Beruflich Dokumente
Kultur Dokumente
SALES
Articles / Laws to Remember: 1458, 1467, 1477
transfer of ownership, 1505, 559 who can transfer
xxx, 1504, 1544, 1484 Recto Law, R.A. 6552,
1602, 1606, 1620, 1623, Redemption xxx
Q: A obliged himself to deliver a certain thing
to B. Upon delivery, B would pay a sum of
money to A. Is that a contract of sale?
A: Not necessarily. Even if there is an obligation to
deliver, if there is no obligation to transfer
ownership, it will not be a contract of sale. It may
be a contact of lease.
Memorize: Art. 1458
Note: Sale is a contract, so the general principles
in oblicon are applicable to sale but note that there
are provisions which are contrary.
Characteristics of Contract of Sale (COS)
1. Consensual (1475) COS is consensual, it is
perfected by mere meeting of the minds of the
parties as to the object and price.
Note: There is 1 special law which requires a
particular form for the validity of a contract of sale
in that sale, it can be said that kind of sale is a
formal contract Cattle Registration Decree. In a
sale of large cattle, the law provides that the
contract of sale of large cattle must be: in a public
instrument, registered and a certificate of title
should be obtained in order for the sale to be valid.
But otherwise, the other contracts are perfected by
mere consent or mere meeting of the minds.
2. Principal sale is a principal contract, it can
stand on its own. It does not depend on other
contracts for its existence and validity.
3. Bilateral (1458) necessarily in a COS, both
parties will be obligated. It is not possible that only
1 party is obligated because a contract of sale is
essentially onerous.
4. Onerous (1350) COS is essentially onerous.
Otherwise, it may be another contract or any other
Distinctions
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Note:
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THE
PERFECTION
OF
THE
Auction Sale
Auction sale is perfected upon the fall of the
hammer or any other customary manner. Thus,
before the fall of the hammer in an auction sale,
the bidder even if he has already made a bid, he
can still withdraw the bid as long as he would do
that before the fall of the hammer. Otherwise, (if
after the fall of the hammer), there is already a
perfected sale.
Q: Can the auctioneer withdraw the goods
before the fall of the hammer?
A: As a rule, yes because the sale has not been
perfected at the moment unless the bidding or
auction has been announced to be without reserve.
Note: Before perfection, there is one contract
which maybe perfected. Before perfection meaning
in the negotiation stage this contract is known
as the option contract.
Option Contract
Sanchez vs. Rigos
Facts: Mrs. Rigos offered to sell her land to
Sanchez for a certain price. Rigos gave Sanchez 2
6.
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was lost through a fortuitous event within the 10day period without fault on his part, the seller will
bear the loss.
Exceptions:
1. Lawyers Cooperative vs. Tabora
Facts: This pertains to a sale of American
Jurisprudence to Atty. Tabora. It was a sale on
installment basis. Upon delivery or on the day the
books were delivered to the office of Atty. Tabora,
the entire block where Atty. Taboras office was
located (in Naga City) was burned. The office
including the books was burned. Atty. Tabora
refused to pay the balance. Lawyers Cooperative
filed a case. Two defenses were raised by Atty.
Tabora: (1) Res perit domino there was a
stipulation in the contract that Lawyers
Cooperative will retain ownership over the books
until full payment. When the books were lost, no
full payment so Atty. Tabora was not yet the owner.
Hence, Lawyers Cooperative should bear the loss.
Q: Is this argument correct?
A: SC Said no. Although there was a stipulation
that Lawyers Cooperative retains ownership over
the books until full payment, there was another
stipulation in the contract which states that the risk
of loss shall pertain to the buyer from the time the
books are delivered whatever may be the cause of
the loss.
So with that stipulation, that is one of the
exceptions.
2. Title was reserved by the seller only to
secure the payment of the price by the buyer
Q: But even assuming that there was such no
stipulation under the contract, would Atty.
Tabora have to bear the loss?
