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PART V.

SALES Persons not of unsound mind but by


reason of age, disease, weak mind, and other
I. Nature and Form of Contract similar causes, cannot take care of themselves
and manage their property without outside aid
By the contract of sale, one of the contracting (Easy prey for deceit and exploitation)
parties obligates himself to transfer the ownership 2. Relative Incapacity
of and to deliver a determinate thing, and the other a. Husband and Wife (Art 1490, CC)
to pay therefor a price certain in money or its General Rule: Cannot sell property
equivalent. (Art. 1458, NCC) to each other
Exceptions:
Elements i. Separation of property in
1. Consent marriage settlement, OR
Meeting of minds upon the thing which is the object ii. Judicial separation of
of the contract and the price. (Art 1475, CC) property.
Requisites b. Alienage (Art. 39, CC)Aliens are
a. Capacity disqualified to purchase or acquire
b. Offer and acceptance property.
c. No vitiation Exception: if acquisition is through
hereditary succession
2. Subject matter c. Trusteeship (Art. 39)
Requisites 3. Specific Incapacity (Art. 1491, CC) (AGEPLJ)
a. Licit a. Agents Property whose
b. Existing, future or contingent administration or sale was entrusted
c. Determinate or determinable to them
Exception: principal gives consent.
3. Price b. Guardian Cannot purchase
Requisites (Ce-MoRe) property of person under his
a. Certain or ascertainable at the time of guardianship
b. perfection c. Executors and Administrators
c. In Money or its equivalent Property of estate under their
d. Real Administration
d. Public Officers and Employees
II. Capacity to Buy or Sell Property of State/any of its
subdivisions/GOCC, the
All persons who have capacity to enter into administration of which was
obligations may enter into a contract of sale (Art entrusted to them.
1489, CC) e. Lawyers Property or rights in
litigation in which they take part
Kinds of Incapacity
because of their profession
1. Absolute Incapacity (MInD-CI) (Art. 1327,
Exceptions: An assignment to a
CC)
lawyer by his client of an interest in
a. Minors
the property does not violate Art
b. Insane or Demented
1491, where
c. Deaf-mutes who do not know how to
A judgment has been rendered
write
and has become final; and
d. Civil Interdiction
In case of contingency fee
e. Judicially-declared Incompetents(Art.
arrangements. The interest of the
39)
lawyer maybe annotated as an
Prodigals
adverse claim on the property
Imbeciles awarded to his client (Director of
Absence & presumption of death Lands v Ababa, 1979)
f. Justices, Judges, prosecuting Effect of the loss of the thing subject of the contract
attorneys, clerks Property or rights at the time of sale
in litigation or levied upon on
execution 1. Total loss contract is void & inexistent
2. Partial loss buyer may elect between
Effects of Incapacity withdrawing from the contract or
1. Absolute Incapacity demanding the remaining part, paying its
If both parties are incapacitated: proportionate price
UNENFORCABLE (Art. 1403 (3))
If only 1 party is incapacitated:
VOIDABLE
If necessaries are sold and delivered to IV. Obligations of the Vendor
an incapacitated person: must pay a
reasonable price therefore. (Art 1489, DDTWTP
CC)
1. Deliver the thing sold;
Necessaries those which are
2. Deliver fruits & accessions/accessories
indispensable for sustenance, dwelling,
accruing from perfection of sale;
clothing, medical attendance, education
3. Transfer the ownership;
and transportation. (Art 194, Family
4. Warranties;
Code)
5. Take care of the thing, pending delivery,
2. Relative Incapacity
with proper diligence;
Sale between spouses is VOID. 6. Pay for the expenses of the deed of sale
3. Specific Incapacity
unless there is a stipulation to the contrary
Contracts expressly prohibited by law are
void and cannot be ratified. Neither can the V. Obligations of the Vendee
right to set-up the defense of illegality be
waived. (Art. 1409 (7), CC)
Sales entered into by guardians, 1. To take care of the goods without the obligation
administrators, and agents (specific to return, where the goods are delivered to the
incapacities) in violation of Art. 1491 may be buyer and he rightfully refuses to accept;
ratified by means of and in the form of a
new contract when the cause of nullity has Note: The goods in the buyers possession
ceased to exist. Ratification is valid only from are at the sellers risk.
date of execution of the new contract and
does not retroact. 2. To be liable as a depositary if he voluntarily
