SALES

Articles / Laws to Remember: 1458, 1467, 1477 transfer of ownership,

1505, 559 who can transfer xxx, 1504, 1544, 1484 Recto Law, R.A. 6552,
1602, 1606, 1620, 1623, Redeption xxx
Q: A obliged himself to deliver a certain thing to B. Upon delivery, B
would pay a sum of money to A. Is that a contract of sale?
A! "ot necessari#$. %&en if there is an o'#i(ation to de#i&er, if there is no
o'#i(ation to transfer ownership, it wi## not 'e a contract of sa#e. )t a$ 'e a
contact of #ease.
Memorize: Art. 1458
Note: *a#e is a contract, so the (enera# princip#es in o'#icon are app#ica'#e
to sa#e '+t note that there are pro&isions which are contrar$.
Characteristics of Contract of Sale (COS)
1. Consensal (1!"#) , -.* is consens+a#, it is perfected '$ ere
eetin( of the inds of the parties as to the o'/ect and price.
Note: 0here is 1 specia# #aw which re1+ires a partic+#ar for for the &a#idit$
of a contract of sa#e , in that sa#e, it can 'e said that 2ind of sa#e is a fora#
contract 3 -att#e Re(istration 4ecree. )n a sa#e of #ar(e catt#e, the #aw
pro&ides that the contract of sa#e of #ar(e catt#e +st 'e! in a p+'#ic
instr+ent, re(istered and a certificate of tit#e sho+#d 'e o'tained in order
for the sa#e to 'e &a#id. 5+t otherwise, the other contracts are perfected '$
ere consent or ere eetin( of the inds.
$. %rinci&al , sa#e is a principa# contract, it can stand on its own. )t does
not depend on other contracts for its existence and &a#idit$.
'. (ilateral (1!#)) , necessari#$ in a -.*, 'oth parties wi## 'e o'#i(ated. )t
is not possi'#e that on#$ 1 part$ is o'#i(ated 'eca+se a contract of sa#e is
essentia##$ onero+s.
!. Oneros (1'#*) , -.* is essentia##$ onero+s. .therwise, it a$ 'e
another contract or an$ other act #i2e it a$ 'e a donation if there is no
copensation for the transfer of ownership to the other part$.
#. Commtati+e ($*1*) , eanin( there is e1+i&a#enc$ in the &a#+e of the
prestation to 'e perfored '$ 'oth parties. "ora##$, the thin( so#d wo+#d
'e e1+a# to the price paid '$ the other part$ 6'+$er7.
%xception! a contract of sa#e which is an a#eator$ contract #i2e sa#e of hope.
)n sa#e of hope, the o'#i(ation of 1 part$ wi## arise +pon the happenin( of a
certain e&ent or condition.
Example Sale of Hope: *a#e of a #otto tic2et, 8-*. wi## ha&e the o'#i(ation
to pa$ $o+ on#$ if $o+ (ot a## the 4 or 6 n+'ers which are drawn
Another Example of Aleatory: )ns+rance
,. Nominate (1!#))
Classification of Contract of Sale
1. As to Natre of Sb-ect Matter
a. 9o&a'#e
'. )o&a'#e
Q: hy there is a need to determine?
A! 5eca+se soe concepts wi## app#$ if the o'/ect is o&a'#e or soe #aws
wi## app#$ if the o'/ect is io&a'#e.
Examples: :nder the *tat+te of ;ra+ds, $o+ ha&e to deterine if the o'/ect
if o&a'#e or io&a'#e in order that stat+te of fra+ds wi## app#$. 0he Recto
#aw wi## app#$ if the o'/ect is o&a'#e. 0he 9aceda #aw wi## app#$ if the
o'/ect is rea#t$. Artic#e 1544 or 4o+'#e *a#e wi## re1+ire $o+ to deterine the
nat+re of the s+'/ect atter.
$. As to Natre
a. 0hin(
'. Ri(ht
Q: hy there is a need to determine?
A! Re#e&ant in the ode of de#i&er$
.istinctions
1. 4eed of A'so#+te *a#e 64A*7 &s. -onditiona# *a#e 6-*7 &s. -ontract to
*e## 6-0*7
2. 4ation in 8a$ent 64)87 &s. -.*
3. -ontract for a 8iece of <or2 6-8<7 &s. -.*
4. 5arter &s. -.*
5. A(enc$ to *e## 6A0*7 &s. -.*
.ee/ of Absolte Sale (.AS) +s. Con/itional Sale (CS) +s. Contract to
Sell (C0S)
.AS , se##er does not reser&e his tit#e o&er the thin( so#d and th+s, +pon
de#i&er$ of the thin(, ownership passes re(ard#ess of whether or not the
'+$er has paid.
CS = condition>s are iposed '$ the se##er 'efore ownership wi## pass.
"ora##$, the condition is the f+## pa$ent of the price. )n -*, ownership
a+toatica##$ passes to the '+$er fro the oent the condition happens.
0here is no need for another contract to 'e entered into.
B!: "eceipt was issued by A to B. #he receipt$s tenor %&ate of the
receipt ''' "eceived from B the sum of ()*,+++.++ as partial payment
for the car ''' the balance to be paid at the end of the month ''',.
-ontract to .ell?
*A! "o. )t does not pertain to a -0* 'eca+se in a -0* ownership is
reser&ed '$ the se##er despite de#i&er$ to the '+$er. 0he '+$er does not
ac1+ire ownership. 0his is an A'so#+te *a#e.
Q: In a -#., upon the happening of the condition/s imposed by the
seller, would ownership automatically pass to buyer?
A! "o. <hi#e a -0* is considered a specia# 2ind of conditiona# sa#e, it is a
pec+#iar 2ind of sa#e 'eca+se despite the happenin( of the condition and
act+a# de#i&er$, the '+$er does not a+toatica##$ ac1+ire ownership. )n
-0*, if condition>s happen, the ri(ht of the '+$er is to cope# the se##er to
exec+te a fina# deed of sa#e. *o ownership does not a+toatica##$ pass.
.ation in %a1ment (.2%) +s. COS
.2% (1$!#) , where'$ propert$ is a#ienated to the creditor. )t is pro&ided that
the #aw on sa#es sha## (o&ern s+ch transaction. )t is specifica##$ pro&ided
that the pre=existin( o'#i(ation +st 'e in one$. )f not in one$ and there
is 4)8, it wi## not 'e (o&erned '$ the #aw on sa#es '+t '$ the #aw on no&ation
'eca+se practica##$ there is a chan(e in the o'/ect of the contract.
Example 1: )f A owes 5 8100,000.00 instead of pa$in( 8100,000, he offers
5 and 5 accepts the car of A as an e1+i&a#ent perforance 3 this is 4)8
and wi## 'e (o&erned '$ the #aw on sa#es.
Example 2: )f the pre=existin( o'#i(ation is to de#i&er a specific horse '+t
instead of de#i&erin( the horse, the de'tor to#d his creditor and the creditor
accepted, that he wi## instead de#i&er his car 3 it is sti## 4)8 '+t it wi## not fa##
on 1245 '+t on no&ation 'eca+se there is a chan(e in the o'/ect of the
o'#i(ation which wo+#d extin(+ish the o'#i(ation.
Note: A (+ide to distin(+ish one concept fro another is to 2now the
nat+re, re1+isites and effects.
1. As to Natre
.2% , a specia# for of pa$ent
COS = it is a contract
$. As to Re3isites
.2% , with a pre=existin( o'#i(ation
COS , not a re1+ireent
'. As to 4ffect
.2% , to extin(+ish the o'#i(ation either who##$ or partia##$.
COS , o'#i(ation wi## arise instead of 'ein( extin(+ished.
Contract for a %iece of 5or6 (C%5) +s. COS
B!: A team if bas0etball players went to a store to buy shoes and out
of the 1+ members, * of them were able to choose the shoes. #hey
agreed to pay the price upon delivery. #he other 2 members were able
to choose but the shoes were not available at that time but they are
normally manufactured. #he last member could not find shoes that
could fit his 13 inches feet and therefore he has to order for such 0ind
of shoes. hat transactions were entered into by these players?
*A! 1467 3 the first 2 transactions in&o#&in( a tota# of 9 p#a$ers wo+#d 'e
considered a -.* 'eca+se the shoes which the$ ordered are 'ein(
an+fact+red or proc+red in the ordinar$ co+rse of '+siness for the (enera#
ar2et. ?owe&er, the #ast transaction which wi## 'e an+fact+red on#$
'eca+se of the specia# order of the p#a$er and is not ordinari#$
an+fact+red for the (enera# ar2et wi## 'e considered a -8< which is
2nown as the 9assach+setts r+#e.
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
1
9assach+setts r+#e , r+#e in deterinin( whether the contract is a -.* or a
-8<.
(arter +s. COS
Q: A obliged himself to deliver a determinate car with a mar0et value
of (4*+,+++.++. B obliged himself to deliver his watch and (1*+,+++.++
in cash. hat 0ind of contract?
A! ;irst, $o+ ha&e to consider the intention of the parties. 0he$ a$ want
this transaction to 'e considered as a sa#e or 'arter and that wi## pre&ai#. 5+t
if the intention of the parties is not c#ear fro their a(reeent then the
nat+re of the contract wi## depend on the &a#+e of the watch. )f the &a#+e of
the watch is (reater than 8150,000 then this is 'arter. )f the &a#+e of the
watch is e1+a# or #ess than 8150,000 then this is sa#e. 0he &a#+e of the car
is irre#e&ant. <hat is on#$ re#e&ant is the &a#+e of the thin( 6watch7 in
re#ation to the cash to 'e (i&en '$ one of the parties.
A7enc1 to Sell (A0S) +s. COS
B!: A gave B the e'clusive right to sell his maong pants 5he has his
own brand of maong pants6 in Isabela. It was stipulated in the contract
that B has to pay the price of maong within 7+ days from delivery to B.
It was stipulated that B will receive 4+8 commission 5discount6 on
sale. #he maong pants were delivered to B. 9owever, before B could
sell the goods, the store was burned without fault of anyone. -an B be
compelled to pay the price?
;ro the wordin(s of the pro'#e $o+ a$ ha&e an idea that this is an
a(enc$ to se##. )f this is an A0*, the fact that the a(ent has not $et so#d the
aon( pants when the$ were '+rned wi## not res+#t in a #ia'i#it$ on his part,
there 'ein( no ne(#i(ence on his part 'eca+se with the de#i&er$ of the thin(
fro the principa# to the a(ent, ownership does not pass. :nder the
princip#e in the -i&i# -ode , res perit doino , it wi## 'e the se##er 6owner7
who wi## 'ear the #oss. 5+t if this transaction is sa#e then with the de#i&er$ of
the aon( pants to 5, ownership passed to 5 'eca+se he did not reser&e
ownership o&er the pants despite the fact that the other part$ has not paid
the price. *o when the pants were '+rned, it wo+#d now 'e 5 as the owner
who wi## 'ear the #oss.
*A! 0his is exact#$ the case of 8iro7a +s. %arsons. Artic#e 1466 , in
constr+in( a contract containin( pro&isions characteristics of 'oth a -.*
and A0*, $o+ ha&e to (o into the essentia# c#a+ses of the who#e instr+ent.
)n this pro'#e, one of the c#a+ses B5 has to pa$ the price within 30 da$sC.
0hat wo+#d a2e the contract -.* and not A0* 'eca+se in 30 da$s fro
de#i&er$, whether or not 5 has a#read$ so#d those pants to other persons, he
is a#read$ o'#i(ed to pa$ a price. 0hat is not an A0*. 5ein( a -.*,
therefore, after ha&in( 'een de#i&ered, ownership passed to the '+$er and
hence +nder res perit doino r+#e, the '+$er 'ears the #oss and therefore
he can 'e cope##ed to pa$ the price.
4ssential 4lements of a Contract of Sale
1. Consent of the Contractin7 %arties
$. Ob-ect or Sb-ect Matter , which is a deterinate thin( or ri(ht
Note: *er&ice cannot 'e the s+'/ect atter of sa#e.
'. Case or Consi/eration , as far as se##er is concerned, it is the price
in one$ or the e1+i&a#ent of the pa$ent of the price.
CONS4N0 O9 0:4 CON0RAC02N; %AR024S
A. No consent of one or both of the &arties
3 the contract is &oid. :nder the #aw on sa#es, it is a fictitio+s contract
where the si(nat+re of one of the parties was for(ed. "ora##$, the se##erDs
si(nat+re is for(ed. )f the si(nat+re of the se##er is for(ed, that wo+#d 'e a
fictitio+s contract. 0he a##e(ed se##er wi## not ha&e participation in the
exec+tion of the contract. 5+t another 2ind of contract reco(ni@ed in the
-i&i# -ode is a si+#ated contract.
*i+#ated , parties to this contract act+a##$ wo+#d ha&e participation. 0he$
wo+#d &o#+ntari#$ si(n in the deed of sa#e. ?owe&er, the$ do not intend to 'e
'o+nd at a## or the$ a$ intend to 'e 'o+nd to another contract '+t the$
exec+ted a deed of sa#e. 0h+s, the #aw wo+#d ratif$ these contracts
considerin( there is a si+#ated sa#e.
<in/s of Simlate/ Contracts
1. A'so#+te#$ *i+#ated , the$ do not intend to 'e 'o+nd at a##.
Q: hy would they enter into this 0ind of sale?
A! 0o defra+d creditors
2. Re#ati&e#$ *i+#ated , sa#e where the$ act+a##$ intended another contract
which nora##$ wo+#d 'e a donation.
(. 2f consent was 7i+en
3 )f consent was (i&en, it does not necessari#$ ean that the -.* is &a#id.
0he consent a$ 'e (i&en '$ an incapacitated person or one with capacit$
to (i&e consent. )f (i&en '$ an incapacitated person, consider the nat+re of
the incapacit$. )t a$ 'e!
a. A'so#+te )ncapacit$ , the part$ cannot (i&e consent to an$ and
a## contracts.
b. Re#ati&e )ncapacit$ , the part$ is prohi'ited fro enterin(
soeties with specific persons and soeties o&er specific
thin(s.
<in/ of Ca&acit1
1. A+ridica# -apacit$ , it is the fitness to 'e the s+'/ect of #e(a# re#ations. )f a
part$ to a sa#e has no /+ridica# capacit$, the contract is &oid. "ote that a##
nat+ra# #i&in( persons ha&e /+ridica# capacit$. %&en if he is a 1 da$ o#d 'a'$,
he has /+ridica# capacit$. 0he 'a'$ can 'e the s+'/ect of donation. %&en if
he is concei&ed, he has pro&isiona# persona#it$.
Example: .ne exap#e of a part$ to a sa#e witho+t /+ridica# capacit$ wo+#d
'e a corporation not re(istered with the *%-. 0he contract entered '$ this
corporation is a &oid contract 'eca+se one of the parties has no /+ridica#
capacit$ to enter into that contract.
2. -apacit$ to Act , it is the power to do acts with #e(a# effects. )f the
incapacit$ on#$ pertains to capacit$ to act, the contract wo+#d nora##$ 'e
&oida'#e. <itho+t capacit$ to act or there are restrictions with oneDs capacit$
to act s+ch as inorit$, insanit$, deaf +te and does not 2now how to write
and ci&i# interdiction.
Note: :nder R.A. 6809 64ece'er 19897 there is no ore creat+re 2nown
as B+neancipated inorC. 5efore 1989, the a(e of a/orit$ was 21.
C. 2f both &arties are inca&acitate/
3 not on#$ &oida'#e '+t +nenforcea'#e.
Q: hat if one of the parties in a -:. is a minor and the minor
actively misrepresented as to his age?
A! 0he *- said that the inor wi## 'e 'o+nd to s+ch contract +nder the
princip#e of estoppe#.
Att1. =ribe>s Comment: %stoppe# is not a (ood (ro+nd 'eca+se the inor
is not aware.
Sale of Necessaries
)n sa#e of necessaries s+ch as food, c#othin( and edicine to a inor, the
inor has to pa$ a reasona'#e price. 0his contract is not &oida'#e. 0he sa#e
of necessaries wi## 'ind the inor and he wi## 'e cope##ed to pa$ not rea##$
the contract price '+t on#$ to reasona'#e price.
