De Leon ─ Sales and Lease
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ART. 1458. By the 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 in money or its equivalent.A contract of sale may be absolute orconditional.
Characteristics of a contract of sale.
- C - Consensual
- B - Bilateral
- O - Onerous
- C - Commutative
- N - Nominate
- P - Principal
Elements of Sale.
Essential - COC
If a conjugal property is sold, may the husband give his consent to such sale without the consent of her wife or vice versa?
The sale of conjugal property requires the consent of both the husband and the wife. The absence of the consent of one renders the sale null and void (see Art. 124, Family Code.) while the vitiation thereof (see Art. 1390.) makes it merely voidable. (Guiang vs.Court of Appeals, 95 SCAD 264, 290 SCRA 372 .)
When is a sale perfected and when is the ownership deemed transferred to the buyer?
Sale is perfected by mere consent but the transfer of title is effected only by payment of the entire purchase price by the vendee and by delivery of the thing by the vendor.
What are the kinds of Sale?
- 1. Absolute.
- 2. Conditional.
- 3. Other kinds.
Distinguish contract of sale from contract to sell.
Is a stipulation allowing automatic rescission upon non-payment of the purchase price valid?
Distinguish contract to sell and conditional sale.
A conditional sale transmits automatically ownership to the vendee when the contigency agreed upon is fulfilled by the party(ies).
On the other hand, a contract to sell is not a conditional sale because the fulfillment of the suspensive condition which is the full payment of the price, ownership will not automatically transfer to the buyer although the property is already delivered unto him. Ownership, in such a case, will only conveyed by the seller to the buyer by entering an absolute sale to consummate the transaction.
What are other cases where there is contract to sell?
1. Where the subject matter is not determinate (Arts. 1458,1460.) or the price is not certain (Art. 1458.), the agreement is merely a contract to sell.
2. A sale of future goods (see Art. 1462.) even though thecontract is in the form of a present sale operates as a contract tosell the goods.
What is the requirement as to the thing and as to the vendor in a valid sale.
ART. 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered.
May rights be a subject of sale?
— All rights which are not intransmissible or personal may also be the object of sale (Art. 1347.), like the right of usufruct (Art. 572.), the right of conventional redemption (Art.1601.), credit (Art. 1624.), etc.
Kinds of illicit things.
The thing may be illicit per se (of its nature) or per accidens (because of some provisions of law declaring it illegal).
What is the status of a sale contracted in violation of the right of first refusal?
Valid but rescissible.
- ART. 1460. A thing is determinate when it is:
- 1. particularly designated; or
2. physically segregated from all others of the same class; or
3. when the thing is capable of being made determinate without the necessity of a new or further agreement between the parties.
Give the status of the following sale:
1. Sale of things having potential existence.
2. Sale of mere hope or expectancy.
3. Sale of vain hope or expectancy.
- 1. Valid.
- 2. Valid but subject to a condition that the thing must come into existence.
- 3. Void.
Define emptio rei speratae and emptio spei.
Distinguish the two.
Emptio rei speratae (sale of thing expected) is the sale of a thing not yet in existence subject to the condition that the thing will exist and on failure of the condition, the contract becomes in effective and hence, the buyer has no obligation to pay the price.
On the other hand, emptio spei is the sale of the hope itself that the thing will come into existence.
In emptio rei speratae, the future thing is certain as to itself but uncertain as to its quantity and quality. Such sale is subject to the condition that the thing will come into existence (see Art. 1545,par. 2.), whatever its quantity or quality. In emptio spei (like the sale of a sweepstake ticket), it is not certain that the thing itself(winning a prize) will exist, much less its quantity and quality.
In emptio rei speratae, the sale is subject to the condition that the thing should exist, so that if it does not, there will be no contract by reason of the absence of an essential element. On the other hand,in emptio spei produces effect even though the thing does not come into existence because the object of the contract is the hope itself,unless it is a vain hope or expectancy.
If there is an ambiguity whether the sale is a emptio rei speratae and emptio spei, what is the presumption?
If there is ambiguity and inaccuracy in determining if the object of the sale is an emptio rei speratae or emptio spei, the presumption is that it is emptio rei speratae or that the thing is sold as a mere expectancy.
What may be the subject of a contract of sale?
- Thing must be:
- 1. Existing goods
- 2. Owned and Possessed by the Seller.
- 3. or goods to be Manufactured, Raised and Acquired by the seller AFTER THE PERFECTION OF THE CONTRACT.
- 4. Goods whose acquisition depends upon a contigency.
what is the best example of a sale with a resolutory condition?
Sale with pacto de retro.
What is the rule in construing a contract having provisions of both the contract of sale and of a contract of agency?
ART. 1466 ─ the essential clauses of the whole instrument shall be considered.
Distinguish contract of sale from an agency to sell.
- IN A SALE:
- 1. the buyer receives the goods as an owner.
- 2. the buyer has to pay the price.
- 3. the buyer cannot return the object purchased.
- 4. seller warrants the thing sold.
- 5. the buyer can deal with the thing sold as he pleases being the owner.
- IN AN AGENCY TO SELL:
- 1. the agent retains the goods for benefit of his principal.
- 2. the agent simply account for the proceeds of the sale on the principals behalf.
- 3. the agent can return the object in case he is unable to sell the same to a third person.
- 4. the agent makes no warranty.
- 5. the agent in dealing with the thing received, must act and is bound according to the instructions of his principal.
Differentiate sale from a contract for a piece of work.
- ART. 1467 ─
- It is a contract of sale if the thing is delivered:
- 1. at a certain price;
- 2. in the ordinary course of the vendor's business; and
- 3. is manufactured or procured for the general market.
- It is a contract for a piece of work if:
- 1. the goods are to be manufactured specially for the customer;
- 2. upon his special order; and
- 3. not for the general market.
If the consideration of contract consists partly in money and partly in another thing, how will the transaction be characterized?
ART. 1468 ─ by the manifest intention of the parties.
If such intention does not appear, it shall be considered as barter if the value of the thing given as part of the consideration exceeds the amount of money given; otherwise it is a sale.
Define dation in payment.
- IN SALE :
- 1. there is no pre-existing credit.
- 2. obligations are created.
- 3. the cause is the price.
- 4. there is freedom in fixing the price.
- 5. buyer has to pay the price.
- IN DATION IN PAYMENT :
- 1. there is pre-existing credit.
