Sales Midterms Reviewer

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(!
567585679

Sharlng ls a good Lhlng! AJ Mojotem uel Clotlom
1
#:; <= !:>?@
3A:BC?D 7E )A? 1:CFD? <G !:>?
"DC. 7HIJ.
8y Lhe conLracL of sale one of Lhe conLracLlng parLles obllgaLes hlmself Lo Lransfer
Lhe ownershlp and Lo dellver a deLermlnaLe Lhlng, and Lhe oLher Lo pay Lherefor a
prlce cerLaln ln money or lLs equlvalenL.
A conLracL of sale may be absoluLe or condlLlonal. (1443a)
!"#$%$&$'% '# )*+"
1:CFD? <G 0K>LM:CL<=@ 3D?:C?N L= : !:>?
ConLracL whereby one of Lhe conLracLlng parLles (seller) obllgaLes hlmself Lo.
o 1ransfer Lhe ownershlp
o uellver Lhe possesslon
o Cf a ,"&"-.$%*&" &/$%0
1o Lhe oLher parLy, Lhe 8uyer, who obllgaLes hlmself
o 1o pay a 1-$2" 2"-&*$%
o 3% .'%"4 '- $&5 "67$8*+"%&
1hese are -"*+ '9+$0*&$'%5 - obllgaLlons Lo glve
o 1hls means LhaL Lhey can be sub[ecL for acLlons of 51"2$#$2
1"-#'-.*%2":
o ArL. 1480 : When whaL ls Lo be dellvered ls a deLermlnaLe Lhlng, Lhe
buyer may compel Lhe seller Lo make Lhe dellvery, plus damages
o 1hus, one who defaulLs can'L lnslsL on [usL paylng damages
!FKO?PC &:CC?D <G !:>?
ueLermlnable" ls lncluded ln deLermlnaLe" when descrlblng Lhe sub[ecL
maLLer of a sale
ArLlcle 1460 - Lhe deLermlnaLe" requlremenL ls saLlsfled when, aL Lhe Llme Lhe
conLracL ls enLered lnLo.
o 1he Lhlng ls capable of belng made deLermlnaLe
o WlLhouL necesslLy of new or furLher agreemenL
CLv: ueLermlnaLe" ls also accuraLe because lL refers Lo Lhe obllgaLlon of Lhe
seller
o necessarlly would requlre a segregaLlon/deslgnaLlon aL some polnL,
maklng Lhe sub[ecL maLLer deLermlnaLe aL LhaL polnL
o ueLermlnaLe" emphaslzes LhaL Lhe dellvery and Lransfer can only be
made when Lhe sub[ecL maLLer becomes speclflc/deLermlnaLe.
$>?Q?=C@ <G 3<=CD:PC <G !:>?
Coronel vs CA
o ;'%5"%& < .""&$%0 '# &/" .$%,5
o )79="2& .*&&"-
o >-$2" 2"-&*$%
When all Lhree are presenL, a perfecLed conLracL of sale arlses
o Such valldlLy noL affecLed by prevlous flcLlLlous deed of sale
o nelLher ls lL affecLed by non-performance LhereafLer
SC has declared sales vold" when Lhese requlslLes noL presenL
o CLv : 1he more proper Lerm ls Lo declare a no conLracL" slLuaLlon
o ulzon v. CA: Absence of requlremenLs %"0*&"5 &/" "?$5&"%2" of a
conLracL of sale
When Lhere ls a defecL ln any of Lhe elemenLs.
o voldable, when defecL ls a vlLlaLlon of consenL
o vold : ArL 1409
1

1 1he followlng conLracLs are lnexlsLenL and vold from Lhe beglnnlng:
(1) 1hose whose cause, ob[ecL or purpose ls conLrary Lo law, morals, good
cusLoms, publlc order or publlc pollcy,
(2) 1hose whlch are absoluLely slmulaLed or flcLlLlous,
(3) 1hose whose cause or ob[ecL dld noL exlsL aL Lhe Llme of Lhe LransacLlon,
(4) 1hose whose ob[ecL ls ouLslde Lhe commerce of men,
(5) 1hose whlch conLemplaLe an lmposslble servlce,
(6) 1hose where Lhe lnLenLlon of Lhe parLles relaLlve Lo Lhe prlnclpal ob[ecL of Lhe
conLracL cannoL be ascerLalned,
(7) 1hose expressly prohlblLed or declared vold by law.

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2
!C:M?@ L= CA? #LG? <G !:>?
SLrlcLly speaklng, only Lwo
8uL SC has consldered Lhree
o ollclLaLlon
1hls ls a 1"-$', '# &$." from when Lhe parLles lndlcaLe
lnLeresL ln enLerlng lnLo an agreemenL
1o Lhe Llme when Lhe conLracL ls perfecLed
o erfecLlon
1he concurrence of Lhe essenLlal elemenLs of Lhe sale
o ConsummaLlon
lrom when Lhe parLles perform Lhelr respecLlve obllgaLlons
CulmlnaLes ln exLlngulshmenL of Lhe conLracL
@55"%&$*+ ;/*-*2&"-$5&$25 '# )*+"
1<QL=:C? :=N /DL=PLB:>
nomlnaLe : lL has been glven a name by law
rlnclpal
o lL can sLand on lLs own
o lndependenL of oLher conLracLs for valldlLy and exlsLence
o arLles enLer lnLo a sale Lo achleve a sale
noL ln preparaLlon for anoLher conLracL
1hls characLerlsLlc leads Lo Lhe SC uocLrlne : 8eal characLer of conLracL ls
lndlcaLed by Lhe subsLance, noL by Lhe name glven Lo lL by Lhe parLles
Lao v. CA
o CourLs musL look aL Lhe lnLenL of Lhe parLles ln order Lo deLermlne Lhe
naLure of a conLracL
o noL aL Lhe nomenclaLure used Lo descrlbe lL
o 1rue alm and purpose can be shown by conducL, words, acLlons
CavlLe uev 8ank vs Llm
o ConLracLs noL deflned by parLles
o 8uL by Lhe prlnclples of law
1hus, all oLher conLracLs whlch have for Lhelr ob[ecLlve.
o 1ransfer of ownershlp and possesslon of a deLermlnaLe sub[ecL
o lor a valuable conslderaLlon
o Wlll be governed by Lhe law on Sales

3<=@?=@F:>
Sale ls perfecLed by mere consenL
o AL Lhe momenL Lhere ls a meeLlng of Lhe mlnds upon Lhe ob[ecL and
conslderaLlon, Lhe conLracL ls perfecLed
8uenavenLura v. CA
o Sale over sub[ecL maLLer ls noL real, buL consensual
o lL becomes valld and blndlng upon meeLlng of Lhe mlnds as Lo Lhe
prlce.
ArL 1473, Clvll Code
2

o arLles may reclprocally demand performance from Lhe momenL of
perfecLlon.
o AcLual dellvery/paymenL are noL necessary componenLs for a valld
sale Lo exlsL
1hus, nondellvery or nonpaymenL does noL lnvalldaLe or vold
a perfecLed sale.
1hese merely become legal basls for remedles.
o lule v. CA
ConLracL of Sale perfecLed aL Lhe momenL Lhere ls a meeLlng
of Lhe mlnds upon Lhe Lhlng, and upon Lhe prlce
lL has Lhe force of law beLween Lhe conLracLlng parLles
noncompllance wlLh formal requlremenLs does noL affecL
valldlLy of conLracL
o Pe who alleges exlsLence of a sale musL show lL by compeLenL proof
o LxcepLlon : ArLlcle 1322 of Lhe Clvll Code
3

ModallLles LhaL AffecL CharacLerlsLlc of ConsensuallLy

2 1he conLracL of sale ls perfecLed aL Lhe momenL Lhere ls a meeLlng of mlnds upon Lhe Lhlng
whlch ls Lhe ob[ecL of Lhe conLracL and upon Lhe prlce.
lrom LhaL momenL, Lhe parLles may reclprocally demand performance, sub[ecL Lo Lhe
provlslons of Lhe law governlng Lhe form of conLracLs.
3
When one of Lhe parLles ls unable Lo read, or lf Lhe conLracL ls ln a language noL undersLood
by hlm, and mlsLake or fraud ls alleged, Lhe person enforclng Lhe conLracL musL show
LhaL Lhe Lerms Lhereof have been fully explalned Lo Lhe former.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

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Consensual characLerlsLlc may be affecLed by cerLaln modallLles added by
sLlpulaLlon
o Lx. Suspenslve Lerm or condlLlon
1hus, noL all conLracLs of sale become auLomaLlcally and lmmedlaLely effecLlve
nPA vs. Crace 8apLlsL Church
o Lven dellvery and Laklng possesslon of sub[ecL maLLer, wlLh consenL of
Lhe seller, does noL perfecL sale when meeLlng of mlnds ls lncompleLe
o ln Lhls case, Lhere was no agreemenL yeL on flnal prlce.

4L>:C?D:> :=N *?PLBD<P:>
8llaLeral : lL lmposes obllgaLlons on 9'&/ 1*-&$"5
o CbllgaLlon/promlse of each parLy ls Lhe cause for Lhe obllgaLlon of Lhe
oLher.
8eclprocal CbllgaLlons
o 1hose whlch arlse from Lhe same cause
o Lach parLy ls slmulLaneously a debLor and credlLor of Lhe oLher
o 1he performance of one ls condlLloned upon Lhe slmulLaneous
fulflllmenL of Lhe oLher
Legal LffecLs of Sale belng bllaLeral/reclprocal
o ower Lo resclnd ls lmplled - lL need noL be sLlpulaLed ln Lhe conLracL
for lnnocenL parLy Lo lnvoke Lhe remedy.
4

o nelLher parLy lncurs ln delay lf Lhe oLher parLy does noL comply/ls noL
ready Lo comply.
3

o lrom Lhe momenL one of Lhe parLles fulfllls, defaulL by Lhe oLher
beglns, wlLhouL need of prlor demand.
6

4 ArL 1191, nCC.
3 ArL 1168.
6 ArLs. 1168 and 1191.
u vs. CA
o lL ls a requlslLe for a valld and enforceable sale LhaL lL ls muLually
obllgaLory
0=?D<F@
Cnerous : lL lmposes a valuable conslderaLlon.
o ldeally, a prlce cerLaln ln money or lLs equlvalenL.
CalLe v. lonacler
o SLlpulaLlon regardlng balance of Lhe purchase prlce was deemed a
suspenslve perlod raLher Lhan a condlLlon.
o Why? CreaLer reclproclLy obLalns lf we conslder lL Lo be a perlod.
o 8ules of lnLerpreLaLlon : we lnLerpreL ln favor of Lhe greaLer reclproclLy
of lnLeresLs.
3<QQFC:CLR?
CommuLaLlve : a Lhlng of value ls exchanged for equal value
o ldeally, Lhe value of Lhe sub[ecL maLLer ls "67$8*+"%& Lo Lhe prlce pald
no 5&-$2& requlremenL Lhough
o WhaL ls requlred ls Lhe 9"+$"# of Lhe seller LhaL he recelved someLhlng
of commuLaLlve value Lo whaL he gave.
CalLe : obllgaLlons ln a sale can be subordlnaLed Lo a suspenslve condlLlon
o 1hus, commuLaLlveness ls noL ob[ecLlve, buL sub[ecLlve.
Lx. Seller selllng old car for 200,000
o More ob[ecLlve revlew would say LhaL Lhe car ls worLh 300,000
o 1he conLracL would sLlll be a sale, as seller really belleves LhaL he's
recelng approprlaLe value
Powever, sub[ecLlve naLure cannoL be pushed Lo absurdlLy
o Seller, knowlng full well LhaL hls car ls worLh 200,000
o Sells lL for 100
o Such could be consldered more of a donaLlon
Sub[ecLlve naLure supporLed by prlnclple LhaL lnadequacy of prlce does noL
affecL ordlnary sale
o noL a sufflclenL ground for cancelllng a volunLary conLracL of sale

!:>? L@ )LC>? :=N 1<C &<N?
erfecLlon of sale glves rlse Lo obllgaLlons and rlghLs
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4
o CbllgaLlon of seller Lo dellver possesslon and ownershlp, rlghL of buyer
Lo recelve such
Powever, dellvery or &-*,$&$'% ls Lhe .'," LhaL Lransfers ownershlp and
possesslon.
Sale ls merely a LlLle LhaL 2-"*&"5 '9+$0*&$'% - on lLs own, sale does noL Lransfer
Lhe ownershlp as a mode.
Sale perfecLed by consenL - buL ownershlp passes only upon dellvery
Acap v. CA
o 8eal rlghL over a Lhlng arlslng from a [urldlcal acL ls noL sufflclenL Lo
glve rlse Lo ownershlp
o Such rlghL musL be compleLed - ln Lhe case of sale, by acLually
acqulrlng Lhe Lhlng
Mode - legal means by whlch ownershlp ls creaLed, Lransferred, or desLroyed
o Successlon
o uonaLlon
o ulscovery
1lLle - consLlLuLes Lhe +"0*+ 9*5$5 by whlch Lo affecL ownershlp.
1o relLeraLe : Sale does noL by lLself Lransfer or affecL ownershlp - lL merely
2-"*&"5 &/" '9+$0*&$'% Lo Lransfer ownershlp

)*+" !$5&$%07$%5/", #-'. A&/"- )$.$+*- ;'%&-*2&5
underlylng prlnclple : lnLenL of parLles and elemenLs of relaLlonshlp are more
lmporLanL Lhan Lhe nomenclaLure used Lo descrlbe a cerLaln conLracL
We look aL Lhe Lrue alm and purpose of Lhe conLracLlng parLles.

SD<Q (<=:CL<=
uonaLlon : acL of llberallLy whereby a person dlsposes graLulLously of a Lhlng or
rlghL ln favor of anoLher person, who accepLs lL.
7

Sale ls essenLlally onerous, whlle donaLlon ls graLulLous.
Sale ls perfecLed by consenL, donaLlon ls a solemn conLracL
o 8equlres consenL

7
ArL. 723, nCC
o Also requlres formallLles mandaLed by law ln order Lo be valld
When ls lL lmporLanL Lo know Lhe dlsLlncLlon? - when Lhe 2'%5$,"-*&$'% #'- &/"
&-*%5#"- ls noL clear
Manongsong v. LsLlmo
o valld sale cannoL have legal effecL of deprlvlng compulsory helrs of
Lhelr leglLlmes
o valld sale dos noL dlmlnlsh Lhe esLaLe of Lhe seller
8ecause Lhere ls subsLlLuLlon of value
CommuLaLlve aspecL
When prlce of sale ls slmulaLed, Lhe sale ls vold, buL Lhe acL may be shown Lo
be a donaLlon or some oLher acL.
8

o ConLracL may be ln Lhe form of a sale" buL wlll end up belng governed
by some oLher provlslons of law.
Cn Lhe oLher hand, a supposed donaLlon may acLually have dlfferenL
conslderaLlons raLher Lhan llberallLy
o 8urdens placed upon Lhe donee
o ln LhaL case, lL becomes lmporLanL Lo deLermlne whaL Lhe appllcable
rule ls (Law on Sales vs. Law on uonaLlon)
ArL 726 of Lhe Clvll Code
o Lven lf a burden ls lmposed on donee, lL ls sLlll a donaLlon when such
burden ls less Lhan Lhe value of Lhe Lhlng glven.
Legal lmpllcaLlon - when Lhe burden ls more valuable Lhan Lhe Lhlng glven, lL ls
an onerous donaLlon"
o Maybe a barLer or a sale.

SD<Q 4:DC?D
8arLer : Cne of Lhe parLles blnds hlmself Lo glve one Lhlng ln conslderaLlon for
Lhe oLher's promlse Lo glve anoLher Lhlng
Sale : Cne of Lhe parLles blnds hlmself Lo dellver a Lhlng ln conslderaLlon of Lhe
oLher's underLaklng Lo pay Lhe prlce ln money or lLs equlvalenL.
8ules Lo ulfferenLlaLe Sale from 8arLer
9

8
ArL 1471, nCC
9
ArL. 1468, nCC
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

3
o ManlfesL lnLenLlon of Lhe arLles
Lven lf acqulslLlon of a Lhlng ls pald for by anoLher ob[ecL
LhaL's worLh more Lhan Lhe money componenL
lL may sLlll be a sale lf such was Lhe lnLenLlon of Lhe parLles.
o When lnLenLlon uoes noL Appear and ConslderaLlon ConslsLs >*-&+4 $%
B'%"4 *%, >*-&+4 $% C%'&/"- D/$%0
lL ls 9*-&"- when value of Lhe Lhlng glven as parL of Lhe
conslderaLlon "?2"",5 Lhe amounL of money glven
lL ls 5*+" when Lhe value of Lhe Lhlng glven as parL of
conslderaLlon "67*+5 or ls +"55 Lhan Lhe amounL of money
glven.
AcLually, Lhese dlsLlncLlons are merely academlc
o Aslde from Lwo separaLe rules appllcable Lo barLer, ArL 1641 say LhaL
barLer ls governed by Lhe Law on Sales
o WhaL are Lhe Lwo separaLe rules?
ArLlcle 1639
lf one of Lhe conLracLlng parLles, havlng recelved Lhe
Lhlng promlsed hlm ln barLer, should prove LhaL lL
dld noL belong Lo Lhe person who gave lL, he cannoL
be compelled Lo dellver LhaL whlch he offered ln
exchange, buL he shall be enLlLled Lo damages
ArLlcle 1640
Cne who loses by evlcLlon Lhe Lhlng recelved ln
barLer may recover LhaL whlch he gave ln exchange
wlLh a rlghL Lo damages, or he may only demand an
lndemnlLy for damages. Powever, he can only make
use of Lhe rlghL Lo recover Lhe Lhlng whlch he has
dellvered whlle Lhe same remalns ln Lhe possesslon
of Lhe oLher parLy, and wlLhouL pre[udlce Lo Lhe
rlghLs acqulred ln good falLh ln Lhe meanLlme by a
Lhlrd person.
1wo lnsLances where dlfference ls 2-$&$2*+
o SLaLuLe of lrauds does noL apply Lo barLer.
o 8lghL of legal redempLlon granLed by law Lo an ad[olnlng owner of an
urban land does noL cover exchanges of properLles.

SD<Q 3<=CD:PC G<D : /L?P?8<G8,<DT
lece of Work ConLracL
o ConLracLor blnds hlmself Lo execuLe a plece of work for Lhe employer,
ln conslderaLlon of a cerLaln prlce or compensaLlon
o ConLracLor may elLher employ only hls labor or sklll, or also furnlsh Lhe
maLerlal
SLaLuLory 8ules Lo ulsLlngulsh Sale from a lece of Work conLracL
o lnchausLl v. Cromwell (1911)
lssue : w/n seller could be held llable for sales Lax on Lhe prlce
lL recelved from balllng hemp sold Lo cusLomers
1hey conLended LhaL Lhe charge for balllng should noL be
consldered as parL of Lhe sale, buL as a charge for Lhe servlce
rendered (l.e., for LhaL plece of work)
o lnchausLl:
ulsLlncLlon beLween sale and conLracL for plece of work ls
LesLed by Lhe lnqulry of E/"&/"- &/" &/$%0 &-*%5#"--", $5 '%"
%'& $% "?$5&"%2" *%, E/$2/ %"8"- E'7+, /*8" "?$5&", 97& #'-
&/" '-,"- '# &/" 1*-&4
Cr, a Lhlng whlch would have exlsLed and been Lhe ob[ecL of a
sale Lo some oLher person, even lf Lhe order was noL made
o LaLer, Lhe Clvll Code gave sLaLuLory rules ln ArLlcle 1467 - Lwo LesLs
ManufacLurlng ln Lhe ordlnary course of buslness - sales
conLracLs
ManufacLurlng upon speclal order for cusLomers - plece of
work
upon speclal order" - based on Lhe ablllLy of producer Lo
manufacLure Lhe goods wlLhouL walLlng for speclflc orders
o CelesLlno Co v. CollecLor of lnLernal 8evenue
Company used Lo pay sales Lax on lLs producLs as a
manufaLcLurer-seller
1hey began clalmlng LhaL Lhey should only be assessed a
conLracLor's Lax
8ecause Lhey manufacLured Lhelr producLs only
upon speclal cusLomers' speclal orders, ln
accordance wlLh speclflcaLlons
1hus maklng Lhelr servlces a plece-of-work conLracL
CourL held LhaL company can'L clalm Lhe conLracLor's Lax -
Lhey were sellers
1hey hablLually made Lhe producLs
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6
1haL Lhey made producLs only upon order dld noL
alLer Lhan Lure of Lhe esLabllshmenL - Lhey would
manufacLure Lhe producLs as Lhey always had
naLure of Lhe producLs - any bullder could order
such producLs. 1hus Lhey dld noL serve speclal
cusLomers only.
Lssence of conLracL of plece of work - sale of servlce"
Company musL accepL a [ob whlch requlres use of servlces
noL generally performed by lL
1he LesL, ln Lhls case, ls noL one of Llmlng
8aLher, lL ls done by deLermlnlng &/" %*&7-" '# &/"
E'-F &' 9" 1"-#'-.", *%, &/" 1-',72&5 &' 9" .*,":
1he producLs musL noL be ordlnary producLs of Lhe
manufacLurer
1hey would requlre speclal skllls or equlpmenL
o Cl8 v. Lng'ng LqulpmenL and Supply Company
LLl was engaged ln deslgn and lnsLallaLlon of alrcon sysLems
SC held LhaL lL was a conLracLor
lf Lhe arLlcle ordered by purchaser ls exacLly such as [vendor]
makes and keeps on hand for sale Lo anyone, and no change
ls made aL defendanL's requesL, lL ls a conLracL of sale."
LLl underLook negoLlaLlons and execuLlon of lndlvldual
conLracLs - each conLracL [ob was dlfferenL, no Lwo were
ldenLlcal.
1esL : wheLher Lhe manufacLurer could produce Lhe producL
ahead of any speclal order
WhaL ls Lhe LesL Lo follow? CLv menLlons Lhe maln Lheme" ln SC declslons
o Maln dlsLlngulshlng facLor - essence of why parLles enLer lnLo Lhe
conLracL
o lf essence ls Lhe ob[ecL, Lhe conLracL ls sale
o lf Lhe essence ls Lhe.
Servlce
knowledge
8epuLaLlon
o Cf Lhe manufacLurer, lL ls for a plece of work
LssenLlally sale of servlces/labor
racLlcal needs for belng able Lo dlsLlngulsh
o 1ax rovlslons
o Sale - real obllgaLlon
Could be sub[ecL of acLlon for speclflc performance
o lece of work - sub[ecL maLLer ls servlce rendered
1hus lL ls an obllgaLlon Lo do
CannoL be sub[ecL Lo speclflc performance
o oW noL governed by SLaLuLe of lrauds

SD<Q "M?=PU C< !?>> <D "M?=PU C< 4FU
Agency : a person blnds hlmself Lo render some servlce or Lo do someLhlng ln
represenLaLlon or on behalf of Lhe prlnclpal, wlLh Lhe consenL or auLhorlLy of
Lhe laLLer.
Agency esLabllshes a represenLaLlve capaclLy ln Lhe agenL
o Plghly flduclary
o lnvolves obllgaLlons Lo do
ulsLlngulshlng Sale from Agency
o Sale ls noL unllaLerally revocable
! ConLracL of agency - essenLlally revocable by prlnclpal
o Sale : buyer hlmself pays for Lhe sub[ecL, whlch ls hls maln obllgaLlon
! Agency - agenL noL obllged Lo pay Lhe prlce, merely obllged
Lo dellver prlce whlch he may recelve from buyer
o Sale - 8uyer becomes owner of sub[ecL maLLer afLer dellvery
! Agency - agenL never becomes owner
o Sale - Seller warranLs
! Agency - agenL assumes no personal llablllLy as long as he
acLs wlLhln auLhorlLy and ln name of prlnclpal.
o Agency ls a flduclary relaLlonshlp
! AgenL dlsquallfled from recelvlng personal proflL
SLaLuLory 8ule - ArL. 1466
10
-- lmporLance of essenLlal clauses"
o Culroga v. arsons, uyaL v. Arco AmusemenL : SC deLermlned LhaL Lhe
conLracL was one of sale and noL agency

10
ln consLrulng a conLracL conLalnlng provlslons characLerlsLlc of boLh Lhe conLracL of sale
and of Lhe conLracL of agency Lo sell, Lhe essenLlal clauses of Lhe whole lnsLrumenL shall be
consldered.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

7
! 1he essenLlal clause provlded for a Lransfer of ownershlp
upon paymenL - preclsely Lhe essenLlal feaLures of a sale.
o ker & Co. v. Llngad - ownershlp of goods was never Lransferred Lo
possesslon of Lhe dealer
! 1hus, noL a sale
o vlcLorlas Mllllng Co v. CA - dlsLlngulshlng facLor of agency lfs LhaL of
conLrol
! Cne person acLs under Lhe conLrol of anoLher.
value for belng able Lo dlsLlngulsh
o ConLracL of Agency ls valld and enforceable ln any form - noL under
Lhe Sol.
o LxcepLlon : auLhorlLy Lo sell land musL be ln wrlLlng.

SD<Q !*2$'% "% >*0'
uaclon : properLy ls allenaLed Lo credlLor ln full saLlsfacLlon of a debL ln money
o Coverned by law on sales (express provlslon of law)
o Cb[ecLlve novaLlon Lakes place
! 1hlng offered as accepLed equlvalenL of performance
! Consldered as ob[ecL of sale - debL ls Lhe purchase prlce
uaclon : exlsLs ln Lhe sLage of consummaLlon
o A speclal mode of paymenL
8equlslLes for uaclon
o erformance of Lhe presLaLlon ln lleu of paymenL
o ulfference beLween presLaLlon due and LhaL glven ln subsLlLuLlon
o AgreemenL LhaL Lhe obllgaLlon ls exLlngulshed.
Slmllar Lo sale - credlLor buys" Lhe Lhlng, paymenL of whlch ls charged Lo Lhe
debLor's debL.

SD<Q #?:@?
Lease : lessor blnds hlmself Lo glve Lo anoLher Lhe en[oymenL or use of a Lhlng
for a prlce cerLaln, for a perlod whlch may be deflnlLe or lndeflnlLe.
Lease wlLh opLlon Lo buy" ls a condlLlonal sale. (lease only ln name)
When renLals ln a lease are meanL Lo be lnsLallmenL paymenLs - lL ls a sale by
lnsLallmenLs.

3A:BC?D 5E /:DCL?@ <G !:>?
G"%"-*+ H7+" '% ;*1*2$&4 '# >*-&$"5
"DC. 7HJV.
All persons who are auLhorlzed ln Lhls Code Lo obllgaLe Lhemselves, may enLer lnLo
a conLracL of sale, savlng Lhe modlflcaLlons conLalned ln Lhe followlng arLlcles.
Where necessarles are Lhose sold and dellvered Lo a mlnor or oLher person wlLhouL
capaclLy Lo acL, he musL pay a reasonable prlce Lherefor. necessarles are Lhose
referred Lo ln ArLlcle 290. (1437a)
Ceneral 8ule : any person who has capaclLy Lo acL, or Lhe power Lo do acLs
E$&/ +"0*+ "##"2&5I or wlLh Lhe power Lo obllgaLe hlmself may enLer lnLo a
conLracL of sale.
naLural ersons : age of ma[orlLy beglns aL 18 years - Lhey have capaclLy Lo
acL from Lhls polnL
!urldlcal ersons - a [urldlcal personallLy dlsLlncL from Lhe members or
parLners
o Lxpressly recognlzed by law
o 1hey have full [urldlcal capaclLy
B$%'-5I 3%5*%" '- !"."%&", >"-5'%5I !"*#JB7&"5
C8: Mlnors, lnsane or demenLed persons, deaf-muLes who cannoL wrlLe
have %' +"0*+ 2*1*2$&4 &' 2'%&-*2& and Lhus cannoL be parLles Lo a sale.
Powever, conLracLs enLered lnLo by Lhese people are noL vold, buL
voldable
o Sub[ecL Lo annulmenL
o Sub[ecL Lo raLlflcaLlon
erson who ls capaclLaLed cannoL lnsLlLuLe Lhe acLlon for annulmenL based
on lncapaclLy.
When enLered lnLo durlng a lucld lnLerval - valld
When ln a sLaLe of drunkenness, under hypnoLlc spell - voldable.
lncapaclLaLed person ls noL obllged Lo make resLlLuLlon
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

8
o LxcepL lnsofar as he has been beneflLLed by Lhe Lhlng/prlce
1?P?@@:DL?@
1hls ls an excepLlon Lo a general rule regardlng mlnors
o Slnce Lhey cannoL glve consenL, Lhere can be no valld sale
o 1hus, Lhe sale ls voldable
Powever, where necessarles are sold and dellvered Lo a mlnor or
lncapaclLaLed person, he musL pay a reasonable prlce Lherefore.
11

o 1he sale here ls 8*+$,:
necessarles are deflned ln ArL. 194 of Lhe lamlly Code
o LveryLhlng lndlspensable for susLenance
o uwelllng
o CloLhlng
o Medlcal ALLendance
o LducaLlon and LransporLaLlon
o ln keeplng wlLh Lhe flnanclal capaclLy of Lhe famlly
Slnce sales can only be obllgaLlons Lo dellver a Lhlng
o necessarles under Lhls arLlcle may only cover sales perLalnlng Lo
susLenance, dwelllng, cloLhlng
o erhaps medlclne and educaLlonal maLerlals.
8equlslLes for sale of necessarles Lo mlnors Lo be valld
o erfecLlon of sale
o uellvery of sub[ecL necessarles
$Q:=PLB:CL<=
8A 6809 has lowered age of ma[orlLy Lo 18 years old
1hus, lssue on valldlLy of sales enLered lnLo by emanclpaLed mlnors no
longer exlsLs.

11
ArL 1489, nCC - Where necessarles are Lhose sold and dellvered Lo a mlnor or oLher
person wlLhouL capaclLy Lo acL, he musL pay a reasonable prlce Lherefor. necessarles are
Lhose referred Lo ln ArLlcle 290."
!?=L>LCU :=N !?DL<F@ '>>=?@@
uomlngo vs. CA
o Maln lssue : dld proponenLs esLabllsh exlsLence and due execuLlon
of a deed of sale
o Cnly evldence - slgnaLure of Lhe seller was a Lhumb mark made
whlle slck
o SC ruled LhaL Lhe sale was vold ab lnlLlo
ConslderaLlon was lnadequaLe
Alleged seller was lncapaclLaLed boLh physlcally and
menLally
o When age or lnflrmlLles have lmpalred menLal faculLles,
prevenLlng person from properly undersLandlng Lhe rlghLs, she ls
lncapaclLaLed
o 1hus Lhere was reason Lo doubL Lhe seller's consenL Lo Lhe sale of
Lhe land.
CLv : Lhe essence of Lhe rullng declarlng Lhe sale vold was LhaL Lhere was
never any meeLlng of Lhe mlnds, and no real conslderaLlon
o 1hls was caused by Lhe lncapaclLy
aragas uocLrlne
o Sale execuLed by senlle person declared vold, and noL voldable
o SC used ArL 24 of nCC
roLecLlon of one wlLh menLal weakness
o CLv : Lhls seems llloglcal
o CLv prefers Lhe annulmenL of conLracL by reason of vlLlaLed
consenL
ln oLher words, CLv seems Lo prefer havlng such sales declared voldable
(aragas) or declarlng sale vold because of no meeLlng of Lhe mlnds
(uomlngo)
)*+"5 K4 *%, K"&E""% )1'75"5
"DC. 7HV6.
)he husband and Lhe wlfe cannoL sell properLy Lo each oLher, excepL:
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

9
(1) When a separaLlon of properLy was agreed upon ln Lhe marrlage seLLlemenLs, or
(2) When Lhere has been a [udlclal separaLlon or properLy under ArLlcle 191.
(1438a)
!:>? ;LCA )ALDN /:DCL?@
8efore lamlly Code - Lhere were llmlLaLlons on when husband or wlfe
could deal wlLh con[ugal properLy
resenL lamlly Code
o Common provlslons apply equally Lo boLh spouses
o Spouses have [olnL admlnlsLraLlon of Lhe con[ugal properLles ln
CC
o ln AC, everyLhlng ls co-owned
ArL 73 of Lhe lC
o LlLher spouse may exerclse . buslness wlLhouL Lhe consenL of Lhe
oLher, and laLLer may only ob[ecL on valld, serlous and moral
grounds.
o CourLs shall declde wheLher Lhe ob[ecLlon ls proper
o lf beneflLs accrued before ob[ecLlon, obllgaLlon enforced agalnsL
separaLe properLy
o CLherwlse, chargeable agalnsL Lhe communlLy properLy
under Law on Sales
o Spouse may enLer lnLo sales ln regular or normal pursulL of hls or
her professlon, wlLhouL consenL
o Powever - ArLs. 96 and 124 of lC
AdmlnlsLraLlon of con[ugal properLy wlll belong Lo boLh
[olnLly
ln case of dlsagreemenL - husband's declslon wlll prevall,
sub[ecL Lo wlfe seeklng remedy wlLhln 3 years
ulsposlLlon/encumbrance of properLy shall be vold
wlLhouL auLhorlLy of courL or wrlLLen consenL of oLher
spouse
ln such case : LransacLlon consldered as a
conLlnulng offer on Lhe parL of Lhe consenLlng
spouse and Lhe Lhlrd person
May be perfecLed as a blndlng conLracL (before
wlLhdrawal by elLher parLy)
o upon accepLance of oLher spouse
o Cr upon auLhorlzaLlon by courL
o Culang v. CA
Sale by husband of con[ugal properLy wlLhouL consenL of
wlfe - vold (Lhere was no full consenL)
o Abalos v. MacaLangay !r
Sale of husband of con[ugal properLy wlLhouL consenL of
capacaLlLaLed wlfe was vold ab lnlLlo
LxcepLlon : husband may dlspose of con[ugal properLy
wlLhouL consenL of wlfe when sale ls necessary Lo answer
for con[ugal llablllLles ln ArLs 161-162 of nCC.
!:>? 4?C;??= !B<F@?@
ArL 1490, nCC - Spouses cannoL sell properLy Lo each oLher, excepL :
o SeparaLlon of properLy was agreed upon ln marrlage seLLlemenL
o !udlclal uecree for separaLlon of properLy
ArL 1492 - rohlblLlon relaLlng Lo spouses selllng Lo one anoLher appllcable
Lo sales ln
o 8edempLlon
o Compromlse
o 8enunclaLlon

a. !C:CF@ <G /D<ALKLC?N !:>?@ K?C;??= !B<F@?@
ConLracLs enLered lnLo ln vlolaLlon of Lhe above Lwo provlslons are vold
noL everyone may assall valldlLy, Lhough
o Spouses Lhemselves cannoL - Lhey are lo potl Jellcto.
o CredlLors who became such afLer LransacLlon cannoL - Lhey have
noL been pre[udlced
Who can assall?
o Pelrs of elLher spouse, who have been pre[udlced
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

10
o rlor credlLors
o SLaLe - paymenL of Laxes due on LransacLlons.
b. 8aLlonale for rohlblLlon
Medlna v. Cl8
o revenL a spouse defraudlng hls credlLors by Lransferrlng hls
properLles Lo Lhe oLher spouse
o Avold slLuaLlon where domlnanL spouse unduly Lakes advanLage
of Lhe weaker spouse, defraudlng Lhe laLLer
o Avold lndlrecL vlolaLlon of prohlblLlons agalnsL donaLlon beLween
spouses (ArL 133)
ArL 133 now replaced by ArL 87 of Lhe lC - prohlblLlon
also applles Lo persons llvlng LogeLher as husband and
wlfe wlLhouL a valld marrlage.
ArL 86 does noL make Lhe same excepLlons for donaLlons LhaL ArL 1490
does for sales
o 1hus, even lf Lhere ls [udlclal separaLlon of properLy, Lhey sLlll
can'L donaLe Lo each oLher.
o LxplanaLlon : donaLlon necessarlly reduces esLaLe of donor - sale
would resulL ln boLh esLaLes belng of Lhe same value

c. 8aLlonale for LxcepLlons Lo rohlblLlon under ArL. 1490
lL would seem LhaL Lhe slLuaLlons ln Lhe excepLlons are also suscepLlble Lo
Lhe evlls soughL Lo be avolded.
o CreaLer danger of undue lnfluence ln separaLlon of properLy
o Cne spouse can sLlll exerclse undue lnfluence or pressure on Lhe
oLher one.
o Also, excepLlons allow Lhe clrcumvenLlon of Lhe prohlblLlon
agalnsL donaLlons beLween spouses.
CLv : key elemenL Lo excepLlons lles ln Lhe psychology of Lhe slLuaLlon
o Pardness of hearL on Lhe parL of Lhe spouses
o 8uslnessllke approach Lo Lhe relaLlonshlp
o 1hus, lL would be unllkely for one spouse Lo lnfluence Lhe oLher.
o 1hls sLlll doesn'L cover slLuaLlons where domlnanL spouses could
lnfluence Lhe oLher, weaker spouses
CLv's flnal word - absoluLe prohlblLlon under ArL 87 of Lhe lC should apply
Lo sales beLween spouses.
"BB>LP:KL>LCU <G '=P:B:PLCU C< 3<QQ<= #:; !B<F@?@
MaLabuena v. CervanLes
o WheLher ban on donaLlons applles Lo common-law spouses
(1hls ls mooL now, ArL 87 of lC also bans donaLlons
beLween people llvlng as husband and wlfe wlLhouL
marrlage)
o SC held LhaL Lhe donaLlon was vold - reasons of pollcy.
Lvery reason Lo apply same prohlblLlve pollcy Lo
common-law spouses
Lvlls soughL Lo be avolded are sLlll presenL
Callmllm-Canullas v. lorLun
o CourL applled Lhe same rullng ln MaLabuena Lo sales
o Sales beLween common law spouses are vold
ArL 1409 - such are conLrary Lo morals and publlc pollcy
ArL 1332 - vold for havlng unlawful cause
ArL 1490 - prohlblLs sales beLween spouses
o SC : oLherwlse, Lhose who lncurred gullL" (Lhus llvlng w/o beneflL
of marrlage) would be ln a beLLer poslLlon LhaL Lhose who were
legally marrled.
)1"2$#$2 3%2*1*2$&4 B*%,*&", 94 L*E
"DC. 7HV7.
1he followlng persons cannoL acqulre by purchase, even aL a publlc or [udlclal
aucLlon, elLher ln person or Lhrough Lhe medlaLlon of anoLher:
(1) 1he guardlan, Lhe properLy of Lhe person or persons who may be under hls
guardlanshlp,
(2) AgenLs, Lhe properLy whose admlnlsLraLlon or sale may have been enLrusLed Lo
Lhem, unless Lhe consenL of Lhe prlnclpal has been glven,
(3) LxecuLors and admlnlsLraLors, Lhe properLy of Lhe esLaLe under admlnlsLraLlon,
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

11
(4) ubllc offlcers and employees, Lhe properLy of Lhe SLaLe or of any subdlvlslon
Lhereof, or of any governmenL-owned or conLrolled corporaLlon, or lnsLlLuLlon, Lhe
admlnlsLraLlon of whlch has been lnLrusLed Lo Lhem, Lhls provlslon shall apply Lo
[udges and governmenL experLs who, ln any manner whaLsoever, Lake parL ln Lhe
sale,
(3) !usLlces, [udges, prosecuLlng aLLorneys, clerks of superlor and lnferlor courLs,
and oLher offlcers and employees connecLed wlLh Lhe admlnlsLraLlon of [usLlce, Lhe
properLy and rlghLs ln llLlgaLlon or levled upon an execuLlon before Lhe courL wlLhln
whose [urlsdlcLlon or LerrlLory Lhey exerclse Lhelr respecLlve funcLlons, Lhls
prohlblLlon lncludes Lhe acL of acqulrlng by asslgnmenL and shall apply Lo lawyers,
wlLh respecL Lo Lhe properLy and rlghLs whlch may be Lhe ob[ecL of any llLlgaLlon ln
whlch Lhey may Lake parL by vlrLue of Lhelr professlon.
(6) Any oLhers speclally dlsquallfled by law. (1439a)
"DC. 7HV5.
1he prohlblLlons ln Lhe Lwo precedlng arLlcles are appllcable Lo sales ln legal
redempLlon, compromlses and renunclaLlons. (n)
ArL 1491 of Lhe CC prohlblLs Lhe followlng persons from enLerlng lnLo
conLracLs of sale: (ACL-!L)
o C0"%&5, wlLh respecL Lo properLy whose admlnlsLraLlon or sale
may have been enLrusLed Lo hlm, unless consenL of prlnclpal has
been glven.
o G7*-,$*%5I wlLh respecL Lo properLy of person under hls
guardlanshlp
o @?"27&'- '- *,.$%$5&-*&'-I wlLh respecL Lo properLy of esLaLe
under hls admlnlsLraLlon
o >79+$2 '##$2"-5 *%, ".1+'4""5I wlLh respecL Lo properLy of Lhe
SLaLe or any subdlvlslon Lhereof
Cr of any CCCC or lnsLlLuLlon
AdmlnlsLraLlon of whlch has been enLrusLed Lo Lhem
rovlslon lncludes [udges and governmenL experLs who
Lake parL ln Lhe sale.
o M75&$2"5I =7,0"5I 1-'5"27&$%0 *&&'-%"45I 2+"-F5 '# 2'7-&5I *%,
'&/"- '##$2"-5 *%, ".1+'4""5 2'%%"2&", E$&/ &/" *,.$%$5&-*&$'%
'# =75&$2", wlLh respecL Lo properLy and rlghLs ln llLlgaLlon or levled
upon an execuLlon before Lhe courL wlLhln whose [urlsdlcLlon or
LerrlLory Lhey exerclse Lhelr respecLlve funcLlons
o L*E4"-5I wlLh respecL Lo properLy and rlghLs whlch may be Lhe
ob[ecL of any llLlgaLlon ln whlch Lhey may Lake parL by vlrLue of
Lhelr professlon.
1hese lncapaclLles are applled also Lo sales ln redempLlon, compromlse
and renunclaLlon
#?M:> !C:CF@ <G 3<=CD:PC@ $=C?D?N '=C< L= +L<>:CL<= <G "DCLP>?@ 7HV7
:=N 7VH5
AparL from case of agenLs, all cases ln Lhe enumeraLlon cannoL be
valldaLed by Lhe consenL of Lhe persons soughL Lo be proLecLed
o Cnly ln Lhe agenLs" parL ls consenL of prlnclpals" glven as an
excepLlon.
lL ls noL expressly sLaLed LhaL such conLracLs are vold.
o Wolfson v. LsLaLe of MarLlnez classlfled Lhem as merely voldable.
8ublas v. 8aLlller - CourL sald LhaL Lhey musL be vold, noL merely voldable
o Clvll Code recognlzes Lhe nulllLy of conLracLs whlch are "?1-"55+4
1-'/$9$&", '- ,"2+*-", 8'$, 94 +*E and declares such lnexlsLenL
and vold from Lhe beglnnlng.
o vlolaLlon of such provlslon cannoL be cured by raLlflcaLlon
a. ulfferenL form of raLlflcaLlon"
8ublas Lrles Lo declare a dlfference ln Lhe voldness" of guardlans, agenLs,
admlnlsLraLors, as opposed Lo [udges, [udlclal offlcers and lawyers.
o ermanenL dlsquallflcaLlon of publlc and [udlclal offlcers and
lawyers ls grounded on publlc pollcy.
o llrsL Lhree may be raLlfled" by means of and ln Lhe form of a
new conLracL"
ln whlch case Lhe valldlLy wlll be deLermlned as of Lhe
Llme of Lhe execuLlon of Lhe new conLracL
1hus, Lhe conLracL may be lawful when aL Lhe Llme of Lhe
second conLracL, Lhe legal lmpedlmenLs no longer exlsL
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

12
ln Lhe flrsL group (agenLs, guardlans, admlnlsLraLors)
o AfLer Lhe lnhlblLlon has ceased, only real wrong ls a prlvaLe one
o A wrong LhaL such prlvaLe parLles may choose Lo condone
Second group
o 1here also exlsLs a publlc wrong
o uamage Lo Lhe publlc servlce
o uamage Lo esLeem wlLh whlch we regard our [usLlce sysLem
"M?=C@
8rokers do noL come wlLhln Lhls prohlblLlon
o 1helr auLhorlLy ls merely looklng for a buyer/seller
o 1o brlng Lhem LogeLher for Lhem Lo consummaLe LransacLlon
Schmld & Cberly v. 8!L MarLlnez llshlng Corp
o 8roker : one who ls engaged, for oLhers, on a commlsslon,
negoLlaLlng conLracLs relaLlve Lo properLy wlLh Lhe cusLody of
whlch he has no concern.
o SLrlcLly a mlddleman.
o Pls occupaLlon ls Lo brlng parLles LogeLher Lo bargaln.
2F:DNL:=@W "NQL=L@CD:C<D@ :=N $X?PFC<D@
1hese are necessarlly offlcers of Lhe courLs - Lhey are appolnLed Lo such
poslLlons ln [udlclal proceedlngs
hll 1rusL Co. v. 8oldan
o Cuardlan flled a moLlon for auLhorlLy Lo sell parcels of land
belonglng Lo Lhe ward (Lo lnvesL ln a house for Lhe ward)
o Cuardlan sold parcels of land ln favor of her broLher ln law, who
lmmedlaLely resold Lhe parcels Lo Lhe guardlan
o SC here overLurned an earller docLrlne whlch requlred proof LhaL
Lhe Lhlrd parLy was a mere lnLermedlary
Lven wlLhouL such proof, Lhe sale may be resclnded.
o Cuardlanshlp ls a LrusL of Lhe hlghesL order - Lhe sales were
declared vold
CLv : Any maLLer relaLlng Lo advanLage or beneflL ls lrrelevanL under ArLlcle
1491.
o 1he arLlcle lmposes absoluLe dlsquallflcaLlon.
o 1o allow excepLlons based on beneflL" ls Lo courL abuse of such
docLrlne.
Are heredlLary rlghLs lncluded ln Lhe coverage?
o Larller rullng : naval v . Lnrlquez held LhaL heredlLary rlghLs aren'L
lncluded ln Lhe prohlblLlon lnsofar as Lhe admlnlsLraLor or
execuLor of Lhe esLaLe of Lhe deceased.
o CLv : 1hls ls hard Lo accepL - heredlLary rlghLs galn Lhelr value
only from Lhe esLaLe
1he esLaLe ls whaL ls wlLhln flduclary conLrol of Lhe
admlnlsLraLor
lf Lhey were noL lncluded, admlnlsLraLor could valldly
acqulre heredlLary rlghLs - puLLlng hlm ln a confllcL of
lnLeresL slLuaLlon.
1hus, Lhe prohlblLlon musL apply based on Lhe splrlL of
Lhe law.
YFNM?@W YF@CLP?@ :=N )A<@? '=R<>R?N L= "NQL=L@CD:CL<= <G YF@CLP?
Can 1lngo v. ablngulL
o As Lo [udges, lL ls %'& -"67$-", LhaL some conLesL or llLlgaLlon over
Lhe properLy lLself should have been Lrled by Lhe [udge.
o 1he properLy ls ln llLlgaLlon from Lhe momenL lL becomes sub[ecL
Lo Lhe [udlclal acLlon of Lhe [udge
Macarlola v. Asunclon
o uocLrlne of prohlblLlon appllcable only durlng perlod of
llLlgaLlon" also applles Lo [udges.
o ln LhaL case, [udge acqulred pleces of land whlch had been parL of
a parLlLlon case declded by hlm
o SC held LhaL prohlblLlon was only appllcable Lo properLy acLually
under llLlgaLlon - and such acqulslLlon musL Lake place durlng Lhe
pendency" of Lhe llLlgaLlon
"CC<D=?U@
valencla v. CabanLlng - reason for Lhe prohlblLlon ls Lhe flduclary
relaLlonshlp
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

13
o lnLended Lo curLall any undue lnfluence of Lhe lawyer upon hls
cllenL.
8ublas v. 8aLlller - nulllLy of such conLracLs ls deflnlLe and permanenL
o CannoL be cured by raLlflcaLlon or compromlse.
AraneLa lnc v. 1uason de aLerno - prohlblLlon applles only when properLy
Lhey are buylng $5 *2&7*++4 &/" 579="2& '# +$&$0*&$'%
o lL does noL apply Lo a sale who were noL Lhe owners' aLLorneys ln
Lhe case.
uel 8osarlo v. Mlllado - prohlblLlon does noL apply when lawyer acqulred
properLy 1-$'- &' /$5 $%8'+8"."%& ln a case concernlng such.
Munlclpal Councll of llollo v. LvangellsLa - prohlblLlon applles only Lo
lawyer who acLually represenLed a cllenL ln a sulL lnvolvlng LhaL properLy.
rohlblLlon only apples when llLlgaLlon ls pendlng
o Lven lf case ls on appeal, afLer flnal [udgmenL.
3<=CL=M?=C S?? "MD??Q?=C@
8ecLo v. Parden - prohlblLlon does noL apply Lo a conLlngenL fee
agreemenL
o lee based on value of properLy lnvolved
o Lawyer can acqulre a cerLaln percenLage of Lhe value of Lhe
properLles, lf hls cllenL wlns.
vda. ue Lalg v. CA - such agreemenL noL prohlblLed because paymenL ls
noL made durlng pendency of llLlgaLlon
ulrecLor of Lands v. Ababa - conLlngenL fee always sub[ecL Lo supervlslon
of courLs
o CourL may proLecL Lhe cllenL from any undue lnfluence or fraud.
lablllo v. lAC - lawyer sLlll musL noL exerL undue lnfluence.
CLv : Ababa and lablllo sorL of mlss Lhe polnL
o 1hey exclude conLlngenL fee agreemenLs from prohlblLlon
because of Lhe Llmlng
lees are pald afLer pendency of llLlgaLlon
o Powever, Lhe agreemenL ls negoLlaLed durlng Lhe pendency of
llLlgaLlon - aL a polnL where Lhe lawyer may sLlll exerL undue
lnfluence
Also - conLlngency fee agreemenL ls essenLlally a conLracL for servlce - why
ls lL ln Lhe Law on Sales?
o Law on Sales : caLch-all" provlslon for all onerous conLracLs for
Lransfer of ownershlp.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

14
3A:BC?D 9E !FKO?PC &:CC?D
H"67$5$&"5 '# N*+$, )79="2& B*&&"-
"DC. 7HIV
1he Lhlng musL be llclL and Lhe vendor musL have a rlghL Lo Lransfer Lhe ownershlp
Lhereof aL Lhe Llme lL ls dellvered. (n)
"DC. 7HZ6
A Lhlng ls deLermlnaLe when lL ls parLlcularly deslgnaLed or physlcally segregaLed
from all oLhers of Lhe same class.
1he requlslLe LhaL a Lhlng be deLermlnaLe ls saLlsfled lf aL Lhe Llme Lhe conLracL ls
enLered lnLo, Lhe Lhlng ls capable of belng made deLermlnaLe wlLhouL Lhe necesslLy
of a new or furLher agreemenL beLween Lhe parLles. (n)
"DC. 7HZ7
1hlngs havlng a poLenLlal exlsLence may be Lhe ob[ecL of Lhe conLracL of sale.
1he efflcacy of Lhe sale of a mere hope or expecLancy ls deemed sub[ecL Lo Lhe
condlLlon LhaL Lhe Lhlng wlll come lnLo exlsLence
1he sale of a valn hope or expecLancy ls vold. (n)
"DC. 7HZ5
1he goods whlch form Lhe sub[ecL of a conLracL of sale may be elLher exlsLlng goods,
owned or possessed by Lhe seller, or goods Lo be manufacLured, ralsed, or acqulred
by Lhe seller afLer Lhe perfecLlon of Lhe conLracL of sale, ln Lhls 1lLle called fuLure
goods."
1here may be a conLracL of sale of goods, whoose acqulslLlon by Lhe seller depends
upon a conLlngency whlch may or may noL happen. (n)

8equlslLes of a valld sub[ecL maLLer: (Lu)
lL musL be a Bosslble Lhlng
lL musL be >lclL
lL musL be NeLermlnaLe or aL leasL deLermlnable
LffecL of absence of any requlslLe
Absence of any requlslLe resulLs ln elLher a no conLracL" slLuaLlon, or a
vold conLracL under ArL. 1409.
LffecL of no conLracL" slLuaLlon - buyer can recover whaL he has pald,
based on Lhe prlnclple of un[usL enrlchmenL
LffecLs of vold conLracLs:
1. lf vold because Lhe lllegallLy consLlLuLes a crlmlnal offense - parl
dellcLo wlll apply, courLs leave Lhe parLles where Lhey are, wlLhouL
pre[udlce Lo crlmlnal prosecuLlon
2. lf no crlme, buL boLh are aL faulL - nelLher may recover
3. lf no crlme, and only one parLy ls aL faulL - lnnocenL parLy may
recover
1he requlslLes of Lhe sub[ecL maLLer are meanL Lo safeguard Lhe
reallzablllLy and enforceablllLy of Lhe obllgaLlons of Lhe seller Lo Lransfer
ownershlp and dellver possesslon.
!FKO?PC &:CC?D &F@C K? : [/<@@LK>? )AL=M\
A Lhlng ls posslble when lL ls: (Ll8)
LxlslLlng (ArL. 1462)
Pas a poLenLlal Lo exlsL, conslderlng Lhe sLaLe of sclence and Lechnology aL
Lhe Llme of perfecLlon of Lhe conLracL (ArL. 1461)
A fuLure Lhlng (ArL. 1462)
ConLlngenL or sub[ecL Lo a resoluLory condlLlon (ArL. 1462 & ArL. 1463)
lmpllcaLlons of Lhe deflnlLlon of posslble Lhlng"
A llLeral appllcaLlon of ArL. 1409(3) whlch holds LhaL conLracLs whose
cause or ob[ecL dld noL exlsL aL Lhe Llme of Lhe LransacLlon" are deemed
lnexlsLenL and vold ob loltlo does noL apply ln conLracLs of sale lnvolvlng
posslble Lhlngs.
8uL lf Lhe sub[ecL maLLer cannoL come Lo exlsLence (l.e. an lmposslble
Lhlng), Lhe conLracL ls vold because of ArL. 1409(3).
1he sale of goods yeL Lo be manufacLured, ralsed, or acqulred by Lhe seller
ls valld, provlded LhaL Lhey can come lnLo exlsLence.
lor Lhlngs whose exlsLence depends on a condlLlon, capaclLy Lo exlsL ls
sufflclenL. CerLalnLy Lo exlsL ls noL necessary.
mptlo kel 5petotoe
A conLracL of sale coverlng fuLure Lhlngs, and sub[ecL Lo a suspenslve
condlLlon LhaL Lhe sub[ecL maLLer wlll come lnLo exlsLence.
LlLerally means Lhe purchase of whaL we hope"
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

13
lf Lhe Lhlng does noL come lnLo exlsLence, conLracL ls deemed exLlngulshed.
Covers only deLermlnaLe or speclflc Lhlngs. Cenerlc or deLermlnable Lhlngs
are noL covered slnce Lhey do noL come ouL of exlsLence.
Crops whlch are yeL Lo be harvesLed and have a poLenLlal exlsLence may be
Lhe valld sub[ecL maLLer of sale. 1hey are consldered dlsLlncL from Lhe land
on whlch Lhey grow. 5lbol v. volJez (50 lbll. 512), llcbel v. Aloozo (111
5ckA J4)
mptlo 5pel
LlLerally means Lhe purchase of hope"
SLlll a valld sale. WhaL ls prohlblLed by Lhe Clvll Code ls Lhe sale of a valn
hope or expecLancy (ArL. 1461)
Lxample: sale of sweepsLakes LlckeL. 1he ob[ecL of Lhe sale ls Lhe chance Lo
wln.
A sale emptlo spel ls a posslble slLuaLlon where Lhe commuLaLlve naLure of
sale ls noL complled wlLh. 1he buyer can acLually geL more Lhan whaL he
pald for.
Sale of 1hlngs Sub[ecL Lo a 8esoluLory CondlLlon
lf Lhe Lhlng ls exLlngulshed by Lhe resoluLory condlLlon, Lhe conLracL of sale
ls lLself exLlngulshed.
o 1he parLles should reLurn Lo each oLher whaL Lhey have recelved,
Lhus preservlng Lhe commuLaLlve naLure of sale.
o 1he frulLs and lnLeresLs of Lhe Lhlngs recelved need noL be
reLurned slnce Lhey are deemed Lo have been muLually
compensaLed (ArL. 1187).
1he suspenslve or resoluLory condlLlon does noL affecL Lhe commuLaLlve
naLure of sale. lL ls presumed LhaL Lhe parLles consldered Lhese ln Lhe
deLermlnaLlon of Lhe prlce or conslderaLlon for Lhe sale.
Sub[ecL MaLLer ls nexus of Sale
1he essence of a conLracL of sale ls Lhe meeLlng of Lhe mlnds wlLh respecL
Lo Lhe sub[ecL maLLer.
1he provlslons on sale are caLch-all" provlslons whlch covers Lransfers
whereby ownershlp of a Lhlng ls ceded for a conslderaLlon. lolytecbolc
uolvetslty v. cA (J68 5ckA 691)
>'+4&"2/%$2 O%$8"-5$&4 8: ;C
S:PC@E nuC owned a 10-hecLare properLy whlch was leased by llresLone Ceramlcs
wlLh a rlghL of flrsL refusal. near Lhe end of Lhe lease Lerm, nuC looked Lo sell Lhe
properLy Lo olyLechnlc unlverslLy of Lhe hlllpplnes (u). Memorandum Crder
no. 214, lssued by res. Cory Aqulno, ordered Lhe conveyance of Lhe properLy Lo
u. lL also cancelled Lhe debL of nuC Lo Lhe naLlonal CovernmenL.
'@@F?E Was Lhere a conLracL of sale beLween nuC and u?
]?>NE ?es, Lhere was a conLracL of sale ln vlolaLlon of llresLone's rlghL of flrsL
refusal. 1he provlslons on sale are caLch-all" provlslons whlch covers Lransfers
whereby ownershlp of a Lhlng ls ceded for a conslderaLlon. 1he cancellaLlon of
nuC's debL was Lhe conslderaLlon for Lhe sale. Slnce Lhe nuC, u, and Lhe naLlonal
governmenL are dlsLlncL from each oLher, Lhe Lransfer was noL a Lransfer wlLhln Lhe
same enLlLy, and was Lhus a conveyance of LlLle.

!FKO?PC &:CC?D &F@C 4? #LPLC
Sales ueclared lllegal by Law
1hlngs ouLslde Lhe commerce of man
Anlmals sufferlng from conLaglous dlsease, renderlng Lhem unflL for use or
servlce Lhey are lnLended for
Sale of fuLure lnherlLance
1hose declared vold by speclal laws:
o narcoLlcs, gunpowder, exploslves, flrearms and ammunlcLlons.
o Wlld anlmals and rare, wlld or polsonous planLs or frulLs
o Sale of frlar land wlLhouL consenL of SecreLary of AgrlculLure
Sale of land Lo a forelgner ls vold because lL ls conLrary Lo Lhe ConsLlLuLlon.
lteozel v. cotlto (406 5ckA 55)
!FKO?PC &:CC?D &F@C 4? (?C?DQL=:C? <D :C #?:@C (?C?DQL=:K>?
ueLermlnaLe Sub[ecL MaLLer
A Lhlng ls deLermlnaLe or speclflc when lL ls
o arLlcularly deslgnaLed, or
o hyslcally segregaLed from oLhers of Lhe same class.
uefense of fotce mojeote ls appllcable Lo release Lhe seller from Lhe
consequences of fallure Lo dellver
ueLermlnable Sub[ecL MaLLer
2 requlslLes/LesLs:
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

16
o capaclLy Lo segregaLe" LesL - aL perfecLlon, sub[ecL maLLer ls
capable of belng made deLermlnaLe
o no furLher agreemenL" LesL - wlLhouL necesslLy of a new or
furLher agreemenL beLween Lhe parLles
A deLermlnable sub[ecL maLLer ls a generlc ob[ecL because lL has noL been
physlcally segregaLed nor parLlcularly deslgnaLed aL Lhe polnL of perfecLlon
from Lhe resL of lLs klnd.
lf Lhe courL sLlll has Lo go back Lo Lhe parLles Lo deLermlne Lhelr lnLended
sub[ecL maLLer, Lhe sale ls vold because of ArL. 1409(6).
B"++$P* 8: ;$&4 '# 3+'$+'
S:PC@E !ullana Melllza sold parLs of LoL no. 1214 Lo llollo ClLy. 1he loLs menLloned
were 1214-C, 1214-u, and Lhe area needed for Lhe consLrucLlon of Lhe slLy hall slLe,
avenues and parks accordlng Lo Lhe Arellano lan." 1he rlghLs Lo Lhe properLy were
evenLually Lransferred Lo lo Slan Melllza. 1he 1C1 lssued Lo hlm conLalned Lhe
annoLaLlon LhaL loLs 1214-8-2 and 1214-8-3 also belonged Lo ClLy of llollo.
'@@F?E WheLher or noL loL 1214-8 dld belong Lo Lhe ClLy of llollo.
]?>NE ?es, lL dld. lL was parL of Lhe sub[ecL maLLer of Lhe deed of sale beLween
!ullana Melllza and Lhe clLy. 1he requlremenL LhaL a sale musL have a deLermlnaLe
ob[ecL ls fulfllled as long as, aL Lhe Llme of perfecLlon of Lhe conLracL, Lhe ob[ecL ls
capable of belng deLermlned wlLhouL furLher agreemenL. ln Lhls case, Lhe Arellano
lan already speclfled Lhe lands whlch were neede for Lhe clLy hall slLe.

1esL of ueLermlnablllLy ls Lhe MeeLlng of Mlnds of arLles and noL Lhe Coverlng
ueed
1he Lrue conLracL of sale ls lnLanglble and ls a legal concepL. lL ls perfecLed
by Lhe meeLlng of Lhe mlnds.
1he ueed of Sale ls merely an evldence of Lhe conLracL. lf lL does noL reflecL
Lhe Lrue meeLlng of Lhe mlnds, lL may be sub[ecL Lo reformaLlon. lL does
noL lnvalldaLe Lhe conLracL.
C&$+*%' 8: C&$+*%'
S:PC@E Luloglo ALllano execuLed a deed of sale ln favor of hls broLher whlch
supposedly covered loL 333-L. lL was laLer on dlscovered LhaL whaL was acLually
occupled was loL 333-A, whlle Luloglo was occupylng loL 333-L. Luloglo's helrs flled
an acLlon seeklng possesslon of loL 333-A.
'@@F?E WhaL was Lhe real sub[ecL maLLer of Lhe deed of sale?
]?>NE 1he SC held LhaL Lhe broLhers lnLended Lo convey loL 333-A. 1he error ln Lhe
deed of sale dld noL lnvalldaLe Lhe Lransfer. lL was [usL a mlsLake whlch dld noL
vlLlaLe consenL. 1hus, Lhe conLracL of sale, as evldenced by Lhe deed of sale, ls valld.

