LAW ON SALES Ownership passes to Ownership is retained by the

the buyer principal

DEFINITION OF CONTRACT OF SALE Cannot return the The agent can return the object in
object sold (as a rule) case he is unable to sell it
- A contract of sale is a contract whereby one of the parties The seller warrant the The agent makes no warranty as
(SELLER/VENDOR) obligates himself to deliver something thing sold long as he acts within the scope
(DETERMINATE) to the other (BUYER/VENDEE), who on his part, of his authority and in the name
binds himself to pay thereof a sum of money or its equivalent. of the seller
(PRICE). The buyer can deal with The agent must act and is bound
- It is one where the two parties called vendor/seller and the the thing sold as he according to the instruction of his
vendee/buyer had a meeting of the minds over the subject matter pleases being the principal
or the object of sale as well as the price thereof. owner

CONTRACT OF SALE vs. DACION EN PAGO CONTRACT OF SALE vs. PAYMENT BY CESSION

No pre-existing credit There is a

pre-existing credit No pre-existing credit There is a pre-existing credit
Obligation arise Obligation extinguished Creates obligations Extinguished obligations
Consideration is price Cause is extinguishment of The cause is the price The cause is the extinguishment
obligation (seller) (debtor)
The parties engaged has The price of the thing is dictated The cause is the The cause is the assignment of
more freedom in the by the pre-existing credit delivery of the object the things to be sold (creditor)
fixing of the price (buyer)
The payment of the The payment of the price is Greater freedom in Less freedom in fixing the price
price is equivalent into equivalent into a fulfillment of fixing the price because of the pre-existing credit
a fulfillment of a resolutory condition. Ownership is Creditors do not become the
suspensive condition. transferred to the buyer owner of the property assigned
to them but merely given the
CONTRACT OF SALE vs. CONTRACT OF LEASE right to sell

Seller transfer Merely transferred the USE &

ownership to buyer POSSESSION of the thing leased CONTRACT OF SALE vs. CONTRACT TO SELL w/ reserved title
Has contingencies Lease Purchase: Option fee
Obligates both parties Lease Purchase: Obligates the Title passes to the If it is stipulated that the thing
to act seller does not obligate the buyer buyer upon delivery of ownership shall not pass until he
to buy. the thing(IF SILENT: the has fully paid, ownership is
buyer took possession reserved in the seller
CONTRACT OF SALE vs. PIECE OF WORK of the property upon
execution, it is an
The thing transferred is Labor or materials for a piece of absolute sale)
the one which would work, transferred is one not in Non-payment of the Payment in full of the price is a
have existed even if the existence & which never would price is a negative POSITIVE SUSPENSIVE
order have not given have existed but for the order of RESOLUTORY CONDITION (prevent the seller to
the other party desiring to CONDITION (exact convey title)
acquire it fulfillment/ rescind)
The risk of loss is borne The risk of loss is borne by the Note: if it executes a Note: automatic rescission upon
by the buyer worker/ contractor not by deed of sale upon full non-payment within the period is
employer payment of the price it valid
Within the Statute of Not within the Statute of Frauds. is a contract to SELL
Frauds If the thing is lost the When the thing is lost, the seller
If it is manufactured for It is only manufacture because of buyer shall suffer the shall suffer the loss
the general market the employer loss

