Absolute And Conditional Sales u4b1i

1458-1470(Pineda) Absolute and Conditional Sales -both can be a perfected contract Absolute  

-no condition no stipulation in the deed of sale that it will be reserved if may full payment  deed of sale is absoule in nature  a condition of sale considered as absolute sale in the absence of stipulations full payment. In ths case, constructive or actual delivery thereof Conditional  contingency  common form contract to sell  not ed to the vendee until there is full oayment of the purchase price  condition imposed on the performance of an obligation Concept of condition in sale  compliance by one party of an undertaking for the fulfillment of a reciprocal prestation  ex:remove the squatters first Elements of Contract of sale 1) Essential elements-necessary for the validity of sale a.Meeting of the mind b.Object which is certain and determinate c. Price certain-money or its equivalent

a right to deman the fulfillment or cancellation of the obligation Contract of sale Title over the prop es to the buyer upon delivery unless there is contrary agreement

Contrtact to sell Ownership is retained by the seller. es ownership only upon FULL PAUMENT

Nonpayment-resolutory condition

NP-suspensive condioton

After delivery the seller loses ownership. Unless the contract is set aside

Whether there is delivery or not, the seller retains the ownership of the object

Promise to Execute a deed of sale significance Contract to sell is akin to a conditional sale. Subordinated to the happening of a future and uncertain event -a bilateral contract Contract of sale effect -ownership is vested on the buyer WON full payment is made. The seller has lost and connot recovere ownership until and unless the contract is resolved and rescinded Failure of buyer to pay price in contract of sale Does not in law cause the ownership to revert to the seller UNLESS the bilateral contract of sale is first rescinded Contract to sell-entered into so as to protect the seller against a buyer who intends to buy the prop in installments

No Price Paid effect contract of sale will be poid if in fact never have been paid 2. Natural Elements-inherent in the contract and are deemed to exist a.Warranty against eviction b. Warranty against hidden defects 3. Accidental Elements-not essential or natural

Effect of absence of proviso Deed of sale is absolute in nature, although denominated as deed of condition sale

Significance of notarization of adeed of sale-sale is undoubtedly a true conveyance. Presumption of regularity. Bidning legal effect

Sale with repurchase or an equitable mortgage=equitable mortgage

Absence of Notarization-not invalidate the transaction. It is to be considered as a private document subject to requirement of proof Deed sale validitly notarized-classified as a private document -notarized by not a real notary public does not affect the validity thereof Failure to pay considereation distinguished from lack of considereation-failurre to pay the consideration results in

Doubt0 Suspensive condition-doubt shall be settled in favor of the greatest reciprocity of interests

Contract of sale in the form lease-title shall vest in lessee such lease in name only Can there be a valid sale against the will of the owner of the property Yes. Expropriation, ordinary execution sale, judicial foreclosre sale, extrajudicial foreclosure *case above involuntary exceptions to the rule regarding free consent Effect of reluctant consent-not vitiated

Forged deed of sale may be the root of a good title-forged deed is null and void and no effect as bet. The parties, it MAY nevertheless be the root of a good title Perfection of a contract-failure of contract Condition imposed on the performance of an obligationonly gives the other party the option to either refuse to proceed with the sale or to waive the condition 1459 The thing must be licit and the vendor must have the right to transfer the ownership at the time it is delivered. Object of Contracts in general All things which are not outside the commerce of men including things may be the object of a contract All rights which are not intransmissible may also be the object of contract Object of a contract of sale-the object of a contract is its subject matter Object must be licit or lawful a.things b.rights classification of illicit things(void) 1.illicit per se-heinous, immoral, and wrongful ex house of prosti 2.illicit per accidens-illegal only bec. There is a law prohibiting it, ex sale of parcel of land to aliens Transmissible Rights Right to usufruct, right to redemption, assignment or sale of cred, right to inheritance already acquired but not future inheritance Intransmissible rights-cannot be transmitted:right of suffrage, right to hold a public position, right to , rmarital rights Can services be the object of sale -may be the object of certain contracts like contract for a piece of work -but services as object bawal because NOT DETERMINATE THINGS thus, no transfer of ownership Pari delicto-a void cantract due to the illegality of the object shall be determined -no action arises in equity or at law -no affirmative relief of any kind will be given to one against the other

