Sales Rabanes Reviewer 2017 PDF

LAW ON SALES🖋
Illustrations
LAW ON SALES Ricardo sold to Jose orally a particular parcel of

land for Php 55,000. Delivery and payment were to
Essential requisites of the contract of sale:
1. Consent of the parties be made four months later. When the date arrived,
2. Object Ricardo refused to deliver. So Jose brought an
3. Cause action in court to compel Ricardo to make the
delivery. Do you think the action will prosper?
Reason.
FORM OF THE CONTRACT
Answer: NO, the action will not prosper, provided
General rule: no particular form is needed to that Ricardo puts up the defense the fact that even
make a contract of sale valid as between the assuming there was a contract, still the contract is
parties UNENFORCEABLE because it had been made
- the contract may be oral or in writing ORALLY. In other words, Ricardo's defense would
- May be in private or public instrument be the Statute of Frauds
Exception: when the law so provides, such as Note: if Ricardo does not set up this defense, it is
those sales which must be in writing to be deemed WAIVED, and therefor Jose's action will
enforceable prosper.
- this in conformity with the the Statute of frauds
Gloria sold to Maria orally a parcel of land for Php
Reason: to prevent the commission of fraud, the 8,000. Maria immediately paid the Php 8,000
memory of man being unreliable although it was agreed that the land would be
delivered three months later. If at the end of three
Q: if the form is not complied with what is the months, Gloria refuses to deliver, may Maria
status of the sale? successfully Sue Gloria to compel the deliver?
A: Invalid - VOID - the law provides that the same Answer: YES, for while it is true that the contract
is void should have been in writing to be enforceable, still,
in the instant case, the Statute of Frauds can no
Sales which must be in writing: (otherwise, it longer be applied - for simple reason that payment
is UNENFORCEABLE) had been made and the contract is therefore
1. Sale of real property - regardless of the value or PARTIALLY EXECUTED. If we were to allow Gloria to
price involved put up the statute as a defense, we would be
2. Sale of personal property - if the price is Php countenancing fraud, not preventing it.
500 or more
3. Sales which are to be performed only after more Mario sold to Francisco a watch for Php 300. The
than one year from the time the agreement was sale was oral. It was agreed that both delivery and
entered into - regardless as to whether the payment would be made 18 months later. Is this
property is real or personal and regardless of contact enforceable?
the price involved
Answer: NO, for while the amount involved was
Note: the statute of frauds applies only to only Php 300, still the performance is to be made
EXECUTORY contracts or those where delivery and after more than a year from the agreement.
payment are to be still performed in the future
Cirilo Paredes vs. Espino (1968): the contract is
enforceable. The Statute of Fraud does not require
that the contract itself be in writing. A written note
Included are discussions of Atty. Melchor Rabanes © Gironella - Macadatar 2017 Page 1 of 30
LAW ON SALES🖋
or memorandum signed by the party charged is to Sale of personal property: the property must be
make the oral agreement enforceable. The letters in the possession of the buyer in good faith.
written by Espino together constitute a sufficient
memorandum of the transaction; they are signed Illustration:
by Espino, refer to the property sold, give its area,
and the purchase price - the essential terms of the Crispin orally sold to Emmanuel a watch for Php
contract. A "sufficient memorandum" does not have 400. Emmanuel immediately paid for it. But it was
to be a single document - it may be found in two or agreed that delivery would be made in two weeks.
more documents The day after the sale, Crispin orally sold the same
watch to Leandro, a buyer in good faith, for the
Requisites for the sale to be effective even same price.Crispin immediately gave the watch to
against third person Leandro. May Emmanuel successfully get the watch
from Leandro thru a court action?
Sale of real property: the sale must be
REGISTERED in the Registry of Deeds or Property of Answer: NO, for although the sale is valid and
the province where the property is located enforceable between crispin and Emmanuel it has
no effect against Leandro a third person with
Note: Before any contract can be accepted in the respect to the original sale. Leandro is a buyer in
Registry for registration - it must be in a PUBLIC good faith.
DOCUMENT otherwise the registration will be
refused Sale of large cattle: to be valid
1. In a public instrument
Illustration 2. Transfer of the certificate of registration
Eduardo sold to Leonie a parcel of land for Php Sale of Land thru an Agent: to be valid his
100,000. The sale was embodied in a private authority must be in WRITING, other wise the sale
instrument. There was neither delivery nor is VOID.
payment.
Illustrations:
1. Is the sale valid and enforceable as between
Eduardo and Leonie? P orally authorized A to sell his land for him. A sold
the land to S in a public instrument. S paid the full
YES, the sale is valid and enforceable between price. What is the status of the sale?
Eduardo and Leonie.
Answer: the sale is VOID because the authority of
2. Is the sale effective as against third parties? the agent was not in writing.
NO, the sale is not yet effective and binding on P in writing authorized A to sell his land for him. A
third parties or strangers because the sale has not sold the land to S orally. S paid the full price. What
yet been recorded in the Registry of Property. is the status of the sale?
Note: what either party should do is to request the Answer: the sale is completely VALID and
other to have their sale notarized or embodied in a ENFORCEABLE as between the parties.
public instrument.
- if the request is not heeded, an action can be Reasons
judicially brought to compel the execution of 1. The authority of the agent was in writing,
public instrument. therefore, on this point, the sale cannot be
questioned
LAW ON SALES🖋
2. Although the sale itself was oral, there was

payment, therefore, the Statute of Fraud cannot Illustration
even apply.
On February 5, 1967, S wrote B a letter, offering a
Note: in the first problem there is no chance for certain object for sale at a definite price. On
the sale to be effective against third person. How February 28, 1967, B write a letter of complete
could it be when it is not even effective as between acceptance, which was received by S that same
the parties? afternoon. BUT the same morning, S had already
written B a letter withdrawing the offer.
Sale of motor vehicle: to be valid
1. Notarized deed of sale Question: was there a contract of sale here?
2. Certificate of registration
Answer: None, because prior to receipt of the letter
of acceptance, the offer had already been
The first essential requisite: withdrawn. In other words, it does not matter that
CONSENT OR PERFECTION the letter of withdrawal may have been received
later by the offeree than receipt of the letter of
OF THE CONTRACT acceptance by the offeror. What is important is that
the letter of withdrawal was made prior to the
knowledge of acceptance.
Perfection of contract of sale
Theory of cognition: knowledge of acceptance will
When the contract of sale is perfected? give rise to the perfection of the contract of sale
- at the moment there is a meeting of the minds - the date of mailing is not the date of knowledge
upon the thing which is the object of the contract
and upon the price Theory of dispatch: e.g. Mailing is the effective
- From the moment, the parties may reciprocally date
demand performance, subject to the - it is applied in negotiable instrument law and
requirements on form of contracts remedial law but not on the law on sales
- Delivery or payment is not essential for
perfection - it is perfected by mere consent 🎀 subject to a suspensive condition:from the
moment the condition is fulfilled
Requisites of perfection
Special Rules for Auction sale
🎀 Face to face: the moment an offer is accepted 1. Where goods are put for sale by auction in lots,
without conditions and without qualifications each lot is the subject of a separate contract of
sale
Conditional acceptance: is regarded as counter 2. A sale by auction is perfected when the
offer auctioneer announces its perfection by the
fall of the hammer, or in other customary
🎀 thru phone: it is as if the parties are face to face manner. Until such announcement is made,
any bidder may retract his bid; and the
auctioneer may withdraw the goods from
🎀 thru correspondence or through telegram: when the sale unless the auction has been
the offer or receives or has knowledge of the announced to be without reserve.
acceptance by the offeree 3. A right to bid may be reserved expressly
- thus, if the buyer has already accepted, but the by or on behalf of the seller, unless
seller does not know yet of the acceptance, the otherwise provided by law or by stipulation.
seller may still withdraw
LAW ON SALES🖋
4. Where notice has not been given that a

Option
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 Option: is an agreement whereby one party
promises to sell or to buy but the other party does
or induce any person to bid at such sale on his
not make the corresponding promise to buy or to
behalf or for the auctioneer, to employ or
induce any person to bid at such sale on sell.
- it is valid provided that it is supported by
behalf of the seller or knowingly to take
consideration other than that of the price
any bid from the seller or any person
- Option is an accepted UNILATERAL promise to
employed by him. Any sale contravening
this rule may be treated as fraudulent by buy or to sell a determinate thing for a certain
the buyer. price.
Note:If one party fails to comply with his word,

NOTE:
1. The same is thus perfected when the auctioneer and instead, disposes of the property in favor of
announces its perfection by the fall of the another before the end of the period agreed upon,
the other party may sue him for DAMAGES.
hammer or in the customary manner
2. Before the fall of the hammer If the option been given out of liberality or
- the bidder may retract his bid: every bidding is generosity, there would be a valid consideration,
the option having been given as a donation.
merely an offer and therefore before it is
accepted, it may be withdrawn
- The auctioneer may withdraw the goods from the If the buyer decides not to buy or failed to
sale: unless the auction has been announced to communicate his choice within the prescribed time,
the option money is not returned to him.
be without reserve - a bid is merely an offer not
an acceptance of an offer to sell
Seller's duty: to wait for the prospective buyer to
3. The sellers in an auction sale may bid provided makes up his mind
- such right was reserved - he binds himself not to alienate the property to
- And notice was given that the sale is subject to a another
right to bid on behalf of the seller

Mutual promise to buy and sell: this is good as
perfected sell.
4. The seller may employ other to bid for him
provided:
- he has notified the public that the auction is
Contract to Sell
subject to the right to bid on behalf of the seller
It is neither a mutual promise to buy and sell nor a

By bidder or puffers: people who bid for the
seller but are not themselves bound contract of sale.
It exists, for instance, when land is promised to be

