Sales Villanueva

By:
C CESAR ESAR L. L. VVILLANUEVA ILLANUEVA, B.S.C., C.P.A., LL.B., LL.M., FAICD, D.J.S.
A ATENEO TENEO DE DE MMANILA ANILA LLAW AW S SCHOOL CHOOL
Rockwell Center, Makati City Rockwell Center, Makati City
LLAW AW on S on SALES ALES
R REVIEW EVIEW
D DEFINITION EFINITION (Art. 1458)
PPARTIES ARTIES
OOBLIGATIONS BLIGATIONS
SSELLER ELLER
B BUYER UYER
(1) (1) TO TO TTRANSFER RANSFER
OOWNERSHIP WNERSHIP
(2) (2) TO TO D DELIVER ELIVER
PPOSSESION OSSESION
(3) (3) TO TO PPAY AY
SSUBJECT UBJECT
M MATTER ATTER
PPRICE RICE
GGENERAL ENERAL PPRINCIPLES RINCIPLES
CONSENT
Meeting of Minds
Real Obligation
Real Obligations
SSALE ALE
2
EESSENTIAL SSENTIAL C CHARACTERISTICS OF HARACTERISTICS OF SSALE ALE: :
N NOMINATE OMINATE
PPRINCIPAL RINCIPAL
C CONSENSUAL ONSENSUAL
B BILATERAL/ ILATERAL/
R RECIPROCAL ECIPROCAL
OONEROUS NEROUS
C COMMUTATIVE OMMUTATIVE
vs vs..
TTITLE ITLE
vs vs..
vs vs..
vs vs..
vs vs..
vs vs..
vs vs..
Innominate Innominate
Solemn Solemn Real Real
Unilateral Unilateral
vs vs..
Gratuitious Gratuitious
Mode Mode
Accessory Accessory
Aleatory Aleatory
vs vs..
Prefaratory Prefaratory
3
SSALES ALES versus versus D DONATION ONATION
C CONSENSUAL ONSENSUAL
SSOLEMN OLEMN
OONEROUS/ NEROUS/
C COMMUTATIVE OMMUTATIVE
GGRATUITOUS RATUITOUS
EESSENCE SSENCE: : B BOTH OTH IINVOLVE THE NVOLVE THE TTRANSFER OF RANSFER OF
OOWNERSHIP/ WNERSHIP/PPOSSESSION OF OSSESSION OF
SSUBJECT UBJECT M MATTER ATTER
( (i.e., i.e., 4 4
th th
Requisite of Requisite of
Form for validity) Form for validity)
( (i.e., i.e., Pure Liberality Pure Liberality
as consideration) as consideration)
4
SSALES ALES versus versus B BARTER ARTER: :
B BARTER ARTER IS IS SSALE ALE,, BUT BUT WITH WITH THE THE PPRICE RICE BEING BEING REPLACED REPLACED
WITH WITH AN AN OOBLIGATION BLIGATION TO TO TTRANSFER RANSFER
OOWNERSHIP/ WNERSHIP/PPOSSESSION OSSESSION OF OF ANOTHER ANOTHER
TTHEREFORE HEREFORE: : B BARTER GOVERNED BY ARTER GOVERNED BY LLAW ON AW ON SSALES ALES
B BUT UT: : N NOT OT COVERED COVERED BY BY SSTATUTE TATUTE OF OF FFRAUDS RAUDS
5
SSALES ALES versus versus D DACION EN ACION EN PPAGO AGO: :
D DACION ACION IS IS PPROCESS ROCESS OF OF EEXTINGUISHMENT XTINGUISHMENT OF OF PPRE RE- -
EEXISTING XISTINGOOBLIGATION BLIGATION ( (C CONTRACTS) ONTRACTS)
EESSENTIALLY SSENTIALLY: : D DACION ACION GGOVERNED OVERNED BY BY LLAW ON AW ON SSALES ALES
D DACION ACION NOVATES NOVATES THE THE ORIGINAL ORIGINAL CONTRACTUAL CONTRACTUAL
RELATIONS RELATIONS INTO INTOA A FULLY FULLY EXECUTED EXECUTED SSALE ALE
(a) (a) There There must must be be delivery delivery of of subject subject matter matter in in lieu lieu of of an an
pre pre- -existing existing obligation obligation; ;
(b) (b) There There must must be be difference difference between between prestation prestation due due and and
what what is is give give in in substitute substitute; ;
(c) (c) There There must must be be a a clear clear meeting meeting of of minds minds that that the the
pre pre- -existing existing obligation obligation is is extinguished extinguished by by reason reason of of
the the prestation prestation substituted substituted..
Lo v KJS Eco. Formwork System Phil., Lo v KJS Eco. Formwork System Phil.,
Inc., Inc., 413 SCRA 182 (2003) 413 SCRA 182 (2003)
6 6
SSALES ALES vs vs. . C CONTRACT FOR ONTRACT FOR PPIECE IECE- -OF OF- -WWORK ORK: :
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)
K for Piece-of-Work: Service Service is the Subject Matter
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:
THERE CAN BE NO CONTRACT FOR PIECE-OF-WORK FOR
PAST SERVICE RESULTING IN THE CREATION OF THE OBJECT
(ALWAYS A SALE)
7
SSALES ALES vs vs. . A AGENCY TO GENCY TO SSELL ELL//B BUY UY
A AGENCY GENCY
R REPRESENTATIVE EPRESENTATIVE
FFIDUCIARY IDUCIARY
Essentially revocable Essentially revocable
Fruits Fruits and and of of principal principal
A AGENT GENT
N NOT PERSONNALY LIABLE FOR THE OT PERSONNALY LIABLE FOR THE
OOBLIGATION CREATED BY THE BLIGATION CREATED BY THE SSALE ALE
C CONTRACT ONTRACT
N NOT OBLIGED TO PAY THE OT OBLIGED TO PAY THE PPRICE RICE
D DOES NOT ASSUME THE RISKS OF OES NOT ASSUME THE RISKS OF
OOWNERSHIP TO THE WNERSHIP TO THE OOBJECT OF BJECT OF SSALE ALE
8 8
SSALES ALES vs vs. . A AGENCY TO GENCY TO SSELL/ ELL/B BUY UY Contd Contd
TTHEREFORE HEREFORE: :
A AGENT GENT is is deemed deemed to to be be Seller/Buyer Seller/Buyer
when when contracted contracted to to assume assume Risks Risks and and
Obligations Obligations contrary contrary to to his his representative/ representative/
fiduciary fiduciary role role: :
(a) (a) H HEE ASSUMES ASSUMES OOBLIGATION BLIGATION TO TO PAY PAY THE THE PPRICE RICE
(b) (b) SSUBJECT UBJECT M MATTER ATTER
R RISKS OF ISKS OF LLOSS OSS
IINSURABLE NSURABLE IINTEREST NTEREST
M MAINTENANCE AINTENANCE
9
SSALE ALE versus versus LLEASE EASE: :
LLEASE EASE ESSENTIALLY ESSENTIALLY INVOLVES INVOLVES THE THE
TTEMPORARY EMPORARY EENJOYMENT NJOYMENT OF OF PPOSSESSION OSSESSION OF OF
THE THE SSUBJECT UBJECT M MATTER ATTER
TTREATED REATED AS AS SSALE ALE ON ON
IINSTALLMENTS NSTALLMENTS WHEN WHEN LLEASE EASE
SSTRUCTURED TRUCTURED IN IN SUCH SUCH A A WAY WAY AS AS
TO TO AVOID AVOID A APPLICATION PPLICATION OF OF THE THE
R RECTO ECTO LLAW AW
10
FFEW EWIINSTANCES NSTANCES: :
PPARTIES TO A ARTIES TO A S SALE ALE
(The Essential Element of CONSENT) (The Essential Element of CONSENT)
GGENERAL ENERAL R RULE ULE: :
All All Parties Parties Having Having Capacity Capacity to to Contract Contract
Can Can Be Be Valid Valid Parties Parties To To a a Sale Sale
EXCEPTIONS:
(a) (a) Minors, Demented, Deaf Minors, Demented, Deaf- -Mutes Mutes Sale is Voidable Sale is Voidable
- - Purchase of Necessaries Purchase of Necessaries
- - Emancipation Emancipation
(b) (b) Spouses Spouses (Art. 1490) (Art. 1490)
- - Sales to Third Parties Sales to Third Parties Sale by One Spouse Void Sale by One Spouse Void
- - Sales to Each Other Sales to Each Other Void Void
Except Except: : When When marriage marriage governed governed by by Complete Complete
Separation Separation of of Property Property Regime Regime
By Pre By Pre- -nuptials nuptials
By Judicial decree By Judicial decree
11
OOTHER THER R RELATIVE ELATIVE D DISQUALIFICATIONS ISQUALIFICATIONS (Art. 1491) (Art. 1491)
Guardian Guardian Wards Wards
Agent Agent
Principal Principal
Except Except: : When When granted granted express express power power
to to buy buy principals principals property property
Administrator/ Administrator/
Executor Executor
Estate under administration Estate under administration
Public Officers Public Officers
Government Government property property under under
their their jurisdiction jurisdiction
Judges/Justices/ Judges/Justices/
Court Officers Court Officers
Property Property falling falling in in their their jurisdiction jurisdiction
Lawyers Lawyers Clients property in litigation Clients property in litigation
Except Except: : Contingency fee arrangement Contingency fee arrangement
BUT NOT BUT NOT: : Purchase of Inheritance Rights Purchase of Inheritance Rights
12
S SUBJECT UBJECT MMATTER ATTER
(O (OBLIGATION BLIGATION to Transfer Ownership and Deliver Possession) to Transfer Ownership and Deliver Possession)
1 1.. PPOSSIBLE OSSIBLE TTHING HING
2 2.. LLICIT ICIT
3 3. . D DETERMINATE ETERMINATE
D DETERMINABLE ETERMINABLE
vs vs..
vs vs..
vs vs..
Impossible things Impossible things
Illicit Illicit
Non Non- -Determinable Determinable
GGENERICS ENERICS
R RATIONALE ATIONALE: : Transfer Transfer of of Ownership/Possession Ownership/Possession of of the the
Subject Subject Matter Matter is is the the ESSENCE ESSENCE of of SALE SALE
Obligation Obligation should should therefore therefore not not be be illusory illusory
To To comply comply with with the the Obligatory Obligatory Force Force
principle principle in in Contract Contract Law Law
13
PPRICE & RICE & OOTHER THER C CONSIDERATION ONSIDERATION
(The Obligation to Pay) (The Obligation to Pay)
1. 1. R REAL EAL/T /TRUE RUE vs vs..
FFALSE ALSE
(Reformation) (Reformation)
vs vs..
SSIMULATED IMULATED
(Void) (Void)
2. 2. Money or its Equivalent Money or its Equivalent vs. vs. PPURE URE vs. vs. N NOMINAL OMINAL
VVALUABLE ALUABLE C CONSIDERATION ONSIDERATION LLIBERALITY IBERALITY C CONSIDERATION ONSIDERATION
4 4. M . MANNER OF PAYMENT ANNER OF PAYMENT
vs vs..
U UNASCERTAINABLE NASCERTAINABLE
A ASCERTAINABLE SCERTAINABLE
3. 3. C CERTAIN ERTAIN
R RATIONALE ATIONALE: :
Must Must comply comply with with Obligatory Obligatory Force Force principle principle in in
Contract Contract Law Law
Must Must meet meet Onerous Onerous and and Commutative Commutative
characteristics characteristics of of SALE SALE
14
U UNASCERTAINABLE NASCERTAINABLE
vs. vs.
S STAGES IN TAGES IN LLIFE OF IFE OF S SALE ALE
N NEGOTIATION EGOTIATION
Covers Covers the the period period from from the the time time the the prospective prospective contracting contracting
parties parties indicate indicate interest interest in in the the contract contract up up to to the the time time immediate immediate
before before the the contract contract is is perfected perfected..
