Sales Reviewer Prelims PDF

and deliver, as well as warrant the thing which is the object What is Sales? of the sale. (Art. 1495) A contract where one of the contracting parties obligates himself to transfer the ownership and...

and deliver, as well as warrant the thing which is the object What is Sales? of the sale. (Art. 1495) A contract where one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate Objects that the vendor has to deliver: (Thi-F- A) thing, and the other to pay a price certain in money or its equivalent. 1. The thing sold (Art. 1495) 2. Fruits, belong to the buyer from the day the Contract of Sale contract of sale is perfected (Art. 1537) Article 1458. By the contract of sale one of the 3. Accessions and accessories, in the condition in contracting parties obligates himself to transfer the which they were upon the perfection of the sale ownership of and to deliver a determinate thing, and (Art. 1537) the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or Obligations of the Vendor conditional. 1. Preserve the subject matter – proper diligence of a good father of a family unless law or parties What is Ownership? stipulate another standard (Art. 1163) Independent and general power of a person over a thing within the limits recognized by law and for purposes 2. Deliver – transfer ownership and deliver object recognized by law (Art. 1495) 3. Deliver fruits and accessories existing from the Attributes of Ownership time of perfection (Arts. 1164, 1166, 1537 ) 1. Jus possidendi -The right to possess 4. Warrant subject matter against eviction and 2. Jus utendi -The right to use hidden defects (Arts. 1546-1581) 3. Jus fruendi -The right to the fruits 4. Jus abutendi -The right to consume General Rule: Seller need not be the owner of the subject 5. Jus disponendi -The right to dispose matter at the time of perfection: sufficient that he is the 6. Jus vindicandi -The right to recover owner at the time of delivery. (Art. 1459) 7. Jus accessiones -The right to accessories Exception: Foreclosure sale (mortgagor must be absolute owner) (Art. 2085) Atty: When we talked about ownership we are not just talking about possession. The common misconception is you possess NOTE: A perfected contract of sale cannot be challenged it that’s why you own it, or you own it because there is on the ground of the seller’s non-ownership of the thing possession. Possession is one of the attributes only of sold at the time of the perfection of the contract. It is at ownership. As long as the person owns a thing or property, delivery that the law requires the seller to have right to he can use all these things regardless of the encumbrances transfer ownership of the thing sold. (Cavite Development attached to itself. Bank v. Sps. Lim, G.R. No. 131679, 2000) What are the obligation created upon a perfected contract of sale? Obligations of Vendee (Buyer) Obligation of the Seller – Deliver the determinate thing and transfer ownership Pay the price: Buyer is obligated to pay the price Obligation of the Buyer – Pay the price certain in money or according to the terms agreed upon regarding time, place its equivalent and amount (Art. 1582) i. If payment of interest is stipulated – must pay; if amount of interest not mentioned – apply legal Art. 1458: Two sets of Obligations rate (a) Obligations of the Seller i. Transfer ownership ii. When buyer defaults – constitutes breach; subject ii. Deliver the Subject Matter to specific performance/rescission and damages; (b) An obligation for the buyer to Pay the Price interest to be paid also from default Obligation of the Vendor The vendor (seller) is bound to transfer the ownership of Will all delivery transfer ownership? NO. There are exceptions to the rule. One of which is effects of delivery would not happen. Reservation. But as a general rule, ownership is transferred upon the delivery of the object. o Thirdly, in order that the execution of public instrument to produce the effect of tradition, not only must the seller have actual control of the object of the Transfer of ownership sale at the execution of the instrument, but that such control or ability to transfer physical possession and 1. By tradition or delivery and not by perfection enjoyment must subsist for a reasonable length of time after the instrument’s execution. 2. By execution of public instrument because intangibles cannot be physically transferred; 3. Without necessity of delivering the document evidencing the credit. How many obligations created? 2 Obligations. One, on the part of the Seller to deliver and NOTE: This rule does not apply to negotiable documents transfer ownership and the other one on the part of the buyer and documents of title which are governed by special laws. to pay the price certain in money or its equivalent Why is there only 1 obligation on the part of the buyer? Because ownership is transferred automatically upon the When is ownership transferred in a contract of sale? delivery of the object. Upon delivery What is the nature of obligation upon a perfected What kind of delivery will transfer ownership? contract of Sale? Actual and Constructive Delivery Real Obligations- meaning to give. To give a determinate thing on the part of the seller and the buyer to give the price Delivery- “the absolute giving-up of the control and certain in money or its equivalent. custody of the property on the part of the vendor, and the assumption of the same by the vendee” (Equatorial Realty In case of breach, how do you enforce real obligation? Dev. v. Mayfair Theater, G.R. No. 133879, 2001) Ask for Specific Performance Recission Two Types of Delivery: Damages 1. Actual- there is actual or physical delivery when the Can you rescind a contract without stipulating that thing sold is placed in the control and possession of the Recission is an available remedy? buyer. Yes. In a contract of sale, Recission is implied. 2. Constructive- the possession is transferred from the What is the opposite of a Real Obligation? vendor to the vendee.” The essence of most forms of Personal Obligation- obligation to do and not to do. constructive delivery is the existence of an agreement between the seller and the buyer, and that the latter is How do you enforce an obligation to do? understood to have control of the subject matter of sale. CAN: Demand for damages CANNOT: Demand for Specific Performance- Cannot compel somebody against its will otherwise it is violative of GR: The general rule is that the execution of a public constitutional guarantee against involuntary servitude. instrument has the same legal effects as actual or physical delivery, i.e., it transfers the ownership of the subject Essential Characteristics of Contract of Sale matter to the buyer, and constitutes valid compliance by the a. Nominate- it has been given a particular name by seller of his primary obligations under the sale. law Opposite: Innominate- not given specific XPN: However, there are cases when the execution of designation by law public instruments covering valid sales do not produce the effects of tradition. Kinds of Innominate Contract 1. “I give that you give” o First, when in the execution of a public 2. “I give that you do, instrument, there is a stipulation to the contrary. 3. “I do that you do 4. “I do that you give” o Secondly, when at the time of the execution of What law will govern the innominate engagements? the public instrument, the subject matter was not In hierarchy: subject to the control of the seller, then the legal  1. Law between the Parties- Stipulation as to the engagement they have for that one e. Bilateral and Reciprocal- the obligation of the 2. Civil Code- Obligation of Contracts parties are dependent upon each other. They are both 3. Provisions governing the most analogous contracts bound by the obligation but they are both dependent 4. Customs of the place upon each other which means that the fulfillment of the obligation by one depends upon the fulfillment Example of agreement of the most analogous contracts by the other. Deposit- Under the law, deposit as a legal concept is the safe keeping of a personal thing for the benefit of the bailor or the Legal Consequences of a Bilateral and Reciprocal depositor. The law provides that only personal things may be Contract subject for deposit for safe keeping for the reason that only 1. When a party fulfilled his obligation, default by the personal object can diminished. Real Properties cannot, other is automatic without need of prior demand therefore be the proper object for deposit. 