Sales Fabulous Notes PDF

FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 1. Jus possidendi -The right to possess...

FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 1. Jus possidendi -The right to possess 2. Jus utendi -The right to use 3. Jus fruendi -The right to the fruits 4. Jus abutendi -The right to consume LAW ON 5. 6. 7. Jus disponendi -The right to dispose Jus vindicandi -The right to recover Jus accessiones -The right to accessories SALES Q: What are the characteristics of a Sale? A: Use at your own peril! Good luck! 1. Nominate Opposite: Innominate NOTE: The rule is that the intent of the parties hold more weight in determining what the transaction is, not the title or the Q: What is a Sale? name of the contract. A: A contract where one of the contracting parties obligates himself to 2. Principal transfer the ownership and to deliver a determinate thing, and the other Opposite: Accessory - dependent on other contract. to pay therefor a price certain in money or its equivalent. 3. Consensual Note: Opposite: Solemn and Real Obligation of the Seller – Deliver possession and transfer ownership 4. Bilateral and Reciprocal Obligation of the Buyer – Pay the price or its equivalent Opposite: Unilateral 5. Commutative Q: What is the primary purpose of Sale? Opposite: Aleatory - big disparity in equivalence between price A: To transfer ownership. and the subject matter (e.g. lottery). Note: The test is whether or not both parties in good faith Q: Is Sales a mode of transferring ownership? believe they are receiving a commutative value for what they A: No. Sales is merely a mode of acquiring title or legal justification of gave. ownership. It is delivery or tradition which conveys ownership. However, inadequacy of the values may evidence a vitiated consent (Alarcon v. Kasilag). Q: We talk about the obligations of a seller, that he has the right to 6. Onerous deliver and transfer possession of a determinable thing, What are Opposite: Gratuitous the attributes of ownership? NOTE: In order to acquire a right, valuable consideration is A: required. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 2. Inexistent - agreements which lack one or some or all of the Q: What are innominate contracts? elements (consent, object and cause) or do not comply with the A: These are contracts which are not named by law and are governed by: formalities which are essential for the existence of a contract. (1) stipulations, (2) provisions of the Civil Code on Obligations and Contracts, (3) most analogous nominate contracts, (4) customs of the (1) Those whose cause, object or purpose is contrary to place. law, morals, good customs, public order or public The kinds are: policy; (1306) 1. “I give that you give” 2. “I give that you do, (2) Those which are absolutely simulated or fictitious; 3. “I do that you do (1345 - 1346) 4. “I do that you give” Q: What are the consequences of a reciprocal obligation? (3) Those whose cause or object did not exist at the time A: of transaction; (1347, 1352-1353) 1. When a party fulfilled his obligation, default by the other begins without need of prior demand Q: Is a Simulated Contract (1) legal and (2) binding? 2. Power to rescind is implied in reciprocal obligations A: Yes it is legal as long as it is not contrary to law, public order, public 3. Neither party incurs delay when neither party performs his policy, morals and customs. obligation 1. Absolutely Simulated - parties did not intend to be bound by any obligation. Q: What modality affects the immediate demandability of a sale? 2. Relatively Simulated - parties real intention is different from A: what appears in the contract. 1. When it is subject to a condition. 2. When it has yet to fulfill the necessary requirements required Q: Given that a relatively simulated contract was created, how will under the Statute of Frauds. you bind the parties? A: Before it becomes binding the requisites must first concur: (1) it is not Q: What is an option contract? contrary to law, public order, public policy, morals and customs; and (2) A: [include definition] it does not prejudice the right of a third person. In addition, the proper Q: What is the difference between an Inexistent Contract and a remedy to make it a legally binding contract, is through Reformation. Void Contract? A: Q: When can you say there has already been a meeting of the 1. Void - Lack of one or more of the essential elements. minds? zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 A: When the offer is definite and the acceptance is absolute. In the 1. Consent / Meeting of the Minds as to the Subject Matter contract of sale, this pertains to the agreement upon the price and the (determinate / determinable) and the Price (certain in money or subject matter. its equivalent) 2. Determinate Subject Matter Q: Is there such a thing as a Simulated Contract of Sale? 3. Price certain in money or its equivalent A: No. Definitely no Absolutely Simulated Sale. But in terms of the Relatively Simulated Contract, it cannot be a valid perfected contract Q: Is there a scenario when meeting of the minds is not necessary because there was no meeting of the minds on the subject matter and the for the sale to be perfected? price; and once it is subjected to Reformation, the true contract will be A: Yes. In cases of involuntary sale such as: revealed which is not a Sale. (1) expropriation (2) execution sale (3) foreclosure Q: What are the classifications of elements of a contract of sale? 1. Essential - elements which the lack of one or more of which Q: What is the status of a contract where consent was reluctantly will not lead to a contract. given? 2. Natural - inherent in the contracts and need not be stipulated. A: Valid. Unless the reluctance is vitiated consent. Note: Natural elements may be dispensed with through express stipulations. Q: When is a subject matter determinate? 3. Accidental - only exists because of express stipulation of the A: An object is considered determinable if at the time the contract is parties. entered into the thing is already capable of being made to be determinate without the necessity of a new or further agreement with the new parties. Q: What are these “natural” elements in a contract of sale”? Give 1. Can be physically segregated examples. 2. Can be particularly designated A: Of others of the same class. They are inherent and need not be stipulated in the contract. 1. Warranty Against Eviction 2. Warranty Against Hidden Defects of Title Article 1460. A thing is determinate when it is 3. Warranty Against Non-Apparent Servitude particularly designated or physical segregated from all others 4. Warranty of the Right to Sell of the same class. The requisite that a thing be determinate is satisfied if at the Q: What are the essential elements of a contract of sale? time the contract is entered into, the thing is capable of being A: zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 made determinate without the necessity of a new or further Note: Jurisprudence expanded the coverage of the essential elements of agreement between the parties. (n) a contract of sale by saying that the manner of the payment should be likewise agreed upon by both parties otherwise non-agreement is tantamount to the failure to agree on the price. (3rd and 1st essential Q: Can a generic object be a subject matter? element will be lacking) making the contract of sale imperfect. A: YES. As long as it is determinable. It is determinable when at the time the contract is entered into, the thing is capable of being made [Riosa v. Tabaco La Suerte Corporation] determinate without the necessity of entering into a new or further agreement. - SC: there is no valid contract of sale between Riosa and Tabaco La Suerte - Lack of authority of Sio Ko Pio is tantamount to lack of consent Q: Is the manner of payment important upon the perfection of of La Suerte; therefore, the contract was not yet