Professional Documents
Culture Documents
COS
5. Agency to Sell (ATS) vs. COS
Articles I Laws to Remember. 1458, 1467, 1477 transfer of ownership,
1505, 559 who can transfer xxx, 1504, 1544, 1484 Recto Law, R.A. 6552, Deed of Absolute Sale (DAS) vs. Conditional Sale (CS) vs. Contract to
1602, 1606, 1620, 1623, Redemption xxx Se I I (CTS)
DAS —seller does not reserve his title over the thing sold and thus, upon
Qr A obliged himself to deliver a certain thing to B. Vpon delivery, B delivery of the thing, ownership passes regardless of whether or not the
would pay a sum of money to A. Is thats contract of sale7 buyer has paid.
A: Not necessarily. Even if there is an obligation to deliver, if there is no
obligation to transfer ownership, it will not be a contract of sale. It may be a CS - condition/s are imposed by the seller before ownership will pass.
contact of lease. Normally, the condition is the full payment of the price. In CS, ownership
automatically passes to the buyer from the moment the condition happens.
Memorize:Art. 1458 There is no need for another contract to be entered into.
Note: Sale is a contract, so the general principles in oblicon are applicable BE: Receipt was issued by A to B. The receipt's tenor "Date of the
to sale but note that there are provisions which are contrary. receipt xxx Received from B the sum of PT5,000.00 as partial payment
for the car xxx the balance to be paid at the end of the month xxx".
Characteristics of Contract of Sale (COS) Contract to Sally
~1.5 I 1415 — COPI I,I I 4 5 5 SA: No. It does not pertain to a CTS because in a CTS ownership is
meeting of the minds of the parties as to the object and price. reserved by the seller despite delivery to the buyer. The buyer does not
Note: There is 1 special law which requires a particular form for the validity acquire ownership. This is an Absolute Sale.
of a contract of sale — in that sale, it can be said that kind of sale is a formal
contract Cat tle Registration Decree. In a sale of large cattle, the law Qr In a CTS, upon the happening of the condition/a imposed by the
provides that the contract of sale of large cattle must be: in a public seller, would ownership automatically pass to buyer7
instrument, registered and a certificate of title should be obtained in order A: No. While a CTS is considered a spedal kind of conditional sale, it is a
for the sale to be valid. But otherwise, the other contracts are perfected by peculiar kind of sale because despite the happening of the condition and
mere consent or mere meeting of the minds. actual delivery, the buyer does not automatically acquire ownership. In
CTS, if condition/s happen, the ri ht of the bu er is to com el the seller to
~2. Princl al —sale is a principal contract, it can stand on its own. It does execute a final deed of sale So ownershi does not automaticafi ss.
not depend on other contracts for its existence and validity.
Dation in Payment (DIP) vs. COS
"'5' 5 "' " "5 ~DIP 1245 —whereby property is alienated to the creditor. It is provided that
is not possible that only 1 party is obligated because a contract of sale is the law on sales shall govern such transaction. It is spedficafiy provided
essentially onerous. that the pre-existing obligation must be in money. If not in money and there
is OIP, it will not be governedby the law on sales but by the law on novation
4~ 5 1555 — COP I I II . OIP because practically there is a change in the object of the contract.
another contract or any other act like it may be a donation if there is no
compensation for the transfer of ownership to the other party. Example I: If A owes B P100,000.00 instead of paying P100,000, he offers
B and B accepts the car of A as an equivalent performance ~ this is DIP
and will be governed by the law on sales.
prestation to be performed by both parties. Normally, the thing sold would
be equal to the price paid by the other party (buyer). Example 2: If the pre-existing obligation is to deliver a specNc horse but
instead of delivering the horse, the debtor told his creditor and the creditor
a contract of sale which is an aleatory contract like sale of hope. accepted, that he will instead deliver his car ~ it is still OIP but it will not fall
In sale of hope, the obligation of 1 party will arise upon the happening of a on 1245 but on novation because there is a change in the object of the
certain event or condiTion. obligation which would extinguish the obligation.
Example Sale of Hope: Sale of a lotto ticket, PCSO will have the obligation Note: A guide to distinguish one concept from another is to know the
to pay you only if you got afi the 4 or 6 numbers which are drawn nature, requisites and effects.
SA: This is exactly the case of Quiroga vs. Pamons.Article 1466 — in Atty. Uribe's Comment: Estoppel is not a good ground because the minor
construing a contract containing provisions characteristics of both a COS is not aware.
and ATS, you have to go into the essential clauses of the whole instrument.
In this problem, one of the clauses " Sale of Necessaries
That would make the contract COS and not ATS because in 30 days from In sale of necessaries such as food, dothing and medicine to a minor, the
delivery, whether or not 8 has already sold those pants to other persons, he minor has to pay a reasonable price. This contract is not voidable. The sale
is already obliged to pay a price. That is not an ATS. Being a COS, of necessaries will bind the minor and he will be compelled to pay n
~ot reall
therefore, after having been delivered, ownership passed to the buyer and
hence under res perit domino rule, the buyer bears the loss and therefore
he can be compelled to pay the price. Relative Incapacity (Articles 1490 and 1491)
1. Sale between s ouses — it is void except:
Essential Elements of a Contract of Sale a. T h e spouses executed a marriage settlement and in the
1 Consent of the Contractin Parties marriage settlement they agreed for a complete separation of
2. Ob ect or Sub ect Matter —which is a determinate thing or right property regime. Then they can sell to each other.
Note:Service cannot be the subject matter of sale. b. I f n o marriage settlement, they may have obtained judicial
3. Cause or Consideration — asfar as seller is concerned, it is the price declaration of separation of property. After that, they can sell to
in money or the equivalent of the payment of the price. each other.
L.R.B. BASTE
~ voidable. FIVUM Exceptions:
1. Intransmlssible by Nature
E If the a ave su c h consent in the name of another without 2. Intransmissible because of Stipulation
authorl of that r s on or no authorl oflaw 3. Intransmissible because of Law
~ unenforceable. Take note may be authorized by the person or by law.
Example of authorized by lawi notary public has the right to sell in pledge CAUSE OR PRICE CERTAIN INMONEY OR ITS EQUIVALENT
because he has the authority to sell under the law.
Qr Adeed of sale was entered Into by A and B. The price agreed upon
OBJECT OR SUBJECT MATTER was 1M yen.
The requisites in sale as to thing would almost be the same as the (a) Na y that be a valid sale 7
requisites of contracts in general. (b) Canthe seller compel the buyer to pay inyen7
1 The thin must be within the commerce of men A: (a) Yes, it is valid. Basis is Article 1458 because the only
Examples: sale of a navigable river is void, sale of a cadaver is void but requirement of the law is "in money". Even Japanese yen is in money. The
donation of a cadaver is allowed, sale of human organs is void, things law states that it may not even be in money, it may be "equivalent" like
which are not appropriated like air is void but if appropriated it can be the promissory notes whether or not negotiable or letters of credit.
object of a valid sale. (b) If the contract was entered into today, yes it is valid because
of R.A. 8183 which repealed R.A. 529 in 1996. If COS was entered before
I R.A. 8183, the seller cannot compel even though the contract is valid. The
Examples: sale of prohibited drugs or shabu is void, sale of marijuana is payment has to be made in Philippine money.
void, sale of wild flowers or wild animals is void Consider the date of the sale. If parties failed to stipulate as to which
currency, it has to be in Philippine currency.
Qr Sale of a land to B with a right to repurchase wi thi n1 year which A Qr If the 3 person fixed the price but It was too high or too low or
delivered. On the 3u month, B sold the land to C. However, on the 9" maybe there was fraud committed by the 3u person or he was in
month,A offered to repurchase the land. connivance with one of the parties, may the sa/e be vold7
(a) What Is the status of thesale between A and C7 A: No, because the remedy of the other party is to go to court for the court
(b) Who willhave a better right over the land7 to fix the price.