CuanLlLy ls LssenLlal ln Lhe valldlLy of Lhe ConLracL of Sale
Ceneral 8ule: CuanLlLy ls essenLlal
o lL goes lnLo Lhe deLermlnablllLy of Lhe sub[ecL maLLer.
o lL also goes lnLo Lhe prlce or conslderaLlon ln Lhe conLracL. (l.e. Lhe
LoLal amounL Lo be pald ls deLermlned by Lhe quanLlLy Lo be
boughL)
o WlLh a speclflc quanLlLy, Lhe obllgaLlon Lo dellver an ob[ecL
becomes reallzable, enforceable and demandable.
LxcepLlon: When a maxlmum quoLa/quanLlLy ls agreed upon. lL ls sLlll
posslble Lo deLermlne Lhe quanLlLy wlLhouL Lhe need of a new conLracL.
Notloool Ctolos Aotbotlty v. lAc (171 5ckA 1J1)
Cenerlc non-ueLermlnable Cb[ecLs
8efers Lo funglble Lhlngs (e.g. sugar, rlce, oll, eLc.)
Sale of funglble Lhlngs ls valld lf lL can be made deLermlnaLe aL Lhe Llme of
dellvery.
lunglble/generlc Lhlngs are never losL. 1herefore, Lhe obllgaLlon Lo dellver
ls noL exLlngulshed by loss.
Q7 D"F R ;': 8: G'%P*+"5
S:PC@E 1he Lwo parLles enLered lnLo a conLracL where Conzales bound hlmself Lo
dellver 600 plculs of flrsL class sugar Lo ?1C, wlLhouL deslgnaLlng a parLlcular source.
Conzales falled Lo dellver. ?1C broughL sulL.
'@@F?E WheLher or noL fotce mojeote ls a valld defense for Conzales.
]?>NE no. Sugar ls a funglble and generlc ob[ecL whlch ls never losL. As long as Lhe
ob[ecL ls noL made deLermlnaLe, Lhe Lhlng ls noL losL, and Lhe seller ls sLlll bound Lo
dellver.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

17

lf Lhe sub[ecL maLLer ls nelLher deLermlnaLe or deLermlnable, Lhe conLracL ls +0'(
vold by vlrLue of ArL. 1409(6) of Lhe Clvll Code whlch declares lnexlsLenL
Lhose [conLracLs] where Lhe lnLenLlon of Lhe parLles relaLlve Lo Lhe
prlnclpal ob[ecL of Lhe conLracL cannoL be ascerLalned."
"DC. 7HZ9
1he sole owner of a Lhlng may sell an undlvlded lnLeresL Lhereln.
"DC. 7HZH
ln Lhe case of funglble goods, Lhere may be a sale of an undlvlded share of a speclflc
mass, Lhough Lhe seller purporLs Lo sell and Lhe buyer Lo buy a deflnlLe number,
welghL or measure of Lhe goods ln Lhe mass, and Lhough Lhe number, welghL or
measure of Lhe goods ln Lhe mass ls undeLermlned. 8y such a sale Lhe buyer
becomes owner ln commmon of such a share of Lhe mass as Lhe number, welghL or
measure boughL bears Lo Lhe number, welghL or measure of Lhe mass. lf Lhe mass
conLalns less Lhan Lhe number, welghL or measure boughL, Lhe buyer becomes Lhe
owner of Lhe whole mass and Lhe seller ls bound Lo make good Lhe deflclency from
Lhe goods of Lhe same klnd and quallLy, unless a conLrary lnLenL appears.
lnsLances where a sale wlll glve rlse Lo a co-ownershlp:
1. Sale of an undlvlded lnLeresL (ArL. 1463)
Co-ownershlp wlll be proporLlonal Lo Lhe percenLage of Lhe undlvlded
lnLeresL wlLh respecL Lo Lhe whole.
2. Sale of an undlvlded share ln a mass of funglble Lhlngs (ArL. 1464)
1he buyer wlll be a co-owner Lo Lhe exLenL of Lhe deflnlLe number,
welghL, or measure acLually boughL.
lf whaL was acLually boughL ls greaLer Lhan Lhe amounL avallable, Lhe
buyer wlll become owner of Lhe whole and Lhe seller ls bound Lo
supply Lhe deflclency.

lf Lhe sale covers a speclflc mass as a sub[ecL maLLer, wlLhouL any
provlslons as Lo Lhe measurlng or welghlng of Lhe sub[ecL sold, and Lhe
prlce was noL based on such measuremenL, Lhe sub[ecL maLLer of Lhe sale
ls Lhe whole mass lLself, as a deLermlnaLe ob[ecL. 1he sale ls valld. Colte v.
loooclet (2 5ckA 8J1)
!?>>?D^@ 0K>LM:CL<= C< )D:=@G?D 0;=?D@ALB *?_FLD?N :C )LQ? <G
(?>LR?DU
Cwnershlp ls only requlred aL Llme of dellvery (consummaLlon sLage)
Ceneral 8ule: Cwnershlp ls requlred only upon dellvery. lL ls noL requlred
aL Lhe perfecLlon of Lhe conLracL, provlded, LhaL Lhe seller wlll be able Lo
LransmlL ownershlp aL Lhe Llme of consummaLlon of Lhe conLracL.
o LxcepLlon: ln [udlclal sale, Lhe forced seller who ls acLually Lhe
morLgagor ln defaulL, ls Lhe owner because only Lhe absoluLe
owner of Lhe Lhlng can morLgage lL.
lf a buyer sells someLhlng and dellvers lL Lo Lhe buyer wlLhouL ownlng lL,
Lhe conLracL of sale remalns valld buL Lhe buyer has no beLLer LlLle Lo Lhe
goods Lhan Lhe seller.
o Powever, lf Lhe seller LhereafLer acqulres LlLle Lo Lhe Lhlng sold
and dellvered, such LlLle passes Lo Lhe buyer by operaLlon of law.
(ArL. 1434)
lf Lhe owner does noL reveal LhaL he ls noL Lhe owner of Lhe Lhlng aL Lhe
Llme of perfecLlon, Lhe conLracL of sale cannoL be declared null and vold.
nllltop v. vlllocotto (1J cAk 11J)
1he sale of copra for fuLure dellvery does noL make Lhe seller llable for
esLafa for falllng Lo dellver because Lhe conLracL ls sLlll valld and Lhere ls
only a clvll obllgaLlon. sqoetto v. leople (108 lbll. 1078)
Sale of a loL by a seller who ls yeL Lo acqulre full ownershlp from a
governmenL agency was sLlll valld slnce lL lnvolved Lhe sale of a fuLure
Lhlng. Moooozolo v. cA (286 5ckA 722)
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

18
3A:BC?D HE /DLP? :=N 0CA?D 3<=@LN?D:CL<=
B"*%$%0 '# S>-$2"T
rlce - sum sLlpulaLed as Lhe equlvalenL of Lhe Lhlng sold and also every
lncldenL Laken lnLo conslderaLlon for Lhe flxlng of Lhe prlce
1he lJeol conslderaLlon for a conLracL of sale would be prlce" as a sum
cerLaln ln money or lLs equlvalenL."
o 8uL a sale can have oLher valuable conslderaLlons, noL necessarlly
money. 1he essence of sale ls Lhe Lransfer of ownershlp for some
valuable conslderaLlon. lolytecbolc uolvetslty of tbe lblllpploes v.
cA (J68 5ckA 691)
Cnce agreed upon, Lhe seller cannoL unllaLerally lncrease Lhe prlce. nelLher
can Lhe buyer unllaLerally wlLhdraw from Lhe sale because of Lhe prlce.
H"675$&"5 '# * N*+$, >-$2"
1he prlce musL be:
1. *?:>
2. ln &<=?U or lLs $_FLR:>?=C
3. lL musL be 3?DC:L= or "@P?DC:L=:K>?
/DLP? &F@C K? *?:>
When rlce ls 8eal
AL Lhe Llme of perfecLlon, Lhere ls >?M:> L=C?=CL<= Lo pay on Lhe parL of Lhe
buyer, and >?M:> ?XB?PC:CL<= on Lhe parL of Lhe seller Lo recelve Lhe prlce.
When rlce ls SlmulaLed
lL ls slmulaLed when =?LCA?D B:DCU had any lnLenLlon LhaL Lhe amounL wlll
be pald.
1he sale lf R<LN
Powever, such a conLracL can ln reallLy be a donaLlon or some oLher
conLracL. ln Lhls way, Lhe conLracL's valldlLy can be saved.
1he lssue Lhus bolls down Lo conLracLual lnLenL aL Lhe Llme of perfecLlon of
Lhe conLracL. lf Lhere was no lnLenL Lo pay and recelve Lhe sLlpulaLed prlce,
Lhen lL ls wholy slmulaLed and Lhus vold.
lnLenL can be deLermlned by Lhe overL acLs of Lhe parLles.
1he potl Jellcto rule wlll apply ln Lhe followlng lnsLances of slmulaLed sales:
o 8oLh parLles are ln bad falLh
o 1here ls lllegal conslderaLlon
o 1he purpose of Lhe slmulaLlon ls lllegal
B*1*+' 8: B*1*+'
S:PC@E Mlguel Mapalo and hls wlfe declded Lo donaLe Lhe easLern parL of Lhelr
properLy Lo Maxlmo Mapalo. Maxlmo Mapalo Lhen made Lhem slgn a ueed of Sale
for Lhe enLlre properLy, for Lhe conslderaLlon of 300. Pe Lold Lhem LhaL lL was a
ueed of uonaLlon. Maxlmo Lhen sold Lhe enLlre properLy Lo narclso.
]?>NE WlLh respecL Lo Lhe easLern porLlon, Lhe conslderaLlon was Lhe pure llberallLy
of Lhe Mapalo spouses. 1he wesLern porLlon, on Lhe oLher hand, had no
conslderaLlon perLalnlng Lo lL. 1he 300 was a slmulaLed prlce. 1hus, Lhe wesLern
porLlon was reconveyed Lo plalnLlff spouses Mapalo.

H'%0*8$++* 8: ;C
S:PC@E uolores 8ongavllla lenL 2,000 Lo her aunLs for Lhe repalr of Lhelr house.
8ongavllla Lhen Lrlcked her aunLs lnLo slgnlng a deed of sale. She Lold Lhem LhaL lL
was [usL a documenL showlng Lhelr lndebLedness.
]?>NE 1he deed of sale ls vold ob loltlo for havlng no conslderaLlon. 1he 2000 glven
whlch was exchanged was noL for Lhe sale of Lhe properLy, buL for Lhe purposes of
repalrs Lo Lhe house.

When rlce ls lalse
lalse prlce" - Lhere ls a real prlce agreed upon buL noL declared, and whaL
ls sLaLed ln Lhe deed of sale ls noL Lhe one lnLended Lo be pald
1he sale lLself ls valld, buL Lhe lnsLrumenL embodylng lL ls sub[ecL Lo
reformaLlon.
A false prlce ls a form of relaLlve slmulaLlon of conLracL.
Powever, Lhe parLles may be bound by esLoppel Lo follow Lhe prlce ln Lhe
lnsLrumenL when lnLeresLs of Lhlrd parLles wlll be adversely affecLed by Lhe
reformaLlon of Lhe lnsLrumenL.
LffecL of non-paymenL of rlce
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

19
lallure Lo pay ls noL auLomaLlcally equal Lo Lhe lack of conslderaLlon. 1here
ls sLlll conslderaLlon, Lhus, Lhe sale remalns valld.
lallure Lo pay goes lnLo Lhe consummaLlon of Lhe conLracL, noL lLs
perfecLlon.
Such fallure Lo pay glves Lhe rlghL Lo Lhe seller Lo demand speclflc
performance or reclsslon of Lhe conLracL.
8u1 lf Lhe deed of sale says LhaL Lhe prlce has been pald when ln facL lL
hasn'L been, Lhls ls a badge of slmulaLlon" whlch would render Lhe
conLracL vold. Mooteclllo v. keyoes (J85 5ckA 2JJ)
/DLP? &F@C 4? L= &<=?U <D 'C@ $_FLR:>?=C
ArL. 1438 : CbllgaLlon of 8uyer - he musL pay Lhe prlce cerLaln ln money
or lLs equlvalenL."
8agnas v. CA
o SomeLhlng equlvalenL" ls someLhlng represenLaLlve of money
o lor Lhls case, servlces are noL lncluded/
ArL. 1468 - Lhe sale ls valld when Lhe conslderaLlon ls parL money and
parLly ln anoLher Lhlng.
o 1he conslderaLlon for a valld sale can be Lhe prlce and oLher
addlLlonal conslderaLlons.
8epubllc v. hll 8esources uevelopmenL
o AposLol purchased logs, buL only pald a small parL of Lhe prlce.
o Pe dellvered, Lo fulfll Lhe balance, goods of Lhe 8uC Lo Lhe
8ureau of rlsons. Was Lhls a valld paymenL?
o SC: money or lLs equlvalenL" - paymenL need noL be ln money
o Powever - Lhls case covers Lhe consummaLlon sLage
noL perfecLlon - Lhey dldn'L agree LhaL such goods could
be used as paymenL
LssenLlally whaL happened here was a Jocloo eo poqo.
(subsLlLuLlon of Lhe goods for Lhe prlce)
1orres v. CA
o ConLracL sLaLed LhaL Lhe conslderaLlon for Lhe sale was
expecLaLlon of proflLs
o 1hls was valld cause or conslderaLlon Lo valldaLe Lhe sale.
olyLechnlc unlverslLy v. CA - cancellaLlon of llablllLles of seller was a valld
conslderaLlon.
CLv : requlslLe of money or lLs equlvalenL" has noL been held sLeadfasL by
Lhe SC.
o 1hls shows LhaL Lhe essence of a sale ls Lhe obllqotloos - for Lhe
seller Lo dellver, and for Lhe buyer Lo pay
o rlce may be sub[ecL Lo varlaLlons - lL's essenLlally a generlc
obllgaLlon
o 1he slgnlflcance of Lhe requlremenL - demonsLraLe Lhe $,"*+
"?*.1+" '# &/" '%"-'75 %*&7-" '# 5*+" U LhaL lL ls supporLed by
valuable conslderaLlon."
"N?_F:PU <G /DLP? C< &:T? LC [*?:>\ ` 3<=P?BC <G [+:>F:K>?
3<=@LN?D:CL<=.\
Cng v. Cng - a sale was held valld when conslderaLlon for real properLy
was one peso and oLher valuable conslderaLlons.
o Slnce Lhere was no evldence LhaL Lhe conslderaLlon was noL pald,
lL ls presumed Lo exlsL.
12

o SC: lnadequacy ls unlmporLanL - usual pracLlce ls Lo place a
nomlnal amounL, buL Lhere are more valuable conslderaLlons Lo
be glven
o Lssence of Lhls rullng - lL ls posslble Lo agree on an adequaLe
conslderaLlon, even sLaLlng a false/nomlnal conslderaLlon.
1hls assumes LhaL Lhe valuable conslderaLlon ln addlLlon
Lo Lhe nomlnal amounL was acLually agreed upon.
o 1here musL be a valuable conslderaLlon.
8agnas v. CA - a sale where conslderaLlon ln Lhe conLracL was one peso
and servlces rendered."
o SC : dlsproporLlon beLween conslderaLlon sLlpulaLed and Lhe value
of Lhe properLy
o 1hey concluded - prlce sLaLed was false and flcLlLlous, Lhus Lhe
sale was 8'$, *9 $%$&$':

12
ArL 1334, CC : -- cause ls presumed Lo exlsL ln Lhe conLracL, even when noL sLaLed
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

20
o SC : even Lhough Lhere was a conslderaLlon agreed upon, and Lhe
parLles lnLended Lo pay lL, Lhe sale ls vold lf prlce was merely
nomlnal
o CLv : Lhls does noL mean LhaL Lhe sale was vold because Lhe
servlces were noL acLually performed
non-performance has noLhlng Lo do wlLh valldlLy
o Sale here was vold because lL was found LhaL Lhere was no
lnLenLlon Lo pay any valuable conslderaLlon - Lhus, vold for lack of
conslderaLlon.
Arlmas v. Arlmas - Lwo documenLs evldenclng Lerms of sale of a haclenda
o ueed of sale
o SupplemenL whlch conLalned parL of Lhe conslderaLlon
CLher furLher conslderaLlons
o Seller : supplemenL was execuLed because he dldn'L agree wlLh
Lhe Lerms ln Lhe flrsL deed of sale
o SC: conslderaLlon ln supplemenL musL be parL of Lhe conslderaLlon
for sale of Lhe haclenda - Lhey were boLh slgned by Lhe parLles
ConslderaLlon generally agreed upon as a whole -
oLherwlse, Lhere ls no prlce cerLaln
CLherwlse, Lhere would be no meeLlng of Lhe mlnds
/DLP? &F@C 4? 3?DC:L= <D "@P?DC:L=:K>? :C /?DG?PCL<=
CerLalnLy - when lL has been expressed and agreed upon ln 51"2$#$2 &"-.5
o Speclflc pesos and cenLavos
o 8elLeraLe : Money ls Lhe besL model of valuable conslderaLlon
ArL. 1469 - when ls prlce consldered ascerLalnable?
o When lL ls wlLh reference Lo anoLher Lhlng cerLaln
o ueLermlnaLlon ls lefL Lo [udgmenL of speclfled person/persons.
/DLP? SLX?N KU 9DN /:DCU
ueslgnaLlon of 3
rd
parLy Lo flx prlce ls valld.
o 1hls deslgnaLlon already makes Lhe prlce ascerLalnable
o Powever - flxlng of prlce cannoL be lefL Lo dlscreLlon of one of Lhe
parLles - Lhe conLracL of sale ls noL yeL exlsLlng when Lhe prlce has
yeL Lo be flxed
no muLuallLy or obllgaLory force
8efore prlce ls flxed by Lhlrd person - Lhe sale ls perfecLed and exlsLlng,
alLhough condlLlonal
o 1hus, a parLy cannoL unllaLerally wlLhdraw from Lhe conLracL
o lL ls condlLlonal - suspenslve condlLlon of Lhe Lhlrd parLy flxlng Lhe
prlce.
ArLlcle 1469 - lf Lhlrd parLy flxes Lhe prlce ln 9*, #*$&/ '- 94 .$5&*F"
o arLles can seek courL remedy Lo flx Lhe prlce
o 1hese are Lhe '%+4 &E' $%5&*%2"5 where Lhls ls posslble.
When parLy ls 7%*9+" '- 7%E$++$%0 Lo flx Lhe prlce
o arLles cannoL seek ald from Lhe courL Lo flx Lhe prlce
o 1he condlLlon lmposed has noL yeL happened
o non-happenlng exLlngulshed Lhe conLracL
o 1he sale here ls lnefflcaclous."
When Lhlrd parLy ls 1-"8"%&", #-'. #$?$%0 &/" 1-$2" by one of Lhe parLles
o lnnocenL parLy has remedles agalnsL Lhe gullLy parLy.
arLy may demand from Lhe courLs Lhe flxlng of Lhe prlce.
8ased on ArL. 1186 - when a parLy prevenLs a condlLlon
from happenlng, lL's consldered as fulfllled.
SLXL=M <G !FKO?PC &:CC?D KU )ALDN /:DCU
1he sub[ecL maLLer may noL be lefL up Lo Lhe wlll of a Lhlrd parLy.
o SlLuaLlon conLemplaLed : prlce agreed upon, buL Lhere are slmllar
sub[ecLs and Lhe parLles can'L choose
Such deslgnaLlon would ln facL auLhorlze wlLhdrawal of Lhe parLles
Sub[ecL maLLer musL be deLermlnaLe/deLermlnable
o 1esL ls one of facL - physlcal segregaLlon and parLlcular
deslgnaLlon
o lL musL be so wlLhouL furLher agreemenL
Why are Lhe rules dlfferenL?
o CbllgaLlon Lo pay Lhe prlce ls essenLlally a funglble obllgaLlon
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

21
Any money may be used
CannoL be exLlngulshed by forLulLous evenL
o CbllgaLlon Lo dellver sub[ecL maLLer can only be complled when lL
ls already deLermlnaLe/deLermlnable
lL ls noL a generlc obllgaLlon
ueslgnaLlon cannoL be lefL Lo a 3
rd
person who may
choose a sub[ecL LhaL parLy mlghL be unwllllng Lo glve.
/DLP? "@P?DC:L=:K>? L= *?G?D?=P? C< 0CA?D )AL=M@ 3?DC:L=
rlce of securlLles, gralns, eLc. Wlll be consldered cerLaln when prlce ls...
o 1haL whlch Lhe Lhlng would have on a deflnlLe day
o Cr ln a parLlcular exchange or markeL
rlce of Lhlng ls cerLaln aL Lhe polnL of perfecLlon when lL refers Lo anoLher
Lhlng cerLaln
o CerLaln lnvolces exlsLlng and ldenLlfled
o known facLors, or sLlpulaLed formula.
$GG?PC <G a=:@P?DC:L=:KL>LCU
When prlce can'L be deLermlned - lnefflcaclous
Law does noL use Lhe Lerm vold"
o 1here ls acLually a conLracL, buL a condlLlonal one
o lL can'L be volded by whaL happens afLer perfecLlon
&:==?D <G /:UQ?=C <G /DLP? &F@C K? "MD??N aB<=
A meeLlng of Lhe mlnds musL lnclude Lhe Lerms and manner of paymenL of
Lhe prlce
o Such ls an essenLlal lngredlenL before a valld sale can exlsL
o lL ls parL of Lhe presLaLlon of Lhe conLracL.
o Speclflc performance can'L be avalled of
Manner of paymenL : essence of whaL makes prlce cerLaln
o 1lme value of money
o Seller may be wllllng Lo accepL lower prlce lf lL ls Lo be pald wlLhln
a shorL perlod of Llme
navarro v. Sugar roducer's Corp
o When manner of paymenL ls dlscussed afLer accepLance, such
accepLance dld noL produce a blndlng conLracL of sale
o 1here was no compleLe meeLlng of Lhe mlnds
velasco v. CA
o Lven lf downpaymenL had been made and recelved, no valld sale
where manner of paymenL was noL agreed upon
o ueflnlLe agreemenL on manner of paymenL - essenLlal elemenL ln
formaLlon of blndlng sale.
Leabres v. CA
o Maln cause of acLlon as a recelpL lssued for an alleged sale
o 8ecelpL was only an acknowledgemenL for 1000
no lndlcaLlon of Lhe LoLal purchase prlce, or of whaL Lhe
lnsLallmenLs were
SC held LhaL recelpL cannoL be basls of valld sale.
San Mlguel roperLles hlllpplnes v. Puang
o no valld sale slnce Lhey were unable Lo arrlve aL accepLable Lerms
of paymenL scheme
Cruz v. uernando
o Absence of sLlpulaLlon on manner of paymenL - lL was a conLracL
Lo sell, noL a conLracL of sale
CLv : Lerms of paymenL" has same requlslLes of prlce" ln order Lo
supporL a valld conLracL of sale - lL musL be 2"-&*$% '- *52"-&*$%*9+":
lf Lerms of paymenL are provlded ln a formula/process LhaL doesn'L requlre
agreemenL of parLles - valld, buL wlLh a condlLlon.
o Slmllar Lo when prlce ls lefL up Lo 3
rd
person.
/D<B?D a=N?D@C:=NL=M <G &:==?D <G /:UQ?=C
Whlle lL ls lmperaLlve LhaL meeLlng of Lhe mlnds be made when lL comes Lo
Lerms of paymenL, Lhey ,' %'& *+E*45 /*8" &' 9" "?1-"55+4 *0-"", 71'% U
when Lhe law supplles Lhese by defaulL.
ln Lhe earller cases, parLles were Lo have a mode of paymenL oLher LhaL
lmmedlaLe paymenL
o 1here could noL have been a meeLlng of Lhe mlnds because boLh
parLles expecLed more negoLlaLlons as Lo manner of paymenL
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

22
ln all oLher cases, prlce ls deemed Lo be demandable aL once
o ArL 1179, CC - all obllgaLlons wlLhouL condlLlons or perlods are
demandable aL once.
ln absence of sLlpulaLlon lndlcaLlng a dlfferenL form of paymenL, prlce ls
deemed by operaLlon of law Lo be lmmedlaLely demandable
u8 v. CA
o Where Lhere ls no oLher basls of paymenL
o 8easonable concluslon ls LhaL subsequenL paymenLs shall be
made ln same amounLs as flrsL paymenL.
,A?= )A?D? L@ !:>? $R?= ,A?= 1< /DLP? ]:@ 4??= "MD??N aB<=
"DC. 7HbH
Where Lhe prlce cannoL be deLermlned ln accordance wlLh Lhe precedlng arLlcles, or
ln any oLher manner, Lhe conLracL ls lnefflcaclous. Powever, lf Lhe Lhlng or any parL
Lhereof has been dellvered Lo and approprlaLed by Lhe buyer he musL pay a
reasonable prlce Lherefor. WhaL ls a reasonable prlce ls a quesLlon of facL
dependenL on Lhe clrcumsLances of each parLlcular case.
ln such a case, courLs have auLhorlLy Lo flx Lhe reasonable prlce for Lhe
sub[ecL maLLer.
1hls arLlcle ls Lhe '%+4 "?2"1&$'% where Lhere would sLlll be a valld sale
even when Lhere ls no meeLlng of Lhe mlnds as Lo prlce.
WhaL does precedlng arLlcles" mean?
o CLv : 1469-1473
WhaL does lnefflcaclous" mean?
o lnablllLy Lo produce Lhe effecL wanLed"
o uoes noL exclude vold sales
o 8aLher, lL lncludes valld sales whlch have become lnefflcaclous ln
Lhe same group as vold sales (when lL comes Lo prlce)
ConcepL of ApproprlaLlon
o 8asls of ArL 1474 - 8obles v. Llzarraga Permanos
An un[usL enrlchmenL would occur ln allowlng someone
Lo approprlaLe Lhe movables wlLhouL compensaLlng Lhe
oLher person.
o 2 lmporLanL olnLs
uocLrlne ls based on un[usL enrlchmenL agalnsL Lhe buyer
-- he can'L be allowed Lo reLaln Lhe sub[ecL maLLer
wlLhouL belng llable Lo pay Lhe prlce
Applles even ln a no conLracL" slLuaLlon where Lhere ls
no meeLlng of Lhe mlnds as Lo prlce
May also apply Lo vold sale conLracL, where
defecL ls ln Lhe prlce.
o ArL 1474 ls meanL Lo cover all sale conLracL slLuaLlons
AgreemenL as Lo Lhe sub[ecL maLLer, along wlLh LradlLlon
ArL 1474 ls a remedy ln favour of Lhe seller
o WhaL lf he does noL wanL Lo Lake advanLage of Lhe remedy, and
lnsLead recover Lhe sub[ecL maLLer?
Seems noL posslble lf approprlaLlon had Laken place
ArL 1474 seems Lo conLemplaLe a slLuaLlon where Lhere
ls dellvery buL noL approprlaLlon
1hus we musL look aL whaL approprlaLlon means
o ApproprlaLlon - covers slLuaLlon of accepLance, and buyer LreaLs
sub[ecL maLLer as hls own,
H7+$%05 '% H"2"$1&5 *%, A&/"- !'27."%&5 @.9',4$%0
>-$2"
Ll Cro Lngravers v. CA - sales lnvolces are noL evldence of paymenL, buL
only of recelpL.
o 8esL evldence Lo prove paymenL : offlclal recelpL lssued by seller
Leabres v. CA - buyer soughL Lo enforce purchase on land based on recelpL
o SC : 8ecelpL cannoL be regarded as conLracL of sale
o Cnly recognlLlon of Lhe sum of 1000
o 8equlslLes for valld conLracL were lacklng
o Sale ls noL valld noL enforceable
CLv : Leabres seems Lo deal wlLh Lhe SLaLuLe of lrauds (sale was noL
enforceable)
o Powever, readlng of facLs was LhaL Lhere was parLlal paymenL and
dellvery of possesslon
o 1hese Lhlngs would remove conLracL from Sol.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

23
1oyoLa Shaw v. CA - wrlLLen agreemenL was enLered beLween a
prospecLlve buyer and Lhe sales represenLaLlve
o Acknowledged a downpaymenL of 100,000
o SC: never a perfecLed conLracL beLween Lhe parLles
! AgreemenL only provlded for Lhe downpaymenL
! no purchase prlce or manner of paymenL of balance
Llmson v. CA - noLhlng ln Lhe recelpL lndlcaLed LhaL Lhe earnesL money was
parL of Lhe purchase prlce, much less any showlng of a perfecLed sale -
only concluslon ls no sale.
Coronel v. CA - seller execuLed a recelpL of downpaymenL, lndlcaLlng
balance of purchase prlce, wlLh obllgaLlon Lo Lransfer LlLle upon paymenL
o SC: Lhere was a perfecLed conLracL of sale
o no reservaLlon of LlLle unLll paymenL
o ConslsLenL wlLh requlremenL LhaL memoranda of sale musL
lnclude all essenLlal requlslLes ln order Lo remove lL from Lhe Sol.
Cheng v. CenaLo - seller acknowledged recelpL of sum as parLlal paymenL
o uld noL provlde furLher sLlpulaLlons as Lo balance or manner of
paymenL
o SC: no sale, slnce requlslLes were noL expressed ln Lhe recelpL.
o CLv : lsn'L sale a consensual conLracL? uefecL ln memorandum
would affecL enforceablllLy, buL should lL affecL valldlLy?
xenLrex v. CA - conLracL of sale perfecLed upon meeLlng of Lhe mlnds
o Seller obllged lLself when lL accepLed deposlL and pulled ouL a unlL
uavld v. 1longson - sale of real properLy on lnsLallmenLs
o Lven when recelpLs do noL provlde for Lhe lnsLallmenLs, when
Lhere ls parLlal paymenL, Sol no longer applles.
1lgno v. Aqulno - absence of recelpLs or any proof of conslderaLlon ls %'&
2'%2+75$8" *5 &' &/" $%"?$5&"%2" '# * 5*+":
o ConslderaLlon always presumed
CLv : %' 2'%5&*%& ,'2&-$%" when lL comes Lo legal consequences of
recelpLs.
3%*,"67*24 '# >-$2"
ArL. 1333 - Leslon or lnadequacy of cause does noL lnvalldaLe a conLracL,
unless Lhere ls fraud, mlsLake or undue lnfluence.
ArL 1470 - Cross lnadequacy of prlce does noL affecL a conLracL of sale
o LxcepL as lL may lndlcaLe a defecL ln consenL
o Cr LhaL parLles really lnLended a donaLlon or some oLher acL.
Cross lnadequacy" - a reasonable man would noL agree Lo dlspose of hls
properLy aL LhaL amounL.
ln a sale, Lhere ls no requlremenL LhaL Lhe prlce ls exacLly Lhe value of Lhe
sub[ecL maLLer.
o 8ecall: 1esL for commuLaLlveness ls Lhe bellef of Lhe parLles LhaL
Lhey recelved good value.
(L@CL=MFL@A?N GD<Q !LQF>:C?N /DLP?
8ravo-Cuerrero v. 8ravo - slmulaLlon of conLracL and gross lnadequacy of
prlce are dlsLlncL legal concepLs
o When parLles Lo an alleged conLracL do noL really lnLend Lo be
bound - slmulaLed
! vold
! no legal effecL
! no real agreemenL
o Cross lnadequacy - noL a vold conLracL
! valldlLy of sale noL affecLed
! O%+"55 Lhere ls a defecL ln consenL '- parLles lnLended
donaLlon or oLher conLracL
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

24
*?@PL@@LK>? 3<=CD:PC@ <G !:>?
lnadequacy of rlce - ground for resclsslon ln cases covered under ArLlcle
1381 of Lhe Clvll Code.
13

YFNLPL:> !:>?
lnadequacy of prlce may render vold [udlclal sale of real properLy
o Why Lhe dlfference? - sale ls noL a resulL of negoLlaLlons
o ln facL, properLy of Lhe Seller" Lo be sold aL publlc aucLlon
o SLaLe musL proLecL seller from a bad deal LhaL's noL hls faulL
Such lnadequacy however musL be shocklng Lo Lhe consclence of man"
o lL musL be shown LhaL a resale would feLch a beLLer prlce.
Powever, even lf Lhese are shown, [udlclal sale wlll noL be seL aslde when
Lhere ls a -$0/& &' -",".1&$'%
o Lower sale prlce " easler Llme for Lhe owner Lo redeem.
o roper remedy ls slmply for Lhe Seller" Lo exerclse such rlghL.
!:>?@ ;LCA *LMAC C< *?BFDPA:@?
ln sales llke Lhls, lnadequacy glves rlse Lo a presumpLlon of "67$&*9+"
.'-&0*0":
8emedy of Lhe seller - have Lhe sale reformed or declared a morLgage
conLracL, Lhen pay off Lhe debL whlch ls secured.
8emedy of Lhe buyer - foreclose on Lhe morLgage.
o CannoL approprlaLe Lhe sub[ecL maLLer - poctom commlssotlom
whlch ls noL allowed.

13
(1) 1hose whlch are enLered lnLo by guardlans whenever Lhe wards whom Lhey represenL
suffer leslon by more Lhan one-fourLh of Lhe value of Lhe Lhlngs whlch are Lhe ob[ecL Lhereof,
(2) 1hose agreed upon ln represenLaLlon of absenLees, lf Lhe laLLer suffer Lhe leslon sLaLed ln
Lhe precedlng number,

V/"% B'&$8" W7++$#$"5 )*+"
ConslderaLlon ls noL equal Lo moLlve
When moLlve ls lllegal, sale ls vold
o Sale execuLed ln order Lo frusLraLe anoLher person's rlghL Lo
lnherlLance and Lo avold Lax
uy v. CA - ulsLlngulshed cause from moLlve
o Cause
! LssenLlal reason whlch moves parLles Lo enLer lnLo Lhe
conLracL
! lmmedlaLe, dlrecL and proxlmaLe reason" Lo creaLe Lhe
obllgaLlon
o MoLlve
! arLlcular reason of a conLracLlng parLy
! uoes noL affecL Lhe oLher parLy
o ln Lhls case - cause of vendor Lo sell Lhe land ls Lo obLaln Lhe
prlce, and for Lhe vendee, Lhe acqulslLlon of Lhe land.
o MoLlve of Lhe vendor - ls Lo use Lhe lands for houslng.
SC : When moLlve predeLermlnes cause, lL may be regarded as Lhe cause.
o When Lhere was a mlsLake ln Lhe quallLy of land, Lhe
moLlve/cause was negaLed
o And Lhus Lhe conLracL was lnexlsLenL.
Pelrs of Spouses 8allLe v. Llm - amounL reflecLed ln ueed of Sale was lower
Lhan whaL Lhey agreed on
o MoLlve was Lo pay lower Laxes
o SC : ConLracL of sale was valld - moLlve here (lower Laxes) was noL
Lhe conslderaLlon.
o AlLhough lllegal, moLlves do noL Lake Lhe place of Lhe
conslderaLlon.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

23
3A:BC?D IE S<DQ:CL<= <G !:>?
)&*0"5 $% &/" L$#" '# )*+"
a) ollclLaclon - negoLlaLlon and bargalnlng
b) erfecLlon - momenL when Lhere ls meeLlng of Lhe mlnds on Lhe sub[ecL
maLLer and prlce
c) ConsummaLlon - parLles perform Lhelr respecLlve obllgaLlons
>'+$2$&*&$'% )&*0"
negoLlaLlon ls lnlLlaLed by an offer whlch musL be cerLaln.
ln order Lo glve rlse Lo a conLracL of sale, Lhe offer musL be accepLed.
AccepLance musL be absoluLe, clear, unequlvocal, plaln and unequlvocal.
Moollo Metol cootoloets cotp. v. lN8 (511 5ckA 444)
8efore Lhe accepLance, Lhere ls freedom Lo conLracL." An owner of
properLy ls free Lo offer Lhe sub[ecL properLy for sale Lo any lnLeresLed
person. 1here ls sLlll no obllgaLlon beLween Lhe poLenLlal buyer and
poLenLlal seller. (LxcepLlon: opLlon conLracL, lofto)
A LeLLer of lnLenL Lo 8uy and Sell ls [usL LhaL, a declaraLlon of lnLenL. lL ls
noL a condlLlonal conLracL of sale or a conLracL Lo sell. lL ls also noL an offer.
Mosllm ooJ cbtlstloo utboo loot Assoclotloo, loc. v. 8k-c uevt. cotp.
(594 5ckA 724)
B*%$+* B"&*+ ;'%&*$%"- ;'-1: 8: >WK

S:PC@E n8 foreclosed Lhe morLgage MMCC consLlLuLed ln lLs favor. n8 won Lhe
publlc aucLlon. MMCC requesLed for an exLenslon of Lhe 1-year redempLlon perlod,
whlch n8 re[ecLed. A speclal asseLs deparLmenL of n8 lssued Lo peLlLloner a
sLaLemenL of accounL lndlcaLlng bld prlce and lnLeresL (abouL hp 1.3 mllllon),
MMCC Lhen remlLLed hp 723,000 as deposlL for repurchase". n8 offered Lo
MMCC Lo buy back Lhe properLy for hp 2.66 mllllon. MMCC lnslsLs LhaL lL had
already accepLed Lhe offer of Lhe n8 deparLmenL of hp 1.3 mllllon, and lL had
deposlLed Lhe money as earnesL money (down paymenL). 1he amounL of hp 2.6
mllllon ls a unllaLeral lncrease by n8 of Lhe purchase prlce.

'@@F?E WCn Lhere was already a perfecLed conLracL of sale when MMCC gave
deposlL afLer Lhe deparLmenL lssued sLaLemenL of accounL-nC

]?>NE 1he exchanges were counLer offers and so Lhe conLracL never moved beyond
Lhe negoLlaLlon sLage. lL was sLlpulaLed by Lhe parLles LhaL n8 wlll accepL Lhe
deposlL on Lhe condlLlon LhaL Lhe purchase prlce ls stlll sobject to tbe opptovol of
Lhe n8 board." 1hus, Lhere was no deflnlLe prlce.

B75+$. *%, ;/-$5&$*% O-9*% >''- C55'2$*&$'%I 3%2: 8: KHQ;JN !"8"+'1."%& ;'-1:

S:PC@E MCuAl enLered lnLo negoLlaLlon wlLh Seafood CorporaLlon (SlC) for Lhe
purchase of laLLer's land. MCuAl execuLed a LeLLer of lnLenL Lo 8uy and SlC a
LeLLer of lnLenL Lo Sell Lo faclllLaLe Lhe former's loan appllcaLlon. 1he sale dldn'L
happen because hereln buyer wasn'L able Lo obLaln a loan, even when lL was glven
an exLenslon of 3 monLhs Lo procure lL. LvenLually, SlC sold Lhe loL Lo 88?C-v.
MCuAl alleged LhaL Lhe sale vlolaLed lLs subslsLlng agreemenL wlLh SlC whlch gave
lL a preferred rlghL Lo purchase Lhe loL.

'@@F?E WCn Lhe leLLers of lnLenL creaLed a bllaLeral conLracL wlLhln Lhe meanlng of
ArL. 1479-nC

]?>NE A mere lnLenLlon or plan Lo do someLhlng does noL glve rlse Lo an obllgaLlon,
nor blnd a parLy Lo do or glve. lL was noL an offer, buL merely an expresslon of Lhe
lnLenLlon Lo enLer ln Lo Lhe conLracL. lL does noL conLaln a commlLmenL Lo enLer
lnLo Lhe conLracL. ln facL, SlC's enLerlng lnLo a conLracL was condlLloned upon
MCuAl's ablllLy Lo ralse Lhe funds.

"NR?DCL@?Q?=C@ :=N '=RLC:CL<=@
"DC. 795I
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

26
unless lL appears oLherwlse, buslness adverLlsemenLs of Lhlngs for sale are noL
deflnlLe offers, buL mere lnvlLaLlons Lo make an offer. (n)
Ceneral rule: Lhey are less Lhan offers and are merely lnvlLaLlons Lo make
an offer
o LxcepLlon: lL appears oLherwlse. 1haL ls, Lhere ls a deLermlnaLe
sub[ecL maLLer and a deLermlnaLe prlce and Lerms of paymenL.
8eLLer rule accordlng Lo CLv and 8: Lven lf Lhe adverLlsemenL conLalns
deflnlLe Lerms, lL remalns an lnvlLaLlon so long as lL ls addressed Lo Lhe
general publlc.. 1he excepLlon comes ln when Lhe lnvlLaLlon ls addressed Lo
a parLlcular offeree.
0GG?D@
1he offeror can aLLach any Lerm or condlLlon he deslres, and may flx Lhe
Llme, place and manner of accepLance. Pe has full conLrol of Lhe offer
before lL ls accepLed.
Cfferor can wlLhdraw Lhe offer any Llme, even wlLhouL noLlfylng Lhe
offeree. (LxcepLlon: opLlon conLracL)
AccepLance by Lhe offeree musL be absoluLe. Any condlLlonal accepLance
wlll be a counLer-offer whlch re[ecLs and LermlnaLes Lhe orlglnal offer.
An offer becomes lneffecLlve upon Lhe deaLh, clvll lnLerdlcLlon, lnsanlLy or
lnsolvency of elLher offeror or offeree, before accepLance ls conveyed and
recelved by Lhe offeror. (ArL 1323)
0BCL<= 3<=CD:PC@
"DC. 7HbV
A promlse Lo buy and sell a deLermlnaLe Lhlng for a prlce cerLaln ls reclprocally
demandable.
An accepLed unllaLeral promlse Lo buy or Lo sell a deLermlnaLe Lhlng for a prlce
cerLaln ls blndlng upon Lhe promlssor lf Lhe promlse ls supporLed by a conslderaLlon
dlsLlncL from Lhe prlce. (1431a)
"DC. 795H
When Lhe offeror has allowed Lhe offeree a cerLaln perlod Lo accepL, Lhe offer may
be wlLhdrawn aL any Llme before accepLance by communlcaLlng such wlLhdrawal,
excepL when Lhe opLlon ls founded upon a conslderaLlon, as someLhlng pald or
promlsed. (n)
ueflnlLlon and Lssence of CpLlon ConLracL
An opLlon ls a preparaLory conLracL ln whlch one parLy granLs Lo Lhe oLher,
for a flxed perlod and under speclfled condlLlons, Lhe power Lo declde
wheLher or noL Lo enLer lnLo a prlnclpal conLracL [of sale]. cotcellet v. cA
(J02 5ckA 718)
An opLlon ls a conLlnulng offer or an unaccepLed offer whlch musL be
cerLaln. lL ls dlsLlncL from Lhe conLracL of sale, by as soon as Lhe offer ls
accepLed, Lhe conLracL of sale ls perfecLed. AJelfo ltopettles, loc. v. cA
(240 5ckA 565)
;*-2"++*- 8: ;C
S:PC@E SlPl (landowner) enLered lnLo lease conLracL wlLh Carcellar wlLh optloo to
potcbose wlLhln a cerLaln perlod, exerclsed by a wrlLLen noLlce Lo SlPl. nearlng
LermlnaLlon, Carceller wroLe and requesLed for an exLenslon Lo ralse funds, whlch
SlPl re[ecLed. Carceller sLlll laLerexpressed lnLenLlon Lo exerclse opLlon Lo purchase
afLer Lhe perlod explred, whlch SlPl denled because perlod had lapsed. Carceller
flles acLlon for speclflc performance.

'@@F?: WCn Carceller should be allowed Lo exerclse opLlon glven Lhe delay ln glvlng
Lhe requlred noLlce-?LS

*:CL<E Carceller's leLLer Lo SlPl showed lnLenL Lo exerclse opLlon Lo purchase desplLe
Lhe requesL for Lhe exLenslon. CranLlng Lhe opLlon ls conslsLenL wlLh Lhe lnLenLlon
of Lhe parLles. 1he delay was noL subsLanLlal or fundamenLal as Lo amounL Lo a
breach LhaL would defeaL Lhe lnLenLlon of Lhe parLles when Lhey enLered lnLo Lhe
conLracL. Pls flrsL leLLer and hls formal exerclse were wlLhln reasonable Llme frame.

D*4*0 8: ;C
S:PC@E Lacsons are owners of a land, LenanLed by farmer Llllers who had
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

27
landholdlngs Lhereon. 1he farmers execuLed a deed of asslgnmenL ln favor of 1ayag
sLaLlng LhaL Lhey would asslgn Lhelr landholdlngs for hp30/sq. meLer payable when
legal lmpedlmenLs Lo Lhe sale of Lhe properLy no longer exlsLed and lf Lhe Lacsons
declde Lo sell Lhe properLy. When 1ayag called for a meeLlng Lo dlscuss Lhelr
agreemenL, Lhe farmers expressed Lhey would noL aLLend and LhaL Lhey were golng
Lo sell Lhelr landholdlngs Lo Lhe Lacsons. 1ayag clalms LhaL Lhey had no rlghL Lo deal
dlrecLly wlLh Lhe Lacsons, whlle Lhelr conLracLs wlLh hlm were valld and exlsLlng.

'@@F?E WCn Lhe deeds of asslgnmenL were opLlon conLracLs-nC

*:CL<E 1he paymenL of Lhe purchase prlce was condlLloned on Lhe dlsappearance of
any legal lmpedlmenLs ln sale of Lhe properLy and on Lhe Lacsons acLually selllng
lL-Lhere was no showlng LhaL Lhey ever agreed Lo sell Lhelr properLy. 1here was no
opLlon conLracL here because ln an opLlon conLracL, Lhe one glvlng ls only bound Lo
hold Lhe land ln case Lhe opLlonee decldes Lhe recelve Lhe lands aL hls elecLlon.
Pere, Lhe farmers dld noL [usL glve 1ayag and opLlon, Lhey gave hlm an excluslve
rlghL Lo buy Lhe properLy. 1hey cannoL legally do Lhls because Lhey are noL Lhe
reglsLered owners of Lhe land. 1hey had no rlghL Lo enLer lnLo Lhose conLracLs wlLh
1ayag wlLhouL Lhe knowledge of Lhe Lacsons.

CharacLerlsLlcs and CbllgaLlons ln an CpLlon ConLracL, Compared wlLh Sale
8oLh opLlon conLracL and sale are onerous conLracLs because boLh requlre
a separaLe conslderaLlon. An opLlon wlLhouL separaLe conslderaLlon ls vold
as a conLracL.
o ConslderaLlon ln an opLlon conLracL may be anyLhlng of value, noL
necessarlly money or lLs equlvalenL, as ln sale.
o LxcepLlon: An opLlon may be lncluded wlLhln anoLher valld
conLracL, such as a lease or morLgage. lL wlll be blndlng even lf lL
does noL have a separaLe conslderaLlon. lL ls a sLlpulaLlon wlLhln
Lhe conLracL whlch acLs llke an opLlon conLracL.
An opLlon conLracL ls a consensual conLracL.
lL ls a unllaLeral promlse Lo sell a deLermlnaLe Lhlng. lL only blnds Lhe
opLloner wlLh Lhe followlng obllgaLlons:
o noL Lo offer Lo any Lhlrd parLy Lhe sale of Lhe ob[ecL
o noL Lo wlLhdraw Lhe offer durlng Lhe agreed perlod
o 1o enLer lnLo a conLracL of sale when Lhe opLlon holder, lf he uses
Lhe opLlon (l.e. accepLs Lhe offer) wlLhln Lhe speclfled perlod.
1he Lhree obllgaLlons are obllgaLlons Lo do. 1herefore, a breach of Lhe
opLlon conLracL wlll only be acLlonable for damages, noL speclflc
performance.
o When Lhe offer ls accepLed, Lhe obllgaLlons become obllgaLlons Lo
glve, slnce Lhe conLracL of sale ls already perfecLed.
1he sub[ecL maLLer of an opLlon conLracL ls Lhe opLlon Lo purchase a
deLermlnaLe Lhlng. ln oLher words, lL ls Lhe sub[ecL maLLer ls Lhe rlghL Lo
choose Lo buy or noL.
An opLlon conLracL ls noL covered by Lhe SLaLuLe of lrauds. 1herefore, lL
can be proved by parol evldence and ls enforceable even lf noL wrlLLen.
LlemenLs of a valld CpLlon ConLracL
a) ConsenL
b) Sub[ecL MaLLer- Lhe rlghL Lo choose wheLher or noL Lo buy a
deLermlnaLe/deLermlnable ob[ecL for a prlce cerLaln (lncludlng manner of
paymenL)
c) ConslderaLlon whlch ls anyLhlng of value and ls separaLe and dlsLlncL from
Lhe purchase prlce

!usL llke ln a sale, Lhe opLlon conLracL wlll only be perfecLed lf Lhe parLles
agree on Lhe speclflc ob[ecL (l.e. Lhe rlghL lLself, and Lhe condlLlons) and Lhe
prlce and manner of paymenL of Lhe conslderaLlon.
Meanlng of SeparaLe ConslderaLlon"
An opLlon conLracL ls an offer and a preparaLory conLracL Lo LhaL of sale.
1hls presupposes LhaL Lhere ls already a purchase prlce on Lhe sub[ecL
maLLer of Lhe sale whlch was agreed upon by Lhe parLles. As long as Lhe
conslderaLlon for Lhe opLlon conLracL ls dlsLlncL and noL lncluded ln Lhe
purchase prlce, lL ls consldered separaLe conslderaLlon".
Some examples where Lhe CourL held LhaL Lhere was separaLe
conslderaLlon:
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

28
o ln vlllomot v. cA (202 5ckA 607), Lhe buyers boughL x of Lhe land
for 70 whlch was much hlgher Lhan Lhe prevalllng markeL raLe aL
LhaL Llme. 1he CourL ruled LhaL Lhe separaLe conslderaLlon for Lhe
opLlon Lo buy Lhe oLher half was Lhe dlfference beLween Lhe
markeL value and Lhe 70 prlce pald.
o ln reclprocal conLracLs llke lease, Lhe obllgaLlon or promlse of each
parLy ls Lhe conslderaLlon for LhaL of Lhe oLher.
14
vJo. ue Ooltloo
v. lolotco (29 5ckA 1)
o 1he monLhly lnLeresL pald by Lhe spouses on Lhe foreclosed
properLy durlng Lhe one year perlod granLed Lo Lhem by Lhe bank
was consldered as Lhe separaLe conslderaLlon Lo hold Lhe opLlon
conLracL valld. uljomco v. cA (440 5ckA 190)
o 1he opLlon Lo buy lncluded ln a morLgage was deemed a vald
sLlpulaLlon slnce lL ls supporLed by Lhe same conslderaLlon of Lhe
morLgage, whlch ls lLself dlsLlncL from LhaL of Lhe sale. 5otlooo v.
8ootlsto (6 5ckA 946)
1he CourL had ruled ln 1947 LhaL Lhe conslderaLlon ls presumed Lo exlsL.
Cnce proven, lL ls blndlng. Mootloolo v. cojoooqco (78 lbll. 481) 1hls ls ln
conLrasL wlLh Lhe 1972 case of Sanchez v. 8lgos whlch refused Lo apply LhaL
presumpLlon.
N$++*.'- 8: ;C
S:PC@E vlllamor purchased from 8eyes one half of a plece of land for more Lhan Lhe
markeL value. 1hey Lhen execuLed a ueed of CpLlon sLaLlng LhaL Lhe reason only
why vlllamor boughL Lhe half ln Lhe flrsL place ls because 8eyes granLed hlm
excluslve rlghL Lo buy Lhe oLher half whenever Lhe need would arlse for elLher parLy.
8eyes soughL Lo repurchase Lhe half already boughL by vlllamore buL Lhe laLLer
refused.

14
ArL. 1330. ln onerous conLracLs Lhe cause ls undersLood Lo be, for each conLracLlng parLy, Lhe
presLaLlon or promlse of a Lhlng or servlce by Lhe oLher, ln remuneraLory ones, Lhe servlce or beneflL
whlch ls remuneraLed, and ln conLracLs of pure beneflcence, Lhe mere llberallLy of Lhe benefacLor. (1274)
'@@F?E WCn Lhe ueed of CpLlon was valld-?LS

*:CL<E
1he conslderaLlon for Lhe CpLlon was Lhe dlfference ln Lhe hlgher purchase prlce of
Lhe land compared Lo lLs acLual markeL value. ConslderaLlon maybe anyLhlng of
value. 1he opLlon here was Lhe conslderaLlon for Lhe vlllamors buylng Lhe flrsL half
of Lhe land. Slnce Lhey expressed Lhelr lnLenLlon Lo exerclse Lhe opLlon (whlch ls an
offer), a valld conLracL was perfecLed.

When CpLlon ls WlLhouL SeparaLe ConslderaLlon
WlLhouL separaLe conslderaLlon, an opLlon conLracL ls vold as a conLracL
buL would sLlll be a valld offer. lf Lhe opLlon ls exerclsed before lL ls
wlLhdrawn, lL ls equlvalenL Lo an offer belng accepLed. 1hus, a valld and
blndlng sale would be perfecLed. 5oocbez v. klqos (45 5ckA J68)
1he burden of proof Lo show LhaL Lhe opLlon conLracL has a separaLe
conslderaLlon ls wlLh Lhe parLy seeklng Lo show lL. ArL. 1334, whlch
presumes LhaL conslderaLlon exlsLs, cannoL apply slnce ArL. 1479, Lhe more
speclflc provlslon, requlres such separaLe conslderaLlon for an opLlon Lo be
valld.
LaLely, Lhere have been rullngs by Lhe SC whlch Lend Lo dlverge from Lhe
5oocbez docLrlne. Powever, Sanchez ls sLlll Lhe conLrolllng docLrlne slnce lL
has yeL Lo be expressly abandoned by Lhe CourL. Mootlllo v. cA (161 5kA
167), Notloo v. lAc (197 5ckA J2J), ol ko 5lo 1toJloq v. cA (209 5ckA
76J), ulomoote v. cA (206 5ckA 52)
lL was held ln vozpoez v. cA (199 5ckA 102) LhaL for Lhe 5oocbez docLrlne
Lo apply, Lhe opLlon musL be accepLed and Lhe accepLance musL be
communlcaLed Lo Lhe offeror. 1hls emphaslzes Lhe polnL LhaL an opLlon
conLracL ls a dlsLlncL conLracL.
Classroom example:
o S ls selllng 8 a condomlnlum unlL. Pe Lells 8 LhaL he can pay
30,000 as reservaLlon fee whlch wlll enLlLle hlm Lo a perlod of 1
monLh Lo Lhlnk abouL Lhe purchase. lf he accepLs, Lhe 30,000 wlll
be deducLed from Lhe purchase prlce. 1hls ls noL an opLlon
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

29
conLracL because Lhe 30,000 ls noL a separaLe conslderaLlon buL ls
acLually parL of Lhe purchase prlce. WhaL we have ls an
lnnomlnaLe conLracL (Jo ot foclos). 8reach of Lhe conLracL wlll
enLlLle 8 Lo damages only. 1he lnnomlnaLe conLracL lnvolves a
presLaLlon Lo do, Lhus, speclflc performance ls noL avallable.
)*%2/"P 8: H$0'5
S:PC@E An CpLlon Lo urchase was execuLed where 8lgos would sell a plece of land
Lo Sanchez upon Lhe exerclse of Lhe opLlon wlLhln 2 years. Sanchez made several
Lenders of paymenL Lo 8lgos, whlch laLLer re[ecLed. Sanchez Lhen deposlLed Lhe
amounL wlLh Lhe Cll and commenced sulL for speclflc performance agalnsL 8lgos.
LaLLer asserLs LhaL lL was noL a valld conLracL for absence of conslderaLlon.

'@@F?E WCn 8lgos ls bound Lo sell by vlrLue of Lhe CpLlon Lo urchase-?LS

*:CL<E Seller cannoL revoke an offer lf Lhe opLlon Lo buy had a separaLe
conslderaLlon. lf Lhe opLlon ls glven wlLhouL a conslderaLlon, lL ls a mere offer of a
conLracL of sale, whlch ls noL blndlng unLll accepLed. lf, however, accepLance ls
made before a wlLhdrawal, lL consLlLuLes a blndlng conLracL of sale, even LhoughL
Lhe opLlon was noL supporLed by a sufflclenL conslderaLlon. Sanchez's Lenders were
valld exerclse of Lhe opLlon granLed hlm and Lhus a conLracL of sale was perfecLed.

N*567"P 8: ;C
S:PC@E valle[era sold land Lo vasquez who Lhen secured 1C1. A separaLe lnsLrumenL
LogeLher wlLh Lhe deed of sale, a 8lghL Lo 8epurchase was execuLed by Lhem ln
favor of valle[era. LaLer, vasquez reslsLed Lhls acLlon for redempLlon on Lhe premlse
LhaL 8lghL Lo 8epurchase ls [usL an opLlon Lo buy slnce lL ls noL embodled ln Lhe
same documenL of sale buL ln a separaLe documenL, and such opLlon ls noL
supporLed by a conslderaLlon dlsLlncL from Lhe prlce, Lhe deed for rlghL Lo
repurchase ls noL blndlng upon Lhem.

'@@F?E WCn Lhe rlghL of repurchase gave rlse Lo a valld conLracL of sale-nC

*:CL<E 1he rlghL Lo repurchase was noL supporLed by a separaLe conslderaLlon. 1hus,
for lL Lo be blndlng on vasquez, lL musL hav been shown LhaL valle[era accepLed Lhe
offer Lhereln before lL was wlLhdrawn by vasquez. none was made, Lhe vendor a
reLro musL make acLual and slmulLaneous Lender of paymenL and conslgnaLlon.
Mere expresslons of readlness or wllllngness Lo repurchase are lnsufflclenL. 1he
rlghL of repurchase ls oot a rlghL qtooteJ Lhe vendor by Lhe vendee ln a sobsepoeot
losttomeot, buL ls a rlghL tesetveJ by tbe veoJot lo tbe some losttomeot of sale as
one of Lhe sLlpulaLlons of Lhe conLracL.

CpLlon noL ueemed arL of 8enewal of Lease
under Lhe prlnclple of toclto tecooJoccloo, a lease ls lmplledly renewed lf
Lhe Lerm of Lhe orlglnal conLracL of lease has explred, Lhe lessor has noL
ordered Lhe lessee Lo vacaLe, and 13 days has passed wlLhouL Lhe
acqulsecnce of Lhe lessor
13
.
Cnly Lhe essenLlal sLlpulaLlons ln Lhe lease are deemed renewed.
An opLlon Lo purchase whlch ls sLlpulaLed ln a lease ls noL essenLlal Lo Lhe
lease. 1hus, Lhey lL ls noL renewed.
erlod of Lxerclse of CpLlon
lf Lhe opLlon conLracL does noL speclfy Lhe perlod ln whlch Lhe opLlon can
be exerclsed, lL cannoL be presumed LhaL lL can be exerclsed lndeflnlLely.
AcLlons upon wrlLLen conLracLs musL be broughL wlLhln 10 years.
AfLerwards, lL prescrlbes.
roper Lxerclse of CpLlon
1he opLlonee may exerclse hls rlghL by merely advlslng Lhe offeror of Lhe
declslon Lo buy and expresslng hls readlness Lo pay, provlded LhaL he ls
acLually able Lo pay. AcLual paymenL ls noL necessary Lo exerclse Lhe
opLlon. Nletes v. cA (46 5ckA 654)
noLlce wlLhln Lhe opLlon perlod of clear lnLenLlon Lo purchase Lhe
properLy, even wlLh a requesL for leeway or exLenslon of Lhe perlod ln

13
Samelo v. ManoLok Servlces, lnc., C.8. no. 170309 (noL ln Lhe book)
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

30
order Lo ralse money Lo buy Lhe properLy, ls a valld and subsLanLlal
exerclse of Lhe opLlon. cotcellet v. cA (J02 5ckA 718)
ln 5oocbez v. klqos, Lhe CourL held LhaL repeaLed Lenders of paymenL,
whlch were refused by Lhe opLloner for no reason, was a valld exerclse of
Lhe opLlon.
1he refusal by Lhe offeror Lo comply wlLh Lhe demand by Lhe offeree wlLh
Lhe exerclse of hls opLlon may be enforced by speclflc performance.
Lxerclse of Lhe opLlon ls accepLance of Lhe offer whlch perfecLs Lhe
conLracL of sale. 1hus, Lhe obllgaLlons Lo do become obllgaLlons Lo glve.
W$"&"5 8: ;C
S:PC@E Carcla (owner and lessor) enLered lnLo a ConLracL of Lease wlLh CpLlon Lo
8uy a school wlLh nleLes (lessee). Lessee ls granLed an opLlon Lo buy Lhe land wlLhln
Lhe perlod of Lhe conLracL of lease. LaLer, Carcla expressed hls lnLenLlon Lo resclnd
Lhe conLracL due Lo poor malnLenance of Lhe bulldlng. ln hls reply, nleLes expressed
lnenLlon Lo exerclse Lhe opLlon Lo buy. ln Lhe speclflc performance case flled agalnsL
Carcla, he asserLs LhaL Lhe full purchase prlce musL flrsL be pald before Lhe opLlon
could be exerclsed.

'@@F?E WCn Carcla's asserLlon ls correcL-nC

*:CL<E ln Lhe case of an opLlon Lo buy, 1PL C8Lul1C8 MA? vALluL? Anu
LllLC1lvLL? LxL8ClSL PlS 8lCP1 8? ML8LL? AuvlSlnC 1PL uL81C8 Cl 1PL
lC8ML8'S (1) uLClSlCn 1C 8u? Anu (2) PlS 8LAulnLSS 1C A? 1PL S1luLA1Lu
8lCL, provlded LhaL Lhe same ls avallable and acLually dellvered Lo Lhe debLor upon
execuLlon and dellvery by hlm of Lhe correspondlng deed of sale. ln oLher words,
noLlce of Lhe credlLor's declslon Lo exerclse hls opLlon Lo buy need noL be coupled
wlLh acLual paymenL of Lhe prlce, so long as Lhls ls dellvered Lo Lhe owner of Lhe
properLy upon performance of hls parL of Lhe agreemenL.

Summary 8ules When erlod ls CranLed Lo romlsee
Aoq o Asoocloo v. cA (2J8 5ckA 602) sumarlzed Lhe appllcable rules:
a. lf Lhe perlod ls noL supporLed by a separaLe conslderaLlon, Lhe
offeror can sLlll wlLhdraw Lhe offer before lL ls accepLed, or before
he learns of an accepLance made by Lhe offeree.
b. 1he rlghL Lo wlLhdraw musL noL be done whlmslcally or arblLrarlly,
oLherwlse, Lhe oLher parLy may sue for damages under ArLlcle 19.
c. lf Lhere ls a separaLe conslderaLlon, an opLlon conLracL ls
perfecLed, and wlLhdrawal of Lhe opLlon wlLhln Lhe perlod ls a
breach of Lhe conLracL.
d. 1he opLlon conLracL ls an lndependenL conLracL by lLself. lf lL ls
wlLhdrawn, Lhere ls a breach whlch can be Lhe basls of an acLlon
for damages. Speclflc performance ls noL avallable.
e. 1he naLure of Lhe conslderaLlon musL be Laken lnLo accounL. lf Lhe
conslderaLlon was ln facL parL of Lhe purchase prlce, Lhen Lhere ls
no opLlon conLracL, buL a perfecLed conLracL of sale.
Aoq o Asoocloo ruled LhaL Lhe Lhe separaLe conslderaLlon merely
guaranLees LhaL wlLhln Lhe opLlon perlod, before Lhe opLloner wlLhdraws
Lhe offer, an accepLance by Lhe opLlonee would glve rlse Lo a valld sale.
1hls, ln effecL, ls slmllar Lo Lhe docLrlne ln 5oocbez v. klqos whlch
consldered an opLlon whlch dld noL have separaLe conslderaLlon.
o 1he effecL ls LhaL as far as Lhe opLlonee ls concerned, wheLher or
noL he glves a separaLe conslderaLlon, hls rlghL can be defeaLed
slmply by Lhe opLloner's wlLhdrawal. Pe ls Lherefore noL assured
LhaL a sale wlll be perfecLed.
o Accordlng Lo 8, Lhe more loglcal acLlon ln case of a breach of an
opLlon conLracL ls speclflc performance. 8uL, Lhe reasonlng ln Aoq
o (l.e you can'L compel speclflc performance for presLaLlons Lo
do) ls also loglcal.
o CLv says Lhls does noL provlde for a commerclally sound docLrlne
because lL emasculaLes Lhe effecLlveness of an opLlon supporLed
by a separaLe conslderaLlon. 1here ls no lncenLlve or moLlvaLlon
for Lhe opLlonee Lo glve, and Lhe opLloner Lo demand a separaLe
conslderaLlon.
C%0 Q7 C57%2$'% 8: ;C
S:PC@E Ang ?u and oLhers were LenanLs and lessees of commerclal spaces owned by
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

31
Cngpln. Cn several occaslons, Cngpln lnformed Ang ?u LhaL he ls offerlng Lo sell Lhe
premlses and ls glvlng Lhem prlorlLy Lo acqulre Lhe same. negoLlaLlons were had
and counLer offers were glven by boLh parLles. Ang ?u flled for speclflc performance
Lo compel Cngpln Lo sell Lhe properLy when he found ouL LhaL Lhe laLLer was abouL
Lo sell Lhe properLy. endlng resoluLlon of Lhe case, Cngpln sold Lhe properLy Lo
anoLher.

'@@F?E WheLher or noL Lhere was a perfecLed sale. - nC

*:CL<E ln a rlghL of flrsL refusal, whlle Lhe ob[ecL mlghL be made deLermlnaLe, Lhe
exerclse of Lhe rlghL, would depend noL only on Lhe vendor's lnLenLlon Lo sell buL
also on Lerms, lncludlng Lhe prlce, LhaL are yeL Lo be flrmed up. lLs breach cannoL
[usLlfy an lssuance of a wrlL of execuLlon under a [udgmenL or sancLlon an acLlon for
speclflc performance wlLhouL negaLlng consensuallLy ln Lhe perfecLlon of conLracLs.

1he proper remedy ls an acLlon for damages.

*LMAC@ <G SLD@C *?GF@:>
A promlse on Lhe parL of Lhe owner LhaL lf he decldes Lo sell Lhe properLy
ln Lhe fuLure, he would flrsL negoLlaLe lLs sale Lo Lhe promlsee.
lf Lhe promlse ls breached, an acLlon for speclflc performance ls noL
allowed, buL acLlon for damages ls allowed. Coetteto v. lqo (96 lbll. J7)
ln Coetteto, Lhe CourL ruled LhaL reclsslon ls also noL allowed for breach of
rlghL of flrsL refusal. 1hls was reversed ln 1992 ln Lhe case of Cozmoo,
8ocolloq & co. v. 8oooevle (206 5ckA 668). lL held LhaL when a rlghL of flrsL
refusal lncluded ln a conLracL of lease ls breached by selllng Lhe properLy Lo
anoLher, Lhe conLracL of sale ls resclslble because of ln[ury Lo Lhlrd persons
(Lhe lessees).
1he buyer of a real properLy who knew LhaL such properLy was sub[ecL Lo
Lhe rlghL of flrsL refusal cannoL clalm good falLh.
A rlghL of flrsL refusal ls noL a conLracL. lL ls noL a sale nor an opLlon
conLracL.
o Whlle lL has a deflnlLe sub[ecL maLLer, Lhere ls no agreemenL as Lo
Lhe prlce or Lhe manner of paymenL.
o lurLhermore, Lhe exerclse of Lhe rlghL would be dependenL upon
Lhe granLor's evenLual lnLenLlon Lo sell Lhe land.
lf Lhe rlghL of flrsL refusal ls lncluded ln a lease, Lhere need noL be a
separaLe conslderaLlon for Lhe rlghL slnce lL ls already parL and parcel of
Lhe enLlre conLracL of lease. 1he conslderaLlon for Lhe lease ls Lhe
conslderaLlon for Lhe rlghL of flrsL refusal. poototlol keolty uev., loc. v.
Moyfolt 1beotet, loc. (264 5ckA 48J)
o 1he enforceablllLy of Lhe rlghL of flrsL refusal ls based on Lhe
obllgaLory force of Lhe lease conLracL.
o lf Lhe rlghL ls vlolaLed by Lhe granLor who sold Lhe properLy Lo
anoLher, Lhe resulLlng conLracL ls resclsslble by Lhe granLee of Lhe
rlghL.
1he poototlol keolty rullng would only apply Lo rlghLs of flrsL refusal
aLLached Lo a valld prlnclpal conLracL. lf Lhey are consLlLuLed as separaLe
conLracLs, Lhe rullng ln Aoq o Asoocloo would apply.
o verbal granLs of Lhe rlghL of flrsL refusal are unenforceable slnce
such rlghL musL be embodled ln a wrlLLen conLracL. 5eo lo k
Motketloq cotp. v. Mottloez (J25 5ckA 210)
Pow Lo comply wlLh Lhe rlghL of flrsL refusal when Lhe seller decldes Lo sell:
o 1he seller musL flrsL offer Lo sell Lhe properLy Lo Lhe granLee of Lhe
opLlon.
o 1he negoLlaLlons abouL Lhe sale beLween Lhe seller and Lhe
granLee would be deemed compllance wlLh Lhe rlghL, even lf Lhere
ls no flnal prlce agreed upon. klvleto llllploo, loc. v. cA (J80 5ckA
245)
o lf no prlce ls agreed upon, Lhe seller can Lhen offer Lo sell Lo oLher
parLles wlLh Lhe same Lerms as Lhose offered Lo Lhe granLee.
o lf Lhe seller and Lhe Lhlrd parLy negoLlaLe and agree upon dlfferenL
Lerms, Lhe seller musL flrsL offer Lhese new Lerms agaln Lo Lhe
granLee.
o lf Lhe granLee agaln re[ecLs Lhe new Lerms, Lhe seller can proceed
wlLh Lhe sale of Lhe properLy Lo Lhe Lhlrd parLy.
1he rlghL of flrsL refusal granLed Lo Lhe lessee may noL be avalled of by Lhe
sublessee because he ls a sLranger Lo Lhe lessor. 5oJbwool v. cA (281 5ckA
75)
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

32
Slmllar Lo an opLlon conLracL, Lhe rlghL of flrsL refusal lncluded ln a lease ls
noL renewed even ln toclto tecooJoccloo. ulzoo v. cA (J96 5ckA 152)
@67*&'-$*+ H"*+&4 !"8: 3%2: 8: B*4#*$- D/"*&"- 3%2:
S:PC@E Mayfalr leased a porLlon of Carmelo's bulldlng. 1helr lease conLracL sLlpulaLed
LhaL lf Carmelo wanLs Lo sell Lhe premlses, Lhe Mayfalr shall be glven excluslve
opLlon Lo purchase wlLhln 30 days. Carmelo lnformed Mayfalr LhaL lL wanLed Lo sell
Lhe properLy, buL Lhey never agreed upon Lhe prlce. Carmelo sold Lhe properLy Lo
LquaLorlal. Mayfalr flled an acLlon for speclflc performance Lo have Lhe properLy
sold Lo lL and Lo annul Lhe sale Lo LquaLorlal.

