FTP Notes – SALES MIDTERM – Atty.

Marasigan

FORMATION OF CONTRACT OF SALE

I. POLICITACION
A. OPTION CONTRACT

TAYAG VS LACSON OPTION CONTRACT DEFINED 

An option is a contract by which the owner of the property agrees with another person
that he shall have the right to buy his property at a fixed price within a certain time or
under, or in compliance with certain terms and conditions, or which gives to the owner of
the property the right to sell or demand a sale. It imposes no binding obligation on the
person holding the option, aside from the consideration for the offer. Until accepted, it is
not, properly speaking, treated as a contract.
In this case, the defendants-tenants-subtenants, under the deeds of assignment, granted
to the petitioner not only an option but the exclusive right to buy the landholding. Not
being the registered owners of the property, the defendants-tenants could not legally
grant to the petitioner the option, much less the "exclusive right" to buy the property.
Nemo dat quod non habet, literally meaning "no one gives what he doesn't have"

ADELFA PROPERTIES VS CA THE DISTINCTION BETWEEN AN "OPTION" AND A CONTRACT OF SALE

An option is an unaccepted offer. It states the terms and conditions on which the owner is
willing to sell the land, if the holder elects to accept them within the time limited. If the
holder does so elect, he must give notice to the other party, and the accepted offer
thereupon becomes a valid and binding contract. If an acceptance is not made within the
time fixed, the owner is no longer bound by his offer, and the option is at an end. A
contract of sale, on the other hand, fixes definitely the relative rights and obligations of
1
both parties at the time of its execution. The offer and the acceptance are concurrent,
since the minds of the contracting parties meet in the terms of the agreement.

EARNEST MONEY VS OPTION MONEY

(a) earnest money is part of the purchase price, while option money ids the money given
as a distinct consideration for an option contract; (b) earnest money is given only where
there is already a sale, while option money applies to a sale not yet perfected; and (c)
when earnest money is given, the buyer is bound to pay the balance, while when the
would-be buyer gives option money, he is not required to buy.

1. MEANING OF SEPARATE CONSIDERATION

VILLAMOR VS CA Deed of Option is not valid when it stipulated that the Reyeses agreed to sell their lot to
Villamors "whenever the need of such sale arises, either on the part of Reyeses or on the
part of Villamors”. It appears that while the option to buy was granted to the Villamors,
the Reyeses were likewise granted an option to sell. In other words, it was not only the
Villamors who were granted an option to buy for which they paid a consideration. The
Reyeses as well were granted an option to sell should the need for such sale on their part
arise.Since there was, between the parties, a meeting of minds upon the object and the
price, there was already a perfected contract of sale. What was, however, left to be done
was for either party to demand from the other their respective undertakings under the
contract. It may be demanded at any time either by the Reyeses, who may compel the

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Villamors to pay for the property or the Villamors, who may compel the Reyeses to deliver
the property.
However, the Deed of Option did not provide for the period within which the parties may
demand the performance of their respective undertakings in the instrument. The parties
could not have contemplated that the delivery of the property and the payment thereof
could be made indefinitely and render uncertain the status of the land. The failure of
either parties to demand performance of the obligation of the other for an unreasonable
length of time renders the contract ineffective.

2. NO SEPARATE CONSIDERATION

SANCHEZ VS RIGOS Article 1479 of the new Civil Code "an option to sell," or "a promise to buy or to sell," as
used in said article, to be valid must be "supported by a consideration distinct from the
price." This is clearly inferred from the context of said article that a unilateral promise to
buy or to sell, even if accepted, is only binding if supported by consideration. In other
words, "an accepted unilateral promise can only have a binding effect if supported by a
consideration which means that the option can still be withdrawn, even if accepted, if the
same is not supported by any consideration. It is not disputed that the option is without
consideration. It can therefore be withdrawn notwithstanding the acceptance of it by
appellee.

--

DIAMANTE VS CA the Option to Repurchase executed by private respondent in the present case, was merely
a promise to sell.
An agreement to repurchase becomes a promise to sell when made after the sale, because
when the sale is made without such an agreement, the purchaser acquires the thing sold
2 absolutely, and if he afterwards grants the vendor the right to repurchase, it is a new
contract entered into by the purchaser, as absolute owner already of the object.A
unilateral promise to buy or sell is a mere offer, which is not converted into a contract
except at the moment it is accepted. The contract of option is a separate and distinct
contract from the contract which the parties may enter into upon the consummation of
the option, and a consideration for an optional contract is just as important as the
consideration for any other kind of contract. Thus, a distinction should be drawn between
the consideration for the option to repurchase, and the consideration for the contract of
repurchase itself.
Even if the promise was accepted, private respondent was not bound thereby in the
absence of a distinct consideration.
BIBLE BAPTIST VS CA An option contract needs to be supported by a separate consideration. The consideration
need not be monetary but could consist of other things or undertakings. However, if the
consideration is not monetary, these must be things or undertakings of value, in view of
the onerous nature of the contract of option. Furthermore, when a consideration for an
option contract is not monetary, said consideration must be clearly specified as such in the
option contract or clause.
PNOC VS KEPPEL In an option contract, the subject matter is the right or privilege to buy (or to sell) a
determinate thing for a price certain, while in a sales contract, the subject matter is the
determinate thing itself. The consent in an option contract is the acceptance by the
offeree of the offerer's promise to sell (or to buy) the determinate thing, i.e., the offeree
agrees to hold the right or privilege to buy (or to sell) within a specified period. This
acceptance is different from the acceptance of the offer itself whereby the offeree asserts
his or her right or privilege to buy (or to sell), which constitutes as his or her consent to the
sales contract. The consideration in an option contract may be anything of value, unlike in

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a sale where the purchase price must be in money or its equivalent. There is sufficient
consideration for a promise if there is any benefit to the offeree or any detriment to the
offeror.
But the absence of consideration supporting the option contract cannot invalidate an offer
to buy or to sell.An option unsupported by a separate consideration stands as an
unaccepted offer to buy (or to sell) which, when properly accepted, ripens into a contract
to sell.

3. PROPER EXERCISE OF OPTION CONTRACT

B. RIGHT OF FIRST REFUSAL

PUP VS GOLDEN An option is a contract by which the owner of the property agrees with another person that the
latter shall have the right to buy the former’s property at a fixed price within a certain time. It is a
condition offered or contract by which the owner stipulates with another that the latter shall have
the right to buy the property at a fixed price within a certain time, or under, or in compliance with
certain terms and conditions; or which gives to the owner of the property the right to sell or
demand a sale. It binds the party, who has given the option, not to enter into the principal
contract with any other person during the period designated, and, within that period, to enter into
such contract with the one to whom the option was granted, if the latter should decide to use the
option.
Upon the other hand, a right of first refusal is a contractual grant, not of the sale of a property, but
of the first priority to buy the property in the event the owner sells the same. As distinguished
from an option contract, in a right of first refusal, while the object might be made determinate, the
3 exercise of the right of first refusal would be dependent not only on the owner’s eventual
intention to enter into a binding juridical relation with another but also on terms, including the
price, that are yet to be firmed up.

ANG YU ASUNCION VS CA In the law on sales, the so-called “right of first refusal” is an innovative juridical relation and it
cannot be deemed a perfected contract of sale. In a right of first refusal, while the object might be
made determinate, the exercise of the right, however, would be dependent not only on the
grantor’s eventual intention to enter into a binding juridical relation with another but also on
terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at best
be so described as merely belonging to a class of preparatory juridical relations governed not by
contracts (since the essential elements to establish the vinculum juris would still be indefinite and
inconclusive) but by, among other laws of general application, the pertinent scattered provisions
of the Civil Code on human conduct.The proper action for violation of the right of first refysal is to
file an action for damages and NOT writ of execution
The final judgment.
PARANAQUE KINS VS CA There was actionable contractual breach on the part of private respondent. Under paragraph 9 of
the contract of lease between respondent Santos and petitioner, the latter was granted the first
option or priority to purchase the leased properties in case Santos decided to sell. If Santos never
decided to sell at all, there can never be a breach, much less an enforcement of such right. But on
September 21, 1988, Santos sold said properties to Respondent Raymundo without first offering
these to petitioner.
ROSENCOR VS CA A right of first refusal is not among those listed as unenforceable under the statute of frauds.As
such, it need not be written to be enforceable and may be proven by oral evidence.A contract of
sale entered into in violation of a right of first refusal of another person, while valid, is rescissible.
However, the right of first refusal involved in the instant case was an oral one given to Inquing et al

