ATENEO DE MANILA LAW SCHOOL
LAW ON SALES OUTLINE
First Semester, SY 2009-2010 I. THE NATURE OF SALE
A. DEFINITION (Art. 1458)
DEAN CESAR L. VILLANUEVA AND ATTY. ALEXANDER C. DY
Sale is a contract by which one of the contracting parties obligates himself to transfer the 2 ownership and to deliver possession, of a determinate thing, and the other to pay therefor a 3 price certain in money or its equivalent. xCruz v. Fernando, 477 SCRA 173 (2005). 1. Elements of Sale Elements of sale: (a) consent or meeting of the minds; (b) determinate subject matter; and (c) price certain in money or its equivalent. xNavarra v. Planters Dev. Bank , 527 SCRA 4 562 (2007). Absence of any essential elements negates a sale xDizon v. CA, 302 SCRA 288 (1999), even when earnest money has been paid. Manila Metal Container Corp. v. PNB, 511 SCRA 444 (2006).
Sale being a consensual contract, its essential elements must be proven xVillanueva v. CA, 267 SCRA 89 (1997); but once proven, a sale’s validity is not affected by a previously executed fictitious deed of sale xPeñalosa v. Santos, 363 SCRA 545 (2001); and the burden is on the other party to prove otherwise. xHeirs of Ernesto Biona v. CA, 362 SCRA 29 (2001). 2. Stages of Contract of Sale Policitacion covers the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected. Perfection takes place upon the concurrence of the essential elements, which are the meeting of the minds of the parties as to the object of the contract and upon the price. Consummation begins when the parties perform their respective undertakings, culminating in the extinguishment thereof. xSan Miguel 6 Properties Philippines, Inc. v. Huang, 336 SCRA 737 (2000). 3. Sale Creates Real Obligations ―To Give‖ (Art. 1165) 4. Essential Characteristics of Sale: a. Nominate and Principal A contract of sale is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it. xSantos v. Court of Appeals, 337 7 SCRA 67 (2000). b. Consensual (Art. 1475) A contract of sale is not a real, but a consensual contract, and becomes valid and 8 binding upon the meeting of the minds of the parties as to the object and the price , that:
The Outline presents the manner by which the LAW ON SALES will be taken-up in class. The x's and those footnoted in the Outline represent cases or topics which need no extended discussions, either because the essence of the rulings are already summarized in the Outline or they contain similar rulings or doctrines as other cases to be discussed. Unless otherwise indicated, the numbered articles refer to articles of the Civil Code of the Philippines. 2 Ownership is the independent and general power of a person over a thing for purposes recognized by law and within the limits established thereby. According to Art. 428 of the Civil Code, this means that: The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law. x x x Aside from the jus utendi and the jus abutendi inherent in the right to enjoy the thing, the right to dispose, or the jus disponendi, is the power of the owner to alienate, encumber, transform and even destroy the thing owned. Flancia v. Court of Appeals, 457 SCRA 224 (2005). 3 Alfredo v. Borras, 404 SCRA 145 (2003); Manila Metal Container Corp. v. PNB, 511 SCRA 444 (2006); Roberts v. Papio, 515 SCRA 346 (2007). 4 Jovan Land, Inc. v. CA, 268 SCRA 160 (1997); Quijada v. CA, 299 SCRA 695 (1998); Co v. CA, 312 SCRA 528 (1999); San Andres v. Rodriguez, 332 SCRA 769 (2000); Roble v. Arbasa, 362 SCRA 69 (2001); Polytechnic University v. CA, 368 SCRA 691 (2001); Katipunan v. Katipunan, 375 SCRA 199 (2002); Londres v. CA, 394 SCRA 133 (2002); Manongsong v. Estimo, 404 SCRA 683 (2003); Jimenez, Jr. v. Jordana, 444 SCRA 250 (2004); San Lorenzo Dev. Corp. v. CA, 449 SCRA 99 (2005); Yason v. Arciaga, 449 SCRA 458 (2005); Roberts v. Papio, 515 SCRA 346 (2007); Navarra v. Planters Dev. Bank, 527 SCRA 562 (2007); Republic v. Florendo, 549 SCRA 527 (2008). 5 Roberts v. Papio, 515 SCRA 346 (2007). 6 Limketkai Sons Milling, Inc. v. Court of Appeals, 250 SCRA 523 (1995); Jovan Land, Inc. v. CA, 268 SCRA 160 (1997); Bugatti v. Court of Appeals, 343 SCRA 335 (2000); Moreno, Jr. v. Private Management Office, 507 SCRA 63 (2006); Manila Metal Container Corp. v. PNB, 511 SCRA 444 (2006); Navarra v. Planters Dev. Bank, 527 SCRA 562 (2007); Province of Cebu v. Heirs of Rufina Morales, 546 SCRA 315 (2008). 7 Bowe v. CA, 220 SCRA 158 (1993); Romero v. CA, 250 SCRA 223 (1995); Lao v. CA, 275 SCRA 237 (1997); Cavite Development Bank v. Lim, 324 SCRA 346 (2000).
-2 Upon its perfection, the parties may reciprocally demand performance. xHeirs of 9 Venancio Bejenting v. Bañez, 502 SCRA 531 (2006); subject only to the provisions of the law governing the form of contracts. xCruz v. Fernando, 477 SCRA 173 (2005).
It remains valid even if parties have not affixed their signatures to its written form
xGabelo v. CA, 316 SCRA 386 (1999), or the manner of payment is breached. xPilipinas Shell Petroleum Corp v. Gobonseng, 496 SCRA 305 (2006).
The binding effect of sale is based on the principle that the obligations arising therefrom have the force of law between the parties. xVeterans Federation of the Philippines v. Court of Appeals, 345 SCRA 348 (2000). Perfection Distinguished from Demandability – Not all contracts of sale become automatically and immediately effective. In sales with assumption of mortgage, there is a condition precedent to the seller’s consent and without the approval of the mortgagee, the sale is not perfected. xBiñan Steel Corp. v. Court of Appeals, 391 SCRA 90 (2002). “No Contract Situation” versus “Void Contract” – Absence of consent (i.e., complete meeting of minds) negates the existence of a perfected sale. xFirme v. Bukal Enterprises and Dev. Corp., 414 SCRA 190 (2003). The contract then is null and void ab initio, absolutely wanting in civil effects; hence, it does not create, modify, or extinguish the juridical relation to which it refers. xCabotaje v. Pudunan, 436 SCRA 423 (2004). When there is no meeting of the minds on price, the contract ―is not perfected‖ and does not serve as a binding juridical relation between the parties. x Manila Metal Container 10 Corp. v. PNB, 511 SCRA 444 (2006), and should be more accurately denominated as inexistent, as it did not pass the stage of generation to the point of perfection. xNHA v. Grace Baptist Church, 424 SCRA 147 (2004). c. Bilateral and Reciprocal (Arts. 1169 and 1191) A contract of sale gives rise to ―reciprocal obligations‖, which arise from the same cause with each party being a debtor and creditor of the other, such that the obligation of one is dependent upon the obligation of the other; and they are to be performed simultaneously, so that the performance of one is conditioned upon the simultaneous 11 fulfillment of the other. xCortes v. Court of Appeals, 494 SCRA 570 (2006). The power to rescind is implied in reciprocal ones in case one of the obligors should not comply with what is incumbent upon him, and without need of prior demand. xAlmocera 12 v. Ong, 546 SCRA 164 (2008). d. Onerous (√Gaite v. Fonacier, 2 SCRA 830 ). e. Commutative (BUT SEE: Arts. 1355 and 1470) In a contract of sale, there is no requirement that the price be equal to the exact value of the subject matter of sale; all that is required is that the parties believed that they will receive good value in exchange for what they will give. √Buenaventura v. CA, 416 SCRA 263 (2003). f. Sale Is Title and Not Mode Sale is not a mode, but merely a title. A mode is the legal means by which dominion or ownership is created, transferred or destroyed, but title is only the legal basis by which to affect dominion or ownership. Sale by itself does not transfer or affect ownership; the most that sale does is to create the obligation to transfer ownership. It is tradition or delivery, as a consequence of sale, that actually transfers ownership. xSan Lorenzo Dev. Corp. v. CA, 13 449 SCRA 99 (2005), citing VILLANUEVA, PHILIPPINE LAW ON SALES, 1995 ed., at p. 5. Seller’s ownership of the thing sold is not an element of perfection; what the law requires is that seller has the right to transfer ownership at the time of delivery. xQuijada v. 14 CA, 299 SCRA 695 (1998).
Romero v. CA, 250 SCRA 223 (1995); Balatbat v. CA, 261 SCRA 128 (1996); Coronel v. CA, 263 SCRA 15 (1996); City of Cebu v. Heirs of Candido Rubi, 306 SCRA 408 (1999); Agasen v. CA, 325 SCRA 504 (2000); Laforteza v. Machuca, 333 SCRA 643 (2000); Londres v. Court of Appeals, 394 SCRA 133 (2002); Alcantara-Daus v. de Leon, 404 SCRA 74 (2003); Buenaventura v. Court of Appeals, 416 SCRA 263 (2003); San Lorenzo Dev. Corp. v. CA, 449 SCRA 99 (2005); Yason v. Arciaga, 449 SCRA 458 (2005); Ainza v. Padua, 462 SCRA 614 (2005); Roberts v. Papio, 515 SCRA 346 (2007); MCC Industrial Sales Corp. v. Ssangyong Corp., 536 SCRA 408 (2007); Castillo v. Reyes. 539 SCRA 193 (2007) . 9 Province of Cebu v. Heirs of Rufina Morales, 546 SCRA 315 (2008). 10 Roberts v. Papio, 515 SCRA 346 (2007). 11 Ong v. Court of Appeals, 310 SCRA 1 (1999); Mortel v. KASSCO, 348 SCRA 391 (2000); Agro Conglomerates, Inc. v. CA, 348 SCRA 450 (2000); Velarde v. Court of Appeals, 361 SCRA 56 (2001); Carrascoso, Jr. v. Court of Appeals, 477 SCRA 666 (2005). 12 Vda. De Quirino v. Palarca, 29 SCRA 1 (1969) 13 Acap v. CA, 251 SCRA 30 (1995). 14 Equatorial Realty Dev. Inc. v. Mayfair Theater, Inc., 370 SCRA 56 (2001); Alcantara-Daus v. de Leon, 404 SCRA 74 (2003); Heirs of Jesus M. Mascuñana v. Court of Appeals, 461 SCRA 186 (2005).
-3BUT SEE: xTitong v. CA, 287 SCRA 102 (1998), which defined a ―sale‖ as ―a contract transferring dominion and other real rights in the thing sold. ‖
B. SALE DISTINGUISHED FROM SIMILAR CONTRACTS
A contract is what the law defines it to be, taking into consideration its essential elements, 15 and the title given to it by the parties is not as much significant as its substance. The transfer of ownership in exchange for a price paid or promised is the very essence of a contract of sale. xSantos v. Court of Appeals, 337 SCRA 67 (2000). In determining the real character of sale, courts look at the intent of the parties, their true aim and purpose in entering into the contract, as well as ―by their conduct, words, actions and deeds prior to, during and immediately after executing the agreement,‖ and not at the nomenclature used to describe it, xLao v. Court of Appeals, 275 SCRA 237 (1997). 1. Donation (Arts. 725 and 1471) Unlike a donation, sale is a disposition for valuable consideration with no diminution of the estate but merely substitution of values, with the property sold replaced by the equivalent monetary consideration; unlike donation, a valid sale cannot have the legal effect of depriving the compulsory heirs of their legitimes. xManongsong v. Estimo, 404 SCRA 683 (2003). The rules on double sales under Art. 1544 find no relevance to contracts of donation. xHemedes v. Court of Appeals, 316 SCRA 347 (1999). 2. Barter (Arts. 1468, 1638 to 1641) 3. Contract for Piece-of-Work (Arts. 1467, 1713 to 1715) The Crux: ―Ineluctably, whether the contract be one of sale or one for a piece of work, a transfer of ownership is involved and a party necessarily walks away with an object.‖ xCommissioner of Internal Revenue v. CA, 271 SCRA 605 (1997), citing VILLANUEVA, LAW ON SALES, pp. 7-9 (1995). In both provisions on warranty of title against hidden defects applies. xDiño v. CA, 359 SCRA 91 (2001). When a person stipulates for the future sale of articles which he is habitually making, and which at the time are not made or finished, it is essentially a contract of sale and not a contract for labor xInchausti & Co. v. Cromwell, 20 Phil. 345 (1911); even when he executes production thereof only after an order is placed by customers. √Celestino & Co. v. Collector, 99 Phil. 841 (1956). If the thing is specially done only upon the specific order of another, this is a contract for a piece of work; if the thing is manufactured or procured for the general market in the ordinary course of business, it is a contract of sale. √Commissioner of Internal Revenue v. 16 Engineering Equipment & Supply Co. , 64 SCRA 590 (1975). To Tolentino, the distinction depends on the intention of parties : if parties intended that at some future date an object has to be delivered, without considering the work or labor of the party bound to deliver, the contract is one of sale; but if one of the parties accepts the undertaking on the basis of some plan, taking into account the work he will employ personally or through another, the contract is for a piece of work. xEngineering & Machinery Corp. v. CA, 252 SCRA 156 (1996). 4. Agency to Sell (Art. 1466) Assumption by ―agent‖ of the risk pertaining to the cost or price of the subject matter makes the relationship that of buyer-seller, for the agent does not assume risk with respect to the price or the property subject of the relationship. xKer & Co., Ltd. v. Lingad, 38 SCRA 524 (1971). Consequently: (a) the contractual relationship is not inherently revocable. √Quiroga v. Parsons, 38 Phil. 501 (1918); or (b) the purported agent does not have to account for the profit margin earned from acquiring the property for the purported principal. √Puyat v. Arco Amusement Co., 72 Phil. 402 (1941). One factor that most clearly distinguishes agency from other legal concepts, including sale, is control; one person – the agent – agrees to act under the control or direction of another – the principal. xVictorias Milling Co., Inc. v. CA, 333 SCRA 663 (2000). Commercial broker, commission merchant or indentor is a middleman acting in his own name, and acts as agent for both seller and buyer to effect a sale between them. Although he is neither seller nor buyer to the contract effected he may voluntarily assume warranties of seller. xSchmid and Oberly, Inc. v. RJL Martinez, 166 SCRA 493 (1988).
15 Romero v. CA, 250 SCRA 223 (1995); Lao v. Court of Appeals, 275 SCRA 237 (1997); Orden v. Aurea, 562 SCRA 660 (2008); Ver Reyes v. Salvador, Sr., 564 SCRA 456 (2008).. 16 Commissioner of Internal Revenue v. Arnoldus Carpentry Shop , 159 SCRA 199 (1988); Del Monte Philippines, Inc. v. Aragones, 461 SCRA 139 (2005).
-45. Dacion En Pago (Arts. 1245 and 1934) Governed by the law on sales, dation in payment is a transaction that takes place when property is alienated to the creditor in full satisfaction of a debt in money—it involves the delivery and transmission of ownership of a thing as an accepted equivalent of the performance of the obligation. xYuson v. Vitan, 496 SCRA 540 (2007). In its modern concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price. xAquintey v. Tibong 511 SCRA 414 (2006). Elements of dation in payment: (a) performance of the prestation in lieu of payment (animo solvendi) which may consist in the delivery of a corporeal thing or a real right or a credit against the third person; (b) some difference between the prestation due and that which is given in substitution (aliud pro alio); and (c) agreement between the creditor and debtor that the obligation is immediately extinguished by reason of the performance of a presentation different from that due. √Lo v. KJS Eco-Formwork System Phil., Inc., 413 SCRA 182 17 (2003). There is no dation in payment where there is no transfer of ownership in the creditor’s favor, as when the possession of the thing is merely given to the creditor by way of security. Fort Bonifacio Dev. Corp. v. Yllas Lending Corp., 567 SCRA 454 (2008). For dacion to arise, there must be actual delivery of the property to the creditor by way of extinguishment of the pre-existing debt. xPhilippine Lawin Bus Co. v. CA, 374 SCRA 332 18 (2002). BUT SEE OBITER: xSSS v. Court of Appeals, 553 SCRA 677 (2008). There is no dation when there is no such transfer of ownership in favor of the creditor, as when the possession is only by way of security. x PNB v. Pineda, 197 SCRA 1 (1991). A creditor, especially a bank, which enters into dacion en pago, should know and must accept the legal consequence thereof, that the pre-existing obligation is totally extinguished. xEstanislao v. East West Banking Corp., 544 SCRA 369 (2008). 6. Lease (Arts. 1484 and 1485) When rentals in a ―lease‖ are clearly meant to be installment payments to a sale contract, despite the nomenclature given by the parties, it is a sale by installments and governed by the Recto Law. xFilinvest Credit Corp. v. CA, 178 SCRA 188 (1989).
II. PARTIES TO A CONTRACT OF SALE (Arts. 1489-1492)
1. General Rule: Every person having legal capacity to obligate himself, may validly enter into a contract of sale, whether as seller or as buyer. (Art. 1489) 2. Minors, Insane and Demented Persons, Deaf-Mutes (Arts. 1327, 1397 and 1399) A minor cannot be deemed to have given her consent to a contract of sale; consent is among the essential requisites of a contract, including one of sale, absent of which there can be no valid contract. [?] xLabagala v. Santiago, 371 SCRA 360 (2001). a. Necessaries (Arts. 1489 and 290) b. xEmancipation (Arts. 399 and 1397; Inutile: Majority age now at 18 years, Arts. 234 and 236, Family Code, amended by R.A. 6809). c. Protection of the Senile and Elderly (Art. 24) and Illiterates (Art. 1332) Under Art. 1332, when one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former; otherwise, sale is void. [?] xVda. De Ape v. Court of Appeals, 456 SCRA 193 (2005). While a person is not incompetent to contract merely because of advanced years or by reason of physical infirmities, when such age or infirmities have impaired the mental faculties so as to prevent the person from properly, intelligently or firmly protecting his property rights, then he is undeniably incapacitated, and the sale he entered into is void [?]. 19 √Paragas v. Heirs of Dominador Balacano, 468 SCRA 717 (2005). 3. Sales By and Between Spouses:
Aquintey v. Tibong 511 SCRA 414 (2006). Filinvest Credit Corp. v. Philippine Acetylene Co., Inc. 111 SCRA 421 (1982); Vda. de Jayme v. Court of Appeals , 390 SCRA 380 (2002). 19 Domingo v. Court of Appeals, 367 SCRA 368 (2001).
nor to a lawyer who acquired property prior to the time he intervened as counsel in the suit involving such property. v. 1491 and 1492) Contracts entered into in violation of Arts. Since under Art. Enriquez. 1492. 87. xPelayo v. 1490 and 1492 are not merely voidable. Hernandez. √Philippine Trust Co.‖ √Calimlim-Canullas v. Matabuena v. 73. Ababa. when property resold to a third-party buyer in good faith and for value. 55 (1940). a. 124 of Family Code. 459 SCRA 475 (2005).. xDaroy v. CA. xCruz v. 1 SCRA 302 (1961). Family Code) Under Art. Goynako. 24 Recto v. rather. 96. 4. 133. Cantollas. Medina v. 1490. Prohibition applies only to a sale to a lawyer of record. xGuiang v. the spouses cannot validly sell property to one another. Jr. a basic social institution which public policy cherishes and protects. Family Code) Sales between spouses who are not governed by a complete separation of property regime are void. Macatangay. 129 21 SCRA 675 (1984). 290 (1930). xAbalos v. Prohibition against agents does not apply if the principal consents to the sale of the property in the hands of the agent. Agents and Administrators No more need to comply with xRodriquez v. 88 SCRA 513 (1979). and does not cover assignment of the property given in judgment made by a client to an attorney. xDistajo v. Ching v. 86 SCRA 641 (1978). 45 (1952). c. Prohibition applies only while litigation is pending. Abecia. 26 SCRA 700 (1969).. Collector. CA. Perez. Between Spouses (Arts. Court of Appeals. Cabanting. 13 (1934) which required showing that a third party bought as conduit/nominee of the buyer disqualified under Art. husband may dispose of conjugal property without wife’s consent if such sale is necessary to answer for conjugal liabilities mentioned in Articles 161 and 162. 427 (1956). Evangelista. Millado. 23 Gregorio Araneta. to his attorney as long as the property was not the subject of the litigation. 1490. Mactal. Inc. b. cf. √Fabillo v. 298 SCRA 172 (1998). Sec. IAC. since the resulting contract lacks one of the 20 essential elements of full ―consent‖. Guardians. 392 (1956). 291 SCRA 372 (1998). or (b) to a contingency fee arrangement which grants the lawyer of record proprietary rights to the property in litigation since the payment of said fee is not made during the pendency of litigation but 24 only after judgment has been rendered. not merely voidable. Others Relatively Disqualified (Arts. The in pari delicto doctrine would apply to the spouses-parties under Art. reconveyance is no longer available. 281 SCRA 491 (1997). 490 SCRA 625 (2006). who has not taken part in 23 the case. xDirector of Lands v. Sale by husband of conjugal land to his concubine is null and void for being contrary to morals and public policy and ―subversive of the stability of the family. xNaval v. 317 SCRA 696 (1999). Collector. since only the heirs and the creditors can question the sale’s nullity. Jr. sale by husband of a conjugal property without the wife’s consent is void. 669 (1904). 38 SCRA 284 (1971). b. 22 Uy Sui Pin v. Attorneys. 502 SCRA 334 (2006). x Modina v. 49 O. 60 Phil.G. √Rubias v. 439 SCRA 64 (2004). Contracts with Third Parties (Arts. Prohibition does not apply: (a) to sale of a land acquired by a client to satisfy a judgment in his favor. 3 Phil. Fortun. Batiller. 506 SCRA 735 (2006). CA. CA. 1491. 100 Phil. the presumption now is that such disqualified party obtained the property in violation of said article. even when the litigation is not adversarial in nature √Rubias v. Roldan. 195 SCRA 28 (1991). 70 Phil. Hereditary rights are not included in the prohibition insofar as administrator or executor of the estate of the deceased. xMunicipal Council of Iloilo v. 339 SCRA 52 (2000). xDel Rosario v. x Medina v. v. Cervantes. 55 Phil.
. 51 SCRA 120 (1973). Nevertheless. de Laig v. 99 Phil. but 22 are null and void. Batiller. Harden. 196 SCRA 302 (1991). then policy consideration and the dictates of morality require that the prohibition should apply also to common-law relationships. Bautista v. or when it is a certiorari proceeding that may have no merit xValencia v. Vda. 1 SCRA 302 (1960). and 124. Judges
Cirelos v. A wife affixing her signature to a Deed of Sale as a witness is deemed to have given her consent. 1490. not just voidable. 51 SCRA 120 (1973). Silva. Tuason de Paterno. As an exception.-5a.
409 SCRA 438 (2003). 1463) or Undivided Share in a Mass of Fungible Goods (Art. 496 SCRA 273 (2006). or claims she has over a parcel of land in favor of another party in consideration of the latter’s payment of therein loan. xTañedo v. b. CA and Ateneo de Manila University . and such transaction cannot be considered to effectively be sale of the land or any part thereof. 1465) 2. Article 1347 does not cover waiver of hereditary rights which is not equivalent to sale. 1461) c. a. Determinable subject matter of sale are not subject to risk of loss until they are physically segregated or particularly designated. since waiver is a mode of extinction of ownership in favor of the other persons who are coheirs. 384 (1915). Atilano. CA. 1460) When the deed of sale describes a lot adjacent to the land seen. 1459 to 1465)
―Transfer of title or an agreement to transfer it for a price paid or promised to be paid is the essence of sale. 1347. 3. CA. the agreement is essentially a sale. Emptio Rei Speratae (Arts. Jr. 1459 and 1575) Under Art. xGan Tingco v. 486 SCRA 523 (2006). agreed upon and delivered to the buyer. A mortgagor is not prevented from selling the property. Undivided Interest (Art. SUBJECT MATTER OF SALE (Arts. City of Iloilo. 271 SCRA 605 (1997). Gonzales. and the rule on delivery effected through a public instrument apply. such land is the one upon which the minds have met. Alonzo. xMacariola v.‖ xCommissioner of Internal Revenue v. 368 SCRA 691 (2001). Where under an agreement. v. 1347. 252 SCRA 80 (1996). b. Must Be Determinate or At Least ―Determinable‖ (Art. Future or Contingent (Arts. Subject to Resolutory Condition (Art. xPineda v. 29 Phil. CA. since it is merely encumbrance and effect a loss of his principal attribute as owner to dispose of the property. xSibal v. a party renounces and transfers whatever rights. The Civil Code provisions defining sales is a ―catch-all‖ provision which effectively brings within it grasp a whole gamut of transfers whereby ownership of a thing is ceded for a consideration. Britanico v. the properties levied are still subject to the prohibition. a sale involving future inheritance is void and cannot be the source of any right nor create any obligation. Where the lot sold is said to adjoin the ―previously paid lot‖ on three sides thereof. xSan Andres v. Espinosa. √Yu Tek & Co. Generic things may be object of sale (Arts. Must Be Existing. 251 SCRA 30 (1995). Asuncion. Court of Appeals. 512 (1927). Rodriguez. v.
. Pabinguit. Even when the main cause is a collection of a sum of money. interests. 1348. A judge who buys property in litigation before his court after the judgment becomes final does not violate Art. 50 Phil. xCaoibes. but he can be administratively disciplined for violation of the Code of Judicial Ethics. 114 SCRA 77 (1982). Caoibes-Pantoja. 35 Phil.
Londres v. Court of Appeals. 1. 1347. and 1462) a. 332 SCRA 769 (2000). and not that 25 erroneously described in the deed. the subject lot is capable of being determined without the need of any new contract. √Melliza v. even when the exact area of the adjoining residential lot is subject to the result of a survey. Must Be Licit (Arts.-6A judge should restrain himself from participating in the sale of properties —it is incumbent upon him to advise the parties to discontinue the transaction if it is contrary to law. 81 (1916).
