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as the declaration of heirship and the waver of

DEFINITION AND ESSENTIAL rights neither recites the elements of either a
sale, a donation, or any other derivative mode
REQUISITES OF of acquiring ownership
CONTRACT OF SALE
PARTIES TO A CONTRACT OF SALE

CONTRACT OF SALE; defined
one of the contracting parties obligates himself
to transfer the ownership of and to the delivery
of a determinate thing and
the other to pay therefor a price certain
in money or its equivalent
REQUISITES
1. CONSENT OF THE CONTRACTING
PARTIES; by virtue of which, the vendor
obligates himself to transfer the ownership
of an to deliver a determinate thing, and the
vendee obligates himself to pay therefor a
price certain in money or its equivalent
2. OBJECT CERTAIN; which is the subject
matter of the contract
3. CAUSE OF THE OBLIGATION
IN RE: OBJECT, it must be
1. licit; and
2. determinate, or at least capable of
being made determinate without
the necessity of a new or further
agreement between the parties.
Art. 1489. All persons who are authorized in
this Code to obligate themselves, may enter
into a contract of sale, saving the modifications
contained in the following articles.
Where necessaries are those sold and
delivered to a minor or other person without
capacity to act, he must pay a reasonable
price therefor. Necessaries are those referred
to in Article 290.
see. art. 1490-1492
BASIS OF ART. 1491 and 1492
public policy and morality
- the law believes that human nature,
being what it is, would not be strong
enough to resists temptations which
arise as a result of the antagonism
between the interest of the vendor and
that of the vendee

IN RE: CAUSE
• as to the vendor, the cause is the
acquisition of the price certain in
money or its equivalent
• as to the vendee, the cause is the
acquisition of the thing which is the
object of the contract

CHARACTERISTICS OF A CONTRACT OF
SALE
1. consensual
2. bilateral and reciprocal
3. principal
4. onerous
5. commutative; and
6. nominate

Q: what is the status of deed of sale whee

state consideration had not in fact been
paid?

A: void
for absence of cause, when the deed shows
that there is such when none in the first place

Q: can a declaration of heirship and waiver

of rights be considered as a deed of sale in
favor of another?

A: NO

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SUBJECT MATTER • The goods which form the subject of a

contract of sale may be either
1. existing goods, owned or possessed
by the seller, or
THE THINGS MUST BE
2. goods to be manufactured, raised, or
acquired by the seller after the
• The thing must be licit and the vendor must perfection of the contract of sale, in this
have a right to transfer the ownership thereof
Title called "future goods."
at the time it is delivered.
There may be a contract of sale of
The sole owner of a thing may sell an
goods, whose acquisition by the seller
undivided interest therein.
depends upon a contingency which
may or may not happen.
• the thing be determinate is satisfied if at the
time the contract is entered into, the thing is
In the case of fungible goods, there
capable of being made determinate without
may be a
the necessity of a new or further agreement
between the parties. • sale of an undivided share of a
specific mass, though the seller
purports to sell and
Things having a potential existence
may be the object of the contract of • the buyer to buy a definite number,
weight or measure of the goods in
sale.
the mass, and
though the number, weight or
The efficacy of the sale of a
measure of the goods in the
mere hope or expectancy is
mass is undetermined.
deemed subject to the
condition that the thing will
By such a sale the buyer
come into existence.
becomes owner
in common of such a
The sale of a vain hope or
share of the mass as
expectancy is void.
the number, weight or
measure bought bears
EMPTIO RES to the number, weight
EMPTIO SPEI or measure of the
SPERATAE
mass.
sale of a thing with sale of mere hope or
potential of expectancy If the mass contains
existence less than the number,
weight or measure
the uncertainty bought,
pertains to - the buyer becomes
- the quality and - the existence of the owner of the whole
quantity, but not with the thing mass and
regard to the - the seller is bound to
existence of the make good the
thing deficiency from goods
of the same kind and
deals with future deals with present quality,
property thing UNLESS a
contrary intent
should the thing appears.
does not exists
- there is no contract - the contract of sale • Things subject to a resolutory condition may
for lack of essential still produces an be the object of the contract of sale.
requisities effect as the subject
matter of the
contract is the hope
itself.

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Art. 1466. In construing a contract

containing provisions characteristic of both EFFECTS IF THE THING WHICH IS THE
SUBJECT MATTER OF THE SALE IS LOST
the contract of sale and of the contract of
agency to sell, the essential clauses of the • If at the time the contract of sale is perfected,
whole instrument shall be considered. the thing which is the object of the contract
has been entirely lost,
the contract shall be without any effect.
CONTRACT OF CONTRACT TO
SALE SELL • But if the thing should have been lost in part
only,
title passes to the by agreement, the vendee may choose between
vendee upon ownership is 1. withdrawing from the contract and
delivery of the thing reserved in the 2. demanding the remaining part,
vendor and is not to paying its price in proportion to the
pass until full total sum agreed upon.
payment of the price.
Where the parties purport a sale of specific
the non-payment the full payment goods, and
operates as a operates as a the goods without the knowledge of
- negative resolutory - positive suspensive the seller have
condition condition - perished in part or have wholly or in
a material part so deteriorated in
vendor cannot title remains in the quality as to be substantially changed
recover the vendor in character,
ownership once lost - and when he seeks the buyer may at his option
- until and unless the to eject the vendee treat the sale:
contract is resolved because of non- 1. As avoided; or
or rescinded compliance by such 2. As valid in all of the
vendee with the existing goods or in so
s u s p e n s i v e much thereof as have not
condition, he is deteriorated, and as
enforcing the binding the buyer to pay
contract and not the agreed price for the
rescinding it goods in which the
ownership will pass, if the
BASTA: if all requisites for a contract of sale to sale was divisible.
exists are present and the vendor did not
make any reservation of ownership
- it is a contract of sale. OBLIGATION OF THE SELLER
CONTRACT FOR A PIECE OF WORK TO TRANSFER OWNERSHIP

CONTRACT OF CONTRACT OF Art. 1524. The vendor shall not be bound to

SALE PIECE OF WORK deliver the thing sold, if the vendee has not
paid him the price, or if no period for the
A contract for the the goods are to be payment has been fixed in the contract.
delivery at a certain manufactured
price of an article 1. specially for the
which the vendor in customer and
the ordinary course 2. upon his special
of his business order, and not for
manufactures or the general market,
procures for the
general market,
whether the same is
on hand at the time
or not

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PRICE
REQ: the price must be certain
WHEN IS PRICE DEEMED CERTAIN
when the price is
1. fixed in their stipulation
2. it be so with reference to another
thing certain, or
3. that the determination thereof be
left to the judgment of a special
person or persons.
RULE WHEN PRICE IS FIXED BY THIRD
PERSON
RULE:
The fixing of the price can never be left to the
discretion of one of the contracting parties.
However, if the price fixed by one of
the parties is accepted by the other,
the sale is perfected.
CONTRACT SHALL BE
INEFFICACIOUS
Should such person or persons be
unable or unwilling to fix it,
UNLESS
the parties subsequently agree
upon the price.
WHEN THE COURT MAY FIX THE
PRICE INSTEAD
If the third person or persons acted in
bad faith or by mistake.
NOTE: if the price is fixed by one of
the contracting parties, while the price
is inefficacious, it does not affect the
validity of the sale.
- the vendee is only bound to pay the
reasonable price, after the thing or a
part of it has been delivered to him and
appropriated
------------
Where such third person or persons
are prevented from fixing the price or
terms
by fault of the seller or the
buyer, the party not in fault
may have such remedies
against the party in fault as are
allowed the seller or the buyer,
as the case may be.
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DOES INADEQUACY OF THE PRICE
A F F E C T T H E VA L I D I T Y O F T H E
CONTRACT OF SALE
NO: Gross inadequacy of price does not affect
a contract of sale
EXE: as it may indicate
• a defect in the consent, or
• that the parties really intended a
donation or some other act or
contract.
gross inadequacy of the price would
constitute a defect in the consent;
when
- the price is shocking to the morals
EFFECT OF SIMULATED PRICE
the sale is void,
BUT the act may be shown to have
been in reality a donation, or some
other act or contract.
PRICE WITH REFERENCE TO ANOTHER
THING CERTAIN
The price of securities, grain, liquids, and other
things shall also be considered certain,
WHEN the price fixed is that which the
thing sold would have
1. on a definite day, or
2. in a particular exchange or market,
or
3. when an amount is fixed above or
below the price on such day, or
4. in such exchange or market,
provided said amount be certain.
WHERE THE PRICE CANNOT [STILL] BE
DETERMINED IN ANY OTHER MANNER; the
contract is inefficacious.
However, if the thing or any part
thereof has been delivered to and
appropriated by the buyer
- he must pay a reasonable price
therefor.
What is a reasonable price is a
question of fact
dependent on the
circumstances of each
particular case.
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IN RE: BARTER
WHAT IS THE NATURE OF THE CONTRACT FORMATION OF CONTRACT OF
IF THE CONSIDERATION IS PARTLY IN
MONEY AND PARTLY IN ANOTHER THING
SALE

RULE: would depend upon the intention of the

WHEN IS CONTRACT OF SALE
parties, as manifested, whether it is to be
PERFECTED
treated as a sale or barter
at the moment there is a meeting of minds
1. upon the thing which is the object of the
IF SUCH INTENTION DOES NOT
contract and
CLEARLY APPEAR
2. upon the price.
it shall be considered as a
• BARTER; if the value of the thing FROM T H AT MOMENT
given as a part of the consideration
[PERFECTION]
exceeds the amount of the money
the parties may reciprocally demand
or its equivalent;
performance,
• SALE; if otherwise. subject to the provisions of the
law governing the form of
supposing, A offered his car worth
contracts.
100k plus 200k in cash in exchange of
B's diamond ring worth 250k
NOTE:
- naalala ko kay URIBS
when one of the vendor is outside the
- still it is barter, as the diamond ring
country, her consent may be inferred
has greater in value than the cash
when she is aware and participated in
being offered by A. in here, the value
the negotiation, and a contract of sale
of the car is irrelevant, always the point
was perfected from the time they
of reference is the cash involved and
agreed on the price and the object of
the value of the thing being exchange
the sale
with.
~ pero please confirm this first.
IN RE: AS TO THE FORMS
Subject to the provisions of the Statute
EARNEST MONEY; defined
of Frauds and of any other applicable
part of the purchase price advanced by he
statute, a contract of sale may be
vendee to the vendor as a token of the
made
perfection of the contract.
1. in writing,
2. by word of mouth,
ART. 1482whenever earnest money is
3. partly in writing and partly by word
given in a contract of sale,
of mouth, or
- it shall be considered as
4. may be inferred from the conduct
• part of the price and of the parties.
• as a proof of the perfection of
the contract
IN CASE OF AUCTION SALE

Where goods are put up for sale by auction in

lots,
each lot is the subject of a separate
contract of sale.

A SALE BY AUCTION IS PERFECTED; when

the auctioneer announces its perfection by
1. the fall of the hammer, or
2. in other customary manner.

Until such announcement is made,

• any bidder may retract his bid; and
• the auctioneer may withdraw the
goods from the sale
UNLESS the auction has been
announced to be without
reserve.

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A right to bid may be reserved expressly by or
on behalf of the seller, unless otherwise
provided by law or by stipulation.
Where notice has not been given that
a sale by auction is subject to a right to
bid on behalf of the seller,
- it shall not be lawful for the seller
1. to bid himself or
2. to employ or induce any person to
bid at such sale on his behalf or
for the auctioneer,
3. to employ or induce any person to
bid at such sale on behalf of the
seller or knowingly to take any bid
from the seller or any person
employed by him.
Any sale contravening this rule
may be treated as fraudulent
by the buyer.
EFFECT OF THE PERFECTION OF
CONTRACT OF SALE IN RE TO THE
OBJECT OF THE SALE
• the vendee acquires only a personal right
over the thing.
HENCE: prior to delivery the thing was
attached by the vendor's creditor
- it defeats the vendee's right over the
thing
REMEDY: to proceed against A for
indemnification
if after delivery; the vendee who now becomes
the owner of the thing (principal), also
becomes the owner of the accessory.
HENCE; suppossing bumili ng fresh
oyster, pagkatapos ibigay ni waiter kay
customer, nakita ni customer na may
pearls. ang may ari ng pearls ay si
customer
PROMISE TO BUY AND SELL
Art. 1479. A promise to buy and sell a
determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell
a determinate thing for a price certain is
binding upon the promissor if the promise is
supported by a consideration distinct from the
price. ~ this refers to an option contract
OPTION CONTRACT
is an agreement granting a privilege to
buy or sell within an agreed time and
at a determinate price.
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- it is separate and distinct contract
from that which the parties may enter
upon the consummation of the option.
- supported by a separate
consideration
Q: lessee is given an exclusive
option to purchase the leased
property by the lessor in the
contract of lease, within 30 days
from the time the lessor decided to
sell the subject property. what is the
nature of the option?
A: RIGHT OF FIRST REFUSAL, not
an option contract
- right of first refusal is integral part of
the contract of lease. the consideration
is built into the reciprocal obligation of
the parties.
OPTION; when can the vendor
withdraw the offer
IF NOT SUPPORTED BY SEPARATE
AND DISTINCT CONSIDERATION
- the vendor may withdraw at any time,
before acceptance is communicated to
him
IF SUPPORTED BY
CONSIDERATION
- the period is binding upon the
promissor
EFFECT OF ACCEPTANCE BY THE
VENDEE; prior to withdrawal by the
vendor and before the expiration of
the stipulated period
- the transaction becomes a bilateral
contract to sell and buy
meeting of minds. perfected
contract of sake
- in here; parties may now
then reciprocally demand for
the performance
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TRANSFER OF OWNERSHIP
WHEN OWNERSHIP IS TRANSFERRED TO
THE VENDEE
upon the actual or constructive delivery
thereof.
UNLESS
The parties stipulates that ownership
in the thing shall not pass to the
purchaser
until he has fully paid the
price.
THE THING SHALL BE UNDERSTOOD AS
DELIVERED; when
it is placed in the control and possession of the
vendee.
EXE: WHEN THERE IS DEEMED
DELIVERY
• When the sale is made through a
public instrument,
the execution thereof shall be
equivalent to the delivery of
the thing which is the object of
the contract,
if from the deed the
contrary does not
appear or cannot
clearly be inferred.
EXE: if there is an impediment
that may prevent the passing
of the property from the hands
of the vendor into those of the
vendee.
- ie. when the vendee cannot
have the enjoyment and
material tenancy of the thing
and make use of it himself,
because such is opposed by
another.
- in here, there is no delivery.
KEYWORD; control and not
possession
• With regard to movable property, its
delivery may also be made by
1. the delivery of the keys of the
place or depository where it is
stored or kept; or
2. by the mere consent or
agreement of the contracting
parties,
if the thing sold
a. c a n n o t be
transferred to
the possession
of the vendee at
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the time of the
sale, or
b. i f t h e l a t t e r
already had it in
his possession
for any other
reason.
• There may also be tradition
constitutum possessorium.
• with regard to incorporeal property,
it may be made by:
1. e x e c u t i o n o f a p u b l i c
instrument;
2. b y p l a c i n g t h e t i t l e o f
ownership in the possession
of the vendee; or
3. use by the vendee of his
rights, with the vendor's
consent
SALE OR RETURN
goods delivered to the buyer under sale or
return,
to give the buyer an option to return
the goods instead of paying the price,
UPON DELIVERY
- ownership passes to the buyer
HOWEVER; the buyer has the
right to:
revest the ownership in the
seller by
- returning or tendering the
goods:
• within the time fixed in the
contract, or,
• if no time has been fixed,
within a reasonable time.
SALE ON TRIAL OR SALE ON APPROVAL/
ON SATISFACTION
OWNERSHIP PASSES TO THE BUYER
not from delivery, but after delivery and after
the buyer
• signifies his approval or acceptance to
the seller or
• does any other act adopting the
transaction;
IF THE BUYER DOES NOT SIGNIFY
HIS ACCEPTANCE; when deemed
accepted
- when he retains the goods without
giving notice of rejection,
AFTER
• the expiration of the time
for the return of the goods
as stipulated; or
• after the lapse of
reasonable time, when no
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stipulated period within
which to return
What is a reasonable time is a
question of fact.
AS AN EXE TO THE RULE: that despite the
thing is placed in the possession and
control of the vendee, still there is no
delivery
• When there is a contract of sale of specific
goods, the seller may, by the terms of the
contract, reserve the right of possession or
ownership in the goods until certain
conditions have been fulfilled.
The right of possession or ownership
may be thus reserved notwithstanding
the delivery of the goods to the buyer
or to a carrier or other bailee for the
purpose of transmission to the buyer.
IN RE: BILL OF LADING
T H E R E I S R E S E R VAT I O N O F
OWNERSHIP WHEN
Where goods are shipped, and by the
bill of lading the goods are deliverable
• to the seller or his agent, or
• to the order of the seller or of his
agent,
the seller thereby reserves the
ownership in the goods.
BUT THERE IS TRANSFER OF
OWNERSHIP; when
- the reservation made by the seller
was only for the purpose of securing
payment
tama be interpretation ko?
But, if except for the form of the bill of
lading, the ownership would have
passed to the buyer on shipment of the
goods, the seller's property in the
goods shall be deemed to be only for
the purpose of securing performance
by the buyer of his obligations under
the contract.
T H E R E I S R E S E R VAT I O N O F
POSSESSION WHEN
Where goods are shipped, and by the
bill of lading the goods are deliverable
• to order of the buyer or of his agent,
• but possession of the bill of lading is
retained by the seller or his agent,
the
WHEN IS THE BUYER BOUND TO
RETURN THE BILL OF LADING
Where the seller of goods draws on
the buyer for the price and transmits
the bill of exchange and bill of lading
together to the buyer to secure
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acceptance or payment of the bill of
exchange, and
he does not honor the bill of exchange,
and if he wrongfully retains the bill of
lading
he acquires no added right thereby.
If, however, the bill of lading provides
that the goods are deliverable
• to the buyer or to the order of the
buyer, or
• is indorsed in blank, or
• to the buyer by the consignee
named therein,
one who purchases in good faith, for
value, the bill of lading, or goods from
the buyer
will obtain the ownership in the
goods,
- although the bill of exchange
has not been honored,
PROVIDED that
such purchaser has received
delivery of the bill of lading
indorsed by the consignee
named therein, or of the
goods,
without notice of the
facts making the
transfer wrongful.
WHEN THERE IS NO DELIVERY
• where goods are sold by a person who is not
the owner thereof, and
• who does not sell them under authority or
with the consent of the owner,
= the buyer acquires no better title to the
goods than the seller had,
UNLESS: the owner of the goods is by
his conduct precluded from denying
the seller's authority to sell.
EXE:
1. if the owner, buy his own conduct, is
precluded from denying the seller's
authority to sell
2. The provisions of any factors' act, recording
laws, or any other provision of law enabling
the apparent owner of goods to dispose of
them as if he were the true owner thereof;
3. The validity of any contract of sale under
statutory power of sale or under the order
of a court of competent jurisdiction;
4. Purchases made in a merchant's store, or
in fairs, or markets, in accordance with the
Code of Commerce and special laws.
NOTE: for #3
if the property is movable, the true owner may
still recover it from the vendee. however, if the
vendee is a buyer in gf, the true owner must
first reimburse the latter for the price paid.
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INJURY TO OR BENEFIT FROM THE THING

