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Law on Sales

Concept –
a contract whereby one of the contracting
parties known as the seller or vendor,
Contract of obligates himself to transfer the ownership
Sale of and to deliver a determinate thing and
other party known as the buyer or vendee,
obligates himself to pay therefor the price
certain in money or its equivalent.

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1. Actual Delivery
2. Constructive Delivery
i. Traditio Symbolica
Kinds of ii. Traditio Longa Manu
Delivery iii.
iv.
Traditio Brevi Manu
Traditio Constitum Possessorium
v. Delivery by Legal Formalities
vi. Quasi Traditio

1. Essential Elements
a. Consent
b. Subject matter which should be a
determinate thing.
Elements of c. Consideration
a Contract 2. Natural Elements – Those inherent in
every Contract of Sale:
of Sale a. Warranty Against Eviction
b. Warranty against hidden defects and
encumbrances
3. Accidental Elements

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a. Consensual
b. Principal
Characteristics c. Bilateral
of a Contract d. Onerous
of Sale e. Commutative
f. Nominate

Rules on the object of a Contract of Sale

Requisites:
a. The thing must be within the commerce of men
b. The thing must not be contrary to laws, morals, good customs, public
orders and public policy
c. The thing must be determinate – a thing is determinate if its
particularly designated or physically segregated from all others of the
same class.

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1. The seller must have the right to transfer the ownership

of the thing at the time that is delivered; it is not
necessary that the seller be the owner of the thing at the
time of sale.
2. Things having potential existence may be the object of
sale. However, the thing must come into existence,
Other rules otherwise the sale will not be effective for not having an
object.
on object a. Emptio rei spratae – sale of future thing;
b. Emptio Spei – Sale of Hope(e.g. Lottery, Gacha)
3. The goods which form the subject of a contract of sale
may either be:
a. Existing Goods
b. Goods to be Manufactured – Future Goods.

Concept - The price is the sum that will be paid for the property that is
sold.
1. Certain

Rules on
2. The price is considered certain if:
a. It is a fixed amount.
b. It is certain with reference to another certain thing.
Price c. The determination is left to the judgment of a specified person
or persons.
3. Fixing of the price cannot be at the sole discretion of one party.
However if the price fixed by one of the parties is accepted by the
other, the sale is perfected.

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1. Should such person or persons be unable or

Rules when unwilling to fix it, the contract shall be
inefficacious, unless the parties
a third subsequently agree upon the price.

person or 2. If the third person or persons acted in bad

faith or by mistake, the courts may fix the
persons price.

determines 3. Where such third person or persons are

prevented from fixing the price or terms by
the price of fault of the seller or the buyer, the party not
in fault may have such remedies against the
an object party in fault as are allowed the seller or the
buyer, as the case may be.

EFFECT IF PRICE CANNOT BE FIXED:

There is no meeting of the minds, therefore the contract is
inefficacious or without effect.

GROSS INADEQUACY OF PRICE:

Does not affects the validity of a contract of sale. However, it may
indicate:
• A defect in the consent; or
• The Parties really intend a donation or some other act or Contract.

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All parties who are capacitated may enter

into a contract of sale.
1. Minors – where necessaries are sold and
delivered to a minor or other person
Who may be without capacity to act, he must pay a
parties to a reasonable price thereafter.
2. Sale between spouses are considered VOID,
Contract of this also applies to common law Spouses.
EXCEPTIONS:
Sale? • When a separation of property was agreed in the
marriage settlement; or
• When there has been a judicial separation or
property.

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The following cannot acquire by purchase, even at public or judicial

auction sales or in legal redemption, compromises and renunciations,
either in person or through mediation of another:
Relative a. The Guardian
b. Agents
incapacity c. Executors and Administrators
d. Public Officers and Employees the property of the State or any
to buy subdivision thereof or of any GOCC or institution.
e. Justices, Judges, and Prosecuting Attorneys, Clerk of Superior
or Inferior Courts and other Officers and employees connected
with the administration of justice.

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A contract of sale is perfect at the moment

there is meeting of the minds upon:
a. The Subject of the sale; and
Perfection b. The Price
Form of a Contract of Sale
of a Subject to the provisions of the Statute of
Contract of Frauds and any other applicable Statute, a
Contract of sale may be in any of the following
Sale terms:
a. In writing
b. By word of Mouth
c. Partly in writing partly by word of mouth
d. By the conduct of the parties.