A: Yes because it would fall into the other
exceptions under 1504 that when the title was
reserved by the seller only to secure the payment
of the price by the buyer, then by law, risk of loss
will already be with the buyer. This title of the seller
is known as Security Title and therefore by law
xxx the buyer will bear the loss.
3. Delay in the Delivery
When there is delay in the delivery due to
the fault of one of the parties, whoever was at fault
will bear the loss. Note that either buyer or seller
may be at fault.
Example 1: The buyer and the seller may have
agreed that the goods are to be obtained by the
buyer at the warehouse of the seller on a specific
date. On the date agreed upon, the seller
demanded the buyer to get the goods. Despite
such, the buyer failed to get the goods. On the next
day, the warehouse was destroyed due to
fortuitous event.
Q: Who is the owner at that time?
delivery.
Carumba vs. CA
Facts: Sale of land to B who took physical
possession but did not register. He is the first
buyer. However, the seller (A) is a judgment debtor
in one case to a certain creditor named C. The land
became the subject of an execution sale. The
buyer became C who registered the sale.
Q: Who would have a better right between C
and B (C had no knowledge of the sale)?
A: SC Said B because this land was not
registered under the Torrens System. 1544 would
not apply to unregistered lands.
Q: How would you know that the land is
registered under the Torrens System?
A: Pag may OCT or TCT na. Pero kung ibang
documents lang like tax declaration, it is not
considered registered.
Q: But C registered the sale, does it mean that
it is registered under the Torrens System?
A: No because there are also systems of
registration of sale of land in which the lands are
still considered as unregistered lands. Sa ibang
libro. Hindi libro under the Torrens System.
Q: If 1544 will not apply, who has the better
right?
A: B because there was delivery to him which was
actual delivery and hence under the general rules
on delivery, ownership passes to the buyer and
when ownership have passed to the buyer, when
the property was sold in an execution sale, ano
makukuha ng buyer sa execution sale? Wala.
He merely steps into the shoes of the judgment
debtor at the time of the sale then he did not
acquire ownership by virtue of that sale.
OBLIGATION TO DELIVER THE OBJECT OF
THE SALE
Determine the subject matter if it is a thing
or a right because there are different modes of
delivery as to thing and as to right.
Things
Kinds of delivery of things as a consequence of
sale known as tradition under the law:
1. Actual Delivery / Material Delivery / Physical
Delivery / Real Delivery the thing is in the
possession and control of the vendee. Take note
control. Take note to the vendee.
Q: What if the thing was delivered to a 3 rd
person?
A: Jurisprudence SC said yes, there maybe
actual delivery if the third person has authority to
receive from the vendee. Thus, making him an
agent of the vendee and that would still be actual
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If it is apparent, no liability.
Q: If the encumbrance is non apparent does
that necessarily mean that the vendor can be
held liable?
A: No because the encumbrance may be known to
the buyer. This liability would arise only if the
encumbrance is not known to the buyer.
Q: If he was not aware of this encumbrance
and the encumbrance is non apparent,
vendor will now be liable?
A: Not yet because the encumbrance may be
registered or annotated at the back of the title
negligence of the vendee so he cannot hold the
vendor liable.
Q: If there is an encumbrance, what are the
remedies of the buyer?
A: (a) He can seek for the reduction of the price.
Q: Can he rescind the contract?
A: (b) Yes but the law requires that the action for
rescission must be filed within 1 year from the date
of the contract. If after 1 year, no more rescission.
(c) If he became aware more than a year, he
may file an action for damages, But the law
requires that the action for damages has to be filed
within 1 year also but from the time of the
discovery of encumbrance. If he filed it for
example, after 2 years from discovery no
recovery of damages.
WARRANTY OF QUALITY
Prof. Deleon, Prof. Vitug, Prof. Baviera: there is
another warranty which is WARRANTY OF
QUALITY which includes:
(1) Warranty of Fitness
(2) Warranty of Merchantability
To some authors the warranty of quality is
considered under the warranty of hidden defects.
