2019 Sales Review

2019 SALES REVIEW
WITH CASE UPDATES

[TAKEN FROM LAW ON SALES, OUTLINE, AND LECTURES OF
DEAN CESAR L. VILLANUEVA]
By Atty. Alexander C. Dy
NATURE OF SALE
Definition/Elements: (Art. 1458)

Parties Obligations Object
1. Seller To Transfer Ownership Subject Matter
To Deliver Possession
[Consent]
2. Buyer To Pay Price
*Case: Guison v. Heirs of Loreno Terry, 836 SCRA 90 (2017)
Thus, Sale creates real obligations to give (Art. 1165)

NATURE OF SALE
Guison v. Heirs of Loreno Terry, 836 SCRA 90 (2017)
Given that both the Revocation Agreement and the Partition Agreement are silent on
the issue of consideration, and further considering the conflicting accounts of the parties
themselves as to the exact amount of the purchase price, this Court agrees with the finding
of the RTC that the parties did not reach any agreement as to the amount of monetary
consideration for the property.
This lack of consensus as to the price prevented the perfection of the sale. We
emphasize that the law requires a definite agreement as to a "price certain"; otherwise,
there is no true meeting of the minds between the parties. x x x.
The price must be certain, otherwise there is no true consent between the parties.
There can be no sale without a price. In the instant case, however, what is dramatically clear
from the evidence is that there was no meeting of mind as to the price, expressly or
impliedly, directly or indirectly.
As there was no sufficient evidence of a meeting of the minds between the parties
with regard to the consideration for the sale, we are compelled to declare the transaction
null and void.
NATURE OF SALE
Essential Characteristics of Sales:
1. Nominate vs. Innominate
2. Principal vs. Accessory
3. Consensual (Art. 1475) vs. Solemn vs. Real
4. Bilateral/Reciprocal vs. Unilateral
(Arts. 1169 and 1191)
*Case: Philippine Economic Zone Authority v. Pilhino Sales Corporation,
804 SCRA 266 (2016)
NATURE OF SALE
Philippine Economic Zone Authority v. Pilhino Sales Corporation, 804 SCRA 266 (2016)
A contract of. sale, such as that entered into by petitioner and respondent, entails
reciprocal obligations. As explained in Spouses Velarde v. Court of Appeals, "[i]n a contract of
sale, the seller obligates itself to transfer the ownership of and deliver a determinate thing,
and the buyer to pay therefor a price certain in money or its equivalent."
Respondent correctly notes that rescission under Article 1911 results in mutual
restitution. Jurisprudence has long settled that the restoration of the contracting parties to
their original state is the very essence of rescission.
Contrary to respondent's assertion, mutual restitution under Article 1191 is,
however, no license for the negation of contractually stipulated liquidated damages.
Article 1191 itself clearly states that the options of rescission and specific performance
come with "with the payment of damages in either case." The very same breach or delay in
performance that triggers rescission is what makes damages due.
NATURE OF SALE
Essential Characteristics of Sales: [Cont’d]

5. Onerous vs. Gratuitous
6. Commutative vs. Aleatory
7. Title vs. Mode
NATURE OF SALE
Sales vs. Donations: (Arts. 725 and 1471)

1. Both involve the transfer of ownership/possession
of subject matter
2. Sale is Consensual, while Donation is Solemn
3. Sale is Onerous, while Donation is Gratuitous
NATURE OF SALE
Sales vs. Barter: (Arts. 1468, 1638-1641)

1. Barter is Sale, since it involves the transfer of
ownership/possession of subject matter
Therefore, Barter governed by Law on Sales
2. Price is replaced with obligation to transfer
ownership/possession of another subject matter
NATURE OF SALE
Sales vs. Dacion en Pago: (Arts. 1245 and 1934)

1. Dacion is process of extinguishment of contracts
2. Dacion novates original contractual relations into a
fully executed Sale, therefore, delivery is required
3. The results of Dacion governed by Law on Sales
*Case: Pen v. Julian, 778 SCRA 56 (2016)
NATURE OF SALE
Pen v. Julian, 778 SCRA 56 (2016)
In a sale, the contract is perfected at the moment when the seller obligates herself to
deliver and to transfer ownership of a thing or right to the buyer for a price certain, as to
which the latter agrees. The absence of the consideration from Linda's copy of the deed of
sale was credible proof of the lack of an essential requisite for the sale. x x x. And, even
assuming that Linda's leaving the consideration blank implied the authority of Adelaida to fill
in that essential detail in the deed of sale upon Linda's default on the loan, the conclusion of
the CA that the deed of sale was a pactum commisorium still holds, for, as earlier
mentioned, all the elements of pactum commisorium were present.
The petitioners have theorized that their transaction with the respondents was a valid
dacion en pago by highlighting that it was Linda who had offered to sell her property upon
her default. Their theory cannot stand scrutiny. Dacion en pago is in the nature of a sale
because property is alienated in favor of the creditor in satisfaction of a debt in money. For
a valid dacion en pago to transpire, however, the attendance of the following elements must
be established, namely: (a) the existence of a money obligation; (b) the alienation to the
creditor of a property by the debtor with the consent of the former; and (c) the satisfaction
of the money obligation of the debtor. To have a valid dacion en pago, therefore, the
alienation of the property must fully extinguish the debt. Yet, the debt of the respondents
subsisted despite the transfer of the property in favor of Adelaida.
NATURE OF SALE
Sales vs. Contracts for Piece-of-Work:

(Arts. 1467, 1713-1715)
1. Both involve transfer of ownership/possession of
object for valuable consideration
2. In Contract for Piece-of-Work, main motivation is
the reputation, skill, mastery, of contractor
(Commissioner of Internal Revenue v. Engineering Equipment
& Supply Co., 64 SCRA 590 [1975])
Therefore, Contract for Piece-of-Work involves a
personal obligation to do (not for past service)
NATURE OF SALE
Sales vs. Agency to Sell/Buy: (Art. 1466)

1. Agency: Representative (essentially revocable) and
Fiduciary (fruits/income for benefit of principal)
2. Therefore, Agent:
a. Not personally liable
b. Not obliged to pay price (since no transfer of
ownership (Quiroga v. Parsons, 38 Phil. 501 [1918])
c. Does not assume risks of ownership (Puyat v. Arco
Amusement Co., 72 Phil. 402 [1941])
NATURE OF SALE
Sales vs. Leases: (Arts. 1484 and 1485)

1. Sales involves transfer of ownership/possession;
Lease involves temporary enjoyment of possession
2. Otherwise, contract treated as Sale on Installments
PARTIES TO CONTRACT OF SALE
General Rule: (Art. 1489) All parties having capacity to

contract can be valid parties
Exceptions:
1. Minors, Demented, Deaf-Mutes (To Sell To/To Buy)
(Arts. 1327, 1397 and 1399) – Merely Voidable
a. But Sale of Necessaries to Minors Valid (Art.
1489; Art. 194, Family Code)
2. Spouses (To Sell)

a. Sale of community/conjugal property to third
parties without consent of both spouses Void
(Arts. 73, 96, and 124, Family Code)
*Case: Nobleza v. Nuega, 752 SCRA 602 (2015)
*Case: Alejo v. Cortez, 827 SCRA 319 (2017)
b. Sale to one another, Void unless governed by

compete separation of property regime
(Arts. 133, 1490, 1492; Sec. 87, Family Code)
Note: prohibition applies to common-law wife
(Calimlim-Canullas v. Fortun, 129 SCRA 675 [1984])
Nobleza v. Nuega, 752 SCRA 602 (2015)
Since the subject property does not fall under any of the exclusions provided in Article
92, it therefore forms part of the absolute community property of Shirley and Rogelio.
Regardless of their respective contribution to its acquisition before their marriage, and
despite the fact that only Rogelio's name appears in the TCT as owner, the property is
owned jointly by the spouses Shirley and Rogelio.
In the instant case, defendant Rogelio sold the entire subject property to defendant-
appellant Josefina on 29 December 1992 or during the existence of Rogelio's marriage to
plaintiff-appellee Shirley, without the consent of the latter. The subject property forms part
of Rogelio and Shirley's absolute community of property. Thus, the trial court erred in
declaring the deed of sale null and void only insofar as the 55.05 square meters
representing the one-half (1/2) portion of plaintiff-appellee Shirley. In absolute community
of property, if the husband, without knowledge and consent of the wife, sells (their)
property, such sale is void. The consent of both the husband Rogelio and the wife Shirley is
required and the absence of the consent of one renders the entire sale null and void
including the portion of the subject property pertaining to defendant Rogelio who
contracted the sale with defendant-appellant Josefina. x x x.
Alejo v. Cortez, 827 SCRA 319 (2017)
The law is therefore unequivocal when it states that the disposition of conjugal
property of one spouse sans the written consent of the other is void. Here, x x x the
Kasunduan was entered into solely by Jacinta and x x x therefore, the Kasunduan is void.
Nevertheless, x x x the void Kasunduan constitutes a continuing offer from Jacinta
and Dolores and that Jorge had the option of either accepting or rejecting the offer before
it was withdrawn by either, or both, Jacinta and Dolores.
It is undisputed that after the execution of the Kasunduan, Jorge sent two letters to
Dolores: one, in forming her that he did not consent to the sale; and the other, demanding
that' Dolores pay the balance of the purchase price on or before October 5, 1996 and failing
which, the purchase price shall be increased to PhP700,000.
Clearly, Jorge's first letter was an outright and express repudiation of the
Kasunduan. The second letter x x x varied its terms on material points, i.e., the date of
payment of the balance and the purchase price. Consequently, such counter-offer cannot
be construed as evidencing Jorge's consent to or acceptance of the Kasunduan for it is
settled that where the other spouse's putative consent to the sale of the conjugal property
appears in a separate document which does not contain the same terms and conditions as
in the first document signed by the other spouse, a valid transaction could not have arisen.
3. Relative Disqualifications (To Buy)

(Arts. 1491 and 1492)
a. Guardians – property of their Wards
(Philippine Trust Co. v. Roldan, 99 Phil. 392 [1956])
b. Agents – property of their Principal
(Except: if agent granted express power to buy)
c. Administrators/Executors – property of Estate
under their administration
3. Relative Disqualifications (To Buy) [Cont’d]

d. Public Officers vis-a-vis property of Government
under their jurisdiction
e. Judges/Justices/Court Officers – property
within their judicial jurisdiction
f. Lawyers – Client’s property in litigation, only
while litigation is pending, even on appeal, even
if non-adversarial, but only if counsel of record
(Rubias v. Batiller, 51 SCRA 120 [1973]); Exception:
contingency fee (Fabillo v. IAC, 195 SCRA 28 [1991])
SUBJECT MATTER
Requisites of Subject Matter:

