SAT/SUN - S (QN)

ARTICLE 1458

By the contract of sale one of the contracting parties obligate himself to transfer the ownership and to deliver a determinate thing, and the other to pay there for a price certain in money or its equivalent

PURPOSE OF DELIVERY

Transfer of ownership

PERFECTION

By mere consent

SUBJECT MATTER

Determinate Thing

CAUSE

Onerous

BILATERAL CONTRACT

Both parties have obligations

NOMINATE CONTRACT

Existence of specific rules provide provided by law

COMMUTATIVE

Equivalence in the presentation of parties

ALEATORY

Only applies to sale of hope (Lotto)

CONTRACT OF SALE (VS CPW)

• Transfer of ownership

• Buyer pays the price

• In the ordinary course of business

• Goods are for the general market

• Subject is a thing and its delivery

• Sale of personal property over ₱500: required to be in writing (SoF)

CONTRACT FOR A PIECE OF WORK

• Transfer of ownership

• Buyer pays the price

• Upon customer’s special order

• Goods are for customer with the order

• Subject is a service

• Sale of personal property over ₱500: NOT required to be in writing

CONTRACT OF SALE (VS DEP)

• Government by law on sales

• Delivery of thing + transfer of ownership

• Is a source of obligation

• NO requirement for a pre-existing obligation

• Cause of seller: Price

• Cause of buyer: Delivery of thing + Ownership

DACION EN PAGO

• Governed by law on sales

• Delivery of thing + transfer of ownership

• Special form of payment to extinguish obligation

• Pre-existing obligation is needed

• Cause of debtor: Extinguishment of obligation

• Cause of creditor: Delivery of thing + Ownership

CONTRACT OF SALE (VS PBC)

• Governed by Law on Sales

• No pre-existing obligation

• Is a source of obligation

• Cause of seller: Price

• Cause of buyer: Delivery of object

• Greater freedom in fixing price

• Buyer becomes owner upon delivery

PAYMENT BY CESSION

• Governed by Law on Obligation (FRIA)

• There is pre-existing obligation

• Extinguishes obligation

• Cause of debtor: Extinguishment of obligation

• Cause of creditor: Assignment of things to be sold

• Less freedom in fixing price

• Creditor merely given the right to sell property

CONTRACT OF SALE (VS B)

• Cause: Cash

• Personal property over ₱500 and real property: required to be in writing (SoF)

• Partly in money and partly in another thing if intended

• Unclear intention, MONEY > THING

BARTER

• Cause: Non-cash

• Personal property over ₱500 and real property: not required to be in writing

• Partly in money and partly in another thing if intended

• Unclear intention, THING > MONEY

CONTRACT OF SALE (VS CAS)

• Thing is delivered to buyer

• There is transfer of ownership

• After delivery, buyer bears risk of loss

CONTRACT OF AGENCY TO SELL

• Thing is delivered to agent

• Delivery to agent has no transfer of ownership

• After delivery, principal bears risk of loss (not agent)

ABSOLUTE SALE

Upon delivery, regardless of total payment of price

CONDITIONAL SALE

Upon fulfillment of obligation (payment of price)

CONTRACT TO SELL

Upon execution of the deed of sale, or other mode of delivery

CONSENT

• Absolute incapacity

  • VOIDABLE OR VOID

  • Valid is contract of sale of “necessities”

• Relative incapacity

  • Husbands and wives: PROPERTY

  • Guardian: PROPERTY OF WARD

  • Agents: PROPERTY OF PRINCIPAL (xpn: consented)

  • Executor & Administrators: PROPERTY OF ESTATE

  • Public officers & Employees: PROPERTY OF STATE OR GOCC

  • Justices, judges, attorneys: OBJECT IN LITIGATION OR LEVY

  • Aliens: LAND IN PH (xpn: Succession or lost citizenship)

CAUSE

• Seller: Payment of price

• Buyer: Delivery of object

• Rules as to price

  • Must be certain

  • Bad faith or mistake – courts may fix the price

  • Prevented – party not in fault may have remedies

  • Special person unable/unwilling to fix – inefficacious

  • Parties agree in price – efficacious

  • Gross inadequacy of price – No effect on contract

  • Price of securities, grain, liquids, and other things certain if:

    • Fix on a definite day

    • In a particular market

    • Fixing is not left to one party (xpn: accepted)

