Silliman notes (2002)

SALES
Tips If you can use legal terms, use them, law has its own set of language; Dont debate on the facts Present your answer in chronological manner Every fact has its purpose, use them in your answers. Before you answer !"#E " $E%&"' ()&'I%E*** +ead the ,uestion very carefully Practice your penmanship -i.e., rephrasing )P "nswers to the Bar. Pray for final denouement

Preliminaries (EQ: - Estolloso Question SU Civil Law Professor) (AQ: - Albano Question Reviewer and Authorit in Civil Law) (JQ: - !urado Question Author and Authorit in Civil Law) "hat is a #ontra#t of sale$ %ive its essential re&uisites$ "hat are its #hara#teristi#s$ "/ By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determine thing and the other to pay therefor a price certain in money or its e,uivalent -"rticle 0123. &he essential re,uisites are 0. consent, 4. ob5ect and 6. cause. &he characteristics of a contract of sale are/ 0. consensual 4. bilateral and reciprocal 6. principal 1. onerous 2. commutative and 7. nominate.
Per "lbano, the contract of sales is an interplay of "rticle 0603 and "rticle 0123. &o bind is to give consent; the delivery of determinate thing is the ob5ect of the contract and the consideration is the cause.

EQ: 's deliver ne#essar to (erfe#t sales #ontra#t$ Pa )ent of (ri#e ne#essar of transferrin* ownershi($ "/ "rticle 0123 for re,uisites of sales contract. Delivery %(. Price 8es.
Per "lbano, payment does not ma9e the contract of sale perfected. &ransfer of ownership is by delivery.

AQ: "hat is the effe#t if there is a *ross inade&ua# of the (ri#e$ "/ It does not necessary mean that the contract is void, but the parties may have intended a different contract i.e., mere e,uitable mortgage. But note that the gross inade,uacy of price may indicate that there is a vitiation of consent hence annulment of contract may be availed of. But note in case of P+, vs- A)a#ol where it was ruled that :it is better for the property to be sold at a lesser price so that the redemptioner will have an easy time redeeming it.; !Q: Serra is the owner of (ar#el of land- .e entered into a /Contra#t of Lease with o(tion to bu 0 with RC,C for 12 ears- Under the #ontra#t RC,C is *iven the o(tion to bu the land at P134 (er s&- )- within 34 ears fro) e5e#ution of the #ontra#t ,U6 with the #ondition that

if it fails to e5er#ise the o(tion7 the buildin* and i)(rove)ents that RC,C ere#ted on the land shall *o the Serra without ri*ht of rei)burse)entRC,C e5er#ised its o(tion under the #ontra#t- ,ut Serra refused and #ontended that he is not bound b the #ontra#t be#ause of *ross inade&ua# of (ri#e and that the o(tion to bu was not su((orted with an #onsideration"as the o(tion to bu su((orted b a #onsideration distin#t fro) the (ri#e$ "/ 8es* <hat may be regarded as a consideration separate from the price is discussed in the case of 8da- 9e Quirino vs- Palar#a where it was ruled that the consideration for the lessors obligation to sell the leased premises to the lessee, should he choose to e=ercise his option to buy the same, is the obligation of the lessee to sell to the lessor the improvements constructed by the former, if he fails to e=ercise his option to buy said premises. In the present case -Serra vs- Court of A((eals (3::;))7 the consideration is even more onerous on the part of +>B> since it entails transferring the improvements on the property to ?erra, should +>B> fail to e=ercise its option within the period stipulated. &he two cases of Serra and 8da- 9e Quirino is confirmed in the re#ent #ase of San <i*uel Pro(erties7 'n#- vs- S(s- .uan* (<E+9=>A) when it was ruled that :anything of value can be considered as consideration distinct from the price.; In this case, it was furthered ruled that :the option contract price may be agreed to form part of the consideration of the price in the main contract.; In San <i*uel Pro(erties7 'n#- vs- S(s- .uan* it was ruled that/
:an accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the promissory only if the promise is supported by a distinct consideration. Consideration in an option contract may be anythin o! "al#e$ #nli%e in sale &here it m#st be the price certain in money or its e'#i"alent( Lac%in any s#ch proo! o! consideration$ the option is #nen!orceable() In this case, it was held by the >" that there was a perfected contract of sale because of the alleged giving of an earnest money. &he said amount, however was not given as an earnest money under "rticle 0134 but presented merely as a deposit of what would eventually become an earnest money if a contract of sale be made by them. It was used merely as a guarantee that the seller would not bac9 out. In fact, it was described as an earnest deposit. &he non@perfection of a contract of sale is bolstered by the fact that the petitioner merely given an option to purchase within 6A days. ?uch contract is separate and distinct from the contract of sale which the parties may enter into. ?ince the parties failed to agree on the terms of payment, there is no contract of sale that may be enforced.

AQ: 's failure to a*ree on the ter)s of the (a )ent a bar to the (erfe#tion of the sale$ "/ 8es, in San <i*uel Pro(erties 'n#- vs- S(s- .uan*7 #itin* 6o ota Shaw7 'n#- vs- CA7 it was said that a disagreement on the manner of payment is tantamount to a failure to agree on the price. In 8elas#o vs- CA 23 SCRA, it was said that if the parties had to agree on how and when the downpayment and the installments were to be paid, there is not perfected contract. AQ: 's *ivin* of earnest )one that establishes the e5isten#e of a (erfe#ted #ontra#t of sale$ "/ It was said in San <i*uel Pro(erties 'n#- vs- S(s- .uan* (<endo?a) it is not the giving of earnest money but the proof of the concurrence of all the essential elements of the contract of sale which establishes the e=istence of a perfected sale. AQ: "hat is the for) of a #ontra#t of sale$ "/ "rticle 0627 provides any form without pre5udice to the re,uirements of the ?tatute of Brauds. -"rticle 01AAC0136.

AQ: 's a suit available to #o)(el another (art for s(e#ifi# (erfor)an#e without #o)(l in* with the Statute of @rauds$ "/ %o. ?uch a suit can be a sub5ect to a motion to dismiss on the ground of unenforceability of contract. EQ: 's the ri*ht of first refusal7 a #ontra#t of sale or )erel an o(tion to bu $ "/ In LitonAua vs- L B R Cor(- (<ar#h 1C7 1444 D1E SCRA C:F Gnares-Santia*o the right of first refusal is %(< a contract that can, rescind the sale that was already made. AQ: "hat is the effe#t where there is a violation of the ri*ht of first refusal$ "/ In LitonAua vs- L B R Cor(oration (1444)7 the basic ,uestion is the nature of a contract of sale in violation of a right of first refusal. &he ?> said that it is rescissible, reiterating %u?)an7 ,o#alin* and Co- vs- ,onnevie7 14F SCRA where it emphasiDed therein that it was not voidable. It said/
:)nder "rticle 063A to 0634-6., a contract otherwise valid may nonetheless be subse,uently rescinded by reason of in5ury to third persons, li9e creditors. &he status of creditors could be validly accorded the Bonnevies for they had substantial interests that were pre5udiced by the sale of the sub5ect property to the petitioner without recogniDing their right of first priority under the >ontract of 'ease. +escission is a remedy granted by law to the contracting parties and even third persons, to secure reparation for damages caused to them by a contract, even if this could be valid, by the celebration of said contract. It is a relief allowed for one of the contracting parties and even third persons from all in5ury and damage the contract may cause, or to protect some incompatible and preferential right created by the contract. +escission implies a contract which, even if initially valid, produces a lesion or pecuniary damage to someone that 5ustifies its validation for reasons of e,uity.

In rescinding the contract, the purpose is to uphold and enforce the right of first refusal of the other party. It cannot be sold then at the current price. It should be sold a price similar to that price at the time it was sold in violation of the right of first refusal, for to do otherwise would afford the other party undue advantage in the intervening years when it precisely violated and ignored the right of first refusal of the other party. +ote: )nder "rticle 06EF if you were not a party to a contract, you cannot annul it. &he action by the lessee is to +E?>I%D because when the lessor offered the property to a third party at an E"?IE+ term, there is violation of the right of first refusal clause and thereby elevating the lessee to a level of a creditor. In the case of E&uitorial Realt , ?> ruled that, we have to elevate the lessee to a creditor status because of the substantial violation of this right. In rescissible contracts, when there is fraud to creditors, the creditor is entitled to rescind. AQ: "/ Should the (ri#e be ne#essaril indi#ated in the do#u)ent$

%ote/ &hat under "rticle 0621 there is a presumption of consideration in the delivery of a valuable thingGIn the case of =n* vs- =n* the sale of the property for P0.AA and :other consideration; is a valid sale. &he other consideration is a matter of evidence. But in A*uinaldo vs- A#a lar the payment of P.2A every day was nullified because it involved a lawyer who too9 advantage of his s9ills as against an illiterate. AQ: "hen is there (erfe#tion of #ontra#t$ "/ <hen concurrence of the essential elements of a valid contract in "rticle 0603. Perfected by mere consent. &he payment of earnest money is a manifestation of perfection of contract.

AQ: Can (erfe#tion of #ontra#t be (roven b other )eans$ "/ 8es, by evidence aliunde. In the case of @irst Phil- 'ntHl ,anI (for)erl Produ#ers ,anI) the series of communications over the phone by the parties are evidence of the perfected contract. >ase of condition for validity vs. condition for performance AQ: Su((ose the vendee i)(osed in the a*ree)ent /to eAe#t the tenant first before full (a )ent will be )ade on the balan#e-0 'f the vendor #annot eAe#t the tenant7 #an the vendor #o)(el the vendee to (a for the balan#e$ Can the vendor render the #ontra#t as void be#ause he was not able to eAe#t the tenant$ "/ &his is only a condition for performance and not a condition for the validity of the contract. &he vendor cannot render the contract void because he was not able to e5ect the tenant, neither can he compel the vendee to pay the balance. -Li) vs- Court of A((eals) AQ: 's the a((roval of the (robate #ourt a #ondition for validit or a #ondition for (erfor)an#e in the #ontra#t of sale- 'n other words7 is the a((roval of the #ourt ne#essar in order for the sale to be valid$ "/ It is only a condition for performance. It is only upon the delivery of the share to the buyer that the courts approval is re,uired it having complete control over the distribution of said estate. -San#he? vs- Court of A((eals) EQ: Can there be sale of *eneri# thin*s$ "/ &here can be, per de 'eon, but it is not a contract of sale, before delivery, but a contract to sell, it becomes, after delivery, a contract of sale. EQ: .ow about the for)7 is the written do#u)ent an essential re&uisite needed for (erfe#tion$ "/ %o, but for enforceability, yes. &ransfer of ownership is not a necessary factor or hindrance to the perfection of the contract of sale. Bor failure to transfer by one party, it is a reciprocal contract %(& sale under "rticle 0161. &he remedy as to non@performance of the sales contract is breach of warranties i.e., of hidden defects, evictionG EQ: 9ifferentiate sale fro) lease of servi#es"/ Illustration/ Emery wanting to build a hotel, contracted Engineering E,uipment Inc. &he contract contained the installation of a centraliDed airconditioning system from >ondura as well as its installation in the hotel building. &he test of whether it is a sale or lease of services is whether it has been specially ordered by the customer and whether the parts needed to install or ma9e it are ordinarily within the inventory of Engineering E,uipment, Inc. -p. 123 of "lbano. (see Constantino vs- Colle#tor of ,'R)EQ: 9ifferentiate #ontra#t of sale fro) a*en# to sell"/ Per "lbano, in a contract of sale, there is transfer of ownership thru delivery, the buyer is obligated to pay and that the seller warrants the sale. <hereas in agency to sell, by delivery of

the ob5ect sub5ect to agency, there is no transfer of ownership. &he agent is not bound to pay but to remit whatever he collects out of the sale and finally, it is not the agent that warrants but the principal. EQ: ,edroo) store #ontra#ted with Sheraton ,ed and a*reed to the #ondition that onl Sheraton ,ed #an be sold- F4 da s after deliver ,edroo) Store should (a Sheraton in e5#han*e for 14J dis#ount- 's the #ontra#t one of sale or a*en# $ 's the 14J dis#ount a #o))ission$ "/ &his is one of sale. %ormally, the agent will only remit what he has sold, here there is no ,ualification. -see Puyat case. where the commission was not really one, but was an additional incentive. EQ: 9istin*uish #ontra#t of sale fro) barter"/ Gthe law says that in barter, the law on sales will apply. Bor instance, $ichael decided to sell the car to 'ily. <hen he delivered, 'ily as9ed to pay PEA,AAA but willing to give her motorcycle worth P 00A,AAA, or a total of P4AA,AAA. &he transaction is sale. Intention controls. "bsent the intention, then the values will be ta9en up. &a9e note that intention controls. ?ee p. 122 "lbano, on agreement between the sales agent of &oyota. %ote that the manner of payment is an essential re,uisite. ?ee p. 31F Hurado. EQ: "/ EQ: "/ Can there be a sale of in#or(oreal ri*hts i-e-7 shares of sto#Is$ 8es, "rticle 02A0 also includes incorporeal rights.