1. Possible Thing vs. Impossible
(Arts. 1347, 1348, 1461, 1462 and 1465)
2. Licit vs. Illicit
(Arts. 1347, 1459 and 1575)
*Case: Heirs of Zosimo Q. Maravilla v. Tupas, 803 SCRA 1 (2016)
3. Determinate/ vs. Indeterminable

Determinable Generics
(Arts. 1460, 1246, 1409[6] and 1463)
4. Quantity?
SUBJECT MATTER
Heirs of Zosimo Q. Maravilla v. Tupas, 803 SCRA 1 (2016)
The above reasoning of the CA has its basis on a simple logic that one cannot
dispose of a thing he does not own. In this case, at the time of the sale of the subject
property, the late Asiclo S. Tupas had no right to sell a property that has not been declared
alienable by the State; hence, he cannot pass unto another any right or title to own or
possess the land. Therefore, the "Sale of Unregistered Land" entered into between the late
Asiclo S. Tupas and the late Zosimo Maravilla on February 8, 1975, previously considered valid
and legitimate and became the basis used by the RTC to settle the dispute between the
parties as to who has the better to right to the property, has become null and void because
the subject property of the contract is a forest land and cannot be alienated at the time the
said deed of sale was executed. Article 1347 of the Civil Code provides that only things,
which are not outside the commerce of man, including future things, may be the objects of
the contracts and Article 1409 of the Civil Code also states that contracts whose objects are
outside the commerce of man are non-existent and void ab initio.
PRICE AND OTHER CONSIDERATION
Requisites of Price: (Arts. 1469-1474)

1. Real/True vs. Simulated/False
(Arts. 1471; 1353 and 1354)
2. Valuable Consideration vs. Liberality/Nominal/
Money or its equivalent Inadequacy
(Arts. 1458; 1468; 1355 and 1470; 1381; 1602)
3. Certain/Ascertainable vs. Cannot be Ascertained
(Arts. 1469, 1472 to 1474)
4. Manner of Payment (Art. 1179)
When Price Ascertainable: (Art. 1469)

1. Third party designated to fix Price (Art. 1469)
Price can never be left to discretion of one party,
unless accepted by the other (Arts. 1473, 1182)
2. In reference to another thing certain (Art. 1469)
3. In reference to an exchange or market (Art. 1472)
Otherwise: Sale is inefficacious (Art. 1474)

When Court Can Fix Price: (Art. 1469)

1. When designated party fixes Price by:
a. mistake; or
b. fraud or bad faith
But NOT if third party fails/refuses to fix Price
2. When Subject Matter has been:
a. delivered to; and
b. appropriated by the Buyer (Art. 1474)
STAGES OF CONTRACT OF SALE
1. Negotiation/Policitacion (Art. 1479)

Covers period from time prospective contracting
parties indicate interest to time of perfection
2. Perfection (Arts. 1475, 1319, 1325 and 1326)
Takes place when essential elements concur, i.e.,
meeting of minds of parties as to object and price
3. Consummation (Arts. 1493-1506, 1536-1544, 1582-1590)
Begins when parties perform their obligations and
culminates in the extinguishment of contract
*Case: Far East Bank and Trust Company v. Philippine Deposit Insurance
Corporation, 763 SCRA 438 (2015)
STAGES OF CONTRACT OF SALE
Far East Bank and Trust Company v. Philippine Deposit Insurance Corporation, 763
SCRA 438 (2015)
It is well-established that a contract undergoes various stages that include its
negotiation or preparation, its perfection, and finally, its consummation.
Negotiation covers the period from the time the prospective contracting parties
indicate interest in the contract to the time the contract is concluded (perfected). The
perfection of the contract takes place upon the concurrence of its essential elements. A
contract which is consensual as to perfection is so established upon a mere meeting of
minds, i.e., the concurrence of offer and acceptance, on the object and on the cause or
consideration. The consummation stage begins when the parties perform their respective
undertakings under the contract, culminating in its extinguishment.
As mentioned above, the FEBTC submitted its bid to the Central Bank in response to
the latter's invitation to submit a formal proposal for the purchase of the assets of the PBC.
Subsequently, the FEBTC, the PBC, and the Central Bank entered into a MOA that
essentially adopted the FEBTC's bid.
In view of the perfection of the contract of sale, the execution of the PA over the
fixed assets, like the executed PA over the non-fixed assets, falls under the consummation
stage and not the perfection stage.
POLICITACION STAGE
1. Proposals (Invitations to make Offers)

2. Offers
3. Acceptances
4. Option Contracts
5. Rights of First Refusal
6. Agreements to Enter into Sales
7. Mutual Promises to Buy and Sell
POLICITACION STAGE: OFFERS
Rules on Offers:
1. Offer is at the complete will of the Offeror,
who may destroy it at will prior to acceptance (i.e.,
when Offeror has knowledge of acceptance)
2. Offer will lapse upon:
a. happening of condition/period placed upon it
b. passage of reasonable period, if no condition
3. Offer cannot be accepted partially or substantially,
as counter-offer legally extinguishes original offer
POLICITACION STAGE: OFFERS
When Offer is Certain:

a. Contains a Clear Promise to Sell/to Buy
b. Covers a Subject Matter which is:
(1) Possible; (2) Licit; and (3) Determinate/
Determinable
c. Covers a Price or Consideration which is:
(4) Real; (5) Valuable; (6) Certain/Ascertainable;
and (7) With Manner of Payment/Performance
POLICITACION STAGE: ACCEPTANCE
When Acceptance is Absolute:

a. No Condition on, or Amendment to, the Terms
of the Offer
b. May clarify on terms and language
c. But Never Touch on: (1) the Subject Matter; or
(2) the Consideration [any of the seven items]
POLICITACION STAGE: OPTION CONTRACT
Elements of Option Contract: (Art. 1479)

1. Acceptance of Offer: Offer of Option to Buy/Sell
2. Subject Matter: Option/Privilege to Buy/Sell:
an Object (Possible; Licit; and
Determinate/Determinable)
at a Price (Real; Valuable;
Certain/Ascertainable)
3. Consideration: Anything Separate and
Distinct from Purchase Price
Rules on Option Contracts:

(Ang Yu Asuncion v. CA, 238 SCRA 602 [1994])
1. If there is NO separate consideration:
a. Option Contract void, but constitutes an offer
which can be withdrawn by Offeror, but if
accepted before withdrawal, would give rise to
a valid sale (Sanchez v. Rigos, 45 SCRA 368 [1972])
b. If withdrawal of offer is whimsical/arbitrary,
could give rise to damage claim under Art. 19 of
Civil Code
Rules on Option Contracts: (Ang Yu Asuncion) [Cont’d]

2. If there is separate consideration:
a. Option Contract perfected, if option exercised
within option period, would give rise to a sale
which can be enforced by specific performance
b. If offer is withdrawn within option period,
withdrawal is breach of Option Contract
POLICITACION STAGE: RIGHT OF FIRST REFUSAL
Elements of Rights of First Refusal:

1. Offeror binds himself to first offer Subject Matter to
Offeree for Sale
2. In the event Offeror ever decides to sell it
3. Subject Matter:
a. Possible Thing;
b. Licit; and
c. Determinate/Determinable
4. For Price that will then be agreed upon
Doctrines on Right of First Refusal:

1. Ang Yu Asuncion v. CA, 238 SCRA 602 (1994)
a. Generally, ROFR Contracts would be void for
lack of cause or consideration, or failure to
carry the valid price for the expectant contract
b. Cannot be enforced by specific performance
c. Breach allows recovery of damages based on
Art. 19 of Civil Code for “abuse of right”
2. Equatorial Realty Dev., Inc. v. Mayfair Theater, Inc.

264 SCRA 483 (1996)
a. If attached to principal contract (e.g., lease),
ROFR is valid, its enforcement takes its vitality
from obligatory force of main contract
b. Such ROFR, if breached, may be enforced at
Price at which Subject Matter sold to third party
c. Third party’s purchase may be rescinded under
accion pauliana (entered into in breach and
in fraud of Optionee’s contract)
3. Paranaque Kings Enterprises, Inc. v. CA, 268 SCRA

727 (1997)
a. ROFR is complied with by first offering Subject
Matter to Optionee and negotiating for a sale
b. Only when negotiation does not ripen to a sale
can Subject Matter be offered to third-party
buyer, but at the same Price asked of Optionee
POLICITACION STAGE: AGREEMENTS
Agreements to Enter Into Future Sale or Series of Sale:

1. Quotas (National Grains Authority v. IAC, 171 SCRA 131
[1989])
2. Supply Agreements (Johannes Schuback & Sons Phil.
Trading Corp. v. CA, 227 SCRA 719 [1993])
3. Distribution/Licensing Agreements
POLICITACION STAGE: MUTUAL PROMISE
Mutual Promises to Buy and Sell (Art. 1479)

(“True Contract to Sell”)
1. Conditional Contract of Sale where bilateral
obligations to buy and sell have been agreed upon,
but subject to conditions
2. Agreement to enter into Contract of Sale upon
happening of the conditions
PERFECTION STAGE
Perfection of Contract of Sale: (Art. 1475)

