Professional Documents
Culture Documents
UP 2010 Civil Law (Sales)
UP 2010 Civil Law (Sales)
TABLE of CONTENTS
SALES
Table of Contents
Chapter I. The Contract of Sale ..................269
I.
Definition (Art 1458, CC) ...................269
II.
Elements ...........................................269
III. Stages ...............................................274
IV. Kinds of Sale .....................................275
V. Form ..................................................276
VI. Sale
Distinguished
From
Other
Contracts....................................................276
Chapter II. Obligations of the Seller and
Buyer .............................................................278
I.
Obligations of the Seller ....................278
II.
Obligations of the Buyer....................284
268
SALES
CIVIL LAW
Kristine Bongcaron
Patricia Tobias
Subject Editors
ACADEMICS COMMITTEE
Kristine Bongcaron
Michelle Dy
Patrich Leccio
Editors-in-Chief
DEFINITION
ELEMENTS
A. CONSENT
B. SUBJECT MATTER
C. PRICE
III. STAGES
A. PREPARATION/NEGOTIATION
B. PERFECTION
C. CONSUMMATION
IV. KINDS
A. ABSOLUTE
B. CONDITIONAL
V. FORM
VI. SALE DISTINGUISHED FROM OTHER
CONTRACTS
A. DONATION
B. BARTER
C. CONTRACT FOR A PIECE OF WORK
D. LEASE OF THINGS
E. AGENCY TO BUY AND SELL
F. DACION EN PAGO
G. CONTRACT TO SELL
H. BILATERAL PROMISE TO BUY AND SELL
I.
LECTURES COMMITTEE
Michelle Arias
Camille Maranan
Angela Sandalo
Heads
Katz Manzano Mary Rose Beley
Sam Nuez Krizel Malabanan
Arianne Cerezo Marcrese Banaag
Volunteers
LOGISTICS
Charisse Mendoza
SECRETARIAT COMMITTEE
Jill Hernandez
Head
Loraine Mendoza Faye Celso
Mary Mendoza Joie Bajo
Members
II. Elements
The case of (Coronel v CA, 1996) enumerates
the 3 elements of a valid contract of sale
namely:
Consent
Subject matter
Price
_______
A. CONSENT
Meeting of minds upon the thing which is the
object of the contract and the price. (Art 1475,
CC)
Requisites
1. Capacity
2. Offer and acceptance
3. No vitiation
269
SALES
SALES TEAM
SALES
CAPACITY
e. Lawyers
Property or rights in litigation in which
they take part because of their
profession
Rationale: Lawyer may have undue
influence over client. Greed may get the
better of the sentiments of loyalty and
disinterestedness.
(Valencia
v
Cabanting, 1991)
Prohibition is definite and permanent,
cannot be cured by ratification. (Rubias
v Batiller, 1973)
Exceptions: An assignment to a lawyer
by his client of an interest in the property
does not violate Art 1491, where
A judgment has been rendered and
has become final; and
In case of contingency fee
arrangements. The interest of the
lawyer maybe annotated as an
adverse claim on the property
awarded to his client (Director of
Lands v Ababa, 1979)
or
their
2. Relative Incapacity
a. Husband and Wife (Art 1490, CC)
(Asked in 75, 76, 00, 02, 06)
f.
Effects of Incapacity
1. Absolute Incapacity
If both parties are incapacitated:
UNENFORCABLE (Art. 1403 (3))
270
SALES
Kinds of Incapacity
1. Absolute Incapacity (MInD-CI) (Art. 1327,
CC)
a. Minors
b. Insane or Demented
c. Deaf-mutes who do not know how to
write
d. Civil Interdiction
e. Judicially-declared
Incompetents(Art.
39)
Prodigals
Imbeciles
Absence & presumption of death
Persons not of unsound mind but by
reason of age, disease, weak mind,
and other similar causes, cannot
take care of themselves and
manage their property without
outside aid (Easy prey for deceit
and exploitation)
2. Relative Incapacity
Sale between spouses is VOID.
Rationale: (as provided in the case of
Medina v CIR, 1961)
rd
To protect 3 persons who may
have contracted with the spouse
To avoid undue advantage of the
dominant spouse over the weaker
spouse.
To avoid indirect prohibition against
donations between spouses.
