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Rei spetae
- the future thing is certain as to itself but - like the sale of a sweepstake ticket, it is not
uncertain as to its quantity and quality;
certain that the thing itself (winning a prize)
will exist, much less it quantity and quality;
- contract deals with a future thing;
1. Consensual
2. Bilateral
3. Onerous
4. Commutative
Absolute where the sale is not subject to any condition whatsoever and where the title
passes to the buyer upon delivery of the thing sold.
5. Aleatory
Conditional where the sale contemplates a contingency and where the contract is
subject to certain conditions, usually in the case of the vendee, for the full payment of the
agreed purchase price.
6. Nominate
7. Principal
- the contract does not depend for its existence and validity
upon another contract.
Natural Elements those which are deemed to exist in certain contracts, in the absence
of any contrary stipulations, like warranty against eviction;
2. Other kinds
There may be a sale against the will of the owner in case of expropriation
and the three different kinds of sale under the law ordinary execution sale,
judicial foreclosure sale, and extra-judicial foreclosure sale.
2. Object or subject matter refers to the determinate thing which is the object of the
contract;
Even a future thing not existing at the time the contract is entered into may
be the object of sale, provided it has a potential or possible existence, that
is, it is reasonably certain to come into existence as the natural increment or
usual incident of something in existence already belonging to the seller, and
the tile will vest the buyer the moment the thing comes into existence (Art.
1461).
Transfer of title:
Contract of Sale
Contract to Sell
Ownership of
vendor:
(b) cancel the sale, if the vendee shall have failed to pay two or more installments;
Sale
Dation in Payment
(c) foreclose the chattel mortgage, if one has been constituted, if the vendee shall have
failed to pay two or more installments.
- no pre-existing credit
- extinguishes obligation
- less freedom
- giving of the price may generally end the - the giving of the object in lieu of the credit
obligation of the buyer
may extinguish completely or partially the
credit (depending on the agreement)
(a) to pay without additional interest the unpaid installments due within the total grace
period earned by him fixed at the rate of one-month grace period for every one year of
installment payments made this right shall be exercised by him only once in every five
(5) years of the life of the contract and its extension, if any; and
(b) if the contract is cancelled, the seller shall refund to the buyer the cash surrender
value of the payments on the property equivalent to 50% of the total payments made
and, after 5 years of installments, an additional 5% of every year but not to exceed 90%
of the total payments made. [Sec. 3, RA 6552 or the Realty Installment Buyer Protection
Act; see Layug vs. IAC, 67 SCRA 627].
(c) The buyer has the right to sell his right or assign the same before actual
cancellation of the contract and to pay in advance any unpaid installment anytime without
interest and to have such full payment of the purchase price annotated in the certificate
of title covering the property.
II.
Generally, a contract may be entered into in any form provided all the essential requisites
for its validity are present (Art. 1356). It may be in writing, oral, or partly in writing and
party oral. It may even be inferred from the conduct of the parties, since sale is a
consensual contract that is perfected by mere consent.
As a general rule, all persons, whether natural or juridical, who can bind themselves,
have the legal capacity to buy and sell.
However, in case the contract of sale should be covered by the Statute of Frauds, the law
requires that the agreement be in writing subscribed by the party charged, or by his
agent; otherwise, the contract cannot be enforced by action [see Art. 1403].
Under the Statute of Frauds (Art. 1403 [2, a, d, e].) of the Civil Code, the
following contracts must be in writing to be enforceable:
(a) Minor
(b) Insane or demented persons
(c) Deaf-mutes who do not know how to read and write
Sale of real property by minors who have already passed the ages of
puberty and adolescence and are now in the adult age, when they pretended
to have already reached their majority, while in fact they have not, is valid,
and they cannot be permitted afterwards to excuse themselves from
compliance with the obligations assumed by them or to seek their
annulment. This is in accord with the doctrine of estoppel[Mercado and
Mercado vs. Espiritu, 37 Phil. 265].
(b) sale of real property or an interest therein regardless of the price involved; and
(c) sale of property not to be performed within a year from the date thereof regardless
of the nature of the property and the price involved.
The Statute Frauds specifies three (3) ways in which contracts of sales of
goods within its terms may be made binding:
2. Relative Incapacity where it exists only with reference to certain persons or class
of property (Art. 1490-1491). The prohibition extends to sales by virtue of legal
redemption, compromises, and renunciations.
(a) Husband and wife to each other except when a separation of property was agreed
upon in the marriage settlements, or when there has been a judicial separation of
property
Recto Law (Art. 1484) Remedies of Vendor in Sale of Personal Property Payable
in Installments:
(c) Agents as to the property whose administration or sale has been entrusted to
them, unless consent of the principal is given
1.