1. Comes about when a Certain Offer has been met by
an Unqualified Acceptance
*Case: First Optima Realty Corporation v. Securitron Security Services, Inc.,
748 SCRA 534 (2015)
PERFECTION STAGE
SCRA 438 (2015)
Specifically, contracts of sale are perfected by mutual consent, when the seller
obligates himself, for a price certain, to deliver and transfer ownership of a specified thing or
right to the buyer over which the latter agrees.
Mutual consent, as a state of mind, may only be inferred from the confluence of two
acts of the parties: an offer certain as to the object of the contract and its consideration,
and an absolute acceptance of the offer, i.e., with respect to the exact object and
consideration embodied in the offer. While it may not be possible to expect the
acceptance to echo every nuance of the offer, it is imperative that it assents to those points
in the offer that, under the operative facts of each contract, are not only material but
motivating as well.
Simply put, a contract of sale is perfected upon the meeting of the minds of the
parties on the essential elements of the contract, i.e., consent, object certain, and the
consideration of the contract.
Based on the above well-established principles, the Court rules that the essential
elements of a contract of sale are present in the MOA as confirmed by the FEBTC's bid and
the provisions of the MOA and the PA. x x x.
PERFECTION STAGE
First Optima Realty Corporation v. Securitron Security Services, Inc., 748 SCRA 534
(2015)
It cannot be denied that there were negotiations between the parties conducted after
the respondent's December 9, 2004 letter-offer and prior to the February 4, 2005 letter.
These negotiations culminated in a meeting between Eleazar and Young whereby the latter
declined to enter into an agreement and accept cash payment then being tendered by the
former. Instead, Young informed Eleazar during said meeting that she still had to confer with
her sister and petitioner's board of directors; in turn, Eleazar told Young that respondent shall
await the necessary approval.
Thus, the trial and appellate courts failed to appreciate that respondent's offer to
purchase the subject property was never accepted by the petitioner at any instance, even
after negotiations were held between them. Thus, as between them, there is no sale to
speak of. "When there is merely an offer by one party without acceptance of the other,
there is no contract."
Respondent's subsequent sending of the February 4, 2005 letter and check to
petitioner — without awaiting the approval of petitioner's board of directors and Young's
decision, or without making a new offer — constitutes a mere reiteration of its original offer
which was already rejected previously; x x x.
PERFECTION STAGE
First Optima Realty Corporation v. Securitron Security Services, Inc., 748 SCRA 534
(2015) [Cont’d]
Since there is no perfected sale between the parties, respondent had no obligation
to make payment through the check; nor did it possess the right to deliver earnest money
to petitioner in order to bind the latter to a sale. As contemplated under Art. 1482 of the
Civil Code, "there must first be a perfected contract of sale before we can speak of earnest
money." "Where the parties merely exchanged offers and counter-offers, no contract is
perfected since they did not yet give their consent to such offers. Earnest money applies to a
perfected sale.“
In a potential sale transaction, the prior payment of earnest money even before the
property owner can agree to sell his property is irregular, and cannot be used to bind the
owner to the obligations of a seller under an otherwise perfected contract of sale; to cite a
well-worn cliché, the carriage cannot be placed before the horse.
PERFECTION STAGE
Perfection of Contract of Sale: (Cont’d)

2. Is the only point in time to determine the validity or
invalidity of a Contract of Sale
3. Establishes the contractual principles of:
a. Consensuality
b. Relativity
c. Mutuality or Obligatory Force
FORM OF SALE
Generally: None, because consensual contract

For Enforceability: (Art. 1403) Statute of Frauds covers

1. Sale which by its terms is not to be performed
within one (1) year
2. Sale of movables, at least P500
3. Sale of immovables, at any price
In which cases, contract of sale must be in writing,
signed by the party sought to be charged
FORM OF SALE
SCRA 438 (2015)
A contract of sale is perfected by the meeting of the minds of the parties regardless
of whether it was reduced to writing.
In Limketkai Sons Milling, Inc. v. CA, we ruled that the fact that the deed of sale still
had to be signed and notarized did not mean that no contract had been perfected. A
binding contract may exist between the parties whose minds have met, although they did not
affix their signatures to any written document, as acceptance may be expressed or implied.
Furthermore, a sale of land, once consummated, is valid regardless of the form it
may have been entered into. The law or jurisprudence does not mandate that the contract
of sale be put in writing before such contract can validly cede or transmit rights over a certain
real property between the parties themselves.
FORM OF SALE
Even if sale not in writing, enforceable if: (Art. 1405)

1. Memorandum (Art. 1403) signed by party sought to
be charged and containing description of Subject
Matter (Possible; Licit;
Determinate/Determinable) and Price (Real;
Valuable; Certain/Ascertainable; Manner of
Payment Provided)
*Case: Estrellado v. Presiding Judge of the Municipal Trial Court in Cities, 11th
Judicial Region, Branch 3, Davao City, 844 SCRA 304 (2017)
2. Partially Executed by party sought to be charged

and must touch upon Subject Matter or Price
3. Waiver of adducement of oral evidence at trial
FORM OF SALE
Estrellado v. Presiding Judge of the Municipal Trial Court in Cities, 11th Judicial Region, Branch
3, Davao City, 844 SCRA 304 (2017)
The Franciscos could not produce the deeds of sale between them and the
Estrellados. Nonetheless, they presented the certification x x x signed x x x by the late
Spouses Alipio and Vivina Barredo x x x.
The Franciscos also presented the receipt signed x x x by the late Spouses Alipio and
Vivina Barredo x x x.
These documents pointed to nothing else but that the late Spouses Alipio and Vivina
Barredo had sold their parcel of land of 15,465 square meters to Dr. Francisco.
It is required under Article 1403(2) of the Civil Code that the sale of real property, to
be enforceable, should be in a writing subscribed by the party charged for it. This
requirement was met herein by the Franciscos even in the absence of any formal deed of
sale. Considering that the agreement between the parties on the sale was reduced in
writing and signed by the late Spouses Alipio and Vivina Barredo as the sellers, the sale was
enforceable under the Statute of Frauds. Despite the document embodying the agreement
on the sale not being acknowledged before a notary public, the nonobservance of the form
prescribed by Article 1358(1) of the Civil Code did not render the sale invalid. Indeed, the
form required by Article 1358 was only for convenience of the parties and was not essential
to the validity or enforceability of the sale.
FORM OF SALE
For Validity: Sale of Realty Through Agent (Art. 1874)

1. Agent’s authority must be in writing
2. Otherwise, Sale is Void, even if:
a. Deed of Sale in writing/notarized
b. There has been partial payment of Price
c. There has been delivery of Subject Matter
d. Sale is registered
*Case: Bautista-Spille v. NICORP Management and Development Corporation,
773 SCRA 67 (2015)
*Case: Mactan-Cebu International Airport Authority v. Unchuan, 791 SCRA 581
(2016)
FORM OF SALE
Bautista-Spille v. NICORP Management and Development Corporation, 773 SCRA 67
(2015)
The well-established rule is when a sale of a parcel of land or any interest therein is
through an agent, the authority of the latter shall be in writing, otherwise the sale shall be
void. (Articles 1874 and 1878 of the Civil Code)
In the case at bench, the only evidence adduced by NICORP to prove Benjamin's
authority to sell petitioner's property was the document denominated as General Power of
Attorney, dated June 20, 1996.
Doubtless, there was no perfected contract to sell between petitioner and NICORP.
Nowhere in the General Power of Attorney was Benjamin granted, expressly or impliedly, any
power to sell the subject property or a portion thereof. The authority expressed in the
General Power of Attorney was couched in very broad terms covering petitioner's businesses
and properties. Time and again, this Court has stressed that the power of administration
does not include acts of disposition, which are acts of strict ownership. As such, an
authority to dispose cannot proceed from an authority to administer, and vice versa, for
the two powers may only be exercised by an agent by following the provisions on agency of
the Civil Code.
FORM OF SALE
Mactan-Cebu International Airport Authority v. Unchuan, 791 SCRA 581 (2016)
The Court finds that the sale transaction executed between Atanacio, acting as an
agent of his fellow registered owners, and the CAA was indeed void insofar as the other
registered owners were concerned. They were represented without a written authority
from them clearly in violation of the requirement under Articles 1874 and 1878 of the Civil
Code.
Without a special power of attorney specifying his authority to dispose of an
immovable, Atanacio could not be legally considered as the representative of the other
registered co-owners of the properties in question. Atanacio's act of conveying Lot No. 4810-
A and Lot No. 4810-B cannot be a valid source of obligation to bind all the other registered
co-owners and their heirs because he was not clothed with any authority to enter into a
contract with CAA. The other heirs could not have given their consent as required under
Article 1475 of the New Civil Code because there was no meeting of the minds among the
other registered co-owners who gave no written authority to Atanacio to transact on their
behalf. Therefore, no contract was perfected insofar as the portions or shares of the other
registered co-owners or their heirs were concerned.
FORM OF SALE
Sales of Immovables:
1. Private Document: (Arts. 1403 and 1405) Enforceability
between parties, except partial execution/waiver
2. Public Instrument: (Art. 1358)
a. mode of transferring ownership
b. authenticity and due execution
c. registrability with Register of Deeds
*Case: Bitte v. Jonas, 777 SCRA 489 (2015)
3. Registration: (P.D. No. 1529) to bind the whole world

FORM OF SALE
Bitte v. Jonas, 777 SCRA 489 (2015)
Article 1358 of the New Civil Code requires that the form of a contract transmitting or
extinguishing real rights over immovable property should be in a public document.
Not having been properly and validly notarized, the deed of sale cannot be considered
a public document. It is an accepted rule, however, that the failure to observe the proper
form does not render the transaction invalid. It has been settled that a sale of real
property, though not consigned in a public instrument or formal writing is, nevertheless,
valid and binding among the parties, for the time-honored rule is that even a verbal
contract of sale or real estate produces legal effects between the parties.
Not being considered a public document, the deed is subject to the requirement of
proof under Section 20, Rule 132.
Accordingly, the party invoking the validity of the deed of absolute sale had the
burden of proving its authenticity and due execution. x x x.
CONSUMMATION STAGE
1. Performance – Delivery of Subject Matter; Payment

of Price; Double Sales Rule
2. Risk of Loss
3. Remedies – Specific Performance; Rescission;
Subdivision Lots & Condo Units Rules; Recto Law;
Maceda Law; Contract of Sale vs. Contract to Sell
4. Conditions and Warranties – Effects of Conditions;
Express Warranties; Implied Warranties
5. Extinguishment – Conventional Redemption (Sale A
Retro); Equitable Mortgage; Legal Redemption
CONSUMMATION STAGE: PERFORMANCE
Obligations of Seller
1. To preserve the thing with diligence of a good
father of the family (Art. 1163)
2. To deliver fruits, accessories and accessions (Arts.
1164, 1166, 1495 and 1537)
3. To deliver the Subject Matter (Art. 1477)
Obligations of Buyer
1. To pay the Price (Art. 1582)
2. To accept delivery of Subject Matter (Arts. 1582-1585)
Delivery of Subject Matter:

Tradition as Mode to Transfer Ownership
*Case: Badilla v. Bragat, 757 SCRA 131 (2015)
*Case: NFF Industrial Corporation v. G & L Associated Brokerage, 745 SCRA 73
(2015)
1. Actual or Physical Delivery (Art. 1497)

