ATENEO DE MANILA LAW SCHOOL
Rockwell Center, Makati City
LAW on SALES
REVIEW
By:
CESAR L. VILLANUEVA, B.S.C., C.P.A., LL.B., LL.M., FAICD, D.J.S.
GENERAL PRINCIPLES
DEFINITION
(Art. 1458)
PARTIES
OBLIGATIONS
(1) TO TRANSFER
OWNERSHIP
SELLER
SALE
CONSENT
Real Obligations
SUBJECT
MATTER
(2) TO DELIVER
POSSESION
“Meeting of Minds”
Real Obligation
BUYER
2
(3) TO
PAY
PRICE
ESSENTIAL CHARACTERISTICS OF SALE:
NOMINATE
vs.
Innominate
PRINCIPAL
vs.
Accessory
vs.
CONSENSUAL
vs.
Solemn
vs.
BILATERAL/
RECIPROCAL
vs.
Unilateral
ONEROUS
vs.
Gratuitious
COMMUTATIVE
vs.
TITLE
3
vs.
Aleatory
“Mode”
Prefaratory
Real
SALES
versus
CONSENSUAL
DONATION
SOLEMN
(i.e., 4th Requisite of
“Form” for validity)
ONEROUS/
COMMUTATIVE
ESSENCE:
4
GRATUITOUS
(i.e., “Pure Liberality”
as consideration)
BOTH INVOLVE THE TRANSFER OF
OWNERSHIP/POSSESSION OF
SUBJECT MATTER
SALES
versus
BARTER
SALE,
IS
BARTER:
BUT WITH THE
PRICE
BEING REPLACED
OBLIGATION TO TRANSFER
OWNERSHIP/POSSESSION OF ANOTHER
SUBJECT MATTER
WITH AN
THEREFORE: BARTER GOVERNED BY LAW ON SALES
BUT:
5
NOT COVERED BY STATUTE OF FRAUDS
SALES

versus
DACION EN PAGO:
DACION IS PROCESS OF EXTINGUISHMENT
EXISTING OBLIGATION (CONTRACTS)
OF
PRE-
(a) There must be delivery of subject matter in lieu of an
pre-existing obligation;
(b) There must be difference between prestation due and
what is give in substitute;
(c) There must be a clear “meeting of minds” that the
pre-existing obligation is extinguished by reason of
the prestation substituted.
Lo v KJS Eco. Formwork System Phil.,
Inc., 413 SCRA 182 (2003)

DACION
NOVATES
THE
ORIGINAL
CONTRACTUAL
RELATIONS INTO A FULLY EXECUTED SALE
ESSENTIALLY: DACION GOVERNED BY LAW ON SALES
6
SALES
vs. CONTRACT FOR PIECE-OF-WORK:
K for Piece-of-Work:
Service is the Subject Matter
“Ineluctably, whether the contract be one of sale or one
for a Piece of Work, a transfer of ownership is involved
and a party necessarily walks away with an object.”
Commission of Internal Revenue v. Court of Appeals, 271 SCRA 605 (1997)
Although there is the primary obligation to
pay fee (or price), the main motivation is the
“reputation, skill, mastery” of contractor.
Engineering & Machinery Corp. v. Court of Appeals, 252 SCRA 156
(1996)
BUT:
7
THERE CAN BE NO CONTRACT FOR PIECE-OF-WORK FOR
PAST SERVICE RESULTING IN THE CREATION OF THE OBJECT
(ALWAYS A SALE)
SALES
vs.
AGENCY TO SELL/BUY
REPRESENTATIVE
AGENCY
FIDUCIARY


Essentially revocable
Fruits and of principal
NOT PERSONNALY LIABLE FOR THE
OBLIGATION CREATED BY THE SALE
CONTRACT
AGENT
NOT OBLIGED TO PAY THE PRICE
DOES NOT ASSUME THE RISKS OF
OWNERSHIP TO THE OBJECT OF SALE
8
SALES vs. AGENCY TO SELL/BUY
Cont’d
THEREFORE:
“AGENT” is deemed to be Seller/Buyer
when contracted to assume Risks and
Obligations contrary to his representative/
fiduciary role:
(a) HE ASSUMES OBLIGATION TO PAY THE PRICE
RISKS OF LOSS
(b) SUBJECT MATTER
INSURABLE INTEREST
MAINTENANCE
9
SALE
versus
LEASE
LEASE:
ESSENTIALLY
INVOLVES
THE
TEMPORARY ENJOYMENT OF POSSESSION OF
THE SUBJECT MATTER
FEW INSTANCES:
10
TREATED AS SALE ON
INSTALLMENTS WHEN LEASE
STRUCTURED IN SUCH A WAY AS
TO AVOID APPLICATION OF THE
RECTO LAW
PARTIES TO A SALE
(The Essential Element of CONSENT)
GENERAL RULE: All Parties Having Capacity to Contract
EXCEPTIONS:
11
Can Be Valid Parties To a Sale
(a)
Minors, Demented, Deaf-Mutes – Sale is Voidable
- Purchase of Necessaries
- Emancipation
(b)
Spouses (Art. 1490)
- Sales to Third Parties – Sale by One Spouse Void
- Sales to Each Other – Void
Except: When marriage governed by Complete
Separation of Property Regime

By Pre-nuptials

By Judicial decree
OTHER RELATIVE DISQUALIFICATIONS
Guardian
Agent
(Art. 1491)
Wards
Principal
Except: When granted express power
to buy principal’s property
Administrator/
Executor
Estate under administration
BUT NOT: Purchase of Inheritance Rights
Public Officers
Government property
their jurisdiction
under
Judges/Justices/
Court Officers
Property falling in their jurisdiction
Lawyers
Client’s property in litigation
Except: Contingency fee arrangement
12
SUBJECT MATTER
(OBLIGATION to Transfer Ownership and Deliver Possession)
1.
2.
3.
POSSIBLE THING
vs.
Impossible things
LICIT
vs.
Illicit
vs.
Non-Determinable
GENERICS
DETERMINATE
DETERMINABLE
RATIONALE:
Transfer of Ownership/Possession of the
Subject Matter is the ESSENCE of SALE
 Obligation should therefore not be illusory
 To comply with the “Obligatory Force”
principle in Contract Law
13
PRICE & OTHER CONSIDERATION
(The Obligation to Pay)
1.
2.
3.
4
REAL/TRUE
FALSE
(Reformation)
“Money or its Equivalent”
VALUABLE CONSIDERATION
CERTAIN
ASCERTAINABLE
. MANNER OF PAYMENT
RATIONALE:
14
vs.
vs.
SIMULATED
vs.
PURE
(Void)
vs.
LIBERALITY
NOMINAL
CONSIDERATION
vs.
UNASCERTAINABLE
vs.
UNASCERTAINABLE

