LAW ON SALES

DEFINITION:

Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to
deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.

Characteristics of a Contract of Sale:

1. Purpose: is to transfer of ownership;
2. Perfection: is by mere consent, since one of the parties “obligates” himself, as such, he already bound himself, a
contract is already perfected even before delivery of the thing;
3. Subject Matter: determinate thing.
4. Cause: the contract of sale is onerous, since the other party has the obligation to pay;
5. Bilateral Contract: since both parties have their respective obligations;
6. Nominate Contract: not only because there’s a specific designation of the contract, but more so because there are
specific rules are provided by law to govern the rights and obligations of the parties, after stipulations;
7. Commutative: classic commutative in the sense that there is equivalence in the prestation of the parties. Ordinarily,
price reflects the value of the property, since the seller would not normally accept a price below the value of the
property and the buyer would not normally pay an amount more than the value of the property.

Aleatory: there is also a sale of hope where there is no equivalence in the value of prestations. Since the obligation
of the other party is not certain to arise. E.g., lotto. (Art. 1461)

DISTINGUISHED FROM OTHER TRANSACTIONS:

1. Contract for a piece of work

Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of
his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a
contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and
not for the general market, it is a contract for a piece of work. (n)

the Massachussetts Rule: if the thing to be delivered by the obligor is manufactured in the ordinary course of business,
and being offered to the general market, even if not at hand at the time the order is made, it is a contract of sale;

But, if the thing is to be manufactured only because of the order of the buyer; not offered to the general market –
contract for a piece of work.

SIMILARITIES:
a. There is transfer of ownership
b. Buyer/Customer pays the price.

DISTINCTION: is as to the subject matter: in a contract of sale, the subject is a thing and its delivery, in a contract
for a piece of work, the subject is service.

Importance of Distinction: sale is covered by the statute of frauds. On the other hand, contracts for a piece of work
is covered only if to be performed after more than one year.

E.g., customized shoes. If for more than 1 year – covered by statute of frauds. If for 6 months – depends on type of
contract.

2. Dacion en pago

SIMILARITY: upon delivery, ownership passes. Although, dacion en pago, there is always transfer of ownership.

DISTINCTION:
a. sale is a contract and a source of obligation; dation in payment is a special form of payment and a mode of
extinguishment of an obligation.
b. In sale, there is no requirement of a pre-existing obligation, in dation in payment, as a special form of payment,
there is a need for a pre-existing obligation.

3. Barter

Art. 1468. If the consideration of the contract consists partly in money, and partly in another thing, the transaction
shall be characterized by the manifest intention of the parties. If such intention does not clearly appear, it shall
be considered a barter if the value of the thing given as a part of the consideration exceeds the amount of the money
or its equivalent; otherwise, it is a sale.

ILLUSTRATION: In an agreement where A obliged himself to give to B a watch worth P800,000, and B obliged himself to give
to A, his car and cash P350,000. What contract was entered into?

ANSWER: It depends upon the intention of the parties. If the intention is not clear, it will depend on the value of the
car. If the value of the car is greater than cash, it will be treated as barter. If the value of the car is less than
P350,000 it will be treated as a sale.

4. Contract of agency to sell

Art. 1466. In construing a contract containing provisions characteristic of both the contract of sale and of the
contract of agency to sell, the essential clauses of the whole instrument shall be considered. (n)

ELEMENTS OF A CONTRACT OF SALE:

1. Natural – those which are deemed part of the contract even if not stipulated or even if the parties are unaware.
Deemed part of the contract by law. E.g., warranties.
2. Accidental – present only because the parties so stipulated. E.g. obligation to pay interest. E.g., in a contract
of sale of a parcel of land, obligation of the seller to cause the registration of the land in the name of the
buyer.
3. Essential – required for validity.

ESSENTIAL ELEMENTS OF A CONTRACT OF SALE:

1. Consent of the contracting parties, i.e., the buyer and the seller.

Incapacity: consent may have been given, but the one giving it is incapacitated.
a. Absolute Incapacity – the party cannot give consent to any and all contract, which may result in the contract
being voidable or void.

Minors and those without capacity to act: may enter into a valid contract of sale of “necessaries” as provided
under Art. 1489. Necessaries are those which are indispensable for sustenance, dwelling, clothing and medical
attendance.

b. Relative Incapacity – the party is prohibited from entering some specific transactions with some persons and
sometimes over specific things.

Examples of Relative Incapacity:

a. Husband and wife cannot sell property to each other, except:
(1) When a separation of property was agreed upon in the marriage settlements; or
(2) When there has been a judicial separation or property
b. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or
through the mediation of another:
(1) The guardian, the property of the person or persons who may be under his guardianship;
(2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the
principal has been given;
(3) Executors and administrators, the property of the estate under administration;
(4) Public officers and employees, the property of the State or of any subdivision thereof, or of any government-
owned or controlled corporation, or institution, the administration of which has been intrusted to them;
this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the
sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and
employees connected with the administration of justice, the property and rights in litigation or levied upon
an execution before the court within whose jurisdiction or territory they exercise their respective functions;
this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the
property and rights which may be the object of any litigation in which they may take part by virtue of their
profession.
(6) Any others specially disqualified by law
c. Aliens are prohibited by the Constitution from acquiring lands in the Philippines, except by succession or in
case of a former natural born Filipino citizen who has lost his citizenship.

Vitiated consent: by force, intimidation, violence, mistake or fraud – the contract is voidable.

Consent by a party given by another without authority: the contract is unenforceable as to the supposed principal.

2. Cause – as to each contracting party is the prestation or promise to be performed by the other party. For the buyer,
it is the delivery of the object, while for the seller, it is the payment of the price.

Rules as to PRICE:
a. It must be certain.
(1) With reference to another thing certain, or
(2) The determination thereof be left to the judgment of a special person or persons.
i. Should such person or persons be unable or unwilling to fix it, the contract shall be inefficacious,
unless the parties subsequently agree upon the price.
ii. If the third person or persons acted in bad faith or by mistake, the courts may fix the price.
iii. Where such third person or persons are prevented from fixing the price or terms by fault of the seller
or the buyer, the party not in fault may have such remedies against the party in fault as are allowed the
seller or the buyer, as the case may be
b. Gross inadequacy of price does not affect a contract of sale, except as it may indicate a defect in the consent,
or that the parties really intended a donation or some other act or contract.
c. The price of securities, grain, liquids, and other things shall also be considered certain, when the price fixed
is that which the thing sold would have:
(1) On a definite day, or
(2) In a particular exchange or market, or
(3) When an amount is fixed above or below the price on such day, or in such exchange or market, provided said
amount be certain.
d. The fixing of the price can never be left to the discretion of one of the contracting parties. However, if the
price fixed by one of the parties is accepted by the other, the sale is perfected.

