Sales
Definition: By the contract of sale one of the contracting parties
obligates himself to transfer the ownership of and to deliver a
determinate thing and the other to pay therefor a price certain in
money or its equivalent.
A. Nature and Form
a. Essential requisites
1. Consent
2. Object
3. Price in money or its equivalent
A.Object of the Contract
To constitute as a valid subject matter in the contract of sale :
1. The thing must be licit
2. The thing may be existing or not at the time of the
perfection of the contract so long as it has the
possibility of existence at some future things.
Future : If it pertains to a future goods, there must be an intention
to make the delivery in the future. There must be an intention to
have the goods of commodity pas form one party to another.
Resolutory : the things subject to resolutory condition may be the
object of the contract of sale. If the condition is fulfilled the parties
have to return what they received from each other.
Emptio rei Separatae and Emptio Spei
1. Emptio Rei Speratae
This must be specific kasi if generic it never perishes.The quality
of the thing is uncertain but not the thing itself for this is
definitely to exist whatever may be the quality and quantity with
which it appears. This is subject to the condition that the thing
must come into existence so that if the thing does not exist the
contract cannot have effect of lack of essential requisite. ( Exist :
Pero di alam ung quality)
2. Emptio Spei
The contract has effect even though the thing does not come into
existence. Therefore whatever caught or not the price has to be
paid however vain hope and expectancy is void.
Example: the sale of the next cast of a net.
Right to transfer ownership:
The seller need not be the owner at the time the sale is perfected
( meeting of the minds)what the law requires is that the seller must
be the owner at the time the thing sold is delivered.
Effect if the seller cannot transfer ownership at the time of
delivery:
1. Nemo Dat Quod Non Habeat: One can only sell
what one owns or is legally authorized to sell and
the buyer can acquire no more that what the seller
can transfer legally.
Effect: The sale is NOT void there would only be a reach of
contract since the validity of the contract is determined at the
time of the perfection and not at consummation.
Exception:
1. The mortgagor not being a owner of the property his
title is fraudulent the mortgage contract that arises
thereto are given effect.
Ratio : Properties dealing with Torrens Certificate of Title as
buyer or mortgagees are not required to go beyond what it
appears on the face of the title.
Ratio: Sale is not a mode but merely a title it does not transfer or
affect ownership but it does create an obligation to transfer
ownership.
Price :
1. It must be real and true:
The price is simulated the contract is void but this must show that
the act is something else like a donation)
2.It must be in money or its equivalent:
Its equivalent pertains to negotiable instruments.
3. It must be certain :
It must be sufficient that it be so with reference to another thing
certain or that the determination thereof be left to the judgment of
as specified person
Note:
1.Manner of payment: It is not enough that the parties agree on
the manner of payment of the price of the property to give rise
to a binding and enforceable contract of sale or contract to sell.
This is because the agreement as to the manner of sale goes into
the price such that disagreement on the manner of payment is
tantamount to disagreement as to the price.
2. In case of disagreement, the third parties can fix the price, if
such person acted in bad faith the court fixes the price.
3. Inadequacy of the price : Gross inadequacy of the price does
not affect the contract of sale however it may indicate a defect
in the consent of the parties.
b. Perfection
Perfected : A contract of sale is perfected by mere consent which
means that it is perfected upon the meeting of the minds upon the
thing which is the object of the contract and upon the price.
Delivery : The delivery of the thing bought or payment of the price
is not necessary for the perfection of the contract and failure of the
vendee to pay the price after the execution does not make the sale
as null and void.
Sale is not a mode of acquisition
The sale is not a mode but merely a legal means by which
dominion or ownership is transferred to the other. The ownership
or other real right is acquired by 1. Transmitted by law 2. Donation
3. Testate 3. Certain act by tradition.
c. Capacity
Formalities Required by law
1.Right of first refusal is not a contract: At beat it is not a
contractual grant not of the sale of real property involved but the
right of first refusal over the property sold. Therefore, there is no
need for the same to e in written contract to be enforceable.
2. Option Contract: This is merely a privilege to buy. It is not the
sale of property but a sale of the right to repurchase. This is simply
a contract whereby the buyer agrees with another person that he
will buy the property at a fixed and certain time. Therefore , since
this contract merely talks about the privilege to buy hence it need
not be written to be enforceable
3.Agency to sell a piece of land : When the sale of a piece of land
or any interest is though an agent, the authority of the agent shall
be in writing otherwise the sale is void ( 1874). There must be a
special power of attorney to enter into any contract by which the
ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration. Otherwise the sale is
void
Contract of sale
General Rule: VALIDITY: A contract of sale is a consensual
contract that the sale is perfected by mere consent no particular
form is required for its validity.
Exception: Sale of large cattle must be recorded with the municipal -This is an evidence of the whether you will push though
treasurer . perfection of the contract of the buying or not ( Waiting
sale. time of the seller on the
Enforceability: only as to enforcement it must comply with the buyer’s choice)
statute of frauds for it to be enforced. 2.Given only when there is 2.Given only when the sale
already a sale has not yet been perfected
Sale of land need not be in a public document : but must be in 3.Buyer bound to pay the 3.Option money he is not
writing in order to be enforceable balance required to buy but may even
forfeit it depending on the
1. The sale of land need not be in a public document or to term of the contract.
be recorded. It is a consensual contract which is
perfected by mere consent and no form is required for
its validity. It must however be in writing in order to be Q: If the money is given for the purpose of binding the
enforceable in the statute of fraud. prospective seller to reserve the subject property in favor of
Right to compel: Each of the contracting party is granted the right the prospective buyer and to exclude all prospective buyer or
to compel the other to execute the proper public instrument so that to exclude the property from being auction off what is the
the valid contract of sale of registered land can be registered to contract?
bind third person. A: It is merely an option contract. For earnest money to apply there
must first be a perfected contract of sale before we can speak about
Formation of Contract and Perfection of earnest money.

Stages of Contract
1.Negotiation: Time when the parties indicate interest in the
contract
2.Perfection: Concurrence of the essential element of the sale
which are meeting of the minds of the parties as to the object and
upon the price.
3.Consummation: Begins when the parties perform their
respective undertaking in a contract of sale.
Negotiation:
Promise to Buy and To sell :
1.Unilateral: Promise to buy and promise to sell
- What is accepted or not is merely the promise to buy
or to sell and this is not yet the offer.
Contract of Option: An accepted unilateral promise whether to
buy or to sell a determinate thing for a price certain distinct form
the price is binding upon the promisor. Do not that this is merely a
contract preparatory to sale, hence upon payment, there is a
RIGHT WHETHER TO BUY or TO SELL.
2.Bilateral: Reciprocal promise to buy and to sell
-This is different from a perfected contract o sale. In a bilateral
contract to buy and sell there is no perfected contract yet it is
merely a reciprocal promise to buy and sell.
Perfection:
1. The contract of sale is perfected by mere consent
between the parties or is perfected at the moment there
is a meeting of the mind upon the thing which is the
object of the contract and the price.
Consent: if the condition is imposed upon the perfection of the
contract the failure of such condition prevents the juridical relation
from coming into existence. ( Therefore the condition must be
complied with)
Ownership of the Property: At the time of the perfection of the
contract, the seller need not be the owner at the time of perfection.
What the law requires is that the seller must HAVE THE
RIGHT TO TRANSFER OWNERSHIP at the time the thing
sold is delivered.
Earnest Money
Definition: This is a money given by the prospective buyer to the
seller to show that the buyer is interested in the purchase of the
property the main purpose of earnest money is to bind the bargain.
Earnest Money Option Money
1.Part of the purchase price : 1.Distinct consideration for
Give rise to perfected contract option contract : A reasonable
of sale period given by the vendor
Q: Here is 20 Pesos for down payment of the price, You come
to the seller and tell the seller I have no more money to buy the
car?
A: You are liable. This is already a contract of sale and if you
decide no loner to pay the car anymore you become liable for the
breach of the contract of sale.
