Supplemental Notes
Chapter 1, 2 and 3 (Sales)
1. Define contract of sale
By the contract of sale one of the contracting parties obligates himself to transfer
the ownership and to deliver a determinate thing, and the other pay therefore a
price certain in money or its equivalent.
2. Characteristics of a contract of sale
a. Bilateral - The parties are bound by reciprocal obligations.
b. Consensual - It is perfected by mere consent.
c. Cumulative - The parties exchange almost equivalent values.
d. Nominate - It has a special name given to it by law.
e. Onerous - There is an exchange of valuable considerations.
f. Principal - It can exist by itself.
3. Essential requisites of contract of sale
a. Consent
b. Objects
(1) Must be licit
(2) Seller must have the right to transfer ownership of object at the time of
delivery
(3) Must be determinate
(4) Emptio rei speratae is the sale of future thing
(5) Emptio spei is a sale of hope or expectancy
(6) Vain hope or expectancy – void
(7) Future inheritance – void
c. Price
(1) Fixed by the parties
(2) If it be certain with reference to another thing certain
(3) If the determination of the price is left to the judgement of a specified person
or persons
(a) The third person is unable or unwilling to fix the price – The contract
is inefficacious or null and void.
(b) The third person acted in bad faith or by mistake – The injured party
may ask the court to fix the reasonable price.
(c) The third person is prevented from fixing the price or terms by fault of
the seller or the buyer – The injured party may ask for fulfillment or
recission plus damages.
(4) If the price is fixed by one of the contracting parties and accepted by the
other.
(5) Inadequacy of price in a contract of sale – valid unless there is a defect in
consent or parties intended a donation or some other contract.
(6) Simulated price in a contract of sale – void but the parties may prove that
the contract is a donation or some other contract.
4. Natural elements of the contract of sale -Elements which are presumed to exist
in a contract of sale unless validly waived by the contracting parties.
a. Warranty against eviction
b. Warranty against hidden defects
c. Warranty against non-apparent and unregistered servitude or encumbrance
d. Warranty for merchantability
5. Accidental elements in the contract of sale – Elements which do not exist in a
contract of sale unless provided by the contracting parties.
a.
b.
c.
d.
Place of delivery and payment
Time of delivery and payment
Terms or conditions of payment
Interest of the price
6. Contract of Sale vs. Agency to sell
a. In sale, ownership passes to the buyer, while in agency to sell, ownership is
retained by the principal.
b. In sale, the buyer pays the seller, while in agency to sell, the buyer pays the
agent, and the latter transmits the money to the principal.
c. In sale, the goods are delivered by the seller to the buyer while in agency to sell,
it is delivered by the agent to the final consumer.
7. Contract of Sale vs. Contract for a piece of work
a. It is a contract of sale if it is for the delivery at a certain price of an article which
the vendor in the ordinary course of business, manufacturers or procures for
the general market, whether the same is on hand or not while it is a contract
for a piece of work if the goods are to be manufactured especially for the
customer upon his special order and not for the general market.
8. Sale vs Barter
a. In sale there is an exchange of thing and money, while in barter there is an
exchange of thing and thing.
b. If consideration is part in money and part in thing
(1) Determine the manifest or evident intention of the parties.
(2) The contract is one of barter if the value of the thing given as part of the
consideration exceeds the monetary consideration.
(3) The contract is one of the sale if the monetary consideration is more than
the value of the thing given as part of the consideration.
(4) The contract is one of sale if the monetary consideration is equal to the
value of the thing given as part of the consideration.
9. Bilateral promise to buy and sell is as good as perfected contract of sale
10. Unilateral promise to buy or sell accepted by the promises is binding only if
supported by option money.
11. Policitacion refers to unilateral promise not accepted by the promise, therefore,
is does not produce any effect.
12. Who bears the risk of loss?
a. Before perfection – seller
b. At the time of perfection – seller
c. After perfection but before delivery – buyer
d. After perfection but after delivery – buyer
13. Earnest (arras) vs. option money
Earnest money is proof of perfection of contract of sale while option money is proof
of perfection of option contract of sale.
Earnest money is part of purchase price while option money is not.
14.
Recto Law (Remedies of the Seller)
a. Exact fulfillment of obligation, should the vendee fail to pay
b. Cancel the sale, should the vendee’s failure to pay cover two or more
installments
c. Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendee’s failure to pay cover two or more installments. In this case,
he shall have no further action against the purchaser to recover any unpaid
balance of the price. Any agreement to the contrary shall be void.