Where the price cannot be determined in accordance with the preceding rules, or in any other manner, the contract is
inefficacious.

However, if the thing or any part thereof has been delivered to and appropriated by the buyer he must pay a reasonable
price therefor. What is a reasonable price is a question of fact dependent on the circumstances of each particular
case

3. Object – is the subject matter which may be things or rights.

 Service: unlike in contracts, in general, where “service” may be the object of the contract, in sales, service cannot
be a valid subject since no person acquires ownership over service, and transfer of ownership is the purpose of a
contract of sale. It, may, however, be another contract, such as a lease or agency.

Rules as to Objects of Contracts of Sale:

a. It must be licit or within the commerce of men.
b. The vendor must have a right to transfer the ownership thereof at the time it is delivered.
c. It must be determinate. A thing is determinate when:
(1) It is particularly designated or
(2) Physical segregated from all other of the same class.

The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is
capable of being made determinate without the necessity of a new or further agreement between the parties.

d. In the case of fungible goods, there may be a sale of an undivided share of a specific mass, even though
(1) The seller purports to sell and the buyer to buy a definite number, weight or measure of the goods in the
mass, and
(2) The number, weight or measure of the goods in the mass is undetermined.

By such a sale the buyer becomes owner in common of such a share of the mass as the number, weight or measure
bought bears to the number, weight or measure of the mass.

If the mass contains less than the number, weight or measure bought, the buyer becomes the owner of the whole
mass and the seller is bound to make good the deficiency from goods of the same kind and quality, unless a
contrary intent appears.

e. It may be either existing goods, owned or possessed by the seller, or goods to be manufactured, raised, or
acquired by the seller after the perfection of the contract of sale, in this Title called "future goods."

There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency which may
or may not happen.

i. Emptio rei speratae - sale of future thing; must come into existence otherwise the sale will not be
effective;
ii. EmptioSpei – sale of hope itself; produces effects even if the thing hoped does not come into existence.
iii. Vain Hope – the sale of vain hope is void.

f. The sole owner of a thing may sell an undivided interest therein.

g. Things subject to a resolutory condition may be the object of the contract of sale.

PERFECTION OF A CONTRACT OF SALE

Consensual Contract: sale, being a consensual contract, is perfected by mere consent as to the object of the contract
and upon the price.

Transfer of ownership: however, happens only after delivery, either actual or constructive, as a general rule. Except
if the parties agreed that ownership will not pass until full payment of the price.

Sale by Auction:
1. Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract of sale.
2. A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in other
customary manner. Until such announcement is made, any bidder may retract his bid; and the auctioneer may withdraw
the goods from the sale unless the auction has been announced to be without reserve.
3. A right to bid may be reserved expressly by or on behalf of the seller, unless otherwise provided by law or by
stipulation.
4. Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the seller, it
shall not be lawful for the seller to bid himself or to employ or induce any person to bid at such sale on his behalf
or for the auctioneer, to employ or induce any person to bid at such sale on behalf of the seller or knowingly to
take any bid from the seller or any person employed by him. Any sale contravening this rule may be treated as
fraudulent by the buyer

Option Agreement and Contract: A promise to buy and sell a determinate thing for a price certain is reciprocally
demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor
if the promise is supported by a consideration distinct from the price, known as option money.

Withdrawal of Offer:
1. In an option agreement, the offerer may withdraw the offer before acceptance is communicated to him, and he would
not be liable for damages.
2. In an option contract, however, there is a consideration distinct and separate from the price, and as such, the
offerer cannot validly withdraw before the period agreed upon expires without being liable for damages. This does
not, however, entitle the offeree the right to demand specific performance since there is no perfected contract of
sale yet.

Earnest Money – forms part of the purchase price and is proof of perfection of a contract of sale.

Sale of Goods by Description or Sample: the contract may be rescinded if the bulk of the goods delivered do not correspond
with the description or the sample.

Sale of Goods by Description AND Sample: if the contract be by sample as well as description, it is not sufficient that
the bulk of goods correspond with the sample if they do not also correspond with the description.
The buyer shall have a reasonable opportunity of comparing the bulk with the description or the sample

Form: no specific form is required for the perfection of a contract of sale. However, the same is still subject to the
Statute of Frauds for its enforceability.

THE RECTO LAW: applies to a contract of sale of personal property the price of which is payable in installments. Under
Art. 1484, the vendor will have the following remedies in case of non-payment by the vendee:
1. Exact fulfillment of the obligation, should the vendee fail to pay;
2. Cancel the sale, should the vendee's failure to pay cover two or more installments;
3. Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay
cover two or more installments.

Note:
1. The law applies only in case of “installment” sales. Not to sales “on credit”. As such, if the sale of personal
property required a downpayment and the whole balance due on a certain date, the law does not apply, since it is not
a sale on installment.
2. The remedies are alternative. As such, if the seller/vendor invoked one, he can no longer invoke any of the two
remaining remedies. Any agreement to the contrary shall be void.
3. The 2nd and 3rd remedy are available only if there were two consecutive installments which are not paid. Accordingly,
if there is only one installment that is unpaid, only the first remedy is available. Moreover, if the buyer failed
to pay twice, but not consecutively, still only the first remedy is available.
4. The 2nd option of cancelling the sale would entail mutual restitution by the parties, but the seller is allowed to
retain a reasonable amout of the purchase price already paid as compensation for the use of the thing, but he cannot
retain ALL of the purchase price absent a forfeiture clause which entitles him to the purchase price already paid
at the time of cancellation. However still, this clause will not apply if the retention of ALL the purchase price
would be unconscionable.

Note that under the MACEDA law, a forfeiture clause would not be valid.
5. The 3rd option entails that the foreclosed mortgage is the mortgage on the personal property itself, not a mortgage
on a different property.

ILLUSTRATION: A bought a truck from B payable in installment secured by a chattel mortgage on the truck. As
additional security, A’s brother, C, executed a real estate mortgage over his own land in favor of B. A defaulted
in two installments. Consequently, B foreclosed the real estate mortgage.

