Sales Finals Reviewer

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Sales Finals Reviewer

Prof. J. Sanchez
1 semester, AY 10-11
st
Janz Hanna Ria N. Serrano

B. Object of the Contract
1. Requisites
CC, 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered.
CC, 1347. All things which are not outside the commerce of men, including future things, may be the object of a contract. All
rights which are not intransmissible may also be the object of contracts. No contract may be entered into upon future
inheritance except in cases expressly authorized by law. All services which are not contrary to law, morals, good customs,
public order or public policy may likewise be the object of a contract.
CC, 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.
CC, 1409. The following contracts are inexistent and void from the beginning: (1) Those whose cause, object or purpose is
contrary to law, morals, good customs, public order or public policy; (2) Those which are absolutely simulated or fictitious; (3)
Those whose cause or object did not exist at the time of the transaction; (4) Those whose object is outside the commerce of
men; (5) Those which contemplate an impossible service; (6) Those where the intention of the parties relative to the principal
object of the contract cannot be ascertained; (7) Those expressly prohibited or declared void by law. These contracts cannot
be ratified. Neither can the right to set up the defense of illegality be waived.
CC, 1411. When the nullity proceeds from the illegality of the cause or object of the contract, and the act constitutes a criminal
offense, both parties being in pari delicto, they shall have no action against each other, and both shall be prosecuted. Moreover,
the provisions of the Penal Code relative to the disposal of effects or instruments of a crime shall be applicable to the things or
the price of the contract. This rule shall be applicable when only one of the parties is guilty; but the innocent one may claim
what he has given, and shall not be bound to comply with his promise.
CC, 1416. When the agreement is not illegal per se but is merely prohibited, and the prohibition by the law is designated for
the protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid or delivered.
Licit
CC, 1347, supra.
CC, 1459, supra.
CC, 420. The following things are property of public dominion: (1) Those intended for public use, such as roads, canals,
rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character; (2)
Those which belong to the State, without being for public use, and are intended for some public service or for the
development of the national wealth.
CC, 422. Property of public dominion, when no longer intended for public use or for public service, shall form part of the
patrimonial property of the State.
CC, 424. Property for public use, in the provinces, cities, and municipalities, consist of the provincial roads, city streets,
municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said
provinces, cities, or municipalities. All other property possessed by any of them is patrimonial and shall be governed by this
Code, without prejudice to the provisions of special laws.
Martinez v. CA. Lot No. 2 embraced in said title is bounded practically on all sides by rivers. Lot #2 is a branch of the main
river that has been covered with water since time immemorial and, therefore, part of the public domain. The river is one not
capable of private appropriation or acquisition by prescription.
Prohibitions
CC, 1347, supra.
CC, 777. The rights to the succession are transmitted from the moment of the death of the decedent.
2. Determinate
CC, 1460. A thing is determinate when it is particularly designated or physical segregated from all other of the same class. The
requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being made
determinate without the necessity of a new or further agreement between the parties.
Meliza v. City of Iloilo. The requirement of the law that a sale must have for its object a determinate thing is fulfilled as long
as, being made determinate without the necessity of a new or further agreement between the parties. The statement that the
lots object of the sale are the ones needed for city hall site, avenues and parks according to the Arellano Plan, which was then
in existence, sufficiently provides a basis, as of the time of the execution of the contract, for rendering determinate said lots
without the need of a new and further agreement of the parties.
Gaite v. Fonacier. This is a case of a sale of a specific mass of fungible goods for a single price or a lump sum. Neither of the
parties had actually measured or weighed the mass, so that they both tried to arrive at the total quantity by making an
estimate of the volume thereof. The subject matter of the sale is, therefore, a determinate object, the mass, and not the
actual number of units or tons contained therein, so that all that was required of Gaite was to deliver in good faith to
his buyer all of the ore found in the mass, notwithstanding that the quantity delivered is less than the amount
estimated by them.
Atilano v. Atilano. [Eulogio Atilano II wants the sale reformed as he discovered that Lot No. 535-E was designated in the
contract as Lot No. 535-A which has a bigger area.] The SC ruled that there can be no reformation. When one buys real
property, he buys it as he sees it, not by the lot number. The true intention was already followed. Remedy is deed of
conveyance.
3. Nature of Object
a. Future Goods
CC, 1461. Things having a potential existence may be the object of the contract of sale. The efficacy of the sale of a mere
hope or expectancy is deemed subject to the condition that the thing will come into existence. The sale of a vain hope or
expectancy is void.
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CC, 1462. The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the
seller, or goods to be manufactured, raised, or acquired by the seller after the perfection of the contract of sale, in this
Title called "future goods." There may be a contract of sale of goods, whose acquisition by the seller depends upon a
contingency which may or may not happen.
Republic v. Lichauco. The plaintiff-appellant has a right to buy any increase in area that might be finally adjudicated by
the court to the defendants because it was clearly stipulated in paragraph 5 of the Agreement and Joint Motion. In the
event that the difference in area in G.L.R.O No. 1 still subject of judicial determination is adjusted and/or adjudicated in
favor of defendant co-owners, the plaintiff shall have the option to buy the said portions in question as adjudicated and
pay the corresponding price as in this expropriation case. This stipulation has the force of law between the contracting
parties and should be complied with. The increase in area contemplated is a matter that has yet to be the subject of a
hearing before the CFI to determine the exact extent of that increased area as well as the value of it, and the proportion
should correspond to each of the defendant-appellees and/or their successors-in-interest.
Onapal v. CA. Making contracts for the purchase and sale of commodities for future delivery, the parties not intending an
actual delivery, contracts of the kind commonly called futures, are unenforceable. This is simple speculation, gambling or
wagering on prices within a given time; it is not buying and selling and is illegal as against public policy. It appears that
petitioner and private respondent did not intent, in the deals of purchasing and selling for future delivery, the actual or
constructive delivery of the goods/community, despite the payment of the full price therefor.
b. Undivided interest of Share
CC, 1463. The sole owner of a thing may sell an undivided interest therein.
CC, 1464. In the case of fungible goods, there may be a sale of an undivided share of a specific mass, though the seller
purports to sell and the buyer to buy a definite number, weight or measure of the goods in the mass, and though the
number, weight or measure of the goods in the mass is undetermined. By such a sale the buyer becomes owner in
common of such a share of the mass as the number, weight or measure bought bears to the number, weight or measure of
the mass. If the mass contains less than the number, weight or measure bought, the buyer becomes the owner of the
whole mass and the seller is bound to make good the deficiency from goods of the same kind and quality, unless a
contrary intent appears.
Yturralde v. CA. The pacto de retro sale executed by MARGARITA expressly stipulates that she only sold all her rights,
interests and participation in the subject land. MARGARITA therefore, could not, for she had no right to, sell the
entire lot, since it was registered "in the name of Francisco Yturralde married to Margarita Yturralde." Said lot is the
conjugal property of FRANCISCO and MARGARITA. Hence, what she validly disposed of under the aforesaid pacto de
retro sale to ISABELO was only her conjugal share in the lot plus her successional right as heir in the conjugal share of her
deceased husband. Consequently, the vendee a retro, ISABELO, cannot legally petition for the consolidation of his
ownership over the entire lot
c. Things in Litigation
CC, 1381(4). The following contracts are rescissible: (4) Those which refer to things under litigation if they have been
entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority
CC, 1385(2). Neither shall rescission take place when the things which are the object of the contract are legally in the
possession of third persons who did not act in bad faith.
Atkins, Kroll & Co. v. Domingo. The effect of filing notice lis pendens is to charge the stranger with notice of the
particular litigation referred to in the notice; and if the notice is effective, a third person who acquires the property
affected by the lis pendens takes subject eventually of the litigation. But when the adverse right fails in such litigation, the
lis pendens loses its efficacy.
d. Things subject to conditions
CC, 1465. Things subject to a resolutory condition may be the object of the contract of sale.
CC, 1608. The vendor may bring his action against every possessor whose right is derived from the vendee, even if in the
second contract no mention should have been made of the right to repurchase, without prejudice to the provisions of the
Mortgage Law and the Land Registration Law with respect to third persons.
Arsenal v. IAC. The reversion of a public land grant to the government is effected only at the instance of the Government
itself. The reversion contemplated in the Public Land Act is not automatic. The Government has to take action to cancel
the patent and the certificate of title in order that the land involved may be reverted to it. Considering that this is an
ordinary civil action in which the Government has not been included as a party and in view of the settled jurisprudence,
we rule against the automatic reversion of the land in question to the State.
C. Cause or Consideration
CC, 1352. Contracts without cause, or with unlawful cause, produce no effect whatever. The cause is unlawful if it is contrary to
law, morals, good customs, public order or public policy.
CC, 1353. The statement of a false cause in contracts shall render them void, if it should not be proved that they were founded upon
another cause which is true and lawful.
CC, 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or some other act or
contract.
CC, 1401, supra.
CC, 1411, supra.
CC, 1416, supra.
Mapalo v. Mapalo. The rule under the Civil Code is that contracts without a cause or consideration produce no effect whatsoever.
Nonetheless, under the old CC, the statement of a false consideration renders the contract voidable, unless it is proven that it is
supported by another real and licit consideration. || A contract that states a false consideration is one that has in fact a real
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consideration, but the same is not the one stated in the document. || where there was in fact no consideration, the statement of one
in the deed will not suffice as a false consideration.
Morales Devt Co. v. CA. Inadequacy of the monetary consideration does not render a conveyance inexistent, for the assignors
liberality may be sufficient cause for a valid contract. It is not unusual, in deeds of conveyance adhering to the Anglo-Saxon practice
that the consideration given is the sum of P1.00, although the actual consideration may have been much more.
Santiago v. CA. The fact that subject deed of absolute sale executed by Arcega in favor of petitioners is a notarized document does
not justify the petitioners desired conclusion that said sale is undoubtedly true conveyance to which the parties thereto are
irrevocably and undeniably bound.
Rongavilla v. CA. The gross inadequacy and unconscionable-ness of the consideration deters the Court from subscribing to
defendants theory that plaintiffs sold the property to them. It is more reasonable to assume that the P2,000 refers to the loan
defendant extended to plaintiffs
1. Form of consideration
CC, 1468. If the consideration of the contract consists partly in money, and partly in another thing, the transaction shall be
characterized by the manifest intention of the parties. If such intention does not clearly appear, it shall be considered a barter
if the value of the thing given as a part of the consideration exceeds the amount of the money or its equivalent; otherwise, it is
a sale.
CC, 1638. By the contract of barter or exchange one of the parties binds himself to give one thing in consideration of the
other's promise to give another thing.
CC, 1245. Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in money, shall be
governed by the law of sales.
Republic v. PRDC. Although Art.1458 of the new CC provides that priceis always paid in terms of money and the supposed
payment being in kind it is no payment at all, yet the same article provides that the purchaser may pay a price certain in
money or its equivalent which means that payment of the price need not be money.
Ong v. Ong. A careful perusal of the subject deed reveals that the conveyance was for and in consideration of One peso and
other valuable considerations. Although the cause is not stated in the contract it is presumed that it is existing unless the
debtor proves the contrary. One of the disputable presumptions is that there is a sufficient cause of the contract. It is a legal
presumption of sufficient cause or consideration supporting a contract even if such cause is not stated therein.
Bagnas v. CA. Without necessarily according all these assertions its hill concurrence, but upon the consideration alone that the
apparent gross, not to say enormous, disproportion between the stipulated price of P1.00 plus unspecified and unquantilled
services and the undisputably valuable real estate allegedly sold plainly and unquestionably demnostrates that they state a
false and fictitious consideration, and no other true and lawful cause having been shown, the Court finds both said deeds no
merely voidable but void ab initio.
2. Adequacy of Price
CC, 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been
fraud, mistake or undue influence.
CC, 1470. Gross inadequacy of price does not affect a contract of sale, except as it may indicate a defect in the consent, or that
the parties really intended a donation or some other act or contract.
Laperal v. Rogers. Where the evidence of a person seeking invalidation of a contract made during the enemy occupation
proved that he was inspired by a reasonable and well grounded fear of suffering an imminent and serious injury to his person
or property, including that of his family, if he did not execute the deed of sale to his property as demanded by the Japanese
army authorities, it is held that the transaction is not covered by the theory of general or collective duress, and therefore
the deed in question should be invalidated.
De Leon v. Salvador. As to the alleged gross inadequacy of the price of P30,194 paid by Aurora when according to Bernave the
properties could have been easily sold for a total price of P385,000. Bernave has admitted that there was an existing mortgage
lien on the properties amounting to P120,000 which necessarily affect their value.
Buenaventura v. CA. Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code
which would invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement that the price be equal to the
exact value of the subject matter of sale. All the respondents believed that they received the commutative value of
what they gave. Moreover, the factual findings of the appellate court are conclusive on the parties and carry greater weight
when they coincide with the factual findings of the trial court. This Court will not weigh the evidence all over again unless
there has been a showing that the findings of the lower court are totally devoid of support or are clearly erroneous so as to
constitute serious abuse of discretion. In the instant case, the trial court found that the lots were sold for a valid consideration,
and that the defendant children actually paid the purchase price stipulated in their respective Deeds of Sale. Actual payment of
the purchase price by the buyer to the seller is a factual finding that is now conclusive upon us.
3. Definiteness and Certainty
CC, 1469. In order that the price may be considered certain, it shall be sufficient that it be so with reference to another thing
certain, or that the determination thereof be left to the judgment of a special person or persons. Should such person or persons
be unable or unwilling to fix it, the contract shall be inefficacious, unless the parties subsequently agree upon the price. If the
third person or persons acted in bad faith or by mistake, the courts may fix the price. Where such third person or persons are
prevented from fixing the price or terms by fault of the seller or the buyer, the party not in fault may have such remedies
against the party in fault as are allowed the seller or the buyer, as the case may be.
CC, 1470, supra.
CC, 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or some other
act or contract.
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CC, 1472. The price of securities, grain, liquids, and other things shall also be considered certain, when the price fixed is that
which the thing sold would have on a definite day, or in a particular exchange or market, or when an amount is fixed above or
below the price on such day, or in such exchange or market, provided said amount be certain.
CC, 1473. The fixing of the price can never be left to the discretion of one of the contracting parties. However, if the price fixed
by one of the parties is accepted by the other, the sale is perfected.
CC, 1474. Where the price cannot be determined in accordance with the preceding articles, or in any other manner, the
contract is inefficacious. However, if the thing or any part thereof has been delivered to and appropriated by the buyer he must
pay a reasonable price therefor. What is a reasonable price is a question of fact dependent on the circumstances of each
particular case.
Robles v. Lizarraga. An agreement to buy certain things at a valuation to be determined by an appraisal to be effected jointly
by buyer and seller obligates the buyer to proceed with the appraisal in good faith, and he cannot escape liability on the
contract by frustrating the appraisal. The making of the appraisal in such case is not a condition prerequisite to the liability of
the buyer, and if he fails to join in the appraisal, he is liable for the true value of the things contracted about, as the same may
be established in the usual course of proof.
Navarro v. Sugar Producers Corp. An accepted unilateral promise to sell, not supported by any consideration distinct from
the price, does not produce a binding and enforceable contract of sale. The offer in this case, as well as the acceptance, both
lack a most essential element the manner of payment of the purchase price. Hence, the offer to sell may be withdrawn
without the offeror committing any breach of contract.
III. Obligations of the Vendor/Seller
A. Obligation to transfer/deliver
1. In general
CC, 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.
CC, 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways
specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the
vendor to the vendee.
Asset Privatization v. TJ Enterprises. The ownership of a thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof. The thing sold shall be understood as delivered when it is placed in the control and possession
of the vendee. As a general rule, when the sale is made through a public instrument, the execution thereof shall be equivalent
to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly
be inferred. And with regard to movable property, its delivery may also be made by the delivery of the keys of the place or
depository where it is stored or kept. In order for the execution of a public instrument to effect tradition, the purchaser must
be placed in control of the thing sold. However, the execution of a public instrument only gives rise to a prima facie
presumption of delivery. Such presumption is destroyed when the delivery is not effected because of a legal impediment.
Phil. Suburban Devt Corp. v. Auditor General. Under the civil law, delivery (tradition) as a mode of transmission of
ownership may be actual (real tradition) or constructive (constructive tradition). When the sale of real property is made in a
public instrument, the execution thereof is equivalent to the delivery of the thing object of the contract, if from the deed the
contrary does not appear or cannot clearly be inferred. And, in the case at bar, where the vendor had actually placed the
vendee in possession and control over the thing sold even before the date of the sale, the non-payment of the purchase price of
the goods did not preclude the transmission of the title upon execution of the deed of sale, since payment of the purchase price
is not a condition precedent to the transfer of title to the buyer.
2. Exceptions
a. Sale on return
CC, 1502. When goods are delivered to the buyer "on sale or return" to give the buyer an option to return the goods
instead of paying the price, the ownership passes to the buyer of delivery, but he may revest the ownership in the seller
by returning or tendering the goods within the time fixed in the contract, or, if no time has been fixed, within a reasonable
time. (n)
When goods are delivered to the buyer on approval or on trial or on satisfaction, or other similar terms, the
ownership therein passes to the buyer: (1) When he signifies his approval or acceptance to the seller or does any other
act adopting the transaction; (2) If he does not signify his approval or acceptance to the seller, but retains the goods
without giving notice of rejection, then if a time has been fixed for the return of the goods, on the expiration of such time,
and, if no time has been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of fact. (n)
b. Sale on approval
c. Execution sales
CC, 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the
price.
CC, 1503(1). 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. 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.
Vallarta v. CA. In a sale or return, the ownership passes to the buyer on delivery. The subsequent return of the goods reverts
ownership in the seller. Delivery, or tradition, as a mode of acquiring ownership must be in consequence of the contract, e.g.
sale. In case at bar, it was a sale on approval since ownership passed to the buyer only when she signified her approval or
acceptance to the seller and the price was agreed upon.
Industrial Textile v. LPI. The provision in the Uniform Sales Act and the Uniform Commercial Code from which Article 1502
was taken, clearly requires an express written agreement to make a sales contract either a sale or return or a sale on
approval. Parol or extrinsic testimony could not be admitted for the purpose of showing that an invoice or bill of sale that was
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complete in every aspect and purporting to embody a sale without condition or restriction constituted a contract of sale or
return. If the purchaser desired to incorporate a stipulation securing to him the right of return, he should have done so at the
time the contract was made. On the other hand, the buyer cannot accept part and reject the rest of the goods since this falls
outside the normal intent of the parties in the on approval situation.
Mendoza v. David. There is a sale by sample when a small quantity is exhibited by the seller as a fair specimen of the bulk,
which is not present and there is no opportunity to inspect or examine the same. To constitute a sale by sample, it must appear
that the parties treated the sample as the standard of quality and that they contracted with reference to the sample with the
understanding that the product to be delivered would correspond with the sample. In a contract of sale by sample, there is an
implied warranty that the goods shall be free from any defect which is not apparent on reasonable examination of the sample
and which would render the goods unmerchantable. There is a sale of goods by description where "a seller sells things as
being of a particular kind, the buyer not knowing whether the seller's representations are true or false, but relying on them as
true; or as otherwise stated, where the buyer has not seen the article sold and relies on the description given to him by the
seller, or has seen the goods, but the want of identity is not apparent on inspection." A seller's description of the goods which
is made part of the basis of the transaction creates a warranty that the goods will conform to that description. Where the goods
are bought by description from a seller who deals in the goods of that description, there is an implied warranty that the goods
are of merchantable quality.
Lietz v. CA. Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area. In a unit price
contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the
area actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the vendor to deliver all
that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not possible. If
the vendor delivers more than the area stated in the contract, the vendee has the option to accept only the amount agreed
upon or to accept the whole area, provided he pays for the additional area at the contract rate. In some instances, a sale of an
immovable may be made for a lump sum and not at a rate per unit. The parties agree on a stated purchase price for an
immovable the area of which may be declared based on an estimate or where both the area and boundaries are stated. In the
case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered may not
measure up exactly with the area stated in the contract. According to Article 1542 11 of the Civil Code, in the sale of real estate,
made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or
decrease of the price although there be a greater or lesser area or number than that stated in the contract. However, the
discrepancy must not be substantial.
3. Manner of transfer
CC, 1477, supra.
CC, 1496, supra.
CC, 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee
Obana v. CA. Ownership of the rice, too, was transferred to the vendee, Chan Lin, upon its delivery to him at San Fernando, La
Union, the place stipulated, and pursuant to Articles 1477 and 1496 of the same Code: "Art. 1477. The ownership of the thing
sold shall be transferred to the vendee upon the actual or constructive delivery thereof." "Art. 1496. The ownership of the
thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to
1501, or in any manner signifying an agreement that the possession is transferred from the vendor to the vendee."
Kuenzle v. Macke. The ownership of personal property can not be transferred to the prejudice of third persons except by
delivery of the property itself, and a sale without such delivery gives the would-be purchaser no rights in said property except
those of a creditor.
Ocejo v. Intl Bank. Where the terms of the contract of sale of goods are that the purchase price is payable upon demand
after delivery, the title to the goods passes to the buyer as soon as delivery is made. || Merchandise is delivered when the
possession and control thereof is given by the seller to the buyer. || In absence of an express stipulation to the contrary the
payment of the purchase price of goods is not a condition precedent to the transfer of title to the buyer, but title passes by the
delivery of the goods.
4. Kinds of delivery
a. Real or actual delivery
CC, 1497, supra.
Bean v. Cadwallader. Actual manual delivery of property sold is not essential to the passing of the title thereto unless it
is so stipulated in the contract of sale or agreed to by the parties. (Art. 1450, Civil Code.)
Alfredo v. Borras. The contract of sale of the subject land has been consummated because the sellers and buyers have
performed their respective obligations under the contract. The physical delivery of the subject land also constituted a
transfer of ownership.
b. Constructive delivery
i. Symbolic delivery/delivery by public instrument
CC, 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot
clearly be inferred. With regard to movable property, its delivery may also be made by the delivery of the keys of the
place or depository where it is stored or kept.
Florendo v. Foz. When the sale is made by means of a public instrument, the execution thereof is tantamount to
conveyance of the subject matter, unless the contrary clearly follow or be deduced from such instrument itself, and in
the absence of this condition such execution by the vendor is per se a formal or symbolical conveyance of the
property sold, that is, the vendor in the instrument itself authorizes the purchaser to use the title of ownership as
proof that the latter is thenceforth the owner of the property.
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Masallo v. Cesar. A person who does not have actual possession of real property cannot transfer constructive
possession by the execution and delivery of a public document by which the title to the land is transferred.
Aviles v. Arcega. Where an estate is sold to two different persons in public documents and none of the sales is
recorded in the registry, the execution of the document does not have the effect of a symbolic delivery of the estate
sold to the purchaser, if in the said document it is stipulated that the vendor was to continue in possession of the
property during a specified period of time. In such a case, even after the lapse of the period stipulated, the purchaser
whose document contains such stipulation does not acquire any title to the estate, unless he should have taken
possession of the property after the lapse of said period. This being so, the second purchaser, to whom the same
property was sold after said period and who also failed to register his document, acquires title to the thing sold,
either by taking physical possession thereof, or by virtue of the symbolic delivery which ordinarily takes place upon
the execution of the public document. (Art. 1473, Civil Code.)
Alliance Tobacco v. PVTA. The Civil Code provides that ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof. There is delivery when the thing sold is placed in the control
and possession of the vendee. || In tobacco trading, actual delivery plays a pivotal role. The peculiar procedure
undergone in trading, which procedure was set out at length in both the Santiago and the PVTA vs. De los Angeles
cases, reveals that delivery seals the contract of sale because the trader loses not only possession but also control
over the shipment. Outlined by the PVTA pursuant to its power "to take over and assume, and therefore exclusively
direct, supervise and control, all functions and operations with respect to the processing, warehousing, and trading of
Virginia tobacco, the provisions of any existing law to the contrary notwithstanding," the procedure is observed by
everyone involved in the trade.
Asset Privatization, supra.
Dy, Jr. v. CA. Article 1496 of the Civil Code states that the ownership of the thing sold is acquired by the vendee from
the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501 or in any other manner
signifying an agreement that the possession is transferred from the vendor to the vendee. || In the instant case, actual
delivery of the subject tractor could not be made. However, there was constructive delivery already upon the
execution of the public instrument pursuant to Article 1498 and upon the consent or agreement of the parties when
the thing sold cannot be immediately transferred to the possession of the vendee (Article 1499).
Addison v. Felix. It is the duty of the vendor to deliver the thing sold. Symbolic delivery by the execution of a
public Instrument is equivalent to actual delivery only when the thing sold is subject to the control of the vendor.
Chua v. CA. It is only upon the existence of the contract of sale that the seller becomes obligated to transfer the
ownership of the thing sold to the buyer. Article 1458 of the Civil Code defines a contract of sale as follows: Art. 1458.
By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefore price certain in money or its equivalent. . . . Prior to the existence
of the contract of sale, the seller is not obligated to transfer ownership to the buyer, even if there is a contract
to sell between them. It is also upon the existence of the contract of sale that the buyer is obligated to pay the
purchase price to the seller, these obligations must be simultaneously fulfilled at the time of the execution of the
contract of sale, in the absence of a contrary stipulation. In a contract of sale, the obligations of the seller are specified
in Article 1495 of the Civil Code, as follows: Art. 1495. The vendor is bound to transfer the ownership of and deliver,
as well as warrant the thing which is the object of the sale. The obligation of the seller is to transfer to the buyer
ownership of the thing sold. In the sale of real property, the seller is not obligated to transfer in the name of the buyer
a new certificate of title, but rather to transfer ownership of the real property. There is a difference between
transfer of the certificate of title in the name of the buyer, and transfer of ownership to the buyer. The buyer
may become the owner of the real property even if the certificate of title is still registered in the name of the seller. As
between the seller and buyer, ownership is transferred not by the issuance of a new certificate of title in the
name of the buyer but by the execution of the instrument of sale in a public document. In a contract of sale,
ownership is transferred upon delivery of the thing sold. As the noted civil law commentator Arturo M. Tolentino
explains it, Delivery is not only a necessary condition for the enjoyment of the thing, but is a mode of
acquiring dominion and determines the transmission of ownership, the birth of the real right. The delivery,
therefore, made in any of the forms provided in articles 1497 to 1505 signifies that the transmission of
ownership from vendor to vendee has taken place. The delivery of the thing constitutes an indispensable
requisite for the purpose of acquiring ownership. Our law does not admit the doctrine of transfer of property
by mere consent; the ownership, the property right, is derived only from delivery of the thing. In a contract of
sale on real property, delivery is effected when the instrument of sale is executed in a public document.
When the deed of absolute sale is signed by the parties and notarized, then delivery of the real property is
deemed made by the seller to the buyer.
ii. Traditio longa manu