With respect to (b) to (d), the sale shall only be voidable because in such
cases only private interests are affected. The defect can be cured by
ratification by the seller. With respect to (e) and (f), the sale shall be null and
void, public interests being involved therein.
Actual or Real (Art. 1497) the thing sold is placed in the control and
possession of the vendee or his agent. This involves the physical delivery of
the thing and is usually done by the passing of a movable thing from hand to
hand.
2.
(g) Aliens who are disqualified to purchase private agricultural lands under Art. XII,
Secs. 3 and 7 of the Constitution
Legal formalities applies to real and personal properties, where the delivery is made
through the execution of a public document;
(h) Unpaid seller having a right of lien or having estopped the goods in transitu
Traditio simbolica to effect delivery, the parties make use of a token symbol to
represent the thing delivered;
(i)
III.
LOST
Where the thing is entirely lost at the time of perfection, the contract is
inexistent and void because there is no object. There being no contract,
there is no necessity to bring an action for annulment.
Where the thing is only partially lost, the vendee may elect between
withdrawing from the contract and demanding the remaining part, paying its
proportionate price.
IV.
Traditio longa manu movable property is delivered by mere consent by the contracting
parties if the thing sold cannot be transferred to the possession of the vendee at the time
of the sale;
Traditio brevi manu the vendee already has the possession of the thing sold by virtue
of another title as when the lessor sells the thing leased to the lessee;
Constitotum possessorium the vendor continues in possession of the property sold not
as owner but in some other capacity (e.g., as tenant of the vendee).
3. Quasi-Traditio (Art. 1501) delivery of rights, credits or incorporeal real
property, made by placing the titles of ownership in the hands of the vendee or lawyer, by
execution of a public instrument, or by allowing the vendee to use his rights as new
owner with the consent of the vendor.
(a) Seller must have control over the thing; otherwise, can he put another in control?
The vendor need not be the owner of the thing at the time of perfection of
the contract; it is sufficient that he has a right to transfer the ownership
thereof at the time it is delivered (Art. 1459).
If the seller promised to deliver at a stipulated period and such period is of
the essence of the contract but did not comply with his obligation on time, he
has no right to demand payment of the price. The vendee-buyer is fact may
ask for the rescission or resolution of the sale.
If the failure of the seller to deliver on time is not due to his fault, as when it
was the buyer who failed to supply the necessary credit for the
transportation of the goods, delay on the part of the seller may be said to be
sufficiently excused.
to deliver the thing, with its accessions and accessories, if any, in the condition in which
they were upon the perfection of the contract (Art. 1537);
(c) There must be the intention to deliver the thing for purposes of ownership.
to warrant against eviction and against hidden defects (Arts. 1495, 1547);
1. A lien on the goods or right to retain them for the price while in his possession
to take care of the thing, pending delivery, with proper diligence (Art. 1163);
2. A right of stopping the goods in transitu in case of insolvency of the buyer; requisites:
to pay for the expenses of the deed of sale, unless there is a stipulation to the contrary
(Art. 1487).
Delivery or Tradition
(d) the seller must either actually take possession of the goods sold or give notice of
his claim to the carrier or other person in possession;
If the condition is in the nature of a promise that it should happen, the non-performance
of such condition may be treated by the other party as a breach of warranty.
(e) the seller must surrender the negotiable document of title, if any, issued by the
carrier or bailee; and
Implied warranty as to sellers title (Art. 1548) that the seller guarantees that he has a
right to sell the thing sold and to transfer ownership to the buyer who shall not be
disturbed in his legal and peaceful possession thereof.
(f) the seller must bear the expenses of delivery of the goods after the exercise of the
right.
3. A right of resale
4. A right to rescind the sale
Rules in case of loss, deterioration, or improvement of thing before delivery
1.
If the thing is lost without the fault of the debtor, the obligation shall be
extinguished.
2.
If the thing is lost through the fault of the debtor, he shall be obliged to pay
damages, if is understood that the thing is lost when it perishes, or goes out
of commerce, or disappears in such a way that its existence is unknown or it
cannot be recovered.
3.
4.
When the thing deteriorates without the fault of the debtor, the impairment is
to be borne by the creditor.
If it deteriorates through the fault of the debtor, the creditor may choose
between the rescission of the obligation and its fulfillment, with indemnity for
damages in either case.
5.
If the thing is improved by its nature, or by time, the improvement shall inure
to the benefit of the creditor.
