Sales - Beda

San Beda College of Law
113
MEMORY AID IN CIVIL LAW
SALES
SALE
A nominate contract whereby one of
the contracting parties obligates
himself to transfer the ownership of
and to deliver a determinate thing and
the other to pay therefor a price
certain in money or its equivalent.
NOTES: Delivery and payment in a
contract of sale are so interrelated and
intertwined with each other that without
delivery of the goods there is no
corresponding obligation to pay. The two
complement each other. It is clear that
the two elements cannot be dissociated,
for the contract of purchase and sale is
essentially a bilateral contract, as it gives
rise to reciprocal obligations. (Pio
Barretto Sons, Inc. vs. Compania
Maritima, 62 SCRA 167).
Neither is the delivery of the thing
bought nor the payment of the price
necessary for the perfection of the
contract of sale. Being consensual, it
is perfected by mere consent.
Elements:
a. ssential elements ! those without
which, there can be no valid sale"
#. $onsent or meeting of minds
%. A Determinable sub&ect matter
'. (rice certain in money or its
equivalent
b. Natural elements ! inherent in the
contract, and which in the absence of
any contrary provision, are deemed to
e)ist in the contract"
#. *arranty against eviction
%. *arranty against hidden defects
c. Accidental elements ! may be
present or absent depending on the
stipulation of the parties (e.g.:
conitions, interest, pena!t", time or
p!ace o# pa"ment, etc.)
Characteristics:
#. (rincipal
%. $onsensual+
'. Bilateral+
,. Nominate+
-. $ommutative+ In some cases,
aleatory .emptio spei/+
0. 1nerous.
2 Aleatory contract" one of the parties or
both reciprocally bind themselves to give
or to do something in consideration of
what the other shall give or do upon the
happening of an event which is uncertain,
or which is to occur at an indeterminate
time. ($%: Sa!e o# s&eepsta'es tic'et)
Contract to sell
e)clusive right and privilege to
purchase an ob&ect.
a bilateral contract whereby the
prospective seller, while e)pressly
reserving the ownership of the
sub&ect property despite delivery
thereof to the prospective buyer binds
himself to sell the said property
e)clusively to the prospective buyer
upon fulfilment of the condition
agreed upon, that is, full payment of
the purchase price.
NOTE: Absent a proviso in the contract
that the title to the property is reserved in
the vendor until full payment of the
purchase price or a stipulation giving the
vendor the right to unilaterally rescind the
contract the moment the vendee fails to
pay within the fi)ed period, the
transaction is an absolute contract of sale
and not a contract to sell. ((ignos vs. CA
)1*++,)
2 The contract of sale by itself is not a
mode of acquiring ownership. The contact
transfers no real rights+ it merely causes
certain obligations to arise.
Contract of
Sale
Contract to
Sell
#. Title passes to t-e
./"er upon delivery of
the thing sold
#. 1wnership is
reserved in the
seller and is not to
pass until full
payment of the
purchase price
%. Non3payment of the
price is a negative
resolutory condition
and the remedy of the
seller is to e)act
fulfilment or to rescind
the contract
%. 4ull payment is a
positive suspensive
condition, the failure
of which is not a
breach ! casual or
serious but simply
prevents the
CIVIL LAW COMMITTEE
CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON : Vida Bocar, Joyce Vidad EDP : Alnaia Ha!!iman, Doro"#y $ayon
S%BJECT HEADS: C#ri!"o&#er Rey 'ara!i(an )Per!on! and *amily Rela"ion!+, Ale,andro Ca!a-ar)Pro&er"y+, 'a. R#odora
*errer).ill! and Succe!!ion+, Ian Dominic Pua)O-li(a"ion! and Con"rac"!+, S#a Eli,a# Dumama)Sale! and /ea!e+, Jo#n S"e&#en
0uiam-ao)PAT+, C#ri!"o&#er Ca-i(ao)Credi" Tran!ac"ion!+, /i(aya Ali&ao)Tor"! and Dama(e!+, An"#ony Pur(anan)/TD+,
'a. Rica!ion Tu(adi )Con1lic"! o1 /a2+
114 2005 CENTRALIZED BAR OPERATIONS
obligation of the
vendor to convey
title from having
binding force
'. 5endor loses and
cannot recover
ownership of the thing
sold and delivered
until the contract of
sale is resolved and
set aside
'. Title remains in
the vendor if the
vendee does not
comply with the
condition
preceent of
ma6ing payment at
the time specified
in the contract
Conditional Sale Contract to
Sell
As to reservation of title to the subject
property
In both cases the seller may reserve the
title to the sub&ect property until fulfillment
of the suspensive condition i.e. full
payment of the price
As to effect of fulfillment of suspensive
condition
#. 7pon fulfillment of
the suspensive
condition, the contract
of sale is thereby
perfected, such that if
there had been
previous delivery of
the sub&ect property to
the buyer, ownership
thereto automatically
transfers to the
buyer by operation
of law without any
further act by the
seller.
#. 7pon
fulfillment of the
suspensive
condition, which
is the full
payment of the
purchase price,
ownership will
not automatically
transfer to the
buyer although
the property may
have been
previously
delivered to him.
The prospective
seller still has
to convey title
to the
prospective
buyer by
entering into a
contract of
absolute sale.
As to effect of sale of the subject
property to 3
rd
persons
#. $onstructive
8actual 6nowledge on
the part of the %
nd
buyer of the defect in
the seller9s title
renders him not a
registrant in good
faith. :uch second
buyer cannot defeat
the first buyer9s title.
Ratio" 4ulfilment of
the suspensive
conditions affects the
seller9s title to the
property and previous
delivery of the
property automatically
transfers
ownership8title to the
buyer.
#. Third person
buying the
property despite
fulfilment of the
suspensive
condition cannot
be deemed a
buyer in bad faith
and prospective
buyer cannot
see6 the relief of
reconveyance of
property.
Exception: If
There was no
previous sale of
the property.
OBJECTS OF SALE
Reqisites:
#. T;IN<:"
a/ determinate or determinable .Arts.
#,-=, #,0>/
b/ lawful .Arts #',?, #,>@ A#,,B
c/ should not be impossible .Art.
#',=/ e.g. must be within the
commerce of man
%. CI<;T: ! must be transmissible
)ceptions"
3future inheritance
3 service
Emptio rei
speratae
Emptio spei
#. :ale of an e%pecte
t-ing
#. :ale of a mere
hope or e)pectancy
that the thing will
come to e)istence+
Sa!e o# t-e -ope
itse!#
%. :ale is sub&ect to
the condition that the
thing will e)ist+ if it
does not, there is no
contract
%. :ale produces
effect even if the
thing does not
come into
e)istence, unless it
is a vain hope
'. The uncertainty is
with regard to the
quantity and quality of
the thing and not the
e)istence of the thing
'. The uncertainty
is with regard to the
e)istence of the
thing
,. 1b&ect is a future
thing
,. 1b&ect is a
present thing which
is the hope or
e)pectancy
NOTE: In case of doubt the presumption
is in favor of emptio rei speratae which is
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT
CHAIRPERSONS
Mar!"# A$ar"%&'( )O3er4all C#air&er!on+, R'%a#) Ja#*a%+ar )O3er4all Vice C#air+, Y'#a%)a T'#"%&%')VC4Acad!+,
J"%%,"r A%-)VC4 Secre"aria"+, J'. I%)/!&0' )VC4*inance+, E#a%" Ma(/1a& )VC4EDP+, A%%a Mar-ar&a Er"( )VC4
/o(i!"ic!+. J'%a&2a%
Ma%-/%)a.a' )Poli"ical /a2+, 3ra%!( B"%")!& R"'&/&ar )/a-or /a2+, R'*/a#) Pa)##a )Ci3il /a2+, C2ar*a%" T'rr"(
)Ta5a"ion /a2+, Mar1 Da0) Mar&%"+ )Criminal /a2+, 4ar%. L/(a A#"-r" )Commercial /a2+, J%1. A%% U. )Remedial /a2+,
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
115
more in 6eeping with the commutative
character of the contract
!oods "hich ma# $e O$%ect of Sale
a. )isting goods ! goods owned or
possessed by the seller.
b. 4uture goods ! goods to be
manufactured, raised or acquired by
the seller after the perfection of the
contract.
NOTES:
A sale of future goods is valid only as
an e)ecutory contract to be fulfilled by
the acquisition and delivery of goods
specified.
*hile there can be sale of future
property, there can generally be no
donation of future property .Artic!e
701 Civi! Coe/
4uture inheritance cannot be sold.
A contract of sale or purchase of
goods to be delivered at a future time,
if entered into without the intention of
having any goods pass from one
party to another, but with an
understanding that at the appointed
time, the purchaser is merely to
receive or pay the difference between
the contract and the mar6et prices, is
illegal. :uch contract falls under the
definition of DfuturesE in which the
parties merely gamble on the rise or
fall in prices and is declared null and
void by law. .Art. %>#=, N$$/
.1napa! P-i!. Commoities, Inc. vs.
CA A#@@'B/
&nstances "hen the Ci'il Code
reco(ni)es sale of thin(s not
actall# or alread# o"ned $# the
seller at the time of the sale:
#. :ale of a thing having potential
e)istence .Artic!e 1261/
%. :ale of future goods .Artic!e 1262/
'. $ontract for the delivery at a certain
price of an article which the vendor in
the ordinary course of the business
manufactures or procures for the
general mar6et, whether the same is
on -an at t-e time or not (Artic!e
#,0?/
Sale A(enc# to sell
#. Buyer receives
the goods as owner
#. Agent receives
the goods as goods
of the principal who
retains his
ownership over them
%. Buyer pa"s t-e
price
%. Agent e!ivers t-e
price &-ic- in t/rn
-e got #rom -is
./"er
'. Buyer, as a
general rule, cannot
return the ob&ect sold
'. Agent can return
the goods in case he
is unable to sell the
same to a third
person
,. :eller warrants
the thing sold
,. Agent ma6es no
warranty for which
he assumes
personal liability as
long as he acts
within his authority
and in the name of
the seller
-. Buyer can deal
with the thing sold as
he pleases being the
owner
-. Agent in dealing
with the thing
received, must act
and is bound
according to the
instructions of the
principal
Contract for
*iece of +or,
Sale
#. The thing
transferred is one
not in e)istence and
which never would
have e)isted but for
the order of the party
desiring to acquire it
#. The thing
transferred is one
which would have
e)isted and would
have been the
sub&ect of sale to
some other person,
even if the order had
not been given
%. The services
dominate the
contract even though
there is a sale of
goods involved
%. The primary
ob&ective of the
contract is a sale of
the manufactured
item+ it is a sale of
goods even though
the item is
manufactured by
labor furnished by
the seller and upon
previous order of the
customer
'. Not within the
:tatute of 4rauds
'. *ithin the :tatute
of 4rauds
Rles to determine if the contract is
one of Sale or *iece of "or,:
CIVIL LAW COMMITTEE
a. If ordered in the ordinary course of
business ! sale
b. If manufactured specially for the
customer and upon his special order,
and not for the mar6et ! piece of
work
SCHOOLS OF HO!"H#
a/ Fassachusetts rule" If specifically
done at the order of another, this
is a contract for a piece of wor6.
.(hilippine application/
b/ New Gor6 rule" If thing already
e)ists3:AH+ if not3*1CI
c/ nglish rule" If material is more
valuable3:AH+ if s6ill is more
valuable3*1CI
BARTER
contract whereby one of the parties
binds himself to give one thing in
consideration of the otherJs promise
to give another thing.
NOTE: The only point difference
between contract of sale and barter is in
the element which is present in sale but
not in barter, namely" price certain in
mone" or its e3/iva!ent
NOTE: If the consideration is partly in
mone" and partly in anot-er t-ing ,
determine"
a. The manifest intention of the
parties
b. If the intent is not clear, apply the
following rules"
#. If the thing is more valuable
than money ! barter
%. If the money and the thing
are of equal value ! sale
'. If the thing is less valuable
than money ! sale
Sale -ation in
*a#ment
#. No pre3e)isting
credit
#. (re3e)isting credit
%. 1bligations are
created
%. 1bligations are
e)tinguished
'. $onsideration on
the part of the seller
is the price+ on the
part of the buyer is
the acquisition of the
ob&ect
'. $onsideration of
the debtor is the
e)tinguishment of the
debt+ on the part of
the creditor, it is the
acquisition of the
ob&ect offered in lieu
of the original credit
,. <reater freedom
in determining
the price
,. Hess 4reedom in
determining the
price
-. Buyer still has to
pay the price
-. The payment is
received by the
debtor before the
contract is
perfected.
*R&CE
The sum stipulated as the equivalent
of the thing sold and also every
incident ta6en into consideration for
the fi)ing of the price, put to the debit
of the vendee and agreed to by him.
Reqisites:
#. $ertainty or ascertainable at the
time of perfection
%. Ceal, not fictitious
'. In some cases, must not be
grossly inferior to the value of the
thing sold.
,. (aid in money or its equivalent
Certaint#
It is not necessary that the certainty
of the price be actual or determined
at the time of the e)ecution of the
contract. The price is certain in the
following cases"
#. If the parties have fi)ed or agreed
upon a definite amount+
NOTE: The fi)ing of the price can
never be left to the discretion of one
of the contracting parties. ;owever if
the price fi)ed by one of the parties is
accepted by the other, the sale is
perfected.
%. If it be certain with reference to
another thing certain
'. If the determination of the price is
left to the &udgment of a specified
person or persons even before
such determination
,. In the cases provided under Art.
