LAW ON SALES

I. INTRODUCTION
Stages in Life of Contract of Sale
Contract of Sale
1. Negotiation
 One of the contracting parties obligates himself
2. Perfection – by mere consent; performance
to transfer the ownership of and to deliver a
may be demanded (specific performance)
determinate thing, and the other to pay therefor
3. Consummation
a price certain money or its equivalent. A
contract of sale may be absolute or conditional.
Contract to Sell
 Exclusive right and privilege to purchase an
Elements of Contract of Sale
object
a. Essential Elements – those without which,
 A bilateral contract whereby the prospective
there can be no valid sale:
seller, while expressly reserving the ownership
 Consent or meeting of minds
of the subject property despite delivery thereof
 A determinable subject matter
to the prospective buyer binds himself to sell
 Price certain in money or its equivalent
the said property exclusively to the prospective
b. Natural Elements – inherent in the contract, buyer upon fulfilment of the condition agreed
and which in the absence of any contrary upon, that is, full payment of the purchase
provision, are deemed to exist in the contract: price.
 Warranty against eviction
 Warranty against hidden defects Contract of Sale vs. Contract to Sell
c. Accidental Elements – may be present or 1. Contract of Sale (absolute)
absent depending on the stipulation of the  Real obligation – obligation to give
parties  Remedies available:
 Conditions a. Specific performance
 Interest b. Rescission
 Penalty c. Damages
 Time or place of payment
2. Contract to Sell (conditional)
Characteristics of Contract of Sale  Personal obligation – obligation to do
1. Nominate – law gave it a name  Remedies available:
2. Principal – can stand on its own; unlike a. Resolution
accessory contract b. Damages
3. Bilateral – imposes obligation on both parties
a. Obligation of seller – transfer ownership & Contract of Sale Contract to Sell
deliver
b. Obligation of buyer – pay for price Ownership is reserved
 Consequence: power to rescind is implied Title passes to the in the seller and is not
in bilateral contracts buyer upon delivery of to pass until full
4. Onerous – with valuable consideration the thing sold payment of the
Consequence: all doubts in construing contract purchase price
to be resolved in greater reciprocity of interest
5. Commutative – equal value is exchanged for Full payment is a
equal value positive suspensive
Non-payment of the
condition, the failure of
 Test: subjective – as long as parties in all price is a negative
which is not a breach
honesty that he is receiving equal value resolutory condition
– casual or serious but
then it complies with test & would not be and the remedy of the
simply prevents the
deemed a donation; but must not be seller is to exact
obligation of the
absurd. fulfilment or to rescind
vendor to convey title
 Inadequacy of price or aleatory character the contract
from having binding
not sufficient ground to cancel contract of force
sale; inadequacy can show vitiation of
consent & sale may be annulled based on Vendor loses and Title remains in the
vice but not on inadequacy cannot recover vendor if the vendee
6. Consensual – meeting of minds makes a ownership of the thing does not comply with
sold and delivered condition precedent of
perfect contract of sale but needs delivery to
until the contract of making payment at the
consummate
sale is resolved and time specified in the
7. Title & not a mode – gives rise to an obligation set aside contract.
to transfer; it is delivery which actually transfer
ownership; mode which actually transfer
ownership
 Contract of Sale vs. Contract of Donation Seller warrants the thingAgent makes no
sold warranty for which he
Contract of Sale Contract of Donation
assumes personal
Onerous Gratuitous
liability as long as he
Consensual Formal Contract
acts within his authority
Governed by law on sales Governed by law on
and in the name
donation
Buyer can deal with the Agent in dealing with the
thing sold as he pleases thing received, must act
Contract of Sale vs. Barter being the owner and is bound according
Contract of Sale Barter to the instructions of the
Giving of money as The consideration is the principal
payment giving of a thing
Both are governed by law on sales; both are the Contract of Sale vs. Dation in Payment
species of the genus of sales
If consideration consists of partly in money & partly by Contract of Sale Dation in Payment
thing – look at manifest intention; No pre-existing credit Pre-existing credit
If intention is not clear: Obligations are created Obligations are
Value of thing is equal or Value of thing is more extinguished
less than the amount of than the amount of money Consideration on the part Consideration of the
money of the seller is the price; debtor is the
on the part of the buyer is extinguishment of the
the acquisition of the debt; on the part of the
Contract of Sale vs. Contract of Piece of Work
object creditor, it is the
Contract of Sale Contract of Piece of acquisition of the object in
Work lieu of the original credit
The thing transferred is The thing transferred is
one which would have one not in existence and Contract of Sale vs. Lease
existed and would have which never would have
been the subject of sale to existed but for the order of Contract of Sale Lease
some other person, even the party desiring to Obligation to absolutely Use of thing is for
if the order had not been acquire it transfer ownership of specified period only with
given thing obligation to return
The primary objective of The services dominate Consideration is price Consideration is rent
the contract is a sale of the contract even though Seller needs to be owner Lessor need not be owner
the manufactured item; it there is a sale of goods of thing to transfer
is a sale of goods even involved ownership
though the item is
manufactured by labor II. PARTIES TO A CONTRACT OF SALE
furnished by the seller
and upon previous order General Rule: All parties with capacity to contract
of the customer can enter into a valid contract of sale
Within the Statute of Not within the Statute of 1. Natural
Frauds Frauds
2. Judicial – corporation / partnership /
associations / cooperatives
Contract of Sale vs. Agency to Sell
 Status of contract valid
Contract of Sale Agency to Sell  Remedies available therefore are:
Buyer receives the Agent receives the a. Specific performance
goods as owner goods as goods of the b. Rescission
principal who retains his c. Damage
ownership over them
Buyer pays the price Agent delivers the price Exception to General Rule:
which in turn he got from 1. Minors
his buyer
 Status of contract: Voidable only; therefore
Buyer, as a general rule, Agent can return the
ratifiable
cannot return the object goods in case he is
sold unable to sell the same  Remedy is action for annulment (with
to a third person partial restitution in so far as the minor is
Seller warrants the thing Agent makes no benefited)
sold warranty for which he 2. Sale by & between spouses
assumes personal a. Contract with third parties
liability as long as he  Status of contract is valid
acts within his authority b. Sale between parties
and in the name of the  Status not provided for but by law but
seller VOID according to case law
  Reason: Emptio Rei Speratae Emptio Spei
i. Prevent defraudation of creditors Sale of an expected Sale of a mere hope or
ii. Avoid situation where dominant thing expectancy that the
spouse take advantage of others thing will come to
iii. Avoid circumvention on prohibition existence; Sale of the
of donation between spouses hope itself
Sale is subject to the Sale produces effect
 Exception
condition that the even if the things does
i. Separation of property agreed
things will exist; if it not come into
(marriage settlement) does not, there is no existence, unless it is a
ii. Judicial separation of property contract vain hope
c. Common Law Spouses (Paramours) The uncertainty is with The uncertainty is with
 Status of contract: VOID regard to the quantity regard to the existence
 Rationale: evil sought to be avoided is and quality of the thing of the thing
present and not the existence
3. Others per specific provisions of law of the thing
a. Guardian with regards to property of ward Object is a future thing Object is a present
during period of guardianship thing which is the hope
b. Agent with regards to property of principal or expectancy
c. Executor/administrator with regards to the NOTES:
estate of the deceased  In case of doubt, the presumption is in favor of
d. Public officers with regards to the property emptio rei speratae which is more in keeping
of the estate with the commutative character of the contract
e. Officer of court & employee – with regards  A sale of future goods is valid only as an
to property in litigation executory contract to be fulfilled by the
acquisition and delivery of goods specified.
