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Board Subjects Law on Sales Law on Agency Pledge, Mortgage, Antichresis &Chattel Mortgage - Arts. 1458-1637 - Arts. 1868-1932 - 180 articles 65 articles
- Arts. 2085-2141 57 articles ______________ 302 articles - Articles 1935-1961 -Articles 1962-2008 -Articles 2045-2081 27 articles 47 articles 37 articles _____________ 111 articles
Loan Deposit Guaranty
- Republic Act No. 6552 Realty Installment Buyer Protection Act ( Maceda law) - Presidential Decree No. 957 – Subdivision and Condominium Buyer Protective Decree - Consumer Act of the Philippines ( R.A. 7394) - Pawnshop Regulation Act - Act No. 1508 -SC Circulars on procedure for foreclosure (real and chattel mortgages)
Historical Background of the Law on Sales Prior to the adoption of the New Civil Law ( Republic Act No. 386), Philippine laws on sales were based on the Spanish Civil Code of 1887 and the Spanish Code of Commerce of 1885. In 1947, however, a Code of Commission was created to draft and update the Civil Code. Sometime in December 1947, the Commission completed its work and the New Civil Code took effect on August 30, 1950. Provisions on sales of the Spanish Code of Commerce were repealed and the distinction between civil and commercial laws was thus eliminated. Instead the Commission had adopted majority of the provisions of the American Uniform Sales Act which was adopted by the National Conference of Commissioners on the Uniform State Laws in 1907. The primary objective of this conference was to eliminate the diversities in the law of sales which existed among different States in America resulting to divergent interpretations of sales contracts by the courts. The Uniform Sales Act was largely declaratory of the common law rules which had been developed and generally followed by different states in America at the time it was drafted. It was reported by the Code of Commission for the New Civil Code that the Uniform Sales Act was in force n 31 states and territories of the American Union and had been adopted by our Civil code with some modifications to suit the principles of Philippine Law. The Philippine Law on Sales today as covered by title VI, Articles 1458 to 1637 ( 174 articles) of the New Civil Code is a blend of Civil Law and Common law principles.
Origin of the contract of sale - The contract of sale has its earliest known origin in Roman Law. The name itself of the Roman “venditio’ or vendito or sale has identified in the Italian term “ vendita, the Spanish “venta” and the French “vente” The Tagalog for sale is “bilihan”
Contract of Sale Defined: Sale is a contract where one party (seller or vendor) obligates himself to transfer the ownership of and to deliver a determinate thing, while the other party (buyer or vendee) obligates himself to pay for said thing a price certain in money or its equivalent. (Art. 1458, Civil Code) Parties: Seller/Vendor – one who obligates himself to transfer ownership and deliver a determinate thing. Buyer/ Vendee – one who obligates himself to pay a price certain in money or its equivalent. Essential Characteristics of the Contract of Sale: a) Consensual (as distinguished as real), because the contract is perfected by mere consent; Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. (1254a) Art. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. Art. 1315. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law b) Bilateral reciprocal - because both parties are bound by obligations dependent upon each other. Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfilment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfilment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. (1124)
c) Onerous, because to acquire the rights, valuable considerations must be given. d) Commutative, as a rule, because the values exchanged are almost equivalent to each other. (NOTE: By way of exception, some contracts of sale are aleatory, that is, what one receives may in time greater or smaller than what he has given. Example: The sale of genuine sweepstakes ticket.) e) Principal (as distinguished from an accessory contract), because for the contract of sale to be validly exist, there is no necessity for it to depend upon the existence of another valid contract. f) Nominate because the Code refers to it by a special designation or name, that is the contract of sale. –compare it to innominate contracts referred to under Article 1307. Art. 1307. Innominate contracts shall be regulated by the stipulations of the parties, by the provisions of Titles I and II of this Book, by the rules governing the most analogous nominate contracts, and by the customs of the place. Elements of the Contract of Sale: a) Essential elements (those without which there can be no valid sale) - Consent or meeting of the minds, that is consent to transfer ownership and deliver the determinate object in exchange for the price. When is there meeting of the minds? Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer. Acceptance made by letter or telegram does not bind the offerer except from the time it came to his knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer was made, Parties must have legal capacity. Art. 1239. In obligations to give, payment made by one who does not have the free disposal of the thing due and capacity to alienate it shall not be valid, without prejudice to the provisions of Article 1427 under the Title on "Natural Obligations." b. Determinate subject matter (generally, there is no sale of generic thing, moreover, if the parties differ as to the object, there be no meeting of the minds). c. Price certain in money or its equivalent (this is the cause or consideration) (The price need not be in money) a) Natural elements (those which are inherent in the contract, and which in the absence of any contrary provision, are deemed to exist in the contract) - Warranty against eviction, deprivation of the property bought) - Warranty against Hidden Defects b) Accidental elements (those which may be present or absent in the stipulation, such as the place or time of payment, or the presence of conditions) Art. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order, or public policy. Stages in the Contract of Sale: a) Generation or Negotiation b) Perfection - Meeting of the Minds c) Consummation - when the object is delivered and the price is paid. Kinds of Sales a) As to the subject matter: -sale of real property -sale of personal property b) As to the value of things exchanged: -Commutative -Aleatory c) As to whether the object is tangible or intangible: - Sale of property (tangible or corporeal) - Sale of Rights (Assignment of a right or a credit, or some other intangibles such as copyright, trademark or goodwill) (NOTE: If the object is tangible, it is called a chose in possession; if the object is intangible, as in the case of a right, it is chose in action. d) As to the validity or defect of the transaction: -valid sale -rescissible sale -voidable sale -unenforceable sale -void sale e) As to the presence or absence of conditions: -Absolute Sale (no conditions imposed) -Conditional Sale (As when there is a sale with a pacto de retro, a right to repurchase or redeem; or when there are suspensive conditions, or when the things sold merely possess potential existence, such as sale of future harvest of a designated parcel of land.) f) As to the legality of the object: -Sale of a licit object -Sale of an illicit object g) As to whether wholesale or retail: - Wholesale, if to be resold for a profit the goods being unaltered when resold, the quantity being large. - Retail, if otherwise h) As to proximate inducement for the sale: - Sale by description - Sale by sample - Sale by description and sample (Art.1481) i) As to when the price is tendered: - Cash sale - Sale on the installment plan Sale Distinguished from Dation in Payment SALE DATION IN PAYMENT 1. There is no pre-existing credit. 1. There is a pre-existing credit.