Such prohibition shall likewise apply to
common law spouses. (CalimlimCanulas v Fortun, 1984) BUT if
already sold to a third person who relied
on the title of his immediate seller,
reconveyance to the seller spouse is no
longer available (Cruz v CA, 1997)
3. Specific Incapacity
Contracts expressly prohibited by law
are void and cannot be ratified. Neither
can the right to set-up the defense of
illegality be waived. (Art. 1409 (7), CC)
Sales entered into by guardians,
administrators, and agents (specific
incapacities) in violation of Art. 1491
may be ratified by means of and in the
form of a new contract when the cause
of nullity has ceased to exist. Ratification
is valid only from date of execution of
the new contract and does not retroact.
Those
entered
into
by
public
officer/employees, justices and judges,
and lawyers also in violation of Art. 1491
are inexistent and void from the
beginning. (Rubias v Batiller, 1973).
B. SUBJECT MATTER
Requisites
1. Licit
2. Existing, future or contingent
3. Determinate or determinable
271
SALES
Emptio Spei
Void
Parties
intend
the
contract to exist at all
events
Buyer will have to pay
DETERMINATE OR DETERMINABLE
A thing is determinate when it is particularly
designated or physically segregated from all
others of the same class. (Art 1460, CC)
A thing is determinable when it is capable
of being made
determinate at the time
the contract was entered into without the
necessity of a new or further agreement
between the parties. (Art 1460, CC)
Failure to state the exact location of the land
does not make the subject matter
indeterminate, so long as it can be located.
(Camacho v C,A 2007)
The fact that the exact area of subject land
in the contract of sale is subject to the result
of a survey does not render the subject
matter indeterminate. (Heirs of Juan San
Andres v. Rodriguez (2000))
Particular Kinds
1. Future Goods
Sale of future goods or those goods which
are to be manufactured, raised, or acquired
by seller after the perfection of the sale is
valid (Art 1462, CC). Future goods are
those capable of future existence.
2. Sale of Undivided Interest or Share
a. Sole owner of a thing may sell an
undivided
interest
therein.
(Art
1463,CC) Ex., a fraction ( or half) or
percentage (50%), or my share in the
property.
b. The sale of an undivided share in a
specific mass of fungible goods makes
the buyer a co-owner of the entire mass
in proportion to the amount he bought.
(Art 1464,CC)
c. Co-owner cannot sell more than his
share (Yturralde v CA, 1972) (Asked
in 01, 02)
3. Sale of Things in Litigation
a. Sale of things under litigation entered
into by defendant, without the approval
of the litigants or the court is
rescissible. (Art 1381 (4))
b. NO RESCISSION where the thing is
rd
legally in the possession of 3 persons
who did not act in bad faith (Art 1385
(2))
272
SALES
_______
C. PRICE
Requisites (Ce-MoRe)
1. Certain or ascertainable at the time of
perfection
2. In Money or its equivalent
3. Real
CERTAIN OR ASCERTAINABLE AT THE TIME
OF PERFECTION
Price considered certain in the following
cases
1. Fixed by agreement of the parties
a. Fixing of price cannot be left to
discretion of one of the parties
b. BUT if such is accepted by the other,
sale is perfected. (Art 1473, CC)
2. Determination is left to the judgment of a
specified person
a. If unable or unwilling: Sale is
inefficacious
UNLESS
parties
subsequently agree about the price.
b. If in bad faith/by mistake: Courts may fix
price
rd
c. If 3 person is prevented from fixing
price by fault of seller or buyer: Innocent
party may avail of remedies.
3. It be so in reference to another thing, or
when the price fixed is that which the thing
have on a definite day, or in a particular
exchange or market, OR when the amount
fixed is above or below the price on such
day, exchange or market. (Art 1472, CC)
If price cannot be determined (Asked in 76)
1. Sale is inefficacious (Art. 1474, CC)
REAL
Meaning of Real
When buyer has an intention to pay and the
seller has an expectation to receive the price
1. If simulated: Sale is VOID; BUT act may be
shown to have been a donation or some
other act or contract. (Art 1471, CC)
2. In Labagala vs. Santiago (2001), Petitioner
admittedly did not pay any centavo for the
property. Hence, the sale is void.
