Sales Transcript2017 PreMid

June
13, 2017

CHAPTER 1: NATURE AND FORM OF THE What contract is it where both parties are obliged
CONTRACT to perform?
Ans. Contract of Sale
What is a Contract?
A contract is a meeting of minds between two Seller / Vendor = A party that obligates
persons whereby one binds himself, with himself to deliver a determinate thing and to
respect to the other, to give something or to transfer ownership.
render some service. Art. 1305, CC
Buyer / Vendee = A party that obligates
What are the Essential Elements of the Contract? himself to pay the price or certain money or
1. Consent is manifested by the meeting of the its equivalent.
offer and the acceptance upon the thing and
the cause which are to constitute the contract. Elements of the Contract of Sale:
Art. 1319, CC a. Essential Elements
2. Subject Matter or Object 1. Consent or meeting of the minds
3. Cause or Consideration consent to transfer ownership in
exchange for the price.
What are the Natural Elements of the Contract?
Those which are inherent in a contract and Note: What is the effect of counter offer?
not stipulated by the parties; no need for There is no perfected contract of sale when an
stipulation by the parties. offer is answered with a counter offer. There
is no meeting of the minds. A qualified
What are Accidental Elements? acceptance constitutes a counter-offer. -
Those which may be present or absent in the Manila Metal Container Corp. v. PNB ; see
stipulation, such as the place or time of also Art. 1319, CC
payment, or the presence of conditions. Art.
1458, CC - Paras 2. Object/Subject Matter (Determinate
Subject Matter) - generally, there is no sale
What is Sale? of generic thing; moreover, if the parties
Sale is a contract whereby on of the differ as to the object, there can be no
contracting parties obligates himself to transfer the meeting of the minds
ownership of and to deliver a determinate thing,
while the other party (buyer or vendee) obligates How can be a generic thing can be the
himself to pay for the said thing a price certain in object of a sale when the definition says
money or its equivalent. Article 1458, CC that the object is a determinate thing?

Note: Ans: From the moment to segregate a
Contract is one of the sources of obligation. generic thing from the rest of its class can
Upon perfection of the contract of sale then become a determinate thing.
obligations are created.
Determinate Thing is physically
Sources of Obligations: see Art. 1157, CC segregated or particularly segregated
1. Law from the same class.
2. Contracts
3. Quasi-contracts 3. Cause or Consideration (Price certain in
4. Acts or omissions punished by law money or its equivalent) - Refers not only to
5. Quasi-delicts the amount of the price, but also to the
manner in the payment of the price.
1 & 2 = Only 2 sources of obligations
3 to 5 = Already imposed by law.
Law on Sales: Course Outline A.Y. 2017 2018 (Judge Adviento) | KKK | LLB2 EH406 1

Note: If you would not agree on the manner of But before the delivery, I agreed to lend the
payment whether cash or installments, then the computer to you. Have we perfected the
Supreme Court said, you have not agreed on the contract? Ans. Yes. Consensual contracts;
price. Again, you must agree on the amount of price meeting of the minds; perfected.
and the manner of payment.
Consensual - From the moment of the
In order to perfect a contract of sale, it is not perfection of the contract I have the
enough to agree on a price certain. The obligation to deliver the computer.
manner of payment of the price must also be
agreed. - Toyota Shaw, Inc. v. CA Real - After the delivery that is when the real
contract of loan is perfected.
What happens if all the essential elements are
present? Perfect contract of Sale. Contract of Sale:
Why is it consensual?
What if one of the essential elements is not present? Ans. From the definition itself, the law does
There is no contract. not say that the contract of sale where one of the
parties delivers and transfers ownership. The law
What if you have all the essential elements but one merely says that one of the parties undertakes to
element is defective? It depends. deliver (theres no delivery, transfer of ownership and
theres no payment of the price yet) BUT the contract
Ex. is already perfected.
The object is marijuana Void Contract
(Unlawful subject matter). Note: From the moment there is agreement, there is
The seller is a minor, is the contract of sale meeting of the minds between the seller and the
valid? Yes. But its a Voidable Contract; it is buyer over the thing and the price including the
valid until annulled. manner of payment of the price Contract of Sale is
perfected.
Note: Presence of all essential requisites makes a
valid contract of sale. If at least one is absent, then the Nganong kailangan i-notarize ang deed of sale over a
contract is void or inexistent. If at least one is parcel of land?
defective such as the consent, then the contract is
voidable. Q: Is that public document really necessary for the
validity of the contract of sale over a parcel of land? Is
What are the contracts classified as to perfection? it an exception to the definition?
See Art. 1315, CC
1. Consensual Contracts are perfected by A: The execution of that public document is merely
mere consent. Example: Contract of Sale for the convenience of the parties to facilitate the
2. Formal or Solemn Contracts Ex. Donation transfer of the title of the land.
of realty, which must be in a public document,
and the acceptance must be in a public Characteristics of the Contract of Sale
document for its validity. (For the A. Consensual see discussion above.
convenience of the party.) B. Bilateral Both parties are obliged to
3. Real Contracts are perfected upon delivery perform; because both parties are bound by
of the subject/object in the contract. obligations dependent upon each other.

Consensual Contracts vs. Real Contracts: Note: Seller vs. Buyer (Both parties are
creditors and debtors of each other.)
Example: I promised to lend my computer to o The seller has two major obligations
you so that you can copy all the notes. The to transfer ownership and to deliver
moment I deliver the computer to you the the thing and the buyer shall pay the
contract is perfected. What contract is that? price.
Ans: Contract of Loan
2 Law on Sales: Course Outline A.Y. 2017 2018 (Judge Adviento) | KKK | LLB2 EH406

o The seller is a debtor in a sense that Note: The moment the sale is consummated
he has the obligation to deliver and to then thats the end of it; you dont enter into a
transfer ownership at the same time contract of loan before you can enter into a
he is a creditor because he can contract of sale.
demand from the buyer for the
payment of the price. The seller has Contract of Pledge is an accessory contract
the right to collect and to receive the constituted to secure the fulfillment or the
price. Thats the role of the creditor to performance of the principal obligation.
demand performance.
Contract of Loan is a principal obligation. You
o The buyer is a debtor in a sense that can enter into a contract of loan without first
he is obliged to pay the price. He is a entering into the contract of pledge.
creditor in a sense that he has the
right to demand the delivery and to Example: Do you purchase a car on
transfer ownership of the object of the installments? The seller would require you a
sale. security. Usually the security is the car itself
subject to chattel mortgage.
C. Onerous Because to acquire the right,
valuable consideration must be given. There can be no chattel mortgage (accessory
contract) if there is no perfected contract of
Note: The seller does not receive the price for sale (principal contract).
free. He has to deliver and transfer
ownership. The buyer does not receive the You cannot mortgage something that you do
pay for free; he has to pay the price. It not own.
imposes an obligation on the part of the
parties. It is not a gratuitous contract. F. Commutative as a rule, because the values
exchanged are almost equivalent to each
D. Nominate - (as distinguished from an other; One where each of the party that
innominate contract) because the Code refers receives and gives an equivalent.
to it by a special designation or name, i.e., the
contract of sale. Example: Ill buy the car worth 1.4 million
pesos. I paid 1.4 million pesos and I received a
Note: There is a specific name of contract vehicle worth 1.4 million pesos.
given by law. The contract is named Commutative Contract
according to how the law defines it to be, not
how the parties call it to be. Vs. Aleatory Contract - (NOTE: By way of
exception, some contracts of sale are aleatory,
Example: If the parties agreed that one will i.e., what one receives may in time be greater
deliver and transfer ownership of a or smaller than what he has given. Example:
determinate thing and the other party The sale of a genuine sweepstakes ticket;
obligates himself to pay for the said thing a Insurance). You pay a small amount but you
price certain in money or its equivalent. Then receive something more valuable.
it is a Contract of Sale.
G. Delivery transfers ownership
E. Principal - (as distinguished from an Note: Sale is only a title that creates an
accessory contract), because for the contract obligation to transfer ownership. The
of sale to validly exist, there is no necessity contract of sale itself does not transfer
for it to depend upon the existence of another ownership. (See definition of Sale above). It is
valid contract (Examples of accessory the delivery transfers ownership.
contracts are those of pledge and mortgage)


It is not right for us to claim that once you
have paid the price you already own it, kung
wala pa gi deliver. You have fully paid the
price, ako nana kay nakabayad nako until the
thing is delivered to you then you do not
become the owner of the thing even you have
fully paid the price.

Payment of the price is not a condition for
the transfer of ownership.


June 20, 2017 and subject matter, is that the plaintiff was to furnish
the defendant with the beds, which the latter might
CONTRACT OF SALE DISTINGUISHED FROM order, at the price stipulated, and that the defendant
OTHER CONTRACTS was to pay the price in the manner stipulated. There
was the obligation on the part of the plaintiff to
A. vs. agency to sell (Art. 1466) supply the beds, and, on the part of the defendant, to
pay their price. These features exclude the legal
Q: What is the essence of the Agency to Sell? conception of an agency or order to sell whereby the
If the agent sells a property belonging to the mandatory or agent received the thing to sell it, and
principal, from whom does the buyer acquire does not pay its price, but delivers to the principal
ownership? the price he obtains from the sale of the thing to a
third person, and if he does not succeed in selling it,
A: The agent in an agency to sell does not he returns it.
acquire ownership over the property delivered to
him by the principal. On the other hand, the buyer Q: Why did the court not grant Quirogas prayer?
acquires his ownership directly from the principal. What was Quirogas claiming?