2. Give rise to an obligation.
1. Extinguishes obligations.
3. The cause or consideration here is 3. The cause or consideration here, the price, from the viewpoint of from the viewpoint of the person the seller; or of the obtaining of offering the dation, is the the object from the viewpoint of extinguishing of his debt; from the the buyer. viewpoint of the creditor is the acquisition of the object offered in lieu of the original credit. 4. There is greater freedom in the 4. There is less freedom in determination of the price. determination of the price the
5. The giving of the price may 5. The giving of the object in lieu of generally end the obligation of the the credit may extinguish buyer. completely or partially the credit depending on the agreement. 8. Difference between a Contract of Sale and a Contract to Sell In a Contract of Sale, the non-payment of the price is a resolutory condition, that is the contract of sale may by such occurrence put an end to a transaction that once upon a time existed.; In a Contract to Sell, the payment in full of the price is a positive suspensive condition. Hence if the price is not paid, it is as if the obligation of the seller to deliver and to transfer ownership never became effective. In the Contract of Sale, title over the property generally transfer to the buyer upon delivery; in the Contract of Sell, ownership is retained by the seller, regardless of the delivery and it will not pass until full payment of the price. In a contract of Sale, after delivery has been made, the seller has lost ownership and cannot recover it unless the contract is resolved or rescinded. In a Contract to Sell, since the seller retains ownership, despite delivery, he is enforcing the contract if he seeks to oust the buyer for failure to pay. "A" agrees to sell a sewing machine to "B" for P 4,000 in cash, and places the machine aboard the truck of "B", while "B" goes home to fetch money. Before "B" returns, "C" appears and claim ownership of the sewing machine, exhibiting a document signed by "B" selling the machine to "C". A rejects "C's" claim alleging that he is still the owner. Decide with reasons. Answer: It is submitted that the claim of "A" that he is still the owner of the sewing machine is correct. While it is true that there is already a perfected contract of sale between "A" and "B" and that apparently, there is already an actual delivery when the former placed the sewing machine onboard the truck of the latter, nevertheless, such delivery did not vest ownership thereof in the vendee. In other words, we have here a simple case of reservation of the vendor of his right over the thing sold. That this can be done expressly or impliedly. In the case at bar, the agreement between "A" and "B" is that the sale must be in cash. Hence, it can be easily inferred that at the precise moment while "A" was waiting for "B" return with the P 4,000 purchase price, which the latter was supposed to fetch in his house, his intention, in spite of actual delivery, was to reserve ownership in himself and to vest such ownership in the vendee only upon the actual payment of the purchase price. Beside we have here a clear case of a Contract to Sell. Well-settled is the rule that in a Contract to Sell, as distinguished from a Contract of Sale,
ownership is reserved to the vendor and not to pass to the vendee until full payment of the purchase price. Art. 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. The object of Sale must be LICIT and the Vendor must have the right to transfer ownership at the time the object is delivered. (Art. 1459) * Things may be illicit or unlawful, per se (of its nature) Example: Sale of human flesh for human pleasure) or per accidens (made illegal by provision of the law). Example is sale of land to an alien. * As to transfer of ownership, it is essential for a seller to transfer ownership (art. 1458) and therefore the seller must be the owner of the object sold. This stems from the principle that nobody can dispose of that, which does not belong to him - Nemo dat quad non habet. But although the seller must be the owner, he need not be the owner at the time of the perfection of the contract. It is sufficient that he is the owner at the time the object is delivered otherwise he may be held liable for breach of warranty against eviction. Be it noted that the contract of sale by itself, is not a mode of acquiring ownership. The contract transfers no real right, it merely causes certain obligation to arise. Art. 1460. A thing is determinate when it is particularly designated or physical segregated from all other of the same class. The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being made determinate without the necessity of a new or further agreement between the parties. Art. 1347. All things which are not outside the commerce of men, including future things, may be the object of a contract. All rights which are not intransmissible may also be the object of contracts. No contract may be entered into upon future inheritance except in cases expressly authorized by law. All services which are not contrary to law, morals, good customs, public order or public policy may likewise be the object of a contract. (1271a) Art. 1348. Impossible things or services cannot be the object of contracts. (1272) Art. 1349. The object of every contract must be determinate as to its kind. The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties. Meaning of object – as the thing, right or service, which is subject matter of the obligation, which is created or established. Requisites for a valid object: a. It must be within the commerce of man in other words susceptible of appropriation and transmissible to one person to another. b. The object must real and possible, meaning it should exist at the moment of the celebration of the contract or at least, it can subsequently exist or in the future; c. The object should be licit, it should not be contrary to law, morals, good customs, or public order and public policy and; d. The object should be determinate, or at least, possible of determination as to its kind.
IN A CONTRACT OF SALE, THE OBJECT IS ONLY THINGS AND RIGHTS. SERVICES CANNOT BE SOLD. IT CAN HOWEVER BE LEASED SUCH AS IN THE CASE OF CONTRACT OF LEASE OF SERVICES OR EMPLOYMENT. Sale of rights is governed by ASSIGNMENT OF CREDITS AND OTHER INCORPOREAL RIGHTS (Arts. 1624 to 1635) The object of the sale must be determinate, that is specific, but it is not essential really that at the time of perfection, the object be already specific. It is sufficient that it be capable of being determinate without need of any new agreement. Thus, there can be a sale of 20 kilos of sugar of a named quality. However in the viewpoint of risk or loss, not until the object has really been made determinate can we say that the object has been lost for as is well known, generic things cannot be lost." Art. 1461. Things having a potential existence may be the object of the contract of sale. The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence. The sale of a vain hope or expectancy is void. Things of potential Existence may be an object of sale. This is a future thing that may be sold. Example: "All my rice harvest next year." Note however that future inheritance cannot be sold, however. (Art. 1347, par. 2, Civil Code) Other examples of things possessed of a potential existence: a) Young animals not yet in existence or still ungrown fruits; b) The wine that a particular vineyard is expected to produce; c) Expected goodwill of a business Sale of expected thing and sale of mere hope or expectancy). Art. 1461 Sale of expected thing (Emptio Rei Speratae) Sale of hope itself (Emptio Spei) NOTE: If the expected thing in (a) does not materialize, the sale is not effective. In the second, it does not matter whether the expected thing materialized or not; what IS IMPORTANT IS THAT THE HOPE ITSELF VALIDLY EXISTED. The first deals with future thing - that which is expected; the second deals with the present thing certainty the hope or expectancy already exist. Example of Emptio Spei: Sale of a valid sweepstakes ticket. Whether the sweepstake ticket wins or not, the sale is valid. NOTE: If the hope or expectancy itself is in vain, the sale is itself VOID. Be it noted that this is not an aleatory contract for while in aleatory contract there is an element of chance, here there is completely no chance. Example : Sale of a losing ticket for a sweepstake already drawn. Graphic Distinction between emptio speratae & emptio spei Point of Distinction Emptio Rei Speratae Emptio Spei Object of Sale Things having potential There is hope or existence expectancy Existence of Condition Conditional Absolute Validity of Contract of Sale Valid Valid as long as the sale is not vain hope or expectancy Effect of failure of object Contract become It does not invalidates sale to come into existence. ineffective
Art. 1462. The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured, raised, or acquired by the seller after the perfection of the contract of sale, in this Title called "future goods."
There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which may or may not happen. Goods may be future or existing goods. The New Civil Code enumerates different kinds of future goods: a) Existing Goods which may be either be owned or possessed by the seller; and b) future goods having potential existence, when may come to existence either by: (1) those still to be manufactured, (2) raised or (3) those acquired by the seller after the perfection of the contract. Art. 1462 c) Sale of goods the acquisition of which depends upon a contingency is valid.
Art. 1463. The sole owner of a thing may sell an undivided interest therein. (n) An undivided Interest may also be sold. Art 1463. Notwithstanding the fact that an object may be divisible, the owner thereof has the perfect right to dispose of the same as a whole as a natural consequence of ownership or he may sell only a portion of that entire object if he be the owner only of a portion thereof. Art. 1464. In the case of fungible goods, there may be a sale of an undivided share of a specific mass, though the seller purports to sell and the buyer to buy a definite number, weight or measure of the goods in the mass, and though the number, weight or measure of the goods in the mass is undetermined. By such a sale the buyer becomes owner in common of such a share of the mass as the number, weight or measure bought bears to the number, weight or measure of the mass. If the mass contains less than the number, weight or measure bought, the buyer becomes the owner of the whole mass and the seller is bound to make good the deficiency from goods of the same kind and quality, unless a contrary intent appears. Sale of undivided share of a specific mass. The subject matter of the sale is incorporeal right. (Act 1501) Meaning of fungible goods – It means goods of which any unit is, from its nature or by mercantile usage, treated as the equivalent of any other unit, Sec. 76 of the US Uniform Sales Act). It includes movable substances or goods that are replaceable distinguishable as to undivided parts in quantity. Effect of sale – The owner of a mass of goods may sell only an undivided share thereof, provided the mass is specific or capable of being made determinate. (Art. 1460) (a) By such sale, the buyer becomes a co-owner with the seller of the whole mass in the proportion in which the definite share bought bears to the mass. It must follow that the aliquot share of each owner can be determined only by the measurement of the entire mass. (b) If later on it be discovered that the mass of fungible goods contain less than what was sold, the buyer becomes the owner of the whole mass and furthermore, the seller shall supply whatever is lacking from goods of the same kind and quality, subject to any stipulation to the contrary. Art. 1465. Things subject to a resolutory condition may be the object of the contract of sale. Also things subject to a resolutory condition may be sold. Art. 1465 A resolutory condition is that the happening of which depends on the extinction of the obligation. In other words, a resolutory condition is that which puts an end to an obligation.