III. √Atilano v. Valdez. 28 SCRA 231 (1969). 1246 and 1409) Subject matter is determinable when by a formula or description agreed upon at perfection there is a way by which the courts can delineate independent of the will of the parties. 394 SCRA 133 (2002). Law even considers void a stipulation forbidding the owner from alienating mortgaged immovable. 1491. 1464) – May result it co-ownership. xPichel v. xAcap v. Emptio Spei (Art. 23 SCRA 477 (1968). 1461 and 1347) Pending crops which have potential existence may be valid object of sale. 111 SCRA 341 (1981). √Polytechnic University v.
1409 of Civil Code. xTac-an v. 145. and 1505) a. CA. √Johannes Schuback & Sons Phil. 404 SCRA 74 (2003). Quantity of Subject Matter Not Essential for Perfection? (Art. A perfected contract of sale cannot be challenged on the ground of the seller’s non ownership of the thing sold at the time of the perfection of the contract. CA. 345 (1911). Court of Appeals. wild bird or mammal (Act 2590.A. Trading Corp. Code. 1409(5): ―Those which contemplate an impossible service. 5. v. nevertheless such contract may be deemed to be inoperative and may thus fall. dynamited fish (R. xSiacor v.-74. xAlcantara-Daus v. CA. gunpowder and explosives (Act 2255). 1288). x x x To assert that mere prompt
―Price‖ signifies the sum stipulated as the equivalent of the thing sold and also every incident taken into consideration for the fixing of the price put to the debit of the buyer and agreed to by him.
IV.‖ √Nool v. 20 Phil. 129 SCRA 319 (1984). Gigantana. 1462). and 1575) a. provided he acquires title to the property later on. This law stems from the principle that nobody can dispose of that which does not belong to him. 323 SCRA 430 (2000). That the sellers are no longer owners of the goods at perfection does not appear to be one of the void contracts enumerated in Art. it is at delivery that the law requires the seller to have the right to transfer ownership of the thing sold. and under Art. 276 SCRA 149 (1997). 1402 the Civil Code itself recognizes a sale where the goods are to be ―acquired x x x by the seller after the perfection of the contract of sale‖ clearly implying that a sale is possible even if the seller was not the owner at the time of sale. Seller's Ownership Need Not Exist at Perfection: Sale of copra for future delivery does not make seller liable for estafa for failing to deliver because the contract is still valid and the obligation was civil and not criminal. xNoel v. 1459. Subsequent Acquisition of Title by Non-Owner Seller (Art. 375 SCRA 390 (2002). xInchausti & Co. Special Laws: narcotics (R. Buyer who opted to purchase the land on installment basis with imposed interest. 240 SCRA 78 (1995). be sold. rare wild plants (Act 3983). sale of realty by non-Christians (Sec. part number. without congressional fiat. by analogy. Seller’s Obligation to Transfer Title to Buyer (Art. The amount of the stated contract price paid in full today is worth much more that a series of small payments totaling the same amount. 1120. IAC. xEsguerra v. 9). 171 SCRA 131 (1989). xAlonso v.A. Court of Appeals. and the buyer had sent in reply a purchase order without indicating the quantity being order. 1461. The principal obligation of a seller is ―to transfer the ownership of‖ the property sold (Art. Made in violation of land reform laws declaring tenant-tillers as the full owners of the lands they tilled. Sec. Friar land without consent of Secretary of Agriculture required under Act No. Authority v. 1462. poisonous plants or fruits (R. NEMO DAT QUOD NON HABET. cannot later unilaterally disavow the obligation created by the stipulation in the contract which sets the interest at 24% per annum: ―The rationale behind having to pay a higher sum on the installment is to compensate the vendor for waiting a number of years before receiving the total amount due. by item number. Acquisition by the Buyer May Even Depend on Contingency (Art. 227 SCRA 719 (1993). √NGA v. Reclaimed lands are of the public domain and cannot. 1349) Sale of grains is perfected even when the exact quantity or quality is not known. Cromwell.D. CA. 108 Phil. 7). Following Sales of Land Void:
By Non-Christian if not approved by Provincial Governor per Sec. even when due to increased construction costs. 534 SCRA 490 (2007). Seller cannot unilaterally increase the price previously agreed upon with the buyer. 1409. b. 228 SCRA 183 (1993). 6425). even when required letter of credit had not been opened by the buyer. 1462. c. so long as the source of the subject is certain. description and unit price. Cebu Country Club. It is essential that seller is owner of the property he is selling. under Art. 1434) – validates the sale and title passes to the seller by operation of law. de Leon.
X6. v. xGSIS v. Liao v. public or private. R. Where seller quoted to buyer the items offered for sale. firearms and ammunitions (P. 145 of Revised Administrative Code. 1078 (1960). there was already a perfected contract of sale.. 1458). PRICE AND OTHER CONSIDERATION (Arts.A 4252) b. 1458. Fisheries Dev.
Illegality of Subject Matter (Arts. People. CA. 380 SCRA 306 (2002).A 428). Revised Adm. Inc.
Court of Appeals. Heirs of Catalina 29 Roque. Santos. which render the sale void. Reynes. not versed in English. Consideration for sale can take different forms. versus: When Deed of Sale was executed to facilitate transfer of property to buyer to enable him to construct a commercial building and to sell the property to the children. . b. 261 SCRA 128 (1996). Court of Appeals. xPolytechnic University v. Ong. x Macapgal v. since there was in fact no intention to enter into a sale. 102 Phil. Quimpo. v Abad Vda de Beltran. xHeirs of Spouses Balite v. Must Be in Money or Its Equivalent (Arts. 379 SCRA 490 (2002). Montecillo v. ―In a contract of sale. 367 SCRA 559 (2001). Cancellation of liabilities on the property in favor of the seller. such arrangement being merely a subterfuge on the part of buyer. for a time. CA. When Price is ―False‖ (Arts. [?] The remedy of an unpaid seller in a contract of sale is to seek either specific performance or rescission. 40 Phil. Soliva v. √Yu Bun Guan v. and more importantly. existed and discharges the obligations created thereunder. 74 SCRA 83 (1976). AFP RSBS. but the sale is still valid and binding on the real terms. 28 281 SCRA 176 (1997). 371 SCRA 360 (2001). thus:
When deed provides that the consideration was the expected profits from the subdivision project. 446 SCRA 54 (2004). CA. for which the 27 seller may exercise his legal remedies. Court of Appeals. 682 (1939) Peñalosa v. Ladanga v. 1353 and 1354) When the parties intended to be bound but the deed did not reflect the actual price agreed upon. Resources Dev. Rongavilla v. the situation constitutes more than just fraud and vitiation of consent to give rise to a voidable contract. 280 SCRA 297 (1997). Not Just Unpaid: It is a badge of simulated price. Labagala v. but results in buyer’s default.‖ xBortikey v. xModina v. 294 SCRA 289 (1998).
Yu Bun Guan v. sign a Deed of Sale on representation by buyer that it was merely to evidence their lending of money. has in fact never been paid by the purchaser to the seller. 477 SCRA 511 (2005). Southside Homeowners Asso. 176 SCRA 159 (1989). Court of Appeals. which makes the contract void ab initio. Gonzales v. CA. Court of Appeals. Sr. 139 SCRA 133 (1985). 320 SCRA 428 (1999). Remorin. When price indicated in deed of absolute sale is undervalued consideration pursuant to intention to avoid payment of higher capital gains taxes. 363 SCRA 545 (2001). Trinidad. the non-payment of the price is a resolutory condition which extinguishes the transaction that. c. Lim. such as the prestation or promise of a thing or service by another. Court of Appeals. 294 SCRA 289 (1998). 546 SCRA 315 (2008). 458 SCRA 652 (2005). 502 SCRA 587 (2006). which denies all recovery to the guilty parties inter se. there was no consideration or price agreed upon. when the price. 1471) a. √Rongavilla v. there was no consent at all. CA.-8payment of the monthly installments should obviate imposition of the stipulated interest is to ignore an economic fact and negate one of the most important principles on which commerce operates. 2. 29 Ocejo v. 17 SCRA 114 (1966). 417 SCRA 277 (2003).‖ x Heirs of Pedro Escanlar v. xVda. Republic v. Non-Payment of Price Sale being consensual. . Price Must Be Real (Art. the agreement cannot also be taken as a consideration and sale is void. The Intestate Estate of Marcelo M. Florex. the doctrine applies only where the nullity arises from the illegality of the consideration or 26 the purpose of the contract. where the price is simulated. 1. Phil. Mapalo. √Bagnas v. the price stated is false. 368 SCRA 691 (2001). 28 Villaflor v. 367 SCRA 559 (2001). instead of ―any price‖ mandated in common law. 317 SCRA 696 (1999). which appears thereon as paid. failure of buyer to pay the price does not make the contract void for lack of consideration or simulation. Ong. 131 SCRA 361 (1984). (2) √Mate v. When Price ―Simulated‖ (1) √Mapalo v. √Ong v. but subject to reformation. versus: When two aged ladies. Badge That Price Is Simulated. Ong. 960 (1958). Santiago. 67 Phil.
. xBalatbat v. Court of Appeals. xTorres v.. 921 (1920). there is only a relative simulation of the contract which remains valid and enforceable. de Catindig. Villalba.. 290 SCRA 463 (1998). v. 545 SCRA 174 (2008). Heirs of Rufina Morales. 385 SCRA 244 (2002). 1458 and 1468) Price must be ―valuable consideration‖ as mandated by Civil Law. Province of Cebu v. Bancom Finance Corp. √Republic v. (3) Effects When Price Simulated – The principle of in pari delicto nonoritur action. Cruz v.
Manalo. Court of Appeals. x Doles v. Inc. 55 O. and even if it is contained in one or more instruments. √Navarra v. 5. mistake. 1 SCRA 1180 (1961). Manalo. 54 SCRA 13 (1973). Cucueco. Court of Appeals. Huang. v. there can be no binding contract of sale upon which an action for specific performance can prosper. 488 SCRA 156 (2006). Private Management Office. (Art. not even on fixing the price equal to the fair market value of the property. 1474) There can be no concept of “appropriation” when it comes to land? – Where a church organization has been allowed possession and introduce improvements on the land as part of its application to purchase with the NHA. unless fraud. Aenlle. Court of 33 Appeals. Planters Dev.
30 The deed of sale with assumption of mortgage is a registrable instrument and must be registered with the Register of Deeds in order to bind third parties. Jr. 344 SCRA 492 (2000). [?] xDBP v. 477 SCRA 173 (2005). Court of Appeals. then the price is not certain. b. v. Marnelego v. Price is ascertainable if the terms of the contract furnishes the courts a basis or measure for determining the amount agreed upon. Grace Baptist Church. Boston Bank of the Phil. 32 Velasco v. xVillanueva v. Bezore. 468 SCRA 597 (2005). unless the price is separately accepted by the other party.. He Must Pay Reasonable Price. Ramos. 492 SCRA 607 30 (2006). 1469) (iii) By reference to a definite day. Price Never Set By One or Both Parties (Arts. such as to invoices then in existence and clearly identified by the agreement x McCullough v. c. xArimas v.-9 Assumption of mortgage constituted on the property sold. without having to refer back to either or 31 both parties. Where there is no other basis for the payment of the subsequent amortizations in a Deed of Conditional Sale. Must Be Certain or Ascertainable at Perfection (Art.
3. Manner of Payment of Price ESSENTIAL A definite agreement on the manner of payment of price is an essential element in the formation of a binding and enforceable contract sale. the reasonable conclusion one can reach is that the subsequent payments shall be made in the same amount as the first payment. xMoreno. 1472) (iv) By reference to another thing certain. xNHA v. 285 (1904). Cruz v. Reynes. Consideration is generally agreed upon as whole even if it consists of several parts. and thereafter it refused the formal resolution of the NHA Board setting the price and insisted on paying the lower price allegedly given by the NHA Field Office.‖ then such ―acceptance‖ did not produce a binding and enforceable contract of sale. particular exchange or market (Art. v. The contract may be annulled for vitiated consent and not due to the inadequacy of price. without it the sale is void and an action 32 for specific performance must fail. 1182). 482 SCRA 108 (2006). Inadequacy of Price Does Not Affect Ordinary Sale (Arts. 436 SCRA 141 (2004). 267 SCRA 89 (1997). 1469) (ii) Set by the courts (Art. Angeles. Manila. 39 Phil. 33 Ereñeta v. Co v. Court of Appeals. 286 SCRA 76 (1998). 495 SCRA 490 (2006). Banco Filipino Savings and Mortgage Bank. Where the sale involves an asset under a privatization scheme which attaches a peculiar meaning or signification to the term ―indicative price‖ as merely constituting a ball park figure. PNB. and the contract of sale not perfected. 527 SCRA 562 (2007). BUT: If Buyer Appropriates the Object. Manila Metal Container Corp. 1355 and 1470) Mere inadequacy of the price does not affect the validity of the sale when both parties are in a position to form an independent judgment concerning the transaction. When the manner of payment of the price is discussed after ―acceptance. Rodriguez v. 31 Boston Bank of the Philippines v. How Price Determined to Be Ascertainable (i) Set by third person appointed at perfection (Art. 385 SCRA 244 (2002). Edrada v. Montecillo v.
.G. v. 336 SCRA 737 (2000). x Bautista v. 624 (1919). Arimas. 424 SCRA 147 (2004). CA. 51 SCRA 439 (1973). 511 SCRA 444 (2006). 507 SCRA 63 (2006). or known factors or stipulated formula (xMitsui v. 1469) a. 3 Phil. Fernando. Effects of Unascertainability: Sale is inefficacious. Sugar Producer's Corp. or undue influence indicative of a defect in consent is present.. 482 SCRA 108 (2006). San Miguel Properties Philippines v. 4. xNavarro v. 1473. Bank. otherwise there would be no price certain. Platinum Plans Phil. 480 SCRA 399 (2006). 8682.
Leon v. De Delfin v. xSeven Brothers Shipping Corp. Vasquez v. Where the offer is given with a stated time for its acceptance. xCometa v. Planters Dev. the latter is entitled return of price with simple interest. x Cu Bie v. √Manila Metal Container Corp. Court of Appeals. Republic v. Court of Appeals. NLRC. 15 SCRA 307 (1965). Lesion of more than 1/4 of value of thing makes sale rescissible unless approved by court (Art.G. CA. 1. 333 SCRA 643 (2000). for a fixed period and under specified conditions.. Simeon. Acabal. A negotiation is formally initiated by an offer. 454 34 SCRA 897 (2005). absent any prior agreement vesting the occupants the right of first priority to buy. 37 Navarra v.
V. in the event of a resale. POLICITACION STAGE (Art. Court of Appeals. 542 SCRA 397 (2008). At this stage.
BUT: By way of extraordinary circumstances perceived. v. Bank. 1386). Salvador. Macatangay. however. 499 SCRA 276 (2006). 302 38 SCRA 718 (1999). and is not duty bound to sell the same to the occupant thereof.. not to enter into the principal contract with any other person during the period designated. in which case the proper remedy is to redeem . taxes. b. and other expenses. 246 SCRA 33 (1995). √Carceller v. Dellota. 1479)
Policitation stage covers the doctrine of ―freedom of contract‖ which signifies or implies the right to choose with whom to contract. 527 SCRA 562 (2007). the offer may be withdrawn. and (ii) There is showing that. Court of Appeals. if the latter should decide to use the option. whether or not to enter into a principal contract. It is a separate agreement distinct from the contract of sale which the parties may enter into upon the consummation of the option. Jr. xVillegas v. Dorado Vda. x Acabal v. a. either negotiating party may stop the negotiation. 37 O. together with all sums paid out by him in improvements introduced on the property. Gross Inadequacy of Price May Avoid Judicial Sale: (i) Only when it is shocking to the conscience of man. To convert the offer into a contract. within that period. 1602). unequivocal. the power to decide. When judicial sale is voided without fault of purchaser. Lacson. x Gabelo v. it must be plain. 443 SCRA 231 (2004). 35 Court of Appeals. 36 Vda. does not give rise to any obligation or right.
. 161 SCRA 1 (1988). Gross inadequacy of price may raise the presumption of equitable mortgage (Art. must be certain. 244 SCRA 564 (1995). FORMATION OF CONTRACT OF SALE (Arts. and. Ayala Corp. to enter into such contract with the one to whom the option was granted. Court of Appeals. Tayag v. 1911. There is ―gross inadequacy in price‖ if a reasonable man will not agree to dispose of his property. de Gordon v. v. the offer is terminated at the expiration of that time. 1475-1488)
A. 511 37 SCRA 444 (2006). when in a judicial sale the right of redemption has been lost. Court of Appeals. 109 SCRA 388 (1981).10 Absent any evidence of the fair market value of a land as of the time of its sale. 426 SCRA 282 (2004). Marquez. 316 SCRA 386 (1999). which. xRaroque v. 485 SCRA 8 (2006). Tayengco v. Buot v. a better price can be obtained. where the inadequacy of the price is purely shocking to the conscience. the same will be se aside. 15 SCRA 306 (1965).
UNLESS: There is right of redemption. it cannot be concluded that the price at which it was sold was inadequate. the withdrawal is effective immediately after its manifestation.
Avila v. 439 SCRA 649 (2004). Abalos v. unconditional and without variance of any sort from the proposal. An unaccepted unilateral promise (offer to buy or to sell) prior to acceptance. Barabat. 36 SCRA 567 (1970). At any time prior to the perfection of the contract. 357 SCRA 846 (2001). Option Contract An option is a preparatory contract in which one party grants to the other. such that the mind revolts at it and such that a reasonable man would neither directly or indirectly be likely to consent to it.. the acceptance must be absolute and must not qualify the terms of the offer. Machuca. Court of Appeals. It binds the party who has given the option. 351 SCRA 294 (2001). 38 Laforteza v. xPascua v. PNB. A property owner is free to offer his property for sale to any interested person. c.
Polytechnic University v. 43 Limson v.. 982 (1918). Villegas v.. Court of Appeals.. v. it is not treated as a sale. and once proven. 336 SCRA 737 (2000) 42 Affirming Atkins. 481 (1947). BUT LATELY: xYao Ka Sin Trading v. the option is binding. Limson v.
39 Adelfa Properties. 239 SCRA 356 (1995). they are not subject to contractual enforcement. 41 De la Cavada v. There must be ―virtual‖ exercise of option with the option period. 44 264 SCRA 483 (1996). CA. b. 40 Court of Appeals. 6 SCRA 946 (1962). Inquing. Until accepted. Cojuangco. 240 SCRA 565 (1995). 336 SCRA 737 (2000). Cua. including the price. Court of 41 Appeals. Inv. Inc. 46 SCRA 654 (1972). . 368 SCRA 691 (2001). 357 SCRA 209 (2001). xGuzman. CA. Lucrative Realty and Dev. and xDiamante v. No Separate Consideration: Void as Option. 44 Rosencor Dev. 392 SCRA 679 (2002). 268 SCRA 727. Inc.11 An option imposes no binding obligation on the person holding the option aside from the consideration for the offer. v. 948 (1958). which must be enforced with ten (10) years as provided under Art. v. CA. √Equatorial Realty Dev. Inc. Court of Appeals. Court of Appeals . CA. San Miguel Properties Philippines. 206 SCRA 668 (1992). Sta.‖ xTayag v. c. 45 SCRA 368 (1972). Mayfair Theater. xMontinola v. Inc. v. Huang. xMontilla v. but do not rise to the level of contractual commitment since with the absence of agreement on price certain. 371 SCRA 295 (2001). that are yet to be firmed up. 367 SCRA 164 (2001). Conculada v. Bautista. 97 Phil. xSan Miguel Properties Philippines. v. Court of Appeals. Kilosbayan. Atlantic Gulf & Pacific Co. v. the ―offer‖ may be withdrawn anytime by communicating the withdrawal to the other party. 238 SCRA 602 (1994). 37 (1954). Lacson. √Villamor v. 246 SCRA 540 (1995). Court of Appeals. √Vasquez v. 426 SCRA 282 (2004). 2. . v. Proper exercise of an option gives rise to the reciprocal obligations of sale xHeirs of 43 Luis Bacus v. 209 SCRA 763 (1991). 302 SCRA 718 (1999). 102 Phil. In a right of first refusal. Kroll & Co. √Vazquez v. Valid as a Certain Offer √Sanchez v. Diaz. . 380 SCRA 245 (2002). Proper Exercise of Option Contract.. Lacson. IAC. Although no consideration is expressly mentioned in an option contract. 443 SCRA 231 (2004). CA. CA. Morato. CA. 199 SCRA 102 (1991). overturning Southwestern Sugar Molasses Co. v. 40 JMA House. An option attached to a lease when not exercised within the option period is extinguished and cannot be deemed to have been included in the implied renewal ( tacita reconduccion) of the lease. 302 SCRA 288 (1999). CA. 302 SCRA 288 (1999). 161 SCRA 855 (1988). 78 Phil.
. CA. it is presumed that it exists and may be proved.. 202 SCRA 607 (1991). CA. in order to be binding upon the promissor. Court of Appeals. √Paranaque Kings Enterprises. when breached by promissor allows enforcement by the promisee by way of rescission of the sale entered into with the third party. must be for a price certain and supported by a consideration separate from such price. Bernabe. v. 206 SCRA 52 (1992). Inc. Yñigo. Meaning of ―Separate Consideration‖ (Arts. 741 (1997). Inc. 500 SCRA 526 (2006). d. 354 SCRA 119 (2001). Right of First Refusal A right of first refusal cannot be the subject of specific performance. unlike in sale where it must be the price certain in money or its equivalent. a. The ―separate consideration‖ in an option may be anything of value. v. Bocaling & Co. 426 39 SCRA 282 (2004). 1479 and 1324) A unilateral promise to sell. Right of first refusal contained in a lease. Huang. Monica Industrial and Dev. xNatino v. √Tayag v. CA. such when the option is attached to a real estate mortgage xSoriano v. √Carceller v. cannot grant an option on the land. while the object might be made determinate. v. Corp. 1144. xSalame v. 96 Phil. the exercise of the right would be dependent not only on the grantor’s eventual intention to enter into a binding juridical relation with another but also on terms.. Inc. xDizon v. v. Tenants. 357 SCRA 209 (2001). 42 Rigos. pursuant to Arts. 499 SCRA 276 (2006). There Must Be Acceptance of Option Offer. xGuerrero v. not being the registered owners. 37 Phil. Corp. Inc. 197 SCRA 323 (1991). Inc. √Nietes v. but breach would allow a recovery of damages.. v. √Ang Yu Asuncion v. Riviera Filipina. 249 (1955). Court of Appeals. Corp. much less any ―exclusive right‖ to buy the property under the Latin saying ― nem dat quod non habet.. 1381(3) and 1385 of Civil Code. Jr. Bonnevie. xDizon v. Ayala Corp. Rights of first refusal only constitute ―innovative juridical relations‖.
Guiani. 507 SCRA 63 (2006).12 A right of first refusal clause simply means that should the lessor decide to sell the leased property during the term of the lease. An accepted bilateral promise to buy and sell is in a sense similar to. 1479): ―True Contract to Sell‖ Mutual promises to buy and sell a certain thing for a certain price gives each of the contracting parties a right to demand from the other the fulfillment of the obligation. From that moment. 462 SCRA 614 (2005).. 1475. 202 SCRA 607 (1991). 480 SCRA 399 (2006). Blas v. xBoston Bank of the Phil. otherwise. v. 65 SCRA 352 (1975). 1325 and 1326)
Sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. 45 √Riviera Filipina. xVillanueva v. such that each has the right to demand from the other the fulfillment of their respective undertakings. whereas in a bilateral promise to buy and sell gives the contracting parties rights in personam. 611 (1940). Inv. √Macion v. 439 SCRA 55 (2004). Fernando. Villegas v. the parties may reciprocally demand performance subject to the law governing the form of contracts. 1319. 49 Moreno. Bormaheco. and there is no violation of the right of the lessee. the same is too indefinite to be enforceable. Ah Sing. If sale subject to suspensive condition: No perfected sale of a lot where the award thereof was expressly made subject to approval by the higher authorities and there eventually was no acceptance manifested by the supposed awardee. Court of Appeals. Rodriguez. The cause of action under a mutual promise to buy and sell is 10 years. Coronel v.
Polytechnic University v. CA.
B. 507 SCRA 63 (2006). or future negotiations or consideration yet to be had between the parties. Jr. 225 47 SCRA 102 (1993). 482 SCRA 108 (2006). 477 SCRA 173 (2005). 281 SCRA 75 (1997). v. PNB. x Marnelego v. xMoreno. 511 SCRA 444 (2006). v. 49 (1905). Manalo. 50 Beaumont v. Franco. Zayco v. v. 460 SCRA 170 (2005). 670 (1916). 44 Phil. CA. Manuel v. Jr. its terms must be certain and explicit. xDBP v. and the series of negotiations that transpire between the lessor and the lessee on the basis of such preference is deemed a compliance of such clause even when no final purchase agreement is perfected between the parties.
