Rabuya
Rabuya
2. Rights Granted to Buyer in relation to Payment of Price: The cancellation becomes effective 30 days from receipt of
a. Right to Suspend Payment such notice of cancellation
b. Right to Grace Period
c. Right to Pay Price Even After Expiration of C. Right of Buyer Who Paid At Least Two Years
Period. Installments
1. He is entitled to a grace period of 1 month for every 1
Right to Suspend (Art 1590 NCC) year of installment payments paid.
GR: If the vendee be disturbed in possession or ownership of the - This right shall be exercised by the buyer only once in every
thing acquired, he may suspend the payment of the price until the five years of the life of the contract and its extensions
vendor has caused the disturbance or danger to cease. 2. The seller may cancel the contract only after the grace
period but must comply with two mandatory
XPN: requirements:
1. when the vendor gives security for the return of the price (1) to send a notarized notice of cancellation to the
in a proper case buyer
2. when it has been stipulated that, notwithstanding any (2) to refund the cash surrender value
such contingency, the vendee shall be bound to make the - “cash surrender value” is at least 50% of the total
payment payments, but after five years of installments, an additional
3. a mere act of trespass shall not authorize the suspension 5% every year but not to exceed 90% of the total payments
of the payment of the price, because in the latter case the made.
vendee can easily resort to an action for ejectment.
Rules Applicable in Sale of Subdivision Lots or Condominium Right to Pay Price Even After Expiration of Period (Art. 1592)
Units
In case the owner or developer failed to comply, the buyer may In the sale of immovable property. Article 1592 of the Civil Code
exercise the following remedies: allows the buyer to still pay, even after the expiration of the period
1. he may suspend payment and wait for further allowed for payment, as long as no demand for rescission has been
development. made. whether judicially or by notarial act.
- the owner/developer may not forfeit the installment
payments made by the buyer Even an offer to pay prior to the demand for rescission is sufficient
2. he may demand reimbursement of the total amount paid. to defeat the seller’s right to rescind under article 1592
- the notice informing the developer of the intention not to of the Civil Code
remit further payments on account of non-development of
the subdivision, and the-demand for refund, can be made at Two Types of Pricing Agreements in Sale Involving Real Estate
the same time. 1. Unit Price Contract
- purchase price is determined by way of reference to a stated
Right to Grace Period rate per unit area (e.g., Pl ,000 per square meter)
1. If granted by contract: the same is a right, not an - If the vendor delivers less than the area agreed upon, the
obligation of the debtor, and when unconditionally vendee may:
conferred, the grace period is effective without further a. oblige the vendor to deliver all that may be
need of demand either calling for the payment of the stated in the contract.
obligation or for honoring the right b. proportionate reduction of the purchase price or
2. MACEDA LAW (In Sale of Realty by Installments) rescission of the contract, if the lack in the area
is not less than 1/10 of the stated area.
1
- If it is not the quality specified in the contract: - Title and ownership of property are immediately vested in the
a. Same rules with ^ vendee a retro, subject only to he resolutory condition that the
b. Apply rescission when the inferior value of the vendor repurchases it within the stipulate period.
thing sold exceeds 1/10 of the price agreed
upon. Period of Redemption (Art. 1606)
- If vendor delivers more than the area stated, the vendee has 1. Expressly agreed upon but shall not exceed 10 yrs
the option to: 2. Absence of stipulation, 4 years from the date of the
a. accept only the amount agreed upon contract/
b. accept the whole area, provided he pays for 3. If the court ruled that it is a real pacto de retro sale, the
additional area at the contract rate. vendor may still exercise the right to repurchase within
30 days from finality of judgment.
