Cases

UPDATES IN REGULATORY FRAMEWORKS
TITLE: Heirs of Juan San Andres (Victor the lot, would be due and payable
S. Ziga) and Salvacion S. Tria vs. Vicente within five (5) years)
Rodriguez
3. The validity of consignation for the
Petitioner: Heirs of Juan San Andres balance of the purchase price despite
Respondent: Vicente Rodriguez alleged noncompliance with
mandatory requirements.
FACTS:
4. The applicability of laches and
Juan San Andres was the registered owner of prescription in contesting the
Lot No. 1914-B-2 in Naga City. On September agreement after 24 year.
28, 1964, he sold a 345 sqm portion to
Vicente Rodriguez. Following San Andres’ COURT’S DECISION
death in 1965, a dispute arose over an
additional 509 sqm that Rodriguez claimed to WHEREFORE, the decision of the Court of
have also purchased from San Andres, Appeals is AFFIRMED with the modification
leading to a legal battle involving the estate’s that respondent is ORDERED to reimburse
judicial administrator and Rodriguez’s heirs, petitioners for the expenses of the survey.
since both original parties had passed away.
1. The court found the property to be
The dispute led to a lawsuit filed by the sufficiently determinate,
estate’s administrator in 1987 for recovery of determinable through a survey
possession of the 509 sqm. Rodriguez, linked to the original 345 sqm portion
through his legal maneuvers, countered that sold. (the receipt profoundly
he had a verbal agreement with San speaks of a meeting of the mind
Andres for the additional area, supporting his between San Andres and Rodriguez
claim with a receipt and correspondence from for the sale of the property adjoining
the estate’s administrator. the 345 square meter portion
previously sold to Rodriguez on its
After the trial court sided with the San Andres three (3) sides excepting the frontage.
heirs, the Court of Appeals reversed the The price is certain, which is P15.00
decision, prompting the heirs to seek a per square meter.)
review from the Supreme Court.
2. It held the agreement to be an
ISSUES: absolute sale, not conditional, with
the receipt and subsequent
1. Whether the receipt acknowledged a correspondences serving as proof of a
contract to sell despite lacking precise perfected contract. (There is no
description of the object. (It ruled that reservation of ownership nor a
there was no contract of sale to stipulation providing for a
speak of for lack of a valid object unilateral rescission by either
because there was no sufficient party. In fact, the sale was
indication in Exhibit 2 to identify the consummated upon the delivery of
property subject of the sale, hence, the lot to respondent.)
the need to execute a new contract.
Contract to sell lang daw yung 3. The Court clarified that consignation
nagawa) wasn’t directly addressed in the
appellate court’s decision but
2. Whether the respondent (Rodriguez’s deemed Rodriguez’s act of depositing
heirs) should be obliged to fulfill the the balance into court as appropriate
condition of payment for a sale to be given the circumstances. (the
considered binding. (the appellate contracting parties agreed that full
court considered as a "condition" the payment of purchase price shall
stipulation of the parties that the full be due and payable within five (5)
consideration, based on a survey of years from the execution of a
formal deed of sale. At the time 4. Prescription and laches do not bar the
respondent deposited the amount of enforcement of rights within a
P7,035.00 in the court, no formal contract of sale if actions to fulfill
deed of sale had yet been obligations are evident
executed by the parties, and,
therefore, the five-year period during HISTORICAL BACKGROUND:
which the purchase price should be
paid had not commenced. In short, This case emerged from a transaction in the
the purchase price was not yet 1960s, evolving through the death of original
due and payable) parties, reflecting on the complexities of
proving agreements posthumously and the
4. It ruled out laches (concerns itself importance of clear, documented agreements
with the effect of delay and not the in property transactions. It demonstrates how
period of time that has lapsed) and contractual disputes can span generations,
prescription (deals with delay itself emphasizing the necessity of judicial
and thus is an issue of how much time interpretation to resolve issues rooted in the
has passed. The time period when adequacy of contractual terms and
prescription is deemed to have set in conditions.
is fixed by law), emphasizing that the
sale was consummated upon
delivery, with Rodriguez and
subsequently his heirs seeking to DETAILS:
complete their obligations. (the
contract of sale in this case is Respondent deposited in court the balance of
perfected, and the delivery of the the purchase price amounting to P7,035.00
subject lot to respondent effectively for the aforesaid 509-square meter lot.
transferred ownership to him)
While the proceedings were pending, judicial
DOCTRINE: administrator Ramon San Andres died and
was substituted by his son Ricardo San
This case reiterates principles of contract law, Andres. On the other band, respondent
particularly pertaining to sales. It underscores Vicente Rodriguez died on August 15, 1989
that a sale can be deemed absolute even and was substituted by his heirs.
without a formal deed if consent, a
determinate subject matter, and agreed-upon Petitioner, as plaintiff, presented two
consideration are present. The resolution also witnesses. The first witness, Engr. Jose
clarifies that the fulfillment of obligations, Peñero, testified that based on his survey
such as payment of the purchase price, can conducted sometime between 1982 and
be subject to agreed conditions without 1985, respondent had enlarged the area
affecting the validity of a sale. which he purchased from the late Juan San
Andres by 509 square meters belonging to
NOTES: the latter's estate. According to Peñero, the
titled property (Exh. A-5) of respondent was
1. Consent, determinate subject matter, enclosed with a fence with metal holes and
and price certain are essential for a barbed wire, while the expanded area was
contract of sale. fenced with barbed wire and bamboo and
2. A sale can be absolute even in the light materials.
absence of a formal deed if there is a
clear intention to transfer ownership. The second witness, Ricardo San Andres,
3. Consignation (nagbayad pero hindi administrator of the estate, testified that
tinanggap) is a valid mode of fulfilling respondent had not filed any claim before
payment obligations when done in Special Proceedings No. R-21 and denied
accordance with the agreed terms knowledge of Exhibits 2 and 3. However, he
between parties. recognized the signature in Exhibit 3 as
similar to that of the former administrator,
Ramon San Andres. Finally, he declared that rendering judgment against the plaintiff-
the expanded portion occupied by the appellee (heirs of san andres):
family of respondent is now enclosed
with barbed wire fence unlike before 1. to accept the P7,035.00 representing the
where it was found without fence. balance of the purchase price of the portion
and which is deposited in court under Official
On the other hand, Bibiana B. Rodriguez, Receipt No. 105754 (page 122, Records);
widow of respondent Vicente Rodriguez,
testified that they had purchased the subject 2. to execute the formal deed of sale over the
lot from Juan San Andres, who was their said 509 square meter portion of Lot 1914-B-
compadre, on September 29, 1964, at P15.00 2 in favor of appellant Vicente Rodriguez;
per square meter. According to her, they
gave P500.00 to the late Juan San 3. to pay the defendant-appellant the amount
Andres who later affixed his signature to of P50,000.00 as damages and P10,000.00
Exhibit 2. She added that on March 30, attorney's fees as stipulated by them during
1966; Ramon San Andres wrote them a letter the trial of this case; and
asking for P300.00 as partial payment for the
subject lot, but they were able to give him 4. to pay the costs of the suit.
only P100.00. She added that they had paid
the total purchase price of P7,035.00 on SO ORDERED.
November 21, 1988 by depositing it in
court. Bibiana B. Rodriquez stated that they First. Art. 1458 of the Civil Code
had been in possession of the 509-square provides:
meter lot since 1964 when the late Juan San
Andres signed the receipt. (Exh. 2) Lastly, By the contract of sale one of the
she testified that they did not know at contracting parties obligates himself
that time the exact area sold to them to transfer the ownership of and to
because they were told that the same deliver a determinate thing, and the
would be known after the survey of the other to pay therefor a price certain in
subject lot. money or its equivalent.
On September 20, 1994, the trial court A contract of sale may be absolute or
rendered judgment in favor of conditional.
petitioner. It ruled that there was no
contract of sale to speak of for lack of a As thus defined, the essential elements
valid object because there was no sufficient of sale are the following:
indication in Exhibit 2 to identify the property
subject of the sale, hence, the need to a) Consent or meeting of the minds, that
execute a new contract. is, consent to transfer ownership in
exchange for the price;
Respondent appealed to the Court of Appeals,
which on April 21, 1998 rendered a decision b) Determinate subject matter; and,
reversing the decision of the trial court. The
appellate court held that the object of the c) Price certain in money or its
contract was determinable, and that equivalent.
there was a conditional sale with the
balance of the purchase price payable within As shown in the receipt, dated September 29,
five years from the execution of the deed of 1964, the late Juan San Andres received
sale. The dispositive portion of its decision's P500.00 from respondent as "advance
reads: payment for the residential lot adjoining his
previously paid lot on three sides excepting
IN VIEW OF ALL THE FOREGOING, the on the frontage; the agreed purchase price
judgment appealed from is hereby was P15.00 per square meter; and the full
REVERSED and SET ASIDE and a new one amount of the purchase price was to be
entered DISMISSING the complaint and based on the results of a survey and
would be due and payable in five (5) determinate or determinable. As the Court of
years from the execution of a deed of Appeals explained:
sale.
Concomitantly, the object of the sale
Petitioner contends, however, that the is certain and determinate. Under
"property subject of the sale was not Article 1460 of the New Civil Code, a
described with sufficient certainty such thing sold is determinate if at the time
that there is a necessity of another the contract is entered into, the thing
agreement between the parties to finally is capable of being determinate
ascertain the identity; size and purchase without necessity of a new or further
price of the property which is the object of agreement between the parties. Here,
the alleged sale." He argues that the this definition finds realization.
"quantity of the object is not
determinate as in fact a survey is needed to Appellee's Exhibit "A" (page 4, Records)
determine its exact size and the full purchase affirmingly shows that the original 345 sq. m.
price therefor" portion earlier sold lies at the middle of Lot
1914-B-2 surrounded by the remaining
In support of his contention, petitioner portion of the said Lot 1914-B-2 on three (3)
cites the following provisions of the Civil sides, in the east, in the west and in the
Code: north. The northern boundary is a 12 meter
road. Conclusively, therefore, this is the only
Art. 1349. The object of every contract remaining 509 sq. m. portion of Lot 1914-B-2
must be determinate as to its kind. surrounding the 345 sq. m. lot initially
The fact that the quantity is not purchased by Rodriguez. It is quite defined,
determinable shall not be an determinate and certain. Withal, this is the
obstacle to the existence of a same portion adjunctively occupied and
contract, provided it is possible to possessed by Rodriguez since September 29,
determine the same without the need 1964, unperturbed by anyone for over
of a new contract between the parties. twenty (20) years until appellee
instituted this suit.
Art. 1460. . . . The requisite that a
thing be determinate is satisfied if at Thus, all of the essential elements of a
the time the contract is entered into, contract of sale are present, i.e., that
the thing is capable of being there was a meeting of the minds between
made determinate without the the parties, by virtue of which the late Juan
necessity of a new and further San Andres undertook to transfer ownership
agreement between the parties. of and to deliver a determinate thing for a
price certain in money. As Art. 1475 of the
Petitioner's contention is without merit. Civil Code provides:
There is no dispute that respondent
purchased a portion of Lot 1914-B-2 The contract of sale is perfected at the
consisting of 345 square meters. This portion moment there is a meeting of minds
is located in the middle of Lot 1914-B-2, upon the thing which is the object of
which has a total area of 854 square meters, the contract and upon the price.
and is clearly what was referred to in the
receipt as the "previously paid lot." Since the That the contract of sale is perfected was
lot subsequently sold to respondent is said to confirmed by the former administrator of the
adjoin the "previously paid lot" on three sides estates, Ramon San Andres, who wrote a
thereof, the subject lot is capable of letter to respondent on March 30, 1966
being determined without the need of asking for P300.00 as partial payment for the
any new contract. The fact that the exact subject lot. As the Court of Appeals observed:
area of these adjoining residential lots is
subject to the result of a survey does not Without any doubt, the receipt profoundly
detract from the fact that they are speaks of a meeting of the mind between
San Andres and Rodriguez for the sale of the
property adjoining the 345 square meter stipulated, e.g., until or unless the
portion previously sold to Rodriguez on its price is paid. Ownership will then be
three (3) sides excepting the frontage. The transferred to the buyer upon actual
price is certain, which is P15.00 per square or constructive delivery (e.g., by the
meter. Evidently, this is a perfected execution of a public document) of the
contract of sale on a deferred payment property sold. Where the condition is
of the purchase price. All the pre-requisite imposed upon the perfection of the
elements for a valid purchase transaction are contract itself, the failure of the
present. Sale does not require any formal condition would prevent such
document for its existence and validity. perfection. If the condition is imposed
And delivery of possession of land sold is a on the obligation of a party which is
consummation of the sale (Galar vs. Husain, not fulfilled, the other party may
20 SCRA 186 [1967]). A private deed of either waive the condition or refuse to
sale is a valid contract between the proceed with the sale. (Art. 1545, Civil
parties (Carbonell v. CA, 69 SCRA 99 [1976]). Code).
In the same vein, after the late Juan R. San Thus, in. one case, when the sellers declared
Andres received the P500.00 downpayment in a "Receipt of Down Payment" that they
on March 30, 1966, Ramon R. San Andres received an amount as purchase price for a
wrote a letter to Rodriguez and received from house and lot without any reservation of title
Rodriguez the amount of P100.00 (although until full payment of the entire purchase
P300.00 was being requested) deductible price, the implication was that they sold their
from the purchase price of the subject property. 18 In People's Industrial Commercial
portion. Enrique del Castillo, Ramon's Corporation v. Court of Appeals, 19 it was
authorized agent, correspondingly signed the stated:
receipt for the P100.00. Surely, this is
explicitly a veritable proof of the sale over the A deed of sale is considered absolute
remaining portion of Lot 1914-B-2 and a in nature where there is neither a
confirmation by Ramon San Andres of the stipulation in the deed that title to the
existence thereof. property sold is reserved in the seller
until full payment of the price, nor one
There is a need, however, to clarify what the giving the vendor the right to
Court of Appeals said is a conditional contract unilaterally resolve the contract the
of sale. Apparently, the appellate court moment the buyer fails to pay within a
considered as a "condition" the stipulation of fixed period.
the parties that the full consideration, based
on a survey of the lot, would be due and Applying these principles to this case, it
payable within five (5) years from the cannot be gainsaid that the contract of sale
execution of a formal deed of sale. It is between the parties is absolute, not
evident from the stipulations in the receipt conditional. There is no reservation of
that the vendor Juan San Andres sold the ownership nor a stipulation providing
residential lot in question to respondent for a unilateral rescission by either
and undertook to transfer the ownership party. In fact, the sale was consummated
thereof to respondent without any upon the delivery of the lot to respondent.
qualification, reservation or condition. Thus, Art. 1477 provides that the
In Ang Yu Asuncion v. Court of Appeals, 17 we ownership of the thing sold shall be
held: transferred to the vendee upon the
actual or constructive delivery thereof.
In Dignos v. Court of Appeals (158
SCRA 375), we have said that, First. The stipulation that the "payment of
although denominated a "Deed of the full consideration based on a survey
Conditional Sale," a sale is still shall be due and payable in five (5)
absolute where the contract is devoid years from the execution of a formal
of any proviso that title is reserved or deed of sale" is not a condition which
the right to unilaterally rescind is affects the efficacy of the contract of sale. It
merely provides the manner by which function of courts is to give force and effect
the full consideration is to be computed to the intentions of the parties.
and the time within which the same is to be
paid. But it does not affect in any manner the Fourth. Finally, petitioners argue that
effectivity of the contract. Consequently, the respondent is barred by prescription and
contention that the absence of a formal deed laches from enforcing the contract. This
of sale stipulated in the receipt prevents the contention is likewise untenable. The
happening of a sale has no merit. contract of sale in this case is perfected,
and the delivery of the subject lot to
Second. With respect to the contention that respondent effectively transferred
the Court of Appeals erred in upholding the ownership to him. For this reason,
validity of a consignation of P7,035.00 respondent seeks to comply with his
representing the balance of the purchase obligation to pay the full purchase price, but
price of the lot, nowhere in the decision of the because the deed of sale is yet to be
appellate court is there any mention of executed, he deemed it appropriate to
consignation. Under Art. 1257 of this Civil deposit the balance of the purchase price in
Code, consignation is proper only in court. Accordingly, Art. 1144 of the Civil
cases where an existing obligation is Code has no application to the instant
due. In this case, however, the contracting case. 21 Considering that a survey of the
parties agreed that full payment of lot has already been conducted and
purchase price shall be due and payable approved by the Bureau of Lands,
within five (5) years from the execution respondent's heirs, assign or
of a formal deed of sale. At the time successors-in-interest should reimburse
respondent deposited the amount of the expenses incurred by herein
P7,035.00 in the court, no formal deed of petitioners, pursuant to the provisions
sale had yet been executed by the of the contract.
parties, and, therefore, the five-year period
during which the purchase price should be TITLE: Emilia M. Uraca, Concordia D.
paid had not commenced. In short, the Ching, and Ong Seng v. Court of
purchase price was not yet due and Appeals, Jacinto Velez, Jr., Carmen Velez
payable. Ting, Avenue Merchandising, Inc., Felix
Ting, and Alfredo Go
This is not to say, however, that the deposit
of the purchase price in the court is Petitioners: Uraca
erroneous. The Court of Appeals correctly
ordered the execution of a deed of sale and Respondents: Court of appeals (Velezes)
petitioners to accept the amount deposited
by respondent. FACTS:
 The Velezes (herein private
Third. The claim of petitioners that the price respondents) were the owners of the
of P7,035.00 is iniquitous (unfair or morally lot and commercial building in
wrong) is untenable. The amount is based question located at Progreso and M.C.
on the agreement of the parties as Briones Streets in Cebu City.
evidenced by the receipt (Exh. 2). Time  Herein (petitioners) were the lessees
and again, we have stressed the rule that a of said commercial building.
contract is the law between the parties, and  On July 8, 1985, the Velezes through
courts have no choice but to enforce such Carmen Velez Ting wrote a letter to
contract so long as they are not contrary to herein (petitioners) offering to sell the
law, morals, good customs or public policy. subject property for P1,050,000.00
Otherwise, court would be interfering with the and at the same time requesting
freedom of contract of the parties. Simply (herein petitioners) to reply in three
put, courts cannot stipulate for the parties days.
nor amend the latter's agreement, for to do  On July 10, 1985, petitioners accepted
so would be to alter the real intentions of the the offer in writing through Atty.
contracting parties when the contrary Escolastico Daitol.
 On July 11, 1985, Emilia Uraca
(petitioner) was informed by Carmen 1. Whether the original contract of sale
Ting of a revised price of P1,400,000. for P1,050,000 was valid and
Uraca agreed but proposed enforceable despite alleged novation
installment payments, with a down (Since it ruled in its decision that
payment of P1,000,000.00 and the there was no meeting of the minds on
balance of P400,000 to be paid in 30 the "second" price offered
days. Carmen Velez Ting did not (P1,400,000.00), hence no contract of
accept the said counter-offer of Emilia sale was perfected, the Court of
Uraca although this fact is disputed by Appeals erred in not holding that the
Uraca. original written contract to buy and
 No payments were made by sell for P1,050,000.00 the Velezes
petitioners on July 12 and 13, 1985. property continued to be valid and
 On July 13, 1985, the Velezes sold the enforceable pursuant to Art. 1279 in
property to Avenue Merchandising Inc. relation with Art. 1479, first
(Avenue Group) for P1,050,000. paragraph, and Art. 1403,
 At the time the Avenue Group subparagraph 2 (e) of the Civil Code.).
purchased subject property on July 13,
1985 from the Velezes, the certificate 2. Whether petitioners had a better claim
of title of the said property was clean to the property based on their prior
and free of any annotation of registration of lis pendens (Article
adverse claims or lis pendens. 1544 of the Civil Code).
 On July 31, 1985, petitioners filed a COURT’S DECISION
complaint against the Velezes
 Avenue Group registered their deeds The petition is meritorious. (Claim which
of sale on August 1, 1985, and filed an has a valid basis)
ejectment case on October 30, 1985, WHEREFORE, the petition is GRANTED. The
thereafter while petitioners amended assailed Decision of the Court of Appeals is
their complaint to align against hereby SET ASIDE and the dispositive
Avenue Group portion of the trial court's decision dated
 Thereafter, herein (petitioners) filed an October 19, 1990 is REVIVED with the
amended complaint impleading the following MODIFICATION — the
Avenue Group as new defendants consideration to be paid under par. 2 of the
(after about 4 years after the filing of disposition is P1,050,000.00 and not
the original complaint). P1,400,000.00. No Costs.
PROCEDURAL POSTURE 1. NO EXTINCTIVE NOVATION