CC, 1498, supra.
CC, 1499. The delivery of movable property may likewise be made by the mere consent or agreement of the
contracting parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the sale, or if
the latter already had it in his possession for any other reason.
Board of Liquidators v. Floro. The fact that the salvor was required under the contract of salvage to post a bond
to guarantee compliance with its terms; that the operations for salvage were entirely at the salvor's expense and
risks; that gold, silver, copper, coins, currency, Jewelry, precious stones, etc. were excepted from the contract; and
that expenses for storage, including guard service, were for the salvor's account, it is clear that ownership of the
goods passed to the salvor-contractor as soon as they were recovered or salvaged, and not after payment of the
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stipulated price. While there can be reservation of title in the seller until full payment of the price (Art. 1478, N.C.C.)
or until fulfillment of a condition (Art. 1505, N.C.C.); and while execution of a public instrument amounts to delivery
only when from the deed the contrary does not appear or cannot clearly be inferred (Art. 1498), the contract in
question does not show reservation of title or withholding of delivery.
Santos v. Santos. It is true that neither tax receipts nor declarations of ownership for taxation purposes constitute
sufficient proof of ownership. They must be supported by other effective proofs. These requisite proofs we find
present in this case. As admitted by petitioner, despite the sale, Jesus and Rosalia continued to possess and
administer the property and enjoy its fruits by leasing it to third persons. Both Rosa and Salvador did not exercise
any right of ownership over it. Before the second deed of sale to transfer her 1/2 share over the property was
executed by Rosa, Salvador still sought the permission of his mother. Further, after Salvador registered the property
in his name, he surrendered the title to his mother. These are clear indications that ownership still remained with the
original owners. In Serrano vs. CA, 139 SCRA 179, 189 (1985), we held that the continued collection of rentals from
the tenants by the seller of realty after execution of alleged deed of sale is contrary to the notion of ownership.
Nowhere in the Civil Code, however, does it provide that execution of a deed of sale is a conclusive presumption
of delivery of possession. The Code merely said that the execution shall be equivalent to delivery. The presumption
can be rebutted by clear and convincing evidence. Presumptive delivery can be negated by the failure of the vendee
to take actual possession of the land sold. In Danguilan vs. IAC, 168 SCRA 22, 23 (1988), we held that for the
execution of a public instrument to effect tradition, the purchaser must be placed in control of the thing sold. When
there is no impediment to prevent the thing sold from converting to tenancy of the purchaser by the sole will of the
vendor, symbolic delivery through the execution of a public instrument is sufficient. But if, notwithstanding the
execution of the instrument, the purchaser cannot have the enjoyment and material tenancy nor make use of it
himself or through another in his name, then delivery has not been effected.
iii. Traditio brevi manu
CC, 1499, supra.
Abuan v. Garcia. Under Section 119 of the Public Land Law the five- year period for legal redemption starts from
the date of the execution of the deed of conveyance, even if full payment of the purchase price is not made or said
date unless there is a stipulation in the agreement that ownership will not vest in the vendees until full payment of
the price.
Escanlar v. CA. The distinction between contracts of sale and contracts to sell with reserved title has been
recognized by this Court in repeated decisions, according to Justice J.B.L. Reyes in Luzon Brokerage Co. Inc. vs.
Maritime Building Co., Inc., 43 SCRA 93 (January 31, 1972), upholding the power of promisors under contracts to sell
in case of failure of the other party to complete payment, to extrajudicially terminate the operation of the contract,
refuse the conveyance, and retain the sums of installments already received where such rights are expressly
provided for. In contracts to sell, ownership is retained by the seller and is not to pass until the full payment of the
price. Such payment is a positive suspensive condition, the failure of which is not a breach of contract but simply an
event that prevented the obligation of the vendor to convey title from acquiring binding force. To illustrate, although
a deed of conditional sale is denominated as such, absent a proviso that title to the property sold is reserved in the
vendor until full payment of the purchase price nor a stipulation giving the vendor the right to unilaterally rescind
the contract the moment the vendee fails to pay within a fixed period, by its nature, it shall be declared a deed of
absolute sale.
iv. Traditio constitutum possesurium
CC, 1500. There may also be tradition constitutum possessorium.
Bautista v. Sioson. In the absence of proof to the contrary, that the second purchaser Raymundo de la Cruz, on
acquiring the camarin of its original owner Francisco Sioson, who, according to the written contract, became a tenant
or lessee of the camarin, was not aware of said first sale to Bautista, and believed that Sioson, who was in possession
of the camarin, was still the owner thereof. Therefore, Cruz acted in good faith in acquiring it, inasmuch as, through
failure to enter the property in the registry, there was no reason why the previous alienation of the camarin should
have been known. But be all this as it may, nevertheless, the actual and material possession of the camarin by Cruz
does not constitute a sufficient legal reason for holding the he has a better right to the building than the first
purchaser Rosalio Bautista, although the latter was not in actual, physical, and material of the camarin that he had
purchased. This conclusion is derived from a strict application of the provisions of said article 1473 of the Civil Code.
Amigo v. Teves. . The lease that a vendor executes on the property may be considered as a means of delivery or
tradition by constitutum possessorium. Where the vendor a retrocontinues to occupy the land as lessee, by fiction of
law, the possession is deemed to be constituted in the vendee by virtue of this mode of tradition (10 Manresa, 4th ed.
p.124). We may say therefore that this covenant regarding the lease of the land sold is germane to the contract of sale
with pacto de retro.
c. Delivery to a common carrier
CC, 1523. Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer,
delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer is
deemed to be a delivery of the goods to the buyer, except in the case provided for in Article 1503, first, second and third
paragraphs, or unless a contrary intent appears.
Unless otherwise authorized by the buyer, the seller must make such contract with the carrier on behalf of the
buyer as may be reasonable, having regard to the nature of the goods and the other circumstances of the case. If the seller
omit so to do, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the
carrier as a delivery to himself, or may hold the seller responsible in damages.
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Unless otherwise agreed, where goods are sent by the seller to the buyer under circumstances in which the
seller knows or ought to know that it is usual to insure, the seller must give such notice to the buyer as may enable him to
insure them during their transit, and, if the seller fails to do so, the goods shall be deemed to be at his risk during such
transit.
CC, 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. 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.
Where goods are shipped, and by the bill of lading the goods are deliverable to the seller or his agent, or to the
order of the seller or of his agent, the seller thereby reserves the ownership in the goods. But, if except for the form of the
bill of lading, the ownership would have passed to the buyer on shipment of the goods, the seller's property in the goods
shall be deemed to be only for the purpose of securing performance by the buyer of his obligations under the contract.
Where goods are shipped, and by the bill of lading the goods are deliverable to order of the buyer or of his agent,
but possession of the bill of lading is retained by the seller or his agent, the seller thereby reserves a right to the
possession of the goods as against the buyer.
Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of lading
together to the buyer to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of
lading if he does not honor the bill of exchange, and if he wrongfully retains the bill of lading he acquires no added right
thereby. If, however, the bill of lading provides that the goods are deliverable to the buyer or to the order of the buyer, or
is indorsed in blank, or to the buyer by the consignee named therein, one who purchases in good faith, for value, the bill of
lading, or goods from the buyer will obtain the ownership in the goods, although the bill of exchange has not been
honored, provided that such purchaser has received delivery of the bill of lading indorsed by the consignee named
therein, or of the goods, without notice of the facts making the transfer wrongful.
Ben Meyer v. Yangco. The letters "c.i.f." found in British contracts stand for cost, insurance, and freight. They signify
that the price fixed covers not only the cost of the goods, but the expense of freight and insurance to be paid by the seller.
(Ireland vs. Livingston, L. R., 5 H. L., 395.) Our instant contract, in addition to the letters "c.i.f.," has the word following,
"Manila." Under such a contract, an Australian case is authority for the proposition that no inference is permissible that a
seller was bound to deliver at the point of destination. (Bowden vs. Little, 4 Comm. [Australia], 1364.) || In mercantile
contracts of American origin the letters "F.O.B." standing for the words "Free on Board," are frequently used. The
meaning is that the seller shall bear all expenses until the goods are delivered where they are to be "F.O.B." According as to
whether the goods are to be delivered "F.O.B." at the point of shipment or at the point of destination determines the time
when property passes. || Both the terms "c.i.f." and "F.O.B." merely make rules of presumption which yield to proof of
contrary intention. As Benjamin, in his work on Sales, well says: " The question, at last, is one of intent, to be ascertained
by a consideration of all the circumstances."
d. Effects of bills of lading on transfer of ownership
CC, 1503, supra.
5. Double sale
CC, 1544(1). If the same thing should have been sold to different vendees, the ownership shall be transferred to the person
who may have first taken possession thereof in good faith, if it should be movable property.
CC, 526. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw
which invalidates it. He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing. Mistake upon a
doubtful or difficult question of law may be the basis of good faith.
CC, 527. Good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of
proof.
Leung Yee v. FL Strong Machinery. One who purchases real estate with knowledge of a defect or lack of title in his vendor
cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and
the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and
investigation as might be necessary to acquaint him with the defects in the title of his vendor. A purchaser cannot close his
eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief
that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful closing of his
eyes to the possibility of the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if
afterwards develops that the title was in fact defective, and it appears that he had such notice of the defects as would have led
to its discovery had he acted with that measure of precaution which may reasonably be acquired of a prudent man in a like
situation.
Carumba v. CA. While under the invoked Article 1544 registration in good faith prevails over possession in the event of a
double sale by the vendor of the same piece of land to different vendees, said article is of no application to the case at bar, even
if Balbuena, the later vendee, was ignorant of the prior sale made by his judgment debtor in favor of petitioner Carumba. The
reason is that the purchaser of unregistered land at a sheriff's execution sale only steps into the shoes of the judgment debtor,
and merely acquires the latter's interest in the property sold as of the time the property was levied upon.
Remalante v. Tibe. A1544 -- Clearly the provision applies to a situation where the same property is sold to different vendees.
No such situation obtains in the instant case. As found by the Court of Appeals, the three parcels of land covered by Tax
Declaration Nos. 20323, 20324 and 20325 were never sold by Silvino Alminario to petitioner. There was only one sale--the
sale to private respondent Cornelia Tibe. Petitioner therefore cannot claim a better right by virtue of his prior registration of
the deeds of sale in the Registry of Property as such registration was found to be fraudulent since the three parcels of land
were never sold to him to begin with.
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Mathay v. CA. It is a well-settled rule for the vendees that if the circumstances would piut a party on guard and prompt him to
investigate, then he must inquire first into Te status or nature of possession of the occupants. Failure to do so would mean
negligence on the part of the vendee. They cannot rely on CC1544 because the fundamental premise of preferential rights
under the law is good faith.
Quijada v. CA. The donor may have an inchoate interest in the donated property during the time that ownership of the land
has not reverted to her. Such inchoate interest may be the subject of contracts including a contract of sale. In this case,
however, what the donor sold was the land itself which she no longer owns. It would have been different if the donor-seller
sold her interests over the property under the deed of donation which is subject to the possibility of reversion of ownership
arising from the non-fulfillment of the resolutory condition.
Diaz-Duarte v. Ong. Time and again, we have reiterated that a purchaser in good faith and for value is one who buys the
property of another without notice that some other person has a right to or interest in such property and pays a full and fair
price for the same, at the time of such purchase, or before he has notice of the claims or interest of some other person in the
property. The adverse claim of petitioner Rogelia Diaz-Duarte was annotated in Corregidor's title as early as October 17, 1979.
It was existing when Corregidor sold the property to respondents Ong on February 28, 1981. Hence, respondent spouses
cannot be considered innocent purchasers for value and in good faith. Their claim over Lot 1208 must yield to the lien in favor
of petitioner.
Po Lam v. CA. While it is true that when the petitioners purchased Lot 1557, the notice of lis pendens affecting said lot had
been cancelled, it could not be denied that such inscription appears on the Transfer Certificate of Title of the said lot together
with the cancellation of the notice of lis pendens. This fact coupled with the non-cancellation of the notice of lis pendens on
Transfer Certificate of Title No. 2581 covering Lot 1558, should have sufficiently alerted the petitioners vis-a-vis a possible
defect in the title of LACHO, especially so that Lots 1557 and 1558 were simultaneously sold to the petitioners in a single deed
of sale executed on May 28, 1969.
Republic v. de Guzman. There is no question that de Guzman was not in possession of the property. Hence, de Guzman
misrepresented facts in his application for sales patent. || The State can assail a patent fraudulently issued by the Director of
Lands. "Where public land is acquired by an applicant through fraud and misrepresentation, the State may institute reversion
proceedings even after the lapse of one year."23 "The indefeasibility of a title does not attach to titles secured by fraud and
misrepresentation."
Ten Forty Realty v. Cruz. We ruled that the subject property had not been delivered to petitioner; hence, it did not acquire
possession either materially or symbolically. As between the two buyers, therefore, respondent was first in actual
possession of the property.
Rural Bank of Sta. Ignacia v. Dimatulac. In the present case, while petitioner sent a representative to verify the original TCT
on file with the Registrar of Deeds, no ocular inspection of the premises took place. Judicial notice may be taken of the
common practice of banks, before approving a loan, to send a representative to the premises of the land offered as collateral
and duly investigate who are the true owners thereof. Failure to do so is negligence on the part of a bank. 25 Had petitioner
taken extra steps, time and effort in dealing with the property it purchased by conducting proper ocular inspection of the
premises, it could have discovered early the presence of settlers therein who are land reform beneficiaries.
Occena v. Esponilla. A purchaser in good faith and for value is one who buys property without notice that some other
person has a right to or interest in such property and pays its fair price before he has notice of the adverse claims and interest
of another person in the same property. So it is that the "honesty of intention" which constitutes good faith implies a freedom
from knowledge of circumstances which ought to put a person on inquiry. || The settled rule is that a buyer of real
property in the possession of persons other than the seller must be wary and should investigate the rights of those in
possession. Without such inquiry, the buyer can hardly be regarded as a buyer in good faith and cannot have any right
over the property.
Pagaduan v. Ocuma. For a second buyer like the respondents to successfully invoke the second paragraph, Article 1544 of the
Civil Code, it must possess good faith from the time of the sale in its favor until the registration of the same. Respondents
sorely failed to meet this requirement of good faith since they had actual knowledge of Eugenia's prior sale of the southern
portion property to the petitioners, a fact antithetical to good faith.
Naawan Community Rural Bank v. CA. The "priority in time" principle being invoked by petitioner bank is misplaced
because its registration referred to land not within the Torrens System but under Act 3344. On the other hand, when private
respondents bought the subject property, the same was already registered under the Torrens System. It is a well-known rule
in this jurisdiction that persons dealing with registered land have the legal right to rely on the face of the Torrens Certificate of
Title and to dispense with the need to inquire further, except when the party concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry.
Naval v. CA. "[T]he issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is registered land and
the purchaser is buying the same from the registered owner whose title to the land is clean x x x in such case the purchaser who
relies on the clean title of the registered owner is protected if he is a purchaser in good faith for value." Since the properties in
question are unregistered lands, petitioners as subsequent buyers thereof did so at their peril. Their claim of having bought
the land in good faith, i.e., without notice that some other person has a right to or interest in the property, would not protect
them if it turns out, as it actually did in this case, that their seller did not own the property at the time of the sale. || Nemo dat
quod non habet.
Carbonell v. CA. The buyer of realty must act in good faith in registering his deed of sale to merit the protection of the second
paragraph of Article 1544 of the New Civil Code. Unlike the first and third paragraphs of said Article which accords preference
to the one who first takes possession in good faith of personal or real property, the second paragraph directs that ownership of
immovable property should be recognized in favor of one "who in good faith recorded" his right. Under the first and third
paragraphs, good faith must characterize prior possession. Under the second paragraph, good faith must characterize the act
of anterior registration. If there is no inscription, what is decisive is prior possession in good faith. If there is inscription, prior
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registration in good faith is a pre-condition to support title. || Where the first buyer was not aware - and could not have been
aware - of any sale to another person as there was no such sale, the buyer's prior purchase of the land was made in good faith.
Her good faith subsisted and continued to exist when she recorded her adverse claim four days prior to the registration of the
second buyer's deed of sale. The first buyer's good faith did not cease after the seller told her of his second sale of the same lot
to the second buyer. By reason thereof, she has superior right to the land in question.
Tanglao v. Parungao. A purchaser in good faith or innocent purchaser for value is one who buys property and pays a full and
fair price for it at the time of the purchase or before any notice of some other person's claim on or interest in it. 7 The burden
of proving the status of a purchaser in good faith lies upon him who asserts that status and it is not sufficient to invoke the
ordinary presumption of good faith, that is, that everyone is presumed to have acted in good faith. In the instant case, the
HLURB Arbiter, the HLURB Commission, the Office of the President, and the Court of Appeals found that at the time of the
second sale to petitioners by Spring Homes, there were already occupants and improvements on the two lots in question.
These facts should have put petitioners on their guard. Settled is the rule that a buyer of real property in possession of persons
other than the seller must be wary and should investigate the rights of those in possession, for without such inquiry the buyer
can hardly be regarded as a buyer in good faith and cannot have any right over the property. 9
Consolidated Rural Bank v. CA. Following Article 1544, in the double sale of an immovable, the rules of preference are: (a)
the first registrant in good faith; (b) should there be no entry, the first in possession in good faith; and c) in the absence
thereof, the buyer who presents the oldest title in good faith. Prior registration of the subject property does not by itself confer
ownership or a better right over the property. Article 1544 requires that before the second buyer can obtain priority over the
first, he must show that he acted in good faith throughout (i.e., in ignorance of the first sale and of the first buyer's rights) from
the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession.
San Lorenzo Devt Corp. v. CA. A purchaser in good faith is one who buys property of another without notice that some other
person has a right to, or interest in, such property and pays a full and fair price for the same at the time of such purchase, or
before he has notice of the claim or interest of some other person in the property. Following the foregoing definition, we rule
that SLDC qualifies as a buyer in good faith since there is no evidence extant in the records that it had knowledge of the prior
transaction in favor of Babasanta. At the time of the sale of the property to SLDC, the vendors were still the registered owners
of the property and were in fact in possession of the lands.
Cheng v. Genato. Notwithstanding this contrary finding with the appellate court, we are of the view that the governing
principle of Article 1544, Civil Code, should apply in this situation. Jurisprudence teaches us that the governing principle is
PRIMUS TEMPORE, PORTIOR JURE (first in time, stronger in right). For not only was the contract between herein respondents
first in time; it was also registered long before petitioner's intrusion as a second buyer. This principle only applies when the
special rules provided in the aforecited article of the Civil Code do not apply or fit the specific circumstances mandated under
said law or by jurisprudence interpreting the article. The rule exacted by Article 1544 of the Civil Code for the second buyer to
be able to displace the first buyer are: (1) that the second buyer must show that he acted in good faith (i.e., in ignorance of the
first sale and of the first buyer's rights) from the time of acquisition until title is transferred to him by registration or failing
registration, by delivery of possession; (2) the second buyer must show continuing good faith and innocence or lack of
knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law. Thus, in
the case at bar, the knowledge gained by the Da Jose spouses, as first buyers, of the new agreement between Cheng and Genato
will not defeat their rights as first buyers except where Cheng, as second buyer, registers or annotates his transaction or
agreement on the title of the subject properties in good faith ahead of the Da Jose spouses. Moreover, although the Da Jose
spouses, as first buyers, knew of the second transaction it will not bar them from availing of their rights granted by law, among
them, to register first their agreement as against the second buyer.
6. Risk of loss
CC, 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the
buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery
has been made or not, except that: (1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in
pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the
buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery; (2) Where actual
delivery has been delayed through the fault of either the buyer or seller the goods are at the risk of the party in fault.
CC, 1452. If two or more persons agree to purchase property and by common consent the legal title is taken in the name of
one of them for the benefit of all, a trust is created by force of law in favor of the others in proportion to the interest of each.
CC, 1189. When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give, the
following rules shall be observed in case of the improvement, loss or deterioration of the thing during the pendency of the
condition: (1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished; (2) If the thing is lost
through the fault of the debtor, he shall be obliged to pay damages; it is understood that the thing is lost when it perishes, or
goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered; (3) When the thing
deteriorates without the fault of the debtor, the impairment is to be borne by the creditor; (4) If it deteriorates through the
fault of the debtor, the creditor may choose between the rescission of the obligation and its fulfillment, with indemnity for
damages in either case; (5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the
creditor; (6) If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary.
CC, 1538. In case of loss, deterioration or improvement of the thing before its delivery, the rules in Article 1189 shall be
observed, the vendor being considered the debtor.
Sun Bros. v. Perez. Plaintiff and defendant executed a conditional sale of an air-conditioner, which contained the stipulation
that title thereto would vest in the buyer only upon full payment of the entire account and only upon complete performance of
all the other conditions specified in the contract, and that if the property be lost, damaged or destroyed for any cause, the
buyer would suffer the loss, or repair the damage. After the air-conditioner had been installed at plaintiff's residence, it was
destroyed by fire. Held: The agreement making the buyer responsible for any loss whatsoever, fortuitous or otherwise, even if
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title to the property remains in the vendor, is neither contrary to law, nor to morals or public policy. On the contrary it is based
on a sound public policy, according to the weight of authority (47 Am. Jur. pp. 81-82). Defendant must pay plaintiff the balance
of the price of the air-conditioner, including interest and attorney's fees.
Lawyers Coop v. Tabora. In a contract of sale where the seller agreed that the ownership of the books sold shall remain with
it until the purchase price shall have been fully paid, it is held that such stipulation cannot make the seller liable in case of loss,
not only because such was agreed merely to secure performance by the buyer of his obligation but also because in the very
contract it was agreed that the loss or damage to the books after delivery to the buyer shall be borne by the buyer. || The rule
that an obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds true when the
obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even in case of
fortuitous event. It does not apply when the obligation is pecuniary in nature and the obligor binds himself to assume the loss
after delivery of the goods to him.
7. Documents of title
CC, 1636(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 endorsement or by delivery, goods represented by such document.
"Goods" includes all chattels personal but not things in action or money of legal tender in the Philippines. The term
includes growing fruits or crops.
"Order" relating to documents of title means an order by endorsement on the documents.
"Quality of goods" includes their state or condition.
"Specific goods" means goods identified and agreed upon at the time a contract of sale is made.
An antecedent or pre-existing claim, whether for money or not, constitutes "value" where goods or documents of title
are taken either in satisfaction thereof or as security therefor.
CC, 1507. A document of title in which it is stated that the goods referred to therein will be delivered to the bearer, or to the
order of any person named in such document is a negotiable document of title.
CC, 1508. A negotiable document of title may be negotiated by delivery: (1) Where, by the terms of the document the carrier,
warehouseman or other bailee issuing the same undertakes to deliver the goods to the bearer; or
(2) Where, by the terms of the document the carrier, warehouseman or other bailee issuing the same undertakes to
deliver the goods to the order of a specified person, and such person or a subsequent endorsee of the document has indorsed it