15. Maceda Law (Rights of the Buyer)
Section 3. In all transactions or contracts involving the sale or financing of real
estate on installment payments, including residential condominium apartments
but excluding industrial lots, commercial buildings and sales to tenants under
Republic Act No. 3844, as amended by republic Act No. 6381, where the buyer has
paid at least two years of installments, the buyer is entitled to the following rights
in case he defaults in the payment of succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within
the total grace period earned by him which is hereby fixed at the rate of
one month grace period for every one year of installment payments made:
Provided, that this right shall be exercised by the buyer only once in every
five years of the life of the contract and its extensions, if any.
(b) If the contract is canceled, the seller shall refund the buyer the cash
surrender value of the payments on the property equivalent to 50% of the
total payments made, and after 5 years of installments, and additional 5%
every year but not to exceed 90% of the total payments made: Provided,
that the actual cancellation of the contract shall take place after 30 days
from receipt by the buyer of the noise of cancellation or the demand for
recission of the contract by a notarial act and upon full payment of the
cash surrender value to the buyer.
Down payments, deposits or options on the contracts shall be included in
the computation of the total number of installment payments made.
Section 4. In case where less than 2 years of installments were paid, the seller
shall give the buyer a grace period of not less than 60 days from the date the
installment became due.
If the buyer fails to pay the installments due at the expiration of the grace period,
the seller may cancel the contract after 30 days from receipt by the buyer of the
notice of cancellation or the demand for recission of the contract by the notarial
act..
16. Capacity to buy and sell
a. If one of the parties is incapable of giving consent the contract is voidable.
b. If both parties are incapable of giving consent the contract is unenforceable
c. The husband and wife cannot sell property to each other, except:
(1) When a separation of property was agreed upon in the marriage settlements;
or
(2) When there has been judicial separation of property under article 191
d. Person who are prohibited from acquiring by purchase, even at public or judicial
auction, sales in legal redemption, compromises, or renunciation:
(1) The guardian, the property of the person or persons under his guardianship.
(2) Agents, the property whose administration or sale may have been entrusted
to them, unless the consent of the principal has been given.
(3) Executors and administrators, the property of the estate under
administration.
(4) Public Officers and employees, the property of the State of GOCC under their
administration.
(5) Justice, judges, prosecuting attorneys, clerk of court and other officers and
employees connected with the administration of justice, the property and
rights in litigation.
17. Loss of specific at the time of perfection
a. If entirely loss – the consent of the sale is without any effect/void
b. If partially loss – the buyer may:
(1) Withdraw
(2) Demand remaining part and pay its proportionate part
Supplemental Notes
Chapter 4 and 5 (Sales)
1. Obligations of the vendor or seller
a.
b.
c.
d.
To transfer the ownership of the thing sold
To deliver the determinate thing sold
To warrant the thing sold
To take care of the thing sold with the diligence of a good father of a family
unless the law or the stipulation of the parties requires another standard of
care.
2. Delivery is a mode of acquiring ownership
a. Kinds of Delivery
a. Actual Delivery – thing sold is placed in the control and possession of
the vendee
b. Constructive Delivery
(1) By legal formalities – Sale is made through a public document, the
execution thereof shall be equivalent to the delivery if the thing sold.
It applies to both movable and immovable property.
(2) Symbolic delivery (tradition simbolica or tradition clavium) – It that
takes place by delivering the keys of the place or depository where
the moveable is stored or kept.
(3) Traditio longa manu – Delivery of movable property by the mere
consent or agreement of the contracting parties, if the thing sold
cannot be transferred to the possession of the vendee at the time of
the sale.
(4) Traditio brevi manu – Vendee already had possession of the thing
sold for any other reason. It applies to movables only.
(5) Traditio constitutem
possessorium – Vendor continues in
possession of the thing sold after the sale but in another capacity.
3. Delivery of incorporeal property (quasi-traditio)
a. Execution of public document
b. By placing the titles of ownership in the possession of the vendee
c. Through the use by the vendee of his rights with consent of the vendor
4. Sale or return vs. Sale on trial or approval
In sale or return, ownership is transferred to the buyer upon delivery.
In sale on trial, ownership to the buyer is not transferred upon the delivery. The
ownership passes to the buyer:
(1) When he signifies his approval or acceptance to the seller, but retains the
goods without giving notice of rejection, then if time has been fixed for the
return of the goods, on the expiration of such time, and, if no time has been
fixed, on the expiration of a reasonable time. What is a reasonable time is a
question of fact.