(Sale widt a right to repurchase)
Note: Lesion or gross inadequacy of the price does not as a rule invalidate
A: (a) Be guided by the fact that a COS is a consensual contract. The mere a contract unless otherwise specified by law.
meeting of the minds as to the object and the price, then there is a valid and ~Exec tion: when otherwise provided by law.
perfected sale. Hence, this is a valid sale even if the object of the sale is a Example:Article 1381.
Ih I h M . A I l 146 5 14 Ih hI 6'
resolute condition ma be the ob'ect of a COS. Note: Under the law on sales, if there is gross inadequacy, it may reflect
Atty. Urlbe: Mas tamang sabihin — since the o~wnershi thereof is subject to vitiation of consent so the SC would normally enjoin the lower courts to be
a resolutory condition. Hindi neman yung thing is the subject of resolutory warned of the possibility of fraud in case of lesion. Lesion must be proven
condition, it is the ownership over the thing. as a fact. It is not presumed.
If A exercises the right to repurchase and such would be a valid exerdse of If there is gross inadequacy, it maybe because actually they intended
such right then the ownership of B would be extinguished. The exercise of another contract and that would make the sale a simulated sale and
the right is considered a resolutory condition as to the ownership of B. The therefore the sale is void.
fact that the object of the sale is subject to a repurchase will not affect the Example: The value of the property is P1M but only P10,000 was written in
validity of the sale. the contract because they intended it to be a donation ~ void.
(b) As a rule, it would be A as a seller a retro because he has the right to
repurchase assuming his repurchase is valid. C may have a better right if TIME OF THE PERFECTION OF THE CONTRACT
he can claim that he is an innocent purchaser for value. Example: maybe
the right to repurchase was not annotated at the back of the title of the land Auction Sale
and he has no actual knowledge. If that is the case, C may have a better Auction sale is perfected upon the fall of the hammer or any other
right. customary manner. Thus, before the fall of the hammer in an auction sale,
the bidder even if he has already made a bid, he can still withdraw the bid
SALE OF RIGHTI ASSIGNMENT OF RIGHT as long as he would do that before the fall of the hammer. Otherwise, (if
Assignment of right is not necessarily a sale. If there is a valuable after the fall of the hammer), there is already a perfected sale.
consideration for the assignment, it is a sale. If there is no valuable
consideration, it may be a donation or dacion en pago. Qr Can the auctioneer withdraw the goods beibre the fall of the
hammerf
Examples of right: credit, shares of stock A: As a rule, yes because the sale has not been perfected at the moment
unless the bidding or auction has been announced to be without reserve.
6
intransmissible Note: Before perfection, there is one contract which maybe perfected.
G.Ru As a ru l e, r ights and o bligations arising from contracts are Before perfection meaning in the negotiation stage ~ this contract is known
transmissible. as the ggllggJNB)gtgL
L.R.B. BASTE
the statute of frauds and therefore he may be compefied to execute the final
Option Contract deed of sale.
s I * .o
Facts: Mrs. Rigos offered to sell her land to Sanchez for a certain price. RIGHTS AND OBLIGATIONS OF THE VENDOR
Rigos gave Sanchez 2 years within which to decide.(Note: The optionee or In a deed of sale (DOS), there can be hundreds of obligations of
promisee or offeree is not bound to purchase but he has the option to buy the vendor but those obligations would be because of the stipulation. But
or purchase). In this case, Sanchez has the option. Before the lapse of 2 there are only few obligations imposed by law. The 3 most important:
years, Sanchez told Rigos that he is buying and offered the price agreed 1. T o transfer ownership
upon but Rigos refused claiming that she was not bound by the written 2. T o deliver
option agreement because no option money (consideration) was given by 3. T o warrant the thing
Sanchez. According to Rigos, the option contract is void. There are other obligations:
Held: Since Sanchez accepted the offer and decided to buy within the 4. O b l igation to take care of the thing sold with the diligence of a
period before the offer was withdrawn, a perfected COS was created even good father of a family prior to delivery.
without option money. In this case, there was no option contract because it 5. F r om the time of the perfection up to the time of delivery then
was merely an option agreement. Therefore, there was merely an offer on there would be obligation to pay for the expenses for the
the part of Rigos and once the offer was accepted before it was withdrawn, execution and registration of the sale and obligation to pay the
regardless of whether option money was given and in this case no option capital gains tax would be on the seller as a rule.
money was given, a perfected COS was created. 6. O b ligation to deliver the fruits which is related to the obligation to
Note:Iba pag may opti
o n m oney deliver the thing
Qr 2 years within which to decide — assuming them was option
money, beforethe offeree could decide to buy, the offeror withdraw OBLIGATION TO DELIVER THE FRUITS
on the 6" month. BE: A sold a mango plantation to B but they stipulated that delivery
fa) Ca n theofferee on the 10e month say "I would like to will be after the signing of the deed oi sale. Alter the expiration of the
buy'7 6-month period, B demanded for the delivery. The vendor was able Io
(b) Can the buyer compel the seller tosell? deliver 1 month after the date when he was supposed to deliver the
A: (a) No. mango plantation. During this period, the vendor harvested mango
(b) No, an action for specific performance will not prosper because when fruits and sold them toX. The vendor was able to deliver only after the
he said he will but there was not more offer to be considered. Na-withdraw other fruits were harvested and sold to Y. Can B recover the mango
na eh. frui ts from Y during the 6" month period?
SA: Determine first whether B is entitled to the fruits because if he is not
Qr If the oiieree ffles an action for damages, may that action prosper entitled, then he cannot recover the fruits. Is he entitled to the fruits after 6-
there being option money given? month period during the 1-month period prior to delivery? Yes, in fact, under
A: Yes, because with the option money, an option contract is perfected, the 1537, the fruits of the thing sold from the time of perfection shall pertain to
offeror is bound to give the offeree, 2 years within which to dedde and the buyer.
failure to that he is liable not based on r f e cted COS but on erfected
cggttactgfggfiglt. OBLIGATION TO TAKE CARE OF THE THING
G.Rz The thing sold should be determinate because if generic (1460, 2"'
Option Money (OM) vs. Earnest Money (EM) paragraph) then there is nothing to be taken cared of. It will become
OM is not part of the price while EM is part of the price and at the same determinate only upon delivery.
time, it is a proof of the perfection of the contract. Exceptions: There are sales transactions wherein the vendor would not
have this obligation:
G.Rz A COS may be in any form. Article 1483 provides that a COS may be a. C o nstructive delivery - brevi manu — There would be no
in writing, partly in writing xxx. This provision is exactly the same as Article obligation on the part of the seller to take care of the thing
1356 in contracts which provides that contracts may be obligatory in from the time of perfection because at the time of
whatever form they may have been entered into provided afi the essential perfection, the buyer was already in possession of the
requisites are present. But then again even Article 1356 just like Artide thing. Maybe he borrowed the thing. Example: he borrowed
1475 would provide for exceptions. the car and he decided to buy it — the thing was already in
Exceptions: The law may require a particular form for its validity. The his possession.
Cattle Registration Decree is an example - where the law itself provides for
a particular form for the validity of the sale. But the law may require OBLIGATION TO PAY EXPENSES ITAXES
particular form for its enforceability of the sale and that would be 1403 or These obligations may b e t h e s ubject of s tipulation. By
the statute of frauds. Concretely, the sale of a parcel of land if not in writing agreement, it would be the buyer who will pay xxx Normally, dito hindi
is valid but unenforceable. It is not void. Note that the price of the land is natutuloy ang sale dahil hindi magkasundo kung sino magbabayad ng tax.
irrelevant if immovable.
OBLIGATION TO TRANSFER OWNERSHIP
Example: Eafgtb, the sale of a land for P300 is valid and enforceable even BEr May a person sell something which does not belong to himP
if not in writing. But ~resentl, it has to be in writing to be enforceable. The Would the sale be valid? Would the buyer acquire ownership over the
price is still irrelevant. thing sold, If seller does not own the thing?