 While there can be sale of future property,
III. OBJECTS OF SALE
there can generally be no donation of future
property
Requisites:
 Future inheritance cannot be sold
1. THINGS:
 A contract of sale or purchase of goods to be
a. Determinate or determinable
delivered at a future time, if entered into without
b. Lawful
the intention of having any goods pass from
c. Should not be impossible
one party to another, but with an understanding
2. RIGHTS – must be transmissible
that at the appointed time, the purchaser is
Exceptions:
merely to receive or pay the difference between
a. Future inheritance
the contract and the market prices, is illegal.
b. Service
Such contract falls under the definition of
Goods which may be Object of Sale “futures” in which the parties merely gamble on
1. Existing goods – goods owned or possessed the rise or fall in prices and is declared null and
by the seller void by law.
2. Future goods – goods to be manufactured,
Licit & Vendor must have a Right to Transfer
raised or acquired by the seller after the
perfection of the contract Subject Matter
1. Licit – must be within the commerce of men
Refers to subject matter that are existing & not
existing but capable of existence VOID Subject Matter:
a. Contrary to law
 If this is present, status of contract: VALID
b. Simulated/fictitious
 If absent: NO CONTRACT SITUATION,
c. Did not exist at a time of transaction
therefore no cause of action
d. Outside commerce of men
 If mere pipe dream: VOID
e. Impossible service
a. SALE OF THINGS HAVING POTENTIAL
f. Intention cannot be ascertained
existence (Emptio Rei Speratae)
g. By provision of law
b. SALE OF HOPE (Emptio Spei)
2. Seller must be OWNER – only at a time of
consummation since tradition transfers
ownership but to have a perfected contract of
sale. Vendor need not be owner of thing; can
be validated/ratified by subsequent acquisition
of title by seller
Determinate & Determinable Real
 Absence: VOID; there is subject matter but 1. When price stated is one intended by parties
intention regarding subject matter cannot be  If fictitious: no intention with respect to
ascertained price - VOID
 Kinds of subject matter:  If False/simulated: what appears in
1. Specific – Determinate contract is not the true price
 Particularly designated or segregated a. VALID if there is true consideration
from all others of the same class b. VOID but if none (because it is fictitious)
2. Generic – Determinable 2. Valuable
 Test: Reach a point of description  When not valuable – VOID
where both minds concur  When contract is onerous, presumed to
 At the time the contract is entered have valuable consideration
into, the thing is capable of being  Nominal consideration w/c is common law
made determinate without the concept does not apply (P1.00)
necessity of a new or further  Gross inadequacy of price in ordinary sale
agreement between parties does not render contract void unless it is
 Exact quantity not essential shocking to conscience of man.
 Sale of generic things – VALID; still Except:
executory a. Judicial Sale
 There can only be contract of sale  Shocking to conscience of man
when subject is finally chosen for  Higher price can be obtained at
delivery – already segregated or resale
designated b. Rescissible contracts due to lesion
3. Undivided interest (BUYER becomes co- c. Sales with right to repurchase (raises
owner) presumption of equitable mortgage) –
4. Undivided share in mass of fungible Remedy is reformation
goods (BUYER becomes co-owner)
Manner of payment must be agreed upon
 Deemed to be an essential requisite because it
IV. PRICE
is part of the presentation of the contract
Price – the sum stipulated as the equivalent of the  Integral part of concept of price
thing sold and also very incident taken into  If there is failure to meet minds as regards term
consideration for the fixing of the price, put to the of payment: CASH BASIS
debit of the vendee and agreed to by him.  Must be certain or at least ascertainable
 Effect is absent: NO CONTRACT SITUATION
Requisites:
1. Certainty or ascertainable at the time of Effect when the price is fixed by the third
perfection person designated:
2. Real, not fictitious
3. In some cases, must not be grossly inferior to General Rule: Price fixed by a third person
the value of the thing sold designated by the parties to binding upon them
4. Paid in money or its equivalent Exceptions:
1. When the third person acts in bad faith or by
Certain or Ascertainable mistake
It is not necessary that the certainty of the price be 2. When the third person disregards the specific
actual or determined at the time of the execution of instructions or the procedure marked out by
the contract. The price is certain in the following the parties
cases:
1. If the parties have fixed or agreed upon a Effect when the price is not fixed by the third
definite amount person designated:
 The fixing of the price can never be left to 1. If the third person refuses or cannot fix the
the discretion of one of the contracting price, the contract shall become ineffective,
parties. However if the price fixed by one of unless the parties subsequently agree upon
the parties is accepted by the other, the the price
sale is perfected. 2. If the third person is prevented from fixing the
2. If it be certain with reference to another thing price by the fault of the seller or buyer, the
certain party not in fault may obtain redress against
3. If the determination of the price is left to the the party in fault
judgment of a specified person or persons even
before such determination
4. In the case provided under Art. 1472 NCC
Effect of Gross Inadequacy of Price: 2. Perfection – concurrence of all requisites;
1. Voluntary Sales meeting of minds
General Rule: Mere inadequacy of the 3. Consummation – parties perform their
price does not affect validity of the sale respective undertakings
 A valuable consideration, however
small or nominal, if given or stipulated Policitation
in good faith is, in the absence of fraud, 1. Offer is floated but not absolute
sufficient. 2. Acceptance is likewise floated but conditional
 Future inheritance cannot be sold
Rules:
Exceptions:
1. Offer is floated – prior to acceptance, may
a. Where low price indicates vice of
be withdrawn at will by offeror
consent, sale may be annulled; or
2. Offer floated with a period – without
contract is presumed to be an equitable
acceptance, extinguished when period has
mortgage
ended & maybe withdrawn at will by offeror;
b. Where the price is so low as to be
right to withdrawn must not be arbitrary
“shocking to conscience”, sale may be
otherwise, liable to damage under Art. 19,
set aside.