Badilla v. Bragat, 757 SCRA 131 (2015)
Then, as Ledesma subsequently sold, in 1970, a portion of the property to the
petitioner Spouses Badilla, who immediately took delivery and possession, ownership of this
portion had also been transferred to the said spouses. Although that sale appears to be
merely verbal, and payment therefor was to be made on installment, it is a partially
consummated sale, with the Badillas paying the initial purchase price and Ledesma
surrendering possession. That the parties intended for ownership to be transferred may be
inferred from their lack of any agreement stipulating that ownership of the property is
reserved by the seller and shall not pass to the buyer until the latter has fully paid the
purchase price. x x x. The Civil Code states that ownership of the thing sold is transferred
to the vendee upon the actual or constructive delivery of the same. And the thing is
understood as delivered when it is placed in the control and possession of the vendee.
Payment of the purchase price is not essential to the transfer of ownership as long as the
property sold has been delivered; and such delivery (traditio) operated to divest the
vendor of title to the property which may not be regained or recovered until and unless the
contract is resolved or rescinded in accordance with law.
[W]hen a verbal contract has been completed, executed or partially consummated, its
enforceability will not be barred by the Statute of Frauds, which applies only to an executory
agreement. Thus, x x x where it was proven that one party had delivered the thing sold to
another, then the contract was partially executed and the Statute of Frauds does not apply.
NFF Industrial Corporation v. G & L Associated Brokerage, 745 SCRA 73 (2015)
The resolution of the issue at bar necessitates a scrutiny of the concept of "delivery"
in the context of the Law on Sales. Under the Civil Code,the vendor is bound to transfer the
ownership of and deliver, as well as warrant the thing which is the object of the sale. The
ownership of thing sold is considered acquired by the vendee once it is delivered to him.
Thus, ownership does not pass by mere stipulation but only by delivery. Manresa
explains, "the delivery of the thing . . . signifies that title has passed from the seller to the
buyer." Moreover, according to Tolentino, the purpose of delivery is not only for the
enjoyment of the thing but also a mode of acquiring dominion and determines the
transmission of ownership, the birth of the real right. The delivery under any of the forms
provided by Articles 1497 to 1505 of the Civil Code signifies that the transmission of
ownership from vendor to vendee has taken place. Here, emphasis is placed on Article
1497 of the Civil Code, which contemplates what is known as real or actual delivery, when
the thing sold is placed in the control and possession of the vendee.
Applying the foregoing criteria to the case at bar, We find that there were various
occasions of delivery by petitioner to respondents, and the same was duly acknowledged by
respondent Trinidad.
2. Constructive Delivery (Arts. 1498-1499, 1513-1514)

a. Execution of Public Instrument, unless contrary
stipulation/intention appears
Except when Buyer assumes risk, Seller must
have control which should remain within a
reasonable time (Addison v. Felix, 38 Phil 404 [1918];
Danguilan v. IAC, 168 SCRA 22[1988])
2. Constructive Delivery [Cont’d]

b. Constitutum Possessorium (Art. 1500)
c. Traditio Brevi Manu
d. Traditio Longa Manu or Symbolic Delivery
e. Delivery for Intangibles (Arts. 1498 and 1501)
f. Delivery to Carrier (FAS/FOB/CIF) (Art. 1523)
g. Documents of Title (Arts. 1507-1520)
Special Rules on Completion of Delivery:

1. In case of movables (Arts. 1522, 1537, 1480)
a. Sale on approval, trial, or satisfaction vs. Sale or
return (Art. 1502)
b. Sale by description and/or sample (Art. 1481)
2. In case of immovables
a. When sold per unit or number (Arts. 1539, 1540)
b. When sold for a lump sum (Art. 1542)
*Case: Arcaina v. Ingram, 817 SCRA 606 (2017)
Arcaina v. Ingram, 817 SCRA 606 (2017)
[W]here both the area and the boundaries of the immovable are declared in a sale
of real estate for a lump sum, the area covered within the boundaries of the immovable
prevails over the stated area. The vendor is obliged to deliver all that is included within the
boundaries regardless of whether the actual area is more than what was specified in the
contract of sale; and he/she shall do so without a corresponding increase in the contract
price. This is particularly true when the stated area is qualified to be approximate only, such
as when the words "more or less" were used.
However, in case there is conflict between the area actually covered by the
boundaries and the estimated area stated in the contract of sale, he/she shall do so only
when the excess or deficiency between the former and the latter is reasonable.
[W]e find that the difference of 5,800 sq. m. is too substantial to be considered
reasonable. We note that only 6,200 sq. m. was agreed upon between petitioners and
Ingram. Declaring Ingram as the owner of the whole 12,000 sq. m. on the premise that this is
the actual area included in the boundaries would be ordering the delivery of almost twice the
area stated in the deeds of sale. Surely, Article 1542 does not contemplate such an unfair
situation to befall a vendor-that he/she would be compelled to deliver double the amount
that he/she originally sold without a corresponding increase in price.
Special Rules on Double Sales Under Art. 1544:

1. For Movables
a. First to possess, in good faith
b. Oldest title, in good faith
2. For Immovables
a. First to register, in good faith
b. First to possess, in good faith
c. Oldest title, in good faith
In either case, if none, “first in time, priority in right”
Requisites for Art. 1544 to Apply:

(Cheng v. Genato, 300 SCRA 722 [1998])
1. Two (or more) sales transactions must be valid sales
2. Two (or more) sales transactions must pertain to
exactly the same Subject Matter
3. Two (or more) Buyers at odds over rightful
ownership of Subject Matter must each represent
conflicting interests
4. Two (or more) Buyers at odds over rightful
ownership of Subject Matter must each have
bought from the very same Seller
Effects of Art. 1544 Requisites:

1. Not applicable where one of the Sales is Void
2. Not applicable to Contracts to Sell
3. Not applicable if first sale is the property and the
second sale is the redemption right to the same
property
Doctrines on Art. 1544 Double Sales Rules:

1. Carbonell v. Court of Appeals, 69 SCRA 99 (1976)
Rules under Art. 1544 are addressed to (directed at)
Second Buyer, which asks of him to do a positive
thing if he hopes to win at all.
2. Tanedo v. Court of Appeals, 252 SCRA 80 (1996)

a. First Buyer wins by virtue of greater doctrine of
“first in time, priority in rights”
b. Second Buyer must register his purchase while
in good faith if he hopes to win
c. First Buyer, who is always in good faith, when
he registers ahead, wins
d. Even if Second Buyer is first to possess in good
faith, subsequent registration by First Buyer
prevails
3. Cruz v. Cabana, 129 SCRA 656 (1984)

a. Knowledge of First Buyer of second sale does
not adversely affect First Buyer nor does it
constitute registration in favor of Second Buyer
b. However, knowledge of Second Buyer of first
sale would place him not only in bad faith but
would constitute registration in favor of First
Buyer
*Case: Spring Homes Subdivision Co., Inc. v. Tablada, Jr., 815 SCRA 114 (2017)
Spring Homes Subdivision Co., Inc. v. Tablada, Jr., 815 SCRA 114 (2017)
Here, the first buyers of the subject property, the Spouses Tablada, were able to take
said property into possession but failed to register the same because of Spring Homes'
unjustified failure to deliver the owner's copy of the title whereas the second buyers, the
Spouses Lumbres, were able to register the property in their names. But while said the
Spouses Lumbres successfully caused the transfer of the title in their names, the same was
done in bad faith. [T]he Spouses Lumbres cannot claim good faith since at the time of the
execution of their Compromise Agreement with Spring Homes, they were indisputably and
reasonably informed that the subject lot was previously sold to the Spouses Tablada. x x x.
Indeed, knowledge gained by the first buyer of the second sale cannot defeat the
first buyer's rights except only as provided by law, as in cases where the second buyer first
registers in good faith the second sale ahead of the first. Such knowledge of the first buyer
does bar her from availing of her rights under the law, among them, first her purchase as
against the second buyer. But conversely, knowledge gained by the second buyer of the
first sale defeats his rights even if he is first to register the second sale, since such
knowledge taints his prior registration with bad faith.
4. Agricultural and Home Extension Dev. v. CA, 213

SCRA 536 (1992)
It seems that Second Buyer must have paid full
purchase price to gain benefit under Art. 1544 as
Supreme Court has defined meaning of “good faith”
to include having paid full value
Global Rules on Double Sale for Real Estate:

1. For Registered Land under Torrens System,
registration is the operative act, so first to register
in good faith and for value, wins
2. For Unregistered Land, as between a conventional
prior purchase, and a second purchase at public
auction, first conventional buyer wins, since buyer
at public sale is bound by provisions of Rules of
Court that says he only takes whatever is the
remaining title of the judgment debtor
3. If requisites under Cheng v. Genato are present,

Rules on Double Sale under Art. 1544 shall apply:
a. First to Register in good faith, or
b. First to Possess in good faith, or
c. Oldest Title in good faith
4. “First in time, priority in rights” apply
Sale and Delivery by Non-Owner

