GROUP 2 BONACHITA, JV Karlo February 21, 2023

BONGALOS, Karyll Joy

CABALGADA, Michael Cloud
CATIIL, Frizzian Angel
CONZON, Alessandra Ysabelle

QUESTIONS:
1. Distinguish among a contract of sale, a contract to sell and conditional
contract of sale in terms of:
a. Which element of a contract of sale is missing in a contract to sell
and conditional contract of sale

Contract of Sale:

Immediate transfer of ownership from the seller to the buyer

upon execution of the contract. Buyer has the right to use, possess,
and dispose of the object.

Contract To Sell:

Consent is missing. Ownership of the object remains with the

seller until the suspensive condition (usually payment) are fulfilled.
Buyer has no right to use, possess, or dispose of the object until the
conditions are fulfilled.

Conditional Contract of Sale:

Ownership of the object remains with the seller until the

conditions (usually payment or other agreed-upon conditions) are
fulfilled. Buyer has no right to use, possess, or dispose of the object
until the conditions are fulfilled.

b. Transfer of ownership of the determinate object

Contract of Sale:

In a contract of sale, ownership of the determinate object is

immediately transferred from the seller to the buyer at the time of the
contract's execution/consummation. The buyer has the right to use,
possess, and dispose of the object.
 Contract To Sell:

In a contract to sell, ownership of the determinate object

remains with the seller until the buyer fulfills the condition of payment.
Once the condition is fulfilled, ownership is transferred from the seller
to the buyer. Until that happens, the buyer has only a contractual right
to demand transfer of ownership upon fulfilling the condition.

Conditional Contract of Sale:

In a conditional contract of sale, ownership of the determinate

object also remains with the seller until the condition is fulfilled. Once
the condition is fulfilled, ownership is transferred from the seller to the
buyer. Until that happens, the buyer has only a right to use the object
and an expectation of ownership transfer upon fulfillment of the
condition.

c. Ability of seller to recover object after delivery

Contract of Sale:

In a contract of sale, the seller has no right to recover the object

after delivery to the buyer. Once ownership is transferred to the buyer,
the seller loses all rights to the object.

Contract To Sell:

In a contract to sell, the seller retains the right to recover the

object until the condition of payment is fulfilled. Until the condition is
fulfilled, the ownership remains with the seller, and they can demand
the return of the object from the buyer.

Conditional Contract of Sale:

In a conditional contract of sale, the seller also retains the right

to recover the object until the condition is fulfilled. Once the condition is
fulfilled, ownership is transferred to the buyer, and the seller loses the
right to recover the object.
 d. The nature of the conditions involved

Contract of Sale:

In a contract of sale, there are no conditions attached to the

sale. The seller agrees to transfer ownership of the goods to the buyer
in exchange for the agreed-upon price. Once the contract is executed,
the sale is final, and ownership of the goods is transferred to the buyer.

Contract To Sell:

In a contract to sell, the transfer of ownership of the goods is

subject to suspensive conditions. The condition is usually the payment
of the purchase price. The seller agrees to transfer ownership of the
goods to the buyer upon the happening of the condition. Until the
condition is fulfilled, the ownership of the goods remains with the seller.

Conditional Contract of Sale:

In a conditional contract of sale, the transfer of ownership of the

goods is also subject to a condition, but the condition is different from a
contract to sell. The condition may be related to the goods' quality or
quantity or to the happening of a specific event, such as the arrival of a
shipment. The ownership of the goods remains with the seller until the
condition is fulfilled. Once the condition is fulfilled, ownership of the
goods is transferred to the buyer.

2. Is there a difference in result/impact between a situation a.) where a

consideration is not paid after perfection of a contract of sale and b.)
where a deed of sale states that consideration had been paid even when
it had not? Explain.

There is a difference in result in a situation where a consideration is not

paid after perfection of a contract of sale, and where a deed of sale states that
consideration had been paid even when it had not.

In the first situation (A), where the consideration is not paid after the
perfection of the contract, the seller has the right to either void the contract or
enforce it. It is upon the discretion of the seller whether he wants to continue
 or cancel the contract depending on the situation. The seller can also sue the
buyer for non-payment.

