Notes in Sales -- Articles 1582-1593 and Special Laws 1582/1583

Notice to the vendor in order to make the buyer liable for breach of warranty Failure to notify will exonerate the vendor from liability

When is there a justified rejection of the whole delivery? Purpose of notice to the vendor: Breach of contract is immaterial and non severable o Injured party can sue for damages and asks for the rescission of the contract Breach is severable o He can sue for partial damages To insulate the vendor from belated claims of defects To allow him to make urgent inspection to determine the validity of the claims of the vendee To meet the exigencies of the defects To afford him the right to protect and guard his interest

When entitled?

General Rule Right to Examination Buyer is given the right to examine the goods delivered to him Right is waivable by the vendee Vendee must exercise the right to inspection w/n reasonable time 1587 When is the buyer justified in refusing delivery of goods? When goods do not conform to quality in agreement Effects: 1. When buyer has no duty to return the goods to the seller but he must notify the seller of his rejection (no liability in case of loss) Effects if no examination is done Delivery w/o previous examination vendee is deemed not to have accepted the same. Unless he is afforded the reasonable opportunity to examine and determine if the goods delivered conform to the specification agreed upon 2. Buyer acts as the depositary of the goods (didnt notify. Then there is a fortuitous event you are liable to the seller)

1588 Unjustifiable refusal to accept the goods When the buyer refuses to accept the delivery of the goods w/o a valid cause

ART 1584 Rights of the buyer to examine.. When entitled ? gen rule When not entitled If there is an express agreement that the vendee shall not be afforded the right to examine the goods When the goods are delivered COD collect cash on delivery the vendee cant examine the goods unless he pays the price first

Gen rule: title or ownership to the goods passes to him from the time the goods were placed at his control or disposal Risk of loss is borne by the buyer Exception: If there is an agreement to the contrary Seller reserves the ownership as security for the payment of the goods

Except 1. 2. usage of trade and agreement by the parties 1589 When vendee is bound to pay interest after delivery? 1. If the parties stipulated 1585 Evidence of acceptance 1. Vendee expressly manifest his acceptance of the goods. (direct communication to the vendor) 2. Vendee performs act of ownership Continuous possession and use of the goods Reselling or offer to sell the goods to others 3. Vendee retained the goods after the lapse of a reasonable time to return or complain or reject the goods 2. If the thing sold and delivered produces fruits or income 3. If the vendee is in default from the time of demand (judicial or extrajudicial) is made upon him Legal rate 1. If stipulated, follow 2.W/o stipulation fixed at 6% per annum Computed on the purchase price for the period counted from the date of delivery until the price (goods) are paid Interest = (P x IR x 30 days/365)

1586 Effect of acceptance of goods of vendee GEN RULE: Mere acceptance of the goods by the vendee does not necessarily discharge the vendor from liability for the breach of warranty Exception: If there was an agreement express or implied to the contrary 1587 Requirements to hold vendor liable

1590 When is there suspension of payment by the vendee? 1. Vendee is disturbed in the possession or ownership of the thing bought 2. There is a danger (well grounded fear or sufficient basis) of a vindicatory action or foreclosure of mortgage

Instances when no suspension of payment can be made: 1. vendor has given security for the return of the price

2. stipulation to pay regardless of disturbance 3. vendor has remedied/eliminated the danger or disturbance

1. PD 957 sec 23 and 24 Subdivision or condo project 2. Maceda law

1591 Vendor fear of loss of the immovable property

If the buyer has paid at least 2 years of instalment 1. Buyer must pay w/o additional interest, the unpaid instalment.. (maam change ppt)

Sept 19, 2012 Maceda Law RA 6552 1592 Rescission involving immovable; Demand for rescission must be given (judicial or extrajudicial) to the vendor (seller) in order for it to be effective Covered Sales Residential Real Estate Sales on Installments Financing of real estate on instalment payments Residential Condominium Apartments p. 326 of Pineda