If Price is false (real consideration is not the
same as that stated in the contract)
1. Sale is void
2. UNLESS proved to be founded on another
true and lawful price (Art 1353, CC)
_______
Gross Inadequacy of Price
1. General Rule: Does not affect a contract of
sale. (Art 1470,CC)
The stipulation in a contract of sale
which states that the consideration is
P1 and other valuable considerations
does not make the contract void. Gross
inadequacy of price does not affect the
contract of sale except that it may
indicate a defect in consent. (Bagnas v.
C.A., 1989)
273
SALES
2. Exceptions:
a. It may indicate a defect in consent such
as fraud, mistake, or undue influence
b. It may indicate that the contract was in
reality a donation or some other act or
contract
c. Inadequacy would make the contract of
sale rescissible where a contract was
entered into by the guardian of a ward or
a representative of an absentee, without
the courts approval, and the owner
suffers lesion by more than of the
value of the thing sold. (Art 1381 (1) (2),
CC)
III. Stages
Sale of property
A. Negotiation/Preparation
From the time the parties indicate interest in the
contract up to the time said contract is perfected
1.
Offer
a. General Rule: Offer may be withdrawn
at any time without even communicating
such withdrawal to the interested buyer.
b. Exception: When the offerer has
allowed the offeree a certain period to
accept, the offer may be withdrawn at
any time before acceptance by
communicating such withdrawal. (Art
1324, CC)
c. Exception to the exception: Cannot be
withdrawn within the period if offer is
founded upon a consideration. (Art 1324
and 1479, CC)
c.
OPTION CONTRACT
Unilateral: gives a right to buy
or to sell, but imposes no
obligation on the part of the
option-holder, aside from the
consideration for the offer
Sale of right to purchase
274
SALES
Manner of Payment
Disagreement on the manner of payment is
tantamount to a failure to agree on the price.
(Toyota Shaw vs. CA, 1995)
SALE
RIGHT OF 1 REFUSAL
Bilateral
Unilateral
Price and other Price and other terms are yet to
terms of payment be agreed upon
are certain
the thing to be sold must be determinate
EARNEST MONEY
Part of purchase price
(Art 1482, CC)
Given only when there
is already a sale
When given, the buyer
is bound to pay the
balance
_______
C. Consummation
OPTION
CONTRACT
Separate
consideration
is
necessary
Grantee has the
right to buy or sell
RIGHT OF 1
ST
REFUSAL
No need for
consideration
separate
_______
B. Perfection
(Asked in 88 and 91)
When Perfected
1. Contract of sale is a consensual contract,
hence perfected at the moment of the
meeting of the minds of the parties as to the
object of the contract and the price. (Art
1475,CC)
2. It is the proof of all the essential elements of
the contract of sale, and not the mere giving
of earnest money, which establishes the
existence of a perfected sale. (Platinum
Plans Phils. vs. Cucueco, 2006)
Effect of Perfection
From the moment of the perfection of the
contract of sale, the parties may reciprocally
demand performance, subject to the provisions
of the Statute of Frauds. (Art 1475,CC)
Earnest Money
Definition- paid in advance of the purchase
price agreed upon by the parties in a contract of
sale, given by the buyer to the seller, to bind the
latter to the bargain. (Asked in 93, 02)
275
SALES
From
Other
A. DONATION
SALE
Onerous
Perfected
consent
by
mere
DONATION
Gratuitous
Must comply with the
formalities required by
law. (Art 745, CC)
BARTER
Consideration
another thing
is
CONTRACT FOR A
PIECE OF WORK
Goods are manufactured
for customer upon his
special order
Specifically for customer
276
SALES
V. Form
DACION EN PAGO
Pre-existing debt
Extinguishes
the
obligation
(mode
of
payment)
Price is value of the thing
given
Conditional Contract of
Sale
Sale is already perfected
A subsequent buyer is
presumed to be a buyer
in bad faith
Contract to Sell
Ownership
is
only
transferred
upon
full
payment of price
Full payment is a positive
suspensive
condition,
hence
non
payment
would not give rise to the
obligation to transfer
ownership
Contract to sell
No perfected sale yet
A subsequent buyer is
presumed to be a buyer
in good faith
SALE
Consideration
Buyer: thing
Seller: price
Title passes to
the buyer
277
SALES
II.