2. Lump Sum Contract
- Which states a full purchase price for an immovable the area Equitable Mortgage:
of which may be declared based on the estimate or where - one which, although lacking in some formality, or form or
both the area and boundaries are stated. words, or other requisites demanded by a statute,
nevertheless reveals the intention of the parties to charge real
Remedies of Seller if Price not Paid in Sale of Personal property as security for a debt, and contains nothing
Property on Installments: impossible or contrary to law
2
2. Contract for Piece of Work (ii) the father or guardian as to the property of the minor
- it is a lease of service, or when the subject matter is a or ward; and
service. (iii) the manager.20’ However, even if the lease is not to
be recorded, a special power is also necessary when
It is a contract involving the grant of temporary use or enjoyment the lease is for a period of more than one year. In
of a property to another in consideration of the payment of a price the foregoing, if the lease is without a special
certain in money or its equivalent (called “rent”) (Art. 1643) power, the same is void.
Commodatum – if the grant of temporary use is gratuitous. (Art. Recording in Registry – it becomes binding upon 3rd person.
1935)
Term of Lease:
Innominate - if the consideration is not payment of a price but the (i) the period agreed upon; however, no lease for more
delivery of another thing or rendition of service. than 99 years shall be valid (1643)
(ii) When the duration of the lease has not been fixed
Consensual - it is perfected at the moment there is a meeting of the and it is a lease of rural lands, it is understood to
minds on the thing and the cause and consideration which are to have been made for all the time necessary for the
constitute the contract gathering of the fruits which the whole estate leased
may yield in one year, or which it may yield once,
Lessor Need Not be the Owner although two or more years may have to elapse for
Because lease does not involve any transfer of ownership. the purpose (1682)
(iii) when the period for the lease has not been fixed and
However, the lessor must have: it is a lease of urban land, it is understood to be from
1. right (eg. Usufructuary or lessee) year to year, if the rent agreed upon is annual; from
2. authority (eg. Agent of the owner) month to month, if it is monthly; from week to
week, if the rent is weekly; and from day to day, if
otherwise, the contract is VOID because the object of which did the rent is to be paid daily (1687)
not exist at the time of the transaction.
However, the court may fix a longer period when:
Subject matter of lease: - the rent is paid daily and the lessee has stayed in the place for
1. Personal Property over one month; the rent is paid weekly and the lessee has
- Consumable goods cannot be a subject matter. XPN: when been in possession for over six months; or the rent is paid
they are merely to be exhibited or when they are accessory to monthly and the lessee has occupied the premises for over one
an industrial establishment. (Art. 1645) year.
2. Real Property - when the lease contract provides that it "shall continue for an
a. Lease of Rural and Urban Lands indefinite period provided the lessee is up-to-date in the
- Those persons disqualified to buy under Articles 1490 and payment of his monthly rentals,"
1491, are also disqualified to become lessees of the things o Article 1687 does not apply because the lease
mentioned. is not one with a period but instead subject to a
- Foreigners are allowed to lease lands in the Philippines resolutory condition
o if the foreigner is investing in the Philippines,
the lease shall be for a period not exceeding 50 Rights and Obligations of the Parties
years, renewable once for a period of not more 1. Right to Assign Contract
than 25 years and the lease are shall be used a. GR: lessee cannot assign the lease.
solely for the purpose of the investment upon b. XPN:
the mutual agreement of the parties. (i) if the assignment is with the consent of the lessor; or
o if the foreigner is not investing in the (ii) even without the lessor’s consent, if there is a
Philippines, he is allowed to lease private lands stipulation in the contract allowing the assignment of the
in the Philippines but for a maximum period lease.
only of 25 years, renewable for another period
of 25 years upon mutual agreement of both 2. Right to Sublease
parties. a. GR: The lessee may sublet the thing leased
b. XPN: He cannot do so if expressly prohibited in the
Statute of Frauds govern: contract.