So long as the object of the sale is licit or lawful and the vendee has the right to transfer ownership thereof at the time it has to be delivered, it is a valid object of such sale, even if it be subject to a resolutory condition. Example is pacto de retro sale. SUMMARY Requisites in order that a thing may be the object of sale: (1) The thing must be existing, or at least, have a future or contingent existence (Arts. 1461, 1462, 1465); (2) It must be determinate or determinable by description or segregation (Art. 140); (3) It must be licit or legal (Art. 1459) (4) The vendor must have real right to transfer ownership of the thing at the time it is delivered (Art. 1459) Objects of Contract of Sale: The following may be the objects of sale: (a) Things having potential existence (Art. 1461, NCC); (b) Things that are existing or to be manufactured, raised or acquired in the future or future goods (Art. 1462, NCC) (c) Those whose acquisition by the seller depends upon contingency which may or may not happen (Art. 1462, NCC); (d) Things subject to a resolutory condition (Art. 1465) Art. 1466. In construing a contract containing provisions characteristic of both the contract of sale and of the contract of agency to sell, the essential clauses of the whole instrument shall be considered Distinction between a Contract of Sale and An Agency to Sell (Art. 1466) CONTRACT OF SALE AGENCY TO SELL 1. In contract of sale, the buyer pays the 1. In an agency to sell, the agent delivers price. the price which in turn he got from his buyer; 2. In sale, the buyer after delivery 2. The agent who is supposed to sell does becomes the owner; not become the owner, even if the property has been delivered to him; 3. In sale, the seller warrants 3. The agent who sells assumes no personal liability as long as he acts within his authority and in the name of the principal. Graphic Distinction between sale and agency to sell Point of Distinction Contract of Sale Governing Law Law on Sales Objections created The obligation of vendor in a contract of sale is to deliver the thing sold and the buyer to pay the price.
Contract of Agency Law on Agency The obligation of the agent in the agency to sell is to render account and deliver the proceeds to the principal who in turn should pay agent commission. Existence of trust and Unnecessary because it Necessary because it is the confidence between parties. does no affect the contract. basis of the contract. Illustrative (Decided) Cases: Case I
X Co. granted to A the exclusive right to sell in the Visayas a certain number of beds which the company was manufacturing at the invoice price of the beds in Manila, with a discount of 20%, the price to be paid at the end of 60 days. What contract is perfected - a contract of sale or a contract of agency to sell? ANSWER: The contract perfected here is a contract of sale. The essential features of sale are present in this case. There is the obligation on the part of X Company to supply the beds and the obligation on the part of A to pay the purchase price. These features exclude the legal conception of a contract of agency to sell where the agent receives the thing in order to sell it without paying the price but with the obligation to deliver to the principal the price which he may have obtained from sale of the thing to third person, then if he does not succeed in selling it, he returns it. In the contract between X Co., and A, the latter, on receiving the beds, was necessarily obliged to pay the price within the term fixed, without any other consideration and regardless as to whether he had or had not sold the beds. Case II In a case where the consignor or firm delivers goods to a distributor for resale to customers, retaining the ownership of such goods, and the price and term are still subject to the control of the firm, but with the understanding that the distributor is not the agent or legal representative of the firm for any purpose whatsoever, what kind of contract was perfected - a contract of sale or a contract of agency to sell? Explain. ANSWER: The contract is still a contract of agency to sell. Since the company retained ownership of the goods, even as it delivered possession to the dealer for resale to customers, the price terms of which were subject to the company's control, the relationship between the company and dealer is one of agency. Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. Contract of Sale as against Contract for a Piece of Work: By the contract for a piece of work, the contractor binds himself to execute a piece of work for the employer (e.g., to construct a house) in consideration of a certain price or compensation. The contractor may either employ his labor or skill, or also furnish the material. (Art. 1713.) A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured especially for the customer and upon his special order (e.g. dress made on the basis of the body measurement of the customer) and not for the general market, it is a contract for a piece of work. (Art. 1467) Graphic distinction between contract of sale and contract of piece of work Point of Distinction Contract of Sale Contract of Piece of Work Governing Law Arts. 1458-1637, NCC Arts. 1713 -1731, NCC Obligations of vendor Delivery of the object Delivery of object manufactured on ordinary manufactured specially for course of business the customer. Existence of special order Special order of customers Special order of customer is of customers not necessary necessary. Applicability of Statute of Applicable Not applicable Frauds
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. Rules to determine whether contract is sale or barter. In a contract where the consideration is partly money and partly goods, the following rules shall apply: (a) the intention of the parties must be determined; (b) If the intent is not clear, then apply the following rules: 1. If the sold thing is more valuable than money, the contract is barter; 2. If the money and the thing are equal value, the contract is sale; 3. If the thing is less valuable than money, the contract is a contract of sale (Art. 1468, NCC) Note: Meaning of contract of barter or exchange: One of the parties binds himself to give one thing in consideration of the other's promise to give another thing. (Art. 1638) In contrast to the contract of sale, the vendor gives a thing in consideration for a price. Graphic distinction between contract of sale and contract of barter Point of Distinction Contract of Sale Contract of Barter Governing Law Arts. 1458-1637, NCC Arts. 1638-1641, NCC Consideration A price certain in money or Non-fungible things (Art. its equivalent 1954)
Rules on Cause and Consideration: 1. Meaning of Cause or consideration – the essential reason, which moves the contracting, parties to enter into the contract. The immediate, direct or most proximate reason, which explains and justifies the creation of an obligation through the will of the contracting parties. 2. Difference between cause and motives: - The cause is the direct or approximate reason of a contract, whereas the motives are the indirect or remote reasons. - The cause is the objective or juridical reason of a contract, whereas the motives are the psychological or personal reasons; - The cause for a certain contract is always the same, whereas the motives will differ or vary depending upon who are the parties; - The cause can affect the validity of a contract, whereas the motives cannot. 3. Requisites of a valid cause: - cause should be in existence - cause should be licit or lawful and - cause should be true Presumption in cause: Under Article 1354 - the law presumes that a contract has an existing and lawful cause and consideration. Thus, though cause is not stated in the contract, it is presumed to exist and is lawful, unless the debtor proves otherwise. This is only a disputable presumption. 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. 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. Nature/Requisites for Cause Requisites of price in a contract of sale: (a) The price must be in money or its equivalent (Art. 1458) (b) It must be certain or ascertainable (Art. 1469) (c) It must be real, i.e., not simulated, (Art. 1471) Meaning of a price certain:
(a) The parties have fixed or agreed upon a definite amount; or (b) It be certain with reference to another thing certain (See Art. 1472), as where the buyer agrees to pay the price as indicated in the invoices; (c) The determination of the price is left to the judgment of a specified person or persons (Art. 1469) The last two cases are applicable only when no specific amount has been stipulated by the parties. 18. Rules if price is to be determined by a third person: (a) The price fixed by the third person is binding except when he acts in bad faith or by mistake; (b) In such case, the courts may fix the price; (c) If the third person is unable or unwilling to fix the price, the contract shall be inefficacious (without effect), unless the parties subsequently come to an agreement ; and (d) If the third person is prevented from fixing the price by the fault of the seller or buyer, the party not in fault may choose between rescission and fulfillment with damages in either case. (Art. 1469) The fixing of the price may not be left to the discretion of one of the contracting parties, as it cannot be said that there is meeting of minds upon the fixed price. (Art. 1308) But if the other accepts price fixed, the sale is
If the price cannot be determined, the contract is inefficacious. However, if the thing or any part thereof has been delivered to and appropriated by the buyer, he is under obligation to pay reasonable price thereof. (Art. 1474) 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) Effect of Gross Inadequacy of Price: It does not affect the contract of sale except when the inadequacy may indicate that there is a defect in the consent, or that the parties really intended a donation or some other act or contract. Inadequacy of the cause (lesion) may only be an effect of vitiated consent and so the contract becomes voidable under Article 1390. If damage or lesion is suffered by ward or absentee more than ¼ of the value of the property, contract is rescissible under Articles 1381 pars. 1 & 2. 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. Simulation of the Price (Art. 1471) There is simulation of the price in a contract of sale when for the purpose of deceiving others, the parties thereto made it appear in document either: a) There is a price when actually there is none at all. In this case being absolutely simulated contract is void. (Art. 1346) b) That the price stated is different from the actual price. This merely relative simulation of the price and does not render the contract of sale null and void. The parties are bound by their true agreement as long as the same does not
prejudice a third person and is not contrary to law, morals, good customs, public order or public policy ( Arts. 1345 & 1346) 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. When price of securities, grains, liquids and other things considered certain: a. The price fixed is that which things sold would have on a definite day; b. The price fixed is that which the thing sold would have in a particular exchange or market; and c. or the price fixed is an amount above or below the price on such day or on such exchange or market. Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. Perfection of sale: The contract of sale is perfected at the moment there is meeting of the minds upon the thing which is the object of contract and upon the price.