RISK OF LOSS SOLD AFTER THE PERFECTION
ART. 1480

This rule shall apply to the sale of fungible

AT SELLER'S RISK
things, made independently and for a single
until the ownership therein is transferred to the
price, or without consideration of their weight,
buyer.
number, or measure.
UNLESS: otherwise agreed
Should fungible things be sold for a price fixed
according to weight, number, or measure, the
ART. 1504
risk shall not be imputed to the vendee until
AT BUYER'S RISK
they have been weighed, counted, or
when the ownership therein is transferred to
measured and delivered, unless the latter has
the buyer
incurred in delay.
whether actual delivery has been
made or not.
• Every person obliged to give something is
also obliged to take care of it with the proper
EXE:
diligence of a good father of a family,
unless the law or the stipulation of the
• Where delivery of the goods has parties requires another standard of
been made to the buyer or to a
care.
bailee for the buyer, in pursuance of
the contract and
the ownership in the goods • The creditor has a right to the fruits of the
thing from the time the obligation to deliver it
has been retained by the seller
arises.
- merely to secure
However, he shall acquire no real right
performance by the buyer of
over it until the same has been
his obligations under the
delivered to him.
contract,
the goods are at the
buyer's risk from the • When what is to be delivered is a
determinate thing,
time of such delivery;
the creditor, in addition to the right
granted him by Article 1170, may
• Where actual delivery has been compel the debtor to make the
delayed
delivery.
through the fault of either the
buyer or seller
the goods are at the • If the thing is indeterminate or generic,
he may ask that the obligation be
risk of the party in
complied with at the expense of the
fault.
debtor.
RULES IN CASE OF
LOSS, D E T E R I O R AT I O N OR • If the obligor delays, or has promised to
deliver the same thing to two or more
IMPROVEMENT OF THE THING BEFORE
persons who do not have the same interest,
THE DELIVERY
he shall be responsible for any
1. If the thing is lost without the fault of the
fortuitous event until he has effected
debtor, the obligation shall be extinguished;
the delivery.
2. If the thing is lost through the fault of the
debtor, he shall be obliged to pay damages;
3. When the thing deteriorates without the • An obligation which consists in the delivery of
a determinate thing shall be extinguished if it
fault of the debtor, the impairment is to be
should be lost or destroyed without the fault
borne by the creditor;
of the debtor, and before he has incurred in
4. If it deteriorates through the fault of the
delay.
debtor, the creditor may choose between
EXE:
the rescission of the obligation and its
When by law or stipulation, the obligor
fulfillment, with indemnity for damages in
is liable even for fortuitous events,
either case;
- the loss of the thing does not
5. If the thing is improved by its nature, or by
extinguish the obligation, and
time, the improvement shall inure to the
- he shall be responsible for damages.
benefit of the creditor;
6. If it is improved at the expense of the
debtor, he shall have no other right than
that granted to the usufructuary.

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The same rule applies when the nature

of the obligation requires the
assumption of risk.

3 VIEWS AS TO WHO HAS THE RISK OF

LOSS

when the object of the sale is lost before

delivery, the obligation is extinguished
• since the contract of sale is reciprocal in
nature, it shall extinguish not only the
obligation of the vendor to deliver. but as well
as the correlative duty of the vendee to pay
the price
• since before delivery the seller (generally) is
still the owner, he shall bear the risk of loss

when the thing is lost without the fault of

the vendor, he is released from his
obligation to deliver the thing, while the
vendee's obligation to pay the price
subsists
• IF; the vendee had paid in advance
• in here, the vendee assumes the risk of loss
by fortuitous event
- from the time of the perfection of the
contract of sale, up to the time of the
delivery.

art. 1504 applies only to fungible goods,

while art. 1480 applies to specific goods.

JURADO:
THE FIRST VIEW IS CORRECT
- being more just and equitable, also follows
the principle of res perit domino

Q: nasunog yung object after the delivery

to the buyer. may partial payment na. who
has the burden of risk of loss?

A: the buyer
- may delivery na kasi. hence, liable to pay the
remaining price.

NOTE:
after the delivery to the buyer, but the seller
retains right of ownership until the price is fully
paid, the risk of loss due to fortuitous event
shall be assumed by the buyer.
- as mandated by law

when all of the elements of a valid contract of

sale are present, there is a perfected contract
of sale. after perfection, regardless on whether
the object has been lost due to causes beyond
the control of either party, the contract remains
valid. if there is a delivery prior to such loss,
the buyer shall assume the risk of loss.

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WHO MAY NEGOTIATE NEGOTIABLE

DOCUMENT OF TITLE DOCUMENT OF TITLE
1. By the owner therefor; or
2. By any person to whom the possession or
custody of the document has been
DOCUMENT OF TITLE; defined
entrusted by the owner,
an instrument in which it is stated that the
goods referred to therein will be delivered to
REQ FOR #2:
the bearer, or to the order of any person
named in such document • if by the terms of the document the
bailee issuing the document
- undertakes to deliver the
A NDT MAY IS NEGOTIATED BY DELIVERY;
goods to the order of the
where
person to whom the
possession or custody of the
• by the terms of the document the carrier, document has been entrusted,
warehouseman or other bailee issuing the
or
same
undertakes to deliver the goods
- to the bearer; • if at the time of such entrusting the
document is in such form that it may
be negotiated by delivery.
• Where by the terms of the document the
carrier, warehouseman or other bailee
RIGHTS ACQUIRED BY PERSON TO WHOM
issuing the same
NDT HAS BEEN DULY NEGOTIATED
undertakes to deliver the goods
- to the order of a specified person,
and • Such title to the goods
1. a s t h e p e r s o n n e g o t i a t i n g t h e
- such person or a subsequent
document to him had or had ability to
endorsee of the document has
convey to a purchaser in good faith for
indorsed it in blank or to the bearer.
value; and also
2. as the person to whose order the
goods were to be delivered by the
- Where by the terms of a negotiable document
terms of the document had or had
of title the goods are deliverable to bearer or
ability to convey to a purchaser in good
- where a negotiable document of title has
faith for value; and
been indorsed in blank or to bearer,
- any holder may indorse the same
- to himself or to any specified person, • The direct obligation of the bailee issuing the
document
and
to hold possession of the goods for
in such case the document shall
him
thereafter be negotiated only by the
- according to the terms of the
endorsement of such endorsee.
document as fully as if such bailee had
contracted directly with him.
A N D T M AY B E N E G O T I AT E D B Y
ENDORSEMENT; where
IMPLIED WARRANTIES OF PERSON WHO
by the endorsement of the person to whose
NEGOTIATED NDT
order the goods are by the terms of the
A person who for value negotiates or transfers
document deliverable.
a document of title by endorsement or delivery,
including one who assigns for value a claim
Such endorsement may be
secured by a document of title unless a
• in blank, contrary intention appears, warrants:
• to bearer or 1. That the document is genuine;
• to a specified person. 2. That he has a legal right to negotiate or
transfer it;
If indorsed to a specified person,
3. That he has knowledge of no fact which
it may be again negotiated by the
would impair the validity or worth of the
endorsement of such person
document; and
in blank, to bearer or to
4. That he has a right to transfer the title to the
another specified person.
goods and that the goods are merchantable
or fit for a particular purpose, whenever
Subsequent negotiations may be
such warranties would have been implied if
made in like manner.
the contract of the parties had been to
transfer without a document of title the
goods represented thereby.

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 THE AWESOME NOTES
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1506. Where the seller of goods has a
voidable title thereto, but his title has not been
avoided at the time of the sale, the buyer
acquires a good title to the goods, provided he
buys them in good faith, for value, and without
notice of the seller's defect of title.
Art. 1510. If a document of title which contains
an undertaking by a carrier, warehouseman or
other bailee to deliver the goods to bearer, to a
specified person or order of a specified person
or which contains words of like import, has
placed upon it the words "not negotiable,"
"non-negotiable" or the like, such document
may nevertheless be negotiated by the holder
and is a negotiable document of title within the
meaning of this Title. But nothing in this Title
contained shall be construed as limiting or
defining the effect upon the obligations of the
carrier, warehouseman, or other bailee issuing
a document of title or placing thereon the
words "not negotiable," "non-negotiable," or
the like.
Art. 1511. A document of title which is not in
such form that it can be negotiated by delivery
may be transferred by the holder by delivery to
a purchaser or donee. A non-negotiable
document cannot be negotiated and the
endorsement of such a document gives the
transferee no additional right.
Art. 1514. A person to whom a document of
title has been transferred, but not negotiated,
acquires thereby, as against the transferor, the
title to the goods, subject to the terms of any
agreement with the transferor.
If the document is non-negotiable, such person
also acquires the right to notify the bailee who
issued the document of the transfer thereof,
and thereby to acquire the direct obligation of
such bailee to hold possession of the goods for
him according to the terms of the document.
Prior to the notification to such bailee by the
transferor or transferee of a non-negotiable
document of title, the title of the transferee to
the goods and the right to acquire the
obligation of such bailee may be defeated by
the levy of an attachment of execution upon
the goods by a creditor of the transferor, or by
a notification to such bailee by the transferor or
a subsequent purchaser from the transfer of a
subsequent sale of the goods by the transferor.
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Art. 1515. Where a negotiable document of
title is transferred for value by delivery, and the
endorsement of the transferor is essential for
negotiation, the transferee acquires a right
against the transferor to compel him to
endorse the document unless a contrary
intention appears. The negotiation shall take
effect as of the time when the endorsement is
actually made.
Art. 1517. The endorsement of a document of
title shall not make the endorser liable for any
failure on the part of the bailee who issued the
document or previous endorsers thereof to
fulfill their respective obligations.
Art. 1518. The validity of the negotiation of a
negotiable document of title is not impaired by
the fact that the negotiation was a breach of
duty on the part of the person making the
negotiation, or by the fact that the owner of the
document was deprived of the possession of
the same by loss, theft, fraud, accident,
mistake, duress, or conversion, if the person to
whom the document was negotiated or a
person to whom the document was
subsequently negotiated paid value therefor in
good faith without notice of the breach of duty,
or loss, theft, fraud, accident, mistake, duress
or conversion.
Art. 1519. If goods are delivered to a bailee by
the owner or by a person whose act in
conveying the title to them to a purchaser in
good faith for value would bind the owner and
a negotiable document of title is issued for
them they cannot thereafter, while in
possession of such bailee, be attached by
garnishment or otherwise or be levied under
an execution unless the document be first
surrendered to the bailee or its negotiation
enjoined. The bailee shall in no case be
compelled to deliver up the actual possession
of the goods until the document is surrendered
to him or impounded by the court.
Art. 1520. A creditor whose debtor is the owner
of a negotiable document of title shall be
entitled to such aid from courts of appropriate
jurisdiction by injunction and otherwise in
attaching such document or in satisfying the
claim by means thereof as is allowed at law or
in equity in regard to property which cannot
readily be attached or levied upon by ordinary
legal process.
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RIGHT OF RETENTION AND LIEN

REMEDIES OF THE SELLER
WHEN AVAILABLE

RIGHT OF RETENTION
REMEDIES OF AN UNPAID SELLER;
the unpaid seller of goods who is in
this is despite the ownership has passed to
possession of them is entitled to retain
the buyer
possession of them until payment or
1. A lien on the goods or right to retain them
tender of the price in the following
for the price while he is in possession of
cases, namely:
them;
1. Where the goods have been sold
2. In case of the insolvency of the buyer, a
without any stipulation as to credit;
right of stopping the goods in transitu after
2. Where the goods have been sold
he has parted with the possession of them;
on credit, but the term of credit
3. A right of resale as limited by this Title;
has expired;
4. A right to rescind the sale as likewise
3. W h e r e t h e b u y e r b e c o m e s
limited by this Title.
insolvent.
PLUS: where the ownership has not passed to
LIEN
the buyer
Where an unpaid seller has made part
- a right of withholding delivery similar to
delivery of the goods,
he may exercise his right of
NOTE: This right is coextensive with
lien on the remainder,
his rights of lien and stoppage in
transitu where the ownership has
UNLESS
passed to the buyer.
such part delivery has been
made under such
WHEN IS SELLER OF GOODS
circumstances as to show
D E E M E D T O B E A N U N PA I D
- an intent to waive the lien or
SELLER
right of retention
1. when the whole price has not
been paid or tendered; or
The seller may exercise his right of lien
2. when a bill of exchange or other
notwithstanding that he is in
negotiable instrument has been
possession of the goods as agent or
received a conditional payment,
bailee for the buyer.
and the condition on which it was
received has not been broken by
WHEN DOES THE UNPAID SELLER
reason of the dishonor of the
LOSES HIS RIGHT OF RETENTION
instrument, the insolvency of the
AND LIEN
buyer or otherwise
1. When he delivers the goods to a
carrier or other bailee for the
NOTE: THE TERM SELLER HERE
purpose of transmission to the
INCLUDES
buyer without reserving the
1. an agent of the seller to whom the
ownership in the goods or the right
bill of lading has been indorsed, or
to the possession thereof;
2. a consignor or agent who has
2. When the buyer or his agent
himself paid,
lawfully obtains possession of the
3. is directly responsible for the price;
goods; or
or any other person who is in the
3. By waiver thereof.
position of a seller.
NOTE:
The unpaid seller of goods, having a
lien thereon, does not lose his lien by
reason only that he has obtained
judgment or decree for the price of the
goods.

