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Civil Law Sales Review 2008 Lecture Notes of Atty.

Maria Christina Sagmit

Ateneo de Davao University College of Law

Sales Bar Review


CONCEPT OF SALE Article 1458, Civil Code By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional. Essential Elements consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; determinate subject matter; and price certain in money or its equivalent Sale v. Donation Donation an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it. Sale v. Barter Barter contract where consideration given is partly in money and partly in another thing and the value of the thing exceeds the amount of money. Sale v. K for a Piece of Work Contract for a piece of work contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. test: thing is specially manufactured for the customer and upon his special order (CIR v. Arnolds, 159 SCRA199) Sale if the article is manufactured or procured for the general market in the ordinary course of business, WHETHER THE SAME IS ON HAND AT THE TIME OR NOT Test: thing is manufactured in the ordinary course of business (1467)
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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

Sale v. Agency to Sell Agency to sell contract where a person called the agent acts as agent for buyer and seller to effect a sale between them. Sale v. Dacion en Pago Dacion En Pago / Dation in payment property is alienated to the creditor in satisfaction of a debt in money. This contract is governed by the law on sales (1245) Sale v. Lease Lease- use of thing for a price and return of the same after the period RENT TO OWN - When the lease gives the lessee the option to buy for a small consideration at the end of the term, after crediting to the price all the so-called rents, such contract may be regarded a contract of sale on installments. Articles 1484 and 1485 will apply (Filinvest v. CA, 178 SCRA 188) 1484 and 1485 1484 relief available to an unpaid installment seller 1485- 1484 is applicable if there is lease of personal property and lessor deprives the lessee of possession or enjoyment of the SM ELEMENTS OF A CONTRACT OF SALE
Consent

Buyer

Seller

Subject Matter

Price

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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

1st ELEMENT: CONSENT OF PARTIES Who can be a party to a sale? Art. 1489 : any person who is authorized in the Civil Code to obligate himself Incapacitated Parties GENERAL RULE: Contracts entered into by minors, insane and demented persons, deafmutes who cannot read and write are VOIDABLE (1327) The voidable contract cannot be avoided by capacitated party (1397) EXCEPTION: If contracts of these incapacitated persons are for NECESSARIES or those things which are indispensable for his support, they must pay a reasonable price therefor (1489) Sale between spouses Can spouses sell property to each other? General rule: NO (Article 1490) UNLESS when a separation of property was agreed upon in the marriage settlements; OR when there has been a judicial separation of property under Article 191 (when spouse is sentenced to a penalty which carries with it civil interdiction or has been declared absent or in case of legal separation)

Sale against public policy Persons who cannot acquire by purchase, even at a public or judicial auction the following property: (Article 1491) guardians, property of his ward agents, property whose administration or sale has entrusted to him, unless principal consents been

executors, property of state under administration public officers & employees, property of the state or subdivision or GOCC entrusted to them includes JUDGES and GOVT EXPERTS
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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

justices, judges, prosecuting attorneys, clerks of inferior and superior courts, other officers and employees connected with the administration of justice, property and rights in litigation / levied within their jurisdiction. Shall apply to lawyers contracts violative of Art. 1490 & 1491 are null and void (Medina v. Collector, 1 SCRA 302)
STATUS:

2nd ELEMENT: SUBJECT MATTER A valid subject matter: must be existing, or it may be future or even contingent (Art. 1462); must be licit (Art. 1459); and must be determinate or at least determinable (Art. 1460).

EXISTING SM must be existing, future thing or based on a contingency FUTURE: Do not view as to physical existence or non-existence BUT check if science and technology will allow said SM to come into existence things subject to a resolutory condition may be a valid SM e.g. property in a reserva troncal, SM under legal redemption Emptio Rei Speratae v. Emptio Spei Emptio Rei subject has potential existence and the uncertainty lies in the quantity or quality of the thing. If the thing comes into existence, there is a VALID contract Emptio Spei- subject matter is a vain hope or expectancy and the uncertainty lies in the existence of the thing. The contract is VOID

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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

LICIT SM must be LICIT: (Art. 1347) licit not outside the commerce of man, includes all rights which are transmissible sale of future inheritance, sale of animals suffering from contagious disease ARE void DETERMINATE SM must be determinate OR at least determinable (Art. 1460) determinate particularly designated or physically segregated from all others of the same class