I.
Sellers residence
4. When to Deliver
Absent a stipulation as to time, delivery must
be made within a reasonable time; demand
or tender of delivery shall be made at a
reasonable hour.
Ways of Effecting Delivery
1. Actual Delivery
a. When deemed made: when the thing
sold is placed in the control and
possession of the vendee (Art. 1497)
b. Not always essential to passing of title
(Art. 1475)
c. Parties may agree when and on what
conditions the ownership in the subject
of the contract shall pass to the buyer
(example: Art 1478 where ownership will
only pass after full payment of the price)
2. Constructive Delivery
a. Execution of public instrument (Art
1498, par. 1)
General rule: produces the same
legal effects of actual delivery.
Exceptions:
The intention of the parties is
otherwise.
At the time of execution, the
subject matter was not subject
to the control of the seller which
must subsist for a reasonable
length of time after execution.
(Pasagui v Villablanca, 68
SCRA 18)
Control over thing sold must be
such that seller is capable of
physically transferring it to buyer
b. Symbolic Delivery
Delivery of keys of the place or
depositary where the movable is
stored or kept. (Art 1498, CC)
Unless otherwise agreed, when
symbolic delivery has been made,
the seller is not obliged to remove
tenants to place the buyer in actual
278
SALES
Completeness of Delivery
1. When may the seller refuse to deliver:
a. No payment yet or no period for
payment has been fixed in the contract
(Art.1524);
b. The buyer loses the right to make use
of the term, as when:
He becomes insolvent UNLESS he
gives a guaranty or security for the
debt;
He does not does not furnish the
seller the guaranties or securities he
promised;
He impairs the guaranties or
securities
or
they
disappear
fortuitously UNLESS he immediately
gives new ones equally satisfactory;
He violates any undertaking, in
consideration of which the seller
agreed to the period;
He attempts to abscond. (Art.1536)
2. Rules on Sales of Goods
a. When Quantity less than expected
Buyer may reject all
Buyer accepts with knowledge of
sellers inability to deliver the rest
buyer pays at contract price
Buyer has used or disposed prior to
knowing sellers inability to deliver
the rest buyer pays fair value
b. Quantity more than expected
If divisible, buyer may reject excess
If indivisible, buyer may reject all
c. Quality different or different goods
If divisible, buyer may accept the
goods compliant with contract and
reject those that are not
If indivisible, buyer may reject all
(Art. 1522)
d. Sale of specific mass of goods
In the sale of fungibles where the
measure or weight has not been
agreed upon nor is there a fixed rate
based upon a measurement, the
subject matter of the sale is a
determinate object the specific
mass; seller is merely required to
deliver such mass even if actual
quantity falls short of parties
estimate (Art. 1480)
279
SALES
e. Delivery by installments
By default, buyer is not bound to
accept delivery of goods by
instalments
In a contract of delivery by
installment to be paid for via
installment as well, delay or breach
may not necessarily mean breach of
the entire contract; depending on
the circumstances, breach may be
severable and the aggrieved party
is entitled to damages and not
rescission. (Art. 1583)
3. Rules on Sales of Immovables
a. Sale at a fixed rate per unit of measure
Seller bound to deliver entire land
If the area is less than that stated,
buyer may rescind or demand a
proportionate reduction in price
If a part of the land is not of the
quality stated in the contract, buyer
may rescind
or
demand
a
proportionate reduction in price
Buyer may only avail of rescission if
the area deficiency is 10% or more
of total area or if the inferior value of
the part of the land exceeds 10% of
the price agreed upon. (Art. 1539)
If the area turns out to be greater
than that stated, buyer may accept
area included and reject the excess
or
accept
all
and
pay
a
proportionate increase in price (Art.
1540)
b. Sale for lump sum
Follows the same rule as the sale of
a specific mass which is explained
above
There is no change in price even if
area or number turns out to be
greater or lesser than that stated
(Art. 1542)
Exception: when the excess or
deficiency is no longer reasonable;
in Asian v Jalandoni, 1923, 644 sq
m was found to be unreasonable.