Atty. Uribe: I cannot agree that the warranty of
quality is in the warranty of hidden defects. I agree
with Prof. De Leon, Prof. Vitug and Prof, Baviera
that there is a warranty of quality.
WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE
The thing bought may not actually have any defect
and for 1 million buyers it would be fit for their
purpose. However, it may not be fit for the purpose
of 1 buyer and if all the requisites for this warranty
are present, then he may hold the seller liable for
breach of warranty of fitness for a particular
purpose although there is no hidden defect but it is
not fit for the purpose of the buyer.
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Example
Q: In a mango plantation, there may be fruits at
the time of redemption. The value of the fruits
is 100k. Can the seller be compelled to pay for
the value of the fruits?
A: The answer will depend on whether there are
fruits at the time of the sale. If there were fruits at
the time of the sale, the seller will only be obliged
to pay for the fruits at the time of redemption if at
the time of the sale, the buyer paid for the price of
the value of the fruits.
So again, there were fruits at the time of
redemption, whether or not the seller would have to
pay for the fruits at the time of redemption would
depend on whether or not there were fruits at the
time of the sale. Take note that the sale may have
been 2 years before that or 3 years before that but
if at the time of the sale there were fruits and the
buyer paid for the value of these fruits, it is
reasonable that the seller would also have to pay
for the value of the fruits at the time of repurchase.
But if at the time of the sale, there were fruits but
the buyer did not pay for the value of the fruits then
the seller should not likewise be compelled to pay
for the value of the fruits at the time of redemption.
There were no fruits at the time of the sale but
there were fruits at the time of redemption.
Q: If a COS was entered into in 2001 and there
were no fruits at the time of the sale. However,
at the time of redemption April 1, 2005 there
were fruits. The value of which is 100k. How
much can the seller be compelled to pay for
these fruits?
A: Under the law, the seller can be compelled to
pay for the value of the fruits in proportion to the
period in which the buyer was in counted from the
anniversary date of this contract. Yung anniversary
date ay every Jan 1. Yung anniversary date this
year Jan 1, 2005, from Jan 1, 2005 up to April 1,
2005 - the buyer would be in possession for 3
months out of 12 months is of the entire year.
Therefore, how much can the seller be
compelled to pay? 25,000 of the value. The
longer the buyer is in possession of the goods, the
bigger the amount which has to be paid by the
seller.
Atty. Uribes Comment: It is reasonable. If the
buyer has been in possession for a longer period
of time then he would have tend more for the
preservation of the thing or fruits. In fact, if the date
of redemption period is July 1 and the seller would
have to pay 50% in proportion to the period when
the buyer was in possession counted from the
anniversary date.
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2.
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LEASE
Notes:
Read the Definition of Lease under Articles
1643, 1644, 1713.
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1.
2.
3.
4.
5.
Consensual Contract
Onerous (essentially onerous)
Bilateral
Nominate
Principal.
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AGENCY
Definition 1868, 1874 and 1878 - formalities
Because a form is required for the validity or for
the enforceability of the contract entered by the
agent-1878, 1874
1892 - pertain to appointment of the substituteeffect- may the agent nonetheless be held liable for
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CHARACTERISTICS OF A CONTRACT OF
AGENCY
Q: Real? Formal?
A: Definitely it is not a real contract and also not a
formal contract.
Rallos Case
Facts: Letter was sent by B to X, informing X that A
has the authority to enter into a contract with X
specifically to obtain goods from X, like copra,
abaca which goods will be sold by A. After the sale
a portion can be deducted as a commission and
the rest to be delivered to X. After a certain period,
the goods obtained by A from X remained unpaid.
In other words, A will get the goods from X. A did
not deliver the proceeds of the sale. X demanded
payment from B. The defense of B was as of that
moment from that certain period he has already
revoked the authority of the agent and therefore be
bound by any contract entered into by A in
representation of B with 3rd person. Is the claim of
B tenable?