SA: Yes. Ownership over the thing sold is not an essential requisite for the
If the object of the sale is movable, you have to consider not the value of sale to be valid. But if the seller does not own the thing, he may have a
the thing but the price agreed upon. The value may be different from the problem on his obligation to transfer ownership. The problem would be
price. You can sell a thing worth P1,000 for P400 but the law provides for whether or not the buyer would acquire ownership over the thing sold if the
the price. If the price is at least P500 and the sale is not in writing, it will be person who sold the thing is not the owner.
unenforceable.
Qr Who would have the right to sell and themfom they can transfer
ownership by way oisale?
Efigjfi: Paredes was a prospective buyer. Espino owns a land in Palawan. A: First, is the owner. Even if he is not the owner, he may have the right to
Parades is from Northern Luzon. Their negotiation was thru letters and sell because:
telegrams. Espino sent a letter to Parades stating that he and his wife (1) He was given the authority by the owner.Example: Agent
agreed to sell the land to Paredes, that the deed of sale will be executed (2) He may be the owner but he may have the authority of the
upon the arrival of Paredes in Palawan. When Paredes arrived, Espino said law to sell, known as "Statuto P o wer to Sell" (Article
he is no longer interested in selling. Parades filed a case to compel Espino 1505). Examples: Notary public in pledge, liquidators,
to sell the land. Espino contended that the contract is unenforceable guardians and receivers.
because it is not in writing. He contended that under the statute of frauds it (3) Those who have the authority of the court. Example:
is unenforceable. His contention was sustained by the trial court. Sheriff. Note: it is as if they have the authority of law
Held: This contract is no longer covered by the statute of frauds because because not even the judge can validly sell something if it
there was a letter. Article 1403 provides that a note or memorandum signed is not consistent with the law.
by the part charged would be suflicient to take that contract out of the
operation of the statute of frauds. In this case, the defendant wrote a letter Qr May a buyer acquire ownemhip over the thing sold it the seller has
with his signature on it. The letter took that contract out of the operation of no right to sell?
L.R.B. BASTE
A: The answer by way of exception is yss. But the general rule here is
under 1505 — the buyer acquires no better title than what the seller had. If Qr Would Velasco acquire ownershipf
the seller is neither the owner nor does he have the authority to sell, the A: No because Article 1505 provides that the buyer acquired no better title
buyer acquires no better title than what the seller had. If his right is only as than what the seller had. However, Velasco was the owner of a store. On
a lessee that is the most that can be transferred to the buyer. If he has no the next day, Velasco sold the ref to Ko Kang Chu who paid in full. When
title then no title can be transferred to the buyer. Sun Brothers learned this transaction, it filed an action to recover the ref
Exceptions: (When the buyer can acquire a better title than what ths seller from Ko Kang Chu.
had. Even if the seller does not have the right to sell, the buyer may acquire
ownership over the thing sold because the law so provides and not because BE: F lost her diamond ring in s hold-up. Eater on, this ring wss an
ths sefisr was able to transfer ownership to ths buyer.) objectof a pubgc sale ofone pawnshop. Can F recover the ring from
1. B y Estoppel the buysrin that public ssle9
2. E s toppel by Deed SA: Yes, Artide 559 provides that even if the buyer is in good faith so long
3. E s toppel by Record as ths owner is willing to reimburse ths buyer of the price paid in that sale.
4. S a le by an Apparent Owner
5. N e gotiable Document of Title Note: Again in 1505, there is no right to recover as long as the buyer
6. P u rchases from a Merchant's Store xxx bought it in good faith from a merchant's store, there can bs no recovery as
1. By Estoppel —by the principle of estoppel, a person is preduded from a matter of right.
denying that another person has authority to sell because of his acts. Also
known as XatgppaLjtLMia" which is a kind of agujtabjgmtggpa( because QrHow transfer of ownershipis eifectedy
of the acts I representation of the owner, he may not later on deny the A: Under the law, as far as things are concerned, it is effected by delivery:
authority of the 3" person. (a) Actual
(b) Constructive
2. Estoppel by Deed There can be no transfer of ownership without delivery.
BE: A and B co-owners of land sold(sale Is verbal) to X their land. X
subsequently sold the land to y. Would y be considered to have Notes:
aequi md ownershi p over ths land 9 (a) There may be a period agreed upon by the parties within which the
buyer would have to dsdde. Even if hs failed to signify his
estoppel) — when the seller who was not the ownerat the time of the sale, acceptance by the mere lapse of the period, he is deemed to have
acquires ownership, automatically, ownership passes to the buyer by accepted (impliedly accepted) hence, ownership passes to him.
operation of law. However, Artids 1434 requires delivery to the buyer. And (b) Even before the lapse of the period, he may be considered to have
under the facts, 1434 would not apply because: accepted if he did an act wherein he would be considered to have
a) T h ere was no showing there was payment adopted the transaction then ownership passed to him.
b) N o showing that there was delivery of the land to X. Example: Even if he has 10 days within which to decide but on the
It cannot be said that by operation of law, Y likewise acquired ownership by 2"' day, he sold the car to another. Obviously, he is deemed to
way of estoppel by deed. have accepted the thing because he did a n act which is
3. Estoppel by Record
Y P (c) If there is no period agreed upon, ths law says if he did not signify
nephew could not deliver the land, the buyer sued the nephew for estafa. his acceptance he will be considered to have accepted after the
For the accused to be acquitted, he asked his uncle to testify that he lapse of a reasonable time. Reasonable time will depend on the
actually had the authority to sell. When the uncle testified in court, ths circumstances of the sale, purpose of the sale, nature of the thing
nephew is acquitted. After acquittal, the buyer demanded from the uncle the sold.Example: Perishable goods.
delivery of the land. The uncle refused, claiming that "sa totoo land, I did not
authorized my nephew . Sale or Return
Qr Case was filed against the uncle, would that action pros peri QrOwnership passes upon delivery'
A: SC said yes because he cannot be afiowed now to claim that his nephew A: Yss. However, the buyer is given the right to revest the title back to the
was not authorize to sell after he testified in court that he gave such seller normally within a certain period. Example: Clauses in subscription
authority. magazine which says that you can return within 30 days without payment.
BE:A car was sold for P150,000. P75,000 paid upon the execution of
4. Sale by an Apparent Owner DOS. The balancepayable on a monthly basis.B T5,000 was paid. The
A. Factor's Act car was delivered to the buyer. However, belbre he could pay the
B. Recording Laws balance, the car was destroyed due to a fortuitous event or was
C. Any other provision of law enabling the apparent owner of the goods to burned xxx Can he still bs compelled topay the balance9
dispose of them as if hs was really ths owner. SA: Yes. Upon the delivery of the car to the buyer, there being no retention
of ownership by the seller. (Note: Wale sa facts na na-retain ng seller and
A. Factor's Act ownership). Therefore, ownership passed to ths buyer. Under ths principle
Even if agent has no right to sell, a third person may acquire ownership of res perit domino — Artide 1504 — the owner bears the loss and hence it
because he may rely on the power ofattorney as written. can be compelled to pay the price.
6. Purchases from a Merchant's Store(Markets l Fairs Example 1:The buyer and the seller may have agreed that the goods are to
Sun Brothersvs. Ve/asco be obtained by the buyer at the warehouse of the seller on a specific date.
Facts: Sun Brothers was the owner of a refrigerator. Sun Brothers was On ths date agreed upon, the seller demanded the buyer to gst ths goods.
engaged in the business of selling refrigerator. Sun Brothers sold a ref to Despite such, the buyer failed to get the goods. On the next day, the
Lopez on installment basis. As stipulated, Sun Brothers reserved ownership warehouse was destroyed due to fortuitous event.
until full payment. Lopez only paid P300 out of P1,500. Ths balance to be Qr Who is the owner at that ffmey
paid on installment. Lopez then sold the ref to Velasco.