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The auction is perfected by the fall of the

hammer, or in any other manner.
Rights of parties before perfection:
a. Any bidder may retract his bid
Rules in b. The Auctioneer may withdraw the goods
case of Sale from the sale unless the auction has been
announced to be without reserve.
by Auction Rights of the parties after the perfection.
a. The winning bidder cannot retroact his bid
nor the auctioneer withdraw the goods since
there is already a perfected contract.

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Rights of the seller to bid – The seller may bid at the auction
provided the following requisites are present:
a. The right to bid have been reserved expressly by or on behalf of the
seller.
b. His right to bid must not be prohibited by law or stipulation;
c. Notice must be given that the sale is subject to a right to bid by or on
behalf of the seller.

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1. Bilateral Promise – both parties

promises to each other to buy/sell a
determinate thing at an agreed price.
a. This is as good as a perfect sale; For
enforceability, the rules in Statue of Frauds
Rules on must be observed
Promise to 2. Unilateral Promise – A promise to
buy/sell is made by one of the parties.
Buy/Sell a. If not accepted – No legal effect
b. If accepted with consideration - the
promise is binding upon the promisor.
c. If accepted without consideration - the
promise is not binding upon the promisor.

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1. Earnest Money – The money is

given as part of the purchase price
and as proof of the perfection of
the contract; paid by the buyer to
show his legitimate interest and
Earnest money earnest desire to purchase the
thing.
and Option 2. Option Money – Is the
Money consideration paid for the purpose
of holding one to his promise to
buy or sell a determinate thing for
a certain period of time, which
consideration is separate and
distinct from the purchase price.

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Sale by sample,
description, sale or
return, sale on approval

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1. Sale by Sample – The parties contract

solely with reference to the sample.
2. Sale by Description – The parties
Sale by sample, contract solely with reference to the
description.
description, 3. Sale by sample by Sample and
Description – The seller warrants that
sale or return, the bulk of the goods delivered
corresponds with both the sample and
sale on 4.
the description.
Sale or Return – The buyer has the
approval option to return the thing within the time
fixed in the contract or within a
reasonable time.

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5. Sale on approval or on trial or on satisfaction – ownership of the object remains

with the seller despite delivery, but shall be transferred to the buyer in the ff. cases:
• When the buyer signifies his approval or acceptance of the goods.
• When he does an act adopting the transaction (e.g. makes use or consumes the
thing)
• If he does not signify his approval or acceptance of the goods but retains the
goods without giving notice of rejection within the time fixed in the contract.

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The determination of who has preferred right (who becomes

the owner) in case the same thing had been sold to different
buyers is governed by the following:
1. Movables – ownership shall be transferred to the
person who may have first taken possession
thereof in good faith;
2. Immovable property:
a. The buyer who first registered in good faith;
Rules on b. Should there be no inscription or
registration, ownership shall pertain to the
person who in good faith was first in the
Double Sale c.
possession; and
Oldest Title

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Sale of Property
in Installments

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In contracts of sale of Personal Property on Installment

basis, the vendor may exercise any of the following
alternative remedies:
1. Exact fulfillment of the obligation should the
vendee fail to pay;

Recto Law 2. Cancel the sale, should the vendee’s failure to

pay cover two or more installments; or
3. Foreclose the chattel mortgage.
(Art. 1484)

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The Maceda Law applies to contracts of sale of real

estate on installment payments including residential
condominium apartments. It likewise covers contracts
to sell.

Maceda Law 1. Maceda Law does not apply to:

a. Sale of industrial lots
(R.A. No. b. Sale of Commercial Buildings
c. Sale to Agricultural Tenants
6552) d. Straight sale or sale not on installment basis.
2. Maceda Law cannot be invoked by the following
person
a. The highest bidder in the foreclosure sale, if
the seller opted to foreclose the mortgage;
b. The developer-seller or his successor.