PPERFECTION ERFECTION
Takes Takes place place upon upon the the concurrence concurrence of of the the essential essential elements elements
of of the the Sale Sale which which are are: :
the the meeting meeting of of the the minds minds of of the the parties parties
as as to to the the object object of of the the contract contract
upon upon the the price price..
C CONSUMMATION ONSUMMATION
It It begins begins when when the the parties parties perform perform their their respective respective
undertaking undertaking under under the the perfected perfected contract contract of of sale, sale, culminating culminating in in
the the extinguishments extinguishments thereof thereof..
Jovan Land, Inc. v. CA, 268 SCRA 160 (1997)
San Miguel Properties Philippines, Inc. v. Huang, 336 SCRA 737 (2000)
15
PPOLICITACION OLICITACION SSTAGE TAGE
Invitations to make Offers Invitations to make Offers (Proposals) (Proposals)
OOFFERS FFERS
A ACCEPTANCES CCEPTANCES
A AGENCY TO GENCY TO SSELL ELL//TO TO B BUY UY
OOPTION PTION C CONTRACTS ONTRACTS
R RIGHTS OF IGHTS OF FFIRST IRST R REFUSAL EFUSAL
A AGREEMENTS TO GREEMENTS TO EENTER INTO NTER INTO SSERIES OF ERIES OF SSALES ALES
M MUTUAL UTUAL PPROMISES ROMISES TTO O B BUY AND UY AND SSELL ELL
(Contracts to Sell of the First Type) (Contracts to Sell of the First Type)
16
RULES ON OFFERS:
1. Offer is at the complete will of Offeror, who may destroy
it at will prior to acceptance
2. 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. Only a certain Offer when met by an Absolute Acceptance
will give rise to a valid SALE.
17
CERTAIN OFFER
(a) CONTAINS A CLEAR PROMISE TO SELL/TO BUY
(b) COVERS A SUBJECT MATTER THAT IS:
Possible thing
Licit
Determinate or Determinable
(c) COVERS A PRICE OR CONSIDERATION
Real
Valuable
Certain or Ascertainable
With Manner of Payment/Performance
agreed upon
18
ABSOLUTE ACCEPTANCE
(a) NO CONDITION OR AMENDMENT OF THE
TERMS OF THE OFFER
(b) MAY CLARIFY
(c) BUT NEVER TOUCH ON THE
TERMS/COVERAGE OF SUBJECT MATTER
AND TERMS/COVERAGE OF PRICE
19
OOPTION PTION C CONTRACT ONTRACT: :
A ACCEPTANCE CCEPTANCE of O of OFFER FFER to give on Option to Buy/to Sell to give on Option to Buy/to Sell
C CONSIDERATION ONSIDERATION: :
Anything Anything separate separate and and distinct distinct from from
Price Price
SSUBJECT UBJECT M MATTER ATTER: :
Option Option or or Privilege Privilege to to Sell/ Sell/ Purchase Purchase: :
A AN N OOBJECT BJECT: : AT A AT A PPRICE RICE: :
- - Possible Possible - - Real Real
- - Licit Licit - - Valuable Valuable
- - Determinate/ Determinate/ - - Certain/ Certain/
Determinable Ascertainable Determinable Ascertainable
20
1. 1. If If no no separate separate consideration consideration,, Option Option Contract Contract
void, void, but but may may constitute constitute certain certain Offer Offer which which can can
be be withdrawn withdrawn by by Offeror, Offeror, but but if if accepted accepted before before
withdrawal withdrawal would would give give rise rise to to a a valid valid Sale Sale
( (Sanchez Sanchez vv.. Rigos Rigos doctrine) doctrine)
2. 2. If If withdrawal withdrawal of of option/offer option/offer whimsical whimsical or or
arbitrary, arbitrary, could could give give rise rise to to damage damage claim claim under under
Art Art.. 19 19 of of Civil Civil Code Code
3 3.. When When there there is is separate separate consideration consideration,, an an
Option Option Contract Contract deemed deemed perfected perfected: :
Ang Yu Asuncion v. Court of Appeals Ang Yu Asuncion v. Court of Appeals
238 SCRA 602 (1994) 238 SCRA 602 (1994)
21
(a) (a) If If exercised exercised within within option option period, period, gives gives rise rise
to to Sale, Sale, which which can can be be enforced enforced by by specific specific
performance performance
(b) (b) Would Would be be a a breach breach of of the the Option Option Contract, Contract, for for
Offeror Offeror to to withdraw withdraw the the offer offer during during the the agreed agreed
period, period, but but withdrawal withdrawal destroys destroys nevertheless nevertheless
the the Option Option
Ang Yu Asuncion v. Court of Appeals Ang Yu Asuncion v. Court of Appeals contd contd
22
Optionee Optionee- -Offeree Offeree ay ay not not sue sue for for specific specific
perfor ance perfor ance on on the the ale ale since since it it has has failed failed
to to reach reach its its own own perfection perfection stage stage
Optioner Optioner- -Offeror, Offeror, however, however, renders renders hi self hi self
liable liable for for da ages da ages for for breach breach of of option option
(c) (c) But But if, if, however, however, Optioner Optioner- -Offeror Offeror withdraws withdraws
Offer Offer even even during during option option period period before before its its
acceptance acceptance ( (ii..e e..,, exercise) exercise): :
R RIGHT OF IGHT OF FFIRST IRST R REFUSAL EFUSAL
OOFFEROR FFEROR BOUNDS BOUNDS HIMSELF HIMSELF TO TO FIRST FIRST
OFFER OFFER SSUBJECT UBJECT M MATTER ATTER TO TO OOFFEREE FFEREE
FOR FOR SSALE ALE
IIN THE N THE EEVENT VENT OOFFEROR FFEROR EEVER VER D DECIDES ECIDES
TO TO SSELL ELL IITT
Possible thing Possible thing
Licit Licit
Determinate/Determinable Determinate/Determinable
PPRICE RICE: : THAT WILL THAT WILL TTHEN (H HEN (HAPPENING APPENING OF OF C CONDITION ONDITION) BE ) BE
A AGREED UPON GREED UPON
23 23
EESSENCE SSENCE: :
C CONDITION ONDITION: :
D DOCTRINES ON OCTRINES ON R RIGHTS OF IGHTS OF FFIRST IRST R REFUSAL EFUSAL
Ang Yu Asuncion v. Court of Appeals Ang Yu Asuncion v. Court of Appeals
Generally, Generally, RFRs RFRs would would be be none none contracts, contracts, for for
lack lack of of cause cause or or consideration, consideration, or or failure failure to to agree agree
the the valid valid Price Price for for the the expectant expectant contract contract
Merely Merely innovative innovative juridical juridical relation relation
RFR RFR
Cannot Cannot be be enforced enforced by by specific specific performance performance
Not Not being being a a Contract, Contract, it it lacks lacks essence essence of of
consensuality, consensuality, obligatory obligatory force force or or mutuality mutuality
Breach Breach allows allows recovery recovery of of damage damage based based on on Art Art.. 19 19
principle principle of of Abuse Abuse of of right right
24
Equatorial Realty Dev., Inc. v. Mayfair Theater Equatorial Realty Dev., Inc. v. Mayfair Theater
264 SCRA 483 (1996) 264 SCRA 483 (1996)
D DOCTRINES ON OCTRINES ON RFR RFR contd contd
When When RFR RFR attached attached to to a a valid valid principal principal contract contract
( (e e..gg.. Lease), Lease), its its enforcement enforcement takes takes its its vitality vitality from from
the the obligatory obligatory force force of of the the principal principal contract contract
Such Such RFR, RFR, when when breached breached may may be be enforced, enforced, at at the the
Price Price at at which which Subject Subject Matter Matter sold sold to to Third Third Party Party
The The Third Third- -Party Party Buyers Buyers purchase purchase may may be be
rescinded rescinded under under accion accion pauliana pauliana,, ii..e e..,, entered entered into into
in in breach breach and and in in fraud fraud of of Optionees Optionees contractual contractual
right right
25
Paraaque Kings Enterprises v. CA Paraaque Kings Enterprises v. CA
268 SCRA 727 (1997) 268 SCRA 727 (1997)
D DOCTRINES ON OCTRINES ON RFR RFR contd contd
RFR RFR is is complied complied with with by by first first offering offering the the Subject Subject
Matter Matter to to the the Optionee Optionee and and negotiating negotiating for for a a Sale Sale
There There is is no no obligation obligation to to reach reach a a sale, sale,
obligation obligation is is to to negotiate negotiate in in good good faith faith
Only Only when when negotiations negotiations do do not not ripen ripen into into a a Sale, Sale,
can can Subject Subject Matter Matter be be offered offered to to Third Third- -Party Party
Buyer, Buyer, but but at at same same price price and and terms terms asked asked of of the the
Optionee Optionee
Otherwise, Otherwise, must must re re- -offer offer under under new new terms terms to to
Optionee Optionee
26
A AGREEMENTS TO GREEMENTS TO EENTER INTO NTER INTO FFUTURE UTURE SSALE ALE
OR OR SSERIES OF ERIES OF SSALES ALES: :
- - National Grains Authority National Grains Authority v. v. IAC, IAC, 171 SCRA 131 (1989) 171 SCRA 131 (1989)
- - Johannes Schuback v. Court of Appeals, Johannes Schuback v. Court of Appeals, 227 SCRA 719 (1993) 227 SCRA 719 (1993)
(1) (1) D DISTRIBUTION/ ISTRIBUTION/ SSUPPLY UPPLY A AGREEMENT GREEMENT
27
EESSENCE SSENCE: :
An Agreement to enter into a series An Agreement to enter into a series
of Contracts of Sale of Contracts of Sale
Obligations to do To enter into a Obligations to do To enter into a
Contract of Sale Contract of Sale
(2) (2) M MUTUAL UTUAL PPROMISES ROMISES TO TO B BUY UY AND AND TO TO SSELL ELL
(C (CONTRACTS TO ONTRACTS TO SSELL) ELL)
M MUTUAL UTUAL PPROMISES TO ROMISES TO B BUY AND UY AND SSELL ELL
(C (CONTRACTS TO ONTRACTS TO SSELL) ELL)
1. 1. A AGREEMENTS GREEMENTS TO TO EENTER NTER INTO INTO C CONTRACT ONTRACT OF OF
SSALE ALE UPON UPON H HAPPENING APPENING OF THE OF THE C CONDITIONS ONDITIONS
Essentially, contains Obligations to do: Essentially, contains Obligations to do: to to
enter into a Sale enter into a Sale
2 2.. C CONDITIONAL ONDITIONAL C CONTRACT ONTRACT OF OF SSALE ALE WHERE WHERE THE THE
B BILATERAL ILATERAL OOBLIGATIONS BLIGATIONS TO TO B BUY UY AND AND SSELL ELL HAVE HAVE
BEEN BEEN A AGREED GREED U UPON PON,, BUT BUT SSUBJECT UBJECT TO TO SSUSPENSIVE USPENSIVE
C CONDITION ONDITION
Condition Condition usually usually is is the the full full payment payment of of the the
price price
28
PPERFECTION ERFECTION S STAGE TAGE
PPERFECTION ERFECTION HAPPENS HAPPENS WHEN WHEN A A C CERTAIN ERTAIN
OOFFER FFER HAS HAS BEEN BEEN MET MET BY BY AN AN A ABSOLUTE BSOLUTE
A ACCEPTANCE CCEPTANCE
TTHE HE ONLY ONLY POINT POINT IN IN TIME TIME TTOO D DETERMINE ETERMINE THE THE
VVALIDITY ALIDITY OR OR IINVALIDITY NVALIDITY OF OF A A C CONTRACT ONTRACT OF OF SSALE ALE
EESTABLISHES THE STABLISHES THE C CONTRACTUAL ONTRACTUAL PPRINCIPLES OF: RINCIPLES OF:
CONSENSUALITY CONSENSUALITY
MUTUALITY OR OBLIGATORY FORCE MUTUALITY OR OBLIGATORY FORCE
RELATIVITY RELATIVITY
29
Birth sets the essence of the Sale Birth sets the essence of the Sale
FFORM OF ORM OF S SALE ALE
GGENERALLY ENERALLY: :
None, because Sale is None, because Sale is consensual consensual
contract contract
FFOR OR EENFORCEABILITY NFORCEABILITY: : SSTATUTE OF TATUTE OF FFRAUDS RAUDS
1 1.. Sale Sale which which by by its its terms terms is is not not to to be be
performed performed within within one one ( (1 1) ) year year..