CONTRACT OF SALE vs. BARTER

ELEMENTS OF A CONTRACT OF SALE
The consideration is in The consideration is another
Essential Natural Accidental
money thing or the exchange of 2 things
CONSENT refers to Deemed to exist Present only if
the meeting of the unless excluded stipulated
minds by the parties
over the subject
IN THE CASE IN WHICH THE THING GIVEN IN EXCHANGE CONSISTS OF matter and
PARTLY IN MONEY AND PARTLY IN ANOTHER THING. with respect to the
- Take in to account the MANIFESTATION of the parties by taking transfer of ownership
into account the contemporaneous and subsequent acts of the and payment of price
parties. OBJECT refers to the Warranty against Time & place of
- If the intention cannot be ascertained it is barter if the value of subject matter of eviction payment
the thing excess the amount of the money or its equivalent. contract
PRICE should be in Warranty against
sum certain in money. hidden defects
- Note: if one of the essential elements of sale is absent, there can
CONTRACT OF SALE vs. AGENCY TO SELL be no contract of sale. (VOID)
3 STAGES IN A CONTRACT OF SALE
1. PREPARATION – negotiation in progress
2. PERFECTION – meeting of minds, birth of contract
3. CONSUMMATION – when the object is delivered & the price is
paid; this is the death of the contract
CLASSIFICATION OF SALE
1. As to the nature of the subject matter
a. Sale of REAL or IMMOVABLE
b. Sale of PERSONAL or MOVABLE
2. As to the nature of the object of sale
a. CHOSE IN POSSESSION - Sale of PROPERTY (tangible or
corporal)
b. CHOSE IN ACTION - Sale of RIGHT (copyright, trademark,
goodwill)
3. As to validity or defect of the transaction (validity)
a. Valid sale d. Unenforceable sale
b. Rescissible sale e. Void sale
c. Voidable sale
4. As to presence or absence of condition
a. Absolute sale – no condition attached
b. Conditional sale – subject to contingent event
5. As to whether wholesale or retail
a. Wholesale – goods are sold for profit, large in quantity
b. Retail – goods are sold directly to the general public
(small quantity) buyer becomes the owner.
6. As to payment of price
a. Cash sale – under a cash sale, the payment is tendered
by the buyer upon the delivery of the thing. It is
simultaneously happening, you pay as you receive the
object. E.g. canteen or cashier.
b. Installment sale – there is a division in payments.
There is a down payment or it depends on the agreed
term. You pay down payment and receive the object
and pay the remaining in installment
c. Straight term – it is a one-time deferred payment. It is
a deferred payment or deferred cash sale. It is a sales
transaction where the parties agreed to a one-time
deferred payment.
7. As to proximate inducement for the sale
a. Sale by sample – the contract solely w/ reference to
the sample if it does not correspond with the sample
shown the contract is RESCISSIBLE.
b. Sale by description – the goods must correspond to the
description otherwise RESCISSIBLE. However, if the
goods delivered tally with the description even if the
intention of the buyer is not fitted, the contract
CANNOT BE RESCINDED
c. Sale by sample and description – if it does not
correspond to both, the contract may be RESCINDED.
d. –
e. –
WHAT ARE THE REQUISITES FOR A VALID OBJECT
1. It must exist or with a potential existence
o Rule: the sale of a mere hope or expectancy is deemed
subject to the condition that the thing will come into
existence (VALID). The sale of VAIN HOPE is VOID
o Note: the thing sold must be specific and identified and
they must also owned by the seller at the time of
delivery.
o Note: the sale of future goods is valid only as an
executory contract to be fulfilled by delivery and
acquisition
o Note: if goods manufactured is made especially and
not in the normal course of business it must be
considered for a PIECE OF WORK
2. It must be determinate or at least determinable
a) Note: it is not necessary that the thing sold must be in
sight
b) Note: it is determinable if it is capable of being made
without the necessity of a new or further agreement to
ascertain its identity otherwise, VOID.
3. It must be licit or lawful
a) Q: can be an owner of a specific thing sell an undivided
share or interest of the specific thing?
A: YES, if you became a co-owner of a thing
(undivided), you can sell your share even without the
consent of the other co-owner
b) Note: an owner of a mass of goods may sell only an
undivided share thereof,: if the later on it be
discovered that the mass of goods contains less than
what was sold, the buyer becomes the owner of the
whole mass. The seller shall supply whatever is lacking.
c) Note: the ownership passes to the buyer by the
intention of the parties. Also, the risk of loss is borne
by the owner & co-owner.
CAN A THING SUBJECT TO RESOLUTORY CONDITION BECOME AN OBJECT
OF A SALE?
- YES
- Note: in defining the contract of sale, we simply define the object
or the prestation.
o Seller prestation – DELIVER & TRANSFER OWNERSHIP
o Buyer prestation – PAY THE PRICE CERTAIN IN MONEY
OR ITS EQUIVALENT
IF THE PRICE IS SIMULATED WHAT HAPPENS
- The sale is VOID. But can be valid as donation otherwise VOID. If
there is no intention to be bound at all.
CAN THERE BE A SITUATION WHEREIN A PRICE IS SIMULATED AND YET THE
CONTRACT OF SALE IS VALID? WHEN?
- Yes, when there is a relative simulation, because in relative
simulation there is an intention to be bound by obligation.
EXAMPLE (RELATIVE): I HAVE SOLD TO YOU A PARCEL OF LAND BECAUSE YOU
OFFERED TO BUY IT. I OFFERED TO YOU A PRICE OF 100 MILLION BUT THEN I
SAID THAT I WILL ONLY SELLD THE LAND FOR YOU FOR 100 MILLION BUT WE
WILL MAKE IT APPEAR IN THE DEED OF SALE AS AMOUNT OF ONLY
50,000,000.
FACTS: THE PRICE IS SIMULATED. WHEN I PAY THE CAPITAL GAINS TAX, I
WILL EITHER PAY AT A PRICE OF 50,000,000 OR THE ZONAL VALUE,
WHICHEVER IS HIGHER (TAX EVASION) NOT AT 100 MILLION.
NOTE: ALWAYS REMEMBER IT IS NOT THE PAYMENT THAT TRANSFERS
OWNERSHIP, IT IS THE DELIVERY OF THE THING.
EXAMPLE (ABSOLUTE): ATTY PADILLA SAID “NO ONE OF YOU WILL GET A
PASSING GRADE IN THIS SUBJECT IF YOU CANT CREATE A DEED OF SALE”. ALL
OF THE STUDENTS FINDS THEMSELVES A PAIR AND CREATED A DEED OF
SALE. EVERYTHING WILL BEE SIMULATED INCLUDING THE PRICE. IN THIS
CASE, YOU DON’T REALLY INTEND TO BE BOUND BY AN OBLIGATION TO SELL
SOMETHING, THEREFORE IT IS ABSOLUTE SIMULATED (VOID).
HOW DO YOU KNOW WHETHER THE PRICE IS CERTAIN IN MONEY OR ITS
EQUIVALENT?
- Instances when the price is certain.
 o When it is stipulated 1. Exact fulfillment
o When it is with reference to another thing which is 2. Cancel the sale if fail to cover 2 or more installments
certain 3. Foreclosure of the chattel mortgage if fail to cover 2 or more
o When it is fixed by a third person installments.
o When it is fixed by the court
RECTO LAW (INSTALLMENT OF BUYERS MOVABLE)
o In cases of securities, there is a fixed price on such day
available in the market or the said amount is certain. - To remedy the abuses committed in connection with the
- Note: a mere inadequacy in price does not affect its validity. foreclosure chattel mortgage.
However low price indicates defect in the consent. The contract
may be annulled not because of the low price but because of the MACEDA LAW (REALTY INSTALLMENT BUYERS PROTECTION ACT)
vitiated consent.
- Applicable to sale of immovable property
WHO SHALL FIX THE PRICE? - Situation: when you purchase a car payable in 60 months and
after 12 months you stop payment. You can found the remedy of
- Third party the seller in 1484 and the buyers protection in recto or maceda
- Left to the judgment of a specified (not a contracting party) law (depends on whether movable or immovable)
IF THE PRICE IS NOT FIXED BUT THE OBJECT HAS BEEN DELIVERED AND IF IN A CONTRACT OF LEASE THERE IS AN OPTION TO PURCHASE, WILL YOU
APPROPRIATED BY THE BUYER. WHAT IS THE RULE TO BE FOLLOWED? APPLY THE SAME RULE; PROVIDED FOR UNDER 1484 IN CONNECTION WITH
MACEDA OR RECTO LAW
- The buyer must pay a REASONABLE price therefore. It is generally
the market price at the time and place fixed by the contract or by - YES
law.
WHO SHALL BEAR THE COST OF SALE?
WHAT WILL BE THE RULE WHICH MUST PREVAIL WHEN THERE HAS BEEN
AN OFFER TO SELL OR OFFER TO BUY WHICH IS ACCEPTED? - Shall be borne by the seller unless there is a stipulation to the
contrary, it can be the buyer or shared expenses
1. Perfection, it is perfected by the fall of the hammer.
2. Owner’s right to withdraw goods from auction sale WHAT IS AN EXPROPRIATION SALE?
o Before – can withdraw unless there was an
announcement that it is WITHOUT RECOURSE - Involuntary sale – the state can takeover private properties for
o After – owner can no longer withdraw public use. YOU HAVE NO CHOICE.
3. Bidder’s right to retract his bid
o before – can retract LAW ON SALES (ATTY PADILLA)
o after – can no longer retract
SCENARIO: JOB, JEMAR, AND JOE (SELLER) AGREED TO SELL THEIR PSP TO
WHEN A UNILATERAL OFFER TO SELL OR AN OFFER TO BUY WHICH IS ATTY PADILLA, THEY AGREED THAT ATTY WILL BE THE ONE WHO WILL FIX
ACCEPTED AND UNACCEPTED? THE PRICE. SELLERS DELIVERED THE THING TO ATTY. ATTY STARTED TO USE
THE PSP, SELLERS GOES TO ATTY PADILLA AFTER A WEEK TO ASK FOR
- Not accepted: does not produce legal effect PAYMENT OF THE PSP. THEN ATTY PADILLA SAID “YOU SAID TO ME THAT
- Accepted: if acceptance is made before withdrawal it is a binding AND WE AGREED THAT I WILL BE THE ONE WHO WILL FIX THE PRICE, SORRY I
sale. HAVE NOT DECIDED YET ON HOW MUCH I MUST PAY YOU”
- OPTION CONTRACT – giving a person a certain period to accept
the offer IS THE CONTRACT OF SALE VALID? IF IT IS VALID, THAT MEANS I HAVE A
- OPTION PERIOD – period given within the offeree to accept the PRESTATION TO PAY. IF IT IS OTHERWISE, THAT MEANS I HAVE NO RIGHT
offer TO USE THE PROPERTY AND YOU HAVE NO RIGHT TO ASK ME FOR
OPTION MONEY vs. EARNEST MONEY PAYMENT. IF IT IS VALID WHAT IS YOUR BASIS OF THE PRICE CERTAIN THAT
I NEED TO PAY?
Paid in consideration Proof of perfection (deducted
for the option from the total price) - If the price has not been fixed/ascertained based on (1469-1473).
Distinct consideration Partial payment 1474 is signed by law to protect the seller who has delivered the
for the money paid object. To protect against any available taking advantage by the
Not required to buy Bound to pay the balance buyer by simple reasoning that “there is no price fixed”. The buyer
Not yet a sale Already a sale must pay the price based on fair market value.