Effects of perfection of sale: (a) From the moment consent is given, the reciprocal obligations of the parties arise and they may reciprocally demand the performance, subject to the Statute of Fraud; (b) The ownership of the thing sold is not transferred until it is delivered, actually or constructively, to the buyer (Art. 1477); and (c) In case one of the contracting parties does not comply with what is incumbent upon him, the injured party may sue for fulfillment or rescission with the right to damages in either case. (art. 1191) Perfection of Sale It is consensual and for this reason principle of consensuality applies. “Contracts are perfected by mere consent, and from that moment the parties bound not only to the fulfillment of the what has been expressly stipulated but also to all the consequences which, according to their nature, may be keeping with good faith, usage and law (Art. 1315). Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith (Art. 1159). Since sale is reciprocal, the parties may reciprocally demand performance subject to the provision of law governing forms. Art. 1476. In the case of a sale by auction: (1) Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract of sale. (2) A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in other customary manner. Until such announcement is made, any bidder may retract his bid; and the auctioneer may withdraw the goods from the sale unless the auction has been announced to be without reserve.
(3) A right to bid may be reserved expressly by or on behalf of the seller, unless otherwise provided by law or by stipulation. (4) Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ or induce any person to bid at such sale on his behalf or for the auctioneer, to employ or induce any person to bid at such sale on behalf of the seller or knowingly to take any bid from the seller or any person employed by him. Any sale contravening this rule may be treated as fraudulent by the buyer. (n) Perfection of Sale by Auction: Sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in any customary manner. Until such announcement is made, any bidder may retract his bid; and the auctioneer may withdraw the goods from the sale unless the auction has been announced without reserve (meaning the seller did not reserve the right to bid)
Gross inadequacy of price in cases of auction sales where there is right to redeem is not material as in forced sales, judgment debtors ought not to expect their properties to be sold on its market value. The nature of such sales
precludes any reasonable expectation of obtaining prices such as are procured in ordinary sales where the elements of free bargaining is in full play. It has likewise been held by the Supreme Court in DBP vs. Vda de Moll, 43 SCRA 82 that if there is right to redeem in foreclosure sale, inadequacy of the price is not material because the lesser the price, the easier it will be for the owner to effect the redemption.
Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. (n)
The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery. ( Art. 1477)
Ownership of a thing is not transferred by mere perfection of the contract of sale but by ACTUAL or CONSTRUCTIVE delivery. Governed by Chapter 4 Arts. 1497 to 1501 Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price. (n) The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price. (PACTUM RESERVATI DOMINI) Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. (1451a) Effect of an accepted unilateral promise to sell or buy a thing for a price certain: (a) Such unilateral promise also known as option contract does not bind the promissor and may be withdrawn at any time;
(b) If the promise, however, is supported by a consideration distinct from the price, its acceptance gives rise to the perfection of the contract. Case: X unilaterally promised to sell to Y his car for P 50,000.00 within a period of one month. Y accepted the promise. On the 16th day, Y received a note from X telling him that he is withdrawing the promise. Issues: (a) Can Y hold X liable for damages if he persists on withdrawing the promise? Why? (b) Assume that Y gave an option money when he accepted the promise, and on the 16th day, he backed out, can X compel him to buy the car? Explain
Answers: (a) No. An accepted unilateral promise to buy or to sell a determinate thing or a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. (Art. 1479 (2) & Art. 1324) In the case at bar, no consideration distinct form the price has been delivered to X, the offer or promise can be withdrawn anytime. (b) No, because the option to buy or not to buy depends upon Y. Effect of a bilateral promise to buy and sell a thing for a price certain: When the promise is bilateral, that is, one party accepts the other's promise to buy and the latter, the former's promise to sell, a determinate thing for a price certain, it has practically the same effect as a perfected contract of sale since it is reciprocally demandable. But there is no contract of sale yet until it is executed. Graphic Distinction between Promise to Buy and Sell and Unilateral Promise to Buy and Sell Point Distinction Promise to buy and sell Unilateral Promise to buy and Sell Parties Involved Seller and Buyer Seller or buyer Effect Reciprocally demandable Binding on promissory if supported by consideration distinct form price Application of Article 1354 in relation to Article 1479 of the New Civil Code Article 1354 of the New Civil Code which presumes the existence of a consideration in every contract applies to contracts in general, whereas the second paragraph of Article 1479 thereof refers to sales and more specifically to an accepted unilateral promise to buy and sell. “Policitation” simply means an unilateral promise to buy or sell which is not accepted. That being the case, it is a mere offer and has not yet been converted into a contract. Therefore, of no judicial effect. Art. 1480. Any injury to or benefit from the thing sold, after the contract has been perfected, from the moment of the perfection of the contract to the time of delivery, shall be governed by Articles 1163 to 1165, and 1262. This rule shall apply to the sale of fungible things, made independently and for a single price, or without consideration of their weight, number, or measure. Should fungible things be sold for a price fixed according to weight, number, or measure, the risk shall not be imputed to the vendee until they have been weighed, counted, or measured and delivered, unless the latter has incurred in delay. (1452a)
Rules with regards to any injury to or benefit from the thing sold, after contract is perfected but before delivery( Article 1480). (1) The vendor is obliged to take care of the thing sold with proper diligence. (Art. 1163) (2) The vendor has the right to the fruits of the thing from the time the obligation to deliver arises but shall acquire no real right or ownership over it until the same has been delivered to him (Art. 1164; Art. 1537) (3) If the thing is determinate, the vendee may compel the vendor to make the delivery, and hold him liable for damages by reason of fraud, delay, etc., Arts. 1165 and 1170) (4) If the thing is generic, he may ask that the obligation be complied with at the expense of the vendor if the latter fails to make delivery also with a right to damages in proper case (Arts. 1165, 1170); (5) If the thing is determinate, and it is lost or destroyed --(a) Through the fault of one party, the party at fault is liable for damages; (b) Through fortuitous event, the vendor is released from the obligation to deliver and the vendee is liable to pay the price if he has not yet paid the same (see Arts. 1480, 1583, 1189 and 1269). Art. 1504, par. 1 however provides a rule contrary to 1480); (c) The vendor shall be responsible for any fortuitous event if it is so stipulated, or if the same took place after he has incurred delayed, or he has promised to deliver the same thing to two or more persons who do not have the same interest, Arts. 1164, 1262) (d) The rule under letter (b) applies to the sale of fungible things, made independently and for a single price or without consideration or their weight, number or measurement (Art. 1480). Reason: In such case, the fungible things have been " particularly designated or physically segregated" (e) It does not apply where the fungible things have been sold for a price fixed in relation to weight, number or measure. In such case, the risk shall not be imputed to the vendee until they have been weighed, counted or measured and delivered; Applicable Provisions: Art. 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acquire no real right over it until the same has been delivered to him. (1095) Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170, may compel the debtor to make the delivery. If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor. If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for any fortuitous event until he has effected the delivery. Art. 1188. The creditor may, before the fulfillment of the condition, bring the appropriate actions for the preservation of his right. The debtor may recover what during the same time he has paid by mistake in case of a suspensive condition. Art. 1189. When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give, the following rules shall
be observed in case of the improvement, loss or deterioration of the thing during the pendency of the condition: (1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished; (2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is understood that 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; (3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor; (4) If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of the obligation and its fulfillment, with indemnity for damages in either case; (5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor; (6) If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary. Art. 1262. An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred in delay. When by law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not extinguish the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation requires the assumption of risk. (6) If the thing is generic, the loss with or without the vendor's fault, of anything of the same kind does not distinguish his obligation to deliver. (Art 1262) Art. 1481. In the contract of sale of goods by description or by sample, the contract may be rescinded if the bulk of the goods delivered do not correspond with the description or the sample, and if the contract be by sample as well as description, it is not sufficient that the bulk of goods correspond with the sample if they do not also correspond with the description. The buyer shall have a reasonable opportunity of comparing the bulk with the description or the sample. (n) Special Rules on sales by description and sale by sample (1) In the contract of sales of goods by description or by sample, the contract may be rescinded if the bulk of goods delivered do not correspond with the description or by the sample; (2) If the contract be by sample as well as by description, it is not sufficient that the bulk of goods correspond with sample if they do not correspond with the description; (3) The buyer shall have reasonable opportunity of comparing bulk with the description or sample (Art. 1481) Graphic Distinction between sales by description and sample Point of Distinction Sale by Description Sale by Sample Basis of Buyer Seller’s representation or Seller’s sample descriptions Previous sight of goods by NONE Buyer saw the sample
