Beruflich Dokumente
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RECTO LAW
MACEDA LAW
The distinction is on the date of payment. For those who already paid installment for more than two (2) years, the law
gives the buyer a grace period of one month for every year of installment made within which to pay the unpaid
installment without interest. If he still fails to pay within the grace period, the seller is free to cancel the sale but only upon
compliance with two (2) conditions:
(1) payment of cash surrender value which is equivalent to 50% of all the payments made
a. Note further that if payment is made for more than 5 years, there is an additional 5% of the payment
made to be added as cash surrender value not exceeding 90% of the total payments made
(2) notice of cancellation should be given to the buyer and the notice should be by way of notarial act.
If both conditions are complied, the sale may effectively be cancelled 30 days from receipt of such notice.
For buyers who have paid installments for less than 2 years, the grace period is different. It is fixed at sixty (60) days grace
period. Within this grace period, the buyer can pay the installment without interest but failure to pay such installment
during the grace period, the seller can cancel the sale by complying with one condition: sending a notice of cancellation
by a notarial act and the sale may effectively be cancelled 30 days from receipt of such notice.
Q: What is the degree of diligence required in the preservation of the subject matter?
A: Diligence of a good father of a family
Q: Up to when are you required to preserve the subject matter?
A: Until delivery of the object
Q: A contract was perfected on November 1 covering 1 hectare of property with trees bearing fruits. Delivery is agreed to
happen on Nov. 30. Today is November 25, can the buyer demand the seller to deliver the fruits today? If the buyer is
entitled to the fruits and accessories from the moment of perfection, can the buyer demand the seller to deliver the fruits?
A: NO. The right is inchoate. The right to demand fruits and accessories only happens upon actual delivery of the principal.
The accessory follows the principal. You cannot demand delivery of fruits and accessories if the principal have not yet been
delivered. Only then can the buyer demand all the fruits and accessories that accrued from the moment of perfection up
until delivery.
Transfer of ownership is the essence of contract of sale. It is delivery which transfers ownership. Delivery can either be
actual or constructive. Actual delivery is the actual physical exchange of the property. Constructive delivery is delivery by
way of symbolism such as the giving of a key or a certificate of ownership. But in effect, constructive delivery is the same
as actual delivery. This means that, constructive delivery likewise transfers the ownership to the buyer. However, this is not
always the case.
Q: What if it is premised on a voidable or unenforceable or rescissible contract of sale? Will it still amount to transfer
ownership?
A: It will still transfer ownership. Defective contracts remain to be valid until they are effectively annulled or rescinded.
Note: Notarization is for convenience. It is a convenient way of proving the existence of a document. Without notarization,
an instrument is a private one.
Q: Are there any instance or exception where execution of a public instrument does not transfer ownership?
A: YES. The following are the instances:
(1) If there is a stipulation reserving ownership until full payment of purchase price is made
(2) If the subject matter is not within the control of the seller and he does not have the liberty to dispose of the
property
Q: If 100 cavans of rice is agreed upon but 75 cavans was only given, can you accept? And how much should you pay?
A: The buyer may accept or reject. If the buyer knew that the seller cannot complete the delivery and still accepts the
delivery, the buyer should pay the contract rate. If the buyer accepts the delivery upon the representation of the buyer
that the delivery will be completed but the seller fails to do so, the buyer should only pay the fair market value of the
object.
Q: What does sale of real property per unit or lump sum mean? What is the difference?
A:
Q: What are the rights of the buyer if what was delivered is less than the area stipulated?
A: There are two (2) remedies:
(1) Proportionate reduction of the price; or
(2) Rescission – when at least 1/10 is missing from the area agreed upon
Q: Can the buyer, even if the area delivered is complete, ask for rescission?
A: YES. If the quality of the area delivered is such that at least 1/10 is inferior in value.
Q: What if the buyer refuses to accept the object, can delivery still be considered complete?