 The Regional Trial Court (RTC) of Cebu  The original contract of sale
City, Branch 19, declared the sales to was perfected as petitioners’
Felix Ting, Manuel Ting, and Alfredo Go written acceptance of the
null and void and ordered execution of Velezes’ offer for P1,050,000
a new deed in favor of the petitioners. satisfied elements of consent,
 Petitioners were to pay P1,400,000 to object certain, and cause.
the Velezes and defendants to  Revising the price to
reimburse amounts paid by others. P1,400,000 constituted a
 Avenue Group to deliver properties to counter-offer, which the
petitioners. Velezes did not accept, hence
 The Court of Appeals reversed the RTC no new contract was perfected.
decision stating novation and holding (since essential requisite of
that no contract was perfected due to consent was absent, the
lack of agreement on the second parties having failed to agree
price. The case was elevated to the on the terms of the payment. )
Supreme Court by the petitioners  No novation occurred since it
did not follow one of the
ISSUES: requisites which is the
agreement of all the parties to The foregoing holding would have
the new contract. (the been simple and straightforward. But
petitioners and the Velezes did Respondent Velezes complicated the
not reach an agreement on the matter by selling the same property to
new price of P1,400,000.00 the other private respondents who
demanded by the latter.) no were referred to in the assailed
valid new agreement Decision as the Avenue Group.
extinguished the old one. The
first sale remained valid. The Court is now called upon to
 Under Article 1319 of the Civil determine which of the two groups
Code, 16 such qualified of buyers has a better right to
acceptance constitutes a said property.
counter-offer and has the
ineludible effect of rejecting  Article 1544 mandates that
the Velezes' offer. 17 Indeed, o Should it be immovable
petitioners' counter-offer property, the ownership
was not accepted by the shall belong to the
Velezes. It is well-settled that person acquiring it who
"(a)n offer must be clear and in good faith first
definite, while an acceptance recorded it in the
must be unconditional and Registry of Property
unbounded, in order that their  The Court found bad faith on
concurrence can give rise to a the part of Avenue Group, who
perfected contract." 18 In line knew about the first sale when
with this basic postulate of they registered the property.
contract law, "a definite (knowledge gained by the
agreement on the manner second buyer of the first sale
of payment of the price is an defeats his rights even if he is
essential element in the first to register the second
formation of a binding and sale, since such knowledge
enforceable contract of taints his prior registration with
sale." 19 Since the parties failed bad faith)
to enter into a new contract
that could have extinguished The Avenue Group, whose store is
their previously perfected close to the properties in question,
contract of sale, there can be had known the plaintiffs to be the
no novation of the latter. lessee-occupants thereof for quite a
Consequently, the first sale of time. Felix Ting admitted to have a
the property in controversy, by talk with Ong Seng in 1983 or 1984
the Velezes to petitioners for about the properties. In the cross-
P1,050,000.00, remained examination, Manuel Ting also
valid and existing. admitted that about a month after
Ester Borromeo allegedly offered the
In view of the validity and subsistence of their sale of the properties Felix Ting went
original contract of sale as previously to see Ong Seng again. If these were
discussed, it is unnecessary to discuss public so, it can be safely assumed that Ong
respondent's theses that the second Seng had consequently told Felix
agreement is unenforceable under the about plaintiffs' offer on January
Statute of Frauds and that the agreement 11, 1985 to buy the properties for
constitutes a mere promise to sell. P1,000,000.00 and of their timely
acceptance on July 10, 1985 to buy
2. DOUBLE SALE OF IMMOVABLE the same at P1,050,000.00.
PROPERTY
The two aforesaid admissions by the
Tings, considered together with
Uraca's positive assertion that Felix Article 1544 DCotP: Priority of Registration
Ting met with her on July 11th and and Good Faith in Double Sales
who was told by her that the plaintiffs
had transmitted already to the Velezes Case Law: Knowledge of a prior sale by the
their decision to buy the properties at second buyer usually defeats the second
P1,050,000.00, clinches the proof that buyer’s rights unless they register first
the Avenue Group had prior without bad faith.
knowledge of plaintiffs' interest.
Hence, the Avenue Group HISTORICAL BACKGROUND:
defendants, earlier forewarned of the  This case underscores the historical
plaintiffs' prior contract with the struggle within Philippine law
Velezes, were guilty of bad faith regarding contractual disputes and the
when they proceeded to buy the interpretation of good faith in property
properties to the prejudice of the registration.
plaintiffs
 Reflects measures to ensure fair
 Given this bad faith, dealings in commercial areas like
registration by Avenue Group Cebu City during the mid-1980s real
equates to no valid inscription estate developments
under Article 1544. Since
petitioners were in the first
actual possession, they had a DETAILS:
better right.
 Having already ruled that WHEREFORE, judgment is hereby
petitioners' actual knowledge rendered:
of the first sale tainted their
registration, we find no more 1) declaring as null and void the three (3)
reason to pass upon the issue deeds of sale executed by the Velezes
of whether the annotation of lis to Felix C. Ting, Manuel Ting and Alfredo
pendens automatically negated Go;
good faith in such registration.
2) ordering Carmen Velez Ting and Jacinto
DOCTRINE: M. Velez, Jr. to execute a deed of
 Novation is not presumed and must be absolute sale in favor of Concordia D.
clearly established with evidence of a Ching and Emilia M. Uraca for the
new, valid contract extinguishing the properties in question for
old one. P1,400,000.00, which sum must be
 For immovable property, first delivered by the plaintiffs to the Velezes
registration in good faith gives immediately after the execution of said
ownership priority; bad faith negates contract;
this priority validity
3) ordering Carmen Velez Ting and Jacinto
NOTES: M. Velez, Jr. to reimburse Felix C. Ting,
Manuel C. Ting and Alfredo Go whatever
Elements of a Contract (Art. 1318): amount the latter had paid to the
1. Consent former;
2. Object Certain
3. Cause 4) ordering Felix C. Ting, Manuel C. Ting
and Alfredo Go to deliver the properties
Novation Requirements (Art. 1231): in question to the plaintiffs within
1. Previous valid obligation fifteen (15) days from receipt of a copy
2. Agreement to new obligation of this decision;
3. Extinguishment of old obligation
4. Validity of new obligation 5) ordering all the defendants to pay,
jointly and severally, the plaintiffs the
sum of P20,000.00 as attorney's fees.
for lack of acceptance or a separate
The trial court found two perfected consideration.
contracts of sale between the Velezes and
the petitioners involving the real property in
question. The first sale was for
P1,050,000.00 and the second was for
P1,400,000.00.
In respect to the first sale, the trial court held

