15462086 Sales General Principles Dean CLV

8/6/2019 15462086 Sales General Principles Dean CLV

1/110

By:

CCESARESAR L.L. VVILLANUEVAILLANUEVA, B.S.C., C.P.A., LL.B., LL.M., FAICD, D.J.S.

AATENEOTENEO DEDE MMANILAANILA LLAWAW SSCHOOLCHOOLRockwell Center, Makati CityRockwell Center, Makati City

LLAWAW on Son SALESALESRREVIEWEVIEW


2/110

DDEFINITIONEFINITION (Art. 1458)

PPARTIESARTIES OOBLIGATIONSBLIGATIONS

SSELLERELLER

BBUYERUYER

(1)(1) TOTO TTRANSFERRANSFEROOWNERSHIPWNERSHIP

(2)(2) TOTO DDELIVERELIVERPPOSSESIONOSSESION

(3)(3) TOTO PPAYAY

SSUBJECTUBJECT

MMATTERATTER

PPRICERICE

GGENERALENERAL PPRINCIPLESRINCIPLES

CONSENT

Meeting of MindsReal Obligation

Real Obligations

SSALEALE

2


3/110

EESSENTIALSSENTIAL CCHARACTERISTICS OFHARACTERISTICS OF SSALEALE::

NNOMINATEOMINATE

PPRINCIPALRINCIPAL

CCONSENSUALONSENSUAL

BBILATERAL/ILATERAL/

RRECIPROCALECIPROCAL

OONEROUSNEROUS

CCOMMUTATIVEOMMUTATIVE

vsvs..

TTITLEITLE

vsvs..

vsvs..

vsvs..

vsvs..

vsvs..

vsvs..

InnominateInnominate

SolemnSolemn Real Real

UnilateralUnilateral

vsvs..

GratuitiousGratuitious

ModeMode

AccessoryAccessory

AleatoryAleatory

vsvs..

PrefaratoryPrefaratory

3


4/110

SSALESALES versusversus DDONATIONONATION

CCONSENSUALONSENSUAL SSOLEMNOLEMN

OONEROUS/NEROUS/CCOMMUTATIVEOMMUTATIVE GGRATUITOUSRATUITOUS

EESSENCESSENCE:: BBOTHOTH IINVOLVE THENVOLVE THE TTRANSFER OFRANSFER OF

OOWNERSHIP/WNERSHIP/PPOSSESSION OFOSSESSION OF

SSUBJECTUBJECT MMATTERATTER

((i.e.,i.e., 44thth Requisite ofRequisite of

Form for validity)Form for validity)

((i.e.,i.e., Pure LiberalityPure Liberality

as consideration)as consideration)

4


5/110

SSALESALES versusversus BBARTERARTER::

BBARTERARTER ISIS SSALEALE,, BUTBUT WITHWITH THETHE PPRICERICE BEINGBEING REPLACEDREPLACED

WITHWITH ANAN OOBLIGATIONBLIGATION TOTO TTRANSFERRANSFER

OOWNERSHIP/WNERSHIP/PPOSSESSIONOSSESSION OFOF ANOTHERANOTHER


TTHEREFOREHEREFORE:: BBARTER GOVERNED BYARTER GOVERNED BY LLAW ONAW ON SSALESALES

BBUTUT:: NNOTOT COVEREDCOVERED BYBY SSTATUTETATUTE OFOF FFRAUDSRAUDS

5


6/110

SSALESALES versusversus DDACION ENACION ENPPAGOAGO::

DDACIONACION ISIS PPROCESSROCESS OFOF EEXTINGUISHMENTXTINGUISHMENT OFOF PPRERE--

EEXISTINGXISTING OOBLIGATIONBLIGATION ((CCONTRACTS)ONTRACTS)

EESSENTIALLYSSENTIALLY:: DDACIONACION GGOVERNEDOVERNED BYBY LLAW ONAW ON SSALESALES

DDACIONACION NOVATESNOVATES THETHE ORIGINALORIGINAL CONTRACTUALCONTRACTUAL

RELATIONSRELATIONS INTOINTO AA FULLYFULLY EXECUTEDEXECUTED SSALEALE

(a)(a) ThereThere mustmust bebe deliverydelivery ofof subjectsubject mattermatter inin lieulieu ofof anan

prepre--existingexisting obligationobligation;;

(b)(b) ThereThere mustmust bebe differencedifference betweenbetween prestationprestation duedue andand

whatwhat isis givegive inin substitutesubstitute;;

(c)(c) ThereThere mustmust bebe aa clearclear meetingmeeting ofof mindsminds thatthat thethe

prepre--existingexisting obligationobligation isis extinguishedextinguished byby reasonreason ofof

thethe prestationprestation substitutedsubstituted..

Lo v KJS Eco. Formwork System Phil.,Lo v KJS Eco. Formwork System Phil.,

Inc.,Inc., 413 SCRA 182 (2003)413 SCRA 182 (2003)

66


7/110

SSALESALES vsvs.. CCONTRACT FORONTRACT FOR PPIECEIECE--OFOF--WWORKORK::

Ineluctably, whether the contract be one of sale or one

for a Piece of Work, a transfer of ownership is involved

and a party necessarily walks away with an object.

Commission of Internal Revenue v.

Court of Appeals, 271 SCRA 605 (1997)

K for Piece-of-Work: ServiceService is the Subject Matter

Although there is the primary obligation to

pay fee (or price), the main motivation is the

reputation, skill, mastery of contractor.

Engineering & Machinery Corp. v. Court of Appeals, 252 SCRA 156(1996)

BUT: THERE CAN BE NO CONTRACT FOR PIECE-OF-WORK FORPAST SERVICE RESULTING IN THE CREATION OF THE OBJECT

(ALWAYS A SALE)7


8/110

SSALESALES vsvs.. AAGENCY TOGENCY TO SSELLELL//BBUYUY

AAGENCYGENCYRREPRESENTATIVEEPRESENTATIVE

FFIDUCIARYIDUCIARY Essentially revocableEssentially revocable

FruitsFruits andand ofof principalprincipal

AAGENTGENT

NNOT PERSONNALY LIABLE FOR THEOT PERSONNALY LIABLE FOR THEOOBLIGATION CREATED BY THEBLIGATION CREATED BY THE SSALEALE

CCONTRACTONTRACT

NNOT OBLIGED TO PAY THEOT OBLIGED TO PAY THE PPRICERICE

DDOES NOT ASSUME THE RISKS OFOES NOT ASSUME THE RISKS OF

OOWNERSHIP TO THEWNERSHIP TO THE OOBJECT OFBJECT OF SSALEALE

88


9/110

SSALESALES vsvs.. AAGENCY TOGENCY TO SSELL/ELL/BBUYUY ContdContd

TTHEREFOREHEREFORE::

AAGENTGENT isis deemeddeemed toto bebe Seller/BuyerSeller/Buyerwhenwhen contractedcontracted toto assumeassume RisksRisks andand

ObligationsObligations contrarycontrary toto hishis representative/representative/

fiduciaryfiduciary rolerole::

(a)(a) HHEE ASSUMESASSUMES OOBLIGATIONBLIGATION TOTO PAYPAY THETHE PPRICERICE

(b)(b) SSUBJECTUBJECT MMATTERATTER

RRISKS OFISKS OF LLOSSOSS

IINSURABLENSURABLE IINTERESTNTEREST

MMAINTENANCEAINTENANCE

9


10/110

SSALEALE versusversus LLEASEEASE::

LLEASEEASE ESSENTIALLYESSENTIALLY INVOLVESINVOLVES THETHE

TTEMPORARYEMPORARY EENJOYMENTNJOYMENT OFOF PPOSSESSIONOSSESSION OFOFTHETHE SSUBJECTUBJECT MMATTERATTER

TTREATEDREATED ASAS SSALEALE ON ON

IINSTALLMENTSNSTALLMENTS WHENWHEN LLEASEEASE

SSTRUCTUREDTRUCTURED ININ SUCHSUCH AA WAYWAY ASASTOTO AVOIDAVOID AAPPLICATIONPPLICATION OFOF THETHE

RRECTOECTO LLAWAW

10

FFEWEW IINSTANCESNSTANCES::


11/110

PPARTIES TO AARTIES TO A SSALEALE(The Essential Element of CONSENT)(The Essential Element of CONSENT)

GGENERALENERAL RRULEULE:: AllAll PartiesParties HavingHaving CapacityCapacity toto ContractContractCanCan BeBe ValidValid PartiesParties ToTo aa SaleSale

EXCEPTIONS:

(a)(a) Minors, Demented, DeafMinors, Demented, Deaf--MutesMutes Sale is VoidableSale is Voidable

-- Purchase of NecessariesPurchase of Necessaries-- EmancipationEmancipation

(b)(b) SpousesSpouses (Art. 1490)(Art. 1490)

-- Sales to Third PartiesSales to Third Parties Sale by One Spouse VoidSale by One Spouse Void

-- Sales to Each OtherSales to Each Other VoidVoid

ExceptExcept:: WhenWhen marriagemarriage governedgoverned byby CompleteCompleteSeparationSeparation ofof PropertyProperty RegimeRegime

By PreBy Pre--nuptialsnuptials

By Judicial decreeBy Judicial decree11


12/110

OOTHERTHER RRELATIVEELATIVE DDISQUALIFICATIONSISQUALIFICATIONS (Art. 1491)(Art. 1491)

GuardianGuardian WardsWards

AgentAgent PrincipalPrincipal

ExceptExcept:: WhenWhen grantedgranted expressexpress powerpowertoto buybuy principalsprincipals propertyproperty

Administrator/Administrator/

ExecutorExecutor Estate under administrationEstate under administration

Public OfficersPublic OfficersGovernmentGovernment propertyproperty underunder

theirtheir jurisdictionjurisdiction

Judges/Justices/Judges/Justices/

Court OfficersCourt OfficersPropertyProperty fallingfalling inin theirtheir jurisdictionjurisdiction

LawyersLawyers Clients property in litigationClients property in litigation

ExceptExcept:: Contingency fee arrangementContingency fee arrangement

BUT NOTBUT NOT:: Purchase of Inheritance RightsPurchase of Inheritance Rights

12


13/110

SSUBJECTUBJECT MMATTERATTER(O(OBLIGATIONBLIGATION to Transfer Ownership and Deliver Possession)to Transfer Ownership and Deliver Possession)

11.. PPOSSIBLEOSSIBLE TTHINGHING

22.. LLICITICIT

33.. DDETERMINATEETERMINATEDDETERMINABLEETERMINABLE

vsvs..

vsvs..

vsvs..

Impossible thingsImpossible things

IllicitIllicit

NonNon--DeterminableDeterminable

GGENERICSENERICS

RRATIONALEATIONALE:: TransferTransfer ofof Ownership/PossessionOwnership/Possession ofof thetheSubjectSubject MatterMatter isis thethe ESSENCEESSENCE ofof SALESALE

ObligationObligation shouldshould thereforetherefore notnot bebe illusoryillusory

ToTo complycomply withwith thethe ObligatoryObligatory ForceForce

principleprinciple inin ContractContract LawLaw

13


14/110

PPRICE &RICE & OOTHERTHERCCONSIDERATIONONSIDERATION(The Obligation to Pay)(The Obligation to Pay)

1.1. RREALEAL/T/TRUERUE vsvs.. FFALSEALSE(Reformation)(Reformation)

vsvs.. SSIMULATEDIMULATED(Void)(Void)

2.2. Money or its EquivalentMoney or its Equivalent vs.vs. PPUREURE vs.vs. NNOMINALOMINAL

VVALUABLEALUABLE CCONSIDERATIONONSIDERATION LLIBERALITYIBERALITY CCONSIDERATIONONSIDERATION

44. M. MANNER OF PAYMENTANNER OF PAYMENT

vsvs.. UUNASCERTAINABLENASCERTAINABLEAASCERTAINABLESCERTAINABLE

3.3. CCERTAINERTAIN

RRATIONALEATIONALE:: MustMust complycomply withwith ObligatoryObligatory ForceForce principleprinciple ininContractContract LawLaw

MustMust meetmeet OnerousOnerous andand CommutativeCommutativecharacteristicscharacteristics ofof SALESALE

14

UUNASCERTAINABLENASCERTAINABLEvs.vs.


