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Sales Midterms Reviewer Prof. J. Sanchez 1 semester, AY 10-11

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Janz Hanna Ria N. Serrano

I. Introduction A. Essential requirements of a contract [see Labitag ObliCon reviewer] Consent Object Consideration Definitions 1. Contract of Sale CC, 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership 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. Tolentino: The contract of sale is consensual, bilateral, commutative and onerous. It gives rise to reciprocal obligations between the seller and buyer, since each party assumes obligations conditioned upon those of the other, and the obligations of both are derived from a common origin, the perfected contract 1458 expressly makes the obligation to transfer ownership as an essential element of sale Topacio v. CA. [property mortgaged to BPI. Foreclosed. Petitioner offered to buy. Paid 30% of purchase price] Earnest Money is considered part of the purchase price and as proof of the perfection of the contract. Earnest money is something of value to show that the buyer was really in earnest, and given to the seller to bind the bargain. Nowhere in the transaction indicates that BPI reserved its title on the property nor did it provide for automatic rescission in case of default. Hence, contract of sale. Laforteza v. Machuca. [mother and other siblings executed SPA in favor of 2 brothers. 30K earnest money, 600K upon issuance of title. When asked for extension, only 1 of SPAs conformed. When payment given, sellers refused to accept.] There was a perfected contract of sale. The six-month period during which the respondent would be in possession of the property as lessee, was not a period within which to exercise an option. The 6 months merely delayed the demandability of the contract of sale and did not determine its perfection for after the expiration of the period, there was an absolute obligation on the part of the petitioners and the respondent to comply with the terms of the sale. Cavite Devt Bank v. Lim. Nemo dat quod non habet. While it is not required that, at the perfection stage [meeting of the minds], the seller be the owner of the thing sold or even that subject matter of the sale exists at that point in time, of the delivery or consummation stage of the sale, it is required that the seller be the owner of the thing sold Almira v. CA. a deed of sale is absolute in nature in the absence of any stipulation reserving title to the vendor until full payment of the purchase price. The absence of a stipulation the agreement which expressly provides that the seller retains title or ownership of the property until full payment of the purchase price, couple with the fact that the buyer took possession of the property upon execution of the agreement, indicates that the parties have contemplated a contract of absolute sale. Alfredo v. Borras. The contract of sale of the subject land has been consummated because the sellers and buyers have performed their respective obligations under the contract. The physical delivery of the subject land also constituted a transfer of ownership. Blas v. Angeles-Hutalla. A contract of sale is absolute, absent any stipulation therein reserving title over the property to the vendee until full payment of the purchase price nor giving the vendor the right to unilaterally rescind the contract in case of non-payment. // it is settled that the real nature of a contract may be determined from the express terms of the written agreement and from the contemporaneous and subsequent acts of the parties thereto. Cruz v. Fernando. The manner of payment of the purchase pruce is an essential element before a valid and binding contract of sale can exist the conspicuous absence of a definite manner of payment of the purchase price in the agreement confirms the conclusion that it is a contract to sell. Although the CC does not expressly state that the minds of the parties must also meet on the terms or manner of payment, the same is needed, otherwise there is no sale. Valdez v. CA. [contract of sale] petitioner did not reserve the right to ownership over the property, as well as any right to unilaterally rescind the contract. There has been, by the execution of the deed, a constructive delivery of the property to the respondent; hence, the latter acquired ownership over the same. Manila Metal Container Corp v. PNB. A definite agreement as to the price is an essential element of a binding agreement to sell personal or real property because it seriously affects the rights and obligations of the parties; when the contract of sale is not perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation between the parties. The fixing of the price can never be left to the decision of one of the contracting parties. But a price fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale. Roberts v. Papio. One repurchases only what he previously sold the right to repurchase presupposes a valid contract of sale between the same parties. // an option to buy or promise to sell is different and distinct from the right to repurchase that must be reserved by means of stipulations to that effect in the contract of sale. Serrano v. Caguiat. A contract to sell is akin to a conditional sale where the obligatory force of the vendors obligation to transfer title is subordinated to the happening of a future and uncertaion event, so that if the suspensive conditional obligation does not take plaece, the parties would stand as if the conditional obligation had never existed. The suspensive condition is commonly full payment of the purchase price. In a contract to sell where earnest money is given, the earnest money forms part of the consideration only if the sale is consummated upon full payment of the purchase price. Contract to Sell In case of failure to pay, promisors have the power to extrajudicially terminate the operation of the contract, refuse the conveyance, and retain the sums of installments already received, where such rights are expressly provided for Adelfa Prop. Inc v. CA. [Petitioner entered into an Exclusive Option to Purchase with respondents Jimenez. However, Adelfa put on hold its payment until the respondents could dispose of the civil suit brought against them. While the instrument they really executed is a contract to sell, Adelfa can no longer compel the respondents to sell them the land because of its delay in payment which precisely prompted the latter to rescind the contract. An option is a continuing offer or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a certain time, or under, or in compliance with, certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale. It is also sometimes called an unaccepted offer. (Distinguish it with a contract to sell as to object of the sale, whether the offer is accepted or not, and whether consignation is necessary in the tender of payment.) Castillo v. Reyes. [uncashed check] A contract of sale is valid even if the manner of payment is breached.