- 2. obligations are extinguished.
- 3. the cause is the extinguishment of the debt.
- 4. freedom to fix the price may be impaired.
- 5. payment is received by the debtor before the contract is perfected.
1. When is the price considered certain?
2. What will happen if the person so fixing the price is unable or unwilling to fix it?
ART. 1469 - if it be so with reference to another thing certain, or that the determination thereof be left to the judgment of a specified person(s).
the sale will be inefficacious UNLESS the parties subsequently upon a price or if in case the third person had acted in bad faith or by mistake, then the court may fix the price.
What is the effect of the gross in adequacy of the price?
ART. 1470. Gross inadequacy of price does not affect a contract of sale, except as it may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract.
What will be the effect if the price is so low as to be shocking to the conscience of the court?
The sale may be set aside and may be declared an equitable mortgage. ( De Leon vs. Salvador, 36 SCRA 507)
What will be the effect if the price is simulated?
ART. 1471. 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.
How may price of securities, grains, liquids and other things be considered certain?
- ART. 1472 -
- if the price fixed for the thing sold :
- 1. would have on a definite day, or
- 2. in a particular exchange or market, or
- 3. when an amount is fixed above or below the price fixed on such day, or
- 4. in such exchange or market provided that said amount is certain.
Discuss the principle of mutuality as to the fixing of the price.
ART. 1473 - 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.
If the price cannot be determined in accordance with provisions of the Civil Code or in any other manner, what will happen to the sale?
it will be inefficacious but should the thing have been delivered to the buyer, he must pay a reasonable price therefor with regards to the question of fact dependent on the circumstances of each particular case.
If the consent as to the sale has been reluctantly given by any of the parties, what is the status of the sale?
Still valid for there is no difference in law where a person gives his consent reluctantly and even against his good sense and judgment as when he acts voluntarily and freely.
what is the effect of the failure to pay the price?
Non-payment of the purchase price is not among the instances where the law declares a contract of sale to be null and void. (Peñalosa vs. Santos, 153 SCAD 531)
And this will give rise to the right of the seller to rescind the sale or to ask fulfillment, with indemnification of damages in either case.
if the price is not stated in the contract, what is the status of the sale?
Valid but subject to reformation.
Rules in case of a sale by auction.
- Art. 1476 -
- 1. Each lot is the subject of a separate contract of sale.
- 2. Sale by auction is perfected by the fall of the hammer or in other customary manner.
- 3. The seller has right to bid : (a) if he expressly reserves such right; and (b) if he gives a notice informing his right to bid. In absence of such notice, it shall be unlawful for or on behalf of the seller to bid in the auction.
What does pactum reservati dominii mean?
contractual reservation of title. (Jovellanos v. CA, 210 SCRA 126 )
Does a perfected sale gives any equittable title in favor of the buyer?
A perfected contract of sale even without delivery vests in the vendee an equitable title or interest over the object of the contract.
What is ART. 1479?
ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demand-able.
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.
what do you call a unilateral promise or order to sell or to buy a thing which is not accepted that creates no juridical or legal bond?
It is a policitacion.
Define option contract.
What will happen if there is a lack or absence of any proof evidencing the presence of consideration in a option?
It is a privilege existing in one person for which he has paid a consideration which gives him the right to buy/sell,for example, certain merchandise or certain specified property,from/to another person, if he chooses, at any time within the agreed period at a fixed price, or under, or in compliance with certain terms and conditions.
Lacking any proof of such consideration, the option is unenforceable. (San Miguel Properties Philippines, Inc. vs.Huang, 130 SCAD 713, 336 SCRA 737 .)
Can the promissor withdraw an option to sell, after acceptance, if the option is not supported by any consideration?
NO for the acceptance resulted in a perfected contract of sale. (Sanchez v. Rigos)
Distinguish earnest money from option money.
‘Earnest money’ and ‘option money’ are not the same but distinguished thus: (a) earnest money is part of the purchase price,while option money is the money given as a distinct consideration for an option contract; (b) earnest money is given only where there is already a sale, while option money applies to a sale not yet perfected; and (c) when earnest money is given,the buyer is bound to pay the balance, while when the would-be buyer gives option money, he is not required to buy
Rules on who shall bear the loss or deterioration of the thing.
(1) If the thing is lost before perfection, the seller and not the one who intends to purchase it bears the loss (see Roman vs.Grimalt, 6 Phil. 96 .) in accordance with the principle that the thing perishes with the owner (res perit domino);
(2) If the thing is lost at the time of perfection, the contract is void or inexistent. (Art. 1409.) The legal effect is the same as when the object is lost before the perfection of the contract of sale(see Art. 1493.);
(3) If the thing is lost after perfection but before its delivery, that is, even before the ownership is transferred to the buyer, the risk of loss is shifted to the buyer as an exception to the rule of res perit domino (Arts. 1480, pars. 1 and 2, 1538, 1189, and 1269.); and
(4) If the thing is lost after delivery, the buyer bears the risk of loss following the general rule of res perit domino.
When may a contract of sale of goods by description or by sample be rescinded?
- ART. 1481. In the contract of sale of goods by description or by sample, the contract may be rescinded if:
- 1. the bulk of the goods delivered do not correspond with the description or the sample, and
- 2. if the contract be by sample as well as by description, it is not sufficient that the bulk of goods correspond with the sample if they do not also correspond with the description.
Define earnest money.
Earnest money 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 actually a partial payment of the purchase price and is considered as proof of the perfection of the contract.
Differentiate earnest from option money.
- EARNEST MONEY IS :1. a part of the purchase price.
- 2. given when there is already sale.
- 3. given by the buyer for him to be bound to pay the balance.
- OPTION MONEY IS :1. not part of the purchase price.
- 2. applied on a sale not yet perfected.
- 3. something given by the buyer in order him to decide to buy or not.
What are those sales which must comply with the requirements pertaining to the statute of frauds?
- (a) Sale of personal property at a price not less thanP500.00;
- (b) Sale of real property or an interest therein regardless of the price involved; and
- (c) Sale of property not to be performed within a year from the date thereof regardless of the nature of the property and the price involved.
What is the status of the sale of a parcel of land contracted by an agent who has no written authority?
VOID. [ART. 1874]
Is it necessary that the contract of sale be notarized?