General Rule: Nemo Dat Quod Non Habet
*Case: Cahayag v. Commercial Credit Corporation, 780 SCRA 255 (2016)
*Case: Badilla v. Bragat, 757 SCRA 131 (2015)
*Case: Heirs of Zosimo Q. Maravilla v. Tupas, 803 SCRA 1 (2016)
*Case: Gonzalez, Jr. v. Pena, 816 SCRA 212 (2017)
Cahayag v. Commercial Credit Corporation, 780 SCRA 255 (2016)
[I]t was not correct for the CA to consider the contract of sale void. The CA
erroneously considered lack of ownership on the part of the seller as having an effect on the
validity of the sale. The sale was very much valid when the Deed of Absolute Sale between
the parties was executed on 10 December 1983, even though title to the property had earlier
been consolidated in favor of respondent CCC as early as 10 November 1983. The fact that
Dulos Realty was no longer the owner of the property in question at the time of the sale
did not affect the validity of the contract.
On the contrary, lack of title goes into the performance of a contract of sale. It is
therefore crucial to determine in this case if the seller was the owner at the time of
delivery of the object of the sale.
In this case, the delivery coincided with the perfection of the contract — The Deed of
Absolute Sale x x x was executed on 10 December 1983. As already mentioned, Dulos Realty
was no longer the owner of the property on that date. Accordingly, it could not have validly
transferred ownership of the real property it had sold to petitioner.
Thus, the correct conclusion that should be made is that while there was a valid sale,
there was no valid transfer of title to Baldoza, since Dulos Realty was no longer the owner
at the time of the execution of the Deed of Absolute Sale.
Badilla v. Bragat, 757 SCRA 131 (2015)
In addition, TCT No. T-47759 was issued to Fe Bragat on the strength of a Deed of Sale
of Registered Land dated October 2, 1987. This deed of sale, however, is void for being
simulated, since both the vendor (Pastrano) and the vendee (Bragat) knew at the time of
its execution of the vendor's lack of ownership over Lot No. 19986, the property being sold.
At that time, it was not Pastrano but Ledesma who was absolute owner of the property by
virtue of the latter's earlier purchase of Lot No. 19986 from the Spouses Pastrano on
November 18, 1968, via a Deed of Definite Sale of Unregistered Coconut and Residential
Land. Bragat herself knew this, as she and her husband themselves first bought the property
from Ledesma through a Deed of Absolute Sale of Residential Land dated April 18, 1978.
In fact, it is from this sale in 1978 that Fe Bragat derives title on the property and not
from the Deeds of Sale dated May 5, 1984 and October 2, 1987 executed between her as
vendee and Pastrano as vendor. Pastrano could no longer sell any part of the property to
Bragat on such later dates since he had already sold the same as early as November 18,
1968 to Ledesma. Well-settled is the rule that no one can give what one does not have —
nemodat quod non habet — and, accordingly, one can sell only what one owns or is
authorized to sell, and the buyer acquires no better title than the seller. Thus, the sales
made on the dates May 5, 1984 and October 2, 1987 are void for being simulated and for lack
of a subject matter. x x x.
Heirs of Zosimo Q. Maravilla v. Tupas, 803 SCRA 1 (2016)
The above reasoning of the CA has its basis on a simple logic that one cannot
dispose of a thing he does not own. In this case, at the time of the sale of the subject
property, the late Asiclo S. Tupas had no right to sell a property that has not been declared
alienable by the State; hence, he cannot pass unto another any right or title to own or
possess the land. Therefore, the "Sale of Unregistered Land" entered into between the late
Asiclo S. Tupas and the late Zosimo Maravilla on February 8, 1975, previously considered valid
and legitimate and became the basis used by the RTC to settle the dispute between the
parties as to who has the better to right to the property, has become null and void because
the subject property of the contract is a forest land and cannot be alienated at the time the
said deed of sale was executed. Article 1347 of the Civil Code provides that only things,
which are not outside the commerce of man, including future things, may be the objects of
the contracts and Article 1409 of the Civil Code also states that contracts whose objects are
outside the commerce of man are non-existent and void ab initio.
Gonzalez, Jr. v. Pena, 816 SCRA 212 (2017)
As regards legal impossibility, the RTC appears to have jumped to the conclusion that
because of the perfected sale of the shares to Vera, petitioner can no longer claim actual
restitution of the property.
However, Article 1505 of the Civil Code instructs that "x x x where goods are sold by
a person who is not the owner thereof, and who does not sell them under authority or
with the consent of the owner, the buyer acquires no better title to the goods than the
seller had, unless the owner of the goods is by his conduct precluded from denying the
seller's authority to sell. x x x."
The Court itself settled that Peña acquired the properties by virtue of a null and void
execution sale. In effect, his buyers acquired no better title to the goods than he had.
Therefore, the RTC erred in appreciating the existence of legal impossibility in this case on the
mere pretext that the properties had already been transferred to third parties. By virtue of
Article 1505, the true owners of the goods are definitely not legally precluded from
claiming the ownership of their actual properties.
Special Rules:
1. Sale and delivery, with subsequent acquisition of
title by owner (Art. 1434)
2. Sale by co-owner (Art. 493)
a. Particular portion
b. Whole property
*Case: Mactan-Cebu International Airport Authority v. Unchuan, 791 SCRA 581
(2016)
Mactan-Cebu International Airport Authority v. Unchuan, 791 SCRA 581 (2016)
The transaction entered into by Atanacio and CAA, however, was not entirely void
because the lack of consent by the other co-owners in the sale was with respect to their
shares only. (Article 493 of the New Civil Code)
The quoted provision recognizes the absolute right of a co-owner to freely dispose
of his pro indiviso share as well as the fruits and other benefits arising from that share,
independently of the other co-owners. The sale of the subject lots affects only the seller's
share pro indiviso, and the transferee gets only what corresponds to his grantor's share in
the partition of the property owned in common. Since a co-owner is entitled to sell his
undivided share, a sale of the entire property by one co-owner without the consent of the
other co-owners is not null and void; only the rights of the co-owner/seller are transferred,
thereby making the buyer a co-owner of the property.
In the case at bench, although the sale transaction insofar as the other heirs of the
registered owners was void, the sale insofar as the extent of Atanacio's interest is concerned,
remains valid. Atanacio was one of the registered co-owners of the subject lots, but he was
not clothed with authority to transact for the other co-owners. By signing the deed of sale
with the CAA, Atanacio effectively sold his undivided share in the lots in question. Thus, CAA
became a co-owner of the undivided subject lots. x x x.
Special Rules: [Cont’d]

3. “Chain of Title Theory” under Torrens System (P.D.
No. 1529)
4. Sales by court authority
5. Sales in merchant stores (Arts. 85 and 86, Code of
Commerce; City of Manila v. Bugsuk, 101 Phil 859 [1957])
6. Sales by one having voidable title prior to
annulment (Art. 1506, as an exception to Art. 559)
7. Sale under documents of title (Arts. 1507-1520)
CONSUMMATION STAGE: RISK OF LOSS
Rules for Deterioration, Fruits and Improvements:

1. Rules have no application if Subject Matter is
merely determinable (Art. 1263)
2. Roman Law Doctrine: Buyer bears consequences of
deterioration, but benefits from improvements and
fruits (Arts. 1480, 1163-1165, 1262, 1189, 1537 and 1538)
Rules when Subject Matter is Lost:

1. Before Perfection: Res Perit Domino (Roman v. Grimalt,
6 Phil. 96 [1906])
2. At Time of Perfection: Seller (Arts. 1493 and 1494)
3. After Perfection But Before Delivery (Arts. 1164, 1189
and 1262)
a. General Rule: Res Perit Domino
b. By Fault of a Party (Arts. 1480, 1504, 1538)
c. By Fortuitous Event: Two schools of thought
(Arts. 1480, 1163-1165, 1504, 1538, 1189)
Rules when Subject Matter is Lost: [Cont’d]

4. After Delivery: Buyer bears risk, under Res Perit
Domino Rule (Art. 1504)
Except: When retention of possession by Seller is
for purpose of securing payment of Purchase Price
CONSUMMATION STAGE: REMEDIES
Remedies of Seller
1. Specific Performance or Rescission plus Damages
(Art. 1191)
2. Remedies of “Unpaid Seller” of Goods (Art. 1525)
a. Possessory Lien (Arts. 1526-1529. 1503, 1535)
b. Stoppage in Transitu (Arts. 1530-1532, 1535,
1636[2])
c. Special Right of Resale (Art. 1533)
d. Special Right to Rescind (Art. 1534)
3. Recto Law: For Sale of Movables on Installments

(Arts. 1484-1486)
*Case: Equitable Savings Bank (BDO Unibank, Inc.) v. Palces, 787 SCRA 260 (2016)
a. Meaning of “Installment Sale” (Levy v. Gervacio, 69

Phil. 52 [1939])
b. Contracts to Sell Movables Not Covered (Visayan
Sawmill Company, Inc. v. CA, 219 SCRA 378 [1993])
c. Remedies Available
i. Specific Performance (one unpaid)
ii. Rescission (two unpaid)
iii. Foreclosure (two unpaid)
Equitable Savings Bank (BDO Unibank, Inc.) v. Palces, 787 SCRA 260 (2016)
In this case, there was no vendor-vendee relationship between respondent and
petitioner. Judicious perusal of the records would reveal that respondent never bought the
subject vehicle from petitioner but from a third party, and merely sought financing from
petitioner for its full purchase price. In order to document the loan transaction between
petitioner and respondent, a Promissory Note with Chattel Mortgage dated August 18, 2005
was executed wherein, inter alia, respondent acknowledged her indebtedness to petitioner
in the amount of P1,196,100.00 and placed the subject vehicle as a security for the loan.
Indubitably, a loan contract with the accessory chattel mortgage contract — and not a
contract of sale of personal property in installments — was entered into by the parties with
respondent standing as the debtor-mortgagor and petitioner as the creditor-mortgagee.
Therefore, the conclusion of the CA that Article 1484 finds application in this case is
misplaced, and thus, must be set aside.
3. Recto Law: [Cont’d]

d. Nature of Remedies of Unpaid Seller
i. Remedies under Art. 1484 are not
cumulative but alternative and exclusive
(Borbon II v. Servicewide Specialists, Inc., 258
SCRA 634 [1996])
ii. Seeking a writ of replevin consistent with
all three remedies (Universal Motors Corp. v.
Dy Hian Tat, 28 SCRA 161 [1969])

e. Specific Performance: No bar to full recovery
(Tajanglangit v. Southern Motors, 101 Phil. 606 [1957])
i. Even if it is mortgaged property that is
sold on execution (Southern Motors v.
Moscoso, 2 SCRA 168 [1961])
ii. Even with replevin and recovery of
subject property , action may still be for
specific performance (Industrial Finance Corp.
v. Ramirez, 77 SCRA 152 [1977])

f. Rescission: Has inherent “barring” effect
i. Surrender of mortgaged property not
equivalent to rescission (Vda. de Quiambao
v. Manila Motors Co., Inc., 3 SCRA 444 [1961])
ii. Stipulation on non-return of payments is
valid provided not unconscionable
(Delta Motor Sales Corp. v. Niu Kim Duan, 213
SCRA 259 (1992)

g. Rescission: Has H-V “barring” effect
i. Third Party Mortgage covered (Ridad v.
Filipinas Investment, 120 SCRA 246 [1983])
ii. Assignee (Financing Transaction) covered
(Zayas v. Luneta Motors, 117 SCRA 726 [1982])
iii. Foreclosure on Chattel Mortgage bars
action on REM and vice-versa (Cruz v.
Filipinas Investment & Finance Corp., 23 SCRA 791
[1968]; Borbon II v. Servicewide Specialists, Inc.,
258 SCRA 634 [1996])

g. Rescission: [Cont’d]
iv. Amounts barred from recovery (Macondray
& Co. v. Eustaquio, 64 Phil. 446 [1937])
v. Perverse buyer (Filipinas Investment & Finance
Corp. v. Ridad, 30 SCRA 564 [1969])
h. Purported Lease with Option to Buy (Art. 1485)
If lessor takes possession of subject movable,
treated as foreclosure
4. Maceda Law: Sales of Residential Realty on

