Sales and Lease

8/13/2019 Sales and Lease

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San Beda College of Law113

MEMORYAIDINCIVILLAW

SALES

SALE

A nominate contract whereby one ofthe contracting parties obligateshimself to transfer the ownership ofand to deliver a determinate thingand the other to pay therefor a pricecertain in money or its equivalent.

NOTES: Delivery and payment in acontract of sale are so interrelated andintertwined with each other that withoutdelivery of the goods there is nocorresponding obligation to pay. Thetwo complement each other. It is clear

that the two elements cannot bedissociated, for the contract of purchaseand sale is essentially a bilateralcontract, as it gives rise to reciprocalobligations. (Pio Barretto Sons, Inc. vs.Compania Maritima, 62 SCRA 167).

Neither is the delivery of the thingbought nor the payment of the pricenecessary for the perfection of thecontract of sale. Being consensual,it is perfected by mere consent.

Elements:a. ssential elements ! those without

which, there can be no valid sale"1. #onsent or meeting of minds2. A Determinable sub$ect matter3. %rice certain in money or its

equivalentb. Natural elements ! inherent in the

contract, and which in the absenceof any contrary provision, aredeemed to e&ist in the contract"1. 'arranty against eviction2. 'arranty against hidden defects

c. Accidental elements ! may bepresent or absent depending on thestipulation of the parties (e.g.:conitions, interest, pena!t", timeor p!ace o# pa"ment, etc.)

Characteristics:1. %rincipal2. #onsensual(3. Bilateral(4. Nominate(5. #ommutative( In some cases,

aleatory )emptio spei*(

6. +nerous.

Aleatory contract" one of the parties orboth reciprocally bind themselves to giveor to do something in consideration ofwhat the other shall give or do upon thehappening of an event which isuncertain, or which is to occur at anindeterminate time. ($%: Sa!e o#s&eepsta'es tic'et)

Contract to sell

e&clusive right and privilege topurchase an ob$ect.

a bilateral contract whereby theprospective seller, while e&presslyreserving the ownership of thesub$ect property despite deliverythereof to the prospective buyerbinds himself to sell the saidproperty e&clusively to theprospective buyer upon fulfilment ofthe condition agreed upon, that is,full payment of the purchase price.

NOTE: Absent a proviso in the contract

that the title to the property is reservedin the vendor until full payment of thepurchase price or a stipulation giving thevendor the right to unilaterally rescindthe contract the moment the vendeefails to pay within the fi&ed period, thetransaction is an absolute contract ofsale and not a contract to sell. (ignosvs. CA 1*++) The contract of sale by itself is not amode of acquiring ownership. Thecontact transfers no real rights( itmerely causes certain obligations to

arise.

Contract ofSale

Contract toSell

-. Title passes to t-e/"er upon deliveryof the thing sold

-. +wnership isreserved in theseller and is not topass until fullpayment of thepurchase price

. Non/payment ofthe price is anegative resolutorycondition and the

. 0ull payment is apositive suspensivecondition, the

failure of which is

CIVILLAWCOMMITTEECHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP : Alnaia Ha!!iman, Doro"#y $ayon

S%BJECTHEADS: C#ri!"oer Rey 'ara!i(an )Per!on! and *amily Rela"ion!+, Aleandro Ca!a-ar)Pro&er"y+, 'a. R#odora*errer)ill! and Succe!!ion+, Ian Dominic Pua)O-li(a"ion! and Con"rac"!+, S#a Elia# Dumama)Sale! and /ea!e+, Jo#n S"een0uiam-ao)PAT+, C#ri!"oer Ca-i(ao)Credi" Tran!ac"ion!+, /i(aya Ali&ao)Tor"! and Dama(e!+, An"#ony Pur(anan)/TD+,'a. Rica!ion Tu(adi )Con1lic"! o1 /a2+


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114 2005CENTRALIZEDBAROPERATIONS

remedy of the selleris to e&act fulfilmentor to rescind thecontract

not a breach !casual or seriousbut simplyprevents theobligation of thevendor to conveytitle from havingbinding force

1. 2endor loses andcannot recoverownership of thething sold anddelivered until thecontract of sale isresolved and setaside

1. Title remains inthe vendor if thevendee does notcomply with thecondition

preceent ofma3ing payment atthe time specifiedin the contract

Conditional Sale Contract toSellAs to reservation of title to the subject

property

In both cases the seller may reserve thetitle to the sub$ect property untilfulfillment of the suspensive condition i.e.full payment of the price

As to effect of fulfillment of suspensivecondition

-. 4pon fulfillment ofthe suspensivecondition, thecontract of sale is

thereby perfected,such that if there hadbeen previous deliveryof the sub$ectproperty to the buyer,ownership theretoautomaticallytransfers to thebuyer by operationof law without anyfurther act by theseller.

-. 4ponfulfillment of thesuspensivecondition, which

is the fullpayment of thepurchase price,ownership willnotautomaticallytransfer to thebuyer althoughthe property mayhave beenpreviouslydelivered to him.The prospectiveseller still has

to convey titleto the

prospectivebuyer byentering into acontract ofabsolute sale.

As to effect of sale of the subjectproperty to 3rdpersons

-. #onstructive5actual 3nowledge onthe part of the nd

buyer of the defect inthe seller6s title

renders him not aregistrant in goodfaith. 7uch secondbuyer cannot defeatthe first buyer6s title.Ratio" 0ulfilment ofthe suspensiveconditions affects theseller6s title to theproperty and previousdelivery of thepropertyautomaticallytransfers

ownership5title to thebuyer.

-. Third personbuying theproperty despitefulfilment of thesuspensive

condition cannotbe deemed abuyer in badfaith andprospectivebuyer cannotsee3 the relief ofreconveyance ofproperty.Exception: IfThere was noprevious sale ofthe property.

OBJECTS OF SALEReqisites:-. T8IN97"

a* determinate or determinable)Arts. -:;*b* lawful )Arts -1:?, -:>@ -,:c* should not be impossible )Art.-1:


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MEMORYAIDINCIVILLAW

NOTE: In case of doubt the presumptionis in favor of emptio rei speratae whichis more in 3eeping with the commutativecharacter of the contract

!oods "hich ma# $e O$%ect of Salea. &isting goods ! goods owned or

possessed by the seller.b. 0uture goods ! goods to be

manufactured, raised or acquired bythe seller after the perfection of thecontract.

NOTES:

A sale of future goods is valid only asan e&ecutory contract to be fulfilledby the acquisition and delivery ofgoods specified.

'hile there can be sale of futureproperty, there can generally be nodonation of future property )Artic!e701 Civi! Coe*

0uture inheritance cannot be sold.

A contract of sale or purchase ofgoods to be delivered at a futuretime, if entered into without theintention of having any goods passfrom one party to another, but withan understanding that at theappointed time, the purchaser is

merely to receive or pay thedifference between the contract andthe mar3et prices, is illegal. 7uchcontract falls under the definition offuturesE in which the partiesmerely gamble on the rise or fall inprices and is declared null and voidby law. )Art. >-


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Rles to determine if the contract isone of Sale or *iece of "or,:a. If ordered in the ordinary course of

business ! sale

b. If manufactured specially for thecustomer and upon his special order,and not for the mar3et ! piece ofwork

SCHOOLS OF HO!"H#a* Fassachusetts rule" If

specifically done at the order ofanother, this is a contract for apiece of wor3. )%hilippineapplication*

b* New Gor3 rule" If thing alreadye&ists/7AH( if not/'+C

c* nglish rule" If material is morevaluable/7AH( if s3ill is morevaluable/'+C

BARTER

contract whereby one of the partiesbinds himself to give one thing inconsideration of the otherJs promiseto give another thing.

NOTE: The only point differencebetween contract of sale and barter is inthe element which is present in sale butnot in barter, namely" price certain inmone" or its e3/iva!ent

NOTE: If the consideration is partly inmone" and partly in anot-er t-ing,determine"

a. The manifest intention of theparties

b. If the intent is not clear, applythe following rules"1. If the thing is more valuable

than money ! barter2. If the money and the thing

are of equal value ! sale3. If the thing is less valuablethan money ! sale

Sale -ation in *a#ment-. No pre/e&isting

credit-. %re/e&isting credit

. +bligations arecreated

. +bligations aree&tinguished

1. #onsideration onthe part of the selleris the price( on thepart of the buyer isthe acquisition of

1. #onsideration ofthe debtor is thee&tinguishment ofthe debt( on the partof the creditor, it is

the ob$ect the acquisition ofthe ob$ect offered inlieu of the originalcredit

4. 9reater freedomin determiningthe price

:. Hess 0reedom indetermining theprice

5. Buyer still has topay the price

;. The payment isreceived by thedebtor beforethe contract isperfected.