In the second situation (B) where the deed of sale states that
consideration had been paid when it had not, this can be considered a
misrepresentation or fraud on either party created the contract. As there was
no payment or exchange for the consideration the contract is not perfected.It
is voidable both by the defrauded party which can be either the seller or
buyer. The one who created the contract is the one who committed fraud and
is liable for damages if the defrauded party plans to sue.

In both situations it involves no payment of the consideration, it talked

about two very different cases. In the first case the one at fault is the buyer as
he had not paid the consideration at the perfection of the contract which gives
the seller the right to void or enforce the contract. The Second case, the one
at fault is the creator of the contract as they have committed fraud and the
defrauded party has the right to void and demand compensation due to
damages. The difference of the cases is that in case one it can be clearly
seen that the buyer is at fault for non-payment and the contract is voidable,
while in the other case it is not so clear as we do not know who created the
contract but the creator of the contract is liable for damages of fraud which
can give the other party the right to void the contract and sue for damages.

3. Agora Corporation delivers 150 pieces of umbrellas to distributor Ms.

Macalaguing for retail selling to customers, with the corporation
retaining the ownership of said umbrellas as well as the power to dictate
the price and terms. A document entitled “Deed of Sale” was signed
between the two parties and it states in part that the distributor is
purportedly not the agent or legal representative of the firm. What kind
of contract was perfected - a contract of sale or a contract of agency to
sell? Explain.

The kind of contract that was perfected is a contract of agency to sell.

In a contract of agency to sell, title to the goods is retained by the principal
despite the delivery of the goods to the agent. In this case the Corporation
 retains control and ownership of the goods. Moreover, the execution of the
document entitled “Deed of Sale” is not a conclusive evidence that the
intentions of the contracting parties is for a contract of sale. Even though the
document says that the distributor is purportedly not the agent or legal
representative of the firm but the intention of the parties is the otherwise, then
the true intentions of the parties shall prevail. According to the second
paragraph of Art. 1370 of the Civil Code of the Philippines, if the words appear
to be contrary to the evident intention of the parties, the latter shall prevail
over the former. The evident intentions of the parties is the primary
consideration in determining the true nature of the contract. In this case the
intention of the parties is that the principal owner retains control and
ownership of the goods despite the delivery to the agent which is a
characteristic of a contract of agency to sell.

4. Mr. Abdul sells his Avanza to Mr. Ong and lets the latter determine its
price. If Mr. Ong fails to fix a price and simply takes the car, then uses it
as a school bus for XUHS students. Is he still obliged to pay the price?
Explain.

In terms of the undetermined price, the prevailing law/legal basis for it

are articles’ 1469 and 1473 of the Civil Code of the Philippines. Article 1473 of
the Civil Code of the Philippines states that, “The fixing of the price can
never be left to the discretion of one of the contracting parties. However,
if the price fixed by one of the parties is accepted by the other; the sale is
perfected.” In this case, the price of the Avanza was assigned to Mr. Ong
alone and fixing of price by one of the contracting parties is not allowed,
as the general rule. The reason for this is that: (1) If consent is essential to a
contract of sale, the determination of the price cannot be left to the discretion
of one of the contracting parties, otherwise, it cannot be said that the other
consented to a price he did not and could not previously know (see 10
Manresa 58.) The validity or compliance of the contract cannot be made to
depend upon the will of one party. (Art. 1308). (2) Moreover, to be just, the
price must be determined impartially by both parties (Art. 1458.) or left to the
 judgment of a specified person or persons. (Art. 1469.) Furthermore, if Mr.
Ong failed to fix the price, the contract is inefficacious. The 2nd paragraph
of Article 1469 of the Civil Code of the Philippines states that: “Should such
a person or persons be unable or unwilling to fix it, the contract shall be
efficacious, unless the parties subsequently agree upon the price.” With
regards to the use of the object (Avanza), Yes, Mr. Ong is still obliged to
pay the price and must be a reasonable price therefor since he simply
takes the car and used it as a school bus for XUHS students. The reasonable
price or value of goods is generally the market price at the time and place
fixed by the contract or by law for the delivery of the goods. This is according
to Article 1474 of the Civil Code of the Philippines. However, in case one of
the contracting parties should not comply with what is incumbent upon him,
the injured party may sue for fulfillment or rescission with the payment of
damages in either case. (Art. 1191, pars. 1 and 2.)

