SALES
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Contr Contrac actt of Sale Sale.. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing and the other to pay therefore a price certain in money or its equivalent. Contract of Sale Title Title over over the property property passes passes to the buyer upon upon deli delive very ry unle unless ss ther there e is a cont contra rary ry agreement NonNon-pa paym ymen entt of the the purc purcha hase se pric price e is a negative resolutory condition, meaning the sale become becomes s ineff ineffect ectiv ive e upon upon the happen happening ing of such condition After delivery of the obective, the seller loses ownership over it. !nless, the contract is set aside, he cannot recover the obect
Contract to Sell Ownership is retained by the seller whether or not there is delivery. Ownership passes to the buyer only upon full payment of the price The payment payment in full full is a positi positive ve suspens suspensiv ive e condition, meaning, if the purchase price is not paid, the obligation to deliver and to transfer ownership on the part of the seller does not become effective "hethe "hetherr there there is delive delivery ry or not, not, the seller seller retains the ownership of the obect. #f the seller, due to non-payment of the price is ousting the buye buyerr from from the the prop proper erty ty,, he $sel $selle ler% r% is not not rescinding the contract of sale but is precisely enforcing it.
Pactum Reservatii Domini Contract to Sell &onditional 'ale there is already a contract of No contract to sale only, a preparatory contract sale There is already delivery but ownership retain No delivery yet. No sale yet by seller 'pecific (erformance)*escission No specific performance)rescission+no contract yet (ayment completes the transaction (ayment will not complete transaction Phases or Stages of A contract of Sale . Preparat Preparation, ion, concepti conception on or generati generation on+t +the he period period of negoti negotiati ation on and bargai bargainin ning, g, ending ending at the moment moment of agreement of the parties . Perfection or Birth of the Contract . Consummation or death+which death +which is the fulfilment or performance of the terms a greed upon Characteristics Characteristics or Features of Contract of Sale (NBCC!P" . Nominate+#t has a specific name given by law. . Bilateral+both parties are obliged to fulfil reciprocal obligations to one another. . &onsensual+#t is perfected by mere consent /. &ommutative+The &ommutative+The thing sold is equivalent of the price paid 0. Onerous+The thing sold is conveyed in consideration of the purchase price and the purchase price is paid in consideration of the conveyance of the thing. 1. (rincipal+#ts e2istence does not depend upon the e2istence and validity of another contract #lements of Contract of Sale .3ssential 3lements+necessary 3lements+necessary for the validty of the sale. a. 4eeting of the minds of the seller and the buyer b. Obect which is certain and determinate c. (rice certain . Natural 3lements+those which are inherent in the contract and are deemed to e2ist in the contract of sale in the absence of clear contrary agreement. a. "arrant against eviction b. "arranty against hidden defects . Accidental Accidental 3lements+ 3lements+4ay 4ay or may not e2ist e2ist depending depending on the stipulations stipulations of the parties li5e conditions, conditions, payment of interest, place and time of payment. Object Must be Licit or Lawful . Lawful . There are two kinds of illicit things: a. Illicit per se—when by its nature it is heinous, immoral or wrongful b. Illicit per accidens—when it is prohibited by law When is a thing determinate? a. When it is particularly designated or physically segregated from all others of the same class. b. The thing is capable of being made determinate, at the time the contract is entered into, w/o the necessity of a new or further agreement between the parties. #mptio rei speratae$a speratae$a sale of an e2pected thing subect to the condition that the thing will come to e2istence. #f the thing did not come into e2istence, the contract is not effective and the buyer has no obligation to pay the price. (resumption is in favor of this 5ind of sale, because it is more in 5eeping with the commutative character of a sale. #mptio spei$a spei$a sale of a hope or e2pectancy. The The contracting parties intended that contract of sale to e2ist at all events, whether or not the e2pected thing will come into e2istence such that the buyer will have to pay the purchase price, such that the contract becomes aleatory in n ature.
SALES
#mptio rei speratae vs. #mptio spei #mptio rei speratae 'ale 'ale of a thi thing ng havi having ng a pot poten enti tial al e2is e2iste tenc nce e The uncertainty is with regard the quantity and quality but not with regard the e2istence of the thing The contract deals with a future thing The sale is subect to the condition that the thing should e2ist, so that if it does not, there is no contract for lac5 of an essential requisite
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#mptio spei 'ale 'ale of a mer mere e hop hope e or or e2pec e2pecta tanc ncy y The uncertainty is with regard the e2istence of the thing The contract deals with a present thing+the hope or e2pectancy The sale produces effects eventhough the thing itself does not come into e2istence, since the subect matter is the hope itself
Future Goods Goods that may be subject of a contract of sale . 6oods to be manufactured yet . 6oods to be acquired by the seller after the perfection of contract of sale . 6oods that depends upon a contingency that may or may not h appen Purchase of an Undivided hare in !ecific Mass of Fungible Goods" #ules$ . #f the aliquot part purchased from the seller is more than the whole undetermined mass after it had been weighed or measured, then the buyer becomes the owner of the entire mass. . #f the aliquot part purchased is less than the whole undetermined mass, the purchaser will become the co-owner of the whole mass in the proportion in which the number, weight or measure of what had been purchased bears to the number, weight or measure of the mass or stoc5.
Sale vs. Agenc% SA&# The buyer pays for the price of the goods)property purchased The buy buyer beco ecomes the owner of the goods)property purchased Buyer cannot return the goods)property when the sale is defective The The sel selle lerr war warra rant nts s the the goods goods)p )pro roper perty ty sold sold
The seller has full freedom to enter into any terms or conditions on the contract of sale
A'#NC The The agen agentt does does not not pay pay for for the the pric price. e. 7e merely accounts for the proceeds of the sale. The agent does not become the owner of the goods)property delivered to him for sale. The agent returns the goods)property if he was not able to sell the same The The agen agentt does does not not ma5 ma5e e any any warr warran anty ty as as long long as he acts within his authority and in the name of the principal The agent must follow the instructions of the principal
Contract for a Piece of )or*$ The article sold is specially manufactured and upon the special order of the customer. Article is not sold in the ordinary ordinary course of business. business. $'ee. &oncrete &oncrete Aggregates Aggregates vs. &TA% &TA% Contract for a piece of +or* The thing transferred is one not in e2istence and w)c never would have e2isted but for the order of the party desiring to acquire it The services dominate the contract eventhough there is a sale of goods involved
Not w)in the 'tatute of 9rauds
Contract of Sale The thing transferred is one which would have e2isted and would have been the subect of sale to some other person, even if the order had not been given The primary obective of the contract is a sale of the manufactured item8 it is a sale of goods eventhough the item is manufactured by labor furnished by the seller and upon previous order of the customer 6overnable by the 'tatute of 9rauds
Rules if Consideration is partl% one% and Partl% 'oods . :etermine the intention of the parties. . #f intention could not be determined, consider the value of the thing given; a. #f value of the thing more than value of the money, it is BA*T3* BA*T3* b. #f value of the thing less than value of the money, it is 'A<3 c. #f both values are the same, 'A<3
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one% #-change. #f local currency is e2changed for foreign currency+there is purchase and sale. #f the local currency is e2changed with other denominations of the local currency also, there is barter $'ame rule if 9oreign &urrency e2changed in the (hilippines for another foreign currency% PRC# the sum stipulated as the equivalent of the thing sold and also every incident ta5en into consideration for the fi2ing of the price, which was agreed upon by both parties.