Agency to Sell vs. Contract of Sale (Read Pineda A: Quiroga was to deliver beds to Parsons, which
book for distinction) Parsons was to sell at a certain price less 25% which
is his commission and which Parsons was oblige to
Q: To whom does the buyer pay the price in a pay within 60 days from shipment, not from the
contract of sale? delivery.
A: Directly to the seller. (Read Pineda book
for further details) Q: What was the contract entered between the
parties?
Note: Ownership by the seller of the purchase price is A: Contract of Sale (read the full text of this case for
dependent upon his delivery of the thing to the buyer. Quirogas contentions)

Case: Example:
Quiroga vs. Parsons Hardware Co., 38 Phil 501,
G.R. No. 11491, August 23, 1918 (read full text) Situation: If I deliver to you a specific number of
sardines, 10 boxes of sardines to be sold at 2,400 per
Facts: The defendant was granted by the plaintiff of box (Total of 24,000pesos). With the agreement that
the exclusive right to sell as an agent Quiroga beds youre going to sell the goods within 30 days and
in the Visayas at the invoice price in Manila. The remit the proceeds to me, those were not sold you
agreement was for the defendant to pay for the beds have to return to me. Is this a Contract of Sale?
at a discount from 20% to 25% as commission on the
sales. The defendant shall pay the plaintiff claims that Answer: No. Instead, you entered an Agency to Sell.
the defendant is his agent while defendant says he
was merely a purchaser. Note:
If you did not remit the proceeds of the sale
Issue: Is this a contract of sale or agency? and you also did not return to me the unsold
goods. There will be a criminal liability of
Held: The Supreme Court declared that the contract Estafa (for Misappropriation).
by and between the plaintiff and the defendant was Failure to remit the proceeds or return the
one of purchase and sale, and that the obligations the goods constitutes misappropriation, because
breach of which is alleged as a cause of action are not you cannot appropriate it and you dont own
imposed upon the defendant, either by agreement or it personally.
by law.
In order to classify a contract, due regard must be
given to its essential clauses. In the contract in
question, what was essential, as constituting its cause

Situation: If I sold those 10 boxes of sardines to you What is controlling is the inquiry of whether the thing
on credit to be paid within 30 days from delivery and transferred is one not in existence and which never
after 30 days you failed to pay the price. Can I hold would have existed but for the order of the party
you criminally liable? No, civil liability instead. desiring to acquire it, or a thing which would have
(Collection of the price) existed and had been the subject of sale to some
other person, even if the order had not been given.
Note:
Q: When I sold the sardines to you on credit - If the essence of the agreement is the object,
and I delivered the sardines to you even if you irrespective of the party giving or executing it,
have not yet paid the price. Did you become the Contract is Sale.
the owner?
- If the essence of the agreement is the
A: Yes. Because ownership of the thing does service, knowledge or even reputation of the
not depend on the payment of the price, person who executes or manufactures the
likewise, ownership of the proceeds does not object, the contract is for piece of work.
depend upon delivery of the thing.
The distinction is important:
If you became the owner, can you 1. To know who bears the loss before the
misappropriate something that you owned? delivery (when contract for a piece of work
No. There will be no criminal liability only the worker or contractor);
CIVIL LIABILITY (Collection of the price) 2. Applicability of the Statute of Frauds
(contract for a piece of work is not covered);
Situation: Real Estate Brokers. 3. Payment of taxes.

Q: Are they agent? If you deal with a broker to Case:
whom do you pay the price? Del Monte Phils. Inc. vs. Aragones, G.R. No.
153033, June 23, 2005
A: Directly to the seller. The role of the broker
is merely to bring the buyer and the seller together. SCs ruling: (read the full text of this case)
They are not agents.
C. vs. barter (Art. 1468)
Situation:
Even if brokers or commission merchants are not If the value of the thing is more than the value
agents of the seller, they may assume warranties of of the money or its equivalent, the contract is
the sellers? If they do, they may held be liable for barter.
breach of warranties.
If the value of the thing is less than the value
B. vs. lease of service or contract for a piece of of the money, then the contract is a sale.
work (Art. 1467)
Why do we need to know whether the contract
Situation: agreement is a sale or barter?
You are a furniture manufacturer. You have your
samples. Someone ordered a particular piece of Instances where the distinction is critical:
furniture that you do not manufacture normally in 1. The rules on the Statute of Frauds only apply
the course of your business. But you said yes that you to sale and not to barter;
could fabricate that as a special order. 2. The right of legal redemption granted by law
to an adjoining owner of an urban land covers
Question: only resale and does not cover exchange of
Why do we need to distinguish a Sale to a Contract properties. (It will be discussed further for
for a Piece of Work? (read Pineda book for further the next chapter)
explanation)


D. vs. Dation in payment/Dacion in Pago Why do we need to distinguish?
1. For taxation purposes.
Dation in payment there is an existing obligation 2. Formalities
(payment of sum of money). a. Sale Consensual Contract
b. Donation it has to comply with the
Situation: In lieu of payment of sum of money, what formal requirements of the donation.
the debtor does is to deliver of the thing. Is the i. Real Property Public
obligation extinguished by the delivery of the thing? - Instrument and acceptance
It depends. must be also in public
instrument.
Note:
Dation in payment is governed by the Law on Sales. Additional info:
The distinction is important in cases such as:
The moment that the seller delivers the thing then he 1. Tax consequences and
has formed (not sure if formed ba ang term. Kay 2. Which law governs when the value of burden
nagrap dinhe dapita!) the obligation to the buyer. is more or less that which is donated.

But the moment that the debtor delivers a thing and PROMISE TO SELL: WHEN BINDING (ART. 1479)
he owed (not sure if owed ba ang term. Kay nagrap
dinhe dapita!) a payment of sum of money his A. Bilateral
obligation is not necessary to be completely Bilateral promise to sell is actually a mutual
extinguished. Only up to the extent on the value of the promise to buy and sell.
thing.
Promise to Buy and to Sell the law says
E. Vs. lease of things that it is a binding and executory contract.

In both Sale and Lease there is delivery of the subject Is it a contract of sale? No.
of the contract. Villanueva said, this is a true Contract to Sell.

Sale Deliver transfers ownership. Note:
Lease What is delivered is only the temporary An unconditional mutual promise to buy and
possession for the lessee to enjoy the thing. sell as long as the object is made determinate
and the price is fixed.
Note: A bilateral promise to buy or to sell a
However, there are certain agreements where the certain thing for a price certain gives to the
parties purportedly entered into a contract of lease contracting parties personal rights in that
but with option to buy. each has the right to demand from the other
the fulfillment of the obligation.
Example:
The car plan granted by certain companies in favor of B. Unilateral
certain employees (Junior Officers, Banks, It is a promise to sell with the promising the
Pharmaceutical companies). They entered into a person to whom the promise is given at
lease to own car plan schemes. liberty whether to buy or not. But its not
binding on the promisor unless it is
Note: supported with a separate consideration
Lease to Own schemes have been ruled by the SC (money or its equivalent).
as Sales on Installments.

F. vs. donation

Sale Onerous Contract
Donation Gratuitous Contract

Case: Q: Can a Right of First Refusal be a basis for an action
Eulogio vs. Apeles, G.R. No. 167884, January 20, of specific performance to compel the owner to sell?
2009
A: No. Unlike an option contract where the price is
SCs Ruling: An accepted unilateral promise that only fixed, if a grant of the right of first refusal the price is
have a binding effect if supported by a consideration. not fixed. The parties still have to agree on the price.
(Read the full text of this case for further details) If they cannot agree on the price, then the owner is
not bound to sell. He has discharged his obligations
What is option contract? When it is binding on the once he offers it to the grantee. But they still have to
promisor? (Read the for the definition case) negotiate on the price and the manner of payment of
the price.

Case: Situation:
PNOC vs. Keppel, G.R. No. 202050, July 25, 2016 I own a parcel of land and we are friends, you are
using my property and included in the lease contract
SCs Ruling: With an option to buy or to sell is is a grant to right of first refusal. If I decide to sell the
not supported by a consideration separate from the property, I will offer it to you first before I offer it to
purchase price the option constitutes an offer to buy other party. Despite stipulated in the lease contract, I
or to sell which may be withdrawn by the offeror at sold it to X. The lease contract is not registered in the
anytime prior to the communication of the offerees Registry of Deeds.
acceptance.
Q: Can you sue for the rescission of the contract? Can
Note: you sue X for the reconveyance of the property in
Ruling in PNOC vs. Keppel is inconsistent with your favor?
the ruling Eulogio vs. Apeles.
When the offer is duly accepted, the mutual A: Sue for damages only.
promise to buy and sell a determinate thing
for a price is reciprocally demandable (Par. 1, Situation:
Art. 1479) However, if X is aware of the grant of the right and
that I have committed a breach of that agreement.
In PNOC vs. Keppel Even if theres no
consideration given for as long as acceptance is Q: Can you sue for the rescission of the contract?
communicated to the offeror he can no longer
withdraw. A: Yes. Then the court grants your prayer for
rescission. You must purchase the property. You
In Eulogio vs. Apeles Even if accepted if theres no cannot sue for rescission without purchasing the
consideration, the offeror can withdraw the offer. property. This is no a battle of rights.
CONTROLLING JURISPRUDENCE.
Situation:
General Rule: An option is that binding on the
offeror unless it is supported by a valuable Q: How much will you pay for the property? Provided
consideration (being in the form of money or its that theres no agreement with the owner about the
equivalent). price.

