P1 ride the taxi carried by D, a driver of taxi business owned by O. D accidentally hit P2 on the road.

What are the rights and obligations based on the circumstances?

What are the cases to be filed considering the aforementioned circumstances?

P1 may file contractual negligence against O and criminal negligence against D.

P2 may file civil negligence against the D and 0 and criminal negligence against D.

Conditional Obligations

Suspensive Potestative on the part of the debtor- Both the condition and obligation is void.
Resolutory Potestative on the part of the creditor-Obligation and condition is valid
Suspensive or Resolutory Potestative on the part of creditor-the obligation and condition is valid

RULE IN CASE OF LOSS UNDER ALTERNATIVE OBLIGATIONS BEFORE CHOICE IS COMMITTED:

WHEN THE RIGHT OF CHOICE BELONGS TO DEBTOR (when the obligation is silent who will choose)
Instances Reason Effect
One or some are lost Fortuitous event or Debtor may choose any remainder
debtor’s fault
All are lost Fortuitous event Obligation extinguished
All are lost Debtor’s fault Debtor shall pay the value of last
thing lost plus damages
All except one are lost and; Debtor’s fault
The only remaining one is subsequently Fortuitous event Obligation is extinguished
lost
All except one are lost and; Fortuitous event Debtor shall pay damages
The only remaining one is subsequently Debtor’s fault
lost

WHEN THE RIGHT OF CHOICE BELONGS TO CREDITOR (express stipulation)

Instances Reason Effect
One or some are lost Fortuitous event Creditor may choose any
remainder or the one left if no
other choices
One or some are lost Debtor’s fault Creditor may claim any subsisting
or the price of any of the lost ones
plus damages
All are lost Fortuitous event Obligation extinguished
All are lost Debtor’s fault Creditor may claim price any of the
loss ones plus damages
All except one are lost and; Debtor’s fault
The only remaining one is subsequently Fortuitous event Obligation is extinguished
lost
All except one are lost and; Fortuitous event Debtor shall pay damages
The only remaining one is subsequently Debtor’s fault
lost
RULE IN CASE OF LOSS OF PRINCIPAL THING AND SUBSITUTE UNDER FACULTATIVE OBLIGATIONS
(RIGHT OF CHOICE CANNOT BE GIVEN TO CREDITOR):
Instances Reason Effect
Before substitution principal Fortuitous event Obligation is extinguished
thing is lost
Before substitution principal Debtor’s fault Debtor shall pay damages
thing is lost
Before substitution, the Fortuitous event/Debtor’s fault Debtor is not liable, obligation
substitute is lost becomes simple
After substitution, principal Debtor’s fault/Fortuitous event Debtor is not liable, obligation
thing is lost becomes simple
After substitution, substitute Fortuitous event Obligation is extinguished
thing is lost
After substitution, substitute Debtor’s fault Debtor shall pay damages
thing is lost

RULES IN CASE OF ASSIGNMENT ON COMPENSATION OF DEBTS

INSTANCES EFFECT EXEMPTION/APPLICABILITY
Assignment with debtor’s consent Debtor cannot set up Unless debtor’s right to the
the compensation compensation is reserved
against the assignee
Debtor was notified but did not Debtor may set up To debts maturing before the
give consent to the assignment compensation assignment but not the debts
maturing subsequent to assignment
Assignment without debtor’s Debtor can set up of all debts maturing before the time
knowledge compensation he obtains knowledge

General Rule Exemptions

Cession releases debtor from liability to the Contrary Stipulation
extent of the proceeds.

