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NATURE AND FORM OF THE CONTRACT Sources of the Law on Sales Sales are governed by the provisions of the Civil Code: 1. Book IV, Title VI, Articles 1458-1637 (Sales) 2. Title I, Arts. 1156-1422 (Obligations and Contracts) 3. Opinions of Commentators 4. Jurisprudence Concept of Contract of Sale The contract of sales is an agreement whereby one of the parties (called the seller or vendor) obligates himself to deliver something to the other (called the buyer or purchaser or vendee) who, on his part, hinds himself to pay therefore a sum of money or its equivalent (known as the price). The transfer of title to property or the agreement to transfer title for a price paid or promised, not mere physical transfer of the property, is the essence of sale. Characteristics of a Contract of Sale 1. Consensual 2. Bilateral - perfected by mere consent of the parties without further acts. - both the contracting parties are bound to fulfill correlative obligations towards each other (the seller to deliver and transfer ownership of the thing sold, and the buyer to pay the price). 3. Onerous - the thing sold is conveyed in consideration of the price and vice versa. 4. Commutative - the thing sold is considered the equivalent of the price paid and vice versa. 5. Aleatory - in the case of sale of hope, one of the parties or both reciprocally bind themselves to give or to do something in consideration of what the other shall give or do upon the happening of an event which is uncertain, or which is to occur at an indeterminate time. 6. Nominate 7. Principal - the contract is given a special name or designation in the Civil Code. - the contract does not depend for its existence and validity upon another contract. Essential Requisites of a Contract of Sale 1. Consent or meeting of the minds – refers to the conformity of the parties to the terms of the contract, the acceptance by one of the offer made by the other. As a bilateral contract, the acceptance of payment by a party is an indication of his consent to a contract of sale, thereby precluding him from rejecting its binding effect [Clarin vs. Rulova, 127 SCRA 512].
There may be a sale against the will of the owner in case of expropriation and the three different kinds of sale under the law – ordinary execution sale, judicial foreclosure sale, and extra-judicial
foreclosure sale. 2. Object or subject matter – refers to the determinate thing which is the object of the contract;
Other kinds As to the nature of the subject matter – real or personal. 1461). Natural Elements – those which are deemed to exist in certain contracts. . Cause or consideration – refers to the price certain in money or its equivalent.contract deals with a future thing. Accidental Elements – those which may be present or absent depending on the stipulations of the parties. As to presence or absence of conditions Absolute – where the sale is not subject to any condition whatsoever and where the title passes to the buyer upon delivery of the thing sold. 3. subject to the condition that the thing will exist and on failure of the condition. the buyer has not obligation to pay the price. usually in the case of the vendee. it is not certain that the thing itself (winning a prize) will exist.like the sale of a sweepstake ticket. Emptio rei speratae (sale of thing expected) . and the tile will vest the buyer the moment the thing comes into existence (Art. or expectancy (like the sale of a falsified sweepstakes ticket which can never win). . tangible or intangible As to the manner of payment – cash or installment As to its validity – valid. there will be come into existence because the object of the no contract by reason of the absence of an contract is the hope itself. . Conditional – where the sale contemplates a contingency and where the contract is subject to certain conditions. in the absence of any contrary stipulations.the future thing is certain as to itself but uncertain as to its quantity and quality. it is reasonably certain to come into existence as the natural increment or usual incident of something in existence already belonging to the seller. unless it is a vain hope essential element.the sale of a thing not yet in existence. time or place of payment. Even a future thing not existing at the time the contract is entered into may be the object of sale. the contract becomes ineffective and hence. 2. . for the full payment of the agreed purchase price. .sale is subject to the condition that the thing . rescissible. Rei spetae . so that if it does not.the sale of hope itself that the thing will come into existence. like warranty against eviction.produces effect even though the thing does not should exist. interest. provided it has a potential or possible existence. void Contract of Sale Distinguished from Contract to Sell . much less it quantity and quality. Kinds of a Contract of Sale 1. like conditions.contract relates to a thing which exists or is present – the hope or expectancy. penalty. that is. where it is agreed that the buyer will pay the price even if the thing does not eventually exist. unenforceable.