Note: without the notice, any sale contravening the
sold, and title is given only after the downpayment
rule may be treated by the buyer as FRAUDULENT.
- in other words the purchaser can be relieved and the monthly installments therefor shall have all
been paid.
from his bid
- Failure to make the needed payment is failure to
comply with the needed suspensive condition
- A clause in such contract allowing UNILATERAL
AUTOMATIC RESCISSION by the seller in the
LAW ON SALES🖋
event the buyer fails to pay any installment due The sum of P100,000.00 was part of the purchase
is VALID price. Although the same was denominated as
"option money," it is actually in the nature of
earnest money or down payment when considered
Earnest money with the other terms of the contract. Doubtless, the
agreement is not a mere unilateral promise to sell,
Earnest money: is money given to show the seller but, indeed, it is a Contract to Sell
that the buyer is really interested in the purchase.
Tuazon vs. Del Rosario (2010): An agreement in
Effects: writing to give a person the `option' to purchase
1. It is part of the purchase price lands within a given time at a named price is
2. It is a proof of the perfection of the contract neither a sale nor an agreement to sell. It is simply
a contract by which the owner of property agrees
Hence from the total price must be deducted such with another person that he shall have the right to
earnest money, the balance is all that has to be buy his property at a fixed price within a certain
paid. time. He does not sell his land; he does not then
agree to sell it; but he does sell something; that is,
If there is violation on the part of the seller; the right or privilege to buy at the election or
remedy:SPECIFIC PERFORMANCE option of the other party. The second party gets in
praesenti, not lands, nor an agreement that he
shall have lands, but he does get something of
Earnest money Option money
value; that is, the right to call for and receive lands
Applies to perfected sale Applies to a sale not yet if he elects. The owner parts with his right to sell
perfected his lands, except to the second party, for a limited
period. The second party receives this right, or
The buyer is required to The money is not part of
pay the balance the purchase price rather, from his point of view, he receives the right
to elect to buy.
The would be buyer is
not required to buy
In the law on sales, the so-called `right of first
refusal' is an innovative juridical relation. Needless
Oesmer vs. Paraiso (2007): In the instant case, to point out, it cannot be deemed a perfected
the consideration of P100,000.00 paid by contract of sale under Article 1458 of the Civil
respondent to petitioners was referred to as "option Code. Neither can the right of first refusal,
money." However, a careful examination of the understood in its normal concept, per se be brought
words used in the contract indicates that the money within the purview of an option under the second
is not option money but earnest money. "Earnest paragraph of Article 1479, aforequoted, or possibly
money" and "option money" are not the same but of an offer under Article 1319 of the same Code. An
distinguished thus: (a) earnest money is part of the option or an offer would require, among other
purchase price, while option money is the money things, a clear certainty on both the object and the
given as a distinct consideration for an option cause or consideration of the envisioned contract.
contract; (b) earnest money is given only where In a right of first refusal, while the object might be
there is already a sale, while option money applies made determinate, the exercise of the right,
to a sale not yet perfected; and, (c) when earnest however, would be dependent not only on the
money is given, the buyer is bound to pay the grantor's eventual intention to enter into a binding
balance, while when the would-be buyer gives juridical relation with another but also on terms,
option money, he is not required to buy, but may including the price, that obviously are yet to be
even forfeit it depending on the terms of the later firmed up. Prior thereto, it can at best be so
option. described as merely belonging to a class of
preparatory juridical relations governed not by
LAW ON SALES🖋
contracts (since the essential elements to establish Vitiated consent in a contracts of sale:
the vinculum juris would still be indefinite and
inconclusive) but by, among other laws of general The consent to a contract of sale must be free from
application, the pertinent scattered provisions of the vices of consent
the Civil Code on human conduct.
Vices of consent: FUMVI
From the foregoing, it is thus clear that an option 1. Fraud
contract is entirely different and distinct from a 2. Undue influence
right of first refusal in that in the former, the option 3. Mistake
granted to the offeree is for a fixed period and at a 4. Violence
determined price. Lacking these two essential 5. Intimidation
requisites, what is involved is only a right of first
refusal. Status of the sale: VOIDABLE - valid until
annulled
Special sales Parties to the contract of sale: all person who

are authorized in the civil code to obligate
Two kinds: themselves, may enter into a contract of sale,
1. Sale where the delivery to the buyer is made subject to certain exceptions
"on sale or on return"

2. Sale where delivery to the buyer is made "on SALONGA VS. FARRALES (1981): It is
approval" or "on trial" or "on satisfaction" elementary that consent is an essential element for
the existence of a contract, and where it is wanting,
On sale or on return: the contract is non-existent. The essence of

- it is subject to a resolutory condition consent is the conformity of the parties on the
- Upon delivery to the buyer the buyer becomes terms of the contract, the acceptance by one of the
the owner offer made by the other. The contract to sell is a
- BUT he can return the ownership to the seller by bilateral contract. Where there is merely an offer by
returning the goods. one party, without the acceptance of the other,
there is no consent.
On approval, on trial or on satisfaction:
- a sale depending not on the discretion of the It appears in this case that the offeree, the
buyer, but more or less on the quality of the defendant-appellee Julita B. Farrales not only did
goods not accept, but rejected the offer of plaintiffs-
- It is a sale with a suspensive condition appellants, spouses Salonga to buy the land in
- Even if there is delivery the seller is still the question. There being no consent there is,
owner pending the buyer's approval - expressly therefore, no contract to sell to speak of.
or impliedly
- The buyer becomes the owner only if he indicates PARAGAS VS. BALACANO (2005): It is not
his approval of the sale disputed that when Gregorio signed the deed of
- Risk of loss remains generally with the seller sale, Gregorio was seriously ill, as he in fact died a
week after the deed's signing. Gregorio died of
complications caused by cirrhosis of the liver.
Legal capacity of the parties G r e g o r i o ' s d e a t h wa s n e i t h e r s u d d e n n o r
immediate; he fought at least a month-long battle
against the disease until he succumbed to death on
Absent or lack of consent to a contract of sale will
July 22, 1996. Given that Gregorio purportedly
result to void or voidable contract of sale.
executed a deed during the last stages of his battle
against his disease, we seriously doubt whether
LAW ON SALES🖋
Gregorio could have read, or fully understood, the Exception: where necessaries are sold and
contents of the documents he signed or of the delivered to him he must pay a reasonable price -
consequences of his act. We note in this regard that the sale is VALID
Gregorio was brought to the Veteran's Hospital at
Quezon City because his condition had worsened on Necessaries: include everything that is
or about the time the deed was allegedly signed. indispensable according to the social position of the
This transfer and fact of death not long after speak family such as
volumes about Gregorio's condition at that time. 1. Sustenance
We likewise see no conclusive evidence that the 2. Dwelling
contents of the deed were sufficiently explained to 3. Clothing
Gregorio before he affixed his signature. 4. Medical attendance
5. Education
Domingo vs. CA (2001): In the present case, at
the time of the execution of the alleged contract, It is presumed that a person is sane, unless
Paulina Rigonan was already of advanced age and 1. The person is judicially declared insane
senile. She died an octogenarian on March 20, 2. Or a certification from an expert
1966, barely over a year when the deed was
allegedly executed on January 28, 1965, but before When estoppel applies
copies of the deed were entered in the registry - when a minor represent himself that he is of age
allegedly on May 16 and June 10, 1966. when in reality he is not the - contract will be
considered valid
The general rule is that a person is not incompetent
to contract merely because of advanced years or by Status of the sale:
reason of physical infirmities. However, when such
When one of the parties is VOIDABLE
age or infirmities have impaired the mental a minor or an insane
faculties so as to prevent the person from properly,
When one is minor and UNENFORCEABLE
intelligently, and firmly protecting her property
the other is insane
rights then she is undeniably incapacitated.
When both are minors or UNENFORCEABLE
both are insane
The unrebutted testimony of Zosima Domingo
shows that at the time of the alleged execution of
the deed, Paulina was already incapacitated
physically and mentally. She narrated that Paulina
Special rules for husbands and wives
played with her waste and urinated in bed. Given
these circumstances, there is in our view sufficient General rule: they cannot sell property to each
reason to seriously doubt that she consented to the other
sale of and the price for her parcels of land.
Moreover, there is no receipt to show that said price Exceptions:
was paid to and received by her. 1. When a separation of property was agreed upon
in the marriage settlement
2. When there has been a judicial separation of
Special rules for minors and the insane property
General rule: for a minor or an insane to enter Status of sale: VOID