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Sales Midterms Reviewer Prof. J. Sanchez 1 semester, AY 10-11

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Janz Hanna Ria N. Serrano

City of Cebu v. Heirs of Rubi. The effect of an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract, upon notice of the award to the bidder. // a letter ordering a buyer to vacate the premises for reason that the occupancy is illegal does not amount to a demand for rescission where there was no reference to the sale. // an exchange of written correspondence is sufficient compliance to the statute of frauds = no need for it to be a public instrument. Buot v. CA Platinum Plans Phils. V. Cucueco. The vendor cannot recover ownership of the thing sold until and unless the contract itself is resolved and set aside. A party who fails to invoke judicially or by notarial act the resolution of the contract of sale would be prevented from blocking the consummation of the same in light of the precept that mere failure to fulfill the contract does not operate ipso facto as rescission. // a contract to sell may not be considered a contract of sale because of its first element of constent to transfer ownership is lacking in the former // in a contract to sell, no judicial rescission is necessary in case of breach, but this act is subject to the scrutiny of the courts Bowe v. CA. mere acceptance of down payment and others does not characterize transaction as a sale in the avsence of a formal deed of conveyance of realty. There was no immediate transfer of title to petitioners to speak of as would have happened if there had been a sale at the outset. Rayos v. CA. Contract to sell = retention of ownership to seller UMCUPAI v. BRYC-V Devt Corp. The letter of intent is just that a manifestation of SFCs intention to sell the propery and UMCUPAIs intention to acquire the same. It is neither a contract to sell nor a contract of sale. 3. Conditional Contract of Sale CC, 1461. Things having a potential existence may be the object of the contract of sale. The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence. The sale of a vain hope or expectancy is void. A valid sale may be made of a thing, which, though not yet actually in existence, is reasonably certain to come into existence as the natural increment or usual incident of something already in existence, and then belonging to the vendor, and the title will best in the buyer the moment the thing comes into existence CC, 1462. The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured, raised, or acquired by the seller after the perfection of the contract of sale, in this Title called "future goods." There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which may or may not happen. CC, 1465. Things subject to a resolutory condition may be the object of the contract of sale CC, 1503. When there is a contract of sale of specific goods, the seller may, by the terms of the contract, reserve the right of possession or ownership in the goods until certain conditions have been fulfilled. The right of possession or ownership may be thus reserved notwithstanding the delivery of the goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer. Where goods are shipped, and by the bill of lading the goods are deliverable to the seller or his agent, or to the order of the seller or of his agent, the seller thereby reserves the ownership in the goods. But, if except for the form of the bill of lading, the ownership would have passed to the buyer on shipment of the goods, the seller's property in the goods shall be deemed to be only for the purpose of securing performance by the buyer of his obligations under the contract. Where goods are shipped, and by the bill of lading the goods are deliverable to order of the buyer or of his agent, but possession of the bill of lading is retained by the seller or his agent, the seller thereby reserves a right to the possession of the goods as against the buyer. Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of lading together to the buyer to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if he does not honor the bill of exchange, and if he wrongfully retains the bill of lading he acquires no added right thereby. If, however, the bill of lading provides that the goods are deliverable to the buyer or to the order of the buyer, or is indorsed in blank, or to the buyer by the consignee named therein, one who purchases in good faith, for value, the bill of lading, or goods from the buyer will obtain the ownership in the goods, although the bill of exchange has not been honored, provided that such purchaser has received delivery of the bill of lading indorsed by the consignee named therein, or of the goods, without notice of the facts making the transfer wrongful. CC, 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price. Peoples Homesite & Housing Corp v. CA. there is no perfected sale of a subdivision lot where award thereof was expressly made subject to approval by higher authorites and there was no acceptance manifested by the supposed awardee. The city council did not approve the subdivision plan in 1961. When, in 1964, the plan was approved, sps. Mendoza should have manifested in writing their acceptance of the award. Lim v. CA. in a contract of sale, the vendor loses and cannot recover ownership of the thing sold until and unless the contract itself resolved and set; whereas, in a contract to sell, title remains in the vendor, if vendee fails to make payment at the time specified in the contract. Pingol v. CA. A deed of sale is absolute in nature although denominated as a deed of conditional sale when there is no stipulation in the deed that title to the property sold is reserved in the seller until full payment of the price nor is there a stipulation giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. the contract, being one of absolute sale, the ownership was transferred to buyer upon actual and constructive delivery thereof. Contract of Sale Conditional Contract of Sale Contract to Sell Transfer of ownership? Yes. Yes. No. seller expressly reserves ownership Condition? None. Yes. Negative resolutory Yes. Positive suspensive condition condition Rescission Judicial Judicial IF buyer fails to pay, seller may EXTRA-judicially rescind the contract, but still subject to review by court upon buyers instance Consent Present, no qualification Present, with prejudice to None yet; consent will be happening of suspensive present upon entering contract condition of sale 3rd person buys property? Buyer in bad faith, sale to him Buyer in bad faith Must be ascertained from null and void circumstances