No, 1873 so far as 3rd person are concerned, this
notice itong letter nya kay X remain in full force and
effect until it is rescinded in the same manner it
was given.
Q: What if B was able to prove that he posted
the notice in Manila Bulletin - notice of fact of
revocation of A. If there was such publication
of notice, would the ruling of the SC be
different?
A: No, still the same (Article 1873)
1. Estoppel
Kang Case
Facts: Flores appears to have full control in a
restaurant (Washington Caf) owned by Kang and
in the administration of the restaurant he bought
certain items from Mack - items needed for
restaurant. But a portion / price was not paid by
Flores. So Mack (seller) went after the owner of the
restaurant. The only defense raised by the owner
was that Flores was not his agent.
Take note: It is very difficult to prove actual
agency, because an agreement between 2
persons, eh kung verbal lang ang agreement dun,
how would you be able to prove?
Held: The owner of the restaurant can be held
liable by estoppel because he clothed Flores with
full power as if he had the authority to buy those
items necessary for the administration of the
restaurant. Aside from that, Mack was able to
prove pieces of evidence - like in the lease
agreement over the building where the restaurant
was located and comes the owner of the restaurant
as lessee and Flores signed as an agent of the
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(2)
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Partnership
BE: Chato, using all his savings in the total
amount of 2,000, decided to establish a
restaurant. Faye, however, gave 4,000 as
financial assistance with the agreement that
Faye will have 22% share of the profits of the
business. After 22 years, Faye filed an action to
compel Chato to deliver to her the share in the
profits claiming that she was a partner. Chato
denied that Faye was her partner. Is Faye a
partner of Chato?
A: Yes, Faye was a partner in the business
because there was a contribution of money to a
common fund and there was an agreement to
divide the profit among themselves.
Atty. Uribes Comment: I do not agree with the
answer. Id rather agree with the alternative
answer. WHY? In the alternative answer as can be
seen from the facts, Faye gave 4,000 only as a
financial assistance. It was not a contribution to a
common fund. As such, she actually became a
creditor of Chato. Therefore, she did not contribute
to a common fund.
Q: What about the stipulation that Faye will
have 22% share of the profits?
A: The law on partnership is very clear that a
sharing in the profits does not necessarily result in
a partnership contract because the sharing of the
profits may only be a way of compensating the
other person, in fact that can be a mode of
payment of the loan. Kasi yung loan, supposedly
pwede payable every month with a fixed amount.
But mas maganda ang agreement na ito, 22% of
the profits, so that if walang profit sa isang taon,
wala munang bayad. Di ba thats reasonable
agreement. Only kung may profit, saka lang
babayaran. Kumbaga, friendly loan ito. The sharing
in the profits as expressly provided by law does not
necessarily result in a partnership contract. Thus, it
can be said that really Faye was not a partner but
is actually a creditor of Chato.
DEFINITION OF PARTNERSHIP
Q: What if two or more persons agreed to put
up a partnership but they never intended to
divide the profits among themselves, would
that still be considered a valid partnership
contract?
A: Yes, under the second paragraph of the article,
two or more persons can form a partnership for the
exercise of a profession.
Partnership vs. Co-ownership
Consider the essential features:
Creation:
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2. Object of Partnership:
To engage in a lawful activity.
Q: If the object is to engage in a lawful activity,
necessarily the partnership is valid?
A: No. There are specific business activities
wherein the law would require particular business
organization which may engage in such business
activity, specifically the Corporation Code which
provides that only corporation may engage in
insurance and banking business, therefore there
can be no partnership engaging in such business:
banking and insurance.
3. Cause of Partnership
The promise of each partner to contribute either
money, property or industry.
Q: What would be the effect if either the cause
or the object of the partnership is illegal or if
the partnership has an unlawful cause or
object?