2. 2. Sale of Movables, at least P500 Sale of Movables, at least P500
3 3. Sale of Immovables, at any price . Sale of Immovables, at any price
Must be in writing signed by the party Must be in writing signed by the party
sought to be bound sought to be bound
30
FFORM OF ORM OF SSALE ALE contd contd
Memo must contain Description of: Memo must contain Description of:
(a) (a) SSUBJECT UBJECT M MATTER ATTER
Possible thing Possible thing
Licit Licit
Determinate/ Determinate/
Determinable Determinable
(b) (b) PPRICE RICE
real real
valuable valuable
certain/ascertainable certain/ascertainable
manner of payment provided manner of payment provided
OOR R PPARTIALLY ARTIALLY EEXECUTED XECUTED (Estoppel) (Estoppel)
OOR R WWAIVER AIVER OF OF A ADDUCEMENT DDUCEMENT OF OF OORAL RAL EEVIDENCE VIDENCE AT AT
TRIAL TRIAL
31
(c) (c) SSIGNED BY THE PARTY SOUGHT TO BE CHARGED IGNED BY THE PARTY SOUGHT TO BE CHARGED
Exception Exception: Electronic Document : Electronic Document
FORM OF SALE contd
What Constitutes Partial Execution? What Constitutes Partial Execution?
(a) (a) Performance Must Performance Must
Touch Upon Touch Upon
Subject Matter Subject Matter
Price Price
Cannot Cover Other Cannot Cover Other
Consideration Consideration
(b) (b) Must Involve/Compromise Party Sought to Must Involve/Compromise Party Sought to
be Charged be Charged
32
FFORMS THAT ORMS THAT VVOID OID C CONTRACT OF ONTRACT OF SSALE: ALE:
1 1. . SSALE OF ALE OF R REALTY THROUGH EALTY THROUGH A AGENT: GENT:
A AGENTS GENTS AUTHORITY AUTHORITY MUST MUST BE BE IN IN WWRITING RITING
SSALE ALE VVOID OID: :
- - EEVEN VEN IF IF D DEED EED OF OF SSALE ALE IN IN
WRITING WRITING and/or and/or NOTARIZED NOTARIZED
- - EEVEN VEN IF IF THERE THERE HAS HAS BEEN BEEN
PPARTIAL/ ARTIAL/ FFULL ULL PPAYMENT AYMENT
- - EEVEN VEN IF IF THERE THERE HAS HAS BEEN BEEN
DELIVERY DELIVERY OF OF SSUBJECT UBJECT M MATTER ATTER
- - EEVEN VEN IF IF SALE SALE REGISTERED REGISTERED
33 33
OOTHERWISE THERWISE: :
SSALES OF ALES OF IIMMOVABLES MMOVABLES
1. 1. PPRIVATE RIVATE D DOCUMENT OCUMENT N NEEDED EEDED TO TO BE BE EENFORCEABLE NFORCEABLE
B BETWEEN ETWEEN PPARTIES ARTIES
EEXCEPT XCEPT: : PPARTIAL ARTIAL EEXECUTION/ XECUTION/WWAIVER AIVER
2. 2. M MUST UST B BE E IIN A N A PPUBLIC UBLIC IINSTRUMENT NSTRUMENT
- -TTO O B BIND THE IND THE PPUBLIC UBLIC
- -TTO O B BE E R REGISTRABLE WITH EGISTRABLE WITH R REGISTRY OF EGISTRY OF D DEEDS EEDS
3 3.. FFOR OR R REAL EAL EESTATE STATE,, M MUST UST B BEE R REGISTERED EGISTERED TO TO B BEE VVALID ALID
AND AND B BINDING INDING A AGAINST GAINST THE THE WWORD ORD
34
- - Authority of Agent must be in writing Authority of Agent must be in writing VOID VOID
- - Bound by actual possession situation, otherwise Bound by actual possession situation, otherwise
not in good faith not in good faith
C CONSUMMATION ONSUMMATION S STAGE TAGE
EEFFECTS OF FFECTS OF C CONDITIONS ONDITIONS
EEXPRESS XPRESS WWARRANTIES ARRANTIES
IIMPLIED MPLIED WWARRANTIES ARRANTIES
(3) (3) R REMEDIES EMEDIES
(1) PERFORMANCE
DELIVERY OF
SUBJECT MATTER
PAYMENT OF PRICE
(5) (5) EEXTINGUISHMENT XTINGUISHMENT
C CONVENTIONAL ONVENTIONAL
R REDEMPTION EDEMPTION
(SALE A (SALE A RETRO) RETRO)
EEQUITABLE QUITABLE
M MORTGAGES ORTGAGES
LLEGAL EGAL
R REDEMPTION EDEMPTION
(2) (2) R RISK OF ISK OF LLOSS OSS
(4) (4) C CONDITIONS AND ONDITIONS AND
WWARRANTIES ARRANTIES
SSPECIFIC PERFORMANCE PECIFIC PERFORMANCE
R RESCISSION ESCISSION
D DOUBLE OUBLE SSALES ALES R RULE ULE
SSUBDIVISION LOTS & UBDIVISION LOTS &
C CONDO UNITS ONDO UNITS R RULES ULES
R RECTO ECTO LLAW AW
M MACEDA ACEDA LLAW AW
35
OOBLIGATIONS OF BLIGATIONS OF SSELLER ELLER
1. 1. TTO O PPRESERVE RESERVE THE THE TTHING HINGWITH WITH D DILIGENCE OF A ILIGENCE OF A
GGOOD OOD FFATHER OF A ATHER OF A FFAMILY AMILY
2. 2. TTOO DELIVER DELIVER THE THE SUBJECT MATTER SUBJECT MATTER
3. 3. To D To DELIVER ELIVER FFRUITS RUITS, A , ACCESSORIES CCESSORIES AND AND
A ACCESSIONS CCESSIONS
4 4. To C . To COMPLY OMPLY WITH WITH WWARRANTIES ARRANTIES
OOBLIGATIONS OF BLIGATIONS OF B BUYER UYER
1. 1. TTO O PPAY THE AY THE PRICE PRICE
2. 2. TTO O A ACCEPT CCEPT D DELIVERY OF ELIVERY OF SSUBJECT UBJECT M MATTER ATTER
36 36
D DELIVERY OF ELIVERY OF SSUBJECT UBJECT M MATTER ATTER
TTRADITION RADITIONAS THE AS THE M MODE ODE
TO TO TTRANSFER RANSFER OOWNERSHIP WNERSHIP
- Actual or Physical Delivery Actual or Physical Delivery
- - Constructive Delivery Constructive Delivery
37
M MAGIC AGIC OF OF
TTRADITION RADITION
Fulfillment Fulfillment of of the the Primary Primary
Obligation Obligation of of the the Seller Seller
Transfer Ownership/ Transfer Ownership/
Possession to the Buyer Possession to the Buyer
EEXECUTION OF XECUTION OF PPUBLIC UBLIC IINSTRUMENT NSTRUMENT
- - No Contrary Stipulation/ Intention No Contrary Stipulation/ Intention
- - Seller Must Have Control Seller Must Have Control
- - Passage of Reasonable Time Passage of Reasonable Time
EEXCEPTION XCEPTION: : WWHEN HEN B BUYER UYER TTAKES THE AKES THE R RISK ISK
D DOCTRINES ON OCTRINES ON C CONSTRUCTIVE ONSTRUCTIVE D DELIVERY ELIVERY
Produces Produces the the Same Same Magic Magic of of
Actual Actual Delivery Delivery
C CONSTRUCTIVE ONSTRUCTIVE D DELIVERY ELIVERY
C CONSTITUTUM ONSTITUTUM PPOSSESORIUM OSSESORIUM
TTRADITIO RADITIO B BREVI REVI M MANU ANU
TTRADITIO RADITIO LLONGA ONGA M MANU OR ANU OR SSYMBOLIC DELVERY YMBOLIC DELVERY
39
D DELIVERY ELIVERY TTHROUGH HROUGH C CARRIER ARRIER
- - FAS FAS
- - FOB FOB
- - CIF CIF
D DOCUMENTS OCUMENTS TO TO TTITLE ITLE
D DELIVERY ELIVERY FOR FOR
IINTANGIBLES NTANGIBLES
Public Instrument Public Instrument
Transfer/Negotiation Transfer/Negotiation of of the the Title Title
Evidences Evidences the the Intangible Intangible
Enjoyment Enjoyment of of Rights Rights and and Privileges Privileges with with
the the consent consent of of the the Seller Seller
R RULES ON ULES ON D DOUBLE OUBLE SSALES ALES U UNDER NDER A ART. RT. 1544 1544
1 1. . FFOR OR M MOVABLES OVABLES: :
First to Possess, in good faith First to Possess, in good faith
Oldest Title, in good faith Oldest Title, in good faith
Then Then: : First in time, priority in rights First in time, priority in rights
2 2. . FFOR OR IIMMOVABLES MMOVABLES: :
First to Register, in good faith First to Register, in good faith
First to Possess, in good faith First to Possess, in good faith
Oldest Title, in good faith Oldest Title, in good faith
Then Then: : First in time, priority in rights First in time, priority in rights
40
R REQUISITES FOR EQUISITES FOR A ART. RT. 1544 1544 TO TO A APPLY PPLY
Cheng v. Genato, Cheng v. Genato, 300 SCRA 722 (1998 300 SCRA 722 (1998) )
(a) (a) The The two two (or (or more) more) sales sales transactions transactions must must
constitute constitute valid valid Sales Sales; ;
(b) (b) The The two two (or (or more) more) sales sales transactions transactions must must pertain pertain
to to exactly exactly the the same same Subject Subject Matter Matter; ;
(c) (c) The The two two (or (or more) more) Buyers Buyers at at odds odds over over the the rightful rightful
ownership ownership of of the the Subject Subject Matter Matter must must each each
represent represent conflicting conflicting interests interests; ; and and
(d) (d) The The two two (or (or more) more) Buyers Buyers at at odds odds over over the the rightful rightful
ownership ownership of of the the Subject Subject Matter Matter must must each each have have
bought bought from from the the very very same same Seller Seller
Consolidated Rural Bank (Cagayan Valley Consolidated Rural Bank (Cagayan Valley), ), Inc. v. CA, Inc. v. CA, 448 448
SCRA 347 (2005) SCRA 347 (2005)
41
EEFFECTS OF FFECTS OF A ART. RT. 1544 1544 R REQUISITES EQUISITES
Not Not applicable applicable where where one one of of the the
Sales Sales is is Void Void
Not Not applicable applicable to to Contracts Contracts to to Sell Sell
Not Not applicable applicable if if first first sale sale is is the the
Subject Subject Matter Matter and and the the second second sale sale
is is the the redemption redemption right right to to the the
Subject Subject Matter Matter
42
D DOCTRINES ON OCTRINES ON A ART. RT. 1544 1544 D DOUBLE OUBLE SSALES ALES R RULES ULES
(a) (a) Rules Rules under under Art Art.. 1544 1544 are are addressed addressed to to the the
Second Second Buyer, Buyer, who who is is mandated mandated to to do do
positive positive things things if if he he hopes hopes to to win win at at all all
Carbonell v. CA Carbonell v. CA, 69 SCRA 99 (1976) , 69 SCRA 99 (1976)
Uraca v. CA, Uraca v. CA, 278 SCRA 702 (1997) 278 SCRA 702 (1997)
Consolidated Rural Bank (Cagayan Valley), Inc. v. CA Consolidated Rural Bank (Cagayan Valley), Inc. v. CA, 448 , 448
SCRA 347 (2005) SCRA 347 (2005)
First First Buyer Buyer wins wins by by being being first first (first (first in in
time) time) and and does does not not need need the the benefits benefits
of of Art Art.. 1544 1544
43
D DOCTRINES ON OCTRINES ON A ART. RT. 1544 1544 contd contd
(b) (b) First First Buyer Buyer wins wins by by virtue virtue of of greater greater