L.R.B. BASTE
A: Ths sefisr but there was delay on the part of ths buyer hence under 1504 Kuenzle 5 Strslff vs fifacke 5 Chandler
it is the buyer who will bear the loss. Facts: The original owner here Stanley and Griffindor (parang Harry Potter
0) and the property involved here are fixtures of a saloon. Macke and
Example 2:Ths sefisr himself maybe ths one at fault. Thus, hs is in delay in Chandler are judgment creditor of Stanley and Griftindor. Because of a
delivering the goods to the buyer. judgment in favor of Macke and Chandler, the sheriff levied upon these
Qr Why would this be an exception to the res perit domino rule7 properties which was still in the possession of Stanley and Griflindor. The
A: Ang premise dito, ths ownership has already passed to the buyer but the properties under execution were questioned by Kusnzle and Strsiff.
goods are still with the seller. Can this happenf Yes, because of Kuenzle and Streiff claimed that these things were sold to them prior to the
constructive delivery. If there was constructive delivery, ownership passes levy. If they daimed that the properties were sold to them, the properties
to the buyer but physical possession is still with the ssfier. They may have should be in their possession. Take nots that Stanley and Griffindor were
agreed this time that the seller will be the one to deliver the goods to the still in possession of the goods physically. Hence, there was no actual
buyer at a certain date. When the date arrived, despite demand from the delivery.
buyer, there was no delivery on the part of the seller. Even if the goods are )jaitL In order that ownership would pass, it has to be in a public instrument
destroyed the next day due to fortuitous event, take note ang owner ay ang if that would be by constructive delivery.
buyer na but who will bear the loss7 The sefisr because he was in delay
in delivering the goods. Kinds of Constructive Delivery
warehouse.
DOUBLE SALE (ARTICLE 1544) Prof. De Leon: this also called as symbolic delivery.
BE: F sold a registered parcel of land fo R who did not register the
sale.Thereafter, F sold fhe very same pascal of land to C who 2 B Mere Consent or r e smsnt of the Parties — if at ths time of ths sale,
registered and obtained a new TCTin his name. Who would have a possession to the goods cannot be transferred to the buyer. There must be
better right7 a reason why it cannot be transferred at the time of the sale. This is also
SA: Atty. Uribe: I fully agree with ths UP Law Center's answer. It depends known as tradition loncaamanu.
on whether or not C registered the sale in good faith. Registration is only Example 1: The thing was the subject matter of a lease with a 3" person
one of the requirements good faith is equally an important requirement. until the expiration of the lease, ths thing cannot be delivered.
Note: In 1544 (double sale), as to which rule applies will depend on the Example 2: The thing was the subject matter of commodatum. As a rule,
thing sold if movable or immovable. period of commodatum has to be respected.
Qr If the thing is sold twice, who would have the better right7 3. Brevi Manu — this is a kind of constructive delivery because the buyer
A: If movable, ths buyer who first took possession in good faith will have the was already in possession of ths thing sold at the time of the perfection of
better right. If immovable, the buyer, who first registered in good faith, will the sale so he will continue to be in possession after the sale, tzzjttcgazaa
have the better right. If there was no registration, it will be the first who took a lessee but this time as the owner. So dati lessee lang sya that is why he
possession in good faith. If no possession in good faith, the was in possession or maybe deposit
ary lang sya or maybe he was ths
buyer who has the oldest title in good faith. agent at the time prior to the sale.
Even the 1" buyer is required to be in good faith. Obviously, the first buyer
would have the oldest title. Yung good faith ditto obviously would not pertain — the seller will continue to be in the
to absence of knowledge of the 2"' sale kasi syempre 1" buyer sya. He is possession of the thing after the sale but no ion er as an owner but in
nonetheless required to have bought the thing in good faith. Good faith another ca adt like lessee.
means that he had no knowledge of ths defect of the title of ths sefisr.
Bautista vs. Sioson
Because a lease agreement was entered into by ths buyer and seller after
land. the sale then the buyer became the lessor and the seller became lessee.
Therefore, the lessee would continue with the possession no longer as an
Read: Bautista vs. Sioson owner.
Carumba vs. CA Rights
Facts: Sale of land to B who took physical possession but did not register. Kinds of Delivery of Incorporeal PropertyI Quasi — Tradition
Hs is ths first buyer. However, the seller (A) is a judgment debtor in one
case to a certain creditor named C. The land became the subject of an
execution sale. The buyer became C who registered the sale. 2 Placin ths Title of Ownershi in the Possession of Vendee — a right
would normally be covered by a certificate.
Qr Who would have a better right between C and B (C had no Example: delivery of ths certificats of shares of stocks.
knowledge of the sale) 7
A: ~ ~ B bec ause this land was not registered under the Torrens 3. Use b the Vendee of His Ri hts with the Vendor's Consent
System. 1544 would not apply to unregistered lands. Example: Sale of shares of stocks ~ the vendee may not always have the
right to exerdse his rights under the shares of stocks. Concretely, if there is
OBLIGATION TO DELIVER THE OBJECT OF THE SALE a stockholders' meeting, the books of the corporation will be closed for 30
Determine the subject matter if it is a thing or a right because days before the meeting. Thus, if ths sale occurred when the books are
there are different modes of delivery as to thing and as to right. already closed, no one will be recognized except those registered owners.
So if you are the buyer of those stocks, you can only use your right with the
Things consent of the vendor.
Kinds of defi
very of things as a consequence of sale known as
"tradition" — under the law: RULES ON SALE AS TO QUANTITYI QUALITY OF THE THING SOLD
1 Actual Delive I Material Delive I P h sical Delive I Real Delive Qr In a sa/e involving 1,000 pairs of shoes with a specific design as
the thing is in the possession and control of the vendee. Take note agreed upon.The sellerdelivered 1,200 pairs of shoes instead ofonly
"control". Take note "to the vendee". 1,000. Can the buyer reject sverr hlngf
Qr What if the thing was delivered to a 3e person7 A: No. He has the right to reject only the azcaaa. Reject the 200 but he can
A: Jurisprudence — SC said ~ yes, there maybe actual delivery if the third be compelled to accept the 1,000.
person has authority to receive from the vendee. Thus, making him an
agent of t h e v e ndee an d t hat w ould s till b e a c tual delivery. Qr What ifinstead of 1,000, 800 wasonly delivered 7
A: The buyer cannot be compelled to receive 800 because partial
Note: Philippine law does not only require actual delivery — constructive performance is non-performance. You cannot compel the creditor to accept
delivery may result in transfer of ownership. partial fulfifiment aaAZIdh because '
there can be artist delive
f
intention does not a sar on the document. By the mere execution of the Qr The obligation to deliver 1,000 cavans of Milagrosa rice. Instead of
public instrument that is equivalent to delivery. Hence, ownership passes to delivering 1,000 cavans of Mllagnosa, the seller delivered 1, 100 cavans
the buyer. of bothMilagrosa and Burmese nce. May the buyer reject everything 7
L.R.B. BASTE
A: Yes, if the goods are indivisible. Meaning each sack of rice, Milagrosa 1. Express —any aftirmation of fact or any promise by the seller relating to
and Burmese rice were mixed. However, if it is clear that per sack it is the thing, the natural tendency is to induce to purchase the thing.
Milagrasa rice and the 100 sacks, it is clear that those are Burmese rice Requisites:
that would not be considered as indivisible. He can be compelled to accept (a) There is an aftirmation of fact
1,000 sacks Milagrosa and he has the right to reject 100 sacks Burmese (b) The fact must pertain to the thing either to the quality, character or
rice. title of the thing
SALE OF REALTY Any other matter may not be considered as an express warranty.