RULES ON APPLICATION OF PAYMENT

INSTANCES APPLICATION
Preferential right is given to the debtor Apply the payment to debts due or not due which
amount is equal to available payment
Preferential right is given to the creditor Creditor may apply the payment to any debts by
indicating on his receipt unless debtor there is a
just cause to invalidate
 Expromision Delegacion

RULES IN DETERMINING WHETHER SALE OR BARTER

General Rule When no clear intentions

True intentions of the party shall prevail Barter thing value is greater than money value
Sale if money value is more than and equal to
thing value

CONTRACT OF SALE CONTRACT TO SELL

Ownership is transferred upon delivery Ownership by agreement is reserved to the
Non-payment of price is a negative resolutory vendor until full payment of price
condition
No consent to transfer until full payment which is
a positive suspensive condition

Failure to pay is not a breach but it prevents the

obligation of the vendor to convey title

Example: A contract whereby a seller promises to

execute a deed of sale upon full payment

CONTRACT OF SALE AGENCY TO SELL

The goods is transferred to the buyer upon Title to the goods is retained by the owner
delivery of the thing sold. despite the delivery of the goods to agent

Buyer is required to pay The agent is required to turn over to the principal

The recipient of the property may do with the Principal retains control of the property
property as he pleases

Rule on the sales contracted (LAND THROUGH AN AGENT):

VALID VOIDABLE UNEFORCEABLE VOID
Authority to sell a land Sale made with Unwritten sale of real Authority of the agent
is in private instrument defective property or of any to sell immovable is not
and sale is entered in consent interest in writing and the sale
private instrument entered in whatever
Seller employs Unwritten sale of things form
Authority to sell a land by bidders or with price 500 or more
is in private instrument puffers without
and sale is entered in notice Authority to sell a land is
public instrument in private instrument but
 Authority to sell a land sale is entered orally
is in public instrument
and sale is entered in Authority to sell a land is
private instrument in public instrument but
sale is entered orally
Authority to sell a land
is in public instrument
and sale is entered in
public instrument

Note: For registration in the Registry of Deeds, both authority of the agent and the sale of land must be
in public instrument

RULES CONCERNING A CONTRACT OF SALE

Instances Effect
After perfection and before delivery Seller should preserve the thing
Upon perfection Buyer has a right to fruits of the thing unless contrary is
stipulated
Before delivery Buyer has no real right but only a personal right
Completely loss before perfection The sale is void
Partially loss before perfection Buyer may withdraw or rescind; or
Demand the remaining part and pay a proportionate price
Loss after perfection before delivery Buyer bear the risk of loss except delay by seller, law
provides, stipulation, nature of seller’s obligation requires
the assumption of risk
After perfection before delivery, the Loss is at seller risk and buyer is not obliged to pay the price
goods is still owned by the seller unless
 There is contrary agreement
 Ownership is retained by the seller merely to secure
performance
 Actual delivery has been delayed through the fault
of the buyer
Goods delivered do not corresponds Buyer may ask for rescission
with the sample, description or sample
and description
Sale of personal property in installment Remedies of the seller:
basis or lease of personal property with 1) Exact fulfillment for due debt in case of failure to
option to buy and lessor has deprived pay regardless of the number of installments paid.
the lessee the possession or enjoyment 2) Ask payment for the whole amount payable in case
of the thing of acceleration clause or the default of the buyer
make him lose the right to make use of the period
In case of buyer’s failure to pay two or more installments,
seller may avail either:
1) Cancellation of sale; OR
2) Foreclosure of chattel mortgage on the object of sale
ONLY (no further action against the purchaser for
unpaid balance, otherwise such agreement is void
 Note: When sale is rescinded, the seller shall return to the
vendee the sums received minus reasonable rent
Upon delivery Ownership is acquired by the buyer
Upon perfection Vendor has obligation to deliver the thing sold with
accessions and accessories
Upon perfection The fruits pertain to the buyer unless contrary is stipulated

STEPS ON THE EXERCISE OF RIGHT UNDE MACEDA LAW (SALE OF REAL PROPERTY IN INSTALLMENT
BASIS)

LESS THAN TWO YEARS OF INSTALLMENTS PAID AT THE TIME OF DEFAULT

1) The buyer is given a grace period of 60 days from due date of installment payment to pay.
2) If not paid within such 60 days, seller should send a notarized notice of rescission or cancellation
by notarial act to the buyer.
3) If buyer receives such notice, he is given another 30 days to pay but with interest of unpaid due
debt installment.
4) Within this 30 days, the buyer has the right to:
a. sell his right by notarial act,
b. to assign his right by notarial act
c. to reinstate the contract upon updating the account,
d. to pay in advance the installment or full unpaid balance anytime without interest
e. to ask for annotation of the full payment of the purchase price in the certificate of title
covering the property.
5) After such 30 days from receipt by the buyer of notice, the seller may cancel the sale.