Sales Midterms Reviewer Prof. J. Sanchez 1 semester, AY 10-11

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Janz Hanna Ria N. Serrano

4. Option CC, 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. CC, 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. Southwestern Sugar v. AG&P. while it is true that under A1324, the general rule regarding offer & acceptance is that, when the offeror gives to the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance, except when the option is founded upon consideration, this general rule must be interpreted as modified by A1479, which applies to a promise to buy or sell specifically. This rule requires that a promise to sell to be valid must be supported by a consideration distinct from the price, which means that the option can still be withdrawn, even if accepted, if the same is not supported by any consideration. Atkins, Kroll & Co. v. Cua Hian Tek. If an option is given without consideration, it is a mere offer of contract of sale, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitute a binding contract of sale, even though the option was not supported by sufficient consideration. Sanchez v. Rigos [Sanchez and Rigos executed Option to Purchase whereby Rigos agreed, promised, and committed to sell to Sanchez the sum of P1,510 a parcel of land. When Rigos refused to accept the P1,510, Sanchez consigned it and filed for specific performance.] The SC decision ruled, putting it differently, that if the option is without a consideration, it is a mere offer to sell which is not binding until accepted. Art. 1324 and 1479 are reconciled. In this case, Sanchez has accepted the offer before revocation. Limson v. CA. An option is not itself a purchase, but merely secures the privilege to buy; until acceptance, it is not, properly speaking, a contract, and does not vest, transfer, or agree to transfer, any title to, or any interest or right in the subject matter, but is merely a contract by which the owner of the property gives the optionee the right or privilege of accepting the offer and buying the property on certain terms. Earnest money Option Money Part of the purchase price Money given as a distinct consideration for an option contract Given only where there is already a sale Applies to a sale not yet perfected When given, buyer is bound to pay the balance When given, buyer is not required to buy, but may forfeit it depending on the terms of the option Nool v. CA. [basically restores Southwestern ruling ::: prevailing case law on option] An accepted unilateral promise to buy and sell a determinate thing for a price certain is binding upon the promissory if the promise is supported by a consideration distinct from the price. Contract of Sale distinguished from other contracts 1. Piece of Work CC, 1713. By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material. CC, 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. Contract of Sale Contract for a Piece of Work A contract for the delivery at a certain price of an article which the If the goods are to be manufactured specially for the customer vendor in the ordinary course of his business manufactures or and upon his special order and not for the general market procures for the general market whether the same is on hand at the time or not Inchausti v. Cromwell. The distinction between a contract of sale and one for work, is tested by the inquiry whether the thing transferres is one not in existence and which would never have existed but for the order of the party desiring to acquire it, or a thing which would have existed and bee nthe subject of sale to some other person, even if the order had not been given. When a person stipulates for the future sale of articles which he is habitually making, and which at the time are not made or finished, it is essentially a contract of sale and not a contract for labor. It is otherwise where the article would not have been made but for the agreement and where the article ordered by the purchase is exactly such as the vendor makes and keeps on hand for sale to anyone, and no change or modification of it is made at the vendees request, it is a contract of sale even though it be entirely made after and in consequence of the vendees order for it. Celestino v. CIR. A factory which habitually makes sash, windows and doors, and sells the goods to the public is a manufacturer. The fact that the windows and doors are made by it only when customers place their orders and according to such form or combination as suit to the fancy of the purchasers does not alter the nature of the establishment. CIR v. Engineering Equipment & Supply Co. The company did not manufacture ACUs for sale to the general public, but imported some items which were used in executing contracts entered into by it. It undertook negotiations and wxecution of individual contracts for the design, supply and installation of ACUs of the central type, taking into consideration in the process such factors as the area of the space, etc. Hence, contractor = a person who, in the pursuit of independent business, undertakes to do a specific job or piece of work for other persons, using his own means and methods without submitting himself to control as to petty details. The true test of a contractor = he renders service in the course of an independent occupation, representing the will of his employer only as to the result of his work, and not as to the means by which it is accomplished. Concrete Aggregates v. CTA. CAI, which operates a batching plant and an asphalt mixing plant, is a manufacturer and not a mere contractor. Petitioner does nothing more than sell the articles it habitually manufactures. It stocks raw materials, ready at any time, for the manufacture of asphalt and/or concrete mix. Its marketing system would readily disclose that its products are available for sale to anyone needing them. The habituality of the production of goods for the general public characterizes the business of petitioner. C.