Transfer of ownership is essential in sale -seller must have THE RIGHT to transfer the ownership of the thing. -delivery may be actual or constructive By implication-AT THE TIME OF THE DELIVERY,he is already the owner of the thing or right -if not punishment WARRANTY AGAINST EVICTION -nobody can dispose of thing which does not belong to him Why seller in GF need not be required to be the owner of the object of sale -because kung required na owner of the object of the sale at the perfection of the contract. Future goods could no longer be the subject matter of sale -no impediment, if abelonged to another person especially if the seller is in good faith Rule in Donation Future prop cannot be the subject of donation unlike in rule in sale Art 1460. A thing is determinate when it particularly designated or physically segrated from all others of the same class. The requisite that a thing to be determinate is satisfied at the contract entered into, the thing is capable of being made determinate without the necessity of a new or further agreement bet. The parties Object must be determinate, not generic-possible to determinate the same without the need of anew contract bet. Parties Determinate thing -particularly designated or phusically segregated from all others -ex specific lot consisting of a certain number of square meters Relaxation fo the rule determinate character of the thing or object-as long as the object capable of being made determinate without the need for entering into a new or supplemental contract 1461 Things having a potential existence may be the object of the contract of sale The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence The sale of vain hope or expectancy is void

Things with potential existence Future fruits-expected to harvest Wine-produced from the indicated existing vineyard Sugar-harvested from a sugar plantation Status of sale of things with potential existence -depends upon the INTENTION of the parties 1.contract of sale is made dependent upon the existence of things-contract is not effective Emptio Rei Speratae Emptio spei -a purchase of an -intended the contract of expected thing subject to sale to exist AT ALL the condition the thing EVENTS will come to existence -WON the expected thing -in case of doubt sa will come into existence. emptio rei spate The contract becomes commutative character of aleatory in nature. the contract of sale -purchase of hope or expectancy Ex: sale of genuine lotto Void-fake pala yung lotto ticket- this is called a vain or impossible hope Sale of a mere hope or expectancy when not valid a.the hope or expectancy is vain b. the parties intended that if the hope or expectancy will not materialize the sale is void ex. Use bingo Pagcor ticket Art. 1462. The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured, raised, or acquired by the seller after the perfection of the contract of sale, in this Title called "future goods." There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which may or may not happen. Goods- chattels personal BUT NOT MONEY OR LEGAL TENDER kahit REAL PROP -includes fruits or crops Kinds of Goods a.existing goods-actually existing at the time of the perfection of the contract b. future goods-do not exist yet but have potential existence Ex:Goods to be manufactured like magazines or newspapers, copra, goods acquired after the perfection of the contract, Goods the acquisition of which is dependent upon a contingency which may or may not happen

Delivery is understood-w/o delivery of the future goods at the appointed time, the sale is not valied -merely speculation w.o delivery Art. 1463. The sole owner of a thing may sell an undivided interest therein -sole owner can sell an undivided interest therein like onehalf or any other aliquot part thereof -co-ownership will result from the sale of an alquot part to another person Can a co owner of athing alienate his share or a portion of his share in the co-ownerhip -like the sole owner he can have full ownership of his aliquot part. He may alienate, assign or mortgage it. Selling prop to a dead person effect -cannot transfer a lot, through deed of absolute sale bec dead thus no civil personality or juridciacal capacticity Art. 1464. In the case of fungible goods, there may be a sale of an undivided share of a specific mass, though the seller purports to sell and the buyer to buy a definite number, weight or measure of the goods in the mass, and though the number, weight or measure of the goods in the mass is undetermined. By such a sale the buyer becomes owner in common of such a share of the mass as the number, weight or measure bought bears to the number, weight or measure of the mass. If the mass contains less than the number, weight or measure bought, the buyer becomes the owner of the whole mass and the seller is bound to make good the deficiency from goods of the same kind and quality, unless a contrary intent appears FUNGIBLE AND TO NON FUNGIBLE GOODS Purchase of an undivided share in specific mass of fungible goods FG-cannot be used w/o being consumed ex flour, wine and gasoline Sale of fungible goods-DEFINITE NUMBER, WEIGHT OR MEASURE OF GOODS IN AN UNDETERMINED MASS OR STOCK If the aliquot part purchased from the seller is more than the whole undetermined mass after it had been weighed or emasures, then the buyer becomes the owner of the entire mass. FI the qliqout part is purchased LESS THAN the whole undetermined mass, the purchaser will become the co owner of the whole mass in the proportion