15/110

SSTAGES INTAGES IN LLIFE OFIFE OF SSALEALE

NNEGOTIATIONEGOTIATION

CoversCovers thethe periodperiod fromfrom thethe timetime thethe prospectiveprospective contractingcontractingpartiesparties indicateindicate interestinterest inin thethe contractcontract upup toto thethe timetime immediateimmediatebeforebefore thethe contractcontract isis perfectedperfected..

PPERFECTIONERFECTION

TakesTakes placeplace uponupon thethe concurrenceconcurrence ofof thethe essentialessential elementselementsofof thethe SaleSale whichwhich areare::

thethe meetingmeeting ofof thethe mindsminds ofof thethe partiespartiesasas toto thethe objectobject ofof thethe contractcontractuponupon thethe priceprice..

CCONSUMMATIONONSUMMATIONItIt beginsbegins whenwhen thethe partiesparties performperform theirtheir respectiverespective

undertakingundertaking underunder thethe perfectedperfected contractcontract ofof sale,sale, culminatingculminating ininthethe extinguishmentsextinguishments thereofthereof..

Jovan Land, Inc. v. CA, 268 SCRA 160 (1997)

San Miguel Properties Philippines, Inc. v. Huang, 336 SCRA 737 (2000)15


16/110

PPOLICITACIONOLICITACION SSTAGETAGE

Invitations to make OffersInvitations to make Offers (Proposals)(Proposals)

OOFFERSFFERS

AACCEPTANCESCCEPTANCES

AAGENCY TOGENCY TO SSELLELL//TOTO BBUYUY

OOPTIONPTION CCONTRACTSONTRACTS

RRIGHTS OFIGHTS OF FFIRSTIRST RREFUSALEFUSAL

AAGREEMENTS TOGREEMENTS TO EENTER INTONTER INTO SSERIES OFERIES OF SSALESALES

MMUTUALUTUAL PPROMISESROMISES TTOO BBUY ANDUY AND SSELLELL(Contracts to Sell of the First Type)(Contracts to Sell of the First Type)

16


17/110

RULES ON OFFERS:

1. Offer is at the complete will of Offeror, who may destroy

it at will prior to acceptance

2. Will disappear or lapse upon the happening of the

condition or period placed upon it

3. When floated unconditionally, will be extinguished

through thepassage of reasonable time

4. Cannot be accepted partially or even substantially

Counter-offer extinguishes original Offer

5. Legal effect of acceptance is taken only from point of

view of Offeror Offeror may still extinguish Offer at any time before he has

knowledge of Acceptance

6. Only a certain Offer when met by an Absolute Acceptance

will give rise to a valid SALE.

17


18/110

CERTAIN OFFER

(a) CONTAINS A CLEAR PROMISE TO SELL/TO BUY

(b) COVERS A SUBJECT MATTER THAT IS: Possible thing

Licit Determinate or Determinable

(c) COVERS A PRICE OR CONSIDERATION Real

Valuable

Certain or Ascertainable

With Manner of Payment/Performanceagreed upon

18


19/110

ABSOLUTE ACCEPTANCE

(a) NO CONDITION OR AMENDMENT OF THE

TERMS OF THE OFFER

(b) MAY CLARIFY

(c) BUT NEVER TOUCH ON THETERMS/COVERAGE OF SUBJECT MATTER

AND TERMS/COVERAGE OF PRICE

19


20/110

OOPTIONPTION CCONTRACTONTRACT::

AACCEPTANCECCEPTANCE of Oof OFFERFFER to give on Option to Buy/to Sellto give on Option to Buy/to Sell

CCONSIDERATIONONSIDERATION:: AnythingAnything separateseparate andand distinctdistinct fromfromPricePrice

SSUBJECTUBJECT MMATTERATTER:: OptionOption oror PrivilegePrivilege toto Sell/Sell/ PurchasePurchase::

AANN OOBJECTBJECT:: AT AAT A PPRICERICE::-- PossiblePossible -- RealReal-- LicitLicit -- ValuableValuable

-- Determinate/Determinate/--

Certain/Certain/Determinable AscertainableDeterminable Ascertainable

20


21/110

1.1. IfIf nono separateseparate considerationconsideration,, OptionOption ContractContractvoid,void, butbut maymay constituteconstitute certaincertain OfferOffer whichwhich cancan

bebe withdrawnwithdrawn byby Offeror,Offeror, butbut if if acceptedaccepted beforebefore

withdrawalwithdrawal wouldwould givegive riserise toto aa validvalid SaleSale

((SanchezSanchez vv.. RigosRigos doctrine)doctrine)

2.2. IfIf withdrawalwithdrawal ofof option/offeroption/offer whimsicalwhimsical oror

arbitrary,arbitrary, couldcould givegive riserise toto damagedamage claimclaim underunder

ArtArt.. 1919 ofof CivilCivil CodeCode

33.. WhenWhen therethere isis separateseparate considerationconsideration,, ananOptionOption ContractContract deemeddeemed perfectedperfected::

Ang Yu Asuncion v.Court of AppealsAng Yu Asuncion v.Court of Appeals238 SCRA 602 (1994)238 SCRA 602 (1994)

21

(a)(a) IfIf exercisedexercised withinwithin optionoption period,period, givesgives riserisetoto Sale,Sale, whichwhich cancan bebe enforcedenforced byby specificspecificperformanceperformance


22/110

(b)(b) WouldWould bebe aa breachbreach ofof thethe OptionOption Contract,Contract, forforOfferorOfferor toto withdrawwithdraw thethe offeroffer duringduring thethe agreedagreedperiod,period, butbut withdrawalwithdrawal destroysdestroys neverthelessneverthelessthethe OptionOption

Ang Yu Asuncion v. Court of AppealsAng Yu Asuncion v. Court of Appeals contdcontd

22

OptioneeOptionee--OffereeOfferee ayay notnot suesue forfor specificspecific

perfor anceperfor ance onon thethe aleale sincesince itit hashas failedfailedtoto reachreach itsits ownown perfectionperfection stagestage

OptionerOptioner--Offeror,Offeror, however,however, rendersrenders hi self hi self

liableliable forfor da agesda ages for for breachbreach ofof optionoption

(c)(c) ButBut if,if, however,however, OptionerOptioner--OfferorOfferor withdrawswithdrawsOfferOffer eveneven duringduring optionoption periodperiod beforebefore itsits

acceptanceacceptance ((ii..ee..,, exercise)exercise)::


23/110

RRIGHT OFIGHT OF FFIRSTIRST RREFUSALEFUSAL

OOFFERORFFEROR BOUNDSBOUNDS HIMSELFHIMSELF TOTO FIRSTFIRSTOFFEROFFER SSUBJECTUBJECT MMATTERATTER TOTO OOFFEREEFFEREE

FORFOR SSALEALE

IIN THEN THE EEVENTVENT OOFFERORFFEROR EEVERVER DDECIDESECIDESTOTO SSELLELL IITT


Possible thingPossible thing

LicitLicit

Determinate/DeterminableDeterminate/Determinable

PPRICERICE:: THAT WILLTHAT WILL TTHEN (HHEN (HAPPENINGAPPENING OFOF CCONDITIONONDITION) BE) BE

AAGREED UPONGREED UPON2323

EESSENCESSENCE::

CCONDITIONONDITION::


24/110

DDOCTRINES ONOCTRINES ON RRIGHTS OFIGHTS OF FFIRSTIRST RREFUSALEFUSAL

Ang Yu Asuncion v. Court of Appeals Ang Yu Asuncion v. Court of Appeals

Generally,Generally, RFRsRFRs wouldwould bebe nonenone contracts,contracts, forfor

lacklack ofof causecause oror consideration,consideration, oror failurefailure toto agreeagree

thethe validvalid PricePrice forfor thethe expectantexpectant contractcontract

MerelyMerely innovativeinnovative juridicaljuridical relationrelation

RFRRFR

CannotCannot bebe enforcedenforced byby specificspecific performanceperformance

NotNot being being aa Contract,Contract, it it lackslacks essenceessence of ofconsensuality,consensuality, obligatoryobligatory forceforce oror mutualitymutuality

BreachBreach allowsallows recoveryrecovery ofof damagedamage basedbased onon ArtArt.. 1919

principleprinciple ofof AbuseAbuse ofof rightright

24


25/110

Equatorial Realty Dev., Inc. v. Mayfair Theater Equatorial Realty Dev., Inc. v. Mayfair Theater264 SCRA 483 (1996)264 SCRA 483 (1996)

DDOCTRINES ONOCTRINES ON RFRRFR contdcontd

WhenWhen RFRRFR attachedattached toto aa validvalid principalprincipal contractcontract

((ee..gg.. Lease),Lease), itsits enforcementenforcement takestakes itsits vitalityvitality fromfrom

thethe obligatoryobligatory forceforce ofof thethe principalprincipal contractcontract

SuchSuch RFR,RFR, whenwhen breachedbreached maymay bebe enforced,enforced, atat thethe

PricePrice atat whichwhich SubjectSubject MatterMatter soldsold toto ThirdThird PartyParty

TheThe ThirdThird--PartyParty BuyersBuyers purchasepurchase maymay beberescindedrescinded underunderaccionaccion paulianapauliana,, ii..ee..,, enteredentered intointo

inin breachbreach andand inin fraudfraud ofof OptioneesOptionees contractualcontractual

rightright

25


26/110

Paraaque Kings Enterprises v. CAParaaque Kings Enterprises v. CA

268 SCRA 727 (1997)268 SCRA 727 (1997)

DDOCTRINES ONOCTRINES ON RFRRFR contdcontd

RFRRFR isis compliedcomplied withwith byby firstfirst offeringoffering thethe SubjectSubject

MatterMatter toto thethe OptioneeOptionee andand negotiatingnegotiating forfor aa SaleSale

ThereThere isis nono obligationobligation toto reachreach aa sale,sale,

obligationobligation isis toto negotiatenegotiate inin goodgood faithfaith

OnlyOnly whenwhen negotiationsnegotiations dodo notnot ripenripen intointo aa Sale,Sale,

cancan SubjectSubject MatterMatter bebe offeredoffered toto ThirdThird--PartyParty

Buyer,Buyer, butbut atat samesame priceprice andand termsterms askedasked ofof thethe

OptioneeOptionee

Otherwise,Otherwise, mustmust rere--offeroffer underunder newnew termsterms toto

OptioneeOptionee

26


27/110

AAGREEMENTS TOGREEMENTS TO EENTER INTONTER INTO FFUTUREUTURE SSALEALE

OROR SSERIES OFERIES OF SSALESALES::

-- National Grains AuthorityNational Grains Authority v.v. IAC,IAC, 171 SCRA 131 (1989)171 SCRA 131 (1989)

-- Johannes Schuback v.C

ourt of Appeals,Johannes Schuback v.C

ourt of Appeals, 227 SCRA 719(1993)227 SCRA 719(1993)

(1)(1) DDISTRIBUTION/ISTRIBUTION/ SSUPPLYUPPLY AAGREEMENTGREEMENT

27

EESSENCESSENCE::

An Agreement to enter into a seriesAn Agreement to enter into a series

of Contracts of Saleof Contracts of Sale

Obligations to do To enter into aObligations to do To enter into a

Contract of SaleContract of Sale

(2)(2) MMUTUALUTUAL PPROMISESROMISES TOTO BBUYUY ANDAND TOTO SSELLELL(C(CONTRACTS TOONTRACTS TO SSELL)ELL)


28/110

MMUTUALUTUAL PPROMISES TOROMISES TO BBUY ANDUY AND SSELLELL(C(CONTRACTS TOONTRACTS TO SSELL)ELL)