Sales Midterms Reviewer Prof. J. Sanchez 1 semester, AY 10-11

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Janz Hanna Ria N. Serrano

E&M Corp v. CA. A contract for the fabrication and installation of a central AC system is one for a piece of work where it is not the contractors line of business to manufacture AC systems to be sold off-the-shelf the price/compensation for the system manufactured & installed will depend greatly on the particular plans and specifications agreed upon with the customers. Del Monte v. Aragones. supply agreement = contract for a piece of work. The goods manufactured specially for the customer and upon his special order, and not for the general market. 2. Agency to buy and Sell Contract of Sale Contract of Agency to sell Buyer pays the price Agent does not pay Buyer acquires the ownership over the object Agent does not acquire ownership Essence: transfer of title Essence: delivery to the agent of the goods not as the agents property but of the principal who remains the owner and has the right to control CC, 1466. In construing a contract containing provisions characteristic of both the contract of sale and of the contract of agency to sell, the essential clauses of the whole instrument shall be considered. CC, 1868. By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. Puyat v. Arco Amusements. [sound producing equipment] contract of sale; letters of buyer to seller accepting price quotations and further agreeing to purchase Quiroga v. Parsons. The plaintiff was to furnish defendant with the beds which the latter might order, at the stipulated price, and that the defendant was to pay this price in the manner agreed upon. = SALE Asbestos v. Peralta. An agreement that the buyer shall deal exclusively with the products of the seller is not inconsistent with the contract of sale much less convert it into one of agency, and where the entire control and direction of the business operation remains with the dealer, the latter cannot be considered a mere alter ego of manufacturer. Victorias Milling v. CA. The basis of agency is representation on the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions, while on the part of the agent, there must be an intention to accept the appointment and act on it; one factor which most clearlty distinguishes agency from other legal concepts is control one person [agent] agreeing to act under the control or direction of another [principal] 3. Barter and Exchange CC, 1638. By the contract of barter or exchange one of the parties binds himself to give one thing in consideration of the other's promise to give another thing. CC, 1641. As to all matters not specifically provided for in this Title, barter shall be governed by the provisions of the preceding Title relating to sales. CC, 1468. If the consideration of the contract consists partly in money, and partly in another thing, the transaction shall be characterized by the manifest intention of the parties. If such intention does not clearly appear, it shall be considered a barter if the value of the thing given as a part of the consideration exceeds the amount of the money or its equivalent; otherwise, it is a sale. Fule v. CA. jewelry < money = sale. 4. Dacion en Pago Contract of Sale Dacion en Pago No pre-existing credit Pre-existing credit Gives rise to obligations Extinguishes obligations Cause/consideration = price (sellers POV) Cause/consideration = extinguishment of debt (debtors POV) = object (buyers POV) = acquisition of object offered in lieu of credit (creditors POV) Greater freedom in determination of price Less freedom Giving of the price may generally end the buyers obligation Giving of the object may be complete or partial extinguishment only. CC, 1245. Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in money, shall be governed by the law of sales. Yuson v. Vitan. Governed by the law on sales, dation is a transaction that takes place when a piece of property is alienated to the creditor in satisfaction of a debt in money it involves delivery and transmission of ownership of a thing as an accepted equivalent of the performance of the obligation. When Vitan allegedly sold his property to Yuson, it did not extinguish his obligation since he did not really intend to sell and relinquish his ownership to the same. Aquintey v. Tibong. In it s modern concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the obligation is considered as the object of the contract od sale, while the debt is considered as the purchase price. // REQUISITES: (1) there must be a performance of the prestation in lieu of payment, which may consist in the delivery of a corporeal thing or a real right or a credit against 3 rd person; (2) there must be a difference between the prestation due and that which is given in substitution; (3) there must be an agreement between creditor and debtor that the obligation is immediately extinguished by reason of performance of a prestation different from that due. Phil. Lawin Bus v. CA. No dacion. There was no meeting of the minds in thace on whether Lawins loan would be extinguished by dacion. Lo v. KJS Eco-Formwork. The assignment of credit, which is in the nature of a sale of personal property, produced the effects of a dacion which may extinguish the obligation FCC v. Phil. Acetylene. [vehicle mortgaged] The mere return of the mortgaged motor vehicle does not constitute a dacion en pago in the absence of the true intention of the parties. Dacion en pago is the transmission of the ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of an obligation. In dacion en pago the debtor offers another thing to the creditor who accepts it as equivalent payment of an outstanding debt. The evidence on record fails to show that the mortgage consented, or at least intended that the mere delivery to and acceptance by him, of the Chevrolet be construed as actual payment. Vda. de Jayme v. CA. the alienation of the building in favor of MBTC for partial satisfaction of loan is valid. SSS v. CA. a suit to obtain enforcement of an approved and agreed dacion en pago is, doubtless, a suit for specific performance and one incapable of pecuniary estimation beyond the competence of the Social Security Commission it is cognizable by RTC. PNB v. Pineda. Where there is no transfer of ownership in favor of the creditor, there is no dation.

