ANGELES UNIVERSITY UNIVERSITY FOUNDATION FOUNDATION School of Law Sales and Lease st 1 Semester, AY 2017-2018 Prof. R. R. R. Dujunco I.
Nature Nature and Form of Contract
A. Definition - Art. 1458 1458 B. Characteristics 1. Nominate and Principal 2. Consensual – Art. 1475 3. Bilateral and Reciprocal – Arts. 1169 and 1191 4. Onerous 5. Commutative – Arts. 1355 and 1470 C. Essential Requisites 1. Consent 2. Subject Matter 3. Price D. Kinds E. Distinguished from other contracts 1. Contract to Sell 2. Donation – Arts. 725-726, 745-749 and 1471 3. Dacion en pago – Arts. 1245 and 1619 4. Barter – Arts. 1468, 1638 to 1641 5. Contract for a Piece of Work – Arts. 1467, 1713 to 1715 6. Agency to Buy or Sell – Art. 1466, 1868 7. Dacion en Pago – Art. 1245 8. Lease – Arts. 1484 to 1485, 1643
II.
Object of the Contract
A. Requisites of a Valid Subject Subject Matter – Arts. 1459 to 1465 1.
Must be licit – Arts. 1347, 1459, 1575, 1409
2.
Must be determinate or determinable – Arts. 1349, 1460
3.
Must be existing, future or contingent – Arts. 1347, 1348 and 1462 a. Emption rei speratae vs. emptio spei – Arts. 1461, 1462 and 1347 b. Undivided interest – Arts. 1463 -1464 c. Subject to resolutory condition – Art. 1465 d. Things in litigation – Art. 1381 and 1385
4.
Quantity of subject subject matter matter not essential for perfection – Art. 1349
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III.
The Price
A. Existence of Price, not simulated – Arts. 1318, 1469 to 1471, 1353-1355 B. Certain or ascertainable – Arts. 1469, 1472-1474, 1171 1. 2. 3. 4. 5.
By a third person – Art. 1469 By the courts – Art. 1469 By reference – Art. 1472 By reference to another thing certain Never by one party – Arts. 1473, 1182
C. Payable in money or its equivalent – Arts. 1245, 1468, 1482 D. Option money v. Earnest money – Art. 1482 E. Effect of failure – Art. 1474
IV.
Parties to a Cont ract of Sale
A. Capacity of Parties – Arts. 1489-1492, 44 and 46 B. Absolute Incapacity – Arts. 1327-1328, 1390, 1393 1397, 1399; Family Code Arts. 194, 234-237 1. Necessaries – Art. 1489, 290 C. Relative Incapacity 1. Contracts with Third Parties – Arts. 73, 96 and Family Code 2. Between Spouses – Arts. 133, 1490 and 1492 3. Applicability to Common-Law Spouses – Art. 133 4. Minors – Arts. 1327,1399,1489, 290, 399 and 1397 D. Special Disqualifications – Arts. 1491 –1492 1. Guardians, Agents and Administrators 2. Lawyers 3. Judges
V.
Formation of the Contract of Sale
A. Preparatory – Art. 1479 1. Offer – Art. 1475 a. Forms of offer – Arts. 1319, 1325, 1326 b. Forms of acceptance – Arts. 1319 c. Vices vitiating consent – Arts. 1330-1334, 1338, 1390 2.
Option Contract – Arts. 1479 , 1324 a. Meaning of Consideration b. An option to buy is not a contract of purchase and sale c. Without consideration void as option but valid as offer Page 2 of 7
d. Proper exercise of option e. There must be acceptance of option 3.
Right of First Refusal
4. Mutual Promise to Buy and Sell – Art. 1479 B. Perfection of Contract – Arts. 1305, 1475, 1319, 1325, 1326 1.
Effect of perfection – Arts. 1475, 1478, 1483, 1874
2.
Bilateral promise to buy and sell / option to buy – Arts. 1479 and 1324
3.
When deviation allowed
4.
Place of Perfection – Art. 1391
5.
Expenses of Execution and Registration – Art. 1487, 1521
6.