Exception to the exception: when
buyer expressly assumes risk on
actual area of the land. (Garcia v
Veloso, 1941)
If the price per unit or measure is
not provided for in the contract, then
the rules of lump sum sale should
prevail. (Sta. Ana v Hernandez,
1966)
Effect of Delivery
1. Delivery, generally, results in transfer of
ownership from seller to buyer.
2. As such, it also transfers the risk of loss of
the thing sold to the buyer.
3. Acceptance is not a condition for the
completeness of delivery; even with such
refusal of acceptance, delivery will be
deemed completed and produce its legal
effects.
4. By default, expenses of and incidental to
putting the goods into a deliverable state
must be borne by seller. (Art. 1521)
280
SALES
Sale on Return
Ownership
passes
upon
delivery, but buyer may revest
ownership in the seller by
returning or tendering the
goods within the time fixed in
the contract
Depends on the will of the
buyer
Subject
to
a
resolutory
condition
Risk of loss remains with the
buyer
2. Express Reservation
If it was stipulated that ownership in the
thing shall not pass to the purchaser until he
has fully paid the price. (Art 1478, CC)
3. Implied Reservation
The following are instances when there is an
implied reservation of ownership
a. Goods are shipped, but by the bill of
lading goods are deliverable to the seller
or his agent, or to the order of the seller
or his agent
281
SALES
Condition v. Warranty
Condition
Pertains to and affects
the existence of the
obligation
Non-happening does not
amount to breach of
contract
Must be stipulated
May attach to either to
the sellers duty to
deliver thing or some
other circumstance
Warranty
Goes
into
the
performance
of
an
obligation and may, in
itself, be an obligation
Non-fulfillment
constitutes breach of
contract
Stipulation or operation
of law
Always relates to the
subject matter or the
sellers obligations as to
the subject matter
Form
1. Express Warranty (APIR)
For there to be express warranty, the
following requisites must concur:
a. An affirmation of fact or any promise
relating to the thing sold;
b. The natural tendency of such affirmation
or promise is to induce the buyer to buy;
c. The buyer buys the thing relying
thereon. (Art. 1546)
d. Made before the sale not upon delivery
or any other point
An express warranty can be made by and
also be binding on the seller even in the sale
of a second hand article. (Moles v. IAC,
1989)
Express Warranty
What
is
specifically
represented as true in
said document cannot be
considered as mere
dealer's talk. (Moles v.
IAC, 1989)
Dealers or Traders
Talk
Affirmation of the
value of the thing or
statement
of
the
sellers opinion only
is not a warranty
unless:
- The seller made
it as an expert;
- It was relied upon
by the buyer.
(Art.1546)
Ordinarily, what does
not appear on the face
of
the
written
instrument (Moles v.
IAC, 1989)
Express Warranty
Concealment of facts
does not necessarily
amount
to
false
representation
False Representation
When concealment of
facts comes with an
active misstatement of
fact
or
a
partial
statement of fact such
that withholding of that
unsaid portion makes
that which is stated
absolutely false
However, buyer who
fails to inspect condition
of
property
despite
ample opportunity to do
so and no opposition on
the part of seller cannot
later on allege false
representation.
(Phil
Mftg Co. v Go Jucco,
1926) This is because
buyers duty to inspect
remains despite false
representation by the
seller. Buyer has the
duty to exercise due
diligence.
2. Implied Warranty
a. Implied Warranty of Title
b. Implied Warranty against Encumbrance
/ Non-Apparent Servitudes
c. Implied Warranty against Hidden
Defects (Art. 1547)
Implied
warranty
as
to
Merchantable Quality and Fitness
of Goods
Implied
warranty
against
Redhibitory Defect in the Sale of
Animals (Art. 1572)
Quality and Fitness of Goods in
Sale by Sample or Description
d. Other Warranties
Implied Warranty of Title
1. Implied warranty arises by operation of law
and need not be stipulated in the contract of
sale.
2. Warranty of Sellers Right to Sell: seller
warrants his right to sell at the time the
ownership is to pass.
Inapplicable to a sheriff, auctioneer,
mortgagee, pledgee, or other person
professing to sell by virtue of authority in
fact or law. (Art. 1547)
3. Warranty against Eviction: seller warrants
that buyer, from the time ownership passes,
shall have and enjoy legal and peaceful
possession of the thing. Its requisites are:
a. Buyer is deprived of the whole or a part
of the thing sold;
282
SALES
relies on the
(Art.1562(1))
sellers
skill
or
judgment
283
SALES
284
SALES
285
SALES
I.