1.1. AAGREEMENTSGREEMENTS TOTOEENTERNTER INTOINTOCCONTRACTONTRACT OFOF

SSALEALEUPONUPON HHAPPENINGAPPENING OF THEOF THE CCONDITIONSONDITIONS

Essentially, contains Obligations to do:Essentially, contains Obligations to do: toto

enter into a Saleenter into a Sale

22.. CCONDITIONALONDITIONAL CCONTRACTONTRACT OFOF SSALEALE WHEREWHERE THETHE

BBILATERALILATERAL OOBLIGATIONSBLIGATIONS TOTO BBUYUY ANDAND SSELLELL HAVEHAVE

BEENBEENAAGREEDGREED UUPONPON,, BUTBUT SSUBJECTUBJECT TOTO SSUSPENSIVEUSPENSIVECCONDITIONONDITION

ConditionCondition usuallyusually isis thethe fullfull paymentpayment ofof thethe

priceprice

28


29/110

PPERFECTIONERFECTION SSTAGETAGE

PPERFECTIONERFECTION HAPPENSHAPPENS WHENWHEN AA CCERTAINERTAINOOFFERFFER HASHAS BEENBEEN METMET BYBY ANAN AABSOLUTEBSOLUTEAACCEPTANCECCEPTANCE

TTHEHE ONLYONLY POINTPOINT ININ TIMETIME TTOO DDETERMINEETERMINE THETHEVVALIDITYALIDITY OROR IINVALIDITYNVALIDITY OFOF AA CCONTRACTONTRACT OFOF SSALEALE

EESTABLISHES THESTABLISHES THE CCONTRACTUALONTRACTUAL PPRINCIPLES OF:RINCIPLES OF:

CONSENSUALITYCONSENSUALITY

MUTUALITY OR OBLIGATORY FORCEMUTUALITY OR OBLIGATORY FORCE

RELATIVITYRELATIVITY

29

Birth sets the essence of the SaleBirth sets the essence of the Sale


30/110

FFORM OFORM OF SSALEALE

GGENERALLYENERALLY:: None, because Sale isNone, because Sale is consensualconsensualcontractcontract

FFOROR EENFORCEABILITYNFORCEABILITY:: SSTATUTE OFTATUTE OFFFRAUDSRAUDS

11.. SaleSale whichwhich byby itsits termsterms isis notnot toto bebeperformedperformed withinwithin oneone ((11)) yearyear..

2.2. Sale of Movables, at least P500Sale of Movables, at least P500

33. Sale of Immovables, at any price. Sale of Immovables, at any price

Must be in writing signed by the partyMust be in writing signed by the party

sought to be boundsought to be bound

30


31/110

FFORM OFORM OF SSALEALE contdcontd Memo must contain Description of:Memo must contain Description of:

(a)(a) SSUBJECTUBJECT MMATTERATTER Possible thingPossible thingLicitLicit

Determinate/Determinate/

DeterminableDeterminable

(b)(b) PPRICERICE

realreal

valuablevaluable

certain/ascertainablecertain/ascertainable

manner of payment providedmanner of payment provided

OORR PPARTIALLYARTIALLYEEXECUTEDXECUTED (Estoppel)(Estoppel)

OORR WWAIVERAIVER OFOFAADDUCEMENTDDUCEMENT OFOFOORALRAL EEVIDENCEVIDENCE ATATTRIALTRIAL

31

(c)(c) SSIGNED BY THE PARTY SOUGHT TO BE CHARGEDIGNED BY THE PARTY SOUGHT TO BE CHARGEDExceptionException: Electronic Document: Electronic Document


32/110

FORM OF SALE contd

What Constitutes Partial Execution?What Constitutes Partial Execution?

(a)(a) Performance MustPerformance Must

Touch UponTouch Upon

Subject MatterSubject Matter

PricePrice

Cannot Cover OtherCannot Cover Other

ConsiderationConsideration

(b)(b) Must Involve/Compromise Party Sought toMust Involve/Compromise Party Sought to

be Chargedbe Charged

32


33/110

FFORMS THATORMS THAT VVOIDOID CCONTRACT OFONTRACT OF SSALE:ALE:

11.. SSALE OFALE OF RREALTY THROUGHEALTY THROUGH AAGENT:GENT:

AAGENTSGENTS AUTHORITYAUTHORITY MUSTMUST BEBE ININ WWRITINGRITING

SSALEALE VVOIDOID:: -- EEVENVEN IFIF DDEEDEED OFOF SSALEALE ININWRITINGWRITING and/orand/or NOTARIZEDNOTARIZED

-- EEVENVEN IFIF THERETHERE HASHAS BEENBEEN

PPARTIAL/ARTIAL/ FFULLULL PPAYMENTAYMENT-- EEVENVEN IFIF THERETHERE HASHAS BEENBEEN

DELIVERYDELIVERY OFOF SSUBJECTUBJECT MMATTERATTER

-- EEVENVEN IFIF SALESALE REGISTEREDREGISTERED

3333

OOTHERWISETHERWISE::


34/110

SSALES OFALES OF IIMMOVABLESMMOVABLES

1.1. PPRIVATERIVATE DDOCUMENTOCUMENT NNEEDEDEEDED TOTO BEBE EENFORCEABLENFORCEABLEBBETWEENETWEEN PPARTIESARTIES

EEXCEPTXCEPT:: PPARTIALARTIAL EEXECUTION/XECUTION/WWAIVERAIVER

2.2. MMUSTUST BBEE IIN AN A PPUBLICUBLIC IINSTRUMENTNSTRUMENT

--TTOO BBIND THEIND THE PPUBLICUBLIC

--TTOO BBEE RREGISTRABLE WITHEGISTRABLE WITH RREGISTRY OFEGISTRY OF DDEEDSEEDS

33..FF

OROR

RREALEAL

EESTATESTATE,,

MMUSTUST

BBEE

RREGISTEREDEGISTERED TOTO

BBEE

VVALIDALID

ANDAND BBINDINGINDING AAGAINSTGAINST THETHE WWORDORD

34

-- Authority of Agent must be in writingAuthority of Agent must be in writing VOIDVOID

-- Bound by actual possession situation, otherwiseBound by actual possession situation, otherwisenot in good faithnot in good faith


35/110

CCONSUMMATIONONSUMMATION SSTAGETAGE

EEFFECTS OFFFECTS OF CCONDITIONSONDITIONS

EEXPRESSXPRESS WWARRANTIESARRANTIES

IIMPLIEDMPLIED WWARRANTIESARRANTIES

(3)(3) RREMEDIESEMEDIES

(1) PERFORMANCE

DELIVERY OF

SUBJECT MATTER

PAYMENT OF PRICE

(5)(5) EEXTINGUISHMENTXTINGUISHMENT

CCONVENTIONALONVENTIONALRREDEMPTIONEDEMPTION(SALE A(SALE A RETRO)RETRO)

EEQUITABLEQUITABLEMMORTGAGESORTGAGES

LLEGALEGALRREDEMPTIONEDEMPTION

(2)(2) RRISK OFISK OF LLOSSOSS

(4)(4) CCONDITIONS ANDONDITIONS AND

WWARRANTIESARRANTIES

SSPECIFIC PERFORMANCEPECIFIC PERFORMANCE

RRESCISSIONESCISSION

DDOUBLEOUBLE SSALESALES RRULEULE

SSUBDIVISION LOTS &UBDIVISION LOTS &

CCONDO UNITSONDO UNITS RRULESULES

RRECTOECTO LLAWAW

MMACEDAACEDA LLAWAW

35


36/110

OOBLIGATIONS OFBLIGATIONS OF SSELLERELLER

1.1. TTOO PPRESERVERESERVE THETHE TTHINGHING WITHWITH DDILIGENCE OF AILIGENCE OF A

GGOODOOD FFATHER OF AATHER OF A FFAMILYAMILY

2.2. TTOO DELIVERDELIVER THETHE SUBJECT MATTERSUBJECT MATTER

3.3. To DTo DELIVERELIVER FFRUITSRUITS, A, ACCESSORIESCCESSORIES ANDAND

AACCESSIONSCCESSIONS

44. To C. To COMPLYOMPLY WITHWITH WWARRANTIESARRANTIES

OOBLIGATIONS OFBLIGATIONS OF BBUYERUYER

1.1. TTOO PPAY THEAY THE PRICEPRICE

2.2. TTOO AACCEPTCCEPT DDELIVERY OFELIVERY OF SSUBJECTUBJECT MMATTERATTER

3636


37/110

DDELIVERY OFELIVERY OF SSUBJECTUBJECT MMATTERATTER

TTRADITIONRADITIONAS THEAS THE MMODEODETOTO TTRANSFERRANSFER OOWNERSHIPWNERSHIP

- Actual or Physical DeliveryActual or Physical Delivery

-- Constructive DeliveryConstructive Delivery

37

MMAGICAGIC OFOFTTRADITIONRADITION

FulfillmentFulfillment ofof thethe PrimaryPrimary

ObligationObligation ofof thethe SellerSeller

Transfer Ownership/Transfer Ownership/

Possession to the BuyerPossession to the Buyer


38/110

EEXECUTION OFXECUTION OFPPUBLICUBLICIINSTRUMENTNSTRUMENT

-- No Contrary Stipulation/ IntentionNo Contrary Stipulation/ Intention

-- Seller Must Have ControlSeller Must Have Control

-- Passage of Reasonable TimePassage of Reasonable Time

EEXCEPTIONXCEPTION:: WWHENHEN BBUYERUYER TTAKES THEAKES THE RRISKISK

DDOCTRINES ONOCTRINES ON CCONSTRUCTIVEONSTRUCTIVE DDELIVERYELIVERY

ProducesProduces thethe SameSame MagicMagic ofof

ActualActual DeliveryDelivery


39/110

CCONSTRUCTIVEONSTRUCTIVE DDELIVERYELIVERYCCONSTITUTUMONSTITUTUMPPOSSESORIUMOSSESORIUM

TTRADITIORADITIOBBREVIREVIMMANUANUTTRADITIORADITIOLLONGAONGA MM ANU OR ANU ORSSYMBOLIC DELVERYYMBOLIC DELVERY

39

DDELIVERYELIVERY TTHROUGHHROUGH CCARRIERARRIER-- FASFAS-- FOBFOB

-- CIFCIF

DDOCUMENTSOCUMENTS TOTO TTITLEITLE

DDELIVERYELIVERY FORFOR

IINTANGIBLESNTANGIBLES

Public InstrumentPublic Instrument

Transfer/NegotiationTransfer/Negotiation ofof thethe TitleTitleEvidencesEvidences thethe IntangibleIntangible

EnjoymentEnjoyment ofof RightsRights andand PrivilegesPrivileges withwith

thethe consentconsent ofof thethe SellerSeller


40/110

RRULES ONULES ON DDOUBLEOUBLE SSALESALES UUNDERNDER AART.RT. 15441544

11.. FFOROR MMOVABLESOVABLES::

First to Possess, in good faithFirst to Possess, in good faith

Oldest Title, in good faithOldest Title, in good faith

ThenThen: : First in time, priority in rightsFirst in time, priority in rights

22.. FFOROR IIMMOVABLESMMOVABLES::

First to Register, in good faithFirst to Register, in good faith

First to Possess, in good faithFirst to Possess, in good faith

Oldest Title, in good faithOldest Title, in good faith

ThenThen: : First in time, priority in rightsFirst in time, priority in rights

40


41/110

RREQUISITES FOREQUISITES FOR AART.RT. 15441544 TOTO AAPPLYPPLYCheng v. Genato,Cheng v. Genato, 300 SCRA 722 (1998300 SCRA 722 (1998))

(a)(a) TheThe twotwo (or (or more)more) salessales transactionstransactions mustmust

constituteconstitute validvalid SalesSales;;

(b)(b) TheThe twotwo (or(or more)more) salessales transactionstransactions mustmust pertainpertain

toto exactlyexactly thethe samesame SubjectSubject MatterMatter;;

(c)(c) TheThe twotwo (or(or more)more) BuyersBuyers atat oddsodds overover thethe rightfulrightful

ownershipownership ofof thethe SubjectSubject MatterMatter mustmust eacheach

representrepresent conflictingconflicting interestsinterests;; andand

(d)(d) TheThe twotwo (or(or more)more) BuyersBuyers atat oddsodds overover thethe rightfulrightful

ownershipownership ofof thethe SubjectSubject MatterMatter mustmust eacheach havehaveboughtbought fromfrom thethe veryvery samesame SellerSeller

