1. A) Define a contract of sale in accordance with Article 1458 of the Civil Code.

B)
Application problem: Suppose you had just bought a laptop computer for Php 80T
sold to you by a stranger. A few days later, a student comes to you showing a
police blotter report of theft of her laptop with proof of purchase in her name with
a similar serial number of the laptop you just bought. Should you insist that you
are now the owner thereof? Explain.

1. CONTRACT OF SALE IN ACCORDANCE WITH ARTICLE 1458 OF THE CIVIL CODE:

The article states that by forming a sale of contract, one party is obligated to transfer the
ownership goods and also deliver the same, where as the other contracting party has to pay
a certain amount or money equivalent in exchange of the goods. The contract maybe absolute
or may be conditional. The seller or vendor is obligated to transfer ownership and deliver
something and the buyer or vendee is obligated to pay a certain amount or its equivalent. The
sale of contract is governed by the law governing the general contract. Some of the elements
of contract are:

• Free consent of both the parties is necessary to form a contract.There should be free
consent and both the parties should be of the same thought and mind upon the object
and price of the contract.
• Obligation of both the parties is established through the contract, where the seller is
bound to transfer and deliver and the buyer is bound to pay money or its equivalent.
• Determining the object or subject matter that is referred by law to be transferred by
the seller.
• Consideration or the price that is in terms of money or its equivalent that is paid in
exchange of the goods. Though, this consideration cannot include goods or
merchandise although they hold their own value in money or in any other terms.
• The contract can be formed only when it gains free consent and meeting of minds of
both the parties.
• The contract is bilateral as both the parties should fulfill their respective correlative
duties for the contract to be perfect and complete.
• The contract is nominate as it is given a name in the code.
• The contract of sale is an independent contract as it does not depend on the existence
of another contract for its validity or existence.

B). According to the sale of Goods Act, only the rightful owner can transfer the ownership of
goods to another party. The sale of goods by non-owners doesn't lead to transfer of goods
ownership title. Only the owner possess the liberty to transfer the property, which in this case
is the Laptop. The student is the real owner of the good and the transfer of ownership took
place without his consent. The goods sold to you is without the consent of the owner and is
sold by a third party who is not the real owner of the goods. And even the sale took place
without any legal agreement due to which you do not possess any evidence to prove the
transfer of ownership. There should be rightful transfer of ownership and possession from the
seller to buyer, which in this case was not done by the rightful owner but a third party. The
real owner can claim her possession of laptop can claim it back from you and you cannot
prevent the real owner from acquiring the same , provided she even gave the required
evidence.
This is supported by the Latin principle Nemo dat quod non-habet, which means that any
individual cannot transfer the ownership title to the buyer, only the owner of goods can
transfer the better title. If such sale takes place then there would be passage of defective title
from seller to buyer. Hence, owing to the above explanation you cannot argue about being
the owner of the Laptop.

2. A. What is the significance of the presence of elements of a contract? B. Distinguish,

and give each an example the essential, the natural, and the accidental elements of a
contract of sale.

2(A). A contract is formed through mutual agreement between the parties. A valid contract
must have the essential elements to make the status of contract as a legally supported
document. To make the contract a binding documents the presence of certain elements of
contract is necessary.To protect the contract against any objections, it is necessary for the
elements of the contracts to be present in the contract. The significance of the presence of
elements of a contract:

• The absence of any of the elements of the contract may lead to the contract being
void. The presence of every element is necessary for the perfect formation of the
contract.
• The elements in the contract make the contract agreement indispensable to have a
steady and smooth carrying out of operations present in the contract.
• The elements make the contract more transparent and the concerned parties is at
ease during the contract formation.
• The elements protects the contracts during conflict. In case of any conflicts or
misunderstanding the elements protects the parties and existence of contract.
• The drafting of contract is incomplete without the offer from the party. The offer
becomes contract when the other party accepts the offer. This makes both the parties
agreeable to terms of the contract. This element is the base of formation of contract.
• It helps to establish a legal relationship between the parties. It works when any of the
parties wish to break up the contract. These elements provide a legal support to the
contract.
• These elements act as evidence of mutual agreement of both the parties, which may
prevent occurrence of conflicts or issues in future.
• These elements proves the competency of the parties. These elements prevent the
formation of contract if the parties prove to be incompetent , these elements prevent
the contract to get tangled in a legal turmoil.

