Bitanga, Princess Jovie Mary S.
BSA-II
1. What are the causes of extinguishment of sale?
Common – those causes which are also the means of extinguishing all other contracts
like payment, loss of the thing, coadunation, etc. (Art. 1231).
Special – those causes which are recognized by the law on sales (those covered by Arts.
1484, 1532, 1539, 1540, 1542, 1556, 1560, 1567, and 1591).
Extra-special – conventional redemption and legal redemption.
2. Differentiate right to redeem from option to purchase
1. As to nature, a right to redeem is not separate contract, but merely a part of the main
contract of sale; whereas an option to purchase is generally a principal contract and
may be created independent of another contract.
2. As to consideration, a right to redeem does not need a separate consideration in order
to be valid and effective; whereas in an option to purchase, to be valid, the same must
have a consideration separate and distinct from the purchase price
3. As to the maximum period for exercise of the right, a right to redeem cannot exceed
ten years; while in an option to purchase, it may be beyond ten years.
4. As to how it exercised, in a right to redeem, there must be tender of payment of the
amount required by law including consignment thereof if tender of payment cannot be
made effectively on the buyer; whereas in an option to purchase, it may be exercised
by notice of its exercise to the offeror.
3. Define equitable mortgage
An equitable mortgage is one which lacks the proper formalities, form of words, or other
requisites prescribed by law for a mortgage, but shows the intention of the parties to
make the property subject of the contract as security for a debt and contains nothing
impossible or contrary to law .
4. Differentiate pacto de retro sale from mortgage
Pacto de retro Mortgage
Ownership is transferred but the ownership is Ownership is not transferred but the property
subject to the condition that the seller might is merely subject to a charge or lien as
recover the ownership within a certain period security for the compliance of a principal
of time. obligation, usually a loan.
If the seller does not repurchase the property The mortgagor does not lose his interest in
upon the very day named in the contract, he the property if he fails to pay the debt at its
loses all interest thereon. maturity.
There is no obligation resting upon the It is the duty of the mortgagee to foreclose the
purchaser to foreclose; neither does the mortgage if he wishes to secure a perfect title
vendor have any right to redeem the property thereto, and after the maturity of the debt
after the maturity of the debt. secured by the mortgage and before
foreclosure, the mortgagor has a right to
redeem [Basilio vs. Encarnacion, 5 Phil.
360].
5. Define pactum commissorium
This is a stipulation in a pledge or mortgage which provides for automatic forfeiture, i.e.,
that ownership of the thing pledged or mortgaged shall pass to the creditor by the mere
default of the debtor. (Declaro vs. Alpha Insurance 58564-R, June 16 1978)
6. Differentiate conventional redemption from legal redemption
Conventional Redemption Legal Redemption
(Arts. 1601-1618) (Arts. 1619-1623)
It is the right which the vendor reserves to It is the right to be subrogated, upon the
himself, to reacquire the property sold same terms and conditions stipulated in the
provided her returns to the vendee the price of contract, in the place of one who acquires a
the sale, the expenses of the contract, any thing by purchase or dation in payment, or
other legitimate payments made therefore and by any other transaction whereby ownership
the necessary and useful expenses made on is transmitted by onerous title.
the thing sold, and fulfills other stipulations
which may have been agreed upon.
Nature: Nature: (a) identical with conventional
redemption, except for the source of the
(a) it is purely contractual because it is a right – conventional redemption arises from
right created, not by mandate of the law, but the voluntary agreement of the parties; legal
by virtue of an express contract[Ordoñez vs. redemption proceeds from law;
Villaroman, 78 Phil. 116];
(b) it is not predicated on proprietary right
(b) it is an accidental stipulation and, but on a bare statutory privilege to be
therefore, its nullity cannot affect the sale of exercised only by the person named in the
itself since the latter might be entered into statute – the statute does not make actual
without said stipulation [Alojado vs. Lim ownership at the time of sale or redemption
Siongco, 51 Phil. 339]; a condition precedent, the right following
(c) it is a real right when registered, because the person and not the property[Magno vs.
it binds third persons [Mortera vs. Martinez, Viola and Sotto, 61 Phil. 80];
14 Phil. 541]; (c) it is in the nature of a mere
(d) it is a resolutory condition because when privilegecreated partly for reason of public
exercised, the right of ownership acquired by policy and partly for the benefit and
the vendee is extinguished[Aquino vs. Deal, convenience of the redemptioner to afford
63 Phil. 582]; him a way out of what might be a
disagreeable or inconvenient association into
(e) it is potestative because it depends upon which he has been thrust – it is intended to
the will of the vendor; minimize co-ownership [Basa vs. Aguilar,
(f) it is a power or privilege, not an 117 SCRA 128; Tan vs. CA, 172 SCRA
obligation, that the vendor has reserved for 660].
himself [Ocampo vs. Potenciano, CA 48 OG
2230];
Instances of Legal Redemption:
(g) it is reserved at the moment of the
perfection of the contract for if the right to
repurchase is agreed upon afterwards, there is
only a promise to sell which produces (a) Under the Civil Code, those found in
different rights and effects and is governed by Arts. 1620-1622, 1634, and 1088;
Art. 1479 [Diamante vs. CA, 206 SCRA 52];
(h) the person entitled to exercise the right (b) Under special laws:
of redemption necessarily is theowner of the
property sold and not any third party [Gallar (1) redemption by owner of real property
vs. Husain, 20 SCRA 186]; sold for delinquent taxes – period is within 1
year from date of sale;
(i) it gives rise to reciprocal obligationthat
of returning the price of sale and other (2) repurchase by homesteader of
expenses, on the part of the vendor, and that homestead sold under the Public Land Act –
of delivering the property and executing a period is 5 years [Tupas vs. Damasco, 132
deed of sale therefore, on the part of the SCRA 593];
vendee [Pandaquilla vs. Gaza, 12 Phil. 663].
