Sales Reviewer Midterms
Sales Reviewer Midterms
Sales Reviewer Midterms
Generic or indeterminate thing - refers only to a class or genus to which it pertains and
cannot be pointed out with particularity.
What are the obligations of a debtor obliged to give a determinate or specific thing?
ANS:
1. To preserve or take care of the thing due with the proper diligence of a good father of
family unless another standard of care is required by law or stipulation by the parties (Art.
1163)
2. To deliver the fruits of the thing (Art. 1164)
3. To deliver all the accessions and accessories of the thing although not mentioned (Art.
1166)
4. To deliver the thing itself.
5. To be liable for damages in case of delay, fraud, negligence or contravention of tenor
thereof (Art. 1170).
What are the obligations of a debtor obliged to give an indeterminate or generic thing?
ANS:
1. To deliver a thing which is neither of superior nor inferior quality, taking into consideration
the purpose and circumstances of the obligation (Art. 1246).
2. To be liable for damages in case of delay, fraud, negligence or contravention of tenor
thereof (Art. 1170)
ART. 1170. Those who in the performance of their obligations are guilty of fraud, negligence,
or delay, and those who in any manner contravene the tenor thereof, are liable for damages.
ART. 1174. Except in cases expressly specified by the law, or when it is otherwise declared
by stipulation, or when the nature of the obligation requires the assumption of risk, no person
shall be responsible for those events which could not be foreseen, or which, though foreseen,
were inevitable.
ART. 1189. When the conditions have been imposed with the intention of suspending the
efficacy of an obligation to give, the following rules shall be observed in case of the
improvement,loss or deterioration of the thing during the pendency of the condition:
(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is
understood that the thing is lost when it perishes, or goes out of commerce, or disappears
in such a way that its existence is unknown or it cannotbe recovered;
(3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne
by the creditor;
(4) If it deteriorates through the fault of the debtor, the creditor may choose between the
rescission of the obligation and its fulfillment, with indemnity for damages in either case;
(5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit
of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other right than that granted
to the usufructuary.
ART. 1305. A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.
ANS:
1. Consent of the contracting parties;
2. Object certain which is the subject matter of the contract; and
3. Cause of the obligation which is established.
ANS:
1. Must be manifested by the concurrence of the offer and acceptance;
2. Parties must possess the necessary legal capacity; and
3. Must be intelligent, free, spontaneous, and real.
ANS:
1. Must be within the commerce of men;
2. Should be real or possible;
3. Should be licit; and
4. Should be determinate, or at least possible of determination as to its kind.
Note: The genus or kind of the object must be expressed.
Contract of Sale – One of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other to pay therefor a price
certain money or its equivalent. A contract of sale may be absolute or conditional. (Art. 1458)
6. Consensual – meeting of minds makes a perfect contract of sale but needs delivery
to consummate.
7. Title & not a mode – gives rise to an obligation to transfer; it is delivery w/c actually
transfer ownership; mode which actually transfer ownership.
DISTINGUISHED FROM OTHER CONTRACTS:
1. Donation
- donation is gratuitous; sale is onerous
- donation is formal contract; sale is consensual
- donation is governed by law on donation; sale is governed by law on sales
2. Barter
- in barter, the consideration is the giving of a thing; in sale, it is giving of money as payment
- both are governed by law on sales; both are species of the genus sales
- if consideration consists party in money & partly by thing – look at manifest intention; if
intention is not clear (1468 ):
a. value of thing is equal or less than amount of money – sale
b. value of thing is more than amount of money – barter
a. contract for delivery of an article which the vendor in the ordinary course of business
manufactures or procures for general market ( whether on hand or not ) – sale
b. goods are to be manufactured specially for a customer and upon special order and not for
the general market – contract for piece of work.
jurisprudence:
a. Timing test – under art 1467; whether the thing transferred would have never existed but
for the order – contract for piece of work (abandoned)
c. Nature of the object test – each product’s nature of execution differs from the others;
products are not ordinary products of manufacturer.
main factor in decision of the SC: essence of why parties enter into it:
a. essence is object – contract of sale
b. essence is service – contract for piece of work
4. Agency to sell
- in sale, buyer pays for price of object; in agency to sell, agent not obliged to pay
for price, merely obliged to deliver price received from buyer.
