Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty.

FAbsy was speaking at maximum

speed and I was not able to get everything. Use at your own risk!  - sjgrafilo

SALES (FINALS) arises upon the happening of the

suspensive condition.
09.08.2011 c) In case of CONTRACT OF SALE, the
obligation to deliver arises at the
Obligations of a seller? time of PERFECTION.
1. preserve the subject matter
- with the diligence of a good father What are GENERAL WARRANTIES?
of a family, from perfection of the contract Warranty against eviction
of sale until delivery Warranty against hidden defects.
- if the subject matter of the sale is
specific, the seller is required to preserve so Will all delivery result to transfer of
as not to be liable for deterioration or loss. ownership?
2. deliver the thing, consequence is to GEN. RULE - DELIVERY TRANSFERS
transfer ownership OWNERSHIP
3. deliver the fruits, accessories and 2 Requisites for delivery to produce LEGAL
accessions EFFECT:
1. intention to transfer ownership -
When should you deliver? even if you deliver but it is without the
Delivery should be made: intention, that delivery will not transfer
1. at the time stipulated by the ownership
parties 2. That delivery is a consequence of
2. usage of trade or custom a VALID contract of Sale
3. within reasonable hours - working
hours 8am - 5pm EXECUTION OF A PUBLIC INSTRUMENT
Public Instrument - these are
Where should you deliver? instruments that are notarized
Delivery should be made: Registered Instruments - binds 3rd
1. at the place stipulated by the persons, not necessarily notarized
parties
2. usage of trade or custom REMEMBER 2 KINDS OF DELIVERY:
3. place of business of seller constructive and actual
4. seller’s residence
XPN: specific goods - where the goods may If an instrument of conveyance is made a
be found public instrument, what is the effect?
Real or actual delivery
Can you demand delivery at 3am or at
9pm? If beyond reasonable hour, can you Execution of deed of sale = constructive
be compelled to deliver or to accept? delivery
If beyond reasonable hour denial of delivery d) if made public instrument = real or
is JUSTIFIABLE. You have a ground to deny or actual delivery
reject delivery. Remember: acceptance is
effective, denial is justifiable. What are the XPNs that the execution of a
public instrument will result to actual
When do you deliver the fruits? delivery?
a) The obligation to deliver the fruits 1. if the thing sold is under material
arises from the time the obligation to control by the seller at the time of perfection
deliver arises. of the contract of sale
b) In case of CONDITIONAL SALE, XPN to this XPN: if there is a
ownership transfers immediately, it is stipulation as to assumption of risk
perfected upon the meeting of the 2. possession and control within a
minds, but the obligation to deliver reasonable period of time

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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo

3. if there is a stipulation to the 09.14.2011

contrary
3 Types of Constructive Delivery of What are the instances when delivery does
Incorporeal Property: not transfer ownership in contract of sale?
1. Execution of Public Instrument (Art. 1502)
2. Title of ownership placed in the 1. Sale on return - ownership not fully
hands of the Buyer perfected, buyer may revest ownership
3. Using such right with the consent within a reasonable time
of the seller 2. Sale on trial or acceptance -
a) buyer signifies approval or
When is delivery complete? acceptance = transfer of ownership
In case of MOVABLE goods, b) buyer retained goods
if what has been delivered was less without notice of rejection, failed to return
than what has been contracted: within reasonable time = transfer of
1. buyer has right to reject ownership
2. accept what has been delivered, c) does any other act
but pay at the contract price and demand accepting the transaction = transfer of
specific performance ownership
Can the buyer reject after
acceptance? When do you reserve ownership?
Depends on whether the buyer has Gen. Rule - Delivery transfers ownership
knowledge of the capacity of the seller to XPNS
deliver the remaining difference of the 1. express reservation by stipulation
quantity agreed upon. 2. implied reservation of ownership:
a) bill of lading deliverable to seller,
If what has been delivered was more or his agent or to their order - because the
than what has been contracted: goods will be deliverable to the seller or his
1. buyer may reject all the goods agent, or to their order, therefore the buyer
delivered (if indivisible) cannot get the goods yet, subject to certain
2. accept all the goods and pay at conditions.
contract price - this is deemed as an b) bill of lading deliverable to the
amendment to the contract of sale buyer or his agent or to their order, but the
3. reject the excess, pay and accept bill of lading is retained by the seller -
only what has been agreed upon. because without the bill of lading, the buyer
cannot take possession of the goods
In case of MIXED goods, same as the rules because the goods cannot be released
above. without it.
c) bill of lading + bill of exchange
When the goods are in the hands of a 3 rd deliverable to the buyer, his agent or their
person, delivery is completed when that 3rd order - for the purpose of getting
person acknowledges that the goods are acceptance and payment, if the bill of
now owned by the buyer. That exchange is dishonored, NO effective
acknowledgment transfers ownership. delivery