(B).DISTINCTION AND EXAMPLES OF:

• ESSENTIAL ELEMENT:

A legal contract is defined as an agreement between two parties, that involves agreement to
certain conditions. The contract is only valid if the parties enter into the contract with free
consent and meeting of like minds happen between the parties. There are seven essential
elements whose presence is necessary for the formation of contract. If the contract lacks any
of the elements then it cannot be legally valid or offered. The contract can be valid and bind
both the parties if there is presence of all essential elements. A contract that lacks one or
more essential elements cannot bind any of the parties.

EXAMPLE: Contracting party A agrees to buy a two wheeler from another party B for
Rs.25,000. A paid the agreed amount to the party and got the two wheeler registered in his
name and the object of sale was transferred to A. This is valid contract of sale because the
ownership is transferred with the consent of both the parties, in exchange of money or
consideration, and object of sale is identified under 'goods'.

• NATURAL ELEMENTS:

The purpose of the contract is to establish agreement between the parties. A natural element
is already existent in a contract and does not need to be additionally specified in the legal
copy of the contract. These are usually prescribed by the statutes and they restrict the term
of contract where the parties or general public is affected. The lack of natural elements does
not make the contract void or voidable, the contract can be carried out as planned. Though
the natural elements protect the parties.

EXAMPLE: If A sells his car to B for $300,000, then A is obligated to provide warranty of car
until the ownership is completely transferred to B. This clause is not specifically included in
the contracted but the party is still stipulated for warranty. If the car suffers any damage before
the complete transfer of ownership, then the A is bound to B charges for damage.

• ACCIDENTAL ELEMENTS:

Accidental elements are those which are established or stipulated in the contract by any of
the two contracting parties, in accordance to their convenience, like a stipulation or clause or
any kind of terms and conditions. It is just an additional clause to the existence of an already
formed contract and lac of the same does not cause the contract to become void or voidable.
It only exist due to the stipulation of parties.

EXAMPLE: If A sells a house to B and B is unable to pay the full amount immediately, B
requests the payment of amount in installments. If A agrees to the request, the sale of
property and contract is still valid. Only a stipulation of payment through installment is added,
whereas the sale and transfer still takes place.

3. How shall a contract of sale be perfected? What is the legal effect as to the
ownership of the thing sold?
3. PERFECT CONTRACT OF SALE:
A contract of sale is a legal contract for the purchase of goods from a buyer to seller in
exchange of money or consideration. The contract may be absolute or conditional. A contract
of sale is perfected when there is presence of all elements in a contract. It is also necessary
for all elements of the contract to be present for the contract to be legal. If the contract of sale
lacks any of the element of the contract then the contract becomes void. The contracts of sale
is perfected when both the parties agree to give free consent to enter into contract and when
there is meeting of minds. The object of sale should be included under "goods" stipulated in
law, and there should be payment of some money or money equivalent to the other party as
consideration, then the contract of sale is deemed to be perfect.
LEGAL EFFECT AS TO OWNERSHIP OF GOODS SOLD:
Transfer of ownership of goods from buyer to seller is the contract of sale of goods. It is
necessary to establish certain legal effects to protect the rights of both the parties. After the
completion of sale the buyer becomes the owner becomes the owner of the specified goods
in the contract. The buyer becomes liable to pay the dues, taxes, rents, revenues of the goods
after the sale. The legal effect as to the ownership of goods that were sold are:

• The buyer is entitled to benefit from the revenue that is generated from the object of
sale.
• After the sale of the good, the buyer is entitled to pay for all the costs incurred by the
goods. The liability of payment falls in the hands of the buyer after completion of sale.
• The completion of sale makes the buyer liable for all the outgoings like rent, tax etc of
the goods.
• The seller can charge the buyer in case of any unpaid price from the buyer. This
happens if the ownership is passed before the full payment of the goods. Hence, the
seller becomes entitled to charge the buyer

4. What is the significance of the act of delivery of a property as far as the rights of
the buyer is concerned?

4. After the total amount of purchase is paid to the seller, he is bound to deliver to the buyer
all documents of title relating to the property which are in the possession or power of the
seller. After the completion of sale, the seller becomes bound to deliver all the title deeds
relating to the property to the buyer which are in the possession of the seller. If the seller
holds back any part of property due to any valid reason, he can hold that particular documents
as well. If the property is sold to different buyers then the documents should be delivered to
the buyer who holds the greatest value of property.