perfected. sale? - Because RIOSA would never have agreed to the contract of sale A: Yes. The manner of payment is important to give rise to a binding because the agreement between Riosa and SIO KO PIO was and enforceable contract. Even the law does not prescribe that the actually one for loan and a loan agreement supposedly manner of payment is an essential element of the contract. collateralized by the commercial building and the like owned by RIOSA not intending to it to be the subject of a contract of sale The manner of payment of the price (although not stated) is an essential thus the property of RIOSA and it is not the subject of sale. requisite since it is part of the prestation of the contract. - 2nd that they invoke that SIO KO PIO is a representative of a corporation for purchasing the property is denied by the Note: Swedish Match v. CA: (the contract is not yet perfected being just documentation and there is no proof that he was indeed only in the negotiation stage) authorized by the corporation to allow him to enter into a Q: Does the law extend to the manner of payment to perfect a contract of sale. contract of sale? - If at all the contract of SIO KO PIO alone is not a contract of A: sale and it is deemed to be void then it negates the existence of The manner of payment of the purchase price is an essential element the consent which is the essential element of the contract of sale. before a valid and binding contract of sale can exist since the agreement on the manner of payment goes into the price such that a failure to agree [Peñalosa v. Santos] on the manner of payment is tantamount to a failure to agree on the price. It means you do not consent to it and therefore consent is lacking - Basis of Severino that there is no contract of sale is because there and the contract is not yet perfected (Montescillo v. Reynes; Navarro v. Sugar is no payment of the purchase price it is not the fact that there producers, and; Velasco v. CA) is no definite agreement as to the price because there is they agreed of 2M and there is non-payment of the agreed price It is zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 Henry’s argument that it is the fault of Severino as he never b) the false appearance must have been intended by mutual release the copy of certificate of title requested by PHILAM. agreement; - The petition for acquiring of the Title. c) the purpose is to deceive third persons. - The non-payment of the contract price does not mean that the contract of sale is null and void. The remedy would be to secure - Definition of simulated contract- SC: Simulation is a payment but not to nullify the contract of sale. The ownership declaration of a fictitious will, deliberately made by agreement was already transferred from Severino to Penalosa. of the parties, in order to produce, for purposes of deception, - Severino alleged that this is not actually a contract of sale: this is the appearance of a juridical act which does not exist or is not a true contract of sale it is addressed in the manner that the different from that which was really executed. 2nd Deed of sale is a simulated contract because it was never - Article 1482 of the New Civil Code, is part of the purchase price intended to transfer ownership. It was only intended to facilitate and proof of perfection of the contract. the ejectment to be done by Henry Penalosa to Eluterio Perez. - SC gives 4 reason that there is a valid contract of sale: It is the only intention of the parties. - The contention of Severino that there is no contract of sale is - It was for the purpose to have the appearance of ownership to different from the action showed by both parties subsequent to eject the lessee. the 2nd deed of sales as the action is directed to the completion - From the case: because it was executed only for the purpose of of the virtue of the 2nd deed of sale. placing Henry in possession of the property because he tendered ACTS: "earnest money." 1. Severino Authorized Penalosa to file an action towards - SC said that there is no simulation of contract because none of eleuterio perez (who wont authorize somebody) the elements of a simulated contract is present. 2. Upon the application of loan there was already the intention - basic characteristic of an absolutely simulated or fictitious of the completion of the payment indicated on the 2nd deed of contract is that the apparent contract is not really desired or sale. intended to produce legal effects or alter the juridical situation 3.There was no action of Severino when Penalosa moved to the of the parties in any way. premises of the property. - the parties already undertook certain acts which were directed 4.There is a payment of earnest money. towards fulfillment of their respective covenants under the second deed, indicating that they intended to give effect to their Note: Payment of earnest money is an evidence of perfection. agreement. - Requisites of Simulation: (none of this is present in this Q: What are the stages of a contract of sale? case) A: negotiation, perfection and consummation a) an outward declaration of will different from the will of the parties zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 1. POLICITATION / Negotiation- it covers the period from the wanting the price certain in money or its equivalent. The price must be time the parties indicator show interest to contract a sale until certain, otherwise there is no true consent between the parties.44 There the contract is perfected. can be no sale without a price.45 Quite recently, this Court reiterated the 2. Period of perfection - when there is a meeting of the minds, as long-standing doctrine that the manner of payment of the purchase price to the thing of the object of the thing and a certain money and is an essential element before a valid and binding contract of sale can mode of payment until the consummation or the fulfilment of exist since the agreement on the manner of payment goes into the price the contract of the parties such that a 3. Consummation - when the obligations of the parties commences and has been fulfilled that the obligations are disagreement on the manner of payment is tantamount to a failure to deemed to be extinguished. agree on the price.46 Granting arguendo, that the amount of US$36 million was a definite [Swedish Match v. CA] offer, it would remain as a mere offer in the absence of evidence of its - When does the definite offer happen, is it before or after June acceptance. To produce a contract, there must be acceptance, which may 30? Or is it after the 2nd negotiation with the ALS be express or implied, but it must not qualify the terms of the offer. The - There is no perfected contract of Sale acceptance of an offer must be unqualified and absolute to perfect the - The price is certain only to Litonjua but not to SMAB contract. In other words, it must be identical in all respects with that of - It i only on the negotiation as there is no acceptance. the offer so as to produce consent or meeting of the minds - It is only an offer. - Consent was lacking because acceptance was lacking. Respondents' attempt to prove the alleged verbal acceptance of their - What we have is a definite offer, but the acceptance was not in US$36 million bid becomes futile in the face of the overwhelming the intent of SMAB; for what SMAB wanted is a new round of evidence on record that there was in the first place no meeting of the negotiation. minds with respect to the price. It is dramatically clear that the US$36 million was not the actual price agreed upon but merely a preliminary Litonjua repeatedly stressed in his letters that they would not be able to offer which was subject to adjustment after the conclusion of the audit submit their final bid by 30 June 1990.43 With indubitable inconsistency, of the company finances. Respondents' failure to submit their final bid respondents later claimed that for all intents and