2. Power to rescind is implied in reciprocal obligations What if the parties agree to entrust the safe keeping of a 3. Neither party incurs delay when neither party real property to a bailee? What engagement is created performs his obligation between the two?- Not a contract of deposit and therefore it does not fall in any of the innominate agreements. Elements of Contract of sale Atty: That’s why it is an obligation to give that you do- I give 1. Essential- needed in order for a contract of sale to you my property so you can safely keep it. That is an be valid innominate contract akin to a deposit therefore the provision a. Consent on deposit on the most analogous engagement will govern the b. Determinate Subject Matter parties. c. Price b. Principal- it can stand on its own and can be Essential Elements of a contract of Sale independent of the other contracts Opposite: Accessory- cannot stand alone but Consent or meeting of the minds. — This depends to the existence and validity of the refers to the consent on the part of the seller to principal contracts transfer and deliver and on the part of the buyer to pay. The parties must have legal capacity to Example of Accessory give consent and to obligate themselves. The Mortgage- Accessory essence of consent is the conformity of the Loan- Principal parties on the terms of the contract, the - Loan can stand with or without mortgage acceptance by one of the offer made by the other. - Mortgage cannot stand without a valid and existent contract of loan Object or subject matter. — This refers to the - The extinguishment of the Principal contract determinate thing which is the object of the carries with it the extinguishment of the contract. The thing must be determinate or at accessory, but the extinguishment of the least capable of being made determinate because accessory does not carry with it the if the seller and the buyer differ in regard to the extinguishment of the principal. thing sold, there is no meeting of the minds; therefore, there is no sale. The subject matter c. Consensual- perfected by mere consent may be personal or real property. *Contract of Sale is perfected at the moment there is Price certain in money or its equivalent - this meeting of the minds of the parties upon the is the cause or consideration. The price need not determinate thing which is the object of the contract and be in money. upon the price. Opposite: Real Contract- perfected by delivery Example of Real Contract Contract on Pledge The absence of any essential elements negates the Loan existence of a perfected contract of sale. (Dizon v. CA, G.R. Deposit 122544, 1999) d. Onerous- there is valuable consideration exchanged in a contract of sale 2. Natural- inherent and need not to be stipulated unless there is contrary stipulation stipulated in the Opposite: Gratuitous- Consideration under this contract is the act of liberality of the giver. coverage.  a. Warranty Against Eviction demonstrate breach, are certain and b. Warranty Against Hidden Defects of Title unequivocable. It is also when the subject matter c. Warranty Against Non-Apparent Servitude is determinate or specific that the defense of force d. Warranty of the Right to Sell majeure is applicable to legally relieve the seller from the consequences of failure to deliver the subject matter of the sale. INHERENT – those which are inherent in the contract, and are deemed to exist in the contract of sale in the Determinable: absence of clear contrary agreement. - A thing is determinable only when two (2) requisites are present: 2 natural elements: (a) If at perfection of the sale, the subject matter is capable of being made determinate (the Warranty against eviction “capacity to segregate” test); and (b) Without the necessity of a new or further Art. 1548. Eviction shall take place whenever by a final agreement between the parties (the “no further judgment based on a right prior to the sale or an act agreement” test) imputable to the vendor, the vendee is deprived of the - When the nature and quantity of the subject matter whole or of a part of the thing purchased. is agreed upon, the subject matter, although essentially generic or fungible, has complied The vendor shall answer for the eviction even though withthe characteristic of being determinable, nothing has been said in the contract on the subject. since the parties know more or less the exact The contracting parties, however, may increase, diminish, nature of the object or objects which will become the subject of performance “without need of or suppress this legal obligation of the vendor. (1475a) further agreement.” Warranty against hidden defects - Although the sale of determinable generic thing is valid, the obligation to deliver the subject matter Art. 1561. The vendor shall be responsible for warranty can only be complied with when the subject against the hidden defects which the thing sold may have, matter has been made determinate, either by should they render it unfit for the use for which it is physical segregation or particular designation; intended, or should they diminish its fitness for such use to before such time, even the risk of loss over the such an extent that, had the vendee been aware thereof, he subject matter does not arise, since by definition would not have acquired it or would have given a lower generic object are never lost. When the minds of price for it; but said vendor shall not be answerable for the parties have met upon a subject matter which patent defects or those which may be visible, or for those is neither determinate or determinable, the which are not visible if the vendee is an expert who, by resulting contract would be void. reason of his trade or profession, should have known them. NOTE: Subject matter CANNOT be (1484a) DETERMINED BY a 3rd PARTY. (Villanueva & Tiansay, Law on Sales, 102, 2016 3. Accidental- stipulated by the parties. These are the terms and conditions of a contract. It may or may not Can generic object be object of sale? be included in the contract upon the agreement of the Yes. As long as it is determinable. parties. Determinable- when at the time the contract is entered into, a. Time or place of payment the thing is capable of being made determinate without the necessity of entering into a new or further agreement. What do you mean by “determinate”? A thing is determinate when it is particularly designated or What is legal basis that a generic object can be a valid physical segregated from all others of the same class. object of sale? Article 1460- The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing Determinate: is capable of being made determinate without the necessity - A thing is determinate or specific when it is of a new or further agreement between the parties. particularly designated or physically segregated from all others of the same class. (Art. 1460) - When the subject matter of a sale is determinate, Can there be a valid contract of sale without the meeting the basis upon which to enforce seller’s obligation of the minds? to deliver, as well as the basis upon which to Yes. In cases of Involuntary Sale, such as:  1. Expropriation 2. Judicial Foreclosure How did the CA rule? 3. Execution of Sale They reverse the ruling of RTC and ruled in favor of Tabacco La Suerte on the ground that tax declaration and General Rule: There is no valid contract of sale without the taxes are paid by Tabacco La Suerte. meeting of the mind. XPN: Involuntary Sale What is the reason why there is no meeting of the minds? 