. A right of first refusal in a lease in favor of the lessee cannot be availed of by the sublessee. Angeles-Hutalla. 368 SCRA 691 (2001). such sale should first be offered to the lessee. Private Management Office. CA. √Manila Metal Container 50 Corp. 326 (1923). xBorromeo v. But a contract of sale is consummated only upon delivery and payment. not vague or indefinite. 263 SCRA 15 (1996). Even in this case the certainty of the price must also exist. 5 Phil. 41 Phil. 69 Phil. Padua. xPeople's Homesite & Housing Corp. Placing the word ―Noted‖ and signing such note at the bottom of the written offer cannot be considered an acceptance that would give rise to a valid contract of sale. CA. 1475) A qualified acceptance or one that involves a new proposal constitutes a counter-offer and a rejection of the original offer. v. If a material element of a contemplated contract is left for future negotiations. Court of Appeals. El Banco Nacional Filipino v. Court of Appeals. xVillamor v. PNB. 67 Phil. as a perfected contract of sale because there is already a meeting of minds upon the 46 thing which is the object of the contract and upon the price. 5 Phil. Ong. 1 (1960). The acceptance must be identical in all respects with that of the offer so as to produce consent or meeting of minds. 4. Absolute Acceptance of a Certain Offer (Art. 739 (1939). Private Management Office. 109 Phil. The lessor was then at liberty to offer the sale to a third party who paid a higher price. 49 (1905). v. For a contract to be enforceable. When ―Deviation‖ Allowed: √Villonco v. its existence may only be inferred from the confluence of two acts of the parties: an offer certain as to the object of the contract and its consideration. 499 SCRA 276 (2006). 1. Villamor v. Mutual Promises to Buy and Sell (Art. Yu Jose. So long as there is any uncertainty or indefiniteness. 202 SCRA 607 (1991). Court of Appeals. Borromeo v. xTan Tiah v. 133 SCRA 777 (1984). 510 SCRA 275 (2006). 2. and an acceptance of the offer which is absolute in that it refers to the exact 49 object and consideration embodied in said offer. 48 Banco Filipino Savings and Mortgage Bank. Serra. PERFECTION STAGE (Arts. Cruz v. there is no contract at all. 48 Valdez v. but not exactly the same. 380 SCRA 245 (2002). CA. Franco. there is no valid and enforceable contract to sell. 439 SCRA 273 (2004). Ainza v. Mutual consent being a state of mind. Prieto. xSadhwani v.
v. 491 SCRA 581 (2006). 1406 and 1483)
1. Alfaro v. Lumbao. clear and convincing evidence is required. CA. 362 SCRA 29 (2001). 20 SCRA 186 (1967). Bravo-Guerrero v. Inc. 539 SCRA 401 (2007). A auction sale is perfected by the fall of the hammer or in other customary manner and it does not matter that another was allowed to match the bid of the highest bidder. Court of Appeals. 1403(2). v. require that the sale of real property must be in writing for it to be enforceable. Tambunting. 20. 1 Phil. v. Arciaga. the giving of earnest money cannot establish the existence of a perfected contract of sale. Husain. 449 SCRA 458 (2005). Earnest Money (Art. Vailoces. Article 1482 does not apply when earnest money given in a contract to sell xSerrano v. 519 SCRA 408 (2007). whether they knew of such conditions or not. xR. 1326) The terms and conditions provided by the owner of property to be sold at auction are binding upon all bidders. otherwise the document should be upheld. because it is not the function of the notary public to validate
51 Limjoco v. Rule 132 of the Rules of Court. (Art. De Mende. CA. 5. Inc. Sale by Auction (Arts. with no obligation to pay the balance. it need not be notarized for there is nothing in those provisions which require that it must be executed in a public document to be valid. then with the rescission it becomes incumbent upon seller to return the earnest money as legal consequence of mutual restitution. xTigno v. 55 Yason v. 511 SCRA 444 (2006). v. such partial failure would not render the sale void. Aquino. 1476. CA.
Articles 1357 and 1358. 519 SCRA 270 (2007). Corp. Absent proof of the concurrence of all the essential elements of a contract of sale. A Deed of Sale when acknowledged before a notary public. xEscueta v. CA. Loquellano Vda. 514 SCRA 228 (2007). 47 Phil. Union Bank v. 358 SCRA 38 (2001). Lim. xProvince of Cebu v. Bravo. v. 465 SCRA 244 (2005). 1357. 37 SCRA 663 (1971). Cucueco. Irureta Goyena v. 401 SCRA 54 (2003). sufficient. Heirs of Rufina Morales. x Pan Pacific Industrial Sales Co. Other Rulings on Deeds of Sale:
Seller may agree to a deed of absolute sale before full payment of the purchase price. 1482) Earnest money given by the buyer shall be considered as part of the price and as proof of the perfection of the contract. 444 SCRA 61 (2003). To overthrow that presumption. Ong.. Spouses Doromal. 336 SCRA 737 (2000). PNB v. 490 (1902). Caguiat. pursuant to Sec. That marital consent was executed prior to the Deed of Absolute Sale does not indicate that it is a phoney. in relation to Art. Heirs of Benedicto Pedrano. a. 554 SCRA 384 (2008). Court of Appeals. San Miguel Properties Philippines. Bormaheco.F. Pedrano v. said documents were merely converted into private documents. Navarro & Co. Santos v. Bravo. CA.. CA. Inc. Notarization of Deeds of Sale by one who was not a notary public does not affect the validity thereof. Sarmiento.. Huang. It constitutes an advance payment to be deducted from the total price. Sr. 517 SCRA 57 (2007). 482 SCRA 164 (2006).. but both its due execution and its authenticity must be proven. 361 SCRA 139 (2001). Court of Appeals. Tapuroc v. 262 SCRA 464 (1996). 55 465 SCRA 244 (2005). √Oesmer v. 54 xMartinez v. v. v. 336 SCRA 737 (2000). 66 SCRA 575 (1975). 482 SCRA 164 (2006). Inc. especially where by stipulation the buyer has the right to walk away from the transaction. Platinum Plans Phil. xGoldenrod. 4. xChua v.13 3. 53 F. enjoys the presumption of regularity and due execution. Inc. 51 √Manila Metal Container Corp. Villonco v. 546 SCRA 315 (2008). 772 (1925). Postal Savings Bank. 54 Heirs of Biona v. 488 SCRA 156 (2006). Paraiso Dev. v. although he will forfeit 52 the earnest money. Form Not Important for Validity of Sale Sale of land under private instrument is valid. Difference Between Earnest Money and Option Money. xGallar v. v. 299 SCRA 141 (1998). Sale Deemed Perfected Where Offer Was Made. xLeoquinco v. 1358. PNB . Pan Pacific Industrial Sales Co. Assuming that the buyers failed to pay the full price stated in the Deed of Sale. When there is no provision for forfeiture of earnest money in the event the sale fails to materialize. 65 SCRA 352 (1975). 1319)
C. Notarization of a deed of sale does not guarantee its validity nor is it conclusive of the true agreement of the parties thereto. 52 San Miguel Properties Philippines. 6. Olivares v. Inc.
. x Bravo-Guerrero v. 1403(2)(d). FORMAL REQUIREMENTS OF SALES (Arts. Inc. 512 SCRA 97 (2007). Huang. 512 SCRA 411 (2007). CA.
Cruz Trading Corp. Santos v. 62 xRosencor Development Corp. b. Heirs of Angel Teves. e. for the benefit of third parties. order slip. √Dalion v. Presupposes Valid Contract of Sale – ―The application of the Statute of Frauds presupposes the existence of a perfected contract. but must necessarily be evidenced by a written instrument. 347 SCRA 13 (2000). For Enforceability Between the Parties: STATUTE OF FRAUDS (Arts. Inc. 182 SCRA 872 (1990).. CA. √Fule v. They are written memorials of the details of the consummation of contracts. CA. Formal requirements are. 61 Shoemaker v. to be in writing. and difference in price and/or the terms thereof). 414 SCRA 190 (2003). Non-registration of a contract of sale does not affect its validity and binding effect as between the contracting parties themselves. 344 SCRA 284 (2000) Domingo v. Santos v. Concepcion. xSalonga 56 v. delivery charge invoice and the like. √Secuya v. 389 SCRA 316 (2002). x Lagon v. the purpose being to prevent fraud and perjury in the enforcement of obligations depending for their evidence on the unassisted memory of witnesses by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to be 61 charged. xFirme v. Corp. v. 59 Limketkai Sons Milling. Jr. 325 SCRA 504 (2000). Manalili. 24 (1939). Any substantial difference between the terms of the Contract to Sell and the concomitant Deed of Absolute Sale (such as difference in subject matter. 366 SCRA 395 (2001). 389 SCRA 316 (2002). v. Heirs of Jose P. duly subscribed by the party charged.
56 57 58
Nazareno v. the seller’s continued possession of the property makes dubious the contract of sale between them. it cannot be considered binding on third persons. xLumbres v. xAlcos v. Hooven Comalco Industries. Heirs of Angel Teves. 2. CA. 1403 and 1405) The term ―Statute of Frauds‖ is descriptive of the statutes which require certain classes of contracts. Vda. CA. there is no basis for the application of the Statute of 62 Frauds. 356 SCRA 263 (2001). 326 SCRA 244 60 (2000). Agasen v. and noncompliance therewith does not adversely affect the validity of the contract nor the contractual rights and obligations of the parties thereunder. therefore. 68 Phil. These documents are not mere scraps of paper bereft of probative value but vital pieces of evidence of commercial transactions. 470 SCRA 291 (2005). said business forms are commonly recognized in ordinary commercial transactions as valid between the parties and at the very least they serve as an acknowledgment that a business transaction has in fact transpired. Santos. for it is truism that the execution of the Deed of Absolute Sale effectively rendered the previous Contract to Sell ineffective and cancelled [through the process of novation]. La Tondeña. 343 SCRA 637 (2000). IAC.14 an instrument that was never intended by the parties to have any binding legal effect.. Buyer’s immediate taking of possession of subject property corroborates the truthfulness and authenticity of the deed of sale. such as agreements for the sale of real property.. 250 SCRA 523 (1995). which are issued by the seller in the ordinary course of the business are not always fully accomplished to contain all the necessary information describing in detail the whole business transaction—more often than not they are accomplished perfunctorily without proper regard to any legal repercussion for such neglect such that despite their being often incomplete. 354 SCRA 119 (2001).. Value of Business Forms to Prove Sale: Business forms. CA. WHEN FORM IMPORTANT IN SALE a. does not make the transaction between the seller and the buyer void. and registration of the instrument only adversely affects third parties. To Bind Third Parties Article 1358 which requires the embodiment of certain contracts in a public instrument is only for convenience.
b. v. CA. if it is not embodied in a public instrument and recorded in the Registry of Deeds. De Selma. While sale of land appearing in a private deed is binding between the parties. 349 SCRA 363 (2001). 57 xSantos v. 516 SCRA 575 (2007). Conversely. 60 Talusan v. v. 476 SCRA 679 (2005). 286 SCRA 698 58 59 (1998). 162 SCRA 823 (1988). Mariano.
. Inquing. Tayag. x Donato C. xUniversal Robina Sugar Milling Corp. Bukal Enterprises and Dev. (1) Coverage: (i) Sale of Real Property – A sale of realty cannot be proven by means of witnesses.. Inc. Talbrad. 367 SCRA 368 (2001). v. CA.g.‖ When the records show that there was no perfected contract of sale. Universal Robina Sugar Milling Corp. or by secondary evidence of the contents of such document.
Court of Appeals. but vital pieces of evidence of commercial transactions. (5) Rulings on Receipts and Other Documentary Evidence of Sale Since a contract of sale is perfected by mere consent. it was in breach of contract when it sold the car subsequently to another buyer. 1403(2)(e) of Civil Code presupposes the existence of a perfected. El Oro Engravers Corp. √Alfredo v. Briones. is not by any means a perfected contract of sale of real property. Torcuator v. 417 SCRA 277 (2003). de Jomoc v. (4) Waiver – (Art. 200 SCRA 74 (1991). Leonardo. 508 SCRA 62 (2006). 306 SCRA 408 (1999). Dacuycuy.
. with no intention to part with the title until the purchase price is paid. 29 Phil. Inc. 69 Lacanilao v. x Mactan Cebu International Airport Authority v. 462 SCRA 614 (2005). Court of Appeals. an agency to sell does not belong to any of the three categories of contracts covered by Arts. v. 1403. Autocorp Group. 250 SCRA 523 (1995). 250 SCRA 523 . Bernabe. such as the one involved in the instant case. The Statute of Frauds does not apply to contracts either partially or totally performed. 263 SCRA 736 (1996). Inc. 1405) √Ortega v. xXentrex Automotive. Heirs of Candido Rubi. Magdalena Estate. Espino. written memorials of the details of the consummation of contracts. √Limketkai Sons Milling. even when scattered into various correspondences which can 67 be brought together xCity of Cebu v. 22 SCRA 1000 (1968). 92 Phil. Court of Appeals. 110 (1952). Seaiol Petroleum Corp. The Intestate Estate of Marcelo M. CA. Court of Appeals. Inquing. 1405) Cross-examination on the contract is deemed a waiver of the 69 defense of the Statute. 65 Rosales v. For the memorandum to take the sale out of the coverage of the Statute of Frauds.0000 and pulls out a unit from the assembler for that purpose.. √Claudel v. 68 Vda.A. CA. 314 SCRA 36 (1999). Bernabe. (ii) Agency to Sell or to Buy – As contrasted from sale. Furthermore. 100 (1916). 104 SCRA 668 . does not take the case out of the Statute of Frauds. 459 SCRA 439 (2005). Borras. v. 252 SCRA 259 (1996). 34 Phil. but evidence of the receipt of the goods. Art. xCuyugan 65 v. 964 (1924). 354 SCRA 119 (2001). 103 Phil. CA. BUT SEE 255 SCRA 6). 262 SCRA 486 (1996). 291 SCRA 66 (1998).15 No other evidence can be received except the documentary evidence referred to. 66 Paredes v. 254 SCRA 170 (1996). CA. x Baretto v. (2) Memorandum (√Yuviengco v. 21 (1914). xTorcuator v. Corp. 199 SCRA 113 (1991). Ilayat. since the best evidence to prove payment is the official receipt. 250 SCRA 523 (1995).. v. 66 459 SCRA 439 (2005). a contract that violates the Statute of Frauds is ratified by the acceptance of benefits under the contract. De Rax v. 569 SCRA 387 (2008). CA. then when the dealer of motor vehicles accepts a deposit of P50. v. although the agreement for redemption or defeasance is proved by parol evidence. 1357 and 1358 and not one enumerated under the Statutes of Frauds in Art. Suba. Inc.
Alba Vda. 408 SCRA 664 (2003). (iii) Rights of First Refusal – A ―right of first refusal‖ is not covered by the statute of frauds. Delivery of the deed to buyer’s agent. Villalba. Sales invoices are not evidence of payment of the price. xRosencor Dev. Inc. v. Inc. when such was the parties’ intention. such as the acceptance of the purchase price and using the proceeds to pay outstanding loans. xLimketkai Sons Milling. 870 (1958). 67 Berg v. 46 Phil. Padua. In addition. the deed of sale is itself the note or memorandum evidencing the contract. 404 SCRA 68 145 (2003). First Philippine Int’l Bank v. Manila Railroad Co. it must contain ―all the essential terms of the contract‖ of sale. 8792) (3) Partial Execution (Art. v. CA. (v) Right to Repurchase – The deed of sale and the verbal agreement allowing the right of repurchase should be considered as an integral whole. 63 xGorospe v. Soliva v. 546 SCRA 42 (2008). albeit unwritten. EXCEPTION: Electronic Documents under the E-COMMERCE ACT (R. Ainza v. 64 Court of Appeals. De la Cena v. contract of sale. Court of Appeals. x Lim v. a right of first refusal. Santos.. (iv) Equitable Mortgage – Statute does not stand in the way of treating an absolute deed as a mortgage. A sales invoice is a commercial document-commercial documents or papers are those used by merchants or businessmen to promote or facilitate trade or credit transactions—they are not mere scraps of paper bereft of probative value. Limketkai Sons Milling. v.
430 SCRA 210 (2004). 1. 514 SCRA 228. CA. Court of Appeals. otherwise. xDizon v. 466 73 SCRA 438 (2005). Inc. 325 SCRA 385
(2000). 559 SCRA 197 (2008). the absence of receipts. xCity-Lite Realty Corp. Navarro & Co. 444 SCRA 61 (2003). Bukal Enterprises and Dev. 15851. CA. or any proof of consideration. CA. xR. xTigno v. Payongayong v. Sale of Large Cattle (Art. the sale shall be void. CA.. the written authority for their agent mandated under Article 1874 of the Civil Code is no longer required. consideration is. and when the primary motive is illegal. 74 Solidstate Multi-Products Corp. Firme v. v. 414 SCRA 190 (2003). 278 SCRA 98 (1997). with different
effects – the concept of a simulated sale is incompatible with inadequacy of price. Loyola v. Vailoces.. Corp. and it does not even affect the validity of a contract of sale. even when:
Agent is the son of the owner. it must be proven by clear. the contract is simulated and void. (b) false appearance must have been intended by mutual agreement. CA. 357 SCRA 209 (2001). as a rule. Sec. that did not amount to simulation. Authority Must Be in Writing (Art. CA.
2. When the parties to an alleged contract do not really intend to be bound by it. x Villaflor v. 72 Pineda v. For Validity: Sale of Realty Through Agent. and (c) purpose is to deceive third persons. v. But bare assertions that the signature appearing on the Deeds of Sale is not that of her husband is not enough to allege simulation. 1874) When sale of a piece of land or any interest therein is through an agent. xDelos Reyes v. Receipts proves payment which takes the sale out of the Statute of Frauds. The requisites are: (a) an outward declaration of will different from the will of the parties. 491 SCRA 581 (2006). 237 (2007). 559 SCRA 186 (2008). When Motive Nullifies the Sale
In sale. but not when there appears a legitimate lessor-lessee relationship between the vendee and the vendor. CA. 73 Rosario v. 146 SCRA 158 70 (1986). Code)
XD. xVillaflor v. since delivery of certificate of ownership and execution of deed of absolute sale were expressly stipulated as suspensive conditions. since forgery is not presumed. CA. Aquino. v. v. 529. the sale is void
Limson v. the authority of the latter shall be in writing. 376 SCRA 222 (2002). c. cannot be the basis of valid sale. CA. xOesmer v. In itself. absence of any attempt by the buyers to assert their 74 alleged rights over the subject property. 310 SCRA 464 (1999). When signature on a deed of sale is a forgery. 465 SCRA 244 (2005). 280 SCRA 297 (1997). CA. v. 361 SCRA 139 (2001). without any indication therein of the total purchase price of the land or of the monthly installments to be paid. Revised Adm. x Leabres v. √Toyota Shaw. Bravo. 396 71 SCRA 154 (2003). 313 SCRA 632 (1999) There is partial payment of the price received by the supposed agent. Although the agreement did not provide for the absolute transfer ownership of the land to buyer.
Characteristic of simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the parties’ juridical situation.F. Paraiso Dev. Ong. Ong. c. Court of Appeals. or that the parties have no intention to be bound by the contract.. xUnion Bank v. CA. positive and convincing evidence.
In the case of a corporate owner of realty.16 A receipt which is merely an acknowledgment of the sum received. 280 SCRA 297 (1997).
Simulation of contract and gross inadequacy of price are distinct legal concepts. Badges and Non-badges of Simulation:
Non-payment of the stipulated consideration. unless it signifies a defect in the consent or that the parties actually intended a donation or some other contract. Gross inadequacy of price by itself will not result in a void contract. Failure of alleged buyers to collect rentals from alleged seller. which gave rise to the corresponding obligation on part of buyer to pay the last installments. would not be conclusive of the inexistence of a sale since consideration is always presumed. Silverio. Corp. x Manila Banking Corp.
When the Contract to Sell was signed by the co-owners themselves as witnesses. 367 SCRA 559 (2001). Fidel v. different from the motive of parties. xBravo-Guerrero v. 244 SCRA 320 (1995). 326 SCRA 285 (2000). xSantiago v. such as when the sale was executed over a land to illegally frustrate a person's right to inheritance and to avoid payment of estate tax. Yu Bun Guan v. Catienza-Villaverde. CA.
526 SCRA 51 (2007).17 because illegal motive predetermined purpose of the contract. 269 SCRA 15 (1997). 560 SCRA 137 (2008). A tax declaration. 1582-1590)
A.. Daclag v. v. since the transaction is void ab initio for being in violation of the constitutional prohibition. Nemo dat quod non habet – No man can 76 give that which he does not have. The rescissory action to set aside contracts in fraud of creditors is accion pauliana. Remedies Allowed When Sale Simulated When a contract of sale is void. no valid title can pass in favor of the buyer. 406 SCRA 55 (2003). it must be shown that both contracting parties have acted maliciously so as to prejudice the creditors who were prevented from collecting their claims. Macahilig. 446 SCRA 54 (2004). 1166. x Olegario v. acting in good faith. 410 SCRA 97 (2003). CONSUMMATION (Arts. and the buyer can acquire no more than what the seller can transfer legally. 1537)
3. 560 SCRA 137 (2008). CA. When seller had no ownership over the subject matter at the time of delivery.
VI. the motives neither determine nor take the place of the consideration. 316 SCRA 650 (1999). essentially a subsidiary remedy accorded under Article 1383 which the party suffering damage can avail of only when he has no other legal means to obtain reparation for the same. 366 SCRA 324 (2001). CA. 371 SCRA 49 (2001)
. One can sell only what one owns or is authorized to sell. Where the parties to a contract of sale agreed to a consideration. 3. Deliver with Fruits and Accessories (Arts. otherwise valid. 466 SCRA 438 (2005). Tangalin v. 313 SCRA 632 (1999). 238 SCRA 75 96 (1994). 81 (1999). Daclag v. Inc. Court of Appeals. Fil-Estate Golf and Dev. xHeirs of Ignacia Aguilar-Reyes v. Preserve Subject Matter (Art. since the relationship between parties in any
contract even if subsequently voided must always be characterized and punctuated by good faith and fair dealing. no valid title over the subject matter can be conveyed to the buyer even with delivery. Catito. 4. Ong. 314 SCRA 69. CA. but the amount reflected in the final Deed of Sale was lower. 1163) 2. xUnion Bank v. 1164. Navarro. the contract of sale remains valid and enforceable upon the terms of the real consideration.
Then restoration of what has been given is in order. has no standing to seek legal remedies to either recover the property or the purchase price paid. is not considered conclusive evidence of ownership —it is merely an indicium of a claim of ownership. Silverio. CA. xTsai v. Nemo potest nisi quod de jure potest – No man can do anything except what he can do lawfully . 1493-1506) AND PERFORMANCE OF CONTRACT (Arts. Lim. CA. by itelf. Effect When Sale Declared Void:
The action for the declaration of the contract’s nullity is imprescriptible—an action for reconveyance of property on a void contract of sale does not prescribe. Legal Premises for Doctrines on Tradition When the sale is void or fictitious. xHeirs of Spouses Balite v. v.. xDBP v. xTraders Royal Bank v. In such action. xFrenzel v.
Alien who purchases land in the name of his Filipina lover. 1495. CA. Although illegal. Likewise. undertaken in fraud of creditors. Mijares. the remedy of accion pauliana is available when the subject matter is a conveyance. xManila Banking Corp. OBLIGATIONS OF SELLER
1. Rescission if generally unavailing should a third person. Nevertheless when at the time of delivery there is no proof that the seller had ownership and as in fact the tax declaration to the subject property was in the name of
Uy v. is in lawful possession of the property since he is protect by law against a suit for rescission by the registration of the transfer to him in the registry. 1477)
a. DELIVER THE SUBJECT MATTER (Art. 491 SCRA 581 (2006). 1536-1544. xDe los Reyes v. their motivation being to pay lower taxes on the transaction. the right to set up its nullity or non-existence is available to third persons whose interests are directly affected thereby. Macahilig. Possessor is entitled to keep the fruits during the period for which the buyer held the property in good faith.
There is nothing in Article 1498 that provides that execution of a deed of sale is a conclusive presumption of delivery of possession. 519 SCRA 79 (2007) 80 Equatorial Realty Dev. 1498-1499. √Dy. and the assumption of the same by the vendee. Inc. Failure of the buyer to make good the price does not. CA. most important of which being conveyance of ownership. 79 Jr.‖ xEquatorial Realty Dev. 1498 can still be effected through the execution of the deed of conveyance. v. when sellers themselves introduced the tenant to the buyer as the new owners of the land. x Heirs of
Kuenzle & Streiff v. tradition produces its natural effects in law. 496 SCRA 273 (2006). 1497) It is not necessary that seller himself delivers title to the buyer because the thing sold is understood as delivered when it is placed in control and possession of buyer. Mayfair Theater. d. Where it is stipulated that deliveries must be made to the buyer or his duly authorized representative named in the contracts. presumptive delivery can be negated by the failure of the vendee to take actual possession of the land or the continued 80 enjoyment of possession by the vendor. 23 SCRA 1217 (1968). Perez & Co. 26 (1909). Since delivery of subject matter of sale is an obligation on the part of the seller. 370 SCRA 56 (2001). Caoibes-Pantoja. International Corporate Bank. then there was no transfer of ownership by delivery. Notwithstanding the presence of illegal occupants on the subject property. Suburban Dev. Borras.18 another person. without prejudice to right of the seller to claim payment of the price. Constructive Delivery: EXECUTION OF A PUBLIC INSTRUMENT (Art. Under Art. but title passes by the delivery of the goods. And there is said to be delivery if and when the thing sold ―is placed in the control and possession of the vendee. Execution by supposed buyers of a chattel mortgage over subject vehicle in favor of the financing company does not mean that ownership had been transferred to them.
. Marcella. 1191. 12 SCRA 276 (1964). xAlfredo v. Ocampo v. 370 SCRA 56 (2001). v. 63 78 SCRA 397 (1975). Pan Oriental 77 Shipping Co. 198 SCRA 826).. for delivery must be on the part of the seller. Severina San Miguel v. is made through a public instrument. Whether Actual or Constructive: It may be stipulated that ownership in the thing shall not pass to buyer until he has fully paid price (Art. since ownership and possession are two entirely different legal concepts. Thus. General Doctrines on Tradition. Inc. 401 SCRA 217 (2003). 349 SCRA 363 (2001). 13 Phil. the acceptance thereof by the buyer is not a condition for the completeness of delivery. x La Fuerza v. 233 SCRA 551 (1994). 79 Tating v. there was delivery that transferred title to the buyer. √Santos v. Ten Forty Realty and Dev. v. v. Inc. Non nudis pactis sed traditione dominia rerum transferantur .. xBalatbat v. CA. Court of Appeals... Mayfair Theater. 410 SCRA 484 (2003). 364 SCRA 523 (2001). In the absence of such stipulation to the contrary. Delivery contemplates ―the absolute giving up of the control and custody of the property on the part of the vendor. Physical Delivery (Art... Watson & Co. xEngreso v. 37 Phil.. Copuyoc v. Int'l Banking Corp. 364 SCRA 385 (2001). In the absence of an express stipulation to the contrary. its execution is equivalent to the delivery of the property.. CA. v. 631 (1918). payment of purchase price of the goods is not a condition precedent to the transfer of title to the buyer. v. Corp. 366 SCRA 395 (2001). 261 SCRA 128 (1996). and that prior physical delivery or possession is not legally required. De Solas. x Sabio v. the mere execution of the deed of conveyance in a public instrument is equivalent to the delivery of the property. Auditor General. 504 SCRA 176 (2006). xUnion Motor Corp. De La Cruz. in law. Corp. 1478). Cruz. xLagon v. Ocejo. b. 404 SCRA 145 (2003). Hooven Comalco Industries. 1513-1514. transfer of ownership by symbolic delivery under Art. v. Court of Appeals. xFroilan v. CA. Jr. c. Inc. and from that time on the buyer acted as landlord thereof. (i) As to Movables (Arts. Caoibes. cause the ownership to revest to the seller unless the bilateral contract of sale is first rescinded or resolved pursuant to Art. the seller is under obligation to deliver in accordance with such instructions. 1498. x Phil. Inc. 361 SCRA 506 (2001). v. 1498) Where deed of sale or any agreement analogous to a deed of sale. Santos.