that "[d]ue to the unqualified acceptance by
the plaintiffs within the period set by the
Velezes, there consequently came about a
meeting of the minds of the parties not only
as to the object certain but also as to the
definite consideration or cause of the
contract." And even assuming arguendo that JON AND MARISSA DE YSASI VS. ARTURO
the second sale was not perfected, the trial AND ESTELA ARCEO
court ruled that the same still constituted a
mere modificatory novation which did PETITIONERS: YSASI
not extinguish the first sale. Hence, the RESPONDENTS: ARCEO
trial court held that "the Velezes were not
free to sell the properties to the Avenue FACTS:
Group." It also found that the Avenue  On October 1, 1988, spouses Jon and
Group purchased the property in bad Marissa de Ysasi leased from spouses
faith Arturo and Estela Arceo, the latter's
premises in order to carry on their
Private respondents appealed to the Court of business of hand painting and
Appeals. As noted earlier, the CA found the finishing services. Petitioners paid
appeal meritorious. Like the trial court, the P5,000.00 as goodwill money and
public respondent held that there was a P15,000.00 as deposit for three
perfected contract of sale of the months.
property for P1,050,000.00 between the
Velezes and herein petitioners. It added,  It appears that due to heavy rains, the
however, that such perfected contract of sale roof of the building leaked and the
was subsequently novated. Thus, it ruled: premises were flooded, as a result of
"Evidence shows that that was the original which the schedule of the delivery of
contract. However, the same was mutually hand painted moldings to petitioners'
withdrawn, cancelled and rescinded by customers was disrupted. Although
novation, and was therefore abandoned by petitioners asked respondents to make
the parties when Carmen Velez Ting raised the necessary repairs, the latter
the consideration of the contract [by] repaired only a portion of the leased
P350,000.00, thus making the price premises. Consequently, petitioners
P1,400,000.00 instead of the original price of stopped paying rent as well as their
P1,050,000.00. Since there was no share of the electric, water, and
agreement as to the 'second' price telephone bills from December 1988
offered, there was likewise no meeting up to the time they vacated the leased
of minds between the parties, hence, no premises in June 1989.
contract of sale was perfected." The
Court of Appeals added that, assuming there  Respondents in turn filed an ejectment
was agreement as to the price and a second suit against petitioners in the
contract was perfected, the later contract Metropolitan Trial Court. In its
would be unenforceable under the Statute of decision, the MeTC, while ruling that
Frauds. It further held that such second petitioners were justified in
agreement, if there was one, constituted a suspending the payment of rent,
mere promise to sell which was not binding ordered the deposits made by them to
be applied to the payment of rentals that the repairs made were
up to June 1989 and directed them to inadequate. This fact indicates that
pay them electric and water bills. On there was no implied waiver of
appeal to the Regional Trial Court, the repairs on the part of the lessee. For
decision was modified inasmuch as Art. 1371 of the Civil Code provides
petitioners were ordered to pay that “In order to judge the intention of
P20,000.00 as balance of their rentals the contracting parties, their
up to the time they vacated the contemporaneous and subsequent
premises. acts should be principally considered”
(example: R and E entered into a
 Petitioners then filed a complaint in contract of lease. Even if R is the
the Regional Trial Court, for specific lessor, it states that the ownership of
performance or rescission of contract the land are transferred to E. It shows
with damages, which they that R’s intention is to make E the
subsequently changed to a claim for owner of the land)
damages in view of the expiration of
the lease contract. The trial court,  Under Arts. 1561 and 1653 of the Civil
however, dismissed the complaint and Code, the lessor is responsible for
ordered petitioners to pay warranty against hidden defects,
respondents the sums of P5,000.00 as but he is not answerable for patent
attorney's fees and P20,000.00 as defects or those, which are visible.
back rentals, with interest at the legal
rate. On appeal to the Court of Petitioners contend that
Appeals, the decision was affirmed. respondents were liable for
Petitioners' motion for reconsideration hidden defects and, for this
was subsequently denied. purpose, cite the following provisions
of the Civil Code:
ISSUE: Art. 1566. The vendor is
 Whether or not there was an implied responsible to the vendee for
waiver of repairs including repairs for any hidden faults or defects
hidden and unknown defects by the in the thing sold, even though
lessee he was not aware thereof. This
provision shall not apply if the
RULING: contrary has been stipulated,
 Decision of Court of Appeals affirmed and the vendor was not aware
with modification that the order for of the hidden faults or defects
payment of unpaid rentals with in the thing sold.
interest to respondents is deleted
Art. 1653. The provisions
 Petitioners anchor their complaint for governing warranty, contained
damages on respondents' failure, as in the Title on Sales, shall be
lessors, to make the necessary repairs applicable to the contract of
on the leased premises as provided in lease.
Art. 1654(2) of the Civil Code. The
Court of Appeals held that under the Petitioners’ contention is without
contract of lease of the parties, there merit. (no legal basis) Petitioner Jon de
was an implied waiver of right to Ysasi admitted on cross-examination
demand repairs to be made by the that he inspected the premises three
lessee or four times before signing the lease
contract. During his inspection, he
 The records show that respondent noticed the rotten plywood on the
Mrs. Arceo (respondent) caused ceiling, which in his opinion was
certain repairs to be done on the caused by leaking water or termites
leased premises at the request of (anay). Yet, he decided to go through
petitioners, although the latter alleged with the lease agreement. Hence,
respondents cannot be held liable with the late Emigdio Mercado is one
for the alleged warranty against of an equitable mortgage. The
hidden defects. plaintiff claims that Emigdio Mercado
registered the necessary
Considering that the documents late. The petitioner also
representatives of the claims that the validity of the sale
petitioner were given every is not as reliable as written or
opportunity to visit and inspect document evidence. He failed to
the premises prior to the present clear and convincing
execution of the contract of evidence to overcome the
lease, we cannot impute bad presumption of validity of the
faith on the part of notarized Deed conveying the land to
respondents for having private respondents.
allegedly withheld the
information that the leased  Sometime in 1991, the petitioner
land was a former fishpond. started to gather documentations that
could serve as her evidence to the
Accordingly, private respondents court against respondents. After
cannot be held liable for the alleged finding the Deed
warranty against defects under Art. of Absolute Sale with Pacto De Retro
1561 of the Civil Code. (right to
repurchase), the document turned out
Petitioners deny that they are liable for not to have been submitted by the
unpaid rentals to respondents in the amount deceased for notarization. Petitioner
of P20,000.00. submitted said deed of sale to
disinterested parties to confirm its
In the case at bar, there is no evidence to being fake, she sought the assistance
show that the defendants were liable to of the Philippine National Police (PNP).
repair the roof and ceiling of the leased The plaintiff further claimed that the
premises. They [are] also not liable for said document of sale is a forgery
the alleged damages sustained by the and hence, it is patent that the
plaintiffs. On the other hand, defendants transfer of title on the property was
had not sufficiently established that they done through fraud
sustained damages to warrant the award for
moral and exemplary damages. However, it is  The respondents answered against the
unfortunate that the plaintiffs had filed the counterclaim that what was written in
instant action for which they should pay the Deed of Real Estate Mortgage Sale
attorney’s fees to the defendants in the was true and that the Pacto De
amount of P5,000.00. Plaintiffs should also Retro were not pushed through
pay the sum of P20,000.00 representing the because the petitioner decided to sell
balance of their rentals up to the time they the property to the deceased. In
vacated the leased premises in June 1989 addition the plaintiff already has
with interest at the legal rate starting from knowledge that she had sold the
January 1991. property to the late Mr. Mercado and
that she was already the one who
CEBALLOS V. INTESTATE ESTATE OF THE delivered to him the “Deed of Absolute
LATE EMIGDIO MERCADO Sale” signed by her and her husband
which was also notarized by the public
PETITIONER: Leonatdo Ceballos notary and since that time
respondents have been in possession
RESPONDENT: Emigdio Mercado of said property and were the ones
who have been paying the taxes.
FACTS:
 The petitioner Leonatdo Ceballos ISSUES:
insists that the transaction engaged in
 Whether or not the transaction is one Harping on the alleged unconscionably
of equitable mortgage or not. low selling price of the subject land,
Petitioner also contends that the petitioner points out that it is located
Contract should be declared as an in a tourist area and golf haven in
equitable mortgage, because (1) the Cebu. Notably, she has failed to prove
original transaction was a loan; and, that on February 13, 1982, the date of
(2) for a titled property with an area of the sale, the area was already the
more than fifty-three thousand square tourist spot and golf haven that she
meters in a tourist area, the contract describes it to be. In 1990, the
price of P16,500 was ridiculously property might have been worth ten
low million pesos,14 as she claimed;
however, at the time of the sale, the
 The findings of the appellate court as area was still undeveloped. Hence,
regards the questioned signature her contention that the selling price
cannot be upheld as it is in disregard was unconscionably low lacks
of fundamental precepts on sufficient substantiation.
handwriting analysis. Moreover, the
said findings failed to take into Petitioner also argues that Mercados
account circumstances admitted by delay in registering the Deed of
respondents and which ineluctably Absolute Sale and transferring the
show a transaction of mortgage, not of land title shows that the real
sale agreement was an equitable
mortgage.
 The award of moral damages,
attorneys fees and costs of suit finds An equitable mortgage is
no support in fact, in law, and in one that -- although lacking in
prevailing jurisprudence some formality, form or words,
or other requisites demanded
RULING: by a statute -- nevertheless
reveals the intention of the
WHEREFORE, the Petition is PARTLY parties to charge a real
GRANTED. The assailed decision property as security for a
is AFFIRMED, with the MODIFICATION that debt and contains nothing
the awards for moral damages, attorneys impossible or contrary to
fees and expenses of litigation are deleted. law. Delay in transferring title
No pronouncement as to costs. is not one of the instances
enumerated by law -- instances
 The original transaction was a in which an equitable
loan. Petitioner failed to pay the loan; mortgage can be presumed.
consequently, the parties entered into Moreover, throughout the
another agreement. In addition to testimony of petitioner before
that, the new agreement did not the trial court, she never
embody the true intention of the claimed that after the Deed of
parties which is one of the Absolute Sale had been
characteristics of an equitable executed in February 13, 1982,
mortgage. Petitioner had the burden the land continued to be
of proving that she did not intend to intended merely to secure
sell the property; that Emigdio payment of the P12,000 loan
Mercado did not intend to buy it; and taken on December 31, 1980.
that the new agreement did not
embody the true intention of the In this case, petitioner failed to
parties.13 We find no basis for present clear and convincing evidence
disturbing the CAs finding that she to overcome the presumption of
had failed to discharge this burden. validity of the notarized Deed
conveying the land to private
respondents. Her testimony denying alleged forgery to the deceased
the validity of the sale, having been Emigdio Mercado. Hence, the
made by a party who has an interest courts a quo erred in awarding
in the outcome of the case, is not as moral damages.
reliable as written or documentary
evidence. Moreover, self-serving For the same reasons, the award for
statements are inadequate to attorneys fees and expenses of
establish ones claims. Proof must be litigation cannot be sustained.
presented to support the same.
LAW:
 The Court of Appeals held that
petitioner had failed to prove by the  A contract, regardless of its nomenclat
requisite evidence her allegation of ure may be presumed to be equitable
forgery in the subject Deed of mortgage were enumerated in Article
Absolute Sale. Her contention has no 1602 of the Civil Code. Article 1606 of
merit. the Civil Code which is about the
In the present case, we find no reason vendor may not exercise his right to
to deviate from this rule. The courts a repurchase in a sale judicially declared
quo had sufficient factual basis in as a pacto de retro was also covered
holding that the questioned signatures by this case
were not forgeries. Although there
were dissimilarities between the
questioned and the standard CAPACITY TO BUY OR SELL
signatures, the CA also found between
them striking similarities as to indicate GENERAL RULE: All persons who can bind
the habitual and characteristic writing themselves also have legal capacity to buy
of the appellant. The apparent and sell.
dissimilarities are overshadowed by
the striking similarities and, therefore, EXCEPTIONS:
fail to overcome the presumption of 1. Absolute incapacity (minors,
validity in favor of the duly notarized demented persons, imbeciles, deaf
Deed of Absolute Sale. and dumb, prodigals, civil interdictees)
– party cannot bind themselves in any
 The award of moral damages, case.
attorney’s fees and costs of suit finds
no support, in law, and in prevailing PURCHASE BY MINORS: Contract is
jurisprudence. The petitioner does not generally voidable but in case of
impute authorship of the alleged necessaries, “where necessaries are
forgery to the deceased Emigdio sold and delivered to a minor or other
Mercado. Hence, the courts a quo person without capacity to act, he
erred in awarding moral damages. For must pay a reasonable price therefore.
some reasons, the said expenses Necessaries are those in Art. 290.”
cannot be sustained. The petition was
partly granted and the judgment was 2. Relative incapacity – incapacity
affirmed with modification. exists only with reference to certain
persons or a certain class of property
Respondents have failed to show that
petitioner was motivated by bad faith RELATIVE INCAPACITY
or malice when she instituted the 1. Husband and wife (Art. 1490):
action for declaration of nullity of the Generally, a sale by one spouse to
Deed of Absolute Sale. Moreover, another is void
although she claims that her signature
on the Deed was a forgery, contrary to The husband and wife cannot sell
the findings of the court a quo, she property to each other except:
does not impute authorship of the
1. When a separation of property was - This influence is presumed to
agreed upon by the spouses last while the guardian’s
2. When there has been a judicial functions are to any extent still
separation of property under Article unperformed, while the
134 and 135 of the Family Code property is still under his
control and until the accounts
B. Incapacity by reason of relation to have been finally settled
property - may be “ratified” by means
of and in the form of a new
1. the guardian, with respect to the contract, in which case its
property of his ward; VOIDABLE validity shall be determined
2. agents, with respect to the only by the circumstances at
property whose administration or the time of execution of such
sale may have been entrusted to new contract
them, unless the consent of the
principal has been given; B. AGENTS AND PRINCIPAL
VOIDABLE - The incapacity of the agent is
3. executor or administrator, with only against buying the
respect to the property of the property he is required to sell
estate under administration; during the existence of the
VOIDABLE relationship. Therefore, an
4. public officers and employees, agent can buy for himself the
with respect to the properties of property after the termination
the government, its political of the agency
subdivisions, or GOCCs, that are - the agent may buy property
entrusted to them; placed in his hands for sale or
5. judges, justices, prosecuting administration if the principal
attorneys, clerks of courts, etc., gives his consent thereto
with respect to the property in C. EXECUTOR OR ADMINISTRATOR
custogia legis; and - does not apply to a purchase
6. any other person specially by an executor of such
disqualified by law. hereditary rights
EXAMPLES OF PERSONS ESPECIALLY REASON: only private rights, which are