Art. 1465. Things subject to a resolutory condition may be the object of the contract of sale. Resolutory condition -uncertain the happening or fulfillment of which extinguishes a subsisting obligation Effect: -Subject to a resolutory condition is NOT the thing itself but the TRANSACTION OF SALE. If the condition happens, te sale becomes ineffective. rt. 1466. In construing a contract containing provisions characteristic of both the contract of sale and of the contract of agency to sell, the essential clauses of the whole instrument shall be considered. -sale and agency essential and conditions of the entire document -it is determined by WHAT THE LAW DEFINES IT TO BE Sale Agency -buyer pays for the price -agent does not pay for of goods the price. But merely -buyer becomes the s for the proceeds owner -agent does not become -buyer cannot return the the owner upon delivery good when the sale is -agen returns goods if he defective was not able to sell the -the seller warrants the same goods/property sold -agent does not make any -the seller has full warranty as long as he freedom to enter into any acts within his authority or conditons on the and in the name of the contract of sales principal -the agent mhst follow the instruction of the principal Primordial test- WON SALEs or agency=INTENTION Whole scope or effect of the language used Agency= principal retained the ownership and the price subject to its control despite the delivery Sale on Consignment -sale of goods through a dealer or agency -goods are received by the consignee for sale What form should a contract of agency to sell be entered itno: Any form, however the law requires a particular form of validity it must be followed Intent prevails over form:TRUE intent Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his

business manufactures or procures for the general market, 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 work. Sale-artice being manufactured in the ordinary course of his business -whether the article is already finished or not Piece of work-manufactured upon special order of the customer ex: personalized shoes -not habitually performed Art. 1468. If the consideration of the contract consists partly in money, and partly in another thing, the transaction shall be characterized by the manifest intention of the parties. If such intention does not clearly appear, it shall be considered a barter if the value of the thing given as a part of the consideration exceeds the amount of the money or its equivalent; otherwise, it is a sale. Applicability of the artice:partly in money and partly in kind RULES TO FOLLOW 1. determine the intention of the parties-if different yung name ng contract sa intention. The intention will prevail 2. intention could not be determined. Consider the value of the thing More than the value of money-barter Less than the value of the by any amount-sale Money exchange rule Local currency+foreign=purchase and sale Local currency+ other denominations=barter Art. 1469. In order that the price may be considered certain, it shall be sufficient that it be so with reference to another thing certain, or that the determination thereof be left to the judgment of a special person or persons. Should such person or persons be unable or unwilling to fix it, the contract shall be inefficacious, unless the parties subsequently agree upon the price. If the third person or persons acted in bad faith or by mistake, the courts may fix the price. Where such third person or persons are prevented from fixing the price or by fault of the seller or the buyer, the party not in fault may have such remedies against the party in fault as are allowed the seller or the buyer, as the case may be

Certainty of purchase priceDEFINITENESS=ESSENTIAL ELEMENT of a binding agreement to sell personal prop. -if the price is not certain the contract of sale cannot exist.

-used as a standard in determining the gross inadequacy of price. Ex: prop sold 10 percent of the actual value it is shocking to the conscience

Effect if there is no specific amount stipulated as purchase price: GR: specified sa contract Xpn: a.determinable by making a reference to another thing which by itself is certain b.determination is entrusted to the judgement of a specified person or persons c. by reference to certain fact or or facts

Hard Bargain effect-When both parties are in a position to form INDEPENDENT JUDGEMENT concerning the transaction, is not a sufficient ground for cancellation of a contract. Time to determine adequacy or inadequacy of the price-at TIME OF THE EXECUTION OF THE CONTRACT Inadequacy of price must be proved-proven by sufficient evidence

I sell my house for the same price I paid for it DESIGNATED a third person as the arbitrator of the price of goods I sell my milagrosa rice at the price similar to the brand exactly 3 mos ago.

When price paid is much higher: Price paid much higher than the assess value + another consideration(this consideration is paid more)=price is not considered as inadequate

Price based on mere estimates: The transaction lacks the requisites essential for the perfection of the contract

Gross Inadequacy of price in judicial sale: Prop more than 60,000 pero nabenta P877 void for inadequacy of price

Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as it may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract

Rule when the seller is given the right to redeem -pwede gawin sa public auction -the reason why the price is lessen, so its easier for the owner to redeem the prop sold

Inadequacy of price -a price insufficient to satisfy the real or actual price of the object of sale. -negligble or gross -mere inadequacy does not affect the validity of acontract of sale if the parties are in a position to form on INDEPENDENT JUDGEMENT concerning the transaction

NOTES:

GR: Gross inadequacy of price does not affect a contract of sale Xpn: Vitiated FUMI Donation: Gross inadequacy of price will affect the validity of the contract of sale, kung real contract is one of donation which is onerous -the done may explain that the inadequate price is ed by the donor’s liberality to maintain the validity of the donation Shocking to the Conscience Leesion- more than ¼ of the value of the thing are rescissible unless approved by the court

How do you characterize a contract if the consideration is partly paid in money AND partly paid in kind? 1 st determine the intention 2 nd determine the value of the goods (if the 1 cannot be determined) Value of thing in kind > value of money partly used for payment – barter otherwise sale If the consideration is entirely in kind OR entirely in money don’t distinguish between the 2 contracts. Only classify something sale and barter only the consideration is both in money AND in kind. Only if the consideration partly in kind and in money will you determine the value of the thing in kind over the value of the money.

value of the money > value of the thing in kind – sale otherwise barter same value – sale because you exchange something in money or its equivalent SALES 4 What is the rule for the price to be considered certain? It shall be sufficient if 1. it is determinable by making reference to another thing which is certain; or 2. determination is left to the judgment of a “specified” person or persons 3. it is certain with reference to certain fact or facts Can the determination of the price be left to one of the parties? Yes, if there is consent. If none, it cannot be, because Still there is no meeting of the minds.

What if there is no meeting of the price but there is knowledge of the price but w/o objection? Is it validated by estoppel or laches? No. If there is no consent, there is no meeting of the minds. It will not be validated by estoppel or laches because at the time you are asked to pay the price you can say that you did not give your consent. And, according to the civil code the price is determined by the by one of the parties can only be valid if the other party consents to it because this amounts to meeting of the mind. Without that, one of the essential elements of the contract therefore the contract is void. it is certain with reference to certain fact or facts – i.e. securities grains and liquids What is the rule? What are those facts that will make the price certain? • If it is certain on a definite day or on a particular exchange or market; OR • If the price is fixed above or below the price on that definite day, or particular exchange or market What is a price? It signifies sum stipulated as the equivalent of the thing sold and also all the considerations and incidents taken to fix the price or the value of the thing put to the debit of the vendee and agreed by him.

What are the requisites of a valid price? - it must be 1) certain 2) unconscionable or grossly inferior to the value of the thing subject of the contract 3) real and not fictitious (absolutely simulated) How can you impugn the price fixed by a 3 You can ask to court to impugn it. On what grounds? rd person? 1) Bad Faith 2) mistake 3) violation of the instruction or standards, set by the parties, to accurately fix the price Can you make the price certain by referring it to a pension plan? i.e. U r receiving P10 k a month. Seller said, “I am selling this house and the price will be the same as ur pension plan that you will get from the government.” Is this a valid price? The price is based on the pension that your parents will get from the gov’t in next 10 yrs. That is certain if they will survive that year. They will get only a certain sum only up to the point of their life. Meaning, if they die, i.e. 3 after the contract they will only get the equivalent. This is no longer certain. The basis actually of pension is life itself. Since life is not certain, you cannot base the price on life pension. Any price referred to a life pension cannot be certain because life itself is not certain. What is inadequate price? If it insufficient to satisfy the actual value of the thing subject of the contract What are the kinds of inadequate price? 1. Gross 2. Negligible – immaterial / diminimis If the inadequacy of the price is negligible is a contract valid? Yes, because it is practically immaterial. i.e. if the value of the thing is P50 K the price to be paid is

P49K.

No.

If the inadequacy is gross is the contract valid? GR - gross inadequacy will not invalidate the contract EXs 1. defect in the consent resulting to a vitiated consent. The status is of the contract is voidable /annullable. 2. if it can be inferred that the intention of the parties is that of donation or sine other contract – it is considered, not a contract of sale but a donation if it complies with the requisites of a donation 3. shocking to the conscience that it would result to the invalidation of a contract of sale. 4. If the guardian sold the property for less than 25% of its value then the ward suffers lesion, the court may invalidate the price and fix another. This can be a gauge on how much is inadequate. If less than ¼ of its value it can be considered as grossly inadequate to shock the conscience of the court.

It does not apply if the debtor is given the right to redemption because it gives more freedom to the debtor to redeem the property in a much lower price.