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1. If the buyer has paid less than two years installment:

a. Grace Period – the buyer may pay within 60
days from the date the installment become due.
b. Cancellation – in case of non-payment within
the 60-day grace period, the seller may cancel

Rules in the sale after 30 days from receipt of the buyer

of the notice of cancellation or demand for
rescission.
Maceda Law

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2. If the buyer has paid at least two years installment:

a. In case of defaults, the buyer has a grace period of one month for every year of installment payment. The buyer can
pay the unpaid installment interest free during this grace period.
b. The foregoing right shall be exercised by the buyer only once in every five year of the life of the contract.
c. The seller could cancel the sale if the buyer still failed to pay within the grace period. The following must be
complied with if the seller wishes to cancel:
i. Give a notarized notice of cancellation or demand for recission of the contrary by a notarial act;
ii. There must be full payment of the cash surrender value, if any.
iii. The actual cancellation shall take place after 30 days from receipt by the buyer of the notice of cancellation or
the notarial demand for rescission and upon full payment of the cash surrender value.
iv. Amount of cash surrender value – 50% of the total payments made plus after five years of installments, an
addition 5% every year.
v. The amount of CSV should not exceed 90% of the total payment made; and down payments, deposits and
options on the contract shall be include in the computation of the total number of installment payments
made.

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Obligations of the
Seller
1. To transfer the ownership of the thing sold;
2. To deliver the thing sold
3. To warrant the thing sold
4. To take care of the thing sold with the
diligence of a good father of a family unless
the law or the stipulation of the parties
requires another standard of care.

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The buyer acquires no better title than the seller had, except in the
following cases:
Sale by a a. When the sale is made under authority or with the consent of
the owner;
person who b. When the owner is precluded by his conduct from the denying
the seller’s authority;

is not the c. When the sale is made under the provisions of any factor’s acts,
recording laws or any other provisions of law enabling the
apparent owner to dispose of the goods as if he were the true
owner of owner thereof;
d. When the sale is made under a statutory power of sale or
thing sold under the order of court of competent jurisdiction;
e. When the purchase is made in merchant’s store or in fairs or
markets.

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Place of delivery

Time and • Place stipulated in the contract

• If no stipulation, place fixed by usage or trade;

place of
• In the absences of both, the seller’s place of
business if he has one; if none, the seller’s
place of residence.

delivery of Time for delivery of goods

the thing • Time stipulated

• If there is no stipulation, delivery must be

sold made within a reasonable time from the

execution of the contract.
• Demand or tender of delivery must be made
at a reasonable hour to be effectual.

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Expenses The sellers bears the expenses of an incidental to

putting the goods into a deliverable state, unless
of Delivery otherwise stipulated.

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When is a seller not bound to deliver the thing sold?

a. If the vendee has not paid him the price;
b. If no period for the payment of the prices has been fixed in the contract;
c. If a period has been fixed for the payment of the price, the seller is bound to
deliver the thing sold. However, the seller is not bound to deliver if the buyer
loses the right to make use of the period.

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What are the rights of the buyer when

quantity or quality of goods delivered is What if the quantity delivered is MORE than
that which the parties agreed upon? The
different from that which the seller
contracted to sell? buyer may:

• Reject the goods - because the creditor
cannot be compelled to accept partial
payment;
• Accept the goods – the buyer must pay for
the goods at the contract rate. If the buyer
has used or disposed of the goods before he
knows that the seller is not going to perform
his contract in full, the buyer shall not be
liable for more than fair value to him of the
goods so received
• Accept the goods agreed upon and reject the
rest;
• Accept the whole of the goods delivered and
pay them at the contract rate;
• Reject the whole of the goods if they are
indivisible.

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What if the goods delivered are mixed good of different

description? The buyer may:
a. Accept the goods agreed upon and reject the rest, if the sale is divisible;
b. Reject the whole of the goods if the sale is indivisible.
Unpaid Seller
One who has not been paid or tendered the whole of the price or who has
received a bill of exchange or other negotiable instrument as conditional
payment and the condition under which it was received has been broken by
reason of the dishonor of the instrument, the insolvency of the buyer, or
otherwise.

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Rights of an
Unpaid Seller

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1. Or a right on the goods or right to retain them

while he is in possession of them.
2. When Available – This right is available to the
seller and notwithstanding that he may be in
Possessory possession of the goods as agent or bailee for
the buyer in the following instances:
Lien a. Where the goods have been sold without
any stipulation or credit;
b. Where the goods have been sold on credit,
but the credit term has expired;
c. Where the buyer is insolvent.

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3. Lien where there is partial delivery:

a. Where an unpaid seller has made part delivery of
the goods, he may exercise his rights of lien on the
remainder, unless such part delivery has been
made under such circumstances as to show an
intent to waive the lien or right of retention.
b. When lien is lost – the unpaid seller loses his lien
on the goods in the following cases:
i. When he delivers the goods to a carrier or
other bailee for the purpose of transmission
to the buyer without reserving the
ownership in the goods or the right to the
possession thereof.
ii. When the buyer or his agent lawfully obtains
possession of the goods.
iii. By waiver thereof.