General Rule
II. Requisites
Requisites (Cheng v Genato, 1998)
1. 2 or more valid sales;
2. Same subject matter;
3. 2 or more buyers with conflicting interests at
odds over the rightful ownership of the thing
sold;
4. Same seller
286
SALES
2. Presumption
Gen Rule: As a rule, he who asserts the
status of a purchaser in good faith and for
value, has the burden of proving such
assertion. This onus probandi cannot be
discharged by mere invocation of the legal
presumption of good faith, i.e., that everyone
is presumed to act in good faith (Mathay v
CA, 295 SCRA 556)
When buyer is presumed to be in bad
faith:
a. Annotation of adverse claim: Places
any subsequent buyer of the registered
land in bad faith. (Balatbat v CA, 261
SCRA 128)
b. Annotation of Lis Pendens: Buyer
cannot be considered an innocent
purchaser for value where it ignored the
lis pendens on the title.
Annotation of Adverse
Claim
may be cancelled only in
one instance, i.e., after the
claim is adjudged invalid
or unmeritorious by the
Court
287
SALES
Lis Pendens
GENERAL RULE
EXCEPTION
I.
General Rule
Res perit domino: Owner bears risk of
loss
Ownership is not transferred until delivery
II. Exceptions
TOTAL LOSS
Contract
ineffective.
is
Because there
can be no contract
without an object
c.
288
SALES
1. Contrary stipulation
2. An obligation to deliver a generic thing is
not extinguished by loss. (Art 1263, CC)
3. Risk of loss of specific things is subject to
the ff:
a. When loss occurs before perfection,
such loss is borne by seller
b. When loss occurs at time of perfection,
loss must have occurred before the
contract was entered into, without the
knowledge of both parties
I. IN GENERAL
II. NEGOTIABLE DOCUMENTS OF TITLE
III. NON-NEGOTIABLE DOCUMENTS OF TITLE
I.
In General
Definition
A document used in the ordinary course of
business in the sale or transfer of goods, as
proof of the possession or control of the goods,
or authorizing or purporting to authorize the
possessor of the document to transfer or
receive, either by endorsement or by delivery,
goods represented by such document. (Art.
1636)
Examples: bill of lading, quedan, warehouse
receipts, trust receipts
Purpose
1. Evidence of possession or control of goods
described therein
2. Medium of transferring title and possession
over the goods described therein without
having to effect actual delivery thereof
(Villanueva)
3. The custody of a negotiable warehouse
receipts issued to the order of the owner, or
to bearer, is a representation of title upon
which bona fide purchasers for value are
entitled to rely, despite breaches of trust or
violations of agreement on the part of the
apparent owner. (Siy Cong Bieng vs.
HSBC, 56 Phil 598)
HOW NEGOTIATED
By delivery of the
document to another
By indorsement of
such
person
(Art.
1509,CC)
289
SALES
Transfer
The assignment of rights
of the consignee of a
non-negotiable document
of title to another; or
Document of title was
ordered sold or assigned,
without indorsement.
290
SALES
GENERAL REMEDIES
A. SPECIFIC PERFORMANCE
B. RESCISSION
C. DAMAGES
II. REMEDIES OF THE SELLER
A. IN THE SALE OF MOVABLES
1. EXTRAJUDICIAL REMEDIES
2. JUDICIAL REMEDIES
B. IN THE SALE OF IMMOVABLES
1. RESCISSION FOR ANTICIPATORY
BREACH
2. SPECIFIC
PERFORMANCE
WITH
DAMAGES
3. RESCISSION WITH DAMAGES
4. MACEDA LAW
III. REMEDIES OF THE BUYER
A. FOR BREACH OF OBLIGATION TO
PRESERVE
B. FOR BREACH OF OBLIGATION TO
DELIVER
C. FOR BREACH OF WARRANTY
I.