- in sale, buyer becomes owner of thing; in agency; principal remains owner even
if object delivered to him
Agency is a personal contract; sale is real contract ( to give ) – rescission not available in
agency
5. Dacion en pago
6. Lease
- lease with option to buy: really a contract of sale but designated as lease in name.
What are the distinctions between Contract of Sale and Contract to Sell?
ANS:
The distinction are:
As to transfer of ownership
Contract of Sale: Title passes to the buyer upon delivery of the thing sold (Art. 1496).
Contract to Sell: Ownership will pass only upon full payment of the price (Art. 1478).
As to ownership of vendor
Contract of Sale: Vendor has lost and cannot recover the ownership until and unless the
contract of sale itself is resolved and set aside
Contract to Sell: Title remains in the vendor if the vendee does not comply with the condition
precedent.
ANS:
The distinction are:
As to presence of consent
Conditional Contract of Sale: Consent is present.
Contract to Sell: Consent will only be present upon the fulfillment of the condition stipulated in
the contract.
Article 1187. The effects of a conditional obligation to give, once the condition has been
fulfilled, shall retroact to the day of the constitution of the obligation.
Applying Article 1187, in a conditional contract of sale, the ownership shall retroact from the
fulfillment of the condition to the point of perfection of the contract.
What are the distinctions between Absolute Contract of Sale and Conditional Contract
of Sale?
ANS:
In a contract of sale, its perfection is consummated at the moment there is a meeting of the
minds upon the thing that is the object of the contract and upon the price. Consent is
manifested by the meeting of the offer and the acceptance of the thing and the cause, which
are to constitute the contract.
Can there be a perfected contract of sale even if, at the time of the perfection, the seller
is not the owner of the thing sold?
ANS:
Yes, there is a perfected contract of sale as long as the seller is the owner at the time of
delivery (Art. 1459). Otherwise, he may be held liable for breach of warranty against eviction
(Art.1548).
Note: When a person who is not the owner of a thing sells or alienates and delivers it, and
later the seller or grantor acquires title there, such title passes by operation of law to the buyer
or grantee (Art. 1434).
Article 1459. The thing must be licit and the vendor must have a right to transfer the
ownership thereof at the time it is delivered.
Article 1505. Subject to the provisions of this Title, where goods are sold by a person who is
not the owner thereof, and who does not sell them under authority or with the consent of the
owner, the buyer acquires no better title to the goods than the seller had, unless the owner of
the goods is by his conduct precluded from denying the seller's authority to sell.
Nothing in this Title, however, shall affect:
(1) The provisions of any factors' act, recording laws, or any other provision of law enabling
the apparent owner of goods to dispose of them as if he were the true owner thereof;
(2) The validity of any contract of sale under statutory power of sale or under the order of a
court of competent jurisdiction;
(3) Purchases made in a merchant's store, or in fairs, or markets, in accordance with the
Code of Commerce and special laws. (n)
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)
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).
What right does a buyer acquire in case of sale made by non-owner?
ANS:
In sale made by the non-onwer, the buyer acquires no better title to the goods than the seller
had (Art. 1505). No one can giv what he does not have - nemo dat quoad non habet.
Therefore, even if a person be a bona fide purchaser, he succeds only to the right of the
vendore.
Exceptions:
What is the effect if the seller of goods has a voidable title thereto but his title has not
been avoided at the time of the sale?
ANS:
Where the seller of the goods has a voidable title thereto, but his title has not yet 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 (Art. 1506).
ANS:
Yes, the possession of movable property acquired in good faith is equivalent to a title
(Art.559).
Note: In these cases, the possessor cannot retain the thing as against the owner, who may
recover it without paying any indemnity, except when the possessor acquired it in a public
sale.
In case of sale by installments, will the payments previously made be returned to the
payer?
- It depends. When the object is in possession of the payee (seller), the payments shall be
returned subject to governing provisions of the law as regards sales by installments. But,
when the object is in possession of the payer (buyer), the payments previously made will
serve as a rent.
ANS:
A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is
binding upon the promissor if the promise is supported by a consideration distinct from the
price (Art. 1479).
What is policitacion?
