Sales Finals

Question 1

Obligations of the seller

Answer 1

1. Preserve the subject matter
   
   2. Deliver the subject matter and transfer ownership
   3. Deliver fruits and accessories
   4. Pay for expenses for the execution and registration of Deed of sale, unless there is a stipulation to the contrary
   5. Warrant the subject matter

Question 2

Seller’s obligation to preserve the subject matter

Answer 2

ARTICLE 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties requires another standard of care. (1094a)

Question 3

Seller’s obligation to deliver fruits and accessories

Answer 3

ARTICLE 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acquire no real right over it until the same has been delivered to him. (1095)

ARTICLE 1537. The vendor is bound to deliver the thing sold and its accessions and accessories in the condition in which they were upon the perfection of the contract.

All the fruits shall pertain to the vendee from the day on which the contract was perfected. (1468a)

Question 4

What warranties are included under the obligation of the seller?

Answer 4

Warranties that:
1. The seller has the right to sell
2. Against eviction
3. Against non-apparent servitudes
4. Against hidden defects
5. As to fitness or quality

Question 5

Tradition

Answer 5

A derivative mode of acquiring ownership where one has the right and intention to alienate a corporeal thing, transmits it by virtue of a just title to one who accepts the same.

Question 6

Actual Delivery

Answer 6

ARTICLE 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee. (1462a)

Question 7

Constructive Delivery

Answer 7

The existence of an agreement between the seller and buyer that the latter is understood to have control of the subject matter of the sale.

Question 8

Traditio Longa Manu

Answer 8

Delivery may be made by the mere consent or agreement of the contracting parties . Such as when the seller points at the property which is the subject matter of the sale, he would hold it in the possession of the concept of an owner.

Question 9

Traditio Brevi Manu

Answer 9

Before the sale, the would be buyer is already in the possession of the subject matter of the sale. The buyer would be in possession of the subject matter as a lessee, but after the sale he holds it in the concept of an owner

Question 10

Sale by description

Answer 10

solely relies on the description of the seller on the nature of the goods given by the seller.
- Therefore, in the sale, the goods must conform to the description given by seller.
- This description is what made the buyer to enter into the contract in the first place

Question 11

Sale by sample

Answer 11

Buyer relies on the sample shown by the seller.
- The sample must conform to the goods delivered.
- There is a perfected sale because it is determinable.
- If it fails to comply, then there is no meeting of the minds. A12

Question 12

Sale on Return

Answer 12

Property 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. The option to return is vested entirely on the buyer

Question 13

Civil Code Provision on Double Sales

Answer 13

ARTICLE 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. (1473)

Question 14

Requisites in order for the rules on double sale to apply

Answer 14

1. The vendor has an exiting right over the property and the power of disposal
   
   2. There are at least 2 sales executed by the same vendor
   3. The sale involves the same property
   4. There are 2 or more vendees of the same property sold by the vendor

Question 15

Rule in double sale of movable property

Answer 15

The ownership shall pertain to the one who has first taken possession thereof in good faith. Prior possession and good faith must concur.

Question 16

Rule in double sale of immovable property

Answer 16

If what was sold twice is an immovable property, the following order of preference shall apply:
1. To the one who, in good faith, first recorded it in the registry of property
2. Should there ever be be no inscription, to the one who, in good faith was first in possession
3. To the person who presents the oldest title, provided there is good faith

Question 17

Obligations of the buyer

Answer 17

1. Pay the Price
   
   2. Accept delivery of the thing bought

The buyer is bound to pay for the price at the time and place stipulated in the contract. Nonpayment of the consideration, does not prove simulation, at most it gives the right to sue for collection

Question 18

Effect of sale by a non-owner

Answer 18

The buyers acquires no title better than the seller had

XP:
Seller is estopped
When the contrary is provided for in existing laws
Sales made under the order of a court of competent jurisdiction
Sales made in a merchant’s store

Question 19

Sale by one having a voidable title

Answer 19

Article 559.The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same.
If the possessor of a movable lost or which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor. (464a)

Article 1506.Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller’s defect of title. (n)

Question 20

Theory of Irrevindicability

Answer 20

Possession of movable property acquired in good faith is equivalent to title.

XP: One who has either lost any movable property or has been unlawfully deprived thereof may recover it from the person in possession of the same.
XXP: The one unlawfully deprived cannot recover it from the buyer if he acquired in good faith at a. Public sale unless he reimburses for the price paid.