The fact that the notarization of a deed of sale of real property is false is of no consequence, for it need not be notarized; it is enough that it be in writing. (Heirs of Amparo del Rosario vs.Santos)
If A orally sold and delivered to B his land, will the sale between them be deemed unenforceable if said sale will not be reduced into writing and violated the provisions of the Statutes of Fraud?
Statute of Frauds is applicable only to executory contracts(those where no performance,whether total or partial, relevant to the transaction is made). Hence, if there is already delivery, the contract is no longer executory and hence, statute of fraud no longer applies.
What are the remedies of the seller in a sale of personal property payable on installments if there will be default in paying the installments?
- ART. 1484 - The following are remedies of the seller in sale of personal property payable on installments:
- 1. To ask fulfillment of the obligation.
- 2. To cancel the sale, if the buyer fails to pay payment covering two or more installments.
- 3. To foreclose any constituted chattel mortgage.
This provision shall also be applied in case of contracts purporting to be leases of personal property with an option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing. (ART. 1485
In relation to ART. 1484, may the vendor recover any deficiency after foreclosure of the chattel mortgage?
*Read the book of Paras pertaining to Maceda Law.
Who shall bear the expenses for the execution and registration of the sale?
The vendor unless there is a stipulation to the contrary.
Who may enter into a contract of sale?
May a minor enter a contract of sale?
ART. 1489 - All persons who are authorized in the Civil Code to obligate themselves, may enter into a contract of sale.
A minor may enter a contract of sale if what he has purchased are necessaries and that he must have paid a reasonable price therefor.
Necessaries are those things which are needed for sustenance,dwelling, clothing, medical attendance, education and transportation according to the financial capacity of the family of the incapacitated person.
May a husband and a wife sell properties to each other?
- ART. 1490 -
- GR : NO.
- EXCEPTIONS :
- 1. when a complete separation of property was agreed upon in the marriage settlement.
- 2. when there has been granted a judicial declaration of complete separation of their property.
- ADDITIONAL NOTES :
- The persons disqualified to buy referred to in Articles 1490 and 1491 are also disqualified to become lessees of the things mentioned therein. (Art. 1646.)see page 159 of this book.
- MEANING: If the husband and wife is prohibited in selling their property to each other, then it also follows that they cannot also lease said property to each other.
Discuss ART. 1491.
- ART. 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 orpersons 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 institu-tion, 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;
- (6) Any others specially disqualified by law.
What is the status of the sales in violation of ART. 1491 ?
- The purchase of the following properties are VOIDABLE:
- 1. property of the ward purchased by the guardian.
- 2. property of a principal purchased by his agent.
- 3. property under administration purchased by the executor or administrator.
- The purchase of the following properties are NULL AND VOID:1. property of the State or any of its subdivision entrusted to and purchased by a public officer and employee.
- 2. property under litigation purchased by the judge, by a lawyer, by clerks of court and other officers and employees who are charged with the administration of justice.
- 3. property purchased by aliens and other person specially disqualified by law.
If a part of thing sold is lost or deteriorated, what are those remedies available to the vendee?
- ART. 1493.The vendee may :
- 1. withdraw from the contract or
- 2, demand the remaining part by paying its price in proportion to the total sum agreed upon.
What are the remedies available to the vendee if the specific thing which was subject to the sale has perished in part or so deteriorated as to substantially changed in character?
- If the specific thing has perished in part or so deteriorated as to be substantially changed in character, the buyer may treat the sale:
- 1. AS AVOIDED.
- 2. AS VALID as to the goods which have not deteriorated, if the obligation is divisible.
What are the obligations of the vendor?
- (1) to transfer the ownership of the determinate thing sold;
- (2) to deliver the thing, with its accessions and accessories, ifany, in the condition in which they were upon the perfection ofthe contract (Art. 1537.);
- (3) to warrant against eviction and against hidden defects(Arts. 1495, 1547.);
- (4) to take care of the thing, pending delivery, with properdiligence (see Art. 1163.); and
- (5) to pay for the expenses of the deed of sale, unless there isa stipulation to the contrary.
What are the ways of effecting constructive delivery?
- (a) by the execution of a public instrument (Art. 1498,par. 1.);
- (b) by symbolical tradition or traditio symbolica (ibid., par.2.);
- (c) by traditio longa manu (Art. 1499.);
- (d) by traditio brevi manu (Ibid.);
- (e) by traditio constitutum possessorium (Art. 1500.); or
- (f) by quasi-delivery or quasi-traditio. (Art. 1501.)
When can we say that the thing is already delivered to the buyer?
ART. 1497 - when it is placed in the control and pos-session of the vendee.
Tradition is a derivative mode of acquiring ownership by virtue of which one who has the right and intention to alienate a corporeal thing, transmits it by virtue of a just title to one who accepts the same.
Does the delivery of the thing consummates the sale even if the price has not been fully paid?
Delivery of the thing together with the payment of the price, marks the consummation of the contract of sale. (Phil. National Bank vs. Ling, 69 Phil. 611 ;
Does the execution of the public instrument tantamounts to delivery?
YES, if from the deed the contrary does not appear or cannot clearly be inferred.
What is quasi-traditio?
How is incorporeal rights be delivered?
- The mode of delivery of incorporeal things or rights is known as quasi-traditio.
- In the case of incorporeal things, delivery is effected:
- (1) by the execution of a public instrument; or
- (2) when that mode of delivery is not applicable, by the placing of the titles of ownership in the possession of the vendee; or
- (3) by allowing the vendee to use his rights as new owner with the consent of the vendor.
Discuss SALE or RETURN and SALE on TRIAL.
Differentiate the two.
"SALE OR RETURN"
is where the goods are delivered to the buyer to give the buyer the an option to return the goods instead of paying the price, the ownership passes to the buyer upon delivery, but he may revest the ownership in the seller by returning the goods within a fixed or reasonable time.
"SALE ON TRIAL"
is where the goods are delivered to the buyer on approval and satisfaction, the ownership passes to the buyer when he signifies his approval or acceptance to the seller or when he does not signify his approval and acceptance but he retains the goods and fails to give notice of such to the seller within a fixed or reasonable time.
1. there is a resolutory condition.
- 2. this depends entirely on the will of the buyer.
- 3. ownership passes to the buyer on delivery but he may subsequently revest it back to the seller.
- 4. risk of loss is borne by the buyer.
- IN A SALE ON TRIAL :
- 1. there is a suspensive condition.
- 2. this depends on the character or quality of the goods.