*R&CE

The sum stipulated as the equivalentof the thing sold and also everyincident ta3en into consideration forthe fi&ing of the price, put to thedebit of the vendee and agreed to byhim.

Reqisites:1. #ertainty or ascertainable at the

time of perfection2. Ceal, not fictitious3. In some cases, must not be

grossly inferior to the value ofthe thing sold.

4. %aid in money or its equivalent

Certaint#

It is not necessary that the certaintyof the price be actual or determinedat the time of the e&ecution of thecontract. The price is certain in thefollowing cases"-. If the parties have fi&ed or

agreed upon a definite amount(NOTE: The fi&ing of the price cannever be left to the discretion of oneof the contracting parties. 8oweverif the price fi&ed by one of theparties is accepted by the other, thesale is perfected.. If it be certain with reference to

another thing certain1. If the determination of the price

is left to the $udgment of aspecified person or persons evenbefore such determination

:. In the cases provided under Art.-:? N##

2005 CENTRALIZEDBAROPERATIONSEXECUTIVECOMMITTEEANDSUBJECTCHAIRPERSONS

Mar!"# A$ar"%&'( )O3er4all C#air&er!on+, R'%a#) Ja#*a%+ar )O3er4all Vice C#air+, Y'#a%)a T'#"%&%')VC4Acad!+,J"%%,"r A%-)VC4 Secre"aria"+, J'. I%)/!&' )VC4*inance+, E#a%" Ma(/a& )VC4EDP+, A%%a Mar-ar&a Er"( )VC4/o(i!"ic!+. J'%a&a%

Ma%-/%)a.a' )Poli"ical /a2+, ra%!( B"%")!& R"'&/&ar )/a-or /a2+, R'*/a#) Pa)##a )Ci3il /a2+, Car*a%" T'rr"()Ta5a"ion /a2+, Mar Da) Mar&%"+ )Criminal /a2+, ar%. L/(a A#"-r" )Commercial /a2+, J%. A%% U.)Remedial /a2+,Ja!" L'/ Ba/&(&a)/e(al E"#ic!+


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$8C$P9I5: 'hen the sale is sub$ectto a suspensive condition by virtue oflaw or stipulation. The terms and conditions of payment

are merely accidental, not essentialelements of the contract of sale e&ceptwhere the partied themselves stipulatethat in addition to the sub$ect/matterand the price, they are essential ormaterial to the contract.

Reqirements for perfectiona$ %hen parties are face to face

'hen an offer is accepted withoutconditions or qualificationsNOTES:

A conditional acceptance is acounter/offer

when negotiated thru phone it isas if it is negotiated face to face

b$ %hen contract is thrucorrespondence or thru tele&ram

'hen the offeror receives or has3nowledge of the acceptance by theoffereeNOTE: If the buyer has alreadyaccepted but the seller does not3now yet of the acceptance, theseller may still withdraw

c$ %hen a sale is subject to asuspensive condition

0rom the moment the condition isfulfilled

TRANSFER OF O+NERS3&*4$5$RA R$: 'hile a contract ofsale is consensual, ownership of thething sold is acquired only upon itsdelivery, actual or constructive, to thebuyer. (a/s vs. Sps. e eon, 16 >/ne2;;a!&inor Man/#act/rers,Inc. *< SCRA 2;)

Nonpayment only creates a rightto demand payment or to rescindthe contract, or to criminalprosecution in the case of

bouncing chec3s. ($CAP/!is-ing an istri/tingCorp. vs. Santos, 1+ SCRA 61)

$8C$P9I5S:-. Contrar" stip/!ation or 'actum

reservati dominii )contractualreservation of title* ! a stipulation,usually in sales by installment,whereby, despite delivery of theproperty sold, ownership remainswith the seller until full payment ofthe price is made.

2. Contract to se!!1. Contract o# ins/rance ! a perfected

contract of sale, even withoutdelivery, vests in the vendee an

equitable title, an e&isting interestover the goods sufficient to be thesub$ect of insurance

R4LES !O0ERN&N! A4CT&ON SALES-. 7ales of separate lots by auction areseparate contracts of sale.. 7ale is perfected by the fall of thehammer1. 7eller has the right to bid in theauction, provided" a* such right was reserved b* notice was given that the sale was

sub$ect to a right to bid on behalf of theseller c* right is not prohibited by law or bystipulation:. Advertisements for bidders are simplyinvitations to ma3e proposals, and theadvertiser is not bound to accept thehighest or lowest bidder, unless thecontrary appears.

EFFECT OF *RO5&SE TREATE- 4N-ERART/ .678 Ci'il Code:1. Accepted nilateral promise to sell

or $#

+nly one ma3es the promise, thispromise is accepted by the other.$%amp!e" A promises to sell to B, Baccepts the promise, but does not inturn promise to buy.

does not bind the promissor even ifaccepted and may be withdrawnanytime.

NOTE: %ending notice of its withdrawal,the accepted promise parta3es thenature of an offer to sell which if





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MEMORYAIDINCIVILLAW

accepted, results in a perfected contractof sale )Sanc-e vs. Rigos 0 SCRA< 6+*.In other words, if the acceptance ismade before withdrawal, it constitutes a

binding contract of sale although theoption is given without consideration.

if the promise is supported by aconsideration istinct an separatefrom the price )option money*, itsacceptance will give rise to aperfected contract.

2. Bilateral promise to $# and sell

+ne party accepts the other6spromise to buy and the latter, theformer6s promise to sell adeterminate thing for a price certain

it is reciprocally demandable

It requires no consideration distinctfrom the selling priceNOTE" this is as good as a perfectedsale. No title of dominion istransferred as yet, the parties beinggiven only the right to demandfulfillment or damages.

'olicitation

An unaccepted unilateral promise tobuy or sell. ven if accepted by theother party, it does not bind thepromissor and maybe withdrawnanytime. This is a mere offer, andhas not yet been converted into acontract.

Option contract

A contract granting a privilege in oneperson, for which he has paid aconsideration, which gives him theright to buy certain merchandise, atanytime within the agreed period, at

a fi&ed price. An option without consideration is

void and the effect is the same as ifthere was no option

? 8owever, in Sanc-e vs. Rigos (1*72*,even though the option was notsupported by a consideration, themoment it was accepted, a perfectedcontract of sale resulted, applying Art.-1: of the N##. In view of the ruling ofthe 7upreme #ourt, the only importanceof the consideration for an option is that

the option cannot be withdrawn by thegrantor after acceptance. In an option to buy, the party who hasan option may validly and effectively

e&ercise his right by merely notifying theowner of the former6s decision to buyand e&pressing his readiness to pay thestipulated price.

Ri(ht of First Refsal

It is a right of first priority all thingsand conditions being equal( thereshould be identity of the terms andconditions to be offered to theoptionee and all other prospectivebuyers, with optionee to en$oy theright of first priority. A deed of sale

e&ecuted in favor of a third partywho cannot be deemed a purchaserin good faith, and which is inviolation of the of the right of firstrefusal granted to the optionee isN+T voidable under the 7tatute of0rauds, such contract is valid B4Trescissible under Article -1 to-1


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sub$ect property to any other party,the lessee is similarly barred toassign her first option to buy theleased property to another.

)Banga"an et.a! vs. CA an im 4R5o.12


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4. public officers and employees,with respect to the properties ofthe government, its politicalsubdivisions, or 9+##s, that are

entrusted to them(5. %udges, $ustices, prosecuting

attorneys, cler3s of courts, etc.,with respect to the property incustogia legis( and

6. any other person speciallydisqualified by law.Examples of persons especiall#disqalified $# la":a. Aliens who are disqualified topurchase agricultural landsb. An unpaid seller having a right

of lien or having stopped thegoods in transitu, who isprohibited from buying the goodseither directly or indirectly inthe resale of the same, at publicor private sale which he mayma3ec. The officer holding thee&ecution, or his deputy.NOTE: 'hile those disqualifiedunder Arts. -:@> and -:@- maynot become lessees )Art. -=:=*,still aliens may become lessees

even if they cannot buy lands.