1. Riosa never intended to enter into a contract of sale. What he thought was the receipt for the loan When Form is Important for Validity; Exception by that he got from Sio Ko Pio was the one that turned Specific Provision of Law; out to be the contract of sale. So the intent to enter 1. Donations and wills (Arts. 749, 804) in contract of Loan on the part of Riosa was the intent to enter in a contract of sale for Sio Ko Pio. 2. Power to sell a piece of land granted to an agent Therefore, the seller does not intent to sell the property, there was no meeting of the minds as to must be in writing– otherwise sale is VOID (Art. 1874) the subject matter and as to the sale of the property. 3. Sale of large cattle; must also be registered with 2. The court agreed that there was no authority given by the CEO of the company to Sio Ko Pio Municipal treasurer – otherwise VOID (Art. 1581; Revised Administrative Code, Sec. 529) authorizing him to enter in a contract of sale. 4. 4. Sale of land by non-Christian if not approved Without authority then Sio Ko Pio is not authorized by Governor – VOID (Tac-an v. CA, G.R. No. L- to enter in a contract of sale. 38736, 1984) Essence of the decision? Article 1358, which requires the embodiment of certain contracts in a public instrument, is only for convenience, SC RULING- Atty.: No valid contract of sale because there and registration of the instrument only adversely affects was no sale to speak of. The seller never intended to enter third parties. Formal requirements are, therefore, for the into a contract of sale. For him, what is being entered into is benefit of third parties; and non-compliance therewith does a contract of loan for 52k he owes from Sio Ko Pio but not not adversely affect the validity of the contract and the the sale of the property. rights and obligations of the parties thereunder. (Dalion v. CA, 182 SCRA 872,1990) What is the status of contract if the consent is reluctantly given? It is still valid. A consent whether freely or reluctantly given will validly perfect a contract. Only a vitiated consent will affect the validity of a contract. Is that a case of vitiated consent if it is reluctantly given? No. It is not Is a manner of payment an essential requisite of a contract of sale? The manner of payment of the purchase price is an essential element 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 on the manner of payment is tantamount to a failure to agree on the price. (Montescillo v. Reynes, 2002) Riosa Case How did the RTC Rule? There is no valid transfer of ownership because it was obtained by reason of fraud. Under the law, if you obtain it by force you are holding it in trust of the real owner of the property. Here, the real owner is Riosa that’s why the property is bound to be transferred to him. PEÑALOSA VS. SANTOS latter for the nonpayment due to Severino’s refusal to G.R. No. 133749, 23 August 2001 renounce the contract. The trial court decided in favor of Severino. Both Facts Henry and Severino filed an appeal with the Court of Respondents Severino C. Santos (deceased) and Appeals. The appellate court upheld the trial court’s Adela Mendez Santos own a residential house and decision and refused Henry’s move for property. They chose petitioner Hernando Peñalosa to reconsideration. As a result, Henry filed this petition. sell their property. The property was then occupied by a lessee, Eleuterio Perez, who was given first priority Issue to purchase it under the same terms as the buyer. Whether the second deed of sale is perfected deed of sale. Perez proposed less favorable terms, which Severino rejected as expected. Ruling Santos and Peñalosa sought to reach an arrangement Yes, the second deed of sale is valid. The second deed in which the former agreed to sell his land to Henry of absolute sale cannot be deemed to be simulated for 1.8 million, but the deed of unconditional sale was because in order for a contract to be simulated, the only signed by Henry. The entire goal of the act was Court laid down the elements: a) an outward to assist the respondent in evicting Perez. Henry paid declaration of will different from the will of the no consideration in the Deed of Absolute Sale. parties; b) the false appearance must have been Following that, Henry and Severino signed another intended by mutual agreement; and c) the purpose is document of absolute sale for a larger sum of 2M. to deceive third persons. None of these requisites is This second deed was completed and notarized by present in this case. both parties. Henry then sent Severino P300,000.00 However, in this case, the parties already undertook as “earnest money.” certain acts which were directed towards the The latter also claimed that he signed the second deed fulfillment of their respective covenants under the solely to facilitate Henry’s acquisition of a bank loan second deed, indicating that they intended to give to finance the payment of the balance of the purchase effect to their agreement. price. The second deed’s signature was required for The following acts negate the idea that they did not Henry to start court action for eviction of the tenant. want to be bound by the said agreement: a) Penalosa Henry filed an ejectment case of wrongful detainer asked the lessee to move away from the said lot and against Perez with the MTC. Perez countersued, he also filed an ejectment case against them b) claiming that he still had a lease on the land and Petitioner also applied for a loan, which was approved questioning the validity of the sale transaction by Philam Life, to complete payment of the stipulated between Henry and Severino. price c) He made improvements to the said property. The loan contract did not materialize due to The elements of a valid contract of sale under Art. Severino’s failure to transfer the owner’s duplicate 1458 of the Civil Code are: (1) consent or meeting of title. Perez was ordered to leave and transfer the minds; (2) determinate subject matter; and (3) possession to Henry by the court. Following the price certain in money or its equivalent. In the instant judgment’s finality, Henry and his family moved into case, the second deed reflects the presence of all these the disputed house and land, spending a total of elements and as such, there is already a perfected P700,000.00 on renovations, as proven by receipts. contract of sale. Severino sent a letter requesting that Henry remove It is well-settled that non-payment of the purchase the house and lot, claiming that Henry had not made price is not among the instances where the law a firm offer or proposal for the acquisition of the declares a contract to be null and void. property. When Henry refused to abandon the The contract in this case is absolute in nature and is property, Severino filed this case in the RTC for devoid of any proviso that title to the property is quieting of title, recovery of possession, and reserved in the seller until full payment of the damages. purchase price. Neither does the second deed give Severino claimed that the second deed was null and Severino a unilateral right to resolve the contract the void because it was fictitious and simulated, and it moment the buyer fails to pay within a fixed period. was executed solely to place Henry in ownership of At most, the non-payment of the contract price merely the property since he tendered “earnest money.” results in a breach of contract for non-performance Severino further argued that there was no agreement and warrants an action for rescission or specific on the reason or consideration. performance under Article 1191 of the Civil Code. Henry, for his part, claimed that due to the finality of What are the other indications that this is not a simulated the arrangement, they were already the owner of the case and the second deed of sale is perfected by agreement land. His ownership of the property was unaffected of the parties? for three (3) years. He, on the other hand, blamed the  Third one is Severino actively participated in the loan any person or entity other than