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San Beda College of Law 113
MEMORY AID IN CIVIL LAW
SALES
SALE 6. Onerous.
A nominate contract whereby one of
the contracting parties obligates * Aleatory contract: one of the parties or
himself to transfer the ownership of both reciprocally bind themselves to give
and to deliver a determinate thing or to do something in consideration of
and the other to pay therefor a price what the other shall give or do upon the
certain in money or its equivalent. happening of an event which is
uncertain, or which is to occur at an
NOTES: Delivery and payment in a indeterminate time. (Ex: Sale of
contract of sale are so interrelated and sweepstakes ticket)
intertwined with each other that without
delivery of the goods there is no Contract to sell
corresponding obligation to pay. The exclusive right and privilege to
two complement each other. It is clear purchase an object.
that the two elements cannot be a bilateral contract whereby the
dissociated, for the contract of purchase prospective seller, while expressly
and sale is essentially a bilateral reserving the ownership of the
contract, as it gives rise to reciprocal subject property despite delivery
obligations. (Pio Barretto Sons, Inc. vs. thereof to the prospective buyer
Compania Maritima, 62 SCRA 167). binds himself to sell the said
Neither is the delivery of the thing property exclusively to the
bought nor the payment of the price prospective buyer upon fulfilment of
necessary for the perfection of the the condition agreed upon, that is,
contract of sale. Being consensual, full payment of the purchase price.
it is perfected by mere consent.
NOTE: Absent a proviso in the contract
Elements: that the title to the property is reserved
a. Essential elements – those without in the vendor until full payment of the
which, there can be no valid sale: purchase price or a stipulation giving the
1. Consent or meeting of minds vendor the right to unilaterally rescind
2. A Determinable subject matter the contract the moment the vendee
3. Price certain in money or its fails to pay within the fixed period, the
equivalent transaction is an absolute contract of
b. Natural elements – inherent in the sale and not a contract to sell. (Dignos
contract, and which in the absence vs. CA [1988])
of any contrary provision, are * The contract of sale by itself is not a
deemed to exist in the contract: mode of acquiring ownership. The
1. Warranty against eviction contact transfers no real rights; it
2. Warranty against hidden defects merely causes certain obligations to
c. Accidental elements – may be arise.
present or absent depending on the
stipulation of the parties (e.g.: Contract of Contract to
conditions, interest, penalty, time Sale Sell
or place of payment, etc.) 1. Title passes to the 1. Ownership is
buyer upon delivery reserved in the
Characteristics: of the thing sold seller and is not to
1. Principal pass until full
payment of the
2. Consensual;
purchase price
3. Bilateral;
2. Non-payment of 2. Full payment is a
4. Nominate; the price is a positive suspensive
5. Commutative; In some cases, negative resolutory condition, the
aleatory (emptio spei); condition and the failure of which is
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 114
MEMORY AID IN CIVIL LAW
remedy of the seller not a breach – 1. Constructive 1. Third person
is to exact fulfilment casual or serious /actual knowledge on buying the
or to rescind the but simply the part of the 2nd property despite
contract prevents the buyer of the defect in fulfilment of the
obligation of the the seller’s title suspensive
vendor to convey renders him not a condition cannot
title from having registrant in good be deemed a
binding force faith. Such second buyer in bad
3. Vendor loses and 3. Title remains in buyer cannot defeat faith and
cannot recover the vendor if the the first buyer’s title. prospective
ownership of the vendee does not Ratio: Fulfilment of buyer cannot
thing sold and comply with the the suspensive seek the relief of
delivered until the condition conditions affects the reconveyance of
contract of sale is precedent of seller’s title to the property.
resolved and set making payment property and previous Exception: If
aside at the time delivery of the There was no
specified in the property previous sale of
contract automatically the property.
transfers
ownership/title to the
Conditional Sale Contract to buyer.
Sell
As to reservation of title to the subject
property OBJECTS OF SALE
In both cases the seller may reserve the Requisites:
title to the subject property until 1. THINGS:
fulfillment of the suspensive condition i.e. a) determinate or determinable
full payment of the price (Arts. 1458, 1460)
As to effect of fulfillment of suspensive b) lawful (Arts 1347, 1409 [1,4]
condition c) should not be impossible (Art.
1. Upon fulfillment of 1. Upon 1348) e.g. must be within the
the suspensive fulfillment of the commerce of man
condition, the suspensive 2. RIGHTS – must be transmissible
contract of sale is condition, which Exceptions:
thereby perfected, is the full -future inheritance
such that if there had payment of the - service
been previous delivery purchase price,
of the subject ownership will
property to the buyer, not Emptio rei Emptio spei
ownership thereto automatically speratae
automatically transfer to the 1. Sale of an expected 1. Sale of a mere
transfers to the buyer although thing hope or
buyer by operation the property may expectancy that
of law without any have been the thing will come
further act by the previously to existence; Sale
seller. delivered to him. of the hope itself
The prospective 2. Sale is subject to 2. Sale produces
seller still has the condition that the effect even if the
to convey title thing will exist; if it thing does not
to the does not, there is no come into
contract existence, unless it
prospective
is a vain hope
buyer by
entering into a 3. The uncertainty is 3. The uncertainty
contract of with regard to the is with regard to
absolute sale. quantity and quality of the existence of
the thing and not the the thing
As to effect of sale of the subject existence of the thing
property to 3rd persons 4. Object is a future 4. Object is a
thing present thing which
is the hope or
expectancy
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 115
MEMORY AID IN CIVIL LAW
NOTE: In case of doubt the presumption Sale Agency to sell
is in favor of emptio rei speratae which 1. Buyer receives 1. Agent receives
is more in keeping with the commutative the goods as owner the goods as goods
character of the contract of the principal who
retains his
Goods which may be Object of Sale ownership over
them
a. Existing goods – goods owned or
2. Buyer pays the 2. Agent delivers
possessed by the seller.
price the price which in
b. Future goods – goods to be turn he got from his
manufactured, raised or acquired by buyer
the seller after the perfection of the 3. Buyer, as a 3. Agent can return
contract. general rule, cannot the goods in case he
NOTES: return the object is unable to sell the
A sale of future goods is valid only as sold same to a third
an executory contract to be fulfilled person
by the acquisition and delivery of 4. Seller warrants 4. Agent makes no
the thing sold warranty for which
goods specified.
he assumes personal
While there can be sale of future liability as long as
property, there can generally be no he acts within his
donation of future property (Article authority and in the
751 Civil Code) name of the seller
Future inheritance cannot be sold. 5. Buyer can deal 5. Agent in dealing
with the thing sold with the thing
A contract of sale or purchase of as he pleases being received, must act
goods to be delivered at a future the owner and is bound
time, if entered into without the according to the
intention of having any goods pass instructions of the
from one party to another, but with principal
an understanding that at the
appointed time, the purchaser is Contract for
merely to receive or pay the Sale
Piece of Work
difference between the contract and 1. The thing 1. The thing
the market prices, is illegal. Such transferred is one transferred is one
contract falls under the definition of not in existence and which would have
“futures” in which the parties which never would existed and would
merely gamble on the rise or fall in have existed but for have been the
prices and is declared null and void the order of the subject of sale to
by law. (Art. 2018, NCC) (Onapal party desiring to some other person,
acquire it even if the order
Phil. Commodities, Inc. vs. CA
had not been given
[1993])
2. The services 2. The primary
dominate the objective of the
Instances when the Civil Code contract even contract is a sale of
recognizes sale of things not though there is a the manufactured
actually or already owned by the sale of goods item; it is a sale of
seller at the time of the sale: involved goods even though
1. Sale of a thing having potential the item is
manufactured by
existence (Article 1461)
labor furnished by
2. Sale of future goods (Article 1462) the seller and upon
3. Contract for the delivery at a certain previous order of
price of an article which the vendor the customer
in the ordinary course of the 3. Not within the 3. Within the
business manufactures or procures Statute of Frauds Statute of Frauds
for the general market, whether the
same is on hand at the time or not
(Article 1467)
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 116
MEMORY AID IN CIVIL LAW
Rules to determine if the contract is the object it is the acquisition
one of Sale or Piece of work: of the object offered
a. If ordered in the ordinary course of in lieu of the original
business – sale credit
b. If manufactured specially for the 4. Greater freedom 4. Less Freedom in
in determining determining the
customer and upon his special order,
the price price
and not for the market – piece of
work 5. Buyer still has to 5. The payment is
pay the price received by the
SCHOOLS OF THOUGHT: debtor before
a) Massachusetts rule: If the contract is
specifically done at the order of perfected.
another, this is a contract for a
piece of work. (Philippine PRICE
application) The sum stipulated as the equivalent
b) New York rule: If thing already of the thing sold and also every
exists-SALE; if not-WORK incident taken into consideration for
c) English rule: If material is more the fixing of the price, put to the
valuable-SALE; if skill is more debit of the vendee and agreed to by
valuable-WORK him.
BARTER Requisites:
contract whereby one of the parties 1. Certainty or ascertainable at the
binds himself to give one thing in time of perfection
consideration of the other's promise 2. Real, not fictitious
to give another thing. 3. In some cases, must not be
NOTE: The only point difference grossly inferior to the value of
between contract of sale and barter is in the thing sold.
the element which is present in sale but 4. Paid in money or its equivalent
not in barter, namely: price certain in
money or its equivalent Certainty
It is not necessary that the certainty
NOTE: If the consideration is partly in of the price be actual or determined
money and partly in another thing, at the time of the execution of the
determine: contract. The price is certain in the
a. The manifest intention of the following cases:
parties 1. If the parties have fixed or
b. If the intent is not clear, apply agreed upon a definite amount;
the following rules: NOTE: The fixing of the price can
1. If the thing is more valuable never be left to the discretion of one
than money – barter of the contracting parties. However
2. If the money and the thing if the price fixed by one of the
are of equal value – sale parties is accepted by the other, the
3. If the thing is less valuable sale is perfected.
than money – sale 2. If it be certain with reference to
another thing certain
Sale Dation in Payment 3. If the determination of the price
1. No pre-existing 1. Pre-existing credit is left to the judgment of a
credit specified person or persons even
2. Obligations are 2. Obligations are before such determination
created extinguished 4. In the cases provided under Art.
3. Consideration on 3. Consideration of
1472 NCC
the part of the seller the debtor is the
is the price; on the extinguishment of
part of the buyer is the debt; on the
the acquisition of part of the creditor,
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 117
MEMORY AID IN CIVIL LAW
Effect when the price is fixed by the EXCEPTIONS:
third person designated: a. Where the price is so low as to
GENERAL RULE: Price fixed by a third be shocking to the moral
person designated by the parties is conscience, judicial sale of
binding upon them. personal property will be set
EXCEPTIONS: aside
1. When the third person acts in b. In the event of a resale, a better
bad faith or by mistake price can be obtained
2. When the third person disregards
the specific instructions or the NOTE: The validity of the sale is not
procedure marked out by the necessarily affected where the law gives
parties to the owner the right to redeem, upon
the theory that the lesser the price, the
Effect when the price is not fixed by easier it is for the owner to effect
the third person designated: redemption.
1. If the third person refuses or
cannot fix the price, the Effect where price is simulated
contract shall become 1. If it is shown to have been in reality
ineffective, unless the parties a donation or some other act or
subsequently agree upon the contract
price The sale is void but the act or
2. If the third person is prevented contract may be valid as a
from fixing the price by the fault donation
of the seller or buyer, the party 2. If not
not in fault may obtain redress The contract is void and
against the party in fault inexistent
Effect of Gross Inadequacy of Price: Effect of Failure to determine price:
1. Voluntary sales 1. Where contract executory
GENERAL RULE: Mere inadequacy of The contract is inefficacious
the price does not affect validity of the 2. Where the thing has been delivered
sale. to and appropriated by the buyer
A valuable consideration, however The buyer must pay a reasonable
small or nominal, if given or price therefore
stipulated in good faith is, in the
absence of fraud, Reasonable price – generally the market
sufficient.(Rodriguez vs. CA, 207 price at the time and place fixed by the
SCRA 553) contract or by law for the delivery of the
Future inheritance cannot be sold. goods
EXCEPTIONS: PERFECTION OF SALE
a. Where low price indicates vice of GENERAL RULE: It is perfected at the
consent, sale may be annulled; moment there is meeting of the minds
or contract is presumed to be an upon a determinate thing (object), and a
equitable mortgage certain price (consideration), even if
b. Where the price is so low as to neither is delivered. A choice between
be “shocking to conscience”, rescission and fulfilment, with damages
sale may be set aside. in either case)
2. Involuntary or Forced sales NOTE: Sale is a consensual contract;
GENERAL RULE: Mere inadequacy of Hence, delivery and payment are not
the price is not a sufficient ground for essential for its perfection
the cancellation of the sale if property is EXCEPTION: When the sale is subject
real. to a suspensive condition by virtue of
law or stipulation.