- Note: under 1480, the rule is the buyer must still pay for the price
if the object loss after perfection before the delivery. 1504, the
rule “RES PERIT DOMINO” – whoever the owner shall bear the
burden of loss
EXAMPLES OF CONTRACT OF SALES WHICH ARE VALID BUT CANNOT BE
ENFORCED BECAUSE IT VIOLATES THE STATURE OF FRAUDS. (Analyze!!!)
1. Sale of personal property at a price not less than 500
2. Sale of real property orally
3. Sale of property not be performed within 1 year
WHEN CAN A SELLER DEMAND PAYMENT FOR A PRICE BASED ON FMV?
- When there is no price which has been fixed in accordance with
the agreement of the parties, or in accordance with the decision
of the party designated by the parties. However, 1474 can only be
used if the thing delivered has been USED. He must pay a price
based on FMV of the object.
- Note: if the buyer had not appropriated (use) it, you cannot
demand a price from the buyer.
EXPLANATION OF THE PRECEEDING ARTICLES BEFORE

WHAT ARE THE RIGHTS OF THE SELLER IN CASE THE BUYER BECOME IN - Note: under 1473, fixing of the price cannot be designated to one
ARREARS AND WHEN THE BUYER FAILS TO PAY THE PRICE? WHAT ARE THE of the contracting parties alone. (General rule)
AVAILABLE PROTECTION TO HIM UNDER THE LAW? (1484)
 Because contract of sale is a consensual contract and that means
there is a meeting of the minds, if only one of the parties will
determine the price how can there be a meeting of the minds.
- Note: the general rule is the one who shall fix the price is both
buyer and seller
CAN THERE BE AN EXEMPTION?
- Yes, if the parties stipulated that only one of the parties will be
the one who shall fix it subject to the ACCEPTANCE of the other.
- Note: under the characteristic of the “mutuality” of the contract,
the will of one of that parties cannot be imposed by the other.
Mutuality refers to the participation by both of the parties.
- Note: under 1469, the price shall be considered certain in money
in the following:
o The parties have fixed/agreed upon a definite amount
o If be certain with reference with another thing –
“stipulation” if he insist that you have a series of
transactions in the past let us say 5 transactions,
whatever is the price in the 5 th transaction that will be
the price certain.
o The determination of the price is left to the judgment
of a specified person
DO YOU FOLLOW THE SAME RULE IN THE SALES OF THE SHARES OF STOCK
IN THE STOCK OF EXCHANGE? (LIQUID, GRAINS, AND OTHER THINGS).
WHAT IS THE RULE IN DETERMINING THE PRICE OF THOSE OBJECTS?
- Under 1472, the price will become a certain price, based on
whatever price may be obtained in a particular place at a
particular time.
SCENARIO: UNDER 1472, YOU SOLD TO ME 100 CAVANS OF RICE, WE
AGREED THAT THE PRICE WOULD BE WHATEVER THE PRICE OF “MAHARLIKA
RICE IN TONDO” AT THE END OF THE MONTH.
WHEN CAN YOU DEMAND PAYMENT FROM ME?
- At the end of the month, it will only be in the end of the month
that the price will be certain.
FACTS: AT THE TTIME THE CAVANS OF RICE WERE DELIVERED IT HAS A PRICE
OF 1500 BUT BY THE END OF THE MONTH IT HAS INCREASED TO 2500.
HOW MUCH CAN YOU DEMAND?
- 2500
WHAT IS THE CONNECTION BETWEEN 1469 & 1472? ***
- It is the basis on how will you determine whether the price is
certain in money under the last sentence/portion of 1458 “or its
equivalent”
SCENARIO: IF THE PRICE IS GROSSLY INADEQUATE, THE VALUE OF THE
OBJECT IS 1,000,000 BUT THE PRICE IS ONLY 10,000.
IS THE CONTRACT INVALID?
- No, the contract cannot be invalidated
WHY?
- Because, the rule is SUFFICIENCY OF THE CONSIDERATION
RATHER THAN ADEQUACY OF THE CONSIDERATION.
- Note: sufficiency is anything that has value.
WHAT IS CONSIDERATION?
- Anything of value which is sufficient
- Note: under 1470, the general rule is even if the price is not
commensurate/adequate to the value of the object, it shall not be
a reason to disregard the contract of sale
WHAT IS THE EXCEPTION?
- If there is a VITIATED CONSENT
WHAT IS A VITIATED CONSENT?
1. Fraud
2. Intimidation
3. Violence
4. Undue influence
5. Mistake / Error
IF THE CONTRACT IS DEFECTIVE DUE TO VITIATED CONSENT WHAT WILL BE
THE RIGHT OF THE VICTIM?
- Voidable = annulment
WHAT ARE THE REQUISITES FOR A VALID OBJECT?
1. It must be TRUE / it must EXIST or with potential existence
2. It must be DETERMINATE or at least determinable
3. It must be LICIT, lawful, legal, within the commerce of man
- True means it exist. However, things with potential existence MAY
also become a valid object in a contract of sale.
SUBJECT TO WHAT CONDITION THAT A THING WITH POTENTIAL EXISTENCE
MAY BECOME A VALID OBJECT OF A CONTRACT OF SALE?
- Under 1461 par. 2 the efficacy of sale of mere hope or expectancy
is deemed subject to condition that the thing will come into
existence.
- Under 1462 the object of a contract of sale may be either
EXISTING GOODS or FUTURE GOODS
- EXISTING GOODS are owned and possessed by the vendor
- FUTURE GOODS are yet to be manufactured, raised or acquired
by the seller
- A thing with potential existence under 1461 par. 2, refers to the
thing covered by 1462 (those that are yet to be manufactured,
raised, or acquired)
SCENARIO: G-ANN IS A GARMENT MAKER AND JEMAR PLANNED TO BUY
SEVERAL DOZENS OF TSHIRT TO G-ANN THAT SHE IS PRODUCING IN HER
“NORMAL COURSE OF BUSINESS”, UNFORTUNATELY AT THE TIME JEMAR
CAME TO HER FACTORY, THE TSHIRT HE WANT TO BUY IS OUT OF STOCK BUT
STILL, WE ENTERED INTO A CONTRACT OF SALE, THE OBJECT (DOZENS OF
TSHIRT), AT THE TIME THOSE TSHIRT DOES NOT EXIST BUT G-ANN CAN
MANUFACTURE IT. SUPPOSING JEMAR PAID TO MANUFACTURE IT, WILL THE
CONTRACT OF SALE BETWEEN G-ANN & JEMAR BECOME EFFECTIVE?
WILL IT BECOME EFFECTIVE?
- Yes if it is produced. Under 1461 par. 2, the efficacy of a contract
of sale involving mere hope or expectancy shall be rendered
ineffective if the future thing/ thing with potential existence did
not materialized.
- Note: it has to be understood in that context because there is
something you called ALEATORY contract.
- We classify contract of sale as to the value of the thing exchange
between the buyer and seller. When the value received by the
buyer and seller are equivalent/equal from each other it is
CUMMUTATIVE. A contract of sale are generally commutative.
WHY A CONTRACT OF SALE IS HAS A CHARACTERISTICES OF
COMMUTATIVE?
- Because normally a person will not sell a property unless he gets
