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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

CHAPTER 1: INTRODUCTION 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 pa! therefor a price certain mone! or its e"#ivalent$ A contract of sale ma! be absol#te or conditional$ SALES %$ Contract of sale &absol#te' real obligation obligation to give remedies available( a$ specific performance b$ rescission c$ damages )$ Contract to sell &conditional' personal obligation obligation to do remedies available( a$ resol#tion b$ damages ESSENT*AL RE+,*S*TES OF A CONTRACT OF SALE %$ consent )$ s#b-ect matter .$ price C/ARACTER*ST*CS OF CONTRACT OF SALE( %$ Nominate 0 law gave it a name )$ 1rincipal 0 can stand on its own2 #nli3e accessor! contract .$ 4ilateral 0 imposes obligation on both parties a$ obligation of seller transfer ownership 5 deliver b$ obligation of b#!er pa! for price Conse"#ence( power to rescind is implied in bilateral contracts 6$ Onero#s with val#able consideration Conse"#ence( all do#bts in constr#ing contract to be resolved in greater reciprocit! of interest 7$ Comm#tative e"#al val#e is e8changed for e"#al val#e Test( s#b-ective as long as parties in all honest! that he is receiving e"#al val#e then it complies with test 5 wo#ld not be deemed a donation2 b#t m#st not be abs#rd$ *nade"#ac! of price or aleator! character not s#fficient gro#nd to cancel contract of sale2 inade"#ac! can show vitiation of consent 5 sale ma! be ann#lled based on vice b#t not on inade"#ac! 9$ Consens#al meeting of minds ma3es a perfect contract of sale b#t needs deliver! to cons#mmate$ :$ Title 5 not a mode gives rise to an obligation to transfer2 it is deliver! w;c act#all! transfer ownership2 mode which act#all! transfer ownership$ STA<ES *N L*FE OF CONTRACT OF SALE( %$ negotiation )$ perfection b! mere consent2 performance ma! be demanded & specific performance ' .$ cons#mmation =*ST*N<,*S/E= FRO> OT/ER CONTRACTS( %$ =onation donation is grat#ito#s2 sale is onero#s donation is formal contract2 sale is consens#al donation is governed b! law on donation2 sale is governed b! law on sales

C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

)$ 4arter in barter the consideration is the giving of a thing2 in sale it is giving of mone! as pa!ment both are governed b! law on sales2 both are species of the gen#s sales if consideration consists part! in mone! 5 partl! b! thing loo3 at manifest intention2 if intention is not clear &%69? '( a$ val#e of thing is e"#al or less than amo#nt of mone! sale b$ val#e of thing is more than amo#nt of mone! barter .$ Contract for piece of wor3 test in article %69:( a$ contract for deliver! of an article which the vendor in the ordinar! co#rse of b#siness man#fact#res or proc#res for general mar3et & whether on hand or not ' sale b$ goods are to be man#fact#red speciall! for a c#stomer and #pon special order and not for the general mar3et contract for piece of wor3$ -#rispr#dence( a$ Timing test #nder art %69:2 Inchausti; whether the thing transferred wo#ld have never e8isted b#t for the order contract for piece of wor3 &abandoned' b$ /abit#alit! test en#nciated in Celestino v CIR2 contract of sale if man#fact#rer engages in activit! witho#t need to emplo! e8traordinar! s3ills and e"#ipment2 contract for piece of wor3 is sale of service2 contract of sale is sale of things$ c$ Nat#re of the ob-ect test en#nciated in EEI v CIR2 each prod#ct@s nat#re of e8ec#tion differs from the others2 prod#cts are not ordinar! prod#cts of man#fact#rer$ main factor in decision of the SC( essence of wh! parties enter into it( a$ essence is ob-ect contract of sale b$ essence is service contract for piece of wor3 6$ Agenc! to sell in sale b#!er pa!s for price of ob-ect2 in agenc! to sell agent not obliged to pa! for price merel! obliged to deliver price received from b#!er$ in sale b#!er becomes owner of thing2 in agenc!2 principal remains owner even if ob-ect delivered to him in sale seller warrants2 in agenc! agent ass#mes no ris3;liabilit! as long as within a#thorit! given in sale not #nilaterall! revocable2 in agenc! ma! be revo3ed #nilaterall! beca#se fid#ciar! 5 even w;o gro#nd in sale seller receives profit2 in agenc! agent not allowed to profit TEST( essential cla#ses of whole instr#ment & art %699 motherhood statement not good law ' Agenc! is a personal contract2 sale is real contract & to give ' rescission not available in agenc! 5. Dacion en pago dacion: contract where propert! is alienated to satisf!;e8ting#ish obligation to pa! debt in dacion: novates creditor0debtor relationship into seller0b#!er in dacion: deliver! is re"#ired & real contract ' 9$ Lease in sale( obligation to absol#tel! transfer ownership of thing2 in lease( #se of thing is for specified period onl! with obligation to ret#rn in sale( consideration is price2 in lease( consideration is rent in sale( seller needs to be owner of thing to transfer ownership2 in lease( lessor need not be owner lease with option to b!( reall! a contract of sale b#t designated as lease in name onl!2 it is a safe b! installments

C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

CHAPTER 2: PARTIES TO A CONTRACT OF SALE <ENERAL R,LE( All parties with capacit! to contract can enter into a valid contract of sale %$ Nat#ral )$ A#dicial 0 corporation;partnership;associations;Cooperatives Stat#s of contract valid Remedies available therefore are( a$ specific performance b$ rescission c$ damages EBCE1T*ON TO <ENERAL R,LE( %$ >inors stat#s of contract( voidable onl! therefor ratifiable remed! is action for ann#lment &with partial restit#tion in so far as the minor is benefited' )$ SALE 4C 5 4ETDEEN S1O,SES a$ Contract with .rd parties stat#s of contract is valid b$ Sale between parties Stat#s not provided for b! law b#t EO*= according to case law Reason( i$ prevent defra#dation of creditors ii$ avoid sit#ation where dominant spo#se ta3e advantage of others iii$ avoid circ#mvention on prohibition of donation between spo#ses E8ception i$ separation of propert! agreed &marriage settlement' ii$ -#dicial separation of propert! c$ Common Law Spo#ses &1aramo#rs' Stat#s of contract( EO*= &per case law' Rationale( evil so#ght to be avoided is present .$ OT/ERS 1ER S1EC*F*C 1ROE*S*ONS OF LAD a$ <#ardian with regards to propert! of ward d#ring period of g#ardianship b$ Agent with regards to propert! of principal c$ E8ec#tor;administrator with regards to the estate of the deceased d$ 1#blic officers with regards to the propert! of the estate e$ Officer of co#rt 5 emplo!ee with regards to propert! in litigation LE<AL STAT,S OF CONTRACT( %$ EO*= &1ER CASE LAD' g#ardian; e8ec#tor;p#blic officers ; officers of the co#rt )$ EO*=A4LE &1ER C*E*L CO=E' agent2 and if with consent EAL*= TDO <RO,1S OF 1RO/*4*TE= 1ART*ES FRO> EN<A<*N< *N CONTRACT OF SALE( %$ <#ardian ; Agent ; E8ec#tors ratifiable in the sense that onl! private wrong is involved )$ 1#blic Officials ; Officers of Co#rt not ratifiable in the sense that p#blic wrong is concerned <,AR=*AN;A<ENT;A=>*N*STRATOR %$ Legal stat#s of contract( EO*= &case law' )$ =irect or indirect .$ *f mediator no need to prove coll#sion2 in#tile 6$ Even if co#rt approved sale 7$ Reason( fid#ciar! relationship is based on tr#st