"hen ou bu dollars7 are the rules on sale a((li#able$ 's a dollar a le*al tender$ I thin9 -Estolloso. the law on sales will apply, 9ay if fa9e, the warranty will apply. "ssignment of credit is an incorporeal right thus the law on sales shall govern. )nder "rticle 012E, the thing must be licit. &he right of the thing must be present at the time of delivery. &he ob5ect must be determinate. It doesnt really mean that the ,uantity is to be 9nownGas long as %( new contract is entered to determine the ,uantity. In "rticle 0176, even an undivided interest can be sold or in cases of undivided mass. !Q: 9istin*uish between e)(tio res s(eratae and e)(tio s(ei"/ p. 311 Hurado. %(&E?/ "rticle 0170 sale of things 0. Potential e=istence :I will buy all the sugar cane in you hacienda.; 4. !ope or e=pectancy :I pay whether there is a fish or not; Distinction/ If one tal9ed about future things, potential of e=istence and the sale of hope is not conditionalGin other words, buying of the hope not the thing. In contracts, intent of the parties control, regardless of the denomination. EQ: 9istin*uish sale fro) #ontra#t of (ie#eworI"/ " contract of piecewor9 is not covered by the statute of frauds while a contract of sale is covered. &he test is if the obligor in the ordinary course of his business manufactures or procures for the general mar9et, whether the same is on hand at the time or not, contract is of

sale. If the article is to be manufactured especially for the customer and upon his special order, and not for the general mar9et, contract is for a piece of wor9. EQ: 9istin*uish Audi#ial sale fro) voluntar sale"/ In 5udicial sale, inade,uacy of price is not material because it will be easier to redeem. In voluntary sale, inade,uacy is a badge of fraud. ?ee "rticle 01F0 on simulated contract. EQ: 9istin*uish (erfor)an#e in sales #ontra#t fro) (erfe#tion of sales #ontra#t"/ In sales, distinction must be made between performance and perfection. &he payment of the price and delivery of the thing is only performance not perfection.-in absolute sale. unless provided otherwise. EQ: Sa)(a*uita Pi#tures owned an unfinished buildin*- 't leased said buildin*- 6he lease #ontra#t (rovides that u(on ter)ination of the lease7 all i)(rove)ents (ertain to lessorLessee (ur#hased for i)(rove)ents on #redit- Lessee subse&uentl failed to (a K of the delivered i)(rove)ents- 6hereafter7 lessee also failed to (a rents7 leadin* to the e5tin*uish)entsLter)ination of the lease- "ho owns the i)(rove)ent$ "ho would have a better ri*ht$ "/ &he delivery of the improvements perfected the contract and nonpayment of the lessee of the price did not affect the ownership of the lessee to the improvements, thus, by virtue of the agreement, lessor ?ampaguita Pictures shall become the owner of the improvements. ?ince no stipulation as to the transfer of the ownership, the delivery thereof concludes the saleGthe transfer of ownership is perfected. -*A+ p( 200) ,otes: >ompare "rticle 22E with "rticle 02A2 ?ee the case of !ardine 9avies vs- CAon buying of stolen things.

EQ: Co)(are reservation as to the (ri#e fro) reservation as to ownershi( to se#ure (a )ent- (see Arti#le 3;CE) "/ %ote. :merely to secure performance the ownership is transferredG; this phrase usually connotes the ownership is retained only for purposes of security. EQ: 9istin*uish #ontra#t to sell fro) #ontra#t of sale"/ &he contract to sell is preparatoryGafter the fulfillment, the parties will still have to enter into a contract of sale. &here is no double sale in contract to sell. %ote that the distinction is very crucial in "rticle 02E4.
Per Hurado in contract of sale title passes to the vendee upon delivery of thing sold whereas in contract to sell, by agreement ownership is reserved in the vendor and is not to pass until full payment of the price. In the first, nonpayment is a negative resolutory condition, in the second, full payment is a positive suspensive condition. In the first, vendor has lost and cannot recover ownership until contract is rescinded, in the second the vendor can e5ect the vendee for failure to comply with the suspensive condition, vendor here is enforcing not rescinding the contract. Per "lbano, a contract to sell is not even a conditional sale, nor is it an installment sale, it is a mere promise to sell such that upon payment of last installment, the owner shall deliver and e=ecute the deed of sale. If there is a breach of contract to sell, it cannot give rise to rescission, because you cannot rescind what does not e=ist. Its effect is to prevent the e=ecution of the deed of absolute sale. &here is no rescission in a contract to sell because the vendee is only a prospective vendeeCbuyer.

AQ: "/

's there transfer of ownershi( des(ite deliver in a #ontra#t to sell$ %o, because of the condition imposed that ownership shall not transfer despite delivery.

AQ: A and , entered into a #ontra#t of sale of real (ro(ert 7 24J down and 24J thereafter'f , #annot (a A the 24J balan#e is res#ission available$ "ho #an avail of su#h re)ed $ "/ Case of S(ouses Co vs- CA both the vendor and the vendee can e=ercise the power of rescission. In this case, the lawyer of the vendor repeatedly sent letter of demand for the 2AI. <hen the vendee was ready to pay for the balance, the vendor refused acceptance because he said that he has rescinded the contract. &he vendee rescinded the contract. &he ?> ruled that the mere sending of the letter demanding the 2AI balance is not rescission. +escission may be made by 3) e5(ress reservation in the #ontra#t itself or 1) b suin* in #ourt for res#ission- &he refusal of " to accept Bs payment is also material breach of the contract since, " did not sue in court to rescind the contract. &hus, if there is rescission, there is restitution under "rticle 0632. AQ: 'f ou have (aid the last install)ent toda 7 does the vendee be#o)e the owner toda $ "/ %o. It only obligates vendor to e=ecute the document of sale. %ot payment but delivery, is the rule. AQ: "hat if the vendor issued the do#u)ent of sale to another (sold to another) who bou*ht the (ro(ert in *ood faith and for value des(ite the #ontra#t to sell7 what a#tion7 if an #an be filed a*ainst the vendor7 the third (art $ "/ "s against the third party, none. "s against the vendor, he can be sued for damages under "rticle 0E. AQ: A oun* law er bou*ht set of booIs fro) Re5 ,ooIstore7 24J down- Re5 ,ooIstore7 however7 reserved title until full (a )ent- 6wo da s after7 the booIs were burned when the house of the law er was *utted b fire- 's Re5 ,ooIstore still the owner be#ause it reserved the title$ "/ ?> ruled in Law ers Publishin* Co- vs- 6abora that :if there is delivery there is transfer of ownership. &he reservation as to the ownership of the boo9s is merely for security of the payment. Per "rticle 02A1 on res perit domino, the lawyer shall bear the loss. EQ: sale"/ 9istin*uish #onditional sale and #ontra#t to sell in relation to Arti#le 32;; on double

AQ: 's it ne#essar that the seller be the owner of the thin* sold at the (erfe#tion of the #ontra#t$ "/ It is not necessary that the seller be the owner of the property sold at the time of perfection provided that upon delivery the seller has become the owner thereof. +emember the rule is that not payment but delivery. AQ: Can ou sell a thin* subAe#t to a resolutor #ondition$ "/ 8es, it is similar to a case contemplated in reserva troncal. &he reservista who are sub5ect to the resolutory condition that the reservatarios surviving herChim will inherit the property can

sell the property. ?ub5ect of course to the condition in the reserva. &he reservatarios can rescind the sale thereafter. AQ: !ose(h and ,enedi#t are two sons of 9a57 a wealth and handso)e but dirt old )an!ose(h without the #onsent of his father7 sold one of townhouses- "hen 9a5 died7 !ose(h inherited the townhouse he sold- 's the sale valid$ "/ 8es. &he property did not pass anymore to Hoseph but by operation of law shall accrue to the buyer. -modification of the ver i)(ortant #ase of Claudio delos Re os vs- -----) "rticle 0161 and "rticle 012E. AQ: !ose(h and ,enedi#t are two sons of 9a5- !ose(h sold the house of his father 9a5 without the #onsent of the latter- "hen 9a5 died7 he donated the (ro(ert to ,enedi#t )ortis #ausa- "hat is the effe#t$ 's the sale valid$ "/ ?ee case of Claudio delos Re es!Q: "hat is the effe#t of an o(tion to bu without #onsideration$ 's the absen#e of #onsideration for the o(tion (in a lease #ontra#t with o(tion to bu with #ondition that failin* on the o(tion7 the i)(rove)ents will (ertain to the lessor) )aIes the o(tion ineffe#tual$ "/ Jenerally an option to buy without consideration is without effect. Per "rticle 01FE, an accepted unilateral promise to buy and 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. But the option to buy in a lease with option to buy, the consideration is even more onerous as the failure to e=ercise the option will mean the transfer of improvements introduced by the lessee to the lessor. EQ: Consider the re&uire)ent of /notarial and Audi#ial de)and0 in RA F221 (Subdivision A#t) and Arti#le 32:1"/ In +" 7224, sale of real estate by installment, there is a need for a notarial notice only. <hile in "rticle 02E4, it mentions of :notarial and 5udicial demand.; %otes/ >onsider these cases/ <asiIlat vs- Centeno 2LD3L2F <anana vs- CA 3D2 SCRA 22C Soriano vs- ,autista Seta (- ;F: Albano 8s- Palan#a (*A+ p( -.) E&uitorial Realt 9evHt- 1F; SCRA Asun#ion #ase Arti#le 3;E4 per Paras and de Leon this is the exception on the res perit domino. Per Tolentino and Babiera this is the general rule on res perit domino. EQ: "/ 's title and ownershi( s non )ous$ Document of title is e,uivalent to ownership %ote/ &he registration of title is only to affect third parties hence not a re,uisite for transfer of ownership as ownership may be transferred prior to delivery of the document of title. But when the title is the ownership per se, the term should be treated synonymously.

EQ: 6ata and Adrian entered into a (rivate do#u)ent7 and delivered a do#u)ent of title7 is it a s )boli#al deliver $ "/ It is said that it is ,uasi@traditio because it involves incorporeal rightsGso again intention should be thereGthe delivery of title is ,uasi traditio. -"rticle 02A0 on incorporeal rights.. %ote that intent is necessary in delivery. EQ: Under the Re#to Law7 Arti#le 3;E;7 what are to be re)e)bered$ "/ 0. It pertains to personal property i.e., lease of personal property with option to buy, is merely a subterfuge of sale, the rentals as the installments of the price, but the facts of the case must be loo9ed into. Bor instance, 2AI downpayment, and 2AI thereafter, this is not covered by the +ecto 'aw. &he +ecto 'aw involves more than two installments including the downpayment. AQ: "/ "hat are the ri*hts of an un(aid seller$ 0. 'ien 4. ?toppage in transitu 6. +escission 1. +esale

!Q: "hat are the re)edies of an un(aid seller$ "/ 0. a lien on the goods or right to retain them for the price while he is in possession of them; 4. stoppage in transitu 0. a right of resale 4. a right to rescind the sale. AQ: "/ .ow )a the ri*ht of res#ission e5er#ised$ Hudicially or e=tra5udicially %ote in the case of Le*arda .er)anos vs- Court of A((eals it was ruled that if rescission will result in unfairness then it cannot be enforced either 5udicially or e=tra5udicially, the remedy is for specific performance and damages. $oreover, failure to pay the last installment is %(& anymore a $"&E+I"' breach. If both committed breach of the contract, upon rescission, the court will temper the award of damages pursuant to "rticle 00E4. EQ: "hat three re)edies that an un(aid seller )a #hoose in a #ontra#t of sale of (ersonal (ro(ert the (ri#e is (a able in install)ents$ "/ &here are alternatives as a general rule, only one remedy chosen can be availed of, but ta9e note of the e=ception. &he alternative remedies are/ 0. >ollect the debt 4. Boreclosure 6. >ancellation of sale AQ: "hat is the reason wh the re)edies are alternative$

"/

&he reason why the remedies are alternative is to prevent solutio indebiti. %ote/ &he rule on alternative remedies depends on what stage the e=ercise thereof was reached. If one remedy is %(& e=ercised in full because it was dismissed -e.g., the foreclosure cannot be made because the mortgagor hid the car. then another alternative remedy can be availed of. %(&E also the three phases of "rticle 0131, per "lbano there is this >ivil 'aw phase, +emedial 'aw phase and >ommercial 'aw phase the effects on deficiency. )nder the remedial law phase, instead of foreclosure, an action for replevin was instituted, thus the balance can still be as9ed for. )nder the commercial law phase, under a contract of loanCmortgage, there is no prohibition as to collection of deficiency. EQ: "/ EQ: "/ EQ: "/ =n s(e#ifi# #olle#tion7 #an the vendor *o after sa 68$ ($) 8es, because specific performance is chosenK =n #an#ellation of sale7 #an the vendee re#over the down(a )ent$ 8es, unless there is a stipulation to the contrary. =n fore#losure7 does the vendor have to *o throu*h the (ro#ess of fore#losure$ &he vendor has to go thru foreclosure otherwise it becomes a pactum commissorium.