Must comply with “Obligatory Force” principle in
Contract Law

Must
meet
Onerous
characteristics of SALE
and
Commutative
STAGES IN LIFE OF SALE
NEGOTIATION
Covers the period from the time the prospective contracting
parties indicate interest in the contract up to the time immediate
before the contract is perfected.
PERFECTION
Takes place upon the concurrence of the essential elements
of the Sale which are:
the meeting of the minds of the parties
as to the object of the contract
upon the price.
CONSUMMATION
It begins when the parties perform their respective
undertaking under the perfected contract of sale, culminating in
the extinguishments thereof.
Jovan Land, Inc. v. CA, 268 SCRA 160 (1997)
San Miguel Properties Philippines, Inc. v. Huang, 336 SCRA 737 (2000)
15
POLICITACION STAGE

Invitations to make Offers (“Proposals”)

OFFERS

ACCEPTANCES

AGENCY TO SELL/TO BUY

OPTION CONTRACTS

RIGHTS OF FIRST REFUSAL

AGREEMENTS TO ENTER INTO SERIES OF SALES

MUTUAL PROMISES TO BUY AND SELL
(Contracts to Sell of the First Type)
16
RULES ON OFFERS:
1.
2.
Offer is at the complete will of Offeror, who may destroy
it at will prior to acceptance
Will “disappear” or lapse upon the happening of the
condition or period placed upon it
3.
When floated unconditionally, will be extinguished
through the passage of reasonable time
4.
Cannot be accepted partially or even substantially
 Counter-offer extinguishes original Offer
5.
Legal effect of acceptance is taken only from point of
view of Offeror
 Offeror may still extinguish Offer at any time before he has
knowledge of Acceptance
6.
17
Only a “certain” Offer when met by an “Absolute” Acceptance
will give rise to a valid SALE.
“CERTAIN” OFFER
(a)
CONTAINS A CLEAR PROMISE TO SELL/TO BUY
(b)
COVERS A SUBJECT MATTER



(c)
Possible thing
Licit
Determinate or Determinable
COVERS A PRICE OR CONSIDERATION




18
THAT IS:
Real
Valuable
Certain or Ascertainable
With Manner of Payment/Performance
agreed upon
“ABSOLUTE” ACCEPTANCE
(a) NO CONDITION OR AMENDMENT OF THE
TERMS OF THE OFFER
19
(b)
MAY CLARIFY
(c)
BUT NEVER TOUCH ON THE
TERMS/COVERAGE OF SUBJECT MATTER
AND TERMS/COVERAGE OF PRICE
OPTION CONTRACT:
ACCEPTANCE of OFFER to give on Option to Buy/to Sell
SUBJECT MATTER: Option or Privilege to Sell/ Purchase:
AN OBJECT:
- Possible
- Licit
- Determinate/
Determinable
CONSIDERATION:
20
AT A PRICE:
-
Real
- Valuable
- Certain/
Ascertainable
Anything separate and distinct from
Price
Ang Yu Asuncion v. Court of Appeals
238 SCRA 602 (1994)
1.
If no separate consideration, Option Contract
void, but may constitute certain Offer which can
be withdrawn by Offeror, but if accepted before
withdrawal would give rise to a valid Sale
(Sanchez v. Rigos doctrine)
2.
If withdrawal of option/offer whimsical or
arbitrary, could give rise to damage claim under
Art. 19 of Civil Code
3.
When there is separate consideration, an
Option Contract deemed perfected:
(a) If exercised within option period, gives rise
to Sale, which can be enforced by specific
performance
21
Ang Yu Asuncion v. Court of Appeals cont’d
(b)
Would be a breach of the Option Contract, for
Offeror to withdraw the offer during the agreed
period, but withdrawal destroys nevertheless
the Option
(c)
But if, however, Optioner-Offeror withdraws
Offer even during option period before its
acceptance (i.e., exercise):
Optionee-Offeree may not sue for specific
performance on the Sale since it has failed
to reach its own perfection stage
Optioner-Offeror, however, renders himself
liable for damages for breach of option
22
RIGHT OF FIRST REFUSAL
ESSENCE:
CONDITION:
OFFEROR BOUNDS HIMSELF TO FIRST
OFFER SUBJECT MATTER TO OFFEREE
FOR SALE
IN THE EVENT OFFEROR EVER DECIDES
TO SELL IT
Possible thing
SUBJECT MATTER
Licit
Determinate/Determinable
PRICE:
THAT WILL THEN (HAPPENING OF CONDITION) BE
AGREED UPON
23
DOCTRINES ON RIGHTS OF FIRST REFUSAL
Ang Yu Asuncion v. Court of Appeals
• Generally, RFRs would be “none” contracts, for
lack of cause or consideration, or failure to agree
the valid Price for the expectant contract
• Merely “innovative juridical relation”
 RFR
• Cannot be enforced by specific performance
 Not
being a Contract, it lacks essence of
“consensuality,” “obligatory force” or “mutuality”
• Breach allows recovery of damage based on Art. 19
principle of “Abuse of right”
24
DOCTRINES ON RFR cont’d
Equatorial Realty Dev., Inc.
v.
Mayfair Theater
264 SCRA 483 (1996)
25
•
When RFR attached to a valid principal contract
(e.g. Lease), its enforcement takes its vitality from
the obligatory force of the principal contract
•
Such RFR, when breached may be enforced, at the
Price at which Subject Matter sold to Third Party
•
The Third-Party Buyer’s purchase may be
rescinded under accion pauliana, i.e., entered into
in breach and in fraud of Optionee’s contractual
right
DOCTRINES ON RFR cont’d
Parañaque Kings Enterprises v. CA
268 SCRA 727 (1997)
• RFR is complied with by first offering the Subject
Matter to the Optionee and negotiating for a Sale