the buyer Opportunity for examination None by buyer
Notes: a) For exhibition of sample to result in sale by sample, it is necessary that such exhibition of the sample must have been sole basis or inducement of the sale to the buyer. b) It is important to know whether a sale was made by description or sample because it the goods sold does not correspond to the sample or description or both if agreed upon, the sale may be rescinded. Art. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. (1454a) Principle of Earnest Money or Arras: Earnest Money is that given by the buyer to the seller to bind the bargain. It is actually a partial payment of the purchase price and is considered as proof of the perfection of the contract. Earnest Money vs. Option Money (1) Earnest money is part of the purchase price, while option money is given as distinct consideration for an option contract; (2) Earnest money is given only if there is already a sale while option money applies to sales not yet perfected; (3) When the earnest money is given, the buyer is bound to pay the balance, while the would be buyer who gives option money is not required to buy. But option money may become earnest money if the parties so agree. Art. 1483. Subject to the provisions of the Statute of Frauds and of any other applicable statute, a contract of sale may be made in writing, or by word of mouth, or partly in writing and partly by word of mouth, or may be inferred from the conduct of the parties. (n) Formalities for validity or enforceability of contracts The general rule, a contract of sale may be made orally or in writing or partly oral or partly in writing or even inferred from the conduct of the parties thereto. Some of the exceptions are provided by law. In contract of sale, some forms are prescribed for reasons of validity, enforceability or convenience. Examples: a) Sale of a piece of land or any interest therein through an agent, authority of the latter shall be in writing, otherwise sale shall be void (Art. 1874). b) Agreement for sale of goods, chattels or things in action at a price not less than P 500 must be in writing to be enforceable (Art. 1403 par 2 (d) c) Agreement of sale of real property or any interest therein must be in writing for enforceability ( Art. 1403 par. 2 (e) d) Agreement of sale not to be performed within a year from the making thereof must be in writing for enforceability e) Sale must be in public instrument for convenience to bind third person (Art. 1356) Art. 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee’s failure to pay cover two or more installments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee’s failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void. (1454A-a) Art. 1485. The preceding article shall be applied to contracts purporting to be leases of personal property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing. (1454-A-a) Art. 1486. In the case referred to in two preceding articles, a stipulation that the installments or rents paid shall not be returned to the vendee or lessee shall be valid insofar as the same may not be unconscionable under the circumstances. (n) Remedies of vendor in Sale of Personal Property Payable in Installments. (RECTO LAW)) The vendor of personal property payable in installments may exercise any of the following remedies: (1) Elect fulfillment upon the vendee's failure to pay; (2) Cancel the sale, if the vendee shall have failed to pay two or more installments; or (3) Foreclose the chattel mortgage, if one has been constituted, if the vendee shall have failed to pay two or more installments. 1. Nature of the above remedies in Recto Law: 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. 2. Right of the vendor to recover the unpaid balance of the purchase price: (a) The vendor who has chosen specific performance or to exact fulfillment of the obligation is not limited to the proceeds of the sale, on execution, of the mortgaged goods. He may still recover from the purchaser the unpaid balance of the price, if any on real or personal properties of the purchaser not exempt by law from attachment or execution; (b) If the vendor chooses rescission or cancellation of the contract upon the vendee's failure to pay two or more installments, the latter can demand the return of payments already made unless there is a stipulation about forfeiture. (See Art. 1468) (c) If the vendor has chosen the third remedy of foreclosure of the chattel mortgage, he shall have no further action against the vendee for the recovery of any unpaid balance of the price and any agreement to the contrary is void. The foreclosure is caused by selling the mortgaged personal property at public auction and applying the proceeds of the sale to the satisfaction of the claim secured by the mortgage. 3. Requisites before Art. 1484 may be applied: (a) (b) (c) (d) There must be a contract. The contract must be of sale. What is sold in personal property The sale must be in installment
4. Instances where Art. 1484 may not be applied: (a) It does not apply in real property mortgage.
(b) It does not apply to sale of personal property in straight terms, a sale on straight terms being one, which the balance, after the payment of initial sum should be paid in totality at the time specified. Illustrations: Case I : ABC Corporation, a dealer in appliances sold to Mr. T, a Video-CD for P 15,000 payable on installment at the rate of P 1,200.00 per month. Mr. T executed a chattel mortgage over the thing sold. When Mr. T defaulted in the payment of his obligation, ABC Corporation foreclosed the mortgage. At the sale, only P 10,000 was realized. Can the seller recover the deficiency? Answer: No, because in case of foreclosure of the chattel mortgage and there is deficiency, the seller cannot recover the deficiency. This is an absolute prohibition in the Recto Law, amending Art. 1484, NCC. Case II : X purchased on installment basis a car from ABC Corp. Having failed to pay his installments, the corporation sued X for replevin (an action for recovery of personal property) and seized the unit, sold it but it failed to realize the balance of X in the sheriff's sale. Can ABC Corp. recover the balance? Why? Answer: Yes, where the mortgagee in installment sales of personal property chose specific performance in a replevin suit with damages, it is entitled to an alias writ of execution for the portion of the judgment that has not been satisfied. he rule is that in installment sales, if the action instituted is for specific performance and the mortgaged property is subsequently attached and sold, the sale thereof does not amount to a foreclosure of the mortgage. Hence, the seller creditor is entitled to a deficiency judgment. Lease of Personal Property with Option to Buy is considered as sale of property in installments. (Art. 1485) As a rule, payment of installments should be returned unless parties stipulate that the same shall not be returned. Article 1486 provides that a stipulation that the installments or rents paid shall not be returned to the vendee or lessee shall be valid insofar as the same may not be UNSCONCIONABLE under circumstances. Art. 1487. The expenses for the execution and registration of the sale shall be borne by the vendor, unless there is a stipulation to the contrary Expenses for the execution and registration shall be borne by the vendor in the absence of any agreement between the parties to the contrary. Sale of Real Property By Installment: REALTY INSTALLMENT BUYER PROTECTION ACT (MACEDA LAW) –R.A. NO. 6552 also known as AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS Section 1. This Act shall be known as the "Realty Installment Buyer Act." Section 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions. Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding
industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments: (a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any. (b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer. Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.lawphi1™ Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act. Section 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act. Section 6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property. Section 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void. Section 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall be affected thereby.lawphi1™ Section 9. This Act shall take effect upon its approval. Approved: August 26, 1972. Salient Features of the above law: In transactions involving the sale or financing of real estate on installment payments including residential condominium apartments, under the Maceda Law, (R.A.NO. 6552), the rights of the buyer who has paid at least two (2) years installments and subsequently defaulted in the succeeding installments are the following (a) To pay w/out additional interest, the unpaid installment within total grace period earned by him fixed at the rate of one-month grace period for every one year of
installments made. The right however shall be exercised by him only once in every 5 years of the life of the contract and its extensions, if any; and (b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on property equivalent to 50% of the total payments made and after 5 years of installments, and additional 5% every year but not to exceed 90% of the total payments made. (Section 3, R.A. No. 6552 (Maceda Law), Realty Installment Buyer Protection Act) The above law excludes from its operation sales on installments of industrial lots and commercial buildings and sales to tenants under the CARP. Down payments, deposits or options on the contract shall be included in the computation of the total number of installments payable. Further, R.A. No. 6552 applies to the purchase of subdivisions and condominiums in relation to Section 24 of P.D. No. 957 otherwise known as Subdivision and Condominium Buyers’ protective decree Effect of buyer on realty installments has paid less than 2 years of installments: The seller shall give him a grace period of not less than 60 days from the date the installment became due. If he fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after 30 days from receipt of the buyer of the notice of cancellation or the demand for rescission of the contract by notarial act. PRESIDENTIAL DECREE NO. 957 REGULATING THE SALE OF SUBDIVISION LOTS AND CONDOMINIUMS, PROVIDING PENALTIES FOR VIOLATIONS THEREOF WHEREAS, it is the policy of the State to afford its inhabitants the requirements of decent human settlement and to provide them with ample opportunities for improving their quality of life; WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and other similar basic requirements, thus endangering the health and safety of home and lot buyers; aisa dc WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators, such as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent purchasers for value; WHEREAS, these acts not only undermine the land and housing program of the government but also defeat the objectives of the New Society, particularly the promotion of peace and order and the enhancement of the economic, social and moral condition of the Filipino people; WHEREAS, this state of affairs has rendered it imperative that the real estate subdivision and condominium businesses be closely supervised and regulated, and that penalties be imposed on fraudulent practices and manipulations committed in connection therewith. NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby decree and order: cd i TITLE I Title and Definitions SECTION 1. Title. — This Decree shall be known as THE SUBDIVISION AND CONDOMINIUM BUYERS' PROTECTIVE DECREE. SECTION 2. Definition of Terms. — When used in this Decree, the following terms shall, unless the context otherwise indicates, have the following respective meanings: a) Person. — "Person" shall mean a natural or a juridical person. A juridical person refers to a business firm whether a corporation, partnership, cooperative or associations or a single proprietorship. b) Sale or sell. — "Sale" or "sell" shall include every disposition, or attempt to dispose, for a valuable consideration, of a subdivision lot, including the building and