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by the deceased spouses Tiangco and subsequently recognized by their heirs. As such, in order to
hold Rosencor were in bad faith, there must be clear and convincing proof that Rosencor were
made aware of the said right of first refusal either by Inquing et al or by the heirs of the spouses
Tiangco.
VASQUEZ VS AYALA CORP Paragraph 5.15 of the MOA provides: 5.15. The BUYER (AYALA) agrees to give the SELLERS
(Vasquez) a first option to purchase four developed lots next to the “Retained Area” at the
prevailing market price at the time of the purchase.”The said paragraph is a mere right of first
refusal. The phrase “at the prevailing market price at the time of the purchase” connotes that
there is no definite period within which Ayala is bound to reserve the subject lots for Vasquez to
exercise his privilege to purchase.Neither is there a fixed or determinable price at which the
subject lots will be offered for sale. The price is considered certain if it may be determined with
reference to another thing certain or if the determination thereof is left to the judgment of a
specified person or persons.
TANAY RECREATION VS FAUSTO When a lease contract contains a right of first refusal, the lessor is under a legal duty to the lessee
not to sell to anybody at any price until after he has made an offer to sell to the latter at a certain
price and the lessee has failed to accept it. The lessee has a right that the lessor's first offer shall
be in his favor. right of first refusal is an integral and indivisible part of the contract of lease and is
inseparable from the whole contract. The consideration for the lease includes the consideration
for the right of first refusal and is built into the reciprocal obligations of the parties.Thus, under the
terms of petitioners right of first refusal, Fausto has the legal duty to petitioner not to sell the
property to anybody, even her closest kin or relatives, at any price until after she has made an
offer to sell to petitioner at a certain price and said offer was rejected by petitioner.
TUAZON VS DEL ROSARIO- Option contract is entirely different and distinct from a right of first refusal in that in the former,
SUAREZ the option granted to the offeree is for a fixed period and at a determined price. Lacking these two
essential requisites, what is involved is only a right of first refusal.A unilateral promise to buy or
sell is a mere offer, which is not converted into a contract except at the moment it is accepted.
Upon acceptance, however, a bilateral contract to sell and to buy is created, and the offeree ipso
4 facto assumes the obligations of a purchaser; the offeror, on the other hand, would be liable for
damages if he fails to deliver the thing he had offered for sale.Even if the promise was accepted,
private respondent was not bound thereby in the absence of a distinct consideration. In this case,
it is undisputed that Roberto did not accept the terms stated in the letter of Lourdes as he
negotiated for a much lower price. Roberto’s act of negotiating for a much lower price was a
counter-offer and is therefore not an acceptance of the offer of Lourdes.The counter-offer of
Roberto for a much lower price was not accepted by Lourdes. There is therefore no contract that
was perfected between them with regard to the sale of subject property. Roberto, thus, does not
have any right to demand that the property be sold to him at the price for which it was sold to the
De Leons neither does he have the right to demand that said sale to the De Leons be annulled.
TUAZON COMPARED TO EQUATORIAL CASE
In Equatorial, the property was sold within the lease period. In this case, the subject property was
sold not only after the expiration of the period provided in the letter-offer of Lourdes but also after
the effectivity of the Contract of Lease.

II. PERFECTION STAGE

A. ABSOLUTE ACCEPTANCE OF A CERTAIN OFFER

HEIRS OF IGNACIO VS HOME A contract of sale is consensual in nature and is perfected upon mere meeting of the minds. When
BAKERS there is merely an offer by one party without acceptance of the other, there is no contract. When
the contract of sale is not perfected, it cannot, as an independent source of obligation, serve as a
binding juridical relation between the parties.The acceptance must be identical in all respects with
that of the offer so as to produce consent or meeting of the minds. Where a party sets a different
purchase price than the amount of the offer, such acceptance was qualified which can be at most

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considered as a counter-offer; a perfected contract would have arisen only if the other party had
accepted this counter-offer.

B. WHEN DEVIATION ALLOWED

VILLONCO VS BARMAHECO Contracts are perfected by mere consent, and from that moment the parties are bound not only
to the fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law.” (Art. 1315, Civil
Code). Bormaheco’s acceptance of Villonco Realty Company’s offer to purchase the Buendia
Avenue property, indubitably proves that there was a meeting of minds upon the subject matter
and consideration of the sale. Therefore, on that date the sale was perfected. Not only that
Bormaheco’s acceptance of the part payment of one hundred thousand pesos shows that the sale
was conditionally consummated or partly executed subject to the purchase by Bormaheco, Inc. of
the Punta property.
C. SALE BY AUCTION

D. EARNEST MONEY

MANILA CONTAINER VS PNB Earnest money does not establish contract of sale.
ART. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of
the price and as proof of the perfection of the contract. The deposit of P725,000 was accepted by
PNB on the condition that the purchase price is still subject to the approval of the PNB Board and
in the case at bar the board did not approve. Absent proof of the concurrence of all the essential
elements of a contract of sale, the giving of earnest money cannot establish the existence of a
5 perfected contract of sale.
FIRST OPTIMA VS SECURITRON In a potential sale transaction, the prior payment of earnest money even before the property
owner can agree to sell his property is irregular, and cannot be used to bind the owner to the
obligations of a seller under an otherwise perfected contract of sale.The property owner-
prospective seller may not be legally obliged to enter into a sale with a prospective buyer through
the latter'semployment of questionable practices which prevent the owner from freely giving his
consent to the transaction; this constitutes a palpable transgression of the prospective seller's
rights of ownership over his property. In the case at bar the parties never got past the negotiation
stage. Since there is no perfected sale between the parties, respondent had no obligation to make
payment through the check; nor did it possess the right to deliver earnest money to petitioner in
order to bind the latter to a sale.Under Art. 1482 of the Civil Code, there must first be a perfected
contract of sale before we can speak of earnest money.Where the parties merely exchanged
offers and counter-offers, no contract is perfected since they did not yet give their consent to
such offers. Earnest money applies to a perfected sale.
E. DIFFERENCE BETWEEN EARNEST MONEY AND OPTION MONEY
F. SALE DEEMED PERFECTED WHERE OFFER WAS MADE

FORMAL REQUIREMENTS OF SALE

1. FORM NOT IMPORTANT FOR VALIDITY OF SALE

NARANJA VS CA Deed of sale need not contain technical description of the subject property to be valid. What is
important is that there is, in fact, an object that is determinate or at least determinable, as
subject of the contract of sale. The form of a deed of sale provided in Section 127 of Act No. 496

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is only a suggested form. It is not a mandatory form that must be strictly followed by the parties
to a contract. In the instant case, the deed of sale clearly identifies the subject properties by
indicating their respective lot numbers, lot areas, and the certificate of title covering them.
Resort can always be made to the technical description as stated in the certificates of title
covering the two properties.

DALION VS CA The provision of Art. 1358 on the necessity of a public document is only for convenience, not for
validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of
land that this be embodied in a public instrument. A contract of sale is a consensual contract,
which means that the sale is perfected by mere consent. No particular form is required for its
validity. Upon perfection of the contract, the parties may reciprocally demand performance (Art.
1475, NCC), i.e., the vendee may compel transfer of ownership of the object of the sale, and the
vendor may require the vendee to pay the thing sold (Art. 1458, NCC).
HEIRS OF BIONA VS CA The fact that the deed of sale was not notarized does not render the agreement null and void
and without any effect. The observance of which is only necessary to insure its efficacy, so that
after the existence of said contract had been admitted, the party bound may be compelled to
execute the proper document.As to the authenticity of the deed of sale, we subscribe to the
Court of Appeals' appreciation of evidence that Hilajos has substantially proven that Soledad
Biona indeed signed the deed of sale of the subject property in his favor. The burden is on the
heirs to prove the contrary which they have dismally failed to do.

6
2. WHEN FORM IS IMPORTANT IN SALE
- TO BIND THIRD PARTIES
- FOR ENFORCEABILITY BETWEEN THE PARTIES: STATUTE OF FRAUDS

CLAUDEL VS CA The rule of thumb is that a sale of land, once consummated, is valid regardless of the form it
may have been entered into.However, in the event that a third party, as in this case, disputes
the ownership of the property, the person against whom that claim is brought can not present
any proof of such sale and hence has no means to enforce the contract. Thus the Statute of
Frauds was precisely devised to protect the parties in a contract of sale of real property so that
no such contract is enforceable unless certain requisites, for purposes of proof, are met.
Therefore, except under the conditions provided by the Statute of Frauds, the existence of the
contract of sale made by Cecilio with his siblings can not be proved.

SPS ALFREDO VS SPS BORRAS There was a valid and enforceable contract of sale even though there is no written instrument
evidencing the alleged contract of sale over the Subject Land in favor of SPS. BORRAS. The
contract of sale between the spouses Godofredo and Carmen and the spouses Armando and
Adelia was a perfected contract. A contract is perfected once there is consent of the
contracting parties on the object certain and on the cause of the obligation. The contract of
sale of the Subject Land has also been consummated because the sellers and buyers have
performed their respective obligations under the contract. SPS. ALFREDO cannot invoke the
Statute of Frauds to deny the existence of the verbal contract of sale because they have
performed their obligations, and have accepted benefits, under the verbal contract.

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ESTRELLADO VS PRESIDING The Franciscos could not produce the deeds of sale between them and the Estrellados.
JUDGE Nonetheless, they presented the certification signed in by the late Spouses Alipio and Vivina
Barredo. The Franciscos also presented the receipt signed by the late Spouses Alipio and Vivina
Barredo to the effect that they had received from Dr. Francisco the balance of ₱972.15 as the
"final instalment and full payment of the sale of the land.These documents pointed to nothing
else but that the late Spouses Alipio and Vivina Barredo had sold their parcel of land of 15,465
square meters to Dr. Francisco. It is required under Article 1403(2) of the Civil Code that the
sale of real property, to be enforceable, should be in a writing subscribed by the party charged
for it. This requirement was met herein by the Franciscos even in the absence of any formal
deed of sale. Considering that the agreement between the parties on the sale was reduced in
writing and signed by the late Spouses Alipio and Vivina Barredo as the sellers, the sale was
enforceable under the Statute of Frauds. Despite the document embodying the agreement on
the sale not being acknowledged before a notary public, the non-observance of the form
prescribed by Article 1358(1)35 of the Civil Code did not render the sale invalid. Indeed, the
form required by Article 1358 was only for convenience of the parties, and was not essential to
the validity or enforceability of the sale.

3. FOR VALIDITY: SALE OF REAL PROERTY THROUGH AN AGENT, AUTHORITY MUST BE IN WRITING

III. CONSUMMATION
A. OBLIGATION OF SELLER
7 SPS SANTOS VS CA In contracts to sell, ownership is reserved by the vendor and is not to pass until full payment
of the purchase price. This we find fully applicable and understandable in this case, given
that the property involved is a titled realty under mortgage to a bank and would require
notarial and other formalities of law before transfer thereof could be validly effected. In a
contract of sale, the vendor has lost ownership of the thing sold and cannot recover it, unless
the contract of sale is rescinded and set aside. In a contract to sell, however, the vendor
remains the owner for as long as the vendee has not complied fully with the condition of
paying the purchase price. If the vendor should eject the vendee for failure to meet the
condition precedent, he is enforcing the contract and not rescinding it.