There is no obligation to reach a sale,
obligation is to negotiate in good faith
• Only when negotiations do not ripen into a Sale,
can Subject Matter be offered to Third-Party
Buyer, but at same price and terms asked of the
Optionee
• Otherwise, must re-offer under new terms to
Optionee
26
AGREEMENTS TO ENTER INTO FUTURE SALE
OR SERIES OF SALES:
ESSENCE:
(1)
Obligations “to do”
To enter into a
Contract of Sale
DISTRIBUTION/ SUPPLY AGREEMENT
 An Agreement to enter into a series
of Contracts of Sale
- National Grains Authority v. IAC, 171 SCRA 131 (1989)
- Johannes Schuback v. Court of Appeals, 227 SCRA 719 (1993)
(2)
MUTUAL PROMISES TO BUY AND TO SELL
(CONTRACTS TO SELL)
27
MUTUAL PROMISES TO BUY AND SELL
(CONTRACTS TO SELL)
1. AGREEMENTS TO ENTER INTO CONTRACT OF
SALE UPON HAPPENING OF THE CONDITIONS
 Essentially, contains Obligations “to do”: to
enter into a Sale
2.
CONDITIONAL CONTRACT OF SALE WHERE THE
BILATERAL OBLIGATIONS TO BUY AND SELL HAVE
BEEN AGREED UPON, BUT SUBJECT TO SUSPENSIVE
CONDITION

28
Condition usually is the full payment of the
price
PERFECTION STAGE
• PERFECTION HAPPENS WHEN A “CERTAIN
OFFER” HAS BEEN MET BY AN “ABSOLUTE
ACCEPTANCE”
• THE ONLY POINT IN TIME TO DETERMINE THE
VALIDITY OR INVALIDITY OF A CONTRACT OF SALE
 “Birth” sets the essence of the Sale
• ESTABLISHES THE CONTRACTUAL PRINCIPLES OF:
29

CONSENSUALITY

MUTUALITY OR OBLIGATORY FORCE

RELATIVITY
FORM OF SALE
GENERALLY:
None, because Sale is consensual
contract
FOR ENFORCEABILITY: STATUTE OF FRAUDS
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

30
Must be in writing signed by the “party
sought to be bound”
FORM OF SALE
cont’d
 Memo must contain Description of:
(a)
SUBJECT MATTER
Possible thing
Licit
Determinate/
Determinable
(b)
PRICE
real
valuable
certain/ascertainable
manner of payment provided
(c)
SIGNED BY THE PARTY SOUGHT TO BE CHARGED
Exception: Electronic Document
 OR PARTIALLY EXECUTED
(Estoppel)
 OR WAIVER OF ADDUCEMENT OF ORAL EVIDENCE AT
TRIAL
31
FORM OF SALE
cont’d
What Constitutes “Partial Execution”?
Subject Matter
(a)
(b)
32
Performance Must
Touch Upon
Price
Cannot Cover “Other
Consideration”
Must Involve/Compromise “Party Sought to
be Charged”
FORMS THAT VOID CONTRACT OF SALE:
1.
SALE OF REALTY THROUGH AGENT:

AGENT’S AUTHORITY MUST BE IN WRITING
OTHERWISE:

SALE VOID: - EVEN
IF DEED OF SALE IN
WRITING and/or NOTARIZED
- EVEN IF THERE HAS BEEN
PARTIAL/ FULL PAYMENT
- EVEN IF THERE HAS BEEN
DELIVERY OF SUBJECT MATTER
- EVEN IF SALE REGISTERED
33
SALES OF IMMOVABLES
1.
PRIVATE DOCUMENT NEEDED
BETWEEN PARTIES
TO
BE
ENFORCEABLE
EXCEPT: PARTIAL EXECUTION/WAIVER
2.
MUST BE IN A PUBLIC INSTRUMENT
-TO BIND THE PUBLIC
-TO BE REGISTRABLE WITH REGISTRY OF DEEDS
3.
FOR REAL ESTATE, MUST BE REGISTERED
AND BINDING AGAINST THE WORD
TO
BE VALID
- Authority of Agent must be in writing – VOID
- Bound by actual possession situation, otherwise
not in good faith
34
CONSUMMATION STAGE
(3)
(1)


PERFORMANCE
DELIVERY OF
SUBJECT MATTER
PAYMENT OF PRICE

SPECIFIC PERFORMANCE
RESCISSION
DOUBLE SALES RULE
SUBDIVISION LOTS &
CONDO UNITS RULES
RECTO LAW

MACEDA LAW





(2)
RISK OF LOSS
(5)
REMEDIES
(4)
EXTINGUISHMENT
 CONVENTIONAL
REDEMPTION
(SALE A RETRO)
EQUITABLE
MORTGAGES
 LEGAL
REDEMPTION

CONDITIONS AND
WARRANTIES
 EFFECTS OF CONDITIONS
 EXPRESS WARRANTIES
 IMPLIED WARRANTIES
35
OBLIGATIONS OF SELLER
1.
TO PRESERVE THE THING WITH DILIGENCE OF A
GOOD FATHER OF A FAMILY
2.
TO DELIVER THE SUBJECT MATTER
3.
To DELIVER FRUITS, ACCESSORIES AND
ACCESSIONS
4.
To COMPLY WITH WARRANTIES
OBLIGATIONS OF BUYER
1. TO PAY THE PRICE
2.
36
TO ACCEPT DELIVERY OF SUBJECT MATTER
DELIVERY OF SUBJECT MATTER
TRADITION AS THE MODE
TO TRANSFER OWNERSHIP
- Actual or Physical Delivery
- Constructive Delivery
MAGIC OF
TRADITION
Fulfillment of the Primary
Obligation of the Seller
Transfer Ownership/
Possession to the Buyer
37
DOCTRINES ON CONSTRUCTIVE DELIVERY
EXECUTION OF PUBLIC INSTRUMENT
- No Contrary Stipulation/ Intention
- Seller Must Have “Control”
- Passage of Reasonable Time
EXCEPTION: WHEN BUYER TAKES
THE RISK
 Produces the Same “Magic” of
Actual Delivery
CONSTRUCTIVE DELIVERY
CONSTITUTUM POSSESORIUM
TRADITIO BREVI MANU
TRADITIO LONGA MANU OR SYMBOLIC DELVERY
Public Instrument
DELIVERY FOR
INTANGIBLES
Transfer/Negotiation of
Evidences the Intangible
the
“Title”
Enjoyment of Rights and Privileges with
the consent of the Seller
DELIVERY THROUGH CARRIER
- FAS
- FOB
- CIF
DOCUMENTS TO TITLE
39
RULES ON DOUBLE SALES UNDER ART. 1544
1.
FOR MOVABLES:



2.
40
First to Possess, in good faith
Oldest Title, in good faith
Then: “First in time, priority in rights”
FOR IMMOVABLES:

First to Register, in good faith

First to Possess, in good faith

Oldest Title, in good faith

Then: “First in time, priority in rights”
REQUISITES FOR ART. 1544 TO APPLY
Cheng v. Genato, 300 SCRA 722 (1998)
(a)
The two (or more) sales transactions must
constitute valid Sales;
(b)
The two (or more) sales transactions must pertain
to exactly the same Subject Matter;
(c)
The two (or more) Buyers at odds over the rightful
ownership of the Subject Matter must each
represent conflicting interests; and
(d)
The two (or more) Buyers at odds over the rightful
ownership of the Subject Matter must each have
bought from the very same Seller
Consolidated Rural Bank (Cagayan Valley), Inc. v. CA, 448
SCRA 347 (2005)
41
EFFECTS OF ART. 1544 REQUISITES
 Not applicable where one of the
Sales is Void
 Not applicable to Contracts to Sell
 Not applicable if first sale is the
Subject Matter and the second sale
is the redemption right to the
Subject Matter
42
DOCTRINES ON ART. 1544 DOUBLE SALES RULES
(a)
Rules under Art. 1544 are addressed to the
Second Buyer, who is mandated to do
positive things if he hopes to win at all
First Buyer wins by being first (first in
time) and does not need the benefits
of Art. 1544
Carbonell v. CA, 69 SCRA 99 (1976)
Uraca v. CA, 278 SCRA 702 (1997)
Consolidated Rural Bank (Cagayan Valley), Inc. v. CA, 448
SCRA 347 (2005)
43
DOCTRINES ON ART. 1544
cont’d
(b)
First Buyer wins by virtue of greater
doctrine of “first in time, priority in rights”
(c)
Second Buyer must register his purchase
while in good faith if he hopes to win:
(d)
First Buyer, who is always in good faith,
when he registers ahead, wins became
second buyer in hopeless
(e) Even if Second Buyer was first to possess
in good faith, the subsequent registration
by First Buyer prevails
Tañedo v. CA, 252 SCRA 80 (1996)
44
DOCTRINES ON ART. 1544
cont’d
(f)
Knowledge of the First Buyer of the
second sale does not adversely affect
First Buyer, nor does it constitute
registration in favor of the Second Buyer
(g)
However, knowledge of the Second Buyer
of the first sale, would place him not only
in bad faith, but would constitute
registration in favor of the First Buyer
Cruz v. Cabana, 129 SCRA 656 (1984)
45
DOCTRINES ON ART. 1544
(h)
cont’d
It seems that Second Buyer must have
paid in full the Price to gain the benefit
under Art. 1544, as the Court defines the
meaning of “good faith” to include
having paid full value
Heirs of Aguilar-Reyes v. Spouses Mijares, 410 SCRA 97 (2003)
Tanongon v. Samson, 382 SCRA 130 (2002)
Balatbat v. CA, 261 SCRA 128 (1996)
Agricultural and Home Extension Dev. v. CA, 213 SCRA 536 (1992)
46
GLOBAL RULES ON DOUBLE SALE FOR REAL ESTATE
47
I.
First to Register, in Good Faith and for Value, his
Purchase of Land registered under the Torrens
System wins, for registration is the “Operative
Act” (Does not matter whether he is First or
Second Buyer)
II.
For Unregistered Land, as between a
conventional prior purchase, and a second
purchase
at
public
auction,
the
first
Conventional Buyer wins, since the Buyer at
public sale is bound by the provisions of the
Rules of Court that says he only takes whatever
is the remaining title of the judgment debtor.
GLOBAL RULES ON DOUBLE SALE
cont’d
III. The Rules of Double Sale under Art. 1544 shall
apply, only when the requisites under Cheng v.
Genato are present, as follows:
1. First to Register in good faith
 But this can only apply to unregistered
land, because Rule I applies to registered
land.
2. First to Possess in good faith, or
3. Oldest Title, in good faith
IV. “First in time, priority in rights” applies last
48
SALE AND DELIVERY BY NON-OWNER
GENERAL RULE: Nemo Dat Quod Non Habet
SPECIAL RULES:
1.
Sale and Delivery, with subsequent
acquisition of title by owner (Art. 1434), ipso
jure transfers title to Buyer
2.
Sale by Co-Owner
- particular portion
- whole property
3.
49
Estoppel on the Part of the True Owner (Art. 1426)
SALE AND DELIVERY BY NON-OWNER
3.
50
cont’d
“Chain of Title Theory” under the Torrens
System
4.
Sales by Court Authority
5.
Sales in Merchant Stores
6.
Sales by One Having Voidable Title Prior
to Annulment
7.
Sale under Documents of Title
RULES FOR DETERIORATION, FRUITS
AND IMPROVEMENTS