In this case, if the foreclosure sale proceeds of the real estate mortgage is less than the unpaid amount, B can
still go after A to collect, under option 1 since the mortgage that was foreclosed is not the one on the truck.

6. The law applies to contracts purporting to be leases of personal property with option to buy, when the lessor has
deprived the lessee of the possession or enjoyment of the thing.

THE MACEDA LAW, or the Realty Installment Buyer Act (RA No. 6552), applies to a contract of sale of residential realty
on installments, where the buyer is given protection in case of failure to pay installments.

Note:
1. The law applies to residential realty. Thus, it covers condominium units and houses and lots, but not ALL IMMOVABLES.
2. It pertains only to sale on installment, not “on credit”, similar to the Recto Law.
3. Under this law, the buyer has the following rights:
a. If installments already paid are less than two years equivalent:
(1) Pay without interest within 60 days;
(2) The buyer may sell his interest;
(3) He may assign his interest (by way of donation or dacion en pago);
(4) Pay the entire balance.

b. After two years’ worth of installment, the buyer will have the following additional rights:
(1) In addition to the 60 day grace period, the buyer shall have additional 1 month grace period for every year
of installment payments after the first 2 years installments;
(2) If the seller will exercise his right to rescind the contract, he is required to first give the Cash Surrender
Value to the buyer.

Cash Surrender Value:

(a) Minimum of 50% of all payments (including downpayment) plus
(b) 5% after five years (55% after 7 years of payment); and
(c) 5% for every additional year thereafter upto a maximum of 90% (or 14 years of instalment).

4. The following are void stipulations:

a. Stipulation as to interest or damages or penalty during the grace period
b. Forfeiture clause
c. Automatic cancellation or rescission upon default of the buyer

5. Requirements for a valid rescission: the rescission will take effect only after 30 days from complying with both:
a. Notice to be given to the buyer as to the intention to rescind
b. Payment of the cash surrender value

OBLIGATIONS OF THE VENDOR:

1. To take care of the thing after the contract has been perfected, prior to delivery.

Risk of Loss:
a. General Rule: the thing perishes with the owner, following the principle of res perit domino.
b. Exceptions:
(1) Stipulation
 (2) Security title - Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in
pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure
performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from the
time of such delivery;
(3) Delay in the delivery – whoever causes the delay shall bear the risk of loss.
c. If the thing is lost in part only, the buyer may choose between:
(1) Withdrawing from the contract; and
(2) Demanding the remaining part, paying its price in proportion to the total sum agreed upon.
d. Where the parties purport a sale of specific goods, and the goods without the knowledge of the seller have
perished in part or have wholly or in a material part so deteriorated in quality as to be substantially changed
in character, the buyer may at his option treat the sale:
(1) As avoided; or
(2) As valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding the
buyer to pay the agreed price for the goods in which the ownership will pass, if the sale was divisible.

Note: the risk of loss is where it is important why there are distinctions in the following:
• Contract of Sale vs. Contract of Agency to Sell
• Sale or Return vs. Sale on Approval/Trial/Satisfaction

Loss, Deterioration or Improvement pending delivery of the goods: the rules under Art. 1189 applies, accordingly:
a. The thing is lost (when it perishes, goes out of commerce, or disappears in such a way that its existence is
unknown or it cannot be recovered)
(1) Without fault of the seller – obligation is extinguished;
(2) With fault of the seller – jhe is liable for damages.
b. The thing deteriorartes
(1) Without fault of the seller – the impairment is borne by the buyer;
(2) With fault of the seller – the debtor has two options:
(a) To exact fulfillment and ask for damages
(b) Rescission with damages
c. There is improvement
(1) By nature or time – the improvement will inure to the benefit of the buyer
(2) At the expense of the seller – he shall have no other right than that granted to the usufructuary, e.g., he
may remove the improvement if it will not cause damage to the thing.

2. Obligation to pay taxes and incidents of the sale, unless otherwise agreed upon;
3. To warrant the thing (see Warranties);
4. To transfer ownership.

Seller need not be the owner for validity of the contract: the seller need not be the owner and the sale is still
valid if he sold the thing in a capacity authorizing him to do so such as a liquidator, executor, administrator,
sheriff, or a notary (in case of pledge).

This is different from a pledge or mortgage which requires the pledger or mortgagor to be the absolute owner of the
thing.

SELLER IS NOT THE OWNER:

General Rule: the buyer acquires no better title to the goods than the seller had

Exceptions:
a. Authority from the owner – like an agent
b. Valid Sale by Statutory or Judicial Authority – such as sales made by guardians, executors, administrators,
sheriffs, etc.
c. In cases of estoppel:
(1) As to the owner: estoppel in pais - by his conduct or representation, he led the buyer to believe that the
seller had authority to sell.
(2) As to the seller: estoppel by deed – if after the sale, he acquired ownership, such ownership automatically
passes to the buyer. THERE MUST BE DELIVERY.
d. Sale of an Apparent Owner: the sale of an apparent owner will give the buyer a better right provided the
following shall concur:
(1) There is apparent ownership
Examples:
• An old lady asked a lawyer to register her land in her name. However, the lawyer instead registered it
in his name.
• A group of businessmen agreed to register the lot in the name of the one who will manage the business.
(2) Buyer in good faith and for value – the buyer had no knowledge of any defect in the seller’s title at the
time of full payment (not only at the time of sale).
(3) There must be a law from which apparent ownership may be had, such as:
(a) PD 1529 which provides that those dealing with registered land need not inquire beyond the title, also
known as the mirror principle, unless the buyer is required under the law to exercise the highest degree
of diligence, e.g., banks and public utility companies.
(b) Factor’s Act (agency) – so far as third persons are concerned, they only have to rely on the power of
attorney as written, they need not inquire into limitations imposed by the principal to the agent not
written.
(c) Art. 1518 – for goods covered by negotiable instruments.
e. Purchase from a Merchant Store, Market or Fair in good faith and for value: the purpose of this exception is
to facilitate commercial ransactions so as not to degrade the trust in sales made through such stores.

Right of buyer to reimbursement: One who has lost any movable or has been unlawfully deprived thereof, may
recover it from the person in possession of the same. If the possessor of a movable lost or which the owner
has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its
return without reimbursing the price paid therefor
 The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him or in any other
manner signifying an agreement that the possession is transferred from the vendor to the vendee.