87 Phil. 1521). Phil. 193 SCRA 694 (1991). In case of immovables. 1498) Issuance of an acknowledgment receipt of partial payment. IAC. (1) Registration of Title is Separate Mode from Execution of Public Instrument – The recording of the sale with the proper Registry of Deeds and the transfer of the certificate of title in the name of the buyer are necessary only to bind third parties to the transfer of ownership. 1498 and 1501). √Pasagui v. They buyer can retain the amount for the capital gains tax and pay it upon authority of the seller. (2) signed deed of absolute sale. (ii) As to Immovables (Art. not in the concept of lessees anymore but as owners now through symbolic delivery known as traditio brevi manu. 252 (1954). xHeirs of Pedro Escanlar v. Auditor. 281 SCRA 176 (1997).19 Neither issuance of an invoice. EXCEPT: When buyer assumes the risks of ownership and possession. Court of Appeals . Provided That: (a) The thing sold is subject to the control of the seller √Addison v. Execution of Deed of Conditional Sale with provision that final deed of sale to be executed upon full payment does not transfer ownership of the subject matter. 168 SCRA 22 (1988). Court of Appeals. 63 SCRA 397 (1975). xManuel R. BUT SEE: Under Art. NLRC. 1478 and 1503) 5. v. Rosete. v. v. Abuan v. the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract. Florendo v. Court of Appeals. CA. Inc. 20 Phil. 149 SCRA 31 (1987). Santos v. 38 Phil. Traditio Brevi Manu – Prior to the sale. nor of the registration certificate of vehicle xUnion Motor 82 Corp. 1588) b. when it is not a public instrument does not convey title.. 40 Phil. 401 SCRA 54 (2003). 1478. 1495. Dulay Enterprises. if from the deed the contrary does not appear or cannot clearly be inferred 83 xMunicipality of Victorias v. 401 SCRA 54 (2003). when sale is made through a public instrument. Quimson v. 404 (1918). Ramos. As between the seller and the buyer. xFortune Tobacco Corp. v. 366 SCRA 395 (2001). which is not a document of title xP. 221 SCRA 19 (1993). Santos. would constitute constructive delivery. (iii) As to Incorporeal Property (Arts. petitioners were in possession of the subject property as lessees. Inc. and that prior physical delivery or possession is not legally required since execution of the deed is deemed equivalent to delivery. 225 SCRA 678 (1993). CA. Court of Appeals . or the seller can pay the tax. Teves. 14 SCRA 759 (1965). (2) Customary Steps in Selling Immovables – ―Customarily. in the absence of a contrary agreement. 1500) – A provision in the deed of sale granting to seller a right to lease the subject matter of the sale is valid: the possession is deemed to be constituted in the vendee by virtue of this mode of tradition.‖ √Chua v. (3) tax declaration. CA. Transfer Ownership to Vendee Upon Delivery (Arts.‖ xAmigo v. 81 CA. When Buyer Refuses to Accept (Art.
Norkis Distributors v. v. In Case of Express or Implied Reservation (Arts.
82 83 81
. CA. seller is obliged to transfer title over the property and deliver the same to the vendee. 68 SCRA 18 (1975). Felix. Cerna Corp. Sanchez v. √Vive Eagle Land. Time and Place of Delivery (Art. Villablanca.T. 361 SCRA 506 (2001). and 1496) a. Foz. √Chua v. 159 (1950). and (b) Such control should remain within a reasonable period after the execution of the instrument √Danguilan v. 614 (1919). Garcia. Taking-Out Insurance Coverage (Art. Corp. the transfer of ownership takes effect upon the execution of a public instrument conveying the real estate. 449 SCRA 99 (2005). 96 Phil. 4. v. 1523) 6. 274 SCRA 597 (1997). e. Upon sale to them of the rights. Court of Appeals. √Power Commercial and Industrial Corp. 388 (1911). CA. the submission by an individual seller to the buyer of the following papers would complete a sale of real estate: (1) owner’s duplicate copy of the Torrens title. v. Constitutum Possessorium (Art. 200 SCRA 766 (1991). and (4) latest realty tax receipt. interests and participation as to the ½ portion pro indiviso. v. depending on the agreement of the parties. 444 SCRA 445 (2004). Suburban Dev. f. they remained in possession. 1477. xSan Lorenzo Dev.
since the prestation to effect a meeting of the minds to give rise to a valid contract is incumbent on the buyer. but also the freight and insurance expenses. they signify that the price fixed covers not only the costs of the goods. otherwise.20 7. Court of Appeals. this is taken to indicate that the delivery is to be made at the port of destination. Court of Appeals. Yangco. 1502 of Civil Code governing such sales cannot be invoked by either party to the contract. the provisions of Art. so that all that is required of seller was to deliver in good faith to his buyer all of those found in the mass. Singzon. Pacific Coast‖ (destination). 2 SCRA 831 (1961). the capital gains tax remains a liability of the seller since it is a tax on the seller’s gain from the sale of the real estate. SPECIAL RULES ON COMPLETENESS OF DELIVERY
1. 332 SCRA 139 (2000).B.. v. that the seller shall bear all expenses until the goods are delivered according as to whether the goods are to be delivere d ―F. NACOCO. and. xVallarta v. The transfer of ownership takes effect upon the signing and notari zation of the deed of absolute sale..‖ xGaite v. A judgment on a contract of sale that decrees seller’s obligations to execute and deliver the deed of absolute sale and the certificate of title. Trial or Satisfaction (Art. ―the vendor is to pay not only the cost of the goods. 1481)
.. HLRB. 29 April 1955. Court of Appeals. Fonacier. xA. 1480) When the contract does not provide for the measuring or weighing of a sold specific mass. In Case of Movables (Art. 444 SCRA 445 (2004). the delivery of the object does not transfer ownership to the buyer since the delivery was not for purposes of transferring ownership. v. Inc.I. Soriano Y Cia. ―F. insurance. 337 (1956).B. Collector. does not necessarily include within its terms the obligation to pay for the expenses in notarizing a deed of sale and in obtaining new certificate of title. Expenses of Execution and Registration (Art. LPJ Enterprises. xEquitable Realty Development Inc. xVallarta v. 1523) (i) FAS Sales – ―The seller pays all charges and is subject to risk until the goods are placed alongside the vessel‖. a.O.‖ i. Inc.. 1521). v. Buyer has more interest in having the capital gains tax paid immediately since this is a pre-requisite to the issuance of a new Torrens title in his name. Mayfair Theater. and the price agreed upon was not based on such measurement. Unless otherwise stipulated: (a) under Art. 38 Phil. Nevertheless. Court of Appeals. 150 SCRA 336 (1987). Inc. the mass. 1487 the expenses for the registration of the sale should be shouldered by the vendor x Vive Eagle Land. v. In such case. (iii) CIF Sales √General Foods v. Payment of the capital gains tax. 606 (1918).‖ there must be a clear agreement to either of such effect. Sale on Approval. v.F. 1502) In a ―sale or return. Sale by Description and/or Sample (Art. 150 SCRA 336 (1987). Yangco.e. ―C.O. then ―[t]he subject matter of the sale is. b. 606 (1918). √Behn Meyer & Co. Supreme Court Advance Decisions. v. and freight. 505 (1955). as far as the government is concerned. ―sale on trial‖ or ―sale on satisfaction‖). In a ―sale on approval‖ (also called ―sale on acceptance.‖ at the point of shipment or at the point of destination determines the time when property passes. 217 SCRA 322 (1993). tradition as a mode of acquiring ownership must be in consequence of a contract. Rules on Delivery to Carrier (Art. 1522 and 1537.‖ found in British contracts stand for costs.i.f. and not the actual number of units or tons contained therein. xIndustrial Textile Manufacturing Co. and of Putting Goods in Deliverable Estate (Art. c.‖ √Pacific Vegetable Oil Corp. 401 SCRA 54 (2003). and the subsequent return of the goods reverts ownership back to the seller. 602. 602. 97 Phil. therefore. and (b) duty to withhold taxes due on the sale is imposed on seller.‖ stand for the words ―Free on Board. is not a pre-requisite to the transfer of ownership to the buyer.
B. 38 Phil. a determinate object.‖ xChua v. v. as it was judicially interpreted. xJose Clavano.‖ the ownership passes to the buyer on delivery pursuant to a perfected contract of sale. notwithstanding that the quantity delivered is less than the amount estimated in the contract. Under an arrangement ―c. but the expense of freight and insurance to be paid by the seller. 378 SCRA 172 (2002). For a sale to be a ―sale or return‖ or a ―sale on approval. v. 100 Phil. 1487). √Behn Meyer & Co. however. (ii) FOB Sales – In mercantile contracts of American origin. Inc.
DOUBLE SALES (Arts. when the land delivered to the buyer is exactly as that described in the deed and covered within the boundaries designated. 56 Phil. 249 SCRA 323 (1995).
C. Court of 85 Appeals. the vendee may oblige the vendor to deliver all that is stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not possible. buyer will not be released from his obligation to accept and pay for the goods by deviations on the part of the seller from the exact terms of the contract. x Mendoza v. 1481 and 1584) Except when carrier delivers COD. 1544 do not overcome the rules provided under the Property Registration Decree (P. the difference in actual area (34 versus 10 hectares) will not authorize the buyer to rescind the contract because the seller has complied with delivering the subject matter agreed upon. xGarcia v. who has been occupying the land for two years as lessee. Hernandez. and 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 correspondent with the sample. xTeran v. the buyer cannot refuse to pay the balance of the purchase price and the cost of installation if it proves that the machine cannot be used satisfactorily for the purposes for which he bought it when such purpose was not made known to the seller. Where Sold for a Lump Sum [―A cuerpo cierto or por precio alzado”] (Art. 441 SCRA 172 (004) Even in sales by description and/or sample. Court of Appeals. In a lump sum sale. (b) Invoking the rules on double sales and ―priority in time‖ under Art. v. Mariano Velasco & Co. Buyer's Right to Inspect Before Acceptance (Arts. 84 √Rudolf Lietz. Court of Appeals. which is not present and there is no opportunity to inspect or examine the same. Ermita Market & Cold Stores. In the case at bar an area of ―644 square meters more‖ is not reasonable excess or deficiency. In Case of Immovables a. 18 SCRA 973 (1966). xPacific Commercial Co. 1544 and 1165)
1. Gay. v. xLiao v. to be deemed included in the deed of sale.D. the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries.
. EXCEPT: A buyer of land. 478 SCRA 451 (2005). Arbasa. If the vendor delivers less than the area agreed upon. if buyer had acquiesced to such deviations after due notice thereof. Salinas v. 1544 would be misplaced by a first buyer who bought the land not within the Torrens system but under
Goyena v. When the machine delivered is in accordance with the description stated in the sales contract. actually is deemed to take risk on the actual size of the property bought at lump sum. Balantakbo v. d. Inc. the buyer who claims under a title that was first issued shall be preferred. Velasco. 478 SCRA 451 (2005). 47 Phil.21 There is a sale by sample when a small quantity is exhibited by the seller as a fair specimen of the bulk. 72 Phil. 566 SCRA 18 (2008). EXCEPTION TO EXCEPTION: When buyer. such as: (a) When two different titles are issued over the same registered land. 617 (1932). Esguerra v. the statement of the area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. this is the rule when evidence shows that the parties never gave importance to the area of the land in fixing the price (97 versus 60 hectares). Jalandoni.√Rudolf Lietz. 518 SCRA 186 (2007). xRoble v. 599 (1928). Where Sold Per Unit or Number (Arts. 490 (1902). Trinidad. Faustino. 52 Phil. the vendee has the option to accept only the amount agreed upon or to accept the whole area. Court of Appeals. provided he pays for the additional area at the contract rate. 45 Phil 296 (1923). 248 (1941).. Villanueva. 323 SCRA 430 (2000). when sold in gross or with the description ―more or less‖ or similar words in designating quantity covers only a reasonable excess of deficiency. 115 (1924). Priority of Torrens System of Registration – The rules on double sales under Art. David. If the vendor delivers more than the area stated in the contract. 362 SCRA 69 (2001). 1542) In a contract of sale of land in a mass. 2. 56 Phil. Inc. 1459). 1 Phil. Tambunting.. Asiain v. x Azarraga v. b. xEngel v. v. 677 (1932). 1539 and 1540) In a unit price sale. Santa Ana v.
portior jure (first in time. are lacking in a contract to sell for neither a transfer of ownership nor a sales transaction has been consummated. √San Lorenzo Dev. exception being: (a) when the second buyer. Tibe. xDischoso v. as against the second buyer who bought the same property when it was already registered under the Torrens system. xOng v. 88 Fudot v. 88 Espiritu v.
√Naawan Community Rural Bank. Unless. 3344. 158 SCRA 138 (1988). Exact Same Subject Matter Article 1544 applies where the same thing is sold to different buyers by the same seller. Court of 89 Appeals. when the second buyer. CA. M AIN RULE: PRIOR TEMPORE. Inc. because:
of the ―well-known rule in this jurisdiction that persons dealing with registered land have the legal right to rely on the fact of the Torrens Certificate of Title and to dispense with the need to inquire further.22 Act No. b. 432 SCRA 544 (2005).. Court of Appeals. 236 (1921). namely that there must be a valid sales transactions. In spite of the three levels of tests provided under Art. Court of Appeals.‖ xCoronel v. or Where one of the contract is a contract to sell. v. 485 SCRA 464 (2006). 300 SCRA 722 (1998). Parungao. 89 Torrecampo v. and (b) should there be no inscription by either of the two buyers. 517 SCRA 84 (2007). 503 SCRA 66 (2006). The provision on double sale presumes title or ownership to pass to first buyer. the governing principle of Art. and buyers must be at odds over the rightful ownership of the subject matter who must have bought from the very same seller. Tests Applicable under Article 1544:
Caveat emptor requires the buyer to be aware of the supposed title of the seller and he who buys without checking the seller's title takes all the risks and losses consequent to such failure. 69 SCRA 99 (1976). 535 SCRA 123 (2007). 280 SCRA 536 (1997).‖ and
the Torrens system rule that formal registration proceedings undertaken on the property
and the subsequent issuance of a title over the land had under the Torrens system had the legal effect of cleansing title on the property of all liens and claims which were not annotated therein.
. The rules on double sales under Art. while the other sale over the same property is void. √Cheng v. 2. BUT SEE: √Naval v. 263 SCRA 15 (1996). mainly the governing principle of primus tempore.. because of the circumstances that must concur in order for the provisions to Art. stronger in right). Tanglao v. Roxas. 9 SCRA 761 (1963). Genato. 5 SCRA 781 (1962). Valerio. 103 SCRA 7 (1981). Exact Same Seller for Both Sales
Reiterated in Abrigo v. title or ownership will not transfer to him to the prejudice of the first buyer. 3. Inc. registers the sale ahead of the first buyer. There Must Be Two Different Valid Sales: Article 1544 do not apply where: There is only one valid sale. acquires possession of the property ahead of the first buyer. Alindogan. 533 SCRA 350 (2007). 42 Phil. Oalsiman. PRIOR JURE. √Adalin v. Corp. Delfin v. CA. the second buyer satisfies these requirements.. the Court seems to recognize only registration in good faith by the second buyer and does not characterize the meaning of the last two test of possession and oldest title. √Carbonell v. and such contract is binding only upon the fulfillment or non-fulfillment of an event. Salvador. in good faith. 483 SCRA 102 (2006). 449 SCRA 99 (2005). Ver Reyes v. 564 SCRA 456 (2008). Sr. 1544 on double sales to apply. v. Cattleya Land. Requisites for Double Sale: a. Kalaw. 502 SCRA 24 (2006). (1) Doctrine on Conditional Sales/Contracts to Sell and Adverse Claims: √Mendoza v. 1544 should apply. a. Jr. except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry. Valdez. Laureta. xCaram. Sr. CA. 395 SCRA 43 (2003). Court of Appeals. in good faith. and therefore does not apply where there was a sale to one party of the land itself while the other contract was a mere promise to sell the land or at most an actual assignment of the rights to repurchase the same land. 1544. v.. c. De Vera. Remalante v. Nevertheless. √Carillo v. 1544 are not applicable to contract to sell.
This is the priced exacted by Article 1544 for the second buyer being able to displace the first buyer. since such knowledge taints his prior registration with bad faith. Vda. 485 SCRA 464 (2006). Declaration of purchase for taxation purposes does not comply with the required registration. annotation. 216 SCRA 423 (1992). 94 Cruz v. xBayoca v. Bucad v. 467 SCRA 341. 5568. Court of Appeals. Gatmaitan v. 472 SCRA 241 (2005). 69 SCRA 99 (1976). to register first her purchase as against the second buyer. Bernardez v.G. xMartinez v. and even marginal notes. PHILIPPINE LAW ON SALES 100 (1995). citing VILLANUEVA. 488 SCRA 148 (2006). Salera v. Inc. Gallardo. But in converso. No. 516 SCRA 575 (2007). 340 SCRA 154 (2000). open and notorious possession of a disputed property at the time of registration. Olasiman. Cattleya Land. 3. Court of Appeals. 472 SCRA 241 (2005). 535 SCRA 123 (2007). 530 SCRA 90 432. knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the second sale. Registration in Good Faith as First Priority a. Bautista v. Jr. Fudot v. De la Cena v. Sigaya v.‖ xUraca v. without knowledge of any defect in the 93 title of the property sold. In a situation where a party has actual knowledge of the claimant’s actual.23 Article 1544 applies where the same thing is sold to different vendees by the same vendor. de Alcantara v. And even if the sale was made by the same person. Such knowledge of the first buyer does not bar her from availing of her rights under the law.. Esponilla. 533 SCRA 350 (2007). 448 SCRA 347 (2005). Briones. Inc. Court of Appeals. CA.or even to the same buyer but by different sellers. It cannot be invoked where the two different contracts of sale are made by two different persons. 129 SCRA 656 (1984). CA. √Consolidated Rural Bank 91 (Cagayan Valley). xCheng v. 399 SCRA 573 (2003)..‖ xAmodia Vda. 508 SCRA 62 (2006). Tanglao v. Berico v. xOcceña v.. Lim.. Nogales.
91 92 90
. 512 SCRA 411 (2007). among them. 322 SCRA 294 (2000). CA. Parungao. Mayuga. that is. v. Parungao. Registration Must Always Be in Good Faith – In cases of double sales of immovables. 358 SCRA 38 (2001). Registration of the Extra-judicial Partition which merely mentions the sale is not the registration covered under Art. 200 SCRA 37 (1991). but whether or not said second buyer registers such second sale in good faith. he must show that he acted in good faith throughout (i. 300 SCRA 92 722 (1998). Gallardo v. including both registration in its ordinary and strict sense. the second purchaser cannot acquire any right. CA. Knowledge of First Buyer of the Second Sale Does Not Amount to Registration in Favor of the Second Buyer Knowledge gained by the first buyer of the second sale cannot defeat the first buyer's rights except where the second buyer registers in good faith the second sale ahead of the first. 438 (2007). and the fact alone does not even itself constitute evidence of ownership. √Carbonnel v. 533 SCRA 451 (2007). CA. that before the second buyer can obtain priority over the first. Registration means any entry made in the books of the registry. 357 (2005). by delivery of possession. 46 O. It does not apply where the same thing is sold to different vendees by different vendors. 200 SCRA 74 (1991). Court of Appeals. CA. Ulep v. CA. 11 p. ―There can be no constructive notice to the second buyer through registration under Act 3344 if the property is registered under the Torrens system. Court of Appeals. Cabana. 225 SCRA 469 (1993). Court of Appeals. Genato. c. Rodaje. de Jomoc v. Escueta v. Tablada. 534 SCRA 62. Gabriel v. 1544 and cannot prevail over the registration of the pacto de retro sale. the actual notice
Ong v. Lumbres v. if the second sale was made when such person was no longer the owner of the property. xVda. 252 SCRA 457 (1996). 535 SCRA 123 (2007). Meaning of ―Registration‖ The annotation of adverse claim can qualify as the registration mandated under the rules on double sale. Mabanta. b. 431 SCRA 116 (2004). and cancellation. in ignorance of the first sale and of the first buyer's right) –from the time of acquisition until the title is transferred to him by registration or failing registration. CA. this is so because the defense of indefeasibility of a Torrens title does not extend to a transferee who takes the certificate of title in bad faith. 278 SCRA 94 702 (1997). one of them not being the owner of the property sold. what finds relevance and materiality is not whether or not the second buyer was a buyer in good faith or that he was first to register. CA. For Article 1544 to apply. Tanglao v. Rivera. Ulep v. 322 SCRA 294 (2000). 82 (2007). it is necessary that the conveyance must have been made by a party who has an existing right in the thing and the power to dispose of it. De Melencion v. 93 Blanco v.e. Bautista v. because it had been acquired by the first purchaser in full dominion. It is the entry made in the registry which records solemnly and permanently the right of ownership and other real rights.
√Consolidated Rural Bank (Cagayan Valley). v. Court of Appeals. 382 SCRA 130 (2002). that everyone is presumed to have acted in good faith. 448 SCRA 347 (2005). v. 4. CA. Instances When No Good Faith: (1) Being In Business on Realty – A mortgagee who eventually ended buying the property at the public auction. Rosete. BUT SEE: It is anxiomatic that good faith is always presumed in the absence of any direct evidence of bad faith. √San Lorenzo Dev. 410 SCRA 96 484 (2003). 421 SCRA 310 (2004). including real estate loans. 323 SCRA 430 (2000). 40 Phil. Corp. Raymundo v. 261 SCRA 128 (1996). 526 SCRA 514 (2007). 213 SCRA 536 (1992). or before he has notice of the claim or interest of some other person in the property. cannot claim to be a buyer in good faith when his business in the constructing and selling townhouses and extending credit to the public. 389 SCRA 316 (2002). for he is charged with greater diligence that ordinary buyers or encumbrances for value. Navera v. v. Mathay v. Exchavez. 159 (1950). the point in time to be considered is the moment when the parties actually entered into the contract of sale. CA. (b) possessors in good faith are those who are not aware of any flaw in their title or mode of acquisition. CA. to ascertain whether the property being offered as security for the debt has already
95 Liao v. 614 (1919). No. 485 SCRA 346 (2006).
. Tanglao v. Tanongon v. Must Have Paid Price in Full – A purchaser is good faith is one who buys property of another. Court of Appeals. CA. Registration in Good Faith Always Pre-empts Possession in Good Faith – Between two purchasers. mere registration is not enough to acquire a new title. they merely confirm or record title already existing and vested. Clearly. In the absence of inscription under double sales. 535 SCRA 123 (2007). CA. CA. Dauz v. Diaz-Duarte v. the law gives preferential right to the buyer who in good faith is first in possession. Samson. 252 SCRA 80 (1996). the buyer cannot feign good faith. 526 SCRA 514 (2007). Aguirre v. Quimson v. 97 Parungao. CA. v. Burden of Proof – The burden of proving the status of a purchaser in good faith lies upon him who asserts that status. and as long as seller remains unpaid. b. and (d) good faith is always presumed. 5. x Ten Forty Realty and Dev. Good faith must concur. 98 xTanglao v. xUniversal Robina Sugar Milling Corp. or interest in. Corp. such property and pays a full and fair price for the same at the time of such purchase . a. v. 298 SCRA 388 (1998). Bandong. CA. CA. 535 SCRA 123 (2007) Under Article 1544. 546 SCRA 577 (2005). 563 SCRA 373 (2008). Parungao. Ongjoco. The registration of a sale after the annotation of the notice of lis pendens does not obliterate the effects of delivery and possession in good faith. Balatbat v. 87 Phil. (c) Buyers of real property that is in the possession of persons other than the seller must be wary – they must investigate the rights of the possessors. Aguirre v. because it would be standard in his business. c. Veloso v. 184 SCRA 584 (1990). the one who registered the sale in his favor has a preferred right over the other who has not registered his title. Talusan v. 295 SCRA 556 (1998). Cruz. It is not sufficient to invoke the ordinary presumption of good faith. as a matter of due diligence required of banks and financing companies.D. under the following jurisprudential parameters: (a) Possession mentioned in Article 1544 includes not only material but also symbolic possession. xTañedo v. Ramos. Ong. The rules on constructive notice upon registration provided for under Section 52 of the Property Registration Decree (P. 1529) operate only from the time of the registration of the notice of lis pendens which in this case was effected only after the time the sale in favor of the second buyer had long been consummated by delivery of the subject matter. 366 SCRA 324 (2001). 97 Agricultural and Home Extension Dev. 521 SCRA 68 (2007). 98 Tsai v. 449 SCRA 99 (2005). when the buyer has not yet fully paid the purchase price. Raymundo v. 356 SCRA 263 (2001).. Soriano. CA. Chua v. Court of Appeals. Cristobal. unassailable and binding against the whole world. d. Bandong. because to hold otherwise would be to tolerate fraud and the Torrens system cannot be used to shield fraud – while certificates of title are indefeasible. x Portic v. 323 SCRA 430 (2000). √Estate of Lino Olaguer v. Court of Appeals. Heirs of Angel Teves. Liao v. 247 SCRA 336 (1995). 421 SCRA 310 (2004). since the good faith that is here essential is integral with the very status that must be established. even if the latter is in actual possession of the 95 immovable property. 260 SCRA 593 (1996). xSantiago v. 533 SCRA 637 (2007). Inc. that is. upon those who allege bad faith on the part of the possessors rests the burden of proof. CA. Tayag. Who is Purchaser in Good Faith? In the determination of whether or not a buyer is in good faith.24 and knowledge are equivalent to registration. Possession Refers Both to Material and Symbolic Possession . 96 Sanchez v.. without notice that some other person has a right to. Galvez v.
