Documente Academic
Documente Profesional
Documente Cultură
1, 2016]
deja [already] + entendu [heard] = youve heard all of this before
(Notes in red are opinions of lecturer[s]1 & authors2 on the subject, or of the reviewee.)
SALES
I. NATURE & FORM OF THE CONTRACT
Art. 1458 + others (sale, defined)
Sale is a contract where one of the contracting parties obligates oneself to transfer ownership of
& deliver a determinate thing, & the other to pay therefor a price certain or its equivalent.
Kinds of contract of sale as to presence/absence of conditions
1. Absolute title passes to buyer upon delivery
2. Conditional contemplates a contingency; in general, where the contract is subject to
certain conditions, e.g. full payment of the purchase price
Contract of sale vs. contract to sell
1. Contract of sale title passes to buyer upon delivery of the thing sold
2. Contract to sell (i.e. exclusive right & privilege to purchase) ownership is reserved in
the seller & not to pass until full payment of the purchase price
Reqs. for a thing to be a proper object of sale
1. Existing (or at least w/ a future/contingent existence)
2. Licit/legal
3. Determinate (or determinable by description/segregation)
Determinate req., satisfied if the thing is capable of being made determinate
w/o having enter into a new contract between the parties!
4. Vendor must have a right to transfer ownership of the thing @ time of delivery
Not reqd for vendor to have the right to transfer ownership @ time of perfection!
Emptio rei speratae vs. emptio spei
1. Emptio rei speratae sale of future things (w/c must be determinate/specific)
In case of doubt, this is presumed!
2. Emptio spei sale of mere hope/expectancy; buyer pays the price even if the thing does
not eventually exist; effective even if thing doesn't appear (XPN: sale of vain hope)
Effect of the sale by the sole owner of an undivided share
OBLIGATIONS OF THE SELLER
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Rule:
A. As to place:
(1) Based on stipulation as to when and where
In the absence of stipulation:
Reasonable place: based on
(2) Usage of trade
(3) Place
(4) Residence of the seller
Exception to the rule: That you delivery at (3) and (4) in the absence of (1) and (2) is
where the subject is other than (3) and (4)
(3) refers to where the object is at the time of perfection of the contract
B. As to time:
(1) Stipulation
(2) Usage of trade
(3) Reasonable hour
(4) Beyond reasonable hour denial of delivery/receipt is acceptable
(acceptance is effective but denial of which is acceptable)
Delivery
Actual/Real
Constructive/Legal
Incorporeal rights/Intangibles
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CIF (Costs, Insurance and Freight) paid by the buyer cost of goods + CIF
Movable property: If the goods are less than the quantity stipulated.
Rights of Buyer:
1. Reject
2. Accept and demand the rest
If there was still no delivery of the balance:
GR: Pay for what has been delivered @ contract rate (if you did not know that seller
failed to deliver the balance)
XPN: If you accepted the goods knowing that the seller hasnt delivered all (cannot
be obliged to pay more than fair value)
Immovable property:
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Delivery by seller
[Non-acceptance =/= refusal to accept]
Is acceptance necessary?
GR: No, because it is the obligation of the seller, otherwise, the seller cannot comply with his
obligation just by the non-acceptance of the buyer.
When to pay:
1. At time stipulated by the parties
2. Within reasonable period of time
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1. General remedies
In case of movables:
No delivery yet (no transfer of ownership)
a. Rescission [when?]
i. If buyer does not appear at the place of delivery; or
ii. If buyer appears but refuses to accept delivery w/o justification; or
iii. Refuses to pay unless there is a stipulation as to time of payment
b. Offer delivery (specific performance)
i. If buyer refuses to accept delivery:
1. Rescission + damages
2. Resale at reasonable price
How much can you claim by reason of non-acceptance
c. Damages
i. Profits that he should have earned
ii. Estimated loss/actual loss resulting from non-acceptance
iii. Difference between contract price & price upon resale
iv. Expenses incurred in making the goods at a deliverable state
If there is delivery (w/ transfer of ownership)
1. Get the price (spec. performance)
If there is no delivery (w/o transfer of ownership)
1. Offer delivery [if refused, rescission or resell or notify the buyer that you hold the
goods in his name]
1. Possessory lien
2. Stoppage in transitu
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As to movables:
1. For failure of seller to deliver
a. Specific performance (w/o giving the seller the option to retain goods upon
paying damages)
b. Rescission (on the ground of substantial breach)
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As to immovables:
A. Remedies of seller:
1. Anticipatory breach reasonable ground to gear that subject matter/price is lost
a. Rescission (in substantial breach)
2. Spec. performance or rescission (Art. 1592)
[in case of failure of buyer to pay the price (period already expired)]
Equitable resolutions
B. Remedies of buyer:
1. Suspension of payment in anticipatory breach
[upon judicial or notarial demand, seller has no ground to reject payment]
DOUBLE SALES
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Rules on preference:
As to movables:
1. First possessor in good faith
As to immovables:
1. First to register in good faith at the Registry of Property
2. First possessor in good faith
3. One who presents the oldest title in good faith
Q: If one has personal knowledge on the annotation of [(1) adverse claim (2) lis pendens] on the
title, will it make one in bad faith?