Relati+e 2nca&acit1 (Articles 1!?* an/ 1!?1)
1. *a#e 'etween spo+ses , it is &oid except!
a. 0he spo+ses exec+ted a arria(e sett#eent and in the
arria(e sett#eent the$ a(reed for a cop#ete separation of
propert$ re(ie. 0hen the$ can se## to each other.
'. )f no arria(e sett#eent, the$ a$ ha&e o'tained /+dicia#
dec#aration of separation of propert$. After that, the$ can se## to
each other.
2. 0hose entioned in Artic#e 1491
a. A (+ardian cannot '+$ the propert$ of the ward. 0he (+ardian is
not act+a##$ prohi'ited fro enterin( into an$ and a## contracts. )t
is /+st that he cannot 'e the '+$er of a propert$ of his ward.
'. An a(ent cannot '+$ witho+t the consent of the principa# a
propert$ which he was s+pposed to se## or adinister.
c. 0he exec+tors and adinistrators of the estate cannot '+$ a
propert$ which is part of the estate.
d. 8+'#ic officers, /+d(es, their staff, c#er2 of co+rt, steno(raphers
and #aw$ers are prohi'ited fro '+$in( those properties which
are the s+'/ect of #iti(ation d+rin( the pendenc$ of the case.
Q: hat is the status of the contracts under 12;1?
A! 8rof. 0o#entino , &oida'#e
A+stice Eit+( F 8rof. 5a&iera , &oid
8rof. 8ineda F 8rof. de Leon , the first 3 are &oida'#e and the
#ast 3 are &oid.
0he 'etter answer is &oid 'eca+se these persons are prohi'ited fro
enterin( into these contracts. :nder Artic#e 1409, if the contract is
prohi'ited, it is &oid.
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
2
3. A#iens are prohi'ited fro ac1+irin( '$ p+rchase pri&ate #ands , 0a2e
note Bac1+irin(C which eans '+$in( not se##in(. 0he$ can se##.
%xceptions > when a#iens can '+$!
a. ;orer nat+ra# 'orn ;i#ipino citi@en. :nder the -onstit+tion the$
are a##owed to '+$ sa## #and which the$ can +se for residentia#
p+rpose.
'. Another wa$ of ac1+irin( is '$ s+ccession '+t this is not a sa#e
.. 4+en if consent was 7i+en b1 one with ca&acit1 to 7i+e consent bt
if the consent is +itiate/
3 &oida'#e. ;)E:9
4. 2f the &art1 7a+e sch consent in the name of another withot
athorit1 of that &erson or no athorit1 of law
3 +nenforcea'#e. 0a2e note a$ 'e a+thori@ed '$ the person or '$ #aw.
Example of authorized by law: notar$ p+'#ic has the ri(ht to se## in p#ed(e
'eca+se he has the a+thorit$ to se## +nder the #aw.
O(@4C0 OR S=(@4C0 MA004R
0he re1+isites in sa#e as to thin( wo+#d a#ost 'e the sae as the
re1+isites of contracts in (enera#.
1. 0he thin( +st 'e within the coerce of en
Examples: sa#e of a na&i(a'#e ri&er is &oid, sa#e of a cada&er is &oid '+t
donation of a cada&er is a##owed, sa#e of h+an or(ans is &oid, thin(s
which are not appropriated #i2e air is &oid '+t if appropriated it can 'e the
o'/ect of a &a#id sa#e.
2. 0he thin( +st 'e #icit , not contrar$ to #aw
Examples: sa#e of prohi'ited dr+(s or sha'+ is &oid, sa#e of ari/+ana is
&oid, sa#e of wi#d f#owers or wi#d ania#s is &oid
3. 9+st 'e deterinate
Read Artic#e 1460
R=L4S AS 0O O(@4C0 O9 COS
Q: A obliged himself to deliver and transfer ownership over the palay
that will be harvested from a specific parcel of rice land in <ay 4++=.
hat if by <ay 4++=, no palay was harvested?
a. hat is the status of the sale?
b. <ay the seller %A, be held liable for damages for failure to
comply with his obligation?
A!
a. A#wa$s consider that in a -.* there are on#$ 3 re1+isites. As #on( as
these 3 were cop#ied, there is a &a#id sa#e. )n fact, '$ express pro&ision of
#aw, sa#e of thin(s ha&in( potentia# existence 6eptio rei sperati7 is &a#id.
'. "ot necessari#$ 'eca+se there are exc+ses to non=perforance s+ch
as pesti#ence, t$phoon, f#ood and therefore his fai#+re to cop#$ is an
exc+se. 5+t if the reason of the se##er is 'eca+se of his ne(#i(ence, he
cannot find s+pport +nder Art. 1174.
Sale of :o&e (4m&tio S&ei)
Example: *a#e of a #otto tic2et
Q: .ale of a land to B with a right to repurchase within 1 year which A
delivered. :n the 7
rd
month, B sold the land to -. 9owever, on the ;
th
month, A offered to repurchase the land.
5a6 hat is the status of the sale between A and -?
5b6 ho will have a better right over the land?
5.ale with a right to repurchase6

A! 6a7 5e (+ided '$ the fact that a -.* is a consens+a# contract. 0he ere
eetin( of the inds as to the o'/ect and the price, then there is a &a#id and
perfected sa#e. ?ence, this is a &a#id sa#e e&en if the o'/ect of the sa#e is a
sa#e with a ri(ht to rep+rchase. Artic#e 1465 pro&ides that thin(s s+'/ect to a
reso#+tor$ condition a$ 'e the o'/ect of a -.*.
Att1. =ribe: 9as taan( sa'ihin , since the ownership thereof is s+'/ect to
a reso#+tor$ condition. ?indi naan $+n( thin( is the s+'/ect of reso#+tor$
condition, it is the ownership o&er the thin(.
)f A exercises the ri(ht to rep+rchase and s+ch wo+#d 'e a &a#id exercise of
s+ch ri(ht then the ownership of 5 wo+#d 'e extin(+ished. 0he exercise of
the ri(ht is considered a reso#+tor$ condition as to the ownership of 5. 0he
fact that the o'/ect of the sa#e is s+'/ect to a rep+rchase wi## not affect the
&a#idit$ of the sa#e.
6'7 As a r+#e, it wo+#d 'e A as a se##er a retro 'eca+se he has the ri(ht to
rep+rchase ass+in( his rep+rchase is &a#id. - a$ ha&e a 'etter ri(ht if
he can c#ai that he is an innocent p+rchaser for &a#+e. Example: a$'e
the ri(ht to rep+rchase was not annotated at the 'ac2 of the tit#e of the #and
and he has no act+a# 2now#ed(e. )f that is the case, - a$ ha&e a 'etter
ri(ht.
SAL4 O9 R2;:0 / ASS2;NM4N0 O9 R2;:0
Assi(nent of ri(ht is not necessari#$ a sa#e. )f there is a &a#+a'#e
consideration for the assi(nent, it is a sa#e. )f there is no &a#+a'#e
consideration, it a$ 'e a donation or dacion en pa(o.
Examples of right: credit, shares of stoc2
Re3isite of a ri7ht 3 the on#$ re1+ireent is that the ri(ht +st not 'e
intransissi'#e
;.R.: As a r+#e, ri(hts and o'#i(ations arisin( fro contracts are
transissi'#e.
4Ace&tions:
1. 2ntransmissible b1 Natre
$. 2ntransmissible becase of Sti&lation
'. 2ntransmissible becase of Law
CA=S4 OR %R2C4 C4R0A2N 2N MON4B OR 20S 48=2CAL4N0
Q: A deed of sale was entered into by A and B. #he price agreed upon
was 1< yen.
5a6 <ay that be a valid sale?
5b6 -an the seller compel the buyer to pay in yen?
A! 6a7 Ges, it is &a#id. 5asis is Artic#e 1458 'eca+se the on#$
re1+ireent of the #aw is Bin one$C. %&en Aapanese $en is in one$. 0he
#aw states that it a$ not e&en 'e in one$, it a$ 'e Be1+i&a#entC #i2e
proissor$ notes whether or not ne(otia'#e or #etters of credit.
6'7 )f the contract was entered into toda$, $es it is &a#id 'eca+se
of R.A. 8183 which repea#ed R.A. 529 in 1996. )f -.* was entered 'efore
R.A. 8183, the se##er cannot cope# e&en tho+(h the contract is &a#id. 0he
pa$ent has to 'e ade in 8hi#ippine one$.
-onsider the date of the sa#e. )f parties fai#ed to stip+#ate as to which
c+rrenc$, it has to 'e in 8hi#ippine c+rrenc$.
%rice Mst be Certain
Q: ho can fi' the price?
A! 617 0he 'est wa$ is for the parties to a(ree as to the price. 627 0he$ a$
a(ree that one of the wi## fix the price.
Q: <ay the sale be perfected if the agreement of the parties was for
one of them to fi' the price?
A! Ges, it a$ 'e perfected on#$ if the price fixed '$ the part$ who was
as2ed to fix the price was accepted '$ the other part$. )f not accepted, there
was no eetin( of the inds.
Note: 0he perfection wi## on#$ 'e considered at the tie of the acceptance
of the price fixed '$ the other part$ not fro the tie of the first a(reeent
of the parties.
Q: hat if a 7
rd
person was as0ed to fi' the price > A and B agreed
that ? will fi' the price, may the sale be void?
A! Ges, the sa#e a$ 'e &oid if the third person does not want to fix the
price or +na'#e to fix the price. ?ence, there was no eetin( of the inds.
Q: If the 7
rd
person fi'ed the price but it was too high or too low or
maybe there was fraud committed by the 7
rd
person or he was in
connivance with one of the parties, may the sale be void?
A! "o, 'eca+se the reed$ of the other part$ is to (o to co+rt for the co+rt
to fix the price.
Note: Lesion or (ross inade1+ac$ of the price does not as a r+#e in&a#idate
a contract +n#ess otherwise specified '$ #aw.
%xception! when otherwise pro&ided '$ #aw.
Example: Artic#e 1381.
Note: :nder the #aw on sa#es, if there is (ross inade1+ac$, it a$ ref#ect
&itiation of consent so the *- wo+#d nora##$ en/oin the #ower co+rts to 'e
warned of the possi'i#it$ of fra+d in case of #esion. Lesion +st 'e pro&en
as a fact. )t is not pres+ed.
)f there is (ross inade1+ac$, it a$'e 'eca+se act+a##$ the$ intended
another contract and that wo+#d a2e the sa#e a si+#ated sa#e and
therefore the sa#e is &oid.
Example! 0he &a#+e of the propert$ is 819 '+t on#$ 810,000 was written in
the contract 'eca+se the$ intended it to 'e a donation 3 &oid.
02M4 O9 0:4 %4R94C02ON O9 0:4 CON0RAC0
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
3
Action Sale
A+ction sa#e is perfected +pon the fa## of the haer or an$ other
c+stoar$ anner. 0h+s, 'efore the fa## of the haer in an a+ction sa#e,
the 'idder e&en if he has a#read$ ade a 'id, he can sti## withdraw the 'id
as #on( as he wo+#d do that 'efore the fa## of the haer. .therwise, 6if
after the fa## of the haer7, there is a#read$ a perfected sa#e.
Q: -an the auctioneer withdraw the goods before the fall of the
hammer?
A! As a r+#e, $es 'eca+se the sa#e has not 'een perfected at the oent
+n#ess the 'iddin( or a+ction has 'een anno+nced to 'e witho+t reser&e.
Note: 5efore perfection, there is one contract which a$'e perfected.
5efore perfection eanin( in the ne(otiation sta(e 3 this contract is 2nown
as the option contract.
O&tion Contract
.anche@ vs. "igos
;acts! 9rs. Ri(os offered to se## her #and to *anche@ for a certain price.
Ri(os (a&e *anche@ 2 $ears within which to decide. 6Note: 0he optionee or
proisee or offeree is not 'o+nd to p+rchase '+t he has the option to '+$
or p+rchase7. )n this case, *anche@ has the option. 5efore the #apse of 2
$ears, *anche@ to#d Ri(os that he is '+$in( and offered the price a(reed
+pon '+t Ri(os ref+sed c#aiin( that she was not 'o+nd '$ the written
option a(reeent 'eca+se no option one$ 6consideration7 was (i&en '$
*anche@. Accordin( to Ri(os, the option contract is &oid.
?e#d! *ince *anche@ accepted the offer and decided to '+$ within the
period 'efore the offer was withdrawn, a perfected -.* was created e&en
witho+t option one$. )n this case, there was no option contract 'eca+se it
was ere#$ an option a(reeent. 0herefore, there was ere#$ an offer on
the part of Ri(os and once the offer was accepted 'efore it was withdrawn,
re(ard#ess of whether option one$ was (i&en and in this case no option
one$ was (i&en, a perfected -.* was created.
Note: )'a pa( a$ option one$
Q: 4 years within which to decide > assuming there was option
money, before the offeree could decide to buy, the offeror withdraw
on the 3
th
month.
(a) -an the offeree on the 1+
th
month say %I would li0e to
buy,?
5b6 -an the buyer compel the seller to sell?
A! 6a7 "o.
6'7 "o, an action for specific perforance wi## not prosper 'eca+se when
he said he wi## '+t there was not ore offer to 'e considered. "a=withdraw
na eh.
Q: If the offeree files an action for damages, may that action prosper
there being option money given?
A! Ges, 'eca+se with the option one$, an option contract is perfected, the
offeror is 'o+nd to (i&e the offeree, 2 $ears within which to decide and
fai#+re to that he is #ia'#e not 'ased on perfected -.* '+t on perfected
contract of option.
O&tion Mone1 (OM) +s. 4arnest Mone1 (4M)
.9 is not part of the price whi#e %9 is part of the price and at the sae
tie, it is a proof of the perfection of the contract.
;.R.: A -.* a$ 'e in an$ for. Artic#e 1483 pro&ides that a -.* a$ 'e
in writin(, part#$ in writin( xxx. 0his pro&ision is exact#$ the sae as Artic#e
1356 in contracts which pro&ides that contracts a$ 'e o'#i(ator$ in
whate&er for the$ a$ ha&e 'een entered into pro&ided a## the essentia#
re1+isites are present. 5+t then a(ain e&en Artic#e 1356 /+st #i2e Artic#e
1475 wo+#d pro&ide for exceptions.
4Ace&tions: 0he #aw a$ re1+ire a partic+#ar for for its &a#idit$. 0he
-att#e Re(istration 4ecree is an exap#e = where the #aw itse#f pro&ides for
a partic+#ar for for the &a#idit$ of the sa#e. 5+t the #aw a$ re1+ire
partic+#ar for for its enforcea'i#it$ of the sa#e and that wo+#d 'e 1403 or
the stat+te of fra+ds. -oncrete#$, the sa#e of a parce# of #and if not in writin(
is &a#id '+t +nenforcea'#e. )t is not &oid. "ote that the price of the #and is
irre#e&ant if io&a'#e.
Example: 5efore, the sa#e of a #and for 8300 is &a#id and enforcea'#e e&en
if not in writin(. 5+t present#$, it has to 'e in writin( to 'e enforcea'#e. 0he
price is sti## irre#e&ant.
)f the o'/ect of the sa#e is o&a'#e, $o+ ha&e to consider not the &a#+e of
the thin( '+t the price a(reed +pon. 0he &a#+e a$ 'e different fro the
price. Go+ can se## a thin( worth 81,000 for 8400 '+t the #aw pro&ides for
the price. )f the price is at #east 8500 and the sa#e is not in writin(, it wi## 'e
+nenforcea'#e.
(aredes vs. !spino
;acts! 8aredes was a prospecti&e '+$er. %spino owns a #and in 8a#awan.
8aredes is fro "orthern L+@on. 0heir ne(otiation was thr+ #etters and
te#e(ras. %spino sent a #etter to 8aredes statin( that he and his wife
a(reed to se## the #and to 8aredes, that the deed of sa#e wi## 'e exec+ted
+pon the arri&a# of 8aredes in 8a#awan. <hen 8aredes arri&ed, %spino said
he is no #on(er interested in se##in(. 8aredes fi#ed a case to cope# %spino
to se## the #and. %spino contended that the contract is +nenforcea'#e
'eca+se it is not in writin(. ?e contended that +nder the stat+te of fra+ds it
is +nenforcea'#e. ?is contention was s+stained '$ the tria# co+rt.