DETERMINABLE capable of being made determinate without the necessity of a new or further agreement between the parties DETERMINATE: generic objects, undivided interested of a sole owner (1463), undivided share of a specific mass (1464) Determinable Atilano v. Atilano wrong designation of a lot does not vitiate the sale since the parties before entering into the contract saw the actual setting and metes and bounds of the subject matter Determinable despite lack of specific quantity National Grains v. IAC subject matter was the rice to be harvested from sellers farmland The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract provided it is possible to determine the same without the need for a further agreement Illegal Sale due to Illegal Subject Matter narcotics (RA 6425) wild bird / mammal (Art No. 2950) rare wild plants (Art No. 3893) poisonous plants / fruits (RA 1288) dynamited fish (RA 428) gunpowder and explosives (Act No.2255)
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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

firearms and ammunitions (PD#9) 3rd ELEMENT: PRICE Price sum stipulated as the equivalent of the thing sold and also every incident taken into consideration for the fixing of the price put to the debit of the buyer and agreed to by him Price must be: real in money or its equivalent certain or ascertainable at perfection by: Effect if: There is no price void contract for lack of consideration Mapalo v. Mapalo illiterate farmers signed a contract which provided for P500 consideration when the amount was never paid. Since there was no real consideration, the K is VOID Simulated represented to have been paid BUT was NOT in fact paid If price is SIMULATED, the sale is VOID but the contract may be shown to have been in reality a donation or some other contract (1471) Illustration Ong v. Ong - P1.00 and other valuable considerations void sale but may be a donation a third person the courts reference to a definite day/particular exchange or market reference to another thing certain never by one party to the K (VOID)

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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

Bagnas v. CA - gross disproportion between consideration stipulated and value of the thing shows that the price is false and fictitious. The contract is VOID Effect if Price is Uncertain - the K is inefficacious but if buyer nevertheless appropriates the object he must pay reasonable price (Art. 1474) Manner of payment must be agreed upon Inadequacy of price: Effect Voluntary sale - does not affect the validity of sale In judicial sale: General rule: may avoid the judicial sale when it is shocking to the conscience of man Exception: when theres a right of redemption Sales a retro/right to repurchase - raises the presumption of equitable mortgage sale by guardians or by representatives when wards/persons represented suffer lesion of > of the value of the things rescissible contract unless approved by court (Art.1381, Art.1386) FORMATION OF A CONTRACT OF SALE

STAGES
Preparation/ Conception/ Generation

Perfection / Birth of the Contract

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Consummation / Death of the Contract

Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

FIRST PHASE: PREPARATORY period of negotiation and bargaining ending at the moment of agreement of the parties Contracts in the first phase Policitacion - UNACCEPTED unilateral promise to buy or sell. Even if accepted by the other party, it is not binding upon the promissor and may be withdrawn at any time. violation does not give rise to any relief on the part of the other party since there is no valid contract Option Contract ACCEPTED unilateral promise to buy or sell a determinate thing which is supported by a consideration distinct from the price if with consideration gives rise to a case for damages but NOT for specific performance Must the option have separate consideration? Sugar Molasses case when an option is without a separate consideration, it is VOID and can be withdrawn anytime Sanchez v. Rigos if the option does not have separate consideration, the option contract is VOID but the offer until it is withdrawn may be accepted by the offeree Right of First Refusal - a contract which grants a person the right to buy a property before it is offered to another. This doesnt need a separate consideration since such stipulation is part and parcel of the entire contract if there is identity in offeree and offerrors terms and offeror violates the agreement AND right is incorporated in the contract, offeree may demand specific performance. Otherwise, there can only be a case for damages.
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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

Contract of Sale v. Contract to Sell

Title passes to the buyer upon delivery Vendor reserves ownership and will of SM not pass until full payment of price Non-payment is a negative resolutory Full payment is a positive resolutory condition condition Title remains in the vendor and he can Vendor has lost control and can eject vendee for non-compliance with recover only if K is rescinded suspensive condition

Is a contract to sell a contract of sale? A contract to sell is NOT a contract of sale because it lacks the first essential element which is consent of the parties. The seller does not consent to transfer ownership to the buyer until the happening of an event, which may be the full payment of price which is a suspensive condition, the non-fulfillment of which prevents the obligation from arising (Coronel v. CA, Oct. 7,1996)