into a contract of sale, the consent of the parent or
guardian is needed - otherwise it is voidable Who can attack the validity of the sale:
1. The heirs of either spouse
2. Prior creditor (persons who were already
creditors at the time of the transfer)
LAW ON SALES🖋
- Rural: 3 hectares
Special Rules for persons in a
Fiduciary (Trust) Relation Rubias vs. Batiller (1973): Article 1491 of our
Civil Code (like Article 1459 of the Spanish Civil
Persons who occupy a position of trust and Code) prohibits in its six paragraphs certain
confidence are not allowed to PURCHASE certain persons, by reason of the relation of trust or their
properties, whether at a private sale or a public or peculiar control over the property, from acquiring
judicial auction, whether directly or indirectly, or such property in their trust or control either directly
whether personally or though another. or indirectly and "even at a public or judicial
auction," as follows: (1) guardians; (2) agents; (3)
1. The Guardian - with respect to the property of administrators; (4) public officers and employees;
the person under his guardianship judicial officers and employees, prosecuting
2. The executor or administrator of the estate of a attorneys, and lawyers; and (6) others especially
decease person with respect to such estate disqualified by law.
3. An agent - with respect to the property
entrusted to him for administration or sale the nullity of such prohibited contracts is definite
UNLESS the principal consents to the purchase and permanent and cannot be cured by ratification.
by the agent himself The public interest and public policy remain
4. Public officers or employees - with respect to paramount and do not permit of compromise or
government property under their charge ratification.
5. Judges and experts - who take part in the
judicial sales or properties the permanent disqualification of public and judicial
6. Lawyers and judicial officials - with respect to officers and lawyers grounded on public policy
properties being litigated, and in which litigation differs from the first three cases of guardians,
they are participating agents and administrators (Article 1491, Civil
7. Others specially disqualified by law Code), as to whose transactions it had been opined
that they may be "ratified" by means of and in "the
Note: form of a new contact, in which cases its validity
- an agent can buy for himself after the shall be determined only by the circumstances at
termination of the agency the time the execution of such new contract. The
- The law does not prohibit a lawyer from acquiring causes of nullity which have ceased to exist cannot
a certain percentage of the value of the impair the validity of the new contract. Thus, the
properties in litigation that may be awarded to object which was illegal at the time of the first
his client. A contingent fee based on such value, contract, may have already become lawful at the
is allowed. time of the ratification or second contract; or the
- The prohibition applies also to legal redemption, service which was impossible may have become
compromises and denunciations possible; or the intention which could not be
ascertained may have been clarified by the parties.
STATUS OF SALE: The ratification or second contract would then be
- first three: VOIDABLE valid from its execution; however, it does not
- Remainder: VOID retroact to the date of the first contract."
NOTE: aliens a are disqualified to buy lands in the Wolfson vs. Martinez (1911): even if it be
Philippines admitted that he purchase by an attorney Of a final
judgment which he has secured in favor of his client
Exception: former Filipinos falls provisions of Article 1459 of the Civil Code, in
which attorneys and solicitors are prohibited from
Limitation: purchasing the property and rights which may be
- Urban: 5,000 square meters the object of the litigation in which they make take
LAW ON SALES🖋
part by virtue of their profession and office., a land has since become the property of a naturalized
question which is not discussed or decided, Filipino citizen who is constitutionally qualified to
nevertheless, such purchase and sale, under the own land.
terms of the said article, is not void but voidable at
the election of the vendor, and such voidability can In short, the law disregards the constitutional
not be asserted by one not a party to the contract disqualification of the buyer to hold land if the land
or his privy. (Overturned) is subsequently transferred to a qualified party, or
the buyer himself becomes a qualified party.
Sarsosa Vda. De Barsobia vs. Cuenco (1982):
There should be no question that the sale of the Some rules:
land in question in 1936 by Epifania to Ong King Po
was inexistent and void from the beginning (Art. DEAF AND MUTE who do not know how to read
1409 , Civil Code) because it was a contract and write: disqualified or void
executed against the mandatory provision of the
1935 Constitution, which is an expression of public Intoxication or drunkenness: Voidable
policy to conserve lands for the Filipinos.
Hypnotic spell: voidable
But the factual set-up has changed. The litigated
property is now in the hands of a naturalized Drugs: voidable
Filipino. It is no longer owned by a disqualified
vendee. Respondent, as a naturalized citizen, was
constitutionally qualified to own the subject Absolutely Simulated Sale
property. There would be no more public policy to
be served in allowing petitioner Epifania to recover Status of the sale: VOID
the land as it is already in the hands of a qualified
person. What if: in order to defraud the creditor the debtor
sold the property, what is the status of the sale?
While, strictly speaking, Ong King Po, private
respondent's vendor, had no rights of ownership to Answer: it depends
transmit, it is likewise inescapable that petitioner
Epifania had slept on her rights for 26 years from If there is no consideration: the sale is considered
1936 to 1962. By her long inaction or inescusable simulated sale and thus VOID
neglect, she should be held barred from asserting
her claim to the litigated property If the transaction is genuine but in fraud of the
creditor (with consideration) - RESCISSIBLE SALE
Republic vs. Register of Deeds of Roxas City - accion publiciana will be applicable (4 years from
(2008): The circumstances of this case are similar the discovery of the fraudulent sale
to the case of De Castro v. Teng Queen Tan,
wherein a residential lot was sold to a Chinese Who can question the sale?
citizen. Upon the death of the alien vendee, his
heirs entered into an extrajudicial settlement of the Relative simulation: creditors before the sale
estate of the deceased and the subject land was
transferred to a son who was a naturalized Filipino. Absolutely simulated: creditors before and after the
Subsequently, the vendor of the lot filed a suit for sale (Declaration of Nullity/ Inexistence of sale)
annulment of sale for alleged violation of the - the action is imprescriptible
Constitution prohibiting the sale of land to aliens.
Independently of the doctrine of in pari delicto, the Clemente vs. CA (2015): Simulation takes place
Court sustained the sale, holding that while the when the parties do not really want the contract
vendee was an alien at the time of the sale, the they have executed to produce the legal effects
LAW ON SALES🖋
expressed by its wordings. Article 1345 of the Civil agreement is absolutely binding and enforceable
Code provides that the simulation of a contract may between the parties and their successors in
either be absolute or relative. The former takes interest.
place when the parties do not intend to be bound at
all; the latter, when the parties conceal their true In absolute simulation, there is a colorable contract
agreement. but it has no substance as the parties have no
intention to be bound by it. “The main characteristic
In absolute simulation, there is a colorable contract of an absolute simulation is that the apparent
but it has no substance as the parties have no contract is not really desired or intended to produce
intention to be bound by it. The main characteristic legal effect or in any way alter the juridical situation
of an absolute simulation is that the apparent of the parties.” “As a result, an absolutely simulated
contract is not really desired or intended to produce or fictitious contract is void, and the parties may
legal effect or in any way alter the juridical situation recover from each other what they may have given
of the parties. As a result, an absolutely simulated under the contract.”
or fictitious contract is void, and the parties may
recover from each other what they may have given The primary consideration in determining the true
under the contract. nature of a contract is the intention of the parties.
The following circumstances led the RTC and the CA Such intention is determined not only from the
to conclude that the Deeds of Absolute Sale are express terms of their agreement, but also from the
simulated, and that the transfers were never contemporaneous and subsequent acts of the
intended to affect the juridical relation of the parties. As heretofore shown, the contemporaneous
parties: and subsequent acts of both parties in this case,
point to the fact that the intention of Ireneo was
a) There was no indication that Adela intended to just to lend the title to the Spouses Intac to enable
alienate her properties in favor of petitioner. In fact, them to borrow money and put up a hospital in Sta.
the letter of Adela to Dennis dated April 18, 1989 Cruz, Laguna. Clearly, the subject contract was
reveals that she has reserved the ownership of the absolutely simulated and, therefore, void.
Properties in favor of Dennis.
b) Adela continued exercising acts of dominion and Relatively simulated Sale

control over the properties, even after the
execution of the Deeds of Absolute Sale, and The parties should be bound by their true
though she lived abroad for a time. agreement.
c) The SPA executed on the same day as the Deeds Tongoy vs. CA (1983): The characteristic of
of Absolute Sale appointing petitioner as simulation is the fact that the apparent contract is
administratrix of Adela's properties, including the not really desired nor intended to produce legal
Properties, is repugnant to petitioner's claim that effects nor in any way alter the juridical situation of
the ownership of the same had been transferred to the parties. Thus, where a person, in order to place
her. his property beyond the reach of his creditors,
simulates a transfer of it to another, he does not
Intac vs. CA (2012): If the parties state a false really intend to divest himself of his title and
cause in the contract to conceal their real control of the property; hence, the deed of transfer
agreement, the contract is only relatively simulated is but a sham.
and the parties are still bound by their real
agreement. Hence, where the essential requisites of The following are the most fundamental
a contract are present and the simulation refers characteristics of void or inexistent contracts:
only to the content or terms of the contract, the
LAW ON SALES🖋
1) As a general rule, they produce no legal effects rights whatsoever in favor of Luis Tongoy or his
whatsoever in accordance with the principle "quod heirs. That which is inexistent cannot give life to
nullum est nullum producit effectum." anything at all.
2) They are not susceptible of ratification. Balite vs. Lim (2004): In the present case, the
parties intended to be bound by the Contract, even
3) The right to set up the defense of inexistence or if it did not reflect the actual purchase price of the
absolute nullity cannot be waived or renounced. property. That the parties intended the agreement
to produce legal effect is revealed by the letter of
4) The action or defense for the declaration of their Esperanza Balite to respondent dated October 23,
inexistence or absolute nullity is imprescriptible. 1996 and petitioners’ admission that there was a
partial payment of P320,000 made on the basis of
5) The inexistence or absolute nullity of a contract the Deed of Absolute Sale. There was an intention
cannot be invoked by a person whose interests are to transfer the ownership of over 10,000 square
not directly affected meters of the property . Clear from the letter is the
fact that the objections of her children prompted
The nullity of these contracts is definite and cannot Esperanza to unilaterally withdraw from the
be cured by ratification. The nullity is permanent, transaction.
even if the cause thereof has ceased to exist, or
even when the parties have complied with the Since the Deed of Absolute Sale was merely
contract spontaneously relatively simulated, it remains valid and
enforceable. All the essential requisites prescribed
Consistently, this Court held that "where the sale of by law for the validity and perfection of contracts
a homestead is null and void, the action to recover are present. However, the parties shall be bound by
the same does not prescribe because mere lapse of their real agreement for a consideration of
time cannot give efficacy to the contracts that are P1,000,000 as reflected in their Joint Affidavit.
null and void and inexistent"
The juridical nature of the Contract remained the
Evidently, therefore, the deeds of transfer executed same. What was concealed was merely the actual
in favor of Luis Tongoy were from the very price. Where the essential requisites are present
beginning absolutely simulated or fictitious, since and the simulation refers only to the content or
the same were made merely for the purpose of terms of the contract, the agreement is absolutely
restructuring the mortgage over the subject binding and enforceable between the parties and
properties and thus preventing the foreclosure by their successors in interest
the PNB.
Valerio vs. Refresca (2006): In the case at bar,
Considering the law and jurisprudence on simulated the records reveal that the clear intent of Narciso
or fictitious contracts as aforestated, the within Valerio in executing the 1975 Deed of Sale was to
action for reconveyance instituted by herein transfer ownership of the apportioned areas of his
respondents which is anchored on the said 6.5-hectare land to petitioners as his heirs and to
simulated deeds of transfer cannot and should not his tenant Alejandro. Although no monetary
be barred by prescription. No amount of time could consideration was received by landowner Narciso
accord validity or efficacy to such fictitious from any of the vendees, it cannot be said that the
transactions, the defect of which is permanent. contract was not supported by a cause or
consideration or that Narciso never intended to
There is no implied trust that was generated by the transfer ownership thereof.
simulated transfers; because being fictitious or
simulated, the transfers were null and void ab initio Indeed, the primary consideration in determining
— from the very beginning — and thus vested no the true nature of a contract is the intention of the
LAW ON SALES🖋
parties. If the words of a contract appear to necessity of new and further agreement between
contravene the evident intention of the parties, the the parties.
latter shall prevail. Such intention is determined not
only from the express terms of their agreement, Sale of Future inheritance is VOID.
but also from the contemporaneous and
subsequent acts of the parties. In the case at bar, LAND COVERED BY HOMESTEAD PATENT;
the circumstances reveal that when landowner Cases
Narciso executed the 1975 Deed of Sale, he
intended to transfer ownership of his entire 6.5- De Guzman vs. CA (2016): Under Section 124 of
hectare landholding and apportion the area among the Public Land Act, any acquisition, conveyance,
Alejandro and the petitioners. Neither he nor his alienation, transfer, or other contract made or
wife, during their lifetime, exerted effort to evict executed in violation of Sections 118 to 123 of the
respondents when the latter allegedly failed to Public Land Act shall be unlawful and null and void
comply with the condition to surrender their from its execution. The violation shall also produce
tenancy rights after the sale. That petitioners and the effect of annulling and cancelling the grant,
tenant Alejandro then took possession of their title, patent or permit originally issued, recognized
respective portions of the land additionally shows or confirmed actually or presumptively. The
that Narciso divested himself of his title and control violation shall also cause the reversion of the
over the property. Truly, one of the most striking property and its improvements to the State. The
badges of absolute simulation is the complete contract executed in violation of these sections
absence of any attempt on the part of a vendee to being void, it is not susceptible of ratification, and
assert his right of dominion over the property. In the action for the declaration of the absolute nullity
the case at bar, petitioners and respondents were of such a contract is imprescriptible.
not amiss in claiming their right over their
respective lots. In this case, portions of Lot No. 532 were conveyed
to petitioners by virtue of two Deeds of Absolute
Sale executed on May 24, 1969 and June 18, 1970,
The second essential or after the grant and issuance of Free Patent No.
requisite: DETERMINATE 400087 on May 28, 1968. Both Deeds of Absolute
Sale were executed within the prohibited period of
SUBJECT MATTER OR five years. Consequently, following Section 124,
these Deeds are null and void and produce no
OBJECT OF THE CONTRACT effect. They did not convey any right from Spouses
Bajao to petitioners on the property. The parties
Necessity of the Object being determinate or could not have claimed ignorance of the free patent
specific: grant
- a thing is determinate or specific when it is
particularly designated or physically segregated Nonetheless, although Section 124 states that a
from all other of the same class violation of Section 118 causes the reversion of the
property to the State, we have held that a private
B and S today agreed on the sale for Php 30,000 of individual may not bring an action for reversion or
a car, to be specifically chosen tomorrow by P (their any action which would have the effect of cancelling
professor in law 2) from amongst 100 cars on a free patent and the corresponding certificate of
display in a certain car company. Today, is there title issued on the basis thereof, with the result that
already a contract of sale? the land covered thereby will again form part of the
public domain, since only the Solicitor General or
Answer; YES because the object is already the officer acting in his stead may do so. Until then,
considered specific or determinate if the thing is respondent, as heir of the vendors, has the better
capable of being made determinate without the right to remain in possession of the property.
LAW ON SALES🖋
contract of sale. And in Sibal vs. Valdez, 50 Phil.