#,?% N$$
Effect "hen the price is fixed $# the
third person desi(nated:
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
116
4$5$RA6 R76$: (rice fi)ed by a third
person designated by the parties is
binding upon them.
$8C$P9I15S:
#. *hen the third person acts in bad
faith or by mista6e
%. *hen the third person disregards
the specific instructions or the
procedure mar6ed out by the
parties
Effect "hen the price is not fixed $#
the third person desi(nated:
#. If the third person refuses or
cannot fi) the price, the contract
shall become ineffective, unless
the parties subsequently agree
upon the price
%. If the third person is prevented
from fi)ing the price by the fault of
the seller or buyer, the party not
in fault may obtain redress
against the party in fault
Effect of !ross &nadeqac# of *rice:
./ 0olntar# sales
4$5$RA6 R76$: Fere inadequacy of
the price does not affect validity of the
sale.
A valuable consideration, however
small or nominal, if given or stipulated
in good faith is, in the absence of
fraud, sufficient.(Rorig/e: vs. CA,
2;7 SCRA 00<)
4uture inheritance cannot be sold.
$8C$P9I15S:
a. *here low price indicates vice of
consent, sale may be annulled+ or
contract is presumed to be an
equitable mortgage
b. *here the price is so low as to be
Dshoc6ing to conscienceE, sale
may be set aside.
1/ &n'olntar# or Forced sales
4$5$RA6 R76$: Fere inadequacy of
the price is not a sufficient ground for the
cancellation of the sale if property is real.
$8C$P9I15S:
a. *here the price is so low as to be
shoc6ing to the moral
conscience, &udicial sale of
personal property will be set
aside
b. In the event of a resale, a better
price can be obtained
NOTE: The validity of the sale is not
necessarily affected where the law gives
to the owner the right to redeem, upon
the theory that the lesser the price, the
easier it is for the owner to effect
redemption.
Effect "here price is simlated
1. I# it is s-o&n to -ave .een in rea!it" a
onation or some ot-er act or
contract
The sale is void but the
act or contract may be valid as a
donation
2. I# not
The contract is void and
ine)istent
Effect of Failre to determine price:
1. =-ere contract e%ec/tor"
The contract is
inefficacious
2. =-ere t-e t-ing -as .een e!ivere
to an appropriate ." t-e ./"er
The buyer must pay a reasonable
price therefore
Reasona$le price 2 generally the mar6et
price at the time and place fi)ed by the
contract or by law for the delivery of the
goods
*ERFECT&ON OF SALE
4$5$RA6 R76$: It is perfected at the
moment there is meeting of the minds
upon a determinate thing .ob&ect/, and a
certain price .consideration/, even if
neither is delivered. A choice between
rescission and fulfilment, with damages in
either case/
NOTE: :ale is a consensual contract+
;ence, delivery and payment are not
essential for its perfection
$8C$P9I15: *hen the sale is sub&ect
to a suspensive condition by virtue of law
or stipulation.
2 The terms and conditions of payment
are merely accidental, not essential
elements of the contract of sale e)cept
where the partied themselves stipulate
CIVIL LAW COMMITTEE
that in addition to the sub&ect3matter and
the price, they are essential or material to
the contract.
Reqirements for perfection
a$ %hen parties are face to face
*hen an offer is accepted without
conditions or qualifications
NOTES:
A conditional acceptance is a
counter3offer
when negotiated thru phone it is
as if it is negotiated face to face
b$ %hen contract is thru
correspondence or thru tele&ram
*hen the offeror receives or has
6nowledge of the acceptance by the
offeree
NOTE: If the buyer has already
accepted but the seller does not 6now
yet of the acceptance, the seller may
still withdraw
c$ %hen a sale is subject to a
suspensive condition
4rom the moment the condition is
fulfilled
TRANSFER OF O+NERS3&*
4$5$RA6 R76$: *hile a contract of
sale is consensual, ownership of the thing
sold is acquired only upon its delivery,
actual or constructive, to the buyer. ((a/s
vs. Sps. (e 6eon, 16 >/ne 2;;<)
This is true even if the purchase
has been made on credit.
(ayment of the purchase price is
not essential to the transfer of
ownership, as long as the
property sold has been delivered.
(Sampag/ita Pict/res, Inc vs.
>a!&inor Man/#act/rers, Inc. *<
SCRA 22;)
Nonpayment only creates a right
to demand payment or to rescind
the contract, or to criminal
prosecution in the case of
bouncing chec6s. ($(CA
P/.!is-ing an (istri./ting Corp.
vs. Santos, 1+2 SCRA 612)
$8C$P9I15S:
#. Contrar" stip/!ation or 'actum
reservati dominii .contractual
reservation of title/ ! a stipulation,
usually in sales by installment,
whereby, despite delivery of the
property sold, ownership remains with
the seller until full payment of the
price is made.
2. Contract to se!!
'. Contract o# ins/rance ! a perfected
contract of sale, even without
delivery, vests in the vendee an
equitable title, an e)isting interest
over the goods sufficient to be the
sub&ect of insurance
R4LES !O0ERN&N! A4CT&ON SALES
#. :ales of separate lots by auction are
separate contracts of sale.
%. :ale is perfected by the fall of the
hammer
'. :eller has the right to bid in the
auction, provided"
a/ such right was reserved
b/ notice was given that the sale was
sub&ect to a right to bid on behalf of the
seller
c/ right is not prohibited by law or by
stipulation
,. Advertisements for bidders are simply
invitations to ma6e proposals, and the
advertiser is not bound to accept the
highest or lowest bidder, unless the
contrary appears.
EFFECT OF *RO5&SE TREATE-
4N-ER ART/ .678 Ci'il Code:
#. Accepted nilateral promise to sell
or $#
1nly one ma6es the promise, this
promise is accepted by the other.
$%amp!e" A promises to sell to B, B
accepts the promise, but does not in
turn promise to buy.
does not bind the promissor even if
accepted and may be withdrawn
anytime.
NOTE: (ending notice of its withdrawal,
the accepted promise parta6es the nature
of an offer to sell which if accepted,
results in a perfected contract of sale
.Sanc-e: vs. Rigos 20 SCRA< 6+/. In
other words, if the acceptance is made
before withdrawal, it constitutes a binding
contract of sale although the option is
given without consideration.
if the promise is supported by a
consideration istinct an separate
from the price .option money/, its
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
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118
acceptance will give rise to a
perfected contract.
%. Bilateral promise to $# and sell
1ne party accepts the other9s
promise to buy and the latter, the
former9s promise to sell a determinate
thing for a price certain
it is reciprocally demandable
It requires no consideration distinct
from the selling price
NOTE" this is as good as a perfected
sale. No title of dominion is
transferred as yet, the parties being
given only the right to demand
fulfillment or damages.
'olicitation
An unaccepted unilateral promise to
buy or sell. ven if accepted by the
other party, it does not bind the
promissor and maybe withdrawn
anytime. This is a mere offer, and has
not yet been converted into a
contract.
Option contract
A contract granting a privilege in one
person, for which he has paid a
consideration, which gives him the
right to buy certain merchandise, at
anytime within the agreed period, at a
fi)ed price.
An option without consideration is
void and the effect is the same as if
there was no option
? ;owever, in Sanc-e: vs. Rigos (1*72/,
even though the option was not
supported by a consideration, the
moment it was accepted, a perfected
contract of sale resulted, applying Art.
#'%, of the N$$. In view of the ruling of
the :upreme $ourt, the only importance
of the consideration for an option is that
the option cannot be withdrawn by the
grantor after acceptance.
2 In an option to buy, the party who has
an option may validly and effectively
e)ercise his right by merely notifying the
owner of the former9s decision to buy and
e)pressing his readiness to pay the
stipulated price.
Ri(ht of First Refsal
It is a right of first priority all things
and conditions being equal+ there
should be identity of the terms and
conditions to be offered to the
optionee and all other prospective
buyers, with optionee to en&oy the
right of first priority. A deed of sale
e)ecuted in favor of a third party who
cannot be deemed a purchaser in
good faith, and which is in violation of
the of the right of first refusal granted
to the optionee is N1T voidable
under the :tatute of 4rauds, such
contract is valid B7T rescissible
under Article #'=> to #'=#.'/ of the
New $ivil $ode .4/:man Boca!ing @
Co. vs. BonnavieA Riviera Bi!ipina, Inc
vs. CA et.a!. 4R 5o. 117<00, Apri! 0,
2;;2/.
The basis of the right of first refusal
must be the current offer to sell of the
seller or offer to purchase of any
prospective buyer. 1nly after the
optionee fails to e)ercise its right of
first priority under the same terms
and within the period contemplated
could the owner validly offer to sell
the property to a third person, again,
under the same terms as offered to
the optionee .Parana3/e Cings
$nterprises, Inc. vs. CA 4R 5o.
1110<+, Be.r/ar" 26, 1**7/
The lessee9s right of first option to
buy the leased property in case of its
sale is but a part of the bigger right to
lease the said property from the
lessor. The option was given to the
lessee because she was the lessee
of the sub&ect property. It was a
component of the consideration of the
lease. The option was by no means
an independent right which can be
e)ercised by the lessee. If the lessee
is barred by the contract from
assigning her right to lease the
sub&ect property to any other party,
the lessee is similarly barred to
assign her first option to buy the
leased property to another.
.Banga"an et.a! vs. CA an 6im 4R
5o.12<0+1, A/g/st 2*, 1**7/
Earnest mone# ! or DACCA:E is
something of value to show that the buyer
was really in earnest, and given to the
CIVIL LAW COMMITTEE
seller to bind the bargain. It is considered
as"
a/ part of the purchase price
b/ proof of perfection of the
contract
2It shall be deducted from the total price.
Earnest mone# Option mone#
#. Title passes to
the buyer upon
delivery of the
thing sold
#. 1wnership is
reserved to the seller
and is not to pass
until full payment
%. In case of
non3payment, an
action for specific
performance or for
rescission can be
filed by the in&ured
party
%. In case of
non3payment, there
can be action for
specific performance
'. (art of the
purchase price
'. Foney given as a
distinct consideration
for an option contract
,. *hen given, the
buyer is bound to
pay the balance
,. The would3be
buyer is not required
to buy
-. <iven when
there is already a
sale
-. Applies to a sale
not yet perfected
R4LES ON R&S9 OF LOSS AN-
-ETER&ORAT&ON:
a. The thing sold is lost before
perfection: :eller bears the loss.
b. The thing sold is lost at the time of
perfection" $ontract is void or
ine)istent.
c. The thing sold is lost after
perfection( but before delivery"
4$5$RA6 R76$: *ho bears the
ris6 of loss is governed by the
stip/!ations in t-e contract
&n the a$sence of an#
stiplation:
First view#
Buyer bears the loss as an e)ception
to the rule of res perit omino.
$8C$P9I15S:
#. when ob&ect sold consists of
fungible goods for a price fi)ed
according to weight, number or
measure
%. seller is guilty of fraud,
negligence, default or violation of
contractual terms
'. ob&ect sold is generic
.Civi! Coe o# t-e P-i!ippines, Paras/
NOTE: This view conforms with
Fanresa9s view. Buyer would have
been the one to profit from the thing
had it not been lost or destroyed.
Contrary view#
*here the ownership is transferred
by delivery, as in our code, the
application of the a)iom res perit
omino, imposes the ris6 of loss upon
the vendor+ hence, if the thing is lost
by fortuitous event before delivery,
the vendor suffers the loss and
cannot recover the price from the
vendee .Commentaries an
>/rispr/ence on t-e Civi! Coe o#
t-e P-i!ippines, 9o!entino/
d. The thing is lost after delivery" Buyer
bears the loss.
Kuestion" If one does not comply, the
other need not payL
Answer" True. But this only applies when
the seller is able to deliver but does not.
EFFECT OF LOSS AT T3E T&5E OF
SALE:
a. Thing entirely lost at the time of
perfection" $ontract is void and
ine)istent
b. Thing only partially lost" 5endee may
elect between withdrawing from the
contract or demanding the remaining
part, paying its proportionate price
Sale $# description
A sale where a seller sells things as
being of a certain 6ind, buyer merely
relying on the seller9s representations
or descriptions.
There is warranty that the thing sold
corresponds to the representations or
descriptions.
Sale $# sample
A sale where a small quantity of a
commodity is e)hibited by the seller
as a fair specimen of the bul6, which
is not present and as to which there is
no opportunity to inspect or e)amine.
NOTE: The mere e)hibition of the
sample does not necessarily ma6e it
a sale by sample. This e)hibition
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
121
must have been the sole basis or
inducement of the sale.
There is warranty that the bul6 of the
commodity will correspond in 6ind,
quality, and character with the sample
e)hibited.
NOTE" In a sale by sample and by
description, there is a two3fold warranty.
R&!3TS OF B4:ER:
#/ Ceturn the thing and recover the
money paid, or
%/ Cetain the thing and sue for the breach
of warranty.
*4RC3ASE B: 5&NORS: $ontract is
generally voidable but in case of
necessaries, Dwhere necessaries are sold
and delivered to a minor or other person
without capacity to act, he must pay a
reasonable price therefore. Necessaries
are those in Art. %@>.E
FOR5AL&T&ES OF CONTRACT OF
SALE
4$5$RA6 R76$: :ale is a consensual
contract and is perfected by mere
consent.
$8C$P9I15S: In order to be
enforceable by action, the following must
be in writing"
#. :ale of personal property at a
price not less than (->>
%. :ale of real property or an
interest therein
'. :ale of property not to be
performed within a year from the
date thereof
,. DApplicable statuteE requires that
the contract of sale be in a certain
form
NOTE: :tatute of 4rauds is applicable
only to e)ecutory contracts and not to
contracts which are totally or partially
performed.
