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A C B O 2007 Civil Law: Donation Sale
A C B O 2007 Civil Law: Donation Sale
Civil Law
SUMMER REVIEWER
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
Non-payment of the
price is a negative
resolutory condition
remedies available:
1. specific
performance
2. rescission
3. damages
I.
II.
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
III.
OBLIGATIONS CREATED - 2 sets of real
obligations to give
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IV.
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
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
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 products nature
of execution differs from
the others; products are
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
Adviser: Dean Cynthia del Castillo Head: Joy Ponsaran, Eleanor Mateo; Understudy: Joy Tajan, John Paul Lim;
Subject Head: Patricia Marie Regina Roque; Pledgees: Melina Rose Gutierrez, Kristine Margret Malang
Sale
Buyer pays for price of
object
Buyer becomes owner of
thing; in agency
Seller warrants
Not unilaterally revocable
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
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Consideration is rent
Consideration
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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
1. REQUISITES:
1. Things
a. Possible - existing, future, and
contingent
i. 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. Licit
i. not outside the commerce of
man
ii. if illicit, contract is void
c. Determinate or determinable
i. determinate: particularly
designated or physically
segregated from all others of
the same class
ii. determinable:
1. thing is capable of
being made
determinate
2. without
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2. Rights must be transmissible, except:
a. future inheritance
b. 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. Real
a. when at the perfection of the contract
of sale, there is every intention on
the buyer to pay the price, 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. In money or its equivalent
a. consideration for a valid contract of
sale can be the price and other
valuable consideration; at the very
least, a true contract of sale must
have price as part of its
consideration
3. Certain or ascertainable
a. certain: expressed and agreed in
terms of specific pesos and/or
centavos
b. ascertainable:
i. by third persons
ii. by the courts in cases
where the third person fixes
the price in bad faith or by
mistake
iii. by reference to a definite
day, particular exchange or
market
iv. by reference to another thing
certain
Page 132 of 297
II. Policitacion
1. RULES:
1. offer is floated
prior to acceptance,
may be withdrawn at
will by offeror
3. offer floated w/
condition
4. offer floated without
period/without condition
5. offer is floated and
there
is counter-offer
6. offer is floated
7. offer accepted
absolutely
without acceptance,
extinguished when
period has ended and
maybe withdrawn at will
by offeror; right to
withdraw must not be
arbitrary otherwise,
liable to damage under
Art 19, 20, 21 of Civil
Code
extinguished by
happening/nonhappening of condition
continues to be valid
depending upon
circumstances of time,
place and person
original offer is
destroyed, there is a
new offer; can not go
back to original offer
no authority of offeror
to modify offer
proceed to perfected
stage
REQUIREMENTS:
1. When parties are face to face when there
is absolute acceptance of an offer that is
certain
2. When thru correspondence or telegram
when the offeror receives or had knowledge
of the acceptance
3. When the sale is subject to a suspensive
condition from the moment the condition is
fulfilled
III.
EARNEST MONEY
1. Money given as part of purchase price
2. Acceptance is the proof that contract of sale
exists
3. Nothing in law prevents parties from treating
earnest money differently
4. Old concept: subject to forfeiture when
BUYER backs out
5. New concept: can not be forfeited part of
purchase price; must be restored
6. Qualification: if old concept is stipulated
VALID
7. Presumption of perfection of contract of sale
and such earnest money as part of purchase
price is disputable
OPTION MONEY
EARNEST MONEY
II.
a.
b.
c.
III.
a.
b.
c.
IV.
EXCEPTIONS TO COVERAGE OF
STATUTE IN SALES CONTRACTS:
1. When there is a note or memorandum in
writing and subscribed to by party or his
Different forms of Constructive Delivery Constructive delivery has same legal effect
as actual or physical delivery
V.
VI.
4. Constitutum possessarium
When at the time of the perfection of the
contract of sale, seller had possession of the
subject matter in the concept of owner and
pursuant to the contract, 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.
5. Quasi-tradition
Delivery of rights, credits or incorporeal
property, made by:
a. Placing titles of ownership in the
hands of the buyer
b. Allowing buyer to make use of rights
WHEN
EXECUTION
OF
PUBLIC
INSTRUMENT DOES NOT PRODUCE THE
EFFECTS OF DELIVERY
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1. When there are
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execution does not produce effect of delivery
2. When at the time of execution of instrument,
subject matter was not subject to control of
the seller
3. Subject matter should be within control of
seller; he should have capacity to deliver at
the time of execution of public instrument
when he wants to effect actual delivery
VII.
