Professor: Atty. r!in Joseph M.

"a#ella

Transcribers:

Marc Roby de Chavez (MARX)

Mon Cristhoper Pasia (MON) Jennielyn Reyes (JEN) Angela dela Cruz (ANGELA)

Sales Notes by MARX, MON, ANGELA & JEN SALES1 Article 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional. What is a contract of sale? By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. (Codal definition) A contract of sale is when one of the contracting parties obligates himself to deliver or to transfer ownership of a thing and the other party pay a price certain in money or its equivalent. What is the primary purpose of the contract of sale? Transfer of ownership. Because that was what the buyer wants. The buyer will not want delivery of the object if he does not acquire ownership of the thing. Why? For example in contracts to sell, there is delivery but you did not acquire ownership. Even if you have possession of the thing but there is no transfer of ownership, there is no contract of sale. What are the essential characteristics of a contract of sale? Explain each. Consensual it is perfected by mere consent; Principal contract there is no necessity for it to depend upon the existence of another valid contract Either Commutative or Aleatory o Commutative- as a rule, because the values exchanged are almost equivalent to each other o Aleatory- by way of exception (example: lottery ticket the thing itself may not be the equivalent of consideration); Bilateral parties are boundby the obligation dependent upon each other; Nominate there is a specific name given by law or the code Can there be a contract of sale by unilateral agreement? No. What are the classifications of the elements of a contract of sale? Essential Elements Natural Elements Accidental Elements
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What are the essential elements of a contract of sale? Consent or meeting of minds determinate subject matter, price certain in money or its equivalent Natural Elements those which are inherent in the contract, and which in the absence of any contrary provision, are deemed to exist in the contract Warranty against eviction Warranty against hidden defects Accidental elements- those which may be present or absent in the stipulation Place of payment Time of payment Presence of conditions Etc. Can there be a valid sale against the will of one of the parties? Yes. In expropriation and foreclosure proceedings. There can be a valid sale but it is not by meeting of the minds by the party because the other party is compelled to enter into a contract. What are the kinds of sale as to the nature of subject matter? Sale of real property Sale of personal property What are the kinds of sale based on the value of the thing exchanged? Commutative sale- value of the thing may be equivalent as to each other Aleatory sale- one is greater than to the other As to the quantity of the object? Wholesale Retail Classification of the kind of sale based on its validity? Valid sale Rescissible sale Voidable sale Unenforceable sale Void sale As to legality of the object? Sale of licit object sale of illicit object Classifications of illicit objects Illicit per se- of its nature Illicit per accidens- made illegal by provision of the law

Sales Notes by MARX, MON, ANGELA & JEN Classification of sale based on whether the object is tangible or not? sale of property (chose in possession) sale of a right (chose in action) Distinguish between chose in possession and chose in action Chose in possession object of the sale is tangible; Chose in action object of the sale is intangible Classification of the kind of sale based on the presence or absence of a condition? Absolute- no imposed condition, then the obligations of the parties are demandable being an essential element of a contract of sale ConditionalThe classification of the contract of sale as to the presence or absence of a condition is limited only to the accidental element. Meaning, the contract of sale may or may not have conditions. What are natural elements? Warranty against eviction Warranty against hidden defects What distinguishes it from an essential element? If it is an essential element, even if you stipulate otherwise, you cant do it, otherwise the contract is void. If it is just a natural element, if there is a contrary stipulation even if it is an inherent element, you may dispense with it. What are the characteristics of a wholesale sale? The quantity is large; It is resold unaltered and for profit; Purchaser has no use of the goods or it is in excess of his requirement; Seller must be habitually engaged in selling a large number of quantities The sale of 2 tons of recycled newspaper to a publishing house, as opposed to a sale of 2 tons of newspaper to a junk shop. Which is wholesale sale and which is retail sale? The sale to the publishing house is a retail sale. Because the goods (newspaper) are already altered when sold (in the form of a book for example). The sale to the junk shop can either be a wholesale or retail, depending upon whether it is in excess of the requirement of business or not. What are the kinds of sale based on the proximate inducement? Sale by description- where seller things as being of a certain kind, the buyer merely relying on the sellers representations or descriptions. Generally, the buyer
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has not previously seen the goods, or even if he has seen them, he believes that description tallies with the goods he has seen Sale by sample- that where the seller warrants that the bulk (not the major part or the majority of the goods but the goods themselves) of the goods shall correspond with the sample in kind quality and character. Only the sample is exhibited Sale by description and sample- must satisfy the requirements in both, and not in only one

You bought the property because of the description of the goods or by the sample given to you or both. Is the contract of sale valid even if the other party gives a reluctant consent? No Is a reluctant consent a vitiated consent? The contract is still valid because a reluctant consent is not a vitiated consent. Can there be a perfected contract of sale if the seller fails to acquire ownership of the object of the sale at the time of its supposed delivery to the buyer? If not what is the remedy, if so what is the effect? There is a perfected contract of sale. The contract of sale is perfected upon the meeting of the minds, and you need ownership only upon delivery and not upon the meeting of the minds. If the seller fails to deliver the property at the time of its supposed delivery, what is the remedy? Is the contract automatically voided? The contract is not automatically voided. The remedy is an action for damages based on breach of warranty against eviction What if it is an absolute sale without an imposed condition, can there be an action for damages? or there would be mutual restitution? There can be an action for damages, because warranty against eviction is a natural element of the contract, unless, there is a contrary stipulation. So if you are entering a contract of sale, do not waive your right against warranty against eviction. Meaning if the seller does not acquire ownership of the property at the time of its supposed delivery you have a cause of action for damages. Can services be the object of a contract of sale? No. Because there can be no transfer of ownership if the object of the contract of sale is services.

Distuinguish between emptio rei sperati and and emptio spei.

Sales Notes by MARX, MON, ANGELA & JEN Emptio spei is the sale of the hope itself; Emptio rei sperati is the sale of an expected future thing. assigned whether or not it is twice or thrice the value of the debt of the debtor. As regards solvency of the debtor whats the rule? Do they have to know the solvency of the debtor in dation in payment? How about in cession? In dation in payment it does not matter whether the debtor is solvent or insolvent. In cession the debtor required to be insolvent. Why require being insolvent in cession? We are agreeing that you need to be insolvent for you to have applied or for you to have cession or for you to abandon all your property and give it to all your creditors for them to sell it and apply the proceeds to your debt. If you are insolvent the presumption is that your asset is less than your liabilities. If your asset is more than your liabilities, because after the sale you still have the remaining balance over the liability, then you are solvent and if you are not insolvent then it would not apply cession. You have to take the consequences of insolvency, your debt to your creditor share whatever asset you have remain. If you have asset more than your liability then your creditor may without abandoning all your property because if you have abandon your property to your creditor you have nothing to get back because all the proceeds will be divided to your creditor depending on the range of liability or the debts that you owe your creditor. You have to be insolvent because it is a requisite for the abandonment of all your property. The presumption there is you cant claim all of them so that in order for you to be relieved from liability you are showing them that you have given them all your property such that even if it less than the value of the debt share depending on the debt you owe to them on a pro rata basis. Thats why you have to be insolvent first before you can apply cession. What is the contract to sell? A contact to sell is a bilateral agreement whereby the seller while reserving right on ownership to the property binds himself to sell the property upon payment of the purchase price by the prospective buyer so the obligation of the prospective seller is not to get the transfer of ownership but actually the obligation to sell because a contract of sale is different from the contract to sell. Upon compliance of the prospective buyer of his obligation to pay the purchase price then the seller now is bound to enter into a contract of sale whereby he is required to transfer ownership. So in a contract to sell the obligation is actually first to be bound to sell the object subject of the contract upon payment of the
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SALES2 What is Cession? Cession- that which consist in the abandonment of all the property of the debtor for the benefit of his creditors in order that the latter may apply the proceeds thereof to the satisfaction of their credits It is a mode of payment whereby the debtor assigns his property to his creditors on the matter of which to acquire the right on the thing and to apply the proceeds to the debts of the debtor. It is the assignment of all and not just the sum of the property of debtor in favour of the creditor not for the creditor to acquire ownership of the thing assigned to them but for them to have the right to sell them and after the sale the proceeds shall be applied to the debt and that is how the debts are paid. That is cession. What is the distinction between Cession and Dation in Payment? Dation in Payment One creditor is sufficient Not all properties of the debtor are conveyed Insolvency is immaterial The creditor becomes the owner of the thing conveyed Cession There must be 2 or more creditors All the debtors properties are conveyed Takes place only when the debtor is insolvent The creditors do not become owners of the thing conveyed

How many creditors are there in Dation in payment and how many creditors are there in Cession? In dation in payment one creditor is sufficient and in cession there must be two or more creditors. As to the number of property given by the debtor. We all know that in cession all of the properties must be assigned and not some of them. In dation in payment one is enough as long as the value of the property is sufficient to answer for the debts. The number of the property will depend on the amount of the debt. If one property is sufficient to cover the debt and that is accepted by the creditor then dation in payment will be completed even if you assign or give 3 properties should the value will not be sufficient there can never be dation in payment and the creditor will assign and not accept your property. But the general rule is for as long as it is sufficient and the same is acceptable to the creditor then one property is enough. Again as compared in cession all the property must be ceded or