Contract of Sale Transfer of title: .vendor loses and cannot sold and delivered.cause of consideration is extinguishment of the debt (from the point of view of the offeror).there is greater freedom in the determination of . Ownership of vendor: . and the remedy is to exact fulfillment or to rescind the contract. casual or serious. Sale of goods by description occurs where the purchaser has not seen Sale of goods by sample the article sold and relies on the description given . the failure of which is not a breach.less freedom the price .remains with the seller until full payment of the agreed price. or the acquisition of title to the property Dation in Payment . of the contract but simply an event that prevents the obligation of the vendor to convey title from acquiring binding force.passes to the buyer upon delivery of the thing sold. Payment of ..cause or consideration is the price. with the understanding that the bulk want of identity is not apparent on inspection.giving of the price may generally end the obligation of the buyer .no pre-existing credit .full payment is a positive price: negative resolutory condition.gives rise to obligation .. or has seen the goods but the the sample.title remains in the vendor recover ownership of the thing until full payment of price. Contract to Sell .extinguishes obligation .the parties contracted solely with reference to him by the vendor.non-payment of the price is a .there is pre-existing credit .the vendor warrants that the thing . suspensive condition. actually or constructively until and unless the contract of sale itself is resolved and set aside. and the acquisition of the object offered (from the point of view of the creditor) in lieu of the original credit .the giving of the object in lieu of the credit may extinguish completely or partially the credit (depending on the agreement) .was like it. Sale Distinguished from Dation in Payment: Sale .
charater. However. and quality. 62 Phil. since sale is a consensual contract that is perfected by mere consent. in case the contract of sale should be covered by the Statute of Frauds. It may be in writing. sale of real property or an interest therein regardless of the price involved. and not to contracts which are totally consummated or partially performed [Vda. CFI of Cavite. IAC. 1585). e]. 1403]. It may even be inferred from the conduct of the parties. (a) (b) Under the Statute of Frauds (Art.) Form of Contract of Sale Generally. has as yet been made by both parties). otherwise. be rescinded. if the vendee shall have failed to pay two or more installments.. the contract cannot be enforced by action [see Art. Recto Law (Art. d. a. if one has been constituted. or by his agent. and (c) sale of property not to be performed within a year from the date thereof regardless of the nature of the property and the price involved. 1356). De Espiritu vs. 1484) – Remedies of Vendor in Sale of Personal Property Payable in Installments: (a) elect fulfillment upon the vendee’s failure to pay. oral. delivery and payment. Nonato vs. if the vendee shall have failed to pay two or more installments. . These remedies are alternative and are not to be exercised cumulatively or successively and the election of one is a waiver of the right to resort to the others [Pacific Commerial Co. 140 SCRA 255]. the following contracts must be in writing to be enforceable: sale of personal property at a price not less than P500.e. (Art. 1481. the law requires that the agreement be in writing subscribed by the party charged. 380. (b) cancel the sale. (b) acceptance and receipt of part of the goods (or things in action) sold and actual receipt of the same (Art. (c) foreclose the chattel mortgage.) of the Civil Code. and (c) payment or acceptance at the time some part of the purchase price. The Statute of Frauds is applicable only to executory contracts (where no performance. 1403 [2. 47 SCRA 354]. vs De la RAma.If the bulk of the goods delivered does not sold and to be delivered by him shall conform correspond with the description. i. (a) The Statute Frauds specifies three (3) ways in which contracts of sales of goods within its terms may be made binding: the giving of a memorandum. the contract may with the sample in kind. or partly in writing and party oral. a contract may be entered into in any form provided all the essential requisites for its validity are present (Art.