EQ: .ow about the #ost7 au#tion fees7 attorne s fees and sheriff fees$ "/ &he ordinary e=penses are deducted from the price of the bidder, simply put, the vendor cannot recover. -see p. 1F7 of "lbano. (rdinarily in e=tra5udicial foreclosure, replevin is not available because, normally the vendee returns the property. !ence, if the vendee caused the hiring of a lawyer to institute replevin, damages should be awarded. <hen e=ecution is present, it is not consistent with foreclosure. EQ: "/ "hat are the so-#alled <a#eda and Re#to Laws$ *A+ p( /.( In $aceda 'aw there is nothing regarding foreclosure. It has its feature of cash surrender value. " refund of 2AI of total payments. " grace period of 0 month for every year of payment. "fter 2 years, additional 2I but not more than EAI. (n the cancellation through notarial actCnotice as compared with the re,uirement in "rticle 02E4 on 5udicial and notarial demand. %ote that the $aceda 'aw does not include commercial and industrial lots. (nly residential and apartments, with reservation on commercial buildings. *A+ p( 01. on two re,uirements of cash surrender value and notice of rescission by notarial act. *A+ p( 2/3 and *A+ p( 0/. EQ: "/ 9oes Arti#le 32:1 a((l to all Iinds of sale b install)ents$ "pplies only to sale of immovables on installments. %otes/ "rticle 041F and "rticle 01EA Case of <atabuena vs- Cervantes

0A

"rticle 01E0 par. 0@6 void but can be ratified "rticle 01E0 par. 1@7 void absolutely Case of <aharliIa 3;1 SCRA 22E Case of @abillo vs- 'AC DL33L:4 " letter of demand sent by a lawyer, >"%%(& be deemed the %(&"+I"' ">& contemplated under "rticle 02E4. &hus, for as long as the letter is not a notarial act or when no 5udicial demand has been made, the buyer on installment can still ma9e installment payment beyond the period fi=ed. See ,alarao vs- Court of A((eals on un5ust enrichment complicating "rticle 02E4. EQ: "/ "hat are the wa s when deliveries )a be )ade$ &raditio longa mano &raditio brevi mano &radio symbolica >onstitutum possessarium *A+ p( -3 %otes/ "rticle 0231 last par. >ash on Delivery there is already a transfer of ownership upon delivery and receipt of payment. )nder "rticle 0211 it is the registration and not the transfer of public instrument that matters. AQ: +orIis sold to Alberto +a(ales a Ga)aha "onderbiIe )otor# #le (a able b a letter of *uarant fro) 9,P- Credit was e5tended to +a(ales and as se#urit for the (a )ent of the loan7 he shall e5e#ute a #hattel )ort*a*e- ,efore the deliver 7 +orIis issued +a(ales sales invoi#e and re*istered the biIe in +a(alesH na)e- +orIis delivered to a #ertain !ulian +a(ales7 an alle*ed a*ent of Alberto7 who) the latter denied- 6he )otorbiIe )et an a##identAs +orIis #ould not deliver the unit7 +a(ales sued +orIis who inter(osed the defense that it has alread delivered the biIe"/ %or9is shall be liable. &he issuance of invoice is not e,uivalent to delivery. %or is registration tantamount to delivery. %or is registration tantamount to delivery vesting ownership. &he documents mentioned are 5ust preparatory in character in order that credit investigation by DBP could start on the loan by "lberto %apales. <hen %or9is registered the bi9e in favor of %apales, it did not intend to transfer the title or ownership but merely to facilitate the loan. In all forms of delivery it is necessary that the act of delivery whether constructive or actual, be coupled with the intention of delivering the thing. &he act, without the intention, is insufficient. In other words, the critical factor in the different modes of effecting delivery, which gives legal effect to the act, is the actual intention of the vendor to deliver and its acceptance by the vendee. <ithout that intention, there is no tradition. EQ: "hat are sale or returnM sale on a((roval or trialM sale b des#ri(tionM and #olle#t (#ash) on deliver $ "/ see. P- EFC of !urado. <hen goods are delivered to the buyer on :sale or return; to give the buyer an
option to return the goods instead of paying the price, the ownership passes to the buyer on delivery, but he may revest the ownership in the seller by returning the goods within the time fi=ed in the contract, or, if no time has been fi=ed, within a reasonable time. <hen goods are delivered to the buyer :on approval; or :on trial; or :on satisfaction; or other similar terms, the ownership passes to the buyer/

00

0. 4.

<hen he signifies his approval or acceptance to the seller or does any other act adopting the transaction; If he does not signify his approval or acceptance to the seller, but retains the goods without giving notice of re5ection, then if a time has been fi=ed for the return of the goods, on the e=piration of such time, and, if no time has been fi=ed, on the e=piration of a reasonable time. <hat is reasonable time is a ,uestion of fact.

AQ: "/

Can the s(ouses sell to ea#h other$ %o, e=cept when they are governed under complete separation of property.

AQ: "ho #an &uestion the sale between the s(ouses$ "/ &he spouses cannot ,uestion each others act because of the principle of in pari delicto. But the Jovernment can, also the creditors of the spouses before the sale, but those creditors after the sale cannot. EQ: Correlate Arti#le 321D fro) Arti#le 324D"/ "rticle 02A6 you can reserve ownership even if possession is transferred. )nder "rticle 0246 @ delivery to carrier is delivery to buyer, the e=ception is "rticle 02A6 -res perit domino. *A+ p( /2-4 *A+ p( 2034 *A+ p( 0/-4 *A+ p( 203 5 /64 *A+ p( 603 5-A >o@ownership is crucial as to who will bear the loss. Bebruary 1, 4AA4 EQ: Arti#le 324; on res (erit do)ino7 loss of the thin* in the event of fortuitous event is with the owner- "hat are the e5#e(tions$ "/ %ote/ +e/ Delivery it can also be made to agent, depositary et.al., the ,uestion is who is this agent, that of buyerK EQ: 'f the reservation as to ownershi( is with res(e#t to (rote#t a*ainst non-(a )ent7 is there transfer alread $ "/ 8es. !Q: "/ "hen is the seller of *oods dee)ed to be an un(aid seller$ 0. when the whole of the price has not been paid or tendered; and 4. when the bill of e=change or other negotiable instrument has been received as conditional payment, and the condition on which it was received has been bro9en by reason of the dishonor of the instrument, the insolvency or the buyer or otherwiseG !Q: "/ !Q: "/ "hen is the ri*ht to retain the *oods available to the un(aid seller$ p. 3F4 Hurado "hen does the un(aid seller lose his lien on or ri*ht of retention over the *oods$ p. 3F4 Hurado

04

!Q: "hat is )eant b the ri*ht of sto((a*e in transitu$ "hen is this ri*ht available and how is the ri*ht e5er#ised$ "/ see. 3F6 Hurado !Q: "/ "hen is the ri*ht of resale available$ "hen is the ri*ht of res#ission available$ pp. 3F1@3F2 Hurado %ote/ &he essential re,uisites before resaleCrescission can be made, the unpaid seller should have a right of lien or should have stopped the goods in transitu. -"rticle 0261. %ote/ <hen the bill of lading is sent by seller to his agent in the point of destination, ?&(PP"JE I% &+"%?I&) is %(& applicable because the seller is still the owner. &he principle applies when the buyer is insolvent. If buyer is in P(??E??I(%, stoppage in transitu is %(& applicable. *A+ p( /2- 7 on res perit domino. not applicable to generic things. But see conflicting opinions of Dr. &olentino and Paras. *A+ p( 203 EQ: "hat are the re)edies of an un(aid seller$ "/ )nder "rticle 0247 an unpaid seller shall have lien on the goods but true only when there has been %( delivery yet. "nd stoppage in transitu. &he lien on the goods is preparatory to 4 remedies. Birst, to resell the goods plus deficiency and second, to rescind plus damages. In the alternative, hold the goods as depository. In stoppage in transitu, the seller relin,uishes the ownership but e=ercise right ofGLLLLL. EQ: "hen are the *oods in transitu$ "/ "rticle 0260. It is still in transitu if the goods arrived at the point of destination and the buyer re5ects it. It is not in transit, when the carrier withheld the goods for the buyer or when the carrier withholds them unreasonably. EQ: "/ .ow is sto((a*e )ade$ Inform the carrier.

EQ: 'n e5er#isin* (ossessor lien7 is it ne#essar to *ive noti#e to bu er if in #ase of resellin*$ "/ %( need for perishables, but advisable to give notice in order to apprise the court as to the length of time that buyer did not pay. EQ: "hat are the re&uisites of sto((a*e in transitu$ "/ &hese are/ ?eller is unpaid meaning no stipulation as to credit; buyer is insolvent; before the arrival to buyer and LLLL. %ote/ If there is a bill of lading, it must be surrendered. "rticle 0266 is 9nown as the remedy of resale. EQ: "hen )a noti#e be )andator $ "/ <hen e=ercising stoppage in transitu notice to carrier; notice of demand to pay when already in possession; notice of resale @ 6 notices re,uired*

06

"rticle 0261 is remedy of rescission while the goods are still in buyers hands. EQ: 's la#I of (a )ent a bar to the (erfe#tion of the #ontra#t$ "/ %o. &he lac9 of payment is not a bar to the perfection of the contract EM>EP& when the condition EMP+E??'8 reserving that ownership is reserved until full payment. *A+ p( 203 Delivery to the carrier is presumed delivery to the buyer. *A+ p( 603 Favorite BAR question daw Article !"#$ on loss o% movable propert& in relation to Article ""'. EQ: Can ou taIe ba#I what was unlawfull taIen fro) ou$ "/ 8es, when what you lost was ta9en unlawfully from youGit can be ta9en bac9. But ta9e note that there are e=ceptions. ?ee E9CA Publishin* Co- vs- Santos (3::4) illustrating the difficult ,uestion of :unlaw%ull& deprived.( *A+ p( 200( %ote that there is a fine line between estafa and perfected sale. $otor vehicle registration is %(& e,uivalent to 'and +egistration for purposes of effecting ownership. Bor instance, +e= Boo9store which sold the boo9s but the vendees chec9 bounced, there is no unlawful deprivation of the thing, 5ust the payment. EQ: Sherr entrusted to 9i)(le a Aewelr for sale7 but 9i)(le (awned it to (awnsho(- 's Sherr de(rived of the thin*$ "/ 8es, ?herry is deprived of possession of the 5ewelry. "rticle 02A2 applies. &he pawnshop cannot claim reimbursement. EQ: "hat is a (ubli# sale$ "/ It means there is publicationCnotice of sale under "rticle 22E. If bought in a department store, "rticle 22E will %(& apply, but "rticle 02A2 will apply. But note that %( reimbursement in "rticle 02A2. 6he #ase of Sun ,rosEQ: "/ "hat if bou*ht in a )er#hant store7 is there rei)burse)ent$ 8es. -K.