If the lease of real property, including lands, is for a period of more c. Duty of Sublessee:
than one year, it must be in writing; otherwise, the contract is i. he is bound to the lessor for all acts which refer to the
unenforceable. use and preservation of the thing leased in the manner
stipulated between the lessor and the lessee
If the lease is to be recorded in the Registry of Property, the ii. he is subsidiarily liable to the lessor for any rent due
following cannot constitute the same without special power: from the lessee but he cannot be responsible beyond the
(i) the husband with respect to the wife’s paraphernal amount of rent due from him
real estate;
3. Principal Obligation of the Lessor
3
a. To deliver the thing which is the object of the contract in - By the contract for a piece of work the contractor binds
such a condition as to render it fit for the use intended. himself to execute a piece of work for the employer, in
i. since the delivery of the object of the contract is merely consideration of a certain price or compensation.
an obligation created by the contract upon perfection, - The obligation created on the part of the contractor is an
the lessor can be compelled to make the delivery. obligation to do
b. to make on the leased premises during the lease all the
necessary repairs in order to keep it suitable for the use to 2 Kinds:
which it has been devoted, unless there is a stipulation to 1. where contractor employs only his labor or skill
the contrary 2. where contractor employs labor and also furnishes the
c. to maintain the lessee in the peaceful and adequate material.
enjoyment of the lease for the entire duration of the
contract Principal Obligations of Contractor:
i. merely a warranty that the lessee shall not be disturbed (1) to deliver the thing produced;
in having legal and not physical possession of the (2) to transfer dominion over the thing;
property. (3) to warrant that he has the right to transfer ownership of
the thing (warranty of title) and that the thing shall be
4. Principal Obligation of the Lessee: free from hidden defects or faults (warranty against
a. to pay the price of the lease according to the terms hidden defect)
stipulated;
b. to use the thing leased as a diligent father of a family, Effect of Loss Prior to Delivery: contractor shall suffer the loss,
devoting it to the use stipulated, and in the absence of unless there has been delay in receiving the thing produced
stipulation, to that which may be inferred from the nature
of the thing leased, according to the customs of the place; Effect of Acceptance of Work
and GR: Acceptance of the work by the employer relieves the
c. to pay the expenses for the deed of lease contractor of liability for any defect in the work.
The lessee may suspend the payment of the rent in case the lessor XPN:
fails to make the necessary repairs or to maintain the lessee in (1) if the defect is hidden and the employer is not, by his
peaceful and adequate enjoyment of the property leased. special knowledge, expected to recognize the same.
(2) the employer expressly reserves his rights against the
Tacita reconduccion or Implied New Lease contractor by reason of the defect and
- refers to the right of the lessee to continue enjoying the (3) if a building or edifice falls within 15 years on account of
material or de facto possession of the thing leased within a defects in the construction or the use of materials of
period of time fixed by law. inferior quality furnished by him, or due to any violation
of the terms of the contract.
Requisites:
1. the term of the original contract of lease has expired; Extent of Liability of Contractor
2. the lessor has not given the lessee a notice to vacate; and 1. The contractor is responsible for the work done by
3. the lessee continued enjoying the thing leased for 15 days persons employed by him
with the acquiescence of the lessor. 2. The contractor is liable for all the claims of laborers and
others employed by him, and of third persons for death or
Effect: Except for the period, the other terms of the original physical injuries during the construction
contract are deemed revived. 3. Unpaid Wages of Employees:
a. The contractor is liable for the unpaid wages of
Term of Implied New Lease: his employees.
(1) In case of urban lands, it is understood to be from year b. However, the owner is also liable to pay such
to year, if the rent agreed upon is annual; from month to unpaid wages "up to the amount owing from
month, if it is monthly; from week to week, if the rent is (him) to the contractor at the time the claim is
weekly; and from day to day, if the rent is to be paid made”
daily.