Effect of Perfection: : The parties may reciprocally demand
performance the vendee may compel the transfer of ownership and
the vendor may require that the vendee pay for the thing sold.
Effect of loss before the perfection
1. If lost entirely: The contract does not have any effect ,
the total loss of the thing sold before perfection is a
inexistent contract
2. If lost only in part: The vendee chooses
a. Withdrawing of the contract
b. Demanding the remaining part and paying
its price in proportion to the price ageed
upon.
Specific Goods : Option
1.Avoided
2.Valid in all of the existing goods in so much thereof as have not
deteriorated and as binding to the buyer to pay the agreed price for
the good which the ownership will pass if the sale is divisible.
Perfection in auctions :
Advertisement : Are simply invitation to bid or make proposal and
that the advertiser is no bound to accept the highest and the lowest
bidder unless the contrary appears.
Perfection:
1. Auctioneer announces it perfection by the fall of thee
hammer or any other customary matter until the
announcement is made any bidder may retract its bid
and the auctioneer may withdraw the goods from the
sale unless the auction has been announced without
reserve.
“ Without reserve”: The owner cannot withdraw the property from
the sale after a bid.
Right of the seller to bid :
1. The right to bid may be reserved by the seller, but the
latter must give a notice that a sale of auction is subject
to the right of the seller to bid himself or to induce a
seller at his own behalf.
Transfer of Ownership
Forms : Ownership is to be transferred to the vendee upon the the thing sold of the purchase price
actual and constructive delivery The vendee loses ownership
1. Actual or real delivery: and cannot recover the thing
Definition : Material delivery of the thing that consist in actually unless rescinded . The seller
handling it over to another in the case of movable thing or in will transfer ownership upon
certain acts which are also material and possessory. the execution of the
agreement regardless of
2. Constructive : This is effected when in order to realize whether it is fully paid or not.
the delivery the parties avail of the sign or symbol to ( At that moment there is a
represent the thing which is to be delivered. transfer)
a. Delivery of Keys Upon delivery, the buyer The seller remains to the the
b. Delivery or negotiation of document of title : The becomes the owner of the owner until the full payment
delivery of document of title or warehouse receipt property of purchase price
constitute a symbolic delivery of the property provided
that there is an intent to change possession.
c. Delivery of Public instrument : The execution of a B. Capacity to buy or sell
public instrument is equivalent to the delivery of the
thing whichi s the object of the contract ( Public General Rule : Both parties must be capacitated
instrument : Presumptive Delivery of the thing) Exception: When necessaries are sold and delivered to a minor or
other person without capacity to act he must pay a reasonable price
The execution of the instrument is equivalent to the
therefor.
delivery of the thing which is the object in the contract
Prohibited Sale:
but in order for this to be a symbolic deliver, there must
be the vendor must have control over the thing sold at
1.Between the Husband and the wife
the moment of the sale.
General Rule : The husband and the wife cannot sell property to
Exception
each other
1.When the instrument itself express or implies that it was not
intention of the parties to effect delivery Exception:
2.Therei s an impediment that prevent the transfer such as when 1. Separation of property was agreed upon the in the
the property is in the possession of third person. marriage settlement
2. When there has been a judicial separation of property.
Rule of Sale of Goods in certain form: Note: A husband who sold a property in favor of his concubine
1. Specific mass of fungible goods after he abandoned his family is void for being contrary to public
If there is a sale of an undivided share of a specific mass policy.
through the seller purports to sell and the buyer to buy a
definite number weight, measure of the goods, mass and the Effect of Violation: Null ad void and not merely voidable, but note
number the ff rules are to govern: that only the heirs can question this and not the spouses.
a. The buyer becomes the owner in common of
such a share in the mas as the number, weight 2.Between guardian and ward
or measure bought bears to the number ,
weight and measure of the mass General Rule : The guardian cannot acquire by purchase even at a
b. If the mass contains less than the number, public auction or judicial auction the property of the ward under
weght and measure the buyer becomes the his guardianship. This include instances of circumvention of the
owner of the whole mass and the seller is
provision when the property is sold to a third person and that the
bound to make good of the deficiency from the
goods of the same kind and quantity. guardian will buy the said property to the third person
2. Delivery on sale or return
Effect of violation: The contract is void and not merely voidable.
The ownership passes to the buyer upon delivery but he may
revest the ownership to the seller by returning or tendering the
Remedy The sale is only prohibited while the guardian ship exist,
goods within a time fixed in the contract or if no time is fixed
after the termination of guardianship this no longer applies, hence
within a reasonable time
3. Sale on approval or on trial on satisfaction the transaction can be ratified by means of and in the form of a
The ownership will only pass when new contract.
1. The buyer signifies his approval or acceptance to the
seller or does any act adopting the transaction 3.Between agent and Principal
2. If he does not signify his approval or acceptance
BUT retains the goods without objection. General Rule : The agent cannot acquire the property of the
4. Sale with reservation of possession or ownership principal whose administration of sale may have been entrusted to
Notwithstanding delivery the ownership may thus be reserved him such sale is void and not merely voidable.
outstanding the delivery of the goods to buyer or to the carrier
for purpose of transmission to the buyer. Exception:

1. This does not apply if there is consent on the part of the

principal to the sale of the property
d. Contract of sale vs Contract to sell 2. After the termination of the affairs of the agency the
prohibition no longer applies thus the transaction may
Contract of SALE Contract to Sell be ratified by way of new contract which is valid from
1.The title passes to the 1.The title will only pass the time of its execution.
vendee upon the delivery of when there is a full payment
4.Between the executor or administrator and estate of the
deceased
General Rule: The executor or administrator cannot acquire by
purchase even at public auction or judicial auction either in person
or through the mediation of another the property of the estate under
his administration. The sale is void.
Fungible:
1.If the sale is made independently and for a single price or
without consideration of weight number or measure: The seller
has the burden
2.If the sale is sold for a price according to the weight,
measure: It is the buyer who has the burden and bear the loss.

Prohibition is not permanent : After the settlement of the estate ,the
prohibition is no longer applicable thus the transaction is ratified
by way of new contract.
4. Sale involving properties of the government
General Rule : Public officer and employee cannot acquire by
purchase even at public auction or judicial auction either in person
or through mediation of another the property of the state or any
subdivision thereof any property that is entrusted to them. The sale
is null and void.
Nullity is PERMANENT The nullity of prohibited contract is
definite and permanent and cannot be cured by ratification. The
public interest remains to be paramount and do not permit
compromise or ratification.
6. Sale of property in litigation
Res Perit Domino
1. The goods remain at the seller’s risk until it is transferred to te
buyer but when the ownership is already transferred to the
buyer regardless of whether there is actual delivery, the buyer
assume the risk
Exception
1.When the contract provides
2.When actual delivery has been delayed through the fault of either
the buyer and the seller the goodsa re at the risk of the party in
fault
3. unless otherwise agreed where the goods, are sent by the seller
to the buyer under circumstance in which the seller knows or ought
to know that it is usual to insure the seller must give such notice to
the buyer as to enable him to insure them during the transit and if
the seller fails to do so the goods are to be deemed at his risk
Q: A bought a car from B the car got destroyed who bears the
risk ?
A: B. The ownership is still with B hence he bears the risk

The prohibition applies only to a sale or assignment to the lawyer

D. Obligations of vendor
by his client of the property that is subject t litigation. The sale or
transfer of the property must take place during the litigation. Obligation :
1.To transfer ownership of the thing which is the object of the sale
Exception: This does not apply when the property is acquired 2.To deliver it
AFTER the termination of the case. If the property is not the 3.To warrant the same
subject of litigation the prohibition does not apply it also does not
cover the assignment of property covered in judgment made by the .To transfer ownership of the thing which is the object of the
client to the attorney. sale
To deliver it
1. There must be a transfer of possession
C. Effect of the contract when the thing sold has been
2. There must e a transfer of ownership
lost Time when the seller is bound to deliver:
1. Simultaneous: The vendor is not bound to deliver the thing if the
Effect of loss before the perfection vendee has not paid him the purchase price or if no period of
1. If lost entirely: The contract does not have any payment is made
effect , the total loss of the thing sold before Exception:
perfection is a inexistent contract 1. When the period is stated in the contract.