20, 21 of Civil Code
2. Involuntary or Forced Sales
3. Offer floated with a condition –
General Rule: Mere inadequacy of the
extinguished by happening/non-happening
price is not a sufficient ground for the
of condition
cancellation of the sale, if property is real.
4. Offer floated without period/without
Exceptions:
condition – continues to be valid depending
a. Where the price is so low as to be
upon circumstances of time, place & person
shocking to the moral conscience,
5. Offer is floated & there is counter-offer –
judicial sale of personal property will be
original offer is destroyed, there is a new
set aside
offer; cannot go back to original offer
b. In the event of a resale, a better price
6. Offer is floated – no authority of offeror to
can be obtained
modify offer
Note: The validity of the sale is not
7. Offer is accepted absolutely – proceed to
necessarily affected where the law gives to
perfected stage
the owner the right to redeem, upon the
theory that the lesser the price, the easier it
Option Contract
is for the owner to effect redemption.
 Floats in the policitacion stage
Effect where price is simulated  Offer with a period but founded upon a
1. If it is shown to have been in reality a separate consideration distinct from the price
donation or some other act or contract  No presumption of consideration, needs to be
 The sale is void but the act or contract proven
may be valid as a donation  Characteristics:
2. If not a. Not the contract of sale by itself, distinct
 The contract is void and inexistent b. Nominate
c. Principal; but can be attached to other
Effect of Failure to determine price: principal contracts
1. Where contract executory d. Onerous
 The contract is inefficacious e. Commutative
2. Where the thing has been delivered to and f. Unilateral
appropriated by the buyer  To be perfected & give rise to action, the
 The buyer must pay a reasonable following must concur
price therefore a. subject matter of sale must be agreed upon
b. price of sale & manner of payment must be
Reasonable price – generally the market price at agreed upon
the time and place fixed by the contract or by law c. consideration separate & distinct from price
for the delivery of the goods d. period – as per contract; if period not
provided – prescribes in 10 years (written
V. FORMATION OF CONTRACT OF SALE contract)
e. how exercised: notice of acceptance should
3 Stages in Life of a Contract of Sale be communicative to offeror without actual
1. Policitation / Negotiation Stage – offer is payment as long as there is delivery of
floated, acceptance is floated but they do payment in consummation stage
not meet; time parties indicate their interest
but no concurrence of offer & acceptance
2 Situations in an Option Contract Option Contract vs. Right of First Refusal
1. With separate consideration Option Contract Right of First Refusal
 Legal consequence: Principal contract; Accessory; cannot
a. option contract is valid stands on its own stand on its own
b. offeror can not withdrawn offer until Needs separate Does not need
after expiry period consideration separate consideration
c. subject to rescission, damages but Subject matter & price There must be subject
not to specific performance because must be valid matter but price not
this is not an obligation to give important
2. Without separate consideration Not conditional Conditional
 Legal consequence: Not subject to specific Subject to specific
 OLD RULE: performance performance
a. Offer is still valid, but
b. Option contract is void Perfection
c. Not subject to rescission, damages  Sale is a consensual contract, perfected by
 NEW RULE: Right of first refusal meeting of minds regarding subject matter &
recognized price
 Meeting of minds:
Right of First Refusal 1. Offer – certain
 It is a right of first priority all things and 2. Acceptance – absolute
conditions being equal; there should be
 Qualified acceptance – merely a
identity of the terms and conditions to be
counter-offer which needs to be
offered to the optionee and all other
absolutely accepted to give rise to
prospective buyers, with optionee to enjoy
perfected contract of sale
the right of first priority. A deed of sale
 Business ads are mere invitations to
executed in favor of a third party who
make an offer except when it appears
cannot be deemed a purchaser in good
to be otherwise
faith, and which is in violation of the of the
 Acceptance by letter/telegram – binds
right of first refusal granted to the optionee
only at time it came to knowledge of
is NOT voidable under the Statute of
SELLER; prior thereto – offer may still
Frauds, such contract is valid BUT
be withdrawn
rescissible under Article 1380 to 1381(3) of
 Must be exact terms to be considered
the New Civil Code
absolute
 The basis of the right of first refusal must be  When sale is subject to suspensive condition,
the current offer to sell of the seller or offer no perfected contract of sale yet; becomes
to purchase of any prospective buyer. Only perfected only upon happening of condition
after the optionee fails to exercise its right  In sale at auction, perfected when auctioneer
of first priority under the same terms and announces its perfection by the fall of the
within the period contemplated could the hammer or in other customary manner may
owner validly offer to sell the property to a impose terms under bidder may retract his bid;
third person, again, under the same terms owner of property sold at auction may impose
as offered to the optionee terms under which the auction will proceed & it
 The lessee’s right of first option to buy the shall be binding within the bidders are aware
leased property in case of its sale is but a  Place of perfection: where the meeting of
part of the bigger right to lease the said minds happen; when acceptance sent by mail,
property from the lessor. The option was perfection is deemed where the offer is made
given to the lessee because she was the  Performance has nothing to do with perfection
lessee of the subject property. It was a stage
component of the consideration of the
lease. The option was by no means an Earnest Money – or “ARRAS” is something of
independent right which can be exercised value to show that the buyer was really in earnest,
by the lessee. If the lessee is barred by the and given to the seller to bind the bargain. It is
contract from assigning her right to lease considered as:
the subject property to any other party, the a. Part of the purchase price
lessee is similarly barred to assign her first b. Proof of perfection of the contract
option to buy the leased property to
Note: it shall be deducted from the total price
another.
 Earnest Money Option Money  Execution
Title passes to the Ownership is reserved  Exception:
buyer upon delivery of to the seller and is not a. When there is stipulation to
the thing sold to pass until full contrary, execution does not
payment produce effect of delivery
In case of non- In case of non- b. When at the time of execution of
payment, an action for payment, there can be
instrument, subject matter was
specific performance action for specific
not subject to control of the seller
or for rescission can be performance
filled by the injured  Subject matter should be
party within control of seller; he
Part of the purchase Money given as a should have capacity to
price distinct consideration deliver at the time of execution
for an option contract of public instrument when he
When given, the buyer The would-be-buyer is wants to effect actual delivery
is bound to pay the not required to buy  Such capacity should subsist
balance for reasonable time after
Given when there is Applies to a sale not execution of instrument
already a sale yet perfected (reason: time depends on
circumstances of persons,
Consummation places & things)
 Stage where parties both comply with their
 Effect when 2 requisites do not concur:
obligation
no constructive delivery; no compliance
 Nature of diligence required: diligence of good
on part of SELLER to deliver. Even
father of family unless other requirement is when thing is mortgaged, seller can still
stipulated deliver because naked title still belongs
 Consequence: Seller will guilty of breach if to him & can still do acts of ownership
thing is lost through his fault including conveyance

Delivery - Is a mode of acquiring ownership, as a Constructive delivery requires three things

consequence of certain contracts such as sale, by before ownership may be transferred:
virtue of which, actually or constructively, the object
1. The seller must have control over the thing
is placed in the control and possession of the
2. The buyer must be put under control
vendee.