Vendee
becomes
291
SALES
Effects:
Seller is no longer liable to the
original buyer upon the contract of
sale or for any profit made by the
resale
Buyer at resale acquires good title
as against the original owner
In case resale is at a loss, seller
entitled to recover the difference
from the original buyer
Seller may recover damages from
original buyer for breach of contract
d. Special right to rescind:
RETURN of the title over the
undelivered goods to the seller, and
right to recover DAMAGES for breach of
contract (1534)
Available to unpaid seller who has a
right of lien or who has stopped the
goods in transitu
When available:
Seller expressly reserved right to
rescind in case buyer defaults
Buyer has been in default in
payment for an unreasonable time
Transfer of title shall not be held to have
been rescinded by the unpaid seller until
he manifests by notice to the buyer or
some other overt act an intention to
rescind.
Conditions:
the goods has passed to the buyer
Price is payable on a certain day,
irrespective of delivery of the goods
Buyer can set up the defense that
seller could not or did not intend to
deliver the goods
Seller was notified by the buyer of
his repudiation of the contract after
the seller has completed the
manufacture of the goods/had
procured the goods to be delivered
and the goods could not readily be
resold for a reasonable price
b. Action
for
damages
for
nonacceptance, if buyer wrongfully neglects
or refuses to accept and pay for the
goods (1596)
292
SALES
293
SALES
Agricultural
294
SALES
More
Reject the excess
OR
Accept the whole
and pay at contract
rate
Not everything is
within boundaries
Proportional
reduction in price
OR
Rescission
_________
B. Remedy for breach of obligation to
deliver
Delivery of wrong quantity (1522)
Goods are less than what
was contracted
Reject the goods
OR
Accept and pay
At contract rate if buyer
accepts knowing that seller
wont perform in full
At fair value: If goods were
used before knowing that
seller wont be able to
perform in full
More
Reject the excess (Or
the
whole,
if
indivisible)
OR
Accept the whole and
pay at contract rate
295
SALES
Implied
warranty
(1555,1556)
TOTAL EVICTION
Enforce
liability
for
eviction
- Demand from seller:
VICED
Income or fruits, if he
has been ordered to
deliver them to the
party who won the
eviction suit
Expenses of the
contract, if buyer has
paid them
Damages
and
interests,
and
ornamental
expenses, IF sale
was made in bad
faith
against
c.
eviction
PARTIAL EVICTION
Enforce liability (demand
VICED)
OR
Rescind
If he would not have
bought the thing sold
without the part lost BUT
he must return the thing
without
other
encumbrances
than
those which it had when
he acquired it
1. Rules:
a. Buyer need not appeal from decision to
hold seller liable for eviction
b. When adverse possession commenced
before sale, but prescription period
completed after transfer: seller is not
liable
296
SALES
2. If sale is rescinded:
a. Buyer must return animal in condition in
which it was sold and delivered
b. Buyer shall be liable for injury due to his
negligence.
3. Prescriptive period: 40 days from delivery
Warranty in sale of consumer goods (RA
7394, Sec.68)
If implied warranty accompanies express
warranty, both will be of equal duration.
IMPLIED WARRANTY
1. Retain the goods
and
recover
damages
OR
2. Reject the goods,
cancel contract and
recover from seller
so much of the
purchase price as
has been paid +
damages
297
SALES
EXPRESS WARRANTY
1. Demand repair within
30 days
Extendible
for
causes beyond the
control
of
the
warrantor
2. Demand refund of
price minus amount
directly attributable to
the
use
of
the
consumer prior to the
discovery of the nonconformity
IN GENERAL
CONVENTIONAL REDEMPTION
EQUITABLE MORTGAGE
LEGAL REDEMPTION
I.
In General
298
SALES
Option to Purchase
Generally a principal
contract and may be
created independent of
another contract
Must
have
a
consideration
separate
and distinct from the
purchase price to be valid
and effective (Arts. 1324
and 1479)
May be exercised by
notice of its exercise to
the offeror
Equitable mortgage
When any of the
cases in Art. 1602
arise
299
SALES
Manner
1. a formal offer to redeem or
2. filing of an action in court together with the
consignation of the redemption price within
the reglementary period
Period to Redeem
To whom granted
a. Co-owner (Art 1620)
b. Adjoining owner of
Rural
Land
(Article
1621)
c. Adjoining owner of
urban land (Art. 1622)
Debtor in case a
credit or
incorporeal right in
litigation is sold
(Art.1634)
Applicant or his widow
or legal heirs in case of
sale of homestead
(Sec.119, Public
Land Act)
Taxpayer in case of tax
sale (Sec. 215,
NIRC)
Judgment
debtor,
successorin- interest,
or
creditor
with
subsequent lien, in case
of execution sale
(Rule 39, Sec.27,
ROC)
Debtor-mortgagor,
successors-in- interest,
judicial/judgment
creditor, any person
having a lien on the
property, in case of
extrajudicial foreclosure
of mortgage (Act No.
