ATENEO DE MANILA LAW SCHOOL

Rockwell Center, Makati City

LAW on SALES
REVIEW
By:
 

CESAR L. VILLANUEVA, B.S.C., C.P.A., LL.B., LL.M., FAICD, D.J.S.

 GENERAL PRINCIPLES
DEFINITION (Art. 1458)

PARTIES OBLIGATIONS
(1) TO TRANSFER
OWNERSHIP

SELLER SUBJECT
Real Obligations
MATTER
(2) TO DELIVER
SALE CONSENT POSSESION

“Meeting of Minds”
Real Obligation

BUYER (3) TO PAY

PRICE
2
 ESSENTIAL CHARACTERISTICS OF SALE:
NOMINATE vs. Innominate

PRINCIPAL vs. Accessory vs. Prefaratory

CONSENSUAL vs. Solemn vs. Real

BILATERAL/ vs. Unilateral

RECIPROCAL
ONEROUS vs. Gratuitious

COMMUTATIVE vs. Aleatory

TITLE vs. “Mode”

3
 SALES versus DONATION
CONSENSUAL SOLEMN
(i.e., 4th Requisite of
“Form” for validity)

ONEROUS/ GRATUITOUS
COMMUTATIVE (i.e., “Pure Liberality”
as consideration)

ESSENCE: BOTH INVOLVE THE TRANSFER OF

OWNERSHIP/POSSESSION OF
SUBJECT MATTER

4
 SALES versus BARTER:
BARTER IS SALE, BUT WITH THE PRICE BEING REPLACED
WITH AN OBLIGATION TO TRANSFER
OWNERSHIP/POSSESSION OF ANOTHER
SUBJECT MATTER

THEREFORE: BARTER GOVERNED BY LAW ON SALES

BUT: NOT COVERED BY STATUTE OF FRAUDS

5
SALES versus DACION EN PAGO:
 DACION IS PROCESS OF EXTINGUISHMENT OF PRE-
EXISTING OBLIGATION (CONTRACTS)
(a) There must be delivery of subject matter in lieu of an
pre-existing obligation;
(b) There must be difference between prestation due and
what is give in substitute;
(c) There must be a clear “meeting of minds” that the
pre-existing obligation is extinguished by reason of
the prestation substituted.
Lo v KJS Eco. Formwork System Phil.,
Inc., 413 SCRA 182 (2003)
 DACION NOVATES THE ORIGINAL CONTRACTUAL
RELATIONS INTO A FULLY EXECUTED SALE

ESSENTIALLY: DACION GOVERNED BY LAW ON SALES

6
 SALES vs. CONTRACT FOR PIECE-OF-WORK:

K for Piece-of-Work: Service is the Subject Matter

“Ineluctably, whether the contract be one of sale or one

for a Piece of Work, a transfer of ownership is involved
and a party necessarily walks away with an object.”
Commission of Internal Revenue v. Court of Appeals, 271 SCRA 605 (1997)

Although there is the primary obligation to

pay fee (or price), the main motivation is the
“reputation, skill, mastery” of contractor.
Engineering & Machinery Corp. v. Court of Appeals, 252 SCRA 156
(1996)

BUT: THERE CAN BE NO CONTRACT FOR PIECE-OF-WORK FOR

PAST SERVICE RESULTING IN THE CREATION OF THE OBJECT
(ALWAYS A SALE)
7
 SALES vs. AGENCY TO SELL/BUY

REPRESENTATIVE
AGENCY  Essentially revocable
FIDUCIARY  Fruits and of principal

NOT PERSONNALY LIABLE FOR THE

OBLIGATION CREATED BY THE SALE
CONTRACT
AGENT NOT OBLIGED TO PAY THE PRICE

DOES NOT ASSUME THE RISKS OF

OWNERSHIP TO THE OBJECT OF SALE
8
 SALES vs. AGENCY TO SELL/BUY Cont’d

THEREFORE:
“AGENT” is deemed to be Seller/Buyer
when contracted to assume Risks and
Obligations contrary to his representative/
fiduciary role:

(a) HE ASSUMES OBLIGATION TO PAY THE PRICE

RISKS OF LOSS
(b) SUBJECT MATTER INSURABLE INTEREST
MAINTENANCE

9
 SALE versus LEASE:

LEASE ESSENTIALLY INVOLVES THE

TEMPORARY ENJOYMENT OF POSSESSION OF
THE SUBJECT MATTER

FEW INSTANCES: TREATED AS SALE ON

INSTALLMENTS WHEN LEASE
STRUCTURED IN SUCH A WAY AS
TO AVOID APPLICATION OF THE
RECTO LAW

10
 PARTIES TO A SALE
(The Essential Element of CONSENT)
GENERAL RULE: All Parties Having Capacity to Contract
Can Be Valid Parties To a Sale
EXCEPTIONS:
(a) Minors, Demented, Deaf-Mutes – Sale is Voidable
- Purchase of Necessaries
- Emancipation
(b) Spouses (Art. 1490)
- Sales to Third Parties – Sale by One Spouse Void
- Sales to Each Other – Void
Except: When marriage governed by Complete
Separation of Property Regime
 By Pre-nuptials
 By Judicial decree
11
OTHER RELATIVE DISQUALIFICATIONS (Art. 1491)

Guardian Wards
Agent Principal
Except: When granted express power
to buy principal’s property
Administrator/
Executor Estate under administration
BUT NOT: Purchase of Inheritance Rights

Public Officers Government property under

their jurisdiction
Judges/Justices/
Property falling in their jurisdiction
Court Officers
Lawyers Client’s property in litigation
Except: Contingency fee arrangement
12
 SUBJECT MATTER
(OBLIGATION to Transfer Ownership and Deliver Possession)

1. POSSIBLE THING vs. Impossible things

2. LICIT vs. Illicit

3. DETERMINATE Non-Determinable
vs.
DETERMINABLE GENERICS

RATIONALE: Transfer of Ownership/Possession of the

Subject Matter is the ESSENCE of SALE
 Obligation should therefore not be illusory
 To comply with the “Obligatory Force”
principle in Contract Law
13
 PRICE & OTHER CONSIDERATION
(The Obligation to Pay)

1. REAL/TRUE vs. FALSE vs. SIMULATED

(Reformation) (Void)