Espiritu. or when there has been a judicial separation of property (b) Guardian – as to the property of his ward (c) Agents – as to the property whose administration or sale has been entrusted to them. II. the following are the rights given to the buyer who has paid at least two (2) years of installments in case he defaults in the payment of succeeding payments (a) to pay without additional interest the unpaid installments due within the total grace period earned by him fixed at the rate of one-month grace period for every one year of installment payments made – this right shall be exercised by him only once in every five (5) years of the life of the contract and its extension. Persons Who Are Incapacitated to Enter Into a Contract of Sale 1. including residential condominium apartments. Relative Incapacity – where it exists only with reference to certain persons or class of property (Art. In transactions involving the sale of financing of real estate on installment payments. 37 Phil. is valid. and renunciations. and (b) if the contract is cancelled. The prohibition extends to sales by virtue of legal redemption. the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to 50% of the total payments made and. an additional 5% of every year but not to exceed 90% of the total payments made. IAC. 1490-1491). who can bind themselves. have the legal capacity to buy and sell. he must pay a reasonable price therefor. 67 SCRA 627]. The contract is therefore valid. CAPACITY TO BUY OR SELL Persons Who May Enter Into a Contract of Sale As a general rule. 3. Absolute Incapacity – pertains to persons who cannot bind themselves (a) Minor (b) (c) Insane or demented persons Deaf-mutes who do not know how to read and write Contracts entered into by a minor and other incapacitated persons arevoidable. (c) The buyer has the right to sell his right or assign the same before actual cancellation of the contract and to pay in advance any unpaid installment anytime without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property. when they pretended to have already reached their majority. This is in accord with the doctrine of estoppel[Mercado and Mercado vs. whether natural or juridical. see Layug vs. after 5 years of installments. while in fact they have not. [Sec. unless consent of the principal is given (d) Executors or administrators – as to the state under their administration . but the minor has the right to recover any excess above a reasonable value paid by him. all persons. (a) Husband and wife to each other – except when a separation of property was agreed upon in the marriage settlements. where the necessaries are sold and delivered to him (without the intervention of the parent or guardian). 2. However. compromises. 265]. Sale of real property by minors who have already passed the ages of puberty and adolescence and are now in the adult age. if any. RA 6552 or the Realty Installment Buyer Protection Act. and they cannot be permitted afterwards to excuse themselves from compliance with the obligations assumed by them or to seek their annulment.
there is no necessity to bring an action for annulment. to prevent fraud and undue and improper influence. OBLIGATIONS OF THE VENDOR Principal Obligations of the Vendor to transfer the ownership of the determinate thing sold (Art. 1487). the sale shall only be voidable because in such cases only private interests are affected. unless there is a stipulation to the contrary (Art. IV. if any. EFFECTS OF THE CONTRACT WHEN THE THING SOLD HAS BEEN LOST Where the thing is entirely lost at the time of perfection. transmits it by virtue of a just title to one who accepts the same. Delivery or Tradition Tradition or delivery is a derivative mode of acquiring ownership by virtue of which one has the right and intention to alienate a corporeal thing. The vendor need not be the owner of the thing at the time of perfection of the contract. to take care of the thing. the sale shall be null and void. Where the thing is only partially lost. delay on the part of the seller may be said to be sufficiently excused. or of the government-owned or controlled corporations. paying its proportionate price. to deliver the thing. 1547). There being no contract. to warrant against eviction and against hidden defects (Arts. 1495). 3 and 7 of the Constitution (h) (i) Unpaid seller having a right of lien or having estopped the goods in transitu Officer holding the execution or his deputy III. 1537). The defect can be cured by ratification by the seller. he has no right to demand payment of the price. 1495. 1459). The vendee-buyer is fact may ask for the rescission or resolution of the sale. with proper diligence (Art. Secs. the contract is inexistent and void because there is no object. pending delivery. to pay for the expenses of the deed of sale. the administration of which is entrusted to them (f) Judges and government experts who take part in the sale of the property and rights under litigation The prohibition is based on the fiduciary relationship (based on trust). The thing is lost when it perishes or goes out of commerce or disappears in such a way that its existence is unknown or it cannot be recovered. XII. in the condition in which they were upon the perfection of the contract (Art. as when it was the buyer who failed to supply the necessary credit for the transportation of the goods. With respect to (b) to (d). the vendee may elect between withdrawing from the contract and demanding the remaining part. it is sufficient that he has a right to transfer the ownership thereof at the time it is delivered (Art. If the seller promised to deliver at a stipulated period and such period is of the essence of the contract but did not comply with his obligation on time. 1163). (g) Aliens who are disqualified to purchase private agricultural lands under Art. public interests being involved therein. With respect to (e) and (f). If the failure of the seller to deliver on time is not due to his fault. with its accessions and accessories. .(e) Public officers and employees – as to the property of the State or any subdivision thereof.