in blank or to the bearer.
Where by the terms of a negotiable document of title the goods are deliverable to bearer or where a negotiable
document of title has been indorsed in blank or to bearer, any holder may indorse the same to himself or to any specified
person, and in such case the document shall thereafter be negotiated only by the endorsement of such endorsee.
CC, 1509. A negotiable document of title may be negotiated by the endorsement of the person to whose order the goods are by
the terms of the document deliverable. Such endorsement may be in blank, to bearer or to a specified person. If indorsed to a
specified person, it may be again negotiated by the endorsement of such person in blank, to bearer or to another specified
person. Subsequent negotiations may be made in like manner.
CC, 1516. A person who for value negotiates or transfers a document of title by endorsement or delivery, including one who
assigns for value a claim secured by a document of title unless a contrary intention appears, warrants: (1) That the document
is genuine; (2) That he has a legal right to negotiate or transfer it; (3) That he has knowledge of no fact which would impair the
validity or worth of the document; and (4) That he has a right to transfer the title to the goods and that the goods are
merchantable or fit for a particular purpose, whenever such warranties would have been implied if the contract of the parties
had been to transfer without a document of title the goods represented thereby.
CC, 1517. The endorsement of a document of title shall not make the endorser liable for any failure on the part of the bailee
who issued the document or previous endorsers thereof to fulfill their respective obligations.
CC, 1519. If goods are delivered to a bailee by the owner or by a person whose act in conveying the title to them to a purchaser
in good faith for value would bind the owner and a negotiable document of title is issued for them they cannot thereafter,
while in possession of such bailee, be attached by garnishment or otherwise or be levied under an execution unless the
document be first surrendered to the bailee or its negotiation enjoined. The bailee shall in no case be compelled to deliver up
the actual possession of the goods until the document is surrendered to him or impounded by the court
CC, 1520. A creditor whose debtor is the owner of a negotiable document of title shall be entitled to such aid from courts of
appropriate jurisdiction by injunction and otherwise in attaching such document or in satisfying the claim by means thereof as
is allowed at law or in equity in regard to property which cannot readily be attached or levied upon by ordinary legal process.
CC, 1514(3). Prior to the notification to such bailee by the transferor or transferee of a non-negotiable document of title, the
title of the transferee to the goods and the right to acquire the obligation of such bailee may be defeated by the levy of an
attachment of execution upon the goods by a creditor of the transferor, or by a notification to such bailee by the transferor or a
subsequent purchaser from the transfer of a subsequent sale of the goods by the transferor.
CC, 1515. Where a negotiable document of title is transferred for value by delivery, and the endorsement of the transferor is
essential for negotiation, the transferee acquires a right against the transferor to compel him to endorse the document unless a
contrary intention appears. The negotiation shall take effect as of the time when the endorsement is actually made.
8. Unpaid seller
CC, 1525. The seller of goods is deemed to be an unpaid seller within the meaning of this Title: (1) When the whole of the price
has not been paid or tendered; (2) When a bill of exchange or other negotiable instrument has been received as conditional
payment, and the condition on which it was received has been broken by reason of the dishonor of the instrument, the
insolvency of the buyer, or otherwise.
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In Articles 1525 to 1535 the term "seller" includes an agent of the seller to whom the bill of lading has been indorsed,
or a consignor or agent who has himself paid, or is directly responsible for the price, or any other person who is in the position
of a seller.
CC, 1526. Subject to the provisions of this Title, notwithstanding that the ownership in the goods may have passed to the
buyer, the unpaid seller of goods, as such, has: (1) A lien on the goods or right to retain them for the price while he is in
possession of them; (2) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with
the possession of them; (3) A right of resale as limited by this Title; (4) A right to rescind the sale as likewise limited by this
Title.
Where the ownership in the goods has not passed to the buyer, the unpaid seller has, in addition to his other
remedies a right of withholding delivery similar to and coextensive with his rights of lien and stoppage in transitu where the
ownership has passed to the buyer.
CC, 1527. Subject to the provisions of this Title, the unpaid seller of goods who is in possession of them is entitled to retain
possession of them until payment or tender of the price in the following cases, namely: (1) Where the goods have been sold
without any stipulation as to credit; (2) Where the goods have been sold on credit, but the term of credit has expired; (3)
Where the buyer becomes insolvent. The seller may exercise his right of lien notwithstanding that he is in possession of the
goods as agent or bailee for the buyer.
CC, 1528. Where an unpaid seller has made part delivery of the goods, he may exercise his right of lien on the remainder,
unless such part delivery has been made under such circumstances as to show an intent to waive the lien or right of retention.
CC, 1529. The unpaid seller of goods loses his lien thereon: (1) When he delivers the goods to a carrier or other bailee for the
purpose of transmission to the buyer without reserving the ownership in the goods or the right to the possession thereof; (2)
When the buyer or his agent lawfully obtains possession of the goods; (3) By waiver thereof. The unpaid seller of goods,
having a lien thereon, does not lose his lien by reason only that he has obtained judgment or decree for the price of the goods.
CC, 1530. Subject to the provisions of this Title, when the buyer of goods is or becomes insolvent, the unpaid seller who has
parted with the possession of the goods has the right of stopping them in transitu, that is to say, he may resume possession of
the goods at any time while they are in transit, and he will then become entitled to the same rights in regard to the goods as he
would have had if he had never parted with the possession.
CC, 1531. Goods are in transit within the meaning of the preceding article: (1) From the time when they are delivered to a
carrier by land, water, or air, or other bailee for the purpose of transmission to the buyer, until the buyer, or his agent in that
behalf, takes delivery of them from such carrier or other bailee; (2) If the goods are rejected by the buyer, and the carrier or
other bailee continues in possession of them, even if the seller has refused to receive them back.
Goods are no longer in transit within the meaning of the preceding article: (1) If the buyer, or his agent in that behalf,
obtains delivery of the goods before their arrival at the appointed destination; (2) If, after the arrival of the goods at the
appointed destination, the carrier or other bailee acknowledges to the buyer or his agent that he holds the goods on his behalf
and continues in possession of them as bailee for the buyer or his agent; and it is immaterial that further destination for the
goods may have been indicated by the buyer; (3) If the carrier or other bailee wrongfully refuses to deliver the goods to the
buyer or his agent in that behalf.
If the goods are delivered to a ship, freight train, truck, or airplane chartered by the buyer, it is a question depending
on the circumstances of the particular case, whether they are in the possession of the carrier as such or as agent of the buyer.
If part delivery of the goods has been made to the buyer, or his agent in that behalf, the remainder of the goods may be stopped
in transitu, unless such part delivery has been under such circumstances as to show an agreement with the buyer to give up
possession of the whole of the goods.
CC, 1532. The unpaid seller may exercise his right of stoppage in transitu either by obtaining actual possession of the goods or
by giving notice of his claim to the carrier or other bailee in whose possession the goods are. Such notice may be given either
to the person in actual possession of the goods or to his principal. In the latter case the notice, to be effectual, must be given at
such time and under such circumstances that the principal, by the exercise of reasonable diligence, may prevent a delivery to
the buyer.
When notice of stoppage in transitu is given by the seller to the carrier, or other bailee in possession of the goods, he
must redeliver the goods to, or according to the directions of, the seller. The expenses of such delivery must be borne by the
seller. If, however, a negotiable document of title representing the goods has been issued by the carrier or other bailee, he shall
not obliged to deliver or justified in delivering the goods to the seller unless such document is first surrendered for
cancellation
CC, 1533. Where the goods are of perishable nature, or where the seller expressly reserves the right of resale in case the buyer
should make default, or where the buyer has been in default in the payment of the price for an unreasonable time, an unpaid
seller having a right of lien or having stopped the goods in transitu may resell the goods. He shall not thereafter be liable to the
original buyer upon the contract of sale or for any profit made by such resale, but may recover from the buyer damages for any
loss occasioned by the breach of the contract of sale.
Where a resale is made, as authorized in this article, the buyer acquires a good title as against the original buyer.
It is not essential to the validity of resale that notice of an intention to resell the goods be given by the seller to the
original buyer. But where the right to resell is not based on the perishable nature of the goods or upon an express provision of
the contract of sale, the giving or failure to give such notice shall be relevant in any issue involving the question whether the
buyer had been in default for an unreasonable time before the resale was made.
It is not essential to the validity of a resale that notice of the time and place of such resale should be given by the
seller to the original buyer.
The seller is bound to exercise reasonable care and judgment in making a resale, and subject to this requirement may
make a resale either by public or private sale. He cannot, however, directly or indirectly buy the goods.
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CC, 1534. An unpaid seller having the right of lien or having stopped the goods in transitu, may rescind the transfer of title and
resume the ownership in the goods, where he expressly reserved the right to do so in case the buyer should make default, or
where the buyer has been in default in the payment of the price for an unreasonable time. The seller shall not thereafter be
liable to the buyer upon the contract of sale, but may recover from the buyer damages for any loss occasioned by the breach of
the contract.
The transfer of title shall not be held to have been rescinded by an unpaid seller until he has manifested by notice to
the buyer or by some other overt act an intention to rescind. It is not necessary that such overt act should be communicated to
the buyer, but the giving or failure to give notice to the buyer of the intention to rescind shall be relevant in any issue involving
the question whether the buyer had been in default for an unreasonable time before the right of rescission was asserted.
CC, 1535. Subject to the provisions of this Title, the unpaid seller's right of lien or stoppage in transitu is not affected by any
sale, or other disposition of the goods which the buyer may have made, unless the seller has assented thereto.
If, however, a negotiable document of title has been issued for goods, no seller's lien or right of stoppage in transitu
shall defeat the right of any purchaser for value in good faith to whom such document has been negotiated, whether such
negotiation be prior or subsequent to the notification to the carrier, or other bailee who issued such document, of the seller's
claim to a lien or right of stoppage in transitu.
Bachrach v. Mendoza. B sold M an auto-truck paying a portion of the purchase money in cash and giving a series of
promissory notes for the remainder, secured by a chattel mortgage on the truck and with the provision that default in the
payment of one of the notes would render the other notes immediately due and payable, and that any payment made by the
vendee whether upon the notes or for repairs or accessories might be applied to either account at the option of the vendor.
The truck was afterwards brought to the vendor's shop repairs and the vendor retained possession of it, claiming that the
vendee was in default in the purchase price. The vendee admits that some money was due but maintains that it was due on the
repair account and not on the notes. Held: That it was immaterial whether the money was due on the given notes for the
purchase price or upon the account for the repairs of the truck as in either event the vendor would have the right to retain the
truck until the amount due was paid or payment tendered.
Katigbak v. CA. The herein petitioner failed to take delivery of the winch, subject matter of the contract and such failure or
breach was, according to the Court of Appeals, attributable to him, a fact which We are bound to accept under existing
jurisprudence. The right to resell the equipment, therefore, cannot be disputed. It was also found by the Court of Appeals that
in the subsequent sale of the winch to a third party, the vendor thereof lost P2,000.00, the sale having been only for
P10,000.00, instead of P12,000.00 as agreed upon, said difference to be borne by the supposed vendee who failed to take
delivery and/or pay the price.
B. Warranties
Laforteza v. Machuca.
Power Commercial v. CA. A breach of warranty against eviction requires the concurrence of the following circumstances: (1) The
purchaser has been deprived of the whole or part of the thing sold; (2) This eviction is by a final judgment; (3) The basis thereof is
by virtue of a right prior to the sale made by the vendor; and (4) The vendor has been summoned and made co-defendant in the
suit for eviction at the instance of the vendee. In the absence of these requisites, a breach of the warranty against eviction under
Article 1547 cannot be declared.
1. Express warranties
CC, 1545. Where the obligation of either party to a contract of sale is subject to any condition which is not performed, such
party may refuse to proceed with the contract or he may waive performance of the condition. If the other party has promised
that the condition should happen or be performed, such first mentioned party may also treat the nonperformance of the
condition as a breach of warranty.
Where the ownership in the thing has not passed, the buyer may treat the fulfillment by the seller of his obligation to
deliver the same as described and as warranted expressly or by implication in the contract of sale as a condition of the
obligation of the buyer to perform his promise to accept and pay for the thing.
CC, 1546. Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the natural
tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer purchase the thing
relying thereon. No affirmation of the value of the thing, nor any statement purporting to be a statement of the seller's opinion
only, shall be construed as a warranty, unless the seller made such affirmation or statement as an expert and it was relied
upon by the buyer.
PMC v. Go. A purchaser of merchandise having fully examined the same to his satisfaction before the consummation of the
sale, cannot maintain an action for breach of an implied warranty under article 336 of the Code of Commerce. || In order to
maintain an action under article 342 of the Code of Commerce for latent defects in merchandise purchased, he must present
his claim in regard to such defects within thirty days from the delivery of the merchandise.
FCC v. CA. considering that between the parties, it is the private respondents, by reason of their business, who are
presumed to be more knowledgeable, if not experts, on the machinery subject of the contract, they should not
therefore be heard now to complain of any alleged deficiency of the said machinery. It is their failure or neglect to
exercise the caution and prudence of an expert, or, at least, of a prudent man, in the selection, testing, and inspection of the
rock crusher that gave rise to their difficulty and to this conflict. A well- established principle in law is that between two
parties, he, who by his negligence caused the loss, shall bear the same. || At any rate, even if the private respondents
could not be adjudged as negligent, they still are precluded from imputing any liability on the petitioner. One of the
stipulations in the contract they entered into with the petitioner is an express waiver of warranties in favor of the latter.
Harrison Motor v. Navarro. It is true that the ownership of the trucks shifted to private respondent after the sale. But
petitioner must remember that prior to its consummation it expressly intimated to her that it had already paid the taxes and
customs duties. Such representation shall be considered as a seller's express warranty under Art. 1546 of the Civil Code which
covers any affirmation of fact or any promise by the seller which indicates the buyer to purchase the thing and actually
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purchases it relying on such affirmation or promise. It includes all warranties which are derived from express language,
whether the language is in the form of a promise or representation. Presumably, therefore, private respondent would not have
purchased the two (2) Elf trucks were it not for petitioner's assertion and assurance that all taxes on its imported parts were
already settled. This express warranty was breached the moment petitioner refused to furnish private respondent with the
corresponding receipts since such documents were the best evidence she could present to the government to prove that all
BIR taxes and customs duties on the imported component parts were fully paid. Without evidence of payment, she was
powerless to prevent the trucks from being impounded. Under Art. 1599 of the Civil Code, once an express warranty is
breached the buyer can accept or keep the goods and maintain an action against the seller for damages. This was what private
respondent did. She opted to keep the two (2) trucks which she apparently needed for her business and filed a complaint for
damages, particularly seeking the reimbursement of the amount she paid to secure the release of her vehicles.
Guinhawa v. People. when private complainant went to petitioner's showroom, the former had every right to assume that she
was being sold brand new vehicles there being nothing to indicate otherwise. But as it turned out, not only did private
complainant get a defective and used van, the vehicle had also earlier figured in a road accident when driven by no less than
petitioner's own driver. || Indeed, the petitioner and Azotea obdurately insisted in the trial court that the van was brand new,
and that it had never figured in vehicular accident. This representation was accentuated by the fact that the petitioner gave the
Service Manual to the private complainant, which manual contained the warranty terms and conditions, signifying that the van
was "brand new." Believing this good faith, the private complainant decided to purchase the van for her buy-and-sell and
garment business, and even made a downpayment of the purchase price.
2. Implied warranties
a. Warranty in case of eviction
CC, 1548. Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act imputable to
the vendor, the vendee is deprived of the whole or of a part of the thing purchased. The vendor shall answer for the
eviction even though nothing has been said in the contract on the subject. The contracting parties, however, may increase,
diminish, or suppress this legal obligation of the vendor.
CC, 1549. The vendee need not appeal from the decision in order that the vendor may become liable for eviction.
CC, 1550. When adverse possession had been commenced before the sale but the prescriptive period is completed after
the transfer, the vendor shall not be liable for eviction.
CC, 1551. If the property is sold for nonpayment of taxes due and not made known to the vendee before the sale, the
vendor is liable for eviction.
CC, 1552. The judgment debtor is also responsible for eviction in judicial sales, unless it is otherwise decreed in the
judgment.
CC, 1553. Any stipulation exempting the vendor from the obligation to answer for eviction shall be void, if he acted in bad
faith.
CC, 1554. If the vendee has renounced the right to warranty in case of eviction, and eviction should take place, the vendor
shall only pay the value which the thing sold had at the time of the eviction. Should the vendee have made the waiver with
knowledge of the risks of eviction and assumed its consequences, the vendor shall not be liable.
CC, 1555. When the warranty has been agreed upon or nothing has been stipulated on this point, in case eviction occurs,
the vendee shall have the right to demand of the vendor: (1) The return of the value which the thing sold had at the time
of the eviction, be it greater or less than the price of the sale; (2) The income or fruits, if he has been ordered to deliver
them to the party who won the suit against him; (3) The costs of the suit which caused the eviction, and, in a proper case,
those of the suit brought against the vendor for the warranty; (4) The expenses of the contract, if the vendee has paid
them; (5) The damages and interests, and ornamental expenses, if the sale was made in bad faith.
CC, 1556. Should the vendee lose, by reason of the eviction, a part of the thing sold of such importance, in relation to the
whole, that he would not have bought it without said part, he may demand the rescission of the contract; but with the
obligation to return the thing without other encumbrances that those which it had when he acquired it. He may exercise
this right of action, instead of enforcing the vendor's liability for eviction. The same rule shall be observed when two or
more things have been jointly sold for a lump sum, or for a separate price for each of them, if it should clearly appear that
the vendee would not have purchased one without the other.
CC, 1557. The warranty cannot be enforced until a final judgment has been rendered, whereby the vendee loses the thing
acquired or a part thereof.
CC, 1558. The vendor shall not be obliged to make good the proper warranty, unless he is summoned in the suit for
eviction at the instance of the vendee.
CC, 1559. The defendant vendee shall ask, within the time fixed in the Rules of Court for answering the complaint, that
the vendor be made a co-defendant.
CC, 1560. If the immovable sold should be encumbered with any non-apparent burden or servitude, not mentioned in the
agreement, of such a nature that it must be presumed that the vendee would not have acquired it had he been aware
thereof, he may ask for the rescission of the contract, unless he should prefer the appropriate indemnity. Neither right can
be exercised if the non-apparent burden or servitude is recorded in the Registry of Property, unless there is an express
warranty that the thing is free from all burdens and encumbrances.
Within one year, to be computed from the execution of the deed, the vendee may bring the action for rescission,
or sue for damages.
One year having elapsed, he may only bring an action for damages within an equal period, to be counted from
the date on which he discovered the burden or servitude.
Mendoza v. Caparros. Condition to defend now and forever against just claims of those who file the same Seller has
the obligation to proce that the land sold was with just title.
b. Warranty against hidden defects
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CC, 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold may have, should
they render it unfit for the use for which it is intended, or should they diminish its fitness for such use to such an extent
that, had the vendee been aware thereof, he would not have acquired it or would have given a lower price for it; but said
vendor shall not be answerable for patent defects or those which may be visible, or for those which are not visible if the
vendee is an expert who, by reason of his trade or profession, should have known them.
CC, 1562. In a sale of goods, there is an implied warranty or condition as to the quality or fitness of the goods, as follows:
(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods
are acquired, and it appears that the buyer relies on the seller's skill or judgment (whether he be the grower or
manufacturer or not), there is an implied warranty that the goods shall be reasonably fit for such purpose; (2) Where the
goods are brought by description from a seller who deals in goods of that description (whether he be the grower or
manufacturer or not), there is an implied warranty that the goods shall be of merchantable quality
CC, 1563. In the case of contract of sale of a specified article under its patent or other trade name, there is no warranty as
to its fitness for any particular purpose, unless there is a stipulation to the contrary.
CC, 1564. An implied warranty or condition as to the quality or fitness for a particular purpose may be annexed by the
usage of trade.
CC, 1565. In the case of a contract of sale by sample, if the seller is a dealer in goods of that kind, there is an implied
warranty that the goods shall be free from any defect rendering them unmerchantable which would not be apparent on
reasonable examination of the sample.
CC, 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though he was
not aware thereof. This provision shall not apply if the contrary has been stipulated, and the vendor was not aware of the
hidden faults or defects in the thing sold
CC, 1567. In the cases of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect between withdrawing from the
contract and demanding a proportionate reduction of the price, with damages in either case.
CC, 1568. If the thing sold should be lost in consequence of the hidden faults, and the vendor was aware of them, he shall
bear the loss, and shall be obliged to return the price and refund the expenses of the contract, with damages. If he was not
aware of them, he shall only return the price and interest thereon, and reimburse the expenses of the contract which the
vendee might have paid.
CC, 1569. If the thing sold had any hidden fault at the time of the sale, and should thereafter be lost by a fortuitous event
or through the fault of the vendee, the latter may demand of the vendor the price which he paid, less the value which the
thing had when it was lost. If the vendor acted in bad faith, he shall pay damages to the vendee.
CC, 1570. The preceding articles of this Subsection shall be applicable to judicial sales, except that the judgment debtor
shall not be liable for damages.
CC, 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six months, from the
delivery of the thing sold.
CC, 1572. If two or more animals are sold together, whether for a lump sum or for a separate price for each of them, the
redhibitory defect of one shall only give rise to its redhibition, and not that of the others; unless it should appear that the
vendee would not have purchased the sound animal or animals without the defective one. The latter case shall be
presumed when a team, yoke pair, or set is bought, even if a separate price has been fixed for each one of the animals
composing the same.
CC, 1573. The provisions of the preceding article with respect to the sale of animals shall in like manner be applicable to
the sale of other things.
CC, 1574. There is no warranty against hidden defects of animals sold at fairs or at public auctions, or of live stock sold as
condemned.
CC, 1575. sale of animals suffering from contagious diseases shall be void. A contract of sale of animals shall also be void
if the use or service for which they are acquired has been stated in the contract, and they are found to be unfit therefor.
CC, 1576. If the hidden defect of animals, even in case a professional inspection has been made, should be of such a nature
that expert knowledge is not sufficient to discover it, the defect shall be considered as redhibitory. But if the veterinarian,
through ignorance or bad faith should fail to discover or disclose it, he shall be liable for damages.
CC, 1577. The redhibitory action, based on the faults or defects of animals, must be brought within forty days from the
date of their delivery to the vendee. This action can only be exercised with respect to faults and defects which are
determined by law or by local customs.
CC, 1578. If the animal should die within three days after its purchase, the vendor shall be liable if the disease which
cause the death existed at the time of the contract.
CC, 1579. If the sale be rescinded, the animal shall be returned in the condition in which it was sold and delivered, the
vendee being answerable for any injury due to his negligence, and not arising from the redhibitory fault or defect.
CC, 1580. In the sale of animals with redhibitory defects, the vendee shall also enjoy the right mentioned in article 1567;
but he must make use thereof within the same period which has been fixed for the exercise of the redhibitory action.
CC, 1581. The form of sale of large cattle shall be governed by special laws.
RA 7394, Section 68. Additional Provisions on Warranties. In addition to the Civil Code provisions on sale with
warranties, the following provisions shall govern the sale of consumer products with warranty:
a) Terms of express warranty. Any seller or manufacturer who gives an express warranty shall:
1) set forth the terms of warranty in clear and readily understandable language and clearly identify himself as the
warrantor;
2) identify the party to whom the warranty is extended;