Option vs. Right of First Refusal: A: Same price paid by X.

Right of First Refusal a promise on the
part of the owner not even the seller. That if the
owner decides to sell the property he will offer it first
to the grantee. If the owner does not decide, the
grantee cannot compel the owner to sell.


THE CONTRACT OF SALE MAY BE- purchase price becomes a positive condition
(Suspensive Condition).
1. Absolute one where ownership is not
reserve by the seller. Therefore, the moment Transfer of Ownership
delivery is effected, the ownership is Absolute upon delivery
transferred. Condition ownership is reserved by the
owner
Note:
Sale is absolute when the title passes to the
vendee. Title here does not refer to the Case:
transfer certificate of title. Because a TCT, the Coronel vs. CA. G.R. No. 103577, Oct. 7, 1996
registrant there is the seller. It can be (Read the full text of this case for further details
transferred the document when you transfer about Conditional Sale and Contract to Sell)
at a later date/day. But ownership is already
transferred to you. SCs Ruling: The court declared the contract
Title to the property passes upon the delivery as a Conditional Contract of Sale, not merely a
of the thing sold when theres a stipulation in Contract to Sell.
the contract that the title of the property
remains in the seller and fulfillment of the Conditional contract of sale is one over the seller
purchase price and theres a stipulation giving may likewise to serve the title to the property subject
the vendor the right to cancel (NagRap of the sale until the fulfillment of a suspensive
napud!)- Ramos vs. Heruela, G.R. No. condition.
145330, Oct. 14, 2005 (read the full text of
this case for the definition of absolute Note:
sale) Conditional Sale the fulfillment of the suspensive
condition perfects the contract, such that if there was
already delivery. Ownership is immediately
Case: transferred to the buyer. (According to Coronel vs.
Heirs of Mascunana vs. CA, G.R. No. 158646, June CA).
23, 2005
(Read the full text of this case for the definition of Remember that there can be a delivery without
Absolute Sale.) transfer of ownership.

2. Conditional - Contract to Sell fulfillment of the suspensive
a. Executed contract, or condition gives rise to the obligation of the seller to
b. Executory contract transfer ownership. Hes still has to transfer
ownership even if there is delivery.
Executed Contract is one where ownership is
already transferred to the buyer but subject to The main distinction of Contract of Sale and Contract
condition (Negative Resolutory Condition) there has to Sell is OWNERSHIP.
to be a positive act to be performed by the buyer.
Usually, this positive act is PAYMENT of the FULL Case:
PURCHASE PRICE. Ong vs. CA, G.R. No. 97347, July 6, 1999
(Read the full text of this case for further details
Non-payment of the full purchase price even if about Contract of Sale and Contract to Sell)
ownership is already transferred to the buyer can be
a cause of the extinguishment of an already executed SCs Ruling:
contract. Contract of Sale - the title to the property passes to
the vendee upon the deliver of thing sold.
Executory Contract when ownership does not pass
until some future time or some conditional of full
payment of the purchase price. Payment of the

Contract to Sell - Ownership is reserved in the
vendor, itll be passed to the vendee until full
payment of the purchase price.

Note:
In a Contract to Sell, the payment of the
purchase price is a positive suspensive
condition, the failure of which is not a breach
of the contract. But a situation that prevents
the obligation of the vendor/vendee, buyer
and seller to convey title from acquiring an
obligatory force.
In a Contract to Sell, you dont need to
rescind the contract, because theres no
contract to rescind.
In a Contract to Sell, the seller remains the
owner. Therefore, the seller can still sell the
property to another person. Because hes still
the absolute owner.

Maceda Law and Recto Law another favorite topic
in the Bar.


June 27, 2017 Recent law: Grantees cannot sell or encumber
the property or the beneficiaries cannot
Arts. 1459 to 1465 encumber or sell the property within 10 years
Object from the award.
The prescription in homesteads and free
Q: Can you buy services? Can services be the object of patents is only 5 years under the CARP/CARL
sale? (not sure if CARL/CARP iya gi mention) is 10
A: No. years.

Q: Why not?
A: Because if you buy services, youre actually Case: Qualities The object must be lawful.
entering a contract of either employment or (Read Manlapat vs. CA, G.R. 125585, June 8, 2005)
services/labor.
Q: Can you sell an undivided portion or real property,
Q: Can you sell rights? which is not a determinate?
A: Yes.
A: Yes, the sale is valid even if the thing is not
Note: determinate because of the specific provision of law.
When you sell the right to collect a credit,
youre actually governed by the law of sales Note:
(assigning of credits). Only to the extent of undivided shares.
When the credit is evidenced by a negotiable
instrument then that assign will be called Q: What are fungibles? (Read Pineda book for further
negotiation. explanation)

Qualities of the Object of a Contract of Sale: A: Goods of which any unit is, from its nature or by
1. It must be lawful mercantile usage, treated as the equivalent of any
2. Determinate or determinable other unit.
a. Test of Determinability:
i. Capable of physically - In this case, what must be known is the
segregated from all others of definite number, weight or measure of the
the same class goods in the mass even if the actual number,
ii. Without entering into another weight or measure of the goods is
contract in order to make it undetermined.
determinate.
3. Existing, future or contingent - If the mass contains less than the number
4. Transferability of ownership bought, then the buyer becomes the owner of
the entire mass and the seller is bound to
Situation: make good the deficiency.
Q: Can real property such as parcel of land be the
object of a contract of sale? Case: Determinate or Determinable
A: Not always. Sale by co-heir of definite portion of estate prior to
partition.
How about a private parcel of land? It depends.
Vagilidad vs. Vagilidad, G. R. 161136, Nov. 16,
Note: 2006
Homesteads or those covered by free patents (Read the full text of this case for further details)
cannot be sold or encumbered within 5 years
from the award. Q: Can he sell his share?
Free patents and Homesteads are covered by A: Yes.
an older law.


Q: Can he sell a definite portion of the property? the seller is to deliver and transfer
A: He could have because his ownership is co- ownership.
ownership. In fact the law says that subsequent
acquisition of title by a seller validates the
What he did was he sold a particular portion sale.
of the property and after a certain period of The vendee or the buyer acquires ownership
time he sold the same portion. at the time of the delivery. But the ownership
or the title of the vendee can also be a subject
SC Ruling: He can no longer sell the portion because of contingency. Meaning, he can be dispossess
he previously sold it. of title in a resolutory condition.
o Example: The happening or not
Q: Why was it legally possible for him to sell that happening of which determines
definite portion? whether a buyer becomes the
absolute owner of the property.
A: Because he became eventually the owner of the
entire property so he could sell any portion of the Example: Subject of contingency
lands. I borrow 1million pesos from you. Before you
release the money you required me to put up
a security or collateral. I did execute a real
Case: Determinate or Determinable - estate mortgage on the property that I own in
Effect of agreement where the exact number of palay your favor and I did not pay my obligation
to be sold was not fixed. after the due date. Then you foreclose the
mortgage and to sell the property in a public
National Grains Authority vs. IAC, G.R. 74470, sale so that the proceeds will be applied in the
Mar. 8, 1989 (Read the full text of this case for payment of the obligation. During the auction
further details) sale you were the only bidder, thats fine,
perfectly valid.
Note: o Did you acquire the title over the
The Government and Soriano agreed on 2,640 cavans property? Of course, you are the
of palay. Soriano was able to delivered only 630 buyer.
cavans of palay.
Note: But your title is subject to a
Q: Was there a determinate subject matter? contingency.
A: Yes.
Q: What is that contingency?
Q: Will the parties have to enter into another contract A: My right to redeem the property from you.
to determine how much does the government oblige If I decide to exercise my right of rejection,
to pay? then you can be dispossess of your title.
A: No. But the government did not want to pay.
Case: Transferability of Ownership Sale by
Soriano could deliver up to the maximum of 2,640 mortgagee of land not proper subject of mortgage
cavans of palay. Soriano only delivered 630 cavans of
palay then the government is oblige and liable to pay Cavite Development Bank vs. Lim, G.R. No.
for the actual volume of palay that was delivered. 131679, Feb. 1, 2000 (Read the full text of this case
for further details)
Note:
Ownership is transferred to the buyer upon Was there a subject matter of the sale?
delivery. So the ownership of the seller is Why the court said that there was no sale?
required at the time of the delivery. Who fraudulently obtained the title?
Ownership of the seller is not required at the How did he fraudulently acquire the title over that
time of the perfection of the contract, because parcel of land?
at the time of the perfection, the obligation of Why is it fraudulent at the first place?