2. If lost only in part: The vendee chooses Place of Delivery
a. Withdrawing of the contract General Rule:
b. Demanding the remaining part and 1. The place of delivery is the sellers place of business if
paying its price in proportion to the price he has one if none is his residence.
ageed upon. To whom must delivery be made :
1. To the vendee or his successor in interest or to any
Specific Goods : Option person authorized to receive it.
1.Avoided 2. Delivery to the carrier = Delivery to the buyer
2.Valid in all of the existing goods in so much thereof as have What must be delivered
not deteriorated and as binding to the buyer to pay the agreed 1. Gen Rule : The vendor is bound to deliver the thing
price for the good which the ownership will pass if the sale is sold and its accession and accessories in condition
divisible. which they were upon the perfection of the sale. ( All
the fruits from the time the contract is perfected belongs
Effect of Loss AFTER the perfection of the contract to the vendee)
Specific / Non -Fungible : The vendor is freed from the
obligation to deliver if the loss occurs due to his fault and In case of REAL PROPERTY
before he incurs delay . Pricing agreements
A: Should the buyer vendee pay for the purchase price> 1. Unit price contract : Purchase price – reference to the
No. Res peruit dominio: When the fortituous event makes it sated rate per unit area. ( P10 per sq meter)
impossible for the performance of obligation of one of the The Price may be reduced or increased depending on the area
parties the obligation of the other is also extinguished at the actually delivered :
time and necessarily. The risk is imputed to the vendor, as prior 1. If the vendor delivers LESS than the area agreed
to delivery he is still the owner hence he loses the right to upon the vendee OR QUALITY is NOT UPTO
claim the price and contract is extinguished. Par may
 A. Oblige the vendor to deliver all that may be stated in
the contract.
B. The vendee may demand for the proportionate
reduction of the price or ask for the rescission of
the contract if the lack in the area is not less than
1/10th of the stated area.
2. Lump Sum: Full purchase price for an immovable the
area of which is based on the estimate or where both the
area and boundaries are stated.
1. If the area of the immovable is stated in the contract
based on the estimate BUT it does not measure with
the area of the immovable “
a. There can be NO INCREASE OR DECREASE of
the price although there be a greater or lesser area
than that state in the contract if the discrepancy is
not substantial.
Prescriptive Period : This shall prescribe in six months counted
from the day of delivery but the order for the period to commence
to run the delivery must not only transfer possession u also
ownership.
In case of Sale of goods :
1. If the seller deliver LESS than what he contracted to
sell
a. The buyer may reject them
b. Accept knowing that the seller is not going to perform
the obligation or contract in full he must pay for them at
contract rate.
c.
2. If the seller delivers a quantity larger that what he
contracted to sell
a. Accept the goods included in the contract and
reject the rest
b. Accept the whole of hoods so delivered he must
pay them at contrct price
c. If the subject matter is indivisible the buyer may
reject the whole of the goods.
3. Seller delivers goods he contracted to sell mixed with
a good with different description
1. Accept but reject the rest
2. If the subject matter is indivislbe the buyer may reject
the whole of goods.
To warrant the same
Definition: A statement or representation made by the seller of the
goods and contemporaneously and as a part of the contract of sale
having reference to the character, quality or title of the goods and
by which he promise or undertakes to insure that certain facts are
or shall be taken to represent them.
Kinds of warranties :
1. Express
This is any affirmation of fact or promise by the seller to the thing
an express warranty if the natural tendency of such affirmation or
promise is to induce the buyer to purchase the same and if the
buyer purchase the same relying on the said promise.
The Opinion of the seller is irrelevant
General Rule: The opinion of the seller as to the quantity, quality
of the goods are not relevant
Exception: If the seller made such affirmation or statement as an
expert and upon the buyer.
Prescriptive Period: 1. One specified in the contract 2. 4 years
2. Implied
Definition: An implied warranty is one which the law derives by
application or inference from the nature of transaction orr relative
to the situation or circumstance of the parties irrespective of the
intention of the parties o create it
Implied warrant in contract of sale : The warranties impliedly
made by the seller in entering into the contract
1. His right to sell the thing at the time when the
ownership is to pass
2. The peaceful enjoyment by the buyer from the time of
legal and peaceful possession of the thing ( warranty
against eviction)
3. Freedom of the thing from any hidden faults or defect
or any charge or encumbrance not declared or known to
the buyer ( hidden defects)
Exception: This implied warranty does not apply to 1. Sheriff 2.
Auctioneer 3. Mortgagee 4. Pledgee 5. Other person professing to
sell by virtue of an authority granted for by law.
Warranty against Eviction:
Requisites : A breach of warranty against eviction requires the ff :
1. The purchaser has been deprived of the whole or a part
of the thing sold
2. This eviction is by final judgment
3. The basis thereof is by virtue of a prior right to the sale
made by the vendor ‘
4. The vendor has been summoned and made co defendant
in the suit for eviction at the instance of the vendee.
When is the vendee liable?
1. If the property is sold for nonpamyent of taxes due
and not made known to the vendee before the sale
2. The judgment debtor is liable for eviction in judicial
sales unless decree in judgment
When is vendor not liable for eviction:
3. When adverse possession had been commenced
before the sale but prescriptive period is completed
after the transfer the vendor is not liable for
eviction.
General : The contracting parties however may increase, diminish
or suppress the legal obligation of the vendor for his implied
warranty against eviction.
Exception: When there is a stipulation that exempt the vendor from
obligation for eviction and he acted in bad faith.
Q: When is the right to warranty renounced?
1. Intended renunciation: When the vendee renounced the
right in case of eviction and ask waiver is made with the
knowledge of risk of eviction assumed that if eviction
takes place the vendor is not liable
2. Conscious renunciation: When the vendee renounced
the right to warranty in case of eviction( without stating
any circumstance which reveals that he has knowledge
of the risk of eviction and intention to assume its
consequence) and the eviction takes place the vendor
shall only pay the value which the thingsold at the time
of the eviction.
Liability in case of eviction
1. Total Eviction: The vendee has the right
a. The return of the value which the thing sold
had at the time of eviction be it greater or
less than the price of the sale
b. The income or fruits if he has een ordered to
deliver them to thep arty who won the suit
c. The cost of the suit which caused the
eviction and in proper case those the suit
brought against the vendor of the warranty
d. The expenses of the contract if paid by the
vendee
e. The damage and interest fi the sale is made
in bad faith
 2. Partial eviction: When the vendee looses a part of the
thing sold in relation to the hole that he would not have
bought it without the said part or when two or more
things have been jointly sold for a lump sum the vendee
may
a. Enforce the liability of the vendor for
eviction
b. Demand the rescission of the contract but
with the obligation to return the thing
without other encumbrances that those
which it had when he acquired it
Prescriptive Period: Six months from the date of delivery of the
thing sold.
Warranty against Hidden defects :
General Rue : The defect must be hidden the vendor is not
answerable for patent defect or those which re visible or if not
visible the vendee is an expert who must have known the defect.
Nature: The defect must have diminished the value or render the
use unfit had the vendee been aware thereof he would not have
acquired the property.