ANS:
Policitacion is an unaccepted unilateral promise to buy or sell (Art. 1479). This produces no
juridical effect and creates no legal bond. This is a mere offer, and has not yet been
converted into a contract.
What happens to a unilateral promise to sell if it not withdrawn by the offeror before
acceptance?
ANS:
It becomes a bilateral contract to sell and to buy, because upon acceptance bu the creditor of
the offer to sell by the debtor, there is already a meeting of the minds of the parties as to the
thing which is determinate and the price which is certain. In which case, the parties may then
reciprocally demand performance.
ANS:
Yes. When the offeror has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except when
the option is founded upon a consideration, as something paid or promised (Art. 1324).
What are the formal requisites for the validity of a contract of sale?
Subject to the provisions of the Statute of Frauds and of any other applicable statute, a
contract of sale may be made in writing, or by word of mouth, or partly in writing and partly in
word by word of mouth, or may be inferred from the conduct of the parties (Art. 1483).
ANS:
Article 1874 of the Civil Code requires for the validity of a sale involving land that the agent
should have an authorization in writing, without which the resulting sale entered into in behalf
of the principal would be void.
Note: If the authorization is not in writing, only the sale is void, not the contract of agency.
ANS:
Note: The requisite of a written contract is only for enforceability. A sale of land not in writing
for example is still valid but not binding to third persons.
Contract for a piece of work is not governed by Statute of Frauds.
ANS:
1. Execution of Public Instrument - When the sale is made through a public instrument, the
execution thereof shall be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot clearly be inferred (Art.
1498).
2. Traditio Symbolica - With regard to movable property, its delivery may be made by the
delivery of they keys of the place or depositary where it is stored or kept (Art. 1498).
3. Traditio Brevi Manu - The delivery of movable property may be made by the mere
consent or agreement of the contracting parties of the thing sold cannot be transferred to the
possession of the vendee at the time of the sale (I.e., by mere pointing) (Art. 1499).
4. Traditio Brevi Manu - The delivery of movable property may likewise be made by the
mere consent or agreement of the contracting parties if the vendee already had it in his
possession for any other reason (Art. 1499).
5. Constitutum Possessorium - At the time of perfection, the seller held possession of the
subject matter in the concept of owner, and pursuant to the contract, the seller continues to
hold physical possession other than the concept of owner (Art. 1500).
ANS:
1. Sale by non-owner - the contract is valid because it has passed perfection stage; the
transfer of title is void.
Note: The rationale is nemo dat quod habet (nobody can dispose of that which does not
belong to him).
Note: In “Sale or Return,” the ownership passes to the buyer upon delivery, but he may
revest the ownership in the seller by returning the goods within the time fixed in the contract,
or, if there is no time fixed, within a reasonable time (Art. 1502).
A. Where goods are shipped, and by the bill of lading the goods are deliverable to the seller
or his agent, or to the order of seller or his agent - seller reserves ownership in the goods (Art.
1503)
B. Where goods are shipped, and by the bill of lading the goods are deliverable to the order of
the buyer or his agent, but the possession of the bill of lading is retained by the seller or his
agent - seller reserves a right to the possession of the goods (Art. 1503)
C. Where the seller of goods draws on the buyer for the price and transmits the bill of
exchange and bill of lading together to the buyer to secure acceptance or payment of the bill
of exchange, and the buyer does not honor the bill of exchange (Here, the seller is the drawer
and the buyer is the drawee). If the buyer, as drawee, does not honor the bill of exchange, he
shall return the bill of lading. If he retains the same, he acquires no added right thereby (Art.
1503)
(Comment: Yang implied reservation of ownership, mukhang di ata lalabas yan. For bar exam
review nalang yan.)
ANS:
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 fruits shall pertain to the
vendee from the day the contract was perfected (Art. 1537).
What are the remedies of a buyer if the seller delivers to him a quantity if goods less
than what he contracted to sell?
ANS:
What are the remedies of the buyer if the seller delivers to him a quantity of goods
larger than what he contracted to sell?
