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II. NATURE AND CONCEPT OF SALES - Coggle Diagram

- - - - D. NATURAL AND ACCIDENTAL ELEMENTS
        
        E. SALE NOT A MODE, BUT TITLE
        
        F. STAGES OF A CONTRACT OF SALE
        
        1. NEGOTIATION
        Covering the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected;
        
        2. PERFECTION
        Takes place upon the concurrence of the essential elements of the sale, which is the meeting of the minds of the parties as to the object of the contract and upon the price; and
        
        3. CONSUMMATION
        Begins when the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment thereof.
        
        G. KINDS OF CONTRACT OF SALE
        
        1. ABSOLUTE
        
        2. CONDITIONAL
        
        CONDITIONAL SALE:
        SELLER MAY RESERVE POSSESSION/OWNERSHIP
        UNTIL CONDITIONS FULFILLED
        Article 1503. When there is a contract of sale of specific goods, the seller may, by the terms of the contract, reserve the right of possession or ownership in the goods until certain conditions have been fulfilled.
        DESPITE DELIVERY
        The right of possession or ownership may be thus reserved notwithstanding the delivery of the goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer.
        
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        H. SALES DISTINGUISHED FROM OTHER CONTRACTS
        
        1. DONATION
        
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        NOT SALES
        
        DONATION
        Donative intent
        (But presumed if no money in sale is given)
        
        BARTER & EXCHANGE
        Part money + part thing
        -Manifest intention
        -No manifest intention ->$ exceeds value=barter
        
        PIECE OF WORK
        Does not exist and would not have existed were it not for the order.
        
        OPTION AGREEMENT
        Distinct purchase price
        
        AGENCY TO BUY & SELL
        -No transfer of ownership
        -Accounts for proceeds or return thing
        -Agent exempted from all liability
        
        DACION EN PAGO
        Debt
        
        LEASE
        Possession + No transfer of ownership
        -Except: Option to buy
        
        CHATTEL MORTGAGE
        Security
        
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        3 STAGES OF A CONRACT OF SALE
        In San Miguel Properties Philippines, Inc. v. Spouses Huang, 13 we held that the stages of a contract of sale are:
        
        negotiation,covering the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected;
        
        perfection,which takes place upon the concurrence of the essential elements of the sale, which is the meeting of the minds of the parties as to the object of the contract and upon the price; and
        
        consummation,which begins when the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment thereof.||| (Spouses Serrano v. Caguiat, G.R. No. 139173, [February 28, 2007], 545 PHIL 660-669)
        
        OWNERSHIP ACQUIRED BY:
        
        OCCUPATION
        
        INTELLECTUAL CREATION
        Article 712. Ownership is acquired by occupation and by intellectual creation.
        
        OWNERSHIP & OTHER REAL RIGHTS ARE ACQUIRED & TRANSMITTED BY:
        
        LAW
        
        DONATION
        
        TESTATE & INTESTATE SUCCESSION
        
        CERTAIN CONTRACTS
        
        TRADITION
        
        PRESCRIPTION
        Ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition.
        
        They may also be acquired by means of prescription. (609a)
        
        What is "Intellectual Creation"?
      - ESSENTIAL ELEMENTS OF CONTRACT
        Article 1318. There is no contract unless the following requisites concur:
        
        CONSENT
        (1) Consent of the contracting parties;
        
        OBJECT CERTAIN
        (2) Object certain which is the subject matter of the contract;
        
        CAUSE
        (3) Cause of the obligation which is established. (1261)
        
        DEFINED:
        
        MEETING OF MINDS
        
        2 PERSONS
        
        1 BINDS HIMSELF
        -TO GIVE
        -TO DO
        Article 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. (1254a)
        
        FREEDOM OF CONTRACTS
        
        STIPULATIONS
        
        CLAUSES
        
        TERMS & CONDITIONS
        Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. (1255a)
        
        EXCEPTIONS IF:
        
        LAW
        
        MORALS
        
        GOOD CUSTOMS
        
        PUBLIC ORDER
        
        PUBLIC POLICY
        
        SALE ESSENTIAL ELEMENTS
        The essential elements of a contract of sale are the following:
        