Is a contract to sell a conditional sale? NO. A contract to sell may not even be considered a conditional sale where the seller reserves title to the property until the fulfillment of a suspensive condition, because in a conditional sale, the first element of consent is present although it is conditioned on the happening of an event. In a contract to sell, the full payment of the purchase price will not automatically transfer ownership to the buyer. A contract of absolute sale must be entered into. SECOND PHASE: PERFECTION a contract of sale is perfected at the moment there is meeting of the minds
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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

consent offer must be certain and acceptance absolute meeting of offer and acceptance qualified acceptance is merely a counter-offer which in turn must be absolutely accepted to give rise to a valid and binding contract If sale is subject to a suspensive condition, there is no perfected contract even if there was meeting of the minds (Homesite v. CA) acceptance by letter / telegram becomes effective from the time acceptance comes to the knowledge of offeror earnest money considered part of the price and proof of the perfection of aK SECOND PHASE: PERFECTION Earnest Money Part of purchase price Earnest money presupposes a perfected contract of sale Buyer is bound to pay the balance after earnest money is paid PERFECTION: Form of Sales
General Rule: Exception:

Option Money Not part of the purchase price; distinct and separate No perfected contract of sale yet when option money is paid Optioner is not required to pay

no form required

a) statute of frauds (Art 1403 and 1405) b) sale of realty through agent

Statute of Frauds 1403(2) UNENFORCEABLE unless in writing: Sale agreement which is not to be performed within 1 year from making of agreement
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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

Agreement for sale of goods, chattels or movables valued at P500 or more Sale of real property or any interest therein

THIRD PHASE: CONSUMMATION & PERFORMANCE Obligations of the Seller Obligations of the Buyer Double Sales Sale by non-owner Sale by one having voidable title

OBLIGATIONS OF THE SELLER preserve thing (1163) Exercise diligence of a good father of a family prior to delivery deliver thing with fruits and accessories (1164, 1495, 1537) WHY DELIVER? Ownership of SM shall be transferred to the vendee upon actual or constructive delivery (1477) ownership of SM is acquired by the vendee from the moment it is delivered to him in any of the ways specified in articles 1497-1501 (1496) Delivered but no transfer of ownership? 1478 parties may stipulate that ownership shall not pass to the buyer until he has fully paid TYPES OF DELIVERY physical delivery (1497) when the SM is placed in the possession and control of the vendee constructive delivery- IMMOVABLES

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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

(1498) if sale through public instrument, the execution of the instrument shall be equivalent to delivery if the contrary does not appear in the deed Placing the title of ownership in vendees possession with vendor's consent (1501)

Constructive delivery-movables delivery of the keys or depository where it is stored (1498) delivery by consent of the parties if SM cannot be transferred to buyer at the time of sale or the buyer already had possession before sale (1499) person to whom negotiable document of title has been negotiated acquires the right of person to whom delivery shall be made by the terms of the document (1513)

Documents of Title Document of Title of Goods- bill of lading, dock warrant, quedan, warehouse receipt or any document used in the ordinary course of business in the sale or transfer of goods as proof of possession and control or authorizing or purporting to authorize the possessor of the document to transfer or receive either by endorsement or delivery the goods covered by the document (1636) Documents of Title purpose Evidence of control and possession or control of goods described Medium of transferring possession and control of goods described without having to undertake actual delivery Types of Documents of Title Negotiable states that goods will be delivered to bearer or to the order of one person Non-Negotiable- does not state that the goods referred to therein will be delivered to the bearer or the order of any person Delivery through Carrier

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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