Sales Notes by MARX, MON, ANGELA & JEN full purchase price then the seller is now to sell, deliver and transfer ownership. Can seller be liable for estafa in failing to deliver a thing because of his failure to acquire ownership? The buyer full paid the property- the seller bound himself to deliver the thing at the agreed period, however he failed to deliver it on the agreed date because he failed to acquire ownership on the thing. Initially, the contract is valid because you dont have to own the property at the perfection of the contract A seller may be held liable of estafa, if he is guilty of deceit in selling a thing which he cannot own or which belongs to somebody else If you know that you dont own the property but you honestly believe that you can acquire ownership of the property with sufficient time before delivery or at least you know that you can acquire ownership at the time of delivery then there is no deceit or fraud on your part on that example and if there is no deceit or fraud on your part estafa will not lie. However if you actively represented and misrepresented that you can own the object of the thing at the delivery but you ought to know that that is an absolute impossibility, you are deceiving the buyer and there is that deceit in the representation at the time of the perfection that will qualify for estafa. Without that you will only be liable for damages. If it is not estafa can you be held liable at all? Yes, That is for breach of contract for damages for failure to acquire ownership. When is the thing considered determinate? A thing is determinate when it is particularly designated or physically segregated from all others of the same class. The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being made determinate without the necessity of a new or further agreement between the parties. The thing cannot be determinate by the stipulation of the parties because even if the parties stipulated that the thing is determinate but if it is not actually determinate under the provision of the law it cannot be considered determinate thing, therefore it cannot be element or essential element of a contract of sale. Now if the thing cannot be particularly designated or physically segregated from all others of the same class it is sufficient that at the time the parties enter into a contract of sale the thing is capable of being made determinate without the parties having to enter to new or further agreement for that matter. What is the basis of the validity of the thing having potential existence? You can either classify it as Emptio Rei Sperai and Emptio Spei. That is based on expected or expectancy of a thing which is existing then it is valid. On the other hand if it is actually not based on something that will exist but a mere fact of sale of hope or expectancy then it is also valid depending on that thing. Whats the basis? Based on the validity of the thing with potential existence. Validity of the thing to what will it depend? Based on the intention, why? If the party intends to valid the contract upon the existence of a thing with potential existence if such thing will not exist or failed to exist then you will not have a valid contract. However if the party merely intends to enter into a contract WON the thing will come into existence the contract itself is valid already even if you fail to have existence for your potential thing so based on the intention of the party you will have your validity. Again depending on the intention of the party in the contract of thing or sale of thing with potential existence will depend, why? If the party intends to validate a contract based on the existence of a potential thing then only if the thing exist will the contract be considered valid because that is your intention the contract will only be valid if this potential thing will exist. However if the party intends to enter into a contract even without the existence of the thing with potential existence even if you fail to have even the potential thing failed to exist you will have a valid contract. Give me an example of something with potential existence? Future crop, if you enter into a contract your intention is that you should have a crop in the future if you fail to get your future crop, you did not get any crop at the end of the harvest season you will not have a valid contract of sale because it depends on the existence of the crop because you intends to have a crop harvested at the end of the season but if your intention is just to enter the contract WON this future crop exist at the end of the harvest season thats another thing if you intend to enter into a contract now WON you harvested something at the end of the season is already immaterial nor the intention will bind the contract of sale.
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Sales Notes by MARX, MON, ANGELA & JEN SALES3 So whats the difference now between Emptio Rei Sperati and Emptio Spei? If you intend to violate your sale depending on the existence of the sale with potential existence then you are actually entering into what kind of sale? Emptio Rei Sperati because you are entering into a contract depending on the potential existence of something with potential existence. It is the expected thing that you intend to acquire. If it is Emptio Spei it is actually a sale of the hope or expectancy itself to sell the thing with potential existence. Thats the difference, you bought the hope or expectancy it is the fact of expectancy that you bought and not the existence of the expectancy. Thats why based on the intention you can have validity of the sale of thing with potential existence. What are the kinds of goods under the law on sales? Future goods and Existing goods. What are goods? Is that goods money? Will it consider money? Money of legal tender in the Philippines cannot be subject of goods because the law does not consider it as a good. What is a contract for piece of work? If I order a pair of shoe, is that a contract of sale or piece of work? Fro example Im size 10, a leathered shoes and there is no size 10 available in the market, so I ordered for that size of leathered shoes. Whats that? It is a contract for piece of work only if it is specially manufactured for the buyer and it not readily available for the general market. If it is available for general consumption only that it is not available at that time even if it is specially made because of the order that does not qualify as contract for piece of work. For example they have a pair of shoes available for general market only at that particular time you have no available size and even if it is no longer available and they manufacture it because of the order especially for the buyer in ordering that particular shoe it will not make for a contract for a piece of work because the fact remains that it available for general consumption not specifically made for the buyer. So the qualification actually WON it is a special product for the buyer and that it is unique and not readily available for general consumption. If it is it is a contract of sale and if not it is a contract for piece of work. Can all things be the subject of a contract of sale? Only licit things. Illicit thing cannot. What are the kinds of illicit things? Illicit per se/ illicit in nature human flesh or flesher Illicit per accidence prohibited by law. i.e. prohibited drugs What is the nature/status of a contract if its object is illicit? Void. The object is unlawful therefore one of the essential elements of the contract is absent. If you dont have a lawful object you dont have a valid contract therefore the contract is from the start void. Can you sell rights? Yes. Legal basis: objects of a contract in general Things which are not outside the commerce of men and rights which are not intransmissible (transmissible rights). What are examples of instrasmissible right? Marital rights, rights of suffrage, right to life, liberty What are examples of transmissible right? Right to usufruct, right of redemption. How about right to inheritance? Yes, but only inheritance which has already been acquired. Future inheritance cannot be transferred. When can you consider a thing as determinate? Particularly designated or physically segregated from all the other of the same class. If it is not particularly designated or physically segregated, how can that requirement of a determinate thing be satisfied? If at the time the contract was entered into the object is capable of being made determinate w/o need of a new contract between the parties. What are the kinds of goods that may be the object to a contract of sale? Existing goods - owned and possessed by the seller at the time the sale Future goods - does not exist but w/ potential existence If you are a seller selling existing goods what is the presumption? If you have the power to deliver and to transfer ownership, what is the presumption? The presumption is that you have possession
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Sales Notes by MARX, MON, ANGELA & JEN

What are the kinds of future goods? 1. goods to be manufactured i.e. car 2. those which are to be raised i.e. young of animals 3. goods to be acquired by the seller after the perfection of the contract a. anything you promised which you do not have ownership of yet at time of the perfection of the contract may be the subject of a contract of sale because you can acquire ownership b. anything you may acquire after the perfection of the contract i. i.e. You promise to sell a parcel of land which you do not have ownership yet at the time of the perfection of the contract of sale. If you acquire it subsequently. 4. things whose acquisition depends upon a contingency which may or may not happen. c. i.e. A will sell to B a house of lot if A pass the bar. What are the kinds of delivery? 1. Actual - physical delivery to the buyer which transfer ownership Transfer of personal property actual physical transfer of possession 2. Constructive merely symbolic delivery which also transfers ownership i.e. In real property by giving of the title or execution of the deed of conveyance What are fungible and non-fungible goods? Fungible If based on the intention of the parties, it may be substituted Non-fungible it cannot be substituted What are consumable and non-consumable things? Consumable by the nature of the object it cannot be used w/o being consumed Non-consumable it can be used even w/o being consumed What is the basis of their distinction? Consumable and nonconsumable The nature of the thing. What is the basis of the distinction between a fungible and non-fungible? Intention of the parties Can a real property be fungible? A Real property is actually non-consumable but if it is based on the intention of the parties they may be considered fungible
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Even if the thing is consumable by nature (i.e. rice, sugar, salt) if the intention of the parties are for them to be returned, it is non-fungible. i.e. If the intention of the parties is for exhibition. What is the rule regarding sale of fungible goods? There may be sale of undivided share of specific mass although the seller purports to sell and the buyer i.e. Buyer wants to buy 100 cavans of rice. The entire mass produced is 150. 100 cavans should be owned by the buyer who purports to buy specific numbers, weight or measure. Since the cavans turned out to be more than what the buyer wants what will be the resulting ownership of the entire mass? The seller and the buyer will both own the 150 cavans in proportion to what they actually buy and sell. 100 cavans will be owned by the buyer the remaining 50 will be owned by the seller. The entire mass will be co-owned by them. What happens if the entire mass only produced 50 cavans? It will entirely be owned by the buyer. What will happen to the remaining 50? Is the contract valid only w/ respect to 50 cavans produced? Yes but the seller is obligated to fulfill the remaining obligations (remaining 50) because that is the subject of the contract of sale. Distinguish between sale and Agency Sale 1. Seller receives the purchase price from the buyer as owner 2. seller directly receives the purchase price 3. buyer becomes the owner of the object upon its delivery 4. if the goods/object is defective the buyer cannot return the them. His remedy is damages Agency Agent receives the payment in trust for the seller with the obligation to deliver the price to the seller Agent receives the purchase price in behalf of the seller Even if there is delivery the agent does not acquire ownership over the object of the contract Agent can return the goods

What is the test to determine whether the contract is a sale or agency? st 1 determination of whether there is acquisition of ownership. nd 2 resulting relationship from contract or transaction - buyer and seller or principal and agent a) Sale results in a Debtor creditor relationship one is liable to the other; it means that he

Sales Notes by MARX, MON, ANGELA & JEN is acting on his own behalf therefore has failure or nonpayment of the consideration of the contract makes him liable as debtor. b) In an Agency is the agent liable to the seller? No because he merely acts on behalf of the seller (agent principal relationship). Distinguish Sale and Piece of work? Sale Goods are Manufactured or procured for the general market, available upon demand Piece of work Specially manufactured for a customer and upon his order and it is not available for the general market What if there is no meeting of the price but there is knowledge of the price but w/o objection? Is it validated by estoppel or laches? No. If there is no consent, there is no meeting of the minds. It will not be validated by estoppel or laches because at the time you are asked to pay the price you can say that you did not give your consent. And, according to the civil code the price is determined by the by one of the parties can only be valid if the other party consents to it because this amounts to meeting of the mind. Without that, one of the essential elements of the contract therefore the contract is void. it is certain with reference to certain fact or facts i.e. securities grains and liquids What is the rule? What are those facts that will make the price certain? If it is certain on a definite day or on a particular exchange or market; OR If the price is fixed above or below the price on that definite day, or particular exchange or market What is a price? It signifies sum stipulated as the equivalent of the thing sold and also all the considerations and incidents taken to fix the price or the value of the thing put to the debit of the vendee and agreed by him. What are the requisites of a valid price? - it must be 1) certain 2) unconscionable or grossly inferior to the value of the thing subject of the contract 3) real and not fictitious (absolutely simulated) How can you impugn the price fixed by a 3 person? You can ask to court to impugn it. On what grounds? 1) Bad Faith 2) mistake 3) violation of the instruction or standards, set by the parties, to accurately fix the price Can you make the price certain by referring it to a pension plan? i.e. U r receiving P10 k a month. Seller said, I am selling this house and the price will be the same as ur pension plan that you will get from the government. Is this a valid price? The price is based on the pension that your parents will get from the govt in next 10 yrs. That is certain if they will survive that year.
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How do you characterize a contract if the consideration is partly paid in money AND partly paid in kind? st 1 determine the intention nd st 2 determine the value of the goods (if the 1 cannot be determined) Value of thing in kind > value of money partly used for payment barter otherwise sale If the consideration is entirely in kind OR entirely in money dont distinguish between the 2 contracts. Only classify something sale and barter only the consideration is both in money AND in kind. Only if the consideration partly in kind and in money will you determine the value of the thing in kind over the value of the money. value of the money > value of the thing in kind sale otherwise barter same value sale because you exchange something in money or its equivalent SALES 4 What is the rule for the price to be considered certain? It shall be sufficient if 1. it is determinable by making reference to another thing which is certain; or 2. determination is left to the judgment of a specified person or persons 3. it is certain with reference to certain fact or facts Can the determination of the price be left to one of the parties? Yes, if there is consent. If none, it cannot be, because there is no meeting of the minds.