?e#d! 0his contract is no #on(er co&ered '$ the stat+te of fra+ds 'eca+se
there was a #etter. Artic#e 1403 pro&ides that a note or eorand+ si(ned
'$ the part char(ed wo+#d 'e s+fficient to ta2e that contract o+t of the
operation of the stat+te of fra+ds. )n this case, the defendant wrote a #etter
with his si(nat+re on it. 0he #etter too2 that contract o+t of the operation of
the stat+te of fra+ds and therefore he a$ 'e cope##ed to exec+te the fina#
deed of sa#e.
R2;:0S AN. O(L2;A02ONS O9 0:4 C4N.OR
)n a deed of sa#e 64.*7, there can 'e h+ndreds of o'#i(ations of
the &endor '+t those o'#i(ations wo+#d 'e 'eca+se of the stip+#ation. 5+t
there are on#$ few o'#i(ations iposed '$ #aw. 0he 3 ost iportant!
1. 0o transfer ownership
2. 0o de#i&er
3. 0o warrant the thin(
0here are other o'#i(ations!
4. .'#i(ation to ta2e care of the thin( so#d with the di#i(ence of a
(ood father of a fai#$ prior to de#i&er$.
5. ;ro the tie of the perfection +p to the tie of de#i&er$ then
there wo+#d 'e o'#i(ation to pa$ for the expenses for the
exec+tion and re(istration of the sa#e and o'#i(ation to pa$ the
capita# (ains tax wo+#d 'e on the se##er as a r+#e.
6. .'#i(ation to de#i&er the fr+its which is re#ated to the o'#i(ation to
de#i&er the thin(
O(L2;A02ON 0O .4L2C4R 0:4 9R=20S
B!: A sold a mango plantation to B but they stipulated that delivery
will be after the signing of the deed of sale. After the e'piration of the
3Amonth period, B demanded for the delivery. #he vendor was able to
deliver 1 month after the date when he was supposed to deliver the
mango plantation. &uring this period, the vendor harvested mango
fruits and sold them to ?. #he vendor was able to deliver only after the
other fruits were harvested and sold to B. -an B recover the mango
fruits from B during the 3
th
month period?
*A! 4eterine first whether 5 is entit#ed to the fr+its 'eca+se if he is not
entit#ed, then he cannot reco&er the fr+its. )s he entit#ed to the fr+its after 6=
onth period d+rin( the 1=onth period prior to de#i&er$H Ges, in fact, +nder
1537, the fr+its of the thin( so#d fro the tie of perfection sha## pertain to
the '+$er.
O(L2;A02ON 0O 0A<4 CAR4 O9 0:4 0:2N;
;.R.: 0he thin( so#d sho+#d 'e deterinate 'eca+se if (eneric 61460, 2
nd
para(raph7 then there is nothin( to 'e ta2en cared of. )t wi## 'ecoe
deterinate on#$ +pon de#i&er$.
4Ace&tions: 0here are sa#es transactions wherein the &endor wo+#d not
ha&e this o'#i(ation!
a. -onstr+cti&e de#i&er$ = 're&i an+ , 0here wo+#d 'e no
o'#i(ation on the part of the se##er to ta2e care of the thin(
fro the tie of perfection 'eca+se at the tie of
perfection, the '+$er was a#read$ in possession of the
thin(. 9a$'e he 'orrowed the thin(. Example: he 'orrowed
the car and he decided to '+$ it , the thin( was a#read$ in
his possession.
O(L2;A02ON 0O %AB 4D%4NS4S / 0AD4S
0hese o'#i(ations a$ 'e the s+'/ect of stip+#ation. 5$
a(reeent, it wo+#d 'e the '+$er who wi## pa$ xxx "ora##$, dito hindi
nat+t+#o$ an( sa#e dahi# hindi a(2as+ndo 2+n( sino a('a'a$ad n( tax.
O(L2;A02ON 0O 0RANS94R O5N4RS:2%
B!: <ay a person sell something which does not belong to him?
ould the sale be valid? ould the buyer acCuire ownership over the
thing sold, if seller does not own the thing?
*A! Ges. .wnership o&er the thin( so#d is not an essentia# re1+isite for the
sa#e to 'e &a#id. 5+t if the se##er does not own the thin(, he a$ ha&e a
pro'#e on his o'#i(ation to transfer ownership. 0he pro'#e wo+#d 'e
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
4
whether or not the '+$er wo+#d ac1+ire ownership o&er the thin( so#d if the
person who so#d the thin( is not the owner.
Q: ho would have the right to sell and therefore they can transfer
ownership by way of sale?
A! ;irst, is the owner. %&en if he is not the owner, he a$ ha&e the ri(ht to
se## 'eca+se!
(1) ?e was (i&en the a+thorit$ '$ the owner. Example: A(ent
(2) ?e a$ 'e the owner '+t he a$ ha&e the a+thorit$ of the
#aw to se##, 2nown as B*tat+tor$ 8ower to *e##C 6Artic#e
15057. Examples: "otar$ p+'#ic in p#ed(e, #i1+idators,
(+ardians and recei&ers.
(3) 0hose who ha&e the a+thorit$ of the co+rt. Example:
*heriff. Note: it is as if the$ ha&e the a+thorit$ of #aw
'eca+se not e&en the /+d(e can &a#id#$ se## soethin( if it
is not consistent with the #aw.
Q: <ay a buyer acCuire ownership over the thing sold if the seller has
no right to sell?
A! 0he answer '$ wa$ of exception is $es. 5+t the 7eneral rle here is
+nder 1505 , the '+$er ac1+ires no 'etter tit#e than what the se##er had. )f
the se##er is neither the owner nor does he ha&e the a+thorit$ to se##, the
'+$er ac1+ires no 'etter tit#e than what the se##er had. )f his ri(ht is on#$ as
a #essee that is the ost that can 'e transferred to the '+$er. )f he has no
tit#e then no tit#e can 'e transferred to the '+$er.
4Ace&tions: 6<hen the '+$er can ac1+ire a 'etter tit#e than what the se##er
had. %&en if the se##er does not ha&e the ri(ht to se##, the '+$er a$ ac1+ire
ownership o&er the thin( so#d 'eca+se the #aw so pro&ides and not 'eca+se
the se##er was a'#e to transfer ownership to the '+$er.7
1. 5$ %stoppe#
2. %stoppe# '$ 4eed
3. %stoppe# '$ Record
4. *a#e '$ an Apparent .wner
5. "e(otia'#e 4oc+ent of 0it#e
6. 8+rchases fro a 9erchantDs *tore xxx
1. (1 4sto&&el , '$ the princip#e of estoppe#, a person is prec#+ded fro
den$in( that another person has a+thorit$ to se## 'eca+se of his acts. A#so
2nown as B%stoppe# in 8aisC which is a 2ind of e1+ita'#e estoppe# 'eca+se
of the acts > representation of the owner, he a$ not #ater on den$ the
a+thorit$ of the 3
rd
person.

$. 4sto&&el b1 .ee/
B!: A and B coAowners of land sold 5sale is verbal6 to ? their land. ?
subseCuently sold the land to B. ould B be considered to have
acCuired ownership over the land?
*A! :nder 1434 which is considered as B%stoppe# '$ 4eedC 6technica#
estoppe#7 , when the se##er who was not the ownerat the tie of the sa#e,
ac1+ires ownership, a+toatica##$, ownership passes to the '+$er '$
operation of #aw. ?owe&er, Artic#e 1434 re1+ires de#i&er$ to the '+$er. And
+nder the facts, 1434 wo+#d not app#$ 'eca+se!
a7 0here was no showin( there was pa$ent
'7 "o showin( that there was de#i&er$ of the #and to I.
)t cannot 'e said that '$ operation of #aw, G #i2ewise ac1+ired ownership '$
wa$ of estoppe# '$ deed.
'. 4sto&&el b1 Recor/
Durisprudence: *a#e '$ nephew of the owner of the #and. *ince the
nephew co+#d not de#i&er the #and, the '+$er s+ed the nephew for estafa.
;or the acc+sed to 'e ac1+itted, he as2ed his +nc#e to testif$ that he
act+a##$ had the a+thorit$ to se##. <hen the +nc#e testified in co+rt, the
nephew is ac1+itted. After ac1+itta#, the '+$er deanded fro the +nc#e the
de#i&er$ of the #and. 0he +nc#e ref+sed, c#aiin( that Bsa totoo #and, ) did not
a+thori@ed $ nephewC.
Q: -ase was filed against the uncle, would that action prosper?
A! *- said $es 'eca+se he cannot 'e a##owed now to c#ai that his nephew
was not a+thori@e to se## after he testified in co+rt that he (a&e s+ch
a+thorit$.
0his is estoppe# '$ record which is considered a technica# estoppe#.
!. Sale b1 an A&&arent Owner
A. ;actorDs Act
5. Recordin( Laws
-. An$ other pro&ision of #aw ena'#in( the apparent owner of the (oods to
dispose of the as if he was rea##$ the owner.
A. ;actorDs Act
%&en if a(ent has no ri(ht to se##, a third person a$ ac1+ire ownership
'eca+se he a$ re#$ on the power of attorne$ as written.
5. Recordin( Laws
Jost coon 1+estion in the 'ar exa
Rea/! <apalo vs. <apalo
#. Ne7otiable .ocment of 0itle
)f (oods are co&ered '$ a ne(otia'#e doc+ent of tit#e and it was
thereafter ne(otiated. )f the '+$er 'o+(ht it in (ood faith and for &a#+e, he
wi## 'e protected +nder the #aw. ?e wi## ac1+ire ownership e&en if the se##er
did not ha&e the ri(ht to se##.
Example: 0he se##er a$ ha&e ac1+ired tit#e '$ &io#ence. 5in+('o( n$a
$+n( owner n( (oods. 8ero 2+n( ne(otia'#e doc+ent of tit#e $an and
proper#$ ne(otiated, #a#o na 2+n( 'earer doc+ent of tit#e, then the '+$er
a$ ac1+ire ownership e&en if the se##er has no ri(ht to se##.
,. %rchases from a Merchant>s Store / Mar6ets / 9airs
.un Brothers vs. Eelasco
;acts! *+n 5rothers was the owner of a refri(erator. *+n 5rothers was
en(a(ed in the '+siness of se##in( refri(erator. *+n 5rothers so#d a ref to
Lope@ on insta##ent 'asis. As stip+#ated, *+n 5rothers reser&ed ownership
+nti# f+## pa$ent. Lope@ on#$ paid 8300 o+t of 81,500. 0he 'a#ance to 'e
paid on insta##ent. Lope@ then so#d the ref to Ee#asco.
Q: ould Eelasco acCuire ownership?
A! "o 'eca+se Artic#e 1505 pro&ides that the '+$er ac1+ired no 'etter tit#e
than what the se##er had. ?owe&er, Ee#asco was the owner of a store. .n
the next da$, Ee#asco so#d the ref to Ko Kan( -h+ who paid in f+##. <hen
*+n 5rothers #earned this transaction, it fi#ed an action to reco&er the ref
fro Ko Kan( -h+.
B!: F lost her diamond ring in a holdAup. Gater on, this ring was an
obHect of a public sale of one pawnshop. -an F recover the ring from
the buyer in that public sale?
*A! Ges, Artic#e 559 pro&ides that e&en if the '+$er is in (ood faith so #on(
as the owner is wi##in( to rei'+rse the '+$er of the price paid in that sa#e.
Note: A(ain in 1505, there is no ri(ht to reco&er as #on( as the '+$er
'o+(ht it in (ood faith fro a erchantDs store, there can 'e no reco&er$ as
a atter of ri(ht.
Q: 9ow transfer of ownership is effected?
A! :nder the #aw, as far as thin(s are concerned, it is effected '$ de#i&er$!
6a7 Act+a#
6'7 -onstr+cti&e
0here can 'e no transfer of ownership witho+t de#i&er$.
Notes:
(a) 0here a$ 'e a period a(reed +pon '$ the parties within which the
'+$er wo+#d ha&e to decide. %&en if he fai#ed to si(nif$ his
acceptance '$ the ere #apse of the period, he is deeed to ha&e
accepted 6ip#ied#$ accepted7 hence, ownership passes to hi.
6'7 %&en 'efore the #apse of the period, he a$ 'e considered to ha&e
accepted if he did an act wherein he wo+#d 'e considered to ha&e
adopted the transaction then ownership passed to hi.
Example: %&en if he has 10 da$s within which to decide '+t on the
2
nd
da$, he so#d the car to another. .'&io+s#$, he is deeed to
ha&e accepted the thin( 'eca+se he did an act which is
inconsistent with the ownership of the se##er #i2e he donated or
destro$ed the thin(.
(c) )f there is no period a(reed +pon, the #aw sa$s if he did not si(nif$
his acceptance he wi## 'e considered to ha&e accepted after the
#apse of a reasona'#e tie. Reasona'#e tie wi## depend on the
circ+stances of the sa#e, p+rpose of the sa#e, nat+re of the thin(
so#d. Example: 8erisha'#e (oods.
Sale or Retrn
Q: :wnership passes upon delivery?
A! Ges. ?owe&er, the '+$er is (i&en the ri(ht to re&est the tit#e 'ac2 to the
se##er nora##$ within a certain period. Example: -#a+ses in s+'scription
a(a@ine which sa$s that $o+ can ret+rn within 30 da$s witho+t pa$ent.
B!: A car was sold for (1*+,+++. ()*,+++ paid upon the e'ecution of
&:.. #he balance payable on a monthly basis. ()*,+++ was paid. #he
car was delivered to the buyer. 9owever, before he could pay the
balance, the car was destroyed due to a fortuitous event or was
burned ''' -an he still be compelled to pay the balance?
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
5
*A! Ges. :pon the de#i&er$ of the car to the '+$er, there 'ein( no retention
of ownership '$ the se##er. 6Note: <a#a sa facts na na=retain n( se##er and
ownership7. 0herefore, ownership passed to the '+$er. :nder the princip#e
of res perit doino , Artic#e 1504 , the owner 'ears the #oss and hence it
can 'e cope##ed to pa$ the price.
;.R.: Res perit doino , 1504.
Note! 4eterination of when ownership passed is iportant 'eca+se if at
the tie of the #oss, the '+$er is not $et the owner, as a r+#e, the '+$er wi##
not 'ear the #oss #i2e in sa#e on appro&a# and he has 10 da$s within which
to decide and the thin( was #ost thro+(h a fort+ito+s e&ent within the 10=da$
period witho+t fa+#t on his part, the se##er wi## 'ear the #oss.
4Ace&tions:
1. Rea/ Gawyers$ -ooperative vs. #abora
$. .ela1 in the .eli+er1
<hen there is de#a$ in the de#i&er$ d+e to the fa+#t of one of the
parties, whoe&er was at fa+#t wi## 'ear the #oss. "ote that either '+$er or
se##er a$ 'e at fa+#t.
Example 1: 0he '+$er and the se##er a$ ha&e a(reed that the (oods are to
'e o'tained '$ the '+$er at the wareho+se of the se##er on a specific date.
.n the date a(reed +pon, the se##er deanded the '+$er to (et the (oods.
4espite s+ch, the '+$er fai#ed to (et the (oods. .n the next da$, the
wareho+se was destro$ed d+e to fort+ito+s e&ent.
Q: ho is the owner at that time?
A! 0he se##er '+t there was de#a$ on the part of the '+$er hence +nder 1504
it is the '+$er who wi## 'ear the #oss.

Example 2: 0he se##er hise#f a$'e the one at fa+#t. 0h+s, he is in de#a$ in
de#i&erin( the (oods to the '+$er.
Q: hy would this be an e'ception to the res perit domino rule?
A! An( preise dito, the ownership has a#read$ passed to the '+$er '+t the
(oods are sti## with the se##er. -an this happen? Ges, 'eca+se of
constr+cti&e de#i&er$. )f there was constr+cti&e de#i&er$, ownership passes
to the '+$er '+t ph$sica# possession is sti## with the se##er. 0he$ a$ ha&e
a(reed this tie that the se##er wi## 'e the one to de#i&er the (oods to the
'+$er at a certain date. <hen the date arri&ed, despite deand fro the
'+$er, there was no de#i&er$ on the part of the se##er. %&en if the (oods are
destro$ed the next da$ d+e to fort+ito+s e&ent, ta2e note an( owner a$ an(
'+$er na '+t who will bear the loss? 0he se##er 'eca+se he was in de#a$
in de#i&erin( the (oods.