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This right involves the right of the unpaid seller

to resume possession of the goods at any time
while they are in transit and he will then
Right of become entitled to the goods as he would have
had if he never parted with the possession.
Stoppage in
Transitu When the right available – This right is
available after the unpaid seller has parted
with the possession of the goods and the buyer
is or becomes insolvent.

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3. How it is exercised:

• By obtaining actual possession of the goods;

• By giving notice of his claim to the carrier or other bailee in
whose possession the goods are.

4. Effects of exercise of right of stoppage in

transit:
• The goods are no longer in transit
• The contract of carriage ceases; the carrier shall be liable as
depositary or other bailee
• The carrier must redeliver the goods to, or according to the
instructions, the seller; However, if a negotiable document
of the title has been issued for the goods, the carrier will
not be bound to deliver the goods unless the document of
title is first surrendered to him for cancellation.

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5. When goods are in transit

• From the time are delivered to the carrier or other bailee
for the purpose of transmission to the buyer, until the
buyer or his agent, takes delivery of them from such carrier
or other bailee;
• If the goods are rejected by the buyer, and the carrier or
other bailee continues in possession of them, even if the
seller has refused to received them back.
6. When the goods are NO LONGER in transit
• If the buyer obtains delivery of the goods before arrival at
the appointed destination;
• If the carrier or other bailee acknowledges to the buyer or
his agent, that he is holding the goods in his behalf, after
arrival of the goods at their appointed destination.
• If the carrier or other bailee wrongfully refuses to deliver
the goods to buyer or his agent.

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The right of Resale becomes available

when:
• The buyer has defaulted in the payment of the price;
• The seller has the right of lien or has stopped the
goods in transit;
Right of • Title to the goods has passed on to the buyer;

Resale Grounds for Resale:

• The goods are of a perishable nature;

• The seller has expressly reserved the right to resell
the goods in case the buyer should make default;
• The buyer has been in default for an unreasonable
time.

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3. How resale is made – the seller may resell the

goods in a public or private sale. He is bound to
exercise reasonable care and judgment in making
the resale. He cannot directly and indirectly, buy the
goods.
4. Effects of Resale:
a. The seller shall not be liable to the original
buyer upon the contract of sale or for any
profit made by such resale;
b. He may recover damages from the buyer for
any loss occasioned by the breach of
contract of sale.
c. The new buyer acquires a good title against
the original buyer.

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The Right to Rescind Sale Becomes

available when:
• The buyer has defaulted in the payment of the price.
• The seller has the right of lien or has topped the
Right to goods in transit;

rescind the • Title to the goods has passed on the buyer;

sale Grounds for rescission:

• The seller has expressly reserved the right to rescind

the sale in case the buyer should make default;
• The buyer has been in default in the payment of the
price for an unreasonable time.

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3. How rescission is made:

a. By giving notice to the buyer of the
intention to rescind;
b. By doing an overt act manifesting the
intention to rescind.
4. Effects of rescission:
a. The seller shall not be liable to the buyer
upon the contract of sale;
b. He may recover from the buyer damages
for any loss occasioned by the breach of
the contract of sale;
c. The seller resumes ownership of the
goods.

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What
happens to
The other party may choose to do any of the
a contract following:
of sale a. Refuse to proceed with the contract – he
may also treat the non-performance of the
subject to a condition as a breach of warranty;
condition b. Waive the performance of the condition and
proceed with the contract.
that is not
fulfilled?

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Warranties

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1. Warranties may be express or

implied. Implied warranties are natural
elements of a contract of sale.
Implied and 2. Express Warranties of the seller – an
express warranty is an affirmation of
Express fact or any promise by the seller relating
Warranties to the thing if the natural tendency of
such affirmation or promise is to induce
the buyer to purchase the same, and if
the buyer purchase relying thereon

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3. Implied Warranties of the Seller Unless a contrary intention appears, the

following are deemed included in a contract of sale even without an express
stipulation:
a. Warranty against Eviction/Warranty in case of eviction –
• The warranty may be eliminated by stipulation, so long as the stipulation was agreed upon in
good faith;
• Any stipulation exempting the vendor from the obligation to answer for eviction shall be void
if he acted in bad faith.