DISQUALIFIED BY LAW: subject to ratification are violated
A. Aliens who are disqualified to  NULL AND VOID

purchase agricultural lands A. PUBLIC OFFICERS AND
B. An unpaid seller having a right of lien EMPLOYEES
or having stopped the goods in - definite and permanent and
transitu, who is prohibited from buying cannot be cured by ratification.
the goods either directly or indirectly B. JUDGES, JUSTICES,
in the resale of the same, at public or PROSECUTING ATTORNEYS,
private sale which he may make CLERKS OF COURTS, ETC
C. The officer holding the execution, or - applies only to the sale or
his deputy. assignment of property which
is the subject of litigation to
NOTE: While those disqualified under Arts. the persons disqualified
1490 and 1491 may not become lessees (Art. therein.
1646), still aliens may become lessees even C. ANY OTHER PERSON SPECIALLY
if they cannot buy lands DISQUALIFIED BY LAW.
EFFECTS OF VIOLATION: REASON: violation of public policy cannot be

 VOIDABLE subject to ratification
A. GUARDIAN TO WARD
1. The relative incapacity provided in remains of the object. However, since
Articles 1490 and 1491 applies also to it is not of the character or in the
sales by virtue of legal redemption condition contemplated by the parties,
(see Art. 1619.), compromises, and the buyer may withdraw from the
renunciations. contract or demand the delivery of the
2. The persons disqualified to buy car, paying its proportionate price.
referred to in Articles 1490 and 1491
are also disqualified to become EFFECT OF LOSS IN CASE OF SPECIFIC
lessees of the things mentioned GOODS
therein  which means “goods identified and
agreed upon at the time a contract of
EFFECTS OF THE CONTRACT WHEN THE sale is made.”
THING SOLD HAS BEEN LOST
REMEDIES OF THE BUYER
RES PERIT DOMINO 1. RESCIND OR WITHDRAW FROM THE
CONTRACT – divisible only
The concept that owner bears risk of loss and 2. PAY THE PROPORTIONATE PRICE OF
deterioration because ownership is not THE REMAINING OBJECT
transferred until delivery.
SALE DIVISIBLE
RULES ON RISK OF LOSS AND  A contract is divisible when its
DETERIORATION consideration is made up of several
parts.
 Before Perfection: Seller bears the
risk SALE INDIVISIBLE
 At the time of perfection: Contract  Suppose the sale is not divisible, what
is VOID or inexistence price is the buyer to pay for the
 At the time of sale: if entirely lost, remaining goods if he elects to
contract is VOID or inexistence. If continue with the sale? It is believed
partially lost, vendee may elect that the buyer should be made to pay
between withdrawing or demanding only the proportionate price of the
the remaining part. remaining goods as provided for in
 After perfection but before paragraph 2 of the preceding article
delivery: risk of loss is shifted to the  If the sale is indivisible, the object
buyer but stipulations in the contract thereof may be considered as a
will govern. specific thing.
 After delivery: buyer bears the risk.
Unless delivery was delayed through OBLIGATIONS OF THE VENDOR
the fault of either parties, the risk is
with the party in fault; and when the 1. Transfer ownership (cannot be waived)
ownership of the goods has been
retained by the seller. 2. Deliver the thing sold (cannot be
waived)
EXAMPLES:
3. Warrant against eviction and against
ENTIRELY LOST: (1) S sold his car to hidden defects (can be waived or
B. Unknown to both of them, the car modified if there’s a stipulation since
has been totally destroyed before they they are natural elements and
agreed on the sale. In this case, there warranty is not an essential
is no valid contract of sale for lack of element of the contract of sale)
object. S, as owner, bears the loss and
B does not have to pay for the price 4. Take care of the thing, pending
delivery, with proper diligence (Article
PARTIALLY LOST: If the car sold is 1163)
only partially destroyed, there still
5. Pay for the expenses of the deed of possession but under a different title
sale, unless there is stipulation to the other than ownership.
contrary (general rule, seller will pay)
3. QUASI-TRADITION - delivery of
DELIVERY rights, credits or incorporeal property,
 Is a mode of acquiring ownership, as a made by:
consequence of certain contracts such
as sale, by virtue of which, actually or a. placing titles of ownership in
constructively, the object is placed in the hands of buyer
the control and possession of the b. allowing buyer to make use of
vendee. rights
 Delivery of the thing together with the
payment of the price, marks the 4. Tradition by operation of law
consummation of the contract of sale
 In all forms of delivery, it is necessary CONSTRUCTIVE DELIVERY REQUIRES
that the act of delivery be coupled THREE THINGS BEFORE OWNERSHIP MAY
with the intention of delivering the BE TRANSFERRED:
thing. The act without the intention is
insufficient. 1. The seller must have control over the
thing
KINDS OF DELIVERY 2. The buyer must be put under control
3. There must be the intention to deliver
1. Actual or real – placing the thing the thing for purposes of ownership
under the control and possession of
the buyer. WHEN IS THE VENDOR NOT BOUND TO
DELIVER THE THING SOLD
2. Legal or constructive – delivery is
represented by other signs or acts 1. If the vendee has not paid him the
indicative thereof price
2. If no period for payment has been
A. delivery by the execution of a fixed in the contract
public instrument 3. Even if a period for payment has been
fixed in the contract, if the vendee has
NOTE: Gives rise only to a prima facie lost the right to make use of the same.
presumption of delivery which is
destroyed when actual delivery is not SALE OR RETURN
effected because of a legal  Property is sold, but the buyer, who
impediment becomes the owner of the property on
delivery, has the option to return the
B. traditio symbolica – to effect same to the seller instead of paying
delivery, the parties make use of a the price.
token or symbol to represent the thing
delivered NOTES:
 It is a kind of sale with a condition
C. traditio longa manu - buyer subsequent.
simply continues in possession of the  The buyer must comply with the
thing but under title of ownership. express or implied conditions
attached to the return privilege;
otherwise, the sale becomes absolute
D. traditio brevi manu - buyer  Buyer, being the owner, bears the risk
simply continues in possession of the of loss
thing but under title of ownership.
E. traditio constitutum
possessorium – seller continues in
SALE ON TRIAL, APPROVAL OR SELLER’S DUTY AFTER DELIVERY TO
SATISFACTION CARRIER
1. To enter on behalf of buyer into such
 A contract in the nature of an option contract reasonable under the
to purchase if the goods prove to be circumstances
satisfactory, the approval of the buyer 2. To give notice to buyer regarding
being a condition precedent necessity of insuring the goods.
RULES: INSTANCES WHERE SELLER IS STILL THE