CA*AC&T: TO B4: OR SELL
4$5$RA6 R76$: All persons who can
bind themselves also have legal capacity
to buy and sell.
$8C$P9I15S:
#. Absolute incapacity .minors,
demented persons, imbeciles,
deaf and dumb, prodigals, civil
interdictees/ 3 party cannot bind
themselves in any case.
%. Celative incapacity ! incapacity
e)ists only with reference to
certain persons or a certain class
of property
Relati'e &ncapacit#
A/ 3s$and and "ife ;Art/ .68<=:
4enera!!", a sa!e ." one spo/se to
anot-er is voi.
The husband and wife cannot sell
property to each other except:
#. *hen a separation of property
was agreed upon by the spouses
%. *hen there has been a &udicial
separation of property under
Article #', and #'- of the 4amily
$ode
B/ &ncapacit# $# reason of relation to
propert# ;Art/ .68.=
The following persons cannot acquire
property by purchase, even at a
public auction, either in person or
through the mediation of another"
;!AE*>JO=
#. the (uardian, with respect to the
property of his ward+
%. a gents, with respect to the
property whose administration or
sale may have been entrusted to
them, unless the consent of the
principal has been given+
'. e )ecutor or administrator, with
respect to the property of the
estate under administration+
,. p ublic officers and employees,
with respect to the properties of
the government, its political
subdivisions, or <1$$s, that are
entrusted to them+
-. %udges, &ustices, prosecuting
attorneys, cler6s of courts, etc.,
with respect to the property in
custogia legis+ and
0. any other person specially
disqualified by law.
Examples of persons
especiall# disqalified $# la":
a. Aliens who are disqualified to
purchase agricultural lands
b. An unpaid seller having a right
of lien or having stopped the
CIVIL LAW COMMITTEE
goods in transitu, who is
prohibited from buying the goods
either directly or indirectly in the
resale of the same, at public or
private sale which he may ma6e
c. The officer holding the
e)ecution, or his deputy.
NOTE: *hile those disqualified
under Arts. #,@> and #,@# may
not become lessees .Art. #0,0/,
still aliens may become lessees
even if they cannot buy lands.
Effect of 'iolation:
a/ *ith respect to nos. . to ?" the
sale is )O*+A,L-.
Reason: only private rights,
which are sub&ect to ratification
are violated
NOTE: In the case of Lao vs$
"enato( .3/ SC0A //, the
:upreme $ourt found that the
sale by the administrator of
certain properties of the estate in
order to settle the e)isting
obligations of the estate was
mae to t-e aministratorDs son
#or a gross!" !o& price.
4urthermore, the said sa!e &as
not s/.mitte to t-e pro.ate
co/rt #or approva! as manate
." t-e orer a/t-ori:ing t-e
aministrator to se!!. The sale
was indubitably illegal, irregular
and fictitious, and the court9s
approval of the assailed
compromise agreement violated
Article #,@# and cannot wor6 to
ratify a fictitious contract which is
non1e2istent and void from the
very beginning
b/ *ith respect to nos. 6 to @" the
sale is 3!LL A3+ )O*+.
Reason: violation of public policy
cannot be sub&ect to ratification
OBL&!AT&ONS OF T3E 0EN-OR:
.*(D3TT/
#. T ransfer ownership (cannot .e
&aive)
%. - eliver the thing sold (cannot .e
&aive)
'. + arrant against eviction and against
hidden defects (can .e &aive or
moi#ie since &arrant" is not an
essentia! e!ement o# t-e contract o#
sa!e)
,. T a6e care of the thing, pending
delivery, with proper diligence .Artic!e
116</
-. * ay for the e)penses of the deed of
sale, unless there is stipulation to the
contrary
-EL&0ER:
Is a mode of acquiring ownership, as
a consequence of certain contracts
such as sale, by virtue of which,
actually or constructively, the ob&ect is
placed in the control and possession
of the vendee.
Delivery of the thing together with
the payment of the price, mar6s
the consummation of the contract
of sale.(NB vs. Hing, 0@ (hil.
0##/
In all forms of delivery, it is
necessary that the act of delivery
be coupled with the intention of
delivering the thing. The act
without the intention is
insufficient. (5or'is (istri./tor,
Inc. vs. CA, 1*0 SCRA 6*2)
9inds:
#. Actual or real ! placing the thing
under the control and possession of
the buyer.
%. Hegal or constructive ! delivery is
represented by other signs or acts
indicative thereof
a. delivery by the e%ec/tion o# a
p/.!ic instr/ment.
NOTE: <ives rise only to a prima
facie presumption of delivery which is
destroyed when actual delivery is not
effected because of a legal
impediment (9en Bort" Rea!t" vs.
Cr/:, 1; Sept. 2;;<)
b. traitio s"m.o!ica 3 to effect
delivery, the parties ma6e use of
a to6en or symbol to represent
the thing delivered
c. traitio !onga man/ ! seller
pointing out to the buyer the
things which are transferred,
which at the time must be in
sight.
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
123
d. traitio .revi man/ ! buyer simply
continues in possession of the
thing but under title of ownership.
e. traitio constit/t/m possessori/m
! seller continues in possession
but under a different title other
than ownership.
'. Kuasi3tradition ! delivery of rights,
credits or incorporeal property, made
by"
a. placing titles of ownership in the
hands of buyer
b. allowing buyer to ma6e use of
rights
,. Tradition by operation of law
Constrcti'e deli'er# reqires three
thin(s $efore o"nership ma# $e
transferred:
#. The seller must have control over the
thing
%. The buyer must be put under control
'. There must be the intention to deliver
the thing for purposes of ownership
+hen is the 'endor not $ond to
deli'er the thin( sold:
#. If the vendee has not paid him the
price
%. If no period for payment has been
fi)ed in the contract
'. ven if a period for payment has
been fi)ed in the contract, if the
vendee has lost the right to ma6e use
of the same.
Sale or retrn
(roperty is sold, but the buyer, who
becomes the owner of the property
on delivery, has the option to return
the same to the seller instead of
paying the price.
NOTES:
It is a 6ind of sale with a condition
subsequent.
The buyer must comply with the
e)press or implied conditions
attached to the return privilege+
otherwise, the sale becomes
absolute.
Buyer, being the owner, bears the
ris6 of loss
Sale on trialA appro'alA or satisfaction
A contract in the nature of an option
to purchase if the goods prove to be
satisfactory, the approval of the buyer
being a condition precedent.
Rles:
#. title remains in the seller
%. ris6 of loss remains with seller e)cept
when the buyer is at fault or has
agreed to bear the loss
'. buyer must give goods a trial, e)cept
where it is evident that it cannot
perform the wor6
,. period within which buyer must signify
his acceptance runs only when all the
parts essential for the operation of the
ob&ect have been delivered.
-. if it is stipulated that a third person
must satisfy approval or satisfaction,
the provision is valid, but the third
person must be in good faith. If
refusal to accept is not &ustified, seller
may still sue.
0. <enerally, the sale and delivery to a
buyer who is an e)pert on the ob&ect
purchased is not a sale on approval,
trial, or satisfaction.
Sale or retrn Sale on Trial
#. :ub&ect to a
resolutory condition
#. :ub&ect to a
suspensive condition
%. Depends entirely
on the will of the
buyer
%. Depends on the
character or quality of
the goods
'. 1wnership
passes to the buyer
on delivery and
subsequent return
reverts ownership in
the seller
'. 1wnership remains
in the seller until buyer
signifies his approval or
acceptance to the seller
,. Cis6 of loss or
in&ury rests upon the
buyer
,. Cis6 of loss remains
with the seller
&nstances "here Seller is still the
O"ner despite -eli'er#:
#. :ale on trial, approval or satisfaction
%. $ontrary intention appears by the
term of the contract+
'. Implied reservation of ownership
.Article #->'/
a. If under the bill of lading, the
goods are deliverable to seller or
agent or their order+
b. If the bill of lading, although
stating that the goods are to be
delivered to the buyer or his
CIVIL LAW COMMITTEE
agent, is 6ept by the seller or his
agent+
a. *hen the buyer, although the
goods are deliverable to order of
buyer, and although the bill of
lading is given to him, does not
honor the bill of e)change sent
along with it.
Transfer of o"nership "here (oods
sold deli'ered to carrier
!eneral Rle: Delivery to the carrier is
deemed to be delivery to the buyer
Exception: *here the right of
possession or ownership of specific
goods sold is reserved
SALE OF !OO-S B: A NON>O+NER
4$5$RA6 R76$: Buyer acquires no
title even if in good faith and for value
under the ma)im 3emo dat 4uid non
habet .DGou cannot give what you do not
haveE/.
$8C$P9I15S: .:FC5:/
#. 1wner is estopped or precluded
by his conduct
%. *hen sale is made by the
registered owner or apparent
owner in accordance with
recording or registration laws
'. :ales sanctioned by &udicial or
statutory authority
,. (urchases in a merchantJs store,
fairs or mar6ets
-. *hen a person who is not the
owner sells and delivers a thing,
subsequently acquires title
thereto .Art. #,',/
0. *hen the seller has a 'oidable
title which has not been avoided
at the time of the sale .Art. #->0/
2 D7nlawful deprivationE is no longer
limited to a criminal act. There is 7nlawful
Deprivation where there is no valid
transmission of ownership.
*lace of deli'er# of (oods
#. =-ere t-ere is an agreement, place
of delivery is that agreed upon
%. =-ere t-ere is no agreement, place
of delivery determined by usage of
trade
'. =-ere t-ere is no agreement an no
preva!ent /sage, place of delivery is
the seller9s place
,. In an" ot-er case, place of delivery is
the seller9s residence
-. In case o# speci#ic goos, which to
the 6nowledge of the parties at the
time the contract was made were in
some other place, that place is the
place of delivery, in the absence of
agreement or usage of trade to the
contrary
Time of deli'er# of (oods
#. :tipulated time
%. In the absence thereof, within a
reasonable time
NE!OT&ABLE -OC45ENT OF T&TLE
;N-T=
A document of title in which it is
stated that the goods referred to
therein will be delivered to the bearer,
or to the order of any person named
in such document.
Fay be negotiated by delivery or
indorsement.
The docment is ne(otia$le if:
#. The goods are deliverable to the
bearer+ or
%. If the goods are deliverable to the
order of a certain person
*ersons "ho ma# ne(otiate N-T:
#. The owner+ or
%. Any person to whom the possession
or custody thereof has been
entrusted by the owner, if by the
terms of the document the bailee
issuing the document underta6es to
deliver the goods to the order of the
person to whom the possession or
custody of the document has been
entrusted or if at the time of such
entrusting the document in such form
that it may be negotiated by delivery.
2 If the holder of a negotiable document of
title .deliverable to bearer/ entrusts the
document to a friend for deposit, but the
friend betrays the trust and negotiates the
document by delivering it to another who
is in good faith, the said owner cannot
impugn the validity of the negotiation. As
between two innocent persons, he who
made the loss possible shall bear the
loss, without pre&udice to his right to
recover from the wrongdoer.
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
125
R&!3TS OF *ERSON TO +3O5
-OC45ENT 3AS BEEN NE!OT&ATE-:
#/ 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, over such goods+
'/ The direct obligation of the bailee to
hold possession of the goods for him, as
if the bailee had contracted to him directly
NOTEB Fere transferee does not acquire
directly the obligation of the bailee .in Art.
#-#'/. To acquire it, he must notify the
bailee.
+3O CAN -EFEAT R&!3TS OF
TRANSFEREE:
#. $reditor of transferor
%. Transferor
'. :ubsequent purchaser
R4LES +3EN C4ANT&T: &S LESS
T3AN A!REE- 4*ON:
#. Buyer may re&ect+ or
%. Buyer may accept what has been
delivered, at the contract rate
R4LES +3EN C4ANT&T: &S 5ORE
T3AN A!REE- 4*ON:
#. Buyer may re&ect all+ or
%. Buyer may accept the goods
agreed upon and re&ect the rest+
or
'. Buyer may accept all and must
pay for them at the contract rate
NOTE: Acceptance, even if not e)press
may be implied when the buyer e)ercises
acts of ownership over the e)cess goods.
R4LES +3EN !OO-S 5&DE- +&T3
!OO-S OF -&FFERENT
-ESCR&*T&ON:
Buyer may accept the goods which
are in accordance with the contract
and re&ect the rest
NOTE: If the sub&ect matter is indivisible,
in case of delivery of larger quantity of
goods or of mi)ed goods, the buyer may
re&ect the whole of the goods
-EL&0ER: TO T3E CARR&ER
4$5$RA6 R76$: *here the seller is
authoriMed or required to send the goods
to the buyer, delivery to the carrier is
delivery to the buyer.
$8C$P9I15S:
#. *hen a contrary intention
appears
%. Implied reservation of ownership
under pars. #,%,' of Art. #->'
9inds of -eli'er# to the Carrier
a. $.I.4. (cost, ins/rance, #reig-t ) !
signify that the price fi)ed covers
not only the costs of the goods,
but the e)pense of the freight and
the insurance to be paid by the
seller
b. 4.1.B. (#ree on .oar ) ! goods
are to be delivered free of
e)pense to the buyer to the point
where they are 4.1.B. The point
of 4.1.B., either at the point of
shipment or the point of
destination, determines when the
ownership passes.
NOTE: the terms $.I.4. and 4.1.B.
merely ma6e rules of presumption
c. $.1.D. (co!!ect on e!iver") ! the
carrier acts for the seller in
collecting the purchase price,
which the buyer must pay to
obtain possession of the goods.