EQ: Renee was held-u( b 9o)in* taIin* fro) her a silver ne#Ila#e- 9o)in* sold it to < la- Can Renee re#over the held-u( silver ne#Ila#e *rantin* that (res#ri(tion has not et set in$ "/ 8es. %ote/ "rticle 02A2 can cover immovables; "rticle 0767 on immovables. *A+ p( /03 - when his name was falsified, the original owner can recover from "%8(%E in possession* B)& if done through a public auction, +EI$B)+?E$E%& must be made. *A+ p( 2.14 *A+ p( 2124 *A+ p( 263 7 prescribed claim. *A+ p( 0.2

01

*A+ p( 601 EQ: 9oes Arti#le 32;; on double sale a((l to unre*istered land$ "/ %o. &his "rticle 0211 does not apply to unregistered land, the rule on unregistered land is >"#E"& E$P&(+. In land titles, the rule is you can rely on the document. But the rule in civil law is %(& the same, one is not protected by the mere title alone, if other facts that will incite suspicion i.e., a person occupying the landG then J((D B"I&! will not be invo9ed. EQ: Louie is the owner of the #ar7 he *ave the Ie s to An*elo7 Louie sold it to An*elo- ,ut An*elo did not Iee( the #ar et- Louie later sold the #ar to Sa)uel7 the du(li#ate Ie was *iven- "ho has (ossession$ "/ It is "ngelo, because according to de 'eon, delivery may be ">&)"' or ?8$B('I>"'. &he rule in movables is the first person who ta9es the movable in good faith. EQ: "hat is the rule (ertainin* to i))ovables$ "/ &he rule is who recorded it first in good faith, which include value. ?ome rules/ ?ale vs. Donation ?ale prevailsGeven if the donation came first, much more when it comes laterGbut isnt this unfairK +egistration in good faith ta9es priority against prior title. EQ: "/ EQ: "/ "hat is *ood faith$ )pon failure to ma9e in,uiry, when reasonable facts incited himG

"hat is )eant b re#ordin*$ 9oes it )ean )ere filin*$ $ere filing is not enough, entry is the 9ey factor. %ote/ Even if your title is only in private document, annotate it as "D#E+?E >'"I$ it will put subse,uent registrants even holding public documents to be in bad faith. (n the first buyer the good faith is re,uired only at the time of purchase. ?ubse,uent 9nowledge is %(& essential. (n the second buyer good faith at the time of purchase and at the time of registration. Case of Carbonel vs- CA (3:C1) ?ubse,uent 9nowledge by first buyer in good faith cannot defeat the right ac,uired by him at the time of purchase. If no registration, the rule is who is BI+?& I% >(%&+('. In the absence of registration and possession the rule is ('DE?& &I&'E. AQ: Renee sold to Ate <a et her (ar#el of land in Si&uiAor7 later sold also the sa)e land to Queenie and )u#h later to 6ell- All the three Si&uiAorian bu ers are in *ood faith- .owever7 it is 6ell who first re*istered it- "ho has the better ri*ht$ "/ &ell has the better right. AQ: ,ut su((ose the #ontra#t between Renee and Ate <a et is oral7 Renee and Queenie7 also oral #ontra#t7 Renee and 6ell in writin* and in a (ubli# instru)ent but 6ell has Inowled*e of the oral sale (reviousl )ade b Renee to Queenie andLor Ate <a et- "ho has now the better ri*ht$ "/ &he rule on buyer in good faith and for value and registration must coincide or go hand in hand. ?o &ell cannot be a buyer in good faith even if he registered the property and that the sale is in a public instrument. It is "te $ayet who shall have a better right.

02

%ote/ <irror Prin#i(le meaning the bu&er cannot close his e&es to things that he is supposed to see. &hus, under this <irror (rin#i(le, although reliance on the &orrens &itle alone is enough, but if there are reasons for the buyer to investigate, he is obliged to do so. " prima facie presumption of regularity in the &orrens &itle e=ists without pre5udice to the $irror principle. AQ: "/ AQ: "/ 's there double sale if one #ontra#t is of sale and the other is a #ontra#t to sell$ %o. &here is no double sale if one is a contract of sale and the other is a contract to sell. 'f there is a re*istration of a usufru#t7 is it an en#u)bran#e warrantin* bad faith$ %o. 9io)edes vs- CA-

EQ: Lowell the owner of an unre*istered land7 a((lied for 6orrens re*istration- Lowell sold it to Nell 7 but the Re*ister of 9eeds still issued the title to Lowell- Lowell then )ort*a*ed the (ro(ert to ,a ani- "hen ,a ani fore#losed the (ro(ert 7 it was sold on (ubli# au#tion"ho is the better titler$ "/ Case of 9a*u(an vs- <a#a) 3; SCRA 3C: in e=ecution sale, the sheriff does not warrant title. "rticle 0211 will not apply since one is unregistered and other is not* In unregistered land, 9insa nauna pagbaligya sa yuta mao the BI+?& I% P+I(+I&8. EQ: Nathia sold her land to <i)ie- Nathia is a widow- "hile she was still livin*7 her #hildren sold the sa)e land to Queenie- "ho has a better ri*ht$ "/ $imie has a better right. %ote/ but when Nathia died, the children became the owner of the land after her death. If Oueenie registers it, then Oueenie will have a better right. Double sale may also occur in P">&( DE +E&+( ?"'E. !ence, if the seller will not buy it bac9, instead sell it to another, who register it first, the latter will have a better title. *A+ p( 2.-4 *A+ p 626 EQ: <i#hael7 a )inor7 sold a 68 set to Renee- Renee sold the 68 set to Anne who is in *ood faith- Can <i#hael invoIe )inorit as a defense a*ainst Anne$ "/ %o. $ichael cannot invo9e minority as against "nne. "nne has a better title. %otes/ )nder "rticle 0246 delivery of goods to the carrier is deemed delivery to the buyer )%'E?? 0. if the carrier is chartered by the seller ma9ing the carrier the agent of the seller 4. seller does not deliver the bill of lading to the carrier and intends to send the same to his agent in the point of destination; and 6. "rticle 02A6. EQ: ,ut what if the (eriod is fi5ed$ "hat instan#es )a )aIe the vendee de)and deliver now even if the (eriod has not arrived$ "/ "rticle 00E3 vis@P@vis "rticle 0267. EQ: "/ 9oes Arti#le 321; a((l to sale on #redit$ It does not apply if the sale is on credit.

07

EQ: "h not in#luded in Arti#le 32:;$ "/ In "rticle 02E2, the remedies in "rticle 02E1 pertains to events where ownership has passed. EQ: "hat is re#ou()ent$ "/ (ne where he ta9es bac9 possession and sell the goods. (r one, where no delivery but retain the goods for sale. %ote/ ?toppage in transitu applicable when placed in carrier. %ot applicable if delivery is simultaneous. <arranties !Q: 9efine a##ion redhibitoria$ "/ Accion redhibitoria is an action instituted by the vendee against the vendor to avoid a sale on account of some vice or defect in the thing sold which renders it unfit for the use to such an e=tant that, had the vendee been aware thereof, he would not have ac,uired it. !Q: 9efine a##ion &uanti )inoris$ "/ "n action to procure the return of a part of the purchase price paid by the vendee to the vendor by reason of such defect. ,ote/ &he two remedies are available to the vendee if there is a breach by the vendor of the implied warranty against hidden defects of or encumbrances upon the thing sold. &he period of prescription is 7 months from delivery to the vendee. <ith respect to redhibitory actions based on faults or defects of animals, the period is 1A days. EQ: "/ EQ: "/ Correlate Arti#le 33F; with Arti#le 32DC9istin*uish Lu)( su) sale fro) Unit of )easure sale-

EQ: "ith re*ard to #onditional sale7 what if the #ondition will not ha((en$ "/ Proportional reduction if more than 0C0A of the area. +escission only if it was the intention of the buyer -9nown to seller. that the buyer would not have bought the thing if it were the case. But rescission may ensue on the basis of Asain vs- !alandoni (- ;F4 Albano- +e/ sub5ect matter is defined by boundaries @ In lump sum, the general rule is that one cannot as9 for proportional reduction of price because in lump sum, G ?ee "lbano p. 13E on accion ,uanti minoris -proportionate reduction of price. EQ: "hat does i)(lied warranties in#lude$ "/ <arranty against eviction, fitness of thing for merchantability. %ote that fitness and merchantability are not the same; against hidden defects. EQ: 9istin*uish warrant of fitness fro) warrant of )er#hantabilit -

0F

"/ In warrant of fitness though implied, warrants that there is an e=press agreement that the thing is for a specific purpose. In merchantability implied that :general purpose; is warranted. EQ: "/ %ive si5 warranties0. description 4. fitness 6. merchantability 1. eviction ,ote/ +ule on caveat emptor is %(& really applicable to ?"'E? but applicable to 5udicial sales, because the sheriff does not warrant the sale. In sales, it is >"#E"& LLLL meaning seller beware. -as to sellers opinion, unless the seller is an agent. 's *ood faith or bad faith a defense in warranties$ %o. It is not a defense. Can there be a waiver of these warranties$ 8es, as long as it is done in good faith by the seller.

EQ: "/ EQ: "/

EQ: E)er is the owner of "ater Co)(an that owns (urifiers- E)er sold to Asereth (urifiers and in the #ontra#t it was sti(ulated that it #an Iill ba#teria- ,ut Asereth noti#ed that there were sedi)ents in the water- 9ates 9eliver !an- 3M =n @eb- 17 Asereth noti#ed the sedi)ents and on Au*- 3 she brou*ht the a#tion- "hat is the (res#ri(tive (eriod for brea#h of warrant of hidden defe#ts$ "/ si= -7. months counted from the date of DE'I#E+8. &a9e note that if it is implied warrantyGit prescribes in 7 months from the date of delivery. But if the warranty is e=press it is four -1. years from DI?>(#E+8. EQ: Coca Cola deli"ered so!tdrin%s on Jan( /$ on 8eb( 2$ disco"ery o! !ibro#s ob9ects not pre"io#sly patent &ere seen( :n A# ( /$ !ilin o! the case a ainst Coca Cola( ;as the case prescribed< "/ %o. not as a breach of implied warranty, but on the basis of ,uasi@delict, which is compatible with contracts, it prescribes in four -1. years from date of discovery or occurrence of in5ury. -(rdinarily, 0A years from time of e=ecution in contracts -"rticle 0011.. EQ: 's there warrant of hidden defe#ts of se#ond hand arti#les$ "/ %one with respect to the enumeration. But it is fit for its purpose only. If it is second hand, the buyer is presumed to 9now the condition thereof. EQ: =felia owns a (ar#el of land7 subAe#t to the CARP7 with tenant na)ed ,a o - =felia sold to Ra)on the land free of lien- Ra)on sold to 'n*rid7 wherein Ra)on said he warrants that the land is not subAe#t to CARP- After a few )onths7 there was a de#ision awardin* the land to tenant7 ,a o Can Ra)on sue =felia on hidden en#u)bran#e$ "/ %o, not an encumbrance on land, because tenancy is relationship not encumbrance. But Ingrid can sue +amon on his EMP+E?? warranty.

03

,otes/ +e ?heriffs sale "rticle 021F. "rticle 02F1 no warranty against hidden defects on a. 4. ta= delin,uency sales and 6. sheriffs sale.

animals sold in fairs

:as is where is; the vendor does not warrantGit however does not include those that cannot be seen. <arranty against eviction will ta9e place if vendor has been notifiedGcan only happen if there is final 5udgment "rticle 022F. ?ee two remedies in "rticle 02EA. EQ: "/ EQ: "/ "ould a )ere tres(ass )aIe the re)edies in Arti#le 32;E and Arti#le 32:4 a((li#able$ %o. " mere trespass does not violate the warranty against eviction. "hat are the re&uisites in warrant a*ainst evi#tion$ 0. deprivation of the vendee 4. there is a final 5udgment 6. prior right in5ured must be imputable to vendor 1. ,ote/ "rticle 0226 on eviction colored with bad faith and "rticle 0277 on hidden defects and bad faith. #endor is not liable for patent defects on hidden defects, ta9e note if the vendee is an e=pert. "rticle 0274 implied warranty as to fitness. "rticle 027F two remedies a. rescind from the contract accion redhibitoria b. to reduce the price proportionately accion ,uanti minoris. "rticle 02FA no damages for 5udicial sales.