5. Sendoy sold his land to his neighbour Bewan, who immediately took possession of
the same but because of financial constraints, did not bother to register the sale. A
month later Sendoy sold the same to Betwo, (an OFW who has knowledge of the prior
sale), who paid twice the amount paid by Bewan. Betwo then registered the sale unto
the Register of Deeds. Betwo, armed with the Certificate of Title to the land, politely
asked Bewan to vacate the property, with the latter saying “imo nang papel, sa ako ang
yuta”. Both ask you, who is the rightful owner of the land? Reason out your answer.
5. The property in the goods is said to be transferred from the seller to the buyer when the
buyer acquires the proprietary rights over the goods. The transfer of property in the goods
from the seller to the buyer is the essence of a contract of sale. Speaking generally if the
same property has been sold twice by the same person, the sale deed which was registered
first will be considered as valid. But Bewan has failed to register the land,hence, the first
registered deed will be that of Betwo. The right of the property is transferred to Betwo due to
the fact that he has registration documents.Though Bewn can file a case against the seller
and claim damages that he suffered due to the doings of the seller. Though, the situation and
registration deed make Bewan the rightful owner of property.

6) Define warranty in a contract of sale. What are the implied warranties in sales?

Answer: Warranty in a Contract of Sale:

A warranty is a stipulation that isn't directly related to the contract's principal purpose. If a
warranty is breached, the party that is harmed can only sue for damages and has no right to
reject the contract.

A warranty is a stipulation that isn't directly related to the contract's principal purpose. The
aggrieved person can only sue for damages if the guarantee is breached. A violation of
warranty cannot be construed as a breach of condition in any way.

Implied Warranties in Sales:

An implied warranty is a legal phrase for guarantees, whether written or oral, that a product
is fit for the purpose intended and merchantable, that is, that it meets the expectations of a
typical customer. Unless the warranty of merchantability is specifically disclaimed by name
or the transaction is recognised with the term "as is" or "with all defects," the warranty of
merchantability is implicit.

Whether or not there is a stated warranty, products and services come with an implied
warranty to safeguard consumers. This guarantee is in addition to any express warranty given
at the time of sale, and it includes the implied warranty of workmanlike quality for services,
the implied warranty of habitability for a dwelling, and the implied warranty of title, which gives
the seller the right to sell the goods.

Example: Fruit that appears to be fresh but contains concealed faults, for example, would be
in violation of the implied promise of merchantability. Consumers think that all food in a
grocery store is fresh and edible, which is why they are entitled to a refund if it isn't.

7) Manong Mael purchased one box of Tagal Pawikan Capsules for Php 5000.00. After
one week, he went back to the same pharmacy demanding a refund, claiming it has no
effect on his sexual stamina as advertised on the radio. The sales lady refused, saying
there is a caveat on-air "no approved therapeutic claim". Who is right, Manong Mael or
the saleslady? Why?

Answer: No Approved Therapeutic Claim: This basically indicates that the supplements
haven't been demonstrated to be an effective treatment for the ailments they claim to treat.

The Philippines' Food and Drug Administration (FDA), a government agency under the
Department of Health (DOH), has ordered all food and dietary supplement manufacturers,
distributors, and advertisers to remove the phrase "No Approved Therapeutic Claim" from all
product labels and advertisements and replace it with the phrase "Mahalagang Paalala: Ang
( This notice notifies the public that the product is not a pharmaceutical and should not be
used to treat any medical symptoms. The FDA's reiteration of this rule follows the Court of
Appeals' judgement on November 28, 2014, upholding the DOH-FDA Administrative Order
2010-0008.

Audio advertising and promotions, in accordance with this criterion, must include a standard
message in Filipino that is clearly and audibly voiced over without being cut off at the last line
of the commercial or promotion, regardless of its duration.

The Department of Health (DOH), as the Philippines' top health authority, plays a critical role
in safeguarding the public's health. The usage of the Filipino term is more appropriate since
it clearly communicates the message to the public, eliminating misinterpretations and raising
public awareness. It also serves as a warning to consumers in the Philippines about
fraudulent therapeutic claims made by some food and dietary supplement manufacturers and
distributors.

Therefore, the saleslady is right and Manong Mael should read and negotiate (if possible) the
terms and conditions before making a buying decision.

8) Under the Realty Instalment Buyer Protection Act (R.A. 6552), after having paid in
installment for 8 years a total of Php1,000,000, how much cash surrender value shall
the buyer be entitled for refund if the contract is cancelled by default?