.O=(L4 SAL4 (AR02CL4 1#!!)
B!: F sold a registered parcel of land to " who did not register the
sale. #hereafter, F sold the very same parcel of land to - who
registered and obtained a new #-# in his name. ho would have a
better right?
*A! Att1. =ribe: ) f+##$ a(ree with the :8 Law -enterDs answer. )t depends
on whether or not - re(istered the sa#e in (ood faith. Re(istration is on#$
one of the re1+ireents (ood faith is e1+a##$ an iportant re1+ireent.
Note: )n 1544 6do+'#e sa#e7, as to which r+#e app#ies wi## depend on the
thin( so#d if o&a'#e or io&a'#e.
Q: If the thing is sold twice, who would have the better right?
A! )f o&a'#e, the '+$er who first too2 possession in (ood faith wi## ha&e the
'etter ri(ht. )f io&a'#e, the '+$er, who first re(istered in (ood faith, wi##
ha&e the 'etter ri(ht. )f there was no re(istration, it wi## 'e the first who too2
possession in (ood faith. )f no possession in (ood faith, the
'+$er who has the o#dest tit#e in (ood faith.
%&en the 1
st
'+$er is re1+ired to 'e in (ood faith. .'&io+s#$, the first '+$er
wo+#d ha&e the o#dest tit#e. G+n( (ood faith ditto o'&io+s#$ wo+#d not pertain
to a'sence of 2now#ed(e of the 2
nd
sa#e 2asi s$epre 1
st
'+$er s$a. ?e is
nonethe#ess re1+ired to ha&e 'o+(ht the thin( in (ood faith. Lood faith
eans that he had no 2now#ed(e of the defect of the tit#e of the se##er.
5arnin7: Please be careful when you recite you register the sale not the
land!
Rea/: Bautista vs. .ioson
-arumba vs. -A
;acts! *a#e of #and to 5 who too2 ph$sica# possession '+t did not re(ister.
?e is the first '+$er. ?owe&er, the se##er 6A7 is a /+d(ent de'tor in one
case to a certain creditor naed -. 0he #and 'ecae the s+'/ect of an
exec+tion sa#e. 0he '+$er 'ecae - who re(istered the sa#e.
Q: ho would have a better right between - and B 5- had no
0nowledge of the sale6?
A! *- *aid 3 5 'eca+se this #and was not re(istered +nder the 0orrens
*$ste. 1544 wo+#d not app#$ to +nre(istered #ands.
O(L2;A02ON 0O .4L2C4R 0:4 O(@4C0 O9 0:4 SAL4
4eterine the s+'/ect atter if it is a thin( or a ri(ht 'eca+se
there are different odes of de#i&er$ as to thin( and as to ri(ht.
0hin7s
<in/s of /eli+er1 of thin7s as a conse3ence of sale 6nown as
Etra/itionF G n/er the law:
1. Act+a# 4e#i&er$ > 9ateria# 4e#i&er$ > 8h$sica# 4e#i&er$ > Rea# 4e#i&er$ ,
the thin( is in the possession and contro# of the &endee. 0a2e note
Bcontro#C. 0a2e note Bto the &endeeC.
Q: hat if the thing was delivered to a 7
rd
person?
A! A+rispr+dence , *- said 3 $es, there a$'e act+a# de#i&er$ if the third
person has a+thorit$ to recei&e fro the &endee. 0h+s, a2in( hi an
a(ent of the &endee and that wo+#d sti## 'e act+a# de#i&er$.
Note: 8hi#ippine #aw does not on#$ re1+ire act+a# de#i&er$ , constr+cti&e
de#i&er$ a$ res+#t in transfer of ownership.
2. -onstr+cti&e , '$ the exec+tion of a p+'#ic instr+ent if the contrar$
intention does not appear on the doc+ent. 5$ the ere exec+tion of the
p+'#ic instr+ent that is e1+i&a#ent to de#i&er$. ?ence, ownership passes to
the '+$er.
Iuen@le J .treiff vs. <ac0e J -handler
;acts! 0he ori(ina# owner here *tan#e$ and Lriffindor 6paran( ?arr$ 8otter
7 and the propert$ in&o#&ed here are fixt+res of a sa#oon. 9ac2e and
-hand#er are /+d(ent creditor of *tan#e$ and Lriffindor. 5eca+se of a
/+d(ent in fa&or of 9ac2e and -hand#er, the sheriff #e&ied +pon these
properties which was sti## in the possession of *tan#e$ and Lriffindor. 0he
properties +nder exec+tion were 1+estioned '$ K+en@#e and *treiff.
K+en@#e and *treiff c#aied that these thin(s were so#d to the prior to the
#e&$. )f the$ c#aied that the properties were so#d to the, the properties
sho+#d 'e in their possession. 0a2e note that *tan#e$ and Lriffindor were
sti## in possession of the (oods ph$sica##$. ?ence, there was no act+a#
de#i&er$.
?e#d! )n order that ownership wo+#d pass, it has to 'e in a p+'#ic instr+ent
if that wo+#d 'e '$ constr+cti&e de#i&er$.
<in/s of Constrcti+e .eli+er1
1. 4e#i&er$ of the Ke$s , of the p#ace where the (oods are #ocated #i2e a
wareho+se.
8rof. 4e Leon! this a#so ca##ed as s$'o#ic de#i&er$.
2. 5$ 9ere -onsent or A(reeent of the 8arties , if at the tie of the sa#e,
possession to the (oods cannot 'e transferred to the '+$er. 0here +st 'e
a reason wh$ it cannot 'e transferred at the tie of the sa#e. 0his is a#so
2nown as tradition #on(a an+.
Example 1: 0he thin( was the s+'/ect atter of a #ease with a 3
rd
person
+nti# the expiration of the #ease, the thin( cannot 'e de#i&ered.
Example 2: 0he thin( was the s+'/ect atter of coodat+. As a r+#e,
period of coodat+ has to 'e respected.
3. 5re&i 9an+ , this is a 2ind of constr+cti&e de#i&er$ 'eca+se the '+$er
was a#read$ in possession of the thin( so#d at the tie of the perfection of
the sa#e so he wi## contin+e to 'e in possession after the sa#e, no #on(er as
a #essee '+t this tie as the owner. *o dati #essee #an( s$a that is wh$ he
was in possession or a$'e depositar$ #an( s$a or a$'e he was the
a(ent at the tie prior to the sa#e.
4. -onstit+t+ 8ossessori+ , the se##er wi## contin+e to 'e in the
possession of the thin( after the sa#e '+t no #on(er as an owner '+t in
another capacit$ #i2e #essee.
Bautista vs. .ioson
5eca+se a #ease a(reeent was entered into '$ the '+$er and se##er after
the sa#e then the '+$er 'ecae the #essor and the se##er 'ecae #essee.
0herefore, the #essee wo+#d contin+e with the possession no #on(er as an
owner.
Ri7hts
<in/s of .eli+er1 of 2ncor&oreal %ro&ert1 / 8asi G 0ra/ition:
1. %xec+tion of 8+'#ic )nstr+ent
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
6
2. 8#acin( the 0it#e of .wnership in the 8ossession of Eendee , a ri(ht
wo+#d nora##$ 'e co&ered '$ a certificate.
Example: de#i&er$ of the certificate of shares of stoc2s.
3. :se '$ the Eendee of ?is Ri(hts with the EendorDs -onsent
Example: *a#e of shares of stoc2s 3 the &endee a$ not a#wa$s ha&e the
ri(ht to exercise his ri(hts +nder the shares of stoc2s. -oncrete#$, if there is
a stoc2ho#dersD eetin(, the 'oo2s of the corporation wi## 'e c#osed for 30
da$s 'efore the eetin(. 0h+s, if the sa#e occ+rred when the 'oo2s are
a#read$ c#osed, no one wi## 'e reco(ni@ed except those re(istered owners.
*o if $o+ are the '+$er of those stoc2s, $o+ can on#$ +se $o+r ri(ht with the
consent of the &endor.
R=L4S ON SAL4 AS 0O 8=AN020B / 8=AL20B O9 0:4 0:2N; SOL.
Q: In a sale involving 1,+++ pairs of shoes with a specific design as
agreed upon. #he seller delivered 1,4++ pairs of shoes instead of only
1,+++. -an the buyer reHect everything?
A! "o. ?e has the ri(ht to re/ect on#$ the excess. Re/ect the 200 '+t he can
'e cope##ed to accept the 1,000.
Q: hat if instead of 1,+++, =++ was only delivered?
A! 0he '+$er cannot 'e cope##ed to recei&e 800 'eca+se partia#
perforance is non=perforance. Go+ cannot cope# the creditor to accept
partia# f+#fi##ent as a r+#e 'eca+se it can 'e a s+'/ect of a stip+#ation that
there can 'e partia# de#i&er$.
Q: #he obligation to deliver 1,+++ cavans of <ilagrosa rice. Instead of
delivering 1,+++ cavans of <ilagrosa, the seller delivered 1,1++ cavans
of both <ilagrosa and Burmese rice. <ay the buyer reHect everything?
A! Ges, if the (oods are indi&isi'#e. 9eanin( each sac2 of rice, 9i#a(rosa
and 5+rese rice were ixed. ?owe&er, if it is c#ear that per sac2 it is
9i#a(rosa rice and the 100 sac2s, it is c#ear that those are 5+rese rice
that wo+#d not 'e considered as indi&isi'#e. ?e can 'e cope##ed to accept
1,000 sac2s 9i#a(rosa and he has the ri(ht to re/ect 100 sac2s 5+rese
rice.
SAL4 O9 R4AL0B
Q: .ale of a parcel of land. (rice agreed upon is (1<. <ore or less 1++
sCm. #he actual area delivered by the seller was only ;* sCm. hat
are the remedies of the buyer?
A! 617 *pecific perforance , wo+#d 'e a reed$ if the se##er is sti## in the
position to de#i&er the 'a#ance. *i(+ro $+n( 2ata'in( #+pa sa se##er din,
hence, he can afford to (i&e additiona# 5 s1.
627 Q: If specific performance is not possible, is proportional
reduction a remedy?
A! )t depends on whether the sa#e is considered as a sa#e with a stateent
of an area of a rate of a certain eas+re or if it is a #+p s+ sa#e.
Q: Under the facts, ;* sCm was delivered, would rescission be a
remedy?
A! As a r+#e no 'eca+se rescission wo+#d on#$ 'e a reed$ if the area
#ac2in( is ore than 10M of that area a(reed +pon. *o 2+n( 100 s1,
dapat 11 s1 or 15 s1 an( 2+#an(, so o+t of 100 2+n( 85 #an( an( na=
de#i&er, then rescission is a atter of ri(ht.
%LAC4 O9 .4L2C4RB
Read 1524, 1525 and 1198
0he se##er de#i&ered the (oods to the p#ace of '+siness of the '+$er. )f the
'+$er ref+ses to recei&e the (oods, the '+$er wi## 'e considered in de#a$
and therefore wi## 'e #ia'#e to the se##er 'eca+se of +n/+st ref+sa#.
Q: <ay the buyer be considered in delay for his refusal to accept if
there is no place stipulated in the contract?
A! )t depends on the 2ind of thin(. 4eterine if it is deterinate or (eneric.
)f the thin( is deterinate, the #aw pro&ides that it wi## 'e the p#ace where
the thin( is #ocated at the tie of the perfection of the contract.
Q: hat if the obHect of the sale is a generic thing?
A! *e##erDs p#ace of '+siness or residence.
Note: )f there is no stip+#ation when to 'e de#i&ered, the se##er cannot 'e
cope##ed to de#i&er.
Q: hat if at the time of the perfection of sale, though the thing is
determinate, it was on board a ship while in transit. here will be the
place of delivery?
A! 4ependin( on the shippin( arran(eent a(reed +pon '$ the parties.
9.O.(. , ;ree on 5oard
C.2.9. , -ost, )ns+rance, ;rei(ht
;...5. and -.).; are r+#es of pres+ption which wo+#d ha&e to (i&e wa$ to
the rea# intention of the parties. *o after a##, the ;...5. or -.).;.
arran(eents do not rea##$ deterine the p#ace of de#i&er$, the$ on#$ a2e
r+#es of pres+ption.
*o in a -.).;. arran(eent, it is on#$ pres+ed that the p#ace of de#i&er$ is
the port of ori(in.
)n a ;...5. destination, it is on#$ pres+ed that the point of destination is
the p#ace of de#i&er$.
Q: hat really determines the place of delivery?
A! .- said this indication as to the intention of the parties as to the p#ace
of de#i&er$ is the anner and p#ace of pa$ent. )f there is an a(reeent as
to where and how the price is to 'e paid that wo+#d 'e the p#ace considered
for p+rposes of de#i&er$ and therefore for transfer of ownership.
Read 1582
Obli7ations which cannot be 5ai+e/:
1. .'#i(ation to transfer
2. .'#i(ation to de#i&er
Obli7ation which can be 5ai+e/:
1. .'#i(ation to warrant the thin(
<in/s of 5arranties n/er the Law:
1. %xpress
2. )p#ied
1. 4A&ress , an$ affiration of fact or an$ proise '$ the se##er re#atin( to
the thin(, the nat+ra# tendenc$ is to ind+ce to p+rchase the thin(.
Re3isites:
6a7 0here is an affiration of fact
6'7 0he fact +st pertain to the thin( either to the 1+a#it$, character or
tit#e of the thin(
An$ other atter a$ not 'e considered as an express warrant$.
0he +se of the words > terino#o(ies is not conc#+si&e as to whether or not
there is an express warrant$.
Example: B) (+arant$ > warrant$ $o+ that $o+ wi## 'e happ$ if $o+ '+$ this
car at 8100,000C3 this does not res+#t in an express warrant$
A(ain, if the affiration of fact pertains to the 1+a#it$ of the thin(, it is an
express warrant$.
Example: 0hese 10 sac2s of ferti#i@er wo+#d res+#t in 200 ca&ans of rice.
0he stateent of the se##erDs opinion is not as a r+#e considered an express
warrant$.
Example: B0his is the 'est piNa c#othC 3 it a$ t+rn o+t that there are 'etter
piNa c#oth.
As #on( as the se##er is not an expert on that fie#d, that wo+#d 'e treated
ere#$ as an opinion and there can 'e no #ia'i#it$ for 'reach of an express
warrant$.
B!: %A, sold a land to B for (1< in Antipolo. As agreed upon
(1++,+++ will be paid upon the signing of the &:.. #he balance will be
paid within 7+ days from the time the occupants 5sCuatters6 of the
land are evicted. It was so stipulated that if within 3 months, the
sCuatters have not yet been evicted, the seller should return the
(1++,+++. Another stipulation states > within the 3Amonth period, the
value of the land doubled. &espite the filing of an eviction suit by the
seller and the lapse of the 3Amonth period, the sCuatters were still
occupying the land. #he seller offers to return the (1++,+++ to the
buyer. #he buyer refused to accept the (1++,+++ and told the seller
%never mind even if the sCuatters are still there. I will still buy the
land,. .o the buyer offered to pay the balance (;++,+++ and
demanded that a &:. be e'ecuted by the seller. #he seller refused to
accept the (;++,+++. hat he did is to file an action to rescind the
contract. ould the action prosper?
*A! )f the answer is 'ased on rescission, the action wi## not prosper
'eca+se rescission a$ on#$ 'e in&o2ed '$ the a((rie&ed part$. 0he se##er
is not an a((rie&ed part$.

$. 2m&lie/ ,
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
7
%rof. .e Leon: 'eca+se of this ip#ied warrant$, it cannot 'e said that
8hi#ippine #aw does not adopt ca&eat eptor B'+$er 'ewareC. 6;a$eDs
-a&eat ! 8#ease chec2 the 'oo2 of 8rof. 4e Leon re(ardin( this
stateent. 0han2s 7
%&en if there is no stip+#ation as to these warranties, the #aw itse#f wo+#d
pro&ide for these warranties and hence if there are hidden defects he wo+#d
ha&e reedies +nder the #aw or e&en if he was depri&ed of the thin( he
'o+(ht he wo+#d ha&e a reed$ a(ainst the se##er. ?ence, it is not correct
to sa$ that 8hi#ippine #aw has adopted ca&eat eptor. 5+t there are certain
instances when there wo+#d 'e no s+ch ip#ied warrant$ a(ainst hidden
defects. 0here a$ 'e warrant$ as to tit#e or a(ainst e&iction '+t there is no
warrant$ a(ainst hidden defects +nder certain circ+stances.