Sales Notes by MARX, MON, ANGELA & JEN They will get only a certain sum only up to the point of their life. Meaning, if they die, i.e. 3 after the contract they will only get the equivalent. This is no longer certain. The basis actually of pension is life itself. Since life is not certain, you cannot base the price on life pension. Any price referred to a life pension cannot be certain because life itself is not certain. What is inadequate price? If it insufficient to satisfy the actual value of the thing subject of the contract What are the kinds of inadequate price? 1. Gross 2. Negligible immaterial / diminimis If the inadequacy of the price is negligible is a contract valid? Yes, because it is practically immaterial. i.e. if the value of the thing is P50 K the price to be paid is P49K. If the inadequacy is gross is the contract valid? GR - gross inadequacy will not invalidate the contract EXCPs 1. defect in the consent resulting to a vitiated consent. The status is of the contract is voidable /annullable. 2. if it can be inferred that the intention of the parties is that of donation or sine other contract it is considered, not a contract of sale but a donation if it complies with the requisites of a donation 3. shocking to the conscience that it would result to the invalidation of a contract of sale. 4. If the guardian sold the property for less than 25% of its value then the ward suffers lesion, the court may invalidate the price and fix another. This can be a gauge on how much is inadequate. If less than of its value it can be considered as grossly inadequate to shock the conscience of the court. contract. The presumption is that they voluntary agreed on the inadequate price and the court has no power to invalidate such law between the parties How is ordinary sale different from judicial sale? There is no voluntariness. The debtor is forced part with his property or to enter into the contract of sale. Since there is no freedom to contract, court may step in and protect your rights. If it is now unfair because you already parted with your property and you are still made to pay for more than the value of the deficiency in the auction sale. The court can enter into the picture to protect your rights and fix the price. Is it an absolute rule that in a judicial sale and the price is shocking? No. It does not apply if the debtor is given the right to redemption because it gives more freedom to the debtor to redeem the property in a much lower price. Is there an exception in ordinary sale? Yes. If the court based on EQUITY says that the price cannot be considered, it can enter into the picture and fix the price. If the guardian sold the property for less than 25% of its value then the ward suffers lesion, the court may invalidate the price and fix another. This can be a gauge on how much is inadequate. If less than of its value it can be considered as grossly inadequate to shock the conscience of the court. Are all lesions invalid? Not if it is approved by the court. How do you question gross inadequacy of the price? It is enough that you allege in the court that is less than of the value of the property and it is grossly inadequate as to shock the conscience of the court? No. You have to present proof or evidence to show the court that the price is shocking. What is the status of the contract if the price is simulated? What is a simulated price? It is a fictitious price. What are the classifications of simulated price 1) absolutely simulated parties did not intend to be bound at all 2) relatively simulated - parties conceal their true agreement
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Can the court invalidate the sale? No, because there is a price only that it is grossly inadequate. The court will fix the price based on what is acceptable under the prevailing circumstance. Is the 3 rule absolute? No. The exception applies only in a judicial sale. It does not apply to ordinary sale, because there is freedom to contract and whatever they stipulate will validate the
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Sales Notes by MARX, MON, ANGELA & JEN What will happen if the thing was already appropriated by the buyer before it was determined that the contract was inefficacious? Buyer shall be obliged to pay reasonable price. The object has already been delivered, and was later appropriated by the buyer however the price is uncertain and not paid therefore the contract is invalid. What is the remedy of the seller? To demand the buyer to pay a reasonable price. What is the standard of reasonable price? Fair market value- Reasonable sum which the property would command in a fair sale by a man willing sell but not obliged to sell and by buyer willing to buy but not obliged to buy. What if the goods are still intact? Seller can demand the return of the object subject to the ___(150) damages that the seller would demand from the buyer. If the seller delivers a thing to buyer which is different from what the buyer demand and the latter accepts the thing, how much should he pay? i.e. Object A for 100 K. the seller delivers object B, which the buyer knows is P200 K, he accepts delivery, ownership is transferred. How much the buyer obliged to pay? P200 K. Knowledge of the price and acceptance of delivery is tantamount to a new contract. There is a price certain (P100 K) but is there a determinate thing? None there was a no delivery. It is a perfected contract subject to damages. But how much can you be compelled for the delivery? P200 K. It is a new contract, it is new accepted offer for a definite thing. So you are required to pay P200 K. You can compel the buyer to pay because he accepted it. He should have rejected delivery of object B because it is not the object of their contract, therefore there can never be demand for P200 K. But the point, the sale is valid because it is in effect an accepted offer of a new thing. Since he accepted he can be obliged to pay P200 K. Is the seller released from his responsibility from the 1 contract? No. The contract is perfected. The remedy is damages.
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Is an absolutely simulated contract absolutely void? Yes Is a relatively simulated contract also void? No. The concealed agreement is binding upon the rd parties and is enforceable IF it does not prejudice 3 person AND is not intended for any purpose not contrary to law, morals, good customs, public order and public policy. Why is a simulated is price void? Simulated price is tantamount to lack of price or consideration. If there is no consideration then there is no valid contract. If the price is not paid, is the contract valid? Yes. There is a price only that it was not paid. If the parties made it appear that price was agreed upon but there was none, is the contract valid or void? Void If a forfeited or counterfeited currency was used as payment, is contract valid or void? Valid, because the price is certain, the price is valid. Only the mode of payment is void. What if the parties agreed that the consideration shall be paid in a counterfeit or forfeited currency? Valid because the price is certain what was agreed is the mode of payment. It such was the agreement it does not mean that there was no agreed price. HOWEVER if it is to the effect that the agreement to pay in a counterfeit currency results to an agreement that there is actually no necessity for payment of a price that may result to simulated price which will invalidate the contract of sale. What is the remedy/action to invalidate a null and void contract? Declaration of nullity What is the prescriptive period for such action? If the contract is not valid from the start it is imprescriptible, meaning you can bring an action for declaration of nullity anytime. No prescriptive period. What is the status of the contract if he price cannot be determined? It is inefficacious, meaning it is ineffective.

Sales Notes by MARX, MON, ANGELA & JEN SALES 5 What is the status of the contract if the price cannot be determined? What are the requisites of the price for the contract of sale to be valid? Certain Must not be grossly be inferior to the value of the thing EXCEPT when the parties intended it to be a donation. Real not fictitious What are the rules for it to be made certain? 1. reference to another thing which is certain i.e. I will sell my car based on the price of the BMW sold to Mr. A. 2. determination is entrusted to the judgment of a specified person or persons 3. reference to certain facts or facts Sale of securities, grains, liquids or other things certainty may be referred to what facts? We have specific rules on sale of securities, grains and liquids because their price is difficult to ascertain at a definite day or at the week you purchase or the sell these things. The code allows the setting of the price 1) based on its particular market value or price at a definite day or definite/particular exchange or market. i.e. your price for the sale of your grains will be certain even if you dont know the price today, if you stipulated that price will be the price of the grains 5 days from now at its regular market value (i.e. P30/kilo) 2) It can also be based at a price below or above the price on that particular/ definite day or on a particular market or exchange. If there is no certainty as to the price based on the rules the contract is inefficacious. There is no contract because there is no price fixed as a consideration. And a consideration is essential element of a contract of sale. Without that the contract is sale from the start. When do you need to determine the market value of the thing? When a sale is inefficacious but delivery had been made to the buyer who appropriated the same. The latter required to pay reasonable price therefore. Fair market value is a good standard to determine reasonable price. There is no thing to return by reason of the void contract. GR when contract is void mutual restitution is proper.
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If there is already appropriation because it has been previously delivered, it cannot be returned for this reason that what should be returned is the value of the thing. What will be the basis of value of the thing? Fair market value. What is market value? ibid -Price is set by the market (not unilaterally set by the seller) in a fair sale. In the market it is the price of the property. When is a contract of sale perfected? From the moment of the meeting of the minds upon the thing which is the object of the contract and upon the price. Is it always the case that upon meeting of the minds of the parties on the thing and price there is already perfected contract of sale? No. If the obligation/contract is subject to a suspensive condition. If such is the case when is the sale perfected? Upon the fulfillment of the condition. i.e. A will sell the house and lot to B for P100 K if B pass the bar exam. Even if buyer accepts the price and agree that he will buy the house and lot, the contract is not yet perfected until B passeses bar. What if the seller offers the buyer to buy the house and for 100 K and gives the buyer 1 mo. w/in which to decide on whether to buy the property. Can the seller sell the property before 1 mo.? When can the seller not sell the property within 1 mo? What is an option money? Consideration distinct from the price for the seller to be bound by the option contract. If the buyer said, I will exercise that option and if I do decide to buy the property after I mo. I will give you $110 K instead of $100 K is this a proper option? Can the seller still sell the property within 1 month? Code provides that there should be separate and distinct consideration to support the contract of option. Is this required to be received by the seller?

If there is an option to buy within 1 month it should be coupled w/ option money or a consideration distinct from the price for the seller be bound by the option contract. If he is

Sales Notes by MARX, MON, ANGELA & JEN bound by the option contract he cannot sell the property before the expiration of the option period. If the buyer did buyer did not give option money but promises I will exercise that option and if I do decide to buy the property after I mo. I will give you $110 K instead of $100 K is this a proper option? Can the seller still sell the property within 1 month, will this bind the seller thereby preventing him to sell the property w/in 1 month? Is actual receipt of money required? Can the seller be bound even if there is no actual payment of the option money? Art 1479 provides only that there must be a separate and distinct consideration that will support the option contract. Is it required that it is given to the seller already? Is an option contract different from other contract that receiving of the consideration is necessary? If you are face to face with your seller or buyer when is your contract perfected? If parties actually agreed on the price and the thing subject of the contract and the acceptance of both is unconditional. Because a conditional acceptance would make the contract subject to the fulfillment of that condition. Therefore even if you are fact to face with your buyer/seller the contract of sale is not yet perfected. What if the acceptance is based on a correspondence? The buyer accepted the offer of the seller through a regular mail. The seller received the mail indicating the acceptance this morning. Without reading it the seller he offered the property to other people in the afternoon. Since knowledge is material does it mean there is no perfected contract of sale, because the seller did not read the mail? Is there a perfected contract? Contract is perfected upon acceptance and knowledge of acceptance Is it true although it is knowledge which is required if there is actual receipt it is your fault that you have not read the mail or acceptance then he can perfectly enter into another contract because it is as if has been withdrawn before the acceptance? If there is an offer, it can be withdrawn before knowledge of the acceptance. Meaning when if buyer enters into another contract using the same property, because if you offer the same thing to other people, it means you are withdrawing your offer and withdrawn offer will not ripen to a perfected contract of sale.
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Does this rule apply to the said case? What if the letter was received one week before the withdrawal? The rule is there should be Actual knowledge, meaning you give your offer, so entirely it have to be accepted and the acceptance ____ made face to face or orally ____ knowledge must be made known to the offeror. How about if it is through writing/ correspondence? There must be actual knowledge. the seller should have read the acceptance before it is considered a perfected acceptance leading to a perfected contract of sale. HOWEVER based on evidence receipt is actually knowledge, because if you go to court you cannot say, Yes I received the letter today but I did not read it, so I did not know of the acceptance. That will not be accepted by the court because once you receive a letter it is as if you have received it because you would not have received the letter in the first place if you have no intention of reading it. So if we are looking at evidence the best way to go around that, if there is actual withdrawal is to check the time of receipt. i.e. If you received the letter at 10 am today but at 9 am you have proof that you have actually already offered the property to somebody else. So even if you received and made an offer at that same day evidence will show that you have actually withdrawn your offer prior to your knowledge or receipt of the acceptance. This can be given credit by the court. However if you received the letter in the morning and with is proof that you receive the letter in the morning and also proof that you offered it to another person in that same afternoon, then that cannot be considered as a valid sale because there is already bad faith. So if there is bad faith, the court will lean towards what should have been done, because there is a valid offer and a valid acceptance. Its dependent on your discretion on whether or not the contract is perfected, however the law provides for the perfection of the contract. Therefore there is meeting of the mind there. But that evidence is a second thing, in actual practice you cannot easily say that it is done the day before or the offer was done before actual receipt. But for purposes of academic discussion the material there is that it must reach the knowledge of the offeror. If there is knowledge of the offeror of the acceptance, then there is presumably perfected contract of sale. For purposes of contract of sale under statutes of fraud, what the contracts that have to be in writing? sale of real property sale of personal property if the value is P500 or more