'@@F?@E WheLher or noL Lhere was a rlghL of flrsL refusal. - ?LS
WheLher or noL Lhe sale Lo LquaLorlal was valld. - ?LS, buL resclsslble.

]?>NE Carmelo vlolaLed Lhe rlghL of flrsL refusal when wlLhouL affordlng lLs
negoLlaLlons wlLh Mayfalr Lhe full process Lo rlpen Lo a deflnlLe offer and a posslble
accepLance wlLhln Lhe "30-day excluslve opLlon" Llme. LquaLorlal ls a buyer ln bad
falLh because lL had noLlce and full knowledge of Mayfalr's rlghLs. Pence, Lhe sale Lo
LquaLorlal ls resclsslble.

>*-*%*67" X$%05 8: ;C
S:PC@E CaLallna SanLos, owner of Lhe properLy whlch was leased Lo aranaque klngs,
sold Lhe properLy Lo a Lhlrd parLy (uavld 8aymundo) for 3M. 1he lease conLracL
beLween SanLos and k provldes LhaL Lhe lessee shall have Lhe flrsL opLlon or
prlorlLy Lo buy Lhe properLles sub[ecL of Lhe lease. SanLos recLlfled her error of
vlolaLlng Lhe conLracLual rlghL, by havlng Lhe properLy reconveyed Lo her. She sold
Lhe properLy Lo k for 13M. Powever k conLesLs LhaL lL should be sold Lo Lhem aL
3M only.

'@@F?@E W/n Lhere ls a vlolaLlon of a conLracLual rlghL of flrsL opLlon or prlorlLy" Lo
buy Lhe properLles sub[ecL of Lhe lease - nC
W/n Lhe granLee of such rlghL ls enLlLled Lo be offered Lhe same Lerms and
condlLlons as Lhose glven Lo a Lhlrd parLy who evenLually boughL such properLles -
?LS

]?>NE Cnly lf Lhe peLlLloner falled Lo exerclse Lhelr rlghL of flrsL prlorlLy could SanLos
LhereafLer lawfully sell Lhe sub[ecL properLy Lo oLhers, and only under Lhe same
Lerms and condlLlons prevlously offered Lo Lhe peLlLloner. 1he basls of Lhe rlghL of
Lhe flrsL refusal musL be Lhe currenL offer Lo sell of Lhe seller or offer Lo purchase of
any prospecLlve buyer.

N*567"P 8: C4*+* ;'-1:
S:PC@E vasquez spouses own shares of sLocks wlLh CondulL CorporaLlon. CondulL's
maln asseL was a 49.9 hecLare land ln Ayala Alabang, MunLlnlupa. Spouses enLer
lnLo a MCA wlLh Ayala where Lhe laLLer commlLLed Lo develop sald lands lncludlng
Lhe 4 parcels of land Lo be sold Lo peLlLloner spouses. ar. 3.13 of MCA sLaLes LhaL
Ayala agrees Lo granL Lhe spouses "a flrsL opLlon Lo purchase four developed loLs
nexL Lo Lhe 8eLalned Area" aL Lhe prevalllng markeL prlce aL Lhe Llme of Lhe
purchase."

'@@F?E W/n Lhe sLlpulaLlon ls a rlghL of flrsL refusal or an opLlon conLracL. - lL was a
rlghL of flrsL refusal.

*:CL<E Whlle Lhe ob[ecL may be deLermlnaLe, Lhe exerclse of Lhe rlghL would depend
noL only on Lhe granLor's evenLual lnLenLlon Lo sell buL also on Lerms, lncludlng
prlce, LhaL are yeL Lo be flrmed up. lL was noL an opLlon conLracL because Lhere was
no separaLe conslderaLlon. 1hls rlghL glven by Ayala can be revoked aL any Llme by
communlcaLlng lL Lo Lhe spouses. When Ayala re[ecLed Lhe prlce aL whlch spouses
wanLed Lo by Lhe lands, Lhe opLlon was losL.

H$8$"-* Y$+$1$%* 8: ;C
S:PC@E 8eyes execuLed a conLracL of lease wlLh a rlghL of flrsL refusal ln favor of
8lvlera. 1he parcel of land was morLgaged Lo rudenLlal 8ank and wlll be foreclosed
upon 8eyes' fallure Lo pay. 8eyes offered Lo sell Lhe loL Lo 8lvlera, and Lhe parLles
underwenL negoLlaLlons on Lhe prlce. 8lvlera flnally conflrmed Lo purchase Lhe
properLy for 3,000. 8eyes negoLlaLed and sold Lhe loL Lo Cypress (owned by a
famlly frlend) for 3,300.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

33

'@@F?E W/n 8lvlera's rlghL of flrsL refusal was vlolaLed by 8eyes' sale of Lhe properLy
Lo Cypress. - nC

*:CL<E 8lvlera sLrongly exhlblLed a "Lake-lL or leave-lL" aLLlLude ln lLs negoLlaLlons
wlLh 8eyes. lL quoLed lLs "flxed and flnal" prlce as 3,000 and noL any peso more.
8lvlera cannoL now be heard LhaL had lL been lnformed of Lhe offer of 3,300 of
Cypress, lL would have maLched sald prlce. lLs sLubborn approach ln lLs negoLlaLlons
wlLh 8eyes showed crysLal-clear LhaL Lhere was never any need Lo dlsclose such
lnformaLlon and dolng so would be [usL a fuLlle efforL on Lhe parL of 8eyes. 8eyes
was under no obllgaLlon Lo dlsclose Lhe same.

/D<B<@?N (<PCDL=? <= 0BCL<= 3<=CD:PC@ RL@8c8RL@ *LMAC <G SLD@C
*?GF@:>
AlLernaLlve uocLrlne of LnforceablllLy of 8lghLs of llrsL 8efusal
!usLlce vlLug, ln hls declslon ln Aoq o Asoocloo and ln hls dlssenL ln
poototlol keolty sald LhaL a rlghL of flrsL refusal ls noL a conLracL.
o ln hls vlew, breach would resulL ln damages pursuanL Lo ArL. 19.
CLv poslLs LhaL a rlghL of flrsL refusal over a deLermlnaLe sub[ecL maLLer
and supporLed by a separaLe conslderaLlon would glve rlse Lo an
lnnomlnaLe conLracL (Jo ot foclos).
o 1hls would allow Lhe remedy of reclsslon whlch would Lhen glve
rlse Lo damages lf lL ls breached. (noLe: ArL. 19 would noL be Lhe
basls for damages.)
LnforceablllLy of CpLlon 8lghLs Should be aL ar wlLh, lf noL aL a Plgher Level 1han,
8lghLs of llrsL 8efusal
ln llghL of Lhe rullngs ln poototlol keolty and lotoopoe kloqs, lL seems
LhaL rlghLs of flrsL refusal aLLached Lo prlnclpal conLracLs have greaLer legal
enforceablllLy Lhan opLlon conLracLs whlch are supporLed by separaLe
conslderaLlon.
CLv's proposed beLLer rule:
o lf Lhe opLlon ls supporLed by a separaLe conslderaLlon, Lhe
opLlonee shall have Lhe rlghL Lo exerclse Lhe opLlon anyLlme
durlng Lhe perlod, and LhaL would glve rlse Lo a valld sale.
o 1he opLloner, on Lhe oLher hand, cannoL wlLhdraw Lhe offer
durlng Lhe opLlon perlod, and any aLLempL Lo wlLhdraw wlll be
vold.
o lf a Lhlrd parLy boughL Lhe properLy ln bad falLh (l.e. he knew Lhe
exlsLence of Lhe opLlon ln favor of Lhe opLlonee), Lhe opLlonee can
go afLer Lhe opLloner and Lhe Lhlrd-parLy buyer ln an acLlon for
speclflc performance.
o lf a Lhlrd parLy boughL Lhe properLy ln good falLh and for value,
Lhe opLlonee may sue Lhe opLloner for recovery of damages for
breach of conLracL of sale.
&FCF:> /D<QL@?@ C< 4FU :=N !?>>
1hls glves rlse Lo a muLual obllgaLlon whlch allows each parLy Lo demand
fulflllmenL of Lhe obllgaLlon. lL ls an execuLory agreemenL. 8ottomeo v.
ltooco (5 lbll. 49)
An uncondlLlonal muLual promlse Lo buy and sell ls enforceable by an
acLlon for speclflc performance.
ConLracL of sale v. MuLual romlse Lo 8uy and Sell:
o A conLracL of sale ls consummaLed by dellvery and paymenL
o A bllaLeral promlse Lo buy and sell glves rlghLs lo petsooom whlch
granLs Lhe parLles a rlghL Lo demand fulflllmenL. Mocloo v. Colool
(225 5ckA 102)
B*2$'% 8: M7,0" G7$*%$
S:PC@E Maclon and uela vlda lnsLlLuLe enLered lnLo a conLracL Lo sell a properLy for
Lhe consLrucLlon of an educaLlonal lnsLlLuLlon. 1he conLracL sLlpulaLed LhaL uela
vlda lnsLlLuLe had unLll !uly 31, 1991 Lo buy Lhe properLy for 1,730. uela vlda
lnsLlLuLe sLarLed consLrucLlon of Lhe bulldlng, buL Lhe sale dld noL maLerlallze.
Maclon flled for unlawful deLalner buL evenLually agreed Lo a compromlse
agreemenL Lo glve uela vlda lnsLlLuLe 3 monLhs Lo pay, oLherwlse Lhe laLLer would
have Lo vacaLe Lhe properLy. 8espondenL [udge oplned LhaL Lhe proxlmaLe cause of
prlvaLe respondenL's fallure Lo comply wlLh Lhe compromlse agreemenL was Lhe
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

34
refusal of peLlLloners Lo execuLe a conLracL Lo sell as requlred under Lhe agreemenL.

'@@F?E W/n respondenL !udge may compel Maclon Lo execuLe a conLracL Lo sell ln
favor of uela vlda lnsLlLuLe. - ?LS

*:CL<E 1he courL looked lnLo Lhe conLemporaneous and subsequenL acLs of Lhe
parLles and deLermlned Lhelr real lnLenLlons. A revlew of Lhe facLs reveal LhaL even
prlor Lo Lhe slgnlng of Lhe compromlse agreemenL and Lhe flllng of Clvll Case no.
392 before Lhe Lrlal courL, Lhe parLles had already enLered lnLo a conLracL Lo sell. ln
conLracLs Lo sell, paymenL ls a poslLlve suspenslve condlLlon, fallure of whlch does
noL consLlLuLe a breach buL an evenL LhaL prevenLs Lhe obllgaLlon of Lhe vendor Lo
convey LlLle from maLerlallzlng, ln accordance wlLh ArLlcle 1184 of Lhe Clvll Code.

>"-#"2&$'% )&*0"< A##"- *%, C22"1&*%2"
"DC. 7HbI
1he conLracL of sale ls perfecLed aL Lhe momenL Lhere ls a meeLlng of mlnds upon
Lhe Lhlng whlch ls Lhe ob[ecL of Lhe conLracL and upon Lhe prlce.
lrom LhaL momenL, Lhe parLles may reclprocally demand performance, sub[ecL Lo
Lhe provlslons of Lhe law governlng Lhe form of conLracLs. (1430a)
3<=@?=C CA:C /?DG?PC@ : !:>?
Sale, belng a consensual conLracL ls perfecLed by Lhe meeLlng of Lhe mlnds
upon Lhe ob[ecL of Lhe conLracL and Lhe prlce.
MeeLlng of Lhe mlnds happens when a cerLaln offer and an absoluLe
accepLance meeL.
0GG?D &F@C 4? [3?DC:L=\
An offer ls cerLaln when lL conLalns:
o A descrlpLlon of Lhe sub[ecL maLLer whlch ls a posslble Lhlng," llclL
and deLermlnaLe or aL leasL deLermlnable.
o And a prlce whlch ls real, ln money or lLs equlvalenL, cerLaln or aL
leasL ascerLalnable. 1he Lerms of paymenL musL also be lncluded.
"PP?BC:=P? &F@C 4? ["K@<>FC?\
1he accepLance musL be plaln and uncondlLlonal, and lL wlll noL be so lf lL
lnvolves any new proposlLlon. 2oyco v. 5etto (44 lbll J26)
AccepLance musL be ln Lhe exacL Lerms ln whlch Lhey are made. Any
modlflcaLlon annuls Lhe offer. 8eomoot v. ltleto (41 lbll. 670)
lf Lhe Lerm Lo negoLlaLe" ls lncluded ln Lhe accepLance leLLer, Lhere ls sLlll
no absoluLe accepLance. ovleoco v. uocoycoy (104 5ckA 668)
ln Lhe same way, lf Lhe word noLed" ls slgned aL Lhe boLLom of Lhe
accepLance, lL was deemed noL Lo be an accepLance of Lhe offer. u8l v.
Ooq (460 5ckA 170)
lf a parLy accepLs buL wlLh a requesL LhaL paymenL Lerms be modlfled,
Lhere ls no absoluLe accepLance. llmketkol 5oos Mlllloq, loc. v. cA (255
5ckA 626)
1he momenL a parLy accepLs Lhe offer uncondlLlonally, Lhe conLracL of sale
ls perfecLed. lf Lhe seller subsequenLly requesLs for a hlgher prlce, buL no
agreemenL ls reached, Lhe flrsL sale ls sLll valld and ls noL novaLed. utoco v.
cA (278 5ckA 702)
A documenL cannoL consLlLuLe a sale even when lL provldes for a
downpaymenL slnce Lhe provlslon on Lhe downpaymenL made no speclflc
reference Lo a sale of a vehlcle. ueflnlLeness as Lo Lhe prlce ls an essenLlal
elemenL of a blndlng agreemenL Lo sell personal properLy. 1oyoto 5bow,
loc. v. cA (244 5ckA J20)
When uevlaLlon" ls Allowed
1he change ln Lhe phrases whlch do noL essenLlally change Lhe Lerms of Lhe
offer does noL amounL Lo a re[ecLlon and a counLer-offer. ClarlflcaLory
changes are allowed. vlllooco v. 8otmobeco (65 5ckA J52)
N$++'%2' 8: K'-.*/"2'
S:PC@E CervanLes (8ormaheco) owns a loL ln 8uendla. lL offered Lo sell Lhe loL Lo
vlllaconco who owns a loL ad[acenL Lo Lhe loL of Lhe laLLer wlLh Lhe followlng
condlLlons, (a) 100k as earnesL money whlch wlll become parL of Lhe paymenL lf loL
ln SLa. Ana ls purchased (b) lf Lhe sald properLy ls noL purchased, Lhe money wlll be
reLurned and Lhe sale wlll noL be consummaLed, whlch wlll be known 43 days afLer
negoLlaLlon. vlllonco senL a counLer offer LhaL Lhe 100k wlll have an lnLeresL of 10
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

33
per annum. CervanLes reLurned Lhe earnesL money and reasoned LhaL he acqulred
Lhe properLy beyond Lhe 43 days perlod.

'@@F?E WheLher or noL Lhere was a perfecLed sale?

]?>NE ?es. "Whenever earnesL money ls glven ln a conLracL of sale, lL shall be
consldered as parL of Lhe prlce and as proof of Lhe perfecLlon of Lhe conLracL" (ArL.
1482, Clvll Code). 1he conLracL was already consummaLed aL Lhe Llme respondenL
accepLed Lhe check. ln facL, he accepLed Lhe earnesL money, and furLhermore
reLurned Lhe 100k wlLh 10 lnLeresL whlch serves as proof of Lhe accepLance.

AccepLance may be Lxpress or lmplled
AccepLance on Lhe parL of Lhe buyer was manlfesLed Lhrough acLs such as
paymenL of Lhe purchase prlce, declaraLlon of Lhe properLy for Lax
purposes, and paymenL of real esLaLe Laxes. Comez v. cA (J40 5ckA 720)
8y afflxlng Lhelr slgnaLures as wlLnesses, Lhe co-owners accepLed Lhe Lerms
of Lhe conLracL. Oesmet v. luc (514 5ckA 228)
A"5."- 8: >*-*$5' !"8"+'1."%& ;':
S:PC@E eLlLloners are slbllngs and co-owners of Lwo parcels of land ln CavlLe.
LrnesLo, meL wlLh 8espondenL uC and slgned a ConLracL Lo Sell. A 100,000 check,
payable Lo LrnesLo, was glven as opLlon money. SomeLlme LhereafLer, 4 oLher also
slgned Lhe ConLracL Lo Sell. eLlLloners Lhen wroLe a leLLer Lo uC Lo resclnd Lhe
conLracL.

'@@F?E WheLher or noL Lhe sale ls valld on Lhe peLlLloners who slgned Lhe conLracL

]?>NE ?es. 1he oLher flve peLlLloners (excludlng LrnesLo) personally afflxed Lhelr
slgnaLures Lhereon. 1herefore, a wrlLLen auLhorlLy ls no longer necessary ln order Lo
sell Lhelr shares because, by afflxlng Lhelr slgnaLures on Lhe ConLracL Lo Sell, Lhey
were noL selllng Lhelr shares Lhrough an agenL buL, raLher, Lhey were selllng dlrecLly
and ln Lhelr own rlghL. 6/8 of Lhe properLy ls sold.

1he courL also had Lhe occaslon of dlsLlngulshlng earnesL money and opLlon money,
(a) earnesL money ls parL of Lhe purchase prlce, whlle opLlon money ls Lhe money
glven as a dlsLlncL conslderaLlon for an opLlon conLracL, (b) earnesL money ls glven
only where Lhere ls already a sale, whlle opLlon money applles Lo a sale noL yeL
perfecLed, and (c) when earnesL money ls glven, Lhe buyer ls bound Lo pay Lhe
balance, whlle when Lhe would-be buyer glves opLlon money, he ls noL requlred Lo
buy, buL may even forfelL lL dependlng on Lhe Lerms of Lhe opLlon.

AccepLance by LeLLer or 1elegram
uoes noL blnd Lhe offeror excepL from Lhe Llme lL came Lo hls knowledge.
1herefore, mere malllng or sendlng Lhe accepLance ls noL enough. 1he
offeror may sLlll wlLhdraw before he learns of Lhe accepLance.
AccepLance Sub[ecL Lo a Suspenslve CondlLlon
Lven lf Lhere ls a meeLlng of Lhe mlnds, Lhere wlll be no perfecLed conLracL
of sale lf lL ls sub[ecL Lo a suspenslve condlLlon. Coo, 5t. v. kefotmo (11 cAk
57)
CLv dlsagrees. Pe proposes LhaL Lhe beLLer rule should be LhaL Lhere ls
already a perfecLed conLracL buL lL ls noL yeL demandable because of Lhe
suspenslve condlLlon.
AccepLance ln AucLlon Sales
1he owner of Lhe properLy sold aL aucLlon may provlde Lhe Lerms under
whlch Lhe aucLlon wlll proceed and Lhe same are blndlng upon all bldders,
wheLher Lhey knew of such condlLlons or noL. leopoloco v. lostol 5ovloqs
8ook (47 lbll. 772)
An aucLlon sale ls perfecLed by Lhe fall of Lhe hammer and lL does noL
maLLer lf anoLher bldder maLched Lhe prlce of Lhe hlghesL bldder. ltovloce
of cebo v. nelts of kofloo Motoles (546 5ckA J15)
Cenerally, Lhe seller and Lhe aucLloneer cannoL bld elLher by Lhemselves or
by an agenL. LxcepLlon ls when Lhe seller reserves such rlghL.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

36
$:D=?@C &<=?U
"DC. 7HJ5
Whenever earnesL money ls glven ln a conLracL of sale lL shall be consldered as parL
of Lhe prlces and as proof of Lhe perfecLlon of Lhe conLracL. (1434a)
luncLlon of LarnesL Money
ArL. 1482 glves a presumpLlon. 1hls prevalls only ln Lhe absense of conLrary
or rebuLLal evldence. lN8 v. cA (262 5ckA 464,484)
1he presumpLlon ls based on Lhe facL LhaL Lhere ls a valld sale. 1he glvlng of
earnesL money does noL esLabllsh Lhe exlsLence of a perfecLed sale. lL ls
sLlll Lhe concurrence of Lhe esenLlal elemenLs of sale whlch perfecLs Lhe
conLracL. Moollo Metol cootoloets cotp. v. lN8 (511 5ckA 444)
1he presumpLlon does noL apply when earnesL money ls glven ln a conLracL
Lo sell. 5ettooo v. coqolot (517 5ckA 57). 1he money glven ln a conLracL Lo
sell ls noL earnesL money buL as parL of Lhe conslderaLlon Lo Lhe seller's
promlse Lo reserve Lhe sub[ecL properLy for Lhe buyer. lN8 v. cA (262 5ckA
464)
ln a condlLlonal conLracL of sale, Lhe accepLance of earnesL money would
prove LhaL Lhe sale ls condlLlonally consummaLed or parLy execuLed.
vlllooco v. 8otmobeco (65 5ckA J52)
varylng 1reaLmenLs of LarnesL Money
1he LreaLmenL of earnesL money ln ArL. 1482 ls Lhe preferred concepL
under Lhe law.
Powever, Lhere ls noLhlng whlch prevenLs Lhe parLles from LreaLlng Lhe
earnesL money dlfferenLly.
lor example, ln 5pooses uotomol v. cA (66 5ckA 575), Lhe parLles LreaLed
Lhe earnesL money as a guaranLee LhaL Lhe buyer would noL back ouL from
Lhe sale. 1hls was Lhe concepL of earnesL money ln Lhe old Clvll Code.
ulsLlngulslng LarnesL Money and CpLlon Money
AJelfo ltopettles, loc. v. cA (240 5ckA 565, 580) provldes Lhe dlsLlncLlons:
$:D=?@C &<=?U 0BCL<= &<=?U
arL of Lhe purchase prlce ulsLlncL conslderaLlon for an opLlon
conLracL
Clven only where Lhere ls already a sale Applles Lo a sale noL yeL perfecLed
1he buyer ls bound Lo pay Lhe balance 1he buyer ls noL requlred Lo buy.

LffecL of 8eclsslon on LarnesL Money 8ecelved
LxcepL lf expressly sLlpulaLed, Lhe seller cannoL keep Lhe earnesL money Lo
answer for damages susLalned ln Lhe evenL LhaL Lhe sale falls due Lo Lhe
faulL of Lhe buyer. ColJeotoJ, loc v. cA (299 5ckA 141)
lf Lhe sale ls resclnded, Lhe seller musL reLurn Lhe earnesL money. 8eclsslon
creaLes Lhe obllgaLlon Lo reLurn Lhe Lhlngs whlch were Lhe ob[ecL of Lhe
conLracL, LogeLher wlLh Lhelr frulLs and lnLeresL.
/>:P? <G /?DG?PCL<=
1he sale's place of perfecLlon ls where Lhe meeLlng of Lhe mlnds as Lo Lhe
deLermlnaLe sub[ecL maLLer and prlce occurs.
ln case of accepLance by Lelegram or leLLer, Lhe presumpLlon ls LhaL Lhe
conLracL was perfecLed ln Lhe place where Lhe offer was made.
$XB?=@?@ <G $X?PFCL<= :=N *?ML@CD:CL<=
1he seller has Lo answer for Lhe followlng expenses:
1. LxecuLlon and reglsLraLlon of Lhe sale
2. uLLlng Lhe goods lnLo a dellverable sLaLe
3. WlLhholdlng Laxes due on Lhe sale
/?DG<DQ:=P? !A<F>N 1<C "GG?PC /?DG?PCL<=
1he ablllLy of Lhe parLles Lo perform Lhe conLracL (afLer perfecLlon) does
noL affecL Lhe perfecLlon of Lhe conLracL.
Lxample:
o ln 5cbobock v. cA (227 5ckA 719), Lhe CourL ruled LhaL Lhere was
already a perfecLed sale even when Lhe requlred leLLer of credlL
(whlch was Lhe means of paymenL agreed upon) had noL been
opened by Lhe buyer.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

37
non-paymenL of Lhe prlce does noL render vold nor reverse Lhe effecLs of
Lhe perfecLlon of Lhe conLracL of sale. lL only creaLes a rlghL Lo demand
fulflllmenL of Lhe obllgaLlon or Lo resclnd Lhe conLracL. 8olotbot v. cA (261
5ckA 128)
When Lhe seller ls noL Lhe owner boLh aL Lhe Llme of perfecLlon and
dellvery, lL ls slmllar Lo an lmposslble servlce" under ArL. 1409(3). 1hus,
Lhe conLracL ls vold. Nool v. cA (276 5ckA 149)
o 8u1, CLv says LhaL Lhe comparlson Lo an lmposslble servlce ls
erroneous because Lhe obllgaLlons are Lo glve," noL Lo do."
Y'-. '# )*+"5
S<DQ 1<C 2?=?D:>>U 'QB<DC:=C G<D +:>LNLCU <G !:>?
"DC. 7HJ9
Sub[ecL Lo Lhe provlslons of Lhe SLaLuLe of lrauds and of any oLher appllcable
sLaLue, a conLracL of sale may be made ln wrlLlng, or by word of mouLh, or parLly ln
wrlLlng and parLly by word of mouLh, or may be lnferred from Lhe conducL of Lhe
parLles. (n)
Sale, belng a consensual conLracL, no parLlcular form ls requlred for lLs
valldlLy.
1he sale of land under a prlvaLe lnsLrumenL ls valld. Collot v. nossolo (20
5ckA 186) 1he requlremenL ln Lhe SLaLuLe of lrauds LhaL sale of real esLaLe
should be embodled ln a publlc documenL ls only for Lhe purpose of
blndlng Lhlrd parLles.
1he facL LhaL Lhe sale over land was noL reglsLered does noL affecL Lhe
valldlLy of Lhe sale. Agaln, reglsLraLlon ls only for Lhe purpose of greaLer
efflcacy and blndlng Lhlrd persons. uolvetsol 5oqot Mlllloq cotp. v. nelts of
Aoqel 1eves (J89 5ckA 216)
8emember: unenforceable conLracLs are sLlll valld.
8equlremenL for ubllc lnsLrumenL for lmmovables under ArL. 1338
ArL. 1338
16
enumeraLes Lhe conLracLs whlch requlre a publlc documenL.
Powever, lL expressly provldes LhaL sales of real properLy or an lnLeresL
Lhereln, are governed by ArL. 1403(2) (l.e. SLaLuLe of lrauds) and ArL. 1403.
rovlslons of ArL. 1338 are only for purposes of convenlence. non-
compllance would noL render Lhe conLracL vold or unenforceable. lL merely
provldes a cause of acLlon for Lhe parLles Lo compel Lhe oLher Lo have Lhe
documenL noLarlzed. uolloo v. cA (182 5ckA 872)
Lven lf Lhe deed of sale has noL yeL been slgned and noLarlzed, Lhe
conLracL ls sLlll perfecLed. llmketkol 5oos Mlllloq, loc. v. cA (250 5ckA 52J)
Powever, lf a deed of sale over a condomlnlum unlL or a plece of land ls
noL reglsLered ln Lhe 8eglsLry of ueeds, lL cannoL blnd Lhlrd persons.
1olosoo v. 1oyoq (J56 5ckA 26J), 5ootos v. Mooollll (476 5ckA 679)
!*+$'% 8: ;C
S:PC@E Segundo uallon ls denylng LhaL he sold hls parcel of land ln SouLhern LeyLe Lo
8uperLo Sabesa[e, conLendlng LhaL Lhe documenL ls flcLlLlous and should have been
execuLed ln a publlc lnsLrumenL. Sabesa[e flled a sulL for recovery of ownershlp of
Lhe parcel of land based on Lhe deed of absoluLe sale execuLed by uallon.

'@@F?E WheLher or noL Lhe sale was valld desplLe Lhe fallure Lo embody lL ln a publlc
documenL

]?>NE ?es. ArL. 1338 sLaLes LhaL acLs and conLracLs whlch have for Lhelr ob[ecL Lhe

16
ArL. 1338 - 1he followlng musL appear ln a publlc documenL:
(1) AcLs and conLracLs whlch have for Lhelr ob[ecL Lhe creaLlon, Lransmlsslon, modlflcaLlon or
exLlngulshmenL of real rlghLs over lmmovable properLy, sales of real properLy or of an lnLeresL
Lhereln are governed by ArLlcles 1403, no. 2, and 1403,
(2) xxx
(3) xxx
(4) xxx
All oLher conLracLs where Lhe amounL lnvolved exceeds flve hundred pesos musL appear ln wrlLlng, even
a prlvaLe one. 8uL sales of goods, chaLLels or Lhlngs ln acLlon are governed by ArLlcles 1403, no. 2 and
1403. (1280a)
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

38
creaLlon, Lransmlsslon, modlflcaLlon or exLlncLlon of real rlghLs over lmmovable
properLy musL appear ln a publlc lnsLrumenL" ls only for convenlence, noL for
valldlLy or enforceablllLy. lL ls noL a requlremenL for Lhe valldlLy of a conLracL of sale
of a parcel of land LhaL Lhls be embodled ln a publlc lnsLrumenL.

A conLracL of sale ls a consensual conLracL, whlch means LhaL Lhe sale ls perfecLed
by mere consenL. no parLlcular form ls requlred for lLs valldlLy. 1he auLhenLlclLy of
Lhe slgnaLure of ualllon was proven by Lhe LesLlmony of several wlLness lncludlng
Lhe person who made Lhe deed of sale.

luncLlon of a ueed of Sale
A formal and symbollc dellvery of Lhe properLy sold. lL can be used by Lhe
buyer as proof of ownershlp.
1he execuLlon of a publlc documenL ls one of Lhe hlghesL forms of
consLrucLlve dellvery ln Lhe Law on Sales
ubllc documenL:
o Subscrlbed and acknowledged before a noLary publlc
o Ln[oys presumpLlon of regularlLy and due execuLlon
o Plgh probaLlve value
o Clear and convlnclng evldence ls requlred Lo conLradlcL such
Powever, noLarlzaLlon does noL guaranLee valldlLy. nelLher ls lL concluslve
of Lhe naLure of Lhe LransacLlon conferred by Lhe sald documenL. 5olooqo
v. coocepcloo (470 5ckA 291)
LxecuLlon and noLarlzaLlon of a deed of sale ls noL concluslve presumpLlon
of dellvery of possesslon. 5ootos v. 5ootos (J66 5ckA J95)
o 1he buyer's lmmedlaLe Laklng of possesslon and occupaLlon of Lhe
properLy corroboraLes Lhe auLhenLlclLy of Lhe deed of sale
o 8uL Lhe seller's conLlnued possesslon of Lhe properLy casLs doubL
on Lhe valldlLy of Lhe sale. lL can show LhaL Lhe sale was slmulaLed.
Iotot - clause aL Lhe fooL of an affldavlL showlng when, where and before
whom Lhe acLual oaLh was sworn
o lf Lhls alone ls presenL, Lhe deed of sale ls noL noLarlzed and
remalns a prlvaLe documenL.
Lven lf deeds of sale were noLarlzed by someone who was noL a noLary
publlc, Lhe sale sLlll remalned valld. 8uL Lhe ueed of Sale becomes a mere
prlvaLe documenL. k.l. Novotto & co. v. volloces (J61 5ckA 1J9)
ln uolomploes v. cA (JJ6 5ckA 5J8), Lhe slgnaLures of Lhe sellers were
found on Lhe acknowledgemnL of Lhe noLarlzed ueed of AbsoluLe Sale, noL
Lhe ueed of AbsoluLe Sale lLself. 1he CourL ruled LhaL Lhe deed cannoL be
consldered noLarlzed because Lhe noLary publlc dld noL observe uLmosL
care ln Lhe performance of hls duLy.
Lven lf unslgned, ConLracLs Lo Sell consLlLuLe Lhe law beLween Lhe
conLracLlng parLles. 1hey are consensual and Lhus, blndlng as long as Lhere
ls a meeLlng of Lhe mlnds. Comez v. cA (J40 5ckA 720)
SubsLanLlal varlance ln Lhe Lerms of Lhe ConLracL Lo Sell and Lhe
subseqeunL ueed of AbsoluLe Sale dld noL vold Lhe LransacLlon. 1he ueed
of AbsoluLe Sale novaLed Lhe ConLracL Lo Sell. lombtes v. 1ejoJo, It. (516
5ckA 575)
,A?= S<DQ <G !:>? "GG?PC@ LC@ +:>LNLCU
Ceneral 8ule: lorm does noL affecL valldlLy of sale.
LxcepLlons: (ACM)
a. ower Lo sell a plece of land by an :genL musL be ln wrlLlng,
oLherwlse, Lhe sale wlll be vold.
b. Sale of large PaLLle musL be ln wrlLlng, oLherwlse Lhe sale would
be vold. lL musL also be reglsLered wlLh Lhe munlclpal Lreasurer ln
order Lo be valld.
c. Sale of land by non-musllm hlll Lrlbe culLural QlnorlLles all
LhroughouL Lhe hlllpplnes" ls vold lf noL approved by Lhe
naLlonal Commlsslon on lndlgenous eoples (nCl).
1he auLhorlLy of an agenL Lo sell real esLaLe musL be embodled ln a wrlLLen
speclal power of aLLorney. 1herefore, Lhe auLhorlLy musL be expressly
glven and speclflc. cosmlc lombet cotp. v. cA (265 5ckA 168), koet v. cA
(295 5ckA 677)
An oral sale enLered lnLo by Lhe son for Lhe real properLy of hls faLher ls
vold. uelos keyes v. cA (J1J 5ckA 6J2)
Llkewlse, Lhe agenL of a corporaLlon musL have a wrlLLen auLhorlLy Lo sell a
plece of land, oLherwlse, lL wlll be vold. 8ecelpL of parL of Lhe purchase
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

39
prlce by Lhe agenL wlll noL valldaLe Lhe sale. clty-llte keolty cotp. v. cA
(J25 5ckA J85)
Powever, Lhe agenL's wrlLLen auLhorlLy alone wlll noL exempL Lhe sale from
Lhe SLaLuLe of lrauds. 1he ueed of Sale lLself musL be ln wrlLlng and
reglsLered ln order Lo be enforceable and blndlng Lo 3
rd
persons. 1otcootot
v. 8etoobe (459 5ckA 4J9)
When Lhe ConLracL Lo Sell ls slgned by Lhe co-owners Lhemselves, wrlLLen
auLhorlLy by Lhe agenL ls no longer requlred. 1he co-owners are acLlng
dlrecLly. Oesmet v. lotolso uev. cotp. (514 5ckA 228)
!C:CFC? <G SD:FN@E ,A?= S<DQ '@ 'QB<DC:=C G<D $=G<DP?:KL>LCU
naLure and urpose of SLaLue of lrauds
1o prevenL fraud and per[ury ln Lhe enforcemenL of obllgaLlons. 1he
wrlLLen noLe musL emobody Lhe essenLlals of Lhe conLracL. 1otcootot v.
8etoobe (459 5ckA 4J9)
1he appllcaLlon of Lhe SLaLuLe of lrauds presupposed Lhe exlsLence of a
perfecLed conLracL. lltme v. 8okol otetptlses ooJ uev. cotp. (414 5ckA
190)
Sales Coverage ln SLaLuLe of lrauds
1he followlng klnds of sale are unenforceable lf noL embodled ln a wrlLLen
documenL: (1-300-8)
o A sale whlch ls noL Lo be performed wlLhln one year
o AgreemenL for Lhe sale of goods, chaLLel or Lhlngs ln acLlon noL
less Lhan 300
o Sale of real properLy
Lvldence of Lhe agreemenL musL be ln wrlLlng.
LxcepLlons Lo Coverage of SLaLue of lrauds ln Sales ConLracLs
1he followlng are exempLed from Lhe SLaLuLe of lrauds and are Lhus
enforceable: (M-CL)
1. 1here ls a noLe or memorandum ln wrlLlng and subscrlbed by Lhe
parLy charged or hls agenL
2. When Lhere has been parLlal consummaLlon/parLlal performance
3. lallure Lo ob[ecL Lo Lhe presenLaLlon of evldence ollooJe
(meanlng: from anoLher place) as Lo Lhe exlsLence of a conLracL
4. Sales effecLed Lhrough elecLronlc commerce
naLure of Memorandum
1he memorandum need noL be ln [usL one documenL. Several
correspondences Laken LogeLher would consLlLuLe sufflclenL
memorandum. 8etq v. MoqJoleoo stote, loc. (92 lbll 110), lltst lbll.
lotetootloool 8ook v. cA (252 5ckA 259)
1he memorandum musL conLaln all Lhe essenLlal Lerms of Lhe conLracL of
sale. All Lhe requlslLes of a valld sale musL be lndlcaLed. loteJes v. sploo
(22 5ckA 1000)
o 1he manner of paymenL musL also be lncluded ln Lhe
memorandum. ovleoco v. uocoycoy (104 5ckA 668)
o 8uL Lhe CourL has held LhaL ln sales of real properLy, Lhe sLaLuLe of
frauds wlll noL apply lf Lhere has already been parLlal paymenL
even lf Lhe memorandum evldenclng Lhe sale dld noL menLlon
paymenL by lnsLallmenL. uovlJ v. 1looqsoo (J1J 5ckA 6J)
1he courLs wlll noL go beyond Lhe four corners of Lhe memorandum Lo
ascerLaln Lhe presence of a sale. uolng so would be vlolaLlve of Lhe SLaLuLe
of lrauds. lf Lhe memoranda do noL embody Lhe essenLlal elemenLs of a
sale, Lhe courL wlll declare LhaL Lhere wasn'L any perfecLed sale. Cral
evldence wlll noL sufflce Lo prove Lhe sale. llmketkol 5oos Mlllloq, loc. v. cA
(255 5ckA 626)
Q78$"%02' 8: !*274274
S:PC@E eLlLloners are owners of a bakery ln 1acloban, Lhey lnLend Lo sell lL aL 6.3M
and Lhe offer pendlng unLll !uly 31, 1978 Lo buy Lhe properLy. ALLy.Camboa wenL Lo
Cebu brlnglng a conLacL wlLh an alLered mode of paymenL whlch says LhaL Lhe
balance paymenL should be pald wlLhlng 30 days lnsLead of Lhe former 90 days. uue
Lo Lhe sald varlance ln Lhe sald documenL, Lhe bank drafL was reLurned unslgned.

'@@F?E WheLher or noL Lhere was a cause of acLlon
WheLher or noL Lhe sLaLuLe of fraud wlll apply
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

40

]?>NE SC consldered Lhe correcL [urldlcal slgnlflcance of Lhe Lelegram of respondenLs
lnsLrucLlng ALLy. Camboa Lo "proceed Lo 1acloban Looeqotlote deLalls." lL
emphaslzes Lhe word "negoLlaLe" advlsedly because Lo SC's mlnd lL ls Lhe key word
LhaL negaLes and makes lL legally lmposslble Lo hold LhaL respondenLs' accepLance
of peLlLloners' offer, assumlng LhaL lL was a "cerLaln" offer lndeed, was Lhe
"absoluLe" one LhaL ArLlcle 1319. aymenL on lnsLallmenLs ls enLlrely dlfferenL from
cash paymenL. 1he manner of paymenL ls an essenLlal requlslLe ln a conLracL of sale.
1he alLeraLlon ln Lhe Lerms of paymenL clearly showed Lhere was no meeLlng of Lhe
mlnds yeL Lo perfecL a conLracL of sale.

ln any sale of real properLy on lnsLallmenLs, Lhe SLaLuLe of lrauds read LogeLher
wlLh Lhe perfecLlon requlremenLs of ArLlcle 1473 of Lhe Clvll Code musL be
undersLood and applled ln Lhe sense LhaL Lhe ldea of paymenL on lnsLallmenLs musL
be ln Lhe requlslLe of a noLe or memorandum Lhereln conLemplaLed. under Lhe
SLaLuLe of lrauds, Lhe conLenLs of Lhe noLe or memorandum, wheLher ln one
wrlLlng or ln separaLe ones merely lndlcaLlve for an adequaLe undersLandlng of all
Lhe essenLlal elemenLs of Lhe enLlre agreemenL, may be sald Lo be Lhe conLracL
lLself, excepL as Lo Lhe form

L$.F"&F*$ 8: ;C
S:PC@: 8l as LrusLee of 8C , auLhorlzed edro 8evllla Lo sell a loL ln 8arrlo 8agong
Pog, aslg. 8l v Albano, AssL. v Aromln and LlmkeLkal had negoLlaLlons and
evenLually seLLled on hp 1000/sq meLer. Llm asked lf Lhey could pay on Lerms and
so v Albano dlcLaLed Lhe Lerms of paymenL. AbouL 3 days laLer, LlmkeLkal learned
LhaL lLs offer Lo pay on Lerms has been frozen. Llm wenL Lo 8l Lo Lender full
paymenL of hp 33, 036, 000.00 Lo v Albano buL Lhe laLLer refused paymenL and
sald hls auLhorlLy Lo sell Lhe land had been wlLhdrawn. LlmkeLkal flled a case Lo
agalnsL 8l for speclflc performance.

3557"5
1) WCn Lhere was a perfecLed conLracL of sale beLween LlmkeLkal and 8l-?LS
2) WCn Lhe evldence admlLLed by Lhe Lrlal courL ln rullng for Lhe perfecLlon of Lhe
sale ls admlsslble, glven LhaL ln a sale of real properLy, Lhe SLaLuLe of lrauds ls
appllcable?-?LS
3) WCn Lhe sale Lo n8S durlng Lhe pendency of Lhe Lrlal ln Lhe 81C was effecLed
ln good falLh-nC

H*&$'
1. 3<=CD:PC <G @:>? B?DG?PC?N-v and AssL. v have auLhorlLy Lo sell slnce
Lhelr prlmary responslblllLles were Lo manage and admlnlsLer real esLaLe
properLy.AssL. v Aromln LesLlfled LhaL Lhere was already a perfecLed
conLracL of sale.When Lhey meL, Lalked and agreed LhaL Lhe loL would be
sold Lo LlmkeLkal aL hp 1000/sq. meLer and on Lerms dlcLaLed by Albano,
Lhe sale was perfecLed.
2. !C:CFC? <G SD:FN@ - LransacLlon was ouLslde Lhe amblL of Lhe Sol, Lhere ls
Lhe exlsLence of a wrlLLen noLe or memorandum, Lhe AuLhorlzaLlon LeLLers
and leLLer from LlmkeLkal conflrmlng Lhe sale. 8espondenLs cross-
examlned Lhe wlLnesses aL lengLh regardlng Lhe conLracL, prlce, Lender of
paymenL, eLc.
J. 14! =<C : BFDPA:@?D L= M<<N G:LCA. 1hey lgnored Lhe lls peoJeos annoLaLed
on Lhe LlLle.

L$.F"&F*$ 8: ;C ZBH[
1. 1< P<=CD:PC <G @:>? B?DG?PC?N- . eLlLloners fall Lo esLabllsh any deflnlLe
agreemenL or meeLlng of Lhe mlnd as regards Lhe prlce or Lerm of paymenL.
eLlLloner's accepLance of Lhe offer was quallfled, whlch amounLs Lo a re[ecLlon of
Lhe orlglnal offer.

5.!C:CFC? <G SD:FN@- eLlLloner clalms as proof of perfecLed conLracL of sale
beLween lL and respondenL 8l were noL subscrlbed by Lhe parLy charged, l.e. 8l,
Lhus dld noL consLlLuLe Lhe memoranda or noLes LhaL Lhe law speaks of.

arLlal erformance
arLlal performance ls noL llmlLed Lo Lhe glvlng of money. ConLracLs
covered by Lhe SLaLuLe of lrauds are raLlfled by accepLance of beneflLs
under Lhem. (ArL. 1403)
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

41
Powever, dellvery of Lhe deed Lo Lhe buyer wlLhouL lnLenLlon on Lhe parL
of Lhe seller Lo parL wlLh Lhe LlLle unLll purchase prlce ls pald does noL
consLlLuLe parLlal performance. 8otetto v. Moollo kolltooJ co. (46 lbll.
964)
arLlal performance of a sale of real properLy wlll Lake lL ouL of Lhe SLaLuLe
of lrauds even lf Lhe formal requlremenLs (l.e. lL musL be ln wrlLlng) are noL
complled wlLh, as long as Lhe essenLlal requlslLes of sale are presenL. vJo.
ue Iomoc v. cA (200 5ckA 74)
1he SLaLuLe of lrauds only applles Lo execuLory conLracLs. Where one parLy
has performed hls obllgaLlon, oral evldence wlll be admlLLed Lo prove Lhe
agreemenL. AlfteJo v. 8ottos (404 5ckA 145) (noLe Lhe dlfference wlLh Lhe
admlsslblllLy of parol evldence ln Lhe LlmkeLkal case, sopto.)
)1'75"5 C+#-",' 8: )1'75"5 K'--"5
S:PC@: Spouses Alfredo sold a land Lo Spouses 8orres, Lhe laLLer wlll pay Lhe u8
loan of Lhe former and Lhe balance wlll be pald ln cash. Carmen Alfredo lssued a
recelpL for Lhe paymenL. Alfredos Lhen dellvered Lhe CC1 284, along wlLh documenL
of cancellaLlon of morLgage, offlclal recelpLs of realLy Lax paymenLs Lo Adella.
Powever, 8orreses dlscovered LhaL Lhe Alfredos had re-sold porLlons of Lhe sub[ecL
land Lo several persons.

'@@F?: WCn sale of land ln favor of 8orreses ls valld even lf orally enLered. (?LS)
WCn SLaLuLe of lrauds ls appllcable (nC)

*:CL<: ConLracL of Sale was a perfecLed conLracL. 1he conLracL was also
consummaLed because boLh parLles have performed Lhelr respecLlve obllgaLlons.
SCl does noL apply because Lhere ls a memorandum of sale, 8ecelpL ls consldered a
memorandum of sale. Sol only applles Lo execuLory conLracLs, noL ones LhaL have
been parLlally/LoLally performed.

LffecL of arLlal LxecuLlon on 1hlrd arLles
Sale of real properLy whlch are noL ln wrlLlng buL are parLlally execuLed sLlll
do noL blnd Lhlrd parLles.
lormal requlremenLs are for Lhe beneflL of Lhlrd parLles. non-compllance
does noL affecL Lhe valldlLy of Lhe conLracL. lole v. cA (286 5ckA 698)
lf a Lhlrd parLy dlspuLes Lhe ownershlp of Lhe properLy, Lhe person agalnsL
whom LhaL clalm ls broughL cannoL presenL any proof of such sale and
hence, has no means Lo enforce Lhe conLracL. 1hus, Lhe SLaLuLe of lrauds ls
for Lhe beneflL of Lhe parLles ln Lhe sale. clooJel v. cA (199 5ckA 11J)
o 1he clooJel rullng conflrms Lhe varlance ln prlnclples lnvolvlng
movables and lmmovables. ArL. 1403 LreaLs parLlal execuLlon as
appllcable only Lo goods and chaLLel."
o lor movables, mere possesslon ls enough Lo glve a presumpLlon
of ownershlp (ArL. 339). lor lmmovables, a 1orrens LlLle ls needed.
o noLe Lhe dlfference ln Lhe rullng of clooJel and vJo. ue Iomoc.
1he conLrolllng docLrlne ls LhaL of vJo. ue Iomoc: parLlal
performance ln sales of real properLy Lakes lL ouL of Lhe SLaLuLe of
lrauds. Powever, lL ls sLlll Lhe reglsLraLlon ln Lhe 8eglsLry of ueeds
whlch wlll blnd Lhlrd parLles.
o clooJel shows Lhe effecL of havlng a sale of real properLy whlch
lsn'L reduced Lo wrlLlng. 1hus, lL emphaslzes Lhe lmporLance of
Lhe SLaLuLe of lrauds. (clooJel was declded based on prescrlpLlon,
noL accordlng Lo Lhe SLaLuLe of lrauds.)
8ellance on LesLlmony of wlLnesses as secondary evldence Lo prove a sale
of real properLy wlll noL prosper because such a sale musL be evldenced by
a wrlLLen lnsLrumenL when lL lnvolves Lhlrd parLles. Albo vJo. ue kox v. cA
(J14 5ckA J6)
looJtes v. cA (J94 5ckA 1JJ) summarlzed Lhe rullngs on Lhe maLLer:
o ArL. 1338 ls only for convenlence
o 8eglsLraLlon of Lhe lnsLrumenL ls needed only Lo adversely affecL
Lhlrd parLles
o non-compllance wlLh formal requlremenLs does noL affecL valldlLy
ln Lhe 1orrens sysLem, execuLlon of a publlc documenL ls noL enough Lo
blnd Lhlrd persons. 8eglsLraLlon wlLh Lhe 8eglsLry of ueeds ls Lhe operaLlve
acL. 5ecoyo v. vJo. ue 5elmo (J26 5ckA 144)
Y7+" 8: ;C
S:PC@E lule offered Lo sell hls land Lo ur. Cruz for Lhe prlce of 40,000 and her
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

42
emerald cuL dlamond earrlngs (worLh 160k). 1hey meL aL Lhe safeLy deposlL box of
ur. Cruz and lule examlned Lhe sald [ewelry. Pe nodded and Look Lhe earrlngs. 1wo
hours afLer, he complalned Lo ALLy. 8elarmlno and ur. Cruz LhaL Lhe [ewelry glven Lo
hlm was a fake. Pe prayed for Lhe annulmenL of Lhe conLracL on Lhe ground of
vlLlaLed consenL Lhrough fraud.

'@@F?E WheLher or noL Lhe sale was lnvalld due Lo fraud

]?>NE no. 1here was no fraud on Lhe parL of Lhe prlvaLe respondenLs. ln facL, lL was
Lhe peLlLloner Lhrough hls agenLs who led ur.Cruz Lo belleve LhaL Lhe properLles
were worLh 400,000 Lhen supposedly dlscounLed lL Lo 200,000 Lo lnduce her Lo
exchange Lhe properLy. All elemenLs were presenL a) consenL b) sub[ecL maLLer and
c) prlce. 1he land was consLrucLlvely dellvered vla deed of absoluLe sale and Lhe
earrlngs Lransferred ownershlp when he lefL Lhe 8ank LhaL day. 1hus, conLracL can
no longer be dlspuLed.

;+*7,"+ 8: ;C
S:PC@: Ceclllo Claudel's helrs and slbllngs clalmed LlLle Lo Lhe land. Slbllngs clalm LhaL
sub[ecL loL was sold Lo Lhelr parenLs by Ceclllo Lhrough an oral conLracL. 1helr proof
of sale ls a subdlvlslon plan of Lhe sald land.
'@@F?: 1.WheLher or noL a conLracL of sale of land may be proven orally (nC)
2. rescrlpLlve perlod for flllng an acLlon for cancellaLlon of LlLles and
reconveyance wlLh damages
*:CL<: ConLracLs of sale are valld regardless of Lhe form lL may have been enLered
lnLo excepL when Lhlrd parLy, dlspuLes Lhe ownershlp of Lhe properLy, Lhe person
agalnsL whom LhaL clalm ls broughL cannoL presenL any proof of such sale and
hence has no means Lo enforce Lhe conLracL. As Lo Lhe prescrlpLlon ,Clvll Code saLes
LhaL under ArL. 1143, acLlons regardlng oral conLracLs musL be commenced wlLhln 6
years.

)"274* 8: N,*: !" )"+.*
S:PC@E Maxlma Caballera, Lhrough an agreemenL of parLlLlon, alloLLed LoL 3679 Lo
aclencla Sabellona. 1he laLLer Lhen sold her share Lo Secuya. ue Selma clalms LhaL
she owns Lhe whole loL, lncludlng Lhe porLlon boughL by Secuya, presenLlng a 1C1
and a deed of sale execuLed by Cesarla Caballero.

'@@F?E WheLher or noL Secuya's own Lhe Lhe properLy

]?>NE no. 1he AgreemenL ls noL one of parLlLlon, because Lhere was no properLy Lo
parLlLlon and Lhe parLles were noL co-owners. 8aLher, lL ls ln Lhe naLure of a LrusL
agreemenL. As a resulL of Lhe AgreemenL, Maxlma Caballero held Lhe porLlon
speclfled Lhereln as belonglng Lo aclencla Sabellona when Lhe appllcaLlon was
evenLually approved and a sale cerLlflcaLe was lssued ln her name.1hus, she should
have Lransferred Lhe same Lo Lhe laLLer, buL she never dld so durlng her llfeLlme.

eLlLloners lnslsL LhaL aclencla sold Lhe dlspuLed properLy Lo ualmaclo Secuya
embodled ln a prlvaLe documenL. Powever, such documenL, whlch would have
been Lhe besL evldence of Lhe LransacLlon, was never presenLed ln courL, allegedly
because lL had been losL. Whlle a sale of a plece of land appearlng ln a prlvaLe deed
ls blndlng beLween Lhe parLles, lL cannoL be consldered blndlng on Lhlrd persons, lf
lL ls noL embodled ln a publlc lnsLrumenL and recorded ln Lhe 8eglsLry of roperLy

naLure and Coverage of arLlal erformance
arLlal paymenL of Lhe purchase prlce ls noL Lhe only manner of parLlal
performance.
CLher modes of parLlal performance: Otteqo v. leoootJo (10J lbll. 870)
o ossesslon
o Maklng of lmprovemenLs
o 8endlLlon of servlces
o aymenL of Laxes
o 8ellnqulshmenL of rlghLs
8equlslLes of parLlal performance:
o MusL perLaln Lo Lhe sub[ecL maLLer or Lhe prlce of Lhe sale
o MusL lnvolve an acL or compllclLy" on Lhe parLy soughL Lo be
charged
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

43
arLlal performance musL amounL Lo esLoppel agalnsL Lhe parLy soughL Lo
be charged.
A-&"0* 8: L"'%*-,'
S:PC@ : Leonardo made a deal wlLh CrLega Lo deslsL from presslng her clalm and
promlsed LhaL he would sell Lo her a porLlon of Lhe loL ptovlJeJ she pald for Lhe
surveylng and subdlvlslon of Lhe LoL and ptovlJeJ fottbet LhaL afLer he acqulred
LlLle, she could conLlnue holdlng Lhe loL as LenanL by paylng a monLhly renLal.
CrLega accepLed Lhe offer. uefendanL acqulred LlLle. CrLega Lendered Lo Leonardo
Lhe purchase prlce for Lhe loL, whlch Lhe laLLer refused Lo accepL, wlLhouL cause or
reason. Alleglng parLlal performance, plalnLlff soughL Lo compel defendanL Lo
comply wlLh Lhelr oral conLracL of sale of a parcel of land.

'@@F?: WCn Lhe parLlal performance of a sale of conLracL occurs only when parL of
Lhe purchase prlce ls pald (nC)

*:CL<: Amerlcan !urlsprudence enumeraLes oLher acLs of parLlal performance (l.e.
conLlnuance ln possesslon, maklng of valuable permanenL lmprovemenLs on Lhe
land, Lender or offer of paymenL, rellnqulshmenL of rlghLs). 1he complalnL ln Lhls
case descrlbed several clrcumsLances lndlcaLlng parLlal performance. Pence, Lhere
was parLlal performance and Lhe prlnclple excludlng parol conLracLs for Lhe sale of
realLy, does noL apply.

Walver of rovlslons of SLaLuLe of lrauds
1hls ls Lhe Lhlrd ground whlch Lakes a conLracL ouL of Lhe SLaLuLe of lrauds.
When a parLy falls Lo ob[ecL durlng Lrlal Lo Lhe presenLaLlon of oral
evldence Lo prove Lhe conLracL, he ls deemed Lo have walved Lhe defecLs
of Lhe conLracL. 1hus, Lhe conLracL wlll be enforceable. (ArL. 1403
17
)

17
ArL. 1403 - ConLracLs lnfrlnglng Lhe SLaLuLe of lrauds, referred Lo ln no. 2 of ArLlcle 1403, are raLlfled
by fallure Lo ob[ecL Lo Lhe presenLaLlon of oral evldence Lo prove Lhe same, or by Lhe accepLance of
beneflLs under Lhem.
Cross-examlnaLlon on Lhe conLracL ls deemed a walver of Lhe defense of
Lhe SLaLuLe of lrauds.
value of 8uslness lorms Lo rove Sale
8uslness forms (e.g. recelpLs, order sllps, eLc.) lssued by Lhe seller are noL
always fully accompllshed Lo conLaln all Lhe necessary lnformaLlon
descrlblng Lhe buslness LransacLlon.
1hey serve as an acknowledgemenL LhaL a buslness LransacLlon dld Lake
place.
8y Lhemselves, Lhey are lnadequaLe Lo esLabllsh Lhe case for Lhe vendor.
1helr probaLlve value musL be evaluaLed ln con[uncLlon wlLh oLher
evldence.
D'4'&* )/*E 8: ;C
S:PC@: Luna Sosa and opong 8ernardo, a sales represenLaLlve execuLed a documenL
enLlLled AgreemenLs beLween Sosa & opong 8ernardo of 1oyoLa Shaw" for Lhe
purchase of a 1oyoLa LlLe Ace. A 100,000.00 down paymenL was sLlpulaLed and
LhaL Lhe LlLe Ace would be avallable aL Lhe glven daLe, wlLh 8ernardo guaranLeelng
LhaL Lhe vehlcle would be dellvered. AL Lhe glven daLe of dellvery, LlLe Ace was
unavallable. Sosa sued for damages.

'@@F?: WCn Lhere was a perfecLed conLracL of sale - nC

*:CL<: no perfecLed conLracL of sale. 1here was no agreemenL as Lo Lhe prlce and
Lhe manner of paymenL - w/c are boLh essenLlal Lo Lhe perfecLlon of Lhe sale.

!:>?@ $GG?PC?N :@ $>?PCD<=LP 3<QQ?DP? d*.". JbV5e
1he maln polnL of Lhls enLlre secLlon ln Lhe book ls Lhls: elecLronlc
documenLs are glven Lhe same legal recognlLlon as paper documenLs.
1hus, Lhey are admlsslble as evldence ln courL.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

44
S<DQ L= $_FLC:K>? &<DCM:M? 3>:LQ@
1he SLaLuLe of lrauds does noL sLand ln Lhe way of LreaLlng an absoluLe
deed of sale as a morLgage, when such was Lhe lnLenLlon of Lhe parLles.
coyoqoo v. 5ootos (J4 lbll. 100)
A conLracL should be consLrued as a morLgage or a loan lnsLead of a pocto
Je tetto sale when lLs Lerms are amblguous or Lhe clrcumsLances
surroundlng lLs execuLlon or lLs performance are lncompaLlble wlLh a sale.
arol evldence becomes admlsslble Lo prove LhaL Lhe lnsLrumenL was
lnLended Lo be a securlLy for a loan. lopot v. kosotlo (J12 5ckA 5J9)
An equlLable morLgage ls noL dlfferenL from a real esLaLe morLgage, and
Lhe llen creaLed Lhereby oughL noL Lo be defeaLed by requlrlng compllance
wlLh Lhe formallLles necessary Lo Lhe valldlLy of a volunLary real esLaLe
morLgage. kosoles v. 5obo (408 5ckA 664)
S<DQ L= [!:>?@ <= *?CFD= <D "BBD<R:>\
"DC. 7I65
When goods are dellvered Lo Lhe buyer on sale or reLurn" Lo glve Lhe buyer an
opLlon Lo reLurn Lhe goods lnsLead of paylng Lhe prlce, Lhe ownershlp passes Lo Lhe
buyer on dellvery, buL he may revesL Lhe ownershlp ln Lhe seller by reLurnlng or
Lenderlng Lhe goods wlLhln Lhe Llme flxed ln Lhe conLracL, or, lf no Llme has been
flxed, wlLhln a reasonable Llme. (n)
When goods are dellvered Lo Lhe buyer on approval or on Lrlal or on saLlsfacLlon, or
oLher slmllar Lerms, Lhe ownershlp Lhereln passes Lo Lhe buyer:
(1) When he slgnlfles hls approval or accepLance Lo Lhe seller or does any oLher acL
adopLlng Lhe LransacLlon,
(2) lf he does noL slgnlfy hls approval or accepLance Lo Lhe seller, buL reLalns Lhe
goods wlLhouL glvlng noLlce of re[ecLlon, Lhen lf a Llme has been flxed for Lhe reLurn
of Lhe goods, on Lhe explraLlon of such Llme, and, lf no Llme has been flxed, on Lhe
explraLlon of a reasonable Llme. WhaL ls a reasonable Llme ls a quesLlon of facL. (n)
1he CourL has held LhaL Lhe condlLlons ln ArL. 1302 wlll only apply lf Lhere
ls an express sLlpulaLlon LhaL Lhe sale ls elLher a sale on reLurn" or a sale
on approval." loJosttlol 1extlle Mooofoctotloq compooy of tbe lbll., loc. v.
llI otetptlses, loc. (217 5ckA J22)
arol evldence wlll noL be admlLLed Lo prove LhaL a sale was a sale on
reLurn" or sale on approval."
1he buyer cannoL accepL parL of Lhe goods and re[ecL Lhe resL.
*LMAC <G SLD@C *?GF@:> &F@C 4? 3<=C:L=?N L= ,DLCC?= 3<=CD:PC
verbal granLs of such rlghL are noL enforceable. ln effecL, Lhls ls an addlLlon
Lo Lhe SLaLuLe of lrauds. 5eo lo k Motketloq cotp. v. Mottloez (J25 5ckA
210)
V/"% )*+" ;'.1+"&"+4 )$.7+*&",
When a sale ls absoluLely slmulaLed, lL ls compleLely vold and non-exlsLenL.
lf Lhe parLles enLer lnLo a sale Lo whlch Lhey dld noL lnLend Lo be legally
bound, Lhe conLracL ls vold and noL suscepLlble Lo raLlflcaLlon. kosotlo v. cA
(J10 5ckA 464)
lallure of Lhe buyers Lo Lake possesslon of Lhe properLy or Lo collecL
renLals ls conLrary Lo Lhe prlnclple of ownershlp. lL shows slmulaLlon whlch
renders Lhe whole LransacLlon vold. 5ootloqo v. cA (278 5ckA 98)
AlLhough Lhe agreemenL Lo sell dld noL absoluLely Lransfer ownershlp of
Lhe land Lo Lhe buyer, Lhe CourL held LhaL lL dld noL show LhaL Lhe
agreemenL was slmulaLed. uellvery of Lhe cerLlflcaLe of ownershlp and Lhe
execuLlon of Lhe deed of sale were suspenslve condlLlons whlch gave rlse
Lo Lhe obllgaLlon Lo pay Lhe lasL lnsLallmenLs. vllloflot v. cA (280 5ckA 297)
SlmulaLlon" - declaraLlon of a flcLlLlous wlll, made by agreemenL of Lhe
parLles, ln order Lo produce, for Lhe purposes of decepLlon, Lhe
appearance of a [urldlcal acL whlch does noL exlsL or ls dlfferenL from whaL
was really execuLed. loyolo v. cA (J26 5ckA 285)
ln slmulaLed conLracLs, Lhe parLles do noL lnLend Lo be bound by Lhe
conLracL and Lhe apparenL conLracL ls noL really deslred or lnLended Lo
produce legal effecL.
8equlslLes of slmulaLlon: (uMu)
o CuLward declaraLlon of wlll dlfferenL from Lhe wlll of Lhe parLles,
o lalse appearance lnLended by muLual agreemenL
o urpose ls Lo decelve Lhlrd persons
1he allegaLlon LhaL a slgnaLure ls forged musL be proven by clear, poslLlve
and convlncln evldence. k.l. Novotto & co. v. volloces (J61 5ckA 1J9)
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

43
When a sale ls vold, Lhe rlghL Lo seL up lLs nulllLy or non-exlsLence ls
avallable Lo Lhlrd persons who are affecLed.
AcLlon for declaraLlon of nulllLy ls llkewlse avallable. lL does noL prescrlbe.
Accloo poollooo ls also avallable when Lhe sub[ecL maLLer ls a conveyance
underLaken ln fraud of credlLors.
#:; <= !:>?@
3A:BC?D Z ` /?DG<DQ:=P? <D 3<=@FQQ:CL<= <G !:>?
A9+$0*&$'%5 '# )"++"-
)< /D?@?DR? CA? !FKO?PC &:CC?D
"DC. 77Z9.
$R?DU B?D@<= <K>LM?N C< MLR? @<Q?CAL=M L@ :>@< <K>LM?N C< C:T? P:D? <G LC
;LCA CA? BD<B?D NL>LM?=P? <G : M<<N G:CA?D <G : G:QL>UW F=>?@@ CA? >:; <D
CA? @CLBF>:CL<= <G CA? B:DCL?@ D?_FLD?@ :=<CA?D @C:=N:DN <G P:D?. d76VH:e
ln Lhe sale of a deLermlnaLe ob[ecL, Lhe obllgaLlon of Laklng care of Lhe
sub[ecL maLLer arlses upon perfecLlon, even before dellvery. CLherwlse,
Lhe seller ls llable for breach.
lL ls an obllgaLlon Lo do."
)< (?>LR?D CA? !FKO?PC &:CC?D
"DC. 7HVI.
)A? R?=N<D L@ K<F=N C< CD:=@G?D CA? <;=?D@ALB <G :=N N?>LR?DW :@ ;?>> :@
;:DD:=C CA? CAL=M ;ALPA L@ <KO?PC <G CA? @:>?. d7HZ7:e
1ransfer of ownershlp ls effecLed by dellvery, acLual or consLrucLlve.
lf Lhere ls no express sLlpulaLlon LhaL LlLle shall noL pass unLll paymenL of
prlce, and Lhe Lhlng sold has been dellvered, ownershlp passes from Lhe
momenL Lhe Lhlng sold ls placed ln Lhe possesslon and conLrol of Lhe buyer.
aymenL of prlce does noL deLermlne Lhe effecL of dellvery. koeozle &
5ttelff v. wotsoo & co. (1J lbll 26)
uellvery Lransfers ownershlp lpso jote, wlLhouL pre[udlce Lo Lhe rlghL of Lhe
seller Lo clalm paymenL of Lhe prlce. Ocejo, letez & co. v. lotetootloool
8ookloq cotp. (J7 lbll. 6J1)

)< (?>LR?D CA? SDFLC@ :=N "PP?@@<DL?@
"DC. 77ZH.
)A? PD?NLC<D A:@ : DLMAC C< CA? GDFLC@ <G CA? CAL=M GD<Q CA? CLQ? CA?
<K>LM:CL<= C< N?>LR?D LC :DL@?@. ]<;?R?DW A? @A:>> :P_FLD? =< D?:> DLMAC <R?D
LC F=CL> CA? @:Q? A:@ K??= N?>LR?D?N C< ALQ. d76VIe
"DC. 7I9b.
)A? R?=N<D L@ K<F=N C< N?>LR?D CA? CAL=M @<>N :=N LC@ :PP?@@L<=@ :=N
:PP?@@<DL?@ L= CA? P<=NLCL<= L= ;ALPA CA?U ;?D? FB<= CA? B?DG?PCL<= <G CA?
P<=CD:PC.
">> CA? GDFLC@ @A:>> B?DC:L= C< CA? R?=N?? GD<Q CA? N:U <= ;ALPA CA?
P<=CD:PC ;:@ B?DG?PC?N. d7HZJ:e
ln a sale lnvolvlng a deLermlnaLe sub[ecL maLLer, even prlor Lo dellvery of
ownershlp Lhereof Lo Lhe buyer, Lhe buyer already has cerLaln rlghLs
enforceable agalnsL Lhe seller.
)< ,:DD:=C CA? !FKO?PC &:CC?D
lease see dlscusslons ln Chap. 12.
D-*,$&$'% *5 * ;'%5"67"%2" '# * N*+$, )*+"
$@@?=P? <G )D:NLCL<=
"DC. 7HVZ.
)A? <;=?D@ALB <G CA? CAL=M @<>N L@ :P_FLD?N KU CA? R?=N?? GD<Q CA?
Q<Q?=C LC L@ N?>LR?D?N C< ALQ L= :=U <G CA? ;:U@ @B?PLGL?N L= "DCLP>?@ 7HVb
C< 7I67W <D L= :=U <CA?D Q:==?D @LM=LGUL=M := :MD??Q?=C CA:C CA?
B<@@?@@L<= L@ CD:=@G?DD?N GD<Q CA? R?=N<D C< CA? R?=N??.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

46
1here ls dellvery lf and when Lhe Lhlng sold ls placed ln Lhe conLrol and
possesslon of Lhe vendee. uellvery ls a composlLe acL, ln whlch boLh
parLles musL [oln and Lhe mlnds of boLh parLles concur. poototlol keolty
uev., loc. v. Moyfolt 1beotet, loc. (J70 5ckA 56)
1radlLlon produces lLs legal consequences from Lhe facL LhaL dellvery ls
effecLed pursuanL Lo a valld sale. 1here ls no Lransfer of ownershlp by Lhe
execuLlon of a deed of sale merely lnLended Lo accommodaLe Lhe buyer Lo
enable hlm Lo generaLe funds for hls buslness.
"PCF:> (?>LR?DU
"DC. 7HVb.
)A? CAL=M @<>N @A:>> K? K? F=N?D@C<<N :@ N?>LR?D?NW ;A?= LC L@ B>:P?N L= CA?
P<=CD<> :=N B<@@?@@L<= <G CA? R?=N??. d7HZ5:e
AlLhough possesslon ls Lhe besL gauge when Lhere ls conLrol, noneLheless
conLrol can Lake oLher forms oLher Lhan acLual physlcal possesslon.
o ln a case, Lhe loL was consldered Lo be ln Lhe buyer's conLrol when
Lhe buyer subsequenLly flled an e[ecLmenL sulL agalnsL someone.
lowet commetclol ooJ loJosttlol cotp. v. cA (274 5ckA 597)
>'E"- ;'.."-2$*+ *%, 3%,75&-$*+ ;'-1: 8: ;C
S:PC@E ClC boughL a properLy from spouses Culambao. ClC also assumed
morLgage on Lhe land ln favor of n8. Spouses agaln morLgaged Lhe land Lo n8 Lo
guaranLee a loan. ClC assumed Lhls morLgage also, so parLles execuLed a ueed of
AbsoluLe Sale wlLh AssumpLlon of MorLgage, along wlLh Lhe appllcaLlon for
assumpLlon of morLgage, Lo n8. ClC flled for resclsslon of Lhe conLracL for
Culambaos' fallure Lo e[ecL Lhe lessees and Lransfer physlcal possesslon Lo Lhem.
uurlng Lhe pendency of Lhe case, Lhe morLgage was foreclosed and n8 was Lhe
hlghesL bldder aL Lhe publlc aucLlon.
'@@F?@E W/n Lhe conLracL may be resclnded due Lo a subsLanLlal breach of Lhe
conLracL-fallure Lo e[ecL LenanLs and vlolaLlon of warranLy agalnsL evlcLlon. --- nC
]?>NE uellvery can be acLual or consLrucLlve. Symbollc dellvery, as a specles of
consLrucLlve dellvery, may be prevenLed lf Lhe vendor does noL possess conLrol over
Lhe Lhlng sold, ln whlch case Lhls legal flcLlon musL yleld Lo reallLy. Pere, Lhe loL had
been placed ln ClC's conLrol. 1haL's why Lhey were able Lo flle Lhe e[ecLmenL cases
subsequenLly. Slnce e[ecLmenL of lessees was noL sLlpulaLed as a condlLlon, lL
cannoL be lnvoked as a cause Lo allow ClC Lo resclnd lLs conLracL. ln facL, ClC was
aware of Lhe presence of Lhe LenanLs when lL enLered lnLo Lhe conLracL of sale
hence lL assumed Lhe rlsks of ownershlp and possesslon.