Bebruary 00, 4AA4 EQ: "/ EQ: "/ "hat is the (res#ri(tive (eriod of e5(ress warrant brea#h$ )nder "rticle 063E e=press warranty prescribes in 1 years ,ote/ Qtenancy relationship is %(& an encumbrance but a relationship "hat are the obli*ations of vendee$

,otes/ "rticle 0231 on reasonable opportunity to e=amine re vendee to e=amine the goods before acceptance. "rticle 02A4 this article confirms that it is acceptance that transfers ownership for sale on acceptanceGnot delivery but ,ualified by re,uest -"rt. 0231. EQ: "/ EQ: "hat if it is the *oods on sa)(le$ +el. "rticle 0246. "hen is a reasonable o((ortunit to e5a)ine$

0E

"/

%raAeda vs- 'AC

two months is already unreasonable.

,otes/ If the buyer accepts the goods, he can still sue on the implied and e=press warranties unless there was waiver. "rticle 0237 vs. "rticle 02F0 the buyer having 9nown of any defect but he did not inform the seller within a reasonable time even if the action has not yet prescribed. "rticle 02E2 those who are un5ustified in refusing to accept is liable. *A+ p( 2304 - "rticle 02E4 only applies to absolute sale. "rticle 02E4 and "rticle 02E0 even if there is automatic rescission, the courts may still entertain the issue of validity of rescission. Consi*nation in #ourt e=tinguishes an obligation but if it is an e=ercise of a right li9e a pacto de retro sale, the vendee if he tendered payment earlier than the redemption period, he may not consign it in court to be considered to have tendered within the time prescribed. EQ: 9istin*uish #onventional rede)(tion fro) le*al rede)(tionH"/ >onventional redemption is that which ta9es place when the vendor reserves the right to repurchase the thing sold with the obligation to reimburse to the vendee the price of the sale, the obligation to reimburse to the vendee the price of the sale, the e=penses of the contract, other legitimate payments made by reason of the sale, as well as necessary and useful e=penses made on the thing sold. 'egal redemption is the right to be subrogated upon the same terms and conditions stipulated in the contract, in the place of one who ac,uires a thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous title. OOO!Q: "/ 0. 4. 6. 1. 2. 7. "hen is #onventional subro*ation (resu)ed to be an e&uitable )ort*a*e$ price of sale with right of repurchase is unusually inade,uate vendor remains in possession as lessee or otherwise when upon e=piration of right of repurchase, e=tention is granted purchaser retains for himself a part of the purchase price; vendor binds himself to pay ta=es on the thing sold; any case where it can fairly inferred that real intention of parties is to secure obligation F. when there is doubt as whether of sale with right of repurchase or e,uitable mortgage.

OOOAQ: =n sale with ri*ht of re(ur#hase7 under what #ir#u)stan#es )a the ri*ht e5ist$ "/ It must be e=pressly stipulated in the contract. In the case of S vs- Court of A((eals it was ruled that if the contract of sale does not contain an e=press stipulation of the right of repurchase, it >"%%(& be e=ercised. &hus, if it is contained in a ?EP"+"&E document, it is merely a promise to sell that can be forgotten -"rt. 07A0.. But note of the two other conflicting rulings of the >ourt, in the first it said that even if the right of repurchase is contained in a separate document, it can be e=ercised as a matter of right* &he document of sale in this case was e=ecuted 5ust hours before the reservation on the right of repurchase in a separate document. It was made on the same day. &he ?> interpreted it

4A

to mean that the separate document formed part of the original contract, it was deemed a continuing act. But in the second case, where the reservation was done after a wee9, the >ourt said that it was an "B&E+&!()J&!. AQ: 'f ou e5er#ised the ri*ht of re(ur#hase7 how )u#h are ou *oin* to (a $ Su((ose the (ri#e before was P3 <illion7 but at the ti)e of re(ur#hase the value in#reased to P 34 <illion"/ Per "rticle 07A0 and "rticle 0707 the vendor a retro is re,uired to repurchase the land at P0 million only but other costs i.e., improvements and preservation costs -%(& I%>+E$E%&?. shall be added. AQ: Can the vendor a retro be re&uired to (a the #ost of )one $ "/ If there is %( stipulation then the vendor a retro cannot be re,uired to pay the cost of money. ?ee last par. of "rticle 07A0 as cited in the case of Solid .o)es7 'n#- vs- Court of A((ealsAQ: "/ "ithin what (eriod should the ri*ht to re(ur#hase be e5er#ised$ 1 years if no stipulated period. If period is stipulated, it cannot e=ceed 0A years. But note, it is the 6A D"8 PE+I(D &!"& I? >+)>I"' here.

AQ: "hat is the offi#eLfun#tion of the D4 da (eriod$ "/ If declared by the court that it is not really one of e,uitable mortgage but a sale with right of repurchase, the vendor a retro has still 6A D"8? from the date of 5udgment to repurchase the property. &hus, after the court in a declaratory relief case decided as to what is the nature of the contract that the parties really entered into, there is still 6A days to repurchase. - @ils n vs- =riasM 8da- 9e <a#o #ases) ,ut if the #ontra#t is #lear7 it #annot be inter(reted thru de#larator relief and after the 34- ear (eriod to re(ur#hase has ela(sed7 the #ase #annot be revived an )ore on the *uise of an a#tion for de#larator relief- Consolidation will ensue- (Arti#le 3F4C) AQ: "hat is the (ur(ose of *ivin* noti#e to the seller in #onsolidation under Arti#le 3F4C$ "/ 0. &o comply with due process 4. In order to allow proof that the contract is %(& -if not truly. one of sale but of e,uitable mortgage -so no consolidation can be made. - Cru? vsLe s) AQ: 'nstead of #onsolidatin*7 < la7 the bu er a retro who be#a)e the owner b la(se of ti)e7 sold it to Adrian7 but it was still under < laHs na)e- "hat is the re)ed of Adrian$ "/ Ouieting of title to remove the cloud under "rticle 1F7. &his action is necessarily an action to declare the title of $yla void and for the reconveyance of the property. !Q: "/ "hat are the different instan#es of le*al rede)(tion re#o*ni?ed b law$ 0. redemption by other co@owners in proportion to their share 4. by co@heirs on sale of co@heir to stranger 6. redemption of ad5oining rural land area not e=ceeding one hectare 1. redemption of ad5oining urban land which is small in area without practical purpose and bought for speculation and resold to a third person.

40

2. redemption by a debtor should the credit or other incorporeal right in litigation be sold by the creditor to a third person. - +ote in ; and 27 it s(eaIs of sale- be#ause if donated7 rede)(tion is not a((li#able) 7. redemption of homestead patent alienated to third persons, period 2 years F. one@year redemption period under +ule 6E, real property sold on e=ecution 3. redemption by owner of proper sold on delin,uency ta= sale E. redemption by mortgagor within one year under +ule 73. EQ: Ernani sold to Sa)uel a (ar#el of land- E5e#uted a do#u)ent in the )ornin*- 'n the afternoon7 the e5e#uted another do#u)ent that the seller )a redee) the (ro(ert within the (eriod of 2 ears- 's this a (a#to de retro sale$ or one with an o(tion to (ur#hase$ "/ p. 2AF "lbano ?ee. >laraval vs. >" :on the same day vs. 7 days after; EQ: "hen is a deed of sale7 even if deno)inated as (a#to de retro but still #onsidered as e&uitable )ort*a*e$ "/ ?ee. "bove. "rticle 07A4. EQ: "/ 9istin*uish real estate )ort*a*e fro) e&uitable )ort*a*e%ote/ &hat in "rticle 07A4, one of the circumstances is enough. *A+ p( 0604 *A+ p( 023 EQ: "/ EQ: "/ 9istin*uish (a#to de retro fro) o(tion to (ur#hase

9istin*uish o(tion to bu fro) ri*ht of re(ur#haseIf it is in a separate instrument, it is an option to buy. %otes/ In real pacto de retro sale the period to repurchase is that of the contractGif none, four years, but if the period is e=pressly agreed by them but not statedG0A years. "rticle 07A7 -"rticle 07A4. 6A days from the time the court ruledCdecided the e,uitable mortgage case is a G-K. EQ: "/ EQ: "/ "hat does the vendor has to do before the land is *iven ba#I to hi)$ 0. &ender of payment 4. "hat are the ri*hts of vendee a retro$ "rticle 07AF . 0. +ight of consolidation not automatic 4. &here has to be compensation -if buys bac9 property. +elate "rticle 0707 with "rticle 0A33.

EQ: "hen is the (eriod of rede)(tion$ "/ 6A days of written notice from the time of saleGmere oral or constructive 9nowledge is not enough. +ural land vs. urban land

44

6A days Gless than 0 hectareGsee "rticle 0740. EQ: "/ .ow do ou deter)ine urban or rural$ It is in the nature of the land, it is not the location but the purpose of the land. +ural land right of redemption )rban land right of redemption or pre@emption >o@ownership right of redemption *A+ p( 00/4 *A+ p( 0-2 and *A+ p( 623 <ention other laws on rede)(tion other than the Civil CodePublic land law; sale of land for failure to pay ta= due &a= >ode 9istin*uish e&uit of rede)(tion fro) ri*ht of rede)(tion

EQ: "/ EQ: "/

%ote/ notice of sale to co@owners must be in writing, and 9nowledge of the sale does not estop the co@owners from redeeming. EQ: .ow about if the (erson7 is the broIer7 does the D4 da (eriod run7 if he is not *iven an noti#e$ "/ 8es, because he has actual 9nowledge. AQ: <eria)7 Naren !o and Renee are #o-owners of real (ro(ert - <eria) sold her undivided share to 6ristan- "ho #an e5er#ise the ri*ht of rede)(tion and to what e5tent$ "/ +enee and Naren Hoy to the e=tent of their proportionate share respectively only. AQ: Su((ose Renee subse&uentl sold her share to Su*ar7 who #an e5er#ise the ri*ht of rede)(tion$ "/ (nly Naren Hoy. $eriam cannot anymore. %either can &ristan redeem. If &ristan bought the undivided share of $eriam, he is no longer a co@owner but a P"+& (<%E+. &ristan can only demand P"+&I&I(% %(& +EDE$P&I(% being %(& a co@owner. - see S(s- Abalos) (dili )erisa ha* hehehe+ AQ: "ithin what (eriod should the ri*ht of rede)(tion be e5er#ised$ "/ <ithin 6A days from the time of written notice -"rt. 0746., but see - 9istrito vs- Court of A((eals) where the 6A day period was not applied, because the very co@owners were made the agent of the other co@owner. %ote in this case, the co@owners defense that they still have the right to redeem because they were not notified by the seller was not recogniDed, because they were the agents of the seller@co@owner, they were supposed to 9now. AQ: "/ AQ: "ho should *ive the written noti#e$ &he seller shall give notice to the other co@owners. Can that noti#e #o)e fro) a third (erson$

46

"/ It is always necessary that the notice should come from the seller. But in these cases of Alonso vs- CA and @ran#is#o vs- ,o ser7 the notice came from the buyerCthird party. AQ: 'f there was no noti#e7 but there was a suit7 at what ti)e should the D4-da (eriod be re#Ioned$ "/ "t the time the summons were served. AQ: "/ "hat is the for) of the noti#e$ "ny form. %ote/ It is not important that the debtor will agree to it, the only re,uirement is to notify the debtor, for him to 9now where to pay. LEASE (Article /3.-4 Article 00-) OOOAQ: Can ou assi*n the lease without the #onsent of the lessor$ "/ %o. Because it parta9es of a s#b9ecti"e no"ation under "rticle 04E0. >onsent of the lessor is a $)?&. " new contract of lease is created, thus a novation e=ist. %ote/ :<hat really perfects the contract is the concurrence of the 6 essential elements consent, cause and ob5ect.; OOOAQ: 6he lessee assi*ned the lease to another without the #onsent of the lessor- +ow7 #an the assi*nee avail of the (rovision in the #ontra#t on the R'%.6 =@ @'RS6 RE@USAL$ "/ %(* Because the assignment is a sub5ective novation re,uiring the lessors consent. %(&E -"rticle 0720@0724 "ccion Directa.. %ote also that a sublessee does not have a better right than what the lessee had. &hus, the sublessee cannot devote the property sub5ect to lease other than its intended purpose. -"rticle 071E, and "rticle 072A. AQ: "hat are the duties of a lessor$ "/ &o deliver the thing leased and to pay for the cost of repair. Duty to deliver the thing to be leased in tenantable condition. &o ma9e the lessee in peaceful possession. AQ: 's a lease #ontra#t a real #ontra#t sin#e it re&uires deliver of the thin* to be leased$ "/ %o, it is still a consensual contract, because the purpose is for lessee to use not for perfection of the contract. AQ: "/ AQ: "/ Can the lessor be #har*ed for for#ible entr if he entered the (re)ises b for#e$ 8es under "rticle 0721. "hat are the duties of the lessee$