C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

ATTORNECS RE+,*S*TES( %$ Law!er0client relationship e8ists )$ S#b-ect matter propert! in litigation &all t!pes' .$ =#ration while in litigation &from filing of complaint to final -#dgment'2 ma! be f#t#re litigation Reason( d#e to p#blic polic!2 gro#nd for mal practice a$ Client is at the merc! of the law!er b$ Law is a noble profession c$ ) >asters ) interest2 one cannot serve ) masters at the same time E8ception( CONT*N<ENT FEE ARRAN<E>ENT a$ Amo#nt of legal fees is based on a val#e of propert! b$ 1ropert! itself is involved Not a sale b#t service contract * give that !o# ma! do &innominate contract' so has to be governed b! law on sales b#t beca#se of p#blic polic! considered EAL*= Reason wh! contingent fee is followed( i$ constit#tional prohibition v impairment of contract ii$ s#b-ect to control of co#rts &ma! be red#ced if #nconscionable or n#llified' iii$ canons of legal ethics iv$ higher p#blic polic! litigants CHAPTER 3: SUBJECT MATTER OF SALE TO 4E A EAL*= 5 4*N=*N< S,4AECT >ATTER T/E FOLLOD*N< >,ST CONC,R( %$ E8isting F#t#re 5 Contingent )$ Licit .$ =eterminate or determinable EB*ST*N< F,T,RE CONT*N<ENT Refers to s#b-ect matter that are e8isting 5 not e8isting b#t capable of e8istence &p#rs#ant to present technolog!' %$ if this is present stat#s of contract( EAL*= )$ if absent ( NO CONTRACT S*T,AT*ON T/EREFORE NO CA,SE OF ACT*ON .$ if mere pipe dream ( EO*= a$ SALE OF T/*N<S /AE*N< 1OTENT*AL EB*STENCE &Emptio Rei Speratae' Sale of f#t#re things2 no ph!sical e8istence !et A resol#tor! condition that thing will come into e8istence Non happening of condition( RES,L,TORC( EBT*N<,*S/ T/E CONTRACT Remed!( can recover what has been paid b$ SALE OF /O1E &Emptio Spei' Ever! sale of f#t#re thing is s#b-ect to condition that the! will come into e8istence *f hope does not come tr#e NO RECOEERC OF 1AC>ENT;NO RESC*SS*ON Aleator! character b#t valid L*C*T 5 EEN=OR >,ST /AEE A R*</T TO TRANSFER S,4AECT >ATTER %$ L*C*T m#st be within the commerce of men EO*= S,4AECT >ATTER( a$ Contrar! to law b$ Sim#lated;fictitio#s c$ =id not e8ist at a time of transaction d$ O#tside commerce of men e$ *mpossible service f$ *ntention can not be ascertained g$ 4! provision of law

C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

)$ SELLER >,ST 4E ODNER onl! at a time of cons#mmation since tradition transfers ownership b#t to have a perfected contract of sale Eendor need not be owner of thing2 can be validated;ratified b! s#bse"#ent ac"#isition of title b! seller =ETER>*NATE 5 =ETER>*NA4LE Absence( EO*=2 there is s#b-ect matter b#t *ntention regarding s#b-ect matter can not be ascertained EO*= Finds of s#b-ect matter( %$ Specific 0 =eterminate 1artic#larl! designated or segregated from all others of the same class )$ <eneric 0 =eterminable Test( reach a point of description where both minds conc#r At the time the contract is entered in to the thing is capable of being made determinate witho#t the necessit! of a new or f#rther agreement between parties E8act "#antit! not essential Sale of generic things EAL*=2 still e8ec#tor! There can onl! be contract of sale when s#b-ect is finall! chosen for deliver! alread! segregated or designated2 b#t before designation valid F of sale alread! e8ists .$ ,ndivided interest &4,CER becomes co0owner' 6$ ,ndivided share in mass of f#ngible goods &4,CER becomes co0owner' CHARTER 4: PRICE !"#!$!% &'% () &!*(+,&%- , %.(!/,+%#& 0$ &'% &'!#" 0+C/ARACTER*ST*CS OF EAL*= 1R*CE %$ >#st be real )$ >#st be in mone! or its e"#ivalent .$ >#st be certain or ascertainable at the time of the perfection of the contract 6$ >anner of pa!ment provided for REAL %$ Dhen price stated is one intended b! parties *f fictitio#s( no intention with respect to price 0 EO*= *f False;sim#lated( what appears in contract is not the tr#e price a$ EAL*= if there is tr#e consideration b$ EO*= b#t if none &beca#se it is fictitio#s' )$ Eal#able Dhen not val#able EO*= Dhen contract is onero#s pres#med to have val#able consideration Nominal consideration w;c is common law concept does not appl! &1%$GG' <ross inade"#ac! of price in ordinar! sale does not render contract void #nless it is shoc3ing to conscience of man$ Except: a$ A#dicial sale Shoc3ing to conscience of man /igher price can be obtained at re0sale b$ Rescissible contracts d#e to lesion c$ Sales with right to rep#rchase &raises pres#mption of e"#itable mortgage' Remed! is reformation CERTA*N OR ASCERTA*NA4LE CERTA*N %$ S#fficient that it is fi8ed with reference to another thing certain That thing will have on a definite da! or in a partic#lar e8change or mar3et or when an amo#nt is fi8ed above or below the price on s#ch da! or in s#ch e8change or mar3et provided said amo#nt be certain

C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

)$ =etermination be left to -#dgment of specified person;s *f contract states that price is to be determined b! . rd part! contract is alread! perfected &there is -#st a s#spensive condition act#al fi8ing of price' .rd part! fi8es price in bad faith or mista3e co#rt remed! can be made .rd part! is #nable or #nwilling to fi8 price parties have no ca#se of action Reason( a$ s#spensive condition does not happen !et co#rts have no -#risdiction b$ enforceable contract have not !et arisen co#rt with no -#risdiction to create contract between parties Res#lt( *NEFF*CAC*O,S Dhen price can not be determined in accordance with an! of the preceding r#les contract of sale in *NEFF*CAC*O,S /owever when S> delivered 4,CER m#st pa! reasonable rice therefore co#rt can fi8 price

>ANNER OF 1AC>ENT >,ST 4E A<REE= ,1ON =eemed to be an essential re"#isite beca#se it is part of the presentation of the contract *ntegral part of concept of price *f there is fail#re to meet minds as regards term of pa!ment( CAS/ 4AS*S >#st be certain or at least ascertainable Effect is absent( NO CONTRACT S*T,AT*ON CHAPTER 1: FORMATION OF CONTRACT OF SALE . STA<ES *N L*FE OF A CONTRACT OF SALE %$ Policitacion;negotiation Stage offer is floated acceptance is floated b#t the! do not meet2 time parties indicate their interest b#t no conc#rrence of offer 5 acceptance )$ 1erfection conc#rrence of all re"#isites2 meeting of the minds .$ Cons#mmation parties perform their respective #nderta3ings PO I!I"CIO# %$ offer is floated b#t not absol#te )$ acceptance is li3ewise floated b#t conditional R,LES( %$ offer is floated prior to acceptance ma! be withdrawn at will b! offeror )$ offer floated with a period witho#t acceptance e8ting#ished when period has ended 5 ma!be withdrawn at will b! offeror2 right to withdrawn m#st not be arbitrar! otherwise liable to damage #nder Art %H )G )% of civil code .$ offer floated with a condition e8ting#ished b! happening;non0happening of condition 6$ offer floated witho#t period;witho#t condition contin#es to be valid depending #pon circ#mstances of time place 5 person 7$ offer is floated 5 there is co#nter0offer original offer is destro!ed there is a new offer2 can not go bac3 to original offer 9$ offer is floated no a#thorit! of offeror to modif! offer :$ offer is accepted absol#tel! proceed to perfected stage O1T*ON CONTRACT floats in the policitacion stage offer with a period b#t fo#nded #pon a separate consideration distinct from the price no pres#mption of consideration needs to be proven Characteristics( a$ not the contract of sale b! itself distinct b$ nominate c$ principal2 b#t can be attached to other principal contracts

C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

d$ onero#s e$ comm#tative f$ #nilateral vs contract of sale which is bilateral to be perfected 5 give rise to action the following m#st conc#r a$ s#b-ect matter of sale m#st be agreed #pon b$ price of sale 5 manner of pa!ment m#st be agreed #pon c$ consideration separate 5 distinct from price d$ period as per contract2 if period not provided prescribes in %G !ears &written contract' e$ how e8ercised( notice of acceptance sho#ld be comm#nicative to offeror witho#t act#al pa!ment as long as there is deliver! of pa!ment in cons#mmation stage