other improvements thereof, if any, in a subdivision project or a condominium unit in a condominium project. "Sale" and "sell" shall also include a contract to sell, a contract of purchase and sale, an exchange, an attempt to sell, an option of sale or purchase, a solicitation of a sale, or an offer to sell, directly or by an agent, or by a circular, letter, advertisement or otherwise. A privilege given to a member of a cooperative, corporation, partnership, or any association and/or the issuance of a certificate or receipt evidencing or giving the right of participation in, or right to, any land in consideration of payment of the membership fee or dues, shall be deemed a sale within the meaning of this definition. c) Buy and purchase. — The "buy" and "purchase" shall include any contract to buy, purchase, or otherwise acquire for a valuable consideration a subdivision lot, including the building and other improvements, if any, in a subdivision project or a condominium unit in a condominium project. cda d) Subdivision project. — "Subdivision project" shall mean a tract or a parcel of land registered under Act No. 496 which is partitioned primarily for residential purposes into individual lots with or without improvements thereon, and offered to the public for sale, in cash or in installment terms. It shall include all residential, commercial, industrial and recreational areas as well as open spaces and other community and public areas in the project. e) Subdivision lot. — "Subdivision lot" shall mean any of the lots, whether residential, commercial, industrial, or recreational, in a subdivision project. f) Complex subdivision plan. — "Complex subdivision plan" shall mean a subdivision plan of a registered land wherein a street, passageway or open space is delineated on the plan. g) Condominium project. — "Condominium project" shall mean the entire parcel of real property divided or to be divided primarily for residential purposes into condominium units, including all structures thereon. h) Condominium unit. — "Condominium unit" shall mean a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more floors (or part of parts of floors) in a building or buildings and such accessories as may be appended thereto. cda i) Owner. — "Owner" shall refer to the registered owner of the land subject of a subdivision or a condominium project. j) Developer. — "Developer" shall mean the person who develops or improves the subdivision project or condominium project for and in behalf of the owner thereof. k) Dealer. — "Dealer" shall mean any person directly engaged as principal in the business of buying, selling or exchanging real estate whether on a full-time or part-time basis. l) Broker. — "Broker" shall mean any person who, for commission or other compensation, undertakes to sell or negotiate the sale of a real estate belonging to another. m) Salesman. — "Salesman" shall refer to the person regularly employed by a broker to perform, for and in his behalf, any or all functions of a real estate broker. n) Authority. — "Authority" shall mean the National Housing Authority. TITLE II Registration and License to Sell SECTION 3. National Housing Authority. — The National Housing Authority shall have exclusive jurisdiction to regulate the real estate trade and business in accordance with the provisions of this Decree. acd SECTION 4. Registration of Projects. — The registered owner of a parcel of land who wishes to convert the same into a subdivision project shall submit his subdivision plan to the Authority which shall act upon and approve the same, upon a finding that the plan complies with the Subdivision Standards' and Regulations enforceable at the time the plan is submitted. The same procedure shall be followed in the case of a plan for a condominium project except that, in addition, said Authority shall act upon and approve the plan with respect to the building or buildings included in the condominium project in accordance with the National Building Code (R.A. No. 6541). The subdivision plan, as so approved, shall then be submitted to the Director of Lands for approval in accordance with the procedure prescribed in Section 44 of the Land Registration Act (Act No. 496, as amended by R.A. No. 440): Provided, that it case of complex subdivision plans, court approval shall no longer be required. The condominium plan as likewise so approved, shall be submitted to the Register of Deeds of the
province or city in which the property lies and the same shall be acted upon subject to the conditions and in accordance with the procedure prescribed in Section 4 of the Condominium Act (R.A. No. 4726). The owner or the real estate dealer interested in the sale of lots or units, respectively, in such subdivision project or condominium project shall register the project with the Authority by filing therewith a sworn registration statement containing the following information: a) Name of the owner; b) The location of the owner's principal business office, and if the owner is a nonresident Filipino, the name and address of his agent or representative in the Philippines is authorized to receive notice; c) The names and addresses of all the directors and officers of the business firm, if the owner be a corporation, association, trust, or other entity, and of all the partners, if it be a partnership; cdt d) The general character of the business actually transacted or to be transacted by the owner; and e) A statement of the capitalization of the owner, including the authorized and outstanding amounts of its capital stock and the proportion thereof which is paid-up. The following documents shall be attached to the registration statement: a) A copy of the subdivision plan or condominium plan as approved in accordance with the first and second paragraphs of this section; b) A copy of any circular, prospectus, brochure, advertisement, letter, or communication to be used for the public offering of the subdivision lots or condominium units; c) In case of a business firm, a balance sheet showing the amount and general character of its assets and liabilities and a copy of its articles of incorporation or articles of partnership or association, as the case may be, with all the amendments thereof and existing by-laws or instruments corresponding thereto; d) A title to the property which is free from all liens and encumbrances: Provided, however, that in case any subdivision lot or condominium unit is mortgaged, it is sufficient if the instrument of mortgage contains a stipulation that the mortgagee shall release the mortgage on any subdivision lot or condominium unit as soon as the full purchase price for the same is paid by the buyer. cd The person filing the registration statement shall pay the registration fees prescribed therefor by the Authority. Thereupon, the Authority shall immediately cause to be published a notice of the filing of the registration statement at the expense of the applicant-owner or dealer, in two newspapers general circulation, one published in English and another in Pilipino, once a week for two consecutive weeks, reciting that a registration statement for the sale of subdivision lots or condominium units has been filed in the National Housing Authority; that the aforesaid registration statement, as well as the papers attached thereto, are open to inspection during business hours by interested parties, under such regulations as the Authority may impose; and that copies thereof shall be furnished to any party upon payment of the proper fees. The subdivision project of the condominium project shall be deemed registered upon completion of the above publication requirement. The fact of such registration shall be evidenced by a registration certificate to be issued to the applicant-owner or dealer. SECTION 5. License to sell. — Such owner or dealer to whom has been issued a registration certificate shall not, however, be authorized to sell any subdivision lot or condominium unit in the registered project unless he shall have first obtained a license to sell the project within two weeks from the registration of such project. The Authority, upon proper application therefor, shall issue to such owner or dealer of a registered project a license to sell the project if, after an examination of the registration statement filed by said owner or dealer and all the pertinent documents attached thereto, he is convinced that the owner or dealer is of good repute, that his business is financially stable, and that the proposed sale of the subdivision lots or condominium units to the public would not be fraudulent. cd i SECTION 6. Performance Bond. — No license to sell subdivision lots or condominium units shall be issued by the Authority under Section 5 of this Decree unless the owner or dealer shall have filed an adequate performance bond approved by said Authority to guarantee the construction and maintenance of the roads, gutters, drainage, sewerage, water system, lighting systems, and full development of the subdivision project or the