Qr Sale of e parcel of land. Price agreed upon is B1M. Mom or less 100
sqm. The actualarea degvered by the seller was only 95 sqm. What The use of the words I terminologies is not conclusive as to whether or not
arethe remedies of the buyer7 there is an express warranty.
A: (1) Specific performance — would be a remedy if the sefier is still in the Example: "I guaranty I warranty you that you will be happy if you buy this
position to deliver the balance. Siguro yung katabing lupa sa seller din, car at P 100,000"~ this does not result in an express warranty
hence, he can afford to give addiTional 5 sqm.
(2) Qr If s pecMc performance Is not possible, Is proportional Again, if the affirmation of fact pertains to the quality of the thing, it is an
reductiona remedy7 express warranty.
A: It depends on whether the sale is considered as a sale with a statement Example: These 10 sacks af fertilizer would result in 200 cavans of rice.
of an area of a rate of a certain measure or if it is a lump sum sale.
The statement of the seller's opinion is not as a rule considered an express
Qr Under the facts, 95 sqm was delivered, would rescission be a warranty.
remedy 7 Example: "This is the best pifla cloth" ~ it may turn out that there are better
A: As a rule no because resdssion would only be a remedy if the area pins cloth.
lacking is more than 10% of that area agreed upon. So kung 100 sqm,
dapat 11 sqm or 15 sqm ang kulang, so out of 100 kung 85 lang ang na- As long as the seller is not an expert on that field, that would be treated
deliver, then rescission is a matter of right. merely as an opinion and there can be no liability for breach af an express
warranty.
PLACE OF DELIVERY
Read 1524, 1525 and 1198 BE: "A" sold a land to B for P1M in Antipolo. As agreed upon
The seller delivered the goods to the place of business of the buyer. If the P100,000 will be paid upon the signing of the DOS. The balance will be
buyer refuses to receive the goods, the buyer will be considered in delay paid within 30 days from the time the occupants (squstters) of the
and therefore will be liable to the seller because of unjust refusal. land are evicted. It was so stipulated that if within 8 months, the
Qr May the buyer be considered In delay for his refusal to accept if squatters have not yet been evicted, the seller should return the
thereis nop/ace stipulated in the contrsct7 P100,000. Another stipulation states — within the 8-month period, the
A: It depends on the kind af thing. Determine if it is determinate or generic. value of the land doubled. Despite the Sling of an eviction suit by the
If the thing is determinate, the law provides that it will be the place where seller and the lapse of the 8-month period, the squatters were still
the thing is located at the time of the perfection of the contract. occupying the land. The seller offers to mturn the p100,000 to the
buyer. The buyer refused to accept the B100,000 and told the seller
Qr What ff the object of the sale Is a generic thlng7 "never mind even if the squatters are still there. I will sgil buy the
A: Seller's place of business or residence. land". So the buyer offered to pay the balance P900,000 and
demanded that s DOS be executed by the seller. The seller refused to
Note: If there is no stipulation when to be delivered, the seller cannot be accept the P900,000. What he did is to file an action to rescind the
compelled to deliver. contract. Would the action pros per7
SA: If the answer is based on rescission, the action will not prosper
Qr What if at the time of the perfection of sa/e, though the thing is because resdssion may only be invoked by the aggrieved party. The seller
determinate, it wss on board a ship while in transit. Wham will be the is not an aggrieved party.
place of dellvery7
A: Depending on the shipping arrangement agreed upon by the parties. 2. Implied-
Prof. De Leon: because af this implied warranty, it cannot be said that
F.O.B. — Free on Board Philippine law does not adopt caveat emptor "buyer beware". (Faye's
C.I.F.— Cost, Insurance, Freight Caveat 0: Please check the book of Prof. De Leon regarding this
statement. Thanks 0)
F.O.B. and C.I.F are rules of presumption which would have to give way to
the real intention af th e parties. So after all, the F .O.B. or C .I.F. Even if there is no stipulation as to these warranties, the law itself would
arrangements do nat really determine the place of delivery, they only make provide for these warranties and hence if there are hidden defects he would
rules of presumption. have remedies under the law or even if he was deprived of the thing he
bought he would have a remedy against the seller. Hence, it is not correct
So in a C.I.F. arrangement, it is only presumed that the place of delivery is to say that Philippine law has adopted caveat emptor. But there are certain
the port of origin. instances when there would be no such implied warranty against hidden
defects. There may be warranty as to title or against eviction but there is no
In a F.O.B. destination, it is only presumed that the point of destination is warranty against hidden defects under certain circumstances.
the place of delivery.
Warranty Against Eviction I Title
Qr What really determines theplace of degvery7 Qr If the seller was able to transfer ownership to the buyer may the
A: ~ this i ndication as to the intention of the parties as to the place seller nonetheless be held liable for breech of warranty against
of delivery is the manner and place of payment. If there is an agreement as eviction 7
to where and how the price is to be paid that would be the place considered A: Yes. These are 2 different obligations: the obligation to transfer
for purposes of delivery and therefore for transfer of ownership. ownership and the obligation ta warrant the thing.
Read 1582 Example: This warranty against eviction would include the warranty that the
buyer from the moment of the sale have and enjoy the legal and peaceful
Obligations which cannot be Waived: possession over the thing sold.
1. O b ligation to transfer
2. O b l igation to deliver Requisites of warranty against eviction:
1 There has to be final 'ud ment de rivin him of such thin either wholl
Obligation which can be Waived: In other words, a case was filed by a 3" person against the
1. O b ligation to warrant the thing buyer which resulted in a favorable decision as ta the plaintiff resulting in
the deprivation of the property by the buyer.
Kinds of Warranties under the Law:
1. E x press 2. De rivatian must be either:
2. I m plied 2 1 Based on a 3e erson's rior ri ht over the thin r i or to the sale
ar
L.R.B. BASTE
2 2 Based on an act afier the sale but im utable to the vendor
WARRANTY OF QUALITY
3 There should be no valid waiver Prof. Deleon, Prof. Vitug, Prof. Baviera: there is another warranty which
is WARRANTY OF QUALITY which includes:
(1) Warranty of Fitness
(2) W arranty of Merchantability
WARRANTY AGAINST HIDDEN DEFECTS To some authors the warranty of quality is considered under the warranty of
Requisites: hidden defects.
1 The defect must exist at the time of the sale If the defect started after the Atty. Urlbe: I cannot agree that the warranty of quality is in the warranty of
sale there can be no such liability. hidden defects. I agree with Prof. De Leon, Prof. Vitug and Prof, Baviera
that there is a warranty of quality.
If the defect is patent and the buyer
nonetheless bought the thing then he can no longer hold the seller liable. WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
If the sefier is not aware of the hidden defects, he can be held liable. If he The thing bought may not actually have any defect and for 1 million buyers
was aware, his liability will be greater because that makes him a bad faith it would be fit for their purpose. However, it may not be fit for the purpose of
seller. 1 buyer and if afi the requisites for this warranty are present, then he may
hold the seller liable for breach of warranty of fitness for a particular
Qr Evenif thereis such a hidden defect, is it possible that the vendee purpose although there is no hidden defect but it is not fit for the purpose of
cannot hold the vendor liable despite the fact that there was hidden the buyer.
defecteven Ifhe was not Informed because maybe the seller was not In order for the sefier may be held liable:
swered' 1. T h e buyer has to inform the seller of the particular purpose for
A: Yes, he may not be able to hold the seller liable if he is an expert on the which the thing is to be use and
thing. He is expected to know the defect. 2. T h e sefier manifested that the thing would be fit for the purpose
and the buyer relied on such representation of the seller.
3 The defect must result in the thin b ein u n fit for the u r ose of the
buyat or at least it diminish the fitness of the thing such that the buyer Note: If the thing is sold under the trade name there can be no warranty of
would not have bought it at the price had he known of such defect. fitness for a particular purpose.
