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Notes 6
Notes 6
Arts. 1475-1488
I. Rules in ordinary sales
A. Form
- manner in which a contract is executed or manifested
Article 1356. Contracts shall be obligatory, in whatever form they may have been
entered into, provided all the essential requisites for their validity are present.
However, when the law requires that a contract be in some form in order that it
may be valid or enforceable, or that a contract be proved in a certain way, that
requirement is absolute and indispensable. In such cases, the right of the parties
stated in the following article cannot be exercised.
Article 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.
Exception: when Statute of Frauds apply (Arts. 1403, par.2 and 1874)
Article 1403. The following contracts are unenforceable, unless they are ratified:
xxx
(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:
xxx
Article 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.
(a) sale of property not to be performed within a year from the date thereof
regardless of the nature of the property and the price involved.
B. Perfection
-meeting of the minds of the parties as to the object of the contract
and the price
Article 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.
> General rule on perfection of contracts of sale follows the general rule on
perfection of contracts by mere consent under Art. 1315:
Article 1315. Contracts are perfected by mere consent, 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 which, according to their nature, may
be in keeping with good faith, usage and law.
Application:
2. Sale of goods by sample: it must appear that the parties contracted solely
with reference to the sample, with the understanding that the bulk was like
it, it must appear that the exhibition of the sample by the seller was an
inducement of the sale or formed the sole basis thereof. In a sale by
sample, the vendor warrants that the thing sold and to be delivered by him
shall conform with the sample in kind, character and quality.
3. Sale of goods by sample and by description: in this case, the goods must
satisfy all the warranties appropriate to either kind of sale and it is not
sufficient that the bulk of the goods correspond with the sample if they do
not also correspond with the description and vice versa.
Right of buyer:
Bulk of goods does not designate the greater portion of the goods. It denotes the
goods themselves as distinguished from the sample and/or description with which
they must correspond.
b. Place of perfection
C. Expenses
Art. 1487. The expenses for the execution and registration of the sale
shall be borne by the vendor, unless there is a stipulation to the
contrary. (1455a)
Art. 1521. Whether it is for the buyer to take possession of the goods
or of the seller to send them to the buyer is a question depending in
each case on the contract, express or implied, between the parties.
Apart from any such contract, express or implied, or usage of trade
to the contrary, the place of delivery is the seller's place of business if
he has one, and if not his residence; but in case of a contract of sale
of specific goods, which to the knowledge of the parties when the
contract or the sale was made were in some other place, then that
place is the place of delivery.
Where the goods at the time of sale are in the possession of a third
person, the seller has not fulfilled his obligation to deliver to the buyer
unless and until such third person acknowledges to the buyer that he
holds the goods on the buyer's behalf.
1. Agreement
2. Usage of trade/customs
3. Seller is bound to send the goods to the buyer within a reasonable time
Duty of seller to put goods in deliverable condition: unless otherwise agreed upon,
the seller bears the expenses to place the thing in a deliverable state that is, in
such a state that the buyer would, under the contract, be bound to take delivery
of them, consistent with the duty of the seller to deliver the goods bargained for.
c. Expenses:
a. Of execution and registration (1487)
b. Of putting the goods in a deliverable state (1521)
(1) Where goods are put up for sale by auction in lots, each lot is the
subject of a separate contract of sale.
(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. (n)
Note: In sale by auction, each bid is an offer and perfected only upon the fall of
the hammer.
The buyer shall have a reasonable opportunity of comparing the bulk with the
description or the sample. (n)
(1) Exact fulfilment 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. (1454-A-a)
2. Cancel the sale if the buyer shall have failed to pay 2 or more instalments
or rescission: in which case, the buyer can demand the return of payments
already made unless there is stipulation about forfeiture
3. Foreclose the chattel mortgage, if one has been constituted, if the vendee
shall have failed to pay 2 or more instalments: vendor has not further action
against the vendee for the recovery of any unpaid balance of the price
and any agreement to the contrary is void. The foreclosure is effected by
selling the mortgaged property at public auction and applying the
proceeds of the sale to the satisfaction of the claim secured by the
mortgage.