For the father, did the court grant his prayer for the Arts. 1469 to 1474
reversion of the title? Price
Who was the highest bidder in the foreclosure sale? The third essential element of a contract, of a
The Bank. contract in general, is the cause or
Being the highest bidder, what did he do over the consideration. In the Contract of Sale, we
property? equate this with Price.
Was the contract executed? Price is the sum stipulated as equivalent of
the thing sold. Ideally, price is a sum of
Note: money. But in the definition, what is the
CDB did not acquire a smooth title over the obligation of the buyer? It can be other
property. Why? Because the mortgagor had consideration other than a sum of money.
no title of the first place. In relation to the price, the parties shall agree
Second requisite for a valid mortgage the on the amount or amount of the price or that
mortgagor must be the absolute owner of the amount of the consideration with also in the
property. In relation to the case, the manner of payment of the consideration.
mortgagor did not acquire title of the
property. It was his father the real owner of Requisites of Price
the property. 1. The price must be real.
a. There must be a legal intention on the
part of the buyer to pay and a legal
Case: Transferability of Ownership expectation on the part of the seller to
receive. Because if theres no legal
Heirs of Arturo Reyes vs. Beltran, G.R. 176474, intention to pay and theres no legal
Nov. 27, 2008 (Read the full text of this case for expectation to receive, then theres no
further details) price even if the amount is stated in
the contract/document stipulated by
What was the condition of the contract to sell before the parties.
they can forge a contract of sale?

Note: Case: Effect if price is simulated
Miguel Soco entered into a contract to sell
with Reyes over this particular property Cruzado vs. Bustos, G.R. No. L-10244, Feb. 29,
(Property B), on the condition that he will 1916 (Read the full text of this case for further
inherent the property, actually he already details)
inherited the property, but he co-owned this
property with other heir. The agreed to sell if Note:
he becomes the owner of the entire property. The buyer of the parcel of land from the
But when the estate was settled, what was kumadre was very generous and of course
adjudicated to him was the other property. they executed a deed of sale without a legal
The other property was adjudicated to expectation to receive the price. In fact,
Beltran, another heir. The SC said no, because Estafania continued the possession. There
the subject property was not adjudicated to was a tenant working on the property. But,
Soco. Bustos never took possession of the property.
Further question not in the case, can Soco be They were so close that their children even
compel to sell the property because he had a got married. Santiago demanded from the
contract to sell agreement with Reyes? No, mother in law the delivery of the property.
because this was not the subject matter of the Question: Is there a contract of sale?
contract to sell.
Answer: It is an absolute simulated
contract of sale because of the absence of the
consideration. There was no price paid. Even


if the price was expressly stated in the Q: What is the remedy?
contract. A: Reformation of document. (Remember this
remedy)
SCs Ruling: The sale between Bustos and the elder
son was simulated. The price of the land was not paid Situation:
and the vendee or his heirs did not at any particular There is a valid price agreed by the parties, correctly
point of time came possession of the property. stated in the document. But, buyer fails to pay the
price.

Case: Requisites of Price The price must be real: Q: What if price is not paid? What effect is that in the
Effect if there is no consideration contract?
A: No effect.
Doles vs. Angeles, G.R. 149353, Jun. 26, 2006
(Read the full text of this case for further details) Q: What is the remedy of the seller?
A: Specific performance.
Why there was no consideration?
Was there a document signed by the parties for the
sake of certain property? 2. In money or its equivalent
Whos the seller? - Doles
What was sold by Doles to Angeles? Parcel of land Case: Requisites of Price In money or its equivalent
What was supposed to be the consideration of the
sale? Torres vs. CA, G.R. 134559, Dec. 9, 1999
(Read the full text of this case for further details)
SCs ruling: There was no consideration in
this case. The two are merely agents; they dont owe Note:
each other any amount. Doles did not owe Angeles. So The consideration from the sale for the
if the consideration of the sale is the unpaid loan, transfer of the property was not a sum of
then its not only for Angeles. money. It stated a particular amount.
What was the consideration for the sale?
The sale therefore is void because theres no The expected practice that if they will earn,
consideration for the transfer of ownership of a land once the property was fully developed into a
to Angeles. This is absence of consideration. new housing project. But of course, the
project did not push through. Because certain
In comparison, relatives where claiming ownership over the
property.
Cruzado vs. Bustos It is an absolute simulated. The SC said, there was a consideration, the
There is no intention to transfer ownership. expectation of profits from the subdivision
project.
Doles vs. Angeles There was intention to transfer
ownership but there was no consideration, because
the consideration was a sum of money to be paid by 3. Certain or Ascertainable (Determinable)
Angeles.
Note:
Note: No problem if the amount is stated.
Price is false There is an agreed amount, but was There are many instances when the price is
stated is an incorrect amount. not fixed or stated in the contract.

Q: Is the contract void? How is price determined?
A: No. The contract is perfectly valid but a wrong By a third person
consideration. By the courts
By reference to a definite day, etc.

By reference to invoices

By application of known facts Example:
I can sell my 1,000 shares of stock common a share in
The SC said, if the third party acts in bad faith, the PLDT.
court may fix the price. But when the third party is
prevented from fixing the price, either by the fault of Q: For how much?
either the seller or the buyer, the party NOT at fault A: Whatever is the opening price tomorrow on the
may have such remedies against the party in fault. start of exchange market. Thats perfectly valid.

Note:
Case 4: Requisites of Price Certain or Ascertainable Q: What if the price cannot be determined? What is
by third person the effect of the indeterminate price?
A: That contract is inefficacious
Barreto vs. Sta. Marina, G.R. No. L-8169, Dec. 29,
193
(Read the full text of this case for further details) Case: Requisites of Price Certain or Ascertainable
Effect of inadequacy of price
Did Barreto and Sta. Marina agree on the amount of
the price? Askay vs. Cosalan, 46 Phil. 79, G.R. No. 21943,
Sept. 15, 1924
Note: (Read the full text of this case for further details)
The amount of his investment is determined.
Barretos interest in the business was Q: What if the price is inadequate or much lower than
determined. He would not sell his interest, the subject of the sale?
because the business has grown. A: The law says, it does not affect the contract but it
How did they agree to determine the price? may show a vitiated consent.
By appraisers.
Did the appraisers determine the price? No. Note:
What did they determine? The net value of Askay is an Igorot and uneducated.
the business. Theres this man, his nephew in law, to sell
this property for 1 peso. Askay was paid
Example: consisted of P107.00 in cash, a billfold, one
20 years ago you contributed 10k pesos. You are sheet, two carabaos, and one cow.
selling your interest in the business after 20 years. The SC said, thats not a valid and sufficient
reason for us to declare the contract as void.
Q: Would you sell your interest for 10k now? The fact that the bargain is a hard one,
A: No, because your interest has grown already. coupled with mere inadequacy of price when
both parties are in a position to form an
independent judgment concerning the
Case: Requisites of Price Certain or Ascertainable transaction, is not sufficient ground for the
by reference to invoices. cancellation of a contract.

McCulough vs. Aenlle & Co, 3 Phil. 285, G.R. 1300,
Feb. 4, 1904 Case: Requisites of Price Certain or Ascertainable
(Read the full text of this case for further details) Effect of inadequacy of price

Note: Aguilar vs. Rubiato, 40 Phil. 570, G.R. No. L-14823,
The price of the business was based on some Dec. 9, 1919
at cost, some at a certain discount, in an (Read the full text of this case for further details)
invoice. Is that a valid way of determining the
price? Yes. Note:
Rubiato owned parcels of land at the time
valued at 26,000pesos. Here comes a man,

Manuel, convinced him to sign a special If you fail to pay the balance of the purchase price, I
power of attorney, authorizing this attorney- could not just immediately sell the property to
in-fact to obtain a loan for 4,000pesos. another person, unlike in a contract to sell.
What did this guy do? Sold the property
under the right to repurchase.
How many parcels of land were sold under Case: Earnest Money
the right to repurchase? 8 parcels of land for
800pesos for 1 year. Oesmer v. Paraiso Devt Corp. (not in the syllabus, pero
The SC acknowledges that when you sell a iya gi discuss)
property in right to repurchase the price is
always much lower than the prevailing "Earnest money" and "option money" are not the
market price. Why? Because the right of the same but distinguished thus:
seller to redeem the property. (a) Earnest money is part of the purchase price,
The SC said that the transaction was a loan while Option money is the money given as a distinct
and the sale was an equitable mortgage. consideration for an option contract;
Rubiato was still obliged to pay the loan with (b) Earnest money is given only where there is
interest. It is that the inadequacy of the already a sale, while Option money applies to a sale
price, which Vila obtained for the eight not yet perfected; and,
parcels of land belonging to Rubiato, is so (c) When Earnest money is given, the buyer is bound
great that the minds revolt at it. to pay the balance, while when the would-be buyer
gives Option money, he is not required to buy, but
may even forfeit it depending on the terms of the
Art. 1482 option.
Earnest Money

Case: Earnest Money
Q: What is Earnest Money?