1. Sale of Goods
a. Implied warranty as to the quality and fitness of
Goods
a. Buyer expressly or impliedly makes
known to the seller the purpose to
which the goods are acquired and it
appears that the buyer relies on the
skill of the seller and judgment there is
an implied warranty that the good is
reasonably fit for such purpose.
b. If the goods are bought by description
there is an implied warranty tat the
goods are of merchantable quality
c. Contract of sale in a sample, if the
seller is a dealer of the goods of the
same kind therei s implied warranty
that the goods are free of defect
rendering them unmerchantable
d. Implied warranty as to quality and
fitness
2. Sale of Animals
a. Defect: Must be hidden , although an expert
may intervene it must be of some sature that
even expert knowledge cannot discover it.
i. If the animal dies within three
days after it was purchased the
vendor is liable if the deceased
which caused its death existed at
the time of the contract
b. When the sale of animals is void
i. The animal is suffering a
deceased that is contagious
ii. The use or service to which
animals are acquired has been
stated in the contract and they are
found to be unfit.
3. Sale of two or more animals whether lunp sum or for
separate price
a. The defect of one does not affect the other
b. But if it appears that thevendee would not
have purchased the animals without the
defective one the entire contract is
rescinded.
NB: There is no warranty against hidden defect on animals sold at
fair, at public auction or livestock.
Remedy: In case of breach
1. Alternative
a. Withdrawing from the contract
b. Proportionate reduction of the price with
damages in other case
Prescriptive Period : The remedy must be availed within 40 days
from the date of delivery of animals to the vendee.
3.in sale of immovable property
1. Immovable is encumbered with NON Apparent burden :
- If di mentioned ung encumbrance and it is presumed that the
vendee would not acquire the property if it knew that the
encumbrance exist it may :
1. Ask for recission
2.Demand payment of appropriate indemnity
Prescriptive Period
1. Within a year from the execution of the deed :
The vendee can bring action for recission or sue for
damages
2. After a year from the execution of the deed : The
vendee can only bring an action for damages within
one year from the date on which he discovered the
burden. ( damages nalang)
Note : If the encumbrance is recorded in th registry of property the
vendee has no right or cause of action against the vendor unless
there is an express warranty that the thing is free from
encumbrance ( Kita naman kasi dun na hindi )
Effects of vendor knowledge of Hidden defects
1. The vendor is NOT aware
a.The vendor is still liable
b. Not liable if there is a stipulation
c.If the thing is lost due to hidden faults the vendor shall only
return the price and the interest thereon and reimburse the
expense of the contract which the vendee paid
d. If the thing is lost by fortituous event or fault of the vendee :
The latter may demand of the vendor the price which he paid less
the value of the thing had when it was loss
2. The vendor is aware
a.If the thing is lost in consequence of hidden fault he bear the
consequence of the loss and shall be obliged to return the price
and refund the expenses of the contract with damage
b. If the thing is lost by fortuitous evet or fault of the vendee : He
shall pay damage to the vendee.
Remedies of the vendor in case of breach of warranty against
hidden defects
1. Alternative remedies
a. Action redhibitoria: An action for the recovery of the
purchase price with interest accompanied with a return
of the thing sold
b. Acctio asetimatoria: An action for the recovery of a
part of the price in proportion to the defects in the
quality of the thing sold or an ation for the
proportionate reduction of the purchase price
Prescriptive Period : six months from the date of delivery of the
thing sold.
E. Obligation of vendee
1.Accept delivery
2.Pay for the price sold
Accept delivery
Delivery by installment: As a rule, a buyer of the goods is not
bound to accept delivery by installment unless there is an
agreement.
a. If there is an agreement agreed upon to be separately
paid for and the seller makes defective deliveries in
respect of some installment or if the buyer neglects
without justifiable cause to accept the same :
i. If the breach is material: The injured party may
refuse to proceed further and sue for damage on
WHOLE CONTRACT
ii. If the breach is severable : The injured party may
claim for compensation but he does not have the
right to treat the whole contract as broken.
Opportunity to Examine :
General Rule : When the goods are delivered to the buyer, he is
not deemed to have accepted them unless he is given a reasonable
opportunity to examine them for the purpose of ascertaining
whether they are in conformity with the contract.
CASH ON DELIVERY
1. When there is a stipulation that the goods are not to be
delivered by the carrier to the buyer until he has paid
the price: The buyer is not entitled to examine the
goods before payment of thep rice in the absence of
agreement. ( Bayad muna bago examine)
General Rule : The buyer is deemed to have accepted the goods
when :
a. He intimates to the seller that he accepted them
b. He does any act in relation to the goods which is
inconsistent with the ownership of the seller when
the goods have been delivered to him.
c. After the lapse of reasonable time he retains the
goods without intimating to the seller that he
rejected them
Effect if the seller committed a breach in the contract of sale
and the buyer accepted the goods :
1. The acceptance of the buyer : does not discharge the
seller from liability in damages or other legal remedy
for breach.
2. The foregoing rule is subject to any express or implied
agreement
3. But if after acceptance of the goods, the buyer fails to
give notice to the seller of he beach in promise or
warranty within reasonable time after the buyer knows
or ought to know of such breach the seller is not liable
therefor.
Responsibility of the buyer if he refuse to accept delivery
1. If the refusal is justified : The buyer is not bound to
return the goods to the seller it being sufficient that he
notifies the seller that he refuses to accept them. ( This
in effect makes the buyer a depository)
2. If the refusal is without just cause: The goods passes
to the buyer from the moment they are placed at his
disposal
Pay for the price sold
1. As to the time and place of payment
- The time and place in the contract
- In the absence of stipulation, it must be made at the
time and place of delivery.
2. Right of the vendee to suspend payment
-The vendee may suspend payment: The vendee be disturbed
in the possession or ownership of the thing acquired or
should have reasonable grounds to fear such disturbance.
Q: When can the vendee suspend payment ?
A: 1. If the vendor gives security for the return of the price in a
proper case 2. There is a stipulation when notwistanding such
contingency the vendee is bound to pay.
EFFECT OF FAILURE TO PAY : Within the period
stipulated
1. In sale of immovable property
Article 1592: The vendee may pay as long as no demand for
rescission was made. The offer to pay prior to the demand of
rescission is sufficient to defeat the right of the seller to rescind.
Rescind : The demand for rescission must e wither judicial or
notarial act. The letter informing the buyer of the automatic
rescission of an agreement does not amount to demand for
rescission if it is not notarized.
Scope : This applies only to a contract of sale and not a contract
on sale of installment or a contract to sell.
Prescriptive Period : The action upon the written contract must be
brought within ten years from the time the right of action accrues.
Maceda Law
1. The Maceda law recognizes the right of the seller to
cancel the contract upon the non payment of an
installment by the buyer ( Here it is a contract to sell
as the ownership of the property is vested on the
owner by the full payment of the purchase price)
If granted in the contract : When the grace period is proven
for the contract of sale the same is a right and not an obligation
of the debtor and when unconditionally conferred the grace
period is effective without any demand calling for the payment.
Rules in case of Real Property in Installment:
1. If the buyer has paid at least two yeas installment
and he defaulted in the payment of the
succeeding installment due within the total grace
period earned by him
RATE : Fixed at the rate of one month grace period for
every one year of installment payment. This right is
exercised by the buyer once every five years of the life of the
contract if any.
2. If the buyer has paid less than two years
installment
Rate : Grave period of sixty days from the date the installment
becomes due.
Note: The seller may cancel the contract by the Maceda law
only when there is an expiration of grace period.
2. In sale of movable property
1. Vendor : The vendor can cancel or rescind the sale
when the vendee upon the expiration of the period fixed
for delivery of the thing should not have received it or
not have paid the price.
3. Obligation to pay interest
The vendee shall owe interest for the period between the delivery
of the thing and the payment of the price :
1. There is a stipulation
2. The thing sold and delivered produce frutis and income
3. If the vendee is in default form the time of judicial or
extrajudicial demand for the payment of the price.

F. Breach of Contract
a. Remedies
Seller’s Rights : The unpaid seller of the goods is entitled to the ff
even if the ownership is passed to the buyer :
1.A lien on the goods or the right to retain them for the price while
he is in possession of them
2.in case of insolvency of the buyer the right to stopping the
goods in transit after he has parted with the possession
3. The right to resale in appropriate cases
4.The right to rescind the same also appropriate case.