2. “Money or its Equivalent” vs. PURE vs. NOMINAL

VALUABLE CONSIDERATION LIBERALITY CONSIDERATION

3. CERTAIN vs. UNASCERTAINABLE

ASCERTAINABLE
4. MANNER OF PAYMENT vs. UNASCERTAINABLE

RATIONALE:  Must comply with “Obligatory Force” principle in

Contract Law
 Must meet Onerous and Commutative
characteristics of SALE
14
 STAGES IN LIFE OF SALE
NEGOTIATION
Covers the period from the time the prospective contracting
parties indicate interest in the contract up to the time immediate
before the contract is perfected.
PERFECTION
Takes place upon the concurrence of the essential elements
of the Sale which are:
the meeting of the minds of the parties
as to the object of the contract
upon the price.
CONSUMMATION
It begins when the parties perform their respective
undertaking under the perfected contract of sale, culminating in
the extinguishments thereof.
Jovan Land, Inc. v. CA, 268 SCRA 160 (1997)
San Miguel Properties Philippines, Inc. v. Huang, 336 SCRA 737 (2000)
15
 POLICITACION STAGE
 Invitations to make Offers (“Proposals”)
 OFFERS
 ACCEPTANCES
 AGENCY TO SELL/TO BUY
 OPTION CONTRACTS
 RIGHTS OF FIRST REFUSAL
 AGREEMENTS TO ENTER INTO SERIES OF SALES
 MUTUAL PROMISES TO BUY AND SELL
(Contracts to Sell of the First Type)

16
 RULES ON OFFERS:
1. Offer is at the complete will of Offeror, who may destroy
it at will prior to acceptance
2. Will “disappear” or lapse upon the happening of the
condition or period placed upon it
3. When floated unconditionally, will be extinguished
through the passage of reasonable time
4. Cannot be accepted partially or even substantially
 Counter-offer extinguishes original Offer

5. Legal effect of acceptance is taken only from point of

view of Offeror
 Offeror may still extinguish Offer at any time before he has
knowledge of Acceptance

6. Only a “certain” Offer when met by an “Absolute” Acceptance

will give rise to a valid SALE.
17
 “CERTAIN” OFFER
(a) CONTAINS A CLEAR PROMISE TO SELL/TO BUY

(b) COVERS A SUBJECT MATTER THAT IS:

 Possible thing
 Licit
 Determinate or Determinable

(c) COVERS A PRICE OR CONSIDERATION

 Real
 Valuable
 Certain or Ascertainable
 With Manner of Payment/Performance
agreed upon

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 “ABSOLUTE” ACCEPTANCE

(a) NO CONDITION OR AMENDMENT OF THE

TERMS OF THE OFFER

(b) MAY CLARIFY

(c) BUT NEVER TOUCH ON THE

TERMS/COVERAGE OF SUBJECT MATTER
AND TERMS/COVERAGE OF PRICE

19
 OPTION CONTRACT:
ACCEPTANCE of OFFER to give on Option to Buy/to Sell

SUBJECT MATTER: Option or Privilege to Sell/ Purchase:

AN OBJECT: AT A PRICE:
- Possible - Real
- Licit - Valuable
- Determinate/ - Certain/
Determinable Ascertainable

CONSIDERATION: Anything separate and distinct from

Price
20
 Ang Yu Asuncion v. Court of Appeals
238 SCRA 602 (1994)

1. If no separate consideration, Option Contract

void, but may constitute certain Offer which can
be withdrawn by Offeror, but if accepted before
withdrawal would give rise to a valid Sale
(Sanchez v. Rigos doctrine)

2. If withdrawal of option/offer whimsical or

arbitrary, could give rise to damage claim under
Art. 19 of Civil Code

3. When there is separate consideration, an

Option Contract deemed perfected:
(a) If exercised within option period, gives rise
to Sale, which can be enforced by specific
performance
21
 Ang Yu Asuncion v. Court of Appeals cont’d

(b) Would be a breach of the Option Contract, for

Offeror to withdraw the offer during the agreed
period, but withdrawal destroys nevertheless
the Option

(c) But if, however, Optioner-Offeror withdraws

Offer even during option period before its
acceptance (i.e., exercise):

Optionee-Offeree may not sue for specific

performance on the Sale since it has failed
to reach its own perfection stage
Optioner-Offeror, however, renders himself
liable for damages for breach of option

22
RIGHT OF FIRST REFUSAL

ESSENCE: OFFEROR BOUNDS HIMSELF TO FIRST

OFFER SUBJECT MATTER TO OFFEREE
FOR SALE

CONDITION: IN THE EVENT OFFEROR EVER DECIDES

TO SELL IT
Possible thing
SUBJECT MATTER Licit
Determinate/Determinable

PRICE: THAT WILL THEN (HAPPENING OF CONDITION) BE

AGREED UPON
23
DOCTRINES ON RIGHTS OF FIRST REFUSAL
Ang Yu Asuncion v. Court of Appeals

• Generally, RFRs would be “none” contracts, for

lack of cause or consideration, or failure to agree
the valid Price for the expectant contract
• Merely “innovative juridical relation”

 RFR

• Cannot be enforced by specific performance

 Not being a Contract, it lacks essence of
“consensuality,” “obligatory force” or “mutuality”

• Breach allows recovery of damage based on Art. 19

principle of “Abuse of right”

24
 DOCTRINES ON RFR cont’d
Equatorial Realty Dev., Inc. v. Mayfair Theater
264 SCRA 483 (1996)

• When RFR attached to a valid principal contract

(e.g. Lease), its enforcement takes its vitality from
the obligatory force of the principal contract

• Such RFR, when breached may be enforced, at the

Price at which Subject Matter sold to Third Party

• The Third-Party Buyer’s purchase may be

rescinded under accion pauliana, i.e., entered into
in breach and in fraud of Optionee’s contractual
right

25
 DOCTRINES ON RFR cont’d
Parañaque Kings Enterprises v. CA
268 SCRA 727 (1997)

• RFR is complied with by first offering the Subject

Matter to the Optionee and negotiating for a Sale
 There is no obligation to reach a sale,
obligation is to negotiate in good faith

• Only when negotiations do not ripen into a Sale,

can Subject Matter be offered to Third-Party
Buyer, but at same price and terms asked of the
Optionee
• Otherwise, must re-offer under new terms to
Optionee

26
 AGREEMENTS TO ENTER INTO FUTURE SALE
OR SERIES OF SALES:

ESSENCE: Obligations “to do” To enter into a

Contract of Sale
(1) DISTRIBUTION/ SUPPLY AGREEMENT
 An Agreement to enter into a series
of Contracts of Sale
- National Grains Authority v. IAC, 171 SCRA 131 (1989)
- Johannes Schuback v. Court of Appeals, 227 SCRA 719 (1993)

(2) MUTUAL PROMISES TO BUY AND TO SELL

(CONTRACTS TO SELL)