A: Something that is given or paid to the seller as
Manila Metal Container Corporation vs. PND, G.R.
evidence of the perfection of a contract of sale.
166862, Dec. 20, 2006

Example:

I sell to you a parcel of land for 1million pesos and
Q: Was there an earnest money?
you paid me 10,000 pesos.
A: No, because there was no perfected contract of

sale.
Q: Have we perfected the contract of sale?

A: Yes. Even partially executed, because you have
Note:
given me earnest money of 10,000 pesos.
What Manila Metal did was to offer to
You failed to pay the balance of the purchase price, repurchase the property, which was the
what is my remedy? I can sue you for either specific subject of foreclosure sale. And the bank did
performance or sue for the rescission of the contract. not accept its offer. The bank made a counter-
offer.
Again, because we have a perfected contract of sale. The Manila Metal was banking on the receipt
issued by PNB.
Remember, you dont talk about an earnest money in
a contract to sell.

We talk about the earnest money in a contract of
sale.

Contract to Sell = no Earnest Money
Contract of Sale = with Earnest Money


July 4, 2017 Since form is not essential for the validity of the
contract.
RULES IN ORDINARY SALES
A. Form If a contract of sale over a real property the technical
description is not indicated in the document of sale,
Case: Form General Rule: Verbal agreement of sale would that affect the validity of the sale? No.

Caoili vs. CA, 314 SCRA 345 Of course, there are contracts of sale that have to be
(Read the full text of this case for further details) in writing for the enforceability that will fall under
the Statue of Frauds.
What was the original arrangement between Santiago
and Sps. Caoili? Lease agreement Statue of Frauds:
Who was the lessor? Santiago Art. 1403. The following contracts are unenforceable,
Who were the lessees? Sps. Caoili unless they are ratified:
What happened in the course of the lease? Secured xxx
a loan. (2) Thosenumber. In the following cases an
Who secured a loan from whom? Santiago agreement hereafter made shall be unenforceable by
Who secured the loan? The Sps. Caoili action, unless the same, or some note or
And eventually, they agreed on? Deed of Absolute memorandum thereof, be in writing, and subscribed
Sale by the party charged, or by his agent; evidence,
But they could not execute the Deed of Absolute Sale, thereof, of the agreement cannot be received without
because? the writing, or a secondary evidence of its contents:-
In whose name was the title of that certificate of title
over the property? xxx
What was her reason in claiming that there was no
sale? There was no document. (d) An agreement for the sale of goods, chattels or
things in action, at a price not less than five hundred
Note: pesos, unless the buyer accept and receive part of
Ownership does not depend upon the transfer such goods and chattels, or the evidences, or some of
of the certificate of title with the owners them, of such things in action, or pay at the time some
name. Its just a formality. part of the purchase money; but when a sale is made
The SC said, the absence of a formal deed of by auction and entry is made by the auctioneer in his
sale does not render the agreement null and sales book, at the time of the sale, of the amount and
void or without any effect. The provision of kind of property sold, terms of sale, price, names of
Article 1358 of the Civil Code on the necessity the purchasers and persons on whose account the
of a public document is only for convenience, sale is made, it is sufficient memorandum.
not for validity or enforceability. It does not
mean that no contract has been perfected so (e) An agreement or for the sale of real property or
long as the essential requisites of consent of of an interest therein;
the contracting parties, object, and cause of
the obligation concur. The SOF covers contracts that are wholly executory.
All of the essential elements of the contract So if theres a partial consideration paid for a contract
are present: Consent, Object and of sale over the property, then form is not required.
Consideration. Not all contracts involving a property made to be in
writing in order to be enforceable.

Case: Form General Rule: Effect of lack of technical
description in the contract

Naranja vs. CA, GR 160132, April 17, 2009


B. Perfection Although, in many cases the buyer would pay
because its a sale of property. Because the
Case: buyer was interested in transferring the
Coronel vs. CA, GR 103577, Oct. 7, 1996 certificate of title to his name. But under the
(Read the full text of this case for further details) law, if theres no agreement between the
parties, which would be the seller.
SCs Ruling: Sometimes the seller wants to receive the
The contract was Contract of Sale, although purchase price and already refuse to pay the
Conditional. Because the payment of the corresponding taxes.
purchase price was not the condition, but
rather the payment of the purchase price was Additional Info:
conditioned on the presentation of a clean Expenses of execution and Registration of the
title in the names of the sellers. What the sale (1487) are borne by the seller.
Coronels did was to sell the property to Expenses of putting the goods in a deliverable
another buyer. The SC said, that could no state (1521, last par.) are also borne by the
longer be made because there was a perfectly seller.
valid contract of sale.

RULES IN SPECIAL SALES
Case: A. Sales at Auction (Art. 1476)
Manila Mining Corp. vs. Tan, GR 171702, Feb. 12,
2009 Example:
(Read the full text of this case for further details) There are several items sold. Each item or each group
of items is called a lot. Each lot is covered by a
Q: Are invoices necessary as proof of perfection of a separate contract of sale. If a contract of sale is
contract of sale? perfected by the meeting of the minds between the
A: No. buyer and the seller.

SCs Ruling: Q: How is it perfected in an auction sale when there is
When Tan supplied the materials indicated in no seller and several prospective buyers?
the purchase orders and the invoices merely A: By fall of the hammer, or in other customary
provided the details of the transaction. manner.
Invoices are not necessary for the perfection
of the contract. The highest bidder is the buyer. The property will be
sold to that highest bidder. After the fall of the
hammer that means the sale is perfected.
Place of perfection
Where is contract of sale perfected? Q: Can the parties change the manner of the bid?
1. Where there was meeting of the minds A: No.
2. In case of acceptance through letter or
telegram, in the place where the offer was Case: Sales at Auction Validity of Supplemental
made. Minutes on Sheriffs Sale

Dizon vs. Dizon, GR 156539, Sept. 5, 2007
C. Expenses (Read the full text of this case for further details)

Note: Involuntary auction sale.
When you become lawyers and youre ask to
draft contracts for your clients. Its not being Note:
redundant to include as a stipulation, who He was the highest bidder in the auction sale
bears the expense for what, to avoid any over the property owned by the judgment
conflict between the parties in the future. debtor. 45 Minutes after the auction sale, the

lawyer for the judgment creditor went to the Case: Sales at Auction Auction sale where the seller
sheriff and increase the bid, because the reserved the right to reject any and all bids
winning bid was under 180,000pesos, he
increased the bid to 1million something. Leoquinco vs. Postal Savings Bank, 47 Phil 772
Q: Can the bidder increase the bid after the auction
sale? Note:
A: No, because the contract has already been Advertised for auction of the parcel of land
perfected. Any of the parties can no longer change the they owned, they preserved the right reject
conditions of the sale, unless both of them agreed. any of all bids and here comes Leoquinco who
claimed to be the highest bidder and he
In fact after the fall of the hammer, the win bidder demanded the execution of contract of sale be
can no longer retract his bid. delivered in his favor. But the Board of
Directors of the bank rejected his bid.
Before the fall of the hammer, a bidder can always
retract his bid. SCs Ruling:
That the owner of property which is offered
Voluntary Auction Sales: for sale, either at public or private auction,
Q: Why cant the seller participate in the bidding? has the right to prescribe the manner,
A: He cannot bid because in doing such he can conditions, and terms of such sale. He may
manipulate the biddings of other participants. provide that all of the purchase price should
be paid at the time of the sale, or any portion
Q: Can the seller bid as a matter of right? thereof, or that time will be given for the
A: The seller himself may bid provided that the payment, or that any and all bids may be
following conditions are present: rejected. The conditions of a public sale
- The right to bid has been expressly announced by an auctioneer or by the owner
reserved and made known to the of the property at the time and place of the
prospective bidders. (Check Page 62 of sale, are binding upon all bidders, whether
Pineda book for further details.) they knew of such conditions or not.

Otherwise, if the seller bids without notifying the Question: Can the seller reject any of the bids? As a
prospective bidders then the winning bidder can matter of right?
consider the sale as fraudulent.
Answer: Actually that is provided by law. The seller
can reject all of the bids unless the auction is
Situation: announced without reserve. Meaning, unless it is
Differentiate Creditor-Debtor and Judgment announced that regardless of the amount the bid then
Creditor-Judgment Debtor the auction has to proceed.
I owe you 1million pesos, I did not pay my obligation.
(Creditor You; Debtor Judge). You sue a specific In actual practice, the sellers would reserve the right
performance and the court said you won. The to reject the bids, which is not actually necessary.
decision become final and executory, the court
ordered me to pay 1million plus legal interest +
attorneys fees, etc. (Judgment Creditor You; B. Sales by Sample and/or Description (Art. 1481)
Judgment Debtor Judge).
Sale by Sample The bulk must correspond to the
My judgment debt is the total amount in the sample, otherwise the buyer cant be compelled to
judgment of the court. accept the goods.

Sale by Description The thing must correspond to
the description. Even if the buyer cannot use the
things for the purpose for which the thing was

purchased, the buyer cannot rescind the sale or Q: How many installments must be in default before
return the thing or refuse to pay the price. the seller can sue for specific performance?