    • It can’t be determined – inefficacious

OBJECT

• Service: Not valid object for contract of sale

• Rules as to objects

  • Licit or within the commerce of men

  • Vendor has right a transfer ownership on delivery

  • Determinate if particularly designated

  • Physically segregated from all other of the same class

  • Sale of undivided share of specific mass for fungible goods

  • May be existing goods or future goods

  • Emptio rei speratae: Sale of future thing

  • Emptio spei: Sale of hope itself

  • Vain Hope: VOID

  • Feature inheritance: Cannot be an object of sale

  • Sole owner may sell undivided interest

  • Things subject to resolutory condition – may be object

SALE BY AUCTION

• Perfected upon fall of hammer by auctioneer, or other customary manner

• Rules of auction

  • Any bidder may retract his bid

  • Auctioneer may withdraw (xpn: announced without reserve)

  • If in lots, each lot is subject of separate contract of sale

• Puffers: Employed by seller to be to increase price

SALE BY AUCTION: GR

• Seller has no right to bid

SALE OF AUCTION: XPN

• Right to bid expressly reserved

• Notice given to bidders

• Not prohibited by law or stipulation

• If sale contradicts any of the above, fraudulent thus VOIDABLE

OPTION AGREEMENT AND CONTRACT

• Rules

  • Binding promise is supported by option money

  • Offeror may withdraw without being liable for damages

  • If with option money, Option Contract. Offeror liable if he withdraw

  • If accepted, contract is perfected, thus may not be withdrawn

• Policitation: Unilateral, promise rejected by promisee, NO EFFECT

  
  

EARNEST MONEY (ARRAS)

Forms part of purchase price; proof of perfection

OPTION MONEY

Not part of purchase price; does not perfect contract

SALE BY DESCRIPTION AND SAMPLE

• Buyer has reasonable opportunity of comparing the bulk with description or sample

• No specific form required for perfection

• Subject to SoF (otherwise UNENFORCEABLE)

  • Not performed within 1 year

  • Sale of personal property over ₱500

  • Sale of real property

RECTO LAW

ARTICLE 1484

RECTO LAW

Application

• Personal property

• Price payable in installments

• Does not apply to sales and credit

• Also applies to leases of personal property with option to buy

RECTO LAW

Remedies (Alternative)

• Exact fulfillment (unpaid covers only one installment)

• Cancel the sale (two or more failed payments)

• GR: Seller may retain reasonable amount of personal property paid

• Auctioneer may withdraw (xpn: announced without reserve)

• Foreclose the chattel mortgage (two or more failed payments)

• Mortgage on property itself, may not recovery deficiency

• Mortgage on another security, may recovery deficiency

MACEDA LAW

A.k.a. Real Installment Buyer Act (RA 6552)

MACEDA LAW

Application

• Residential Realty

• Price payable in installments

• Does not apply to sales on credit

MACEDA LAW

Rights of the buyer

• Payment is less than 2 years equivalent

  • 60 day grace period (once every 5 years)

  • Buyer may sell or assign his interest

  • Pay the entire balance

• Payment is at least 2 years equivalent

  • 60 day GP + 1 month GP for every year (after 2 years)

  • If seller rescinds, give CSV to buyer

• Cash Surrender Value

  • Minimum of 50% of payments, including DP

  • Additional 5% per year after 5 years; on 6th year = 55%

  • Maximum = 90%

MACEDA LAW

Void Stipulations

• As to interest/damages/penalty during the grace period

• Forfeiture clause (because of CSV)

• Auto cancellation or rescission upon default of buyer

MACEDA LAW

Rescission Requirements

• Takes effect after 30 days from complying of both:

  • Notice to be given to buyer as to intention to rescind

  • Payment of CSV

PRESIDENTIAL DECREE NO. 957

CONDOMINIUMS OR SUBDIVISIONS

PRESIDENTIAL DECREE NO. 957

Fail to Develop Subdivision/Condominium

• Buyer suspends further payment after due notice to owner or developer, no forfeiture of payment paid

• Buyer may cancel sale + be reimbursed of total amount paid, including a amortization interest, excluding delinquency interest

PRESIDENTIAL DECREE NO. 957

Failure to pay installments

• Governed by Maceda Law

OBLIGATIONS OF THE VENDOR

• To take care of the thing

• To pay taxes and incidents of the sale unless otherwise agreed-upon

• To warrant the thing

• To transfer ownership

• To deliver determinate thing including fruits, accessions, and accessories

OBLIGATION TO TAKE CARE OF THE THING

After contract has been perfected, prior to delivery

OBLIGATION TO TAKE CARE OF THE THING

Loss of thing pending delivery

• Object is entirely lost

  • Contract shall be without any effect

• Thing is lost in part only

  • Buyer may withdraw from contract

  • Demand remaining part (pay in proportion)

• Perished wholly or in part without knowledge of seller

  • Buyer may treat sale as avoided

  • Treat as valid (remaining) and binding (price of transferred)

• Risk of loss (res perit domino)