27
 MUTUAL PROMISES TO BUY AND SELL
(CONTRACTS TO SELL)

1. AGREEMENTS TO ENTER INTO CONTRACT OF

SALE UPON HAPPENING OF THE CONDITIONS
 Essentially, contains Obligations “to do”: to
enter into a Sale

2. CONDITIONAL CONTRACT OF SALE WHERE THE

BILATERAL OBLIGATIONS TO BUY AND SELL HAVE
BEEN AGREED UPON, BUT SUBJECT TO SUSPENSIVE
CONDITION
 Condition usually is the full payment of the
price

28
 PERFECTION STAGE
• PERFECTION HAPPENS WHEN A “CERTAIN
OFFER” HAS BEEN MET BY AN “ABSOLUTE
ACCEPTANCE”

• THE ONLY POINT IN TIME TO DETERMINE THE

VALIDITY OR INVALIDITY OF A CONTRACT OF SALE
 “Birth” sets the essence of the Sale

• ESTABLISHES THE CONTRACTUAL PRINCIPLES OF:

 CONSENSUALITY
 MUTUALITY OR OBLIGATORY FORCE
 RELATIVITY
29
 FORM OF SALE
GENERALLY: None, because Sale is consensual
contract

FOR ENFORCEABILITY: STATUTE OF FRAUDS

1. Sale which by its terms is not to be
performed within one (1) year.

2. Sale of Movables, at least P500

3. Sale of Immovables, at any price

 Must be in writing signed by the “party

sought to be bound”
30
FORM OF SALE cont’d
 Memo must contain Description of:
Possible thing
(a) SUBJECT MATTER Licit
Determinate/
Determinable
real
(b) PRICE valuable
certain/ascertainable
manner of payment provided
(c) SIGNED BY THE PARTY SOUGHT TO BE CHARGED
Exception: Electronic Document
 OR PARTIALLY EXECUTED (Estoppel)
 OR WAIVER OF ADDUCEMENT OF ORAL EVIDENCE AT
TRIAL
31
FORM OF SALE cont’d

What Constitutes “Partial Execution”?

Subject Matter

(a) Performance Must Price

Touch Upon
Cannot Cover “Other
Consideration”

(b) Must Involve/Compromise “Party Sought to

be Charged”

32
FORMS THAT VOID CONTRACT OF SALE:
1. SALE OF REALTY THROUGH AGENT:
 AGENT’S AUTHORITY MUST BE IN WRITING

OTHERWISE:
 SALE VOID: - EVEN IF DEED OF SALE IN
WRITING and/or NOTARIZED
- EVEN IF THERE HAS BEEN
PARTIAL/ FULL PAYMENT
- EVEN IF THERE HAS BEEN
DELIVERY OF SUBJECT MATTER
- EVEN IF SALE REGISTERED
33
SALES OF IMMOVABLES
1. PRIVATE DOCUMENT NEEDED TO BE ENFORCEABLE
BETWEEN PARTIES
EXCEPT: PARTIAL EXECUTION/WAIVER

2. MUST BE IN A PUBLIC INSTRUMENT

-TO BIND THE PUBLIC
-TO BE REGISTRABLE WITH REGISTRY OF DEEDS

3. FOR REAL ESTATE, MUST BE REGISTERED TO BE VALID

AND BINDING AGAINST THE WORD

- Authority of Agent must be in writing – VOID

- Bound by actual possession situation, otherwise
not in good faith
34
 CONSUMMATION STAGE

(3) REMEDIES (5) EXTINGUISHMENT

 SPECIFIC PERFORMANCE  CONVENTIONAL
(1) PERFORMANCE REDEMPTION
 RESCISSION (SALE A RETRO)
 DELIVERY OF
SUBJECT MATTER  DOUBLE SALES RULE  EQUITABLE
 SUBDIVISION LOTS & MORTGAGES
 PAYMENT OF PRICE
 LEGAL
 CONDO UNITS RULES REDEMPTION
 RECTO LAW
 MACEDA LAW (4) CONDITIONS AND
WARRANTIES
(2) RISK OF LOSS  EFFECTS OF CONDITIONS
 EXPRESS WARRANTIES
 IMPLIED WARRANTIES
35
 OBLIGATIONS OF SELLER
1. TO PRESERVE THE THING WITH DILIGENCE OF A
GOOD FATHER OF A FAMILY
2. TO DELIVER THE SUBJECT MATTER
3. To DELIVER FRUITS, ACCESSORIES AND
ACCESSIONS
4. To COMPLY WITH WARRANTIES

OBLIGATIONS OF BUYER
1. TO PAY THE PRICE

2. TO ACCEPT DELIVERY OF SUBJECT MATTER

36
 DELIVERY OF SUBJECT MATTER
TRADITION AS THE MODE
TO TRANSFER OWNERSHIP

- Actual or Physical Delivery

- Constructive Delivery

Fulfillment of the Primary

MAGIC OF Obligation of the Seller
TRADITION
Transfer Ownership/
Possession to the Buyer
37
DOCTRINES ON CONSTRUCTIVE DELIVERY
EXECUTION OF PUBLIC INSTRUMENT
- No Contrary Stipulation/ Intention
- Seller Must Have “Control”
- Passage of Reasonable Time

EXCEPTION: WHEN BUYER TAKES THE RISK

 Produces the Same “Magic” of

Actual Delivery
 CONSTRUCTIVE DELIVERY
CONSTITUTUM POSSESORIUM
TRADITIO BREVI MANU
TRADITIO LONGA MANU OR SYMBOLIC DELVERY
Public Instrument
DELIVERY FOR Transfer/Negotiation of the “Title”
INTANGIBLES Evidences the Intangible
Enjoyment of Rights and Privileges with
the consent of the Seller

DELIVERY THROUGH CARRIER

- FAS
- FOB
- CIF

DOCUMENTS TO TITLE
39
RULES ON DOUBLE SALES UNDER ART. 1544
1. FOR MOVABLES:
 First to Possess, in good faith
 Oldest Title, in good faith
 Then: “First in time, priority in rights”

2. FOR IMMOVABLES:
 First to Register, in good faith
 First to Possess, in good faith
 Oldest Title, in good faith
 Then: “First in time, priority in rights”

40
 REQUISITES FOR ART. 1544 TO APPLY
Cheng v. Genato, 300 SCRA 722 (1998)

(a) The two (or more) sales transactions must

constitute valid Sales;
(b) The two (or more) sales transactions must pertain
to exactly the same Subject Matter;
(c) The two (or more) Buyers at odds over the rightful
ownership of the Subject Matter must each
represent conflicting interests; and
(d) The two (or more) Buyers at odds over the rightful
ownership of the Subject Matter must each have
bought from the very same Seller