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RIGHT OF STOPPAGE IN TRANSITU
NATURE OF THIS RIGHT
the right of the unpaid seller to resume
possession of the goods at anytime
while they are in transit
- by virtue of which he will then be
entitled to the same rights in regard to
the goods as he would have had if he
had never parted with the possession
WHEN AVAILABLE:
1. when the seller is an unpaid seller;
2. after he had already parted with
the possession of the goods; and
3. the buyer is or becomes insolvent
HENCE; with respect to #2
- lien and stoppage in transitu is
repugnant to each other
- while withholding delivery is not; kasi
ownership still did not pass to buyer.
HOW IS THE RIGHT EXERCISED
either by:
1. obtaining actual possession of the
goods or
2. by giving notice of his claim to the
carrier or other bailee in whose
possession the goods are.
IN CASE OF BY GIVING NOTICE; it
may be given either to the person
• having actual possession of the
goods or
• to his principal
IN CASE NOTICE IS GIVEN
TO THE PRINCIPAL; req
- the notice must be given at
such time and under such
circumstances that the
principal, by the exercise of
reasonable diligence, may
prevent a delivery to the buyer.
OBLIGATION OF THE CARRIER OR
OTHER BAILEE IN POSSESSION OF
THE GOODS (after receipt of the
notice by the unpaid seller)
they must redeliver the goods to, or
according to the direction of, the seller
- the expense for such delivery shall
be borne by the seller
EXE: WHEN THE BAILEE OR
CARRIER IS NOT OBLIGED OR MAY
REFUSE TO COMPLY WITH THE
INSTRUCTION OF THE UNPAID
SELLER
- if the NDT representing the goods
has been issued by the carrier or other
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bailee, and such is not surrendered to
him for cancellation
A F T E R T H E U N PA I D S E L L E R
REGAIN POSSESSION OF THE
GOODS IN TRANSIT; effect
the unpaid seller is
- entitled to the same rights in regard
to the goods as he would have had if
he had never parted with the
possession.
GOODS ARE DEEMED IN TRANSIT;
when
• From the time when they are
delivered to a carrier by land, water,
or air, or other bailee for the
purpose of transmission to the
buyer,
until the buyer, or his agent in
that behalf, takes delivery of
them from such carrier or
other bailee;
• If the goods are rejected by the
buyer, and the carrier or other bailee
continues in possession of them,
even if the seller has refused
to receive them back.
WHEN DEEMED NO LONEGR IN
TRANSIT
1. If the buyer, or his agent in that
behalf, obtains delivery of the
goods before their arrival at the
appointed destination;
2. If, after the arrival of the goods at
the appointed destination, the
carrier or other bailee
acknowledges to the buyer or his
agent that he holds the goods on
his behalf and continues in
possession of them as bailee for
the buyer or his agent; and it is
immaterial that further destination
for the goods may have been
indicated by the buyer;
3. If the carrier or other bailee
wrongfully refuses to deliver the
goods to the buyer or his agent in
that behalf.
If the goods are delivered to a ship,
freight train, truck, or airplane
chartered by the buyer, it is a question
depending on the circumstances of the
particular case, whether they are in the
possession of the carrier as such or as
agent of the buyer.
If part delivery of the goods has been
made to the buyer, or his agent in that
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 THE AWESOME NOTES
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behalf, the remainder of the goods
may be stopped in transitu, unless
such part delivery has been under
such circumstances as to show an
agreement with the buyer to give up
possession of the whole of the goods.
RIGHT OF RESALE
WHEN AVAILABLE
1. Where the goods are of perishable
nature,
2. w h e r e t h e s e l l e r e x p r e s s l y
reserves the right of resale in case
the buyer should make default, or
3. where the buyer has been in
default in the payment of the price
for an unreasonable time,
REQUIREMENT
• an unpaid seller must have a right of
lien or having stopped the goods in
transitu.
He shall not thereafter be liable to the
original buyer upon the contract of sale
or for any profit made by such resale,
but may recover from the buyer
damages for any loss occasioned by
the breach of the contract of sale.
EFFECT OF RESALE
the buyer acquires a good title as
against the original buyer.
NOT REQUIRED FOR THERE TO
HAVE A VALID RESALE
• notice of an intention to resell the
goods be given by the seller to the
original buyer.
EXE: such is necessary in
order to determine whether the
buyer had been in default for
an unreasonable time
- when the resale is not based
on the perishable nature of the
goods, or such right is nit
expressly given by stipulation
of the parties.
• notice of the time and place of such
resale should be given by the seller
to the original buyer.
HOW RESALE IS EFFECTED
either public or private sale
DEPENDING ON
The seller's exercise of
reasonable care and
judgment.
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ONLY LIMITATION IS
- He cannot, however, directly
or indirectly buy the goods.
RIGHT TO RESCIND
WHEN AVAILABLE
1. where he expressly reserved the
right to do so in case the buyer
should make default
2. where the buyer had been in
default in the payment of the price
for unreasonable time
3. that the seller should have a right
of lien or should have stopped the
goods in transitu
EFFECTS OF RESCISSION
1. the unpaid seller shall resume
ownership in the goods
2. he shall no longer be liable to the
buyer upon the contract of sale
3. may recover from the buyer
damages for any loss occasioned
by the breach of the contract
NOTE:
the overt act of rescission need not be
communicated to the vendee.
- however, notice of his intention to
rescind is required to be given to the
vendee
WHEN
there is an issue of whether
the vendee has been in default
for an unreasonable lenght of
time
NOTE:
Q: should there had been a delivery to the
buyer prior to payment and the buyer sold
the same goods to another person, does it
affect the right of lien or stoppage in
transitu of an unpaid seller
A: NO
the unpaid seller's right of lien or stoppage in
transitu is not affected by any sale, or other
disposition of the goods which the buyer may
have made,
EXE:
the seller has assented thereto.
If, however, a negotiable document of title has
been issued for goods, no seller's lien or right
of stoppage in transitu shall defeat the right of
any purchaser for value in good faith to whom
such document has been negotiated, whether
such negotiation be prior or subsequent to the
notification to the carrier, or other bailee who
issued such document, of the seller's claim to
a lien or right of stoppage in transitu.
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 THE AWESOME NOTES
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W H E N T H E C O N T R A C T M AY B E
RESCINDED IN SALE OF GOODS BY
DESCRIPTION OR BY SAMPLE
if the bulk of the goods delivered
DO NOT
• correspond with the description or the
sample, and
NOTE:
if the contract be by sample as well as
description,
TO BE SUFFICIENT; the bulk must
correspond with the:
1. sample; AND
2. with the description.
The buyer shall have a reasonable opportunity
of comparing the bulk with the description or
the sample.
RECTO LAW
ART, 1484: REMEDIES OF THE SELLER IN;
• sale of personal property in installments;
and
• lease of personal property with option to
buy, where the lessor has deprived the
lessee of the possession or enjoyment of
the thing
1. Exact fulfillment of the obligation, should
the vendee fail to pay;
2. Cancel the sale, should the vendee's failure
to pay cover two or more installments;
3. Foreclose the chattel mortgage on the thing
sold, if one has been constituted, should
the vendee's failure to pay cover two or
more installments. In this case, he shall
have no further action against the
purchaser to recover any unpaid balance of
the price. Any agreement to the contrary
shall be void.
NOTE: in lease of personal property
with option to buy
- a stipulation that the installments or
rents paid shall not be returned to the
vendee or lessee shall be valid insofar
AS LONG AS:
the same may not be
unconscionable under the
circumstances.
Art. 1487. The expenses for the execution and
registration of the sale shall be borne by the
vendor, unless there is a stipulation to the
contrary.
Art. 1488. The expropriation of property for
public use is governed by special laws. (1456)
NOTE: THE REMEDIES REFERRED IN ART.
1484 ARE IN ALTERNATIVE;
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not in cumulative
BASIS: the principle that no one shall enrich
himself at the expense of another.
- hence, once the seller opted to enforce the
contract, he is barred from rescinding or
canceling the same.
NOTES: supposing there are 2
mortgages. after the default of the
vendee, the vendor opted tho
foreclose the first mortgage. in case of
deficiency, he can no longer foreclose
the second mortgage
- for the exercise of right in full,
forecloses the right to exercise other
remedies.
NOTE: same rules in going against the
guarantor for the collection of
deficiency after the foreclosure.
- kasi, should the guarantor be
compelled to pay, it will give the
guarantor a cause of action to proceed
against the vendee-debtor for
reimbursement.
NOTE: RECTO LAW DOES NOT
APPLY WHEN
- after the foreclosure, what the vendor
seeks is for the collection of
reasonable expenses, expended to
1. effect the seizure of the chattel
mortgage; and
2. r e a s o n a b l e a t t y ' s f e e i n
prosecuting the action for replevin
RESCISSION AND FORECLOSURE
APPLIES ONLY; when
- should the vendee fails to pay for 2 or
more installments
NOTE: ART. 1484
- applies only is sale of personal
property in installment
PURPOSE OF RECTO LAW
the underprivileged mortgagors must
be afforded full protection against the
rapacity of the mortgages, which not to
be construed as to deprive the
mortgagee protection against perverse
mortgagor
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ie: where lease of personal property with an
option to buy, but the lessor has deprived
the lessee of the possession and
enjoyment.
DITO; bale
- in a lease with an option to buy, should the
lessee fails to pay the rents for 3 months, and
the vendor took possession of the property;
after such, the vendor can no longer collect the
unpaid rents
AS: taking possession of the thing
leased, the lessor shall have no further
action against the lessee to recover
any unlaid rent.
- and any agreement to the contrary
shall be void
MACEDA LAW
(not included in the syllabus; kasi Maceda
Law is essentially a remedy granted to the
buyer and not to the seller, which is not
included in the syllabus)
WHEN APPLICABLE
1. sale or financing of real estate on
installment payments, including residential
condominium apartments but excluding
industrial lots, commercial buildings and
sale tenants under RA 3844, as amended
by RA 6389
2. where the buyer has paid at least 2 years
of installments.
RIGHTS OF THE BUYER
• to pay, without additional interest, the unpaid
installments due within the total grace period
earned by him
GRACE PERIOD; rate
- one month for every year of
installment payments
LIMITATION IN THE EXERCISE OF
RIGHT
- only once for every 5 years of the life
of the contract and its extension
• if the contract is cancelled, the seller shall
refund to the buyer the cash surrender value
of the payment on the property
RATE OF THE CASH SURRENDER
VALUE
- equivalent to 50% of the total
payment made and an additonal 5%
after 5 years, and an additional 5%
every year, but not exceeding 90%
- so sa 14th year and beyond, the
maximum CSV that the vendee can
recover is 90% of the total payment
made.
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WHEN THE ACTUAL RESCISSION
OF THE CONTRACT SHALL TAKES
PLACE;
after 30 days from receipt by the buyer
of
• the notice of the cancellation; or
• demand for the rescission of
the contract by a notarial act;
and
after the full payment of the CSV to the
buyer
NOTE:
dp, deposits or options on the contract
shall be included in the computation of
the total number of installments made.
RIGHT OF THE BUYER
aside from the exercise of grace period and
his entitlement to CSV
• to sell his rights or assign the same to
another person or to reinstate the contract by
updating the account during the grace period
and before actual cancellation of the
contract.
- the deed of assignment or sake shall
be done by notarial act
• to pay in advance any installment or the full
unpaid balance of the purchase price at any
tome without interest, and to have such full
payment of the purchase price annotated of
the title covering the property
WHEN THE VENDOR CAN RESCIND
IF AT LEAST 2 YEARS OF INSTALLMENT
HAS BEEN PAID
1. lapse of 30 day mandatory grace period for
every one year of installment payments;
and
2. after 30 days from notice of cancellation or
demand for rescission by notarial act; and
3. after the CSV had been paid
IF THE MINIMUM 2 YEARS OF
INSTALLMENT HAS NOT BEEN PAID
1. buyer is given a grace period of not less
than 60 days from the date the installment
became due
2. and such grace period lapsed without the
buyer paying the installment due
3. the seller may cancel the contact after 30
days from receipt of the notice of
cancellation or demand for rescission of the
contract by notarial act.
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PERFORMANCE OF A
CONTRACT
PLACE OF DELIVERY
the stipulation of the parties, expeess or
implied, or according to the usage of trade,
determines the place of delivery.
IN DEFAULT OF SUCH; the place of
delivery would be
1. seller's place of business, if he
has one
2. if none, at the seller's residence
EXE: in sale of specific goods, which is
to the knowledge of the parties when
the contract of sale was made were in
some other place
- then place is the place of delivery
TIME WITHIN WHICH DELIVERY MUST BE
MADE
1. as stipulated; or
2. within reasonable time, if there is no such
stipulation
Demand or tender of delivery may be
treated as ineffectual unless made at a
reasonable hour. What is a reasonable
hour is a question of fact.
DELIVERY THROUGH 3 PERSON; when it is
deemed effected
ONLY AFTER
such third person acknowledges to the buyer
that he holds the goods on the buyer's behalf.
W H O S H A L L B E A R T H E D E L I V E RY
EXPENSES
the seller
UNLESS:
Unless otherwise agreed,
IN RE: QUANTITY
IF WHAT IS DELIVERED IS LESS
THAN THE QUANTITY STIPULATED
the buyer may
- reject or accept the
SHOULD THE BUYER
ACCEPTS OR RETAINS THE
INSUFFICIENT GOODS;
he is liable to pay the contract
price is:
if the buyer accepts or retains
the goods so delivered,
knowing that the seller is not
going to perform the contract
in full,
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buyer is liable only to pay the
fair value of the goods
received if
the buyer has used or
disposed of the goods
delivered
- before he knows that the
seller is not going to perform
his contract in full.
IF WHAT IS DELIVERED IS A
LARGER QUANTITY THAN THAT
STIPULATED
the buyer may accept the goods
included in the contract and reject the
rest.
If the buyer accepts the whole
of the goods so delivered
- he must pay for them at the
contract rate.
EXE: the seller may reject the
rest, only when:
- if the subject matter is
indivisible
IN RE: QUALITY
IF WHAT IS DELIVERED ARE MIXED
WITH GOODS OF DIFFERENT
DESCRIPTION NOT INCLUDED IN
THE CONTRACT
the buyer may accept the goods which
are in accordance with the contract
and reject the rest.
EXE: the seller may reject the
rest, only when:
- if the subject matter is
indivisible
The provisions of this article are subject to any
usage of trade, special agreement, or course
of dealing between the parties. (both as to the
quantity and quality)
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Art. 1523. Where, in pursuance of a contract of
sale, the seller is authorized or required to
send the goods to the buyer, delivery of the
goods to a carrier, whether named by the
buyer or not, for the purpose of transmission to
the buyer is deemed to be a delivery of the
goods to the buyer, except in the case
provided for in Article 1503, first, second and
third paragraphs, or unless a contrary intent
appears.
Art. 1503. When there is a contract of
sale of specific goods, the seller may,
by the terms of the contract, reserve
the right of possession or ownership in
the goods until certain conditions have
been fulfilled. The right of possession
or ownership may be thus reserved
notwithstanding the delivery of the
goods to the buyer or to a carrier or
other bailee for the purpose of
transmission to the buyer.
Where goods are shipped, and by the
bill of lading the goods are deliverable
to the seller or his agent, or to the
order of the seller or of his agent, the
seller thereby reserves the ownership
in the goods. But, if except for the form
of the bill of lading, the ownership
would have passed to the buyer on
shipment of the goods, the seller's
property in the goods shall be deemed
to be only for the purpose of securing
performance by the buyer of his
obligations under the contract.
Where goods are shipped, and by the
bill of lading the goods are deliverable
to order of the buyer or of his agent,
but possession of the bill of lading is
retained by the seller or his agent, the
seller thereby reserves a right to the
possession of the goods as against the
buyer.
Unless otherwise authorized by the buyer, the
seller must make such contract with the carrier
on behalf of the buyer as may be reasonable,
having regard to the nature of the goods and
the other circumstances of the case. If the
seller omit so to do, and the goods are lost or
damaged in course of transit, the buyer may
decline to treat the delivery to the carrier as a
delivery to himself, or may hold the seller
responsible in damages.
Unless otherwise agreed, where goods are
sent by the seller to the buyer under
circumstances 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
may enable him to insure them during their
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transit, and, if the seller fails to do so, the
goods shall be deemed to be at his risk during
such transit. (n)
OBLIGATION OF THE SELLER TO DELIVER
THE THING SOLD; carries with it the ff
obligation
1. to take care of the propery prior to the
delivery
2. bound to deliver the thing sold and its
accessions and accessories in the
condition in which they were upon the
perfection of the contract.
3. All the fruits shall pertain to the vendee
from the day on which the contract was
perfected.
4. I n c a s e o f l o s s , d e t e r i o r a t i o n o r
improvement of the thing before its delivery,
the rules in Article 1189 shall be observed,
the vendor being considered the debtor.
5. placing in the control of the vendee all that
is mentioned in the contract, in conformity
with the following rules:
IN RE: DELIVERY OF REAL PROPERTY
• If the sale of real estate should be made
with a statement of its area, at the rate of
a certain price for a unit of measure or
number,
the vendor shall be obliged to deliver
to the vendee, if the latter should
demand it,
- all that may have been stated in the
contract;
but, should this be not possible, the
vendee may choose between
1. a proportional reduction of the
price and
2. the rescission of the contract,
NOTE: RESCISSION IS AVAILABLE
ONLY;
1. the lack in the area be not less
than 1/10 of that stated.
2. or in case of quality different from
that specified in the contract, the
inferior value of the thing sold
exceeds 1/10 of the price agreed
upon
3. Nevertheless, if the vendee would
not have bought the immovable
had he known of its smaller area
of inferior quality, he may rescind
the sale. (as an exe of the 1/10,
kahit less than, rescission is still
available)
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 THE AWESOME NOTES
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IF WHAT IS DELIVERED IS AN AREA
GREATER THAN THAT STIPULATED
the vendee may accept the area
included in the contract and reject the
rest.
If he accepts the whole area,
he must pay for the same at
the contract rate.
Art. 1541. The provisions of the two
preceding articles shall apply to judicial
sales.
• In the sale of real estate, made for a lump
sum and not at the rate of a certain sum
for a unit of measure or number,
there shall be no increase or decrease
of the price,
- although there be a greater or less
area or number than that stated in the
contract.
The same rule shall be applied when
two or more immovables as sold for a
single price;
IN CASE OF CONFLICT BETWEEN
THE BOUNDARIES AND THE AREA
STIPULATED
but if, besides mentioning the
boundaries, which is indispensable in
every conveyance of real estate, its
area or number should be designated
in the contract,
- the vendor shall be bound to deliver
all that is included within said
boundaries,
even when it exceeds the area
or number specified in the
contract;
FAILURE TO DO SO; vendee
is entitled to either
1. reduction of the price, in
proportion to what is
lacking in the area or
number; or
2. rescission of the contract
Art. 1543. The actions arising from Articles
1539 and 1542 shall prescribe in six months,
counted from the day of delivery.
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DOUBLE SALE
if the same should have been sold to different
vendees
BETWEEN THE 2 VENDEES; who has the
better right over the things
IF THE SUBJECT MATTER IS A MOVABLE
PROPERTY
the ownership shall be transferred to the
person who may have
• first taken possession thereof in good
faith
I F T H E S U B J E C T M AT T E R I S A N
IMMOVABLE PROPERTY
the ownership shall belong to the person
1. acquiring it
2. who in good faith first recorded it in the
Registry of Property.
NOTE: still in gf even though the
registration was made after he had
knowledge of the subsequent sale
- what makes a vendee registrant in bf
is when at the time of the sale, he had
knowledge of a previous sale of the
same immovable
IF NO REGISTRATION
the ownership shall pertain to the
person who in good faith was first in
the possession; and,
IF NO POSSESSION
to the person who presents the oldest
title, provided there is good faith.
NOTE: THE RULE UNDER ART. 1544 ON
D O U B L E S A L E A P P L I E S O N LY T O
PROPERTIES UNDER THE TORRENS TITLE
HENCE; for unregistered land, Act. no. 496
applies.
dito; pag benta yung lupa, tapos
subsequently was awarded to the
highest bidder in an auction sale after
levy,
- the highest bidder of an unregistered
land at a sheriff's execution sale only
steps into the shoes of the judgment
debtor and merely acquires the latter's
interest in the property sold as of the
time the property was levied upon.
- hence, it does not defeat the title of
the first vendee of said immovable,
kahit na said vendee did not register
the property in his name after the said
sale.
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RIGHT OF PRIORITY OF THE FIRST
VENDEE OF AN IMMOVABLE PROPERTY
AS EXPRESSED IN ART. 1544
IS BASED UPON
- the principle of "first in time, stronger
in right." prius tempore, potior jure
REQ:
first vendee in gf
HOW CAN HE PRESERVE HIS
RIGHT AGAINST THE SECOND
VENDEE
must register it in the Registry of
Deeds, ahead of any registration in gf
by the second vendee.
as to who between B and C has better right
over the immovable
everything would depend whether B first
registered the sale in his own name in the
Registry of Deeds. if not, then it would depend
whether C is a buyer in good faith and
registered the same in gf. if not, then, it would
be decided as to who between the two first
took possession over the property. if all still
fails, definitely, B has a better title as he has
the oldest title.
NOTE: THE LEVY ON ATTACHMENT, DULY
REGISTERED TAKES PREFERENCE OVER
A PRIOR UNREGISTERED SALE

HENCE; there can only be a

priority in right when
- there is both priority in time
with respect to the sale and
and registration
- pero syempre, the vendee
here must be in gf, at the time
of the sale.