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4. Requisites for the enforcement of warranty in case of eviction:

a. The vendee has been evicted;
b. The eviction was by virtue of final judgment;
c. The eviction was based on the ground or right prior to the sale or an act imputable to
the vendor and;
d. The seller must be summoned in the suit for eviction at the instance of the buyer.
5. Waiver of Warranty in case of eviction – may be conciente or intentionada:
a. The waiver is conciente when the buyer made the waiver twithout he knowledge of the
risks of eviction – the seller shall only pay the value which the thing sold had at the
time of the eviction;
b. The waiver is intentionada when the buyer made the waiver with knowledge of the
risks of eviction and assumed its consequences – seller is NOT liable.

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Liabilities of the seller in case of breach of

the said Warranty
The buyer shall demand from the seller:
a. The return of the value which the thing sold had at the time of the eviction, be
it greater or less, than the price of the sale;
b. The income or fruits if he has been ordered to deliver them to the party who
won the suit against him;
c. The costs of the suit which caused the eviction and in a proper case, those of
suit brought against the vendor for the warranty;
d. The expense of the contract, if the vendee has paid them.
e. The damages and interest ornamental expenses if the sale was made in bad
faith.

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Warranty against hidden defects

This is an implied warranty that the thing shall be free from any hidden faults or
defects or any change or encumbrance not declared or known to the buyer;
a. These refer to defects which would render the thing unfit for the use for which it is
intended or should they diminish its fitness for such use to such an extend that,
had the vendee been aware thereof he would not have acquired it would have
given a price for it.
b. Remedies (within 6mos. period from delivery):
i. Withdrawing from the contract also known as accion redhibitoria with
damages
ii. Demanding a proportionate reduction of the price also known as recoupment
with damages.

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Warranties under the Consumer Act

(RA No. 7394)
1. Consumer products are goods which are primarily for personal, family, household, or
agricultural purposes shall include but not limited to goods, drugs, cosmetics and devices;
2. Any seller or manufacturer who gives an express warranty for consumer products is
required to do the following:
a. Set the times of warranty in clear and readily understandable language and clearly
identify himself as the warrantor;
b. Identify the party who the warranty is extended;
c. State the products or parts covered;
d. State what the warrantor will do in the event of a defect, malfunction or failure to
conform to the written warranty and whose expenses;
e. State what the consumer must do to avail of the warranty rights;
f. Stipulate the warranty period.

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Period of Warranty
It is also mandated that all written warranties or guarantee issued
by a manufacturer, producer, or importer shall be operative from the
moment of sale. The period of warranty shall be:
a. The parties may stipulate the period within which the express warranty
shall be enforceable. If the implied warranty on merchantability
accompanies an express warranty, both will be of equal durations;
b. Any other implied warranty shall endure not less than 60 days nor more
than one year following the sale of new consumer products.

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Redhibitory defect of animals

If the hidden defect of animals, even in case a professional
inspection has been made, should be of such a nature that expert
knowledge is not sufficient to discover it, the defect shall be
considered as redhibitory;
a. The sale of animals suffering from contagious diseases shall be void.
b. A contract of sale of animals shall also be void if the use or service for
which they are acquire has been stated in the contract and they are
found to be unfit therefore;
c. If a veterinarian, through ignorance or bad faith should fail to discover
or disclose it, the veterinarian shall be liable for damages;
d. Prescriptive period – the redhibitory action based on the faults or
defects of animals, must be brought within 40 days from the date of
their delivery to the vendee

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One Price Tag Requirement

Every retailer is required to display a price
tag to indicate the price of each consumer
good and/or services, as required under the
Consumer Act of the Philippines.
Price Tag
Act The price tag must be written clearly,
indicating the price of the consumer
product including Value Added Tax (VAT)
whenever the consumer product is
VATABLE. Service charge, if any, shall not be
included in the price tag.

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Republic Act No. 10642 is an Act Strengthening Consumer

Protection in the Purchase of Brand New Motor Vehicles
which aims to promote full protection to the rights of
consumers in the sale of motor vehicles against business and
trade practices which are deceptive, unfair, or otherwise
inimical to consumers and the public interest.
The Philippine Lemon Law protects owners of brand-new
vehicles purchased in the Philippines within a period of
Philippine twelve (12) months after the date of the original delivery of
the brand-new motor vehicle or within the first twenty
Lemon Law thousand (20,000) kilometers of operation after delivery of
the vehicle, whichever comes first. It gives the owner the right
to report any non-conformity with the vehicle’s manufacturer
or distributor’s standards or specifications.
The owner/ consumer should notify in writing the
manufacturer, distributor, authorized dealer, or retailer of the
unresolved complaint and his intention to avail of the Lemon
Law rights.