Effect of 'iolation:a* 'ith respect to nos. . to ?" the

sale is )O*+A,L-.Reason: only private rights,which are sub$ect to ratificationare violatedNOTE: In the case of Lao vs$"enato( .3/ SC0A //, the7upreme #ourt found that thesale by the administrator ofcertain properties of the estatein order to settle the e&istingobligations of the estate wasmae to t-e aministratorDs son

#or a gross!" !o& price.0urthermore, the said sa!e &asnot s/mitte to t-e proateco/rt #or approva! as manate" t-e orer a/t-oriing t-eaministrator to se!!. The salewas indubitably illegal, irregularand fictitious, and the court6sapproval of the assailed

compromise agreement violated

Article -:@- and cannot wor3 toratify a fictitious contract whichis non1e2istent and void fromthe very beginning

b* 'ith respect to nos. 6 to @" thesale is !LL A+ )O*+.Reason: violation of publicpolicy cannot be sub$ect toratification

OBL&!AT&ONS OF T3E 0EN-OR: )'%D/TT*1. Transfer ownership (cannot e

&aive)2. -eliver the thing sold (cannot e

&aive)3. +arrant against eviction and against

hidden defects (can e &aive ormoi#ie since &arrant" is not anessentia! e!ement o# t-e contracto# sa!e)

4. Ta3e care of the thing, pendingdelivery, with proper diligence)Artic!e 116


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MEMORYAIDINCIVILLAW

2. Hegal or constructive ! delivery isrepresented by other signs or actsindicative thereofa. delivery by the e%ec/tion o# a

p/!ic instr/ment.NOTE: 9ives rise only to a primafacie presumption of delivery whichis destroyed when actual delivery isnot effected because of a legalimpediment (9en ort" Rea!t" vs.Cr/, 1; Sept. 2;;


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-. 7ub$ect to aresolutory condition

-. 7ub$ect to asuspensive condition

. Depends entirelyon the will of thebuyer

. Depends on thecharacter or quality ofthe goods

1. +wnershippasses to the buyeron delivery andsubsequent returnreverts ownershipin the seller

1. +wnership remainsin the seller until buyersignifies his approval oracceptance to theseller

:. Cis3 of loss orin$ury rests uponthe buyer

:. Cis3 of loss remainswith the seller

&nstances "here Seller is still theO"ner despite -eli'er#:-. 7ale on trial, approval or satisfaction. #ontrary intention appears by the

term of the contract(1. Implied reservation of ownership

)Article -;>1*a. If under the bill of lading, the

goods are deliverable to seller oragent or their order(

b. If the bill of lading, althoughstating that the goods are to bedelivered to the buyer or hisagent, is 3ept by the seller or hisagent(

a. 'hen the buyer, although thegoods are deliverable to order of

buyer, and although the bill oflading is given to him, does nothonor the bill of e&change sentalong with it.

Transfer of o"nership "here (oodssold deli'ered to carrier!eneral Rle: Delivery to the carrier isdeemed to be delivery to the buyerException: 'here the right ofpossession or ownership of specific goodssold is reserved

SALE OF !OO-S B A NON>O+NER4$5$RA R$:Buyer acquires no titleeven if in good faith and for value underthe ma&im emo dat 4uid non habet)Gou cannot give what you do nothaveE*.$8C$P9I5S: )7FC27*

1. +wner is estopped or precludedby his conduct

2. 'hen sale is made by theregistered owner or apparent

owner in accordance withrecording or registration laws

3. 7ales sanctioned by $udicial orstatutory authority

4. %urchases in a merchantJs store,fairs or mar3ets5. 'hen a person who is not the

owner sells and delivers a thing,subsequently acquires titlethereto )Art. -:1:*

6. 'hen the seller has a 'oidabletitle which has not been avoidedat the time of the sale )Art.-;>=*

4nlawful deprivationE is no longerlimited to a criminal act. There is4nlawful Deprivation where there is no

valid transmission of ownership.

*lace of deli'er# of (oods1. =-ere t-ere is an agreement, place

of delivery is that agreed upon2. =-ere t-ere is no agreement, place

of delivery determined by usage oftrade

3. =-ere t-ere is no agreement an nopreva!ent /sage, place of delivery isthe seller6s place

4. In an" ot-er case, place of deliveryis the seller6s residence

5. In case o# speci#ic goos, which tothe 3nowledge of the parties at thetime the contract was made were insome other place, that place is theplace of delivery, in the absence ofagreement or usage of trade to thecontrary

Time of deli'er# of (oods1. 7tipulated time2. In the absence thereof, within a

reasonable time

NE!OT&ABLE -OC45ENT OF T&TLE;N-T=

A document of title in which it isstated that the goods referred totherein will be delivered to thebearer, or to the order of any personnamed in such document.

Fay be negotiated by delivery orindorsement.

The docment is ne(otia$le if:





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MEMORYAIDINCIVILLAW

-. The goods are deliverable to thebearer( or

. If the goods are deliverable to theorder of a certain person

*ersons "ho ma# ne(otiate N-T:1. The owner( or2. Any person to whom the possession

or custody thereof has beenentrusted by the owner, if by theterms of the document the baileeissuing the document underta3es todeliver the goods to the order of theperson to whom the possession orcustody of the document has beenentrusted or if at the time of suchentrusting the document in such

form that it may be negotiated bydelivery.

If the holder of a negotiable documentof title )deliverable to bearer* entruststhe document to a friend for deposit,but the friend betrays the trust andnegotiates the document by delivering itto another who is in good faith, the saidowner cannot impugn the validity of thenegotiation. As between two innocentpersons, he who made the loss possibleshall bear the loss, without pre$udice to

his right to recover from the wrongdoer.

R&!3TS OF *ERSON TO +3O5-OC45ENT 3AS BEEN NE!OT&ATE-:-* The title of the person negotiating thedocument, over the goods covered bythe document(* The title of the person )depositor orowner* to whose order by the terms ofthe document the goods were to bedelivered, over such goods(1* The direct obligation of the bailee tohold possession of the goods for him, asif the bailee had contracted to himdirectlyNOTE Fere transferee does not acquiredirectly the obligation of the bailee )inArt. -;-1*. To acquire it, he must notifythe bailee.

+3O CAN -EFEAT R&!3TS OFTRANSFEREE:

-. #reditor of transferor. Transferor1. 7ubsequent purchaser

R4LES +3EN 4ANT&T &S LESS T3ANA!REE- 4*ON:

1. Buyer may re$ect( or2. Buyer may accept what has been

delivered, at the contract rate

R4LES +3EN 4ANT&T &S 5ORE T3ANA!REE- 4*ON:

1. Buyer may re$ect all( or2. Buyer may accept the goods

agreed upon and re$ect the rest(or

3. Buyer may accept all and mustpay for them at the contractrate

NOTE:Acceptance, even if not e&pressmay be implied when the buyer

e&ercises acts of ownership over thee&cess goods.

R4LES +3EN !OO-S 5&DE- +&T3!OO-S OF -&FFERENT -ESCR&*T&ON:

Buyer may accept the goods whichare in accordance with the contractand re$ect the rest

NOTE: If the sub$ect matter isindivisible, in case of delivery of largerquantity of goods or of mi&ed goods, thebuyer may re$ect the whole of the goods

-EL&0ER TO T3E CARR&ER4$5$RA R$: 'here the seller isauthoriMed or required to send the goodsto the buyer, delivery to the carrier isdelivery to the buyer.$8C$P9I5S:

1. 'hen a contrary intentionappears

2. Implied reservation of ownershipunder pars. -,,1 of Art. -;>1

9inds of -eli'er# to the Carriera. #.I.0. (cost, ins/rance, #reig-t) !

signify that the price fi&edcovers not only the costs of thegoods, but the e&pense of thefreight and the insurance to bepaid by the seller

b. 0.+.B. (#ree on oar) ! goodsare to be delivered free ofe&pense to the buyer to thepoint where they are 0.+.B. Thepoint of 0.+.B., either at thepoint of shipment or the point of




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destination, determines whenthe ownership passes.

NOTE: the terms #.I.0. and 0.+.B.merely ma3e rules of presumption

c. #.+.D. (co!!ect on e!iver") ! thecarrier acts for the seller incollecting the purchase price,which the buyer must pay toobtain possession of the goods.

SELLERS -4T AFTER -EL&0ER TOCARR&ER-. To enter on behalf of buyer into suchcontract reasonable under thecircumstances. To give notice to buyer regardingnecessity of insuring the goods

*A5ENT OF T3E *4RC3ASE *R&CE4$5$RA R$:The seller is not boundto deliver the thing sold unless thepurchase price has been paid.$8C$P9I5: The seller is bound todeliver even if the price has not beenpaid, if a period of payment has beenfi&ed.

Sale of Real *ropert# $# 4nit

ntire area stated in the contract

must be delivered 'hen entire area could not be

delivered, vendee may"-. nforce the contract with the

corresponding decrease in price. Cescind the sale"

a. If the lac3 in area is at least-5-> than that stated orstipulated

b. If the deficiency in qualityspecified in the contracte&ceeds -5-> of the priceagreed upon

c. If the vendee would not havebought the immovable hadhe 3nown of its smaller areaof inferior qualityirrespective of the e&tent oflac3 of area or quality

Sale for a Lmp Sm 5A Cuerpo Cierto6

2endor is obligated to deliver all theland included within the boundaries,regardless of whether the real areashould be greater or smaller

+rdinarily, there can be no rescissionor reduction or increase whether thearea be greater or lesser, unlessthere is gross mista3e.