Unpaid seller :
1. When the price is not yet paid or tendered
2.When the bill of exchange or other negotiable instrument was
received as payment and the condition which it was received was
broken by reason of dishonor of the instrument, insolvency of the
buyer or otherwise.
If the title of the goods was not passed to the buyer : In addition
to the said remedies the seller has the right to withhold delivery.
1.A lien on the goods or the right to retain them for the price
while he is in possession of them
-The title of the goods have passed to the buyer but the goods are
still in the possession of the seller. There is a right of lien. If the
title of the goods are not passed to the buyer the unpaid seller has
the right to withhold delivery similar to and co-extensive with the
right of lien and stoppage in transitu.
-The seller has the right to retain possession of them until the
payment or tender of the price is made :
1.When the goods are sold without stipulation as to the credit
2.When the goods have been sold on credit but the credit expired
3.Where the buyer becomes insolvent.
Loss of Lien: When the seller lost his or her lien :
1.When he delivers the goods to a carrier or other bailee for the
purpose of transmission to the buyer without reserving the
ownership in the goods or the right to possession ( Delivery to the
carrier is delivery to the buyer)
2.When the buyer or agent lawfully obtains possession of the
goods
3.Waiver thereof.
Partial Delivery: He may exercise his right to lien on the remainder
2.in case of insolvency of the buyer the right to stopping the
goods in transit after he has parted with the possession
Nature : It is the right which the seller of goods on credit has to
recall them or retake them while they are in possession of a carrier
or other middleman who received them for delivery to the buyer,
on the discovery of the insolvency of the buyer.
Circumstances that must concur for right to exist:
1.There must be an unpaid seller
2.The title to the goods must have passed to the buyer
3.Good must e in transit form the seller to the buyer
4.The buyer must be insolvent
5.A resale of the goods by the buyer must not have cut off the
right.
When goods are considered “ Transit”
1.From the time when they are delivered to a carrier by land, water
or air or other bailee for the purpose of transmission to the buyer
until the buyer or his agent takes delivery of them from the carrier
or other bailee
2. If the goods are rejected by the buyer and the carrier continues
in possession of them even if the seller has refused to receive them
back.
Exercise of the Right
1.obtaining actual possession of the goods or
2.Giving notice of his claim to the carrier or other bailee in whose
possession the goods are. ( Notice : Person in actual possession of
the goods or to the principal)
Rights, duties and liabilities of the carrier or other bailee
1.When notice is given by the seller or the bailee in possession of
the goods he must redeliver the goods to or according to the
direction of the seller. ( Notice given seller - bailee carrier
redeliver to seller)
Operation and effect: The stoppage in transit does not rescind the
contract of sale but restore the seller of the goods in possession of
the seller.
3. The right to resale in appropriate cases
The unpaid seller has the right to resale in the ff cases:
1.Where the goods are perishable
2.Where the seller has expressly reserve the right of resale in case
the buyer makes default
3.Where the buyer has been in default in payment of the price for
unreasonable length of time.
PROFIT: The seller is not liable to the original buyer for any
profit made by such resale but may recover from the buyer
damages for any loss caused by the breach of sale.
Need for Notice :
1. Validity of resale: Notice of an intention to resell the goods by
the seller to the buyer is not essential and neither is the notice of
the time and place of resale is essential
Notice: This is only material in resolving issues in cases where the
right to resell is not based on perishable nature of the goods or
upon the express provision of the contract of sale.
4.The right to rescind the same also appropriate case.
1.Where the seller has expressly reserved the right to rescind in
case the buyer should make default
2.Where the buyer is in default I payment of the price for an
unreasonable length of time.
Notice: There must be a manifestation by the unpaid seller by some
other overt act an intention to rescind. It is not necessary that the
overt act be known to the buyer but the issue of notice only
becomes relevant to determine whether the buyer is in default for
unreasonable time before the right of rescission.
Action for breach of contract of sale of goods
a. On the part of the seller
a. Action for purchase price :
1. Where the ownership of the goods has passed: The seller may
maintain an action against the buyer for the full payment of the
purchase price of the goods.
2.If price is payable on day certain: If the price is payable on the
day certain and the buyer wrongfully or refuses to pay thep rice the
seller maintains an action for the price of ownership in goods that
has not passed.
Defense: The seller’s inability to perform the seller at the time
before the judgment in such action manifested inability to perform
If the goods cannot be resold : Although the ownership of the
goods has not passed if they cannot be resold in a reasonable price
the seller offers them to the buyer and if the buyer refuses to
receive them may noitfiy the buyer that the goods are held by the
seller as bailee for the buyer.
b. Action for the non-acceptance of the goods
If the buyer wrongfully neglects or refuses to accept and pay for
the goods the seller may maintain an action against him for
damages.
DAMAGES:
General: Estimated loss directly and naturally resulting in the
ordinary course of events from the buyer’s breach of contract.
Available market for the goods : If there is an available market for
the goods the measure of damage is ( Difference between the
contract price and the market or current price at he time or times
when the goods are ought to be accepted or if no time is fixed
then at the time of the refusal to accept)
Where the breach occurs before the completion of production
1.The buyer is liable to the seller for the labor performed or
expenses made before receiving the notice of the buyer’s
repudiation or countermand. The profit that the seller could have
eared is considered in the awarding of damages ( On process na
ginagawa ung product tapos sa kalagitaan sabi ni buyer repudiate
na nya abd that t need not want to proceed)
On the part of the buyer
1.Action for specific performance or DAMAGES
a.Where the seller has broken a contract to deliver specific or
ascertain goods a court may on application of the buyer direct that
the contract shall be performed specifically without giving the
seller the option to retain th goods n payment of damages.
The buyer can also maintain an action for damages
Action for damages : ( Difference between he contract price and
the price prevailing in the market at the time stipulated in the
delivery)
2.When there is a breach of warranty by the seller
1. Accept or keep the goods and set up against the seller breach of
warranty by way or recoupment in diminution or of the price
2. Accept the good and maintain an action against the seller for
damages for the breach of warranty
3.Refuse to accept the good and maintain an action for breach of
damage
4. rescind the contract and refuse to accept the good if the good
or if the goods have already been received return them or offer
them to the seller and recover the price or any part thereof paid.
Effect of rescind:
1.The buyer no longer is liable for the price paid upon returning or
offering to return the goods. If the price thereof is paid the seller
shall be liable to repay so much thereof as has been paid
concurrently with the return of the goods or immediael after the
offer tor return the goods in exchange of repayment of the price
2.If the seller refuses to accept an offer of the buyer to return the
good the buyer is deemed to hold the goods as bailee for the seller
but subject to a lien to secure payment of any porition of the pirce
which is paid.
Damage : Loss in the absence of special circumstance showing
proximate damage of a greater amount is the difference between
the value of the good at the time of delivery to the buyer and the
value they would have had if they answered the wararnty ( Value
of goods at time delivery- Warranty)
b. Recto Law and Maceda Law
RECTO LAW
Scope : These remedies are available who the vendor who sold
personal property on installment plan and are alternative
The vendor may exercise the ff remedies :
1. Exact fulfillment of obligation should the vendee failed
to pay
2. Cancel the sale due to vendee failure to pay
3. Foreclose the chattel mortgage on the thing sold if
one has been constituted should the vendee failed to
pay two or more installment.
REMEDY IS ALTERNATIVE : The choice becomes conclusive
only uon the exercise of the remedy.
Exact Fulfillment or Specific Performance
1. The filing of the suit for collection barred the
foreclosure of the mortgage. If the mortgagee files a
suit for collection he abandons the right to foreclose the
mortgage ( Collection suit = Foreclosure of the
mortgage)
a. An action for the recovery of possession
with replevin as a provisional remedy
preparatory to foreclosure is not an action
for collection much less for foreclosure .
BUT: If the action for replevin culminated from the foreclosure
of the chattel mortgage and sale of personal property : This is
considered as the action for collection.