In case of IMMOVABLE PROPERTIES, *Bill of Lading (“lay-ding”) - a document

If less than what has been agreed acknowledging the receipt of goods by a
upon, the Buyer may: carrier or by the shipper’s agent and the
1. accept the property, with contract for transporting those goods, a
proportionate reduction of the price. document of title
2. not accept = rescission, provided *buyer retains bill of lading = no perfected
that the area lacking is not less than 1/10 of transfer ownership
the entire area

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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo

It is the Seller’s obligation to deliver, but is When will the obligation to warrant be
the acceptance of the buyer a requisite to extinguished?
perfect delivery? What is the distinction 1. there is a waiver
between non-acceptance and refusal to 2. buyer fails to give notice of such breach
accept? Will refusal always result to the of warranty within reasonable time
prevention of transfer of ownership?
Gen. Rule - Acceptance is NOT necessary Remedies of the Seller
because it is the obligation of the seller. I. General Remedies/ Ordinary Remedies
Gen. Rule - Refusal to accept will NOT -movables:
prevent completion of delivery. If there is no delivery yet:
XPN: Justifiable reason for such refusal.  rescission -
a) buyer does not appear at the
place of delivery
Obligations of the Buyer: b) buyer appears but does not pay
1. payment of the price EXCEPT when there is a stipulation to the
2. acceptance of the subject matter contrary
if there is delivery:
When do you pay the price?  specific performance - to recover
1. at the time stipulated payment
2. If there is no stipulation = within
reasonable time (no delivery)
1. to offer delivery
Are you required to pay interest? 2. refusal to accept - rescission + damages
Gen. Rule: NO! 3. resell the goods at reasonable price
XPN: 4. notify the buyer that you hold the goods
1. there is stipulation as bail
2. if there is a stipulation that should
the buyer be in default, interest is required - What will be the measure of damages by
counted from the time of either judicial or reason of non-acceptance?
extra-judicial demand 1. profits that the seller would have earned
3. the subject matter produces fruits 2. actual loss resulting from non-
acceptance
When do you accept delivery? 3. goods later on resold, difference between
1. at the time stipulated contract price and price were the goods
2. at the time and place of actual delivery were sold to buyer
4. seller already informed that buyer is
When is there an implied acceptance of repudiating the sale, expenses incurred at
delivery? deliverable state
1. buyer intimates to seller that he accepts
the goods II. Special Remedies
2. if after reasonable time, the buyer retains 1. possessory lien - right to possess
the goods and does not tell seller he rejects 2. stoppage in transit
3. buyer does acts inconsistent with 3.. special right of resale
ownership of seller - when the buyer 4. special right to rescind
exercises rights of ownership
Why special right?
Will acceptance by the buyer relieve the Not ordinary (duh!), specific only to unpaid
seller of all his obligations? NO! seller.

What obligations remain? Warrant the thing.