NOTE: The #ivil #ode presumes that thepurchaser had in mind a particular pieceof land and that he ascertained its areaand quality before the contract of salewas perfected. If he did not do so, or ifhaving done so he made no ob$ectionand consented to the transaction, he canblame no one but himself )9eran vs.Ei!!an/eva Ei/a e Riosa 06 P-i! 677*.

'hat is important is the deliveryof all the land included in theboundaries.

-O4BLE SALE ;Art/ .66=

Reqisites:2+#71. two or more transactions must

constitute 'alid sales(2. they must pertain e&actly to the

same ob$ect or sub$ect matter(3. they must be bought from the same

or immediate seller( AND4. two or more buyers who are at odds

over the rightful ownership of thesub$ect matter must representconflicting interests.

Rles of preference:-. %ersonal %roperty

a. first possessor in good faith. Ceal %roperty

a. first registrant in good faithb. first possessor in good faithc. person with oldest title in good

faith

NOTES:

*rchaser in !ood Faith! one who

buys the property of another withoutnotice that some other person has aright to or interest in such propertyand pays a full and fair price for thesame at the time of such purchase orbefore he has notice of the claim orinterest of some other person in theproperty (Ee!oso vs. CA).

Cegistration requires actualrecording( if the property was neverreally registered as when theregistrar forgot to do so although he





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MEMORYAIDINCIVILLAW

has been handed the document,there is no registration.

%ossession is either actual orconstructive since the law made no

distinction )Sanc-e vs. Ramos ;P-i!61*

%ossession in Art.-;:: includes notonly material but also symbolicpossession (9en ort" Rea!t" vs.Cr/, 1; Sept. 2;;


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2. &5*L&E- / that which the lawderives by implication or inferencefrom the nature of the transaction or

the relative situation orcircumstances of the parties,irrespective o# an" intention o# t-ese!!er to create it.a. 'arranty against evictionb. 'arranty against hidden defectsc. 'arranty as to 0itness and

FerchantabilityNOTE: An implied warranty is a natural,not an essential element of a contract,and is deemed incorporated in thecontract of sale. It may however, bewaived or modified by e&press

stipulation.(e eon)There is no implied warranty as to thecondition, adaptation, fitness orsuitability or the quality of an articlesold as a second/hand article. But sucharticles might be sold under suchcircumstances as to raise an impliedwarranty. A certification issued by a vendor thata second/hand machine was in A/-condition is an e&press warranty bindingon the vendor.(Mo!es vs. IAC 1*+*)

A/ +arrant# a(ainst e'iction 'arranty in which the seller

guarantees that he has the right tosell the thing sold and to transferownership to the buyer who shall notbe disturbed in his legal andpeaceful possession thereof.

Elements:1. vendee is deprived, in whole or

in part, of the thing purchased(2. the deprivation is by virtue of a

final $udgment(3. the $udgment is based on a prior

right to the sale or an actimputable to the vendor(

4. the vendor was summoned in thesuit for eviction at the instanceof the vendee( AND

5. no waiver of warranty by thevendee.

0endorGs lia$ilit# shall consist of:1. otal eviction# )2I#D*

a. 0alue of the thing at the time ofeviction(

b. &ncome or fruits if he has beenordered to deliver them to the

party who won the suit(c. Costs of the suit(d. E&penses of the contract( AN-e. -amages and interests if the sale

was in bad faith.

2. 'artial eviction#a. to enforce vendor6s liability

for eviction )2I#D*( ORb. to demand rescission of

contract.

Kuestion" 'hy is rescission not a remedy

in case of total evictionLAnswer" Cescission contemplates thatthe one demanding it is able to returnwhatever he has received under thecontract. 7ince the vendee can no longerrestore the sub$ect/matter of the sale tothe vendor, rescission cannot be carriedout.

The suit for the breach can be directedonly against the immediate seller, notsellers of the seller unless such sellershad promised to warrant in favor of later

buyers or unless the immediate sellerhas e&pressly assigned to the buyer hisown right to sue his own seller.NOTE: The disturbance referred to inthe case of eviction is a disturbance inlaw which requires that a person go tothe courts of $ustice claiming the thingsold, or part thereof and invo3ingreasons. Fere trespass in fact does notgive rise to the application of thedoctrine of eviction.

2endor6s liability is waivable but anystipulation e&empting the vendorfrom the obligation to answer foreviction shall be void if he acted inbad faith. 9inds of +ai'er:

a. Consciente ! voluntarilymade by the vendee withoutthe 3nowledge andassumption of the ris3s ofeviction





17/37


MEMORYAIDINCIVILLAW

NOTE: vendor shall pay only thevalue which the thing sold had atthe time of evictionb. *ntencionada! made by the

vendee with 3nowledge ofthe ris3s of eviction andassumption of itsconsequences

EFFECT: vendor not liableNOTE: very waiver is presumed to beconsciente. To consider it intencionada,it must be accompanied by somecircumstance which reveals thevendor6s 3nowledge of the ris3s ofeviction and his intention to submit tosuch consequences.

+3ERE &55O0ABLE SOL- ENC45BERE-+&T3 NON>A**ARENT B4R-EN./ Ri(ht of 'endee

a* recission, orb* indemnity

1/ +hen ri(ht cannot $e exercised:a* if the burden or servitude is

apparentb* if the non/apparent burden or

servitude is registeredc* if vendee had 3nowledge of the

encumbrance, whether it is registered

or not?/ +hen action mst $e $ro(ht

/ within +N GAC from thee&ecution of the deed of sale

B/ +arrant# a(ainst hidden defects

'arranty in which the sellerguarantees that the thing sold is freefrom any hidden faults or defects orany charge or encumbrance notdeclared or 3nown to the buyer.

Elements: )78N%'*-. defect must be Serious or

important(. it must be 3idden(1. it must E&ist at the time of the

sale(:. vendee must give Notice of the

defect to the vendor within areasonable time(

;. action for rescission or reductionof price must be brought withinthe proper *eriod )within = mos.from delivery of the thing or :>

days from date of delivery incase of animals*( and

=. no +aiver of the warranty.

Remedies of the 0endee:a. Accionre-iitoria)rescission*b. Accion 3/anti minoris)reduction

of the price*NOTES:

8idden faults or defects pertain onlyto those that ma3e the ob$ect unfitfor the use for which it was intendedat t-e time o# t-e sa!e.

This warranty in 7ales is applicablein Hease )Gap vs. 9iao3/i 1


18/37


+arrant# of Fitness

'arranty in which the sellerguarantees that the thing sold isreasonably fit for the 3nown

particular purpose for which it wasacquired by the buyer

4$5$RA R$: There is no impliedwarranty as to the quality or fitness forany particular purpose of goods under acontract of sale$8C$P9I5S:

1. 'here the buyer, e&pressly or byimplication manifests to theseller the particular purpose forwhich the goods are required

2. 'here the buyer relies upon theseller6s s3ill or $udgment

+arrant# of 5erchanta$ilit#

'arranty in which the sellerguarantees, where the goods werebought by description, that they arereasonably fit for the generalpurpose for which they are sold

It requires identity between &-at isescrie in t-e contractAND &-atis tenere, in the sense that thelatter is of such quality to have some

value

&nstances "here implied "arranties areinapplica$le:1. As is and where is sale / vendor

ma3es no warranty as to the qualityor wor3able condition of the goods,and that the vendee ta3es them inthe condition in which they arefound and from the place where theyare located.

2. 7ale of second/hand articles3. 7ale by virtue of authority in fact or

law

Caveat )enditor ;HLet the seller$e"areI=: the vendor is liable to thevendee for any hidden faults or defectsin the thing sold, even though he wasnot aware thereof.

Caveat -mptor ;HLet the $#er$e"areI=:requires the purchaser to beaware of the supposed title of thevendor and one who buys withoutchec3ing the vendor6s title ta3es all the

ris3s and losses consequent to suchfailure.