  • Before delivery: Seller

  • After delivery: Buyer

• XPN in risk of loss

  • Stipulation

  • Security title – buyer a time of delivery

  • Delay in delivery – whoever causes the delay

• Sale or return

  • Owner ownership is transferred but maybe revested

  • Buyer bears risk upon delivery

• Seal on approval//trial/satisfaction

  • Delivery does not transfer ownership

  • Seller bears risk upon delivery

SELLER IS NOT THE OWNER: GR

Buyer has no better title than the seller

SELLER IS NOT THE OWNER: GR

If owner can recover from seller, owner can likewise recover from buyer

SELLER IS NOT THE OWNER: XPN

• Seller is authorized by the owner

  • Agent

SELLER IS NOT THE OWNER: XPN

• Seller had statutory or judicial authority to sell

  • Guardian

  • Executor

  • Administrator

  • Court Sheriff

SELLER IS NOT THE OWNER: XPN

• In cases of estoppel

  • As to the owner – Estoppel in Pais

  • As to the seller – Estoppel by Deed

SELLER IS NOT THE OWNER: XPN

• Requisites of sale of an apparent owner

  • There is apparent ownership

  • Buyer in good faith and for value

  • There must be law from which ownership may be had

  • PD1529 – Mirror principle

  • Factor’s Act

  • Article 1518 – goods covered by negotiable instruments

SELLER IS NOT THE OWNER: XPN

• Purchase from merchant store, Market, or Fair

  • Buyer acquired good title if bought on good faith for value

SELLER IS NOT THE OWNER: XPN

• Recover possession of a movable

  • Is acquired a public sale – reimburse the buyer

  • If acquired in private – buyer not entitled to reimbursement

DELIVERY: MODE AS TO THINGS

• Actual Delivery

• Constructive Delivery

• To a common carrier

ACTUAL DELIVERY

Actual and physical transfer

CONSTRUCTIVE DELIVERY

• Traditio Longa Manu

  • Longhand delivery (thing leased by another)

• Constitutum Possessorium (sale and leaseback)

• Brevi Manu

  • Shorthand delivery (lessee buys the thing leased)

• Symbolic Delivery

  • Delivery of keys of place where thing is stored

• Execution of the Required Formality

  • Available to both rights and things

TO A COMMON CARRIER

• Upon receipt of the common carrier

• XPN:

  • Ownership is reserved by the seller

  • The seller reserved possession

  • Bill of Exchange dishonored by buyer

DELIVERY: MODE AS TO RIGHTS

• Public instrument

  • Execution of public instrument

• Quasi Traditio

  • Title placed in possession of vendee (stock certificate)

  • Use of vendee’s right with vendor’s consent

TIME OF DELIVERY

• Stipulation of the parties

• If no stipulation, within a reasonable time

PLACE OF DELIVERY

• Stipulation of the parties

• If no stipulation, usage of trade

• If no stipulation nor usage of trade, seller’s place of business

• If none, seller’s residence

• If specific goods in which contract is made in another place, place of delivery

SELLER IS NOT BOUND TO DELIVER

• Pure obligation and the buyer does not pay

• Buyer loses right to make use of period when there is a period agreed upon

DELIVERY IS LESS THAN QUANTITY AGREED UPON (PERSONAL PROPERTY)

• Buyer may reject delivery

• Accept + pay full price if he knew seller will not perform in full

• Accept + pay FV if without such knowledge

DELIVERY IS GREATER THAN QUANTITY AGREED UPON (PERSONAL PROPERTY)

• Accept only what’s agreed

• Accept all + pay at contract rate

MIXED WITH GOODS OF DIFFERENT DESCRIPTION (PERSONAL PROPERTY)

• Accept only what’s agreed

SUBJECT MATTER IS INDIVISIBLE (PERSONAL PROPERTY)

• Reject the whole of the goods

DELIVERY IS LESS THAN QUANTITY AGREED UPON (REAL ESTATE)

• Specific performance + demand delivery of shortage

• Accion quanti minoris - proportionate price reduction

• Rescission if lacking 1/10 of that agreed upon

• Rescission if buyer would not buy if he had known if size

• Same rules if part is not buy if he had known if size

• Same rules if part is not of specified quality

DELIVERY IN EXCESS OF AGREED (REAL ESTATE)

• Accept only what’s agreed

• Accept all + pay at contract rate

• Same rules apply to judicial sales

LUMP SUM SALE, ACTUAL AREA BIGGER THAN AGREED (REAL ESTATE)

• Proportionate price reduction

• Rescind for failure to deliver what has been stipulated

DEEMED UNPAID WHEN (RIGHTS OF UNPAID SELLER)

• The whole price has not been paid or tendered

• Bill of exchange or other negotiable instrument has been received as conditional payment

• Condition broken by reason of dishonor, insolvency of buyer, or otherwise

POSSESSORY LIEN (RIGHTS OF UNPAID SELLER)