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 118
MEMORY AID IN CIVIL LAW
* The terms and conditions of payment EXCEPTIONS:
are merely accidental, not essential 1. Contrary stipulation or Pactum
elements of the contract of sale except reservati dominii (contractual
where the partied themselves stipulate reservation of title) – a stipulation,
that in addition to the subject-matter usually in sales by installment,
and the price, they are essential or whereby, despite delivery of the
material to the contract. property sold, ownership remains
with the seller until full payment of
Requirements for perfection the price is made.
a. When parties are face to face 2. Contract to sell
When an offer is accepted without 3. Contract of insurance – a perfected
conditions or qualifications contract of sale, even without
NOTES: delivery, vests in the vendee an
A conditional acceptance is a equitable title, an existing interest
counter-offer over the goods sufficient to be the
when negotiated thru phone it is subject of insurance
as if it is negotiated face to face
b. When contract is thru RULES GOVERNING AUCTION SALES
correspondence or thru telegram 1. Sales of separate lots by auction are
When the offeror receives or has separate contracts of sale.
knowledge of the acceptance by the 2. Sale is perfected by the fall of the
offeree hammer
NOTE: If the buyer has already 3. Seller has the right to bid in the
accepted but the seller does not auction, provided:
know yet of the acceptance, the a) such right was reserved
seller may still withdraw b) notice was given that the sale was
c. When a sale is subject to a subject to a right to bid on behalf of the
suspensive condition seller
From the moment the condition is c) right is not prohibited by law or by
fulfilled stipulation
4. Advertisements for bidders are simply
TRANSFER OF OWNERSHIP invitations to make proposals, and the
GENERAL RULE: While a contract of advertiser is not bound to accept the
sale is consensual, ownership of the highest or lowest bidder, unless the
thing sold is acquired only upon its contrary appears.
delivery, actual or constructive, to the
buyer. (Daus vs. Sps. De Leon, 16 June EFFECT OF PROMISE TREATED UNDER
2003) ART. 1479 Civil Code:
This is true even if the purchase 1. Accepted unilateral promise to sell
has been made on credit. or buy
Payment of the purchase price is Only one makes the promise, this
not essential to the transfer of promise is accepted by the other.
ownership, as long as the Example: A promises to sell to B, B
property sold has been accepts the promise, but does not in
delivered. (Sampaguita Pictures, turn promise to buy.
Inc vs. Jalwindor Manufacturers, does not bind the promissor even if
Inc. 93 SCRA 420) accepted and may be withdrawn
Nonpayment only creates a right anytime.
to demand payment or to rescind NOTE: Pending notice of its withdrawal,
the contract, or to criminal the accepted promise partakes the
prosecution in the case of nature of an offer to sell which if
bouncing checks. (EDCA accepted, results in a perfected contract
Publishing and Distributing Corp. of sale (Sanchez vs. Rigos 45 SCRA3 68).
vs. Santos, 184 SCRA 614) In other words, if the acceptance is
made before withdrawal, it constitutes a
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 119
MEMORY AID IN CIVIL LAW
binding contract of sale although the and expressing his readiness to pay the
option is given without consideration. stipulated price.
if the promise is supported by a
consideration distinct and separate Right of First Refusal
from the price (option money), its It is a right of first priority all things
acceptance will give rise to a and conditions being equal; there
perfected contract. should be identity of the terms and
conditions to be offered to the
2. Bilateral promise to buy and sell optionee and all other prospective
One party accepts the other’s buyers, with optionee to enjoy the
promise to buy and the latter, the right of first priority. A deed of sale
former’s promise to sell a executed in favor of a third party
determinate thing for a price certain who cannot be deemed a purchaser
it is reciprocally demandable in good faith, and which is in
It requires no consideration distinct violation of the of the right of first
from the selling price refusal granted to the optionee is
NOTE: this is as good as a perfected NOT voidable under the Statute of
sale. No title of dominion is Frauds, such contract is valid BUT
transferred as yet, the parties being rescissible under Article 1380 to
given only the right to demand 1381(3) of the New Civil Code
fulfillment or damages. (Guzman Bocaling & Co. vs.
Bonnavie; Riviera Filipina, Inc vs. CA
Policitation et.al. GR No. 117355, April 5, 2002).
An unaccepted unilateral promise to The basis of the right of first refusal
buy or sell. Even if accepted by the must be the current offer to sell of
other party, it does not bind the the seller or offer to purchase of any
promissor and maybe withdrawn prospective buyer. Only after the
anytime. This is a mere offer, and optionee fails to exercise its right of
has not yet been converted into a first priority under the same terms
contract. and within the period contemplated
could the owner validly offer to sell
Option contract the property to a third person,
again, under the same terms as
A contract granting a privilege in one offered to the optionee (Paranaque
person, for which he has paid a
Kings Enterprises, Inc. vs. CA GR No.
consideration, which gives him the
111538, February 26, 1997)
right to buy certain merchandise, at
anytime within the agreed period, at The lessee’s right of first option to
a fixed price. buy the leased property in case of its
sale is but a part of the bigger right
An option without consideration is to lease the said property from the
void and the effect is the same as if
lessor. The option was given to the
there was no option
lessee because she was the lessee of
* However, in Sanchez vs. Rigos (1972),
the subject property. It was a
even though the option was not
component of the consideration of
supported by a consideration, the
the lease. The option was by no
moment it was accepted, a perfected
means an independent right which
contract of sale resulted, applying Art.
can be exercised by the lessee. If
1324 of the NCC. In view of the ruling of
the lessee is barred by the contract
the Supreme Court, the only importance
from assigning her right to lease the
of the consideration for an option is that
subject property to any other party,
the option cannot be withdrawn by the
the lessee is similarly barred to
grantor after acceptance.
assign her first option to buy the
* In an option to buy, the party who has
leased property to another.
an option may validly and effectively
(Bangayan et.al vs. CA and Lim GR
exercise his right by merely notifying the
No.123581, August 29, 1997)
owner of the former’s decision to buy
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 120
MEMORY AID IN CIVIL LAW
Earnest money – or “ARRAS” is according to weight, number or
something of value to show that the measure
buyer was really in earnest, and given to 2. seller is guilty of fraud,
the seller to bind the bargain. It is negligence, default or violation
considered as: of contractual terms
a) part of the purchase price 3. object sold is generic
b) proof of perfection of the (Civil Code of the Philippines, Paras)
contract NOTE: This view conforms with
*It shall be deducted from the total Manresa’s view. Buyer would have
price. been the one to profit from the thing
had it not been lost or destroyed.
Earnest money Option money
1. Title passes to 1. Ownership is Contrary view:
the buyer upon reserved to the Where the ownership is transferred
delivery of the seller and is not to by delivery, as in our code, the
thing sold pass until full application of the axiom res perit
payment domino, imposes the risk of loss
2. In case of 2. In case of upon the vendor; hence, if the thing
non-payment, an non-payment, there is lost by fortuitous event before
action for specific can be action for delivery, the vendor suffers the loss
performance or specific
for rescission can performance
and cannot recover the price from
be filed by the the vendee (Commentaries and
injured party Jurisprudence on the Civil Code of
3. Part of the 3. Money given as a the Philippines, Tolentino)
purchase price distinct
consideration for an d. The thing is lost after delivery:
option contract Buyer bears the loss.
4. When given, 4. The would-be
the buyer is bound buyer is not required Question: If one does not comply, the
to pay the balance to buy other need not pay?
5. Given when 5. Applies to a sale
there is already a not yet perfected Answer: True. But this only applies when
sale the seller is able to deliver but does not.
EFFECT OF LOSS AT THE TIME OF SALE:
RULES ON RISK OF LOSS AND
a. Thing entirely lost at the time of
DETERIORATION:
perfection: Contract is void and
a. The thing sold is lost before
inexistent
perfection: Seller bears the loss.
b. Thing only partially lost: Vendee
b. The thing sold is lost at the time of
may elect between withdrawing
perfection: Contract is void or
from the contract or demanding the
inexistent.
remaining part, paying its
c. The thing sold is lost after
proportionate price
perfection, but before delivery:
Sale by description
GENERAL RULE: Who bears the risk
of loss is governed by the A sale where a seller sells things as
stipulations in the contract being of a certain kind, buyer merely
In the absence of any relying on the seller’s
stipulation: representations or descriptions.
First view: There is warranty that the thing sold
Buyer bears the loss as an exception corresponds to the representations
to the rule of res perit domino. or descriptions.
EXCEPTIONS:
1. when object sold consists of Sale by sample
fungible goods for a price fixed A sale where a small quantity of a
commodity is exhibited by the seller
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 121
MEMORY AID IN CIVIL LAW
as a fair specimen of the bulk, which CAPACITY TO BUY OR SELL
is not present and as to which there GENERAL RULE: All persons who can
is no opportunity to inspect or bind themselves also have legal capacity
examine. to buy and sell.
NOTE: The mere exhibition of the EXCEPTIONS:
sample does not necessarily make it 1. Absolute incapacity (minors,
a sale by sample. This exhibition demented persons, imbeciles,
must have been the sole basis or deaf and dumb, prodigals, civil
inducement of the sale. interdictees) - party cannot bind
There is warranty that the bulk of themselves in any case.
the commodity will correspond in 2. Relative incapacity – incapacity
kind, quality, and character with the exists only with reference to
sample exhibited. certain persons or a certain class
of property
NOTE: In a sale by sample and by
description, there is a two-fold Relative Incapacity
warranty. A. Husband and wife (Art. 1490):
Generally, a sale by one spouse to
RIGHTS OF BUYER: another is void.
1) Return the thing and recover the The husband and wife cannot sell
money paid, or property to each other except:
2) Retain the thing and sue for the 1. When a separation of property
breach of warranty. was agreed upon by the spouses
2. When there has been a judicial
PURCHASE BY MINORS: Contract is separation of property under
generally voidable but in case of Article 134 and 135 of the Family
necessaries, “where necessaries are sold Code
and delivered to a minor or other person
without capacity to act, he must pay a B. Incapacity by reason of relation to
reasonable price therefore. Necessaries property (Art. 1491)
are those in Art. 290.” The following persons cannot acquire
property by purchase, even at a
FORMALITIES OF CONTRACT OF SALE public auction, either in person or
GENERAL RULE: Sale is a consensual through the mediation of another:
contract and is perfected by mere (GAEP-JO)
consent. 1. the guardian, with respect to the
EXCEPTIONS: In order to be property of his ward;
enforceable by action, the following 2. agents, with respect to the
must be in writing: property whose administration or
1. Sale of personal property at a sale may have been entrusted to
price not less than P500 them, unless the consent of the
2. Sale of real property or an principal has been given;
interest therein 3. executor or administrator, with
3. Sale of property not to be respect to the property of the
performed within a year from estate under administration;
the date thereof 4. public officers and employees,
4. “Applicable statute” requires with respect to the properties of
that the contract of sale be in a the government, its political
certain form subdivisions, or GOCCs, that are
NOTE: Statute of Frauds is applicable entrusted to them;
only to executory contracts and not to 5. judges, justices, prosecuting
contracts which are totally or partially attorneys, clerks of courts, etc.,
performed. with respect to the property in
custogia legis; and
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 122
MEMORY AID IN CIVIL LAW
6. any other person specially OBLIGATIONS OF THE VENDOR: (WPD-
disqualified by law. TT)
Examples of persons especially 1. Transfer ownership (cannot be
disqualified by law: waived)
a. Aliens who are disqualified to 2. Deliver the thing sold (cannot be
purchase agricultural lands waived)
b. An unpaid seller having a right 3. Warrant against eviction and against
of lien or having stopped the hidden defects (can be waived or
goods in transitu, who is modified since warranty is not an
prohibited from buying the goods essential element of the contract of
either directly or indirectly in sale)
the resale of the same, at public 4. Take care of the thing, pending
or private sale which he may delivery, with proper diligence
make (Article 1163)
c. The officer holding the 5. Pay for the expenses of the deed of
execution, or his deputy. sale, unless there is stipulation to
NOTE: While those disqualified the contrary
under Arts. 1490 and 1491 may
not become lessees (Art. 1646), DELIVERY
still aliens may become lessees Is a mode of acquiring ownership, as
even if they cannot buy lands. a consequence of certain contracts
such as sale, by virtue of which,
Effect of violation: actually or constructively, the object
a) With respect to nos. 1 to 3: the is placed in the control and
sale is VOIDABLE. possession of the vendee.