Installments (R.A. No. 6552)
a. “Role” of Maceda Law: Not applicable to
protect developer or one who succeeds him
(Lagandaon v. CA, 290 SCRA 463 (1998)
b. Transactions Covered: Covers both “option” and
“sale” under P.D. No. 957 (Realty Exchange Venture
Corp. v. Sendino, 233 SCRA 665 [1994]), But curiously,
no application to a Contract to Sell (?) (Mortel v.
KASSCO, Inc., 348 SCRA 391, 398 [2000])
4. Maceda Law: [Cont’d]

c. How Cancellation of Contract Effected
i. Seller to give Buyer a 60-day grace period
ii. At end of grace period, Seller to give
Buyer a notarial notice of cancellation/
demand for rescission effective 30 days
from notice
iii. For contracts with two years of payments
Seller to give Buyer cash surrender value
*Case: Orbe v. Filinvest Land, Inc., 839 SCRA 72 (2017)
Orbe v. Filinvest Land, Inc., 839 SCRA 72 (2017)
It should be noted that Section 3 of R.A. 6552 and paragraph six of Contract Nos. 2271
and 2272, speak of "two years of installments." The basis for computation of the term refers
to the installments that correspond to the number of months of payments, and not to the
number of months that the contract is in effect as well as any grace period that has been
given. Both the law and the contracts thus prevent any buyer who has not been diligent in
paying his monthly installments tom unduly claiming the rights provided in Section 3 of R.A.
6552. x x x.
The phrase "at least two years of installments" refers to value and time. It does not
only refer to the period when the buyer has been making payments, with total disregard for
the value that the buyer has actually conveyed. It refers to the proportionate value of the
installments made, as well as payments having been made for at least two (2) years.
Jestra was wrong to use the installment payments on the down payment as divisor. It
is an error to reckon the payment of two (2) years' worth of installments on the
apportionment of the down payment because, even in cases where the down payment is
broken down into smaller, more affordable portions, payments for it still do not embody the
ratable apportionment of the contract price throughout the entire duration of the contract
term. Rather than the partial payments for the down payment, it is the partition of the
contract price into monthly amortizations that manifests the ratable apportionment across a
complete contract term that is the essence of sales on installment. The correct standard is
that which was used in Marina, not in Jestra.
Marina also correctly demonstrated how Section 3's injunction that "[d]own
payments, deposits or options on the contract shall be included in the computation of the
total number of installment payments made" should operate. In Marina, the total amount of
P1,810,330.70 paid by the buyer was inclusive of payments for down payment worth
P1,034,200.00 and cash deposit worth P50,000.00. In concluding that the buyer in Marina
had paid more than two (2) years' or 24 months' worth of installments, what this Court
considered was the total amount of P1,810,330.70 and not merely the payments on
amortizations.
To be effective, sellers' cancellations under the Maceda Law must strictly comply with
the requirements of Sections 3 and 4. This Court clarifies here that with respect to notices of
cancellation or demands for rescission by notarial act, an acknowledgement is imperative.
Moreover, when these are made through representatives of juridical persons selling real
property, the authority of these representatives must be duly demonstrated. For
corporations, the representative's authority must have either been granted by a board
resolution or existing in the seller's articles of incorporation or by-laws.
With the Maceda Law's avowed purpose of extending benefits to disadvantaged
buyers and liberating them from onerous and oppressive conditions, it necessarily follows
that the Maceda Law's permission for sellers to cancel contracts becomes available only
when its conditions are heedfully satisfied. No liberal construction of the Maceda Law can be
made in favor of the seller and at the same time burdening the buyer.
4. Maceda Law: [Cont’d]

d. Other Rights Granted to Buyer
i. To sell/assign his rights to another person
ii. To reinstate contract by updating account
during grace period, before cancellation
iii. To pay in advance installments or in full
unpaid balance of Price any time without
interest and have the same annotated
e. Any stipulation contrary to Maceda Law is Void.
4. Anticipatory Breach (Arts. 1591)

5. Rescission Sale of Non-Residential Realty on
Installments (Arts. 1191 and 1592)
Remedies of Buyer
1. Specific Performance or Rescission with Damages
(Arts. 1191)
2. In case of movables (Art. 1598-1599)
3. In case of immovables (Secs. 23 and 24 of P.D. No. 957)
4. Suspension of Payment (Art. 1590)
CONSUMMATION STAGE: CONTRACT TO SELL
Contracts to Sell vs. Conditional Contracts of Sale:

Similarities
1. Art. 1458 defines a Sale to cover both “absolute”
and “conditional”
2. Both contracts are usually bound by same
condition: Full payment of Price
3. Both contracts are consensual, onerous,
commutative and cover bilateral obligations
*Case: Raceli v. Javier, 853 SCRA 256 (2018)
Raceli v. Javier, 853 SCRA 256 (2018)
Under Article 1482 of the Civil Code, whenever earnest money is given in a contract of
sale, it shall be considered as "proof of the perfection of the contract." However, this is a
disputable presumption, which prevails in the absence of contrary evidence. The delivery of
earnest money is not conclusive proof that a contract of sale exists.
x x x.
Based on the evidence on record, petitioner and respondents executed a contract to
sell, not a contract of sale. Petitioner reserved ownership of the property and deferred the
execution of a deed of sale until receipt of the full purchase price. x x x.
xxx
Earnest money, under Article 1482 of the Civil Code, is ordinarily given in a perfected
contract of sale. However, earnest money may also be given in a contract to sell.
In a contract to sell, earnest money is generally intended to compensate the seller for
the opportunity cost of not looking for any other buyers. It is a show of commitment on the
part of the party who intimates his or her willingness to go through with the sale after a
specified period or upon compliance with the conditions stated in the contract to sell.
Raceli v. Javier, 853 SCRA 256 (2018)
Earnest money, therefore, is paid for the seller's benefit. It is part of the purchase
price while at the same time proof of commitment by the potential buyer. Absent proof of a
clear agreement to the contrary, it is intended to be forfeited if the sale does not happen
without the seller's fault. The potential buyer bears the burden of proving that the earnest
money was intended other than as part of the purchase price and to be forfeited if the sale
does not occur without the fault of the seller. Respondents were unable to discharge this
burden.
There is no unjust enrichment on the part of the seller should the initial payment be
deemed forfeited. After all, the owner could have found other offers or a better deal. The
earnest money given by respondents is the cost of holding this search in abeyance.
Contracts to Sell vs. Contracts of Sale: Differences

1. In CTS, ownership is reserved by Seller, while in
COSale, ownership transfers to Buyer upon delivery;
CTS must have express reservation of ownership
2. “Rescission” (Cancellation) of CTS is matter of right
upon non-happening of condition, but written
notice of “cancellation” required (UP v. Delos Angeles,
35 SCRA 103 [1970]); in COS, non-payment is
substantial breach, so remedy is rescission (judicial)
*Case: Felix Plazo Urban Poor Settlers Community Assocation, Inc. v. Lipat, Sr.,
821 SCRA 12 (2017)
Felix Plazo Urban Poor Settlers Community Assocation, Inc. v. Lipat, Sr., 821 SCRA 12
(2017)
[I]t is undisputed that the abovementioned contract is in the nature of a CTS. As
such, the obligation of the seller to sell becomes demandable only upon the occurrence of
the suspensive condition. In the present case, as correctly observed by the CA, the
suspensive condition is the payment in full of the purchase price by the petitioner prior to
the expiration of the 90-day period stipulated in their CTS, which the latter failed to do so.
The relevant portion of the CA's decision reads:
As shown in the case at bar, the [petitioner] did not pay the full purchase price which
is its obligation under the [CTS]. As the payment of the full purchase price is a positive
suspensive condition the non-fulfillment of which prevents the perfection of a [CTS], it is
indubitable that the subject [CTS] is ineffective and without force and effect. x x x.
In Spouses Garcia, et al. v. Court of Appeals, et al., the Court emphasized that in a CTS,
payment of the full purchase price is a positive suspensive condition, failure of which is not
considered a breach of the same but an occurrence that prevents the obligation of the
seller to transfer title from becoming effective. Here, there is no dispute that the petitioner
failed to pay the full purchase price stipulated in the CTS on the date fixed therein. Thus, the
respondents are within their rights to refuse to enforce the same.
CONSUMMATION STAGE: CONDITIONS
Conditions vs. Warranties: (Power Commercial and

Industrial Corp. v. CA, 274 SCRA 597 [1997)
1. Condition goes into root of existence of obligation,
while warranty goes into performance of obligation
2. Condition must be expressly stipulated by parties,
while warranty may form part of obligation or
contract by provision of law, without prior contract
3. Condition may attach itself either to obligations of
Seller or Buyer, while warranty, express or implied,
relates to the Subject Matter itself or to obligations
of Seller as to the Subject Matter of the Sale
CONSUMMATION STAGE: CONDITIONS
Conditions: (Art. 1545)

1. Failure to comply with condition imposed on
perfection of contract results in a failure of contract,
while failure to comply with condition imposed on
performance of an obligation only gives other party
the option to either refuse to proceed or waive it
(Laforteza v. Machuca, 333 SCRA 643 [2000])
2. In “Sale with Assumption of Mortgage”, assumption
of mortgage is condition to Seller’s consent, so
without approval by mortgagee, no sale is perfected
(Ramos v. CA, 279 SCRA 118 [1997])
CONSUMMATION STAGE: WARRANTIES
Express Warranties: (Art. 1546)

1. Must be an affirmation of fact or any promise by
Seller relating to Subject Matter of Sale;
2. Natural tendency of such affirmation or promise is
to induce Buyer to purchase the thing; and
3. Buyer purchases the thing relying on such
affirmation or promise thereon
*Case: Pabillo v. Commission on Elections, 756 SCRA 606 (2015)
Note: Law allows considerable latitude to Seller’s

statements or dealer’s talk (Songco v. Sellner, 37
Phil. 254 [1917])
Pabillo v. Commission on Elections, 756 SCRA 606 (2015)
Albeit undefined in our local statutes, a warranty has been ordinarily considered as
an agreement to be responsible for all damages that arise from the falsity of a statement or
assurance of fact. In other words, a warranty promises indemnity against defects in an
article sold. In Ang v. CA, a warranty was defined as "a statement or representation made by
the seller of goods, contemporaneously and as part of the contract of sale, having reference
to the character, quality or title of the goods, and by which he promises or undertakes to
insure that certain facts are or shall be as he then represents them."
There are two warranties under the 2009 AES Contract, which were all explicitly
incorporated and made part of the 2012 Deed of Sale.
The first is found in Articles 4.3 and 8.4 of the 2009 AES Contract, both of which
pertain to a warranty on manufacturing defects of supplies and equipment.
Implied Warranties: (Art. 1547)