6.
2.
(a) the vendee who first registers the sale in good faith in the Registry of Deeds has
preferred right over another vendee who has not registered his title even if the latter is in
actual possession of the immovable property governed by the principle prius tempore,
patior jure (first in time, stronger in right) knowledge by the first buyer of the second
sale cannot defeat the first buyers right except when the second first registers in good
faith the second sale;
(b) in the absence of registration, the vendee who first takes possession in good faith;
and
(c) in the absence of both registration and possession, the vendee who presents the
oldest title (who first bought the property) in good faith.
Article 1544 has no application to lands not registered with the Torrens
system.
Implied warranty against hidden defects or unknown encumbrance (Art. 1562) that the
seller guarantees that the thing sold is reasonably fit for the known particular purpose for
which it was acquired by the buyer or, where it was bought by description, that it is of
merchantable quality.
Essential elements of warranty against eviction
1.
2.
3.
the judgment is based on a right prior to the sale or an act imputable to the
vendor;
4.
the vendor was summoned in the suit for eviction at the instance of the
vendee; and
5.
1.
2.
Rights of the vendee against the vendor in case eviction occurs (Art. 1555)
1.
2.
income or fruits if he has been ordered to deliver them to the party who won
the suit against him;
3.
4.
5.
damages and interests and ornamental expenses if the sale was made in
bad faith.
Redhibition
Redhibitory action
Caveat venditor
Caveat emptor
(b) should the vendor give security for the return of the price; or
- the vendor is liable to the vendee for any - applies in sheriffs sale, sales of animals, and
hidden faults or defects in the thing sold, tax sales, for there is no warranty of title or
even though he was not aware thereof quality on the part of the seller in such sales.
(Art. 1566).- Based on the principle that a
sound price warrants a sound article.
- Also applies in double sales of property
where the issue is who between two vendees
has a better right to the property .
- Requires the purchaser to be aware of the
supposed title of the vendor and one who buys
without checking the vendors title takes all the
risks and losses consequent to such
failure [Solvoso vs. Tanega, 87 SCRA 349].
Alternative remedies of the buyer to enforce warranty (Art. 1567):
1.
2.
(c) should the vendor have caused the disturbance or danger to cease; or
(d) should the disturbance consist only of a mere act or trespass.
VII.
Goods include all chattels personal but not things in action or money of legal tender in
the Philippines. The term includes growing fruits or crops.
Actions available for breach of the contract of sale of goods:
Action by the seller for payment of the price (Art. 1595)
Action by the seller for damages for non-acceptance of the goods (Art. 1596)
Action by the seller for rescission of the contract for breach thereof (Art. 1597)
Action by the buyer for specific performance (Art. 1598)
Action by the buyer for rescission or damages for breach of warranty (Art. 1599)
Remedies allowed to the buyer when the seller has been guilty of a breach of
promise or warranty (Art. 1599):
1
Recoupment - accept the goods and set up the sellers breach to reduce or
extinguish the price.The theory of recoupment is that the sellers damages are cut
down to an amount which will compensate him for the value of what he has given.
Set-off or Counterclaim for damages - accept the goods and maintain an action for
damages for the breach of the warranty. Both sides of the contract are enforced in
the same litigation. The buyer (defendant) does not seek to avoid his obligation
under the contract but seeks to enforce the sellers (plaintiffs) obligation and to
deduct it from his liability for the price for breach of warranty.
Action for damages refuse to accept the goods and maintain an action for
damages for the breach of the warranty.
Rescission - rescind the contract of sale by returning or offering the return of the
goods, and recover the price or any part thereof which has been paid. This remedy is
not available in the following cases:
The vendee is obliged to (1) accept delivery; and (2) pay the price of the
thing sold.
(a) if the buyer accepted the goods knowing of the breach of warranty without
protest;
(b) if he fails to notify the seller within a reasonable time of his election to rescind;
and
1. In contract of sale, the vendor is not required to deliver the thing sold until the price is
paid nor the vendee pay the price before the thing is delivered in the absence of an
agreement to the contrary [La Font vs. Pascacio, 5 Phil. 591].
(c) if he fails to return or offer to return the goods in substantially as good condition
as they were in at the time of the transfer of ownership to him. But where the injury
to the goods was caused by the very defect against which the seller warranted, the
buyer may still rescind the sale.
2. If stipulated, then the vendee is bound to accept delivery and to pay the price at the
time and place designated.
3. If there is no stipulation as to the time and place of payment and delivery, the vendee
is bound to pay at the time and place of delivery.