NOTE: ART. 1544 APPLIES ONLY WHEN

THE SAME SELLER-OWNER OF AN
IMMOVABLE SOLD THE SAME LAND TO
DIFFERENT VENDEES

HENCE; Art. 1544 does not apply

when 2 different contracts of sale were
made by 2 different persons, one of
them not being the owner.
- the vendee on the sale made by the
person who is not the owner of an
immovable
merely steps into the shoes of
vendor. cannot defeat the right
of the vendee whose title were
derived from the owner.

NOTE: for art. 1544 to apply

- it is necessary that the
conveyance must have been
made by a party who has an
existing right in the thing and
the power to dispose of it.

Q: A sold to B a registered parcel of land.

upon the death of A, the heirs of the same,
not knowing of the previous sale, sold the
same land to C. between B and C, who has
a better right over the immovable? is art.
1544 applicable?

A: ART. 1544 applies

under the principle of relativity of contracts, the
first sale effected by A is also binding upon the
heirs. hence, rule on double sale under Art.
1544 is also applicable

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 THE AWESOME NOTES
SALES
WARRANTIES
WHERE THE OBLIGATION IS SUBJECT TO
A CONDITION
IF SUCH CONDITION IS NOT PERFORMED;
either party may
1. refuse to proceed with the contract; or
2. waive the performance thereof or the
condition
Where the ownership in the thing has not
passed,
the buyer may treat the fulfillment by
the seller of his obligation to deliver the
same as described and as warranted
expressly or by implication in the
contract of sale
- as a condition of the obligation of the
buyer to perform his promise to accept
and pay for the thing.
WHEN DOES A CONDITION BE TREATED
AS A WARRANTY
If the other party has promised that the
condition should happen or be performed,
HENCE; in case of its non-
performance,
a party may also treat the
nonperformance of the condition as a
breach of warranty.
EXPRESS WARRANTY
Any affirmation of fact or any promise by the
seller relating 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 the thing
relying thereon.
THERE IS CAN BE NO EXPRESS
WARRANTY ON THE FF
1. affirmation of the value of the
thing,
2. any statement purporting to be a
statement of the seller's opinion
only,
EXE:
• the seller made such affirmation or
statement as an expert and
• it was relied upon by the buyer.
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IMPLIED WARRANTY
In a contract of sale, unless a contrary
intention appears, there is:
• An implied warranty on the part of the seller
that
1. he has a right to sell the thing at the
time when the ownership is to pass,
and
2. that the buyer shall from that time have
and enjoy the legal and peaceful
possession of the thing;
• An implied warranty that the thing shall be
free from
1. any hidden faults or defects, or
2. any charge or encumbrance not
declared or known to the buyer.
THE IMPLIED WARRANTY DOES NOT
APPLY TO THE SALE MADE BY
a sheriff, auctioneer, mortgagee, pledgee, or
other person professing to sell by virtue of
authority in fact or law,
for the sale of a thing in which a third
person has a legal or equitable
interest.
FURTHER IMPLIED WARRANTIES; as to the
quality and fitness of the goods
• Where the buyer, expressly or by implication,
makes known to the seller the particular
purpose for which the goods are acquired,
and it appears that the buyer relies on the
seller's skill or judgment (whether he be the
grower or manufacturer or not),
- there is an implied warranty that the
goods shall be reasonably fit for such
purpose
• Where the goods are brought by description
from a seller who deals in goods of that
description (whether he be the grower or
manufacturer or not),
- there is an implied warranty that the
goods shall be of merchantable quality.
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 THE AWESOME NOTES
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WARRANTY AGAINST EVICTION
is an implied warranty in a contract of sale, by
virtue of which if
the vendee is deprive of the whole or
part of the thing purchased by a final
judgment based on a right
- prior to the sale or an act imputable
to the vendor.
such vendor shall answer for the
eviction even though nothing has been
said in the contract on the subject
WARRANTY AGAINST EVICTION;
may be
increase, diminish, or suppress this
legal obligation of the vendor,
~ by stipulation
REQUISITES FOR WARRANTY
A G A I N S T E V I C T I O N M AY B E
ENFORCED
1. deprivation of the vendee of the
whole or part of the thing
purchased
2. the deprivation must be by virtue
of a final judgment
3. the deprivation must be based on
a right prior to the sale or an act
imputable to the vendor
4. the vendor must be summoned in
the suit for eviction at the instance
of the vendee
ADDED REQUISITE
if the vendor is not summoned, the
vendee must notify the former of the
action commenced by 3rd person on
the subject property.
IF ANY OR ALL OF THE REQUISITES
ARE NOT PRESENT
- vendee cannot go after the vendor for
refund
NOTE:
• The vendee need not appeal from
the decision in order that the vendor
may become liable for eviction.
• the warranty cannot be enforced
until a final judgment has been
rendered, whereby the vendee
loses the thing acquired or a part
thereof.
• The vendor shall not be obliged to
make good the proper warranty,
unless he is summoned in the suit
for eviction at the instance of the
vendee.
• The defendant vendee shall ask,
within the time fixed in the Rules of
Court for answering the complaint,
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that the vendor be made a co-
defendant.
KINDS OF WAIVER OF
WARRANTIES AGINST EVICTION;
effects
WAIVER CONSCIENTE
- voluntary renunciation
EFFECT:
liability of the vendor in case of
eviction
shall extend only
to the payment of the value of
the thing sold at the time of the
eviction.
WAIVER INTENCIONADA
- voluntary renunciation of the vendee,
with knowledge of the risk of eviction
and assuming the consequence
thereof
EFFECT
shall relieve the vendor from any
liability whatsoever arising from
eviction.
PWEDE IMPLIED WAIVER
INTENCIONADA
- when the vendee already knew the
risk of eviction at the time of the
purchase
NOTE: IN CASE OF EVICTION,
VENDEE CANNOT RESORT TO
RESCISSION
AS; rescission implies mutual
restitution (one demanding rescission
is able to return whatever he has
received under the contract), which is
impossible
FURTHERMORE; when there is a
waiver intencionada
- deemed to have assumed the risk,
therefore he can no longer go after the
vendor
EXTENT OF LIABILITY OF THE
V E N D O R W H E N WA R R A N T Y
AGAINST EVICTION IS NOT
EXPRESSLY STIPULATED
1. 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
2. the income or fruits, if he has been
ordered to deliver them to the
party who win the suit against him
3. the cost of the suit which caused
the eviction, and in proper cases,
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 THE AWESOME NOTES
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those if the suit brought against
the vendor for the warranty
4. the expenses of the contract, if the
vendee has paid them; and
5. the damages and interest and
ornamental expenses, if the sake
was made in bf
THE ABOVE MENTION WILL NOT
A P P LY I N C A S E O F PA RT I A L
EVICTION;
EXE: AND RESCISSION MAY BE
APPLIED
• a part of the thing sold of such
importance, in relation to the whole,
that he would not have bought it
without the part
PROVIDED
for rescission to be availed of,
- capable to return the thing
without other encumbrances
than those which it had when
he acquired it.
• same principle for sale of 2/more
things have been jointly sold for
lump sum, or for separate price but
which clearly showing that the
vendee would not have purchased
one without the other
INSTANCES WHEN VENDOR WILL
NOT BE HELD LIABLE FOR
WARRANTY AGAINST EVICTION
1. When adverse possession had
been commenced before the sale
but the prescriptive period is
completed after the transfer, the
vendor shall not be liable for
eviction.
2. in case of judicial sale, when the
judgment decree that the vendor is
not liable for such
3. stipulation exempting the vendor
from liability against eviction, if the
stipulation was made in gf
4. waiver intencionada
INSTANCES WHEN VENDOR IS
LIABLE FOR WARRANTY AGAINST
EVICTION
1. I f t h e p r o p e r t y i s s o l d f o r
nonpayment of taxes due and not
made known to the vendee before
the sale, the vendor is liable for
eviction.
2. The judgment debtor is also
responsible for eviction in judicial
sales, unless it is otherwise
decreed in the judgment.
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3. Any stipulation exempting the
vendor from the obligation to
answer for eviction shall be void, if
he acted in bad faith.
4. waiver consciente
Art. 1556. Should the vendee lose, by
reason of the eviction, a part of the
thing sold of such importance, in
relation to the whole, that he would not
have bought it without said part, he
may demand the rescission of the
contract; but with the obligation to
return the thing without other
encumbrances that those which it had
when he acquired it.
He may exercise this right of action,
instead of enforcing the vendor's
liability for eviction.
The same rule shall be observed when
two or more things have been jointly
sold for a lump sum, or for a separate
price for each of them, if it should
clearly appear that the vendee would
not have purchased one without the
other.
Art. 1560. If the immovable sold should
be encumbered with any non-apparent
burden or servitude, not mentioned in
the agreement, of such a nature that it
must be presumed that the vendee
would not have acquired it had he
been aware thereof, he may ask for
the rescission of the contract, unless
he should prefer the appropriate
indemnity. Neither right can be
exercised if the non-apparent burden
or servitude is recorded in the Registry
of Property, unless there is an express
warranty that the thing is free from all
burdens and encumbrances.
Within one year, to be computed from
the execution of the deed, the vendee
may bring the action for rescission, or
sue for damages.
One year having elapsed, he may only
bring an action for damages within an
equal period, to be counted from the
date on which he discovered the
burden or servitude.
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 THE AWESOME NOTES
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WARRANTY AGAINST HIDDEN DEFECT
The vendor shall be responsible for warranty
against the hidden defects which the thing sold
may have,
• should they render it
1. unfit for the use for which it is intended,
or
2. should they diminish its fitness for such
use to such an extent that,
- had the vendee been aware thereof,
he would not have acquired it or would
have given a lower price for it;
WHEN VENDOR IS NOT LIABLE
FOR HIDDEN DEFECT
1. for patent defects or
2. those which may be visible, or
3. for those which are not visible if
the vendee is an expert who, by
reason of his trade or profession,
should have known them.
NOTE: The vendor is responsible to
the vendee for any hidden faults or
defects in the thing sold, even though
he was not aware thereof.
EXE:
the contrary has been
stipulated, and the vendor was
not aware of the hidden faults
or defects in the thing sold.
IMPLIED WARRANTY ON THE
CONDITION OR QUALITY IN SALE
OF GOODS
• Where the buyer, expressly or by
implication, makes known to the
seller the particular purpose for
which the goods are acquired,
and it appears that the buyer
relies on the seller's skill or
judgment (whether he be the
grower or manufacturer or
not),
- there is an implied warranty
that the goods shall be
reasonably fit for such
purpose;
• Where the goods are brought by
description from a seller who deals
in goods of that description (whether
he be the grower or manufacturer or
not),
- there is an implied warranty
that the goods shall be of
merchantable quality.
• In the case of contract of sale of a
specified article under its patent or
other trade name, there is no
warranty as to its fitness for any
particular purpose, unless there is a
stipulation to the contrary.
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• An implied warranty or condition as
to the quality or fitness for a
particular purpose may be annexed
by the usage of trade.
• In the case of a contract of sale by
sample, if the seller is a dealer in
goods of that kind,
there is an implied warranty
that the goods shall be free
from any defect rendering
them unmerchantable which
would not be apparent on
reasonable examination of the
sample.
REMEDIES OF THE VENDEE
ACCION REDHIBITORIA
action instituted by the vendee against
the vendor
- to avoid a sale on account of some
vice or defect in the thing sold which:
1. renders it unfit for the uses
intended or
2. will diminish its fitness for such
use to such an extent that, had
the vendee been aware thereof,
he would not have acquired it
GIST: withdrawal from the contract
ACCION QUANTI MINORIS
is an action to procure the return of a
art of the purchase price paid by the
vendee to the vendor
- by reason of such defect.
GIST: proportionate reduction of the
price
NOTE: with damage in either case
LOSS (JUDICIAL SALE INCLUDED)
OF THE THING WITH HIDDEN
D E F E C T; L I A B I L I T Y O F T H E
VENDOR
If the thing sold should be lost in
consequence of the hidden faults,
and
the vendor was aware of them,
1. he shall bear the loss, and
2. shall be obliged to return the price
and
3. refund the expenses of the
contract, with damages.
If he was not aware of them,
1. he shall only return the price and
interest thereon, and
2. reimburse the expenses of the
contract which the vendee might
have paid.
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If the thing sold had any hidden
fault at the time of the sale, and
should thereafter be lost by a
fortuitous event or through the fault
of the vendee,
the latter may demand of the vendor
• the price which he paid,
LESS
the value which the thing had
when it was lost.
If the vendor acted in bad faith,
he shall pay damages to the vendee.
NOTE: if the loss is due to judicial
sale. vendor cannot be held liable for
damages
PRESCRIPTION PERIOD
GEN RULE:
WITHIN 6 MOS
- from delivery
EXE:
IN REDHIBITORY ACTION BASED
ON THE FAULT OR DEFECT OF
ANIMALS
WITHIN 40 DAYS
- from delivery
RULES ON HIDDEN DEFECT WITH
REGARD TO ANIMALS
GEN RULE
the redhibitory defect of one, is sale of
2/more animals, whether for lump sum
or for a separate price
- redhibition is only proper with
respect to the animal suffering
from redhibitory defect
EXE:
it should appear that the vendee would
not have purchased the sound animal
or animals without the defective one.
WHICH IS PRESUMED
WHEN
The latter case shall be
presumed when a team, yoke
pair, or set is bought, even if a
separate price has been fixed
for each one of the animals
composing the same.
- lovebirds
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WHEN NO WARRANTY AGAINST
HIDDEN DEFECT FOR SALE OF
ANIMALS
hidden defects of animals sold at
1. fairs or
2. public auctions, or
3. of live stock sold as condemned.
WHEN SALE S DEEMED VOID
1. The sale of animals suffering from
contagious diseases shall be void.
2. if the use or service for which they
are acquired has been stated in
the contract, and they are found to
be unfit therefor.
WHEN A DEFECT ON ANIMALS IS
DEEMED REDHIBITORY
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.
EXE:
But if the veterinarian, through
ignorance or bad faith should fail to
discover or disclose it, he shall be
liable for damages.
PRESCRIPTION PERIOD FOR
FILING ACTION
WITHIN 40 DAYS
- from delivery
This action can only be exercised with
respect to faults and defects which are
determined by law or by local customs.
Art. 1578. If the animal should die
within three days after its purchase,
the vendor shall be liable if the disease
which cause the death existed at the
time of the contract. (1497a)
Art. 1579. If the sale be rescinded, the
animal shall be returned in the
condition in which it was sold and
delivered, the vendee being
answerable for any injury due to his
negligence, and not arising from the
redhibitory fault or defect. (1498)
Art. 1580. In the sale of animals with
redhibitory defects, the vendee shall
also enjoy the right mentioned in
article 1567; but he must make use
thereof within the same period which
has been fixed for the exercise of the
redhibitory action. (1499)
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Art. 1567. In the cases of Articles
1561, 1562, 1564, 1565 and 1566, the
vendee may elect between
withdrawing from the contract and
demanding a proportionate reduction
of the price, with damages in either
case.
Art. 1581. The form of sale of large
cattle shall be governed by special
laws. (n)
ART. 1599: IN RE: BREACH OF CONTRACT
OPTION OF THE VENDEE IN CASE OF
BREACH OF WARRANTIES
1. Accept or keep the goods and set up
against the seller, the breach of warranty by
way of recoupment in diminution or
extinction of the price;
2. Accept or keep the goods and maintain an
action against the seller for damages for
the breach of warranty;
3. Refuse to accept the goods, and maintain
an action against the seller for damages for
the breach of warranty;
4. Rescind the contract of sale and refuse to
receive the goods or if the goods have
already been received, return them or offer
to return them to the seller and recover the
price or any part thereof which has been
paid.
5. In the case of breach of warranty of quality,
such loss, in the absence of special
circumstances showing proximate damage
of a greater amount, is the difference
between the value of the goods at the time
of delivery to the buyer and the value they
would have had if they had answered to the
warranty.
NOTE:
Election of any, except for #4, would bar the
vendee to claim for rescission
EXE: when after opting for fulfillment,
fulfillment becomes impossible.
- in here, he may proceed with the
rescission.
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IN RE: #4: RESCISSION
VENDEE CANNOT RESCIND IN THE FF
INSTANCES
Where the goods have been delivered to the
buyer, he cannot rescind the sale if he
1. knew of the breach of warranty when he
accepted the goods without protest,
2. fails to notify the seller within a reasonable
time of the election to rescind, or
3. fails to return or to offer to return the goods
to the seller in substantially as good
condition as they were in at the time the
ownership was transferred to the buyer.
QUALIFICATION
But if deterioration or injury of the
goods is due to the breach or warranty,
such deterioration or injury shall not
prevent the buyer from returning or
offering to return the goods to the
seller and rescinding the sale.
EFFECT AFTER THE ELECTION OF
RESCISSION BY THE VENDEE
VENDEE
shall cease to be liable for the price upon
returning or offering to return the goods.
if the seller refuses to accept an offer
of the buyer to return the goods,
the buyer shall thereafter be deemed
to hold the goods as bailee for the
seller,
• but subject to a lien to secure
payment of any portion of the price
which has been paid, and
• with the remedies for the
enforcement of such lien allowed to
an unpaid seller by Article 1526.
WHEN OWNERSHIP HAD PASSED
TO THE BUYER
1. A lien on the goods or right to
retain them for the price while he
is in possession of them;
2. In case of the insolvency of the
buyer, a right of stopping the
goods in transitu after he has
parted with the possession of
them;
3. A right of resale as limited by this
Title;
4. right to rescind the sale as
likewise limited by this Title.
Where the ownership in the goods has
not passed to the buyer, the unpaid
seller has, in addition to his other
remedies a right of withholding delivery
similar to and coextensive with his
rights of lien and stoppage in transitu
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 THE AWESOME NOTES
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where the ownership has passed to
the buyer.
VENDOR
If the price or any part thereof has already
been paid, the seller shall be liable to
1. repay so much thereof as has been paid,
concurrently with the return of the goods, or
2. immediately after an offer to return the
goods in exchange for repayment of the
price.
~ NOT INCLUDED IN THE SYLLABUS ~
Art. 1582. The vendee is bound to accept
delivery and to pay the price of the thing sold
at the time and place stipulated in the contract.
If the time and place should not have been
stipulated, the payment must be made at the
time and place of the delivery of the thing sold.
(1500a)
Art. 1583. Unless otherwise agreed, the buyer
of goods is not bound to accept delivery
thereof by installments.
Where there is a contract of sale of goods to
be delivered by stated installments, which are
to be separately paid for, and the seller makes
defective deliveries in respect of one or more
instalments, or the buyer neglects or refuses
without just cause to take delivery of or pay for
one more instalments, it depends in each case
on the terms of the contract and the
circumstances of the case, whether the breach
of contract is so material as to justify the
injured party in refusing to proceed further and
suing for damages for breach of the entire
contract, or whether the breach is severable,
giving rise to a claim for compensation but not
to a right to treat the whole contract as broken.
(n)
Art. 1584. Where goods are delivered to the
buyer, which he has not previously examined,
he is not deemed to have accepted them
unless and until he has had a reasonable
opportunity of examining them for the purpose
of ascertaining whether they are in conformity
with the contract if there is no stipulation to the
contrary.
Unless otherwise agreed, when the seller
tenders delivery of goods to the buyer, he is
bound, on request, to afford the buyer a
reasonable opportunity of examining the goods
for the purpose of ascertaining whether they
are in conformity with the contract.
Where goods are delivered to a carrier by the
seller, in accordance with an order from or
agreement with the buyer, upon the terms that
the goods shall not be delivered by the carrier
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to the buyer until he has paid the price,
whether such terms are indicated by marking
the goods with the words "collect on delivery,"
or otherwise, the buyer is not entitled to
examine the goods before the payment of the
price, in the absence of agreement or usage of
trade permitting such examination. (n)
Art. 1585. The buyer is deemed to have
accepted the goods when he intimates to the
seller that he has accepted them, or when the
goods have been delivered to him, and he
does any act in relation to them which is
inconsistent with the ownership of the seller, or
when, after the lapse of a reasonable time, he
retains the goods without intimating to the
seller that he has rejected them. (n)
Art. 1586. In the absence of express or implied
agreement of the parties, acceptance of the
goods by the buyer shall not discharge the
seller from liability in damages or other legal
remedy for breach of any promise or warranty
in the contract of sale. But, if, after acceptance
of the goods, the buyer fails to give notice to
the seller of the breach in any promise of
warranty within a reasonable time after the
buyer knows, or ought to know of such breach,
the seller shall not be liable therefor. (n)
Art. 1587. Unless otherwise agreed, where
goods are delivered to the buyer, and he
refuses to accept them, having the right so to
do, he is not bound to return them to the seller,
but it is sufficient if he notifies the seller that he
refuses to accept them. If he voluntarily
constitutes himself a depositary thereof, he
shall be liable as such. (n)
Art. 1588. If there is no stipulation as specified
in the first paragraph of article 1523, when the
buyer's refusal to accept the goods is without
just cause, the title thereto passes to him from
the moment they are placed at his disposal. (n)
Art. 1589. The vendee shall owe interest for
the period between the delivery of the thing
and the payment of the price, in the following
three cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered
produce fruits or income;
(3) Should he be in default, from the time of
judicial or extrajudicial demand for the payment
of the price. (1501a)
Art. 1590. Should the vendee be disturbed in
the possession or ownership of the thing
acquired, or should he have reasonable
grounds to fear such disturbance, by a
vindicatory action or a foreclosure of mortgage,
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he may suspend the payment of the price until