) S*T,AT*ONS *N AN O1T*ON CONTRACT( %$ with separate consideration Legal conse"#ence( a$ option contract is valid b$ offeror can not withdrawn offer #ntil after e8pir! period c$ s#b-ect to rescission damages b#t not to specific performance beca#se this is not an obligation to give )$ witho#t separate consideration Legal conse"#ence( OL= R,LE( a$ offer is still valid b#t b$ option contract is void c$ not s#b-ect to rescission damages NED R,LE( Right if first ref#sal recogniIed R*</T OF F*RST REF,SAL( creates a promise to enter into a contract of sale and it has no separate consideration not s#b-ect to specific performance beca#se there is no contract#al relationship here 5 it is not an obligation to give &not a real contract' New doctrine( ma! be s#b-ect to specific performance Effect of new doctrine( t#rned the world of policitacion #pside down beca#se while valid option contract is not s#b-ect to specific performance right of first ref#sal which does not even have a separate consideration ma! be s#b-ect to specific performance O1T*ON CONTRACT 5 R*</T OF F*RST REF,SAL =*ST*N<,*S/E= O1T*ON CONTRACT R*</T OF F*RST REF,SAL 1rincipal contract2 stands on its own Accessor!2 can not stand on its own Needs separate consideration =oes not need separate consideration S#b-ect matter 5 price m#st be valid There m#st be s#b-ect matter b#t price not important Not conditional Conditional Not s#b-ect to specific performance S#b-ect to specific performance RecogniIes recover! of damage based on ab#se of rights doctrine 1ERFECT*ON( OFFER 5 ACCE1TANCE 1ERFECT*ON Sale is a consens#al contract perfected b! meeting of minds regarding s#b-ect matter 5 price >eeting of >inds( %$ Offer certain )$ Acceptance absol#te +#alified acceptance merel! a co#nter0offer which needs to be absol#tel! accepted to give rise to perfected contract of sale 4#siness ads are mere invitations to ma3e an offer e8cept when it appears to be otherwise

C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

Acceptance b! letter;telegram binds onl! at time it came to 3nowledge of SELLER2 prior thereto offer ma! still be withdrawn >#st be e8act terms to be considered absol#te Dhen deviations allowed( a$ an!thing that refers to price is material b$ small items are insignificant does not ma3e acceptable #nconditional when sale is s#b-ect to s#spensive condition no perfected contract of sale !et2 becomes perfected onl! #pon happening of condition *n sales at a#ction perfected when a#ctioneer anno#nces its perfection b! the fall of the hammer or in other c#stomar! manner ma! impose terms #nder bidder ma! retract his bid2 owner of propert! sold at a#ction ma! impose terms #nder w;c the a#ction will proceed 5 it shall be binding w;n the bidders are aware 1lace of perfection( where the meeting of minds happen2 when acceptance sent b! mail perfection is deemed where the offer is made 1erformance has nothing to do with perfection stage

EARNEST >ONEC %$ mone! given as part of p#rchase price )$ its acceptance is proof that contract of sale e8ists nothing in law prevents parties from treating earnest mone! differentl! old concept( s#b-ect to forfeit#re when 4,CER bac3s o#t new concept( can not be forfeited part of p#rchase price2 m#st be restored "#alification( if old concept is stip#lated EAL*= pres#mption of perfection of contract of sale and s#ch earnest mone! as art of p#rchase price is disp#table FOR> OF SALES %$ Form not important in validit! of sale Sale being consens#al ma! be oral or written perfected b! mere consent as to price 5 s#b-ect matter *f partic#lar form is re"#ired #nder the stat#te of fra#ds( a$ valid 5 binding between parties b$ not binding to .rd persons onl! Reason( p#rposes of convenience onl! 5 not for validit! 5 enforceabilit!2 ca#se of action is granted to s#e 5 compel other part! to e8ec#te the doc#ment )$ Dhen form is important for validit!2 e8ception b! specific provision of law2 a$ power to sell a piece of land granted to an agent otherwise EO*= b$ sale of large cattle2 m#st also be registered with >#nicipal treas#rer otherwise EO*= c$ sale of land b! non0Christian if not approved b! <overnor EO*= .$ Dhen form is important for enforceabilit! &STAT,TE OF FRA,=S' a$ sale to be performed % !ear after b$ Agreement to sell things with val#e of 7GG and #p c$ Sale of real propert! or interest therein E8ception( i$ Dhen there is a note or memorand#m in writing 5 s#bscribe b! part! or his agent &contains essential terms of the contract' ii$ Dhen there has been partial performance;e8ec#tion &seller delivers with intent to transfer title;receives price' iii$ when there has been fail#re to ob-ect to presentation of evidence &oral' &constit#te waiver' CHAPTER 2: CONCUMMATION STA3E4PERFORMANCE STA3E Stage where parties both compl! with their obligation Nat#re of diligence re"#ired( diligence of good father of famil! #nless other re"#irement is stip#lated Conse"#ence( Seller will g#ilt! of breach if thing is lost thro#gh his fa#lt

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

=EL*EERC OF T/E T/*N< Transfer ownership &tradicion' twin obligation( %$ transfer title&ownership' SELLER m#st be owner of thing at the time of cons#mmation to validl! transfer title )$ deliver! of the thing =ifferent 3inds of deliver!( %$ Act#al when thing sold is placed in the control 5 possession of the b#!er )$ Constr#ctive =*FFERENT FOR>S OF CONSTR,CT*EE =EL*EERC( $. !raditio onga %anu =eliver! of thing b! mere agreement2 when SELLER points to the propert! witho#t need of act#all! delivering $. !raditio &revi %anu %$ 4efore contract of sale the wo#ld be b#!er was alread! in possession of the wo#ld be s#b-ect matter of sale &e8( as lessee' )$ S!mbolic deliver! As to movables e8( deliver! of the 3e!s to a car '. Constitutum possessarium at the time of perfection of contract seller contin#es to hols possession merel! as a holder 6$ E8ec#tion( E8ception( a$ when there is stip#lation to contrar! e8ec#tion does not prod#ce effect of deliver! b$ when at the time of e8ec#tion of instr#ment s#b-ect matter was not s#b-ect to control of the seller s#b-ect matter sho#ld be within control of seller2 he sho#ld have capacit! to deliver at the time of e8ec#tion of p#blic instr#ment when he wants to effect act#al deliver! s#ch capacit! sho#ld s#bsist for reasonable time after e8ec#tion of instr#ment &reason time depends on circ#mstances of persons places 5 things' Effect when ) re"#isites do not conc#r( no constr#ctive deliver!2 no compliance on part of SELLER to deliver Even when thing is mortgaged seller can still deliver beca#se na3ed title still belongs to him 5 can still do acts of ownership incl#ding conve!ance 7$ Negotiable doc#ments of title 5 non negotiable instr#ments transferee ac"#ires title of transferor when delivered witho#t negotiation it is a mere assignment 9$ *ntangibles; incorporeal propert! thro#gh p#blic instr#ment e8ec#tion is e"#ivalent to deliver! if from the deed contrar! does not appear =EL*EERC OF FR,*TS 5 ACCESS*ONS; ACCESSOR*ES Right to fr#its 5 accessions;accessories accr#e from time sale is perfected b#t no real right over it #ntil it is delivered =EL*EERC T/RO,</ CARR*ER %$ FAS FREE ALON< S*=E Dhen goods delivered alongside the ship there is alread! deliver! to the b#!er &twin effects deemed f#lfilled' )$ FO40FREE ON 4OAR= a$ Shipment when goods are delivered at ship at point of shipment2 deliver! to carrier b! placing goods on vessel is deliver! to b#!er