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Exclusions:
a. Noncompliance by the consumer of the obligations
under the warranty;
b. Modifications not authorized by the manufacturer,
distributor, authorized dealer, or retailer;
c. Abuse or neglect of the brand-new motor vehicle;
Philippine and

Lemon Law d. Damage to the vehicle due to accident or force

majeure.
After the notification in writing, the owner/consumer
should bring the vehicle to the manufacturer,
distributor, authorized dealer, or retailer from where the
vehicle was purchased for a final attempt to address the
complaint of the consumer to his or her satisfaction.

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The obligations of the buyer/vendee are as

follows:
1. To accept delivery; when are the goods
deemed accepted?

Obligations a. He intimates to the seller that he

accepting them;
b. When he does any act in relation to the
of the Buyer goods which is inconsistent with the
ownership of the seller;
c. When he retains the goods after the
lapse of a reasonable time without
intimating to the seller that he has
rejected them.

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2. To pay price of the thing sold a the time and place stipulated in the contract.
When can the vendee suspend payment of the price?
a. Should the vendee be disturbed in the possession or ownership of the thing acquired
or;
b. Should he have reasonable grounds to fear such disturbance, by a vindicatory action or
a foreclosure of mortgage.
c. The suspension is effective until vendor has cause the disturbance or danger to cease,
unless the latter gives security for the return of the price in a proper case, or it has
been stipulated that, notwithstanding any such contingency, the vendee shall be bound
to make the payment. A mere act of trespass shall not authorize the suspension of the
payment of the price.

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1. Specific Performance :
a. The ownership of the goods has passed to the
buyer and he wrongfully neglects or refuses to
What are the pay for the goods according to the terms of the
contract of sale;

basic remedies b. The price is payable on a certain day, irrespective

of delivery or of transfer of title and the buyer
of each party wrongfully neglects or refuses to pay such price;
c. When the buyer refused to receive the goods
in case the 2.
upon the seller’s offer to deliver.
Action for damages
other breaches 3. Rescission by the seller
a. Repudiated the contract of sale;
his or her b. Has manifested his ability to perform his
obligations, or;
obligation? c. Has committed a breach thereof, the seller may
totally rescind the contract of his election so to do
to the buyer.

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1. A contract of sale is extinguished by:

Extinguishment a. The same causes as all other obligations;
of Sale b. Conventional redemption;
c. Legal Redemption

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2. Conventional Redemption – also known as Sale con Pacto de Retro. By express agreement, the seller is given the right
to repurchase the thing sold.
a. Period :
i. Within the period agreed upon which should not exceed ten years from the date of the contract;
ii. In the absence of an express agreement, the seller should redeem within four years from the date of the
contract.
b. Requisites:
i. Give his express intention to repurchase;
ii. Payment or valid tender of the redemption price. The redemption price consists of the following:
a) The price of the sale;
b) The expenses of the contract
c) Necessary and useful expenses made on the thing sold

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c. Effects of redemption – Redemption has the following effects:

i. Any money, fruits or other benefits to be received by the vendee as rent or
otherwise shall be considered as interest which shall be subject to usury law;
ii. The apparent seller may ask for the reformation of the instrument;
iii. The buyer is subrogated to the seller’s rights and actions.
• Failure to redeem shall have the effect of consolidation of ownership in the person of the
vendee.

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A sale with a right to repurchase or even a deed of absolute

sale shall be presumed to be an equitable mortgage in any of
the following cases:
a. When the price of a sale with right to repurchase is
unusually inadequate;
b. When the seller remains in possession as lessee or
otherwise;
c. When upon or after the expiration of the right to
Equitable repurchase another instrument extending the
period of redemption or granting a new period is
executed;
Mortgage d. When the purchaser retains for himself a part of
the purchase price;
e. When the seller binds himself to pay taxes on the
thing sold;
f. In any other case where it may be fairly inferred
that the real intention of the parties that the
transaction shall secure payment of a debt or the
performance of any other obligation
i. In case of doubt, a contract purporting to be
a sale with right to repurchase shall be
construed as an equitable mortgage.