Can the court invalidate the sale? Is the 3rd No, because there is a price only that it is grossly inadequate. The court will fix the price based on what is acceptable under the prevailing circumstance. rule absolute? No. The exception applies only in a judicial sale. It does not apply to ordinary sale, because there is freedom to contract and whatever they stipulate will validate the

How do you question gross inadequacy of the price? It is enough that you allege in the court that is less than ¼ of the value of the property and it is grossly inadequate as to shock the conscience of the court? No. You have to present proof or evidence to show the court that the price is shocking.

contract. The presumption is that they voluntary agreed on the inadequate price and the court has no power to invalidate such law between the parties How is ordinary sale different from judicial sale? There is no voluntariness. The debtor is forced part with his property or to enter into the contract of sale. Since there is no freedom to contract, court may step in and protect your rights. If it is now unfair because you already parted with your property and you are still made to pay for more than the value of the deficiency in the auction sale. The court can enter into the picture to protect your rights and fix the price. Is it an absolute rule that in a judicial sale and the price is shocking?

Is there an exception in ordinary sale? Yes. If the court based on EQUITY says that the price cannot be considered, it can enter into the picture and fix the price. If the guardian sold the property for less than 25% of its value then the ward suffers lesion, the court may invalidate the price and fix another. This can be a gauge on how much is inadequate. If less than ¼ of its value it can be considered as grossly inadequate to shock the conscience of the court. Are all lesions invalid? Not if it is approved by the court.

What is the status of the contract if the price is simulated? What is a simulated price? It is a fictitious price. What are the classifications of simulated price 1) absolutely simulated – parties did not intend to be bound at all 2) relatively simulated - parties conceal their true Agreement Is an absolutely simulated contract absolutely void? Yes Is a relatively simulated contract also void? No. The concealed agreement is binding upon the parties and is enforceable IF it does not prejudice 3 person AND is not intended for any purpose not contrary to law, morals, good customs, public order and public policy.

Why is a simulated is price void? Simulated price is tantamount to lack of price or consideration. If there is no consideration then there is no valid contract. If the price is not paid, is the contract valid? Yes. There is a price only that it was not paid. If the parties made it appear that price was agreed upon but there was none, is the contract valid or void? Void If a forfeited or counterfeited currency was used as payment, is contract valid or void? Valid, because the price is certain, the price is valid. Only the mode of payment is void. What if the parties agreed that the consideration shall be paid in a counterfeit or forfeited currency? Valid because the price is certain what was agreed is the mode of payment. It such was the agreement it does not mean that there was no agreed price. HOWEVER if it is to the effect that the agreement to pay in a counterfeit currency results to an agreement that there is actually no necessity for payment of a price that may result to simulated price which will invalidate the contract of sale. What is the remedy/action to invalidate a null and void contract? Declaration of nullity What is the prescriptive period for such action? If the contract is not valid from the start it is imprescriptible, meaning you can bring an action for declaration of nullity anytime. No prescriptive period. What is the status of the contract if he price cannot be determined? It is inefficacious, meaning it is ineffective. Rd What will happen if the thing was already appropriated by the buyer before it was determined that the contract was inefficacious? Buyer shall be obliged to pay reasonable price. The object has already been delivered, and was later

appropriated by the buyer however the price is uncertain and not paid therefore the contract is invalid. What is the remedy of the seller? To demand the buyer to pay a reasonable price. What is the standard of reasonable price? Fair market value- Reasonable sum which the property would command in a fair sale by a man willing sell but not obliged to sell and by buyer willing to buy but not obliged to buy. What if the goods are still intact? Seller can demand the return of the object subject to the ___(150) damages that the seller would demand from the buyer. If the seller delivers a thing to buyer which is different from what the buyer demand and the latter accepts the thing, how much should he pay? i.e. Object A for 100 K. the seller delivers object B, which the buyer knows is P200 K, he accepts delivery, ownership is transferred. How much the buyer obliged to pay? P200 K. Knowledge of the price and acceptance of delivery is tantamount to a new contract. There is a price certain (P100 K) but is there a determinate thing? None there was a no delivery. It is a perfected contract subject to damages. But how much can you be compelled for the delivery? P200 K. It is a new contract, it is new accepted offer for a definite thing. So you are required to pay P200 K. You can compel the buyer to pay because he accepted it. He should have rejected delivery of object B because it is not the object of their contract, therefore there can never be demand for P200 K. But the point, the sale is valid because it is in effect an accepted offer of a new thing. Since he accepted he can be obliged to pay P200 K. Is the seller released from his responsibility from the 1 contract? No. The contract is perfected. The remedy is damages. st