respondents, and that application of Peñalosa for the purpose of paying the any such sale to third parties is void. Respondents purchase price of the property. further asked that petitioners be directed to complete Lastly, Peñalosa actually paid earnest money in all documentation and perform all activities necessary consideration of the second deed of sale and we all to finalize the sales deal in their favor. know that earnest money is an indication of a perfected On the judgment for specific performance with contract of sale therefore the SC declared the 2nd deed damages and a prayer for the issue of a writ of a of sale as valid. preliminary injunction. Litonjua wanted SMAB to deliver the shares by virtue of a perfected contract of sale. (Atty: If you want to enforce a contract of sale, SWEDISH MATCH V. CA your cause of action is specific performance.) G.R. No. 128120, 20 October 2004 The RTC dismissed the respondent’s complaint, citing the fact that the petitioner did not accept the Facts respondent’s bid offer because the letter was merely an Swedish Match, as the petitioner, and Litonjua, as the invitation, therefore there is no perfected contract of respondent, are the parties in this case. Swedish Match sale. (Atty: There is no meeting of the minds since the (SMAB) is a Swedish corporation that does not bid was never accepted by SMAB.) conduct business in the Philippines. In the Philippines, The decision of the trial court was overturned by the it has three subsidiary companies: Phimco Industries, CA. It found that the petitioners’ and respondents’ Inc. (Phimco), Provident Tree Farms, Inc., and chain of written communications combined constitute OTT/Louie (Phils.), Inc. STORA, SMAB’s parent a sufficient memorandum of an agreement under Art. company, agreed in 1988 to sell SMAB of Sweden and 1203 of the Civil Code, and thus the case should not be the latter’s worldwide match, lighter, and shaving dismissed on the grounds that it was unenforceable supplies division to Eemland Management Services, under the Statute of Frauds. The pertinent provision known today as Swedish Match NV of the Netherlands states, “If the debtor is unable to make a choice under (SMNV). the terms of the obligation due to the creditor’s actions, Ed Enriquez, Vice-President of SMSA, the Swedish the latter may withdraw the contract with damages.” Match group’s management firm, was commissioned and given full authority to negotiate SMNV. He was Issue given strict instructions that the sale of Phimco shares Is there a perfected contract of sale between both be completed on or by June 30, 1990, due to SMNV’s parties with respect to Phimco shares? stringent loan restrictions. Respondent Antonio Litonjua, the president and general manager of ALS, Ruling was among those who made an offer. Litonjua’s first No, there is no perfected contract of sale between both offer fell short of the petitioner’s expectations, but he parties. requested them to do a thorough examination with the In general, contracts undergo three distinct stages, to assurance that the respondent would be given priority. wit: negotiation; perfection or birth; and Litonjua then offered to buy the shares for US$ 36 consummation. Negotiation begins from the time the million. prospective contracting parties manifest their interest Litonjua questioned SMAB’s decision to accept a new in the contract and ends at the moment of agreement of bidder on June 18, 1990, and notified the CEO that the parties. Perfection or birth of the contract takes they might not be able to submit their final bid by the place when the parties agree upon the essential deadline. Enriquez then notified Litonjua that they elements of the contract. Consummation occurs when must accept offers due to the respondent’s failure to the parties fulfill or perform the terms agreed upon in make a solid commitment. He informed Litonjua that the contract, culminating in the extinguishment his bid would no longer be considered if the local thereof. group failed to complete the purchase. Litonjua, upset SC said that Litonjua's letter dated 21 May 1990, by the decision, claimed that the US$ 36 million was proposing the acquisition of the Phimco shares for their final proposal, effectively completing the sale. US$36 million was merely an offer. This offer, Negotiations with local buyers failed to materialize however, in Litonjua's own words, "is understood to be after two months. Enriquez invited subject to adjustment on the basis of an audit of the Litonjua to resume negotiations on completely assets, liabilities and net worth of Phimco and its different terms and conditions. Litonjua objected, subsidiaries and on the final negotiation between stating that the new offer was an attempt to reopen the ourselves." already concluded contract of sale in his favor. The letters relied on by the respondent barely qualify Respondents, therefore, requested that petitioners as a note or memorandum in and of themselves. First, refrain from selling or transferring the Phimco shares, it does not state the price at which the share was sold, or from otherwise effecting such a sale or transfer, to and second, it does not specify the form of payment.  The Trial Court correctly dismissed the complaint on period when parties indicate their interest but no the basis of unenforceability under the Statute of concurrence of offer and acceptance. Frauds. There can be no contract unless the following 2. Perfection – the “birth” of the contract, concurrence of conditions are met: (a) consent of the contracting all requisites; meeting of the minds upon the object and parties; (b) a specific object that is the subject matter price. of the contract; and (c) an established cause of the 3. Consummation – the “death” of the contract, parties obligation. The proposal to purchase Phimco shares for perform their respective undertakings (Arts. 1475, 1479, US$36 million was only an offer. Respondents’ lack of 1493-1506; Villanueva & Tiansay, Law on Sales, 118-119, a definite offer could not possibly be used to support 2016) their argument that the sale of the Phimco shares in their favor was perfected, because one essential element of a contract of sale was evidently needing the price certain in money or its equivalent. The price must What are the kinds of sale base on subject matter? be fixed; otherwise, there is no genuine agreement 1. Sale of Real Property between the parties. There can be no sale if there is no 2. Sale of Personal Property price. Respondents’ attempt to prove the alleged verbal What are the kinds of sale based on value of the things acceptance of their US$36 million bid becomes futile exchanged? in the face of the overwhelming evidence on record 1. Commutative that there was in the first place no meeting of the minds 2. Aleatory with respect to the price. It is clear that the US$36 million was not the actual price agreed upon but merely a preliminary offer which was subject to As to the risk involved adjustment after the conclusion of the audit of the company finances. Respondents’ failure to submit (a) Commutative – when the undertaking of one their final bid on the deadline set by petitioners party is considered the equivalent of that of the other prevented the perfection of the contract of sale. It was (e.g. sale, lease) not perfected due to the absence of one essential element which was the price certain in money or its (b) Aleatory – when it depends upon an uncertain equivalent. event or contingency both as to benefit or loss (e.g. Atty: Initially, Litonjua said that they will be offering insurance, sale of hope) (DESIDERIO P. JURADO, another one after due diligence, but eventually COMMENTS AND JURISPRUDENCE ON Litonjua manifested that the US$36 million is their OBLIGATIONS AND CONTRACTS 361 (2010)) final offer. Therefore there is a definite offer. It’s the lack of acceptance that hindered the perfection of the What are the kinds of sale whether the object is Tangible contract of sale, it is not the lack of a definite offer. SC or Intangible? said