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LECTURE AID - SALES
REMEDIES OF AN UNPAID SELLER:
a. General Remedies:
1. Action for specific performance with damages
2. Action for rescission with damages
b. Special Remedies:
1. Sale of personal property in installment basis [RECTO LAW]
a. Specific performance in case the buyer fails to pay.
b. Rescission of the sale in case of default of 2 or more
installments.
c. Foreclose the chattel mortgage on the thing sold in case of
default of 2 or more installments. In this case, the seller shall have
no further action for deficiency judgment.
NOTE:
•
Aside from the above remedies, the seller can also retain the
installments paid provided that the forfeiture was part of the
stipulations of the parties and the same is not unconscionable.
•
The remedies are alternative and not cumulative.
•
Art. 1484 does not apply in:
1. Sale of real property
2. Mortgage of real property
3. Sale of a personal property on straight terms
2. Sale of goods
Unpaid seller of goods – 1. one who has not been paid or tendered the
whole price
2. one who has received a bill of exchange or
other negotiable instrument as conditional payment
and the condition on which it was received has
been broken by reason of the dishonor of the
instrument.
a. Lien on goods while in his possession
Requisites:
1. the seller is unpaid
2. the buyer is insolvent
3. the goods are in the possession of the seller
4. the goods have been sold
a. without stipulation as to credit
b. with a stipulation as to credit but the term has expired
NOTE: Possessory lien will be lost:
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1. when the goods are delivered to the common carrier or
other bailee without reservation of ownership;
2. when the buyer or his agent lawfully obtains possession
of the goods
3. when there is waiver on the part of the seller
b. Stoppage in transitu
(Goods are in transit from the time
they are delivered to the carrier for the purpose of delivery to
the buyer or his agent)
Requisites:
1. the seller is unpaid
2. buyer is insolvent
3. the goods are in transit
4. seller will bear the expenses of delivery of the goods after
the exercise of the right
c. Resale of thing
Requisites:
1. the seller is unpaid
2. the buyer is in default in the payment of the price
3. the goods are perishable in nature
4. the right is expressly reserved
5. the seller can either exercise possessory lien or
stoppage in transitu
d. Rescission of the contract
Requisites:
1. the seller is unpaid
2. the right is expressly reserved
3. the buyer has been in default in the payment of the price for an
unreasonable time
4. the seller can exercise right of lien or stoppage in transit
3. Sale of real estate in installment (R.A. 6552) [MACEDA LAW]
a. Right of specific performance - the seller must observe the
grace period granted to the buyer to pay, without additional
interest, the unpaid installment.
b. Right of rescission - cancellation can only take place after 30
days from receipt of the notice of cancellation or demand for
rescission by a notarial act.
c. Right on installments - seller can retain not more than 50% of
the installments paid. But if the installments paid were less
than 2 years, the seller can have absolute forfeiture over the
installments paid.
RULES IN CASE OF DOUBLE SALE:
1. Personal Property - to the first possessor in good faith:
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2. Real Property - the person who first recorded the sale in the Registry of
Property (Register of Deeds) in good faith.
• if not recorded, to the first possessor in good faith;
• if none of the above, to the person with the oldest title, in
good faith.
Rules in case area/number is greater/lesser than that stated in the contract
1. If area was stated at the rate of a certain price for a unit or number
a. In case of excess the buyer may choose to:
1. pay for the agreed area and refuse the rest
2. accept everything but will pay for the excess
b. In case of deficiency the buyer may choose:
1. proportional reduction of the price
2. cancellation of the contract if deficiency is at least 10% of
that stated
2. If the sale was made for a lump sum: no decrease or increase in the
price
WARRANTY
A statement or representation made by the seller of goods,
contemporaneously and as a part of the contract of sale, having reference to
the character, 1 quality or title of the goods, and by which he promises or
undertakes to insure that certain facts are or shall be as he then represents.