Special sales a. Sale by auction – Art. 1476, 1403 (d), 1326 b. Sale by sample or description – Arts. 1481 and 1565 c. Leases with option to buy – Arts. 1485-1487 d. Expropriation – Art. 1488
C. Formalities of the Contract 1. Formation of the contract – Arts. 1483, 1356, 1357, 1358, 1874 2. Statue of frauds – Arts. 1403, 1405 3. Expropriation – Art. 1488 4. Electronic Commerce Act RA 8792 Sec. 7, 8 and 11 5. Rules on Electronic Evidence 6. Rules of Court 7. Notarial Law and Rules
VI.
Risk of Loss
A. In general – Arts. 1480, 1163-1165, 1262, 147, 1263, 1189, 1493, 1494 1. 2. 3.
Loss by fault of a party – Arts. 1480, 1504. 1538, 1636 Loss by fortuitous events – Arts. 1480, 1163, 1165, 1504, 1538, 1189 Fruits or improvements – Arts. 1537
B. Effect of loss of thing sold – Arts. 1493,1494, 1504 and 1538
VII.
Rights and Obligations of the Vendor
A. Transfer ownership and title – Arts. 1477, 1478, 1495, 1585, and 599 1. Sale by person not the owner – Arts. 1459, 1505, 1462, 1434 2. Sale by one having voidable title – Art. 1506, 559 3. Estoppel – Arts. 1505, 1431, 1434 4. Judicial sales 5. Sale in Merchant’s Store, Market or Fair Page 3 of 7
B. Delivery of thing sold – Arts. 1165 1.
Manner of transfer – Arts. 1477 and 1496
2.
General obligation to deliver – Arts. 1496-1497
3.
Kind of delivery – Arts. 1497-1501 a. Real or physical b. Constructive Delivery i. Symbolic Delivery – Art. 1498 ii. Traditio Longa Manu – Arts. 1498, 1499, 1513, 1514 iii. Tradition Brevi Manu – Art. 1499 iv. Traditio Constitutom Possessorium – Art. 1500 Delivery to a Common Carrier – Arts. 1523 v. FOB, CIF, FAS vi. Effect of form of bill of lading – Art. 1503
4.
Exceptions/special cases a. b. c. d. e. f.
5.
Sale or return – Art. 1502 par. 1 Sale on approval – Art. 1502 par. 2 Upon payment of price Reservation of ownership – Art. 1503, 1478 Executory contract of sale Sale by lump sum
Accessory obligations – Arts. 1537-1543, 1163 and 1487
C. Double Sales – Art. 1544 a. b. c. d. e. f. g. h. i. j. k. l.
General Rule – Prior tempore, prior jure Requisites for Double Sale Who is purchaser in good faith Priority of registration over possession Sale of Movables – Arts. 1544 , 1497 to 1501 Sale of Immovables – Art.1 1544 par. 2 Sale by virtue of execution and attachment – Art. 1544 Meaning of “Better Right” Unregistered land – PD 1529 sec. 113 When one sale is forgery First in possession in good faith Oldest title – Art. 1544 pars. 3
D. Conditions and warranties 1.
Express – Arts. 1545-1546 a. Distinguish from condition – Arts. 1545 b. Distinguish from opinion, dealer’s talk – Art. 1546, 1340, 1341 c. Distinguish from false representation – Art. 1342
2.
Implied – Arts. 1547 and 1558 a. Seller has right to sell b. Warranty against eviction – Arts. 1548 – 1560, 1590 Page 4 of 7
c. Warranty against non-apparent servitudes – Art. 1560 d. Warranty against hidden encumbrance or defects – Arts. 1547, 1560-1561, 15661571 e. Additional warranties for consumer products – RA 7394, Art. 68 f. Warranty in sale of animals – Art. 1568, 1572-1581 g. Implied Warranty of Quality – Art. 1562 (1), 1564, 1565 h. Sale by sample or description – Art. 1574, 1562 (2), 1565, 1481 3.
VIII.
