sales review

8/13/2019 Sales Review

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SALES

SALEA nominate contract whereby one of the contracting parties obligates himself to transfer the ownership ofand to deliver a determinate thing and the other to pay therefor a price certain in money or its equivalent.

NOTES !elivery and payment in a contract of sale are so interrelated and intertwined with each otherthat without delivery of the goods there is no corresponding obligation to pay. The two complement eachother. "t is clear that the two elements cannot be dissociated# for the contract of purchase and sale isessentially a bilateral contract# as it gives rise to reciprocal obligations. $%io &arretto Sons# "nc. vs.'ompania (aritima# )* S'+A ,)-.

Neither is the delivery of the thing bought nor the payment of the price necessary for theperfection of the contract of sale.&eing consensual# it is perfected by mere consent.

ElementsEssential elements those without which# there can be no valid sale

'onsent or meeting of minds

A !eterminable sub/ect matter%rice certain in money or its equivalentNatural elements inherent in the contract# and which in the absence of any contrary provision# aredeemed to e0ist in the contract1arranty against eviction1arranty against hidden defects

Accidental elements may be present or absent depending on the stipulation of the parties $e.g.conditions#interest# penalty# time or place of payment# etc.

'haracteristics%rincipal'onsensual2&ilateral2

Nominate2'ommutative2 "n some cases# aleatory $emptio spei2Onerous.

3 Aleatory contract 4 one of the parties or both reciprocally bind themselves to give or to do something inconsideration of what the other shall give or do upon the happening of an event which is uncertain# orwhich is to occur at an indeterminate time. $E0. Sale of sweepsta5es tic5et

'ontract to sell4e0clusive right and privilege to purchase an ob/ect.4a bilateral contract whereby the prospective seller# while e0pressly reserving the ownership of the sub/ectproperty despite delivery thereof to the prospective buyer binds himself to sell the said propertye0clusively to the prospective buyer upon fulfillment 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 fullpayment of the purchase price or a stipulation giving the vendor the right to unilaterally rescind thecontract the moment the vendee fails to pay within the fi0ed period# the transaction is an absolute contractof sale and not a contract to sell. $!ignos vs. 'A 6,78893 The contract of sale by itself is not a mode of acquiring ownership. The contact transfers no real rights2 itmerely causes certain obligations to arise.


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'ontract of Sale vis4:4vis 'ontract to Sell

,. Title passes to the buyer upon delivery of the thing sold ,. Ownership is reserved in the seller and isnot to pass until full payment of the purchase price

*. Non4payment of the price is a negative resolutory condition and the remedy of the seller is to e0actfulfilment or to rescind the contract *. ;ull payment is a positive suspensive condition# the failure of whichis not a breach casual or serious but simply prevents the obligation of the vendor to convey title fromhaving binding force


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effect even if the thing does not come into e0istence# unless it is a vain hope


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+ules to determine if the contract is one of Sale or %iece of wor5"f ordered in the ordinary course of business sale"f manufactured specially for the customer and upon his special order# and not for the mar5et piece ofwor5

S'OOLS O; TO>BT(assachusetts rule"f specifically done at the order of another# this is a contract for a piece of wor5.$%hilippine applicationNew Gor5 rule"f thing already e0ists4SALE2 if not41O+HEnglish rule"f material is more valuable4SALE2 if s5ill is more valuable41O+H

&A+TE+contract whereby one of the parties binds himself to give one thing in consideration of the otherIs promiseto give another thing.NOTE The only point difference between contract of sale and barter is in the element which is present insale but not in barter# namelyprice certain in money or its equivalent

NOTE "f the consideration is partly in money and partly in another thing# determine

The manifest intention of the parties"f the intent is not clear# apply the following rules"f the thing is more valuable than money barter"f the money and the thing are of equal value sale"f the thing is less valuable than money sale

Sale !ation in %aymentNo pre4e0isting credit ,. %re4e0isting credit*. Obligations are created *.Obligations are e0tinguished


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"n the cases provided under Art. ,C-* N''

Effect when the price is fi0ed by the third person designated$BENE+AL +>LE%rice fi0ed by a third person designated by the parties is binding upon them.

$EJ'E%T"ONS1hen the third person acts in bad faith or by mista5e1hen the third person disregards the specific instructions or the procedure mar5ed out by the parties

Effect when the price is not fi0ed by the third person designated"f the third person refuses or cannot fi0 the price# the contract shall become ineffective# unless the partiessubsequently agree upon the price"f the third person is prevented from fi0ing the price by the fault of the seller or buyer# the party not in faultmay obtain redress against the party in fault

Effect of Bross "nadequacy of %rice=oluntary sales$BENE+AL +>LE(ere 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 absenceof fraud# sufficient.$+odrigueF vs. 'A# *- S'+A DD


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+easonable price generally the mar5et price at the time and place fi0ed by the contract or by law for thedelivery of the goods

%erfection of Sale$BENE+AL +>LE"t is perfected at the moment there is meeting of the minds upon a determinate thing$ob/ect# and a certain price $consideration# even if neither is delivered. A choice between rescission and

fulfilment# with damages in either case

NOTE Sale is a consensual contract2 ence# delivery and payment are not essential for its perfection$EJ'E%T"ON1hen the sale is sub/ect to a suspensive condition by virtue of law or stipulation.3 The terms and conditions of payment are merely accidental# not essential elements of the contract ofsale e0cept where the partied themselves stipulate that in addition to the sub/ect4matter and the price#they are essential or material to the contract.