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3) state the products or parts covered;
4) state what the warrantor will do in the event of a defect, malfunction of failure to conform to the written warranty and
at whose expense;
5) state what the consumer must do to avail of the rights which accrue to the warranty; and
6) stipulate the period within which, after notice of defect, malfunction or failure to conform to the warranty, the
warrantor will perform any obligation under the warranty.
b) Express warranty operative from moment of sale. All written warranties or guarantees issued by a manufacturer, producer,
or importer shall be operative from the moment of sale.
1) Sales Report. All sales made by distributors of products covered by this Article shall be reported to the manufacturer,
producer, or importer of the product sold within thirty (30) days from date of purchase, unless otherwise agreed upon.
The report shall contain, among others, the date of purchase, model of the product bought, its serial number, name and
address of the buyer. The report made in accordance with this provision shall be equivalent to a warranty registration
with the manufacturer, producer, or importer. Such registration is sufficient to hold the manufacturer, producer, or
importer liable, in appropriate cases, under its warranty.
2) Failure to make or send report. Failure of the distributor to make the report or send them the form required by the
manufacturer, producer, or importer shall relieve the latter of its liability under the warranty: Provided, however, That
the distributor who failed to comply with its obligation to send the sales reports shall be personally liable under the
warranty. For this purpose, the manufacturer shall be obligated to make good the warranty at the expense of the
distributor.
3) Retail. The retailer shall be subsidiarily liable under the warranty in case of failure of both the manufacturer and
distributor to honor the warranty. In such case, the retailer shall shoulder the expenses and costs necessary to honor the
warranty. Nothing therein shall prevent the retailer from proceeding against the distributor or manufacturer.
4) Enforcement of warranty or guarantee. The warranty rights can be enforced by presentment of a claim. To this end,
the purchaser needs only to present to the immediate seller either the warranty card of the official receipt along with the
product to be serviced or returned to the immediate seller. No other documentary requirement shall be demanded from
the purchaser. If the immediate seller is the manufacturer's factory or showroom, the warranty shall immediately be
honored. If the product was purchased from a distributor, the distributor shall likewise immediately honor the warranty.
In the case of a retailer other than the distributor, the former shall take responsibility without cost to the buyer of
presenting the warranty claim to the distributor in the consumer's behalf.
5) Record of purchases. Distributors and retailers covered by this Article shall keep a record of all purchases covered by
a warranty or guarantee for such period of time corresponding to the lifetime of the product's respective warranties or
guarantees.
6) Contrary stipulations null and void. All covenants, stipulations or agreements contrary to the provisions of this
Article shall be without legal effect.
c) Designation of warranties. A written warranty shall clearly and conspicuously designate such warranty as:
1) "Full warranty" if the written warranty meets the minimum requirements set forth in paragraph (d); or
2) "Limited warranty" if the written warranty does not meet such minimum requirements.
d) Minimum standards for warranties. For the warrantor of a consumer product to meet the minimum standards for warranty, he
shall:
1) remedy such consumer product within a reasonable time and without charge in case of a defect, malfunction or failure
to conform to such written warranty;
2) permit the consumer to elect whether to ask for a refund or replacement without charge of such product or part, as the
case may be, where after reasonable number of attempts to remedy the defect or malfunction, the product continues to
have the defect or to malfunction.
The warrantor will not be required to perform the above duties if he can show that the defect, malfunction or failure to conform to
a written warranty was caused by damage due to unreasonable use thereof.
e) Duration of warranty. The seller and the consumer may stipulate the period within which the express warranty shall be
enforceable. If the implied warranty on merchantability accompanies an express warranty, both will be of equal duration.
Any other implied warranty shall endure not less than sixty (60) days nor more than one (1) year following the sale of new
consumer products.
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f) Breach of warranties. 1) In case of breach of express warranty, the consumer may elect to have the goods repaired or its
purchase price refunded by the warrantor. In case the repair of the product in whole or in part is elected, the warranty work must
be made to conform to the express warranty within thirty (30) days by either the warrantor or his representative. The thirty-day
period, however, may be extended by conditions which are beyond the control of the warrantor or his representative. In case the
refund of the purchase price is elected, the amount directly attributable to the use of the consumer prior to the discovery of the
non-conformity shall be deducted.
2) In case of breach of implied warranty, the consumer may retain in the goods and recover damages, or reject the goods,
cancel and contract and recover from the seller so much of the purchase price as has been paid, including damages.
EMC v. CA.
Castle v. Gutierrez. The plaintiffs entered into a contract with the defendants by virtue of which the latter agreed to
furnish the former 500 bales of hemp. The plaintiffs testified that defendants' agent agreed to purchase and to furnish
hemp which should grade "good current Manila." The hemp delivered did not equal "good current." Plaintiffs demanded
that suitable hemp be furnished, and, upon refusal, they purchased in the open market 299 bales at an advance of P4.50
per picul: Held, That the evidence is sufficient to establish the contract as alleged by the plaintiffs, and that they are
entitled to recover their loss of P2,691 caused by defendants' failure to comply with the agreement.
Pacific Comm v. Ermita. Plaintiff contracted to sell to defendant an automatic refrigerating machine as per description
stated in the sales contract. The machine was delivered and by mutual agreement the vendor installed the machine. The
machine did not give the results expected from it, and the defendant refused to pay the balance of its purchase price and
the cost of the installation of the machine. Thereupon plaintiff brought this action. Held: The fact that the defendant could
not use the machine satisfactorily in the three cold stores divisions cannot be attributed to plaintiff's fault; the machine
was strictly in accordance with the written contract between the parties, and the defendant can hardly honestly say that
there was any deception by the plaintiff.
Nutrimix Feeds Corp v. CA. A hidden defect is one which is unknown or could not have been known to the vendee. Under
the law, the requisites to recover on account of hidden defects are as follows: (a) the defect must be hidden; (b) the defect
must exist at the time the sale was made; (c) the defect must ordinarily have been excluded from the contract; (d) the
defect, must be important (renders thing UNFIT or considerably decreases FITNESS); (e) the action must be instituted
within the statute of limitations. || In the sale of animal feeds, there is an implied warranty that it is reasonably fit and
suitable to be used for the purpose which both parties contemplated. To be able to prove liability on the basis of breach of
implied warranty, three things must be established by the respondents. The first is that they sustained injury because of
the product; the second is that the injury occurred because the product was defective or unreasonably unsafe; and finally,
the defect existed when the product left the hands of the petitioner. A manufacturer or seller of a product cannot be held
liable for any damage allegedly caused by the product in the absence of any proof that the product in question was
defective. The defect must be present upon the delivery or manufacture of the product; or when the product left the
seller's or manufacturer's control; or when the product was sold to the purchaser; or the product must have reached the
user or consumer without substantial change in the condition it was sold. Tracing the defect to the petitioner requires
some evidence that there was no tampering with, or changing of the animal feeds. The nature of the animal feeds makes it
necessarily difficult for the respondents to prove that the defect was existing when the product left the premises of the
petitioner.
IV. Obligations of the Vendee/Buyer
A. Obligation to accept delivery
CC, 1524. The vendor shall not be bound to deliver the thing sold, if the vendee has not paid him the price, or if no period for the
payment has been fixed in the contract.
CC, 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands
from them the fulfillment of their obligation. However, the demand by the creditor shall not be necessary in order that delay may
exist: (1) When the obligation or the law expressly so declare; or (2) When from the nature and the circumstances of the obligation
it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling
motive for the establishment of the contract; or (3) When demand would be useless, as when the obligor has rendered it beyond his
power to perform.
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.
CC, 1521. Whether it is for the buyer to take possession of the goods or of the seller to send them to the buyer is a question
depending in each case on the contract, express or implied, between the parties. Apart from any such contract, express or implied,
or usage of trade to the contrary, the place of delivery is the seller's place of business if he has one, and if not his residence; but in
case of a contract of sale of specific goods, which to the knowledge of the parties when the contract or the sale was made were in
some other place, then that place is the place of delivery.
Where by a contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed, the seller is
bound to send them within a reasonable time.
Where the goods at the time of sale are in the possession of a third person, the seller has not fulfilled his obligation to deliver to the
buyer unless and until such third person acknowledges to the buyer that he holds the goods on the buyer's behalf.
Demand or tender of delivery may be treated as ineffectual unless made at a reasonable hour. What is a reasonable hour is a
question of fact.
Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state must be borne by the seller.
CC, 1536. The vendor is not bound to deliver the thing sold in case the vendee should lose the right to make use of the terms as
provided in Article 1198.
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CC, 1198. The debtor shall lose every right to make use of the period: (1) When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or security for the debt; (2) When he does not furnish to the creditor the guaranties
or securities which he has promised; (3) When by his own acts he has impaired said guaranties or securities after their
establishment, and when through a fortuitous event they disappear, unless he immediately gives new ones equally satisfactory; (4)
When the debtor violates any undertaking, in consideration of which the creditor agreed to the period; (5) When the debtor
attempts to abscond.
CC, 1522. Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them, but
if the buyer accepts or retains the goods so delivered, knowing that the seller is not going to perform the contract in full, he must
pay for them at the contract rate. If, however, the buyer has used or disposed of the goods delivered before he knows that the seller
is not going to perform his contract in full, the buyer shall not be liable for more than the fair value to him of the goods so received.
Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept the goods
included in the contract and reject the rest. If the buyer accepts the whole of the goods so delivered he must pay for them at the
contract rate.
Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in
the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest.
In the preceding two paragraphs, if the subject matter is indivisible, the buyer may reject the whole of the goods.
The provisions of this article are subject to any usage of trade, special agreement, or course of dealing between the parties.
CC, 1584. Where goods are delivered to the buyer, which he has not previously examined, he is not deemed to have accepted them
unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in
conformity with the contract if there is no stipulation to the contrary.
Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a
reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.
Where goods are delivered to a carrier by the seller, in accordance with an order from or agreement with the buyer, upon the terms
that the goods shall not be delivered by the carrier to the buyer until he has paid the price, whether such terms are indicated by
marking the goods with the words "collect on delivery," or otherwise, the buyer is not entitled to examine the goods before the
payment of the price, in the absence of agreement or usage of trade permitting such examination.
CC, 1585. The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the
goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller, or
when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.
CC, 1586. In the absence of express or implied agreement of the parties, acceptance of the goods by the buyer shall not discharge
the seller from liability in damages or other legal remedy for breach of any promise or warranty in the contract of sale. But, if, after
acceptance of the goods, the buyer fails to give notice to the seller of the breach in any promise of warranty within a reasonable
time after the buyer knows, or ought to know of such breach, the seller shall not be liable therefor.
CC, 1587. Unless otherwise agreed, where goods are delivered to the buyer, and he refuses to accept them, having the right so to
do, he is not bound to return them to the seller, but it is sufficient if he notifies the seller that he refuses to accept them. If he
voluntarily constitutes himself a depositary thereof, he shall be liable as such.
CC, 1588. If there is no stipulation as specified in the first paragraph of article 1523, when the buyer's refusal to accept the goods is
without just cause, the title thereto passes to him from the moment they are placed at his disposal.
Republic v. Litton. The contention that paragraph 2 of the "conditions" contained at the back of the contracts is contrary to law
and public morals, because it makes Litton liable for any delay due even to an act of the Government, is of no moment, since it is not
pretended in this case that Litton's default was caused by such an act.
Azarraga v. Gay. When the purchaser proceeds to make investigations by himself, and the vendor does nothing to prevent such
investigation from being as complete as the former might wish, the purchaser cannot later allege that the vendor made false
representations to him. || One who contracts for the purchase of real estate in reliance on the representations and statements of the
vendor as to its character and value, but after he has visited and examined it for himself, and has had the means and opportunity of
verifying such statements, cannot avoid the contract on the ground that they were false or exaggerated.
B. Obligation to pay the price
CC, 1582. The vendee is bound to accept delivery and to pay the price of the thing sold at the time and place stipulated in the
contract. If the time and place should not have been stipulated, the payment must be made at the time and place of the delivery of
the thing sold.
CC, 1589. The vendee shall owe interest for the period between the delivery of the thing and the payment of the price, in the
following three cases: (1) Should it have been so stipulated; (2) Should the thing sold and delivered produce fruits or income; (3)
Should he be in default, from the time of judicial or extrajudicial demand for the payment of the price.
CC, 1590. Should the vendee be disturbed in the possession or ownership of the thing acquired, or should he have reasonable
grounds to fear such disturbance, by a vindicatory action or a foreclosure of mortgage, he may suspend the payment of the price
until the vendor has caused the disturbance or danger to cease, unless the latter gives security for the return of the price in a
proper case, or it has been stipulated that, notwithstanding any such contingency, the vendee shall be bound to make the payment.
A mere act of trespass shall not authorize the suspension of the payment of the price.
CC, 1592. In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time
agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as
long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand,
the court may not grant him a new term.
CC, 1593. With respect to movable property, the rescission of the sale shall of right take place in the interest of the vendor, if the
vendee, upon the expiration of the period fixed for the delivery of the thing, should not have appeared to receive it, or, having
appeared, he should not have tendered the price at the same time, unless a longer period has been stipulated for its payment.
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CC, 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment
of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be
without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the
Mortgage Law.
Arra Realty v. Guarantee Devt. In a contract of sale, until and unless the contract is resolved or rescinded in accordance with law,
the vendor cannot recover the thing sold even if the vendee failed to pay in full the initial payment for the property. The failure of
the buyer to pay the purchase price within the stipulated period does not by itself bar the transfer of ownership or possession of
the property sold, nor ipso facto rescind the contract. Such failure will merely give the vendor the option to rescind the contract of
sale judicially or by notarial demand as provided for by Article 1592 of the New Civil Code. || The law is that men, singly or in
combination, may use any lawful means to accomplish a lawful purpose, although the means adopted may cause injury to another.
When a person is doing a lawful thing in a lawful way, his conduct is not actionable though it may result in damages to another; for,
though the damage caused is undoubted, no legal right of another is invaded; hence, it is said to be damnum absque injuria.
Luzon Brokerage v. Maritime. In the instant case, Maritime's non-payment for March, April and May, 1961, due to the
corporation, was intentional and deliberate non-performance, designed to extrajudicially force Myers corporation to grant the
moratorium originally solicited and rejected, thus constituting dolo (in the performance, in solvendo) and not mere culpa or
negligence. || Where the answer filed by Myers in the court below to the Luzon Brokerage's complaint for interpleader constituted
in effect a judicial demand for rescission of the contract of sale, and for repossession of the real estate sold, Maritime cannot
demand further time to pay under Article 1592 of the New Civil Code and must conform to the rescission of the contract and the
surrender of the premises, with all the consequences stipulated in the original contract.
Bareng v. CA. Under the provisions of Article 1590 of the Civil Code of the Philippines the vendee has the right to suspend payment
of the price of the thing sold in the face of any danger that he might be disturbed in its possession or ownership thereof. || If the
vendee is in default in the payment of the price of the thing sold, under the provision of Article 2209 of the Civil Code, he is liable to
pay legal interest from the date of the filing of the complaint, unless he deposits in Court the amount due at the start of the action.
Liu v. Loy. There was no valid cancellation of the contract to sell, not even an implied one where there was no written notice of the
cancellation given to Benito Liu or Frank Liu. Obviously, the letter of Teodoro Vao clearly stating that the only action Teodoro
Vao would take if Frank Liu did not reply was that Teodoro Vao would write directly to Benito Liu and Cirilo Pangalo, cannot be
construed as a unilateral extrajudicial rescission of the contract to sell. The letter does not mention anything about rescinding or
canceling the contract to sell. || Although the law allows the extra-judicial cancellation of a contract to sell upon failure of the party
to comply with his obligation, notice of such cancellation must still be given to the party who is at fault. The notice of cancellation to
the other party is one of the requirements for a valid cancellation of a contract to sell, aside from the existence of a lawful cause,
Recto Law: Sales of Movables on Installments1