purposes, the US$36 on the deadline set by petitioners prevented the perfection of the million was their final bid. If this were so, it would be inane for Litonjua contract of sale. It was not perfected due to the absence of one essential to state, as he did, in his letter dated 28 June 1990 that they would be in element which was the price certain in money or its equivalent. a position to submit their final bid only on 17 July 1990. The lack of a definite offer on the part of respondents could not possibly serve as the KINDS OF SALE basis of their claim that the sale of the Phimco shares in their favor was 1. As to Nature perfected, for one essential element of a contract of sale was obviously a) Sale of Real Property (Immovables) zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 b) Sale of Personal Property (Movables) 2. As to the Value of the Things Exchanged Q: What are intransmissible rights? a) Commutative: A: b) Aleatory: value exchanged not equivalent to each 1. Right to Vote other. Does not make the sale defective. The sale 2. Marital Rights remains valid and perfected 3. Support Rights 3. As to Tangible or Intangible 4. Right to Hold Public Office a) Incorporeal / Rights - Chose in Action (assignment of Q: What are transmissible rights? right/credit) A: b) Property - Chose in Possession. 1. Usufruct 4. As to Defectiveness 2. Right of Redemption a) Void/Inexistent 3. Assignment of Credit b) Voidable c) Unenforceable Q: What are the rescissible contracts? 5. As to Legality A: Those within the purview of Art. 1381 of the Civil Code. a) Licit object b) Illicit object 1. Those which are entered into by guardians whenever the wards 6. As to Direct Inducement whom they represent suffer lesion by more than one-fourth of a) By Description the value of the things which are the object thereof; b) By Sample 2. Those agreed upon in representation of absentees, if the latter c) By Description and Sample suffer the lesion stated in the preceding number; 3. Those undertaken in fraud of creditors when the latter cannot Q: Can services be sold? in any other manner collect the claims due them; A: NO. Because they are not determinate things and the purpose of a 4. Those which refer to things under litigation if they have been sale is transfer of ownership. There is no transfer if it is services. You sell entered into by the defendant without the knowledge and the output not the service itself. approval of the litigants or of competent judicial authority; Note: Contract of Service is not a Sale. 5. All other contracts specially declared by law to be subject to rescission. Q: Can rights be transferred or sold? 6. Payments made in a state of insolvency for obligations to whose A: YES. All things which are not outside the commerce of men, fulfillment the debtor could not be compelled at the time they including future things, may be the object of a contract. All rights which were effected, are also rescissible. (Art. 1382). are not intransmissible may also be the object of contracts (Art. 1347). zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 NOTE: By nature, all sale are rescissible because of the nature of it being Q: When does the action for annulment of voidable contracts bilateral and reciprocal. prescribe? A: 4 years but the reckoning is dependent of the ceasing of the defect. Q: What are the effects of rescission? Q: What are the unenforceable contracts? Art. 1403 - A: Mutual Restitution. A: Contracts which are valid, however UNENFORCEABLE which are entered into Q: What is mutual restitution? 1. The person acting for and in behalf of the principal is without A: Parties are obliged to return whatever they have given. authority or in excess of authority. 2. Contracts not compliant with the Statute of Frauds. Q: What are the exceptions to mutual restitution? 3. Those where both parties are incapable of giving consent to a A: contract. 1. Person who demands for rescission is unable to return what he NOTE: When only one of the parties is incapable of giving consent, it is obliged to return. Indemnity for damages will be returned. is VOID. 2. The thing is in the legal possession of a 3rd person who did not act in bad faith. Q: What are these kinds of agreements which require the Statute of Frauds? Q: When does prescription prescribe? A: A: 4 years. 1. An agreement that by its terms is not to be performed within a a) Incapacity – depends on the nature of the incapacity. year from the making thereof; b) Minority – 4 years will start from the time minority ceases 2. A special promise to answer for the debt, default, or miscarriage c) Others (ex. guardian) – from the time the guardianship ceases of another; d) Vitiated consent – from the time the cause of vitiation ceases 3. An agreement made in consideration of marriage, other than a mutual promise to marry; NOTE: Prescription will deem the defective contracts ratified. 4. An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer Q: What are the voidable contracts? Art. 1390 accept and receive part of such goods and chattels, or the A: Valid until annulled by court. Subject to ratification. evidences, or some of them, of such things in action or pay at the 1. Those where one of the parties is incapable of giving consent to time some part of the purchase money; but when a sale is made a contract; by auction and entry is made by the auctioneer in his sales book, 2. Those where the consent is vitiated by mistake, violence, at the time of the sale, of the amount and kind of property sold, intimidation, undue influence or fraud. terms of sale, price, names of the purchasers and person on These contracts are binding unless whose account the sale is made, it is a sufficient memorandum; they are annulled by a proper action in court. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 5. An agreement for the leasing for a longer period than one year, 1. Those whose cause, object or purpose is contrary to law, morals, or for the sale of real property or of an interest therein; good customs, public order or public policy; 6. A representation as to the credit of a third person. 2. Those which are absolutely simulated or fictitious; 3. Those whose cause or object did not exist at the time of the transaction; Q: What are the unenforceable contracts in relation to the Statute 4. Those whose object is outside the commerce of men; of Frauds? 5. Those which contemplate an impossible service; A: Certain agreements must be reduced in writing for its enforceability. 6. Those where the intention of the parties relative to the principal object of the contract cannot be ascertained; 7. Those expressly prohibited or declared void by law. Q: What is the requirement in Statute of Frauds? A: That certain agreements be put in writing for its enforceability (refer to Art. 1403 (2) of the Civil Code). Q: What is the prescriptive period of a void contract? A: NONE. It is imprescriptive. It is also not subject to a waiver because Q: Is there an exception to the requirement of the Statute of it is not subject to ratification. Frauds? A: YES. The Statute of Frauds only covers executory contracts. Wholesale v.s. Retail Therefore, if there is partial fulfillment, it remains enforceable without Note: The volume sold is not the determinant. It is the use of the goods. the need to put it in writing. Characteristics of Wholesale: Q: Can you waive the requirements of the Statute of Frauds? 1. Resold at a profit A: YES. 2. Goods are unaltered if unsold 1. Acceptance of Benefits 3. Quantity is Large 4. Not to be used by the purchaser Q: What is the prescription for Unenforceable Contracts? A: NONE. There Is no judicial remedy for unenforceable contracts; Absence of ANY of characteristics: RETAIL. hence, it cannot prescribe. Sale by DESCRIPTION vs. Sale by SAMPLE 1. By Description - a sale that is made without the buyer seeing Q: What are void contracts? the goods and having only a description of them from the seller: A: Contracts which are inexistent from the beginning and create no legal In sales by description, there is an implied condition that the effect. goods shall correspond with the description in the catalogue. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 2. By Sample – sale of goods made on the basis that the bulk of Dacion will only extinguish the obligation if the transfer leads to the goods to be delivered to the buyer will match a sample submitted transfer of ownership. by the seller. In Dacion, only one creditor with regard to the property to be alienated. NOTE: If the bulk does not match the sample the seller is in breach of an implied condition of the contract and the buyer may reject the goods. The seller 2. Cession - Creditor sell’s debtors property for the former to have must give the buyer a reasonable opportunity of the proceeds. Governed by law of sales. What transpired between comparing the bulk with the sample and the goods must the parties is equivalent of the sale. Object is the determinate be free from any defect making them unmerchantable subject matter, and the consideration or the price certain is the debt. that would not be apparent on reasonable examination of the sample. In cession, the property is alienated for the purpose of selling it for the proceeds of sale for the creditor. It is necessary to have 2 or Sale vs. Other Contracts more creditors in cession. Q: What is the right acquired by the creditor on a cession/ 1. Dacion en Pago - Property is alienated in favor of the creditor for A: The right to sell the thing alienated for the proceeds. the purpose of extinguishing debt dependent on its capacity to fulfill the obligation. a) Partial 3. Novation - contract which extinguishes a contract and replaces b) Full it with another contract in which a third party takes up the rights and obligations which duplicate those of one of the original parties NOTE: Dacion en pago is governed by the Law of Sales. Because it is to the agreement. in the nature of a Sale. The subject matter is the property and the price A novation is never presumed. is the debt. Dacion in payment is an objective novation. An objective novation ‹ a novation involving the change of an object or Objective/Real Novation - Changing the object or principal condition principal condition. of the contract. Q: Can dacion in payment extinguish an obligation by mere Subjective/Personal Novation - Substituting the person of the obligee delivery? wherein the substitute will perform for the obligee. A: NOTE: In Sale there is greater freedom in determination of the price It depends on the nature of delivery. because there is meeting of the minds as to the subject matter and the 1. Delivery transfers ownership - YES. price. 2. Delivery only transfers possession - NO. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 In dacion, no because it is usually based on market value. Contract of Sale Contract to Sell Transfer of Title passes to the buyer upon delivery of the Ownership is reserved in the seller and shall not pass to A Ownership thing sold (Art. 1477) the purchaser until fulfillment of certain conditions, such as full payment of the purchase price. (Art. 1478 Ownership The seller has lost and cannot recover Title remains in the seller if the buyer does not comply of the Seller ownership of the thing sold and delivered with the condition precedent, which payment of the (Arts. 1477, 1496) until and unless the contract price at the time specified in the contract. of sale itself is resolved and set aside NOTE: It must be stipulated that ownership in the thing shall not pass to the buyer until full payment of the price. (Art. 1478) Payment of Non-payment of the price is a negative Full payment of the price is a positive suspensive the Price resolutory condition. condition, the failure of which is not a breach of contract but simply an event that prevents the obligation of the seller to convey title to the buyer. The non-payment of the purchase price renders the contract to sell without force and effect. Remedies for Specific performance or rescission under Specific Performance cannot be availed because a Non- Articles 1191, 1592, and 1593. contract to sell is a personal obligation. Payment Contract to Sell is a Preliminary Agreement precedent to a Sale. It does not transfer ownership. It governs pre-payment obligations which leads to Sale. Note: No amount of delivery or full payment will transfer ownership. Usually what happens is upon full satisfaction, the parties will enter into a contract of sale. Non-payment is a resolutory condition to the contract of sale. Payment in full is a positive suspensive condition for the execution of a contract of sale. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 Q: When the buyer fails to pay the full amount, does the seller need to rescind the contract? 4. Piece of Work: Goods are to be manufactured specially for the A: Rescission is only applicable to Sale NOT a Contract to Sell. The seller customer, not for the general market. can simply walk away. contract of sale: Manufactured in the ordinary course of business If the payment of the contract to sell is through installments, Forfeiture whether the same is available or not at the time for the general of the installment is determined by the agreement. If there is no market: agreement to the same, the seller is unjustly enriched. School of Thoughts on Sale vs. Piece of Work 1. Massachusetts Rule – specially done at the order of another, contract for a piece of work. 2. New York Rule – if thing already exists – Sale; if thing does not exists – Piece of Work. 3. English Rule – material is more valuable – Sale; skill is more valuable – Piece of Work. Note: The PH Civil Code subscribes with the Massachusetts Rule. Q: What about fashion designers and couturiers? Are they contracting Sale or Piece of Work? A: SALE. Despite the fact that the items they are making are customized, the general public knows for a fact that they are engaged in the business of selling clothes; hence, not necessarily a piece of work. Fashion designers are engaged in general clothing businesses. Fact remains that service is offered to the general public. This example will be answered depending on the school of thought you are following. So it’s a contract of sale. Future of sell of the article which someone is habitually making, and not finished yet. Then it is a contract of sale. Even if the manufacturing is done after the request of the customer. Q: The seller is in the business of selling wedding gowns, and the said seller tailors a wedding gown for a client. Is that a contract for a piece of work or a contract of sale? zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 A: It depends. It may be a contract of sale because they are gowns for the public, but it may also be a contract for a piece of work because of the particular design that comes with it. If designing the gown is offered as corollary to the sale of the gown itself, the design is offered for the general public as well because the designer customizes the gown for everybody else. It’s part of the manufacturing and the sale of the gown itself which makes it merely a contract of sale. Example: If you have a shop where you sell gowns of different designs and part of your service is to customize a gown for a client, that is a contract of sale. If the designer is not offering a particular line of gowns and she accepts orders based on particular specifications and design, that becomes a contract for a piece of work. Example: If you are a designer that only caters to clients by creating specific designs, that is a contract for a piece of work. Q: What if the design becomes available to the public? A: At that point, it becomes a contract of sale already. The moment it becomes available to the general market, that contract is already considered a sale. When it is not made available to the general public, and its manufactured for a specific client or customer, it is a contract for a piece of work. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 5. Contract to Sell v.s. Agency to Sell (Sale on Consignment) of sale. Contract to sell is different from agency to sell. Agent does not assume the risk for the warranty - (Care and Company Ltd. v. Lingad) In a contract to sell - Another step has to made and the execution of contract of sale. NOTE: Agent does not have to account for the profit. Agent does not pay the price, remits to the seller, accounts to proceeds. Not the Agency to sell: agent to sell the object in behalf of the seller. owner of the object delivered to him. You return defective items. NOTE: Otherwise known as, “”Sale on consignment” - Does not warrant. Agent must follow instruction of principle, goods sold is through a dealer. Title regardless of delivery will otherwise, will exceed his authority. never pass to the consignee or agent. 6. Barter Sale: buyer pays the price; owner becomes property. Buyer cannot If the consideration consists partly in money and another thing, look at return the goods/property when the sale is defective. Full freedom to the intention of parties. enter terms and conditions, accidental agreements. Value of Thing > Amount = Barter Value of Thing < Amount = Sale. Q: What is the test whether it is a Sale or Agency? 1. 1st – intent; 1. Ownership test: ownership transferred - sale 2. 2nd – if intent is not clear; a. Thing is more valuable – Barter 2. Relationship test: b. 50 -50 – Sale; a. if the relationship is a creditor-debtor: sale. c. Thing is less valuable than the money – Sale b. No creditor-debtor relationship – agency In agency to sell. Agent not obliged to pay as a debtor. Just accounts for Q: If there is an item that is being exchanged, then it depends on the proceeds. the intention, sale or barter? A: If there’s a separate subject matter and the money used is partly in Q: Is an agency to sell required to be in writing to be valid and kind and partly in money then Payment is a combination. enforceable? Q: What will you classify that contract? A: NO. It does not fall within the enumeration under Arts. 1357, 1358, 1403 of the Civil Code. A: (See Art. 1468), It depends on the intention. Regardless of the value of money, if intended to be sale, then sale. If no intention, determine Q: What happens when agent assumes risk? the value of the object. What if it’s 50/50. Money and object. How do A: Assumption of the risk makes the relationship that of a buyer-seller. you classify it. Sale or barter, in the absence of intention. Then, it is a Agreement therefore considered to be an agreement of sale. Contract contract of sale, by default. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 Art. 1347 - Rights may be sold A: YES. Prepare yourself for criminal liability for estafa. SUBJECT MATTER Second essential element, without which there’s no contract of sale. Q: Do all future things have potential existence? A: NO. A thing with potential existence is that which although not yet Requisites: in actual existence, but which may reasonable come into existence for 1. Existing or having potential to exist. If it will come into existence, being the natural increment of something already in existence is a thing g. with potential existence. 2. Licit, within the commerce of men Wine expected to be coming from a vinyward, Sugar expected to be coming from a sugar plantation. a) Per se: based on nature b) Per accidens: illegal by provision of the law (drugs); sell of land KINDS OF SALE OF THINGS HAVING POTENTIAL to foreigner EXISTENCE 3. Object is determinate or determinable a) Determine: particular designated Emptio Rae Emptio Spei (sale of hope) b) Determinable: at the time contract is entered into, thing is Speratae (potential capable in turning determinate without additional contract existence) from parties. Generic things can be objects 1. Sale of thing having 1. Sale of a mere hope or expectancy Q: May a seller sell something he doesn’t own? potential existence A: YES. A sale is not a mode of transferring ownership, but only a title. 2. Uncertainty is with 2. Uncertainty is with regard existence of thing Law says a seller may sell something he does not own. Future goods regard the quantity may be sold. The contract of sale at the perfection does not transfer and quality but not ownership. with regard to existence of thing NOTE: Selling of objects does not require ownership upon perfection. 3. Contract deals with 3. Contract deals with present thing – hope or But ownership is required upon delivery. If the seller fails to acquire future thing expectancy ownership and fails it to transfer. 4. Sale is subject to 4. Sale produces effect even though thing itself Consequence: the condition that the does not come into existence. a) Civil liability for breach of warranty against eviction. thing should exist b) Criminal liabiltiy for estafa ‹ seller from the beginning knew he Only when it comes into existence Valid from the beginning, as what we buy is the hope that the thing comes into existence in the future cannot own the object to be owned. There is already deceit and fraud which warrants criminal liability for estafa. Sale of expected thing: sale is valid if the thing already exists; intended to have the actual thing Q: Can you sell UST? zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 Sale of hope: always valid because hope is eternal. It is always there. What you buy is only hope. Did not intended to have the actual thing b) Non-Fungible - may not be substituted with another thing, and same thing must be returned. Parties intend to return the How many sales are we talking about? Only one. Sale of an expected object. thing. But validity will depend on the intention of the parties. Sale of expected thing or sale of hope? 3. Based on nature a) Consumable - by its nature, cannot be used without being consumed Article 1636: b) Non-consumable - by its nature, may be used for the purpose "Goods" includes all chattels personal but not which it is intended without being consumed. things in action or money of legal tender in the Philippines. The term includes growing fruits NOTE: Consumable objects may be non-fungible. How can you use a or crops. (Art. 1636). consumable and not substitute it? If the intention is merely to exhibit. Kind of Goods: 1. Based on Possession PRICE a) Possessed by the seller Signifies sum stipulated as the equivalent of the thing sold, and every incident taken into consideration for the fixing of the price put to the b) Future goods but with potential to exist debit of the buyer and agreed to by him. i. Those to be manufactured Requisites of a Valid Price ii. To be raised 1. Price should be real and not fictitious iii. To be acquired after the perfection of contract 2. Price should be certain c) Acquisition depends upon a contingency which may or may 3. Price must be in money or its equivalent not happen 4. Price should not be grossly inferior to the value of the thing exchanged. 2. Based on intention: Requisites: a) Fungible - by the intention of the parties, may be substituted 1. Real and not fictitious - during the perfection, there is every with another thing intention to pay and receive the price and every expectation to receive the same. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 EFFECTS: 3. If the price is in reference to certain facts provided by Art. a. False cause: render the contract void if it should not be 1472. proved if b. False price: contract is void because it means no price to Art. 1472. The price of securities, grain, liquids, and other speak of. things shall also be considered certain, when the price fixed is c. Status of the sale if price undervalued in order to avoid that which the thing sold would have on a definite day, or in taxes: price is FALSE. a particular exchange or market, or when an amount is fixed NOTE: But the sale valid and binding in real terms. Price above or below the price on such day, or in such exchange or is FALSE but the contract is still valid in real terms. Since market, provided said amount be certain. Ex: I will sell this stock to you at this value, next week, in particular the parties undervalued it, they will be bound by the terms time —> ascertainable —> valid and conditions of the agreement itself. Consequences of the sale will happen. They will be liable for the In essence, the price of securities, grain, liquids, and other undervaluation. Will pay taxes. things can be fixed based on the price on a market 10, 15, d. Non-payment of purchase price: doesn’t affect validity of 20 or 30 days from now. sale. Demand for specific performance or rescission with damages. 2. Certain or ascertainable Q: Can we conclude then that delegating the determination of the price a) Certain: parties agree to a third party better than delegating it to one of the contracting parties b) Ascertainable: As long as can be determined then the price is because if the determination of the price is left to a third party, what the valid, and make the contract perfect. contracting parties need to do is wait for the price fixed by the third Q: What are the three instances to know when the prices is party, and the price fixed is a valid price, while, if it is delegated to one certain? of the contracting parties, the other party must consent to the price fixed A: by one of the contracting parties before it becomes a valid price? Isn’t 1. If it is certain with reference to another thing certain. there an imbalance where a third party is given a priority and If these elements are present, a valid subject matter based on a importance over the contracting parties? price on another thing which is also certain, then the price A: The law has given sufficient parameters in order to make the price fixed by even if it is not yet determined, if it made reference to another the third party valid. Ultimately, whether the price is fixed by a third party, or by certain thing, it is already considered a valid and certain price. both contracting parties, or by one of the contracting parties, consent is still 2. If the determination of the price is left to the judgment of a required. specified person/s. The law is specific that the determination of the price cannot be left to one of If the third person fixes the price, then the price fixed by him the contracting parties unless the other party agrees to the price fixed, in which is considered a certain price. case, consent is attained. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 The only reason the law prohibits one of the contracting parties to fix the price The contracting parties cannot leave the designation of the subject and make it valid is that, the party may fix a price so outrageous and beyond matter to a third party because if the third party designates an object the means of the other party and has no way of complying with his obligation, and if the he does not know what to pay, the element of consent is lacking. that is beyond their means to transfer and to pay, then the parties will Therefore, he has to consent to the price fixed by the other party to validate not be able comply with obligations of a contract of sale. the price. The designation of a third party is only limited to the fixing of the price which can be easily complied with as opposed to the object which may Consent is also required to the price fixed by a third party. The contracting parties need to agree the price, because even if it is designated by a third party, be beyond the control of the contracting parties. if they do not agree to such, then they are free to reject it. The contracting parties may then: 3. Cannot be grossly inferior to the value of the thing delivered. 1. Fix price themselves, or 4. Must be in Money or its Equivalent 2. Designate another third party In essence, the contracting parties are not bound to accept the price fixed by Q: What is inadequate price? the third party. Again, it all goes to the element of consent. If they do not consent to the price, there’s no price fixed. A: A price insufficient to satisfy the real or actual price of the object of the contract of sale. Inadequacy could either be negligible or gross. Q: Can the determination of subject matter be left to the Q: Will gross inadequacy of price invalidate the contract of sale? judgement of the third person? A: NO. The obligation to pay the price is fungible, money can be used A: to pay the price any money. The price which is the object of obligation, GR: Gross inadequacy does not affect the contract of sale because the is generic, cannot be extinguished by fortuitous event. Regardless of parties, by the power to contract, have the right to assign and agree on how much it is set, it remains to be money. On the other hand, in terms the price in respect to their contract of sale. of subject matter, may be extinguished by fortuitous event. Transfer of ownership only possible when Subject Matter is specific. XPNs: There are instances where gross inadequacy of the price may actually A third party cannot choose Subject Matter that is not within the result to a defective contract giving the aggrieved party remedies under capacity of the seller to transfer or comply with. Cannot be considered the law. as a definite subject matter. Hence, cannot be used to perfect a contract 1. If there is a vitiated consent to the agreement acceptance of the of sale. inadequate price = Voidable and can be annulled on the grounds NOTE: Designating the fixing the price to a third party only deals with provided by law. money or its equivalent which can easily be complied with and agreed 2. If the contracting parties intended the contract to be a contract upon by the contracting parties. On the other hand, subject matter is of donation and not a contract of sale. something not specific, in the sense that, the designation of the third It means that the price is too inadequate that the contract cannot be a party might be beyond the means to transfer by the contracting parties. contract of sale because it violates the commutative nature of a contract zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 of sale. But the contract can be considered a valid contract, not of sale, A: At the time of the PERFECTION of the contract. It is the time when but a contract of donation or some other contract. the price is agreed upon. 3. If the price is too inadequate that it shocks the conscience of the If later on by reason of inflation, the object has deteriorated in value and court = the court can fix the price the price to be paid is already either grossly inadequate or grossly more Q: Will all shocking inadequacy empower the court to change the of what is supposed to be paid because of such supervening event, then price? - NO. that will no longer be considered for the purpose of determining whether the price is grossly inadequate. Because such change in the price is already A: XPN to XPN No. 3 after the perfection of the contract. If the law grants the seller the right of redemption. Even if the price is NOTE: If it is negligible, it will not affect the contract of sale. The inadequate, the court will keep it at that because the court reserves the question is determined at the time of the execution of the sale. It is the right of the seller to redeem the property at a relatively lower price. time price is agreed upon. Q: When is the inadequacy of the price determined? Q: Can inadequacy of price affect the validity of a Sale? A: NO. Price may be inadequate but it doesn’t affect the validity of the sale. Inadequacy is determined at perfection because it is the time when the IF there is lesion, contract is affected, because contract is rescissible price is agreed upon.. Circumstances where inadequacy of price may be a ground to struck down the sale: Sale facilitated by the court (judicial sale) can be invalidated by gross inadequacy of price. 