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

b$ =estination when goods reach the port even if not disembar3ed !et from the vessel there is deliver! to the b#!er .$ C*F COST *NS,RANCE FRE*</T a$ when b#!ers pa!s for services of carrier deliver! to carrier is deliver! to b#!er2 carrier is agent of the b#!er b$ when b#!er pa!s seller the price from moment the vessel is at port of destination there is alread! deliver! to b#!er$ CO>1LETENESS OF =EL*EERC %$ >OEA4LES deliver! of thing pl#s accessories 5 accessions in the condition in which the! were #pon the perfection of the contract incl#ding the fr#its a$ LESS b#!er has ) options( i$ re-ect ii$ accept &%' when accepts with 3nowledge that seller is not going to perform contract in f#ll he m#st pa! at price stip#lated &)' when accepts 5 cons#mes before 3nowledge that b#!er will both perform contract in f#ll liable onl! for fair val#e of goods delivered b$ LAR<ER b#!er has ) options2 i$ accepts per contract 5 re-ect the rest ii$ accept the whole pa! price stip#lated iii$ re-ect whole if s#b-ect matter is indivisible c$ >*BE= D*T/ <OO=S OF =*FFERENT =ESCR*1T*ON b#!er has ) options( i$ accepts good w;c are in accordance with contract 5 re-ect the rest ii$ re-ect goods entirel! if indivisible )$ *>>OEA4LES a$ sold per #nit or n#mber with statement of its area rate at certain price deliver all that ma! heave been stated in the contract if impossible remedies of b#!er( LESS *N AREA i$ rescission ii$ proportional red#ction of price LACF *N AREA S/L= NOT 4E LESS T/AN %;%G OF AREA A<REE= ,1ON <REATER *N AREA i$ accept per stip#lation 5 re-ect the rest ii$ accept whole area pa! at contract rate Not applicable to -#dicial sales b$ sold for l#mp s#m Dhen price per #nit not indicated *s area delivered is either greater or lesser price will not be ad-#sted accordingl! T*>E 5 1LACE OF =EL*EERC %$ follow stip#lation in contact or )$ follow #sage of trade or .$ seller@s place of b#siness or his residence 6$ specific goods place where the thing is 7$ at reasonable ho#r EFFECTS OF =EL*EERC( Title to thing is transferred;ownership is transferred Except: contrar! is stip#lated as in the case of( %$ contract to sell )$ sale on acceptance;approval .$ sale or ret#rn 6$ there is implied reservation of ownership

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

D/O 4EARS EB1ENSES OF =EL*EERC Seller Sale b! description;sample %$ Sample goods m#st correspond with sample shown )$ =escription goods m#st correspond with description or sample Effect if there is no compliance( RESC*SS*ON ma! be availed of b! the b#!er O4L*<AT*ON OF 4,CER %$ 1a! the price 4#!er is obligated to pa! price according to terms agreed #pon regarding time place 5 amo#nt *f pa!ment of interest is stip#lated m#st pa!2 if amo#nt of interest not mentioned appl! legal rate Dhen b#!er defa#lts constit#tes breach( s#b-ect to specific performance;rescission 5 damages 2 interest to be paid also from of defa#lt )$ Accept deliver! of thing sold Dhere to accept( at time 5 place stip#lated in the contract2 if none specified at the time 5 place of deliver! <oods2 there is acceptance when( a$ /e intimates to seller that he has accepted b$ Dhen delivered 5 does an! act inconsistent with ownership of seller c$ Retains witho#t intimating to seller that he has re-ected Sale of <oods on installment( a$ <oods m#st be delivered in f#ll e8cept when stip#lated b$ Dhen not e8amined b! b#!er not accepted #ntil e8amined or at least had reasonable time to e8amine Acceptance of goods in general absent contrar! e8press stip#lation does not discharges seller from liabilit! in case of breach of warranties &#nless no notice or fail#re to give it within reasonable time' Dhen b#!er has a right to ref#se goods no need to ret#rn2 shall be considered as depositar!2 #nless there is stip#lation to contrar! =O,4LE SALE <eneral R#le( F*RST *N T*>E 1R*OR*TC *N R*</T Dhen does it appl!( when not all re"#isites embodied in %766 conc#r S1EC*AL R,LE( %766 Re"#isites2 %$ e8actl! same s#b-ect matter )$ e8actl! same immediate seller .$ the! b#!ers represent conflicting interest 6$ both sales are valid R,LES ACCOR=*N< TO %766( %$ >OEA4LE owner is first to posses in good faith )$ *>>OEA4LE First to register in good faith No inscription first to possess in good faith No inscription 5 no possession in good faith 1erson who presents oldest title in good faith <OO= FA*T/ %$ one who b#!s propert! witho#t notice that another person has a right or interest in s#ch propert! )$ one who has paid price before notice that another has claim or interest lis pendens notice that s#b-ect matter is in litigation adverse claim notice that somebod! is claiming better right

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

1OSSESS*ON 4oth act#al or constr#ctive RE<*STRAT*ON %$ registered #nder Torrens s!stem %766 applies )$ not registered #nder the Torrens s!stem %766 still applies decided case which e8cl#ded #nregistered land dealt with -#dicial sale whereb! b#!er ac"#ires right of transferor2 o#tside of s#ch sit#ation m#st appl! to conflicting sale over same #nregistered parcel of land .$ when sit#ation is sale % deals with land when not !et registered 5 sale ) is done when land alread! registered appl! F*RST *N T*>E 1R*OR*TC *N R*</T CHAPTER 5: DOCUMENTS OF TITLE =OC,>ENTS OF T*TLE not creations of law b#t b! merchants to allow them to deal with merchandise witho#t having to ph!sicall! carr! them aro#nd pertains to specific t!pe of movables onl! ( <OO=S ) F,NCT*ONS %$ evidence of e8istence 5 possession of goods described therein )$ medi#m b! which seller is able to transfer possession of goods ) FOR>S %$ negotiable a$ deliver to bearer &negotiation b! mere deliver!' b$ deliver to specific person or his order &negotiation b! endorsement J deliver!' even if face of instr#ment sa!s NON0NE<OT*A4LE it is still NE<OT*A4LE2 limiting words not to destro! negotiabilit! if order instr#ment 5 no endorsement was made e"#ivalent to assignment *>1ORTANT CONS*=ERAT*ONS %$ Negotiation gives better right than assignment NE<OT*AT*ON ASS*<N>ENT transferor;holder ac"#ires title to goods ac"#ires title to goods against transferor bailee has direct obligation to holder as if ac"#ires right to notif! bailee so that he directl! dealt with him ac"#ires obligation of bailee to hold goods for him )$ Assignee ta3es doc#ment with defects of the assignor .$ Obligation of bailee bailee is immediatel! bo#nd to the doc#ment DARRANT*ES ON NE<OT*AT*ON;ASS*<N>ENT T/E SA>E %$ the doc#ment is gen#ine )$ he has legal right to negotiate or transfer it .$ he has 3nowledge of no fact which wo#ld impair the validit! or worth of the doc#ment 6$ he has right to transfer title to goods and goods are merchantable;fit R,LES OF LEEC;<ARN*S/>ENT OF <OO=S COEERE= 4C =OC,>ENTS OF T*TLE %$ Non negotiable Notification is operative act to transfer title;possession of goods in favor assignee 4efore notification can be garnished b#t not when there is notification alread! )$ Negotiable Can not be levied or garnished when docs alread! with p#rchaser in good faith #nless( a$ =oc#ment is first s#rrendered b$ =oc#ment is po#nded b! co#rt c$ Negotiation is en-oined

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

CHAPTER 6: SALE BY NON7OWNER OR BY ONE HAVIN3 VOIDABLE TITLE %$ SALE 4C NON0ODNER Per(ection Stage a$ sale b! owner valid b$ sale b! non0owner valid2 beca#se ownership is necessar! onl! transfer title to goods2 at perfection stage no obligation on part of seller to transfer ownership law on estoppel f#rther bolster it( title passes b! operation of law to grantee when person who is not owner of goods sold delivers it and later on ac"#ires title thereto since valid action to ann#l is improper2 there is perfected contract Consummation Stage Contract of sale is valid beca#se it has passed perfected stage despite( a$ seller is not owner b$ seller has no a#thorit! to sell Dhat is void is the transfer of title; ownership did not pass Effect( b#!er ac"#ired no better right than transferor Legal effect( CAEEAT E>1TOR 4,CER 4EDARE a$ co0owner sells whole propert! prior to partition sale is void as to his spirit#al share b$ co0owner sells definite portion to partition sale is void as to other co0owner b#t valid as to his spirit#al share E8ception( a$ owner b! his cond#ct is precl#ded from den!ing seller@s a#thorit! &ESTO11EL' b$ contrar! is provided for in recording laws &pd %7)H' c$ sale is made #nder stat#tor! power of sale or #nder a co#rt of competent -#risdiction d$ sale is made #nder merchant@s store in accordance with code of commerce 5 special laws )$ SALE 4C SELLER D*T/ EO*=A4LE T*TLE Per(ection Stage Ealid sale b#!er ac"#ires title of goods Consummation Stage Ealid sale if title has not !et been avoided b#!er b#!s goods #nder following condition( a$ in good faith b$ for val#e c$ witho#t notice of seller@s defect of title