an equivalent value from the buyer.
WHAT IS THE EXCEPTION?
- ALEATORY CONTRACT, because in aleatory the subject of sale is
mere hope or expectancy. (ALEATORY CONTRACT or EMPTIO SPEI)
- EMPTIO SPEI (sale of hope or expectancy)
“THE THING WILL COME INTO EXISTENCE”
- When you entered into a contract of sale involving future goods
which pursuant to 1462 may either be subject to manufacturing,
raising, or acquisition. It must materialized. Therefore, if NOT
PRODUCED, RAISED OR ACQUIRED, it is deemed as if there is no
contract or sale. It is called EMPTIO REI SPERATAE or EPTIO REI
SEPARATI
- Note: ALEATORY SALE pertains to EMPTIO SPEI
WHAT IS THE SUBJECT MATTER OF SALE OF HOPE OR EPECTANCY?
- The “Chance” of winning what motivated you to enter into a
contract of sale.
- Note: in the 3rd paragraph of 1461, this will be the basis why there
is EMPTIO SPEI. “the sale of VAIN hope or expectancy is VOID”
HOW DO YOU KNOW WHETHER THE HOPE OR EXPECTANCY IS A HOPE
VAIN?
- When there is NO CHANCE of winning what motivated you to
enter into a contract of sale
WHY DO YOU BUY A LOTTO TICKET?
- What you are buying is the hope or expectation of winning the
prize. You paid 200 but did not win. How much did you give 200,
how much did you receive none.
- An ALEATORY CONTRACT of sale has an “element of contingency”
because the value will be dependent upon whether the
contingency will happen or not. While in EMPTIO REI SPERATAE,
what you are buying did not exist at the time of perfection. It is
allowed under the law as long as it can be manufactured, raised,
or acquired. Therefore, if NOT MATERIALIZED, 1461 par. 2 states
that the contract will rendered it ineffective contract of sale.
There is no rule like that in sale of hope or expectancy, when what
you are buying is hope or expectancy. As long as it is not in vain it
exist at the time of perfection it is VALID.
EMPTIO SPEI EMPTIO REI SPERATAE
OBJECT OBJECT
- Hope - Not needed to be exist
- Expectancy at the perfection
- Need to exist at
perfection
SCENARIO: (CONTRACT OF SALE W/ THE OWNERSHIP BELONGS TO ANOTHER
PERSON) I AM SELLING TO YOU A CELLPHONE (W/ OWNERSHIP BELONGS TO
ANOTHER PESON). I HAVE NO AUTHORITY TO SELL THE CELLPHONE. THE
CONTRACT IS VALID BUT IT CANNOT BE ENFORCED BECAUSE THERE IS NO
AUTHORITY FROM THE OWNER. IF THE OWNER AUTHORIZED ME TO SELL
THE THING, THEN THE CONTRACT CAN BE ENFORCED.
WHAT IF I SELL IT THAT EXCEEDS MY AUTHORITY, WILL THE CONTRACT
STILL BE ENFORCED?
- NO
WHAT ARE THE OTHER THINGS I CAN DO AT THE TIME OF DELIVERY FOR
THE CONTRACT BE ENFORCED IF HE DOES NOT AUTHORIZE TO SELL IT?
- Buy from him the cellphone, so that at the time of delivery I have
the capacity to transfer ownership.
DOEST IT NEED THAT A SELLER HAS OWNERSHIP OF THE THING?
- Under 1459, the law said the seller need not because the owner
of the thing. What is important is at THE TIME OF DELIVERY, he
has the capacity to transfer ownership of the thing.
- Note: it also said that the object must be lawful/licit/legal/.
2 KINDS OF ILLICIT THINGS
ILLICIT PER SE ILLICIT PER ACCIDEN
By its NATURE it is illegal By the power of law, it becomes
illicit.
Example: Sold her flesh for a Example: Selling of prohibited
pleasure of another person drugs
- Note: you can donate any organs of your body but you CANNOT
SELL IT
- Note: the object must be determinate or at least capable of being
determinate. As a RULE, the object must be specific. Even if the
object is generic but can be identified it is still valid.
SCENARIO: I HAVE 3 CARS MERCEDEZ BENZ, BMW, & VIOS. WE ENTERED
INTO A CONTRACT OF SALE. IT MERELY DESCRIBES “I AM SELLING TO YOU A
CAR”. AS A RULE, A CAR IS GENERIC THEREFORE THE SALE IS VOID. HOWEVER
BY WAY OF PERCEPTION IF A GENERIC THING CAN BE PARTICULARIZED IT
CAN BE VALID BECAUSE UNDER 1460 IT ALLOWS AT LEAST DETERMINABLE,
SO THEREFORE THE SALE IS REALLY VALID.
IF YOU DEMAND A MERCEDEZ BENZ, IT WILL BE IN YOUR FAVOR BECAUSE
IT IS MORE VALUABLE THAN VIOS. ON MY PART, I WILL INSIS ON THE VIOS
BECAUSE IT IS MORE FAVORABLE TO ME
HOW CAN THEY RESOLVE THIS?
- Go back to 1346, under oblicon, when the subject matter is
generic, the rule is do not allow the creditor to insist the most
expensive, do not allow it. Do not allow the debtor to insist in the
least expensive. But if they insist on what is favorable to them,
THERE IS NO MEETING OF THE MINDS.
- Note: under the law, if you can establish of the parties therefor
you can make a generic thing become a specific thing. By simply
prove the intention of the parties.
CONTIUATION SCENARIO: WHY DO I SELL IT TO YOU? WHY DO YOU WANT
TO BUY? IF THERE IS A PROOF THAT IT IS BECAUSE YOU WANT TO OPERATE
FOR A TAXI, THEREFOR THE “VIOS” IS MORE APPROPRIATE FOR THAT
PURPOSE. THEREFORE, EVEN IF THE THING IS GENERIC, YOU CANNOT ESCAPE
YOUR OBLIGATION AS BUYER TO PAY A PRICE CERTAIN IN MONEY.
CAN THE OWNER OF THE THING SELL HIS UNDIVIDED INTEREST ON A THING
OR HIS UNDIVIDED INTEREST ON A SPECIFIC MASS?
- Yes
SCENARIO: I SOLD TO YOU ¼ OF THE 5 HEACTARES OF RICE FIELD
WHAT WILL HAPPEN?
- We will become co-owner to the proportion of his interest.
Therefore, when you purchase a portion of a specific thing, it is
better have it divided to avoid co-ownership. The same rule apply
to specific mass.
- Note: specific mass refers to the thing that you mix like GRAIN of
the same variety.
WHAT ABOUT THINGS SUBJECT TO A RESOLUTORY CONDITION? CAN IT
BECOME A SUBJECT MATTER OF SALE?
- Yes
WHAT IS A RESOLUTORY CONDITION?
- One which extinguished the obligation once condition fulfilled
EXAMPLE: CAMILLE SOLD HIS CAR TO RYZEL BUT CAMILLE HAS THE RIGHT TO
BUY BACK THE CAR WITHIN 2 YEARS. ( PACTO DE RETRO SALE – CONTRACT
OF SALE WITH A RIGHT TO REPURCHASE)
DOES IT MEANT THAT CAMILLE HAD A RIGHT TO SELL THE CAR AS LONG AS
SHE SELLS WITHIN 2 YEARS
 - No, because it will become a double sale
- Ryzel is the one who can sell it within 2 years, the car she sold is
subject to resolutory condition.
WHAT IS THE RESOLUTORY CONDITION THERE?
- That if within the period of 2 years, Camille did not exercise her
right of conventional redemption, the obligation is
EXTINGUISHED. (Obligation of Ryzel to sell it again to Camille.)
- In the meantime, when ryzel waits for the 2 years, ryzel can sell it
to other person but if the car was purchased by other person
within 2 years, camille can buy it again from that other person.