Rights of an unpaid seller: 1. There can be no constructive delivery by means of a public instrument if there is a stipulation to the contrary. made by placing the titles of ownership in the hands of the vendee or lawyer. The execution of a deed or contract is only presumptive delivery. he cannot transfer ownership by constructive delivery. A right of stopping the goods in transitu in case of insolvency of the buyer. as tenant of the vendee). the goods must be in transit. Legal or Constructive (Arts. by execution of a public instrument. There must be the intention to deliver the thing for purposes of ownership. If a seller has an actual possession. 1501) – delivery of rights. (a) (b) (c) Requisites in constructive delivery before ownership may be transferred: Seller must have control over the thing. or by allowing the vendee to use his rights as new owner with the consent of the vendor. 2.. Rules of constructive delivery: 1. This involves the physical delivery of the thing and is usually done by the passing of a movable thing from hand to hand. 1498-1501) – through the execution of a public instrument Legal formalities – applies to real and personal properties. (d) the seller must either actually take possession of the goods sold or give notice of his claim to the carrier or other person in possession. Traditio brevi manu – the vendee already has the possession of the thing sold by virtue of another title as when the lessor sells the thing leased to the lessee. Traditio simbolica – to effect delivery. where the delivery is made through the execution of a public document. otherwise. credits or incorporeal real property. 1497) – the thing sold is placed in the control and possession of the vendee or his agent. can he put another in control? Buyer must be put under control. he has one (1) year within which to redeem the property. . Duty to Deliver at Execution Sale: a judgment debtor is not obliged to deliver right away. 3. (b) (c) the buyer must be insolvent. An Unpaid Seller is one who has not been pair or rendered the whole price or who has received a bill of exchange or other negotiable instrument as conditional payment and the condition on which it was received has been broken by reason of the dishonor of the instrument.g. Actual or Real (Art. the parties make use of a token symbol to represent the thing delivered. requisites: (a) the seller must be unpaid. Traditio longa manu – movable property is delivered by mere consent by the contracting parties if the thing sold cannot be transferred to the possession of the vendee at the time of the sale. Kinds of Delivery or Tradition 1. A lien on the goods or right to retain them for the price while in his possession 2. 2. Constitotum possessorium – the vendor continues in possession of the property sold not as owner but in some other capacity (e. 3. Quasi-Traditio (Art.
or (2) proceed with the contract. or title of the goods. vs Ferrer. and by which he promises or undertakes to insure that certain facts are or shall be as he then represents them. 6. the improvement shall inure to the benefit of the creditor. or by time. or improvement of thing before delivery 1. If the condition is in the nature of a promise that it should happen. When the thing deteriorates without the fault of the debtor. issued by the carrier or bailee. the obligation shall be extinguished. 3. Article 1544 has no application to lands not registered with the Torrens system.(e) (f) the seller must surrender the negotiable document of title. deterioration. If it is improved at the expense of the debtor. If it deteriorates through the fault of the debtor. quality. 5. patior jure (first in time. 2. the non-performance of such condition may be treated by the other party as a breach of warranty. or disappears in such a way that its existence is unknown or it cannot be recovered. Warranty is a statement or representation made by the seller of goods. the vendee who first takes possession in good faith. the creditor may choose between the rescission of the obligation and its fulfillment. If the thing is lost without the fault of the debtor. Rules as to preference of ownership in case of double sale 1. stronger in right) – knowledge by the first buyer of the second sale cannot defeat the first buyer’s right except when the second first registers in good faith the second sale. Inc. the impairment is to be borne by the creditor. waiving the performance of the condition. A right of resale 4. such party may either (1) refuse to proceed with the contract. with indemnity for damages in either case. CONDITION AND WARRANTIES Condition means an uncertain event or contingency on the happening of which the obligation (or right) of the contract depends. if is understood that the thing is lost when it perishes. If the property sold is immovable. 4. A right to rescind the sale Rules in case of loss. the ownership shall belong to: (a) the vendee who first registers the sale in good faith in the Registry of Deeds has preferred right over another vendee who has not registered his title even if the latter is in actual possession of the immovable property – governed by the principle prius tempore. if any. the vendee who presents the oldest title (who first bought the property) in good faith. . V. 25 SCRA 861]. the ownership shall be acquired by the vendee who first takes possession in good faith [Villa Rey Transit. he shall be obliged to pay damages. and the seller must bear the expenses of delivery of the goods after the exercise of the right. having reference to the character. he shall have no other right than that granted to the usufructuary. If the property sold is movable. (b) in the absence of registration. 3. If the obligation of either party is subject to any condition and such condition is not fulfilled. If the thing is lost through the fault of the debtor. 2. contemporaneously and as a part of the contract of sale. If the thing is improved by its nature. or goes out of commerce. and (c) in the absence of both registration and possession.