T*TLE AS TO >OEA4LE 1RO1ERT*ES R#le( 1OSSESS*ON *S E+,*EALENT TO T*TLE Re"#isites( a$ 1ossession of a movable b$ *n good faith E8ception( a$ Owner lost movable owner can recover w;o reimb#rsing price b$ Owner is #nlawf#ll! deprived owner can recover w;o reimb#rsing price E8ception to E8ception( a$ movable is bo#ght at p#blic sale owner can onl! recover after reimb#rsing price b$ in good faith 5 for val#e

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

CHAPTER 8: LOSS9 DETERIORATION9 FRUITS : OTHER BENEFITS C*E*L LAD CO>>ON LAD No valid contract involving generic s#b-ect 1erfection of F of sale which is not matter2 conditional covers good that are determinable To have a valid contract of sale s#b-ect 1erfection is the mode which transfers matter m#st be determinate &law on loss ownership to b#!er2 deterioration fr#its applies onl! to determine s#b-ect matter' Not a title b#t a mode Tradition is merel! a means to perform obligation 1erfection of contract of sale which is not Res perit domino2 owner bears ris3 of loss Conditional incl#de goods which are not deliverable2 transfers ris3 to b#!er D/O 4EARS R*SF OF LOSS;=ETER*ORAT*ON;FR,*TS %$ 4efore perfection Res perit domino Owner is seller so seller bears ris3 of loss )$ At 1erfection Res perit domino Contract is merel! inefficacio#s beca#se loss of the s#b-ect matter does not affect the validit! of the sale Seller cannot an!more compl! with obligation so b#!er cannot an!more be compelled .$ After 1erfection b#t before deliver! a$ Loss conf#sed state ) vie*s: 1aras( 4,CER Tolentino( SELLER b$ =eterioration 5 fr#its 0 4#!er bears loss 6$ After deliver! Res perit domino Owner is b#!er so b#!er bears ris3 of loss =eliver! e8ting#ish ownership vis+a+vis the seller 5 creates a new one in favor of the b#!er CHAPTER 10: REMEDIES OF PARTIES FOR BREACH OF CONTRACT OF SALE S,4AECT >ATTER( >OEA4LES &*N <ENERAL' RE>E=*ES OF ,N1A*= SELLER An! man ma! not ta3e law in his own hands m#st see3 remed! thro#gh co#rts E8ception( %$ =OCTR*NE OF SELF /EL1 )$ S1EC*AL RE>E=*ES Re"#isites( %$ S#b-ect matter goods )$ Seller is #npaid not completel! paid or received negotiable instr#ment #nder a condition 5 condition has been breached b! reason of dishonor .$ 1h!sical possession is with seller %$ )$ .$ 6$ possessor! lien stoppage in transitu special right of re0sale special right to rescind

Can onl! be e8ercised when ) prior rights have been e8ercised

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

1OSSESSORC L*EN Seller not bo#nd to deliver if b#!er has no paid him the price Right to retain2 cannot be availed when seller does not have c#stod! E8ercisable onl! in following circ#mstances( a$ goods sold witho#t stip#lation as to credit b$ goods sold on credit b#t term of credit has e8pired c$ b#!er becomes insolvent Dhen part of goods delivered ma! still e8ercise right on goods #ndelivered *nstances when possessor! lien lost( a$ seller delivers goods to carrier for transmission to b#!er witho#t reserving ownership in goods or right to possess them b$ b#!er or agent lawf#ll! obtains possession of goods c$ waiver loses lien when he parts with goods &still has stoppage in transitu' notice b! seller to b#!er not essential STO11A<E I# !R"#SI!, Re"#isites( %$ <oods are in transit Dhen goods are in transit From the time goods are delivered to carrier for p#rpose of transmission to b#!er <oods re-ected b! b#!er 5 carrier contin#es to possess them Dhen goods no longer in transit Reached point of destination 4efore reaching destination b#!er met seller along the wa! <oods are s#pposed to have been delivered to b#!er b#t carrier ref#sed )$ Shown b! seller that b#!er is insolvent & fail#re to pa! when debts come d#e ' /ow is right e8ercised( a$ Obtain act#al possession of goods b$ <ive notice of claim to carrier ; bailee in possession thereof Notice b! seller to b#!er is not re"#ired2 notice to carrier is essential S1EC*AL R*</T TO RESELL T/E <OO=S Re"#isites( %$ goods are perishable )$ stip#lated the right of resale in case b#!er defa#lts in pa!ment .$ b#!er in defa#lt for #nreasonable time notice b! seller to b#!er not essential wh! special there are things which seller cannot do in ordinar! sale( %$ ownership is with b#!er b#t seller can sell goods )$ title accorded to b#!er is destro!ed even witho#t co#rt intervention S1EC*AL R*</T TO RESC*N= wh! special ownership of goods alread! with b#!er b#t seller ma! still rescind2 ownership is destro!ed even witho#t co#rt intervention b#t in ordinar! sale need to go to co#rt to destro! transfer of ownership Re"#isites( %$ E8pressl! stip#lated )$ 4#!er is in defa#lt for #nreasonable time Notice needed to be given b! seller to b#!er RE>E=*ES OF 4,CER Dhen Seller fails to deliver b#!er ma! see3 S1EC*F*C 1ERFOR>ANCE D*T/O,T <*E*N< SELLER O1T*ON TO RETA*N <OO=S ON 1AC>ENT OF =A>A<ES

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

SALE OF >OEA4LES ON *NSTALL>ENT RE>E=*ES OF ,N1A*= SELLER &%6?6' %$ E8act f#lfillment sho#ld the b#!er fail to pa! )$ Cancel the sale if b#!er fails to pa! ) or more installments .$ Foreclose on chattel mortgage if b#!er fails to pa! ) or more installments *f b#!er chooses foreclos#re no f#rther action against b#!er to recover an! #npaid balance of the price Dhen is law is applicable( Sale on movables b! installment Sale on installment( pa!ment b! several partial pa!ments in small amo#nt Rationale of the law( 4#!er is l#lled into thin3ing that he co#ld afford beca#se of small amo#nts per installment 5 at the same time remed! ab#se of commercial ho#ses Nat#re of remedies( alternative 5 not c#m#lative Coverage( sale 5 financing transaction 5 contracts of lease with option to p#rchase Action ( A#dicial 5 E8tra-#dicial S1EC*F*C 1ERFOR>ANCE *f alread! chose specific performance cannot an!more choose other remedies E8cept( after choosing it has become impossible rescission ma! be p#rs#ed RESC*SS*ON Dhen chosen there is correlative obligation to restit#te 4#t stip#lation that installments paid are forfeited are valid if not #nconscionable =eemed chosen when( a$ Notice of rescission is sent b$ Ta3es possession of s#b-ect matter of sale c$ Files action for rescission 4arring effect on recover! of balance FORECLOS,RE 4arring effect on recover of balance E8tent of barring effect( p#rchase price E8ception( mortgagor ref#ses to deliver propert! to effect foreclos#re2 e8penses inc#rred in attorne!s fees etc$ *>>OEA4LES &*N <ENERAL' RE>E=*ES OF SELLER %$ Anticipator! breach Seller has reasonable gro#nds to fear loss of immovable sold 5 its price s#e for RESC*SS*ON )$ Non pa!ment of price RESC*SS*ON RE>E=*ES OF 4,CER %$ =ist#rbed in possession or with reasonable gro#nds to fear dist#rbance S,S1EN= 1AC>ENT )$ *n case of s#bdivision or condo pro-ects *f real estate developer fails to compl! with obligation according to approved plan( a' RESC*N= b' S,S1EN= 1AC>ENT ,NT*L SELLER CO>1L*ES