- 3. ownership remains to the seller until buyer signifies his approval.
- 4. risk of loss is borne by the seller.
In what instances where the seller reserves his ownership in a contract of sale of specific goods?
- ART. 1503 -
- 1. where the goods are delivered to the buyer or to the carrier or other bailee but the right of possession or ownership of the goods is reserved until certain conditions have been fulfilled.
2. where the shipped goods and the B/L are deliverable to the seller or his agent.
3. where the shipped goods and B/L are deliverable to the order of the buyer but possession of the B/L is retained by the seller.
what will happen as to the title of a buyer who purchased goods sold by a person who is not the owner thereof and who does not have authority to sell them?
ART. 1505 - 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.
what will happen to the title of a buyer who shall buy goods from a seller who has voidable title thereto and such title has not yet avoided?
ART. 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.
What is negotiable document of title?
ART. 1507 - it is a document of title in which it is stated that the goods referred to therein will be delivered tothe bearer, or to the order of any person named in such document.
2. Dock warrant.
3. Warehouse receipt.
- 1. B/L — It is a contract and a receipt for the trans-port of goods and their delivery to the person named therein, toorder, or to bearer.
- 2. Dock warrant — It is an instrument given by dock owners to an importer of goods warehoused on the dock as a recognition of the importer’s title to the said goods, upon production of the bill of lading.
- 3. Warehouse receipt. — a contract or receipt for goods deposited with a warehouseman containing the latter’s undertaking tohold and deliver the said goods to a specified person, to order, orto bearer.
- 4. Quedan is a warehouse receipt usually for sugar received by a warehouseman.
When is a negotiable document of title be negotiated by delivery?
- ART. 1508 -
- 1. if the goods covered by it is deliverable to the bearer.
- 2. if the goods covered by it is deliverable to the order of a specified person who subsequently indorsed the document in blank or to the bearer.
See Art. 1510. (page 212, De Leon - Sales[PDF copy)
Notice that the provisions as to the Negotiable Document of title are somehow the same with the provisions as to the Warehouse Receipts Law. It is better to read them jointly.
I had skipped the provisions of the Negotiable Document of Title and just proceeded with ART. 1522.
1. Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, what may the buyer do?
2. Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, what may the buyer do?
3. Where the seller delivers the goods with goods of a different description not included in the contract, what may the buyer do?
4. Where in the circumstances mentioned in 2 and 3, the subject matter is indivisible, what may the buyer do?
1. the buyer may reject them 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.
2. the buyer may accept the goods included in the contract and reject the rest.
3. the buyer may accept the goods included in the contract and reject the rest.
4. the buyer may reject the whole obligation.
Define usage trade.
Define course of dealing.
1. A usage of trade is any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question.
2) A course of dealing is a sequence of previous conduct be-tween the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
when is a seller deemed to be an unpaid seller?
- 1. When the whole of the price has not been paid or tendered;
- 2. When a bill of exchange or other negotiable instrument has been received as conditional payment,and the condition on which it was received has been broken by reason of the dishonor of the instrument,the insolvency of the buyer, or otherwise.
What are the special remedies of the unpaid seller of the goods?
- ART. 1526 - the unpaid seller of goods,as such, has:
- (1) A lien on the goods or right to retain them for the price while he is in possession of them;
- (2) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession of them;
- (3) A right of resale as limited by this Title;
- (4) A right to rescind the sale.
- (5) Right to withhold delivery where the ownership of the goods has not passed to the buyer.
ART. 1527 - What are the instances where the seller is entitled to retain possession of the goods until payment of the price is given?
ART. 1529 - What are the instances where the unpaid seller loses his possessory lien to the goods?
- ART. 1527 -
- (1) Where the goods have been sold without any stipulation as to credit;
- (2) Where the goods have been sold on credit, but the term of credit has expired;
- (3) Where the buyer becomes insolvent.
- ART. 1529 -
- (1) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the ownership in the goods or the right to the possession thereof;
- (2) When the buyer or his agent lawfully obtains possession of the goods;
- (3) By waiver thereof.
When may the seller of the goods has the right of stopping them in transitu?
What are the requisites of the right of stoppage in transitu?
ART. 1530 -
when the buyer of goods is or becomes insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in transitu, that is to say, he may resume possession of the goodsat any time while they are in transit.
- The following are the requisites for the existence of the right:
- (1) The seller must be unpaid (Art. 1525.);
- (2) The buyer must be insolvent;
- (3) The goods must be in transit (Art. 1531.);
- (4) The seller must either actually take possession of the goods sold or give notice of his claim to the carrier or other person inpossession (Art. 1532, par. 1.);
- (5) The seller must surrender the negotiable document of title, if any, issued by the carrier or bailee (Ibid., par. 2.); and
- (6) The seller must bear the expenses of delivery of the goods after the exercise of the right.
When are the goods considered in transit?
When are the goods considered no longer in transit?
- The goods are deemed to be in transit under the following circumstances:
- (1) after delivery to a carrier or other bailee and before the buyer or his agent takes delivery of them; and
- (2) if the goods are rejected by the buyer, and the carrier or other bailee continues in possession of them.
- The goods are no longer in transit under the following circumstances:
- (1) After delivery to the buyer or his agent in that behalf;
- (2) If the buyer or his agent obtains possession of the goods at a point before the destination originally fixed;
- (3) If the carrier or bailee acknowledges to hold the goods on behalf of the buyer; and
- (4) If the carrier or bailee wrongfully refuses to deliver the goods to the buyer.
when may the unpaid seller has a right to resell the goods?
- 1. when goods are persishable.
- 2. when he expressly reserves such right in case of buyer's default.
- 3. when the buyer has been in default.
When is the unpaid seller has a right of rescission?
- (a) where the right to rescind is expressly reserved in case the buyer should make a default; or
- (b) where the buyer delays in the payment of the price for an unreasonable time.
if the buyer sold the goods to a third person, may the seller exercise his right of stoppage in transitu?
ART. 1535. the unpaid seller’s right of lien or stoppage in transitu is not affected by any sale, or other disposition of the goods which the buyer may have made, unlessthe seller has assented thereto.
If the goods are covered by a negotiable document of title, the right of stoppage in transitu shall be defeated by the right of any third person who purchased for value and in good faith the said document which has been negotiated to him.
When will the vendor have the right to withhold delivery in sale on credit?