Republic v. Thus. 250 SCRA 566 (1995). √Dagupan Trading Co. When Subject of Sale Is Unregistered Land √Naawan Community Rural Bank v. xExpresscredit 99 Financing Corp. Tanglao v. Jr. 556 SCRA 175 (2008). Heirs of Estanislao Militar. if the sale is not registered.. Heirs of Celestial v. Raymundo v. 317 SCRA 696. and
Lloyd’s Enterprises and Credit Corp. 395 SCRA 43 (2003). 6. √Abrigo v. such as
A buyer of a registered land would be in bad faith when he purchases without asking to see the owner’s copy of the title and/or without visiting the land where he would then 101 have seen first buyer occupying the same. 326 SCRA 267 (2000). Occeñna v. v. 358 SCRA 38 (2001). 344 SCRA 238 (2000). and it cannot simply rely upon reviewing the title to the property offered 100 for mortgage. 316 SCRA 721 (1999). De Vera. v. (4) Obligation to Investigate or To Follow Leads – A purchaser who is aware of facts which should put a reasonable man upon his guard cannot turn a blind eye and later claim that he acted in good faith. De Guzman. Chua v. CA. or other voluntary instrument – except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land until its registration. Tanglao v. CA. xPo Lam v. Tio v. Parungao. 473 SCRA 570 (2005). 517 SCRA 369 (2007). CA. EXCEPT: When knowledge of lis pendens was acquired at the time there was order to have it cancelled. Martinez v. 535 SCRA 123. Court of Appeals. 706 (1999). not being really third parties. Court of Appeals. Heirs of Celestial. 295 SCRA 556 (1998). v. San Pablo. The rules in double sale under Article 1544. Sr. Paredes v. CA. Article 1544 is inapplicable to unregistered land because ―the purchaser of unregistered land at a sheriff’s execution sale only steps into the shoes of the judgment debtor. 238 SCRA 397 (1994). Bandong. 495 SCRA 319 (2006).25 been sold to another to prevent injury to prior innocent buyers. When there are occupants to the land being bought. and the ascertainment of the statute or condition of a proper offered to it as security for a loan must be a standard and indispensable part of its operations. Abayata. De Roxas v. The buyers ―are deemed to have constructive knowledge by virtue of their relationship‖ to their sellers. (3) Gross Inadequacy of Price – Mere inadequacy of price is not ipso facto a bade of lack of good faith—to be so. Sr. Court of Appeals. PNB v. Dolleton. 526 SCRA 514 (2007). 522 SCRA 713 (2007). Soriano. (2) Close Relationship – The sale to one’s daughter and sons will give rise to the conclusion that the buyers. Uy. mortgage. R. 556 SCRA 175 (2008). because it may be dissipating its assets to defraud creditors. De la Cena v. 14 SCRA 179 (1965). xPo Lam v. A banking institution is expected to exercise due diligence before entering into a mortgage contract. cannot invoke the right of a purchaser in good faith. Bank of Commerce v. Tio v. whereby the buyer who is able to first register the purchase in good faith ―is in full accord with Section 51 of PD 1529 which provides that no deed.. 132 (2007). xSamson v. De Guzman. v. x Pilapil v. Macam. 494 SCRA 308 (2006). 326 SCRA 267 (2000). CA. xMartinez v. xSantiago v. Calilung. lease.
100 101 99
. Court of Appeals . Abayata. an ocular inspection of the premises involved is a safeguard a 102 cautious and prudent purchaser usually takes. the price must be grossly inadequate or shocing to the conscience such that the mind revolts agains it and such that a reasonable man would neither directly or indirectly be likely to consent to it. 521 SCRA 68 (2007). A purchaser cannot close his eyes to facts which should put a reasonable man on guard and claim that he acted in the belief that there was no defect in the title of the seller. 408 SCRA 291 (2003). Heirs of Trinidad de Leon Vda. 556 SCRA 175 (2008). Erasusta. 103 Modina v. CA. (6) Existence of Lis Pendens – Settled is the rule that one who deals with property with a notice of lis pendens. 247 SCRA 336 (1995). Uy. 432 SCRA 544 (2004).
(5) Land in Adverse Possession – Buyer who could not have failed to know or discover that the land sold to him was in the adverse possession of another is a 103 buyer in bad faith. Esponilla. it is binding only between the seller and the buyer but it does not affect innocent third persons. knew of the previous sales and cannot be considered in good faith. 358 SCRA 38 (2001). v. even when at the time of sale the annotation was cancelled but there was a pending appeal. 347 SCRA 86 (2000). Heirs of Ramon Durano. the rules on double sale do not apply. 344 SCRA 238 (2000). 555 SCRA 142 (2008). 422 SCRA 101 (2004). Jr. xHeirs of Ramon Durano. Velasco.R. since it is the common practice in the real estate industry. CA. 102 Mathay v. Briones. Abayata. Tio v. Such buyer is bound to inquire whether the owners had unsettled obligations encumbrance that could burden the property. Parungao. 535 SCRA 123 (2007). Any person engaged in business would be wary of buying from a company that is closing shop. When first sale is over unregistered land and the second sale is when it is registered. v. 508 SCRA 62 (2006). CA. 431 SCRA 116 (2004). Republic v.
National Bank. 31 SCRA 558 (1970). Negotiable Documents of Title a. 364 SCRA 523 (2001).‖ which means that mere registration does not give the buyer any right over the land if the seller was not anymore the owner of the land having previously sold the same to somebody else even if the earlier sale was unrecorded. 247 SCRA 336 (1995). Fidel v. x Siy Cong Bieng v. 1518) As between the owner of a negotiable document of title who endorsed it in blank and entrusted it to a friend. 559 SCRA 186 (2008). 413 (1921). 56 Phil. 560 SCRA 137 (2008). 1508-1509) b. then its payment to be effective must be made to the seller in accordance with Article 1240 which provides that ―Payment shall be made to the person in whose favor the obligation has been constituted. 459 SCRA 439 (2005). xTorcuator v.
104 Hanopol v. How Negotiated (Arts. Spouses Honorio Santiago v. v. 35. xHeirs of Severina San Miguel v. Definition (Art. or any person authorized to receive it. 1636) 2. Palileo. 42 Phil. Purpose of Documents of Title Through a document of title. v. Mere sending of a letter by the buyer expressing the intention to pay without the accompanying payment is not considered a valid tender of payment and consignation of the amount due are essential in order to extinguish the obligation to pay and oblige the seller to convey title. he who made the loss possible should bear the loss.√Acabal v. CA. 454 SCRA 555 (2005). registration of instruments affecting unregistered land s is ―without prejudice to a third party with a better right. Hongkong & Shanghai Bank. 42 Phil. DOCUMENTS OF TITLE (Arts. xSiy Long Bieng v. Court of Appeals. 1507-1520)
1. and the holder of such negotiable document of title to whom it was negotiated and who received it in good faith and for value. Unauthorized Negotiation (Art. seller is allowed by fiction of law to deal with the goods described therein as though he had physically delivered them to the buyer. Bernabe. and buyer may take the document as though he had actually taken possession and control over the goods described therein. 1512) c. Nogales. or his successor in interest. Under Act 3344. Unless the parties to a sale have agreed to the payment of the purchase price to any other party.‖ as expressly provided for in then Sec. Macahilig. the latter is preferred. 56 Phil. OBLIGATIONS OF BUYER
1. 598 (1932). Bayoca v. 197 SCRA 245 (1991). 3.. National Bank. v. then he cannot compel the buyer to pay the price. Accept Delivery (Arts. Daclag v. CA.
D. 2. 1582-1585)
VII. Effects of Negotiation (Art. but the intrusting of the receipt is more than the mere delivery of the goods.‖ xMontecillo v.26 merely acquires the latter’s interest in the property sold as of the time the property was levied upon. Acabal. Radiowealth Finance Co. √Carumba v. 1544 has no application to land no registered under the 104 Torrens system. xPhilippine Trust Co. 1582) When seller cannot show title to the subject matter. 598 (1932). CA. xPhilippine Trust Co. Rule 39 of the Revised Rules of Court on execution sale [now Sec. 413 (1921). and had the effect of divorcing the property covered therein from the estate of the insolvent prior to the filing of the petition for insolvency. Who Can Negotiate (Art.
. under the principle that as between two innocent persons. 1997 Rules of Civil Procedure)].. The rules on double sale under Art. 385 SCRA 244 (2002). it is a representation that the one to whom the possession of the receipt has been so entrusted has the title to the goods. Rule 39. 33. 7 SCRA 452 (1963). 340 SCRA 154 (2000). Hongkong and Shanghai Banking Corp. d. Reynes. Warehouse receipt represents the goods. Pilapil. Pay the Price (Art. 1513) The endorsement and delivery of a negotiable quedan operates as the transfer of possession and ownership of the property referred to therein.
CA. and under Art. 316 SCRA 502 (1999). Gabar. Rules of Levy/Garnishment of Goods (Arts. 1514) b. but when delivery of ownership is no longer possible. CA. the sale should be considered void. Reyes. 2. Although a situation (where the sellers were no longer owners) does not appear to be one of the void contracts enumerated in Art. CA. Santos v. Court of Appeals. equity will cancel the sale and cause the purchase money to be restored to the buyer. Court of Appeals. 33 Phil. and in consequence of facts unknown alike to both parties. Aguirre v. or for the recovery of possession of the property owned in common from the other co-owners. Republic v. 542 SCRA 166 (2008). Torrens System (Pres. Tomas. 446 (1934). The defense of indefeasibility of Torrens title where the disputed buildings and equipment are located is unavailing. √Mindanao v. xDBP v. 363 SCRA 811 (2001). Ona. 1519. Estoppel on True Owner (Art. Heirs of 107 the Late Spouses Aurelio and Esperanza Balite v. If one buys the land of another. A co-owner who sells one of the two lands owned in common with another co-owner. In sale. 259 SCRA 65 (1996). but for division or partition of the entire property.. Lim. and the vendee merely steps into the shoes of the vendor as co-owner. Casals. the latter may by law and equity lay exclusive claim to the remaining parcel of land. provided he acquires title to the property later on. 446 SCRA 54 (2004). 456 (1916).
VIII. it is essential that the seller is the owner of the property he is selling. 24 SCRA 59 (1968). 276 SCRA 149 (1997). xTsai v. Decree 1529). CA. CA. the right to repurchase provided therein would also be void xNool v. 421 SCRA 310 (2004). Warranties of Seller of Documents of Title (Art. 366 SCRA 324 (2001).
Azcona v. SALE BY NON-OWNER OR BY ONE HAVING VOIDABLE TITLE: LIFE OF A CONTRACT OF SALE
1. the seller has in fact no title at all. 493) In a contract of sale of co-owned property. Acabal. Acabal v. In which case. 106 Oamil. 1458). How Transferred or Assigned (Art. Exceptions: When Ownership Transfers by Act of the Non-Owner a. xPanganiban v. his spiritual share). it shall effectively transfer the seller’s ideal share in the co -ownership. 1520). putting both parties in status quo. 215 SCRA 866 ). Estoque v. to which the seller is supposed to have a good title. The principal obligation of a seller is ―to transfer the ownership of‖ the property sold (Art. 13 SCRA 190 (1965). 249 SCRA 331 (1995). except when the intention of the purchase was clearly the property itself and not just the spiritual share. Fernandez. Yap.. xTomas Claudio Memorial College. Court of 108 Appeals. Court of Appeals. This law stems from the principle that nobody can dispose of that which does not 105 belong to him: NEMO DAT QUOD NON HABET. 240 SCRA 78 (1995). the proper action is not for nullification of sale.
. 1409 of Civil Code. CA. Effects of Transfer (Art. 5. 454 SCRA 593 (2005). Pajimula.e. 204 SCRA 142 (1991). Effect of Sale Where Seller Not Owner at Time of Delivery (Art. Barcenas v. Coronel v. Recording Laws. 454 SCRA 555 (2005). a. 1434) √Bucton v. An agreement that purports a specific portion of an un-partitioned co-owned property is not void. xAguirre v. 59 Phil. 1514. 421 SCRA 310 (2004). 1516) 6. 107 Almendra v. Aguirre v. 1505. Non-negotiable Documents of Title a. 108 Heirs of Romana Ingjug-Tiro v. and does not turn-over one-half of the proceeds of the sale to the other co-owner. 363 SCRA 435 (2001). 549 SCRA 58 (2008). x Imperial v. 519 SCRA 408 (2007). Heirs of Francisca Dignos-Sorono. 1514). √Paulmitan v. Lumbao. IAC. 55 SCRA 499 (1974).27 4. 421 SCRA 310 (2004). v. since such defense is available to sale of lands and not to sale of properties situated therein. and consequently. xNoel v. Inc. Fernandez v. Sales by Co-Owners (Art. what the vendee obtains by virtue of such a sale are the same rights as the vendor had as co-owner (i. b. 1402 Civil Code itself recognizes a sale where the goods are to be ―acquired x x x by the seller after the perfection of the contract of sale‖ clearly implying that a sale is possible even if the seller was not the owner at the time of sale.
6 Phil. Inc. 1480. CA. 9 Phil. xHeirs of Spouses Benito Gavino. the original owner recovers even from the buyer in good faith. c. (1) General Rule: Before delivery.. Court of Appeals. v. 291 SCRA 495 (1998). as an exception to Art. 231 SCRA 281 (1994) d. Article 559 applies and the defense that the pawnshop acquired possession without notice of any defect of the 109 pledgor-agent is unavailing. Code of Commerce) √City of Manila v. 1263) 2.
. Court of Appeals. Capistrano. v. Sy v. Where innocent third persons. risk of loss is borne by seller under the rule of res perit domino. the thing sold remained at the seller’s risk. Statutory Power Order of Courts When a defeated party refuses to execute the absolute deed of sale in accordance with the judgment. Matute. 47 (1911). Jr. or current possessor could not claim good faith because of erasures in the covering documents presented by his seller] Owner of diamond ring may recover possession of the same from pawnshop where the owner’s agent had pledged it without authority to do so. 85 and 86. Jimenez. the court may direct the act to be done at the cost of the disobedient party by some other person appointed by the court and the act when so done shall have the like effect as is done by the party. No Application When Subject Matter is Determinable (Art. Raymundo. when owner did not voluntarily deliver possession of the car. Court of Appeals. After Perfection But Before Delivery (Arts. 1189. [CLV: In those cases possessor is a merchant and only has a pledge in his favor]. x Insurance Services and Commercial Traders. 1504. √Sun Bros. Bugsuk. Sale by One Having Voidable Title (Art. & Co. 560 SCRA 103 (2008). v. 184 SCRA 614 (1990). Pahati. DETERIORATION. 47 SCRA 160 (1972). Every person dealing with the registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property. √Dizon v. LOSS. relying on the correctness of the certificate of title thus issued. 559) Whenever there is an underlying contract of sale which grants to the culprit-buyer a voidable title. then one who buys the car even in good faith from the thief will lose the car to the owner who is deemed to have been unlawfully deprived. acquire rights over the property. v. 101 Phil. c. 788 (1956). In the case of a motor vehicle. where there was neither physical or constructive delivery of a determinate thing. b.. Thus. Fairs or Markets (Arts. 559. 5143 (1958). FRUITS AND OTHER BENEFITS
1.. 1493 and 1494). 133 SCRA 567 (1984). √Tagatac v. 341 SCRA 572 (2000). √Cruz v. Yapdiangco. 96 ). 98 Phil. At Time of Perfection (Arts. Inc. (2) Loss by Fault of a Party (Arts. v. 479 (1908).28 An innocent purchaser for value is one who purchases a titled land by virtue of a deed executed by the registered owner himself not by a forged deed. 859 (1957). 3. 1164. CA. √EDCA Publishing v.G. 3792 (1957). In all other cases of unlawful deprivation done through estafa. the court cannot disregard such rights and order the cancellation of the certificate. Before Perfection (√Roman v. since the effect of such outright cancellation will be to impair public confidence in the certificate of title. xChrysler Phil. 1538)
Valera v. x Manila Remnant Co. 54 O. Santos. xUnion Motor Corp v. Article 1506 would grant to the buyer in good faith a better title as against the original owner even though the latter may be classified to have been ―unlawfully deprived‖ of the subject matter under Art. Effect of Loss/Deterioration of Thing Sold: a. Suntay. 361 SCRA 506 (2001). A person who deals with registered land through someone who is not the registered owner is expected to look beyond the certificate of title and examine all the factual circumstances thereof in order to determine if the vendor has the capacity to transfer any interest in the land. Velasco. 53 O. 1506.
IX. even when this is accompanied by the criminal act of estafa or swindling. and in effect it was stolen from him. Sale in Merchants Stores. Grimalt. Arenas v. [CLV: Decision showed that second buyer. 13 SCRA 486 (1965). √Aznar v. and 1262).G. 19 Phi.
when the buyer fails to pay the purchase price. the seller had a right to terminate the contract. Tabora. Seller in possession of the goods may sell them at buyer's risk. 213 SCRA 259 (1992). c. 1189 and 1538) (5) Fruits or Improvements from time of perfection pertain to buyer (Arts. but pursuant to an action for specific performance with a plea for a writ of replevin. the Supreme Court had already recognized the right of a seller. 1484. Court of Appeals. 1163. 28 SCRA 161 (1969). 3313). xHanlon v. to resell the movables subject matter of the sale. 69 Phil.
X. xKatigbak v. TOLENTINO. v. Inc. Moscoso. Servicewide Specialists. 219 SCRA 378 (1993). 2..
.G. RECTO LAW: SALES OF MOVABLES ON INSTALLMENTS (Arts. Narciso. Dy Hian Tat. 1537-1538). The almost invariable result was that the mortgagor found himself minus the property and still owing practically the full amount of his original indebtedness. Rights of Unpaid Seller: Possessory lien (Arts. ―Installment Sale‖ requires at least stipulated two (2) payments in the future. Rosario v. whether or not there is a downpayment. 55 O. 1524-1535) a. 214 SCRA 103 (1992). 1480. Inc. Inc. 1165. 1534) Even before the formal statutory adoption of the remedies of an unpaid seller. 13 SCRA 762 (1965). After Delivery (Art. 477 SCRA 245 (2005). Unpaid Seller of Goods (Arts.29 (3) Loss by Fortuitous Event (Arts. 77 SCRA 152 (1977). b. v. 33 Phil. v. ON PART OF SELLER
1. Oria. v. √Levy v.. READ Comments of PARAS. does not amount to a foreclosure of the chattel mortgage covered by the Recto Law. Court of Appeals. 1504) √Lawyer's Coop v. PADILLA. 1636) Right of Resale (Art. REMEDIES FOR BREACH OF CONTRACT OF SALE (Arts. 1535. PCI Leasing and Finance. v. Court of Appeals. Inc. (4) Deterioration (Arts. 1486)
The Recto Law prevents mortgagee from seizing the mortgaged property. 1526-1529. 112 √Tajanglangit v. 474 SCRA 500 (2005). Contracts to Sell Movables Not Covered. and non-compliance with the condition meant that the seller’s obligation to sell never did arise. 1525) b. v. Definition of ―Unpaid Seller‖ (Art. 1503. 1485. Ramirez. xMagna Financial Services Group. Colarina. Nature of Remedy of Rescission
Song Fo & Co. 1163-65. and BAVIERA). when the contract of sale is still executory in stage. when the buyer of scrap iron fails to put up the letter of credit in favor of the seller as the condition of the sale. 4 SCRA 243 (1962). a. 112 Southern Motors v. xVisayan Sawmill Co. 40 Phil. Remedies Available to Unpaid Seller Not Cumulative But Alternative and 111 Exclusive. 3 (1915). Hausserman. and 1189. 101 Phil. v. e. 796 (1920). 52 (1939). and 1262. xUniversal Motors Corp. 2 SCRA 168 (1961). Borbon II v. 1538. Arts. 219 SCRA 378 (1993). Lawyer's Coop v. 1594-1599)
A. 1480. Seeking a writ of replevin consistent with any of the three remedies. In Case of Movables ((Arts. d. 1535) Stoppage in transitu (Arts. 1480. Southern Motors. Gervacio.. Asian Consumer. xVisayan Sawmill Company. 258 SCRA 634 (1996).
3. buying it at foreclosure sale for a low price and then bringing the suit against the mortgagor for a deficiency judgment. 1595 to 1597) Under Article 1597. 1593. Industrial Finance Corp. 1164. 1533) Right to Rescind (Art. De la Cruz v. √Delta Motor Sales Corp. 1504. Remedy of Specific Performance The fact that the seller obtained a writ of execution against the property mortgaged. 606 (1957). 1530-1532. d. Niu Kim Duan.
E. Inc. but nevertheless when a final demand is given prior to suit. Ridad. x Vda. xElisco Tool Manufacturing Corp.30 Surrender of mortgaged property is not necessarily equivalent to rescission. b. √Borbon II v. Filipinas Investment. 527 SCRA 405 (2007). CA. 213 SCRA 259 (1992). Mutual restitution prevents recovering on the balance of the purchase price. IAC. v. 241 SCRA 165 (1995). sewerage. 258 SCRA 634 (1996). g. 245 (1938).D. 116 Vda. 115 Pascual v. Purported Lease with Option to Buy The Court took judicial notice of the practice of vendors of personal property of denominating a contract of sale on installment as one of lease to prevent the ownership of the object of the sale from passing to the vendee until and unless the 116 price is fully paid. 64 Phil. x Delta Motor Sales Corp. v. All amounts barred from recovery. Servicewide Specialists. v. U. Servicewide Specialists. Filinvest Credit Corp. It was designed to stem the tide of fraudulent manipulations perpetrated by unscrupulous subdivision and condominium sellers free from liens and encumbrances. P.. 782 (1956). v. 120 SCRA 246 (1983). CA.. When the seller assigns his credit to another person. √Nonato v. 957) P. Manila Motor Co. v. 114 1484(3). v. infrastructure and other forms of development.
. Colarina. f. Foreclosure on the chattel mortgage prevents further action on the supporting real estate mortgage. √Zayas v. Anticipatory Breach (Art. 178 SCRA 188 (1989). 66 Phil. Manila Motors Co. 271 (1953). v. but stipulation on non-return of payments is valid provided not unconscionable. the latter is likewise bound by 113 the same law. √Macondray & Co. (i) ―Barring‖ Effects of Foreclosure – Filing of the action of replevin in order to foreclose on the chattel mortgage does not produce the barring effect under the Recto Law. water systems. IN CASE OF IMMOVABLES:
a . whether the chattel mortgage is first foreclosed √Cruz v. 446 (1937). 93 Phil. 99 Phil. The voluntary payment of the installment by the buyer-mortgagor is valid and not recoverable in spite the restrictive provisions of Art. √PCI Leasing and Finance. and vice versa when the real estate mortgage is first foreclosed. 258 SCRA 634 (1996). 117 SCRA 726 (1982). Eustaquio. H. 23 SCRA 791 (1968). Calupita. Sapinoso. 61 SCRA 121 (1974). 307 SCRA 731 (1999). Universal Motors Corp. Where a lease agreement over equipment is without an express option to purchase.D.. Heacock v. Section 20 of P. developers.. Remedy of Foreclosure Barring effect would cover a third-party mortgage. 1591) √Legarda v. (ii) Rule on “Perverse Buyer”. Magna Financial Services Group. Fernandez. Inc. operators and/or sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads. Bantal Manufacturing. Manila Gas Corp. v. Inc. 30 SCRA 564 (1969). Halili. Saldaña. Office of the President. the demand letter indicates clearly it was within the option of the lessee to fully pay the balance of the unpaid rentals and would be able to keep the equipment. drainage. 23 and 24. Commercial v.957 ―was issued in the wake of numerous reports that many real estate subdivision owners. when it was the chattel mortgage that was first foreclosed. Sales of Subdivision Lots and Condominium Units (Secs. √Ridad v.‖ xCasa Filipinas Realty Corp. 115 Filipinas Investment & Finance Corp. lighting systems and other basic requirements or the health and safety of home and lot buyers. 191 (1939). 140 SCRA 255 (1985). √Filipinas Investment & Finance Corp... de Jose v. v.
4. 3 SCRA 444 (1961). then the real contract between the parties was a sale of movable on installment disguised as a lease agreement. 66 Phil. improvements. failure to carry out which is sufficient cause for the buyer to suspend
Borbon II v. v. Inc. 67 Phil. √Northern Motors v. Barrueco. 33 SCRA 356 (1970).. de Quiambao v. 957 directs every owner and developer of real property to provide the necessary facilities. Giraffe-X Creative Imaging. 747 (1938). Inc. Inc. for it is the fact of foreclosure and actual sale of the mortgaged chattel that bar further recovery by the seller of any balance on the buyer’s outstanding obligation not satisfied by the sale. 477 SCRA 245 (2005). Niu Kim Duan. 55 SCRA 324 (1974).D. Luneta Motors.S..
Nothing in P. Section 23 gives the buyer:
the option to demand reimbursement of the total amount paid. ―Role‖ of Maceda Law – Maceda Law’s declared policy is to protect buyers of real estate on installment basis against onerous and oppressive conditions.. 957 provides for the nullification of a contract to sell in the event the seller. 506 SCRA 591 (2006). at the time the contract was entered into. 480 SCRA 156 (2006). Drilon. xZamora Realty and Dev. buyer required only to give due notice to the owner or developer of the buyer’s intention to suspend payment.