Those entered into by public constituted himself as such;
officer/employees, justices and judges, and 3. To pay interest for the period between delivery of
lawyers also in violation of Art. 1491 are the thing and the payment of the price in the
inexistent and void from the beginning. following cases:
(Rubias v Batiller, 1973). a. should it have been stipulated;
b. should the thing sold and delivered
III. Effects of the Contract when the Thing Sold produces fruits or income; or
has been Lost c. should he be in default, from the time of
judicial or extrajudicial demand for the
It is understood that the thing is lost when it: payment of the price.
1. perishes, or
2. goes out of commerce, or VI. Breach of Contract
3. disappears in such a way that its existence is
unknown or cannot be recovered. (Art. 1189, Remedies of the Seller
2nd par.)
1. Recto Law: Sale of Movables on Installment 2. In case of subdivision or condo projects If
(Articles 1484-1486) real estate developer fails to comply with
obligation according to approved plan:
The Recto Law (Art.1484) refers to sale of a. Rescind
movables payable in installments and limiting the b. Suspend payment until seller complies
right of seller, in case of default by the buyer, to one B. Movables
of three remedies: 1. Failure of seller to deliver Action for
1. Exact fulfillment; specific performance without giving the
2. Cancel the sale of two or more installments have seller the option of retaining the goods on
not been paid; payments of damages
3. Foreclose the chattel mortgage on the things 2. Breach of sellers warranty The buyer may,
sold, also in case of default of two or more at his election, avail of the following
installments, with no further action against the remedies:
purchaser. (1999 Bar Question) a. Accept goods & set up breach of
warranty by way of recoupment in
2. Maceda Law: Sale of Immovable on diminution or extinction or the price.
Installment (RA 6552) b. Accept goods & maintain action against
seller for damages
The Maceda Law (R.A. 6552) is applicable to sales c. Refuse to Accept goods & maintain
of immovable property on installments. The most action against seller for damages
important features are: d. Rescind contract of sale & refuse to
1. After having paid installments for at least two receive goods/return them when already
years, the buyer is entitled to a mandatory grace received.
period of one month for every year of Note: When the buyer has claimed and been
installment payments made, to pay the unpaid granted a remedy in any of these ways, no
installments without interest. other remedy can thereafter be granted,
without prejudice to the buyers right to
If the contract is cancelled, the seller shall refund rescind, even if previously he has chosen
to the buyer the cash surrender value equivalent specific performance when fulfillment has
to fifty percent (50%) of the total payments become impossible. (Villanueva, p. 389 in
made, and after five years of installments, an relation with Art. 1191, NCC)
additional five percent (5%) every year but not 3. Disturbed in possession or with reasonable
to exceed ninety percent (90%) of the total grounds to fear disturbance Suspend
payments made. payment
2. In case the installments paid were less than 2
years, the seller shall give the buyer a grace VII. Extinguishment of Sale
period of not less than 60 days. If the buyer fails
to pay the installments due at the expiration of Generally, sale is extinguished by the same causes as
the grace period, the seller may cancel the all other obligations (Arts.1600 &1231) (PPLAN-
contract after 30 days from receipt by the buyer C3-R3)
of the notice of cancellation or demand for 1. Payment/performance
rescission by notarial act. (Rillo v. CA, G.R. No. 2. Prescription
125347 June 19, 1997) 3. Loss of thing due
4. Annulment
Remedies of the Buyer 5. Novation
6. Condonation/remission
A. Immovables in general 7. Confusion/merger
1. Disturbed in possession or with reasonable 8. Compensation
grounds to fear disturbance Suspend 9. Rescission
payment 10. Resolutory condition fulfilled
11. Redemption (Conventional or Legal)
VIII. Assignment of Credits

See Arts. 1624-1634

The owner of a credit transfers to another


his rights and actions in consideration of a price
certain in money or its equivalent.

1. Transfers the right to collect the full value of


the credit, even if he paid a price less than
such value
2. Transfers all the accessory rights (e.g.
guaranty, mortgage, pledge, preference)
3. Debtor can set up against the assignee all
the defences he could have set up against
the assignor