Qr If the thing which has a hidden defect was lost or destroyed, can WARRANTY OF MERCHANTABILITY
the vendee hold the vendor liable for this breach of wanantyf Does it It pertains to the fact that it is fit for the general purpose. If the thing was
matter lf the loss was due to a fortuitous event or maybe the loss was sold by description or by sample, it is considered that there is such a thing
due to the fault of the buyer himself, nonetheless, can he hold the as warranty of merchantability.
vendor gable 9
A: Yes. The vendee can hold the vendor liable for breach of warranty SALE OF ANIMALS WITH DEFECTS — RULES:
against hidden defects even if the thing was lost due to fortuitous event or 1. — it is such kind of defect that even by
' ' '
due to the fault of the vendee himself because of the hidden defects. But of examination of expert it cannot be discovered.
course, if the cause of the loss was the defect itself, the liability is greater
than if the cause of the loss was a fortuitous event or fault of the buyer. Qr If one of the animals has redhibitory defect, can the buyer rescind
the entire contract pertaining to all the animals'
If there would be a problem here as to the extent of the liability of the A: G.RuNo. He can only resdnd the contract pertaining to the animal with
vendor, he should first consider the cause of the loss, maybe it was lost due redhibitory defect. He cannot rescind the entire contract pertaining to afi
to the defect itself or lost through fortuitous event or lost through the fault of animals.
the vendee. After that, he should determine whether the vendor was aware Exception: If he can prove that he would not have bought the others had
of the defects or he was not aware. Again, if he was aware, damages may he known the defect of one then he can rescind the entire contract.
be recovered. If he was not aware, he may not be held liable for damages
unless he can only be held liable for interest. Qr Who has the burden of proof that he would not have bought the
othershad he known of thedefect of oney
If the defect was the cause of the loss, the vendor would be liable for the A: Normally, it would be the buyer. But the law under certain circumstances
return of the price, not only the price less value but also to refund the would provide for this presumption that it is presumed that he would have
expensesand damages because the vendor was aware of the defects. bought the others had he known of the defect of one.
Examples: He bought the animals in teams or in pairs then the presumption
If the vendor was not aware of the defects, he cannot be held liable for arises.
damages but he would only be held liable for the price. Love birds (Ang mga love birds, kapag namatay yung isa later
on mamatay din yung isa. Minsan nga mgsuicide pa sya pag
he can only be mag isana lang sya.Iuuntog nya ulonya sa cage nya. 0 )
held liable for the price less value.
Instances whether there would be no warranty against hidden defects
A NY CHARGE O R N O N — APPARENT ENCUMBRANCE NOT and therefore caveat emptor may be invoked:
DECLARED OR KNOWN TO THE BUYER 1. Sale which is an "as is where is" sale which means sale where it is found
Qr Would there be an encumbrance over an immovable which is a xxx bahalaka sa buhay mo ifyou want to buy the thing and you cannot
form of easement or servitudef later on daim that there were hidden defects. (Faye: pls. research the
A: An example of this is a road right of way. complete meaning of "as is where is" sale. Atty. Uribe will ask the meaning.
0)
Qr If the buyer bought the land which tumed out to have a road right 2. Sale of 2"' hand items
of way In favor of a 3u person, can he claim breach of warranty 3. Sale of animals in fairs
againstany charge or non — apparent encumbrancef 4. Sale in public auction
A: Of course there are requisites:
(1) The encumbrance or easement or burden or the road right of way Note: There would still be warranty against eviction.
has to be non —apparent. Note:Rules on warranty also apply to judicial sale.
Qr Ifthere Is an encumbrance, what are the remedies of the buyer7 Q: In sale by authority of law or In execution sale, can there be breach
A: (a) He can seek for the reduction of the price. of wananty against evictions
(b) Rescission - the law requires that the action for rescission must be A: Yes. The judgment debtor and not the sheriff shall be liable.
filed within 1 year from the date of the contract. If after 1 year, no more
rescission. The law would specifically exempt certain persons from liability for breach
of warranty like sheriff, auctioneer, mortgagee, pledge and other persons
(c) If he became aware more than a year, he may file an ~ who sell by virtues of an authority of law like notary public because they are
~dama es, But the law requires that the action for damages has to be filed not really selling for themselves, they are selling on behalf of another
within 1 year also but from the time of the discovery of encumbrance. If he person.
filed it for example, after 2 years from discovery — no recovery of damages.
L.R.B. BASTE
RIGHTS AND OBLIGATIONS OF THE VENDEE (3) The buyer has been in default for an unreasonable time.
1. O b ligation to accept the thing delivered.
2. O b l igation to pay the price (if warranted, with interest) Note: The seller should send a notice of the intention to resell to the buyer.
1. Obligation to accept the thing delivered Note:The resale may be a private sale or a public sale. The only limitation
here is that the seller cannot buy directly or indirectly.
Qr If the buyer received the goods delivered, does it mean that he
aim adyaccepted 7 RECTO LAW
A: No because receiving is preliminary ta accepting. In fact, this is Pls. read Sales by Prof. Baviera
consistent to the right provided by law to the buyer which is the right of
inspection ar the right of examination. Thereafter, he may reject the goods if EXTT NGUISHMENT OF SALE
defective. Pls. read Sales by Prof. Baviera
Note: The buyer is not required to be insolvent. Note: The first thing to consider in lease is to consider the kind of lease.
Qr When would the seller be considered to have lost his lien 7 Kinds of Lease:
A: 1. L ease of Things
(1) If he waives his right 2. L e ase of Work or Service
(2) If the buyer lawfully obtained possession aver the goads 3. L e ase af Right
(3) When the thing is delivered to a common carrier and the
seller did not prefer his ownership and possession over the Note: In lease of Service, there are four (4) of them but three (3) will not be
goads. covered by Civil Law, which are Household Service and Contract of Labor
(covered by Labor Law), and Contract of Carriage (covered by Commercial
STOPPAGE INTRANSITU Law). The only kind of Lease of Service that will be discuss under the Civil
Requisites: Law is ths Contract for a Piece of Work.
(1) Insolvency of the buyer
(2) The seller must have parted possession over the goods Definition:
(3) The goods must be in transit
Qr If a party binds himself to give another the enjoyment or use of
How right is exercised: thing, does that make the contract one of lease of thingsfi
(1) By obtaining actual possession of the goods A: No, the most important distinction here with that of commodatum is that
(2) This may be exerdsed by mere notice to the common carrier in lease, it must be for a price certain, otherwise if there is no valuable
consideration for the use or enjoyment of the thing it will be commodatum.
If the ssfier validly exercised ths right of stoppage in transitu, he will be
considered to have regained his possessory lien. Distinguish a Contract for Piece of Work from Contract of Agency
Read: Frensel vs. Mariana
RIGHT OF RESALE
Qr When would the seller have this righty Note: In Agency, the control of the principal over the agent is so pervasive
A: that the principal can control nat only the result but also the manner and
(1) If the goods are perishable method of the performance of the obligation which is not present in this
(2) The right is expressly reserved in the contract case and therefore Merit was not considered an agent of Mariano.
L.R.B. BASTE
9
Note: Two (2) favorite articles are 1649 pertaining to assignment of lease,
Qr As to the relationship of the taxi driver with his operator, Is this a and 1650 on sublease.
contract of leasef
A: SC, ruled that this is in fact a lease but not a lease of thing, but lease of The question in the Bar may be as simple as may a lessee
service specifically an employment contract, this is because of the control of sublease the property without the consent of the lessor and what are the
the operator over the taxi driver, as to when, what time the drive operates respective liabilities of the lessee and sublessee.
the vehicle.
Articles 1649 and 1650 would tefi us that a lessee may not
Note: Again, to distinguish lease contract from other legal relationship you assign his right on the lease without the consent of the lessor however he
have to consider the characteristic of the contract. T h e best way to may sublease the property in whole or in part even without the knowledge
remember the kinds of contract is to know by heart what are the real of the lessor as long as he was not prohibited from subleasing the
contract (mutuum, commodatum, deposit, pledge) and formal contract premises.