Rules if there is no specific amount stipulated as purchase price . #t is still certain if it is determinable by ma5ing reference to another thing which is itself certain . #t is still certain if determination is entrusted to the udgment of a specified person or persons . By reference to certain fact or facts $such as in Art. /=+when the price is fi2ed is that which the thing sold would have on a definite day or a particular e2change% #ffect if / rd Person fi-ed the price General ule: #t is binding upon the parties !"ceptions: . "hen the rd person acts in bad faith . "hen the rd person disregards the specific instructions or the procedure mar5ed out by the parties #ffect +hen the price is not fi-ed 0% the / rd person designated . #f the rd person refuses or cannot fi2 the price, the contract shall become ineffective, unless the parties subsequently agree upon the price . #f the rd person is prevented from fi2ing the price by the fault of the seller or buyer, the party not in fault may obtain redress against the party in fault. #ffect of 'ross nade1uac% of Price. No effect. #-ceptions2 $meaning, sale is set aside% . #f consent is vitiated, such as >#49! $>iolence, #ntimidation, 4ista5e, 9raud, !ndue influence% . #f the parties intended a donation or some other act or contract . #f the price is so low as to be shoc5ing to the conscience #ffect of Simulated Price. 'ale is void, unless it could be shown that the parties intended a donation or some other act of liberality. Price imulated% No price to support a contract of sale, such that neither party had any intention that the amount will be paid+void Price is False% there is a real price not declared+contract is valid, but the underlying deed is subect to reformation to indicate the real price upon which the minds of the parties have met. )hen Price Cannot 0e determined, effect2 'ale is inefficacious. $/=/% #s appropriation of the thing delivered in an inefficacious contract allowed? @es, buyer must pay a reasonable price to that part delivered. $*easonable price is generally the mar5et price at the time and place fi2ed by the contract or by law for the delivery of the goods% P#RF#C3!N !F C!N3RAC3 !F SA&#. 4eeting of the minds upon the thing and price. #ffect2 (arties may reciprocally demand performance R4&#S !N A4C3!N SA&#S . 3ach lot is subect of a separate contract of sale . Auction sale is perfected when the auctioneer announces its perfection by the fall of the hammer or in other customary manner. (ending announcement; Any bidder may retract his bid Auctioneer may withdraw the goods, unless auction is w)o reserve . A right to bid may be reserved e2pressly by or on behalf of the seller, unless otherwise provided by law or stipulation /. Notice is essential for the seller or his representative to be able to bid. &y%bidders or !uffers$ persons employed by auctioneer who will bid w/o being bound but whose bids will ha#e a tendency to induce or pro#oke higher bids from interested buyers, thus misleading the latter because of the inflated bid price. $$It is the secrecy of the puffing and not the authori%ed bidding by the seller which makes it fraudulent. !P3!N C!N3RAC3. A (rivilege e2isting in one person, for which he had paid a consideration, which gives him the right to buy, certain merchandise or property from another person at anytime within the agreed period at a fi2ed price. #n case of breach of promise to buy or to sell, inured party can only see5 damages. $'ee Art. /=% 3est to Determine +hether a Contract is A contract of Sale or An !ption. "hether or not the agreement could be specifically enforced. #f such stipulation could be independently enforced from the contract, then such stipulation is an option.
SALES
#ARN#S3 !N# vs. !P3!N !N# #arnest one% #t is part of the purchase price
#t is given only when there is already a perfected sale "hen it is given, the buyer is bound to pay the balance of the agreed purchase price #f the sale does not materialiCe, the earnest money paid must be returned, unless a contrary agreement had been stipulated
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!ption one% #t is given as a distinct consideration for an option contract which gives the buyer a specific period within which to purchase the thing #t is given at a time when the sale had not yet been perfected. "hat had been perfected only is the option contract 3ven if option money is paid by the would-bebuyer he is not bound to buy the thing #f the buyer decides not to buy the thing, he cannot recover the option money he paid as consideration for the contract of option
&!SS, D#3#R!RA3!N !F 35N'
B#F!R# P#RF#C3!N. No contract to tal5 about. "ould-be-seller bears the loss. A3 35# 3# !F P#RF#C3!N !F C!N3RAC3 !F SA&#$678/ contract without any effect; it never came to e2istence. Tthere could be no contract of sale without a thing to be sold. "ould-be-seller bears the loss. AF3#R P#RF#C3!N B#F!R# D#&9#R. . /DE Applicability, correlate to; $9ungibles sold independently and for a single price covered by the law% 'rt" (()*. !#ery person obliged to gi#e something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties re2uires another standard of care 'rt" (()+" The creditor has a right to the fruits of the thing from the time the obligation to deli#er it arises. 3owe#er, he shall ac2uire no real right o#er it until the same has been deli#ered to him. 'rt" (()," When what is to be deli#ered is a determinate thing, the creditor, in addition to the right granted him by 4rticle 56, may compel the debtor to make the deli#ery. If the thing is indeterminate or generic, he may ask that the obligation be complied with at the e"pense of the debtor. If the obligor delays, or has promised to deli#er the same thing to two or more persons who do not ha#e the same interest, he shall be responsible for any fortuitous e#ent until he has effected the deli#ery 'rt" (-)-" 4n obligation which consists in the deli#ery of a determinate thing shall be e"tinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred in delay. When by law or stipulation, the obligor is liable e#en for fortuitous e#ents, the loss of the thing does not e"tinguish the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation re2uires the assumption of risk.
. 0E/ Applicability. (rinciple of *es (erit :omino. >endor bears ris5 of loss until ownership is transferred by delivery. 32ceptions; a% "here delivery of goods has been made but ownership is retained by the seller merely to secure performance of buyerFs obligation b% "here actual delivery is delayed through fault of the buyer.
Sale of 'oods B% Description where a seller sells a thing as being of a certain 5ind verbally describing them and the buyer simply relies on the sellerFs descriptions of the things, not 5nowing whether the sellerFs representations are true or not. Sale 0% Sample "here the seller warrants that the bul5 of goods being sold correspond with the sample or samples e2hibited not only in 5ind but also in quality and character. Sale 0% Description and Sample "here the seller has to satisfy the requirements in sale by description and sample. There are two-fold warranty here; $a% the goods purchased matched with the description and $b% the goods also matched in 5ind, quality and character with that of the sample or samples e2hibited to the buyer or his representative R#C3! &A) (AR3. 67:7" '!!licability$ &ales of 'ersonal 'roperty in Installments and (eases of 'ersonal 'roperty w/ )ption to *uy #emedies$ +- !"act fulfillment of the obligation, should the #endee fail to pay +- 0ancel the sale, should the #endee1s failure to pay co#er two or more installments
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+7- 8oreclose the chattel mortgage on the thing sold, if one has been constituted, should the #endee1s failure to pay co#er two or more installments. In this case, he shall ha#e no further action against the purchaser to reco#er any unpaid balance of the price. 4ny agreement to the contrary shall be #oid. The stipulation that the instalments or rents shall not be returned to the vendee or lessee shall be valid as long as it is not unconscionable. $/D1%
AR3. 67:8. 3+o ;inds of ncapacit%2 . Absolute #ncapacity- (arty cannot bind himself in any case. . *elative #ncapacity- &ertain (ersons under certain circumstances cannot buy certain property. 4inors in contract for necessaries must pay reasonable price. Necessaries$those things which are needed for sustenance, dwelling, clothing and medical attendance, in 5eeping with the financial capacity of the family of the incapacitated person. AR3. 678<. Prohi0ition against 5us0and and )ife. #-ceptions. Rationale2 PD a. To avoid Pre=udice to rd (ersons b. To prevent one spouse from unduly influencing the other. c. To avoid by indirection the violation of the prohibition against donations. )ho ma% assail illegalit%> a. &reditors prior to the sale b. 7eirs of either spouse. 3ither spouse may not assail illegality because they are parties thereto. A spouse designated as agent of the other spouse may sell the latterFs e2clusive property.
AR3. 6786. Persons Relativel% ncapacitated to Bu%. (PA'#?!" . Public Officers and employees+(roperty Of 'tate. . Agents+(roperty of (rincipal unless with consent. . 'uardian+(roperty of "ard. /. #2ecutors and administrators+3state 0. ?ustices, Gudges, (rosecuting Attorneys, &ler5s and employees of court+(roperty)*ights under litigation. 1. !thers disqualified by law. $!". $aliens who are dis2ualified to purchase pri#ate agricultural lands $an unpaid seller ha#ing a right of lien or ha#ing stopped the goods in transitu, who is prohibited from buying the goods either directly or indirectly in the resale of the same at a public or pri#ate sale w/c he may make. 4rt. 977, par.9Rationale2 9iduciary relationship Status of Sale2 >oidable $-%8 >oid $/-1% AR3. 678@. 678< and 6786 Applica0le to &egal Redemption, Compromises and Renunciations. AR3. 678/. &oss of !0=ect Before Sale. Complete and Partial &oss. Partial &oss Rules2 . >endee may withdraw from the contract . :emand the remaining part, paying its price in proportion to the total sum agreed upon AR3. 6787. &ossSu0stantial Deterioration of Specific 'oods +ithout sellers *no+ledge. . Buyer may avoid the sale or . 4ay treat sale as valid w) respect to the e2isting goods AR3. 678. !0ligations of 9endor. (3D)P" . 3ransfer Ownership $not waivable% . Deliver $not waivable% . )arrant Obect $waivable and may be modified% /. Preserve Thing from perfection to delivery $Art. 1% 0. Pay for the e2ecution and registration of the sale unless there is a contrary agreement 32ecution sales do not require the delivery of thing since a o ne year period of redemption is available to seller. AR3. 678. Deliver% 3ransfers !+nership. AR3. 678E. Control and Possession necessar% in Deliver%. #-ception2 Art. /=D. 'tipulation as to full payment of price. Deliver% a mode of acquiring ownership as a consequence of a contract of sale by virtue of which actually or constructively the obect is placed in the control and possession of the vendee.