the vendor has caused 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.
(1502a)
Art. 1591. Should the vendor have reasonable
grounds to fear the loss of immovable property
sold and its price, he may immediately sue for
the rescission of the sale.

Should such ground not exist, the provisions of

Article 1191 shall be observed. (1503)

Art. 1592. In the sale of immovable property,

even though it may have been stipulated that
upon failure to pay the price at the time agreed
upon the rescission of the contract shall of
right take place, the vendee may pay, even
after the expiration of the period, as long as no
demand for rescission of the contract has been
made upon him either judicially or by a notarial
act. After the demand, the court may not grant
him a new term. (1504a)

Art. 1593. With respect to movable property,

the rescission of the sale shall of right take
place in the interest of the vendor, if the
vendee, upon the expiration of the period fixed
for the delivery of the thing, should not have
appeared to receive it, or, having appeared, he
should not have tendered the price at the
same time, unless a longer period has been
stipulated for its payment.

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BREACH OF CONTRACT
BREACH OF CONTRACT WHICH VENDEE
MAY COMMIT
• REFUSES OR WILLFULLY NEGLECTS TO
PAY FOR THE PRICE
DESPITE OF:
1. transfer of ownership to the
vendee has already been effected
2. when no transfer of ownership yet,
but failed to pay to the date fixed
for payment
DEFENSE
the seller at any time before the
judgment in such action
~ has manifested
1. an inability to perform the contract
of sale on his part or
2. an intention not to perform it
NOTE:
Although the ownership in the goods
has not passed, IF
1. they cannot readily be resold for a
reasonable price, and
2. the provisions of article 1596,
fourth paragraph, are not
applicable,
If, while labor or expense of
material amount is necessary on
the part of the seller to enable
• REFUSES OR WRONGFULLY NEGLECTS
him to fulfill his obligations under
the contract of sale, the buyer
repudiates the contract or
notifies the seller to proceed no
further therewith, the buyer shall
be liable to the seller for labor
performed or expenses made
before receiving notice of the
buyer's repudiation or
countermand. The profit the
seller would have made if the
contract or the sale had been
fully performed shall be
considered in awarding the
damages.
THE SELLER MAY
1. offer to deliver the goods to the
buyer, and,
2. if the buyer refuses to receive
them,
may notify the buyer that the
goods are thereafter held by
the seller as bailee for the
buyer.
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Thereafter the seller may treat
the goods as the buyer's and
may maintain an action for the
price.
VALID EXCUSE FOR NON PAYMENT
OF PRICE BY THE VENDEE;
suspension of payment
1. Should the vendee be disturbed in
the possession or ownership of
the thing acquired,
2. should he have reasonable
grounds to fear such disturbance,
by a vindicatory action or a
foreclosure of mortgage,
SUSPENSION SHALL LAST UNTIL
the vendor has caused the disturbance
or danger to cease,
EXE: WHEN VENDEE
CANNOT SUSPEND
PAYMENT DESPITE OF THE
MENTIONED GROUNDS
1. vendor gives security for
the return of the price in a
proper case,
2. it has been stipulated
that, notwithstanding any
such contingency, the
vendee shall be bound to
make the payment.
3. A mere act of trespass
shall not authorize the
suspension of the
payment of the price.
TO ACCEPT AND PAY FOR THE GOODS
THE SELLER MAY
maintain an action against him for
damages for nonacceptance.
The measure of damages is
• the estimated loss directly and
naturally resulting in the ordinary
course of events from the buyer's
breach of contract.
• Where there is an available market
for the goods in question, the
measure of damages is,
in the absence of special
circumstances showing
proximate damage of a
different amount,
- the difference between the
# contract price and the
market or current price
1. at the time or times when
the goods ought to have
been accepted, or,
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 THE AWESOME NOTES
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2. if no time was fixed for
acceptance, then at the
time of the refusal to
accept.
the buyer shall be liable to the seller
for labor performed or expenses
made before receiving notice of the
buyer's repudiation or
countermand.
If, while labor or expense of material
amount is necessary on the part of the
seller to enable him to fulfill his
obligations under the contract of sale,
- the buyer repudiates the contract or
notifies the seller to proceed no further
therewith,
The profit the seller would have made
if the contract or the sale had been
fully performed
- shall be considered in awarding the
damages.
WHEN VENDOR MAY RESCIND THE
CONTRACT
• Where the goods have not been delivered to
the buyer, and
• the buyer has
1. repudiated the contract of sale,
2. manifested his inability to perform his
obligations thereunder, or
3. committed a breach thereof,
the seller may totally rescind the contract of
sale
BY giving notice
- of his election so to do to the buyer.
Art. 1598. Where the seller has broken a
contract to deliver specific or ascertained
goods, a court may, on the application of the
buyer, direct that the contract shall be
performed specifically, without giving the seller
the option of retaining the goods on payment
of damages. The judgment or decree may be
unconditional, or upon such terms and
conditions as to damages, payment of the
price and otherwise, as the court may deem
just.
see: breach of warranties
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IN RE: RESCISSION
Art. 1592. In the sale of immovable property,
even though it may have been stipulated that
upon failure to pay the price at the time agreed
upon the rescission of the contract shall of
right take place, the vendee may pay, even
after the expiration of the period, as long as no
demand for rescission of the contract has been
made upon him either judicially or by a notarial
act. After the demand, the court may not grant
him a new term.
THIS APPLIES ONLY WHEN
- vendor retains ownership of the
immovable object of the sale.
REFERS TO CONTRACT TO SELL
RIGHTS OF THE VENDOR
in case the vendee fails to complete
payment
1. to extrajudicially terminate the
operation of the contract
2. refuse conveyance; and
3. retain the sums or installments
already received, when such right
is expressly provided for
REMEDY OF THE VENDEE
so long as there is no demand for
rescission of the contract, either
judicially or by notarial act,
- the vendee may pay, even after the
expiration of the period and even if
there is a stipulation that rescission
shall take place after the lapse of the
period to make payment and none has
been made.
NOTE: acceptance by the vendor of
the payment after the lapse of the
period without making any prior
demand for rescission
- amounts to waiver of right from
rescinding the contract
IN CONTRACT OF SALE
- where buyer acquires ownership
simultaneously with the delivery, art.
1592 is not applicable
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EXTINGUISHMENT OF SALE
HOW CONTRACT OF SALE EXTINGUISHED
1. by the same causes as all other obligations,
and
2. by conventional or legal redemption.
CONVENTIONAL REDEMPTION
CONVENTIONAL REDEMPTION; shall takes
place when
vendor reserves the right to repurchase the
thing sold,
with the obligation to comply with
1. the provisions of Article 1616 and
2. other stipulations which may have
been agreed upon.
WHEN CONVENTIONAL REDEMPTION
P R E S U M E D TO B E A N E Q U I TA B L E
MORTGAGE
1. When the price of a sale with right to
repurchase is unusually inadequate;
2. When the vendor remains in possession as
lessee or otherwise;
3. When upon or after the expiration of the
right to repurchase another instrument
extending the period of redemption or
granting a new period is executed;
4. When the purchaser retains for himself a
part of the purchase price;
5. When the vendor binds himself to pay the
taxes on the thing sold;
6. In any other case where it may be fairly
inferred that the real intention of the parties
is that the transaction shall secure the
payment of a debt or the performance of
any other obligation.
7. when there is doubt as to whether the
contract is a contract of sale with right of
repurchase or an equitable mortgage
In any of the foregoing cases,
any money, fruits, or other benefit to
be received by the vendee as rent or
otherwise
- shall be considered as interest which
shall be subject to the usury laws.
NOTE: a contract of absolute sale may
likewise be treated as an equitable mortgage,
if any or combination of the above mentioned
circumstances are present.
R E M E D Y O F T H E A P PA R E N T
VENDOR
- reformation of the instrument
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PRESCRIPTION PERUOD FOR
REDEMPTION
RULE: apply the stipulated period.
PROVIDED:
that the stipulated period shall not
exceed 10 years
hence; kung yung stipulation only
provide that the vendor may
repurchase the thing sold "at any time"
- treated that such is exercisable within
10 years from the date of the
execution of the contract
-expresses an agreement as to the
period within which the right of
redemption may be exercise
pero; if the stipulation provides that the
vendor a retro can redeem the
property as soon as he has
established a certain business
- treated as no agreement with resect
to a period. as such 4 years from date
of the contract yung redemption
IN THE ABSENCE OF STIPULATION;
redemption must be exercised
WITHIN 4 YEARS
- from the contract
note; if the stipulation provides that the
vendor cannot exercise his right
repurchase within 3 years from the
contract
- treated as no stipulation. hence, has
4 years from expiration within which
the right to redeem could not be
exerised.
- bale parang, from 4th to 8th year of
the contract within which the vendor
may exercise his right to repurchase
however, if the stipulation provides that
in effect would extend the life of the
contract beyond 10 years
i.e. cannot exercise the right to
repurchase within the 7th to 9th years
from the date of the sale
- vendor should be allowed to redeem
the property during the balance of the
10 year period.
ie. if the stipulation provides that
redemption cannot be exercise wothin
the first 10 years of the contract
- void. as if the right to repurchase did
not even arise, since by the time it was
supposed to begin, it was already
interdicted by law.
- contrary to law, moral...
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R E D E M P T I O N I S S T I L L AVA I L A B L E
DESPITED OF THE LAPSE 4 YEARS OR
STIPULATED PERIOD
THROUGH
exercise of the vendee's right to
repurchase
WITHIN 30 DAYS
from the time final judgment
was rendered in a civil action
- on the basis that the contract
was a true sale with right to
repurchase.
DITO:
contract of sale which is subsequently
treated as equitable mortgage
- the right of redemption is exercisable
within 30 days from FJ
regardless on the lapse of the
period within which to redeem
under the invalidated contract
of sale with right to repurchase
ie. contract of sale with right to
repurchase within 10 years
from the contract. vendor a
retro failed to redeem. on the
12th year, vendee a retro files
an action for consolidation,
which was opposed by the
vendor a retro, alleging that
the contract entered into is an
equitable mortgage. the court
favored vendor a retro, and
judgment become final on the
15th year of the contract.
- in here, vendor a retro may
redeem the property within 30
days from the date the the
court's decision become final
declaring the contract as an
equitable mortgage.
- bale parang 15th year plus
30 days
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CONSOLIDATION AFTER THE VENDEE
FAILS TO REDEEM WITHIN THE PERIOD
R E Q : F O R R E G I S T R AT I O N O F
C O N S O L I D AT I O N I N V O LV I N G R E A L
PROPERTY
1. recorded in the Registry of Property
2. a judicial order, after the vendor has been
duly heard (ordinary civil action; prior valid
service of summon)
3. The vendor cannot avail himself of the right
of repurchase without returning to the
vendee
• the price of the sale,
• The expenses of the contract, and any
other legitimate payments made by
reason of the sale;
• The necessary and useful expenses
made on the thing sold.
R AT I O N OF JUDICIAL
CONFIRMATION
a. to have all doubts over the true
nature of the transaction speedily
ascertained and decided; and
b. to prevent the interposition of
buyers in gf while such
determination is being made
Hence; mere extra-judicial affidavit for
consolidation is not enough
C O N S O L I D AT I O N M U S T B E
BROUGHT AGAINST ALL
INDISPENSABLE PARTIES
- otherwise, no final determination can
be had on the action
NOTE: when the widow sold a
conjugal lot with right repurchase, the
vendee a retro cannot legally petition
for the consolidation of his ownership
over the entire lot.
- as the the widow his conjugal share
and portion of his successional right as
heir in the conjugal share of the
deceased husband.
Art. 1608. The vendor may bring his action
against every possessor whose right is derived
from the vendee, even if in the second contract
no mention should have been made of the
right to repurchase, without prejudice to the
provisions of the Mortgage Law and the Land
Registration Law with respect to third persons.
Art. 1609. The vendee is subrogated to the
vendor's rights and actions.
Art. 1610. The creditors of the vendor cannot
make use of the right of redemption against
the vendee, until after they have exhausted the
property of the vendor.
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Art. 1611. In a sale with a right to repurchase,
the vendee of a part of an undivided
immovable who acquires the whole thereof in
the case of article 498, may compel the vendor
to redeem the whole property, if the latter
wishes to make use of the right of redemption.
Art. 1617. If at the time of the execution of the
sale there should be on the land, visible or
growing fruits, there shall be no reimbursement
for or prorating of those existing at the time of
redemption, if no indemnity was paid by the
purchaser when the sale was executed.

Art. 1612. If several persons, jointly and in the
same contract, should sell an undivided
immovable with a right of repurchase, none of
them may exercise this right for more than his
respective share.
The same rule shall apply if the person who
sold an immovable alone has left several heirs,
in which case each of the latter may only
redeem the part which he may have acquired.
Art. 1613. In the case of the preceding article,
the vendee may demand of all the vendors or
co-heirs that they come to an agreement upon
the purchase of the whole thing sold; and
should they fail to do so, the vendee cannot be
compelled to consent to a partial redemption.
(1515)
Should there have been no fruits at the time of
the sale and some exist at the time of
redemption, they shall be prorated between
the redemptioner and the vendee, giving the
latter the part corresponding to the time he
possessed the land in the last year, counted
from the anniversary of the date of the sale.
Art. 1618. 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 which the latter may
have executed in good faith, and in
accordance with the custom of the place where
the land is situated.