3. There must be the intention to deliver the
Different kinds of delivery: thing for purposes of ownership
1. Actual – when thing sold is placed in the control
& possession of buyer When is the vendor not bound to deliver the
2. Constructive thing sold:
 Traditio Longa Manu – delivery of the thing 1. If the vendee has not paid him the price
by mere agreement; when SELLER points 2. If no period for payment has been fixed in the
to the property without need of actually contract
delivering 3. Even if a period for payment has been fixed in
 Tradito Brevi Manu – before contract of the contract, if the vendee has lost the right to
sale, the would be buyer was already in make use of the same
possession of the would be subject matter
of sale (ex: as lessee) Sale or Return - Property is sold, but the buyer,
 Symbolic delivery – as to movables: ex. who becomes the owner of the property on
Delivery of the keys to a car delivery, has the option to return the same to the
 Constitutum possessarium - at the time of seller instead of paying the price.
perfection of contract, seller continues to Notes:
hols possession merely as a holder  It is a kind of sale with a condition subsequent.
 Negotiable documents of title & non-  The buyer must comply with the express or
negotiable instruments implied conditions attached to the return
 transferee acquires title of transferor privilege; otherwise, the sale becomes
 when delivered without negotiation, it is absolute
a mere assignment  Buyer, being the owner, bears the risk of loss
 Intangibles/incorporeal property
 through public instrument
 execution is equivalent to delivery if from
the deed, contrary does not appear
Sale on trial, approval, or satisfaction - A  if impossible, remedies of buyer:
contract in the nature of an option to purchase if the  LESS IN AREA
goods prove to be satisfactory, the approval of the  Rescission
buyer being a condition precedent.  Proportional reduction in price
Rules: – lack in area should not be
1. Title remains in the seller less than 1/10 of area agreed
2. Risk of loss remains with seller except when upon
the buyer is at fault or has agreed to bear the  GREATER IN AREA
loss  Accept per stipulation & reject
3. Buyer must give goods a trial, except where it the rest
is evident that it cannot perform the work  Accept whole area – pay at
4. Period within which buyer must signify his contract rate
acceptance runs only when all the parts  Not applicable to judicial sales
essential for the operation of the object have B. Sold for lump sum
been delivered.  When price per unit not indicated
5. If it is stipulated that a third person must satisfy  Is area delivered is either greater or
approval or satisfaction, the provision is valid, lesser – price will not be adjusted
but the third person must be in good faith. If accordingly
refusal to accept is not justified, seller may still
sue. Delivery of Fruits & Accessions/Accessories
6. Generally, the sale and delivery to a buyer who  Right to fruits & accessions/accessories
is an expert on the object purchased is not a accrue from time sale is perfected
sale on approval, trial, or satisfaction.  but no real right over it until it is delivered

Completeness of Delivery Delivery through Carrier

1. Movables – delivery of thing plus accessories General Rule: Where the seller is authorized or
& accessions in the condition in which they required to send the goods to the buyer, delivery to
were upon the perfection of the contract the carrier is delivery to the buyer.
including the fruits Exceptions:
 LESS – buyer has 2 options 1. When a contrary intention appears
a. Reject 2. Implied reservation of ownership under pars.
b. Accept 1,2,3 of Art. 1503
 when accepts with knowledge that
seller is not going to perform contract Kinds of Delivery to the Carrier:
in full, he must pay at price stipulated 1. Free Along Side (FAS) - When goods delivered
 when accepts & consumes before alongside the ship, there is already delivery to
knowledge that buyer will both the buyer
perform contract in full, liable only for 2. Free On Board (FOB)
fair value of goods delivered a. Shipment – when goods are delivered at
 LARGER – buyer has 3 options ship at point of shipment; delivery to
a. Accepts per contract & rejects the rest carrier by placing goods on vessel is
b. Accept the whole – pay the price delivery to buyer
stipulated b. Destination – when goods reach the port
c. Reject whole if subject matter is even if not disembarked yet from the
indivisible vessel, there is delivery to the buyer
 MIXED WITH GOODS OF DIFFERENT 3. Cost, Insurance, Freight (CIF)
DESCRIPTION – buyer has 2 options: a. when buyers pays for services of carrier –
a. accepts good w/c are in accordance with delivery to carrier is delivery to buyer;
contract & reject the rest carrier is agent of the buyer
b. reject goods entirely – if indivisible b. when buyer pays seller the price – from
moment the vessel is at port of destination,
2. Immovables there is already delivery to buyer.
A. Sold per unit or number
 with statement of its area, rate at Seller’s duty after delivery to carrier
certain price 1. To enter on behalf of buyer into such
 deliver all that may have been stated contract reasonable under the
in the contract circumstances
2. To give notice to buyer regarding necessity
of insuring the goods
Place of Delivery of Goods b. When delivered & does any act
1. Where there is an agreement, place of delivery inconsistent with ownership of seller
is that agreed upon c. Retains without intimating to seller
2. Where there is no agreement, place of delivery that he has rejected
determined by usage of trade  Sale of Goods on installment: a. Goods
3. Where there is no agreement and no prevalent must be delivered in full, except when
usage, place of delivery is the seller’s place stipulated b. When not examined by
4. In any other case, place of delivery is the buyer – not accepted until examined or
seller’s residence at least had reasonable time to examine
5. In case of specific goods, which to the  Acceptance of goods in general, absent
knowledge of the parties at the time the contrary express stipulation, does not
contract was made were in some other place, discharges seller from liability in case of
that place is the place of delivery, in the breach of warranties (unless no notice
absence of agreement or usage of trade to the or failure to give it within reasonable
contrary time)
Time of Delivery of Goods  When buyer has a right to refuse goods,
1. Stipulated time no need to return; shall be considered
2. In the absence thereof, within a reasonable as depositary; unless there is
time stipulation to contrary

Payment of the Purchase Price DOUBLE SALE

General Rule: The seller is not bound to deliver General Rule: First in time, priority in right
the thing sold unless the purchase price has been When does it apply: when not all requisites
paid. embodied in 1544 concur
Exception: The seller is bound to deliver even if Requisites: VOCS
the price has not been paid, if a period of payment 1. Two or more transactions must constitute Valid
has been fixed sales
2. They must pertain exactly to the same Object
Who bears expenses of Delivery? or subject matter
Answer: Buyer 3. Two or more buyers who are at odds over the
rightful ownership of the subject matter must
Sale of description/sample represent Conflicting interests; AND
1. Sample – goods must correspond with 4. They must be bought from the same or
sample shown. immediate Seller
2. Description – goods must correspond with Rules of Preference:
description or sample 1. Personal Property
 Effect if there is no compliance: a. First possessor in good faith
RESCISSION may be availed of by the 2. Real Property
buyer a. First registrant in good faith
b. First possessor in good faith
Obligations of Buyer c. Person with oldest title in good faith
1. Pay the price
 Buyer is obligated to pay price according to Notes:
terms agreed upon – regarding time, place  Purchaser in Good Faith – one who buys the
& amount property of another without notice that some
 If payment of interest is stipulated – must other person has a right to or interest in such
pay; if amount of interest not mentioned – property and pays a full and fair price for the
apply legal rate same at the time of such purchase or before he
has notice of the claim or interest of some other
 When buyer defaults – constitutes breach:
person in the property
subject to specific performance/rescission
 Registration requires actual recording; if the
& damages; interest to be paid also from of
property was never really registered as when
default
the registrar forgot to do so although he has
2. Accept delivery of thing sold
been handed the document, there is no
 Where to accept: at time & place stipulated
registration.