ART. 1536 - if the vendee should lose the right to make use of the term.
- The debtor shall lose the right to make use of the period or term under the following circumstances: IFIVA
- (1) When after the obligation has been contracted, he be-comes insolvent, unless he gives a guaranty or security for the debt [price];
- (2) When he does not furnish to the creditor [vendor] the guaranties or securities which he has promised;
- (3) When by his own acts he has impaired said guaranties or securities after their establishment, and when through a for-tuitous event they disappear, unless he immediately gives newones equally satisfactory;
- (4) When the debtor [vendee] violates any undertaking,in consideration of which the creditor agreed to the period;
- (5) When the debtor [vendee] attempts to abscond.”
ART. 1539 -
1. if the sale of a real estate should be made with a statement of area and if the buyer cannot possibly deliver the same which has been stated in the contract, what should the buyer do?
2. when there is inferior value, what is the condition needed to be complied in order for the vendee to demand rescission?
1. The buyer may choose between a proportional reduction of the price or rescission of the contract if the lack of area is not less than 1/10 of that stated.
2. 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 of the price agreed upon.
If a greater area or number of immovable than that stated in the contract is delivered to the vendee, what may he do?
ART. 1540 - the vendee may accept the area included in the contract and reject the rest. If he accepts the whole area, he must pay for the same at the contract rate.
take note of 1542:
ART. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or less area or number than that stated in the con-tract.The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number,unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated.
1544 - rules in case of double sale.
CONDITIONS AND WARRANTIES
ART. 1545 -
1. if the obligation is subject to any condition which is not performed, what may the party who has been aggrieved by the non-performance of the condition do?
2. when is the non-performance of the condition be considered as a breach of warranty?
1. such party may refuse to proceed with the contract or he may waive performance of the condition.
2. If the other party has promised that the condition should happen or be performed, such first mentioned party may also treat the non-performance of the condition as a breach of warranty.
what is an express warranty?
when can a seller's opinion be considered as a warranty?
ART. 1546 - any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the natural tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer purchases the thing relying thereon.
- The seller's opinion shall be considered as a warranty if the seller is an expert and the buyer had relied upon the seller's opinion.
ART. 1547 - what are those implied warranties mentioned in this article?
1. Implied warranty of the seller that he has a right to sell and that the buyer shall have and enjoy the legal and peaceful possession.
2. implied warranty that the thing shall be free from any hidden faults, defects, or any charge or encumbrance not known to the buyer.
Define an "as is and where is" sale?
It means nothing more than that the vendor makes no warranty as to the quality or workable condition of the goods, and that the vendee takes them in the conditions in which that they are found and from the place where they are located.
Is there implied warranty in case of sale of second-hand articles?
WARRANTY IN CASE OF EVICTION
ART. 1548 -
1. when shall eviction take place?
2. if there is nothing has been said in the contract, shall the vendor still answer the eviction?
1. Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased.
what are the essential elements of warranty against eviction?
- (1) The vendee is deprived in whole or in part of the thing purchased;
- (2) He is so deprived by virtue of a final judgment (Art. 1557.);
- (3) The judgment is based on a right prior to the sale or an act imputable to the vendor;
- (4) The vendor was summoned in the suit for eviction at the instance of the vendee (Art. 1558.); and
- (5) There is no waiver on the part of the vendee.
Read Articles 1549, 1550, 1551, 1553, 1554.
Kinds of waiver of eviction.
1. consciente - waiver is voluntarily made by the vendee without the knowledge and assumption of the risks of eviction.
2. intencionada - waiver made by the vendee with knowledge of the risks of eviction and assumption of its consequences.
if eviction should take place, what are those which the vendee has a right to demand to the vendor?
- (1) The return of the value which the thing sold had at the time of the eviction, be it greater or less than the price of the sale;
- (2) The income or fruits, if he has been ordered to deliver them to the party who won the suit against him;
- (3) The costs of the suit which caused the eviction and, in a proper case, those of the suit brought against the vendor for the warranty;
- (4) The expenses of the contract, if the vendee has paid them;
- (5) The damages and interests and ornamental expenses, if the sale was made in bad faith.
1. If by reason of eviction, a part of the thing sold of such importance, in relation to the whole, that he would not have bought it without said, what may the vendee do?
2. when two or more things have been jointly sold for a lump sum or for a separate price for each of them, and one or more of those things has been deprived from the buyer, what shall he do?
Remember that rescission can only be availed of if there is partial deprivation of the property purchased by the buyer.
- 1. He may ask for rescission.
- 2. He may ask for rescission if it should clearly appear that the vendee would not have purchased one without the other.
Read Articles 1557, 1558, 1559.
ART. 1560 - if the immovable is encumbered by a non-apparent burden or servitude of such nature that it must be presumed that the vendee would not have bought it had he been thereof, what may the buyer do?
What is the prescriptive period in bringing an action for rescission or for damages?
He may ask for rescission of the contract, unless he should prefer appropriate indemnity or if the non-apparent burden is recorded in the Registry of Property.
Within one year, to be computed from the execution of the deed. OR said one year having elapsed, he may only bring an action for damages within one year to be counted from the date of discovery of the non-apparent burden or servitude.
ART. 1561 - when shall the vendor be responsible for warranty against hidden defects?
If such defects render it unfit the thing for the use for which it is intended or should they diminish its fitness for such use to such an extent that had the vendee been aware thereof, he would not have acquired it or would have given a lower price for it, provided that these defects are invisible or if visible but the vendee is not an expert to know them.
Define redhibitory action.
Define redhibitory vice or defect.
Redhibition is the avoidance of a sale on account of some vice or defect in the thing sold, which renders its use impossible,or so inconvenient and imperfect that it must be supposed that the buyer would not have purchased it had he known of the vice.
Redhibitory action is an action instituted to avoid a sale on account of some vice or defect in the thing sold which renders its use impossible, or so inconvenient and imperfect that it must be supposed that the buyer would not have purchased it had he known of the vice.
Redhibitory vice or defect is a defect in the article sold against which defect the seller is bound to warrant.
Requisites for warranty against hidden diffects.
- (1) The defect must be important or serious;
- (2) It must be hidden;
- (3) It must exist at the time of the sale;
- (4) The vendee must give notice of the defect to the vendor within a reasonable time (Art. 1586.);
- (5) The action for rescission or reduction of the price must be brought within the proper period — 6 months from the delivery of the thing sold (Art. 1571.) or within 40 days from the date of the delivery in case of animals (Art. 1577, par. 1.); and
- (6) There must be no waiver of warranty on the part of thevendee.