A: Even a 1-month default, already entitles the seller
Case: Sales by Sample and/or Description (Art. 1481) to sue for a specific performance.

Pacific Commercial Co. vs. Ermita Market & Cold Q: How much can the seller collect, if the buyer
Stores, 56 Phil 617 defaults for 1 month? Can the seller collect all the
(Read the full text of this case for further details) agreed installments?

Q: What was delivered by Pacific? A: The obligation to be performed on installments,
A: Exactly as ordered by Ermita. each installment is a separate obligation, unless you
have an acceleration clause.
Note:
But Ermita wanted to use it for the purpose 2. Rescind or Cancel the sale
that is not the purpose of which the The seller cannot cancel the sale if theres
refrigeration machine was fabricated. It could only 1 default, but at least 2 or more default
not use the thing for the purpose intended, installments.
because it was not meant to be for the
purpose that it is intended. Note:
There was no breach of contract committed When you say default of two installments, we
by Pacific. Thus, they can compel Ermita to are not saying two monthly installments,
pay for the balance of the purchase price. because installments can be payable on
weekly, by monthly, every two months,
quarterly, yearly, whatever. But the most
C. Sale of Personalty payable by Installments common installment method of payment is
(Recto Law) monthly.

Recto Law: Q: What is the effect of the cancellation of the sale?
Remedies of unpaid seller in sales on A: Mutual restitution.
installment of personal property.
Situation:
The remedies afforded to unpaid seller are Are you telling me that when I sold to you a television
alternative. Meaning, if the seller opts to one remedy, set on installments and you have been in possession
he can no longer avail of the other remedy/remedies. by installment of the television set for 6 months. You
But of course with the first remedy availed of by the defaulted on the payment on 3 installments and I
seller is not possible then he may avail of the other opted to cancel the sale. Im going to return to you the
remedy. installments that you have paid and youre going to
return to me a fully depreciated a television set? No.
Example:
If the seller opts for specific performance to collect Q: Can the parties stipulate on forfeiture of
then he is entitled to avail of rescission of the installments?
contract. A: Yes they can.

Alternative Remedies of Unpaid Sellers (Recto 3. Foreclosure of the chattel mortgage
Law): Art. 1484 constituted on the thing sold.
1. Exact fulfillment of the obligation, should
the vendee fail to pay. Demand payment Note:
from the buyer. If the seller forecloses the mortgage
constituted on the thing sold, he can no longer
sue for or recover for the deficiency.
I want you to underline the on the thing

sold because what if the security for the A: An obligation to pay a sum of money (Promissory
payment of the unpaid installments is another note was indicated in the case); not necessarily a
thing, not the thing sold. loan because when you purchase a car when you sign
a promissory note to pay on installments its not a
Q: Can the seller recover the deficiency? loan, the obligation is to pay the price on
A: Yes. He can because the law is specific. He installments.
cannot recover the deficiency if the chattel
mortgage is on the thing sold. In this case, theres an obligation to pay a sum of
money that constituted a mortgage over the car.
In most instances, the chattel mortgage
constituted to secure payment of the Q: Who foreclosed the mortgage?
installments is on the thing sold. But there is A: Mortgagee: always the creditor
no prohibition against constituting a
mortgage or provide a security mortgage of Q: Who constitutes the mortgage?
another property owned by the buyer, not A: Mortgagor: can be a third person who is not the
even owned by the buyer, for as long as the debtor.
mortgagor is the absolute owner.
Q: What was the reason of de Santos when he refused
Art. 1484 (Recto Law) to pay the deficiency?
Note: A: He invoked the Recto Law. Claiming that, the seller
Provides the remedies available for the forecloses the mortgage then he can no longer
unpaid sellers. It also provides for protection recover the deficiency.
to the defaulting buyer under Art. 1484 (3).
If the seller proposes the mortgage then he Follow up Q: But Recto Law is applicable here?
can no longer recover the deficiency. A: No, because its not a sale of personal property on
installments. What was secured here was an
Example: If the seller is allowed to recover the obligation evidenced by a promissory note.
deficiency, sells a car for 1million pesos, buyer
defaults in 2 installments and buyer has paid 50% Note:
already (500,000) defaults by 2 intallments, he has a In many instances, the mortgagor is also the
balance of 500,000. debtor. But it does not always happen.
Third person can also be a mortgagor for as
Then seller proposes the mortgage and the seller is long as hes the absolute owner of the
the highest bidder, purchases the property for property and he has free disposal of the
100,000 only. Hes allowed to recover the deficiency, property. He can be a mortgagor; he can
the value of the car is more than 500,000. The law secure the obligation of another person.
says that waiver of the right granted to the buyer is You cannot constitute a valid mortgage if
void. theres no principal obligation. Thats the first
requisite for a valid mortgage.

Case: Alternative remedies in case of non-payment
Recto Law: Promissory note with chattel mortgage Case: Alternative remedies in case of non-payment
Recto Law: Sale of car on straight term
Macondray & Co. vs. de Santos, 61 Phil 370
(Read the full text of this case for further details) Levy Hermanos vs. Gervacio, 69 Phil 52
Q: Was there a chattel mortgage here?
A: Yes. Q: Was there a sale of personal property?
A: Yes. A car is a personal property.
Q: What was the principal obligation secured by a
mortgage here? Q: Was the price paid upon the delivery of the car?
A: Only part of the price was paid. The balance of the

purchase price was secured by a mortgage Q: Did the buyers voluntarily surrender the truck?
constituted over the same car that was sold. A: No they did not. They only surrendered on Oct. 10,
1984.
Q: Was the balance of the purchase price paid?
A: No Note:
If upon demand, the buyer refuses to
Q: What did Levy Hermanos do? surrender. Usually, the demand letter by the
A: Initiated the foreclosure. lawyer would say that there is a demand
made upon you to pay this amount OR
Q: How much was the unpaid price at the time of the voluntarily surrender the vehicle.
foreclosure? If the buyer refuses to pay and surrender the
A: P1,600 vehicle, the seller opts to foreclose the
mortgage, it cannot just sell the movable
Q: How much was the vehicle sold? without first taking concession of the
A: P800 movable. It has to have possession to the
movable, because during the foreclosure sale
Q: Was it enough to pay the balance of the purchase it would be immediately delivered to the
price? highest bidder. Thats the first thing of the
A: No. seller to do, to recover possession of the
property.
Q: Why is Recto Law not applicable here?
A: Its not a sale by installment, but a straight sale. In the case, the buyers refused to voluntarily
surrender. They only surrendered after a certain
period. Maybe Asian determined that if they pursue
Case: Alternative remedies in case of non-payment foreclosure, the proceeds would not be enough to pay
Recto Law: Sale of truck on installment where the balance of the purchase price. Instead of pursuing
foreclosure was not pursued foreclosure, they sued for specific performance. Then
Dela Cruz said, you couldnt do that because you
Dela Cruz vs. Asian Consumer & Indl. Finance opted for foreclosure under Art. 1483 (3), if you opt
Crop., L-94828, Sept. 18, 1992 for foreclosure, then you cannot sue for specific
(Read the full text of this case for further details) performance.

Q: Was there a sale of personal property on SCs ruling: There was a timely desistance on the
installments? part of Asian.
A: Yes
Q: Was payment of the installments secured by a How does this differ from Magna Financial?
mortgage?
A: Yes.
Case: Alternative remedies in case of non-payment
Q: Was there a default? Recto Law:
A: Yes. More than 2 installments.
Magna Financial Services Group, Inc. vs. Colarina,
Q: Was Asian Consumer the seller here? GR 15863, Dec. 9, 2005
A: No (Read the full text of this case for further details)

Q: Who is the seller? Note:
A: Benter It involves a sale of a vehicle on installments.
The buyer also defaulted in the payment of at
Q: Why is the Asian Consumer, the party which least 2 installments.
instituted the foreclosure proceedings? Magna Financial initiated foreclosure
A: Asian initiated the foreclosure proceedings, proceedings.
demanded the return of the truck. Magna Financial prays for specific

performance. Lantan continued using the car, he did not
Magna demanded for the return of the car or return the car to the company. He paid the
payment of the unpaid obligation. rentals although not in a regular basis.
The subject vehicle is already in the During audit, they found out in their records,
possession of Magna. there this car leased to Lantan.
But Magna still sued for specific performance. Elisco filed an action to recover the car.
Actually, this case reached the SC because of During the trial, it was found out that Lantan
the fault of the trial court. Because the trial was already fully paid.
court, ordered the recovery of the car and Initially, the trial court granted the writ of
payment of the unpaid price. replevin, the court finally ruled that the car
SC said, no you cannot sue for specific should be returned to that man. The car is his
performance. You must pursue foreclosure. already.
From the start, Magna has been consistent in
pursuing foreclosure. SC said, pursue
foreclosure up to the sale. But you cannot Sale of real property on installments (Maceda
recover the balance of the unpaid price. Law, RA 6552 [Realty Installment Buyer
Protection Act]) *another favorite in the Bar if Sales will be
How this differs from Asian Consumer case? asked.