3135. Sec. 6. )
Debtor-mortgagor
in
case
of
judicial
foreclosure
of
real
estate mortgage IF the
mortgagee is a bank or
a banking institution.
(The
General Banking
Law of 2000)
Period
30 days from notice
- In writing
- By the seller
- Of the actual execution
and delivery of the deed
of sale
Doromal v. CA: Actual
knowledge of the sale is
immaterial
Conejero v. CA: the law
did not provide for a
particular mode of written
notice,
thus
any
compliance with written
notice should suffice,
including the giving of a
copy of the deed of sale
30 days from the date the
assignee
demands
payment from debtor
5 yrs. from
conveyance
date
of
1 year from
forfeiture
date
of
300
SALES
Right of Redemption
If the resale has been
perfected, the owner of
the adjoining land shall
have
a
right
of
redemption, also at a
reasonable price
Priority if 2 or more
adjoining owners want to
redeem: owner whose
intended use of the land
appears to be best
justified
4. Redemption of Credit
Rationale: Public Policy, since
ownership is a hindrance to
development and administration of
property (BAVIERA)
cothe
the
301
SALES
6. Redemption
in
Execution Sales
Who may redeem
Period to redeem
Amount of redemption
Foreclosure
and
In
extra
judicial
foreclosure
-Debtor
-Successor in interest
-Judicial or judgment
creditor of said debtor
-Junior encumbrancer
In execution sales
-Judgment debtor
-Successor in interest
-Creditor having a lien
on the property sold by
attachment, judgment or
mortgage
on
the
property subsequent to
the judgment
Extra judicial foreclosure
- within 1 year from the
date of the sale
Execution sale
- within 12 months after
the sale
If land is mortgaged in
favor of a bank
- within 1 year after the
sale (not available in
case of a corporate
mortgagor)
-Amount of the purchase
-Interest at 1% per
month from the time of
302
SALES
PURPOSE
COVERAGE
DUTY OF SELLER
EFFECT OF NON-COMPLIANCE
I.
Purpose
Purpose (Villanueva)
To compel the seller in bulk to execute
and deliver a verified list of his creditors
to his buyer, and notice of intended sale
to be sent in advance to said creditors
and to use the proceeds to cover
payment of outstanding liabilities
To protect creditor of merchant stores
The Law is constitutional as a valid exercise of
police power of the State. (Liwanag v.
Menghraj, (1941))
II. Coverage
The Law covers all transactions, whether done
in good faith or not, that fall within the
description of what is bulk sale (Villanueva)
Transactions Covered
Applies to sales and transfers in bulk,
including any sale, transfer, mortgage or
assignment of:
1. A stock of goods, wares, merchandise,
provisions or materials NOT in the ordinary
course of trade and the regular prosecution
of the business of the seller, transferor,
mortgagor, or assignor
2. All, or substantially all, of the business or
trade theretofore conducted by the seller,
transferor, mortgagor, or assignor
3. All, or substantially all, of the fixtures and
equipment used in and about the business
of the seller, transferor, mortgagor, or
assignor
When not applicable
1. Written waiver by vendor, transferor,
mortgagor or assignor, as shown by verified
statements
2. To executors, administrators, receivers,
assignees in insolvency, or public officers,
acting under judicial process.
303
SALES
Violation
Failure to comply with
the
obligation
to
prepare and deliver the
sworn statement listing
his creditors and the
application pro-rata of
the proceeds to the
creditors. (Sec 4)
Transferor
or
Sanction
criminal liability
Section 7: Transfer by any
person, firm or corporation
as owner of any stock of
goods,
wares,
merchandise, provisions
or materials, in bulk of
title to the same without
consideration or for a
nominal
consideration
only, subjects him to
criminal liability
- end of Sales -
304
SALES
On
Seller,
Assignor