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;NDS !F D#&9#R . Actual or *eal. $/=% .
*evesting of ownership in the owner
*is5 of loss or deterioration
Sale on Approval 'ubect to suspensive condition #t depends upon the suitability, quality or character of the goods Ownership immediately Ownership does not passes to the buyer on immediately pass to the buyer. delivery #t passes only upon approval or satisfaction of the buyer duly manifested after trial Ownership is revested in the There is no revesting of seller if the buyer so decides ownership because it is retained by the seller until the sale becomes absolute The ris5 rests on the buyer The ris5 remains in the seller before the revestment of while the goods are on trial ownership
Art. 6
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#FF#C3 !F B4#RS !B3ANN' P!SS#SS!N !F B&& !F &ADN' )35!43 5!N!RN' 35# DRAF3. #f the BO< provides that the goods are deliverable to the buyer or to the order of the buyer or is indorsed in 0lan* or is indorsed to the 0u%er 0% the consignee named therein, a purchaser in 'F for value of the BO< or goods from the buyer will o0tain the o+nership in the goods although the BO3 has not been honored. ;inds of Deliver% to the Carrier . C..F. (Cost, nsurance, Freight" +signify that the price fi2ed covers not only the costs of the goods, but the e2pense of the freight and the insurance to be paid by the seller . F.!.B. (Free on Board"$goods are to be delivered free of e2pense to the buyer to the point where they are 9.O.B. The point of 9.O.B. $either at point of shipment or the point of destination% determines when the ownership passes. CF and F!B merely ma5e rules of presumption. . C.!.D. (Collect on Deliver%" +the carrier acts for the seller in collecting the purchase price, which the buyer must pay to obtain possession of the goods. AR3. 6<. SA&# B A P#RS!N N!3 35# !)N#R)35!43 A435!R3 !F !)N#R. 'eneral Rule; Buyer acquires no better title to the goods than the seller had. #-ceptions2 S!&9A . "here the sale is sanctioned by statutory or udicial authority. $'ee Art. 00% . "here the owner of the goods is by his conduct, precluded from denying the sellerFs authority to sell. . "here the law enables the owner to dispose of the goods as if he were the true owner thereof. 9actorFs Acts $Agency%8 *ecording
Some Forms of Documents of 3itle . &ill of Lading - #t is a contract or receipt for the transport of goods and their delivery to the person named therein, to order or to bearer. #t usually involves three persons; the carrier, the shipper and the consignee. . .oc1 Warrant it is an instrument gi#en by dock owners to an importer of goods warehoused on the dock as a recognition of the importers title to the said goods, upon production of the bill of lading. 7. 2uedan% a warehouse receipt for commodities or goods such as sugar, tobacco, rice or hemp ;. Warehouse #ecei!t0 4 receipt wherein it is stated that certain goods were recei#ed by the bailee to be deli#ered to the bearer or to the order of any person named in such receipt or to a specified person 9. Letter of 3redit0it is nothing more than a commitment by the issuer that the party in whose fa#or it is issued and who can collect upon it will ha#e his credit against the applicant of the letter duly paid in the amount therein specified. Classes of Documents of 3itle2 . Negotiable- those by the terms of which the bailee underta5es to deliver the goods to the bearer and those by the terms of which the bailee underta5es to deliver the goods to the order of a specified person. . Non Negotiable- those by the terms of which the goods covered are deliverable to a specified person. AR3. 6<:. N#'!3A3!N !F N#'!3AB&# D!C4#N3 B D#&9#R. . "here by the terms the carrier, warehouseman or other bailee underta5es to deliver the goods to the bearer. . "here by the terms the carrier, warehouseman or other bailee underta5es to deliver the goods to a specified person and such person or subsequent indorsee has indorsed it in blan5 or to bearer. "here negotiable document of title the goods are deliverable to bearer or where a negotiable document of title has been indorsed in blan5 or to bearer, any holder may indorse the same to himself or to any specified person, and in such case the document shall thereafter be negotiated only by the indorsement of such indorsee. AR3. 6<8. N#'!3A3!N !F N#'!3AB&# D!C4#N3 B ND!RS##N3.
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#ndorsement is made by the person to whose the goods are deliverable. #t may be in blan5, to bearer or to a specified person. AR3. 66<. N#'!3AB&# D!C4#N3S !F 33&# AR;#D GN!NN#'!3AB&#H -No effect on negotiability. The obligations of carrier,warehouseman, or bailee not limited. AR3. 666. 3RANSF#R !F N!NN#'!3AB&# D!C4#N3. -Though non-negotiable may be transferred but transferee acquires rights under 0/. 3ven if document indorsed transferee has no additional rights. AR3. 66@. P#RS!NS )5! A N#'!3A3# A D!C4#N3. . By the owner thereof . By any person to whom possession or custody has been entrusted by the owner, if bailee underta5es to deliver the goods to the order of the possessor of the document O* document is in such form that it may be negotiated by delivery at the time it is entrusted. AR3. 66/. R'53 !F P#RS!N 3! )5! D!C4#N3 5AS B##N N#'!3A3#D. . The title of the person negotiating the document over the goods covered by the document. . The title of the person$depositor or owner% to whose order by the terms of the document the goods were to be delivered. . The direct obligation of the bailee $warehouseman or carrier% to hold possession of the goods for him, as if the bailee had contracted with him. AR3. 667. R'53S !F P#RS!N 3! )5! D!C4#N3 5AS B##N 3RANSF#RR#D. Applicability; $a% Transferee of Negotia0le document of title not duly negotiated $b%transferee of a nonnegotia0le document. Rights ac1uired2 . Title to the goods as against the transferor. . The right to notify the b ailee of the transfer thereof. . The right, thereafter to acquire the obligation of the bailee to hold the goods for him. *ights not absolute. They are subect to the terms of any agreement with the transferor. Before Notification the bailee is not bound to the transferee whose right may be defeated by a levy of an attachment or e2ecution upon the goods by the creditor of the transferor or by a notification to such bailee of the subsequent sale of the goods. AR3. 66. 3RANSF#R !F !RD#R D!C4#N3 )35!43 ND!RS##N3. #ights of transferee$ . The right to the goods as against the transferor. . The right to compel the transferor to indorse the indorsement. Ascertain the intention if contrary appears as to necessity of negotiation. AR3. 66. )ARRAN3#S !N SA&# !F D!C4#N3S B 35# 3RANSF#R!R. (indorsement deliver%" ('R3" . That the document is 'enuine . That he has legal Right to negotiate or transfer it. . The he has no 5nowledge of fact which would mpair the validity or worth of the document. /. That he has the right to transfer the 3itle to the goods and goods are merchantable or fit for a particular purpose. AR3. 66E. ND!RS#R N!3 '4ARAN3!R . T73*39O*3 NOT <#AB<3 9O* BA#<33F' 9A##O!' #N:O*'3*'. AR3. 66:. )5#N N#'!3A3!N N!3 PAR#D B FRA4D, S3A;#, D4R#SS, &!SS, 35#F3, !R C!N9#RS!N. !R 35#R# )AS BR#AC5 !F D43 !F 3RANSF#R!R. --#f the transferee paid value, without notice of such factors, therefore in 6ood 9aith AR3. 668. A33AC5#N3 !R 4P!N '!!DS C!9#R#D B A N#'!3AB&# D!C4#N3 N!3 A&&!)#D, )5&# N P!SS#SS!N !F BA&## 4N&#SS D!C4#N3 B# FRS3 S4RR#ND#R#D !R 3S N#'!3A3!N PR!5B3#D B 35# C!4R3. AR3. 6@<. CR#D3!RS R##D#S !N PR!5B3!N !N A33AC5#N3 . #nunction or T*O. AR3. 6@6. A. P&AC# !F D#&9#R !F '!!DS . Agreement. . !sage of trade. . 'ellerFs place of business /. 'ellerFs residence. 0. 'pecific 6oods; (lace where goods are at the time of contract 5nown to parties. B. 3# !F D#&9#R !F '!!DS . Agreement.