Sales Notes by MARX, MON, ANGELA & JEN If the sale is not in writing what is the status of the contract? Unenforceable. Contracts which are not in writing but should be in writing under the statute of fraud are unenforceable contracts. You cannot enforce it. Even if you are compelled by the court to comply with the obligation you have a valid defense that it cannot be enforced under the statutes of fraud. What are defective contracts? Void, voidable, rescissible, and uneforceable However even if these contracts are not in writing there are instances when you can enforce them. How? Can you cannot ratify an unenforceable contract, esp. it is violative of statutes of fraud? What are your defenses in case contracts are entered orally for you to enforce it? What are the exceptions that contracts violative of statute of fraud are unenforceable? If there is waiver of the privilege/right under statute frauds Contact already been partially (or under the book, completely executed) If it is completely executed what is there to enforce? No more. What is the rule on sale by auction? When is contract of sale by auction perfected? When the auctioneer announces its perfection of the sale by the fall of the hammer or in some other customary manner (if there is no hammer) where bid is accepted. Prior to the fall of the hammer/perfection of the contract may the bidder withdraw his bid? Yes. It is merely an offer and if there is no acceptance yet it can be withdrawn properly, because there is no meeting of the minds yet. Therefore there is no valid contract of sale yet. Can the auctioneer withdraw the thing for sale prior even if there is a bid? If the public is notified that the auctioneer will not actually withdraw or will have no right to withdraw it then that is the rule. W/o that reservation. The customary thing to do is to accept it. So there is a perfected contract of sale. If there is reservation on the part of the auctioneer he may withdraw even if there is already a bid, because there is merely an offer and unless it is accepted there is no meeting of the minds. Therefore there is no perfected contract of sale yet. Can juridical entities be bidders? Yes. Is the presence of by-bidders or puffers prohibited? If there is no notice the seller has the right to bid, if the seller bids either by himself or through a puffer or by-bidder, then that sale with by-bidder and puffer is fraudulent. Why is it fraudulent? Due to the misrepresentation that may be caused by making the buyer believe the value of the thing is actually higher than actual market value/price. The by-bidders or puffers take into consideration the interest of the seller may actually bid higher so that interested of the buyer may top their bid and actually buy the property at an exaggerated price. The defrauded buyer/bidder may invalidate the sale by reason of fraud. Ownership is transferred by delivery. Delivery may be actual or constructive delivery. Actual delivery is the actual physical transfer of possession from the seller to the buyer. If there is actual delivery the ownership is transferred upon delivery. If it is impossible to physically transfer possession of the property subject of the contract of sale, delivery may be done constructively. Classification of constructive delivery 1) Symbolic/ instrumental delivery Under code/jurisprudence 2) tradicion longa manu 3) tradicion brevi manu 4) constitutum possessorium 5) by operation of law 5) Quasi-Tradicion
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Who are by-bidders or puffers? Those employed by the seller to represent them in biddings and make a bid in their behalf. They may represent juridical entites. Can they be juridical entities or just natural persons? No, because by-bidders and puffers are actual bidders. Can juridical persons do that? No

Sales Notes by MARX, MON, ANGELA & JEN

Technically/ usually if there is a sale of immovable property the physical transfer is impossible thats why we resort to constructive delivery through delivery ,for i.e., of title, deed of conveyance or whatever that will represent symbolically the real property. Warehouse, for i.e., is transferred through delivery of the key of the warehouse; house and lot (disregarding in meantime the requisite for execution of the deed of sale and transfer of title) through delivery of the key or any other symbols of the immovable property subject of the sale.

GR delivery of the object of the contract transfers ownership EXCP when there is a reservation as to the transfer of ownership Roman term - Pactum Resvanti In Domini. The parties actually delivers the property subject of the contract of sale however the ownership is reserved usually until full payment of the price or fulfillment of the condition imposed upon the buyer and agreed upon by both of the parties. If there is a reservation as to ownership and there is delivery of the property but the title remains with the seller. It is considered a Contract TO sell. Only upon payment of the full purchase price will that title be transferred to the buyer. If there is already transfer of ownership to the buyer the contract to sell is usually changed with an absolute deed of sale. If there is already an absolute deed of sale, that is the deed of conveyance actually transferring title to the buyer. Why do you need a deed of sale if full payment and delivery will already result to transfer of ownership? It is required by the Register of Deeds. Because if you have a deed of sale already it is a proof that you are the owner. Especially if you have possession or symbolic possession of the property that will absolutely be you property already. But for purposes of transferring title from the previous owner to the new owner/to your name, you have to present the deed of sale to the register of deeds and pay all the taxes so that the title will by transfer to you.

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Sales Notes by MARX, MON, ANGELA & JEN FINALS What are the OBLIGATIONS OF A VENDOR? Transfer ownership Deliver the thing this is important because this is the very act of transferring ownership Preserve the thing from the perfection until it is delivered to the buyer Warrant the thing sold against eviction and hidden defects Is it always necessary to stipulate on the time when the thing is to be delivered? No. If there is no stipulation as to the time of delivery, when should such delivery be made? General Rule- at the time stipulated If there is no stipulation, the nature of the contract will be determined, such that if the time is the essence of the contract then it should be delivered within that particular period. Otherwise it should be delivered within reasonable time subject to the expectation of the parties. When are things sold considered to be delivered? When it is placed in the control and possession of the vendee Possession if the thing is capable of physical transfer of actual delivery Control it the thing is incapable or impossible to be physically transferred or delivered What are the KINDS of delivery? Actual/Real Constructive/Legal Quasi Kinds of Constructive/Legal Delivery? Tradicio Symbolica delivery of the keys of the place or depositary where the goods are stored Symbolic delivery through the execution of legal formalities delivery through public instruments (i.e. notarized deed of sale) Tradicion longa manu executed when the vendor points to the vendee the thing sold which at the of the sale time of the sale cannot be transferred to the possession of the vendee but must be within sight of the parties Tradicion brevi manu when the vendee is already in possession of the thing b virtue of title other than ownership and continues to hold the possession thereof under the title of ownership
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Constitutum possessorium owners continuous possession of the property sold to another person but his present possession is no longer that of an owner but under another capacity like that of a lessee, pledge, depositary etc.

What is quasi-tradicion? Delivery of rights, credits, and other incorporeal properties CHUA vs CA In a contract of sale, the title of the property passes to the vendee upon the delivery of the thing sold and the vendor loses ownership over the property and cannot recover it until and unless the contract is resolved or rescinded. In a contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price and the title is retained by the vendor until full payment of the price. Also in the contract to sell, payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. The receipt made by both of them shows that the true agreement between the parties was a contract to sell. Ownership over the property was retained by Valdes-Choy and was not to pass to Chua until full payment of the purchase price. What are the requisites of actual/real delivery? Seller has control over the thing Such control is placed/transferred with the buyer For the purpose of transferring ownership There can be delivery even without transferring ownership, especially in instances where ownership is reserved to the seller until the payment of the full purchase price. VISAYAN SAWMILL VS CA The nature of the transaction between the petitioner corporation and the private respondent is a mere contract to sell or promise to sell, and not a contract of sale. The seller bound and promised itself to sell the scrap iron upon the fulfillment by the private respondent of his obligation to make or indorse an irrevocable and unconditional letter of credit in payment of the purchase price. The VISAYAN SAWMILL's unequivocally subject to condition, i.e., the private making or indorsing of obligation to sell is a positive suspensive respondent's opening, an irrevocable and

Sales Notes by MARX, MON, ANGELA & JEN unconditional letter of credit. The former agreed to deliver the scrap iron only upon payment of the purchase price by means of an irrevocable and unconditional letter of credit. Otherwise stated, the contract is not one of sale where the buyer acquired ownership over the property subject to the resolutory condition that the purchase price would be paid after delivery. Thus, there was to be no actual sale until the opening, making or indorsing of the irrevocable and unconditional letter of credit. Since what obtains in the case at bar is a mere promise to sell, the failure of the private respondent to comply with the positive suspensive condition cannot even be considered a breach casual or serious but simply an event that prevented the obligation of petitioner corporation to convey title from acquiring binding force. Consequently, the obligation of the petitioner corporation to sell did not arise; it therefore cannot be compelled by specific performance to comply with its prestation. In short, Article 1191 of the Civil Code does not apply; on the contrary, pursuant to Article 1597 of the Civil Code, the petitioner corporation may totally rescind. The trial court ruled, however, and the public respondent was in agreement, that there had been an implied delivery in this case of the subject scrap iron because on 17 May 1983, private respondent's men started digging up and gathering scrap iron within the petitioner's premises. The entry of these men was upon the private respondent's request. This permission or consent can, by no stretch of the imagination, be construed as delivery of the scrap iron in the sense that, as held by the public respondent, citing Article 1497 of the Civil Code, petitioners placed the private respondent in control and possession thereof. In the first place, said Article 15 Obligations of the 1491 falls under the Chapter Vendor, which is found in Title VI (Sales), Book IV of the Civil Code. As such, therefore, the obligation imposed therein is premised on an existing obligation to deliver the subject of the contract. In the instant case, in view of the private respondent's failure to comply within the positive suspensive condition earlier discussed, such an obligation had not yet arisen. In the second place, it was a mere accommodation to expedite the weighing and hauling of the iron in the event that the sale would materialize. The private respondent was not thereby placed in possession of and control over the scrap iron. Thirdly, the conversion of the initial contract or promise to sell into a contract of sale by the petitioner corporation's alleged implied delivery of
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the scrap iron because its action and conduct in the premises do not support this conclusion. Indeed, petitioners demanded the fulfillment of the suspensive condition and eventually cancelled the contract. MUNICIPALITY OF VICTORIAS v CA It is expressly provided by law that the thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee. Where there is no express provision that title shall not pass until payment of the price, and the thing gold has been delivered, title passes from the moment the thing sold is placed in the possession and control of the buyer. Delivery produces its natural effects in law, the principal and most important of which being the conveyance of ownership, without prejudice to the right of the vendor to payment of the price. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed, the contrary does not appear or cannot be clearly inferred. The execution of the public instrument operates as a formal or symbolic delivery of the property sold and authorizes the buyer to use the document as proof of ownership. Respondent Norma Leuenberger admitted that she inherited the land covered by Transfer Certificate of Title No. T-34036 from her grandmother, who had already sold the land to the petitioner in 1934; hence, she merely stepped into the shoes of her grandmother and she cannot claim a better right than her predecessor-in-interest. Is seller the required to deliver the object subject of the auction sale to the buyer upon the perfection of the contract? This is because delivery is for the purpose of transferring ownership. In auction sale even if you make the delivery it will not serve the purpose because it will not transfer ownership, since ownership is retained by the seller within 1 year. This is because he still has the right of redemption. Even if you make the delivery you can still exercise the right of redemption and if the buyer takes possession of the object prior to the expiration of the period of redemption you can claim for damages or take possession of the property with damages. If the possession of the buyer extends after the expiration of the period of redemption, meaning he took possession of thing immediately after the sale then continued to be in possession after the remaining period of redemption, you have 2 cause of