OWNER DESPITE DELIVERY
1. title remains in the seller 1. Sale on trial, approval or satisfaction
2. risk of loss remains with seller except 2. Contrary intention appears by the
when the buyer is at fault or has terms of the contract
agreed to bear the loss 3. Implied reservation of ownership
3. buyer must give goods a trial, except a. Goods are shipped, but by the
where it is evident that it cannot bill of landing goods are
perform the work delivered to seller or his agent
4. period within which buyer must signify or their order
his acceptance runs only when all the b. Bill of landing is kept by the
parts essential for the operation of the seller or his agent
object have been delivered. c. When the buyer does not honor
5. if it is stipulated that a third person the bill of exchange by
must satisfy approval or satisfaction, returning the bill of landing to
the provision is valid, but the third seller.
person must be in good faith. If refusal
to accept is not justified, seller may SALE BY ONE HAVING A VOIDABLE TITLE
still sue.
6. Generally, the sale and delivery to a  If the seller has only a voidable title,
buyer who is an expert on the object buyer acquires a good title to the
purchased is not a sale on approval, goods provided he buys them:
trial, or satisfaction. o Before the title of the seller has
been avoided
SALE OR RETURN SALE ON TRIAL o In good faith for value
Subject to a Subject to a o Without notice of the seller’s
resolutory condition suspensive conditon defect of title
Depends on the will Depends on the
of the buyer character or quality SALE OF GOODS BY A NON-OWNER
of the goods
Ownership passes to Ownership remains
GENERAL RULE: Buyer acquires no title
buyer on delivery in the seller until
even if in good faith or for value. Nemo dat
buyer signifies his
approval (meeting quid non habet (“You cannot give what you
of the minds) do not have”).
Risk of loss or injury Risk of loss and
rest with the buyer injury remains with EXCEPTIONS:
seller 1. Owner is estopped or precluded by his
conduct
GOODS DELIVERED THROUGH CARRIER 2. Sale is made by the registered owner
or apparent owner
GENERAL RULE: Delivery to carrier is 3. Sales sanctioned by judicial or
deemed to be delivery to the buyer. statutory authority
4. Purchase in a merchant’s store, fairs
EXCEPTION: Where the right of possession or markets (art. 559)
or ownership of specific goods sold is 5. When a person who is not the owner
reserved. sells and delivers a thing,
subsequently acquires title thereto.
6. When the seller has a voidable title a mixed goods, the buyer may reject
which has not been avoided at the the whole of the goods.
time of sale.  Right of rejecting the whole of the
goods delivered is given only if the
PLACE OF DELIVERY subject matter is indivisible.
1. Where there is an agreement:
Place specified RIGHTS OF VENDEE TO THE FRUITS
2. Where there is no agreement:  Vendee has the right to the fruits of
Place of delivery determined by usage the thing sold from the time obligation
of trade to deliver arises. Generally at time of
3. Where there is no agreement and perfection, however parties may
no prevalent usage: seller’s place of modify it by agreement.
business
4. In any other case: seller’s residence
5. In case of specific goods, which to
the knowledge of the parties at the
time the contract was made were in
some other place, that place is the DOCUMENT OF TITLE
place of delivery, in the absence of
agreement or usage of trade to the  A document of title in which is stated
contrary that the goods referred to therein will
be delivered to the bearer, or to order
PAYMENT OF THE PURCHASE PRICE of any person named in such
document is a negotiable instrument
GENERAL RULE: Seller is not bound to of title.
deliver unless the purchase price has been
paid. DOCUMENT IS NEGOTIABLE IF:
1. Goods are deliverable to bearer
EXCEPTION: The Seller is bound to deliver 2. Goods are deliverable to the order of a
even if the price has not been paid, is a certain person
period of payments has been fixed.
GOODS DELIVERED LESS THAN COMMON FORMS OF DOCUMENT OF

QUANTITY AGREED TITLE
1. Buyer may reject; or
2. Buyer may accept and pay at the A. Bill of Landing- contract or receipt
contract rate for the transport of goods and their
delivery to the person named therein,
QUANTITY MORE THAN AGREED UPON to order or bearer.
1. Buyer may reject all; or B. Dock Warrant- given by dock owners
2. Buyer may accept the goods agreed to an importer of goods recognizing
upon and reject the rest; or the latter’s title of the said goods
3. Buyer may accept all and must pay for C. Warehouse Receipt- contract or
them at the contract rate receipt for goods deposited with a
warehouseman containing the latter’s
GOODS MIXED WITH GOODS OF undertaking to hold and deliver the
DIFFERENT DESCRIPTION said goods to a specified person, to
 Buyer may accept the goods which order or bearer.
are in accordance with the contract
and reject the rest. CLASSES OF DOCUMENTS OF TITLE
INDIVISIBLE GOODS A. Negotiable Documents of title-

 If the subject is indivisible, in case of stated that goods can be delivered to
delivery of a large quantity of goods or bearer, or to the order of a person.
B. Non-negotiable Instrument of prejudice to his right to recover from the
Title - stated that goods are to be wrongdoer.
delivered to a specified person.
RIGHTS OF THE HOLDER
NEGOTIATION OF NEGOTIABLE 1. Title of the person negotiating the
DOCUMENT OF TITLE document, over the goods covered by
1. By Delivery the document;
2. By Indorsement plus Delivery 2. Title of the person to whose order by
the terms of the document the goods
FORMS OF INDORSEMENT were to be delivered, over such goods;
a. Blank Indorsement- consist of 3. The direct obligation of the bailee to
signature of the indorser without hold possession of the goods for him,
specifying the name of the indorsee. as if the bailee had contracted to him
b. To bearer- where the indorsement directly.
states that the goods are deliverable
to bearer. NOTE: Mere transfer foes not acquire
c. Special Indorsement- name of directly the obligation of the bailee. To
indorsee is specified. acquire it, he must notify the bailee.
RIGHTS OF THE TRANSFEREE
The rights of a transferee, tot whom a

document is transferred but not negotiated,
NEGOTIABLE DOCUMENT OF TITLE are not absolute as it is subjected to the
MARKED “NON-NEGOTIABLE” terms of the agreement.
Such mark will have no effect on the 1. Title of the goods as against the
instrument and remains to be negotiable. transferor;
2. Right to notify the bailee of the
WHO MAY NEGOTIATE NEGOTIABLE transfer thereof;
DOCUMENT OF TITLE 3. Right, thereafter, to acquire the
1. By the owner obligation of the bailee to hold goods
2. By the person to whom the possession for him.
or custody of the document has been
entrusted by the owner, if by the TRANSFER FOR VALUE OF DELIVERY
terms of the document the bailee
issuing the document undertakes to If a negotiable document of title is transferred
deliver the goods to the order of the for value by delivery, and indorsement is
person to whom the possession or essential for negotiation, The right of the
custody of the document has been transferee are:
entrusted or if at the time of such 1. Right to the goods as against the
entrusting the document in such form transferor;
that it may be negotiated by delivery. 2. Right to compel the transferor to
indorse
NOTE: If the holder of a negotiable
document of title (deliverable to bearer) Negotiation shall take effect as to the time
entrusts the document to a friend for when indorsement is actually made.
deposit, but the friend betrays the trust
and negotiates the document by WARRANTIES ON SALE OF DOCUMENT
delivering it to another who is in good 1. Document is genuine
faith, the said owner cannot impugn the 2. He has a legal right to negotiate or
validity of the negotiation. As between transfer it
two innocent persons, he who made the 3. He has knowledge of no fact which
loss possible shall bear the loss, without would impair the validity or worth of
the document
4. He has the right to transfer the title to A. WHEN AVAILABLE:
the goods and that goods are 1. Goods sold without stipulation as to
merchantable or fit for a particular credit
purpose 2. Goods are sold on credit, but credit
term has expired
BAILEE 3. Buyer becomes insolvent
 The bailee has the direct obligation to
hold possession of the goods for the B. LIEN ON PARTIAL DELIVERY
original owner. The goods cannot be  When unpaid seller made partial
attached or levied and bailee cannot delivery of the goods, he may exercise
be compelled to deliver the goods his lien on the remainder, unless such
unless the document be first part delivery shows an intent to waive
surrendered or its negotiation the lien or right of retention.
prohibited by court.
C. WHEN LIEN IS LOST:
FAILURE OF BAILEE OR PREVIOUS 1. Delivers the goods to a carrier or other
INDOSERS TO FULFILL THEIR bailee for the purpose of transmission
OBLIGATIONS to the buyer without reserving the
 Indorser hall not be liable for any ownership in the goods or the right of
failure on the part of the bailee or possession thereof;
previous indorsers to fulfill their 2. Buyer or his agent lawfully obtains
respective obligation. possession of the goods;
3. By waiver thereof
EFFECT OF TYPOGRAPHICAL OR
GRAMMATICAL ERROR NOTE: Possessory lien is lost after the
 It does not destroy the negotiability of seller loses possession but his lien as an
the document of title, for what should unpaid seller remains; hence he is still an
be considered is the intent. unpaid creditor with respect to the price
of specific goods sold. His preference
UNPAID SELLER can only be defeated by the governments
claim to the specific tax on the goods
 Unpaid seller is one who has not been themselves (Arts. 2247 and 2241).
paid the whole amount of the price or
one who received a negotiable The bringing of an action to recover the
instrument and it has been purchase price is not one of the ways of
dishonored, buyer is insolvent, or losing the possessory lien. An unpaid
otherwise. seller does not lose his lien by reason that
he has obtained a money judgement or
RIGHTS OF THE UNPAID SELLER decree for the price of goods
 Right to lien of goods or the rights to
retain them for the price while he is in
possession of them
 Right of stoppage in transit after he RIGHT OF STOPPAGE IN TRANSITU
has parted with the possession of the  An extension of the lien for the price;
goods and the buyer becomes entitles unpaid seller to resume
insolvent possession of the goods while they are
 Special Right of resale in transit before the goods come in
 Special Right to rescind the sale possession of the vendee
RIGHT TO LIEN A. WHEN AVAILABLE:

 Right to retain possession of goods 1. Buyer must be insolvent;
until payment or tender of the whole 2. Seller must be unpaid
price, or unless he agrees to sell on 3. Goods are in transit
credit 4. Seller must actually take possession of
the goods sold or give notice of his
claim to the carrier or other person in A. WHEN AVAILABLE:
possession. May be exercised only when the unpaid
5. Seller must surrender the document of seller has either a right of lien OR
title, if any, issues by the carrier or goods in transitu AND under ANY of the
bailee; following conditions
6. Seller must bear the expenses of
delivery after the exercise of the right 1. Seller has the right to lien or stoppage
in transitu.
B. WHEN GOODS ARE CONSIDERED IN 2. Under the following cases:
TRANSIT: a. Goods are perishable by nature
1. After delivery to carrier or other bailee b. Right to resell is expressly
and before the buyer or his agent reserved
takes delivery of them; c. Buyer delays in payment for an
2. Goods are rejected by buyer, and unreasonable time
carrier or bailee continues to be in
possession of them, even if seller B. EFFECTS OF RESALE
refused to received them back 1. Seller is not liable to the buyer for any
profit
C. HOW TO EXERCISE: 2. If sells for less than the price, seller
1. By obtaining actual possession of the has right to sue for the balance from
goods. buyer
2. By giving notice of his claim to the 3. New buyer acquires good title as
carrier or bailee. against the original buyer
Such notice may be given in to the RIGHT TO RESCIND THE SALE

person in actual possession or to his  Return of the title over the
principal. But if given to the principal, undelivered goods to the seller, and
it must be given at such time and right to recover damages for breach of
under such circumstances to be contract
effectual so the principal can prevent
delivery. A. WHEN AVAILABLE:
1. Seller has the right to lien or stoppage
D. EFFECTS OF EXERCISE: in transit
1. Goods are no longer in transit 2. Under either of the 2 situations:
2. Carrier shall be liable as depositary or a. Right to rescind is expressly
other bailee. reserved
3. Carrier must redeliver the goods to, or b. When buyer delays in the
according to the instructions of the payment of the price for an
seller unreasonable time.
E. WHEN GOODS ARE NO LONGER IN B. EFFECTS OF RESCISSION:

TRANSIT 1. Seller resumes ownership of the goods
1. After delivery to the buyer or his agent 2. Seller shall not be liable to the buyer
in that behalf; upon the contract
2. Buyer obtains delivery of the goods 3. Buyer may be held liable to the seller
before arrival at the appointed for damages for any loss occasioned
destination by the breach of contract
3. Carrier or bailee acknowledges to hold
the goods on behalf of the buyer C. HOW SELLER MAY RESCIND:
4. Carrier or other bailee wrongfully 1. by notice to the buyer or by some
refuses to deliver the goods to the overt act showing an intention to
buyer or his agent. rescind.
RIGHT OF RESALE Communication to buyer of rescission is

not always necessary but giving/failure to
give notice is relevant in determining  Vendee may accept the area included
reasonableness of time given to the buyer to in the contract and reject the rest. The
make good his obligation under contract. vendee may not withdraw from the
contract.
EFFECT IF BUYER SOLD THE GOODS
GENERAL RULE: the unpaid seller's right of

lien or stopage in transitu remains even if the LUMP SUM SALE (A CUERPO CIERTO)
buyer has sold or otherwise disposed of the  Sates the full purchase price based on
goods. the estimate or where both area and
boundaries are stated.
EXCEPTIONS:  Vendor is obligated to deliver all the
1. Seller has given his consent land included within the boundaries,
2. When purchaser or buyer is a regardless of whether the real area
purchaser for value in good faith of a should be greater or smaller
negotiable document of title.  Ordinarily, there can be no rescission
or reduction or increase whether the
SALE OF REAL ESTATE area be greater or lesser, unless there
is gross mistake
UNIT PRICE CONTRACT
 Payment will be made only on the NOTE: The Civil Code presumes that
basis of contractual items actually the purchaser had in mind a particular
performed. The amount agreed upon piece of land and that he ascertained
is merely an estimate. Price is its area and quality before the
depending upon the quantities contract of sale was perfected. If he
performed multiplied by the unit did not do so, or if having done so he
prices previously agreed upon. made no objection and consented to
the transaction, he can blame no one
SALE OF REAL ESTATE BY THE UNIT but himself
 The vendor must deliver the entire
property agreed upon. The immovable BOUNDERIES
property must be of the quality  Mentioning the boundaries of the land
specified in the contract. is indispensable in every conveyance
 If the entire area could not be of real estate. The vendor is bound to
delivered, then the object of the deliver all that is included within the
contract is not delivered. Hence the said boundaries. The area of which,
vendee is entitled to rescind it. But he even if lesser or grater than what is
may, however, enforce the contract stipulated, is immaterial.
with the corresponding decrease in
price. REAL PROPERTY NOT IN VENDOR’S
POSSESSION
WHEN THE VENDEE IS ENTITLED TO  The failure of a person to take the
RESCIND SALE OF REAL PROPERTY ordinary precautions, specially in
1. If the lack of area is at least 1/10th buying a piece of land in the actual,
than that stated or stipulated. visible and public possession of
2. If the deficiency in the quality another person, other than the
specified in the contract exceeds vendor, constitutes gross negligence
1/10th of the price agreed upon amounting to bad faith. One who
3. If the vendee would not have bought purchases real property which is in the
the immovable had he known of its actual possession of another should,
smaller area or inferior quality. at least make some inquiry concerning
the right of those in possession. He
WHEN IMMOVABLE OF A GREATER AREA can scarely, in the absence of such
OR NUMBER inquiry, be regarded as a bona fide
purchaser as against such possessors.
 Possession is either actual or
PRESCRIPTION OF ACTION constructive since the law made no
 The action for either recission of the or distinction
reduction of the price must be brought
6 months from the day of delivery.  Possession in Art.1544 includes not
only material but also symbolic
DOUBLE SALE possession
REQUISITES OF DOUBLE SALE  Title means title because of sale, and

1. Two or more valid contract of sale; not any other title or mode of
2. Two or more buyers ; acquiring property
3. They must pertain exactly to the same
object; and  Hernandez vs. Katigbak Rule:
4. They must be bought from the same When the property sold on execution
seller. is registered under Torrens,
registration is the operative act that
RULES OF PREFERENCE gives validity to the transfer or
creates a lien on the land, and a
1. Two or more valid contract of sale; purchaser on execution sale is not
2. Two or more buyers ; required to go behind the registry to
3. They must pertain exactly to the same determine the conditions of the
object; and property. Exception: Where the
4. They must be bought from the same purchaser had knowledge, prior to or
seller. at the time of the levy, of such
previous lien or encumbrance, his
RULES OF PREFERENCE knowledge is equivalent to
registration
1. DOUBLE SALE OF
MOVABLES/PERSONAL PROPERTY CONDITIONS
- who first takes possession in
good faith An uncertain event or contingency on the
2. DOUBLE SALE OF REAL PROPERTY happening. Conditions may be:
a. First registrant in good faith 1. Waived; or
b. First possessor in good faith 2. Considered as warranties
c. Person with oldest title in good
faith EFFECT OF NON-FULFILLMENT OF
CONDITION
NOTE: 1. If the obligation of either party is
 Purchaser in Good Faith – one who subjected to any condition and such
buys the property of another without condition is not fulfilled, such party
notice that some other person has a may;
right to or interest in such property a. Refuse to proceed with the
and pays a full and fair price for the contract
same at the time of such purchase or b. Proceed the contract, waiving
before he has notice of the claim or the performance of the
interest of some other person in the condition
property (Veloso vs. CA)
2. If condition is in nature a promise that
 Registration requires actual it should happen, the non
recording; if the property was never performance of such condition may be
really registered as when the registrar treated by the other party as a breach
forgot to do so although he has been of warranty.
handed the document, there is no
registration. NOTE: A distinction must be made
between a condition imposed on the
perfection of a contract and a condition 1. Seller is an expert; and
imposed merely on the performance of an 2. Opinion was relied upon by the buyer
obligation. The failure to comply with the
first condition would prevent the juridical Not every false representation voids the
relation itself from coming into existence, contract, only those matters substantially
while failure to comply with the second affecting the buyer’s interest
merely gives the option either to refuse
or proceed with the sale or to waive the EXPRESS WARRANTY
condition.  It is an affirmation of fact or any
promise by the seller about the
The mere fact that the second contract of subject matter where the natural
sale was perfected in good faith is not tendency of it is to induce the buyer to
sufficient if, before title passes, the purchase the thing and the buyer
second vendee acquires knowledge of the purchases the thing relying on such
first transaction. The good faith or affirmation or promise.
innocence of the posterior vendee needs  An express warranty can be made by
to continue until his contract ripens into and also be binding on the seller even
ownership by tradition or registration. in the sale of a second hand article.
IMPLIED WARRANTY
WARRANTIES  It is a natural, not an essential
element of a contract, and is deemed
 It is a promise that a fact is true. In a incorporated in the contract of sale. It
sale, it is a statement of fact abut the is inherent.
quality or character of the goods sold  Its reason is to protect naïve and
to induce the sale relied upon by the unsuspecting buyers from scrupulous
buyer. Breach or violation of it gives sellers from running away from their
rise to a suit for damages. Warranty is wrongful doings.
enforceable only against the  It may be modified or suppressed by
immediate vendor of the party agreement of the parties. Unless
dispossessed. waived, the warranties stay.
WARRANTY CONDITION IMPLIED WARRANTIES IN SALE

Goes into the Affects the 1. Warranty as to seller’s title / Warranty
performance of an existence of the against eviction
obligation and may, obligation 2. Warrant against hidden defects
in itself, be an 3. Warranty as to fitness or
obligation merchantability
Stipulation or Must be stipulated
operation of law WHEN IMPLIED WARRANTY NOT
Non-fulfillment Non-happening does
APPLICABLE
constitutes breach not breach the
1. “As is and where is” sale - vendor
of contract contract
makes no warranty as to the quality or
May attach to the Always relate to the
seller’s duty to subject matter or workable condition of the goods, and
deliver or some the seller’s that the vendee takes them in the
other circumstances obligations condition in which they are found and
from the place where they are located.
KINDS OF WARRANTIES 2. Sale of secondhand articles
1. Express Warranty 3. Sale by virtue of authority in fact or
2. Implied Warranty law
EXPRESS OF OPINION SUBSECTION 1

A mere expression of opinion by the seller WARRANTY AGAINST EVICTION
does not import a warranty unless:
EVICTION presence of a fact giving rise to
 Vendee is deprived of the whole or eviction. (art. 1553)
part of the thing purchased. B. Vendee in bad faith- not entitled to
warranty against eviction nor right to
WARRANTY AGAINST EVICTION recover damages. He proceeded to
 Seller guarantees that he has the right the sale with the assumption of the
to sell the thing sold and to transfer risk of eviction. (art. 1554)
ownership to the buyer who shall not
be disturbed in his legal and peaceful KINDS OF WAIVER
possession thereof. If evicted, vendor
is liable thereof. 1. CONSCIENTE
a. voluntarily made by the
ELEMENTS OF WARRANTY AGAINST vendee without the knowledge
EVICTION and assumption of the risks of
1. Vendee has been deprived in whole or eviction.
in part of the thing purchased b. Vendor shall only pay the value
2. Deprived by virtue of final judgement of the thing sold at the time of
3. Judgement is based on right prior to eviction
the sale or act imputable to the
vendor EVICTION IN PART
4. Vendor was summoned in the suit for Buyer may either enforce vendor’s
eviction at the instance of the vendee liability for eviction or he may
5. There is no waiver on the part of the demand rescission of the contract
vendee provided in article 1556, if the
buyer lose, by eviction, a part of
WHY IS RESCISSION NOT A REMEDY the thing sold of such importance
IN CASE OF TOTAL EVICTION that he would not have bought it
without said part.
NOTE: Rescission is not a remedy against
total eviction. Rescission contemplates 2. INTENCIONADA
that the one demanding it is able to a. Made by vendee with
return whatever he has received under knowledge of risk of eviction
the contract. Since the buyer can no and assumption of its
longer return the thing sold to the seller, consequences
rescission cannot be carried out. b. Vendor not liable unless acted
in bad faith
PRESCRIPTION RIGHTS AND LIABILITIES

 Where one acquires ownership and In case eviction occurs, the vendee shall have
other real right through the lapse of the right to demand of the vendor the
time in the manner and conditions following:
prescribed by law. 1. Return of value of thing
2. Income or fruits of thing
A. Completed before sale- vendee can 3. Cost of the suit
enforce warranty against eviction 4. Expenses of the contract
B. Completed after sale- vendor is not 5. Damages and interest, and
liable for eviction. (art. 1550) ornamental expenses, if sale is made
in bad faith. (art. 1555)
EFFECTS OF WAIVING WARRANTY IN BAD
FAITH SUBSECTION 2
WARRANTY AGAINST HIDDEN DEFECTS
A. Vendor in bad faith- cannot be OF, OR ENCUMBRANCES UPON, THE
exempted from warranty. Because he THING SOLD
has knowledge beforehand of a
REQUISITES FOR WARRANTY AGAINST (“Let the seller beware”)
HIDDEN DEFECTS Vendor is still liable even is he
1. Defect must be important or serious; is not aware due to this
2. Must be hidden doctrine. It is based on the
3. Must exist at the time of sale principle that a sound price
4. Vendee must give notice of defect to warrants a sound article.
vendor within reasonable time
5. Action for rescission or reduction in CAVEAT EMPTOR (“Let the
price must be brought within 6 months buyer beware”) requires the
from delivery or 40 days in case of purchaser to be aware of the
animals supposed title of the vendor
6. No waiver of warranty on the part of and one who buys without
vendee checking the vendor’s title
takes all the risks and losses
WHEN DEFECT IMPORTANT consequent to such failure.
A. Renders the thing sold unfit for its
intended use; ALTERNATIVE REMEDIES OF THE BUYER
B. Diminishes its fitness for such use
VENDEE HAS THE OPTION TO EITHER:
NOTE: The use contemplated must be 1. Accion redhibitoria (withdraw from
that which is stipulated, and in absence of the contract)
stipulation, that which is adopted to the 2. Accion quanti minoris (reduction in
nature of the thing, and to the business of price)
the buyer.
EFFECTS OF THING LOSS DUE TO HIDDEN
IMPLIED WARRANTY OF FITNESS DEFECTS
Generally, there is no implied warranty of A. Vendor aware of hidden defect -
fitness for any particular purpose except he shall bear the lost due to bad faith.
under the following: Vendee may recover:
A. Buyer expressly or impliedly manifest i. Price paid
to the seller the particular purpose of ii. Expenses of the contract
the goods acquired iii. Damages
B. Buyer relies upon the seller’s skill or B. Vendor is not aware - since he
judgement acted in good faith, he shall be obliged
only to return:
There is an implied warranty that the goods i. Price
are reasonably fit for such special purpose. ii. Interest
iii. Expenses of the contract paid by
IMPLIED WARRANT OF vendee
MERCHANTABILITY
 It’s a warranty that goods are LOST DUE TO FAULT OF VENDEE
reasonably fit for the general purpose  If the thing sold had any hidden
for which the same are sold. defects at the time of sale, and it is
 It requires identity between what is lost through the fault of the vendee,
described in the contract AND that the vendor shall be liable for the price
latter is of such quality to have some paid less value of the thing had when
value it was lost. (art. 1569)
IGNORANCE OF VENDOR OF HIDDEN RULES