The buyers did not voluntarily surrender.
Recto Law Governs sale of personal property of
Asian timely desisted from pursuing
installments; Old Law ; Found in the Civil Code
foreclosure.

Maceda law Governs sale of real property (not all
Q: What is rent-to-own?
real property) on installments; Ernesto Maceda
A: Lease for a certain period, after a certain period, if
(Younger law)
you decide to purchase the car, the rentals will be

applied as installment payments, you will be required
Transactions covered:
to pay only a small amount for the price. That
1. Sales of condominium
arrangement is installment sale of personal
2. Sales of house and lot
property.
3. Lots only

4. Townhouses
Situation:

If its a sale of personal property, if you rent a car of a
Except:
rent-to-own scheme, meaning lease contracts with
1. Industrial lots
option to buy. If you default on the payment of
2. Commercial buildings
rentals, and the lessor recovers possession of the
3. Sales to tenants under RA 3844 (Agricultural
vehicle, you are no longer obliged to pay the unpaid
Land Reform Code)
balance. Its like foreclosing of a chattel mortgage. No

right to recover the deficiency.
Maceda Law

Enumerates the rights of the defaulting buyer.

Case: Leases of Personalty with Option to Buy Covers not only contracts of sale but also
contracts to sell.
Elisco Tool Mfg. Corp. vs. CA, 307 SCRA 731
(Read the full text of this case for further details) Rights of the Defaulting Buyer:

Note: Situation: If a buyer has paid 2 years worth of
installments, it should be accumulated equivalent to
Lantan was an employee of Elisco.
2 years. And defaults in the payment of his
There was a car plan, granted by certain
installments.
employees.

The rentals for the car deducted from the

salary, but Elisco closed shop. So Lantan was

laid-off, termination of service with cause.

Defaulting buyer who has paid at least 2 years of Q: Can the buyer pay the due installments during the
installment: 30 day period?
1. Entitled to a grace period equivalent to 1
month for every year he has paid to pay the A: In actual practice, when the seller sends a notarial
only defaulted installment without interest. notice of rescission, after 30 days, when the seller
(During the grace period). opts to rescind the contract, it does not immediately
a. If he does not pay within the grace send a notice of rescission immediately after the
period, then thats the time that the lapse of grace period. It takes time to send a notarial
seller may opt to cancel the sale. notice.

Note: If the contract is covered by the Maceda Within the 30 day period from the receipt of the
Law, the seller has to cancel the sale. It can buyer of the notarial notice or notarial demand,
offer the property to for sale to other buyers. according to the court, the buyer can still pay the
Look at the contract agreement if its covered installment/s.
by Maceda Law.
Note:
If the buyer fails to pay within the grace period, if the If the seller merely sends a notarial notice of
seller wants to cancel the sale. Twin requirements rescission without tendering the cash
must exist: (Take note of the twin requirements of surrender value, then the seller cannot cancel
seller) the sale.
1. Notarial notice of rescission or notarial In many cases decided by the SC, the buyer
demand for rescission, and was still allowed to pay even after more than
2. Return of the cash surrender value 10 years of default. Because of the failure by
a. If the buyer has paid the seller to comply with the twin
i. 2 years to 5 years = 50% requirements mentioned above.
ii. After 5 years = 50%;
additional 5% per year, but Other Rights of the Defaulting Buyer:
the total cash surrender value 1. To assign his right over the property.
do not exceed 90%
Q: Can the buyer advance payment?
Buyer has not paid 2 years of installments: A: Yes. Malipay ang seller ana. J
1. Entitled to the grace period not less than 60
days to pay the unpaid installments without
interest. Case: Maceda Law Rights of Buyer: In case of
cancellation of sale
Note:
Cash surrender value is 50% of all payments Pagtalunan vs. de Manzano, GR 147695, Sept. 13,
made. 2007
If payment is less than 2 years, no right to (Read the full text of this case for further details)
receive cash surrender value.
Again the seller cannot rescind the sale if he Compared with other cases:
does not send a notarial notice of rescission
or notarial demand rescission to the buyer. Gatchalian case The term (2 years payment or less
than 2 years) means the total number of
(If the buyer fails to pay the installments due at the installments. Its not 2 years from year 1 to 2 years.
expiration of the grace period, the seller may cancel (Even the installments are not paid within 2 years,
the contract after thirty days from the receipt by the for as long as 24 months of installments are paid,
buyer of the notice of cancellation or the demand for thats equivalent to 2 years of payment). Provided
rescission of the contract by a notarial act.) that the agreement is monthly installment.


Pagtalunan case There was merely a demand contains a license to sell.
letter. The court said, it does not comply with the
twin requirement of notarial notice or notarial Two Permits:
demand of rescission. The court allowed the buyer to 1. Permit to construct
continue paying the installments from April 1997, but 2. Permit to sell absence of it will not
she defaulted by 1980. The SC said, there was no invalidate the contracts. It will just subject the
valid rescission of the contract, because the seller owner/developer or its officers for civil or
failure to comply with the twin requirements. personal/criminal liability. The sales are
perfectly valid.
Ramos vs. Heruela Payment was less than 2 years
here. There was no notarial notice of rescission Situation:
(sellers failure to comply with the twin If the subject of a contract of sale or contract to sell is
requirements). The buyers were allowed to continue a subdivision lot or a condominium unit, and the
paying the installments to the seller. buyer defaults in the pay of installments.

Active Realty case The buyer almost completed Q: Will Maceda Law apply?
the payment of the installments, and then she A: Yes
defaulted. When she offered to pay, it was refused by
Active, because after she defaulted, Active sold the Situation: If the developer of the subdivision or the
property to another buyer at a higher price. So the condominium project fails to develop the project,
court can no longer order continuation of the according to the plans and within the period
payment of the installments, because theres no more indicated in the project proposal submitted to
object of sale. HLURB.

Q: What was the equitable solution ordered by the The buyer is justified in suspending payments. But
court? the buyer cannot just unilaterally suspend payment.
A: Since you sold the property, you return to Daroya If he does, Maceda Law might apply. He has to notify
the price that you collected from the new buyer. the owner/developer of the reason why hell stop
Active was ordered to pay 875,000. payment. He can also demand the return of all
payments paid, not just the cash surrender value.

PD No. 957 The Subdivision and Condominium Note:
Buyers Protective Decree Under PD 957, the developer or the owner
In relation to the Maceda Law. cannot mortgage the property (the
subdivision or condominium project) without
Maceda Law if the buyer defaults in the payment of first obtaining the approval of HLURB. If it
installments, hes given a grace period depending on does, the mortgage will be declared void.
the number of installments he has made.

PD 957 Cases:
The buyer has the reason to stop payment, or Far East Bank case The court did not declare the
To demand the return of everything that he mortgage as void, because there was only one
paid. If the developer or the owner fails to complainant. Only that portion (the townhouse),
develop the property within the time frame purchased by Marquez. Not the entire mortgage.
indicated in the project proposal submitted to
HLURB. Tamayo Failure of owner and developer to provide
necessary forms of development.
Note:
The developer of subdivision or Cantemprate Failure of the developer to secure a
condominium project cannot start the license to sell. The court said that it will not
development without first securing a permit invalidate the sale but the officers are subject to civil
from HLURB. It cannot start selling unless it and criminal liabilities.

July 11, 2017 Case: Special Disqualifications Transfer in common
law relationship
CHAPTER 2: Capacity to Buy or Sell
Ching vs. Goyanko, G.R. No. 165879, Nov. 10, 2006
Art. 1489 1492 (Read the full text of this case for further details)
I. Parties and their Consent
A. Capacity in general (Art. 1489) Pronouncement of the court:
The prohibitions apply to a couple even as
Q: Is there a particular capacity required on the husband and wife without the benefit of
parties to enter into a contract of sale? marriage otherwise the condition of those
A: Yes. who incurred guilt would turn out to be
better than those in legal union.. Carpio
On the part of the buyer, is there a special capacity? Morales (Former Justice of the Supreme
No. Court).

But on the part of the seller? Yes. Who are the other persons that are incapacitated
to purchase a property? (Refer to Art. 1491 of the
Q: What is that additional requirement for the part of NCC)
the seller?
A: He must be the owner of the thing at the time of
the delivery because you cannot transfer ownership Case: Special Disqualifications Persons in trust
unless hes the owner of the thing. relations: Sale to guardians

Note: Phil. Trust Co. vs. Roldan, 99 Phil. 392 (1956), G.R.
There are certain contracts of sale, even if the No. L-8477, May 31, 1956
parties are legal capacitated to enter into a (Read the full text of this case for further details)
contract. Even if the seller is the absolute
owner of the property, the buyer and seller Note:
are prohibited from entering into a contract The court approved the sale. The guardian
of sale. here sought permission from the court to sell
Example: Spouses are prohibited from the property of the ward, to purchase a
entering into a contract of sale between each residential property for the benefit of the
other. ward.