Sales Notes by MARX, MON, ANGELA & JEN action before the expiration of the period of redemption and 1 cause of action after. Before the expiration of the period of the redemptionTake possession of the property and demand for damages After the period of redemption you can only claim for damages because you have lost your right of possession What is Tradicion/Delivery? Mode of acquiring ownership as a consequence of certain contracts such as sale by virtue which actually or contstructively the object is placed under the control and possession of the vendee. When is delivery of goods considered on sale or return contract of sale? The buyer has the option of returning the goods instead of paying the price. Upon delivery there is already a transfer of ownership, therefore he acquires ownership. However he also has the option to revest the ownership if he does not want to acquire ownership for whatever reason depending only upon his discretion. What are the 2 rights acquired under this concept? Acquisition of ownership Revest the ownership after the period If he has merely an option to return the goods when should it be exercised? Within the period stipulated in the contract Within reasonable period time What is Sale on approval or on trial or on satisfaction? The only difference is that ownership even if there is delivery is not automatically transferred to the buyer. When is ownership transferred? If there is no notification that the goods are approved/accepted but the buyer retains it without notice of rejection then the ownership passes to the buyer at the fixed for the return OR If there is no time fixed for the return within a reasonable time Who bears the risk of loss in case of sale on approval or trial or satisfaction? General Rule - the seller because he still owns the goods even if there is delivery which does amount to ownership. Exceptions- (when risks are borne by buyer) stipulation that the buyer will bear the loss buyer is at fault
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In a contract of sale of specific goods when is the seller still considered the owner even if there is delivery? Stipulation Bill of lading is deliverable to the seller or his agent or to their order because the goods will be deliverable to the seller or his agent or to their orders therefore the buyer cannot get the goods yet subject to certain conditions. Bill of lading is deliverable to the buyer or his agent or their order but the bill of lading is kept by the seller because without the bill of lading the buyer cannot take possession of the goods because such cannot be released without it. If the bill of lading is deliverable to the buyer/his agent or their order and the bill of lading is with him, Bill of lading is coupled with a bill of exchange which is usually the mode of payment. If the bill of exchange is dishonoured by the buyer it is as if the entire goods are likewise dishonoured therefore there is no effective delivery. What is the general rule as regards to risks of ownership? Risk is with the seller until ownership is transferred to the buyer. Ownership is retained by the seller until after ownership is transferred to the buyer If ownership is transferred to the buyer who shall bear the risk of loss? The buyer. If the ownership is transferred to the buyer without delivery? The buyer, because he already owns the goods. When can the buyer be liable for the loss even if the ownership is retained by the seller? If the cause of the delay of the delivery is the buyer If the retention of ownership is for the purpose of securing the performance of the buyer of his obligation under the contract. When can a negotiable document of title be negotiated by delivery? If it is deliverable to the bearer Negotiation is done by indicating the it is negotiated to the bearer or holder of the negotiable instrument If it is deliverable to the order of a specified person, and such specified person indorsed it in blank or to the bearer What are the two forms of negotiating a negotiable document of title? By delivery

Sales Notes by MARX, MON, ANGELA & JEN By indorsement AND delivery without delivery it cannot be negotiated since it is retained by the holder Because of this you cannot effectively transfer ownership by mere constructive delivery. What will be your remedy/resort? The Buyer may rescind the contract or demand damages for failure to delivery The Seller may to recover the personal property (by means of replevin) and then effect actual/constructive delivery. When you recover actual possession of the property you can now have effective control over your property therefore constructive delivery may be effected. Dont be confused between actual and constructive delivery. Constructive delivery is resorted only if actual delivery is not possible or material. The ideal is actual delivery if the object is capable of being physically delivered to the buyer. If it is impossible to deliver to the buyer because it is an immovable or cannot physically be transferred to the buyer then you can resort to constructive delivery through the traditional delivery. Even if there is constructive delivery dont resort with it immediately because the preference is actual delivery/actual transfer of ownership. SALES (make up class) Is it always the case that when the seller is unpaid he may resell? Only when the goods are perishable by nature Seller expressly reserved his right to resell in case of default Buyer has been in default for unreasonable period of time Why is it necessary for you not to lose the benefit of the period? If the period has been fixed for payment, the vendor shall deliver the thing sold even if there is no payment yet. If the buyer loses the right to the period the vendor is excused from delivering the goods even after the perfection of the contract if the buyer refuses to make the payment When do you lose your right to make use of the period? Art. 1198 When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the debt When he does not furnish guaranties/securities which he promised
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Who can negotiate a negotiable document of title? Owner Person to whom possession and custody has been entrusted by the owner if the bailee undertakes to deliver it to the order of the person to whom possession and custody has been entrusted by the owner, or if by the very nature of the document at the time it is entrusted to the said person, it was indicated that it can be negotiated by mere delivery What are the rights acquired by a person to whom a negotiable document of title has been negotiated? Only such Title that the person negotiating had when the document was negotiated Obligation to hold possession of the goods based on the original terms of the goods In CONSTRUCTIVE DELIVERY you must have control of the thing subject of the contract. Example 1: You own a sports car but it is being used by your brother, Ryan. You sold it to Ian. You told Ian that upon payment of the purchase price it is now yours. Is Ian now the new owner of the car? When do you transfer ownership? Is there constructive delivery? Yes. If by mere agreement the possession or ownership is transferred there is constructive delivery by tradition Even if there is no agreement or consent there is also constructive delivery by tradicio symbolica,i.e., by delivering the key to Ian. Example 2: Ryan is claiming ownership because you owe him an amount of money equivalent to the value of the sports car. But you did not acknowledge the debt. You sold the sports car to Ian, telling him that he is now the owner of the sports car. Is there constructive delivery? None. If you are in control, actually or constructively, you can deliver. You can effect constructive delivery. If you do not have control because there is impediment or claim of ownership you may have control as an owner but you dont have effective control to be transferred to the buyer. If you cannot place the control to the buyer then constructive delivery is ineffective. In this case, you may have control because you own it but since there is a claim of ownership adverse to your own ownership. You cannot place that control to your buyer.

Sales Notes by MARX, MON, ANGELA & JEN When by his own acts he has impaired said guarantees or securities after their establishment, and when through a fortuitous event they disappear, unless he immediately gives new ones equally satisfactory When the he violates any undertaking, in consideration of which the creditor agreed to the period When the debtor attempts to abscond is in the concept of an owner and uninterrupted (open, continuous, exclusive, and notorious). General Rule - registrant in good faith will always have better right over possessor in good faith because under the rule of st preference the person who made the 1 registration will have a better right. Only when there is no registration will you consider possession. If it is possession in good faith against possession if bad faith credence is given to the former. What is the EFFECT OF BADFAITH in registration? It is as if you have not registered and therefore rule on possession in good faith and on just title will govern preference. Is possession limited to actual possession? No. It can be constructive/symbolical possession. This means that if you are a possessor in good faith but merely in constructive possession you can still invoke the rule on preference. Actual possession is not required. Constructive possession is sufficient because there are instances wherein the property is placed in your possession constructively such as the execution of a public instrument. In double sale there are two contracts, the one will be upheld and the other, w/c is not preferred, will be nullified. What will happen to the contract between the buyer and the seller that was declared void because it is not preferred? What are the remedies of the buyer whose contract of sale was not preferred? He is entitled to the reimbursement of the purchase price plus interest, and damages (if he is good faith). Is it always the case that he is entitled to damages? If the buyer was in bad faith in entering of the contract. He is entitled only to reimbursement of purchase price plus interest. What are your remedies/rights in case of non-performance of CONDITIONS AND WARRANTIES? Refuse to proceed with the contract OR Waive the performance of the condition and proceed with the contract.

What is the RULE OF PREFERNCE IN DOUBLE SALE? To whom shall ownership pertain? In case of sale of st movable property to the person who may have 1 taken possession thereof in good faith immovable property st o The one who 1 registered/recorded his deed of sale in good faith with the proper Registry of Property (INSCRIPTION/RECORDING) st o 1 possessor in good faith o The one who presents the oldest title *In all the above situations, the law requires the observance of good faith. Can you always invoke Art 1544 in case of double sale? What is pre-requisite before you could invoke the rule on preference under the Civil Code? What right should you present? Conveyance came from somebody who owns the immovable property and has the right to dispose of it. Because if you cannot show this, the rule on preference cannot be invoked and the property will be awarded to the person who can show the same. If it came from an impostor you dont need to apply the rule on preference because no good title will arise from a fraudulent transaction. What is REGISTRATION? The entry of the deeds or instruments of conveyance involving lands in the official books of Registry of Deeds. The general rule is a mere possessor has lesser right over a person who has recorded/registered title with the registry of deeds, is there an instance where the former will have better right? In case of ACQUISITIVE PRESCRIPTION possession st ripens into ownership. This defeats the 1 rule in preference. Ordinary - possession for 10 years in good faith and with just title Extraordinary possession for 30 years even if in bad faith and no just title provided such possession
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What is an EXPRESS WARRANTY? Any affirmation of fact or any promise by the seller relating to the thing which has the natural tendency to induce the buyer to purchase the same.

Sales Notes by MARX, MON, ANGELA & JEN Where do you put the express warranty? It cannot be enforced unless it is written/ included in the contract which conditions are factors that induced the buyer in entering into the contract. Who can invoke/enforce express warranties? The buyer i.e. Joseph is the original seller he sold the property to Carlo. Carlo sold the property to Joanna. Can Joanna invoke her warranties against Joseph? As a General rule the basis of the express warranty is your contract. Your contract can be enforced only against the other contracting party/privy to the contract your seller. Therefore your warranty can be enforced only against your seller. Can your express warranty be enforced against somebody who is not privy to the contract, in this case original seller? General Rule: No. Parties not privy to the contract is not bound to the contract Exceptions: If the original seller warrants the goods to subsequent buyers if the your seller assigns his right to enforce the warranty against the original seller What are the kinds of IMPLIED WARRANTIES? Warranty of title Warranty against hidden/latent defects What is WARRANTY OF TITLE? Composed of 3 assurance Seller is the owner of the property Seller has the right to sell the thing The buyer will be provided with the right to enjoy quiet possession of the goods. Such that if he is evicted or ejected from the property he may enforce his warranty against eviction. What is LATENT/HIDDEN DEFECT? What are the CONDITIONS for a defect may be considered as such? It must be hidden from knowledge AND sight. It should not be discoverable by inspection or exercise of ordinary diligence. This is a more important condition of the defect to be considered latent. Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased. (Art 1548) To be validly considered as a warranty what particular portion of the eviction are required? Final Judgment. As consequence of final judgment the buyer is deprived, in whole or in part, of the ownership of the thing sold It was based on a right prior to the sale or an act imputable to the vendor Vendor must be notified of the case in the form of summons. What is the difference between summons and subpoena? Summons served for the purpose of acquiring jurisdiction. This is only given to parties impleaded in the case. You are part of the case the case if such is served upon you. Subpoena You may or may not be part of the case. You are either invited by the court as a witness to testify or as an expert to give your opinion. You may be subpoenaed as a witness even if you are party to the case. The notice required for you the preliminarily invoke your right of warranty against eviction is for you to implead/include the vendor. Summons, meaning you have to include him as one of the defendants. Procedurally there is a complaint. A 3 party filed a case against you claiming that he has ownership of the property. So in anticipation against eviction in case there is a good ground for you to be evicted/ejected from the property you implead your seller by asking the court to serve summons upon him. If you served summons it is considered as rd another complaint, a 3 party complaint, against the vendor. If you just informed him that the case have been filed against you involving the property, that is not sufficient notification. If you lose your right/property you cannot enforce your warranty for failure to comply with the requisites. What is the purpose why you are required serve summons to the vendor? To give the vendor an opportunity to prove that the contract of sale is valid.
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What is EVICTION? A judicial process by virtue of which ownership is removed or a person is deprived of ownership.