1. Seller has Right to Sell
2. Warranty Against Eviction: After final judgment
(Arts. 1548-1559)
a. Buyer is deprived of whole or part of thing sold
b. Eviction is by a final judgment
c. Basis thereof is by virtue of right prior to Sale
d. Seller summoned and made co-defendant in
suit for eviction at instance of Buyer (Ang v. Court
of Appeals, 567 SCRA 53 [2008])
Implied Warranties: [Cont’d]

3. Warranty Against Hidden Defects: (Arts. 1561-1580)
a. Defect must be hidden
b. Defect exists at time Sale was made
c. Defect is ordinarily excluded from the contract
d. Defect is important (renders the thing unfit or
considerably decreases fitness)
e. Action instituted within 6 months from delivery
*Case: Geromo v. La Paz Housing and Development Corp., 814 SCRA 578 (2017)
*Case: RCBC Savings Bank v. Odrada, 806 SCRA 646 (2016)
*Case: Poole-Bluden vs Union Bank of the Philippines, SCRA 847 SCRA 146 (2017)
Geromo v. La Paz Housing and Development Corp., 814 SCRA 578 (2017)
The central issue in this case is whether La Paz should be held liable for the structural
defects on its implied warranty against hidden defects.
Under the Civil Code, the vendor shall be answerable for warranty against hidden
defects on the thing sold under the following conditions x x x:
Here, the petitioners observed big cracks on the walls and floors of their dwellings
within two years from the time they purchased the units. The damage in their respective
houses was substantial and serious. They reported the condition of their houses to La Paz,
but the latter did not present a concrete plan of action to remedy their predicament. They
also brought up the issue of water seeping through their houses during heavy rainfall, but
again La Paz failed to properly address their concerns. The structural cracks and water
seepage were evident indications that the soil underneath the said structures could be
unstable. Verily, the condition of the soil would not be in the checklist that a potential buyer
would normally inquire about from the developer considering that it is the latter's prime
obligation to ensure suitability and stability of the ground.
RCBC Savings Bank v. Odrada, 806 SCRA 646 (2016)
The law defines a hidden defect as one which would render the thing sold unfit for
the use for which it is intended, or would diminish its fitness for such use to such an extent
that, had the vendee been aware thereof, he would not have acquired it or would have
given a lower price for it.
In this case, Odrada and Lim entered into a contract of sale of the Montero. Following
the initial downpayment and execution of the deed of sale, the Montero was delivered by
Odrada to Lim and the latter took possession of the Montero. Odrada's warranties against
hidden defects continued even after the Montero's delivery. A misrepresentation as to the
Montero's roadworthiness constitutes a breach of warranty against hidden defects.
In Supercars Management & Development Corporation v. Flores, we held that a
breach of warranty against hidden defects occurred when the vehicle, after it was delivered
to respondent, malfunctioned despite repairs by petitioner. In the present case, when Lim
acquired possession, he discovered that the Montero was not roadworthy. The engine was
misaligned, the automatic transmission was malfunctioning, and the brake rotor disks
needed refacing. However, during the proceedings in the trial court, Lim's testimony was
stricken off the record because he failed to appear during cross-examination. In effect, Lim
was not able to present clear preponderant evidence of the Montero's defective condition.
Poole-Bluden vs Union Bank of the Philippines, SCRA 847 SCRA 146 (2017)
The phrase "as is, where is" basis pertains solely to the physical condition of the thing
sold, not to its legal situation. x x x
A condominium unit's area is a physical attribute. In Hian's contemplation, it appeared
that the total area of a condominium unit is a valid object of an as-is-where-is clause.
However, while as-is-where-is clauses exclusively apply to the physical attributes of a thing
sold, they apply only to physical features that are readily observable. The significance of this
Court's pronouncements in Hian and National Development Company are in clarifying that
legal status, which is a technical matter perceptible only by lawyers and regulators, cannot be
encompassed by an as-is-where-is stipulation. Hian and National Development Company are
not a sweeping approbation of such stipulations' coverage of every corporeal attribute or
tangible trait of objects being sold. Thus, in Asset Privatization v. T.J. Enterprises, the as-is-
where-is stipulation was understood as one which "merely describes the actual state and
location of the machinery and equipment sold," and nothing else. Features that may be
physical but which can only be revealed after examination by persons with technical
competence cannot be covered by as-is-where-is stipulations. A buyer cannot be considered
to have agreed "to take possession of the things sold 'in the condition where they are found
and from the place where they are located'" if the critical defect is one which he or she
cannot even readily sense.
Poole-Bluden vs Union Bank of the Philippines, SCRA 847 SCRA 146 (2017)
In inspecting the Unit prior to the auction sale, petitioner took note of its actual state:
"he noticed that the ceilings were down, [that] there was water damage from the leaks
coming from the unit above, and [that] the parquet floor was damaged." He also took note
of its irregular shape and the circular terrace outside it. These observations represent the full
extent of what was readily perceptible to petitioner. The precise measurement of the Unit's
area, in contrast, could only be determined by someone with specialized or technical
capabilities. While ordinary persons, such as petitioner, may hold such opinions that the Unit
looks small, their perception could not be ascertained until after an examination by someone
equipped with peculiar skills and training to measure real property. Indeed, petitioner's
suspicions were not roused until years after he had occupied the Unit and confirmed until
after a certification was issued by a surveyor.
Any waiver of warranties under Section 12 of the Contract to Sell could have only
been concerned with the readily apparent subpar condition of the Unit. A person not
equipped with technical knowledge and expertise to survey real property could not
reasonably be expected to recognize deficiencies in measurement at the first instance
especially if that property was of "irregular shape," "neither square nor rectangle," and
having a "circular terrace."

4. Warranty Against Non-Apparent Servitudes: 1 year
from execution of Deed of Sale (Art. 1560)
5. Redhibitory Defects of Animals: 40 days from
delivery (Arts. 1572-1581)
a. Sale of a team, treated individually
b. NOT Animals Sold at Fairs or Public Auctions
c. Sale of Animals with Contagious Diseases Void
d. Sale of Unfit Animals

6. Implied Warranties in the Sale of Goods: 6 months
from delivery (Arts. 1564, 1565, 1568 and 1571)
a. Warranty as to Fitness or Quality
b. Sale of Goods by Sample
7. Additional Warranties for Consumer Products (Arts.
68, Consumer Act, R.A. No. 7394)
Rules on Warranties:
1. Effects of Breach of Warranties/Buyer’s Options
a. Buyer may sue for rescission plus damages
b. If violation of warranties against hidden
defects, redhibitory defects of animals, and
implied warranties in sale of goods, Buyer may
elect between withdrawing from the contract
(accion rehibitoria) or demanding proportionate
reduction of price (accion quanti minoris), with
damages in either case (Art. 1567)
2. Waivers: Allowed; “As is, where is” basis
CONSUMMATION STAGE: EXTINGUISHMENT
Extinguishment of Sale
1. Sale extinguished by same modes applicable to all
contracts (Arts. 1231 and 1600)
2. Redemption is mode of extinguishment unique to
Sales:
a. Conventional Redemption: Sale with Right to
Repurchase (Sale A Retro)
b. Legal Redemption
Conventional Redemption (Sale A Retro):

1. Reserved by Seller at point of perfection (Art. 1601)
2. Even though found in a separate instrument (Torres v.
CA, 216 SCRA 287 [1992])
3. Its validity is tied to validity of Contract of Sale to
which appended (Nool v. CA, 276 SCRA 149 [1997])
4. When Sale covered by Deed, Right A Retro may be
proved by parol evidence (Mactan Cebu Int’l Airport
Authority v. CA, 263 SCRA 736 [1996])
Right A Retro vs. Option Contract:

1. Right A Retro not a separate K, but part of K of Sale
while Option K generally a principal K, but may be
appended to another valid K
2. Right A Retro does not need separate consideration
while Option K requires consideration separate and
distinct from Price in order to be valid
3. Right A Retro max period cannot exceed 10 years
while Option K period may be beyond 10 years
Right A Retro vs. Option Contract: [Cont’d]

4. Right A Retro requires tender of agreed amount,
including consignation when tender not possible,
while Option may be exercised by mere notice to
Offeror
Salient Matters on Right of Redemption:

1. Period of Redemption (Art. 1606)
a. When no period agreed upon: 4 years
b. When period agreed upon: maximum 10 years
c. Pendency of action tolls redemption period
(Ong Chua v. Carr, 53 Phil. 975 [1929])
d. Non-payment of price does not affect running
of redemption period (Catangcatang v. Legayada, 84
SCRA 51 [1978])
*Case: Cebu State College of Science and Technology (CSCST) v. Misterio, 759
SCRA 1 (2015)
Cebu State College of Science and Technology (CSCST) v. Misterio, 759 SCRA 1 (2015)
To repeat, Article 1606 expressly provides that in the absence of an agreement as to
the period within which the vendor a retro may exercise his right to repurchase, the same
must be done within four (4) years from the execution of the contract. In the event the
contract specifies a period, the same cannot exceed ten (10) years. Thus, whether it be for
a period of four (4) or ten (10) years, this Court consistently implements the law and limits
the period within which the right to repurchase may be exercised, adamantly striking down
as illicit stipulations providing for an unlimited right to repurchase. Indubitably, it would be
rather absurd to permit respondents to repurchase the subject property upon the occurrence
of the second suspensive condition, particularly, the relocation of SAHS on October 3, 1997,
the time when petitioner ceded the property to the Province of Cebu, which is nearly forty-
one (41) years after the execution of the Deed of Sale on December 31, 1956. This Court
must, therefore, place it upon itself to suppress these kinds of attempts in keeping with the
fundamentally accepted principles of law.
Indeed, the freedom to contract is not absolute. The contracting parties may establish
such stipulations, clauses, terms and conditions as they may deem convenient, provided they
are not contrary to law, morals, good customs, public order, or public policy. 39 When the
conditions in a contract manifest an effective circumvention of existing law and
jurisprudence, it is incumbent upon the courts to construe the same in accordance with its
ultimate spirit and intent.
Salient Matters on Right of Redemption: [Cont’d]