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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo
Who is an unpaid seller? (Art. 1525)
1. when the whole of the price has not been
paid or tendered
2. when a bill of exchange or other
negotiable instrument has been received as
conditional payment and the condition was
not fulfilled
* seller may still be considered an unpaid
seller even if the title to the goods has
passed to the buyer, even if the seller was
paid partially
What is the minimum requirement for the
exercise of special remedies?
The goods must be at seller’s possession
If still have possession of the goods, no
transfer of ownership yet = possessory lien +
withholding of delivery
Instances when to exercise possessory lien
If there is Partial delivery - possessory
lien on the undelivered goods
UNLESS the part delivery shows waiver of
right to possessory lien.
Instances where seller losses his possessory
lien:
1. when he delivers the goods to a carrier for
the purpose of transmission to the buyer
without reservation of ownership
2. buyer already acquired possession of the
goods
3. waiver of possession
What is the right of STOPPAGE IN TRANSITU?
Art. 1530 - Right of the seller who sold his
goods on credit, to repossess them while
they are in transit (while in the possession of
the carrier or middleman) by reason of
discovery of insolvency of the buyer
What is the ground?
Buyer is or becomes INSOLVENT. judicial
declaration of insolvency is not required.
If your petition for insolvency is sufficient in
form at the start of proceedings
Sufficient for the seller to show that the
buyer has more liabilities than his assests.
When are goods considered to be in transit?
Art. 1531 - 1. After delivery t0o a carrier or
other bailee and before the buyer or his
agent takes delivery of them
2. if the goods are rejected by the
buyer and the carrier or ther bailee
continues in possession of them.
When are the goods considered no longer in
transit? (Atty. Fabella’s lectures states only 3, but the
reviewer stated 4… check the book na lang  )
1. after delivery to buyer or his agent
2. buyer or his agent obtains
possession of the goods at the point before
the destination originally fixed
3. the carrier or bailee
acknowledges that he holds the goods in
behalf of buyer or his agent
4. carrier or bailee wrongfully refuses
to deliver the goods to the buyer or his
agent
How is the right of stoppage in transit
exercised?
1. notice of claim to the carrier
- you are claiming that you are an
unpaid seller and you are claiming the
amount of the liability of the buyer
- notice of claim is given to the
carrier or bailee or to the actual possessor of
the goods.
CONSEQUENCE: The contract of
carriage will cease because carrier no
longer carrying the goods to a destination. It
is converted to a simple obligation of bailee
where you are in possession of the goods in
behalf of the seller. Carrier must redeliver
the goods to seller or upon seller’s directions.
What if the carrier still delivers the goods to
the buyer?
The carrier is liable for damages for violation
of his contract which was converted to a
bailor-bailee contract and failure to comply
with the directions of the seller.
2. by obtaining actual possession of the
goods
Who will bear the expenses for redelivery?
Seller - he was the one who gave
instructions for redelivery
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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo
09.21.2011
In all the 4 rights of the UNPAID SELLER, the
minimum requirement for him to be able to
exercise them is - SELLER MUST HAVE
POSSESSION OF THE GOODS
Right to Resell the Goods (when exercised):
1. goods are perishable
2. there is a stipulation
3. buyer in default for unreasonable length
of time
- any profit received by seller is for his own
benefit only
- BUT any damage may be reimbursed from
the buyer
Is notice needed?
NO need for validity of resale,
BUT it is ADVISABLE to notify buyer if 3rd
ground, because this is to determine
damages and if really in default for
unreasonable length of time
May the seller himself be the buyer in
resale?
NO! This is to prevent abuse. The seller will
acquire goods at a lower price and ask
buyer for deficiency = UNJUST ENRICHMENT
How to exercise the special right to rescind?
1. there is express stipulation in case of
default of the buyer
2. buyer is in default for unreasonable length
of time
Is notice needed? YES!
1) To inform buyer that the seller is
rescinding the contract
2) to determine if seller is right in
exercising his right to rescind
3) to determine if buyer is really in
default for unreasonable length of time
Remedies of Buyer if there is no delivery:
1. specific performance