Consolidated Rural Bank (Cagayan Valley), Inc. v. CA, 448

SCRA 347 (2005)
41
 EFFECTS OF ART. 1544 REQUISITES

 Not applicable where one of the

Sales is Void

 Not applicable to Contracts to Sell

 Not applicable if first sale is the

Subject Matter and the second sale
is the redemption right to the
Subject Matter

42
 DOCTRINES ON ART. 1544 DOUBLE SALES RULES

(a) Rules under Art. 1544 are addressed to the

Second Buyer, who is mandated to do
positive things if he hopes to win at all

First Buyer wins by being first (first in

time) and does not need the benefits
of Art. 1544

Carbonell v. CA, 69 SCRA 99 (1976)

Uraca v. CA, 278 SCRA 702 (1997)
Consolidated Rural Bank (Cagayan Valley), Inc. v. CA,
448 SCRA 347 (2005)

43
 DOCTRINES ON ART. 1544 cont’d

(b) First Buyer wins by virtue of greater

doctrine of “first in time, priority in rights”
(c) Second Buyer must register his purchase
while in good faith if he hopes to win:
(d) First Buyer, who is always in good faith,
when he registers ahead, wins became
second buyer in hopeless
(e) Even if Second Buyer was first to possess
in good faith, the subsequent registration
by First Buyer prevails

Tañedo v. CA, 252 SCRA 80 (1996)

44
 DOCTRINES ON ART. 1544 cont’d

(f) Knowledge of the First Buyer of the

second sale does not adversely affect
First Buyer, nor does it constitute
registration in favor of the Second Buyer

(g) However, knowledge of the Second Buyer

of the first sale, would place him not only
in bad faith, but would constitute
registration in favor of the First Buyer

Cruz v. Cabana, 129 SCRA 656 (1984)

45
DOCTRINES ON ART. 1544 cont’d

(h) It seems that Second Buyer must have

paid in full the Price to gain the benefit
under Art. 1544, as the Court defines the
meaning of “good faith” to include
having paid full value

Heirs of Aguilar-Reyes v. Spouses Mijares, 410 SCRA 97 (2003)

Tanongon v. Samson, 382 SCRA 130 (2002)
Balatbat v. CA, 261 SCRA 128 (1996)
Agricultural and Home Extension Dev. v. CA, 213 SCRA 536 (1992)

46
 GLOBAL RULES ON DOUBLE SALE FOR REAL ESTATE

I. First to Register, in Good Faith and for Value, his

Purchase of Land registered under the Torrens
System wins, for registration is the “Operative
Act” (Does not matter whether he is First or
Second Buyer)

II. For Unregistered Land, as between a

conventional prior purchase, and a second
purchase at public auction, the first
Conventional Buyer wins, since the Buyer at
public sale is bound by the provisions of the
Rules of Court that says he only takes whatever
is the remaining title of the judgment debtor.

47
GLOBAL RULES ON DOUBLE SALE cont’d

III. The Rules of Double Sale under Art. 1544 shall

apply, only when the requisites under Cheng v.
Genato are present, as follows:

1. First to Register in good faith

 But this can only apply to unregistered

land, because Rule I applies to registered
land.
2. First to Possess in good faith, or

3. Oldest Title, in good faith

IV. “First in time, priority in rights” applies last

48
 SALE AND DELIVERY BY NON-OWNER

GENERAL RULE: Nemo Dat Quod Non Habet

SPECIAL RULES:
1. Sale and Delivery, with subsequent
acquisition of title by owner (Art. 1434), ipso
jure transfers title to Buyer
2. Sale by Co-Owner
- particular portion
- whole property

3. Estoppel on the Part of the True Owner (Art. 1426)

49
SALE AND DELIVERY BY NON-OWNER cont’d

3. “Chain of Title Theory” under the Torrens

System

4. Sales by Court Authority

5. Sales in Merchant Stores

6. Sales by One Having Voidable Title Prior

to Annulment

7. Sale under Documents of Title

50
 RULES FOR DETERIORATION, FRUITS
AND IMPROVEMENTS

 RULES HAVE NO APPLICATION IS SUBJECT

MATTER IS MERELY DETERMINABLE (Art. 1263)

ROMAN LAW DOCTRINE: Buyer bears the

consequences of
Deterioration, but
benefits from the Fruits
and Improvements

Arts. 1480, 1163-1262

Arts. 1189, 1537 and 1538
51
 RULES WHEN SUBJECT MATTER LOST:

1. BEFORE PERFECTION: Res Perit Domino

Roman v. Grimalt, 6 Phil. 96 (1906)

2. AT TIME OF PERFECTION: Seller (Arts. 1493 and 1494)

“Sale is rendered inefficacious”

52
 SUBJECT MATTER LOST: cont’d

3. AFTER PERFECTION BUT BEFORE DELIVERY

Arts. 1164, 1189, and 1262(

General Rule: For Goods, risk borne by Seller

under Res perit domino rule
Chrysler Phil. v. CA, 133 SCRA 567 (1984)
Union Motor Corp v. CA, 361 SCRA 506 (2001)

Loss by Fault of a Party (Arts. 1480, 1504, 1538)

LOSS BY FORTUITOUS EVENT: Two Schools of

Thought
Arts. 1480, 1163, 1164, 1165
Arts. 1504, 1538, and 1189

53
 SUBJECT MATTER LOST: cont’d

4. AFTER DELIVERY: BUYER BEARS RISK, UNDER

Res Perit Domino

EXCEPT: When retention of Possession by

Seller for purpose of securing
payment of the Purchase Price
Art. 1504
Song Fo & Co. v. Oria, 33 Phil. 3 (1915)
Lawyer's Coop v. Tabora, 13 SCRA 762 (1965)
Lawyer's Coop v. Narciso, 55 O.G. 3313)

54
 REMEDIES FOR CONTRACTS OF SALE
1. REMEDIES OF “UNPAID SELLER” OF GOODS

• Possessory lien (Arts. 1526-1529, 1503, 1535)

• Stoppage in transitu (Arts. 1530-1532, 1535, 1636[2])

• Special Right of Resale (Art. 1533)

• Special Right to Rescind (Art. 1534)

55
2. RECTO LAW: SALES OF MOVABLES ON INSTALLMENTS

(a) Meaning of “Installment Sale” Levy v. Gervacio, 69 Phil. 52 (1939)