5. To deliver the determinate or specific thing including the fruits from the moment the obligation to deliver arises
and the accessions and accessories thereof.

Delivery is the mode by which ownership is transferred. It is accomplished by placing the thing in the control and
possession of the vendee.

MODES OF DELIVERY: THINGS

a. Actual Delivery: The actual and physical transfer of the thing to the buyer.
b. Constructive Delivery
(1) Traditio Longa Manu: literally, long-hand delivery, or by pointing to the thing sold accomplished by mere
consent of the seller, ownership transfers to the buyer, because at the time of sale, the seller cannot
transfer possession to the buyer, e.g., the thing is leased by another.
(2) Consitutum Posessorium: at the time of sale, the seller is in possession and remains in possession in another
concept other than an owner, like that of a lessee, depositary or borrower.
(3) Brevi Manu: or short hand delivery. When the buyer is in possession of the thing, in a concept other than
that of an owner, at the time of sale, and remains in possession after sale, now as owner. E.g., a lessee
who buys the thing leased.
(4) Symbolic Delivery: where the seller merely gives the key to a warehouse where the goods are located or in a
sale of car, the delivery of the keys is symbolic delivery. Note that if the object of the sale is the
warehouse, this is actual delivery, since the buyer would have possession and control of the warehouse.
(5) Execution of the Required Formality: by execution of a public instrument. This mode of delivery is available
to both sale of rights and sale of things;
c. Delivery to a common carrier: when the parties so agreed that the seller will deliver to the common carrier for
ultimate delivery to the buyer. In this case, there is already delivery upon receipt of the common carrier.
EXCEPT:
(1) Ownership is reserved by the seller – such as if it is deliverable to the seller or his agent.
(2) The seller reserved possession – goods are deliverable to the buyer, but possession of the bill of lading
is with the seller.
(3) A Bill of Exchange is drawn by the seller against the buyer and the latter dishonors the same.

MODE OF DELIVERY: As to rights:

a. By execution of the required formality;
b. Quasi Traditio:
(1) When the title of ownership is placed in the possession of the vendee (e.g., certificates of stock for sale
of shares of stock);
(2) By the use of the vendee of his rights with the vendor’s consent. (e.g., the vendee of shares where the same
has not been transferred in his name yet, with the consent of the owner, through a proxy, he may exercise
his rights as a stockholder)

SALE OR RETURN: where the goods are delivered to the buyer but the buyer has an option to return the goods instead
of paying the price, the ownership passes to the buyer but he may revest the ownership in the seller by returning
or tendering the goods within the time fixed in the contract, or when no time is fixed, within a reasonable time.

SALE ON APPROVAL OR ON TRIAL OR ON SATISFACTION: the ownership passes to the buyer:

a. When he signifies his approval or acceptance to the seller or does any other act adopting the transaction
b. If he does not signify his approval or acceptance to the seller, but retains the goods without giving notice of
rejection, then if a time has been fixed for the return of the goods, on the expiration of such time, and, if
no time has been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of fact.

TIME OF DELIVERY:
• Stipulation of the parties;
• If no stipulation, within a reasonable time.

PLACE OF DELIVERY:
• Stipulation of the parties;
• If no stipulation, by usage of trade;
• If no stipulation nor usage of trade, the seller’s place of business;
• If none, the seller’s residence.
• However, in case of a contract of sale of specific goods, which to the knowledge of the parties when the
contract or the sale was made were in some other place, then that place is the place of delivery.

SELLER IS NOT BOUND TO DELIVER:

1. If it is a pure obligation and the buyer does not pay; or
2. If there is a period agreed upon, the obligation to deliver shall be demandable at that time. Except, if the
buyer loses the right to make use of the period under Art. 1198

DELIVERY OF LESS OR MORE OF THE QUANTITY AGREED UPON IN SALE OF PERSONAL PROPERTY:
1. Delivery is less than quantity agreed upon, the buyer may:
a. Reject the delivery; or
b. Accept or retain the goods delivered and pay:
(1) The full contract price if he knew that the seller is not going to perform the contract in full; or
(2) Pay the fair value of the goods delivered if without such knowledge.
2. Delivery is greater than quantity agreed upon, the buyer may:
a. Accept the goods in the quantity agreed upon and reject the rest; or
b. Accept the whole of the goods delivered and pay for them at the contract rate.
3. Delivery of goods mixed with goods of different description not included in the contract, the buyer may accept
the goods which are in accordance with the contract and reject the rest.
4. In no. 2 and 3, if the subject matter is indivisible, the buyer may reject the whole of the goods.
 DELIVERY OF LESS OR MORE OF THE QUANTITY AGREED UPON IN SALE OF REAL ESTATE WITH A STATEMENT OF AREA AND THE SALE
IS AT A RATE OF A CERTAI PRICE FOR A UNIT OF MEASURE OR NUMBER:
1. Delivery is LESS than that agreed upon, the buyer may:
a. Ask for specific performance and demand delivery of the shortage;
b. Ask for the proportionate reduction of the price (accion quanti minoris)
c. Rescission, in case:
(1) The area lacking is at least 1/10 of that agreed upon; or
(2) The buyer would not have entered into the contract, had he known of its smaller area.

The same rules apply if any part of the immovable is not of the QUALITY specified in the contract (except that
rescission is an available remedy in the event that the inferior value is MORE THAN 1/10 of the price agreed
upon) even if the area delivered be that agreed upon.
2. If the delivery is in excess of the area agreed upon, the buyer may:
a. Accept the area agreed upon and reject the rest; or
b. Accept the whole and pay at the contract rate.

The above rules likewise applies to judicial sales.

DELIVERY OF LESS OR MORE OF THE QUANTITY AGREED UPON IN SALE OF REAL ESTATE FOR A LUMP SUM PRICE:
1. Delivery is less than the area agreed upon, the buyer is bound to accept the actual area without any reduction
of the price.
2. Delivery is more than the area agreed upon, the seller is bound to deliver the actual area without any increase
in the price.
3. If the seller should not deliver the whole area which exceeds that which was agreed upon, the buyer may:
a. Reduce the price to be paid, in proportion to what is lacking in the area or number; or
b. Rescind the contract for failure ofhte vendee to deliver what has been stipulated.