SANTOS VS SANTOS Neither tax receipts nor declarations of ownership for taxation purposes constitute sufficient
proof of ownership. They must be supported by other effective proofs.These requisite proofs
we find present in this case. Despite the sale, Jesus and Rosalia continued to possess and
administer the property and enjoy its fruits by leasing it to third persons. Both Rosa and
Salvador did not exercise any right of ownership over it. Before the second deed of sale to
transfer her 1/2 share over the property was executed by Rosa, Salvador still sought the
permission of his mother.Further, after Salvador registered the property in his name, he
surrendered the title to his mother.These are clear indications that ownership still remained
with the original owners.
Article 1498, provides that when the sale is made through a public instrument, its execution
is equivalent to the delivery of the thing subject of the contract. Petitioner avers that
applying said provisions to the case, Salvador became the owner of the subject property by
virtue of the two deeds of sale executed in his favor. BUT execution of a deed of sale is NOT
a conclusive presumption of delivery possession. The Code merely said that the execution

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shall be equivalent to delivery. The presumption can be rebutted by clear and convincing
evidence. Presumptive delivery can be negated by the failure of the vendee to take actual
possession of the land sold.

DY, JR. VS CA The mortgagor who gave the property as security under a chattel mortgage did not part with
the ownership over the same. He had the right to sell it although he was under the obligation
to secure the written consent of the mortgagee.Thus, Wilfredo Dy, as the chattel mortgagor
can sell the subject tractor. There is no dispute that the consent of Libra Finance was
obtained in the instant case.The sale between the brothers was therefore valid and binding
as between them and to the mortgagee, as well. Art. 1498. When the sale is made through a
public instrument, the execution thereof shall be equivalent to the delivery of the thing
which is the object of the contract, if from the deed the contrary does not appear or cannot
clearly be inferred. In the instant case, actual delivery of the subject tractor could not be
made. However, there was constructive delivery already upon the execution of the public
instrument pursuant to Article 1498 and upon the consent or agreement of the parties when
the thing sold cannot be immediately transferred to the possession of the vendee. (Art.
1499) While it is true that Wilfredo Dy was not in actual possession and control of the
subject tractor, his right of ownership was not divested from him upon his default.

ADDISON VS FELIX The execution of a public instrument gives rise only to a prima facie presumption of delivery,
which is negated by the failure of the vendee to take actual possession of the land sold. “A
person who does not have actual possession of the thing sold cannot transfer constructive
possession by the execution and delivery of a public instrument." In this case, no
constructive delivery of the land transpired upon the execution of the deed of sale since it
was not the spouses Villamor, Sr. but the respondents who had actual possession of the
land. The presumption of constructive delivery is inapplicable and must yield to the reality
8 that the petitioners were not placed in possession and control of the land.
SPS SANTIAGO VS VILLAMOR

LA FUERZA VS CA Upon the completion of the installation of the conveyors, in May, 1960, particularly after the
last trial run, in July 1960, La Fuerza was in a position to decide whether or not it was
satisfied with said conveyors, and, hence, to state whether the same were a accepted or
rejected. The failure of La Fuerza to express categorically whether they accepted or rejected
the conveyors does not detract from the fact that the same were actually in its possession
and control; that, accordingly, the conveyors had already been delivered by the plaintiff; and
that, the period prescribed in said Art. 1571 had begun to run.

B. DELIVERY/ SPECIAL RULES

BEHN MEYER VS YANGCO Yangco ordered 80 drums of caustic soda from Behn Meyer to be shipped from New York to
Manila. Only 71 drums were received and the 9 were lost. Yangco refused to accept the
substitute goods offered by Behn Meyer which were different from what he ordered. The
contract provided CIF Manila.

Behn Meyer should bear the burden of loss. Behn Meyer failed to prove that it performed its

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part in the contract In this case, the place of delivery was Manila and Behn Meyer has not
legally excused default in delivery of the specified merchandise at that place. In resume, we
find that the plaintiff has not proved the performance on its part of the conditions precedent
in the contract. For breach of warranty, the buyer may demand rescission of the contract of
sale

Additional discussion: Payment of freight by the buyer = acquires ownership at the point of
shipment. Payment of freight by the seller = title of property does not pass until the goods
have reached their destination.

C.I.F. means Cost, Insurance and Freight = CFI is paid by the seller. They signify that the price
fixed covers not only the cost of the goods, but the expense of freight and insurance to be paid
by the seller. F.O.B. stands for Free on Board = seller bear all expenses until goods are
delivered
DAVID VS MISAMIS OCCIDENTAL Misamis occidental II electric cooperative inc ordered power transfromers from David. The
former failed to pay the purchase price and alleged that they never received the item when in
fact it was already released to them; that the loan they applied for such purchase was not yet
approved; and that there was no contract of sale because it was unenforceable under the
statute of fruads.

There was a valid contract of sale since there is a meeting of the minds. Although the form is
unconventional, it is the express stipulation and intent of the parties which is considered.
There was also delivery which consummated the sale, as evidenced by the bill of lading. There
being delivery and release, said fact constitutes partial performance which takes the case out
of the protection of the Statute of Frauds. It is elementary that the partial execution of a
contract of sale takes the transaction out of the provisions of the Statute of Frauds
DESIGNER BASKETS VS AIR SEA Ambiente ordered goods from DBI. These were shipped through ACCLI who was the agent of
9 ASTI (both carrier). Ambiente was able to receive the goods yet he did not pay. DBI filed a
complaint agains Ambiente, ACCLI and ASTI that they should all be solidarily liable.

It cannot be so. There is no obligation, therefore, on the part of ASTI and ACCLI to release the
goods only upon the surrender of the original bill of lading. The general rule is that upon
receipt of the goods, the consignee surrenders the bill of lading to the carrier and their
respective obligations are considered canceled. The law, however, provides two exceptions
where the goods may be released without the surrender of the bill of lading because the
consignee can no longer return it. These exceptions are when the bill of lading gets lost or for
other cause.

A contract of sale is separate and distinct from a contract of carriage. They involve different
parties, different rights, different obligations and liabilities. Not being a party to the contract of
sale between DBI and Ambiente, ASTI cannot be held liable for the payment of the value of the
goods sold
ARCAINA VS INGRAM Ingram bought a parcel of land with an estimated area of 6,200sqm from Arcaina for the price
of 1,860,000. After Ingram caused the property to be surveyed it was discovered that the land
had an area of 12,000sqm. Ingram claims that she owns the whole unit by virtue of the sale.

This is not true. Article 1524 states that: “In a lump sum contract, a vendor is generally
obligated to deliver all the land covered within the boundaries, regardless of whether the real
area should be greater or smaller than that recited in the deed. However, in case there is
conflict between the area actually covered by the boundaries and the estimated area stated in
the contract of sale, he/she shall do so only when the excess or deficiency between the former
and the latter is reasonable.” The difference of 5,800sqm is to substantial to be considered

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 FTP Notes – SALES MIDTERM – Atty. Marasigan

reasonable. Ingram is entitled only to what is stated in their contract which is 6,200spqm.

Additional:  two types of pricing agreement: a unit price contract wherein the purchase price is
determined by way of reference to a stated rate per unit area (e.g., P1,000.00 per sq. m.) or
a lump sum contract which states a full purchase price for an immovable the area of which
may be declared based on an estimate or where both the area and boundaries are stated (e.g.,
P1 million for 1,000 sq. m., etc.). 

C. DOUBLE SALE

SPS ROQUE VS AGUADO Sps roque executed a deed of conditional sale with Rivero et. al. for a parcel of land which
stated that ownership shall be transferred upon payment of the full purchase price. The same
lot was then acquired by another through a free patent and was sold to Aguado, who
mortgaged the land and was subsequently foreclosed by the bank.

The deed of conditional sale was in fact a contract to sell.  In a contract to sell, there being no
previous sale of the property, a third person buying such property despite the fulfillment of
the suspensive condition such as the full payment of the purchase price, cannot be deemed a
buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the
property.
There is no double sale in such case. Title to the property will transfer to the buyer after
registration because there is no defect in the owner-seller’s title per se, but the latter, of
course, may be sued for damages by the intending buyer.
CORONEL VS CA Coronel entered into a contract of sale with Alcaraz which stated that the ownership will be
transferred upon the receipt of the down payment of P50,000 and it was so executed.
However, said land was subsequently sold by Coronel to Mabanag for the down payment of
10 P300,000 and rescinded the contract with Alcaraz and deposited the P50,000 back to the
latter.

The receipt of down payment is a conditional contract of sale and not a contract to sell. There
was a perfected contract of sale. Accordingly, there is a case of double sale and article 1544
shall apply.
URACA VS CA Uraca was the lessee of a commercial building owned by Velez. Velez offered to sell it to Uraca
fo P1,050,000 and they agreed. However, Velez raised the price to P1,400,000, Uraca did not
accept such. Subsequently, Velez sold the same to Avenue Merchandising inc.

There was a perfected contract of sale between Uraca and Velez for P1.050,000. There was no
novation as the requisites were not complied with. Uraca has the better right over the
property.
Article 1544 requires that such registration must be coupled with good faith. Jurisprudence
teaches us that "the governing principle is primus tempore, potior jure (first in time, stronger in
right). Knowledge gained by the first buyer of the second sale cannot defeat the first buyer's
rights except where the second buyer registers in good faith the second sale ahead of the first.
PAGADUAN VS SPS OCUMA Eugenia Reyes, the owner of a parcel of land sold the same land to both pagaduan and ocuma.
Pagaduan being the first buyer but their transactions were never recorded. Sps Ocuma being
the subsequent buyer, effected the registration of the deed of sale.