Reason: only private rights,
which are subject to ratification Delivery of the thing together
are violated with the payment of the price,
NOTE: In the case of Lao vs. marks the consummation of the
Genato, 137 SCRA 77, the contract of sale(PNB vs. Ling, 69
Supreme Court found that the Phil. 611)
sale by the administrator of In all forms of delivery, it is
certain properties of the estate necessary that the act of
in order to settle the existing delivery be coupled with the
obligations of the estate was intention of delivering the thing.
made to the administrator’s son The act without the intention is
for a grossly low price. insufficient. (Norkis Distributor,
Furthermore, the said sale was Inc. vs. CA, 195 SCRA 694)
not submitted to the probate
court for approval as mandated
by the order authorizing the
Kinds:
1. Actual or real – placing the thing
administrator to sell. The sale
under the control and possession of
was indubitably illegal, irregular
the buyer.
and fictitious, and the court’s
2. Legal or constructive – delivery is
approval of the assailed
represented by other signs or acts
compromise agreement violated
indicative thereof
Article 1491 and cannot work to
a. delivery by the execution of a
ratify a fictitious contract which
public instrument.
is non-existent and void from
NOTE: Gives rise only to a prima
the very beginning
facie presumption of delivery which
b) With respect to nos. 4 to 6: the
is destroyed when actual delivery is
sale is NULL AND VOID.
not effected because of a legal
Reason: violation of public
impediment (Ten Forty Realty vs.
policy cannot be subject to
Cruz, 10 Sept. 2003)
ratification
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 123
MEMORY AID IN CIVIL LAW
b. traditio symbolica - to effect NOTES:
delivery, the parties make use of It is a kind of sale with a condition
a token or symbol to represent subsequent.
the thing delivered The buyer must comply with the
c. traditio longa manu – seller express or implied conditions
pointing out to the buyer the attached to the return privilege;
things which are transferred, otherwise, the sale becomes
which at the time must be in absolute.
sight. Buyer, being the owner, bears the
d. traditio brevi manu – buyer risk of loss
simply continues in possession of
the thing but under title of Sale on trial, approval, or satisfaction
ownership.
A contract in the nature of an option
e. traditio constitutum
to purchase if the goods prove to be
possessorium – seller continues
satisfactory, the approval of the
in possession but under a
buyer being a condition precedent.
different title other than
ownership.
3. Quasi-tradition – delivery of rights, Rules:
credits or incorporeal property, 1. title remains in the seller
made by: 2. risk of loss remains with seller
a. placing titles of ownership in the except when the buyer is at fault or
hands of buyer has agreed to bear the loss
b. allowing buyer to make use of 3. buyer must give goods a trial, except
rights where it is evident that it cannot
4. Tradition by operation of law perform the work
4. period within which buyer must
Constructive delivery requires three signify his acceptance runs only
things before ownership may be when all the parts essential for the
transferred: operation of the object have been
1. The seller must have control over delivered.
the thing 5. if it is stipulated that a third person
2. The buyer must be put under control must satisfy approval or satisfaction,
3. There must be the intention to the provision is valid, but the third
deliver the thing for purposes of person must be in good faith. If
ownership refusal to accept is not justified,
seller may still sue.
When is the vendor not bound to 6. Generally, the sale and delivery to a
deliver the thing sold: buyer who is an expert on the object
1. If the vendee has not paid him the purchased is not a sale on approval,
price trial, or satisfaction.
2. If no period for payment has been
fixed in the contract Sale or return Sale on Trial
1. Subject to a 1. Subject to a
3. Even if a period for payment has resolutory condition suspensive condition
been fixed in the contract, if the
2. Depends entirely 2. Depends on the
vendee has lost the right to make on the will of the character or quality of
use of the same. buyer the goods
3. Ownership 3. Ownership remains
Sale or return passes to the buyer in the seller until
Property is sold, but the buyer, who on delivery and buyer signifies his
subsequent return approval or
becomes the owner of the property reverts ownership acceptance to the
on delivery, has the option to return in the seller seller
the same to the seller instead of
paying the price. 4. Risk of loss or 4. Risk of loss remains
injury rests upon with the seller
the buyer
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 124
MEMORY AID IN CIVIL LAW
Instances where Seller is still the * “Unlawful deprivation” is no longer
Owner despite Delivery: limited to a criminal act. There is
1. Sale on trial, approval or satisfaction Unlawful Deprivation where there is no
2. Contrary intention appears by the valid transmission of ownership.
term of the contract;
3. Implied reservation of ownership Place of delivery of goods
(Article 1503) 1. Where there is an agreement, place
a. If under the bill of lading, the of delivery is that agreed upon
goods are deliverable to seller or 2. Where there is no agreement, place
agent or their order; of delivery determined by usage of
b. If the bill of lading, although trade
stating that the goods are to be 3. Where there is no agreement and no
delivered to the buyer or his prevalent usage, place of delivery is
agent, is kept by the seller or his the seller’s place
agent; 4. In any other case, place of delivery
c. When the buyer, although the is the seller’s residence
goods are deliverable to order of 5. In case of specific goods, which to
buyer, and although the bill of the knowledge of the parties at the
lading is given to him, does not time the contract was made were in
honor the bill of exchange sent some other place, that place is the
along with it. place of delivery, in the absence of
agreement or usage of trade to the
Transfer of ownership where goods contrary
sold delivered to carrier
General Rule: Delivery to the carrier is Time of delivery of goods
deemed to be delivery to the buyer 1. Stipulated time
Exception: Where the right of 2. In the absence thereof, within a
possession or ownership of specific goods reasonable time
sold is reserved
NEGOTIABLE DOCUMENT OF TITLE
SALE OF GOODS BY A NON-OWNER (NDT)
GENERAL RULE: Buyer acquires no title A document of title in which it is
even if in good faith and for value under stated that the goods referred to
the maxim Nemo dat quid non habet therein will be delivered to the
(“You cannot give what you do not bearer, or to the order of any person
have”). named in such document.
EXCEPTIONS: (SMERVS) May be negotiated by delivery or
1. Owner is estopped or precluded indorsement.
by his conduct
2. When sale is made by the The document is negotiable if:
registered owner or apparent 1. The goods are deliverable to the
owner in accordance with bearer; or
recording or registration laws 2. If the goods are deliverable to the
3. Sales sanctioned by judicial or order of a certain person
statutory authority
4. Purchases in a merchant's store, Persons who may negotiate NDT:
fairs or markets 1. The owner; or
5. When a person who is not the 2. Any person to whom the possession
owner sells and delivers a thing, or custody thereof has been
subsequently acquires title entrusted by the owner, if by the
thereto (Art. 1434) terms of the document the bailee
6. When the seller has a voidable issuing the document undertakes to
title which has not been avoided deliver the goods to the order of the
at the time of the sale (Art. person to whom the possession or
1506) custody of the document has been
entrusted or if at the time of such
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 125
MEMORY AID IN CIVIL LAW
entrusting the document in such NOTE: Acceptance, even if not express
form that it may be negotiated by may be implied when the buyer
delivery. exercises acts of ownership over the
excess goods.
* If the holder of a negotiable document
of title (deliverable to bearer) entrusts RULES WHEN GOODS MIXED WITH
the document to a friend for deposit, GOODS OF DIFFERENT DESCRIPTION:
but the friend betrays the trust and Buyer may accept the goods which
negotiates the document by delivering it are in accordance with the contract
to another who is in good faith, the said and reject the rest
owner cannot impugn the validity of the
negotiation. As between two innocent NOTE: If the subject matter is
persons, he who made the loss possible indivisible, in case of delivery of larger
shall bear the loss, without prejudice to quantity of goods or of mixed goods, the
his right to recover from the wrongdoer. buyer may reject the whole of the goods
RIGHTS OF PERSON TO WHOM DELIVERY TO THE CARRIER
DOCUMENT HAS BEEN NEGOTIATED: GENERAL RULE: Where the seller is
1) The title of the person negotiating the authorized or required to send the goods
document, over the goods covered by to the buyer, delivery to the carrier is
the document; delivery to the buyer.
2) The title of the person (depositor or EXCEPTIONS:
owner) to whose order by the terms of 1. When a contrary intention
the document the goods were to be appears
delivered, over such goods; 2. Implied reservation of ownership
3) The direct obligation of the bailee to under pars. 1,2,3 of Art. 1503
hold possession of the goods for him, as
if the bailee had contracted to him Kinds of Delivery to the Carrier
directly a. C.I.F. (cost, insurance, freight) –
NOTE; Mere transferee does not acquire signify that the price fixed
directly the obligation of the bailee (in covers not only the costs of the
Art. 1513). To acquire it, he must notify goods, but the expense of the
the bailee. freight and the insurance to be
paid by the seller
WHO CAN DEFEAT RIGHTS OF b. F.O.B. (free on board) – goods
TRANSFEREE: are to be delivered free of
1. Creditor of transferor expense to the buyer to the
2. Transferor point where they are F.O.B. The
3. Subsequent purchaser point of F.O.B., either at the
point of shipment or the point of
RULES WHEN QUANTITY IS LESS THAN destination, determines when
AGREED UPON: the ownership passes.
1. Buyer may reject; or NOTE: the terms C.I.F. and F.O.B.
2. Buyer may accept what has been merely make rules of presumption
delivered, at the contract rate c. C.O.D. (collect on delivery) – the
carrier acts for the seller in
RULES WHEN QUANTITY IS MORE THAN collecting the purchase price,
AGREED UPON: which the buyer must pay to
1. Buyer may reject all; or obtain possession of the goods.
2. Buyer may accept the goods
agreed upon and reject the rest; SELLER’S DUTY AFTER DELIVERY TO
or CARRIER
3. Buyer may accept all and must 1. To enter on behalf of buyer into such
pay for them at the contract contract reasonable under the
rate circumstances
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 126
MEMORY AID IN CIVIL LAW
2. To give notice to buyer regarding DOUBLE SALE (Art. 1544)
necessity of insuring the goods Requisites: VOCS
1. two or more transactions must
PAYMENT OF THE PURCHASE PRICE constitute valid sales;
GENERAL RULE: The seller is not bound 2. they must pertain exactly to the
to deliver the thing sold unless the same object or subject matter;
purchase price has been paid.
3. they must be bought from the same
EXCEPTION: The seller is bound to
or immediate seller; AND
deliver even if the price has not been
paid, if a period of payment has been 4. two or more buyers who are at odds
fixed. over the rightful ownership of the
subject matter must represent
Sale of Real Property by Unit conflicting interests.