The rule of pari delicto will not apply here in view of 512, pending crops which have potential existence
the nullity of the contracts of sale between the may be the subject matter of sale.
parties. To have it otherwise would go against the
public policy of preserving the grantee's right to the
land under the homestead law. Additional requisites for the subject
matter
With respect to the purchase price of P2,400 which
petitioners paid for the land, respondent should 1. The subject matter must be licit
return it with interest. 2. The seller must have the right to transfer
ownership thereof at the time it is delivered
Binayug vs. Ugaddan (2012): A contract which
purports to alienate, transfer, convey, or encumber Licit Subject Matter
any homestead within the prohibitory period of five
years from the date of the issuance of the patent is - it must be within the commerce of men
void from its execution. In a number of cases, this
Court has held that such provision is mandatory. When things may be illicit:
1. Per se - by its nature such as selling a human
flesh
Future or potential things
2. Per accidens - made illegally by provision of law
such as sale of land to an alien
Future and potential things may be the object of a
sale, provided that at the time of perfection, they Status of sale: VOID
are already in a sense "determine".
The following can be an object or subject
Examples matter of contract of sale:
1. Those still to be manufactured 1. The right of conventional redemption
2. Those still to be raised or future harvest or 2. Literary, artistic, and scientific works
agricultural products 3. The usufruct of a land, unless personal
3. Those still to be acquired by the seller after the considerations are involved
perfection of the contract
4. The expected good will of a business enterprise The right to transfer ownership
Emptio rei sperati (sale of expected thing): the - nobody can give what he does not have (nemo
validity is deemed subject to the condition that the dat quad non habet)
thing will come into existence. - The seller need not be the owner of the thing at
the time of perfection of the contract
Emptio spei (sale of mere hope or - It is sufficient if he is the owner at the time the
expectancy): it is valid object is delivered otherwise he may held liable
for breach of warranty against eviction and hence
Sale of vain hope or expectancy: VOID be responsible for damages
Pichel vs. Alonzo (1982): The subject matter of Fuentes vs. Roca (2010): Under the provisions of
the contract of sale in question are the fruits of the the Civil Code governing contracts, a void or
coconut trees on the land during the years from inexistent contract has no force and effect from the
September 15, 1968 up to January 1, 1976, which very beginning. And this rule applies to contracts
subject matter is a determinate thing. Under Article that are declared void by positive provision of law,
1461 of the New Civil Code, things having a as in the case of a sale of conjugal property without
potential existence may be the object of the the other spouse's written consent. A void contract
LAW ON SALES🖋
is equivalent to nothing and is absolutely wanting in Accordingly, the Deed of Sale executed on January
civil effects. It cannot be validated either by 12, 1974 between Bonifacio and the Tarrosas
ratification or prescription. covering the PHHC lot is void.
But, although a void contract has no legal effects GENERAL RULE: you cannot sell what you do not
even if no action is taken to set it aside, when any have
of its terms have been performed, an action to
declare its inexistence is necessary to allow Status of sale: VOID
restitution of what has been given under it. This - buyer's right - acquires a derivative right
action, according to Article 1410 of the Civil Code - No better right than that of the seller
does not prescribe. - A spring cannot rise above or higher than its
source
De Leon vs. De Leon (2009): In the case at bar,
ownership over what was once a PHHC lot and EXCEPTION: sale by non owner
covered by the PHHC-Bonifacio Conditional Contract 1. Forced sales - foreclosure sale, execution sale,
to Sell was only transferred during the marriage of tax delinquency sale
Bonifacio and Anita. It is well settled that a 2. Owner is estopped by his conduct
conditional sale is akin, if not equivalent, to a 3. Article 1505 (personal properties)
contract to sell. In both types of contract, the
efficacy or obligatory force of the vendor's - The provisions of any factors' act, recording
obligation to transfer title is subordinated to the laws, or any other provision of law enabling
happening of a future and uncertain event, usually the apparent owner of goods to dispose of
the full payment of the purchase price, so that if them as if he were the true owner thereof;
the suspensive condition does not take place, the - The validity of any contract of sale under
parties would stand as if the conditional obligation statutory power of sale or under the order
had never existed. In other words, in a contract to of a court of competent jurisdiction;
sell ownership is retained by the seller and is not - Purchases made in a merchant's store, or in
passed to the buyer until full payment of the price, fairs, or markets, in accordance with the
unlike in a contract of sale where title passes upon Code of Commerce and special laws.
delivery of the thing sold.
Exception by analogy: sale of immovable
Such is the situation obtaining in the instant case. property
The conditional contract to sell executed by and 1. When owner is in estoppel
between Bonifacio and PHHC on July 20, 1965 2. Sale of land under the Torrens System
provided that ownership over and title to the
property will vest on Bonifacio only upon execution Arcabal vs. Arcabal (2005): While a co-owner
of the final deed of sale which, in turn, will be has the right to freely sell and dispose of his
effected upon payment of the full purchase price undivided interest, nevertheless, as a co-owner, he
cannot alienate the shares of his other co-owners –
Evidently, title to the property in question only nemo dat qui non habet.
passed to Bonifacio after he had fully paid the
purchase price on June 22, 1970. This full payment, This Court is not unmindful of its ruling in Cruz v.
to stress, was made more than two (2) years after Leis where it held:
his marriage to Anita on April 24, 1968. In net
effect, the property was acquired during the It is conceded that, as a rule, a co-owner such as
existence of the marriage; as such, ownership to Gertrudes could only dispose of her share in the
the property is, by law, presumed to belong to the property owned in common.
conjugal partnership.
LAW ON SALES🖋
Unfortunately for private respondents, however, the absence of anything to excite suspicion, he is under
property was registered in TCT No. 43100 solely in no obligation to look beyond the certificate and
the name of “Gertrudes Isidro, widow.” Where a investigate the title of the mortgagor appearing on
parcel of land, forming part of the undistributed the face of said certificate.
properties of the dissolved conjugal partnership of
gains, is sold by a widow to a purchaser who Rufloe vs. Burgos (2009): The issue concerning
merely relied on the face of the certificate of title the validity of the deed of sale between the Rufloes
thereto, issued solely in the name of the widow, the and Delos Reyes had already been resolved with
purchaser acquires a valid title to the land even as finality in Civil Case No. M-7690 by the RTC of
against the heirs of the deceased spouse. The Pasay City which declared that the signatures of the
rationale for this rule is that “a person dealing with alleged vendors, Angel and Adoracion Rufloe, had
registered land is not required to go behind the been forged. It is undisputed that the forged deed
register to determine the condition of the property. of sale was null and void and conveyed no title. It is
He is only charged with notice of the burdens on a well-settled principle that no one can give what
the property which are noted on the face of the one does not have, nemo dat quod non habet. One
register or the certificate of title. To require him to can sell only what one owns or is authorized to sell,
do more is to defeat one of the primary objects of and the buyer can acquire no more right than what
the Torrens system.” (Citation omitted) the seller can transfer legally. Due to the forged
deed of sale, Delos Reyes acquired no right over
Cruz, however, is not applicable for the simple the subject property which she could convey to the
reason that in the case at bar the property in Burgos siblings. All the transactions subsequent to
dispute is unregistered. The issue of good faith or the falsified sale between the spouses Rufloe and
bad faith of a buyer is relevant only where the Delos Reyes are likewise void, including the sale
subject of the sale is a registered land but not made by the Burgos siblings to their aunt,
where the property is an unregistered land. One Leonarda.
who purchases an unregistered land does so at his
peril. Nicolas’ claim of having bought the land in As a general rule, every person dealing with
good faith is thus irrelevant. registered land, as in this case, may safely rely on
the correctness of the certificate of title issued
Duran vs. IAC (1985): Thus, where innocent therefor and will in no way oblige him to go beyond
third persons relying on the correctness of the the certificate to determine the condition of the
certificate of title issued, acquire rights over the property. However, this rule admits of an
property, the court cannot disregard such rights unchallenged exception:
and order the total cancellation of the certificate for
that would impair public confidence in the ... a person dealing with registered land has a right
certificate of title; otherwise everyone dealing with to rely on the Torrens certificate of title and to
property registered under the torrens system would dispense with the need of inquiring further except
have to inquire in every instance as to whether the when the party has actual knowledge of facts and
title had been regularly or irregularly issued by the circumstances that would impel a reasonably
court. Indeed, this is contrary to the evident cautious man to make such inquiry or when the
purpose of the law. Every person dealing with purchaser has knowledge of a defect or the lack of
registered land may safely rely on the correctness title in his vendor or of sufficient facts to induce a
of the certificate of title issued therefor and the law reasonably prudent man to inquire into the status
will in no way oblige him to go behind the of the title of the property in litigation. The
certificate to determine the condition of the presence of anything which excites or arouses
property. Stated differently, an innocent purchaser suspicion should then prompt the vendee to look
for value relying on a torrens title issued is beyond the certificate and investigate the title of
protected. A mortgagee has the right to rely on the vendor appearing on the face of said certificate.
what appears in the certificate of title and, in the One who falls within the exception can neither be
LAW ON SALES🖋
denominated an innocent purchaser for value nor a In the case at bar, Bolos’ certificate of title was
purchaser in good faith and, hence, does not merit concededly free from liens and encumbrances on its
the protection of the law. face. However,the failure of Carlos and the spouses
Guevara to exercise the necessary level of caution
The circumstances surrounding this case point to in light of the factual milieu surrounding the
the absolute lack of good faith on the part of sequence of transfers from Bolos to respondents
respondents. The evidence shows that the Rufloes bars the application of the mirror doctrine and
caused a notice of adverse claim to be annotated inspires the Court’s concurrence with petitioner’s
on the title of Delos Reyes as early as November 5, proposition.
1979. The annotation of an adverse claim is a
measure designed to protect the interest of a RIGHT OF FIRST REFUSAL:
person over a piece of real property, and serves as
a notice and warning to third parties dealing with If violated the remedy is RESCISSION OR
said property that someone is claiming an interest CANCELLATION
on the same or may have a better right than the
registered owner thereof. Despite the notice of
The third essential requisite:
adverse claim, the Burgos siblings still purchased
the property in question. CAUSE OR CONSIDERATION
Locsin vs. Hizon (2014): Thus, in Domingo
Need for cause or consideration
Realty, Inc. v. CA,we emphasized the need for
prospective parties to a contract involving titled
Without a lawful cause or consideration, the
lands to exercise the diligence of a reasonably
contract of sale is VOID.
prudent person in ensuring the legality of the title,
and the accuracy of the metes and bounds of the
The cause need not be stated in the document, if
lot embraced therein,by undertaking precautionary
there is, nonetheless it must exist.
measures, such as:
The cause in a contract of sale is a PRICE CERTAIN