(2) In case of rural lands, it is understood to have been To this extent, the owner’s liability is solidary
made for all the time necessary for the gathering of the with the contractor, if both are sued together
fruits which the whole estate leased may yield in one
year, or which it may yield once, although two or more
years may have to elapse for the purpose
4
Article 1522. Where the seller delivers to the buyer a quantity of goods namely:
less than he contracted to sell, the buyer may reject them, but if the
buyer accepts or retains the goods so delivered, knowing that the seller (1) Where the goods have been sold without any stipulation as to credit;
is not going to perform the contract in full, he must pay for them at the
contract rate. If, however, the buyer has used or disposed of the goods
delivered before he knows that the seller is not going to perform his (2) Where the goods have been sold on credit, but the term of credit has
contract in full, the buyer shall not be liable for more than the fair value expired;
to him of the goods so received.
(3) Where the buyer becomes insolvent.
Where the seller delivers to the buyer a quantity of goods larger than he
contracted to sell, the buyer may accept the goods included in the The seller may exercise his right of lien notwithstanding that he is in
contract and reject the rest. If the buyer accepts the whole of the goods possession of the goods as agent or bailee for the buyer. (n)
so delivered he must pay for them at the contract rate.
Where the seller delivers to the buyer the goods he contracted to sell Article 1530. Subject to the provisions of this Title, when the buyer of
mixed with goods of a different description not included in the contract, goods is or becomes insolvent, the unpaid seller who has parted with the
the buyer may accept the goods which are in accordance with the possession of the goods has the right of stopping them in transitu, that is
contract and reject the rest. to say, he may resume possession of the goods at any time while they
are in transit, and he will then become entitled to the same rights in
In the preceding two paragraphs, if the subject matter is indivisible, the regard to the goods as he would have had if he had never parted with the
buyer may reject the whole of the goods. possession. (n)
The provisions of this article are subject to any usage of trade, special Article 1531. Goods are in transit within the meaning of the preceding
agreement, or course of dealing between the parties. article:
(1) From the time when they are delivered to a carrier by land, water, or
Article 1525. The seller of goods is deemed to be an unpaid seller air, or other bailee for the purpose of transmission to the buyer, until the
within the meaning of this Title: buyer, or his agent in that behalf, takes delivery of them from such
carrier or other bailee;
(1) When the whole of the price has not been paid or tendered;
(2) If the goods are rejected by the buyer, and the carrier or other bailee
continues in possession of them, even if the seller has refused to receive
(2) When a bill of exchange or other negotiable instrument has been them back.
received as conditional payment, and the condition on which it was
received has been broken by reason of the dishonor of the instrument,
the insolvency of the buyer, or otherwise. Goods are no longer in transit within the meaning of the preceding
article:
In articles 1525 to 1535 the term "seller" includes an agent of the seller
to whom the bill of lading has been indorsed, or a consignor or agent (1) If the buyer, or his agent in that behalf, obtains delivery of the goods
who has himself paid, or is directly responsible for the price, or any before their arrival at the appointed destination;
other person who is in the position of a seller. (n)
(2) If, after the arrival of the goods at the appointed destination, the
Article 1526. Subject to the provisions of this Title, notwithstanding that carrier or other bailee acknowledges to the buyer or his agent that he
the ownership in the goods may have passed to the buyer, the unpaid holds the goods on his behalf and continues in possession of them as
seller of goods, as such, has: bailee for the buyer or his agent; and it is immaterial that further
destination for the goods may have been indicated by the buyer;
(1) A lien on the goods or right to retain them for the price while he is in
possession of them; (3) If the carrier or other bailee wrongfully refuses to deliver the goods
to the buyer or his agent in that behalf.
(2) In case of the insolvency of the buyer, a right of stopping the goods
in transitu after he has parted with the possession of them; If the goods are delivered to a ship, freight train, truck, or airplane
chartered by the buyer, it is a question depending on the circumstances
of the particular case, whether they are in the possession of the carrier as
(3) A right of resale as limited by this Title; such or as agent of the buyer.