Entire area stated in the contract Rules of preference:
must be delivered
1. Personal Property
When entire area could not be a. first possessor in good faith
delivered, vendee may: 2. Real Property
1. Enforce the contract with the a. first registrant in good faith
corresponding decrease in price b. first possessor in good faith
2. Rescind the sale: c. person with oldest title in good
a. If the lack in area is at least faith
1/10 than that stated or
stipulated NOTES:
b. If the deficiency in quality
Purchaser in Good Faith – one who
specified in the contract
buys the property of another without
exceeds 1/10 of the price
notice that some other person has a
agreed upon
right to or interest in such property
c. If the vendee would not have
and pays a full and fair price for the
bought the immovable had
same at the time of such purchase or
he known of its smaller area
before he has notice of the claim or
of inferior quality
interest of some other person in the
irrespective of the extent of
property (Veloso vs. CA).
lack of area or quality
Registration requires actual
Sale for a Lump Sum (A Cuerpo Cierto) recording; if the property was never
really registered as when the
Vendor is obligated to deliver all the registrar forgot to do so although he
land included within the boundaries,
has been handed the document,
regardless of whether the real area
there is no registration.
should be greater or smaller
Possession is either actual or
Ordinarily, there can be no rescission constructive since the law made no
or reduction or increase whether the
distinction (Sanchez vs. Ramos 40
area be greater or lesser, unless
Phil614)
there is gross mistake.
NOTE: The Civil Code presumes that the Possession in Art.1544 includes not
purchaser had in mind a particular piece only material but also symbolic
of land and that he ascertained its area possession (Ten Forty Realty vs.
and quality before the contract of sale Cruz, 10 Sept. 2003.)
was perfected. If he did not do so, or if Title means title because of sale,
having done so he made no objection and not any other title or mode of
and consented to the transaction, he can acquiring property (Lichauco vs.
blame no one but himself (Teran vs. Berenguer 39 Phil 642)
Villanueva Viuda de Riosa 56 Phil 677). Hernandez vs. Katigbak Rule: When
What is important is the delivery the property sold on execution is
of all the land included in the registered under Torrens,
boundaries. registration is the operative act that
gives validity to the transfer or
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 127
MEMORY AID IN CIVIL LAW
creates a lien on the land, and a EFFECT IF BUYER HAS ALREADY SOLD
purchaser on execution sale is not THE GOODS:
required to go behind the registry to General Rule: The unpaid seller’s right
determine the conditions of the to lien or stoppage in transitu remains
property. Exception: Where the even if buyer has sold the goods.
purchaser had knowledge, prior to or Except:
at the time of the levy, of such 1) When the seller has given consent
previous lien or encumbrance, his thereto, or
knowledge is equivalent to 2) When the buyer is a purchaser in good
registration. faith for value of a negotiable document
of title.
CONDITION
Effect of Non-fulfillment of WARRANTY
Condition a statement or representation made
1. If the obligation of either party by the seller of goods,
is subject to any condition and contemporaneously and as a part of
such condition is not fulfilled, the contract of sale, having
such party may either: reference to the character, quality,
a. refuse to proceed with the or title of the goods, and by which
contract he promises or undertakes to insure
b. proceed with the contract , that certain facts are or shall be as
waiving the performance of he then represents.
the condition.
2. If the condition is in the nature
Kinds:
of a promise that it should
1. EXPRESS – any affirmation of fact or
happen, the non-performance of
any promise by the seller relating to
such condition may be treated
the thing if the natural tendency of
by the other party as breach of
such affirmation or promise is to
warranty.
induce the buyer to purchase the
same and if the buyer purchases the
NOTE: A distinction must be made
thing relying thereon
between a condition imposed on the
perfection of a contract and a condition
NOTE: A mere expression of opinion, no
imposed merely on the performance of
matter how positively asserted, does not
an obligation. The failure to comply with
import a warranty unless the seller is an
the first condition would prevent the
expert and his opinion was relied upon
juridical relation itself from coming into
by the buyer.
existence, while failure to comply with
the second merely gives the option
2. IMPLIED - that which the law
either to refuse or proceed with the sale
derives by implication or inference
or to waive the condition.
from the nature of the transaction or
the relative situation or
The mere fact that the second circumstances of the parties,
contract of sale was perfected in irrespective of any intention of the
good faith is not sufficient if, before seller to create it.
title passes, the second vendee a. Warranty against eviction
acquires knowledge of the first b. Warranty against hidden defects
transaction. The good faith or c. Warranty as to Fitness and
innocence of the posterior vendee Merchantability
needs to continue until his contract NOTE: An implied warranty is a natural,
ripens into ownership by tradition or not an essential element of a contract,
registration. (Palanca vs. Dir. Of and is deemed incorporated in the
Lands, 46 PHIL 149) contract of sale. It may however, be
waived or modified by express
stipulation. (De Leon)
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 128
MEMORY AID IN CIVIL LAW
There is no implied warranty as to the whatever he has received under the
condition, adaptation, fitness or contract. Since the vendee can no longer
suitability or the quality of an article restore the subject-matter of the sale to
sold as a second-hand article. But such the vendor, rescission cannot be carried
articles might be sold under such out.
circumstances as to raise an implied
warranty. * The suit for the breach can be directed
* A certification issued by a vendor that only against the immediate seller, not
a second-hand machine was in A-1 sellers of the seller unless such sellers
condition is an express warranty binding had promised to warrant in favor of later
on the vendor. (Moles vs. IAC [1989]) buyers or unless the immediate seller
has expressly assigned to the buyer his
A. Warranty against eviction own right to sue his own seller.
Warranty in which the seller NOTE: The disturbance referred to in
guarantees that he has the right to the case of eviction is a disturbance in
sell the thing sold and to transfer law which requires that a person go to
ownership to the buyer who shall not the courts of justice claiming the thing
be disturbed in his legal and sold, or part thereof and invoking
peaceful possession thereof. reasons. Mere trespass in fact does not
give rise to the application of the
Elements: doctrine of eviction.
1. vendee is deprived, in whole or
in part, of the thing purchased; Vendor’s liability is waivable but any
2. the deprivation is by virtue of a stipulation exempting the vendor
final judgment; from the obligation to answer for
3. the judgment is based on a prior eviction shall be void if he acted in
right to the sale or an act bad faith.
imputable to the vendor; Kinds of Waiver:
4. the vendor was summoned in the a. Consciente – voluntarily
suit for eviction at the instance made by the vendee without
of the vendee; AND the knowledge and
5. no waiver of warranty by the assumption of the risks of
vendee. eviction
NOTE: vendor shall pay only the
Vendor's liability shall consist of: value which the thing sold had at
1. Total eviction: (VICED) the time of eviction
a. Value of the thing at the time of b. Intencionada – made by the
eviction; vendee with knowledge of
b. Income or fruits if he has been the risks of eviction and
ordered to deliver them to the assumption of its
party who won the suit; consequences
c. Costs of the suit; EFFECT: vendor not liable
d. Expenses of the contract; AND NOTE: Every waiver is presumed to be
e. Damages and interests if the sale consciente. To consider it intencionada,
was in bad faith. it must be accompanied by some
circumstance which reveals the
2. Partial eviction: vendor’s knowledge of the risks of
a. to enforce vendor’s liability eviction and his intention to submit to
for eviction (VICED); OR such consequences.
b. to demand rescission of
contract. WHERE IMMOVABLE SOLD ENCUMBERED
WITH NON-APPARENT BURDEN
Question: Why is rescission not a remedy 1. Right of vendee
in case of total eviction? a) recission, or
Answer: Rescission contemplates that b) indemnity
the one demanding it is able to return
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 129
MEMORY AID IN CIVIL LAW
2. When right cannot be exercised: c. damages
a) if the burden or servitude is 2. If vendor was not aware, he shall be
apparent obliged to return: (PIE)
b) if the non-apparent burden or a. price paid
servitude is registered b. interest thereon
c) if vendee had knowledge of the c. expenses of the contract if paid
encumbrance, whether it is registered by the vendee
or not
3. When action must be brought Effect if the cause of loss was not the
- within ONE YEAR from the hidden defect
execution of the deed of sale If the thing sold had any hidden fault
at the time of the sale, and should
B. Warranty against hidden defects thereafter be lost by a (1) fortuitous
Warranty in which the seller event OR (2) through the fault of the
guarantees that the thing sold is free vendee:
from any hidden faults or defects or the vendee may demand of the
any charge or encumbrance not vendor the price which he paid
declared or known to the buyer. less the value of the thing at the
time of its loss.
Elements: (SHENPW) NOTE: the difference between the
1. defect must be Serious or price paid and the value of the thing
important; at the time of its loss represents the
2. it must be Hidden; damage suffered by the vendee and
3. it must Exist at the time of the the amount which the vendor
sale; enriched himself at the expense of
4. vendee must give Notice of the the vendee
defect to the vendor within a If the vendor acted in bad faith:
reasonable time; vendor shall pay damages to the
5. action for rescission or reduction vendee
of price must be brought within
the proper Period (within 6 mos. C. Implied Warranties of Quality
from delivery of the thing or 40 Warranty of Fitness
days from date of delivery in Warranty in which the seller
case of animals); and guarantees that the thing sold is
6. no Waiver of the warranty. reasonably fit for the known
particular purpose for which it was
Remedies of the Vendee: acquired by the buyer
a. Accion redhibitoria (rescission)
b. Accion quanti minoris (reduction GENERAL RULE: There is no implied
of the price) warranty as to the quality or fitness for
NOTES: any particular purpose of goods under a
Hidden faults or defects pertain only contract of sale
to those that make the object unfit EXCEPTIONS:
for the use for which it was intended 1. Where the buyer, expressly or by
at the time of the sale. implication manifests to the
This warranty in Sales is applicable seller the particular purpose for
in Lease (Yap vs. Tiaoqui 13Phil433) which the goods are required
Effect of loss of thing on account of 2. Where the buyer relies upon the
hidden defects: seller’s skill or judgment
1. If vendor was aware of hidden
defects, he shall bear the loss and Warranty of Merchantability
vendee shall have the right to Warranty in which the seller
recover: (PED) guarantees, where the goods were
a. the price paid bought by description, that they are
b. expenses of the contract
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 130
MEMORY AID IN CIVIL LAW
reasonably fit for the general contract, and they are found to be unfit
purpose for which they are sold therefor
It requires identity between what is 4. Limitation of the action: 40 days
described in the contract AND what from the date of their delivery to the
is tendered, in the sense that the vendee
latter is of such quality to have some 5. Vendor shall be liable if the animal
value should die within 3 days after its
purchase if the disease which caused the
Instances where implied warranties are death existed at the time of the contract
inapplicable:
1. As is and where is sale - vendor OBLIGATIONS OF THE VENDEE:
makes no warranty as to the quality A. Principal Obligations:
or workable condition of the goods, 1. To accept delivery
and that the vendee takes them in 2. To pay the price of the thing sold in
the condition in which they are legal tender unless another mode
found and from the place where they has been agreed upon
are located. NOTE: A grace period granted the
2. Sale of second-hand articles vendee in case of failure to pay the
3. Sale by virtue of authority in fact or amount/s due is a right not an
law obligation. The grace period must not
be likened to an obligation, the non-
Caveat Venditor (“Let the seller payment of which, under Article 1169 of
beware”): the vendor is liable to the the Civil Code, would still generally
vendee for any hidden faults or defects require judicial or extra-judicial demand
in the thing sold, even though he was before “default” can be said to arise
not aware thereof. (Bricktown Dev’t Corp vs. Amor Tierra
Dev’t Corp. 57SCRA437)
Caveat Emptor (“Let the buyer
beware”): requires the purchaser to be B. Other Obligations
aware of the supposed title of the 1. To take care of the goods without
vendor and one who buys without the obligation to return, where the
checking the vendor’s title takes all the goods are delivered to the buyer and
risks and losses consequent to such he rightfully refuses to accept
failure.