2. The mere filing of the ordinary action for collection
against the principal debtor the creditor is deemed to
have elected a remedy as a result of which a waiver of
the others must arise.
Cancellation or rescission of the contract
1. The vendor may not recover the balance of the price: If
the vendor had chosen to cancel the contract he is
barred from exacting payment of the balance of the
price of the vehicle.
a. The stipulation that the installment and
rental paid shall not be returned to the
vendee or lessee shall be valid insofar as the
same is not unconscionable.
Foreclosure of the chattel mortgage
If the vendor elected to foreclose the mortgage he shall have no
further acting against the purchaser to recover the unpaid balance
of the price . This is to prevent the circumvention of the law
wherein mortgagee seizes the mortgage property by buying it at the
foreclosure sale for the law price and then brining it against the
mortgagor for deficiency judgment. - This will mean that the
mortgagor is deprived of his property and still owing practically
the full amount of indebtedness.
Unpaid Balance : The vendor is prohibited from recovering not
only the balance of the price but also the interest on the principal ,
attorney’s fee , expenses of collection and cost. ( Gen Rule: No
right of recovery)

Exception:
1. When the mortgagor refuses to deliver he chattel to the
mortgagee in two or more installment or if he conceal
the chattel to place it beyond the reach of the mortgage
forcing the mortgagee to file an action for replevin.
Here, he is allowed to recover reasonable expenses
which would include expenses in the seizure of the
property.
In order for prohibition to apply there must be an actual
sale :
Foreclosure: When all the proceeding of the foreclosure including
the sale of the property in a public auction have been
accomplished. This means that the property must be sold at a
public auction before the mortgagor’s liability is extinguished
Limitation: If the property s already within the possession of the
creditor and it persistently and consistently avowed that it elects
foreclosure sas a remedy.
Note: The recto law also applies if the contract is made to appear
as a lease but there is a stipulation granting the lessee the option to
purchase the lease property for a small consideration at the end of
the term, provided that the rents are paid. This is considered as
sale though installment and the so called rent is considered as
payment by installment.
Art 1191 : The power to rescind obligation is implied in reciprocal
one in case one of the obligation should not comply with what is
incumbent upon him. The injured party may choose fulfillment or
rescission and payment of damages in either case. He may also
seek rescission even after fulfillment if the latter becomes
impossible.
Article 1591: Should the vendor have reasonable grounds to fear
the immovable property sold and its price he may immediately sue
for the rescission of the sale.
Article 1591: Anticipatory Article 1191
breach
Fear of being left without a The court has the discretion ti
price and without a thing fix the period
-The vendor may immediately
sue for the rescission of the
sale
-once the grounds are proven
the court cannot deny the
rescission of the contract
Article 1592: In a sale of immovable property even though it may
have been stipulated that upon failure to pay the price at the time
agreed upon the rescission of the contract shall of right take place
the vendee may pay even after the expiration of the period as
long as there is no demand for rescission in the contract has
been made upon him either judicially or extrajudicially or by
notarial act . After the demand the court may not grant him a new
term
- The offer to pay prior to the demand of rescission is
made is sufficient to defeat the right of the seller to
rescind under Article 1592
Article 1592 Maceda
Contract of sale Contract to sell
Maceda Law
Scope : Applies to contract of sale or real estate on installment
payment including residential condominium payment but
excluding industrial lots, commercial building and tenants
If granted in the contract : When the grace period is proven for
the contract of sale the same is a right and not an obligation of the
debtor and when unconditionally conferred the grace period is
effective without any demand calling for the payment.
Rules in case of Real Property in Installment:
If the buyer has paid at least two yeas installment
and he defaulted in the payment of the succeeding
installment due within the total grace period earned
by him
RATE : Fixed at the rate of one month grace period for every
one year of installment payment. This right is exercised by the
buyer once every five years of the life of the contract if any.
The seller may cancel the contract provided that :
1.He pays the buyer cash surrender value of the payment on
property equivalent to 50% of the total payment and after five
years of installment an additional 5% every year but not
exceeding 90% of the total payment made AND
2.He furnishes the buyer a notice of cancellation or demand for
rescission of contract by a notarial act. The cancellatio takes
place 30 days after the receipt of the buyer and upon full
payment of the surrender value .
TWIN NOTICE: Notarial act of rescission and the refund to the
buyer of the full payment of the cash surrender value of the
payment on the property.
3. If the buyer has paid less than two years installment
Rate : Grace period of sixty days from the date the installment
becomes due.
Note: The seller may cancel the contract by the Maceda law only
when there is an expiration of grace period.
The seller may cancel the contract after thirty days from the
receipt of the buyer of the notice of cancellation or demand for
rescission of the contract by a notarial act.
Requisite for valid cancellation
1.The seller may cancel the contract :
a.There must be a notice of cancellation or demand for
rescission by a notarial act. ( The vendor goes to court for the
rescission in lieu of notarial act it can also be annulment)
G. Extinguishment
a. In general
Sale are extinguished by the same causes as all other obligation by
those stated in the articles in this title and by conventional and
legal redemption.
A.Conventional Redemption:
b. Pacto De Retro Sale
Definition:The vendor reserves the right to repurchases the thing
sold with the obligation of returning to the vendee the price of the
sale, expenses of he contract and any other legitimate payment
made by reason of the sale the necessary and useful expenses made
on the thing sold and the obligation to comply with other
stipulation.
Here, the title to an ownership of the property are vested in the
vendee a retro subject only to the resolutory condition that the
vendor repurchase it with the stipulated period.
Option: The right to repurchase is merely an option it creates no Concept: An equitable mortgage is defined as one which although
existing right and whatsoever. Therefore, the failure of the vendor lacking in some formalities in the statute reveals the intention of
a retro to purchase the proeprty vest upon the vendee a retro by the parties to charge real property as security for the debts and
operation of law the absolute title and ownership over the property. contains nothing impossible o contrary to law.

Pacto De Mortgge Anti Cheriss Loan Pacto De Retro Equitable Mortgage

Retro The ownership of the A contract although lacking I
There is a There is no proeprty sold is immediately formality or other requisite
transfer of transmissio transferred to the vendee a nevertheless reveals the intent
ownership of n of retro subject to the right to of the parties to burden a
a thing ownership repurchase by the vendor piece or pieces of real
although it is within a specified period property 1. The parties enter
revocable into what appears as contract
If the seller The of sale 2. Their intention is to
does not mortgagor secure an existing debt by
repurchase the does not lose way of mortgage.
property on his interest in Effect of Non payment: The
the day stated the property mortgagee has the right to
in the contract if he fails to foreclose the mortgage sell
by the express pay the debt the property and apply the
terms he loses at maturity. It proceed of sale to the
the interest is the duty of satisfaction of the loan.
therein . Here the
there is no mortgagee to
obligation on foreclose the Presumption : Equitable mortgage
the part of the mortgage if
mortgagee to he wishes to 1.When the price of the sale with the right to repurchase is
foreclose. secure a unusually inadequate
perfect title 2.When the vendor remains in possession as lessee or otherwise
thereto 3.When upon or after the expiration of the right to repurchase
The vendor The creditor another instrument extending the period of redemption is executed
cannot only 4.When the purchase retains for himself a part of the purchaser
exercise the acquires a price
right of right to 5. When the vendor binds himself to pay the taxes on the thing sold
redemption receive the 6. Any other cases where it can be inferred that the real intention of
without fruits of the the parties is that the transaction shall secure the payment of the
returning to real property debt in the performance of other obligation.
the vendee the of his debtor
price of the with the Note : This presumption is not conclusive it may be rebutted by
sale obligation to competent and satisfactory proof to the contrary.
apply them
to the Effect: If the sale pacto de retro is equitable mortgage
payment first 1.Any fruits, money or benefit to be received by the vendee is
to interest considered as interest which is subject to usury law
then 2.The vendor who s the mortgagor can ask for the reformation of
principal the instrument to express the true intention of the parties
3. If there is a stipulation in the sale with pacto de retro that
provides that complete and absolute title shall be vested on the
SAME INSTRUMENT: The right to repurchase is not a right vendee should the vendor fails to redeem the property on the
granted the vendor by the vendee in a subsequent instrument but a specified date is void for being pactum commissorium which
right reserved by the vendor in the same instrument of the sale as enable the mortgagor to acquire the property without foreclosure
one of the stipulation to a contract. Pactum Commissorium: Automatic appropriate by the creditor
of the pledged or mortgaged upon the failure of the debtor to
Note: pay the principal obligation.