Answer: Based on the Realty Instalment Buyer Protection Act (R.A. 6552)

Section 3:

Under Republic Act Numbered 3844, as amended by Republic Act Numbered 6389, in all
transactions or contracts involving the sale or financing of real estate on instalment payments,
including residential condominium apartments but excluding industrial lots, commercial
buildings, and sales to tenants, where the buyer has paid at least two years of escrow,

In the event that the buyer fails to pay subsequent instalments, he has the following rights:

(1) To pay the delinquent instalments due without additional interest within the entire
grace period gained by him, which is now set at one month grace period for every one
year of instalment payments made: Provided, however, that the buyer may use this
right only once every five years during the contract's duration and any extensions if any.

(2) If the contract is cancelled, the Seller will repay to the buyer the cash surrender
value of the property payments, which is equal to 50% of the total payments made, plus
an additional 5% every year after the first five years of instalments, up to a maximum
of 90% of the total payments made: Provided, however, that the contract is actually
cancelled thirty days after the buyer receives the notice of cancellation or demand for
rescission of the contract by a notarial act, and upon full payment of the cash surrender
value to the buyer.
as per the above section 3 part 2 clarification, after having paid in instalment for 8 years which
is PHP 1000000, the seller will repay to the buyer the cash surrender value of the property
payments, which is equal to 50% of the total payments made (1000000*0.5=PHP 500000),
plus an additional 5% every year after the first five years of instalments
(1000000*3/8*5%=PHP 18750).

Hence, a total of 500000+18750=518750PHP cash surrender value the buyer is entitled to

refund if the contract is cancelled by default.

9. Briefly discuss the nature of a "bulk sale". What are the requirements for a valid bulk
sale?

Answer: Nature of Bulk Sale and Requirement for a Valid Bulk Sale:

The Bulk Sales Law is one of the more obscure laws (Act no. 3952). As per law, a sale is
called a bulk sale when:

(1) There is a sale, transfer, mortgage, or disposition that is not in the ordinary course
of business or the usual conduct of business;
(2) the business or trade is being sold entirely or nearly entirely, or
(3) when the sale includes all or nearly all of the business's fixtures and equipment.

The goal of this rule is to prevent creditors from being defrauded by a merchant's stock of
goods being secretly sold or disposed of in bulk. The Bulk Sales Law stipulates a number of
formalities: The bulk sale must be accompanied by a sworn document from the
vendor/mortgagor detailing the names and addresses of creditors, as well as the amounts
owed to them; The buyer will get the sworn statement; the seller will be required to produce
an inventory of the stocks to be sold, and the seller will be obliged to notify the creditors of
the planned sale at least 10 days prior to the sale.

You do not need to follow the above procedures if:

(1) the transaction takes place in the ordinary course of business;

(2) all creditors have signed a written waiver,
(3) the sale is made pursuant to a court order,
(4) those sold in insolvency by an assignee or those beyond the reach of creditors.

If the Bulk Sales Law is infringed, meaning the foregoing standards aren't followed, the bulk
sale is still legitimate between the parties but void in the eyes of the impacted creditors. As a
result, the buy is deemed to hold the property in trust for the seller, as well as liable to the
seller's creditors for the assets that are part of the bulk and that he has already disposed of.
As a result, the Bulk Sales Law must be followed when purchasing all or practically all of a
company's assets.

10. A, B, and C, siblings to each other, are co-owners of the ancestral house and lot in
Kidapawan City. C, a drug addict, validly sold his interest of the property to Datu
Janggo who is C's shabu supplier. A and B come to you for advice of their plan of
ousting Datu Janggo of his interest in the co-owned property. Is there any way
possible? Give a legal basis for your answer.

Answer: C was within his hereditary rights in selling his proportion to Datu Janggo in the
instance at hand. However, because the property had not been partitioned according to the
Rules of Court, no specific component of the land could be defined and designated as the
sale's goal. As a result, interpreting Article 493 of the Civil Code, which states that the
alienation of a co-owned property is restricted to the amount that may be given to the seller
in the division following co-ownership termination,

A co-owner has the right to alienate his pro-indiviso portion in a co-owned property under this
law, even if the other co-owners do not agree.

Different people share ownership of an undivided thing or right in a co-ownership. Each co-
owner of pro-indiviso property exercises his rights over the entire property and may use and
enjoy it with no restrictions other than not injuring the interests of his co-owners. The
fundamental reason is that until a division is made, the respective share of each co-owner
cannot be identified, and each co-owner exercises joint ownership over the pro-indiviso
property with his co-participants, in addition to his use and pleasure of it.

Although an heir's right to the decedent's property is inchoate until the estate is settled and
partitioned, the law allows a co-owner to exercise ownership rights over such an inchoate
right.

As a result, buying Datu Hanggo's part of ownership with his consent is the only method to
get rid of him from the co-owned property.