ATLEAST TWO SUCEEDING YEARS OF INSTALLMENTS PAID AT THE TIME OF DEFAULT

1) The buyer is given a grace period of one month for every year of installment payment. This is
exercisable only once every five years of the life of the contract and extensions, if any.
2) If buyer receives the notice of rescission, he is given another 30 days to pay but with interest.
3) After such 30 days from receipt by the buyer of notice, the seller may cancel the sale and buyer
will then be entitled of refund for cash surrender value to be computed as follows:
 50% of total of total payments made (including deposits, options, partial payment) + 5%
of each payment value in excess of five years
 Above computation should not exceed 90% of total payments made

 50 % + 5% of each in excess of five years (downpayment + periodic payment x number of

periods before default)

Kinds of Delivery Concept

Actual or Real Delivery Physically placing movables or immovables
Legal Formalities Execution of public instrument involving both
movables or immovable provided that the seller
has actual possession or lawful owner
Symbolic Delivery (Traditio Simbolica) Delivery of keys of the place or depository where
movable is stored or kept
 Traditio Longa Manu (Delivery by long hand) Delivery of a movable by mere consent if thing
can’t be transferred
Traditio Brevi Manu Delivery of movable when buyer is already in the
possession of the property prior to the sale
Traditio Constitutum Possessorium Delivery of movable or immovable when seller
continues to be in possession of thing sold after
sale
Delivery of incorporeal property (Quasi-traditio) 1) Execution of public document
2) Placing titles in possession of the buyer
3) Use by the buyer of his rights with seller
Sale or Return Risk of loss borne by buyer
Sale on approval Risk of loss borne by seller

OTHER NOTES:
What are to be delivered?
 Object
 Accessions and Accessories

Right of the buyer to the fruits?

 From the time the obligation to deliver arises
When is the time of delivey?
 Agreement by the parties
 Without agreement, within reasonable time
 The seller is not obligated to deliver unless the purchase is paid in full

Place of delivery in order of priority:

 Agreement
 Usage of trade
 Seller’s place of business
 Seller’s place of residence –specific goods
Note: The buyer has no right to demand from the seller for delivery if not fixed
Seller is obligated to deliver

When delivery is completed?

 Buyer’s acquire physical possession
 Seller delivered the goods to carrier for the purpose of transmission to the buyer
 In case of real property:
o If price is lump sum and not based on a unit of measure regardless of actual size,
executive of public instrument is delivery
o Object on immovable is specifically described through boundaries, everything in
boundaries should be delivered, otherwise the price may be reduced or the contract may
be rescinded because the buyer does not accede to the failure to deliver what has been
stipulated
OBLIGATIONS OF THE SELLER AND THE REMEDIES ON PART OF THE BUYER

Rules on Delivery
Ownership of the thing sold is acquired only upon real or constructive delivery except:
 Agreement that ownership remains in seller until price is fully paid
 Contract to sell
 Sale on approval, trial or satisfaction
 Implied reservation of ownership

Double Sale:
Requisites:
1) Two or more valid contract of sale
2) Two or more buyers at odds over ownership of one object
3) One the same object
4) Must be bought from the same seller

Immovable property:
1) First registrant in good faith
2) First possessor in good faith
3) Person with oldest title in good faith (person who caused registration to his name first)

Movable:
1) First possessor in good faith

Action for breach of contract of sale of goods:

1) File civil case/specific performance
2) Maintain an action for rescission or damages for breach of warranty
Buyer’s options:
a) Accept or return the goods and maintain action to enforce warranty or extinction of the
price
b) Accept or keep the goods and maintain an action for damage
c) Refuse to accept or keep the goods and maintain an action for damages
d) Maintain an action for rescission
Note: There should be refusal to receive the goods or if the goods have been delivered, return the goods.
Consequently, buyer shall not be liable for the price or if price shall have already been paid, the buyer
can recover the price.