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. No time fi2ed, within a reasonable time. C. D#&9#R !F '!!DS A3 35# P!SS#SS!N !F 35RD P#RS!NS. I 'eller is relieved if rd person ac5nowledges to be the bailee of the buyer. D. Demand or tender of deliver% effective if made at a reasona0le hour. #. Seller 0ears the e-penses incidental to putting goods in delivera0le state. AR3. 6@@ A. D#&9#R !F '!!DS &#SS 35AN 35# 4AN33 C!N3RAC3#D. . Buyer may reect. . Buyer may accept by paying; a. price at the contract rate if he 5new that no more were to be delivered b. fair value $reasonable mar5et value% of the goods if he did not 5now that the seller is going to be guilty of breach of contract. B. D#&9#R !F '!!DS !R# 35AN 4AN33 C!N3RAC3#D . Accept and reect e2cess. . Accept all-
AR3. 6@. R##D#S !F AN 4NPAD S#&&#R. K&S RR)L . A lien on the goods or right to retain them for the price while he is in possession of them8 . *ight of stopping the goods in transitu after he has parted with the possession of them8 . *ight of Resale /. *ight to Rescind 0. *ight of +ithholding the delivery when ownership has not yet passed to buyer. AR3. 6@E. )5#N 4NPAD S#&&#RS P!SS#SS!R &#N A B# #J#RCS#D. KS#L . 'ales without stipulation as to credit. . 32piration of term of credit. . #nsolvency of the buyer. AR3. 6@:. &#N !N 35# R#AND#R )5#N 35#R#S PAR3 D#&9#R, 4N&#SS N3#N3 3! )A9# 35# &#N !R R'53 !F R#3#N3!N. AR3. 6@8. )5#N 4NPAD S#&&#R &!S#S P!SS#SS!R &#N. KDP)L . Deliver% to agent or bailee of buyer. . Possession by buyer or his agent. . )aiver of lien. MMM "hen unpaid seller becomes udgment creditor he does not lose his lien.
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AR3. 6/<. R#4S3#S F!R 35# #J#RCS# !F R'53 !F S3!PPA'# N 3RANS34 . The seller must be unpaid $00% . The buyer must be insolvent . The goods must be in transit $0% /. The seller must either actually ta5e possession of the goods sold or give notice of his claim to the carrier. $0.% 0. The seller must surrender the negotiable document of title, if any, issued by the carrier or bailee. $0.% 1. The seller must bear the e2penses of delivery of the goods after the e2ercise of the right. AR3. 6/6. )hen 'oods are in transit . after the delivery to a carrier or other bailee and before the buyer or his agent ta5es delivery of them . if the goods are reected by the buyer, and the carrier or other bailee continues in possession of them. )hen 'oods No longer in 3ransit (after deliver% to 0u%eragent" . if the buyer or his agent obtains possession of the goods at a point before the destination originally fi2ed. . if the carrier or bailee ac5nowledges to hold the goods on behalf of the buyer . if the carrier or bailee wrongfully refuses to deliver the goods to the buyer. 6oods delivered to a ship, freight, train, truc5 or airplane chartered by the buyer+circumstantial whether they are in possession of the carrier or as agent of the buyer. (art of :elivery made to buyer o r agent+remainder may be stopped in transitu, unless there is showing an agreement with buyer to give up possession of the whole of goods. AR3. 6/@. )AS !F #J#RCSN' 35# R'53 3! S3!P. . Ta5ing actual possession of the goods . giving notice of his claim to the carrier or bailee. --Notice to be effectual must be given in such time and circumstance that the principal by the e2ercise of reasonable diligence may prevent a delivery to the buyer. --*edelivery necessary according to d irections of seller. --#f goods are covered by negotiable document of title carrier or bailee has no obligation to deliver to seller unless document is cancelled. AR3. 6//. )5#N R#SA&# S A&&!)AB&# "here seller has either a right of lien or a right of stoppage in transitu and under the following cases; PRD . "here the goods are perisha0le in nature . "here the right to resell is e-pressl% reserved in case the buyer should ma5e a default . "here the buyer dela%s in the pa%ment of the price for an unreasonable time. AR3. 6/7. )5#N 35# S#&&#R A R#SCND . "here the right to rescind is e2pressly reserved in case the buyer should ma5e a d efault . "here the buyer delays in the payment of the price for an unreasonable time. AR3. 6/. #FF#C3 !F SA&# !F '!!DS S4B?#C3 3! &#N !R S3!PPA'# N 3RANS34. . Where Goods not co#ered by negotiable document of title.+'eller can give no larger right than he has. Also with a buyer who sold goods to another. . Where Goods co#ered by negotiable document of title+'ellerFs lien cannot prevail against the rights of a purchaser for value in 69 to whom the document is indorsed.
Article 6/+*ight to "ithhold delivery of thing sold by the vendor in case the vendee lose the right to ma5e use of the term, as provided in Art. D; (F9A" . "hen after the obligation has been contracted vendee becomes insolvent, unless he gives a guaranty or security for the price . "hen he does not f urnish to the vendor the guaranties or securities which he has promised . "hen by his own acts he has impaired said guaranties or securities after their establishment, and when through fortuitous event they disappear, unless he immediately gives new ones equally satisfactory /. "hen the vendee violates any underta5ing, in consideration of which the vendor agreed to the period 0. "hen the vendee attempts to abscond Article 6/E+>endor is bound to deliver the thing sold and its accessions and accessories in the condition in which they were upon the perfection of the contract. All fruits pertain to vendee from the day on which the contract was perfected. Article 6/:+
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0. #f the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the buyer 1. #f it is improved at the e2pense of the seller, he shall have no other right than that granted to the usufructuary Article 6/8+"hat delivery includes? #t includes the placing in the control of the vendee all that is stated in the contract in conformity with the following rules; a. ale OF #4'L 4/'/4 by unit of measure or number ; The vendor must deliver all that may have been stated in the contract. #f it is not possible to deliver all, the vendee may choose between;
6*3AT3* A*3A O* N!4B3* $0/E% >endee may accept the area stated in the contract and reect the e2cess O* >endee may accept the whole but must pay for the same at the contract rate No *ight of *escission since the vendee is not preudiced at all. The
Above *ules $Art. 0 and 0/E shall be applicable to udicial sales%
b. ale of #4'L 4/'/4 by lum! sum+9;-; There should be no increase or decrease of the price, although there be a greater or lesser area or number than that stated in the contract. *ule applicable to 'ale of two or more immovables for a single price. "hat if the area or number of the immovable is stated together with its boundaries? Then the vendor is bound to deliver all that is included w)in the BO!N:A*#3', although the same e2ceeds the area or number specified in the contract. The BO!N:A*#3' prevail because it contains the real and true area of the land. "hat if the vendor cannot deliver all that is included w)in the designated boundaries? >endee has the option to; a. *educe the price in proportion to the deficiency in the area O* b. *escind the contract for breach of stipulations. PR#SCRP3!N !F AC3!NS for rescission or e2action of proportionate reduction of the purchase price against the vendor under Art. 0 and 0/; 'i2 4onths from the day of delivery. L0/M D!4B&# SA&# (677" 'eneral Rule2 9#*'T #N T#43, (*#O*#T@ #N *#67T Applica0ilit% of 'eneral Rule2 Only when the requisites in Article 0// are not present Re1uisites for D!4B&# SA&# to #JS3 (9!CS" . Two or more sales transactions must constitute valid sales . Two or more sales transactions must pertain to the same obect or subect matter . Two or more buyers at odds over the rightful ownership of the subect matter must each represent conflicting interests /. Two or more buyers must each have brought from the very same seller
#ules of Preference of Ownershi! Movable or Personal Pro!erty : Owner is the one who is in first possession in good faith. 7mmovable . 9irst to register in good faith . No inscription, first to possess in good faith . No inscription and no possession in good faith+(erson who presents oldest title in good faith )hat is R#'S3RA3!N> #t is any entry made in the boo5s of the *egistry, including both registration in its ordinary and strict sense, and cancellation, annotation, and even the marginal notes. #t is the entry which records solemnly and permanently the right of ownership and other real rights. CAS#S )5#R# AR3C&# 677 CANN!3 B# N9!;#D . "hen the earlier transaction is a pacto de retro sale of an unregistered land and the subsequent conveyance is a donation of the land in favor of another by the vendor a retro. The vendee a retro has the better right over the donee. The donor had nothing more to donate because of failure to repurchase the property. . "here one of the deeds of sale is a forgery. . "here one sale is absolute and the other is a pacto de retro where the period to redeem has not yet e2pired. /. "here one of the sales is subect to a suspensive condition which condition was not complied with and the other is an absolute sale. 3ven if the conditional sale was made prior to the absolute sale.