CC, 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the
following remedies: (1) Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee's
failure to pay cover two or more installments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendee's failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser
to recover any unpaid balance of the price. Any agreement to the contrary shall be void.
CC, 1485. The preceding article shall be applied to contracts purporting to be leases of personal property with option to buy, when
the lessor has deprived the lessee of the possession or enjoyment of the thing.
CC, 1486. In the case referred to in two preceding articles, a stipulation that the installments or rents paid shall not be returned to
the vendee or lessee shall be valid insofar as the same may not be unconscionable under the circumstances.
Levy v. Gervacio. Undoubtedly, the law is aimed at those sales where the price is payable in several installments, for, generally, it is
in these cases that partial payments consist in relatively small amounts, constituting thus a great temptation for improvident
purchasers to buy beyond their means. There is no such temptation where the price is to be paid in cash, or, as in the instant case,
party in cash and partly in one term, for, in the latter case, the partial payments are not so small as to place purchasers off their
guard and delude them to a miscalculation of their ability to pay. Theoretically, perhaps, there is no difference between paying the
price in two installments and paying the same partly in cash and partly in one installment, in so far as the size of each partial
payment is concerned; but in actual practice the difference exists, for, according to the regular course of business, in contracts
providing for payment of the price in two installments, there is generally a provision for initial payment. But all these
considerations are immaterial, the language of the law being so clear as to require no construction at all.
Delta Motors v. Niu Kim Duan. The vendor in a sale of personal property payable in installments may exercise one of three
remedies, namely, (1) exact the fulfillment of the obligation, should the vendee fail to pay; (2) cancel the sale upon the vendee's
failure to pay two or more installments; (3) foreclose the chattel mortgage, if one has been constituted on the property sold, upon
the vendee's failure to pay two or more installments. The third option or remedy, however, is subject to the limitation that the
vendor cannot recover any unpaid balance of the price and any agreement to the contrary is void (Art. 1484) The three (3)
remedies are alternative and NOT cumulative. If the creditor chooses one remedy, he cannot avail himself of the other two.
Tajanlangit v. Southern Motors. In a contract of sale of personal property the price of which is payable in installments, secured by
a mortgage on the goods sold, the vendor who chooses to exact fulfillment of the obligation to pay is not limited to the proceeds of
the sale, on execution, of the mortgaged goods. The vendor may still recover from the purchaser the unpaid balance of the price, if
any.
Ridad v. Filipinas Investment. Under Article 1484 of the Civil Code, the vendor of personal property, the purchase of which is
payable in installments, has the right, should the vendee default in the payment of two or more of the agreed installments, to exact
1 See attached for full text of law.

