the Civil Code defines
a contract of sale and Art. 1475 specifically provides when it is
deemed perfected. The document (in Exhibit “A”, see case),
executed and signed by the petitioner's sales representative, is
not a contract of sale. No obligation on the part of Toyota to
transfer ownership of a determinate thing to Sosa and no
correlative obligation on the part of the latter to pay therefor a
price certain appears therein. The provision on the downpayment
of P100,000 made no specific reference to a sale of a vehicle. If it
was intended for a contract of sale, it could only refer to a sale on
installment basis, as the VSP executed the following day
confirmed. But nothing was mentioned about the full purchase
price and the manner the installments were to be paid. This Court
had already ruled that a definite agreement on the manner of
payment of the price is an essential element in the formation of a
binding and enforceable contract of sale. This is so because the
agreement as to the manner of payment goes into the price such
that a disagreement on the manner of payment is tantamount to a

Art. 1474. Where the price cannot be
determined in accordance with the preceding
articles, or in any other manner, the contract is
inefficacious. However, if the thing or any part
thereof has been delivered to and appropriated
by the buyer he must pay a reasonable price
therefor. What is a reasonable price is a question
of fact dependent on the circumstances of each
particular case. (n)

Art. 1469. In order that the price may be
considered certain, it shall be sufficient that it be
so with reference to another thing certain, or
that the determination thereof be left to the
judgment of a special person or persons.

Should such person or persons be unable or
unwilling to fix it, the contract shall be
inefficacious, unless the parties subsequently
agree upon the price.

If the third person or persons acted in bad faith
or by mistake, the courts may fix the price.

Where such third person or persons are
prevented from fixing the price or terms by fault
of the seller or the buyer, the party not in fault
may have such remedies against the party in
fault as are allowed the seller or the buyer, as
the case may be. (1447a)

Art. 1470. Gross inadequacy of price does not
affect a contract of sale, except as it may
indicate a defect in the consent, or that the
parties really intended a donation or some other
act or contract. (n)

Art. 1471. If the price is simulated, the sale is
void, but the act may be shown to have been in
reality a donation, or some other act or contract.
(n)

Art. 1472. The price of securities, grain, liquids,
and other things shall also be considered certain,
when the price fixed is that which the thing sold
would have on a definite day, or in a particular
exchange or market, or when an amount is fixed
above or below the price on such day, or in such
exchange or market, provided said amount be
certain. (1448)

Art. 1473. The fixing of the price can never be
left to the discretion of one of the contracting
parties. However, if the price fixed by one of the
parties is accepted by the other, the sale is
perfected. (1449a)

failure to agree on the price. Definiteness as to the price is
an essential element of a binding agreement to sell
personal property.

11

4. Manner of Payment must be agreed upon18

5. How price is determined

Art. 1469. In order that the price may be considered
certain, it shall be sufficient that it be so with
reference to another thing certain, or that the
determination thereof be left to the judgment of a
special person or persons.

Should such person or persons be unable or unwilling
to fix it, the contract shall be inefficacious, unless the
parties subsequently agree upon the price.

If the third person or persons acted in bad faith or by
mistake, the courts may fix the price.

Where such third person or persons are prevented
from fixing the price or terms by fault of the seller or
the buyer, the party not in fault may have such
remedies against the party in fault as are allowed the
seller or the buyer, as the case may be. (1447a)

a) by a third person19

b) by the courts

Art. 1469. (3) If the third person or persons acted in
bad faith or by mistake, the courts may fix the price.

c) by reference to definite day, particular exchange
market20

18

VELASCO V. CA: It is not difficult to glean from the
aforequoted averments that the petitioners themselves admit that
they and the respondent still had to meet and agree on how and
when the down-payment and the installment payments were to
be paid. Such being the situation, it cannot, therefore, be said
that a definite and firm sales agreement between the parties had
been perfected over the lot in question. Indeed, this Court has
already ruled before that a definite agreement on the manner of
payment of the purchase price is an essential element in the
formation of a binding and enforceable contract of sale. The fact,
therefore, that the petitioners delivered to the respondent the sum
of P10,000 as part of the down-payment that they had to pay
cannot be considered as sufficient proof of the perfection of any
purchase and sale agreement between the parties under Art.
1482 of the new Civil Code;
NAVARRO V. SUGAR’S PRODUCERS: When the manner of
payment of purchase price is discussed after acceptance,, then
such acceptance did not produce a binding and enforceable
contract of sale. There was no complete meeting of the minds

19

BARRETTO V. SANTA MARINA: It is necessary to a
perfected sale that the parties agree upon the thing sold and that
the price be fixed, it being sufficient for the latter purpose that the
price be left to the judgment of a specified person.

20

Price is certain at the point of perfection by reference to
another thing certain, such as to certain invoices then in
existence and clearly identified by the agreement
(MCCOLLOUGH V. AENLLE) or known factors or stipulated
formula (MITSUI V. MANILA)

Art. 1472. The price of securities, grain, liquids,
and other things shall also be considered certain,
when the price fixed is that which the thing sold
would have on a definite day, or in a particular
exchange or market, or when an amount is fixed
above or below the price on such day, or in such
exchange or market, provided said amount be
certain. (1448)

d) by reference to another thing certain

e) never by one party

Art. 1473. The fixing of the price can never be
left to the discretion of one of the contracting
parties. However, if the price fixed by one of the
parties is accepted by the other, the sale is
perfected. (1449a)

6. Inadequacy of price21

Art. 1355. Except in cases specified by law,
lesion or inadequacy of cause shall not invalidate
a contract, unless there has been fraud, mistake
or undue influence. (n)

Art. 1470. Gross inadequacy of price does not
affect a contract of sale, except as it may
indicate a defect in the consent, or that the
parties really intended a donation or some other
act or contract. (n)

Art. 1381. The following contracts are
rescissible:

(1) Those which are entered into by guardians
whenever the wards whom they represent suffer
lesion by more than one-fourth of the value of
the things which are the object thereof;
(2) Those agreed upon in representation of
absentees, if the latter suffer the lesion stated in
the preceding number;
(3) Those undertaken in fraud of creditors when
the latter cannot in any other manner collect the
claims due them;
(4) Those which refer to things under litigation if
they have been entered into by the defendant
without the knowledge and approval of the
litigants or of competent judicial authority;
(5) All other contracts specially declared by law
to be subject to rescission. (1291a)

Art. 1602. The contract shall be presumed to be
an equitable mortgage, in any of the following
cases:

21

ERENETE V. BEZORE: That the consideration in the
sale was "cheap" is not a ground for the infirmity of the sale.
Inadequacy of cause in a contract does not of itself
invalidate the contract.

12

1) When the price of a sale with right to repurchase is
unusually inadequate;
(2) When the vendor remains in possession as lessee
or otherwise;
(3) When upon or after the expiration of the right to
repurchase another instrument extending the period
of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of
the purchase price;
(5) When the vendor binds himself to pay the taxes
on the thing sold;
(6) In any other case where it may be fairly inferred
that the real intention of the parties is that the
transaction shall secure the payment of a debt or the
performance of any other obligation.

In any of the foregoing cases, any money, fruits, or
other benefit to be received by the vendee as rent or
otherwise shall be considered as interest which shall
be subject to the usury laws. (n)

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