RIGHTS OF AN UNPAID SELLER

Unpaid Seller: the seller of the goods is deemed to be an unpaid seller when:
1. The whole of the price has not been paid or tendered;
2. A bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on
which it was received has been broken by reason of the dishonor of the instrument, the insolvency of the buyer, or
otherwise

Rights of an Unpaid Seller: notwithstanding that the ownership of the goods may have passed to the buyer, the unpaid
seller of goods has the following rights:
1. Possessory lien – right to retain the goods or right to withhold delivery of the goods.

Grounds:
a. Where the goods have been sold without any stipulation as to credit;
b. Where the goods have been sold on credit, but the term of credit has expired;
c. Where the buyer becomes insolvent.

The seller may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee
for the buyer.

Partial Lien: Where an unpaid seller has made part delivery of the goods, he may exercise his right of lien on the
remainder, unless such part delivery has been made under such circumstances as to show an intent to waive the lien
or right of retention.
Loss of possessor lien: happens:
a. When the seller delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer
without reserving the ownership in the goods or the right to the possession thereof;
b. When the buyer or his agent lawfully obtains possession of the goods;
c. By waiver.

The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that he has obtained
judgment or decree for the price of the goods.

Sale of the thing by the buyer to third persons:

a. As a rule, the seller does not lose his right to possessory lien or right of stoppage in transitu.
b. Exceptions:
(1) If the seller assented to the transfer;
(2) If the goods are covered by a negotiable document of title and it is sold to a purchaser for value in good
faith to whom such document has been negotiated.

2. Stoppage in transitu – right to stop the goods while in transit.

Requisites:
a. The seller already parted with the possession of the goods;
b. The goods are already in transit;
c. The buyer is insolvent.

Goods are in transit:

a. From the time when they are delivered to a carrier by land, water, or air, or other bailee for the purpose of
transmission to the buyer, until the buyer, or his agent in that behalf, takes delivery of them from such carrier
or other bailee;
b. If the goods are rejected by the buyer, and the carrier or other bailee continues in possession of them, even if
the seller has refused to receive them back.

Goods are no longer in transit:

 a. If the buyer, or his agent in that behalf, obtains delivery of the goods before their arrival at the appointed
destination;
b. If, after the arrival of the goods at the appointed destination, the carrier or other bailee acknowledges to the
buyer or his agent that he holds the goods on his behalf and continues in possession of them as bailee for the
buyer or his agent; and it is immaterial that further destination for the goods may have been indicated by the
buyer;
c. If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent in that behalf.

If part delivery of the goods has been made to the buyer, or his agent in that behalf, the remainder of the goods
may be stopped in transitu, unless such part delivery has been under such circumstances as to show an agreement with
the buyer to give up possession of the whole of the goods.

Right of stoppage in transitu is exercised:

a. By taking actual possession of the goods; or
b. By giving notice of his claim to the carrier or other bailee who is in possession of the goods, as a consequence
of which:
(1) The carrier or bailee then must redeliver the goods to, or according to the directions of, the seller.
(2) The expenses of such delivery must be borne by the seller.
(3) If, however, a negotiable document of title representing the goods has been issued by the carrier or other
bailee, he shall not be obliged to deliver or justified in not delivering the goods to the seller unless
such document is first surrendered for cancellation.

3. Resale

Grounds:
a. The goods are perishable in nature
b. The seller expressly reserves the right of resale in case the buyer should make default, or
c. Where the buyer has been in default in the payment of the price for an unreasonable time

To exercise such right: the unpaid seller must have a right of lien or stoppage in transitu.

In case the resale resulted in proceeds less than or more than the price in the original sale:
a. If the resale price is LESS than the price in the original sale, the seller can recover from the original buyer
the difference as damages occasioned by the breach of contract of sale;
b. If the resale price is MORE than the price in the original sale, the seller is entitled to the profit made in
such resale.

Good Title: the buyer in the resale acquires a good title as against the original buyer.

Notice: except in case of resale made because the goods are perishable, notice shall be given to the original buyer
about:
a. The intention to resell – which is relevat to prove that the buyer has been in default for an unreasonable length
of time.
b. The date, time and place of resale – to be considered doing the resale in good faith and entitle the seller to
any deficiency.

Note, however, that failure to give notice does not affect the validity of the resale.

Participation: the seller is prohibited from being the buyer in the resale, either directly or indirectly, whether
the resale be public or private.

4. Rescission

Grounds:
a. When the right to rescind is expressly reserved by the seller;
b. When the buyer has been in default in the payment of the price for an unreasonable time.

To exercise such right: the unpaid seller must have a right of lien or stoppage in transitu.

Recovery of damages: the seller is not liable to the buyer upon the contract of sale, but may recover from the buyer
damages for any loss occasioned by the breach of contract.

Notice: is not necessary for the validity of rescission. But the same shall be relevant in determining whether the
buyer has been in default for an unreasonable length of time.

Mutually Exclusive Rights: the right of possessory lien and stoppage in transitu are mutually exclusive in the sense
that both rights cannot exist together at the same time. This is because the right of possessory lien presupposes that
the seller retains possession, while in stoppage in transitu, the seller should have parted with the possession already.

Note, however, that for the right of resale and right to rescind, it is necessary that the seller has either possessory
lien or the right of stoppage in transitu.

Insolvency of the buyer: is a requisite only for the right of stoppage in transitu, but not in all other rights. It is,
however, a ground to exercise possessory lien, but still, not a requisite.

DOUBLE SALE; MOVABLE PROPERTY: if the same movable is sold by the vendor to two or more vendees, the one who has a
better rigth over the thing shalle be the first one to take possession in good faith.

DOUBLE SALE; IMMOVABLE PROPERTY: if the same immovable property is sold by the vendor to two or more vendees, the one
who has a better right over the thing shall be:
1. The one to first register in good faith; if none,
2. The one to first take possession in good faith; if none still,
3. The one with the oldest title.

CONDITIONS: where the obligation of either party to a contract of sale is subject to any condition which is not performed,
such party may:
1. Refuse to proceed with the contract; or
2. Waive the performance of the condition; or
3. Treat the non-performance as a breach of warranty and ask for damages.

WARRANTIES: Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the
natural tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer purchase
the thing relying thereon.

Opinion of the seller: is not understood to be a warranty unless the seller made such affirmation or statement as an
expert and it was relied upon by the buyer.