Consolidated Rural Bank (Cagayan ValleyConsolidated Rural Bank (Cagayan Valley),),Inc. v. CA,Inc. v. CA, 448448

SCRA 347 (2005)SCRA 347 (2005)

41


42/110

EEFFECTS OFFFECTS OF AART.RT. 15441544 RREQUISITESEQUISITES

NotNot applicableapplicable wherewhere oneone of of thethe

SalesSales isis VoidVoid

NotNot applicableapplicable toto ContractsContracts toto SellSell

NotNot applicableapplicable ifif firstfirst salesale isis thethe

SubjectSubject MatterMatter andand thethe secondsecond salesale

isis thethe redemptionredemption rightright toto thetheSubjectSubject MatterMatter

42


43/110

DDOCTRINES ONOCTRINES ON AART.RT. 15441544 DDOUBLEOUBLE SSALESALES RRULESULES

(a)(a) RulesRules underunder ArtArt.. 15441544 areare addressedaddressed toto thetheSecondSecond Buyer,Buyer, whowho isis mandatedmandated toto dodo

positivepositive thingsthings ifif hehe hopeshopes toto winwin atat allall

Carbonell v. CACarbonell v. CA, 69 SCRA 99 (1976), 69 SCRA 99 (1976)

Uraca v. CA,Uraca v. CA, 278 SCRA 702 (1997)278 SCRA 702 (1997)

Consolidated Rural Bank (Cagayan Valley), Inc. v. CAConsolidated Rural Bank (Cagayan Valley), Inc. v. CA, 448, 448

SCRA 347 (2005)SCRA 347 (2005)

FirstFirst BuyerBuyer winswins byby beingbeing firstfirst (first(first inintime)time) andand doesdoes notnot needneed thethe benefitsbenefits

ofof ArtArt.. 15441544

43


44/110

DDOCTRINES ONOCTRINES ON AART.RT. 15441544 contdcontd

(b)(b) FirstFirst BuyerBuyer winswins byby virtuevirtue of of greatergreater

doctrinedoctrine ofof firstfirst inin time,time, prioritypriority inin rightsrights

(c)(c) SecondSecond BuyerBuyer mustmust registerregister hishis purchasepurchasewhilewhile inin goodgood faithfaith ifif hehe hopeshopes toto winwin::

(d)(d) FirstFirst Buyer,Buyer, whowho isis alwaysalways inin goodgood faith,faith,whenwhen hehe registersregisters ahead,ahead, winswins becamebecame

secondsecond buyerbuyer inin hopelesshopeless

(e)(e) EvenEven ifif SecondSecond BuyerBuyer waswas firstfirst toto possesspossessinin goodgood faith,faith, thethe subsequentsubsequent registrationregistrationbyby FirstFirst BuyerBuyer prevailsprevails

Taedo v. CA,Taedo v. CA, 252 SCRA 80 (1996252 SCRA 80 (1996))

4444


45/110

(f)(f) KnowledgeKnowledge ofof thethe FirstFirst BuyerBuyer of of thethesecondsecond salesale doesdoes notnot adverselyadversely affectaffect

FirstFirst Buyer,Buyer, nor nor doesdoes itit constituteconstitute

registrationregistration inin favorfavor ofof thethe SecondSecond BuyerBuyer

(g)(g) However,However, knowledgeknowledge ofof thethe SecondSecond BuyerBuyer

ofof thethe firstfirst sale,sale, wouldwould placeplace himhim notnot onlyonly

inin badbad faith,faith, butbut wouldwould constituteconstitute

registrationregistration inin favorfavor ofof thethe FirstFirst BuyerBuyer

Cruz v. Cabana,Cruz v. Cabana, 129 SCRA 656 (1984)129 SCRA 656 (1984)

45



46/110

(h)(h) ItIt seemsseems thatthat SecondSecond BuyerBuyer mustmust havehavepaidpaid inin fullfull thethe PricePrice toto gaingain thethe benefitbenefit

underunder ArtArt.. 15441544,, asas thethe CourtCourt definesdefines thethe

meaningmeaning ofof goodgood faithfaith toto includeinclude

havinghaving paidpaid fullfull valuevalue

Heirs of AguilarHeirs of Aguilar--Reyes v. Spouses Mijares,Reyes v. Spouses Mijares, 410 SCRA 97 (2003)410 SCRA 97 (2003)

Tanongon v. SamsonTanongon v. Samson, 382 SCRA 130 (2002), 382 SCRA 130 (2002)

Balatbat v. CABalatbat v. CA, 261 SCRA 128 (1996), 261 SCRA 128 (1996)

Agricultural and Home Extension Dev. v. CAAgricultural and Home Extension Dev. v. CA, 213 SCRA 536 (1992), 213 SCRA 536 (1992)

4646



47/110

GGLOBALLOBAL RRULES ONULES ON DDOUBLEOUBLE SSALE FORALE FOR RREALEAL EESTATESTATE

I.I. FirstFirst toto Register,Register, inin GoodGood FaithFaith andand forfor Value,Value, hishisPurchasePurchase ofof LandLand registeredregistered underunder thethe TorrensTorrens

SystemSystem wins,wins, forfor registrationregistration isis thethe OperativeOperative

ActAct (Does(Does notnot mattermatter whetherwhether hehe isis FirstFirst oror

SecondSecond Buyer)Buyer)

II.II. ForFor UnregisteredUnregistered Land,Land, asas betweenbetween aa

conventionalconventional priorprior purchase,purchase, andand aa secondsecond

purchasepurchase atat publicpublic auction,auction, thethe firstfirst

ConventionalConventional BuyerBuyer wins,wins, sincesince thethe BuyerBuyer atatpublicpublic salesale isis boundbound byby thethe provisionsprovisions ofof thethe

RulesRules ofof CourtCourt thatthat sayssays hehe onlyonly takestakes whateverwhatever

isis thethe remainingremaining titletitle ofof thethe judgmentjudgment debtordebtor..

47


48/110

III.III. TheThe RulesRules ofof DoubleDouble SaleSale underunder ArtArt.. 15441544 shallshall

apply,apply, onlyonly whenwhen thethe requisitesrequisites underunder ChengCheng vv..GenatoGenato areare present,present, asas followsfollows::

1.1. First to Register in good faithFirst to Register in good faith

But this can only apply to unregisteredBut this can only apply to unregisteredland, because Rule I applies to registeredland, because Rule I applies to registered

land.land.

2.2. First to Possess in good faith, orFirst to Possess in good faith, or

3.3. Oldest Title, in good faithOldest Title, in good faith

IV.IV. First in time, priority in rightsFirst in time, priority in rightsapplies lastapplies last

48

GGLOBALLOBAL RRULES ONULES ON DDOUBLEOUBLE SSALEALE contdcontd


49/110

SSALEALE ANDAND DDELIVERYELIVERY BYBY NNONON--OWNEROWNER

GGENERALENERAL RRULEULE:: Nemo Dat Quod Non HabetNemo Dat Quod Non Habet

SSPECIALPECIAL RRULES:ULES:

1.1. Sale and Delivery, with subsequentSale and Delivery, with subsequentacquisition of title by owner (Art. 1434),acquisition of title by owner (Art. 1434), ipsoipsojurejure transfers title to Buyertransfers title to Buyer

2.2. Sale by CoSale by Co--OwnerOwner

-- particular portionparticular portion-- whole propertywhole property

3.3. Estoppel on the Part of the True Owner (Art. 1426)Estoppel on the Part of the True Owner (Art. 1426)

49


50/110

3.3. Chain of Title TheoryChain of Title Theory under the Torrens under the TorrensSystemSystem

4.4. Sales by Court AuthoritySales by Court Authority

5.5. Sales in Merchant StoresSales in Merchant Stores

6.

6. Sales by One Having Voidable Title PriorSales by One Having Voidable Title Prior

to Annulmentto Annulment

7.7. Sale under Documents of TitleSale under Documents of Title

SSALE ANDALE AND DDELIVERY BYELIVERY BY NNONON--OWNEROWNER contdcontd

50


51/110

RRULESULES FORFOR DDETERIORATION,ETERIORATION, FFRUITSRUITS

ANDAND IIMPROVEMENTSMPROVEMENTS

RRULES HAVE NO APPLICATION IS SUBJECTULES HAVE NO APPLICATION IS SUBJECTMATTER IS MERELY DETERMINABLE (Art. 1263)MATTER IS MERELY DETERMINABLE (Art. 1263)

RROMANOMAN LLAWAW DDOCTRINEOCTRINE:: BuyerBuyer bearsbears thetheconsequencesconsequences of of

Deterioration,Deterioration, butbut

benefitsbenefits fromfrom thethe FruitsFruitsandand ImprovementsImprovements

Arts. 1480, 1163Arts. 1480, 1163--12621262

Arts. 1189, 1537 and 1538Arts. 1189, 1537 and 1538

5151


52/110

RRULES WHENULES WHEN SSUBJECTUBJECT MMATTERATTER LLOSTOST::

11.. BBEFOREEFORE PPERFECTIONERFECTION:: Res Perit DominoRes Perit DominoRoman v. GrimaltRoman v. Grimalt, 6 Phil. 96 (1906), 6 Phil. 96 (1906)

22. A. ATT TTIME OFIME OF PPERFECTIONERFECTION: Seller: Seller (Arts. 1493 and 1494)(Arts. 1493 and 1494)

Sale is rendered inefficaciousSale is rendered inefficacious

5252


53/110

GeneralGeneral RuleRule:: ForFor Goods,Goods, riskrisk borneborne byby SellerSellerunderunderResRes peritperit dominodomino rulerule

Chrysler Phil. v. CA,Chrysler Phil. v. CA, 133 SCRA 567 (1984)133 SCRA 567 (1984)Union MotorCorp v. CAUnion MotorCorp v. CA, 361 SCRA 506 (2001), 361 SCRA 506 (2001)

Loss by Fault of a PartyLoss by Fault of a Party (Arts. 1480, 1504, 1538)(Arts. 1480, 1504, 1538)

LLOSSOSS BYBY FFORTUITOUSORTUITOUS EEVENTVENT:: Two Schools ofTwo Schools ofThoughtThought

Arts. 1480, 1163, 1164, 1165Arts. 1480, 1163, 1164, 1165

Arts. 1504, 1538, and 1189Arts. 1504, 1538, and 1189

SSUBJECT MATTER LOST:UBJECT MATTER LOST: contdcontd

53

33. A. AFTERFTER PPERFECTIONERFECTION BUTBUT BBEFOREEFORE DDELIVERYELIVERYArtsArts.. 11641164,, 11891189,, andand 12621262((


54/110

SSUBJECT MATTER LOST:UBJECT MATTER LOST: contdcontd

44. A. AFTERFTER DDELIVERYELIVERY: B: BUYER BEARS RISKUYER BEARS RISK,, UNDERUNDERRes Perit DominoRes Perit Domino

Art. 1504Art. 1504Song Fo & Co. v. OriaSong Fo & Co. v. Oria, 33 Phil. 3 (1915), 33 Phil. 3 (1915)

Lawyer's Coop v. TaboraLawyer's Coop v. Tabora, 13 SCRA 762 (1965), 13 SCRA 762 (1965)

Lawyer's Coop v. NarcisoLawyer's Coop v. Narciso, 55 O.G. 3313), 55 O.G. 3313)

EEXCEPTXCEPT:: WhenWhen retentionretention ofof PossessionPossession bybySellerSeller forfor purposepurpose ofof securingsecuring

paymentpayment ofof thethe PurchasePurchase PricePrice

5454


55/110

RREMEDIES FOREMEDIES FOR CCONTRACTS OFONTRACTS OF SSALEALE

1.1. RREMEDIES OF EMEDIES OF UUNPAIDNPAID SSELLER OFELLER OFGGOODSOODS

Possessory lienPossessory lien (Arts. 1526(Arts. 1526--1529, 1503, 1535)1529, 1503, 1535)

StoppageStoppage in transituin transitu (Arts. 1530(Arts. 1530--1532, 1535, 1636[2])1532, 1535, 1636[2])

Special Right of ResaleSpecial Right of Resale (Art. 1533)(Art. 1533)

Special Right to RescindSpecial Right to Rescind (Art. 1534)(Art. 1534)

5555


56/110

2.2. RRECTOECTO LLAW:AW: SSALES OFALES OFMMOVABLES ONOVABLES ON IINSTALLMENTSNSTALLMENTS

(a)(a) MeaningMeaning ofof InstallmentInstallment SaleSale LevyLevy vv.. GervacioGervacio,, 6969 PhilPhil.. 5252 ((19391939))

(b)(b) ContractsContracts toto SellSell MovablesMovables NotNot CoveredCovered VisayanVisayan SawmillSawmillCoCo..,,IncInc.. vv.. CACA,, 219219 SCRASCRA 378378 ((19931993))

(c)(c) Nature of Remedies of Unpaid SellerNature of Remedies of Unpaid Seller

Remedies under Art. 1484 are not cumulative, butRemedies under Art. 1484 are not cumulative, butalternative and exclusive.alternative and exclusive.