(4) A right to rescind the sale as likewise limited by this Title. If part delivery of the goods has been made to the buyer, or his agent in
that behalf, the remainder of the goods may be stopped in transitu,
Where the ownership in the goods has not passed to the buyer, the unless such part delivery has been under such circumstances as to show
unpaid seller has, in addition to his other remedies a right of an agreement with the buyer to give up possession of the whole of the
withholding delivery similar to and coextensive with his rights of lien goods. (n)
and stoppage in transitu where the ownership has passed to the buyer.
(n) Obligation of the Vendee
Article 1582. The vendee is bound to accept delivery and to pay the
Article 1527. Subject to the provisions of this Title, the unpaid seller of price of the thing sold at the time and place stipulated in the contract.
goods who is in possession of them is entitled to retain possession of
them until payment or tender of the price in the following cases, If the time and place should not have been stipulated, the payment must
5
be made at the time and place of the delivery of the thing sold. (1500a)
(1) Accept or keep the goods and set up against the seller, the breach of
warranty by way of recoupment in diminution or extinction of the price;
(2) Accept or keep the goods and maintain an action against the seller
for damages for the breach of warranty;
(3) Refuse to accept the goods, and maintain an action against the seller
for damages for the breach of warranty;
(4) Rescind the contract of sale and refuse to receive the goods or if the
goods have already been received, return them or offer to return them to
the seller and recover the price or any part thereof which has been paid.
When the buyer has claimed and been granted a remedy in anyone of
these ways, no other remedy can thereafter be granted, without
prejudice to the provisions of the second paragraph of article 1191.
Where the goods have been delivered to the buyer, he cannot rescind the
sale if he knew of the breach of warranty when he accepted the goods
without protest, or if he fails to notify the seller within a reasonable time
of the election to rescind, or if he fails to return or to offer to return the
goods to the seller in substantially as good condition as they were in at
the time the ownership was transferred to the buyer. But if deterioration
or injury of the goods is due to the breach or warranty, such
deterioration or injury shall not prevent the buyer from returning or
offering to return the goods to the seller and rescinding the sale.
Where the buyer is entitled to rescind the sale and elects to do so, he
shall cease to be liable for the price upon returning or offering to return
the goods. If the price or any part thereof has already been paid, the
seller shall be liable to repay so much thereof as has been paid,
concurrently with the return of the goods, or immediately after an offer
to return the goods in exchange for repayment of the price.
Where the buyer is entitled to rescind the sale and elects to do so, if the
seller refuses to accept an offer of the buyer to return the goods, the
buyer shall thereafter be deemed to hold the goods as bailee for the
seller, but subject to a lien to secure the payment of any portion of the
price which has been paid, and with the remedies for the enforcement of
such lien allowed to an unpaid seller by article 1526.
6
Obligation of the Vendee 2. Rule in sale of subdivision lots or condominium units.
1. To accept delivery a. If developer failed to develop the property
2. To pay the price of the thing sold. according to the terms and conditions, the
buyer may exercise the ff ALTERNATIVE
Delivery by installments REMEDIES:
GR: The buyer of goods is not bound to accept delivery by i. Suspend the payment and wait for further
installments, unless otherwise agreed development
the owner/ developer may not forfeit
When seller makes defective deliveries in respect of some the installment payments made by the
installments or buyer refuses to accept, buyer and the buyer may not be ousted
1. If breach is material - the injured party may refuse to from the subdivision.
proceed further and sue for damages for breach of the ii. He may demand reimbursement of the total
entire contract amount.
2. If breach is severable - the injured party may claim for the notice informing the developer of
compensation but he does not have the right to treat the the intention not to remit further
whole contract as broken. payments on account of non-
development of the subdivision, and the
What constitutes acceptance of goods demand for refund, can be made at the
1. He intimates to the seller that he has accepted them; or same time.
2. He does any act in relation to the goods which is 3. Right of buyer to a grace period.
inconsistent with the ownership of the seller when the a. If it is provided in the contract of sale, the same
goods have been delivered to him; or is a right, not an obligation of the debtor.