Express Warranty: is an affirmation of fact or promise by the seller relating to the thing which would induce the buyer
to buy the same. However, those relating to opinions of the seller are not considered warranties unless they are made
by experts and the buyer relies upon them.

Implied Warranties:
1. Warranty against eviction – that the seller has a right to sell the thing at the time when ownership is to pass, and
that the buyer shall from that time have and enjoy legal and peaceful possession of the thing;

Eviction; requisites:
a. The vendee is deprived of the whole or of a part of the thing purchased;
b. By virtue of a final judgment
c. Such judgment is based on:
(1) A right prior to the sale or
(2) An act imputable to the vendor

Rules Applicable:
a. The warranty applies even if there is no agreement to such effect;
b. The vendee need not appeal from the decision in order that the vendor may become liable for eviction.
c. When the adverse possession had been commenced before the sale but the prescriptive period is completed after the
transfer, the vendor shall not be liable for eviction.
d. If the property is sold for non-payment of taxes due and not made known to the vendee before the sale, the vendor
is liable for eviction.
e. The judgment debtor is also responsible for eviction in judicial sales, unless it is otherwise decreed in the
judgment.
f. The warranty cannot be enforced until a final judgment has been rendered, whereby the vendee loses the thing
acquired or a part thereof.
g. The defendant vendee shall ask, within the time fixed in the Rules of Court for answering the complaint, that the
vendor be made a co-defendant.
h. The vendor shall not be obliged to make good the proper warranty, unless he is summoned in the suit for eviction
at the instance of the vendee.

Extent of Liability: First, it will depend whether the seller is in bad faith:
a. If the seller is in bad faith, he shall be liable for:
(1) Value of the thing sold at the time of eviction;
(2) Income or fruits, if he has been ordered to deliver them to the party who won the suit against him;
(3) Costs of the suit which caused the eviction, and, in a proper case, those of the suit bought against the
vendor for the warranty;
(4) Expenses of the contract, if the vendee has paid them;
(5) Damages and interests and ornamental expenses.
b. If the seller is in good faith, the liability of the vendor shall depend whether there is a waiver executed by
the buyer:
(1) If there is no waiver, the seller is liable for VICE above except Damages.
(2) If there is a waiver, the liability of the vendor shall depend whether the buyer is aware of the risk of
eviction:
(a) Consciente – the buyer is not aware of the risk, or without knowledge of the defect in the title of the
seller: seller is still liable but only for the VALUE of the thing at the time of eviction;
(b) Intencionada – the buyer was aware of the risk of eviction or of the defect in the title of the seller,
the seller is no longer liable for anything.

Partial Loss: should the vendee lose only a part of the thing sold but the same is of such importance, in relation
to the whole, that he would not have bought it without said part, he may demand the rescission of the contract; but
with the obligation to return the thing without other encumbrances that those which it had when he acquired it,
instead of enforcing the vendor’s liability for eviction.

Two or more things sold: the same rules as to partial loss shall apply:
a. If they have been jointly sold for a lumpsum; or
b. Even if they were sold for a separate price for each of them if it should appear that the vendee would not have
purchased one without the oth

2. Warranty agains hidden defects or of quality - the thing shall be free from any hidden faults or defects.

Effect of Hidden Defects: it would render the thing unfit for iits indended use; or diminish its fitness for such
use to such extent that, had the vendee been aware thereof, he would not have acquired it or would have given a lower
price for it.

Vendor not liable: in case:

a. The defects are patent or those which may be visible; or
 b. Even if not visible, the vendee who is an expert, by reason of his trade or profession, should have known.

Warranty of Fitness of Goods: there is an implied warranty that the goods shall be reasonably fit for such purpose;
a. The buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are
acquired, and
b. Tt appears that the buyer relies on the seller's skill or judgment (whether he be the grower or manufacturer or
not),

In the case of contract of sale of a specified article under its patent or other trade name, there is no warranty as
to its fitness for any particular purpose, unless there is a stipulation to the contrary.

Warranty of Merchantable Quality: there is an implied warranty that the goods shall be of merchantable quality
a. Where the goods are brought by description
b. From a seller who deals in goods of that description (whether he be the grower or manufacturer or not),

In the case of a contract of sale by sample, if the seller is a dealer in goods of that kind, there is an implied
warranty that the goods shall be free from any defect rendering them unmerchantable which would not be apparent on
reasonable examination of the sample.

Other rules on warranty against hidden defects or of quality:

a. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though he was
not aware thereof, unless there is contrary stipulation.
b. An implied warranty or condition as to the quality or fitness for a particular purpose may be annexed by the
usage of trade.

Remedies of the vendee:

a. Withdraw from the contract plus damages;
b. Accion quanti minoris or demand a proportionate reduction of the price plus damages.

Loss of the thing with hidden defect; liability of the seller:

a. If the cause was the defect itself: the seller shall be liable for:
(1) Price
(2) Expenses of the contract
(3) Interest (if in good faith)
(4) Damages (if in bad faith)
b. If the cause of the loss is a fortuitous event or through the fault of the vendee, the seller shall be liable to
refund the price less the value at the time of loss, plus damages (if he was aware).

Judicial sales: the above rules likewise apply to judicial sales, except the judgment detor shall not be liable for
damages.

Prescriptive period for the remedies: is 6 years from delivery.

Rules on hidden defects in animals:

Redhibitory Defect is the hidden defect on animals that, even in case a professional inspection has been made, should
be of such nature that expert knowledge is not sufficient to discover it.

But if the veterinarian, through ignorance or bad faith shall fail to discover or disclose it, he shall be liable
for damages.

Sale of more than 1 animal: General Rule: The redhibitory defect of one shall only give rise to its redhibition, and
not of the others; Except: if the vendee would not have purchased the sound animal or animals without the defective
one, which is presumed when a team, yoke pair, or set is bought, even if a separate price has been fixed for each
one of the animals composing the same.

No warranty: There is no warranty against hidden defects of animals sold at fairs or at public auctions, or of live
stock sold as condemned.

Void sale of animals:

a. The sale of animals suffering from contagious diseases shall be void.
b. If the use or service for which they are acquired has been stated in the contract, and they are found to be unfit
therefor.