RULES HAVE NO APPLICATION IS SUBJECT
MATTER IS MERELY DETERMINABLE (Art. 1263)
ROMAN LAW DOCTRINE:
Buyer
bears
the
consequences
of
Deterioration,
but
benefits from the Fruits
and Improvements
Arts. 1480, 1163-1262
Arts. 1189, 1537 and 1538
51
RULES WHEN SUBJECT MATTER LOST:
1.
BEFORE PERFECTION:
Res Perit Domino
Roman v. Grimalt, 6 Phil. 96 (1906)
2.
AT TIME OF PERFECTION: Seller
(Arts. 1493 and 1494)
“Sale is rendered inefficacious”
52
SUBJECT MATTER LOST:
cont’d
3. AFTER PERFECTION BUT BEFORE DELIVERY
Arts. 1164, 1189, and 1262(
General Rule: For Goods, risk borne by Seller
under Res perit domino rule
Chrysler Phil. v. CA, 133 SCRA 567 (1984)
Union Motor Corp v. CA, 361 SCRA 506 (2001)
Loss by Fault of a Party
(Arts. 1480, 1504, 1538)
LOSS BY FORTUITOUS EVENT: Two Schools of
Thought
Arts. 1480, 1163, 1164, 1165
Arts. 1504, 1538, and 1189
53
SUBJECT MATTER LOST:
4.
cont’d
AFTER DELIVERY: BUYER BEARS RISK, UNDER
Res Perit Domino
EXCEPT: When retention of Possession by
Seller for purpose of securing
payment of the Purchase Price
Art. 1504
Song Fo & Co. v. Oria, 33 Phil. 3 (1915)
Lawyer's Coop v. Tabora, 13 SCRA 762 (1965)
Lawyer's Coop v. Narciso, 55 O.G. 3313)
54
REMEDIES FOR CONTRACTS OF SALE
1. REMEDIES OF “UNPAID SELLER” OF GOODS
• Possessory lien (Arts. 1526-1529, 1503, 1535)
• Stoppage in transitu (Arts. 1530-1532, 1535, 1636[2])
• Special Right of Resale (Art. 1533)
• Special Right to Rescind (Art. 1534)
55
2. RECTO
LAW:
SALES OF MOVABLES ON INSTALLMENTS
(a)
Meaning of “Installment Sale”
(b)
Contracts to Sell Movables Not Covered
(c)
Nature of Remedies of Unpaid Seller
Levy v. Gervacio, 69 Phil. 52 (1939)
Visayan Sawmill Co.,
Inc. v. CA, 219 SCRA 378 (1993)
 Remedies under Art. 1484 are not cumulative, but
alternative and exclusive.
Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996)
 Seeking a writ of replevin consistent with all three
remedies
Universal Motors Corp. v. Dy Hian Tat, 28 SCRA 161 (1969)
56
RECTO LAW: cont’d
(d)
REMEDY OF SPECIFIC PERFORMANCE: No bar to full
recovery
Tajanglangit v. Southern Motors, 101 Phil. 606 (1957)
Even when it is mortgaged property that is
sold on execution.
Southern Motors v. Moscoso, 2 SCRA 168 (1961)
Even with replevin and recovery of the
subject property, the action may still be for
specific performance.
Industrial Finance Corp. v. Ramirez, 77 SCRA 152 (1977)
57
RECTO LAW: cont’d
(e)
NATURE OF REMEDY OF RESCISSION
• Inherent “Barring” Effect of Rescission
• Surrender of mortgaged property not
equivalent to rescission.
Vda. de Quiambao v. Manila Motors Co., Inc.,
3 SCRA 444 (1961)
• Stipulation on non-return of payments
is valid provided not unconscionable.
Delta Motor Sales Corp. v. Niu Kim Duan,
213 SCRA 259 (1992)
58
RECTO LAW: cont’d
(f)
REMEDY OF FORECLOSURE
(i)
Third Party Mortgage
Ridad v. Filipinas Investment, 120 SCRA 246 (1983)
(ii)
Assignor-Assignee; Financing Transactions
Zayas v. Luneta Motors, 117 SCRA 726 (1982)
When seller assigns his credit to another,
the assignee is likewise bound by the terms of
the Recto Law.
Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996).
59
RECTO LAW: cont’d
(iii) H-V “Barring” Effects of Foreclosure
Foreclosure on the chattel mortgage
prevents further action on the supporting
real estate mortgage.
Cruz v. Filipinas Investment & Finance Corp.,23 SCRA 791 (1968)
Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996)
(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)
60
RECTO LAW: cont’d
(g)
PURPORTED LEASE WITH OPTION TO BUY:
“Contracts purporting to be leases of personal property
with option to buy, when the lessor has deprived the lessee
of the possession or enjoyment of the thing.” (Art. 1485)
When purported Lessor takes possession of
subject movable, it is treated legally as a foreclosure
and the barring effects applicable to foreclosure
remedy, not rescission, are given application.
Vda. de Jose v. Barrueco, 67 Phil. 191 (1939)
Filinvest Credit Corp. v. CA, 178 SCRA 188 (1989)
U.S. Commercial v. Halili, 93 Phil. 271 (1953)
H.E. Heacock v. Bantal Manufacturing, 66 Phil. 245 (1938)
Manila Gas Corp. v. Calupita, 66 Phil. 747 (19 38)
Vda. de Jose v. Barrueco, 67 Phil. 191 (1939)
61
3. MACEDA LAW: SALES OF RESIDENTIAL REALTY
ON INSTALLMENTS (R.A. 6552)
(a) “Role” of Maceda Law
Lagandaon v. CA, 290 SCRA 463 (1998)
(b)
Transactions Covered
The formal requirements of rescission
under the Maceda Law apply even to contracts
entered into prior to its effectivity.
Siska Dev. Corp. v. Office of the President, 231 SCRA 674 (1994)
BUT SEE:
62
People’s Ind’l and Comm. Corp. v. CA, 281 SCRA 206 (1997)
MACEDA LAW
cont’d
The Maceda Law makes no distinctions
between “option” and “sale” which under P.D.
957 also includes “an exchange or attempt to sell,
an option of sale or purchase, a solicitation of a
sale or an offer to sell directly.”
Realty Exchange Venture Corp. v. Sendino, 233 SCRA 665 (1994)
Curiously: No application to Contract to Sell
“because said law presupposes the
existence of a valid and effective
contract to sell a condominium.”
Mortel v. KASSCO, Inc., 348 SCRA 391, 398 (2000)
63
MACEDA LAW
cont’d
Pursuant to Art. 1253 of Civil Code, in a contract
involving installments with interest chargeable against the
remaining balance of the obligation, it is the duty of the
creditor-seller to inform the debtor-buyer of the interest that
falls due and that is applying the installment payments to
cover said interest. Otherwise, the creditor cannot apply the
payments to the interest and then hold the debtor in default for
non-payment of installments on the principal.
Rapanut v. CA, 246 SCRA 323 (1995)
(c) How Cancellation of Contract Can Be Effected:
Active Realty & Dev. Corp. v. Daroya, 382 SCRA 152 (2002)
64
MACEDA LAW
cont’d
OTHER RIGHTS GRANTED TO BUYER
(a) To sell/assign his rights to another person
(b) To reinstate contract by updating account
during
grace
period,
cancellation of contract
before
actual
(c) To pay in advance installments or in full
unpaid balance of Price any time without
interest and have same annotated in title
Any stipulation in any contract entered
into contrary to the provisions of the Law,
shall be null and void. (Art. 7)
65
4. OTHER REMEDIES ON SALE OF REAL ESTATE
(a)
ANTICIPATORY BREACH (ART. 1591)
(b)
RESCISSION ON SALE ON NONRESIDENTIAL REALTY ON
INSTALLMENTS (Arts. 1191 and 1592)
(c)
66
SEC. 23 AND 24, PRES. DECREE 957
CONTRACTS TO SELL
Versus
CONDITIONAL CONTRACTS OF SALE
 Art. 1458 Defines a Sale to covered both
“Absolute and Conditional”
 Both Contracts are usually bound by same
condition: Full payment of the Price
 Both Contracts are consensual, onerous,
commutative,
and
cover
bilateral
obligations
67
K TO SELL VS. K OF SALE
cont’d
 Power to Rescind is inherently Judicial
 Rescission requires a positive act
 Non-fulfillment of Condition ipso jure
destroys contract
 Substantial Breach Relevant to Contract of
Sale, Irrelevant to Contracts to Sell
68
K TO SELL VS. K OF SALE
1.
cont’d
In Contract to Sell Ownership if Reserved by
Seller, while in a Contract to Sell ownership
transfers to Buyer upon delivery.
Ergo: K to Sell must have express
reservation of ownership