AQ: 'sa*ani and 8i#toriano entered into a #ontra#t of lease over a 3444 s&- )- lot and the buildin* thereat- 8i#toriano will use the leased (re)ises as a warehouse- 'f the buildin* was burned is the lease #ontra#t e5tin*uished$

41

"/ It depends. If the building was burned only partially so that the building can still be used for which the building was leased then the lease contract is not e=tinguished, rather leasehold rental may be reduced accordingly upon application of the principle of solutio indebiti. (n the other hand, if the warehouse is totally destroyed, then the lease is e=tinguished assuming that the premises can no longer be used as intended in the lease contract. But if the land can still be used for the purpose of the lease -stoc9 yard for container vans. then the lease contract is not e=tinguished, it will only result to reduction of lease rental payments. AQ: Pendin* the #ase between the lessor and the lessee7 the latter did not (a the rentals for no reason other than the (enden# of the #ase- <a the #ourt order the lesseeHs eAe#t)ent$ "/ 8es. &he court may suspend the rules and e5ect the lessee. - Army and ,a"y cl#b case4 <anila ,a #ase) AQ: "/ "hat are the *rounds for eAe#t)ent$

AQ: 6he lessor and the lessee a*reed the #ontra#t of lease shall e5(ire at the end of 2 ears7 but what is the effe#t if the lessee shall still (ossess for 32 da s or )ore after the lease e5(ired without (rior de)and$ "/ )nder "rticle 07FA, there is implied renewal of the lease contract 9nown as ta#ita re#ondu##ionAQ: "/ "hat are the funda)ental re&uisites of ta#ita re#ondu##ion$ &here must be no prior demand to vacate or notice of termination &he lessee shall have continued possession for 02 days or more after the lease e=pired. &he contract of lease has e=pired.

AQ: 'f there was noti#e to in#rease lease rentals7 is there de)and$ "/ In the case of Arevalo and %o)e? vs- CA a demand to increase the rental is a demand to vacate the premises if demand to increase was not accepted. &acita reconduccion is not applicable. AQ: "hat (rovisions in the #ontra#t are i)(liedl renewed$ "/ &he provisions that are impliedly renewed are those that are JE+$"%E to possession. &he right to buy in the contract of lease is %(& germane to possession, thus it is %(& impliedly renewed. -Con#hita 8da- 9e Chua vs- CA) OOOAQ: <a a lessee be a builder in *ood faith$ "/ )nder "rticle 07F3 and "rticle 113, the lessee can %E#E+ be a builder in good faith. &he good faith in "rticle 07F3 is DIBBE+E%& from the good faith in "rticle 113. In "rticle 113, the good faith there entitles the possessor to better rights li9e +E&E%&I(% and 0AAI >($PE%?"&I(% at the time of payment. -Pe#son vs- CA) <hereas in "rticle 07F3 if the lessee improves the property in good faith, he shall be entitled to compensation for #se!#l impro"ements to the e=tent of only 2AI of the value of the improvement. &he reason behind is for him %(& to I$P+(#E ()& the lessor. " lessee

42

though in good faith is %(& entitled to +E&E%&I(%. If it was for ornamental impro"ements$ the lessor is not re,uired to pay. AQ: "hat if the lessor does not want to (a the 24J #o)(ensation$ "hat is the re)ed of the lessee$ "/ If it involves useful improvements, then the lessee can remove the property even if it will destroy the principal thing leased i.e., removal of building destroying the land. But if it was only ornamental improvements, then it can (%'8 be removed if it will not destroy the thing leased. -Ra#asa vs- Susana Realt Cor(-) AQ: 'n a #ontra#t of lease with the ri*ht to (ur#hase at a future ti)e is entered b A and ,6here was an i)(rove)ent introdu#ed b ,7 the lessee7 i-e-7 a house- ,ut the lessor did not sell the land to the ,- 6he lessee said that there )ust be 344J #o)(ensation7 he bein* in *ood faith- 's the #ontention #orre#t$ "/ &he e=pectancy for the land to be sold the future time is %(& a basis for being a builder in good faith. &he lessee remains as one who cannot be a builder in good faith. (,enite? #ase) P'E"?E D( %(& )?E "+&I>'E 11E IB &!E+E I? " 'E"?E >(%&+">&. AQ: 'n ta#ita re#ondu##ion7 does it )ean that the whole lease #ontra#t be renewed7 sa 24 ears$ "/ &he period cannot be renewed. It is dependent on the manner of payment, say 8E"+ &( 8E"+, $(%&! &( $(%&!, <EEN &( <EEN. '("% EQ: "/ 9istin*uish #o))odatu) fro) )utuu)In mutuum, the lender may not demand paymentCreturn before the time it is due. In case of loss, in commodatum -fortuitous event. the loss is borne by bailor. In mutuum, the death of creditor does not e=tinguish the loan. In commodatum, death e=tinguishes the contract as it is personal. Both contracts re,uire delivery of the thing loan for perfection real contracts

EQ: 9istin*uish #o))odatu) fro) usufru#t"/ &he purpose are the same )?E, but in commodatum, you cannot use the fruits* <hich in usufruct the fruit may be en5oyed by the usufructuary. Essentially, commodatum is gratuitous. In usufruct perfection is consensual while in commodatum it is real. *A+ p( 02 EQ: "/ Can there be a #o))odatu) on a real estate$ 8es. But in mutuum only movables. In usufruct, both for movable and immovables.

EQ: <i#hael (ro)ised that he would lend %ina P2447444-447 but it was not delivered- Can %ina #o)(el <i#hael to deliver the )one $ @or s(e#ifi# (erfor)an#e$ "/ " contract of loan is not covered under the statute of frauds, but the perfection is real. &hus, no.

47

EQ: "/ EQ: "/ AQ: "/

Contra#t of loan vs- #ontra#t to loan >ontract of loan is a real contract >ontract to loan is a consensual contract. 9istin*uish #o))odatu) fro) lease "hen is the defense of fortuitous event not (ro(er$ -"rticles 0E14, 00FA, 007E and 00F1. a. incur in delay b. contravene the tenor of the obligation c. fraud in the performance of the obligation d. general principle

EQ: Pado)s is an owner of a #attle ran#h- Pado)s went to the ,ureau of A*ri#ulture to borrow a bull- 6he ,A asIed Pado)s to (a a fi5ed a)ount for a (eriod of one ear- After one ear7 Pado)s did not deliver ba#I the bull- "hen the +PA atta#Ied the ran#h all #ows were Iilled (in#ludin* the bull)- "as it a lease or a #o))odatu)$ "/ If the fee was for the use, then the agreement was a lease; but if the fee was minimal, for processing, then it was a commodatum. EQ: "/ 's Pado)s liable for da)a*es7 des(ite the fortuitous event$ 8es, because he delayed the return of the bull.

EQ: Sherwin borrowed the Aee(ne of !ason for (ur(oses of brin*in* his wife to the hos(ital- =n his wa ho)e7 he a##e(ted (assen*ers for a fee7 while on his wa 7 <t- 6alinis eru(ted7 wre#Iin* the Aee(- 's Sherwin liable$ "/ 8es, because he used the 5eepney under commodatum for a different purpose. -see "rticle 0E66. %ote/ In commodatum, the bailor may demand the return of the thing whenever he needs the thing loaned. -"rticle 0E17. EQ: "/ 's it essential that the bailor be the owner of the thin*$ %o, he may be a lessee -"rticle 0E63. %ote/ "rticle 0E67 consumable goods are susceptible to commodatum. >onsumable goods cannot be sub5ect to lease or commodatum unless it is only for display. "rticle 271 usufruct EQ: "/ EQ: "/ "ho will (a for ordinar re(air e5(enses$ In lease, lessor; in commodatum bailee. "hen #an a borrower retain a thin* as a*ainst the owner$ %ote/ "rticle 0E1E "rticle 0E20 on e=traordinary right of retention is specific.

4F

"rticle 0E14 on fortuitous event general rule, the bailee is not liable. &he bailee holds in trust for the bailor the property loaned, so that the prescription will not lie, unless there is an e=press waiver. AQ: "/ EQ: "/ EQ: "/ EQ: "/ "hat is (re#ariu)$ )nder "rticle 0E1F where the possession of the lessee is merely tolerated by the lessor. 9istin*uish #o))odatu) fro) (re#ariu)%ote/ "rticle 0E13 relation to "rticle F72. 9istin*uish )utuu) fro) barter9istin*uish barter fro) #o))odatu) e=ception as to the rule that interest shall not accrue if not

%ote/ "rticle 023E e=pressly written -par. 7.

EQ: Louel borrowed fro) %ra#e ,anI of Norea P3447444-44- Later7 LouelHs friend7 'odine borrowed )one fro) the sa)e banI- Louel (led*ed shares for 'odineHs debt- "hen debt of Louel was due and de)andable7 Louel offered (a )ent but %ra#e ,anI did not a*ree as he )ust also (a to*ether 'odineHs loan- Louel did not #onsi*n the a)ount to the #ourt- 's Louel liable for interest$ "/ ?ince 'ouel, although not in delay, did not consign the money, he is still liable for the interest on the use of the money, but not for damages due to delay. Bebruary 03, 4AA4 EQ: "/ "hen does the 31J interest arise$ ?ince this is a li,uidated damage, then from the time of demand.

EQ: .ow about the FJ interest$ "/ "s a general rule, it commences to run from the time of 5udgment since it depends upon the discretion of the 5udge. But from the time the 5udgment becomes final and e=ecutory, 04I commences to run. -?ee p. 703 "lbano. In case of obligation arising from contract of sale, the interest is 7I not 04I. In interest for forbearance of money and debt loan, the rate of interest is 04I. But the first to loo9 for is the stipulated interest* EQ: Queenie is a law er who was asIed to a((ear a #ase in Cebu for 2 da s- Cash advan#e of P 247444 was )ade- She left the law fir) without li&uidatin*- Can she be #har*ed for estafa$ "/ p. 70FC700 "lbano. &his is not a case of estafa, because the amount given is not held in trust, this is one of loan.