(antichresis, donation). Aside from that it may be safe to consider as a rule
afi the other contract as consensual contract, where no particular form is Read: Ma lacat
vs.Salazar
required except in exceptional case: e.g. sale of large cattle. Frensal vs. Mari ano
As a rule lease, therefore is a consensual contract by mere
meeting of the mind as to the object and to the consideration the contract is TERMINATION OF THE LEASE
perfected.
BE: Discuss the effect of death of lessee, lessor, agent and principal.
SA: In a lease of thing, death of the lessee does not terminate the contract.
Note:Lease of things is not essentially personal. A contract of lease is not essentially a personal contract therefore upon the
death of the lessee, it may be continued until the expiration of period of the
Heirs of Fausto Dimaculan an vs IAC Upon the death of parties like lease by the heirs. (Case: Heirs of Dimaculangan vs. IAC)
death of lessee, the contract is not thereby terminated. The heirs of the
lessee may continue to occupy the premises by virtue of the lease because
it is not extinguish upon death of lessee. IMPLIED NEW LEASE
Note: one of the most favorite in the bar exam.
Characteristic of Lease of things
+ C o nsensual Contract Requisites:
Onerous 1. The lease period has expired and
Bilateral 2. The lessee continues to be in possession of the lease for at least 15 days
+ No minate from the time of the expiration of the lease and
3. No notice to the contrary from the lessor and the lessee.
+ P r incipal.
BE: Pertai to contract of lease entered into for period of 3 yearn Jan
Essential Requisites of Contract of Lease 1, 81 up to 1984. Re n tals were paid on monthly basis. It was
1. CONSENT stipulated that the lessee has tha option to buy property at a certain
2. OBJECT price within a certain period (option to buy). Despite tha lapse of the 3
Qr In lease of things, may a consumable thing be the subject matter of year period, the lessee did not exercise the option, but continued to
lease7 be in possession of the property and paying the monthly rentals and
A: Normally when a consumable thing is use in accordance with its nature it the lessoraccepting the same. This condnued andi June 1984 when
is consumed, as a rule therefore consumable things cannot be the subject the lessee stated that he would now buy the property in accordance
matter of lease of things. The exception is, when the use of the things is with the option to buy. The lessor mfuse, claiming there was no more
only for exhibition, or when they are accessory to a n i ndustrial option. Was the lessor correct7 Yes. Was It conoct to say that there
establishment then it may be a subject of lease. was extension of the lease under the facts7 SA: Yes, there was an
3. CAUSE extension known was implied new lease. However, with the implied new
lease it does not mean that afi the terms and condition of the contract in the
FORMALITIES original lease continue also. First as to the term, under the law, the term of
Lease of Service — there is no particular form required by law for the validity the renewed lease would not be the term agreed upon but only be of a
of the lease not even for the enforceability as a rule. period depending on the manner the rentals are paid. If the payment is on
annual basis, the renewal would only be for a year and if monthly payment
of rental is made, the implied new lease would only last for 30 days.
As to the option, it was renews, SC held, in an implied new
to be enforceable. lease, only those terms and conditions which are germane in a contract of
lease are deemed renewed as to the rest like option to buy, will not be
Note: the problem in lease would normafiy be a combination of an agency considered renewed. Even in the facts of the case itself, it was stipulated
and lease. that the option may be exercise within the period agreed upon (3 years).
BE: Agreement for the repair of a private plane and for a certain sum AGENCY
of money, however additional work was requested by s person who
has the authority of a duly recognize representadve of the owner of Definition 1666, 1674 and 1676- formalities
the plane and the request was merely verbal, when the additional
work was completed,the one who rendered the work demanded Coz a form is required for the validity or for the enforceability of the contract
additional payment, the defense raise was under 1724 In order that a entered by the agent-1878, 1674
claim for additional payment for the additional work, the agreement
forthe additional work must bein writing and the changes should be 1692- pertain to appointment of the substitute- effect- may the agent
authorized In wrldng nonetheless be held liable for the loss that incurred by the principle as the
SA: The suggested answer of UP will sustain the defense because of 1724; result of the appointment of the substitute.
such change not being authorized in writing, the request was merely verbal
then the claim may not prosper. Other provisions pertain to the right and obligations of commission agent or
more importantly the guaranty commission agent-1907-1908
RIGHTS AND OBLIGATION OF THE LESSOR
Effect of death-1919, 1930 and 1931
As to necessary repairs of the thing lease, this is an obligation of Either of the agent or prindpal
the lessor, under the law the lessor is oblige to make the necessary repairs.
Revocation-kind of agency- agency coupled with interest-1927
Read:Gonzales vs.Mateo
BE: A asked her best friend to B buy for her certain items in a grocery
RIGHTS AND OBLIGATIONS OF THE LESSEE store. Is there a nominate contract created between A and B7
LpcB. BASTE
10
SA: Better answer, if B agreed to the request of A, an agency relationship Read: 1909 - the liability of the agent for damage to the principal due to his
has been created, a nominate contract has been created. negligence or even bad faith or fraud committed against the principal may
be mitigated if the agency is gratuitous in character.
Some authom would classify contract of agency into three, not As to form, the law is clear that it may be oral however the law may require
concepts. a particular form.
1. Actual agency
2. A p parent I dormant ESSENTIAL ELEMENTS OF ACONTRACT OF AGENCY
3. E s toppel Read: Ra/los case
The SC enumerated the essential elements or the alleged essentials
1. Estoppel elements of a contract of agency.
~Kan case 1. C o n sent
Facts: Flores appears to have full control of a restaurant, owned by Kang 2. E x ecution of the juridical act- subject matter
and in the administration of the restaurant he bought certain items from 3. A cts within the scope of authority
Mack, items needed for restaurant but a portion I price to be paid, not by 4. T h e acts must be in representation of the principal
Flores, so Mack ( seller ) went after the owner of the resto. The only This are allegedly the essential element again some authors would discuss
defense raised by the owner was that Flores was not his agent. in their books with due respect to the ponente of this case, medyo mali mali
Take note: it is v ery d i f f icult to prove actual agency, because an ang enumeration, first there was nothing m ention about the cause or
agreementbetween 2 persons, eh kung verbal lang ang agreement dun, consideration as a contract, a contract will never validly have a cause or
how would you be able to prove, the owner of the restaurant can be held consideration well it may be liberality pwede neman cause yan but there
liable by estoppel because he cloth Flores with full power as if he has the must have a cause if only for that the enumeration be defective more than
authority to buy those items necessary for the administration of restaurant that that last 2 mention that the agent act within the scope and that the
aside from that Mack was able to prove pieces of evidence like in the lease agent must act in representation are not essential elements of a contract of
agreement over the building where restaurant was located and comes the agency they are actually obligations of agent which means they have been
owner of the restaurant as lessee and Flores sign as an agent of the lessee already perfected of contract of agency, no obligation will arise kung void
with all this the ung kontrata kung wale pang valid contract, so essential elements are only
Held: The owner of the restaurant is liable under the Principle of Estoppel. those elements necessarily for the validity of the contract, once the contract
is valid then the obligations will arise evenif the agent acted outside the
2. Apparent I Ostensible scope of authority does it mean that the contract of agencyis voidf Of
Qr A letter was sent by B to X, Inibrmlng X that A has the authority to course not, he can be held liable for acting outside the scope of authority or
enterinto a contract with X specifically to obtain goods from X like if he acted not in contemplation of the principal, doesit mean that there
copra, abaca which goods will be sold by A, after the sale a portion was no agency at ally Of course not, there is a contract of agency. Under
can bededucted as a commission and the mstaurant tobe delivered the rule the consequences if the agent did not act in the representation of
to X. after a certain period, the goods obtain by A from X mmained the principal.