        CONSENT TO TRANSFER OWNERSHIP
        a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;
        
        DETERMINATE SUBJECT MATTER
        b) Determinate subject matter; and
        
        PRICE CERTAIN IN MONEY or EQ
        c) Price certain in money or its equivalent.
        
        ||| (Reyes v. Tuparan, G.R. No. 188064, [June 1, 2011], 665 PHIL 425-447)
        
        CTS: NO 1ST REQ
        NO CONSENT TO TRANSFER OWNERSHIP
        Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking.
        In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes we shall take as the full payment of the purchase price. (Reyes v. Tuparan, G.R. No. 188064, [June 1, 2011], 665 PHIL 425-447)
        
        CTS:
        OBLIGES TO FULFILL PROMISE! TO SELL UPON FULFILLMENT OF CONDITION
        What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him.
        
        NON-FULFILL -> NO OBLIGATION ->
        NO BREACH -> NO NEEDED REMEDY
        In other words, the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and, thus, ownership is retained by the prospective seller without further remedies by the prospective buyer.||| (Reyes v. Tuparan, G.R. No. 188064, [June 1, 2011], 665 PHIL 425-447)
        Failure to pay in full the purchase price is not the breach of contract contemplated under Article 1191 of the New Civil Code but rather just an event that prevents the petitioner from being bound to convey title to the respondent.||| (Reyes v. Tuparan, G.R. No. 188064, [June 1, 2011], 665 PHIL 425-447)
        
        FULFILL -> DEMANDABLE OBLIG TO SELL
        Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective seller's obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable as provided in Article 1479 of the Civil Code||| (Reyes v. Tuparan, G.R. No. 188064, [June 1, 2011], 665 PHIL 425-447)
        
        BUT IS THERE
        AUTOMATIC PERFECTION OF A SALE?
        No because there is no consent to transfer ownership in exchange for the price.
        
        FULFILLMENT OF CONDITION
        
        CONDI-COS:
        IF PRIOR DELIVERY -> TRANSFER OWNERSHIP
        
        CTS:
        IF PRIOR DELIVERY -> STILL NO TRANSFER OF OWNERSHIP -> DOAS STILL REQUIRED
        In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale.||| (Reyes v. Tuparan, G.R. No. 188064, [June 1, 2011], 665 PHIL 425-447)
        
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        CONDITIONAL COS:
        CONSENT TO TRANSFER OWNERSHIP
        in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. (Reyes v. Tuparan, G.R. No. 188064, [June 1, 2011], 665 PHIL 425-447)
        
        NOT FULFILLED -> NO PERFECTION -> NO OBLIGATION -> NO BREACH
        If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated.
        
        FULFILL -> PERFECTED SALE ->
        IF PRIOR DELIVERY = TRANSFER OWN
        However, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller.
        
        REMEDY UPON NON-PAYMENT IN FULL
        
        ABSOLUTE SALE -> RESCISSION
        Existing obligation must be rescinded
        
        CONDITIONAL SALE -> NO RESCISSION
        Conditioned on payment; non-fulfillment results in no obligation to rescind in the first place
        
        CONTRACT TO SELL -> NO RESCISSION
        Conditioned on payment; non-fulfillment results in no obligation to rescind in the first place
      - CONTRACTS = OBLIGATORY
        WHATEVER FORM
        
        (ORAL/WRITTEN)
        
        (EXPRESS/IMPLIED)
        Article 1356. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present.
        
        EXCEPTION:
        IF FORM or PROOF REQUIRED FOR VALIDITY/ENFORCEABILITY INDISPENSABLE
        However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable.
        