2. rescission
What is anticipatory breach on the part of
the buyer?
Art. 1590 - disturbed in the possession or
ownership of the thing acquired, or should
he have reasonable grounds to fear such
disturbance, by a vindicatory action or a
foreclosure of mortgage
REMEDY: suspension of payment during
disturbance or until the seller has caused the
disturbance to cease
Gen. Rule - The buyer is justified in refusing
payment.
XPNs: 1. Seller gives security to buyer for the
return of the purchase price
2. there is a stipulation - assumption
of risk on the part of the buyer
3. seller has succeeded in
eliminating the danger or disturbance
What is anticipatory breach on the part of
the seller?
Art. 1591 - seller have reasonable grounds to
fear the loss of immovable property sold
and its price
* Should such ground not exist, the provisions
of Article 1191 shall be observed.
REMEDY: rescission of the sale (but this is
available only in specific cases)
Failure to pay the price ( remedy of seller):
1. specific performance
2. rescission
When will rescission take effect?
Notice is required for rescission to take
effect, so it will only take effect upon notice.
DEMAND = NOTICE
Art. 1592 - How Notice should be made,
either:
1. Judicial Notice - file action in court
2. Notarial Notice - in writing &
notarized
* If there was notice already, buyer
may still pay, and seller will be compelled to
accept = why? Because the contract is still
existing. Seller has no ground to refuse
payment
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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo
Art. 1593 - Automatic Rescission of Sale of
Movable property:
1. if the buyer upon the expiration of the
period fixed for delivery of the thing
purchased, refused to receive the thing
without justifiable cause
2. if the buyer failed to pay the price unless
granted a longer period within which to pay
Judicial or Notarial Act not required for
movable property. WHY?
- market value of personal things may easily
go down because of deterioration, delay
may prejudice the seller
BUT for practical reasons, notification is
necessary
* this provision is not applicable if the subject
matter is already delivered
10.04.2011
What is the rule on double sale?
1. MOVABLE property - person who may
have 1st taken possession in Good Faith
- longer possession in GF is preferred
2. IMMOVABLE property
Requisites:
a) 2 or more VALID contracts of sale
b) 2 or more contracts of sale have
the same subject matter
c) 2 or more buyers must present
conflicting interests
d) the interest is regarding ownership
e) 2 or more buyers, only 1 seller
Rules on Preference (Art. 1544):
a) the one who 1st registered in good
faith
b) if without registration - possessor in
good faith
c) one who presents the oldest title
Registration - entry of instrument of
conveyance
- entry in the books of registration,
includes annotation, cancellation, and
even the marginal notes
Who is a Purchaser in Good Faith?
1. One who buys the property without
notice that some other person has interest
on the subject matter
2. Gives full payment of the purchase price
*these 2 most concur before you
can be considered as a purchaser in good
faith
Why do you need good faith?
You need good faith to be given priority
under the rules in Art. 1544
Do you have to have personal knowledge of
ADVERSE CLAIM to be in bad faith?
If there is adverse claim, that notice will
disqualify you from being a purchaser in GF.
Your only defense is that adverse claim has
NO basis.
What if there is lis pendens?
G.R. = Same effect as adverse claim.
There is notice that there is something wrong
with the property.
If no adverse claim or lis pendens, will the
buyer be considered in GF?
Yes! Because the law does not require the
buyer to look beyond the title.
BUT if buyer has ACTUAL KNOWLEDGE of the
lis pendens and the adverse claim = BF
There are 2 buyers who bought the same
property. 1st buyer from the original owner,
2nd buyer from the heir. Who will be given
priority? If 2nd buyer 1st registers, will he be
given priority? (asked in the recit but can also be
found in Jurado reviewer  )
ART. 1544 NOT applicable, not SAME seller.
Inheritance is not considered in Art. 1544.
Apply : first in time, priority in right.
- oldest title given preference, this
may be the deed of sale or deed of
conveyance
Death of a person does not invalidate any
contract entered into prior to the death.
2 buyers, same seller, same property
1st buyer - no registration
2nd buyer - registered property first.
Who will be given preference?
It depends, we have to consider now the GF
in applying 1544.
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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo

2 buyers, same seller, same property Will all affirmations or promise be

1st buyer knew of the 2nd sale, so he registers considered as an express warranty?
first. Will the 1st buyer be given preference NO! Sales talk/ dealer’s talk - mere opinions,
even if he is in BF? UNLESS the seller is an EXPERT and the buyer
Yes. BF in the 1st buyer does not matter, the relied on that opinion to buy the subject
1st buyer will always be given priority. matter.
Bad faith only matters for the 2nd and
subsequent buyers. What are implied warranties?
1. seller has the right to sell
What is a condition? 2. warranty against eviction
Future and uncertain event which may or 3. warranty against non-apparent servitude
may not happen, upon which depends the 4. warranty against hidden defects
rising or extinction of an obligation.
(suspensive or resolutory)
seller has the right to sell - only required at
Non-performance of obligation or condition the consummation stage of the sale
is NOT necessarily a breach of warranty.
warranty against eviction - legal transfer of
2 remedies in non-performance of ownership and peaceful possession of the
condition: subject matter from time of transfer of
1. refuse to proceed with the contract ownership
2. proceed with the contract, waiving the 5 requisites:
performance of the condition a) buyer is evicted in whole or in
part from the subject matter of the
Distinction between Warranty and Condition sale
b) there is a final judgment
Warranty Conditions c) basis of eviction is a right prior to
- not always - stipulated by the the sale or an act imputable to the
stipulated, some are parties seller
implied d) seller has been summoned in the
suit for eviction at the instance of
- refers to the - refers to the the buyer; or made 3rd party
performance existence of an defendant through 3rd party
obligation claimant brought by the buyer
e) no waiver on the part of the
-refers to fitness/ - refers to delivery or buyer
mercantability transfer of ownership
Who shall take the lead in the
What are express warranties? defense? SELLER, he is the one who
Express stipulations agreed upon by the warranted the thing sold. The
parites buyer’s only obligation is to notify
the seller.
What are the 3 requisites?
1. affirmation of fact or any promise by the Final Judgment - Entry in the book
seller relating to the thing of judgment. Without appeal within
2. if the natural tendency of such affirmation 15 days, the judgment becomes
or promise is to induce the buyer to final and executory.
purchase the same
3. buyer purchase the thing relying thereon

Breach of Express Warranty = Seller liable for

damages

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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo

Failure of the buyer to appeal = he Are there XPNs?

can still avail of remedies. It is the Yes! 1. If the defect is latent or visible
seller who has the obligation to 2. if buyer is an expert in trade or
appeal. Buyer may still enforce his profession
right of warranty against eviction.
May the buyer waive this warranty? What is
the effect?
What are the rights of a buyer in Breach of Yes. Seller not aware = no liability
Warranty Against Eviction? Seller aware = Bad Faith = still liable
1. Value of the thing (at the time of
eviction)to be returned by the seller Remedies of buyer:
2. costs of suit - a)eviction suit and b) 1. withdraw from the contract + damages
enforcement of warranty 2. reduction of purchase price + damages
3. in come and fruits 8 should be exercised within 6 months from
4. expenses of the contract delivery of the thing sold.
5. damages + interests
What is Redhibitory Defect?
May a warranty against eviction be waived? Despite professional inspection, the hidden
YES!. When the buyer with knowledge of risk defect cannot be discovered (SALE of
of eviction assumed its consequence and ANIMALS)
made a waiver, the seller will not be liable. Prescriptive period (ANIMALS) = 40 days
Qualification: from delivery of the animal
 Should be an EXPRESS waiver Remedies: 1. Withdrawal from contract
 If general waiver = will only limit the 2. reduction in the purchase
liability of the seller price
 If specific waiver = will extinguish the
liability of the seller to the warranty Implied warranties in case of sale of goods
specifically waived. 1. warranty of fitness
2. warranty or mercantibility
warranty against non-apparent servitude
- immovable is encumbered with non- What are the instances of waiver?
apparent servitude not mentioned in the 1. even if knew of the defect, buyer
agreement accepted goods without protest.
2. failure to notify the seller that he is
Remedies: rescinding the sale
1. rescission 3. failure to return goods in substantially
2. action for damages good condition.
- should be exercised within 1 year
from the perfection of the contract or
execution of deed
After 1 year, what remedy is available?
Damages from discovery of non-apparent
servitude.