SELLERES -4T: AFTER -EL&0ER: TO
CARR&ER
#. To enter on behalf of buyer into such
contract reasonable under the
circumstances
%. To give notice to buyer regarding
necessity of insuring the goods
*A:5ENT OF T3E *4RC3ASE *R&CE
4$5$RA6 R76$: The seller is not
bound to deliver the thing sold unless the
purchase price has been paid.
$8C$P9I15: The seller is bound to
deliver even if the price has not been
paid, if a period of payment has been
fi)ed.
Sale of Real *ropert# $# 4nit
ntire area stated in the contract
must be delivered
*hen entire area could not be
delivered, vendee may"
CIVIL LAW COMMITTEE
#. nforce the contract with the
corresponding decrease in price
%. Cescind the sale"
a. If the lac6 in area is at least
#8#> than that stated or
stipulated
b. If the deficiency in quality
specified in the contract
e)ceeds #8#> of the price
agreed upon
c. If the vendee would not have
bought the immovable had he
6nown of its smaller area of
inferior quality irrespective of
the e)tent of lac6 of area or
quality
Sale for a Lmp Sm 5A Cuerpo
Cierto6
5endor is obligated to deliver all the
land included within the boundaries,
regardless of whether the real area
should be greater or smaller
1rdinarily, there can be no rescission
or reduction or increase whether the
area be greater or lesser, unless
there is gross mista6e.
NOTE: The $ivil $ode presumes that the
purchaser had in mind a particular piece
of land and that he ascertained its area
and quality before the contract of sale
was perfected. If he did not do so, or if
having done so he made no ob&ection and
consented to the transaction, he can
blame no one but himself .9eran vs.
Ei!!an/eva Ei/a e Riosa 06 P-i! 677/.
*hat is important is the delivery
of all the land included in the boundaries.
-O4BLE SALE ;Art/ .F66=
Reqisites: 51$:
#. two or more transactions must
constitute 'alid sales+
%. they must pertain e)actly to the same
ob&ect or sub&ect matter+
'. they must be bought from the same
or immediate seller+ AND
,. two or more buyers who are at odds
over the rightful ownership of the
sub&ect matter must represent
conflicting interests.
Rles of preference:
#. (ersonal (roperty
a. first possessor in good faith
%. Ceal (roperty
a. first registrant in good faith
b. first possessor in good faith
c. person with oldest title in good
faith
NOTES:
*rchaser in !ood Faith ! one who
buys the property of another without
notice that some other person has a
right to or interest in such property
and pays a full and fair price for the
same at the time of such purchase or
before he has notice of the claim or
interest of some other person in the
property (Ee!oso vs. CA).
Cegistration requires actual
recording+ if the property was never
really registered as when the registrar
forgot to do so although he has been
handed the document, there is no
registration.
(ossession is either actual or
constructive since the law made no
distinction .Sanc-e: vs. Ramos 2;
P-i!612/
(ossession in Art.#-,, includes not
only material but also symbolic
possession (9en Bort" Rea!t" vs.
Cr/:, 1; Sept. 2;;<.)
Title means title because of sale, and
not any other title or mode of
acquiring property .6ic-a/co vs.
Bereng/er <* P-i! 622/
Fernane: vs. Catig.a' Cule" *hen
the property sold on e)ecution is
registered under Torrens, registration
is the operative act that gives validity
to the transfer or creates a lien on the
land, and a purchaser on e)ecution
sale is not required to go behind the
registry to determine the conditions of
the property. )ception" *here the
purchaser had 6nowledge, prior to or
at the time of the levy, of such
previous lien or encumbrance, his
6nowledge is equivalent to
registration.
CON-&T&ON
Effect of Non>flfillment of Condition
#. If the obligation of either party is
sub&ect to any condition and such
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
126
condition is not fulfilled, such
party may either"
a. refuse to proceed with the
contract
b. proceed with the contract ,
waiving the performance of
the condition.
%. If the condition is in the nature of
a promise that it should happen,
the non3performance of such
condition may be treated by the
other party as breach of warranty.
NOTE: A distinction must be made
between a condition imposed on the
perfection of a contract and a condition
imposed merely on the performance of an
obligation. The failure to comply with the
first condition would prevent the &uridical
relation itself from coming into e)istence,
while failure to comply with the second
merely gives the option either to refuse or
proceed with the sale or to waive the
condition.
The mere fact that the second
contract of sale was perfected in
good faith is not sufficient if, before
title passes, the second vendee
acquires 6nowledge of the first
transaction. The good faith or
innocence of the posterior vendee
needs to continue until his contract
ripens into ownership by tradition or
registration. (Pa!anca vs. (ir. 1#
6ans, 26 PFI6 12*)
EFFECT &F B4:ER 3AS ALREA-:
SOL- T3E !OO-S:
<eneral Cule" The unpaid seller9s right to
lien or stoppage in transitu remains even
if buyer has sold the goods.
)cept"
#/ *hen the seller has given consent
thereto, or
%/ *hen the buyer is a purchaser in good
faith for value of a negotiable document
of title.
+ARRANT:
a statement or representation made
by the seller of goods,
contemporaneously and as a part of
the contract of sale, having reference
to the character, quality, or title of the
goods, and by which he promises or
underta6es to insure that certain facts
are or shall be as he then represents.
Iinds"
#. ED*RESS ! 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
NOTE: A mere e)pression of opinion, no
matter how positively asserted, does not
import a warranty unless the seller is an
e)pert and his opinion was relied upon by
the buyer.
%. &5*L&E- 3 that which the law derives
by implication or inference from the
nature of the transaction or the
relative situation or circumstances of
the parties, irrespective o# an"
intention o# t-e se!!er to create it.
a. *arranty against eviction
b. *arranty against hidden defects
c. *arranty as to 4itness and
Ferchantability
NOTE: An implied warranty is a natural,
not an essential element of a contract,
and is deemed incorporated in the
contract of sale. It may however, be
waived or modified by e)press stipulation.
((e 6eon)
There is no implied warranty as to the
condition, adaptation, fitness or suitability
or the quality of an article sold as a
second3hand article. But such articles
might be sold under such circumstances
as to raise an implied warranty.
2 A certification issued by a vendor that a
second3hand machine was in A3#
condition is an e)press warranty binding
on the vendor. (Mo!es vs. IAC )1*+*,)
A/ +arrant# a(ainst e'iction
*arranty in which 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.
CIVIL LAW COMMITTEE
Elements:
#. vendee is deprived, in whole or in
part, of the thing purchased+
%. the deprivation is by virtue of a
final &udgment+
'. 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+ AND
-. no waiver of warranty by the
vendee.
0endorGs lia$ilit# shall consist of:
#. otal eviction# .5I$D/
a. 0 alue of the thing at the time of
eviction+
b. &ncome or fruits if he has been
ordered to deliver them to the
party who won the suit+
c. C osts of the suit+
d. E )penses of the contract+ AN-
e. - amages and interests if the sale
was in bad faith.
%. 'artial eviction#
a. to enforce vendor9s liability
for eviction .5I$D/+ OR
b. to demand rescission of
contract.
Kuestion" *hy is rescission not a remedy
in case of total evictionL
Answer" Cescission 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 sub&ect3matter of the sale to
the vendor, rescission cannot be carried
out.
2 The suit for the breach can be directed
only against the immediate seller, not
sellers of the seller unless such sellers
had promised to warrant in favor of later
buyers or unless the immediate seller has
e)pressly assigned to the buyer his own
right to sue his own seller.
NOTE: The disturbance referred to in the
case of eviction is a disturbance in law
which requires that a person go to the
courts of &ustice claiming the thing sold, or
part thereof and invo6ing reasons. Fere
trespass in fact does not give rise to the
application of the doctrine of eviction.
5endor9s liability is waivable but any
stipulation e)empting the vendor from
the obligation to answer for eviction
shall be void if he acted in bad faith.
9inds of +ai'er:
a. Consciente ! voluntarily
made by the vendee without
the 6nowledge and
assumption of the ris6s of
eviction
NOTE: vendor shall pay only the
value which the thing sold had at
the time of eviction
b. *ntencionada ! made by the
vendee with 6nowledge of the
ris6s of eviction and
assumption of its
consequences
EFFECT: vendor not liable
NOTE: very waiver is presumed to be
consciente. To consider it intencionada,
it must be accompanied by some
circumstance which reveals the vendor9s
6nowledge of the ris6s of eviction and
his intention to submit to such
consequences.
+3ERE &55O0ABLE SOL-
ENC45BERE- +&T3 NON>A**ARENT
B4R-EN
./ Ri(ht of 'endee
a/ recission, or
b/ indemnity
1/ +hen ri(ht cannot $e exercised:
a/ if the burden or servitude is
apparent
b/ if the non3apparent burden or
servitude is registered
c/ if vendee had 6nowledge of the
encumbrance, whether it is registered or
not
?/ +hen action mst $e $ro(ht
3 within 1N GAC from the
e)ecution of the deed of sale
B/ +arrant# a(ainst hidden defects
guarantees that the thing sold is free
from any hidden faults or defects or
any charge or encumbrance not
declared or 6nown to the buyer.
Elements: .:;N(*/
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
128
#. defect must be Serious or
important+
%. it must be 3idden+
'. it must E)ist at the time of the
sale+
,. vendee must give Notice of the
defect to the vendor within a
reasonable time+
-. action for rescission or reduction
of price must be brought within
the proper *eriod .within 0 mos.
from delivery of the thing or ,>
days from date of delivery in case
of animals/+ and
0. no +aiver of the warranty.
Remedies of the 0endee:
a. Accion re-i.itoria .rescission/
b. Accion 3/anti minoris .reduction
of the price/
NOTES:
;idden faults or defects pertain only
to those that ma6e the ob&ect unfit for
the use for which it was intended at
t-e time o# t-e sa!e.
This warranty in :ales is applicable in
Hease .Gap vs. 9iao3/i 1<P-i!2<</
Effect of loss of thin( on accont of
hidden defects:
#. If vendor was aware of hidden
defects, he shall bear the loss and
vendee shall have the right to
recover" ;*E-=
a. the price paid
b. e )penses of the contract
c. d amages
%. If vendor was not aware, he shall be
obliged to return" .(I/
a. p rice paid
b. interest thereon
c. e )penses of the contract if paid
by the vendee
Effect if the case of loss "as not the
hidden defect
If the thing sold had any hidden
fault at the time of the sale, and
should thereafter be lost by a .#/
fortuitous event 1C .%/ through the
fault of the vendee"
the vendee may demand of the
vendor the price which he paid
less the value of the thing at the
time of its loss.
NOTE: the difference between the
price paid and the value of the thing
at the time of its loss represents the
damage suffered by the vendee and
the amount which the vendor
enriched himself at the e)pense of
the vendee
If the vendor acted in bad faith"
vendor shall pay damages to the
vendee
C/ &mplied +arranties of Calit#
+arrant# of Fitness
guarantees that the thing sold is
reasonably fit for the 6nown particular
purpose for which it was acquired by
the buyer
4$5$RA6 R76$: There is no implied
warranty as to the quality or fitness for
any particular purpose of goods under a
contract of sale
$8C$P9I15S:
#. *here the buyer, e)pressly or by
implication manifests to the seller
the particular purpose for which
the goods are required
%. *here the buyer relies upon the
seller9s s6ill or &udgment
+arrant# of 5erchanta$ilit#
guarantees, where the goods were
bought by description, that they are
reasonably fit for the general purpose
for which they are sold
It requires identity between &-at is
escri.e in t-e contract AND &-at is
tenere, in the sense that the latter
is of such quality to have some value
&nstances "here implied "arranties
are inapplica$le:
#. As is and where is sale 3 vendor
ma6es no warranty as to the quality
or wor6able condition of the goods,
and that the vendee ta6es them in the
condition in which they are found and
from the place where they are
located.
%. :ale of second3hand articles
'. :ale by virtue of authority in fact or
law
CIVIL LAW COMMITTEE
Caveat )enditor ;HLet the seller
$e"areI=: the vendor is liable to the
vendee for any hidden faults or defects in
the thing sold, even though he was not
aware thereof.
Caveat -mptor ;HLet the $#er
$e"areI=: requires the purchaser to be
aware of the supposed title of the vendor
and one who buys without chec6ing the
vendor9s title ta6es all the ris6s and
losses consequent to such failure.
R4LES &N CASE OF SALE OF
AN&5ALS
#. *hen two or more animals have been
sold at the same time and the redhibitory
defect is in one, or some of them but not
in all, the general rule is that the
redhibition will not affect the others
without it. It is immaterial whether the
price has been fi)ed for a lump sum for all
the animals or for a separate price for
each.
%. No warranty against hidden defects of
animals sold at fairs or at public auctions,
or of livestoc6 sold as condemned. This
is based on the assumption that the
defects must have been clearly 6nown to
the buyer.
'. :ale of animals shall be void when"
a/ animals sold are suffering from
contagious disease
b/ if the use or service for which they
are acquired has been stated in the
contract, and they are found to be unfit
therefor
,. Himitation of the action" ,> days from
the date of their delivery to the vendee
-. 5endor shall be liable if the animal
should die within ' days after its purchase
if the disease which caused the death
e)isted at the time of the contract
OBL&!AT&ONS OF T3E 0EN-EE:
A/ *rincipal O$li(ations:
#. To accept delivery
%. To pay the price of the thing sold in
legal tender unless another mode has
been agreed upon
NOTE: A grace period granted the
vendee in case of failure to pay the
amount8s due is a right not an obligation.