Sales Midterms Reviewer Prof. J. Sanchez 1 semester, AY 10-11

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Janz Hanna Ria N. Serrano

Estanislao v. EWBC. In a deed of assignment in the nature of a dation in payment, property is alienated to the creditor in satisfaction of a debt in money; consent to contracts is manifested by the meeting of the offer and the acceptance of the thing and the casue which are to constitute the contract upon due acceptance, the contract is perfected, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences of the same. 5. Chattel mortgage CC, 2140. By a chattel mortgage, personal property is recorded in the Chattel Mortgage Register as a security for the performance of an obligation. If the movable, instead of being recorded, is delivered to the creditor or a third person, the contract is a pledge and not a chattel mortgage. Lease CC, 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies: (1) Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee's failure to pay cover two or more installments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void. CC, 1485. The preceding article shall be applied to contracts purporting to be leases of personal property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing. Vda. de Jose v. Barrueco. The so-called rent must necessarily be regarded as payment of the price in installments since the due payment of the agreed amount results, by the terms of the bargain, in the transfer of title to the lessee. Elisco Tool Mfg. Corp v. CA. [same doctrine] FCC v. CA. [same doctrine]

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Essential elements of a contract of sale A. Consent of the contracting parties 1. Parties to the Contract a. Capacity to contract CC, 1327. The following cannot give consent to a contract: (1) Unemancipated minors; (2) Insane or demented persons, and deaf-mutes who do not know how to write. Rubias v. Batiller. Prohibition against purchase by lawyer of property in litigation from his client makes the sale void and produces no legal effect. Nullity cannot be cured by ratification Araneta v. Tuazon del Paterno. A person who acts as a go-between or middleman between the vendor and the vendee, bringning them together to make the contract themselves, without any power or discretion whatsoever which he could abuse to his advantage and to the owners prejudice is not an agent as in A1459. // A vendor could not be considered to have been deceived into signing a deed of sale where circumstances show (a) that she is intelligent & well-educated; (b) that she had an able attorney; (c) that she has a son who is a leading citizen & knows English well. // Attorneys are only prohibited from buying their clients property which is the subject of litigation. Where the questioned sale of the property of the client was effected before the subject thereof become involved in the present action, the prohibition does not lie. Mangayao v. de Guzman. The approval of the authorities to deeds of sale by illiterate non-Christians is an an essential requisite for its validity. It is not merely a ratification as in voidable contracts. Paragas v. Heirs of Balacano. A contract of sale executed by one who is already of advanced age and senile is null and void. While the general rule is that a person is not incompetent to contract merely because of advanced years or by reason of physical infirmities, when such age or infirmities have impaired the mental faculties so as to prevent the person from properly, intelligently, or firmly protecting his property rights, then he is undeniable incapacitated; the circumstances that the seller was on octogenarian at the time of the alleged execution of the Deed of Sale and was suffering from liver cirrhosis at that raise grave doubts on his physical and mental capacity to freely give consent to the contract. b. Incapacity CC, 1490. The husband and the wife cannot sell property to each other, except: (1) When a separation of property was agreed upon in the marriage settlements; or (2) When there has been a judicial separation or property under Article 191. CC, 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another: (1) The guardian, the property of the person or persons who may be under his guardianship; (2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given; (3) Executors and administrators, the property of the estate under administration; (4) Public officers and employees, the property of the State or of any subdivision thereof, or of any government-owned or controlled corporation, or institution, the administration of which has been intrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the sale; (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession. (6) Any others specially disqualified by law. CC, 1492. The prohibitions in the two preceding articles are applicable to sales in legal redemption, compromises and renunciations. CC, 1409. The following contracts are inexistent and void from the beginning: (7) Those expressly prohibited or declared void by law. Consti, Art. XII Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twentyfive years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof, by purchase, homestead, or grant. Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor. Consti Art. XII Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.

Sales Midterms Reviewer Prof. J. Sanchez 1 semester, AY 10-11

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Janz Hanna Ria N. Serrano