ANS:
The remedies are:
1. The buyer may accept the goods which are in accordance with the contract and reject the
rest; or
2. If the subject matter is indivisible, the buyer may reject the whole of the goods (Art. 1522).
RISK OF LOSS
ANS:
In an obligation to deliver a generic things, the loss or destruction of anything f the same kind
does not extinguish the obligation (Art. 1263). The exceptions are:
1.) In case of sale of fungible things, made independently and for a single price, or without
consideration of their weight number, or measure (Art. 1480, par.2)
2.) In case of fungible things be sold for a price fixed according to weight, number, or
measure, when they have been weighed, counted, or measured and delivered;
3.) When the vendee has incurred in delay (Art. 1480, par. 3);
4.) Where the delivery of the goods has been made to the buyer or to a bailee for the buyer,
in pursuance of the contract, and the ownership in the goods has been retained by the seller
merely to secure performance by the buyer if his obligations under the contract, the goods are
at the buyer’s risk from the time of such delivery (Art. 1504, par. 1); and
5.) Where actual delivery has been delayed through the fault of either the buyer or seller, the
goods are at the risk of the party at fault (Art. 1504, par. 2).
Note: In such cases, the loss shall be at the vendee’s risk and the obligation is deemed
extinguished.
Who bears the risk of loss when loss occurs before perfection?
ANS:
The seller bears the risk of loss. Res perit domino applies. The seller still owns the thing
because there is no delivery or transfer of ownership yet.
Who bears the risk of loss when loss occurs upon perfection?
ANS:
The party who own it at the time of perfection bears the risk of loss. Res perit domino applies.
What is the general rule if the object if the contract has been entirely lost?
ANS:
What is the effect if the object of the contract has been partially lost?
ANS:
What is the effect when specific goods, without the knowledge if the seller have perished?
ANS:
Where the parties purport a sale of specified goods, and the goods without the knowledge of
the seller have perished in part or have wholly or in a material part 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 (Art. 1494).
Who bears the risk of loss when it occurs after perfection but before delivery?
ANS:
It is governed by the stipulations in the contract. In absence of a stipulation, there are two
conflicting views, which are:
1.) Res perit creditori or buyer bears the risk of loss (according to Paras, Vitug, Padilla, and
De Leon); and
2.) Res perit domino or seller bears the risk of loss (according to Tolentino, Jurado, Baviera,
and Villanueva).
ANS:
When the thing deteriorates without the fault of the debtor, the impairment is to be borne by
the creditor (Art. 1189, par. 3).
ANS:
Res perit domino applies. The buyer is the owner; hence the buyer bears the risk of loss.
ANS:
GENERAL RULE: All parties with capacity to contract can enter into a valid contract of sale
1. Natural
2. Judicial - corporation/partnership/associations/Cooperatives
1. Minors
- status of contract: voidable only, therefore may be ratified
- remedy is action for annulment (with partial restitution in so far as the minor is benefited)
Article 1491. The following persons cannot acquire by purchase, even at a public or judicial
auction, either in person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under his guardianship;
(2) Agents, the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given;
(3) Executors and administrators, the property of the estate under administration;
(4) Public officers and employees, the property of the State or of any subdivision thereof, or of
any government-owned or controlled corporation, or institution, the administration of which
has been entrusted to them; this provision shall apply to judges and government experts who,
in any manner whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other
officers and employees connected with the administration of justice, the property and rights in
litigation or levied upon an execution before the court within whose jurisdiction or territory they
exercise their respective functions; this prohibition includes the act of acquiring by assignment
and shall apply to lawyers, with respect to the property and rights which may be the object of
any litigation in which they may take part by virtue of their profession;
ANS:
Incapacity is absolute in case of persons who cannot bind themselves, as in the case of
minors, insane and demented persons, imbeciles, deaf-mutes who do not know how to write,
prodigals and those subject to civil interdiction. As their personality is restricted, they have no
capacity to purchase and sell by themselves personally, but only through their legal
representatives (Art. 1327).
ANS:
Incapacity is relative when certain persons, under certain circumstances cannot buy certain
property.
Subject Matter of Sale
ANS:
5. Must be within the commerce of men;
6. Should be real or possible;
7. Should be licit; and
8. Should be determinate, or at least possible of determination as to its kind.
Note: The genus or kind of the object must be expressed.
What are the distinctions between Emptio Rei Speratae and Emptio Spei?
ANS:
The distinctions between Emptio Rei Speratae and Emptio Spei are:
Emptio Rei Speratae: The sale of a thing with potential existence, subject to a suspensive
condition that the thing will come into existence. If the subject matter does not come into
existence, the contract is deemed extinguished as soon as the time expires or if it has
become indubitable that the event will not take place.