Nature

• Right to retain or withhold delivery of goods

POSSESSORY LIEN (RIGHTS OF UNPAID SELLER)

Grounds

• Sold without any stipulation as to credit

• Sold on credit, but the term of credit has expired

• Buyer becomes insolvent
  
  

POSSESSORY LIEN (RIGHTS OF UNPAID SELLER)

Partial lien

• On partial delivery, may exercise right on the remainder

POSSESSORY LIEN (RIGHTS OF UNPAID SELLER)

Loss of POSSESSORY lien

• Delivery to carrier for purpose of transmission to buyer

• When buyer/his agent lawfully obtains possession of goods

• By waiver

• Not lost when only to obtain judgement/decree for the price

POSSESSORY LIEN (RIGHTS OF UNPAID SELLER)

Sale by buyer to third persons

• Seller does not lose right to lien nor stoppage in transitu

• XPN: Seller assented to the transfer

• Goods are covered in negotiable instrument, sold for value in good faith

STOPPAGE IN TRANSITU (RIGHTS OF UNPAID SELLER)

Nature

• Right to stop the goods while in transit

STOPPAGE IN TRANSITU (RIGHTS OF UNPAID SELLER)

[I-SCENT-U]

• Insolvent buyer

• The sale of goods must be on Credit

• Seller must Surrender the negotiable document of title, if any

• Seller must bear the Expenses of delivery of the goods after the exercise of the right

• Seller must either actually take possession of the goods sold or give Notice of his claim to the carrier or other person in possession

• Goods must be in Transit

• Unpaid seller

GOODS ARE IN TRANSIT

• From delivery until buyer/agent takes them from carrier

• Buyer possesses the goods reject them, seller refuse to receive back

GOODS ARE NO LONGER IN TRANSIT

• Buyer/agent obtains goods before arrival to destination

• Buyer/agent acknowledges that he holds possession

• Carrier wrongfully refuses to deliver to buyer/agent

PART DELIVERY

• Remainder may be stopped in transitu

STOPPAGE IN TRANSITU (RIGHTS OF UNPAID SELLER)

How exercised

• Taking actual possession of the goods

• Gave notice of claim to carrier or other bailee

RESALE (RIGHTS OF UNPAID SELLER)

Grounds

• Goods are perishable in nature

• Seller expressly reserves right in case the buyer defaults

• Where buyer has been in default for unreasonable time

RESALE (RIGHTS OF UNPAID SELLER)

How exercised

• Unpaid seller must have a right of lien or stoppage in transitu

PROCEEDS LESS THAN ORIG SALE

Recover difference from buyer as a damage for breach

PROCEEDS MORE THAN ORIG SALE

Seller is entitled to profit

GOOD TITLE

Buyer in resale acquires good title against orig buyer

RESALE (RIGHTS OF UNPAID SELLER)

Notice to orig buyer (except for perishable goods)

• Intention to resell – to determine default buyer

• Date, Time, and Place of resale

• Failure to give notice does not affect validity of resale

PARTICIPATION OF SELLER IN RESALE

Prohibited in all cases

RESCISSION (RIGHTS OF UNPAID SELLER)

Grounds

• Seller expressly reserves right

• Where buyer has been in default for unreasonable time

RESCISSION (RIGHTS OF UNPAID SELLER)

How exercised

• Unpaid seller must have a right of lien or stoppage in transitu

RESCISSION (RIGHTS OF UNPAID SELLER)

Recovery of damages

• May recover from buyer damages for breach

RESCISSION (RIGHTS OF UNPAID SELLER)

Notice

• Not necessary for validity of rescission

• To determine default of buyer

MUTUALLY EXCLUSIVE RIGHTS (RIGHTS OF UNPAID SELLER)

Possessory lien and stoppage in transitu cannot exist at the same time

INSOLVENCY OF BUYER (RIGHTS OF UNPAID SELLER)

• Requisites for right of stoppage in transitu

• Only as ground to exercise possessory lien

DOUBLE SALE

Requisites

• Single property

• Two or more contracts of sales

• Two or more different buyers with conflicting rights

• Buyers acquired same property from same seller

DOUBLE SALE

Movable Property

• Right will go to first one to take possession in good faith

DOUBLE SALE

Immovable Property

• First to register in good faith; if none,

• First to take possession in good faith; if none still,

• The one with the oldest title in good faith

DOUBLE SALE

Both must be valid

• To apply, must be valid or at least rescissible or voidable

CONDITIONS

Not performed

• Refuse to proceed with the contract

• Waive the performance of the condition

• Treat non-performance as breach of warranty + damages

EXPRESS WARRANTY

• Affirmation of fact/promise to induce buyer to purchase thing

• Opinion of the seller

  • not warranty unless seller made statement as expert