5arrant1 A7ainst 4+iction / 0itle
Q: If the seller was able to transfer ownership to the buyer may the
seller nonetheless be held liable for breach of warranty against
eviction?
A! Ges. 0hese are 2 different o'#i(ations! the o'#i(ation to transfer
ownership and the o'#i(ation to warrant the thin(.
Example: 0his warrant$ a(ainst e&iction wo+#d inc#+de the warrant$ that the
'+$er fro the oent of the sa#e ha&e and en/o$ the #e(a# and peacef+#
possession o&er the thin( so#d.
Re3isites of warrant1 a7ainst e+iction:
1. 0here has to 'e fina# /+d(ent depri&in( hi of s+ch thin( either who##$
or partia##$. )n other words, a case was fi#ed '$ a 3
rd
person a(ainst the
'+$er which res+#ted in a fa&ora'#e decision as to the p#aintiff res+#tin( in
the depri&ation of the propert$ '$ the '+$er.
2. 4epri&ation +st 'e either!
62.17 5ased on a 3
rd
personDs prior ri(ht o&er the thin( prior to the sa#e
or
62.27 5ased on an act after the sa#e '+t ip+ta'#e to the &endor.
3. 0here sho+#d 'e no &a#id wai&er
4. 0he action to ho#d the &endor #ia'#e sho+#d 'e fi#ed within the period
prescri'ed '$ #aw.
5ARRAN0B A;A2NS0 :2..4N .494C0S
Re3isites:
1. 0he defect +st exist at the tie of the sa#e. )f the defect started after the
sa#e there can 'e no s+ch #ia'i#it$.
2. 0he defect +st 'e hidden. )f the defect is patent and the '+$er
nonethe#ess 'o+(ht the thin( then he can no #on(er ho#d the se##er #ia'#e.
)f the se##er is not aware of the hidden defects, he can 'e he#d #ia'#e. )f he
was aware, his #ia'i#it$ wi## 'e (reater 'eca+se that a2es hi a 'ad faith
se##er.
Q: !ven if there is such a hidden defect, is it possible that the vendee
cannot hold the vendor liable despite the fact that there was hidden
defect even if he was not informed because maybe the seller was not
aware?
A! Ges, he a$ not 'e a'#e to ho#d the se##er #ia'#e if he is an expert on the
thin(. ?e is expected to 2now the defect.
3. 0he defect +st res+#t in the thin( 'ein( +nfit for the p+rpose of the
'+$er or at #east it diinish the fitness of the thin( s+ch that the '+$er
wo+#d not ha&e 'o+(ht it at the price had he 2nown of s+ch defect.
Q: If the thing which has a hidden defect was lost or destroyed, can
the vendee hold the vendor liable for this breach of warranty? &oes it
matter if the loss was due to a fortuitous event or maybe the loss was
due to the fault of the buyer himself, nonetheless, can he hold the
vendor liable?
A! Ges. 0he &endee can ho#d the &endor #ia'#e for 'reach of warrant$
a(ainst hidden defects e&en if the thin( was #ost d+e to fort+ito+s e&ent or
d+e to the fa+#t of the &endee hise#f 'eca+se of the hidden defects. 5+t of
co+rse, if the ca+se of the #oss was the defect itse#f, the #ia'i#it$ is (reater
than if the ca+se of the #oss was a fort+ito+s e&ent or fa+#t of the '+$er.
)f there wo+#d 'e a pro'#e here as to the extent of the #ia'i#it$ of the
&endor, he sho+#d first consider the ca+se of the #oss, a$'e it was #ost d+e
to the defect itse#f or #ost thro+(h fort+ito+s e&ent or #ost thro+(h the fa+#t of
the &endee. After that, he sho+#d deterine whether the &endor was aware
of the defects or he was not aware. A(ain, if he was aware, daa(es a$
'e reco&ered. )f he was not aware, he a$ not 'e he#d #ia'#e for daa(es
+n#ess he can on#$ 'e he#d #ia'#e for interest.
)f the defect was the ca+se of the #oss, the &endor wo+#d 'e #ia'#e for the
ret+rn of the price, not on#$ the price #ess &a#+e '+t a#so to ref+nd the
expenses and daa(es 'eca+se the &endor was aware of the defects.
)f the &endor was not aware of the defects, he cannot 'e he#d #ia'#e for
daa(es '+t he wo+#d on#$ 'e he#d #ia'#e for the price.
)f the ca+se of the #oss of the thin( was a fort+ito+s e&ent, he can on#$ 'e
he#d #ia'#e for the price #ess &a#+e.
ANB C:AR;4 OR NON G A%%AR4N0 4NC=M(RANC4 NO0
.4CLAR4. OR <NO5N 0O 0:4 (=B4R
Q: ould there be an encumbrance over an immovable which is a
form of easement or servitude?
A! An exap#e of this is a road ri(ht of wa$.
Q: If the buyer bought the land which turned out to have a road right
of way in favor of a 7
rd
person, can he claim breach of warranty
against any charge or non > apparent encumbrance?
A! .f co+rse there are re1+isites!
617 0he enc+'rance or easeent or '+rden or the road ri(ht of wa$
has to 'e non , apparent.
Q: If there is an encumbrance, what are the remedies of the buyer?
A! 6a7 ?e can see2 for the red+ction of the price.
6'7 Rescission = the #aw re1+ires that the action for rescission +st 'e
fi#ed within 1 $ear fro the date of the contract. )f after 1 $ear, no ore
rescission.

6c7 )f he 'ecae aware ore than a $ear, he a$ fi#e an action for
daa(es, 5+t the #aw re1+ires that the action for daa(es has to 'e fi#ed
within 1 $ear a#so '+t fro the tie of the disco&er$ of enc+'rance. )f he
fi#ed it for exap#e, after 2 $ears fro disco&er$ , no reco&er$ of daa(es.
5ARRAN0B O9 8=AL20B
%rof. .eleonH %rof. Cit7H %rof. (a+iera: there is another warrant$ which
is 5ARRAN0B O9 8=AL20B which inc#+des!
617 <arrant$ of ;itness
627 <arrant$ of 9erchanta'i#it$
0o soe a+thors the warrant$ of 1+a#it$ is considered +nder the warrant$ of
hidden defects.
Att1. =ribe: ) cannot a(ree that the warrant$ of 1+a#it$ is in the warrant$ of
hidden defects. ) a(ree with 8rof. 4e Leon, 8rof. Eit+( and 8rof, 5a&iera
that there is a warrant$ of 1+a#it$.
5ARRAN0B O9 920N4SS 9OR A %AR02C=LAR %=R%OS4
0he thin( 'o+(ht a$ not act+a##$ ha&e an$ defect and for 1 i##ion '+$ers
it wo+#d 'e fit for their p+rpose. ?owe&er, it a$ not 'e fit for the p+rpose of
1 '+$er and if a## the re1+isites for this warrant$ are present, then he a$
ho#d the se##er #ia'#e for 'reach of warrant$ of fitness for a partic+#ar
p+rpose a#tho+(h there is no hidden defect '+t it is not fit for the p+rpose of
the '+$er.
)n order for the se##er a$ 'e he#d #ia'#e!
1. 0he '+$er has to infor the se##er of the partic+#ar p+rpose for
which the thin( is to 'e +se and
2. 0he se##er anifested that the thin( wo+#d 'e fit for the p+rpose
and the '+$er re#ied on s+ch representation of the se##er.
Note: )f the thin( is so#d +nder the trade nae there can 'e no warrant$ of
fitness for a partic+#ar p+rpose.
5ARRAN0B O9 M4RC:AN0A(2L20B
)t pertains to the fact that it is fit for the (enera# p+rpose. )f the thin( was
so#d '$ description or '$ sap#e, it is considered that there is s+ch a thin(
as warrant$ of erchanta'i#it$.
SAL4 O9 AN2MALS 520: .494C0S G R=L4S:
1. 0he defect is a redhi'itor$ defect , it is s+ch 2ind of defect that e&en '$
exaination of expert it cannot 'e disco&ered.
Q: If one of the animals has redhibitory defect, can the buyer rescind
the entire contract pertaining to all the animals?
A! ;.R.! "o. ?e can on#$ rescind the contract pertainin( to the ania# with
redhi'itor$ defect. ?e cannot rescind the entire contract pertainin( to a##
ania#s.
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
8
4Ace&tion: )f he can pro&e that he wo+#d not ha&e 'o+(ht the others had
he 2nown the defect of one then he can rescind the entire contract.
Q: ho has the burden of proof that he would not have bought the
others had he 0nown of the defect of one?
A! "ora##$, it wo+#d 'e the '+$er. 5+t the #aw +nder certain circ+stances
wo+#d pro&ide for this pres+ption that it is pres+ed that he wo+#d ha&e
'o+(ht the others had he 2nown of the defect of one.
Examples! ?e 'o+(ht the ania#s in teas or in pairs then the pres+ption
arises.
= Lo&e 'irds 6An( (a #o&e 'irds, 2apa( naata$ $+n( isa
#ater on aata$ din $+n( isa. 9insan n(a (s+icide pa s$a
pa( a( isa na #an( s$a. )++nto( n$a +#o n$a sa ca(e n$a. 7
2nstances whether there wol/ be no warrant1 a7ainst hi//en /efects
an/ therefore ca+eat em&tor ma1 be in+o6e/:
1. *a#e which is an Bas is where isC sa#e which eans sa#e where it is fo+nd
xxx 'aha#a 2a sa '+ha$ o if $o+ want to '+$ the thin( and $o+ cannot
#ater on c#ai that there were hidden defects. 6;a$e! p#s. research the
cop#ete eanin( of Bas is where isC sa#e. Att$. :ri'e wi## as2 the eanin(.
7
2. *a#e of 2
nd
hand ites
3. *a#e of ania#s in fairs
4. *a#e in p+'#ic a+ction
Note! 0here wo+#d sti## 'e warrant$ a(ainst e&iction.
Note: R+#es on warrant$ a#so app#$ to /+dicia# sa#e.
Q: In sale by authority of law or in e'ecution sale, can there be breach
of warranty against eviction?
A! Ges. 0he /+d(ent de'tor and not the sheriff sha## 'e #ia'#e.
0he #aw wo+#d specifica##$ exept certain persons fro #ia'i#it$ for 'reach
of warrant$ #i2e sheriff, a+ctioneer, ort(a(ee, p#ed(e and other persons
who se## '$ &irt+es of an a+thorit$ of #aw #i2e notar$ p+'#ic 'eca+se the$ are
not rea##$ se##in( for these#&es, the$ are se##in( on 'eha#f of another
person.
R2;:0S AN. O(L2;A02ONS O9 0:4 C4N.44
1. .'#i(ation to accept the thin( de#i&ered.
2. .'#i(ation to pa$ the price 6if warranted, with interest7
1. Obli7ation to acce&t the thin7 /eli+ere/
Q: If the buyer received the goods delivered, does it mean that he
already accepted?
A! "o 'eca+se recei&in( is pre#iinar$ to acceptin(. )n fact, this is
consistent to the ri(ht pro&ided '$ #aw to the '+$er which is the ri(ht of
inspection or the ri(ht of exaination. 0hereafter, he a$ re/ect the (oods if
defecti&e.
$. Obli7ation to &a1 the &rice
Q: hen?
A! 617 As stip+#ated
627 )f there is no stip+#ation, it wo+#d 'e at the tie and p#ace of
de#i&er$.
Ri7ht to 2ns&ect / 4Aamine
0his a$ 'e wai&ed.
Example: -...4. arran(eent.
MAC4.A LA5
*t+d$ 9aceda Law and its essentia# feat+res 6see 'oo2 of 8rof. 5a&iera7
Q: Are the remedies under the <aceda Gaw alternative? -an the buyer
be able to e'ercise 4 or more remedies all at the same time?
A! Ges. Reedies +nder the 9aceda Law are c++#ati&e.
R4M4.24S 9OR (R4AC: O9 CON0RAC0
R4M4.24S O9 AN =N%A2. S4LL4R (AR02CL4 1#$,)
617 Ri(ht to retain the thin( in his possession 6possessor$ #ien7
627 Ri(ht of stoppa(e in transit+ > ri(ht to res+e possession of the
(oods
637 Ri(ht of resa#e
647 Ri(ht to rescind
Q: Are there other remedies aside 1*43?
A! Ges. 0he se##er a$ opt to fi#e an action for specific perforance or an
action for daa(es.
=n&ai/ seller , is one who has not 'een f+##$ paif of the price.
Note: reedies of the +npaid se##er are not necessari#$ a#ternati&e. 0he
ri(ht of resa#e and the ri(ht to rescind a$ on#$ 'e exercised if the se##er
has possessor$ #ien.
%OSS4SSORB L24N
Q: hy is it called possessory lien?
A! 'eca+se there another #ien in the #aw. 0his is the #ien +nder the r+#es on
conc+rrence and preference of credit.
Note: 0he '+$er is not re1+ired to 'e inso#&ent.
Q: hen would the seller be considered to have lost his lien?
A!
617 )f he wai&es his ri(ht
(2) )f the '+$er #awf+##$ o'tained possession o&er the (oods
(3) <hen the thin( is de#i&ered to a coon carrier and the
se##er did not prefer his ownership and possession o&er the
(oods.
S0O%%A;4 2N 0RANS20=
Re3isites:
617 )nso#&enc$ of the '+$er
627 0he se##er +st ha&e parted possession o&er the (oods
637 0he (oods +st 'e in transit
:ow ri7ht is eAercise/:
617 5$ o'tainin( act+a# possession of the (oods
627 0his a$ 'e exercised '$ ere notice to the coon carrier
)f the se##er &a#id#$ exercised the ri(ht of stoppa(e in transit+, he wi## 'e
considered to ha&e re(ained his possessor$ #ien.
R2;:0 O9 R4SAL4
Q: hen would the seller have this right?
A!
617 )f the (oods are perisha'#e
(2) 0he ri(ht is express#$ reser&ed in the contract
637 0he '+$er has 'een in defa+#t for an +nreasona'#e tie.
Note: 0he se##er sho+#d send a notice of the intention to rese## to the '+$er.
Note: 0he resa#e a$ 'e a pri&ate sa#e or a p+'#ic sa#e. 0he on#$ #iitation
here is that the se##er cannot '+$ direct#$ or indirect#$.
R4C0O LA5
8#s. read *a#es '$ 8rof. 5a&iera
4D02N;=2S:M4N0 O9 SAL4
8#s. read *a#es '$ 8rof. 5a&iera
1. 8a$ent
2. "o&ation
3. Loss of the thin(
=n/er the law on sales
1. 0he exercise of the ri(ht of resa#e wi## res+#t in the
extin(+ishent of the 1
st
sa#e. 0he ownership of the 1
st
'+$er wi##
'e terinated and s+ch ownership wi## 'e &ested to the 2
nd
'+$er
2. Rescission or cance##ation wi## extin(+ish -.*
3. Redeption
<in/s of Re/em&tion
1. -on&entiona#
2. Le(a#
LEASE
Note:
Read the 4efinition of Lease +nder Artic#es 1643, 1644,
1713.
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
9
-onsider a#so on ;ora#ities! Artic#es 1647, 1724 in
re#ation to 1403 on *tat+te of ;ra+ds and 1403, 1878 on A(enc$ to
Lease.
Assi(nent and *+'#ease! Artic#es 1649, 1650
)p#ied new #ease or tacita rec+nd+cion! Artic#e 1670
"important#
Ri(hts and .'#i(ation of the Lessor and Lessee! Artic#es
1673, 1678, 1680, 1723 "ta$e note se%eral &uestions in the bar ha%e
appeared under these pro%isions#
8eriod of the Lease if the parties fai#ed to ;ixed the 8eriod!
Artic#es 1682, 1687
Ri(hts of 0hird 8erson! Artic#e 1729 "ex: rights of owner of
materials against the owner of the building#
"ote! 0he first thin( to consider in #ease is to consider the 2ind of #ease.
<in/s of Lease:
1. Lease of 0hin(s
2. Lease of <or2 or *er&ice
3. Lease of Ri(ht
"ote! )n #ease of *er&ice, there are fo+r 647 of the '+t three 637 wi## not 'e
co&ered '$ -i&i# Law, which are ?o+seho#d *er&ice and -ontract of La'or
6co&ered '$ La'or Law7, and -ontract of -arria(e 6co&ered '$ -oercia#
Law7. 0he on#$ 2ind of Lease of *er&ice that wi## 'e disc+ss +nder the -i&i#
Law is the -ontract for a 8iece of <or2.