A: The contract of partnership is void and under the
law, when the contract is void, it produces no legal
effects whatsoever, therefore, action to compel a
party to the contract to distribute the profits will
never prosper. In fact, under the law on
partnership, the State will confiscate the profits of
such illegal partnership.
Q: Will an action to compel a partner to render
an accounting prosper?
A: No. Any action to enforce a void contract will
never prosper.
Q: May a party to such void contract at least be
able to recover what he contributed or
delivered pursuant to that void contract?
A: As a rule, no, because of the in pari delicto rule
under Article 1411.
EXCEPTIONS: Article 1411, 1412, 1414,1415 and
1416. Under these circumstances, a party to a void
contract may be able to recover what he
contributed.
Atty. Uribe: I would always consider one of these
provisions as a very practical one:
In a contract that is void, it is so provided that a
party to such contract may recover what
contributed if he repudiated the contract before the
consummation of the contract and before damage
is incurred by a third person.
FORMALITIES:
Q: If the agreement of the parties to a contract
of partnership was only a verbal agreement,
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B. Property:
If a partner promised to contribute
property, it must be determined as to what was
really contributed: was it the property itself or the
use of the property.
2.)
3.)
4.)
until
the
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TRUST
2 KINDS:
1.) Express;
2.) Implied.
IMPLIED TRUST
Resulting Trust:
BE: A and B, brother and sister respectively,
inherited two identical parcels of land. For
purposes of convenience, B, sister of A, agreed
to have the land registered in the name of A.
However, when the parcels of land were
registered in the name of A, A sold one of the
parcels of land to a buyer in good faith and for
value. Can B recover the land from the buyer?
What would be the remedy of B?
A: This question clearly pertains to a resulting trust.
This is specifically, Art. 1451 of the NCC.
B cannot recover the land from the buyer.
As discussed in Sales, a buyer who had bought the
property from a seller who has no right to sell, but
he has apparent authority to sell, who appears to
be the owner and the buyer bought the property in
good faith, he will acquire ownership over the thing
even if the seller has no right to sell.
Bs remedy would be to go after her
brother for breach of trust in selling the property
without her consent.
BE: A property was bought by a father and was
registered in the name of his illegitimate
daughter. The illegitimate daughter occupied
the said parcel of land and constructed a
house where she and her husband and their
children lived. Several years thereafter, her
father died. The other heir of her father (his
legitimate children) demanded for the delivery
of the said property to the estate for
distribution to the other heirs, claiming that a
trust relationship was established between the
father and the illegitimate child. Is this a valid
claim?
A: Under the law, there is no presumption as to
trust relationship under 1448, because the donee
in this situation is a child, even if illegitimate, of the
father. Therefore, it may be a donation as provided
under Art. 1448.
Q: Can the other heirs recover that property?
A: It depends, considering that it is a donation, if
the donation is inofficious. If the same be
inofficious, the other heirs may demand for the
return of the property or at least the value of the
property.
Resulting trust includes Articles 1448, 1451, 1449,
1450,1452,1453,1454.
Constructive Trust:
Credit transactions
Q: Why credit transactions?
A: Because these transactions all involved credit
meaning there is a belief in the capacity of one of
the parties to perform his obligation in the future.
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Transactions:
A. Kinds of Loans
1. Mutuum
2. Commadatum
B. Kind of Deposits
1. Judicial
2. Extrajudicial
C. Guaranty
D. Suretyship
E. Real Guaranty favorite in the bar exams
1. Pledge
2. Chattel Mortgage (CM)
3. Real Estate Mortgage (REM)
4. Antichresis
Deposit
Q: Are checking accounts, savings account,
dollar accounts irregular deposits?
A: No. They are not deposits under the law
because they are governed by the rules on
mutuum (loan). The bank is the debtor. SC called
these deposits in the nature of irregular deposits
but not irregular deposits because the banks use
the money that is why it is in the nature of irregular
deposits.
CREDIT TRANSACTIONS
Quiz
1. Deposit is a real contract TRUE
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