in the contract; if none specified – at the
 Possession is either actual or constructive
time & place of delivery
since the law made no distinction
 Goods; there is acceptance when:
 Possession in Art.1544 includes not only
a. He intimates to seller that he has
material but also symbolic possession
accepted
 Title means title because of sale, and not any  Effect: buyer acquired no better right than
other title or mode of acquiring property transferor
 When the property sold on execution is  Legal effect: CAVEAT EMPTOR – BUYER
registered under Torrens, registration is the BEWARE
operative act that gives validity to the transfer a. co-owner sells whole property prior to
or creates a lien on the land, and a purchaser partition – sale is void as to his spiritual
on execution sale is not required to go behind share
the registry to determine the conditions of the b. co-owner sells definite portion to
property. partition – sale is void as to other co-
Exception: Where the purchaser had owner but valid as to his spiritual share
knowledge, prior to or at the time of the levy, of  Exception:
such previous lien or encumbrance, his a. owner by his conduct is precluded from
knowledge is equivalent to registration. denying seller’s authority (ESTOPPEL)
b. contrary is provided for in recording
VI. SALE BY NON-OWNER OR BY ONE laws (pd 1529)
HAVING VOIDABLE TITLE c. sale is made under statutory power of
sale or under a court of competent
General Rule: Buyer acquires no title even if in jurisdiction
good faith and for value under the maxim Nemo d. sale is made under merchant’s store in
dat quid non habet (“You cannot give what you accordance with code of commerce &
do not have”) special laws

Exception: (SMERVS) B. Sale by Seller with Voidable Title

1. Sales Sanctioned by judicial or statutory Perfection Stage
authority Valid sale – buyer acquires title of goods
2. Purchases in a Merchant’s store, fairs or
markets Consummation Stage
3. Owner is Estopped or precluded by his conduct Valid sale – if title has not yet been avoided
4. When sale is made by the Registered owner or buyer buys goods under following condition:
apparent owner in accordance with recording a. in good faith
or registration laws b. for value
5. When the seller has a Voidable title which has c. without notice of seller’s defect of title
not been avoided at the time of the sale
6. When a person who is not the owner sells and VII. LOSS, DETERIORATION, FRUITS
delivers a thing, Subsequently acquires title & OTHER BENEFITS
thereto
Rules on Risk of Loss & Deterioration:
A. Sale by Non-owner 1. The thing sold is lost before perfection: Seller
Perfection Stage bears the loss
a. Sale by owner – valid 2. The things sold is lost at the time of perfection:
b. Sale by non-owner – valid Contract is void or inexistent
 Because ownership is necessary only 3. The thing sold is lost after perfection, but before
transfer title to goods; at perfection delivery:
stage, no obligation on part of seller to General Rule: Who bears the risk of loss is
transfer ownership governed by the stipulations in the contract
 Law on estoppel further bolster it: title In the absence of any stipulation:
passes by operation of law to grantee First View: Buyer bears the loss as an
when person who is not owner of goods exception to the rule of res perit domino
sold delivers it and later on acquires title Exceptions:
thereto  When object sold consists of fungible
 Since valid, action to annul is improper; goods for a price fixed according to weight,
there is perfected contract number or measure
Consummation Stage  Seller is guilty of fraud, negligence, default
 Contract of sale is valid because it has or violation of contractual terms
passed perfected stage, despite:  Object sold is generic
a. seller is not owner 4. After delivery
b. seller has no authority to sell  Res perit domino
 What is void is the transfer of title/  Owner is buyer so buyer bears risk of loss
ownership did not pass  Delivery extinguish ownership; the seller &
creates a new one in favor of the buyer
 VIII. REMEDIES OF PARTIES FOR b. Give notice of claim to carrier / bailee
BREACH OF CONTRACT OF SALE in possession thereof
 Notice by seller to buyer is not required;
Subject Matter: MOVABLES notice to carrier is essential

 REMEDIES OF UNPAID SELLER 3. Special right of resale

Requisites:  Requisites:
 Subject Matter: Goods 1. goods are perishable
 Seller is unpaid 2. stipulated the right of resale in case
 Physical possession is with seller buyer defaults in payment
3. buyer in default for unreasonable time
1. Possessory Lien  notice by seller to buyer not essential
 Seller is not bound to deliver if buyer  why special – there are things which seller
has not paid him the price cannot do in ordinary sale:
 Right to retain; cannot be availed when 1. ownership is with buyer but seller can
seller does not have custody sell goods
 Exercisable only in following 2. title accorded to buyer is destroyed
circumstances: even without court intervention
a. goods sold without stipulation as to 4. Special right to rescind
credit
 why special – ownership of goods already
b. goods sold on credit but term of
with buyer but seller may still rescind;
credit has expired
ownership is destroyed even without court
c. buyer becomes insolvent
intervention but in ordinary sale, need to go
 When part of goods delivered, may still
to court to destroy transfer of ownership
exercise right on goods undelivered
 Requisites:
 Instances when possessory lien lost:
1. Expressly stipulated
a. seller delivers goods to carrier for
2. Buyer is in default for unreasonable
transmission to buyer without
time
reserving ownership in goods or
 Notice needed to be given by seller to buyer
right to possess them
b. buyer or agent lawfully obtains  REMEDIES OF BUYER
possession of goods
c. waiver When Seller fails to deliver, buyer may seek
 loses lien when he parts with goods SPECIFIC PERFORMANCE WITHOUT
(still has stoppage in transitu) GIVING SELLER OPTION TO RETAIN
 notice by seller to buyer not essential GOODS ON PAYMENT OF DAMAGES

2. Stoppage in transit Subject Matter: SALE OF MOVABLES ON

Requisites: INSTALLMENT
1. Goods are in transit
 REMEDIES OF UNPAID SELLER
 When goods are in transit
1. Exact fulfillment should the buyer fail to pay
 From the time goods are
2. Cancel the sale if buyer fails to pay 2 or
delivered to carrier for purpose
more instalments
of transmission to buyer
3. Foreclose on chattel mortgage if buyer fails
 Goods rejected by buyer &
to pay 2 or more instalments
carrier continues to possess
 If buyer chooses foreclosure, no further
them
action against buyer to recover any
 When goods no longer in transit
unpaid balance of the price
 Reached point of destination
 When is law is applicable: Sale on
 Before reaching destination, buyer
movables by instalment
met seller along the way
 Sale on installment: payment by several
 Goods are supposed to have been
partial payments in small amount
delivered to buyer but carrier
refused  Rationale of the law: Buyer is lulled into
2. Shown by seller that buyer is insolvent thinking that he could afford because of
(failure to pay when debts come due ) small amounts per installment & at the
same time remedy abuse of
 How is right exercised:
commercial houses
a. Obtain actual possession of
goods  Nature of remedies: alternative & not
cumulative
  Coverage: sale & financing transaction b. Cancellation if failure to pay within 60
& contracts of lease with option to days grace
purchase c. 30 days notice before final cancellation