Capulong: The option to buy was embodied in a document
executed at the same time that the questioned deed of sale was
executed. ( Nakahiwalay ung document). In the Capulong case,
the court ruled that this must have put the court on guard
considering that other circumstances of the case from which no
other conclusion could be derived except that the document
giving the right to repurchase were in fact only one transaction
of sale pacto de retro that must be considered as equitable
mortgage.
c. Equitable Mortgage
4.A sale a retro is found to be a equitable mortgage the proper
remedy in case the borrower refuses to pay the price is to foreclose
the mortgage and there can be no loss of the seller’s right to
redeem since the right of redemption is pactum commisorium
Period of Redemption: Pacto De Retro Sale
1.Period expressly agreed upon , but it must not exceed 10 years
-If there is no agreement it is four years from the date of contract
-if there is a doubt as to the true nature of the agreement, as to
whether it is a pacto de retro or equitable mortgage, the vendor
may still exercise right of redemption within thirty days from the
time final judgment was rendered in a civil action on the basis that
the contract is a true sale with right to repurchase.

Right of the parties ( Before Repurchase)
In pacto de retro sale, the property is immediately vested in the
vendee subject to the condition of the right to repurchase by the
vendor a retro within the period provided for in the NCC. Prior to
the repurchase, the vendee a retro can alienate, encumber the same
but such alienation and encumbrance is revocable as is his right.
- Upon the exercise of the vender a retro the right of the
vendee a retro is resolved because he has a property
free from all damages and encumbrance.
Vendee a Retro Alienate:
REGISTRATION: The vendee can register his right to
repurchase under the Land Registration Act and may be enforced
against any person deriving title from the vendee a retro. (
Enforced against)
A vendee lost his land because it was levied upon to satisfy a
judgment against him and sold at a public auction it was held
that the right to repurchase must be from the purchaser at the
execution sale and not from the vendee a retro.
NON REGISTRATION: The purchaser if one for bona fide for
value acquires good title as against the vendor a retro.
- Here the vendee is subrogated to the vendor’s right
and action. This means that the vendee acquires the
character which the vendor had ( Good title)
Exercise of Right of Redemption:
1.The vendor may bring his action against every possessor whose
right is derived from the vendee even if in the second contract
there is no mention that it should have been made with right to
repurchase without prejudice to the Mortgage law and the Land
Registration Law with respect to third person
When the subject matter is undivided immovable or part
thereof.
1.Where a vendee of a part acquires the whole: The vendee of a
part of an undivided immovable who acquires the whole may
compel the vendor to redeem the whole in case the latter made us
of the right of redemption.
2.Where several parts belong to several person :
A. If sold jointly : If several person jointly and in the same
contract sell an undivided immovable with right to repurchase OR
if the person sold an immovable alone with right to repurchase has
left several heirs the ff are the rules: ( parang co owner ng isnag
property_
1. Vendors a retro: None of them can exercise the right of
repurchase for more than his respective share. In case of heirs,
each of them may redeem the part which he may have acquired.
2.Vendee: He may demand of all the vendors and co-heirs that
they come to an agreement to purchase the whole thing sold if they
failed to do so the vendee cannot be compelled to consent to partial
redemption.
In case the vendee dies :
1.SEVERAL HEIRS :The action for redemption cannot be brought
against each of them except for his own share whether the thing be
undivided or it has been partitioned.
2.INHERITANCE DIVIDED and THING SOLD awarded TO
ONE OF HEIRS : the action for redemption may be constituted
against him for the wholele
Condition and sufficiency
1.Price of the sale
-The payment of the redemption price and the execution of the
deed of resale are simultaneous acts and that the vendor is not
required to deliver the money in advance of the execution. ( The
vendor a retro must exercise an actual and simultaneous tender of
payment)
- Sufficiency: There must be an intention accompanied by an
actual and simultaneous tender of payment. This constituted an
exercise of the right to repurchase. Bona fide redemption pertains
to reasonable and valid tender of the entire purchase price.
-A mere check is enough to tender redemption.
Q: What happens if the offer is refused ?
A: A bona fide offer of requisite amount is sufficient to preserve
the vendor’s right of action in case the offer is refused and
consignation is not required to preserve the right of repurchase as a
mere tender of payment is enough if made on time as a basis for an
action o compel the vendee a retro to resell the property.
2.Expenses of contract and any legitimate payment made by
reason of the sale
3.Necessary useful expense made on the thing sold.
Effects of Repurchase ( Redemption)
General Rule: Upon the arrival of the time to restore the thing by
virtue of an act of redemption the vendee must return to the vendor
with all its accessories including its accessions.
Fruits :
1.If there is fruit at the time of the sale : There shall be no
reimbursement for or prorating of those existing at the time of
redemption if no indemnity was paid by the purchaser when the
sale was executed.
2.If there were no fruits at the time of the sale: If there is no
fruit at the time of the sale and some exist at the time of
redemption they are prorated between the redemptioner and the
vendee giving the latter the part corresponding to the time he
possessed the land last year counted from the anniversary date of
the sale.
Encumbrance :
With respect to the encumbrance, the vendor who recovers the
thing sold shall receive it free from all charges or mortgages
constituted by the vendee but he shall respect the leases constituted
.
Effect of failure to exercise the right of repurchase :
1.Consolidation of the sale and the vendees ownership over the
thing sold.
- in case of real property the consolidation of the ownership in the
vendee by virtue of failure of vendor to comply with Article 1616
shall not be recorded in registry of property WITOHUT a judicial
ORDER after theedom duly heard.
b. Legal Redemption
Definition: Legal Redemption is the right to be subrogated upon
the same terms and condition stipulated in the contract in the place
of one who acquires a thing by purchase or dation en pago or by
any other transaction whereby ownership is transmitted by onerous
title.
Legal Redemption: Civil Code
1.Aong Co-owners
Purpose: To reduce the number of participants until the community
is done away with
Requisites:
1.There must be co-ownership
-To reduce the right of legal redemption between co-owners is to
reduce the number of participants until the community is done
away with once the property is subdivided and distributed among
co-owners. Once the property is subdivided and distributed among
the co-owners the community has terminated and there is no reason
to sustain any right of legal redemption.
2.One of the co-owner sold his right to a stranger
-Anyone who is not a co-owner. If the share is sold to a co-owner
the right does not arise because a new participant is not added to
the co-ownership
3.The sale was made before the partition of co-owned property
4.The right of redemption must be exercised by one or more
co-owner within a period of thirty days to be counted from the
time he or they were notified in writing by the vendee or by co
owner thereof
-The co-owner’s right of redemption is invoked only after the
shares are to be sold to third party or stranger not before. ‘
Note:
1. The right of legal redemption shall not be exercised except
within thirty days from the notice in writing by the vendor. In a
more recent case, the court relaxed the written notice
requirement and ruled that the co-owner with actual notice of
sale is not entitled to written notice.
2.The court ruled that a co-owner with actual notice of sale is
not entitled to a written notice. It is immaterial as to who may
have notified the co-owners who are entitled to redeem.
Several Co-owners: If two or more co-owners desire to exercise
the right of redemption they may only do so in proportion to the
share they may respectively have in the thing owned in common
5.The vendee must be reimbursed of the price of the sale.