NOTES:
RULES IN CASE OF SALE OF ANIMALS The buyer in such a case is in the
1. When two or more animals have been position of a bailee who has had
sold at the same time and the goods thrust upon him without
redhibitory defect is in one, or some of his assent. He has the obligation
them but not in all, the general rule is to take reasonable care of the
that the redhibition will not affect the goods but nothing more can be
others without it. It is immaterial demanded of him.
whether the price has been fixed for a The goods in the buyer’s
lump sum for all the animals or for a possession under these
separate price for each. circumstances are at the seller’s
2. No warranty against hidden defects risk
of animals sold at fairs or at public 2. To be liable as a depositary if he
auctions, or of livestock sold as voluntarily constituted himself as
condemned. This is based on the such
assumption that the defects must have 3. To pay interest for the period
been clearly known to the buyer. between delivery of the thing and
3. Sale of animals shall be void when: the payment of the price in the
a) animals sold are suffering from following cases:
contagious disease a. Should it have been stipulated
b) if the use or service for which
they are acquired has been stated in the
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 131
MEMORY AID IN CIVIL LAW
b. Should the thing sold and Acceptance is an obligation of
delivered produce fruits or the vendee; acceptance cannot
income be regarded as a condition to
c. Should he be in default, from complete delivery;
the time of judicial or extra- seller must comply with the
judicial demand for the payment obligation to deliver although
of the price there is no acceptance yet by
the buyer
Pertinent Rules: Acceptance by the buyer may
1. The vendor is not required to deliver precede actual delivery; there may
the thing sold until the price is paid be actual receipt without
nor the vendee to pay the price acceptance and there may be
before the thing is delivered in the acceptance without receipt
absence of an agreement to the Unless otherwise agreed upon,
contrary (Article 1524). acceptance of the goods by the
2. If stipulated, the vendee is bound to buyer does not discharge the seller
accept delivery and to pay the price from liability for damages or other
at the time and place designated; legal remedy like for breach of any
3. If there is no stipulation as to the promise or warranty
time and place of payment and
delivery, the vendee is bound to pay When vendee may suspend payment of
at the time and place of delivery the price:
4. In the absence of stipulation as to 1. If he is disturbed in the possession or
the place of delivery, it shall be ownership of the thing bought
made wherever the thing might be at 2. If he has well-grounded fear that his
the moment the contract was possession or ownership would be
perfected (Article 1251) disturbed by a vindicatory action or
5. If only the time for delivery has been foreclosure of mortgage
fixed in the contract, the vendee is
required to pay even before the NOTES:
thing is delivered to him; if only the If the thing sold is in the possession
time for payment has been fixed, of the vendee and the price is
the vendee is entitled to delivery already in the hands of the vendor,
even before the price is paid by him the sale is a consummated contract
(Article 1524) and Article 1590 is no longer
applicable. Article 1590,
Ways of accepting goods: presupposes that the price or any
1. Express acceptance part thereof has not yet been paid
2. Implied acceptance and the contract is not yet
a. When buyer does an act which consummated.
only an owner can do,
Under Article 1590, the vendee has
b. Failure to return goods after
no cause of action for rescission
reasonable lapse of time
before final judgement, otherwise
the vendor might become a victim of
NOTES:
machinations between the vendee
The retention of goods is strong and the third person
evidence that the buyer has
accepted ownership of the goods.
Disturbance must be in possession
and ownership of the thing acquired
Delivery and acceptance are two If the disturbance is caused by the
separate and distinct acts of
existence of non-apparent servitude,
different parties
the remedy of the buyer is
Delivery is an act of the vendor
rescission, not suspension of
and one of the vendor’s
payment.
obligations; vendee has nothing
to do with the act of delivery by
the vendor
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 132
MEMORY AID IN CIVIL LAW
When vendee cannot suspend payment received as conditional payment,
of the price even if there is AND the condition on which it
disturbance in the possession or was received has been broken by
ownership of the thing sold: reason of the dishonor of the
1. if the vendor gives security for the instrument, insolvency of the
return of the price in a proper case buyer or otherwise.
2. if it has been stipulated that Remedies:
notwithstanding any such 1. Possessory lien over the goods
contingency, the vendee must make 2. Right of stoppage in transitu
payment (see Article 1548 par.3) after he has parted with the
3. if the vendor has caused the possession of the goods and the
disturbance or danger to cease buyer becomes insolvent
4. if the disturbance is a mere act of 3. Special Right of resale
trespass 4. Special Right to rescind the sale
5. if the vendee has fully paid the price 5. Action for the price
6. Action for damages
REMEDIES FOR BREACH OF CONTRACT
A. Remedies of the seller 3. Article 1484 or Recto Law
1. Action for payment of the price (Art. Remedies of vendor in sale of
1595) personal property by installments
2. Action for damages for non- Requisites:
acceptance of the goods (Art. 1596) 1. Contract of sale
3. Action for rescission (Art. 1597) 2. Personal property
B. Remedies of the buyer 3. Payable in installments
1. Action for specific performance (Art. 4. In the case of the second and
1598) third remedies, that there has
2. Action for rescission or damages for been a failure to pay two or
breach of warranty (Art 1599) more installments
NOTE: Apply likewise to contracts
A. REMEDIES OF THE SELLER FOR purporting to be leases of personal
BREACH OF CONTRACT property with option to buy
IN CASE OF MOVABLES Art. 1484 does not apply to a sale:
1. Ordinary Remedies 1. Payable on straight terms (partly
a. Movables in General – Failure of in cash and partly in one term)
the vendee to appear to receive 2. Of Real property
delivery or, having appeared,
failure to tender the price at the
Remedies:
1. Specific performance upon
same time, unless, a longer
vendee’s failure to pay
period for its payment has been
NOTE: Does not bar full recovery for
stipulated
judgment secured may be executed
action to rescind the sale on all personal and real properties of
(Art. 1593) the buyer which are not exempt
b. Sale of Goods – from execution (Palma v. CA.)
action for the price (Art. 2. Rescission of the sale if vendee
1595) shall have failed to pay two or
action for damages (Art. more installments
1596) NOTES:
2. Unpaid Seller Nature of the remedy – which
Types: requires mutual restitution – bars
a. The seller of the goods who has further action on the purchase
not been paid or to whom the price (Nonato vs. IAC.)
price has not been tendered GENERAL RULE: cancellation
b. The seller of the goods, in case a of sale requires mutual
bill of exchange or other restitution, that is all partial
negotiable instrument has been
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 133
MEMORY AID IN CIVIL LAW
payments of price or rents must NOTE: Remedies are alternative and
be returned exclusive
EXCEPTIONS: a stipulation that
the installments or rents paid IN CASE OF IMMOVABLES
shall not be returned to the 1. Ordinary Remedies
vendee or lessee shall be valid a. In case of anticipatory breach –
insofar as the same may not be rescission (Article 1591)
unconscionable under the b. Failure to pay the purchase price
circumstan-ces (Article 1486). –
3. Foreclosure of the chattel rescission upon judicial or
mortgage on the thing sold if notarial demand for
vendee shall have failed to pay rescission (Article 1592)
two or more installments. In this
the vendee may pay, even
case, there shall be no further
after the expiration of the
action against the purchaser to
period, as long as no demand
recover unpaid balance of the
for rescission has been made
price.
upon him
NOTE: Article 1592 does not
NOTES:
apply to:
Further recovery barred only from 1) Sale on instalment of real
the time of actual sale at public auction estate
conducted pursuant to foreclosure 2) Contract to sell
(Macondray vs. Tan.) 3) Conditional sale
Other chattels given as security 4) Cases covered by RA 6552:
cannot be foreclosed if they are not Realty Installment buyer
subject of the installment sale (Ridad vs. protection act
Filipinas investment and Finance Corp.
GR 39806, Jan. 28, 1983) 2. R.A. No. 6552 or Maceda Law
If the vendor assigns his right to a An Act to Provide Protection to
financing company, the latter may be buyers of Real Estate on Installment
regarded as a collecting agency of the Payments
vendor and cannot therefore recover any Law governing sale or financing of
deficiency from the vendee (Zayas vs. real estate on installment payments
Luneta Motors Co.) Requisites:
When the vendor assigns his credit to 1. transactions or contracts
another person, the latter is likewise involving the sale OR financing of
bound by the same law. Accordingly, real estate on installment
when the assignee forecloses on the payments, including residential
mortgage, there can be no further condominium apartments; and
recovery of the deficiency and the 2. buyer defaults in payment of
vendor-mortgagee is deemed to have succeeding installments.
renounced any right thereto (Borbon II
vs. Servicewide Specialist, Inc. Rights of the buyer:
258SCRA658) A. If Buyer has paid at least two
NOTE: However, Article 1484(3) does (2) years of installments
NOT bar one to whom the vendor has 1. The buyer must pay, without
assigned on with a recourse basis his additional interest, the unpaid
credit against the vendee from installments due within the total
recovering from the vendor the grace period earned by him.
assigned credit in full although the There shall be one (1) month
vendor may have no right of recovery grace period for every one (1)
against the vendee for the deficiency year of installment payments
(Filipinas Invest. & Finance Corp. vs. made
Vitug, Jr. 28SCRA658) NOTE: This right shall be
exercised by the buyer ONLY
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 134
MEMORY AID IN CIVIL LAW
once in every 5 years of the life NOTE: Down payments, deposits or
of the contract AND its options on the contract shall be included
extensions. in the computation of the total number
2. Actual cancellation can only take of installment payments made
place after 30 days from receipt
by the buyer of the notice of Remedies of Unpaid Seller
cancellation OR demand for I. Possessory Lien
rescission by a notarial act AND When may be exercised:
upon full payment of the cash 1. Where the goods have been sold
surrender value to the buyer without any stipulation as to
(Olympia Housing vs. Panasiatic, credit
16 January 2003.) 2. When the goods have been sold
NOTE: The seller shall refund to on credit, but the term of credit
the buyer the cash surrender has expired
value of the payments on the 3. Where the buyer becomes
property equivalent to 50% of insolvent
the total payments made. After When lost:
five (5) years of installments, 1. Delivery of the goods to a carrier
there shall be an additional 5% or bailee for the purpose of
every year but not to exceed 90% transmission to the buyer
of the total payments made without reserving ownership or
3. The buyer shall have the right to right of possession
sell his rights or assign the same 2. When the buyer lawfully obtains
to another person OR to possession of the goods
reinstate the contract by 3. By waiver of the lien
updating the account during the NOTE: Possessory lien is lost after the
grace period and before actual seller loses possession but his lien as an
cancellation of the contract unpaid seller remains; hence he is still
4. The buyer shall have the right to an unpaid creditor with respect to the
pay in advance any installment price of specific goods sold. His
or the full unpaid balance of the preference can only be defeated by the
purchase price any time without governments claim to the specific tax on
interest and to have such full the goods themselves (Arts. 2247 and
payment of the purchase price 2241).
annotated in the certificate of NOTE: The bringing of an action to
title covering the property. recover the purchase price is not one of
the ways of losing the possessory lien.
B. If Buyer has paid less than 2 An unpaid seller does not lose his lien by
years of installments reason that he has obtained a money
1. The seller shall give the buyer a judgement or decree for the price of
grace period of NOT less than 60 goods (Art. 1529, last paragraph).
days from the date the
installment became due. If the II. Stoppage of goods in transitu
buyer fails to pay the Requisites:
installments due at the 1. Seller must be unpaid
expiration of the grace period, 2. Buyer must be insolvent
the seller may cancel the 3. Goods must be in transit
contract after 30 days from 4. Seller must either:
receipt by the buyer of the a. actually take possession of
notice of cancellation or the the goods sold OR
demand for rescission of b. give notice of his claim to
contract by a notarial act. the carrier or other person in
2. Same No. 3 and 4 paragraph A possession
above 5. Seller must surrender the
negotiable document of title, if
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 135
MEMORY AID IN CIVIL LAW
any, issued by the carrier or 2. Where the right to resell is
bailee expressly reserved in case the
6. Seller must bear the expenses of buyer should make a default
delivery of the goods after the 3. Where the buyer delays in the
exercise of the right payment of the price for an
unreasonable time
GOODS ARE CONSIDERED IN TRANSITU:
1. after delivery to a carrier or other IV. Rescission
bailee and before the buyer or his agent Types:
takes delivery of them; and 1. Special Right to Rescind Under
2. If the goods are rejected by the Art. 1534 – If the seller has
buyer, and the carrier or other bailee either the right of lien OR a right
continues in possession of them to stop the goods in transitu AND
under either of 2 situations:
GOODS ARE NO LONGER CONSIDERED IN a. Where the right to rescind
TRANSITU: on default has been
1. after delivery to the buyer or his expressly reserved
agent in that behalf; b. Where the buyer has been in
2. if the buyer or his agent obtains default for an unreasonable
possession of the goods at a point before time
the destination originally fixed; 2. Under Art. 1597 (“technical
3. if the carrier or the bailee rescission”)
acknowledges to hold the goods on
behalf of the buyer; and V. Action for the price
4. if the carrier or bailee wrongfully When may be exercised:
refuses to deliver the goods to the buyer 1. Where the ownership has passed
to the buyer AND he wrongfully
Effects of the exercise of the right neglects OR refuses to pay for
1. The goods are no longer in transit. the price
2. The contract of carriage ends; 2. Where the price is payable on a
instead the carrier now becomes a day certain AND he wrongfully
mere bailee, and will be liable as neglects OR refuses to pay for
such. the price, irrespective of the
3. The carrier should not deliver delivery or transfer of title
anymore to the buyer or the latter’s 3. Where the goods cannot readily
agent; otherwise he will clearly be be resold for a reasonable price
liable for damages. AND the buyer wrongfully refuses
4. The carrier must redeliver to, or to accept them even before the
according to the directions of the ownership of the goods has
seller. passed, if Article 1596 is
inapplicable.