(b) Contracts to Sell Movables Not Covered Visayan Sawmill Co.,

Inc. v. CA, 219 SCRA 378 (1993)

(c) Nature of Remedies of Unpaid Seller

 Remedies under Art. 1484 are not cumulative, but

alternative and exclusive.
Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996)

 Seeking a writ of replevin consistent with all three

remedies
Universal Motors Corp. v. Dy Hian Tat, 28 SCRA 161 (1969)

56
 RECTO LAW: cont’d
(d) REMEDY OF SPECIFIC PERFORMANCE: No bar to full
recovery
Tajanglangit v. Southern Motors, 101 Phil. 606 (1957)

Even when it is mortgaged property that is

sold on execution.
Southern Motors v. Moscoso, 2 SCRA 168 (1961)

Even with replevin and recovery of the

subject property, the action may still be for
specific performance.
Industrial Finance Corp. v. Ramirez, 77 SCRA 152 (1977)

57
 RECTO LAW: cont’d

(e) NATURE OF REMEDY OF RESCISSION

• Inherent “Barring” Effect of Rescission
• Surrender of mortgaged property not
equivalent to rescission.
Vda. de Quiambao v. Manila Motors Co., Inc.,
3 SCRA 444 (1961)

• Stipulation on non-return of payments

is valid provided not unconscionable.
Delta Motor Sales Corp. v. Niu Kim Duan,
213 SCRA 259 (1992)

58
 RECTO LAW: cont’d
(f) REMEDY OF FORECLOSURE

(i) Third Party Mortgage

Ridad v. Filipinas Investment, 120 SCRA 246 (1983)

(ii) Assignor-Assignee; Financing Transactions

Zayas v. Luneta Motors, 117 SCRA 726 (1982)

When seller assigns his credit to another,

the assignee is likewise bound by the terms of
the Recto Law.
Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996).

59
 RECTO LAW: cont’d

(iii) H-V “Barring” Effects of Foreclosure

Foreclosure on the chattel mortgage

prevents further action on the supporting
real estate mortgage.
Cruz v. Filipinas Investment & Finance Corp., 23 SCRA 791 (1968)
Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996)

(iv) Amounts Barred from Recovery

Macondray & Co. v. Eustaquio, 64 Phil. 446 (1937)

(v) Perverse Buyer

Filipinas Investment & Finance Corp. v. Ridad, 30 SCRA 564 (1969)

60
 RECTO LAW: cont’d
(g) PURPORTED LEASE WITH OPTION TO BUY:
“Contracts purporting to be leases of personal property
with option to buy, when the lessor has deprived the lessee
of the possession or enjoyment of the thing.” (Art. 1485)

When purported Lessor takes possession of

subject movable, it is treated legally as a foreclosure
and the barring effects applicable to foreclosure
remedy, not rescission, are given application.
Vda. de Jose v. Barrueco, 67 Phil. 191 (1939)
Filinvest Credit Corp. v. CA, 178 SCRA 188 (1989)
U.S. Commercial v. Halili, 93 Phil. 271 (1953)
H.E. Heacock v. Bantal Manufacturing, 66 Phil. 245 (1938)
Manila Gas Corp. v. Calupita, 66 Phil. 747 (19 38)
Vda. de Jose v. Barrueco, 67 Phil. 191 (1939)

61
 3. MACEDA LAW: SALES OF RESIDENTIAL REALTY
ON INSTALLMENTS (R.A. 6552)

(a) “Role” of Maceda Law

Lagandaon v. CA, 290 SCRA 463 (1998)

(b) Transactions Covered

The formal requirements of rescission

under the Maceda Law apply even to contracts
entered into prior to its effectivity.
Siska Dev. Corp. v. Office of the President, 231 SCRA 674 (1994)

BUT SEE: People’s Ind’l and Comm. Corp. v. CA, 281 SCRA 206 (1997)

62
MACEDA LAW cont’d

The Maceda Law makes no distinctions

between “option” and “sale” which under P.D.
957 also includes “an exchange or attempt to sell,
an option of sale or purchase, a solicitation of a
sale or an offer to sell directly.”
Realty Exchange Venture Corp. v. Sendino , 233 SCRA 665 (1994)

Curiously: No application to Contract to Sell

“because said law presupposes the
existence of a valid and effective
contract to sell a condominium.”
Mortel v. KASSCO, Inc., 348 SCRA 391, 398 (2000)

63
MACEDA LAW cont’d

Pursuant to Art. 1253 of Civil Code, in a contract

involving installments with interest chargeable against the
remaining balance of the obligation, it is the duty of the
creditor-seller to inform the debtor-buyer of the interest that
falls due and that is applying the installment payments to
cover said interest. Otherwise, the creditor cannot apply the
payments to the interest and then hold the debtor in default for
non-payment of installments on the principal.
Rapanut v. CA, 246 SCRA 323 (1995)

(c) How Cancellation of Contract Can Be Effected:

Active Realty & Dev. Corp. v. Daroya, 382 SCRA 152 (2002)

64
MACEDA LAW cont’d

OTHER RIGHTS GRANTED TO BUYER

(a) To sell/assign his rights to another person

(b) To reinstate contract by updating account

during grace period, before actual
cancellation of contract
(c) To pay in advance installments or in full
unpaid balance of Price any time without
interest and have same annotated in title
Any stipulation in any contract entered
into contrary to the provisions of the Law,
shall be null and void. (Art. 7)
65
4. OTHER REMEDIES ON SALE OF REAL ESTATE

(a) ANTICIPATORY BREACH (ART. 1591)

(b) RESCISSION ON SALE ON NON-

RESIDENTIAL REALTY ON
INSTALLMENTS (Arts. 1191 and 1592)

(c) SEC. 23 AND 24, PRES. DECREE 957

66
 CONTRACTS TO SELL
Versus
CONDITIONAL CONTRACTS OF SALE

 Art. 1458 Defines a Sale to covered both

“Absolute and Conditional”

 Both Contracts are usually bound by same

condition: Full payment of the Price

 Both Contracts are consensual, onerous,

commutative, and cover bilateral
obligations

67
K TO SELL VS. K OF SALE cont’d

 Power to Rescind is inherently Judicial

 Rescission requires a positive act

 Non-fulfillment of Condition ipso jure

destroys contract

 Substantial Breach Relevant to Contract of

Sale, Irrelevant to Contracts to Sell

68
K TO SELL VS. K OF SALE cont’d

1. In Contract to Sell Ownership if Reserved by

Seller, while in a Contract to Sell ownership
transfers to Buyer upon delivery.