R4LES &N CASE OF SALE OF AN&5ALS

-. 'hen two or more animals have beensold at the same time and theredhibitory defect is in one, or some ofthem but not in all, the general rule isthat the redhibition will not affect theothers without it. It is immaterialwhether the price has been fi&ed for alump sum for all the animals or for aseparate price for each.. No warranty against hidden defectsof animals sold at fairs or at publicauctions, or of livestoc3 sold ascondemned. This is based on the

assumption that the defects must havebeen clearly 3nown to the buyer.1. 7ale of animals shall be void when" a* animals sold are suffering fromcontagious disease b* if the use or service for whichthey are acquired has been stated in thecontract, and they are found to be unfittherefor:. Himitation of the action" :> daysfrom the date of their delivery to thevendee;. 2endor shall be liable if the animal

should die within 1 days after itspurchase if the disease which caused thedeath e&isted at the time of the contract

OBL&!AT&ONS OF T3E 0EN-EE:A/ *rincipal O$li(ations:-. To accept delivery. To pay the price of the thing sold in

legal tender unless another modehas been agreed upon

NOTE: A grace period granted thevendee in case of failure to pay theamount5s due is a right not anobligation. The grace period must notbe li3ened to an obligation, the non/payment of which, under Article --=@ ofthe #ivil #ode, would still generallyrequire $udicial or e&tra/$udicial demandbefore defaultE can be said to arise)Bric'to&n evDt Corp vs. Amor 9ierraevDt Corp. 07SCRA


19/37


MEMORYAIDINCIVILLAW

goods are delivered to the buyer andhe rightfully refuses to accept

NOTES:

The buyer in such a case is in theposition of a bailee who has hadgoods thrust upon him withouthis assent. 8e has the obligationto ta3e reasonable care of thegoods but nothing more can bedemanded of him.

The goods in the buyer6spossession under thesecircumstances are at the seller6sris3

. To be liable as a depositary if hevoluntarily constituted himself as

such1. To pay interest for the period

between delivery of the thing andthe payment of the price in thefollowing cases"a. 7hould it have been stipulatedb. 7hould the thing sold and

delivered produce fruits orincome

c. 7hould he be in default, fromthe time of $udicial or e&tra/$udicial demand for the paymentof the price

*ertinent Rles:-. The vendor is not required to deliver

the thing sold until the price is paidnor the vendee to pay the pricebefore the thing is delivered in theabsence of an agreement to thecontrary )Artic!e 102*.

. If stipulated, the vendee is bound toaccept delivery and to pay the priceat the time and place designated(

1. If there is no stipulation as to the

time and place of payment anddelivery, the vendee is bound to payat the time and place of delivery

:. In the absence of stipulation as tothe place of delivery, it shall bemade wherever the thing might beat the moment the contract wasperfected )Artic!e 1201*

;. If only the time for delivery has beenfi&ed in the contract, the vendee isrequired to pay even before thething is delivered to him( if only thetime for payment has been fi&ed,

the vendee is entitled to delivery

even before the price is paid by him)Artic!e 102*

+a#s of acceptin( (oods:

1. &press acceptance2. Implied acceptance

a. 'hen buyer oes an act &-ic-on!" an o&ner can o,

b. 0ailure to return goods afterreasonable lapse of time

NOTES:

The retention of goods is strongevidence that the buyer hasaccepted ownership of the goods.

Delivery and acceptance are twoseparate and distinct acts ofdifferent parties -eli'er# is an act of the vendor

and one of the vendor6sobligations( vendee has nothingto do with the act of delivery bythe vendor

Acceptance is an obligation ofthe vendee( acceptance cannotbe regarded as a condition tocomplete delivery(

seller must comply with theobligation to deliver although

there is no acceptance yet bythe buyer

Acceptance by the buyer mayprecede actual delivery( there maybe actual receipt withoutacceptance and there may beacceptance without receipt

4nless otherwise agreed upon,acceptance of the goods by thebuyer does not discharge the sellerfrom liability for damages or otherlegal remedy li3e for breach of any

promise or warranty

+hen 'endee ma# sspend pa#ment ofthe price:1. If he is disturbed in the possession or

ownership of the thing bought2. If he has well/grounded fear that his

possession or ownership would bedisturbed by a vindicatory action orforeclosure of mortgage

NOTES:




20/37


If the thing sold is in the possessionof the vendee and the price isalready in the hands of the vendor,the sale is a consummated contract

and Article -;@> is no longerapplicable. Article -;@>,presupposes that the price or anypart thereof has not yet been paidand the contract is not yetconsummated.

4nder Article -;@>, the vendee hasno cause of action for rescissionbefore final $udgement, otherwisethe vendor might become a victim ofmachinations between the vendeeand the third person

Disturbance must be in possessionand ownership of the thing acquired

If the disturbance is caused by thee&istence of non/apparent servitude,the remedy of the buyer isrescission, not suspension ofpayment.

+hen 'endee cannot sspend pa#mentof the price e'en if there isdistr$ance in the possession oro"nership of the thin( sold:

-. if the vendor gives security for thereturn of the price in a proper case

. if it has been stipulated thatnotwithstanding any suchcontingency, the vendee must ma3epayment )see Artic!e 10+ par.


21/37


MEMORYAIDINCIVILLAW

NOTE: Apply li3ewise to contractspurporting to be leases of personalproperty with option to buy

Art/ .66 does not appl# to a sale:

1. %ayable on straight terms )partlyin cash and partly in one term*

2. +f Ceal property

Remedies:1. 7pecific performance upon

vendee6s failure to payNOTE:Does not bar full recovery for$udgment secured may be e&ecutedon all personal and real properties ofthe buyer which are not e&emptfrom e&ecution (Pa!ma v. CA.)2. Cescission of the sale if vendee

shall have failed to pay two ormore installments

NOTES:

Nature of the remedy ! whichrequires mutual restitution ! barsfurther action on the purchaseprice (5onato vs. IAC.)

4$5$RA R$: cancellationof sale requires mutualrestitution, that is all partialpayments of price or rents mustbe returned$8C$P9I5S:a stipulation thatthe installments or rents paidshall not be returned to thevendee or lessee shall be validinsofar as the same may not beunconscionable under thecircumstan/ces )Artic!e 1+6*.

3. 0oreclosure of the chattelmortgage on the thing sold ifvendee shall have failed to paytwo or more installments. In thiscase, there shall be no furtheraction against the purchaser torecover unpaid balance of theprice.

NOTES:

0urther recovery barred only fromthe time of actual sale at public auctionconducted pursuant to foreclosure(Maconra" vs. 9an.)

+ther chattels given as securitycannot be foreclosed if they are notsub$ect of the installment sale )Riavs. i!ipinas investment an inanceCorp. 4R an. 2+, 1*+


22/37


1/ R/A/ No/ @1 or 5aceda La" An Act to %rovide %rotection to

buyers of Ceal state on Installment%ayments

Haw governing sale or financing ofreal estate on installment payments

Reqisites:-. transactions or contracts

involving the sale +C financingof real estate on installmentpayments, including residentialcondominium apartments( and

. buyer defaults in payment ofsucceeding installments.

Ri(hts of the $#er:

A$ *f ,uyer has paid at least two586 years of installments-. The buyer must pay, &it-o/t

aitiona! interest, the unpaidinstallments due within the totalgrace period earned by him.There shall be one )-* monthgrace period for every one )-*year of installment paymentsmadeNOTE: This right shall bee&ercised by the buyer +NHGonce in every ; years of the life

of the contract AND itse&tensions.

. Actual cancellation can only ta3eplace after 1> days from receiptby the buyer of the notice ofcancellation +C demand forrescission by a notarial act ANDupon full payment of the cashsurrender value to the buyer(!"mpia Fo/sing vs. Panasiatic,16 >an/ar" 2;; ofthe total payments made. Afterfive );* years of installments,there shall be an additional ;every year but not to e&ceed @>of the total payments made

1. The buyer shall have the rig-t tose!! -is rig-ts or assignthe sameto another person +C toreinstate t-e contract byupdating the account during the

grace period and before actualcancellation of the contract

:. The buyer shall have the right topay in advance any installment

or the full unpaid balance of thepurchase price any time withoutinterest and to have such fullpayment of the purchase priceannotated in the certificate oftitle covering the property.

,$ *f ,uyer has paid less than 8years of installments

-. The seller shall give the buyer agrace period of N+T less than =>days from the date theinstallment became due. If the

buyer fails to pay theinstallments due at thee&piration of the grace period,the seller may cancel thecontract after 1> days fromreceipt by the buyer of thenotice of cancellation or thedemand for rescission ofcontract by a notarial act.

. Same o$ 3 and 9 para&raph Aabove

NOTE: Down payments, deposits or

options on the contract shall be includedin the computation of the total numberof installment payments made

Remedies of 4npaid SellerI. *ossessor# Lien

+hen ma# $e exercised:-. 'here the goods have been sold

without any stipulation as tocredit

. 'hen the goods have been soldon credit, but the term of credit

has e&pired1. 'here the buyer becomesinsolvent

+hen lost:-. Delivery of the goods to a carrier

or bailee for the purpose oftransmission to the buyerwithout reserving ownership orright of possession

. 'hen the buyer lawfully obtainspossession of the goods

1. By waiver of the lien





23/37


MEMORYAIDINCIVILLAW

NOTE: %ossessory lien is lost after theseller loses possession but his lien as anunpaid seller remains( hence he is stillan unpaid creditor with respect to the

price of specific goods sold. 8ispreference can only be defeated by thegovernments claim to the specific ta& onthe goods themselves )Arts. 227 an221*.NOTE: The bringing of an action torecover the purchase price is not one ofthe ways of losing the possessory lien.An unpaid seller does not lose his lien byreason that he has obtained a money$udgement or decree for the price ofgoods )Art. 102*, !ast paragrap-*.