(2) If he does not signify his approval or acceptance to the seller, but retains the
goods without giving notice of rejection, then if a time has been fixed for the
return of the goods, on the expiration of such time, and, if no time has been
fixed, on the expiration of a reasonable time. What is a reasonable time is a
question of fact.
5. General Rule: 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.
Exception:
a. Owner of the goods is by his conduct precluded from denying the seller’s
authority to sell – estoppel
b. The provisions of any factors’ act, recording laws, or any other provision of
law enabling the apparent owner of goods to dispose of them as if her were
the true owner thereof.
c. The validity of any contract of sale under statutory power of sale or under
the order of a court of competent jurisdiction.
d. Purchases made in a merchant’s store, or in fairs, or markets, in accordance
with the Code of Commerce and special laws.
6. Where the seller of goods has a voidable title thereto, the buyer acquires a good
title to the goods provided:
a.
b.
c.
d.
Title has not been avoided at the time of the sale,
He buys them in good faith
For value, and
Without notice of the seller’s defect
7. Place of delivery:
a. Place stipulated in the contract
b. In case there is no stipulation, place fixed by usage or trade
c. In the absence of a and b, the seller’s place of business if he has one; if none,
the seller’s place of residence.
d. In the case of specific goods, the place where the goods are located at the
time of perfection of contract of sale
8. Time of delivery
a. At the time agreed upon
b. In the absence of time agreed upon, within reasonable time from the
execution of the contract
9. Unpaid Seller is one who has not been paid or tendered the whole of the price or
who has received a bill of exchange or other negotiable instruments as conditional
payment and the condition under which it was received has been broken by reason
of the dishonor of the instrument, the insolvency of the buyer, or otherwise.
10. Rights of an unpaid seller
a. Right to possessory lien on the goods or right to retain
(1) Grounds
(a) Where the goods have been sold without any stipulation as to credit.
(b) Where the goods have been sold on credit, but the credit term has
expired.
(c) Where the buyer is insolvent.
(2) Possessory lien no longer available
(a) When the seller delivers the goods to a carrier or other bailee for the
purpose of transmission to the buyer without reserving the ownership
in the goods or the right to the possession thereof.
(b) When the buyer or his agent lawfully obtains possession of the goods.
(c) By waiver of the possessory lien
When the unpaid seller obtains judgment or decree for the price of the
goods, he does not lose his possessory lien or his right to retain them
while he is in possession of them.
b. Right of stoppage in transit
(1) Ground
(a) Where the buyer is insolvent
(2) Goods are still in transit
(a) From the time they are delivered to the carrier or other bailee for the
purpose of transmission to the buyer, until the buyer or his agent,
takes delivery of them from such carrier or other bailee.
(b) If the goods are rejected by the buyer, and the carrier or other bailee
continues in possession of them, even if the seller has refused to
receive them back.
(3) Goods are no longer in transit
(a) If the buyer obtains delivery of the goods before arrival at the appointed
destination.
(b) If the carrier or other bailee acknowledges to the buyer or his agent,
that he is holding the goods in his behalf, after arrival of the goods at
their appointed destination
(c) If the carrier or other bailer wrongfully refuses to deliver the goods to
buyer of his agent
c. Right of resale
(1) Grounds
(a) The goods are of perishable nature
(b) The seller has expressly reserved the right to resell the goods in case
the buyer should make default.
(c) The buyer has been in default for an unreasonable time.
It is not essential to the validity of resale that notice of an intention to
resell the goods be given by the seller to the original buyer. But if the
ground of sale is the buyer has been in default for an unreasonable
time, then, giving notice of intention to original buyer becomes relevant
to determine the unreasonableness of the default.
(2) Effects of Resale
(a) The seller shall not be liable to the original buyer for the delivery of the
goods.
(b) The seller may recover damages from the original buyer for any loss
occasioned by the breach of the contract of sale.
(c) The new buyer acquires a good title against the original buyer.
The unpaid seller is prohibited from participating as a bidder, directly
or indirectly, in the public sale or private sale of the goods.
(3) Place of Resale
(a) Public sale; or
(b) Private sale
d. Right to rescind the sale
(1) Grounds
(a) The seller has expressly reserved the right to rescind the sale in case
the buyer should make default.
(b) The buyer has been in default in the payment of the price for an
unreasonable.