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Sales Notes by MARX, MON, ANGELA & JEN If there is proper notification and you lost the case in the lower court but you did not file an appeal making the decision final and executory, will this lapse on your part be considered against your enforcement of the warranty? No. The Code provides that you do not lose your warranty against eviction if you did not file an appeal (Art 1549). What is an express warranty? Any affirmation of fact or any promise by the seller relating to the thing subject of the sale is an express warranty if the natural tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer purchases the thing relying thereon. When do you have an express warranty? Must it be written on the contract of sale? In order to be enforceable it must be written on the contract of sale. Are all affirmation of facts written in the contract of sale considered as an express warranty? No. No affirmation of the value of the thing, nor any statement purporting to be a statement of the sellers opinion only, shall be construed as a warranty, unless the made such affirmation or statement as an expert and it was relied upon by the buyer. Why is an affirmation of the value of thing not considered a warranty? Why is a statement of the sellers opinion not a warranty? Because the law permits exaggeration. It is what you call sales talk or dealers talk. Are all affirmation of facts or promise in relation to the goods which has the tendency to induce the buyer considered an express warranty? No. Only if the buyer relied on the affirmation or promise to buy the goods Can you have a contrary stipulation that you dont want an express warranty or an implied warranty? When the parties forgot to provide for an express warranty, did the implied warranty automatically apply? Generally, yes When will the implied warranty not apply? When a contrary intention appears What are the implied warranties? (a) Warranty against hidden defects (b) warranty of title What are the division of the warranty of title? An implied warranty on the part of the seller that: (a) he is the owner (b) he has the authority to sell (c) he will give the buyer legal and peaceful possession of the thing (d) that the thing is free from any charge or lien by third persons What is a hidden defect? When it is hidden from knowledge and sight and it cannot be discovered even by the exercise of due diligence What are the kinds of deprivation of property? (a) deprivation in fact (b) deprivation in law Distinguish one from the other In deprivation in law there is intervention of judicial authorities and in deprivation in fact there is no intervention of competent authority but mere performance by a third person of an act depriving ownership Which type of deprivation is covered by warranty against eviction? Deprivation in law Why? Because eviction takes place when the vendee is deprived in whole or in part of the thing purchased by virtue of a final judgement What are the requisites in warranty in case of eviction? A: there is a final judgement; there is deprivation of property in whole or in part; there must be notification to the vendor in the form of summons; by virtue of an act imputable to the vendor Give an example of deprivation which does not arise from any act of the vendor sale of property in a foreclosure; sale of your property in a tax sale because you fail to pay taxes Even if it is a tax sale, when can you enforce the warranty? If the reason why the property was sold for nonpayment of tax is because of the failure of the vendor to pay taxes which is prior to the sale to the vendee What are the obligations of the vendor for purposes of warranty against eviction? To respect peaceful possession; To indemnify the vendee
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Sales Notes by MARX, MON, ANGELA & JEN To whom can you enforce the warranty? To the vendor If there are 10 vendors, can you enforce the warranty against all of them? Only to your immediate vendor What are the exceptions that it is enforceable only to the immediate vendor? (a) If the previous vendor has warranted or has bound himself to answer for any warranty against eviction in favor of all succeeding vendees/if the original vendor bound himself to be liable for the warranties in case of all subsequent buyers (b) if there is an assignment of your right to enforce your warranty against your own vendor in which case you are stepping into the shoes of your own vendor; your own vendor has the right to enforce your warranty against his or her own vendor, in such case you can go directly the vendor of your own vendor If the decision is final, can you already enforce your warranty? Yes. Because by express provision, the vendee need not appeal from the decision in order that the vendor may become liable for eviction. Is that inadvertence (did not appeal) can be use against the vendee? No. In fact the vendee dont even have to participate since it is the role of the vendor to appeal, thats the reason why in notifying the vendor you have to implead him as one of the rd parties to the case by way of 3 party complaint. Can you waive your warranty against eviction? Yes When will your waiver will not be recognized? If there is bad faith, in which case the waiver is void and the vendee may enforce the warranty Where can you make the waiver? It must be formally expressed in contract of sale If you have the warranty, what are your rights against the vendor? to demand the return of the value of the thing subject of the contract; to deliver income or fruits; the expenses of the contract, if the vendee is the one who paid them; the costs of the suit which caused the eviction; damages, interests and ornamental expenses but only when the sale is made in bad faith If you waive without the knowledge of the risk of eviction, what rights are lost and what rights are retained? A: If the waiver was made without the knowledge of the risk of eviction, you will only retain the right to demand the return of the value of the thing What if the waiver was made with the knowledge of the risk of eviction? If the waiver was made with the knowledge of the risk of eviction, it means you are already assuming the risk of eviction and therefore, even the value of the thing you will lose. What are the rights of the vendee if the eviction result in the deprivation of the property or part of the property? Rescission of the contract or enforcement of the vendors liability for eviction. Should the vendee lose by reason of the eviction a part of the thing sold of such importance, in relation to the whole, that he would not have bought it without said part, he may demand the rescission of the contract. Other than that, he may enforce the contract. Give an example of a non-apparent servitude Ex. A burden on your property that limits construction beyond a certain height. For example, th you can only construct a building up to 10 floor, and you bought the property precisely to build a 50storey building not being aware that there is restriction as to height. Give the remedy if there is a non-apparent servitude Rescission and indemnity writing in the Are both remedies available at once? General Rule - Rescission is only available if the nonapparent servitude is of such nature that it must be presumed that the vendee would not have acquired the property had he been aware thereof. What is the exception? You cannot exercise rescission or indemnity if the non-apparent servitude is recorded in the Registry of Property, because such is a constructive notice t and therefore you should have known that there is nonapparent servitude.
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What are the kinds of waiver? Waiver without the knowledge of the risk of eviction and waiver with the knowledge of eviction What is the effect of the waiver? You cannot enforce your warranty against eviction

Sales Notes by MARX, MON, ANGELA & JEN What is the exception to the exception? You can still exercise your right to rescind or ask for indemnification even if it is recorded in the Registry of Property when there is an express warranty that the object is free from all burdens and encumbrances. SALES TRANSCRIBE: What are the requisites for the warranty of hidden defects? The defect must be important or grave. The defect must be hidden. The defect must be present at the time of the execution of the sale. Otherwise, if the defect is after the perfection of the sale then it will not warrant the enforcement of warranty. The defect must not have been excluded by the contract The vendee must not have waived the warranty against hidden defects. The action for rescission or reduction of price must be filed within the prescriptive period. The defect is unknown or could not have been known to the vendee or the buyer even with the exercise of due diligence on the part of the buyer. The defect must render or diminish the fitness of the goods bought. When will you bring the action for warranty against hidden defects? What is the prescriptive period? Within 6 mos. from the delivery of the thing. As regards the requisite of the importance of the goods, the goods must not be diminishing the use for which it is intended. What is the test of use of the goods bought? How will you determine if it can be use for the purpose for which it is intended? If the party stipulated that the thing will be use for this particular purpose then that is the first test. If the thing cannot be used for the purpose for which it was stipulated then it implies that the sale was diminish by or its use or the fitness. Second in the absence of stipulation as to use how will you determine? You check the nature of the thing, if it could be used for a particular purpose then the thing should be used for that particular purpose. If by reason of the defect the thing in the absence of stipulation cannot be used as to its nature then you can enforce the warranty against eviction. In the absence of any adaptation as to its nature the last test is the business, operation, or trade of the buyer. Is there a warranty against hidden defects in case of second hand goods? Generally or absolutely? Generally because it is sold on the act of the purchaser and therefore it is presumed that it is not in a perfect condition. If the buyer buys second hand goods then the presumption is he knows that it is not in a perfect condition and that there are defects that maybe hidden both from his knowledge and sight that may render the object ineffective for the use for which it is intended. however because he knows that it is a second hand then he assumes as a general rule the risk of it. however if the fact that it is a second hand did not for a consideration and that the buyer bought the goods on the assumption and on the inducement by the seller that it will perform and that it can be used based on the purpose for which it was intended then the exception to that is that second hand will also be subject to implied warranty against hidden defects. When there is an implied warranty or condition as to the quality or fitness of the goods? There are 2 warranties under this. Warranty of fitness for a particular purpose. If the buyer makes known to the seller the particular purpose for which the goods for and the buyer relies on the assurance of the sellers skill or judgement that the goods will be or can be used for a particular purpose. Merchantability or the warranty of merchantable quality. Where the goods are bought by description from a seller who deals in goods of that description. What is merchantable quality? The article is in such condition that a reasonable man would after a full examination accept it under the circumstances of the case in performance of his offer to buy that article whether he buys it for his own use or to sell again. In order for an implied warranty of fitness for a particular purpose to be enforced the buyer must have known his purpose for the goods and that he relies on the judgement or skill of the seller that the goods will actually perform such use. Is it always necessary that the buyer makes known the purpose for which he needs to be used for? meaning without telling the seller that he needs the goods for a particular purpose can there be an implied warranty for fitness for a particular purpose? Yes if based on past experiences the seller already knows for which purpose the buyer needs the goods for inwhich case if he sells the goods to the buyer there is also an equally implied warranty that such goods based on
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Sales Notes by MARX, MON, ANGELA & JEN past experience will defeat for a particular purpose needed by the buyer. Is the vendor responsible for warranty against hidden defects if it is not known or he is not aware of such defect? Or is it a prerequisite to the vendor should have known the defect and that he fulfilled such information from the vendee. As a Gen. Rule: the vendor may not be excused even if hes not aware of the defect when the thing was sold to the buyer except when theres stipulation from that even hes not aware hell not be excused then the warranty against hidden defect will not be enforced. In case of warranty against hidden defects what are the actions available to the vendee? Accion Redhibitoria or Redhibitory Action withdrawal from the contract by reason of the hidden defect. Accion quanti minores or estimatoria proportionate reduction of the price by reason of hidden defect. Damages is a consequence of the annulment of the contract. What are the obligations of the vendor if he is aware of the hidden defect and the thing is lost and the vendee can enforce it against warranty hidden defect? Vendor shall bears the loss Vendor is obliged to return the price Refund the expenses of the contract Payment of damages If he is not aware of the hidden defect then the vendor is only liable to return the purchase price plus interest and the expenses of the contract. Can animals have hidden defect? Yes. What do you call that? Redhibitory defect. Can you always enforce redhibitory defect against all animals assuming that there is a redhibitory defect? Not all animals because those which are sold at fair or public auction are exempted from the warranty and second even if they are not sold at public auction or at fairs but you failed to bring the action within the reglementary period then there may be a warranty but it is no longer enforceable. What is a redhibitory defect? Defect of animals which cannot be detected or discovered even through the help of professional inspection or expert knowledge.
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What are the requisites to enforce a warranty against hidden defects for animals? The defect must be hidden or redhibitory. It must be brought within the prescriptive period of 40 days from delivery of animals or the action has not yet prescribed upon the enforcement of warranty. The defect must be determined by law, local customs meaning it must be redhibitory. The sale must not have been made at public auction or fairs and the animals must not have been sold as condemned. ONLY WITH THESE REQUISITES CAN YOU ENFORCE REDHIBITORY DEFECTS. What are the obligations of the vendee? To accept delivery Pay the purchase price. When do you accept delivery and pay the purchase price? Vendee accepts and pays the price at the time and place stipulated by the parties because there are instances when delivery is not simultaneous with the requirement of payment. In the absence of stipulation when do you accept and pay? Then there is where acceptance and payment becomes simultaneous. In the absence of stipulation your acceptance and payment should be made at the time and place of delivery of the thing sold. If the thing is delivered without stipulation as to the place of payment but the seller did not accept or ask payment at the time of delivery when can the seller demand for payment? Anytime after delivery. Actually there is no requirement of reasonable time otherwise you will be bound by reasonableness of the time for as long as you delivered there is already obligation on the part of the other party to pay otherwise he be enriching himself unjustly at the expense of the seller. So if there is no simultaneous payment upon delivery it will not prejudice the right of the seller because anytime after delivery he can enforce payment either extra-judicially or through judicial action. What is the rule in case the delivery was made for less than the quantity of the stipulation? What are the rights of the buyer? So as a general rule for what shall have been stipulated should be complied with meaning if you stipulated to deliver for a 100 sacks of rice for example 100 sacks of rice should be delivered. What if what was delivered was less than the quantity agreed upon? What is the basis of right? So the GR is there is no delivery by instalments only if it is