doctrine doctrine of of first first in in time, time, priority priority in in rights rights
(c) (c) Second Second Buyer Buyer must must register register his his purchase purchase
while while in in good good faith faith if if he he hopes hopes to to win win: :
(d) (d) First First Buyer, Buyer, who who is is always always in in good good faith, faith,
when when he he registers registers ahead, ahead, wins wins became became
second second buyer buyer in in hopeless hopeless
(e) (e) Even Even if if Second Second Buyer Buyer was was first first to to possess possess
in in good good faith, faith, the the subsequent subsequent registration registration
by by First First Buyer Buyer prevails prevails
Taedo v. CA, Taedo v. CA, 252 SCRA 80 (1996 252 SCRA 80 (1996) )
44 44
(f) (f) Knowledge Knowledge of of the the First First Buyer Buyer of of the the
second second sale sale does does not not adversely adversely affect affect
First First Buyer, Buyer, nor nor does does it it constitute constitute
registration registration in in favor favor of of the the Second Second Buyer Buyer
(g) (g) However, However, knowledge knowledge of of the the Second Second Buyer Buyer
of of the the first first sale, sale, would would place place him him not not only only
in in bad bad faith, faith, but but would would constitute constitute
registration registration in in favor favor of of the the First First Buyer Buyer
Cruz v. Cabana, Cruz v. Cabana, 129 SCRA 656 (1984) 129 SCRA 656 (1984)
45
(h) (h) It It seems seems that that Second Second Buyer Buyer must must have have
paid paid in in full full the the Price Price to to gain gain the the benefit benefit
under under Art Art.. 1544 1544,, as as the the Court Court defines defines the the
meaning meaning of of good good faith faith to to include include
having having paid paid full full value value
Heirs of Aguilar Heirs of Aguilar- -Reyes v. Spouses Mijares, Reyes v. Spouses Mijares, 410 SCRA 97 (2003) 410 SCRA 97 (2003)
Tanongon v. Samson Tanongon v. Samson, 382 SCRA 130 (2002) , 382 SCRA 130 (2002)
Balatbat v. CA Balatbat v. CA, 261 SCRA 128 (1996) , 261 SCRA 128 (1996)
Agricultural and Home Extension Dev. v. CA Agricultural and Home Extension Dev. v. CA, 213 SCRA 536 (1992) , 213 SCRA 536 (1992)
46 46
GGLOBAL LOBAL R RULES ON ULES ON D DOUBLE OUBLE SSALE FOR ALE FOR R REAL EAL EESTATE STATE
I. I. First First to to Register, Register, in in Good Good Faith Faith and and for for Value, Value, his his
Purchase Purchase of of Land Land registered registered under under the the Torrens Torrens
System System wins, wins, for for registration registration is is the the Operative Operative
Act Act (Does (Does not not matter matter whether whether he he is is First First or or
Second Second Buyer) Buyer)
II. II. For For Unregistered Unregistered Land, Land, as as between between a a
conventional conventional prior prior purchase, purchase, and and a a second second
purchase purchase at at public public auction, auction, the the first first
Conventional Conventional Buyer Buyer wins, wins, since since the the Buyer Buyer at at
public public sale sale is is bound bound by by the the provisions provisions of of the the
Rules Rules of of Court Court that that says says he he only only takes takes whatever whatever
is is the the remaining remaining title title of of the the judgment judgment debtor debtor..
47
III. III. The The Rules Rules of of Double Double Sale Sale under under Art Art.. 1544 1544 shall shall
apply, apply, only only when when the the requisites requisites under under Cheng Cheng v v..
Genato Genato are are present, present, as as follows follows: :
1. 1. First to Register in good faith First to Register in good faith
But this can only apply to unregistered But this can only apply to unregistered
land, because Rule I applies to registered land, because Rule I applies to registered
land. land.
2. 2. First to Possess in good faith, or First to Possess in good faith, or
3. 3. Oldest Title, in good faith Oldest Title, in good faith
IV. IV. First in time, priority in rights First in time, priority in rights applies last applies last
48
GGLOBAL LOBAL R RULES ON ULES ON D DOUBLE OUBLE SSALE ALE contd contd
SSALE ALE AND AND D DELIVERY ELIVERY BY BY N NON ON- -OWNER OWNER
GGENERAL ENERAL R RULE ULE: :
Nemo Dat Quod Non Habet Nemo Dat Quod Non Habet
SSPECIAL PECIAL R RULES: ULES:
1. 1. Sale and Delivery, with subsequent Sale and Delivery, with subsequent
acquisition of title by owner (Art. 1434), acquisition of title by owner (Art. 1434), ipso ipso
jure jure transfers title to Buyer transfers title to Buyer
2. 2. Sale by Co Sale by Co- -Owner Owner
- - particular portion particular portion
- - whole property whole property
3. 3. Estoppel on the Part of the True Owner (Art. 1426) Estoppel on the Part of the True Owner (Art. 1426)
49
3. 3. Chain of Title Theory Chain of Title Theory under the Torrens under the Torrens
System System
4. 4. Sales by Court Authority Sales by Court Authority
5. 5. Sales in Merchant Stores Sales in Merchant Stores
6. 6. Sales by One Having Voidable Title Prior Sales by One Having Voidable Title Prior
to Annulment to Annulment
7. 7. Sale under Documents of Title Sale under Documents of Title
SSALE AND ALE AND D DELIVERY BY ELIVERY BY N NON ON- -OWNER OWNER contd contd
50
R RULES ULES FOR FOR D DETERIORATION, ETERIORATION, FFRUITS RUITS
AND AND IIMPROVEMENTS MPROVEMENTS
R RULES HAVE NO APPLICATION IS SUBJECT ULES HAVE NO APPLICATION IS SUBJECT
MATTER IS MERELY DETERMINABLE (Art. 1263) MATTER IS MERELY DETERMINABLE (Art. 1263)
R ROMAN OMAN LLAW AW D DOCTRINE OCTRINE: : Buyer Buyer bears bears the the
consequences consequences of of
Deterioration, Deterioration, but but
benefits benefits from from the the Fruits Fruits
and and Improvements Improvements
Arts. 1480, 1163 Arts. 1480, 1163- -1262 1262
Arts. 1189, 1537 and 1538 Arts. 1189, 1537 and 1538
51 51
R RULES WHEN ULES WHEN SSUBJECT UBJECT M MATTER ATTER LLOST OST: :
1 1. . B BEFORE EFORE PPERFECTION ERFECTION: : Res Perit Domino Res Perit Domino
Roman v. Grimalt Roman v. Grimalt, 6 Phil. 96 (1906) , 6 Phil. 96 (1906)
2 2. A . ATT TTIME OF IME OF PPERFECTION ERFECTION: Seller : Seller (Arts. 1493 and 1494) (Arts. 1493 and 1494)
Sale is rendered inefficacious Sale is rendered inefficacious
52 52
General General Rule Rule: : For For Goods, Goods, risk risk borne borne by by Seller Seller
under under Res Res perit perit domino domino rule rule
Chrysler Phil. v. CA, Chrysler Phil. v. CA, 133 SCRA 567 (1984) 133 SCRA 567 (1984)
Union Motor Corp v. CA Union Motor Corp v. CA, 361 SCRA 506 (2001) , 361 SCRA 506 (2001)
Loss by Fault of a Party Loss by Fault of a Party (Arts. 1480, 1504, 1538) (Arts. 1480, 1504, 1538)
LLOSS OSS BY BY FFORTUITOUS ORTUITOUS EEVENT VENT: : Two Schools of Two Schools of
Thought Thought
Arts. 1480, 1163, 1164, 1165 Arts. 1480, 1163, 1164, 1165
Arts. 1504, 1538, and 1189 Arts. 1504, 1538, and 1189
SSUBJECT MATTER LOST: UBJECT MATTER LOST: contd contd
53
3 3. A . AFTER FTER PPERFECTION ERFECTION BUT BUT B BEFORE EFORE D DELIVERY ELIVERY
Arts Arts.. 1164 1164,, 1189 1189,, and and 1262 1262( (
SSUBJECT MATTER LOST: UBJECT MATTER LOST: contd contd
4 4. A . AFTER FTER D DELIVERY ELIVERY: B : BUYER BEARS RISK UYER BEARS RISK, , UNDER UNDER
Res Perit Domino Res Perit Domino
Art. 1504 Art. 1504
Song Fo & Co. v. Oria Song Fo & Co. v. Oria, 33 Phil. 3 (1915) , 33 Phil. 3 (1915)
Lawyer's Coop v. Tabora Lawyer's Coop v. Tabora, 13 SCRA 762 (1965) , 13 SCRA 762 (1965)
Lawyer's Coop v. Narciso Lawyer's Coop v. Narciso, 55 O.G. 3313) , 55 O.G. 3313)
EEXCEPT XCEPT: : When When retention retention of of Possession Possession by by
Seller Seller for for purpose purpose of of securing securing
payment payment of of the the Purchase Purchase Price Price
54 54
R REMEDIES FOR EMEDIES FOR C CONTRACTS OF ONTRACTS OF SSALE ALE
1. 1. R REMEDIES OF EMEDIES OF U UNPAID NPAID SSELLER OF ELLER OF GGOODS OODS
Possessory lien Possessory lien (Arts. 1526 (Arts. 1526- -1529, 1503, 1535) 1529, 1503, 1535)
Stoppage Stoppage in transitu in transitu (Arts. 1530 (Arts. 1530- -1532, 1535, 1636[2]) 1532, 1535, 1636[2])
Special Right of Resale Special Right of Resale (Art. 1533) (Art. 1533)
Special Right to Rescind Special Right to Rescind (Art. 1534) (Art. 1534)
55 55
2. 2. R RECTO ECTO LLAW: AW: SSALES OF ALES OF M MOVABLES ON OVABLES ON IINSTALLMENTS NSTALLMENTS
(a) (a) Meaning Meaning of of Installment Installment Sale Sale Levy Levy vv.. Gervacio Gervacio,, 69 69 Phil Phil.. 52 52 ( (1939 1939) )
(b) (b) Contracts Contracts to to Sell Sell Movables Movables Not Not Covered Covered Visayan Visayan Sawmill Sawmill Co Co..,,
Inc Inc.. vv.. CA CA,, 219 219 SCRA SCRA378 378 ( (1993 1993) )
(c) (c) Nature of Remedies of Unpaid Seller Nature of Remedies of Unpaid Seller
Remedies under Art. 1484 are not cumulative, but Remedies under Art. 1484 are not cumulative, but
alternative and exclusive. alternative and exclusive.