+equirements for perfection1hen parties are face to face1hen an offer is accepted without conditions or qualificationsNOTES

A conditional acceptance is a counter4offer

when negotiated thru phone it is as if it is negotiated face to face1hen contract is thru correspondence or thru telegram1hen the offeror receives or has 5nowledge of the acceptance by the offereeNOTE "f the buyer has already accepted but the seller does not 5now yet of the acceptance# the sellermay still withdraw1hen a sale is sub/ect to a suspensive condition;rom the moment the condition is fulfilled

Transfer of Ownership$BENE+AL +>LE1hile a contract of sale is consensual# ownership of the thing sold is acquired onlyupon its delivery# actual or constructive# to the buyer. $!aus vs. Sps. !e Leon# ,) @une *LES BO=E+N"NB A>'T"ON SALES

,.Sales of separate lots by auction are separate contracts of sale.*.Sale is perfected by the fall of the hammer


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E;;E'T O; %+O("SE T+EATE! >N!E+ A+T. ,C-'ivil 'odeAccepted unilateral promise to sell or buyOnly one ma5es the promise# this promise is accepted by the other. E0ampleA promises to sell to &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 parta5es the nature of an offer to sell whichif accepted# results in a perfected contract of sale $SancheF vs. +igos CD S'+A< )8."n other words# if theacceptance is made before withdrawal# it constitutes a binding contract of sale although the option isgiven without consideration.if the promise is supported by a consideration distinct and separate from the price $option money# itsacceptance will give rise to a perfected contract.

&ilateral promise to buy and sellOne party accepts the others promise to buy and the latter# the formers promise to sell a determinatething for a price certainit is reciprocally demandable"t requires no consideration distinct from the selling priceNOTEthis is as good as a perfected sale.No title of dominion is transferred as yet# the parties being givenonly the right to demand fulfillment or damages.

%olicitationAn unaccepted unilateral promise to buy or sell. Even if accepted by the other party# it does not bind thepromissor and maybe withdrawn anytime. This is a mere offer# and has not yet been converted into acontract.

Option contractA contract granting a privilege in one person# for which he has paid a consideration# which gives him theright to buy certain merchandise# at anytime within the agreed period# at a fi0ed price.

An option without consideration is void and the effect is the same as if there was no option3 owever# in SancheF vs. +igos $,7-*# even though the option was not supported by a consideration#the moment it was accepted# a perfected contract of sale resulted# applying Art. ,


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assign her first option to buy the leased property to another. $&angayan et.al vs. 'A and Lim B+No.,*


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There is warranty that the thing sold corresponds to the representations or descriptions.

Sale by sampleA sale where a small quantity of a commodity is e0hibited by the seller as a fair specimen of the bul5#which is not present and as to which there is no opportunity to inspect or e0amine.NOTEThe mere e0hibition of the sample does not necessarily ma5e it a sale by sample.This e0hibition

must have been the sole basis or inducement of the sale.There is warranty that the bul5 of the commodity will correspond in 5ind# quality# and character with thesample e0hibited.

NOTE "n a sale by sample and by description# there is a two4fold warranty.

+"BTS O; &>GE+, +eturn the thing and recover the money paid# or* +etain the thing and sue for the breach of warranty.

%>+'ASE &G ("NO+S'ontract is generally voidable but in case of necessaries# where necessariesare sold and delivered to a minor or other person without capacity to act# he must pay a reasonable pricetherefore. Necessaries are those in Art. *7.

;O+(AL"T"ES O; 'ONT+A'T O; SALE$BENE+AL +>LESale is a consensual contract and is perfected by mere consent.$EJ'E%T"ONS"n order to be enforceable by action# the following must be in writingSale of personal property at a price not less than %DSale of real property or an interest thereinSale of property not to be performed within a year from the date thereof

Applicable statute requires that the contract of sale be in a certain formNOTE Statute of ;rauds is applicable only to e0ecutory contracts and not to contracts which are totally orpartially performed.

'A%A'"TG TO &>G O+ SELL$BENE+AL +>LEAll persons who can bind themselves also have legal capacity to buy and sell.$EJ'E%T"ONS

Absolute incapacity $minors# demented persons# imbeciles# deaf and dumb# prodigals# civil interdictees 4party cannot bind themselves in any case.+elative incapacity incapacity e0ists only with reference to certain persons or a certain class of property

+elative "ncapacityA. usband and wife $Art. ,C7Benerally# a sale by one spouse to another is void.The husband and wife cannot sell property to each other e0cept1hen a separation of property was agreed upon by the spouses1hen there has been a /udicial separation of property under Article ,


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/udges# /ustices# prosecuting attorneys# cler5s of courts# etc.# with respect to the property in custogia legis2and

any other person specially disqualified by law.E0amples of persons especially disqualified by lawa. Aliens who are disqualified to purchase agricultural lands

b. An unpaid seller having a right of lien or having stopped the goods in transitu# who is prohibited frombuying the goods either directly or indirectly in the resale of the same# at public or private sale which hemay ma5ec. The officer holding the e0ecution# or his deputy.NOTE1hile those disqualified under Arts. ,C7and ,C7, may not become lessees $Art. ,)C)# still aliensmay become lessees even if they cannot buy lands.