Emptio Spei: Sale of a mere hope or expectancy (e.g., sale of sweepstake ticket for P100
where the buyer purchases the ticket with the hope that upon the draw the ticket would win
him a million pesos. The object of the sale is not the prize, but rather the ticket or the chance
to win).
Price
REAL
2. Valuable
- When not valuable – Void
- When contract is onerous, presumed to have valuable consideration
- Nominal consideration w/c is common law concept does not apply (P1.00)
- Gross inadequacy of price in ordinary sale does not render contract void unless it
is shocking to conscience of man.
Under Art. 1470, gross inadequacy of price does not affect a contract of sale.
CERTAIN
When price can not be determined in accordance with any of the preceding rules,
contract of sale in inefficacious (Art. 1474)
ANS:
If the price is simulated, the sale is void, but the act may be shown to have been in reality a
donation, or some other act or contract (Art. 1471).
May the fixing of the price be left to the discretion of the parties?
ANS:
The fixing of the price can never be left to the discretion of one of the contracting parties.
However, if the price fixed by one of the parties is accepted by the other, the sale is perfected
(Art. 1473). (Same principle in the case of Robern Dev. Corp. V. People’s Landless Assoc.)
ANS:
Yes, provided that it is supported by consideration depsite the lack of price. Consideration,
more properly denominated as cause, can take different forms, such as the prestation or
promise of a thing or service by anotehr. (Same principle in the case of Ong v. Ong)
ANS:
Where the price cannot be determined in accordance with articles 1469-1473 of the New Civil
Code, or in any other manner, the contract is inefficacious. However, if the thing or any part
thereof has been delivered to and appropriated by the buyer he must pay a reasonable price
therefore. What is reasonable price is a question of fact dependent on the circumstances of
each particular case (Art. 1474).
Reasonable price is generally the market price at the time and place fixed by the contract or
by law for the delivery of the goods.
ANS:
Yes. Before a valid and binding contract of sale can exist, the manner of payment of the
purchase price must first be established since the agreement on the manner of payment goes
into the price such that a disagreement on the manner of payment is tantamount to a failure to
agree on the price. (Same principle in the case of Toyota Shaw v. CA)
ANS:
It is something of value given by the buyer to the seller to show that the buyer is really in
earnest, and to bind the bargain. It is considered as part of the purchase price and as proof of
perfection of contract (Art. 1482).
ANS:
An option contract is one granting a privilege in favor of one person, for which he has paid a
consideration, giving him the right to buy certain merchandise or certain specified property at
any time within the agreed period at a fixed price.
What are the distinctions between earnest money and option money?
ANS:
As to effect of non-payment
Earnest money: An action for specific performance or for rescission can be files by the injured
party.
Option money: There can be an action for specific performance.
As to consideration
Earnest money: Part of the purchase price (Art. 1482)
Option money: Money is given as a distinct consideration for an option contract.
As to perfection of sale
Earnest money: There is already a sale.
Option money: Applies to a sale not yet perfected.
ANS:
It is the right given by the contract to a prospective buyer a priority option to purchase the
thing that will be sold by the owner (Equitorial Realty v. Mayfair).
Note: There should be identity of the terms and conditions offered to the optionee and all
other prospective buyers, where the optionee enjoys the right of first priority.
What are the distinctions between Option Contract and Right of First Refusal?
ANS:
As to definition
Option contract: A separate and distinct contract from that which the parties may enter into
upon the consummation of the option and must be supported by a consideration.
Right of first refusal: An integral part of the contract of lease, the consideration of which is
built into the reciprocal obligations of the parties.
As to when exercised
Option contract: The party who has an option may validly and effectively exercise his right by
merely notifying the owner of the former’s decision to buy and expressing his readiness to pay
the stipulated price.
Right of first refusal: In a right of first refusal, while the object might be made determinate, the
exercise of the right of first refusal would be dependent not only on the owner’s eventual
intention to enter into a binding juridical relation with another but also on terms, including the
price, that are yet to be firmed up.
Types of Sales and Rules on Double Sales
Co-owner may sale his undivided share even without the consent of the other co-owners.