Borbon II v. Servicewide Specialists, Inc., Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996) 258 SCRA 634 (1996)
Seeking a writ of replevin consistent with all three Seeking a writ of replevin consistent with all three
remedies remedies
Universal Motors Corp. v. Dy Hian Tat, Universal Motors Corp. v. Dy Hian Tat, 28 SCRA 161 (1969) 28 SCRA 161 (1969)
56 56
(d) (d) R REMEDY OF EMEDY OF SSPECIFIC PECIFIC PPERFORMANCE ERFORMANCE: No bar to full : No bar to full
recovery recovery
Tajanglangit v. Southern Motors Tajanglangit v. Southern Motors, 101 Phil. 606 (1957) , 101 Phil. 606 (1957)
R RECTO ECTO LLAW: AW: contd contd
Even Even when when it it is is mortgaged mortgaged property property that that is is
sold sold on on execution execution..
Southern Motors v. Moscoso, Southern Motors v. Moscoso, 2 SCRA 168 (1961) 2 SCRA 168 (1961)
Even Even with with replevin replevin and and recovery recovery of of the the
subject subject property, property, the the action action may may still still be be for for
specific specific performance performance..
Industrial Finance Corp. v. Ramirez, Industrial Finance Corp. v. Ramirez, 77 SCRA 152 (1977) 77 SCRA 152 (1977)
57 57
(e) (e) N NATURE OF ATURE OF R REMEDY EMEDY OF OF R RESCISSION ESCISSION
R RECTO ECTO LLAW: AW: contd contd
Inherent Inherent Barring Barring Effect Effect of of Rescission Rescission
Surrender Surrender of of mortgaged mortgaged property property not not
equivalent equivalent to to rescission rescission..
Vda. de Quiambao v. Manila Motors Co., Inc., Vda. de Quiambao v. Manila Motors Co., Inc.,
3 SCRA 444 (1961) 3 SCRA 444 (1961)
Stipulation Stipulation on on non non- -return return of of payments payments
is is valid valid provided provided not not unconscionable unconscionable..
Delta Motor Sales Corp. v. Niu Kim Duan Delta Motor Sales Corp. v. Niu Kim Duan, ,
213 SCRA 259 (1992) 213 SCRA 259 (1992)
58
(f) (f) R REMEDY OF EMEDY OF FFORECLOSURE ORECLOSURE
R RECTO ECTO LLAW AW: : contd contd
(i) (i) Third Party Mortgage Third Party Mortgage
Ridad v. Filipinas Investment Ridad v. Filipinas Investment, 120 SCRA 246 (1983) , 120 SCRA 246 (1983)
(ii) (ii) Assignor Assignor- -Assignee; Financing Transactions Assignee; Financing Transactions
Zayas v. Luneta Motors Zayas v. Luneta Motors, 117 SCRA 726 (1982) , 117 SCRA 726 (1982)
When When seller seller assigns assigns his his credit credit to to another, another,
the the assignee assignee is is likewise likewise bound bound by by the the terms terms of of
the the Recto Recto Law Law..
Borbon II v. Servicewide Specialists, Inc., Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996). 258 SCRA 634 (1996).
59 59
(iii) (iii) H H- -VV Barring Barring Effects Effects of of Foreclosure Foreclosure
Foreclosure Foreclosure on on the the chattel chattel mortgage mortgage
prevents prevents further further action action on on the the supporting supporting
real real estate estate mortgage mortgage..
Cruz v. Filipinas Investment & Finance Corp., Cruz v. Filipinas Investment & Finance Corp.,23 SCRA 791 (1968) 23 SCRA 791 (1968)
Borbon II v. Servicewide Specialists, Inc., Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996) 258 SCRA 634 (1996)
(iv) (iv) Amounts Barred from Recovery Amounts Barred from Recovery
Macondray & Co. v. Eustaquio, Macondray & Co. v. Eustaquio, 64 Phil. 446 (1937) 64 Phil. 446 (1937)
(v) (v) Perverse Buyer Perverse Buyer
Filipinas Investment & Finance Corp. v. Ridad, Filipinas Investment & Finance Corp. v. Ridad, 30 SCRA 564 (1969) 30 SCRA 564 (1969)
60 60
(g) (g) PPURPORTED URPORTED LLEASE WITH EASE WITH OOPTION TO PTION TO B BUY: UY:
Contracts Contracts purporting purporting to to be be leases leases of of personal personal property property
with with option option to to buy, buy, when when the the lessor lessor has has deprived deprived the the lessee lessee
of of the the possession possession or or enjoyment enjoyment of of the the thing thing.. (Art (Art.. 1485 1485) )
When When purported purported Lessor Lessor takes takes possession possession of of
subject subject movable, movable, it it is is treated treated legally legally as as aa foreclosure foreclosure
and and the the barring barring effects effects applicable applicable to to foreclosure foreclosure
remedy, remedy, not not rescission, rescission, are are given given application application..
Vda. de Jose v. Barrueco, Vda. de Jose v. Barrueco, 67 Phil. 191 (1939) 67 Phil. 191 (1939)
Filinvest Credit Corp. v. CA, Filinvest Credit Corp. v. CA, 178 SCRA 188 (1989) 178 SCRA 188 (1989)
U.S. Commercial v. Halili, U.S. Commercial v. Halili, 93 Phil. 271 (1953) 93 Phil. 271 (1953)
H.E. Heacock v. Bantal Manufacturing, H.E. Heacock v. Bantal Manufacturing, 66 Phil. 245 (1938) 66 Phil. 245 (1938)
Manila Gas Corp. v. Calupita, Manila Gas Corp. v. Calupita, 66 Phil. 747 (19 38) 66 Phil. 747 (19 38)
Vda. de Jose v. Barrueco, Vda. de Jose v. Barrueco, 67 Phil. 191 (1939) 67 Phil. 191 (1939)
61 61
3 3.. M MACEDA ACEDA LLAW AW: : SSALES ALES OF OF R RESIDENTIAL ESIDENTIAL R REALTY EALTY
ON ON IINSTALLMENTS NSTALLMENTS ( (R R..A A.. 6552 6552) )
(a) (a) Role of Maceda Law Role of Maceda Law
Lagandaon v. CA Lagandaon v. CA, 290 SCRA 463 (1998) , 290 SCRA 463 (1998)
B BUT UT SSEE EE: : Peoples Indl and Comm. Corp. v. CA, Peoples Indl and Comm. Corp. v. CA, 281 SCRA 206 (1997) 281 SCRA 206 (1997)
(b) (b) Transactions Covered Transactions Covered
The The formal formal requirements requirements of of rescission rescission
under under the the Maceda Maceda Law Law apply apply even even to to contracts contracts
entered entered into into prior prior to to its its effectivity effectivity..
Siska Dev. Corp. v. Office of the President Siska Dev. Corp. v. Office of the President, 231 SCRA 674 (1994) , 231 SCRA 674 (1994)
62
The The Maceda Maceda Law Law makes makes no no distinctions distinctions
between between option option and and sale sale which which under under PP..D D..
957 957 also also includes includes an an exchange exchange or or attempt attempt to to sell, sell,
an an option option of of sale sale or or purchase, purchase, aa solicitation solicitation of of aa
sale sale or or an an offer offer to to sell sell directly directly..
Realty Exchange Venture Corp. v. Sendino Realty Exchange Venture Corp. v. Sendino, 233 SCRA 665 (1994) , 233 SCRA 665 (1994)
M MACEDA ACEDA LLAW AW contd contd
63 63
Curiously Curiously: : No No application application to to Contract Contract to to Sell Sell
because because said said law law presupposes presupposes the the
existence existence of of a a valid valid and and effective effective
contract contract to to sell sell a a condominium condominium..
Mortel v. KASSCO, Inc., Mortel v. KASSCO, Inc., 348 SCRA 391, 398 (2000) 348 SCRA 391, 398 (2000)
Pursuant Pursuant to to Art Art.. 1253 1253 of of Civil Civil Code, Code, in in aa contract contract
involving involving installments installments with with interest interest chargeable chargeable against against the the
remaining remaining balance balance of of the the obligation, obligation, it it is is the the duty duty of of the the
creditor creditor- -seller seller to to inform inform the the debtor debtor- -buyer buyer of of the the interest interest that that
falls falls due due and and that that is is applying applying the the installment installment payments payments to to
cover cover said said interest interest.. Otherwise, Otherwise, the the creditor creditor cannot cannot apply apply the the
payments payments to to the the interest interest and and then then hold hold the the debtor debtor in in default default for for
non non- -payment payment of of installments installments on on the the principal principal..
Rapanut v. CA, Rapanut v. CA, 246 SCRA 323 (1995) 246 SCRA 323 (1995)
(c) (c) How How Cancellation Cancellation of of Contract Contract Can Can Be Be Effected Effected: :
Active Realty & Dev. Corp. v. Daroya, Active Realty & Dev. Corp. v. Daroya, 382 SCRA 152 (2002) 382 SCRA 152 (2002)
64
(a) (a) To To sell/assign sell/assign his his rights rights to to another another person person
(b) (b) To To reinstate reinstate contract contract by by updating updating account account
during during grace grace period, period, before before actual actual
cancellation cancellation of of contract contract
(c) (c) To To pay pay in in advance advance installments installments or or in in full full
unpaid unpaid balance balance of of Price Price any any time time without without
interest interest and and have have same same annotated annotated in in title title
Any Any stipulation stipulation in in any any contract contract entered entered
into into contrary contrary to to the the provisions provisions of of the the Law, Law,
shall shall be be null null and and void void.. (Art (Art.. 77) )
65 65
OOTHER THER R RIGHTS IGHTS GGRANTED TO RANTED TO B BUYER UYER
4. 4. OOTHER THER R REMEDIES ON EMEDIES ON SSALE OF ALE OF R REAL EAL EESTATE STATE
(a) (a) A ANTICIPATORY NTICIPATORY B BREACH (ART. 1591) REACH (ART. 1591)
(b) (b) R RESCISSION ON ESCISSION ON SSALE ON ALE ON N NON ON- -
R RESIDENTIAL ESIDENTIAL R REALTY ON EALTY ON
IINSTALLMENTS (Arts. 1191 and 1592) NSTALLMENTS (Arts. 1191 and 1592)
(c) (c) SSEC. 23 AND 24, EC. 23 AND 24, PPRES. RES. D DECREE 957 ECREE 957
66 66
C CONTRACTS TO ONTRACTS TO SSELL ELL
Versus Versus
C CONDITIONAL ONDITIONAL C CONTRACTS OF ONTRACTS OF SSALE ALE
Art Art.. 1458 1458 Defines Defines a a Sale Sale to to covered covered both both
Absolute Absolute and and Conditional Conditional
Both Both Contracts Contracts are are usually usually bound bound by by same same
condition condition: : Full Full payment payment of of the the Price Price
Both Both Contracts Contracts are are consensual, consensual, onerous, onerous,
commutative, commutative, and and cover cover bilateral bilateral
obligations obligations
67
K KTO TO SSELL ELL VS. VS. K KOF OF SSALE ALE contd contd
Power Power to to Rescind Rescind is is inherently inherently Judicial Judicial
Non Non- -fulfillment fulfillment of of Condition Condition ipso ipso jure jure
destroys destroys contract contract
Substantial Substantial Breach Breach Relevant Relevant to to Contract Contract of of
Sale, Sale, Irrelevant Irrelevant to to Contracts Contracts to to Sell Sell
Rescission Rescission requires requires a a positive positive act act
68
1 1.. In In Contract Contract to to Sell Sell Ownership Ownership if if Reserved Reserved by by
Seller, Seller, while while in in a a Contract Contract to to Sell Sell ownership ownership
transfers transfers to to Buyer Buyer upon upon delivery delivery..