5. he cannot now turn to this Court for succor without impairing the constitutional right to the obligation of contracts. 513 SCRA 413 (2007). Panasiatic Travel Corp. Maceda Law finds no application to a contract to sell where the suspensive condition has not been fulfilled. 252 SCRA 620 (1996). 350 SCRA 371 (2001). and Management Corp. F. 120 Boston Bank of the Phil. Transactions Covered The formal requirements of rescission under the Maceda Law apply even to contracts entered into prior to its effectivity. v. and seeks to address the acute housing shortage problem in our country that has prompted thousands of middle and lower class buyers of houses. v.‖ xBortikey v. x Active 117 Realty & Dev. when the developer-seller fails to give them a copy of the Contract to Sell despite repeated demands. 480 SCRA 156 (2006). xRelucio v. demand for refund can be made as the notice and demand can be made in the same letter or communication. PNB v. MACEDA LAW: SALES OF RESIDENTIAL REALTY ON INSTALLMENTS (R. 119 Eugenio v. Factora. 6552). because said Law presuppose the existence of a valid and effective contract to sell a condominium. 482 SCRA 108 (2006). he may suspend payment of the installments until such time that the owner or developer has fulfilled its obligations. Co Chien v. x Tamayo v. 378 SCRA 121 (2002). Office of the President. Cordero v. xSiska Dev. Manalo. BrillanteGarfin. a. xCasa Filipinas Realty Corp v. act. Corp. which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding 118 force. 241 SCRA 165 (1995). Pacifico. v. . Maceda Law recognizes in conditional sales of all kinds of real estate seller’s right to cancel the contract upon non-payment of an installment by the buyer. xPagtulunan v. 382 SCRA 152 (2002). 395 SCRA 298 (2003). Huang. 252 SCRA 106 (1996).
―The contract for the purchase of a piece of land on installment basis is not o nly lawful. v. b. v. . Executive Secretary Franklin M. . Daroya.31 payment. Corp. and otherwise lawful. xTamayo v. v.
. In case the developer of a subdivision or condominium fails in its obligation under Section 20. 120 398 (2000).. and any sums of money already paid shall not be forfeited. 187 SCRA 405 (1990). This Court will not relieve petitioner of the necessary consequences of his free and voluntary. AFP Retirement and Separation Benefits System.D. Lucia Realty. did not possess a certificate of registration and license to sell. CA. and Option granted by law is with buyer and not the developer/seller.. 477 SCRA 511 (2005). Inc. [?] xMortel v. 348 SCRA 391. Buyers of condominium units would be justified in suspending payments. Jestra Dev. and when the buyer opts for the latter alternative. 513 SCRA 570 (2007). Office of the President . 369 SCRA 36 (2001). xGold Loop Properties. KASSCO. or to wait for further development of the subdivision. v. 23 does not require that a notice be given first by the buyer to the seller before a
―Buyer‖ under P. CA. 118 Leaño v. 957 would include one who acquires for a valuable consideration a condominium unit by way of assignment by the condominium project owner in payment of its indebtedness for contractor’s fee. it is also of widespread usage or custom in our economic system. . 533 SCRA 242 (2008). BUT SEE xPeople’s Industrial and Commercial Corp. Corp. If [buyer] eventually found the interest stipulation in the contract financially disadvantageous to him.S. 506 SCRA 451 (2006).
117 OIympia Housing Inc. Sta. 119 231 SCRA 674 (1994). Office of the President . 281 SCRA 206 (1997). Inc. . De Manzano.D. Court of Appeals.. Corp. Inc. Huang. Management & Dev. Office of the President. xAMA Computer College. Dela Cruz Vda.A. lots and condominium units to enter into all sorts of contracts with private housing developers involving installment schemes.
86 Phil. CA . but as the buyer was not given the cash surrender value of the payments she made. 488 SCRA 156 (2006). 366 SCRA 41 (2001). 545 SCRA 325 122 (2008). which is a kindred concept of rescission by notarial act. an option of sale or purchase. Dela Cruz Vda. Inc. 546 SCRA 315 (2008). and Management Corp. No. √McLaughlin v. CA. 274 SCRA 461 (1997). Rodriguez. Court of Appeals. 395 SCRA 298 (2003). Albea v.‖ and the all-embracing definition virtually includes all transactions concerning land and housing acquisition.. v. there was still no actual cancellation of the contract. Olympia Housing v. Inc. Corp. v. Platinum Plans Phil. Heirs of Rufina Morales. 6552. Rillo v.A. 123 Caridad Estates.. 144 SCRA 693 (1986). xPagtulunan v. Inc. Joseph & Sons Enterprises. v.. De Manzano. short of a notarial act.. RESCISSION ON SALES OF NON-RESIDENTIAL IMMOVABLES ON INSTALLMENTS (Arts.‖ xValarao v. including reservation agreements.. IAC. the seller shall furnish the buyer with a notarial notice of cancellation or demand for rescission. Inc. a mere notice or letter. and Management Corp. 114 (1940). Maritime Bldg. Maceda Law has no application to protect the developer or one who succeeds the developer. Third. xLagandaon v. xLeaño v. rescission requires under the law a positive act of choice on the party of the non-defaulting party. Manuel v. Inc. the suspensive condition not 123 having happened. Panasiatic Travel Corp. 395 SCRA 298 (2003). the seller should extend the buyer a grace period of at least sixty (60) days from the due date of the installments. at the end of the grace period. v. 86 SCRA 305 (1978). A decision rendered in an ejectment case operated as the required notice of cancellation under the Maceda Law. 290 SCRA 463 (1998). Jestra Dev. 124 Escueta v. 369 SCRA 36 (2001). 488 SCRA 156 (2006). Daroya. 382 SCRA 152 (2002). Article 1592 allows the buyer of an immovable to pay as long as no demand for rescission has been made. 167 SCRA 627 (1988). xVilldara. Court of Appeals.. 256 (1946). Cucueco. Automatic rescission clauses are not valid nor can be given legal effect under Articles 124 1191 and 1592 .
1191 and 1592) Articles 1191 and 1592 on rescission cannot apply to a contract to sell since ―there can be no rescission of an obligation that is still non-existent. to be merely circuitous and consequently superfluous‖ since the seller therein filed an action for annulment of contract. Vendor cannot recover ownership of the thing sold until and unless the contract itself is resolved and set aside.
. Second. Luzon Brokerage v. Zabala. v. 513 SCRA 413 (2007). Panasiatic Travel Corp. a solicitation of a sale or an offer to sell directly. Court of Appeals. v. Odyssey Park. c. a party who fails to invoke judicially or by notarial act the resolution of a contract of sale would be prevented from blocking the consummation of the same in light of the precept that mere failure to fulfill the contract does not operate ipso facto as rescission. v. Platinum Plans Phil. 195 SCRA 205 (1991).
6. 477 (1950). v. Cucueco. CA. 71 Phil. 957 also includes ―an exchange or attempt to sell. in the premises. How to Determine Years of Installments: √Jestra Dev. Pando.32 Maceda Law makes no distinctions between ―option‖ and ―sale‖ which under P. 209 SCRA 246 (1992). The additional formality of a demand on [the seller’s] part for rescission by notarial act would appear. Inquimboy. A formal letter demand upon buyer to vacate the premises is not the same as the notice of cancellation or demand for rescission by a notarial act required by R. xOlympia Housing v. v.. d. 233 SCRA 665 (1994). 122 Active Realty & Dev. Jacinto v. and the consignation of the balance of the purchase price before the trial court operates as full payment. the case of unlawful detainer filed by petitioner does not exempt him from complying with the said requirement. effective thirty (30) days from the buyer’s receipt thereof . would 121 not suffice.D. How Cancellation of Contract Can Be Effected – The cancellation of the contract under the Maceda Law must follow the following steps: First. San Francisco del Monte. Maritime Bldg. xLayug v. Jr. xRealty Exchange Venture Corp. 280 SCRA 253 (1997). Kaparaz. Pacifico. 475 SCRA 247 (2005). 1 (1960). CA. Sendino. 109 Phil. v. 513 SCRA 413 (2007).
121 Luzon Brokerage v. xIringan v. 76 Phil. 533 SCRA 242 (2008). 143 SCRA 663 (1986) Gimenez v. 304 SCRA 155 (1999). Pacifico. xProvince of Cebu v. Fabrigas v. Court of Appeals. Indeed. for contracts covering more than two years of payments. there must be return to the buyer of the cash surrender value. Evidently. Court of Appeals. 43 SCRA 93 (1972). Santero.
1479.‖ the original term which was used in the old Civil Code was ―resolution. The effects that flow from an affirmative judgment in either case would be materially dissimilar in various respects: judicial resolution of a contract gives rise to
Iringan v. but to abrogate it from the beginning and restore the parties to their relative positions as if no contract has been made. xOng v. 128 Central Philippine University v. 1598-1599) 2. 23 and 24. 1592)
1. Basis of Remedy of Rescission (Resolution) Rescission under Art. This is true for reciprocal obligations where the obligation is a resolutory condition of the other.
. CA. In case of Immovables (Arts. Court of Appeals. v.D. is sufficient to defeat the right of the seller to demand for a rescission of the deed of absolute sale. CA. CA. Romeo v. Non-payment of the purchase price is a resolutory condition for which the remedy is either rescission or specific performance under Article 1191. But see contra Suria v. P. 366 SCRA 41 (2001). 361 127 SCRA 56 (2001). the court 126 shall decree the rescission. v. 33 SCRA 22 ). Court of Appeals. the buyer is entitled to retain the purchase price or a part thereof if the seller fails to perform any essential obligation of the contract. 127 Ocampo v. 300 SCRA 722 (1998). Court of Appeals. Creditors do not have such material interest as to allow them to sue for rescission of a sale – theirs is only a personal right to receive payment for the loan. CA. 411 SCRA 18 (2003).
XI. Such right is premised on the general 128 principles of reciprocal obligation. Almira v. 319 SCRA 200 (1999). 361 SCRA 56 (2001). When a party asks for the resolution or cancellation of a contract it is implied that he recognizes it existence – a non-existent contract cannot be cancelled. 1383 is a subsidiary action limited to cases of 125 rescission for lesion under Art. 1590) The pendency of suit over the subject matter of the sale justifies the buyer in suspending payment of the balance of the purchase price by reason of aforesaid vindicatory action filed against it. 399 SCRA 351 (2003). Consignation by the buyer of the purchase price of the property. Inc. On the other hand. xVelarde v. Court of Appeals. 482 SCRA 164 (2006). and the breach contemplated is the obligor’s failure to comply with an existing obligation. v. It is not merely to terminate it and release the parties from further obligations to each other. While Art. CA. CA. 957) 3. the seller is not precluded from going to the court to demand judicial rescission in lieu of a notarial act of rescission. there having been no previous receipt of a notarial demand for rescission. ON PART OF BUYER
1. xAdelfa Properties. not a real right over the property subject of the deed of sale. 411 SCRA 18 (2003). Court of Appeals. 1191 is predicated on a breach of faith by the other party who violates the reciprocity between them. IAC. 151 SCRA 661 ). NATURE OF REMEDY OF RESCISSION (RESOLUTION) (Arts. 1381. xAdorable v. xGil v. xVelarde v. Court of Appeals. Court of Appeals.. Cheng v. 246 SCRA 511 (1995). The assurance made by the seller that the buyer did not have to worry about the case because it was pure and simple harassment is not the kind of guaranty contemplated under Article 1590 wherein the buyer is bound to make payment if the seller should give a security for the return of the price. 250 SCRA 223 (1995). 312 SCRA 528 (1999). Suspension of Payment (Art. When the obligee may seek rescission and. 240 SCRA 565 (1995). REMEDY OF RESCISSION IN SALES CONTRACTS COVERING IMMOVABLES: CONTRACT OF SALE versus CONTRACT TO SELL
A. in the absence of any just cause for the court to determine the period of compliance. xPan Pacific Industrial Sales Co. 310 SCRA 1 (1999). Co v. while rescission under Art. Court of Appeals. But such action is different from an action for reconveyance of possession on the thesis of a prior rescission of the contract covering the property.‖ Resolution is a principal action which is based on breach of a party. xGil v. Distinguishing from Other Remedy of Rescission (Universal Food Corp. Court of Appeals. Genato. 1191. Inc. Secs.. Action for Rescission Not Similar to An Action for Reconveyance – In the sale of real property. 1191 uses the term ―rescission. To rescind is to declare a contract void at its inception and to put an end to it as though it never was. 233 SCRA 551 (1994). 2. 1191.33 B. 314 SCRA 63 (1999). Uy v. CA. In case of Movables (Arts.
In a contract of sale. Maritime Bldg. 134 Lim v. 86 SCRA 305 (1978). Leaño v. even if the buyers did not mistakenly make partial payments. the court. International Banking Corp. 247 SCRA 312 (1995). Garilao. Nonetheless. Ver Reyes v. v. It cannot be inferred in a situation where both parties understood the price to be paid in cash. Luzon Brokerage v. 306 SCRA 408 (1999). 461 SCRA 186 (2005). Tayamen. whereas in a contract to sell.
B. 820 (1949).34 mutual restitution which is not necessarily the situation that arise in an action for reconveyance. Orden v. 1956.) (1956). the law does not prohibit the parties from entering into agreement that violation of the terms of the contract would cause cancellation thereof. parties are governed by Art. 3. 43 SCRA 95 (1972). Aurea. failure of which is not a breach but an event that prevents the obligation of the 134 vendor to convey title from becoming effective.. title is retained by the seller until full payment of the price. 399 SCRA 351 (2003). it is only fair and just that the buyers be allowed to recover what they had paid in expectancy that the condition would happen. 84 Phil. reserved in the seller and is not to pass to buyer until full payment of purchase price. v. In an action for rescission. 133 240 SCRA 575 (1995). Court of Appeals. Mutual Restitution and Forfeiture (Art. instead of decreeing rescission. Salvador. Vidad. ownership is. that is. Inc. Sr. 564 SCRA 456 (2008). 394 SCRA 250 (2002). while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer. title to the property passes to buyer upon the delivery of the thing sold. Hulst v. in a contract to sell. G. Hospital de San Juan de Dios. 12 SCRA 276 (1964). V. The Manila Jockey Club. payment of the price is a positive suspensive condition. Bernabe v. 539 SCRA 193 (2007). PR Builders. 129 xBenito v. Mascuñana v. Panasiatic Travel Corp. 8784. 395 SCRA 298 (2003). 131 Velarde v. In the latter contract. Heirs of Jesus M. seller loses ownership over the property and cannot recover it until and unless the contract is resolved or rescinded. 37 Phil. 130 Luzon Brokerage Co. 357 SCRA 846 (2001). Unilateral rescission will not be judicially favored or allowed if the breach is not substantial and fundamental to the fulfillment of the obligation. xBuot v. 182 SCRA 564 (1990). 133 Sta. DISTINCTIONS BETWEEN CONTRACT OF SALE AND CONTRACT TO SELL
1. v. Pursuant to Art. 401 SCRA 54 (2002). CA. a. with 131 their fruits..
. Otherwise stated. xPangilinan v. Lucia Realty & Dev. 99 Phil. Court of Appeals. xInes v. 562 SCRA 226 (2008). 532 SCRA 74 (2007). CA. in a contract of sale. 1398 whereunder they shall restore to each other the things which have been the subject matter of the contract. CA.. No. 1458) √Adelfa Properties. even without court 130 intervention. 457 SCRA 224 (2005). x Olympia Housing v. Court of Appeals. Maritime Building Co. 1385) When sale is annulled. 531 SCRA 147 (2007). Reyes. Court of Appeals . Perez & Co.. 362 SCRA 654 (2001). v. b. Tuazon v. v. CA. Heirs of Candido Rubi. by agreement. inasmuch as the suspensive condition was not fulfilled. 631 (1918). there would be unjust enrichment on the part of the seller. Republic v. 361 SCRA 56 (2001). Sr. and price with interest. 132 The Manila Racing Club v. Court of Appeals. Flancia v. 4. 562 SCRA 660 (2008). full payment of the purchase
129 Ocejo. Universal Robina Sugar Milling Corp. May 21. Inc. 369 SCRA 36 (2001). may authorize for a just cause the fixing of a period. Uyecio.R. The seller’s right in a contract to sell with reserved title to extrajudicially cancel the sale upon failure of the buyer to pay the stipulated installments and retain the sums and installments already received has long been recognized by the well-established doctrine 132 of 39 years standing. De la Rama Steamship Co. Tan. xCastillo v. Court of Appeals. 357 SCRA 846 (2001). Saquitan-Ruiz. 1188.. otherwise. Chua v.. Buot v. Inc... CA. Heirs of Angel Teves. x City of Cebu v. Inc. 389 SCRA 316 (2002). 559 SCRA 53 (2008).. 361 SCRA 328 (2001).. CONTRACT OF SALE versus CONTRACT TO SELL (Art. xFroilan v. Power to Rescind Generally Judicial in Nature A seller cannot unilaterally and extrajudicially rescind a contract of sale where there is no express stipulation authorizing it. unlike in an action for reconveyance predicated on an extrajudicial rescission (rescission by notarial act). Rationale of Contracts to Sell A contract to sell is commonly entered into so as to protect the seller against a buyer who intends to buy the property in installments by withholding ownership over the property until the buyer effects full payment therefor. Court of Appeals. 55 (1939). binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon. 69 Phil. Abesamis v. 1034 (unrep. Almira v. CA. Is a Contract to Sell a ―Sale‖ under Article 1458? A ―contract to sell‖ as ―a bilateral contract whereby the prospective seller. Pan Oriental Shipping Co. Heirs of Antonio F. Inc. in a contract to sell. v. 279 SCRA 590 (1997). Court of Appeals.
Zabala. Blas v. with respect to the other.
.‖ √Babasa v. such condition is imposed merely on the performance of the obligation. 506 SCRA 591 (2006). Orden v. Calanz. 158 SCRA 375 (1988). 290 SCRA 532 (1998). Aurea. 418 SCRA 73 (2003). Almira v. 137 Court of Appeals. xPortic v. Machuca. Angeles v. Court of 140 Appeals. Salvador. a contract of sale may either be absolute or conditional. in which the efficacy or obligatory force of the vendor’s obligation to transfer title is subordinated to the happening of a future and uncertain event. Necessary Stipulations in a Contract to Sell: A contract is one of sale. Villadar. 464 (1996). The reservation of title may not be found in express provision of the contract. Lapuz. For a contract. √Valdez v. Court of Appeals. 439 SCRA 55 (2004). Office of the President . xRayos v. v. such party may refuse to proceed with the contract or he may waive performance of the condition. in a contract to sell. 434 SCRA 365 (2004). all in consonance with Art. Court of Appeals. like a contract to sell. xGomez v. 538 SCRA 305 (2007). The absence of full payment suspends the vendors’ obligation to convey title . 399 SCRA351 (2003). 139 Roque v. 559 SCRA 197 (2008). even if the sale has already been registered. 186 SCRA 400 (1990) 140 xSan Andres v. 332 SCRA 769 (2000). to give something or to render some service. 211 SCRA 219 (1992). xSalazar v. 135 SCRA 323 (1985). 728 (2000). for a time existed. 333 SCRA 643 (2000). CA. A contract to sell is akin to a conditional sale. absent any stipulation therein (a) reserving title over the 138 property to the vendee until full payment of the purchase price. 564 SCRA 456 (2008). 562 SCRA 660 (2008). Court of Appeals. 262 SCRA
To be sure. 258 SCRA 325 (1996). 27 (1996). the non-payment of the price is a resolutory condition which extinguishes the transaction that. so that if the suspensive condition does not take place. The absence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership.‖ where ownership or title is retained until the fulfillment of a positive suspensive condition normally the payment of the purchase price in the manner agreed upon. as distinguished from a condition imposed on the perfection of the contract.Alfonso v. 439 SCRA 273 (2004). 220 SCRA 158 (1993). title to a particular property. Inc. V.‖ √Coronel v. De Mistica v. and discharges the obligations created thereunder. Registration does not vest. Court of Appeals. 439 SCRA 273 (2004).35 price. 488 SCRA 156 (2006). and the seller retained possession of the certificate of tile and all other documents relative to the sale until there was full payment of the purchase price. CA. One form of conditional sales is what is now popularly termed as a ―Contract to Sell. Heirs of Spouses Sandejas v. 141 Bowe v. 357 SCRA 846 (2001). e. CA. 138 Topacio v. Issue of Substantial Breach (Arts. Court of Appeals. 96 SCRA 741 (1980). The non-happening of the condition merely granted the buyer the right to rescind the contract or even to waive it and enforce performance on the part of the seller. the payment of the purchase price is a positive suspensive conditio n. 545 SCRA 325 (2008). xBlas v. involves a meeting of minds between two persons whereby one binds himself. 351 SCRA 183 (2001). Sr. The vendor’s obligation to convey the title does not become effective in case of failure to pay. When the obligation of buyer to pay the full amount of the purchase price was made subject to the condition that the seller first delivery the clean title over the parcel bough within twenty (20) months from the signing of the contract. Vda. 263 SCRA 15. Whereas. Solidstate Multi-Products Corp. d. and (b) giving the vendor 139 the right to unilaterally rescind the contract in case of non-payment. CA. Laforteza v.. Cucueco. 340 SCRA 720. CA.. 1191 and 1234)
Platinum Plans Phil. 456 SCRA 577 (2005). Jr. Ver Reyes v. but merely serves as evidence of. v. An agreement in which ownership is reserved in the vendor and is not to pass to the vendee until full payment of the purchase price is known as a contract to sell. BUT SEE: √Dignos v. xBuot v. 401 SCRA 54 (2003). Court of Appeals. but only a transfer after full payment of the 141 purchase price. 1545 of Civil Code which provides that ―W here the obligation of either party to a contract of sale is subject to any condition which is not performed. c. Catienza-Villaverde. Rodriguez. AngelesHutalla. Cristobal.
BUT SEE: √PNB v.. xChua v. Lina. Our land registration laws do not give title holders any better ownership than what they actually had prior to registration. but may also be determined from proven acts of the parties. Zamora Realty and Dev. Court of 136 Appeals. Angeles-Hutalla. Court of Appeals. Corp v. Demafelis v. Importance of ―Locating‖ the Condition to Pay Price in Full In a contract of sale. Naguiat. the parties would stand as if the conditional obligation never existed.
xLegarda Hermanos v. 562 SCRA 660 (2008). upon failure of buyer to comply with its obligation. Florendo. 2. but even after default he was willing and had offered to pay all the arrears. √Laforteza v. a party may take it upon itself to consider the contract rescinded and act accordingly albeit subject to judicial confirmation. 143 Manuel v. the grace period is effective without further need of demand either calling for the payment of the obligation or for honoring the right.M. Inc. The act of the seller in notifying the buyer of his intention to sell the properties to other interest persons if the latter failed to pay the balance of the purchase price is sufficient notice for the cancellation or resolution of their contract to sell.‖ the assumption of mortgage is a condition to the seller’s consent so that without approval by the mortgagee. 280 SCRA 536 (1997). v. v. but simply an event that prevented the obligation of the vendor to convey title from acquiring any obligatory force. Machuca. 333 SCRA 643 (2000). Saldaña. CA. De los Angeles. v. while the failure to comply with a condition imposed on the performance of an obligation only gives the other party the option either to refuse to proceed with sale or waive 146 the condition... the full payment of the purchase price is a positive condition. 109 Phil. v. Clave. CA. which may or may not be given. CA. Inc. the Court granted additional period of 60 days from receipt of judgment for buyer to make all installments payments in arrears plus interests. there was no need to judicially rescind the contract to sell. xBricktown Dev. xLeaño v. v. In such case. √AFP Mutual Benefit Assn. the seller remains the owner and mortgagor of the property and retains the right to 147 redeem the foreclosed property. the Supreme Court nevertheless awarded ownership over one of the two (2) lots jointly purchased by the buyer. CA. √Lim v. 250 SCRA 223 (1995). BUT SEE: In a contract to sell. 147 Biñan Steel Corp. v. Amor Tierra Dev. Inc. CA. Javier. Corp.36 The concept of substantial breach is irrelevant to a contract of sale. Machuca.
XII. Uyecio. Inc. 549 SCRA 527 (2008). Court of Appeals. De los 144 Angeles. Laforteza v. Orden v. In a ―Sale with Assumption of Mortgage. casual or serious.. although demand for rescission had already been made.. the failure of which is not considered a breach. Judicial rescission is required under Article 1191. 146 Romero v.. xJ. Court of Appeals.
142 Siska Dev.. Equity Resolutions on Contracts To Sell Although buyer clearly defaulted in his installment payments in a contract to sell covering two parcels of land. 279 SCRA 118 (1997). 96 SCRA 69 (1980). √Palay Inc. 239 SCRA 126 (1995). Villamaria. Conditions (Art. A grace period is a right. v. CA. although not enough to cover the purchase price of the two lots were enough to cover fully the purchase price of one lot. Lim v. 182 SCRA 564 (1990). Cheng v. Adalin v. 124 SCRA 638 (1983). this rule is not absolute. on the basis that the total amount of installments paid. no sale is perfected. Aurea. 562 SCRA 226 (2008). 31 SCRA 829 (1970). 43 SCRA 93 (1972). Court of Appeals. 3. xLuzon Brokerage 142 Co.