Remedies and Prescriptive Period: Remedies of the vendee in case of sale of animals with redhibitory defects are
similar to the remedies for breach of warranty against hidden defects; but he must make use thereof within the same
period which has been fixed for the exercise of the redhibitory action or 40 days.

Other Rules:
a. If the animal should die within three days after its purchase, the vendor shall be liable if the disease which
cause the death existed at the time of the contract.
b. If the sale be rescinded, the animal shall be returned in the condition in which it was sold and delivered, the
vendee being answerable for any injury due to his negligence, and not arising from the redhibitory fault or
defect.
c. Sale of large cattle is governed by special laws.

3. Warranty against non-apparent encumbrances: an encumbrance (or an easement or servitude) is a burden imposed upon an
immovable for the benefit of another immovable belonging to a different owner. It is non-apparent, when there are no
external indications of their existence.

The warranty against non-apparent encumbrances arises when the same is:
a. Not mentioned in the agreement; or
 b. Not recorded in the Registry of Property (now Registry of Deeds).

In which case, the buyer has the following remedies, within 1 year, counted from:
a. Ask for the rescission of the contract – from execution of the deed;
b. Ask for damages – from discovery.

Not applicable to: the implied warranties are not applicable to a sheriff, auctioneer, mortgagee, pledgee or other
person professing to sell by virtue of authority in fact or law, for the sale of a thing in which a third person has a
legal or equitable interest.

OBLIGATIONS OF THE VENDEE:

1. To pay the price
a. At the time and place stipulated; or if none was stipulated, the payment must be made at the time and place of
the delivery of the thing sold.
b. The vendee shall be liable for interest for the period between the delivery of the thing and the payment of the
price in the following cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce fruits or income;
(3) Should he be in default, from the time of judicial or extrajudicial demand for the payment of the price.
c. Suspension of payments: if the vendee is disturbed in the possession or ownership of the thing acquired, or should
he have reasonable grounds to fear such disturbance, by a vindicatory action or a foreclosure of mortgage, he may
suspend the payment of the price until the vendor has caused the disturbance or danger to cease, unless:
(1) The seller gives security for the return of the price in a proper case, or
(2) It has been stipulated that, notwithstanding any such contingency, the vendee shall be bound to make the
payment.

A mere act of trespass shall not authorize the suspension of the payment of the price.

d. However, if the fear of loss covers immovable property, the vendor may immediately sue for rescission.
e. In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at
the time agreed upon the rescission of the contract may be had, the vendee may pay, even after the expiration of
the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a
notarial act. After the demand, the court may not grant him a new term.

2. To accept delivery
a. The buyer is not bound to accept delivery
b. If it was agreed that delivery be done in
• the seller makes defective deliveries
• the buyer neglects or refuses without
by installments, unless otherwise agreed upon.
installments and payments separately made, and
in respect of one or more instalments, or
just cause to take delivery of or pay for one or more instalments,

It depends in each case on the terms of the contract and the circumstances of the case, whether the breach of
contract is:
i. So material as to justify the injured party in refusing to proceed further and suing for damages for breach
of the entire contract, or
ii. Severable, giving rise to a claim for compensation but not to a right to treat the whole contract as broken

c. Deemed Acceptance: the buyer is deemed to have accepted the delivery if:
i. He intimates to the seller that he has accepted the thing;
ii. He does any act which is inconsistent with the ownership of the seller;
iii. After the lapse of a reasonable time, he retains the goods without intimating to the seller that he has
rejected them.
d. Buyer’s obligation to notify the seller of breach of promise or warranty: After delivery is made, as a general
rule, the seller is not discharged of liability for damages or of breach of warranty, EXCEPT:
i. There is an express or impled agreement to the contrary; or
ii. The buyer fails to give notice to the seller of the breach within a reasonable time after the buyer knows, or
ought to know of such breach.
e. Buyer as depositary: Unless otherwise agreed, where goods are delivered to the buyer, and he refuses to accept
them, having the right so to do, he is not bound to return them to the seller, but it is sufficient if he notifies
the seller that he refuses to accept them. If he voluntarily constitutes himself a depositary thereof, he shall
be liable as such.
f. Right to Examine:
i. Delivered goods not previously examined: he is not deemed to have accepted them unless and until he has had
a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity
with the contract if there is no stipulation to the contrary.
ii. Unless otherwise agreed, the seller is bound, on request, to afford the buyer a reasonable opportunity of
examining the goods for the purpose of ascertaining whether they are in conformity with the contract
iii. Where goods are delivered to a carrier by the seller, upon the terms that the goods shall not be delivered
by the carrier to the buyer until he has paid the price, the buyer is not entitled to examine the goods
before the payment of the price, in the absence of agreement or usage of trade permitting such examination.
g. Rescission is an available remedy to the seller with respect to movable property, if the vendee upon the
expiration of the period fixed for the delivery of the thing :
i. Should not have appeared to receive it, or,
ii. Having appeared, he should not have tendered the price at the same time, unless a longer period has been
stipulated for its payment.

BREACH OF CONTRACT: REMEDIES OF THE SELLER

1. SPECIFIC PERFORMANCE
a. Goods already delivered and buyer neglects or refuses to pay
b. Due date was agreed upon (regardless of delivery) – buyer neglects or refuses to pay
c. Buyer refuses to accept the goods
2. DAMAGES - buyer wrongfully neglects or refuses to ACCEPT goods or PAY price.
3. RESCISSION – with NOTICE, even BEFORE DELIVERY in case:
 a. Buyer repudiates the sale
b. Manifested INABILITY to perform his obligation (e.g., insolvent)
c. Breach of contract committed by the buyer.

BREACH OF CONTRACT: REMEDIES OF THE BUYER

1. SPECIFIC PERFORMANCE – to compel delivery
2. BREACH OF WARRANTY:
a. Accept or keep the goods + RECOUPMENT of the price for the breach of warranty (either to reduce or totally
compensate for the price)
b. Accept or keep the goods + DAMAGES
c. Refuse to accept eh goods + DAMAGES
d. Rescind the contract; refuse to receive the goods; return them (if already delivered); RECOVER THE PRICE

If buyer asked for rescission and seller refused to accept the goods, the BUYER shall be deemed a BAILEE, subject
to a lien to secure payment of the price already paid.

EXTINGUISHMENT OF A CONTRACT OF SALE: sales are extinguished by the same causes as all other obligations, and by
conventional or legal redemption.