$ Effect of violation1ith respect to nos. , to


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ownership.Kuasi4tradition delivery of rights# credits or incorporeal property# made byplacing titles of ownership in the hands of buyerallowing buyer to ma5e use of rightsTradition by operation of law

'onstructive delivery requires three things before ownership may be transferredThe seller must have control over the thingThe buyer must be put under controlThere must be the intention to deliver the thing for purposes of ownership

1hen is the vendor not bound to deliver the thing sold"f the vendee has not paid him the price"f no period for payment has been fi0ed in the contractEven if a period for payment has been fi0ed in the contract# if the vendee has lost the right to ma5e use ofthe same.

Sale or return%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"t is a 5ind of sale with a condition subsequent.The buyer must comply with the e0press or implied conditions attached to the return privilege2 otherwise#the sale becomes absolute.&uyer# being the owner# bears the ris5 of loss

Sale on trial# approval# or satisfactionA contract in the nature of an option to purchase if the goods prove to be satisfactory# the approval of thebuyer being a condition precedent.

+ulestitle remains in the sellerris5 ofloss remains with seller e0ceptwhen the buyer is at fault or has agreed to bear the lossbuyer must give goods a trial# e0cept where it is evident that it cannot perform the wor5period within which buyer must signify his acceptance runs only when all the parts essential for theoperation 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 thirdperson must be in good faith. "f refusal to accept is not /ustified# seller may still sue.Benerally# the sale and delivery to a buyer who is an e0pert on the ob/ect purchased is not a sale onapproval# trial# or satisfaction.

Sale or return Sale on Trial,. Sub/ect to a resolutory condition ,. Sub/ect to a suspensive condition

*. !epends entirely on the will of the buyer *. !epends on the character or quality of the goods


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"f the bill of lading# although stating that the goods are to be delivered to the buyer or his agent# is 5ept bythe seller or his agent21hen the buyer# although the goods are deliverable to order of buyer# and although the bill of lading isgiven to him# does not honor the bill of e0change sent along with it.

Transfer of ownership where goods sold delivered to carrier

Beneral +ule !elivery to the carrier is deemed to be delivery to the buyerE0ception 1here the right of possession or ownership of specific goods sold is reserved

SALE O; BOO!S &G A NON4O1NE+$BENE+AL +>LE&uyer acquires no title even if in good faith and for value under the ma0im Nemo datquid non habet $Gou cannot give what you do not have.$EJ'E%T"ONS$S(E+=SOwner is estopped or precluded by his conduct1hen sale is made by the registered owner or apparent owner in accordance with recording orregistration lawsSales sanctioned by /udicial or statutory authority%urchases in a merchantIs store# fairs or mar5ets1hen a person who is not the owner sells and delivers a thing# subsequently acquires title thereto $Art.

,Cnlawful deprivation is no longer limited to a criminal act. There is >nlawful !eprivation where there isno valid transmission of ownership.

%lace of delivery of goods1here there is an agreement# place of delivery is that agreed upon1here there is no agreement# place of delivery determined by usage of trade1here there is no agreement and no prevalent usage# place of delivery is the sellers place"n any other case# place of delivery is the sellers residence"n case of specific goods# which to the 5nowledge of the parties at the time the contract was made were insome other place# that place is the place of delivery# in the absence of agreement or usage of trade to thecontrary

Time of delivery of goodsStipulated time"n the absence thereof# within a reasonable time

NEBOT"A&LE !O'>(ENT O; T"TLE $N!TA document of title in which it is stated that the goods referred to therein will be delivered to the bearer# orto the order of any person named in such document.(ay be negotiated by delivery or indorsement.

The document is negotiable ifThe goods are deliverable to the bearer2 or"f the goods are deliverable to the order of a certain person

%ersons who may negotiate N!TThe owner2 or

Any person to whom the possession or custody thereof has been entrusted by the owner# if by the termsof the document the bailee issuing the document underta5es to deliver the goods to the order of theperson to whom the possession or custody of the document has been entrusted or if at the time of suchentrusting the document in such form that it may be negotiated by delivery.

3 "f the holder of a negotiable document of title $deliverable to bearer entrusts the document to a friend for


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deposit# but the friend betrays the trust and negotiates the document by delivering it to another who is ingood faith# the said owner cannot impugn the validity of the negotiation. As between two innocentpersons# he who made the loss possible shall bear the loss# without pre/udice to his right to recover fromthe wrongdoer.

+"BTS O; %E+SON TO 1O( !O'>(ENT AS &EEN NEBOT"ATE!

, The title of the person negotiating the document# over the goods covered by the document2* The title of the person $depositor or owner to whose order by the terms of the document the goodswere to be delivered# over such goods2%ON&uyer may re/ect2 or&uyer may accept what has been delivered# at the contract rate

+>LES 1EN K>ANT"TG "S (O+E TAN AB+EE! >%ON&uyer may re/ect all2 or&uyer may accept the goods agreed upon and re/ect the rest2 or&uyer may accept all and must pay for them at the contract rateNOTEAcceptance# even if not e0press may be implied when the buyer e0ercises acts of ownership overthe e0cess goods.