warranty against hidden defects

a) hidden defect renders object unfit
for its purpose
b) the hidden defect diminishes the
fitness of the object, to the extent that had
buyer known of it, he would have not
bought it.

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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo

10.06.2011 Example: Parties executed first a deed of

sale. Then they executed another
What are the grounds for extinguishmentof instrument. This 2nd instrument will be
sale? considered as a separate contract and not
Same grounds by which obligations are part of the original contract of sale even if
extinguished: the 2 instruments were notarized and
1. payment / performance executed at the same time.
2. loss of the subject matter
3. novation Characteristics of conventional redemption:
4. annulment 1. exists at the time of perfection of the
5. condonation/remission contract
6. confusion/ merger  If the stipulation was made after the
7. compensation sale was already consummated, it is
8. fulfillment of resolutory condition considered as a mere promise to sell
9. prescription
10. rescission 2. accidental stipulation
The contract of sale is also extinguished by: 3. reciprocal
- conventional redemption  Buyer must return the property, seller
- legal redemption must return the price
4. gives rise to real right if properly registered
What is conventional redemption? When  Affects 3rd persons
does it take place? 5. potestative
The right of the seller to repurchase and to  Its exercise depends upon the sole
fulfill the obligations enumerated under Art. will of the seller
1611 6. resolutory condition
It takes place when:  When fulfilled, the ownership of the
1. the vendor reserves the right to buyer is extinguisehd
repurchase the thing sold
2. vendor returns the price of the sale OPTION TO PURCHASE vs. RIGHT TO REDEEM
3. he shoulders the expense of the 1. may be created 1. part of the main
contract and any other legitimate expense independent of the contract
of the contract main contract
4. pay the value of the necessary
and useful expenses made on the thing 2. must have a 2. does not need a
incurred by the buyer separate and separate
5. and comply with other stipulations distinct consideration to be
they may have agreed upon. consideration valid and effective

Application of conventional redemption: 3. may exceed 10 3. redemption

ONLY if there is a stipulation granting the years period is up to 10
seller the right to redeem the thing he sold, years
otherwise conventional redemption has no
basis.
Prescriptive period of right to redeem:
CONVENTIONAL REDEMPTION = ACCIDENTAL 1. by agreement of the parties but should
ELEMENT not exceed 10 years from the date of
 It is stipulated upon by the parties contract
2. no agreement - 4 years from date of
Remember: Conventional redemption is contract
stipulated on the perfection stage of the *date of contract is also date of
contract. It should be part of the original notarization, the parties will sign the
deed of sale. contract upon notarization

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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo

What if the parties agreed 4 years from 2010 Immovable separately sold:
is the period to redeem and the contract  Same rule applies but buyer can be
was dated year 2000? compelled to partial redemption
The stipulation is VOID. It exceeds 10 years. because the basis is the different
If there is stipulation as to period, apply 10 contracts entered into.
years.
If no stipulation, apply 4 years. What is the effect if the seller fails to
redeem?
How is redemption effected? The transfer of title is NOT automatic.
Seller returns to buyer: Buyer acquires title = Automatic
a. price of the sale Recording of title = NOT automatic
b. expenses of the contract and any consolidation
other legitimate payments - proof of title by the order of the
c. necessary and useful expenses court
*Seller may question title in the proceeding,
If seller does not want to pay necessary and only ground is whether the contract is
useful expenses - non-payment will warrant EQUITABLE MORTGAGE or SALE WITH PACTO
the retention of the object of the sale by the DE RETRO
buyer. Nature of the opposition (buyer) - no right of
redemption, no basis, only equitable
How is redemption exercised? mortgage
By tender of payment and notice
REDEMPTION EVEN AFTER FINAL JUDGMENT
What is tender of payment? Is the offer to 30 days. W/N contract is equitable
pay sufficient? mortgage or sale with pacto de retro, other
Mere intention to pay is not sufficient. You than this ground = no more 30 days.
must really have the money when you offer
to pay. If court finds that it is a sale with pacto de
retro = 30 days
If the tender of payment is refused, are you Why? Because in case of Equitable
required to consign? mortgage, seller may pay anytime before
NO. mere valid tender of payment is foreclosure.
sufficient.
10.10.2011
Consignment = added security.
If buyer cannot be found = consignation is a EQUITABLE MORTGAGE (EM)
valid tender of payment. - a mortgage which lacks the proper
formalities, form or words or other requisites
What are the rules in sale of undivided prescribed by law for a mortgage BUT shows
immovable? Who can redeem and what the intention of the parties to make the
can be redeemed? Multi-parties. property subject of the contract a s security
for debt and contains nothing impossible or
In co-ownership: contrary to law
 Co-owner may redeem his
respective share but cannot compel Requisites of Equitable Mortgage:
buyer to partial redemption 1. parties entered into a contract
 Basis: single contract where property denominated as a contract of sale
was sold - buyer may compel all co- 2. their intention was to secure an existing
owners to redeem the entire debt by way of a mortgage
property.