1. Verifying the origin, history, authenticity, and
validity of the title with the Office of the Register
If the priced is fixed, but is later remitted or
of Deeds and the Land Registration Authority;
condoned, this is perfectly all right, for then the
2. Engaging the services of a competent and
price would not be fictitious.
reliable geodetic engineer to verify the
boundary, metes, and bounds of the lot subject
The failure to pay the agreed price does not cancel
of said title based on the technical description in
a sale for lack of consideration or cause. The seller
the said title and the approved survey plan in
can still sue in court for said price or for the
the Land Management Bureau;
rescission of the contract.
3. Conducting an actual ocular inspection of the
lot;
If the money paid is counterfeit
4. Inquiring from the owners and possessors of
adjoining lots with respect to the true and legal
After perfection: the sale is still valid, we cannot
ownership of the lot in question;
say that the cause or consideration is the illegal
5. Putting up of signs that said lot is being
currency
purchased, leased, or encumbered; and
- the real consideration Is still the value or the
6. Undertaking such other measures to make the
price agreed upon and this is understood to be in
general public aware that said lot will be subject
the form of genuine currency
to alienation, lease, or encumbrance by the
- The person who paid the counterfeit money
parties.
would of course still be liable for the price plus
interest
LAW ON SALES🖋
still, if the price is so inadequate as to SHOCK the

Negotiation to perfection: results to VOIDABLE conscience of the court, it will be set aside.
contract
Criminal liability: estafa or swindling Combination of money and property
When no specific amount has been stipulated: Whether the contract is one of barter or sale
the price is still considered certain in the following
cases Rules:
1. If it be certain with reference to another thing 1. Manifest intention of the parties
certain 2. If intent is not clear, determine the value of each
2. If the determination of the price is left to the
judgment of a specified person or persons If the value of the thing is more than the cash -
3. If it is the price which the object would have on BARTER
a definite day
If the cash amount is more than the value of the
Note: the fixing of the price can never be left to thing - SALE
the discretion of one of the contracting parties.
- however, the price fixed by one of the parties is Equal value - SALE
accepted by the other, the sale is perfected
Effect of motives of the parties: the particular

Use of Coins / Payable to legal tender
motives of the buyer or seller in entering into a
contract of sale do not count Rules:
- they are not the cause or consideration 1. Stipulation by the parties
2. If no stipulation - philippine currency, bank
Effect of gross inadequacy of the price notes or coins
(lesion): it generally does not affect the validity of
the contract, hence, the sale is valid BSP Circular 537 series of 2006:
- Php 1, 5 and 10: maximum of 1,000
However, said inadequacy may: - Centavos: maximum of 100
1. Indicate a defect in the consent (In this case the
contract may be ANNULLED) or
2. That the parties really intended a donation or
Use of Negotiable Instrument
some other act or contract
Produces payment only upon encashment
Gross inadequacy of price in Judicial or
Execution Sales:
- the rules above stated are not exactly applicable
OBLIGATION OF THE
to judicial or execution sales SELLER / VENDOR
Judicial or execution sale: is one made by a
The principal obligation of the seller
court with respect to a debtor's property if the
1. To deliver the determinate object of the contract
debtor does not have the money with which to pay
plus accessions, accessories or fruits
his indebtedness.
2. To transfer its ownership
3. To warrant against eviction and against hide dun
While it is true that mere inadequacy of price will
defects
not set aside a judicial sale, say of real property,
4. To pay for the expenses of the deed of sale,
unless there is stipulation to the contrary
LAW ON SALES🖋
5. To preserve the thing from the moment of 2. Allowing the buyer to make use of the rights
perfection up to the time of delivery
Requisite for constructive Delivery:
Obligation to deliver If the seller cannot, even if he wants to, deliver

actually, he cannot be also allowed to deliver
Remedy in case the seller fails to deliver at constructively.
the time stipulated:

1. Rescission of the contract Thus, if I sell my land to B, I may ordinarily deliver
2. Damages or it to him actually (by placing him in possession of
3. Both the property) or constructively thru public
instrument or a deed of sale. However, if the land is
Note: in execution sales, the debtor is not obliged completely occupied by squatters, my execution of
to deliver right away because he has a period of public instrument of sale does not effect a
one year within which to redeem the period. constructive delivery to the buyer of the land
because, under the circumstances, the presence of
When is the object said to be delivered? the squatters makes it impossible for him to
- the thing sold shall be understood as delivered, actually deliver the land.
when it is placed in the control and possession of
the buyer. Note: cancellation of the contract is the proper
remedy when there is no delivery
Kinds of delivery (Tradition)
1. Actual or real Villamar vs. Magaoil (2012): While Articles 1458
2. Legal or constructive and 1495 of the NCC and the doctrine enunciated in
3. Quasi - delivery the case of Chua do not impose upon the petitioner
the obligation to physically deliver to the
Legal or constructive deliver respondent the certificate of title covering the
1. Thru the execution of a public instrument subject property or cause the transfer in the latter's
2. Thru symbolic tradition or traditio symbolica- name of the said title, a stipulation requiring
such as the deliver of a key of the place where otherwise is not prohibited by law and cannot be
the movable sold is being kept regarded as violative of morals, good customs,
public order or public policy. Item no. 3 of the
Symbolic delivery only creates a prima facie agreement executed by the parties expressly states
presumption of delivery. that “transfer [shall] be immediately effected
so that the latter can apply for a loan from any
3. Thru traditio longa manu (by mere consent or lending institution using the corresponding
agreement) - if the movable cannot be certificate of title as collateral therefore.” Item
transferred to the possession of the buyer at the no. 3 is literal enough to mean that there should be
time of the sale physical delivery of the TCT for how else can the
4. Thru traditio brevi manu- this happens when the respondent use it as a collateral to obtain a loan if
buyer had already possession of the object even the title remains in the petitioner’s possession. We
before the purchase agree with the RTC and the CA that the petitioner
5. Thru traditio constitutum possessorium- failed to prove that she delivered the TCT covering
opposite of brevi Manu the subject property to the responden.
Quasi- delivery: it is the delivery of rights, credit In item no. 2 of the agreement, it is stated that
or incorporeal property, made by: part of the P185,000.00 initially paid to the
1. Placing titles of ownership in the hands of the petitioner shall be used to pay the mortgagors,
buyer Parangan and Lacaden. While the provision does
LAW ON SALES🖋
not expressly impose upon the petitioner the then fiction yields to reality—the delivery has not
obligation to eject the said mortgagors, the been effected."
undertaking is necessarily implied.
in a contract of purchase and sale the obligation of
Notwithstanding the absence of stipulations in the the parties is reciprocal, and, as provided by the
agreement and absolute deed of sale entered into law, in case one of the parties fails to comply with
by Villamar and Mangaoil expressly indicating the what is incumbent upon him to do, the person
consequences of the former's failure to deliver the prejudiced may either exact the fulfillment of the
physical possession of the subject property and the obligation or rescind the sale.
certificate of title covering the same, the latter is
entitled to demand for the rescission of their Place of delivery:
contract pursuant to Article 1191 of the NCC. 1. Agreement express or implied
2. If there is no agreement - usage of the trade
as a general rule, the execution of a public 3. If there be no prevalent usage - the buyer must
instrument amounts to a constructive delivery of get them at the seller's business place or
the thing subject of a contract of sale. However, residence
exceptions exist, among which is when mere
presumptive and not conclusive delivery is created Exception: if specific goods are sold and the parties
in cases where the buyer fails to take material know where they are, that place is the place of
possession of the subject of sale. A person who delivery
does not have actual possession of the thing sold
cannot transfer constructive possession by the Note: there is however sufficient delivery when a
execution and delivery of a public instrument. fortuitous event prevents delivery at the place
actually agreed upon, forcing a delivery at a place
In the case at bar, the RTC and the CA found that NEAR the original one.
the petitioner failed to deliver to the respondent the - there is also sufficient delivery when the original
possession of the subject property due to the place is changed, but the buyer accepted the
continued presence and occupation of Parangan and goods at a different place without complaint.
Lacaden.
C.I.F vs. F.O.B
Vda. De Sarmiento vs. Lesaca (1960): in order
that this symbolic delivery may produce the effect C.I.F (Cost, Insurance, Freight) - selling price
of tradition, it is necessary that the vendor shall already includes the insurance and freight, it is
have had such control over the thing sold that, at understood that said insurance and freight should
the moment of the sale, its material delivery could now be paid by the seller - after all he is supposed
have been made. It is not enough to confer upon to receive the total selling price
the purchaser the ownership and right of - consequently, all charges up to the place of
possession. The thing sold must be placed in his destination must be paid by the seller
control. When there is no impediment whatever to
prevent the thing sold passing into the tenancy of Beneficiary of the insurance: BUYER
the purchaser by the sole will of the vendor,
symbolic delivery through the execution of a public Seller's delivery is complete when goods are loaded
instrument is sufficient. But if, notwithstanding the on receiving ship while docked in port of shipment,
execution of the instrument, the purchaser cannot after all the buyer is the beneficiary of the
have the enjoyment and material tenancy of the insurance proceeds
thing and make use of it himself or through another
in his name, because such tenancy and enjoyment F.O.B (Free on Board)
are opposed by the interposition of another will,
Seller: clears goods for export
LAW ON SALES🖋
- delivery is complete when goods passed In case of fortuitous event: GRAY AREA
transporter's rail
DE LEON: buyer bears the loss
Buyer: responsible for all cost of carriage, arranges - roman law, principle of perfection, Articles 1480,
for transportation, nameship or authorizes seller to 1164, 1165, 1162, 1537
select one
TOLENTINO: no delivery yet, seller shoulders the
1. F.O.B. At the place of shipment - here, the loss
buyer must pay the freight - principle of tradition, article 1504, rules of equity
Since it is "free" for him till the goods are "on Chryler Phils vs. CA (1984): Sambok, Bacolod,
board" the vessel which is to sail. For the carriage cannot be faulted for not accepting or refusing to
itself aboard the vessel, he must pay. accept the shipment from Negros Navigation four
years after shipment. The evidence is clear that
2. F.O.B at the place of destination - here, the N e g r o s N av i g a t i o n c o u l d n o t p r o d u c e t h e
seller must pay the freight - since the contract merchandise nor ascertain its whereabouts at the
states that the goods are free for the buyer till time Sambok, Bacolod, was ready to take delivery.
destination. Where the seller delivers to the buyer a quantity of
goods less than he contracted to sell, the buyer
FAS - Free alongside Ship may reject them.
Seller: clears good for export, deliver goods to From the evidentiary record, Negros Navigation was
wharf beside buyer chosen vessel the party negligent in failing to deliver the complete
- delivery is complete when goods are place on the shipment either to Sambok, Bacolod, or to Sambok,
wharf Iloilo, but as the Trial Court found, petitioner failed
to comply with the conditions precedent to the filing
Buyer: shoulders all cost of carriage of a judicial action. Thus, in the last analysis, it is
petitioner that must shoulder the resulting loss. The
Time of delivery: general rule that before delivery, the risk of loss is
borne by the seller who is still the owner, under the
If to be made by the seller: it must be made within principle of "res perit domino" , is applicable in
a reasonable time in the absence of express petitioner's case.
agreement
In sum, the judgment of respondent Appellate
Reasonable time: a question of fact, depending Court, will have to be sustained not on the basis of
upon circumstances, such as the character of the misdelivery but on non-delivery since the
goods, transportation facilities, and the distance, merchandise was never placed in the control and
thru which the goods must be carried. possession of Sambok, Bacolod, the vendee.
Who bears the risk of loss Union Motor vs. CA (2001): Undisputed is the
fact that the respondent Bernal spouses did not
1. If the object is lost before perfection: the come into possession of the subject Cimarron
SELLER bears the loss (res perit domino) - the jeepney that was supposed to be delivered to them
thing perishes with the owner by the petitioner. The registration certificate,
2. If the object is lost after perfection but before receipt and sales invoice that the respondent Bernal
delivery: spouses signed were explained during the hearing
without any opposition by the petitioner. According
Seller is at fault: he shoulders the loss to testimonial evidence adduced by the respondent
Buyer at fault: he shoulders the loss spouses during the trial of the case, the said
LAW ON SALES🖋
documents were signed as a part of the processing on March 4, 1967, and the house was completely
and for the approval of their application to buy the destroyed. On April 3, 1967 does Marita still have
subject motor vehicle. Without such signed to deliver anything, and does Edita have to pay for
documents, no sale, much less delivery, of the anything? Reasons.
subject jeepney could be made. The documents
were not therefore an acknowledgment by Answer: Marita must still deliver the lot but is
respondent spouses of the physical acquisition of excused from delivering the house (since this has
the subject motor vehicle but merely a requirement been completely destroyed without her fault). On
of petitioner so that the said subject motor vehicle the other hand, Edita must still pay the entire Php
would be delivered to them. 200,000 for the following reasons:
We have ruled that the issuance of a sales invoice (Sir Rabanes; only the value of the land)
does not prove transfer of ownership of the thing
sold to the buyer; an invoice is nothing more than a 1. Although she was not yet the owner of the
detailed statement of the nature, quantity and cost house, she must bear the loss, just as she would
of the thing sold and has been considered not a bill have been the one to profit if the house had
of sale. instead of being destroyed, increased in value or
had improved.
Inasmuch as there was neither physical nor 2. While sale is reciprocal contract, and while it is
constructive delivery of a determinate thing, (in this true that in reciprocal contract, if one does not
case, the subject motor vehicle) the thing sold want to comply, the other is excused from
remained at the seller's risk. The petitioner should compliance, still in this case Marita did not
therefore bear the loss of the subject motor vehicle refuse to comply, she wanted to comply but the
after Sosmeña allegedly stole the same unforeseen destruction prevented her from
complying. Her obligation to deliver the house
3. If the object is lost after delivery - BUYER bears was therefore extinguished. In the case,
the loss because after delivery, the buyer however of Edita, there is nothing that would
becomes the owner, and therefore, res perit prevent her from complying with the duty to
domino pay.
3. We cannot say that this contract had no subject
Exceptions: matter, for indeed it had since the house was
1. Sale on trial, approval or satisfaction still existing at the time the contract was
2. Pactum reservati domini - agreement to entered into. The subsequent loss is completely
reserve ownership (contract to sell, immaterial
conditional sale) 4. Edita, the buyer has a right to proceed against
Jose, the negligent stranger, for damages.
4. At the time of perfection:
(This is a case of partial loss after perfection but
Entire loss: contract is without any effect before delivery. See: Article 1189)
Partial loss: buyer's options
1. Withdrawal
2. Proportionate reduction in the price plus the Obligation to Transfer the Ownership of
remaining the object
Marita on March 1, 1967 sold for Php 200,000 to The ownership must be transferred, otherwise, the
Edita her house and lot. It was agreed that delivery seller may be liable for eviction.
of the house and lot, and the payment therefor,
would be made on April 3, 1967. unfortunately,
Jose, a stranger, negligently set the house on fire
LAW ON SALES🖋
The buyer acquires ownership from the moment of C. In the absence of such possession - the buyer
actual or constructive delivery, unless there is a with the oldest title in good faith (means, the
contrary intent. buyer who first bought in good faith the
property)
Generally, when the object is sold by a non owner,
the buyer gets only such rights as the seller had. Remedy of the buyer who is not preferred: to
sue the seller for breach of warranty against
Exception: when the owner of the goods is by his eviction
conduct precluded or prevent from denying the
seller's authority, ownership may be said to have
been transferred to the buyer Obligation to warrant against Eviction
Note: if a person loses his personal property or is The seller warrants that the buyer will not be
unlawfully deprived of it, he may recover the same evicted from or deprived of the property sold.
from whoever is in possession regardless of the
latter's good or bad faith, without the necessity of Unless: the contrary has been provided in the
reimbursing said possessor contract of sale
Unless: the acquisition was through a public sale in This is the logical consequence of the seller's duty
which case reimbursement must be given to transfer ownership.
- public sale or auction
- Merchant's store Eviction: the judicial process whereby a buyer is
- Fair or market deprived, totally or partially of the ownership of the
property that he has purchased, because of the
Rule if the seller has only a voidable title: seller's fault.
The titled has not been annulled or avoided at the While the seller and the buyer in their contract may
time of sale: the buyer acquires a GOOD TITLE to increase, decrease or diminish the legal obligation
the goods, provided he buys them in good faith and of the seller to warrant against eviction, still such a
for value and provided he has no notice of the stipulation would be void, if the seller is on bad
seller's defect of title faith.
Rules as to preference of ownership in Case of Effect of eviction: the buyer can demand from the
a Double Sale: seller the return of the VALUE which the property
had at the time the eviction took place.
1. Personal property - this value may be greater or lesser Than the
selling price
The ownership shall be transferred to the parson
who may have first taken possession thereof in In case of fruits or income: if the buyer had been
good faith. ordered to deliver to the winner the income or fruits
which the property had previously yielded, buyer
2. Real property may obtain reimbursement of the same from the
seller.
Rule:
A. The buyer who fist registers in good faith the If the seller is in bad faith: he is also liable for
sale in the Registry of Property damages, interest and for the reimbursement of the
B. In the absence of said registration - the buyer ornamental expenses that had been incurred by the
who first possesses in good faith the property buyer.
LAW ON SALES🖋
Unless: it can be proved that the buyer would not