COMPLETENESS OF DELIVERY
1. MOVABLES
a. delivery of thing plus accessories
and accessions in the condition in
which they were upon the perfection
of the contract including the fruits
b. When the seller delivers to the buyer
a quantity of goods LESS than he
contracted to sell, buyer has the
option to reject or accept it.
a. When accepts with knowledge
that seller is not going to perform
Page 136 of 297
2. IMMOVABLES
a. Sold per unit or number
i. If the sale should be made with
statement of its area, rate at
certain price, deliver all that may
have been stated in the contract
if impossible, remedies of buyer:
ii. If Less in area:
- rescission
- proportional reduction of
price LACK IN AREA
SHLD NOT BE LESS
THAN 1/10 OF AREA
AGREED UPON
iii. If Greater in area:
- accept per stipulation and
reject
the rest
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at contract rate
- Not applicable to judicial
sales
iv. Sold for lump sum
When price per unit not
indicated
If area delivered is either
greater or lesser price
will not be
accordingly
VIII.
1.
2.
3.
4.
5.
IX.
adjusted
SALE BY DESCRIPTION/SAMPLE
Sample goods must correspond with
sample shown
2. Description goods must correspond
with description or sample
3. Effect if there is no compliance:
RESCISSION may be
availed of by
the buyer
1.
XI.
OBLIGATIONS OF BUYER
1. Pay the price
a. Buyer is obligated to pay price
according to terms agreed upon
regarding time, place and amount
b. If payment of interest is stipulated
must pay; if amount of interest not
mentioned apply legal rate
c. When buyer defaults constitutes
breach:
subject
to
specific
performance/rescission
and
damages; interest to be paid also
from default
2. Accept delivery of thing sold
a. Where to accept: at time and place
stipulated in the contract; if none
specified at the time and place of
delivery goods; there is acceptance
when:
i. He intimates to seller that
he has accepted
ii.
3.
5.
2. IMMOVABLE
a. First to register in good faith
b. No inscription, first to possess in
good faith
c. No inscription and no possession in
good faith Person who presents
oldest title in good faith
d. Good Faith - 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
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SALE and a
III.
LIS PENDENS notice that subject matter is
in litigation
IV.
ADVERSE CLAIM notice that somebody is
claiming better right
V.
VI.
Important Considerations
1. Negotiation
gives
better
right
than
assignment
2. Assignee takes document with defects of the
assignor
3. Obligation of bailee bailee is immediately
bound to the document
Warranties on Negotiation
1. the document is genuine
2. he has legal right to negotiate or transfer it
3. he has knowledge of no fact which would
impair the validity or worth of the document
4. he has right to transfer title to goods and
goods are merchantable/fit
NEGOTIABLE:
a. Can not be levied or garnished when
documents are already with purchaser in
good faith, unless:
b. Document is first surrendered
c. Document is pounded by court
d. Negotiation is enjoined
NEGOTIATION
ASSIGNMENT
transferor/holder acquires
title to goods
VII.
1.
2.
VIII,
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
3.
Foreclosure
i. Barring effect on recovery of
balance
ii. Extent of barring effect: purchase
price
iii. Exception: mortgagor refuses to
deliver
property
to
effect
foreclosure,
recover
also
expenses incurred in attorneys
fees, etc. (Perverse BuyerMortgagor)
Remedies of Buyer
1. In case of subdivision or condo projects,
suspend payment.
2. If real estate developer fails to comply with
obligation according to approved plan:
- RESCIND
- SUSPEND PAYMENT UNTIL SELLER
COMPLIES
o
o
Nature: Judicial
Extra judicial Rescission
a. allowed if stipulated; burden to sue shifts
to party who does not like rescission
b. court still has final say as to propriety of
rescission
c. Forfeiture of amounts valid being in
nature of penal clause
Contract of Sale Rescission is Applicable
Contract to Sell Rescission not Applicable
Nonpayment of purchase price would
automatically cancel even without further
action for rescission
Except: If subject matter is residential
lots, law on rescission applies when
there is substantial breach. Maceda law
applies.
CONDITION and WARRANTIES
See Articles 1545-1547
I. Condition
1. When a contract contains a condition, the non
happening of which would not constitute a breach
but extinguishes the obligation
2. However, if party to the sales contract has
promised that the condition should happen or be
performed, the non-performance of which may be
treated by parties as breach
II. Warranties
A statement or representation made by the seller
contemporaneously and as a part of the contract of
sale, having reference tot eh character, quality, or
title of the goods, and by which he promises or
undertakes to insure that certain
facts are or shall be
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Express Warranties ( requisites ):
1. it must be an affirmation of fact or any promise by
seller relating to the subject matter of sale
2. natural tendency of affirmation or promise is to
induce buyer to purchase subject matter
3. buyer purchases the subject matter relying
thereon
5. defects on animals
a. even in the case of professional inspection
but hidden defect is of such nature that
expert knowledge is not sufficient to discover
it - defect shall be considered as
REDHIBITORY
b. 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, 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. animals at fair or public auction
no warranty against hidden defects
e. sale of animals with contagious disease is
void
f. 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, animals to be returned in
same condition when they were acquired;
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
Effects of Waiver
o Waiver in Warranty against eviction -
EXTINGUISHMENT
See Arts. 1600 -1623
I.