Borbon II v. Servicewide Specialists, Inc.,Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996)258 SCRA 634 (1996)

Seeking a writ of replevin consistent with all threeSeeking a writ of replevin consistent with all three

remediesremediesUniversal Motors Corp. v. Dy Hian Tat,Universal Motors Corp. v. Dy Hian Tat, 28 SCRA 161 (1969)28 SCRA 161 (1969)

5656


57/110

(d)(d)

RREMEDY OFEMEDY OF

SSPECIFICPECIFIC

PPERFORMANCEERFORMANCE: No bar to full: No bar to full

recoveryrecovery

Tajanglangit v. Southern MotorsTajanglangit v. Southern Motors, 101 Phil. 606 (1957), 101 Phil. 606 (1957)

RRECTOECTO LLAW:AW: contdcontd

EvenEven whenwhen itit isis mortgagedmortgaged propertyproperty thatthat isissoldsold onon executionexecution..

Southern Motors v. Moscoso,Southern Motors v. Moscoso, 2 SCRA 168 (1961)2 SCRA 168 (1961)

EvenEven withwith replevinreplevin andand recoveryrecovery ofof thethesubjectsubject property,property, thethe actionaction maymay still still bebe for for

specificspecific performanceperformance..

Industrial Finance Corp. v. Ramirez,Industrial Finance Corp. v. Ramirez, 77 SCRA 152 (1977)77 SCRA 152 (1977)

5757


58/110

(e)(e) NNATURE OFATURE OF RREMEDYEMEDY OFOF RRESCISSIONESCISSION

RRECTOECTO LLAW:AW: contdcontd

InherentInherent BarringBarring EffectEffect ofof RescissionRescission

SurrenderSurrender ofof mortgagedmortgaged propertyproperty notnot

equivalentequivalent toto rescissionrescission..

Vda. de Quiambao v. Manila Motors Co., Inc.,Vda. de Quiambao v. Manila Motors Co., Inc.,

3 SCRA 444 (1961)3 SCRA 444 (1961)

StipulationStipulation onon nonnon--returnreturn ofof paymentspayments

isis validvalid providedprovided notnot unconscionableunconscionable..

Delta Motor Sales Corp. v. Niu Kim DuanDelta Motor Sales Corp. v. Niu Kim Duan,,

213 SCRA 259 (1992)213 SCRA 259 (1992)

58


59/110

(f)(f) RREMEDY OFEMEDY OF FFORECLOSUREORECLOSURE

RRECTOECTO LLAWAW:: contdcontd

(i)(i) Third Party MortgageThird Party MortgageRidad v. Filipinas InvestmentRidad v. Filipinas Investment, 120 SCRA 246 (1983), 120 SCRA 246 (1983)

(ii)(ii) AssignorAssignor--Assignee; Financing TransactionsAssignee; Financing TransactionsZayas v. Luneta MotorsZayas v. Luneta Motors, 117 SCRA 726 (1982), 117 SCRA 726 (1982)

WhenWhen sellerseller assignsassigns hishis creditcredit toto another,another,

thethe assigneeassignee isis likewiselikewise boundbound byby thethe termsterms ofof

thethe RectoRecto LawLaw..

Borbon II v. Servicewide Specialists, Inc.,Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996).258 SCRA 634 (1996).

5959


60/110

(iii)(iii) HH--VV BarringBarring EffectsEffects ofof ForeclosureForeclosure

ForeclosureForeclosure onon thethe chattelchattel mortgagemortgage

preventsprevents furtherfurther actionaction onon thethe supportingsupporting

realreal estateestate mortgagemortgage..Cruz v. Filipinas Investment & Finance Corp.,Cruz v. Filipinas Investment & Finance Corp.,23 SCRA 791 (1968)23 SCRA 791 (1968)

Borbon II v. Servicewide Specialists, Inc.,Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996)258 SCRA 634 (1996)


(iv)(iv) Amounts Barred from RecoveryAmounts Barred from RecoveryMacondray & Co. v. Eustaquio,Macondray & Co. v. Eustaquio, 64 Phil. 446 (1937)64 Phil. 446 (1937)

(v)(v) Perverse BuyerPerverse Buyer

Filipinas Investment & Finance Corp. v. Ridad,Filipinas Investment & Finance Corp. v. Ridad, 30 SCRA 564 (1969)30 SCRA 564 (1969)

6060


61/110

(g)(g) PPURPORTEDURPORTED LLEASE WITHEASE WITH OOPTION TOPTION TO BBUY:UY:

ContractsContracts purportingpurporting toto bebe leasesleases ofof personalpersonal propertypropertywithwith optionoption toto buy,buy, whenwhen thethe lessorlessor hashas depriveddeprived thethe lesseelessee

ofof thethe possessionpossession oror enjoymentenjoyment ofof thethe thingthing.. (Art(Art.. 14851485))


WhenWhen purportedpurported LessorLessor takestakes possessionpossession ofofsubjectsubject movable,movable, itit isis treatedtreated legallylegally asas aa foreclosureforeclosureandand thethe barringbarring effectseffects applicableapplicable toto foreclosureforeclosureremedy,remedy, notnot rescission,rescission, areare givengiven applicationapplication..

Vda. de Jose v. Barrueco,Vda. de Jose v. Barrueco, 67 Phil. 191 (1939)67 Phil. 191 (1939)

FilinvestCreditCorp. v. CA,FilinvestCreditCorp. v. CA, 178 SCRA 188 (1989)178 SCRA 188 (1989)

U.S. Commercial v. Halili,U.S. Commercial v. Halili, 93 Phil. 271 (1953)93 Phil. 271 (1953)

H.E. Heacock v. Bantal Manufacturing,H.E. Heacock v. Bantal Manufacturing, 66 Phil. 245 (1938)66 Phil. 245 (1938)

Manila Gas Corp. v. Calupita,Manila Gas Corp. v. Calupita, 66 Phil. 747 (19 38)66 Phil. 747 (19 38)

Vda. de Jose v. Barrueco,Vda. de Jose v. Barrueco, 67 Phil. 191 (1939)67 Phil. 191 (1939)

6161

MM LL


62/110

33.. MMACEDAACEDA LLAWAW:: SSALESALES OFOFRRESIDENTIALESIDENTIAL RREALTYEALTYONONIINSTALLMENTSNSTALLMENTS((RR..AA.. 65526552))

(a)(a) Role of Maceda LawRole of Maceda LawLagandaon v. CALagandaon v. CA, 290 SCRA 463 (1998), 290 SCRA 463 (1998)

BBUTUTSSEEEE:: Peoples Indl andComm. Corp. v. CA,Peoples Indl andComm. Corp. v. CA, 281 SCRA 206 (1997)281 SCRA 206 (1997)

(b)(b) Transactions CoveredTransactions Covered

TheThe formal formal requirementsrequirements ofof rescissionrescission

underunder thethe MacedaMaceda LawLaw applyapply eveneven toto contractscontracts

enteredentered intointo priorprior toto itsits effectivityeffectivity..

Siska Dev. Corp. v. Office of the PresidentSiska Dev. Corp. v. Office of the President, 231 SCRA 674 (1994), 231 SCRA 674 (1994)

62


63/110

TheThe MacedaMaceda LawLaw makesmakes nono distinctionsdistinctionsbetweenbetween optionoption andand salesale whichwhich underunder PP..DD..957957 alsoalso includesincludes anan exchangeexchange oror attemptattempt toto sell,sell,anan optionoption ofof salesale oror purchase,purchase, aa solicitationsolicitation ofof aa

salesale oror anan offeroffer toto sellsell directlydirectly..Realty Exchange Venture Corp. v. SendinoRealty Exchange Venture Corp. v. Sendino, 233 SCRA 665 (1994), 233 SCRA 665 (1994)

MMACEDAACEDA LLAWAW contdcontd

6363

CuriouslyCuriously:: NoNo applicationapplication toto ContractContract toto SellSell

becausebecause saidsaid lawlaw presupposespresupposes thetheexistenceexistence of of aa validvalid andand effectiveeffectivecontractcontract toto sellsell aa condominiumcondominium..

Mortel v. KASSCO, Inc.,Mortel v. KASSCO, Inc., 348 SCRA 391, 398 (2000)348 SCRA 391, 398 (2000)

MM LL


64/110


PursuantPursuant toto Art Art.. 12531253 of ofC

ivilC

ivilC

ode,C

ode, inin aa contract contractinvolvinginvolving installmentsinstallments withwith interestinterest chargeablechargeable againstagainst thethe

remainingremaining balancebalance ofof thethe obligation,obligation, itit isis thethe dutyduty of of thethe

creditorcreditor--sellerseller toto informinform thethe debtordebtor--buyerbuyer ofof thethe interestinterest thatthat

fallsfalls duedue andand thatthat isis applyingapplying thethe installmentinstallment paymentspayments toto

covercover saidsaid interestinterest.. Otherwise,Otherwise, thethe creditorcreditor cannotcannot applyapply thethepaymentspayments toto thethe interestinterest andand thenthen holdhold thethe debtordebtor inin defaultdefault forfor

nonnon--paymentpayment ofof installmentsinstallments onon thethe principalprincipal..

Rapanut v. CA,Rapanut v. CA, 246 SCRA 323 (1995)246 SCRA 323 (1995)

(c)(c) HowHow CancellationCancellation ofof ContractContract CanCan BeBe EffectedEffected::

Active Realty & Dev. Corp. v. Daroya,Active Realty & Dev. Corp. v. Daroya, 382 SCRA 152 (2002)382 SCRA 152 (2002)

64


65/110


(a)(a) ToTo sell/assignsell/assign hishis rightsrights toto anotheranother personperson

(b)(b) ToTo reinstatereinstate contractcontract byby updatingupdating accountaccount

duringduring gracegrace period,period, beforebefore actualactualcancellationcancellation ofof contractcontract

(c)(c) ToTo paypay inin advanceadvance installmentsinstallments oror inin fullfull

unpaidunpaid balancebalance ofof PricePrice anyany timetime withoutwithout

interestinterest andand havehave samesame annotatedannotated inin titletitle

AnyAny stipulationstipulation inin anyany contractcontract enteredentered

intointo contrarycontrary toto thethe provisionsprovisions ofof thethe Law,Law,

shallshall bebe nullnull andand voidvoid.. (Art(Art.. 77))

6565

OOTHERTHER

RRIGHTSIGHTS

GGRANTED TORANTED TO

BBUYERUYER


66/110

4.4. OOTHERTHER RREMEDIES ONEMEDIES ON SSALE OFALE OF RREALEAL EESTATESTATE

(a)(a) AANTICIPATORYNTICIPATORY BBREACH (ART. 1591)REACH (ART. 1591)

(b)(b) RRESCISSION ONESCISSION ON SSALE ONALE ON NNONON--

RRESIDENTIALESIDENTIAL RREALTY ONEALTY ON

IINSTALLMENTS (Arts. 1191 and 1592)NSTALLMENTS (Arts. 1191 and 1592)

(c)(c) SSEC. 23 AND 24,EC. 23 AND 24, PPRES.RES. DDECREE 957ECREE 957

6666

CC SS


67/110

CCONTRACTS TOONTRACTS TO SSELLELLVersusVersus

CCONDITIONALONDITIONAL CCONTRACTS OFONTRACTS OF SSALEALE

ArtArt.. 14581458 DefinesDefines aa SaleSale toto coveredcovered bothboth

AbsoluteAbsolute andand ConditionalConditional

BothBoth ContractsContracts areare usuallyusually boundbound byby samesame

conditioncondition:: FullFull paymentpayment ofof thethe PricePrice

BothBoth ContractsContracts areare consensual,consensual, onerous,onerous,

commutative,commutative, andand cover cover bilateralbilateral

obligationsobligations

67


68/110

KK TOTO SSELLELL VS.VS. KK OFOF SSALEALE contdcontd

PowerPower toto RescindRescind isis inherentlyinherently JudicialJudicial

NonNon--fulfillmentfulfillment ofof ConditionCondition ipsoipso jurejure

destroysdestroys contractcontract

SubstantialSubstantial BreachBreach RelevantRelevant toto ContractContract ofofSale,Sale, IrrelevantIrrelevant toto ContractsContracts toto SellSell

RescissionRescission requiresrequires aa positivepositive actact

68


69/110


11.. InIn ContractContract toto SellSell OwnershipOwnership ifif ReservedReserved bybySeller,Seller, whilewhile inin aa ContractContract toto SellSell ownershipownership

transferstransfers toto BuyerBuyer uponupon deliverydelivery..