Consti Art. XII Section 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to limitations provided by law. RA 6713 Section 7. Prohibited Acts and Transactions. - In addition to acts and omissions of public officials and employees now prescribed in the Constitution and existing laws, the following shall constitute prohibited acts and transactions of any public official and employee and are hereby declared to be unlawful: (a) Financial and material interest. - Public officials and employees shall not, directly or indirectly, have any financial or material interest in any transaction requiring the approval of their office. (b) Outside employment and other activities related thereto. - Public officials and employees during their incumbency shall not: (1) Own, control, manage or accept employment as officer, employee, consultant, counsel, broker, agent, trustee or nominee in any private enterprise regulated, supervised or licensed by their office unless expressly allowed by law; (2) Engage in the private practice of their profession unless authorized by the Constitution or law, provided, that such practice will not conflict or tend to conflict with their official functions; or (3) Recommend any person to any position in a private enterprise which has a regular or pending official transaction with their office.These prohibitions shall continue to apply for a period of one (1) year after resignation, retirement, or separation from public office, except in the case of subparagraph (b) (2) above, but the professional concerned cannot practice his profession in connection with any matter before the office he used to be with, in which case the one-year prohibition shall likewise apply. (c) Disclosure and/or misuse of confidential information. - Public officials and employees shall not use or divulge, confidential or classified information officially known to them by reason of their office and not made available to the public, either: (1) To further their private interests, or give undue advantage to anyone; or (2) To prejudice the public interest.(d) Solicitation or acceptance of gifts. - Public officials and employees shall not solicit or accept, directly or indirectly, any gift, gratuity, favor, entertainment, loan or anything of monetary value from any person in the course of their official duties or in connection with any operation being regulated by, or any transaction which may be affected by the functions of their office. As to gifts or grants from foreign governments, the Congress consents to: (i) The acceptance and retention by a public official or employee of a gift of nominal value tendered and received as a souvenir or mark of courtesy; (ii) The acceptance by a public official or employee of a gift in the nature of a scholarship or fellowship grant or medical treatment; or (iii) The acceptance by a public official or employee of travel grants or expenses for travel taking place entirely outside the Philippine (such as allowances, transportation, food, and lodging) of more than nominal value if such acceptance is appropriate or consistent with the interests of the Philippines, and permitted by the head of office, branch or agency to which he belongs.The Ombudsman shall prescribe such regulations as may be necessary to carry out the purpose of this subsection, including pertinent reporting and disclosure requirements. Nothing in this Act shall be construed to restrict or prohibit any educational, scientific or cultural exchange programs subject to national security requirements. RA 6766 Sotto v. Samson. The conveyance of the property in litigation by the litigant to his counsel during the existence of a lawyer-client relationship is VOID. The statute prohibiting such sale is designed to curtail any undue influence of the lawyer upon his client on account of their confidential association. Calimlim-Canullas v. Fortun. The sale made by a husband in favor of a concubine after he had abandoned his family and left the conjugal home where his wife and children lived is null and void for being contrary to morals and public policy. That sale was subversive of the stability of the family, a basic social institution which public policy cherishes and protects. Ching v. Goyanko Jr. The proscription against sale of property between spouses applies even to common law relationships. The law emphatically prohibits selling of property and donations between common law spouses. If transfers or conveyances between spouses were allowed during marriage, that would destroy the system of conjugal partnership, a basic policy in civil law. It was also designed to prevent the exercise of undue influence by one spouse over the other, as well as to protect the institution of marriage, which is the cornerstone of family law. Fabillo v. IAC. A contract between a lawyer and his client stipulating a contingent fee is not covered by the prohibition in A1491(5) because the payment of said fee is not made during the pendency of the litigation but only after judgment has been rendered in the case handled by the lawyer. Perfection of the Contract CC, 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. CC, 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counteroffer. Acceptance made by letter or telegram does not bind the offerer except from the time it came to his knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer was made. CC, 1325. Unless it appears otherwise, business advertisements of things for sale are not definite offers, but mere invitations to make an offer. CC, 1326. Advertisements for bidders are simply invitations to make proposals, and the advertiser is not bound to accept the highest or lowest bidder, unless the contrary appears. CC, 1330. A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable. CC, 1338. There is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. CC, 1476. In the case of a sale by auction: (1) Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract of sale. (2) A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in other customary manner. Until such announcement is made, any bidder may retract his bid; and the auctioneer may withdraw the goods from the sale unless the auction has been announced to be without reserve. (3) A right to bid may be reserved expressly by or on behalf of the seller, unless otherwise provided by law or by stipulation. (4) Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ or induce any person to bid at such sale on his behalf or for the auctioneer, to employ or induce any person to bid at such sale on behalf of the seller or knowingly to take any bid from the seller or any person employed by him. Any sale contravening this rule may be treated as fraudulent by the buyer. CC, 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price.