3<=@CDFPCLR? (?>LR?DU
1he essence of mosL forms of consLrucLlve dellvery ls Lhe exlsLence of an
agreemenL beLween Lhe seller and Lhe buyer, and LhaL Lhe laaLLer ls
undersLood Lo have conLrol of Lhe sub[ecL maLLer of Lhe sale.
LxecuLlon of ubllc lnsLrumenL
"DC. 7HVJ.
,A?= CA? @:>? L@ Q:N? CAD<FMA : BFK>LP L=@CDFQ?=CW CA? ?X?PFCL<= CA?D?<G
@A:>> K? ?_FLR:>?=C C< CA? N?>LR?DU <G CA? CAL=M ;ALPA L@ CA? <KO?PC <G CA?
P<=CD:PCW LG GD<Q CA? N??N CA? P<=CD:DU N<?@ =<C :BB?:D <D P:==<C P>?:D>U
K? L=G?DD?N.
,LCA D?M:DN C< Q<R:K>? BD<B?DCUW LC@ N?>LR?DU Q:U :>@< K? Q:N? KU CA?
N?>LR?DU <G CA? T?U@ <G CA? B>:P? <D N?B<@LC<DU ;A?D? LC L@ @C<D?N <D T?BC.
d7HZ9:e
"DC. 7HJb.
)A? ?XB?=@?@ G<D CA? ?X?PFCL<= :=N D?ML@CD:CL<= <G CA? @:>? @A:>> K? K<D=?
KU CA? R?=N<DW F=>?@@ CA?D? L@ : @CLBF>:CL<= C< CA? P<=CD:DU. d7HII:e
!urlsprudence has held LhaL a noLarlzed deed of sale has Lwo funcLlons:
1. lL operaLes as a formal or symbollc dellvery of Lhe properLy sold
2. lL auLhorlzes Lhe buyer Lo use Lhe documenL as proof of
ownershlp
ConsLrucLlve dellvery has Lhe same legal effecL as acLual or physlcal
dellvery. Moolclpollty of vlctotlos v. cA (149 5ckA J1)
rlor physlcal possesslon lL noL legally requlred slnce Lhe mere execuLlon of
Lhe deed of conveyance ln a publlc lnsLrumenL ls equlvalenL Lo Lhe dellvery
of Lhe properLy. 5oblo v. lotetootloool cotpotote 8ook (J64 5ckA J85)
ConLrol ls sLlll necessary. lf a publlc documenL was execuLed, buL Lhe buyer
ls noL placed ln conLrol of Lhe properLy, Lhere ls only a rebuLLable
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

47
presumpLlon of dellvery whlch can be rebuLLed by clear and convlnclng
evldence. 5ootos v. 5ootos (J66 5ckA J95)
)*%&'5 8: )*%&'5
S:PC@E !esus and 8osalla SanLos execuLed a deed of sale of a properLy ln favor of
Salvador and 8osa. 8osalla conLlnued Lo lease and recelve renLals from Lhe
aparLmenL unlLs. !esus, 8osalla and Salvador dled. Zenalda, Salvador's wlfe,
demanded renL from AnLonlo, 8osalla's LenanL. Pe refused. 8osalla's slbllngs flled
for reconveyance of Lhe properLy alleglng LhaL Lhe deed of sale was slmulaLed for
lack of conslderaLlon.
'@@F?E ls a sale Lhough a publlc lnsLrumenL LanLamounL Lo dellvery of Lhe Lhlng sold?
--- nC
]?>NE 1here ls noLhlng ln ArLlcle 1498 LhaL provldes LhaL execuLlon of a deed of sale
ls a concluslve presumpLlon of dellvery of possesslon, presumpLlve dellvery can be
negaLed by Lhe fallure of Lhe vendee Lo Lake acLual possesslon of Lhe land or Lhe
conLlnued en[oymenL of possesslon by Lhe vendor. lor Lhe execuLlon of a publlc
lnsLrumenL Lo effecL LradlLlon, Lhe purchaser musL be placed ln conLrol of Lhe Lhlng
sold. 1o effecL dellvery, Lhere musL be Lhe acLual lnLenLlon of Lhe vendor Lo dellver,
and lLs accepLance by Lhe vendee.

Cases where execuLlon of publlc lnsLrumenL coverlng valld sales do noL
produce Lhe effecLs of LradlLlon:
1. When Lhere ls a conLrary sLlpulaLlon. lbll. 5obotboo uev. v.
AoJltot (6J 5ckA J97)
2. AL Lhe Llme of Lhe execuLlon of Lhe publlc lnsLrumenL, Lhe sub[ecL
maLLer was noL sub[ecL Lo Lhe conLrol of Lhe seller. AJJlsoo v. lellx
(J8 lbll. 404)
a. Powever, lf Lhere was an express agreemenL LhaL Lhe
buyer had Lo Lake necessary sLeps Lo obLaln maLerlal
possesslon, and lL was proven LhaL Lhe buyer knew Lhe
sub[ecL maLLer Lo be ln possesslon of a Lhlrd parLy, such
agreemenL ls valld. 1he seller ls deemed Lo have
complled wlLh hls obllgaLlon Lo dellver by Lhe execuLlon
of Lhe publlc lnsLrumenL.
3. noL only musL Lhe seller have conLrol aL Lhe execuLlon of Lhe
lnsLrumenL, such conLrol or ablllLy Lo Lransfer physlcal posseslon
musL subslsL for a reasonable lengLh of Llme. losoqol v.
vllloblooco (68 5ckA 18)
C,,$5'% 8: Y"+$?
S:PC@E Spouses Marclana lellx and 8alblno 1loco boughL 4 parcels of land from A. A.
Addlson. lellx pald aL Lhe Llme of execuLlon 3000 and Lhe manner of paymenL for
subsequenL lnsLallmenLs were sLlpulaLed by Lhe parLles. 1he conLracL also provlded
for a sLlpulaLlon for resclsslon wlLhln 1 year from Lhe lssuance of LlLle Lo Lhe
properLy, and shall effecL resLlLuLlon among Lhe parLles. Addlson flled a sulL ln Lhe
Cll of Manlla clalmlng Lhe flrsL lnsLallmenL of 2000. uefendanLs conLesLed LhaL Lhe
properLy was noL dellvered, hence Lhey asked for a refund.
'@@F?: W/n Lhere was dellvery and, Lherefore, a Lransfer of ownershlp of Lhe Lhlng
sold. --- nC
]?>NE 1he Lhlng ls consldered Lo be dellvered when lL ls placed "ln Lhe hands and
possesslon of Lhe vendee." (ArL. 1462). lL ls Lrue LhaL Lhe same arLlcle declares LhaL
Lhe execuLlon of a publlc lnsLrumenLs ls equlvalenL Lo Lhe dellvery of Lhe Lhlng
whlch ls Lhe ob[ecL of Lhe conLracL, buL, ln order LhaL Lhls symbollc dellvery may
produce Lhe effecL of LradlLlon, lL ls necessary LhaL Lhe vendor shall have had such
conLrol over Lhe Lhlng sold LhaL, aL Lhe momenL of Lhe sale, lLs maLerlal dellvery
could have been made. lL ls noL enough Lo confer upon Lhe purchaser Lhe
ownershlp and Lhe rlghL of possesslon. 1he Lhlng sold musL be placed ln hls conLrol.

!*%07$+*% 8: 3C;
S:PC@E Apolonla flled a complalnL agalnsL uangullan for recovery of Lwo loLs. She
clalmed Lo have purchased Lhese loLs from uomlngo Melad and moved ouL because
uangullan asked lf he could culLlvaLe Lhe lands. uomlngo clalms uomlngo slgned
prlvaLe lnsLrumenLs conveylng sald properLles on Lhe undersLandlng LhaL Lhe laLLer
would Lake care of Lhe granLor and arrange for hls burlal.
'@@F?E Who has a beLLer clalm Lo Lhe properLy? --- uangullan
]?>NE Apolonla falled Lo show LhaL she consummaLed Lhe conLracL of sale by acLual
dellvery of Lhe properLles Lo her, and her acLual possesslon Lhereof ln concepL of
owner. Such conLrol should remaln wlLhln a reasonable perlod afLer Lhe execuLlon
of Lhe lnsLrumenL.

>*5*07$ 8: N$++*9+*%2*
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

48
S:PC@E CallxLo asagul and lausLa Mosar purchased land from LusLaqula and
CaLallna 8ocar for 2,800.00. 1he sale was embodled ln a publlc lnsLrumenL.
Powever, Lhey falled Lo Lake possesslon of Lhe properLy because Spouses
vlllablanca lllegally Look possesslon of Lhe properLy and harvesLed coconuLs Lhereln.
As such, asagul flled a case for e[ecLmenL agalnsL Lhe vlllablancas.
'@@F?E W/n Lhere was consLrucLlve dellvery upon Lhe execuLlon of Lhe publlc
lnsLrumenL. - nC.
]?>NE 1he seller musL have acLual conLrol of Lhe ob[ecL of sale aL Lhe Llme of Lhe
execuLlon of Lhe lnsLrumenL, and such conLrol/ablllLy Lo Lransfer physlcal possesslon
musL subslsL for a reasonable amounL of Llme afLer Lhe execuLlon of Lhe lnsLrumenL.
asagul had noL yeL acqulred physlcal possesslon of Lhe land because no dellvery
was ever made by Lhe seller, even by consLrucLlve dellvery LhaL proves acLual
possesslon and conLrol.

1he reglsLraLlon of a ueed of Sale lnvolvlng land wlLh Lhe 8eglsLry of ueeds
ls necessary only Lo blnd 3
rd
parLles. As beLween Lhe buyer and seller,
ownershlp ls Lransferred by Lhe execuLlon of Lhe publlc documenL. cboo v.
cA (401 5ckA 54)
"DC. 7HVV.
)A? N?>LR?DU <G Q<R:K>? BD<B?DCU Q:U >LT?;L@? K? Q:N? KU CA? Q?D?
P<=@?=C <D :MD??Q?=C <G CA? P<=CD:PCL=M B:DCL?@W LG CA? CAL=M @<>N P:==<C
K? CD:=@G?DD?N C< CA? B<@@?@@L<= <G CA? R?=N?? :C CA? CLQ? <G CA? @:>?W <D LG
CA? >:CC?D :>D?:NU A:N LC L= AL@ B<@@?@@L<= G<D :=U <CA?D D?:@<=. d7HZ9:e
When lL comes Lo a Lhlrd-parLy and Lhe lssue cenLers on Lhe LlLle or
ownershlp of Lhe sub[ecL maLLer, consLrucLlve dellvery by Lhe execuLlon of
a publlc lnsLrumenL would produce Lhe effecL of LradlLlon, buL only lnsofar
as LlLle ls concerned, provlded LhaL aL Lhe Llme of Lhe execuLlon Lhere was
no legal lmpedlmenL on Lhe parL of Lhe seller Lo Lransfer LlLle Lo Lhe buyer,
even lf aL Lhe Llme of sale, conLrol of possesslon of Lhe sub[ecL maLLer was
noL ln Lhe hands of Lhe seller. uy, It. v. cA (198 5ckA 826)
!4I M-: 8: ;C
S:PC@E Wllfredo uy obLalned a loan from Llbra Lo buy a Lruck and LracLor, whlch
were morLgaged Lo Llbra as securlLy. erfecLo uy purchased Lhe LracLor from
Wllfredo and assumed Lhe morLgage debL. 1he LracLor was ln Llbra's possesslon
because Wllfredo falled Lo pay Lhe amorLlzaLlon. erfecLo offered Lo pay Lhe full
amounL buL Llbra refused slnce Lhe loan was obLalned noL only for Lhe LracLor buL
Lhe Lruck as well. 1here was a collecLlon case pendlng flled by Celac 1radlng agalnsL
Wllfredo. 1he LracLor was selzed and sold aL a publlc aucLlon where Celac 1radlng
was Lhe lone bldder. Celac 1radlng sold Lhe LracLor Lo AnLonlo Conzales.
'@@F?E
1. WheLher or noL Lhere was consLrucLlve dellvery aL Lhe Llme of Lhe
execuLlon of Lhe deed of sale ln favor erfecLo. - ?LS
2. WheLher or noL Wllfredo musL flrsL have conLrol and possesslon of Lhe
Lhlng before he could Lransfer ownershlp by consLrucLlve dellvery. - nC
]?>NE ArL 1496 sLaLes LhaL Lhe ownershlp of Lhe Lhlng sold ls acqulred by Lhe vendee
from Lhe momenL lL ls dellvered Lo hlm ln any of Lhe ways speclfled ln ArL 1497-
1301 or ln any oLher manner slgnlfylng an agreemenL LhaL Lhe possesslon ls
Lransferred from Lhe vendor Lo Lhe vendee. AlLhough acLual dellvery of Lhe LracLor
could noL be made, Lhere was consLrucLlve dellvery already upon Lhe execuLlon of
Lhe publlc lnsLrumenL pursuanL Lo ArL 1498 and upon Lhe consenL or agreemenL of
Lhe parLles when Lhe Lhlng sold cannoL be lmmedlaLely Lransferred Lo Lhe
possesslon of Lhe vendee.
Symbollc uellvery
MusL lnvolve or cover Lhe sub[ecL maLLer, and cannoL Lake a form relaLlng
Lo Lhe paymenL of Lhe purchase prlce.
o 1he lssuance of a recelpL for parLlal paymenL cannoL be Laken Lo
mean a Lransfer of ownershlp. loteozo uev. cotp. v. cA (449 5ckA
99)
coostltotom lossessotlom
1he seller held possesslon ln Lhe concepL of owner, and pursuanL Lo Lhe
conLracL, Lhe seller conLlnues possesslon, buL as lessee, or any oLher form
of possesslon oLher Lhan ln Lhe concepL of an owner.
1toJltlo 8tevl Mooo
CpposlLe of consLlLuLum possessorlum
1he buyer ls already ln Lhe possesslon of Lhe properLy before Lhe sale, buL
noL ln Lhe concepL of Lhe owner. AfLer Lhe sale, Lhe buyer becomes
possesor ln Lhe concepL of owner.
1toJltlo looqo Mooo
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

49
uellvery by mere agreemenL, such as when Lhe seller polnLs Lhe properLy
sub[ecL maLLer of Lhe sale by way of dellvery wlLhouL need of acLually
dellverlng physlcal possesslon.
uellvety of locotpoteol ltopetty
"DC. 7I67.
,LCA D?@B?PC C< L=P<DB<D?:> BD<B?DCUW CA? BD<RL@L<=@ <G CA? GLD@C B:D:MD:BA
<G "DCLP>? 7HVJ @A:>> M<R?D=. '= :=U <CA?D P:@? ;A?D?L= @:LN BD<RL@L<=@ :D?
=<C :BB>LP:K>?W CA? B>:PL=M <G CA? CLC>?@ <G <;=?D@ALB L= CA? B<@@?@@L<= <G
CA? R?=N?? <D CA? F@? KU CA? R?=N?? <G AL@ DLMAC@W ;LCA CA? R?=N<D^@
P<=@?=CW @A:>> K? F=N?D@C<<N :@ N?>LR?DU. d7HZHe
3 Lypes of consLrucLlve dellvery speclflcally appllcable Lo lncorporeal
properLy:
1. LxecuLlon of a publlc lnsLrumenL, lf Lhe conLrary does noL appear
2. laclng of Lhe LlLles of ownershlp ln Lhe possesslon of Lhe buyer
3. use and en[oymenL by Lhe buyer of Lhe rlghLs perLalnlng Lo Lhe
lncorporeal properLy, wlLh Lhe seller's consenL

lor shares of sLocks, dellvery of Lhe sLock cerLlflcaLes ls essenLlal. lallure Lo
dellver Lhe sLock cerLlflcaLes may amounL Lo subsLanLlal breach, a ground
for resclsslon. kopoel-5ootos v. coott of Appeols, 592 5ckA 169
uellvety by Neqotloble uocomeot of 1ltle
A negoLlable documenL of LlLle represenLs Lhe acLual goods. lf lL ls
Lransferred ln good falLh and for value, and lf Lhe Lransferror had Lhe
ablllLy Lo convey, lL ls equlvalenL Lo Lhe Lransfer of Lhe Lhlng lLself. (ex.
negoLlable warehouse recelpL)
lf Lhe documenL of LlLle has merely been asslgned, and noL negoLlaLed, Lhe
Lransferee/asslgnee only acqulres Lhe Lransferor's LlLle.
uellvety tbtooqb cottlet
1hls mode only applles Lo Lhe sale of goods. 1he general rule, and ln Lhe
absence of conLrary sLlpulaLlon, dellvery Lo Lhe carrler ls deemed dellvery
Lo Lhe buyer. 1he carrler acLs as an agenL of Lhe buyer.
"DC. 7I59.
,A?D?W L= BFD@F:=P? <G : P<=CD:PC <G @:>?W CA? @?>>?D L@ :FCA<DLf?N <D
D?_FLD?N C< @?=N CA? M<<N@ C< CA? KFU?DW N?>LR?DU <G CA? M<<N@ C< CA?
KFU?DW ;A?CA?D =:Q?N KU CA? KFU?D <D =<CW G<D CA? BFDB<@? <G
CD:=@QL@@L<= C< CA? KFU?D L@ N??Q?N C< K? : N?>LR?DU <G CA? M<<N@ C< CA?
KFU?DW ?XP?BC L= CA? P:@?@ BD<RLN?N G<D L= "DCLP>? 7I69W GLD@CW @?P<=N :=N
CALDN B:D:MD:BA@W <D F=>?@@ : P<=CD:DU L=C?=C :BB?:D@.
a=>?@@ <CA?D;L@? :FCA<DLf?N KU CA? KFU?DW CA? @?>>?D QF@C Q:T? @FPA
P<=CD:PC ;LCA CA? P:DDL?D <= K?A:>G <G CA? KFU?D :@ Q:U K? D?:@<=:K>?W
A:RL=M D?M:DN C< CA? =:CFD? <G CA? M<<N@ :=N CA? <CA?D PLDPFQ@C:=P?@ <G
CA? P:@?. 'G CA? @?>>?D <QLC @< C< N<W :=N CA? M<<N@ :D? ><@C <D N:Q:M?N L=
P<FD@? <G CD:=@LCW CA? KFU?D Q:U N?P>L=? C< CD?:C CA? N?>LR?DU C< CA? P:DDL?D
:@ : N?>LR?DU C< ALQ@?>GW <D Q:U A<>N CA? @?>>?D D?@B<=@LK>? L= N:Q:M?.
a=>?@@ <CA?D;L@? :MD??NW ;A?D? M<<N@ :D? @?=C KU CA? @?>>?D C< CA? KFU?D
F=N?D PLDPFQ@C:=P?@ L= ;ALPA CA? @?>>?D T=<;@ <D <FMAC C< T=<; CA:C LC L@
F@F:> C< L=@FD?W CA? @?>>?D QF@C MLR? @FPA =<CLP? C< CA? KFU?D :@ Q:U
?=:K>? ALQ C< L=@FD? CA?Q NFDL=M CA?LD CD:=@LCW :=NW LG CA? @?>>?D G:L>@ C< N<
@<W CA? M<<N@ @A:>> K? N??Q?N C< K? :C AL@ DL@T NFDL=M @FPA CD:=@LC. d=e
a. l. A. S. Sales
lrelghL Along Slde"
Lhe seller pays all charges and ls sub[ecL Lo rlsk unLll Lhe goods are placed
alongslde Lhe vessel. uellvery of Lhe goods alongslde Lhe vessel compleLes
Lhe effecL of dellvery.
b. l. C. 8. Sales
free on board"
f. o. b. shlpplng polnL" - dellvery of Lhe goods Lo Lhe carrler ls equlvalenL
Lo dellvery Lo Lhe buyer. 8lsk of loss perLalns Lo Lhe buyer.
f. o. b. desLlnaLlon" - dellvery Lo Lhe buyer Lakes place upon arlval of Lhe
vessel aL Lhe polnL of desLlnaLlon. rlor Lo arrlval, rlsk of loss perLalns Lo
Lhe seller.
c. C. l. l. Sales
cosLs, lnsurance, and frelghL"
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

30
Lhe prlce flxed covers noL only Lhe cosLs of Lhe goods, buL also Lhe expense
of frelghL, and lnsurance
1wo schools of LhoughL on Lhe effecL of dellvery under c.l.f. sales:
1. 1he carrler acLs as an agenL of Lhe buyer, and Lherefore, dellvery
Lo Lhe carrler ls dellvery Lo Lhe buyer. 1he buyer Lhus obLalned
ownershlp. (ex. Ceoetol looJs v. NAcOcO, 100 lbll 6J7)
2. 8oLh parLles agree LhaL Lhe seller Lakes on Lhe responslblllLy of
lnsurlng Lhe goods. uellvery Lo Lhe carrler ls oot equlvalenL Lo
dellvery Lo Lhe buyer. (ex. 8ebo, Meyet & co. v. ooqco, J8 lbll
602)

1hese shlpplng arrangemenLs creaLe presumpLlve effecLs whlch can gulde
Lhe courLs ln consLrulng when consLrucLlve dellvery occurs. Powever, such
presumpLlons musL necessarlly glve way Lo any sLlpulaLlon or lnLlmaLlon Lo
Lhe conLrary, as Lhese show Lhe lnLenL of Lhe parLles. lL ls sLlll Lhe lnLenLlon
of Lhe parLles whlch conLrol Lhe agreemenL.
K"/%I B"4"- R ;': 8: Q*%02'
S:PC@E 1he conLracL was for dellvery of causLlc soda, prlce lncludlng cosL, lnsurance
and frelghL, Lo be shlpped and dellvered Lo Manlla and pald upon dellvery. lrom
shlpplng polnL aL new ?ork (carrler), 8rlLlsh auLhorlLles deLalned Lhe shlp aL enang
and some of Lhe causLlc soda was removed.
'@@F?E ls Lhe seller llable? ?LS.
*:CL<E ConLracL provlded for c.l.f. Manlla." 1he Lerm c.l.f. presumes LhaL properLy
passes (consldered dellvered) Lo Lhe buyer upon dellvery Lo Lhe common carrler.
l.o.b. presumes LhaL Lhe seller ls responslble unLll dellvery ls made Lo desLlnaLlon.
8uL Lhese are [usL presumpLlons. lnLenL ls sLlll conLrolllng. AlLhough c.l.f." was
used, lL ls clear from Lhe conLracL LhaL Lhe parLles lnLended Lhe seller Lo be llable
unLll dellvery was made Lo desLlnaLlon (Manlla). noL havlng been fulfllled, buyer has
a rlghL Lo resclnd for subsLanLlal breach.

G"%"-*+ Y'',5 8: WC;A;A
S:PC@E nACCCC sold 1000 Lons of copra Lo ClC. lL was shlpped Lo ClC aboard Lhe SS
Mlndoro. nACCCC wlLhdrew from ClC's leLLer of credlL Lhe amounL correspondlng
Lo Lhe copra. 8uL ClC only recelved 800 Lons so lL demanded a refund
correspondlng Lo Lhe prlce of Lhe deflclency. nACCCC's defense ls LhaL slnce Lhe
conLracL was c.l.f., dellvery Lo Lhe carrler (SS Mlndoro) was equlvalenL Lo dellvery Lo
Lhe buyer (ClC).
'@@F?E ls nACCCC llable Lo refund? ?LS.
*:CL<E Whlle ln ordlnary c.l.f. dellvery Lo Lhe carrler ls dellvery Lo Lhe buyer, Lhe
parLles can lnserL sLlpulaLlons. Pere, Lhe parLles sLlpulaLed LhaL Lhe prlce Lo be pald
would be based on Lhe exacL neL welghL upon arrlval aL porL of desLlnaLlon.
nACCCC had burden Lo prove LhaL Lhe deflclency ln welghL was owlng Lo rlsks of
Lhe voyage or allowable welghlng errors and noL Lhe drylng up of Lhe copra. lL dld
noL prove.

>*2$#$2 N"0"&*9+" A$+ ;'-1: 8: )$%0P'%
S:PC@E Slngzon conLracLed wlLh vCC Lo dellver Lo laLLer 300 Lons of copra, c.l.f. 1he
former falled and afLer subsequenL agreemenL, Slngzon falled agaln. vCC sued hlm
for damages
'@@F?E Slngzon llable? ?LS.
*:CL<E under Lhelr arrangemenL, Lhe vendor was noL only Lo pay for cosL, buL also
frelghL and lnsurance expenses. So before arrlval aL Lhe desLlnaLlon, Lhe rlsk of loss
should be for Lhe accounL of Lhe seller.

@##"2&5 *%, ;'.1+"&"%"55 '# !"+$8"-4
2 1hlngs MusL 8e resenL Lo make dellvery produce lLs lefal effecL:
1. uellvery musL be made pursuanL Lo a valld sale
1radlLlon perLalns Lo Lhe consummaLlon sLage of sale, Lhus, lL
presupposes a valld sale.
When a sale ls flcLlLlous, no LlLle over Lhe sub[ecL maLLer of Lhe sale
can be conveyed.
2. uellvery musL be made when seller has ownershlp over Lhe sub[ecL maLLer
of sale so dellvered
no man can dlspose of LhaL whlch does noL belong Lo hlm.
1o Whom uellvery MusL 8e Made
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

31
Ceneral 8ule: uellvery musL be made Lo Lhe buyer or hls duly
auLhorlzed represenLaLlves named ln Lhe conLracL. loqooo v. nooveo
comolco loJosttles, loc. (J49 5ckA J6J)
Powever, parLles can valldly sLlpulaLe how dellvery ls Lo be made and
Lo whom.
Lven lf Lhe buyer refuses Lo accepL, Lhe dellvery by Lhe seller wlll
produce lLs legal effecLs. Powever, Lhe seller ls sLlll legally obllged Lo Lo
Lake cerLaln sLeps as noL Lo be held llable for consequenL loss or
damage Lo Lhe goods.
"DC. 7IJJ.
'G CA?D? L@ =< @CLBF>:CL<= :@ @B?PLGL?N L= CA? GLD@C B:D:MD:BA <G "DCLP>? 7I59W
;A?= CA? KFU?D^@ D?GF@:> C< :PP?BC CA? M<<N@ L@ ;LCA<FC OF@C P:F@?W CA?
CLC>? CA?D?C< B:@@?@ C< ALQ GD<Q CA? Q<Q?=C CA?U :D? B>:P?N :C AL@
NL@B<@:>. d=e
*F>?@ <= $GG?PC@ <G (?>LR?DU G<D &<R:K>?@
"DC. 7I55.
,A?D? CA? @?>>?D N?>LR?D@ C< CA? KFU?D : _F:=CLCU <G M<<N@ >?@@ CA:= A?
P<=CD:PC?N C< @?>>W CA? KFU?D Q:U D?O?PC CA?QW KFC LG CA? KFU?D :PP?BC@ <D
D?C:L=@ CA? M<<N@ @< N?>LR?D?NW T=<;L=M CA:C CA? @?>>?D L@ =<C M<L=M C<
B?DG<DQ CA? P<=CD:PC L= GF>>W A? QF@C B:U G<D CA?Q :C CA? P<=CD:PC D:C?. 'GW
A<;?R?DW CA? KFU?D A:@ F@?N <D NL@B<@?N <G CA? M<<N@ N?>LR?D?N K?G<D? A?
T=<;@ CA:C CA? @?>>?D L@ =<C M<L=M C< B?DG<DQ AL@ P<=CD:PC L= GF>>W CA? KFU?D
@A:>> =<C K? >L:K>? G<D Q<D? CA:= CA? G:LD R:>F? C< ALQ <G CA? M<<N@ @<
D?P?LR?N.
,A?D? CA? @?>>?D N?>LR?D@ C< CA? KFU?D : _F:=CLCU <G M<<N@ >:DM?D CA:= A?
P<=CD:PC?N C< @?>>W CA? KFU?D Q:U :P?BC CA? M<<N@ L=P>FN?N L= CA? P<=CD:PC
:=N D?O?PC CA? D?@C. 'G CA? KFU?D :PP?BC@ CA? ;A<>? <G CA? M<<N@ @<
N?>LR?D?NW A? QF@C B:U G<D CA?Q :C CA? P<=CD:PC D:C?.
,A?D? CA? @?>>?D N?>LR?D@ C< CA? KFU?D CA? M<<N@ A? P<=CD:PC?N C< @?>>
QLX?N ;LCA M<<N@ <G : NLGG?D?=C N?@PDLBCL<= =<C L=P>FN?N L= CA? P<=CD:PCW
CA? KFU?D Q:U :PP?BC CA? M<<N@ ;ALPA :D? L= :PP<DN:=P? ;LCA CA? P<=CD:PC
:=N D?O?PC CA? D?@C.
'= CA? BD?P??NL=M C;< B:D:MD:BA@W LG CA? @FKO?PC Q:CC?D L@ L=NLRL@L:K>?W CA?
KFU?D Q:U D?O?PC CA? ;A<>? <G CA? M<<N@.
)A? BD<RL@L<=@ <G CAL@ :DCLP>? :D? @FKO?PC C< :=U F@:M? <G CD:N?W @B?PL:>
:MD??Q?=CW <D P<FD@? <G N?:>L=M K?C;??= CA? B:DCL?@. d=e
When goods are ln Lhe possesslon of a Lhlrd parLy aL Lhe Llme of Lhe sale,
Lhe seller has noL fulfllled hls obllgaLlon Lo dellver unless and unLll Lhe Lhlrd
person acknowledges Lo Lhe buyer LhaL he holds Lhe goods on Lhe buyer's
behalf. (ArL. 1321, CC)
8eservaLlon of Cwnershlp
Cwnershlp wlll noL Lransfer Lo Lhe buyer ln case of express reservaLlon ln
Lhe conLracL, such as when Lhe parLles sLlpulaLe LhaL ownershlp wlll noL
Lransfer unLll Lhe purchase prlce ls full pald, or unLll cerLaln condlLlons are
fulfllled. (ArL. 1478, ArL. 1303)
o 1echnlcally speaklng, Lhls does noL refer Lo condlLlonal conLracLs
of sale or conLracLs Lo sell where Lhe condlLlons refer Lo Lhe
perfecLlon of Lhe conLracL.
o 1he condlLlons menLloned here refer Lo Lhe consummaLlon sLage
of Lhe conLracL.
ArLlcle 1303 of Lhe Clvll Code glves lnsLances where reservaLlon of
ownershlp ls lmplled:
1. Coods are shlpped, and by Lhe blll of ladlng Lhe goods are
dellverable Lo Lhe seller or hls agenL, Lhe seller reserves
ownershlp of Lhe goods. 8uL, lf excepL from Lhe form of Lhe blll of
ladlng, ownershlp would have passed Lo Lhe buyer, Lhe seller's
properLy ln Lhe goods shall be deemed Lo be only for purpose of
securlng performance of Lhe buyer's obllgaLlon, ln whlch case
Lhebuyer bears Lhe rlsk of loss.
2. Coods are shlpped, and by Lhe blll of ladlng Lhe goods are
dellverable Lo Lhe buyer, buL possesslon of Lhe blll of ladlng ls
reLalned by Lhe seller, Lhe seller reserves a rlghL Lo Lhe possesslon
of Lhe goods, and ownershlp ls sLlll Lransferred Lo Lhe buyer
3. Seller draws on Lhe buyer for Lhe prlce, and LransmlLs Lhe blll of
exchange and Lhe blll of ladlng LogeLher Lo Lhe buyer, Lhe buyer ls
bound Lo reLurn Lhe blll of ladlng lf he does noL honor Lhe blll of
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

32
exchange. lf he reLalns Lhe blll of ladlng, he does noL acqulre no
added rlghL.
a. lf Lhe blll of ladlng provldes LhaL Lhe goods are
dellverable Lo Lhe buyer, one who purchases ln good
falLh and for value Lhe blll of ladlng or Lhe goods from Lhe
buyer, wlll obLaln ownershlp, provlded LhaL Lhe blll of
ladlng ls lndorsed Lo such purchaser.
Sale ln Mass of Movables
Sale of movables ln ArLlcle 1322 musL be dlsLlngulshed from Lhe sale of
speclflc mass under ArLlcle 1480 whlch refers Lo sale of funglble Lhlngs.
lf Lhere ls no provlslon ln Lhe conLracL for Lhe measurlng or welghlng of Lhe
funglble Lhlng, nor ls Lhe prlce agreed upon by Lhe parLles Lo be based on
such measuremenL, Lhe sub[ecL maLLer of Lhe sale ls Lhe mass lLself, as a
deLermlnaLe ob[ecL. 1he obllgaLlon Lherefore, of Lhe seller ls Lo dellver Lhe
whole mass, regardless of Lhe quanLlLy. Colte v. loooclet (2 5ckA 8J0)
Sale by uescrlpLlon and/or Sample
"DC. 7HJ7.
'= CA? P<=CD:PC <G @:>? <G M<<N@ KU N?@PDLBCL<= <D KU @:QB>?W CA? P<=CD:PC
Q:U K? D?@PL=N?N LG CA? KF>T <G CA? M<<N@ N?>LR?D?N N< =<C P<DD?@B<=N
;LCA CA? CA? N?@PDLBCL<= <D CA? @:QB>?W :=N LG CA? P<=CD:PC K? KU @:QB>? :@
;?>> :@ KU N?@PDLBCL<=W LC L@ =<C @FGGLPL?=C CA:C CA? KF>T <G M<<N@ P<DD?@B<=N
;LCA CA? @:QB>?C LG CA?U N< =<C :>@< P<DD?@B<=N ;LCA CA? N?@PDLBCL<=.
)A? KFU?D @A:>> A:R? : D?:@<=:K>? <BB<DCF=LCU <G P<QB:DL=M CA? KF>T ;LCA
CA? N?@PDLBCL<= <D CA? @:QB>?. d=e
1here ls a sale by sample when a small quanLlLy ls exhlblLed by Lhe seller as
a falr speclmen of Lhe bulk, whlch ls noL presenL and Lhere ls no
opporLunlLy Lo lnspecL or examlne Lhe same, and Lhe parLles LreaLed Lhe
sample as Lhe sLandard of quallLy and LhaL Lhey conLracLed wlLh reference
Lo Lhe sample wlLh Lhe undersLandlng LhaL Lhe producL Lo be dellvered
would correspondenL wlLh Lhe sample. MeoJozo v. uovlJ (441 5ckA 172)
lf Lhe buyer had agreed Lo devlaLlons beLween Lhe sample and whaL has
been dellvered, resclslon wlll noL be avallable. oqel v. Motlooo velosco &
co., 47 lbll. 115
lf a cerLaln plece of machlnery dellvered ls ln accordance wlLh Lhe
descrlpLlon, and yeL, lL cannoL be used for Lhe purposes lnLended by Lhe
buyer, he cannoL refuse Lo pay lf Lhe seller was noL made aware of Lhe
lnLended purpose. loclflc commetclol co. v. tmlto Motket & colJ 5totes,
56 lbll. 617
Cn Sale or 8eLurn" and Sale on Approval, 1rlal, SaLlsfacLlon, or AccepLance"
"DC. 7I65.
,A?= M<<N@ :D? N?>LR?D?N C< CA? KFU?D [<= @:>? <D D?CFD=\ C< MLR? CA?
KFU?D := <BCL<= C< D?CFD= CA? M<<N@ L=@C?:N <G B:UL=M CA? BDLP?W CA?
<;=?D@ALB B:@@?@ C< CA? KFU?D <= N?>LR?DUW KFC A? Q:U D?R?@C CA?
<;=?D@ALB L= CA? @?>>?D KU D?CFD=L=M <D C?=N?DL=M CA? M<<N@ ;LCAL= CA?
CLQ? GLX?N L= CA? P<=CD:PCW <DW LG =< CLQ? A:@ K??= GLX?NW ;LCAL= :
D?:@<=:K>? CLQ?. d=e
,A?= M<<N@ :D? N?>LR?D?N C< CA? KFU?D <= :BBD<R:> <D <= CDL:> <D <=
@:CL@G:PCL<=W <D <CA?D @LQL>:D C?DQ@W CA? <;=?D@ALB CA?D?L= B:@@?@ C< CA?
KFU?DE
,A?= A? @LM=LGL?@ AL@ :BBD<R:> <D :PP?BC:=P? C< CA? @?>>?D <D N<?@ :=U
<CA?D :PC :N<BCL=M CA? CD:=@:PCL<=g
'G A? N<?@ =<C @LM=LGU AL@ :BBD<R:> <D :PP?BC:=P? C< CA? @?>>?DW KFC D?C:L=@
CA? M<<N@ ;LCA<FC MLRL=M =<CLP? <G D?O?PCL<=W CA?= LG : CLQ? A:@ K??= GLX?N
G<D CA? D?CFD= <G CA? M<<N@W <= CA? ?XBLD:CL<= <G @FPA CLQ?W :=NW LG =< CLQ?
A:@ K??= GLX?NW <= CA? ?XBLD:CL<= <G : D?:@<=:K>? CLQ?. ,A:C L@ :
D?:@<=:K>? CLQ? L@ : _F?@CL<= <G G:PC. d=e
When Lhe sale of a movable ls sale on accepLance," no ownershlp could
have been Lransferred Lo Lhe buyer desplLe dellvery and possesslon
because Lhere was sLlll no perfecLed conLracL when dellvery was done. 1he
accepLance by Lhe buyer ls a suspenslve condlLlon whlch wlll glve rlse Lo
Lhe perfecLed conLracL of sale. vollotto v. cA (150 5ckA JJ6)
ln order for ArL. 1302 Lo apply, lL musL be clearly expressed ln wrlLlng LhaL
Lhe sale ls LhaL of sale or reLurn" or sale on approval." lL cannoL be
proved by parol evldence. loJosttlol 1extlle Mooofoctotloq co. v. llI
otetptlses (217 5ckA J22)
WrlLLen roof of uellvery
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

33
uellvery of goods ls generally evldenced by a wrlLLen acknowlegmenL of
recelpL. loo v. cA (J25 5ckA 694)
o A blll of ladlng cannoL subsLlLuLe for a dellvery recelpL. lL ls a
wrlLLen acknowledgmenL of recelpL of Lhe goods by Lhe carrler. lL
ls noL evldence of recelpL of goods by Lhe conslgnee or Lhe person
named ln Lhe blll of ladlng
o A facLory conslgnmenL lnvolce ls noL evldence of acLual dellvery. lL
ls [usL a deLalled sLaLemenL of Lhe naLure, quanLlLy and cosL of Lhe
Lhlng sold. lL does noL prove LhaL Lhe goods were acLually
dellvered Lo Lhe buyer or conslgnee.
1lme and lace of uellvery
"DC. 7I57.
,A?CA?D LC L@ G<D CA? KFU?D C< C:T? B<@@?@@L<= <G CA? M<<N@ <D G<D CA? @?>>?D
C< @?=N CA?Q C< CA? KFU?D L@ : _F@CL<= N?B?=NL=M L= ?:PA P:@? <= CA?
P<=CDD:PCW ?XBD?@@ <D LQB>L?NW K?C;??= CA? B:DCL?@. "B:DC GD<Q :=U @FPA
P<=CD:PCW ?XBD?@@ <D LQB>L?N <D F@:M? <G CD:N? C< CA? P<=CD:DUW CA? B>:P? <G
N?>LR?DU L@ CA? @?>>?D^@ B>:P? <G KF@L=?@@ LG A? A:@ <=?W :=N LG =<C AL@
D?@LN?=P?g KFC L= P:@? <G : P<=CD:PC <G @:>? <G @B?PLGLP M<<N@W ;ALPA C< CA?
T=<;>?NM? <G CA? B:DCL?@ ;A?= CA? P<=CD:PC <D CA? @:>? ;:@ Q:N? ;?D? L=
@<Q? <CA?D B>:P?W CA?= CA:C B>:P? L@ CA? B>:P? <G N?>LR?DU.
,A?D? KU P<=CD:PC <G @:>? CA? @?>>?D L@ K<F=N C< @?=N CA? M<<N@ C< CA?
KFU?DW KFC =< CLQ? G<D @?=NL=M CA?Q L@ GLX?NW CA? @?>>?D L@ K<F=N C< @?=N
CA?Q ;LCAL= : D?:@<=:K>? CLQ?.
,A?D? CA? M<<N@ :C CA? CLQ? <G @:>? :D? L= CA? B<@@?@@L<= <G : CALDN
B?D@<=W CA? @?>>?D A:@ =<C GF>GL>>?N AL@ <K>LM:CL<= C< N?>LR?D C< CA? KFU?D
F=>?@@ :=N F=CL> @FPA CALDN B?D@<= :PT=<;>?NM?@ C< CA? KFU?D CA:C A?
A<>N@ CA? M<<N@ <= CA? KFU?D^@ K?A:>G.
(?Q:=N <D C?=N?D <G N?>LR?DU Q:U K? CD?:C?N :@ L=?GG?PCF:> F=>?@@ Q:N?
:C : D?:@<=:K>? A<FD. ,A:C L@ : D?:@<=:K>? A<FD L@ : _F?@CL<= <G G:PC.
a=>?@@ <CA?D;L@? :MD??NW CA? ?XB?=@?@ <G :=N L=PLN?=C:> C< BFCCL=M CA?
M<<N@ L=C< : N?>LR?D:K>? @C:C? QF@C K? K<D=? KU CA? @?>>?D. d=e
1he expenses for dellvery are Lo be borne by Lhe seller slnce Lhey are
expenses perLalnlng Lo puLLlng Lhe goods lnLo a dellverable sLaLe."
*F>?@ <= $GG?PC@ <G (?>LR?DU G<D 'QQ<R:K>?@
Where lmovables Sold per unlL or number
"DC. 7I9V.
)A? <K>LM:CL<= C< N?>LR?D CA? CAL=M @<>N L=P>FN?@ CA:C <G B>:PL=M L= CA?
P<=CD<> <G CA? R?=N?? :>> CA:C L@ Q?=CL<=?N L= CA? P<=CD:PCW L= P<=G<DQLCU
;LCA CA? G<>><;L=M DF>?@E
'G CA? @:>? <G D?:> ?@C:C? @A<F>N K? Q:N? ;LCA : @C:C?Q?=C <G LC@ :D?:W :C
CA? D:C? <G : P?DC:L= BDLP? G<D : F=LC <G Q?:@FD? <D =FQK?DW CA? R?=N<D
@A:>> K? <K>LM?N C< N?>LR?D C< CA? R?=N??W 'G CA? >:CC?D @A<F>N N?Q:=N LCW :>>
CA:C Q:U A:R? K??= @C:C?N L= CA? P<=CD:PCg KFCW @A<F>N CAL@ K? =<C
B<@@LK>?W CA? R?=N?? Q:U PA<<@? K?C;??= : BD<B<DCL<=:> D?NFPCL<= <G CA?
BDLP? :=N CA? D?@PL@@L<= <G CA? P<=CD:PCW BD<RLN?N CA:CW L= CA? >:CC?D P:@?W
CA? >:PT L= CA? :D?: K? =<C >?@@ CA:= <=?8C?=CA <G CA:C @C:C?N.
)A? @:Q? @A:>> K? N<=?W ?R?= ;A?= CA? :D?: L@ CA? @:Q?W LG :=U B:DC <G CA?
LQQ<R:K>? L@ =<C <G CA? _F:>LCU @B?PLGL?N L= CA? P<=CD:PC.
)A? D?@PL@@L<=W L= CAL@ P:@?W @A:>> <=>U C:T? B>:P? :C CA? ;L>> <G CA? R?=N??W
;A?= CA? L=G?DL<D R:>F? <G CA? CAL=M @<>N ?XP??N@ <=?8C?=CA <G CA? BDLP?
:MD??N FB<=.
1?R?DCA?>?@@W LG CA? R?=N?? ;<F>N =<C A:R? K<FMAC CA? LQQ<R:K>? A:N A?
T=<;= <G LC@ @Q:>>?D :D?: <D L=G?DL<D _F:>LCUW A? Q:U D?@PL=N CA? @:>?.
d7HZV:e
"DC. 7IH6.
'GW L= CA? P:@? <G CA? BD?P??NL=M :DCLP>?W CA?D? L@ : MD?:C?D :D?: <D =FQK?D
L= CA? LQQ<R:K>? CA:= CA:C @C:C?N L= CA? P<=CD:PCW CA? R?=N?? Q:U :PP?BC
CA? :D?: L=P>FN?N L= CA? P<=CD:PC :=N D?O?PC CA? D?@C. 'G A? :PP?BC@ CA?
;A<>? :D?:W A? QF@C B:U G<D CA? @:Q? :C CA? P<=CD:PC D:C?. d7Hb6:e
"DC. 7IH7.
)A? BD<RL@L<=@ <G CA? C;< BD?P??NL=M :DCLP>?@ @A:>> :BB>U C< OFNLPL:> @:>?@.
d=e
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

34
ln a unlL prlce sale, Lhe sLaLemenL of Lhe area of lmmovable ls noL
concluslve and Lhe prlce may be reduced or lncreased dependlng on Lhe
area acLually dellvered. koJolf lletz, loc. v. coott of Appeols (478 5ckA 451)
o lf Lhe vendor dellvers less Lhan Lhe area agreed upon, Lhe vendee
may obllge Lhe vendor Lo dellver all LhaL ls sLaLed ln Lhe conLracL
or demand for Lhe proporLlonaLe reducLlon of Lhe purchase prlce
lf dellvery ls noL posslble.
o lf Lhe vendor dellvers more Lhan Lhe area sLaLed ln Lhe conLracL,
Lhe vendee has Lhe opLlon Lo accepL only Lhe amounL agreed
upon or Lo accepL Lhe whole area, provlded he pays for Lhe
addlLlonal area aL Lhe conLracL raLe.
H7,'+# L"$&PI 3%2: 8: ;C
S:PC@E 8urlol leased 1 hecLare of land Lo lLallans. Pe sold 3 hecLares (lncludlng Lhe
leased one) Lo 8udolf. 1he deed of sale descrlbed Lhe properLy ln Lerms of area and
boundarles, noL prlce per unlL. 8udolf laLer on found ouL LhaL 8urlol dld noL own
one of Lhe hecLares, and one oLher hecLare was leased (Lo Lhe lLallans). So he
soughL reducLlon of Lhe prlce because all he really goL was 3 hecLares, ln
accordance wlLh ArL. 1339 CC.
'@@F?E Wlll hls case prosper? nC.
*:CL<E ArL. 1342 (lump sum sale of land) applles. 1here shall be no reducLlon ln prlce
even lf Lhe area dellvered ls less Lhan LhaL sLaLed ln Lhe conLracL. 1he area wlLhln
Lhe boundarles as sLaLed ln Lhe conLracL shall conLrol over shall conLrol over Lhe
area agreed upon ln Lhe conLracL.

Where lmmovables sold for a Lump Sum
"DC. 7IH5.
'= CA? @:>? <G D?:> ?@C:C?W Q:N? G<D : >FQB @FQ :=N =<C :C CA? D:C? <G :
P?DC:L= @FQ G<D : F=LC <G Q?:@FD? <D =FQK?DW CA?D? @A:>> K? =< L=PD?:@? <D
N?PD?:@? <G CA? BDLP?W :>CA<FMA CA?D? K? : MD?:C?D <D >?@@?D :D?:@ <D
=FQK?D CA:= CA:C @C:C?N L= CA? P<=CD:PC.
)A? @:Q? DF>? @A:>> K? :BB>L?N ;A?= C;< <D Q<D? LQQ<R:K>?@ :D? @<>N G<D
: @L=M>? BDLP?g KFC LGW K?@LN?@ Q?=CL<=L=M CA? K<F=N:DL?@W ;ALPA L@
L=NL@B?=@:K>? L= ?R?DU P<=R?U:=P? <G D?:> ?@C:C?W LC@ :D?: <D =FQK?D
@A<F>N K? N?@LM=:C?N L= CA? P<=CD:PCW CA? R?=N<D @A:>> K? K<F=N C< N?>LR?D
:>> CA:C L@ L=P>FN?N ;LCAL= @:LN K<F=N:DL?@W ?R?= ;A?= LC ?XP??N@ CA? :D?:
<D =FQK?D @B?PLGL?N L= CA? P<=CD:PCg :=NW @A<F>N A? =<C K? :K>? C< N< @<W
A? @A:>> @FGG?D : D?NFPCL<= L= CA? BDLP?W L= BD<B<DCL<= C< ;A:C L@ >:PTL=M L=
CA? :D?: <D =FQK?DW F=>?@@ CA? P<=CD:PC L@ D?@PL=N?N K?P:F@? CA? R?=N??
N<?@ =<C :PP?N? C< CA? G:L>FD? C< N?>LR?D ;A:C A:@ K??= @CLBF>:C?N. d7Hb7e
"DC. 7IH9.
)A? :PCL<=@ :DL@L=M GD<Q "DCLP>?@ 7I9V :=N 7IH5 @A:>> BD?@PDLK? L= @LX
Q<=CA@W P<F=C?N GD<Q CA? N:U <G N?>LR?DU. d7Hb5:e
ln a conLracL of sale of land ln a mass, Lhe speclflc boundarles sLaLed ln Lhe
conLracL musL conLrol over any sLaLemenL wlLh respecL Lo Lhe area
conLalned wlLhln lLs boundarles. 5olloos v. loostloo (566 5ckA 18)
LxcepLlon Lo ArL. 1342: 1he sale of land under Lhe descrlpLlon more or
less" or slmllar words covers only a reasonable excess or deflclency." lletz
v. cA (478 5ckA 4J1)
o LxcepLlon Lo Lhe excepLlon: 1he buyer assumes Lhe rlsk on Lhe
acLual loss of Lhe acLual area of Lhe land. Cotclo v. velosco (72 lbll
248)
Lxpenses of uellvery and 8eglsLraLlon on 8eal LsLaLe
ln Lhe 2002 case of Iose clovooo v. nluk8 (J78 5ckA 172), Lhe SC held LhaL
a [udgmenL on a sale LhaL decrees Lhe obllgaLlons of Lh seller Lo execuLe
and dellver Lhe deed of absoluLe sale and Lhe cerLlflcaLe of LlLle, does noL
necessarlly lnclude Lhe obllgaLlon on Lhe parL of Lhe seller Lo pay for
expenses ln noLarlzlng Lhe deed of sale and ln obLalnlng a new cerLlflcaLe
of LlLle.
ln Lhe 2003 case of Chua v. CA (401 SC8A 34), Lhe CourL held LhaL Lhe
obllgaLlon of Lhe seller ls Lo Lransfer ownershlp whlch ls done by Lhe
execuLlon of a publlc lnsLrumenL. 1hus, expenses for reglsLraLlon ln Lhe
8eglsLry of ueeds, whlch merely blnds Lhlrd persons buL does noL Lransfer
ownershlp, ls Lo be borne by Lhe buyer. CaplLal galns Lax remalns llablllLy of
Lhe seller.
ln Lhe 2004 case of vlve oqle looJ, loc. v. cA (444 5ckA 445), Lhe SC held
LhaL reglsLraLlon of Lhe sale should be shouldered by Lhe seller unless Lhere
ls a conLrary sLlpulaLlon.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

33
CLv doesn'L say whlch case ls correcL, buL he seems Lo favor cboo v. cA
slnce he keeps saylng LhaL Lhe oLher 2 cases are ln sLark conLrasL Lo cboo.
;/7* 8: ;C
S:PC@E Chua boughL a house and loL from valdes Choy. Chua pald 100,000 as
earnesL money. 8ecelpL had a sLlpulaLlon LhaL fallure Lo pay balance on or before 13
!uly 1989 forfelLs Lhe earnesL money. Chua requlred LhaL Lhe roperLy be reglsLered
flrsL ln hls name before he would Lurn over Lhe check Lo valdes-Choy. 1hls angered
valdes-Choy, clalmlng LhaL whaL Chua requlred was noL parL of Lhelr agreemenL.
'@@F?E W/n Chua can compel valdes-Choy Lo cause Lhe lssuance of a new 1C1 ln
Chua's name even before paymenL of Lhe full purchase prlce. --- nC
]?>NE 1he obllgaLlon of Lhe seller ls Lo Lransfer Lo Lhe buyer owoetsblp of Lhe Lhlng
sold. 1here ls a dlfference beLween Lransfer of Lhe cerLlflcaLe of LlLle ln Lhe name of
Lhe buyer, and Lransfer of ownershlp Lo Lhe buyer. 8eglsLraLlon of LlLle ls separaLe
mode from execuLlon of publlc lnsLrumenL. 1he recordlng of Lhe sale wlLh Lhe
proper 8eglsLry of ueeds and Lhe Lransfer of Lhe cerLlflcaLe of LlLle ln Lhe name of
Lhe buyer are necessary only Lo blnd Lhlrd parLles Lo Lhe Lransfer of ownershlp. As
beLween Lhe seller and Lhe buyer, Lhe Lransfer of ownershlp Lakes effecL upon Lhe
execuLlon of a publlc lnsLrumenL conveylng Lhe real esLaLe. 1he submlsslon by a
seller Lo Lhe buyer of Lhe followlng papers would compleLe a sale of real esLaLe: (1)
owner's dupllcaLe copy of Lhe 1orrens LlLle, (2) slgned deed of absoluLe sale, (3) Lax
declaraLlon, and (4) laLesL realLy Lax recelpL.

N$8" @*0+" L*%,I 3%2 8: ;C
S:PC@E 1aLlc Corp. purchased 2 parcels of land from Spouses llores. 1aLlc sold Lhe loL
Lo vLLl. vLLl sold Lhe loL Lo Cenulno. Cenulno demanded vLLl Lo pay caplLal galns
Lax, evlcL lnformal seLLlers and Lo reglsLer LlLle ln lLs name. vLLl re[ecLed Lhe
demand.
'@@F?E W/n peLlLloner vLLl ls obllged Lo pay for Lhe expenses for Lransfer of Lhe
properLy and Lhe lssuance of Lhe LlLles Lo and under Lhe name of Lhe respondenL ---
?LS
]?>NE under ArLlcle 1493

of Lhe new Clvll Code, peLlLloner vLLl, as Lhe vendor, ls
obllged Lo Lransfer LlLle over Lhe properLy and dellver Lhe same Lo Lhe
vendee. unless oLherwlse sLlpulaLed, under ArL. 1487 Lhe expenses for Lhe
reglsLraLlon of Lhe sale should be shouldered by Lhe vendor.

!'79+" )*+"5
"DC. 7IHH.
'G CA? @:Q? CAL=M @A<F>N A:R? K??= @<>N C< NLGG?D?=C R?=N??@W CA?
<;=?D@ALB @A:>> K? CD:=@G?DD?N C< CA? B?D@<= ;A< Q:U A:R? GLD@C C:T?=
B<@@?@@L<= CA?D?<G L= M<<N G:LCAW LG LC @A<F>N K? Q<R:K>? BD<B?DCU.
!A<F>N LC K? LQQ<R:K>? BD<B?DCUW CA? <;=?D@ALB @A:>> K?><=M C< CA?
B?D@<= :P_FLDL=M LC ;A< L= M<<N G:LCA GLD@C D?P<DN?N LC L= CA? *?ML@CDU <G
/D<B?DCU.
!A<F>N CA?D? K? =< L=@PDLBCL<=W CA? <;=?D@ALB @A:>> B?DC:L= C< CA? B?D@<=
;A< L= M<<N G:LCA ;:@ GLD@C L= CA? B<@@?@@L<=g :=NW L= CA? :K@?=P? CA?D?<GW
C< CA? B?D@<= ;A< BD?@?=C@ CA? <>N?@C CLC>?W BD<RLN?N CA?D? L@ M<<N G:LCA.
d7Hb9e
);< (LR?DM?=C !U@C?Q@ ,A?= 'C 3<Q?@ C< #:=N
8eglsLered Land under Lhe 1orrens SysLem (u 1329)
Sec. 31 of u 1329 embodles Lhe reglsLraLlon ln good falLh as Lhe
operaLlve acL" docLrlne.
ArL. 1344 does noL overcome Lhe prlorlLy rules under u 1329.
o 8eglsLraLlon" ln ArL. 1344 refers Lo Lhe annoLaLlon of conLracLs,
LransacLlons and legal processes ln Lhe 8eglsLry of ueeds
When Lwo cerLlflcaLes of LlLle are lssued Lo dlfferenL persons coverlng Lhe
same land, ArL. 1344 cannoL apply. lnsLead, Lhe prlnclple of Lhe 1orrens
sysLem wlll apply. 1he earller LlLle wlll prevall. lloo v. cA (J2J 5ckA 4J0)
ArL. 1344 wlll also noL apply ln a case where a flrsL buyer boughL Lhe land
noL under Lhe 1orrens sysLem, buL under AcL no. 3344, and a subsequenL
buyer boughL Lhe same properLy when lL was already reglsLered under Lhe
1orrens sysLem of u 1329. 1he 1orrens LlLle wlll prevall. Noowoo
commoolty kotol 8ook, loc. v. cA (J95 5ckA 4J), Abtlqo v. ue veto (4J2
5ckA 544), uoqopoo 1toJloq co. v. Mocom (14 5ckA 179)
W**E*% ;'..7%$&4 H7-*+ K*%F 8: ;C
S:PC@E Lumos boughL a land from Comayas and acqulred 1C1 ln hls name. upon
appllcaLlon for Lax declaraLlon, he found ouL LhaL lL had already been declared for
Laxes by nC88. WhaL had happened was: Comayas morLgaged Lhe land Lo nC88
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

36
before, lL was foreclosed and land sold Lo nC88. Sherlff's cerLlflcaLe was recorded
under AcL 3344. SubsequenLly Lhough, Comayas obLalned LlLle ln hls name (LhaL's
how he was able Lo sell Lo Lumos). 8aslcally, when bank acqulred Lhe land by
conveyance, lL was unLlLled. When Lumos acqulred lL, lL was already LlLled.
'@@F?E Who has beLLer rlghL? Lumos.
*:CL<E lssuance of CC1 had Lhe effecL of rellevlng Lhe land of any clalms excepL
Lhose annoLaLed Lhereln. AL Lhe Llme of deed of flnal conveyance Lo nC88, Lhe LlLle
had already been lssued Lo Comayas (wlLhouL any annoLaLlon of nC88's clalm).
1hus, Lumos was noL requlred Lo go beyond Lhe LlLle and was enLlLled Lo rely on lL.
rlorlLy ln Llme" prlnclple applles Lo AcL 3344, noL 1orrens sysLem.

!*071*% D-*,$%0 ;': 8: B*2*.
Maron slbllngs sold Lhelr co-owned unreglsLered properLy Lo Macam, lssulng 2
deeds of sale LhaL were slmllarly unreglsLered. SubsequenLly, an CC1 was lssued ln
favor of Lhe Maron slbllngs wlLhouL Lhe deeds of sale Lo Macam belng annoLaLed.
LaLer on, a [udgmenL was rendered agalnsL Sammy Maron, leadlng Lo Lhe
foreclosure sale of hls 1/8 lnLeresL ln Lhe co-owned properLy. 1he 1/8 lnLeresL was
evenLually sold Lo u1C.
(<PCDL=?E When flrsL sale ls over unreglsLered land and Lhe second sale ls when lL ls
reglsLered, Lhe rules on double sale do noL apply.
(?PL@L<=E 1he CC1 lssued ln favor of Lhe Maron slbllngs noL conLalnlng an
annoLaLlon of Lhe sale Lo Macam cannoL defeaL Lhe sale Lo Macam because
ownershlp had already been Lransferred. (1hls declslon was promulgaLed before u
1329, whlch provldes LhaL Lhe buyer can rely on Lhe cerLlflcaLe alone eLc eLc).