1. Defect in Consent (voidable) a) Price is shocking to the conscience of the court 2. Parties intended a donation (contract valid, but sale is void) b) In the event of the resale, better price can be obtained. There is a showing that in an event of a resale. A better price can be NOTE: Regardless of ordinary or judicial sale, same exceptions applies. obtained. Not all although will be considered for purposes of invalidating As well as the XPNs ot the XPNs. a contract of sale if there is a right of redemption. Purpose of the grossly inadequate price is to allow seller to redeem the property later on, then In case a sale is rescinded by reason of GIP, what are the rights of buyers price cannot be struck down as invalid. It will be respected. who paid the inadequate price. If the sale voided fo, purchaser entitled XPN: Right of redemption to refund with 6 percent annum interest, under the law, including all sums paid out by him as taxes and improvements. NOTE: Lesion suffered by the ward more than ⅓ of the value of the property: contract may be invalidated unless contract approved by Simulation Relative: remedy is reformation to conform to the itent of the court. Contract is valid. country. Pero dapat not contract to law etc, no other third party prejudiced. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 A: The thing that has been delivered must be returned because there is Absolutely simulated: no contract to speak of. Everything must be returned. Determining certainty of price: Q: What happens if the object has already been delivered to the Ascertain or assign a third party to fix the price. buyer, and they buyer has already appropriated the object? What Q: Can the fixing of the price be left to the sole prerogative of one is the obligation on the part of the buyer? of the parties? A: A: Pay the reasonable price thereof. He will pay the value of the price of GR: Assigning the fixing of the price to one of the parties not the object that can no longer be returned. allowed. XPN: seller fixes the price, take it or leave it. A price fixed by Where a church organization allowed possession and introduce one of the contract parties but accepted by the other party who possession of land. There can be no binding contract of sale. (NHA vs. consents, it is VALID Baptist church) Land delivered by virtue of contract that is inefficacious, would have to be returned. Q: What happens if the price is not fixed and is not certain for purposes of it to be qualified a valid price? What happens to the Rights of the Buyer who paid the inadequate price contract? 1. Right to Refund with Interest (including all the sums paid and A: The contract is considered INEFFICACIOUS. The contract is not all improvements, as well as taxes paid). void. Because a void contract is a valid contract that is defective, void from the beginning. But a price that is not certain from the beginning Q: What is the contract entered into by the parties wherein prevents the contract to be perfected. Hence, it is inaccurate to say that currency of a foreign country is exchanged in the Philippines for the contract is void, because the contract was never perfected. (See Art. currency of another foreign country? 1474) A; Contract of Foreign Exchange. Q: What does inefficacious mean? Perfection A: It is the inability to produce the effects the contract intends, or Occurs after the concurrence of three elements; if parties are f2f, then inability to get things done. Hence, the contract did not materialize. upon unconditional acceptance, the contract is perfected. Q: What if transaction is correspondence? Q: What happens if the price is not determined or is not A: From the moment offeror has knowledge of the acceptance; ascertained and the contract is inefficacious? NOTE: If the contract subject to suspensive condition, regardless of the satisfaction of 3 requisites, the condition must be fulfilled first. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 A: The acceptance must come from the auctioneer, accepting the bid Q: Are Advertisements considered as Offer? price in order for the contract to be considered perfected. Prior to A: acceptance, the bidder’s offer remains to be an offer, and therefore still GR: Advertisements are merely invitations in the negotiation stage until the auctioneer accepts the price. Fancier, XPN: When the advertisement constitutes as a definite offer the auctioneer bangs the gavel which indicates that the object has been (when it appears on the advertisement itself) sold. 1. The law provides sale by auction is perfected when auctioneer announces its perfection by the fall of the hammer. If a sale by Q: Can the seller bid in an auction sale? auction is perfected by customary hammer indicating A: YES. In all instances? The seller requires a puffer. acceptance of bidders, what happens before the fall of the If the auction is without reservation hammer. Can he retract his bid? The buyer? The auctioneer? Q: What is a “puffer”? to withdraw the goods, once the auctioneer can no longer withdraw a. The notice of auction shared with public may or may not perfect, the goods when the sale is already everything the bidders gave are mere offers. A: Buyer for or in behalf of the seller. starting. Without acceptance of offer, no contract of sale because there is no In an auction sale, the presumption is the seller is not bidding, and perfection. therefore the bidders are free to bid whatever amount they want, unless Q: What is the basis of the reasonable value? there is a reservation provided in the sale when the auctioneer notifies the public that the sale is subject to the right of the seller to bid. A: The market value of the object. This is the reasonable sum which a property would command in a fair sale by a man willing but not obliged If there is no notification that the seller can bid, and the seller bids to sell to another man willing but not obliged to buy. secretly, the winning bidder who might have felt defrauded because of the result can nullify the contract of sale on the ground of fraud vitiating SALE BY AUCTION his consent. In a sale by auction, there are different objects called “lots” for sale. Each object is considered a lot and the sale of each will be subjected to a Q: WHY? separate contract of sale. A: If the seller has the right to bid through a puffer, then the innocent Q: Since it is done publicly, how is the perfection of sale public would not know that the prices may be jacked up by the manifested? How is consent manifested to perfect the contract of representatives of the seller. If they do not know that the seller has the sale? right to bid, they will just think that all the bids coming in are actually innocent bids and one would just have to be the highest bidder to win the object. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 Q: Will the highest bidder still have the right to annul the contract Kinds of constructive delivery: of sale if there is a notification that the seller has the right to bid? 1. Symbolic Tradition – delivery of certain symbols or things representing the thing being delivered (e.g keys) A: NO MORE. Because, if there is a notification that the seller has the 2. Instrumental Tradition- delivery of the instrument of conveyance right to bid through puffers, then any bidder is already on the lookout, to the grantee by the grantor (e.g. deed) assuming the risk that the prices might be jacked up by the puffers. If the 3. Tradition Brevi Manu – when the grantee’s continuous highest bidder is aware that the seller is bidding on that sale, he cannot possession over the thing delivered but not under a title of later on feign ignorance on the notification and question the sale by ownership reason of fraud. 