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0. "here one transaction is a sale and the other a mortgage 1. "here one claim is based on prescription and the other is on sale =. "here the subect land is not registered under (: 0 D. #n a contract to sell, there being no previous sale of the property. Article 0// applicable to :ouble :onations as provided by Art. =//.
C!ND3!NS AND )ARRAN3#S Article 67. "hat are the options of a party to a contract of sale subect to a condition, when such condition was not fulfilled by the other party? a. *efuse to proceed with the contract O* b. "aive performance of the condition and proceed with the contract "hat if the condition agreed upon is in the nature of a promise that it should happen? Then the non-fulfillment of such condition is considered a breach of warranty. Article 67. )ARRAN3. --#t is a collateral underta5ing in a sale of either real or personal property, e2press or implied, that if the p roperty sold does not possess certain incidents or qualities, the purchaser may either consider the sale void or claim damages for breach of warranty. 45!ress Warranty —any affirmation of fact or any promise by the seller relating to the thing if the natural tendency of such affirmation or promise is to induce the buyer to purchase the same and if the buyer purchases the thing relying thereon. Affirmation of the value of the thing or statement of the sellerFs opinion is not warranty, unless the seller made such affirmation or statement as an e2pert and it was relied upon by the buyer. 7m!lied Warranty —It is inherent in a contract of sale and presumed to e"ist although nothing has been mentioned about it. 7m!lied Warranties in 3ontracts of ale 8(,+9: . #mplied warranty as to the right of the seller to sell at the time when ownership has to pass. $"arranty against eviction% . #mplied warranty against hidden defects or faults o r charge or encumbrances un5nown to the buyer . #mplied warranty as to fitness and merchantability /. "arranty against encumbrances or non-apparent servitudes $01E% 3ases where im!lied warranty is not a!!licable . 'ale made by a sheriff, auctioneer, mortgagee, pledge or other person professing to sell by virtue of authority in fact or law $0/=% $The udgment debtor is responsible here for eviction% . 'ale under Ias is and where isJ+this carries no warranty as to the quality or wor5able condition of the goods and the buyer ta5es them as they are. 7owever, such condition does not include those that could not be discovered by a physical e2amination of the goods sold. . 'ale of second hand articles does not carry any warranty as to the condition, adaptation, fitness or suitability for purposes for which they have been purchased. /. 'ale of property sold at public auction for ta2 delinquency. There is no warranty on the part of the 'tate as to the title of the owner. )ARRAN3 A'ANS3 #9C3!N +The seller guarantees that he has the right to sell the thing sold and to transfer ownership to the buyer who shall not be disturbed in his legal and peaceful possession thereof. 4viction0 4 endee is deprived in whole or in part of the thing purchased . The deprivation is by virtue of a final udgment $00=% . The =udgment is based on a prior right to the sale or an act imputable to the vendor /. The vendor was summoned in the suit for eviction at the instance of the vendee $00D% 0. No +aiver of warranty by the vendee 9ailure of the vendee to appeal does not relieve vendor from responsibility L0/M 3ffect of (rescription)Adverse (ossession $00E% . (rescription consummated before sale+>endee can claim warranty against eviction $deprivation is based on right prior to sale% . (rescription consummated after sale+>endee cannot claim warranty against e viction
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#f (roperty is sold for non-payment of ta2es due and not made 5nown to the vendee before the sale, vendor is liable for eviction $00% Gudgment debtor is responsible for eviction in udicial sales unless otherwise decreed in udgment $00% Any stipulation e2empting vendor from responsibility for eviction is void if he acted in bad faith $00%
;inds of )aiver in eviction (67" I Applicable to total eviction only. . 0onsciente—the wai#er is #oluntarily made by the #endee w/o the knowledge and assumption of the risks of e#iction. +=endor shall only be liable to pay the #alue w/c the thing sold had at the time of the e#iction. Intencionada—the wai#er is made by the #endee w/ knowledge of the risk of e#iction and assumption of its conse2uences. +=endor here shall not be liableRights of 9endee in case of eviction (6" To demand to the vendor the following (9C#D" . 9alue which the thing sold had at the time of eviction, be it greater or less than the price of the sale. . ncome or fruits, if vendee was ordered to deliver them to the party who won the suit against him . Costs of the suit which caused the eviction, and those suit brought against the vendor for warranty /. #2penses of the contract, if the vendee paid them 0. Damages and interests and ornamental e2penses, if the sale was made in bad faith. *escission is not a remedy in case of Total eviction because rescission contemplates that the one demanding it is able to return whatever he has received under the contract. 'ince the vendee can no longer restore the subect-matter of the sale to the vendor, rescission cannot be carried out. Rights of Action of 9endee in case of Partial #viction (6" . 3nforce the vendorFs liability for warranty against eviction O* . :emand the rescission of the contract of sale w) obligation to return the thing w)o o ther encumbrances than those w)c it had when acquired Applicability; A part of the thing sold of such importance was lost because of eviction, that the vendee would not have bought it w)o said part. 'ame rules apply to a case where two or more things are ointly sold for a lump sum or for separate price for each, when the vendee would not have bought one w)o the other. )arrant% against encum0rances or nonapparent servitudes (6<" Re1uisites2 . #mmovable sold is encumbered with non-apparent burden or servitude not mentioned in the agreement . Nature of non-apparent servitude or burden is such that it must be presumed that the buyer would not have acquired it had he been aware thereof. Remedies of the vendee . *escission of the contract O* . #ndemnity "arranty is not applicable if non-apparent servitude is recorded in the *egistry of (roperty, unless there is an e2press warranty that the thing is free from all burdens and encumbrances. (rescription of actions for rescission of damages; " )in year from the e2ecution of contract #f what was chosen was rescission but was not filed w)in year, vendee may still sue for damages w)in one year from the discovery of burden or servitude.
)ARRAN3 A'ANS3 5DD#N D#F#C3S #e;uisites$ 8<7P'==: . :efect must be hidden. it cannot be discovered by an ordinary inspection or e2amination. . :efect must be important or grave. a% defect renders the thing sold unfit for the use for w)c it is intended8 b% diminishes its fitness for the use intended, to such an e2tent that the vendee would not have acquired if he had been aware thereof or would have given a lower price for it. . :efect must be present at the time of the e2ecution of the sale. /. Action for rescission or reduction of price must be filed w)in the prescriptive period. 0. No waiver of the warranty against h idden defects. 1. Notice by the vendee to the vendor within a reasonable time. R#D5B3!R D#F#C3S+an imperfection or defect of such nature as to engender a certain degree of importance R#D5B3!N--claim against the seller of a product in which the buyer demands a full refund or a reduction of the purchase price due to a hidden defect that prevents the product from performing the tas5 for which it was purchased.