WAYS OF EXERCISING THE RIGHT TO
STOP: VI. Action for damages
1. By taking actual possession of the When may be exercised:
goods 1. In case of wrongful neglect or
2. By giving notice of his claim to the refusal by the buyer to accept or
carrier or bailee pay for the thing sold (Art. 1596
par.1)
III. Special Right of Resale 2. In an executory contract, where
May be exercised only when the the ownership in the goods has
unpaid seller has either a right of not passed, and the seller cannot
lien OR has stopped the goods in maintain an action to recover
transitu AND under ANY of the the price (Art 1595)
following conditions: 3. If the goods are not yet
1. Where the goods are perishable identified at the time of the
in nature contract or subsequently
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 136
MEMORY AID IN CIVIL LAW
B. REMEDIES OF THE BUYER FOR d. any other legitimate payments
BREACH OF CONTRACT made therefore and;
e. the necessary and useful
1. Action for specific performance expenses made on the thing
(Art. 1598) sold; and
Where the seller has broken the f. fulfills other stipulations which
contract to deliver specific or may have been agreed upon.
ascertained goods
The judgment or decree may be
A sale with conventional redemption is
unconditional, or upon such terms
deemed to be an equitable mortgage
and conditions as to damages,
in any of the following cases:
payment of the price and otherwise
(IPERTOD)
as the court may deem just
1. Unusually Inadequate purchase
2. Remedies of buyer for breach of price;
warranty by seller (Art. 1599): 2. Possession by the vendor remains, as
1. Recoupment – accept the goods and lessee or otherwise;
set up the seller’s breach to reduce 3. Extension of redemption period after
or extinguish the price expiration;
2. Accept the goods and maintain an 4. Retention by the vendee of part of
action for damages for breach of the purchase price;
warranty 5. Vendor binds himself to pay the
3. Refuse to accept the goods and Taxes of the thing sold;
maintain an action for damages for 6. Any Other case where the parties
breach of warranty really intended that the transaction
4. Rescind the contract by returning or should secure the payment of a debt
offering the return of the goods, and or the performance of any
recover the price of any part thereof obligation; or
NOTE: These are alternative remedies. 7. When there is Doubt as to whether
contract is contract of sale with
When rescission by buyer not allowed: right of repurchase or an equitable
1. if the buyer accepted the goods mortgage.
knowing of the breach of warranty
without protest Equitable Mortgage
2. if he fails to notify the seller within a One which lacks the proper
reasonable time of his election to formalities, form of words, or other
rescind requisites prescribed by law for a
3. if he fails to return or offer to return mortgage, but shows the intention of
the goods in substantially as good the parties to make the property
condition as they were in at the time of subject of the contract as security
the transfer of ownership to him for a debt and contains nothing
impossible or contrary to law
EXTINGUISHMENT OF SALE (Cachola vs. CA 208SCRA496)
1. Same causes as in all other
obligations * When can there be presumption as to
2. Conventional Redemption Equitable Mortgage?
3. Legal Redemption 1) Parties must have entered into a
contract denominated as a contract of
CONVENTIONAL REDEMPTION sale
The right which the vendor reserves 2) The intention of the parties was to
to himself, to reacquire the property secure an existing debt by way of
sold provided he returns to the mortgage
vendee: NOTE: In the cases referred to in Arts.
b. the price of the sale; 1602 and 1604, the apparent vendor may
c. expenses of the contract; ask for the reformation of the
instrument.
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 137
MEMORY AID IN CIVIL LAW
Remedy of Reformation: To correct the NOTE: Written notice under Article 1623
instrument so as to make it express the is mandatory for the right of redemption
true intent of the parties. to commence (PSC vs. Sps. Valencia 19
August 2003.)
Redemption Period
a. if there is an agreement: period BASIS OF LEGAL REDEMPTION: Not on
agreed upon cannot exceed 10 years any proprietary right, which after the
b. if no agreement as to the period: 4 sale of the property on execution, leaves
years from the date of the contract the judgment debtor and vests in the
c. the vendor who fails to repurchase purchaser, but on a bare statutory
the property within the period privilege to be exercised only by the
agreed upon may, however, exercise persons named in the statute.
the right to repurchase within 30
days FROM the time final judgment Tender of payment is not necessary;
was rendered in a civil action on the offer to redeem is enough.
basis that the contract was a true
sale with right of repurchase PRE-EMPTION REDEMPTION
This refers to cases involving a
1. arises before 1. arises after sale
transaction where one of the sale
parties contests or denies that 2. no rescission 2. there can be
the true agreement is one of sale because no sale as rescission of the
with right to repurchase; not to yet exists original sale
cases where the transaction is 3. the action is 3. action is directed
conclusively a pacto de retro directed against against the buyer
sale. Example: Where a buyer a the prospective
retro honestly believed that he seller
entered merely into an Equitable
Mortgage, not a pacto de retro Instances of legal redemption:
transaction, and because of such A. Under the Civil Code (legal
belief he had not redeemed redemption):
within the proper period. 1. Sale of a co-owner of his share
NOTE: Tender of payment is to a stranger (Article 1620)
sufficient to compel redemption, but 2. When a credit or other
is not in itself a payment that incorporeal right in litigation is
relieves the vendor from his liability sold (Article 1634)
to pay the redemption price (Paez 3. Sale of an heir of his hereditary
vs. Magno.) rights to a stranger (Article
1088)
4. Sale of adjacent rural lands not
LEGAL REDEMPTION exceeding one hectare (Article
The right to be subrogated, upon the 1621)
same terms and conditions stipulated 5. Sale of adjacent small urban
in the contract, in the place of one lands bought merely for
who acquires a thing by (1) purchase speculation (Article 1622)
or (2) dation in payment, or (3) by B. Under special laws:
any other transaction whereby 1. An equity of redemption in cases
ownership is transferred by onerous of judicial foreclosures
title. 2. A right of redemption in cases of
May be effected against movables or extra-judicial foreclosures
immovables. 3. Redemption of homesteads
It must be exercised within thirty 4. Redemption in tax sales
(30) days from the notice in writing 5. Redemption by an agricultural
by the vendor.\ tenant of land sold by the
landowner
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 138
MEMORY AID IN CIVIL LAW
ASSIGNMENT OF CREDIT not the objects which make up his
a contract by which the owner of a inheritance.
credit transfers to another his rights
and actions against a third person in Liabilities of the assignor of credit for
consideration of a price certain in violation of his warranties
money or its equivalent 1. Assignor in good faith
Liability is limited only to the
NOTE: Transfer of rights by assignment price received and to the
takes place by the perfection of the expenses of the contract, and
contract of assignment without the any other legitimate payments
necessity of delivering the document by reason of the assignment
evidencing the credit. 2. Assignor in bad faith
this rule does not apply to Liable not only for the payment
negotiable documents and of the price and all the expenses
documents of title which are but also for damages
governed by special laws.
Legal Redemption in Sale or Credit or
Effects of Assignment: other incorporeal right in litigation
1. transfers the right to collect the full Requisites:
value of the credit, even if he paid a 1. There must be a sale or assignment
price less than such value of credit
2. transfers all the accessory rights 2. There must be a pending litigation at
3. debtor can set up against the the time of the assignment
assignee all the defenses he could 3. The debtor must pay the assignee:
have set up against the assignor a. price paid by him
b. judicial cost incurred by him;
Effect of payment by the debtor after AND
assignment of credit c. interest on the price from the
1. Before Notice of the assignment date of payment
Payment to the original creditor
is valid and debtor shall be 4. The right must be exercised by the
released from his obligation debtor within 30 days from the date
2. After Notice the assignee demands (judicially or
Payment to the original creditor extra-judicially) payment from him
is not valid as against the
assignee SALE OF CREDIT OR OTHER
He can be made to pay again by INCORPOREAL RIGHTS IN LITIGATION
the assignee GENERAL RULE: Debtor has the right of
legal redemption in sale of credit or
Warranties of the assignor of credit: incorporeal rights in litigation
a. He warrants the existence of the EXCEPTIONS:
credit a. Sale to a co-heir or co-owner
b. He warrants the legality of the b. Sale to a co-owner
credit at the perfection of the c. Sale to the possessor of property
contract in question
NOTE: There is no warranty as to the
solvency of the debtor unless it is
expressly stipulated OR unless the
BARTER
insolvency was already existing and of
BARTER
public knowledge at the time of the
assignment
contract whereby one of the parties
binds himself to give one thing in
consideration of the other's promise
NOTE: The seller of an inheritance
to give another thing (Article 1638)
warrants only the fact of his heirship but
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 139
MEMORY AID IN CIVIL LAW
NOTE: Barter is similar to a sale with 2. If it is made by one who produces
the only difference that instead of and delivers a written waiver of the
paying a price in money, another thing is provisions of the Bulk Sales Act from
given in lieu of the purchase price his creditors
3. If it is made by an executor,
PERFECTION and CONSUMMATION administrator, receiver, assignee in
Perfected from the moment there is insolvency, or public officer, acting
a meeting of minds upon the things under judicial process (Section 8);
promised by each party in and
consideration of the other 4. If it refers to properties exempt
from attachment or execution (Rules
Consummated from the time of of Court, Rule 39, Section 12)
mutual delivery by the contracting
parties of the things promised Protection Accorded to Creditors by
Bulk Sales Law:
NOTES: 1. It requires the vendor, mortgagor,
Where the giver of the thing transferor or assignor to deliver to
bartered is not the lawful owner the vendee, mortgagee, or to his or
thereof, the aggrieved party cannot its agent or representative a sworn
be compelled to deliver the thing written statement of names and
which he has promised and is also addresses of all creditors to whom
entitled to damages. said vendor, etc. may have been
indebted together with the amount
Where a party is evicted of the thing due or to be due (Section 3)
exchanged, the injured party is given
2. It requires the vendor, mortgagor,
the option, either to recover the
transferor or assignor, at least 10
property he has given in exchange
days before the sale, transfer,
with damages or only claim an
mortgage, assignment to make a full
indemnity for damages.