1523 - delivery of goods to the carrier is deemed delivery of goods to the buyer F.A.S. sales - seller pays all charges and is subject to all risks until the goods are places alongside the vessel F.O.B. sales - free on board seller shall bear all expenses until the goods are delivered whether at the point of shipment or the point of destination C.I.F. sales - cost, insurance & freight price covers cost of goods and freight and insurance costs paid by the seller Special Modes of Delivery constitutum possessorium (1500) - mode of delivery takes effect when at the time of perfection of the contract the seller held possession of the SM in the concept of an owner and after the contract, he continues to hold SM no longer in the concept of an owner tradition brevi manu - opposite of constitutum; before the contract, the would-be-buyer is already is possession of the SM but not in the concept of an owner and pursuant to the sale, he now holds possession of the SM in the concept of an owner tradition longa manu - delivery merely by agreement such as when the seller points the SM without actually delivering physical possession - e.g. 1499 Obligations of the Buyer Pay price of thing sold (1582) Accept delivery of thing sold (1582-1585) Pay expenses of delivery Double Sales
Requisites:

a.) 2 or more sales must be valid sales b.) 2 or more sales must pertain to exactly the same subject c.) 2 buyers must each represent conflicting interests d.) 2 buyers must each have bought from the very same seller Double Sales - movables

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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

Ownership shall be confirmed to the person who may have taken possession in good faith Double Sales- immovables in good faith recorded it in Registry of Property if there's no inscription, who in good faith was first in possession in absence thereof, to the person who presents the oldest title, provided theres good faith What if not all elements of double sale is present?
PRINCIPLE:

Prior tempore, Prior Jure [First in time, stronger in right] Sale by Non-Owner is VOID Article 1505 - goods are sold by a non-owner or does not sell under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had. Status of the contract is void - DBP v. CA, Oct. 16, 1995 Exceptions to 1505: when the owner, by his conduct, is precluded from denying sellers authority when the contrary is provided for in recording laws (Torrens System) when the sale is made under statutory power of sale or under the order of a court of competent jurisdiction when the sale is made in a merchants store (Sun Bros. V. Velasco, 54 OG 5143)

Sale by Non-Owner- Estoppel (1434) when a non-owner sells a thing and delivers it Later on, he becomes the owner Title passes to the buyer or grantee by operation of law

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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

Sale by one having voidable title Article 1506 seller has a voidable title title has not been avoided at the time of the sale the buyer acquires a good title to the goods, provided he buys them in good faith for value and without notice of sellers defect of title What does TIME OF THE SALE mean? The phrase means at the time of the delivery of the subject matter since it is the fact of DELIVERY which transfers ownership Illustration A and B already agreed on a sale A has voidable title annulment takes place after perfection but BEFORE delivery B does not obtain good title over the thing

Illustration A and B already agreed on a sale A has voidable title annulment takes place after perfection and AFTER delivery B obtains good title over the thing as long as he is an innocent purchaser for value

INNOCENT PURCHASER FOR VALUE One who buys property of another, without notice that some other person has a right to, or an interest in such property pays a full and fair price for the same at the time of such purchase, or before he has notice of the claim or interest of some other person in the property Jurisprudence

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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

Tagatac v. Jimenez A sold his car to B, B issued a check Check bounced C bought the car from B, in good faith and for value Ruling: C acquires good title to the car A can only rescind but sale must be set aside by the court first before A can recover title BUT A must reimburse C the price paid Aznar v. Yapdiangco A takes a car before B, the owner can consent to the sale A sells it to C, an IPV Ruling: C does not acquire good title to the car B was unlawfully deprived of his car under Art. 559 C is not an IPV since it is essential that A should have at least a voidable title to the car

PART FOUR: LOSS, DETERIORATION, FRUITS AND OTHER BENEFITS LOSS Res perit domino one who has beneficial interest will bear the loss At preparatory stage- would-be-seller bears the loss At consummation buyer bears the loss At perfection - 1493 entire loss - contract will be without any effect (void without need for annulment) partial loss - buyer may choose between withdrawing from the contract OR demanding the remaining part and pay proportionate price

At perfection specific goods - goods have perished in whole or in part


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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

buyer may choose, avoid the contract or valid as to existing goods

After perfection, before delivery Beneficial interest is still with seller NOTE: delivery transfers ownership, thus, seller still bears loss before delivery after perfection

After perfection, after delivery buyer bears the loss DETERIORATION, FRUITS AND OTHER BENEFITS Before perfection seller After perfection - buyer At perfection, EVEN before delivery - deterioration, fruits and improvement will already pertain to the buyer DELIVERY is NOT essential PART FIVE: REMEDIES IN CASE OF BREACH Principle Main Rule: caveat emptor - buyer beware. The buyer must be aware of the supposed title of the seller and he who buys without checking the sellers title takes all the risks and losses consequent to such failure However, the law provides certain remedies in case of breach Breach by the Seller Seller does not deliver Buyer may ask court for specific performance without giving seller the option to retain the goods on payment of damages (1598) Implied Warranties seller has the right to sell warranty vs. eviction- right to enjoy legal and peaceful possession of the thing warranty vs. non-apparent servitude (1560) warranty vs. hidden defects-(1561- 1580)
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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