A: YES. Delivery is complete if the conditions for delivery is met. It is not subject to the acceptance of the buyer.
Q: What are the remedies of the seller when the buyer wrongfully refuses to accept the goods?
A: The only remedy is an action for damages against the buyer. The basis of the damage is actual damages which is the
estimated loss directly and naturally resulting from the buyer’s non-acceptance. Considering that the buyer rejects the
object, should the seller sell the object to an available market, then the measure of damage would be the difference of the
contract rate and the market value of the object. If the buyer repudiates the object prior the delivery, then all actual
expenses or costs, including labor, may be demanded as damages against the buyer. Finally, the profits which the seller
could have made can also be the measure of damage.
Note: When the refusal is justified, then the action for damages will not lie.
Note: From this definition, this means that even if there is already partial payment, the seller is still unpaid because it must
be the whole of the price.
Q: What if the seller made partial delivery, can he still exercise the right of possession?
A: YES. Only as to the remaining portion.
Q: Do you need to file an action for insolvency before this right can be exercised?
A: NO. It is illogical to wait for the court to act on an insolvency proceeding. Insolvency in the law of sales is a condition
when the buyer has either ceased to pay his debts in the ordinary course of business or cannot pay his debts as they
become due, whether or not insolvency proceedings has been commenced.
Q: What is the similarity and difference between possessory lien and right of stoppage in transitu?
A: Both requires insolvency. In essence, the seller has already lost possession and the possession is supposedly transferred
to the buyer because transfer to the carrier is transfer to the buyer. However, because of the special right of stoppage in
transitu, the law deems it still in possession of the seller because it has not reached the hands of the buyer.
Note: Just like special right of resale, special right of rescission is called special because there is no need to file an action in
court. You just need to prove that you are an unpaid seller. In regular rescission you have to prove substantial breach to
invoke Art. 1191 of the Civil Code.
Q: Is it required that the seller notifies the buyer if he wants to exercise the right to resell?
A: It depends. If right of resale, notice to the buyer will depend on the ground for resale. If the ground for resale is the
perishable nature of the goods, then you don’t have to notify. Otherwise, the goods will already perish before you can
resell. If the basis for resale is the unreasonable length of time of default, then notice is advised but not required. Notice
will prove that the buyer is actually in default for an unreasonable length of time.
REMEDIES OF THE BUYER FOR FAILURE OF SELLER TO COMPLY WITH HIS OBLIGATION
Q: What is the remedy of the buyer if the seller breaches his warranties?
A: The following are the remedies of the buyer:
(1) he may accept the goods and set up against the seller breach of warranty by way of diminution or extinction of
the price (meaning he will accept the goods but will not pay for it)
(2) he may accept the goods and ask for damages for breach of warranty
(3) he may refuse the goods but maintain an action for breach of warranty for damages
(4) he may rescind the contract of sale
a. refuse to receive the goods
b. if goods are delivered, he may return or offer to return them and recover the price or any amount thereof
that was already paid
Q: When can seller still require the buyer to pay even if there is such fear of disturbance of possession or ownership?
A: On the following instance:
(1) If the seller gives security to return the price in case such disturbance of ownership or possession happens
(2) If there is a prior stipulation that regardless of such fear of disturbance, payment is still required
Q: What is the remedy of the seller in case of buyer to pay the price?
A: The remedy is rescission under Art. 1592 which is premised upon judicial or notarial demand.
Double Sale
Q: Is it always the case that when the same property is sold to two or more person that the provision of Art. 1544 will
apply?
A: NO. The following are the requisites for Art. 1544 to apply:
(1) There must be two (2) or more valid sale or transaction
(2) There must be two (2) or more sale pertaining to the same subject matter
(3) There must be two (2) or more buyers having conflicting interest over the property
(4) The two or more buyers with conflicting interest must each have bought the property from the same seller
Q; A sold a property to B and they executed a notarized deed of sale. After a month, A entered into another contract of
sale with C via a notarized deed of sale. C registered the sale with the register of deeds. Who has a better right?