2.Among co-heirs
When right exist : Should any of the heirs sell his hereditary
rights to a stranger before partition any or all of the co-heirs may
be subrogated to the right of the purchaser by reimbursing him for
the price of the sale provided that they do so within a period of one
month from the time they were notified of writing of sale by
vendor
Application: This provision applies when the sale consist of an
interest in some particular property or properties of inheritance the
right of redemption arises in favor of the other co-heirs. ( This
pertain to those hereditary shares that had already been determined
such as the interest in the property or properties in inheritance)
*Written notice is not indispensable: This is no longer necessary if
there is actual notice of the sale.
3.Among adjoining owners.
a. In case of Rural Land
Right exist: The owners of the adjoining land have the right of
redemption when the piece of rural land the area does not exceed
one hectare is alienated unless the grantee does not own any rural
land.
Requisite for existence of legal redemption:
1.The adjoining lands are both rural in character
2.The land must be alienated in favor of someone who
is not adjoining owner
3.Lands adjoin each other
4.Area of land alienated does not exceed one hectare
Note: The right of legal redemption cannot be exercised by any of
these latter among themselves but only by them against a stranger
who acquires from any one of them y purchase or gift or payment
or by any other title for value.
Purpose: The object of the law in allowing redemption by adjacent
owner is to prevent a rural estate adjacent to that belonging to
another owner or owners and the area of which does not exceed
one hectare form passing into the hands of a person other than
some one of the adjacent owner so that the property of these latter
would be divide without benefits ot public and prejudice of the
adjacent owner themselves who are interested in the preservation
of integrity of their respective properties.
b. In case of Urban Land
Requisites :
1.That piece of land is urban land
2.That the land is so small that major portion thereof cannot be
used for any practical purpose within a reasonable time
3.That it was bought merely for speculation
4.That the land is about to be resold or that its resale has been
perfected. Before a party may avail of the right of preemption or
redemption under this provision it is necessary that all these
elements be alleged in the complaint be proven at trial
Right of redemption: The right of legal preemption or redemption
shall not be exercised except within 30 days from the notice n
writing by the prospective vendor or by the vendor as the case may
be. The deed is not to be recorded in the registry of proeprty unless
accompanied y an affidavit of the vendor that he has given Witten
notice to the possible redemptioner.
H. Assignment of Credits
Concept: An assignment of credit is an agreement by which the
owner of the credit known as the assignor by a legal cause
exchange or donate without the consent of the debtor , transfers his
credit and accessory rights to another known as the assignee who
acquires the power to enforce it to the same extent as the assignor
could enforce it against the debtor( The creditor assigns his right to
the debtor)
Kinds of Transfer
1.Onerous Transfer or credit
1.The assignor vendor warrants both the credit itself ( existence
and legality) and the person of the debtor if so stipulated. If there is
a breach the vendor is liable thereto.
-The vendor is liable for the existence and legality of the credit
at the time of the sale unless it should have been sold as doubtful,
but not for the solvency of the debtor unless it is so stipulated or
unless solvency is known prior to the sale of common knowledge.
WARRANTY: 1. Existence of the credit 2. Solvency of the debtor
( No: Unless it is so stipulated and common knowledge)
2.Gratitious transfer of transfer of credit.
-The assignment is pure liberality on the part of the assignor the
rules on donation is likewise pertinent. Thus the formalities
required under the Civil Code must e followed.
Formalities :
1.Onerous: Akin to a contract of sale of personal property.
-The assignment partakes the nature of the contract of sale or
purchase. It is in the nature of the sale of personal property. Thus
the assignment of credit for a price not less than P500 must be in
writing. Pursuant to the statute of fraud.
2.Gratituous: Akin to donation
-If the value of the credit to be assigned exceeds P5,000 the
assignment and acceptance must be in writing otherwise the
assignment is void.
Effect as to third person: The assignment or credit or right of
action shall produce no effect as to third person unless it appears in
the public instrument or the instrument is recorded in the registry
of property in case of real property – This requirement is only
needed to produce effect as to third person or to adversely affect
third persons
Perfection and Consummation.
1.Perfection: Meeting of the minds upon the thing which is the
object and upon the price although neither or the same is delivered.
-Effect upon perfection The transfer of right from the assignor to
the assignee immediately takes place and ownership of the rights is
thereby acquired by the assignee who steps into the shoes of the
original creditor as subrogee of the latter.
Note: The consent of the debtor is not necessary what the law
merely requires is that in an assignment of credit the debtor
must be notified. A creditor may therefore validly assign his
credit and its accessory without the consent of the debtor as
long as the debtor is notified.
Notice: To inform the debtor from the date of the assignment
that payment is to be made to the assignee and not to the
original creditor. The assignment binds the debtor only upon
knowledge. There is no formal notice necessary all the law
requires is knowledge of the assignment.
Effect of failure to give notice : If the debtor pays his creditor
( without notice na naasign na). released from the obligation
the assignee has the duty to demand payment of the debt to
give his debtor notice. – Basta if ng pay si creditor without the
notice it is deemed as if nakabayad na siya the obligation is
extinguished.
Effects of Assignment of Credit
1.Takes effect upon the perfection of the contract
2.The assignee merely steps into the shoes of the assignor. The
rights of the assignee are no greater that the rights of the assignor
since the assignee merely substitutes in the place of the assignor
and that the assignee acquires his rights subject to equities.
Obligation of the parties
1.Vendor in good faith
Credit
GEN RULE : He warrants the credit itself its existence and legality
at the time of the sale. Consequently if there is a breach, the
assignor vendor is answerable
Exception: Unless the credit should have been sold as doubtful.
Solvency of the Debtor:
General Rule : He does not warrant the solvency of the debtor
Exception:
1.Unless so stipulated or the insolvency is prior to the sale and of
common knowledge.
-Here the assignor is liable and answerable for the insolvency.
Duration:
1.The period agreed upon
2.in the absence of an agreement as to the duration of the said
responsibility
a.If the period had already expired the responsibility shall last from
one year from the date of assignment
b.If the credit is payable within a term or period which has not
yet expired the responsibility ceases one year after maturity.
2.Vendor in bad faith
The vendor is answerable for all expenses and for damages. The
assignor in bad faith if he is aware at the time of the assignment of
sale that the credit no loner exist or that it is unlawful or debtor is
insolvent.
Sale of Inheritance
1.On the part of the assignor
General Rule: One who sells an inheritance without enumerating
the things of which it is composed is only answerable for his
character as a heir. ( Successory rights)
Note: If the vendor had profited from the fruits he shall pay the
vendee thereof if the contrary has not been stipulated.
-The vendee reimburses the vendor for all that the latter may
have paid for the debts of and charges of the estate and satisfy
the credits he may have against the same unless there is an
agreement to thecontrary.
Sale of Lump Sum of whole of certain rights
-One who sells for lump sum the whole of certain rights, rent or
product shall comply y answering for the legitimacy of the whole
in general but he is not obliged to warrant each of the various part
of which it may be composed except eviction from the whole or
part of greater value. ( Answerable for the whole but not obliged
each of the various parts)
Extinguishment (Paano ma stop ni debtor si creditor sap ag
benta ng incorporeal right ung credit nya?)
General Rule: When a credit or other incorporeal right of the
litigation is sold, the debtor has the right to extinguish it by
1. Reimbursing the assignee for the price that the latter paid
2.Juridical cost incurred by him
3.Interest on the price from the day which the same is paid.
Requisites for redemption:
1.There must be a sale of creditor or other incorporeal rights
2.Theo object of the sale is in litigation. It is necessary that the
suit is commenced prior to the sale of the credit and the litigation is
still pending at the time of the sale
- Litigation: From the time the complaint concerning the same is
answered
Period to exercise right: The debtor may exercise his right within
30 days form the date the assignee demands payment form him
Exception: The redemption of litigious credit sold does not exist
when
1.To co -heir or co owner of the right assigned
2.To creditor in payment of his credit
3.To the possessor of a tenement or piece of land which is subject
to the right of litigation assigned.