4. Tradicion Longa Manu – pointing of the thing within the sight by the grantor to the grantee by which at the time of the Q: If the sale is nullified, will there be another auction? transaction, the thing could not be placed yet at the hands of the buyer A: Yes. If the object remains to be available for sale. The one responsible 5. Tradicion Constitutum Possessorium – owner’s continuous for fraud, will be liable for damages. possession of the property he had sold to another person and his present possession is no longer that of an owner, but under Note: The auctioneer can withdraw the object anytime before the capacity like that of a lessee, pledge of depository acceptance of the winning bid, unless there is notification that there is 6. By Operation of Law – delivery of the things by operation of law no such reservation to withdraw. such as intestate succession where inheritance is transferred to the heir upon the descendant If the public is not notified that the auctioneer has the reservation to 7. Quasi – Tradicion – delivery of the incorporeal property like withdraw the object anytime before a bid is accepted, the object cannot rights and credits Payment of the price does not nullify a contract be withdrawn anytime. But if there is no such reservation to withdraw, of sale. It only gives rise to the obligation that the other party the moment the auction starts, it will end with a sale. demand specific performance or damages for failure to pay the price. NOTE: Terms and conditions provided by the owner, are binding upon all bidders, whether they new about the conditions or not. Q: How is an incorporeal property delivered symbolically? A: 1. When the sale is made through a public instrument, execution Delivery of the document shall be equivalent to delivery. (XPN: The deed appears to convey an intent to the contrary) Ownership is transferred by delivery, whether actual or constructive. 2. Placing of the title in the possession of the buyer Actual delivery is the preferred mode of delivery because of the actual 3. The use and enjoyment by the buyer of the rights pertaining to transfer of object. the incorporeal property sold. zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 What’s the distinction, if there is, between a contract to sell and a conditional deed of sale? If I were to be your client and I will ask you “Atty, what is better, to enter in a conditional deed of sale or to a contract Q: What do you call the reservation of ownership that is proper in to sell?” What would be your advice? Both ownerships is retained to the the contract to sell where ownership will not be transferred? seller. Both have suspensive conditions to be fulfilled for the ownership A: Pactum reservati dominii. In a Contract of sale, payment is not relevant to be transferred. If you know the distinction, then you will by heart for purposes of transfer of ownership. As long as the object has been know what to tell your client in the future. The distinction there is, in a delivered. Actually or constructively. Ownership is transferred once conditional deed of sale, all you have to do is fulfill the condition and delivered. In a contract to sell, even if the object is delivered to the buyer ownership is automatically transferred which means in a conditional deed by the seller, ownership is not transferred. Because ownership is of sale, once the condition is transferred that conditional sale is transferred only if once full payment of the purchase price is made. considered as an absolute sale already. You don’t have to execute another contract to make it an absolute sale. In a contract to sell, there is a Q: Why is a pactum reservati dominii only applicable to contracts condition, which is the payment of the price. Once payment of the price, to sell? there is still a subsequent condition to require the parties to enter into a A: In Contract to sell- full payment of the purchase price only gives rise contract of absolute sale which means you’re better off with a conditional to an obligation on the part of the seller to enter into a contract of sale. deed of sale because it is automatic. In a contract to sell, then you will Which therefore is the contract that would transfer ownership. Here, have to actually convince and force the seller to enter into a contract. ownership is reserved until full payment of the purchase price. With the What if something happens? For some reason, he doesn’t want to enter corresponding part of the seller to execute the contract of sale. And once into a contract anymore so there will be litigation thereafter. You’re the contract of sale is executed and the object is delivered, actually or better off with a conditional deed of sale. constructively, will ownership be transferred to the buyer. Q: Who are persons capacitated to enter into a contract of sale? Q: What is the best document to execute if you want to sell a A: property? GR: Any person who has “capacity to act’, or “the power to do acts with A: (Atty. Fabella’s Comment) legal effects”, or more specifically, ‘to obligate himself’. In your practice later when you become a lawyer, when you’re asked by XPNs: (provided below) your client what the best document to execute is if he wanted to document the sale of a property, it is a contract of sale because in a Q: Who are persons INCAPACITATED to enter into a contract of contract of sale, if the object is delivered, ownership transfers sale? automatically. But in a contract to sell, even if the object is delivered and A: it has been paid, until and unless a contract of sale is executed, the 1. Minors (XPN: Necessaries) ownership will not be transferred. 2. Insane (XPN: During a lucid interval) 3. Demented Persons zms-jade FABULOUS NOTES - SALES Atty. Irvin Joseph Fabella Lectures 2021 4. Deaf-Mutes Q: Are all sale of property by one of the spouses void? 5. Between Spouses A: NO. If the sale pertains to an ordinary business or practice of 6. Between Common Law relationships profession, it is a valid sale and need not the consent of the other spouse. 7. Guardians-Wards (XPN: After the termination of guardianship) 8. Agent with regard to administrated property Q: Are all conveyances on the conjugal property of the spouses by 9. Executor-Administrator with regard to the administration of the only one of the spouses without the consent of the other void? estate property A: NO. As an exception to the general rule that conveyances without the 10. Public Officers and Employees entrusted with the consent of the other spouse, the sale is void, conveyances made for the administration of the property liabilities and support of the family are valid. 11. Justices, judges prosecuting attorneys, clerks of court, and other employees connected with the administration of justice with the Q: What is an option, vis-a-vis an option contract? thing in action A: An option- is a privilege to buy or not to buy an object within the 12. Lawyers with respect to the thing in action time agreed upon by the parties. If it has the consideration distinct from the price, the option becomes an option contract. Seller may sell property Q: Are all minors incapacitated to enter into a sale? even without following period given to the buyer. A: NO. If the sale to the minor pertains to necessaries, then it is a valid Ex: A, the seller, gives B, the buyer, the privilege to buy the sale provided he pays a reasonable price for it. property by giving him, say, 15 days to think about it. Option- is a privilege given to a person to buy, not to buy or sell, because Art. 1489 (2). Where necessaries are those the seller has no right under this circumstance except the promise to buy. sold and delivered to a minor or other person The only party who can enforce its right under option contract is the without capacity to act, he must pay a buyer. reasonable price therefor. Necessaries are those referred to in Article 290. Option money- consideration to make it an option contract; distinct Q: What are necessaries? from the purchase price; without this you don’t have the contract. A: Support is everything that is indispensable