(2) Effects of recission of sale
(a) The seller shall not be liable to the buyer upon the contract of sale
(b) The seller may recover from the buyer damages for any loss occasioned
by the breach of contract of sale.
(c) The seller resumes ownership of the goods.
11. Rules as to preference of ownership in Double Sale
a. In case of personal property
(1) Actual or constructive possessor in good faith
b. In case of titled real property
(1) Registrant of the sale in good faith
(2) Actual or constructive possessor in good faith
(3) Buyer with the oldest title
c. In case of untitled real property
(1) Buyer with the oldest title
12. Natural elements or implied warranties in a contract of sale
a. Warranty against eviction
Eviction refers to the deprivation of the vendee of the whole or a part of the
thing sold by virtue of a final judgement based on a right to the sale or an
act imputable to the vendor.
Requisites to enforce warranty against eviction
(1) There must be a final judgement depriving the vendee of the whole part of
the thing sold.
(2) The deprivation is based on a right prior to the sale or an act imputable
to the vendor.
(3) The vendor must have been notified of the suit for eviction at the instance
of the vendee.
Waiver
(1) Waiver Consciente is a type of waiver made by the buyer when he acted
in good faith because he has no knowledge of risk of eviction. The seller
is still liable for eviction.
(2) Waiver Intentionada is a type of waiver made by the buyer when acted in
bad faith because he has knowledge of risk of eviction. The seller is no
longer liable for eviction.
b. Warranty against hidden defects
Requisites to enforce warranty against hidden defects
(1) The defect must exist at the time of sale.
(2) The defect must be hidden
(3) The defect must render the thing unfit for the use for which it is intended
or diminishes 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.
(4) The action to enforce it must be made within the period provided by law.
The seller is liable for selling object with hidden defect regardless of if the
awareness of the presence of defect.
The seller is liable for selling object with hidden defect regardless of the
reason of the loss of the thing sold.
13. Principal obligations of the vendee/buyer
a. Accept delivery
b. Pay the price
14. Payment must be made at the time and place of the delivery of the thing sold
unless there is a stipulation to the contrary.
15. Delivery by installments is not allowed unless agreed upon.
16. As a rule, the buyer has the right to examine the goods prior to delivery.
However, the buyer has no right to examine if:
a. There is a stipulation to this natter; or
b. When the goods are delivered COD
17. There is acceptance when:
a. When the buyer intimates to the seller that he has accepted the thing sold;
b. When the buyer does an act as an owner; or
c. When the buyer retains the goods for an unreasonable length of time.
18. Buyer has the obligation to pay interest on the price
a. There is a stipulation to the contrary
b. The thing sold produces fruits
c. Buyer is in default
19. Buyer may suspend payment of the price
a. In case there is an action for recovery/vindicatory action
b. In case of foreclosure of mortgage.
Supplemental Notes
Chapter 6 and 7 (Sales)
1. Actions by the seller
a. Maintain an action against the buyer for the price of the goods. (Article 1595)
b. Maintain an action against the buyer for damages for non-acceptance. (Article
1596)
c. Rescind the contract:
a. Buyer repudiated the sale
b. Buyer manifested inability to perform his obligations; or
c. Buyer committed a breach of contract
2. Actions by the buyer
a. Bring an action for specific performance
(1) Seller has broken the contract; and
(2) The goods to be delivered is specific or ascertained
b. In case of breach of warranty:
(1) Accept or keep the goods and set up against the seller, the breach of warranty
by way of recoupment in diminution or extinction of the price;
(2) Accept or keep the goods and maintain an action against the seller for
damages for the breach of warranty
(3) Refuse to accept the goods, and maintain an action against the seller for
damages for the breach of warranty
(4) Rescind the contract of sale and refuse to receive the goods or if the goods
have already been received, return them or offer to return them to the seller
and recover the price or any part thereof which has been paid.
3. Redemption in a Contract of Sale
a. Conventional Redemption is a type of redemption that occurs when the
vendor reserved the right to repurchase the thing sold with the obligation to
return to the vendee the price of the sale, expenses of the contract and
necessary and useful expenses made on the thing sold and to comply with
other stipulations which may have been agreed upon.
Period for exercise of right of redemption in conventional redemption
or pacto de retro sale
(1) If a period is not stated in the contract, it will be 4 years
(2) If a period less than 10 years is stated, follow the stated period
(3) If a period more than 10 years is stated, it till be 10 years because that
the maximum period.