The grace period must not be li6ened to
an obligation, the non3payment of which,
under Article ##0@ of the $ivil $ode,
would still generally require &udicial or
e)tra3&udicial demand before DdefaultE can
be said to arise .Bric'to&n (evDt Corp vs.
Amor 9ierra (evDt Corp. 07SCRA2<7/
B/ Other O$li(ations
#. To ta6e care of the goods without the
obligation to return, where the goods
are delivered to the buyer and he
rightfully refuses to accept
NOTES:
The buyer in such a case is in the
position of a bailee who has had
goods thrust upon him without his
assent. ;e has the obligation to
ta6e reasonable care of the
goods but nothing more can be
demanded of him.
The goods in the buyer9s
possession under these
circumstances are at the seller9s
ris6
%. To be liable as a depositary if he
voluntarily constituted himself as such
'. To pay interest for the period
between delivery of the thing and the
payment of the price in the following
cases"
a. :hould it have been stipulated
b. :hould the thing sold and
delivered produce fruits or
income
c. :hould he be in default, from the
time of &udicial or e)tra3&udicial
demand for the payment of the
price
*ertinent Rles:
#. The vendor is not required to deliver
the thing sold until the price is paid
nor the vendee to pay the price
before the thing is delivered in the
absence of an agreement to the
contrary .Artic!e 1022/.
%. If stipulated, the vendee is bound to
accept delivery and to pay the price
at the time and place designated+
'. If there is no stipulation as to the time
and place of payment and delivery,
the vendee is bound to pay at the
time and place of delivery
,. In the absence of stipulation as to the
place of delivery, it shall be made
wherever the thing might be at the
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
131
moment the contract was perfected
.Artic!e 1201/
-. If only the time for delivery has been
fi)ed in the contract, the vendee is
required to pay even before the thing
is delivered to him+ if only the time for
payment has been fi)ed, the vendee
is entitled to delivery even before the
price is paid by him .Artic!e 1022/
+a#s of acceptin( (oods:
#. )press acceptance
%. Implied acceptance
a. *hen buyer oes an act &-ic-
on!" an o&ner can o,
b. 4ailure to return goods after
reasonable lapse of time
NOTES:
The retention of goods is strong
evidence that the buyer has accepted
ownership of the goods.
Delivery and acceptance are two
separate and distinct acts of different
parties
-eli'er# is an act of the vendor
and one of the vendor9s
obligations+ vendee has nothing
to do with the act of delivery by
the vendor
Acceptance is an obligation of
the vendee+ acceptance cannot
be regarded as a condition to
complete delivery+
seller must comply with the
obligation to deliver although
there is no acceptance yet by the
buyer
Acceptance by the buyer may
precede actual delivery+ there may be
actual receipt without acceptance and
there may be acceptance without
receipt
7nless otherwise agreed upon,
acceptance of the goods by the buyer
does not discharge the seller from
liability for damages or other legal
remedy li6e for breach of any promise
or warranty
+hen 'endee ma# sspend pa#ment
of the price:
#. If he is disturbed in the possession or
ownership of the thing bought
%. If he has well3grounded fear that his
possession or ownership would be
disturbed by a vindicatory action or
foreclosure of mortgage
NOTES:
If the thing sold is in the possession
of the vendee and the price is already
in the hands of the vendor, the sale is
a consummated contract and Article
#-@> is no longer applicable. Article
#-@>, presupposes that the price or
any part thereof has not yet been
paid and the contract is not yet
consummated.
7nder Article #-@>, the vendee has
no cause of action for rescission
before final &udgement, otherwise the
vendor might become a victim of
machinations between the vendee
and the third person
Disturbance must be in possession
and ownership of the thing acquired
If the disturbance is caused by the
e)istence of non3apparent servitude,
the remedy of the buyer is rescission,
not suspension of payment.
+hen 'endee cannot sspend
pa#ment of the price e'en if there is
distr$ance in the possession or
o"nership of the thin( sold:
#. if the vendor gives security for the
return of the price in a proper case
%. if it has been stipulated that
notwithstanding any such
contingency, the vendee must ma6e
payment .see Artic!e 102+ par.</
'. if the vendor has caused the
disturbance or danger to cease
,. if the disturbance is a mere act of
trespass
-. if the vendee has fully paid the price
RE5E-&ES FOR BREAC3 OF
CONTRACT
A/ Remedies of the seller
#. Action for payment of the price .Art.
#-@-/
%. Action for damages for non3
acceptance of the goods .Art. #-@0/
'. Action for rescission .Art. #-@?/
B/ Remedies of the $#er
CIVIL LAW COMMITTEE
#. Action for specific performance .Art.
#-@=/
%. Action for rescission or damages for
breach of warranty .Art #-@@/
A/ RE5E-&ES OF T3E SELLER FOR
BREAC3 OF CONTRACT
*3 CAS- OF 7O)A,L-S
./ Ordinar# Remedies
a. Fovables in <eneral ! 4ailure of
the vendee to appear to receive
delivery or, having appeared,
failure to tender the price at the
same time, /n!ess, a longer
period for its payment has been
stipulated
action to rescind the sale
.Art. #-@'/
b. :ale of <oods !
action for the price .Art.
#-@-/
action for damages .Art.
#-@0/
1/ 4npaid Seller
T#pes:
a. The seller of the goods who has
not been paid or to whom the
price has not been tendered
b. The seller of the goods, in case a
bill of e)change or other
negotiable instrument has been
received as conditional payment,
AND the condition on which it
was received has been bro6en by
reason of the dishonor of the
instrument, insolvency of the
buyer or otherwise.
Remedies:
#. (ossessory lien over the goods
%. Cight of stoppage in transit/ after
he has parted with the
possession of the goods and the
buyer becomes insolvent
'. :pecial Cight of resale
,. :pecial Cight to rescind the sale
-. Action for the price
0. Action for damages
?/ Article .6J6 or Recto La"
Remeies o# venor in sa!e o#
persona! propert" ." insta!!ments
Reqisites:
#. $ontract of sale
%. (ersonal property
'. (ayable in installments
,. In the case of the second and
third remedies, that there has
been a failure to pay two or more
installments
NOTE: Apply li6ewise to contracts
purporting to be leases of personal
property with option to buy
Art/ .6J6 does not appl# to a sale:
#. (ayable on straight terms .partly
in cash and partly in one term/
%. 1f Ceal property
Remedies:
#. :pecific performance upon
vendee9s failure to pay
NOTE: Does not bar full recovery for
&udgment secured may be e)ecuted
on all personal and real properties of
the buyer which are not e)empt from
e)ecution (Pa!ma v. CA.)
%. Cescission of the sale if vendee
shall have failed to pay two or
more installments
NOTES:
Nature of the remedy ! which
requires mutual restitution ! bars
further action on the purchase
price (5onato vs. IAC.)
4$5$RA6 R76$: cancellation
of sale requires mutual restitution,
that is all partial payments of
price or rents must be returned
$8C$P9I15S: a stipulation
that the installments or rents paid
shall not be returned to the
vendee or lessee shall be valid
insofar as the same may not be
unconscionable under the
circumstan3ces .Artic!e 12+6/.
'. 4oreclosure of the chattel
mortgage on the thing sold if
vendee shall have failed to pay
two or more installments. In this
case, there shall be no further
action against the purchaser to
recover unpaid balance of the
price.
NOTES:
4urther recovery barred only from the
time of actual sale at public auction
conducted pursuant to foreclosure
(Maconra" vs. 9an.)
1ther chattels given as security
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
133
cannot be foreclosed if they are not
sub&ect of the installment sale .Ria vs.
Bi!ipinas investment an Binance Corp.
4R <*+;6, >an. 2+, 1*+</
If the vendor assigns his right to a
financing company, the latter may be
regarded as a collecting agency of the
vendor and cannot therefore recover any
deficiency from the vendee (Ha"as vs.
6/neta Motors Co.)
*hen the vendor assigns his credit to
another person, the latter is li6ewise
bound by the same law. Accordingly,
when the assignee forecloses on the
mortgage, there can be no further
recovery of the deficiency and the
vendor3mortgagee is deemed to have
renounced any right thereto .Bor.on II vs.
Service&ie Specia!ist, Inc.
20+SCRA60+/
NOTE: ;owever, Article #,=,.'/ does
N1T bar one to whom the vendor has
assigne on &it- a reco/rse .asis his
credit against the vendee from
reco'erin( from the 'endor the
assi(ned credit in fll although the
vendor may have no right of recovery
against the vendee for the deficiency
.Bi!ipinas Invest. @ Binance Corp. vs.
Eit/g, >r. 2+SCRA60+/
NOTE: Cemedies are alternati'e and
exclsi'e
*3 CAS- OF *77O)A,L-S
./ Ordinar# Remedies
a. In case of anticipatory breach !
rescission .Artic!e 10*1/
b. 4ailure to pay the purchase price
!
rescission upon &udicial or
notarial demand for
rescission .Artic!e 10*2/
the vendee may pay, even
after the e)piration of the
period, as long as no demand
for rescission has been made
upon him
NOTE: Article #-@% does not
apply to"
#/ :ale on instalment of real
estate
%/ $ontract to sell
'/ $onditional sale
,/ $ases covered by CA 0--%"
Cealty Installment buyer
protection act
1/ R/A/ No/ @FF1 or 5aceda La"
An Act to (rovide (rotection to
buyers of Ceal state on Installment
(ayments
Haw governing sale or financing of
real estate on installment payments
Reqisites:
#. transactions or contracts
involving the sale 1C financing of
real estate on installment
payments, including residential
condominium apartments+ and
%. buyer defaults in payment of
succeeding installments.
Ri(hts of the $#er:
A$ *f ,uyer has paid at least two
586 years of installments
#. The buyer must pay, &it-o/t
aitiona! interest, the unpaid
installments due within the total
grace period earned by him.
There shall be one .#/ month
grace period for every one .#/
year of installment payments
made
NOTE: This right shall be
e)ercised by the buyer 1NHG
once in every - years of the life of
the contract AND its e)tensions.
%. Actual cancellation can only ta6e
place after '> days from receipt
by the buyer of the notice of
cancellation 1C demand for
rescission by a notarial act AND
upon full payment of the cash
surrender value to the buyer
(1!"mpia Fo/sing vs. Panasiatic,
16 >an/ar" 2;;<.)
NOTE: The seller shall refund to
the buyer the cash surrender
value of the payments on the
property equivalent to ->N of the
total payments made. After five
.-/ years of installments, there
shall be an additional -N every
year but not to e)ceed @>N of the
total payments made
'. The buyer shall have the rig-t to
se!! -is rig-ts or assign the same
to another person 1C to reinstate
t-e contract by updating the
CIVIL LAW COMMITTEE
account during the grace period
and before actual cancellation of
the contract
,. The buyer shall have the right to
pay in advance any installment or
the full unpaid balance of the
purchase price any time without
interest and to have such full
payment of the purchase price
annotated in the certificate of title
covering the property.
,$ *f ,uyer has paid less than 8
years of installments
#. The seller shall give the buyer a
grace period of N1T less than 0>
days from the date the installment
became due. If the buyer fails to
pay the installments due at the
e)piration of the grace period, the
seller may cancel the contract
after '> days from receipt by the
buyer of the notice of cancellation
or the demand for rescission of
contract by a notarial act.
%. Same 3o$ 3 and 9 para&raph A
above
NOTE: Down payments, deposits or
options on the contract shall be included
in the computation of the total number of
installment payments made
Remedies of 4npaid Seller
i/ *ossessor# Lien
+hen ma# $e exercised:
#. *here the goods have been sold
without any stipulation as to credit
%. *hen the goods have been sold
on credit, but the term of credit
has e)pired
'. *here the buyer becomes
insolvent
+hen lost:
#. Delivery of the goods to a carrier
or bailee for the purpose of
transmission to the buyer without
reserving ownership or right of
possession
%. *hen the buyer lawfully obtains
possession of the goods
'. By waiver of the lien
NOTE: (ossessory lien is lost after the
seller loses possession but his lien as an
unpaid seller remains+ hence he is still an
unpaid creditor with respect to the price of
specific goods sold. ;is preference can
only be defeated by the governments
claim to the specific ta) on the goods
themselves .Arts. 2227 an 2221/.
NOTE: The bringing of an action to
recover the purchase price is not one of
the ways of losing the possessory lien.
An unpaid seller does not lose his lien by
reason that he has obtained a money
&udgement or decree for the price of
goods .Art. 102*, !ast paragrap-/.
ii/ Stoppa(e of (oods in transitu
Reqisites:
#. :eller must be unpaid
%. Buyer must be insolvent
'. <oods must be in transit
,. :eller must either"
a. actually ta6e possession of
the goods sold 1C
b. give notice of his claim to the
carrier or other person in
possession
-. :eller must surrender the
negotiable document of title, if
any, issued by the carrier or
bailee
0. :eller must bear the e)penses of
delivery of the goods after the
e)ercise of the right
!OO-S ARE CONS&-ERE- &N
TRANS&T4:
#. after delivery to a carrier or other
bailee and before the buyer or his agent
ta6es delivery of them+ and
%. If the goods are re&ected by the buyer,
and the carrier or other bailee continues
in possession of them
!OO-S ARE NO LON!ER
CONS&-ERE- &N TRANS&T4:
#. after delivery to the buyer or his agent
in that behalf+
%. if the buyer or his agent obtains
possession of the goods at a point before
the destination originally fi)ed+
'. if the carrier or the bailee
ac6nowledges to hold the goods on
behalf of the buyer+ and
,. if the carrier or bailee wrongfully
refuses to deliver the goods to the buyer
Effects of the exercise of the ri(ht
#. The goods are no longer in transit.