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Is the right to be subrogated,

upon the same terms and
conditions stipulated in the
contract, in the place of tone who
acquires a thing by purchase or
Legal dation in payment or by any
other transaction whereby
Redemption ownership is transmitted by
onerous title.

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An interest in real property

consisting of a separate interest
in a unit in a residential,
industrial or commercial
building and an undivided
interest in common, directly or
Condominium indirectly, in the land on which it
is located and in other common
areas of the building.

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1. Condominium Corporation: a corporation which holds title to the common areas,

including the land, or the appurtenant interest in such areas for the purpose in which the
holders of separate interest shall automatically be members or shareholders, to the
exclusion of others, in proportion to the appurtenant interest of their respective units in
the common areas.
2. Interest in real property: Any transfer or conveyance of a unit or an apartment, office or
store or other space therein, shall include transfer or conveyance of the undivided interest
in the common areas, or in a proper case the membership or shareholdings in the
condominium corporation, provided, however, that where the common areas in the
condominium project are held by the owners of separate units as co-owners thereof, no
condominium unit therein shall be conveyed or transferred to person other than Filipino
citizens or corporations at least 60% of the capital of which belong to Filipino Citizens,
except in case of hereditary succession.

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3. Documents to Consider:
a. Master Deed
b. Declaration of Restrictions
c. Articles and by-laws of the condominium corporation or association
4. Rights of Condominium owner:
a. Exclusive right to paint, repaint, tile, wax, paper, or otherwise refinish decorate the inner
surfaces of the walls, ceilings, floor, windows and doors bounding his own unit.
b. Exclusive right to mortgage, pledge or encumber his condominium and to have the same
appraised independently of other condominiums but any obligation incurred by such
condominium owner is personal to him.
c. Absolute right to sell or dispose his condominium unless the master deed contains a
requirement that the property be first offered to the condominium owners within a reasonable
period of time before the same is offered to outside parties.

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5. Obligations of a condominium owner:

a. Pay realty tax of his unit
b. Share realty tax on land and common areas
c. Pay condominium dues and other assessments
d. Share in the insurance of common areas
e. Comply with restrictions of the condominium project
f. Give right of first refusal to the condominium corporation or unit
owners in case of sale (if required in the master deed)

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6. Grounds for partition of common areas (or dissolution of condominium corporation):

a. That 3 years after damage or destruction to the project which renders material part thereof unit
for its use prior thereto, the project has not been rebuilt or repaired substantially to its state
prior to its damage or destruction.
b. That damage or destruction to the project has rendered ½ or more of the units therein untenable
and that condominium owners holding in aggregate more than 30% interest in the common
areas (or of the members of the corporation, if non-stock, or the shareholders representing more
than 30% of the capital stock entitled to vote, in case of dissolution of condominium corporation)
are opposed to repair or restoration or remodeling or modernizing of the project.

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c. That the project or a material part thereof has been condemned or expropriated and
that the project is no longer viable, or that the condominium owners holding in aggregate more
than 70% in the common areas (or of the members of the corporation, if non-stock, or th
stockholders representing more than 70% of the capital stock entitled to vote, if a stock
corporation, in case of dissolution of condominium corporation) are opposed to continuation of
the condominium regime after expropriation or condemnation of a material portion thereof.
d. That the conditions for such partition by sale (or dissolution) set forth in the
declaration of restrictions, duly registered in accordance with the term so RA 4726, have been
met.
e. Voluntary dissolution of condominium corporation: by affirmative vote of all the
stockholders or members thereof at a general or special meeting duly called for the purpose,
provided that all the requirements of Title VI of the Corporation Code are complied with.

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Rules affecting condominium projects:

1. Non-forfeiture of payments: No installment payment made by a buyer in a
subdivision or condominium project for the lot or unit he contracted to buy shall
be forfeited in favor of the owner or developer when the buyer, after due notice to
the owner or developer, deists from further payment due to the failure of the
owner or developer to develop the subdivision or condominium project according
to the approved plans within the time limit for complying with the same. Such
buyer may, at his option,, be reimbursed the total amount paid including
amortization interests but excluding delinquency interests, buy excluding
delinquency interests, with interest thereon at the legal rate. (Section 23, PD 957)
2. Failure to pay installments: the rights of the buyer in the event of this failure to
pay the installments due for reasons other than the failure of the owner or
developer to develop the project shall be governed by RA 6552

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