Buyer’s options in case of breach of warranty – Art. 1599
Documents of titl e – Ar ts . 1636, 1507-1522, and 1503
A. Compared with Negotiable Instruments Law B. How negotiated – Arts. 1508, 1509 C. Who many negotiate – Art. 1512-1513 D. Rights acquired by negotiation – Art. 1505 E. Rights acquired by transfer F. Implied warranties – Art. 1516-1520 G. Negotiation not impaired by fraud H. Creditors’ rights over goods covered by negotiable document I. Non-negotiable documents of title – Art. 1507, 1514 IX.
Remedies of unpaid seller – Ar ts . 1525-1536, 1514, 1519, 1520
A. Lien – Art. 1535, 1526-1529, 1503 B. Stoppage in transitu – Arts. 1530-1535, 1532(2) C. Resale – Art. 1533 D. Rescission – Art. 1534, 1385, 1596 E. Withhold delivery
X.
Rights and Obligations of the Vendee
A. Accept delivery – Arts. 1582-1589 and 1481 1. Right to examine/inspection – Arts. 1584-1589 2. Forms of acceptance 3. Remedies B. Pay price/remedies 1. 2. 3. 4. 5.
XI.
Liability for interest – Arts. 1582 Suspension of payments – Arts. 1589-1590, 1560, 1664 Sale of real property – Arts. 1592, 1560 Effect of non payment – Art. 1191 Maceda Law: Sales of Residential Realty on Installment (RA 6552)
Action s for Breach of Contract/Remedies
A. Sale of Goods – Art. 1594 1.
Remedies of the Seller a. Action for price – Art. 1595 b. Action for damages – Art. 1596 Page 5 of 7
c. Rescission – Arts. 1597, 1534 and 1591-1593 2.
Remedies of the Buyer a. Specific performance – Art. 1598-1599 b. Breach of warranty – Art. 1191-1192, 1545, 1599 c. Rescission – Art. 1599 d. Other laws
B. Sale of movables on installments – Recto Law, Arts. 1484-1486, C. Sale of immovable on installments – Arts. 1385, 1591-1592, Maceda Law 1. Subdivision and Condominium Buyer’s Protective Decree P.D. 957 2. Realty Property Buyer Protection Act R.A. 6552 D. Barter – Arts. 1638-1641
XII.
Extinguish ment of the Sale
A. Causes – Arts. 1600, 1231 B. Conventional Redemption – Art. 1601-1618, 1144, 1677 1.
Equitable Mortgage – Arts. 1602 - 1604 a. b. c. d.
Definition of Equitable Mortgage Rationale of Equitable Mortgage Badges of Equitable Mortgage Pactum Commissorium – Art. 2088
2.
Distinguish from Option to Buy – Art. 1602
3.
Period of Redemption a. When no period agree upon – Art. 1606 b. When period agreed upon c. When there is a period of non-redemption
4.
Exercise of the right to redeem – Art. 1616 a. By whom exercised – Arts. 1610 - 1613 b. From whom to redeem – Art. 1615 c. Effect of redemption – Arts. 1617, 1618 d. Effect of non-redemption – Art. 1607
C. Legal Redemption – Art. 1619-1623, 1088 1.
Period to redeem – Art. 1623
2.
Instances of legal redemption a. Co-owners – Art. 1620 b. Co-heirs – Art. 1088 c. Adjoining landowners of rural land – Art. 1621 d. Adjoining landowners of urban land – Art. 1622 e. Under Public Land Act – CA 141 sec. 118 f. Under Extrajudicial Foreclosure – Act 3175 sec. 6 g. Under Agrarian Land Reform Code – RA 6389 sec. 11-12 Page 6 of 7
h. Foreclosure and execution sales – Act. No. 3135, Rule 68 ROC, GBL Sec. 47
XIII.
Bul k Sales Law
A. B. C. D.
XIV.
Scope Coverage of Bulk Sales Compliance requirements under the law Effects of non-compliance Sec. 4,7,11
Retail Trade Lib eralizatio n Act of 2000
A. B. C. D. E.
Constitutionality Scope and definition Elements Application of Grandfather Rule on 100% Filipino ownership of corporate entity Anti-Dummy Act – CA No. 108 as amended by PD 715
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