II. Stoppa(e of (oods in transitu Reqisites:

-. 7eller must be unpaid. Buyer must be insolvent1. 9oods must be in transit:. 7eller must either"

a. actually ta3e possession ofthe goods sold +C

b. give notice of his claim tothe carrier or other person inpossession

;. 7eller must surrender thenegotiable document of title, ifany, issued by the carrier orbailee

=. 7eller must bear the e&penses ofdelivery of the goods after thee&ercise of the right

!OO-S ARE CONS&-ERE- &N TRANS&T4:-. after delivery to a carrier or otherbailee and before the buyer or his agentta3es delivery of them( and. If the goods are re$ected by thebuyer, and the carrier or other bailee

continues in possession of them

!OO-S ARE NO LON!ER CONS&-ERE- &NTRANS&T4:-. after delivery to the buyer or hisagent in that behalf(. if the buyer or his agent obtainspossession of the goods at a point beforethe destination originally fi&ed(1. if the carrier or the baileeac3nowledges to hold the goods onbehalf of the buyer( and:. if the carrier or bailee wrongfully

refuses to deliver the goods to the buyer

Effects of the exercise of the ri(ht-. The goods are no longer in transit.. The contract of carriage ends(

instead the carrier now becomes amere bailee, and will be liable assuch.

1. The carrier should not deliveranymore to the buyer or the latter6sagent( otherwise he will clearly beliable for damages.

:. The carrier must redeliver to, oraccording to the directions of theseller.

+AS OF EDERC&S&N! T3E R&!3T TOSTO*:

-. By ta3ing actual possession of thegoods. By giving notice of his claim to thecarrier or bailee

III. Special Ri(ht of Resale

Fay be e&ercised only when theunpaid seller has either a right oflien +C has stopped the goods intransit/ AND under ANG of thefollowing conditions"-. 'here the goods are perishable

in nature. 'here the right to resell ise&pressly reserved in case thebuyer should ma3e a default

1. 'here the buyer delays in thepayment of the price for anunreasonable time

IV. Rescission

T#pes:-. Specia! Rig-t to Rescin ner

Art. 10


24/37


-. 'here the ownership has passedto the buyer AND he wrongfullyneglects +C refuses to pay forthe price

. 'here the price is payable on aday certain AND he wrongfullyneglects +C refuses to pay forthe price, irrespective of thedelivery or transfer of title

1. 'here the goods cannot readilybe resold for a reasonable priceAND the buyer wrongfully refusesto accept them even before theownership of the goods haspassed, if Article -;@= isinapplicable.

VI. Action for dama(es +hen ma# $e exercised:

-. In case of wrongful neglect orrefusal by the buyer to accept orpay for the thing sold )Art. -;@=par.-*

. In an e&ecutory contract, wherethe ownership in the goods hasnot passed, and the seller cannotmaintain an action to recoverthe price )Art -;@;*

1. If the goods are not yetidentified at the time of thecontract or subsequently

B/ RE5E-&ES OF T3E B4ER FORBREAC3 OF CONTRACT

./ Action for specific performance;Art/ .8=

'here the seller has bro3en thecontract to deliver specific orascertained goods

The $udgment or decree may beunconditional, or upon such termsand conditions as to damages,

payment of the price and otherwiseas the court may deem $ust

1/ Remedies of $#er for $reach of"arrant# $# seller ;Art/ .88=:

1. 0ecoupment! accept the goods andset up the seller6s breach to reduceor e&tinguish the price

2. Accept the goods and maintain anaction for damages for breach ofwarranty

3. Cefuse to accept the goods andmaintain an action for damages forbreach of warranty

4. Cescind the contract by returning or

offering the return of the goods, andrecover the price of any part thereofNOTE:These are alternative remedies.

+hen rescission $# $#er not allo"ed:-. if the buyer accepted the goods3nowing of the breach of warrantywithout protest. if he fails to notify the seller within areasonable time of his election torescind1. if he fails to return or offer to returnthe goods in substantially as good

condition as they were in at the time ofthe transfer of ownership to him

EDT&N!4&S35ENT OF SALE1. 7ame causes as in all other

obligations2. #onventional Cedemption3. Hegal Cedemption

CON0ENT&ONAL RE-E5*T&ON

The right which the vendor reservesto himself, to reacquire the propertysold provided he returns to thevendee"b. the price of the sale(c. e&penses of the contract(d. any other legitimate payments

made therefore and(e. the necessary and useful

e&penses made on the thingsold( and

f. fulfills other stipulations whichmay have been agreed upon.

A sale "ith con'entional redemption is

deemed to $e an e4uitable mort&a&ein an# of the follo"in( cases:)I%CT+D*

-. 4nusually &nadequate purchaseprice(

. *ossession by the vendor remains, aslessee or otherwise(

1. E&tension of redemption period aftere&piration(

:. Retention by the vendee of part ofthe purchase price(





25/37


MEMORYAIDINCIVILLAW

;. 2endor binds himself to pay theTa&es of the thing sold(

=. Any Other case where the partiesreally intended that the transaction

should secure the payment of a debtor the performance of anyobligation( or

?. 'hen there is -oubt as to whethercontract is contract of sale withright of repurchase or an equitablemortgage.

Eqita$le 5ort(a(e

+ne which lac3s the properformalities, form of words, or otherrequisites prescribed by law for amortgage, but shows the intention of

the parties to ma3e the propertysub$ect of the contract as securityfor a debt and contains nothingimpossible or contrary to law)Cac-o!a vs. CA 2;+SCRA*6*

'hen can there be presumption as toquitable FortgageL-* %arties must have entered into acontract denominated as a contract ofsale* The intention of the parties was tosecure an e&isting debt by way ofmortgageNOTE: In the cases referred to in Arts.-=> and -=>:, the apparent vendor mayas3 for the reformation of theinstrument.Cemedy of Ceformation" To correct theinstrument so as to ma3e it e&press thetrue intent of the parties.

Redemption *erioda. if there is an agreement" period

agreed upon cannot e&ceed -> yearsb.

if no agreement as to the period" :years from the date of the contractc. the vendor who fails to repurchase

the property within the periodagreed upon may, however, e&ercisethe right to repurchase within 1>days 0C+F the time final $udgmentwas rendered in a civil action on thebasis that the contract was a truesale with right of repurchase This refers to cases involving a

transaction where one of theparties contests or denies that

the true agreement is one of sale

with right to repurchase( not tocases where the transaction isconclusively a pacto de retrosale. &ample" 'here a buyer a

retro honestly believed that heentered merely into an quitableFortgage, not a pacto de retrotransaction, and because of suchbelief he had not redeemedwithin the proper period.

N+T" Tender of payment issufficient to compel redemption, butis not in itself a payment thatrelieves the vendor from his liabilityto pay the redemption price (Paevs. Magno.)

LE!AL RE-E5*T&ON

The right to be subrogated, upon thesame terms and conditionsstipulated in the contract, in theplace of one who acquires a thing by)-* purchase or )* dation inpayment, or )1* by any othertransaction whereby ownership istransferred by onerous title.

Fay be effected against movables orimmovables.