CONVENTIONAL REDEMPTION: otherwise known as “right of repurchase” shall take place when the vendor reserves the right
to repurchase the thing sold, with the obligation to return the price, expenses related thereto and usefule and necessary
expenses, and other stipulations which may have been agreed upon.

The sale, with a right of repurchase, is also known as pacto de retro sale.

Ownership: transfers to the vendee a retro upon delivery. However, this ownership is not absolute but only conditional.
This is because the seller a retro may be able to exercise the right to repurchase and the ownership of the buyer will
be terminated.

Amount to be paid at the time the right is exercised:

1. The purchase price;
2. The expenses of the contract, and any other legitimate payments made by reason of the sale; and
3. Useful and necessary expenses (e.g., fencing of the land)

Fruits: If at the time of the execution of the sale there should be on the land, visible or growing fruits, there shall
be no reimbursement for or prorating of those existing at the time of redemption, if no indemnity was paid by the
purchaser when the sale was executed.

Should there have been no fruits at the time of the sale and some exist at the time of redemption, they shall be prorated
between the redemptioner and the vendee, giving the latter the part corresponding to the time he possessed the land in
the last year, counted from the anniversary of the date of the sale.

Equitable Mortgage: a sale with a right of repurchase (or even a contract of absolute sale) is presumed to be an
equitable mortgage in the following cases:
1. When the price of a sale with right to repurchase is unusually inadequate;
2. When the vendor remains in possession as lessee or otherwise;
3. When upon or after the expiration of the right to repurchase another instrument extending the period of redemption
or granting a new period is executed;
4. When the purchaser retains for himself a part of the purchase price;
5. When the vendor binds himself to pay the taxes on the thing sold;
6. In any other case where it may be fairly inferred that the real intention of the parties is that the transaction
shall secure the payment of a debt or the performance of any other obligation.

In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise
shall be considered as interest which shall be subject to the usury laws. The remedy would be to ask for the reformation
of the instrument purporting to be a contract of sale with right of repurchase or a contract of absolute sale.

In case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an equitable
mortgage.

Period to exercise right of repurchase:

1. That which was agreed upon which cannot exceed 10 years;
2. If no agreement as to the period, it shall be four years from the date of the contract.

The vendor may still exercise the right to repurchase within thirty days from the time final judgment was rendered in a
civil action on the basis that the contract was a true sale with right to repurchase.

Other rules on conventional redemption:

1. In case of real property, the consolidation of ownership in the vendee by virtue of the failure of the vendor to pay
the required amounts shall not be recorded in the Registry of Property without a judicial order, after the vendor
has been duly heard.
2. The vendor may bring his action against every possessor whose right is derived from the vendee, even if in the second
contract no mention should have been made of the right to repurchase, without prejudice to the provisions of the
Mortgage Law and the Land Registration Law with respect to third persons.
3. The vendee is subrogated to the vendor's rights and actions.
4. The creditors of the vendor cannot make use of the right of redemption against the vendee, until after they have
exhausted the property of the vendor.
5. SALE OF UNDIVIDED IMMOVABLE – vendee eventually acquires the whole; may compel the vendor to redeem the whole
property.

E.g. A and B are co-owners of a land. A sold his share to X with a right to repurchase. B eventually sold his share
to X too. X can compel A to redeem the entire lot.
6. SEVERAL PERSONS JOINTLY AND IN THE SAME CONTRACT: sell an undivided immovable with a right of repurchase:
a. SELLERS – can only redeem their share
b. BUYER – can compel redemption of the entire property; cannot be compelled to agree to a partial redemption

E.g., A and B, co-owners, sold their respective shares in the same Deed of Sale to X with a right of repurchase. In
this case, A can only redeem his share, but X cannot be compelled to a partial redemption; he can require B to also
redeem. If B does not want to, A cannot validly exercise his right of redemption for his share alone.

7. Same rule applies to CO-HEIRS (A sold his land to B with a right of repurchase; A1 and A2 are the heirs of A. If A
dies, same rule above applies to A1 and A2 as if they are A and B in the above illustration.)

If VENDEE has multiple heirs – the action for redemption should be to each for his own share.

8. CO-OWNERS SOLD SEPARATELY – each can exercise his own right of redemption and cannot be compelled to redeem the
whole property

LEGAL REDEMPTION: is the right to be subrogated, upon the same terms and conditions stipulated in the contract, in the
place of one who acquires a thing by purchase or dation in payment, or by any other transaction whereby ownership is
transmitted by onerous title.

The Right of Legal Redemption is available to:

1. Co-owners – a co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners
or of any of them, are sold to a third person.

Subject property: may be movable or immovable property.

Amount to be paid for redemption: is the purchase price, unless the price of alienation is grossly excessive, in
which case, the redemptioner shall pay only a reasonable one.

Two or more redemptioners: should two or more co-owners desire to exercise the right of redemption, they may only
do so in proportion to the share they may respectively have in the thing owned in common

2. Owners of adjoining lands – have the right of redemption in case of transfers of land.

Rural Land; Requisites:

a. The subject is rural land;
b. The land does not exceed one hectare;
c. The redemptioner is an owner of a land adjoining the subject rural land;
d. The adjacent lands is not separated by brooks, drains, ravines, roads and other apparent servitudes for the
benefit of other estates; and
e. The grantee does not own any rural land;

Multiple redemptioners: in case two or more adjoining owners desire to exercise the right of redemption at the same
time:
a. The owner of the adjoining land of smaller area shall be preferred; and
b. Should both lands have the same area, the one who first requested redemption.

Redemption and Pre-emption of Urban Land; Requisites:

a. The subject is urban land;
b. The area of the land is so small and so situated that a major portion thereof cannot be used for any practical
purpose within a reasonable time, having been bought merely for speculation;
c. The one exercising the right of redemption or pre-emption is an adjoining land owner.

When redemption, when pre-emption:

a. Pre-emption is the right exercised by the adjoining land owner if the sale is NOT YET perfected;
b. Redemption is the right exercised if the sale is already perfected.

Multiple persons exercising the right of redemption/pre-emption: the one whose intended use is best justified shall
be preferred.

Period to exercise: 30 days from NOTICE in writing by the prospective vendor, or by the vendor. The deed of sale
shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has
given written notice thereof to all possible redemptioners.

If there are co-owners: the right of redemption of the co-owners excludes that of adjoining owners.