unpaid. In other words A will get the goods fromX A did not deliver
the proceeds of the sa/e. X demanded payment from B. The defense of PARTIES
B wes es of that moment from that certain period he has already Going to the consent of the parties, well 1 author claims that there are 3
revoked the authorit y of the agent and therefore be bound by any parties in a contract of agency that is totally wrong! There are only 2 parties
contract entemd into byA in representation of B with 3w person. Is the in a contract of agency the principal and the agent, however in problems
claim of B tenabley involving agency there may be there would be normally three persons
SA: No. 1873 so far as 3" person are concern, this notice itong letter nya involve, the third persons with whom the agent transacted, no longer part of
kay X remain in full force and effect until it is rescinded in the same manner the concept agency, this is the agency, the contract entered into between
it was given. by the principal and the agent, but when the agent entered into a contract it
may be a sale, lease or other contract and the 3" person is not a party to
3 Actual agency this contract, the 3" person is a party to a 2"' contract, that again the parties
The law itself classify actual agency into as manner of creation, express I is the principal and the agent, they may be called in another names the
implied. There is no problem with express agency. prindpal- employer, constituent, chief; the agent may be calledattorney-in-
3. E x press agency-it is a kind of agency the consent of both parties fect, proxy, representative.
were expressly given.
4. I m plied agency- were the consent of one parties was only OBJECT
impliedly given on the part of principal- the leading case is Dele As to the object of the contract of agency - this is the execution of juridical
act.
FORM
Qr If a person was asked to administer ihe property of another to sell Agency may be oral. It does not matter, the contract of agency would be
theproperty,and he said nothing- by hissilence, by his inactionsmay valid but the parties even if it is by verbal agreement, however any effect of
be deemed accept agencyf the verbal authorization, the agreement between the agent and the principal
A: Not necessarily. Under the law, you have to make distinction to if it was only verbal will be in the contract entered into by the agent.
determine the scenario under which the said appointment was made, okie! Read 1874
The law would say when the 2 parties are absent, and when the 2 parties
are present. Contracts which require a SPA —see codal
When 2 parties are absent- 1 is in Manila and the other is in Cebu. dfjgagasxsJhbgf
When 2 parties are present- present in the same room Facts: Jimenez was the owner of a certain parcels of land in Pangasinan,
he was then in the province of North Luzon, he sent a letter to his sister
(a) 2 persons present- present in the same conference hall asking his sister to sell one of his parcels of land and with that letter the
(b) If 2 persons are in different place, one in Manila and the other one sister indeed sold one of his parcels of land to Rabot, however the sister did
in Cebu not remit the proceeds of th sale, binulsa Ing nya, so when Jimenez went
back toPangasinan, he demanded the property,yun ay na kay Rabot na,
Compensation so he filed an action against Rabot, the defense raised by him that the letter
As to the compensation in a contract of agency consider if the agency is would not be suflicient a power of attorney to bind him as a principal the
gratuitous or onerous. sale of the parcels of land.
Held: A letter suflices as a power of attorney. When you sent a letter to your
brothers or sisters you do not notarize first.
L.R.B. BASTE
2. G o afier the agent or damages if there is any damage sustain by him
Obligations of the Agent: for his failure to follow the instructions of the principal.
1. T o carry out the agency
2. In carrying out the agency, there are 2 obligations of the agent, Read: 1898
he should always remember:
a. t o act within the scope authority Appointment of Substitute
b. t o act in behalf of the principal Read: Substitute vs. Sub Agent (Prof. De Leon's book)
PURPOSE
Obligation to render an accounting Partnership: either to divide profits or exercise a profession.
If this time the principal authorize the agent to sell his car for 300k, the Co-ownership: Common enjoyment of the thing or right owned in common;
description of the car was mention in the SPA at least 300k however before merely to enjoy the property, thus they may have different purposes.
the agent would sell the car, the principal called him by phone instructed
him to sefi the cart in QC to a member of IBP member chapter, instead of A very important feature of partnership in relation to co-ownership, it has a
selling the car in QC IBP member chapter he sold the car in Manila not juridical personality, separate and distinct from the individual partner which
known by the principal for 300k, (I) Can the principal recover the car is obviously not present in co-ownership. In co-ownership, they have their
from the buyer If that car Is already delivered to the buyer7 (2)Any respective personalities and no new personality will be created.
remedy provi ded by the law to the seller or to the princi pal7
1. I t depends, if that buyer has no knowledge of that instruction of the POWERS OF THE MEMBERS
prindpal then he has afi the right to retain the car and that sale will be Partnership: Unless otherwise agreed upon, each partner is an agent of the
valid and binding as against the principal. As provided under Art. 1900 other partners and of the partnership.
so far as 3" persons are concerned they only rely on the SPA as Co-ownership: As a rule, a co-owner cannot act as an agent of the other co-
written they have no obligation to inquire on the special instructions owners unless otherwise agreed upon between the co-owners.
made by the principal which are not mention in the SPA, eh wale PROFITS:
neman dun sa SPA na it will be sold to an IBP member chapter in QC. Co-ownen Mas malaki ang profits, mas malaki ang interest. But not
necessarily in partnership, because the sharing in the profits may be
L.R.B. BASTE
12
stipulated upon by the parties. Pero kung walang stipulation, it may be The SC ruled that even if the partners failed to fix a period, the partnership
based on the capital contribution. cannot be considered as a partnership at will because there was a
stipulation in the partnership agreement that the debt of the partnership
Qr Wiii death extinguish co-ownershlp7 shall paid out of the profits that will be obtained by the bowling business.
A: No, Kapag namatay ang isang co-owner, his heirs will be the co-owners Thus, after afi, it cannot be dissolved at will, for the debts will have to be
of the surviving co-owners at pwedeng tulou-tuloy lang yan. However in paid. Therefore, the SC ruled that the said partnership is a partnership for a
partnership, if it is a general partnership, if one of the partners dies, the particular undertaking.
partnership is dissolved.
CLASSIFICAllON OF PARTNERS:
ESSENTIAL ELEMENTS OF PARTNERSHIP According to the liability of the partners:
Like any other contract, it should have the three essential requisites: 1.) General
1.) Consent 2.) L imited
2.) Object: to engage to a lawful activity, whether a business or This classification is relevant only in limited partnership.
profession.
3.) Cause or consideration: the promise of each partner to Note: A limited partner cannot be held personally liable for partnership
contribute money, property or industry obligations but there are exceptions
Qr Upon the dissolution of the partnership, and there were assets left,
how will these be distnbuted9 To whom these assets be gi vent
A: As far as partnership assets are concerned:
1.) P artnership creditors who are not partners.
2.) P artnership creditors
3.) If there are remaining assets, to the capitalist partners;
4.) E xcess profits - based on their agreement as to profits.
TRUST
2 KINDS:
1.) Express
2.) Implied
The dassification of trust into two kinds (express and implied) and
implied trust into two kinds (resulting and constructive) would be relevant in
two concepts:
1.)
2.)
N.B.: An express trust over an immovable may not be proven by parole
evidence. This means that implied trust over an immovable may be proven
by parole evidence or express trust over a movable, may be proved by
parole evidence.
EXPRESS TRUST
IMPLIED TRUST
Resulting Trust
BE: A and B, brother and sister respectively, Inherited two Idendcal
parcelsof land. Por purposes ofconvenience, B, sisterofA,agreed to
have the land registeredin the name of A. However, when the parcels
of landwere registered In the name of A, A sold one of the parcels of
land to a buyer in good faith and for value. Can B recover the land
from thebuyery What would be the remedy of B7
SA: This question dearly pertains to a resulting trust. This is specificafiy,
Art. 1451 af the NCC.
B cannot recover the land from the buyer. As discussed in Sales, a buyer
who had bought the property from a seller who has no right to sell, but he
has apparent authority to sell, who appears to be the owner and the buyer
bought the property in good faith, he will acquire ownership over the thing
even if the seller has no right ta sell.
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15