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

*>>OEA4LES &4C *NSTALL>ENT' %7H) Applies onl! to contract of sale >aceda Law applies to COS 5 CTS 5 Financing >ACE=A LAD Coverage( REAL ESTATE defines space v CON=O not defined space &w; common areas' %$ contract of sale )$ contract to sell .$ financing transactions E8cl#ded( %$ ind#strial )$ commercial .$ sale to tenants #nder agrarian laws R*</TS <RANTE= TO 4,CERS( %$ 4#!er paid at least ) !ears installment a$ 1a! witho#t interest the balance within grace period of % month for ever! !ear of installment pa!ment <race to be e8ercised once ever! 7 !ears b$ Dhen no pa!ment 0 cancelled2 b#!er entitled to 7GK of what he has paid J 7K for ever! !ear e8ceeding HGK of pa!ments made Cancellation to be effected .G da!s from notice 5 #pon pa!ment of cash s#rrender val#e )$ 4#!er paid lees than ) !ears installment a$ <race period is 9G da!s b$ Cancellation if fail#re to pa! within 9G da!s grace c$ .G da!s notice before final cancellation b#!er can still pa! within the .G da!s period with interest 1#rpose of law ( 1rotect b#!ers in installment against oppressive conditions Notice needed waiver thereof id oppressive Appl! to contracts even before law was enacted Stip#lation to contrar! is void Other rights( a$ Sell rights to another b$ Reinstate contract b! #pdating within .G da!s before cancellation c$ =eed of Sale to be done b! notarial act d$ To pa! f#ll installment in advance the balance of price an!time witho#t interest e$ /ave f#ll pa!ment annotated in certificate of title CHAPTER 11: REMEDY OF RESCISSION IN CONTRACTS COVERIN3 IMMOVABLES RESC*SS*ON &RESOL,T*ON' %%H% RESC*SS*ON %.?7 legal basis is s#bstantial breach legal basis is lesion &rescissible contract' principal remed! retaliator! vs. #n-#st part! s#bsidiar! remed! cannot be instit#ted e8cept when other remedies e8ha#sted m#t#al restit#tion m#t#al restit#tion Nat#re( A#dicial E8tra -#dicial Rescission allowed if stip#lated2 b#rden to s#e shifts to part! who do not li3e rescission co#rt still has final sa! as to propriet! of rescission Forfeit#re of amo#nts valid being in nat#re of penal cla#se

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

CONTRACT OF SALE <overned b! gen#s SALE Ownership passes beca#se of tradition Non0pa!ment is resol#tor! condition which ma! be basis of breach 1erfection gives rise to reciprocal demandable obligation CONTRACT TO SELL <overned b! gen#s SALE Ownership passes #pon f#ll pa!ment Non pa!ment is s#spensive non0pa!ment e8ting#ishes contract to sell 1erfection gives rise to reciprocal conditional obligation

CONTRACT OF SALE RESC*SS*ON *S A11L*CA4LE CONTRACT TO SELL RESC*SS*ON NOT A11L*CA4LE Non pa!ment of p#rchase price wo#ld a#tomaticall! cancel even witho#t f#rther action for rescission E8cept( *f s#b-ect matter is residential lots law on rescission applies when there is s#bstantial breach CHAPTER 12: CONDITION : WARRANTIES A$ CON=*T*ON Dhen a contract contains a condition the non0happening of which wo#ld not constit#te a breach b#t e8ting#ishes the obligation /owever if part! to the sales contract has promised that the condition sho#ld happen or be performed the non0performance of which ma! be treated b! parties as breach CON=*T*ON DARRANTC 1#rports to e8istence of obligation 1#rports to performance of obligation Obligation m#st be stip#lated to form part Need not be stip#lated2 ma! form part of of the obligation obligation b! provision of law >a! attach itself to obligation of seller to Relates to the s#b-ect matter itself or to deliver possession 5 transfer obligation of the seller as to the s#b-ect matter of the sale 4$ EB1RESS DARRANT*ES & RE+,*S*TES ' %$ it m#st be an affirmation of fact or an! promise b! seller relating to the s#b-ect matter of sale )$ nat#ral tendenc! of affirmation or promise is to ind#ce b#!er to p#rchase s#b-ect matter .$ b#!er p#rchases the s#b-ect matter rel!ing thereon when breached seller is liable for damages C$ *>1L*E= DARRANT*ES deemed incl#ded in all contracts of sale whether parties are act#all! aware or not aware or whether the! were intended or not2 b! operation of law %$ warrant! that seller has a right to sell refers to cons#mmation stage since in cons#mmation stage it is where ownership is transferred b! tradition not applicable to sheriff a#ctioneer mortgagee pledgee )$ warrant! against eviction #nless contrar! provision appears in contract when ownership is transferred b#!er shall en-o! the legal and peacef#l possession of the thing RE+,*S*TES OF 4REAC/ OF DARRANTC A<A*NST EE*CT*ON( %$ b#!er is evicted in whole or in part from the s#b-ect matter of sale )$ there is a final -#dgement .$ basis of eviction is a right prior to sale or an act imp#table to vendor 6$ seller has been s#mmoned in he s#it for eviction at the instance of b#!er2 or made .rd part! defendant thro#gh .rd part! complaint bro#ght b! b#!er

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

no appeal needed nor a need to resist eviction for right to accr#e2 eno#gh that aforementioned re"#isites are complied with warrant! cannot be enforced #ntil aforementioned re"#isites conc#r applies to -#dicial sale2 -#dgement debtor responsible for eviction #nless otherwise decreed in -#dgement vendor not liable for eviction if adverse possession had been commenced before sale b#t prescriptive period is completed after transfer

L*A4*L*TC OF SELLER( &eviction w;c ca#sed b#!er to lose whole s#b-ect matter' %$ val#e of thing at time of eviction & whether or not 0;J of price of sale ' )$ val#e of income of fr#its .$ cost of s#it which ca#sed the eviction 6$ e8penses of contract if b#!er paid for them 7$ damages 5 interests and ornamental e8penses if sale was made in bad faith R*</TS OF 4,CER D/EN =E1R*EE= OF ONLC 1ART OF T/E S,4AECT >ATTER 4,T DO,L= NOT /AEE 4O,</T S,C/ 1ART *F NOT *N RELAT*ON FOR T/E D/OLE( %$ rescission )$ m#t#al restit#tion .$ DARRANTC A<A*NST ENC,>4RANCES &non0 apparent' re"#isites( a$ immovable sold is enc#mbered with non apparent b#rden or servit#de not mentioned in the agreement b$ nat#re of non apparent servit#de or b#rden is s#ch that it m#st be pres#med that the b#!er wo#ld not have ac"#ired it had he been aware thereof when breach of warrant! e8ist( b#!er ma! as3 for rescission or indemnit! warrant! not applicable when non apparent b#rden or servit#de is recorded in the Registr! of 1ropert! #nless there is e8pressed warrant! that the thing is free from all b#rdens 5 enc#mbrances 6$ DARRANTC A<A*NST /*==EN =EFECTS SELLER does not warrant patent defect2 caveat emptor E8cept when hidden a$ s#b-ect matter ma! be movable or immovable b$ nat#re of hidden defect is s#ch that it sho#ld render the s#b-ect matter #nfit for the #se of which it was intended or sho#ld diminish its fitness c$ had the b#!er been aware he wo#ld not have ac"#ired it or wo#ld have given a lower price when defect is visible or even if visible if the b#!er is an e8pert b! reason of his trade or profession seller is not liable obligation of seller for breach depends on whether he has 3nowledge of s#ch defect or not a$ seller is aware seller sho#ld ret#rn price 5 ref#nd e8penses of contract with damages b$ seller is not aware 0 seller sho#ld ret#rn price and interest 5 ref#nd e8penses & no damages ' b#!er ma! elect between withdrawing from contract or demanding proportionate red#ction of price with damages in either case applicable to -#dicial sale e8cept -#dgement debtor not liable for damages action to prescribe 9 months from deliver! of s#b-ect matter 7$ =EFECTS ON AN*>ALS even in the case of professional inspection b#t hidden defect is of s#ch nat#re that e8pert 3nowledge is not s#fficient 0 defect shall be considered as RE=/*4*TORC if vet fails to discover thro#gh ignorance or bad faith he is liable for damages a$ sale of animals on teams & ) or more '