3. After the lapse of a reasonable time, he retains the goods b. If it is conferred, the grace period is effective
without intimating to the seller that he has rejected them. without further need of demand either calling
for the payment of the payment.
If seller has committed breach of any promise or warranty in the c. MACEDA LAW – Rule in case of sale of
contract of sale and the buyer accepted the goods the following real property on installment:
rules shall be observed i. If the buyer has paid at least two years of
1. the buyer's acceptance shall not discharge the seller from installments and he defaulted in the payment
any liability in damages or other legal remedy for breach of succeeding installments, he may pay,
of any such promise or warranty without additional interests, the unpaid
2. subject to any express or implied agreement of the parties installments due within the total grace period
3. if after acceptance of the goods, the buyer fails to give earned by him, which is fixed at the rate of 1
notice to the seller of the breach in any promise of month grace period for every 1 year of
warranty within a reasonable time, the seller shall not be installment payments.
liable. This right shall be exercised by the
buyer only once in every 5 of the life of
Responsibility of the buyer if he refuses to accept the contract and its extensions, if any.
1. If refusal is justified: the buyer is not bound to return the ii. If the buyer has paid less than two years
goods to the seller, it being sufficient that he notifies the installments, the buyer shall still be entitled
seller that he refuses to accept them. to a grace period of 60 days.
2. If refusal is without just cause: The title to the goods Effect of failure to pay within the period stipulated:
passes to the buyer from the moment they are placed at 1. In sale of Immovable Property – vendee may pay even after
his disposal. the expiration of the period, as long as no demand for
rescission of the contract has been made, either judicial or
Right to pay the price notarial act, under Art 1952.
1. Time and place – fixed by the contract a. The requirement for judicial and notarial act does not
2. Time and place of the delivery of the thing – if absence apply in contract to sell
of stipulation b. In contracts to sell over immovable property, the
Maceda Law applies: The Maceda Law recognizes the
Right of the vendee to suspend payment: right of the seller to cancel the contract upon nonpayment
1. If disturbed in possession, the vendee may suspend the of an installment by the buyer, which is simply an event
payment until the vendor has caused the disturbance or that prevents the obligation of the vendor to convey title
danger to cease. from acquiring binding force, hence, it is applicable to a
a. Unless the latter gives security for the return of contract to sell.
the price in a proper case. c. Prescriptive period: 10 years from the time the right of
b. Mere act of trespass shall not authorize the action accrues.
suspension because the vendee can easily resort
to an action for ejectment. 2. In sale of Movable Property – The rescission of sale shall take
c. It is necessary that the disturbance or the place in the interest of the vendor, if the vendee did not appear
danger be attributable to a fact prior to the sale. to receive it, he should not have tendered the price at the same
7
time, unless a longer period has been stipulated for its
payment Prescriptive period in instituting action:
a. The vendee shall owe interest for the period between the - may be specified in the contract.
delivery of the thing and the payment of the price, in the - Absence of stipulation, 4 years.
ff cases:
1. It has been so stipulated. B. Implied Warranty - An implied warranty is that which the law
2. The thing sold and delivered produce fruits or derives by application or inference
income from the nature of the transaction or the relative situation or
3. If vendee is in default, from the time of judicial or circumstances of the parties, irrespective of any intention of the
extrajudicial demand for the payment of the price. seller to create it.