detailed inventory showing the
As to matters not provided for by the quantity and the cost of price of
provisions on barter, the provisions goods, and to notify every creditor
on sales will apply suppletorily of the price terms and conditions of
the sale, etc. (Section 5)
BULK SALES LAW (Act No. 3952)
When Sale or Transfer in Bulk: Effects of False Statements in the
Any sale, transfer, mortgage, or Schedule of Creditors:
assignment: 1. Without knowledge of buyer
1. Of a stock of goods, wares, If the statement is fair upon its
merchandise, provisions, or face and the buyer has no
materials otherwise than in the knowledge of its incorrectness
ordinary course of trade and the and nothing to put him on
regular prosecution of business; or inquiry about it, he will be
2. Of all or substantially all, of the protected in its purchase
business or trade; or The remedy of the creditor is not
3. Of all or substantially all, of the against the goods but to
fixtures and equipment used in the prosecute the seller criminally
business of the vendor, mortgagor, 2. With knowledge or imputed
transferor or assignor (section 2) knowledge of buyer
The vendee accepts it at his
When sale or transfer in bulk not peril
covered by Bulk Sales Law: The sale is valid only as between
1. If the sale or transfer is in the the vendor and the vendee but
ordinary course of trade and the void against the creditors
regular prosecution of business of
the vendor;
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 140
MEMORY AID IN CIVIL LAW
3. With names of certain creditors Acts Punished by Bulk Sales Law:
without notice are omitted from 1. Knowingly or wilfully making or
the list delivering a statement required by
The sale is void as to such the Act which does not include the
creditors, whether the omission names of all the creditors of the
was fraudulent or not, vendor, etc. with the correct
4. With respect to an innocent amount due or to become due or
purchaser for a value from the which contains any false or untrue
original purchaser statement; and
An innocent purchaser for value 2. Transferring title to any stock of
from the original purchaser is goods, wares, merchandise,
protected provisions or materials sold in bulk
However if the circumstances without consideration or for nominal
are such as to bind the consideration (Section 7)
subsequent purchaser with
constructive notice that the sale RETAIL TRADE LIBERALIZATION ACT
to the vendor (original (RA 8762)
purchaser) was fraudulent, the
property will be liable in his Retail Trade
hands to creditors of the original Any act occupation or calling of
vendor habitually selling direct to the
Effect of violation of law on Transfer: general public merchandise,
1. As between the parties commodities or goods for
The Bulk Sales Law does not in consumption, but the restrictions of
any way affect the validity of this law shall not apply to the
the transfer as between the following:
intermediate parties thereto 1. Sales by manufacturer, processor,
A sale not in compliance with laborer, or worker, to the general
the Bulk Sales Law is valid public the products manufactured,
against all persons other than processed produced by him if his
the creditors. capital does not exceed P100,000;
2. As against creditors 2. Sales by a farmer or agriculturalist
A purchaser in violation of the selling the products of his farm
law acquires no right in the 3. Sales in restaurant operations by a
property purchased as against hotel owner or inn-keeper
the creditors of the seller irrespective of the amount of
His status is that of a trustee or capital; provided that the restaurant
receiver for the benefit of the is incidental to the hotel business;
creditors of the seller; as such, and
he is responsible for the 4. Sales which are limited only to
disposition of the property products manufactured, processed or
assembled by a manufacturer
Remedies Available to creditors: through a single outlet, irrespective
The proper remedy is one against the of capitalization
goods to subject them to the
payment of the debt, such as High-End or Luxury Goods
execution, attachment, Goods which are not necessary for
garnishment, or by a proceeding in life maintenance and whose demand
equity is generated in large part by the
An ordinary action against the higher income groups
purchaser to obtain money Shall include but not limited to:
judgement will not lie, unless the jewelry, branded or designer
purchaser has sold or otherwise clothing and footwear, wearing
disposed of, or dealt with the apparel, leisure and sporting goods,
property, so as to become personally electronics and other personal
liable to creditors for value of it. effects
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 141
MEMORY AID IN CIVIL LAW
NOTE: A natural-born citizen of the NOTES:
Philippines who has lost his citizenship Foreign investor shall be required to
but who resides in the Philippines shall maintain in the Philippines the FULL
be granted the same rights as Filipino amount of the prescribed minimum
citizens capital, UNLESS the foreign investor
has notified the SEC and the DTI of
Foreign Equity Participation: its intention to repatriate its capital
Foreign-owned partnerships, and cease operations in the
associations and corporations formed Philippines
and organized under the laws of the Failure to maintain the full amount
Philippines may, upon registration of the prescribed minimum capital
with SEC and DTI, or in case of prior to notification of the SEC and
Foreign-owned single proprietorship the DTI shall subject the foreign
with the DTI, engage or invest in investors to penalties or restrictions
retail trade business, subject to the on any future trading
following categories: activities/business in the Philippines
1. Category A:
Paid-up capital of the equivalent NOTE: Foreign Investors Acquiring
in Philippine Peso of: < Shares of Stock of existing retail stores
$2,500,000 US Dollars whether or not publicly listed whose net
Reserved exclusively for Filipino worth is in excess of the Peso equivalent
citizens and corporations wholly of US $2,500,000 may purchase only up
owned by citizens to the maximum of 60% of the equity
2. Category B: thereof within the first 2 years, and
Minimum paid-up capital of the thereafter, they may acquire the
equivalent in Philippine Peso of remaining percentage consistent with
$2,500,000 US Dollars, but the allowable foreign participation as
<$7,500,000 herein provided
May be wholly owned by
foreigners except for the first NOTE: All retail Trade enterprises under
two years after the effectivity of categories B and C in which foreign
this Act wherein foreign ownership exceeds 80% of equity shall
participation shall be limited to offer a minimum of 30% of their equity
not > 60% of total equity. to the public through any stock
3. Category C: exchange in the Philippines within 8
years from the start of the operations
Paid-up capital of the equivalent
in Philippine Peso of:
Qualification of Foreign Retailers
$7,500,000 US Dollars or more
1. Minimum of $200,000,000 US Dollars
May be wholly owned by net worth in its parent corporation
foreigners for Categories B and C and
NOTE: In no case shall the $50,000,000 net worth in its parent
investments for establishing a corporation for Categories D
store in Categories B and C be 2. 5 retailing branches or franchises in
less than the equivalent in operation anywhere around the
Philippine Peso of: US $830,000 world unless such retailer has at
4. Category D: least 1 store capitalized at a
Enterprises specializing in high- minimum of $25,000,000 US Dollars
end or luxury products with paid- 3. 5-year track record in retailing; and
up capital of the equivalent in 4. Only nationals from, or juridical
Philippine Peso of: $250,000 US entities formed or incorporated in
Dollars per store Countries which allow to engage in
May be wholly owned by retail trade in the Philippines
foreigners
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 142
MEMORY AID IN CIVIL LAW
PD 957 (SUBDIVISION AND condominium unit in the registered
CONDOMINIUM BUYERS’ PROTECTIVE project unless he shall have first
DECREE obtained a license to sell the project
within two weeks from the
Registration of Projects registration of such project.
The registered owner of a parcel of
land who wishes to convert the same Exempt transactions
into a subdivision project shall A license to sell and performance
submit his subdivision plan to the bond shall not be required in any of
HOUSING AND LAND-USE the following transactions:
REGULATORY BOARD, which shall act 1. Sale of a subdivision lot resulting
upon and approve the same, upon a from the partition of land among co-
finding that the plan complies with owners and co-heirs.
the Subdivision Standards' and 2. Sale or transfer of a subdivision lot
Regulations enforceable at the time by the original purchaser thereof and
the plan is submitted. The same any subsequent sale of the same lot.
procedure shall be followed in the 3. Sale of a subdivision lot or a
case of a plan for a condominium condominium unit by or for the
project except that, in addition, said account of a mortgagee in the
Authority shall act upon and approve ordinary course of business when
the plan with respect to the building necessary to liquidate a bona fide
or buildings included in the debt.
condominium project in accordance
with the National Building Code Grounds for Revocation of registration
(R.A. No. 6541). certificate and license to sell of owners
The subdivision plan, as so approved, or dealers
shall then be submitted to the 1. Is insolvent; or
Director of Lands for approval in 2. Has violated any of the provisions of
accordance with the procedure this Decree or any applicable rule or
prescribed in Section 44 of the Land regulation of the Authority, or any
Registration Act (Act No. 496, as undertaking of his/its performance
amended by R.A. No. 440): Provided, bond; or
that it case of complex subdivision 3. Has been or is engaged or is about to
plans, court approval shall no longer engage in fraudulent transactions; or
be required. The condominium plan 4. Has made any misrepresentation in
as likewise so approved, shall be any prospectus, brochure, circular or
submitted to the Register of Deeds other literature about the
of the province or city in which the subdivision project or condominium
property lies and the same shall be project that has been distributed to
acted upon subject to the conditions prospective buyers; or
and in accordance with the 5. Is of bad business repute; or
procedure prescribed in Section 4 of 6. Does not conduct his business in
the Condominium Act (R.A. No. accordance with law or sound
4726). business principles.
National Housing authority (now
Housing and Land Use Regulatory LEASE
Board) has the exclusive jurisdiction
to regulate the real estate trade and LEASE
business. consensual, bilateral, onerous, and
commutative contract by virtue of
License to sell which one person binds himself to
Such owner or dealer to whom has grant temporarily the use of the
been issued a registration certificate thing or to render some service to
shall not, however, be authorized to another who undertakes to pay some
sell any subdivision lot or rent.
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 143
MEMORY AID IN CIVIL LAW
Kinds of Leases (From the view point of NOTES:
the subject matter When a student boards and lodges in
1. Lease of things a dormitory, there is no contract of
2. Lease of service lease. The contract is not
3. Lease of work designated specifically in the Civil
Code. It is an innominate contract.
NOTE: Since lease is consensual and is It is however, believed that the
not imposed by law, only the lessor has contract can be denominated as the
the right to fix the rents. However, the contract of board and lodging.
increasing of the rent is not an absolute There is a contract of lease when the
right on the part of the lessor. use and enjoyment of a safety
deposit box in a bank is given for a
Characteristics or Requisites for Lease price certain. This is certainly not a
of Things contract of deposit.
1. Consensual A lease of personal property with
2. Principal option to buy (at a nominal amount)
3. Nominate at the end of the lease can be
4. Purpose is to allow enjoyment or considered a sale.
use of a thing (the person to
enjoy is the lessee; the person
LEASE SALES
allowing the enjoyment by 1. only use or 1. ownership is
another is the lessor enjoyment is transferred
5. Subject matter must be within transferred
the commerce of man 2. transfer is 2. transfer is
6. Purpose to which the thing will temporary permanent
be devoted should not be 3. lessor need not 3. seller must be
immoral be the owner the owner at the
7. Onerous (there must rent or time the property
price certain) is delivered
8. Period is Temporary (not 4. the price of the 4. usually, the
object, selling price is
perpetual, hence, the longest
distinguished from mentioned
period is 99 years) the rent, is usually
9. Period is either definite or not mentioned
indefinite
If no term is fixed, we Lease of Lease of Services
should apply Art.1682 (for rural
Things
leases) and Art. 1687 (for urban
1. object of 1. object is some
leases) contract is a work or service
If the term is fixed but thing
indefinite, the court will fix the 2. lessor has to 2. lessor has to
term under the law of deliver the thing perform some work
obligations and contracts leased or service
10. Lessor need not be the owner 3. in case of 3. in case of
breach, there breach, no action
NOTE: A usufructuary may thus can be an action for specific
lease the premises in favor of a for specific performance
performance
stranger, such lease to end at the
time that the usufruct itself ends
Lease of Contract for a
Rent Services Piece of Work
(locatio (locatio operas)
The compensation either in operatum)
money, provisions, chattels, or 1. the 1. the important
labor, received by the lessor important object object is the work
from the lessee. is the labor done
performed by the
lessor
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 144
MEMORY AID IN CIVIL LAW
2. the result is 2. the result is * Lease may be made orally, but if the
generally not generally lease of Real Property is for more than 1
important, important; year, it must be in writing under the
hence the generally, the price Statue of Frauds.
laborer is is not payable until
entitled to be the work is
paid even if completed, and Persons Disqualified to be Lessees
there is said price cannot be Because Disqualified to Buy
destruction of lawfully demanded 1. A husband and a wife cannot lease to
the work through if the work is each other their separate properties
fortuitous event destroyed before it except:
is finished and
a. if separation of property was
accepted
agreed upon
b. if there has been judicial
separation of property
Persons referred to in Art. 1491 are
Lease of Agency
Services
disqualified because of fiduciary
It is based on It is based on relationships
employment – representation –
the lessor of agent represents his SUBLEASE
services does not principal and enters A separate and distinct contract of
represent his into juridical acts. lease wherein the original lessee
employer nor becomes a sublessor to a sublessee.
does he execute
juridical acts.
Allowed unless expressly prohibited.