(3) redemption by judgment debtor or
redemptioner or real property sold on
execution – period is 12 months;
(4) redemption by mortgagor after
mortgaged property has been judicially
foreclosed and sold – period is 90 days but
before confirmation of sale by the court (in
all cases of extra-judicial foreclosure sale,
the mortgagor may redeem the property
within 1 year from the date of registration of
the sale);
(5) redemption by an agricultural lessee of
landholding sold by the landowner – period
is 180 days from notice in writing which
shall be served by the vendee on all lessees
affected by DAR upon the registration of the
sale.
7. Differentiate contract of sale from assignment of credit
Basis Contract of sale Assignment of credit
Object Property Credits, incorporeal rights or
rights of action
Manner of delivery of object It need not be through public It must be through public a
instrument instruments
Subject obligated The whole world A definite third person
Ownership when transferred Transfer of ownership need Ownership is transferred upon
not be upon delivery of the delivery of the documents
thing. The parties may agree evidencing the credit or
that ownership be transferred incorporeal rights
only after full payment
Consideration It is always requisite It is not always a requisite.
Action may be maintained by
the assignee based on his title
even if there is no
consideration
8. Define negotiable instrument
The law governing negotiable instruments is the Negotiable Instruments Law or Act No.
2031which was enacted on February 3, 1911 and took effect ninety days after its
publication in the Official Gazette on March 4, 1911. Accordingly, the law took effect on
June, 02, 1911
9. What are the requisites of negotiability ( section 01 of negotiable instruments law)
1. It must be in writing and signed by the maker or drawer;
2. It must contain an unconditional promise or order to pay a sum certain in money;
3. It must be payable on demand, or at a fixed or determinable future time;
4. It must be payable to order or to bearer; and
5. Where the instrument is addressed to a drawee, he must be named or otherwise
indicated therein with reasonable certainty.
10. What are the kinds of negotiable instruments?
1. Bill of exchange, defined.
A bill of exchange is an unconditional order in writing addressed by one person to
another, signed by the person giving it, requiring the person to whom it is addressed to
pay on demand or at a fixed or determinable future time a sum certain in money to order
or to bearer.
2. Promissory note, defined
A negotiable promissory note within the meaning of this Act is an unconditional
promise in writing made by one person to another, signed by the maker, engaging to
pay on demand, or at a fixed or determinable future time, a sum certain in money to
order or to bearer. Where a note is drawn to the maker's own order, it is not complete
until indorsed by him.
3. Check, defined
A check is a bill of exchange drawn on a bank payable on demand. (Sec 185)
11. Differentiate promissory note from bill of exchange
Promissory Note Bill of Exchange
Unconditional promise Unconditional order
Involves 2 parties Involves 3 parties
Maker primarily liable Drawer only secondarily liable
Only 1 presentment - Generally 2
For payment Presentments – for acceptance and for payment
12. Differentiate bill of exchange from check
CHECK BILL OF EXCHANGE
The Check is the document which contains an The Bill of Exchange is the document which contains an
order to the bank to pay a certain amount of money order to drawee to pay a certain amount to the payee on
from the account of the customer. demand or after certain time period.
Defined In
The check is defined in section 6 of the Negotiable Bill of Exchange is defined in Section 5 of the Negotiable
Instruments Act, 1881. Instruments Act, 1881.
CHECK BILL OF EXCHANGE
Obligation to Pay
The amount which is mentioned in the check is The amount which is mentioned in the bill of exchange
always payable on demand. may be payable on demand or after a certain time period.
Days of Grace
The check is not allowed to have any days of grace
The Bill of Exchange is allowed to have three days of
after the check is presented for payment to the
grace period for payment.
bank.
Acceptance
The Check does not need any acceptance from the The Bill of Exchange needs acceptance from the drawee to
parties before it is presented for payment. pay the amount.
Crossing Of document
The check can be crossed to ensure the safety There is no such feature as the crossing of Bill of
against theft or loss of checks. Exchange.
Dishonor
Notice of dishonor is not necessary in the case of
Notice of dishonor is necessary in the case of dishonor.
dishonor.
Liability
The parties remain liable to pay even notice of The parties who does not receive a notice of dishonor can
dishonor is not given. escape the liability to pay.
Validity
CHECK BILL OF EXCHANGE
The check is only valid for three months from the There is no such thing as validity in the case of a bill of
date it is issued. exchange.
Stamp
The check is not required to duly stamped by the The Bill of Exchange must be duly stamped as per Indian
authority. Stamp Act.
13. I have internet connection as of the moment (escifically, load lang sir) but not stable.