that this case has not passed beyond the 1. Chose in Action negotiation stage yet because parties are offering and there is no definite and unconditional acceptance to ○ Sale of rights or credit make a valid contract. Remember, an offer should be 2. Chose in Possession unconditionally accepted to create a valid perfected ○ refers to a bundle of rights and remedies of contract of sale because if an acceptance is conditional, an object of tangible personal property that that is a counter-offer that needs to be accepted again can be physically possessed by the owner before there is a meeting of minds. Here, the stage and can be transferred by delivery. remains to be in negotiation because parties are still ○ Subject matter is tangible property as offering and SMAB is still reviewing the offer and opposed to rights which is intangible. there was actually no acceptance. That’s why the SC said that by reason of lack of consent, the contract was Can rights be transferred or sold? not perfected. Yes. Under Article 1347, all rights which are not intransmissible may also be the object of contracts. FORMATION OF THE CONTRACT If we will rely on the definition of contract of sale under Article 1458, then we will be limited Three Stages in Life of a Contract of Sale to determinate subject matter, specific thing. To the question, we have to correlate the provision 1. Policitacion/Negotiation Stage – offer floated, under 1347 to justify that rights may be sold acceptance is floated but they do not meet; covers the under chose in action.  o All things which are not outside the particular designation) (Yu Tek & Co. v. Gonzales, commerce of men, including future G.R. No. L-9935, 1915) things, may be the object of a contract. o Rights which are not intransmissible may also be the object of contracts. Contract of sale is a kind of contract therefore rights may be sold. What are transmissible rights? Rights which can be transferred 1. Right of Usufruct 2. Right of Redemption 3. Assignment of Credit 4. Right to inheritance already acquired (not future) What are intransmissible rights? Rights recognized by law itself and can be What are the kinds of contract based on validity or enforced but cannot be transferred or be a defect? subject of a contract. 1. Valid 1. Right to Vote 2. Void 2. Marital Rights 3. Voidable 3. Support Rights 4. Right to Hold Public Office 4. Rescissible 5. Unenforceable Can services be sold? NO. Because they are not determinate things Legal Status of Contract and the purpose of a sale is transfer of Void (case law) – guardian/executor/public ownership. There is no transfer if it is services. officers/officers of the court. (Rubias v. Batiller, G.R. No. You sell the output, not the service itself. L-35702, 1973) Reason: Ownership is impossible to be Unenforceable (civil code) – agent; VALID if with transferred when it comes to services consent (Art. 1491) 1. Service is not a determinate thing SPECIAL DISQUALIFICATIONS 2. Essence of contract of sale is the transfer of Any others specially disqualified by law (Art. 1491 ) ownership and you cannot transfer the NOTE: These contracts are void for public policy. They ownership of service. cannot be ratified neither can the right to set up the defense of illegality be waived. (Rubias v. Batiller, G.R. No. L- Can you agree in the performance of service? 35702, 1973) Yes. Service agreement is a valid contract but it is not called contract of sale What are the rescissible contracts? When Subject Matter is a Right: It must be Rescissible contracts are those validly agreed transmissible. (Art. 1311) upon because all the essential elements exist 1. Future inheritance cannot be sold (Art. 1347) and, therefore, legally effective, but in the cases 2. Service cannot be sold (Art. 1348) established by law, the remedy of rescission is granted in the interest of equity. Quantity of subject matter is not essential for In a rescissible contract, there is no defect at all perfection, but quantity is essential if it goes into the but by reason of some external facts, its determinability of the subject matter and the price or enforcement would cause injustice consideration in the contract; Determine the nature and Those within the purview of Art. 1381 of the quality of subject matter (National Grains Authority v. Civil Code. IAC, G.R. No. 74470, 1989) 1. Those which are entered into by guardians whenever the wards whom Generic things may be the object of a sale, but the they represent suffer lesion by more obligation to deliver the subject matter can only be than one-fourth of the value of the complied with when the subject matter has been made things which are the object thereof; determinate (either by physical segregation or  2. Those agreed upon in representation of absentees, if the latter suffer the lesion What are the voidable contracts? stated in the preceding number; Existent, valid and obligatory unless annulled or 3. Those undertaken in fraud of creditors set aside by a proper action in court. Valid until when the latter cannot in any other annulled by court. Subject to ratification. manner collect the claims due them; Possess all the essential requisites of a valid 4. Those which refer to things under contract but one of the parties is legally litigation if they have been entered into incapable of giving consent, or consent is by the defendant without the vitiated by mistake, violence, intimidation, knowledge and approval of the undue influence, or fraud. litigants or of competent judicial o Those where one of the parties is authority; incapable of giving consent to a 5. All other contracts specially declared contract; by law to be subject to rescission. o Those where the consent is vitiated by 6. Payments made in a state of mistake, violence, intimidation, undue insolvency for obligations to whose influence or fraud. fulfillment the debtor could not be compelled at the time they were effected, are also rescissible. (Art. When does the action for annulment of voidable contracts 1382). prescribe? 4 years but the reckoning is dependent of the When does rescissible contracts prescribe? ceasing of the defect. The prescriptive period for annulment is 4 years o Prescriptive period for void contracts commences from the cessation of the When does it commence? incapacity, violence, intimidation and a) When minority, guardianship or representation undue influence or discovery of ceases mistake or fraud. b) In things under litigation, prescriptive period o If incapacitated, 4 years after the commences upon the discovery of the incapacity ceases. unauthorized transfer. o If fraudulent, 4 years from the discovery c) In fraud of creditors, it is from the moment of discovery of fraudulent alienation. of the fraud. What are the unenforceable contracts? If the contract is rescinded, what is the effect of rescission? Those contracts that although valid, cannot be There should be mutual restitution enforced in court or sued by reason of defects provided by law until and unless they are ratified according to law. What is mutual restitution? Parties are obliged to return whatever they have Contracts which are valid, however UNENFORCEABLE which are entered into given 1. The person acting for and in behalf of the The parties must restore to each other principal is without authority or in excess 1. the subject matter of the contract with of authority. its fruits 2. Contracts not compliant with the Statute 2. the price thereof with legal interest. of Frauds. 3. Those where both parties are incapable When is mutual restitution not possible? of giving consent to a contract. 1. Person who demands for rescission is unable to return what he is obliged to return. Indemnity for What are these contracts that have to be in writing to damages will be returned. comply with the statute of frauds? 2. The thing is in the legal possession of a third person 1. An agreement that by its terms is not to be who did not act in bad faith. performed within a year from the making thereof; What happens when mutual restitution is not possible? 