ART. 1562 -
when is there an implied warranty or condition as to the quality or fitness of goods?
1. Where the buyer, expressly or by implication,makes known to the seller the particular purpose for which the goods are acquired, and it appears that the buyer relies on the seller’s skill of judgment.
2. Where the goods are bought by description from a seller who deals in goods of that description.
Distinguish warranty of merchantability from warranty of fitness.
A warranty of merchantability is a warranty that goods are reasonably fit for the general purpose for which they are sold. On the other hand, a warranty of fitness is a warranty that the goods are suitable for the special purpose of the buyer which will not be satisfied by mere fitness for general purposes.
Read Articles 1563, 1564, 1565, 1566, 1567, 1568.
what is the effect of the loss of the thing on account of hidden defects?
- If the vendor is aware of the hidden defects:
- L - loss shall be borne by him
- P - price need to be paid by him
- E - expenses of the contract shall be reimbursed by him.
- D - damages shall be paid by him.
- If the vendor is not aware of the hiddent defects:
- P - Price shall be paid by him
- I - interest thereon shall be paid by him
- E - Expenses of the contract shall be reimbursed to the buyer
Read Articles 1569, 1571, 1572, 1573, 1574, 1575, 1576, 1577, 1578, 1579, 1580.
In relation to 1571, if the action is not breach of warranty but by quasi-delict or negligence, the prescriptive period if four years.
OBLIGATIONS OF THE VENDEE
ART. 1582 - What are the principal obligations of the vendee?
- (1) to accept delivery; of the thing sold; and
- (2) to pay the price of the thing sold at the time and place stipulated in the contract; and
- (3) to bear the expenses for the execution and registration of the sale and putting the goods in a deliverable state, if such is the stipulation.
Read Articles 1584 which talks about the right of the buyer to examine the goods.
ART. 1685 - when is the buyer deemed accepted the goods?
- 1, if he intimates to the seller that he has accepted them; or
- 2. when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller; or
- 3. when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.
ART. 1587 - If the buyer refuses to accept the goods, is he bound to return them to the seller?
He is not bound to return them to the seller, but it is sufficient if he notifies the seller that he refuses to accept them. If he voluntarily constitutes himself a depositary thereof, he shall be liable as such.
ART. 1589 - In what cases will the vendee shall owe interest for the period between the delivery of the thing and the payment of the price?
- (1) Should it have been so stipulated;
- (2) Should the thing sold and delivered produce fruits or income;
- (3) Should he be in default, from the time of judicial or extrajudicial demand for the payment of the price.
ART. 1590 - When may the vendee be allowed to suspend the payment of the price?
- (a) if he is disturbed in the possession or ownership of the thing bought; or
- (b) if he has a well-grounded fear that his possession or ownership would be disturbed by a vindicatory action or foreclosure of mortgage. UNLESS the vendor gives security for the return of the price or if it has been stipulated that the vendee shall be bound to make such payment.
when will the vendee cannot suspend the payment of the price?
- (a) if the vendor gives security for the return of the price in a proper case;
- (b) if it has been stipulated that notwithstanding any such contingency, the vendee must make payment (see Art. 1548,par. 3.);
- (c) if the vendor has caused the disturbance or danger to cease (see Bareng vs. Court of Appeals, 107 Phil. 641 .);
- (d) if the disturbance is a mere act of trespass; and
- (e) if the vendee has fully paid the price.
What are the actions available in case of breach of the contract of sale of goods?
- (1) action by the seller for payment of the price (Art. 1595.);
- (2) action by the seller for damages for non-acceptance of the goods.
- (3) action by the seller for rescission of the contract for breach thereof (Art. 1597.);
- (4) action by the buyer for specific performance (Art. 1598.);and
- (5) action by the buyer for rescission or damages for breachof warranty.
ART. 1595 - when shall the vendor have an action for the price of the goods?
1. Where, under a contract of sale, the ownership of the goods has passed to the buyer, and he wrongfully neglects or refuses to pay.
2. Where the price is payable on a certain day, irrespective of delivery or oftransfer of title, and the buyer wrongfully neglects orrefuses to pay such price.
3. when the goods cannot readily be resold for a reasonable price and the buyer wrongfully refuses to accept them even before the ownership in the goods has passed.
ART. 1596 - when shall the seller maintain an action for damages against the buyer?
what is the measure of damages to be given by the buyer to the seller?
- 1. Where the buyer wrongfully neglects or refuses to accept and pay for the goods. (this is the only one mentioned in this article. the rest are found in elsewhere.)
- 2. In an executory contract, where the ownership in the goods has not passed, and the seller cannot maintain an action to recover the price.
- 3. If the goods are not yet identified at the time of the con-tract or subsequently, the seller’s right is necessarily confined toan action for damages.
The measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events, from the buyer’s breach of contract or where there is an available market for the goods in question, the measure of damages is the difference between the contract price and the market or current price at the time or times when the goods
ART. 1597 - when shall the seller have an action for rescission in contract of sale of goods?
- 1. when the buyer has repudiated the contract of sale;
- 2. when the buyer has manifested his inability to perform his obligations thereunder; and
- 3. when the buyer has committed a breach of the contract of sale.
that in order for rescission to be given effect, there must be notice of such by the seller to the buyer.
ART. 1598 - when shall the buyer have a right of action for specific performance against the seller?
Where the seller has broken a contract to deliver specific or ascertained goods, a court may,on the application of the buyer, direct that the contract shall be performed specifically, without giving the seller the option of retaining the goods on payment of damages.
ART. 1599 - what are the rights of the buyer in case there is a breach of warranty?
- (1) Accept or keep the goods and set up against the seller, the breach of warranty by way of recoupment in diminution or extinction of the price;
- (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 to receive the goods or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid.
That only one of these remedies can be exercised by the buyer.
ART. 1599 - When can the buyer not allowed to rescind the contract of sale?
1. if he knew of the breach of warranty when he accepted the goods without protest, or
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, unless the goods are deteriorated due to the defect.
What is the effect to the responsibility of buyer as to the payment of the price and as to the goods whenever the buyer elects his right to rescind the sale?
As to the payment of the price, he shall cease to be liable for the price upon returning or offering to return the goods or if the price has been paid by him, the seller shall be liable to repay the price to the buyer.