condominium project and the compliance by the owner or dealer with the applicable laws and rules and regulations. The performance bond shall be executed in favor of the Republic of the Philippines and shall authorize the Authority to use the proceeds thereof for the purposes of its undertaking in case of forfeiture as provided in this Decree. SECTION 7. Exempt transactions. — A license to sell and performance bond shall not be required in any of the following transactions: a) Sale of a subdivision lot resulting from the partition of land among co-owners and co-heirs. b) Sale or transfer of a subdivision lot by the original purchaser thereof and any subsequent sale of the same lot. c) Sale of a subdivision lot or a condominium unit by or for the account of a mortgagee in the ordinary course of business when necessary to liquidate a bona fide debt. SECTION 8. Suspension of license to sell. — Upon verified complaint by a buyer of a subdivision lot or a condominium unit in any interested party, the Authority may, in its discretion, immediately suspend the owner's or dealer's license to sell pending investigation and hearing of the case as provided in Section 13 hereof. cd i The Authority may motu proprio suspend the license to sell if, in its opinion, any information in the registration statement filed by the owner or dealer is or has become misleading, incorrect, inadequate or incomplete or the sale or offering for a sale of the subdivision or condominium project may work or tend to work a fraud upon prospective buyers. The suspension order may be lifted if, after notice and hearing, the Authority is convinced that the registration statement is accurate or that any deficiency therein has been corrected or supplemented or that the sale to the public of the subdivision or condominium project will neither be fraudulent not result in fraud. It shall also be lifted upon dismissal of the complaint for lack of legal basis. Until the final entry of an order of suspension, the suspension of the right to sell the project, though binding upon all persons notified thereof, shall be deemed confidential unless it shall appear that the order of suspension has in the meantime been violated. SECTION 9. Revocation of registration certificate and license to sell. — The Authority may, motu proprio or upon verified complaint filed by a buyer of a subdivision lot or condominium unit, revoke the registration of any subdivision project or condominium project and the license to sell any subdivision lot or condominium unit in said project by issuing an order to this effect, with his findings in respect thereto, if upon examination into the affairs of the owner or dealer during a hearing as provided for in Section 14 hereof, if shall appear there is satisfactory evidence that the said owner or dealer: cd i a) Is insolvent; or b) has violated any of the provisions of this Decree or any applicable rule or regulation of the Authority, or any undertaking of his/its performance bond; or c) Has been or is engaged or is about to engage in fraudulent transactions; or d) Has made any misrepresentation in any prospectus, brochure, circular or other literature about the subdivision project or condominium project that has been distributed to prospective buyers; or e) Is of bad business repute; or f) Does not conduct his business in accordance with law or sound business principles. Where the owner or dealer is a partnership or corporation or an unincorporated association, it shall be sufficient cause for cancellation of its registration certificate and its license to sell, if any member of such partnership or any officer or director of such corporation or association has been guilty of any act or omission which would be cause for refusing or revoking the registration of an individual dealer, broker or salesman as provided in Section 11 hereof. SECTION 10. Registers of subdivision lots and condominium units. — A record of subdivision lots and condominium units shall be kept in the Authority wherein shall be entered all orders of the Authority affecting the condition or status thereof. The registers of subdivision lots and condominium units shall be open to public inspection subject to such reasonable rules as the Authority may prescribe. aisa dc TITLE III Dealers, Brokers and Salesmen
SECTION 11. Registration of dealers, brokers and salesmen. — No real estate dealer, broker or salesman shall engage in the business of selling subdivision lots or condominium units unless he has registered himself with the Authority in accordance with the provisions of this section. If the Authority shall find that the applicant is of good repute and has complied with the applicable rules of the Authority, including the payment of the prescribed fee, he shall register such applicant as a dealer, broker or salesman upon filing a bond, or other security in lieu thereof, in such sum as may be fixed by the Authority conditioned upon his faithful compliance with the provisions of this Decree: Provided, that the registration of a salesman shall cease upon the termination of his employment with a dealer or broker. Every registration under this section shall expire on the thirty-first day of December of each year. Renewal of registration for the succeeding year shall be granted upon written application therefor made not less than thirty nor more than sixty days before the first day of the ensuing year and upon payment of the prescribed fee, without the necessity of filing further statements or information, unless specifically required by the Authority. All applications filed beyond said period shall be treated as original applications. The names and addresses of all persons registered as dealers, brokers, or salesmen shall be recorded in a Register of Brokers, Dealers and Salesmen kept in the Authority which shall be open to public inspection. casia SECTION 12. Revocation of registration as dealers, brokers or salesmen. — Registration under the preceding section may be refused or any registration granted thereunder, revoked by the Authority if, after reasonable notice and hearing, it shall determine that such applicant or registrant: 1) Has violated any provision of this Decree or any rule or regulation made hereunder; or 2) Has made a material false statement in his application for registration; or 3) Has been guilty of a fraudulent act in connection with any sale of a subdivision lot or condominium unit; or 4) Has demonstrated his unworthiness to transact the business of dealer, broker, or salesman, as the case may be. In case of charges against a salesman, notice thereof shall also be given the broker or dealer employing such salesman. Pending hearing of the case, the Authority shall have the power to order the suspension of the dealer's, broker's, of salesman's registration; provided, that such order shall state the cause for the suspension. The suspension or revocation of the registration of a dealer or broker shall carry with it all the suspension or revocation of the registrations of all his salesmen. TITLE IV Procedure for Revocation of Registration Certificate SECTION 13. Hearing. — In the hearing for determining the existence of any ground or grounds for the suspension and/or revocation of registration certificate and license to sell as provided in Section 8 and 9 hereof, the following shall be complied with: cd i a) Notice. — No such hearing shall proceed unless the respondent is furnished with a copy of the complaint against him or is notified in writing of the purpose of such hearing. b) Venue. — The hearing may be held before the officer or officers designated by the Authority on the date and place specified in the notice. c) Nature of proceeding. — The proceedings shall be non-litigious and summary in nature without regard to legal technicalities obtaining in courts of law. The Rules of court shall not apply in said hearing except by analogy or in a suppletory character and whenever practicable and convenient. d) Power incidental to the hearing. — For the purpose of the hearing or other proceeding under this Decree, the officer or officers designated to hear the complaint shall have the power to administer oaths, subpoena witnesses, conduct ocular inspections, take depositions, and require the production of any book, paper, correspondence, memorandum, or other record which are deemed relevant or material to the inquiry. SECTION 14. Contempt. — a) Direct contempt. — The officer or officers designated by the Authority to hear the complaint may summarily adjudge in direct contempt any person guilty of misbehavior in the presence of or so near the said hearing officials as to obstruct or
interrupt the proceedings before the same or of refusal to be sworn or to answer as a witness or to subscribe an affidavit or deposition when lawfully required to do so. The person found guilty of direct contempt under this section shall be punished by a fine not exceeding Fifty (P50.00) Pesos or imprisonment not exceeding five (5) days, or both. acd b) Indirect contempt. — The officer or officers designated to hear the complaint may also adjudge any person in indirect contempt on grounds and in the manner prescribed in Rule 71 of the Revised Rules of Court. SECTION 15. Decision. — The case shall be decided within thirty (30) days from the time the same is submitted for decision. The Decision may order the revocation of the registration of the subdivision or condominium project, the suspension, cancellation, or revocation of the license to sell and/or forfeiture, in whole or in part, of the performance bond mentioned in Section 6 hereof. In case forfeiture of the bond is ordered, the Decision may direct the provincial or city engineer to undertake or cause the construction of roads and of other requirements for the subdivision or condominium as stipulated in the bond, chargeable to the amount forfeited. Such decision shall be immediately executory and shall become final after the lapse of 15 days from the date of receipt of the Decision. SECTION 16. Cease and Desist Order. — Whenever it shall appear to the Authority that any person is engaged or about to engage in any act or practice which constitutes or will constitute a violation of the provisions of this Decree, or of any rule or regulation thereunder, it may, upon due notice and hearing as provided in Section 13 hereof, issue a cease and desist order to enjoin such act or practices. SECTION 17. Registration. — All contracts to sell, deeds of sale and other similar instruments relative to the sale or conveyance of the subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered by the seller in the Office of the Register of Deeds of the province or city where the property is situated. cdt Whenever a subdivision plan duly approved in accordance with Section 4 hereof, together with the corresponding owner's duplicate certificate of title, is presented to the Register of Deeds for registration, the Register of Deeds shall register the same in accordance with the provisions of the Land Registration Act, as amended: Provided, however, that it there is a street, passageway or required open space delineated on a complex subdivision plan hereafter approved and as defined in this Decree, the Register of Deeds shall annotate on the new certificate of title covering the street, passageway or open space, a memorandum to the effect that except by way of donation in favor of a city or municipality, no portion of any street, passageway, or open space so delineated on the plan shall be closed or otherwise disposed of by the registered owner without the requisite approval as provided under Section 22 of this Decree. SECTION 18. Mortgages. — No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the Authority. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. The loan value of each lot or unit covered by the mortgage shall be determined and the buyer thereof, if any, shall be notified before the release of the loan. The buyer may, at his option, pay his installment for the lot or unit directly to the mortgagee who shall apply the payments to the corresponding mortgage indebtedness secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereto; SECTION 19. Advertisements. — Advertisements that may be made by the owner or developer through newspaper, radio, television, leaflets, circulars or any other form about the subdivision or the condominium or its operations or activities must reflect the real facts and must be presented in such manner that will not tend to mislead or deceive the public. cd i The owner or developer shall answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures, advertisements and other sales propaganda disseminated by the owner or developer or his agents and the same shall form part of the sales warranties enforceable against said owner or developer, jointly and severally. Failure to comply with these warranties shall also be punishable in accordance with the penalties provided for in this Decree.