Grounds
(same
grounds
whereby
obligations in general are extinguished)
1. payment or performance
2. loss of the subject matter
3. condonation or remission
4. confusion or merger of rights of creditor
and debtor
5. compensation
6. novation
7. annulment
8. rescission
9. fulfillment of a resolutory condition
10. prescription
II.
Conventional redemption
1. only extinguishes obligations pertaining
to contract of sale, not extinguish
contract itself; only applies to contract of
sale
2. The right which the vendor reserves to
himself to reacquire the property sold
provided he returns to the vendee:
a. the price of the sale,
b. expenses of contract,
c. other legitimate payments,
d. he necessary and useful expenses
made on the thing sold
e. and fulfills other stipulations which
may have been agreed upon
3. The right is exercised only be seller in
whom right is recognized in the contract
or by any person to whom right was
transferred; must be in the same contract
Legal redemption
1. Only applies to contracts of sale.
2. The right to be subrogated upon the
same terms and conditions stipulated in
the contract, 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.
3. Types of Legal Redemption:
a. among co-heirs
i. any of the heirs sell his
hereditary rights to stranger
before partition
ii. 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. co-heirs has 1 month from
receipt of notice in writing
b. among co-owners
i. any or all of co-owners sells their
shares to 3rd person
ii. any co-owner may exercise right
of redemption by paying
reasonable price of property to
the buyer
iii. if 2 or more co-owners desire to
exercise right of redemption,
they may only do so in proportion
to the share they respectively
have in thing owned in common
c. among adjoining owners
i. rural land
a. where piece of rural land has
an area not exceeding 1
hectare, adjoining owner has
right to redeem unless
grantee does not own a rural
land
b. if two or more adjacent lot
owners desire to exercise
right to redeem, owner of
adjoining lot with smaller
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owners desire to exercise
right to redeem and both
have same lot area, one who
first requested shall be
granted
ii. urban land
a. when piece of land is small
and cannot be used for any
practical purpose and bought
d.
4.
5.
6.
7.
8.
9.
V.
Equitable Mortgage
c.
d.
e.
f.
VI.
VII.
IX.
PRE-EMPTION
In Case of Multi-Parties
1. When an undivided thing is sold because
co- owners cannot agree that it be
allotted to one of them vendee a retro
REDEMPTION
2. No rescission
because no sale exists
yet
ASSIGNMENT
See Arts . 1624 1634
I.
VIII.
Fruits
1. what controls is the stipulation between
parties as regards the fruits; if none:
a. 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. 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.
2.
3.
II.
1.
2.
III.
IV.
V.
2.
VI.
VII.
VIII.
Effects of Assignment
1.
lack of knowledge or consent of debtor
not essential for validity but has legal
effects
2.
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.
debtor has consented to assignment
cannot set up
4.
compensation unless assignor was
notified by debtor that he reserved his
right to the
compensation
5.
debtor has knowledge but no consent may still set up compensation of
debts previous to assignment but not
the subsequent ones.
Transfer of Ownership
1.
by tradition and not by perfection
2.
by execution of public instrument
because intangibles cannot be
physically transferred
3.
Without necessity of delivering the
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4.
This rule does not apply to negotiable
documents and documents of title
which are governed by special laws.
Effect of payment of debtor after
assignment of credit
1.
Before Notice of the Assignment
IV.
V.
VI.
VII.
2.
3.
creditor
of
merchant
I.
Purpose:
stores.
II.
III.
3.
4.
With
knowledge
or
imputed
knowledge of buyer
a. The vendee accepts it at his peril
b. 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 sale is VOID as to such
creditors, whether the omission was
fraudulent or not.
With respect to an innocent
purchaser for value from the original
purchaser
a. An IPV from the original purchaser
is protected
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, the
property will be liable in his hands to
creditors of the original vendor
VIII.
IX.
X. 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
On Seller
Criminal
Liability
Fraudulent and
void
Not void
Criminal
Liability
No Criminal
Liability
Not void
No Criminal
Liability
Criminal
Liability
Void
Void
Criminal
Liability
Anti-Dummy Law
I.
II.
III.
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