A: C has a better right. He is the first in registration.
Q: Under the same set of facts. What if B discovered the sale between A and C so he immediately went to the Registry of
Deeds to register his Deed of Sale. Who has a better right?
A: B has a better right. Good faith is only applicable to subsequent buyers. If you are the first buyer, the rule does not
apply to you. All you have to do is to register it immediately. Your right will be overtaken if somebody else registers it in
good faith.
Sales Lecture of Atty. Fabella (Transcribed) 11-30-2017 | JG Soriano
Q: What is a condition?
A: Something that may or may not happen. If it happens, it may give rise to an obligation or it may extinguish an
obligation.
Q: What are the requisites of express warranty? When can a warranty be considered as an express warranty?
A: The following are the requisites of express warranty:
(1) there is an affirmation of fact or a promise by the seller relating to the subject matter
(2) such affirmation or promise induced the buyer to buy; and
(3) the buyer actually buys based from that affirmation or promise
Q: An action for eviction was filed against the buyer for the property he bought from the seller. Upon receipt of the
summons, the buyer complied to the requisite for invoking the warranty against eviction and furnished the seller a copy of
the summons received with the instruction on the part of the seller to participate in the proceedings and defend both
their right. The buyer lost and got evicted from the property. The buyer wants to make the seller liable for breach of
warranty against eviction. Will the action prosper?
A: NO. The notice required to invoke the warranty against eviction is by making the seller a party to the case. It cannot be
done by simply furnishing a copy of the summons. The seller should be impleaded to be included in the case as a co-
defendant. That is the notice required by law. If you fail to do that then you will miss one of the requisites in availing the
warranty against eviction.
Q: In the same situation as above, if the seller is impleaded as a co-defendant in a case for eviction. The seller wants you to
cooperate in defending the case but you simply don’t want to participate such that both of you lost the case. The seller
raises the defense that the buyer lost the opportunity and is in estoppel to question the liability because buyer did not
participate and did not care. Will that defense prosper?
A: The only requirement of the law for the buyer to do is to notify, meaning to implead the seller in the action for eviction.
The law does not require him to actively participate or defend the title because precisely that is the reason for that
warranty: that you will have peaceful possession of the property. If that peaceful possession is disturbed, then you can
claim damages on the ground of breach of warranty against eviction.
Q: What is the measure of the damage you can claim for breach of warranty against eviction? What are the items for
damages?
A: There are five (5) items that the buyer can claim from the seller:
(1) the value of the thing at the time of eviction
(2) incomes or fruits
(3) cost of the suit
(4) expenses of the contract
(5) damages and interest and ornamental expenses
Q: What if the waiver is specific? Will it absolve the seller from liability?
A: It depends. If the buyer gives a waiver on a specific risk of eviction and eviction happens on that risk waived, then the
seller will not be liable. But if the buyer gave a waiver on a particular risk of eviction or cause for eviction and the buyer is
evicted from some other cause, then that specific waiver will not matter. The seller will remain to be liable.
Note: Whether if the waiver is generic or specific, the seller must always be in good faith when the buyer gives his waiver
because if the seller is in bad faith, which means he knew that there will be eviction later on, then no amount of waiver,
whether generic or specific, will absolve him from liability.
Warranty against non-apparent servitude
Examples: easement of light and view, easement not to build higher than is required
In order for this warranty to be invoked, it must be attached to an immovable but is not mentioned in the agreement. And
the nature of that burden or servitude is such that the buyer is presumed not to have bought the property had he known
of such burden or servitude
The warranty will not be applicable if it is mention in the agreement, meaning there is knowledge on both part of the
parties that the immovable property is burdened by such servitude or if such burden or servitude or encumbrance is
registered in the registry of property. The buyer should have made his due diligence in determining whether the property
is encumbered by whatever encumbrance available. If those are present, the buyer cannot invoke breach of warranty for
non-apparent servitude.