When buyer cannot rescind?

a) If goods have been accepted by the buyer and the buyer knew of the breach of warranty bud did
not make timely protest
b) If buyer fails to notify the seller within reasonable time
c) If buyer fails to return or to offer to return the goods to the seller in substantially the same
condition as they are at the time of ownership was transferred to the buyer except where goods
have deteriorated due to breach of warranty

Effects of election to rescind:

 a) Buyer holds the goods as bailee
b) If buyer has paid for the price, he will be deemed as un unpaid seller which shall have lien on the
goods

OBLIGATIONS OF THE BUYER AND THE REMEDIES ON PART OF THE SELLER

a) Accept delivery
b) To pray the price and interest if latter is applicable

ACCEPT DELIVERY

Acceptance-buyer’s assent, either by express act of by implication

Type of acceptance
1. Express
2. Implied acceptance
3. After lapse of time, he retains without rejection

General rule: Buyer must accept the entirety of goods

Exception: goods are delivered by installments except if paid separately or by agreement

Rules on Examination of Goods:

General Rule: Buyer should have reasonable opportunity to examine the goods upon delivery
Exception: Agreement or COD unless there is agreement permitting examination or usage of trade
permits such examination

Rules on Whether Buyer is allowed to refuse the goods delivered

General Rule: Buyer is allowed to refuse
Exception: Buyer has unjustified reason for refusal, in this case title passes to the buyer from the
moment they are placed at his disposal

If buyer is justified to refuse, the following rules should be observed by the buyer:
1. Buyer has no obligation to return the goods to the seller
2. Buyer must notify the seller that he refuses to accept the goods
3. If buyer voluntarily constitutes himself as depositary, he shall be liable for interest

OBLIGATION TO PAY THE PRICE AND INTEREST, IF ANY

General Rule: The obligation to pay means to pay the entire amount of purchase price unless installment
is agreed upon. The buyer cannot compel the seller to accept installment payment

Time and place of payment

a) At time and place stipulated; if not possible
b) At time and place of delivery

Right to suspend payment by the buyer can be enforced through the following grounds:
a) Buyer disturbed in the possession
b) Reasonable grounds to fear such as disturbance by vindicatory action or foreclosure of mortgage
Buyer has no right to suspend payment provided:
a) Seller gives security for return of the price in proper case
b) Stipulated that even if contingency exist, buyer is bound to make payment
c) Seller has caused disturbance or danger to cease

THE REMEDIES ON PART OF THE SELLER IN CASE BUYER HAS BREACH TO ACCEPT DELIVERY OR PAY
THE PURCHASE PRICE

1. Maintain an action for the price if the price is not paid (CIVIL CASE)
Grounds: Ownership transferred to the buyer and buyer wrongfully refused to pay the price
When payment for price has been set and buyer wrongfully refused to pay the price
Note: Whether title is transferred or not; or goods are not yet deliver, the buyer may set up the
defense that the seller is not willing or able to deliver the goods, in which case buyer cannot be
compelled to pay

2. Maintain an action for damages in case of wrongful refusal of buyer to accept the goods and pay
the price
Ground: Buyer wrongfully refuses to accept the goods and to pay the price therefore:
Measure of damages:
a) Estimated of loss directly and naturally resulting
b) Available Market difference between the contract price and the market price at the time
the goods should have been accepted
c) Damages for cost of labor, if any

3. Maintain an action rescission/cancellation

Requisites: Ownership has not yet passed to the buyer/ not delivered and giving a notice of
rescission
Grounds:
a) Buyer repudiates the sale
b) Buyer manifests his inability to perform his obligation
c) Buyer is guilty of breach

RIGHTS OF AN UNPAID SELLER (INCLUDES AGENTS, BAILEE AND REPRESENTATIVES OF SELLER):