Ergo: K to Sell must have express

reservation of ownership

• To execute a formal Deed of Sale

• Only receipt of payment evidences sale
• Seller retained original titles

69
K TO SELL VS. K OF SALE cont’d

2. “Rescission” of Contract to Sell is a matter

of right upon non-happening of the
condition
Ergo: K to Sell must have express
right to rescind the contract
upon default of the Buyer

 A written notice of “cancellation” must be served

upon Buyer even when Contract to Sell
UP v. Delos Angeles, 35 SCRA 103 (1970)

70
 CONDITIONS versus WARRANTIES
Power Commercial and Industrial Corp. v. CA
274 SCRA 597 (1997)

(a) Condition goes into root of existence of obligation,

whereas warranty goes into performance of such
obligation, and in fact may constitute an obligation
itself;
(b) Condition must be expressly stipulated by parties,
while warranty may form part of the obligation or
contract by provision of law, without previous
agreement; and
(c) Condition may attach itself either to the Obligations
of Seller, while warranty, express or implied, relates
to the Subject Matter itself or to the obligations of
Seller as to Subject Matter of the sale.
71
CONDITIONS AND WARRANTIES cont’d

Failure to comply with condition imposed upon perfection

of the contract results in failure of a contract, while the
failure to comply with a condition imposed on the
performance of an obligation only gives the other party the
option either to refuse to proceed with sale or waive the
condition.
Laforteza v. Machuca, 333 SCRA 643 (2000)

In a “Sale with Assumption of Mortgage,” the

assumption of mortgage is a condition to the seller’s consent
so that without approval by the mortgagee, no sale is
perfected. In such case, the seller remains the owner and
mortgagor of the property and retains the right to redeem the
foreclosed property.
Ramos v. CA, 279 SCRA 118 (1997)
72
CONDITIONS AND WARRANTIES cont’d

A. EXPRESS WARRANTIES (Art. 1546)

(a) Must be an affirmation of fact or any promise by the

seller relating to Subject Matter of the sale;
(b) The natural tendency of such affirmation or promise
is to induce Buyer to purchase the thing; and
(c) Buyer purchases the thing relying on such
affirmation or promise thereon.

The law allows considerable latitude to seller’s

statements, or dealer’s talk; and experience teaches
that it is exceedingly risky to accept it at its face value.
Ramos v. CA, 279 SCRA 118 (1997)

73
CONDITIONS AND WARRANTIES cont’d

B. IMPLIED WARRANTIES (Art. 1547)

1. SELLER HAS RIGHT TO SELL

2. WARRANTY AGAINST EVICTION

Seller must be summoned in the suit for eviction at

the instance of the buyer (Art. 1558), and be made a co-
defendant (Art. 1559); or made a third-party defendant.
Escaler v. CA, 138 SCRA 1 (1985)
Canizares Tiana v. Torrejos, 21 Phil. 127 (1911)
J.M. Tuazon v. CA, 94 SCRA 413 (1979)

74
 CONDITIONS AND WARRANTIES cont’d

3. WARRANTY AGAINST NON-APPARENT

SERVITUDES

4. WARRANTY AGAINST HIDDEN DEFECTS

The stipulation in a contract of lease with option to

purchase (which it treated as a sale of movable on
installments) that the buyer-lessee "absolutely releases
the lessor from any liability whatsoever as to any and
all matters in relation to warranty in accordance with
the provisions hereinafter stipulated," was held as an
express waiver of warranty against hidden defect.
Filinvest Credit Corp. v. CA, 178 SCRA 188 (1989)

75
 CONDITIONS AND WARRANTIES cont’d
Nutrimix Feeds Corp. v. CA
441 SCRA 357 (2004)

A hidden defect is one which is unknown or could not

have been known to the buyer. Under the law, the requisites
to recover on account of hidden defects are as follows:
a. Defect must be hidden;
b. Must exist at the time the sale was made;
c. Must ordinarily have been excluded from the contract;
d. Defect, must be important (render the thing unfit or
considerably decreases fitness);
e. Action must be instituted within statute of limitations.

The remedy against violation of warranty against hidden

defects is either to withdraw from the contract (accion
redhibitoria) or to demand a proportionate reduction of the
price (accion quanti minoris), with damages in either case.

76
Investments & Dev., Inc. v. CA, 162 SCRA 636 [1988]
 CONDITIONS AND WARRANTIES cont’d

5. REDHIBITORY DEFECTS OF ANIMALS

a. Sale of a Team
b. Animals Sold at Fairs or Public Auction
c. Sale of Animals with Contagious Diseases
d. Sale of Unfit Animals

6. IMPLIED WARRANTIES IN THE SALE OF GOODS

a. Warranty as to Fitness or Quality

b. Sale of Goods by Sample

7. ADDITIONAL WARRANTIES FOR CONSUMER PRODUCTS

(Arts. 68, Consumer Act of the Philippines, R.A. 7394).

77
 CONDITIONS AND WARRANTIES cont’d

C. EFFECTS OF WARRANTIES
D. EFFECTS OF WAIVERS

G. BUYER'S OPTIONS IN CASE OF BREACH OF WARRANTY

78
 EXTINGUISHMENT OF SALE
SALE EXTINGUISHED BY SAME MODES
APPLICABLE TO ALL CONTRACTS
Arts. 1231, 1600

“REDEMPTION” IS A MODE OF
EXTINGUISHMENT UNIQUE TO SALES:

 CONVENTIONAL REDEMPTION: SALE

WITH RIGHT TO REPURCHASE
 LEGAL REDEMPTION

79
 CONVENTIONAL REDEMPTION
(SALE WITH A RIGHT TO REPURCHASE)

NATURE OF RIGHT TO REPURCHASE:

 Reserved by Seller at the point of
Perfection.
Art. 1601
Villarica v. CA, 26 SCRA 189 (1968)

 Even though found in a separate

instrument
Torres v. CA, 216 SCRA 287 (1992)
Claravall v. CA, 190 SCRA 439 (1990)

80
 CONVENTIONAL REDEMPTION cont’d

 Its Validity is Tied to the Validity of the

Contract of Sale to which appended.
Nool v. Court of Appeals, 276 SCRA 149 (1997)

 When Sale Covered by Deed, Right a retro may

be proved by parol evidence.
Mactan Cebu Int’l Airport Authority v. Court of Appeals ,
263 SCRA 736 (1996)

81
 RIGHT A RETRO versus OPTION CONTRACT
(A) Not separate contract, but (A) Generally principal contract,
must be part of main but may be appended in
Contract of Sale another contract valid