A: Adverse claim annotation expires in 30 days, BUT
GR: Regardless of whether it is still effective, it puts the purchaser in bad faith
XPN: If it can be proved that one exercised due diligence to discover that the claim was
filed maliciously
If you have actual knowledge, even if it is not annotated, bad faith.
If Art. 1544 does not apply, the rule is: first in time, first in right (prior tempore, potior jure).
Bad faith in registration of first buyer upon learning of second sale does not prejudice him.
CONDITION WARRANTY
Stipulated Some are implied
Rooted to the existence of the obligation Goes into the performance of such obligation
itself (and in fact may constitute an obligation in itself)
May attach itself either to the obligations of Relates to the subject matter itself or to the
the seller or that of the buyer obligations of the seller as to said subject matter
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Implied warranties
1. Warranty that the seller has the right to sell the thing [applies only at consummation
stage as seller need not own the thing at the perfection of the sale anyway]
2. Warranty against eviction
[Unless there is contrary stip., implied warranty that when the ownership is to pass, the
buyer shall from that time have and enjoy the legal & peaceful possession of the thing]
Purchaser deprived (or evicted from) in whole or in part of the thing sold
By final judgment
Buyer need not appeal to avail of remedy of breach of warranty against
eviction [sellers duty to defend himself]
Based on an issue arising prior to the sale by the seller
Seller has been summoned and made co-defendant in the suit for eviction at the
instance of the buyer
Reason: it is he who warranted against the eviction
He must defend the buyers title; takes the lead in the case
What can be demanded?
Value of the thing at the time of eviction
Fruits/income
Expenses of the contract
Cost of suit [(1) eviction (2) enforcement of warranty]
Damages, interests, ornamental expenses if the sale was made in bad faith
Q: Can warranty against eviction be waived? A: YES.
Q: How?
A: Waiver may be (1) implied or (2) express.
General [Consciente] value at the time of eviction
Specific [Intencionada] total extinguishment of liability of seller on liabilities
expressly/specifically waived
3. Warranty against non-apparent servitudes
Subject matter involved is an immovable
There is a non-apparent servitude not mentioned in the agreement
Purchaser would not have bought the immovable had he known of the servitude
Remedies:
o Rescission
o Damages
Prescriptive period:
o Within 1 year from the execution of the deed.
What if 1 year has already lapsed? May only bring an action for
damages within an equal period, counted from the date on which
he discovered the burden/servitude (note that rescission can no
longer be availed of here)
4. Warranty against hidden defects
Defect is hidden
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A.:
1. Buyer makes known the purpose for which the goods are acquired
2. Buyer relied on sellers skill/judgment
3. There would be an implied warranty that the goods shall be reasonably fit for said
purpose
B.:
1. Goods are bought by description
2. Bought from seller who deals in goods of that description
3. There would be an implied warranty that the goods shall be of merchantable quality
Requisites of breach:
1. Buyer sustained injury because of the product
2. Injury occurred because the product was defective/unreasonably unsafe
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3. Defect existed when the product left the hands of the seller
Instances of waiver:
Even if buyer know of the breach of warranty, he accepted the goods without protest
Failure to notify seller within reasonable time
Failure to return the goods in substantially good condition as they were at the time the
ownership was transferred to the buyer
XPN: If deterioration/injury was caused by the breach of warranty, buyer is not
stopped from returning or offering to return the goods to the seller + rescinding
the sale.