- 1465 contemplates that the sale of the thing subject to resolutory
condition pertains to one with a period over the condition.
Therefore, if sold to another person within the period, it can be
repurchased by the one who has the right to repurchase.
CAN YOU TRANSFER OWNERSHIP EVEN THOUGH YOU ARE NOT THE
OWNER?
- Yes, if you have the authority of the owner to sell it. (agency to
sell)
- Note: the attribute of ownership is the right to dispose
ONE OF THE CHARACTERISTICS OF CONTRACT OF SALE IS BILATERAL OR
RECIPROCAL. WHY?
- Because in a contract of sale the contracting parties assume an
undertaking in favor of another. Therefore, in a reciprocal
contract, the price is treated as the cause or consideration.
CAN THE PRICE BECOME AN OBJECT?
- Yes, because a contract of sale is a bilateral/reciprocal contract
CAN YOU GIVE ME AN EXAMPLE OF UNILATERAL CONTRACT?
- Promissory note, the promisor and promisee is the parties. The
promisor only had an obligation to pay.
WHAT IS AN ALEATORY CONTRACT OF SALE?
- The value of thing given to each other is not commensurate
EXAMPLE OF THINGS TO BE ACQUIRED: IF YOU PASS THE CPALE, I PROMISE
TO SELL THE LAND TO YOU. THAT LAND THAT I PROMISE TO YOU, WHICH
YOU WILL BE ABLE TO ACQUIRE SUBJECT TO CERTAIN CONDITONS.
WHY A CONTRACT IS CONSENSUAL?
- Sale is perfected by mere meeting of the minds. The rule
IS THERE A SALE THAT CANNOT BE PERFECTED BY MERE MEETING OF THE
MINDS (NOT CONSENSUAL) EXCEPTION
- There can be a sell without perfection if the sale is an AUCTION
SALE/PUBLIC BIDDING. The sale is perfected when the auctioneer
“bangs his hammer”
WHY IS A CONTRACT OF SALE IS RECIPROCAL?
- Based on 1458, definition of sale. 1479 1 st paragraph, if there’s an
offer to buy and sell, the parties shall be reciprocally bound.
WHY IS ONEROUS A CHARACTERISTIC OF SALE?
- Because both of the parties assumed an undertaking. Because
valuable consideration is given.
WHAT IS THE OPPOSITE OF AN ONEROUS CONTRACT?
- Gratuitous contract, only the donor assume an undertaking
BY ONEROUS ACQUISITION OF PROPERTY
1. “I Bought it …” – contract of sale
2. “I accepted it” – by way of dacion en pago
3. “I acquired it” – to barter (I exchange another thing)
WHY CONTRACT HAS A CHARACTERISTIC OF PRINCIPAL?
- It can stand on its own. It does not depend on another contract
A CONTRACT WHEREIN IT CANNOT STAND ALONE?
- Accessory contract (mortgage / pledge)
WHY A SALE HAS A CHARACTERISTIC OF NOMINATE?
- It has a name given by the law (contract of sale)
WHAT’S THE DIFFERENCE BETWEEN ESSENTIAL AND NATURAL ELEMENT
- An essential element, if absent shall render the contract void.
Natural elements need not be stipulated, in form part in any
contract of sale (warrant against hidden defects/eviction)
- Unlike in accidental elements, they are stipulated by the parties.
CAN A NATURAL ELEMENTS CAN BE AN ACCIDENTAL ELEMENT AND VICE
VERSA?
- A natural element can be an accidental but an accidental cannot
be a natural element.
WHAT IS NEGOTIATION?
- Refers to the parties goes to the process of preliminary talks.
WHAT THE PRELIMINARY TALKS/NEGOTIOTAION IS CONCLUDED, IT GIVES
BIRTH TO WHAT?
- Perfection
CAN YOU GIVE ME EXAMPLES OF CONTRACT WHICH IS VALID BECAOUSE IT
IS PERFECTED YET IT NEVER REACH THE EXECUTION STAGE?
- If it violates the statute of fraud. When it requires a specific form
to be valid.
EXECUTION REFERS TO WHAT
- Enforcement/ implementation
CLASSIFY THE CONTRACT OF SALE ACCORDING TO SUBJECT MATTER?
- Sale of PERSONAL (movable) & real (immovable) property
CLASSIFY THE CONTRACT OF SALE ACCORDING TO THE VALUE OF THE
THINGS EXCHANGED?
- Commutative / aleatory
CONTRACT OF SALE WHERE IT CANNOT BE ENFORCED?
1. When the object is a real property
2. When the object is a personal property which value exceeds
500 pesos
3. When the execution of contract of sale is fixed after 1 year
WHEN WILL A CONTRACT OF SALE VOIDABLE?
- FIVUM
WHAT IS A CONDITION?
- Uncertain event
IS A CONTRACT TO SELL A PREPARATORY CONTRACT?
- Yes it is a preparatory contract to a contract of sale
 - Note: a contract of sale is a final contract
WHY IS ACONTRACT OF SALE A FINAL CONTRACT?
- You need not execute any other contract. In contract to sell, after
signing it, you need to comply with the conditions thereof.
WHAT ARE THE CONDITION?
- The seller will deliver the object, the buyer will pay a price in
installment. After full payment of price, that Is the time the
buyer become the owner.
- In a contract to sell, the transfer of ownership over the object is
conditioned upon the full payment of the price
SCENARIO: WE ENTERED INTO A CONTRACT TO SELL A CONDO UNIT. I AM A
REALTOR, I OWN SEVERAL CONDO UNITS. AND NOW, YOU IS SUBJECT INTO A
CONTRACT TO SELL, UPON SIGNING OF THE CONTRACT, UPON PAYMENT OF
THE DOWNPAYMENT, YOU CAN NOW HAVE THE CONDO UNIT.
DID YOU BECOME THE OWNER?
- Not yet because in a contract to sell, ownership is conditioned
upon the full payment of the price. Whereas, in the contract of
sale, the ownership is immediately transferred once the object
has delivered. Therefore, in a contract of sale is a final contract.
Whereas in the contract to sell, after full payment you need to
execute a deed of sale.
CONTINUATION: WHEN YOU BUY A CONDO UNIT, WHAT YOU WILL SIGN IS A
CONTRACT TO SELL. IF YOU SIGN A CONTRACT OF DEED OF SALE, THEN IT IS
NOT A CONTRACT TO SELL BUT A CONTRACT OF SALE. BUT FOR THE
PROTECTION OF THE SELLER, YOU WILL BE OR MAY BE REQUIRED TO ENTER
INTO A REAL ESTATE MORTGAGE.
- Note: you cannot mortgage something you did not own.
- Note: in a contract of sale, the payment of price is not material to
transfer of ownership. In a contract to sell the payment of price is
material to transfer ownership.
SCENARIO: IN A CONTRACT OF EXCHANGE, OCAY DELIVERS TO TAYAG A
SPECIFIC CELLPHONE WORTH 5000, IN RETURN TAYAG GAVE OCAY A
BALLPEN WORTH 2500 AND CASH AMOUNTING TO 2500
WHAT CONTRACT TRANSPIRED
- Contract of barter, 1468 is very clear, unless the intention of the
parties are not clearly manifested, the transaction shall become a
sale if the parties received equal value of the thing and money
which accompanies each other. In exchange in another thing
given by the opposite party, it shall become a barter if the
combination of the things given (money & thing), the value of the
thing given is higher than that the money.
- Partly money partly thing = intention of the parties
- If the intention is not clearly manifested THING > MONEY it is