• To execute a formal Deed of Sale
• Only receipt of payment evidences sale
• Seller retained original titles
69
K TO SELL VS. K OF SALE
cont’d
2. “Rescission” of Contract to Sell is a matter
of right upon non-happening of the
condition
Ergo: K to Sell must have express
right to rescind the contract
upon default of the Buyer
 A written notice of “cancellation” must be served
upon Buyer even when Contract to Sell
UP v. Delos Angeles, 35 SCRA 103 (1970)
70
CONDITIONS
versus
WARRANTIES
Power Commercial and Industrial Corp. v. CA
274 SCRA 597 (1997)
(a) Condition goes into root of existence of obligation,
whereas warranty goes into performance of such
obligation, and in fact may constitute an obligation
itself;
(b) Condition must be expressly stipulated by parties,
while warranty may form part of the obligation or
contract by provision of law, without previous
agreement; and
(c) Condition may attach itself either to the Obligations
of Seller, while warranty, express or implied, relates
to the Subject Matter itself or to the obligations of
Seller as to Subject Matter of the sale.
71
CONDITIONS AND WARRANTIES
cont’d
Failure to comply with condition imposed upon perfection
of the contract results in failure of a contract, while the
failure to comply with a condition imposed on the
performance of an obligation only gives the other party the
option either to refuse to proceed with sale or waive the
condition.
Laforteza v. Machuca, 333 SCRA 643 (2000)
In a “Sale with Assumption of Mortgage,” the
assumption of mortgage is a condition to the seller’s consent
so that without approval by the mortgagee, no sale is
perfected. In such case, the seller remains the owner and
mortgagor of the property and retains the right to redeem the
foreclosed property.
Ramos v. CA, 279 SCRA 118 (1997)
72
CONDITIONS AND WARRANTIES
A.
EXPRESS WARRANTIES
cont’d
(Art. 1546)
(a) Must be an affirmation of fact or any promise by the
seller relating to Subject Matter of the sale;
(b) The natural tendency of such affirmation or promise
is to induce Buyer to purchase the thing; and
(c)
Buyer purchases the thing
affirmation or promise thereon.
relying
on
such
The law allows considerable latitude to seller’s
statements, or dealer’s talk; and experience teaches
that it is exceedingly risky to accept it at its face value.
Ramos v. CA, 279 SCRA 118 (1997)
73
CONDITIONS AND WARRANTIES
B.
IMPLIED WARRANTIES
cont’d
(Art. 1547)
1.
SELLER HAS RIGHT TO SELL
2.
WARRANTY AGAINST EVICTION
Seller must be summoned in the suit for eviction at
the instance of the buyer (Art. 1558), and be made a codefendant (Art. 1559); or made a third-party defendant.
Escaler v. CA, 138 SCRA 1 (1985)
Canizares Tiana v. Torrejos, 21 Phil. 127 (1911)
J.M. Tuazon v. CA, 94 SCRA 413 (1979)
74
CONDITIONS AND WARRANTIES
cont’d
3.
WARRANTY AGAINST NON-APPARENT
SERVITUDES
4.
WARRANTY AGAINST HIDDEN DEFECTS
The stipulation in a contract of lease with option to
purchase (which it treated as a sale of movable on
installments) that the buyer-lessee "absolutely releases
the lessor from any liability whatsoever as to any and
all matters in relation to warranty in accordance with
the provisions hereinafter stipulated," was held as an
express waiver of warranty against hidden defect.
Filinvest Credit Corp. v. CA, 178 SCRA 188 (1989)
75
CONDITIONS AND WARRANTIES
cont’d
Nutrimix Feeds Corp. v. CA
441 SCRA 357 (2004)
A hidden defect is one which is unknown or could not
have been known to the buyer. Under the law, the requisites
to recover on account of hidden defects are as follows:
a.
b.
c.
d.
e.
Defect must be hidden;
Must exist at the time the sale was made;
Must ordinarily have been excluded from the contract;
Defect, must be important (render the thing unfit or
considerably decreases fitness);
Action must be instituted within statute of limitations.
The remedy against violation of warranty against hidden
defects is either to withdraw from the contract (accion
redhibitoria) or to demand a proportionate reduction of the
price (accion quanti minoris), with damages in either case.
76
Investments & Dev., Inc. v. CA, 162 SCRA 636 [1988]
CONDITIONS AND WARRANTIES
cont’d
5. REDHIBITORY DEFECTS OF ANIMALS
a. Sale of a Team
b. Animals Sold at Fairs or Public Auction
c. Sale of Animals with Contagious Diseases
d. Sale of Unfit Animals
6. IMPLIED
WARRANTIES IN THE SALE OF GOODS
a. Warranty as to Fitness or Quality
b. Sale of Goods by Sample
7.
77
ADDITIONAL WARRANTIES
FOR CONSUMER
(Arts. 68, Consumer Act of the Philippines, R.A. 7394).
PRODUCTS
CONDITIONS AND WARRANTIES
78
cont’d
C.
EFFECTS OF WARRANTIES
D.
EFFECTS OF WAIVERS
G.
BUYER'S OPTIONS IN CASE OF BREACH OF WARRANTY
EXTINGUISHMENT OF SALE
SALE EXTINGUISHED BY SAME MODES
APPLICABLE TO ALL CONTRACTS
Arts. 1231, 1600
“REDEMPTION”
IS
A MODE
EXTINGUISHMENT UNIQUE TO SALES:
 CONVENTIONAL REDEMPTION: SALE
WITH RIGHT TO REPURCHASE
 LEGAL REDEMPTION
79
OF
CONVENTIONAL REDEMPTION
(SALE WITH A RIGHT TO REPURCHASE)
NATURE OF RIGHT TO REPURCHASE:
 Reserved by Seller at the point of
Perfection.
Art. 1601
Villarica v. CA, 26 SCRA 189 (1968)
 Even though
instrument
found
in
a
separate
Torres v. CA, 216 SCRA 287 (1992)
Claravall v. CA, 190 SCRA 439 (1990)
80
CONVENTIONAL REDEMPTION
cont’d
 Its Validity is Tied to the Validity of the Contract
of Sale to which appended.
Nool v. Court of Appeals, 276 SCRA 149 (1997)
 When Sale Covered by Deed, Right a retro may
be proved by parol evidence.
Mactan Cebu Int’l Airport Authority v. Court of Appeals,
263 SCRA 736 (1996)
81
RIGHT A RETRO versus OPTION CONTRACT
(A) Not separate contract, but
must be part of main
Contract of Sale
(A) Generally principal contract,
but may be appended in
another contract valid
(B) Right to Redeem does
not
need
separate
consideration
(B) Option requires consider-ation
separate and distinct of the
Price in order to be valid
(C) Maximum Period for
(C) Period of Option may be
exercise of Right of
redemption
cannot
exceed 10 years
(D) Right of repurchase requires
in addition the tender of the
amount mandated, including
consignation when tender
not possible
82
beyond 10 years
(D) Option may be exercised
by mere notice to Offeror
SALIENT MATTERS ON
RIGHT OF REDEMPTION
(a)
PERIOD OF REDEMPTION:
 When no Period agreed upon: 4 years
 When
Period agreed
exceed 10 years
 When
Period
Stipulated
of
upon:
cannot
“Non-Redemption”
Anchuel v. IAC, 147 SCRA 434 (1987)
Tayao v. Dulay, 13 SCRA 758 (1965)
83
SALIENT MATTERS ON RIGHT OF
REDEMPTION cont’d
 Pendency of Action Tolls Redemption
Period
Ong Chua v. Carr, 53 Phil. 975 (1929)
 Non-Payment of Price Does Not Affect
Running of Redemption Period
Catangcatang v. Legayada, 84 SCRA 51 (1978)
84
SALIENT MATTERS
(b)
cont’d
HOW REDEMPTION EFFECTED:
Only tender of payment is sufficient.
Legaspi v. CA, 142 SCRA 82 (1986)
Consignation is not required after tender is
refused.
Mariano v. CA, 222 SCRA 736 (1993)
But when tender not possible, consignation
should be made.
Catangcatang v. Legayada, 84 SCRA 51
85
(1978)
SALIENT MATTERS
cont’d
Simply by Filing Judicial Action
Lee Chuy Realty Corp. v. CA, 250 SCRA 596 (1995)
Seller returning to Buyer:

Price of the sale

Expenses of contract, and any other
legitimate payments made by reason of the
sale

Necessary and useful expenses made on
the thing sold
ART. 1616
86
SALIENT MATTERS
cont’d
When Redemption Not Made, Buyer a retro
automatically acquires full ownership.
Oviedo v. Garcia, 40 SCRA 17 (1971)
HOWEVER:
In real property, consolidation shall
not be recorded in the Registry of
Property without a judicial order, after
the seller has been duly heard.
Article 1607
If Seller proves the transaction a sale a retro, he
is given a period of 30 days from finality of
judgment to repurchase.
Solid Homes v. CA, 275 SCRA 267 (1997).
87
EQUITABLE MORTGAGE
DEFINITION AND ELEMENTS
(a) The contract entered into
is
denominated as a Sale (absolute or a
retro); and
(b)
Real intention was to secure an
existing debt by way mortgage
Molina v. CA, 398 SCRA 97 (2003)
88
EQUITABLE MORTGAGE
cont’d
RATIONALE OF EQUITABLE MORTGAGE PRINCIPLE
Prevent circumvention of law on usury and
rule against pactum commissorium, i.e. against
a creditor appropriating the mortgage property.
To end unjust or oppressive transactions or
violations in connection with a sale or property.
Spouses Miseña v. Rongavilla, 303 SCRA 749 (1999).
Matanguihan v. CA, 275 SCRA 380 (1997)
Lao v. CA, 275 SCRA 237 (1997)
89
RULINGS ON EQUITABLE MORTGAGE
Badges of Equitable Mortgage in Art. 1602
Apply both to sale a retro and to a contract
purporting to be an absolute sale.
Tuazon v. CA, 341 SCRA 707 (2000)
Zamora v.CA, 260 SCRA 10 (1996)
Parol evidence is competent and admissible
in support of allegation of equitable mortgage
arrangement.
Mariano v. CA, 220 SCRA 716 (1993)
90
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)
(b) To an agreement between Lender and Borrower
which provides that in the event Borrower fails to
comply with the new terms of payment, the agreement
shall automatically operate to be an instrument of
dacion en pago without need of executing any
document to such an effect.
Solid Homes, Inc. v. CA, 275 SCRA 267 (1997)
91
RULINGS ON EM
CONTRA:
cont’d
P/N stipulation that upon makers’ failure
to pay interests, ownership of property
would automatically be transferred to
Payee and the covering deed of sale
would be registered, is in substance a
pactum commissorium in violation of Art.
2088.
A. Francisco Realty v. CA, 298 SCRA 349 (1998)
A pactum commisorium sale is void, registration
and obtaining of new title by apparent buyer would
also be void.
A. Francisco Realty v. CA, 298 SCRA 349 (1998)
92
REMEDIES UNDER EQUITABLE MORTGAGE
SITUATIONS
Apparent seller can seek reformation of
instrument (Art. 1605).
An action for consolidation of ownership (in
case presented as sale a retro) would be void, and
proper remedy of mortgagee-buyer is to file
appropriate foreclosure of the mortgage in
equity.
Briones-Vasquez vs. CA, 450 SCRA 644 (2005).
93
REMEDIES IN EM
cont’d
Additional 30-day Period of Redemption is
allowed under Art. 1606, in event courts should
find the sale was not equitable mortgage,
provided:
(a) Honest belief that it was equitable mortgage supported
by convincing evidence, such as badges under Art. 1602,
or consignation during trial of the amount of the alleged
loan
Abilla v. Gobonseng, 374 SCRA 51 (2002)
Vda. de Macoy v. CA, 206 SCRA 244 (1992)
94
LEGAL REDEMPTION
DEFINITION AND RATIONALE:
Privilege created by law for reasons of
public policy.
For benefit and convenience of the
redemptioner, to afford him a way out of what
might be a disagreeable or inconvenient
association into which he has been thrust.
Intended to minimize co-ownership.
Fernandez v. Tarun, 391 SCRA 653 (2002)
Basa v. Aguilar, 117 SCRA 128 (1982)
95
LEGAL REDEMPTION cont’d
PERIOD OF LEGAL REDEMPTION BEGINS:
30 DAYS FROM WRITTEN NOTICE
Written notice must cover perfected sale
Art. 1623
Spouses Doromal v. CA, 66 SCRA 575 (1975)
Notice must be given by seller; and that notice given
by buyer or even by the Register of Deeds are not
sufficient.
Francisco v. Boiser, 332 SCRA 305 (2000)
Butte v. Manuel Uy and Sons, Inc., 4 SCRA 526 (1962)
Salatandol v. Retes, 162 SCRA 568 (1988)
96
LEGAL REDEMPTION
cont’d
Seller furnishing of the copies of deeds of sale to
co-owner would be sufficient.
Distrito v. CA, 197 SCRA 606 (1991)
Conejero v. CA, 16 SCRA 775 (1966)
Badillo v. Ferrer, 152 SCRA 407 (1987)
Notice to minors may validly be served upon
parents even when not judicially appointed since
beneficial to the children.
Badillo v. Ferrer, 152 SCRA 407 (1987).
97
LEGAL REDEMPTION cont’d
Deemed complied when co-owners signed
Deed of Extrajudicial Partition embodying
disposition of part of the property owned in
common.
Fernandez v. Tarun, 391 SCRA 653 (2002)
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)
98
INSTANCES OF LEGAL REDEMPTION
(a) Among Co-heirs (Art. 1088)
A co-heir cannot exercise the right of redemption
alone.
De Guzman v. CA, 148 SCRA 75 (1987)
No legal redemption for sale of the property of the