Kinds of warranty:
1. Express
2. Implied
Kinds of Implied Warranties:
1. Warranty against eviction
Elements:
a. Vendee is deprived of the thing purchased;
b. The deprivation is by virtue of a final judgment;
c. The judgment is base on a prior right to the sale or an act
imputable to the vendor;
d. The vendor was summoned in the suit for eviction at the instance
of the vendee;
e. No waiver of warranty by the vendee.
Remedies of the Vendee:
1. Total eviction - the vendee can demand the following:
a. Value of the thing at the time of eviction;
b. Income or fruits if he has been ordered to deliver them to the
party who won the suit;
c. Costs of the suit;
d. Expenses of the contract;
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e. Damages and interest if the sale was in bad faith.
2. Partial eviction
a. The vendee can rescind the contract;
b. The vendee can demand the following;
1. Value of the thing at the time of eviction;
2. Income or fruits if he has been ordered to deliver them to
the party who won the suit;
3. Costs of the suit;
4. Expenses of the contract;
5. Damages and interest if the sale was in bad faith.
Waiver of eviction:
1. Consciente
- waiver without knowledge of the risk of eviction
2. Intencionada - waiver with knowledge of the risks of eviction coupled
with an assumption of its consequences
2. Warranty against hidden defects
Elements:
a.
defect must be serious or important;
b.
it must be hidden;
c.
it must exist at the time of the sale;
d.
vendee must give notice of the defect to the vendor within a
reasonable time;
e.
no prescription yet (6 months from delivery of thing or 40 days in case
of animals)
f.
no waiver of warranty
Remedies of the Vendee:
a.
Accion redhibitoria (rescission)
b.
Accion quanti minoris (reduction of the price)
Redhibition:
the avoidance of a sale on account of some vice or defect in the
thing sold
3. Warranty as to Fitness or Merchantability
- goods are reasonably fit for the purpose for which they are sold.
EXTINGUISHMENT OF SALE
1. Same causes as all other obligations
2. Conventional Redemption - The vendor reserved the right to reacquire
the property sold.
When to exercise the right of redemption:
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1. if there is no agreement to redeem --- there is no right to
redeem (sale is absolute)
2. if there is an agreement to redeem --a. but no express stipulation as to time ---- 4 years form date
of contract
b. period was fixed or intended --- not to exceed 10 years
NOTE:
period of redemption may be extended ONLY
before its expiration but the extension plus the original term
should not exceed 10 years
HOWEVER, the vendor may still exercise the right to repurchase
within 30 days from the time the final judgment was rendered in a
civil action on the basis that the contract was a true sale with right of
repurchase.
3. Legal Redemption - the right to be subrogated, upon the same terms
and conditions stipulated in the contract, in the place of one who
acquires a thing by purchase or donation in payment, or by any
other transaction whereby ownership is transferred by onerous title.
Conventional redemption is considered to be an equitable mortgage in any of
the following:
1. Price of sale is unusually inadequate;
2. Vendor remains in possession;
3. Period of redemption is extended after expiration;
4. Purchaser retains part of the purchase price;
5. Vendor binds himself to pay the taxes of the thing sold;
6. Other cases where the parties really intended that the transaction shall
secure the payment of a debt or the performance of any obligation.
Vendor should pay the following in case of redemption:
1. Price of the sale
2. Expenses of the contract
3. necessary and useful expenses made upon the thing sold
INSTANCES OF REDEMPTION:
1. Under the Civil Code (legal redemption)
a. Sale of co-owner by his share to a stranger
b. When a credit or other incorporeal right in litigation is sold
c. Sale of an heir of his hereditary rights to a stranger
d. Sale of adjacent rural lands not exceeding 1 hectare
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e. Sale of small urban lands bought merely for speculation.
2. Under special laws
a. An equity of redemption in case of judicial foreclosures;
b. A right of redemption in cases of extra-judicial foreclosures.
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