SECTION 20. Time of Completion. — Every owner or developer shall construct and provide the facilities, improvements, infrastructures and other forms of development, including water supply and lighting facilities, which are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters, letters or in any form of advertisement, within one year from the date of the issuance of the license for the subdivision or condominium project or such other period of time as may be fixed by the Authority. SECTION 21. Sales Prior to Decree. — In cases of subdivision lots or condominium units sold or disposed of prior to the effectivity of this Decree, it shall be incumbent upon the owner or developer of the subdivision or condominium project to complete compliance with his or its obligations as provided in the preceding section within two years from the date of this Decree unless otherwise extended by the Authority or unless an adequate performance bond is filed in accordance with Section 6 hereof. Failure of the owner or developer to comply with the obligations under this and the preceding provisions shall constitute a violation punishable under Sections 38 and 39 of this Decree. acd SECTION 22. Alteration of Plans. — No owner or developer shall change or alter the roads, open spaces, infrastructures, facilities for public use and/or other form of subdivision development as contained in the approved subdivision plan and/or represented in its advertisements, without the permission of the Authority and the written conformity or consent of the duly organized homeowners association, or in the absence of the latter, by the majority of the lot buyers in the subdivision. SECTION 23. Non-Forfeiture of Payments. — No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate. SECTION 24. Failure to pay installments. — The rights of the buyer in the event of this failure to pay the installments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552. Where the transaction or contract was entered into prior to the effectivity of Republic Act No. 6552 on August 26, 1972, the defaulting buyer shall be entitled to the corresponding refund based on the installments paid after the effectivity of the law in the absence of any provision in the contract to the contrary. SECTION 25. Issuance of Title. — The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith. aisa dc SECTION 26. Realty Tax. — Real estate tax and assessment on a lot or unit shall de paid by the owner or developer without recourse to the buyer for as long as the title has not passed the buyer; Provided, however, that if the buyer has actually taken possession of and occupied the lot or unit, he shall be liable to the owner or developer for such tax and assessment effective the year following such taking of possession and occupancy. SECTION 27. Other Charges. — No owner or developer shall levy upon any lot or buyer a fee for an alleged community benefit. Fees to finance services for common comfort, security and sanitation may be collected only by a properly organized homeowners association and only with the consent of a majority of the lot or unit buyers actually residing in the subdivision or condominium project. SECTION 28. Access to Public Offices in the Subdivisions. — No owner or developer shall deny any person free access to any government office or public establishment located within the subdivision or which may be reached only by passing through the subdivision.
SECTION 29. Right of Way to Public Road. — The owner or developer of a subdivision without access to any existing public road or street must secure a right of way to a public road or street and such right of way must be developed and maintained according to the requirement of the government and authorities concerned. SECTION 30. Organization of Homeowners Association. — The owner or developer of a subdivision project or condominium project shall initiate the organization of a homeowners association among the buyers and residents of the projects for the purpose of promoting and protecting their mutual interest and assist in their community development. cdt SECTION 31. Donations of roads and open spaces to local government. — The registered owner or developer of the subdivision or condominium project, upon completion of the development of said project may, at his option, convey by way of donation the roads and open spaces found within the project to the city or municipality wherein the project is located. Upon acceptance of the donation by the city or municipality concerned, no portion of the area donated shall thereafter be converted to any other purpose or purposes unless after hearing, the proposed conversion is approved by the Authority. SECTION 32. Phases of Subdivision. — For purposes of complying with the provisions of this Decree, the owner or developer may divide the development and sale of the subdivision into phases, each phase to cover not less than ten hectares. The requirement imposed by this Decree on the subdivision as a whole shall be deemed imposed on each phase. SECTION 33. Nullity of waivers. — Any condition, stipulation, or provision in contract of sale whereby any person waives compliance with any provision of this Decree or of any rule or regulation issued thereunder shall be void. SECTION 34. Visitorial powers. — This Authority, through its duly authorized representative may, at any time, make an examination into the business affairs, administration, and condition of any person, corporation, partnership, cooperative, or association engaged in the business of selling subdivision lots and condominium units. For this purpose, the official authorized so to do shall have the authority to examine under oath the directors, officers, stockholders or members of any corporation, partnership, association, cooperative or other persons associated or connected with the business and to issue subpoena or subpoena duces tecum in relation to any investigation that may arise therefrom. cd The Authority may also authorize the Provincial, City or Municipal Engineer, as the case may be, to conduct an ocular inspection of the project to determine whether the development of said project conforms to the standards and specifications prescribed by the government. The books, papers, letters, and other documents belonging to the person or entities herein mentioned shall be open to inspection by the Authority or its duly authorized representative. SECTION 35. Take-over Development. — The Authority, may take over or cause the development and completion of the subdivision or condominium project at the expenses of the owner or developer, jointly and severally, in cases where the owner or developer has refused or failed to develop or complete the development of the project as provided for in this Decree. The Authority may, after such take-over, demand, collect and receive from the buyers the installment payments due on the lots, which shall be utilized for the development of the subdivision. SECTION 36. Rules and Regulations. — The Authority shall issue the necessary standards, rules and regulations for the effective implementation of the provisions of this Decree. Such standards, rules and regulations shall take effect immediately after their publication three times a week for two consecutive weeks in any newspaper of general circulation. SECTION 37. Deputization of law enforcement agencies. — The Authority may deputize the Philippine Constabulary or any law enforcement agency in the execution of its final orders, rulings or decisions. casia SECTION 38. Administrative Fines. — The Authority may prescribe and impose fines not exceeding ten thousand pesos for violations of the provisions of this Decree or of any rule or regulation thereunder. Fines shall be payable to the Authority and enforceable through writs of execution in accordance with the provisions of the Rules of Court.
SECTION 39. Penalties. — Any person who shall violate any of the provisions of this Decree and/or any rule or regulation that may be issued pursuant to this Decree shall, upon conviction, be punished by a fine of not more than twenty thousand (P20,000.00) pesos and/or imprisonment of not more than ten years: Provided, That in the case of corporations, partnership, cooperatives, or associations, the President, Manager or Administrator or the person who has charge of the administration of the business shall be criminally responsible for any violation of this Decree and/or the rules and regulations promulgated pursuant thereto. SECTION 40. Liability of controlling persons. — Every person who directly or indirectly controls any person liable under any provision of this Decree or of any rule or regulation issued thereunder shall be liable jointly and severally with and to the same extent as such controlled person unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action. SECTION 41. Other remedies. — The rights and remedies provided in this Decree shall be in addition to any and all other rights and remedies that may be available under existing laws. SECTION 42. Repealing clause. — All laws, executive orders, rules and regulations or part thereof inconsistent with the provisions of this Decree are hereby repealed or modified accordingly. acd SECTION 43. Effectivity. — This Decree shall take effect upon its approval. Done in the City of Manila, this 12th day of July, in the year of Our Lord, nineteen hundred and seventy-six.
Art. 1488. The expropriation of property for public use is governed by special laws. (1456) Power of eminent domain. The procedure is found in Rule 67 of the Revised Rules of Court. It is a special proceedings. Owner of the property shall be paid just compensation provided it is proved that the purpose of the property is for public use.
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