Question 21

When is a title considered voidable?

Answer 21

When it arose from a contract where the consent of one of the party’s has been vitiated by MIFVU

Question 22

A buyer is in good faith when he purchases property from a seller with a voidable title when:

Answer 22

1. He is in GF
   
   2. He paid something of value for the property
   3. He is not aware of the seller’s defect or flaw in the title

Question 23

Rules on co-ownership in sales

Answer 23

1. Every co-owner has the right to sell his pro indiviso share in the co-owner property even without the consent of the other co-owners
   
   2. Non e of the co-owners may claim any tight, title, or interest to a particular portion of the thing owned in common
   3. Therefore, the co-owner has no right to sell a divided part of the real estate.

Question 24

Effect on AADL before perfection

Answer 24

Article 1493.If at the time the contract of sale is perfected, the thing which is the object of the contract has been entirely lost, the contract shall be without any effect.
But if the thing should have been lost in part only, the vendee may choose between withdrawing from the contract and demanding the remaining part, paying its price in proportion to the total sum agreed upon. (1460a)
Article 1494.Where the parties purport a sale of specific goods, and the goods without the knowledge of the seller have perished in part or have wholly or in a material part so deteriorated in quality as to be substantially changed in character, the buyer may at his option treat the sale:
(1) As avoided; or
(2) As valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay the agreed price for the goods in which the ownership will pass, if the sale was divisible. (n)

Question 25

Effect on AADL after perfection but before delivery

Answer 25

The risk of loss is borne by the seller (res perit domino), unless there is actual or constructive delivery thereof.

Question 26

Effect on AADL after perfection but before delivery

Answer 26

Once the goods are delivered and ownership has passed to the buyer, the risk of loss or damage is on the buyer. This is the general rule under Article 1504 of the Civil Code. XP: 1. Retention of Ownership to Secure Payment Even if ownership is retained by the seller only as security (e.g., installment sales), but the goods are already delivered, the buyer still bears the risk. 2. Delay Due to Fault of a Party If the loss happens due to the fault (delay) of either the seller or buyer, then the party at fault bears the risk, even if ownership hasn't transferred yet.

Question 27

Caveat Emptor

Answer 27

Caveat emptor, a Latin phrase meaning "let the buyer beware," implies that buyers take the risk in a transaction. Potential buyers are warned by the phrase to do their research and ask pointed questions of the seller. The seller isn't responsible for problems that the buyer encounters with the product after the sale.

Question 28

Who is an innocent purchaser for value

Answer 28

One who buys the property of another, without notice that some other person has a right or interest in the property, for which a full and fair price is paid by the buyer at the time of the purchase or before receipt of any claim or interest of another person in the property.

Question 29

What is a Document of Title?

Answer 29

A document of title (like a warehouse receipt or bill of lading) is used in business to: 1. Prove possession or control of goods; and 2. Transfer ownership or possession of those goods without needing to physically deliver them.

Question 30

Negotiable despite “Non-Negotiable” Words:

Answer 30

Even if a document says “non-negotiable,” it can still be considered negotiable if it contains phrases like “to bearer” or “to the order of someone.” So, it can still be transferred like a negotiable document. Who Can Negotiate It? ● The person it was originally issued to (the owner). ● Anyone the owner allowed to hold it, if the document says the goods can be delivered to that person’s order, or if the document is to bearer.

Question 31

Remedies of buyer in sale of goods

Answer 31

1. File an action for specific performance with damages in case of failure to deliver (Art. 1598) 2. Accept or reject the goods or rescind the sale in case of breach of seller’s warranty (Art. 1599) 3. Suspension of payments in anticipation of breach (Art. 1590)

Question 32

Remedies of seller in sale of goods

Answer 32

Ordinary Remedies 1. File an action for specific performance for nonpayment of price (Art. 1595) 2. File an action for damages in case of wrongful refusal to accept goods (Art. 1596) 3. Rescission in case the buyer has repudiated the sale or manifested inability to perform his obligations (Art. 1597) Special Remedies of unpaid seller of goods (Art. 1525) 1. Possessory Lien (Art. 1527-29) 2. Stoppage in transitu (Art. 1530-32) 3. Special right of resale (Art. 1533) 4. Special right to rescind (Art. 1534)