Q: When can the buyer claim for damages for breach of warranty against non-apparent servitude?
A: The buyer has two (2) remedies: rescission or damages. If he claims it within one (1) year from the execution of the deed
of sale. If he discovers the breach of warranty against non-apparent servitude beyond one (1) year, then he can no longer
bring an action for rescission. His only remedy now is claim for damages. The prescriptive period of such claim for
damages is within one (1) year from discovery.
Q: When do you consider defect as a hidden defect for the purpose of applying the warranty against hidden defect?
A: It must be in such nature that such hidden defect would render the object unfit for the purpose for which it was bought.
Or such hidden defect will diminish the fitness of the object that if the buyer knew of such diminished purpose, he would
not have bought the property. Obviously, when you say hidden defects, these are defects that are not apparent from the
naked eye and the object has been relied upon for the purpose for which it was originally intended.
Q: What is the extent of liability of the seller in breach of warranty against hidden defect?
A: There should first be a distinction if the seller is aware or not of the hidden defect. If he is aware, then he will be liable
to pay the price of the object, the expenses of the contract, and damages. If he is not aware, he is still liable but only to the
price of the object and expense of the contract.
Q: What is the remedy of a buyer in case of breach of warranty against hidden defect?
A: The buyer may either withdraw from the contract or demand a proportionate reduction from the price with damages in
either case.
Q: If the goods do not conform to the implied warranty, what are the remedies of the buyer?
A: The following are the remedies:
(1) The buyer may accept or keep the goods and set up against the seller the breach of warranty by way of
recoupment in diminution or extinction the price;
(2) He may accept or keep the goods and file an action for damages for breach of warranty
(3) He may refuse to accept the goods and file an action for damages for breach of warranty
(4) He may rescind the contract and refuse to receive the goods from the seller but if he already received the goods,
he has the obligation to return the goods and recover the price he paid for such delivery
Q: Can the implied warranty in the sale of goods be waived? When is it considered waived?
A: YES. It is considered waived when:
(1) if the buyer knew of the breach of warranty when he accepted the goods without protest
(2) When he fails to notify the seller within a reasonable time of the action to rescind the contract
(3) If he fails to return or offer to return the goods in substantially as good condition as it were at the time the
ownership was transferred
Note: unreasonable delay in the return of goods is an implied waiver on the part of the buyer for the breach of warranty in
the sale of goods.
Extinguishment of Sale
Note: What is important in conventional redemption is the timing of when the reservation is made. The law requires that
reservation must be made at the time of the original contract and done in the same instrument.
Q: A and B entered into a contract of sale and as an internal agreement between the parties, they agreed that B has the
right to repurchase but in order for that side agreement to just be known between the parties, they executed a side letter
that is attached to the contract of sale evidencing the seller’s reservation of his right to repurchase. 10 years later, the
seller wants to repurchase. Can the buyer refuse?
A: The buyer can refuse. The condition is that it has to be done at the perfection of the original contract. It should not be
an afterthought and executed later on. The more important condition is that such right of repurchase must be executed in
the same instrument. It has to be embodied beside the contract of sale.
Q: Parties entered in a contract of sale. A month later, the parties, by agreement, signed an addendum to the contract.
(Note: An addendum is part and parcel of a contract itself). In the addendum, the parties agreed that the seller has the
right to repurchase the property. If the buyer wants to repurchase the property on the basis of the addendum attached to
the contract of sale, will his right prevail?
A: NO. An addendum is not a valid reservation. It should not be an afterthought. It should be executed in the instrument
at the time of the perfection of the contract. An addendum does not perfect a contract. The contract has long been
perfected at the execution upon the meeting of the minds of the parties. To allow addendum would circumvent the
requirement of the law that it should be made at the time of perfection of the sale.