. and when unconditionally conferred. 391 SCRA 90 (2002). However. √University of the Philippines v. Lucia Realty & Dev. Republic v. 1545) Failure to comply with condition imposed upon perfection of the contract results in failure of a contract. In a contract to sell real property on installments.. Tuazon Co. 300 SCRA 722 (1998). Court of Appeals. 231 SCRA 674 (1994). 364 SCRA 145 768 (2001).. xRamos v. The transfer of ownership and title would occur after full 143 payment of the price. Failure by one of the parties to abide by the conditions in a contract to sell resulted in the rescission of the contract. v. 144 Jison v. We have held that in proper cases. Corp. v. Office of the President. A contract to sell imposes reciprocal obligations and so cannot be terminated unilaterally by either party. ruling there was substantial performance insofar as one of the lots concerned as to prevent rescission thereto. not an obligation of the debtor. 369 SCRA 36 (2001). CONDITIONS AND WARRANTIES
1. 55 SCRA 3246 (1974). Rodriguez. Maritime Building Co. 35 SCRA 103 (1970). Sta. 145 Torralba v. Where buyer had religiously been paying monthly installments for 8 years. 487 SCRA 571 (2006). 164 SCRA 339 (1988). Minimum Requirement for Cancellation of Contract to Sell The act of a party in treating a contract as cancelled should be made known to the other party because this act is subject to scrutiny and review of the courts in case the alleged defaulter bring the matter for judicial determination. 1 (1960).. Jr. 333 SCRA 643 (2000). Inc. Genato. 182 SCRA 564 (1990).
the essential requisites of a contract are: consent of the contracting parties. Jr. Assertions concerning the property which is the subject of a contract of sale. gave an implied warranty of title. √Guinhawa v. The principle of caveat emptor only requires the purchaser to exercise care and attention ordinarily exercised by prudent men in like business affairs. Corp. 1546) A warranty is a statement or representation made by the seller of goods. Inc. 1318 of Civil Code. Under Art.M. v. Sy. and the prescriptive period to file a breach thereof is six months after the delivery of the vehicle. v. Court of Appeals. and only applies to defects which are open and patent to the service of one exercising such care. Claunan. 138 SCRA 1 (1985). 567 SCRA 53 (2008). Implied Warranties (Art.. Court of Appeals. Escaler 149 v. Breach of an express warranty makes the seller liable for damages. quality or title of the goods. Sellner. where all are present. 1559). 281 SCRA 176 (1997). No Warranty Against Eviction When Execution Sale – In voluntary sales. Absent one of the above. the result is a valid contract. in delcariung that he owned and had clean title to the vehilce. 474 SCRA 427 (2005). 1548-1560) Seller must be summoned in the suit for eviction at the instance of the buyer (Art. Seller Has Right to Sell b. J. v. 468 SCRA 278 (2005). or made a third-party defendant. some parties introduce various kinds of restrictions or modalities.
. 477 SCRA 666 (2005). and (3) the buyer purchases the thing relying on such affirmation or promise thereon.‖ in the event of non-approval by the courts. However. vendor can be expected to defend his title because of his warranty to the vendees but no such obligation is owed by the owner whose land is sold at execution sale. Conditions versus Warranties. object certain which is the subject matter of the contract and cause of the obligation which is established. having reference to the character. ―The law allows considerable latitude to seller’s statements. 94 SCRA 413 (1979). Express Warranties (Art. affect the validity of the contract. √Heirs of Pedro Escanlar v. contemporaneously and as part of the contract of sale. Court of Appeals. It does not apply to a representation that amounts to a warranty by the seller and the situation requires the buyer to rely upon such promise or affirmation. Thus. the lack of which will not. a provision ―this Contract of Sale of rights. CA. 3. Court of Appeals. Warranty Against Eviction (Arts. 2. A man who relies upon such an affirmation made by a person whose interest might so readily prompt him to exaggerate the value of his property does so as his peril. Tuazon v. A warranty is an affirmation of fact or any promise made by a vendor in relation to the thing sold. no contract can arise. interests and participations shall become effective only upon the approval by the Honorable Court. v. It can only be applied where it is shown or conceded that the parties to the contract stand on equal footing and have equal knowledge or equal means of knowledge and there is no relation of trust or confidence between them. Corp. Torrejos. The decisive test is whether the vendor assumes to assert a fact of which the vendee is ignorant. or in regard to its qualities and characteristics. CA. or dealer’s talk. 148 People. BUT SEE: Art. 1558). 276 SCRA 674 (1997). xCarrascoso. are the usual and ordinary means used by sellers to obtain a high price and are always understood as affording to buyers no ground for omitting to make inquiries. however. 274 SCRA 597 (1997). Conversely. and must take the consequences of his own imprudence.‖ he gave a warranty against eviction. and be made a co-defendant (Art. 127 (1911). The seller. and experience teaches that it is exceedingly risky to accept it at its face value. 1547) a. 254 (1917).37 There has arisen here a confusion in the concepts of validity and the efficacy of a contract. 516 SCRA 681 (2007) Canizares Tiana v. v.
Oro Land Realty Dev. The following requisites must be established in order that there be an express warranty in sale: (1) the express warranty must be an affirmation of fact or any promise by the seller relating to the subject matter of the sale. x Santiago Land Dev. 37 Phil. 21 Phil. 4. (2) the natural tendency of such affirmation or promise is to induce the buyer to purchase the thing. √Ang v. CA. and in pledging that he ―will defend the same from all claims or any claim whatsoever [and] will save the vendee from any suit by the government of the Republic of the Philippines. CA.‖ xSongco v. xGoodyear Philippines. 1552. √Power Commercial and Industrial Corp. and by which he promises or undertakes to insure that certain facts are or shall be as he then represents them Ang v. affect only the effectivity and not the validity of the contract of sale. 567 SCRA 53 (2008).
or when the product left the seller’s or manufacturer’s control. 1560) d. 441 SCRA 357 (2004). the US tax liabilities constitute a potential lien which applies to the subject’s matter’s legal situation.A. CA. 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. which was present upon the delivery or manufacture of the product. Madrigal Wan Hui Lines Corp. 162 SCRA 636 ). 6. (e) The action must be instituted within the statute of limitations. PNB v. 1599). Effects of Waivers The phrase ―as is. v. Warranty Against Hidden Defects (Arts. Court of Appeals. Court of Appeals. 1561-1580) The stipulation in a lease with option to purchase (treated as a sale of movable on installments) that the buyer-lessee ―absolutely releases the lessor from any lia bility whatsoever as to any and all matters in relation to warranty in accordance with the provisions hereinafter stipulated. Court of Appeals. 441 SCRA 357 (2004).. 5. g. xMendoza v. v. 166 SCRA 493 (1988). 412 SCRA 375 (2003). 178 SCRA 188 (1989). Inc. Ang v. (b) The defect must exist at the time the sale was made. the following must be established: (a) that the buyer sustained injury because of the product.. RJL Martinez. To constitute a sale by sample. √Nutrimix Feeds Corp. √Nutrimix Feeds Corp. Sale of Goods by Sample There is a sale by sample when a small quantity is exhibited by the seller as a fair specimen of the bulk. and in the absence of such period. where is‖ basis pertains solely to the physical condition of the thing sold. 150 441 SCRA 357 (2004).. Court of Appeals. or the product must have reached the user or consumer without substantial change in the condition it was sold. while for actions based on breach of implied warranty. the general rule on rescission of contract. A hidden defect is one which is unknown or could not have been known to the buyer. or when the product was sold to the purchaser. Warranty as to Fitness or Quality of Goods In order to enforce the implied warranty that the goods are reasonably fit and suitable to be used for the purpose which both parties contemplated. 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 is defective. xNDC v. Mega Prime Realty and Holding Corp. Court of Appeals. Additional Warranties for Consumer Products (Arts. (d) The defect. 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 correspondent with the sample. The prescriptive period for instituting actions based on a breach of express warranty is that specified in the contract. √Nutrimix Feeds Corp. R. (b) that the injury occurred because the product was defective or unreasonably unsafe.
Investments & Development. Buyer’s Options in Case of Breach of Warranty (Art. In a contract of sale by sample.38 c. the buyer has no obligation to shoulder the same. 441 SCRA 172 (2004). 567 SCRA 53 (2008). In the case at bar. v. not to its physical aspect. which is not present and there is no opportunity to inspect or examine the same.‖ was held as an express waiver of warranty against hidden defect in favor of the seller-lessor which ―absolved the [seller-lessor] from any liability arising from any defect or deficiency of the machinery they bought. Seller’s agent can by agreement be liable for the warranty against hidden defects. 7. the requisites to recover on account of hidden defects are as follows: (a) The defect must be hidden. Effects and Prescription of Warranties A breach in the warranties of the seller entitles the buyer to a proportionate reduction of the purchase price. which is four years. Warranty Against Non-Apparent Servitudes (Arts. v. 567 SCRA 633 (2008). and finally (c) the defect existed when the product left the hands of the petitioner. e. Under the law. f. Inc. the prescriptive period is six months from the date of the delivery of the thing sold. v. xSchmid and Oberly. David. (c) The defect must ordinarily have been excluded from the contract. Consumer Act.‖ x Filinvest Credit Corp. not to its legal situation. must be important (render the thing unfit or considerably decreases fitness). 68. v. Thus. 7394).
Inc. Solid Homes. buyer has a right to the immediate possession of the property sold. 1601) Right to repurchase must be constituted as part of a valid sale at perfection. v. it is a new contract entered into by the purchases as absolute owner. is equivalent to a formal offer to redeem. Lumayag v. B. CA. 153 463 SCRA 627 (2005). Cebu State College of Science and Technology . 216 SCRA 287 (1992). 153 Reyes v. Court of Appeals. v. √Misterio v. if he afterwards grants the vendor the right to repurchase. Dizon. CA. 499 SCRA 276 (2006). De Delfin v. is not in contravention with Art. 526 SCRA 51 (2007). Dellota. 190 SCRA 439 (1990). 498 SCRA 17 (2006). Court of Appeals. Papio. 142 SCRA 82 1986). CONVENTIONAL REDEMPTION 1. 6. Legayada. 441 SCRA 357 (2004). 1231. 222 SCRA 736 (1993). Definition (Art. 26 SCRA 189 (1968). xVda. xVillegas v. 275 SCRA 267 (1997). But when tender not possible. CA. 1616) In order to exercise the right to redeem. 3. 151 CA. Situation Prior to Redemption In a sale a retro. de Rigonan v. consignation is not required after tender is refused xMariano v. consignation should be made x Catangcatang v. Hamada. 1600). the price agreed upon should not generally be considered as the just value of the thing sold. only tender of payment is sufficient x Legaspi v.. Roberts v. 14 SCRA 215 (1965). Papio. 1611 to 1614) 5. Yap. Icasiano.
. xVillarica v. Redemption Price (Art. CA. v.
XIII. 1616. Ramos v. EXTINGUISHMENT OF SALE
A. absent other corroborative evidence—there is no requirement in sales that the price be equal to the exact value of the thing subject matter of the sale. In sales denominated as pacto de retro. and does not bar additional amounts that the parties may agree upon. 515 SCRA 346 (2007). is not essential where the right to redeem is exercised through a judicial action within the redemption period and simultaneously depositing the redemption price. 2. since the provision is not restrictive nor exclusive. 461 SCRA 122 (2005). 51 Phil (1927). accompanied by a bona fide tender of redemption price. with damages in either case. √Nutrimix Feeds Corp. Misterio v. Redemption Period The period to repurchase is not suspended merely because there is a divergence of opinion between the parties as to the precise meaning of the phrase providing for the condition upon which the right to repurchase is triggered. Who Can Redeem (Arts.39 The remedy against violation of warranty against hidden defects is either to withdraw from the contract (accion redhibitoria) or to demand a proportionate reduction of the price ( accion quanti minoris). IN GENERAL (Arts. xDorado Vda. Well-settled is the rule that a formal offer to redeem must be accompanied by a valid tender of the redemption price and the filing of a judicial action. The existence of seller a retro’s right to repurchase the proper is not dependent upon the prior final interpretation by the court of the said phrase. and. 515 SCRA 152 346 (2007). Derecho. unless otherwise agreed upon. Ramos v. An agreement to repurchase becomes a promise to sell when made after the sale because when the sale is made without such agreement the purchases acquires the things sold absolutely. 250 SCRA 596 (1995). subject only to the resolutory condition of repurchase by the seller a retro within the stipulated period. 461 SCRA 122 (2005). xLee Chuy Realty Corp. Torres v. Cadungog v. √Roberts v. CA. CA. How Redemption Effected (Art. A formal offer to redeem. Heirs of Jacinto Nemeño. 1616) A stipulation in a sale a retro requiring as part of the redemption price interest for the cost of money. 84 SCRA 51 (1978). since title and ownership of the property sold are immediately vested in the buyer a retro. 469 SCRA 561 (2005). plus the consignation of the redemption price within the period of redemption. since the
Claravall v. 542 SCRA 397 (2008). 4. Cebu State College of Science and Technology.
‖ x Solid Homes v. Salonga v. the parties contractual stipulations prevail. EQUITABLE MORTGAGE (Arts. xCadungog v. Olivares v. De Delfin v. Dorado Vda. Martinez v. Court of Appeals. Dellota. An equitable mortgage is defined as one which although lacking in some formality or form or words. the attitude. Hernandez. xVda. Lee. Court of Appeals. under the Latin maxim NEMO DAT QUOD NON HABET. Jr. 275 SCRA 267 (1997). Papio. otherwise. 526 SCRA 51 (2007). Court of Appeals. Heirs of Jacinto Nemeño. 526 SCRA 514 (2007). the vendor is still given a period of thirty days from the finality of the judgment within which to repurchase the property. after the effect of consolidation. vests upon the buyer a retro absolute title and ownership over the property sold by operation of law. Court of Appeals. Rongavilla. CESAR L. Additionally. Intestate Estate of the Late Emigdio Mercado. de Rigonan v. irrevocable title shall be vested in the vendee by operation of law. 501 SCRA262 (2006).. Tio v. 470 SCRA 291 (2005). as shown not necessarily by the terminology used in the contract but by all the surrounding circumstances. 430 SCRA 323 (2004). Cirelos v. Yap. 398 SCRA 97 (2003). Bandong. as the case may be. Consequently. Intestate Estate of the Late Emigdio Mercado. 479 SCRA 288 (2006). 275 SCRA 267 (1997). p. Ternida. 472 SCRA 229 (2005). 1607) Article 1607 abolished automatic consolidation of ownership in the vendee a retro upon expiration of the redemption period by requiring the vendee to institute an action for consolidation where the vendor a retro may be duly heard. San Pedro v. courts have no business extricating her from that bad bargain —courts are not guardians of persons who are legally competent. Under a sale a retro. declarations of the parties. Dorado Vda. Ceballos v. 7. 9. In fact. such persons would have no choice but to sign a deed of absolute sale of property or a sale thereof with pacto de retro if only to obtain a much-needed loan from unscrupulous money lenders. 515 SCRA 346 (2007). it is a fact that in time of grave financial distress which render persons hardpressed to meet even their basic needs or answer an emergency. 463 SCRA 627 (2005). Bacaron.
155 156 154
. the mortgage or re-sale by the seller a retro of the same property would not transfer title and ownership to the mortgagee or buyer.).. and (b) Their intention was to secure an existing 157 debt by way of a mortgage. it is aimed to end unjust or oppressive transactions or violations in connection with a sale or property. 8. Romulo v. De Delfin v. 469 SCRA 561 (2005). or other requisites demanded by a statute. PHILIPPINE LAW ON SALES. nevertheless reveals the intention of the parties to charge real property as security for a debt. Besides. Lumayag v. considering many cases of unlettered persons or even those with average intelligence invariably finding themselves in no position whatsoever to bargain fairly with their creditors. 542 SCRA 397 (2008). Once the vendor fails to redeem the property within the stipulated period. Effect When No Redemption Made: Consolidation (Art. xRaymundo v. xAlmeda v. Daluro. such as the relative situation of the parties at that time. 275 SCRA 380 (1997). Fruits (Art. 1602-1604) If the terms of the pacto de retro sale were unfavorable to the vendor. 1607 does not impair such title and ownership because the method prescribed thereunder is merely for the purpose of registering and consolidating titles to the property. since the law seeks to prevent circumvention of the law on usury and the prohibition against pactum commissorium provisions. 275 SCRA 237 (1997). and contains nothing impossible 156 or contrary to law. The essential requisites of an equitable mortgage are: (a) The parties entered into a contract denominated as a contract of sale. Hilado v. CA. xSpouses Miseña v. Dellota. citing VILLANUEVA. Sarmiento. Alvaro v. the failure of the buyer to consolidate his title under Art. 37 SCRA 257 (2002). 430 SCRA 323 (2004). 79 SCRA 327 (1977). xSolid Homes v. the failure on the part of a seller a retro to exercise the redemption right within the period agreed upon or provided for by law. 303 SCRA 154 749 (1999). Go v. 490 SCRA 624 (2006). CA. acts. Heirs of Rafael Medlla. Abayata. The wisdom of these provisions cannot be doubted. The decisive factor in evaluating whether an agreement is an equitable mortgage is the intention of the parties. conduct.40 article itself provides ―and other stipulations which may have been agreed upon. Ceballos v. 542 SCRA 397 (2008). Roberts v. Bandong. xMatanguihan v. Derecho. 358 SCRA 38 (2001). xMolina v. Raymundo v. 556 SCRA 175 (2008). the negotiations between them
Lao v. 1617) Article 1617 on the disposition of fruits of property redeemed applies only when the parties failed to provide a sharing arrangement thereof. 430 SCRA 338 (2005). Concepcion. 271. 155 Court of Appeals. The law on equitable mortgage favors the least transmission of rights and interest over a property in controversy. 275 SCRA 380 (1997). 157 Matanguihan v. If the vendee succeeds in proving that the transaction was indeed a pacto de retro. 554 SCRA 384 (2008). Layug. 526 SCRA 514 (2007). (1998 ed.
v. Bello. 1602 is sufficient for a contract of sale a retro to be presumed an equitable mortgage.41 leading to the deed. Sarmiento. 166 Cruz v. The provisions of Art. 100 (1916). 471 SCRA 653 (2005). IAC. 481 SCRA 226 (2006). ―Inadequacy of purchase price‖ is considered so far short of the real value of the property as to startle a correct mind. 537 SCRA 699 (2007).
. 472 SCRA 229 (2005). Matanguihan v. 557 SCRA 256 (2008). 45 O. xTuazon v. Bautista v. Dizon. in that to answer a pressing emergency. 165 Romulo v. Alvaro v. Uy v. 351 SCRA 716 (2001). 220 SCRA 716 (1993). the alleged sale with pacto de retro will be construed as an equitable mortgage. Layug.
To presume a contract is an equitable mortgaged based on gross inadequacy of price. they will submit to any term that the crafty may 158 impose on them. Heirs of Jacinto Nemeño. Jimenez. CA. Mere inadequacy of price is not sufficient to create the presumption. 526 SCRA 514 (2007). 479 SCRA 288 (2006). Madrigal v. 557 SCRA 50 (2008). Layug.G. 3394 (1948). Dizon. Laserna. CA. Jr. 231 SCRA 309 (1994). Diño v. Court of Appeals. 498 SCRA 17 (2006) When the vendor is in urgent need of money when he executes the sale. 557 SCRA 256 (2008). for it may be rebutted by competent and satisfactory proof to the contrary. De Delfin v. Ayson. (c) when after the expiration of the right of repurchase. Dizon. A contract purporting to be an absolute sale is presumed to be an equitable mortgage: 164 (a) when the price of the sale is unusually inadequate. 471 SCRA 653 (2005). Bello. 448 (1990). xRedondo v. Banga v. Dorado Vda. 543 SCRA 402 (2008). Legaspi v. Bacaron. 420 SCRA 414 (2004). 501 SCRA262 (2006). Diño v. Hilado v. Calaguas. Ternida. Balatero v. Raymundo v. all pertinent facts having a tendency to fix and determine the real nature of their design and understanding. Badges of Equitable Mortgage (Art. it is extended by the buyer. (d) when the purported seller continues to collect rentals from the lessees of the property sold. or when continued possession by the seller is supported by a valid arrangement consistent with the
Austria v. Paragas. 557 SCRA 256 (2008). 1602
A contract of sale actually intended to secure the payment of an obligation is presumed 161 an equitable mortgage. 8. Lim v. it constitutes evidence of great weight that a person under whose name the realty taxes were declared has a valid 167 and right claim over the land. CA.. p. 45 O. Jr. 164 Romulo v. 351 SCRA 716 (2001). xSantiago v. 163 Zamora v. 456 SCRA 659 (2005). Jr. 341 SCRA 707 (2000). V. x Hilado v. 34 Phil.CA. xSantiago v. and generally. 543 SCRA 402 (2008). Bautista v. Santos. CA.G. 162 Claravall v. 498 SCRA 365 (2006). Unangst. Unangst. The presumption in Article 1602 jibes with the rule that the law favors the least transmission of property rights. xGo v. xOlivares v. 260 SCRA 10 (1996). Bandong. xHilado v. Gonzales. 275 SCRA 380 (1997). it must be clearly shown from the evidence presented that the consideration was in fact grossly inadequate at the time the sale was executed. Heirs of Rafael Medlla. Ong. (b) when the vendor remains in 165 possession as lessee or otherwise. CA. Bautista v. Banga v. However mere allegations without proof to support inadequacy of price. Calaguas. 1602 on the presumption of equitable mortgage applies also to a 163 contract purporting to be an absolute sale. xMariano 159 v. 8. and when such payment is coupled with continuous possession of the property. Bandong. No. 542 SCRA 397 (2008). Layug. a.. 230 SCRA 664 (1994). Paragas. Lobres v. but it is not conclusive. Necessitous men are not always free. or to transfer the title with a right to repurchase under specified conditions reserved to the seller. Dellota. Unangst. Unangst. Ramos v. Jardines. Jardines. 160 Lim v. 190 SCRA 439. Cuyugan v. 459 SCRA 122 (2005). 557 SCRA 256 (2008). Aleligay v. Heirs of Spouses Nieves and Alfredo Baldonado. 554 SCRA 384 (2008). 37 SCRA 257 166 (2002). was in truth and in fact given merely as security for the repayment of a loan. xEnriquez. The presence of only one circumstance defined in Art. Bautista v. 161 Ayson.. Heirs of Rafael Medalla. Sr. CA. That is why parol evidence is competent and admissible in support of the allegations that an instrument in writing. No. Lobres v. or that the mind revolts at it as such that a reasonable man would neither directly or indirectly be likely to consent to it. V. 526 SCRA 514 (2007). xVda de Alvarez v. 501 SCRA262 (2006). 536 SCRA 639 (2007). 220 SCRA 716 (1993). 481 SCRA 226 (2006). Payment of real estate taxes is a usual burden attached to ownership. Raymundo v.. 501 SCRA262 (2006). 167 Lumayag v. 37 SCRA 257 (2002). 154 SCRA 530 (1987). 557 SCRA 50 (2008). Court of Appeals. 412 SCRA 614 (2003). Court of Appeals. Jr. CA. Jr. purporting on its face to transfer the absolute title to property.
Mere tolerated possession is not enough to prove that the transaction was an equitable mortgage. Mariano v. Medalla 377 SCRA 257 162 (2002). 526 SCRA 51 (2007). xRomulo v. 3394 (1948).. p. CA. Jr.
e. Feliciano v. xCirelos v. the agreement shall automatically operate to be an instrument of d acion en pago without need of executing any new document does not constitute pactum commissorium. 171 Guerrero v. Yñigo. would amount to a pactum commissorium. Lim. and the covering deed of sale would be registered is in substance a pactum commissorium in violation of Art. √A. 1602. Hernandez. xOlea v. Sellers in a sale judicially declared as pacto de retro may not exercise the right to repurchase within the 30-day period provided under Art. Remedies Allowed for Equitable Mortgage (Art. Heirs 171 of Jacinto Nemeño. may be applied retroactively in cases prior to the effectivity of the Civil Code. BUT SEE: The stipulation in the promissory note providing that upon failure of the makers to pay interests. Under Article 1602. The only proper remedy is to cause the foreclosure of the mortgage in equity. √Solid Homes. 579 (1918). or to determine if the principal obligation secured by the equitable mortgage has been paid or settled. 2088. Although under the agreement the seller shall remain in possession of the property for only one year. in fact a pacto de retro sale. 526 SCRA 315 (2007). 1605). 1606. 172 Legaspi v. CA. although Art. 298 SCRA 133 (1998). if it is shown that there was no honest
Austria v. 1606) The 30 day period under Art. Article 1602 being remedial in nature. Montevirgin v. such as an action for declaration of nullity of the deed of sale and specific performance. Court of Appeals. 2088) A stipulation which is a pactum commisorium enables the mortgagee to acquire ownership of the mortgaged properties without need of any foreclosure proceedings —it is a nullity being contrary to the provisions of Article 2088 of the Civil Code. and consequently. xLegaspi v. xPangilinan v. xIgnacio v. 1605 which allows for the remedy of reformation.42 sale. 420 SCRA 414 (2004). delay in transferring title is not one of the instances enumerated by law—instances in which an equitable mortgage can be presumed. v. Court of Appeals. nothing therein precludes an aggrieved party from pursuing other remedies to effectively protect his interest and recover his property. The fact that the price in a pacto de retro sale is not the true value of the property does not justify the conclusion that the contract is one of equitable mortgage. Oronce v. Vda. Belonio v. c. 471 SCRA 653 (2005). Inc. xConsing v. Ong. 69 SCRA 393 (1976). would not support the allegation of equitable mortgage. 37 (1954). Intestate Estate of the Late Emigdio Mercado. 459 SCRA 122 (2005). Court of Appeals. especially when it was shown that the vendor 169 retained part of the purchase price. Jr. 298 SCRA 349 (1998). ownership of the property would automatically be transferred to the payee. Movella. x Tolentino v. 450 SCRA 644 (2005). xBriones-Vasquez v. Octaviano. was retained by the alleged vendor to qualify the arrangement as an equitable mortgage. In an equitable mortgage situation. 170 De Ocampo v. de Zulueta v. Court of Appeals. Ramos. 756 (1959). 490 168 SCRA 624 (2006). 386 SCRA 36 (2002). CA. The provision in a MOA/Dacion en Pago with a Right to Repurchase that in the event the borrower fails to comply with the new terms of restructuring the loan. b. which when it was not paid on due date was negotiated into a sale.147 (1920). such stipulation does not detract from the fact that possession of the property. 246 SCRA 242 (1995). an indicium of ownership. Gonzales. Bello. CA. CA. 38 Phil.