+>LES 1EN BOO!S ("JE! 1"T BOO!S O; !";;E+ENT !ES'+"%T"ON&uyer may accept the goods which are in accordance with the contract and re/ect the rest

NOTE"f the sub/ect matter is indivisible# in case of delivery of larger quantity of goods or of mi0ed goods#the buyer may re/ect the whole of the goods

!EL"=E+G TO TE 'A++"E+$BENE+AL +>LE1here the seller is authoriFed or required to send the goods to the buyer# delivery tothe carrier is delivery to the buyer.$EJ'E%T"ONS1hen a contrary intention appears"mplied reservation of ownership under pars. ,#*#< of Art. ,D(&E+E! 1"T NON4A%%A+ENT &>+!EN,. +ight of vendee arecission# or bindemnity

*. 1hen right cannot be e0ercised a if the burden or servitude is apparent b if the non4apparent burden or servitude is registered c if vendee had 5nowledge of the encumbrance# whether it is registered or not


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"mplied 1arranties of Kuality1arranty of ;itness1arranty in which the seller guarantees that the thing sold is reasonably fit for the 5nown particularpurpose for which it was acquired by the buyer

$BENE+AL +>LEThere is no implied warranty as to the quality or fitness for any particular purpose ofgoods under a contract of sale$EJ'E%T"ONS1here the buyer# e0pressly or by implication manifests to the seller the particular purpose for which thegoods are required1here the buyer relies upon the sellers s5ill or /udgment

1arranty of (erchantability1arranty in which the seller guarantees# where the goods were bought by description# that they arereasonably fit for the general purpose for which they are sold"t requires identity between what is described in the contract AN! what is tendered# in the sense that thelatter is of such quality to have some value

"nstances where implied warranties are inapplicableAs is and where is sale 4 vendor ma5es no warranty as to the quality or wor5able condition of the goods#and that the vendee ta5es them in the condition in which they are found and from the place where theyare located.Sale of second4hand articlesSale by virtue of authority in fact or law

'aveat =enditor $Let the seller bewarethe vendor is liable to the vendee for any hidden faults or defectsin the thing sold# even though he was not aware thereof.

'aveat Emptor $Let the buyer bewarerequires the purchaser to be aware of the supposed title of thevendor and one who buys without chec5ing the vendors title ta5es all the ris5s and losses consequent tosuch failure.

+>LES "N 'ASE O; SALE O; AN"(ALS,.1hen two or more animals have been sold at the same time and the redhibitory defect is in one# orsome of them but not in all# the general rule is that the redhibition will not affect the others without it."t isimmaterial whether the price has been fi0ed for a lump sum for all the animals or for a separate price foreach.*.No warranty against hidden defects of animals sold at fairs or at public auctions# or of livestoc5 sold ascondemned.This is based on the assumption that the defects must have been clearly 5nown to the buyer.


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,,)of the 'ivil 'ode# would still generally require /udicial or e0tra4/udicial demand before default can besaid to arise $&ric5town !evt 'orp vs. Amor Tierra !evt 'orp. D-S'+AC


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NOTES"f the thing sold is in the possession of the vendee and the price is already in the hands of the vendor# thesale is a consummated contract and Article ,D7is no longer applicable.Article ,D7# presupposes that theprice or any part thereof has not yet been paid and the contract is not yet consummated.>nder Article ,D7# 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!isturbance must be in possession and ownership of the thing acquired"f the disturbance is caused by the e0istence of non4apparent servitude# the remedy of the buyer isrescission# not suspension of payment.

1hen vendee cannot suspend payment of the price even if there is disturbance in the possession orownership of the thing soldif the vendor gives security for the return of the price in a proper caseif it has been stipulated that notwithstanding any such contingency# the vendee must ma5e payment $see

Article ,DC8 par.


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+emedies of vendor in sale of personal property by installments+equisites'ontract of sale%ersonal property%ayable in installments"n the case of the second and third remedies# that there has been a failure to pay two or moreinstallmentsNOTE Apply li5ewise to contracts purporting to be leases of personal property with option to buy

Art. ,C8C does not apply to a sale%ayable on straight terms $partly in cash and partly in one termOf +eal property+emediesSpecific performance upon vendees failure to payNOTE!oes not bar full recovery for /udgment secured may be e0ecuted on all personal and realproperties of the buyer which are not e0empt from e0ecution $%alma v. 'A.+escission of the sale if vendee shall have failed to pay two or more installmentsNOTESNature of the remedy which requires mutual restitution bars further action on the purchase price $Nonatovs. "A'.$BENE+AL +>LE cancellation of sale requires mutual restitution# that is all partial payments of price or

rents must be returned$EJ'E%T"ONSa stipulation that the installments or rents paid shall not be returned to the vendee orlessee shall be valid insofar as the same may not be unconscionable under the circumstan4ces $Article,C8).;oreclosure of the chattel mortgage on the thing sold if vendee shall have failed to pay two or moreinstallments. "n this case# there shall be no further action against the purchaser to recover unpaid balanceof the price.

NOTES;urther recovery barred only from the time of actual sale at public auction conducted pursuant toforeclosure $(acondray vs. Tan.Other chattels given as security cannot be foreclosed if they are not sub/ect of the installment sale $+idadvs. ;ilipinas investment and ;inance 'orp. B+


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Sale on instalment of real estate'ontract to sell'onditional sale'ases covered by +A )DD* +ealty "nstallment buyer protection act

+.A. No. )DD* or (aceda Law

An Act to %rovide %rotection to buyers of +eal Estate on "nstallment %aymentsLaw governing sale or financing of real estate on installment payments+equisitestransactions or contracts involving the sale O+ financing of real estate on installment payments# includingresidential condominium apartments2 andbuyer defaults in payment ofsucceeding installments.