However, he may only transfer ownership to buyer corresponding to the portion of his share.
Sale by Auction
Sale by Sample
Parties treated the sample as the standard of quality and they contracted solely with
reference to the sample and seller warrants that the bulk of goods delivered correspond to the
sample or description
*If the goods delivered do not correspond with the sample or description then the buyer may
ask for recission of the sale.
Sale by Description
The seller sells things as being of a particular kind, the buyer not knowing whether the seller’s
representations are true or false, but still relying on them as true and is the basis for the
transaction
*Sale in this kind may still happen regardless of whether the buyer has seen the goods or not,
as long as the buyer buys them only on the basis of the description made by the seller.
Sec. 7. Legal Recognition of Electronic Documents - Electronic documents shall have the
legal effect, validity or enforceability as any other document or legal writing, and
(a) Where the law requires a document to be in writing, that requirement is met by an
electronic document if the said electronic document maintains its integrity and reliability and
can be authenticated so as to be usable for subsequent reference, in that -
i) The electronic document has remained complete and unaltered, apart from the
addition of any endorsement and any authorized change, or any change which arises
in the normal course of communication, storage and display; and
ii) The electronic document is reliable in the light of the purpose for which it was
generated and in the light of all relevant circumstances.
(b) Paragraph (a) applies whether the requirement therein is in the form of an obligation or
whether the law simply provides consequences for the document not being presented or
retained in its original form. (c)Where the law requires that a document be presented or
retained in its original form, that requirement is met by an electronic document if -
i) There exists a reliable assurance as to the integrity of the document from the time
when it was first generated in its final form; and
ii) That document is capable of being displayed to the person to whom it is to be
presented: Provided, That no provision of this Act shall apply to vary any and all
requirements of existing laws on formalities required in the execution of documents
for their validity.
This Act does not modify any statutory rule relating to the admissibility of electronic data
messages or electronic documents, except the rules relating to authentication and best
evidence.
a) A method is used to identify the party sought to be bound and to indicate said party’s
access to the electronic document necessary for his consent or approval through the
electronic signature; b) Said method is reliable and appropriate for the purpose for which the
electronic document was generated or communicated, in the light of all circumstances,
including any relevant agreement; c) It is necessary for the party sought to be bound, in order
to proceed further with the transaction, to have executed or provided the electronic signature;
and d) The other party is authorized and enabled to verify the electronic signature and to
make the decision to proceed with the transaction authenticated by the same.
Sale or return
Buyer becomes the owner of the goods upon delivery and he or she has the right to revest
ownership back to the seller when he returns the goods within the specified time or within the
reasonable time
Sale on approval
Seller is still the owner despite delivery to the buyer except when:
1. buyer accepts
2. buyer does an act impliedly accepting (ex. If it was actually used or consumed)
3. buyer does not signify his approval but fails to return within a reasonable time the goods.
There shall be no increase or decrease of the price although there be a greater or lesser are
or number than that stated in the contract. However, the discrepancy must not be substantial.
Rules: 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 if measure or number:
1. The vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that
may been stated in the contract; or
2. Should it be not possible, the vendee may choose between:
A. Proportional reduction of the price; and
B. Rescission of the contract, provided that the lack in the area is not less tahn one-tenth
(1/10) of that stated (Art. 1539).
What are the rules if any of the immovable is not of the quality specified in the contract?
ANS:
The same rules above will apply if any part of the immovable is not of the quality specified in
the contract, even when the area is the same. The rescission in this case shall only take place
at the will of the vendee when the inferior value of the thing sold exceeds one-tenth (1/10) of
the price agreed upon (Art. 1539).
Note: If the vendee would not have bought the immovable had he known of its smaller area or
inferior quality, he may rescind the sale (Art. 1539).
When shall the action prescribe arising from the sale of real estate mentioned in Art. 1539?
ANS:
Said actions shall prescribe in six (6) months, counted from the day of the delivery (Art. 1543).
DOUBLE SALES
ANS:
ANS:
In order for the second buyer to displace the first buyer, the following must be shown:
(1) the second buyer must show that he acted in good faith (i.e., in ignorance of the first sale
and of the first buyer’s rights) from the time of acquisition until title is transferred to him by
registration or failing registration, by delivery of possession; and
(2) the second buyer must show continuing good faith and innocence or lack of knowledge of
the first sale until his contract ripens into full ownership through prior registration as provided
by law.