(4) If there is a pending case before the court to determine whether the
contract is one pacto de retro sale or equitable mortgage, it will be 30 days
from the decision of the court declaring it to be pacto de retro sale.
b. Legal redemption is a type of redemption in a contract of sale that is
available only in exceptional cases provided by law. It refers to the right of a
third person to purchase a real property sold by another person in
exceptional cases provided by law. It is defined as the right to be subrogated
upon the same terms and conditions stipulated in the contract, in the place
of one who acquires a thing by purchase, or dation in payment, or by any
other transaction whereby the ownership is transmitted by onerous title.
Additional Notes
1. Principles of sale of an undivided share of a specific mass of fungible goods
though the seller purports to sell and the buyer purports to buy a definite
number, weight or measure of the goods in the mass, and though the
number, weight or measure of the goods in the mass is undetermined.
a. If the quantity, number, weight, or measure, of the mass is more than the
quantity sold, the parties shall become co-owners of the mass.
b. If the quantity of the mass is less than the quantity sold, the buyer becomes
the owner of the whole mass, with the seller being bound to make good the
deficiency from goods of the same kind and quality, unless a contrary intnent
appears.
2. Rights of Buyer of Subdivision or condominium under PD 957 also known
as Subdivision and Condominium buyer’s Protective Decree
a. In case of noncompliance by the developer with the plan, the buyer may
suspend payment of the price and ask for the cancellation of contract with
corresponding demand for the return of the price he has paid.
b. The developer shall pay the real property tax before transfer of ownership to
buyer.
c. The developer can only collect fees for registration of sale from the buyer.
3. Delivery to the common carrier (FOB Shipping Point) – The law presumed
that the contract od sale is FOB Shipping Point which means that delivery to
the carrier means delivery to the buyer.
4. As a general rule, it is the obligation of the vendor to deliver the thing sold
to the buyer after perfection of contract of sale. However, the following are
the instances when a vendor is not bound to deliver the thing sold after
perfection of contract of sale:
a. If the vendee has not paid him the price
b. If no period for payment of the price has been fixed in the contract
c. If the vendee loses the right to make use of the period.
5. Remedies of buyer in sale of real estate with a statement of its area at the
rate of a certain price per unit of measure or number if the vendor delivers
the following area:
a. Excess area
(1) Accept the whole area and pay for the contract rate; or
(2) Accept the agreed area eject the excess
b. Lacking area
(1) Lacking of Less than 10% of Actual Area
(a) Action quanti minoris or proportionate reduction of price; or
(b) Action for cancellation but only if the lacking area of less than 10%
of Actual Area is very important
(2) Lacking of 10% or more of Actual Area
(a) Action quanti minoris or proportionate reduction of price; or
(b) Action for cancellation whether or not the lacking area of 10% or
more of Actual Area is very important
c. Poor Quality
(1) Poor Quality of 10% or less of Actual Area
a. Action quanti minoris or proportionate reduction of price
b. Action for cancellation but only if the poor quality of not more than
10% of Actual Area is very important.
(2) Poor Quality of more then 10% of Actual Area
a. Action quanti minoris or proportionate reduction of price; or
b. Action for cancellation whether or not the poor quality of more than
10% of Actual Area is very important
Prescriptive period of the action – It shall be filed within 6 months from
the date of delivery.
6. Rights of buyer and seller is sale real estate for lump sum and not at the
rate of a certain sum for a unit of measure or number.
a. In sale of real estate for a lump sum and not at the rate of certain sum for a
unit of measure or number, the vendor is bound to deliver all that it is
included within the boundaries stated in the contract although there be
greater or less area or number than that stated in the contract.
b. The buyer has the obligation to pay the lump sum stipulated in the contract
with no increase or decrease in the price although there be greater or less
area or number than that stated in the contract unless the lacking or excess
area is already unconscionable.
7. Other Instance of Eviction which makes the seller liable for breach of
warranty
a. If the property is sold for non-payment of taxes due and not made known to
the vendee before the sale.
b. In case of judicial sales unless otherwise decreed in the judgment.
8. Status of Waiver of Warranty against eviction
a. Stipulation exempting a vendor from the obligation to answer for eviction is
valid if he acted in good faith.
b. Stipulation exempting a vendor from the obligation to answer for eviction is
void if he acted in bad faith.
9. Redhibitory defect refers to a defect in an animal and it is of such nature that
expert knowledge, even after a professional inspection has been made, is not
sufficient to discover it.