+ights of the buyer"f &uyer has paid at least two $* years of installmentsThe buyer must pay# without additional interest# the unpaid installments due within the total grace periodearned by him.There shall be one $, month grace period for every one $, year of installment paymentsmadeNOTE This right shall be e0ercised by the buyer ONLG once in every D years of the life of the contract

AN! its e0tensions.Actual cancellation can only ta5e place after


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be defeated by the governments claim to the specific ta0 on the goods themselves $Arts. **C- and **C,.NOTE The bringing of an action to recover the purchase price is not one of the ways of losing thepossessory 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. ,D*7# last paragraph.

Stoppage of goods in transitu

+equisitesSeller must be unpaid&uyer must be insolventBoods must be in transitSeller must eitheractually ta5e possession of the goods sold O+give notice of his claim to the carrier or other person in possessionSeller must surrender the negotiable document of title# if any# issued by the carrier or baileeSeller must bear the e0penses of delivery of the goods after the e0ercise of the right

BOO!S A+E 'ONS"!E+E! "N T+ANS"T>,.after delivery to a carrier or other bailee and before the buyer or his agent ta5es delivery of them2 and*."f the goods are re/ected by the buyer# and the carrier or other bailee continues in possession of them

BOO!S A+E NO LONBE+ 'ONS"!E+E! "N T+ANS"T>,.after delivery to the buyer or his agent in that behalf2*.if the buyer or his agent obtains possession of the goods at a point before the destination originallyfi0ed2


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1hen may be e0ercised1here the ownership has passed to the buyer AN! he wrongfully neglects O+ refuses to pay for the price1here the price is payable on a day certain AN! he wrongfully neglects O+ refuses to pay for the price#irrespective of the delivery or transfer of title1here the goods cannot readily be resold for a reasonable price AN! the buyer wrongfully refuses toaccept them even before the ownership of the goods has passed# if Article ,D7) is inapplicable.

Action for damages1hen may be e0ercised"n case of wrongful neglect or refusal by the buyer to accept or pay for the thing sold $Art. ,D7) par.,"n an e0ecutory contract# where the ownership in the goods has not passed# and the seller cannotmaintain an action to recover the price $Art ,D7D"f the goods are not yet identified at the time of the contract or subsequently+E(E!"ES O; TE &>GE+ ;O+ &+EA' O; 'ONT+A'T

Action for specific performance $Art. ,D781here the seller has bro5en the contract to deliver specific or ascertained goodsThe /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

+emedies of buyer for breach of warranty by seller $Art. ,D77+ecoupment accept the goods and set up the sellers breach to reduce or e0tinguish the price

Accept the goods and maintain an action for damages for breach of warranty+efuse to accept the goods and maintain an action for damages for breach of warranty+escind the contract by returning or offering the return of the goods# and recover the price of any partthereofNOTEThese are alternative remedies.

1hen rescission by buyer not allowed,.if the buyer accepted the goods 5nowing of the breach of warranty without protest*.if he fails to notify the seller within a reasonable time of his election to rescind


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=endor binds himself to pay the Ta0es of the thing sold2Any Other case where the parties really intended that the transaction should secure the payment of adebt or the performance of any obligation2 or1hen there is !oubt as to whether contract is contract of sale with right of repurchase or an equitablemortgage.

Equitable (ortgageOne which lac5s the proper formalities# form of words# or other requisites prescribed by law for amortgage# but shows the intention of the parties to ma5e the property sub/ect of the contract as securityfor a debt and contains nothing impossible or contrary to law $'achola vs. 'A *8S'+AC7)

3 1hen can there be presumption as to Equitable (ortgage, %arties must have entered into a contract denominated as a contract of sale* The intention of the parties was to secure an e0isting debt by way of mortgageNOTE"n the cases referred to in Arts. ,)* and ,)C# the apparent vendor may as5 for the reformation ofthe instrument.+emedy of +eformationTo correct the instrument so as to ma5e it e0press the true intent of the parties.

+edemption %eriod

if there is an agreementperiod agreed upon cannot e0ceed ,yearsif no agreement as to the periodCyears from the date of the contractthe vendor who fails to repurchase the property within the period agreed upon may# however# e0ercise theright to repurchase within


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"nstances of legal redemptionA. >nder the 'ivil 'ode $legal redemptionSale of a co4owner of his share to a stranger $Article ,)*1hen a credit or other incorporeal right in litigation is sold $Article ,)nder special laws

An equity of redemption in cases of /udicial foreclosuresA right of redemption in cases of e0tra4/udicial foreclosures+edemption of homesteads+edemption in ta0 sales+edemption by an agricultural tenant of land sold by the landowner

ASS"BN(ENT O; '+E!"Ta contract by which the owner of a credit transfers to another his rights and actions against a third personin consideration of a price certain in money or its equivalent

NOTETransfer of rights by assignment ta5es place by the perfection of the contract of assignment withoutthe necessity of delivering the document evidencing the credit.this rule does not apply to negotiable documents and documents of title which are governed by speciallaws.