Breach of Seller's Warranties (1599) accept the goods & sue seller for recoupment accept the goods & sue for damages dont accept the goods & sue for damages rescind the contract of sale, refuse to receive the goods or already received goods offer to return and recover the price NOTE: Options under 1599 are mutually exclusive unless: buyer opts for specific performance and this becomes impossible then buyer can file an action for rescission (1191) Breach of Implied Warranty against Eviction: Disturbance in Possession Vendee is disturbed in possession OR Has reasonable grounds to fear disturbance Vendee may suspend payment of price until vendor causes cessation of disturbance NOTE: mere trespassing is not disturbance in possession Breach by the Buyer Sale of movables Buyer does not accept delivery OR Accepts thing but does not pay the price OPTION: Rescission (1593) Where title has passed to the buyer Buyer neglects or refuses to pay OPTION: Action for price (1595) with claim for damages (1596) Goods have not been delivered Buyer repudiates the sale OR Buyer manifests inability to perform obligation
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if

Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

OPTION Rescind (1597) with prayer for damages Breach by Buyer of Obligation to Pay the Price Unpaid seller, when either: whole of the price has not been paid or tendered negotiable document of title was received as conditional payment and condition was broken Special Remedies of the Unpaid Seller 1. 2. 3. 4. Possessory Lien Stoppage in transitu Special right of resale Special right to rescind Special Rights 3&4 can only be used when Right 1 or 2 has been exercised

Possessory Lien 1526 ownership has been transferred to the buyer Seller is still unpaid seller may retain goods for the price while still in possession of the goods

Can only be exercised when goods were sold without any stipulation as to credit OR goods were sold on credit but term of credit has expired OR buyer becomes insolvent

Stoppage in Transitu - 1526,1530 Seller no longer has possession of thing Buyer becomes insolvent Seller can stop the goods in transitu or resume possession at any time while goods are in transit Seller enjoys same rights as if he never parted possession with thing Goods are deemed in transit
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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

Period between delivery to the carrier for transmission to the buyer until buyer claims them from the carrier Goods are rejected by the buyer and carrier continues to have possession even if the seller refuses to take goods back

Status of Sale Made by Buyer while in transitu If buyer sells thing without consent of seller while the goods are in transitu, this sale shall not affect the seller's right of stoppage in transitu (1535) Right of stoppage DOES NOT defeat title of an innocent purchaser for value who is issued a negotiable document of title (1535) Special Right to Resell Goods Available only after exercise of either possessory lien or stoppage in transitu Can be exercised when: goods are perishable in nature seller expressly reserves the right to resell in case of buyers default buyer has been in default for an unreasonable period of time Special Right to Rescind- 1526, 1534 After exercise of possessory lien or stoppage May hold buyer liable for damages Rescission of Sale of Immovables 1592 - in the sale of immovables, even if it was stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period FOR AS LONG AS NO DEMAND FOR RESCISSION OF THE CONTRACT HAS BEEN MADE UPON HIM EITHER JUDICIALLY OR BY A NOTARIAL ACT

Sale on installment

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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

RECTO LAW: SALE OF MOVABLES ON INSTALLMENTS (1484) If installment is not paid, vendor may: exact fulfillment of the obligation cancel the sale if the buyer fails to pay TWO OR MORE instalments foreclose the chattel mortgage if the buyer fails to pay TWO OR MORE installments (without right to sue for unpaid balance) The remedies under 1484 are alternative and not cumulative. Such rule is founded on the principle that no one should enrich himself at the expense of another. Hence, when the unpaid seller has already enforced the K by collecting the amount due, he can no longer rescind or cancel the same. He cannot also foreclose the mortgage over the SM. For the exercise of one in full forecloses the right to exercise remedies (Nonato v. CA, Nov. 22, 1985) RECTO LAW: SALE OF MOVABLES ON INSTALLMENTS If the seller forecloses the chattel mortgage, it can no longer sue for deficiency/balance of purchase price If the seller choses specific performance in a replevin suit for damages, seller is still entitled to alias writ of execution for unsatisfied balance (Industrial v. Ramirez)