Ergo Ergo: : K K to to Sell Sell must must have have express express
reservation reservation of of ownership ownership
To To execute execute a a formal formal Deed Deed of of Sale Sale
Only Only receipt receipt of of payment payment evidences evidences sale sale
Seller Seller retained retained original original titles titles
69
2. Rescission of Contract to Sell is a matter 2. Rescission of Contract to Sell is a matter
of right upon non of right upon non- -happening of the happening of the
condition condition
Ergo Ergo: : K K to to Sell Sell must must have have express express
right right to to rescind rescind the the contract contract
upon upon default default of of the the Buyer Buyer
A A written written notice notice of of cancellation cancellation must must be be served served
upon upon Buyer Buyer even even when when Contract Contract to to Sell Sell
UP v. Delos Angeles UP v. Delos Angeles, 35 SCRA 103 (1970) , 35 SCRA 103 (1970)
70 70
C CONDITIONS ONDITIONS versus versus WWARRANTIES ARRANTIES
Power Commercial and Industrial Corp. v. CA Power Commercial and Industrial Corp. v. CA
274 SCRA 597 (1997) 274 SCRA 597 (1997)
(a) (a) Condition goes into root of existence of obligation, Condition goes into root of existence of obligation,
whereas warranty goes into performance of such whereas warranty goes into performance of such
obligation, and in fact may constitute an obligation obligation, and in fact may constitute an obligation
itself itself; ;
(b) (b) Condition must be expressly stipulated by parties, Condition must be expressly stipulated by parties,
while warranty may form part of the obligation or while warranty may form part of the obligation or
contract by provision of law, without previous contract by provision of law, without previous
agreement agreement; and ; and
(c) (c) Condition may attach itself either to the Obligations Condition may attach itself either to the Obligations
of Seller, while warranty, express or implied, relates of Seller, while warranty, express or implied, relates
to the Subject Matter itself or to the obligations of to the Subject Matter itself or to the obligations of
Seller as to Subject Matter of the sale Seller as to Subject Matter of the sale..
71 71
C CONDITIONS AND ONDITIONS AND WWARRANTIES ARRANTIES contd contd
In In aa Sale Sale with with Assumption Assumption of of Mortgage, Mortgage, the the
assumption assumption of of mortgage mortgage is is aa condition condition to to the the sellers sellers consent consent
so so that that without without approval approval by by the the mortgagee, mortgagee, no no sale sale is is
perfected perfected.. In In such such case, case, the the seller seller remains remains the the owner owner and and
mortgagor mortgagor of of the the property property and and retains retains the the right right to to redeem redeem the the
foreclosed foreclosed property property..
Ramos v. CA Ramos v. CA, 279 SCRA 118 (1997) , 279 SCRA 118 (1997)
Failure Failure to to comply comply with with condition condition imposed imposed upon upon perfection perfection
of of the the contract contract results results in in failure failure of of aa contract, contract, while while the the
failure failure to to comply comply with with aa condition condition imposed imposed on on the the
performance performance of of an an obligation obligation only only gives gives the the other other party party the the
option option either either to to refuse refuse to to proceed proceed with with sale sale or or waive waive the the
condition condition..
Laforteza v. Machuca, Laforteza v. Machuca, 333 SCRA 643 (2000) 333 SCRA 643 (2000)
72 72
A A. . EEXPRESS XPRESS WWARRANTIES ARRANTIES (Art. 1546) (Art. 1546)
The The law law allows allows considerable considerable latitude latitude to to sellers sellers
statements, statements, or or dealers dealers talk talk; ; and and experience experience teaches teaches
that that it it is is exceedingly exceedingly risky risky to to accept accept it it at at its its face face value value..
Ramos v. CA Ramos v. CA, 279 SCRA 118 (1997) , 279 SCRA 118 (1997)
(a) (a) Must Must be be an an affirmation affirmation of of fact fact or or any any promise promise by by the the
seller seller relating relating to to Subject Subject Matter Matter of of the the sale sale; ;
(b) (b) The The natural natural tendency tendency of of such such affirmation affirmation or or promise promise
is is to to induce induce Buyer Buyer to to purchase purchase the the thing thing; ; and and
(c) (c) Buyer Buyer purchases purchases the the thing thing relying relying on on such such
affirmation affirmation or or promise promise thereon thereon..
73 73
B B. . IIMPLIED MPLIED WWARRANTIES ARRANTIES (Art. 1547) (Art. 1547)
1 1. S . SELLER ELLER H HAS AS R RIGHT TO IGHT TO SSELL ELL
2 2. . WWARRANTY ARRANTY A AGAINST GAINST EEVICTION VICTION
Seller Seller must must be be summoned summoned in in the the suit suit for for eviction eviction at at
the the instance instance of of the the buyer buyer (Art (Art.. 1558 1558), ), and and be be made made aa co co- -
defendant defendant (Art (Art.. 1559 1559) ); ; or or made made aa third third- -party party defendant defendant..
Escaler v. CA, Escaler v. CA, 138 SCRA 1 (1985) 138 SCRA 1 (1985)
Canizares Tiana v. Torrejos Canizares Tiana v. Torrejos, 21 Phil. 127 (1911) , 21 Phil. 127 (1911)
J.M. Tuazon v. CA J.M. Tuazon v. CA, 94 SCRA 413 (1979) , 94 SCRA 413 (1979)
74
3 3. . WWARRANTY ARRANTY A AGAINST GAINST N NON ON- -A APPARENT PPARENT
SSERVITUDES ERVITUDES
4 4. . WWARRANTY ARRANTY A AGAINST GAINST H HIDDEN IDDEN D DEFECTS EFECTS
The The stipulation stipulation in in aa contract contract of of lease lease with with option option to to
purchase purchase (which (which it it treated treated as as aa sale sale of of movable movable on on
installments) installments) that that the the buyer buyer- -lessee lessee "absolutely "absolutely releases releases
the the lessor lessor from from any any liability liability whatsoever whatsoever as as to to any any and and
all all matters matters in in relation relation to to warranty warranty in in accordance accordance with with
the the provisions provisions hereinafter hereinafter stipulated," stipulated," was was held held as as an an
express express waiver waiver of of warranty warranty against against hidden hidden defect defect..
Filinvest Credit Corp. v. CA, Filinvest Credit Corp. v. CA, 178 SCRA 188 (1989) 178 SCRA 188 (1989)
75
A A hidden hidden defect defect is is one one which which is is unknown unknown or or could could not not
have have been been known known to to the the buyer buyer.. Under Under the the law, law, the the requisites requisites
to to recover recover on on account account of of hidden hidden defects defects are are as as follows follows: :
a. a. Defect Defect must must be be hidden hidden; ;
b. b. Must Must exist exist at at the the time time the the sale sale was was made made; ;
c. c. Must Must ordinarily ordinarily have have been been excluded excluded from from the the contract contract; ;
d. d. Defect, Defect, must must be be important important (render (render the the thing thing unfit unfit or or
considerably considerably decreases decreases fitness) fitness); ;
e. e. Action Action must must be be instituted instituted within within statute statute of of limitations limitations..
Investments & Dev., Inc. v. CA, Investments & Dev., Inc. v. CA, 162 SCRA 636 [1988] 162 SCRA 636 [1988]
76 76
Nutrimix Feeds Corp. v. CA Nutrimix Feeds Corp. v. CA
441 SCRA 357 (2004) 441 SCRA 357 (2004)
The The remedy remedy against against violation violation of of warranty warranty against against hidden hidden
defects defects is is either either to to withdraw withdraw from from the the contract contract ( (accion accion
redhibitoria redhibitoria) ) or or to to demand demand a a proportionate proportionate reduction reduction of of the the
price price ( (accion accion quanti quanti minoris minoris), ), with with damages damages in in either either case case..
6 6. . IIMPLIED MPLIED WWARRANTIES IN THE ARRANTIES IN THE SSALE OF ALE OF GGOODS OODS
a. a. Warranty as to Fitness or Quality Warranty as to Fitness or Quality
b. b. Sale of Goods by Sample Sale of Goods by Sample
7 7.. A ADDITIONAL DDITIONAL WWARRANTIES ARRANTIES FOR FOR C CONSUMER ONSUMER PPRODUCTS RODUCTS
(Arts (Arts.. 68 68,, Consumer Consumer Act Act of of the the Philippines, Philippines, R R..AA.. 7394 7394) )..
5. 5. R REDHIBITORY EDHIBITORY D DEFECTS EFECTS OF OF A ANIMALS NIMALS
a. Sale of a Team a. Sale of a Team
b. Animals Sold at Fairs or Public Auction b. Animals Sold at Fairs or Public Auction
c. Sale of Animals with Contagious Diseases c. Sale of Animals with Contagious Diseases
d. Sale of Unfit Animals d. Sale of Unfit Animals
77
C. C. EEFFECTS OF FFECTS OF WWARRANTIES ARRANTIES
D. D. EEFFECTS OF FFECTS OF WWAIVERS AIVERS
GG. B . BUYER'S UYER'S OOPTIONS IN PTIONS IN C CASE OF ASE OF B BREACH REACH OOF F WWARRANTY ARRANTY
78
EEXTINGUISHMENT OF XTINGUISHMENT OF S SALE ALE
SSALE ALE EEXTINGUISHED XTINGUISHED BY BY SSAME AME M MODES ODES
A APPLICABLE PPLICABLE TO TO A ALL LL C CONTRACTS ONTRACTS
Arts. 1231, 1600 Arts. 1231, 1600
R REDEMPTION EDEMPTION IS IS A A MODE MODE OF OF
EXTINGUISHMENT EXTINGUISHMENT UNIQUE UNIQUE TO TO SSALES ALES: :
C CONVENTIONAL ONVENTIONAL R REDEMPTION EDEMPTION: : SSALE ALE
WITH WITH R RIGHT IGHT TO TO R REPURCHASE EPURCHASE
LLEGAL EGAL R REDEMPTION EDEMPTION
79
N NATURE OF ATURE OF R RIGHT TO IGHT TO R REPURCHASE: EPURCHASE:
C CONVENTIONAL ONVENTIONAL R REDEMPTION EDEMPTION
( (S SALE WITH A ALE WITH A RRIGHT TO IGHT TO RREPURCHASE EPURCHASE) )
Reserved by Seller at the point of Reserved by Seller at the point of
Perfection. Perfection.
Art. 1601 Art. 1601
Villarica v. CA Villarica v. CA, 26 SCRA 189 (1968) , 26 SCRA 189 (1968)
Even Even though though found found in in a a separate separate
instrument instrument
Torres v. CA Torres v. CA, 216 SCRA 287 (1992) , 216 SCRA 287 (1992)
Claravall v. CA, Claravall v. CA, 190 SCRA 439 (1990) 190 SCRA 439 (1990)
80
IIts ts Validity Validity is is Tied Tied to to the the Validity Validity of of the the Contract Contract
of of Sale Sale to to which which appended appended..
Nool v. Court of Appeals Nool v. Court of Appeals, 276 SCRA 149 (1997) , 276 SCRA 149 (1997)
When When Sale Sale Covered Covered by by Deed, Deed, Right Right a a retro retro may may
be be proved proved by by parol parol evidence evidence..