have purchased the sound animal or animals
Obligation to warrant against Hidden without the defective one
Defects
The Indivisibility of the sale shall be presumed
The seller impliedly warrants that the object sold when a team, pair, or set is bought and this
shall be free from any hidden faults or defects, or presumption remains, even if a separate price has
any encumbrances not known to the buyer. been fixed for each one of the animals composing
the same.
If the object is unfit for the use intended, a similar
action may be made. The use however must have REMEDIES OF THE SELLER
been stated in the contact itself, or can be inferred
from the nature of the object, or from the trade or
The Seller's Remedies: in case of non payment
occupation of the buyer.
of the price, the unpaid seller has the
following remedies:
Two requisites to sue on the warranty
1. To sue for specific performance, that is, to sue
1. There must be really be an important defect
for the price plus damages or interests
2. The defect must be really hidden, that is, it was
2. To sue for rescission or cancellation of the
not known and could not have been known
contract plus damages
3. To have a possessory lien - to possess and hold
Remedy in case of breach
the property, if no delivery has made yet, until
1. Withdrawal from, or rescission of the contract
the price is paid
(accion redhibitoria) OR
4. To exercise the right of stoppage in transitu - to
2. proportionate reduction in the price (accion
stop the delivery of the property to the buyer -
quanti minores o estimatoria)
when the property is already on its way
5. To have the property resold - in case the
Note: there can be damages in either case
property is still with the seller
6. If the buyer be insolvent and the property is
Rule in case of animals
already with said buyer
1. To demand the return of the property
When there is no warranty: There is no warranty
2. Or to have buyer's other properties attached
against hidden defects of animals sold at fairs or at
3. Or to have contracts entered into by the
public auctions or livestock sold as condemned.
buyer in fraud of the seller's right -
rescinded or cancelled (accion pauliniana)
When the sale is void: sale of animals suffering
4. Or to be subrogation or substituted in place
from contagious disease
of the buyer in the exercise of the buyer's
- also, when the use or service for which the
rights - provided that said rights are not
animals have been acquired (stated in the
purely personal and intransmissible - accion
contract) are found to be unfit thereof
subrogatoria
- Also, if an animal should die within 3 days after
its purchase, the seller shall be liable if the
disease which caused the death already existed Specific Performance
at the time of the contract
In every reciprocal obligation, such as contract of

Rule when two or more animals are sold
sale, either party can generally be compelled to
together: whether for lump sum or separate price
comply with what is incumbent upon him.
for each of them the hidden defect of one will not
give rise to a cancellation of the sale of the others
LAW ON SALES🖋
Since the buyer has the duty to pay for he price, it In the contract TO SELL property: what has
follows that upon non payment thereof at the been said above is not applicable.
proper time, a suit for payment, with damages, will
be allowed. In a contract to sell land, on the installment basis,
if the contract states that failure to pay any
installment will rescind the contract automatically, if
Rescission or Cancellation the seller so desires - said stipulation is considered
VALID
In case of personal properties:
If there has been no delivery yet: the rescission Right of Possessory Lien
can take place without judicial intervention.
The right to retain the object until the seller is paid.
Thus, if the buyer does not appear at the time
stipulated for delivery, or, in case he appears, he The right of possessory lien is lost after the seller
fails to pay, the seller can generally consider the delivers the property.
contract automatically rescinded or cancelled.
However, his lien (no longer possessory) as an
If there has already been a delivery: the seller unpaid seller remains; hence, he is still a preferred
cannot take the law into his own hands, and just creditor with respect to the specific goods sold.
take back by force the property that had been sold.
His preferences is defeated only by the
If the buyer refuses to return the object voluntarily, government's claim to the specific taxes on the
the seller must go to court and ask that the goods themselves.
contract be rescinded.
- if it is granted by the court, the seller gets back When can the seller continue in possession
the property, plus damages. and refuse delivery until he is paid
1. When the goods have been sold and the buyer
When rescission will not be granted: was not given a period within which to pay
1. If the breach of the contract is trivial or slight 2. When the goods have been sold on credit but
2. If the court believes that the buyer should be the term for payment has already expired
granted a longer period within which to pay 3. When the buyer becomes insolvent
because of justifiable reasons
3. If the property is in the hands of an innocent Note: when the unpaid seller has made part
third party delivery, he may exercise his right of lien on the
remainder
In case of real properties
In the contract of SALE of real property: the Right of Stoppage in Transitu

buyer is allowed to pay even after the expiration of
the period within which to pay as long as the seller If the unpaid seller has already parted with the
has not yet asked FOR THE RESCISSION (not possession of the goods and the same are on the
demand for the price) of the sale either judicially or way to the buyer, said seller may exercise the right
thru a demand executed before a notary public of stoppage in transitu if he discovers that the
buyer has become insolvent.
This is true even if the contract stipulates that upon
failure to pay the price agreed upon, the rescission
of the contract shall of right take place.
LAW ON SALES🖋
Right to Resell Special Rights - Sale of real property

on installment
This is a right and not a duty.
Maceda law - RA 6552 - RIBPA - Realty
When the right exist: Installment Buyer's Protection Act
1. when the goods are perishable in nature
2. When there is a stipulation Remedies of seller:
3. Even in the absence of stipulation, the buyer has 1. Cancellation of sale - the seller just issue a
been in default for an unreasonable length of notarized notice of cancellation or demand for
time Rescission (no need to go to the court;
extrajudicial)
When the seller resells and gets more than the 2. Forfeiture of amounts paid
price, he keeps the excess for himself, if he sells for 3. Exact fulfillment
less, he can still sue for the balance or deficiency
Rights of the buyer:
1. Grace period of 30 days per year of completed
Special Rights - Sale of personal
payments
property on installment 2. Cash surrender value of amounts paid - 50 %
for 2-5 years, on the 6th year onwards plus 5%
Remedies of the vendor per year but not exceeding 90%
1. Exact fulfillment of the obligation, should the
vendee fails to pay Illustration:
2. Cancel the saLE, should the vendee's failure to 2010 - 2012 - paid
pay cover two or more installments 2013 - defaulted, January, February. March and
3. Foreclosure the chattel mortgage on the thing April
sold, if one has been constituted, should the
vendee's failure to pay cover two or more Maceda law: starting May, he has 30 days per year
installments. In this case, he shall have no - total of 90 days grace period (2010 - 2012)
further action against the purchase to recover - within such period he can pay the amount
any unpaid balance of the price. Any agreement without additional interest
to the contrary shall be VOID. - The seller cannot cancel
- However, the grace period can be availed only
NOTE: the law says that any of the three remedies once every 5 years
"may" be exercised by the seller. Therefore, he is - Maximum of 150 days grace period
not oblige to foreclose the chattel mortgage, even if - If the buyer fails to settle his obligation during
there be one. the grace period, the seller shall issue a notice of
cancellation or demand for rescission
In a sale of personal property on installment - From date of receipt of the notice, 30 days after,
plan, is a stipulation that installment paid will thats the only time the contract is cancelled - in
not be returned to the up buyer considered other words the buyer has another 30 days more
valid?
Cash surrender value:
Answer: YES. In so far as said stipulation will not 2010-2015 - total amount multiply by 50 %
be considered unconscionable under the The next years - 5 % per year
circumstances
- e.g. When more than 50% has already been paid Note: the rights of the buyer as enumerated, will
be applicable only if the buyer has completed at
least 2 years of payment
LAW ON SALES🖋
- if the contract is cancelled he has only 60 days - he must do so within a reasonable period of time
grace period
- Not entitled to cash surrender value If the buyer justifiably refuses delivery, is he
required to send them back to the seller? NO!
When the law is applicable: Residential lands, But he must notify the seller that he refuses to
buildings, apartments, including residential accept them
condominium apartment or units
When not applicable: It is not applicable in Duty to Pay the Price

industrial lots, agricultural lands covered by
agrarian reforms, commercial buildings The buyer is duty bound to pay the price. This is
because the price is the cause or consideration of
the sale.
OBLIGATIONS OF THE BUYER
In the following cases, the buyer shall pay
PRINCIPAL obligations of the buyer interest for the period between the delivery of
1. To accept delivery the thing and the payment of the price:
2. To pay the price - at the time and place 1. If the payment of the interest be so stipulated in
stipulated in the contract the contract - here no demand is needed to
make the buyer liable for interest
Note: if the time and place are not stipulated, the 2. If the thing sold and delivered should produce
payment must be made at the time and place of fruits or income - no demand is needed. The
the delivery of the thing sold presence of the fruits and income is sufficient to
warrant the payment of interest
3. If the buyer should be in default (note that
Duty to Accept
default comes only after a judicial or
Generally, the buyer may accept only if the extrajudicial demand for the price)
property sold is completely delivered.
Thus, unless there is a contrary stipulation, the REMEDIES OF THE BUYER

buyer is not required to accept delivery by
installments. The principal remedies of the buyer:
1. To sue for specific performance plus damages -
Is the buyer entitled to examine the goods if the seller refuses unjustifiably to deliver
before he accepts their delivery? 2. To sue fore rescission of the contract plus
damages - if the seller does not comply with his
Ordinarily, yes, so that he may know, whether or obligation
not the terms of the contract have been fulfilled. 3. To suspend the payment of the price in certain
cases
Hence, the seller must afford the buyer a 4. To refuse to accept the goods in certain cases
reasonable opportunity to examine the goods. 5. To sue for damages in case of breach of
warranty
COD (Cash on Delivery) 6. To ask for the reduction of the price in certain
cases
The buyer cannot examine unless he first pays.
If he first pays, and later discovered the goods to

be defective, he may sue the seller for breach of
warranty because of the hidden defects.
LAW ON SALES🖋
If this is not possible, the buyer may choose

Suspension of the Payment of the Price
between:
1. A proportionate reduction of the price OR
Ground: when there is well founded fear that he 2. Rescission of the contract provided that what is
would lose possession or ownership of the property
lacking is at least 1/10 of the area stated
because of a foreclosure of mortgage or because
somebody has brought or will bring an action to get Exception: if the buyer would not have bought if he
the property from him. had known of the smaller area, he may rescind the
contract
If a usurper without any right whatsoever deprives
him of the property, this cannot serve as an excuse Illustration
for suspending the payment of the price.
If B buys from S a piece of land supposed to