1593 Automatic rescission of the sale of movable property: The vendor can rescind the contract automatically, 1. If the vendee upon expiration of the period fixed are for the delivery of the thing purchased refused to receive it w/o justifiable cause. 2. If the failed to pay the price unless granted a longer period w/in which to pay

Excludes Industrial lots commercial building

Remedies of the Seller Action for the Price Art 1595 Action for Damages Action for Technical rescission

sales-tenant RA6389

Q: Rights of the buyer if you have paid at least 2 yrs of instalments, 2 or more annual payments A: YOU CAN PAY W/O INTEREST BUT must pay during grace period For every year you are given a grace period of 1 month 32 months / 12 = 2 = 2 months You can pay your instalment in 2 months wo interest Grace period used only once every 5 years 3 times lang pwede mag default 15 years Reservation fee, option money, cash advances prior to instalment.

When may action for the price be exercised Where the ownership has passed to the buyer and he wrongfully neglects or refuses to pay for the price Where price is payable on a day certain and he wrongfully neglects or refuses to pay for the price irrespective of the delivery or transfer of title Where the goods cannot be readily be resold for a reasonable price and the buyer wrongfully refuses to accept them even before the ownership of the goods has passed if Art 1596 is not applicable

When action for damages exercised? 1. In case of wrongful neglect or refusal by the buyer to accept or pay for the thing sold (1596 par 1) 2. In an executor contract where the ownership in the goods has not passed, and the seller cannot maintain an action to recover the price (1595) If the goods are not yet identified at the time of the contract or subsequently thereafter Sale of Movables Recto Law In a contract of sale of personal property the two price of which is payable in instalments, the vendor may exercised any of the ff remedies 1. Exact fulfilment of the obligation should the vendee fail to pay 2. Cancel the sale should the vendees failure to pay cover 2 or more instalments 3. Foreclose on the chattel mortgage on the thing sold if one has been constituted should the vendees failure to pay cover two or more instalments

Less than 2 annual Grace period of 60 days If no payment w/n grace period cancelled w/n 30 days from receipt of notice of cancellation

2 or more Grace period 1 month for every year of instalment made Use once every 5 years Instalments include option money downpayment Cash surrender value 50% Plus 5% for every year in excess of 5 years but not more than 90% of instalments made

Cash surrender value 4 years of instalments at 100k per year

Sale of immovables

50% of 400k= 200K

When may action for the price be exercised 6 years of instalments at 100k per year 300k + 5% = 330K Where the ownership has passed to the buyer and he wrongfully neglects or refuses to pay for the price Where price is payable on a day certain and he wrongfully neglects or refuses to pay for the price irrespective of the delivery or transfer of title Where the goods cannot be readily be resold for a reasonable price and the buyer wrongfully refuses to accept them even before the ownership of the goods has passed if Art 1596 is not applicable

When developer commits breach of ccontract Buyer desists from paying further installments Owner fails to develop the subd accdg to approved plans and within the time limit Buyer is entitled to reimbursement of all instalments made

When action for damages exercised? 1. In case of wrongful neglect or refusal by the buyer to accept or pay for the thing sold (1596 par 1)

Bar 2005 A bought subd lot Paid instalments for 48 months Developer failed to develop A wrote not anymore pay Developer cancelled. Informed A payments are forfeited.

2. In an executor contract where the ownership in the goods has not passed, and the seller cannot maintain an action to recover the price (1595) If the goods are not yet identified at the time of the contract or subsequently thereafter Sale of Movables

Was the action of D proper? No. Must reimburse. NOT deemed forfeited. Failed to develop within the TIME FRAME STIPULATED.

Recto Law In a contract of sale of personal property the two price of which is payable in instalments, the vendor may exercised any of the ff remedies 1. Exact fulfilment of the obligation should the vendee fail to pay

Rights of A?