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
135
%. The contract of carriage ends+ instead
the carrier now becomes a mere
bailee, and will be liable as such.
'. The carrier should not deliver
anymore to the buyer or the latter9s
agent+ otherwise he will clearly be
liable for damages.
,. The carrier must redeliver to, or
according to the directions of the
seller.
+A:S OF EDERC&S&N! T3E R&!3T TO
STO*:
#. By ta6ing actual possession of the
goods
%. By giving notice of his claim to the
carrier or bailee
iii/ Special Ri(ht of Resale
Fay be e)ercised only when the
unpaid seller has either a right of lien
1C has stopped the goods in transit/
AND under ANG of the following
conditions"
#. *here the goods are perishable
in nature
%. *here the right to resell is
e)pressly reserved in case the
buyer should ma6e a default
'. *here the buyer delays in the
payment of the price for an
unreasonable time
i'/ Rescission
T#pes:
#. Specia! Rig-t to Rescin 7ner
Art. 10<2 ! If the seller has either
the right of lien 1C a right to stop
the goods in transit/ AND under
either of % situations"
a. *here the right to rescind on
default has been e)pressly
reserved
b. *here the buyer has been in
default for an unreasonable
time
2. 7ner Art. 10*7 (Itec-nica!
rescissionJ)
'/ Action for the price
#. *here the ownership has passed
to the buyer AND he wrongfully
neglects 1C refuses to pay for
the price
%. *here the price is payable on a
day certain AND he wrongfully
neglects 1C refuses to pay for
the price, irrespective of the
delivery or transfer of title
'. *here the goods cannot readily
be resold for a reasonable price
AND the buyer wrongfully refuses
to accept them even before the
ownership of the goods has
passed, if Article #-@0 is
inapplicable.
'i/ Action for dama(es
#. In case of wrongful neglect or
refusal by the buyer to accept or
pay for the thing sold .Art. #-@0
par.#/
%. In an e)ecutory contract, where
the ownership in the goods has
not passed, and the seller cannot
maintain an action to recover the
price .Art #-@-/
'. If the goods are not yet identified
at the time of the contract or
subsequently
B/ RE5E-&ES OF T3E B4:ER FOR
BREAC3 OF CONTRACT
./ Action for specific performance
;Art/ .F8J=
*here the seller has bro6en the
contract to deliver specific or
ascertained goods
The &udgment or decree may be
unconditional, or upon such terms
and conditions as to damages,
payment of the price and otherwise
as the court may deem &ust
1/ Remedies of $#er for $reach of
"arrant# $# seller ;Art/ .F88=:
#. 0ecoupment ! accept the goods and
set up the seller9s breach to reduce or
e)tinguish the price
%. Accept the goods and maintain an
action for damages for breach of
warranty
'. Cefuse to accept the goods and
maintain an action for damages for
breach of warranty
,. Cescind the contract by returning or
offering the return of the goods, and
recover the price of any part thereof
NOTE: These are alternative remedies.
CIVIL LAW COMMITTEE
+hen rescission $# $#er not allo"ed:
#. if the buyer accepted the goods
6nowing of the breach of warranty without
protest
%. if he fails to notify the seller within a
reasonable time of his election to rescind
'. if he fails to return or offer to return the
goods in substantially as good condition
as they were in at the time of the transfer
of ownership to him
EDT&N!4&S35ENT OF SALE
#. :ame causes as in all other
obligations
%. $onventional Cedemption
'. Hegal Cedemption
CON0ENT&ONAL RE-E5*T&ON
The right which the vendor reserves
to himself, to reacquire the property
sold provided he returns to the
vendee"
b. the price of the sale+
c. e)penses of the contract+
d. any other legitimate payments
made therefore and+
e. the necessary and useful
e)penses made on the thing sold+
and
f. fulfills other stipulations which
may have been agreed upon.
A sale "ith con'entional redemption is
deemed to $e an e4uitable mort&a&e in
an# of the follo"in( cases: .I(CT1D/
#. 7nusually &nadequate purchase price+
%. * ossession by the vendor remains,
as lessee or otherwise+
'. E )tension of redemption period after
e)piration+
,. R etention by the vendee of part of the
purchase price+
-. 5endor binds himself to pay the
Ta)es of the thing sold+
0. Any Other case where the parties
really intended that the transaction
should secure the payment of a debt
or the performance of any obligation+
or
?. *hen there is -oubt as to whether
contract is contract of sale with right
of repurchase or an equitable
mortgage.
Eqita$le 5ort(a(e
1ne which lac6s the proper
formalities, form of words, or other
requisites prescribed by law for a
mortgage, but shows the intention of
the parties to ma6e the property
sub&ect of the contract as security for
a debt and contains nothing
impossible or contrary to law
.Cac-o!a vs. CA 2;+SCRA2*6/
2 *hen can there be presumption as to
quitable FortgageL
#/ (arties must have entered into a
contract denominated as a contract of
sale
%/ The intention of the parties was to
secure an e)isting debt by way of
mortgage
NOTE: In the cases referred to in Arts.
#0>% and #0>,, the apparent vendor may
as6 for the reformation of the instrument.
Cemedy of Ceformation" To correct the
instrument so as to ma6e it e)press the
true intent of the parties.
Redemption *eriod
a. if there is an agreement" period
agreed upon cannot e)ceed #> years
b. if no agreement as to the period" ,
years from the date of the contract
c. the vendor who fails to repurchase
the property within the period agreed
upon may, however, e)ercise the
right to repurchase within '> days
4C1F the time final &udgment was
rendered in a civil action on the basis
that the contract was a true sale with
right of repurchase
This refers to cases involving a
transaction where one of the
parties contests or denies that the
true agreement is one of sale with
right to repurchase+ not to cases
where the transaction is
conclusively a pacto de retro
sale. )ample" *here a buyer a
retro honestly believed that he
entered merely into an quitable
Fortgage, not a pacto de retro
transaction, and because of such
belief he had not redeemed within
the proper period.
N1T" Tender of payment is
sufficient to compel redemption, but is
not in itself a payment that relieves
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
136
the vendor from his liability to pay the
redemption price (Pae: vs. Magno.)
LE!AL RE-E5*T&ON
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 transferred by onerous title.
Fay be effected against movables or
immovables.
It must be e)ercised within thirty .'>/
days from the notice in writing by the
vendor.O
NOTE: *ritten notice under Article #0%'
is mandator# for the right of redemption
to commence (PSC vs. Sps. Ea!encia 1*
A/g/st 2;;<.)
BAS&S OF LE!AL RE-E5*T&ON: Not
on any proprietary right, which after the
sale of the property on e)ecution, leaves
the &udgment debtor and vests in the
purchaser, but on a bare statutory
privilege to be e)ercised only by the
persons named in the statute.
Tender of payment is not necessary+
offer to redeem is enough.
*RE>E5*T&ON RE-E5*T&ON
#. arises before
sale
#. arises after sale
%. no rescission
because no sale as
yet e)ists
%. there can be
rescission of the
original sale
'. the action is
directed against
the prospective
seller
'. action is directed
against the buyer
&nstances of le(al redemption:
A/ 4nder the Ci'il Code ;le(al
redemption=:
#. :ale of a co3owner of his share to
a stranger .Artic!e 162;/
%. *hen a credit or other
incorporeal right in litigation is
sold .Artic!e 16<2/
'. :ale of an heir of his hereditary
rights to a stranger .Artic!e 1;++/
,. :ale of ad&acent rural lands not
e)ceeding one hectare .Artic!e
1621/
-. :ale of ad&acent small urban
lands bought merely for
speculation .Artic!e 1622/
B/ 4nder special la"s:
#. An equity of redemption in cases
of &udicial foreclosures
%. A right of redemption in cases of
e)tra3&udicial foreclosures
'. Cedemption of homesteads
,. Cedemption in ta) sales
-. Cedemption by an agricultural
tenant of land sold by the
landowner
ASS&!N5ENT OF CRE-&T
a contract by which the owner of a
credit transfers to another his rights
and actions against a third person in
consideration of a price certain in
money or its equivalent
NOTE: Transfer of rights by assignment
ta6es place by the perfection of the
contract of assignment without the
necessity of delivering the document
evidencing the credit.
this rule does not apply to
negotiable documents and
documents of title which are
governed by special laws.
Effects of Assi(nment:
#. transfers the right to collect the full
value of the credit, even if he paid a
price less than such value
%. transfers all the accessory rights
'. debtor can set up against the
assignee all the defenses he could
have set up against the assignor
Effect of pa#ment $# the de$tor after
assi(nment of credit
1. Be#ore 5otice o# t-e assignment
(ayment to the original creditor is
valid and debtor shall be released
from his obligation
2. A#ter 5otice
(ayment to the original creditor is
not valid as against the assignee
;e can be made to pay again by
the assignee
CIVIL LAW COMMITTEE
+arranties of the assi(nor of credit:
a. ;e warrants the e)istence of the
credit
b. ;e warrants the legality of the
credit at the perfection of the
contract
NOTE: There is no warranty as to t-e
so!venc" o# t-e e.tor unless it is
e)pressly stipulated 1C unless the
insolvency was already e)isting and of
public 6nowledge at the time of the
assignment
NOTE: The seller of an inheritance
warrants only the fact of his heirship but
not the ob&ects which ma6e up his
inheritance.
Lia$ilities of the assi(nor of credit for
'iolation of his "arranties
1. Assignor in goo #ait-
Hiability is limited only to the price
received and to the e)penses of
the contract, and any other
legitimate payments by reason of
the assignment
2. Assignor in .a #ait-
Hiable not only for the payment of
the price and all the e)penses but
also for damages
Le(al Redemption in Sale or Credit or
other incorporeal ri(ht in liti(ation
Reqisites:
#. There must be a sale or assignment
of credit
%. There must be a pending litigation at
the time of the assignment
'. The debtor must pay the assignee"
a. price paid by him
b. &udicial cost incurred by him+ AND
c. interest on the price from the date
of payment
,. The right must be e)ercised by the
debtor within '> days from the date
the assignee demands .&udicially or
e)tra3&udicially/ payment from him
SALE OF CRE-&T OR OT3ER
&NCOR*OREAL R&!3TS &N
L&T&!AT&ON
4$5$RA6 R76$: Debtor has the right
of legal redemption in sale of credit or
incorporeal rights in litigation
$8C$P9I15S:
a. :ale to a co3heir or co3owner
b. :ale to a co3owner
c. :ale to the possessor of property
in question
BARTER
BARTER
contract whereby one of the parties
binds himself to give one thing in
consideration of the otherJs promise
to give another thing .Artic!e 16<+/
NOTE: Barter is similar to a sale with the
only difference that instead of paying a
price in money, another thing is given in
lieu of the purchase price
*ERFECT&ON and CONS455AT&ON
*erfected from the moment there is a
meeting of minds upon the things
promised by each party in
consideration of the other
Consmmated from the time of
mutual delivery by the contracting
parties of the things promised
NOTES:
*here the giver of the thing bartered
is not the lawful owner thereof, the
aggrieved party cannot be compelled
to deliver the thing which he has
promised and is also entitled to
damages.
*here a party is evicted of the thing
e)changed, the in&ured party is given
the option, either to recover the
property he has given in e)change
with damages or only claim an
indemnity for damages.
As to matters not provided for by the
provisions on barter, the provisions
on sales will apply suppletorily
B4L9 SALES LA+ ;Act No/ ?8F1=
+hen Sale or Transfer in Bl,:
An" sa!e, trans#er, mortgage, or
assignment:
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
138
#. 1f a stoc6 of goods, wares,
merchandise, provisions, or materials
otherwise than in the ordinary course
of trade and the regular prosecution
of business+ or
%. 1f all or substantially all, of the
business or trade+ or
'. 1f all or substantially all, of the
fi)tures and equipment used in the
business of the vendor, mortgagor,
transferor or assignor .section %/
+hen sale or transfer in $l, not
co'ered $# Bl, Sales La":
#. If the sale or transfer is in the ordinary
course of trade and the regular
prosecution of business of the
vendor+
%. If it is made by one who produces
and delivers a written waiver of the
provisions of the Bul6 :ales Act from
his creditors
'. If it is made by an e)ecutor,
administrator, receiver, assignee in
insolvency, or public officer, acting
under &udicial process .Section +/+
and
,. If it refers to properties e)empt from
attachment or e)ecution .R/!es o#
Co/rt, R/!e <*, Section 12/
*rotection Accorded to Creditors $#
Bl, Sales La":
#. It requires the vendor, mortgagor,
transferor or assignor to deliver to the
vendee, mortgagee, or to his or its
agent or representative a sworn
written statement of names and
addresses of all creditors to whom
said vendor, etc. may have been
indebted together with the amount
due or to be due .Section </
%. It requires the vendor, mortgagor,
transferor or assignor, at least #>
days before the sale, transfer,
mortgage, assignment to ma6e a full
detailed inventory showing the
quantity and the cost of price of
goods, and to notify every creditor of
the price terms and conditions of the
sale, etc. .Section 0/
Effects of False Statements in the
Schedle of Creditors:
.$ %ithout knowled&e of buyer
If the statement is fair upon its
face and the buyer has no
6nowledge of its incorrectness
and nothing to put him on inquiry
about it, he will be protected in its
purchase
The remedy of the creditor is not
against the goods but to
prosecute the seller criminally
8$ %ith knowled&e or imputed
knowled&e of buyer
The vendee accepts it at his peril
The sale is valid only as between
the vendor and the vendee but
void against the creditors
3$ %ith names of certain creditors
without notice are omitted from
the list
The sale is void as to such
creditors, whether the omission
was fraudulent or not,
9$ %ith respect to an innocent
purchaser for a value from the
ori&inal purchaser
An innocent purchaser for value
from the original purchaser is
protected
;owever if the circumstances are
such as to bind the subsequent
purchaser with constructive
notice that the sale to the vendor
.original purchaser/ was
fraudulent, the property will be
liable in his hands to creditors of
the original vendor
Effect of 'iolation of la" on Transfer:
.$ As between the parties
The Bul6 :ales Haw does not in
any way affect the validity of the
transfer as between the
intermediate parties thereto
A sale not in compliance with the
Bul6 :ales Haw is valid against all
persons other than the creditors.