The object rise to redhibition. income or fruits if he has been ordered to deliver them to the party who won the suit against him. a defect in its so inconvenient and imperfect must be supposed that the buyer nature. that it must be supposed that would not have purchased it had and a minor defect does not five the buyer would not have he known of the vice. 5. there is no waiver on the part of the vendee. expenses of the contract. The vendor is exempted from the obligation to answer for eviction. costs of the suit. 1562) – that the seller guarantees that the thing sold is reasonably fit for the known particular purpose for which it was acquired by the buyer or. Consciente – the waiver is voluntarily made by the vendee without the knowledge and assumption of the risks of eviction. which renders its use impossible. 1151].an action instituted to avoid a . the vendee is so deprived by virtue of a final judgment . Intencionada – the waiver is made by the vendee with knowledge of the risks of eviction and assumption of its consequence. Manansala. where it was bought by description. 1555) 1. 2. 3. Implied warranty against hidden defects or unknown encumbrance (Art. Redhibitory action . 2. return of the value of the thing sold at the time of eviction. The vice or defect must constitute an Redhibition account of some vice or defect defect in the thing sold which in the thing sold. Rights of the vendee against the vendor in case eviction occurs (Art. 3. Essential elements of warranty against eviction 1.Implied warranty as to seller’s title (Art. or inconvenient and imperfect that it imperfection. and 5. the vendor shall pay only the value which the thing sold had at the time of eviction – this is a case of solution indebiti – the effect is to deprive the purchaser of the benefits mentioned in Nos.the avoidance of a sale on sale on account of some vice or Redhibitory vice or defect . 3. provided he did not act in bad faith [Andaya vs. 1548) – that the seller guarantees that he has a right to sell the thing sold and to transfer ownership to the buyer who shall not be disturbed in his legal and peaceful possession thereof. damages and interests and ornamental expenses if the sale was made in bad faith. 107 Phil. the judgment is based on a right prior to the sale or an act imputable to the vendor. the remedy is necessarily a redhibitory . 4.a defect in the article sold against which defect the seller is bound to warrant. 2. or so renders its use impossible. Kinds of waiver of eviction 1. that it is of merchantable quality. The mere purchased it had he known of is the rescission of the contract. If the waiver was only conscious. the vendee is deprived in whole or in part of the thing purchased. If absence of a certain quality in the vice. the vendor was summoned in the suit for eviction at the instance of the vendee. 4 and 5 of Article 1555. 4. 2. the object is to procure the return the thing sold which the vendee of a part of the purchase price thought it to contain is not paid by the vendee. of certain importance.
87 SCRA 349]. and expenses of the contract if paid by the vendee. Tanega. and tax hidden faults or defects in the thing sold. 1566). Doctrines of caveat venditor and caveat emptor Caveat venditor (Let the seller beware) . One thing is that is positively suffers from certain defects. and damages. Accion redhibitoria – to withdraw from the contract Accion quanti minoris – demand a proportionate reduction of the price. He is not made liable for damages VI.the vendor is liable to the vendee for any defect.b) he shall bear the loss because he acted in bad faith. Based on the principle that a sound price warrants a sound article. Pascacio. and (2) pay the price of the thing sold. he shall be obliged only to return: (a) (b) (c) (c) the price paid interest thereon. 591]. In such case. OBLIGATIONS OF THE VENDEE The vendee is obliged to (1) accept delivery. 1568) If the vendor was aware of the hidden defects (a) the expenses of the price paid the contract. 2. Caveat emptor (Let the buyer beware) .applies in sheriff’s sale. . the vendee has the right to recover: If the vendor was not aware of them..known as accion minoris orestimatoris. The following rules must be borne in mind: 1. 5 Phil. for there is no warranty of title or quality though he was not aware thereof (Art. sales of animals. Alternative remedies of the buyer to enforce warranty (Art. In contract of sale. even sales. because he is not guilty of bad faith. the vendor is not required to deliver the thing sold until the price is paid nor the vendee pay the price before the thing is delivered in the absence of an agreement to the contrary [La Font vs. in consequence of which the thing sold was lost. . with a right to damages in either case Effect of loss of thing sold on account of hidden defects (Art.on the part of the seller in such sales. .Requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the vendor’s title takes all the risks and losses consequent to such failure [Solvoso vs. 1567): 1.Also applies in double sales of property where the issue is who between two vendees has a better right to the property .