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Sales Midterms Reviewer Prof. J. Sanchez 1 semester, AY 10-11

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Janz Hanna Ria N. Serrano

San Lorenzo Devt Corp. v. CA. Being a consensual contract, a sale is perfected by mere consent and from that moment, the parties may reciprocally demand performance // Essential Requisites: (1) consent or meeting of the minds to transfer ownership in exchange for the price; (2) object certain which is the subject matter of the contract; (3) cause of the obligation which is established. // Perfection should not be confused with consummation. Sale by itself does not transfer or affect ownership; the most that sale does is to fcreate the obligation to transfer ownership. // The word delivered should not be taken restrictively to mean transfer of actual physical possession of the property. The law recognizes 2 principal modes of delivery: actual, and legal/constructive Lim, Jr. v. San. A contract of sale is consensual, as such it is perfected by mere consent. Consent is essential for the existence of a contract, and where it is wanting, the contract is non-existent. // Consent in contracts presupposes the following requisites: (1) it should be intelligent or with an exact notion of the matter to which it refers; (2) it should be free; (3) it should be spontaneous. Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence; and spontaneity by fraud. Thus, a contract where consent is given through mistake, violence, intimidation, undue influence or fraud is voidable. Asiain v. Jalandoni [mistake in area of land + sugar produce] Generally, if it is a contract of hazard, rescission will not lie. It would also depend whether the sale is one by acre or by description (called sales in gross). This case is not a contract of hazard. There was a mutual mistake as to the quantity of land sold and as to the amount of the standing crop. The use of the phrase more or less may relieve from exactness but not from gross deficiency. Dela Cavada v. Diaz. [cause] A promise made by one party, if made in the forms required by the law, may be a good consideration, for a promise made by another party. In other words, the consideration need not be passed from one to another at the time the contract is entered into. The consideration need not be paid at the time of the promise. The one promise is a consideration for the other. Villonco v. Bormaheco. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer. An acceptance may be express or implied. Acceptance which contains request for changes in offer but does not essentially change the terms of the offer does not constitute a counter-offer. // The controlling fact that there was agreement beween the parties on the subject matter, the price and the mode of payment and that part of the part was paid = earnest money: part of the price and proof of perfection of contract Formalities CC, 1483. Subject to the provisions of the Statute of Frauds and of any other applicable statute, a contract of sale may be made in writing, or by word of mouth, or partly in writing and partly by word of mouth, or may be inferred from the conduct of the parties. CC, 1403. The following contracts are unenforceable, unless they are ratified: (1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers; \(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum, thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents: (a) An agreement that by its terms is not to be performed within a year from the making thereof; (b) A special promise to answer for the debt, default, or miscarriage of another; (c) An agreement made in consideration of marriage, other than a mutual promise to marry; (d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum; (e) An agreement of the leasing for a longer period than one year, or for the sale of real property or of an interest therein; (f) A representation as to the credit of a third person. (3) Those where both parties are incapable of giving consent to a contract. CC, 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of Article 1403, are ratified by the failure to object to the presentation of oral evidence to prove the same, or by the acceptance of benefit under them. CC, 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void. City-lite Realty v. CA. The Civil Code requires that an authority to sell a piece of land shall be in writing When the sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing, otherwise, the sale shall be void (A1874) Agasen v. CA. Notarized documents are considered public documents which enjoy the presumption of validity as to authenticity and due execution // A1358 on the necessity of a public document is only for