CONDITIONS AND WARRANTIES: Unless a contrary intention appears, the warranties impliedly made
by the seller in entering into the contract are three, namely:
CONDITION - in the context of a perfected contract of sale 1) His right to sell the thing at the time when the ownership
pertains to the compliance by one party of an undertaking the is to pass (warranty of ownership);
fulfillment of which would beckon, in turn, the demandability of 2) The peaceful enjoyment by the buyer from the time of
the reciprocal prestation of the other party. the legal and peaceful possession· of the thing (warranty
against eviction); and
Failure to comply with the conditions imposed on the 3) Freedom of the thing from any hidden faults or defects or
obligation: any charge or encumbrance not declared or known to the
buyer (warranty against hidden defects)
Remedy:
1. Such party may refuse to proceed with the contract or he Kinds of Implied Warranties (EHNF)
may waive performance of the condition 1) Warranty against eviction
2. If the other party has promised that the condition should 2) Warranty against hidden defects
happen or be performed, such first mentioned may also 3) Warranty against non-apparent servitude
treat the non-performance of the condition as a breach of 4) Warranty of fitness and merchantability
warranty.
3. Where the ownership in the thing has not passed, the 1. Warranty Against Eviction
buyer may treat the fulfillment by the seller of his
obligation to deliver the same as described and as Requisites:
warranted expressly or by implication in the contract of 1. Purchaser has been deprived of the whole or
sale as a condition of the obligation of the buyer to part of the thing sold;
perform his promise to accept and pay for the thing. 2. Eviction is by final judgement;
3. Basis is a right prior to the sale; and
WARRANTIES - A warranty is a statement or representation 4. Seller has been summoned and made a co-
made by the seller of goods, contemporaneously and as part of the defendant in the suit for eviction at the instance
contract of sale, having reference to the character, quality or title of of the buyer
the goods, and by which he promises or undertakes to insure that Applicability
certain facts are or shall be as he then represents them. 1. If the property is sold for nonpayment of taxes dues and
not made known to the vendee before the sale - the
2 Kinds: vendor is liable for eviction.
1. Express Warranty 2. Judgment debtor is also responsible for eviction in
2. Implied Warranty judicial sales
3. Adverse possession commenced before the sale but
A. Express Warranty - Any affirmation of fact or any promise by prescriptive period take place – the vendor shall not be
the seller relating to the thing is an express warranty if the natural liable for eviction.
tendency of such affirmation or promise is to induce the buyer to
purchase the same, and if the buyer purchases the thing relying GR: The contracting parties, however, may increase, diminish, or
thereon. suppress the legal obligation of the vendor for his implied warranty
against eviction
Requisites:
1. It consists of an affirmation of fact or any promise by the XPN: Considered void if the vendor acted in bad faith.
seller relating to the thing;
2. The natural tendency of such affirmation or promise is to Right to Warranty Renounced:
induce the buyer to purchase the thing; and 1. Intended renunciation - When vendee renounced the
3. The buyer purchases the thing relying upon such right to warranty in case of eviction and the waiver is
affirmation or promise. made with knowledge of the risks of eviction and
assumed its consequences and the eviction takes place,
No affirmation of value of the thing shall be construed as warranty. the vendor is not liable
Unless, the seller made such affirmation or statement as an expert 2. Conscious renunciation - When the vendee has simply
and it was relied upon by the buyer. renounced the right to warranty in case of eviction
8
( without adding any circumstance which reveals his in quality of the thing sold, or an action for the
knowledge of the risks of eviction and his intent to proportionate reduction of the purchase price.
assume its consequences) and the eviction takes place,
the vendor shall only pay the value which the thing sold Prescriptive period: 6 months from the date of delivery of the
had at the time of the eviction. thing sold.
9
cancellation under the law, i.e., failure to can be allowed since the requirement of the Statute of Frauds has
send a notarized notice of cancellation and to already been satisfied.
refund the cash surrender value, shall result
into the contract remaining to be valid and Equitable Mortgage
subsisting. An equitable mortgage has been defined as one which although
The foregoing requirements of the Maceda law are mandatory and lacking in some formality, or form or words, or other requisites
any stipulation in the contract contrary to the provisions of said law demanded by a statute, nevertheless reveals the intention of the
shall be null and void. parties to charge real property as security for a debt, and contains
nothing impossible or contrary to law.