E. Expropriation (1488)
Rights of buyer:
(a) To pay, without additional interest, the unpaid installments due within the
total grace period earned by him which is hereby fixed at the rate of one
month grace period for every one year of installment payments made:
Provided, That this right shall be exercised by the buyer only once in every
five years of the life of the contract and its extensions, if any.
(b) If the contract is canceled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to 50% of the
total payments made, and, after five years of installments, an additional 5%
every year but not to exceed ninety per cent of the total payments made:
Provided, That the actual cancellation of the contract shall take place
after 30 days from receipt by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial act and upon full
payment of the cash surrender value to the buyer.
Installment made in less than 2 years: In case where less than two years of
installments were paid, the seller shall give the buyer a grace period of not less
than 60 days from the date the installment became due. (Section 4)
Rescission: If the buyer fails to pay the installments due at the expiration of the
grace period, the seller may cancel the contract after 30 days from receipt by
the buyer of the notice of cancellation or the demand for rescission of the
contract by a notarial act. (Section 5)
➢ Subdivision project
-a tract or a parcel of land registered under Act No. 496 which is
partitioned primarily for residential purposes into individual lots with or
without improvements thereon, and offered to the public for sale, in
cash or in installment terms. It shall include all residential, commercial,
industrial and recreational areas as well as open spaces and other
community and public areas in the project.
➢ Subdivision lot
- any of the lots, whether residential, commercial, industrial, or
recreational, in a subdivision project.
➢ Condominium project
- the entire parcel of real property divided or to be divided primarily for
residential purposes into condominium units, including all structures
thereon
➢ Condominium unit
-part of the condominium project intended for any type of independent
use or ownership, including one or more rooms or spaces located in one
or more floors (or part of parts of floors) in a building or buildings and
such accessories as may be appended thereto
➢ Sale or sell-
-shall include every disposition, or attempt to dispose, for a valuable
consideration, of a subdivision lot, including the building and other
improvements thereof, if any, in a subdivision project or a condominium
unit in a condominium project. "Sale" and "sell" shall also include a
contract to sell, a contract of purchase and sale, an exchange, an
attempt to sell, an option of sale or purchase, a solicitation of a sale, or
an offer to sell, directly or by an agent, or by a circular, letter,
advertisement or otherwise.
3. Representation in Ads
The owner or developer shall answerable and liable for the facilities,
improvements, infrastructures or other forms of development represented or
promised in brochures, advertisements and other sales propaganda
disseminated by the owner or developer or his agents and the same shall form
part of the sales warranties enforceable against said owner or developer, jointly
and severally. Failure to comply with these warranties shall also be punishable in
accordance with the penalties provided for in this Decree.
MOLDEX REALTY, INC. vs. FLORA A. SABERON ( G.R. No.176289 April 8, 2013)
In Spouses Co Chien v. Sta. Lucia Realty and Development Corporation, Inc. this
Court has already ruled that the lack of a certificate of registration and a license
to sell on the part of a subdivision developer does not result to the nullification or
invalidation of the contract to sell it entered into with a buyer. The contract to sell
remains valid and subsisting. In said case, the Court upheld the validity of the
contract to sell notwithstanding violations by the developer of the provisions of
PD 957. We held that nothing in PD 957 provides for the nullity of a contract validly
entered into in cases of violation of any of its provisions such as the lack of a
license to sell. Thus:
A review of the relevant provisions of P.D. 957 reveals that while the law
penalizes the selling of subdivision lots and condominium units without prior
issuance of a Certificate of Registration and License to Sell by the HLURB, it
does not provide that the absence thereof will automatically render a
contract, otherwise validly entered, void. The penalty imposed by the
decree is the general penalty provided for the violation of any of its
provisions. It is well-settled in this jurisdiction that the clear language of the
law shall prevail. This principle particularly enjoins strict compliance with
provisions of law which are penal in nature, or when a penalty is provided
for the violation thereof. With regard to P.D. 957, nothing therein provides
for the nullification of a contract to sell in the event that the seller, at the
time the contract was entered into, did not possess a certificate of
registration and license to sell.