2. Cancel the sale should the vendees failure to pay cover 2 or more instalments 3. Foreclose on the chattel mortgage on the thing sold if one has been constituted should the vendees failure to pay cover two or more instalments

Supposing D developed but A after paying 48 months stopped paying. Discuss rights and obligation of the parties.

Entitled to pay w/o interest wn a grace period of 4 months or 1 month for every annual instalment Cancel or rescind after NOTICE TO THE PARTY at fault

Sale of immovables 1. PD 957 sec 23 and 24 Subdivision or condo project

If he fails to pay wn the grace period he is entitled to be reimbursed 50% of his payments since he has made at least 2 annual instalments Maceda w/ PD 957

2. Maceda law If the buyer has paid at least 2 years of instalment 1. Buyer must pay w/o additional interest, the unpaid instalment.. (maam change ppt)

Sept 19 1592 Rescission involving immovable; Demand for rescission must be given (judicial or extrajudicial) to the vendor (seller) in order for it to be effective

Maceda Law RA 6552 Covered Sales Residential Real Estate Sales on Installments Financing of real estate on instalment payments Residential Condominium Apartments p. 326 of Pineda

1593 Automatic rescission of the sale of movable property: The vendor can rescind the contract automatically, 1. If the vendee upon expiration of the period fixed are for the delivery of the thing purchased refused to receive it w/o justifiable cause. 2. If the failed to pay the price unless granted a longer period w/in which to pay

Excludes Industrial lots commercial building sales-tenant RA6389

Remedies of the Seller Action for the Price Art 1595 Action for Damages Action for Technical rescission Q: Rights of the buyer if you have paid at least 2 yrs of instalments, 2 or more annual payments A: YOU CAN PAY W/O INTEREST BUT must pay during grace period

For every year you are given a grace period of 1 month 32 months / 12 = 2 = 2 months

Entitled to pay w/o interest wn a grace period of 4 months or 1 month for every annual instalment Cancel or rescind after NOTICE TO THE PARTY at fault

You can pay your instalment in 2 months wo interest Grace period used only once every 5 years 3 times lang pwede mag default 15 years Reservation fee, option money, cash advances prior to instalment. Apply Maceda w/ PD 957 N/A to office. Residential subdivision or condominium lang. Less than 2 annual Grace period of 60 days If no payment w/n grace period cancelled w/n 30 days from receipt of notice of cancellation Rights of A under the circumstances D at fault 2 or more Grace period 1 month for every year of instalment made Use once every 5 years Instalments include option money downpayment Cash surrender value 50% Plus 5% for every year in excess of 5 years but not more than 90% of instalments made CONDO ACT RA 4726 Unit means a part of the condo project .. (see definition ra 4726) 1 unit several rooms Cash surrender value 4 years of instalments at 100k per year 50% of 400k= 200K Rules on Conveyance Sec 5 6 years of instalments at 100k per year 300k + 5% = 330K You only buy improvements. The building. Hindi yung lupa. When developer commits breach of ccontract Buyer desists from paying further installments Owner fails to develop the subd accdg to approved plans and within the time limit Buyer is entitled to reimbursement of all instalments made Recto Law -- MOVABLES Bar 2005 A bought subd lot Paid instalments for 48 months Developer failed to develop A wrote not anymore pay Developer cancelled. Informed A payments are forfeited. Usual life 50 years. Kelan mag rerevert. Pag nasira ang condo unit wala ka ng property. Thats why foreigners can own condo units. Not a realty. Read section 5. transfer unit also transfer also common areas 1 unit several floors A at fault Not entitled to reimbursement. D was in good faith. Cash surrender A can ask for rescission of the contract all instalments return to him If he fails to pay wn the grace period he is entitled to be reimbursed 50% of his payments since he has made at least 2 annual instalments

Was the action of D proper? No. Must reimburse. NOT deemed forfeited. Failed to develop within the TIME FRAME STIPULATED.

Rights of A?

Supposing D developed but A after paying 48 months stopped paying. Discuss rights and obligation of the parties.