estate.
Plan v. IAC, 135 SCRA 270 (1985)
Written notice to other co-owners deemed inutile by
fact that ebuyers took possession of property in full view
of other co-owners.
Pilapil v. CA, 250 SCRA 560 (1995)
Notice given by city treasurer will not suffice.
Verdad v. CA, 256 SCRA 593 (1996)
99
INSTANCES OF LEGAL REDEMPTION
(b)
cont’d
Among Co-owners (Art. 1620)
Right of legal redemption arises only when shares
of other owners are sold to a “third person,” and not
to another co-owner
Fernandez v. Tarun, 391 SCRA 653 (2002)
Registration of the sale does not estop a co-owner
Cabrera v. Villanueva, 160 SCRA 627 (1988)
Notice required to be given to co-owners must be
in writing; and redemption by co-owner redounds to
the benefit of all other co-owners.
Mariano v. CA, 222 SCRA 736 (1993)
100
INSTANCES OF LEGAL REDEMPTION
cont’d
No written notice required to co-owner who
acted as active intermediary in the
consummation of the sale.
Distrito v. CA, 197 SCRA 606 (1991)
Redemption by co-owner, even when he uses
his own fund, inures to the benefit of all the
other co-owners.
Annie Tan v. CA, 172 SCRA 660 (1989)
101
INSTANCES OF LEGAL REDEMPTION
(c)
cont’d
Among Adjoining Owners (Art. 1621-1622)
Redemption covers only “resale” and does not
cover exchanges or barter of properties
De Santos v. City of Manila, 45 SCRA 409 (1972)
Requisite of “speculation” dropped.
Legaspi v. CA, 69 SCRA 360 (1976)
Does not apply if one adjacent lot is not also
rural land
Primary Structures Corp. v. Valencia, 409 SCRA 371 (2003)
102
INSTANCES OF LEGAL REDEMPTION
cont’d
(d)
Sale of Credit in Litigation (Art. 1634) - 30 days
(e)
Redemption of Homesteads (Sec. 119, C.A. 141)
The right to repurchase is granted by law
and need not be provided for in the deed of sale.
Berin v. CA, 194 SCRA 508 (1991).
103
INSTANCES OF LEGAL REDEMPTION
cont’d
Under the free patent or homestead provisions of
the Public Land Act a period of five (5) years from the
date of conveyance is provided, the five-year period to be
reckoned from the date of the sale and not from the date
of registration in the office of the Register of Deeds.
Lee Chuy Realty Corp. v. CA, 250 SCRA 596 (1995)
For purposes of reckoning the 5-year period to
exercise right of repurchase, the date of conveyance is
construed to refer to date of execution of the deed
transferring the ownership of the land to the buyer.
Mata v. CA, 318 SCRA 416 (1999).
104
INSTANCES OF LEGAL REDEMPTION
(f)
cont’d
Redemption in Tax Sales (Sec. 215, NIRC of 1997)
(g)
Redemption by judgment debtor (Sec. 27, Rule
39, Rules of Civil Procedure)
Period of redemption shall be “at any time within
one (1) year from the date of registration of the
certificate of sale,” so that the period is now to be
understood as composed of 365 days, unlike the 360
days under the old provisions of the Rules of Court
which referred to 12-month redemption period.
Ysmael v. CA, 318 SCRA 215 (1999)
105
INSTANCES OF LEGAL REDEMPTION
cont’d
(h) Redemption in Extrajudicial Foreclosure
One (1) year from registration in the Registry
of Deeds on Mortgage (Sec. 6, Act 3135).
(i)
Redemption in judicial foreclosure of
mortgage
(Sec. 47, General Banking Law of 2000, R.A. 8791).
A stipulation to render the right to redeem
defeasible by an option to buy on the part of the
creditor
Soriano v. Bautista, 6 SCRA 946 (1962)
106
INSTANCES OF LEGAL REDEMPTION
cont’d
No right to redeem from a judicial foreclosure sale,
except those granted by banks or banking institutions
GSIS v. CFI, 175 SCRA 19 (1989).
The one-year redemption period in case of
foreclosure of real estate mortgage is not interrupted by
filing of action assailing validity of mortgage, so that at
the expiration thereof, mortgagee who acquires property
at the foreclosure sale can proceed to have title
consolidated in his name and a writ of possession issued
in his favor.
Union Bank of the Philippines v. CA, 359 SCRA 480 (2001)
Vaca v. CA, 234 SCRA 146 (1994)
107
INSTANCES OF LEGAL REDEMPTION
(j)
cont’d
Redemption in Foreclosure by Rural Banks
Land mortgaged to rural bank under R.A. 720,
may be redeemed within two (2) years from date of
foreclosure or from registration of sheriff's certificate
of sale. If mortgagor fails to exercise such right, heirs
may still repurchase within 5 years from expiration of
2-year redemption period pursuant to Sec. 119 of
Public Land Act (C.A. 141).
Rural Bank of Davao City v. CA, 217 SCRA 554 (1993)
Heirs of Felicidad Canque v. CA, 275 SCRA 741 (1997)
108
INSTANCES OF LEGAL REDEMPTION
(k)
cont’d
Legal Right to Redeem under Agrarian
Reform Code
Sec. 12 of R.A. 3844, grants agricultural lessee
right to redeem within 180 days from notice in
writing and at a reasonable price and
consideration
Quiño v. CA, 291 SCRA 249 (1998)
Redemption right of tenant does not begin to
run without written notice
Springsun Management Systems Corp. v. Camerino,
449 SCRA 65 (2005)
109
END