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fulfillment by the purchaser of the obligation, or to cancel the sale, or to foreclose the mortgage on the purchased personal
property, if one was constituted. Whichever right the vendor elects he cannot avail of the other, these remedies being alternative,
not cumulative. || If the vendor avails himself of the right to foreclose his mortgage, the law prohibits him from further bringing an
action against the vendee for the purpose of recovering whatever balance of the debt secured not satisfied by the foreclosure sale.
The precise purpose of the law is to prevent mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a
low price and then bringing suit against the mortgagor for a deficiency judgment, otherwise, the mortgagor-buyer would find
himself without the property and still owing practically the full amount of his original indebtedness.
Northern Motors v. Sapinoso. What Article 1484 (3) prohibits is "further action against the purchaser to recover any unpaid
balance of the price" and although this Court has construed the word "action" in said Article 1484 to mean "any judicial or
extrajudicial proceeding by virtue of which the vendor may lawfully be enabled to exact recovery of the supposed unsatisfied
balance of the purchase price from the purchaser or his privy, there is no occasion at this stage to apply the restrictive provision of
the said article, because there has not yet been a foreclosure sale resulting in a deficiency.
Borbon II v. Servicewide Specialists. The remedies under Article 1484 of the Civil Code are not cumulative but alternative and
exclusive, which means, as so held in Nonato vs. Intermediate Appellate Court and Investor's Finance Corporation, that ". . . Should
the vendee or purchaser of a personal property default in the payment of two or more of the agreed installments, the vendor or
seller has the option to avail of any of these three remedies either to exact fulfillment by the purchaser of the obligation, or to
cancel the sale, or to foreclose the mortgage on the purchased personal property, if one was constituted. These remedies have been
recognized as alternative, not cumulative, that the exercise of one would bar the exercise of the others." When the seller assigns his
credit to another person, the latter is likewise bound by the same law. Accordingly, when the assignee forecloses on the mortgage,
there can be no further recovery of the deficiency, and the seller-mortgagee is deemed to have renounced any right thereto. A
contrario, in the event the seller-mortgagee first seeks, instead, the enforcement of the additional mortgages, guarantees or other
security arrangements, he must then be held to have lost by waiver or non-choice his lien on the chattel mortgage of the personal
property sold by and mortgaged back to him, although, similar to an action for specific performance, he may still levy on it.
Elisco Tool Mfg. v. CA. [same doctrine of alternativeness and exclusivity]
PCI Leasing v. Giraffe-X. The preceding article shall be applied to contracts purporting to be leases of personal property with
option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing. || As we articulated in Elisco
Tool Manufacturing Corp. v. Court of Appeals, 23 the remedies provided for in Article 1484 of the Civil Code are alternative, not
cumulative. The exercise of one bars the exercise of the others. This limitation applies to contracts purporting to be leases of
personal property with option to buy by virtue of the same Article 1485. The condition that the lessor has deprived the lessee of
possession or enjoyment of the thing for the purpose of applying Article 1485 was fulfilled in this case by the filing by petitioner of
the complaint for a sum of money with prayer for replevin to recover possession of the office equipment.
Republic Act 6552 (Maceda Law)2