Sales Notes by MARX, MON, ANGELA & JEN stipulated by the parties. So if what was delivered is by instalments then the buyer has the right to totally refuse acceptance of delivery and therefore may already bring an action for breach of contract as a whole. So hes not bound to accept instalments. Can the right of the buyer and the seller in the delivery and acceptance for payment be waived? You apply the waiver of the right and obligation of the buyer and the seller in the acceptance of goods only in case of delivery by instalments. When can you waive delivery and the right if the seller? GR there is no delivery by instalments only if there is stipulation to that effect. If there is stipulation to that effect then what are your rights in case of failure to make delivery? He may refuse to proceed with simultaneous claim for damages or he may ask for compensation if the breach is severable. When are these rights waivable and what are the circumstances when first these rights have been waived by the seller? The obligation of the buyer upon delivery is payment and if it is by instalments then necessarily the payment is also by instalment. Your right as a seller is to collect upon delivery. When can you waive that right? If the seller will deliver or make delivery even if there is notice of the default of payment on the part of the buyer. If he continues to make even after notice of default of payment thats one of the waiver on the part of the seller. Second if accepts belated payment of the buyer then it is as if he is waiving his right to either act for the refuse or rescission of the contract or compensation and therefore enforcing in effect in full the contract between the parties. So #1 if there is continuous delivery even after notice of default. #2 acceptance of belated payment from the buyer. What are the circumstances of the waiver on the part of the buyer? If there is payment and acceptance of delivery and if there is waiver or the waiver is apparent on the face that the buyer is willing to accept delivery even after the default on delivery on the part of the seller. What is the right of examination? Is there actual acceptance in the right of examination? Yes because upon acceptance it is the time where you examine the goods if they conform for the purpose for which they are intended or bought
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but is that contemplated acceptance where payment is already due? No it is not deemed accepted for purposes of requiring payment from the buyer unless there is appropriate examination on the part of the buyer but is it accepted literally? Yes because you have to examine it and thats the way on how you can examine the goods delivered to you by literally accepting them but for legal acceptance for purposes of payment of the obligation it is not deemed accepted yet unless and until there is reasonable opportunity for examining the goods. What is the right of the seller or the buyer if the seller refuse to allow the buyer reasonable examination? Refuse payment? What if there is already payment? Examination request? What if examination request has been refused? Whats your remedy? If there is no examination yet there is no legal acceptance yet so technically still the sellers obligation and you have no obligation actually to accept it yet. Whats your remedy if you are refused of examination? What will happen to the payment that has been advanced for example or paid by the buyer for supposed delivery? If there is money advance and there is refusal on the part of the seller you provide for appropriate examination time for the buyer to examine then the obligation maybe considered withdrawn on the part of the buyer and if there is already payment advanced by the buyer then that payment advance is reimbursable on the buyer. When are the goods deemed accepted by the buyer? If he communicates or intimates his acceptance to the seller. If accepts delivery without actually accepting but he shows acts in relation to which there is inconsistency with the ownership of the seller then that is already deemed acceptance. Or if within a reasonable time he retains possession of the goods without intimating to the seller that he has rejected the goods then it also deemed an acceptance of the goods. What are the acts inconsistent with the ownership of the seller? Give examples. If there is conveyance of the goods. Resale of the goods. If you continues possession and the use of the goods because necessarily it is only the seller as the owner who should use or possess the goods. If you mortgage the goods for example. You are the owner and cannot be the mortgagor. However if you

Sales Notes by MARX, MON, ANGELA & JEN mortgage the goods it is already inconsistent as personal with the owner. If short of reselling the goods if you offer it for sale. In case of breach or warranty what is the requirement for you to enforce that breach? In connection with the acceptance of the goods by the buyer. Inform or notify the seller for the breach of warranty. What is the purpose? To correct the inconsistencies or the breach. When should the notice be made? Within reasonable time. Why do you need to give notice within reasonable time? There is breach of warranty after acceptance of the goods. After acceptance of the goods you notice or discovered that there are breaches of warranty for the goods then the requirement of the law to notify the seller as regards those warranties within a reasonable time. Notify to correct the breach within reasonable time because remember notice or notification is for the protection of the seller in order for him to be given a chance to correct or rectify the mistake or the breach and to protect him for belated claim. And therefore those claims must be made within reasonable time. Is it still required for the buyer to notify the seller if the seller knows of the breach? Would it be futile and useless or unnecessary anymore if the seller already knows of this fact constituting the breach? Notice is required for knowledge to inform the seller of the facts constituting the breach because the notice in nit intended merely for purposes of informing the seller that there are facts constituting breach. The notice is intended primarily to inform the seller that each fact actually constitute breach from the point of view of the buyer and therefore that fact should be rectified because even facts exist within the knowledge of both the buyer and the seller without information coming from the buyer that those facts constitute breach from the point of view of the buyer then that cannot be considered breach and therefore you have to notify the seller of this fact constituting breach and that should be rectified. When is the vendee liable for interest? Even if there is stipulation that you are liable for interest you will not be liable without delivery. It is only after delivery you are required to pay interest if the object delivered to you and there is no payment
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yet. If there is payment after delivery there is no liability for interest. When are you required after delivery to pay interest? If there is stipulation to that effect If the thing sold is delivered produce fruits or income When the buyer is in default. When should he be in default? If there is judicial demand. When should extra-judicial demand put the buyer in default? How do you complete extra-judicial demand? By giving a demand letter and from that time the buyer is considered in default. When is judicial demand made? By filing an action in court for the payment. So you could either go directly with the court demand for payment but usually in practice you have to give demand first to give the seller the opportunity to pay. When can you suspend payment? If there is disturbance to possession or ownership of the goods. If there without actual disturbance of the possession or ownership there is reasonable ground to fear such disturbance caused by a foreclosure or reinvicatory action or mortgage then the seller should or may suspend the payment. Until when this suspension be made in case of fear of disturbance or actual disturbance of possession? If the fear of disturbance or the disturbance has already ceased or if the vendor has caused such disturbance or danger ceased. Suspension is not proper or resorted to if there is security or bond given for the goods because you can reasonably addressed such fear by just enforcing the security meaning there is no reasonable fear actually if there is security because you can be sufficiently covered by such security . For example if there is trespass to dwelling can you already suspend payment? Mere trespass to dwelling will not warrant suspension of payment by express provision of the civil code. By way of exception if it is a mere trespass to dwelling even if there is actually disturbance of possession or fear of disturbance by express provision of the law such act will not warrant suspension of payment.

Sales Notes by MARX, MON, ANGELA & JEN How much can you retain when you suspend payment? For example the property is worth 1M and there is reasonable fear of disturbance or actual disturbance how much will you retain or how much payment will you suspend? The concept of retention is that you are not to pay yet, you can retain payment to yourself. You can only retain the portion of the disturbance, if what has been disturb or your possession is only a portion of the property disturb then you can only retain payment for the value of the property or the portion disturbed. So if only 500k is disturb then you can only suspend that portion and not the entire purchase price. How much security required to be given for that 1M property? Considering depreciation can you require security of worth 1.1M? It should be equivalent of the property it cannot exceed the value of the property. If the seller wants to give for more than the value of the property its fine but if the question is if he does not want he cannot be compelled to give security for more than the value of the property what is required is just equivalent or anything left in value for as long as there is security for payment anyway the disturbance may or may not involve the entire property subject to it. When can you actually rescind the contract instead of just retaining the payment? When there is loss of immovable property. When there is loss? When the seller has reasonable ground the loss of the immovable property then he may immediately pursue for rescission. Will this provision apply if there is security or bond given? If there is security or bond given as security for the value of the property even if you have reasonable fear of the loss of immovable property or of the purchase price you cannot rescind the contract. Is it always the case that if there is security or bond then there is no reasonable fear of loss? Qualify between a solvent and insolvent buyer. Is it material that there is security? If the fact that the buyer or the seller solvent or insolvent when material under this article for purposes of rescinding the contract or if the presence of security or bond already sufficient to counter the fear of loss of the immovable property? First is it material? Yes why? In what from does it become material? If there is security or bond for solvency and insolvency is not material because you are sufficiently secured and therefore that security will counter your fear of loss of the immovable
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property. Even if you lose the immovable property on the price you can apply the bond or security to complete or to answer for the loss. Only if there is no bond or security can solvency or insolvency be used or be material for purposes of invoking this article. What are the conditions before a vendor a retro can exercise right of repurchase? 1. He must return to the vendee the price of the sale. 2. Expenses of the contract and legitimate expenses 3. Necessary and useful expenses. What is legal redemption? The right to be subrogated upon the same terms and conditions stipulated in the contract, in the place of one who acquires a thing by: 1 purchase or 2 dation in payment, or 3 any other transaction whereby ownership is transmitted by onerous title If there is legal redemption, in effect what do you have? Right to subrogation. You are exercising legal redemption because something is transferred to you and you are allowed to exercise the right of the original vendee or original vendor. Can anybody exercise legal redemption? Yes as a General Rule Everybody can exercise legal redemption Except if the obligation is personal to the vendee Only transmissible obligations can be subrogated and therefore can be the subject of legal redemption. Obligations which the performance is only personal to the vendee or obligations which were contracted personally by the vendee cannot be subrogated therefore cannot be subject of legal redemption. What is pre-emption? Right of any person to be given preference of the sale over any other buyer. Without preference it is the same with all other rights. Your right of pre-emption is superior because given equal treatment, if you have right of preference and right of pre-emption, then you will be preferred over all other prospective buyers. To whom do you direct the right of pre-emption? Technically and the law provides only the seller gives you that preference and only to him can you enforce the right of pre-emption.