 Action : Judicial & Extrajudicial  buyer can still pay within the 30
days period
Subject Matter: IMMOVABLES (IN GENERAL)  with interest
 Purpose of law : Protect buyers in
 REMEDIES OF SELLER
installment against oppressive conditions
1. Anticipatory breach
 Notice needed – waiver thereof id
 Seller has reasonable grounds to fear
oppressive
loss of immovable sold & its price – sue
 Apply to contracts even before law was
for RESCISSION
enacted
2. Non – payment of price
 Stipulation to contrary is void
 RESCISSION
 Other rights:
 REMEDIES OF BUYER a. Sell rights to another
1. Disturbed in possession or with reasonable b. Reinstate contract by updating within
grounds to fear disturbance 30 days before cancellation
 SUSPEND PAYMENT c. Deed of Sale to be done by notarial act
2. In case of subdivision or condo projects d. To pay full installment in advance the
 If real estate developer fails to comply balance of price anytime without
with obligation according to approved interest
plan: e. Have full payment annotated in
a. RESCIND certificate of title
b. SUSPEND PAYMENT UNTIL
Remedy of Rescission in Contracts covering
SELLER COMPLIES
Immovables
Subject Matter: IMMOVABLES  Nature: Judicial
(BY INSTALLMENT)  Extrajudicial Rescission
 1592 – Applies only to contract of sale  allowed if stipulated; burden to sue shifts to
 Maceda Law – applies to COS & CTS & party who do not like rescission
Financing  court still has final say as to propriety of
rescission
MACEDA LAW  Forfeiture of amounts valid being in nature of
 Coverage: REAL ESTATE – defines space v penal clause
CONDO – not defined space (w/ common
areas)
1. contract of sale IX. CONDITION & WARRANTIES
2. contract to sell A. Condition
3. financing transactions  When a contract contains a condition, the
 Excluded: non-happening of which would not
1. Industrial constitute a breach but extinguishes the
2. Commercial obligation
3. sale to tenants under agrarian laws  However, if party to the sales contract has
 RIGHTS GRANTED TO BUYERS: promised that the condition should happen
1. Buyer paid at least 2 years instalment or be performed, the non-performance of
a. Pay without interest the balance within which may be treated by parties as breach
grace period of 1 month for every year
of installment payment B. Express Warranties
 Grace to be exercised once every 5 1. it must be an affirmation of fact or any
years promise by seller relating to the subject
b. When no payment - cancelled; buyer matter of sale
entitled to 50% of what he has paid + 2. natural tendency of affirmation or promise
5% for every year exceeding 90% of is to induce buyer to purchase subject
payments made matter
 Cancellation to be effected 30 days 3. buyer purchases the subject matter relying
from notice & upon payment of cash thereon
surrender value  when breached, seller is liable for
2. Buyer paid less than 2 years instalment damages
a. Grace period is 60 days
C. Implied Warranties 3. Warranty Against Encumbrances (non-
 deemed included in all contracts of sale apparent) requisites:
whether parties are actually aware or not a. immovable sold is encumbered with non –
aware or whether they were intended or apparent burden or servitude not
not; by operation of law mentioned in the agreement
1. Warranty that seller has a right to sell b. nature of non – apparent servitude or
 refers to consummation stage since in burden is such that it must be presumed
consummation stage, it is where that the buyer would not have acquired it
ownership is transferred by tradition had he been aware thereof
 not applicable to sheriff, auctioneer,  when breach of warranty exist: buyer
mortgagee, pledgee may ask for rescission or indemnity
 warranty not applicable when non –
2. Warranty against eviction
apparent burden or servitude is
 unless contrary provision appears in
recorded in the Registry of Property –
contract
unless there is expressed warranty that
 when ownership is transferred, buyer
the thing is free from all burdens &
shall enjoy the legal and peaceful
encumbrances
possession of the thing
 REQUISITES OF BREACH OF 4. Warranty Against Hidden Defects
WARRANTY AGAINST EVICTION:  SELLER does not warrant patent defect;
1. buyer is evicted in whole or in part caveat emptor
from the subject matter of sale  Except when hidden
2. there is a final judgement a. subject matter may be movable or
3. basis of eviction is a right prior to immovable
sale or an act imputable to vendor b. nature of hidden defect is such that it
4. seller has been summoned in he should render the subject matter unfit
suit for eviction at the instance of for the use of which it was intended or
buyer; or made 3rd party defendant should diminish its fitness
through 3rd party complaint brought c. had the buyer been aware, he would
by buyer not have acquired it or would have
 no appeal needed nor a need to resist given a lower price
eviction for right to accrue; enough that  when defect is visible or even if visible if
aforementioned requisites are complied the buyer is an expert by reason of his
with trade or profession, seller is not liable
 warranty cannot be enforced until  obligation of seller for breach depends on
aforementioned requisites concur whether he has knowledge of such defect
 applies to judicial sale; judgement or not
debtor responsible for eviction unless a. seller is aware – seller should return
otherwise decreed in judgement price & refund expenses of contract
 vendor not liable for eviction if adverse with damages
possession had been commenced b. seller is not aware - seller should
before sale but prescriptive period is return price and interest & refund
completed after transfer expenses ( no damages )
 buyer may elect between withdrawing
LIABILITY OF SELLER: (eviction w/c caused from contract or demanding proportionate
buyer to lose whole subject matter) reduction of price with damages in either
1. value of thing at time of eviction ( whether or case
not -/+ of price of sale )  applicable to judicial sale except
2. value of income of fruits judgement debtor not liable for damages
3. cost of suit which caused the eviction  action to prescribe 6 months from delivery
4. expenses of contract if buyer paid for them of subject matter
5. damages & interests and ornamental expenses
if sale was made in bad faith 5. Defects on Animals
 even in the case of professional inspection
RIGHTS OF BUYER WHEN DEPRIVED OF ONLY but hidden defect is of such nature that
PART OF THE SUBJECT MATTER BUT WOULD expert knowledge is not sufficient - defect
NOT HAVE BOUGHT SUCH PART IF NOT IN shall be considered as REDHIBITORY
RELATION FOR THE WHOLE:  if vet fails to discover through ignorance or
1. rescission bad faith he is liable for damages
2. mutual restitution a. sale of animals on teams ( 2 or more )
  when only one is defective, only 2. Sale of Goods by sample
one is redhibited & not the others  If seller is a dealer in goods of that kind,
 exception: when it appears that there is an implied warranty that the
purchase of team will not be done goods shall be free from defect
without the defective one rendering them unmerchantable which
 apply to sale of other things would not be apparent on reasonable
b. sale of animals at fair or public auction examination of the sample
 no warranty against hidden defects
c. sale of animals with contagious E. Effects of Waiver
disease is void  Parties may increase or diminish implied
d. sale of unit of animal warranty against eviction; but effect
 void if use / service for which they depends on good faith or bad faith on the
are acquired has been stated in the part of the seller.