DEFECTS IN CASE OF SALE OF ANIMALS
 Ignorance does not relieve the vendor
from liability. Good faith cannot be REDHIBITORY VICE OR DEFECT
availed of as a defense by the vendor.  A defect which the seller is bound to
o DOCTRINE OF CAVEAT warrant in animals, the following
VENDITOR special rules shall apply:
1. Defect must be hidden 3. Must be of such nature that the
2. Must be of such nature that vendee would not have acquired the
expert knowledge is not immovable had he been aware
sufficient to discover it thereof.
Veterinarian is liable if he fails to discover REMEDIES AND RIGHT OF VENDEE

or disclose the hidden defect through 1. Within 1 year from execution of the
ignorance or bad faith. (art. 1576) deed of sale:
a. Rescission; or
Seller liable if animal dies within 3 days after b. Damages.
its purchase due to a disease that existed at 2. After one (1) year from of execution of
the time of sale. deed of sale:
a. Damages, within a period of
Limitation of the action: Redhibitory action one (1) year from discovery of
must be brought 40 days from the date of easement or servitude
their delivery to the vendee. (art. 1577)
WHEN VENDEE’S RIGHTS CAN’T BE
NO WARRANTY AGAINST HIDDEN EXERCISED
DEFECTS 1. When servitude is apparent
1. Animals sold at public fairs or public 2. If non-apparent servitude is registered
auctions. 3. If vendee has knowledge of the
2. Livestock sold as condemned encumbrance, registered or not
VOID SALE OF ANIMALS OBLIGATIONS OF THE VENDEE

A. animals sold are suffering from
contagious disease; or PRINCIPAL OBLIGATIONS OF THE VENDEE
B. found unfit for the use or service 1. Accept delivery
stated in the contract. 2. Pay the price
3. Bear expenses for the execution and
ANIMAL DIED WITH VICES registration of the sale and putting the
If loss is caused for fortuitous event or by goods in a deliverable state, if such is
fault of vendee and animal has vices, the the stipulation
buyer may either:
1. withdraw from the contract; or NOTE: A grace period granted the
2. demand a reduction in price. vendee in case of failure to pay the
amount/s due is a right not an
EASE OR SERVITUDE obligation. The grace period must not
be likened to an obligation, the non-
 Easement or servitude is an payment of which, under Article 1169
encumbrance imposed upon an of the Civil Code, would still generally
immovable for the benefit of another require judicial or extra-judicial
immovable owned by a different demand before “default” can be said
person. to arise
KINDS OF EASEMENT OR SERVITUDE OTHER OBLIGATIONS

A. Apparent easement- expressly 1. To take care of the goods without the
made obligation to return, where the goods
B. Non-apparent easement- no are delivered to the buyer and he
external indication of its existence rightfully refuses to accept
REQUISITES FOR VENDOR’S LIABILITY NOTE: The buyer in such a case is in

FOR IMMOVABLE SOLD WITH EASEMENT the position of a bailee who has had
1. Must be non-apparent goods thrust upon him without his
2. Not indicated in the agreement assent. He has the obligation to take
reasonable care of the goods but
nothing more can be demanded of GENERAL RULE: Buyer has the right to a
him. reasonable opportunity to examine the goods
before accepting them. (art. 1584)
The goods in the buyer’s possession
under these circumstances are at the EXCEPTION:
seller’s risk 1. When there is an agreement;
2. stipulation that the goods shall not be
2. To be liable as a depositary if he delivered to buyer until he paid the
voluntarily constituted himself as such price (C.O.D.).
3. To pay interest for the period between If seller refused to allow an

delivery of the thing and the payment opportunity for inspection, buyer may
of the price in the following cases: recind or recover the price paid.
a. Should it have been stipulated
b. Should the thing sold and NOTE: the right to examine the goods
delivered produce fruits or is a condition precedent to the
income transfer of ownership.
c. Should he be in default, from
the time of judicial or extra- WHEN THERE IS ACCEPTANCE OF GOODS
judicial demand for the 1. Express acceptance
payment of the price 2. Implied acceptance
a. Buyer does an act which only
PERTINENT RULES: an owner can do
1. Vendor not required to deliver the b. Failure to return after
thing sold until the price is paid nor reasonable lapse of time
the vendee to pay the price before the
thing is delivered in the absence of an NOTES:
agreement to the contrary; (art. 1524) o The retention of goods is
2. If stipulated, vendee is bound to strong evidence that the buyer
accept delivery and to pay the price at has accepted ownership of the
the time and place designated; goods
3. If there is no stipulation as to the time o Delivery and acceptance are
and place of payment and delivery, two separate and distinct acts
the vendee is bound to pay at the of different parties
time and place of delivery; o Delivery is an act of the
4. In the absence of stipulation as to the vendor and one of the vendor’s
place of delivery, it shall be made obligations; vendee has
wherever the thing might be at the nothing to do with the act of
perfection of the contract (art. 1251); delivery by the vendor
and o Acceptance is an obligation of
5. If only the time for delivery has been the vendee; acceptance cannot
fixed the vendee is required to pay be regarded as a condition to
even before the thing is delivered to complete delivery
him; (art. 1524) o seller must comply with the
obligation to deliver although
DELIVERY IN INSTALLMENT (ART. 1583) there is no acceptance yet by
the buyer
GENERAL RULE: Buyer is not bound to
accept delivery or pay the price thereof by EFFECT OF ACCEPTANCE ON VENDOR’S
installments. LIABILITY FOR BREACH OF WARRANTY
EXCEPTION: If there is a stipulation GENERAL RULE: Seller is not discharged

from liability for breach of warranty by the
RIGHT OF BUYER TO EXAMINE GOODS acceptance of the goods
EXCEPTION: by a vindicatory action or
1. If there is an agreement, express or foreclosure of mortgage.
implied; NOTE:
2. if buyer fails to give notice to seller of o If the thing sold is in the
breach of warranty within a possession of the vendee and
reasonable time after buyer knows of the price is already in the
such breach. (art. 1586) hands of the vendor, the sale is
a consummated contract and
EFFECT IF BUYER REFUSES TO ACCEPT Article 1590 is no longer
DELIVERY applicable. Article 1590,
presupposes that the price or
1. BUYER JUSTIFIABLY REFUSES any part thereof has not yet
o Buyer has no duty to return the been paid and the contract is
goods not yet consummated.
o Title does not pass o Under Article 1590, the vendee
o Not be obliged to pay the price has no cause of action for
o If he constitute himself as a rescission before final
depositary, he shall be liable as judgement, otherwise the
such vendor might become a victim
o Obligation to notify the seller of of machinations between the
such refusal (art. 1587) vendee and the third person
o Disturbance must be in
2. BUYER UNJUSTIFIABLY REFUSES possession and ownership of
o Title passes to the buyer, the thing acquired
unless there is stipulation and o If the disturbance is caused by
seller reserved the ownership the existence of non-apparent
o Obliged to pay the price (art. servitude, the remedy of the
1588) buyer is rescission, not
suspension of payment
TIME AND PLACE FOR PAYMENT OF
PRICE 2. When buyer may NOT suspend
A. Time and place stipulated payment
B. Time and place of delivery of thing, in a. Vendor give security for the
absence of stipulation return of the price;
b. It has been stipulated;
WHEN VENDEE IS LIABLE FOR INTEREST c. Vendor has caused the
Buyer shall pay interest for the period disturbance or danger to
between delivery and payment of price in the cease;
following cases: d. Disturbance is a mere act of
1. If there is stipulation trespass; e. Vendee has fully
2. Thing sold produces fruits or income paid the price.
3. If he is in default, from the time
judicial or extrajudicial demand for WHEN VENDOR MAY RESCIND THE SALE
payment of price. (art. 1589) 1. Sale of immovable- seller must have
a reasonable ground to fear the:
SUSPENSION OF PAYMENT (Art. 1590) a. Loss of the immovable
property; AND
1. When buyer may suspend b. Loss of the price.
payment
a. If he is disturbed in the If one or both grounds do not exist,
possession or ownership of the vendor may choose between:
thing bought; or a. Fulfillment with damages;
b. If he has a well-grounded fear b. Rescission with damages.
that his possession or
ownership would be disturbed
NOTE: Rescission of real property is c. Refuse to accept the goods and
not automatic. Demand is needed maintain an action for
before rescission may take place. damages
Demand is for the rescission and not d. Rescind the contract by the
for the payment of the price. return of goods and recover of
price
2. Sale of Movables- rescission of the
sale of movable shall take place at the NOTE: these are alternative remedies
option of the vendor, if at the time
fixed for the delivery of the thing, the WHEN RESCISSION BY BUYER NOT
vendee: ALLOWED
a. does not accept delivery 1. If buyer accepted the goods knowing
b. does not pay the price, unless of the breach of warranty without
a longer period of payment is protest;
stipulated 2. If he fails to notify the seller within a
reasonable time
BREACH OF CONTRACT OF SALE OF 3. Fails to return or offer to return the
GOODS goods to the seller in substantially as
good condition as they were in the
ACTIONS BY THE SELLER time of delivery
1. Action for payment of price
a. Ownership has passed to buyer RIGHTS AND OBLIGATION IN RESCISSION
and he wrongfully neglects or 1. BUYER
refuses to pay the price; a. Obliged to return the goods,
b. Price is payable on a certain and cease to be liable for the
day and buyer did not pay, price;
even if there is no transfer of b. If paid the price or any part
title; or thereof, he may recover it;
c. If the goods can’t be readily be c. Right to hold the goods as
resold for a reasonable price bailee if the seller refuse the
and buyer wrongfully refuses to return of goods;
accept them before ownership d. Right to have a lien of the
has passed. goods for any portion of price
2. Action for damages paid, as if he were an unpaid
3. Action for rescission seller.
a. When buyer repudiated the
contract of sale; 2. SELLER
b. When buyer manifested his When seller may rescind before
inability to perform his delivery
obligation; and a. When the buyer repudiated the
c. When buyer has committed a contract of sale;
breach in the contract. b. When buyer manifested his
inability to perform his
ACTION BY THE BUYER obligation
1. Bring an action for specific c. When buyer committed a
performance, if the seller has broken breach of the contract.
the contract to deliver specific or
ascertained goods. EXTINGUISHMENT OF SALE
2. In case of breach of warranty by seller:
a. Accept the goods and ask to SALES ARE EXTINGUISH BY:
reduce or extinguish the price 1. By the same causes as all obligations:
b. Accept goods and maintain an a. Payment/performance
action for damages b. Prescription
c. Loss of thing due
d. Annulment
e. Novation B. There is agreement: should not
f. Condonation/remission exceed 10 years. The time in excess of
g. Confusion or merger 10 years shall be null and VOID.
h. Compensation C. Civil Action between the parties:
i. Rescission 30 days after final judgement was
j. Resolutory Conditions made, provided that the contract was
a true sale with a right to repurchase.
2. By the various causes of
extinguishment in title VI (sales): This refers to cases involving a transaction
a. Cancellation of sale of personal where one of the parties contests or denies
property in installments (art. that the true agreement is one of sale with
1484) right to repurchase; not to cases where the
b. Resale of the goods by unpaid transaction is conclusively a pacto de retro
seller (art. 1532) sale.
c. Rescission of the sale by
unpaid seller (art. 1534) Example: Where a buyer a retro honestly
d. Rescission by the buyer in case believed that he entered merely into an
of partial eviction (art. 1556) Equitable Mortgage, not a pacto de retro
e. Rescission by buyer in case of transaction, and because of such belief he
breach of warranty against had not redeemed within the proper period
hidden defect (art. 1567)
f. Rescission by buyer in sale of NOTE: Tender of payment is sufficient to
animals with defects (art. compel redemption, but is not in itself a
1580) payment that relieves the vendor from his
liability to pay the redemption price (Paez vs.
3. By redemption Magno.)
A. CONVENTIONAL REDEMPTION EFFECT OF FAILURE TO EXERCISE RIGHT