Q: What is the distinction between the right to redeem (right to repurchase) and option to purchase?
A: The distinctions are:
Q: Can the parties stipulate that the period to exercise redemption can happen within 15 years?
A: A written stipulation of period for redemption cannot exceed 10 years. In case the period stipulated is 15 years, it is
valid up to the extent allowed by law. The excess of 5 years is rendered void ineffective. Case law explains that if the entire
stipulation will be rendered void, that would defeat the intention of the parties to have a period to repurchase the
property.
Q: The seller paid the price of the sale, expenses of the contract, and legitimate payments in order to redeem the property.
The buyer on the other hand claims that necessary and useful expenses should be made on the thing sold. After a few
days, the seller now tries to make payment but the buyer says the period of payment has already expired because he
failed to pay the first time. Can the seller still repurchase? Is payment of the necessary and useful expenses a pre-requisite
in order to complete redemption?
A: YES. All expenses attached to the property when redeemed should be paid. Otherwise, the redemption is not complete.
Q: What is the right of the buyer in case the seller does not pay the necessary and useful expenses on the thing sold and
the period of redemption has not yet expired?
A: The buyer has the right to retain the property (right of retention). This is available until the seller completes the
payment.
Q: Is there an instance when tender of payment is not required and redemption will still be complete?
A: YES. If the whereabouts of the buyer are unknown and the tender of payment is impossible, then consignation in court
is sufficient. Once consignation is made, the running of the prescriptive period is stopped.
Q: A, B, and C, co-owners of a property, sold the property to D with reservation of right to repurchase within 10 years from
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the execution of the contract of sale. On the 8 year, A wanted to redeem 1/3 of the property from the buyer. Can D be
compelled to resell?
A: NO. If the property is sold by several parties, like co-owners, to a singular buyer, and the sale is made in single
instrument jointly, then the property should be redeemed in its whole. The buyer cannot be compelled to give partial
redemption.
Note: It would be a different case if the sale was made separately (in a separate instrument) and independent of the other
co-owners. The co-owner may redeem that portion of his share in the property and not the entire thing.
Q: What is the 30-day rule from finality of judgment for purposes of right to repurchase?
A: The rule states that the vendor is given 30 days from finality of judgment within which to repurchase the property.
Q: If one of the parties contest the repurchase and an action is filed in court, and the court ultimately rules in favor of the
seller that the contract is actually a sale with right to repurchase, is it automatic that there is 30 days from finality of
judgment within which to make the repurchase? In short, do you have more than the prescriptive period than the 30 days
under this rule?
A: NO. The 30 day from finality of judgment rule does not always apply in instances of the right to repurchase. It only
applies in cases of dispute as to whether the contract is a contract of sale with right to repurchase or an equitable
mortgage.
Note: If the issue brought to court is whether it is a simple sale or sale with right to repurchase and the case is resolved in
favor of right to repurchase, and the period of prescription has actually expired already, then no additional 30 days will be
given to the seller. If the issue is whether the contract is an equitable mortgage or a sale with right to repurchase and the
court resolves that it is in fact a sale with right to repurchase, then the 30 day additional period will be given.
Equitable Mortgage
Q: What is the remedy of the seller if there is dispute as whether it is an equitable mortgage or not?
A: If there is dispute if it is an equitable mortgage or not, the seller may ask for reformation of the contract, the declaration
of nullity of the contract or for specific performance in case of breach.
Note: This is a contract denominated as a contract of sale but the true intention of the parties is really to secure an
obligation. The seller can ask for reformation of the contract and make it a mortgage in order to conform to the intention
or to nullify the contract based on the fact that it is not the intended agreement entered into by the parties.
Note: The mortgagor is always at the mercy of the mortgagee. If pactum commissorium is allowed, then ownership will
always be lost by the mortgagor because of the automatic reconveyance. The law says that there can never be an
automatic reconveyance because if it is a mortgage it has to go through the formalities of foreclosure. You have to
foreclose the property first.