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

when onl! one is defective onl! one is redhibited 5 not the others e8ception( when it appears that p#rchase of team will not be done witho#t the defective one appl! to sale of other things b$ sale of animals at fair or p#blic a#ction no warrant! against hidden defects c$ sale of animals with contagio#s disease is void d$ sale of #nit of animal void if #se ; service for which the! are ac"#ired has been stated in the contract and the! are fo#nd to be #nfit thereof prescription of action( 6G da!s from date of deliver! to b#!er if sale is rescinded animals to be ret#rned in same condition when the! are ac"#ired2 b#!er shall answer for in-#r! ; loss d#e to his fa#lt b#!er ma! elect between withdrawing from sale or demanding proportionate red#ction of price with damages in either case =$ S1EC*F*C *>1L*E= DARRANT*ES *N T/E SALE OF <OO=S %$ Darrant! as to fitness 5 "#alit!2 re"#isites( a$ b#!er ma3es 3nown to seller the partic#lar p#rpose for which goods are ac"#ired and it appears that the b#!er relied on the seller@s s3ill or -#dgement b$ goods are bo#ght b! description from seller who deals in goods of that description no warrant! #nless there is stip#lation in case of sale of specified article #nder its patent or trade name meas#re of damage( difference between val#e of goods at time of deliver! and val#e the! wo#ld have had if the! had answered to the warrant! )$ Sale of <oods b! sample *f seller is a dealer in goods of that 3ind there is an implied warrant! that the goods shall be free from defect rendering them #nmerchantable which wo#ld not be apparent on reasonable e8amination of the sample E$ EFFECTS OF DA*EER 1arties ma! increase or diminish implied warrant! against eviction2 b#t effect depends on good faith or bad faith on the part of the seller$ %$ seller in bad faith 5 there is waiver against eviction n#ll 5 void )$ b#!er witho#t 3nowledge of a partic#lar ris3 made general ren#nciation of warrant! not waiver b#t merel! limits liabilit! of seller in case of eviction &pa! val#e of s#b-ect matter at time of eviction' .$ b#!er with 3nowledge of ris3 of eviction ass#med its conse"#ences 5 made a waiver vendor not liable &applicable onl! to waiver of warrant! against eviction' when goods delivered to b#!er he cannot rescind sale if he 3new of the breach of warrant! when he accepted goods witho#t protest if he fails to ret#rn or offer to ret#rn goods to seller in s#bstantiall! as good condition as the! were at time ownership was transferred when goods deteriorated b#!er can still ret#rn them in that condition if s#ch is d#e to breach or warrant! F$ 4,CER@S O1T*ON *N CASE OF 4REAC/ OF DARRANTC %$ Accept goods 5 set #p breach of warrant! b! wa! of reco#pment in dimin#tion or e8tinction or the price$ )$ Accept goods 5 maintain action against seller for damages .$ Ref#se to Accept goods 5 maintain action against seller for damages 6$ Rescind contract of sale 5 ref#se to receive goods;ret#rn them when alread! received$

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

CHAPTER 13: E;TIN3UISHMENT <RO,N=S( %$ same gro#nds whereb! obligations in general are e8ting#ished( a$ pa!ment or performance b$ loss of the s#b-ect matter c$ condonation or remission d$ conf#sion or merger of rights or creditor and debtor e$ compensation f$ novation g$ ann#lment h$ rescission i$ f#lfillment of a resol#tor! condition -$ prescription )$ conventional redemption onl! applies to contract of sale .$ legal redemption onl! applies to contract of sale CONEENT*ONAL RE=E>1T*ON seller reserved the right to rep#rchase thing sold co#pled with obligation to ret#rn price of the sale e8pensed of contract 5 other legitimate pa!ments and the necessar! 5 #sef#l e8penses made on the thing sold right m#st be recogniIed in the deed of sale2 m#st be the same contract O1T*ON TO 1,RC/ASE right to rep#rchase the thing sold granted to the vendor in a separate instr#ment from the deed of sale E+,*TA4LE >ORT<A<E a contract with right to rep#rchase is e"#itable mortgage if the following re"#isites conc#r( %$ price of sale with right to rep#rchase is #n#s#all! inade"#ate )$ seller remains in possession as a lessee or otherwise .$ #pon ; after e8piration of right to rep#rchase another instr#ment e8tending the period of redemption is e8ec#ted 6$ b#!er retains for himself a part of the p#rchase price 7$ seller binds himself to pa! ta8es on thing sold 9$ real intention of parties is to sec#re the pa!ment of a debt or performance of other obligation IN CASE OF DOUBT IN DETERMININ3 WHETHER IT IS E<UITABLE MORT3A3E OR SALE A RETRO (WITH RI3HT OF REPURCHASE IT SHALL BE CONSTRUED AS E<UITABLE MORT3A3E) D/AT TO LOOF FOR *N =ETER>*N*N< NAT,RE OF CONTRACT %$ lang#age of the contract )$ cond#ct of parties to reveal real intent RE>E=C AEA*LA4LE TO EEN=OR( as3 for reformation of contract RAT*ONALE 4E/*N= 1ROE*S*ON ON E+,*TA4LE >ORT<A<E( %$ Circ#mvention of #s#r! law )$ Circ#mvention of prohibition against pactum commissorium creditor cannot appropriate the things given b! wa! of pledge or mortgage2 remed! here is foreclos#re real intention of parties is that the pretended p#rchase price is mone! loaned 5 to sec#re pa!ment of the loan sale with pacto de retro is drawn #p

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

1ER*O= OF RE=E>1T*ON %$ No period agreed #pon 6 !ears from date of contract )$ Dhen there is agreement sho#ld no e8ceed %G !ears2 if it e8ceeded valid onl! for the first %G !ears$ .$ Dhen period to redeem has e8pired 5 there has been a previo#s s#it on the nat#re of the contract seller shill has .G da!s from final -#dgement on the basis that contract was a sale with pacto de retro( rationale( no redemption d#e to erroneo#s belief that it is e"#itable mortgage which can be e8ting#ished b! pa!ing the loan$ 6$ Dhen period has e8pired 5 seller allowed the period of redemption to e8pire seller is at fa#lt for not having e8ercised his rights so sho#ld not be granted a new period EFFECT D/EN T/ERE *S NO RE=E>1T*ON >A=E( %$ -#rispr#dence before the NCC( b#!er a retro a#tomaticall! ac"#ires f#ll ownership )$ #nder present art %9G:( there m#st be. -#dicial order before ownership of real propert! is consolidate in the b#!er a retro /OD *S RE=E>1T*ON EFFECTE=( %$ Seller a retro m#st ret#rn first pa! the following( a$ the price of the thing sold b$ e8pensed of the contract and other legitimate pa!ments made b! reason of the sale c$ necessar! and #sef#l e8pensed made on the thing sold )$ Ealid tender of pa!ment is s#fficient .$ >ere sending of notice witho#t valid tender is ins#fficient 6$ Fail#re to pa! #sef#l 5 #nnecessar! e8penses entitled vendee to retain land #nless act#al reimb#rsement is made *N CASE OF >,LT*01ART*ES %$ Dhen an #ndivided thing is old beca#se co0owners cannot agree that it be allotted to on of them vendee a retro m! compel the vendor to redeem the whole thing )$ Dhen an #ndivided thing is sold b! co0owners ; co0heirs vendors a retro ma! onl! e8ercise his right over his respective share2 vendee a retro ma! demand that the! m#st come to an agreement first and ma! not be compelled to consent to a partial redemption .$ Dhen rights for co0owners over an #ndivided thins is sold as regards to their own share vendee retro cannot compel one to redeem the whole propert! 6$ Sho#ld one of the co0heirs;co0owners s#cceed in redeeming the propert! s#ch vendor a retro shall be considered as tr#stee with respect to the share of the other co0owners;co0heirs$ FR,*TS %$ what controls is the stip#lation between parties as regards the fr#its2 if none )$ at time of e8ec#tion of the sale a retro there sho#ld be visible or growing fr#its there shall be no pro0rating at time of redemption of no indemnit! was paid b! the vendee a retro .$ at time of e8ec#tion sale a retro there sho#ld be no fr#its b#t there are fr#its at time of redemption pro0rated between vendor a retro 5 vendee a retro giving the vendee a retro a part corresponding to the time he possessed the land$ LE3AL REDEMPTION right to be s#brogated #pon the same terms and conditions stip#lated in the contract in the place of one who ac"#ires the thing b! p#rchase or b! dation in pa!ment or b! other transaction whereb! ownership is transmitted b! onero#s title$ %$ among co0heirs an! of heirs sells hereditar! right to stranger before partition an! of the co0heirs ma! be s#brogated to the rights of the p#rchaser b! redeeming said hereditar! right( reimb#rse b#!er of the price of the sale co0heirs has % month from receipt of notice in writing