barter and if it clearly states that it is a barter. Otherwise, (same
amount or lower) it is a sale.
SCENARIO: DONATO INCORPORATION, PLACED AN ORDER WITH PIMPING
MANUFACTURING COMPANY INVOLVING 100 ROUND NECK SHIRTS. THE
PURCHASE ORDER ISSUED BY DONATO CORP CONTAINS THE DETAILS “FOR
EXCLUSIVE DISTRIBUTION, FOR USE IN THE EMPLOYEES OF DONATO CORP IN
CONNECTION TO THE CHRISTMAS PARTY”
WHAT IS THE CONTRACT EXIST?
- Contract of sale
- Note: a purchase order is an evidence of contract of sale &
contract of piece of work
- Because what is ordered is fit for general consumption. It is
general consumption when the object is fitted for anybody’s
interest, it is a sale.
CONTINUATION: SUPPOSING DONATO COPR BACKET OUT. THERE IS A
BREACH OF CONTRACT. NOW, PIMPING MANUFACTURING CORP. IS NOW
STOCKED WITH WHAT THEY HAVE MANUFACTURED BUT YOU CAN EASILY
DISPOSE IT IN GENERAL MARKET.
WHAT DO YOU CALL THE PARTIES IN THE CONTRACT OF PIECE OF WORK?
- EMPLOYER & CONTRACTOR
CONSIGNMENT SALE vs. CONTRACT OF AGENCY TO SELL
Consignee sells it in his own behalf The agency sell on behalf of the
principal
SCENARIO: IF YOU BUY SHOES IN SM. THE SM IS NOT THE OWNER, THE
OWNER IS THE CONSIGNOR. IF SM DOES NOT SOLD ANYTHING SM DOES NOT
HAVE ANY OBLIGATION TO PAY THE CONSIGNOR
IN AN AUCTION SALE, CAN THE OWNER OF THE THING BID?
- It depends if there is a reservation made and provided further
that there is notification to the public that the owner is reserving
his right to bid.
- Note: 1479, I am not bound with any offer unless there is a
consideration
WHEN THERE ARE CONTRADICTING PROVISIONS IN A CONTRACT, HOW
CAN IT BE INTERPRETED?
- It should be interpreted in such manner which will give way to
whatever is fair, just, and reasonable to the parties.
SCENARIO: I SOLD TO YOU A SPECIFIC THING AND WE HAVE AN AGREEMENT
THAT UNTIL YOU FULLY PAID THE PRICE. I WILL BECOME THE OWNER OF THE
THING. BEFORE THE COMPLETION OF THE PAYMENT OF THE PRICE, THE
THING IS LOST. YOU ARE THE BUYER (THE CAR WAS DELIVERED) BUT YOU
ALSO DO NOT OWN IT YET.
WHO SHALL SUFFER THE LOSS?
- Buyer, under 1504, as an exemption to the rule, if the intention of
the seller to remain the owner to merely secure the payment of
the obligation, the buyer shall suffer the risk of loss.
SCENARIO: KRISTINE’S HOUSE & LOT WAS LEASED TO MR OCAY. MR OCAY
MADE THE HOUSE AND LOT INTO A SHOP. THE PERIOD OF LEASE IS 10 YEARS.
KRISTINE SOLD IT TO MARVIN, KRISTINE HAS THE RIGHT TO SELL THE HOUSE
AND LOT. THE CONTRACT OF SALE BETWEEN KRISTINE AND MARVIN IS IN
WRITING BUT NOT IN A PUBLIC INSTRUMENT, ONLY A PRIVATE
INSTRUMENT.
CAN MARVIN TELL TO MR OCAY TO MOVE OUT IMMEDIATELY?
- No because the instrument between Kristine & Marvin is not in
public instrument.
IF IT IS IN PUBLIC INSTRUMENT, CAN THE CONTRACT OF SALE BE BINDING
TO MR. OCAY?
- Under the rule, it will be binding to him unless Marvin has
knowledge between Kristine and Ocay’s contract. The contract of
lease between Kristine and Ocay’s contract is binding to them but
it’s not binding to 3rd person (marvin) unless the contract of lease
is in public instrument.
GIVE AN EXAMPLE OF SALES TRANSACTION, EVEN THOUGH THEY HAVE
MEETING OF THE MINDS, IN WRITING BUT VOID IF NOT IN PUBLIC
INSTRUMENT?
 - Sale of SHIPS, and sale of large CATTLE. If not in PUBLIC
INSTRUMENT (VOID)
1484 GIVES 3 REMEDIES IN FAVOR OF THE VENDOR & 1 REMEDY IN FAVOR
OF THE VENDEE.
1. Exact fulfillment
2. Cancellation / Rescission of Sale
3. Foreclosure of Chattel Mortgage
WHEN CAN EXACT FULFILLMENT BE AVAILED?
- If delayed in ONE installment
- Note: if there is a chattel mortgage constituted over the object of
sale to secure the payment of the price & the buyer is in arrears
for at least 2 installments.
IF THE BUYER IS IN AREEARS FOR 2 INSTALLMENTS, WHAT REMEDIES CAN
BE AVAILED?
- Cancellation or Foreclosure of chattel mortgage
WHEN THE CONTRACT OF SALE IS RESCINDED/CANCELLED CAN THE
INSTALLMENTS ALREADY PAID CAN BE RETURNED?
- It depends
WHAT IS THE RULE? SHOULD THE INSTALLMENT BE RETURNED?
- Yes, unless there is a stipulation provided it is not unconscionable
(unacceptable or immoral) to the other party
- Note: it will be unconscionable even if there is a stipulation that
the seller cannot return what has been paid if there is a situation
inequitable to the buyer.
- Note: chattel mortgage is a security contract whereby movables
constituted as security for the payment of the indebted
money/obligation to pay
- Note: under the chattel mortgage law, if the proceeds is over that
the obligation to pay, the excess shall be returned to the original
owner. If less than the amount, under RECTO LAW, you cannot
demand for deficiency of payment.
NOTE: UNDER 1484 APPLIES TO INSTALLMENT SALES OF MOVABLE, IF THE
BUYER DELAYS 1 INSTALLMENT, THE SELLER CAN AVAIL SPECIFIC
PERFORMANCE/EXACT FULFILLMENT BUT IF THE DEFAULT INVOLVES 2 OR
MORE INSTALLMENTS THE SELLER CAN CHOOSE BETWEEN CANCELLATIONS
OF SALE OR IN CASE WHEN THERE IS A CHATTEL MORTGAGE CONSTITUTED
OVER THE MOVABLE, HE MAY DECIDE TO FORECLOSE THE MORTGAGE.
AVAILMENT OF ANY OF THE 3 SHALL EXCLUDE THE OTHER.
NOTE: UNDER RECTO LAW, SHOULD THE AUCTION SALE RESULTED INTO A
DEFICIENCY SALE, THE OBLIGATION OF THE BUYER IS NOW EXTINGUISHED
SCENARIO: I SOLD TO YOU A SPECIFIC CAR FOR A PRICE OF 5,000,000
PAYABLE IN INSTALLMENTS. I REQUIRED YOU TO SECURE IT WITH A CHATTEL
MORTGAGE OVER THE CAR ITSELF PLUS ANOTHER CHATTEL MORTGAGE
OVER YOUR PRE-OWNED VEHICLE. YOU DEFAULTED FOR 2 OR MORE
INSTALLMENT. SO I SELECTED TO FORECLOSE THE MORTGAGE CONSTITUTED
OVER THE INSTALLMENT OBJECT UNFORTUNATELY IT RESULTED INTO A
DEFICIENCY SALE. I CAN NO LONGER DEMANDING RECOVERY OF THE
DEFICIENCY BECAUSE THERE IS ANOTHER CHATTEL MORTGAGE WHICH I
WANT TO FORECLOSE.
CAN I FORECLOSE THE CHATTEL MORTGAGE OVER YOUR PRE-OWNED
VEHICLE?
- No, because when the obligation is already extinguished by the
foreclosure of the chattel mortgage constituted over the
installment object. There is no more obligation to be secured by
the mortgage over your pre-owned vehicle and therefore if there
is no more obligation to be secured, there is no more mortgage to
be foreclosed.
SCENARIO REVERSED: THE ONE I FORECLOSE IS THE MORTGAGE OVER THE
PRE-OWNED VEHICLE, THE RESULT DEFICIENCY SALE.
CAN I STILL RECOVER THE DEFICIENCY FROM YOU?
- Yes, because the other mortgage is governed under chattel