b) should he have reasonable grounds to fear such disturbance by a vindicatory action or by a foreclosure of mortgage. . 5. if only the time for payment of the price has been fixed. These rights do not exist in the following cases: (a) should there be a stipulation to that effect.accept the goods and set up the seller’s breach to reduce or extinguish the price. 1251). 1599) Remedies allowed to the buyer when the seller has been guilty of a breach of promise or warranty (Art. VII. If only the time for delivery of the thing sold has been fixed in the contract. 1598) Action by the buyer for rescission or damages for breach of warranty (Art. then the vendee is bound to accept delivery and to pay the price at the time and place designated. the vendee is bound to pay at the time and place of delivery. Both sides of the contract are enforced in the same litigation.accept the goods and maintain an action for damages for the breach of the warranty.2. 1599): 1 Recoupment . the vendee is required to pay even before the thing is delivered to him. or should the disturbance consist only of a mere act or trespass. or should the vendor have caused the disturbance or danger to cease. If there is no stipulation as to the time and place of payment and delivery. 1524). ACTIONS FOR THE BREACH OF CONTRACT OF SALE OF GOODS Goods – include all chattels personal but not things in action or money of legal tender in the Philippines. 1596) Action by the seller for rescission of the contract for breach thereof (Art. The buyer (defendant) does not seek to avoid his obligation under the contract but seeks to enforce the seller’s (plaintiff’s) obligation and to deduct it from his liability for the price for breach of warranty. 1597) Action by the buyer for specific performance (Art. Actions available for breach of the contract of sale of goods: Action by the seller for payment of the price (Art. 1595) Action by the seller for damages for non-acceptance of the goods (Art. as to the place of delivery. 3. Instances when the vendee may suspend the payment of the price: a) should he be disturbed in the possession or ownership of the thing sold. it shall be made wherever the thing might be at the moment the contract was perfected (Art. In the absence also of stipulation. The term includes growing fruits or crops. the vendee is entitled to delivery even before the price is paid by him (Art. 2 Set-off or Counterclaim for damages . or (b) (c) (d) should the vendor give security for the return of the price.The theory of recoupment is that the seller’s damages are cut down to an amount which will compensate him for the value of what he has given. If stipulated. 4.
(b) redemption proceeds from law. condonation. Legal Redemption (Arts. and fulfills other stipulations which may have been agreed upon. by the person named in the statute – the statute does not make actual ownership at the time of sale or redemption a condition precedent. 339]. 1484. except for the source of the right – created. 1619-1623) It is the right to be subrogated. therefore. 1567. This remedy is not available in the following cases: (a) (b) (c) if the buyer accepted the goods knowing of the breach of warranty without protest. (b) its nullity cannot affect the sale of itself since the on a bare statutory privilege to be exercised only latter might be entered into without said stipulation [Alojado vs. if he fails to notify the seller within a reasonable time of his election to rescind. etc. legal Phil. Villaroman. EXTINGUISHMENT OF SALE Classification of modes or causes of extinguishing the contract of sale: Common – those causes which are also the means of extinguishing all other contracts like payment. 1601-1618) It is the right which the vendor reserves to himself. any other legitimate or dation in payment. upon the same terms and conditions stipulated in the contract. and 1591). 1556. Extra-special – conventional redemption and legal redemption. 1560. but by virtue conventional redemption arises from the of an express contract[Ordoñez vs. to reacquire the property sold provided her returns to the vendee the price of the sale. or by any other transaction payments made therefore and the necessary and whereby ownership is transmitted by onerous useful expenses made on the thing sold. loss of the thing. Conventional Redemption (Arts. 1542. and 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. Nature: (a) Nature: (a) identical with conventional title.rescind the contract of sale by returning or offering the return of the goods. and recover the price or any part thereof which has been paid. 1540. not by mandate of the law. 1539. 1231). 1532. 116]. it is purely contractual because it is a right redemption. it is not predicated on proprietary right but it is an accidental stipulation and. the buyer may still rescind the sale.3 Action for damages – refuse to accept the goods and maintain an action for damages for the breach of the warranty. Lim Siongco. 51 Phil. VIII. the . 78voluntary agreement of the parties. Special – those causes which are recognized by the law on sales (those covered by Arts. But where the injury to the goods was caused by the very defect against which the seller warranted. 4 Rescission . (Art. in the place of one who acquires a thing by purchase the expenses of the contract.