Effects of Assignmenttransfers the right to collect the full value of the credit# even if he paid a price less than such valuetransfers all the accessory rightsdebtor can set up against the assignee all the defenses he could have set up against the assignor

Effect of payment by the debtor after assignment of credit&efore Notice of the assignment%ayment to the original creditor is valid and debtor shall be released from his obligation

After Notice%ayment to the original creditor is not valid as against the assigneee can be made to pay again by the assignee

1arranties of the assignor of credite warrants the e0istence of the credite warrants the legality of the credit at the perfection of the contractNOTE There is no warranty as to the solvency of the debtor unless it is e0pressly stipulated O+ unlessthe insolvency was already e0isting and of public 5nowledge 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 ma5e uphis inheritance.

Liabilities of the assignor of credit for violation of his warrantiesAssignor in good faithLiability is limited only to the price received and to the e0penses of the contract# and any other legitimatepayments by reason of the assignment

Assignor in bad faithLiable not only for the payment of the price and all the e0penses but also for damages

Legal +edemption in Sale or 'redit or other incorporeal right in litigation+equisites


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There must be a sale or assignment of creditThere must be a pending litigation at the time of the assignmentThe debtor must pay the assigneeprice paid by him

/udicial cost incurred by him2 AN!interest on the price from the date of payment

The right must be e0ercised by the debtor within


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/udicial process $Section 82 and"f it refers to properties e0empt from attachment or e0ecution $+ules of 'ourt# +ule


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Any act occupation or calling of habitually selling direct to the general public merchandise# commodities orgoods for consumption# but the restrictions of this law shall not apply to the followingSales by manufacturer# processor# laborer# or wor5er# to the general public the products manufactured#processed produced by him if his capital does not e0ceed %,#2Sales by a farmer or agriculturalist selling the products of his farmSales in restaurant operations by a hotel owner or inn45eeper irrespective of the amount of capital2provided that the restaurant is incidental to the hotel business2 andSales which are limited only to products manufactured# processed or assembled by a manufacturerthrough a single outlet# irrespective of capitaliFation

igh4End or Lu0ury BoodsBoods which are not necessary for life maintenance and whose demand is generated in large part by thehigher income groupsShall include but not limited to/ewelry# branded or designer clothing and footwear# wearing apparel# leisureand sporting goods# electronics and other personal effectsNOTE A natural4born citiFen of the %hilippines who has lost his citiFenship but who resides in the%hilippines shall be granted the same rights as ;ilipino citiFens

;oreign Equity %articipation

;oreign4owned partnerships# associations and corporations formed and organiFed under the laws of the%hilippines may# upon registration with SE' and !T"# or in case of ;oreign4owned single proprietorshipwith the !T"# engage or invest in retail trade business# sub/ect to the following categories'ategory A%aid4up capital of the equivalent in %hilippine %eso of P*#D#>S !ollars+eserved e0clusively for ;ilipino citiFens and corporations wholly owned by citiFens'ategory &(inimum paid4up capital of the equivalent in %hilippine %eso of P*#D#>S !ollars# but P-#D#(ay be wholly owned by foreigners e0cept for the first two years after the effectivity of this Act whereinforeign participation shall be limited to not Q ) of total equity.'ategory '%aid4up capital of the equivalent in %hilippine %eso ofP-#D#>S !ollars or more(ay be wholly owned by foreignersNOTE"n no case shall the investments for establishing a store in 'ategories & and ' be less than theequivalent in %hilippine %eso of>S P8


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%hilippines within 8 years from the start of the operations

Kualification of ;oreign +etailers(inimum of P*##>S !ollars net worth in its parent corporation for 'ategories & and ' andPD##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 capitaliFed at a minimum of P*D##>S !ollarsD4year trac5 record in retailing2 andOnly nationals from# or /uridical entities formed or incorporated in 'ountries which allow to engage in retailtrade in the %hilippines

%! 7D- $S>&!"="S"ON AN! 'ON!O("N">( &>GE+S %+OTE'T"=E !E'+EE

+egistration of %ro/ectsThe registered owner of a parcel of land who wishes to convert the same into a subdivision pro/ect shallsubmit his subdivision plan to the O>S"NB AN! LAN!4>SE +EB>LATO+G &OA+!# which shall actupon and approve the same# upon a finding that the plan complies with the Subdivision StandardsI and

+egulations enforceable at the time the plan is submitted. The same procedure shall be followed in thecase of a plan for a condominium pro/ect e0cept that# in addition# said Authority shall act upon andapprove the plan with respect to the building or buildings included in the condominium pro/ect inaccordance with the National &uilding 'ode $+.A. No. )DC,.The subdivision plan# as so approved# shall then be submitted to the !irector of Lands for approval inaccordance with the procedure prescribed in Section CC of the Land +egistration Act $Act No. C7)# asamended by +.A. No. CC%rovided# that it case of comple0 subdivision plans# court approval shall nolonger be required. The condominium plan as li5ewise so approved# shall be submitted to the +egister of!eeds of the province or city in which the property lies and the same shall be acted upon sub/ect to theconditions and in accordance with the procedure prescribed in Section C of the 'ondominium Act $+.A.No. C-*).

National ousing authority $now ousing and Land >se +egulatory &oard has the e0clusive /urisdiction

to regulate the real estate trade and business.

License to sellSuch owner or dealer to whom has been issued a registration certificate shall not# however# be authoriFedto sell any subdivision lot or condominium unit in the registered pro/ect unless he shall have first obtaineda license to sell the pro/ect within two wee5s from the registration of such pro/ect.