Rillo v. CA. Known as the Maceda Law, R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial,
commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is
simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. [Luzon Brokerage Co., Inc. v.
Maritime Building Co., Inc. 86 SCRA 305 (1978] It also provides the right of the buyer on installments in case he defaults in the
payment of succeeding installments, viz: (1) Where he has paid at least two years of installments, "(a) To pay, without additional
interest, the unpaid installments due within the total grace period earned by him, which is hereby fixed at the rate of one month
grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once
in every five years of the life of the contract and its extensions, if any. (b) If the contract is cancelled, the seller shall refund to the
buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made and, after
five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made:
Provided, That the actual cancellation of the contract shall take place after cancellation or the demand for rescission of the contract
by a notarial act and upon full payment of the cash surrender value to the buyer. Down payments, deposits or options on the
contract shall be included in the computation of the total number of installments made." (2) Where he has paid less than two years
in installments, "Sec. 4 * * * the seller shall give the buyer a grace period of not less than sixty days from the date the installment
became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract
after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial
act."
Vallarao v. CA. In any event, the rescission of the contract and the forfeiture of the payments already made could not be effected,
because the case falls squarely under Republic Act No. 6552, otherwise known as the "Maceda Law." Hence, the private respondent
was entitled to a one-month grace period for every year of installments paid, which means that she had a total grace period of three
months from December 31, 1990. Indeed, to rule in favor of petitioner would result in patent injustice and unjust enrichment. This
tribunal is not merely a court of law, but also a court of justice.
Active Realty v. Daroya. The contract to sell in the case at bar is governed by Republic Act No. 6552 "The Realty Installment
Buyer Protection Act," or more popularly known as the Maceda Law which came into effect in September 1972. Its declared
public policy is to protect buyers of real estate on installment basis against onerous and oppressive conditions.. The law seeks to
address the acute housing shortage problem in our country that has prompted thousands of middle and lower class buyers of
houses, lots and condominium units to enter into all sorts of contracts with private housing developers involving installment
schemes. . . . To help especially the low income lot buyers, the legislature enacted R.A. No. 6552 delineating the rights and remedies
of lot buyers and protect them from one-sided and pernicious contract stipulations. || Petitioner refused to accept respondent's
subsequent tender of payment of the outstanding balance alleging that it has already cancelled the contract and sold the subject lot
to another buyer. However, the records clearly show that the petitioner failed to comply with the mandatory twin requirements for
2 See attached for full text of law