Q: A and B entered into a contract of sale where B mortgaged the object of the sale to secure the performance of the
obligation. The contract provides that upon default of the buyer to pay the obligation, the seller shall acquire the property
by the execution of the buyer of a deed of sale in favor of the seller. Is the stipulation valid? Is there pactum
commissorium?
A: YES, the stipulation is valid. It is not a pactum commissorium because there is an act required before the seller may
acquire the property which is the execution of deed of sale. It does not automatically reconvey the property.
Legal Redemption
Q: A, B, and C are co-owners of a property. A, needing money, sold the property to B. C was notified of the sale. C wanted
to exercise his right of redemption as a co-heir with respect to the half of the share of A. Will the action prosper?
A: NO. C cannot exercise legal redemption because the property was sold to the other co-owner and not to a stranger.
There is no right of redemption in this case. Sale of a co-owner to another co-owner does not give rise to right of
redemption.
Q: What is the difference between the legal redemption of a co-heir and co-owner?
A: The legal redemption of a co-owner redounds to the benefit of the other co-owners. For example, if C redeems a
property from D, he will hold it in trust for B’s share in the co-ownership. In co-heir, once a co-heir redeems a hereditary
right, he will own it for himself alone.
Note: The legal right of redemption commences from the notice of sale by the co-owner, co-heir, or owner of the
adjoining land. It only commence upon the receipt of such written notice. Notice should be in writing because implied
knowledge will not start the running of the period of redemption.
Q: What is the exception to this rule? Such that even if there is no written notice of the sale, the period of redemption is
deemed to have commenced?
A: The exception is estoppel or laches. But this will only lie if there was actual knowledge of the sale and the co-heir, co-
owner, or adjoining owner did not do anything to repurchase the property.
Q: What if actual knowledge was acquired from due diligence, such as inquiry or checking with the register of deeds, will
that be considered as actual knowledge required for purposes of estoppel or laches to lie?
A: NO. Actual knowledge by way of due diligence will not defeat the right of redemption of a co-owner, co-heir, or
adjoining owner.
Note: In judicial foreclosure, it is the court who will order the foreclosure of the property. From finality of such order, if you
want to redeem the property, you have 90 days from such finality and you only have the 90 days if after such order of the
court, no auction sale actually happened. If after the order, the foreclosure is made, then the period of redemption which
is actually termed as “equity redemption” is greatly reduced. This happens after foreclosure but before confirmation of the
sale in court. Once the sale is confirmed, the period expires. This can happen in a day or in a week. So in equity
redemption, there is a limited window of time.
Under the General Banking Law, when it comes to foreclosure of property where the mortgagee is a bank, and the
mortgagor is an natural person, then redemption may be exercised within one (1) year from the registration of the
certificate of sale. In essence, if the mortgagee is a bank, there is no change with respect to the period of redemption
whether judicial or extrajudicial.
Q: A foreclosed the property of B as security for the payment of an obligation. After foreclosure, by way of the special
stipulation allowing the extrajudicial foreclosure of the property, the mortgagee then filed an action for judicial
foreclosure. If foreclosure is ordered by the court, what is the period of redemption? Is it the period provided for judicial
foreclosure or extrajudicial foreclosure?
A: It would be based on the foreclosure ultimately carried out. If the extrajudicial foreclosure did not push through due to
the filing a judicial foreclosure, it is the period provided for judicial foreclosure that will be used.
Q: What is the value of having an extrajudicial foreclosure as opposed to judicial foreclosure and vice versa?
A: The value of having extrajudicial foreclosure instead of judicial foreclosure is the speed of foreclosure. In extrajudicial
foreclosure, all you have to do is to notify the debtor that the property will be foreclosed by reason of non-payment of the
obligation. The advantage of judicial foreclosure is its period of redemption because it is shorter than extrajudicial
foreclosure.