2. A special promise to answer for the debt, Whoever causes the loss will have to indemnify default, or miscarriage of another; the other party by paying the value of the thing 3. An agreement made in consideration of lost. If he cannot return the property, he shall marriage, other than a mutual promise to marry; give the value of that property.  4. An agreement for the sale of goods, chattels or recorded in the Registry of Deeds. (Secuya v. Vda. De things in action, at a price not less than five Selma, G.R. No. 136021, 2000) hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum; 5. An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein; 6. A representation as to the credit of a third person Statute of Frauds Note that if particular form is required under the statute of frauds and the same is not followed: While the sale is valid, it is UNENFORCEABLE even as to the parties to the contract of sale. When Form (should be in writing and not merely verbal) is Important for Enforceability [Statute of Frauds](Art. 1403 ) 1. A contract not to be performed in 1 year: A sale agreement which by its terms is not to be performed within a year from the making thereof; 2. Php 500 and Above: An agreement for the sale of goods, chattels or things in action, at a price not less than PhP500 3. Sale of Land: A sale of real property or of an interest therein. Exceptions to Coverage of Statute in Sales Contracts: When is an unenforceable contract ratified? 1. Written: When there is a note or memorandum Three instances: in writing and subscribed to by party or his agent 1. Acceptance of the benefit under the (contains essential terms of the contract) (Art. agreement 1403) 2. Partial enforcement/fulfillment of the 2. Partial Execution: When there has been partial agreement performance/execution (seller delivers with 3. Failure to object to the intent to transfer title/receives price; or when unenforceability of contract at the buyer partially pays the price) (Art. 1405) earliest opportunity (waiver) 3. Failure to object: When there has been failure to object to presentation of evidence (oral) (Art. 1405) 4. 4. E-commerce: When sales are effected through electronic commerce (R.A. 8792, Sec. 12) While a sale of land appearing in a private deed is binding What are void contracts? between the parties, it cannot be considered binding on Contracts which are inexistent from the third persons if not embodied in a public instrument and beginning and create no legal effect.  1. Those whose cause, object or purpose be inspected by buyer and from which the buyer is contrary to law, morals, good will rely as the representation of the whole bulk, customs, or both description and sample. public order or public policy; 2. Those which are absolutely simulated What is Dation in payment? or fictitious; When Property is alienated in favor of the 3. Those whose cause or object did not creditor for the purpose of extinguishing debt exist at the time of the transaction; dependent on its capacity to fulfill the 4. Those whose object is outside the obligation. commerce of men; 5. Those which contemplate an When will it extinguish a debt whether partially or fully? impossible service; Upon the delivery of the object which therefore 6. Those where the intention of the transfer the ownership in favor of the creditor parties relative to the principal object of the contract cannot be ascertained; Distinguish between Dation in payment and Sale 7. Those expressly prohibited or declared void by law. Sale Dation in payment What is the prescriptive period of a void contract? NONE. It is imprescriptive. It can be brought No pre-existing obligation There is anytime during the lifetime of the aggrieved party. There is wide range in There’s a limit since it is fixing the price based on the obligation that What are the Characteristics of Wholesale? is to be extinguished 1. Resold at a profit 2. Goods are unaltered when resold Obligations are created Obligations are 3. Quantity is large (obligation to transfer extinguished 4. Not to be used by the purchaser ownership and pay the price) Without the characteristics of a wholesale the sale is considered as what? Cause is the price paid Cause is Extinguishment of Retail from the viewpoint of the debt from the viewpoint of seller or the acquisition of the debtor, or the What are the kinds of sale based on inducement for the the thing sold from the acquisition of the object in sale? viewpoint of buyer lieu of the credit from the 1. By Description viewpoint of the creditor ○ a sale that is made without the buyer seeing Payment of the price Alienation of the property the goods and having only a description of extinguishes the obligation will extinguish the them from the seller: In sales by because all the obligations obligation depending on description, there is an implied condition have been fulfilled. whether it partially of fully that the goods shall correspond with the covers the debt. If it does description in the catalogue. not cover the debt, then the 2. By Sample obligation is not yet ○ sale of goods made on the basis that the extinguished. bulk of goods to be delivered to the buyer will match a sample submitted by the seller. 3. By Description and Sample Distinguish between a contract of sale and a contract to sell When does sale by description and by sample apply? These kinds of sale apply to sales of goods in bulk. When the entire bulk cannot be presented by the seller, so buyers rely to the description of the seller or by the sample of the entire bulk to  Contract of Sale Contract to Sell Contract of Sale Contract to Sell Transfer of Title passes to Ownership is Remedies Specific Specific ownership the buyer upon reserved in the for Non performance or Performance delivery of the seller and shall Payment rescission under cannot be availed thing sold (Art. not pass to the Articles 1191, because a 1477) purchaser until 1592, and 1593. contract to sell is a fulfillment of personal certain obligation. conditions, such as full payment of In a contract to sell, will full payment of the purchase the purchase price transfer ownership to the buyer? price, and after No because a contract to sell is just a execution of deed preparatory contract and you still need to enter of sale. a contract of sale. Ownership of The seller has Title remains in the seller lost and cannot the seller if the recover buyer does not ownership of the comply with the thing sold and condition delivered (Arts. precedent, which 1477, 1496) payment of the until and unless price at the time the contract of specified in the sale itself is contract. resolved and set NOTE: It must be aside 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 Full payment of the Price the price is a the price is a negative positive resolutory suspensive 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. Price The sum stipulated as the equivalent of the thing sold and also every incident taken into consideration for the fixing of the price, put to the debit of the vendee and agreed to by him. (Inchausti & Co. v. Cromwell, G.R. No. L-6584, 1991) NOTE: Sale is valid when consideration is partly in money and partly in another thing. (Art. 1468). REQUISITES FOR A VALID PRICE (ReM-C) 1. Real 2. In Money or its equivalent 3. Certain or ascertainable (Francisco v. Desierto, G.R. No. 154117, 2009) 1. Real, not simulated When at the perfection of the contract of sale, there is every intention on the buyer to pay the price, and every expectation on the part of the seller to receive such price as the value of the subject matter he obligates himself to deliver. (Test of intention) (Rongavilla v. CA, G.R No. 83974, 1998) Effect Where Price is Simulated 1. The act may be shown to have been in reality a donation, or some other act or contract. (Art. 1471) 2. If not, and neither party had any intention whatsoever that the amount will be paid (absolutely simulated): the sale is void (Rongavilla v. CA, G.R. No. 83974, 1998) 3. If there is a real price but what is stated in the contract is not