W*8*+ 8: ;C
S:PC@E unreglsLered parcel of land was sold by ldelfonso Lo Cregorlo ln 1969.
Cregorlo sold lL Lo oLher people, who Lhen Look possesslon. ln comes !uanlLa who
was able Lo obLaln an CC1 ln her name, saylng Lhe same land was sold Lo her by
ldelfonso ln 1972. 8emember LhaL boLh lnlLlal conveyances were made whlle land
was unreglsLered.
'@@F?E Who has beLLer rlghL? Cregorlo.
*:CL<E 1he lasL was unreglsLered under Lhe 1orrens sysLem aL Lhe Llme of Lhe flrsL
sale. 1he appllcable law ls AcL 3344, under whlch reglsLraLlon by flrsL buyer under
Lhe 8eglsLer of ueeds ls consLrucLlve noLlce Lo Lhe second buyer. So Lhe laLLer
cannoL be deemed ln good falLh. !uanlLa havlng been able Lo obLaln an CC1 ln her
name does noL cleanse her LlLle of Lhe defecL carrled under Lhe provlslons of AcL
3344.

unreglsLered Land
8ules on double sales for lmmovables under ArL. 1344 are appllcable Lo
unreglsLered land, buL only lnsofar as Lhey do noL undermlne speclflc rules,
such as Lhe wlLhouL pre[udlce Lo beLLer rlghL" provlslon ln AcL no. 3344,
now Sec. 113, u 1329.
lf a plece of land ls sold Lhrough a prlvaLe deed of sale buL was never
reglsLered. 1he land was Lhen sold ln publlc aucLlon and Lhe sale Lo Lhe
second buyer was reglsLered under AcL no. 3344. 1he appllcable provlslon
ls LhaL of Sec. 33, 8ule 39 of Lhe 8ules of CourL, noL ArL. 1344. cotombo v.
cA (J1 5ckA 558)
under AcL 3344, reglsLraLlon of lnsLrumenLs affecLlng unreglsLered lands ls
wlLhouL pre[udlce Lo a Lhlrd parLy wlLh a beLLer rlghL," whlch means LhaL
mere reglsLraLlon does noL glve Lhe buyer any rlghL over Lhe land lf Lhe
seller was noL anymore Lhe owner of Lhe land havlng prevlously sold Lhe
same Lo somebody else even lf Lhe earller sale was unrecorded. 1he rules
on double sale under ArL. 1344 has no appllcaLlon Lo land noL reglsLered
under Lhe 1orrens sysLem. Acobol v. Acobol, (454 5ckA 555)
C9-$0' 8: !" N"-*
vlllafanla sold properLy Lo Salazar-Co wlLh a rlghL Lo repurchase wlLhln 1 year.
vlllafanla falled Lo repurchase so land became Salazar-Co's absoluLe properLy.
uesplLe LhaL, vlllafanla obLalned a free paLenL over Lhe properLy and sold Lhe same
Lo ue vera. Meanwhlle, Salazar-Co sold Lhe same Lo Sps. Abrlgo.
(<PCDL=?E ue vera has a beLLer rlghL slnce he boughL and reglsLered Lhe properLy ln
good falLh.
Spouses Abrlgo reglsLered Lhe properLy under AcL no. 3344 because lL was
unknown Lo Lhem LhaL lL was covered under Lhe 1orrens SysLem, whlle ue vera
reglsLered Lhe same under Lhe 1orrens SysLem because vlllafanla procured Lhe 1C1
upon purchase. ue vera's rlghL prevalls, spouses Abrlgo cannoL valldly argue LhaL
Lhey were fraudulenLly mlsled lnLo bellevlng LhaL Lhe properLy was
unreglsLered. A 1orrens LlLle, once reglsLered, serves as a noLlce Lo Lhe whole
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

37
world. All persons musL Lake noLlce, and no one can plead lgnorance of Lhe
reglsLraLlon.
)A? DF>?@ L= N<FK>? @:>? F=N?D "DCLP>? 7IHHW ;A?D?KU CA? KFU?D ;A< L@ :K>? C< GLD@C
D?ML@C?D CA? BFDPA:@? L= M<<N G:LCA [L@ L= GF>> :PP<DN ;LCA !?PCL<= I7 <G /( 7I5V
;ALPA BD<RLN?@ CA:C =< N??NW Q<DCM:M?W >?:@?W <D <CA?D R<>F=C:DU L=@CDFQ?=C `
?XP?BC : ;L>> BFDB<DCL=M C< P<=R?U <D :GG?PC D?ML@C?D?N >:=N @A:>> C:T? ?GG?PC :@ :
P<=R?U:=P? <D KL=N CA? >:=N F=CL> LC@ D?ML@CD:CL<=. )AF@W LG CA? @:>? L@ =<C
D?ML@C?D?NW LC L@ KL=NL=M <=>U K?C;??= CA? @?>>?D :=N CA? KFU?D KFC LC N<?@ =<C
:GG?PC L==<P?=C CALDN B?D@<=@.

;*-7.9* 8: ;C
S:PC@E Amado sold an unreglsLered land Lo Carumba Lhrough a prlvaLe documenL.
Amado owed a sum of money from 8albuena. 8albuena successfully obLalned a
[udgmenL on hls credlL agalnsL Amado. Sherlff lssued a ueflnlLe ueed of Sale (on Lhe
same properLy sold Lo Carumba) ln favor of 8albuena and reglsLered lL before 8ou.
Cll sald levy was vold and declared Carumba as owner because he already had
possesslon of Lhe land. CA sald Lhere was a double sale and 8albuena should be
declared owner because hls sale was reglsLered ln good falLh.
'@@F?E Was Lhere a double sale? nC.
(<PCDL=?E "DC. 7IHH N<?@ =<C :BB>U C< F=D?ML@C?D?N >:=N. 1he purchaser of an
unreglsLered land aL a sherlff's execuLlon sale only sLeps lnLo Lhe shoes of Lhe
[udgmenL debLor and merely acqulres Lhe laLLer's lnLeresL ln Lhe properLy sold as of
Lhe Llme LhaL Lhe properLy was levled upon. 1he flrsL ueed of Sale whlle only
embodled ln a prlvaLe documenL buL coupled wlLh Lhe facL LhaL Carumba had Laken
possesslon of Lhe land sold, sufflced Lo vesL ownershlp on Lhe buyer. So when Lhe
levy was made by Lhe Sherlff, Lhe [udgmenL debLor no longer had domlnlcal lnLeresL
nor any real rlghL over Lhe land. no double sale.

C2*9*+ 8: C2*9*+
lf unreglsLered land, once lL ls reglsLered under Lhe 1orrens SysLem, reglsLraLlon
glves lndefeaslblllLy Lo Lhe LlLle. lL cleanses Lhe LlLle lf reglsLraLlon was made ln good
falLh.
WhaL lf land ls sold 8LlC8L lL was reglsLered and Lhen sold a second Llme by Lhe
same person Al1L8 lL was reglsLered, wlll 1344 apply? no. 1344 wlll noL apply
because reglsLraLlon was dlfferenL for boLh LransacLlons, albelL, no reglsLraLlon aL all
ln Lhe flrsL one.
Cwnershlp of Lhe land wlll Lhen depend on:
1) lf 2
nd
buyer, ln good falLh, reglsLered Lhe land under Lhe 1orrens SysLem, he
prevalls because of Lhe lndefeaslblllLy of a 1orrens 1lLle.
2) 8uL lf reglsLraLlon was made under AcL no. 3344, ownershlp by Lhe buyer of Lhe
land ls sLlll dependenL on oLher beLLer rlghLs of a Lhlrd parLy. Mere reglsLraLlon does
noL glve a buyer any rlghL over Lhe land lf Lhe seller was noL anymore Lhe owner of
Lhe land havlng prevlously sold Lhe same Lo somebody else.

$@@?=CL:> $>?Q?=C@ G<D "BB>LP:KL>LCU <G "DC. 7IHH
:e )A?D? QF@C K? C;< R:>LN @:>?@
lf one sale ls valld, and Lhe oLher ls vold, ArL. 1344 wlll noL apply. loJot v.
cottleyo looJ, loc. (5JJ 5ckA J50)
ArL. 1344 wlll noL apply when one conLracL ls LhaL of sale, anL Lhe oLher ls a
conLracL Lo sell. SLrlcLly speaklng, ln a conLracL Lo sell, Lhere ls sLlll no
Lransfer of ownershlp lnvolved. 5oo loteozo uev. cotp. v. coott of Appeols
(449 5ckA 99), MeoJozo v. kolow, (42 lbll. 2J6), AJollo v. cA (280 5ckA
5J6), cbeoq v. Ceooto (J00 5ckA 722)
;/"%0 8: G"%*&'
CenaLo sold lands Lo ua !ose spouses, subsequenLly execuLlng an AffldavlL Lo Annul
Lhe conLracL Lo sell wlLhouL lnformlng Lhe laLLer. Cheng offered Lo buy Lhe land and
Lendered parLlal paymenL, whlch was subsequenLly reLurned by CenaLo so LhaL Lhe
laLLer may conLlnue wlLh hls conLracL wlLh Lhe spouses.
(<PCDL=?E 8equlslLes for uouble Sale:
(a) 1he Lwo (or more) sales LransacLlons ln lssue musL perLaln Lo exacLly Lhe
same sub[ecL maLLer, and musL be valld sales LransacLlons.
(b) 1he Lwo (or more) buyers aL odds over Lhe rlghLful ownershlp of Lhe
sub[ecL maLLer musL each represenL confllcLlng lnLeresLs, and
(c) 1he Lwo (or more) buyers aL odds over Lhe rlghLful ownershlp of Lhe
sub[ecL maLLer musL each have boughL from Lhe very same seller.

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

38
)*% L'-"%P' !"8: ;'-1: 8: ;C
Spouses Lu alleged LhaL Lhey enLered lnLo a P<=CD:PC C< @?>> lands wlLh 8abasanLa,
Lhe same laLer on havlng been resclnded by Lhe laLLer because of a dlsagreemenL
wlLh Lhe former. SubsequenLly, Lhe lands were sold Lo San Lorenzo uev'L Corp
(SLuC) evldenced by a ueed of AbsoluLe Sale wlLh MorLgage.
(<PCDL=?E SLuC has a beLLer rlghL. ArLlcle 1344 does nC1 apply where one of Lhe
conLracL ls a conLracL Lo sell.

3<=CD:PC <G !:>? 3<=CD:PC C< !?>>
1lLle passes Lo Lhe vendee
upon Lhe dellvery of Lhe
Lhlng sold
8y agreemenL Lhe ownershlp ls reserved ln
Lhe vendor and ls noL Lo pass unLll Lhe full
paymenL of Lhe prlce
1he vendor has losL and
cannoL recover ownershlp
unLll and unless Lhe conLracL
ls resolved or resclnded
1lLle ls reLalned by Lhe vendor unLll Lhe full
paymenL of Lhe prlce, such paymenL belng
a poslLlve suspenslve condlLlon and fallure
of whlch ls noL a breach buL an evenL LhaL
prevenLs Lhe obllgaLlon of Lhe vendor Lo
convey LlLle from becomlng effecLlve

B"%,'P* 8: X*+*E
Mendoza flled a peLlLlon for Lhe reglsLraLlon of a parcel of land he purchased from
CaneL by way of an absoluLe sale. kalaw opposed sLaLlng LhaL he boughL Lhe same
sub[ecL maLLer from CaneL (by way of a condlLlonal sale).
(<PCDL=?E Mendoza ls favored. 1wo sales were execuLed, a condlLlonal sale and an
absoluLe sale. AcLual possesslon was obLalned by Mendoza flrsL. Mendoza also fully
pald Lhe purchase prlce, whlle kalaw's paymenL depended upon Lhe performance of
cerLaln condlLlons menLloned ln Lhe conLracL of sale. A condlLlonal sale, before Lhe
performance of Lhe condlLlon, can hardly be sald Lo be a sale of properLy. ArL. 1473
(now ArL. 1344) wlll noL be appllcable.

C,*+$% 8: ;C
kado slbllngs sold properLy Lo ?u and Llm, Lhe laLLer execuLlng a ueed of CondlLlonal
Sale, whlch sLaLed LhaL Llena kado (one of Lhe slbllngs had Lo evlcL Lhe LenanLs of
Lhe properLy as condlLlon Lo Lhe sale). Llena falled Lo fulflll Lhls condlLlon. kado
slbllngs backed ouL of Lhe sale and, subsequenLly, sold same properLy Lo Carlos, eL
al. by way of a ueed of Sale.
(<PCDL=?E Llena, ln behalf of kado slbllngs, already commlLLed Lo sell Lhe properLy Lo
?u and Llm and LoreLo Adalln. She undersLood her obllgaLlon Lo e[ecL Lhe LenanLs on
Lhe sub[ecL properLy. aymenL of balance was sub[ecL Lo Lhe condlLlon LhaL she
would secure evlcLlon of LenanLs. Sale LransacLlon noL yeL compleLe and boLh sellers
and buyers have respecLlve obllgaLlons Lo be fulfllled-buyers, pay prlce, sellers,
e[ecLmenL. ueed of CondlLlonal Sale may be an accuraLe denomlnaLlon of Lhe
LransacLlon, and Lhe cholce of who Lo sell Lhe properLy Lo had already been made
by Lhe sellers and no longer sub[ecL Lo any condlLlon. !:>? Q:N? KU $>?=: C< -F :=N
#LQ dP<=@LN?D?N KU CA? 3<FDCe L@ :K@<>FC?.
CourL ruled LhaL no amounL of legal raLlonallzlng can sancLlon Lhe breach of
conLracL. Llena commlLLed ln accepLlng offer afLer havlng earller sold properLy Lo ?u
and Llm.
SubsequenL sale smacks of bad falLh conslderlng Lhe LenanLs knew of negoLlaLlons
beLween Llena and ?u Llm.
ueed of CondlLlonal Sale (?u, Llm and kado) was glven preference over Lhe ueed of
Sale of 8eglsLered Land (Carlos, Co and kado).

Ke $X:PC @:Q? @FKO?PC Q:CC?D
Pe $X:PC @:Q? @?>>?D G<D K<CA @:>?@
ArLlcle 1344 on double sales has no appllcaLlon ln cases where Lhe sales
lnvolved were lnlLlaLed noL by [usL one vendor buL by several successlve
vendors. Moctoo-cebo lotetootloool Altpott Aotbotlty v. 1ltol (588 5ckA
6J5)
Consolidated Rural Bank (Cagayan Valley), Inc. v. Court of Appeals
Madrld sold properLy Lo Camlao/uayag (dld noL reglsLer), who laLer on sold Lhe Lhe
same properLy's norLhern half Lo Pernandez, and Lhe souLhern half Lo 1eodoro dela
Cruz (deceased). ?ears laLer, Madrld sold Lhe same Lo Marquez, who reglsLered ln
Lhe 8u. Marquez morLgaged Lhe properLy Lo C88l. Pelrs of 1eodoro assalled Lhe
morLgage and asked for reconveyance Lo Lhelr faLher.
(<PCDL=?: ArLlcle 1344 cannoL apply.
lor ArLlcle 1344 Lo apply, lL ls necessary LhaL Lhe conveyance musL have been made
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

39
by a parLy who has an exlsLlng rlghL ln Lhe Lhlng and Lhe power Lo dlspose of lL. lL
cannoL be lnvoked where Lhe Lwo dlfferenL conLracLs of sale are made by Lwo
dlfferenL persons, one of Lhem noL belng Lhe owner of Lhe properLy sold. And even
lf Lhe sale was made by Lhe same person, lf Lhe second sale was made when such
person was no longer Lhe owner of Lhe properLy, because lL had been acqulred by
Lhe flrsL purchaser ln full domlnlon, Lhe second purchaser cannoL acqulre any rlghL

*?ML@CD:CL<= L= 2<<N S:LCA :@ SLD@C /DL<DLCU
Meanlng of 8eglsLraLlon"
AnnoLaLlon of adverse clalm ls consldered as reglsLraLlon. cotboooel v.
coott of Appeols (69 5ckA 99)
8eglsLraLlon means any enLry made ln Lhe books of Lhe reglsLry, lncludlng
boLh reglsLraLlon ln lLs ordlnary and sLrlcL sense, and cancellaLlon,
:==<C:CL<=W :=N ?R?= Q:DML=:> =<C?@. cbeoq v. Ceooto (J00 5ckA 722)
ueclaraLlon of purchase for LaxaLlon purposes does noL comply wlLh Lhe
requlred reglsLraLlon, and Lhe facL alone does noL even lLself consLlLuLe
evldence of ownershlp. 8oyoco v. Noqoles (J40 5ckA 154)
1here can be no consLrucLlve noLlce Lo Lhe second buyer Lhrough
reglsLraLlon under AcL 3344 lf Lhe properLy ls reglsLered under Lhe 1orrens
sysLem." AmoJlo vJo. ue Meleocloo v. coott of Appeols (5J4 5ckA 62, 82)
8eglsLraLlon musL always be ln good falLh
WhaL maLLers ls lf Lhe buyer reglsLers ln good falLh. lf he buys ln good falLh,
buL subsequenLly reglsLers ln bad falLh, he wlll noL have a beLLer LlLle, even
lf he reglsLers flrsL.
Cood falLh means no noLlce of defecL ln LlLle of Lhe properLy sold. lor Lhe
second buyer Lo be ln good falLh, he musL noL know of Lhe prlor sale Lo Lhe
flrsL buyer.
ln splLe of Lhe Lhree levels of LesLs provlded under ArL. 1344, Lhe CourL
seems Lo recognlze only reglsLraLlon ln good falLh by Lhe second buyer and
does noL characLerlze Lhe meanlng of Lhe lasL Lwo LesLs of possesslon and
oldesL LlLle. cotlllo v. coott of Appeols (50J 5ckA 66)
;*-$++' 8: ;C
S:PC@E 8oLh Conazales and uabons clalm Lo have boughL Lhe land from ArlsLoLle
Manlo. ln llLglLaLlng agalnsL Manlo's alleged aLLorneys-ln-facL for Lhe lssuance of Lhe
deed of sale, Conzales never lmpleaded Manlo hlmself, or Lhe uabons. CourL orders
were lssued ln favor of Conzales for execuLlon of deed of sale as well as lssuance of
1C1 ln her name.
'@@F?E uo Lhe uabons have a rlghL Lo seek annulmenL of Lhe courL order? ?LS.
*:CL<E 1here was exLrlnslc fraud as Lhe necessary parLles ln lnLeresL were noL glven
Lhelr day ln courL. uabons may seek annulmenL of Lhe courL orders. Cn Lhe lssue of
double sale, courL ouLllned Lhe provlslons of ArL. 1344 and sLressed LhaL ln order for
Lhls provlslon Lo be avalled of, Lhere musL have been boLh acqulslLlon ln good falLh
and reglsLraLlon ln good falLh. Case was remanded.

knowledge of Lhe flrsL buyer of Lhe second sale does noL amounL Lo reglsLraLlon ln
favor of Lhe second buyer
lf Lhe flrsL buyer reglsLers Lhe sale Jesplte koowloq oboot tbe secooJ sole,
he wlll sLlll have beLLer rlghL, provlded, LhaL Lhe second buyer had noL
reglsLered lL ln good falLh before Lhe flrsL buyer's reglsLraLlon.
lor Lhe second buyer Lo dlsplace Lhe flrsL, he musL prove LhaL he acLed ln
good falLh LhroughouL Lhe process, from acqulslLlon unLll reglsLraLlon.
utoco v. cA (278 5ckA 702)
1he flrsL buyer's good falLh remalns all LhroughouL desplLe hls subsequenL
knowledge of Lhe second sale. kloqs ltopettles cotp. v. CollJo (606 5ckA
1J7)
8eglsLraLlon ln Cood lalLh always pre-empLs ossesslon ln Cood lalLh
8eLween Lwo buyers, Lhe one who reglsLers Lhe land ls preferred over Lhe
one who merely possesses lL. 1oeJo v. cA (252 5ckA 80)
/<@@?@@L<= D?G?D@ C< 4<CA &:C?DL:> :=N !UQK<>LP /<@@?@@L<=
AbsenL any reglsLraLlon, possesslon wlll deLermlne whlch has beLLer rlghL, based on
Lhese guldellnes:
d) ossesslon menLloned ln ArLlcle 1344 lncludes noL only maLerlal buL also
symbollc possesslon,
e) possessors ln good falLh are Lhose who are noL aware of any flaw ln Lhelr LlLle
or mode of acqulslLlon,
f) 8uyers of real properLy LhaL ls ln Lhe possesslon of persons oLher Lhan Lhe seller
musL be wary - Lhey musL lnvesLlgaLe Lhe rlghLs of Lhe possessors, and
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

60
g) good falLh ls always presumed, upon Lhose who allege bad falLh on Lhe parL of
Lhe possessors resLs Lhe burden of proof. 1eo lotty keolty ooJ uev. cotp. v.
ctoz (410 5ckA 484)
,A< L@ : /FDPA:@?D L= 2<<N S:LCAh
1o deLermlne wheLher a buyer ls ln good falLh, Lhe reckonlng polnL musL
be aL Lhe Llme of perfecLlon of Lhe conLracL. stote of lloo Oloqoet v.
Ooqjoco (56J 5ckA J7J)
8equlslLes of good falLh:
o no noLlce LhaL anoLher person as a rlghL Lo or lnLeresL ln Lhe
properLy
o MusL have pald ln full prlce
Cood falLh ls a quesLlon of facL whlch musL be proven ln courL. 1he burden
of proof ls on Lhe one who asserLs lL. Cood falLh as a presumpLlon ls noL
enough. 1lo v. Aboyoto (556 5ckA 175), 1ooqloo v. lotooqoo (5J5 5ckA
12J)
@5&*&" '# L$%' A+*07"- 8: A%0='2'
AdmlnlsLraLors of Lhe Llno Claguer's (deceased) esLaLe sold parcels of lands
(lncludlng LoL 76) Lo 8acanl. 1he laLLer sold back LoL 76 Lo Lhe admlnlsLraLors. LaLer
on, a 1C1 for Lhe land was lssued Lo Lduardo and Cllvla (Lhe admlnlsLraLors). !ose,
husband of Cllvla, sold porLlons of Lhe same land Lo Cng[oco. 1here were 2 deeds of
sale for each LransacLlon. Claguer's esLaLe flled annulmenL case agalnsL Cng[oco eL
al.
(<PCDL=?E ln Lhe deLermlnaLlon of wheLher or noL a buyer ls ln good falLh, Lhe polnL
ln Llme Lo be consldered ls Lhe momenL Lhe parLles acLually enLered lnLo Lhe
conLracL of sale.
(?PL@L<=E Cng[oco can'L clalm good falLh on Lhe sale of LoLs 1 and 2 because a
power of aLLorney Lo sell Lhe land was never presenLed Lo hlm.

lnsLances where Lhere ls no good falLh
1. 8elng ln Lhe realLy buslness
A person ln Lhe realLy buslness ([usL llke banks) ls charged wlLh
exLraordlnary dlllgence ln ascerLalnlng LhaL Lhere are no oLher persons
wlLh rlghLs over Lhe land. xptesscteJlt llooocloq cotp. v. velosco (47J
5ckA 570)
2. Close relaLlonshlp
lf Lhe buyer ls a chlld of Lhe seller, or a close famlly frlend who llved ln Lhe
same area, Lhey are deemed Lo have known of Lhe clrcumsLances of Lhe
land and are Lhus, noL really Lhlrd parLles. lllopll v. coott of Appeols (250
5ckA 566), Aqoltte v. cA (421 5ckA J10)
3. Cross lnadequacy of prlce
1o be a badge of bad falLh, Lhe prlce musL be grossly lnadequaLe or
shocklng Lo Lhe consclence such LhaL Lhe mlnd revolLs agalnsL lL and such
LhaL a reasonable man would nelLher dlrecLly or lndlrecLly be llkely Lo
consenL Lo lL. 1lo v. Aboyoto (556 5ckA 175)
4. CbllgaLlon Lo lnvesLlgaLe or Lo follow leads
When Lhere are cerLaln facLs whlch would puL a reasonable man on guard
and prompL hlm Lo lnvesLlgaLe Lhe properLy, he ls expecLed Lo do so. AcLual
lack of knowledge of flaw ln LlLle ls noL enough lf Lhese facLs exlsL. Motboy
v. cA (295 5ckA 556)
Lxamples of facLs necesslLaLlng furLher lnvesLlgaLlon on Lhe properLy:
o 1here are occupanLs on Lhe land, wheLher or noL Lhey possess lL ln
Lhe concepL of owner. Mottloez v. cA (J58 5ckA J8)
o When Lhe seller ls a company whlch ls closlng shop and llquldaLlng
asseLs. 1hey mlghL be dlsslpaLlng Lhelr asseLs Lo defraud credlLors.
5omsoo v. cA (2J8 5ckA J97)
o 1he properLy was LlLled and Lransferred wlLh undue hasLe wlLhln a
shorL perlod of Llme and LhaL Lhe land was a vasL LracL of land ln a
prlme locaLlon. oqle keolty cotp v. kepobllc (557 5ckA 77)
o When Lhe buyer deals wlLh someone who ls noL a reglsLered
owner, he ls expecLed Lo examlne Lhe cerLlflcaLe of LlLle as well as
Lhe auLhorlLy and capaclLy of Lhe seller Lo sell Lhe land. k.k.
loteJes v. colllloq (517 5ckA J69), cboo v. 5otlooo (521 5ckA 68)
A buyer of reglsLered land ls requlred Lo aL leasL ask Lhe seller Lo show Lhe
LlLle Lo Lhe land. lf he does noL ask for lL, he wlll be ln bad falLh. 5ootloqo v.
cA (247 5ckA JJ6)
3. When Lhere are sLlpulaLlons ln Lhe deed showlng bad falLh
ln a case, Lhe CourL held LhaL a sLlpulaLlon ln Lhe deed of sale provldlng
LhaL any losses whlch Lhe buyer may lncur ln Lhe evenL Lhe LlLle Lurns ouL
Lo be vesLed ln anoLher person are Lo bo borne by Lhe buyer alone, showed
LhaL Lhe buyer dld noL purchase Lhe sub[ecL maLLer ln good falLh wlLhouL
noLlce of any defecL ln Lhe LlLle of Lhe seller. llmketkol 5oos Mlllloq, loc. v.
cA (250 5ckA 52J)
6. Land ln adverse possesslon
When Lhe land ls ln possesslon of a Lhlrd person, Lhe buyer should
lnvesLlgaLe Lhe rlghLs of Lhose ln possesslon. WlLhouL such lnqulry, Lhe
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

61
buyer can hardly be regarded as a buyer ln good falLh. kepobllc v. ue
Cozmoo (J26 5ckA 267)
A buyer who could noL have falled Lo know or dlscover LhaL Lhe land sold
Lo hlm was ln Lhe adverse possesslon of anoLher ls a buyer ln bad falLh.
nelts of komoo uotooo, 5t. v. uy (J44 5ckA 2J8)
7. LxlsLence of lls leoJeos or Adverse Clalm
An annoLaLlon of lls peoJeos ls a noLlce Lo Lhe world LhaL any rlghL LhaL
anyone wlll acqulre over Lhe properLy ls sub[ecL Lo Lhe resulL of Lhe sulL.
kepobllc v. ue Cozmoo (J26 5ckA 267)
Any subsequenL buyer of Lhe reglsLered land annoLaLed wlLh lls peoJeos or
adverse clalm ls Lhus ln bad falLh. kloqs ltopettles cotp. v. CollJo (606
5ckA 1J7)
Lven lf Lhe annoLaLlon of lls peoJeos was subsequenLly cancelled buL Lhere
was a pendlng appeal, Lhe buyer cannoL lnvoke good falLh. lo lom v. cA
(J16 5ckA 86)
o LxcepLlon: When knowledge of lls peoJeos was acqulred aL Lhe
Llme Lhere was order Lo have lL cancelled.
8. AnnoLaLlon of Llen ln SeLLlemenL of LsLaLe
Such annoLaLlon ls a warnlng Lo Lhlrd persons on Lhe posslble lnLeresL of
excluded helrs or unpald credlLors ln Lhese properLles. 1he buyers of Lhese
properLles musL be ready for Lhe posslblllLy LhaL Lhelr LlLle be sub[ecL Lo
rlghLs of excluded parLles. 1oo v. 8eoolltoo (604 5ckA J6)
,A?= "DCLP>? 7IHH (<?@ 1<C "BB>UW /DL<DLCU L= )LQ? *F>? "BB>L?@
SlLuaLlons where ArL. 1344 wlll noL apply:
o noL all Lhe requlslLes are presenL
o 1he requlslLes are presenL, buL elLher Lhe flrsL Lo reglsLer rule or
flrsL Lo possess rule were noL complled wlLh
ln Lhese cases, Lhe general rule of ltlos tempote, potlot jote (rlorlLy ln
Llme, prlorlLy ln rlghL) wlll apply.
o 1hls ls acLually Lhe maln rule for double sales. cotbooell v. cA (69
5ckA 99)
o 1he rules ln ArL. 1344 only provlde for speclal rules for cerLaln
clrcumsLances.
1he prlorlLy conLemplaLed ln Lhls lnsLance ls LhaL of who acqulred LlLle flrsL.
1he quesLlon Lo ask, Lherefore, ls who among Lhe buyers had Lhe flrsL
petfecteJ ooJ vollJ conLracL of sale.
;*-9'%"++ 8: ;C
S:PC@E onclo was owner of land morLgaged Lo bank. Pe offered Lo sell Lo Carbonell,
who accepLed and applled for assumpLlon of morLgage. LaLer on, onclo lnformed
Carbonell LhaL he could no longer conLlnue wlLh Lhelr sale because he'd already sold
Lhe same land Lo one lnfanLe. upon learnlng Lhls, Carbonell reglsLered an adverse
clalm. SubsequenLly, lnfanLe reglsLered her deed of sale. 1C1 was lssued ln lnfanLe's
name buL wlLh annoLaLlon of Lhe adverse clalm of Carbonell.
'@@F?E beLLer clalm? Carbonell.
*:CL<E When Carbonell's sale was perfecLed, she was ln good falLh because onclo
was Lhe owner. Per good falLh dld noL cease even when she reglsLered Lhe adverse
clalm, noLwlLhsLandlng knowledge of Lhe second sale Lo lnfanLe. lnfanLe, on Lhe
oLher hand, was ln bad falLh because she acLually knew of Lhe flrsL sale.
lurLhermore, she was aware of an adverse clalm on Lhe land when she reglsLered lL.
Carbonell was also ln possesslon of Lhe land when lnfanLe boughL lL, so Lhe laLLer
should have lnqulred.

A9+$0*&$'%5 '# K74"-
/:U CA? /DLP?
"DC. 7IJ5.
)A? R?=N?? L@ K<F=N C< :PP?BC N?>LR?DU :=N C< B:U CA? BDLP? <G CA? CAL=M
@<>N :C CA? CLQ? :=N B>:P? @CLBF>:C?N L= CA? P<=CD:PC.
'G CA? CLQ? :=N B>:P? @A<F>N =<C A:R? K??= @CLBF>:C?NW CA? B:UQ?=C QF@C
K? Q:N? :C CA? CLQ? :=N B>:P? <G CA? N?>LR?DU <G CA? CAL=M @<>N. d7I66:e
When seller cannoL show LlLle Lo Lhe sub[ecL maLLer, Lhen he cannoL
compel Lhe buyer Lo pay Lhe prlce. nelts of 5evetloo 5oo Mlqoel v. cA (J64
5ckA 52J).
Mere sendlng of a leLLer by Lhe buyer expresslng Lhe lnLenLlon Lo pay
wlLhouL Lhe accompanylng paymenL ls noL consldered a valld Lender of
paymenL and conslgnaLlon of Lhe amounL due are essenLlal ln order Lo
exLlngulsh Lhe obllgaLlon Lo pay and obllge Lhe seller Lo convey LlLle.
1otcootot v. 8etoobe (459 5ckA 4J9).
unless Lhere ls a conLrary sLlpulaLlon, paymenL Lo be effecLlve musL be
made Lo Lhe seller ln accordance wlLh ArLlcle 1240 whlch provldes LhaL
aymenL shall be made Lo Lhe person ln whose favor Lhe obllgaLlon has
been consLlLuLed, or hls successor ln lnLeresL, or any person auLhorlzed Lo
recelve lL." Mooteclllo v. keyoes (J85 5ckA 244).
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

62
"PP?BC (?>LR?DU <G )AL=M !<>N
"DC. 7IJ9.
a=>?@@ <CA?D;L@? :MD??NW CA? KFU?D <G M<<N@ L@ =<C K<F=N C< :PP?BC
N?>LR?DU CA?D?<G KU L=@C:>>Q?=C@.
,A?D? CA?D? L@ : P<=CD:PC <G @:>? <G M<<N@ C< K? N?>LR?D?N KU @C:C?N
L=@C:>>Q?=C@W ;ALPA :D? C< K? @?B:D:C?>U B:LN G<DW :=N CA? @?>>?D Q:T?@
N?G?PCLR? N?>LR?DL?@ L= D?@B?PC <G <=? <D Q<D? L=@C:>>Q?=C@W <D CA? KFU?D
=?M>?PC@ <D D?GF@?@ ;LCA<FC OF@C P:F@? C< C:T? N?>LR?DU <G <D B:U G<D <=?
Q<D? L=@C:>>Q?=C@W LC N?B?=N@ L= ?:PA P:@? <= CA? C?DQ@ <G CA? P<=CD:PC
:=N CA? PLDPFQ@C:=P?@ <G CA? P:@?W ;A?CA?D CA? KD?:PA <G P<=CD:PC L@ @<
Q:C?DL:> :@ C< OF@CLGU CA? L=OFD?N B:DCU L= D?GF@L=M C< BD<P??N GFDCA?D :=N
@FL=M G<D N:Q:M?@ G<D KD?:PA <G CA? ?=CLD? P<=CD:PCW <D ;A?CA?D CA? KD?:PA
L@ @?R?D:K>?W MLRL=M DL@? C< : P>:LQ G<D P<QB?=@:CL<= KFC =<C C< : DLMAC C<
CD?:C CA? ;A<>? P<=CD:PC :@ KD<T?=. d=e
"DC. 7IJH.
,A?D? M<<N@ :D? N?>LR?D?N C< CA? KFU?DW ;ALPA A? A:@ =<C BD?RL<F@>U
?X:QL=?NW A? L@ =<C N??Q?N C< A:R? :PP?BC?N CA?Q F=>?@@ :=N F=CL> A?
A:@ A:N : D?:@<=:K>? <BB<DCF=LCU <G ?X:QL=L=M CA?Q G<D CA? BFDB<@? <G
:@P?DC:L=L=M ;A?CA?D CA?U :D? L= P<=G<DQLCU ;LCA CA? P<=CD:PC LG CA?D? L@
=< @CLBF>:CL<= C< CA? P<=CD:DU.
a=>?@@ <CA?D;L@? :MD??NW ;A?= CA? @?>>?D C?=N?D@ N?>LR?DU <G M<<N@ C< CA?
KFU?DW A? L@ K<F=NW <= D?_F?@CW C< :GG<DN CA? KFU?D : D?:@<=:K>?
<BB<DCF=LCU <G ?X:QL=L=M CA? M<<N@ G<D CA? BFDB<@? <G :@P?DC:L=L=M
;A?CA?D CA?U :D? L= P<=G<DQLCU ;LCA CA? P<=CD:PC.
,A?D? M<<N@ :D? N?>LR?D?N C< : P:DDL?D KU CA? @?>>?DW L= :PP<DN:=P? ;LCA :=
<DN?D GD<Q <D :MD??Q?=C ;LCA CA? KFU?DW FB<= CA? C?DQ@ CA:C CA? M<<N@
@A:>> =<C K? N?>LR?D?N KU CA? P:DDL?D C< CA? KFU?D F=CL> A? A:@ B:LN CA?
BDLP?W ;A?CA?D @FPA C?DQ@ :D? L=NLP:C?N KU Q:DTL=M CA? M<<N@ ;LCA CA?
;<DN@ iP<>>?PC <= N?>LR?DUWi <D <CA?D;L@?W CA? KFU?D L@ =<C ?=CLC>?N C<
?X:QL=? CA? M<<N@ K?G<D? CA? B:UQ?=C <G CA? BDLP?W L= CA? :K@?=P? <G
:MD??Q?=C <D F@:M? <G CD:N? B?DQLCCL=M @FPA ?X:QL=:CL<=. d=e

"DC. 7IJI.
)A? KFU?D L@ N??Q?N C< A:R? :PP?BC?N CA? M<<N@ ;A?= A? L=CLQ:C?@ C< CA?
@?>>?D CA:C A? A:@ :PP?BC?N CA?QW <D ;A?= CA? M<<N@ A:R? K??= N?>LR?D?N
C< ALQW :=N A? N<?@ :=U :PC L= D?>:CL<= C< CA?Q ;ALPA L@ L=P<=@L@C?=C ;LCA
CA? <;=?D@ALB <G CA? @?>>?DW <D ;A?=W :GC?D CA? >:B@? <G : D?:@<=:K>? CLQ?W
A? D?C:L=@ CA? M<<N@ ;LCA<FC L=CLQ:CL=M C< CA? @?>>?D CA:C A? A:@ D?O?PC?N
CA?Q. d=e

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

63
3A:BC?D b ` (<PFQ?=C@ <G )LC>?
!"#$%$&$'% *%, Y7%2&$'%
Any blll of ladlng, dock warranL, "quedan," or warehouse recelpL or order
for Lhe dellvery of goods, or any oLher documenL used ln Lhe ordlnary
course of buslness ln Lhe sale or Lransfer of goods, as proof of Lhe
possesslon or conLrol of Lhe goods, or auLhorlzlng or purporLlng Lo
auLhorlze Lhe possessor of Lhe documenL Lo Lransfer or recelve, elLher by
endorsemenL or by dellvery, goods represenLed by such documenL. (ArL.
1636)
o Lxample: Warehouse 8ecelpLs, 8onded Warehouse 8ecelpLs
2 luncLlons:
o As evldence of Lhe possesslon or conLrol of Lhe goods descrlbed
Lhereln
o As Lhe medlum of Lransferrlng LlLle and possesslon over Lhe goods
descrlbed Lhereln, wlLhouL havlng Lo effecL acLual dellvery Lhereof
uellvery and possesslon of Lhe documenL of LlLle ls LanLamounL Lo dellvery
and possesslon of Lhe goods whlch Lhe documenL of LlLle represenLs. lL
represenLs LhaL one who has possesslon of Lhe recelpL has been enLrusLed
has Lhe LlLle Lo Lhe goods. hlllpplne 1rusL co. v. naLlonal 8ank (42 hll.
413), Sly Cong 8leng v. PS8C (36 hll. 398)

D41"5 '# !'27."%&5 '# D$&+"
1?M<CL:K>? (<PFQ?=C <G )LC>?
"DC. 7I6b.
" N<PFQ?=C <G CLC>? L= ;ALPA LC L@ @C:C?N CA:C CA? M<<N@ D?G?DD?N C< CA?D?L=
;L>> K? N?>LR?D?N C< CA? K?:D?DW <D C< CA? <DN?D <G :=U B?D@<= =:Q?N L=
@FPA N<PFQ?=C L@ : =?M<CL:K>? N<PFQ?=C <G CLC>?. d=e
1<=81?M<CL:K>? (<PFQ?=C <G )LC>?
uocumenLs of LlLle whlch are noL dellverable Lo bearer" or Lo order."
$GG?PC@ <G $DD<D@ <= (<PFQ?=C@ <G )LC>?
Clerlcal errors do noL affecL Lhe negoLlablllLy of Lhe lnsLrumenL.
$GG?PC@ <G a@? <G [1<=81?M<CL:K>?\ )?DQ@ <= 1?M<CL:K>? (<PFQ?=C@
<G )LC>?
"DC. 7I76.
'G : N<PFQ?=C <G CLC>? ;ALPA P<=C:L=@ := F=N?DC:TL=M KU : P:DDL?DW
;:D?A<F@?Q:= <D <CA?D K:L>?? C< N?>LR?D CA? M<<N@ C< K?:D?DW C< :
@B?PLGL?N B?D@<= <D <DN?D <G : @B?PLGL?N B?D@<= <D ;ALPA P<=C:L=@ ;<DN@ <G
>LT? LQB<DCW A:@ B>:P?N FB<= LC CA? ;<DN@ i=<C =?M<CL:K>?Wi i=<=8
=?M<CL:K>?i <D CA? >LT?W @FPA N<PFQ?=C Q:U =?R?DCA?>?@@ K? =?M<CL:C?N KU
CA? A<>N?D :=N L@ : =?M<CL:K>? N<PFQ?=C <G CLC>? ;LCAL= CA? Q?:=L=M <G CAL@
)LC>?. 4FC =<CAL=M L= CAL@ )LC>? P<=C:L=?N @A:>> K? P<=@CDF?N :@ >LQLCL=M <D
N?GL=L=M CA? ?GG?PC FB<= CA? <K>LM:CL<=@ <G CA? P:DDL?DW ;:D?A<F@?Q:=W <D
<CA?D K:L>?? L@@FL=M : N<PFQ?=C <G CLC>? <D B>:PL=M CA?D?<= CA? ;<DN@ i=<C
=?M<CL:K>?Wi i=<=8=?M<CL:K>?Wi <D CA? >LT?. d=e
W"0'&$*&$'% '# W"0'&$*9+" !'27."%&5 '# D$&+"
]<; 1?M<CL:CL<= /D<B?D>U $GG?PC?N
"DC. 7I6J.
" =?M<CL:K>? N<PFQ?=C <G CLC>? Q:U K? =?M<CL:C?N KU N?>LR?DUE
7e ,A?D? KU CA? C?DQ@ <G CA? N<PFQ?=C CA? P:DDL?DW
;:D?A<F@?Q:= <D <CA?D K:L>?? L@@FL=M CA? @:Q? F=N?DC:T?@ C< N?>LR?D CA?
M<<N@ C< CA? K?:D?Dg <D
5e ,A?D? KU CA? C?DQ@ <G CA? N<PFQ?=C CA? P:DDL?DW
;:D?A<F@?Q:= <D <CA?D K:L>?? L@@FL=M CA? @:Q? F=N?DC:T?@ C< N?>LR?D CA?
M<<N@ C< CA? <DN?D <G : @B?PLGL?N B?D@<=W :=N @FPA B?D@<= <D : @FK@?_F?=C
?=N<D@?? <G CA? N<PFQ?=C A:@ L=N<D@?N LC L= K>:=T <D C< CA? K?:D?D.
,A?D? KU CA? C?DQ@ <G : =?M<CL:K>? N<PFQ?=C <G CLC>? CA? M<<N@ :D?
N?>LR?D:K>? C< K?:D?D <D ;A?D? : =?M<CL:K>? N<PFQ?=C <G CLC>? A:@ K??=
L=N<D@?N L= K>:=T <D C< K?:D?DW :=U A<>N?D Q:U L=N<D@? CA? @:Q? C<
ALQ@?>G <D C< :=U @B?PLGL?N B?D@<=W :=N L= @FPA P:@? CA? N<PFQ?=C @A:>>
CA?D?:GC?D K? =?M<CL:C?N <=>U KU CA? ?=N<D@?Q?=C <G @FPA ?=N<D@??. d=e

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

64
"DC. 7I6V.
" =?M<CL:K>? N<PFQ?=C <G CLC>? Q:U K? =?M<CL:C?N KU CA? ?=N<D@?Q?=C <G
CA? B?D@<= C< ;A<@? <DN?D CA? M<<N@ :D? KU CA? C?DQ@ <G CA? N<PFQ?=C
N?>LR?D:K>?. !FPA ?=N<D@?Q?=C Q:U K? L= K>:=TW C< K?:D?D <D C< : @B?PLGL?N
B?D@<=. 'G L=N<D@?N C< : @B?PLGL?N B?D@<=W LC Q:U K? :M:L= =?M<CL:C?N KU
CA? ?=N<D@?Q?=C <G @FPA B?D@<= L= K>:=TW C< K?:D?D <D C< :=<CA?D @B?PLGL?N
B?D@<=. !FK@?_F?=C =?M<CL:CL<=@ Q:U K? Q:N? L= >LT? Q:==?D. d=e
,A< 3:= 1?M<CL:C?
"DC. 7I75.
" =?M<CL:K>? N<PFQ?=C <G CLC>? Q:U K? =?M<CL:C?NE
d7e 4U CA? <;=?D CA?D?G<Dg <D
d5e 4U :=U B?D@<= C< ;A<Q CA? B<@@?@@L<= <D PF@C<NU <G CA? N<PFQ?=C A:@
K??= ?=CDF@C?N KU CA? <;=?DW LGW KU CA? C?DQ@ <G CA? N<PFQ?=C CA? K:L>??
L@@FL=M CA? N<PFQ?=C F=N?DC:T?@ C< N?>LR?D CA? M<<N@ C< CA? <DN?D <G CA?
B?D@<= C< ;A<Q CA? B<@@?@@L<= <D PF@C<NU <G CA? N<PFQ?=C A:@ K??=
?=CDF@C?NW <D LG :C CA? CLQ? <G @FPA ?=CDF@CL=M CA? N<PFQ?=C L@ L= @FPA G<DQ
CA:C LC Q:U K? =?M<CL:C?N KU N?>LR?DU. d=e
$GG?PC@ <G /D<B?D 1?M<CL:CL<=
"DC. 7I79.
" B?D@<= C< ;A<Q : =?M<CL:K>? N<PFQ?=C <G CLC>? A:@ K??= NF>U
=?M<CL:C?N :P_FLD?@ CA?D?KUE
d7e !FPA CLC>? C< CA? M<<N@ :@ CA? B?D@<= =?M<CL:CL=M CA? N<PFQ?=C C< ALQ
A:N <D A:N :KL>LCU C< P<=R?U C< : BFDPA:@?D L= M<<N G:LCA G<D R:>F? :=N :>@<
@FPA CLC>? C< CA? M<<N@ :@ CA? B?D@<= C< ;A<@? <DN?D CA? M<<N@ ;?D? C< K?
N?>LR?D?N KU CA? C?DQ@ <G CA? N<PFQ?=C A:N <D A:N :KL>LCU C< P<=R?U C< :
BFDPA:@?D L= M<<N G:LCA G<D R:>F?g :=N
d5e )A? NLD?PC <K>LM:CL<= <G CA? K:L>?? L@@FL=M CA? N<PFQ?=C C< A<>N
B<@@?@@L<= <G CA? M<<N@ G<D ALQ :PP<DNL=M C< CA? C?DQ@ <G CA? N<PFQ?=C :@
GF>>U :@ LG @FPA K:L>?? A:N P<=CD:PC?N NLD?PC>U ;LCA ALQ. d=e
$GG?PC@ <G &?D?>U )D:=@G?DDL=Mj(?>LR?DL=M <G [0DN?D\ 1?M<CL:K>?
(<PFQ?=C@ <G )LC>?
"DC. 7I77.
" N<PFQ?=C <G CLC>? ;ALPA L@ =<C L= @FPA G<DQ CA:C LC P:= K? =?M<CL:C?N KU
N?>LR?DU Q:U K? CD:=@G?DD?N KU CA? A<>N?D KU N?>LR?DU C< : BFDPA:@?D <D
N<=??. " =<=8=?M<CL:K>? N<PFQ?=C P:==<C K? =?M<CL:C?N :=N CA?
?=N<D@?Q?=C <G @FPA : N<PFQ?=C MLR?@ CA? CD:=@G?D?? =< :NNLCL<=:> DLMAC.
d=e
"DC. 7I7I.
,A?D? : =?M<CL:K>? N<PFQ?=C <G CLC>? L@ CD:=@G?DD?N G<D R:>F? KU N?>LR?DUW
:=N CA? ?=N<D@?Q?=C <G CA? CD:=@G?D<D L@ ?@@?=CL:> G<D =?M<CL:CL<=W CA?
CD:=@G?D?? :P_FLD?@ : DLMAC :M:L=@C CA? CD:=@G?D<D C< P<QB?> ALQ C<
?=N<D@? CA? N<PFQ?=C F=>?@@ : P<=CD:DU L=C?=CL<= :BB?:D@. )A?
=?M<CL:CL<= @A:>> C:T? ?GG?PC :@ <G CA? CLQ? ;A?= CA? ?=N<D@?Q?=C L@
:PCF:>>U Q:N?. d=e
$GG?PC@ :=N 3<=@?_F?=P?@ <G a=:FCA<DLf?N 1?M<CL:CL<=
"DC. 7I7J.
)A? R:>LNLCU <G CA? =?M<CL:CL<= <G : =?M<CL:K>? N<PFQ?=C <G CLC>? L@ =<C
LQB:LD?N KU CA? G:PC CA:C CA? =?M<CL:CL<= ;:@ : KD?:PA <G NFCU <= CA? B:DC
<G CA? B?D@<= Q:TL=M CA? =?M<CL:CL<=W <D KU CA? G:PC CA:C CA? <;=?D <G CA?
N<PFQ?=C ;:@ N?BDLR?N <G CA? B<@@?@@L<= <G CA? @:Q? KU ><@@W CA?GCW
GD:FNW :PPLN?=CW QL@C:T?W NFD?@@W <D P<=R?D@L<=W LG CA? B?D@<= C< ;A<Q CA?
N<PFQ?=C ;:@ =?M<CL:C?N <D : B?D@<= C< ;A<Q CA? N<PFQ?=C ;:@
@FK@?_F?=C>U =?M<CL:C?N B:LN R:>F? CA?D?G<D L= M<<N G:LCA ;LCA<FC =<CLP?
<G CA? KD?:PA <G NFCUW <D ><@@W CA?GCW GD:FNW :PPLN?=CW QL@C:T?W NFD?@@ <D
P<=R?D@L<=. d=e

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

63
C55$0%."%& '# W'%JW"0'&$*9+" !'27."%&5 '# D$&+"
]<; "@@LMQ?=C &:N?
"DC. 7I7H.
" B?D@<= C< ;A<Q : N<PFQ?=C <G CLC>? A:@ K??= CD:=@G?DD?NW KFC =<C
=?M<CL:C?NW :P_FLD?@ CA?D?KUW :@ :M:L=@C CA? CD:=@G?D<DW CA? CLC>? C< CA?
M<<N@W @FKO?PC C< CA? C?DQ@ <G :=U :MD??Q?=C ;LCA CA? CD:=@G?D<D.
'G CA? N<PFQ?=C L@ =<=8=?M<CL:K>?W @FPA B?D@<= :>@< :P_FLD?@ CA? DLMAC C<
=<CLGU CA? K:L>?? ;A< L@@F?N CA? N<PFQ?=C <G CA? CD:=@G?D CA?D?<GW :=N
CA?D?KU C< :P_FLD? CA? NLD?PC <K>LM:CL<= <G @FPA K:L>?? C< A<>N B<@@?@@L<=
<G CA? M<<N@ G<D ALQ :PP<DNL=M C< CA? C?DQ@ <G CA? N<PFQ?=C.
/DL<D C< CA? =<CLGLP:CL<= C< @FPA K:L>?? KU CA? CD:=@G?D<D <D CD:=@G?D?? <G :
=<=8=?M<CL:K>? N<PFQ?=C <G CLC>?W CA? CLC>? <G CA? CD:=@G?D?? C< CA? M<<N@
:=N CA? DLMAC C< :P_FLD? CA? <K>LM:CL<= <G @FPA K:L>?? Q:U K? N?G?:C?N KU
CA? >?RU <G := :CC:PAQ?=C <G ?X?PFCL<= FB<= CA? M<<N@ KU : PD?NLC<D <G CA?
CD:=@G?D<DW <D KU : =<CLGLP:CL<= C< @FPA K:L>?? KU CA? CD:=@G?D<D <D :
@FK@?_F?=C BFDPA:@?D GD<Q CA? CD:=@G?D <G : @FK@?_F?=C @:>? <G CA? M<<N@
KU CA? CD:=@G?D<D. d=e
$GG?PC@ <G )D:=@G?D KU "@@LM=?Q?=C
V*--*%&$"5 '% W"0'&$*&$'% *%, C55$0%."%& '#
!'27."%&5 '# D$&+"
"DC. 7I7Z.
" B?D@<= ;A< G<D R:>F? =?M<CL:C?@ <D CD:=@G?D@ : N<PFQ?=C <G CLC>? KU
?=N<D@?Q?=C <D N?>LR?DUW L=P>FNL=M <=? ;A< :@@LM=@ G<D R:>F? : P>:LQ
@?PFD?N KU : N<PFQ?=C <G CLC>? F=>?@@ : P<=CD:DU L=C?=CL<= :BB?:D@W
;:DD:=C@E
d7e )A:C CA? N<PFQ?=C L@ M?=FL=?g
d5e )A:C A? A:@ : >?M:> DLMAC C< =?M<CL:C? <D CD:=@G?D LCg
d9e )A:C A? A:@ T=<;>?NM? <G =< G:PC ;ALPA ;<F>N LQB:LD CA? R:>LNLCU <D
;<DCA <G CA? N<PFQ?=Cg :=N
dHe )A:C A? A:@ : DLMAC C< CD:=@G?D CA? CLC>? C< CA? M<<N@ :=N CA:C CA? M<<N@
:D? Q?DPA:=C:K>? <D GLC G<D : B:DCLPF>:D BFDB<@?W ;A?=?R?D @FPA
;:DD:=CL?@ ;<F>N A:R? K??= LQB>L?N LG CA? P<=CD:PC <G CA? B:DCL?@ A:N
K??= C< CD:=@G?D ;LCA<FC : N<PFQ?=C <G CLC>? CA? M<<N@ D?BD?@?=C?N
CA?D?KU. d=e
H7+"5 '% L"84\G*-%$5/."%& '# G'',5 ;'8"-", 94
!'27."%&5 '# D$&+"
,A?= 1<=81?M<CL:K>? (<PFQ?=C <G )LC>?
"DC. 7I7H.
" B?D@<= C< ;A<Q : N<PFQ?=C <G CLC>? A:@ K??= CD:=@G?DD?NW KFC =<C
=?M<CL:C?NW :P_FLD?@ CA?D?KUW :@ :M:L=@C CA? CD:=@G?D<DW CA? CLC>? C< CA?
M<<N@W @FKO?PC C< CA? C?DQ@ <G :=U :MD??Q?=C ;LCA CA? CD:=@G?D<D.
'G CA? N<PFQ?=C L@ =<=8=?M<CL:K>?W @FPA B?D@<= :>@< :P_FLD?@ CA? DLMAC C<
=<CLGU CA? K:L>?? ;A< L@@F?N CA? N<PFQ?=C <G CA? CD:=@G?D CA?D?<GW :=N
CA?D?KU C< :P_FLD? CA? NLD?PC <K>LM:CL<= <G @FPA K:L>?? C< A<>N B<@@?@@L<=
<G CA? M<<N@ G<D ALQ :PP<DNL=M C< CA? C?DQ@ <G CA? N<PFQ?=C.
/DL<D C< CA? =<CLGLP:CL<= C< @FPA K:L>?? KU CA? CD:=@G?D<D <D CD:=@G?D?? <G :
=<=8=?M<CL:K>? N<PFQ?=C <G CLC>?W CA? CLC>? <G CA? CD:=@G?D?? C< CA? M<<N@
:=N CA? DLMAC C< :P_FLD? CA? <K>LM:CL<= <G @FPA K:L>?? Q:U K? N?G?:C?N KU
CA? >?RU <G := :CC:PAQ?=C <G ?X?PFCL<= FB<= CA? M<<N@ KU : PD?NLC<D <G CA?
CD:=@G?D<DW <D KU : =<CLGLP:CL<= C< @FPA K:L>?? KU CA? CD:=@G?D<D <D :
@FK@?_F?=C BFDPA:@?D GD<Q CA? CD:=@G?D <G : @FK@?_F?=C @:>? <G CA? M<<N@
KU CA? CD:=@G?D<D. d=e
,A?= 1?M<CL:K>? (<PFQ?=C <G )LC>?
"DC. 7I7V.
'G M<<N@ :D? N?>LR?D?N C< : K:L>?? KU CA? <;=?D <D KU : B?D@<= ;A<@? :PC L=
P<=R?UL=M CA? CLC>? C< CA?Q C< : BFDPA:@?D L= M<<N G:LCA G<D R:>F? ;<F>N
KL=N CA? <;=?D :=N : =?M<CL:K>? N<PFQ?=C <G CLC>? L@ L@@F?N G<D CA?Q CA?U
P:==<C CA?D?:GC?DW ;AL>? L= B<@@?@@L<= <G @FPA K:L>??W K? :CC:PA?N KU
M:D=L@AQ?=C <D <CA?D;L@? <D K? >?RL?N F=N?D := ?X?PFCL<= F=>?@@ CA?
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

66
N<PFQ?=C K? GLD@C @FDD?=N?D?N C< CA? K:L>?? <D LC@ =?M<CL:CL<= ?=O<L=?N.
)A? K:L>?? @A:>> L= =< P:@? K? P<QB?>>?N C< N?>LR?D FB CA? :PCF:>
B<@@?@@L<= <G CA? M<<N@ F=CL> CA? N<PFQ?=C L@ @FDD?=N?D?N C< ALQ <D
LQB<F=N?N KU CA? P<FDC. d=e
"DC. 7I56.
" PD?NLC<D ;A<@? N?KC<D L@ CA? <;=?D <G : =?M<CL:K>? N<PFQ?=C <G CLC>?
@A:>> K? ?=CLC>?N C< @FPA :LN GD<Q P<FDC@ <G :BBD<BDL:C? OFDL@NLPCL<= KU
L=OF=PCL<= :=N <CA?D;L@? L= :CC:PAL=M @FPA N<PFQ?=C <D L= @:CL@GUL=M CA?
P>:LQ KU Q?:=@ CA?D?<G :@ L@ :>><;?N :C >:; <D L= ?_FLCU L= D?M:DN C<
BD<B?DCU ;ALPA P:==<C D?:NL>U K? :CC:PA?N <D >?RL?N FB<= KU <DNL=:DU
>?M:> BD<P?@@. d=e

3A:BC?D J ` !:>? 4U : 1<=80;=?D <D 4U 0=? ]:RL=M
+<LN:K>? )LC>?
V/"% )"++"- $5 W'& AE%"- '# )79="2& B*&&"-
"C /?DG?PCL<=
Seller need noL be Lhe owner aL perfecLlon, provlded he acqulres LlLle laLer
on, buL when dellvery of ownershlp ls no longer posslble, Lhe sale should
be consldered vold. Nool v. cA (276 5ckA 149)
erfecLlon merely creaLes Lhe obllgaLlon Lo Lransfer ownershlp, buL lL does
noL by lLself Lransfer ownershlp.
"C 3<=@FQQ:CL<=
"DC. 7I6I.
!FKO?PC C< CA? BD<RL@L<=@ <G CAL@ )LC>?W ;A?D? M<<N@ :D? @<>N KU : B?D@<=
;A< L@ =<C CA? <;=?D CA?D?<GW :=N ;A< N<?@ =<C @?>> CA?Q F=N?D :FCA<DLCU
<D ;LCA CA? P<=@?=C <G CA? <;=?DW CA? KFU?D :P_FLD?@ =< K?CC?D CLC>? C< CA?
M<<N@ CA:= CA? @?>>?D A:NW F=>?@@ CA? <;=?D <G CA? M<<N@ L@ KU AL@ P<=NFPC
BD?P>FN?N GD<Q N?=UL=M CA? @?>>?Dk@ :FCA<DLCU C< @?>>.
1<CAL=M L= CAL@ )LC>?W A<;?R?DW @A:>> :GG?PCE
d7e )A? BD<RL@L<=@ <G :=U G:PC<D@k :PCW D?P<DNL=M >:;@W <D :=U <CA?D
BD<RL@L<= <G >:; ?=:K>L=M CA? :BB:D?=C <;=?D <G M<<N@ C< NL@B<@? <G CA?Q
:@ LG A? ;?D? CA? CDF? <;=?D CA?D?<Gg
d5e )A? R:>LNLCU <G :=U P<=CD:PC <G @:>? F=N?D @C:CFC<DU B<;?D <G @:>? <D
F=N?D CA? <DN?D <G : P<FDC <G P<QB?C?=C OFDL@NLPCL<=g
d9e /FDPA:@?@ Q:N? L= : Q?DPA:=Ck@ @C<D?W <D L= G:LD@W <D Q:DT?C@W L=
:PP<DN:=P? ;LCA CA? 3<N? <G 3<QQ?DP? :=N @B?PL:> >:;@. d=e
noLe LhaL Lhe provlslon does noL say LhaL Lhe conLracL ls vold.
lL ls aL Lhe consummaLlon sLage where Lhe prlnclple of oemo Jot pooJ ooo
bobet (one cannoL glve whaL one does noL have) applles. covlte uevt.
8ook v. 5pooses 5ytos llm (J24 5ckA J46)

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

67
>*7+.$&*% 8: ;C
A co-owner could only sell LhaL porLlon whlch may be alloLLed Lo hlm upon
LermlnaLlon of Lhe co-ownershlp. A @:>? of Lhe enLlre properLy by one co-owner
wlLhouL Lhe consenL of Lhe oLher co-owners L@ =<C =F>> :=N R<LN. Powever, only Lhe
rlghLs of Lhe co-owner-sell are Lransferred, Lhereby maklng Lhe buyer a co-owner of
Lhe properLy.

!:>?@ KU 3<8<;=?D <G ,A<>? /D<B?DCU <D (?GL=LC? /<DCL<= )A?D?<G
none of Lhe co-owners may clalm any rlghL, LlLle or lnLeresL Lo a parLlcular
porLlon of Lhe Lhlng owned ln common.
A co-owner can demand parLlLlon, buL before such, he has no rlghL Lo
dlvlde Lhe loL lnLo Lwo parLs, and convey Lhe whole of one parL by meLes
and bounds. lopez v. llostte (5 lbll 567)
A co-owner, however, has Lhe power Lo allenaLe hls undlvlded share over
Lhe properLy. 1hus, lf before parLlLlon, he sells Lhe enLlre properLy or a
deflnlLe porLlon Lhereof wlLhouL consenL of oLher co-owners, Lhe sale wlll
only be valld wlLh regard Lo hls undlvlded share ln Lhe properLy. 1he sale
cannoL be consldered as null and vold. 8olloo-coslloo v. cA (160 5ckA 7J8),
loolmltoo v. cA (215 5ckA 866)
o 1he buyer Lhus becomes a co-owner of Lhe properLy.
1he remedy of Lhe buyer Lherefore ls Lo demand parLlLlon of Lhe enLlre
properLy. Pe wlll have Lhls rlghL slnce he became a co-owner hlmself.
nulllflcaLlon of Lhe sale ls noL proper. 1omos clooJlo Memotlol colleqe, loc.
v. coott of Appeols (J16 5ckA 502)
o CLv's commenL: 1he rullngs seem Lo dlsregard Lhe commerclal
facL LhaL sellers and buyers agree on Lhe prlce based on Lhe slze of
Lhe properLy (l.e. buyers wlll pay more lf Lhey expecL Lo acqulre
Lhe enLlre properLy, buyers wlll pay less lf Lhey expecL Lo acqulre
[usL a parL). 1he proper remedy, accordlng Lo CLv, ls Lo uphold Lhe
valldlLy of Lhe sale, buL allow Lhe buyer Lo elLher (1) seek
resclsslon for breach of Lhe seller's obllgaLlon Lo dellver Lhe ob[ecL
agreed upon, or (2) accepL parLlal dellvery wlLh approprlaLe
reducLlon ln prlce.
$XP?BCL<=@ C< *F>? <= $GG?PC <G !:>? <G (?GL=LC? /<DCL<= <G 3<8<;=?D
Memory ald: L):P< #
1) 1he sub[ecL maLLer ls Lndlvlslble by naLure or by lnLenL. lL renders Lhe conLracL
vold slnce Lhe buyer would noL have enLered lnLo Lhe LransacLlon excepL Lo
acqulre all of Lhe properLles purchased by hlm. MloJoooo AcoJemy, loc. v. op
(1J 5ckA 190)
2) lf Lhe sale of a parLlcular porLlon ls wlLh PonsenL of oLher co-owners, Lhe sale as
Lo LhaL porLlon ls valld. Lack of ob[ecLlon by Lhe co-owners ls ln effecL already a
parLlal parLlLlon. lomplooo v. Moteto (96 5ckA 775)
3) A co-owner who sells <ne of Lhe Lwo lands owned ln common wlLh anoLher co-
owner, and does noL Lurn-over one-half of Lhe proceeds of Lhe sale Lo Lhe oLher
co-owner, Lhe laLLer may by law and equlLy lay excluslve clalm Lo Lhe remalnlng
parcel of land. lmpetlol v. coott of Appeols (259 5ckA 65)
4) lpso jote Lransfer of ownershlp under ArL. 1434. When Lhe co-owner-seller
subsequenLly acqulres LlLle Lo Lhe deflnlLe porLlon or Lhe enLlre properLy
sub[ecL maLLer of Lhe sale, Lhe LlLle :uLomaLlcally passes Lo Lhe buyer. llsoeo
v. nelts of letto uootloq (J1J 5ckA J84)
3) 8eglsLraLlon under Lhe )orrens sysLem. lf Lhe 1orrens LlLle shows LhaL Lhe
properLy ls owned solely by Lhe seller (l.e. no lndlcaLlon LhaL properLy ls co-
owned), Lhe buyer can rely on Lhe 1orrens LlLle. ctoz v. lels (J27 5ckA 570)
B$%,*%*' C2*,".4I 3%2: 8: Q*1
S:PC@E 8osenda and her son sold Lo ?ap 4 parcels of land lncludlng bulldlngs,
equlpmenLs, books, and oLher flxLures of 2 schools Lhereln whlch alLhough
Lechnlcally Lhey owned, was under a co-ownershlp LogeLher wlLh 8osenda's oLher
chlldren and such were sold by 8osenda wlLhouL Lhelr consenL.
(<PCDL=?E )A? P<=CD:PC <G @:>? ;:@ R<LN K?P:F@? CA? BD<K>?Q ;LCA CA? @:>? ;?=C
L=C< <=? <G CA? ?@@?=CL:> D?_FL@LC?@ <G : @:>?. )A?D? ;:@ =< Q??CL=M <G CA? QL=N@
:@ C< CA? @FKO?PC Q:CC?D. lf Lhe problem ls one of Lhe essenLlal requlslLes and was
only found durlng Lhe consummaLlon sLage, Lhe conLracL can be volded even lf
already aL Lhe consummaLlon sLage. lf Lhe problem ls only wlLh regard Lo Lhe
performance of an obllgaLlon, lL does noL affecL Lhe perfecLlon of Lhe sale.