Illustration
contain 1,000 sq. meters at the rate of Php 100 per
sq. meter, but the land has only 800 sq. meters,
Bareng bought cinematography equipment from the remaining 200 sq. meters must be given,
certain Alegria for Php 15,000. He paid Php 11,400
should B demand them.
down, and executed a promissory note for the
balance. On the date of maturity, he refused to pay If this cannot be done, B may pay only Php 80,000
the balance, alleging that a certain Ruiz had or rescind the contract.
informed him that he (Ruiz) was a co owner of
Alegria of the properties purchased, and that he
If in the above, there are only 950 sq. meters, can
was not in conformity with the sale. Suit was be successfully ask for rescission instead of paying
brought by Alegria for the recovery of the balance. the reduced price?
While the suit was pending, Alegria caused the
disturbance over the ownership to cease by
As a rule no, because the lack in the area is only 50
compromising with Ruiz for the latter's share. sq. meter. However, if A would not have bought the
land had he known of its smaller area he may
Issue: aside from paying the balance, does Bareng
rescind the sale.
have to pay any legal interest thereon? If so, from
what time? Supposed the land consists of 1,500 sq. meters
what can B do?
Answer: Bareng is liable for interest, NOT from the
time of demand for he was justified in suspending
B may accept 1,000 sq. meters and reject the extra
payment from the time he leaned of Ruiz's adverse 500, in which case he will pay only 100,000.
claim BUT FROM the time Alegria had "caused the However, B is also allowed, if he so desires, to
disturbance or danger to cease" by entering into a
accept all the 1,500 sq. meters, but he must pay
compromise with Ruiz.
150,000. In this case, B is not allowed to rescind
the contract.
Special Rules in the Sale of Real Estate

Sale for a Lump Sum (Sale a Cuerpo Cierto)
Sale by the Unit: There shall be no decrease or increase of the price,

although there be a greater or less area or number
Example: Php 100 per sq. meter
than that stated in the contract.
The buyer has the right to insist that the total area The buyer is entitled to receive all that is included
indicated in the contract be given.
within the boundaries stated in the contract - even
LAW ON SALES🖋
when it exceeds the area or number specified in the

EXTINGUISHMENT OF THE
contract.
CONTRACT
If the seller is not able to do so, the buyer is
entitled to demand either a proportionate reduction
Modes of extinguishing the contract of sale
in the price or to rescind in view of the failure to
deliver what has been stipulated.
Ordinary Modes:
Illustration
1. Payment
2. Loss of the definite object before perfection
A buys a piece of land from B for the lump sum of
3. Remission or condonation
Php 1,000. In the contract, the area stated to be
4. Merger or confusion
1,000 sq. meters. The boundaries are of course
5. Compensation
mentioned in the contract. Now then it was
6. Novation
discovered that the land within really contains
7. Annulment
1,500 sq. meters. Is B bound to deliver the extra
8. Rescission
500?
9. Mutual withdrawal from the contract
Answer: yes, furthermore, the price should not be

Extraordinary modes:
increased. This is so because B should deliver all
1. Conventional redemption
which are included in the boundaries. If B does not
2. Legal redemption
deliver the remaining 500 A has the right:
1. Either to rescind the contract for the seller's
failure to deliver what has been stipulated Conventional redemption
2. To pay a reduced proportional price, namely 2/3
of the original price. This is because he really
It is the process whereby a seller, by virtue of a
gets 2/3 of the land include within the
stipulation in the contract of sale, is allowed to get
boundaries (1,000/1,500)
back or redeem the property sold, within the period
of time fixed in the contract, provided he returns
A buys a piece of land cuerpo cierto. The contract
the price and some other things at the time of
states a certain number of sq. meters but the land
repurchase
included in the boundaries happen to be LESS
1. Is A entitled to rescind? NO
If the price of the sale is for example very
2. Is A entitle to pay a reduced price? NO
inadequate, the chances are that the sale is not a
genuine sale, but only an equitable mortgage,
The civil code presumes that the purchase had in
given as security for a loan
mind a determinate piece of land and that he - in such a case the rules on conventional
ascertained its area and qualify before the contract
redemption will not apply
was perfected. If he did not do so, or if, having
done so, he made no objection and consented to
Period within which to redeem:
the transaction, he can blame no one but himself.
1. If there is no stipulation granting the right to
redeem, there is no right of redemption - hence,
it is useless to talk of any period
2. If there is stipulation about the redemption BUT
there is no stipulation about the period -!the
right to redeem may be exercised within 4 years
from the date of the contract. Should there be
an agreement about the period, the period
cannot exceed 10 years
LAW ON SALES🖋
Right of Co owner to Legally Redeem

Illustration
A co owner of a thing may exercise the right of
S sold a retro to B a parcel of land. It was agreed redemption in case the shares of all the other co
that S could not redeem till after 3 years from the owners or any of them, are sold to a third person.
the of the contract. May S still redeem? If so, within
what period? If the price of the alienation is grossly excessive,
the redemptioner shall pay only a reasonable one.
Answer: YES. S may still redeem but not within the
first 3 years. He can redeem within 4 years, to be Should two or more co - owners desire to exercise
counted from the end of the first 3 years. The the right of redemption, they may only do so in
reason for the 4 years answer is that here there is proportion to the share they may respectively have
no agreed period within which to redeem. in the thing owned in common.
Consolidation of Ownership: Reason of the law: to discourage co ownership

since co ownership may lead to a conflict of rights
If real property is involved, and the redemption is
not made within the proper period, the Period within which to redeem: within 30 days from
consolidation of ownership in the buyer will not be notice in writing by the seller. The deed of sale
recorded in the registry of Property unless there is shall not be recorded in the registry of property
JUDICIAL ORDER. unless accompanied by affidavit of the vendor that
he has given written notice thereof to all possible
Reason of the judicial order: that the contract may redemptioner.
really be only equitable mortgage, and not a
genuine pacto de retro transaction Note: the requisite of written notice is mandatory -
even if the would be redemptioner has already
What the seller who wants to redeem should knowledge or oral notice of the sale
return to the buyer
1. The price of the sale Right of adjacent co owners of real property
2. The expenses of the contract and any other to legally redeem
legitimate payments made by reason of the sale
3. The necessary and useful expenses made on the The owners of adjoining land shall have the right of
thing sold redemption when a piece of rural land the area of
which does not exceed one hectare, is alienated
unless the grantee does not own any rural land.
Legal Redemption
It is the process whereby the law automatically Exception: This right is not applicable to adjacent
grants to certain person the right to get back from lands which are separated by brooks, drains,
a buyer the property purchased (upon ravines, roads and other apparent servitudes for
reimbursement of the price). the benefits of other estates.
Reason: public policy If two or more adjoining owners desire to exercise

the right of redemption at the same time, the
Who are granted the right of legal redemption owner of the adjoining land of smaller area shall be
1. The co owner of the property involved preferred; and should both lands haves the same
2. The adjacent owner of the property involved are, the one who first requested the redemption
3. A real estate owner whose property has been
sold in view of tax delinquency Reason for the law: to foster the development of
agricultural areas by adjacent owners who may
LAW ON SALES🖋
desire the increase for the improvement of their FROM the day the sale is registered in the office of
own land the Registry of Property
Reason for the exception: here, the land cannot

really be considered adjacent to each other
The most valuable asset you will ever

Period within which to redeem: same rule as in the
have is your mind and what you put
case of co owners
into it.
Note: as between a co owner and an adjacent
owner, the co owner is preferred
Rights of Adjacent Owners of Urban or City

land to legally redeem:
When ever a piece of urban land which is so small

and so situated that a major portion thereof cannot
be used for any practical purpose within a
r e a s o n a b l e t i m e , h av i n g b e e n b o u g h t f o r
speculation, is about to be resold, the owner of any
adjoining land has a right of PRE - EMPTION at a
reasonable price
If the resale has been perfected, the owner of the

adjoining land shall have a right of REDEMPTION,
also at a reasonable price.
When two or more owners of adjoining lands wish

to exercise the right of pre EMPTION or redemption,
the owner whose intended use of the land in
question appears best justified shall be preferred.
Reason for the law: to prevent speculation
Pre emption: the right of the adjacent owner to

buy from the prospective seller - before the seller
sells the property to another
Redemption: the right to buy from the stranger

after the sale has been made.
Period of preemption or redemption: same as the

case of co owners.
Right of delinquent taxpayer to legally

redeem: the delinquent taxpayer has the right to
redeem within the period of 1 year - counted NOT
from the date of the auction or the tax sale but

Sales Rabanes Reviewer 2017 PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sales Rabanes Reviewer 2017 PDF

Uploaded by

Copyright:

Available Formats

LAW ON SALES🖋

LAW ON SALES Ricardo sold to Jose orally a particular parcel of

2. Although the sale itself was oral, there was

4. Where notice has not been given that a

the buyer. price.

Note:If one party fails to comply with his word,

right to bid on behalf of the seller

It is neither a mutual promise to buy and sell nor a

It exists, for instance, when land is promised to be

Special sales Parties to the contract of sale: all person who

"on sale or on return"

On sale or on return: the contract is non-existent. The essence of

General rule: for a minor or an insane to enter Status of sale: VOID

b) Adela continued exercising acts of dominion and Relatively simulated Sale

contract of sale. And in Sibal vs. Valdez, 50 Phil.

The cause in a contract of sale is a PRICE CERTAIN

still, if the price is so inadequate as to SHOCK the

Criminal liability: estafa or swindling Combination of money and property

Effect of motives of the parties: the particular

Obligation to deliver If the seller cannot, even if he wants to, deliver

the time stipulated:

opposite of brevi Manu the subject property to the responden.

Unless: it can be proved that the buyer would not

In every reciprocal obligation, such as contract of

In the contract of SALE of real property: the Right of Stoppage in Transitu

Right to Resell Special Rights - Sale of real property

When not applicable: It is not applicable in Duty to Pay the Price

Thus, unless there is a contrary stipulation, the REMEDIES OF THE BUYER

If he first pays, and later discovered the goods to

If this is not possible, the buyer may choose

If B buys from S a piece of land supposed to

Special Rules in the Sale of Real Estate

Sale by the Unit: There shall be no decrease or increase of the price,

when it exceeds the area or number specified in the

Answer: yes, furthermore, the price should not be

Right of Co owner to Legally Redeem

Consolidation of Ownership: Reason of the law: to discourage co ownership

Reason: public policy If two or more adjoining owners desire to exercise

Reason for the exception: here, the land cannot

The most valuable asset you will ever

Rights of Adjacent Owners of Urban or City

When ever a piece of urban land which is so small

If the resale has been perfected, the owner of the

When two or more owners of adjoining lands wish

Reason for the law: to prevent speculation

Pre emption: the right of the adjacent owner to

Redemption: the right to buy from the stranger

Period of preemption or redemption: same as the

Right of delinquent taxpayer to legally

You might also like