ErgoErgo:: KK toto SellSell mustmust havehave expressexpress

reservationreservation ofof ownershipownership

ToTo executeexecute aa formalformal DeedDeed ofof SaleSale

OnlyOnly receiptreceipt ofof paymentpayment evidencesevidences salesale

SellerSeller retainedretained originaloriginal titlestitles

69


70/110


2. Rescission of Contract to Sell is a matter2. Rescission of Contract to Sell is a matterof right upon nonof right upon non--happening of thehappening of the

conditioncondition

ErgoErgo:: KK toto SellSell mustmust havehave expressexpressrightright toto rescindrescind thethe contractcontract

uponupon defaultdefault ofof thethe BuyerBuyer

AA writtenwritten noticenotice ofof cancellationcancellation mustmust bebe servedserved

uponupon BuyerBuyer eveneven whenwhen ContractContract toto SellSell

UP v. Delos AngelesUP v. Delos Angeles, 35 SCRA 103 (1970), 35 SCRA 103 (1970)

7070

CCONDITIONSONDITIONS WWARRANTIESARRANTIES


71/110

CCONDITIONSONDITIONS versusversus WWARRANTIESARRANTIES

PowerCommercial and IndustrialCorp. v. CAPowerCommercial and IndustrialCorp. v. CA274 SCRA 597 (1997)274 SCRA 597 (1997)

(a)(a) Condition goes into root of existence of obligation,Condition goes into root of existence of obligation,

whereas warranty goes into performance of suchwhereas warranty goes into performance of such

obligation, and in fact may constitute an obligationobligation, and in fact may constitute an obligation

itselfitself;;

(b)(b) Condition must be expressly stipulated by parties,Condition must be expressly stipulated by parties,

while warranty may form part of the obligation orwhile warranty may form part of the obligation or

contract by provision of law, without previouscontract by provision of law, without previous

agreementagreement; and; and

(c)(c) Condition may attach itself either to the ObligationsCondition may attach itself either to the Obligations

of Seller, while warranty, express or implied, relatesof Seller, while warranty, express or implied, relates

to the Subject Matter itself or to the obligations ofto the Subject Matter itself or to the obligations of

Seller as to Subject Matter of the saleSeller as to Subject Matter of the sale..

7171

CC WW


72/110

CCONDITIONS ANDONDITIONS AND WWARRANTIESARRANTIES contdcontd

InIn aa SaleSale withwith AssumptionAssumption ofof Mortgage,Mortgage, thethe

assumptionassumption ofof mortgagemortgage isis aa conditioncondition toto thethe sellerssellers consentconsent

soso that that withoutwithout approvalapproval byby thethe mortgagee,mortgagee, nono salesale isisperfectedperfected.. InIn suchsuch case,case, thethe sellerseller remainsremains thethe ownerowner andand

mortgagormortgagor ofof thethe propertyproperty andand retainsretains thethe rightright toto redeemredeem thethe

foreclosedforeclosed propertyproperty..

Ramos v. CARamos v. CA, 279 SCRA 118 (1997), 279 SCRA 118 (1997)

FailureFailure toto complycomply withwith conditioncondition imposedimposed uponupon perfectionperfection

ofof thethe contractcontract resultsresults inin failurefailure ofof aa contract,contract, whilewhile thethefailurefailure toto complycomply withwith aa conditioncondition imposedimposed onon thethe

performanceperformance ofof anan obligationobligation onlyonly givesgives thethe otherother partyparty thethe

optionoption eithereither toto refuserefuse toto proceedproceed withwith salesale oror waivewaive thethe

conditioncondition..

Laforteza v. Machuca,Laforteza v. Machuca, 333 SCRA 643 (2000)333 SCRA 643 (2000)

7272



73/110

AA.. EEXPRESSXPRESS WWARRANTIESARRANTIES (Art. 1546)(Art. 1546)

TheThe lawlaw allowsallows considerableconsiderable latitudelatitude toto sellerssellersstatements,statements, oror dealersdealers talktalk;; and and experienceexperience teachesteaches

thatthat itit isis exceedinglyexceedingly riskyrisky toto acceptaccept itit atat itsits faceface valuevalue..

Ramos v. CARamos v. CA, 279 SCRA 118 (1997), 279 SCRA 118 (1997)


(a)(a) MustMust bebe anan affirmationaffirmation ofof factfactororanyany promisepromise byby thethe

sellerseller relatingrelating toto SubjectSubject MatterMatter ofof thethe salesale;;

(b)(b) TheThe naturalnatural tendencytendencyofof suchsuch affirmationaffirmation oror promisepromise

isis toto induceinduce BuyerBuyer toto purchasepurchase thethe thingthing;; andand

(c)(c) Buyer Buyer purchasespurchases thethe thingthing relyingrelying onon suchsuch

affirmationaffirmation oror promisepromise thereonthereon..

7373

CCONDITIONS ANDONDITIONS AND WWARRANTIESARRANTIES dd


74/110

BB.. IIMPLIEDMPLIED WWARRANTIESARRANTIES (Art. 1547)(Art. 1547)

11. S. SELLERELLER HHASAS RRIGHT TOIGHT TO SSELLELL

22.. WWARRANTYARRANTY AAGAINSTGAINST EEVICTIONVICTION

SellerSeller mustmust bebe summonedsummoned inin thethe suitsuit forfor evictioneviction atat

thethe instanceinstance ofof thethe buyerbuyer (Art(Art.. 15581558),), andand bebe mademade aa coco--

defendantdefendant (Art(Art.. 15591559));; oror mademade aa thirdthird--partyparty defendantdefendant..

Escaler v. CA,Escaler v. CA, 138 SCRA 1 (1985)138 SCRA 1 (1985)

Canizares Tiana v. TorrejosCanizares Tiana v. Torrejos, 21 Phil. 127 (1911), 21 Phil. 127 (1911)

J.M. Tuazon v. CAJ.M. Tuazon v. CA, 94 SCRA 413 (1979), 94 SCRA 413 (1979)


74

CC WW


75/110

33.. WWARRANTYARRANTY AAGAINSTGAINST NNONON--AAPPARENTPPARENT

SSERVITUDESERVITUDES


44.. WWARRANTYARRANTY AAGAINSTGAINST HHIDDENIDDEN DDEFECTSEFECTS

TheThe stipulationstipulation inin aa contractcontract ofof leaselease withwith optionoption totopurchasepurchase (which(which itit treatedtreated asas aa salesale of of movablemovable ononinstallments)installments) thatthat thethe buyerbuyer--lesseelessee "absolutely"absolutely releasesreleasesthethe lessorlessor fromfrom anyany liabilityliability whatsoeverwhatsoever asas toto anyany andand

allall mattersmatters inin relationrelation toto warrantywarranty inin accordanceaccordance withwiththethe provisionsprovisions hereinafterhereinafter stipulated,"stipulated," waswas heldheld asas ananexpressexpress waiverwaiver ofof warrantywarranty againstagainst hiddenhidden defectdefect..

FilinvestCreditCorp. v. CA,FilinvestCreditCorp. v. CA, 178 SCRA 188 (1989)178 SCRA 188 (1989)

75

CCONDITIONS ANDONDITIONS AND WWARRANTIESARRANTIES dd


76/110

AA hiddenhidden defectdefect isis oneone whichwhich isis unknownunknown oror couldcould notnot

havehave beenbeen knownknown toto thethe buyerbuyer.. UnderUnder thethe law,law, thethe requisitesrequisites

toto recoverrecover onon accountaccount ofof hiddenhidden defectsdefects areare asas followsfollows::


a.a. DefectDefect mustmust bebe hiddenhidden;;

b.b. MustMust existexist atat thethe timetime thethe salesale waswas mademade;;

c.c. MustMust ordinarilyordinarily havehave beenbeen excludedexcluded fromfrom thethe contractcontract;;

d.d. Defect,Defect, mustmust bebe importantimportant (render(render thethe thingthing unfitunfit ororconsiderablyconsiderably decreasesdecreases fitness)fitness);;

e.e. ActionAction mustmust bebe institutedinstituted withinwithin statutestatute ofof limitationslimitations..

Investments & Dev., Inc. v. CA,Investments & Dev., Inc. v. CA, 162 SCRA 636 [1988]162 SCRA 636 [1988]7676

Nutrimix Feeds Corp. v. CANutrimix Feeds Corp. v. CA

441 SCRA 357 (2004)441 SCRA 357 (2004)

TheThe remedyremedy againstagainst violationviolation ofof warrantywarranty againstagainst hiddenhidden

defectsdefects isis either either toto withdrawwithdraw fromfrom thethe contractcontract ((accionaccion

redhibitoriaredhibitoria)) oror toto demanddemand aa proportionateproportionate reductionreduction ofof thethe

priceprice ((accionaccion quantiquanti minorisminoris),), withwith damagesdamages inin eithereither casecase..

CCONDITIONS ANDONDITIONS AND WWARRANTIESARRANTIES tdtd


77/110


66.. IIMPLIEDMPLIED WWARRANTIES IN THEARRANTIES IN THE SSALE OFALE OF GGOODSOODS

a.a. Warranty as to Fitness or QualityWarranty as to Fitness or Quality

b.b. Sale of Goods by SampleSale of Goods by Sample

77.. AADDITIONALDDITIONAL WWARRANTIESARRANTIES FORFOR CCONSUMERONSUMER PPRODUCTSRODUCTS(Arts(Arts.. 6868,, ConsumerConsumer ActAct ofof thethe Philippines,Philippines, RR..AA.. 73947394))..