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Art. 6@+#mplied "arranty or &ondition as to quality or fitness of goods Applicability; 6oods+all chattel personal but not things in action or money of legal tender, this includes growing fruits or crops 6. P&#D )ARRAN3 !F F3N#SS. 6eneral *ule; there is no implied warranty of fitness 32ceptions; a% Buyer e2pressly ma5es 5nown the particular purpose or by implication8 sellerFs s5ill or udgment
b% Buyer relies upon the
@. P&#D )ARRAN3 !F #RC5AN3AB&3. Applies when goods are bought by description. 4erchantability+quality and condition of goods that a reasonable man would after a full e2amination accept the same under the circumstances of the case, in the performance of his offer to buy, whether for his own use or for resale. --fitness for the general purpose for which they are sold.
There is no warranty as to fitness for particular purpose in a contract of sale of a specified article under its patent or other trade name unless there is a contrary stipulation. $01% A warranty as to quality or fitness for a particular purpose may be attached to a contract by usage or trade in place of e2ecution. $01/% 4erchantability of goods in sale by sample is implied. :efect should not be apparent on reasonable e2amination of the sample for the vendor to be liable $010% >endor is liable eventhough not aware of hidden defects, unless there is a contrary stipulation and he is in good faith $011% 3aveat >enditor —>(et the &eller *eware? >endor is liable eventhough not aware of hidden defects 3aveat 4m!tor0>(et the *uyer *eware? *equires the purchaser to be aware of the supposed title of the vendor and one who buys without chec5ing the vendorFs title ta5es all the ris5s and losses consequent to such failure.
Remedies of Bu%er (6E" . Accion *edhibitoria+action see5ing withdrawal from the contract . Accion quanti minores or estimatoria+action for proportionate reduction in the price Nature of *emedies; Alternative8 both with damages &oss of 3hing Sold due to 5idden Defects (6:" 9endor in Bad Faith Bears the loss 4ust return the price 4ust refund e2penses of the contract (ay damages
9endor in 'ood Faith :oes not bear the loss 4ust return the price with interest 4ust refund e2penses of the contract Not obliged to pay damages
&oss of 3hing Sold + 5idden defects through fortuitous event or vendees fault (68" >endee may demand price paid less value of the thing at the time of loss plus damages if vendor acted in bad f aith. "arranties against hidden defects, merchantability and fitness are applicable to udicial sales but udgment debtor is not liable for damages, because the latter is only forced to sell and therefore did not ta5e part in the conduct of the sale and determination of price which precludes possibility of bad faith $0=E% (rescription of Actions; 1 4onths from delivery of thing $0=% ?oint Sale of t+o or more animals (6E@" "here one suffers redhibitory defect this shall not affect others 32ception; #f the buyer would not have purchased the sound animals w)o the defective ones. #n such case, sale may be rescinded. (resumption of 32ception; #f a team, yo5e or pair or set is bought even if a separate price has been f i2ed for each The following rules shall be applicable to oint sale of two or more things $0=% There is no warranty against hidden defects of animals sold at fairs or at public auctions or of livestoc5 sold as condemned.$0=/% ationale: 4nimals are not bought because of their 2uality or capacity for work and in such circumstance defects are clearly known to buyer. )hen is Sale of Animals 9oid> $0=0% . "hen suffering from contagious diseases . #f use or service for which they are acquired has been stated in the contract and they are found to be unfit *emedy; :eclaration of Nullity of &ontract Redhi0itor% defect of Animals$such defect that even in case of professional inspection it is of such nature that even e2pert 5nowledge is not sufficient to discover it.$0=1%
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(rescription of *edhibitory Actions in defective animals+/E days from delivery$0==% >endor is liable if animal should die w)in days after its purchase, if cause of death e2isted at time of contract $0=D% Animal should be returned in the condition in which it was sold and delivered if sale was rescinded. >endee is answerable for any inury due to his negligence and n ot arising from redhibitory defect $0=%
Remedies of Bu%er in Sale of Animals + Redhi0itor% defect (6:<" . Accion *edhibitoria+action see5ing withdrawal from the contract . Accion quanti minores or estimatoria+action for proportionate reduction in the price 9orm of sale of large cattle shall be governed by special laws. $0D% Article 6:@. Primar% !0ligations of the 9endee; a. To accept the delivery of the thing b. To pay the purchase price simultaneously upon the delivery of the thing unless a period or term has been agreed upon. 3&3(T#ON TO '#4!
)hen right of e-amination not allo+ed> a. #f there is an e2press stipulation to the contrary b. "hen the goods are deliveres Icollect on deliveryJ, the buyer cannot e2amine the goods unless he pays first the price. 32ception; 7e need not pay the price if there is a contrary agreement or the e2amination is permitted by usage of trade at the place of delivery. Article 6:. Signs or #vidence of Acceptance 0% the 0u%er of 'oods delivered to him. (CPR" a. "hen he communicates with the seller e2pressly manifesting his acceptance thereof. b. "hen he performs an act in relation to the goods inconsistent with the ownership of the seller. 32amples; $a% continuous possession and use of goods $b% reselling the goods $c% mortgaging the goods c. "hen after the lapse of a reasonable time following the delivery, he r etains the goods w)o complaining to the seller or w)o intimating that he has reected them.
Article 6:. Acceptance of 'oods. 4ere Acceptance does not necessarily discharge the seller from liability for the breach of any promise or warranty. 7owever to ma5e the seller liable the buyer must notify the seller w)in a reasonable time about the breach of promise or warranty. 'urpose of @otice: To insulate the seller from belated claims of defects and to allow him to ma5e urgent investigation on the validity of claims. Article 6:E. #ffects of ?ustifia0le refusal to accept deliver% 0% the 0u%er . Buyer has no duty to return the goods to the seller but must notify the seller of his refusal to accept the goods. $*is5 of
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. Buyer may voluntarily constitute himself as depositary of the goods, but he will be liable for damages if he does not fulfil the duties of a depositary as required by law. $*is5 of loss is on the buyer% Article 6::. #ffect of 4n=ustifia0le Refusal to accept goods 0% the 0u%er ; Title or ownership passes to him from the time goods were placed at his disposal. 32ceptions; a. #f there is contrary agreement b. #f the seller reserves ownership as security for payment of the price L0E P 0M Article 6:8. )hen vendee is 0ound to pa% interest $period b)w date of delivery and date of payment% after delivery; a. if the parties stipulated b. if the thing sold and delivered produces fruits or income c. if the vendee is in default, from the time demand is made upon him either uidicially or e2tra-udicially. Article 68<. )hen can the vendee suspend pa%ment of the price (total or remaining"> . #f he is disturbed in his possession or ownership of the thing brought . #f he has a well-grounded fear that his possession or ownership would be disturbed by a vindicatory action or foreclosure of mortgage. (ength of suspension: "hile the danger or disturbance e2ists. Situations +here vendee cannot suspend pa%ment despite presence of distur0ance (SSS3P" . "hen the vendor has given security for the return of the price . "hen the parties have stipulated . "hen the vendor has succeeded in eliminating the danger or disturbance /. #f disturbance is mere act of trespass 0. #f vendee has fully paid the price Other causes for suspension; non-compliance by vendor of certain conditions8 warranty of eviction Article 686. mmediate rescission in sale of immova0les, if the vendor has reasonable ground to fear the loss of the immovable. >endor however has the alternative of compelling specific performance if the ground to fear loss does not e2ist.