Tan vs. 172 SCRA 660]. CA 48 OG 2230]. redemption by mortgagor after mortgaged property has been judicially foreclosed and sold – period is 90 days but before confirmation of sale by the court (in all cases of extra-judicial foreclosure sale. Instances of Legal Redemption: perfection of the contract for if the right to repurchase is agreed upon afterwards. Aguilar. 582]. 14 Phil. 80]. 20 SCRA 186]. those found in Arts. (2) repurchase by homesteader of homestead redemption necessarily is theowner of the property sold and not any third party [Gallar vs. 206 SCRA 52]. (b) (1) Under special laws: redemption by owner of real property sold for delinquent taxes – period is within 1 year from date of sale. Gaza. (g) it is reserved at the moment of the (a) Under the Civil Code. 117 the will of the vendor. that the vendor has reserved for himself [Ocampo vs.(c) it is a real right when registered. period is 12 months. there is only a promise to sell which produces different rights and effects and is governed by Art. and 1088. (i) it gives rise to reciprocal obligationthat of sold under the Public Land Act – period is 5 years [Tupas vs. 61 Phil. and that of delivering the redemptioner or real property sold on execution – property and executing a deed of sale therefore. 132 SCRA 593]. property[Magno vs. the right of ownership acquired by the benefit and convenience of the redemptioner to vendee is extinguished[Aquino vs. not an obligation. because it right following the person and not the binds third persons [Mortera vs. (h) the person entitled to exercise the right of 1620-1622. Deal. (4) 12 Phil. Martinez. redemption by judgment debtor or returning the price of sale and other expenses. Husain. 1634. (f) it is a power or privilege. CA. (d) it is a resolutory condition because when (c) it is in the nature of a mere privilegecreated partly for reason of public policy and partly for the exercised. CA. 63 Phil. 541]. on (3) the part of the vendor. 1479 [Diamante vs. on the part of the vendee [Pandaquilla vs. (5) redemption by an agricultural lessee of landholding sold by the landowner – period is 180 days from notice in writing which shall be served by the vendee on all lessees affected by DAR upon the registration of the sale. (e) it is potestative because it depends upon afford him a way out of what might be a disagreeable or inconvenient association into which he has been thrust – it is intended to minimize co-ownership [Basa vs. SCRA 128. 663]. Viola and Sotto. Potenciano. . the mortgagor may redeem the property within 1 year from the date of registration of the sale). Damasco.
2 There must be a pending litigation at the time of the assignment. the mortgagor has a right to redeem [Basilio vs. interest thereon. when the vendor remains in possession as lessee or otherwise. The right cannot be exercised if the transaction is exchange or donation. CA. Dacion en pago is the transmission of the ownership of a thing by the debtor to the creditor as the accepted equivalent of the performance of an obligation. 208 SCRA 496]. 6. but shows the intention of the parties to make the property subject of the contract as security for a debt and contains nothing impossible or contrary to law [Cachola vs. Encarnacion. 3 The debtor must pay the assignee (a) the price paid by him. when the price of a sale with right to repurchase is unusually inadequate. 4.An equitable mortgage is one which lacks the proper formalities. Instances when conventional redemption is presumed to be an equitable mortgage: 1. 5. 3. loan. when there is a doubt as to whether the contract is a contract of sale with right or repurchase or an equitable mortgage. The concept of sale must be understood in its restricted sense. form of words. If the seller does not repurchase the property uponThe mortgagor does not lose his interest in the the very day named in the contract. (b) the judicial costs incurred by him. and after the maturity of the debt secured the debt. Requisites before legal redemption can be exercised: 1 There must be a sale or assignment of credit. 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. 360]. usually a time. by the mortgage and before foreclosure. 2. Pacto de retro Mortgage Ownership is transferred but the ownership isOwnership is not transferred but the property is subject to the condition that the seller mightmerely subject to a charge or lien as security for recover the ownership within a certain period ofthe compliance of a principal obligation. neither does the vendor have anymortgage if he wishes to secure a perfect title right to redeem the property after the maturity ofthereto. 5 Phil. and (c) the interests on the price from the date of payment. he loses allproperty if he fails to pay the debt at its maturity. when the vendor binds himself to pay the taxes on the thing sold. in any other case where it may be fairly inferred the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. The complaint by the assignor must have been filed and answered by the creditor before the sale of the credit. There is no obligation resting upon the purchaserIt is the duty of the mortgagee to foreclose the to foreclose. when the purchaser retains for himself a part of the purchase price. or other requisites prescribed by law for a mortgage. . and 7. 4 The right must be exercised by the debtor within 30 days from the date the assignee demands (judicially or extra-judicially) payment from him.