E0empt transactionsA license to sell and performance bond shall not be required in any of the following transactionsSale of a subdivision lot resulting from the partition of land among co4owners and co4heirs.Sale or transfer of a subdivision lot by the original purchaser thereof and any subsequent sale of thesame lot.Sale 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.

Brounds for +evocation of registration certificate and license to sell of owners or dealers"s insolvent2 oras violated any of the provisions of this !ecree or any applicable rule or regulation of the Authority# orany underta5ing of his?its performance bond2 oras been or is engaged or is about to engage in fraudulent transactions2 oras made any misrepresentation in any prospectus# brochure# circular or other literature about thesubdivision pro/ect or condominium pro/ect that has been distributed to prospective buyers2 or


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"s of bad business repute2 or!oes 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 togrant temporarily the use of the thing or to render some service to another who underta5es to pay somerent.Hinds of Leases $;rom the view point of the sub/ect matterLease of thingsLease of serviceLease of wor5

NOTESince lease is consensual and is not imposed by law# only the lessor has the right to fi0 the rents.owever# the increasing of the rent is not an absolute right on the part of the lessor.

'haracteristics or +equisites for Lease of Things'onsensual

%rincipalNominate%urpose is to allow en/oyment or use of a thing $the person to en/oy is the lessee2 the person allowing theen/oyment by another is the lessorSub/ect matter must be within the commerce of man%urpose to which the thing will be devoted should not be immoralOnerous $there must rent or price certain%eriod is Temporary $not perpetual# hence# the longest period is 7years%eriod is either definite or indefinite"f no term is fi0ed# we should apply Art.,)8* $for rural leases and Art. ,)8- $for urban leases"f the term is fi0ed but indefinite# the court will fi0 the term under the law of obligations and contractsLessor need not be the owner

NOTE A usufructuary may thus lease the premises in favor of a stranger# such lease to end at the timethat the usufruct itself ends

+entThe compensation either in money# provisions# chattels# or labor# received by the lessor from the lessee.

NOTES1hen a student boards and lodges in a dormitory# there is no contract of lease.The contract is notdesignated specifically in the 'ivil 'ode."t is an innominate contract."t is however# believed that thecontract 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 bo0 in a ban5 is given for aprice 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 beconsidered a sale.

LEASE SALES,. only use or en/oyment is transferred ,. ownership is transferred*. transfer is temporary *. transfer is permanent


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is mentioned

Lease of Things Lease of Servicesob/ect of contract is a thing ob/ect is some wor5 or servicelessor has to deliver the thing leased lessor has to perform some wor5 or serviceLE'onsumable goods cannot be the sub/ect matter of a contract of lease of things.1hy To use or en/oy hem# they will have to be consumed. This cannot be done by a lease sinceownership over them is not transferred to him by the contract of lease.$EJ'E%T"ONS"f they are merely e0hibited"f they are accessory to an industrial establishment

+E'O+!"NB O; LEASE O; %E+SONAL %+O%E+TG$BENE+AL +>LELease of real property is personal right$EJ'E%T"ONSLease parta5es of the nature of real right ifLease of real property is more than , yearLease of real property is registered regardless of duration

NOTE Lease of personal property cannot be registered.To be binding against third persons# the partiesmust e0ecute a public instrument.3 Lease may be made orally# but if the lease of +eal %roperty is for more than , year# it must be in writingunder the Statue of ;rauds.%ersons !isqualified to be Lessees &ecause !isqualified to &uy

A husband and a wife cannot lease to each other their separate properties e0cept

if separation of property was agreed uponif there has been /udicial separation of property%ersons referred to in Art. ,C7, are disqualified because of fiduciary relationships

S>&LEASEA separate and distinct contract of lease wherein the original lessee becomes a sublessor to a sublessee.Allowed unless e0pressly prohibited.The sublessee is subsidiarily liable for any rent due. The lessor has an accion directa against thesublessee for unpaid rentals and improper use of the ob/ect.


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S>&LEASE ASS"BN(ENT O; LEASE,. there are two leases and two distinct /uridical relationships although immediately connected and relatedto each other ,. there is only one /uridical relationship# that of the lessor and the assignee# who isconverted into a lessee*. the personality of the lessee does not disappear *. the personality of the lessee disappears

T ENTE+E! "NTO &G LESSEE, +escission and damages# or* !amages only $'ontract will be allowed to remain in force


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NOTESuspend4 for the intervening period# the lessee does not have to pay the rent.

E;;E'T"="TG O; TE S>S%ENS"ONThe right beginsa "n the case of repairs# from the time he made the demand for said repairs# and the demand wentunheeded.

b "n the case of eviction# from the time the final /udgment for eviction becomes effective.

Alternative remedies of Aggrieved party $Lessor?Lessee in case of Non4fulfillment of duties+escission and damages!amages only# allowing the contract to remain in force Specific %erformanceNOTE !amages +ecoverable in e/ectment cases are the rents or the fair rental value of the premises.Thefollowing cannot be successfully claimed%rofits plaintiff could have earned were it not for the possible entry or unlawful detainer(aterial in/ury to the premises

Actual# moral# or e0emplary damages

"mmediate termination of lease under Art. ,))appliesonly to dwelling place or any other building intended for human habitation

even if at the time the contract was perfected# the lessee 5new of the dangerous condition or waived theright to rescind on account of this condition+ules on Alteration of the ;orm of the LeaseThe Lessor can alter provided there is no impairment of the use to which the thing is devoted under theterms of the lease

Alteration can also be made by the Lessee so long as the value of the property is not substantiallyimpaired

+ules in case of >rgent +epairsThe lessee is obliged to tolerate the wor5 although it may be very annoying to him and although duringthe same time he may be deprived of a part of the premises"f repairs last for more than Cdays Lessee cannot act for reduction of rent or rescission"f Cdays or more lessee can as5 for proportionate reduction

NOTE"n either case# rescission may be availed of if the main purpose is to provide a dwelling place andthe property becomes uninhabitable.