It must be e&ercised within thirty)1>* days from the notice in writingby the vendor.O

NOTE:'ritten notice under Article -=1is mandator#for the right of redemptionto commence (PSC vs. Sps. Ea!encia 1*

A/g/st 2;;E5*T&ON RE-E5*T&ON-. arises beforesale

-. arises after sale




26/37


27/37


MEMORYAIDINCIVILLAW

Reqisites:-. There must be a sale or assignment

of credit. There must be a pending litigation at

the time of the assignment1. The debtor must pay the assignee"

a. price paid by himb. $udicial cost incurred by him(

ANDc. interest on the price from the

date of payment

:. The right must be e&ercised by thedebtor within 1> days from the datethe assignee demands )$udicially ore&tra/$udicially* payment from him

SALE OF CRE-&T OR OT3ER&NCOR*OREAL R&!3TS &N L&T&!AT&ON4$5$RA R$: Debtor has the right oflegal redemption in sale of credit orincorporeal rights in litigation$8C$P9I5S:

a. 7ale to a co/heir or co/ownerb. 7ale to a co/ownerc. 7ale to the possessor of property

in question

BARTER

BARTER

contract whereby one of the partiesbinds himself to give one thing inconsideration of the otherJs promiseto give another thing )Artic!e 16


28/37


written statement of names andaddresses of all creditors to whomsaid vendor, etc. may have beenindebted together with the amount

due or to be due )Section days before the sale, transfer,mortgage, assignment to ma3e a fulldetailed inventory showing thequantity and the cost of price ofgoods, and to notify every creditorof the price terms and conditions ofthe sale, etc. )Section 0*

Effects of False Statements in theSchedle of Creditors:

.$ %ithout knowled&e of buyer If the statement is fair upon its

face and the buyer has no3nowledge of its incorrectnessand nothing to put him oninquiry about it, he will beprotected in its purchase

The remedy of the creditor is notagainst the goods but toprosecute the seller criminally

8$ %ith knowled&e or imputedknowled&e of buyer

The vendee accepts it at hisperil

The sale is valid only as betweenthe vendor and the vendee butvoid against the creditors

3$ %ith names of certain creditorswithout notice are omitted fromthe list

The sale is void as to suchcreditors, whether the omissionwas fraudulent or not,

9$ %ith respect to an innocent

purchaser for a value from theori&inal purchaser

An innocent purchaser for valuefrom the original purchaser isprotected

8owever if the circumstancesare such as to bind thesubsequent purchaser withconstructive notice that the saleto the vendor )originalpurchaser* was fraudulent, theproperty will be liable in his

hands to creditors of the originalvendor

Effect of 'iolation of la" on Transfer:.$ As between the parties

The Bul3 7ales Haw does not inany way affect the validity ofthe transfer as between theintermediate parties thereto

A sale not in compliance withthe Bul3 7ales Haw is validagainst all persons other thanthe creditors.

8$ As a&ainst creditors

A purchaser in violation of thelaw acquires no right in theproperty purchased as againstthe creditors of the seller

8is status is that of a trustee orreceiver for the benefit of thecreditors of the seller( as such,he is responsible for thedisposition of the property

Remedies A'aila$le to creditors: The proper remedy is one against

the goods to sub$ect them to thepayment of the debt, such ase&ecution, attachment,garnishment, or by a proceeding in

equity An ordinary action against thepurchaser to obtain money$udgement will not lie, unless thepurchaser has sold or otherwisedisposed of, or dealt with theproperty, so as to become personallyliable to creditors for value of it.

Acts *nished $# Bl, Sales La":-. nowingly or wilfully ma3ing or

delivering a statement required bythe Act which does not include thenames of all the creditors of the

vendor, etc. with the correctamount due or to become due orwhich contains any false or untruestatement( and

. Transferring title to any stoc3 ofgoods, wares, merchandise,provisions or materials sold in bul3without consideration or for nominalconsideration )Section 7*

RETA&L TRA-E L&BERAL&KAT&ON ACT;RA 7@1=





29/37


MEMORYAIDINCIVILLAW

Retail Trade

Any act occupation or calling ofhabitually selling direct to thegeneral public merchandise,

commodities or goods forconsumption, but the restrictions ofthis law shall not apply to thefollowing"

-. 7ales by manufacturer, processor,laborer, or wor3er, to the generalpublic the products manufactured,processed produced by him if hiscapital does not e&ceed %->>,>>>(

. 7ales by a farmer or agriculturalistselling the products of his farm

1. 7ales in restaurant operations by ahotel owner or inn/3eeper

irrespective of the amount ofcapital( provided that the restaurantis incidental to the hotel business(and

:. 7ales which are limited only toproducts manufactured, processed orassembled by a manufacturerthrough a single outlet, irrespectiveof capitaliMation

3i(h>End or Lxr# !oods

9oods which are not necessary for

life maintenance and whose demandis generated in large part by thehigher income groups

7hall include but not limited to"$ewelry, branded or designerclothing and footwear, wearingapparel, leisure and sporting goods,electronics and other personaleffects

NOTE: A nat/ra!Korn citien o# t-eP-i!ippines who has lost his citiMenshipbut who resides in the %hilippines shallbe (ranted the same ri(hts as Filipino

citi)ens

Forei(n Eqit# *articipation:

0oreign/owned partnerships,associations and corporations formedand organiMed under the laws of the%hilippines may, upon registrationwith 7# and DTI, or in case of0oreign/owned single proprietorshipwith the DTI, engage or invest inretail trade business, sub$ect to the

followin& cate&ories#

.$ Cate&ory A#

%aid/up capital of the equivalentin %hilippine %eso of" M1


30/37


on any future tradingactivities5business in the %hilippines

NOTE: 0oreign Investors Acquiring

7hares of 7toc3 of e&isting retail storeswhether or not publicly listed whose networth is in e&cess of the %eso equivalentof 47 P,;>>,>>> ma" p/rc-ase on!" /pto t-e ma%im/m o# 6;L o# t-e e3/it"t-ereo# &it-in t-e #irst 2 "ears, ant-erea#ter, t-e" ma" ac3/ire t-eremaining percentage consistent &it-t-e a!!o&a!e #oreign participation as-erein provie

NOTE: All retail Trade enterprises undercategories B and # in which foreign

ownership e&ceeds of equity s-a!!o##er a minim/m o#


31/37


MEMORYAIDINCIVILLAW

. 7ale or transfer of a subdivision lotby the original purchaser thereof andany subsequent sale of the same lot.

1. 7ale of a subdivision lot or a

condominium unit by or for theaccount of a mortgagee in theordinary course of business whennecessary to liquidate a bona fidedebt.

!ronds for Re'ocation of re(istrationcertificate and license to sell of o"nersor dealers-. Is insolvent( or. 8as violated any of the provisions of

this Decree or any applicable rule orregulation of the Authority, or any

underta3ing of his5its performancebond( or

1. 8as been or is engaged or is about toengage in fraudulent transactions( or

:. 8as made any misrepresentation inany prospectus, brochure, circular orother literature about thesubdivision pro$ect or condominiumpro$ect that has been distributed toprospective buyers( or

;. Is of bad business repute( or=. Does not conduct his business in

accordance with law or sound

business principles.

LEASE

LEASE

consensual, bilateral, onerous, andcommutative contract by virtue ofwhich one person binds himself togrant temporarily the use of thething or to render some service toanother who underta3es to pay somerent.

9inds of Leases ;From the 'ie" point ofthe s$%ect matter

-. Hease of things. Hease of service1. Hease of wor3

NOTE: 7ince lease is consensual and isnot imposed by law, only the lessor hasthe right to fi& the rents. 8owever, theincreasing of the rent is not an absoluteright on the part of the lessor.

Characteristics or Reqisites for Leaseof Thin(s

-. #onsensual. %rincipal

1. Nominate:. %urpose is to allow en$oyment oruse of a thing )the person toen$oy is the lessee( the personallowing the en$oyment byanother is the lessor

;. 7ub$ect matter must be withinthe commerce of man

=. %urpose to which the thing willbe devoted should not beimmoral

?. +nerous )t-ere m/st rent orprice certain*


32/37


deposit bo& in a ban3 is given for aprice certain. This is certainly not acontract of deposit.

A lease of personal property with

option to buy )at a nominal amount*at the end of the lease can beconsidered a sale.

LEASE SALES-. only use oren$oyment istransferred

-. ownership istransferred

. transfer istemporary

. transfer ispermanent

1. lessor need notbe the owner

1. seller must bethe owner at thetime the property

is delivered:. the price of theob$ect,distinguished fromthe rent, is usuallynot mentioned

:. usually, theselling price ismentioned

Lease ofThin(s

Lease of Ser'ices

-. ob$ect ofcontract is athing

-. ob$ect is somewor3 or service

. lessor has todeliver the thing

leased

. lessor has toperform some wor3

or service1. in case ofbreach, therecan be an actionfor specificperformance

1. in case ofbreach, no actionfor specificperformance

Lease ofSer'ices5locatio

operatum6

Contract for a*iece of +or,

5locatio operas6

-. theimportant ob$ect

is the laborperformed by thelessor

-. the importantob$ect is the wor3

done

. the result isgenerally notimportant,hence thelaborer isentitled to bepaid even ifthere isdestruction ofthe wor3 throughfortuitous event

. the result isgenerallyimportant(generally, the priceis not payable untilthe wor3 iscompleted, and saidprice cannot belawfully demandedif the wor3 isdestroyed before itis finished and

accepted

Lease ofSer'ices

A(enc#

It is based onemp!o"ment !the lessor of

services doesnot representhisemployer nordoes he e&ecute

/riica! acts.

It is based onrepresentation !agent represents his

principal and entersinto $uridical acts.