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

68
@?2"1&$'%5 &' H7+"5 '% L"0*+ @##"2&5 '# )*+" 94 *
W'%JAE%"-
,A?= *?:> 0;=?D $@C<BB?N
"DC. 7H9H.
,A?= : B?D@<= ;A< L@ =<C CA? <;=?D <G : CAL=M @?>>@ <D :>L?=:C?@ :=N
N?>LR?D@ LCW :=N >:C?D CA? @?>>?D <D MD:=C<D :P_FLD?@ CLC>? CA?D?C<W @FPA CLC>?
B:@@?@ KU <B?D:CL<= <G >:; C< CA? KFU?D <D MD:=C??.
K72&'% 8: G*9*-
(<PCDL=?E When a person who ls noL Lhe owner of a Lhlng @?>>@ :=N N?>LR?D@ LC, and
laLer Lhe seller acqulres LlLle LhereLo, such LlLle passes by operaLlon of law Lo Lhe
buyer. Seller ls subsequenLly barred by esLoppel from clalmlng oLherwlse.

*?P<DNL=M #:;@
1he buyer of reglsLered land has Lhe rlghL Lo rely on Lhe 1orrens LlLle of Lhe
sald land, absenL any facLual clrcumsLances whlch would lead a prudenL
man Lo lnqurle furLher lf Lhe vendor has Lhe capaclLy Lo Lransfer lnLeresL Lo
Lhe land. 5y v. coplsttooo, It. (560 5ckA 10J)
!C:CFC<DU /<;?Dg YFNLPL:> !:>?
!udgmenLs of courLs dlvesLlng Lhe reglsLered owner of LlLle and vesLlng
Lhem ln Lhe oLher parLy are valld.
Sale by a sherlff of land levled upon aL publlc aucLlon would valldly Lransfer
ownershlp Lo Lhe hlghesL bldder.
When a defeaLed parLy refuses Lo execuLe Lhe absoluLe deed of sale ln
accordance wlLh Lhe [udgmenL, Lhe courL may dlrecL Lhe acL Lo be done aL
Lhe cosL of Lhe dlsobedlenL parLy by some oLher person appolnLed by Lhe
courL and Lhe acL when so done shall have Lhe llke effecL as ls done by Lhe
parLy. Moollo kemooot co., loc. v. cA (2J1 5ckA 281)
!:>? :C : &?DPA:=C !C<D?
1hls ls an example of an lmperfecL or vold LlLle rlpenlng lnLo a valld one.
1he rlghLs and lnLeresL of an lnnocenL purchaser for value ls proLecLed ln
order Lo faclllLaLe commerclal sales on movables and Lo glve sLablllLy Lo
buslness LransacLlon. 5oo 8totbets & co. v. velosco (54 O.C. 514J)
SLore" - any place where goods are kepL for sale or where goods are
deposlLed and sold by one engaged ln buylng and selllng Lhem. clty of
Moollo v. 8oqsok lombet co. (101 lbll. 859)
;$&4 '# B*%$+* 8: K7057F
(<PCDL=?E 1he necessary elemenL of sLore" ls LhaL Lhere are good or wares
dlsplayed or sLored Lhereln. Also, Lhe flrm musL be acLually engaged ln Lhe buslness
of buylng and selllng. lf a flrm produces, manufacLures, and dellvers lLs own
produce from lLs warehouses and Lhey have no sLores open for sale, flrm ls noL a
merchanL sLore.

)7% K-'&/"-5 R ;': 8: N"+*52'
(<PCDL=?E 1he general rule ls LhaL when a person who ls noL Lhe owner of a Lhlng
sells Lhe same, Lhe buyer acqulres no beLLer LlLle Lhan Lhe seller has. Powever, a
purchase ln good falLh ln a merchanL sLore, or falr, or markeL ls proLecLed by law. lL
ls an excepLlon Lo Lhe general rule LhaL no Lransfer of ownershlp may be had
Lhrough an acL of a non-owner. 1he rlghLs and lnLeresL of an lnnocenL buyer for
value who boughL a Lhlng from a merchanL sLore should be proLecLed when lL
comes lnLo clash wlLh Lhe rlghL and lnLeresLs of a vendor. 1he buyer cannoL be
reasonably expecLed Lo look behlnd Lhe LlLle of arLlcles he buys ln a sLore.

!:>? KU : !?>>?D ,A< A:@ +<LN:K>? )LC>? <= CA? !FKO?PC &:CC?D !<>N
"DC. 7I6Z.
,A?D? CA? @?>>?D <G M<<N@ A:@ : R<LN:K>? CLC>? CA?D?C<W KFC AL@ CLC>? A:@ =<C
K??= :R<LN?N :C CA? CLQ? <G CA? @:>?W CA? KFU?D :P_FLD?@ : M<<N CLC>? C< CA?
M<<N@W BD<RLN?N A? KFU@ CA?Q L= M<<N G:LCAW G<D R:>F?W :=N ;LCA<FC =<CLP?
<G CA? @?>>?Dk@ N?G?PC <G CLC>?. d=e
Slnce Lhe provlslon Lalks of paymenL by Lhe buyer and Lransfer of LlLle Lo
Lhe buyer, Lhe provlslon applles Lo Lhe consummaLlon sLage of Lhe
conLracL.
lf afLer perfecLlon buL before consummaLlon, Lhe seller's voldable LlLle
becomes vold, Lhe buyer does noL obLaln good LlLle.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

69
"BB>LP:K>? *F>?@ C< 'QQ<R:K>?@
ArLlcles 1303 and 1306 do noL apply Lo lmmovables. When Lhe seller of a
parcel of land has only voldable or vold LlLle Lo Lhe properLy, Lhe buyer,
even Lhough ln good falLh and for value, Lakes only Lhe same LlLle as Lhe
seller had.
lor land, Lhe 1orrens sysLem sLlll prevalls. nelts of 5pooses 8eolto Covloo.
v. coott of Appeols (291 5ckA 495)
o Powever, Lhe defense of lndefeaslblllLy of 1orrens LlLle ls
unavalllng Lo properLles and oLher lmprovemenLs slLuaLed or bullL
on Lhe land. 1sol v. cA (J66 5ckA J24)
A person who deals wlLh reglsLered land Lhrough someone who ls noL Lhe
reglsLered owner ls expecLed Lo look beyond Lhe cerLlflcaLe of LlLle and
examlne all Lhe facLual clrcumsLances Lhereof ln order Lo deLermlne lf Lhe
vendor has Lhe capaclLy Lo Lransfer any lnLeresL ln Lhe land. 5y v.
coplsttooo, It. (560 5ckA 10J)
[)LC>?\ :@ C< &<R:K>? /D<B?DCL?@
"DC. IIV.
)A? B<@@?@@L<= <G Q<R:K>? BD<B?DCU :P_FLD?N L= M<<N G:LCA L@ ?_FLR:>?=C C<
: CLC>?. 1?R?DCA?>?@@W <=? ;A< A:@ ><@C :=U Q<R:K>? <D A:@ K??= F=>:;GF>>U
N?BDLR?N CA?D?<G Q:U D?P<R?D LC GD<Q CA? B?D@<= L= B<@@?@@L<= <G CA?
@:Q?.
'G CA? B<@@?@@<D <G : Q<R:K>? ><@C <D ;ALPA CA? <;=?D A:@ K??= F=>:;GF>>U
N?BDLR?NW A:@ :P_FLD?N LC L= M<<N G:LCA :C : BFK>LP @:>?W CA? <;=?D P:==<C
<KC:L= LC@ D?CFD= ;LCA<FC D?LQKFD@L=M CA? BDLP? B:LN CA?D?G<D. dHZH:e
LxcepLlons Lo ArL. 339
8y cross-reference Lo ArL. 1303, Lhe owner cannoL recover Lhe movable lf lL
was boughL aL a merchanL sLore
8y cross-reference Lo ArL. 1306, lf Lhe possessor ln good falLh acqulred LlLle
from a seller who aL Lhe Llme of dellvery had a voldable LlLle LhereLo, Lhe
orlglnal owner cannoL recover Lhe movable.
D*0*&*2 8: M$."%"P
S:PC@E 1agaLac sold her car Lo lelsL. lelsL pald by posLdaLed n8 check buL he really
had no accounL LhereaL. ln shorL, esLafa. lelsL sold lL Lo Sanchez, Lhen Sanchez sold
lL Lo !lmenez who had Lhe car exhlblLed ln a car expo.
'@@F?E ls !lmenez a purchaser ln bad falLh? ls 1agaLac enLlLled Lo possesslon?
(<PCDL=?E Whenever Lhere ls a conLracL of sale whlch granLs Lo Lhe culprlL-buyer
(lelsL) a voldable LlLle, even lf accompllshed Lhrough esLafa or swlndllng, Lhe buyer
ln good falLh (!lmenez) ls granLed a beLLer LlLle as agalnsL Lhe orlglnal owner
(1agaLac) even Lhough Lhe laLLer (1agaLac) may be classlfled Lo have been
unlawfully deprlved" of Lhe sub[ecL maLLer (ArL. 1306). !lmenez ls Lherefore noL a
purchaser ln bad falLh havlng no knowledge of any flaw ln Lhe LlLle of Lhe person
from whom he acqulred lL. 1agaLac ls noL enLlLled Lo possesslon. lraud and decelL
only made Lhe sale voldable. 8uL he wasn'L by any means unlawfully deprlved
Lhereof.

@!;C >79+$5/$%0 8: )*%&'5
S:PC@E LuCA sold 406 books Lo !ose Cruz whereln Lhe laLLer lssued a check as
paymenL. Cruz ln Lurn sold 120 of Lhose books Lo Leonor SanLos. Meanwhlle, LuCA
became susplclous of Cruz when he placed hls second order. 1hey lnvesLlgaLed and
found ouL LhaL !ose Cruz was an lmposLor and Lhe check he lssued was drawn
agalnsL a closed accounL. LuCA Lhen forclbly Look Lhe 120 books from SanLos.
]?>NE SanLos was a purchaser ln good falLh and exerclsed due dlllgence when he
asked for Lhe lnvolce from LuCA before purchaslng lL from Cruz. non-paymenL only
creaLes a rlghL Lo demand paymenL or Lo resclnd Lhe conLracL, or Lo crlmlnal
prosecuLlon ln Lhe case of bounclng checks. 8uL absenL Lhe sLlpulaLlon LhaL
ownershlp shall noL pass unLll full paymenL, dellvery of Lhe Lhlng sold wlll effecLlvely
Lransfer ownershlp Lo Lhe buyer who can ln Lurn Lransfer lL Lo anoLher.

CP%*- 8: Q*1,$*%02'
S:PC@E SanLos was selllng Lhe car Lo Marella. SanLos lnsLrucLed hls son, lrlneo noL Lo
parL wlLh ue dlos (Marella's nephew) unLll he has recelved Lhe full paymenL of Lhe
car. ue dlos and hls companlon ran away wlLh Lhe papers and Lhe car, leavlng
lreneo aL Lhe supposed place where paymenL was Lo be made. Marella sold Lhe care
Lhe same day Lo Aznar, Lhe C Lhen selzed Lhe car. 1he lssue here ls who has a
beLLer rlghL over Lhe car.
]?>NE lL should be recalled LhaL whlle Lhere was lndeed a conLracL of sale beLween
Marella and SanLos, Lhe former, as vendee, Look possesslon of Lhe sub[ecL maLLer
Lhereof by @C?:>L=M Lhe same whlle lL was ln Lhe cusLody of Lhe laLLer's son. Pe
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

70
nelLher had a voldable LlLle under ArL. 1306 nor was lL dellvered Lo hlm. SanLos has
a beLLer rlghL.
Moreover ArL. 339 (lrrevlndlcablllLy) does noL apply. 1he common law prlnclple
LhaL where 1 of 2 lnnocenL persons musL suffer by a fraud perpeLraLed by anoLher,
Lhe law lmposes Lhe loss upon Lhe parLy who, by hls mlsplaced confldence, has
enabled Lhe fraud Lo be commlLLed, cannoL be applled ln a case whlch ls covered by
an express provlslon of law.

;-7P 8: >*/*&$
S:PC@E 8ellzo sold an auLomoblle Lo Cruz. 8ellzo offered Lo sell Lhe sell Lhe same car
Lo a cerLaln buyer. Cruz agreed and slnce Lhe cerLlflcaLe of reglsLraLlon was mlsslng,
Cruz made a leLLer addressed Lo Lhe MoLor SecLlon of Lhe 8ureau of ubllc Works
for Lhe lssuance of a new cerLlflcaLe whlch he gave Lo 8ellzo. 1he leLLer was
falslfled, maklng lL appear LhaL a deed of sale was execuLed ln favor of 8ellzo, who
Lhen goL a cerLlflcaLe of reglsLraLlon on hls name. 8ellzo was able Lo sell Lhe car Lo
respondenL 8ulahan who laLer sold lL Lo ahaLl.
]?>NE Cruz, has Lhe beLLer rlghL because plalnLlff had been lllegally deprlved Lhrough
lngenlous schemes by 8ellzo. ArL 339, one who has losL any movable or has been
lawfully deprlved Lhereof, may recover lL from Lhe person ln possesslon of Lhe same
and Lhe only defense ls lf Lhe oLher parLy has acqulred lL ln good falLh and aL a
publlc sale" and 1303, sellers who are noL owners xxx buyer acqulres no beLLer
rlghL Lhan Lhe seller" are appllcable ln Lhls slLuaLlon.

!$P'% 8: )7%&*4
S:PC@E SunLay (owner of Lhe rlng) and ClarlLa Slson enLered lnLo a LransacLlon
whereln Lhe rlng would be sold on commlsslon. AfLer her demands, she was glven a
pawnshop LlckeL, she learned LhaL slson's nlece pledged Lhe sald lLem Lo Lhe
pawnshop of ulzon.
]?>NE Cwner of dlamond rlng may recover possesslon of Lhe same form Lhe
pawnshop where Lhe owner's agenL has pledged lL wlLhouL auLhorlLy Lo do so. ArL
339 applles and Lhe defense LhaL Lhe pawnshop acqulred possesslon wlLhouL noLlce
of any defecL of Lhe pledgor-agenL ls unavalllng.

3A:BC?D V ` #<@@ :=N (?C?DL<D:CL<=W SDFLC@ :=N 0CA?D
4?=?GLC@
1he prevalllng docLrlnes ln our [urlsdlcLlon on rlsk of loss and deLerloraLlon
and Lhe beneflLs of Lhe frulLs and lmprovemenL ls a comblnaLlon of clvll law
and common law concepLs.
1he baslc concepL ls tes petlt Jomloo (Lhe owner shall bear Lhe rlsk of loss).
(1hls ls derlved from common law.)
Cwnershlp can only be Lransferred by dellvery. (1hls ls from clvll law.)
W' C11+$2*&$'% V/"% )79="2& B*&&"- $5
!"&"-.$%*9+"
"DC. 75Z9.
'= := <K>LM:CL<= C< N?>LR?D : M?=?DLP CAL=MW CA? ><@@ <D N?@CDFPCL<= <G
:=UCAL=M <G CA? @:Q? TL=N N<?@ =<C ?XCL=MFL@A CA? <K>LM:CL<=. d=e
K"#'-" >"-#"2&$'%
1he purporLed seller owns Lhe Lhlng. Loss, deLerloraLlon, frulLs and
lmprovemenLs perLaln Lo hlm.
1he purporLed buyer sLlll has no legal relaLlonshlp Lo Lhe Lhlng.
H'.*% 8: G-$.*+&
S:PC@E 8oman and CrlmalL enLered lnLo a conLracL of sale for a schooner payable by
3 lnsLalmenLs provlded Lhe LlLle papers Lo Lhe vessel were ln proper form. 1he
vessel sank before 8oman could presenL hls LlLle and as a resulL, CrlmalL refused Lo
pay Lhe prlce ln Lhe conLracL.
]?>NE lf no conLracL of sale was acLually execuLed by Lhe parLles Lhe loss of Lhe
vessel musL be borne by lLs owner and noL by a parLy who only lnLended Lo
purchase lL and who was unable Lo do so on accounL of fallure on Lhe parL of Lhe
owner Lo show proper LlLle Lo Lhe vessel and Lhus enable Lhem Lo draw up Lhe
conLracL of sale.

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

71
C& &/" D$." '# >"-#"2&$'%
"DC. 7HV9.
'G :C CA? CLQ? CA? P<=CD:PC <G @:>? L@ B?DG?PC?NW CA? CAL=M ;ALPA L@ CA? <KO?PC
<G CA? P<=CD:PC A:@ K??= ?=CLD?>U ><@CW CA? P<=CD:PC @A:>> K? ;LCA<FC :=U
?GG?PC.
4FC LG CA? CAL=M @A<F>N A:R? K??= ><@C L= B:DC <=>UW CA? R?=N?? Q:U PA<<@?
K?C;??= ;LCAND:;L=M GD<Q CA? P<=CD:PC :=N N?Q:=NL=M CA? D?Q:L=L=M
B:DCW B:UL=M LC@ BDLP? L= BD<B<DCL<= C< CA? C<C:> @FQ :MD??N FB<=. d7HZ6:e
"DC. 7HVH.
,A?D? CA? B:DCL?@ BFDB<DC : @:>? <G @B?PLGLP M<<N@W :=N CA? M<<N@ ;LCA<FC
CA? T=<;>?NM? <G CA? @?>>?D A:R? B?DL@A?N L= B:DC <D A:R? ;A<>>U <D L= :
Q:C?DL:> B:DC @< N?C?DL<D:C?N L= _F:>LCU :@ C< K? @FK@C:=CL:>>U PA:=M?N L=
PA:D:PC?DW CA? KFU?D Q:U :C AL@ <BCL<= CD?:C CA? @:>?E
d7e "@ :R<LN?Ng <D
d5e "@ R:>LN L= :>> <G CA? ?XL@CL=M M<<N@ <D L= @< QFPA CA?D?<G :@ A:R? =<C
N?C?DL<D:C?NW :=N :@ KL=NL=M CA? KFU?D C< B:U CA? :MD??N BDLP? G<D CA?
M<<N@ L= ;ALPA CA? <;=?D@ALB ;L>> B:@@W LG CA? @:>? ;:@ NLRL@LK>?. d=e
noLe LhaL ArL. 1493 says LhaL Lhe conLracL ls wlLhouL any effecL." lL does
noL use Lhe Lerm vold because lL hlghllghLs Lhe facL LhaL Lhe perfecLlon of
Lhe conLracL ls noL affecLed by Lhe loss of Lhe sub[ecL maLLer.
o Powever, Lhe effecL of Lhe loss ls LhaL as lf Lhe sale was vold.
C#&"- >"-#"2&$'% K7& K"#'-" !"+$8"-4
"DC. 7I9J.
'= P:@? <G ><@@W N?C?DL<D:CL<= <D LQBD<R?Q?=C <G CA? CAL=M K?G<D? LC@
N?>LR?DUW CA? DF>?@ L= "DCLP>? 77JV @A:>> K? <K@?DR?NW CA? R?=N<D K?L=M
P<=@LN?D?N CA? N?KC<D. d=e
"DC. 77JV.
,A?= CA? P<=NLCL<=@ A:R? K??= LQB<@?N ;LCA CA? L=C?=CL<= <G @F@B?=NL=M
CA? ?GGLP:PU <G := <K>LM:CL<= C< MLR?W CA? G<>><;L=M DF>?@ @A:>> K? <K@?DR?N
L= P:@? <G CA? LQBD<R?Q?=CW ><@@ <D N?C?DL<D:CL<= <G CA? CAL=M NFDL=M CA?
B?=N?=PU <G CA? P<=NLCL<=E
d7e 'G CA? CAL=M L@ ><@C ;LCA<FC CA? G:F>C <G CA? N?KC<DW CA? <K>LM:CL<= @A:>>
K? ?XCL=MFL@A?Ng
d5e 'G CA? CAL=M L@ ><@C CAD<FMA CA? G:F>C <G CA? N?KC<DW A? @A:>> K? <K>LM?N C<
B:U N:Q:M?@g LC L@ F=N?D@C<<N CA:C CA? CAL=M L@ ><@C ;A?= LC B?DL@A?@W <D
M<?@ <FC <G P<QQ?DP?W <D NL@:BB?:D@ L= @FPA : ;:U CA:C LC@ ?XL@C?=P? L@
F=T=<;= <D LC P:==<C K? D?P<R?D?Ng
d9e ,A?= CA? CAL=M N?C?DL<D:C?@ ;LCA<FC CA? G:F>C <G CA? N?KC<DW CA?
LQB:LDQ?=C L@ C< K? K<D=? KU CA? PD?NLC<Dg
dHe 'G LC N?C?DL<D:C?@ CAD<FMA CA? G:F>C <G CA? N?KC<DW CA? PD?NLC<D Q:U
PA<<@? K?C;??= CA? D?@PL@@L<= <G CA? <K>LM:CL<= :=N LC@ GF>GL>>Q?=CW ;LCA
L=N?Q=LCU G<D N:Q:M?@ L= ?LCA?D P:@?g
dIe 'G CA? CAL=M L@ LQBD<R?N KU LC@ =:CFD?W <D KU CLQ?W CA? LQBD<R?Q?=C
@A:>> L=FD? C< CA? K?=?GLC <G CA? PD?NLC<Dg
dZe 'G LC L@ LQBD<R?N :C CA? ?XB?=@? <G CA? N?KC<DW A? @A:>> A:R? =< <CA?D
DLMAC CA:= CA:C MD:=C?N C< CA? F@FGDFPCF:DU. d7755e
2?=?D:> *F>?
"DC. 7I6H.
a=>?@@ <CA?D;L@? :MD??NW CA? M<<N@ D?Q:L= :C CA? @?>>?Dk@ DL@T F=CL> CA?
<;=?D@ALB CA?D?L= L@ CD:=@G?DD?N C< CA? KFU?DW KFC ;A?= CA? <;=?D@ALB
CA?D?L= L@ CD:=@G?DD?N C< CA? KFU?D CA? M<<N@ :D? :C CA? KFU?Dk@ DL@T
;A?CA?D :PCF:> N?>LR?DU A:@ K??= Q:N? <D =<CW ?XP?BC CA:CE
d7e ,A?D? N?>LR?DU <G CA? M<<N@ A:@ K??= Q:N? C< CA? KFU?D <D C< : K:L>??
G<D CA? KFU?DW L= BFD@F:=P? <G CA? P<=CD:PC :=N CA? <;=?D@ALB L= CA? M<<N@
A:@ K??= D?C:L=?N KU CA? @?>>?D Q?D?>U C< @?PFD? B?DG<DQ:=P? KU CA? KFU?D
<G AL@ <K>LM:CL<=@ F=N?D CA? P<=CD:PCW CA? M<<N@ :D? :C CA? KFU?Dk@ DL@T
GD<Q CA? CLQ? <G @FPA N?>LR?DUg
d5e ,A?D? :PCF:> N?>LR?DU A:@ K??= N?>:U?N CAD<FMA CA? G:F>C <G ?LCA?D CA?
KFU?D <D @?>>?D CA? M<<N@ :D? :C CA? DL@T <G CA? B:DCU L= G:F>C. d=e
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

72
AfLer perfecLlon, buL before dellvery, Lhe rlsk of loss ls borne by Lhe seller
under Lhe rule of tes petlt Jomloo. uoloo Motot cotp. v. cA (J61 5ckA 506)
#<@@ KU S:F>C <G : /:DCU
lf Lhe loss ls Lhru Lhe faulL of Lhe seller, Lhe buyer shall have Lhe rlghL Lo
recover damages. (ArL. 1189)
#<@@ KU S<DCFLC<F@ $R?=C
"DC. 7HJ6.
"=U L=OFDU C< <D K?=?GLC GD<Q CA? CAL=M @<>NW :GC?D CA? P<=CD:PC A:@ K??=
B?DG?PC?NW GD<Q CA? Q<Q?=C <G CA? B?DG?PCL<= <G CA? P<=CD:PC C< CA? CLQ?
<G N?>LR?DUW @A:>> K? M<R?D=?N KU "DCLP>?@ 77Z9 C< 77ZIW :=N 75Z5.
)AL@ DF>? @A:>> :BB>U C< CA? @:>? <G GF=MLK>? CAL=M@W Q:N? L=N?B?=N?=C>U
:=N G<D : @L=M>? BDLP?W <D ;LCA<FC P<=@LN?D:CL<= <G CA?LD ;?LMACW =FQK?DW <D
Q?:@FD?.
!A<F>N GF=MLK>? CAL=M@ K? @<>N G<D : BDLP? GLX?N :PP<DNL=M C< ;?LMACW
=FQK?DW <D Q?:@FD?W CA? DL@T @A:>> =<C K? LQBFC?N C< CA? R?=N?? F=CL>
CA?U A:R? K??= ;?LMA?NW P<F=C?NW <D Q?:@FD?N :=N N?>LR?D?NW F=>?@@ CA?
>:CC?D A:@ L=PFDD?N L= N?>:U. d7HI5:e
"DC. 75Z5.
"= <K>LM:CL<= ;ALPA P<=@L@C@ L= CA? N?>LR?DU <G : N?C?DQL=:C? CAL=M @A:>> K?
?XCL=MFL@A?N LG LC @A<F>N K? ><@C <D N?@CD<U?N ;LCA<FC CA? G:F>C <G CA?
N?KC<DW :=N K?G<D? A? A:@ L=PFDD?N L= N?>:U.
,A?= KU >:; <D @CLBF>:CL<=W CA? <K>LM<D L@ >L:K>? ?R?= G<D G<DCFLC<F@ ?R?=C@W
CA? ><@@ <G CA? CAL=M N<?@ =<C ?XCL=MFL@A CA? <K>LM:CL<=W :=N A? @A:>> K?
D?@B<=@LK>? G<D N:Q:M?@. )A? @:Q? DF>? :BB>L?@ ;A?= CA? =:CFD? <G CA?
<K>LM:CL<= D?_FLD?@ CA? :@@FQBCL<= <G DL@T. d77J5:e
aras and adllla say LhaL even lf Lhe sub[ecL maLLer ls losL by forLulLous
evenL, Lhe buyer ls sLlll obllged Lo pay. 1hey don'L clLe any auLhorlLy for Lhls
poslLlon.
1olenLlno says LhaL Lhe obllgaLlon of Lhe buyer Lo pay ls also exLlngulshed
slnce sale creaLes a reclprocal obllgaLlon. 1he seller should Lhus reLurn
whaLever was pald by Lhe buyer, lf Lhere had been paymenL already.
CLv agrees wlLh 1olenLlno's vlew. Pe says LhaL Lhls vlew beLLer harmonlzes
ArL. 1480, 1338 and 1304.
(?C?DL<D:CL<=
ArL. 1189 shall apply.
SDFLC@ :=N 'QBD<R?Q?=C@
"DC. 7I9b.
)A? R?=N<D L@ K<F=N C< N?>LR?D CA? CAL=M @<>N :=N LC@ :PP?@@L<=@ :=N
:PP?@@<DL?@ L= CA? P<=NLCL<= L= ;ALPA CA?U ;?D? FB<= CA? B?DG?PCL<= <G CA?
P<=CD:PC.
">> CA? GDFLC@ @A:>> B?DC:L= C< CA? R?=N?? GD<Q CA? N:U <= ;ALPA CA?
P<=CD:PC ;:@ B?DG?PC?N. d7HZJ:e
"DC. 77ZH.
)A? PD?NLC<D A:@ : DLMAC C< CA? GDFLC@ <G CA? CAL=M GD<Q CA? CLQ? CA?
<K>LM:CL<= C< N?>LR?D LC :DL@?@. ]<;?R?DW A? @A:>> :P_FLD? =< D?:> DLMAC <R?D
LC F=CL> CA? @:Q? A:@ K??= N?>LR?D?N C< ALQ. d76VIe
C#&"- !"+$8"-4
AfLer dellvery Lo Lhe buyer, ownershlp ls Lransferred Lo Lhe buyer. 1he
goods shall Lhen be aL Lhe buyer's rlsk.
o lf dellvery Lo Lhe buyer was made, buL ownershlp was reLalned by
Lhe seller only for Lhe purpose of securlng Lhe buyer's obllgaLlon
Lo pay, Lhe buyer shall sLlll bear Lhe rlsk.
lf Lhe Lhlng ls losL when Lhe buyer bears Lhe rlsk, Lhe buyer shall sLlll pay
Lhe balance of Lhe purchase prlce. 5ooq lo & co. v. Otlo (JJ lbll. J)
L*E4"-]5 ;''1"-*&$8" 8: D*9'-*
S:PC@E 1abora boughL books from LCC and lL was dellvered Lo 1abora's offlce ln
naga. A flre lncldenL burned all of Lhe books ln hls llbrary and afLer LhaL 1abora
falled Lo pay hls monLhly lnsLalmenLs. Pe refuses Lo pay and ralses force ma[eure
asa defense.
]?>NE 1he conLracL speclflcally sLaLed LhaL afLer dellvery, 8uyer would bear Lhe loss.
Moreover under ArL. 1304, When LlLle/ownershlp remalns ln seller merely Lo secure
performance by buyer of hls obllgaLlons, Lhe goods are aL Lhe buyer's rlsk from Llme
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

73
of dellvery. 1he rule LhaL Lhe obllgor should be exempL when loss occurs Lhrough
force ma[eure only applled when Lhe obllgaLlon conslsLs ln Lhe dellvery of a
deLermlnaLe Lhlng.

3A:BC?D 76 ` *?Q?NL?@ <G /:DCL?@
8LMLulLS ln CASLS Cl MCvA8LLS
A-,$%*-4 H".",$"5 '# )"++"-
&<R:K>?@ L= 2?=?D:>
"DC. 7IV9.
,LCA D?@B?PC C< Q<R:K>? BD<B?DCUW CA? D?@PL@@L<= <G CA? @:>? @A:>> <G DLMAC
C:T? B>:P? L= CA? L=C?D?@C <G CA? R?=N<DW LG CA? R?=N??W FB<= CA? ?XBLD:CL<=
<G CA? B?DL<N GLX?N G<D CA? N?>LR?DU <G CA? CAL=MW @A<F>N =<C A:R? :BB?:D?N
C< D?P?LR? LCW <DW A:RL=M :BB?:D?NW A? @A<F>N =<C A:R? C?=N?D?N CA? BDLP?
:C CA? @:Q? CLQ?W F=>?@@ : ><=M?D B?DL<N A:@ K??= @CLBF>:C?N G<D LC@
B:UQ?=C. d7I6Ie
!:>? <G 2<<N@
non-paymenL of prlce by Lhe buyer
"DC. 7IVI.
,A?D?W F=N?D : P<=CD:PC <G @:>?W CA? <;=?D@ALB <G CA? M<<N@ A:@ B:@@?N C<
CA? KFU?D :=N A? ;D<=MGF>>U =?M>?PC@ <D D?GF@?@ C< B:U G<D CA? M<<N@
:PP<DNL=M C< CA? C?DQ@ <G CA? P<=CD:PC <G @:>?W CA? @?>>?D Q:U Q:L=C:L= :=
:PCL<= :M:L=@C ALQ G<D CA? BDLP? <G CA? M<<N@.
,A?D?W F=N?D : P<=CD:PC <G @:>?W CA? BDLP? L@ B:U:K>? <= : P?DC:L= N:UW
LDD?@B?PCLR? <G N?>LR?DU <D <G CD:=@G?D <G CLC>? :=N CA? KFU?D ;D<=MGF>>U
=?M>?PC@ <D D?GF@?@ C< B:U @FPA BDLP?W CA? @?>>?D Q:U Q:L=C:L= := :PCL<= G<D
CA? BDLP? :>CA<FMA CA? <;=?D@ALB L= CA? M<<N@ A:@ =<C B:@@?N. 4FC LC @A:>>
K? : N?G?=@? C< @FPA := :PCL<= CA:C CA? @?>>?D :C :=U CLQ? K?G<D? CA?
OFNMQ?=C L= @FPA :PCL<= A:@ Q:=LG?@C?N := L=:KL>LCU C< B?DG<DQ CA?
P<=CD:PC <G @:>? <= AL@ B:DC <D := L=C?=CL<= =<C C< B?DG<DQ LC.
">CA<FMA CA? <;=?D@ALB L= CA? M<<N@ A:@ =<C B:@@?NW LG CA?U P:==<C
D?:NL>U K? D?@<>N G<D : D?:@<=:K>? BDLP?W :=N LG CA? BD<RL@L<=@ <G :DCLP>?
7IVZW G<FDCA B:D:MD:BAW :D? =<C :BB>LP:K>?W CA? @?>>?D Q:U <GG?D C< N?>LR?D
CA? M<<N@ C< CA? KFU?DW :=NW LG CA? KFU?D D?GF@?@ C< D?P?LR? CA?QW Q:U
=<CLGU CA? KFU?D CA:C CA? M<<N@ :D? CA?D?:GC?D A?>N KU CA? @?>>?D :@ K:L>??
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

74
G<D CA? KFU?D. )A?D?:GC?D CA? @?>>?D Q:U CD?:C CA? M<<N@ :@ CA? KFU?Dk@ :=N
Q:U Q:L=C:L= := :PCL<= G<D CA? BDLP?. d=e
When buyer wrongfully neglecLs or refuses Lo accepL goods
"DC. 7IVZ.
,A?D? CA? KFU?D ;D<=MGF>>U =?M>?PC@ <D D?GF@?@ C< :PP?BC :=N B:U G<D CA?
M<<N@W CA? @?>>?D Q:U Q:L=C:L= := :PCL<= :M:L=@C ALQ G<D N:Q:M?@ G<D
=<=:PP?BC:=P?.
)A? Q?:@FD? <G N:Q:M?@ L@ CA? ?@CLQ:C?N ><@@ NLD?PC>U :=N =:CFD:>>U
D?@F>CL=M L= CA? <DNL=:DU P<FD@? <G ?R?=C@ GD<Q CA? KFU?Dk@ KD?:PA <G
P<=CD:PC.
,A?D? CA?D? L@ := :R:L>:K>? Q:DT?C G<D CA? M<<N@ L= _F?@CL<=W CA? Q?:@FD?
<G N:Q:M?@ L@W L= CA? :K@?=P? <G @B?PL:> PLDPFQ@C:=P?@ @A<;L=M BD<XLQ:C?
N:Q:M? <G : NLGG?D?=C :Q<F=CW CA? NLGG?D?=P? K?C;??= CA? P<=CD:PC BDLP?
:=N CA? Q:DT?C <D PFDD?=C BDLP? :C CA? CLQ? <D CLQ?@ ;A?= CA? M<<N@ <FMAC
C< A:R? K??= :PP?BC?NW <DW LG =< CLQ? ;:@ GLX?N G<D :PP?BC:=P?W CA?= :C CA?
CLQ? <G CA? D?GF@:> C< :PP?BC.
'GW ;AL>? >:K<D <D ?XB?=@? <G Q:C?DL:> :Q<F=C L@ =?P?@@:DU <= CA? B:DC <G
CA? @?>>?D C< ?=:K>? ALQ C< GF>GL>> AL@ <K>LM:CL<=@ F=N?D CA? P<=CD:PC <G @:>?W
CA? KFU?D D?BFNL:C?@ CA? P<=CD:PC <D =<CLGL?@ CA? @?>>?D C< BD<P??N =<
GFDCA?D CA?D?;LCAW CA? KFU?D @A:>> K? >L:K>? C< CA? @?>>?D G<D >:K<D
B?DG<DQ?N <D ?XB?=@?@ Q:N? K?G<D? D?P?LRL=M =<CLP? <G CA? KFU?Dk@
D?BFNL:CL<= <D P<F=C?DQ:=N. )A? BD<GLC CA? @?>>?D ;<F>N A:R? Q:N? LG CA?
P<=CD:PC <D CA? @:>? A:N K??= GF>>U B?DG<DQ?N @A:>> K? P<=@LN?D?N L=
:;:DNL=M CA? N:Q:M?@. d=e
"DC. 7IVb.
,A?D? CA? M<<N@ A:R? =<C K??= N?>LR?D?N C< CA? KFU?DW :=N CA? KFU?D A:@
D?BFNL:C?N CA? P<=CD:PC <G @:>?W <D A:@ Q:=LG?@C?N AL@ L=:KL>LCU C< B?DG<DQ
AL@ <K>LM:CL<=@ CA?D?F=N?DW <D A:@ P<QQLCC?N : KD?:PA CA?D?<GW CA? @?>>?D
Q:U C<C:>>U D?@PL=N CA? P<=CD:PC <G @:>? KU MLRL=M =<CLP? <G AL@ ?>?PCL<= @<
C< N< C< CA? KFU?D. d=e
)1"2$*+ H".",$"5 '# SO%1*$, )"++"-T '# G'',5
(?GL=LCL<= <G [a=B:LN !?>>?D\
"DC. 7I5I.
)A? @?>>?D <G M<<N@ L@ N??Q?N C< K? := F=B:LN @?>>?D ;LCAL= CA? Q?:=L=M <G
CAL@ )LC>?E
d7e ,A?= CA? ;A<>? <G CA? BDLP? A:@ =<C K??= B:LN <D C?=N?D?Ng
d5e ,A?= : KL>> <G ?XPA:=M? <D <CA?D =?M<CL:K>? L=@CDFQ?=C A:@ K??=
D?P?LR?N :@ P<=NLCL<=:> B:UQ?=CW :=N CA? P<=NLCL<= <= ;ALPA LC ;:@
D?P?LR?N A:@ K??= KD<T?= KU D?:@<= <G CA? NL@A<=<D <G CA? L=@CDFQ?=CW CA?
L=@<>R?=PU <G CA? KFU?DW <D <CA?D;L@?.
'= "DCLP>?@ 7I5I C< 7I9I CA? C?DQ i@?>>?Di L=P>FN?@ := :M?=C <G CA? @?>>?D C<
;A<Q CA? KL>> <G >:NL=M A:@ K??= L=N<D@?NW <D : P<=@LM=<D <D :M?=C ;A<
A:@ ALQ@?>G B:LNW <D L@ NLD?PC>U D?@B<=@LK>? G<D CA? BDLP?W <D :=U <CA?D
B?D@<= ;A< L@ L= CA? B<@LCL<= <G : @?>>?D. d=e
*LMAC@ <G a=B:LN !?>>?D
4 Speclal 8emedles avallable Lo Lhe unpald seller
1. ossessory llen
2. SLoppage ln LranslLu
3. Speclal rlghL Lo resell goods
4. Speclal rlghL Lo resclnd

1hese remedles have a hlerarchlchal appllcaLlon.
1he lasL Lwo are called speclal" because Lhey are rlghLs accorded only Lo
Lhe unpald seller, and are of a dlfferenL naLure from Lhe rlghL of resclsslon
ln ArL. 1191.
"DC. 7I5Z.
!FKO?PC C< CA? BD<RL@L<=@ <G CAL@ )LC>?W =<C;LCA@C:=NL=M CA:C CA? <;=?D@ALB
L= CA? M<<N@ Q:U A:R? B:@@?N C< CA? KFU?DW CA? F=B:LN @?>>?D <G M<<N@W :@
@FPAW A:@E
d7e " >L?= <= CA? M<<N@ <D DLMAC C< D?C:L= CA?Q G<D CA? BDLP? ;AL>? A? L@ L=
B<@@?@@L<= <G CA?Qg
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

73
d5e '= P:@? <G CA? L=@<>R?=PU <G CA? KFU?DW : DLMAC <G @C<BBL=M CA? M<<N@ L=
CD:=@LCF :GC?D A? A:@ B:DC?N ;LCA CA? B<@@?@@L<= <G CA?Qg
d9e " DLMAC <G D?@:>? :@ >LQLC?N KU CAL@ )LC>?g
dHe " DLMAC C< D?@PL=N CA? @:>? :@ >LT?;L@? >LQLC?N KU CAL@ )LC>?.
,A?D? CA? <;=?D@ALB L= CA? M<<N@ A:@ =<C B:@@?N C< CA? KFU?DW CA?
F=B:LN @?>>?D A:@W L= :NNLCL<= C< AL@ <CA?D D?Q?NL?@ : DLMAC <G ;LCAA<>NL=M
N?>LR?DU @LQL>:D C< :=N P<?XC?=@LR? ;LCA AL@ DLMAC@ <G >L?= :=N @C<BB:M? L=
CD:=@LCF ;A?D? CA? <;=?D@ALB A:@ B:@@?N C< CA? KFU?D. d=e
/<@@?@<DU #L?=
lf Lhe ownershlp of Lhe goods has passed Lo Lhe buyer, Lhe unpald seller
sLlll has a llen on Lhe goods or rlghL Lo reLaln Lhem for Lhe prlce whlle he ls
ln possesslon.
lf ownershlp has noL passed Lo Lhe buyer, Lhe unpald seller has a rlghL of
wlLholdlng dellvery.
When possessory llen may be exerclsed
Memory ald: !)'
"DC. 7I5b.
!FKO?PC C< CA? BD<RL@L<=@ <G CAL@ )LC>?W CA? F=B:LN @?>>?D <G M<<N@ ;A< L@ L=
B<@@?@@L<= <G CA?Q L@ ?=CLC>?N C< D?C:L= B<@@?@@L<= <G CA?Q F=CL> B:UQ?=C
<D C?=N?D <G CA? BDLP? L= CA? G<>><;L=M P:@?@W =:Q?>UE
d7e ,A?D? CA? M<<N@ A:R? K??= @<>N ;LCA<FC :=U @CLBF>:CL<= :@ C< PD?NLCg
d5e ,A?D? CA? M<<N@ A:R? K??= @<>N <= PD?NLCW KFC CA? C?DQ <G PD?NLC A:@
?XBLD?Ng
d9e ,A?D? CA? KFU?D K?P<Q?@ L=@<>R?=C.
)A? @?>>?D Q:U ?X?DPL@? AL@ DLMAC <G >L?= =<C;LCA@C:=NL=M CA:C A? L@ L=
B<@@?@@L<= <G CA? M<<N@ :@ :M?=C <D K:L>?? G<D CA? KFU?D. d=e
When negoLlable uocumenL of 1lLle has been lssued
no seller's llen shall defeaL Lhe rlghLs of an lnnocenL purchaser for value Lo
whom such documenL has been negoLlaLed.
When parLlal dellvery ls made
"DC. 7I5J.
,A?D? := F=B:LN @?>>?D A:@ Q:N? B:DC N?>LR?DU <G CA? M<<N@W A? Q:U
?X?DPL@? AL@ DLMAC <G >L?= <= CA? D?Q:L=N?DW F=>?@@ @FPA B:DC N?>LR?DU A:@
K??= Q:N? F=N?D @FPA PLDPFQ@C:=P?@ :@ C< @A<; := L=C?=C C< ;:LR? CA?
>L?= <D DLMAC <G D?C?=CL<=. d=e
lnsLances when possessory llen ls losL
Memory ald: (0,
"DC. 7I5V.
)A? F=B:LN @?>>?D <G M<<N@ ><@?@ AL@ >L?= CA?D?<=E
d7e ,A?= A? N?>LR?D@ CA? M<<N@ C< : P:DDL?D <D <CA?D K:L>?? G<D CA? BFDB<@?
<G CD:=@QL@@L<= C< CA? KFU?D ;LCA<FC D?@?DRL=M CA? <;=?D@ALB L= CA? M<<N@
<D CA? DLMAC C< CA? B<@@?@@L<= CA?D?<Gg
d5e ,A?= CA? KFU?D <D AL@ :M?=C >:;GF>>U <KC:L=@ B<@@?@@L<= <G CA? M<<N@g
d9e 4U ;:LR?D CA?D?<G.
)A? F=B:LN @?>>?D <G M<<N@W A:RL=M : >L?= CA?D?<=W N<?@ =<C ><@? AL@ >L?= KU
D?:@<= <=>U CA:C A? A:@ <KC:L=?N OFNMQ?=C <D N?PD?? G<D CA? BDLP? <G CA?
M<<N@. d=e
1he unpald seller losses hls possessory llen when he parLs wlLh physlcal
possesslon of Lhe goods. ln Lhls case, he sLlll has Lhe remedy of sLoppage lo
ttooslto, buL only when Lhe buyer ls lnsolvenL.
!C<BB:M? $% D-*%5$&7
"DC. 7I96.
!FKO?PC C< CA? BD<RL@L<=@ <G CAL@ )LC>?W ;A?= CA? KFU?D <G M<<N@ L@ <D
K?P<Q?@ L=@<>R?=CW CA? F=B:LN @?>>?D ;A< A:@ B:DC?N ;LCA CA? B<@@?@@L<=
<G CA? M<<N@ A:@ CA? DLMAC <G @C<BBL=M CA?Q L= CD:=@LCFW CA:C L@ C< @:UW A?
Q:U D?@FQ? B<@@?@@L<= <G CA? M<<N@ :C :=U CLQ? ;AL>? CA?U :D? L= CD:=@LCW
:=N A? ;L>> CA?= K?P<Q? ?=CLC>?N C< CA? @:Q? DLMAC@ L= D?M:DN C< CA? M<<N@
:@ A? ;<F>N A:R? A:N LG A? A:N =?R?D B:DC?N ;LCA CA? B<@@?@@L<=. d=e
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

76
When a negoLlable documenL of LlLle ls lssued
"DC. 7I9I.
!FKO?PC C< CA? BD<RL@L<=@ <G CAL@ )LC>?W CA? F=B:LN @?>>?Dk@ DLMAC <G >L?= <D
@C<BB:M? L= CD:=@LCF L@ =<C :GG?PC?N KU :=U @:>?W <D <CA?D NL@B<@LCL<= <G CA?
M<<N@ ;ALPA CA? KFU?D Q:U A:R? Q:N?W F=>?@@ CA? @?>>?D A:@ :@@?=C?N
CA?D?C<.
'GW A<;?R?DW : =?M<CL:K>? N<PFQ?=C <G CLC>? A:@ K??= L@@F?N G<D M<<N@W =<
@?>>?Dk@ >L?= <D DLMAC <G @C<BB:M? L= CD:=@LCF @A:>> N?G?:C CA? DLMAC <G :=U
BFDPA:@?D G<D R:>F? L= M<<N G:LCA C< ;A<Q @FPA N<PFQ?=C A:@ K??=
=?M<CL:C?NW ;A?CA?D @FPA =?M<CL:CL<= K? BDL<D <D @FK@?_F?=C C< CA?
=<CLGLP:CL<= C< CA? P:DDL?DW <D <CA?D K:L>?? ;A< L@@F?N @FPA N<PFQ?=CW <G
CA? @?>>?Dk@ P>:LQ C< : >L?= <D DLMAC <G @C<BB:M? L= CD:=@LCF. d=e
When ls Lhe buyer lnsolvenL?
A buyer ls deemed lnsolvenL when he elLher has ceased Lo pay hls debLs ln
Lhe ordlnary course of buslness or cannoL pay hls debLs as Lhey become
due. [ArL. 1636(2)]
lnsolvency proceedlngs need noL be commenced.
8uyer musL be lnsolvenL for sLoppage lo ttooslto Lo apply.
When Coods are ueemed ln 1ranslL"
"DC. 7I97.
2<<N@ :D? L= CD:=@LC ;LCAL= CA? Q?:=L=M <G CA? BD?P?NL=M :DCLP>?E
d7e SD<Q CA? CLQ? ;A?= CA?U :D? N?>LR?D?N C< : P:DDL?D KU >:=NW ;:C?DW <D
:LDW <D <CA?D K:L>?? G<D CA? BFDB<@? <G CD:=@QL@@L<= C< CA? KFU?DW F=CL> CA?
KFU?DW <D AL@ :M?=C L= CA:C K?A:>GW C:T?@ N?>LR?DU <G CA?Q GD<Q @FPA P:DDL?D
<D <CA?D K:L>??g
d5e 'G CA? M<<N@ :D? D?O?PC?N KU CA? KFU?DW :=N CA? P:DDL?D <D <CA?D K:L>??
P<=CL=F?@ L= B<@@?@@L<= <G CA?QW ?R?= LG CA? @?>>?D A:@ D?GF@?N C< D?P?LR?
CA?Q K:PT.
2<<N@ :D? =< ><=M?D L= CD:=@LC ;LCAL= CA? Q?:=L=M <G CA? BD?P?NL=M :DCLP>?E
d7e 'G CA? KFU?DW <D AL@ :M?=C L= CA:C K?A:>GW <KC:L=@ N?>LR?DU <G CA? M<<N@
K?G<D? CA?LD :DDLR:> :C CA? :BB<L=C?N N?@CL=:CL<=g
d5e 'GW :GC?D CA? :DDLR:> <G CA? M<<N@ :C CA? :BB<L=C?N N?@CL=:CL<=W CA?
P:DDL?D <D <CA?D K:L>?? :PT=<;>?NM?@ C< CA? KFU?D <D AL@ :M?=C CA:C A?
A<>N@ CA? M<<N@ <= AL@ K?A:>G :=N P<=CL=F?@ L= B<@@?@@L<= <G CA?Q :@
K:L>?? G<D CA? KFU?D <D AL@ :M?=Cg :=N LC L@ LQQ:C?DL:> CA:C GFDCA?D
N?@CL=:CL<= G<D CA? M<<N@ Q:U A:R? K??= L=NLP:C?N KU CA? KFU?Dg
d9e 'G CA? P:DDL?D <D <CA?D K:L>?? ;D<=MGF>>U D?GF@?@ C< N?>LR?D CA? M<<N@ C<
CA? KFU?D <D AL@ :M?=C L= CA:C K?A:>G.
'G CA? M<<N@ :D? N?>LR?D?N C< : @ALBW GD?LMAC CD:L=W CDFPTW <D :LDB>:=?
PA:DC?D?N KU CA? KFU?DW LC L@ : _F?@CL<= N?B?=NL=M <= CA? PLDPFQ@C:=P?@ <G
CA? B:DCLPF>:D P:@?W ;A?CA?D CA?U :D? L= CA? B<@@?@@L<= <G CA? P:DDL?D :@
@FPA <D :@ :M?=C <G CA? KFU?D.
'G B:DC N?>LR?DU <G CA? M<<N@ A:@ K??= Q:N? C< CA? KFU?DW <D AL@ :M?=C L=
CA:C K?A:>GW CA? D?Q:L=N?D <G CA? M<<N@ Q:U K? @C<BB?N L= CD:=@LCFW F=>?@@
@FPA B:DC N?>LR?DU A:@ K??= F=N?D @FPA PLDPFQ@C:=P?@ :@ C< @A<; :=
:MD??Q?=C ;LCA CA? KFU?D C< MLR? FB B<@@?@@L<= <G CA? ;A<>? <G CA? M<<N@.
d=e
ArL. 1331 presupposes LhaL Lhe carrler Lhrough hlm dellvery ls made ls nC1
an agenL of Lhe buyer. uellvery Lo such carrler ls noL dellvery Lo Lhe buyer.
Pow SLoppage ln LranslLu may be exerclsed
"DC. 7I95.
)A? F=B:LN @?>>?D Q:U ?X?DPL@? AL@ DLMAC <G @C<BB:M? L= CD:=@LCF ?LCA?D KU
<KC:L=L=M :PCF:> B<@@?@@L<= <G CA? M<<N@ <D KU MLRL=M =<CLP? <G AL@ P>:LQ C<
CA? P:DDL?D <D <CA?D K:L>?? L= ;A<@? B<@@?@@L<= CA? M<<N@ :D?. !FPA =<CLP?
Q:U K? MLR?= ?LCA?D C< CA? B?D@<= L= :PCF:> B<@@?@@L<= <G CA? M<<N@ <D C<
AL@ BDL=PLB:>. '= CA? >:CC?D P:@? CA? =<CLP?W C< K? ?GG?PCF:>W QF@C K? MLR?= :C
@FPA CLQ? :=N F=N?D @FPA PLDPFQ@C:=P?@ CA:C CA? BDL=PLB:>W KU CA? ?X?DPL@?
<G D?:@<=:K>? NL>LM?=P?W Q:U BD?R?=C : N?>LR?DU C< CA? KFU?D.
,A?= =<CLP? <G @C<BB:M? L= CD:=@LCF L@ MLR?= KU CA? @?>>?D C< CA? P:DDL?DW <D
<CA?D K:L>?? L= B<@@?@@L<= <G CA? M<<N@W A? QF@C D?N?>LR?D CA? M<<N@ C<W <D
:PP<DNL=M C< CA? NLD?PCL<=@ <GW CA? @?>>?D. )A? ?XB?=@?@ <G @FPA N?>LR?DU
QF@C K? K<D=? KU CA? @?>>?D. 'GW A<;?R?DW : =?M<CL:K>? N<PFQ?=C <G CLC>?
D?BD?@?=CL=M CA? M<<N@ A:@ K??= L@@F?N KU CA? P:DDL?D <D <CA?D K:L>??W A?
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

77
@A:>> =<C <K>LM?N C< N?>LR?D <D OF@CLGL?N L= N?>LR?DL=M CA? M<<N@ C< CA? @?>>?D
F=>?@@ @FPA N<PFQ?=C L@ GLD@C @FDD?=N?D?N G<D P:=P?>>:CL<=. d=e
!B?PL:> *LMAC C< *?@?>> 2<<N@
"DC. 7I99.
,A?D? CA? M<<N@ :D? <G B?DL@A:K>? =:CFD?W <D ;A?D? CA? @?>>?D ?XBD?@@>U
D?@?DR?@ CA? DLMAC <G D?@:>? L= P:@? CA? KFU?D @A<F>N Q:T? N?G:F>CW <D
;A?D? CA? KFU?D A:@ K??= L= N?G:F>C L= CA? B:UQ?=C <G CA? BDLP? G<D :=
F=D?:@<=:K>? CLQ?W := F=B:LN @?>>?D A:RL=M : DLMAC <G >L?= <D A:RL=M
@C<BB?N CA? M<<N@ L= CD:=@LCF Q:U D?@?>> CA? M<<N@. ]? @A:>> =<C CA?D?:GC?D
K? >L:K>? C< CA? <DLML=:> KFU?D FB<= CA? P<=CD:PC <G @:>? <D G<D :=U BD<GLC
Q:N? KU @FPA D?@:>?W KFC Q:U D?P<R?D GD<Q CA? KFU?D N:Q:M?@ G<D :=U
><@@ <PP:@L<=?N KU CA? KD?:PA <G CA? P<=CD:PC <G @:>?.
,A?D? : D?@:>? L@ Q:N?W :@ :FCA<DLf?N L= CAL@ :DCLP>?W CA? KFU?D :P_FLD?@ :
M<<N CLC>? :@ :M:L=@C CA? <DLML=:> KFU?D.
'C L@ =<C ?@@?=CL:> C< CA? R:>LNLCU <G D?@:>? CA:C =<CLP? <G := L=C?=CL<= C<
D?@?>> CA? M<<N@ K? MLR?= KU CA? @?>>?D C< CA? <DLML=:> KFU?D. 4FC ;A?D? CA?
DLMAC C< D?@?>> L@ =<C K:@?N <= CA? B?DL@A:K>? =:CFD? <G CA? M<<N@ <D FB<=
:= ?XBD?@@ BD<RL@L<= <G CA? P<=CD:PC <G @:>?W CA? MLRL=M <D G:L>FD? C< MLR?
@FPA =<CLP? @A:>> K? D?>?R:=C L= :=U L@@F? L=R<>RL=M CA? _F?@CL<= ;A?CA?D
CA? KFU?D A:N K??= L= N?G:F>C G<D := F=D?:@<=:K>? CLQ? K?G<D? CA? D?@:>?
;:@ Q:N?.
'C L@ =<C ?@@?=CL:> C< CA? R:>LNLCU <G : D?@:>? CA:C =<CLP? <G CA? CLQ? :=N
B>:P? <G @FPA D?@:>? @A<F>N K? MLR?= KU CA? @?>>?D C< CA? <DLML=:> KFU?D.
)A? @?>>?D L@ K<F=N C< ?X?DPL@? D?:@<=:K>? P:D? :=N OFNMQ?=C L= Q:TL=M :
D?@:>?W :=N @FKO?PC C< CAL@ D?_FLD?Q?=C Q:U Q:T? : D?@:>? ?LCA?D KU BFK>LP
<D BDLR:C? @:>?. ]? P:==<CW A<;?R?DW NLD?PC>U <D L=NLD?PC>U KFU CA? M<<N@.
d=e
When Lhe rlghL ls excerclsable d/$*ae
1he unpald seller has prevlously ?xcerclsed possessory llen or sLoppage ln
LranslLu
1he goods are of Berlshable naLure
Seller has expressly Deserved such rlghL
8uyer has been ln defaulL for an Fnreasonable lengLh of Llme
noLe: 1he buyer need noL resclnd Lhe flrsL conLracL [udlclally before reselllng Lhe
Lhlng. lf he ls obllged Lo sell lL for less Lhan Lhe conLracL prlce, Lhe non-paylng buyer
ls llable for Lhe dlfference. kotlqbok v. cA (4 5ckA 24J. 1he seller ls noL obllged Lo
glve Lhe orlglnal owner Lhe proflLs (l.e. dlfference of conLracL prlce and sale prlce), lf
any. (ArL. 1333)
1ransfer of Cwnershlp
Speclal rlghL Lo resell can be excerclsed even lf Lhe seller had already
Lransferred ownershlp Lo Lhe orlglnal buyer.
Powever, because of ArL. 1333, Lhe second buyer wlll sLlll be able Lo geL a
good LlLle agalnsL Lhe orlglnal buyer.
1hls ls a speclal feaLure of Lhls rlghL Lo resell. 1he seller can sLlll vesL
ownershlp ln Lhe second buyer even lf aL Lhe Llme of Lhe second sale, he
dld noL have ownershlp anymore.
!B?PL:> *LMAC C< *?@PL=N
"DC. 7I9H.
"= F=B:LN @?>>?D A:RL=M CA? DLMAC <G >L?= <D A:RL=M @C<BB?N CA? M<<N@ L=
CD:=@LCFW Q:U D?@PL=N CA? CD:=@G?D <G CLC>? :=N D?@FQ? CA? <;=?D@ALB L= CA?
M<<N@W ;A?D? A? ?XBD?@@>U D?@?DR?N CA? DLMAC C< N< @< L= P:@? CA? KFU?D
@A<F>N Q:T? N?G:F>CW <D ;A?D? CA? KFU?D A:@ K??= L= N?G:F>C L= CA?
B:UQ?=C <G CA? BDLP? G<D := F=D?:@<=:K>? CLQ?. )A? @?>>?D @A:>> =<C
CA?D?:GC?D K? >L:K>? C< CA? KFU?D FB<= CA? P<=CD:PC <G @:>?W KFC Q:U
D?P<R?D GD<Q CA? KFU?D N:Q:M?@ G<D :=U ><@@ <PP:@L<=?N KU CA? KD?:PA <G
CA? P<=CD:PC.
)A? CD:=@G?D <G CLC>? @A:>> =<C K? A?>N C< A:R? K??= D?@PL=N?N KU := F=B:LN
@?>>?D F=CL> A? A:@ Q:=LG?@C?N KU =<CLP? C< CA? KFU?D <D KU @<Q? <CA?D
<R?DC :PC := L=C?=CL<= C< D?@PL=N. 'C L@ =<C =?P?@@:DU CA:C @FPA <R?DC :PC
@A<F>N K? P<QQF=LP:C?N C< CA? KFU?DW KFC CA? MLRL=M <D G:L>FD? C< MLR?
=<CLP? C< CA? KFU?D <G CA? L=C?=CL<= C< D?@PL=N @A:>> K? D?>?R:=C L= :=U
L@@F? L=R<>RL=M CA? _F?@CL<= ;A?CA?D CA? KFU?D A:N K??= L= N?G:F>C G<D :=
F=D?:@<=:K>? CLQ? K?G<D? CA? DLMAC <G D?@PL@@L<= ;:@ :@@?DC?N. d=e
When Lhe rlghL may be exerclsed d*$(e
unpald seller has ?xerclsed hls possessory llen or sLoppage ln LranslLu
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

78
Seller expressly Deserved Lhe rlghL Lo resclnd ln case of defaulL
8uyer has been ln NefaulL for an unreasonable lengLh of Llme
H".",$"5 '# K74"-
S:L>FD? <G !?>>?D C< (?>LR?D
"DC. 7IVJ.
,A?D? CA? @?>>?D A:@ KD<T?= : P<=CD:PC C< N?>LR?D @B?PLGLP <D :@P?DC:L=?N
M<<N@W : P<FDC Q:UW <= CA? :BB>LP:CL<= <G CA? KFU?DW NLD?PC CA:C CA?
P<=CD:PC @A:>> K? B?DG<DQ?N @B?PLGLP:>>UW ;LCA<FC MLRL=M CA? @?>>?D CA?
<BCL<= <G D?C:L=L=M CA? M<<N@ <= B:UQ?=C <G N:Q:M?@. )A? OFNMQ?=C <D
N?PD?? Q:U K? F=P<=NLCL<=:>W <D FB<= @FPA C?DQ@ :=N P<=NLCL<=@ :@ C<
N:Q:M?@W B:UQ?=C <G CA? BDLP? :=N <CA?D;L@?W :@ CA? P<FDC Q:U N??Q
OF@C. d=e
4D?:PA <G !?>>?D^@ ,:DD:=CU
ArL. 1399 provldes Lhe followlng remedles Lo Lhe buyer ln case Lhe seller breaches
hls warranLy:
1. AccepL or keep Lhe goods and seL up agalns Lhe seller Lhe breach of
warranLy by way of recoupmenL ln dlmlnuLlon or exLlncLlon of Lhe prlce
2. AccepL or keep Lhe goods and malnLaln an acLlon for damages agalns Lhe
seller
3. 8efuse Lo accepL Lhe goods and malnLaln an acLlon for damages
4. 8esclnd Lhe sale and refuse Lo recelve Lhe goods or lf Lhe goods have
already been recelved, reLurn Lhem or offer Lo reLurn Lhem Lo Lhe seller
and recover Lhe prlce pald.
1hese remedles are alLernaLlve. Powever, Lhe buyer sLlll has a rlghL Lo
resclnd lf he has chosen speclflc performance buL lL has become
lmposslble. 1hls ls based on ArL. 1191(2).
!F@B?=@L<= <G /:UQ?=C@ L= "=CLBLP:CL<= <G 4D?:PA
"DC. 7IV6.
!A<F>N CA? R?=N?? K? NL@CFDK?N L= CA? B<@@?@@L<= <D <;=?D@ALB <G CA?
CAL=M :P_FLD?NW <D @A<F>N A? A:R? D?:@<=:K>? MD<F=N@ C< G?:D @FPA
NL@CFDK:=P?W KU : RL=NLP:C<DU :PCL<= <D : G<D?P><@FD? <G Q<DCM:M?W A? Q:U
@F@B?=N CA? B:UQ?=C <G CA? BDLP? F=CL> CA? R?=N<D A:@ P:F@?N CA?
NL@CFDK:=P? <D N:=M?D C< P?:@?W F=>?@@ CA? >:CC?D MLR?@ @?PFDLCU G<D CA?
D?CFD= <G CA? BDLP? L= : BD<B?D P:@?W <D LC A:@ K??= @CLBF>:C?N CA:CW
=<C;LCA@C:=NL=M :=U @FPA P<=CL=M?=PUW CA? R?=N?? @A:>> K? K<F=N C< Q:T?
CA? B:UQ?=C. " Q?D? :PC <G CD?@B:@@ @A:>> =<C :FCA<DLf? CA? @F@B?=@L<= <G
CA? B:UQ?=C <G CA? BDLP?. d7I65:e
*$3)0 #",E !:>?@ <G &<R:K>?@ <= '=@C:>>Q?=C@
"DC. 7HJH.
'= : P<=CD:PC <G @:>? <G B?D@<=:> BD<B?DCU CA? BDLP? <G ;ALPA L@ B:U:K>? L=
L=@C:>>Q?=C@W CA? R?=N<D Q:U ?X?DPL@? :=U <G CA? G<>><;L=M D?Q?NL?@E
d7e $X:PC GF>GL>>Q?=C <G CA? <K>LM:CL<=W @A<F>N CA? R?=N?? G:L> C< B:Ug
d5e 3:=P?> CA? @:>?W @A<F>N CA? R?=N??k@ G:L>FD? C< B:U P<R?D C;< <D Q<D?
L=@C:>>Q?=C@g
d9e S<D?P><@? CA? PA:CC?> Q<DCM:M? <= CA? CAL=M @<>NW LG <=? A:@ K??=
P<=@CLCFC?NW @A<F>N CA? R?=N??k@ G:L>FD? C< B:U P<R?D C;< <D Q<D?
L=@C:>>Q?=C@. '= CAL@ P:@?W A? @A:>> A:R? =< GFDCA?D :PCL<= :M:L=@C CA?
BFDPA:@?D C< D?P<R?D :=U F=B:LN K:>:=P? <G CA? BDLP?. "=U :MD??Q?=C C<
CA? P<=CD:DU @A:>> K? R<LN. d7HIH8"8:e
8aLlonale of 8ecLo Law
lL was orlglnally passed ln 1939 and was evenLually lncorporaLed ln Lhe
Clvll Code as ArL. 1484.
1he purpose ls Lo prevenL Lhe abuses of morLgagees who foreclose on Lhe
chaLLel morLgage, buy Lhe properLy aL a low prlce, and Lhen sulng Lhe
morLgagor for deflclency.
3<R?D:M? <G CA? #:;
lnsLallmenL sales are covered.
o lL ls an lnsLallmenL sale" lf Lhe prlce ls payable ln Lwo or more
fuLure paymenLs, wheLher or noL Lhere ls a downpaymenL. levy v.
Cetvoclo (69 lbll. 52)
ConLracLs Lo Sell are noL covered. vlsoyoo 5owmlll co. v. cA (219 5ckA J78)
llnanclng LransacLlons derlved or arlslng from sales of movables on
lnsLallmenLs are covered.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

79
o ln Lhls case, Lhe seller asslgned hls credlL Lo Lhe flnanclng
company. 1he flnanclng company ls Lhus bound by ArL. 1484.
2oyos v. looeto Motot compooy (117 5ckA 726)
L"84 ^"-.*%'5 8: G"-8*2$'
S:PC@E Levy Permanos, lnc., sold Lo Lazaro 8las Cervaclo, who afLer downpaymenL,
execuLed a promlssory noLe for Lhe balance of 2,400, payable on or before !une
13, 1937, and morLgage Lhe car. Cervaclo falled Lo pay and Lhe morLgage was
foreclosed, Permanos lnsLlLuLed a clvll acLlon for Lhe balance.
]?>NE 1he suggesLlon LhaL Lhe cash paymenL made ln Lhls case should be consldered
as an lnsLallmenL ln order Lo brlng Lhe conLracL sued upon under Lhe operaLlon of
Lhe law, ls unLenable. A cash paymenL cannoL be consldered as a paymenL by
lnsLallmenL, and even lf lL can be so consldered, sLlll Lhe law does noL apply, for lL
requlres non-paymenL of Lwo or more lnsLallmenLs ln order LhaL lLs provlslons may
be lnvoked. Pere, only one lnsLallmenL was unpald.(Applylng ArL. 1434)

_*4*5 8: L7%"&* B'&'- ;'.1*%4
S:PC@ E eLlLloner LuLroplo Zayas, !r. purchased on lnsLallmenL basls a moLor vehlcle
from Lscano LnLerprlses ln Cagayan de Cro ClLy, dealer of 8espondenL LuneLa
MoLor Company. Car was dellvered Lo Zayas who execuLed a promlssory noLe on
Lhe balance and ln addlLlon a chaLLel morLgage on Lhe car ln favor of LuneLa. Zayas
was unable Lo pay furLher prompLlng LuneLa Lo exLra-[udlclally foreclose chaLLel
morLgage, car sold aL publlc aucLlon wlLh LuneLa as hlghesL bldder. LuneLa flled clvll
case for recovery of balance of 1,331.74 plus lnLeresL. Pe denled appllcablllLy of
ArL1484 because conLracL was only a mere loan and noL sale on lnsLallmenL

'@@F?E WCn ArLlcle 1484 would apply Lo a person or enLlLy whlch flnanced purchase
on lnsLallmenLs of a moLor vehlcle where Lhe seller subsequenLly asslgns loan
documenLs Lo Lhe flnanclng person or enLlLy.