Pagaduan is the rightful owner of the land. There is double sale. For Sps Ocuma to inoke the
2nd paragraph of article 1544, they must be in good faith. However, they had knowledge of the
prior sale to Pagaduan which is antithetical to good faith. It is to be emphasized that the
Agaton Pagaduan never parted with the ownership and possession of that portion of Lot No.

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785 which he had purchased from Eugenia Santos. Hence, the registration of the deed of sale
by respondents was ineffectual and vested upon them no preferential rights to the property in
derogation of the rights of the petitioners.
CARBONELL VS CA Poncio, the owner sold a parcel of land to Carbonell who then assumed mortgage and paid the
arrears. Subsequently, Poncio said that he can no longer continue the sale since he sold the
same land to Sps Infante who immediately constructed a gate around the property.

Carbornell was a buyer in good faith and has a better right over the land. Her good faith
subsisted and continued to exist when she recorded her adverse claim four (4) days prior to
the registration of Infantes's deed of sale. Carbonell's good faith did not cease after Poncio
told her on January 31, 1955 of his second sale of the same lot to Infante.
ROSAROSO VS SORIA The requirement under article 1544, in cases of double sale, is two-fold: the acquisition in
good faith and the registration. If the buyer such in this case is in bad faith, the alleged
registration they have made amounted to no registration at all. When a piece of land is in the
actual possession of persons other than the seller, the buyer must be wary and should
investigate the rights of those in possession to be in good faith.
SPS VALLIDO VS SPS PONO Martino Vallido sold a parcel of land: first to sps pono which was not registered but the latter
became the occupants thereafter; second to his grandson Esmeraldo who was given the OCT
and was able to register the same in the registry of deeds. There was a double sale and Sps
Pono had a better right over the property since Esmeraldo was not a buyer in good faith. them.
First, Martino, as seller, did not have possession of the subject property. Second, during the
sale on July 4, 1990, Martino did not have the owner’s duplicate copy of the title. Third, there
were existing permanent improvements on the land. Fourth, the respondents were in actual
possession of the land. These circumstances are too glaring to be overlooked and should have
prompted the petitioners, as prospective buyers, to investigate or inspect the land
TAINA MAIGQUE-STONE VS The subject land by sps Tecson was first sold to Cattleya, however Tecson cannot give the OCT
CATTLEYA LAND since he subsequently sold the same land to Taina who was used as a dummy by her foreigner
11 husband. There can be no double sale in this case. Since the subsequent sale made to Taina
was void ab initio as it was a violation of the constitutional prohibition against aliens acquiring
real properties, their subsequent marriage did not validate the sale.
SPS DOMINGO VS MANZANO Sps Manzano entered into a contract to sell with the Sps Domingo, the latter failed to pay the
full purchase price upon the deadline. They offered to pay the remaining balance however sps
Manzano rejected it since they already sold the property to Aquino. There can be no double
sale in this case, considering that the contract entered into by Sps Manzano and Sps Domingo
was a contract to sell. Sps. Domingos failure to pay the price in full rendered their contract to
sell ineffective and without force and effect, thus nullifying any claim or better right they may
have had.
SPRING HOMES VS SPS TABLADA Spring Homes Sold a parcel of land to both Sps Tablada and Sps Lumbres. The first buyers of
the subject property, the Spouses Tablada, were able to take said property into possession but
failed to register the same because of Spring Homes’ unjustified failure to deliver the owner’s
copy of the title whereas the second buyers, the Spouses Lumbres, were able to register the
property in their names. But while said the Spouses Lumbres successfully caused the transfer
of the title in their names, the same was done in bad faith.
CALMA VS LACHICA JR. Lachica bought a parcel of land from Ceferino but never registered the sale Ceferino. Lachica
then left the property in the possession of his tenant for 20 years. Upon his return, he found
out that Ceferino’s son sold the land to Calma and had it registered in his name. There is
double sale and article 1544 shall apply. Calma had better rights over the property. Calma was
never remiss in his duty of ensuring that the property that he was going to purchase had a
clean title. Despite Ricardo's title being clean on its face, Calma still conducted an investigation
of his own by proceeding to the Register of Deeds, as well as to the bank where said title was
mortgaged, to check on the authenticity and the status of the title. Thus, Calma was proven to
be in good faith

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D. OBLIGATIONS OF BUYER

IV. DOCUMENTS OF TITLE

A. TYPES OF DOCUMENTS OF TITLE AND ITS WARRANTIES
B. DELIVERY THROUGH CARRIER

V. SALE BY NON-OWNER OR BY ONE HAVING VOIDABLE TITLE

AZNAR VS YAPDIANGCO Santos was the original owner of the car advertised to be sold. Marella posed as a buyer and
was able to steal the car through fraud. Marella then sold the stolen car to Aznar which was
subsequently caught by the police authorities. Santos has better rights over the car and not
Aznar. Article 1506 shall not apply. Marella did not have any title to the property under
litigation because the same was never delivered to him. He sought ownership or acquisition of
it by virtue of the contract. Marella did not have any right over the property nor can he
transfer rights which he never had.
TAGACTAC VS JIMENEZ Tagactac was the owner of a car which he sold to a foreigner, Feist, who issued a check.
However when Tagactac encashed the check he discovered that Feist had no account in such
bank. Feist succeeded in having the deed of sale notarized and was able to sell the car to
Jimenez two months after. Jimenez was a purchaser in good faith and Tagactac is no longer
entitled to possession of the car. When Jimenez acquired the car, he had no knowledge of any
flaw in the title of the person from whom he acquired it. There is a valid transmission of
ownership from true owner [Tagatac] to the swindler [Feist], considering that they had a
contract of sale. Feist acquired defective and voidable title, but when he sold it to Sanchez, he
conferred a good title on the latter. Jimenez bought the car from Sanchez in good faith, for
12 value, and without notice of any defect in Sanchez’ title, so he acquired a good title to the car.
Good title means an indefeasible title to the car, even as against original owner Tagatac.
EDCA VS SANTOS Professor Cruz was an impostor who ordered books from EDCA and sold some of the books to
Santos. EDCA found out that Cruz was not a professor in DLSU and had no funds to cover the
check he issued. EDCA sued for recovery of ownership of all the books ordered by Cruz,
including those purchased by Santos. EDCA cannot do so. Ownership in the thing sold shall not
pass to the buyer until full payment of the purchase only if there is a stipulation to that effect.
Otherwise, the rule is that such ownership shall pass from the vendor to the vendee upon the
actual or constructive delivery of the thing sold even if the purchase price has not yet been
paid. Delivery of the thing sold will effectively transfer ownership to the buyer who can in turn
transfer it to another.

VI. LOSS, DETERIORATION, FRUITS AND OTHER BENEFITS

CHRYSLER VS CA Chrysler Philippines made deliveries to Sambok motors which had two branches, namely:
Sambok Bacolod and Sambok ilo-ilo. After the delivery has been made, Chrysler demanded
payment from Sambok Bacolod but the latter refused since there was misdelivery to Sambok
ilo-ilo. The matter of misdelivery is not the decisive factor for relieving Sambok, Bacolod, of
liability herein. Sambok, Bacolod, and Sambok, Iloilo, are actually one. Sambok, Bacolod,
initiated, but did not pursue, to take delivery as they were advised by Negros Navigation that
because some parts were missing. They would just be informed as soon as the missing parts
were located. It was only after 4 years that such parts were found. Sambok, Bacolod, cannot be
faulted for not accepting or refusing to accept the shipment from Negros Navigation four years
after shipment.
Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the
buyer may reject them.

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 FTP Notes – SALES MIDTERM – Atty. Marasigan

The general rule that before, delivery, the risk of loss is home by the seller who is still the
owner, under the principle of "res petit domino", is applicable in this case.
LAWYER’S COOP VS GENERAL RULE The loss of the object of the contract of sale is borne by the owner or in case of
TABORRA force majeure the one under obligation to deliver the object is exempt from liability. THIS IS
NOT APPLICABLE HERE Contract provides that loss or damage after delivery shall be borne by
the buyer FORCE MAJEURE DEFENSE FAILS. The rule only holds true when the obligation
consists in the delivery of a determinate thing and there is no stipulation holding him liable
even in case of fortuitous event. The obligation is pecuniary in nature, and the obligor bound
himself to assume the loss after the delivery.

VII. REMEDIES IN CASE OF BREACH

A. REMEDIES OF BUYER

FIRST UNITED VS First United Constructors Corporation purchased on installment several dumptrucks, prime
BAYANIHAN AUTOMOTIVE movers and transit mixers through different transactions from Bayanihan which they agreed
that the latter shall extend repair services. First United stopped paying when one of the trucks
malfunctioned and Bayanihan refused to repair such. Petitioners could not validly resort to
recoupment against respondent. Recoupment (reconvencion) is the act of rebating or
recouping a part of a claim upon which one is sued by means of a legal or equitable right
resulting from a counterclaim arising out of the same transaction. It was improper for
petitioners to set up their claim for repair expenses and other spare parts of the dump truck
against their remaining balance on the price of the prime mover and the transit mixer they
owed to respondent. Recoupment must arise out of the contract or transaction upon which
the plaintiff’s claim is founded.9 To be entitled to recoupment, therefore, the claim must arise
from the same transaction

13 B. ORDINARY REMEDIES OF SELLER

C. SPECIAL REMEDIES OF UNPAID SELLER OF GOODS
- POSSESSORY LIEN
- STOPPAGE IN TRANSITU
- SPECIAL RIGHT OF RESALE
- SPECIAL RIGHT TO RESCIND
D. SALE OF MOVABLE ON INSTALLMENTS

LEVY HERMANOS, INC. VS Hermanos sold to Garvacio a car. After garvacio paid the initial payment he executed a
GERVACIO promissory note for the balance of P2,400 and to secure payment for such note he mortgaged
the car to Hermanos. Article 1454-A does not apply to this case. In order to apply the
provisions of article 1454A of the Civil Code it must appear that there was a contract for the
sale of personal property payable in installments and that there has been a failure to pay two
or more installments." The contract, in the instant case, while a sale of personal property, is
not, however, one on installments, but on straight term, in which the balance, after payment
of the initial sum, should be paid in its totality at the time specified in the promissory note.
DELTA MOTOR SALES VS Niu Kim Duan bought airconditioners from Delta motor sales in instalment for 24 months. They
NIU KIM DUAN only paid for 7 months and have been using the airconditioners for 22 months when an action
for replevin was issued by Delta Motors. Because of such default the downpayment and
instalments paid by Niu Kim DUan was treated as rentals since they were using the units for
free to the prejudice of Delta Motors. The treatment of the installment payments as rentals
cannot be said to be unconscionable.