Mactan Cebu Intl Airport Authority v. Court of Appeals Mactan Cebu Intl Airport Authority v. Court of Appeals, ,
263 SCRA 736 (1996) 263 SCRA 736 (1996)
C CONVENTIONAL ONVENTIONAL R REDEMPTION EDEMPTION contd contd
81
R RIGHT A IGHT A R RETRO ETRO versus versus OOPTION PTION C CONTRACT ONTRACT
(A) (A) Not Not separate separate contract, contract, but but
must must be be part part of of main main
Contract Contract of of Sale Sale
(A) (A) Generally Generally principal principal contract, contract,
but but may may be be appended appended in in
another another contract contract valid valid
(B) (B) Right Right to to Redeem Redeem does does
not not need need separate separate
consideration consideration
(B) (B) Option Option requires requires consider consider- -ation ation
separate separate and and distinct distinct of of the the
Price Price in in order order to to be be valid valid
(C) (C) Period of Option may be Period of Option may be
beyond 10 years beyond 10 years
(C) (C) Maximum Maximum Period Period for for
exercise exercise of of Right Right of of
redemption redemption cannot cannot
exceed exceed 10 10 years years
(D) (D) Option Option may may be be exercised exercised
by by mere mere notice notice to to Offeror Offeror
(D) (D) Right Right of of repurchase repurchase requires requires
in in addition addition the the tender tender of of the the
amount amount mandated, mandated, including including
consignation consignation when when tender tender
not not possible possible
82
SSALIENT ALIENT M MATTERS ON ATTERS ON
R RIGHT OF IGHT OF R REDEMPTION EDEMPTION
(a) (a) PPERIOD OF ERIOD OF R REDEMPTION: EDEMPTION:
When When no no Period Period agreed agreed upon upon: : 4 4 years years
When When Period Period agreed agreed upon upon: : cannot cannot
exceed exceed 10 10 years years
When When Period Period of of Non Non- -Redemption Redemption
Stipulated Stipulated
Anchuel v. IAC, Anchuel v. IAC, 147 SCRA 434 (1987) 147 SCRA 434 (1987)
Tayao v. Dulay Tayao v. Dulay, 13 SCRA 758 (1965) , 13 SCRA 758 (1965)
83
SSALIENT ALIENT M MATTERS ON ATTERS ON R RIGHT OF IGHT OF
R REDEMPTION EDEMPTION contd contd
Pendency of Action Tolls Redemption Pendency of Action Tolls Redemption
Period Period
Ong Chua v. Carr Ong Chua v. Carr, 53 Phil. 975 (1929) , 53 Phil. 975 (1929)
Non Non- -Payment of Price Does Not Affect Payment of Price Does Not Affect
Running of Redemption Period Running of Redemption Period
Catangcatang v. Legayada, Catangcatang v. Legayada, 84 SCRA 51 (1978) 84 SCRA 51 (1978)
84
SSALIENT ALIENT M MATTERS ATTERS contd contd
Only tender of payment is sufficient. Only tender of payment is sufficient.
Legaspi v. CA Legaspi v. CA, 142 SCRA 82 (1986) , 142 SCRA 82 (1986)
Consignation is not required after tender is Consignation is not required after tender is
refused. refused.
Mariano v. CA, Mariano v. CA, 222 SCRA 736 (1993) 222 SCRA 736 (1993)
But when tender not possible, consignation But when tender not possible, consignation
should be made. should be made.
Catangcatang v. Legayada Catangcatang v. Legayada, 84 SCRA 51 , 84 SCRA 51 (1978) (1978)
(b (b) ) H HOW OW R REDEMPTION EDEMPTION EEFFECTED: FFECTED:
85 85
Simply by Filing Judicial Action Simply by Filing Judicial Action
Lee Chuy Realty Corp. v. CA Lee Chuy Realty Corp. v. CA, 250 SCRA 596 (1995) , 250 SCRA 596 (1995)
Seller returning to Buyer: Seller returning to Buyer:
Price of the sale Price of the sale
Expenses of contract, and any other Expenses of contract, and any other
legitimate payments made by reason of the legitimate payments made by reason of the
sale sale
Necessary and useful expenses made on Necessary and useful expenses made on
the thing sold the thing sold
ART. 1616 ART. 1616
86
When When Redemption Redemption Not Not Made, Made, Buyer Buyer a a retro retro
automatically automatically acquires acquires full full ownership ownership..
Oviedo v. Garcia, Oviedo v. Garcia, 40 SCRA 17 (1971) 40 SCRA 17 (1971)
H HOWEVER: OWEVER:
In In real real property, property, consolidation consolidation shall shall
not not be be recorded recorded in in the the Registry Registry of of
Property Property without without a a judicial judicial order order,, after after
the the seller seller has has been been duly duly heard heard..
Article 1607 Article 1607
87
If If Seller Seller proves proves the the transaction transaction a a sale sale a a retro, retro, he he
is is given given a a period period of of 30 30 days days from from finality finality of of
judgment judgment to to repurchase repurchase..
Solid Homes v. CA, Solid Homes v. CA, 275 SCRA 267 (1997). 275 SCRA 267 (1997).
EEQUITABLE QUITABLE MMORTGAGE ORTGAGE
D DEFINITION AND EFINITION AND EELEMENTS LEMENTS
(a) (a) The The contract contract entered entered into into is is
denominated denominated as as a a Sale Sale (absolute (absolute or or a a
retro retro) ); ; and and
(b) (b) Real Real intention intention was was to to secure secure an an
existing existing debt debt by by way way mortgage mortgage
Molina v. CA Molina v. CA, 398 SCRA 97 (2003) , 398 SCRA 97 (2003)
88
R RATIONALE OF ATIONALE OF EEQUITABLE QUITABLE M MORTGAGE ORTGAGE PPRINCIPLE RINCIPLE
EEQUITABLE QUITABLE M MORTGAGE ORTGAGE contd contd
Prevent Prevent circumvention circumvention of of law law on on usury usury and and
rule rule against against pactum pactum commissorium, commissorium, ii..ee.. against against
aa creditor creditor appropriating appropriating the the mortgage mortgage property property..
To end unjust or oppressive transactions or To end unjust or oppressive transactions or
violations in connection with a sale or property. violations in connection with a sale or property.
Spouses Misea v. Rongavilla Spouses Misea v. Rongavilla, 303 SCRA 749 (1999). , 303 SCRA 749 (1999).
Matanguihan v. CA Matanguihan v. CA, 275 SCRA 380 (1997) , 275 SCRA 380 (1997)
Lao v. CA Lao v. CA, 275 SCRA 237 (1997) , 275 SCRA 237 (1997)
89 89
90 90
R RULINGS ON ULINGS ON EEQUITABLE QUITABLE M MORTGAGE ORTGAGE
Badges Badges of of Equitable Equitable Mortgage Mortgage in in Art Art.. 1602 1602
Apply Apply both both to to sale sale aa retro retro and and to to aa contract contract
purporting purporting to to be be an an absolute absolute sale sale..
Tuazon v. CA, Tuazon v. CA, 341 SCRA 707 (2000) 341 SCRA 707 (2000)
Zamora v.CA Zamora v.CA, 260 SCRA 10 (1996) , 260 SCRA 10 (1996)
Parol Parol evidence evidence is is competent competent and and admissible admissible
in in support support of of allegation allegation of of equitable equitable mortgage mortgage
arrangement arrangement..
Mariano v. CA Mariano v. CA, 220 SCRA 716 (1993) , 220 SCRA 716 (1993)
Pactum Pactum Commissorium Commissorium principle principle does does not not
apply apply: :
91 91
(a) (a) When When security security for for aa debt debt is is also also money money in in form form of of
time time deposit deposit
Consing v. CA, Consing v. CA, 177 SCRA 14 (1989) 177 SCRA 14 (1989)
(b) (b) To To an an agreement agreement between between Lender Lender and and Borrower Borrower
which which provides provides that that in in the the event event Borrower Borrower fails fails to to
comply comply with with the the new new terms terms of of payment, payment, the the agreement agreement
shall shall automatically automatically operate operate to to be be an an instrument instrument of of
dacion dacion en en pago pago without without need need of of executing executing any any
document document to to such such an an effect effect..
Solid Homes, Inc. v. CA Solid Homes, Inc. v. CA, 275 SCRA 267 (1997) , 275 SCRA 267 (1997)
RULINGS ON EM contd
C CONTRA: ONTRA:
P/N P/N stipulation stipulation that that upon upon makers makers failure failure
to to pay pay interests, interests, ownership ownership of of property property
would would automatically automatically be be transferred transferred to to
Payee Payee and and the the covering covering deed deed of of sale sale
would would be be registered, registered, is is in in substance substance a a
pactum pactum commissorium commissorium in in violation violation of of Art Art..
2088 2088..
A. Francisco Realty v. CA A. Francisco Realty v. CA, 298 SCRA 349 (1998) , 298 SCRA 349 (1998)
AA pactum pactum commisorium commisorium sale sale is is void, void, registration registration
and and obtaining obtaining of of new new title title by by apparent apparent buyer buyer would would
also also be be void void..
A. Francisco Realty v. CA A. Francisco Realty v. CA, 298 SCRA 349 (1998) , 298 SCRA 349 (1998)
92
R REMEDIES EMEDIES U UNDER NDER EEQUITABLE QUITABLE M MORTGAGE ORTGAGE
SSITUATIONS ITUATIONS
Apparent Apparent seller seller can can seek seek reformation reformation of of
instrument instrument (Art (Art.. 1605 1605) )..
An An action action for for consolidation consolidation of of ownership ownership (in (in
case case presented presented as as sale sale aa retro) retro) would would be be void, void, and and
proper proper remedy remedy of of mortgagee mortgagee- -buyer buyer is is to to file file
appropriate appropriate foreclosure foreclosure of of the the mortgage mortgage in in
equity equity..
Briones Briones- -Vasquez vs. CA Vasquez vs. CA, 450 SCRA 644 (2005). , 450 SCRA 644 (2005).
93 93
Additional Additional 30 30- -day day Period Period of of Redemption Redemption is is
allowed allowed under under Art Art.. 1606 1606,, in in event event courts courts should should
find find the the sale sale was was not not equitable equitable mortgage, mortgage,
provided provided: :
(a) (a) Honest Honest belief belief that that it it was was equitable equitable mortgage mortgage supported supported
by by convincing convincing evidence, evidence, such such as as badges badges under under Art Art.. 1602 1602,,
or or consignation consignation during during trial trial of of the the amount amount of of the the alleged alleged
loan loan
Abilla v. Gobonseng, Abilla v. Gobonseng, 374 SCRA 51 (2002) 374 SCRA 51 (2002)
Vda. de Macoy v. CA Vda. de Macoy v. CA, 206 SCRA 244 (1992) , 206 SCRA 244 (1992)
94
R REMEDIES EMEDIES IN IN EM EM contd contd
LLEGAL EGAL R REDEMPTION EDEMPTION
D DEFINITION AND EFINITION AND R RATIONALE ATIONALE: :
Privilege Privilege created created by by law law for for reasons reasons of of
public public policy policy..
For For benefit benefit and and convenience convenience of of the the
redemptioner, redemptioner, to to afford afford him him aa way way out out of of what what
might might be be aa disagreeable disagreeable or or inconvenient inconvenient
association association into into which which he he has has been been thrust thrust..
Intended to minimize co Intended to minimize co- -ownership. ownership.
Fernandez v. Tarun Fernandez v. Tarun, 391 SCRA 653 (2002) , 391 SCRA 653 (2002)
Basa v. Aguilar Basa v. Aguilar, 117 SCRA 128 (1982) , 117 SCRA 128 (1982)
95 95
Written notice must cover Written notice must cover perfected perfected sale sale
Art. 1623 Art. 1623
Spouses Doromal v. CA Spouses Doromal v. CA, 66 SCRA 575 (1975) , 66 SCRA 575 (1975)
Notice Notice must must be be given given by by seller seller; ; and and that that notice notice given given
by by buyer buyer or or even even by by the the Register Register of of Deeds Deeds are are not not
sufficient sufficient..