.efinition:
Q: If a party binds himself to give another the enHoyment or use of
thing, does that ma0e the contract one of lease of things?
A! "o, the ost iportant distinction here with that of coodat+ is that
in #ease, it +st 'e for a price certain, otherwise if there is no &a#+a'#e
consideration for the +se or en/o$ent of the thin( it wi## 'e coodat+.
.istin7ish a Contract for %iece of 5or6 from Contract of A7enc1
Rea/: Frensel vs. <ariano
"ote! )n A(enc$, the contro# of the principa# o&er the a(ent is so per&asi&e
that the principa# can contro# not on#$ the res+#t '+t a#so the anner and
ethod of the perforance of the o'#i(ation which is not present in this
case and therefore 9erit was not considered an a(ent of 9ariano.
Q: As to the relationship of the ta'i driver with his operator, is this a
contract of lease?
A! *-, r+#ed that this is in fact a #ease '+t not a #ease of thin(, '+t #ease of
ser&ice specifica##$ an ep#o$ent contract, this is 'eca+se of the contro# of
the operator o&er the taxi dri&er, as to when, what tie the dri&e operates
the &ehic#e.
Note: A(ain, to distin(+ish #ease contract fro other #e(a# re#ationship $o+
ha&e to consider the characteristic of the contract. 0he 'est wa$ to
ree'er the 2inds of contract is to 2now '$ heart what are the rea#
contract 6+t++, coodat+, deposit, p#ed(e7 and fora# contract
6antichresis, donation7. Aside fro that it a$ 'e safe to consider as a r+#e
a## the other contract as consens+a# contract, where no partic+#ar for is
re1+ired except in exceptiona# case! e.(. sa#e of #ar(e catt#e.
As a r+#e #ease, therefore is a consens+a# contract '$ ere
eetin( of the ind as to the o'/ect and to the consideration the contract is
perfected.
Note: Lease of thin(s is not essentia##$ persona#.
9eirs of Fausto &imaculangan vs. IA-. :pon the death of parties #i2e
death of #essee, the contract is not there'$ terinated. 0he heirs of the
#essee a$ contin+e to occ+p$ the preises '$ &irt+e of the #ease 'eca+se
it is not extin(+ish +pon death of #essee.
Characteristic of Lease of thin7s
-onsens+a# -ontract
.nero+s
5i#atera#
"oinate
8rincipa#.
4ssential Re3isites of Contract of Lease
1. -."*%"0
2. .5A%-0
Q: In lease of things, may a consumable thing be the subHect matter of
lease?
A! "ora##$ when a cons+a'#e thin( is +se in accordance with its nat+re it
is cons+ed, as a r+#e therefore cons+a'#e thin(s cannot 'e the s+'/ect
atter of #ease of thin(s. 0he exception is, when the +se of the thin(s is
on#$ for exhi'ition, or when the$ are accessor$ to an ind+stria#
esta'#ishent then it a$ 'e a s+'/ect of #ease.
3. -A:*%
9ORMAL2024S
Lease of *er&ice , there is no partic+#ar for re1+ired '$ #aw for the &a#idit$
of the #ease not e&en for the enforcea'i#it$ as a r+#e.
Rea/: .onal/ .1 +s. CA
Lease of 0hin(s , certain pro&ision of the #aw which re1+ires certain fors
to 'e enforcea'#e.
Note: the pro'#e in #ease wo+#d nora##$ 'e a co'ination of an a(enc$
and #ease.
B!: Agreement for the repair of a private plane and for a certain sum
of money, however additional wor0 was reCuested by a person who
has the authority of a duly recogni@e representative of the owner of
the plane and the reCuest was merely verbal, when the additional
wor0 was completed, the one who rendered the wor0 demanded
additional payment, the defense raise was under 1)42 in order that a
claim for additional payment for the additional wor0, the agreement
for the additional wor0 must be in writing and the changes should be
authori@ed in writing
*A! 0he s+((ested answer of :8 wi## s+stain the defense 'eca+se of 1724O
s+ch chan(e not 'ein( a+thori@ed in writin(, the re1+est was ere#$ &er'a#
then the c#ai a$ not prosper.
R2;:0S AN. O(L2;A02ON O9 0:4 L4SSOR
As to necessar$ repairs of the thin( #ease, this is an o'#i(ation of
the #essor, +nder the #aw the #essor is o'#i(e to a2e the necessar$ repairs.
Rea/: Kon@ales vs. <ateo
R2;:0S AN. O(L2;A02ONS O9 0:4 L4SS44
Note: 0wo 627 fa&orite artic#es are 1649 pertainin( to assi(nent of #ease,
and 1650 on s+'#ease.
0he 1+estion in the 5ar a$ 'e as sip#e as a$ a #essee
s+'#ease the propert$ witho+t the consent of the #essor and what are the
respecti&e #ia'i#ities of the #essee and s+'#essee.
Artic#es 1649 and 1650 wo+#d te## +s that a #essee a$ not
assi(n his ri(ht on the #ease witho+t the consent of the #essor howe&er he
a$ s+'#ease the propert$ in who#e or in part e&en witho+t the 2now#ed(e
of the #essor as #on( as he was not prohi'ited fro s+'#easin( the
preises.
Rea/: <alacat vs. .ala@ar
Frensel vs. <ariano
04RM2NA02ON O9 0:4 L4AS4
B!: &iscuss the effect of death of lessee, lessor, agent and principal.
*A! )n a #ease of thin(, death of the #essee does not terinate the contract.
A contract of #ease is not essentia##$ a persona# contract therefore +pon the
death of the #essee, it a$ 'e contin+ed +nti# the expiration of period of the
#ease '$ the heirs. 6-ase! ?eirs of 4iac+#an(an &s. )A-7
2M%L24. N45 L4AS4
Note: one of the ost fa&orite in the 'ar exa.
Re3isites!
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
10
1. 0he #ease period has expired and
2. 0he #essee contin+es to 'e in possession of the #ease for at #east 15 da$s
fro the tie of the expiration of the #ease and
3. "o notice to the contrar$ fro the #essor and the #essee.
B!: (ertain to contract of lease entered into for period of 7 years Dan
1, =1 up to 1;=2. "entals were paid on monthly basis. It was
stipulated that the lessee has the option to buy property at a certain
price within a certain period 5option to buy6. &espite the lapse of the 7
year period, the lessee did not e'ercise the option, but continued to
be in possession of the property and paying the monthly rentals and
the lessor accepting the same. #his continued until Dune 1;=2 when
the lessee stated that he would now buy the property in accordance
with the option to buy. #he lessor refuse, claiming there was no more
option. as the lessor correct? Ges. as it correct to say that there
was e'tension of the lease under the facts? *A! Ges, there was an
extension 2nown was ip#ied new #ease. ?owe&er, with the ip#ied new
#ease it does not ean that a## the ters and condition of the contract in the
ori(ina# #ease contin+e a#so. ;irst as to the ter, +nder the #aw, the ter of
the renewed #ease wo+#d not 'e the ter a(reed +pon '+t on#$ 'e of a
period dependin( on the anner the renta#s are paid. )f the pa$ent is on
ann+a# 'asis, the renewa# wo+#d on#$ 'e for a $ear and if onth#$ pa$ent
of renta# is ade, the ip#ied new #ease wo+#d on#$ #ast for 30 da$s.
As to the option, it was renews, *- he#d, in an ip#ied new
#ease, on#$ those ters and conditions which are (erane in a contract of
#ease are deeed renewed as to the rest #i2e option to '+$, wi## not 'e
considered renewed. %&en in the facts of the case itse#f, it was stip+#ated
that the option a$ 'e exercise within the period a(reed +pon 63 $ears7.
AGENCY
4efinition 1868, 1874 and 1878= fora#ities
-o@ a for is re1+ired for the &a#idit$ or for the enforcea'i#it$ of the contract
entered '$ the a(ent=1878, 1874
1892= pertain to appointent of the s+'stit+te= effect= a$ the a(ent
nonethe#ess 'e he#d #ia'#e for the #oss that inc+rred '$ the princip#e as the
res+#t of the appointent of the s+'stit+te.
.ther pro&isions pertain to the ri(ht and o'#i(ations of coission a(ent or
ore iportant#$ the (+arant$ coission a(ent=1907=1908
%ffect of death=1919, 1930 and 1931
%ither of the a(ent or principa#
Re&ocation=2ind of a(enc$= a(enc$ co+p#ed with interest=1927
(4: A as6e/ her best frien/ to ( b1 for her certain items in a 7rocer1
store. 2s there a nominate contract create/ between A an/ (I
*A! 5etter answer, if 5 a(reed to the re1+est of A, an a(enc$ re#ationship
has 'een created, a noinate contract has 'een created.

Rea/: Quiroga vs (arsons
4istin(+ishin( contact of a(enc$ fro other contract and other #e(a#
re#ationship. -onsider the characteristics of a contract of a(enc$ as a
contract and as a #e(a# re#ationship '+siness or(ani@ation.
Rea/: Gepanto <ining case
<ariano case
Some athors wol/ classif1 contract of a7enc1 into threeH not
conce&ts.
1. Act+a# a(enc$
2. Apparent > dorant
3. %stoppe#
1. 4sto&&el
Iang case
;acts! ;#ores appears to ha&e f+## contro# of a resta+rant, owned '$ Kan(
and in the adinistration of the resta+rant he 'o+(ht certain ites fro
9ac2, ites needed for resta+rant '+t a portion > price to 'e paid, not '$
;#ores, so 9ac2 6 se##er 7 went after the owner of the resto. 0he on#$
defense raised '$ the owner was that ;#ores was not his a(ent.
0a6e note! it is &er$ diffic+#t to pro&e act+a# a(enc$, 'eca+se an
a(reeent 'etween 2 persons, eh 2+n( &er'a# #an( an( a(reeent d+n,
how wo+#d $o+ 'e a'#e to pro&e, the owner of the resta+rant can 'e he#d
#ia'#e '$ estoppe# 'eca+se he c#oth ;#ores with f+## power as if he has the
a+thorit$ to '+$ those ites necessar$ for the adinistration of resta+rant
aside fro that 9ac2 was a'#e to pro&e pieces of e&idence #i2e in the #ease
a(reeent o&er the '+i#din( where resta+rant was #ocated and coes the
owner of the resta+rant as #essee and ;#ores si(n as an a(ent of the #essee
with a## this the
?e#d! 0he owner of the resta+rant is #ia'#e +nder the 8rincip#e of %stoppe#.
$. A&&arent / Ostensible
Q: A letter was sent by B to ?, informing ? that A has the authority to
enter into a contract with ? specifically to obtain goods from ?, li0e
copra, abaca which goods will be sold by A, after the sale a portion
can be deducted as a commission and the restaurant to be delivered
to ?. after a certain period, the goods obtain by A from ? remained
unpaid. In other words A will get the goods from ?, A did not deliver
the proceeds of the sale. ? demanded payment from B. #he defense of
B was as of that moment from that certain period he has already
revo0ed the authority of the agent and therefore be bound by any
contract entered into by A in representation of B with 7
rd
person. Is the
claim of B tenable?
*A! "o. 1873 so far as 3
rd
person are concern, this notice iton( #etter n$a
2a$ I reain in f+## force and effect +nti# it is rescinded in the sae anner
it was (i&en.
' Actal a7enc1
0he #aw itse#f c#assif$ act+a# a(enc$ into as anner of creation, express >
ip#ied. 0here is no pro'#e with express a(enc$.
3. %xpress a(enc$=it is a 2ind of a(enc$ the consent of 'oth parties
were express#$ (i&en.
4. )p#ied a(enc$= were the consent of one parties was on#$
ip#ied#$ (i&en on the part of principa#= the #eadin( case is &ela
(ena vs. 9idalgo
Q: If a person was as0ed to administer the property of another to sell
the property, and he said nothingA by his silence, by his inactions may
be deemed accept agency?
A! "ot necessari#$. :nder the #aw, $o+ ha&e to a2e distinction to
deterine the scenario +nder which the said appointent was ade, o2ieP
0he #aw wo+#d sa$ when the 2 parties are a'sent, and when the 2 parties
are present.
<hen 2 parties are a'sent= 1 is in 9ani#a and the other is in -e'+.
<hen 2 parties are present= present in the sae roo
6a7 2 persons present= present in the sae conference ha##
6'7 )f 2 persons are in different p#ace, one in 9ani#a and the other one
in -e'+
Com&ensation
As to the copensation in a contract of a(enc$ consider if the a(enc$ is
(rat+ito+s or onero+s.
Rea/: 1909 = the #ia'i#it$ of the a(ent for daa(e to the principa# d+e to his
ne(#i(ence or e&en 'ad faith or fra+d coitted a(ainst the principa# a$
'e iti(ated if the a(enc$ is (rat+ito+s in character.
B!: .cope of authority of the agent whether it only pertains to the
acts of administration or acts of anu yun dominion?
*A! :nder this pro&ision 1877 if the a(enc$ is coes in (enera# ter this
on#$ coprise acts of adinistration e&en if the principa# 'eho#ds power to
the a(ent or it is stated that the a(ent a$ exec+te an$ act as a$ 'e
deeed appropriate. 0hat wi## sti## 'e an a(enc$ pertainin( to act of
adinistration.
As to for, the #aw is c#ear that it a$ 'e ora# howe&er the #aw a$ re1+ire
a partic+#ar for.
4SS4N02AL 4L4M4N0S O9 A CON0RAC0 O9 A;4NCB
Rea/: "allos case
0he *- en+erated the essentia# e#eents or the a##e(ed essentia#s
e#eents of a contract of a(enc$.
1. -onsent
2. %xec+tion of the /+ridica# act= s+'/ect atter
3. Acts within the scope of a+thorit$
4. 0he acts +st 'e in representation of the principa#
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
11
0his are a##e(ed#$ the essentia# e#eent a(ain soe a+thors wo+#d disc+ss
in their 'oo2s with d+e respect to the ponente of this case, ed$o a#i a#i
an( en+eration, first there was nothin( ention a'o+t the ca+se or
consideration as a contract, a contract wi## ne&er &a#id#$ ha&e a ca+se or
consideration we## it a$ 'e #i'era#it$ pwede naan ca+se $an '+t there
+st ha&e a ca+se if on#$ for that the en+eration 'e defecti&e ore than
that that #ast 2 ention that the a(ent act within the scope and that the
a(ent +st act in representation are not essentia# e#eents of a contract of
a(enc$ the$ are act+a##$ o'#i(ations of a(ent which eans the$ ha&e 'een
a#read$ perfected of contract of a(enc$, no o'#i(ation wi## arise 2+n( &oid
+n( 2ontrata 2+n( wa#a pan( &a#id contract, so essentia# e#eents are on#$
those e#eents necessari#$ for the &a#idit$ of the contract, once the contract
is &a#id then the o'#i(ations wi## arise e&en if the agent acted outside the
scope of authority does it mean that the contract of agency is void? .f
co+rse not, he can 'e he#d #ia'#e for actin( o+tside the scope of a+thorit$ or
if he acted not in contep#ation of the principa#, does it mean that there
was no agency at all? .f co+rse not, there is a contract of a(enc$. :nder
the r+#e the conse1+ences if the a(ent did not act in the representation of
the principa#.
%AR024S
Loin( to the consent of the parties, we## 1 a+thor c#ais that there are 3
parties in a contract of a(enc$ that is tota##$ wron(P 0here are on#$ 2 parties
in a contract of a(enc$ the principa# and the a(ent, howe&er in pro'#es
in&o#&in( a(enc$ there a$ 'e there wo+#d 'e nora##$ three persons
in&o#&e, the third persons with who the a(ent transacted, no #on(er part of
the concept a(enc$, this is the a(enc$, the contract entered into 'etween
'$ the principa# and the a(ent, '+t when the a(ent entered into a contract it
a$ 'e a sa#e, #ease or other contract and the 3
rd
person is not a part$ to
this contract, the 3
rd
person is a part$ to a 2
nd
contract, that a(ain the parties
is the principa# and the a(ent, the$ a$ 'e ca##ed in another naes the
principa#= ep#o$er, constit+ent, chiefO the a(ent a$ 'e ca##ed attorne$=in=
fact, prox$, representati&e.