8$ As a&ainst creditors
A purchaser in violation of the law
acquires no right in the property
purchased as against the
creditors of the seller
;is status is that of a trustee or
receiver for the benefit of the
creditors of the seller+ as such, he
is responsible for the disposition
of the property
CIVIL LAW COMMITTEE
Remedies A'aila$le to creditors:
The proper remedy is one against the
goods to sub&ect them to the payment
of the debt, such as e)ecution,
attachment, garnishment, or by a
proceeding in equity
An ordinary action against the
purchaser to obtain money &udgement
will not lie, unless the purchaser has
sold or otherwise disposed of, or
dealt with the property, so as to
become personally liable to creditors
for value of it.
Acts *nished $# Bl, Sales La":
#. Inowingly or wilfully ma6ing or
delivering a statement required by the
Act which does not include the names
of all the creditors of the vendor, etc.
with the correct amount due or to
become due or which contains any
false or untrue statement+ and
%. Transferring title to any stoc6 of
goods, wares, merchandise,
provisions or materials sold in bul6
without consideration or for nominal
consideration .Section 7/
RETA&L TRA-E L&BERAL&KAT&ON ACT
;RA J7@1=
Retail Trade
Any act occupation or calling of
habitually selling direct to the general
public merchandise, commodities or
goods for consumption, but the
restrictions of this law shall not apply
to the following"
#. :ales by manufacturer, processor,
laborer, or wor6er, to the general
public the products manufactured,
processed produced by him if his
capital does not e)ceed (#>>,>>>+
%. :ales by a farmer or agriculturalist
selling the products of his farm
'. :ales in restaurant operations by a
hotel owner or inn36eeper irrespective
of the amount of capital+ provided that
the restaurant is incidental to the
hotel business+ and
,. :ales which are limited only to
products manufactured, processed or
assembled by a manufacturer
through a single outlet, irrespective of
capitaliMation
3i(h>End or Lxr# !oods
<oods which are not necessary for
life maintenance and whose demand
is generated in large part by the
higher income groups
:hall include but not limited to"
&ewelry, branded or designer clothing
and footwear, wearing apparel,
leisure and sporting goods,
electronics and other personal effects
NOTE: A nat/ra!K.orn citi:en o# t-e
P-i!ippines who has lost his citiMenship
but who resides in the (hilippines shall be
(ranted the same ri(hts as Filipino
citi)ens
Forei(n Eqit# *articipation:
4oreign3owned partnerships,
associations and corporations formed
and organiMed under the laws of the
(hilippines may, upon registration
with :$ and DTI, or in case of
4oreign3owned single proprietorship
with the DTI, engage or invest in retail
trade business, sub&ect to the
followin& cate&ories#
.$ Cate&ory A#
(aid3up capital of the equivalent
in (hilippine (eso of" L
M1AF<<A<<< 4S -ollars
Ceserved e)clusively for 4ilipino
citiMens and corporations wholly
owned by citiMens
8$ Cate&ory ,#
Finimum paid3up capital of the
equivalent in (hilippine (eso of
M1AF<<A<<< 4S -ollarsA $t
LM7AF<<A<<<
Fay be wholly owned by
foreigners e%cept for the first two
years after the effectivity of this
Act wherein foreign participation
shall be limited to not N @<O of
total equity.
3$ Cate&ory C#
(aid3up capital of the equivalent
in (hilippine (eso of"
M7AF<<A<<< 4S -ollars or more
foreigners
NOTE: In no case shall the
investments #or esta.!is-ing a
store in Cate(ories B and C be
less than the equivalent in
(hilippine (eso of" 4S MJ?<A<<<
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
141
9$ Cate&ory +#
nterprises specialiMing in high3
end or lu)ury products with paid3
up capital of the equivalent in
(hilippine (eso of" M1F<A<<< 4S
-ollars per store
foreigners
NOTES:
4oreign investor shall be required to
maintain in the (hilippines the 47HH
amount of the prescribed minimum
capital, 7NH:: the foreign investor
has notified the :$ and the DTI of
its intention to repatriate its capital
and cease operations in the
(hilippines
4ailure to maintain the full amount of
the prescribed minimum capital prior
to notification of the :$ and the DTI
shall sub&ect the foreign investors to
penalties or restrictions on any future
trading activities8business in the
(hilippines
NOTE: 4oreign Investors Acquiring
:hares of :toc6 of e)isting retail stores
whether or not publicly listed whose net
worth is in e)cess of the (eso equivalent
of 7: P%,->>,>>> ma" p/rc-ase on!" /p
to t-e ma%im/m o# 6;L o# t-e e3/it"
t-ereo# &it-in t-e #irst 2 "ears, an
t-erea#ter, t-e" ma" ac3/ire t-e
remaining percentage consistent &it- t-e
a!!o&a.!e #oreign participation as -erein
provie
NOTE: All retail Trade enterprises under
categories B and $ in which foreign
ownership e)ceeds =>N of equity s-a!!
o##er a minim/m o# <;L o# t-eir e3/it" to
t-e p/.!ic t-ro/g- an" stoc' e%c-ange in
t-e P-i!ippines &it-in + "ears #rom t-e
start o# t-e operations
Calification of Forei(n Retailers
#. Finimum of P%>>,>>>,>>> 7: Dollars
net worth in its parent corporation for
$ategories B and $ and P->,>>>,>>>
net worth in its parent corporation for
$ategories D
%. - retailing branches or franchises in
operation anywhere around the world
unless such retailer has at least #
store capitaliMed at a minimum of
P%-,>>>,>>> 7: Dollars
'. -3year trac6 record in retailing+ and
,. 1nly nationals from, or &uridical
entities formed or incorporated in
$ountries which allow to engage in
retail trade in the (hilippines
*- 8F7 ;S4B-&0&S&ON AN-
CON-O5&N&45 B4:ERSE
*ROTECT&0E -ECREE
Re(istration of *ro%ects
The registered owner of a parcel of
land who wishes to convert the same
into a subdivision pro&ect shall submit
his subdivision plan to the ;17:IN<
AND HAND37: C<7HAT1CG
B1ACD, which shall act upon and
approve the same, upon a finding that
the plan complies with the
:ubdivision :tandardsJ and
Cegulations enforceable at the time
the plan is submitted. The same
procedure shall be followed in the
case of a plan for a condominium
pro&ect e)cept that, in addition, said
Authority shall act upon and approve
the plan with respect to the building
or buildings included in the
condominium pro&ect in accordance
with the National Building $ode .R.A.
5o. 6021/.
The subdivision plan, as so approved,
shall then be submitted to the
Director of Hands for approval in
accordance with the procedure
prescribed in :ection ,, of the Hand
Cegistration Act .Act No. ,@0, as
amended by C.A. No. ,,>/" (rovided,
that it case of comple) subdivision
plans, court approval shall no longer
be required. The condominium plan
as li6ewise so approved, shall be
submitted to the Cegister of Deeds of
the province or city in which the
property lies and the same shall be
acted upon sub&ect to the conditions
and in accordance with the procedure
prescribed in :ection , of the
$ondominium Act .C.A. No. ,?%0/.
CIVIL LAW COMMITTEE
National ;ousing authority .now
;ousing and Hand 7se Cegulatory
Board/ has the e)clusive &urisdiction
to regulate the real estate trade and
business.
License to sell
:uch owner or dealer to whom has
been issued a registration certificate
shall not, however, be authoriMed to
sell any subdivision lot or
condominium unit in the registered
pro&ect unless he shall have first
obtained a license to sell the pro&ect
within two wee6s from the registration
of such pro&ect.
Exempt transactions
A license to sell and performance
bond shall not be required in any of
the following transactions"
#. :ale of a subdivision lot resulting
from the partition of land among co3
owners and co3heirs.
%. :ale or transfer of a subdivision lot by
the original purchaser thereof and
any subsequent sale of the same lot.
'. :ale of a subdivision lot or a
condominium unit by or for the
account of a mortgagee in the
ordinary course of business when
necessary to liquidate a bona fide
debt.
!ronds for Re'ocation of re(istration
certificate and license to sell of
o"ners or dealers
#. Is insolvent+ or
%. ;as violated any of the provisions of
this Decree or any applicable rule or
regulation of the Authority, or any
underta6ing of his8its performance
bond+ or
'. ;as been or is engaged or is about to
engage in fraudulent transactions+ or
,. ;as made any misrepresentation in
any prospectus, brochure, circular or
other literature about the subdivision
pro&ect or condominium pro&ect that
has been distributed to prospective
buyers+ or
-. Is of bad business repute+ or
0. Does not conduct his business in
accordance with law or sound
business principles.
LEASE
LEASE
consensual, bilateral, onerous, and
commutative contract by virtue of
which one person binds himself to
grant temporarily the use of the thing
or to render some service to another
who underta6es to pay some rent.
9inds of Leases ;From the 'ie" point
of the s$%ect matter
#. Hease of things
%. Hease of service
'. Hease of wor6
NOTE: :ince lease is consensual and is
not imposed by law, only the lessor has
the right to fi) the rents. ;owever, the
increasing of the rent is not an absolute
right on the part of the lessor.
Characteristics or Reqisites for Lease
of Thin(s
#. $onsensual
%. (rincipal
'. Nominate
,. (urpose is to allow en&oyment or
use of a thing .the person to
en&oy is the lessee+ the person
allowing the en&oyment by
another is the lessor
-. :ub&ect matter must be within the
commerce of man
0. (urpose to which the thing will be
devoted should not be immoral
?. 1nerous .t-ere m/st rent or price
certain/
=. (eriod is Temporary .not
perpet/a!, -ence, t-e !ongest
perio is ** "ears/
@. (eriod is either definite or
indefinite
If no term is #i%e, we should
apply Art.#0=% .for rural leases/
and Art. #0=? .for urban leases/
If the term is #i%e ./t
ine#inite, the court will fi) the
term under the law of obligations
and contracts
#>. Hessor need not be the owner
NOTE: A usufructuary may thus
lease the premises in favor of a
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
143
stranger, such lease to end at the
time that the usufruct itself ends
Rent
The compensation either in
money, provisions, chattels, or
labor, received by the lessor from
the lessee.
NOTES:
*hen a student boards and lodges in
a dormitory, there is no contract of
lease. The contract is not designated
specifically in the $ivil $ode. It is an
innominate contract. It is however,
believed that the contract can be
denominated as the contract of board
and lodging.
There is a contract of lease when the
use and en&oyment of a safety
deposit bo) in a ban6 is given for a
price certain. This is certainly not a
contract of deposit.
A lease of personal property with
option to buy .at a nominal amount/
at the end of the lease can be
considered a sale.
LEASE SALES
#. only use or
en&oyment is
transferred
#. ownership is
transferred
%. transfer is
temporary
%. transfer is
permanent
'. lessor need not
be the owner
'. seller must be
the owner at the
time the property
is delivered
,. the price of the
ob&ect,
distinguished from
the rent, is usually
not mentioned
,. usually, the
selling price is
mentioned
Lease of
Thin(s
Lease of
Ser'ices
#. ob&ect of
contract is a
thing
#. ob&ect is some
wor6 or service
%. lessor has to
deliver the thing
leased
%. lessor has to
perform some wor6
or service
'. in case of
breach, there
can be an action
for specific
performance
'. in case of breach,
no action for specific
performance
Lease of
Ser'ices
5locatio
operatum6
Contract for a
*iece of +or,
5locatio operas6
#. the important
ob&ect is the labor
performed by the
lessor
#. the important
ob&ect is the wor6
done
%. the result is
generally not
important, hence
the laborer is
entitled to be
paid even if there
is destruction of
the wor6 through
fortuitous event
%. the result is
generally important+
generally, the price
is not payable until
the wor6 is
completed, and said
price cannot be
lawfully demanded if
the wor6 is
destroyed before it
is finished and
accepted
Lease of
Ser'ices
A(enc#
It is based on
emp!o"ment !
the lessor of
services does
not represent his
employer nor
does he e)ecute
M/riica! acts.
It is based on
representation !
agent represents his
principal and enters
into &uridical acts.
(rincipal contract (reparatory contract
Rle for Lease of Consma$le !oods
4$5$RA6 R76$: $onsumable goods
cannot be the sub&ect matter of a contract
of lease of things.
=-"N To use or en&oy hem, they will have
to be consumed. This cannot be done by
a lease since ownership over them is not
transferred to him by the contract of
lease.
$8C$P9I15S:
a. If they are merely e)hibited
b. If they are accessory to an
industrial establishment
RECOR-&N! OF LEASE OF
*ERSONAL *RO*ERT:
4$5$RA6 R76$: Hease of real
property is personal right
CIVIL LAW COMMITTEE
$8C$P9I15S: Hease parta6es of the
nature of real right if"
a. Hease of real property is more
than # year
b. Hease of real property is
registered regardless of duration
NOTE: Hease of personal property
cannot be registered. To be binding
against third persons, the parties must
e)ecute a public instrument.