%rincipalcontract

%reparatorycontract

Rle for Lease of Consma$le !oods4$5$RA R$: #onsumable goodscannot be the sub$ect matter of acontract of lease of things.=-"N To use or en$oy hem, they will

have to be consumed. This cannot bedone by a lease since ownership overthem is not transferred to him by thecontract of lease.$8C$P9I5S:

a. If they are merely e&hibitedb. If they are accessory to an

industrial establishment

RECOR-&N! OF LEASE OF *ERSONAL*RO*ERT4$5$RA R$:Hease of real propertyis personal right

$8C$P9I5S: Hease parta3es of thenature of real right if"

a. Hease of real property is morethan - year

b. Hease of real property isregistered regardless of duration

NOTE: Hease of personal propertycannot be registered. To be bindingagainst third persons, the parties muste&ecute a public instrument.





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MEMORYAIDINCIVILLAW

Hease may be made orally, but if thelease of Ceal %roperty is for morethan - year, it must be in writingunder the 7tatue of 0rauds.

*ersons -isqalified to $e LesseesBecase -isqalified to B#

-. A husband and a wife cannot lease toeach other their separate propertiese&cept"a. if separation of property was

agreed uponb. if there has been $udicial

separation of property%ersons referred to in Art. -:@- aredisqualified because of fiduciaryrelationships

S4BLEASE

A separate and distinct contract oflease wherein the original lesseebecomes a sublessor to a sublessee.

Allowed unless e&pressly prohibited.

The sublessee is subsidiarily liablefor any rent due. The lessor has anaccion irectaagainst the sublesseefor unpaid rentals and improper useof the ob$ect.

S4BLEASE ASS&!N5ENT OFLEASE

-. there are twoleases and twodistinct $uridicalrelationshipsalthoughimmediatelyconnected andrelated to eachother

-. there is only one$uridicalrelationship, that ofthe lessor and theassignee, who isconverted into alessee

. thepersonality of

the lessee doesnot disappear

. the personality ofthe lessee

disappears

1.the lessee doesnot transmitabsolutely hisrights andobligations to thesublessee

1. the lesseetransmits absolutelyhis rights to theassignee

:. the sublessee,generally, doesnot have anydirect actionagainst the lessor

:. the assignee hasa direct actionagainst the lessor

R&!3TS OF LESSOR &F S4BLEASE*RO3&B&TE- B4T ENTERE- &NTO BLESSEE:-* Cescission and damages, or

* Damages only )#ontract will beallowed to remain in force*1* $ectment

&nstances "hen s$lessee is lia$le tothe lessor:

a. All acts which refer to the useand preservation of the thingleased in the manner stipulatedbetween the lessor and thelessee

b. The sublessee is subsidiarilyliable to the lessor for any rent

due from the lessee.NOTE: The sublessee shall not beresponsible beyond the amount of rentdue from him.

Accion +irecta:direct action which thelessor may bring against a sublessee whomisuses the subleased property.

OBL&!AT&ONS OF T3E LESSOR )DnF*a. +e!iver" o# t-e oect (cannot

e &aive). Ma'ing o# necessar" repairs

c. 7aintenance in peace#/! anae3/ate possession

OBL&!AT&ONS OF T3E LESSEE )CN4*a. to pay rentb. to se thing leased as a diligent

father of a family, devoting it tothe use stipulated

c. to pay e&penses for the deed oflease

d. to notify the lessor of usurpationor untoward acts

e. to notify the lessor of need forrepairs

f. to return the property leasedupon termination of the lease

Effect of -estrction of the Thin(Leased:1. 9ota! estr/ction " a #ort/ito/s

event

Hease is e&tinguished




34/37


2. Partia! estr/ctiona. %roportional reduction of the

rent, orb. Cescission of the lease

+hen lessee ma# sspend pa#ment ofrent:1. lessor fails to underta3e necessary

repairs2. lessor fails to maintain the lessee in

peaceful and adequate en$oyment ofthe property leased

NOTE: 7uspendE/ for the interveningperiod, the lessee does not have to paythe rent.

EFFECT&0&T OF T3E S4S*ENS&ON:

The right begins"a* In the case of repairs, from the timehe made the demand for said repairs,and the demand went unheeded.b* In the case of eviction, from the timethe final $udgment for eviction becomeseffective.

Alternati'e remedies of A((rie'edpart# ;LessorPLessee= in case of Non>flfillment of dties:-. Cescission and damages. Damages only, allowing the contract

to remain in force ! 7pecific%erformance

NOTE: Damages Cecoverable ine$ectment cases are the rents or the fairrental value of the premises. Thefollowing cannot be successfullyclaimed"

-. %rofits plaintiff could haveearned were it not for thepossible entry or unlawfuldetainer

. Faterial in$ury to the premises

1. Actual, moral, or e&emplarydamages

&mmediate termination of lease nderArt/ .@@< applies:

-. only to dwelling place or any otherbuilding intended for humanhabitation

. even if at the time the contract wasperfected, the lessee 3new of thedangerous condition or waived theright to rescind on account of thiscondition

Rles on Alteration of the Form of theLease

The Lessorcan alter provided thereis no impairment of the use to which

the thing is devoted under the termsof the lease

Alteration can also be made by theLessee so long as the value of theproperty is not substantiallyimpaired

Rles in case of 4r(ent Repairs

The lessee is obliged to tolerate thewor3 although it may be veryannoying to him and although duringthe same time he may be deprived

of a part of the premises-. If repairs last for more than :> days"Hessee cannot act for reduction ofrent or rescission

. If :> days or more" lessee can as3for proportionate reduction

NOTE: In either case, rescission may beavailed of if the main purpose is toprovide a dwelling place and theproperty becomes uninhabitable.

Effects if Lessor fails to ma,e 4r(entRepairs

-. Hessee may order repairs at thelessor6s cost

. Hessee may sue for damages1. Hessee may suspend the payment of

the rent:. Hessee may as3 for rescission, in

case of substantial damage to him

TRES*ASS &N LEASE:-. Trespass in fact (pert/racion e

mere -ec-o):

physical en$oyment is reduced

Hessor will not be held liable.. Trespass in la" (pert/racion e

erec-o):

A third person claims legal rightto en$oy the premises

Hessor will be held liable

NOTE: 'hile the Qapanese +ccupationwas a fortuitous event, the lessor is stillnot e&cused from his obligation towarrant peaceful legal possession. Heaseis a contract that calls for prestationsboth reciprocal and repetitive( and the





35/37


MEMORYAIDINCIVILLAW

obligations of either party are notdischarged at any given moment, butmust be fulfilled all throughout the termof the contract. (Ei!!ar/e! vs. Mani!a

Motor Co.)

-ration of Lease.$ Lease made for a determinate

time or fi2ed 'eriod

Hease will be for the said periodand it ends on the day fi&edwithout need of a demand

8$ *f there is no fi2ed periodA$ For 0ural Lands 5Article .:;


36/37


en$oyment of possession, but not thosewith respect to special agreements

which are by nature foreign to the right

of occupancy or en$oyment inherent in acontract of lease ! such as an option topurchase the leased premises (ion vs.Magsa"sa" 4R 5o. 2


37/37


MEMORYAIDINCIVILLAW

authorities concerned in order toma3e said premises safe andhabitable( and

=. E&piration of period of the lease

contract.

NOTE:

&cept when the lease is for adefinite period, the provisions ofArt. -=?1)-* of the #ivil #ode )##*,insofar as they refer to residentialunits, shall be suspended during theeffectivity of C.A. @-=-, but otherprovisions of the ## and the Cules of#ourt on lease contracts insofar asthey are not in conflict with theprovisions of C.A. No. @-=- shall

apply. No increase in monthly rental by

more than -> is allowed.

TER5&NAT&ON OF T3E LEASE

If made for a determinate time, itceases upon the day fi&ed withoutthe need of a demand.

-* By the e&piration of the period* By the total loss of the thing1* By the resolution of the right of thelessor

:* By the will of the purchaser ortransferee of the thing;* By rescission due to non/performanceof the obligation of one of the parties

Special *ro'isions for 0uralLands

Effect of loss de to fortitose'ent:

1. +rdinary fortuitous event ! noreduction

2. &traordinary fortuitous eventa. if more than R of the fruits were

lost, there shall be a reduction,unless there is a stipulation tothe contrary

b. if R or less, there shall be noreduction

Lease dration" If not fi&ed, it shallbe for all time necessary for thegathering of fruits which the wholeestate may yield in - year, or whichit may yield once.

Special *ro'isions for !rbanLands

0epairs for which urban lessor isliable#

-. special stipulation. if none, custom of the place

1. in case of doubt, the repairs arechargeable against him

Lease duration#-. If there is a fi&ed period, lease will befor said period.. If no fi&ed period, apply the followingrules"

a. If rent is paid daily" day to dayb. If rent is paid wee3ly" wee3 to

wee3c. If rent is paid monthly" month to

monthd. If rent is paid yearly" year to

year

Sales and Lease

Documents