O(@4C0
As to the o'/ect of the contract of a(enc$ = this is the exec+tion of /+ridica#
act.
9ORM
A(enc$ a$ 'e ora#. )t does not atter, the contract of a(enc$ wo+#d 'e
&a#id '+t the parties e&en if it is '$ &er'a# a(reeent, howe&er an$ effect of
the &er'a# a+thori@ation, the a(reeent 'etween the a(ent and the principa#
if it was on#$ &er'a# wi## 'e in the contract entered into '$ the a(ent.
Read 1874
Contracts which re3ire a S%A , see coda#
Dimene@ vs. "abot
;acts! Aiene@ was the owner of a certain parce#s of #and in 8an(asinan,
he was then in the pro&ince of "orth L+@on, he sent a #etter to his sister
as2in( his sister to se## one of his parce#s of #and and with that #etter the
sister indeed so#d one of his parce#s of #and to Ra'ot, howe&er the sister did
not reit the proceeds of th sa#e, 'in+#sa #n( n$a, so when Aiene@ went
'ac2 to 8an(asinan, he deanded the propert$, $+n a$ na 2a$ Ra'ot na,
so he fi#ed an action a(ainst Ra'ot, the defense raised '$ hi that the #etter
wo+#d not 'e s+fficient a power of attorne$ to 'ind hi as a principa# the
sa#e of the parce#s of #and.
?e#d! A #etter s+ffices as a power of attorne$. <hen $o+ sent a #etter to $o+r
'rothers or sisters $o+ do not notari@e first.
Obli7ations of the A7ent:
1. 0o carr$ o+t the a(enc$
2. )n carr$in( o+t the a(enc$, there are 2 o'#i(ations of the a(ent,
he sho+#d a#wa$s ree'er!
a. to act within the scope a+thorit$
'. to act in 'eha#f of the principa#
a. Actin7 within the sco&e of athorit1
Q: how would you 0now if the agent was acting within the scope of
authority?
A! 5e (+ided '$ the power of a+thorit$. )n fact as a 3
rd
person, $o+ can
deand the power of a+thorit$, so that $o+ wi## 2now whether in fact he had
a+thorit$ to enter into a contract '+t sa totoo #n( there are soe *8A which
wo+#d 'e s+'/ect of the case +p to the *- pertainin( to the scope of
a+thorit$ of the a(ent.
Rea/: Ginal vs. (uno
Rea/: Insular vs. (LB
B!: A authori@e B to borrow sum of money from any ban0 and he also
authori@e B to mortgage specific property specific parcel of land to
secure that loan what B did he borrow money for himself from a
certain ban0 without disclosing his principal, later on he defaulted the
Cuestion was can the ban0 go after the principal?
A! .f co+rse "o, the contract is 'etween the a(ent and the 'an2 on#$ the
principa# has nothin( to do with the contract, +nder the facts, the a(ent
'orrow for hise#f s$a ta#a(a, howe&er if $o+ ha&e read the s+((ested
answer, $ 2
nd
para(raph to the effect that the 'an2 can at #east forec#ose
the ort(a(e the$ can after the propert$ of the principa#. )f $o+ ree'er
the 1+estion, di tinatanon( n( exainer can the 'an2 (o after the principa#
as far as the thin( is concerned. 0he on#$ 1+estion pertains to the pa$ent
of #oan. Another thin( of the s+((ested answer it is tota##$ wron(, +nder the
facts, the principa# a+thori@e the a(ent to ort(a(e the propert$ for the #oan
that wi## 'e o'tain '$ the a(ent in the nae of the principa#.
Q: If indeed he mortgaged the land for a loan in his name, would that
mortgage be valid?
A! 4efinite#$ not. )f he ort(a(ed it as a ort(a(or the ort(a(e is &oid, the
#aw re1+ires that the ort(a(or +st 'e the a'so#+te owner of the thin(
ort(a(e.
Q: :n other hand even if the agent mortgaged the thing on behalf of
the principal, the principal is the mortgagor, would that be a valid and
binding mortgage as against the principal?
A! A#so not, a#so his a+thorit$ to ha&e the propert$ to ort(a(e to sec+re a
#oan, not to sec+re an$ other persons #oan and that therefore it cannot 'e
within the a+thorit$ of the a(ent and therefore an$ forec#os+re of s+ch
ort(a(e wi## not prosper.
Q: If the agent acted within the scope of his authority and in
representation of the principal, who will be bound in that such
contract?
A! Aside fro the 3
rd
person, it wi## 'e the principa# 'eca+se a(ain the a(ent
ere#$ representin( the principa#. 9owever, it is possible for the agent
himself to be bound in such contract be held liable under such
contract?
A! Ges, one if he express#$ 'inds hise#f to that contract.
Rea/: &omingo vs. &omingo
Rea/: U. vs. "eyes
Obli7ation to ren/er an accontin7
)f this tie the principa# a+thori@e the a(ent to se## his car for 3002, the
description of the car was ention in the *8A at #east 3002 howe&er 'efore
the a(ent wo+#d se## the car, the principa# ca##ed hi '$ phone instr+cted
hi to se## the cart in Q- to a e'er of )58 e'er chapter, instead of
se##in( the car in Q- )58 e'er chapter he so#d the car in 9ani#a not
2nown '$ the principa# for 3002, 516 -an the principal recover the car
from the buyer if that car is already delivered to the buyer? 546Any
remedy provided by the law to the seller or to the principal?
1. )t depends, if that '+$er has no 2now#ed(e of that instr+ction of the
principa# then he has a## the ri(ht to retain the car and that sa#e wi## 'e
&a#id and 'indin( as a(ainst the principa#. As pro&ided +nder Art. 1900
so far as 3
rd
persons are concerned the$ on#$ re#$ on the *8A as
written the$ ha&e no o'#i(ation to in1+ire on the specia# instr+ctions
ade '$ the principa# which are not ention in the *8A, eh wa#a
naan d+n sa *8A na it wi## 'e so#d to an )58 e'er chapter in Q-.
2. Lo after the a(ent or daa(es if there is an$ daa(e s+stain '$ hi
for his fai#+re to fo##ow the instr+ctions of the principa#.
Rea/: 1898
A&&ointment of Sbstitte
Rea/: *+'stit+te &s. *+' A(ent 68rof. 4e LeonDs 'oo27
PARTNERSHIP
B!: A, using all his savings in the total amount f (hp4,+++, decided t
establish a restaurant. B, however, gave (hp2,+++ as %financial
assistance, with the agreement that B will have 448 share of the
profits of the business. After 44 years, B filed an action to compel A to
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
12
deliver to him his share in the profits claiming that he was a partner. A
denied that B was his partner. Is B a partner of A?
*A! Ges, 5 was a partner in the '+siness 'eca+se there was a contri'+tion
of one$ to a coon f+nd and there was an a(reeent to di&ide the profit
aon( these#&es.
Att1. =ribe: ) do not a(ree with the answer. )Dd rather a(ree with the
a#ternati&e answer.
<?G! )n the a#ternati&e answer as can 'e seen fro the facts, 5 (a&e
8hp4,000 on#$ as a financia# assistance. )t was not a contri'+tion to a
coon f+nd. As s+ch, he act+a##$ 'ecae a creditor of A. 0herefore, he
did not contri'+te to a coon f+nd.
Q: hat about the stipulation that B will have 448 share of the
profits?
A! 0he #aw on partnership is &er$ c#ear that a sharin( in the profits does not
necessari#$ does not res+#t in a partnership contract 'eca+se the sharin( of
the profits a$ on#$ 'e a wa$ of copensatin( the other person, in fact that
can 'e a ode of pa$ent of the #oan. Kasi $+n( #oan, s+pposed#$ pwede
pa$a'#e e&er$ onth with a fixed ao+nt. 5+t as a(anda an(
a(reeent na ito, 22M of the profits, so that if wa#an( profit sa isan( taon,
wa#a +nan( 'a$ad. R4i 'a thatDs reasona'#e a(reeent. .n#$ 2+n( a$
profit, sa2a #an( 'a'a$aran. K+'a(a, friend#$ #oan ito. 0he sharin( in the
profits as express#$ pro&ided '$ #aw does not necessari#$ res+#t in a
partnership contract. 0h+s, it can 'e said that rea##$ 5 was not a partner '+t
is act+a##$ a creditor of A.
.efinition of %artnershi&
Q: hat if two or more persons agreed to put up a partnership but
they never intended to divide the profits among themselves, would
that still be considered a valid partnership contract?
A! Ges. :nder the second para(raph of the artic#e, two or ore persons can
for a partnership for the exercise of a profession.
%artnershi& +s. CoJownershi&
-onsider the essentia# feat+res!
CR4A02ON
8artnership is o'&io+s#$ created '$ a(reeent. -o=ownership a$ 'e
created '$ a(reeent, '+t it a$ a#so 'e created '$ operation of #aw. )n
fact, '$ express pro&ision of the #aw, the fact that there is co=ownership
does not necessari#$ ean that there is a partnership existin( 'etween two
persons.
%x.! two persons a$ inherit a propert$ fro their father or other, and
+nder the #aw, the$ a$ 'e considered as co=owners of the sae propert$.
%=R%OS4
8artnership! either to di&ide profits or exercise a profession.
-o=ownership! -oon en/o$ent of the thin( or ri(ht owned in coonO
ere#$ to en/o$ the propert$, th+s the$ a$ ha&e different p+rposes.
A &er$ iportant feat+re of partnership in re#ation to co=ownership, it has a
/+ridica# persona#it$, separate and distinct fro the indi&id+a# partner which
is o'&io+s#$ not present in co=ownership. )n co=ownership, the$ ha&e their
respecti&e persona#ities and no new persona#it$ wi## 'e created.
%O54RS O9 0:4 M4M(4RS
8artnership! :n#ess otherwise a(reed +pon, each partner is an a(ent of the
other partners and of the partnership.
-o=ownership! As a r+#e, a co=owner cannot act as an a(ent of the other co=
owners +n#ess otherwise a(reed +pon 'etween the co=owners.
8R.;)0*!
-o=owner! 9as a#a2i an( profits, as a#a2i an( interest. 5+t not
necessari#$ in partnership, 'eca+se the sharin( in the profits a$ 'e
stip+#ated +pon '$ the parties. 8ero 2+n( wa#an( stip+#ation, it a$ 'e
'ased on the capita# contri'+tion.
Q: ill death e'tinguish coAownership?
A! "o, Kapa( naata$ an( isan( co=owner, his heirs wi## 'e the co=owners
of the s+r&i&in( co=owners at pweden( t+#o+=t+#o$ #an( $an. ?owe&er in
partnership, if it is a (enera# partnership, if one of the partners dies, the
partnership is disso#&ed.
4SS4N02AL 4L4M4N0S O9 %AR0N4RS:2%
Li2e an$ other contract, it sho+#d ha&e the three essentia# re1+isites!
1.) -onsent
2.) .'/ect! to en(a(e to a #awf+# acti&it$, whether a '+siness or
profession.
3.7 -a+se or consideration! the proise of each partner to
contri'+te one$, propert$ or ind+str$
Consent of the contractin7 &arties:
0he r+#es in contract wo+#d 'e e1+a##$ app#ica'#e '+t, /+st #i2e in
sa#es and #ease, there are persons who are prohi'ited fro enterin( into a
contract of partnership.
Ob-ect
0o en(a(e in a #awf+# acti&it$.
Q: If the obHect is to engage in a lawful activity, necessarily the
partnership is valid?
A! "o. 0here are specific '+siness acti&ities wherein the #aw wo+#d re1+ire
partic+#ar '+siness or(ani@ation which a$ en(a(e in s+ch '+siness
acti&it$, specifica##$ the -orporation -ode which pro&ides that on#$
corporation a$ en(a(e in ins+rance and 'an2in( '+siness, therefore there
can 'e no partnership en(a(in( in s+ch '+siness! 'an2in( and ins+rance.
Case
0he proise of each partner to contri'+te either one$, propert$ or
ind+str$.
9ormalities
Q: If the agreement of the parties to a contract of partnership was only
a verbal agreement, would that be a valid and binding contract? ill
there be a Huridical personality created?
A! As a r+#e, $es. %&en if +nder Art. 1772, the #aw pro&ides that e&er$
contract of partnership, ha&in( a capita# of ore than 8hp3,000 or ore,
sha## 'e in a p+'#ic instr+ent and +st 'e re(istered with the *%-.
0he 2
nd
para(raph of Art. 1772 pro&ides that despite fai#+re to
cop#$ with the re1+ireents in the precedin( para(raph, this is witho+t
pre/+dice to the #ia'i#it$ of the partnership and the indi&id+a# partners to third
persons. ;ro that artic#e a#one, it is c#ear that despite non=cop#iance with
the re1+ireents of the #aw as to for, there is a partnership created,
'eca+se this is witho+t pre/+dice to the #ia'i#it$ of the partnership 62+n( a$
partnership7. 5+t ore direct#$, Art. 1768, the #aw pro&ides, the partnership
has a /+ridica# persona#it$ separate and distinct fro that of each if the
partners, e&en in case of fai#+re to cop#$ with the re1+ireents of Art.
1772, par.1.
After a##, a &er'a# partnership contract is &a#id and 'indin( 'etween the
parties.
Conse3ences: se&arate an/ /istinct &ersonalit1
1.) )t can own its propertiesO
2.) )t can s+e and 'e s+edO
3.) )t a$ 'e fo+nd (+i#t$ of an act of inso#&enc$O
4.) )t a$ 'e disso#&ed for coittin( an act of inso#&enc$.
Rea/: -amposA"ueda vs. (acific -ommercial
CLASS292CA02ON O9 %AR0N4RS:2%:
As to the o'/ect of the partnership is on#$ to deterine whether a person
a$ enter s+ch partnership, there is a need to distin(+ish whether a
partnership is a :")E%R*AL or 8AR0)-:LAR partnership
2 Kinds of :ni&ersa# 8artnership!
1.7 :ni&ersa# 8artnership of 8ropert$
2.7 :ni&ersa# 8artnership of 8rofit
04RM O9 %AR0N4RS:2%:
Q: If the partners failed to fi' a period, does it mean that the partners
agreed a partnership at will and may be dissolved at any time without
any liability so long as they acted in good faith?
A! "o, 'eca+se a partnership a$ 'e a partnership for a partic+#ar
+nderta2in( e&en if no period was fixed '$ the parties.
)n one case, a partner, disso#&ed a partnership, c#aiin( it to 'e
a partnership at wi##, the partnership 'ein( in&o#&ed in a 'ow#in( '+siness.
0he *- r+#ed that e&en if the partners fai#ed to fix a period, the partnership
cannot 'e considered as a partnership at wi## 'eca+se there was a
stip+#ation in the partnership a(reeent that the de't of the partnership
sha## paid o+t of the profits that wi## 'e o'tained '$ the 'ow#in( '+siness.
0h+s, after a##, it cannot 'e disso#&ed at wi##, for the de'ts wi## ha&e to 'e
paid. 0herefore, the *- r+#ed that the said partnership is a partnership for a
partic+#ar +nderta2in(.
CLASS292CA02ON O9 %AR0N4RS:
Accordin( to the #ia'i#it$ of the partners!
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
"o&e'er 2008
13
1.7 Lenera#
2.7 Liited
0his c#assification is re#e&ant on#$ in #iited partnership.
"ote! A #iited partner cannot 'e he#d persona##$ #ia'#e for partnership
o'#i(ations '+t there are exceptions
As to the contri'+tion!
1.7 capita#ist
2.7 ind+stria#
Q: An industrial partner, may be a general partner?
A! Ges. A capita#ist partner a$ either 'e an ind+stria# or (enera# partner.
Q: <ay an industrial partner be a limited partner?
A.! "o. A #iited partner can on#$ contri'+te one$ or propert$. ?e cannot
contri'+te ser&ice.
Q: But can a partner be both capitalist and industrial?
A! Ges, he can contri'+te 'oth one$ and ind+str$. ?e can 'e 'oth
capita#ist and ind+stria# and there wi## 'e conse1+ences to that.
%RO%4R0B R2;:0S
3 9a/or propert$ ri(hts of a partner!