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

)$ among co0owners an! or all of co0owners sells their shared to .rd person an! co0owner ma! e8ercise right of redemption b! pa!ing reasonable price of propert! to the b#!er if ) or more co0owners desire to e8ercise right of redemption the! ma! onl! do so in proportion to the share the! ma! respectivel! have in the thing owned in common =*ST*NCT*ON 4ETDEEN R*</T OF RE=E>1T*ON OF CO0/E*RS FRO> CO0ODNERS CO0/E*RS CO0ODNERS /eir ma! redeem for himself alone the Co0owner ma! redeem propert! b#t even if hereditar! right sold b! a co0heir #ses his own f#nds redemption in#res to the benefit of other co0owners Sale of hereditar! right &%G??' over no Sale of interest in partic#lar propert! partic#lar ob-ect .$ among ad-oining owners a$ r#ral land where piece of r#ral land has an area not e8ceeding % hectare ad-oining owner has right to redeem #nless grantee does not own a r#ral land if ) or more ad-acent lot owners desire to e8ercise right to redeem owner of ad-oining lot with smaller area shall be preferred if ) or more ad-acent lit owners desire to e8ercise right to redeem 5 both have same lot area one who first re"#ested shall be granted b$ #rban land when piece of land is small 5 cannot be #sed for an! practical p#rpose 5 bro#ght merel! for spec#lation owner of ad-oining land can redeem ) or more owners of ad-oining lot desire to e8ercise right to redeem owner whose intention towards #se of land shall be preferred$ c$ sale of credit litigation when a credit or other incorporeal right in litigation is sold debtor shall have a right to e8ting#ish it b! reimb#rsing the assignee for the price the latter paid therefor pl#s -#dicial costs interest debtor ma! e8ercise right within .G da!s from assignee demands pa!ment from him D/EN 1ER*O= OF RE=E>1T*ON 4E<*NS TO R,N %$ right of legal pre0emption of redemption shall be e8ercised within .G da!s from notice b! the b#!er )$ deed of sale not to be recorded in R= #nless accompanied b! affidavit that b#!er has given notice to redemptioners .$ when there is act#al 3nowledge no need to give written notice2 period of redemption begins to r#n from act#al 3nowledge OT/ER *NSTANCES D/EN R*</T OF LE<AL RE=E>1T*ON *S <RANTE= %$ Redemption of homesteads 1#blic Land Act Land ac"#ired #nder free patent homestead S#b-ect to rep#rchase b! wife legal heirs within 7 !ears from date of conve!ance <ranted b! law need not be stip#lated )$ Redemption in ta8 sales in case of ta8 delin"#enc!;fail#re to pa! ta8 assessments propert! is foreclosed delin"#ent pa!er has % !ear to redeem b! pa!ing to the reven#e =istrict Officer the amo#nt of ta8 delin"#encies 5 interest or p#rchase price$ .$ Redemption b! -#dgement debtor

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

% !ear to redeem b! pa!ing p#rchaser at p#blic a#ction with interest

6$ Redemption in e8tra-#dicial foreclos#re % !ear from date of sale and registration 7$ Redemption in -#dicial foreclos#re of mortgage no right to redeem is granted to debtor mortgagor e8cept when mortgagee is ban3 of a ban3ing instit#tion HG da!s after finalit! of -#dgement CHAPTER 14: ASSI3NMENT Sale of credits 5 other incorporeal things Technical term b#t basicall! a sale

WHAT MAKES ASSIGNMENT DIFFERENT FROM SPECIES SALE:

S#b-ect matter Form 4inding effect to .rd persons ASS*<N>ENT *ntangibles Consens#al Recorded in registr! propert! SALE Tangibles Consens#al No recording needed to s#ch effect

of

EFFECT OF ASS*<N>ENT %$ lac3 of 3nowledge or consent of debtor not essential for validit! b#t has legal effect )$ assignment of rights made w;o 3nowledge of debtor debtor ma! set #p against assignee the compensation w;c wo#ld pertain to him against assignor of all credits prior to assignment and later ones #ntil he had 3nowledge of the assignment .$ debtor has consented to assignment cannot set #p compensation #nless assignor was notified that he reserved his right to the compensation 6$ debtor has 3nowledge b#t no consent 0 compensation ma! still be set #p TRANSFER OF ODNERS/*1 b! tradition 5 not b! perfection e8ec#tion of p#blic instr#ment beca#se intangibles cannot be ph!sicall! transferred ACCESSOR*ES 5 ACCESS*ONS incl#des all accessor! rights s#ch as g#arant! mortgage pledge or preference DARRANT*ES %$ against hidden defect 0 N;A beca#se intangibles has no ph!sical e8istence )$ e8istence 5 legalit! of credit 0 there is warrant! e8cept when what is sold is do#btf#l acco#nt .$ solvenc! of debtor 0 no warrant! #nless a$ there is stip#lation b$ insolvenc! was prior to assignment 5 of common 3nowledge shall onl! last for % !ear 6$ one who assigns inheritance right w;o en#merating rights shall be answerable for his character as an heir 7$ one who sells certain rights for a l#mp s#m shall be answerable for legitimac! of the whole in general b#t not for each of the vario#s parts 4REAC/ OF DARRANTC %$ if in good faith 0 e8penses of the contract 5 other legitimate pa!ments made b! reason of the assessment )$ if in bad faith 0 e8penses of contract 5 other legitimate pa!ments pl#s #sef#l 5 necessar! e8penses ASS*<N>ENT OF CRE=*T OR *NCOR1OREAL R*</T *N L*T*<AT*ON

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C IV IL L AW ( S AL E S ) MEMORY AID ATENEO CENTRAL BAR OPERATIONS 2001

spec#lative law wo#ld rather benefit the debtor of s#ch credits rather than the one who merel! spec#lates for profit when credit or incorporeal right in litigation is assigned or sold debtor has a right to e8ting#ish it b! reimb#rsing the assignee for the price the b#!er paid pl#s interest right to redeem to be e8ercised within .G da!s from demand b! assignee for pa!ment

R*</T TO RE=EE> 4C =E4TOR NOT AEA*LA4LE *N T/E FOLLOD*N< *NSTANCES &NOT CONS*=ERE= S1EC,LAT*EE' %$ assignment of credit ; incorporeal right to co0heir or co0wor3er )$ assignment to creditor in pa!ment for his credit .$ assignment to possessor of tenement or piece of land which is s#b-ect to the right in litigation assigned CHAPTER 11: BUL= SALES LAW

1rotect creditor of merchant stored . t!pes of transactions( %$ Sale of goods other than in ordinar! co#rse of b#siness )$ Sale of b#siness .$ Sale of fi8t#res 5 e"#ipments Sho#ld cover onl! merchants beca#se creditors cannot get ade"#ate sec#rit! beca#se goods are sold ordinaril! in co#rse of b#siness Not covered( %$ with waiver of creditor of seller )$ receiver assignee in insolvenc! proceeding =#t! of seller to perform the following when transaction is within the coverage of the law %$ ma3e sworn statement of listing of creditors )$ deliver! of sworn statement to b#!er .$ appl! the proceeds pro0data to claims of creditors shown in verified statement 6$ written advance disclos#re to creditors ON TRANSACT*ON ON SELLER

Effects of Non-Compliance

FA*L,RE TO( 1repare 5 deliver sworn listing of creditors Appl! proceeds pro0rata to listed creditors >a3e advance written disclos#re of transactions to creditors Register sworn statement with =T* *ncl#de or omit names of creditors 5 correct amo#nt d#e in the statement Sale for no consideration

Fra#d#lent 5 void Fra#d#lent 5 void Not void Not void Eoid Eoid

Criminal Liabilit! Criminal Liabilit! No Criminal Liabilit! No Criminal Liabilit! Criminal Liabilit! Criminal Liabilit!

ANT*0=,>>C LAD 1enaliIes Filipinos who permit aliens to #se them as nominees or d#mmies to en-o! privileges reserved onl! for Filipinos >anagement operation as officers emplo!ees or laborers Control or non0control position