43

AQ: "hat is the nature of a #ash advan#e$ "/ It is a form of a loan. &herefore, the one ma9ing the cash advance cannot be charged of estafa, because he is the owner thereof. AQ: "hat is the effe#t of es#alation #lause$ 's it valid without a #orres(ondin* dees#alation #lause$ "/ In the case of ,an#o @ili(ino vs- +avarro in order that the escalation clause to be valid, it must have to be coupled with a de@escalation clause otherwise it will result to the hemorrhage of the assets of the debtor. EQ: ,eethoven *ave Ra)on P374447444 tellin* Ra)on to invest then return after 2 ears's this a loan$ "/ 8es. OOOAQ: "hat are the rulin*s of the SC in the #ases of Lib Lao vs- =l )(i# Saw)ills (3:EE)M <edel vs- Court of A((eals (3::C) and Solanon vs- Sala?ar (3:::) "/ In Lib Lao vs- =l )(i# Saw)ills, it was ruled that pursuant to >ircular %o. EA2 issued by the >entral Ban9 the )sury 'aw is no longer in full force and effect. But note in <edel vs- CA, the >ourt ruled that the rate of 77I per annum is although not contrary to law, is #ontrar to )orals. ?ame ruling was availed in Solanon vs- Sala?ar where the F4I per annum interest on loanCdebt was held to be i))oralPer "lbano, citing 'nvestorHs @inan#e Cor(oration case the 77I or F4I as the case may be, shall be recoverable in B)'' without reduction of the 04I legal rate. &his is because the interest agreed upon is void, as if no interest was agreed at all. AQ: 'f it is not forbearan#e of )one 7 but for award of da)a*es7 what is the rate$ "/ 7I but after the 5udgment become final and e=ecutory, it shall be 04I. &he 5udgment is transformed into a liability. ?ee cases A% B P of <anilaM Eastern Shi((in*M RC,CDeposit EQ: %ina delivered to Anne *old S(anish #oins7 for safe Iee(in*- Later on Anne sold the #oins- Can %ina sue Anne for estafa$ "/ 8es. Based on trust. EQ: Su((osin* Aewelr was *iven to an a*ent who sold the sa)e but did not re)it- Could there be estafa$ "/ 8es, because there was no intent to transfer 5ewelry ownership. EQ: 's a loan a real #ontra#t$ 9e(osit$ "/ 8es, loan is a real contract. If there is no delivery of money then no perfection of contract. Deposit is also a real contract. It cannot apply to immovables. EQ: "/ 9istin*uish de(osit fro) )utuu)- @ro) #o))odatu)-

4E

%ote/ In commodatum the bailee can use the thing, but in deposit, without e=press permission, use is not allowed. Deposit is not covered by the statute of frauds. In both deposit and commodatum, there is no ac,uisition of ownership. &hese contracts are essentially gratuitous, unless it is the business of the depositary. EQ: "/ 's it ne#essar that the de(ositar be the owner of the (ro(ert $ &he depositary need not be the owner of the property. ,ote/ If the ob5ect of deposit is lost due to fortuitous event, the depositary is not liable for the loss e=cept in the cases provided for under "rticle 0F7E. If there is delay, the depositary is liable, because in order for a fortuitous event to e=empt another from the obligation, it must be the only and pro=imate cause. AQ: "hat is an irre*ular de(osit$ "/ &he deposit in a ban9 is an irregular deposit. Because when the money is deposited to the ban9, the money shall not only be 9ept, but it shall be usedClent. $oreover, unli9e in deposit, it shall earn interest. AQ: "/ AQ: "/ "hat is the relationshi( between the hotel inn Iee(er and the *uest$

"hen is there for#e )aAeure$ (F ti)es asIed in the ,ar) see the case of 9e %u?)an vs- CAM "rticles 0EE3, 4AA1, 0F21. ,otes/ &he placing of security guard in public conveyances is not a usual practice, thus the hi5ac9ing of the F2A cartons of liberty mil9 is a force ma5eure that will e=empt the proprietor of the truc9ing services from liability. &he liability of hand carried items of the passengers -which are not placed in the conveyanceCcontainer. is not a responsibility of the carrier. EQ: "hat is voluntar de(osit$ "/ It is made by the will of the depositors. &wo persons claiming ownership on a thing and the property is placed in the custody of a third person. EQ: "hat if the de(ositar sold the thin* de(osited7 )a the de(ositor re#over$ "/ <hen depositary sold the thing deposited, if the proceeds is still with the depositary, the depositor shall recover the proceeds; if none are left then only as to the e=tent of what has benefited the depositary. &he depositor cannot recover the thing sold if the buyer acted in good faith. ,ote/ "rticle 0EF7 @ &he depositary may commingle grain. "rticle 0EF6 a depositary cannot deposit the thing to another person, if he allows it he is liable for damages if the third person acted carelessly. EQ: 's rent of safet de(osit bo5es de(osit or lease of thin*$ "/ It is a contract of lease of thing. But see Albano (- F14 saying that it is a special 9ind of contract since the primary function is still safe9eeping of things.

6A

Per estolloso, the controlling factor is :control.; ?o the ,uestion, does the ban9 have controlK Cases of Sia vs- Court of A((eals 2LD3L:D and PPPPPvs- CA DL4DL:D ((- F14 Albano) *A+ p( 2-04 "rticle 0EEA and 0EFF :intent of safe9eeping; must be analyDed in this premise ..as primaryG use must only be incidental. "rticle 0E33 vs. "rticle 0E31 AQ: "hat is the nature of the #ontra#t in safet de(osit bo5es$ "/ It is a special form of deposit %(& a lease on safety deposit bo=es. (S(s- <oran vsCourt of A((eals) EQ: Su((osin* the hotel (osted so)e noti#es that Aewelries should not be left at the roo) but in the safet de(osit bo5es- And Aewelr was lost- 's the hotel liable$ "/ "rticle 4AAA. &o ma9e the hotel liable, the conditions that the valuable was declared and following of precautions must be met. "rticle 4AA4 relative to a stranger brought by the guest to the hotel. "rticle 4AA1 basis Ga person who removes his baggage is liable for estafa. Pledge and $ortgages EQ: "/ 'n (led*e7 #an the (led*ee re#over defi#ien# $ %o. "rticle 4002

EQ: 9istin*uish (led*e fro) #hattel )ort*a*e"/ In pledge, there is no recovery; possession is transferred; it is a real contract. <hereas in chattel mortgage, there can be recovery of deficiency; the mortgagor retains the property sub5ect to chattel mortgage; the contract is consensual. In pledge, even if not registered, it is binding to third persons, although it is re,uired to be in writing. <hereas in chattel mortgage, it must be registered. But remember that both the contract of pledge and chattel mortgage are binding upon the P"+&IE? even if not registered. In pledge, consent is first secured from the pledgee in case the pledgor sells the property. <hereas in mortgage, the stipulation that the mortgagor is prohibited to sell the property mortgaged is #(ID. EQ: "hat other #ontra#ts )a (led*e and )ort*a*e se#ure$ (Arti#le 1421) "/ Pledge and mortgage are also made to secure voidable #ontra#tsM unenfor#eable #ontra#ts and natural obli*ationsEQ: 's (a#tu) #o))issoriu) available in sales transa#tions$ "/ %o. it is not applicable in sales. &he property must be sub5ect to mortgage first, before the prohibition on pactum commissorium could be applied. ,ote/ the cases of +aI(ilM U and <aria 6iu are relevant. In <aria 6iu, the >ourt ruled that the prohibition on pactum commissorium is put in place in order for the creditor not to overreach the debtor.

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'n U 7 there is no pactum commissorium because )y e=ecuted a deed of assignment, after he failed to pay. &here was therefore, no automatic transfer or appropriation of the propertyGif there was an act done by him. Per "lbano, under "rticle 4004, there shall be no automatic appropriation in a contract of pledge unless the procedure under this article is followed. Per Estolloso, under "rticle 4004, it is an e=ception to the pactum commissorium rule, provided that there has to be at least two auctions made. ,AR (- 14 EQ: Can future (ro(ert be (led*e$ "/ %o. Buture property cannot be pledged. But it should be ,ualified in a sense that if they are placed on the land, they shall be allowed to be pledged. ,AR (- 1D2,AR (- ;F; ,AR (- E: ,AR (- 3;3 ,AR (- 2:: EQ: "/ EQ: "/ Can there be a #onstru#tive (led*e$ 8es. &here can be a constructive pledge. "hen is there a le*al (led*e$ "rticle 4040. If the pledge is by operation of law, e=cess may be delivered or returned . ,AR (- FF ,AR (- 224 ,AR (- D4E ,AR (- DF; ,AR (- 3DF ,AR (- 112 ,AR (- 1D3 ,AR (- DD1 , ,AR (- 3;F 9istin*uish (led*e fro) anti#hresis,AR (- 1D; "hat is the effe#t of sale of the (ro(ert on the )ort*a*eL(led*ed$ Even if sold for more or less, it e=tinguishes the debt. -Articles 20-. and 2//6)

EQ: "/ AQ: "/

AQ: %ive the rules on re#over of defi#ien# "/ 'f sold for )ore there shall be total e=tinguishments, the creditor is not obligated to deliver bac9 the e=cess, e=cept when e=pressly provided in the contract. )nder the provision it states :unless otherwise providedG; 'f sold for less the creditor is not entitled to deficiency, even if the contract provides to the effect. &he law states that :notwithstanding stipulations to the contrary;

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,ote/ &he provisions of the law on pledges are applicable to the law on mortgages in so far as they are not inconsistent with each other. &hus, in mortgage, the deficiency can be recovered if the property sold is for less than the debt owed. Juaranty and ?urety EQ: "ho is a *uarantor$ Suret $ "/ Juarantor guarantees the solvency of the debtor, whereas the surety guarantees the debt itself. EQ: "/ 's *uarant #overed under the statute of frauds$ 8es, under "rticle 01A6. Juaranty is an accessory contract, thus it can only stand with a principal obligation. But it can secure voidable, natural obligations and unenforceable contracts. Juaranty and surety cannot be applied retrospectively and prospectively. But please note of provision that guarantee cover future debts*** =( 322 "lbano on continuing guarantee p( 302( "rticle 4A21 vs. "rticle 4A77. )nder "rticle 4A22, guarantee is not presumed. EQ: Suret will not be liable u(on )aturit of the debt- 's this a valid (rovision in the #ontra#t$ "/ &his is an unreasonable stipulation. EQ: "/ 's suret #overed under Statute of @rauds$ 8es, because it is a collateral underta9ing under "rticle 01A6. %ote/ :not receiving something; is not a defense. ?olidary obligations must also be in writing e=presslyGbut not on the basis of statute of frauds. &he fact that the surety is sued separately does not preclude him from raising of defenses against the principal debt. EQ: "/ "hat are the si)ilarities and differen#es between suret and solidarit of obli*ations$ "s to recovery and as to principal and accessory -difference.

EQ: "hat is the benefit of e5#ussion$ H"/ &he benefit of e=cussion in favor of the guarantor refers to the right by which such guarantor cannot be compelled to pay the creditor unless the latter has e=hausted all the property of the principal debtor, and has resorted to all of the legal remedies against such debtor. AQ: "/ "hat are the e5#e(tions to the benefit of e5#ussion$ "rticle 4A2E 0. %ot agreed to be solidarily liable 4. %ot wordings of guaranty but of suretyship 6. <aiver 1. <hen benefit of e=cussion is useless 2. Insolvency of the principal debtor

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7. EQ: "/

<hen the debtor left the country pre5udicing creditors

"hen will the benefit of e5#ussion not taIe (la#e$ "rticle 4A2E

AQ: "hat should the #reditor do$ "/ &he creditor must seiDe the guarantors property thru attachment. &he failure to seiDe the property thru attachment will result in the following/ 0. In the subse,uent sale thereof, if the value of the property is higher, the guarantor is not liable if the property is sold prior to e=ecution. E.g., debt is P0A $ and property is valued at P4A $. But if the property has a lower value than the debt secured, the guarantor is liable for the difference. E.g., debt is P4A $, and property sold prior to e=ecution is P0A $. ?o the guarantor is liable for the balance of P0A $. Arti#le 14F3EQ: "hat are the re)edies of a *uarantor aside fro) the benefit of e5#ussion$ "/ +elease from creditor and to demand another security from the debtor under the so@called indemnity agreement. -"rticle 4AF0. EQ: "/ 's it available to all *uarantors$ %ot applicable to surety, and to legal and 5udicial bondman -"rticle 4A31.

EQ: 9ebtor is insolvent but has (ro(ert in the USA- 6he #reditors used the *uarantor7 the latter #ould not (oint out an (ro(ert - 's the *uarantor liable$ "/ "rticle 4A7AGthe re,uirement is only to point to property in the Philippines. &hus, guarantor is liable. )nder "rticle 4A7A, it does not include mortgaged property. *A+ p( 36( EQ: "/ 's it re&uired that the )ort*a*or be the owner of the (ro(ert $ ,e debtor hi)self$ %o. !e shall be 9nown as an accommodation mortgagor.

AQ: "ho is an a##o))odation )ort*a*or$ "/ (nly a third party to the debt but secures the debt to the e=tent of the value of the property mortgaged. AQ: "hat is the e5tent of liabilit of an a##o))odation )ort*a*or as a*ainst the *uarantor or suret $ "/ &he liability of the accommodation mortgagor is limited to the property mortgaged because unli9e in guaranty, his liability is %(& personal. AQ: "/ AQ: "/ Can there be a #ontinuin* *uarant or suret $ 8es.

Can there be a #ontinuin* a##o))odation )ort*a*or$ 8es, save in cases of chattel mortgage. China ,anIin* Cor(- #ase and AC<E Rubber Shoes #ase it was ruled that there can be a real estate mortgage to secure future obligations provided that the amount is specified.

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!owever, there can be %( chattel mortgage securing future debts, because of the a!!ida"it o! ood !aith which connotes that the chattel mortgage is e=ecuted for a particular loan. EQ: "/ 9oes the (ower to )ort*a*e in#lude the (ower to sell$ %o.