5.5. RREDHIBITORYEDHIBITORY DDEFECTSEFECTS OFOF AANIMALSNIMALS

a. Sale of a Teama. Sale of a Team

b. Animals Sold at Fairs or Public Auctionb. Animals Sold at Fairs or Public Auction

c. Sale of Animals with Contagious Diseasesc. Sale of Animals with Contagious Diseases

d. Sale of Unfit Animalsd. Sale of Unfit Animals

77

CC WW


78/110


C.C. EEFFECTS OFFFECTS OF WWARRANTIESARRANTIES

D.D. EEFFECTS OFFFECTS OF WWAIVERSAIVERS

GG. B. BUYER'SUYER'S OOPTIONS INPTIONS IN CCASE OFASE OF BBREACHREACH OOFF WWARRANTYARRANTY

78

EEXTINGUISHMENT OFXTINGUISHMENT OF SSALEALE


79/110

EEXTINGUISHMENT OFXTINGUISHMENT OF SSALEALE

SSALEALEEEXTINGUISHEDXTINGUISHED BYBYSSAMEAMEMMODESODESAAPPLICABLEPPLICABLE TOTOAALLLL CCONTRACTSONTRACTS

Arts. 1231, 1600Arts. 1231, 1600

RREDEMPTIONEDEMPTION ISIS AA MODEMODE OFOFEXTINGUISHMENTEXTINGUISHMENT UNIQUEUNIQUE TOTO SSALESALES::

CCONVENTIONALONVENTIONAL RREDEMPTIONEDEMPTION:: SSALEALEWITHWITHRRIGHTIGHT TOTORREPURCHASEEPURCHASE

LLEGALEGAL RREDEMPTIONEDEMPTION

79


80/110

NNATURE OFATURE OF RRIGHT TOIGHT TO RREPURCHASE:EPURCHASE:

CCONVENTIONALONVENTIONAL RREDEMPTIONEDEMPTION((SSALE WITH AALE WITH ARRIGHT TOIGHT TORREPURCHASEEPURCHASE))

Reserved by Seller at the point ofReserved by Seller at the point of

Perfection.Perfection.Art. 1601Art. 1601

Villarica v. CAVillarica v. CA, 26 SCRA 189 (1968), 26 SCRA 189 (1968)

EvenEven thoughthough foundfound inin aa separateseparateinstrumentinstrument

Torres v. CATorres v. CA, 216 SCRA 287 (1992), 216 SCRA 287 (1992)

Claravall v. CA,Claravall v. CA, 190 SCRA 439 (1990)190 SCRA 439 (1990)

80

CCONVENTIONALONVENTIONAL RREDEMPTIONEDEMPTION contdcontd


81/110

IItsts ValidityValidity isis TiedTied toto thethe ValidityValidity ofof thethe ContractContractofof SaleSale toto whichwhich appendedappended..Nool v. Court of AppealsNool v. Court of Appeals, 276 SCRA 149 (1997), 276 SCRA 149 (1997)

WhenWhen SaleSale CoveredCovered byby Deed,Deed, RightRight aa retroretro maymaybebe provedproved byby parolparol evidenceevidence..

Mactan Cebu Intl Airport Authority v. Court of AppealsMactan Cebu Intl Airport Authority v. Court of Appeals,,

263 SCRA 736 (1996)263 SCRA 736 (1996)

CCONVENTIONALONVENTIONAL RREDEMPTIONEDEMPTION contdcontd

81

RR RR OO CC


82/110

RRIGHT AIGHT A RRETROETRO versusversus OOPTIONPTION CCONTRACTONTRACT

(A)(A) NotNot separateseparate contract,contract, butbut

mustmust bebe partpart of of mainmain

ContractContract ofof SaleSale

(A)(A) GenerallyGenerally principalprincipal contract,contract,

butbut maymay bebe appendedappended inin

anotheranother contractcontract validvalid

(B)(B) RightRight toto RedeemRedeem doesdoes

notnot needneed separateseparate

considerationconsideration

(B)(B) OptionOption requiresrequires considerconsider--ationation

separateseparate andand distinctdistinct ofof thethe

PricePrice inin orderorder toto bebe validvalid

(C)(C) Period of Option may bePeriod of Option may be

beyond 10 yearsbeyond 10 years

(C)(C) MaximumMaximum PeriodPeriod forforexerciseexercise of of RightRight of of

redemptionredemption cannotcannot

exceedexceed 1010 yearsyears

(D)(D) OptionOption maymay bebe exercisedexercised

byby meremere noticenotice toto OfferorOfferor

(D)(D) RightRight ofof repurchaserepurchase requiresrequires

inin additionaddition thethe tendertender ofof thethe

amountamount mandated,mandated, includingincluding

consignationconsignation whenwhen tendertender

notnot possiblepossible82

SSALIENTALIENT MMATTERS ONATTERS ON


83/110

SSALIENTALIENT MMATTERS ONATTERS ON

RRIGHT OFIGHT OF RREDEMPTIONEDEMPTION

(a)(a) PPERIOD OFERIOD OF RREDEMPTION:EDEMPTION:

WhenWhen nono PeriodPeriod agreedagreed uponupon:: 44 yearsyears

WhenWhen PeriodPeriod agreedagreed uponupon:: cannotcannot

exceedexceed 1010 yearsyears

WhenWhen PeriodPeriod of of NonNon--RedemptionRedemption

StipulatedStipulatedAnchuel v. IAC,Anchuel v. IAC, 147 SCRA 434 (1987)147 SCRA 434 (1987)

Tayao v. DulayTayao v. Dulay, 13 SCRA 758 (1965), 13 SCRA 758 (1965)

83

SSALIENTALIENT MMATTERS ONATTERS ON RRIGHT OFIGHT OF


84/110

SSALIENTALIENT MMATTERS ONATTERS ON RRIGHT OFIGHT OF

RREDEMPTIONEDEMPTION contdcontd

Pendency of Action Tolls RedemptionPendency of Action Tolls Redemption

PeriodPeriod

OngChua v. CarrOngChua v. Carr, 53 Phil. 975 (1929), 53 Phil. 975 (1929)

NonNon--Payment of Price Does Not AffectPayment of Price Does Not Affect

Running of Redemption PeriodRunning of Redemption Period

Catangcatang v. Legayada,Catangcatang v. Legayada, 84 SCRA 51 (1978)84 SCRA 51 (1978)

84

SSALIENTALIENT MMATTERSATTERS contdcontd


85/110

SSALIENTALIENT MMATTERSATTERS cont dcont d

Only tender of payment is sufficient.Only tender of payment is sufficient.Legaspi v. CALegaspi v. CA, 142 SCRA 82 (1986), 142 SCRA 82 (1986)

Consignation is not required after tender isConsignation is not required after tender is

refused.refused.

Mariano v.CA,Mariano v.CA, 222 SCRA 736 (1993)222 SCRA 736 (1993)

But when tender not possible, consignationBut when tender not possible, consignationshould be made.should be made.

Catangcatang v. LegayadaCatangcatang v. Legayada, 84 SCRA 51, 84 SCRA 51 (1978)(1978)

(b(b)) HHOWOW RREDEMPTIONEDEMPTION EEFFECTED:FFECTED:

8585

SSALIENTALIENT MMATTERSATTERS dd


86/110

Simply by Filing Judicial ActionSimply by Filing Judicial ActionLee Chuy Realty Corp. v. CALee Chuy Realty Corp. v. CA, 250 SCRA 596 (1995), 250 SCRA 596 (1995)

Seller returning to Buyer:Seller returning to Buyer:

Price of the salePrice of the sale Expenses of contract, and any otherExpenses of contract, and any other

legitimate payments made by reason of thelegitimate payments made by reason of the

salesale

Necessary and useful expenses made onNecessary and useful expenses made on

the thing soldthe thing soldART. 1616ART. 1616


86

SSALIENTALIENT MMATTERSATTERS dd


87/110


WhenWhen RedemptionRedemption NotNot Made,Made, BuyerBuyer aa retroretro

automaticallyautomatically acquiresacquires fullfull ownershipownership..

Oviedo v. Garcia,Oviedo v. Garcia, 40 SCRA 17 (1971)40 SCRA 17 (1971)

HHOWEVER:OWEVER: InIn real real property,property, consolidationconsolidation shallshall

notnot bebe recordedrecorded inin thethe RegistryRegistry ofofPropertyProperty withoutwithout aa judicialjudicial orderorder,, afterafter

thethe sellerseller hashas beenbeen dulyduly heardheard..

Article 1607Article 1607

87

IfIf SellerSeller provesproves thethe transactiontransaction aa salesale aa retro,retro, hehe

isis givengiven aa periodperiod of of 3030 daysdays fromfrom finalityfinality ofof

judgmentjudgment toto repurchaserepurchase..

Solid Homes v. CA,Solid Homes v. CA, 275 SCRA 267 (1997).275 SCRA 267 (1997).

EEQUITABLEQUITABLE MMORTGAGEORTGAGE


88/110

EEQUITABLEQUITABLE MMORTGAGEORTGAGE

DDEFINITION ANDEFINITION AND EELEMENTSLEMENTS

(a)(a) TheThe contractcontract enteredentered intointo isis

denominateddenominated asas aa SaleSale (absolute(absolute ororaa

retroretro));; andand

(b)(b) RealReal intentionintention waswas toto securesecure anan

existingexisting debtdebt byby wayway mortgagemortgage

Molina v. CAMolina v. CA, 398 SCRA 97 (2003), 398 SCRA 97 (2003)

88

EEQUITABLEQUITABLE MMORTGAGEORTGAGE contdcontd


89/110

RRATIONALE OFATIONALE OF EEQUITABLEQUITABLE MMORTGAGEORTGAGE PPRINCIPLERINCIPLE

EEQUITABLEQUITABLE MMORTGAGEORTGAGE contdcontd

PreventPrevent circumventioncircumvention ofof lawlaw onon usuryusury andand

rulerule againstagainst pactumpactum commissorium,commissorium, ii..ee.. againstagainstaa creditorcreditor appropriatingappropriating thethe mortgagemortgage propertyproperty..

To end unjust or oppressive transactions orTo end unjust or oppressive transactions or

violations in connection with a sale or property.violations in connection with a sale or property.Spouses Misea v. RongavillaSpouses Misea v. Rongavilla, 303 SCRA 749 (1999)., 303 SCRA 749 (1999).

Matanguihan v. CAMatanguihan v. CA, 275 SCRA 380 (1997), 275 SCRA 380 (1997)

Lao v. CALao v. CA, 275 SCRA 237 (1997), 275 SCRA 237 (1997)

8989

RRULINGS ONULINGS ON EEQUITABLEQUITABLE MMORTGAGEORTGAGE


90/110

9090

RRULINGS ONULINGS ON EEQUITABLEQUITABLE MMORTGAGEORTGAGE

BadgesBadges ofof EquitableEquitable MortgageMortgage inin ArtArt.. 16021602ApplyApply bothboth toto salesale aa retroretro andand toto aa contractcontract

purportingpurporting toto bebe anan absoluteabsolute salesale..

Tuazon v. CA,Tuazon v. CA, 341 SCRA 707 (2000)341 SCRA 707 (2000)

Zamora v.CAZamora v.CA, 260 SCRA 10 (1996), 260 SCRA 10 (1996)

ParolParol evidenceevidence isis competentcompetent andand admissibleadmissible

inin supportsupport ofof allegationallegation ofof equitableequitable mortgagemortgagearrangementarrangement..

Mariano v. CAMariano v. CA, 220 SCRA 716 (1993), 220 SCRA 716 (1993)


91/110

PactumPactum CommissoriumCommissorium principleprinciple doesdoes notnot

applyapply::

9191

(a)(a) WhenWhen securitysecurity forfor aa debt debt isis alsoalso moneymoney inin formform ofof

timetime depositdeposit

Consing v. CA,Consing v. CA, 177 SCRA 14 (1989)177 SCRA 14 (1989)

(b)(b) ToTo anan agreementagreement betweenbetween LenderLender andand BorrowerBorrower

whichwhich providesprovides thatthat inin thethe eventevent BorrowerBorrower failsfails toto

complycomply withwith thethe newnew termsterms ofof payment,payment, thethe agreementagreement

shallshall automaticallyautomatically operateoperate toto bebe anan instrumentinstrument ofof

daciondacion enen pagopago withoutwithout needneed of of executingexecuting anyanydocumentdocument toto suchsuch anan effecteffect..

Solid Homes, Inc. v. CASolid Homes, Inc. v. CA, 275 SCRA 267 (1997), 275 SCRA 267 (1997)

RULINGS ON EM contd


92/110

RULINGS ON EM cont d

CCONTRA:ONTRA: P/NP/N stipulationstipulation thatthat uponupon makersmakers failurefailuretoto paypay interests,interests, ownershipownership ofof propertyproperty

wouldwould automaticallyautomatically bebe transferredtransferred toto

PayeePayee andand thethe coveringcovering deeddeed of of salesale

wouldwould bebe registered,registered, isis inin substancesubstance aa

pactumpactum commissoriumcommissorium inin violationviolation ofof ArtArt..20882088..