]?>Nj*:CL<E
?es. Lscano was an agenL of LuneLa MoLor Company and LhaL Lhe cerLlflcaLlon from
Lhe cashler of Lscano LnLerprlses (submlLLed ln evldence) on monLhly lnsLallmenLs
ald by Zayas menLloned LhaL Lhe noLe was ln favor of LuneLa. Lscano asslgned lLs
rlghLs vls-a-vls Lhe sale Lo LuneLa MoLor Company, Lhe naLure of Lhe LransacLlon
dldn'L change and as an asslgnee, LuneLa had no beLLer rlghLs Lhan asslgnor Lscano
under Lhe same LransacLlon. 1ransacLlon would sLlll be a sale of personal properLy ln
lnsLallmenLs covered by ArL. 1484, Lo rule oLherwlse would pave Lhe way for
subverLlng Lhe pollcy underlylng ArL 1484 on Lhe foreclosure of chaLLel morLgages
over personal properLy sold on lnsLallmenL basls.

*?Q?NL?@ /D<RLN?N a=N?D "DCLP>? 7HJH
naLure of Lhe remedles ln ArL. 1484
1he arLlcle provldes for Lhree remedles.
1hese are alLernaLlve and excluslve, and Lhe exerclse of one would bar Lhe
exerclse of Lhe oLhers. uelto Motot 5oles cotp. v. Nlo klm uooo (21J 5ckA
259)
o 1hls ls Lhe verLlcal" barrlng effecL.
Powever, seeklng a wrlL of replevln ls conslsLenL wlLh any of Lhe Lhree
remedles. uolvetsol Motots cotp. v. uy nloo 1ot (28 5ckA 161)
ln lnsLallmenL sales, lf Lhe acLlon lnsLlLuLed ls for speclflc performance and
Lhe morLgaged properLy ls subsequenLly aLLached and sold, Lhe sale does
noL amounL Lo a foreclosure of Lhe morLgage, has been upheld ln
subsequenL declslons and seems now well-esLabllshed. loJosttlol lloooce
cotp. v. komltez (77 5ckA 152)
!"+&* B'&'- )*+"5 ;'-1: 8: W$7 X$. !7*%
S:PC@E uefendanLs purchased from Lhe plalnLlff 3 unlLs of 'uAlkln' alr-condlLloner,
afLer paylng Lhe amounL of 6,966.00, Lhe defendanLs falled Lo pay aL leasL Lwo (2)
monLhly lnsLalmenLs. 1he conLracL has sLlpulaLlons LhaL lncase Lhe conLracL ls
resclnded Lhe defendanL should pay Lhe expenses of Lhe sulL, 23 of Lhe unpald
obllgaLlon.
]?>NE 1he vendor ln a sale of personal properLy payable ln lnsLallmenLs may
exerclse one of Lhree remedles
(1) exacL Lhe fulflllmenL of Lhe obllgaLlon, should Lhe vendee fall Lo pay, (2) cancel
Lhe sale upon Lhe vendee's fallure Lo pay Lwo or more lnsLallmenLs, (3) foreclose
Lhe chaLLel morLgage, lf one has been consLlLuLed on Lhe properLy sold, upon Lhe
vendee's fallure Lo pay Lwo or more lnsLalmenLs.
1he Lhlrd remedy, however, ls sub[ecL Lo Lhe llmlLaLlon LhaL Lhe vendor cannoL
recover any unpald balance of Lhe prlce and any agreemenL Lo Lhe conLrary ls vold
(ArL. 1484) 1he Lhree remedles are alLernaLlve and nC1 cumulaLlve. lf Lhe credlLor
chooses one remedy, he cannoL avall hlmself of Lhe oLher Lwo.

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

80
*?Q?NU <G !B?PLGLP /?DG<DQ:=P?
1hls remedy ls alLernaLlve. Powever, lL can be argued LhaL lf Lhe obllgaLlon
Lo pay becomes lmposslble, Lhe seller may sLlll seek resclsslon based on
ArL. 1191. CLv however says LhaL Lhe generlc obllgaLlon Lo pay can'L
become lmposslble.
1he seller ls deemed Lo have chosen speclflc performance when he flles an
acLlon ln courL for recovery. Sendlng of demand leLLer Lo Lhe buyer ls noL
enough.
When [udgmenL ls rendered ln favor of Lhe seller, Lhe buyer becomes a
[udgmenL debLor. Pls obllgaLlon can be execuLed on all personal and real
properLles of Lhe buyer whlch are noL exempL from execuLlon.
1he facL LhaL Lhe seller obLalned a wrlL of execuLlon agalnsL Lhe properLy
morLgaged, buL pursuanL Lo an acLlon for speclflc performance wlLh a plea
for a wrlL of replevln, does noL amounL Lo a foreclosure of Lhe chaLLel
morLgage covered by Lhe 8ecLo Law. 1ojooqlooqlt v. 5ootbeto Motots (101
lbll. 606)
D*=*%0+*%0$& 8: )'7&/"-% B'&'-5
S"3)!E Spouses 1a[anlanglL boughL 2 LracLors and 1 1hresher from SouLhern MoLors
on lnsLallmenL basls by lssulng a romlssory noLe Lo LhaL effecL. 1hey Lhen
defaulLed on Lhe lnsLallmenL paymenLs. 1he courL enLered [udgmenL for Lhe LoLal
sum of Lhe purchased machlnerles (23,373) plus lnLeresL and collecLlon cosLs. 1he
sherlff Lhen levled on Lhe machlnerles and sold Lhem on aucLlon for 10k Lo Lhe
hlghesL bldder, whlch was also SouLhern MoLors. Slnce Lhe [udgmenL called for so
much more, SouLhern MoLors obLalned an allas wrlL of execuLlon so LhaL Lhe sherlff
could levy aLLachmenL on Lhe oLher real properLles of Lhe 1a[anlanglLs.

'!!!a$E WCn SouLhMo had already foreclosed on Lhe chaLLel morLgage and Lhus
have no more furLher acLlon agalnsL Lhem.

]$#(j*")'0E 1here was nC foreclosure sale slnce SouLhMo elecLed 1484(1) and
sued on Lhe noLe excluslvely. SouLhMo had Lhe cholce whaL remedy ln ArL.1484 Lo
use. nelLher was Lhere cancellaLlon of Lhe sale whlch was also afflrmed by Lhe
sherlff. 1here was an execuLlon agalnsL on Lhe properLy morLgaged noL a
cancellaLlon/foreclosure on Lhe sale. 1he facL LhaL Lhe seller obLalned a wrlL of
execuLlon agalnsL Lhe properLy morLgaged, buL pursuanL Lo an acLlon for speclflc
performance wlLh a plea for a wrlL of replevln, does noL amounL Lo a foreclosure of
Lhe chaLLel morLgage covered by Lhe 8ecLo Law

*?Q?NU <G *?PL@@L<=
8esclsslon obllges boLh parLles Lo make resLlLuLlon. Powever, under ArL.
1486, a sLlpulaLlon LhaL Lhe lnsLallmenLs or renLs pald shall noL be reLurned
ls valld, as long as Lhey are noL unconsclonable. uelto Motot 5oles cotp. v.
Nlo klm uooo (21J 5ckA 259)
A sLlpulaLlon whlch provldes for Lhe forfelLure of Lhe amounLs pald by Lhe
buyer when Lhe conLracL ls resclnded ls noL conLrary Lo law. Such forfelLed
amounLs are llke Lhe damages whlch can also be recovered ln resclsslon.
MuLual resLlLuLlon prevenLs recoverlng on Lhe balance of Lhe purchase
prlce. Noooto v. lAc (140 5ckA 255)
When 8esclsslon ueemed Chosen
1here ls a clear lndlcaLlon by Lhe seller LhaL he wanLs Lo end Lhe conLracL.
o Sends a noLlce of reclsslon Lo Lhe buyer
o 1akes possesslon of Lhe sub[ecL maLLer of Lhe sale
o llles an acLlon for resclsslon
When Lhe seller's asslgnee, a flnanclng company, ls able Lo Lake back
possesslon of Lhe moLor vehlcle wlLh a condlLlon LhaL Lhe car can be
redeemed by Lhe buyers wlLhln 13 days, such possesslon ls clearly wlLh Lhe
lnLenL Lo cancel Lhe conLracL. Noooto v. lAc (140 5ckA 255)
1he reLaklng of possesslon of Lhe properLy musL be coupled wlLh an
unequlvocal deslre on Lhe parL of Lhe seller Lo resclnd. vJo. ue Oolomboo
v. Moollo Motot co. (J 5ckA 445)
8arrlng LffecL of 8esclsslon
Lven lf noL expllclLly sLaLed ln Lhe law, resclsslon sLlll bars Lhe seller from
recoverlng deflclency or unpald balance, ln Lhe same way LhaL foreclosure
on chaLLel morLgage does.
lL ls because of Lhe naLure of resclsslon whlch requlres muLual resLlLuLlon.
When Lhe sub[ecL maLLer ls reLurned, and damages are pald, or paymenLs
are forfelLed, Lhe Lwo parLles are deemed Lo have been muLually
compensaLed. 1he seller cannoL have lLs cake and eaL lL Loo. Noooto v. lAc
(140 5ckA 255)
W'%*&' 8: 3C;
S:PC@E 8esLlLuLo and LsLer nonaLo purchased a volkswagen Sakbayan from Lhe
eople's Car, lnc., on lnsLallmenL basls. 1he defendanLs execuLed a promlssory noLe
and a chaLLel morLgage ln favor of eople's Car, lnc. lL Lhen asslgned lLs rlghLs and
lnLeresLs over Lhe noLe and morLgage ln favor of lnvesLor's llnance CorporaLlon
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

81
(llC). lor fallure of defendanLs Lo pay Lwo or more lnsLallmenLs, desplLe demands,
Lhe car was repossessed by llC. uesplLe repossesslon, llC demanded LhaL nonaLos
pay Lhe balance of Lhe prlce of Lhe car.

'!!a$E WheLher a vendor who had cancelled Lhe sale of a moLor vehlcle for fallure
of Lhe buyer Lo pay Lwo or more of Lhe sLlpulaLed lnsLallmenLs, may also demand
paymenL of Lhe balance of Lhe purchase prlce.

]?>Nj*")'0E Pell no. 1he appllcable law ln Lhe case aL bar ls ArL. 1484.
1hese remedles have been recognlzed as alLernaLlve, noL cumulaLlve, LhaL Lhe
exerclse of one would bar Lhe exerclse of Lhe oLhers. 1he acLs performed by Lhe
corporaLlon are wholly conslsLenL wlLh Lhe concluslon LhaL lL had opLed Lo cancel
Lhe conLracL of sale of Lhe vehlcle. lL ls Lhus barred from exacLlng paymenL of Lhe
balance of Lhe prlce of Lhe vehlcle. lL cannoL have lLs cake and eaL lL Loo.

S<D?P><@FD? <G 3A:CC?> &<DCM:M? 3<=@CLCFC?N <= !FKO?PC /D<B?DCU
When 8emedy of loreclosure ls ueemed Chosen
1he seller ls deemed Lo have chosen Lo foreclose only aL Lhe Llme of acLual
sale of Lhe sub[ecL properLy aL publlc aucLlon. Moollo 1toJloq & 5opply co.
v. keyes (62 lbll. 461), Moollo Motot co., loc. v. letoooJez (99 lbll. 782)
1he flllng for and lssuance of a wrlL of replevln (and Lhe subsequenL
recovery of possesslon) does noL mean LhaL Lhe seller wlll foreclose on Lhe
morLgage. uolvetsol Motots cotp. v. 5y nloo 1ot (28 5ckA 161)
o (llllng of a wrlL of replevln ls usually a prellmlnary sLep Lo
foreclose so LhaL Lhe seller wlll be able Lo regaln possesslon.)
lf Lhe seller flles an acLlon denomlnaLed as replevln wlLh damages" whlch
seeks Lo recover possesslon and ln Lhe alLernaLlve, Lo recover Lhe unpald
balance of Lhe prlce, he ls sLlll noL consldered as havlng chosen foreclosure
as a remedy. loJosttlol lloooce cotp. v. komltez (77 5ckA 152)
8arrlng LffecL of loreclosure
lL ls Lhe foreclosure and acLual sale aL publlc aucLlon whlch bars furLher
recovery by Lhe seller.
lf Lhe seller had flled an acLlon for foreclosure and before Lhe publlc
aucLlon, he recelves furLher paymenL from Lhe buyer, Lhe seller ls noL
obllged Lo refund Lhe paymenLs. Nottbeto Motots, loc. v. 5oplooso (JJ
5ckA J56)
W'-&/"-% B'&'-5I 3%2: 8: )*1$%'5'
S"3)!E Saplnoso purchased from norLhern MoLors, lnc. an Cpel kadeLL car
execuLlng a promlssory noLe for Lhe balance of 10,340.00 payable ln lnsLallmenLs
wlLh lnLeresL aL 12 per annum wlLh a chaLLel morLgage on Lhe car. 1he vendee-
morLgagor falled Lo pay several lnsLallmenLs. norLhern MoLors, lnc. flled a
complalnL agalnsL Saplnoso and soughL foreclosure. SubsequenL Lo Lhe
commencemenL of Lhe acLlon, buL before Lhe flllng of hls answer, defendanL
Saplnoso made Lwo paymenLs on Lhe promlssory noLe. 1he courL allowed Lhe
foreclosure buL however ordered plalnLlff Lo relmburse Lhe sum of 1,230.00 whlch
Lhe plalnLlff had recelved from Lhe laLLer afLer havlng flled Lhe presenL case.

'!!a$E WCn Lhe courL erred ln orderlng norLhern MoLors Lo relmburse Lhe sum of
1,230 recelved by plalnLlff afLer havlng flled Lhe presenL case.

]$#(j*")'0E ?es. 1he CourL erred ln concludlng LhaL Lhe legal effecL of Lhe flllng of
Lhe acLlon was Lo bar plalnLlff-appellanL from accepLlng furLher paymenLs on Lhe
promlssory noLe. 1here has noL yeL been a foreclosure sale resulLlng ln a deflclency.
ArLlcle 1484(3) - prohlblLs "furLher acLlon agalnsL Lhe purchaser Lo recover any
unpald balance of Lhe prlce"
1here ls no reason why a morLgage credlLor should be barred from
accepLlng, before a foreclosure sale, paymenLs volunLarlly Lendered by Lhe
debLor-morLgagor who admlLs a subslsLlng lndebLedness.
Lven a morLgage credlLor, before Lhe acLual foreclosure sale, ls noL
precluded from recoverlng Lhe unpald balance of Lhe prlce alLhough he has
flled an acLlon of replevln for Lhe purpose of exLra[udlclal foreclosure
Lven a morLgage credlLor who has elecLed Lo foreclose buL who
subsequenLly deslsLs from proceedlng wlLh Lhe aucLlon sale, wlLhouL
galnlng any advanLage or beneflL, and wlLhouL causlng any dlsadvanLage or
harm Lo Lhe vendee-morLgagor, ls noL barred from sulng on Lhe unpald
accounL.

8arrlng LffecL on CLher SecurlLles Clven for aymenL of rlce
lf Lhe seller had already foreclosed on Lhe chaLLel morLgage, lL cannoL seek
deflclency [udgmenL by forecloslng on Lhe real esLaLe morLgage consLlLuLed
by Lhlrd-parLy morLgagors. ctoz v. llllploos lovestmeot & lloooce cotp. (2J
5ckA 791)
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

82
o 1he CourL held LhaL lf Lhe Lhlrd-parLy morLgagor ls forced Lo pay,
Lhen he as Lhe guaranLor wlll be allowed Lo recover from Lhe
prlnclpal debLor. 1hls would be an lndlrecL subverslon of ArL.
1484.
o 1he acLlon belng barred also lncludes exLra[udlclal proceedlngs,
noL [usL [udlclal proceedlngs.
1he seller ls llkewlse precluded from furLher exLra[udlclally forecloslng on
any addlLlonal securlLy whlch Lhe buyer hlmself has consLlLuLed. klJoJ v.
llllploos lovestmeot ooJ lloooce cotp. (120 5ckA 246)
When Lhe real esLaLe morLgage consLlLuLed by a Lhlrd-parLy ls foreclosed
flrsL, Lhe seller cannoL anymore foreclose on Lhe chaLLel morLgage
consLlLuLed by Lhe buyer. 8u1 Lhe barrlng effecL as Lo prevenL recovery of
deflclency [udgmenL does noL come lnLo play. 8otboo ll v. 5etvlcewlJe
5peclollsts, loc. (258 5ckA 6J4)
1he orlglnal wordlng of Lhe 8ecLo Law conLalned any unpald balance"
lnsLead of any unpald balance of Lhe prlce." 1he CourL has lnLerpreLed
any unpald balance" Lo lnclude even lnLeresL on Lhe prlnclpal, aLLorney's
fees, expenses of collecLlon, and oLher cosLs. MocooJoy & co., loc. v.
ostoplo. (64 lbll. 446)
o Lven lf Lhls case ls a 1937 case, lL remalns good law, desplLe Lhe
change ln wordlng ln whaL ls now ArL. 1484 of Lhe Clvll Code. 1hls
docLrlne was relLeraLed ln Lhe 1969 case of llllplnas lnvesLmenL &
llnance Corp. v. 8ldad, lofto.
;-7P 8: Y$+$1$%*5 3%8"5&."%& R Y$%*%2" ;'-1:
S:PC@E Cruz purchased from lar LasL MoLor Corp an lsuzu ulesel 8us for 44,616.24
ln lnsLallmenLs wlLh a chaLLel morLgage ln favor of lLMC over Lhe bus. An addlLlonal
securlLy was glven by lellcldad vda. de 8eyes (8eyes) ln Lhe form of a Second
morLgage on a parcel of land owned by her, along wlLh Lhe bulldlng. 1hereafLer,
lLMC, for value recelved, lndorsed Lhe n and asslgned all lLs rlghLs ln Lhe ChaLLel
MorLgage and 8eal LsLaLe MorLgage Lo hereln defendanL, llllplnas lnvesLmenL and
llnance Corp. (lllC). Cruz defaulLed ln paymenL. 1hus, lllC Look sLeps Lo foreclose
Lhe chaLLel morLgage on Lhe bus and afLer for Lhe oLher securlLy for Lhe deflclency.

'@@F?@E WCn lllC, havlng already foreclosed Lhe chaLLel morLgage, also can
foreclose Lhe real esLaLe morLgage?

]?>Nj*:CL<E ArL 1484 applles. 1he remedles Lhereln provlded are alLernaLlve, noL
cumulaLlve - exerclse of one bars exerclse of oLhers. LsLabllshed rule ls LhaL
foreclosure and acLual sale of a ChaLLel MorLgage bars furLher recovery by Lhe
vendor of any balance noL saLlsfled by such sale. A conLrary rullng would be open Lo
abuse coz morLgagees could buy Lhe properLy aL a foreclosure aL a much lower
prlce, Lhen go afLer Lhe second securlLy. lL would have Lhe effecL of deprlvlng Lhe
morLgagor of hls properLy, yeL wlLh almosL Lhe whole debL belng due. nelLher may
lllC recover from Lhe guaranLor. lf Lhe guaranLor (8eyes) was compelled Lo pay Lhe
balance, Lhus she would be allowed Lo recover whaL she has pald from Lhe vendee
(Cruz). 1hus, ulLlmaLely, Cruz would be made Lo bear Lhe balance, even lf Lhe CM
was already foreclosed. roLecLlon of ArL 1484 would be subverLed whlch cannoL be
allowed Lo happen.

H$,*, 8 Y$+$1$%*5 3%8"5&."%& R Y$%*%2" ;'-1:
S:PC@E lalnLlffs 8ldad boughL 2 brand new lord Consul sedans. 1hey execuLed a
promlssory noLe and a chaLLel morLgage on Lhe Lwo cars Anu anoLher car Anu
plalnLlff's Laxl operaLlon franchlse or cerLlflcaLe of publlc convenlence. 1he vendor
asslgned lLs rlghLs, LlLle and lnLeresL Lo Lhe promlssory noLe and chaLLel morLgage Lo
llllplnas lnvesLmenL and llnance Corp. 1he buyers defaulLed on Lhelr paymenL. lllC
foreclosed exLra-[udlclally on Lhe chaLLel morLgage and Lhey were Lhe hlghesL
bldder. AnoLher aucLlon sale was held aL a laLer daLe for Lhe remalnlng properLles,
lncludlng Lhe Laxl franchlse. lllC was agaln Lhe hlghesL bldder. lL subsequenLly sold
and conveyed Lhe Laxl franchlse Lo !ose SebasLlan who flled wlLh Lhe SC for
approval of Lhe sale.
lalnLlff Lhen flled an acLlon for annulmenL of conLracL and Lhe subsequenL sales
wlLh Lhe Cll of 8lzal.

'@@F?E WCn Lhe chaLLel morLgage was valld.

]?>NEnC. ArL. 1484 of Lhe Clvll Code applles.
- 1hese remedles are alLernaLlve, noL cumulaLlve. ln Lhls case, Lhe morLgagee chose
Lo foreclose on Lhe chaLLel morLgage on Lhe 2 new lord vehlcles. 8ecause Lhey
chose Lhls opLlon, Lhey may noL anymore have any furLher acLlon Lo recover Lhe
unpald balance pursuanL Lo ArL. 1484(3). 1hey are Lhus precluded from havlng a
recourse agalnsL Lhe addlLlonal securlLy puL up by a guaranLor.

K'-9'% 33 8: )"-8$2"E$," )1"2$*+$5&5I 3%2:
S"3)!E (8&8) [olnLly and severally slgned a promlssory noLe ln favor angaslnan
AuLo MarL, lnc. for 122,836.00 Lo be payable ln lnsLallmenLs wlLhouL need of
noLlce or demand wlLh a ChaLLel MorLgage on 1 8rand new 1984 lsuzu kCu 20 Crew
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

83
Cab. 1he rlghLs of angaslnan AuLo MarL, lnc. was laLer asslgned Lo llllnvesL CredlL
CorporaLlon, wlLh noLlce Lo Lhe defendanLs. 8ecause Lhe defendanLs dld noL pay
Lhelr monLhly lnsLallmenLs, llllnvesL demanded from Lhe defendanLs Lhe paymenL
of Lhelr lnsLallmenLs due on !anuary 29, 1983 by Lelegram. llllnvesL CredlL
CorporaLlon LhereafLer asslgned all lLs rlghLs, lnLeresL and LlLle over Lhe romlssory
noLe and Lhe chaLLel morLgage Lo Servlcewlde SpeclallsLs, lnc. (SSl). 1he plalnLlff
aLLempLed Lo collecL by sendlng a demand leLLer Lo Lhe defendanLs for Lhem Lo pay
Lhelr enLlre obllgaLlon. 1he defendanLs clalm LhaL whaL Lhey lnLended Lo buy from
angaslnan AuLo MarL was a [eepney Lype lsuzu k. C. Cab. uefendanLs furLher clalm
LhaL Lhey are noL ln defaulL of Lhelr obllgaLlon because Lhe angaslnan AuLo MarL
was flrsL gullLy of noL fulfllllng lLs obllgaLlon ln Lhe conLracL. 1he defendanLs clalm
LhaL nelLher parLy lncurs delay lf Lhe oLher does noL comply wlLh hls obllgaLlon

'!!a$E W/n awards made by Lhe courL a quo of llquldaLed damages and aLLorney's
fees Lo prlvaLe respondenL approprlaLe. ALLorney's fees (?LS) LlquldaLed uamages
(nC)

*")'0E When Lhe seller asslgns hls credlL Lo anoLher person, Lhe laLLer ls llkewlse
bound by Lhe same law. Accordlngly, when Lhe asslgnee forecloses on Lhe
morLgage, Lhere can be no furLher recovery of Lhe deflclency, and Lhe seller-
morLgagee ls deemed Lo have renounced any rlghL Lo Lhe unpald balance. 1hus
Lhere musL be no paymenL of llquldaLed damages, however granL of aLLorney's fees
were allowed.

B*2'%,-*4 R ;':I 3%2: 8: @75&*67$'
S"3)!E Macondray sold a de SoLo car Sedan from LusLaqulo for 393, and for whlch
he execuLed a noLe where he underLook Lo pay Lhe car ln 12 monLhly lnsLallmenLs,
12 lnLeresL per annum. Pe morLgaged same car Lo guaranLee hls noLe, he pald Lhe
flrsL lnsLallmenL buL falled Lo pay any of Lhe remalnlng. So plalnLlff broughL an
acLlon Lo obLaln possesslon of Lhe car "1( recover Lhe balance owlng hlm (lnLeresL,
aLLorney's fees, expenses and cosLs)
(03)*'1$E 1he 8ecLo law prevenLs Lhe morLgagee from selzlng Lhe morLgaged
properLy, buylng lL aL foreclosure sale and Lhen brlnglng a sulL agalnsL Lhe
morLgagor for a deflclency [udgmenL. 1hls ls Lo close Lhe door Lo abuses already
commlLLed ln connecLlon wlLh Lhe foreclosure of Lhe chaLLel morLgages when sales
were payable ln lnsLallmenLs.
"All amounLs barred from recovery."
"Any unpald balance" refers Lo Lhe deflclency [udgmenL lncludlng lnLeresL on
prlnclpal, aLLorney's fees, expenses of collecLlon, and Lhe cosLs.

8ules on erverse 8uyer-MorLgagor
Ceneral 8ule: 1he ostopolo docLrlne bars all amounLs from recovery ln
case Lhe seller-morLgagee forecloses on Lhe chaLLel morLgage.
LxcepLlon: When Lhe buyer-morLgagor refuses Lo surrender Lhe chaLLel Lo
allow Lhe seller Lo be able Lo proceed wlLh foreclosure, Lhe seller ls allowed
Lo recover expeoses ooJ ottotoeys fees locotteJ lo ttyloq to obtolo
possessloo of tbe cbottel. llllploos lovestmeot & lloooce cotp. v. klJoJ (J0
5ckA 564)
Y$+$1$%*5 3%8"5&."%& R Y$%*%2" ;'-1: 8: H$,*,
S"3)!E 8ldad purchased from llllplnas a lord Sedan on lnsLallmenL basls buL falled
Lo pay 3 lnsLallmenLs. LxLra[udlclal foreclosure ensued, spouses 8ldad were
consldered ln defaulL for fallure Lo appear ln courL, and courL awarded aLLorney's
fees and acLual expenses of selzure Lo llllplnas.
(03)*'1$E AlLhough Lhe purpose of Lhe 8ecLo law ls Lo proLecL Lhe buyers on
lnsLallmenL who were vlcLlmlzed by sellers who succeeded ln un[usLly enrlchlng
Lhemselves aL Lhe expense of Lhe buyers, Lhe morLgagee (seller) ls also enLlLled
proLecLlon agalnsL L8vL8SL MC81CACC8S. erverse morLgagors are Lhose where
afLer falllng Lo pay 2 or more lnsLallmenLs, refuse Lo dellver chaLLel Lo Lhe
morLgagee or conceals lL ln a place ouLslde Lhe reach of Lhe morLgagor. Slnce Lhe
morLgagee would enforce hls rlghLs Lhrough Lhe means and wlLhln Lhe llmlLs
dellneaLed by law, Lhe nexL sLep ls Lo flle an acLlon for replevln Lo recover
lmmedlaLe possesslon of Lhe chaLLel. ln Lhls case, Lhe necessary expenses should be
borne by Lhe morLgagor.

L"*5" E$&/ A1&$'% &' >7-2/*5"
"DC. 7HJI.
)A? BD?P?NL=M :DCLP>? @A:>> K? :BB>L?N C< P<=CD:PC@ BFDB<DCL=M C< K? >?:@?@
<G B?D@<=:> BD<B?DCU ;LCA <BCL<= C< KFUW ;A?= CA? >?@@<D A:@ N?BDLR?N CA?
>?@@?? <G CA? B<@@?@@L<= <D ?=O<UQ?=C <G CA? CAL=M. d7HIH8"8:e
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

84
"DC. 7HJZ.
'= CA? P:@? D?G?DD?N C< L= C;< BD?P?NL=M :DCLP>?@W : @CLBF>:CL<= CA:C CA?
L=@C:>>Q?=C@ <D D?=C@ B:LN @A:>> =<C K? D?CFD=?N C< CA? R?=N?? <D >?@@??
@A:>> K? R:>LN L=@<G:D :@ CA? @:Q? Q:U =<C K? F=P<=@PL<=:K>? F=N?D CA?
PLDPFQ@C:=P?@. d=e
Some sellers opL Lo maklng conLracLs ln Lhe form of leases wlLh an opLlon
Lo buy for a small conslderaLlon aL Lhe end of Lhe Lerm. 1hese conLracLs
musL be regarded as lnsLallmenL sales, wlLh Lhe renL paymenLs as Lhe
lnsLallmenLs pald. vJo. ue Iose v. 8ottoeco (67 lbll. 191)
Lven lf an opLlon Lo purchase ls noL expressly sLlpulaLed, Lhe sLlpulaLlons ln
Lhe conLracL can sLlll show LhaL such was Lhe lnLenLlon of Lhe parLles. lcl
leosloq & lloooce, loc. v. Cltoffe-\ cteotlve lmoqloq, loc. (527 5ckA 405)
>;3 L"*5$%0 R Y$%*%2"I 3%2: 8: G$-*##"J` ;-"*&$8" 3.*0$%0I 3%2:
S"3)!E arLles enLered lnLo a Lease AgreemenL where Cl leased Lwo offlce
equlpmenL from Clraffe- x. 1he lease agreemenL conLalned Lhe monLhly renLal
(expenslve!) a guaranLy deposlL and embodled a sLandard acceleraLlon clause
operaLlve ln Lhe evenL Clraffe falled Lo pay any renLal and/or accounLs due. Clraffe
defaulLed for 3 monLhs and were glven a formal pay C8 surrender equlpmenL Lype
of demand leLLer.
(03)*'1$E 8ecLo law applles because Lhe conLracL ls acLually a lease wlLh opLlon Lo
buy. lL was noL a sLralghL lease because Lhe peLlLloner sLands Lo make 13M++ ln a
year's Llme ouL of an lnvesLmenL of 8.1M. 1he lnLenLlon of Lhe parLles musL be
looked lnLo. Also, Lhe demand leLLer was fashloned ln Lhe oltetootlve. poymeot of
Lhe unpald full balance 0* Lhe sotteoJet of Lhe flnanced asseL, suggesLlng LhaL
Clraffe can keep Lhe equlpmenL lf lL exerclses lLs opLlon Lo acqulre Lhe same. 1hls
reflecLs a slLuaLlon where a flnanclng company conceals up Lo Lhe lasL momenL lLs
lnLenLlon Lo sell Lhe properLy ln an aLLempL Lo clrcumvenL Lhe 8ecLo law. Sellers ln
Lhls case have resorLed Lo Lhe devlce of maklng conLracLs ln Lhe form of leases
elLher wlLh opLlons Lo Lhe buyer Lo purchase for a small conslderaLlon aL Lhe end of
Lerm, provlded Lhe so- called renL has been duly pald, or wlLh sLlpulaLlons LhaL lf Lhe
renL LhroughouL Lhe Lerm ls pald, LlLle shall Lhereupon vesL ln Lhe lessee. lL ls
obvlous LhaL such LransacLlons are leases only ln name. ln chooslng replevln, Cl
now walved lLs rlghL Lo brlng an acLlon Lo recover unpald renLals on Lhe leased
lLems. 8emedles under ArLlcle 1484 are alLernaLlve, noL cumulaLlve.

WhaL ls Lhe 8arrlng LffecL on Such ConLracLs?
key quesLlon: When Lhe lessor reLakes possesslon of Lhe ob[ecL upon non-
paymenL, ls Lhls consldered as a foreclosure or a resclsslon?
o CLv clLes a loL of cases whlch show LhaL Lhe CourL hasn'L really
made a deflnlLlve answer Lo Lhls quesLlon.
Powever, CLv says LhaL Lhe CourL seems Lo LreaL lnsLallmenL sales of
movables whlch are sLrucLured as lease wlLh opLlon Lo purchase as
equlvalenL Lo a chaLLel morLgage execuLed on Lhe Lhlng lLself.
1herefore, when Lhe purporLed lessor Lakes possesslon of Lhe sub[ecL
maLLer, lL ls LreaLed legally as a foreclosure. 1hus, Lhe barrlng effecL of
foreclosure applles.
8LMLulLS ln CASLS Cl lMMCvA8LLS
H".",$"5 '# )"++"-
"=CLPLB:C<DU 4D?:PA
"DC. 7IV7.
!A<F>N CA? R?=N<D A:R? D?:@<=:K>? MD<F=N@ C< G?:D CA? ><@@ <G LQQ<R:K>?
BD<B?DCU @<>N :=N LC@ BDLP?W A? Q:U LQQ?NL:C?>U @F? G<D CA? D?@PL@@L<= <G
CA? @:>?.
!A<F>N @FPA MD<F=N =<C ?XL@CW CA? BD<RL@L<=@ <G "DCLP>? 77V7 @A:>> K?
<K@?DR?N. d7I69e
S:L>FD? <G 4FU?D C< /:U /DLP?
"DC. 7IV5.
'= CA? @:>? <G LQQ<R:K>? BD<B?DCUW ?R?= CA<FMA LC Q:U A:R? K??=
@CLBF>:C?N CA:C FB<= G:L>FD? C< B:U CA? BDLP? :C CA? CLQ? :MD??N FB<= CA?
D?@PL@@L<= <G CA? P<=CD:PC @A:>> <G DLMAC C:T? B>:P?W CA? R?=N?? Q:U B:UW
?R?= :GC?D CA? ?XBLD:CL<= <G CA? B?DL<NW :@ ><=M :@ =< N?Q:=N G<D
D?@PL@@L<= <G CA? P<=CD:PC A:@ K??= Q:N? FB<= ALQ ?LCA?D OFNLPL:>>U <D KU :
=<C:DL:> :PC. "GC?D CA? N?Q:=NW CA? P<FDC Q:U =<C MD:=C ALQ : =?; C?DQ.
d7I6H:e
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

83
1he CourL has Lended Lo lnLerpreL ArL. 1392 llberally ln favor of Lhe buyer
Lo glve hlm every opporLunlLy Lo comply wlLh hls obllgaLlon and proceed Lo
Lake Lhe sub[ecL lmmovable.
ArL. 1392 only covers conLracLs of sale. ConLracLs Lo sell are noL covered.
1he CourL has also resorLed Lo equlLable resoluLlons ln Lhe appllcaLlon of
ArL. 1392. Such was Lhe case ln leqotJo netmooos v. 5olJoo. (55 5ckA
J24)
L"0*-,* ^"-.*%'5 8: )*+,*a*
S"3)!E Saldana boughL Lwo loLs from Legarda for 1, 300 each, payable ln 10 years,
dlvlded lnLo 120 equal monLhly lnsLallmenLs wlLh 10 lnLeresL per annum. Saldana
pald for 8 conLlnuous years abouL 93 monLhly lnsLallmenLs LoLal 3, 382 (1.8k
lnLeresL, 1.6k applled Lo prlnclpal), Lhen he sLopped paymenL. 1rlal CourL upheld
cancellaLlon of conLracL Lo sell, CA reversed saylng LhaL Saldana suspended paymenL
because Lhe loLs were under under waLer/ no lmprovemenLs he so lL could noL be
dellvered Lo hlm.
(03)*'1$E 1he LoLal amounL pald as prlnclpal amounLed Lo 1, 682. 23 more Lhan
Lhe amounL of one loL. 1herefore, lL ls [usL and falr ln accordance wlLh law and
equlLy Lo conslder one loL as fully pald. 1here was already subsLanLlal performance.
under ArLlcle 1234- lf Lhe obllgaLlon has been subsLanLlally performed ln good falLh,
Lhe obllgor may recover as Lhough Lhere had been a sLrlcL and compleLe fulflllmenL,
less damages suffered by Lhe obllgee.

H".",$"5 '# K74"-
!F@B?=@L<= <G /:UQ?=C
"DC. 7IV6.
!A<F>N CA? R?=N?? K? NL@CFDK?N L= CA? B<@@?@@L<= <D <;=?D@ALB <G CA?
CAL=M :P_FLD?NW <D @A<F>N A? A:R? D?:@<=:K>? MD<F=N@ C< G?:D @FPA
NL@CFDK:=P?W KU : RL=NLP:C<DU :PCL<= <D : G<D?P><@FD? <G Q<DCM:M?W A? Q:U
@F@B?=N CA? B:UQ?=C <G CA? BDLP? F=CL> CA? R?=N<D A:@ P:F@?N CA?
NL@CFDK:=P? <D N:=M?D C< P?:@?W F=>?@@ CA? >:CC?D MLR?@ @?PFDLCU G<D CA?
D?CFD= <G CA? BDLP? L= : BD<B?D P:@?W <D LC A:@ K??= @CLBF>:C?N CA:CW
=<C;LCA@C:=NL=M :=U @FPA P<=CL=M?=PUW CA? R?=N?? @A:>> K? K<F=N C< Q:T?
CA? B:UQ?=C. " Q?D? :PC <G CD?@B:@@ @A:>> =<C :FCA<DLf? CA? @F@B?=@L<= <G
CA? B:UQ?=C <G CA? BDLP?. d7I65:e
'= 3:@? <G !FKNLRL@L<= <D 3<=N<QL=LFQ /D<O?PC@
.u. 937 ls known as 1he Subdlvlslon and Condomlnlum 8uyers' roLecLlve
uecree.
o 1hls decree was lssued ln Lhe wake of numerous reporLs LhaL
subdlvlslon and condomlnlum developers had reneged on Lhelr
represenLaLlons and obllgaLlon Lo provlde subdlvlslon roads,
dralnage, sewerage, waLer sysLems, llghLlng sysLem, eLc. coso
llllploos keolty cotp. v. Offlce of tbe lteslJeot (241 5ckA 165)
!?PCL<= 56. D$." '# ;'.1+"&$'%:
$R?DU <;=?D <D N?R?><B?D @A:>> P<=@CDFPC :=N BD<RLN? CA? G:PL>LCL?@W
LQBD<R?Q?=C@W L=GD:@CDFPCFD?@ :=N <CA?D G<DQ@ <G N?R?><BQ?=CW L=P>FNL=M ;:C?D
@FBB>U :=N >LMACL=M G:PL>LCL?@W ;ALPA :D? <GG?D?N :=N L=NLP:C?N L= CA? :BBD<R?N
@FKNLRL@L<= <D P<=N<QL=LFQ B>:=@W KD<PAFD?@W BD<@B?PCF@W BDL=C?N Q:CC?D@W >?CC?D@
<D L= :=U G<DQ <G :NR?DCL@?Q?=CW ;LCAL= <=? U?:D GD<Q CA? N:C? <G CA? L@@F:=P? <G
CA? >LP?=@? G<D CA? @FKNLRL@L<= <D P<=N<QL=LFQ BD<O?PC <D @FPA <CA?D B?DL<N <G
CLQ? :@ Q:U K? GLX?N KU CA? "FCA<DLCU.
!?PCL<= 59. W'%JY'-#"$&7-" '# >*4."%&5:
1< L=@C:>>Q?=C B:UQ?=C Q:N? KU : KFU?D L= : @FKNLRL@L<= <D P<=N<QL=LFQ BD<O?PC
G<D CA? ><C <D F=LC A? P<=CD:PC?N C< KFU @A:>> K? G<DG?LC?N L= G:R<D <G CA? <;=?D <D
N?R?><B?D ;A?= CA? KFU?DW :GC?D NF? =<CLP? C< CA? <;=?D <D N?R?><B?DW N?@L@C@
GD<Q GFDCA?D B:UQ?=C NF? C< CA? G:L>FD? <G CA? <;=?D <D N?R?><B?D C< N?R?><B CA?
@FKNLRL@L<= <D P<=N<QL=LFQ BD<O?PC :PP<DNL=M C< CA? :BBD<R?N B>:=@ :=N ;LCAL=
CA? CLQ? >LQLC G<D P<QB>UL=M ;LCA CA? @:Q?. !FPA KFU?D Q:UW :C AL@ <BCL<=W K?
D?LQKFD@?N CA? C<C:> :Q<F=C B:LN L=P>FNL=M :Q<DCLf:CL<= L=C?D?@C@ KFC ?XP>FNL=M
N?>L=_F?=PU L=C?D?@C@W ;LCA L=C?D?@C CA?D?<= :C CA? >?M:> D:C?.
SecLlon 20 of .u. 937 dlrecLs every owner and developer of real properLy
Lo provlde Lhe necessary faclllLles, lmprovemenLs, lnfrasLrucLure and oLher
forms of developmenL, fallure Lo carry ouL whlch ls sufflclenL cause for Lhe
buyer Lo suspend paymenL, and any sums of money already pald shall noL
be forfelLed. 1omoyo v. noooq (480 5ckA 156)
ln case Lhe seller falls Lo comply wlLh hls obllgaLlons ln Sec. 20 of .u. 937,
Lhe buyer has Lwo opLlons: keloclo v. 8tllloote-Ctlfflo (187 5ckA 405)
o uemand relmbursemenL of Lhe amounL pald.
o WalL for furLher developmenL of Lhe subdlvlslon or condomlnlum.
ln Lhls case, Lhe buyer may suspend paymenL unLll Lhe seller
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

86
fulfllls hls obllgaLlons. Pe may noL be ousLed from Lhe subdlvlslon.
1omoyo v. noooq (480 5ckA 156)
Sec. 23 does noL requlre LhaL a noLlce be glven flrsL by Lhe buyer Lo Lhe
seller before a demand for refund can be made as Lhe noLlce and demand
can be made ln Lhe same leLLer or communlcaLlon. coso llllploos keolty
cotp v. Offlce of tbe lteslJeot (241 5ckA 165)
1he buyer has Lhe rlghL Lo compel Lhe seller Lo compleLe Lhe roads and
oLher faclllLles on Lhe subdlvlsloln, even lf lL wasn'L sLlpulaLed ln Lhe sale.
1he seller cannoL shlfL Lo Lhe buyer Lhe burden of provldlng for access Lo
and from Lhe subdlvlslon. llm v. uelos 5ootos (8 5ckA 798), coosloq v. cA
(177 5ckA 14)
o lf Lhe seller defaulLs, Lhe buyer should be enLlLled Lo a
proporLlonaLe reducLlon ln Lhe purchase prlce.
8uyers of condomlnlum unlLs would be [usLlfled ln suspendlng paymenLs,
when Lhe developer-seller falls Lo glve Lhem a copy of Lhe ConLracL Lo Sell
desplLe repeaLed demands. ColJ loop ltopettles, loc. v. cA (J50 5ckA J71)
o Powever, when Lhe 8eservaLlon AgreemenL provldes LhaL Lhe
buyer shall be enLlLled Lo a ConLracL Lo Sell only upon lLs paymenL
of aL leasL 30 of Lhe LoLal conLracL prlce, Lhe non-happenlng yeL
of LhaL condlLlon does noL render Lhe seller ln defaulL as Lo
warranL Lhe buyer Lhe rlghL Lo resclnd Lhe sale and demand a
refund. C.C. 5pottweot Mfq. cotp. v. wotlJ closs ltopettles, loc.
(614 5ckA 75)
noLhlng ln .u. 937 provldes for Lhe nulllflcaLlon of a conLracL Lo sell ln Lhe
evenL Lhe seller, aL Lhe Llme Lhe conLracL was enLered lnLo, dld noL possess
a cerLlflcaLe of reglsLraLlon or a llcense Lo sell, sale belng a consensual
conLracL. co cbleo v. 5to. loclo keolty (51J 5ckA 570)
.u. 937 may be applled reLroacLlvely slnce lL ls Lhe lnLenL of Lhe law as
shown from lLs preamble. lL ls an lnsLrumenL of soclal [usLlce. oqeolo v.
utlloo (252 5ckA 106)
*LMAC C< 2D:P? /?DL<N !CLBF>:C?N
When a grace perlod ls provlded for ln Lhe conLracL of sale, lL should be
consLrued as a rlghL, noL an obllgaLlon of Lhe debLor, and when
uncondlLlonally conferred, Lhe grace perlod ls effecLlve wlLhouL furLher
need of demand elLher calllng for Lhe paymenL of Lhe obllgaLlon or for
honorlng Lhe rlghL. 8tlcktowo uev. cotp. v. Amot 1letto uev. cotp. (2J9
5ckA 126)
BC;@!C LCV< )*+"5 '# H"*+ @5&*&" '% 3%5&*++."%&5
8.A. 6332 ls known as Lhe 8ealLy lnsLallmenL 8uyer roLecLlon AcL."
lL declared a publlc pollcy Lo proLecL buyers of real esLaLe on lnsLallmenL
paymenLs agalnsL onerous and oppresslve condlLlons. (Sec. 2, 8A 6332)
1he courLs have used Lhe Maceda Law as a pollcy sLaLemenL of Lhe SLaLe ln
proLecLlng Lhe lnLeresLs of buyers of resldenLlal real esLaLe on lnsLallmenLs.
AL Llmes, Lhe CourL has also applled Lhe Maceda Law reLroacLlvely. 5lsko
uev. cotp. v. Offlce of tbe lteslJeot (2J1 5ckA 674)
)D:=@:PCL<=@ 3<R?D?N
lL covers prlmarlly resldenLlal real esLaLe boughL on lnsLallmenL.
lL also covers Lhe flnanclng of real esLaLe on lnsLallmenL.
1he Maceda Law also covers conLracLs Lo sell. 1hls ls evldenced by Lhe use
of Lhe word cancellaLlon" ln Lhe law lLself.
1he Maceda Law uses Lhe same deflnlLlon of sale on lnsLallmenL" as Lhe
8ecLo Law.
)D:=@:PCL<=@ $XP>FN?N SD<Q 3<R?D:M?
1he followlng LransacLlons are excluded from coverage of Lhe Maceda Law: ('3")
1. Sales coverlng LndusLrlal loLs
2. Sales coverlng Pommerclal bulldlngs and loLs
3. Sales Lo LenanLs under :grarlan reform laws
1he Maceda Law CannoL be lnvoked by Lhe PlghesL 8ldder ln loreclosure
roceedlngs
Such person ls noL Lhe real parLy Lo Lhe orlglnal lnsLallmenL sales
Pe does noL have any rlghLs promoLed under Lhe Maceda Law.
*LMAC@ 2D:=C?N
When Lhe buyer has pald aL leasL 2 years of lnsLallmenL
!?PCL<= 9.
'= :>> CD:=@:PCL<=@ <D P<=CD:PC@ L=R<>RL=M CA? @:>? <D GL=:=PL=M <G D?:> ?@C:C?
<= L=@C:>>Q?=C B:UQ?=C@W L=P>FNL=M D?@LN?=CL:> P<=N<QL=LFQ :B:DCQ?=C@
KFC ?XP>FNL=M L=NF@CDL:> ><C@W P<QQ?DPL:> KFL>NL=M@ :=N @:>?@ C< C?=:=C@
F=N?D *" 9JHHW :@ :Q?=N?N KU *" Z9JVW ;A?D? CA? KFU?D A:@ B:LN :C >?:@C
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

87
C;< U?:D@ <G L=@C:>>Q?=C@W CA? KFU?D L@ ?=CLC>?N C< CA? G<>><;L=M DLMAC@ L=
P:@? A? N?G:F>C@ L= CA? B:UQ?=C <G @FPP??NL=M L=@C:>>Q?=C@E
d:e )< B:UW ;LCA<FC :NNLCL<=:> L=C?D?@CW CA? F=B:LN L=@C:>>Q?=C@ NF? ;LCAL=
CA? C<C:> MD:P? B?DL<N ?:D=?N KU ALQ ;ALPA L@ A?D?KU GLX?N :C CA? D:C? <G
<=? d7e Q<=CA MD:P? B?DL<N G<D ?R?DU <=? d7e U?:D <G L=@C:>>Q?=C B:UQ?=C@
Q:N?E /D<RLN?NW )A:C CAL@ DLMAC @A:>> K? ?X?DPL@?N KU CA? KFU?D <=>U <=P?
L= ?R?DU GLR? dIe U?:D@ <G CA? >LG? <G CA? P<=CD:PC :=N LC@ ?XC?=@L<=@W LG :=U.
dKe 'G CA? P<=CD:PC L@ P:=P?>?NW CA? @?>>?D @A:>> D?GF=N C< CA? KFU?D CA? P:@A
@FDD?=N?D R:>F? <G CA? B:UQ?=C@ <= CA? BD<B?DCU ?_FLR:>?=C C< GLGCU B?D
P?=C dI6le <G CA? C<C:> B:UQ?=C@ Q:N?W :=NW :GC?D GLR? dIe U?:D@ <G
L=@C:>>Q?=C@W := :NNLCL<=:> GLR? B?D P?=C dIle ?R?DU U?:D KFC =<C C< ?XP??N
=L=?CU B?D P?=C dV6le <G CA? C<C:> B:UQ?=C@ Q:N?E /D<RLN?NW )A:C CA?
:PCF:> P:=P?>>:CL<= <G CA? P<=CD:PC @A:>> C:T? B>:P? :GC?D CALDCU d96e N:U@
GD<Q D?P?LBC KU CA? KFU?D <G CA? =<CLP? <G P:=P?>>:CL<= <D CA? N?Q:=N G<D
D?@PL@@L<= <G CA? P<=CD:PC KU : =<C:DL:> :PC :=N FB<= GF>> B:UQ?=C <G CA?
P:@A @FDD?=N?D R:>F? C< CA? KFU?D.
(<;= B:UQ?=C@W N?B<@LC@ <D <BCL<=@ <= CA? P<=CD:PC @A:>> K? L=P>FN?N L=
CA? P<QBFC:CL<= <G CA? C<C:> =FQK?D <G L=@C:>>Q?=C B:UQ?=C@ Q:N?.
1he cancellaLlon of Lhe conLracL under Lhe Maceda Law musL follow Lhe
followlng sLeps: (21*)
o lltst, Lhe seller should exLend Lhe buyer a Mrace perlod of aL leasL
slxLy (60) days from Lhe due daLe of Lhe lnsLallmenLs.
o 5ecooJ, aL Lhe end of Lhe grace perlod, Lhe seller shall furnlsh Lhe
buyer wlLh a =oLarlal noLlce of cancellaLlon or demand for
resclsslon, effecLlve LhlrLy (30) days from Lhe buyer's recelpL
Lhereof, a mere noLlce or leLLer, shorL of a noLarlal acL, would noL
sufflce. Mclooqbllo v. cA (144 5ckA 69J)
o 1bltJ, for conLracLs coverlng more Lhan Lwo years of paymenLs,
Lhere musL be DeLurn Lo Lhe buyer of Lhe cash surrender value.
vlllJoto, It. v. 2obolo (545 5ckA J25)

1he addlLlonal formallLy of a demand on [Lhe seller's] parL for resclsslon by
noLarlal acL would be unnecessary slnce Lhe seller Lhereln flled an acLlon
for annulmenL of conLracL, whlch ls a klndred concepL of resclsslon by
noLarlal acL. loyoq v. lAc (167 5ckA 627)
A declslon rendered ln an e[ecLmenL case operaLed as Lhe requlred noLlce
of cancellaLlon under Lhe Maceda Law. !"#$% '. coott of Appeols (J69
5ckA J6)
A formal leLLer demand upon buyer Lo vacaLe Lhe premlses ls noL Lhe same
as Lhe noLlce of cancellaLlon or demand for resclsslon by a noLarlal acL
requlred by 8.A. no. 6332. LvldenLly, Lhe case of unlawful deLalner flled by
peLlLloner does noL exempL hlm from complylng wlLh Lhe sald
requlremenL. loqtolooqoo v. uelo ctoz vJo. ue Moozooo (5JJ 5ckA 242)
Where Lhe buyers under a conLracL Lo sell offers Lo pay Lhe lasL lnsLallmenL
a year and a half afLer Lhe sLlpulaLed daLe, LhaL was beyond Lhe slxLy-day
grace perlod under SecLlon 4 of Lhe Maceda Law. 1he buyers cannoL use
Lhe second senLence of SecLlon 4 of Lhe Maceda Law agalnsL Lhe sellers'
alleged fallure Lo glve an effecLlve noLlce of cancellaLlon or demand for
resclsslon because Lhe sellers merely senL Lhe noLlce Lo Lhe address
supplled by Lhe buyers ln Lhe ConLracL Lo Sell. Cotclo v. coott of Appeols
(619 5ckA 280)
G*-2$* 8: ;C
S"3)!E A conLracL Lo sell was enLered lnLo, down paymenL was made, and Lhe resL
was payable ln 3 lnsLallmenLs. 1he lasL lnsLallmenL was noL pald. ln Lhe conLracL lL
sald LhaL fallure Lo comply wlLh Lhe Lerms of paymenL would cause resclsslon, and
possesslon shall be reLalned unLll a deed of absoluLe sale ls execuLed by Lhe buyers.
uoAS shall be execuLed upon full paymenL.
(03)*'1$E Maceda law lnappllcable slnce Lhe sald law applles Lo conLracLs of real
esLaLe on lnsLallmenL paymenLs, example: condomlnlum. Sub[ecL lands are noL
resldenLlal real esLaLe wlLhln Lhe conLemplaLlon of Lhe Maceda Law. Lven lf lL dld
apply, offer of paymenL was made beyond Lhe 60-day grace perlod.

When Lhe buyer has pald less Lhan 2 years of lnsLallmenLs
!?P. H.
'= P:@? ;A?D? >?@@ CA:= C;< d5e U?:D@ <G L=@C:>>Q?=C@ ;?D? B:LNW CA? @?>>?D
@A:>> MLR? CA? KFU?D : MD:P? B?DL<N <G =<C >?@@ CA:= @LXCU dZ6e N:U@ GD<Q CA?
N:C? CA? L=@C:>>Q?=C K?P:Q? NF?.
'G CA? KFU?D G:L>@ C< B:U CA? L=@C:>>Q?=C@ NF? :C CA? ?XBLD:CL<= <G CA? MD:P?
B?DL<NW CA? @?>>?D Q:U P:=P?> CA? P<=CD:PC :GC?D CALDCU d96e N:U@ GD<Q
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

88
D?P?LBC KU CA? KFU?D <G CA? =<CLP? <G P:=P?>>:CL<= <D CA? N?Q:=N G<D
D?@PL@@L<= <G CA? P<=CD:PC KU : =<C:DL:> :PC.
lormula Lo CompuLe Lhe lnsLallmenL Mode
1he proper formula Lo apply ln deLerlnlng how many lnsLallmenLs have
been made ls Lo lnclude any paymenL made as downpaymenL or
reservaLlon fee as parL of Lhe lnsLallmenLs made, and Lhen dlvlde Lhem by
Lhe sLlpulaLed mode of paymenL, l.e., wheLher lL ls monLhly, quarLerly,
seml-annual or annual. Iestto uev. & Mqt. cotp v. loclflco (51J 5ckA 41J)
M"5&-* !"8: B0&: ;'-1 8: >*2$#$2'
S"3)!E aclflco slgned a 8eservaLlon AppllcaLlon for Lhe purchase of a house and
loL. upon full paymenL of u, aclflco wlll slgn a conLracL Lo sell. 70 balance of
purchase prlce payable ln 10 years + lnLeresL, aL a monLhly lnsLallmenL.
(03)*'1$E 1he proper formula Lo apply ln deLermlnlng how many lnsLallmenLs
have been made ls Lo lnclude any paymenL made as down paymenL C8 reservaLlon
fee as parL of Lhe lnsLallmenLs made, and Lhen Lo dlvlde Lhe sLlpulaLed mode of
paymenL (l.e. monLhly, quarLerly, annually, seml- annually) (page 419, Sales 8ook)
Slnce afLer applylng Lhls formula, aclflco falled Lo pay aL leasL 2 years of
lnsLallmenLs, he ls noL enLlLled Lo a refund of Lhe cash surrender value of hls
paymenLs. SecLlon 4 ls appllcable. 1he cancellaLlon ls a 2 sLep process: a. 1he seller
should exLend Lhe buyer a grace perlod of aL leasL 60 days from Lhe due daLe of Lhe
lnsLallmenL, b. AL Lhe end of Lhe grace perlod, Lhe seller shall furnlsh Lhe buyer wlLh
a noLlce of cancellaLlon or demand for resclsslon Lhrough a noLarlal acL, effecLlve 30
days from Lhe buyer's recelpL Lhereof. uesplLe Lhe noLlce of dlshonor, aclflco Look
no acLlon and 60 days had lapsed.

'=C?DBD?C:CL<= <G 2D:P? /?DL<N :=N &<N? <G 3:=P?>>:CL<=
1he rullng ln Mclooqbllo v. cA provldes for 2 grace perlods:
a. 1he 60-day perlod provlded by law before a noLlce of cancellaLlon
ls served Lo Lhe buyer
b. 1he before resclsslon or cancellaLlon acLually Lakes place.
AcLual cancellaLlon occurs 30 days afLer Lhe noLlce of cancellaLlon or
demand for resclsslon ls recelved by Lhe buyer.
o Powever, lf Lhe seller does noL refund Lhe buyer pursuanL Lo Sec.
3(b) of Lhe Maceda Law, resclsslon or cancellaLlon wlll noL Lake
place desplLe Lhe effecLlvlLy of Lhe noLlce of cancellaLlon. leoo v.
cA (J69 5ckA J6)
B2L*70/+$% 8: ;C
S"3)!E A conLracL of condlLlonal sale payable ln lnsLallmenLs was enLered lnLo by
McLaughlln and llores. uue Lo Lhe laLLer's fallure Lo pay Lhe balance, a complalnL
for resclsslon was flled ln courL. arLles submlLLed a Compromlse AgreemenL whlch
had a sLlpulaLlon LhaL ln case of fallure Lo comply, McLaughlln ls enLlLled Lo a wrlL of
execuLlon resclndlng Lhe ueed of CondlLlonal Sale of 8eal roperLy and llores
walves hls rlghL Lo appeal. Also, ln case of resclsslon all paymenLs made by llores
wlll be forfelLed ln favor of llores.
(03)*'1$E under SecLlon 4 of Lhe Maceda Law: "ln case where less Lhan 2 years of
lnsLallmenLs were pald, Lhe seller shall glve Lhe buyer a grace perlod of noL less Lhan
60 days from Lhe daLe Lhe lnsLallmenL became due. lf Lhe buyer falls Lo pay Lhe
lnsLallmenLs due aL Lhe explraLlon of Lhe grace perlod, Lhe seller may cancel Lhe
conLracL afLer 30 days from recelpL by Lhe buyer of Lhe noLlce of cancellaLlon or Lhe
demand for resclsslon of Lhe conLracL by noLarlal acL." Any sLlpulaLlon conLrary Lo
Lhls ls vold. llores made a valld Lender of paymenL wlLhln 30 days from recelpL of
moLlon for execuLlon.
2 uocLrlnes appllcable Lo Maceda Law:
a. alLhough Lhe law seems Lo requlre resclsslon and cancellaLlon Lo be boLh by
noLarlal acL, Lhls case would hold noLarlal acL as merely appllcable Lo resclsslon,
whereas "noLlce of cancellaLlon" need noL be by noLarlal acL.
b. Lven afLer Lhe explraLlon of Lhe grace perlod provlded by law, Lhe buyer can sLlll
prevenL resclsslon or cancellaLlon of Lhe conLracL wlLhln Lhe 30 day perlod when
resclsslon or cancellaLlon ls Lo Lake effecL. (p. 420, Sales book)

0CA?D *LMAC@ 2D:=C?N C< 4FU?D
!?P. I.
a=N?D !?P. 9 :=N HW CA? KFU?D @A:>> A:R? CA? DLMAC C< @?>> AL@ DLMAC@ <D :@@LM=
CA? @:Q? C< :=<CA?D B?D@<= <D C< D?L=@C:C? CA? P<=CD:PC KU FBN:CL=M CA?
:PP<F=C NFDL=M CA? MD:P? B?DL<N :=N K?G<D? :PCF:> P:=P?>>:CL<= <G CA?
P<=CD:PC. )A? N??N <G @:>? <D :@@LM=Q?=C @A:>> K? N<=? KU =<C:DL:> :PC.