the one intended to be paid (only relatively simulated or what is called a “False Price”): the ostensible contract of sale is valid but subject to reformation. (Macapagal v. Remorin, G.R. No. 158380, 2005) 2. In money or its equivalent Consideration for a valid contract of sale can be the price and other valuable consideration; at the very least, a true contract of sale must have price, which consist of valuable consideration (i.e., something that can be quantifiable by pesos and centavos) as part of its consideration (Test of value consideration). (Republic v. Phil. Resources Dev., G.R. No. L-10141, 1958) 3. Certain or ascertainable Certain: expressed and agreed in terms of specific pesos and/or centavos (Art. 1469) Ascertainable: 1. Set by third persons (Art. 1469) 2. Set by the courts – only in cases where the third person designated to fix the price, fixes the same  in bad faith or by mistake (Art. 1469) 3. Set by reference to a definite day, particular exchange or market (Art. 1472) 4. Set by reference to another thing certain (Art. 1472) 5. But never by only one party to the contract of sale as it amounts to a potestative condition (unless the price is accepted by the other party) (Art. 1473) NOTE: When the 3rd party is unwilling to set the price, the parties may not ask the court to fix the price because the condition imposed on the contract has not happened yet and thus, no enforceable contract has arisen. (Art. 1474) IF PRICE IS NEITHER CERTAIN NOR ASCERTAINABLE: The contract of sale is inefficacious. Effect of Non-Payment of Price Non-payment of price does not cancel or avoid the sale, as the sale is still considered perfected. But it is a cause for either: (a) Specific performance or (b) Rescission. (Heirs of Escanlar v. CA, G.R. No. 119777, 1997) HOW PRICE IS DETERMINED Price is determined by the contracting parties. (Art. 1473) INADEQUACY OF PRICE Effect of Gross Inadequacy of Price General Rule: Mere inadequacy of the price does not affect the validity of the sale. (Bautista v. CA, G.R. No. 158015, 2004) Exceptions: 1. When there is fraud, mistake, or undue influence indicative of a defect in consent thereby making the contract voidable. (Art. 1470) NOTE: Art. 1456 of the CIVIL CODE provides that a person acquiring a property through fraud becomes an implied trustee of the property’s true and lawful owner. This case involved constructive trust. The action for reconveyance of the title to the rightful owner prescribes in 10 years from the issuance of the title. This ten-year prescriptive period begins to run from the date the adverse party repudiates the implied trust, which repudiation takes place when the adverse party registers the land. (Spouses Aboitiz v. Spouses Po, G.R. Nos. 208450 & 208497, 2017) 2. When it shows that the parties really intended a donation or some other act or contract thereby making the contract of sale void but may be valid as a contract of donation or some other contract. (Art. 1470) 3. In Judicial Sale, where the inadequacy is shocking to the conscience of man (Pascua v. Heirs of Simeon, G.R. No. L-47717, 1988) and there is showing that, in the event of resale, a better price can be obtained, the contract of sale is void. (Bie v. CA, G.R. No. L-17294, 1965) NOTE: If there was a failure of the contract to set a price but the buyer has already appropriated it, then the buyer must pay a reasonable price. (Art. 1474) MANNER OF PAYMENT MUST BE AGREED UPON The manner of payment must be agreed upon. (Marnelego v. Banco Filipino Savings and Mortgage Bank, G.R. No. 161524, 2006) It is an essential ingredient before a valid and binding contract of sale can be said to exist, because it is part of the prestation of the contract. (Sps. Navarra v. Planters Development Bank, G.R. No. 172674, 200  Cession Dation in payment What will transfer ownership in a contract to sell? Execution of the deed of sale transfer ownership. In a contract to sell, no amount of Insolvency is a pre- Debtor may or may not payment of the purchase price will transfer requisite. be insolvent. ownership. That only gives rise to an obligation on the part of the seller to execute a deed of sale Creditors do not acquire Involves the transfer of and upon execution ownership is transferred ownership of the ownership of the because execution of a deed of sale is a properties; merely the properties. constructive form of deliver. It means that the right to sell them. object is delivered by the execution and therefore will transfer ownership. The debtor has nothing It will only extinguish In a contract to sell, the deed of sale will be used else left so the creditors depending on whether to transfer the title of the property and not the has to share in whatever the value of the pro full payment of the purchase price in a contract proceeds there is in the covers the entire debt to sell. property abandoned in otherwise it is juts their favor and that will partially extinguishment. What do you mean when you said that non-payment of the extinguish the purchase price in a contract of sale is a negative resolutory obligation. condition? It is a condition that is not fulfilled, therefore Two or more creditors One creditor is sufficient are required in order to in order to enter into a negative and thus will extinguish the obligation. Here, non-payment which is negative, is a enter into cession. contract of dation in resolutory condition that will give rise to the payment. extinguishment of the obligation or the sale by rescission. On the other hand, payment of the purchase price is only a positive suspensive condition meaning a condition that will give rise to an obligation and that is the obligation to execute a deed of sale. What if there is no payment of the purchase price in a contract to sell? What is the cause of action? How will you cancel the contract to sell? SEPTEMBER 22, 2022 You just simply cancel the contract. You don’t have to do anything in order to cancel it if it is PIECE OF WORK because of the non-fulfillment of the obligation What is a contract for a piece of work? on the part of the buyer because rescission is not proper in a contract to sell. Contract for a piece of work is when a good is manufactured specially for a customer upon special order and the What is cession? goods/thing is not available to the general market. The debtor abandons all of his properties in EX: Contracting an artist to paint a self-portrait. favor of the creditors so the latter may sell those properties and apply the proceeds for the Article 1467. A contract for the delivery at a certain price payment of the debts of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, Distinction between Cession and Dation in Payment whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of - If what matters is the skill = Contract for a Piece of work. (n) Work The Philippines adheres to what school of thought? CONTRACT FOR A PIECE-OF-WORK - The Philippines adheres to the Massachusetts Rule. The contractor binds himself to execute a piece of work Atty: Massachusetts Rule, which is embodied in the for the employer, in consideration of a certain price or provision of Article 1467. If it specially manufactured for a compensation; the employer may either employ only his customer upon his request and not offered to the general labor/skill, or also furnish the material public, then it is a contract for a piece of work. Otherwise, it is a contract of sale. CONTRACT FOR A What is generally available to the public? The portrait SALE PIECE-OF-WORK produced? Manufacturing in the Manufacturing upon - If the painter regularly produces portraits of people ordinary course of special order of customers. who come to him, then it will be a contract of sale business whether the same since that’s what he regularly does. is available or not at the - But, for example, his work is to paint landscapes or time for the general market. the last supper, hence, his works are singled out to Object has to be delivered, Accepts an undertaking on painting such. So, if Rammel asks him to paint