The vendor in a sale of personal property payable in instalments may exercise one of three
remedies, namely, (1) exact the fulfilment of the obligation, should the vendee fail to pay; (2)

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 FTP Notes – SALES MIDTERM – Atty. Marasigan

cancel the sale upon the vendee's failure to pay two or more instalments; (3) foreclose the
chattel mortgage, if one has been constituted on the property sold, upon the vendee's failure
to pay two or more instalments. The third option or remedy, however, is subject to the
limitation that the vendor cannot recover any unpaid balance of the price and any agreement
to the contrary is void (Art. 1484). The three (3) remedies are alternative and NOT cumulative.
If the creditor chooses one remedy, he cannot avail
himself of the other two.
TAJANGLANGIT VS Tajanlangit bought tractors and a thresher in instalment from sounthern motors, he issued a
SOUTHERN MOTORS promissory note to satisfy the total purchase price. However, Tajanlangit failed to meet any
instalment, they were sued for the amount of the promissory note and the same goods were
levied and sold at a public auction. The remedy in article 1484(3) Foreclose the chattel
mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay
cover two or more installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be
void.

Tajanlangits would invoke the last paragraph. But there has been no foreclosure of the chattel
mortgage nor a foreclosure sale. Therefore the prohibition against further collection does not
apply.
ELISCO TOOLS VS CA The transcation of the parties was in fact a sale on instalment. Although the agreement
provides for the payment by private respondents of monthly rentals, it gives them the option
to purchase the motor vehicle at the end of the 5th year or upon payment of the 60th monthly
rental when all monthly rentals shall be applied to the payment of the full purchase price of
the car. It is clear that the transaction in this case is a lease in name only. The so-called monthly
rentals are in truth monthly amortizations on the price of the car. The remedies provided for in
Art. 1484 are alternative, not cumulative. The exercise of one bars the exercise of the others.
EQUITABLE SAVINGS VS there was no vendor-vendee relationship between Palces and Equitable Savings. A judicious
14 PALCES perusal of the records would reveal that Palces never bought the subject vehicle from
Equitable Savings but from a third party, and merely sought financing from Equitable Savings
for its full purchase price. In order to document the loan transaction between Equitable
Savings and Palces, a Promissory Note with Chattel Mortgage dated August 18, 2005 was
executed wherein Palces acknowledged her indebtedness to Equitable Savings and placed the
subject vehicle as a security for the loan. Indubitably, a loan contract with the accessory
chattel mortgage contract - and not a contract of sale of personal property in installments -
was entered into by the parties with Palces standing as the debtor-mortgagor and Equitable
Savings as the creditor-mortgagee.

E. REMEDIES IN CASE OF IMMOVABLES

F. SALE OF REAL ESTATE ON INSTALLMENTS- RA 6552 (MACEDA LAW)

VALARAO VS CA In any event, the rescission of the contract and the forfeiture of the payments already made
could not be effected, because the case falls squarely under Republic Act No. 6552, 22
otherwise known as the "Maceda Law." Section 3 of said law provides: that the private
respondent was entitled to a one-month grace period for every year of instalments paid, which
means that she had a total grace period of three months from December 31, 1990. Indeed, to
rule in favor of petitioner would result in patent injustice and unjust enrichment. This tribunal
is not merely a court of law, but also a court of justice.
GARCIA VS CA The recision was valid because it was a contract to sell. Contracts are law between the parties,
and they are bound by its stipulations. It is clear from their contract that the parties intended
their agreement to be a Contract to Sell: Dela Cruz retains ownership of the subject lands and
does not have the obligation to execute a Deed of Absolute Sale until petitioners' payment of
the full purchase price. Payment of the price is a positive suspensive condition, failure of which

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 FTP Notes – SALES MIDTERM – Atty. Marasigan

is not a breach but an event that prevents the obligation of the vendor to convey title from
becoming effective. Strictly speaking, there can be no rescission or resolution of an obligation
that is still non-existent due to the non-happening of the suspensive condition. Dela Cruz is
thus not obliged to execute a Deed of Absolute Sale in petitioners' favour because of
petitioners' failure to make full payment on the stipulated date. Article 1592 of the New Civil
Code, requiring demand by suit or by notarial act in case the vendor of realty wants to rescind
does not apply to a contract to sell but only to contract of sale. In contracts to sell, where
ownership is retained by the seller and is not to pass until the full payment.
ACTIVE REALTY VS ACTIVE REALTY can be compelled to refund to DAROYA the value of the lot or to deliver a
DAROYA substitute lot at DAROYA’S option. The contract to sell in the case at bar is governed by
Republic Act No. 6552 -- The Realty Instalment Buyer Protection Act, or more popularly known
as the Maceda Law -- which came into effect in September 1972. Its declared public policy is to
protect buyers of real estate on installment basis against onerous and oppressive conditions.
PAGTALUNAN VS VDA DE Respondent is alleged to be illegally withholding possession of the subject property after the
MANZANO termination of the Contract to Sell between Patricio and respondent. It is, therefore,
incumbent upon petitioner to prove that the Contract to Sell had been cancelled in accordance
with R.A. No. 6552.

The pertinent provision of R.A. No. 6552 reads:

Sec. 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding
industrial lots, commercial buildings and sales to tenants under Republic Act Numbered
Thirty eight hundred forty-four as amended by Republic Act Numbered Sixty-three hundred
eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled
to the following rights in case he defaults in the payment of succeeding installments:

15 (a) To pay, without additional interest, the unpaid installments due within the total grace
period earned by him, which is hereby fixed at the rate of one month grace period for every
one year of installment payments made: Provided, That this right shall be exercised by the
buyer only once in every five years of the life of the contract and its extensions, if any.

(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of
the payments on the property equivalent to fifty percent of the total payments made and,
after five years of installments, an additional five percent every year but not to exceed
ninety percent of the total payments made: Provided, That the actual cancellation of the
contract shall take place after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act and upon full
payment of
the cash surrender value to the buyer.

R.A. No. 6552, otherwise known as the "Realty Installment Buyer Protection Act," recognizes in
conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the
seller to cancel the contract upon non-payment of an installment by the buyer, which is simply
an event that prevents the obligation of the vendor to convey title from acquiring binding
force. The Court agrees with petitioner that the cancellation of the Contract to Sell may be
done
outside the court particularly when the buyer agrees to such cancellation.

However, the cancellation of the contract by the seller must be in accordance with Sec. 3 (b) of
R.A. No. 6552, which requires a notarial act of rescission and the refund to the buyer of the full
payment of the cash surrender value of the payments on the property. Actual cancellation of

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 FTP Notes – SALES MIDTERM – Atty. Marasigan

the contract takes place after 30 days from receipt by the buyer of the notice of cancellation or
the demand for rescission of the contract by a notarial act and upon full payment of the cash
surrender value to the buyer. Based on the records of the case, the Contract to Sell was not
validly cancelled or rescinded under Sec. 3 (b) of R.A. No. 6552.

In addition, Sec. 3 (b) of R.A. No. 6552 requires refund of the cash surrender value of the
payments on the property to the buyer before cancellation of the contract. The provision does
not provide a different requirement for contracts to sell which allow possession of the property
by the buyer upon execution of the contract like the instant case.
PLANTERS VS R. A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial,
CHANDUMAL residential) the right of the seller to cancel the contract upon non-payment of an installment
by the buyer, which is simply an event that prevents the obligation of the vendor to
convey title from acquiring binding force.

The law also provides for the rights of the buyer in case of cancellation. Thus, Sec. 3 (b) of the
law provides that: "If the contract is cancelled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty percent of the total
payments made and, after five years of installments, an additional five percent every year
but not to exceed ninety percent of the total payments made: Provided,That the actual
cancellation of the contract shall take place after thirty days from receipt by the buyer of the
notice of cancellation or the demand for rescission of the contract by a notarial act and upon
full payment of the cash surrender value to the buyer."

R.A. No. 6552 recognizes the right of the seller to cancel the contract but any such cancellation
must be done in conformity with the requirements therein prescribed. In addition to the
notarial act of rescission, the seller is required to refund to the buyer the cash surrender value
of the payments on the property. The actual cancellation of the contract can only be deemed
16 to take place upon the expiry of a thirty (30)-day period following the receipt by the buyer of
the notice of cancellation or demand for rescission by a notarial act and the full payment of the
cash surrender value.