2 Hease may be made orally, but if the
lease of Ceal (roperty is for more
than # year, it must be in writing
under the :tatue of 4rauds.
*ersons -isqalified to $e Lessees
Becase -isqalified to B#
#. A husband and a wife cannot lease to
each other their separate properties
e)cept"
a. if separation of property was
agreed upon
b. if there has been &udicial
separation of property
(ersons referred to in Art. #,@# are
disqualified because of fiduciary
relationships
S4BLEASE
A separate and distinct contract of
lease wherein the original lessee
becomes a sublessor to a sublessee.
Allowed unless e)pressly prohibited.
The sublessee is subsidiarily liable for
any rent due. The lessor has an
accion irecta against the sublessee
for unpaid rentals and improper use
of the ob&ect.
S4BLEASE ASS&!N5ENT OF
LEASE
#. there are two
leases and two
distinct &uridical
relationships
although
immediately
connected and
related to each
other
#. there is only one
&uridical relationship,
that of the lessor
and the assignee,
who is converted
into a lessee
%. the personality
of the lessee
does not
%. the personality of
the lessee
disappears
disappear
'.the lessee does
not transmit
absolutely his
rights and
obligations to the
sublessee
'. the lessee
transmits absolutely
his rights to the
assignee
,. the sublessee,
generally, does
not have any
direct action
against the lessor
,. the assignee has
a direct action
against the lessor
R&!3TS OF LESSOR &F S4BLEASE
*RO3&B&TE- B4T ENTERE- &NTO B:
LESSEE:
#/ Cescission and damages, or
%/ Damages only .$ontract will be
allowed to remain in force/
'/ &ectment
&nstances "hen s$lessee is lia$le to
the lessor:
a. All acts which refer to the use and
preservation of the thing leased in
the manner stipulated between
the lessor and the lessee
b. The sublessee is subsidiarily
liable to the lessor for any rent
due from the lessee.
NOTE: The sublessee shall not be
responsible beyond the amount of rent
due from him.
Accion +irecta: direct action which the
lessor may bring against a sublessee who
misuses the subleased property.
OBL&!AT&ONS OF T3E LESSOR .DnF/
a. + e!iver" o# t-e o.Mect (cannot .e
&aive)
.. Ma'ing o# necessar" repairs
c. 7 aintenance in peace#/! an
ae3/ate possession
OBL&!AT&ONS OF T3E LESSEE
.C
%
N
%
7/
a. to pay rent
b. to se thing leased as a diligent
father of a family, devoting it to
the use stipulated
c. to pay e)penses for the deed of
lease
d. to notify the lessor of usurpation
or untoward acts
e. to notify the lessor of need for
repairs
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
145
f. to return the property leased
upon termination of the lease
Effect of -estrction of the Thin(
Leased:
1. 9ota! estr/ction ." a #ort/ito/s event
Hease is e)tinguished
2. Partia! estr/ction
a. (roportional reduction of the rent,
or
b. Cescission of the lease
+hen lessee ma# sspend pa#ment of
rent:
#. lessor fails to underta6e necessary
repairs
%. lessor fails to maintain the lessee in
peaceful and adequate en&oyment of
the property leased
NOTE: D:uspendE3 for the intervening
period, the lessee does not have to pay
the rent.
EFFECT&0&T: OF T3E S4S*ENS&ON:
The right begins"
a/ In the case of repairs, from the time he
made the demand for said repairs, and
the demand went unheeded.
b/ In the case of eviction, from the time
the final &udgment for eviction becomes
effective.
Alternati'e remedies of A((rie'ed
part# ;LessorPLessee= in case of Non>
flfillment of dties:
#. Cescission and damages
%. Damages only, allowing the contract
to remain in force ! :pecific
(erformance
NOTE: Damages Cecoverable in
e&ectment cases are the rents or the fair
rental value of the premises. The
following cannot be successfully claimed"
#. (rofits plaintiff could have earned
were it not for the possible entry
or unlawful detainer
%. Faterial in&ury to the premises
'. Actual, moral, or e)emplary
damages
&mmediate termination of lease nder
Art/ .@@< applies:
#. only to dwelling place or any other
building intended for human
habitation
%. even if at the time the contract was
perfected, the lessee 6new of the
dangerous condition or waived the
right to rescind on account of this
condition
Rles on Alteration of the Form of the
Lease
The Lessor can alter provided there
is no impairment of the use to which
the thing is devoted under the terms
of the lease
Alteration can also be made by the
Lessee so long as the value of the
property is not substantially impaired
Rles in case of 4r(ent Repairs
The lessee is obliged to tolerate the
wor6 although it may be very
annoying to him and although during
the same time he may be deprived of
a part of the premises
#. If repairs last for more than ,> days"
Hessee cannot act for reduction of
rent or rescission
%. If ,> days or more" lessee can as6
for proportionate reduction
NOTE: In either case, rescission may be
availed of if the main purpose is to
provide a dwelling place and the property
becomes uninhabitable.
Effects if Lessor fails to ma,e 4r(ent
Repairs
#. Hessee may order repairs at the
lessor9s cost
%. Hessee may sue for damages
'. Hessee may suspend the payment of
the rent
,. Hessee may as6 for rescission, in
case of substantial damage to him
TRES*ASS &N LEASE:
#. Trespass in fact (pert/r.acion e
mere -ec-o):
physical en&oyment is reduced
Hessor will not be held liable.
%. Trespass in la" (pert/r.acion e
erec-o):
A third person claims legal right
to en&oy the premises
Hessor will be held liable
CIVIL LAW COMMITTEE
NOTE: *hile the Qapanese 1ccupation
was a fortuitous event, the lessor is still
not e)cused from his obligation to warrant
peaceful legal possession. Hease is a
contract that calls for prestations both
reciprocal and repetitive+ and the
obligations of either party are not
discharged at any given moment, but
must be fulfilled all throughout the term of
the contract. (Ei!!ar/e! vs. Mani!a Motor
Co.)
-ration of Lease
.$ Lease made for a determinate time
or fi2ed 'eriod
Hease will be for the said period
and it ends on the day fi)ed
without need of a demand
8$ *f there is no fi2ed period
A$ For 0ural Lands 5Article .:;<6
it shall be for all time necessary
for the gathering of fruits which
the whole estate may yield in #
year, or which it may yield once
,$ For !rban Lands 5Article .:;/6
a. If rent is paid daily" lease is from
day to day
b. If rent is paid wee6ly" lease is
from wee6 to wee6
c. If rent is paid monthly" lease is
from month to month
d. If rent is paid yearly" lease is
from year to year
R4LES ON EDTENS&ON OF T3E
LEASE *ER&O-:
#/ If a lease contract for a definite term
allows lessee to e)tend the term, there is
no necessity for lessee to notify lessor of
his desire to so e)tend the term, unless
the contrary is stipulated.
%/ DFay be e)tendedE as stipulation"
lessee can e)tend without lessor9s
consent but lessee must notify lessor.
'/ DFay be e)tended for 0 years agreed
upon by both partiesE as stipulation" This
must be interpreted in favor of the lessee.
;ence, ordinarily the lessee at the end of
the original period may either"
a) leave the premises+ or
b) remain in possession
,/ In co3ownership, assent of all is
needed+ otherwise, it is void or ineffective
as against non3consenting co3owners.
-/ *here according to the terms of the
contract, the lease can be e)tended only
by the written consent of the parties
thereto, no right of e)tension can rise
without such written consent.
Rle if Lessor O$%ects to the LesseeEs
contined *ossession:
Cequisites"
#. $ontract has e)pired
%. Hessee continued en&oying the thing
'. Hessor 1b&ected to this en&oyment
If the three requisites are present, the
lessee shall be considered a
possessor in bad faith
&5*L&E- NE+ LEASE 5acita
0econducion6
lease which arises if at the end of the
contract the lessee should continue
en&oying the thing leased for #- days
with the acquiescence of the lessor,
unless a notice to the contrary had
previously been given by either party.
Reqisites:
a. the term of the original contract
has e)pired
b. the lessor has not given the
lessee a notice to vacate
c. the lessee continued en&oying the
thing leased for at least #- days
with the acquiescence of the
lessor
+hen there is no implied ne"
lease:
#. *hen before or after the
e)piration of the term, there is a
notice to vacate given by either party.
%. *hen there is no definite fi)ed
period in the original lease contract
as in the case of successive
renewals.
Effects:
a. The period of the new lease is not
that stated in the original contract
but the time in Articles #0=% and
#0=?.
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+
146
b. 1ther terms of the original
contract are revived.
NOTE: Terms that are revived are only
those which are germane to the
en&oyment of possession, but not those
with respect to special agreements
which are by nature foreign to the right of
occupancy or en&oyment inherent in a
contract of lease ! such as an option to
purchase the leased premises ((i:on vs.
Magsa"sa" 4R 5o. 2<<**, Ma" <1,1*72)
*erpetal Lease
A lease contract providing that the
lessee can stay in the premises for as
long as he wants and for as long as
he can pay the rentals and its
increases.
This is not permissible+ it is a purely
potestative condition because it
leaves the effectivity and en&oyment
of leasehold rights to the sole and
e)clusive will of the lessee
NOTE: In >espaMo Rea!t" vs. CA, 27
Sept. 2;;2, the :$ upheld a lease
contract, which provides that Dthe lease
contract shall continue for an indefinite
period provided that the lessee is up3to3
date in the payment of his monthly
rentalsE for the contract is one with a
period sub&ect to a resolutory condition.
*4RC3ASE OF T3E LEASE-
*RO*ERT:
4$5$RA6 R76$: (urchaser of thing
leased can terminate lease.
$8C$P9I15S:
a. lease is recorded in Cegistry of
(roperty
b. there is stipulation in the contract
of sale that purchaser shall
respect the lease
c. purchaser 6nows the e)istence of
the lease
d. sale is fictitious
e. sale is made with right of
repurchase
!RO4N-S FOR EJECT5ENT 4N-ER
ART/ .@7?: .H57/
#. E )piration of the period agreed upon
or the period under Arts. #0=% and
#0=?+
%. L ac6 of payment of the price
stipulated+
'. 0 iolation of any of the conditions
agreed upon in the contract+ and
,. 4 nauthoriMed use or service by the
lessee of the thing leased.
RENTAL REFOR5 ACT OF 1<<1
;R/A/ No/ 8.@.=
ffectivity" Qanuary #, %>>%.
$overage"
a. All residential units of NCR and other
highly urbaniMed cities, the total
monthly rental for each of which does
not e%cee P7,0;;+
b. All residential units in other areas
the total monthly rental for each of
which oes not e%cee P2,;;; as of
#8#8>%, without pre&udice to pre3
e)isting contracts.
!ronds for %dicial e%ectment:
SANORE
#. Assignment of lease or subleasing of
residential units including the
acceptance of boarders or
bedspacers without written consent of
the owner or lessor+
%. A rrears in payment of rent for a total
of ' months+
'. Hegitimate needs of the owner or
lessor to repossess for his own use or
for the use of any immediate member
of his family as a residential unit,
pro'ided:
a. owner or immediate member not
being owner of any other available
residential unit within the same city or
municipality+
b. lease for a definite period has
e)pired+
c. lessor has given lessee formal
notice ' months in advance+ and
d. owner or lessor is prohibited from
leasing the residential unit or allowing
its use by a third person for at least #
year.
,. Absolute ownership by the lessee of
another dwelling unit in the same city
or municipality which may be lawfully
used as his residence provided
lessee is with formal notice ' months
in advance+
CIVIL LAW COMMITTEE
-. N eed of the lessor to ma6e necessary
repairs in the leased premises which
is the sub&ect of an e)isting order of
condemnation by appropriate
authorities concerned in order to
ma6e said premises safe and
habitable+ and
0. E )piration of period of the lease
contract.
NOTE:
)cept when the lease is for a
definite period, the provisions of Art.
#0?'.#/ of the $ivil $ode .$$/,
insofar as they refer to residential
units, shall be suspended during the
effectivity of C.A. @#0#, but other
provisions of the $$ and the Cules of
$ourt on lease contracts insofar as
they are not in conflict with the
provisions of C.A. No. @#0# shall
apply.
No increase in monthly rental by
more than #>N is allowed.
TER5&NAT&ON OF T3E LEASE
If made for a determinate time, it
ceases upon the day fi)ed without the
need of a demand.
#/ By the e)piration of the period
%/ By the total loss of the thing
'/ By the resolution of the right of the
lessor
,/ By the will of the purchaser or
transferee of the thing
-/ By rescission due to non3performance
of the obligation of one of the parties
Special *ro'isions for 0ural Lands
Effect of loss de to fortitos
e'ent:
#. 1rdinary fortuitous event ! no
reduction
%. )traordinary fortuitous event
a. if more than R of the fruits were
lost, there shall be a reduction,
unless there is a stipulation to the
contrary
b. if R or less, there shall be no
reduction
Lease dration" If not fi)ed, it shall
be for all time necessary for the
gathering of fruits which the whole
estate may yield in # year, or which it
may yield once.
Special *ro'isions for !rban Lands
0epairs for which urban lessor is
liable#
#. special stipulation
%. if none, custom of the place
'. in case of doubt, the repairs are
chargeable against him
Lease duration#
#. If there is a fi)ed period, lease will be
for said period.
%. If no fi)ed period, apply the following
rules"
a. If rent is paid daily" day to day
b. If rent is paid wee6ly" wee6 to
wee6
c. If rent is paid monthly" month to
month
d. If rent is paid yearly" year to year
CHAIRPERSONS
/o(i!"ic!+. J'%a&2a%
Ja!1" L'/ Ba/&(&a )/e(al E"#ic!+

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