mortgage law, when there is deficiency, you can recover, when
there is excess you must return.
THE FORECLOSURE OF THE CHATTEL MORTGAGE OVER THE INSTALLMENT
OBJECT RESULTED INTO AN EXCESS SALE, CAN THE EXCESS BE RETAINED?
- No, the seller cannot retain because the RECTO LAW is a
protection to the buyer
- Note: when the security is pledge or a real estate mortgage,
forget about RECTO LAW. Recto law strictly applies to the chattel
mortgage instituted over the object of the installment buyer. In all
other cases It is the mortgage law will apply
- Note: the MACEDA LAW, is the counterpart of RECTO LAW, the
subject matter of maceda law, installment sales of IMMOVABLES.
Most of the buyers or realty buys in installment.
WHAT ARE THE PROTECTIONS AVAILABLE TO THE BUYER WHO DEFAULTED
IN PAYMENT FOR THE IMMOVABLE?
1. Entitled for 60 days grace period to pay w/o interest. After having
paid installments for at least 2 years, the buyer is entitled for a
mandatory grace period of one month for every year of
installments made to pay w/o interest
SCENARIO: THE BUYER COMPLETED PAYMENT OF 60 MONTHS/5 YEARS.
UNFORTUNATELY ON THE 70TH MONTH HE STARTED DEFAULTING UNTIL HE
COULDN’T CONTINUE PAYMENT.
CAN HE STILL UPDATE HIS ARREARS? WHAT WOULD BE THE GRACE
PERIOD?
- Yes, without interest. 5 months (2 years = 2months, 3-5 years = 3
months)
- Note: if you default happened within 2 years, your grace period
w/o interest are 2 months. The seller can give more than 2
months but not less than 2 months.
HE DEFAULTED PAYMENT ON THE 3OTH MONTH, CAN THE SELLER GIVE
YOU 3 MONTHS?
- Yes but you cannot demand for 3 months because you haven’t
completed the 1 year after 2 years.
- Note: the buyer is entitled to update his account after grace
period but with interest
- Note: seller is entitled to cancel the obligation provided that the
seller will return 50% of what the buyer has been paid. Plus 5% of
what the buyer has been paid. Plus 5% after 5 years. 6 th year =
55% but the limit is only 90%
SCENARIO: THE BUYER HAS COMPLETED 15 YEARS INSTALLMENT BUT
DEFAULTED ON THE 16TH YEAR
HOW MUCH WOULD BE HIS REFUND?
- 90% of what has been paid for 15 years
 - Note: 1485 said that when the transaction refers to a contract of
lease with an option to buy/0purchase it shall also be governed
by RECTO law.
- Because it only purports to be a lease but in truth it is a sale by
installment.
SCENARIO: (READ CAREFULLY) YOU LEASED MY CAR, YOU PAID ME IN A
DOWNPAYMENT OF 50,000 AND EVERYMONT THEREAFTER 10,000 UNTIL
THE AGREED PRICE HAS BEEN FULLY PAID. YOU DEFAULTED PAYING THE
RENTAL. I RECOVERED THE CAR FROM YOU. BUT YOU STILL OWE ME A
CERTAIN AMOUNT OF MONEY.
CAN I STILL RECOVER FROM YOU?
- No, it is as if it has been foreclosed
ASSUMING YOU HAVE PAID ME 90,000 OUT OF 100,000. YOU DEFAULTED
IN PAYMENT OF 10,000. SO I RECOVERED THE CAR FROM YOU. UNDER THE
LAW, I CANNOT RECOVER ANYTHING FROM YOU. BUT WHEN I
REPOSSESSED THE CAR THAT IS TANTAMOUNT/EQUAL TO CANCELLATION
OF TRANSACTION. AND UNDER THE LAW, WHEN YOU RESCINDED, THE
RULE IS WHATEVER HAS BEEN RESCINDED BY PARTIES, THEY MUST RETURN
IT TO THE FIVER MINUS A REASONABLE AMOUNT. IT’S UP TO THE COURT
TO DETERMINE A REASONABLE AMOUNT.
WHY YOU THING UNDER 1487, THE LAW DO PROVIDES THAT THE EXPENSES
ON THE SALE SHALL BE IN ACCOUNT OF THE VENDOR AS A RULE UNLESS
THERE IS A STIPULATION OTHERWISE
- “Execution of the documentary sale, registration, doc stamp tax,
capital gains tax and etc. shall borne by the vendor because under
1458 the vendor binds himself to deliver & transfer ownership &
1495 the vendor’s obligation is to deliver and transfer ownership
to warrant.
DOES IT NEED TO BE SPECIFIC IN A DEED OF SALE THAT THE VENDOR
SHOULD BE THE ONE TO SHOULDER THE COST OF SALE?
- Yes
- Note: if the documentation says “netted or net off” it shall be the
buyer who shall shoulder the cost of sale
WHAT IS THE DIFFERENCE BETWEEN EMINENT DOMAIN AND
EXPROPRIATION?
- Eminent domain is the INHERENT POWER while expropriation is
the process of exercising eminent domain.
WHAT ARE THE REQUISITES FOR THE EXPROPRIATION?
A. It must be taken by a competent authority
- Observance of due process of law
EXPROPRIATION SALE IS AN INVLOUNTARY SALE?
- Because the private property owner has no choice but to yield to
the demand of the state
Buyers in Good Faith
A (January) – fully paid
X B (February) – no payment w/ possession
(Seller in (Physical delivery)
Bad faith) C (March) – no payment w/ registration
(Constructive delivery)
Note: they are all contesting for ownership
WHO WILL HAVE THE RIGHT TO OWN THE LAND?
- When a vendor sells the object to 2 or more times to buyer in
good faith, the ownership shall be given to the buyer WHO HAS
REGISTERED it ahead of the others. If the object is immovable (C is
the owner). In the absence of the registration to the buyer who
took POSSESSION ahead and when there is NOBODY HAS A
REGISTRATION / POSSESSION, to the one who can show the
OLDEST DOCUMENT OF SALE (first buyer). This rule shall apply if
the several buyers are all in good faith. Anyone acted in BAD
FAITH hall be excluded in the consideration as who will be entitled
to ownership.
SCENARIO: BEFORE C REGISTERED IT, HE WENT TO THE SITE TO ASCERTAIN
FOR HIMSELF HOW GOOD THE LAND IS AND HE FOUND OUT THAT B IS IN
OCCUPATION OF THE LAND. WHEN THE 3 BUYERS CONTESTED OWNERSHIP.
C INVOKED 1544
WHO SHALL OWNERSHIP BELONG TO?
- B acquires the ownership because C acted in bad faith
SCENARIO: ASSUMING THAT B KNEW OF HE PREVIOUS SALE OF X TO A, BUT
SINCE THE VENDOR OFFERED TO B A VERY LUCRATIVE OFFER, B WAS
INDUCED TO ACCEPT THE OFFER.
WHO HAS THE RIGHT TO ACQUIRE THE OWNERSHIP?
- A, because B was induced and acted in bad faith because of her
knowledge in previous sale.
RULE ON SALE OF IMMOVABLES
1. First registered it
2. Who took possession
3. First buyer
SCENARIO: HOWEVER THE OBJECT IS A CAR (MOVABLE)
RULE ON SALE OF MOVABLE
1. Who took possession
2. First buyer
- Exception when the movable requires registration, give the
ownership to the one who registered it (example car).
WHO WILL BE ENTITLED FOR THE OWNERSHIP?
- C, in the sale of car it requires registration for transfer of
ownership
WHO CAN BE A BUYER/SELLER?
- Any person who has the capacity to give consent to a contract
WHO ARE PERSONS CAPACITATED TO GIVE CONSENT?
- Natural and Juridical Persons
SCENARIO: JOB IS INSANE, THIS CHRISTMAS, JOB RECEIVED 10,000 IN CASH,