What is the rationale for the prohibition? (Read Q: To whom did the court appointed guardian to sell
Pineda book, page 106) the property?
1. Prevent the stronger spouse from exploiting
the weaker spouse; A: To the brother-in-law.
2. Prevents donations disguised as sales;
3. Protect third persons, specially creditors, Immediately after the court approved the
against fraud through the transfer of the sale, the brother-in-law sold the property to
properties of one spouse to the other to evade the guardian.
payment of obligations. The Philippine Trust Company replaced
Socorro Roldan as guardian, on August 10,
Note: 1948. And this litigation, started two months
The prohibition against spouses in selling a later, seeks to undo what the previous
property to each other extends to guardian had done.
relationships between a man and a woman
who lived together as husband and wife. SCs ruling:
(Judge A: I do not want to call it a common- As Guardianship is a trust of the highest
law relationship because were not governed order, the trustee cannot be allowed to have
by a common-law jurisdiction.) any inducement to neglect his ward's interest;

and whenever the guardian acquires the SCs Ruling:
ward's property through an intermediary, he The point is that he is a public officer and his
violates the provision of Article 1459 of the wife acts for and in his name in any
Civil Code and such transaction and transaction with the GSIS. If he is allowed to
subsequent ones emanating therefrom shall participate in the public bidding of properties
be annulled. foreclosed or confiscated by the GSIS, there
The court declared the contract as void. will always be the suspicion among other
bidders and the general public that the
insider official had access to information and
Case: Special Disqualifications Persons in trust connections with his fellow GSIS officials as to
relations: Sale to agent Exception to prohibition allow him to eventually acquire the property.
against sale by principal in favor of his agent It is precisely the need to forestall such
suspicions and to restore confidence in the
Pelayo vs. Perez, G.R. No. 141323, June 8, 2005 public service that the Civil Code now
(Read the full text of this case for further details) declares such transactions to be void from the
beginning and not merely voidable.
Note:
The principals themselves (the spouses) sold Note:
the property to the agent. Although, the wife Contracts that entered into in violation of the
trying to assail the sale by claiming that she trust are sometimes declared by the court as
did not sign the deed of sale, she only signed voidable.
as a witness. But in the Phil. Trust case they declared it as
The fact that she signed as witness means void.
that she knew the contract.

Situation: Case: Special Disqualifications Persons in trust
If agents are prohibited from acquiring property from relations: Sale/transfer to attorney
the principal, can real estate brokers acquire
property of a developer or the owner of the property Gurrea vs. Suplico, G.R. No. 144320, April 26,
or the seller? Yes. 2006
Q: Are they considered as Agents of the sellers?
Note:
A: No, they are merely intermediaries. They are Proscriptions against lawyer acquiring
considered as agents for both buyer and the seller. property in litigation.
The purpose of the broker is to bring the parties Estate proceeding.
together. The estate was already distributed.
The last act to be done by the court was to act
on a motion to terminate the proceedings. To
Case: Special Disqualifications Persons in trust declare close the proceedings. But which was
relations: Sale to public officers not done, that was the pending incident that
properties were already distributed to the
Maharlika Broadcasting Corp. vs. Tagle, 142 SCRA heirs.
553 Before the case was declared close, he
(Read the full text of this case for further details) demanded that the property would be
delivered to him.
Note:
Properties sold by GSIS. SCs Ruling: Declared the transaction as null and
Husband an employee in GSIS. He knew that void.
he could not acquire the property. He asked
his wife to do the bidding for him.


Case: Special Disqualifications Persons in trust A: Mere demand for delivery of the litigated property
relations: in relation to Art. 1491 (5) does not cause the transfer of ownership, hence, not a
prohibited transaction.
Fornilda vs. RTC, G.R. No. L-72306, January 24,
1989 Note:
(Read the full text of this case for further details) Judge A: When you become lawyers, reminder
Not included in the syllabus, pero iya gi discuss. lang ang ihatag.

Situation: Situation:
What if the property under litigation is not You are the lawyer, during the pendency of the case
transferred to the lawyer, but a mortgage was the property under litigation was transferred to you
constituted during the pendency of the action. A and you know from the ruling of Guerra vs. Suplico
mortgage was constituted in favor of the lawyer. And case that it is a void transfer. So if its void, you are
after the termination of the case, the lawyer was not not paid. The case was terminated. Your client has no
paid on the agreed fee; he forecloses the mortgage to money.
satisfy his lawyers claim.
Q: What will you do?
Q: Is that also prohibited?
A: Yes. A: Remake another contract. Its not prohibited. Its
not a confirmation and ratification of a void contract.
SCs ruling: Remake another contract after the termination of the
At the time of the execution of the mortgage case.
contract, the Controverted Parcels were still
in litigation and a fiduciary relationship of Q: What is the effect if you have a capacitated seller
lawyer and client, which Article 1491[5] and incapacitated buyer? Is the contract valid?
precisely seeks to protect, still existed A: Valid but voidable.
between the parties. To state that mortgages
are not included within the prohibition is to Q: Is the incapacitated buyer freed from any
open the door to an indirect circumvention of obligation to pay the price?
that statutory injunction, acquisition of the A: No. Especially if the incapacitated person
property being merely postponed till eventual purchases necessaries. (Like iPhone, ipad, apple watch.
foreclosure. J )

Note: The person must pay reasonable price.
Even execution of a mortgage during the
pendency of the case because basis for the
foreclosure later on even if the basis is CHAPTER 3: Effects Of The Contract When The
terminated is the mortgage constituted Thing Sold Has Been Lost
during the pendency of the case. (Nag-rap napud
ni nga part, if you know what I mean J) Art. 1493-1494

Situation: Before the perfection of the contract of a contract
What about demand for the entire delivery of the of sale and a determinate thing is lost. Who bears the
property during the pendency of the case? The fee risk of loss? The owner.
here is contingent. The client promised to deliver to
the lawyer his share in the property that will be Note:
awarded to the client. During the pendency of the Because in our jurisdiction, we follow the
case, the lawyer wrote a demand letter to the client, principle of Res Perit Domino adopted from
demanding for the delivery of the property to him. the US.

Q: Is that prohibited? Res Perit Domino it is the owner of the
thing who bears the consequences of the loss.

During the perfection of the contract of sale, who A: Experts have different opinions. Because while we
bears the risk of loss? The seller bears the risk of adapted the Roman Law principle, that ownership is
loss. transferred upon delivery. We also adapted the
Common Law principle of Res Perit Domino. There is
Partial Loss: no problem if we can attribute the laws to a
The buyer/vendee has alternative remedies: particular party, because that party bears the risk of
1. He may withdraw from the contract; or loss.
2. He may demand the delivery of the remaining The question arises if the loss is due to fortuitous
part for which he shall pay an amount in event. Who will bear the risk of loss?
proportion to the total sum agreed upon.
General Provisions in ObliCon:
Note: The seller cannot compel the buyer to (Im not sure unsa na article)
proceed with the contract when there is partial
loss. Any deterioration shall be borne by the debtor from
the time of the perfection of the contract until the
Loss After PerfectionBefore Delivery delivery.

Who bears the risk of loss? Creditor borne by the creditor, because any fruits or
income from the property also inure the benefit of
Note: the creditor from the time of perfection. He has a
Our Civil Code is a mixed of Roman Law personal right to the fruits.
which was adapted from the Spanish Civil
Code and the Common Law was adapted to As far as delivery of the thing is concerned, the
the US Uniform Sales Act. creditor is the buyer and the debtor is the seller.

Roman Law Sale: According to Paras, if the thing is loss (determinate
From the moment of the perfection of the thing), after perfection-before delivery, the sellers
contract, the risk of loss is borne by the buyer. obligation is extinguished. But the obligation of the
But ownership transferred upon delivery. buyer subsists.

Risk of Loss = Borne by the buyer (moment Same opinion of Padilla, when the subject matter of
of the perfection of the contract) the sale is loss without the fault of the seller, hes
released from the obligation to deliver, while the
Ownership = Upon Delivery obligation of the buyer subsists.

Common Law Sale: Seller = Happy. No obligation to deliver, you
The owner bears the risk of loss. Principle of will receive the price.
Res Perit Domino. But ownership is Buyer = What is the purpose of the buyer?
transferred at the time of the perfection of the The intention to acquire ownership.
contract. Even if theres no delivery.
According to Tolentino, the vendor should bear the
Risk of Loss = Owner risk of loss. It means that, he should not collect from
the buyer. Because sale is a bilateral contract, both
Ownership = At the time of the perfection, parties are obliged to perform. It is fundamental in
regardless of delivery. the Civil Code that ownership is transferred by
delivery, hence, before delivery the vendor owns the
Either Roman Law or Common Law, the risk of loss is thing, which he should suffers its loss (RES PERIT
borne by the buyer upon perfection before delivery. DOMINO PRINCIPLE).

Q: What about the Res Perit Domino? Note:
There are instances that the goods are
already delivered to the buyer, and the seller

reserves his ownership, and then the seller
bears the risk of loss, even if the goods are
already delivered to the buyer.
If the reservation of title is only to secure
payment of the price, then as ruled in Gaisano
Cagayan case, the buyer bears the risk of loss.


Sales Transcript2017 PreMid

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Sales Transcript2017 PreMid

Hochgeladen von

Copyright:

Verfügbare Formate

June

Das könnte Ihnen auch gefallen