Question 33

Remedies of seller in sale of movable property on installment (Recto Law)

Answer 33

Art. 1484 1. Exact fulfillment of the obligation, should the vendee fail to pay; (specific performance) 2. Cancel or Rescind the sale, should the vendee's failure to pay cover two (2) or more installments; (recission of contract but you cannot recover unpaid balance however you may ask for damages) 3. Foreclose the chattel mortgage on the thing sold, if one extrajudicially has been constituted, should the vendee's failure to pay cover two (2) or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void. (Foreclosure proceeding)

Question 34

Remedies of buyer in sale of real property on installment (Maceda Law)

Answer 34

When less than 2 years of installments is paid (Sec. 4) 1. The seller shall give the buyer a grace period of not less than 60 days from the date the installment became due. If despite the grant of the grace period the vendee still fails to pay the installments due, the vendor may cancel the contract after thirty (30) days from receipt by the vendee of the notice of cancellation or the demand for rescission of the contract by a notarial act. When at least 2 years of installments is paid (Sec. 3) 1. To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the rate of one (1) month grace period for every one (1) year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five (5) years of the life of the contract and its extensions, if any; 2. If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent (50%) of the total payments made, and, after five (6) years of installments, an additional five percent (5%) every year but not to exceed ninety percent (90%) of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty (30) days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

Question 35

Other rights of the buyer under the Maceda Law

Answer 35

Other Rights Granted to the Buyer 1. The right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. (Sec. 5 of the Maceda Law) 2. The right to pay in advance any installment or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property. (Sec. 6 of the Maceda Law) 3. Finally, under Section 7 of the Maceda Law, any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6 of said law shall be null and void.

Question 36

Conventional Redemption

Answer 36

When the vendor reserves the right to repurchase the thing sold - with the obligation to return the price of the sale as well as the expenses of the contract and other legitimate payments made by reason of the sale.

Question 37

Periods within which to exercise the right of conventional redemption

Answer 37

1. In the absence of an agreement, 4 years from the date of the contract. 2. Should there be an agreement, the period should not exceed 10 years. 3. Vendor may exercise the right to repurchase within 30 days from final judgment was rendered in a civil action on the basis that the contract was a true sale with right to repurchase.

Question 38

Conditions that a vendor must comply with to exercise the right to repurchase under a conventional redemption?

Answer 38

Seller must return to the vendee the following 1. Price of the sale 2. Expenses of the contract and other legitimate payments made by reason of the sale 3. Necessary and useful expenses made on the thing sold

Question 39

Legal Redemption

Answer 39

Right to be subrogated, upon the same terms and conditions stated in the contract, in the place of one who acquires a thing by purchase or dation in payment.

Question 40

Instances when legal redemption may be exercised

Answer 40

1. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners are sold to a third person 2. Owners of adjoining lands shall have the right of redemption when a piece of rural land, the area which does not exceed one hectare, is alienated 3. The co-heirs of an heir who sells his hereditary rights to a stranger prior to partition 4. The owner of an adjoining urban land shall have the right of redemption when a piece of urban land is about to be re-sold; provided that it is so small and so situated that a major portion thereof cannot be used for any practical purpose within a reasonable time

Question 41

Equitable mortgage defined

Answer 41

One that, although lacking in some form or words demanded by law, reveals the intention of the parties to charge a real property as security for a debt and contains nothing impossible or contrary to law

Question 42

Elements of equitable mortgage

Answer 42

a. The parties entered into a contract denominated as a contract of sale B. The intention was to secure an existing debt by way of mortgage. *the defining factor is the intention of the parties. In case of doubt, a contract purporting to be a CoS shall be construed as an equitable mortgage*

Question 43

Pactum Commissorium elements

Answer 43

1. There is a property mortgaged by way of security for the payment of the principal obligation 2. There should be a stipulation for automatic appropriation by the creditor of the thing mortgaged inc case of non-payment of the principal obligation within the stipulated period

Question 44

Exceptions to risk after delivery?

Answer 44

1. Retention of ownership to secure payment. Even if ownership is retained by the seller as security, but the goods are already delivered to the buyer, the buyer still bears the risk. 2. IF the loss happens due to the fault or delay of either party, the party at fault bears the risk even if ownership has not yet transferred

Question 45

Concept of control at the time of delivery

Answer 45

a. Buyer must be placed in control of the property. This control must be in the concept of an owner wherein all the attributes of ownership may be exercised by him. b. Why at the time of Delivery? It is a req. to make sure that the law can be complied with. (Transfer ownership and deliver possession) c. Control – This control cannot be momentary. It must linger for a long time.