1.7 ri(ht in specific partnership propert$O
2.7 interest in the partnershipO and
3.7 the ri(ht of the partner to participate in the ana(eent of the '+siness
of the partnership.
%ro&ert1 ri7hts consi/ere/ as minor:
1.7 ri(ht to ha&e access to the 'oo2s of the partnershipO
2.7 ri(ht to deand for a fora# acco+ntin(.
0B%4S O9 MANA;4M4N0:
1.7 *o#idar$ 9ana(eent!
=witho+t specification as to each otherDs d+ties or witho+t
stip+#ation that one of the sha## act witho+t the consent of a##.
2.7 Aoint 9ana(eent!
=two or ore ana(in( partners with the stip+#ation that none of
the sha## act witho+t the consent of a## others. 0he incapacit$ of one of the
partners, or his a'sence wi## not 'e a &a#id (ro+nd not to o'tain his consent
to a contract. )t has to 'e '$ +nanio+s consent, +n#ess, in o'tainin( his
consent 6he is a'sent or incapacitated7 it wo+#d res+#t in irrepara'#e daa(e
to the partnership, then the consent of the a'sent or incapacitated
ana(in( partner a$ 'e dispensed with. 0his is a#so 2nown as
ana(eent '$ consens+s.
3.7 )f there was ana(eent arran(eent a(reed +pon 'etween
the partners, each partner is considered as an a(ent of the partnership.
)nto these arran(eents, if on#$ one partner is appointed as a ana(er, he
can exec+te an$ acts of adinistration e&en if opposed '$ a## the other
partners.
%x. )n a partnership of which the '+siness is into '+$in( and se##in( cars,
the ana(in( partner decided to '+$ a &inta(e 9ercedes 5en@, to the
opposition of the other partners for the$ consider it 'ad in&estent, wi## the
decision or the act of the ana(in( partner in '+$in( the said car 'ind the
partnershipH
Ans.! Ges, 'eca+se s+ch act is ere#$ an act of adinistration. 0he
pro'#e is, if the ana(in( partner contin+es to not consider the
sentients of the other partners, he a$ 'e reo&ed as a ana(in(
partner.
0he 1+estion now is, can he 'e easi#$ 'e reo&edH
Ans.! "o. 0he re1+ireents for the reo&a# of a ana(in( partner wo+#d
depend on whether he was constit+ted as s+ch in the artic#es of partnership
or he was ere#$ appointed as ana(in( partners after the constit+tion of
the partnership.
)f he was constit+ted as a ana(in( partner in the artic#es f
partnership, he can on#$ 'e &a#id#$ reo&ed +nder two conditions!
1.7 there has to 'e /+st ca+seO and
2.7 '$ those partners ha&in( contro##in( interests.
A'sent one of these conditions, he cannot 'e &a#id#$ reo&ed. )n fact, e&en
if there is /+st ca+se, if the ana(in( partner contro#s 51M of the
partnership, he can ne&er 'e reo&ed.
?owe&er, if he was appointed as a ana(in( partner on#$ after
the constit+tion of the partnership, he can 'e &a#id#$ reo&ed e&en witho+t
/+st ca+se, so #on( as it was done '$ those partners ha&in( contro##in(
interests.
O(L2;A02ONS O9 0:4 %AR0N4RS AMON; 0:4MS4LC4S AN. AS
0O 0:4 %AR0N4RS:2% AN. 2N CAS4 O9 NONJ%4R9ORMANC4 O9
0:4 O(L2;A02ON
' Obli7ations of the &artners:
1.7 0o a2e (ood his proised contri'+tionO
2.7 ;id+ciar$ d+tiesO and
3.7 0o participate in the #osses inc+rred '$ the partnership '+siness.
0o ma6e 7oo/ his &romise/ contribtion:
A. Mone1:
)n order to 2now the reedies that a$ 'e a&ai#ed of '$ the non=
defa+#tin( partners and the partnership, it +st 'e 2nown first what was
proised '$ the partner, whether he proised to contri'+te one$,
propert$ or ind+str$.
)f the partner proised to contri'+te one$, for instance, the
partners a(reed to contri'+te 8hp1 9i##ion with 4 partners, witho+t an
a(reeent as to respecti&e ao+nt to 'e contri'+ted, the #aw pro&ides that
the$ wi## ha&e to share e1+a##$. 0h+s, in this exap#e, 8hp1 9i##ion wi## ha&e
to 'e di&ided into 4 or the respecti&e contri'+tion wi## 'e 8hp250,000. )f one
partner fai#ed to a2e (ood his proised contri'+tion which is a s+ of
one$, he can 'e he#d #ia'#e '$ the non=defa+#tin( partners +p to the
ao+nt proised p#+s interest. )f no rate was stip+#ated '$ the parties, it wi##
'e the #e(a# rate of 12M, 'eca+se this is for'earance in one$. Aside fro
pa$in( the interest, which is +n+s+a#, not on#$ wi## that defa+#tin( part$ 'e
he#d #ia'#e to pa$ interest, he wi## a#so 'e #ia'#e to pa$ daa(es.
"ora##$, in o'#i(ations in&o#&in( one$, in case of daa(e
inc+rred '$ another part$, the #ia'i#it$ wi## on#$ 'e pa$ent of interest. )n
partnership, not on#$ wi## he 'e #ia'#e to pa$ interest, '+t a#so of daa(es.
Reme/ies that ma1 be in+o6e/ b1 the nonJ/efaltin7 &artners:
1.) *pecific perforance= the other partners can cope# hi to
a2e (ood his proised contri'+tion.
2.7 4isso#+tion= a$ 'e an option '$ the non=defa+#tin( partners, if
that is the on#$ ao+nt that the$ are expectin( for the
partnership.
(. %ro&ert1:
)f a partner proised to contri'+te propert$, it +st 'e deterined as to
what was rea##$ contri'+ted! was it the propert$ itse#f or the +se of the
propert$.
)f it was the ownership of the propert$ that was contri'+ted then
he wo+#d ha&e the o'#i(ation to de#i&er and transfer ownership, aside fro
that, +nder the #aw, he wo+#d ha&e the o'#i(ation to warrant the thin(.
Q: Before the delivery of the thing to the partnership, who will bear
the loss?
A! 0he partner wi## 'ear the #oss. 0he partnership wi## 'ear the #oss when
the thin( is a#read$ in its possession
C. 2n/str1
Q: If a partner fails to render service as promised, will specific
performance be a remedy?
A! 4efinite#$ not. )t wo+#d 'e a &io#ation of his ri(hts a(ainst in&o#+ntar$
ser&it+de. 0he reed$ wo+#d 'e to deand for the &a#+e of the ser&ice p#+s
daa(es. )t can 'e easi#$ done 'eca+se there is an ind+str$ rate.
9i/ciar1 .ties:
0he d+t$ to o'ser&e +tost (ood faith, honest$, fairness,
inte(rit$ in 'ein( with each other. 0his d+t$ coences e&en d+rin( the
ne(otiation sta(e.
0est to deterine whether there was a &io#ation of this d+t$!
<hether the partner has an ad&anta(e hise#f at the expense of
the partnership. )f he has s+ch ad&anta(e at the expense of the partnership,
then there is a 'reach of the fid+ciar$ d+t$. 0here need not 'e a proof of
e&i# oti&e so #on( as he has this ad&anta(e at the expense of the
partnership.
0his d+t$ #asts, nora##$, +nti# the terination of the partnership.
Q: <ay a partner may be held liable for breach of fiduciary duty even
after the termination of the partnership?
A! Ges. 0he *- he#d that e&en if the act of a partner was ade after the
terination of the partnership, if the fo+ndation of that act was ade d+rin(
the existence of the partnership, that can sti## 'e considered as a 'reach of
;a$e 9arie -. 9artine@ , -hato -a'i(as , Aessica A. Lope@ , 4ian Rosapapan
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fid+ciar$ d+t$. )n other words, pina(handaan na n$a $+n act d+rin( the
existence of the partnership, howe&er, it was exec+ted on#$ after the
terination of the partnership.
%artici&ate in the Losses:
Q: hat will be the share of the partner in the losses incurred in the
partnership?
Ans.! -onsider first whether there was a stip+#ation as to #osses or there
was no stip+#ation.
O(L2;A02ONS O9 %AR0N4R R4: '
R.
%4RSONS
Q: hen would a contract entered into by a partner bind the
partnership?
%x.! )f a partner went to a f+rnit+re shop to '+$ f+rnit+re the of which is
8hp100,000, and s+ch ao+nt reained +npaid, can the se##er deand
pa$ent fro the partnershipH
A! )t depends as to whether the contract was entered into in the nae of the
partnership, for the acco+nt of the partnership, +nder its si(nat+re, '$ a
partner who is a+thori@ed to enter into that contract to 'ind the partnership.
0h+s, in this exap#e, if in the a(reeent the '+$er was the partner hise#f
and not the partnership, that partner sho+#d 'e he#d #ia'#e, for the f+rnit+re
was not 'o+(ht in the nae of the partnership.
0he pro'#e, if the contract wo+#d 'e 'indin( in the partnership, then wo+#d
'e, whether the partner who represented the partnership had the a+thorit$
to 'ind the partnership.
"ora##$, if a partner wo+#d enter into a contract, a partnership
reso#+tion is not necessar$. <hether or not a contract wo+#d 'ind the
partnership wo+#d depend on the nat+re of the act of s+ch partner and the
nat+re of the '+siness of the partnership.
Q: -oncretely, if a partner bought a complete set of .-"A in the name
of the partnership and signed by that partner, would that contract
bind the partnership for the set was bought in the name of the
partnership?
A! )t wo+#d depend on the nat+re of the act and the nat+re of the '+siness
of the partnership. )n this exap#e, the partner 'o+(ht the set of *-RA,
pero naan, and '+siness n( partnership a$ resta+rant, hindi naan ata
na i='ind n$a an( partnership to s+ch contract, an( ne(os$o ni#a resta+rant.

5+t the se##er wo+#d raise the defense, Bhindi 2o naan a#a na
resta+rant $+n( '+siness, e an( na(represent n( partnership si Att$. A5-,
so a2a#a #aw fir.C Is that a valid defense?
Ans.! "o. 0he *- wo+#d te## that the third part$ contractin( with the
partnership has the o'#i(ation to 2now at #east the nat+re of the '+siness of
the partnership. )n fact, he can deand for the presentation of the artic#es
of partnership in order for the third part$ to 2now the nat+re of the '+siness
of the partnership. ;or, if this tie, the partnership is a #aw office, and the
partner 'o+(ht a set of *-RA, that act of '+$in( a set of *-RA wi## 'e
considered apparent#$ for carr$in( the '+siness of the partnership the +s+a#
wa$. 0herefore, that contract wi## 'ind the partnership.
.2SSOL=02ONH 52N.2N; =% AN. 04RM2NA02ON
0hese are three different concepts. :pon disso#+tion of the partnership, it is
".0 4%%9%4 disso#&ed. )t wi## sti## ha&e to (o thro+(h the process of
windin( +p of the affairs of the '+siness of the partnership 'efore the
partnership itse#f wi## 'e terinated.
Q: hen would there be a dissolution of a partnership?
:nder the #aw, there wi## 'e a disso#+tion if there is a chan(e in
the re#ation of the partners ca+sed '$ an$ of the partners ceasin( to 'e
associated in the carr$in( on of the '+siness of the partnership. 0hat wi##
res+#t in the disso#+tion of the partnership. A(ain, if one of the partners
ceased to 'e associated in the carr$in( on of the '+siness of the
partnership, that wi## res+#t in the disso#+tion of the partnership.
CA=S4S O9 0:4 .2SSOL=02ON
1.7 %xtra/+dicia#O
2.7 A+dicia#.
4Atra-/icial cases:
1.7 &o#+ntar$O
2.7 in&o#+ntar$.
A+dicia# ca+ses are necessari#$ &o#+ntar$ 'eca+se it is '$ app#ication.
2NCOL=N0ARB CA=S4S
Q: If one of the partners in a partnership was elected a .enator, would
this dissolve the partnership by operation of law?
Ans.! "o.
Q: !ven if it is a partnership of lawyers or a law office?
Ans.! "o.
@/icial Cases: ;ron/s:
1.7 )nsanit$ or incapacit$!
=0he co+rts re1+ire that it sho+#d 'e peranent in characterO and
=s+ch incapacit$ or insanit$ +st affect the perforance of s+ch
partner of his o'#i(ations with respect to the partnership '+siness. )n
other words, 2+n( wa#a s$an( pa2ia#a sa ana(eent n( '+siness
n( partnership, insanit$ or incapacit$ is not a &a#id (ro+nd.
2.7 Lross iscond+ct!
a.7 wron(f+# exp+#sionO
'.7 if one partner wo+#d ref+se to a##ow another partner in the
ana(eent of the partnership '+siness, if he has s+ch ri(ht to participate
in the ana(eent O
c.7 if the ana(in( partner wo+#d ref+se to distri'+te the profits
of the partnership when there is s+ch o'#i(ation to distri'+te the profitsO
d.7 isappropriation of the incoe of the partnership '+siness.
Q: Upon the dissolution of the partnership, and there were assets left,
how will these be distributed? #o whom these assets be given?
A! As far as partnership assets are concerned!
1.7 8artnership creditors who are not partners.
2.7 8artnership creditors
3.7 )f there are reainin( assets, to the capita#ist partnersO
4.) %xcess profits = 'ased on their a(reeent as to profits.
TRUST
$ <2N.S:
1.7 %xpress
2.7 )p#ied
2m&lie/ 0rst: $ <in/s:
1.7 res+#tin( tr+stO
2.7 constr+cti&e tr+st
0he c#assification of tr+st into two 2inds 6express and ip#ied7 and
ip#ied tr+st into two 2inds 6res+#tin( and constr+cti&e7 wo+#d 'e re#e&ant in
two concepts!
1.7 app#ica'i#it$ of the paro#e e&idence r+#eO and
2.) prescription, specifica##$, ac1+isiti&e prescription.
".5.! An express tr+st o&er an io&a'#e a$ not 'e pro&en '$ paro#e
e&idence. 0his eans that ip#ied tr+st o&er an io&a'#e a$ 'e pro&en
'$ paro#e e&idence or express tr+st o&er a o&a'#e, a$ 'e pro&ed '$
paro#e e&idence.
4D%R4SS 0R=S0
Q: <ay an e'press trust over an immovable be proven by mere
testimony of the witness?
A! Ges, if the #aw$er of the other part$ did not o'/ect to the presentation of
the witness.
2M%L24. 0R=S0
Resltin7 0rst
B!: A and B, brother and sister respectively, inherited two identical
parcels of land. For purposes of convenience, B, sister of A, agreed to
have the land registered in the name of A. 9owever, when the parcels
of land were registered in the name of A, A sold one of the parcels of
land to a buyer in good faith and for value. -an B recover the land
from the buyer? hat would be the remedy of B?
*A! 0his 1+estion c#ear#$ pertains to a res+#tin( tr+st. 0his is specifica##$,
Art. 1451 of the "--.
5 cannot reco&er the #and fro the '+$er. As disc+ssed in *a#es, a '+$er
who had 'o+(ht the propert$ fro a se##er who has no ri(ht to se##, '+t he
has apparent a+thorit$ to se##, who appears to 'e the owner and the '+$er
'o+(ht the propert$ in (ood faith, he wi## ac1+ire ownership o&er the thin(
e&en if the se##er has no ri(ht to se##.
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5Ds reed$ wo+#d 'e to (o after her 'rother for 'reach of tr+st in se##in( the
propert$ witho+t her consent.
Res+#tin( tr+st inc#+des Artic#es 1448, 1451, 1449, 1450,1452,1453,1454.
Constrcti+e 0rst:
B!: A applied for the registration of a parcel of land in his name.
9owever, he was called in Lew Bor0 to be a chef in a hotel. .o, he
as0ed his cousin to follow up his application for registration of land
while he was in Lew Bor0. Instead of ensuring the registration of the
property in the name of A, he had the property registered in his
5cousin6 name. After which, he sold the property to a thi2rd person
who bought the land relying on the #-#. hen A returned to the
(hils., he learned of what his cousin had done. <ay A recover the
parcel of land from the 7
rd
person who bought the property in good
faith and for value?
A! "o.
N.(.: Art. 1456, 1455.
Q: In constructive trust, may the trustee acCuire the property by
prescription by mere lapse of time, without repudiation?
A! Ges.
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