Francisco v. Boiser, 332 SCRA 305 (2000) Francisco v. Boiser, 332 SCRA 305 (2000)
Butte v. Manuel Uy and Sons, Inc., 4 SCRA 526 (1962) Butte v. Manuel Uy and Sons, Inc., 4 SCRA 526 (1962)
Salatandol v. Retes, 162 SCRA 568 (1988) Salatandol v. Retes, 162 SCRA 568 (1988)
LLEGAL EGAL R REDEMPTION EDEMPTION contd contd
PPERIOD OF ERIOD OF LLEGAL EGAL R REDEMPTION EDEMPTION B BEGINS EGINS: :
30 30 DAYS FROM DAYS FROM WWRITTEN RITTEN N NOTICE OTICE
96 96
Seller Seller furnishing furnishing of of the the copies copies of of deeds deeds of of sale sale to to
co co- -owner owner would would be be sufficient sufficient..
Distrito v. CA Distrito v. CA, 197 SCRA 606 (1991) , 197 SCRA 606 (1991)
Conejero v. CA Conejero v. CA, 16 SCRA 775 (1966) , 16 SCRA 775 (1966)
Badillo v. Ferrer Badillo v. Ferrer, 152 SCRA 407 (1987) , 152 SCRA 407 (1987)
Notice Notice to to minors minors may may validly validly be be served served upon upon
parents parents even even when when not not judicially judicially appointed appointed since since
beneficial beneficial to to the the children children..
Badillo v. Ferrer, Badillo v. Ferrer, 152 SCRA 407 (1987). 152 SCRA 407 (1987).
97 97
Deemed Deemed complied complied when when co co- -owners owners signed signed
Deed Deed of of Extrajudicial Extrajudicial Partition Partition embodying embodying
disposition disposition of of part part of of the the property property owned owned in in
common common..
Fernandez v. Tarun, Fernandez v. Tarun, 391 SCRA 653 (2002) 391 SCRA 653 (2002)
Filing Filing of of ejectment ejectment suit suit or or collection collection of of rentals rentals
against against aa co co- -owner owner dispenses dispenses with with need need for for
written written notice notice..
Alonzo v. IAC Alonzo v. IAC, 150 SCRA 259 (1987) , 150 SCRA 259 (1987)
98
IINSTANCES OF NSTANCES OF LLEGAL EGAL R REDEMPTION EDEMPTION
(a) (a) Among Co Among Co- -heirs heirs (Art. 1088) (Art. 1088)
AA co co- -heir heir cannot cannot exercise exercise the the right right of of redemption redemption
alone alone..
De Guzman v. CA De Guzman v. CA, 148 SCRA 75 (1987) , 148 SCRA 75 (1987)
No No legal legal redemption redemption for for sale sale of of the the property property of of the the
estate estate..
Plan v. IAC Plan v. IAC, 135 SCRA 270 (1985) , 135 SCRA 270 (1985)
Written Written notice notice to to other other co co- -owners owners deemed deemed inutile inutile by by
fact fact that that ebuyers ebuyers took took possession possession of of property property in in full full view view
of of other other co co- -owners owners..
Pilapil v. CA Pilapil v. CA, 250 SCRA 560 (1995) , 250 SCRA 560 (1995)
Notice Notice given given by by city city treasurer treasurer will will not not suffice suffice..
Verdad v. CA Verdad v. CA, 256 SCRA 593 (1996) , 256 SCRA 593 (1996)
99 99
(b) (b) Among Co Among Co- -owners owners (Art. 1620) (Art. 1620)
IINSTANCES OF NSTANCES OF LLEGAL EGAL R REDEMPTION EDEMPTION contd contd
Right Right of of legal legal redemption redemption arises arises only only when when shares shares
of of other other owners owners are are sold sold to to aa third third person, person, and and not not
to to another another co co- -owner owner
Fernandez v. Tarun Fernandez v. Tarun, 391 SCRA 653 (2002) , 391 SCRA 653 (2002)
Registration Registration of of the the sale sale does does not not estop estop aa co co- -owner owner
Cabrera v. Villanueva, Cabrera v. Villanueva, 160 SCRA 627 (1988) 160 SCRA 627 (1988)
Notice Notice required required to to be be given given to to co co- -owners owners must must be be
in in writing writing; ; and and redemption redemption by by co co- -owner owner redounds redounds to to
the the benefit benefit of of all all other other co co- -owners owners..
Mariano v. CA, Mariano v. CA, 222 SCRA 736 (1993) 222 SCRA 736 (1993)
100 100
No No written written notice notice required required to to co co- -owner owner who who
acted acted as as active active intermediary intermediary in in the the
consummation consummation of of the the sale sale..
Distrito v. CA, Distrito v. CA, 197 SCRA 606 (1991) 197 SCRA 606 (1991)
Redemption Redemption by by co co- -owner, owner, even even when when he he uses uses
his his own own fund, fund, inures inures to to the the benefit benefit of of all all the the
other other co co- -owners owners..
Annie Tan v. CA, 172 SCRA 660 (1989) Annie Tan v. CA, 172 SCRA 660 (1989)
101
Redemption Redemption covers covers only only resale resale and and does does not not
cover cover exchanges exchanges or or barter barter of of properties properties
De Santos v. City of Manila De Santos v. City of Manila, 45 SCRA 409 (1972) , 45 SCRA 409 (1972)
Requisite of speculation dropped. Requisite of speculation dropped.
Legaspi v. CA Legaspi v. CA, 69 SCRA 360 (1976) , 69 SCRA 360 (1976)
Does Does not not apply apply if if one one adjacent adjacent lot lot is is not not also also
rural rural land land
Primary Structures Corp. v. Valencia Primary Structures Corp. v. Valencia, 409 SCRA 371 (2003) , 409 SCRA 371 (2003)
(c) (c) Among Adjoining Owners Among Adjoining Owners (Art. 1621 (Art. 1621- -1622) 1622)
102 102
(d) (d) Sale of Credit in Litigation Sale of Credit in Litigation (Art. 1634) (Art. 1634) - - 30 days 30 days
(e) (e) Redemption of Homesteads Redemption of Homesteads (Sec. 119, C.A. 141) (Sec. 119, C.A. 141)
The The right right to to repurchase repurchase is is granted granted by by law law
and and need need not not be be provided provided for for in in the the deed deed of of sale sale..
Berin v. CA Berin v. CA, 194 SCRA 508 (1991). , 194 SCRA 508 (1991).
103
Under Under the the free free patent patent or or homestead homestead provisions provisions of of
the the Public Public Land Land Act Act aa period period of of five five ( (55) ) years years from from the the
date date of of conveyance conveyance is is provided, provided, the the five five- -year year period period to to be be
reckoned reckoned from from the the date date of of the the sale sale and and not not from from the the date date
of of registration registration in in the the office office of of the the Register Register of of Deeds Deeds..
Lee Chuy Realty Corp. v. CA, Lee Chuy Realty Corp. v. CA, 250 SCRA 596 (1995) 250 SCRA 596 (1995)
For For purposes purposes of of reckoning reckoning the the 55- -year year period period to to
exercise exercise right right of of repurchase, repurchase, the the date date of of conveyance conveyance is is
construed construed to to refer refer to to date date of of execution execution of of the the deed deed
transferring transferring the the ownership ownership of of the the land land to to the the buyer buyer..
Mata v. CA Mata v. CA, 318 SCRA 416 (1999 , 318 SCRA 416 (1999). ).
104
(f) (f) Redemption in Tax Sales Redemption in Tax Sales (Sec. 215, NIRC of 1997) (Sec. 215, NIRC of 1997)
(g) (g) Redemption by judgment debtor Redemption by judgment debtor (Sec. 27, Rule (Sec. 27, Rule
39, Rules of Civil Procedure) 39, Rules of Civil Procedure)
Period Period of of redemption redemption shall shall be be at at any any time time within within
one one ( (11) ) year year from from the the date date of of registration registration of of the the
certificate certificate of of sale, sale, so so that that the the period period is is now now to to be be
understood understood as as composed composed of of 365 365 days, days, unlike unlike the the 360 360
days days under under the the old old provisions provisions of of the the Rules Rules of of Court Court
which which referred referred to to 12 12- -month month redemption redemption period period..
Ysmael v. CA Ysmael v. CA, 318 SCRA 215 (1999) , 318 SCRA 215 (1999)
105
(h) Redemption in Extrajudicial Foreclosure (h) Redemption in Extrajudicial Foreclosure
A A stipulation stipulation to to render render the the right right to to redeem redeem
defeasible defeasible by by an an option option to to buy buy on on the the part part of of the the
creditor creditor
Soriano v. Bautista Soriano v. Bautista, 6 SCRA 946 (1962) , 6 SCRA 946 (1962)
One One ( (1 1) ) year year from from registration registration in in the the Registry Registry
of of Deeds Deeds on on Mortgage Mortgage (Sec (Sec.. 6 6,, Act Act 3135 3135) )..
(i) (i) Redemption Redemption in in judicial judicial foreclosure foreclosure of of
mortgage mortgage
( (Sec Sec.. 47 47,, General General Banking Banking Law Law of of 2000 2000,, R R..A A.. 8791 8791) )..
106 106
No No right right to to redeem redeem from from aa judicial judicial foreclosure foreclosure sale, sale,
except except those those granted granted by by banks banks or or banking banking institutions institutions
GSIS v. CFI, GSIS v. CFI, 175 SCRA 19 (1989). 175 SCRA 19 (1989).
The The one one- -year year redemption redemption period period in in case case of of
foreclosure foreclosure of of real real estate estate mortgage mortgage is is not not interrupted interrupted by by
filing filing of of action action assailing assailing validity validity of of mortgage, mortgage, so so that that at at
the the expiration expiration thereof, thereof, mortgagee mortgagee who who acquires acquires property property
at at the the foreclosure foreclosure sale sale can can proceed proceed to to have have title title
consolidated consolidated in in his his name name and and aa writ writ of of possession possession issued issued
in in his his favor favor..
Union Bank of the Philippines v. CA, Union Bank of the Philippines v. CA, 359 SCRA 480 (2001 359 SCRA 480 (2001) )
Vaca v. CA, Vaca v. CA, 234 SCRA 146 (1994 234 SCRA 146 (1994) )
107 107
(j) (j) Redemption in Foreclosure by Rural Banks Redemption in Foreclosure by Rural Banks
Land Land mortgaged mortgaged to to rural rural bank bank under under RR..AA.. 720 720,,
may may be be redeemed redeemed within within two two ( (22) ) years years from from date date of of
foreclosure foreclosure or or from from registration registration of of sheriff's sheriff's certificate certificate
of of sale sale.. If If mortgagor mortgagor fails fails to to exercise exercise such such right, right, heirs heirs
may may still still repurchase repurchase within within 55 years years from from expiration expiration of of
22- -year year redemption redemption period period pursuant pursuant to to Sec Sec.. 119 119 of of
Public Public Land Land Act Act (C (C..AA.. 141 141) )..
Rural Bank of Davao City v. CA Rural Bank of Davao City v. CA, 217 SCRA 554 (1993) , 217 SCRA 554 (1993)
Heirs of Felicidad Canque v. CA Heirs of Felicidad Canque v. CA, 275 SCRA 741 (1997) , 275 SCRA 741 (1997)
108 108
(k) (k) Legal Right to Redeem under Agrarian Legal Right to Redeem under Agrarian
Reform Code Reform Code
Sec. 12 of R.A. 3844, grants agricultural lessee Sec. 12 of R.A. 3844, grants agricultural lessee
right to redeem within 180 days from notice in right to redeem within 180 days from notice in
writing and at a reasonable price and writing and at a reasonable price and
consideration consideration
Quio v. CA Quio v. CA, 291 SCRA 249 (1998) , 291 SCRA 249 (1998)
Redemption right of tenant does not begin to Redemption right of tenant does not begin to
run without written notice run without written notice
Springsun Management Systems Corp. v. Camerino Springsun Management Systems Corp. v. Camerino, ,
449 SCRA 65 (2005) 449 SCRA 65 (2005)
109 109
EEND ND

Sales Villanueva

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sales Villanueva

Uploaded by

Copyright:

Available Formats

By:

You might also like