EXTINGUISHMENT OF SALE
Essential elements are:
Sales are extinguished: a. The parties enter into what appears to be a contract of sale
1. By the same causes as all other obligations b. Their intention is to secure an existing debt by way of
2. By the various causes of extinguishment mortgage
a. Cancellation of sale of personal property ARTICLE 1602. The contract shall be presumed to be an
payable in installments equitable mortgage, in any of the following cases:
b. Resale of the goods by the unpaid seller (1) When the price of a sale with right to repurchase is
c. Rescission of the sale by the unpaid seller unusually inadequate;
d. Rescission by the buyer in case of partial (2) When the vendor remains in possession as lessee or
eviction otherwise;
e. Rescission by the buyer in case of breach of (3) When upon or after the expiration of the right to
warranty against hidden defects. repurchase another instrument extending the period of
3. By redemption redemption or granting a new period is executed;
a. Conventional Redemption (4) When the purchaser retains for himself a part of the
b. Legal Redemption purchase price;
(5) When the vendor binds himself to pay the taxes on the
CONVENTIONAL REDEMPTION (Pacto de Retro) thing sold;
Seller reserved the right to repurchase thing sold coupled with (6) In any other case where it may be fairly inferred that the
obligation to return price of the sale, expenses of contract & other real intention of the parties is that the transaction shall
legitimate payments and the necessary & useful expenses made on secure the payment of a debt or the performance of any
the thing sold. other obligation.
Note: Right to repurchase must be reserved at the time of In any of the foregoing cases, any money, fruits, or other benefit
perfection of sale. (Pineda, p. 333) to be received by the vendee as rent or otherwise shall be
considered as interest which shall be subject to the usury laws.
RIGHT TO REDEEM OPTION TO PURCHASE
As to Nature Reason for Art 1602: it particularly envisions contracts of sale
Not a separate contract but Generally, it is a principal with right to repurchase where
merely part of the main contract and may be created the real intention of the parties is that the pretended purchase price
contract of sale independent of another is money loaned, and in order to secure the payment of the loan a
contract contract purporting to be a sale with pacto de retro is drawn up.
As to Consideration
Does not need its separate To be valid, it must have a Such presumption of equitable mortgage is not conclusive. It may
consideration in order to be consideration separate and be rebutted by competent and satisfactory proof to the contrary
valid and effective distinct from the purchase
price Period of Redemption of Pacto De Retro Sale:
As to Maximum Period for Exercise of the Right 1. Expressly agreed upon, but such cannot exceed 10 years.
Cannot exceed 10 years May be beyond 10 years 2. Absence of stipulation, 4 years from the date of the
contract.
Right of repurchase must be granted in same
Instrument Legal Redemption
Once the instrument of absolute sale is executed, - Legal redemption is the right to be subrogated, upon the
the vendor can no longer reserve the right to repurchase, and any same terms and conditions stipulated in the contract, in the
right thereafter granted the vendor by the vendee in a separate place of one who acquires a thing by purchase or dation in
instrument cannot be a right of repurchase but some other right like payment, or by any other transaction whereby ownership is
an option to buy. transmitted by onerous title.
- It is also defined as a privilege created by
Existence of right of repurchase may be proven by parol - law, partly by reason of public policy and partly for the
evidence: benefit of the redemptioner to afford him a way out of a
If there is a written contract of sale over a real property, parol disagreeable or inconvenient association into which he has
evidence of the existence of a verbal grant of right of repurchase been thrust.
10
Legal redemption takes place in purchase or dation in payment or other stipulations which may have been agreed upon.
in any other transaction whereby ownership is transmitted by
onerous title.
Redemption v. Pre-emption
- Redemption arises after the sale, since it precisely tends to
subrogate one who exercises it in the place of the vendee.
- Right of pre-emption arises before the sale is effected, since
it is when this is sought or proposed that the legal notice has
to be given