Requisites to be called as unpaid seller, a seller must be any of the following:
1) Seller who is not paid of the WHOLE PURCHASE PRICE
2) Seller who received a dishonored payment
Rights:
1) Lien or Retain on the goods
Applicability:
a) Where the goods have been sold without any stipulation of sale on credit/installment
b) Where the goods have been sold on credit but term has expired
c) Where the buyer becomes insolvent

2) Right of stoppage in transit

Requisites:
a) Seller must be unpaid
 b) Buyer must be insolvent
c) Goods must be in transit
d) Seller must either actually take possession of the goods sold or give notice of his claim
to the carrier or other person in possession
e) Seller must surrender the negotiable document of title, if any, issued to carrier or bailee
f) Seller must bear expenses for the goods of delivery after exercise of such right

Applicability (When goods are considered in transit)

a) Goods are in transportation means carried by bailee carrier or agent
b) Goods are rejected by the buyer and carrier continues in possession

Non Applicability (When goods are not considered in transit)

a) If buyer or his agent obtains delivery of the goods before arrival at the pointed
destination
b) Buyer or his agent acknowledges to the buyer or his agent that he holds the good
c) If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his
agent in that behalf

3) Right of Resale
Applicability:
a) Goods are of perishable nature
b) Seller expressly reserves right to resale
c) Buyer in default for an unreasonable time
Note: Notice to resell is not required unless the agreement so provides or the object is not
based a perishable good. Notice of time and place of resale is not required. Seller is not obliged
to refund the buyer for any profit. The seller may recover any loss as a result of resale.

4) Right to Rescind the sale

Requisites:
a) Right to rescission is expressly reserved in case of default by buyer or buyer delays
payment for unreasonable time
b) Notice of rescission or by some overt act
Effect: Seller resumes ownership of the goods
5) Right to Withhold delivery
a) Ownership is not passed to the buyer
 COMPREHENSIVE DISTINGUISHMENT
Instances REAL MORTGAGE CHATTEL MORTGAGE
CONVENTIONAL PLEDGE LEGAL PLEDGE ANTICHRESIS
Effects of Judicial foreclosure: Principal obligation is extinguished Rules
sale whether or not the proceeds of sale applicable to
are equal to amount of principal, real
interest and expenses in proper mortgage
case may apply
Proceeds is Judicial Foreclosure: Belongs to mortgagor Debtor is not entitled of the excess Excess shall be
greater than After applying to cost of sale, claim of even without unless agreed or unless it involves delivered to the
principal person foreclosing, junior stipulation promissory debtor
obligation encumbrancers in order of priority,
balance shall be paid to the mortgagor Excess belongs to mortgagor even
or his agent without stipulation

Extra-judicial Foreclosure (should be

stipulated and special power of
attorney is inserted in the contract):
Same application with judicial
forelosure

Proceeds is Judicial foreclosure: The creditor may Creditor cannot recover deficiency Creditor is entitled
less than The court upon motion shall render institute an action to even if stipulated. If stipulated, the to recover deficiency
principal judgement against debtor recover deficiency stipulation is void.
obligation except in chattel
Extrajudicial foreclosure: mortgage constituted
Creditor may recover by filing a court on personal property
action sold and payable by
installments

Any stipulation
exempting debtor to
the deficiency is not
valid
Rules on
Redemption
Form to bind Any form and for convenience, must be Must be registered in Any form as long as delivered Any form as long as
parties in public instrument the Chattel Mortgage delivered
Register of the
province where the
mortgagor resides
and the object is
located
As to object Immovable Movable Movables Immovable
Requisites
Appropriation Not allowed Not Allowed Allowed after no sale of two public auctions
in case of no
sale
Form to bind Must be registered in the Registry of Must be registered in Public Instrument showing description of the thing pledged
third persons the Property or if not, third persons the Chattel Mortgage and the date of pledge
have knowledge of the mortgage Register of the Public Instrument
province where the
mortgagor resides or
the object is located
with affidavit of good
faith