However, this rule shall not apply when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry or when the
purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to
induce a reasonably prudent man to inquire into the status of the title of the property in
litigation.
ANS:
Who has the burden of proving the status of a buyer in good faith?
ANS:
One asserting the status of a buyer in good faith and for value has the burden of proving such
status, which goes beyond a mere invocation of the ordinary presumption of good faith.
ANS:
Under Act 3344, registration of instruments affecting unregistered lands is “without prejudice
to a third party with a better right”, which means that mere registration does not give the buyer
any right over the land if the seller was not anyomore the owener of the land having
previously sold to somebody else even if the earlier sale was unrecorded.
Conditions and Warranties
What is a condition?
ANS:
It is an uncertain event or contingency in the happening of which the obligation of the contract
depends.
What is a warranty?
ANS:
ANS:
ANS:
It is an affirmation of fact or any promise by the seller relating to the thing, the natural
tendency of which is to induce the buyer to purchase the thing and the buyer thus induced,
purchased the same.
ANS:
An express warranty:
1. Must be an affirmation of fact or any promise by the seller relating to the subject matter of
the sale;
2. The natural tendency of such affirmation or promise is to induce the buyer to purchase the
thing; and
3. The buyer purchases the thing relying on such affirmation or promise (Art. 1546).
ANS:
An implied warranty is that which the law derives from the nature of the transaction r the
relative situation or circumstances of the parties, irrespective of any intentions of the seller to
create it.
What are the kinds of implied warranties?
ANS:
ANS:
Moles v. IAC:
It is generally held that in the sale of a designated and specific article sold as secondhand,
there is no implied warranty as to its quality or fitness for the purpose intended, at least where
it is subject to inspection at the time of the sale. On the other hand, there is also authority to
the effect that in a sale of a secondhand articles there may be, under some circumstances, an
implied warranty of fitness for the ordinary purpose of the article sold or for the particular
purpose of the buyer.
In the instant case, a certification to the effect that the linotype machine bought by petitioner
was in A-1 condition was issued by private respondent in favor of the former. This cannot but
be considered as an express warranty.
To which does the warranty of the seller “that he has right to sell” refer?
ANS:
It refers only to the transfer of ownership at the point ig consummation and not to any
representation as to ownership and the capacity to transfer the same at the point of
perfection.
ANS:
Note: A seller cannot waive a warranty if he has knowledge of such defect as it signifies
fraud. Under Article 1171 of the New Civil Code, any waiver of an action for future fraud is
void.
What are the requisites for warranty against non-apparent burden or servitudes?
ANS:
ANS:
Note: Remedies must be brought within the period of six (6) months from delivery of the thing,
or 40 days from the date of delivery in case of animals.
What are the requisites for breach of warranty in sale of goods to apply?
ANS:
ANS:
What are the buyer’s options in case of breach of warranty by the seller?
ANS:
2. Accept or keep the goods and maintain an action against the seller for damages for the
breach of warranty;
3. Refuse to accept the goods, and maintain an action against the seller for damages for the
breach of warranty;
4. Rescind the contract of sale and refuse them or offer to return them to the seller and
recover the price or any part thereof which has been paid;
Note: When the buyer has claimed and been granted a remedy in any of the
abovementioned, no other remedy can thereafter be granted granted without prejudice to the
provisions of the second paragraph of Article 1191 of the New Civil Code.
Article 1191 par. 2. The injured party may choose between the fulfillment and the rescission
of the obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.
5. In the case of breach of warranty of quality, such loss, in the absence of special
circumstances showing proximate damage of a greater amount, is the difference between the
value of the goods at the time of delivery to the buyer and the value they would have had if
they had answered to the warranty (Art. 1599).
ANS:
Should the goods have been delivered t the buyer, he cannot rescind the sale in any of the
following instances:
1. If he knew of the breach of warranty when he accepted the goods without protest;
2. If he fails to notify the seller within a reasonable time of the election to rescind; or
3. If he fails to return or to offer to return the goods to the seller in substantially as good
condition as they were in at the time the ownership was transferred to the buyer (Art. 1599).