4. In the absence also of stipulation, as to the place of delivery, it shall be made wherever
the thing might be at the moment the contract was perfected (Art. 1251).
5. If only the time for delivery of the thing sold has been fixed in the contract, the vendee
is required to pay even before the thing is delivered to him; if only the time for payment of
the price has been fixed, the vendee is entitled to delivery even before the price is paid
by him (Art. 1524).
Instances when the vendee may suspend the payment of the price:
a) should he be disturbed in the possession or ownership of the thing sold;
b) should he have reasonable grounds to fear such disturbance by a vindicatory action or
by a foreclosure of mortgage;
These rights do not exist in the following cases:
VIII.
EXTINGUISHMENT OF SALE
Legal Redemption
(Arts. 1601-1618)
(Arts. 1619-1623)
Nature:
An equitable mortgage is one which lacks the proper formalities, form of words, or other
requisites prescribed by law for a mortgage, but shows the intention of the parties to
make the property subject of the contract as security for a debt and contains nothing
impossible or contrary to law [Cachola vs. CA, 208 SCRA 496].
Dacion en pago is the transmission of the ownership of a thing by the debtor to the
creditor as the accepted equivalent of the performance of an obligation.
Pacto de retro
Ownership is transferred but the ownership Ownership is not transferred but the property
is subject to the condition that the seller is merely subject to a charge or lien as
might recover the ownership within a
security for the compliance of a principal
certain period of time.
obligation, usually a loan.
If the seller does not repurchase the
property upon the very day named in the
contract, he loses all interest thereon.
Mortgage
1.
2.
3.
4.
when the purchaser retains for himself a part of the purchase price;
5.
when the vendor binds himself to pay the taxes on the thing sold;
6.
in any other case where it may be fairly inferred the real intention of the
parties is that the transaction shall secure the payment of a debt or the
performance of any other obligation; and
7.
There must be a pending litigation at the time of the assignment. The complaint by
the assignor must have been filed and answered by the creditor before the sale of
the credit.
The debtor must pay the assignee (a) the price paid by him, (b) the judicial costs
incurred by him, and (c) the interests on the price from the date of payment.
The right must be exercised by the debtor within 30 days from the date the assignee
demands (judicially or extra-judicially) payment from him.
Redemption
Pre-emption
1 The sale to a third person has already been The sale to a third person has not yet
perfected
been perfected
2 Has a much broader scope
for speculation
3 Directed against the third person who
bought the property
Purpose of the law (Act No. 3952) is to prevent the defrauding of creditors by the secret
sale or disposal or mortgage in bulk of all or substantially all of a merchants stock of
goods.
The general scheme is to declare such bulk sales fraudulent and void as to creditors of
the vendor, or presumptively so, unless specified formalities are observed, such as the
demanding and the giving of a list of creditors, the giving of actual and constructive
notice to such creditors, by record or otherwise, and the making of an inventory.
A sale and transfer in bulk under the Bulk Sales Law is any sale, transfer, mortgage, or
assignment
Assignment of credit a contract by which the owner of a credit transfers to another his
rights and actions against a third person in consideration of a price certain in money or its
equivalent (Art. 1458).
Assignment of credit and other incorporeal rights are consensual, bilateral, onerous, and
commutative or aleatory contracts. The assignment involves no transfer of ownership
but merely effects the transfer of rights which the assignor has at the time to the
assignee [Casabuena vs. CA, 286 SCRA 594].
It may be done gratuitously, but if done onerously, it is really a sale. Thus, the subject
matter is the credit or right assigned; the consideration is the price paid for the credit or
right; and the consent is the agreement of the parties to the assignment of the credit or
right at the agreed price.
(c) of all or substantially all, of the fixtures and equipment used in the business of the
vendor, mortgagor transferor, or assignor.
1.
2.
X. BARTER OR EXCHANGE
Barter a contract whereby one person transfers the ownership of non-fungible things to
another with the obligation on the part of the latter to give things of the same kind,
quantity, and quality.
The contract is perfected from the moment there is a meeting of the minds upon the
things promised by each party in consideration of the other. It is consummated from the
time of mutual delivery by the contracting parties of things they promised.
Effect where the giver is not the lawful owner of the thing delivered: the aggrieved party
cannot be compelled to deliver the thing he has promised. He is entitled to claim
damages (Art. 1639). [Biagtan vs. Viuda de Oller, 62 Phil. 933].
Remedy in case of eviction: the injured party is given the option to recover the property
he has given in exchange with damages or only claim an indemnity for damages. The
right to recover is, however, subject to the rights of innocent third persons (Art. 1640).