contract and they are found to be 1. seller in bad faith & there is waiver
unfit thereof against eviction – null & void
 prescription of action: 40 days from 2. buyer without knowledge of a particular
date of delivery to buyer risk made general renunciation of
 if sale is rescinded, animals to be warranty – not waiver but merely limits
returned in same condition when liability of seller in case of eviction (pay
they are acquired; buyer shall value of subject matter at time of
answer for injury / loss due to his eviction)
fault 3. buyer with knowledge of risk of eviction
assumed its consequences & made a
 buyer may elect between
waiver – vendor not liable (applicable
withdrawing from sale or
only to waiver of warranty against
demanding proportionate
eviction)
reduction of price with damages in
either case  when goods delivered to buyer he
cannot rescind sale
CONDITION WARRANTY  if he knew of the breach of warranty
Purports to existence Purports to when he accepted goods without
of obligation performance of protest
obligation  if he fails to return or offer to return
Obligation must be Need not be stipulated; goods to seller in substantially as
stipulated to form part may form part of
good condition as they were at time
of the obligation obligation by provision
ownership was transferred
of law
May attach itself to Relates to the subject  when goods deteriorated, buyer can
obligation of seller to matter itself or to still return them in that condition if
deliver possession & obligation of the seller such is due to breach or warranty
transfer as to the subject of the
sale F. Buyer’s Option in Case of Breach of
Warranty
D. Specific Implied Warranties in the Sales of 1. Accept goods & set up breach of warranty
Goods by way of recoupment in diminution or
1. Warranty as to fitness & quality; requisites: extinction or the price.
a. buyer makes known to seller the 2. Accept goods & maintain action against
particular purpose for which goods are seller for damages
acquired and it appears that the buyer 3. Refuse to Accept goods & maintain action
relied on the seller’s skill or judgement against seller for damages
b. goods are bought by description from 4. Rescind contract of sale & refuse to receive
seller who deals in goods of that goods/return them when already received.
description
 no warranty unless there is stipulation
in case of sale of specified article under X. EXTINGUISHMENT
its patent or trade name
GROUNDS:
 measure of damage: difference
between value of goods at time of 1. Same grounds whereby obligations in general
delivery and value they would have had are extinguished:
if they had answered to the warranty a. payment or performance
b. loss of the subject matter
c. condonation or remission
 d. confusion or merger of rights or creditor and 2. Circumvention of prohibition against pactum
debtor commissorium – creditor cannot appropriate
e. compensation the things given by way of pledge or mortgage;
f. novation remedy here is foreclosure
g. annulment  real intention of parties is that the
h. rescission pretended purchase price is money loaned
i. fulfillment of a resolutory condition & to secure payment of the loan, sale with
j. prescription pacto de retro is drawn up
2. Conventional redemption – only applies to
contract of sale Period of Redemption
3. Legal redemption – only applies to contract of 1. No period agreed upon – 4 years from date of
sale contract
2. When there is agreement – should no exceed
CONVENTIONAL REDEMPTION 10 years; if it exceeded, valid only for the first
 Seller reserved the right to repurchase thing 10 years.
sold 3. When period to redeem has expired & there
 Coupled with obligation to return price of the has been a previous suit on the nature of the
sale, expensed of contract & other legitimate contract – seller shill has 30 days from final
payments and the necessary & useful judgement on the basis that contract was a sale
expenses made on the thing sold with pacto de retro: rationale: no redemption
 Right must be recognized in the deed of sale; due to erroneous belief that it is equitable
must be the same contract mortgage which can be extinguished by paying
the loan.
Option to Purchase 4. When period has expired & seller allowed the
 Right to repurchase the thing sold granted to period of redemption to expire – seller is at fault
the vendor in a separate instrument from the for not having exercised his rights so should not
deed of sale EQUITABLE MORTGAGE be granted a new period
 A contract with right to repurchase is equitable
mortgage if the following requisites concur: Effect when there is no redemption made:
1. price of sale with right to repurchase is 1. jurisprudence before the NCC: buyer a retro
unusually inadequate automatically acquires full ownership
2. seller remains in possession as a lessee or 2. under present art 1607: there must be judicial
otherwise order before ownership of real property is
3. upon / after expiration of right to consolidate in the buyer a retro
repurchase, another instrument extending
How is redemption effected:
the period of redemption is executed
1. Seller a retro must return first pay the following:
4. buyer retains for himself a part of the
a. the price of the thing sold
purchase price
b. expensed of the contract and other
5. seller binds himself to pay taxes on thing
legitimate payments made by reason of the
sold
sale
6. real intention of parties is to secure the
c. necessary and useful expensed made on
payment of a debt or performance of other
the thing sold
obligation
2. Valid tender of payment is sufficient
Note: In case of doubt – in determining whether it 3. Mere sending of notice without valid tender is
is equitable mortgage or sale a retro (with right of insufficient
repurchase – it shall be construed as equitable 4. Failure to pay useful & unnecessary expenses
mortgage) entitled vendee to retain land unless actual
reimbursement is made
What to look for in determining Nature of
Contract In Case of Multi-Parties
1. Language of the contract 1. When an undivided thing is old because co-
2. Conduct of parties – to reveal real intent owners cannot agree that it be allotted to on of
them – vendee a retro my compel the vendor to
REMEDY AVAILABLE TO VENDOR: ask for redeem the whole thing
reformation of contract 2. When an undivided thing is sold by co-owners
/ co-heirs, vendors a retro may only exercise
Rationale Behind Provision on Equitable
his right over his respective share; vendee a
Mortgage:
retro may demand that they must come to an
1. Circumvention of usury law
agreement first and may not be compelled to
consent to a partial redemption
3. When rights for co-owners over an undivided Sale of hereditary right Sale of interest in
thins is sold as regards to their own share – over no particular particular property
vendee retro cannot compel one to redeem the object
whole property
3. among adjoining owners
4. Should one of the co-heirs/co-owners succeed
a. rural land
in redeeming the property – such vendor a retro
shall be considered as trustee with respect to  where piece of rural land has an
the share of the other co-owners/co-heirs. area not exceeding 1 hectare,
adjoining owner has right to redeem
Fruits unless grantee does not own a rural
1. what controls is the stipulation between parties land
as regards the fruits; if none –  if 2 or more adjacent lot owners
2. at time of execution of the sale a retro there desire to exercise right to redeem,
should be visible or growing fruits – there shall owner of adjoining lot with smaller
be no pro-rating at time of redemption of no area shall be preferred
indemnity was paid by the vendee a retro  if 2 or more adjacent lit owners
3. at time of execution sale a retro there should desire to exercise right to redeem &
be no fruits but there are fruits at time of both have same lot area, one who
redemption – pro-rated between vendor a retro first requested shall be granted
& vendee a retro giving the vendee a retro a b. urban land
part corresponding to the time he possessed  when piece of land is small & cannot
the land. be used for any practical purpose &
brought merely for speculation,
LEGAL REDEMPTION owner of adjoining land can redeem
 Right to be subrogated upon the same terms  2 or more owners of adjoining lot
and conditions stipulated in the contract, in the desire to exercise right to redeem,
place of one who acquires the thing by owner whose intention towards use
purchase or by dation in payment or by other of land shall be preferred.