MACEDA LAW: SALE OF REAL ESTATE ON INSTALLMENTS (RA 6552) covers residential real estate covers sales on installments, even financing of real estate on installment payments Includes residential condominium apartments If buyer has paid at least two years of installment OPTIONS A. pay without interest within the grace period OR
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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

B. Get cash surrender value Grace period 1 month for every year of installment made Can be availed of only once every 5 years Installments includes option money, downpayment, deposit

Cash Surrender Value 50% of installments made If more than 5 annual installments were paid, 50% plus 5% for every year in excess of 5 years BUT, total recovery cannot be more than 90% of the installments paid Illustration in case of cancellation If A has paid 4 years of installments (totaling P400,000) and grace period lapses he is entitled to 50% of P400,000 or P200,000 If he has paid 6 years of installments (P 600,000), he is entitled to 50% + 5% (for 1 year in excess of 5 years) = 55% of P600,000 If buyer has paid less than two years of instalments grace period of 60 days from date the installment became due

If he fails to pay within grace period, the contract will be cancelled after 30 days from receipt of buyer of notice of cancellation or demand for rescission When developer commits breach of contract: PD 957 Buyer desists from paying further installments because Owner or developer fails to develop the subdivision or condominium according to approved plans and within the time limit
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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

Buyer is entitled to reimbursement of all installments made

PART SEVEN: EXTINGUISHMENT OF SALE EXTINGUISHMENT OF SALE payment/performance loss of SM condonation/remission confusion/merger of rts of creditor & debtor compensation novation annulment rescission conventional/legal redemption

CONVENTIONAL REDEMPTION seller reserves for himself the right to repurchase the thing with the obligation to return the price, expenses & other legitimate payments The right must be reserved at perfection of sale The right is governed by Statute of Frauds period to redeem: not more than 10 years If parties fail to agree on the period, the period shall be four years from date of the contract of sale LEGAL REDEMPTION

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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

right to be subrogated upon the same terms and conditions stipulated in the contract in place of one who acquires a thing by purchase or dation in payment (1619) instances of legal redemption a) among co-heirs (1088) b) among co-owners (1620, 1623) c) among adjoining owners (1621, 1622) d) sale of credit in litigation (1634) Among Co-Heirs (1088) An heir sells his hereditary rights to a stranger before partition Any or all co-heirs may be subrogated to buyer's rights by reimbursing him for the price Co-heirs must redeem within 1 month from time they were notified in writing of the sale Among Co-Owners (1620) If a co-owner sells his share to a third person A co-owner may redeem from the third person Rule in case of redemption by two or more co-owners: Redemption shall be in proportion to the share they may have in the thing owned in common Among Adjoining Owners Rural Land area should not exceed 1 hectare unless grantee does not own rural land Urban Land small urban land is situated that a major portion cannot be used for any practical purpose within a reasonable period Sale of Credit in Litigation (1634) Creditor assigns his right to credit to a third person

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Civil Law Sales Review 2008 Lecture Notes of Atty. Maria Christina Sagmit

Ateneo de Davao University College of Law

Debtor may extinguish the credit by reimbursing the assignee for the price he paid for the credit Debtor may reimburse within 30 days from time assignee demands payment from him Period of Redemption Right to redeem shall not be exercised except within 30 days from notice in writing by prospective seller or seller Deed of sale shall not be recorded in Registry of Property unless with seller's affidavit that he has sent written notices to all possible redemptioners (1623) PART EIGHT: BULK SALE LAW BULK SALE LAW Transactions covered: Sale, transfer, mortgage or assignments of: A. B. C. all or substantially all stock of goods, wares, merchandise, provisions or materials otherwise than in the ordinary course of trade all or substantially all of the business or trade thereto fore conducted by the seller, mortgage, tranferor or assignor and all or substantially all, of the fixtures and equipment used in & about the business of the seller, mortgayor, transferor or assignor

Obligations of Seller Delivery of sworn statement of listing of creditors pro-rata application of proceeds written advance disclosure to creditors

VIOLATION: Imprisonment = not less than 6 mos. OR fine = not exceeding P5,000.00 OR both

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