. xBanga v. Pactum Commissorium (Art. 177 SCRA 14 (1989). 112 SCRA 641 (1982). 181 SCRA 359 (1990). 105 Phil. 41 Phil. 96 Phil. the resultant sale is void and the registration and obtaining of new title in the name of the buyer would have be declared void also. 430 SCRA 323 (2004).. the consolidation of ownership in the person of the mortgagee in equity upon failure of the mortgagor in equity to pay the obligation. 172 Francisco Realty v. without evidence that the subsequent deed of sale does not express the true intentions of the parties. 121 SCRA 314 (1983). It does not apply when the security for a debt is also money in the form of time deposit.. Court of Appeals. 275 SCRA 267 (1997). xCeballos v. Ong. Nor does the fact that the original transaction on the land was to support a loan. 247 SCRA 274 (1995). the practice is to fix a relatively reduced price to afford the seller a retro every 170 facility to redeem the property . xLumayag v. although they have taken the position that the same was an equitable mortgage. Final Chance to Redeem in ―Mistaken Equitable Mortgage‖ (Art. 459 SCRA 122 (2005). Limjuco. give rise to a presumption of equitable mortgage. In the case of an equitable mortgage. CA. 173 Tapas v. 1606 does not apply if the courts should find the sale to be 173 absolute.
157 SCRA 455 (1988). Redemption by co-owner redounds to the benefit of all other co-owners. 2. as a sign of good faith.
. are bound by the same. Among Co-heirs (Art. 1621 and1622) Requisite to show property previously bought on ―speculation‖ dropped. Basa v. 148 SCRA 75 (1987). the right to redeem cannot be exercised by a co-heir alone. Legal Redemption Rights under the Civil Code a. 148 SCRA 75 (1987). √Abilla v. CA. Definition (Art. xFernandez v. 45 SCRA 409 (1972). 485 SCRA 8 (2006). Tarun. and (b) that if they truly believed the sale to be an equitable mortgage. 374 SCRA 51 (2002). xLegaspi v. xMariano v. Tarun. 374 (2003). Valencia. on or before the 174 expiration of the right to repurchase. C. Right of redemption covers only ―resale‖ and does not cover exchanges or barter of properties xDe Santos v. de Macoy v. 1620) The right of redemption may be exercised by a co-owner only when part of the community property is sold to a stranger. 222 SCRA 736 (1993). 1619) Legal redemption is in the nature of a privilege created by law partly for reasons of public policy and partly for the benefit and convenience of the redemptioner. Among Adjoining Owners (Arts. CA. But the burden of proof to provide for the exception lies with the buyer. xVda. which included the sale to a third person of their pro indiviso shares in the property.
Vda. 409 SCRA 371. then the right of redemption can be exercised and the only exemption provided is when the buyer can show that he did not own any other rural land. Aguilar. xCua v. 506 SCRA 374 (2006). IAC. while the co-heirs who did not participate are given the right to redeem their shares pursuant to Article 1088. For the right of redemption to be exercised. It is intended to minimize co-ownership.. xAvila v. 176 De Guzman v. xPrimary Structures Corp.43 belief thereof since: (a) none of the circumstances under Art. Gobonseng. d. De Ape v. Court of Appeals. xPlan v. Among Co-owners (Art. 409 SCRA 371 (2003). co-ownership has ceased even though the property is still under one title. CA. Valencia. 456 SCRA 193 (2005). When the seller a retro dies. xDe Guzman v. even when he uses his own fund. When there is no issue that when the adjoining lands involved are both rural lands. Barabat. since the right to redeem belonged in common to all the heirs. 135 SCRA 270 (1985). co-ownership must exist at the time of the conveyance is made by a co-owner and the redemption is demanded by the other coowner or co-owners. 391 SCRA 653 (2002). c. xFernandez v. to afford him a way out of what might be a disagreeable or [an] inconvenient association into which he has been thrust. Distinguishing Between Right of Redemption of Co-heirs and Co-owners – Article 1620 includes the doctrine that a redemption by a co-owner of the property owned in common. v. 206 SCRA 244 (1992). and the sale by one of the heirs of his definite portion cannot trigger the right of redemption in favor of the other heirs. 391 SCRA 653 175 (2002). 172 SCRA 176 660 (1989). Court of Appeals. CA. LEGAL REDEMPTION 1. Court of Appeals. Adille v. and not when there is a sale of a particular property of the estate. xAnnie Tan v. now when sold to another co-owner because a new participant is not added to the co-ownership. The heirs who actually participated in the execution of the extrajudicial settlement. b. 1088) Redemption right pertain to disposition of right to inherit. 1602 were shown to exist to warrant a conclusion that the transaction was an equitable mortgage. 117 SCRA 128 (1982). Court of Appeals. within the period prescribed by law inures to the benefit of all the other co-owners. they should have consigned with the trial court the amount representing their alleged loan. xPrimary Structures Corp. and cannot arise unless both adjacent lands are rural lands. When the heirs have partitioned the estate among themselves and each have occupied and treated definite portions thereof as their own. Vargas. City of Manila. v. 69 SCRA 360 (1976).
197 SCRA 606 (1991). The 30-day period does not begin to run in the absence of written notification coming 177 from the seller. CA. Redemption in Patents (Sec. and it must be a written notice of a perfected sale. xVerdad v. Conejero v. Notice to minors may validly be served upon parents even when the latter have not been judicially appointed as guardians since the same is beneficial to the children. Court of Appeals. cannot be taken to ―being the written affirmation under oath. The existence of a clause in the deed of sale to the effect that the vendor has complied with the provisions of Article 1623. Ferrer. xBadillo v. since the purpose is to reduce the number of participants until the community is terminated. and with definitiveness declared: For the 30-day redemption period to begin to run. Court of Appeals. Manuel Uy and Sons. When the buyers took possession of the property immediately after the execution of the deed of sale in their favor and lived in the midst of the other co-owners who never questioned the same. and must be construed as commencing the running of the period to exercise the right of redemption. nor the annotation of an adverse claim xVda.. as affirmed in xSalatandol v. 332 SCRA 305 (2000). 152 SCRA 407 (1987).. 1623 where there is a need for notice in writing. CA. Sale of Credit in Litigation (Art. and that notice given by the buyer or even by the Register of Deeds is not sufficient. C. v. being a hindrance to the development and better administration of the property. notice must be given by the seller. but only on the form of giving notice but not on the ruling of who is the proper party to give notice. The written notice of sale is mandatory. The notice required under Article 1623 is deemed to have been complied with when the other co-owner has signed the Deed of Extrajudicial Partition and Exchange of Shares which embodies the disposition of part of the property owned in common. that the filing of the suit for ejectment or
collection of rentals against a co-owner actually dispenses with the need for a written notice. and never indicated that he would exercise his right to redeem. 456 SCRA 193 (2005). Valencia. Tarun. 256 SCRA 593 (1996). xSpouses Doromal v. Court of Appeals. Inc. 1623 to begin the tolling of the 30-day period of redemption. 4. ―It is a one -way street. 119.
√Francisco v. Calaliman. 66 SCRA 575 (1975). 16 SCRA 775 (1966). 4 SCRA 526 (1962). 160 SCRA 627 (1988). xDistrito v. 2. in order to remove all uncertainties about the sale. so that the furnishing of the copies of the deeds of sale to the coowner would be sufficient.
a. 391 SCRA 653 (2002). x Fernandez v. summarized the case-law on Art. xPrimary Structures Corp. CA. Court of Appeals. Neither the registration of the sale xCabrera v. This expressly overruled the ruling in xEtcuban v. 409 SCRA 371 (2003). 506 SCRA 374 (2006). 150 SCRA 259 (1987). its terms and conditions. Court of Appeals. which allowed the giving of notice by the buyer to be effective under Article 1623. xBadillo v. Retes. 1623) The interpretation of Art. Villanueva. 256 SCRA 593 (1996). 222 SCRA 736 (1993). De Ape v. IAC.. OTHER LEGAL REDEMPTION RIGHTS a. Boiser. When Period of Legal Redemption Begins (Art.. 141)
Garcia v. nor notice being given by the city treasurer xVerdad v.
. Mariano v. Vargas. comply with the written notice required under Art.44 e. 152 SCRA 407 (1987). for the person entitled to the right is not a party to the deed of sale.
Affirmed ruling in xAlonzo v. the seller). When notice is given by the proper party (i. no particular form of written notice is prescribed under Article 1623. as held previously in xDistrito v.‖ in favor of the redemptioner since he can compel the buyer to sell to him but he cannot be compelled by the vendee to buy. Ferrer. as well as the evidence.e. Rare Exceptions: When the sale to the buyer was effected through the co-owner who acted as the broker. xCua v. 250 SCRA 560 (1995). 148 SCRA 507 (1987). 17 SCRA 201 (1989). xHermoso v.A. 1634) – 30 days from notice of demand to pay. 300 SCRA 516 (1998). 162 SCRA 568 (1988). as well as its efficacy and status. 1623. xPilapil v. should always tilt in favor of the redemptioner and against the buyer. CA. that the required written notice to petitioner under Article 1623 has been meet. notwithstanding actual knowledge of a co-owner. since the filing of the suit amounted to actual knowledge of the sale from which the 30-day period of redemption commences to run. CA. Court of Appeals. 197 SCRA 606 (1991). This expressly affirms the original ruling in Butte v.
the accepted offer of spouses-borrowers to ―repurchase‖ the property was actually a new option contract. 318 SCRA 416 (1999). 3844. the latter is granted by law the right to redeem it within 180 days from notice in writing and at a reasonable price and 181 consideration.A. xRural Bank of Davao City v. After bank has foreclosed the property as highest bidder in the auction sale. as amended. Bautista.. Redemption in judicial foreclosure of mortgage (Sec. he or his heirs may still repurchase within five (5) years from expiration of the two (2) year redemption period pursuant to Sec. 6 SCRA 946 (1962). R. No right to redeem from a judicial foreclosure sale. Rules of Civil Procedure) Written notice must be given to the judgment debtor before the sale of the property on execution. by Torrens title. 449 SCRA 65 (2005). in the event that the landholding is sold to a third person without the knowledge of the agricultural lessee. √Soriano v. Cabling. 217 SCRA 554 (1993). to be reckoned from the date of the sale and not from the date of registration in the office of the Register of Deeds. unlike the 360 days under the old provisions of the Rules of Court. 179 359 SCRA 480 (2001). Court of Appeals. v. Where there is a third-party claim. 440 SCRA 190 (2004). x Torres v. CA. xDijamco v. Court of Appeals. CAs. Camerino. NIRC of 1997) c. g. 119 of the 180 Public Land Act (C.45 Right to repurchase is granted by law and need not be provided for in the deed of sale. CA. 8791) A stipulation to render the right to redeem defeasible by an option to buy on the part of the creditor. xGSIS v. mortgagor may redeem within two (2) years from the date of foreclosure or from the registration of the sheriff's certificate of sale at such foreclosure if the property is not covered or is covered. sheriff should demand from the judgment creditor who becomes the highest bidder. 275 SCRA 329 (1997). Legal Right to Redeem under Agrarian Reform Code Under Section 12 of R. xFirst Global Realty and Dev. Redemption in Extrajudicial Foreclosure (Sec. 234 SCRA 146 (1994). 377 SCRA 341 (2002). x Lee 178 Chuy Realty Corp. The one-year redemption period in the case of foreclosure is not interrupted by the filing of an action assailing the validity of the mortgage. v. 28. so that at the expiration thereof. b. Cabling. the period of redemption shall be ―at any time within one (1) year from the date of registration of the certificate of sale. v. except those granted by banks or banking institutions. Court of Appeals.
. Redemption in Tax Sales (Sec. Redemption in Foreclosure by Rural Banks (R. x Lee Chuy Realty Corp. 291 SCRA 249 (1998). 275 SCRA 329 (1997).
178 179 180
Mata v. 250 SCRA 596 (1995). e. x Union Bank v. CA. 181 Springsun Management Systems Corp. Corp. payment in cash of his bid instead of merely crediting the amount to the partial satisfaction of the judgment debt. 6. Under Sec. CA. f.A. 175 SCRA 19 (1989). x Torres v. 47. If the mortgagor fails to exercise such right. San Agustin. The execution of a dacion en pago by sellers effectively waives the redemption period normally given a mortgagor. Act 3135) The redemption of extra-judicially foreclosed properties is exercised within one (1) year from the date of the auction sale as provided for in Act 3135. Rule 39 of the 1997 Rules of Civil Procedure. 27-28.A. x Ysmael v.A. Redemption by Judgment Debtor (Secs. 215. and the condition that the spouses-borrowers will pay monthly interest during the one-year option period is considered to be the separate consideration to hold the option contract valid. xQuiño v. 250 SCRA 596 (1995). to give him the opportunity to prevent the sale by paying the judgment debt sought to be enforced and the costs which have been incurred. 194 SCRA 508 (1991). Under the free patent or homestead provisions of the Public Land Act a period of five (5) years from the date of conveyance is provided. Heirs of Felicidad Canque v. respectively. Rule 39. xBerin v. 275 SCRA 741 (1997). 318 SCRA 215 (1999). No. CA. CA. the mortgagee who acquires the property at the foreclosure sale can proceed to have title consolidated in his name and a writ of possession issued in his favor.‖ so that the period is now to be understood as composed of 365 days. 141). 720) If the land is mortgaged to a rural bank. CFI. d. Vaca v. v. CA.
Perfection by Mere Consent (Art. it is ordinarily employed to describe the transfer of non-negotiable choses in action and of rights in or connected with property as distinguished from the particular item or property. 4. Corp. 526 SCRA 379 (2007). into a public document. It includes transfers of all kinds of property. The assignment may be done gratuitously or onerously. What the law requires in an assignment of credit is mere notice to debtor. v. 526 SCRA 379 (2007). 587 (1918). known as the assignee. 358 SCRA 626 (2001). 358 SCRA 626 (2001). all creditors would be prevented from assigning their credits because of the possibility of the debtors’ refusal to given consent. Otherwise. 182 xLicaros v. Yap Tico. 200 SCRA 637 (1991). . Ledonio v. v. Although constituting a novation. Inc. PNB. 371 SCRA 603 (2001). Tradition in Assignment Notarization converts an Assignment of Credit. payment should be made to the assignee and not to the original creditor. xAquintey v. Court of Appeals.. xSouth City Homes.46 XIV. 175 SCRA 1 (1989). by a legal cause.. who acquires the power to enforce it to the same extent as the assignor 183 could enforce it against the debtor. real or personal. 511 SCRA 414 (2006). 1624-1635)
1. 1627) Assignment of a credit includes all the accessory rights. (b) If insolvency is known by the assignor prior to assignment. Effects of Assignment a. transfers his credit and accessory rights to another. b.. 358 SCRA 626 (2001). 5. BA Finance Corp. Inc. 413 SCRA 182 (2003). and is peculiarly applicable to intangible personal property and. such as sale. EXCEPTIONS: (a) If this is expressly warranted. in the latter case. Court of Appeals. But Must Be in Public Instrument to Affect Third Parties (Art. CA. even when the assignment is effected without his consent. a private document. v. c. v.. v. C & C Commercial Corp. 511 SCRA 414 (2006). (UPSUMCO) v.. xLedonio v.
182 Nyco Sales Corp. his knowledge thereof or lack of it affecting only the efficaciousness or inefficaciousness of any payment he might make. De los Angeles. 1628) Assignor warrants only the existence or legality of the credit but not the solvency of the debtor. such assignment does not extinguish the obligation under the credit assigned. Tibong. 272 SCRA 291 (1997). BA Finance. such as guaranty. Project Builders. Court of Appeals. Capitol Dev. V. Inc. As a consequence. Assignment of Credit An assignment of credit is an agreement by virtue of which the owner of a credit. and the duty to pay does not depend on the consent of the debtor. xUnited Planters Sugar Milling Co. in possession or in action.‖ xPNB v. ASSIGNMENT (Arts. Tibong. KJS Eco-Formwork System Phil. accordingly. pledge or preference. Consent of debtor is not necessary in order that assignment may fully produce legal effects. 2. mortgage. v. dacion en pago. Gatmaitan. and the purpose of the notice is only to inform the debtor that from the date of the assignment.Aquintey v. √Nyco Sales Corp. 1626) In an assignment of credit. Inc. BA Finance Corp. In its most general and comprehensive sense. Accessories and Accessions (Art. the third party steps into the shoes of the original creditor as subrogee of the latter. 184 Sison & Sison v. Rodriguez v. Project Builders. the consent of the debtor is not essential for its perfection. 183 Lo v.. complying with the mandate of Article 1625 of the Civil Code and making it enforceable even as against third persons. 40 SCRA 489 (1971). 207 SCRA 553 (1992). an assignment is ―a transfer or making over to another of the whole of any property. exchange or donation. Inc. and without the consent of the debtor.. Court of Appeals. 362 SCRA 548 (2001). known as the assignor. Warranties of Assignor (Art. Definition and Nature of Assignment Assignment is the process of transferring the right of assignor to assignee who would then have the right to proceed against the debtor. the assignment has an effect similar to that of a sale. thus. Issues re Debtor (Art. 527 SCRA 336 (2007). 1625).
. 200 SCRA 637 (1991). 1624) 3.. Court of Appeals. xProject Builders. Capitol Development Corp. Inc. d. or of any estate or right therein. 37 Phil. 184 xNIDC v.
merchandise. or assignor. 86 O. (b) All. Right of Repurchase on Assignment of Credit under Litigation (Arts.. The merchant must give the buyer a certified schedule of his debts: names of creditors. 2. by virtue of the warranty in Art. (c) All.G. transfer. and new creditor. mortgage or assignment of: (a) Goods. Ten (10) days before the sale. No.G. 180. c.
. transferor. wares. The proper remedy of the assignee is to proceed to foreclose on the leasehold right assigned as security for the loan. The Law only covers sales in bulk of fixtures and equipment used in the mercantile business. It is a new contractual relation based on the mutual agreement among all the necessary parties. which makes the vendor liable for the existence and legality of the credit at the time of sale. 185 √Licaros v. 4867 (1954).
Ledonio v. because the contents of a foundry shop are not wares and merchandise. and cannot cover the sale of assets by a manufacturer since the nature of his business does not partake of merchandise. xPeople v. the seller must take an inventory of his stock and advise all his creditors of the same. Scope (√Chin v. but the nullity of an obligation is not remedied by the assignment of the creditor’s right to another. the disposal by the owner of a foundry shop of all his iron bars and others does not fall under the law. then it behooves the assignor to make good its warranty and pay the obligation. EXCEPTION: When the seller obtains a written waiver from all creditors. √DBP v. The nullity of an old obligation may be cured by subrogation.G. which involves the buying and selling of merchandise. conventional subrogation requires an agreement among the three parties concerned – original creditor. 4 Supp. provisions or material other than in the ordinary course of business. which may extinguishes the obligation. Subrogation versus Assignment of Credit (Art. In an assignment of credit. b. or substantially all of all or substantially all of the fixtures and equipment used in and about the business. 8. Thus. xLo v. such that a new obligation will be perfectly valid. 3. Wong. Inc. when it is shown that the assigned credit no longer existed at the time of dation. whereas. 6 1137 (05 February 1990). 2088 against pactum commissorium. Uy. it produces the effects of a dation in payment. 6. The Law applies to merchants who are in the business of selling goods and wares and similar merchandise. 362 SCRA 548 (2001). Court of Appeals. x DBP v. 284 SCRA 14 (1998). amounts owing to each and the nature of the debt. however. or substantially all of the business or trade theretofore conducted by the vendor. mortgagor. When dacion en pago takes the form of an assignment of credit. and the non-payment of the loan cannot authorize the assignee to register the assigned leasehold rights in its name as it would be a violation of Art. Intellectual Property Code) 9. Compliance Requirements Under the Law a. the consent of the debtor is not necessary in order that the assignment may fully produce legal effects. 1634 and1635) 7. such assignment is equivalent to an equitable mortgage. 52) The Bulk Sales Law must be construed strictly. 1628. [CA] 50 O. Assignment of Copyright (Sec. 526 SCRA 379 (2007). Corp... 413 SCRA 182 (2003).
BULK SALES LAW
(ACT NO. Gatmaitan.
XV.1301) Subrogation extinguishes the obligation and gives rise to a new one. Purchase price paid must be applied to these debts. Coverage of ―Bulk Sale‖ – Sale. 3952)
1. 40 O. Assignment as an Equitable Mortgage When an assignor executes a Deed of Assignment covering her leasehold rights in order to secure the payment of promissory notes covering the loan she obtained from the bank. debtor. assignment refers to the same right which passes from one person to another. The Honorable Judge of the RTC of Manila.. Capitol Dev.47 (c) If insolvency is prior to assignment is common knowledge. KJS Eco-Formwork System Phil.
186 √Balmaceda v. and (3) Object of the sale is limited to merchandise.
XVI. the preparation of the inventory. as this is taken from the provision thereof excluding form the term ―retail business‖ the operation of a restaurant by a hotel -owner or -keeper since the same does not constitute the act of habitually selling direct to the general public merchandise. Honorable Judge of the RTC of Manila. e. Public Policy under RTLA 2000: A reversal of paradigm. √Goodyear Tire v. makes the transaction fraudulent and void. 2. 4 SCRA 792) b. Hernaez. 73 Phil. d. and the notification to creditors. 7) d. 325. would subject the seller or mortgagor to penal sanctions. v. 162 SCRA 206 (1988). Goodrich Philippines. (Sec. 86 O. Inc. Bulk transfer without consideration or for nominal consideration punishable. Even when the same of consumer goods is limited only to the officers of the the company. 11) A sale in bulk done without complying with the terms of the Law.F. operation of a pharmacy by a hospital. (Sec. and placing of wrong data required by law. (2) Selling direct to the general public.. c. Mapoy. Union Carbide Philippines. 6 1137 (05 February 1990). 124 SCRA 893 (1983).
RETAIL TRADE LIBERALIZATION ACT OF 2000 AND
RELATED PROVISIONS OF THE ANTI-DUMMY LAW
1. The Law limits its application to the sale of items sold for domestic or household..48 4. Inc. Elements: (1) Seller habitually engaged in selling. focus from the protecting the retailers to promoting the interests of consumers. Importance of Retaile Trade (√King v. (Sec. Category A – Exclusive to Filipino citizens and 100% Filipino entities b. but does not change the basic relationship between the seller. Categories of Retail Trade Enterprises a. Sr. the same would still constitute retail trade covered by the Law. the sale is deemed fraudulent and void. Non-giving of the list of creditors or intentional omission of the names of some of the creditors. The portion of a judgment providing for subsidiary liability is invalid. 123 SCRA 273 (1983). Category D – Luxury Items
Marsman & Co. 4) c. Sr. 13 November 2002. IRR of Law). Failure to comply with other provisions of the law the non-application of the consideration proportionately to the creditors. Meaning of ―General Public‖ (DOJ Opinion No. since the proper remedy of the creditor is to collect on the credit against the defendant. SEC Opinion No.. they would constitute non-consumer goods and not covered by the Law.G. series of 2002. Inc.. 3. Where the glass company manufactures glass products only on specific orders. series of 1945. 4) b. Meaning of ―Consumption‖ (DOJ Opinion No. First Coconut Central Co. Inc. commodities or goods for consumption.. assignor/encumbrancer and his creditor. Effects of Non-Compliance a. B. xPeople v. 11. series of 1954). No. (Sec.. 121 SCRA 363 (1983). whereas. sale of cellphones by a telecommunication company] does not constitute ―retail trade‖ within the purview of the Retail Trade Nationalization Law.g. Categories B and C c. it does not sell directly to consumers but manufacturers its products only for the particular clients. If purchase money or mortgage proceeds are not applied pro-rata to payment of the bona fide claims of the creditors. when the same items are sold to commercial users. 678 (1942). and if they cannot pay to attach on the property fraudulently mortgage since the same still pertain to the debtors-defendants. commodities or goods for consumption. √DBP v. v. Meaning of ―Habitually Selling‖ Engaging in the sale of merchandise as an incident to the primary purpose of a corporation [e. are also made punishable.. it cannot be said that it is a merchandiser.
. or properly called consumer goods. Scope and Definition of ―Retail Trade‖ a. Reyes. Reyes. 253.
Promotion of Locally-Manufactured Products d. Act. Foreign Retailers in the Philippines a. 571 SCRA
. it is conclusive evidence of the latter's ownership of the retail business as far as private parties are concerned. allowing her common-law Chinese husband to take part in management of the retail business would be a violation of the law. 6. Foreign Investment or Engage in Retail Trade in the Philippines a. Requirements for Foreign Investors b.49 d. and with express authority from the President of the Philippines. operation. Binding Effect of License to Engage in Retail on Private Parties When a license to engage in cocktail lounge and restaurant is issued to a Filipino citizen. The Filipino common-law wife of a Chinese national is not barred from engaging in the retail business provided she uses capital exclusively derived from her paraphernal properties. with or without remuneration. Exempted Areas e. People. Anti-Dummy Board. provided no Filipino can do such technical work. Pre-qualification requirements b. Later. c. manager. Rights Granted to Former Natural-Born Filipinos 4. Teehankee & Carreon Law Office. v. xTalan v. The amendment was meant to settle the uncertainty created in the obiter opinion in Luzon Stevedoring Corp.
UPDATED: 02 JUNE 2009. DTI Opinion to Tanada. dated 3 August 1959.. Criminal sanctions are imposed on the president. Pres. administration or control of nationalized business. board member or persons in charge of the violating entity and causing the latter to forfeit its privileges. Applicability of the Anti-Dummy Act (Comm. that the Anti-Dummy Law covered only employment in wholly nationalized businesses and not in those that are only partly nationalized. 108. Penalty Provisions 7. 715) a. Prohibited Activities of Foreign Retailers e. dated 20 March 1972 and 22 April 1983. Aliens may not take part in technical aspects. rights and franchises.D. Grandfather Rule on 100% Filipino Ownership of Corporate Entity: SEC Opinions. Law penalizes Filipinos who permit aliens to use them as nominees or dummies to enjoy privileges reserved for Filipinos or Filipino corporations. 227 SCRA 126 (1993). as amended by P. which rejected the argument of a public utility corporation that had no-American aliens in its employ. employees or laborers. c. Public Offerings of Shares of Stock 5. Decree 715 was enacted amending the law by the addition of a proviso expressly allowing the election of aliens as members of the boards of directors or the governing bodies of corporations or associations engaged in partially nationalized activities in proportion to their allowable participation or share in the capital of such entities. 169 SCRA 586 (1989). xDando v. Rules on Branches/Stores c. b. 46 SCRA 474 (1972). Section 2-A of the Law prohibits aliens from intervening in the management. whether as officers. Fraser.