EXTINGUISHMENT OF SALE
Grounds:
1. Payment/Performance
2. Loss of the thing due
3. Compensation
4. Confusion
5. Condonation
6. Novation
7. Annulment
8. Prescription
9. Fulfillment of resolutory condition
10. Rescission
11. Conventional and Legal Redemption
Conventional redemption: right of the seller to repurchase the property, with the obligation to
return:
1. Price of the sale
2. Expenses and other legitimate payments
3. Useful and necessary expenses
Period of redemption:
1. No agreement as to duration: 4 years
2. With period agreed upon: shall not exceed 10 years
If period exceeds 10 years, stipulation is void.
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Q: If the seller does not want to pay (3), can buyer retain the property?
A: Yes. Only after the payment of (1), (2), and (3) can the seller oblige the buyer to return the
property.
If the seller fails to redeem, title is consolidated in the name of the buyer.
A: When is the seller entitled to the 30-day period after the judgment?
A: If the issue is whether the contract is a pacto de retro sale or an equitable mortgage
[Rationale: If the sale is an equitable mortgage, seller may pay any time before the foreclosure
of the mortgage, so that if the seller believed in good faith that it is indeed an equitable
mortgage, then he can disregard the period of redemption because justice dictates that he be
given 30 days.]
Requisites:
1. Parties entered into a contract denominated as sale
2. Intention is to secure a debt by way of a mortgage
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Q: Does this apply to an absolute sale or does it apply only to a sale with pacto de retro?
A: It can also apply to absolute sale, provided that the intention of the parties is to secure debt.
Q: Affidavit of consolidation of title v. Judgment that the sale is really an equi. mortgage what
will prevail?
A: The latter. If it is really an equitable mortgage, there is no absolute sale, and therefore there
is no basis for affidavit of consolidation.
Prescription:
[2 kinds of acquisitive prescription]
1. Ordinary: 10 years
Legal title
Good faith
2. Extraordinary: 30 years
Possession in good faith not required
Example:
1. Sale
2. After 15 years, the sale is adjudged as an equi. mortgage
3. Can buyer refuse because he has legal title & 10 years had passed?
A: NO, because possession, in order to ripen to ownership, should be in the concept of an
owner.
Pactum commissorium: stipulation vesting automatic ownership to the creditor in default of the
debtor in a mortgage or a pledge; void as against public policy.
Legal redemption: right to be subrogated with the same terms and conditions in a contract in the
place of one person who acquired a thing by purchase/dation in payment/any other transaction
where ownership is transferred by onerous title.
Rationale:
1. Convenience
2. To minimize co-ownership (law frowns upon it)
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What is sold?
1. If hereditary rights are sold to a stranger:
Any of the co-heirs may be subrogated to the rights of the stranger by
reimbursing him
May be exercised by co-heir within a month from notice given by a co-heir
For the benefit of the redeeming co-heir only
In case of estate/property left by deceased decedent left to the heirs, right to
redeem would not be as heir but as co-owner in which case it shall be for the
benefit of all co-owners
2. Legal redemption among adjoining owners re: rural land:
Area not exceeding 1 hectare
Not all owners of adjoining land are entitled to legal redemption if owner is
separated from the rural land by rivers, brooks, etc., and other apparent
servitudes
Preference if there are 2 or more adjacent owners:
o One owning the smaller area
o If areas are of same size, then the first one who requested for redemption
3. Legal redemption of urban land:
Urban land must be so small and so situated that a major portion thereof does
not have practical use
Brought for speculation (Legaspi v. CA did away with adjoining owner having to
prove this element when it found that the owner of the subject parcel of land
actually inherited the property and therefore it would require from the adjoining
owner the requirement to comply with something impossible)
Are all urban lands which are so small etc., subject to the right of
redemption/pre-emption? NO, if the transfer is by way of inheritance.
Preference if there are 2 or more claimants:
o One whose intended use of the land is best justified shall be given
preference
Redemption of tax sales: in case of delinquency sale of property of a taxpayer from non-
payment of tax assessments, within 1 year from sale.
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Judicial foreclosure:
GR: No right of redemption
XPN: Within the 90-day period from the day judgment becomes final or even after foreclosure
sale but before confirmation of sale
Equity of redemption
Redemption by juridical person: at any time [within 3 months after foreclosure] until registration.
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