The allegation that Chandumal made herself unavailable for payment is not an excuse as the
twin requirements for a valid and effective cancellation under the law, i.e., notice of
cancellation or demand for rescission by a notarial act and the full payment of the cash
surrender value, is mandatory.
OPTIMUM VS SPS In a contract to sell, the prospective seller binds himself to sell the property subject of the
JAVELLANOS agreement exclusively to the prospective buyer upon fulfillment of the condition agreed
upon which is the full payment of the purchase price but reserving to himself the
ownership of the subject property despite delivery thereof to the prospective buyer.

Further, it is significant to note that given that the Contract to Sell in this case is one which has
for its object real property to be sold on an installment basis, the said contract is especially
governed by – and thus, must be examined under the provisions of – RA 6552, or the "Realty
Installment Buyer Protection Act", which provides for the rights of the buyer in case of his
default in the payment of succeeding installments.

Pertinently, since Sps. Jovellanos failed to pay their stipulated monthly installments as found
by the MeTC, the Court examines Optimum’s compliance with Section 4 of RA 6552, as above-
quoted and highlighted, which is the provision applicable to buyers who have paid less than
two (2) years-worth of installments. Essentially, the said provision provides for three (3)
requisites before the seller may actually cancel the subject contract: first, the seller shall give
the buyer a 60-day grace period to be reckoned from the date the installment became due;

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 FTP Notes – SALES MIDTERM – Atty. Marasigan

second, the seller must give the buyer a notice of cancellation/demand for rescission by
notarial act if the buyer fails to pay the installments due at the expiration of the said grace
period; and third, the seller may actually cancel the contract only after thirty (30) days from
the buyer’s receipt of the said notice of cancellation/demand for rescission by notarial act.
SPS NOYNAY VS Cause of action has been defined as an act or omission by which a party violates a right of
CITIHOMES BUILDER another. It requires the existence of a legal right on the part of the plaintiff, a correlative
obligation of the defendant to respect such right, and an act or omission of such defendant in
violation of the plaintiff’s rights. A complaint should not be dismissed for insufficiency of cause
of action if it appears clearly from the complaint and its attachments that the plaintiff is
entitled to relief.

Included in those matters which were handed over to UCPB were the provisions outlined in
Section 6 of the Contract to Sell. In the said provision, Citihomes, as the seller has been given
the right to cancel the contract to sell in cases of continuing default by Spouses Noynay, to
wit: SECTION 6. If for any reason, whatsoever, the BUYER fails to pay
three (3) consecutive monthly installments, the provision of RA No. 6552 shall apply.

The right to evict is the first constitutive element of the cause of action in this unlawful
detainer case. Considering,however, that the right to cancel was already assigned prior to the
commencement of this controversy with the execution of the Assignment, its legal
consequences cannot be avoided. Well-established is the rule that the assignee is deemed
subrogated to the rights as well as to the obligations of the seller/assignor. By virtue of the
deed of assignment, the assignee is deemed subrogated to the rights and obligations of the
assignor and is bound by exactly the same conditions as those which bound the
assignor. What can be inferred from here is the effect on the status of the assignor relative to
the relations established by a contract which has been subsequently assigned; that is, the
assignor becomes a complete stranger to all the matters that have been conferred to the
17 assignee.

The Court stressed the importance of complying with the provisions of the Maceda Law as to
the cancellation of contracts to sell involving realty installment schemes. There it was held that
the cancellation of the contract by the seller must be in accordance with Section 3 (b) of the
Maceda Law, which requires the notarial act of rescission and the refund to the buyer of the
full payment of the cash surrender value of the payments made on the property. The actual
cancellation of the contract takes place after thirty (30) days from receipt by the buyer
of the notice of cancellation or the demand for rescission of the contract by a notarial act and
upon full payment of the cash surrender value to the buyer, to wit: (b) If the contract is
cancelled, the seller shall refund to the buyer the cash surrender value of the payments
on the property equivalent to fifty percent of the total payments made and, after five years of
installments, an additional five percent every year but not to exceed ninety percent of
the total payments made: Provided, That the actual cancellation of the contract shall take
place after thirty days from receipt by the buyer of the notice of cancellation or the demand
for rescission of the contract by notarial act and upon full payment of the cash surrender value
to the buyer.
ASSOCIATED MARINE Despite its name having no reference to contract to sell, the Shelter Contract Award is in fact a
OFFICERS VS DECENA contract to sell.

"A contract to sell is defined as a bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the subject property despite delivery thereof to
the prospective buyer, binds itself to sell the said property exclusively to the prospective buyer
upon fulfillment of the condition agreed upon, that is, full payment of the purchase price."

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The Shelter Contract Award falls within this definition, as it stipulates that upon full
reimbursement payment of the value of the house and lot, the petitioner shall execute a Deed
of Transfer and shall cause the transfer of title of the property to respondent's name. Any
reference to monthly reimbursements in the contract is just a guise to hide what actually are
installments payments for the value of the house and lot.

Since the contract to sell was not validly rescinded under Section 3(b) of Republic Act 6552
(Realty Installment Buyer Protection Act), the respondent can still occupy the property
undisturbed.

Section 3(b), R.A. 6552:

"(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of
the payments on the property equivalent to fifty per cent of the total payments made, and,
after five years of installments, an additional five per cent every year but not to exceed
ninety per cent of the total payments made: Provided, That the actual cancellation of the
contract shall take place after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act and upon full
payment of the cash surrender value to the buyer."

Lacking proof that the Shelter Contract Award has been cancelled in accordance with R.A.
6552, there is as yet no basis to declare respondent's possession of the house and lot as illegal.

G. THE SUBDIVISION AND CONDOMINIUM BUYERS’ PROTECTIVE DECREE (PD 957)

VIII. CONDITIONS AND WARRANTIES

A. CONDITIONS
18 ROMERO VS CA A perfected contract of sale may either be absolute or conditional depending on whether the
agreement is devoid of, or subject to, any condition imposed on the passing of title of the thing
to be conveyed or on the obligation of a party thereto. When ownership is retained until the
fulfillment of a positive condition the breach of the condition will simply prevent the duty to
convey title from acquiring an obligatory force. If the condition is imposed on an obligation of a
party which is not complied with, the other party may either refuse to proceed or waive said
condition (Art. 1545, Civil Code). Where, of course, the condition is imposed upon the
perfection of the contract itself, the failure of such condition would prevent the juridical
relation itself from coming into existence.

The term "condition" in the context of a perfected contract of sale pertains, in reality, to the
compliance by one party of an undertaking the fulfillment of which would beckon, in turn, the
demandability of the reciprocal prestation of the other party. The reciprocal obligations
referred to would normally be, in the case of vendee, the payment of the agreed
purchase price and, in the case of the vendor, the fulfillment of certain express warranties
(which, in the case at bench is the timely eviction of the squatters on the property).

It would be futile to challenge the agreement here in question as not being a duly perfected
contract. A sale is at once perfected when a person (the seller) obligates himself, for a price
certain, to deliver and to transfer ownership of a specified thing or right to another (the buyer)
over which the latter agrees.

In contracts of sale particularly, Article 1545 of the Civil Code, aforementioned, allows the
obligee to choose between proceeding with the agreement or waiving the performance of the
condition. It is this provision which is the pertinent rule in the case at bench. Here, evidently,

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petitioner has waived the performance of the condition imposed on private respondent to free
the property from squatters. In any case, private respondent's action for rescission is not
warranted. She is not the injured party. The right of resolution of a party to an obligation under
Article 1191 of the Civil Code is predicated on a breach of faith by the other party that violates
the reciprocity between them.
GONZALES VS LIM Art. 1545. Where the obligation of either party to a contract of sale is subject to any condition
which is not performed, such party may refuse to proceed with the contract or he may waive
performance of the condition.If the other party has promised that the condition should happen
or be performed, such first mentioned party may also treat the nonperformance of the
condition as a breach of warranty.

In the case at bar, respondents obviously did not choose the first option as they
proceeded with their contract with petitioner despite the latter’s non-fulfillment of the
condition in the agreement. In fact, in their comment, they stated that they "took possession
of the properties and caused extensive improvement and installed facilities and equipment"
thereon.
CATUNGAL VS RODRIGUEZ Article 1308 states that the contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them.

Article 1182 of the Civil Code, in turn, provides:

Art. 1182. When the fulfillment of the condition depends upon the sole will of the
debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of a
third person, the obligation shall take effect in conformity with the provisions of this Code.

In the past, this Court has distinguished between a condition imposed on the perfection of a
contract and a condition imposed merely on the performance of an obligation. While
failure to comply with the first condition results in the failure of a contract, failure to
19 comply with the second merely gives the other party the option to either refuse to
proceed with the sale or to waive the condition. This principle is evident in Article 1545 of the
Civil Code on sales, which provides in part:

Art. 1545. Where the obligation of either party to a contract of sale is subject to any condition
which is not performed, such party may refuse to proceed with the contract or he may waive
performance of the condition x x x.

Paragraph 1(b) of the Conditional Deed of Sale, stating that Rodriguez shall pay the
balance of the purchase price when he has successfully negotiated and secured a road right of
way,is not a condition on the perfection of the contract nor on the validity of the entire
contract or its compliance as contemplated in Article 1308. It is a condition imposed only on
Rodriguez’s obligation to pay the remainder of the purchase price. In our view and applying
Article 1182, such a condition is not purely potestative as the Catungals contend. It is not
dependent on the
sole will of the debtor but also on the will of third persons who own the adjacent land and
from whom the road right of way shall be negotiated. In a manner of speaking, such a
condition is likewise dependent on chance as there is no guarantee that Rodriguez and the
third party-landowners would come to an agreement regarding the road right of way. This type
of mixed condition is expressly allowed under Article 1182 of the Civil Code.

Art. 1197. If the obligation does not fix a period, but from its nature and the circumstances it
can
be inferred that a period was intended, the courts may fix the duration thereof. The courts
shall also fix the duration of the period when it depends upon the will of the debtor.