Art. 1614. Each one of the co-owners of an

undivided immovable who may have sold his
share separately, may independently exercise
the right of repurchase as regards his own
share, and the vendee cannot compel him to
redeem the whole property. (1516)

Art. 1615. If the vendee should leave 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 among them.

But if the inheritance has been divided, and the

thing sold has been awarded to one of the
heirs, the action for redemption may be
instituted against him for the whole. (1517)

OBLIGATION OF THE VENDOR A RETRO

WHEN HE EXERCISE HIS RIGHT OF
REDEMPTION
as condition precedent for exercise of right
of repurchase
1. returning to the vendee the price of the
sale, and in addition:
2. pay the expenses of the contract, and any
other legitimate payments made by reason
of the sale;
3. pay the necessary and useful expenses
made on the thing sold.

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LEGAL REDEMPTION
LEGAL REDEMPTION; defined
the right to be subrogated,
upon the same terms and conditions
stipulated in the contract,
- in the place of one who acquires a
thing by
1. purchase
2. dation in payment, or
3. by any other transaction whereby
ownership is transmitted by
onerous title.
INSTANCES WHEN LEGAL REDEMPTION IS
RECOGNIZED BY LAW
Art. 1620. A co-owner of a thing may exercise
the right of redemption in case the shares of all
the other co-owners or of any of them, are sold
to a third person. If the price of the alienation is
grossly excessive, the redemptioner shall pay
only a reasonable one.
Should two or more co-owners desire to
exercise the right of redemption, they may only
do so in proportion to the share they may
respectively have in the thing owned in
common.
Art. 1621. The owners of adjoining lands shall
also have the right of redemption when a piece
of rural land, the area of which does not
exceed one hectare, is alienated, unless the
grantee does not own any rural land.
This right is not applicable to adjacent lands
which are separated by brooks, drains,
ravines, roads and other apparent servitudes
for the benefit of other estates.
If two or more adjoining owners desire to
exercise the right of redemption at the same
time, the owner of the adjoining land of smaller
area shall be preferred; and should both lands
have the same area, the one who first
requested the redemption.
Art. 1622. Whenever a piece of urban land
which is so small and so situated that a major
portion thereof cannot be used for any
practical purpose within a reasonable time,
having been bought merely for speculation, is
about to be re-sold, the owner of any adjoining
land has a right of pre-emption at a reasonable
price.
If the re-sale has been perfected, the owner of
the adjoining land shall have a right of
redemption, also at a reasonable price.
When two or more owners of adjoining lands
wish to exercise the right of
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pre-emption or redemption, the owner whose
intended use of the land in question appears
best justified shall be preferred.
Art. 1634. Redemption by a debtor should the
credit or other incorporeal right in litigation be
sold by the creditor to a 3rd person
Art. 1088. Redemption by the other co-heirs,
or by any or some of them, should a co-heir
sells his hereditary right to a stranger
UNDER OTHER LAW
1. redemption by the applicant, his widow, and
legal heir within 5 years should a piece of
land under a homestead or free patent be
alienated to a 3rd person
2. redemption by a judgment debtor within 1
year should real property belonging to him
be sold on execution
3. redemption by the owner should property
belonging to him be sold for delinquent
realty taxes
4. redemption by mortgagor within 1 year
should his mortgaged property be
foreclosed and subsequently sold
PERIOD WITHIN WHICH REDEMPTION MAY
BE EXERCISE
Art. 1623. The right of legal pre-emption or
redemption shall not be exercised
EXE
WITHIN 30 DAYS FROM
the notice in writing by the prospective
vendor, or by the vendor, as the case
may be.
NOTE: notice given to the co-
owner desiring to exercise the
right,
- hence, notice to executor or
administrator is not notice to
the heirs who will exercise the
right of redemption
The deed of sale shall not be recorded
in the Registry of Property, unless
accompanied by an affidavit of the
vendor that he has given written notice
thereof to all possible redemptioners.
The right of redemption of co-owners
excludes that of adjoining owners.
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REDEMPTION PRE-EMPTION

sale to 3rd person no sale to 3rd

has already been person has yet been
effected perfected

broad scope only available when

the ff are present;
the adjoining owner
may exercise right of
preemption if:
1. property is an
urban land
2. it is so small that
it cannot be used for
any practical
purpose within a
reasonable time
3. situated that it
cannot be used for
any practicable
purpose within a
reasonable time;
and
4. previously bought
merely for
speculation

directed against a directed against a

3rd person who prospective vendor
bought a property who is about to
resell the property

effect of redemption
is
- to extinguish a - prevent the birth or
contract that has perfection of a
already been contract
perfected or even
consummated

NOTE: IN RE: RIGHT OF PREEMPTION

- is thos available only before the sale? what if
nalaman nya lang after the sale
- note: dapat for said right to apply, the
previous owner bought it for speculation.
hence, kung inherited, it cannot be said as
such. and for such reason, the adjoining
owners cannot exercise right of pre-emption
over a small piece of urban land