(B) Right to Redeem does (B) Option requires consider-ation

not need separate separate and distinct of the
consideration Price in order to be valid

(C) Maximum Period for (C) Period of Option may be

exercise of Right of beyond 10 years
redemption cannot
exceed 10 years

(D) Right of repurchase requires (D) Option may be exercised

in addition the tender of the by mere notice to Offeror
amount mandated, including
consignation when tender
not possible
82
 SALIENT MATTERS ON
RIGHT OF REDEMPTION

(a) PERIOD OF REDEMPTION:

 When no Period agreed upon: 4 years
 When Period agreed upon: cannot
exceed 10 years
 When Period of “Non-Redemption”
Stipulated
Anchuel v. IAC, 147 SCRA 434 (1987)
Tayao v. Dulay, 13 SCRA 758 (1965)

83
 SALIENT MATTERS ON RIGHT OF
REDEMPTION cont’d

 Pendency of Action Tolls Redemption

Period
Ong Chua v. Carr, 53 Phil. 975 (1929)

 Non-Payment of Price Does Not Affect

Running of Redemption Period
Catangcatang v. Legayada, 84 SCRA 51 (1978)

84
 SALIENT MATTERS cont’d

(b) HOW REDEMPTION EFFECTED:

Only tender of payment is sufficient.

Legaspi v. CA, 142 SCRA 82 (1986)

Consignation is not required after tender is

refused.
Mariano v. CA, 222 SCRA 736 (1993)

But when tender not possible, consignation

should be made.
Catangcatang v. Legayada, 84 SCRA 51 (1978)

85
 SALIENT MATTERS cont’d

Simply by Filing Judicial Action

Lee Chuy Realty Corp. v. CA, 250 SCRA 596 (1995)

Seller returning to Buyer:

 Price of the sale
 Expenses of contract, and any other
legitimate payments made by reason of the
sale
 Necessary and useful expenses made on
the thing sold
ART. 1616

86
 SALIENT MATTERS cont’d
When Redemption Not Made, Buyer a retro
automatically acquires full ownership.
Oviedo v. Garcia, 40 SCRA 17 (1971)

HOWEVER: In real property, consolidation shall

not be recorded in the Registry of
Property without a judicial order, after
the seller has been duly heard.
Article 1607

If Seller proves the transaction a sale a retro, he

is given a period of 30 days from finality of
judgment to repurchase.
Solid Homes v. CA, 275 SCRA 267 (1997).
87
 EQUITABLE MORTGAGE
DEFINITION AND ELEMENTS

(a) The contract entered into is

denominated as a Sale (absolute or a
retro); and

(b) Real intention was to secure an

existing debt by way mortgage

Molina v. CA, 398 SCRA 97 (2003)

88
 EQUITABLE MORTGAGE cont’d

RATIONALE OF EQUITABLE MORTGAGE

PRINCIPLE

Prevent circumvention of law on usury and

rule against pactum commissorium, i.e. against
a creditor appropriating the mortgage property.
To end unjust or oppressive transactions or
violations in connection with a sale or property.
Spouses Miseña v. Rongavilla, 303 SCRA 749 (1999).
Matanguihan v. CA, 275 SCRA 380 (1997)
Lao v. CA, 275 SCRA 237 (1997)

89
 RULINGS ON EQUITABLE MORTGAGE

Badges of Equitable Mortgage in Art. 1602

Apply both to sale a retro and to a contract
purporting to be an absolute sale.
Tuazon v. CA, 341 SCRA 707 (2000)
Zamora v.CA, 260 SCRA 10 (1996)

Parol evidence is competent and admissible

in support of allegation of equitable mortgage
arrangement.
Mariano v. CA, 220 SCRA 716 (1993)

90
 Pactum Commissorium principle does not
apply:
(a) When security for a debt is also money in form of
time deposit
Consing v. CA, 177 SCRA 14 (1989)

(b) To an agreement between Lender and Borrower

which provides that in the event Borrower fails to
comply with the new terms of payment, the agreement
shall automatically operate to be an instrument of
dacion en pago without need of executing any
document to such an effect.
Solid Homes, Inc. v. CA, 275 SCRA 267 (1997)

91
 RULINGS ON EM cont’d

CONTRA: P/N stipulation that upon makers’ failure

to pay interests, ownership of property
would automatically be transferred to
Payee and the covering deed of sale
would be registered, is in substance a
pactum commissorium in violation of Art.
2088.
A. Francisco Realty v. CA, 298 SCRA 349 (1998)

A pactum commisorium sale is void, registration

and obtaining of new title by apparent buyer would
also be void.
A. Francisco Realty v. CA, 298 SCRA 349 (1998)

92
 REMEDIES UNDER EQUITABLE MORTGAGE
SITUATIONS

Apparent seller can seek reformation of

instrument (Art. 1605).
An action for consolidation of ownership (in
case presented as sale a retro) would be void, and
proper remedy of mortgagee-buyer is to file
appropriate foreclosure of the mortgage in
equity.
Briones-Vasquez vs. CA, 450 SCRA 644 (2005).

93
 REMEDIES IN EM cont’d

Additional 30-day Period of Redemption is

allowed under Art. 1606, in event courts should
find the sale was not equitable mortgage,
provided:
(a) Honest belief that it was equitable mortgage supported
by convincing evidence, such as badges under Art. 1602,
or consignation during trial of the amount of the alleged
loan
Abilla v. Gobonseng, 374 SCRA 51 (2002)
Vda. de Macoy v. CA, 206 SCRA 244 (1992)

94
 LEGAL REDEMPTION
DEFINITION AND RATIONALE:

Privilege created by law for reasons of

public policy.
For benefit and convenience of the
redemptioner, to afford him a way out of what
might be a disagreeable or inconvenient
association into which he has been thrust.
Intended to minimize co-ownership.
Fernandez v. Tarun, 391 SCRA 653 (2002)
Basa v. Aguilar, 117 SCRA 128 (1982)
95
LEGAL REDEMPTION cont’d
PERIOD OF LEGAL REDEMPTION BEGINS:
30 DAYS FROM WRITTEN NOTICE
Written notice must cover perfected sale
Art. 1623
Spouses Doromal v. CA, 66 SCRA 575 (1975)

Notice must be given by seller; and that notice given

by buyer or even by the Register of Deeds are not
sufficient.
Francisco v. Boiser, 332 SCRA 305 (2000)
Butte v. Manuel Uy and Sons, Inc., 4 SCRA 526 (1962)
Salatandol v. Retes, 162 SCRA 568 (1988)
96
 LEGAL REDEMPTION cont’d

Seller furnishing of the copies of deeds of sale to

co-owner would be sufficient.
Distrito v. CA, 197 SCRA 606 (1991)
Conejero v. CA, 16 SCRA 775 (1966)
Badillo v. Ferrer, 152 SCRA 407 (1987)

Notice to minors may validly be served upon

parents even when not judicially appointed since
beneficial to the children.
Badillo v. Ferrer, 152 SCRA 407 (1987).