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In every case, the courts shall determine such period as may under the circumstances have
been probably contemplated by the parties. Once fixed by the courts, the period cannot be
changed by them.

Article 1374 of the Civil Code provides that the various stipulations of a contract shall
be interpreted together, attributing to the doubtful ones that sense which may result from all
of them taken jointly. The same Code further sets down the rule that if some stipulation
of any contract should admit of several meanings, it shall be understood as bearing that
import which is most adequate to render it effectual.

B. WARRANTIES
1. EXPRESS WARANTIES

HARRISON MOTORS VS Such representation shall be considered as a seller's express warranty under Art. 1546 of the
NAVARRO Civil Code which covers any affirmation of fact or any promise by the seller which induces the
buyer to purchase the thing and actually purchases it relying on such affirmation or promise. It
includes all warranties which are derived from express language, whether the language is in
the form of a promise or representation.

Under Art. 1599 of the Civil Code, once an express warranty is breached the buyer can accept
or keep the goods and maintain an action against the seller for damages. This was what private
respondent did. She opted to keep the two (2) trucks which she apparently needed for her
business and filed a complaint for damages, particularly seeking the reimbursement of the
amount she paid to secure the release of her vehicles.
MOLES VS IAC When article is sold as a second hand item, a question arises as to whether there is an implied
20 warranty of its quality or fitness. It is generally held that in the sale of a designated and specific
article sold as secondhand, there is no implied warranty as to its quality or fitness for the
purpose intended, at least where it is subject to inspection at the time of the sale. On the other
hand, there is also authority to the effect that in a sale of a secondhand articles there may be,
under some circumstances, an implied warranty of fitness for the ordinary purpose of the
article sold or for the particular purpose of the buyer.

HOWEVER it is not without exceptions. Article 1562 of our Civil Code, which was taken from
the Uniform Sales Act, provides:

Art. 1562. In a sale of goods, there is an implied warranty or condition as to the quality or
fitness of the goods, as follows:

(1) Where the buyer, expressly or by implication, makes known to the seller the particular
purpose for which the goods are acquired, and it appears that the buyer relies on the
seller's skill or judgment (whether he be the grower or manufacturer or not), there is an
implied warranty that the goods shall be reasonably fit for such purpose;

A redhibitory defect must be an imperfection or defect of such nature as to engender a certain

degree of importance. An imperfection or defect of little consequence does not come within
the category of being redhibitory.

2. IMPLIED WARRANTIES

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PILIPINAS MAKRO VS A warranty is a collateral undertaking in a sale of either real or personal property,
COCO CHARCOAL express or implied; that if the property sold does not possess certain incidents or qualities,
the purchaser may either consider the sale void or claim damages for breach of warranty. Thus,
a warranty may either be express or implied.

An express warranty pertains to any affirmation of fact or any promise by the seller relating to
the thing, the natural tendency of which is to induce the buyer to purchase the same. It
includes all warranties derived from the language of the contract, so long as the language is
express-it may take the form of an affirmation, a promise or a representation.

An implied warranty is one which the law derives by application or inference from the
nature of transaction or the relative situation or circumstances of the parties, irrespective of
any intention of the seller to create it. In other words, an express warranty is different from an
implied warranty in that the former is found within the very language of the contract while the
latter is by operation of law.

The CA erred in treating Section 4(i) of the deeds of sale as akin to an implied warranty against
eviction. First, the deeds of sale categorically state that the sellers assure that the properties
sold were free from any encumbrances which may prevent Makro from fully and absolutely
possessing the properties in question. Second, in order for the implied warranty against
eviction to be enforceable, the following requisites must concur: (a) there must be a final
judgment; (b) the purchaser has been deprived of the whole or part of the thing sold; (c) said
deprivation was by virtue of a prior right to the sale made by the vendor; and (d) the vendor
has been summoned and made co-defendant in the suit for eviction at the instance of the
vendee.

21

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POWER COMMERCIAL VS Although most authorities consider transfer of ownership as the primary purpose of
CA sale, delivery remains an indispensable requisite as our law does not admit the doctrine of
transfer of property by mere consent. The Civil Code provides that delivery can either be (1)
actual (Article 1497) or (2) constructive (Articles 1498-1501). Symbolic delivery (Article 1498),
as a species of constructive delivery, effects the transfer of ownership through the execution of
a public document. Its efficacy can, however, be prevented if the vendor does not possess
control over the thing sold, in which case this legal fiction must yield to reality.

A breach of this warranty requires the concurrence of the following

Circumstances:
(1) The purchaser has been deprived of the whole or part of the thing sold;
(2) This eviction is by a final judgment;
(3) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(4) The vendor has been summoned and made co-defendant in the suit for eviction at
the instance of the vendee.

In the absence of these requisites, a breach of the warranty against eviction under Article 1547
cannot be declared. The presence of lessees does not constitute an encumbrance of the land,
nor does it deprive petitioner of its control thereof.
ESCALER VS CA Article 1548, in relation to Articles 1558. and 1559 of the New Civil Code reads as follows:

Art. 1548, Eviction shall take place whenever by a final judgment based on a right prior to the
sale or an act imputable to the vendor, the vendee is deprived of the whole or of a
part of the thing purchased.
The vendor shall answer for the eviction even though nothing has been said in the contract on
the subject. The contracting parties, however, may increase, diminish, or suppress this legal
obligation of the vendor.
22
Art. 1558. The vendor shall not be obliged to make good the proper warranty, unless
he is summoned in the suit for eviction at the instance of the vendee.
Art. 1559. The defendant vendee shall ask, within the time fixed in the Rules of Court
for answering the complaint that the vendor be made as co-defendant.

In order that a vendor's liability for eviction may be enforced, the following requisites must
concur—a) there must be a final judgment; b) the purchaser has been deprived of the whole or
part of the thing sold; c) said deprivation was by virtue of a right prior to the sale made
by the vendor; and d) the vendor has been summoned and made co-defendant in the suit
for eviction at the instance of the vendee.

In the case at bar, the fourth requisite—that of being summoned in the suit for eviction (Case
No. 4252) at the instance of the vendee—is not present. All that the petitioners did, per
their very admission, was to furnish respondents, by registered mail, with a copy of the
opposition they (petitioners filed in the eviction suit. Decidedly, this is not the kind of notice
prescribed by the aforequoted Articles 1558 and 1559 of the New Civil Code. The term "unless
he is summoned in the suit for eviction at the instance of the vendee" means that the
respondents as vendor/s should be made parties to the suit at the instance of
petitioners vendees, either by way of asking that the former be made a co-defendant or by the
filing of a third-party complaint against said vendors. Nothing of that sort appeared to have
been done by the petitioners in the instant case.
NUTRIMIX FEEDS VS CA Under the law, the requisites to recover on account of hidden defects are as follows:
(a)The defect must be hidden;
(b)The defect must exist at the time the sale was made;

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(c)The defect must ordinarily have been excluded from the contract;
(d)The defect, must be important (renders thing UNFIT or considerably decreases FITNESS); (e)
The action must be instituted within the statute of limitations.

In the sale of animal feeds, there is an implied warranty that it is reasonably fit and suitable to
be used for the purpose which both parties contemplated. To be able to prove liability on the
basis of breach of implied warranty, three things must be established by the respondents. The
first is that they sustained injury because of the product; the second is that the injury
occurred because the product was defective or unreasonably unsafe; and finally, the
defect existed when the product left the hands of the petitioner.

A manufacturer or seller of a product cannot be held liable for any damage allegedly caused by
the product in the absence of any proof that the product in question was defective. The defect
must be present upon the delivery or manufacture of the product; or when the product left the
sellers or manufacturers control; or when the product was sold to the purchaser; or the
product must have reached the user or consumer without substantial change in the
condition it was sold.
SUPERCARS VS FLORES It is well within respondents right to recover damages from petitioner who committed a
breach of warranty against hidden defects. Article 1599 of the Civil Code partly provides:
Article 1599. Where there is a breach of warranty by the seller, the buyer may, at his election:
xxx
(4) Rescind the contract of sale and refuse to receive the goods, or if the goods have already
been received, return them or offer to return them to the seller and recover the price or any
part thereof which has been paid.

When the buyer has claimed and been granted a remedy in anyone of these ways, no other
remedy can thereafter be granted, without prejudice to the provisions of the second paragraph
23 of Article 1191. Petitioners contention that under Article 1191 of the Civil Code, rescission can
no longer be availed of as the vehicle was already in the hands of an innocent purchaser for
value lacks merit. Rescission is proper if one of the parties to a contract commits a substantial
breach of its provisions. It creates an obligation to return the object of the contract. It can be
carried out only when the one who demands rescission can return whatever he may be obliged
to restore.

Rescission abrogates the contract from its inception and requires a mutual restitution of
the benefits received. Petitioner is thus mandated by law to give back to respondent
the purchase price upon his return of the vehicle.
PHILIPPINE STEEL Article 1546 of the Civil Code provides that any affirmation of fact or any promise by the seller
COATING VS QUINONES relating to the thing is an express warranty if the natural tendency of such affirmation or
promise if to induce the buyer to purchase the same, and if the buyer purchases the thing
relying thereon. As held in Carrascoso, Jr. vs. CA, the following requisites must be
established in order to prove that there is an express warranty in a contract of sale:
(1) the express warranty must be an affirmation of fact or any promise by the seller relating to
the subject matter of the sale;
(2) the natural effect of the affirmation or promise is to induce the buyer to purchase the thing;
and
(3) the buyer purchases the thing relying on that affirmation or promise. Here, the oral
statements of Angbengco created an express warranty.

According to Article 1599, Civil Code, recoupment refers to the reduction of extinction of the
price of the same item, unit, transaction or contract upon which a plaintiff’s claim is founded.