convenience, not for validity or enforceability it is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public intstrument // Formal requirements are for the benefit of 3 rd parties, and non-compliance therewith does not adversely affect the validity of the contract nor the contractual rights & obligations of the parties therunder. Lopez v. Alvarez. The registration of the assignment or alienation of a credit secured by a mortgage required by A152 of the Mortgage Law, is only necessary in order that it may be effectual as against 3rd parties. Soriano v. Latono. Where the courts order expressly authorized the guardian to execute and deliver to purchaser definitely named, a deed of conveyance to a parcel of land specifically describe at a price already fixed, and it appears that the order was intended as the approval itself of the sale that was perfected or agreed upon by the seller and the buyers, needing only a judicial go-ahead signal to reduce the agreement to the statutory form, it would be a useless formality to submit the deed to court for action in the absence of any requirement or direction to that effect. // Although a deed of sale of real property was not notarized, the same was effective as between the parties, provided that all the elements of a valid contract were present. Paredes v. Espino. A written memorandum, embodying the essentials of the contract and signed by the party charged, or his agent, suffices to make the verbal agreement enforceable, taking it out of the operation of the Statute of Frauds. Inigo v. Maloto. The Statute of Frauds is applicable only to executor contracts, not to contracts either totally or partially performed. Thus, where a contract of sale is alleged to be consummated, it matters not that neither the receipt for the consideration nor the sale itself was in writing, because oral evidence of the alleged consummated sale is not forbidden by the Statute of Frauds and may not be excluded in court. Clarin v. Rulona. Acceptance of payment is an indication of partys consent to the contract contract is then partially executed, not covered by SoF. Maharlika v. Tagle. The written instructions of the GSIS manager on debtors letter proposed to Hold the Bidding. Discuss with me! created a binding agreement. Petitioners are allowed to repurchase the foreclosed property.

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Sales Midterms Reviewer Prof. J. Sanchez 1 semester, AY 10-11

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Janz Hanna Ria N. Serrano

DCCTC v. CA. Business forms, e.g., order slip, delivery charge invoice and the like, which are issued by the seller in the ordinary course of business are not always fully accomplished to contain all the necessary information describing in detail the whole business transaction more often than not they are accomplished perfunctorily without proper regard to any legal repercussion for such neglect such that despite their being often incomplete, said business forms are commonly recognized in ordinary commercial transactions as valid between the parties an at the very least they serve as an acknowledgement that a business transaction has in fact transpired. By themselves, the disputed order slips and charge invoice may be inadequate to establish the case for the vendor but their probative weight must be evaluated not in isolation but in conjunction with other evidence adduced, such as the testimony of a witness and the demand letters. Lagon v. Hooven. Where it is stipulated that deliveries must be made to the buyer or his duly authorized representative named in the contracts, the seller is under obligation to deliver to the buyer only and to no other, unless the buyer specifically designated someone to receive the delivery of materials and his name is written opposite the words Authorized Receiver/Depository Dalion v. CA. public document = convenience, not validity/enforceability Toyota Shaw v. CA. Agreement is not a perfected contract of sale. Nothing was mentioned about the full purchase price and the manner the installments were to be paid. A definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. This is so because the agreement as to the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. Definiteness as to the price is an essential element of a binding agreement to sell personal property. Exhibit "A" shows the absence of a meeting of minds between Toyota and Sosa. For one thing, Sosa did not even sign it. He was not dealing with Toyota but with Popong Bernardo. Bernardo was only a sales representative of Toyota and hence a mere agent of the latter. Exhibit "A" may be considered as part of the initial phase of the generation or negotiation stage of a contract of sale.