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 THE AWESOME NOTES
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PD 957
PRESIDENTIAL DECREE No. 957 J u l y 1 2 ,
1976
REGULATING THE SALE OF SUBDIVISION
LOTS AND CONDOMINIUMS, PROVIDING
PENALTIES FOR VIOLATIONS THEREOF
WHEREAS, it is the policy of the State to
afford its inhabitants the requirements of
decent human settlement and to provide them
with ample opportunities for improving their
quality of life;
WHEREAS, numerous reports reveal that
many real estate subdivision owners,
developers, operators, and/or sellers have
reneged on their representations and
obligations to provide and maintain properly
subdivision roads, drainage, sewerage, water
systems, lighting systems, and other similar
basic requirements, thus endangering the
health and safety of home and lot buyers;
WHEREAS, reports of alarming magnitude
also show cases of swindling and fraudulent
manipulations perpetrated by unscrupulous
subdivision and condominium sellers and
operators, such as failure to deliver titles to the
buyers or titles free from liens and
encumbrances, and to pay real estate taxes,
and fraudulent sales of the same subdivision
lots to different innocent purchasers for value;
WHEREAS, these acts not only undermine the
land and housing program of the government
but also defeat the objectives of the New
Society, particularly the promotion of peace
and order and the enhancement of the
economic, social and moral condition of the
Filipino people;
WHEREAS, this state of affairs has rendered it
imperative that the real estate subdivision and
condominium businesses be closely
supervised and regulated, and that penalties
be imposed on fraudulent practices and
manipulations committed in connection
therewith.
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Title I
TITLE AND DEFINITIONS
Section 1. Title. This Decree shall be known
as THE SUBDIVISION AND CONDOMINIUM
BUYERS' PROTECTIVE DECREE.
Section 2. Definition of Terms When used in
this Decree, the following terms shall, unless
the context otherwise indicates, have the
following respective meanings:
(a) Person. "Person" shall mean a natural or a
juridical person. A juridical person refers to a
business firm whether a corporation,
partnership, cooperative or associations or a
single proprietorship.
(b) Sale or sell. "Sale" or "sell" shall include
every disposition, or attempt to dispose, for a
valuable consideration, of a subdivision lot,
including the building and other improvements
thereof, if any, in a subdivision project or a
condominium unit in a condominium project.
"Sale" and "sell" shall also include a contract to
sell, a contract of purchase and sale, an
exchange, an attempt to sell, an option of sale
or purchase, a solicitation of a sale, or an offer
to sell, directly or by an agent, or by a circular,
letter, advertisement or otherwise.
A privilege given to a member of a cooperative,
corporation, partnership, or any association
and/or the issuance of a certificate or receipt
evidencing or giving the right of participation in,
or right to, any land in consideration of
payment of the membership fee or dues, shall
be deemed a sale within the meaning of this
definition.
(c) Buy and purchase. The "buy" and
"purchase" shall include any contract to buy,
purchase, or otherwise acquire for a valuable
consideration a subdivision lot, including the
building and other improvements, if any, in a
subdivision project or a condominium unit in a
condominium project.
(d) Subdivision project. "Subdivision project"
shall mean a tract or a parcel of land registered
under Act No. 496 which is partitioned primarily
for residential purposes into individual lots with
or without improvements thereon, and offered
to the public for sale, in cash or in installment
terms. It shall include all residential,
commercial, industrial and recreational areas
as well as open spaces and other community
and public areas in the project.
(e) Subdivision lot. "Subdivision lot" shall mean
any of the lots, whether residential,
commercial, industrial, or recreational, in a
subdivision project.
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(f) Complex subdivision plan. "Complex
subdivision plan" shall mean a subdivision plan
of a registered land wherein a street,
passageway or open space is delineated on
the plan.
(g) Condominium project. "Condominium
project" shall mean the entire parcel of real
property divided or to be divided primarily for
residential purposes into condominium units,
including all structures thereon.
(h) Condominium unit. "Condominium unit"
shall mean a part of the condominium project
intended for any type of independent use or
ownership, including one or more rooms or
spaces located in one or more floors (or part of
parts of floors) in a building or buildings and
such accessories as may be appended
thereto.
(i) Owner. "Owner" shall refer to the registered
owner of the land subject of a subdivision or a
condominium project.
(j) Developer. "Developer" shall mean the
person who develops or improves the
subdivision project or condominium project for
and in behalf of the owner thereof.
(k) Dealer. "Dealer" shall mean any person
directly engaged as principal in the business of
buying, selling or exchanging real estate
whether on a full-time or part-time basis.
(l) Broker. "Broker" shall mean any person
who, for commission or other compensation,
undertakes to sell or negotiate the sale of a
real estate belonging to another.
(m) Salesman. "Salesman" shall refer to the
person regularly employed by a broker to
perform, for and in his behalf, any or all
functions of a real estate broker.
(n) Authority. "Authority" shall mean the
National Housing Authority.
Title II
REGISTRATION AND LICENSE TO SELL
Section 3. National Housing Authority The
National Housing Authority shall have
exclusive jurisdiction to regulate the real estate
trade and business in accordance with the
provisions of this Decree.
Section 4. Registration of Projects The
registered owner of a parcel of land who
wishes to convert the same into a subdivision
project shall submit his subdivision plan to the
Authority which shall act upon and approve the
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same, upon a finding that the plan complies
with the Subdivision Standards' and
Regulations enforceable at the time the plan is
submitted. The same procedure shall be
followed in the case of a plan for a
condominium project except that, in addition,
said Authority shall act upon and approve the
plan with respect to the building or buildings
included in the condominium project in
accordance with the National Building Code
(R.A. No. 6541).
The subdivision plan, as so approved, shall
then be submitted to the Director of Lands for
approval in accordance with the procedure
prescribed in Section 44 of the Land
Registration Act (Act No. 496, as amended by
R.A. No. 440): Provided, that it case of
complex subdivision plans, court approval shall
no longer be required. The condominium plan
as likewise so approved, shall be submitted to
the Register of Deeds of the province or city in
which the property lies and the same shall be
acted upon subject to the conditions and in
accordance with the procedure prescribed in
Section 4 of the Condominium Act (R.A. No.
4726).
The owner or the real estate dealer interested
in the sale of lots or units, respectively, in such
subdivision project or condominium project
shall register the project with the Authority by
filing therewith a sworn registration statement
containing the following information:
(a) Name of the owner;
(b) The location of the owner's principal
business office, and if the owner is a non-
resident Filipino, the name and address of his
agent or representative in the Philippines is
authorized to receive notice;
(c) The names and addresses of all the
directors and officers of the business firm, if
the owner be a corporation, association, trust,
or other entity, and of all the partners, if it be a
partnership;
(d) The general character of the business
actually transacted or to be transacted by the
owner; and
(e) A statement of the capitalization of the
o w n e r, i n c l u d i n g t h e a u t h o r i z e d a n d
outstanding amounts of its capital stock and
the proportion thereof which is paid-up.
The following documents shall be attached to
the registration statement:
(a) A copy of the subdivision plan or
condominium plan as approved in accordance
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with the first and second paragraphs of this
section.
(b) A copy of any circular, prospectus,
b r o c h u r e , a d v e r t i s e m e n t , l e t t e r, o r
communication to be used for the public
offering of the subdivision lots or condominium
units;
(c) In case of a business firm, a balance sheet
showing the amount and general character of
its assets and liabilities and a copy of its
articles of incorporation or articles of
partnership or association, as the case may
be, with all the amendments thereof and
existing by-laws or instruments corresponding
thereto.
(d) A title to the property which is free from all
liens and encumbrances: Provided, however,
that in case any subdivision lot or
condominium unit is mortgaged, it is sufficient
if the instrument of mortgage contains a
stipulation that the mortgagee shall release the
mortgage on any subdivision lot or
condominium unit as soon as the full purchase
price for the same is paid by the buyer.
The person filing the registration statement
shall pay the registration fees prescribed
therefor by the Authority.
Thereupon, the Authority shall immediately
cause to be published a notice of the filing of
the registration statement at the expense of
the applicant-owner or dealer, in two
newspapers general circulation, one published
in English and another in Pilipino, once a week
for two consecutive weeks, reciting that a
registration statement for the sale of
subdivision lots or condominium units has
been filed in the National Housing Authority;
that the aforesaid registration statement, as
well as the papers attached thereto, are open
to inspection during business hours by
interested parties, under such regulations as
the Authority may impose; and that copies
thereof shall be furnished to any party upon
payment of the proper fees.
The subdivision project of the condominium
project shall be deemed registered upon
completion of the above publication
requirement. The fact of such registration shall
be evidenced by a registration certificate to be
issued to the applicant-owner or dealer.
Section 5. License to sell. Such owner or
dealer to whom has been issued a registration
certificate shall not, however, be authorized to
sell any subdivision lot or condominium unit in
the registered project unless he shall have first
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obtained a license to sell the project within two
weeks from the registration of such project.
The Authority, upon proper application therefor,
shall issue to such owner or dealer of a
registered project a license to sell the project if,
after an examination of the registration
statement filed by said owner or dealer and all
the pertinent documents attached thereto, he
is convinced that the owner or dealer is of
good repute, that his business is financially
stable, and that the proposed sale of the
subdivision lots or condominium units to the
public would not be fraudulent.
Section 6. Performance Bond. No license to
sell subdivision lots or condominium units shall
be issued by the Authority under Section 5 of
this Decree unless the owner or dealer shall
have filed an adequate performance bond
approved by said Authority to guarantee the
construction and maintenance of the roads,
gutters, drainage, sewerage, water system,
lighting systems, and full development of the
subdivision project or the condominium project
and the compliance by the owner or dealer
with the applicable laws and rules and
regulations.
The performance bond shall be executed in
favor of the Republic of the Philippines and
shall authorize the Authority to use the
proceeds thereof for the purposes of its
undertaking in case of forfeiture as provided in
this Decree.
Section 7. Exempt transactions. A license to
sell and performance bond shall not be
required in any of the following transactions:
(a) Sale of a subdivision lot resulting from the
partition of land among co-owners and co-
heirs.
(b) Sale or transfer of a subdivision lot by the
original purchaser thereof and any subsequent
sale of the same lot.
(c) Sale of a subdivision lot or a condominium
unit by or for the account of a mortgagee in the
ordinary course of business when necessary to
liquidate a bona fide debt.
Section 8. Suspension of license to sell. Upon
verified complaint by a buyer of a subdivision
lot or a condominium unit in any interested
party, the Authority may, in its discretion,
immediately suspend the owner's or dealer's
license to sell pending investigation and
hearing of the case as provided in Section 13
hereof.
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The Authority may motu proprio suspend the
license to sell if, in its opinion, any information
in the registration statement filed by the owner
or dealer is or has become misleading,
incorrect, inadequate or incomplete or the sale
or offering for a sale of the subdivision or
condominium project may work or tend to work
a fraud upon prospective buyers.
The suspension order may be lifted if, after
notice and hearing, the Authority is convinced
that the registration statement is accurate or
that any deficiency therein has been corrected
or supplemented or that the sale to the public
of the subdivision or condominium project will
neither be fraudulent not result in fraud. It shall
also be lifted upon dismissal of the complaint
for lack of legal basis.
Until the final entry of an order of suspension,
the suspension of the right to sell the project,
though binding upon all persons notified
thereof, shall be deemed confidential unless it
shall appear that the order of suspension has
in the meantime been violated.
Section 9. Revocation of registration certificate
and license to sell. The Authority may, motu
proprio or upon verified complaint filed by a
buyer of a subdivision lot or condominium unit,
revoke the registration of any subdivision
project or condominium project and the license
to sell any subdivision lot or condominium unit
in said project by issuing an order to this effect,
with his findings in respect thereto, if upon
examination into the affairs of the owner or
dealer during a hearing as provided for in
Section 14 hereof, if shall appear there is
satisfactory evidence that the said owner or
dealer:
(a) Is insolvent; or
(b) has violated any of the provisions of this
Decree or any applicable rule or regulation of
the Authority, or any undertaking of his/its
performance bond; or
(c) Has been or is engaged or is about to
engage in fraudulent transactions; or
(d) Has made any misrepresentation in any
prospectus, brochure, circular or other
literature about the subdivision project or
condominium project that has been distributed
to prospective buyers; or
(e) Is of bad business repute; or
(f) Does not conduct his business in
accordance with law or sound business
principles.
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Where the owner or dealer is a partnership or
corporation or an unincorporated association, it
shall be sufficient cause for cancellation of its
registration certificate and its license to sell, if
any member of such partnership or any officer
or director of such corporation or association
has been guilty of any act or omission which
would be cause for refusing or revoking the
registration of an individual dealer, broker or
salesman as provided in Section 11 hereof.
Section 10. Registers of subdivision lots and
condominium units. A record of subdivision lots
and condominium units shall be kept in the
Authority wherein shall be entered all orders of
the Authority affecting the condition or status
thereof. The registers of subdivision lots and
condominium units shall be open to public
inspection subject to such reasonable rules as
the Authority may prescribe.
Title III
DEALERS, BROKERS AND SALESMEN
Section 11. Registration of dealers, brokers
and salesmen. No real estate dealer, broker or
salesman shall engage in the business of
selling subdivision lots or condominium units
unless he has registered himself with the
Authority in accordance with the provisions of
this section.
If the Authority shall find that the applicant is of
good repute and has complied with the
applicable rules of the Authority, including the
payment of the prescribed fee, he shall register
such applicant as a dealer, broker or salesman
upon filing a bond, or other security in lieu
thereof, in such sum as may be fixed by the
Authority conditioned upon his faithful
compliance with the provisions of this Decree:
Provided, that the registration of a salesman
shall cease upon the termination of his
employment with a dealer or broker.
Every registration under this section shall
expire on the thirty-first day of December of
each year. Renewal of registration for the
succeeding year shall be granted upon written
application therefor made not less than thirty
nor more than sixty days before the first day of
the ensuing year and upon payment of the
prescribed fee, without the necessity of filing
further statements or information, unless
specifically required by the Authority. All
applications filed beyond said period shall be
treated as original applications.
The names and addresses of all persons
registered as dealers, brokers, or salesmen
shall be recorded in a Register of Brokers,
Dealers and Salesmen kept in the Authority
which shall be open to public inspection.
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Section 12. Revocation of registration as
dealers, brokers or salesmen. Registration
under the preceding section may be refused or
any registration granted thereunder, revoked
by the Authority if, after reasonable notice and
hearing, it shall determine that such applicant
or registrant:
1. Has violated any provision of this Decree or
any rule or regulation made hereunder; or
2. Has made a material false statement in his
application for registration; or
3. Has been guilty of a fraudulent act in
connection with any sale of a subdivision lot or
condominium unit; or
4. Has demonstrated his unworthiness to
transact the business of dealer, broker, or
salesman, as the case may be.
In case of charges against a salesman, notice
thereof shall also be given the broker or dealer
employing such salesman.
Pending hearing of the case, the Authority
shall have the power to order the suspension
of the dealer's, broker's, of salesman's
registration; provided, that such order shall
state the cause for the suspension.
The suspension or revocation of the
registration of a dealer or broker shall carry
with it all the suspension or revocation of the
registrations of all his salesmen.
Title IV
PROCEDURE FOR REVOCATION OF
REGISTRATION CERTIFICATE
Section 13. Hearing. In the hearing for
determining the existence of any ground or
grounds for the suspension and/or revocation
of registration certificate and license to sell as
provided in Section 8 and 9 hereof, the
following shall be complied with:
(a) Notice. No such hearing shall proceed
unless the respondent is furnished with a copy
of the complaint against him or is notified in
writing of the purpose of such hearing.
(b) Venue. The hearing may be held before the
officer or officers designated by the Authority
on the date and place specified in the notice.
(c) Nature of proceeding. The proceedings
shall be non-litigious and summary in nature
without regard to legal technicalities obtaining
in courts of law. The Rules of court shall not
apply in said hearing except by analogy or in a
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suppletory character and whenever practicable
and convenient.
(d) Power incidental to the hearing. For the
purpose of the hearing or other proceeding
under this Decree, the officer or officers
designated to hear the complaint shall have
the power to administer oaths, subpoena
witnesses, conduct ocular inspections, take
depositions, and require the production of any
book, paper, correspondence, memorandum,
or other record which are deemed relevant or
material to the inquiry.
Section 14. Contempt.
(a) Direct contempt. The officer or officers
designated by the Authority to hear the
complaint may summarily adjudge in direct
contempt any person guilty of misbehavior in
the presence of or so near the said hearing
officials as to obstruct or interrupt the
proceedings before the same or of refusal to
be sworn or to answer as a witness or to
subscribe an affidavit or deposition when
lawfully required to do so. The person found
guilty of direct contempt under this section
shall be punished by a fine not exceeding Fifty
(P50.00) Pesos or imprisonment not exceeding
five (5) days, or both.
(b) Indirect contempt. The officer or officers
designated to hear the complaint may also
adjudge any person in indirect contempt on
grounds and in the manner prescribed in Rule
71 of the Revised Rules of Court.
Section 15. Decision. The case shall be
decided within thirty (30) days from the time
the same is submitted for decision. The
Decision may order the revocation of the
registration of the subdivision or condominium
project, the suspension, cancellation, or
revocation of the license to sell and/or
forfeiture, in whole or in part, of the
performance bond mentioned in Section 6
hereof. In case forfeiture of the bond is
ordered, the Decision may direct the provincial
or city engineer to undertake or cause the
construction of roads and of other
requirements for the subdivision or
condominium as stipulated in the bond,
chargeable to the amount forfeited. Such
decision shall be immediately executory and
shall become final after the lapse of 15 days
from the date of receipt of the Decision.
Section 16. Cease and Desist Order.
Whenever it shall appear to the Authority that
any person is engaged or about to engage in
any act or practice which constitutes or will
constitute a violation of the provisions of this
Decree, or of any rule or regulation thereunder,
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it may, upon due notice and hearing as
provided in Section 13 hereof, issue a cease
and desist order to enjoin such act or
practices.
Section 17. Registration. All contracts to sell,
deeds of sale and other similar instruments
relative to the sale or conveyance of the
subdivision lots and condominium units,
whether or not the purchase price is paid in
full, shall be registered by the seller in the
Office of the Register of Deeds of the province
or city where the property is situated.
Whenever a subdivision plan duly approved in
accordance with Section 4 hereof, together
with the corresponding owner's duplicate
certificate of title, is presented to the Register
of Deeds for registration, the Register of Deeds
shall register the same in accordance with the
provisions of the Land Registration Act, as
amended: Provided, however, that it there is a
street, passageway or required open space
delineated on a complex subdivision plan
hereafter approved and as defined in this
Decree, the Register of Deeds shall annotate
on the new certificate of title covering the
street, passageway or open space, a
memorandum to the effect that except by way
of donation in favor of a city or municipality, no
portion of any street, passageway, or open
space so delineated on the plan shall be
closed or otherwise disposed of by the
registered owner without the requisite approval
as provided under Section 22 of this Decree.
Section 18. Mortgages. No mortgage on any
unit or lot shall be made by the owner or
developer without prior written approval of the
Authority. Such approval shall not be granted
unless it is shown that the proceeds of the
mortgage loan shall be used for the
development of the condominium or
subdivision project and effective measures
have been provided to ensure such utilization.
The loan value of each lot or unit covered by
the mortgage shall be determined and the
buyer thereof, if any, shall be notified before
the release of the loan. The buyer may, at his
option, pay his installment for the lot or unit
directly to the mortgagee who shall apply the
payments to the corresponding mortgage
indebtedness secured by the particular lot or
unit being paid for, with a view to enabling said
buyer to obtain title over the lot or unit promptly
after full payment thereto;
Section 19. Advertisements. Advertisements
that may be made by the owner or developer
through newspaper, radio, television, leaflets,
circulars or any other form about the
subdivision or the condominium or its
operations or activities must reflect the real
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facts and must be presented in such manner
that will not tend to mislead or deceive the
public.
The owner or developer shall answerable and
liable for the facilities, improvements,
infrastructures or other forms of development
represented or promised in brochures,
advertisements and other sales propaganda
disseminated by the owner or developer or his
agents and the same shall form part of the
sales warranties enforceable against said
owner or developer, jointly and severally.
Failure to comply with these warranties shall
also be punishable in accordance with the
penalties provided for in this Decree.
Section 20. Time of Completion. Every owner
or developer shall construct and provide the
facilities, improvements, infrastructures and
other forms of development, including water
supply and lighting facilities, which are offered
and indicated in the approved subdivision or
condominium plans, brochures, prospectus,
printed matters, letters or in any form of
advertisement, within one year from the date of
the issuance of the license for the subdivision
or condominium project or such other period of
time as may be fixed by the Authority.
Section 21. Sales Prior to Decree. In cases of
subdivision lots or condominium units sold or
disposed of prior to the effectivity of this
Decree, it shall be incumbent upon the owner
or developer of the subdivision or
condominium project to complete compliance
with his or its obligations as provided in the
preceding section within two years from the
date of this Decree unless otherwise extended
by the Authority or unless an adequate
performance bond is filed in accordance with
Section 6 hereof.
Failure of the owner or developer to comply
with the obligations under this and the
preceding provisions shall constitute a violation
punishable under Sections 38 and 39 of this
Decree.
Section 22. Alteration of Plans. No owner or
developer shall change or alter the roads,
open spaces, infrastructures, facilities for
public use and/or other form of subdivision
development as contained in the approved
subdivision plan and/or represented in its
advertisements, without the permission of the
Authority and the written conformity or consent
of the duly organized homeowners association,
or in the absence of the latter, by the majority
of the lot buyers in the subdivision.
Section 23. Non-Forfeiture of Payments. No
installment payment made by a buyer in a
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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, desists from further payment due to
the failure of the owner or developer to
develop the subdivision or condominium
project according to the approved plans and
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, with interest thereon at
the legal rate.
Section 24. 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
Republic Act No. 6552.
Where the transaction or contract was entered
into prior to the effectivity of Republic Act No.
6552 on August 26, 1972, the defaulting buyer
shall be entitled to the corresponding refund
based on the installments paid after the
effectivity of the law in the absence of any
provision in the contract to the contrary.
Section 25. Issuance of Title. The owner or
developer shall deliver the title of the lot or unit
to the buyer upon full payment of the lot or
unit. No fee, except those required for the
registration of the deed of sale in the Registry
of Deeds, shall be collected for the issuance of
such title. In the event a mortgage over the lot
or unit is outstanding at the time of the
issuance of the title to the buyer, the owner or
developer shall redeem the mortgage or the
corresponding portion thereof within six
months from such issuance in order that the
title over any fully paid lot or unit may be
secured and delivered to the buyer in
accordance herewith.
Section 26. Realty Tax. Real estate tax and
assessment on a lot or unit shall de paid by the
owner or developer without recourse to the
buyer for as long as the title has not passed
the buyer; Provided, however, that if the buyer
has actually taken possession of and occupied
the lot or unit, he shall be liable to the owner or
developer for such tax and assessment
effective the year following such taking of
possession and occupancy.
Section 27. Other Charges. No owner or
developer shall levy upon any lot or buyer a
fee for an alleged community benefit. Fees to
finance services for common comfort, security
and sanitation may be collected only by a
properly organized homeowners association
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and only with the consent of a majority of the
lot or unit buyers actually residing in the
subdivision or condominium project.
Section 28. Access to Public Offices in the
Subdivisions. No owner or developer shall
deny any person free access to any
government office or public establishment
located within the subdivision or which may be
reached only by passing through the
subdivision.
Section 29. Right of Way to Public Road. The
owner or developer of a subdivision without
access to any existing public road or street
must secure a right of way to a public road or
street and such right of way must be
developed and maintained according to the
requirement of the government and authorities
concerned.
Section 30. Organization of Homeowners
Association. The owner or developer of a
subdivision project or condominium project
shall initiate the organization of a homeowners
association among the buyers and residents of
the projects for the purpose of promoting and
protecting their mutual interest and assist in
their community development.
Section 31. Donations of roads and open
spaces to local government. The registered
owner or developer of the subdivision or
condominium project, upon completion of the
development of said project may, at his option,
convey by way of donation the roads and open
spaces found within the project to the city or
municipality wherein the project is located.
Upon acceptance of the donation by the city or
municipality concerned, no portion of the area
donated shall thereafter be converted to any
other purpose or purposes unless after
hearing, the proposed conversion is approved
by the Authority.
Section 32. Phases of Subdivision. For
purposes of complying with the provisions of