transaction whereby ownership is transmitted c. sale of credit litigation
by onerous title.  when a credit or other incorporeal
1. among co-heirs right in litigation is sold, debtor shall
 any of heirs sells hereditary right to have a right to extinguish it by
stranger before partition reimbursing the assignee for the
 any of the co-heirs may be subrogated price the latter paid therefor plus
to the rights of the purchaser by judicial costs, interest
redeeming said hereditary right:  debtor may exercise right within 30
reimburse buyer of the price of the sale days from assignee demands
 co-heirs has 1 month from receipt of payment from him
notice in writing
2. among co-owners When period of Redemption Begins to Run
 any or all of co-owners sells their 1. right of legal pre-emption of redemption shall
shared to 3rd person be exercised within 30 days from notice by the
 any co-owner may exercise right of buyer
redemption by paying reasonable price 2. deed of sale not to be recorded in RD unless
of property to the buyer accompanied by affidavit that buyer has given
 if 2 or more co-owners desire to notice to redemptioners
exercise right of redemption, they may 3. when there is actual knowledge, no need to
only do so in proportion to the share give written notice; period of redemption begins
they may respectively have in the thing to run from actual knowledge
owned in common
Other Instances when Right of Legal
Distinction Between Right of Redemption of Redemption is Granted
Co-heirs from Co-owners 1. Redemption of homesteads
 Public Land Act
Co-Heirs Co-Owners
 Land acquired under free patent
Heir may redeem for Co-owner may redeem
homestead
himself alone the property but even if
hereditary right sold by uses his own funds,  Subject to repurchase by wife, legal heirs
a co-heir redemption inures to within 5 years from date of conveyance
the benefit of other co-  Granted by law, need not be stipulated
owners
2. Redemption in tax sales 5. one who sells certain rights for a lump sum,
 in case of tax delinquency/failure to pay tax shall be answerable for legitimacy of the whole
assessments, property is foreclosed in general but not for each of the various parts
 delinquent payer has 1 year to redeem by
paying to the revenue District Officer the Breach of Warranty
amount of tax delinquencies, & interest or 1. if in good faith - expenses of the contract &
purchase price. other legitimate payments made by reason of
3. Redemption by judgement debtor the assessment
2. if in bad faith - expenses of contract & other
 1 year to redeem by paying purchaser at
legitimate payments plus useful & necessary
public auction with interest
expenses
4. Redemption in extrajudicial foreclosure
 1 year from date of sale and registration 5. Assignment of Credit or Incorporeal Right in
Redemption in judicial foreclosure of Litigation
mortgage  speculative
 no right to redeem is granted to debtor  law would rather benefit the debtor of such
mortgagor credits rather than the one who merely
 except when mortgagee is bank of a speculates for profit
banking institution  when credit or incorporeal right in litigation is
 90 days after finality of judgement assigned or sold, debtor has a right to
extinguish it by reimbursing the assignee for
XI. ASSIGNMENT the price the buyer paid plus interest
 right to redeem to be exercised within 30 days
Effect of Assignment from demand by assignee for payment
1. lack of knowledge or consent of debtor not
Right to Redeem by Debtor not available in the
essential for validity but has legal effect
following Instances (Not considered
2. assignment of rights made w/o knowledge of
Speculative)
debtor – debtor may set up against assignee
the compensation w/c would pertain to him 1. assignment of credit / incorporeal right to co-
against assignor of all credits prior to heir or co-worker
assignment and later ones until he had 2. assignment to creditor in payment for his credit
knowledge of the assignment 3. assignment to possessor of tenement or piece
3. debtor has consented to assignment – cannot of land which is subject to the right in litigation
set up compensation unless assignor was assigned
notified that he reserved his right to the
compensation XII. BULK SALES LAW
4. debtor has knowledge but no consent -
compensation may still be set up  Protect creditor of merchant stored
 3 types of transactions:
Transfer of Ownership 1. Sale of goods other than in ordinary course
 by tradition & not by perfection of business
 execution of public instrument because 2. Sale of business
intangibles cannot be physically transferred 3. Sale of fixtures & equipments
 Should cover only merchants because
Accessories & Accessions creditors cannot get adequate security
 includes all accessory rights such as guaranty, because goods are sold ordinarily in course of
mortgage, pledge or preference business
Warranties  Not covered:
1. against hidden defect - N/A because 1. with waiver of creditor of seller
intangibles has no physical existence 2. receiver, assignee in insolvency
2. existence & legality of credit - there is warranty proceeding
except when what is sold is doubtful account  Duty of seller to perform the following when
3. solvency of debtor - no warranty, unless transaction is within the coverage of the law
a. there is stipulation 1. make sworn statement of listing of creditors
b. insolvency was prior to assignment & of 2. delivery of sworn statement to buyer
common knowledge 3. apply the proceeds pro-data to claims of
 shall only last for 1 year creditors shown in verified statement
4. written advance disclosure to creditors
4. one who assigns inheritance right w/o
enumerating rights shall be answerable for his
character as an heir