97
 LEGAL REDEMPTION cont’d

Deemed complied when co-owners signed

Deed of Extrajudicial Partition embodying
disposition of part of the property owned in
common.
Fernandez v. Tarun, 391 SCRA 653 (2002)

Filing of ejectment suit or collection of rentals

against a co-owner dispenses with need for
written notice.
Alonzo v. IAC, 150 SCRA 259 (1987)

98
 INSTANCES OF LEGAL REDEMPTION
(a) Among Co-heirs (Art. 1088)
A co-heir cannot exercise the right of redemption
alone.
De Guzman v. CA, 148 SCRA 75 (1987)

No legal redemption for sale of the property of the

estate.
Plan v. IAC, 135 SCRA 270 (1985)

Written notice to other co-owners deemed inutile by

fact that ebuyers took possession of property in full view
of other co-owners.
Pilapil v. CA, 250 SCRA 560 (1995)

Notice given by city treasurer will not suffice.

Verdad v. CA, 256 SCRA 593 (1996)
99
 INSTANCES OF LEGAL REDEMPTION cont’d

(b) Among Co-owners (Art. 1620)

Right of legal redemption arises only when shares

of other owners are sold to a “third person,” and not
to another co-owner
Fernandez v. Tarun, 391 SCRA 653 (2002)

Registration of the sale does not estop a co-owner

Cabrera v. Villanueva, 160 SCRA 627 (1988)

Notice required to be given to co-owners must be

in writing; and redemption by co-owner redounds to
the benefit of all other co-owners.
Mariano v. CA, 222 SCRA 736 (1993)

100
 INSTANCES OF LEGAL REDEMPTION cont’d

No written notice required to co-owner who

acted as active intermediary in the
consummation of the sale.
Distrito v. CA, 197 SCRA 606 (1991)

Redemption by co-owner, even when he uses

his own fund, inures to the benefit of all the
other co-owners.
Annie Tan v. CA, 172 SCRA 660 (1989)

101
INSTANCES OF LEGAL REDEMPTION cont’d

(c) Among Adjoining Owners (Art. 1621-1622)

Redemption covers only “resale” and does not

cover exchanges or barter of properties
De Santos v. City of Manila, 45 SCRA 409 (1972)

Requisite of “speculation” dropped.

Legaspi v. CA, 69 SCRA 360 (1976)

Does not apply if one adjacent lot is not also

rural land
Primary Structures Corp. v. Valencia, 409 SCRA 371 (2003)

102
 INSTANCES OF LEGAL REDEMPTION cont’d

(d) Sale of Credit in Litigation (Art. 1634) - 30 days

(e) Redemption of Homesteads (Sec. 119, C.A. 141)

The right to repurchase is granted by law

and need not be provided for in the deed of sale.
Berin v. CA, 194 SCRA 508 (1991).

103
 INSTANCES OF LEGAL REDEMPTION cont’d

Under the free patent or homestead provisions of

the Public Land Act a period of five (5) years from the
date of conveyance is provided, the five-year period to be
reckoned from the date of the sale and not from the date
of registration in the office of the Register of Deeds.
Lee Chuy Realty Corp. v. CA, 250 SCRA 596 (1995)

For purposes of reckoning the 5-year period to

exercise right of repurchase, the date of conveyance is
construed to refer to date of execution of the deed
transferring the ownership of the land to the buyer.
Mata v. CA, 318 SCRA 416 (1999).

104
 INSTANCES OF LEGAL REDEMPTION cont’d

(f) Redemption in Tax Sales (Sec. 215, NIRC of 1997)

(g) Redemption by judgment debtor (Sec. 27, Rule

39, Rules of Civil Procedure)

Period of redemption shall be “at any time within

one (1) year from the date of registration of the
certificate of sale,” so that the period is now to be
understood as composed of 365 days, unlike the 360
days under the old provisions of the Rules of Court
which referred to 12-month redemption period.
Ysmael v. CA, 318 SCRA 215 (1999)

105
 INSTANCES OF LEGAL REDEMPTION cont’d

(h) Redemption in Extrajudicial Foreclosure

One (1) year from registration in the Registry
of Deeds on Mortgage (Sec. 6, Act 3135).

(i) Redemption in judicial foreclosure of

mortgage
(Sec. 47, General Banking Law of 2000, R.A. 8791).

A stipulation to render the right to redeem

defeasible by an option to buy on the part of the
creditor
Soriano v. Bautista, 6 SCRA 946 (1962)

106
 INSTANCES OF LEGAL REDEMPTION cont’d

No right to redeem from a judicial foreclosure sale,

except those granted by banks or banking institutions
GSIS v. CFI, 175 SCRA 19 (1989).

The one-year redemption period in case of

foreclosure of real estate mortgage is not interrupted by
filing of action assailing validity of mortgage, so that at
the expiration thereof, mortgagee who acquires property
at the foreclosure sale can proceed to have title
consolidated in his name and a writ of possession issued
in his favor.
Union Bank of the Philippines v. CA, 359 SCRA 480 (2001)
Vaca v. CA, 234 SCRA 146 (1994)
107
 INSTANCES OF LEGAL REDEMPTION cont’d

(j) Redemption in Foreclosure by Rural Banks

Land mortgaged to rural bank under R.A. 720,

may be redeemed within two (2) years from date of
foreclosure or from registration of sheriff's certificate
of sale. If mortgagor fails to exercise such right, heirs
may still repurchase within 5 years from expiration of
2-year redemption period pursuant to Sec. 119 of
Public Land Act (C.A. 141).
Rural Bank of Davao City v. CA, 217 SCRA 554 (1993)
Heirs of Felicidad Canque v. CA, 275 SCRA 741 (1997)

108
 INSTANCES OF LEGAL REDEMPTION cont’d

(k) Legal Right to Redeem under

Agrarian Reform Code

Sec. 12 of R.A. 3844, grants agricultural lessee

right to redeem within 180 days from notice in
writing and at a reasonable price and
consideration
Quiño v. CA, 291 SCRA 249 (1998)

Redemption right of tenant does not begin to

run without written notice
Springsun Management Systems Corp. v. Camerino,
449 SCRA 65 (2005)
109
END