A. Francisco Realty v. CAA. Francisco Realty v. CA, 298 SCRA 349 (1998), 298 SCRA 349 (1998)

AA pactumpactum commisoriumcommisorium salesale isis void,void, registrationregistrationandand obtainingobtaining ofof newnew titletitle byby apparentapparent buyerbuyer wouldwouldalsoalso bebe voidvoid..

A. Francisco Realty v. CAA. Francisco Realty v. CA, 298 SCRA 349 (1998), 298 SCRA 349 (1998)

92

RREMEDIESEMEDIES UUNDERNDER EEQUITABLEQUITABLE MMORTGAGEORTGAGE


93/110

RREMEDIESEMEDIES UUNDERNDER EEQUITABLEQUITABLE MMORTGAGEORTGAGE

SSITUATIONSITUATIONS

ApparentApparent sellerseller cancan seek seek reformationreformation ofof

instrumentinstrument (Art(Art.. 16051605))..

AnAn actionaction forfor consolidationconsolidation ofof ownershipownership (in(in

casecase presentedpresented asas salesale aa retro)retro) wouldwould bebe void,void, andand

properproper remedyremedy ofof mortgageemortgagee--buyerbuyer isis toto filefile

appropriateappropriate foreclosureforeclosure ofof thethe mortgagemortgage ininequityequity..

BrionesBriones--Vasquez vs. CAVasquez vs. CA, 450 SCRA 644 (2005)., 450 SCRA 644 (2005).

9393

RREMEDIESEMEDIES ININ EMEM contdcontd


94/110

AdditionalAdditional 3030--dayday PeriodPeriod ofof RedemptionRedemption isisallowedallowed underunder ArtArt.. 16061606,, inin eventevent courtscourts shouldshould

findfind thethe salesale waswas not not equitableequitable mortgage,mortgage,

providedprovided::

(a)(a) HonestHonest beliefbelief thatthat itit waswas equitableequitable mortgagemortgage supportedsupported

byby convincingconvincing evidence,evidence, suchsuch asas badgesbadges underunder ArtArt.. 16021602,,

oror consignationconsignation duringduring trialtrial ofof thethe amountamount ofof thethe allegedalleged

loanloan

Abilla v. Gobonseng,Abilla v. Gobonseng, 374 SCRA 51 (2002)374 SCRA 51 (2002)

Vda. de Macoy v. CAVda. de Macoy v. CA, 206 SCRA 244 (1992), 206 SCRA 244 (1992)

94

RREMEDIESEMEDIES ININ EMEM contdcontd



95/110


DDEFINITION ANDEFINITION AND RRATIONALEATIONALE::

PrivilegePrivilege createdcreated byby lawlaw for for reasonsreasons ofof

publicpublic policypolicy..

ForFor benefit benefit and and convenienceconvenience ofof thethe

redemptioner,redemptioner, toto affordafford himhim aa wayway outout of of whatwhat

mightmight bebe aa disagreeabledisagreeable oror inconvenientinconvenient

associationassociation intointo whichwhich hehe hashas beenbeen thrustthrust..Intended to minimize coIntended to minimize co--ownership.ownership.

Fernandez v. TarunFernandez v. Tarun, 391 SCRA 653 (2002), 391 SCRA 653 (2002)

Basa v. AguilarBasa v. Aguilar, 117 SCRA 128 (1982), 117 SCRA 128 (1982)

9595

LLEGALEGAL RREDEMPTIONEDEMPTION contdcontd


96/110

Written notice must coverWritten notice must cover perfectedperfected salesaleArt. 1623Art. 1623

Spouses Doromal v. CASpouses Doromal v. CA, 66 SCRA 575 (1975), 66 SCRA 575 (1975)

NoticeNotice mustmust bebe givengiven byby sellerseller;; andand thatthat noticenotice givengiven

byby buyerbuyer oror eveneven byby thethe RegisterRegister ofof DeedsDeeds areare not not

sufficientsufficient..Francisco v. Boiser, 332 SCRA 305 (2000)Francisco v. Boiser, 332 SCRA 305 (2000)

Butte v. ManuelUy and Sons, Inc., 4 SCRA 526 (1962)Butte v. ManuelUy and Sons, Inc., 4 SCRA 526 (1962)

Salatandol v. Retes, 162 SCRA 568 (1988)Salatandol v. Retes, 162 SCRA 568 (1988)

LLEGALEGAL RREDEMPTIONEDEMPTION cont dcont d

PPERIOD OFERIOD OF LLEGALEGAL RREDEMPTIONEDEMPTION BBEGINSEGINS::3030 DAYS FROMDAYS FROM WWRITTENRITTEN NNOTICEOTICE

9696

LLEGALEGAL RREDEMPTIONEDEMPTION tdtd


97/110

SellerSeller furnishingfurnishing ofof thethe copiescopies ofof deedsdeeds ofof salesale toto

coco--ownerowner wouldwould bebe sufficientsufficient..Distrito v. CADistrito v. CA, 197 SCRA 606 (1991), 197 SCRA 606 (1991)

Conejero v. CAConejero v. CA, 16 SCRA 775 (1966), 16 SCRA 775 (1966)

Badillo v. FerrerBadillo v. Ferrer, 152 SCRA 407 (1987), 152 SCRA 407 (1987)

NoticeNotice toto minorsminors maymay validlyvalidly bebe servedserved uponupon

parentsparents eveneven whenwhen notnot judiciallyjudicially appointedappointed sincesince

beneficialbeneficial toto thethe childrenchildren..Badillo v. Ferrer,Badillo v. Ferrer, 152 SCRA 407 (1987).152 SCRA 407 (1987).


9797

LLEGALEGAL RREDEMPTIONEDEMPTION tdtd


98/110

DeemedDeemed compliedcomplied whenwhen coco--ownersowners signedsigned

DeedDeed of of ExtrajudicialExtrajudicial PartitionPartition embodyingembodying

dispositiondisposition ofof part part of of thethe propertyproperty ownedowned inin

commoncommon..Fernandez v. Tarun,Fernandez v. Tarun, 391 SCRA 653 (2002)391 SCRA 653 (2002)

FilingFiling ofof ejectmentejectment suitsuit oror collectioncollection ofof rentalsrentals

againstagainst aa coco--ownerowner dispensesdispenses withwith needneed for for

writtenwritten noticenotice..

Alonzo v. IACAlonzo v. IAC, 150 SCRA 259 (1987), 150 SCRA 259 (1987)


98

IINSTANCES OFNSTANCES OF LLEGALEGAL RREDEMPTIONEDEMPTION


99/110

IINSTANCES OFNSTANCES OF LLEGALEGAL RREDEMPTIONEDEMPTION

(a)(a) Among CoAmong Co--heirsheirs (Art. 1088)(Art. 1088)

AA coco--heirheir cannotcannot exerciseexercise thethe rightright ofof redemptionredemptionalonealone..

De Guzman v. CADe Guzman v. CA, 148 SCRA 75 (1987), 148 SCRA 75 (1987)

NoNo legallegal redemptionredemption forfor salesale ofof thethe propertyproperty ofof thethe

estateestate..Plan v. IACPlan v. IAC, 135 SCRA 270 (1985), 135 SCRA 270 (1985)

WrittenWritten noticenotice toto otherother coco--ownersowners deemeddeemed inutileinutile byby

factfact thatthat ebuyersebuyers tooktook possessionpossession ofof propertyproperty inin fullfull viewview

ofof otherother coco--ownersowners..Pilapil v. CAPilapil v. CA, 250 SCRA 560 (1995), 250 SCRA 560 (1995)

NoticeNotice givengiven byby citycity treasurertreasurer willwill notnot sufficesuffice..Verdad v. CAVerdad v. CA, 256 SCRA 593 (1996), 256 SCRA 593 (1996)

9999

IINSTANCES OFNSTANCES OF LLEGALEGAL RREDEMPTIONEDEMPTION contdcontd


100/110

(b)(b) Among CoAmong Co--ownersowners (Art. 1620)(Art. 1620)

IINSTANCES OFNSTANCES OF LLEGALEGAL RREDEMPTIONEDEMPTION cont dcont d

RightRight ofof legallegal redemptionredemption arisesarises onlyonly whenwhen sharessharesofof otherother ownersowners areare soldsold toto aa thirdthird person,person, andand notnottoto anotheranother coco--ownerowner

Fernandez v. TarunFernandez v. Tarun, 391 SCRA 653 (2002), 391 SCRA 653 (2002)

RegistrationRegistration ofof thethe salesale doesdoes notnot estopestop aa coco--ownerownerCabrera v. Villanueva,Cabrera v. Villanueva, 160 SCRA 627 (1988)160 SCRA 627 (1988)

NoticeNotice requiredrequired toto bebe givengiven toto coco--ownersowners mustmust bebeinin writingwriting;; and and redemptionredemption byby coco--ownerowner redoundsredounds toto

thethe benefitbenefit ofof allall otherother coco--ownersowners..Mariano v. CA,Mariano v. CA, 222 SCRA 736 (1993)222 SCRA 736 (1993)

100100



101/110


NoNo writtenwritten noticenotice requiredrequired toto coco--ownerowner whowhoactedacted asas activeactive intermediaryintermediary inin thetheconsummationconsummation ofof thethe salesale..

Distrito v. CA,Distrito v. CA, 197 SCRA 606 (1991)197 SCRA 606 (1991)

RedemptionRedemption byby coco--owner,owner, eveneven whenwhen hehe usesuses

hishis ownown fund,fund, inuresinures toto thethe benefitbenefit ofof all all thethe

otherother coco--ownersowners..

Annie Tan v. CA, 172 SCRA 660 (1989)Annie Tan v. CA, 172 SCRA 660 (1989)

101



102/110


RedemptionRedemption coverscovers onlyonly resaleresale andand doesdoes notnot

covercover exchangesexchanges oror barterbarter ofof propertiesproperties

De Santos v. City of ManilaDe Santos v. City of Manila, 45 SCRA 409 (1972), 45 SCRA 409 (1972)

Requisite ofspeculation dropped.Requisite ofspeculation dropped.

Legaspi v. CALegaspi v. CA, 69 SCRA 360 (1976), 69 SCRA 360 (1976)

DoesDoes notnot applyapply ifif oneone adjacentadjacent lotlot isis not not alsoalsoruralrural landland

Primary Structures Corp. v. ValenciaPrimary Structures Corp. v. Valencia, 409 SCRA 371 (2003), 409 SCRA 371 (2003)

(c)(c)

Among Adjoining OwnersAmong Adjoining Owners(Art. 1621(Art. 1621--1622)1622)

102102



103/110


(d)(d) Sale of Credit in LitigationSale of Credit in Litigation (Art. 1634)(Art. 1634) -- 30 days30 days

(e)(e) Redemption of HomesteadsRedemption of Homesteads (Sec. 119, C.A. 141)(Sec. 119, C.A. 141)

TheThe rightright toto repurchaserepurchase isis grantedgranted byby lawlaw

andand needneed notnot bebe providedprovided forfor inin thethe deeddeed ofof salesale..

Berin v. CABerin v. CA, 194 SCRA 508 (1991)., 194 SCRA 508 (1991).

103



104/110

UnderUnder thethe freefree patentpatent oror homesteadhomestead provisionsprovisions ofofthethe PublicPublic LandLand ActAct aa periodperiod ofof fivefive ((55)) yearsyears fromfrom thethedatedate ofof conveyanceconveyance isis provided,provided, thethe fivefive--yearyear periodperiod toto bebereckonedreckoned fromfrom thethe datedate ofof thethe salesale andand notnot fromfrom thethe datedateofof registrationregistration inin thethe officeoffice ofof thethe RegisterRegister ofof DeedsDeeds..

LeeC

huy RealtyC

orp. v.C

A,LeeC

huy RealtyC

orp. v.C

A, 250 SCRA 596 (1995)250 SCRA 596 (1995)

ForFor purposespurposes ofof reckoningreckoning thethe 55--yearyear periodperiod toto

exerciseexercise rightright ofof repurchase,repurchase, thethe datedate ofof conveyanceconveyance isis

construedcons

15462086 Sales General Principles Dean CLV

Documents

Transcript of 15462086 Sales General Principles Dean CLV