Effects if Lessor fails to ma5e >rgent +epairsLessee may order repairs at the lessors costLessee may sue for damagesLessee may suspend the payment of the rentLessee may as5 for rescission# in case of substantial damage to him

T+ES%ASS "N LEASETrespass in fact $perturbacion de mere hechophysical en/oyment is reducedLessor will not be held liable.

Trespass in law $perturbacion de derechoA third person claims legal right to en/oy the premisesLessor will be held liable

NOTE1hile the @apanese Occupation was a fortuitous event# the lessor is still not e0cused from hisobligation to warrant peaceful legal possession. Lease is a contract that calls for prestations bothreciprocal and repetitive2 and the obligations of either party are not discharged at any given moment# butmust be fulfilled all throughout the term of the contract. $=illaruel vs. (anila (otor 'o.


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!uration of LeaseLease made for a determinate time or fi0ed %eriodLease will be for the said period and it ends on the day fi0ed without need of a demand

"f there is no fi0ed period;or +ural Lands $Article ,)8

it shall be for all time necessary for the gathering of fruits which the whole estate may yield in , year# orwhich it may yield once;or >rban Lands $Article ,)8-"f rent is paid daily lease is from day to day"f rent is paid wee5ly lease is from wee5 to wee5"f rent is paid monthly lease is from month to month"f rent is paid yearly lease is from year to year

+>LES ON EJTENS"ON O; TE LEASE %E+"O!, "f a lease contract for a definite term allows lessee to e0tend the term# there is no necessity for lesseeto notify lessor of his desire to so e0tend the term# unless the contrary is stipulated.* (ay be e0tended as stipulationlessee can e0tend without lessors consent but lessee must notify lessor.


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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 asan option to purchase the leased premises $!iFon vs. (agsaysay B+ No. *N!S ;O+ E@E'T(ENT >N!E+ A+T. ,)-E0piration of the period agreed upon or the period under Arts. ,)8* and ,)8-2Lac5 of payment of the price stipulated2=iolation of any of the conditions agreed upon in the contract2 and>nauthoriFed use or service by the lessee of the thing leased.

+ENTAL +E;O+( A'T O; **$+.A. No. 7,),Effectivity@anuary ,# **.'overage

All residential units of N'+ and other highly urbaniFed cities# the total monthly rental for each of whichdoes not e0ceed %-#D2

All residential units in other areas the total monthly rental for each of which does not e0ceed %C#as of,?,?*# without pre/udice to pre4e0isting contracts.

Brounds for /udicial e/ectmentSANO+EAssignment of lease or subleasing of residential units including the acceptance of boarders or bedspacerswithout written consent of the owner or lessor2

Arrears in payment of rent for a total of < months2Legitimate needs of the owner or lessor to repossess for his own use or for the use of any immediatemember of his family as a residential unit# providedowner or immediate member not being owner of any other available residential unit within the same city ormunicipality2lease for a definite period has e0pired2lessor has given lessee formal notice < months in advance2 andowner or lessor is prohibited from leasing the residential unit or allowing its use by a third person for atleast , year.

Absolute ownership by the lessee of another dwelling unit in the same city or municipality which may be


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lawfully used as his residence provided lessee is with formal notice < months in advance2Need of the lessor to ma5e necessary repairs in the leased premises which is the sub/ect of an e0istingorder of condemnation by appropriate authorities concerned in order to ma5e said premises safe andhabitable2 andE0piration of period of the lease contract.

NOTEE0cept when the lease is for a definite period# the provisions of Art. ,)-


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Acads# @ennifer Ang$='4 Secretariat# @oy "nductivo $='4;inance# Elaine (asu5at $='4E!%# Anna(argarita Eres $='4Logistics. @onathan(angundayao $%olitical Law# ;rancis &enedict +eotutar $Labor Law# +omuald %adilla $'ivil Law#'harmaine Torres $Ta0ation Law# (ar5 !avid (artineF $'riminal Law# Barny Luisa Alegre $'ommercialLaw# @in5y Ann >y $+emedial Law# @ac5ie Lou &autista $Legal Ethics

'ivil Law 'ommittee$'hairperson+omuald %adilla $Asst.'hairperson=ida &ocar# @oyce =idad $E!%AlnaiFa assiman# !orothyBayon$ Sub/ect eads'hristopher +ey (arasigan $%ersons and ;amily +elations# Ale/andro'asabar$%roperty# (a. +hodora;errer$1ills and Succession# "an !ominic %ua$Obligations and 'ontracts# Sha Eli/ah !umama$Salesand Lease# @ohn StephenKuiambao$%AT# 'hristopher 'abigao$'redit Transactions# Ligaya Alipao$Torts and !amages# Anthony%urganan$LT!#(a. +icasion Tugadi $'onflicts of Law

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