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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo
Instances when a contract is presumed to
be Equitable Mortgage:
1. price of the sale is unusually inadequate
2. vendor remains in possession as lessee or
otherwise
3. upon or after the expiration of the right to
repurchase, another contract extending the
period of redemption is executed
4. buyer retains for himself a part of the
purchase price
5. vendor binds himself to pay taxes on the
thing sold
6. where it may be fairly inferred that the
real intention of the parties is that the
transaction shall secure payment of a debt
* instances of any one of the conditions =
sufficient to give rise to the presumption that
the contract is an equitable mortgage
What are the requisites for this presumption?
1. clear language in the contract that the
parties intended to secure debt by
mortgage
2. conduct of the parties clearly show that it
is an equitable mortgage
(Villanueva book - there is an enumeration of
circumstances when to treat a contract as an
equitable mortgage - Lim v. Calaguas case - sj)
When in doubt if sale with pacto de retro or
equitable mortgage:
EM prevails! Why? Because it involves lesser
transmission of rights and interests over the
property
Purpose: to prevent circumvention of the
law on usury and the prohibition against a
creditor appropriating the mortgaged
property and additionally to end unjust or
oppressive transactions or violations in
connection with a sale of property
Note: Art 1602 applicable also to absolute
sale. Requisites before absolute sale can be
considered as equitable mortgage (Art.
1604)
Effect if the sale was declared as Equitable
Mortgage:
Title remains to the seller
- if the title already transferred to
buyer - must be revested to seller through
DEED OF CONVEYANCE after compliance
with obligations under art.1616
a. return the purchase price
b. pay expenses of the
contract
c. pay all necessary and
useful expenses
Affidavit of consolidation is of no
consequence, declaration by the court that
the contract is Equitable Mortgage would
still prevail.
What is the remedy?
1. reformation of the instrument by the seller
to show true intention - Primary remedy
2. Annulment/ specific performance
Connect with Acquisitive prescription:
Ordinary = 10 years with good faith +
legal title
Extraordinary = 30 years without GF
and without legal title
Parties entered into contract, after 10 years,
can buyer refuse to surrender title because
of ordinary acquisitive prescription? If
decision rendered after 5 years (=10) = 15
years in possession of the property.
Buyer CANNOT refuse, for possession to ripen
into ownership it must be in the concept of
an owner.
Tile was adjudged as equitable mortgage,
meaning he is only holding the property but
NOT in concept of owner
Pactum Commissorium - stipulation vesting
automatic title to creditor when debtor is in
default
- against public policy
LEGAL REDEMPTION
- the right to be subrogated upon
the same terms and conditions stipulated in
the contract in the palce of one who
acquires a thing by purchase or dation in
payment or by any other trabsaction
whereby ownership is transmitted by
onerous title
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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo
Rationale for Legal Redemption:
- a privilege accorded to redemptioners
- to minimize co-ownership ( law frowns 
upon co-ownership)
Legal redemption:
1. among co-heirs (hereditary rights) Art.
1088
- must be sold to stranger, if also to
co-heir, will not apply
- notice: given by selling co-heir,
within 1 month from the time other co-heirs
were notified in writing of the sale
- redemption by other co-heir - will
redound to the benefit of the redemptioner
heir only
- if already property = legal
redemption of co-owner
2. among co-owners Art 1620
- co-owner may redeem what co-
owner sold to 3rd person
- redemption by co-owner will
redound to the benefit of ALL the other co-
owners
- may be exercised by a co-owner
only when part of the community property is
sold to a stranger
3. among adjoining owners of Rural Land
(art. 1621)
- Are all owners of the adjoining land
allowed to exercise legal redemption? NO!
Not applicable to adjacent lands which are
separated by rivers, brooks, ravines, drains,
roads and other apparent servitudes
REQUISITES for the exercise:
1. rural land with area not exceeding
1 hectare
2. such land is alienated
3. grantee does not own any rural
land
If two or more adjoining owners desire to
exercise the right or redemption at the same
time, who shall be given preference?
The owner of the land with the smaller area
will be preferred.
If both lands have the same area, the one
who first requested the redemption will be
given preference.
4. among adjoining owners of urban land
(art. 1622)
a piece of urban land which is so
small and so situated that a major portion
thereof cannot be used for any practical
purpose within a reasonable time, having
been bought merely for speculation, is
about to be re-sold, the owner of any
adjoining land has a right of pre-emption at
a reasonable price.
2 rights given:
Right of Redemption and Right of Pre-
emption
What is pre-emption?
It is the right of first refusal.
Are all urban land redeemable?
No. If the transfer is by way of inheritance =
NO redemption
Rule on Preference:
The one whose intended use is best justified
will be given preference
When does legal redemption begin to run?
Upon 30 days from receipt of notice from
the prospective seller whether co-heir, co-
owner or owner of adjoining land.
Is the 30-day period a prescriptive period?
NO! It is a condition precedent before one
can exercise the right of legal redemption
Is actual knowledge of the sale allowed?
Gen. Rule- Written notice by the seller is
required to exercise legal redemption.
Why? Because the seller is in the best
position to know to whom that notice must
be given.
XPN: (basis: jurisprudence)
1. actual knowledge to the point of
estoppel and laches
2. lack of objection = estoppel and
laches
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Disclaimer: These notes are NOT complete. It might have been that I was reciting or Atty. FAbsy was speaking at maximum
speed and I was not able to get everything. Use at your own risk!  - sjgrafilo

Redemption in tax sales - within 1 year from

the date of the sale

Redemption of judgment debtor - within 1

year from registration of the certificate of
sale “foreclosure
If no redemption = tile will be consolidated

How do you exercise legal redemption?

1. pay the purchase price
2. pay all other expenses

G.R. Judicial foreclosure = no right of

redemption, only EQUITY OF REDEMPTION

- you can pay the debt within 90

days from the order of foreclosure, but
before the confirmation of the sale by the
court

Within 90 days from final judgment

Extrajudicial foreclosure
Natural Person given = within 1 year from
registration of sale
Juridical person = anytime until registration
of the certification of sale within 3 months
- must redeem immediately, ends
upon registration

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