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C. CONSUMER ACT OF THE PHILIPPINES – RA 7394

IX. EXTINGUISHMENT OF SALE

A. GROUNDS
B. CONVENTIONAL REDEMPTION

DAVID VS DAVID A sale with right to repurchase is governed by Article 1601 of the Civil Code, which
provides that: "Conventional redemption shall take place when the vendor reserves the right
to repurchase the thing sold, with the obligation to comply with the provisions of Article 1616
and other stipulations which may have been agreed upon." Conformably with Article 1616,14
the seller given the right to repurchase may exercise his right of redemption by paying the
buyer:
(a) the price of the sale, (b) the expenses of the contract, (c) legitimate payments made by
reason of the sale, and (d) the necessary and useful expenses made on the thing sold.

In sales with the right to repurchase, the title and ownership of the property sold are
immediately vested in the vendee, subject to the resolutory condition of repurchase by the
vendor within the stipulated period.
TORRES VS CA The right of repurchase is not a right granted the vendor by the vendee in a subsequent
instrument, but is a right reserved by the vendor in the same instrument of sale as one of the
stipulations of the contract. Once the instrument of absolute sale is executed, the vendor can
no longer reserve the right to repurchase, and any right thereafter granted the vendor by the
vendee in a separate instrument cannot be a right to repurchase but some other right like an
option to buy in the instant case.
SPS RAYMUNDO VS An equitable mortgage is one that - although lacking in some formality, forms and words, or
BANDONG other requisites demanded by a statute - nevertheless reveals the intention of the
parties to charge a real property as security for a debt and contains nothing impossible or
24 contrary to law.

The instances when a contract - regardless of its nomenclature - may be presumed to

be an equitable mortgage are enumerated in the Civil Code as follows:

Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the
following cases:
(1) When the price of a sale with right to repurchase is unusually
inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another
instrument
extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold.
(6) In any other case where it may be fairly inferred that the real intention of the parties is that
the transaction shall secure the payment of a debt or the performance of any other obligation.

Art. 1604.The provisions of Article 1602 shall also apply to a contract purporting to be an
absolute sale.

For Articles 1602 and 1604 to apply, two requisites must concur: one, the parties entered into
a contract denominated as a contract of sale; and two, their intention was to secure an
existing debt by way of an equitable mortgage.
HEIRS OF REYES VS REYES There were established circumstances which are among the badges of an equitable mortgage

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enumerated in Article 1602, paragraphs 2 and 5 of the Civil Code, to wit:

Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following
cases: (2) When the vendor remains in possession as lessee or otherwise; (5) When the vendor
binds himself to pay the taxes on the thing sold;

The existence of any one of the conditions enumerated under Article 1602 of the Civil Code,
not a concurrence of all or of a majority thereof, suffices to give rise to the presumption that
the contract is an equitable mortgage.
KINGS PROPERTIES VS
GALIDO
HEIRS OF THE LATE SPS Where the essential requisites are present and the simulation refers only to the content
BALITE VS LIM or terms of the contract, the agreement is absolutely binding and enforceable between the
parties and their successors in interest.

The voluntary, written and unconditional acceptance of contractual commitments negates

the theory of equitable mortgage.

REPUELA VS ESTATE OF An equitable mortgage is one which, although lacking in some formality, or form, or
SPS LARAWAN words, or other requisites demanded by a statute, reveals the intention of the parties to
charge real property as security for a debt, and contains nothing impossible or contrary to law.

For a presumption of an equitable mortgage to arise, two requisites must first be satisfied,
namely: that the parties entered into a contract denominated as a contract of sale and that
their intention was to secure an existing debt by way of mortgage. There is no single conclusive
test to determine whether a deed of sale, absolute on its face, is really a simple loan
accommodation secured by a mortgage. Article 1602, in relation to Article 1604 of the Civil
25 Code, however, enumerates several instances when a contract, purporting to be, and in fact
styled as, an absolute sale, is presumed to be an equitable mortgage. Thus:
ART. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following
cases:
(1)When the price of a sale with right to repurchase is unusually inadequate;
(2)When the vendor remains in possession as lessee or otherwise;
(3)When upon or after the expiration of the right to repurchase another instrument extending
the period of redemption or granting a new period is executed;
(4)When the purchaser retains for himself a part of the purchase price;
(5)When the vendor binds himself to pay the taxes on the thing sold;
(6)In any other case where it may be fairly inferred that the real intention of the parties is that
the transaction shall secure the payment of a debt or the performance of any other obligation.

In any of the foregoing case, any money, fruits, or other benefit to be received by the vendee
as rent or otherwise shall be considered as interest which shall be subject to the usury laws.
xxx
ART. 1604. The provisions of Article 1602 shall also apply to a contract purporting to be an
absolute sale.

In this case, it appears that two (2) instances enumerated in Article 1602 — possession of the
subject property and inference that the transaction was in fact a mortgage attended the
assailed transaction.

C. LEGAL REDEMPTION

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ALONZO VS IAC The written notice should be given by the vendor and not the vendees, conformably to
a similar requirement under Article 1623, reading as follows:

Art. 1623. The right of legal pre-emption or redemption shall not be exercised except
within thirty days from the notice in writing by the prospective vendor, or by the vendors, as
the case may be. The deed of sale shall not be recorded in the Registry of Property, unless
accompanied by an affidavit of the vendor that he has given written notice thereof to all
possible redemptioners.
GARCIA VS CALALIMAN Written notice is indispensable, actual knowledge of the sale acquired in some other
manners by the redemptioner, notwithstanding. He or she is still entitled to written
notice, as exacted by the Code, to remove all uncertainty as to the sale, its terms and its
validity, and to quiet any doubt that the alienation is not definitive. The law not having
provided for any alternative, the method of notifications remains exclusive, though the
Code does not
prescribe any particular form of written notice nor any distinctive method for written
notification of redemption.
PRIMARY STRUCTURES VS ART. 1621. The owners of adjoining lands shall also have the right of redemption when a piece
VALENCIA of rural land, the area of which does not exceed one hectare, is alienated unless the grantee
does not own any rural land.

This right is not applicable to adjacent lands which are separated by brooks, drains, ravines,
roads and other apparent servitudes for the benefit of other estates. If two or more adjoining
owners desire to exercise the right of redemption at the same time, the owner of the adjoining
land of smaller area shall be preferred; and should both lands have the same area, the one
who first requested the redemption.

ART. 1623. The right of legal pre-emption or redemption shall not be exercised except within
26 thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case
may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied
by an affidavit of the vendor that he has given written notice thereof to all possible
redemptioners.

The right of redemption of co-owners excludes that of adjoining owners.

Whenever a piece of rural land not exceeding one hectare is alienated, the law grants to the
adjoining owners a right of redemption except when the grantee or buyer does not own any
other rural land. In order that the right may arise, the land sought to be redeemed and the
adjacent property belonging to the person exercising the right of redemption must both
be rural lands. If one or both are urban lands, the right cannot be invoked.

The written notice of sale is mandatory. This Court has long established the rule that
notwithstanding actual knowledge of a co-owner, the latter is still entitled to a written notice
from the selling co-owner in order to remove all uncertainties about the sale, its terms and
conditions, as well as its efficacy and status.

X. ASSIGNMENT
XI. LEASE

SAMELO VS MANOTOC An action for unlawful detainer exists when a person unlawfully withholds possession of any
land or building against or from a lessor, vendor, vendee or other persons, after the
expiration or termination of the right to hold possession, by virtue of any contract, express
or implied.

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The only issue to be resolved in an unlawful detainer case is physical or material possession
of the property involved, independ relationship of lessor and lessee is established in an
unlawful detainer case, any attempt of the parties to inject the question of ownership into the
case is futile, except insofar as it might throw light on the right of possession.

An implied new lease was therefore created pursuant to Article 1670 of the Civil Code, which
expressly provides:

Article 1670. If at the end of the contract the lessee should continue enjoying the thing
leased for fifteen days with the acquiescence of the lessor, and unless a notice to the contrary
by either party has previously been given, it is understood that there is an implied new lease,
not for the period of the original contract, but for the time established in Articles 1682
and 1687. The other terms of the original contract shall be revived.

An implied new lease or tacita reconduccion will set in when the following requisites are found
to exist: a) the term of the original contract of lease has expired; b) the lessor has not given the
lessee a notice to vacate; and c) the lessee continued enjoying the thing leased for fifteen days
with the acquiescence of the lessor.

Article 1687 of the Civil Code on implied new lease provides:

Article 1687. If the period for the lease has not been fixed, it is understood to be from year
to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to
week, if the rent is weekly; and from day to day, if the rent is to be paid daily.

ent of any claim of ownership by any of the parties involved. Thus, when the Since the
27 rent was paid on a monthly basis, the period of lease is considered to be from month to
month, in accordance with Article 1687 of the Civil Code. A lease from month to month is
considered to be one with a definite period which expires at the end of each month upon a
demand to vacate by the lessor. When the respondent sent a notice to vacate to the petitioner
on August 5, 1998, the tacita reconduccion was aborted, and the contract is deemed to have
expired at the end of that month. A notice to vacate constitutes an express act on the part of
the lessor that it no longer consents to the continued occupation by the lessee of its property.
After such notice, the lessees right to continue in possession ceases and her possession
becomes one of detainer.
DIZON VS CA An implied new lease does not ipso facto carry with it any implied revival of private
respondent's option to purchase (as lessee thereof) the leased premises. The provision
entitling the lessee the option to purchase the leased premises is not deemed incorporated in
the impliedly renewed contract because it is alien to the possession of the lessee. Private
respondents right to exercise the option to purchase expired with the termination of
the original contract of lease for one year.

BURGOS ROMBLON SALVERON UNAS