Sales and Agency
Recto Law and Maceda Law
Recto Law applies to the sale of personal property in installments. It operates when there is a failure to pay at least two installments, balancing the rights of the buyer and seller. recto Law does not apply to real property or the sale of personal property in straight payments.
Maceda Law applies to the sale of residential real property, excluding non-residential properties such as farmland, industrial land, or commercial property. The grace period under the Maceda Law depends on the number of installments already paid by the buyer:
If the buyer has paid less than two years (23 months or below) of installments, they are entitled to a grace period of 60 days from the date the payment became due.
If the buyer has paid at least two years of installments, they are entitled to a grace period of one month for every year of payments made. This right can be exercised only once every five years of the contract's life.
Remember: The law requires specific conditions to be met regarding grace periods based on the duration of payments.
Extinguishment of Sale
The life of a contract of sale has three stages: negotiation, perfection, and consummation. Extinguishment of sale occurs once the contract is consummated. Consummation happens upon the successful delivery of the subject matter and the successful payment. Once both the buyer and seller fulfill their obligations, the contract of sale is extinguished.
Conventional Redemption (Pacto de Retro Sale)
Conventional redemption, also known as pacto de retro sale, occurs when the vendor reserves the right to repurchase the thing sold with the obligation to return the purchase price to the buyer. This often happens when the seller has a sentimental attachment to the property.
Example: Juan de la Cruz sells his family home due to urgent financial needs but includes a condition in the contract allowing him to buy back the property later.
Limitations of Conventional Redemption:
If there is an express agreement regarding the number of years to exercise conventional redemption, the maximum period allowed by law is ten years.
If the contract of sale does not expressly state the number of years for buyback, the law presumes that the maximum period for the seller to buy back the property is four years.
Contract of Agency
In a contract of agency, an agent is bound to render some service or to do something in representation or on behalf of another person called the principal. The essential parties are the agent and the principal.
Elements of a Contract of Agency:
Consent, expressed or implied, of the parties to establish the relationship.
The object is the execution of a juridical act in relation to a third person.
The agent acts as a representative and not for himself.
The agent acts within the scope of his authority.
Example: Employing someone to retrieve a passport or driver's license from the LTO or DFA, which typically requires a Special Power of Attorney (SPA). In this case, the principal authorizes the agent to act on their behalf to retrieve the document from a third party (DFA or LTO).
Agency vs. Employer-Employee Relationship
The determinative element that distinguishes agency from an employer-employee relationship is the element of control.
In an employer-employee relationship, the employer exercises control over the means and methods on how a particular outcome is produced or accomplished.
In a contract of agency, control may not always be present as long as the agent accomplishes the tasks they are authorized to do on behalf of the principal.
Elements of an Employer-Employee Relationship (Tests to Determine Existence):
Selection of an employee.
Payment of wages.
Power of dismissal.
The employer's power to control the employee's conduct, specifically regarding the means and methods to accomplish the desired outcome or work.
Example Illustrating Agency: Alpha is authorized by his parents, Beta and Charlie, via an SPA, to lease out their condo unit in Manila to Delta since Beta and Charlie reside in Cebu. Here, there is a contract of agency with no employer-employee relationship.
Example Illustrating Employer-Employee Relationship: If Alpha is a real estate agent employed by Ayala Land, Alpha is both an agent of Ayala and an employee. Ayala would control the means and methods in the outcome of the sale.
Acts Validly Delegated to an Agent
What a man may do in person, he may do through another. However, certain personal acts cannot be delegated:
Marriage ceremony: The taking of vows in a marriage ceremony and the declaration of husband and wife cannot be subject to a contract of agency.
Drafting a holographic will or a notarial will: The creation of a will cannot be delegated.
Illegal or unlawful acts: Illegal acts cannot be delegated.
Revocation of a Contract of Agency
As a general rule, a contract of agency is generally revocable as it is a personal contract of representation based on trust and confidence. The power of the agent ceases when the will or permission is withdrawn by the principal. Agency may be revoked by the principal at will, compelling the agent to return the document evidencing agency.
Exception: When the Contract of Agency Is Coupled with Interest
When a contract of agency is coupled with interest, it is not revocable by the sole will of the principal because the agent becomes part of another obligation or agreement.
Example: Mr. Isulat owns a piece of land in Quezon City and enters into an agreement with Ms. Bahana, a real estate agent, giving her the exclusive right to sell his property for one year.
Ms. Bahana spends her own money () to advertise the property.
In this scenario, the contract of agency is coupled with interest. Ms. Bahana has the right to recover her investment and earn her commission. Mr. Isulat cannot invoke the revocability of the contract of agency and can only terminate the agency once the contract period expires.