Sales Notes by MARX, MON, ANGELA & JEN But for practical purposes you may implead the buyer to bind and inform him of the right of preemption. How is pre-emption distinguished from redemption? Pre-emption is prior to the sale where you enforce your preference Redemption is after the sale where you exercise subrogation ...co-owners of a thing what is the coverage of the thing referred to by the law? Is it co-ownership of movable, immovable, right or is it limited to immovable property where you have the right of legal redemption? No distinction therefore the thing referred to is either a movable or immovable or a right. If you are a co-owner of a right, or if there are co-owners of a particular thing whether it is a movable/immovable or a right what is the right of legal redemption? When can you exercise the right of legal redemption? If one or all of the co-owners sold their shares to a rd 3 person then that is the time when one can exercise his right of legal redemption as a co-owner. What if there are 2 co-owners who want to exercise the right of legal redemption? What is the extent of the right? What is the right of pre-emption/redemption in adjacent property? Only with the respect to the proportion of their share in the co-ownership. Why does the law allow redemption of a co-owner? What are the reason of the law? 1. To prevent strangers from owning the property co-owned by the co-owners. 2. It has the effect of consolidating ownership in as many shares as one has. Because the purpose of the law is to eliminate and reduce numbers of ownership or sharing in a particular property or community. So if that will serve the purpose of the law of reducing participants in a particular property and vesting it only to a sole owner then that is promoted by redemption of one owner to the other. There are 3 co-owners (A, B, C) of a particular immovable property The property is worth P3M each co-owner owns P1M. A sold his share to B. Does C have the right of redemption? If so how much? Can C redeem 50% of the property sold to B since the law provides that a co-owner can only redeem with the respect to the proportion of his share in the co-ownership Can B actually own the entire 1M of A?
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There is no right of redemption because it is applicable only if rd the person who bought the property is a 3 person is not the st owner of the property because the 1 purpose of the law, to exclude strangers, is not present. You only exercise the right of redemption against a stranger to the co-ownership and not against a co-owner. If the nd property is sold to a co-owner the 2 purpose of the law is met, title is already consolidated and ownership is reduced to 2. What are the conditions before you can exercise your right as an adjoining owner of a land? 1. If it pertains to a rural land What does rural land mean? Main purpose is agriculture. Principally used for agriculture Is the classification of land to rural or urban a matter of location (i.e only if it located in the province)? Location is immaterial with respect to the classification of land to be a rural or urban land. Classification is based on the use not actually the purpose because the parties may intend it be agricultural but the government classifies it as residential or commercial because it cannot be used for agricultural purposes but it is fit for commercial or residential purposes. So for purposes of exercising this right location may be immaterial but rural land should be those intended and classified for agricultural purposes. 2. Grantee must also own adjoining rural land 3. Two lands must not separated by any servitude 4. Rural lands alienated and to be redeemed must not exceed 1 hectare/10 K sq m Your adjoining rural land is composed of 3 hectares all alienated to 1 particular person. The 3 parcels of land are actually 1 hectare per parcel but all 3 of them were sold to a buyer. Can you exercise your right of redemption? Yes but only up to 1 hectare. Can you exercise your right of redemption successively to comply with the law? No. Whether or not it is successive or 1 time redemption your are only allowed 1 hectare.

Sales Notes by MARX, MON, ANGELA & JEN Can you compel the buyer to give you half a hectare only because that is what you can only afford? You cannot compel the buyer exercise of right of redemptoin only with respect to a portion of 1 parcel of land because the law discourages and frowns upon division. You cannot divide. You can only exercise your right of redemption for a particular parcel of land. And if it happens to be one hectare then you can exercise it. However if for example the 3 hectares are divided into more than 1 hectare each your right of redemption is lost. You can exercise only up to that portion. What if there are 2 adjoining owners who wants to exercise right of redemption what is the preference given by law? In rural lands, the preference is given to one who has smaller ownership for him to consolidate it to a bigger adjoining property. st If both areas are the same the one who 1 requisted for redemption. Remember: Not all rural lands are covered by this provision. Only rural lands intended for agricultural purposes. Any way all rural lands are classified as agricultural. Lands are either classified as agricultural, residential and all other kinds of land. For this particular land we are referring to agricultural land intended for agricultural purposes. What are the reasons for the law why they promote redemption only upon adjacent adjoining agricultural land? Promotion and protection of agriculture in general. When you have a bigger lot to cultivate for agricultural purposes the intention of the law is to help agriculture to flourish. So you are given more land to cultivate and in return it will promote and protect agriculture in general. There are 2 adjoining owners of a rural agricultural land, if 1 smaller but far from the adjoining land and 1 is bigger but exactly adjoining the land, who will be preferred? Which will serve the purpose of the law? The smaller, the law does not distinguish and in fact the law will give you preference because you have smaller preference to give you more chances of promoting agriculture. What is your right in case of urban land? right of either pre-emption or redemption What are the conditions before you can exercise these rights? 1. The piece of urban land is so small that it cannot be used for any practical purpose within reasonable time 2. Such land was bought for speculation
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If there are 2 owner of the adjoining land who will be preferred? The one whose intended use for the property appears to be the best justified Is the right of pre-emption available if there is only 1 claimant or only if there are 2 claimants? The problem with our code is that as it allows pre-emption st under the 1 paragraph because of the word if about to be sold meaning the property is not yet sold, and if the property is not yet sold your right is pre-emption. However the code is also specific that he will also exercise the right of redemption. Notice that in the 2 paragraph both the right of prend emption and redemption are mentioned, meaning the 2 paragraph recognizes pre-emption and redemption which is st absent in the 1 paragraph A reasonable interpretation of the law is that when there is 1 claimant is only the right of redemption. Even if you have the right of pre-emption you cannot exercise it before the sale but you can redeem the property. Anyway there is no difference. Even if you invoke the right before or after, the ultimate end is that you can have the property with you. However, there are commentaries who says that pre-emption st and redemption are proper under the 1 paragraph because nd the word to be sold and under the 2 paragraph because of the express provision of the law. In either case Atty. Favilla subscribe to the opinion that you have the right in both instances for pre-emption and redemption. There is no practical purpose to prohibit prest emption in the 1 instance because the code expressly provide that you have that right prior to sale and it will also serve the same purpose. At any rate if there is no preemption it will also be served by the right of redemption. So either answer will be acceptable for as long as the purpose is for the acquisition of the property by the adjoining owner of the land. When do you exercise the right of pre-emption and redemption? Within 30 days from the notice in writing by the prospective vendor/ by the vendor. The prospective vendor wrote the notice today, by regular mail, the prospective buyer received it 2 mos. after today. Can the vendor still exercise the right redemption or pre-emption?
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Sales Notes by MARX, MON, ANGELA & JEN Yes. The law requires written notice, and it is only upon receipt of that notice will the period of 30 days will commence to run. There is a notice on the way but you knew of the sale already, what would be the reckoning period from knowledge or notice of the sale or from receipt of the notice in writing? The law requires written notice, and it is only upon receipt of that notice will the period of 30 days commence to run. Knowledge is immaterial otherwise the law could have provided that only knowledge on the part of the prospective buyer would be sufficient to start the period of redemption. What is assignment of credit? This is an agreement whereby credits, incorporeal rights or actions pertaining to the person (assignor) are transferred by him to another (assignee) either onerously or gratuitously who acquires the power to enforce the same against the debtors. What are the rights assigned? 1. Right to collect the full credit or value of the obligation 2. Accessory rights which includes the right to sue for the performance of the obligation 3. The debtor retains all his rights available against the original creditor and since the creditor only assigns all his rights to the assignee, the assignee is only entitled to enforce the right of the creditor subject also to all the defences available to the debtor against the original creditor. When is assignment of credit binding? Assignment is only binding to the debtor from knowledge of the assignment. Therefore prior to the knowledge whether or not there is already an assignment is immaterial the debtor will be released if he pays the original creditor. However, if there is already knowledge on the part of the debtor that assignment has been made in rd favor of a 3 person, now the assignee payment to the creditor will not release the debtor. Why? Payment made to the original creditor after notice of assignment is tantamount to bad faith because you already know of the assignment. Because there is bad faith you will not be benefited of the payment made. So it will not result to the extinguishment of the obligation but you will not be precluded from demanding back the payment from the creditor. It is different if you have no knowledge because payment to the original creditor already extinguishes the obligation. You have no obligation anymore to pay the assignee or new creditor. The difference is you still have to pay but not necessarily another amount, you can demand it back from the creditor who is no longer entitled to the payment you made to him. It will be binding to 3 person from notice of the assignee is there a qualification if it is movable or immovable property? You have to register your assignment especially with respect to immovable property and only upon rd registration can there be a binding effect to 3 person where you can enforce your right of the assignment. What is the general warranty in case of assignment of credit? As a general rule the assignor Warranty the existence of the credit. He warrants that the credit is valid at the time of the assignment. But you do not warrant the solvency of the debtor. When can there be warranty as to the solvency of the debtor? 1. Express stipulation of the solvency of the debtor 2. If the insolvency of the debtor was prior to the sale and you assign you credit now then there is warranty of the solvency. You dont warrant solvency if the debtor is solvent already. So you are giving assurance that he can pay, even if prior to the sale there is insolvency. Otherwise the assignor will not get the credit. What is the limitation of the warranty of solvency? The Assignor gave the assignment now and he warrants the solvency of the debtor now. The debtor becomes insolvent 1 yr from now is it covered by Assignors warrant of solvency? If there is warranty of solvency it does not warrant future solvency of the debtor. It is only limited to 1 yr from the time of the assignment. After that future insolvency occurring after the period covered will no longer be covered by the warranty of solvency of the debtor. Therefore the assignor will be relieved from the obligation. Who are excepted from assignments or sale? Assignments or sales made to: 1. co-heir or co-owner of the right assigned
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Sales Notes by MARX, MON, ANGELA & JEN 2. 3. creditor in payment of his credit possessor of a tenement or piece of land which is subject to the right in litigation assigned

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