Principal Preparatory The sublessee is subsidiarily liable
contract contract for any rent due. The lessor has an
accion directa against the sublessee
Rule for Lease of Consumable Goods for unpaid rentals and improper use
GENERAL RULE: Consumable goods of the object.
cannot be the subject matter of a
contract of lease of things. SUBLEASE ASSIGNMENT OF
Why? To use or enjoy hem, they will LEASE
have to be consumed. This cannot be 1. there are two 1. there is only one
done by a lease since ownership over leases and two juridical
them is not transferred to him by the distinct juridical relationship, that of
relationships the lessor and the
contract of lease.
although assignee, who is
EXCEPTIONS: immediately converted into a
a. If they are merely exhibited connected and lessee
b. If they are accessory to an related to each
industrial establishment other
2. the 2. the personality of
RECORDING OF LEASE OF PERSONAL personality of the lessee
PROPERTY the lessee does disappears
GENERAL RULE: Lease of real property not disappear
is personal right 3.the lessee does 3. the lessee
not transmit transmits absolutely
EXCEPTIONS: Lease partakes of the
absolutely his his rights to the
nature of real right if: rights and assignee
a. Lease of real property is more obligations to the
than 1 year sublessee
b. Lease of real property is 4. the sublessee, 4. the assignee has
registered regardless of duration generally, does a direct action
not have any against the lessor
NOTE: Lease of personal property direct action
cannot be registered. To be binding against the lessor
against third persons, the parties must
execute a public instrument.
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 145
MEMORY AID IN CIVIL LAW
RIGHTS OF LESSOR IF SUBLEASE 2. Partial destruction
PROHIBITED BUT ENTERED INTO BY a. Proportional reduction of the
LESSEE: rent, or
1) Rescission and damages, or b. Rescission of the lease
2) Damages only (Contract will be When lessee may suspend payment of
allowed to remain in force) rent:
3) Ejectment 1. lessor fails to undertake necessary
repairs
Instances when sublessee is liable to 2. lessor fails to maintain the lessee in
the lessor: peaceful and adequate enjoyment of
a. All acts which refer to the use the property leased
and preservation of the thing
leased in the manner stipulated NOTE: “Suspend”- for the intervening
between the lessor and the period, the lessee does not have to pay
lessee the rent.
b. The sublessee is subsidiarily
liable to the lessor for any rent EFFECTIVITY OF THE SUSPENSION:
due from the lessee. The right begins:
NOTE: The sublessee shall not be a) In the case of repairs, from the time
responsible beyond the amount of rent he made the demand for said repairs,
due from him. and the demand went unheeded.
b) In the case of eviction, from the time
Accion Directa: direct action which the the final judgment for eviction becomes
lessor may bring against a sublessee who effective.
misuses the subleased property.
Alternative remedies of Aggrieved
OBLIGATIONS OF THE LESSOR (DnM) party (Lessor/Lessee) in case of Non-
a. Delivery of the object (cannot fulfillment of duties:
be waived) 1. Rescission and damages
b. Making of necessary repairs 2. Damages only, allowing the contract
c. Maintenance in peaceful and to remain in force – Specific
adequate possession Performance
NOTE: Damages Recoverable in
OBLIGATIONS OF THE LESSEE (R2EN2U) ejectment cases are the rents or the fair
a. to pay rent rental value of the premises. The
b. to use thing leased as a diligent following cannot be successfully
father of a family, devoting it to claimed:
the use stipulated 1. Profits plaintiff could have
c. to pay expenses for the deed of earned were it not for the
lease possible entry or unlawful
d. to notify the lessor of usurpation detainer
or untoward acts 2. Material injury to the premises
e. to notify the lessor of need for 3. Actual, moral, or exemplary
repairs damages
f. to return the property leased
upon termination of the lease Immediate termination of lease under
Art. 1660 applies:
Effect of Destruction of the Thing
Leased: 1. only to dwelling place or any other
1. Total destruction by a fortuitous building intended for human
event habitation
2. even if at the time the contract was
Lease is extinguished
perfected, the lessee knew of the
dangerous condition or waived the
right to rescind on account of this
condition
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 146
MEMORY AID IN CIVIL LAW
Rules on Alteration of the Form of the discharged at any given moment, but
Lease must be fulfilled all throughout the term
The Lessor can alter provided there of the contract. (Villaruel vs. Manila
is no impairment of the use to which Motor Co.)
the thing is devoted under the terms
of the lease Duration of Lease
Alteration can also be made by the 1. Lease made for a determinate time
Lessee so long as the value of the or fixed Period
property is not substantially Lease will be for the said period
impaired and it ends on the day fixed
without need of a demand
Rules in case of Urgent Repairs
The lessee is obliged to tolerate the 2. If there is no fixed period
work although it may be very A. For Rural Lands (Article 1680)
annoying to him and although during it shall be for all time necessary
the same time he may be deprived for the gathering of fruits which
of a part of the premises the whole estate may yield in 1
1. If repairs last for more than 40 days: year, or which it may yield once
Lessee cannot act for reduction of B. For Urban Lands (Article 1687)
rent or rescission a. If rent is paid daily: lease is
2. If 40 days or more: lessee can ask from day to day
for proportionate reduction b. If rent is paid weekly: lease is
NOTE: In either case, rescission may be from week to week
availed of if the main purpose is to c. If rent is paid monthly: lease is
provide a dwelling place and the from month to month
property becomes uninhabitable. d. If rent is paid yearly: lease is
from year to year
Effects if Lessor fails to make Urgent
Repairs RULES ON EXTENSION OF THE LEASE
1. Lessee may order repairs at the PERIOD:
lessor’s cost 1) If a lease contract for a definite term
2. Lessee may sue for damages allows lessee to extend the term, there
3. Lessee may suspend the payment of is no necessity for lessee to notify lessor
the rent of his desire to so extend the term,
4. Lessee may ask for rescission, in case unless the contrary is stipulated.
of substantial damage to him 2) “May be extended” as stipulation:
lessee can extend without lessor’s
TRESPASS IN LEASE: consent but lessee must notify lessor.
1. Trespass in fact (perturbacion de 3) “May be extended for 6 years agreed
mere hecho): upon by both parties” as stipulation: This
physical enjoyment is reduced must be interpreted in favor of the
Lessor will not be held liable. lessee. Hence, ordinarily the lessee at
2. Trespass in law (perturbacion de the end of the original period may
derecho): either:
a) leave the premises; or
A third person claims legal right b) remain in possession
to enjoy the premises
4) In co-ownership, assent of all is
Lessor will be held liable needed; otherwise, it is void or
ineffective as against non-consenting co-
NOTE: While the Japanese Occupation owners.
was a fortuitous event, the lessor is still 5) Where according to the terms of the
not excused from his obligation to contract, the lease can be extended only
warrant peaceful legal possession. Lease by the written consent of the parties
is a contract that calls for prestations thereto, no right of extension can rise
both reciprocal and repetitive; and the without such written consent.
obligations of either party are not
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 147
MEMORY AID IN CIVIL LAW
Rule if Lessor Objects to the Lessee’s which are by nature foreign to the right
continued Possession: of occupancy or enjoyment inherent in a
Requisites: contract of lease – such as an option to
1. Contract has expired purchase the leased premises (Dizon vs.
2. Lessee continued enjoying the thing Magsaysay GR No. 23399, May 31,1974)
3. Lessor Objected to this enjoyment
If the three requisites are present, Perpetual Lease
the lessee shall be considered a A lease contract providing that the
possessor in bad faith lessee can stay in the premises for as
long as he wants and for as long as
IMPLIED NEW LEASE (Tacita he can pay the rentals and its
Reconducion) increases.
lease which arises if at the end of This is not permissible; it is a purely
the contract the lessee should potestative condition because it
continue enjoying the thing leased leaves the effectivity and enjoyment
for 15 days with the acquiescence of of leasehold rights to the sole and
the lessor, unless a notice to the exclusive will of the lessee
contrary had previously been given
by either party. NOTE: In Jespajo Realty vs. CA, 27
Sept. 2002, the SC upheld a lease
Requisites: contract, which provides that “the lease
a. the term of the original contract contract shall continue for an indefinite
has expired period provided that the lessee is up-to-
b. the lessor has not given the date in the payment of his monthly
lessee a notice to vacate rentals” for the contract is one with a
c. the lessee continued enjoying period subject to a resolutory condition.
the thing leased for at least 15
days with the acquiescence of PURCHASE OF THE LEASED PROPERTY
the lessor GENERAL RULE: Purchaser of thing
leased can terminate lease.
When there is no implied new EXCEPTIONS:
lease: a. lease is recorded in Registry of
1. When before or after the Property
expiration of the term, there is a b. there is stipulation in the
notice to vacate given by either contract of sale that purchaser
party. shall respect the lease
2. When there is no definite fixed c. purchaser knows the existence of
period in the original lease contract the lease
as in the case of successive d. sale is fictitious
renewals. e. sale is made with right of
repurchase
Effects: GROUNDS FOR EJECTMENT UNDER ART.
a. The period of the new lease is
1673: (ELVU)
not that stated in the original
1. Expiration of the period agreed upon
contract but the time in Articles
or the period under Arts. 1682 and
1682 and 1687.
1687;
b. Other terms of the original
2. Lack of payment of the price
contract are revived.
stipulated;
3. Violation of any of the conditions
NOTE: Terms that are revived are only
agreed upon in the contract; and
those which are germane to the
4. Unauthorized use or service by the
enjoyment of possession, but not those
lessee of the thing leased.
with respect to special agreements
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 148
MEMORY AID IN CIVIL LAW
RENTAL REFORM ACT OF 2002 NOTE:
(R.A. No. 9161) Except when the lease is for a
Effectivity: January 1, 2002. definite period, the provisions of
Coverage: Art. 1673(1) of the Civil Code (CC),
a. All residential units of NCR and other insofar as they refer to residential
highly urbanized cities, the total units, shall be suspended during the
monthly rental for each of which effectivity of R.A. 9161, but other
does not exceed P7,500; provisions of the CC and the Rules of
b. All residential units in other areas Court on lease contracts insofar as
the total monthly rental for each of they are not in conflict with the
which does not exceed P4,000 as of provisions of R.A. No. 9161 shall
1/1/02, without prejudice to pre- apply.
existing contracts. No increase in monthly rental by
more than 10% is allowed.
Grounds for judicial ejectment:
SANORE TERMINATION OF THE LEASE
1. Assignment of lease or subleasing of If made for a determinate time, it
residential units including the ceases upon the day fixed without
acceptance of boarders or the need of a demand.
bedspacers without written consent 1) By the expiration of the period
of the owner or lessor; 2) By the total loss of the thing
2. Arrears in payment of rent for a 3) By the resolution of the right of the
total of 3 months; lessor
3. Legitimate needs of the owner or 4) By the will of the purchaser or
lessor to repossess for his own use or transferee of the thing
for the use of any immediate 5) By rescission due to non-performance
member of his family as a residential of the obligation of one of the parties
unit, provided:
a. owner or immediate member not Special Provisions for Rural Lands
being owner of any other available Effect of loss due to fortuitous
residential unit within the same city event:
or municipality; 1. Ordinary fortuitous event – no
b. lease for a definite period has reduction
expired; 2. Extraordinary fortuitous event
c. lessor has given lessee formal a. if more than ½ of the fruits were
notice 3 months in advance; and lost, there shall be a reduction,
d. owner or lessor is prohibited unless there is a stipulation to
from leasing the residential unit or the contrary
allowing its use by a third person for b. if ½ or less, there shall be no
at least 1 year. reduction
4. Absolute ownership by the lessee of Lease duration: If not fixed, it shall
another dwelling unit in the same be for all time necessary for the
city or municipality which may be gathering of fruits which the whole
lawfully used as his residence estate may yield in 1 year, or which
provided lessee is with formal notice it may yield once.
3 months in advance;
5. Need of the lessor to make necessary Special Provisions for Urban Lands
repairs in the leased premises which Repairs for which urban lessor is
is the subject of an existing order of liable:
condemnation by appropriate 1. special stipulation
authorities concerned in order to 2. if none, custom of the place
make said premises safe and 3. in case of doubt, the repairs are
habitable; and chargeable against him
6. Expiration of period of the lease
contract.
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
San Beda College of Law 149
MEMORY AID IN CIVIL LAW
Lease duration:
1. If there is a fixed period, lease will be
for said period.
2. If no fixed period, apply the following
rules:
a. If rent is paid daily: day to day
b. If rent is paid weekly: week to
week
c. If rent is paid monthly: month to
month
d. If rent is paid yearly: year to
year
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza Hassiman, Dorothy Gayon
SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
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