quantity. the assignment is valid although it appears only in a private document so long as the law does not require a specific form for its validity. and the consent is the agreement of the parties to the assignment of the credit or right at the agreed price. X. it is really a sale. The contract is perfected from the moment there is a meeting of the minds upon the things promised by each party in consideration of the other. Subrogation – the change in the person of the creditor with the credit being extinguished. Thus. and quality. Alvarez. the former acquiring the credit subject to defenses (fraud. . Substitution – the change of a new debtor for the previous debtor with the credit remaining in the same creditor. ASSIGNMENT OF CREDITS AND OTHER INCORPOREAL RIGHTS Assignment of credit – a contract by which the owner of a credit transfers to another his rights and actions against a third person in consideration of a price certain in money or its equivalent (Art. He cannot acquire greater rights than those pertaining to the assignor. It is consummated from the time of mutual delivery by the contracting parties of things they promised. the subject matter is the credit or right assigned. 28]. It may be done gratuitously. 286 SCRA 594]. etc. and commutative or aleatory contracts. and in case it involves real property. [Koa vs CA. prescription.Redemption 1 Pre-emption The sale to a third person has already beenThe sale to a third person has not yet been perfected perfected Narrower in scope – may be exercised only where there is a prospective resale of a small piece of urban land originally bought by the prospective vendor merely for speculation 2 Has a much broader scope 3 Directed against the third person who bought theDirected against the prospective vendor who is property about to resell the property 4 Effect is to extinguish a contract that has alreadyEffect is to prevent the birth or perfection of a been perfected or even consummated contract IX. Agency – involves representation. it is indispensable that it be recorded in the Registry of Deeds [Lopez vs. not transmission wherein the agent acts for the principal. the assignment must appear in a public instrument. Renunciation – the abandonment of a right without a transfer to another. BARTER OR EXCHANGE Barter – a contract whereby one person transfers the ownership of non-fungible things to another with the obligation on the part of the latter to give things of the same kind. Assignment of credit and other incorporeal rights are consensual. 1458). 219 SCRA 541]. onerous. The assignee is deemed subrogated to the rights as well as to the obligations of the seller. CA. 3 The assignee merely steps into the shoes of the assignor. The assignment involves no transfer of ownership but merely effects the transfer of rights which the assignor has at the time to the assignee [Casabuena vs.) available to the debtor against the assignor. bilateral. 9 Phil. the consideration is the price paid for the credit or right. Binding effects of assignment: 1 As between the parties. 2 To affect third persons. but if done onerously.
of the fixtures and equipment used in the business of the vendor. or assignor. 1639). The right to recover is. transferring title to a any stock of goods. THE BULK SALES LAW Purpose of the law (Act No. wares. Viuda de Oller. with the correct amount due and to become due or which contains any false or untrue statement. A sale and transfer in bulk under the Bulk Sales Law is any sale. knowingly or willfully making or delivering a statement as required by the Act which does not include the names of all the creditors of the vendor. transfer. XI. however. and 2. or presumptively so. or (b) of all or substantially all. 933]. etc. by record or otherwise.Effect where the giver is not the lawful owner of the thing delivered: the aggrieved party cannot be compelled to deliver the thing he has promised. merchandise. 3952) is to prevent the defrauding of creditors by the secret sale or disposal or mortgage in bulk of all or substantially all of a merchant’s stock of goods. of the business or trade. such as the demanding and the giving of a list of creditors. mortgage. provisions. [Biagtan vs. unless specified formalities are observed. or materials otherwise than in the ordinary course of trade and the regular prosecution of the business. 62 Phil. or assignment – (a) of a stock of goods. the giving of actual and constructive notice to such creditors. He is entitled to claim damages (Art. wares. or (c) of all or substantially all. Remedy in case of eviction: the injured party is given the option to recover the property he has given in exchange with damages or only claim an indemnity for damages. mortgagor transferor. 1640). provisions or materials sold in bulk without consideration of for a nominal consideration only. merchandise. and the making of an inventory. subject to the rights of innocent third persons (Art. The general scheme is to declare such bulk sales fraudulent and void as to creditors of the vendor. Acts punished by the law: 1. -–O–- .
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