ART 1484-1485-1486***
RECTO LAW
Applies to:
1. Contract of sale
2. Contract of lease with option to buy
Object: PERSONAL PROPERTY
The price is payable on installments
Example: Equal monthly or quarterly installments
x Straight terms with initial downpayment and the balance payable in the future does not qualify to installments
3 Alternative remedies [not cumulative] under Art. 1484 – choose one, forgoe the others
Art. 1484 par 1 – failure to pay 1 installment will entitle the creditor to exact fulfillment
Art. 1484 par 2&3 – requires failure to pay of 2 or more installments
If seller choses to foreclose, no more further actions from the purchaser of the unpaid balance of the price.
foreclosure is distinguished from an action for replevin, the law here requires foreclosure of the chattel mortgage not
an action or replevin.
take note that the law does not apply to a contract to sell, it must be a contract of sale
With respect to Art 1484 par 2, if seller chose to cancel the sale – Art 1486 provides for a penalty clause, seller will
not be required to return what was paid
on the other hand, rescissible and voidable contracts – contract will become void – there will be mutual restitution.
Recto Law Maceda Law
cancellation does not require a notarial act. cancellation of sale requires notarial act. Cancellation
will take effect after 30 days from the submission of
notarial act to the buyer.
Personal property Applies to contracts of sale/financing of real estate,
including residential condominium
But it does not include: sale to tenants under agrarian
law, commercial buildings/lots, industrial lots
If buyer has been paying the price on installments for
less than 2 years, not entitled to refund when sale is
cancelled. Installment payments will be forfeited
[penalty clause] But will be given a grace period of 60
days.
If buyer has been paying the price on installments for
more than 2 years, additional 30 days grace period,
refund of 30% of installments paid
If buyer has been paying the price on installments for 5
years, 5% for every year of installments paid but not to
exceed 90% of the installments already paid.
ART. 1495
To transfer ownership
To deliver the thing
To warrant – may be waived
To deliver accessions and accessories – otherwise, seller will be guilty of fraud
To take care of the thing with the good father of a family (Art. 1163)
Art. 1496
In relation to Arts. 1477, 1478
Art. 1497 – Actual/Real Delivery
Art. 1498-1501 – Legal/Constructive Delivery
Art. 1498 par 1 – delivery of immovable = execution of public instrument [seller must have capacity to sell; buyer must
be put in control]
Art. 1498 par 2 – traditio symbolica
Art. 1499 1st part – traditio longa manu
Art. 1499 2nd part – traditio brevi manu
Art. 1500 – tradition constitutum posessorium
Art. 1501 – quasi tradition
GR: delivery will transfer ownership
Exceptions
1. Contract to sell
2. Sale/Return (Art. 1502)
3. Sale on approval
4. Implied reservation of ownership [ex. Bill of lading] (Art. 1503)
5. Sale by a non-owner (Art. 1505)
Art. 1505 – in relation to Art. 559
“acquires no better title” – if he does not own it, you will not own it too
Exceptions: [Ownership and transfer of title will pass to the buyer]
(1) The provisions of any factors’ acts, recording laws, or any other provision of law enabling the apparent owner of
goods to dispose of them as if he were the true owner thereof – sale by registered owner in accordance with
registration laws
(2) The validity of any contract of sale under statutory power of sale or under the order of a court of competent
jurisdiction – sale sanctioned by judicial authorities [ex. Judicial sales]
(3) Purchases made in a merchant’s store, or in fairs, or markets, in accordance with the Code of Commerce and
special laws – bought from merchant’s store [ex. SM, Lazada ETC]
(4) When seller has voidable title (Art. 1506) – valid until annulled; buyer acquires good title provided he buys it for
good faith and for value w/o notice of the seller’s defect of title
SKIP DOCUMENT OF TITLE
ARTICLE 1636. In the preceding articles in this Title governing the sale of goods, unless the context or subject matter
otherwise requires:
(1) “Document of title to goods” includes any bill of lading, dock warrant, “quedan,” or warehouse receipt or order for
the delivery of goods, or any other document used in the ordinary course of business in the sale or transfer of goods,
as proof of the possession or control of the goods, or authorizing or purporting to authorize the possessor of the
document to transfer or receive, either by indorsement or by delivery, goods represented by such document.
Art. 1544 DOUBLE SALE
Applies to immovable property
Personal property – race to possession [possession will transfer ownership]
Immovable property – race to good faith registration to acquire ownership
Must be covered by the Torrens Title
Same seller
Two buyers must have conflicting interest
CONDITION
Art. 1545 – same condition as to Obligations
If condition is not fulfilled – will not give rise to the obligation; either party may refuse to proceed to contract of sale;
they may also waive the performance of the obligation; if the condition is in the nature of promise/commitment – may
be treated as breach of warranty and therefore the aggrieved party may demand payment of damages
WARRANTIES
= representation as to the statement of the goods as to quality, title etc
1. Express = if included in the agreement of the parties and the natural tendency of the warranty is to induce the
buyer to purchase and indeed the buyer was induced because of that warranty
2. Implied imposed by law; derived from nature of contract; irrespective of intention of the seller
a. Against eviction [seller’s title]
Warrants that the seller is the owner and that he has title to transfer so that you will have ownership
Exceptions
- As is where is
- Second hand articles
In relation to Art. 1157, Art. 1549, Art. 1558
b. Against hidden defects
c. Merchantability
REMEDIES OF UNPAID SELLER
[often asked in the bar]
1.