Question 46

Remedies in delivery of goods

Answer 46

Art. 1522. Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them (Because the seller did not comply with the contract) , but if the buyer accepts or retains the goods so delivered, knowing that the seller is not going to perform the contract in full, he must pay for them at the contract rate (proportionally reduced) . If, however, the buyer has used or disposed of the goods delivered before he knows that the seller is not going to perform his contract in full, the buyer shall not be liable for more than the fair value to him (keep note that this is different from contract rate as stated in the previous sentence) of the goods so received. Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept the goods included in the contract and reject the rest. If the buyer accepts the whole of the goods so delivered he must pay for them at the contract rate. (The option is not on the seller. It is only on the buyer) Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest. (This means na walang meeting of the minds as to the goods na nasama sa delivery) In the preceding two paragraphs, if the subject matter is indivisible, the buyer may reject the whole of the goods. (Subject to the rules of commixion I forgot how to spell it, basta yung mix of 2 different things(?)) The provisions of this article are subject to any usage of trade, special agreement, or course of dealing between the parties. (n)

Question 47

Unit Price contract vs Lump Sum Contract

Answer 47

In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price contract wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g., P1,000 per square meter), or a lump sum contract which states a full purchase price for an immovable the area of which may be declared based on the estimate or where both the area and boundaries are stated (e.g., P1 million for 1,000 square meters, etc.).

Question 48

Remedy of the buyer in a unit price contract

Answer 48

If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated in the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated.

Question 49

Warranties in negotiable documents

Answer 49

(1) That the document is genuine; (2) That he has a legal right to negotiate or transfer it; (3) That he has knowledge of no fact which would impair the validity or worth of the document; and (4) That he has a right to transfer the title to the goods and that the goods are merchantable or fit for a particular purpose, whenever such warranties would have been implied if the contract of the parties had been to transfer without a document of title the goods represented thereby. (n)

Question 50

Rights of an unpaid seller

Answer 50

1. Possessory Lien 2. Stoppage in transitu 3. Special right of resale 4. Special right to rescind This is a hierarchical application. Resell and rescind may only be exercised when either PL or ST have been exercised

Question 51

Possessory Lien

Answer 51

Although the goods may have passed to the buyer, the unpaid seller has a lien on the goods while he is in possession of them for the price. May be exercised when: 1. Goods have been sold without stipulation to credit 2. Goods have been sold on credit but term of credit has expired 3. Where the buyer becomes insolvent

Question 52

When is possessory lien lost

Answer 52

1. Seller delivers the goods to a carrier or bailee for the purpose of transmission to the buyer without reserving ownership in the goods 2. Buyer or his agent lawfully obtains possession of the goods 3. Waiver

Question 53

Stoppage in Transitu

Answer 53

When the buyer of the goods is insolvent, the unpaid seller who has parted wot the possession of the goods has the right to stop them in transitu. This right is not affected by any disposition the buyer may have made.

Question 54

Negotiable document vs Stoppage in Transitu

Answer 54

If a ND has been issued for goods, no seller's right of stoppage shall defeat the right of any purchaser for value in good faith

Question 55

Special Right to resell goods

Answer 55

This right may be exercised only when the unpaid seller has previously exercised his right to PL or ST and under the following conditions: 1. Goods are of perishable nature 2. Where the seller has been expressly reserved inc case the buyer should make default 3. Where the buyer has been default in payment for an unreasonable amount of time

Question 56

Special right to rescind

Answer 56

An unpaid seller having the right to PL or ST, may rescind the transfer of title and resume ownership where: 1. The seller has expressly reserved the right to do so should the buyer be in default 2. The buyer has been in default for an unreasonable amount of time.

Question 57

When is an equitable mortgage presumed

Answer 57

(a) When the price under a sale a retro is unusually inadequate; (b) When seller remains in possession, such as lessee; (c) When the period of redemption is extended or renewed under a separate instrument; (d) When the buyer retains part of the purchase price; (e) When the seller binds himself or continues to pay the taxes on the thing sold; (f) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.