As to the goods, the buyer shall thereafter be deemed to hold the goods as bailee for the seller but subject to a lien to secure the payment of the price or of any part of it.
How is a sale extinguished?
- ART. 1600 -
- 1. by the same causes as all other obligations.
- 2. by those stated in articles of the Title pertaining to Sales.
- 3. by conventional and legal redemption.
- In other words:
- 1. it is by Common causes or those causes which are also the means of extinguishing all other contracts like payment, loss of the thing,condonation, etc.
- 2. by Special causes or those causes which are recognized by the law on sales (such as those covered by Articles 1484, 1532, 1539, 1540,1542, 1556, 1560, 1567, and 1591.); and
- 3. by Extra-special causes or those causes which are given special discussion by the Civil Code and these are conventional redemption and legal redemption.
ART. 1601 - when shall conventional redemption takes place?
it is when the vendor reserves the right to repurchase the thing sold, with the obligation to complywith the provisions of article 1616 and other stipulations which may have been agreed upon.
what is the nature of a conventional redemption?
- C - pure contractual
- A - an accidental stipulation
- R - it is a real right
- P - potestative
- R - resolutory
- P - privilege
- R - reserved at the moment of perfection of the contract.
- P - person entitled to exercise the right of redemption is the owner of the property.
- G - gives right to reciprocal obligations.
When is a contract be presumed to be an equitable mortgage?
- ART. 1602 - PRERTA
- (1) When the price of a sale with right to repurchase is unusually inadequate;
- (2) When the vendor remains in possession as lessee or otherwise;
- (3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;
- (4) When the purchaser retains for himself a part of the purchase price;
- (5) When the vendor binds himself to pay the taxes on the thing sold;
- (6) 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.
Define an equitable mortgage.
An equitable mortgage is one which lacks the proper formalities, form or words, or other requisites prescribed by law for a mortgage, but shows the intention of the parties to make the property subject of the contract as security for a debt and contains nothing impossible or contrary to law.
Distinguish pacto de retro from mortgage.
- IN PACTO DE RETRO:
- 1. ownership is transferred but the owner-ship is subject to the condition that the seller might recover the ownership within a certain period of time.
- 2. If the seller does not repurchase the property upon the very day named in the contract, he loses all interest thereon.
- 3. there is no obligation resting upon the purchaser to foreclose.
- IN A MORTGAGE:1. ownership is not transferred but the property is merely subject to a charge or lien as security for the compliance of a principal obligation, usually a loan.
- 2. the mortgagor does not lose his interest in the property if he fails to pay the debt at its maturity.
- 3. the mortgagee has the right to foreclose.
What are the requisites of equitable mortgage?
- 1. that the parties entered into a contract denominated as a contract of sale with a right of repurchase or purporting to be an absolute sale (Art. 1604.); and
- 2. that their intention was to secure an existing debt by way of mortgage.
In case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as WHAT?
ART. 1603 - AN EQUITABLE MORTGAGE.
what is the effect where the contract is held as an equitable mortgage?
- (1) Formal requirements of mortgage deemed complied with.
- (2) Contract subordinate to a subsequent registered mortgage.
- (3) Title of property remains in supposed vendor.
- (4) Remedy of creditor is to foreclose.
- (5) Conveyance of land not to affect mortgagor’s right of redemption.
ART. 1605 - what may the apparent vendor do in order to correct a contract referred to in articles 1602 and 1604?
To ask for the reformation of the contract.
Reformation is that remedy granted by law by means of which a written instrument is made or construed so as to express or con-form to the real intention of the parties when such intention is not expressed in the instrument. (see Art. 1359.)
what is the prescriptive period for the exercise of conventional redemption mentioned in ART. 1601?
Four years from the date of contract.
If there should be an agreement, the period cannot exceed ten years.
The vendor may still exercise the right to repurchase within 30 days from the final judgment was rendered in a civil action.
If after expiration of period of redemption, what is the effect of a stipulation extending period of repurchase?
How about if such stipulation is agreed before the expiration of the period of redemption?
NO MORE extension cannot be granted for the ownership of the vendee is already consolidated and becomes absolute.
It may be extended but in no case be extended for more than 10 years; otherwise the extension is void as to the excess.
ART. 1610 - when can a creditor of the vendor make use of the seller's right of redemption against the vendee?
The creditor of the vendor may not make use of the seller's right of redemption against the vendee, until after he exhausted the property of the vendor.
MEMORIZE THESE ARTICLES VERBATIM:
ART. 1612. If several persons, jointly and in the same contract, should sell an undivided immovable with a right of repurchase, none of them may exercise this right for more than his respective share.The same rule shall apply if the person who sold an immovable alone has left several heirs, in which case each of the latter may only redeem the part which he may have acquired.
ART. 1613. In the case of the preceding article, the vendee may demand of all the vendors or co-heirs that they come to an agreement upon the repurchase of the whole thing sold; and should they fail to do so,the vendee cannot be compelled to consent to a partial redemption.
ART. 1614. Each one of the co-owners of an undivided immovable who may have sold his share separately, may independently exercise the right of repurchase as regards his own share, and the vendee cannot compel him to redeem the whole property.
ART. 1615. If the vendee should leave several heirs,the action for redemption cannot be brought against each of them except for his own share, whether the thing be undivided, or it has been partitioned among them.But if the inheritance has been divided, and the thing sold has been awarded to one of the heirs, the action for redemption may be instituted against him for the whole. (1517)
ART. 1616 - What should the vendor do in order to avail for himself the right of repurchase?
- 1. to return to the vendee the price of the sale.
- 2. return the expenses of the contract and any other legitimate payments made by reason of the sale.
- 3. pay the necessary and useful expenses made on the thing sold.
1. Upon the exercise of the right to repurchase. will the encumbrances of the thing sold de retro be passed to the vendor a retro?
2. In the event that the right of repurchase has been exercised, may a vendor a retro eject the tenants who are allowed by the vendee a retro to lease the thing sold?
- ART. 1618.
- NO. The vendor who recovers the thing sold shall receive it free from all charges or mortgages constituted by the vendee, but he shall respect the leases which the latter may have executed in good faith, and in accordance with the customs of the place where the land is situated.
ART. 1619 - Define Legal Redemption.
ART. 1619. Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in the contract, in the place of one who acquires a thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous title.
Define Dation in payment.