Article 68@. #-ception to the general rule on rescission in case of sale of immova0les. General ule on escission: The court may fi2 the period of payment when there is ust cause. !"ception: &ourt is not allowed to grant a new period. Once there is a udicial demand by notarial act received by the vendee, the court may not grant him a new term. The reason is that the vendee already enoyed the advantage of paying beyond the time originally fi2ed in the contract, during the time when no demand for rescission either udicially or e2tra udicially has ta5en place. Art. 0 Not applicable in; . 'ales by instalments where parties have laid down the procedure to be followed in the event the vendee failed to fulfill his obligation . A mere promise to sell where the title remains with the vendor until full payment of the price. Article 68/. Automatic Rescission of sale of mova0les. Conditions for applica0ilit% ; . if the vendee upon the e2piration of the period fi2ed for the delivery of the thing purchased, refused to receive it w)o ustifiable cause . if he failed to pay the price unless granted a longer period w)in w)c to pay. *eason why udicial or notarial act not required; (ersonal things do not generally 5eep a stable price in the mar5et, any delay in their disposal may preudice the vendor. Actions for 0reach of contract of sale of goods Article 687. Actions availa0le to vendor when there is breach of contract of sale on the part of the vendee; (PDR" . Action for payment of the price of the goods L00M . Action for damages due to wrongful neglect and refusal to accept and pay for the goods L01M . Action for r escission if buyer has repudiated the contract or has manifested his inability to perform his obligation L0=M Actions availa0le to the vendee, in case of breach by the vendor (SDR" . Action for specific performance in case of failure of the vendor to deliver the goods L0DM . Action for damages for breach of warranty but accepting the goods L0M . Action for r escission for breach of warranty where the vendee may validly refuse acceptance of the goods, or even if the goods had already been received, he may return them L0 par. /M
Article 68. Action for collection of price, availa0le in the follo+ing cases ; (!PR"
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. "hen the ownership of the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the price according to the terms of the contract . "hen the price is payable irrespective of delivery or transfer of title, on a certain day and the buyer wrongfully neglects or refuses to pay such price. :efense of Buyer; 7e may establish the fact that the seller has at anytime before udgment, manifested his inability not to comply with the contract . "hen the goods cannot readily be r esold for a reasonable price and the buyer refuses to receive the goods when offered for delivery e2cept when 01 par. / is applicable $there is notice of stopping the contract%, with notification that the seller is holding them as bailee for the buyer Article 68. Damages for nonacceptance of goods. Measure of damages$ . As a rule; estimated loss directly and naturally resulting in the ordinary course of events from the buyerFs breach $no available mar5et% . "hen there is available mar5et; IdifferenceJ between contract price and mar5et or current price at the time when the goods ought to have been accepted or if not time has been fi2ed at the time of refusal $#f there are special circumstances establishing pro2imate damages of a different amount than the IdifferenceJ described then liability is based on the pro2imate damages% (ro2imate :amages; refer to damages other than unrealiCed profits #e!udiation of the contract or notice of sto!!ing the contract such as in the case of a sale where goods are to be manufactured" Buyer here shall be liable for the cost of; . labor performed . e2penses for materials used before receiving the notice of repudiation for stoppage . unrealiCed profits Article 68E. )hen seller ma% rescind contract in case there is no deliver% %et . "hen buyer repudiated the contract . "hen the buyer has manifested his inability to perform his ob ligations . "hen the buyer has committed a breach of the contract Notice must be given to the buyer to totally rescind the contract. Article 68:. Remed% of 0u%er in Contract to deliver specific goods ; 'pecific (erformance w)o giving the seller option to retain the goods on payment of damages. Article 688. Remedies of 0u%er + hen seller commits 0reach of +arrant%. . #ecou!ment +whereby the buyer accepts the goods but he sets up against the seller the reduction or e2tinction of the purchase price. . 'ction for damages+whereby the buyer may $a% accept the goods but w) damages or $b% refuse to accept the goods for the breach of warranty but also with damages. . #escission+whereby the buyer see5s the cancellation of the sale and as a consequence there will be restoration on both sides. MMSituations +hen 0u%er cannot choose or elect rescission (;NR" . #f he *nows of the breach of warranty when he accepted the goods w)o protest . #f he fails to notify the seller w)in a reasonable time of the election to rescind . #f he fails to r eturn or offer to return the goods to the seller in substantially the same condition as they were at the time the ownership was transferred to him.
#-tinguishment of Sales Art. 6<< Causes for #-tinguishing Sales . Ordinary &auses+causes which e2tinguish ordinary contracts such as; a. (ayment b. %3# a. The vendor r eserves the right to repurchase the thing sold b. 7e shall shoulder the e2penses of the contract and other legitimate payments made by the buyer. c. 7e shall pay the value of the necessary and useful e2penses made on the thing incurred by the buyer d. 7e shall comply with other stipulations agreed upon. e. 7e shall r eturn the price of the sale
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Characteristics of Conventional Redemption K#AR RPRL a. #t begins to e-ist at the time of the perfection of the contract. $#t becomes a mere promise to sell if stipulated upon after the sale had been consummated% b. #t is an accidental stipulation because it is a right created by the parties c. #t is reciprocal when the right to redeem is e2ercised. $both vendor and vendee has obligations with each other% d. #t gives rise to a real right when properly registered because it affects third persons. e. #t is potestative as its e2ercise depends upon the sole will of the vendor. f. #t is a resolutor% condition because when it is fulfilled, the ownership of the vendee over the thing is e2tinguished PAC3! D# R#3R! SA&# vs. !R3'A'# PAC3! D# R#3R! SA&# Ownership is consolidated in the vendee if vendor does not repurchase w)in time agreed upon No obligation on the part of the vendee to foreclose >endor has no more right to redeem after e2piration of period to redeem
!R3'A'# 9ailure of mortgagor to pay his obligations on time does not deprive him of his interest in the property 4ortgagee must foreclose if he wants to secure a perfect title 4ortgagor may redeem before foreclosure and even after, w)in one year from registration of the sale in e2tra-udicial foreclosure. #n udicial foreclosure redemption may be made before confirmation of the sale by the court. >endee may alienate property 4ortgagee cannot alienate property >endee becomes automatically the owner in 4ortgagee does not automatically become case of vendorFs failure to redeem owner, there must be foreclosure sale first >endee is entitled to reimbursement for 4ortgagee is not entitled to reimbursement for necessary and useful e2penses improvements he made Art. 6<@$Presumption of #1uita0le ortgage . (P#R3!D" . "hen the price of a sale with right to repurchase is unusually inadequate . "hen the vendor remains in possession as lessee or otherwise . "hen upon or after the e2piration of the right to repurchase another instrument e2tending the period of redemption or granting a new period is e2ecuted. /. "hen the purchaser r etains for himself a part of the purchase price 0. "hen the vendor binds himself to pay the ta2es on the thing sold. 1. #n any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. =. "hen there is doubt as to whether contract is (acto de retro or an equitable mortgage 4;uitable Mortgage—one which lacks the proper formalities, form of words or other re2uisites prescribed by law for a mortgage, but howe#er shows the intention of the contracting parties to make the property subendor may as5 for reformation of instrument in cases referred to in 1E P 1E/ Art. 6<$3ime to redeem in conventional redemption . #f there is a period agreed upon then this shall be observed, but this should not e2ceed E years . #f there is no period agreed upon, the redemption shall be e2ercised within / years from the date of contract. . #f an action +as 0rought 0% the seller claiming that the contract was an equitable mortgage but later on proven that it was (acto de retro 'ale, he is given E days from the time final udgment was rendered to repurchase. Art. 6
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Art. 6<:$3he vendor ma% e-ercise his right of redemption against ever% possessor whose right is derived from the vendee, even if the second contract does not mention of the right of redemption. Art. 6<8$9endee is su0rogated to the vendors rights and actions As owner, vendee may; a. transfer his rights to a rd person b. mortgage the property c. enoy the fruits thereof d. recover the property against every possessor e. perform other acts of o wnership Art. 66<$Creditors of the vendor must e-haust first all the other properties of vendor before they could e2ercise the right of redemption against the vendee. Art. 666$Applica0ilit%. . The vendee entered a Pacto de Retro Sale of a part of an undivided immovable. . The vendee later acquired the whole of the property. . The vendor in the I(acto de *etro 'ale of a partJ wishes to e2ercise his right of redemption over the part. #f the abovementioned are present the vendee may compel the vendor in the (acto de *etro 'ale of a part to redeem the whole property. ationale: 0oownership is not fa#ored, because the coowners are reluctant to make impro#ements on the property due to the state of instability in its ownership. Art. 66@$?oint Pacto de Retro Sale 0% Co!+ners or Co5eirs of an 4ndivided mmova0le. 3ach &o-Owner)&o-7eir can e2ercise right of redemption with respect to their share Art. 66/+#n the case referred to in Art. 1, vendee ma% demand that all the vendors or coheirs come to an agreement upon the repurchase of the whole thing, if they failed to do so vendee cannot be compelled to accept partial redemption. Art. 667$Separate Sales of Shares of Coo+ners of an undivided immova0le. 3ach vendor may e2ercise their right of redemption independently and the vendee cannot compel any of them to redeem the whole property Art. 66$f the vendee dies and propert% is left to several heirs , the action for redemption can only be brought to each of them independently with respect to their share, whether or not the property is still undivided or already partitioned. Art. 66$!0ligations of the 9endor a Retro if he desires to redeem a. *eturn to the vendee the price of the sale b. 7e shall shoulder the e2penses of the contract and other legitimate payments made by the buyer. c. 7e shall pay the value of the necessary and useful e2penses made on the thing incurred by the buyer Art. 66E$Rule in case there is no agreement on the sharing of the fruits of the propert%. . #f there are fruits at the time of the sale and the vendee p aid them, he shall be reimbursed by the vendor. . "here there are no fruits at the time of the sale but there are e2isting at the time of redemption, the vendee shall be entitled to the fruits gathered for one year rec5oned from the last anniversary of the date of the effectivity of the contract of sale. Art. 66:$3he vendor +ho recovers the thing shall receive it free from all charges or mortgages constituted by the vendee, but shall respect the lease contract constituted on the property in good faith and in accordance with the customs of the place.