2. How Redemption Effected
a. Only tender of payment is sufficient (Legaspi v.
CA, 142 SCRA 82 [1986])
b. Consignation is not required after tender is
refused (Mariano v. CA, 222 SCRA 736 [1993])
c. But when tender not possible, consignation
should be made (Catangcatang v. Legayada, 84 SCRA
51 [1978])
d. Simply by judicial action (Lee Chuy Realty Corp. v.
CA, 250 SCRA 596 [1995])
Equitable Mortgage: (Art. 1602-1604)

1. Definition/Elements: (Molina v. CA, 398 SCRA 97 [2003])
a. The contract entered into is denominated as a
sale (absolute or a retro)
b. The real intention was to secure an existing
debt by way of mortgage
2. Rationale of Equitable Mortgage Principle:
(Spouses Miseña v. Rongavilla, 303 SCRA 749 [1999])
To prevent circumvention of law against usury and
rule against pactum commisorium
Equitable Mortgage: [Cont’d]

3. Badges of Equitable Mortgage: (Art. 1602)
a. Price is unusually inadequate
b. Seller remains in possession as lessee, etc.
c. Extension or granting of new redemption period
d. Buyer retains part of Price
e. Seller binds himself to pay taxes on property
f. Other cases showing real intent is that
transaction is security for debt/obligation

4. Equitable Mortgage: Parol evidence competent and
admissible (Molina v. CA, 398 SCRA 97 [2003])
5. Pactum Commissorium sale is void, registration and
obtaining new title by apparent buyer is also void
(Art. 2088; A. Francisco Realty v. CA, 298 SCRA 349 [1998])
6. Pactum Commissorium Principle Does Not Apply:
a. When security for a debt is also money in form
of time deposit (Consing v. CA, 177 SCRA 14 [1989])

6. Pactum Commissorium Principle Does Not Apply:
b. To arrangement that provides that if Borrower
fails to comply with new terms of payment,
agreement shall operate as dacion en pago (Solid
Homes, Inc. v. CA, 275 SCRA 267 [1997])
Contra: P/N stipulation that upon makers’
default, ownership of property is automatically
transferred and covering deed of sale registered
is pactum commissorium (A. Francisco Realty v. CA,
298 SCRA 349 [1998])
Remedies under Equitable Mortgage Situations:

1. Apparent Seller can seek reformation of instrument
(Art. 1605)
2. Action for consolidation of ownership (of purported
sale a retro) would be void; proper remedy is
foreclosure (Briones-Vasquez v. CA, 450 SCRA 644 [2005])
3. In case court finds sale was not equitable mortgage,
redemption within 30 days, provided there is
honest belief that it was equitable mortgage
supported by convincing evidence (Art. 1606; Abilla v.
Gobonseng, 374 SCRA 51 [2002])
Legal Redemption – Definition and Rationale:

1. Privilege created by law for reasons of public policy
2. For benefit and convenience of redemptioner, to
afford him a way out of what might be a
disagreeable or inconvenient association into which
he has been thrust
3. Intended to minimize co-ownership
(Fernandez v. Tarun, 391 SCRA 653 [2002])
Period of Legal Redemption: Begins 30 days from

Written Notice (unless otherwise provided by law)
Rules on Notice:
1. Written notice must cover perfected sale (Art. 1623)
2. Notice must be given by Seller; notice by Buyer or
even Register of Deeds insufficient (Francisco v. Boiser,
332 SCRA 305 [2000])
3. Seller furnishing copies of deeds of sale to co-owner
sufficient (Distrito v. CA, 197 SCRA 606 [1991])
Rules on Notice: [Cont’d]

4. Notice to minors may be served on parents even
without judicial appointment because beneficial to
minors (Badillo v. Ferrer, 152 SCRA 407 [1987])
5. Deemed complied with when co-owners signed
Deed of Extrajudicial Partition embodying
disposition of part of property owned in common
(Fernandez v. Tarun, 391 SCRA 653 [2002])
6. Filing of ejectment suit or collection of rentals
against a co-owner dispenses with need for written
notice (Alonzo v. IAC, 150 SCRA 259 [1987])
Instances of Legal Redemption:

1. Among Co-heirs (Art. 1088)
a. A co-heir cannot exercise right of redemption
alone (De Guzman v. CA, 148 SCRA 75 [1987])
b. No legal redemption for sale of property of
estate (Plan v. IAC, 135 SCRA 270 [1985])
c. Written notice inutile because buyer took
possession of property in full view of others
(Pilapil v. CA, 250 SCRA 560 [1995])
d. Notice by city treasurer will not suffice (Verdad v.
CA, 256 SCRA 593 [1996])
Instances of Legal Redemption: [Cont’d]

2. Among Co-owners (Art. 1620)
a. Right of legal redemption arises only when
shares of other co-owners sold to “third
person”, not to another co-owner (Fernandez v.
Taun, 391 SCRA 653 [2002])
b. Registration of sale does not estop a co-owner
(Cabrera v. Villanueva, 160 SCRA 627 [1988])
c. Notice must be in writing, and redemption by
co-owner redounds to benefit of others (Mariano
v. CA, 222 SCRA 736 [1993])

2. Among Co-owners (Art. 1620)
d. No written notice required to co-owner who
acted as active intermediary in consummation
of sale (Distrito v. CA, 197 ASCRA 606 [1991])
e. Redemption by-co-owner, even if he uses own
funds, inures to benefit of all others (Annie Tan v.
CA, 172 SCRA 660 [1989])

3. Among Adjoining Owners (Arts. 1621-1622)
a. Redemption covers only “resale” and does not
cover exchanges or barter of properties (De
Santos v. City of Manila, 45 SCRA 409 [1972])
b. Requisite of “speculation” dropped” (Legaspi v.
CA, 69 SCRA 360 [1976])
c. Does not apply if one adjacent lot is not also
rural land (Primary Structures Corp. v. Valencia, 409
SCRA 371 [2003])

4. Sale of Credit in Litigation (Art. 1634)
within 30 days from notice of demand to pay
5. Redemption of Homesteads (Sec. 119, C.A. No. 141)
a. Right to repurchase granted by law, need not
be provided in deed of sale (Berin v. CA, 194 SCRA
508 [1991])
b. Redemption period is 5 years from date of sale
(execution of deed), not from registration (Lee
Chuy Realty Corp. v. CA, 250 SCRA 596 [1995]; Mata v.
CA, 318 SCRA 416 [1999])

6. Redemption in Tax Sales (Sec. 215, NIRC of 1997)
7. Redemption of Judgment Debtor (Sec. 27, Rule 39,
1997 Rules of Civil Procedure)
At any time within 1 year from date of registration
of certificate of sale (Ysmael v. CA, 318 SCRA 215 [1999])
8. Redemption in Extrajudicial Foreclosure (Sec. 6, Act
3135)
Within 1 year from registration in Registry of Deeds

9. Redemption in Judicial and Extrajudicial Foreclosure
of Mortgage By Banks (Sec. 47, General Banking Law of
2000, R. A. No. 8791)
a. General rule: 1 year from registration of
certificate of sale
b. Except: in cases of extrajudicial foreclosure of
property mortgaged by a juridical entity, in
which case upon registration of certificate of
sale but in no case to exceed 3 months from
foreclosure sale

10. Legal Right to Redeem under Agrarian Reform
Code (Sec. 12, R.A. 3844, as amended)
a. Within 180 days from notice in writing and at a
reasonable price and consideration (Quino v. CA,
291 SCRA 249 [1998])
THE END

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Definition/Elements: (Art. 1458)

Thus, Sale creates real obligations to give (Art. 1165)

Essential Characteristics of Sales: [Cont’d]

Sales vs. Donations: (Arts. 725 and 1471)

Sales vs. Barter: (Arts. 1468, 1638-1641)

Sales vs. Dacion en Pago: (Arts. 1245 and 1934)

Sales vs. Contracts for Piece-of-Work:

Sales vs. Agency to Sell/Buy: (Art. 1466)

Sales vs. Leases: (Arts. 1484 and 1485)

General Rule: (Art. 1489) All parties having capacity to

2. Spouses (To Sell)

b. Sale to one another, Void unless governed by

3. Relative Disqualifications (To Buy)

3. Relative Disqualifications (To Buy) [Cont’d]

Requisites of Subject Matter:

3. Determinate/ vs. Indeterminable

Requisites of Price: (Arts. 1469-1474)

When Price Ascertainable: (Art. 1469)

Otherwise: Sale is inefficacious (Art. 1474)

When Court Can Fix Price: (Art. 1469)

1. Negotiation/Policitacion (Art. 1479)

1. Proposals (Invitations to make Offers)

When Offer is Certain:

When Acceptance is Absolute:

Elements of Option Contract: (Art. 1479)

Rules on Option Contracts:

Rules on Option Contracts: (Ang Yu Asuncion) [Cont’d]

Elements of Rights of First Refusal:

Doctrines on Right of First Refusal:

2. Equatorial Realty Dev., Inc. v. Mayfair Theater, Inc.

3. Paranaque Kings Enterprises, Inc. v. CA, 268 SCRA

Agreements to Enter Into Future Sale or Series of Sale:

Mutual Promises to Buy and Sell (Art. 1479)

Perfection of Contract of Sale: (Art. 1475)

Perfection of Contract of Sale: (Cont’d)

Generally: None, because consensual contract

For Enforceability: (Art. 1403) Statute of Frauds covers

Even if sale not in writing, enforceable if: (Art. 1405)

2. Partially Executed by party sought to be charged

For Validity: Sale of Realty Through Agent (Art. 1874)

3. Registration: (P.D. No. 1529) to bind the whole world

1. Performance – Delivery of Subject Matter; Payment

Delivery of Subject Matter:

1. Actual or Physical Delivery (Art. 1497)

2. Constructive Delivery (Arts. 1498-1499, 1513-1514)

2. Constructive Delivery [Cont’d]

Special Rules on Completion of Delivery:

Special Rules on Double Sales Under Art. 1544:

Requisites for Art. 1544 to Apply:

Effects of Art. 1544 Requisites:

Doctrines on Art. 1544 Double Sales Rules:

2. Tanedo v. Court of Appeals, 252 SCRA 80 (1996)

3. Cruz v. Cabana, 129 SCRA 656 (1984)

4. Agricultural and Home Extension Dev. v. CA, 213

Global Rules on Double Sale for Real Estate:

3. If requisites under Cheng v. Genato are present,

Sale and Delivery by Non-Owner