10. Alternative remedied for redhibitory defect of an animal sold together
with other animals not as a pair
a. Accion redhibitoria or Cancellation of sale over the defective animal; or
b. Accion quanti minoris or Proportional Reduction of Price over the defective
animal
11. Remedies of buyer for breach of warranty against hidden encumbrance
or non-apparent servitude in contract of sale of immovable
a. Within one year from the date of contract
(1) Action for damages; or
(2) Action for rescission
b. Within one year from the discovery of servitude after the lapse of the
one-year period from the date of contract
(1) Action for damages only
Prescriptive Period – One year from the date of contract or discovery of
sertitude
12. Prescriptive period of action based on breach of warranty against hidden
defect – 6 months from the date of delivery
13. Remedy for redibitory defects of two animals sold together as a pair
a. Accion redhibitoria or Cancellation of the contract of sale
14. Prescriptive period of action based on breach of warranty of animal with
redhibitory defect – 40 days from the date of delivery
15. Sale of animals without warranty for hidden defects
a. Sale of animals at fairs
b. Sale of animal at public auctions
c. Sale of live stocks as condemned
16. Status of sale of animal suffering from contagious disease – Null and void
for being contrary to law and public policy
17. Requisites in order for the vendor to be liable in case the animal dies of
disease
a. The disease exists at the time of sale
b. The disease is the cause of death of the animal
c. The animal dies within 3 days from time of purchase
18. Rules in case of exercising conventional redemption in Pacto de retro sale
a. A co-owner of an undivided immovable which is essentially indivisible who
sells his share with a right to repurchase to a third person who subsequently
acquires the whole thereof, may be compelled by the latter to redeem the
whole property if the former wishes to make use of the right of redemption.
b. If several persons, jointly and in the same contract, should sell an undivided
immovable with a right of repurchase, none of them may exercise this right
for more than his respective share.
c. If the person who sold an immovable alone has left several heirs, each heir
may redeem only the part which he may have acquired.
d. In cases of 1 and 2, the vendee cannot be compelled to consent to a partial
redemption.
e. Each one of the co-owners of an individual immovable who may have sold
his share separately, may independently exercise the right of repurchase as
regards his own share and the vendee cannot compel him to redeem the
whole property.
19. Legal Redemption is a type of redemption in a contract of sale that is available
only in exceptional cases provided by law. It refers to the right of a third person
to repurchase a real property sold by another person in exceptional cases
provided by law. It is defined as the right to be subrogated upon the same terms
and conditions stipulated in the contract, in the place of one who acquires a
thing by purchase, or dation in payment, or by any other transaction whereby
the ownership is transmitted by onerous title.
20. Instance of Legal Redemption or Redemption by Operation of Law
a. By a co-owner. A co-owner of a thing may exercise the right of redemption
in case the shares of all the other co-owners or of any of them, are sold to a
third person. All co-owners may exercise on the basis of their proportionate
shares.
b. By an adjoining rural lot owner. If a piece of rural land not exceeding one
hectare is alienated to a person who is not landless, the adjoining rural owner
shall have the right of legal redemption unless the guarantee does not own
any rural land. Order of Preference:
(1) Adjoining rural owner with smallest area
(2) Adjoining rural owner who first exercised the right
c. By adjoining urban lot owner. If a small piece of urban land which was
bought for speculation has been resold, the owner of the adjoining land has
a right of redemption at a reasonable price.
(1) The adjacent urban landowner whose intended use of the land in question
appears best justified shall be preferred.
It is only the adjoining urban lot owner who has the right of legal
preemption which is the right to be given the first opportunity before being
offered to other person.
A co-owner has better right over adjoining rural or urban lot owner in the
exercise of right of legal redemption.
21. Period for the exercise of right of legal redemption – 30 days from the
notice given by the vendor or prospective vendor.
22. Instances wherein a contract of sale with a right to repurchase and other
contract purporting to be an absolute sale shall be presumed to be an
equitable mortgage thereby requiring reformation of instrument
a. When the price of a sale with a right to repurchase is unusually
inadequate.
b. When the vendor remains in possession as lessee or otherwise.
c. When the period for the exercise of the right of repurchase is extended.
d. When the purchaser retains for himself part of the purchase price.
e. When the vendor binds himself to pay the real property taxes on the thing
sold.
f. When the real intention of the parties is that the transaction shall secure
the payment of debt or the performance of any other obligation.
23. Remedy of injured party in equitable mortgage – Action for reformation of
instrument