        RIGHT TO COMPEL THE OTHER TO
        OBSERVE FORM
        In such cases, the right of the parties stated in the following article cannot be exercised. (1278a)
        
        IF LAW REQUIRES A FORM, PARTIES MAY COMPEL THE OTHER TO OBSERVE FORM
        Article 1357. If the law requires a document or other special form, as in the acts and contracts enumerated in the following article, the contracting parties may compel each other to observe that form, once the contract has been perfected. This right may be exercised simultaneously with the action upon the contract. (1279a)
        
        MUST BE IN PUBLIC DOCUMENT
        Article 1358. The following must appear in a public document:
        
        REAL RIGHTS OVER IMMOVABLE
        (1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein are governed by articles 1403, No. 2, and 1405;
        
        REPUDIATION OF:
        a. HEREDITARY RIGHTS
        b. CPG
        (2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains;
        
        POWER TO ADMINISTER
        
        ACT SHOULD APPEAR IN PUBLIC DOC
        
        PREJUDICES A 3RD PERSON
        (3) The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person;
        
        CESSION OF ACTIONS/RIGHTS APPEARING PUBLIC DOC
        (4) The cession of actions or rights proceeding from an act appearing in a public document.
        
        EXCEEDS 5000 PESOS
        All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one.
        
        GOVERNED BY ART. 1403(2) & 1405
        
        GOODS
        
        CHATTELS
        
        THINGS IN ACTION
        But sales of goods, chattels or things in action are governed by articles, 1403, No. 2 and 1405. (1280a)
        
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        NOT for validity/enforceability
        
        For validity/Enforceability
  - - - OWNERSHIP SHALL NOT PASS until
        FULL PAYMENT
        Article 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price. (n)
        
        PROMISE TO BUY & SELL:
        RECIPROCALLY DEMANDABLE
        Article 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.
        
        BINDING UPON PROMISSOR
        
        UNILATERAL PROMISE
        
        ACCEPTED
        
        BUY OR SELL
        a. DETERMINATE THING!
        b. PRICE CERTAIN!
        c. CONSID DISTINCT FROM PRICE
        An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price. (1451a)
        
        What if the promise is not supported by a consideration distinct from the price?
        
        Promise vs Contract
    - - ABSOLUTE OR CONDITIONAL
        A contract of sale may be absolute or conditional. (1445a)
    - - MA'AM: NOTE THE WORD OBLIGATE!!!
        NOTE THE MODE: DELIVERY.TRADITION
        
        MA'AM: TRANSFER OF OWNERSHIP
        Ownership is transferred upon delivery.
    - - SIMILARITY
        CONDITIONAL COS v. CTS
        CONDITION
        A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor's obligation to transfer title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed.
        The suspensive condition is commonly full payment of the purchase price.||| (Spouses Serrano v. Caguiat, G.R. No. 139173, [February 28, 2007], 545 PHIL 660-669)
      - EVIDENCE NON-TRANSFER:
        
        NO FORMAL DEED OF CONVEYANCE
        The absence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but only a transfer after full payment of the purchase price.||| (Spouses Serrano v. Caguiat, G.R. No. 139173, [February 28, 2007], 545 PHIL 660-669)
        
        RETAINED POSSESSION OF CERTIFICATE
        Third,petitioners retained possession of the certificate of title of the lot. This is an additional indication that the agreement did not transfer to respondent, either by actual or constructive delivery, ownership of the property.||| (Spouses Serrano v. Caguiat, G.R. No. 139173, [February 28, 2007], 545 PHIL 660-669)
        
        PROMISE TO EXECUTE A DOAS
        Where the vendor promises to execute a deed of absolute sale upon the completion by the vendee of the payment of the price, the contract is only a contract to sell.||| (Reyes v. Tuparan, G.R. No. 188064, [June 1, 2011], 665 PHIL 425-447)
        
        EARNEST MONEY,
        NOT PART OF PURCHASE PRICE IF CTS
        It is true that Article 1482 of the Civil Code provides that "Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and proof of the perfection of the contract." However, this article speaks of earnest money given in a contract of sale.
        In this case, the earnest money was given in a contract to sell. The earnest money forms part of the consideration only if the sale is consummated upon full payment of the purchase price. 21 Now, since the earnest money was given in a contract to sell, Article 1482, which speaks of a contract of sale, does not apply. DcAa||| (Spouses Serrano v. Caguiat, G.R. No. 139173, [February 28, 2007], 545 PHIL 660-669)