Also called the right to redeem or OF REPURCHASE
repurchase, takes place when the
vendor eserved the right to reacquire Ownership shall be consolidated in the
the thing sold, provided that he: vendee. In case of real property, a judicial
1. Return to the vendee: order is required for the purpose of recording
a. The price paid the consolidation in the registry of property
b. Expenses of the after the vendor has been duly heard. (art.
contract and other 1607)
legitimate payments
made thereof
c. Necessary and useful
expenses made on the WHO MAY EXERCISE THE RIGHT TO
thing sold. REPURCHASE
2. Comply with other stipulations
1. VENDOR A RETRO
NOTE: the seller a retro must a. Vendee, who acquired the
pay for useful improvements whole undivided interest, may
introduced by the buyer a compel the vendor, who only
retro; otherwise, the latter may sold part thereof, to redeem
retain possession of the land the whole property.(art. 1611)
until reimbursement is made. b. Property sold by co-owners
jointly and in the same
PERIOD OF REDEMPTION contract may exercise the right
A. No agreement : 4 years from date of in respect to his share only.
contract (art. 1612)
c. In the case above (b), vendee
cannot be compelled to
consent to a partial
redemption, he may demand NOTE: in case of doubt, a contract
all vendors or co-heirs to agree purporting to be a sale with right to
to repurchase the whole thing repurchase (pacto de retro sale) shall
sold. (art. 1613) be construed as an equitable
mortgage.
2. CREDITORS OF THE VENDOR
a. They cannot make use of the NOTE: Vendor may ask for
right of redemption until after reformation, or to correct the
they have exhausted the instrument to express the true intent
property of the vendor. (art. of the parties.
1610)
RIGHTS OF PARTIES AS TO THE FRUITS

OF LAND WHEN CAN THERE BE PRESUMPTIOM AS
1. If there were fruits at the time of sale TO EQUITABLE MORTGAGE?
and vendee paid for them, he must be 1. Parties must have entered into a
reimbursed. contract denominated as a contract of
2. If vendee did not pay for the fruits, no sale
reimbursement for those existing at 2. The intention of the parties was to
the time of redemption. secure an existing debt by way of
3. No fruits at the time of same and mortgage
some exist at time of redemption, it is
to be distributed proportionately to NOTE: In the cases referred to in Arts.
the vendor and vendee, giving the 1602 and 1604, the apparent vendor may
latter a share in proportion to the time ask for the reformation of the instrument.
he possessed the property during the
last year counted from the REMEDY OF REFORMATION: To correct
anniversary from the date of sale to the instrument so as to make it express
compensate the vendee for his the true intent of the parties
expenses. (art. 1617)
1. LEGAL REDEMPTION
2. EQUITABLE MORTGAGE The right to be subrogated, upon the
One which lacks the proper formalities same terms and conditions stipulated
of a mortgage, but shows the in the contract, in the place of one
intention of the parties to make the who acquires a thing by:
property subject of the contract as a. purchase or
security for a debt. b. dation in payment, or
c. by any other transaction
A contract may be presumed to be an whereby ownership is
equitable mortgage under the following transferred by onerous title.
cases: (applies only to absolute sale)
May be effected against movables or
1. Unusually inadequate purchase price; immovables. It must be exercised within
2. Vendor remains in possession as thirty (30) days from the notice in writing by
lessee or otherwise; the vendor.
3. Extension for period of right to
repurchase; NOTE: Written notice under is
4. Purchases retains for himself a part of mandatory for the right of redemption
the purchase price; to commence.
5. Vendor binds himself to pay the taxes
of the thing sold;
6. When the real intention of the parties
is to secure the payment of an
obligation.
RIGHT OF LEGAL REDEMPTION OF CO- 2. If both lands have same area, the one
OWNERS who first requested the redemption
The following are the requisites for the right shall be preferred. (art. 1621)
to exist:
1. There must be co-ownership; RIGHT OF ADJACENT OWNER OF URBAN
2. There must be alienation of all or any LANDS
of the shares of the other co owners;  The owners may exercise two (2)
3. The sale must be to a third person or rights, right of pre-emption or right of
stranger; redemption. The following are the
4. The sale must be before partition; requisites in order to exercise such
5. The right must be exercised within the right:
period provided; 1. Land must be urban;
6. Vendee must be reimbursed for the 2. One exercising the right must
price of the sale. be an adjacent owner;
3. The land sold must be so
AGAINST WHOM THE RIGHT MAY BE small and so situated that a
EXERCISED major portion thereof cannot
 The right of legal redemption is not be used for any practical
granted solely and exclusively to the purpose within a reasonable
original co owner but applies to those time;
who subsequently acquire their 4. Such urban land was bought
respective share while the co- by its owner merely for
ownership subsist. In other words, the speculation; and
right cannot be exercised against 5. It is about to be resold, or that
another co-owner but rather it is its resale has been perfected.
exercised against the buyer who
bought the share. NOTE: If two or more owner wish to
exercise their rights, the one whose
LEGAL REDEMPTION OF ADJACENT intended use of the land appears best
OWNERS OF RURAL LANDS justified shall be preferred. (art. 1622)
The following are the requisites for the right Co owners are preferred over adjacent
to exist: owners. (art. 1623, par 2)
1. The land must be rural;
2. Land must be adjacent; PRE-EMPTION
3. There must be alienation;  It is the act of purchasing before
4. Rural land alienates must not exceed others. If exercised, they will have
1 hectare; preference over other potential
5. Vendee must already own some rural buyers.
land; and
6. Rural land sold must not be separated PRE-EMPTION REDEMPTION
by brooks, drainage, ravines, roads Arises before the Arises after sale
and other apparent servitudes from sale
the adjoining lands. No rescission There can be
because no sale as rescission of the
NOTE: Legal right of redemption of yet exist original sale
rural land refers to land used for The action is Action is directed
agriculture rather than residential directed against the against the buyer
prospective buyer
purposes. [Fabia vs Intermediate
May attach to the Always relate to the
Appellate Court, Nov. 21, 1984]
seller’s duty to subject matter or
deliver or some the seller’s
If two or more adjoining owners desire other circumstances obligations
to exercise the right of redemption
1. Owner of the smaller area shall be PERIOD WHICH RIGHT MAY BE
preferred. EXERCISED
 The period shall be exercised within
30 days from the notice in writing by
the prospective vendor, or by the
vendor.
 If notice is not given, the 30-day
period has not even begun to run.
[Vda. De Cangco v. Escudibo]
However, no specific form of written
notice is required.
 The 30-day notice in writing should be
counted from notice, not of the
perfected sale, but of the actual
execution and delivery of the
document of sale. [Doromal v. COA L-
36083, Sept. 5, 1975]
ASSIGNMENT OF CREDITS AND OTHER

INCORPOREAL RIGHTS
 Person (creditor/assignor) transfers to

another his rights and actions against
a third person (debtor) to another
person (assignee) in consideration of a
price certain in money.
 An assignment of credit not only
entitles the assignee to the credit, but
also the power to enforce it against
the debtor of the assignor.
FORMS OF ASSIGNMENT OF CREDIT

1. Between parties
a. May be in any form, oral or
written. So long as the law
does not require a specific form
for its validity.
2. To be binding against 3rd persons

a. If personal property- public
instrument
b. If real property- public
instrument must be recorded in
the Registry of Property.
EFFECTS OF PAYMENT BY DEBTOR TO

CREDITOR/ASSIGNOR AFTER
ASSIGNMENT
1. No knowledge of assignment-
Released from obligation. (art. 1626) DURATION OF ASSIGNOR’S WARRANTY
2. With knowledge of assignment- 1. Period Stipulated
not released. 2. If no period stipulated, 1 year from
date of maturity or assignment, which
NOTE: Art. 1626 stresses “knowledge” ever comes later.
rather than when notice is received.
SALE OF SUCCESSIONAL OR HEREDITARY
ACCESSORY RIGHTS INCLUDED IN RIGHTS
ASSIGNMENT  The seller only warrants the fact that
 The assignment of a credit does not he is an heir if sold without
only includes the credit but also all specification of properties. He does
accessory thereto. It includes the not warrants the objects which makes
following: (art. 1627) up the inheritance.
o Guaranty  Unless stipulated, the vendor is liable
o Mortgage to deliver the fruits of the inheritance;
o Pledge if consumed, he must reimburse them;
o Preference if sold, he must deliver the price of
sale. (art. 1632)
NOTE: this inclusion is based on the  The vendee must reimburse the
rule that accessory follows the vendor the debts and charges on the
principal. (art. 1537) estate paid by the latter. (art. 1633)
WARRANTIES OF ASSIGNOR (ART. NOTE: Since vendor already sold the

1628) inheritance, he should not profit
1. When a creditor assigns his except, of course, insofar as the price
credit, he warrants only at the is concerned.
perfection of the contract the:
a. Existence; and
b. Legality of the credit.
NOTE: He is not liable of credit was
sold as doubtful.
2. There is no warranty as to the SALE OF WHOLE OF CERTAIN RIGHTS,

solvency of the debtor unless: RENTS OR PRODUCTS
a. There is a stipulation; or  Vendor only warrant the legitimacy of
b. The insolvency was the WHOLE and not obliged to warrant
already existing and of each of the various parts of which it
public knowledge at the may be composed. Vendor is liable for
time of sale. eviction for:
1. The whole of the thing; or
LIABILITY FOR BREACH OF WARRANTY 2. Part of the grater value. (art.
1631)
1. IN GOOD FAITH
a. Price received LEGAL REDEMPTION IN SALE OF CREDIT
b. Expenses of the contract OR OTHER RIGHTS IN LITIGATION
c. Other legitimate payments by
reason of assignment REQUISITES BEFORE THE RIGHT CAN BE
EXERCISED
2. IN BAD FAITH 1. There must be a sale or assignment of
a. Price received a credit
b. Expenses of the contract 2. There must be a pending litigation at
c. Other legitimate payments by the time of assignment
reason of assignment 3. Debtor must pay the assignee:
d. Damages a. Price paid by him
b. Judicial cost incurred.
c. Interest on the price from the
date of payment
4. Right must be exercised 30 days from
the date assignee demands payment
from him. (art. 1634)
EXCEPTIONS TO DEBTOR’S RIGHT TO

LEGAL REDEMPTION
 The debtor’s right to legal redemption
is not available when the assignment
of the right in litigation is made to a:
(art. 1635)
1. Co-heir or co-owner
2. Creditor in payment of his
credit;
3. Possessor of property in
question.

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UPDATES IN REGULATORY FRAMEWORKS

PROCEDURAL POSTURE 1. NO EXTINCTIVE NOVATION

In respect to the first sale, the trial court held

EXAMPLES OF PERSONS ESPECIALLY REASON: only private rights, which are

A. Aliens who are disqualified to  NULL AND VOID

EFFECTS OF VIOLATION: REASON: violation of public policy cannot be

RULES: INSTANCES WHERE SELLER IS STILL THE

GOODS DELIVERED LESS THAN COMMON FORMS OF DOCUMENT OF

INDIVISIBLE GOODS A. Negotiable Documents of title-

RIGHTS OF THE TRANSFEREE

The rights of a transferee, tot whom a

RIGHT TO LIEN A. WHEN AVAILABLE:

Such notice may be given in to the RIGHT TO RESCIND THE SALE

E. WHEN GOODS ARE NO LONGER IN B. EFFECTS OF RESCISSION:

RIGHT OF RESALE Communication to buyer of rescission is

GENERAL RULE: the unpaid seller's right of

REQUISITES OF DOUBLE SALE  Title means title because of sale, and

WARRANTY CONDITION IMPLIED WARRANTIES IN SALE

EXPRESS OF OPINION SUBSECTION 1

PRESCRIPTION RIGHTS AND LIABILITIES

IGNORANCE OF VENDOR OF HIDDEN RULES

Veterinarian is liable if he fails to discover REMEDIES AND RIGHT OF VENDEE

VOID SALE OF ANIMALS OBLIGATIONS OF THE VENDEE

KINDS OF EASEMENT OR SERVITUDE OTHER OBLIGATIONS

REQUISITES FOR VENDOR’S LIABILITY NOTE: The buyer in such a case is in

3. To pay interest for the period between If seller refused to allow an

EXCEPTION: If there is a stipulation GENERAL RULE: Seller is not discharged

A. CONVENTIONAL REDEMPTION EFFECT OF FAILURE TO EXERCISE RIGHT

RIGHTS OF PARTIES AS TO THE FRUITS

ASSIGNMENT OF CREDITS AND OTHER

 Person (creditor/assignor) transfers to

FORMS OF ASSIGNMENT OF CREDIT

2. To be binding against 3rd persons

EFFECTS OF PAYMENT BY DEBTOR TO

WARRANTIES OF ASSIGNOR (ART. NOTE: Since vendor already sold the

2. There is no warranty as to the SALE OF WHOLE OF CERTAIN RIGHTS,

EXCEPTIONS TO DEBTOR’S RIGHT TO

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