WITH THAT MONEY HE BOUGHT ALL OF THE 10,000 INTO ICE CREAMS AND
GAVE IT ALL TO HIS CLASSMATES. DONATO IS THE GUARDIAN OF OCAY
CAN DONATO GO TO THE ICE CREAM VENDOR AND DEMAND FOR THE
RETURN OF THE 10,000 PESOS PAID FOR THE ICE CREAM?
- Considered VOIDABLE, because okay is insane.
SCENARIO: JOB IS INSANE, THIS CHRISTMAS JOB RECEIVED 10,000 IN CASH,
WITH THAT MONEY JOB BOUGHT THE MOST EXPENSIVE RICE WORTH 100
PER KILO (JOB IS FUCKING RICH)
CAN DONATO DEMAND FOR THE RETURN?
 - It depends on the financial status of job. Therefore if job is rich, it
is valid. If he is poor, it is still valid because what is purchased is a
necessity. Therefore, if the reasonable price is 5,000 then the
excess 5,000 shall be returned.
NOTE: THOSE WHO ARE INCAPACITATED TO GIVE CONSENT ARE THE ONES
WHO ARE ABSOLUTELY DISQUALIFIED BECAUSE THEY DON’T HAVE THE
CAPACITY TO BECOME A BUYER & SELLER PF ANY OBJECT TO ANY PARTY.
THOSE WHO ARE SUFFERING FROM RELATIVE INCAPACITY IS NOT ABSOLUTE
BECAUSE THE HUSBAND CAN STILL BE A BUYER/SELLER PROVIDED THE
OTHER PARTY IS NOT HIS WIFE. THE AGENT, GUARANTOR, EXECUTOR,
ADMINISTRATOR, PUBLIC OFFICERS, ARE ONLY DISQUALIFIED TO BE THE
BUYER OF THE THINGS UNDER THEIR FIDIUCARY RESPONSIBILITY. BUT IN ALL
OTHE OBJECTS THEY ARE QUALIFIED
NOTE: THE ARE ALSO NOT ALLOWED IN TRANSACTIONS LIKE LEGAL
REDEMPTION (RECOVERED), COMPROMISE, CONVENTIONAL REDEMPTION
(RESERVED RIGHT)
NOTE: THE RULE IS A HUSBAND & WIFE CANNOT BECOME A BYER AND
SELLER TO EACH OTHER, THEY CANNOT BECCOME A DONOR & DONEE TO
EACH OTHER
SCENARIO: A HUSBAND AND WIFE WNTERED INTO A CONTRACT OF LEASE
CAN THE CONTRACT OF LEASE BE VALID?
- No, because under the provisions of the urban land and rural land,
the prohibition under 1490 shall also apply.
SCENARIO: KRISTINE & MARVIN ARE LIVED IN COMON LAW HUSBAND &
WIFE
CAN THEY BECOME A BUYER AND SELLER, BECAUSE TECHNICALLY THEY ARE
BOTH SINGLE
- No, to allow a common law husband and wife to sell to each other
and yet you prohibit it lawfully, it is like the law will be
encouraging immoral doings.
- Note: the law will allow the husband and wife to be buyers and
sellers to each other, if they had a marriage settlement contract/
pre-nuptial/ ante-nuptial agreement
- Note: a marriage settlement agreement is an agreement to settle
their property relations (separation of property)
- Note: even though w/o marriage settlement as long as they have
legal separation it is allowed by the court.
4 OBLIGATIONS OF VENDOR
1. To deliver
2. To transfer ownership
3. To warrant
4. To preserve the thing
HOW DO YOU KNOW WHETHER THE VENDOR HAS DIRECTLY COMPLIED
WITH THE OBLIGATION TO DELIVER THE THING?
- 1497, the thing is delivered when POSSESSION or CONTROL over it
is transferred to the vendee
HOW WILL YOU DELIVER AN INTANGIBLE OBJECT?
- QUASI TRADITIO
- Note: endorsement of shares of stock is quasi negotiable because
it is a negotiable document rather than instrument
- Note: a document of title becomes negotiable when it is
deliverable to the vendee or to order or to bearer.
EXAMPLES OF “DOCUMENTS OF TITLE” – CAN TRANSFER THE GOODS W/O
PHYSICAL DELIVERY
1. DOCK WARRANT – shipment of goods by SEA
2. BILL OF AIR WAIVEE – shipment of goods by AIR
3. WAIVEE – shipment by courier???
4. WAREHOUSE RECEIPT – issued by warehouse man by
acknowledging receipt of goods for delivery to a specified person/
to order/ to bearer
DOCUMENTS OF TITLE IS WHAT KIND OF CONSTRUCTIVE DELIVERY?
- TRADITIO SYMBOLICA
SCENARIO: YOU PURCHASE FROM ME A CERTAIN QUANTITY OF A SPECIFIC
MERCHENDISE, I AM MANILA BASED, YOU ARE CEBU BASED, SO TO DELIVER
THE GOODS TO YOU, I ENGAGED THE SERVIDED OF A SHIPPING COMPANY.
THE SHIPMENT IS COVERED BY A BILL OF LADING DELIVERABLE TO YOU (AS A
BUYER)
OTHER TERM FOR ACTUAL DELIVERY
- Physical/real delivery
OTHER TERM FOR CONSTRUCTIVE DELIVERY?
1. BY LEGAL FORMALITIES (DOCUMENTS OF SALE)
2. BY SOMETHING THAT SYMBOLIZED THE THING (TRADITIO
SYMBOLICA)
3. BY MERE POINTING THE OBJECT (TRADITIO LONGA MANU)
4. TRADITIO BRAVI MANU
5. TRADITIO CONSTITUTUM POSSESSORIUM
WHAT IS THE DIFFERENCE BETWEEN TRADITIO BRAVI MANU AND TRADITIO
CONSTITUTUM POSSESSORIUM
- When the object of sale is in possession of the buyer before and
after perfection of sale (BRAVI MANU) example, renting
something, the owner decided to sold it to you
- While the CONSTITUTUM POSSESSORIUM, the possession before
and after perfection of the sale is w/ the vendor. Before the sale,
as the owner, after the sale probably usufructuary or lessee.
(Example I will sold to you under the condition that you will let me
lease it for 1 year.)
- Note: the vendor can go after the vendee for the payment of the
price.
CAN A BUYER ACQUIRE A RIGHT BETTER THAN THAT OF THE SELLER IN SO
FAR AS THE OBJECT IS CONCERNED?
- NO
CAN A PERSON WHO HAS VOIDABLE TITLE OVER A SPECIFIC THING, SELL A
THING
- Yes, provided his title is not yet been voided or annulled.
- Note: the real owner can reacquire the thing sold in a voidable
sale, the buyer in good faith can reimburse.
SCENARIO: I HAVE ISSUED A BILL OF EXCHANGE FOR THE PAYMENT OF THE
MERCHENDISE YOU PURCHASED FROM ME WHICH I AM DELIVERING
THROUGH A BILL OF LADING. SO THAT I WILL BE AASSURED OF PAYMENT, I
SSUED A BOE ADDRESSED TO YOU AS THE DRAWEE PAYABLE TO MY
CREDITOR IN CEBU. SO WHEN YOU HONORED THE BILL OF LADING BY
WITHDRAWING THE GOODS FROM THE SHIPPING COMPANY. MY CEBU
BASED CREDITOR PRESENTED BOE FOR YOUR ACCEPTANCE BUT YOU DID
NOT HONOR.
WHAT WOULD NOW BE THE CONSEQUENCES?
- The vendee shall NOT acquire ownership even though he has
delivery
- Note: if one B/L is with a BOE and the vendee only honored is the
B/L but dishonored BOE, he will not acquire ownership
CONTINUATION: SINCE THE B/L IS NEGOTIABLE, THE VENDEE NEGOTIATES IT
TO A 3RD PERSON WHO HAS NOW THE COPY OF B/L. BUYER OF GOOD FAITH
WHO HAS NO KNOWLEDGE OF PREVIOUS DISHNORED BOE.

- Note: in a case of a 3 rd person, to whom the BOL may have been

sold, if the person is in good faith, he will become the owner,
otherwise he can become the owner.

MEANING OF NEGOTIABLE DOCUMENT OF TITLE

- It is the same with negotiable instrument except for the purpose.

In a negotiable instrument the purpose is the payment of money.
In document of title the purpose is delivery of goods.

WHEN DID THE DOCUMENTS OF TITLE BECOME NEGOTIABLE?

- When the doc of title

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