EQ: 9oes the s(e#ial (ower to sell in#lude the (ower to obtain a loan and )ort*a*e the (ro(ert $ "/ %o. EQ: "hat if the a)ount owed has (res#ribed7 but still the *uarantor se#ured it7 #an it be enfor#ed$ "/ 8es, it can be enforced, because the guaranty can secure or stand up for natural obligations. &he lease of a sidewal9, which is government property is void, hence cannot be sub5ect to suretyship. &he surety can use the defense of the debtor i.e., minor, to the e=tent of his benefitsG because if the surety pays the creditor, he would be stepping into the shoes of the creditor.. -"rticle 4A21; "rticle 4A30. EQ: "hat if the debtor did not have Inowled*e or #onsent on the (resen#e of the *uarantor- "hat is the ri*ht of the *uarantor$ "/ ?ubrogation is only with respect to unpaid amount benefiting the debtor -"rticle 0467C046F. EQ: Re)ed of *uarantor"/ "rticle 4A77 which applies after payment; payment and "rticle 4A23. EQ: "/ EQ: "/ "rticle 4AF0 which applies before

's the a*ree)ent to e5tend the ti)e of (a )ent release the *uarantor$ 8es under "rticle 4AFE. .ow about when the #reditor did not de)and$ 's the *uarantor released$ %o. But he could as9 under "rticle 4AF0-1. to be released.

EQ: "hen )a the *uarantor be also released$ "/ <hen by the act of the creditor the guarantor could no longer be subrogated to the creditor. ,ote/ &he guarantor cannot use the minority of the debtor to annul the debt contract, because the remedy of annulment is personal to the minor. Law on A*en# AQ: "hat is a*en# $

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H"/ 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. -"rticle 0373. AQ: 'n what for)s )a a*en# e5ist$ "/ (ral, writing or implied. But under "rticle 03F1, the employment of an agent to sell a real property, it must be in a specific form, that is in writing. In ,arreto vs- 6uason it was ruled that it is not necessary that it be participated by a notary public. It is enough that it be in writing. AQ: Can a s(e#ial (ower of attorne to sell be #ontained in a letter #o)in* fro) abroad$ "/ 8es, in ,arreto vs- 6uason, it was ruled that the e=ecution of the instrument before the notary public is only for purposes of convenience and facility %(& for validity. )nder "rticle 0627, a contract is valid in whatever form without pre5udice to the ?tatute of Brauds. But if the contract is specifically re,uired to be in a form for purposes of its #"'IDI&8 then the same re,uirement is "B?(')&E and $"%D"&(+8. AQ: "hen is the a*ent be entitled to #o))ission$ "/ In order that the agent be entitled to commission, he must be authoriDed by the principal "rticle 03F2. AQ: 9oes the #ontra#t of a*en# to sell in#lude the authorit to )ort*a*e or vi#e-versa$ "/ %o. $oreover, the contract of agency to sell does not carry with it the authority to sell in installment. But the authority to sell in installment carries with it the authority to sell for cash. AQ: "/ "hat are the E )aAor (rovisions on #ontra#t of a*en# in the Civil Code$ &hese are/ Article /2/. %o one may contract in the name of another without being authoriDed by the latter, or unless he has by law or right to represent him. " contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, e=pressly or impliedly, by the person on whose behalf it has been e=ecuted, before it is revo9ed by the other contracting party. Article /002$ par( /( 7 &he following contracts are unenforceable, unless they are ratified/ 0. &hose entered into the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers; Article /--/ 7 &he agent must act within the scope of his authority. !e may do such acts as may be conducive to the accomplishment of the purpose of the agency. Article /--2 7 &he limits of the agents authority shall not be considered e=ceeded should it have been performed in a manner more advantageous to the principal than that specified by him. Article /--2 If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal.

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In such case, the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, e=cept when the contract involves things belonging to the principal. &he provisions of this article shall be understood to be without pre5udiced to the actions between the principal and agent. 'n +@A #ase the person contracted by %B" to ship its rice acted for an undisclosed principal. %ow, %B" refused to pay. &he ?> ruled that %B" should pay because the person to whom %B" contracted used the vessel of the principal. Article /-1- 7 If the agent contracts in the name of the principal, e=ceeding the scope of his authority, and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if he undertoo9 to secure the principals ratification. Article /1/0 7 &he principal must comply with all the obligations which the agent may have contracted within the scope of his authority. "s for any obligation wherein the agent has e=ceeded his power, the principal is not bound e=cept when he ratifies it e=pressly or tacitly. Article /1// 7 Even when the agent has e=ceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he has full powers. AQ: "hat if the third (erson Inew of the li)its of the a*entHs authorit 7 #an he #lai) da)a*es fro) the a*ent in #ase of brea#h$ "/ &he third person does not have the right to hold the agent for damages. But if the agent promised to secure the principals approval or ratification, the agent shall be liable for any damages to that third person pursuant to "rticle 03E3. -Cervantes vs- CA) Cases: Cara) vs- Laureta since the agent was in bad %aith* then the principal is also in bad %aith. Thus in double sale* where the agent sold the propert& to A and the principal to sold it to B* the one who registered who was the one dealt with b& agent has the better right. 6ravel "ide S(e#ialist vs- CA &he principal cannot point his fingers to the agent. "cts of the agent binds the principal. AQ: "hen the a*en# was established throu*h a news(a(er advertise)ent7 how )a it be revoIed$ "hat is the effe#t of a (ersonal revo#ation b the (rin#i(al on the transa#tions entered into b the a*ent subse&uent thereto$ Shall it bind inno#ent third (arties$ "/ 8es. (n innocent third parties, the transaction is effectual and binding on the principal because the revocation was not in the form the way the agency was constituted. AQ: "/ "hat are the for)s of e5tin*uishin* a*en# $ ED<"+D E E=piration > Dissolution ? <ithdrawal A "ccomplishment + +evocation Gsee "rt. 0E4F and "rticle 03AA > Death

6F

,ote/ If the agency is a means of fulfilling an obligation, even if revocation is with legal ground, the revocation prior to the fulfillment of the agency, does not end up the contract agency. OOOAQ: "hat is an a*en# #ou(led with an interest$ "/ ?ee 8alen?uela vs- Court of A((eals- )nder this contract, even if there is death, the agency is %(& e=tinguished. See !urado (- :E2>ontract of Partnership AQ: "hat is the #ontra#t of (artnershi($ "/ By the contract of partnership, two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing profits among themselves. &wo or more persons may also form a partnership for the e=ercise of a profession. AQ: Su((ose it was onl #redit fro) the start but there was a*ree)ent to divide (rofits a)on* the)selves7 is there a #ontra#t of (artnershi($ "/ In Li) vs- Phil- @ishin* %ear Cor(-7 it was ruled that there e=isted a contract of partnership, because the most important test is the intention to divide the profits. %ote, however, that even if there is division of profits, it is only a presumption of e=istence of partnership, B)& it can be rebutted. ?ay, payment of compensation based on the profit derivedGi.e., 42I of the profits. (Article /.31.. OOOAQ: A has a business but he borrowed fro) ,- A shall (a , based on (rofits- 's there a #ontra#t of (artnershi($ "/ )nder "rticle 0F7E, partnership is presumed to e=ist, but it does not mean that it cannot be rebutted. &herefore, it was said to be a case of a loan. AQ: "/ AQ: "/ "hat are the basi# #hara#teristi#s of a (artnershi($ see !urado (- :;3 Can ou e5#lude a #a(italist (artner fro) the division of (rofits$ %o under "rticle 0FEE.

AQ: 's it (ossible for the industrial (artner to en*a*e in another o##u(ationLbusiness undertaIin*$ "/ %o. !e can be removed and be made to account for profits and losses of the partnership. AQ: "/ .ow about the #a(italist (artners$ %o. if it will directly compete with the partnerships business. 8es. If not.

AQ: 's the industrial (artner liable for losses of the (artnershi($ "/ %o. (nly the capital partners, as the capitalist partners can easily remove their interest from the partnership while the industrial partner cannot. !owever, the industrial partner can not raise the same against third parties, but he is entitled to reimbursement from the capitalist partners.

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OOOAQ: "hat is the (rin#i(le of dele#tus (ersonae$ "/ )nder "rticle 03A1, it pertains to the right of choice of a partner as to who shall be admitted as partners in the partnership. AQ: "/ "hat are the instan#es where the law (rovides that liabilit shall be solidar in nature$ ?ee "rticles 3E1;7 3E11 and 3E1DCorrelate Art-3E1D with Arti#le 3E3F in relation to Arti#le 314C&he general rule is that partners liability shall be 5oint, e=cept in the above mentioned provisions whereby the liability shall be solidary. AQ: "hat is (artnershi( b esto((el$ "/ It e=ists where there is a misrepresentation by one to be a partner, where other partners concur to his acts even though he was not really a partner. AQ: "/ "hat is the test of (artnershi($ "rticle 0F7E.

AQ: "hat is a (artnershi( at will in relation to the (rin#i(le of dele#tus (ersonae$ "/ Partnership is based on trust. &hus, even if there is a written agreement providing for a 2A year contract of partnership e=istence, if on the 6Ath year, one partner withdraws, it shall cause its dissolution at will. In =rte?a vs- CA it was ruled that a law firm is a partnership at will, thus it can be dissolved at will without pre5udice to the one causing the dissolution in bad faith be liable for damages. ?ignificant +ulings in &orts and Damages AQ: "/ "hat are four thin*s to be (roven when ou file an a#tion based on &uasi-deli#t$ 0. %egligent act or omission 4. ?uch act causes damage to another 6. %o pre@e=isting contractual relation 1.

,n the case o% Air @ran#e vs- Caras#oso (!-,-L- Re es) the case of booting out the Bilipino from his seat in the plane -from first class to tourist in favor of a >aucasian. gave rise to ,uasi@delict even if there was a contract of carriage as the act done was independent from the contractual relationship. &here must be causal relationship between the damage sustained and the negligence. 'n 9ula vs- CA it was ruled that concurrence of supervision and omission on the part of the security agency had e=ist ma9ing it liable for damages. &a9e note of the doctrines of 9a)nu) Abs&ue 'nAuria7 Res '(sa Lo&uitor and Last Clear Chan#e7 do#trine of (ro5i)ate #ause&here is a recent development on the doctrine of the last #lear #han#e. )nder this doctrine, where the plaintiff is the source of the negligent act, yet the defendant had the better chance of avoiding the accident, the plaintiff is entitled to damages.

6E

Per ?>, traveling at EA9m per hour in a highway is %(& abnormal But see Nho vs- Court of A((eals and 9a rit vs- CA- <here the truc9 traveling in the bridge at 6A miles per hour was said to be negligent. &he limit is only 6A 9ilometers per hour. &hus the truc9 was 7AA meters faster when the incident occurred. !ad it not been so, the truc9 wouldnt have been in the place of the incident. &hus, applying the last clear chance, it shall be liable although the car -avoiding the children in the middle of the bridge. was negligent because it -truc9. had the better chance of avoiding the collision. OOOAQ: .as the rule that the Last Clear Chan#e is a((li#able onl on vehi#ular a##idents (9ero vs- CA) been abandoned$ "/ 8es. &wo cases of Canlas vs- Court of A((eals and P,Co) vs- CAIn P, Co) vs- CA the ?ecretary of the >ompany was entrusted to deposit the cash with PB>om. It was later revealed that the husband of the ?ecretary has an account in the same Ban9. ?he deposited the amount through scheming and manipulations in the account of her husband. But only once was she as9ed by the teller why does she have the duplicate deposit slip separately validated with mere pencil mar9ings thereon. <hen the >ompany sued the ban9, the latter stressed that the company must bear the loss because it was negligent. &he ?> ruled that both the Ban9 and the >ompany are negligent, but since the Ban9 had the last #lear #han#e to avoid the incident, it shall be liable for the damages sustained by the >ompany. ,otes/ 'n ,asillo vs- Court of A((eals it was ruled that the motion to e=ecute the writ of e=ecution is a mere continuation of the criminal case, thus the employer cannot raise lac9 of due process in a motion to dismiss, because in the motion to e=ecute the subsidiary liability, the employer shall be given the right to refute the e=istence of employer@employee relationship, in fact, it is his only time to rebut the same.

1A