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a valid and effective cancellation under the law, i.e., he failed to send a notarized notice of cancellation and refund the cash
surrender value. At no time, from the date it gave a notice of cancellation up to the time immediately before the respondent filed
the case against petitioner, did the latter exert effort to pay the cash surrender value.
Fabrigas v. San Francisco. Thus, the cancellation of the contract under Section 4 is a two-step process. First, the seller should
extend the buyer a grace period of at least sixty (60) days from the due date of the installment. Second, at the end of the grace
period, the seller shall furnish the buyer with a notice of cancellation or demand for rescission through a notarial act, effective
thirty (30) days from the buyer's receipt thereof. It is worth mentioning, of course, that a mere notice or letter, short of a notarial
act, would not suffice.
Jestra Devt v. Pacifico. While, under the above-quoted Section 3 of R.A. No. 6552, the down payment is included in computing
the total number of installment payments made, the proper divisor is neither P34,983 nor P39,468, but P121,666.66, the
monthly installment on the down payment. The P750,000 down payment was to be paid in six monthly installments. If the down
payment of P750,000 is to be deducted from the total payment of P846,600, the remainder is only P96,600. Since respondent was
able to pay the down payment in full eleven (11) months after the last monthly installment was due, and the sum of P76,600
representing penalty for delay of payment is deducted from the remaining P96,600, only a balance of P20,000 remains. As
respondent failed to pay at least two years of installments, he is not, under above-quoted Section 3 of R.A. No. 6552, entitled to a
refund of the cash surrender value of his payments. What applies to the case instead is Section 4 of the same law
V. Breach
CC, 1191, supra.
CC, 1192. In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered
by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and
each shall bear his own damages.
CC, 1595. Where, under a contract of sale, the ownership of the goods has passed to the buyer and he wrongfully neglects or refuses to
pay for the goods according to the terms of the contract of sale, the seller may maintain an action against him for the price of the goods.
Where, under a contract of sale, the price is payable on a certain day, irrespective of delivery or of transfer of title and the buyer
wrongfully neglects or refuses to pay such price, the seller may maintain an action for the price although the ownership in the goods has
not passed. But it shall be a defense to such an action that the seller at any time before the judgment in such action has manifested an
inability to perform the contract of sale on his part or an intention not to perform it.
Although the ownership in the goods has not passed, if they cannot readily be resold for a reasonable price, and if the provisions of
article 1596, fourth paragraph, are not applicable, the seller may offer to deliver the goods to the buyer, and, if the buyer refuses to
receive them, may notify the buyer that the goods are thereafter held by the seller as bailee for the buyer. Thereafter the seller may
treat the goods as the buyer's and may maintain an action for the price.
CC, 1596. Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may maintain an action against him
for damages for nonacceptance.
The measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events from the buyer's breach
of contract.
Where there is an available market for the goods in question, the measure of damages is, in the absence of special circumstances
showing proximate damage of a different amount, the difference between the contract price and the market or current price at the time
or times when the goods ought to have been accepted, or, if no time was fixed for acceptance, then at the time of the refusal to accept.
If, while labor or expense of material amount is necessary on the part of the seller to enable him to fulfill his obligations under the
contract of sale, the buyer repudiates the contract or notifies the seller to proceed no further therewith, the buyer shall be liable to the
seller for labor performed or expenses made before receiving notice of the buyer's repudiation or countermand. The profit the seller
would have made if the contract or the sale had been fully performed shall be considered in awarding the damages.
CC, 1597. Where the goods have not been delivered to the buyer, and the buyer has repudiated the contract of sale, or has manifested
his inability to perform his obligations thereunder, or has committed a breach thereof, the seller may totally rescind the contract of sale
by giving notice of his election so to do to the buyer.
CC, 1598. Where the seller has broken a contract to deliver specific or ascertained goods, a court may, on the application of the buyer,
direct that the contract shall be performed specifically, without giving the seller the option of retaining the goods on payment of
damages. The judgment or decree may be unconditional, or upon such terms and conditions as to damages, payment of the price and
otherwise, as the court may deem just.
CC, 1599. Where there is a breach of warranty by the seller, the buyer may, at his election: (1) Accept or keep the goods and set up
against the seller, the breach of warranty by way of recoupment in diminution or extinction of the price; (2) Accept or keep the goods
and maintain an action against the seller for damages for the breach of warranty; (3) Refuse to accept the goods, and maintain an action
against the seller for damages for the breach of warranty; (4) Rescind the contract of sale and refuse to receive the goods or if the goods
have already been received, return them or offer to return them to the seller and recover the price or any part thereof which has been
paid.
When the buyer has claimed and been granted a remedy in anyone of these ways, no other remedy can thereafter be granted, without
prejudice to the provisions of the second paragraph of Article 1191.
Where the goods have been delivered to the buyer, he cannot rescind the sale if he knew of the breach of warranty when he accepted
the goods without protest, or if he fails to notify the seller within a reasonable time of the election to rescind, or if he fails to return or to
offer to return the goods to the seller in substantially as good condition as they were in at the time the ownership was transferred to the
buyer. But if deterioration or injury of the goods is due to the breach or warranty, such deterioration or injury shall not prevent the
buyer from returning or offering to return the goods to the seller and rescinding the sale.
Where the buyer is entitled to rescind the sale and elects to do so, he shall cease to be liable for the price upon returning or offering to
return the goods. If the price or any part thereof has already been paid, the seller shall be liable to repay so much thereof as has been
paid, concurrently with the return of the goods, or immediately after an offer to return the goods in exchange for repayment of the price.
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Where the buyer is entitled to rescind the sale and elects to do so, if the seller refuses to accept an offer of the buyer to return the goods,
the buyer shall thereafter be deemed to hold the goods as bailee for the seller, but subject to a lien to secure payment of any portion of
the price which has been paid, and with the remedies for the enforcement of such lien allowed to an unpaid seller by Article 1526.
(5) In the case of breach of warranty of quality, such loss, in the absence of special circumstances showing proximate damage of a
greater amount, is the difference between the value of the goods at the time of delivery to the buyer and the value they would have had
if they had answered to the warranty.
CC, 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six months, from the delivery of the
thing sold.
CC, 1484, supra.
CC, 1576, supra.
CC, 1628. The vendor in good faith shall be responsible for the existence and legality of the credit at the time of the sale, unless it should
have been sold as doubtful; but not for the solvency of the debtor, unless it has been so expressly stipulated or unless the insolvency
was prior to the sale and of common knowledge. Even in these cases he shall only be liable for the price received and for the expenses
specified in No. 1 of Article 1616. The vendor in bad faith shall always be answerable for the payment of all expenses, and for damages.
CC, 1629. In case the assignor in good faith should have made himself responsible for the solvency of the debtor, and the contracting
parties should not have agreed upon the duration of the liability, it shall last for one year only, from the time of the assignment if the
period had already expired. If the credit should be payable within a term or period which has not yet expired, the liability shall cease
one year after the maturity.
CC, 1630. One who sells an inheritance without enumerating the things of which it is composed, shall only be answerable for his
character as an heir.
CC, 1631. One who sells for a lump sum the whole of certain rights, rents, or products, shall comply by answering for the legitimacy of
the whole in general; but he shall not be obliged to warrant each of the various parts of which it may be composed, except in the case of
eviction from the whole or the part of greater value.
CC, 1632. Should the vendor have profited by some of the fruits or received anything from the inheritance sold, he shall pay the vendee
thereof, if the contrary has not been stipulated.
CC, 1633. The vendee shall, on his part, reimburse the vendor for all that the latter may have paid for the debts of and charges on the
estate and satisfy the credits he may have against the same, unless there is an agreement to the contrary.
Song Fo v. Hawaiian. The general rule is that rescission will not be permitted for a slight or casual breach of the contract, but only for
such breaches as are so substantial and fundamental as to defeat the object of the parties in making the agreement. || A delay in
payment for a small quantity of molasses for some twenty days is not such a violation of an essential condition of the contract as
warrants rescission for non-performance.
Luneta Motor v. Salvador. Paragraph 3 of the above-quoted provision is clear that foreclosure of the chattel mortgage and recovery of
the unpaid balance of the price are alternative remedies and may not be pursued conjunctively. It appearing in the case at bar that the
vendor had already foreclosed the chattel mortgage constituted on the property and had taken possession thereof, the lower court acted
rightly in dismissing the complaint filed for the purpose of recovering the unpaid balance of the purchase price, because by seizing the
truck and foreclosing the mortgage at the progress of the suit, the plaintiff renounced whatever claim it may have had under the
promissory note, and consequently, he has no more cause of action against the promissor and the guarantor.
IFC v. Ramirez. But she violated the mortgage by removing the car from her residence at 3 Gladiola Street, Roxas District, Quezon City.
She did not comply with the stipulation that, upon her default, the car should be delivered, on demand, to the mortgagee in Manila. The
corporation's action was for specific performance or fulfillment of the obligation and not for judicial foreclosure Consuelo Alcoba's
payment of P2,000 on account of the money judgment against her signified that she acquiesced in the action for specific performance.
She cannot now be heard to say that the judgment resulting from that action could not be enforced because the mortgagees had opted
for foreclosure of the mortgage.
UMC v. DY Hian. Where the action involving a truck bought by installments, is for delivery of such property under the provision of
Rule 60 of the Rules of Court, and it does not appear in the stipulation of facts nor in the pleadings that the vendor has foreclosed the
chattel mortgage, Article 1484 of the Civil Code does not apply. The lower court therefore did not err in sentencing the vendee to pay
the vendor the sum of P9,305.30 as liquidated damages even after the said court had already confirmed the possession of the title of the
truck in favor of the vendor.
FCC v. CA.
Supercars v. Flores. It is well within respondent's right to recover damages from petitioner who committed a breach of warranty
against hidden defects. Article 1599 of the Civil Code partly provides: "Article 1599. Where there is a breach of warranty by the seller,
the buyer may, at his election: . . . (4) Rescind the contract of sale and refuse to receive the goods, or if the goods have already been
received, return them or offer to return them to the seller and recover the price or any part thereof which has been paid. When the
buyer has claimed and been granted a remedy in anyone of these ways, no other remedy can thereafter be granted, without prejudice to
the provisions of the second paragraph of Article 1191. Rescission is proper if one of the parties to a contract commits a substantial
breach of its provisions. It creates an obligation to return the object of the contract. It can be carried out only when the one who
demands rescission can return whatever he may be obliged to restore. Rescission abrogates the contract from its inception and requires
a mutual restitution of the benefits received. Petitioner is thus mandated by law to give back to respondent the purchase price upon his
return of the vehicle. Records show that at the time respondent opted to rescind the contract, the vehicle was still in his possession. He
returned it to petitioner who, without objection, accepted it. Accordingly, the 30% down payment equivalent to P63,600.00, plus the
premium for the comprehensive insurance amounting to P7,374.80 paid by respondent should be returned by petitioner.
VI. Extinguishment
CC, 1600. Sales are extinguished by the same causes as all other obligations, by those stated in the preceding articles of this Title, and by
conventional or legal redemption
CC, 1601. Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold, with the
obligation to comply with the provisions of Article 1616 and other stipulations which may have been agreed upon. (1507)
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CC, 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases: (1) When the price of a sale with
right to repurchase is unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) When upon or after
the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes on the thing
sold; (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the
payment of a debt or the performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as
interest which shall be subject to the usury laws. (n)
CC, 1603. In case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage. (n)
CC, 1604. The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale. (n)
CC, 1605. In the cases referred to in Articles 1602 and 1604, the apparent vendor may ask for the reformation of the instrument. (n)
CC, 1606. The right referred to in Article 1601, in the absence of an express agreement, shall last four years from the date of the
contract. Should there be an agreement, the period cannot exceed ten years. However, the vendor may still exercise the right to
repurchase within thirty days from the time final judgment was rendered in a civil action on the basis that the contract was a true sale
with right to repurchase. (1508a)
CC, 1607. In case of real property, the consolidation of ownership in the vendee by virtue of the failure of the vendor to comply with the
provisions of article 1616 shall not be recorded in the Registry of Property without a judicial order, after the vendor has been duly
heard. (n)
CC, 1608. The vendor may bring his action against every possessor whose right is derived from the vendee, even if in the second
contract no mention should have been made of the right to repurchase, without prejudice to the provisions of the Mortgage Law and the
Land Registration Law with respect to third persons. (1510)
CC, 1609. The vendee is subrogated to the vendor's rights and actions. (1511)
CC, 1610. The creditors of the vendor cannot make use of the right of redemption against the vendee, until after they have exhausted
the property of the vendor. (1512)
CC, 1611. In a sale with a right to repurchase, the vendee of a part of an undivided immovable who acquires the whole thereof in the
case of article 498, may compel the vendor to redeem the whole property, if the latter wishes to make use of the right of redemption.
(1513)
CC,1612. If several persons, jointly and in the same contract, should sell an undivided immovable with a right of repurchase, none of
them may exercise this right for more than his respective share. The same rule shall apply if the person who sold an immovable alone
has left several heirs, in which case each of the latter may only redeem the part which he may have acquired. (1514)
CC, 1613. In the case of the preceding article, the vendee may demand of all the vendors or co-heirs that they come to an agreement
upon the purchase of the whole thing sold; and should they fail to do so, the vendee cannot be compelled to consent to a partial
redemption. (1515)
CC, 1614. Each one of the co-owners of an undivided immovable who may have sold his share separately, may independently exercise
the right of repurchase as regards his own share, and the vendee cannot compel him to redeem the whole property. (1516)
CC, 1615. If the vendee should leave several heirs, the action for redemption cannot be brought against each of them except for his own
share, whether the thing be undivided, or it has been partitioned among them. But if the inheritance has been divided, and the thing sold
has been awarded to one of the heirs, the action for redemption may be instituted against him for the whole. (1517)
CC, 1616. The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of the sale, and in
addition: (1) The expenses of the contract, and any other legitimate payments made by reason of the sale; (2) The necessary and useful
expenses made on the thing sold. (1518)
CC, 1617. If at the time of the execution of the sale there should be on the land, visible or growing fruits, there shall be no
reimbursement for or prorating of those existing at the time of redemption, if no indemnity was paid by the purchaser when the sale
was executed.
Should there have been no fruits at the time of the sale and some exist at the time of redemption, they shall be prorated between the
redemptioner and the vendee, giving the latter the part corresponding to the time he possessed the land in the last year, counted from
the anniversary of the date of the sale. (1519a)
CC, 1618. The vendor who recovers the thing sold shall receive it free from all charges or mortgages constituted by the vendee, but he
shall respect the leases which the latter may have executed in good faith, and in accordance with the custom of the place where the land
is situated. (1520)
CC, 1619. Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in the contract, in the place of
one who acquires a thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous
title. (1521a)
CC, 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of them, are
sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one.
Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may
respectively have in the thing owned in common. (1522a)
CC, 1621. The owners of adjoining lands shall also have the right of redemption when a piece of rural land, the area of which does not
exceed one hectare, is alienated, unless the grantee does not own any rural land. This right is not applicable to adjacent lands which are
separated by brooks, drains, ravines, roads and other apparent servitudes for the benefit of other estates. If two or more adjoining
owners desire to exercise the right of redemption at the same time, the owner of the adjoining land of smaller area shall be preferred;
and should both lands have the same area, the one who first requested the redemption. (1523a)
CC, 1622. Whenever a piece of urban land which is so small and so situated that a major portion thereof cannot be used for any
practical purpose within a reasonable time, having been bought merely for speculation, is about to be re-sold, the owner of any
adjoining land has a right of pre-emption at a reasonable price.
If the re-sale has been perfected, the owner of the adjoining land shall have a right of redemption, also at a reasonable price.
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When two or more owners of adjoining lands wish to exercise the right of pre-emption or redemption, the owner whose intended use of
the land in question appears best justified shall be preferred. (n)
CC, 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the
prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless
accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners. The right of
redemption of co-owners excludes that of adjoining owners.
CC, 1231. Obligations are extinguished: (1) By payment or performance; (2) By the loss of the thing due: (3) By the condonation or
remission of the debt; (4) By the confusion or merger of the rights of creditor and debtor; (5) By compensation; (6) By novation. Other
causes of extinguishment of obligations, such as annulment, rescission, fulfillment of a resolutory condition, and prescription, are
governed elsewhere in this Code.
Rivero v. CA. 'In determining whether consent is vitiated by any of the circumstances mentioned in this article, courts are given a wide
latitude in weighing the facts or circumstances in a given case and in deciding in favor of what they believe to have actually occurred,
considering the age, physical infirmity, intelligence, relationship, and the conduct of the parties at the time of making the contract and
subsequent thereto, irrespective of whether the contract is in a public or private writing.' (Trasporto vs. Beltran, C.A. 51 O.G. 1434.)"
The undisputed facts of record support the finding of the trial court that the consent of Ana Concepcion to the deed of sale was obtained
through the fraudulent misrepresentation of Jaime Rivero that the contract she was signing was one of mortgage.
Diaz v. CA. The fact that in a deed entitled "Sale with Conventional Redemption" the supposed vendees have expressly admitted the fact
that the land subject of the contract had been mortgaged to them, and the original "purchase price" of P3,600 was increased with the
"additional payments" of P200, P400, and P300 which added up to a total increased "purchase price" of P4,500, only shows that the
transaction between the parties was truly and in reality a simple loan and equitable mortgage. It is not the parties but the law that
determines the juridical situation created by the parties through their contract and the rights and obligations arising therefrom. || A
supposed vendee's payment of amounts in addition to the purchase price fixed in the contract of sale with conventional redemption to
be aggregated to the redemption price is absolutely inconsistent with the concept of a true sale with pacto de retro. || In case of doubt, a
contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage (Article 1603, New Civil Code) and
the vendor may still exercise the right to repurchase within thirty days from the time final judgment was rendered in a civil action on
the basis that the contract was a true sale with right to repurchase (Article 1606, par. 3, New Civil Code).
Gerardino v. CA. The nature of the document in question was squarely placed in issue. The defendants contend that the document was
only an equitable mortgage. The third paragraph of Article 1606 of the Civil Code of the Philippines provides that "the vendor may still
exercise the right to repurchase within thirty days from the time final judgment was rendered in a civil action on the basis that the
contract was a true sale with right to repurchase." Hence even if after a new trial it is found that the document in question is a true sale
with right of repurchase, the defendants may still exercise the right to repurchase the land in question within thirty days from the time
final judgment is rendered.
Villason v. Medel. Article 1524 of the Civil Code which fixes the period of nine days within which the right of legal redemption
may be exercised has not been repealed or modified by the Code of Civil Procedure or the Rules of Court. The right of legal
redemption and the right to commence actions are entirely of different nature. The first is a substantive right which, in the absence of
the article, would never exist; the second restricts the period in which the cause of action may be asserted. || There are other notable
dissimilarities between legal redemption and legal action which challenge any attempt to bring the former within the rule of the statute
of limitations which suspends the running of the period of prescription during minority. An action is addressed to a court of justice;
legal redemption partakes of a rescission of contract and is addressed to one of the contracting parties by the other. An action may be
brought only by persons not working under any disability; legal redemption may be exercised by a minor of sufficient discretion; at any
rate, his natural guardian or whoever has the minor in his custody may validly make the repurchase in his behalf. (Guinto vs. Lim
Bonfing and Abendan, 48 Phil., 884, 887.) An action seeks to assert a fundamental, primary right of which the plaintiff has been
unlawfully deprived, or to redress a wrong which has been inflicted; legal redemption is in the nature of a mere privilege created by law
partly for reasons of public policy and partly for the benefit and convenience of the redemptioner, to afford him a way out of what might
be a disagreeable or inconvenient association into which he has been thrust. || The law in prescribing certain contingencies as the
starting point from which the nine-day period should be counted, is to be presumed to exclude all others. Exclusio unius est
exclusio alterius. The starting point is registration or, in the absence of registration, knowledge of the conveyance by the co-
owners. It is logical to assume that if minority had been contemplated, the law would have so expressly stated. || The period of
nine days within which the right of legal redemption may be taken advantage of, counted from the date of registration or, in
the absence of registration, from the date the redemptioner acquired knowledge of the sale, is absolute. In fact, there is much
stronger reason against relaxing the period in favor of a legal redemptioner than in favor of a vendor with pacto de retro. In the latter
transaction, there is a contractual relation founded on valuable consideration, a contract by which the party from whom the repurchase
is sought has been benefited. The right of legal redemption is a pure creature of the law, regulated by law, and works only one way in
favor of the redemptioner. Not having parted with anything, the legal redemptioner can compel the purchaser to sell but can not be
compelled to buy.
Doromal v. CA. For purposes of the co-owner's right to redemption granted by Article 1620 of the Civil Code, the notice in writing
which Article 1623 requires to be made to the other co-owners and from receipt of which the 30-day period to redeem should be
counted is a notice not only of a perfected sale but of the actual execution and delivery of the deed of sale. This is implied from the latter
portion of Article 1623 which requires that before a register of deeds can record a sale by a co-owner, there must be presented to him
an affidavit to the effect that the notice of sale had been sent in writing to the other co-owners. A sale may not be presented to the
registrar of deeds for registration unless it be in the form of a duly executed public instrument. Moreover, the law prefers that all the
terms and conditions of the sale should be definite and in writing. || Article 1619 of the Civil Code bestows unto a co-owner the right to
redeem and "to be surrogated under the same terms and conditions stipulated in the contract," and to avoid any controversy as to the
terms and condition under which the right to redeem may be exercised, it is the best that the period therefor should not be deemed to
have commenced unless the notice of disposition is made after the formal deed of disposal has been duly executed. Where it is beyond
dispute that the legal redemptioner has never been notified in writing of the execution of the deed of sale by which the buyers acquired
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the subject property and has never been shown a copy of the deed through a written communication by either any of the purchasers or
any of her co-owners-vendees, it is immaterial when the legal redemptioner might have actually come to know about said deed.
Santos v. CA. Equitable mortgage has been defined as "one in which although lacking in some formality, form or words, or other
requisites demanded by a statute nevertheless reveals the intention of the parties to charge a real property as security for a debt, and
contains nothing impossible or contrary to law." || Firstly, it was found that the lot in question could thus easily command a much
higher price than P22,000.00, considering further that the same measures about 2,221.86 square meters, more or less. The conclusion
that the price of the lot is grossly inadequate is well-taken. Secondly, it was clearly established that the private respondents, through
their tenant, remained in physical possession of the land subject matter of the dispute, and enjoyed the fruits thereof despite the
execution of the Deed of Absolute Sale. Thirdly, the respondent court noted that there had always been an extension of the period to
repurchase arising from the fact that there were two (2) sets of deed of sale and with a period given to the vendor to repurchase, as seen
from the two (2) sets of Promise to Sell. Such fact even maintains the theory than an absolute sale was never intended.
Uraca v. CA. Article 1600 of the Civil Code provides that "(s)ales are extinguished by the same causes as all other obligations, . . ." Article
1231 of the same Code states that novation requires: (1) the existence of a previous valid obligation; (2) the agreement of all the parties
to the new contract; (3) the extinguishment of the old obligation or contract; and (4) the validity of the new one. The foregoing clearly
show that novation is effected only when a new contract has extinguished an earlier contract between the same parties. In this light,
novation is never presumed; it must be proven as a fact either by express stipulation of the parties or by implication derived from an
irreconcilable incompatibility between old and new obligations or contracts. After a thorough review of the records, we find this
element lacking in the case at bar.
Roberts v. Papio.
Misterio v. Cebu State College.
Francisco v. Boiser. Art. 1623 of the Civil Code is clear in requiring that the written notification should come from the vendor or
prospective vendor, not from any other person. There is, therefore, no room for construction. Indeed, the principal difference between
Art. 1524 of the former Civil Code and Art. 1623 of the present one is that the former did not specify who must give the notice, whereas
the present one expressly says the notice must be given by the vendor. Effect must be given to this change in statutory language. In the
second place, it makes sense to require that the notice required in Art. 1623 be given by the vendor and by nobody else. As explained by
this Court through Justice J.B.L. Reyes in Butte, the vendor of an undivided interest is in the best position to know who are his co-owners
who under the law must be notified of the sale. It is likewise the notification from the seller, not from anyone else, which can remove all
doubts as to the fact of the sale, its perfection, and its validity, for in a contract of sale, the seller is in the best position to confirm
whether consent to the essential obligation of selling the property and transferring ownership thereof to the vendee has been given.
VII. Assignment of credit
CC, 1624. An assignment of creditors and other incorporeal rights shall be perfected in accordance with the provisions of Article 1475.
CC, 1625. An assignment of a credit, right or action shall produce no effect as against third person, unless it appears in a public
instrument, or the instrument is recorded in the Registry of Property in case the assignment involves real property
CC, 1626. The debtor who, before having knowledge of the assignment, pays his creditor shall be released from the obligation.
CC, 1627. The assignment of a credit includes all the accessory rights, such as a guaranty, mortgage, pledge or preference.
CC, 1628, supra.
CC, 1629, supra.
CC, 1630, supra.
CC, 1631, supra.
CC, 1632, supra.
CC, 1633, supra.
CC, 1634. When a credit or other incorporeal right in litigation is sold, the debtor shall have a right to extinguish it by reimbursing the
assignee for the price the latter paid therefor, the judicial costs incurred by him, and the interest on the price from the day on which the
same was paid. A credit or other incorporeal right shall be considered in litigation from the time the complaint concerning the same is
answered. The debtor may exercise his right within thirty days from the date the assignee demands payment from him.
CC, 1635. From the provisions of the preceding article shall be excepted the assignments or sales made: (1) To a co-heir or co-owner of
the right assigned; (2) To a creditor in payment of his credit; (3) To the possessor of a tenement or piece of land which is subject to the
right in litigation assigned.
Lo v. KJS Eco Formwork.
Nyco Sales v. BA Finance. An assignment of credit is the process of transferring the right of the assignor to the assignee, who would
then be allowed to proceed against the debtor. It may be done either gratuitously or onerously, in which case, the assignment has an
effect similar to that of a sale. || According to Article 1628 of the Civil Code, the assignor-vendor warrants both the credit itself (its
existence and legality) and the person of the debtor (his solvency), if so stipulated, as in the case at bar. Consequently, if there be any
breach of the above warranties, the assignor-vendor should be held answerable therefor. There is no question then that the assignor-
vendor is indeed liable for the invalidity of whatever he assigned to the assignee-vendee.
Licaros v. Gatmaitan. The general tenor of the foregoing definitions of the terms "subrogation" and "assignment of credit" may make it
seem that they are one and the same which they are not. A noted expert in civil law notes their distinctions thus: "Under our Code,
however, conventional subrogation is not identical to assignment of credit. In the former, the debtor's consent is necessary; in the latter
it is not required. Subrogation extinguishes the obligation and gives rise to a new one; assignment refers to the same right which passes
from one person to another. The nullity of an old obligation may be cured by subrogation, such that a new obligation will be perfectly
valid; but the nullity of an obligation is not remedied by the assignment of the creditor's right to another." For our purposes, the crucial
distinction deals with the necessity of the consent of the debtor in the original transaction. In an assignment of credit, the consent of the
debtor is not necessary in order that the assignment may fully produce legal effects. What the law requires in an assignment of credit is
not the consent of the debtor but merely notice to him as the assignment takes effect only from the time he has knowledge thereof. A
creditor may, therefore, validly assign his credit and its accessories without the debtor's consent. On the other hand, conventional
subrogation requires an agreement among the three parties concerned the original creditor, the debtor, and the new creditor. It is a
26
Prof. J. Sanchez
st

new contractual relation based on the mutual agreement among all the necessary parties. Thus, Article 1301 of the Civil Code explicitly
states that "(C)onventional subrogation of a third person requires the consent of the original parties and of the third person."
Ledonio v. Capitol Devt. :
Assignment of credit Subrogation

Debtors consent not required; merely notice Debtors consent necessary
to debtor as the assignment takes effect only
from the time he has knowledge thereof.
Assignment refers to the same right which Subrogation extinguishes an obligation and gives rise to a new
passes from one person to another one
The nullity of an obligation is not remedied by The nullity of an old obligation may be cured by subrogation,
the assignment of the creditor's right to such that the new obligation will be perfectly valid.
another
CC, A1300: conventional subrogation must be clearly
established in order that it may take effect. Since it is
petitioner who claims that there is conventional subrogation
in this case, the burden of proof rests upon him to establish
the same by a preponderance of evidence.

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ii. Traditio longa manu

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2) identify the party to whom the warranty is extended;

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Recto Law: Sales of Movables on Installments1

1 See attached for full text of law.

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Republic Act 6552 (Maceda Law)2

2 See attached for full text of law

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Assignment of credit Subrogation

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