Dation in payment or dacion en pago is the transmission of the ownership of a thing by the debtor to the creditor as the accepted equivalent of the performance of an obligation.
What are the nature of a dation in payment?
- 1. it is a sale of thing.
- 2. it is a novation of a contract.
1. In case the shares of all the co-owners or of any of them are sold the co-owned thing to a third person, may a co-owner exercise the right of legal redemption? How much will he pay the third person in order to exercise such right?
2. What is the rule if two or more co-owners desire to exercise said right?
- ART. 1620 -
- 1. YES, he may do so provided that he pays the price of thing as paid by the third person to acquire it, however, if the price is grossly excessive, he may pay only a reasonable price therefor.
2. Should two or more co-owners desire to exercisethe right of redemption, they may only do so in pro-portion to the share they may respectively have in thething owned in common. (2nd par.)
What are requisites in order for a co-owner exercise the right of legal redemption mentioned in ART. 1620?
- 1. there should be co-ownership.
- 2. there must be alienation of all or any of the share of the co-owners.
- 3. the sale must be to a third person.
- 4. the sale must be before partition.
- ADDITIONAL NOTES:The sale must be made to a third person. A third person, within the meaning of Art.1620, means any person who is not one of the co-owners.
- Hence, if the sale was made to a co-owner, then ART. 1620 cannot be applied.
ART. 1621 - when can the owners of adjoining lands have the right of legal redemption?
- The owners of adjoining lands shall also have the right of redemption when:
- 1. a piece of rural land is alienated; and
- 2. the area of such land does not exceed one hectare, unless the grantee/buyer does not own any rural land. (meaninig if the buyer already owns other rural land, the adjacent/adjoining landowner may exercise the right of redemption but if he does not, the right of legal redemption cannot be exercised.)
- 3. The adjacent or adjoining lands must not be separated by brooks, drains, ravines, roads and other apparent servitudes, for if so, the right of redemption cannot be exercised.
ART. 1621(last par.) -
what is the rule if there are two or more landowners who desire to exercise the right of redemption at the same time?
The owner of the adjoining land of smaller area shall be preferred.
If both have the same area, the one who requested the redemption shall be preferred.
What are the requisites for the exercise of the right of legal redemption of the adjacent landowner?
- 1. both land of the owner exercising the right and land sought to be redeemed must be rural.2. the lands must be adjacent/ adjoining.
- 3. there must be alienation.4. the area of the land alienated must not exceed 1 hectare.5. the grantee/buyer must already own any other rural land.
- 6. the adjoining lands must not be separated by BDRRO.
Define rural land.
That land adopted and used to agricultural and pastoral purposes.
ART. 1622 -
1. Discuss the right of pre-emption and legal redemption of an urban landowner when an adjacent urban land is about to be resold after it is bought merely for speculation.
2. When 2/more landowners wish to exercise such right, who amongst the landowners shall be preferred?
(I find this article difficult to understand at first.)
1. Whenever a piece of urban land which is so small and so situated that a major portion thereof cannot be used for any practical purpose within a reasonable time, having been bought merely for speculation, is about to be re-sold, the owner of any adjoining land has a right of pre-emption at a reasonable price. (the bold words are the keywords, remember them.)
If the re-sale has been perfected, the owner of the adjoining land shall have a right of redemption, also at a reasonable price.
2. the owner whose intended use of the land in question appears best justified shall be preferred.
Define the right of pre-emption.
Give the requisites in order for ART. 1622 (referred in the preceding card) to apply?
Pre-emption, which has been defined as the act or right of purchasing before others.
Redemption, which is exercised after the sale has been perfected against the vendee.
- The Following are the requisites in order for ART. 1622 be applicable:
- (a) The one exercising the right must be an adjacent owner;
- (b) The piece of land sold must be so small and so situated that a major portion thereof cannot be used for any practical purpose within a reasonable time; and
- (c) Such urban land was bought by its owner merely for speculation.
Distinguish rural land from urban land.
means of, or pertaining to, the country as distinguished from a city or town.
The word “urban”
is defined as of, or belonging to, a city or town.
Urban lands are used for the purpose of dwelling, industry or commerce.
Rural lands are for agricultural, fishing or timber exploitation.
- ADDITIONAL NOTES:Meaning of “to speculate.’’
- According to Webster’s International Dictionary (2nd edition,p. 2417.), “to speculate” means: “To enter into a business transaction or venture from which the profits or return are conjectural because the undertaking is outside the ordinary course of business,to purchase or sell with the expectation of profiting by anticipated,but conjectural fluctuations in price. Often in a somewhat depreciative sense, to engage in a hazardous business transaction for the chance of an unusually large profit; as to speculate in coffee, in sugar, or in bank stock.
When can the right of legal redemption or pre-emption, mentioned in ARTs. 1620, 1621 and 1622, be exercised?
ART. 1623 - It shall exercised within 30 days from notice in writing by the prospective vendor or by the vendor, as the case may be.
(The notice to the redemptioners mentioned in this article is an indispensable requisite in order for the deed of sale be registered.)
ASSIGNMENT OF CREDITS AND OTHER INCORPOREAL RIGHTS:
1. Define assignment of credit.
2. How shall it be effected?
3. Distinguish assignment of credit from renunciation, agency, substitution, and subrogation.
1. Assignment of credit is a contract by which the owner (assignor/creditor) of a credit and other incorporeal rights transfers, either onerously or gratuitously, to another (assignee) his rights and actions against a third person (debtor).
2. An assignment must appear in a public instrument or that the instrument must be recorded in the proper Registry of Property if the assignment involves real property.
3. In renunciation, there is abandonment of a right without transmission.
Agency involves representation, not transmission wherein the agent acts for the principal.
Substitution is the change of a new debtor for the previous debtor with the credit remaining in the same creditor.
- Subrogation is the change in the person of the creditor with the credit being extinguished.
What is the duration of the assignor's liability when he guaranteed the debtor's solvency?
ART. 1629 - it shall last for one year only, from the time of the assignment if the period had already expired.
If the credit shoud be payable within a term which has not yet expired, the liability of the assignor shall cease one year after the maturity,
Read Articles 1630 to 1635.
BARTER OR EXCHANGE:
ART. 1638. By the contract of barter or exchange one of the parties binds himself to give one thing inconsideration of the other’s promise to give another thing.
Read Articles 1639, 1640, and 1641.
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