&#'A& R#D#P3!N (668" --is the right to be subrogated upon the same terms and conditions stipulated in the contract, in the place of one who acquires a thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous title. Art. 1E+A co-owner of a thing may e2ercise the right of redemption when the shares of all the other coo+ners or an% of them are sold to a / rd person. #f the price of alienation is grossly e2cessive, redemptioner shall pay only a reasonable price. --#f two or more co-owners desire to e2ercise right of redemption they may only do so in proportion to their share. Art. 6@6$Redemption 0% ad=acent o+ner of rural lands . #e;uisites$ 8#'/O: . The adacent lands involved must be r ural land. . The rural land alienated and to be redeemed must not e2ceed one hectare in area . The alienation must be made in favor of a third person, not in favor of another adacent owner /. The two lands involved must not be separated by broo5s, drains, ravines, roads and other servitudes for the benefit of other estates. 0. The vendee or grantee must already be an owner of a rural land. #f he does not own any, redemption is not allowed.
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#f two or more adoining owners desire to e2ercise the right of redemption at the same time, the one with a smaller area shall be preferred. #f both have same area, the one who first requested. Art. 6@@+Applicability; Piece of 4r0an &and +hich is so small and so situated that a maor portion cannot be used for any practical purpose w)in a reasonable time, having bought merely for speculation and is about to resold. &peculation—means buying or selling with e"pectation of profiting by a rise and fall in price. *ights recogniCed by Article 1. 6. Right of Preemption+the right of an adacent owner to purchase the property before it is sold to a third person or before the proected sale to a rd person is consummated. @. Right of Redemption+the right of an adacent owner to redeem the property after the sale had been perfected and consummated. Preemption Redemption Arises before sale Arises after sale No *escission because no sale as yet e2ists There can be rescission of the original sale The action is directed against the prospective Action is directed against the buyer seller
Preference when two or more owners of adoining lands wish to e2ercise the right of redemption or pre-emption; To the owner whose intended use is best ustified. Art. 6@/$Period of &egal Preemption or Redemption. 4ust be e2ercised within E d ays from the notice in writing by the prospective vendor. The deed of sale e2ecuted by the vendor is not registered if not accompanied by an affidavit that he has given the required written notice. The right of redemption of co-owners is superior to the right of adoining owners.
nstances of &egal Redemption under the Civil Code (C54RC" . 'ale of a co-owner of his share to a stranger $1E% . 'ale of an heir of his hereditary rights to a stranger $EDD% . 'ale of adacent small urban lands bought merely for speculation $1% /. 'ale of adacent r ural land not e2ceeding one hectare $1% 0. "hen a credit or other incorporeal right in litigation is sold $1/% nstances of &egal Redemption under special la+s (35#?A" . *edemption in ta2 sales . *edemption of homesteads . A right of redemption in cases of e2tra-udicial foreclosures /. An equity of redemption in cases of =udicial foreclosures 0. *edemption by an agricultural tenant of land sold by the landowner ASS'N#N3 !F CR#D3S AND !35#R NC!RP!R#A& R'53S 'ssignment of 3redit0an agreement whereby credits, rights or actions pertaining to a person +called assignor- are transferred by him to another +called assignee- either onerously or gratuitously who ac2uires the power to enforce the same against the debtors. @ature of 4ssignment of 0redits and other incorporeal rights: 3as all the elements of a contract of sale: +- consent +)b
.istinction between 3ontract of ale and 'ssignment of 3redits Basis Contract of Sale Assignment of Credits Obect (roperty &redit, incorporeal rights or rights of action 4anner of :elivery of Obect #t need not be through public #t must be through a public instrument instrument $10% 'ubect obligated The whole world A definite third person Ownership when transferred Transfer of ownership need Ownership is transferred upon not be upon delivery of the delivery of the documents thing. The parties may agree evidencing the credit or that ownership be transferred incorporeal rights only after full payment $/=D% &onsideration #t is always a requisite #t is not always a requisite. Action may be maintained by
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the assignee based on his title even if there is no consideration. .istinction between .ation in Payment and 'ssignment of 3redits Basis Dation in Pa%ment Assignment of Credits Nature #t is an alienation of property of The alienation of credits or a debtor in satisfaction of a rights, need not be in debt in money satisfaction of debtorFs debt Obect :eterminate property &redits, incorporeal rights or rights of action 3ffect Obligation is e2tinguished Obligation is not e2tinguished &onsent of debtor is not necessary for the assignment. 7e is therefore released from the obligation if he pays the creditor before having 5nowledge of the assignment $11% 'cope of Assignment; All accessory rights, such as guaranty, mortgage, pledge or preference $1=% Art. 6@: )hat the Assignor of the Credit )arrants> (#&S" . The e2istence of the credit at the time of the assignment . The legality of the credit unless he sold the thing as IdoubtfulJ, meaning, he is not sure of the validity of his acquisition of the thing sold which fact he has disclosed to the assignee . The solvency of the debtor, if e2pressly stipulated or if the insolvency of the debtor was prior to the sale and of common 5nowledge Scope of &ia0ilit% in case of 0reach of +arrant% . #n good faith; Assignor shall pay $a% consideration of price which he received from the assignee8 $b% e2penses of the contract $c% other legitimate e2penses occasioned by the assignment . #n bad faith; 'ame liabilities as in above but with damages Art. 6@8 Duration of the &ia0ilit% of the Assignor in 'ood Faith (in case there is no agreement" . One year from the date of the assignment of the credit if the period of payment of the credit has already e2pired . One year after maturity of the credit if the period of payment has not yet e2pired Art. 6/< Sale of nheritance (5ereditar% Rights" +ithout specification of things. --'eller shall only be answerable for his character as an heir. 7e warrants the fact of his heirship in the estate of the decedent. #f it turns out that he is not an heir, then he is liable for the breach of warranty. Sale of 5ereditar% Rights$presumes the e2istence of a contract or deed of sale between the parties )aiver of 5ereditar% Rights$a mode of e2tinction of ownership, where there is intentional relinquishment of a 5nown right with 5nowledge of its e2istence and intention to relinquish it in favor of other persons who are co-heirs in the succession &umpSum Purchase of the +hole of certain rights, rents or products (6/6" >endor warrants the legitimacy of the whole of the rights, rents or products but not the various parts of which the whole is composed of. 32ception; #f the vendee is evicted from the whole or the part of the greater value $more than half% of the credits in which case warranty stays. Art. 6/@+#f vendor profited from the fruits or received anything from the inheritance sold he must restore it by paying the vendee, unless there is a contrary stipulation. Art. 6//+Charges and de0ts on the estate paid 0% the vendor must be reimbursed by the vendee, unless there is a contrary stipulation. Assignment of Credit or right in &itigation. (6/7" debtor is given the right to e2tinguish the obligation by reimbursing the assignee; (P?" a. The price paid for the credit or right b. #nterest on the said price from the time the day it was paid c. ?udicial costs incurred by the assignee "hen is credit or right in litigation? 9rom the time the complaint concerning the same is answered. (rescriptive (eriod; E days from the date the assignee demands payment from debtor
#-ceptions to the Right of #-tinguishment 0% the de0tor (6/" Assignments or sales made to; (CCP" a. A co-heir or co-owner of the right assigned b. A creditor in payment of his credit c. The possessor of a tenement or piece of land which is subect to the right in litigation assigned.
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