this Decree, the owner or developer may divide
the development and sale of the subdivision
into phases, each phase to cover not less than
ten hectares. The requirement imposed by this
Decree on the subdivision as a whole shall be
deemed imposed on each phase.
Section 33. Nullity of waivers. Any condition,
stipulation, or provision in contract of sale
whereby any person waives compliance with
any provision of this Decree or of any rule or
regulation issued thereunder shall be void.
Section 34. Visitorial powers. This Authority,
through its duly authorized representative may,
at any time, make an examination into the
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business affairs, administration, and condition
of any person, corporation, partnership,
cooperative, or association engaged in the
business of selling subdivision lots and
condominium units. For this purpose, the
official authorized so to do shall have the
authority to examine under oath the directors,
officers, stockholders or members of any
corporation, partnership, association,
cooperative or other persons associated or
connected with the business and to issue
subpoena or subpoena duces tecum in relation
to any investigation that may arise therefrom.
The Authority may also authorize the
Provincial, City or Municipal Engineer, as the
case may be, to conduct an ocular inspection
of the project to determine whether the
development of said project conforms to the
standards and specifications prescribed by the
government.
The books, papers, letters, and other
documents belonging to the person or entities
herein mentioned shall be open to inspection
by the Authority or its duly authorized
representative.
Section 35. Take-over Development. The
Authority, may take over or cause the
development and completion of the subdivision
or condominium project at the expenses of the
owner or developer, jointly and severally, in
cases where the owner or developer has
refused or failed to develop or complete the
development of the project as provided for in
this Decree.
The Authority may, after such take-over,
demand, collect and receive from the buyers
the installment payments due on the lots,
which shall be utilized for the development of
the subdivision.
Section 36. Rules and Regulations. The
Authority shall issue the necessary standards,
rules and regulations for the effective
implementation of the provisions of this
Decree. Such standards, rules and regulations
shall take effect immediately after their
publication three times a week for two
consecutive weeks in any newspaper of
general circulation.
Section 37. Deputization of law enforcement
agencies. The Authority may deputize the
Philippine Constabulary or any law
enforcement agency in the execution of its final
orders, rulings or decisions.
Section 38. Administrative Fines. The Authority
may prescribe and impose fines not exceeding
ten thousand pesos for violations of the
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provisions of this Decree or of any rule or
regulation thereunder. Fines shall be payable
to the Authority and enforceable through writs
of execution in accordance with the provisions
of the Rules of Court.
Section 39. Penalties. Any person who shall
violate any of the provisions of this Decree
and/or any rule or regulation that may be
issued pursuant to this Decree shall, upon
conviction, be punished by a fine of not more
than twenty thousand (P20,000.00) pesos and/
or imprisonment of not more than ten years:
Provided, That in the case of corporations,
partnership, cooperatives, or associations, the
President, Manager or Administrator or the
person who has charge of the administration of
the business shall be criminally responsible for
any violation of this Decree and/or the rules
and regulations promulgated pursuant thereto.
Section 40. Liability of controlling persons.
Every person who directly or indirectly controls
any person liable under any provision of this
Decree or of any rule or regulation issued
thereunder shall be liable jointly and severally
with and to the same extent as such controlled
person unless the controlling person acted in
good faith and did not directly or indirectly
induce the act or acts constituting the violation
or cause of action.
Section 41. Other remedies. The rights and
remedies provided in this Decree shall be in
addition to any and all other rights and
remedies that may be available under existing
laws.
Section 42. Repealing clause. All laws,
executive orders, rules and regulations or part
thereof inconsistent with the provisions of this
Decree are hereby repealed or modified
accordingly.
Section 43. Effectivity. This Decree shall take
effect upon its approval.
Done in the City of Manila, this 12th day of
July, in the year of Our Lord, nineteen hundred
and seventy-six.
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RA 4726
REPUBLIC ACT NO. 4726 June 18, 1966
AN ACT TO DEFINE CONDOMINIUM,
ESTABLISH REQUIREMENTS FOR ITS
CREATION, AND GOVERN ITS INCIDENTS.
Sec. 1. The short title of this Act shall be "The
Condominium Act".
Sec. 2. A condominium is an interest in real
property consisting of separate interest in a
unit in a residential, industrial or commercial
building and an undivided interest in common,
directly or indirectly, in the land on which it is
located and in other common areas of the
building. A condominium may include, in
addition, a separate interest in other portions
of such real property. Title to the common
areas, including the land, or the appurtenant
interests in such areas, may be held by a
corporation specially formed for the purpose
(hereinafter known as the "condominium
corporation") 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.
The real right in condominium may be
ownership or any other interest in real property
recognized by law, on property in the Civil
Code and other pertinent laws.
Sec. 3. As used in this Act, unless the context
otherwise requires:
(a) "Condominium" means a condominium as
defined in the next preceding section.
(b) "Unit" means a part of the condominium
project intended for any type of independent
use or ownership, including one or more rooms
or spaces located in one or more floors (or part
or parts of floors) in a building or buildings and
such accessories as may be appended
thereto.
(c) "Project" means the entire parcel of real
property divided or to be divided in
condominiums, including all structures thereon,
(d) "Common areas" means the entire project
excepting all units separately granted or held
or reserved.
(e) "To divide" real property means to divide
the ownership thereof or other interest therein
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by conveying one or more condominiums
therein but less than the whole thereof.
Sec. 4. The provisions of this Act shall apply
to property divided or to be divided into
condominiums only if there shall be recorded
in the Register of Deeds of the province or city
in which the property lies and duly annotated in
the corresponding certificate of title of the land,
if the latter had been patented or registered
under either the Land Registration or Cadastral
Acts, an enabling or master deed which shall
contain, among others, the following:
(a) Description of the land on which the
building or buildings and improvements are or
are to be located;
(b) Description of the building or buildings,
stating the number of stories and basements,
the number of units and their accessories, if
any;
(c) Description of the common areas and
facilities;
(d) A statement of the exact nature of the
interest acquired or to be acquired by the
purchaser in the separate units and in the
common areas of the condominium project.
Where title to or the appurtenant interests in
the common areas is or is to be held by a
condominium corporation, a statement to this
effect shall be included;
(e) Statement of the purposes for which the
building or buildings and each of the units are
intended or restricted as to use;
(f) A certificate of the registered owner of the
property, if he is other than those executing the
master deed, as well as of all registered
holders of any lien or encumbrance on the
property, that they consent to the registration of
the deed;
(g) The following plans shall be appended to
the deed as integral parts thereof:
(1) A survey plan of the land included in the
project, unless a survey plan of the same
property had previously bee filed in said office;
(2) A diagrammatic floor plan of the building or
buildings in the project, in sufficient detail to
identify each unit, its relative location and
approximate dimensions;
(h) Any reasonable restriction not contrary to
law, morals or public policy regarding the right
of any condominium owner to alienate or
dispose of his condominium.
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The enabling or master deed may be amended
or revoked upon registration of an instrument
executed by the registered owner or owners of
the property and consented to by all registered
holders of any lien or encumbrance on the land
or building or portion thereof. The term
"registered owner" shall include the registered
owners of condominiums in the project. Until
registration of a revocation, the provisions of
this Act shall continue to apply to such
property.
Sec. 5. Any transfer or conveyance of a unit or
an apartment, office or store or other space
therein, shall include the transfer or
conveyance of the undivided interests 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 owned by the owners
of separate units as co-owners thereof, no
condominium unit therein shall be conveyed or
transferred to persons other than Filipino
citizens, or corporations at least sixty percent
of the capital stock of which belong to Filipino
citizens, except in cases of hereditary
succession. Where the common areas in a
condominium project are held by a corporation,
no transfer or conveyance of a unit shall be
valid if the concomitant transfer of the
appurtenant membership or stockholding in the
corporation will cause the alien interest in such
corporation to exceed the limits imposed by
existing laws.
Sec. 6. Unless otherwise expressly provided in
the enabling or master deed or the declaration
of restrictions, the incidents of a condominium
grant are as follows:
(a) The boundary of the unit granted are the
interior surfaces of the perimeter walls, floors,
ceilings, windows and doors thereof. The
following are not part of the unit bearing walls,
columns, floors, roofs, foundations and other
common structural elements of the building;
lobbies, stairways, hallways, and other areas
of common use, elevator equipment and
shafts, central heating, central refrigeration
and central air-conditioning equipment,
reservoirs, tanks, pumps and other central
services and facilities, pipes, ducts, flues,
chutes, conduits, wires and other utility
installations, wherever located, except the
outlets thereof when located within the unit.
(b) There shall pass with the unit, as an
appurtenance thereof, an exclusive easement
for the use of the air space encompassed by
the boundaries of the unit as it exists at any
particular time and as the unit may lawfully be
altered or reconstructed from time to time.
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Such easement shall be automatically
terminated in any air space upon destruction of
the unit as to render it untenantable.
(c) Unless otherwise, provided, the common
areas are held in common by the holders of
units, in equal shares, one for each unit.
(d) A non-exclusive easement for ingress,
egress and support through the common areas
is appurtenant to each unit and the common
areas are subject to such easements.
(e) Each condominium owner shall have the
exclusive right to paint, repaint, tile, wax, paper
or otherwise refinish and decorate the inner
surfaces of the walls, ceilings, floors, windows
and doors bounding his own unit.
(f) Each condominium owner shall have the
exclusive right to mortgage, pledge or
encumber his condominium and to have the
same appraised independently of the other
condominiums but any obligation incurred by
such condominium owner is personal to him.
(g) Each condominium owner has also the
absolute right to sell or dispose of 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;
Sec. 7. Except as provided in the following
section, the common areas shall remain
undivided, and there shall be no judicial
partition thereof.
Sec. 8. Where several persons own
condominiums in a condominium project, an
action may be brought by one or more such
persons for partition thereof by sale of the
entire project, as if the owners of all of the
condominiums in such project were co-owners
of the entire project in the same proportion as
their interests in the common areas: Provided,
however, That a partition shall be made only
upon a showing:
(a) That three 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, or
(b) That damage or destruction to the project
has rendered one-half or more of the units
therein untenantable and that condominium
owners holding in aggregate more than thirty
percent interest in the common areas are
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opposed to repair or restoration of the project;
or
(c) That the project has been in existence in
excess of fifty years, that it is obsolete and
uneconomic, and that condominium owners
holding in aggregate more than fifty percent
interest in the common areas are opposed to
repair or restoration or remodeling or
modernizing of the project; or
(d) 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 seventy percent interest in the
common areas are opposed to continuation of
the condominium regime after expropriation or
condemnation of a material portion thereof; or
(e) That the conditions for such partition by
sale set forth in the declaration of restrictions,
duly registered in accordance with the terms of
this Act, have been met.
Sec. 9. The owner of a project shall, prior to
the conveyance of any condominium therein,
register a declaration of restrictions relating to
such project, which restrictions shall constitute
a lien upon each condominium in the project,
and shall insure to and bind all condominium
owners in the project. Such liens, unless
otherwise provided, may be enforced by any
condominium owner in the project or by the
management body of such project. The
Register of Deeds shall enter and annotate the
declaration of restrictions upon the certificate
of title covering the land included within the
project, if the land is patented or registered
under the Land Registration or Cadastral Acts.
The declaration of restrictions shall provide for
the management of the project by anyone of
the following management bodies: a
condominium corporation, an association of
the condominium owners, a board of
governors elected by condominium owners, or
a management agent elected by the owners or
by the board named in the declaration. It shall
also provide for voting majorities quorums,
notices, meeting date, and other rules
governing such body or bodies.
Such declaration of restrictions, among other
things, may also provide:
(a) As to any such management body;
(1) For the powers thereof, including power to
enforce the provisions of the declarations of
restrictions;
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(2) For maintenance of insurance policies,
insuring condominium owners against loss by
fire, casualty, liability, workmen's compensation
and other insurable risks, and for bonding of
the members of any management body;
(3) Provisions for maintenance, utility,
gardening and other services benefiting the
common areas, for the employment of
personnel necessary for the operation of the
building, and legal, accounting and other
professional and technical services;
(4) For purchase of materials, supplies and the
like needed by the common areas;
(5) For payment of taxes and special
assessments which would be a lien upon the
entire project or common areas, and for
discharge of any lien or encumbrance levied
against the entire project or the common
areas;
(6) For reconstruction of any portion or portions
of any damage to or destruction of the project;
(7) The manner for delegation of its powers;
(8) For entry by its officers and agents into any
unit when necessary in connection with the
maintenance or construction for which such
body is responsible;
(9) For a power of attorney to the management
body to sell the entire project for the benefit of
all of the owners thereof when partition of the
project may be authorized under Section 8 of
this Act, which said power shall be binding
upon all of the condominium owners
regardless of whether they assume the
obligations of the restrictions or not.
(b) The manner and procedure for amending
such restrictions: Provided, That the vote of not
less than a majority in interest of the owners is
obtained.
(c) For independent audit of the accounts of
the management body;
(d) For reasonable assessments to meet
authorized expenditures, each condominium
unit to be assessed separately for its share of
such expenses in proportion (unless otherwise
provided) to its owners fractional interest in any
common areas;
(e) For the subordination of the liens securing
such assessments to other liens either
generally or specifically described;
(f) For conditions, other than those provided for
in Sections eight and thirteen of this Act, upon
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which partition of the project and dissolution of
the condominium corporation may be made.
Such right to partition or dissolution may be
conditioned upon failure of the condominium
owners to rebuild within a certain period or
upon specified inadequacy of insurance
proceeds, or upon specified percentage of
damage to the building, or upon a decision of
an arbitrator, or upon any other reasonable
condition.
Sec. 10. Whenever the common areas in a
condominium project are held by a
condominium corporation, such corporation
shall constitute the management body of the
project. The corporate purposes of such a
corporation shall be limited to the holding of
the common areas, either in ownership or any
other interest in real property recognized by
law, to the management of the project, and to
such other purposes as may be necessary,
incidental or convenient to the accomplishment
of said purposes. The articles of incorporation
or by-laws of the corporation shall not contain
any provision contrary to or inconsistent with
the provisions of this Act, the enabling or
master deed, or the declaration of restrictions
of the project. Membership in a condominium
corporation, regardless of whether it is a stock
or non-stock corporation, shall not be
transferable separately from the condominium
unit of which it is an appurtenance. When a
member or stockholder ceases to own a unit in
the project in which the condominium
corporation owns or holds the common areas,
he shall automatically cease to be a member
or stockholder of the condominium corporation.
Sec. 11. The term of a condominium
corporation shall be co-terminus with the
duration of the condominium project, the
provisions of the Corporation Law to the
contrary notwithstanding.
Sec. 12. In case of involuntary dissolution of a
condominium corporation for any of the causes
provided by law, the common areas owned or
held by the corporation shall, by way of
liquidation, be transferred pro-indiviso and in
proportion to their interest in the corporation to
the members or stockholders thereof, subject
to the superior rights of the corporation
creditors. Such transfer or conveyance shall be
deemed to be a full liquidation of the interest of
such members or stockholders in the
corporation. After such transfer or conveyance,
the provisions of this Act governing undivided
co-ownership of, or undivided interest in, the
common areas in condominium projects shall
fully apply.
Sec. 13. Until the enabling or the master deed
of the project in which the condominium
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corporation owns or holds the common area is
revoked, the corporation shall not be
voluntarily dissolved through an action for
dissolution under Rule 104 of the Rules of
Court except upon a showing:
(a) That three years after damage or
destruction to the project in which the
corporation owns or holds the common areas,
which damage or destruction renders a
material part thereof unfit for its use prior
thereto, the project has not been rebuilt or
repaired substantially to its state prior to its
damage or destruction; or
(b) That damage or destruction to the project
has rendered one-half or more of the units
therein untenantable and that more than thirty
percent of the members of the corporation, if
non-stock, or the shareholders representing
more than thirty percent of the capital stock
entitled to vote, if a stock corporation, are
opposed to the repair or reconstruction of the
project, or
(c) That the project has been in existence in
excess of fifty years, that it is obsolete and
uneconomical, and that more than fifty percent
of the members of the corporation, if non-
stock, or the stockholders representing more
than fifty percent of the capital stock entitled to
vote, if a stock corporation, are opposed to the
repair or restoration or remodeling or
modernizing of the project; or
(d) That the project or a material part thereof
has been condemned or expropriated and that
the project is no longer viable, or that the
members holding in aggregate more than
seventy percent interest in the corporation, if
non-stock, or the stockholders representing
more than seventy percent of the capital stock
entitled to vote, if a stock corporation, are
opposed to the continuation of the
condominium regime after expropriation or
condemnation of a material portion thereof; or
(e) That the conditions for such a dissolution
set forth in the declaration of restrictions of the
project in which the corporation owns of holds
the common areas, have been met.
Sec. 14. The condominium corporation may
also be dissolved by the 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
Section sixty-two of the Corporation Law are
complied with.
Sec. 15. Unless otherwise provided for in the
declaration of restrictions upon voluntary
dissolution of a condominium corporation in
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accordance with the provisions of Sections
thirteen and fourteen of this Act, the
corporation shall be deemed to hold a power of
attorney from all the members or stockholders
to sell and dispose of their separate interests
in the project and liquidation of the corporation
shall be effected by a sale of the entire project
as if the corporation owned the whole thereof,
subject to the rights of the corporate and of
individual condominium creditors.
Sec. 16. A condominium corporation shall not,
during its existence, sell, exchange, lease or
otherwise dispose of the common areas
owned or held by it in the condominium project
unless authorized by the affirmative vote of all
the stockholders or members.
Sec. 17. Any provision of the Corporation Law
to the contrary notwithstanding, the by-laws of
a condominium corporation shall provide that a
stockholder or member shall not be entitled to
demand payment of his shares or interest in
those cases where such right is granted under
the Corporation Law unless he consents to sell
his separate interest in the project to the
corporation or to any purchaser of the
corporation's choice who shall also buy from
the corporation the dissenting member or
stockholder's interest. In case of disagreement
as to price, the procedure set forth in the
appropriate provision of the Corporation Law
for valuation of shares shall be followed. The
corporation shall have two years within which
to pay for the shares or furnish a purchaser of
its choice from the time of award. All expenses
incurred in the liquidation of the interest of the
dissenting member or stockholder shall be
borne by him.
Sec. 18. Upon registration of an instrument
conveying a condominium, the Register of
Deeds shall, upon payment of the proper fees,
enter and annotate the conveyance on the
certificate of title covering the land included
within the project and the transferee shall be
entitled to the issuance of a "condominium
owner's" copy of the pertinent portion of such
certificate of title. Said "condominium owner's"
copy need not reproduce the ownership status
or series of transactions in force or annotated
with respect to other condominiums in the
project. A copy of the description of the land, a
brief description of the condominium
conveyed, name and personal circumstances
of the condominium owner would be sufficient
for purposes of the "condominium owner's"
copy of the certificate of title. No conveyance
of condominiums or part thereof, subsequent
to the original conveyance thereof from the
owner of the project, shall be registered unless
accompanied by a certificate of the
management body of the project that such
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conveyance is in accordance with the
provisions of the declaration of restrictions of
such project.
In cases of condominium projects registered
under the provisions of the Spanish Mortgage
Law or Act 3344, as amended, the registration
of the deed of conveyance of a condominium
shall be sufficient if the Register of Deeds shall
keep the original or signed copy thereof,
together with the certificate of the management
body of the project, and return a copy of the
deed of conveyance to the condominium
owner duly acknowledge and stamped by the
Register of Deeds in the same manner as in
the case of registration of conveyances of real
property under said laws.
Sec. 19. Where the enabling or master deed
provides that the land included within a
condominium project are to be owned in
common by the condominium owners therein,
the Register of Deeds may, at the request of all
the condominium owners and upon surrender
of all their "condominium owner's" copies,
cancel the certificates of title of the property
and issue a new one in the name of said
condominium owners as pro-indiviso co-
owners thereof.
Sec. 20. An assessment upon any
condominium made in accordance with a duly
registered declaration of restrictions shall be
an obligation of the owner thereof at the time
the assessment is made. The amount of any
such assessment plus any other charges
thereon, such as interest, costs (including
attorney's fees) and penalties, as such may be
provided for in the declaration of restrictions,
shall be and become a lien upon the
condominium assessed when the
management body causes a notice of
assessment to be registered with the Register
of Deeds of the city or province where such
condominium project is located. The notice
shall state the amount of such assessment and
such other charges thereon a may be
authorized by the declaration of restrictions, a
description of the condominium, unit against
which same has been assessed, and the name
of the registered owner thereof. Such notice
shall be signed by an authorized
representative of the management body or as
otherwise provided in the declaration of
restrictions. Upon payment of said assessment
and charges or other satisfaction thereof, the
management body shall cause to be registered
a release of the lien.
Such lien shall be superior to all other liens
registered subsequent to the registration of
said notice of assessment except real property
tax liens and except that the declaration of
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restrictions may provide for the subordination
thereof to any other liens and encumbrances.
Such liens may be enforced in the same
manner provided for by law for the judicial or
extra-judicial foreclosure of mortgages of real
property. Unless otherwise provided for in the
declaration of restrictions, the management
body shall have power to bid at foreclosure
sale. The condominium owner shall have the
same right of redemption as in cases of judicial
or extra-judicial foreclosure of mortgages.
Sec. 21. No labor performed or services or
materials furnished with the consent of or at
the request of a condominium owner or his
agent or his contractor or subcontractor, shall
be the basis of a lien against the condominium
of any other condominium owner, unless such
other owners have expressly consented to or
requested the performance of such labor or
furnishing of such materials or services. Such
express consent shall be deemed to have
been given by the owner of any condominium
in the case of emergency repairs of his
condominium unit. Labor performed or services
or materials furnished for the common areas, if
duly authorized by the management body
provided for in a declaration of restrictions
governing the property, shall be deemed to be
performed or furnished with the express
consent of each condominium owner. The
owner of any condominium may remove his
condominium from a lien against two or more
condominiums or any part thereof by payment
to the holder of the lien of the fraction of the
total sum secured by such lien which is
attributable to his condominium unit.
of the project shall continue as a condominium
project, the owners thereof, and the respective
rights of said remaining owners and the just
compensation, if any, that a condominium
owner may be entitled to due to deprivation of
his property. Upon receipt of a copy of the
decree, the Register of Deeds shall enter and
annotate the same on the pertinent certificate
of title.
Sec. 24. Any deed, declaration or plan for a
condominium project shall be liberally
construed to facilitate the operation of the
project, and its provisions shall be presumed to
be independent and severable.
Sec. 25. Whenever real property has been
divided into condominiums, each condominium
separately owned shall be separately
assessed, for purposes of real property
taxation and other tax purposes to the owners
thereof and the tax on each such condominium
shall constitute a lien solely thereon.
Sec. 26. All Acts or parts of Acts in conflict or
inconsistent with this Act are hereby amended
insofar as condominium and its incidents are
concerned.
Sec. 27. This Act shall take effect upon its
approval.
Approved: June 18, 1966

Sec. 22. Unless otherwise provided for by the

declaration of restrictions, the management
body, provided for herein, may acquire and
hold, for the benefit of the condominium
owners, tangible and intangible personal
property and may dispose of the same by sale
or otherwise; and the beneficial interest in such
personal property shall be owned by the
condominium owners in the same proportion
as their respective interests in the common
areas. A transfer of a condominium shall
transfer to the transferee ownership of the
transferor's beneficial interest in such personal
property.

Sec. 23. Where, in an action for partition of a

condominium project or for the dissolution of
condominium corporation on the ground that
the project or a material part thereof has been
condemned or expropriated, the Court finds
that the conditions provided for in this Act or in
the declaration of restrictions have not been
met, the Court may decree a reorganization of
the project, declaring which portion or portions

AAA - BASTE / ATB

prepared by: ronie ablan