a without considering the the basis of some plan, portrait of him, then it would be under the contract work or labor of the party taking into account the of a piece of work. bound to deliver. work he will employ personally or through Atty: Depending on the regular offering of the painter. In this another. case, if the painter offers to regularly paints a portrait of a customer, then not because it is uniquely commissioned Proper subject for action for Specific performance is not because that’s your face would make it a contract of a piece specific performance. allowed. of work. Because the fact remains that the service is generally → Remedy: offered to the public which means that in this case, that Obligation to be remains to be a contract for a piece of work. To Ianna’s point, executed by if, for example, you are known to paint portraits, but you are another person + asked to and commissioned to make a landscape or mural, Damages then that becomes a contract for a piece of work. Because that is generally not offered to the public. That is offered now Not governed by Statute of specifically or produced and manufactured specifically for Frauds your portrait and based on your specification. Not because it is custom-made for you, it is already considered a contract for CONSIGNMENT a piece of work. Consider the nature of the business of the seller and if it is in line with the nature of the business, even What is a sale on consignment? if it is a special order, it doesn’t make it a contract for a piece of work. A sale on consignment is similar to a contract of agency where an agent sells objects from the principal, and he What are the three (3) schools of thought that accounts for such items. But he is not the owner of the thing, distinguishes between a sale and a piece of work? it is the principal who is the owner of the object. (1) Massachusetts Rule Sale on consignment is when the goods are given to the agent who is to sell these things, but the ownership is retained with - If the goods are specially done at the order of the principal. That in this sale by consignment the overprice another, then it is a contract for a piece of work. will be the agent’s commission. (2) New York Rule What is Sale on Consignment? - If the thing is already existing = Contract of Sale Consignment – sale of goods through a dealer or - If the thing is not existing or has not existed = agency and title of the goods does not pass to Contract for a Piece of Work the consignee. NOTE: Title in the goods is retained by the (3) English Rule principal. - If what matters is the material = Contract of Sale  CONTRACT OF AGENCY RECEIPT OF PURCHASE PRICE A person binds himself to render some service or to do - SALE: Seller receives the purchase price from the something in representation or on behalf of the buyer as the owner of the thing. So, the profit goes principal, with the consent or authority of the latter. to him. - ATS: The agent receives the payment in trust to the seller. What he receives is the commission and not What are the tests to determine whether the contract is a the profit. sale or an agency to sell? SALE AGENCY Two tests: PAYMENT Buyer pays for the → Agent price of the does NOT (1) Ownership Test goods/property pay for the - If the ownership is transferred = Contract of Sale purchased. price. - If the ownership is retained with the principal = → He merely Contract of Agency accounts for the (2) Relationship Test proceeds - No creditor-debtor relationship = Contract of of the sale. Agency OWNERSHIP Buyer becomes the Agent does NOT - There is a creditor-debtor relationship = Contract of owner of the become the owner Sale goods/property of the purchased. goods/property What is the relationship created in an Agency to Sell? delivered to him - The relationship created is that of a principal and for sale. agent. RETURN Buyer cannot return Agent returns the the goods/property goods/property if Distinguish Sale and Agency to Sell (ATS). when the sale is he was not able to defective. sell the same. PAYMENT OF PRICE WARRANTY Seller warrants the Agent does NOT - SALE: The buyer in a Contract of Sale pays for the goods/property make any price of the object. That is his obligation. sold. warranty as long - ATS: The agent when it comes to the payment of the as he acts within price, he is not obliged to do so. He is merely obliged his authority and to deliver the price that was given to him by the in the name of the buyer to the principl. principal. FREEDOM Seller has full Agent must follow WARRANTY TO freedom to enter the instructions of - SALE: If the goods are defective, the buyer cannot TRANSACT into any terms and the principal. return them in general; his remedy will be damages. conditions on the Unless there is a warranty for return or exchange. contract of sale. - ATS: For the agent, if the item is not sold, he can return it to the principal. Primordial Test To determine whether the transaction is a Sale or OWNERSHIP Agency. - SALE: Buyer becomes the owner after the delivery o TEST: Intention of the parties of the item. perceived from the whole scope or - ATS: Agent does not become the owner of the object effect of the language used as well as even if the thing is delivered to him. Because the all the provisions taken together. principal retains the ownership to the goods given to NOTE: There is an agency even if there is a the agent. disclaimer that the transaction is not one of agency. What matters is that the “principal” SELLER retained ownership and the price subject to its - SALE: Seller warrants. control despite the delivery. - ATS: Agent assumes no personal liability as long as he acts within his authority and in the name of the Is a contract of agency to sell required to be in writing? principal.  - If it is a sale of a piece of land, then it is required to (2) The cession, repudiation or renunciation of be in writing. Otherwise, NO. hereditary rights or of those of the conjugal partnership of gains; Atty: An agency to sell, unless specifically required by the (3) The power to administer property, or any statute of fraud, by reason of the object of the sale and the other power which has for its object an act circumstance of the sale is NOT required to be in writing. appearing or which should appear in a public Other Practical Value of Being Able to Distinguish document, or should prejudice a third person; (4) The cession of actions or rights proceeding Applicability of Statute of Frauds from an act appearing in a public document. o Lim v. Court of Appeals All other contracts where the amount involved ▪ Agency: No particular form exceeds five hundred pesos must appear in and not one enumerated under writing, even a private one. But sales of goods, the Statute of Frauds. chattels or things in action are governed by o Unlike in Sale which must comply with Articles 1403, No. 2 and 1405 the Statute of Frauds for enforceability. o XPTN: o (1) The assignment of power to administer Article 1874. When a sale of a piece of property. land or any interest therein is through o (2) The cession of actions and rights an agent, the authority of the latter shall preceding from another act which is be in writing; otherwise, the sale shall be required to be in a public document. void. (n) o (3) Repudiation or renunciation of hereditary rights. o (4) The acts or contracts which have for If the transaction requires that the instrument be reduced their creation, transmission, modification, in writing and they are not in writing, what can the parties or extinguishment of real rights over do? immovable property. - The parties can ask for it to be put in writing. ▪ Atty: Acts pertaining to - When you say ask can you compel them to do so? transmission, repudiation, or Can you force them to reduce it in writing? extinguishment of real rights over - Atty: Article 1357 provides that if there is no immovable property or sale of real requirement to be in writing the contract remains to property or any interest therein. be valid and enforceable unless the statute of fraud