In general sense, the parties are only in the negotiation stage where
they have only indicated their interest in the contract to the time the contract
of sale is perfected. Since the contract of sale is consensual, it should be
perfected by mere consent which is manifested by the meeting of minds
between parties and the acceptance upon the thing and the cause/price which
are to constitute the contract (Art. 1475). Since one or two essential elements
of the contract of sale are missing, the sale is void and non-existent.

5. Ms. Saripada is the owner of a 1,000-square meter parcel of land along

Corrales Avenue. She entered into a "Contract of Lease With Option To
Buy" with Xavier University (XU) for 30 years, from 1990 to 2020. Under
the contract, XU was given an option to buy the land within 10 years
from the execution of the contract at P2,100.00 per square meter with
the condition that if it fails to exercise the option, the building and/or the
improvements thereon shall become the property of the lessor (Ms.
Saripada) after the expiration of the 30-year lease without right of
reimbursement. In 1999, XU decided to exercise the option to buy and
informed the lessor of its intention. Ms. Saripada replied that she is no
longer selling the property. Hence, XU filed an action in court to compel
 Ms. Saripada to honor the option contract. As a defense, the landowner
contended that the contract was prepared by XU, that it took advantage
of her when it set lopsided terms and that the option to buy was not
supported by any consideration distinct from the price and hence, not
binding upon her. The trial court ordered her to execute the proper deed
of sale conveying the property to XU. Is the trial court correct? Explain.

Yes. The option contract must be honored due to the fact that all
essential elements were present – subject matter, consent, and
consideration.

In an option contract, the subject matter is the right or privilege to buy

(or to sell) a determinate thing for a price certain which for this case is at
P2,100.00 per square meter. The consent is the acceptance by the offeree of
the offeror’s promise to sell (or to buy) the determinate thing, here the offeree
agrees to hold the right or privilege to buy (or to sell) within a specified period
of 10 years from the execution of the contract. Lastly, the consideration that
may be anything of value and is clearly seen in this case supported by a
separate consideration: Xavier University can buy the land at P2,100.00 per
square meter with the condition that if it fails to exercise the option, the
building and/or the improvements thereon shall become the property of the
lessor (Ms. Saripada) after the expiration of the 30-year lease without the right
of reimbursement. These additional concessions were separate from the
purchase price.

Thus, the trial court is correct in ordering Ms. Saripada to execute the
proper deed of sale conveying the property to XU for it has upheld the validity
of the option contract.

6. Ms. Egypto, is migrating to Canada. So she sold her only van to Ms.
Catiil for PhP2,000,000.00. The cash payment is to be made 15 days after
delivery to Mr. Nahial, a third party depositary agreed upon, who shall
deliver the van to Ms. Catiil upon receipt by him of the purchase price. It
was stipulated in the Deed of Sale that ownership is retained by Ms.
Egypto until delivery of the van to Mr. Nahial. Five days after said
delivery of the van to Mr. Nahial, it was destroyed in a flood which swept
away his house without his or Ms. Catiil’s fault. Is Ms. Catiil still legally
obligated to pay the PhP2,000,000? Explain why or why not?

No, Ms. Catiil is not obliged to pay the Php2,000,000 since at the time
the van is destroyed ownership is not yet transferred to her. According to
Article 1493 of the Civil Code of the Philippines, if at the time the contract of
sale is perfected, the thing which is the object of the contract has been
entirely lost, the contract shall be without any effect. Where the goods at the
time of sale is at the possession of a third person, which is Mr. Nahial, Ms.
Egypto has not yet fulfilled his obligation which is to deliver the van to Ms.
Catiil. Moreover, the principle of res perit domino applies in this case, which
means property lost to the owner. So legally speaking, Ms. Catiil is not
obligated to pay the PhP 2,000,000 cash to Ms. Egypto since the ownership is
being retained until the delivery of the van.