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

89
!?P. Z.
)A? KFU?D @A:>> A:R? CA? DLMAC C< B:U L= :NR:=P? :=U L=@C:>>Q?=C <D CA? GF>>
F=B:LN K:>:=P? <G CA? BFDPA:@? BDLP? :=U CLQ? ;LCA<FC L=C?D?@C :=N C<
A:R? @FPA GF>> B:UQ?=C <G CA? BFDPA:@? BDLP? :==<C:C?N L= CA? P?DCLGLP:C?
<G CLC>? P<R?DL=M CA? BD<B?DCU.
$GG?PC <G 3<=CD:DU !CLBF>:CL<=
!?P. b.
"=U @CLBF>:CL<= L= :=U P<=CD:PC A?D?:GC?D ?=C?D?N L=C< P<=CD:DU C< CA?
BD<RL@L<=@ <G !?PCL<=@ 9W HW I :=N ZW @A:>> K? =F>> :=N R<LN.
&:P?N: #:; 3:==<C 4? "R:L>?N <G KU (?R?><B?D
1he Maceda Law ls almed aL proLecLlng Lhe buyers of real esLaLe on
lnsLallmenL paymenLs. Cne who buys Lhe developmenL from Lhe developer
and Lhen becomes hls successor-ln-lnLeresL ls noL covered by Lhe law.
loqooJooo v. cA (290 5ckA JJ0)
H"52$55$'% '% )*+"5 '# W'%JH"5$,"%&$*+ 3..'8*9+"5
'% 3%5&*++."%&5
erLlnenL provlslons: ArL. 1191 and ArL. 1392, sopto
ArLlcles 1191 and 1392 on resclsslon cannoL apply Lo a conLracL Lo sell
slnce Lhere can be no resclsslon of an obllgaLlon LhaL ls sLlll non-exlsLenL,
Lhe suspenslve condlLlon noL havlng happened." volotoo v. cA (J04 5ckA
155)
ArLlcle 1392 allows Lhe buyer of an lmmovable Lo pay as long as no
demand for resclsslon has been made, and Lhe conslgnaLlon of Lhe balance
of Lhe purchase prlce before Lhe Lrlal courL operaLes as full paymenL.
ltovloce of cebo v. nelts of kofloo Motoles (546 5ckA J15)
AuLomaLlc resclsslon clauses are noL valld nor can be glven legal effecL
under ArLlcles 1191 and 1392. ltloqoo v. coott of Appeols (J66 5ckA 41)
o lndeed, resclsslon requlres under Lhe law a poslLlve acL of cholce
on Lhe parLy of Lhe non-defaulLlng parLy. Olymplo noosloq v.
loooslotlc 1tovel cotp. (J95 5ckA 298)
vendor cannoL recover ownershlp of Lhe Lhlng sold unLll and unless Lhe
conLracL lLself ls resolved and seL aslde, a parLy who falls Lo lnvoke
[udlclally or by noLarlal acL Lhe resoluLlon of a conLracL of sale would be
prevenLed from blocklng Lhe consummaLlon of Lhe same ln llghL of Lhe
precepL LhaL mere fallure Lo fulflll Lhe conLracL does noL operaLe lpso focto
as resclsslon. llotloom lloos lbll., loc. v. cocoeco (488 5ckA 156)
;*%2"++*&$'% '# M7,$2$*+ )*+"
Where a [udlclal sale ls volded wlLhouL faulL of Lhe purchaser, Lhe laLLer ls
enLlLled Lo relmbursemenL of Lhe purchase money pald by hlm. A [udlclal
sale can only be seL aslde upon Lhe reLurn Lo Lhe buyer of Lhe purchase
prlce wlLh slmple lnLeresL, LogeLher wlLh all sums pald ouL by hlm ln
lmprovemenLs lnLroduced on Lhe properLy, Laxes, and oLher expenses by
hlm. 5eveo 8totbets 5blpploq cotp. v. cA (246 5ckA JJ)
#:; <= !:>?@
3A:BC?D 75 ` 3<=NLCL<=@ :=N ,:DD:=CL?@
;'%,$&$'%5
"DC. 7IHI. ,A?D? CA? <K>LM:CL<= <G ?LCA?D B:DCU C< : P<=CD:PC <G @:>? L@
@FKO?PC C< :=U P<=NLCL<= ;ALPA L@ =<C B?DG<DQ?NW @FPA B:DCU Q:U D?GF@? C<
BD<P??N ;LCA CA? P<=CD:PC <D A? Q:U ;:LR? B?DG<DQ:=P? <G CA? P<=NLCL<=.
'G CA? <CA?D B:DCU A:@ BD<QL@?N CA:C CA? P<=NLCL<= @A<F>N A:BB?= <D K?
B?DG<DQ?NW @FPA GLD@C Q?=CL<=?N B:DCU Q:U :>@< CD?:C CA? =<=B?DG<DQ:=P?
<G CA? P<=NLCL<= :@ : KD?:PA <G ;:DD:=CU.
,A?D? CA? <;=?D@ALB L= CA? CAL=M A:@ =<C B:@@?NW CA? KFU?D Q:U CD?:C CA?
GF>GL>>Q?=C KU CA? @?>>?D <G AL@ <K>LM:CL<= C< N?>LR?D CA? @:Q? :@ N?@PDLK?N
:=N :@ ;:DD:=C?N ?XBD?@@>U <D KU LQB>LP:CL<= L= CA? P<=CD:PC <G @:>? :@ :
P<=NLCL<= <G CA? <K>LM:CL<= <G CA? KFU?D C< B?DG<DQ AL@ BD<QL@? C< :PP?BC
:=N B:U G<D CA? CAL=M. d=e
$ 1wo remedles where obllgaLlon of Lhe oLher parLy Lo a conLracL of sale ls
sub[ecL Lo a condlLlon, and such ls noL performed.
o 8efusal Lo proceed wlLh conLracL
o Walve performance of Lhe condlLlon
$ 8omero v. CA - dlsLlncLlon beLween condlLlon lmposed on perfecLlon and
lmposed on performance.
o lallure Lo comply wlLh former resulLs ln fallure of Lhe conLracL
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

90
o lallure Lo comply wlLh Lhe laLLer resulLs ln Lhe Lwo remedles belng
avlalable Lo Lhe oLher parLy.
$ Pelrs of Lscanlar v. CA - conLracL of sale Lo 9"2'." "##"2&$8" upon
happenlng of Lhe condlLlon
o non-happenlng dld noL affecL valldlLy of Lhe conLracL
o Cnly Lhe effecLlvlLy
$ uavld vs 1longson - sLlpulaLlon LhaL deed of sale would lssue afLer Lhe
condlLlon does noL prevenL perfecLlon of Lhe conLracL

!$5&$%2&$'%5 9"&E""% ;'%,$&$'%5 *%, V*--*%&$"5
$ non-happenlng of condlLlon does noL amounL Lo a breach : non-fulflllmenL
of warranLy consLlLuLes a breach
$ When ownershlp has noL passed, buyer may LreaL Lhe fulflllmenL of Lhe
seller of hls obllgaLlon under Lhe conLracL as a condlLlon for hls obllgaLlon
Lo accepL and pay.
$ lf Lhe parLy promlsed LhaL a condlLlon would be performed/would happen,
oLher parLy may LreaL non-performance of such as a KD?:PA <G ;:DD:=CU.
o Such sLlpulaLlon elevaLes Lhe condlLlon Lo a warranLy
o And enLlLle Lhe oLher parLy Lo damages
CLher ulfferences
CondlLlon WarranLy
Coes lnLo rooL of exlsLence of Lhe
obllgaLlon
Coes lnLo performance
May consLlLuLe an obllgaLlon ln lLself
MusL be sLlpulaLed by Lhe parLles May form parL of Lhe obllgaLlon by
provlslon of law, even wlLhouL
sLlpulaLlon
May aLLach Lo Lhe seller or Lo Lhe buyer 8elaLes Lo sub[ecL maLLer lLself, or
obllgaLlons of Lhe seller as Lo Lhe sub[ecL
maLLer

@?1-"55 V*--*%&$"5
"DC. 7IHZ. "=U :GGLDQ:CL<= <G G:PC <D :=U BD<QL@? KU CA? @?>>?D D?>:CL=M C<
CA? CAL=M L@ := ?XBD?@@ ;:DD:=CU LG CA? =:CFD:> C?=N?=PU <G @FPA
:GGLDQ:CL<= <D BD<QL@? L@ C< L=NFP? CA? KFU?D C< BFDPA:@? CA? @:Q?W :=N LG
CA? KFU?D BFDPA:@? CA? CAL=M D?>UL=M CA?D?<=. 1< :GGLDQ:CL<= <G CA? R:>F?
<G CA? CAL=MW =<D :=U @C:C?Q?=C BFDB<DCL=M C< K? : @C:C?Q?=C <G CA?
@?>>?Dk@ <BL=L<= <=>UW @A:>> K? P<=@CDF?N :@ : ;:DD:=CUW F=>?@@ CA? @?>>?D
Q:N? @FPA :GGLDQ:CL<= <D @C:C?Q?=C :@ := ?XB?DC :=N LC ;:@ D?>L?N FB<= KU
CA? KFU?D. d=e

$ 1wo requlslLes for Lhe exlsLence of an express warranLy
o lL musL be an afflrmaLlon of facL, or any promlse by Lhe seller
relaLlng Lo Lhe sub[ecL maLLer of Lhe sale
o naLural Lendency of such afflrmaLlon ls Lo lnduce buyer Lo
purchase Lhe Lhlng, and
o 8uyer purchases relylng on such afflrmaLlon/promlse Lhereon
$ Coodyear hlllpplnes v. Sy
o WarranLy : afflrmaLlon/promlse made by seller ln relaLlon Lo Lhe
Lhlng sold
o ueclslve LesL : whenLher seller assumes Lo asserL a facL of whlch
Lhe buyer ls lgnoranL of.
$ AfflrmaLlon of value or sLaLemenL of seller's oplnlon ls noL a warranLy
o unless seller made such sLaLemenL as an experL, and was relled
upon by Lhe buyer
o ArL 1341 : mere expresslon of oplnlon does noL slgnlfy fraud,
unless made by experL and oLher parLy relles on such speclal
knowledge
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

91
$ Azarraga v. Cay
o AsserLlons concernlng Lhe properLy's characLerlsLlcs are Lhe usual
and ordlnary means of sellers Lo geL a hlgh prlce
o A man who rells upon such afflrmaLlon.does so aL hls own
perll."

3.1+$", V*--*%&$"5
"DC. 7IHb.
'= : P<=CD:PC <G @:>?W F=>?@@ : P<=CD:DU L=C?=CL<= :BB?:D@W CA?D? L@E
d7e "= LQB>L?N ;:DD:=CU <= CA? B:DC <G CA? @?>>?D CA:C A? A:@ : DLMAC C< @?>>
CA? CAL=M :C CA? CLQ? ;A?= CA? <;=?D@ALB L@ C< B:@@W :=N CA:C CA? KFU?D
@A:>> GD<Q CA:C CLQ? A:R? :=N ?=O<U CA? >?M:> :=N B?:P?GF> B<@@?@@L<= <G
CA? CAL=Mg
d5e "= LQB>L?N ;:DD:=CU CA:C CA? CAL=M @A:>> K? GD?? GD<Q :=U ALNN?= G:F>C@
<D N?G?PC@W <D :=U PA:DM? <D ?=PFQKD:=P? =<C N?P>:D?N <D T=<;= C< CA?
KFU?D.
)AL@ "DCLP>? @A:>> =<CW A<;?R?DW K? A?>N C< D?=N?D >L:K>? : @A?DLGGW
:FPCL<=??DW Q<DCM:M??W B>?NM??W <D <CA?D B?D@<= BD<G?@@L=M C< @?>> KU
RLDCF? <G :FCA<DLCU L= G:PC <D >:;W G<D CA? @:>? <G : CAL=M L= ;ALPA : CALDN
B?D@<= A:@ : >?M:> <D ?_FLC:K>? L=C?D?@C. d=e

$ 1hose whlch by law consLlLuLe parL of "8"-4 2'%&-*2& '# 5*+"I wheLher or
noL Lhe parLles were aware of lnLended Lhem.
$ Cnly a seller ls bound by Lhe lmplled warranLles.
o Lxpress sLlpulaLlon ln conLracL may make Lhe agenL of Lhe seller
bound by Lhese.
$ WarranLy LhaL Seller has 8lghL Lo Sell
o lmplled warranLy LhaL seller has Lhe rlghL Lo sell Lhe Lhlng aL Lhe
Llme Lhe ownershlp ls Lo pass
o 8efers only Lo Lhe Lransfer of ownershlp aL Lhe polnL of
consummaLlon
o noL any represenLaLlon as Lo ownershlp aL Lhe polnL of perfecLlon
o lL shall noL be appllcable Lo render llable a sherlff, aucLloneer,
morLgagee, pledgee
! Cr any oLher person professlng Lo sell by vlrLue of
auLhorlLyln facL or law
! lor Lhe sale of a Lhlng ln whlch a Lhlrd person has a
legal/equlLable lnLeresL
o 1here can be no legal walver of Lhls warranLy wlLhouL changlng
baslc naLure of Lhe relaLlonshlp
! 8lghL Lo sell -- 8equlslLe of sale
! unless lL amounLs Lo clear assumpLlon of rlsk on Lhe parL
of Lhe buyer
$ WarranLy AgalnsL LvlcLlon
o lmplled warranLy LhaL when ownershlp wlll pass, buyer shall have
legal and peaceful possesslon
o vendor shall answer for Lhe evlcLlon even lf Lhere ls no sLlpulaLlon
regardlng evlcLlon
o When Lhere ls breach of Lhls warranLy
! urchaser has been deprlved of/evlcLed from Lhe whole
or parL of Lhe Lhlng sold,
! LvlcLlon ls by flnal [udgmenL,
! 8asls Lhereof ls a rlghL prlor Lo Lhe sale made by Lhe
seller, and
! Seller has been summoned and made co-defendanL ln
Lhe sulL for evlcLlon aL Lhe lnsLance of Lhe buyer.
o WarranLy cannoL be enforced unLll Lhe buyer loses Lhe Lhlng by
flnal [udgmenL
! Pe need noL appeal from Lhe declslon Lo make seller
llable
! no need for buyer Lo reslsL fully Lhe acLlon
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

92
o ower Commerclal v. CA - no acLlon for breach of Lhls warranLy
when buyer was well awar of Lhe presence of LenanLs, and even
underLook Lhe [ob of e[ecLlng Lhese squaLLers
o !ovellano v. LualhaLl - vendee only needs Lo glve noLlce of Lhe
complalnL. 1hls perfecLs Lhe rlghL Lo Lhe warranLy.
o Lscaler v. CA - cannoL be enforced agalnsL seller when buyer
merely malled seller a copy of Lhe opposlLlon of buyer Lo Lhe
evlcLlon sulL
! Pe dld noL formally summon Lhe seller Lo be parL of Lhe
sulL.
! 1he vendors should be made parLles Lo Lhe sulL aL Lhe
lnsLance of vendees.
o LvlcLlon ln arL
! lf Lhe parL losL ls of such lmporLance LhaL Lhe buyer
would noL have boughL Lhe Lhlng wlLhouL lL, he may
demand resclsslon
WlLh obllgaLlon Lo reLurn Lhe Lhlng lLself.
! Same rule applles when Lwo or more Lhlngs have beeen
[olnLly sold, when lL appears LhaL Lhe buyer would noL
have purchased one wlLhouL Lhe oLher
o arLlcular causes Clven by Law
! Adverse posseslon has been commenced prlor Lo sale,
buL prescrlpLlve perlod ls compleLed afLer Lhe Lransfer,
seller ls noL llable for breach of Lhls warranLy
! roperLy ls sold for nonpaymenL of Laxes due, noL made
known Lo buyer before sale, seller ls llable for Lhe
evlcLlon.
o AppllcablllLy Lo !udlclal Sales
! !udgmenL debLor ls also responslble for evlcLlon ln
[udlclal sales, unless oLherwlse decreed ln Lhe [udgmenL
! Powever, SanLlago Land uev v. CA
8uyer aL execuLlon sales Lakes properLy sub[ecL
Lo superlor rlghL of oLher parLles
! Allure Mfg v. CA - caveaL empLor applles ln execuLlon
sale
Sherlff does noL warranL Lhe LlLle Lo Lhe
properLy
noL lncumbenL upon hlm Lo place purchaser ln
possesslon

o AmounLs for whlch seller ls llable ln case of evlcLlon
"DC. 7III. ,A?= CA? ;:DD:=CU A:@ K??= :MD??N FB<= <D =<CAL=M A:@ K??=
@CLBF>:C?N <= CAL@ B<L=CW L= P:@? ?RLPCL<= <PPFD@W CA? R?=N?? @A:>> A:R? CA?
DLMAC C< N?Q:=N <G CA? R?=N<DE
d7e )A? D?CFD= <G CA? R:>F? ;ALPA CA? CAL=M @<>N A:N :C CA? CLQ? <G CA?
?RLPCL<=W K? LC MD?:C?D <D >?@@ CA:= CA? BDLP? <G CA? @:>?g
(2) The income or fruits, if he has been ordered to deliver them to
the party who won the suit against him;
(3) The costs of the suit which caused the eviction, and, in a
proper case, those of the suit brought against the vendor for the
warranty;
(4) The expenses of the contract, if the vendee has paid them;
(5) The damages and interests, and ornamental expenses, if the
sale was made in bad faith. (1478
o Walver of warranLy and LffecLs
! LffecL of walver depends on naLure of such walver
Ceneral or speclflc?
Cood falLh or bad falLh on seller's parL?
! lf seller acLed ln bad falLh, Lhen any sLlpulaLlon
exempLlng seller from answerlng evlcLlon shall be vold
! lf buyer merely renounces Lhe warranLy ln general Lerms,
no knowledge of a parLlcular rlsk
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

93
Seller only pays value of Lhlng aL Llme of evlcLlon
! Ceneral walver llmlLs llablllLy of seller.
! lf buyer walved wlLh knowledge of rlsks (speclflc walver)
seller shall noL be llable.
! !M 1uazon v. CA - even when no speclflc walver, buyer
cannoL hold seller llable when he ls aware of a Lhlrd parLy
clalm (PL MuS1 8L ln CCCu lAl1P).

$ WarranLy AgalnsL non-apparenL ServlLudes
o Shall apply when Lhe followlng condlLlons are presenL
! lmmovable sold ls encumbered by non-apparenL
burden/servlLude, noL menLloned ln Lhe agreemenL, and
! naLure of such makes lL so LhaL Lhe buyer would noL have
acqulred Lhe lmmovable had be been aware of lL.
o 1hls warranLy does noL apply
! When servlLude ls menLloned ln Lhe agreemenL
! lf lL ls recorded ln Lhe 8ou
unless Lhere ls an express warranLy LhaL Lhe
Lhlng ls free from all burdens and encumbrances
o 8emedles and rescrlpLlve erlod
! 8uyer may brlng acLlon for resclsslon or sue for damages
wlLhln one year from execuLlon of Lhe deed
! lf Lhls has elapsed, he may only brlng an acLlon for
damages wlLhln one year from when he dlscovered Lhe
servlLude.
$ WarranL agalnsL hldden defecLs
o Seller shall be responslble when.
! naLure of hldden defecL ls such LhaL lL would render Lhe
sub[ecL manner unflL for Lhe use for whlch lL was
lnLended
! ulmlnlsh lLs flLness Lo such an exLenL LhaL buyer would
noL have boughL lL or he would have pald a lower prlce
for lL.
o Seller noL answerable for paLenL defecLs, or Lhose whlch are
vlslble
! Lven for Lhose whlch are lnvlslble, lf Lhe buyer should
know abouL Lhem by reason of hls Lrade/professlon
o Seller responslble even lf he was noL aware of Lhese hldden
defecLs
o Applles Lo boLh movable and lmmovable
o 8equlslLes for breach
! uefecL musL be hldden
! MusL exlsL aL Llme of Lhe sale
! MusL ordlnarlly have been excluded from Lhe conLracL
! MusL be lmporLanL (render Lhlng unflL or decrease flLness
conslderably)
! AcLlon musL be lnsLlLuLed wlLhln SLaLuLe of LlmlLaLlons
o 8emedles of 8uyer/CbllgaLlon of Seller
! 8uyer should wlLhdraw (acclon redhlblLorla)
! Cr demand a reducLlon of Lhe prlce (acLlon quanLl
mlnorls)
uamages ln elLher case.
Cnly when Lhe Lhlng has noL been losL
! lf lL has been losL - obllgaLlons of seller depend on cause
of loss, knowledge of hldden defecL by seller, and
wheLher Lhere was a walver of Lhe warranLy
LosL Lhrough hldden faulLs
o lf seller was aware - he shall bear Lhe
loss, and reLurn Lhe prlce and expenses
of Lhe conLracL, wlLh damages.
o lf seller was noL aware - only obllged
only Lo reLurn Lhe prlce and lnLeresL
Lhereon, and relmburse Lhe expenses
of conLracL, buL no damages.
lf losL Lhrough lL or Lhrough faulL of buyer
o lf seller was noL aware - buyer may
demand Lhe prlce he pald, less value of
Lhe Lhlng when lL was losL
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

94
o lf seller ln bad falLh, he shall pay
damages Lo Lhe buyer
o When Lhere ls a walver of warranLy
! lf seller noL aware - loss wlll noL make seller llable
! lf seller was ln bad falLh - seller sLlll llable on Lhe
warranLy
o AppllcablllLy Lo !udlclal Sales
! lL shall apply Lo [udlclal sales, buL [udgmenL debLor shall
noL be llable for damages.
o rescrlpLlve erlod
! Slx monLhs from dellvery of Lhe Lhlng sold
$ 8edhlblLory uefecLs of Anlmals
o Lven when professlonal lnspecLlon ls made, lf Lhe defecL ls such
LhaL lL would noL be dlscovered even by experLs, Lhe defecL ls
consldered redhlblLory.
o lf veLerlnarlan ls lgnoranL or ln bad falLh, and Lhus does noL
dlscover/dlsclose Lhe flaw, he shall be llable for damages
o Sale of Leam
! lf Lwo or more anlmals are sold LogeLher, redhlblLory
effecL of one shall only affecL Lhe one, and noL Lhe oLhers
unless buyer would noL have purchased Lhe
oLhers wlLhouL Lhe defecLlve one.
1hls shall be presumed when a Leam, yoke, palr
or seL ls boughL, even lf separaLe prlce had been
flxed for each anlmal
! loregolng rules wlLh respecL Lo anlmals shall be
appllcable Lo oLher Lhlngs.
o CLher 8ules - see 1374-73.
o rescrlpLlve perlod - see 1377-78.
o CbllgaLlon of buyer Lo reLurn - see 1378
o 8emedles of buyer
! WlLhdrawal from conLracL
! uemand proporLlonaLe reducLlon of Lhe prlce.
3.1+$", V*--*%&$"5 $% )*+" '# G'',5
WarranLy as Lo llLness or CuallLy
"DC. 7IZ5.
'= : @:>? <G M<<N@W CA?D? L@ := LQB>L?N ;:DD:=CU <D P<=NLCL<= :@ C< CA?
_F:>LCU <D GLC=?@@ <G CA? M<<N@W :@ G<>><;@E
d7e ,A?D? CA? KFU?DW ?XBD?@@>U <D KU LQB>LP:CL<=W Q:T?@ T=<;= C< CA?
@?>>?D CA? B:DCLPF>:D BFDB<@? G<D ;ALPA CA? M<<N@ :D? :P_FLD?NW :=N LC
:BB?:D@ CA:C CA? KFU?D D?>L?@ <= CA? @?>>?Dk@ @TL>> <D OFNMQ?=C d;A?CA?D A?
K? CA? MD<;?D <D Q:=FG:PCFD?D <D =<CeW CA?D? L@ := LQB>L?N ;:DD:=CU CA:C
CA? M<<N@ @A:>> K? D?:@<=:K>U GLC G<D @FPA BFDB<@?g
d5e ,A?D? CA? M<<N@ :D? KD<FMAC KU N?@PDLBCL<= GD<Q : @?>>?D ;A< N?:>@ L=
M<<N@ <G CA:C N?@PDLBCL<= d;A?CA?D A? K? CA? MD<;?D <D Q:=FG:PCFD?D <D
=<CeW CA?D? L@ := LQB>L?N ;:DD:=CU CA:C CA? M<<N@ @A:>> K? <G Q?DPA:=C:K>?
_F:>LCU. d=e
$ 8equlslLes for 8reach
o 8uyer susLalned ln[ury because of Lhe producL
o ln[ury occurred because producL was defecLlve/unreasonably
unsafe
o uefecL exlsLed when producL lefL Lhe hands of Lhe seller
$ nuLrlmlx leeds v. CA - seller cannoL be held llable lf Lhere ls no proof LhaL
Lhe producL was defecLlve.
o roducL musL have reached user wlLhouL subsLanLlal change ln
condlLlon
$ Measure of uamage
o ulfference beLween value of goods aL Lhe Llme of dellvery and Lhe
value Lhey would have had lf Lhe warranLy was complled wlLh
! Applles ln absence of speclal clrcumsLances showlng
damage of a greaLer amounL
Sale of Coods by Sample/uescrlpLlon
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

93
"DC. 7IZI.
'= CA? P:@? <G : P<=CD:PC <G @:>? KU @:QB>?W LG CA? @?>>?D L@ : N?:>?D L= M<<N@
<G CA:C TL=NW CA?D? L@ := LQB>L?N ;:DD:=CU CA:C CA? M<<N@ @A:>> K? GD?? GD<Q
:=U N?G?PC D?=N?DL=M CA?Q F=Q?DPA:=C:K>? ;ALPA ;<F>N =<C K? :BB:D?=C
<= D?:@<=:K>? ?X:QL=:CL<= <G CA? @:QB>?. d=e
$ Mendoza v. uavld : Lhere ls an lmplled warranLy ln such sales LhaL Lhe
goods are free from any defecL whlch ls no apparenL upon examlnaLlon
LhaL would render Lhe goods unmerchanLable.
$ 8uyer's CpLlon - See ArL. 1399
o AccepL or keep goods, enforce warranLy by way of recoupmenL
o AccepL or keep goods, sue for damages
o 8efuse Lo accepL, sue for damages
o 8esclnd sale.
$ 1hese remedles are alLernaLlve.
$ Walver of remedles - he cannoL resclnd sale lf.
o When goods were recelved by buyer wlLhouL proLesL, and wlLh
knowledge of Lhe breach,
o Cr when he falls Lo noLlfy Lhe seller of hls lnLenL Lo resclnd wlLhln
reasonable Llme
o Pe falls Lo reLurn/offer Lo reLurn Lhe goods Lo Lhe seller
! ueLerloraLlon caused by Lhe breach of warranLy, buyer
may sLlll resclnd.
$ CblglLaLlon of 8uyer on Lherlce
o When buyer resclnds, he ls noL llable for Lhe prlce when he
reLurns/offers Lo reLurn Lhe goods
o lf prlce/parL has been pald, seller should repay whaL has been
pald when Lhe buyer reLurns/offers Lo reLurn
$ 8efusal of seller Lo accepL 8eLurn of Coods
o When seller refuses Lo accepL Lhe offer of buyer Lo reLurn Lhe
goods, buyer ls deemed Lo hold Lhem as 9*$+"" #'- &/" 5"++"-I buL
sub[ecL Lo a llen Lo secure paymenL of any parL of Lhe purchase
prlce already pald
o lL also lncludes remedles for Lhe enforcemenL of such llen allowed
Lo an unpald seller ln ArL. 1326.
C,,&$&$'%*+ D"-.5 '# V*--*%&$"5 #'- ;'%57."-
G'',5
See 8A 7394, Lhe Consumer AcL of Lhe hlllpplnes. (dlscusslon ln Lhe book ls
baslcally Lhe codal).

3A:BC?D 79 ` $XCL=MFL@AQ?=C <G !:>?
3% G"%"-*+
Same grounds by whlch obllgaLlons ln general are exLlngulshed also apply
Lo exLlngulshmenL of obllgaLlons arlslng from sale
o A-LC-8L-CC-CC-nC
! aymenL
Cnly exLlngulshes obllgaLlons Lo whlch Lhey perLaln ln a
conLracL of sale
noL necessarlly Lhe conLracL lLself
! Loss
! 8emlsslon
! CompensaLlon
! Confuslon
! novaLlon
o AnnulmenL
o 8esclsslon
o 8esoluLory CondlLlon
o rescrlpLlon
o ArLlcle 1600 - ConvenLlonal Cr Legal 8edempLlon
;'%8"%&$'%*+ H",".1&$'%
"DC. 7Z67 ` 3<=R?=CL<=:> *?N?QBCL<= (?GL=?N
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

96
3<=R?=CL<=:> *?N?QBCL<= @A:>> C:T? B>:P? ;A?= CA? R?=N<D D?@?DR?@ CA?
DLMAC C< D?BFDPA:@? CA? CAL=M @<>NW ;LCA CA? <K>LM:CL<= C< P<QB>U ;LCA CA?
BD<RL@L<=@ <G "DCLP>? 7Z7Z :=N <CA?D @CLBF>:CL<=@ ;ALPA Q:U A:R? K??=
:MD??N FB<=.

(?GL=LCL<= ` 3<=R?=CL<=:> *?N?QBCL<= C:T?@ B>:P?m
$ When Lhe seller reserved for hlmself Lhe rlghL Lo repurchase Lhe Lhlng sold,
wlLh obllgaLlon Lo
o 8eLurn prlce of Lhe sale
o 8eLurn expenses of Lhe conLracL
o Any oLher leglLlmaLe paymenLs made by reason of Lhe sale
o necessary and useful expenses of Lhe Lhlng sold.
$ Lven when sale ls one wlLh rlghL Lo repurchase, 974"- ls subrogaLed Lo Lhe
seller's rlghLs and acLlons
18
even ,7-$%0 &/" 1"-$', E/"-" -",".1&$'% 2*% 9"
.*," - rlghL Lo redempLlon does noL prevenL full consummaLlon
$ Who may exerclse?
o Seller ln whom rlghL ls recognlzed by conLracL
o Any person Lo whom such rlghL may have been Lransferred
o ln Lhe case of legal redempLlon, Lhe person so enLlLled by law
/D<B?D *?@?DR:CL<= <G *LMAC C< *?BFDPA:@?
$ ulsLlngulshlng rlghL Lo redeem from opLlon Lo purchase
19

o ArL. 1601 : 8lghL of repurchase musL be D?@?DR?N by Lhe vendor Lhrough
sLlpulaLlon Lo LhaL effecL ln Lhe conLracL of sale
! noL a rlghL granLed Lo Lhe vendor by Lhe vendee
! lL ls one of Lhe sLlpulaLlons ln Lhe conLracL
! Cnce lnsLrumenL execuLed, vendor may no longer reserve

18
ArL. 1609 - vendee ls subrogaLed Lo Lhe vendor's rlghLs and acLlons.
19
vlllarlca v. CA, MlsLerlo v. Cebu SLaLe College, nool v. CA
o Any rlghL &/"-"*#&"- granLed &' &/" 8"%,'-I 94 &/" 8"%,"" cannoL be
consldered a rlghL Lo repurchae, buL some oLher rlghL,llke an opLlon Lo
buy.
$ Lssence of pocto Je tetto - LlLle and ownershlp ls lmmedlaLely vesLed ln Lhe
vendee a reLro, sub[ecL Lo a -"5&-$2&$8" 2'%,$&$'% '# -"17-2/*5" by Lhe vendor
wlLhln Lhe redempLlon perlod.
$ valld exlsLence of a rlghL Lo repurchase hlnges upon facL LhaL Lhe underlylng
conLracL of sale ls valld, and LhaL Lhere has been performance.
*LMAC <G *?BFDPA:@? /D<R:K>? KU /:D<> $RLN?=P?
$ 8lghL Lo repurchase : merely a feaLure ln Lhe conLracL of sale
o 1hus, lL ls governed by Lhe SLaLuLe of lrauds
o Powever, SC has held : when Lhe conLracL of sale ls ln wrlLlng, 1*-'+
"8$,"%2" .*4 9" *,,72", Lo prove Lhe rlghL Lo repurchase
! 1hls ls because Lhe ueed of Sale and Lhe verbal agreemenL
allowlng Lhe rlghL Lo repurchase are an lnLegral whole
! 1he deed of sale lLself ls Lhe noLe or memorandum" requlred
Lo remove Lhe conLracL from Lhe Sol.
o Also, lf Lhere ls no ob[ecLlon Lo such parol evldence, lL wlll be admlsslble
ln Lrlal.
$ SC : 8esL Lvldence" 8ule noL an obsLacle Lo Lhe adducemenL of such parol
evldence
o When parol agreemenL was Lhe .'8$%0 2*75" of Lhe wrlLLen conLracL
o When wrlLLen conLracL was execuLed on Lhe falLh/represenLaLlon of Lhe
parol conLracL
o 8lghL Lo repurchase proved orally ls conslsLenL wlLh Lerms of wrlLLen
conLracL.
(L@CL=MFL@A?N GD<Q 0BCL<= C< /FDPA:@?
8lghL Lo 8edeem CpLlon Lo urchase
noL a separaLe conLracL - merely parL of
a maln conLracL of sale - cannoL exlsL
unless reserved aL Llme of perfecLlon
Cenerally a prlnclpal conLracL, creaLed
lndependenL of anoLher conLracL

MusL be lmbedded lnLo Lhe conLracL of
sale upon lLs perfecLlon
May exlsL before or afLer Lhe perfecLlon
of Lhe sale, '- be lmbedded ln anoLher
conLracL upon lLs perfecLlon
uoes noL need a separaLe conslderaLlon MusL have conslderaLlon separaLe and
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

97
Lo be valld and effecLlve dlsLlncL from Lhe purchase prlce
8edempLlon perlod 2*%%'& exceed 10
years
erlod for an opLlon .*4 exceed 10
years
Lxerclse requlres LhaL noLlce be
accompanled by Lender of paymenL -
conslgnmenL when Lender cannoL be
made
8equlres only a noLlce of exerclse Lo be
glven Lo Lhe opLloner
Lxerclse exLlngulshes conLracL of sale 8esulLs ln perfecLlon of a conLracL of
sale

/?DL<N <G *?N?QBCL<=
"DC. 7Z6Z.
)A? DLMAC D?G?DD?N C< L= "DCLP>? 7Z67W L= CA? :K@?=P? <G := ?XBD?@@
:MD??Q?=CW @A:>> >:@C G<FD U?:D@ GD<Q CA? N:C? <G CA? P<=CD:PC.
!A<F>N CA?D? K? := :MD??Q?=CW CA? B?DL<N P:==<C ?XP??N C?= U?:D@.
]<;?R?DW CA? R?=N<D Q:U @CL>> ?X?DPL@? CA? DLMAC C< D?BFDPA:@? ;LCAL=
CALDCU N:U@ GD<Q CA? CLQ? GL=:> OFNMQ?=C ;:@ D?=N?D?N L= : PLRL> :PCL<= <=
CA? K:@L@ CA:C CA? P<=CD:PC ;:@ : CDF? @:>? ;LCA DLMAC C< D?BFDPA:@?.
:. ,A?= 1< /?DL<N "MD??N aB<=
$ SLlpulaLed rlghL Lo redeem : ln absence of agreemenL as Lo perlod of exerclse, lL
shall lasL 4 years from daLe of Lhe conLracL
$ MlsLerlo v. Cebu SLaLe College
o lour year perlod held Lo begln from happenlng of condlLlon conLalned ln
deed of sale (raLher Lhan daLe of conLracL)
o 1hls ls lnexpllcable! - CLv
! 1o be dlscussed laLer.
K. ,A?= /?DL<N "MD??N aB<=
$ lf Lhere ls an agreemenL as Lo perlod, lL 2*%%'& exceed 10 years
$ lf lL exceeds 10 years, Lhe agreemenL ls only valld for Lhe flrsL 10 years.
$ Anchuel v. lAC
o SLlpulaLlon : vendor cannoL redeem wlLhln 19 years from execuLlon
o SC : Such ls vold - vlolaLlve of ArL. 1601
o SC flxed perlod of redempLlon aL Len years.
$ 1ayao v. uulay
o SLlpulaLlon : rlghL of redempLlon cannoL be exerclsed wlLhln 10 years
! Agaln, SC held LhaL lL was vold
! Powever : such nulllLy does noL converL conLracL lnLo a mere
lndebLedness nor an equlLable morLgage
! ArL. 1606 would apply - seller may exerclse rlghL Lo
redempLlon wlLhln a perlod of 10 years form daLe of conLracL
o AlLhough sLlpulaLlon as Lo Lhe perlod may be unclear or vold, Lhere ls sLlll
a sLlpulaLlon!
! 1hus, we follow Lhe 10 year perlod for redempLlon
! We do noL conslder Lhe rlghL of redempLlon as belng one
wlLhouL a sLlpulaLed perlod.
$ 8andong v. AusLrla
o ConLracL : sellers could exerclse ln March of any year
o Such could be exerclsed for a perlod of 10 years from daLe LhereafLer, buL
noL afLer 10 years
$ Cchagabla v. CA
o 8lghL Lo redeem had prescrlbes when exerclsed afLer 10 years.
P. /?=N?=PU <G "PCL<= )<>>@ *?N?QBCL<= /?DL<N
$ Cng Chua v. Carr : pendency of an acLlon broughL ln good falLh and relaLlng Lo
Lhe valldlLy of a sale a reLro Lolls Lhe runnlng of Lhe perlod of redepmpLlon
$ MlsLerlo : endency of a llLlgaLlon does noL Loll Lhe perlod
o Such perlod ls noL suspended merely because Lhere ls a dlvergence of
oplnlon beLween Lhe parLles as Lo when Lhe condlLlon upon whlch Lhe
rlghL Lo repurchase ls Lrlggered.
o LxlsLence of rlghL Lo repurchase ls noL dependenL upon Lhe lnLerpreLaLlon
by Lhe courL of sald condlLlon
$ CLv : no conLradlcLlon beLween Lhese Lwo cases
o lmporLanL conslderaLlon : vesLlng" of Lhe exerclse of Lhe rlghL by lLs
proper exerclse (requlrlng noLlce and Lender)
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

98
o 1hus, ln essence, compleLlon of redempLlon process (paymenL of amounLs
requlred ln ArL. 1616) ls Lolled by Lhe #$+$%0 '# * 2$8$+ *2&$'% relaLlng Lo Lhe
lssue of such redempLlon
! rovlded LhaL boLh exerclse and flllng would be done wlLhlng
redempLlon perlod.
N. 1<=8B:UQ?=C <G /DLP? (<?@ 1<C "GG?PC *F==L=M <G *?N?QBCL<= /?DL<N
$ CaLangcaLang v. Legayada - nonpaymenL of purchase prlce does noL serve Lo
suspend Lhe perlod of redempLlon
o Sale was consummaLed upon execuLlon of documenL, and dellvery of land
Lo Lhe vendee
o nonpaymenL of Lhe balance of Lhe prlce does noL suspend Lhe efflcacy of
Lhe provlslons of Lhe valld conLracL.
/<@@?@@L<= <G !FKO?PC &:CC?D (FDL=M /?DL<N <G *?N?QBCL<=
$ ln a sale a reLro, buyer has Lhe rlghL Lo lmmedlaLe possesslon of properLy sold,
unless oLherwlse agreed upon.
$ 1lLle and ownershlp of properLy are lmmedlaLely vesLed ln Lhe buyer a reLro,
sub[ecL only Lo Lhe resoluLory condlLlon of Lhe repurchase by Lhe seller wlLhln
Lhe perlod.
$ endlng repurchase, Lhe buyer may allenaLe, morLgage, or encumber Lhe
properLy
o 8uL such allenaLlon, morLgage or encumbrance ls as revocable as hls rlghL.
o When rlghL exerclsed, Lhe buyer has Lo reLurn Lhe properLy free from all
encumbrances lmposed by hlm.
]<; *?N?QBCL<= $GG?PC?N
"DCLP>? 7Z7Z E
)A? R?=N<D P:==<C :R:L> ALQ@?>G <G CA? DLMAC <G D?BFDPA:@? ;LCA<FC
D?CFD=L=M C< CA? R?=N?? CA? BDLP? <G CA? @:>?W :=N L= :NNLCL<=E
d7e )A? ?XB?=@?@ <G CA? P<=CD:PCW :=N :=U <CA?D >?MLCLQ:C? B:UQ?=C@ Q:N?
KU D?:@<= <G CA? @:>?g
d5e )A? =?P?@@:DU :=N F@?GF> ?XB?=@?@ Q:N? <= CA? CAL=M @<>N.
$ 1hree Lhlngs need Lo be reLurned
o rlce of Lhe sale.
o Lxpenses of conLracL, and any oLher leglLlmaLe paymenLs made by reason
of Lhe sale.
o necessary and useful expenses made on Lhe Lhlng sold.
$ Seller may brlng hls acLlon agalnsL every possessor who derlves rlghL from Lhe
buyer
o Lven lf Lhere ls no menLlon of Lhe rlghL Lo repurchase ln Lhe conLracL
beLween buyer and subsequenL buyer
o WlLhouL pre[udlce Lo provlslons of roperLy 8eglsLraLlon uecree and Lhe
MorLgage Law, wlLh respecL Lo morLgagees/purchasers ln good falLh and
for value.
$ lallure Lo pay useful lmprovemenLs enLlLles buyer a reLro Lo reLaln possesslon
of Lhe land unLll acLual relmbursemenL ls done.
$ ArL. 1616 ls noL excluslve
o lL should be consLrued wlLh ArL. 1601 whlch sLaLes LhaL ln order Lo
redeem, ArL. 1616 musL be complled wlLh as well as oLher sLlpulaLlons
agreed upon."
:. ]<; *?N?QBCL<= $X?DPL@?N
$ ln order Lo exerclse rlghL Lo redeem, Lender of paymenL ls sufflclenL.
$ Mere sendlng of leLLers expresslng deslre Lo repurchase, wlLhouL Lender, does
noL comply wlLh Lhe requlremenL of law.
$ Where Lender of paymenL cannoL be valldly made (because buyer cannoL be
locaLed) seller musL flle a sulL for conslgnaLlon of Lhe redempLlon prlce wlLhln
Lhe redempLlon perlod.
$ lee cboy keolty v. cA
o lormal offer Lo redeem accompanled by Lender of redempLlon prlce %'&
"55"%&$*+ when rlghL Lo redeem ls exerclsed Lhrough a [udlclal acLlon
wlLhln Lhe redempLlon perlod, slmulLaneous wlLh conslgnaLlon of Lhe
redempLlon prlce
o no prescrlbed form for an offer Lo redeem
o 1hus, we have Lwo ways of redeemlng
! lormal offer accompanled by bona flde Lender of paymenL
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

99
Cnly necessary Lo preserve rlghL of redempLlon for
furLher "%#'-2"."%&: (as opposed Lo exerclsed).
! Lxerclse Lhrough [udlclal acLlon accompanled wlLh
slmulLaneous deposlL of Lhe redempLlon prlce.
llllng of acLlon ls equlvalenL Lo formal offer.
o When ls rlghL of redempLlon deemed vesLed"
! lormal offer Lo redeem, accompanled by bona flde Lender of
paymenL, wlLhln redempLlon perlod.
! 1hus, Lhe rlghL ls vesLed" - lL may be enforced even beyond
redempLlon perlod.
K. '= &F>CU8/:DCU 3:@?@
$ ln a sale a reLro, buyer of parL of an undlvlded lmmovable who acqulres Lhe
whole Lhereof under ArL. 498
20
may compel Lhe seller Lo redeem Lhe whole
properLy, lf Lhe seller wanLs Lo make use of Lhe rlghL Lo redempLlon.
o Seller wanLs Lo repurchase only hls parL : 8uyer may compel hlm Lo
repurchase Lhe whole Lhlng.
$ Several persons, [olnLly and ln Lhe same conLracL, sell an undlvlded lmmovable
wlLh rlghL Lo repurchase.
o none of Lhem may exerclse Lhls rlghL for more Lhan hls respecLlve share.
$ Same rule applles lf Lhe seller who sold Lhe lmmovable alone has several helrs.
o Pelrs may only redeem parL whlch he may have acqulred.
$ ln Lhese cases, Lhe buyer may demand LhaL Lhe vendors/co-helrs come Lo an
agreemenL upon Lhe repurchase of Lhe E/'+" &/$%0 5'+,:
o lf Lhey cannoL, buyer cannoL be compelled Lo consenL Lo a parLlal
redempLlon.

20
Whenever Lhe Lhlng ls essenLlally lndlvlslble and Lhe co-owners
cannoL agree LhaL lL be alloLLed Lo one of Lhem who shall lndemnlfy
Lhe oLhers, lL shall be sold and lLs proceeds dlsLrlbuLed. - 1hus, Lhe
above dlscusslon refers Lo Lhe guy who buys Lhls properLy.
$ Co-owner of undlvlded lmmovable who sells hls share separaLely may
$%,"1"%,"%&+4 "?"-2$5" Lhe rlghL of repurchase upon hls own share, and buyer
cannoL compel hlm Lo redeem Lhe whole.
$ CredlLors of Lhe seller cannoL make use of Lhe rlghL of redempLlon agalnsL Lhe
buyer, unLll afLer Lhey have exhausLed Lhe properLy of Lhe seller.
$ ue Cuzman v. CA
o lf one of Lhe co-owners/co-helrs alone redeem Lhe whole properLy, he
wlll be a ."-" &-75&"" wlLh respecL Lo Lhe shares of Lhe co-owners/co-
helrs.
o 1hus, no prescrlpLlon lles agalnsL Lhe rlghLs of Lhese co-owners/co-helrs
Lo demand from Lhe redempLloner Lhelr share ln Lhe properLy.
,A?= *?N?QBCL<= =<C &:N?
"DC. 7Z6b.
'= P:@? <G D?:> BD<B?DCUW CA? P<=@<>LN:CL<= <G <;=?D@ALB L= CA? R?=N?? KU
RLDCF? <G CA? G:L>FD? <G CA? R?=N<D C< P<QB>U ;LCA CA? BD<RL@L<=@ <G :DCLP>?
7Z7Z @A:>> =<C K? D?P<DN?N L= CA? *?ML@CDU <G /D<B?DCU ;LCA<FC : OFNLPL:>
<DN?DW :GC?D CA? R?=N<D A:@ K??= NF>U A?:DN. d=e
$ 8efore Lhe new Clvll Code : when no redempLlon made, buyer auLomaLlcally
acqulred full ownershlp.
$ now, ArL. 1607 above applles.
o 1hls proceedlng for consolldaLlon ls an orlndary clvll acLlon, noL a moLlon
lncldenL Lo anoLher acLlon.
o lf such ls denled because conLracL was acLually an equlLable morLgage,
Lhen anoLher acLlon may be flled Lo collecL/foreclose.
$ ArL. 1607 abollshed auLomaLlc consolldaLlon of ownershlp upon explraLlon of
perlod by requlrlng Lhe above acLlon (where Lhe vendor may be heard).
o lf buyer proves LhaL Lhe LransacLlon was a pacLo de reLro, Lhe vendor ls
Lhen glven a grace perlod of 30 days wlLhln whlch Lo repurchase.
$ 8ecordlng ln Lhe 8eglsLry of ueeds of Lhe consolldaLlon of ownershlp Lo Lhe
buyer ls noL a condlLlon slne qua non Lo Lransfer of ownershlp
o 8uyer would sLlll be Lhe owner.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

100
o Lssence of pacLo de reLro - LlLle and ownershlp are lmmedlaLely vesLed ln
buyer, sub[ecL Lo resoluLory condlLlon of repurchase.
o lallure of seller Lo perform Lhe sald condlLlon vesLs absoluLe LlLle and
ownershlp over Lhe properLy sold.
o lallure Lo consolldaLe LlLle under 1607 does noL lmpalr buyer's ownershlp
- Lhe meLhod prescrlbed ls merely for purposes of reglsLraLlon.
2D:=C <G 968N:U *?N?QBCL<= *LMAC L= 3:@? <G #LCLM:CL<= :=N "DCLP>? 7Z6Z
$ LasL paragraph of ArL. 1606 - vendor may sLlll exerclse Lhe rlghL Lo repurchase
wlLhln LhlrLy days from Lhe Llme flnal [udgmenL was rendered ln a clvll acLlon
on Lhe basls LhaL Lhe conLracL was a Lrue sale wlLh rlghL Lo repurchase."
$ LxplraLlon of perlod lpso [ure exLlngulshes rlghL Lo redeem
o Powever : when Lhere was a prevlous sulL on Lhe naLure of Lhe conLracL :
seller may sLlll exerclse rlghL Lo repurchase wlLhln 30 days from Lhe Llme
flnal [udgmenL was rendered.
$ 1apas v. CA
o 30 day perlod conLemplaLes a case lnvolvlng a conLroversy as Lo Lhe
naLure of Lhe conLracL
o CourL decldes wheLher lL ls a pacLo de reLro or an equlLable morLgage.
$ anglllnan v. 8amos
o 30 day perlod does noL apply Lo a conLracL found Lo be an absoluLe sale.
o lL ls a requlslLe Lo Lhe exerclse of Lhe rlghL Lo redempLon - pollcy of law ls
noL Lo leave LlLle ln uncerLalnLy beyond such 30 day perlod.
$ 8aLlonale for 30 day perlod
o Seller may have consldered Lhe sale Lo be an equlLable morLgage.
o Allowlng Lhe explraLlon of Lhe redempLlon perlod ls conslsLenL wlLh hls
clalm LhaL Lhe sale was an equlLable morLgage.
o 1hus, upon flndlng of Lhe courL LhaL lL was lndeed a pacLo de reLro, Lhen
Lhe seller muL be granLed a flnal 30-day perlod wlLhln whlch Lo declde and
lf ever, exerclse hls rlghL Lo redeem.
$ Powever : lf lssue was wheLher Lhe conLracL was an absoluLe sale or sale a reLro
o !udgmenL of sale a reLro does noL glve Lhe seller Lhe 30 day perlod.
o ln such a case, seller ls negllgenL for noL exerclslng Lhe rlghL Lo redeem.
S?LM=L=M $_FLC:K>? &<DCM:M? !LCF:CL<= C< "R:L> <G "DCLP>? 7Z6Z
$ WhaL lf seller felgns defense of equlLable morLgage ln order Lo geL Lhe 30 day
perlod?
$ Adorable v. lnacala
o Where evldence esLabllshed no honesL doubL as Lo parLles' lnLenLlons Lo
make lL a sale pacLo de reLro, seller would noL be enLlLled Lo arL. 1606's
beneflLs.
$ vda. ue Macoy v. CA & lellcen v. Crlas
o 1here musL be honesL bellef on parL of vendor LhaL Lhe agreemenL was ln
reallLy a morLgage, merely Lo glve securlLy for an obllgaLlon.
$ Abllla v. Cobonseng
o When sale ls [udlclally declared pacLo de reLro, and afLer vendors Lake Lhe
poslLlon LhaL lL was an equlLable morLgage, havlng no honesL bellef Lo
LhaL effecL - vendors may noL avall of Lhe addlLlonal 30 day perlod.
! lf Lhey Lruly belleved LhaL Lhe sale was an equlLable
morLgage, Lhey should have conslgned wlLh Lhe Lrlal courL Lhe
amounL represenLlng Lhe alleged loan.
$ Powever, Lhls was reversed - ArLlcle 1606 only applles when Lhe naLure of Lhe
LransacLlon was puL ln lssue before Lhe courL.
o lL applles ln a slLuaLlon where one parLy clalmes LhaL lL was a pacLo de
reLro, and Lhe oLher clalmed LhaL lL was an equlLable morLgage, and Lhe
courLs declded LhaL lL was a pacLLo de reLro sale.
o Powever, appllcablllLy sLlll resLs on Lhe bona flre lnLenL of Lhe seller a
reLro, lf he Lruly beleleved LhaL Lhe LransacLlon was an equlLable
morLgage.
o lL doesn'L maLLer whaL Lhe buyer lnLended Lhe LransacLlon Lo be.
SDFLC@
"DC. 7Z7b.
'G :C CA? CLQ? <G CA? ?X?PFCL<= <G CA? @:>? CA?D? @A<F>N K? <= CA? >:=NW
RL@LK>? <D MD<;L=M GDFLC@W CA?D? @A:>> K? =< D?LQKFD@?Q?=C G<D <D BD<D:CL=M
<G CA<@? ?XL@CL=M :C CA? CLQ? <G D?N?QBCL<=W LG =< L=N?Q=LCU ;:@ B:LN KU
CA? BFDPA:@?D ;A?= CA? @:>? ;:@ ?X?PFC?N.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

101
!A<F>N CA?D? A:R? K??= =< GDFLC@ :C CA? CLQ? <G CA? @:>? :=N @<Q? ?XL@C :C
CA? CLQ? <G D?N?QBCL<=W CA?U @A:>> K? BD<D:C?N K?C;??= CA? D?N?QBCL<=?D
:=N CA? R?=N??W MLRL=M CA? >:CC?D CA? B:DC P<DD?@B<=NL=M C< CA? CLQ? A?
B<@@?@@?N CA? >:=N L= CA? >:@C U?:DW P<F=C?N GD<Q CA? :==LR?D@:DU <G CA?
N:C? <G CA? @:>?.
$ Almeda v. ualuro - ArL. 1617 applles only when parLles have noL provlded for
Lhelr sharlng arrangemenL wlLh respecL Lo Lhe frulLs.
$_FLC:K>? &<DCM:M?
"DC. 7Z65.
)A? P<=CD:PC @A:>> K? BD?@FQ?N C< K? := ?_FLC:K>? Q<DCM:M?W L= :=U <G CA?
G<>><;L=M P:@?@E
d7e ,A?= CA? BDLP? <G : @:>? ;LCA DLMAC C< D?BFDPA:@? L@ F=F@F:>>U
L=:N?_F:C?g
d5e ,A?= CA? R?=N<D D?Q:L=@ L= B<@@?@@L<= :@ >?@@?? <D <CA?D;L@?g
d9e ,A?= FB<= <D :GC?D CA? ?XBLD:CL<= <G CA? DLMAC C< D?BFDPA:@? :=<CA?D
L=@CDFQ?=C ?XC?=NL=M CA? B?DL<N <G D?N?QBCL<= <D MD:=CL=M : =?; B?DL<N
L@ ?X?PFC?Ng
dHe ,A?= CA? BFDPA:@?D D?C:L=@ G<D ALQ@?>G : B:DC <G CA? BFDPA:@? BDLP?g
dIe ,A?= CA? R?=N<D KL=N@ ALQ@?>G C< B:U CA? C:X?@ <= CA? CAL=M @<>Ng
dZe '= :=U <CA?D P:@? ;A?D? LC Q:U K? G:LD>U L=G?DD?N CA:C CA? D?:> L=C?=CL<=
<G CA? B:DCL?@ L@ CA:C CA? CD:=@:PCL<= @A:>> @?PFD? CA? B:UQ?=C <G : N?KC <D
CA? B?DG<DQ:=P? <G :=U <CA?D <K>LM:CL<=.
'= :=U <G CA? G<D?M<L=M P:@?@W :=U Q<=?UW GDFLC@W <D <CA?D K?=?GLC C< K?
D?P?LR?N KU CA? R?=N?? :@ D?=C <D <CA?D;L@? @A:>> K? P<=@LN?D?N :@ L=C?D?@C
;ALPA @A:>> K? @FKO?PC C< CA? F@FDU >:;@.

:. (?GL=LCL<= <G $_FLC:K>? &<DCM:M?
$ MaLangulhan v. CA - one whlch alLhough lacklng ln some formallLy, or form or
words, or oLher requlslLes demanded by a sLaLuLe, neverLheless reveals Lhe
lnLenLlon of Lhe parLles Lo charge real proerLy as securlLy for a debL, and
conLalns noLhlng lmposslble or conLrary Lo law."
$ Also enumeraLed essenLlal requlslLes
o arLles enLered lnLo a conLracL denomlnaLed as a conLracL of sale, and
o 1he lnLenLlon was Lo secure an exlsLlng debL by way of a morLgage
$ San edro v. Lee - when Lhe Lwo above condlLlons are noL proven, Lhe
exlsLence of any clrcumsLance enumeraLed ln ArL. 1602 cannoL be Lhe basls Lo
LreaL Lhe LransacLlon as an equlLable morLgage.
o ln oLher words, we look aL Lhe Lwo requlslLes flrsL before golng Lo ArL.
1602.
$ When ln doubL, courLs consLrue LransacLlons as equlLable morLgages - lesser
Lransmlsslon of rlghLs.
21

o LapaL v. 8osarlo : conLracL should be consldered as a morLgage or as a
loan lnsLead of pacLo de reLro when lLs Lerms are amblguous or Lhe
clrcumsLances are lnconslsLenL wlLh a sale.
$ Mollna v. CA - lnLenLlon of parLles ls showed by all surroundlng clrcumsLances,
noL by Lhe Lermlnology used ln Lhe conLracL.
/:PCFQ 3<QQL@@<DLFQ
"DC. 56JJ.
)A? PD?NLC<D P:==<C :BBD<BDL:C? CA? CAL=M@ MLR?= KU ;:U <G B>?NM? <D
Q<DCM:M?W <D NL@B<@? <G CA?Q. "=U @CLBF>:CL<= C< CA? P<=CD:DU L@ =F>> :=N
R<LN. d7JIV:e

21
ArL. 1603. ln case of doubL, a conLracL purporLlng Lo be a sale wlLh
rlghL Lo repurchase shall be consLrued as an equlLable morLgage. (n)

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

102
$ vda. de ZulueLa v. CcLavlano
o SLlpulaLlon : upon redempLlon by buyer from Lhlrd parLy, LhaL lnsLrumenL
would be consldered a deed of absoluLe sale from seller Lo buyer.
o AnoLher lnsLrumenL was execuLed enLlLled opLlon Lo repurchase."
o 1hls was noL a sale a reLro - opLlon Lo repurchase was ln a separaLe
documenL.
o nelLher was lL an equlLable morLgage - noL meanL Lo secure a loan, no
appllcaLlon of ArL. 1602.
o SC : lL was noL a pacLum commlssorlum elLher
! Seller was noL a debLor
! noLhlng was offered as securlLy.
o ubllc ollcy on pacLum commlssorlum applles only when Lhe LransacLlon
ls a morLgage or oLher securlLy conLracL - no appllcaLlon Lo a Lrue sale or
Lransfer LransacLlon.
$ Cuerrero v. ?nlgo - morLgage wlLh condlLlonal sale"
o MorLgagor reserved for hlmself Lhe rlghL Lo redeem properLy by paylng
backLhe amounL loaned.
o Cn fallure of morLgagor Lo exerclse such rlghL, LlLle would pass and be
vesLed ln Lhe morLgagee.
o SC: Such sLlpulaLlon cannoL be consLrued as glvlng morLgagee rlghL Lo
own Lhe properLy upon fallure of Lhe morLgagor Lo pay - Lhls ls vold for
belng pacLum commlssorlum.
$ MonLevlrgln v. CA
o LqulLable morLgage gulsed as a sale a reLro cannoL be enforced as a sale
o When a purporLed sale a reLro ls found Lo be an equlLable morLgage, Lhe
proper remedy ln case Lhe borrower does noL pay Lhe prlce" ls Lo
foreclose on Lhe morLgage.
! 1here can be no loss of Lhe seller's" rlghL Lo redeem for LhaL
would be pacLum commlssorlum.
! 8eLurn of redempLlon prlce would be equa, Lo paylng Lhe
prlnclpal loan - exLlngulshlng Lhe equlLable morLgage
$ Solld Pomes v. CA
o arLles enLered lnLo a uaclon en ago wlLh 8lghL Lo 8epurchase
! lf borrower falled Lo comply wlLh new Lerms of paymenL,
agreemenL would cause Lhe obllgaLlon for Lhe borrower Lo
Lransfer and asslgn Lhe real properLy Lo Lhe lender ln full
paymenL
! Such was noL pacLum commlssorlum
*:CL<=:>? 4?AL=N /D<RL@L<=@ <= $_FLC:K>? &<DCM:M?@
$ ueslgned Lo flghL clrcumvenLlon of usury laws and Lhe pollcy agalnsL pacLum
commlssorlum
$ 1hey envlslon conLracLs of sale w/ rlghL Lo repurchase where Lhe real lnLenLlon
of Lhe parLles ls LhaL Lhe repurchase prlce ls money loaned, and Lhe pacLo de
reLro sale" ls a means of securlng Lhe loan.
,A?= /D?@FQ?N $_FLC:K>? &<DCM:M?
$ See ArL. 1602 above.
$ LxlsLence of *%4 '%" of Lhese condlLlons sufflces Lo glve rlse Lo Lhe
%'%2'%2+75$8" presumpLlon LhaL Lhe conLracL ls an equlLable morLgage.
$ Llm v. Calaguas - ln order for presumpLlon Lo apply, Lhe parLles musL have
lnLended Lhe conLracL Lo be a morLgage and noL a pacLo de reLro .
$ Llm enumeraLes Lhe followlng clrcumsLances Lo LreaL Lhe conLracL as an
equlLable morLgage.
o 1erms used ln power-of-aLLorney lndlcaLe LhaL conveyance was lnLended
Lo be a loan secured by a morLgage
o rlce pald ln relaLlon Lo value of properLy ls grossly lnadequaLe
! Mere allegaLlon of lnsufflcency of selllng prlce does noL
creaLe Lhe presumpLlon lf Lhere ls no proof regardlng Lhe
markeL values of Lhe area and properLy ln quesLlon
lnadequacy of prlce : ConslderaLlon so far shorL of
Lhe real value asL Lo sLarLle Lhe mlnd.
Lven wlLh Lhe asserLlon LhaL Lhe prlce ln a pacLo de
reLro ls noL Lhe assessed prlce, does noL [usLlfy Lhe
concluslon LhaL Lhe conLracL ls one of equlLable
morLgage.
o racLlce ln pacLo de reLro sale ls Lo flx a
relaLlvely reduced prlce.

o Seller aL Llme of alleged sale was ln urgenL need of money
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

103
o Supposed seller lnvesLed money he obLalned ln maklng lmprovemenLs on
Lhe properLy sold
o Seller remalned ln possesslon
! AlLhough Lhe seller only remalned ln possesslon for a year,
such sLlpulaLlon dld noL deLracL from Lhe facL LhaL possesslon
(an lndlclum of ownershlp) was reLalned by Lhe vendor, and
LhaL Lhe vendor reLalned parL of Lhe purchase prlce.
1hls polnLed Lo an equlLable morLgage.
! ConLlnued possesslon where sellers promlsed Lo vacaLe, buL
dld noL - LoleraLed possesslon ls noL enough Lo prove
equlLable morLgage.
o Seller pald land Lax
o 8uyer accepLed parLlal paymenLs, such accepLance belng lncompaLlble
wlLh ldea of lrrevocablllLy of Lhe LlLle of ownershlp of Lhe purchaser aL Lhe
explraLlon of Lhe Lerm sLlpulaLed ln Lhe orlglnal conLracL for Lhe exerclse
of Lhe rlghL Lo redempLlon
o Seller remalned bound for Lhe repaymenL of Lhe money
o 1ransacLlon had orlgln ln a borrowlng of money.
! When Lrue lnLenLlon was noL Lo convey ownershlp, buL Lo
secure houslng loan of buyer" ln whlch seller" had a dlrecL
lnLeresL slnce proceeds were Lo be applled Lo Lhelr
ouLsLandlng morLgage obllgaLlons. - LqulLable MorLgage
! Alleged loan dlsbursed on lnsLallmenLs - no proof as Lo
lnadequacy of prlce - conLlnued recelpL of renLals by seller
was found Lo be a gesLure of generoslLy : consldered sale on
lnsLallmenLs
o 1here was a prevlous debL beLween Lhe parLles LhaL was noL exLlngulshed
by Lhe sale buL remalned subslsLlng.
$ uelay ln Lransferrlng LlLle does noL glve rlse Lo presumpLlon.
"BB>LP:KL>LCU C< (??N@ <G "K@<>FC? !:>?
"DC. 7Z6H.
)A? BD<RL@L<=@ <G "DCLP>? 7Z65 @A:>> :>@< :BB>U C< : P<=CD:PC BFDB<DCL=M C<
K? := :K@<>FC? @:>?. d=e
$ 1wo requlslLes for Lhls provlslon Lo apply
o arLles enLered lnLo conLracL denomlnaLed as a conLracL of sale.
o lnLenLlon was Lo secure an exlsLlng debL by way of morLgage.
/D<<G KU /:D<>? $RLN?=P?g 4?@C $RLN?=P? *F>?
$ arole evldence ls admlsslble Lo supporL clalms LhaL Lhe documenLs were really
glven as securlLy for paymenL of a loan - provlded LhaL naLure of agreemenL ls
placed ln lssue.
$ MaLangulhan v. CA
o arol evldence ls compeLenL Lo prove LhaL Lhe lnsLrumenL ln quesLlon was
glven merely as a securlLy.
o upon proof of Lhe LruLh of such allegaLlons, courL wlll enforce Lhe
agreemenL as Lhey Lruly lnLended.
$ AusLrla v. Conzales - non-appllcaLlon of besL evldence rule" Lo equlLable
morLgage slLuaLlons
o ueclslve facLor ln evaluaLlng lnLenL ln such agreemenLs ls noL always Lhe
documenL lLself
o 8uL all Lhe surroundlng clrcumsLances
o 1hus parole evldence ls accepLable.
$GG?PC@ ,A?= !:>? "NOFNM?N C< 4? := $_FLC:K>? &<DCM:M?
"DC. 7Z6I.
'= CA? P:@?@ D?G?DD?N C< L= "DCLP>?@ 7Z65 :=N 7Z6HW CA? :BB:D?=C R?=N<D
Q:U :@T G<D CA? D?G<DQ:CL<= <G CA? L=@CDFQ?=C. d=e
$ When a conLracL ls consLrued Lo be an equlLable morLgage, Lhe followlng may
resulL
o Any money, frulL or beneflL Lo be recelved by Lhe buyer as renL shall be
consldered as lnLeresL sub[ecL Lo usury laws,
o 1he apparenL Seller" may ask for reformaLlon of Lhe lnsLrumenL,
o CourL may decree LhaL buyer"-debLor musL pay hls ouLsLandlng loan Lo
Seller"-credlLor
o Where Lrlal courL dld noL pass upon Lhe morLgagor's clalm LhaL he pald
Lhe morLgage obllgaLlon, a remand of Lhe case Lo Lrlal courL ls ln order
! 1o deLermlne wheLher Lhe morLgage had been seLLled
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

104
! And lf noL, how much morLgagor should pay Lo seLLle Lhe
same.
$ 1olenLlno v. CA
o AlLhough 1603 allows for reformaLlon, noLhlng precludes pursulL of oLher
remedles Lo proLecL hls lnLeresL.
! ueclaraLlon of nulllLy for Lhe deed of sale
! Speclflc performance
$ Powever, nulllflcaLlon proposed by 1olenLlno would be unfalr - lL would leave
buyer wlLhouL Lhe necessary securlLy conLracL, whlch remalns valld
o 8eformaLlon should be Lhe proper remedy Lo enforce Lrue lnLenLlon
$ ln Lhe evenL properLy had been sold Lo a Lhlrd parLy, nulllflcaLlon of LhaL sale
and reconveyance should be allowed provlded securlLy arrangemenL over Lhe
properLy ls preserved
$ 8alaLero v. lAC
o lf a sale a reLro ls consLrued Lo be an equlLable morLgage, execuLlon of an
affldavlL of consolldaLlon ls of no consequence, and consLrucLlve
possesslon" would noL rlpen Lo ownershlp
o lL was noL ln concepL of an owner.
$ 8rlones-vasquez v. CA
o consolldaLlon of ownershlp ln person of Lhe morLgagee would amounL Lo
pacLum commlssorlum
$ LxplraLlon of perlod of redempLlon" ln an equlLable morLgage does noL
prevenL Lhe purporLed seller from exLlngulshlng Lhe maln conLracL of loan, and
Lhus also Lhe equlLable morLgage conLracL
o As long as foreclosure has noL been done.

L"0*+ H",".1&$'%
(?GL=LCL<=
"DC. 7Z7V.
#?M:> D?N?QBCL<= L@ CA? DLMAC C< K? @FKD<M:C?NW FB<= CA? @:Q? C?DQ@ :=N
P<=NLCL<=@ @CLBF>:C?N L= CA? P<=CD:PCW L= CA? B>:P? <G <=? ;A< :P_FLD?@ :
CAL=M KU BFDPA:@? <D N:CL<= L= B:UQ?=CW <D KU :=U <CA?D CD:=@:PCL<=
;A?D?KU <;=?D@ALB L@ CD:=@QLCC?N KU <=?D<F@ CLC>?. d7I57:e
*:CL<=:>? G<D #?M:> *?N?QBCL<=
$ 8easons of publlc pollcy
$ 8eneflL and convenlence of redempLloner, Lo afford hlm a way ouL of whaL
mlghL be an lnconvenlenL assoclaLlon
$ lnLended Lo mlnlmlze co-ownershlp
o Law granLs a co-owner Lhe exerclse of sald rlghL of redempLlon when
shares of oLher owners are sold Lo a Lhlrd person
$ Avlla v. 8arabaL
o Cnce properLy ls subdlvlded and dlsLrlbuLed among Lhe co-owners, no
more reason Lo susLaln any rlghL of legal redempLlon.
!:>L?=C (L@CL=PCL<=@ K?C;??= 3<=R?=CL<=:> :=N #?M:> *LMAC <G *?N?QBCL<=
$ ConvenLlonal = rlghL a reLro"
ConvenLlonal Legal
Can only be consLlLuLed by express
reservaLlon ln a conLracL of sale aL
Llme of perfecLlon
uoes noL have Lo be expressly
reserved, covers oLher onerous
Lransfers of LlLle
ln favor of Lhe seller Clven Lo a Lhlrd-parLy Lo Lhe sale.
Lxerclse exLlngulshes Lhe underlylng
conLracL of sale, as Lhough Lhere was
never any conLracL aL all
ConsLlLuLes a new sale ln subsLlLuLlon
of Lhe orlglnal sale

#?M:> *?N?QBCL<= a=N?D 3LRL> 3<N?

"Q<=M 3<8]?LD@
"DC. 76JJ.
!A<F>N :=U <G CA? A?LD@ @?>> AL@ A?D?NLC:DU DLMAC@ C< : @CD:=M?D K?G<D? CA?
B:DCLCL<=W :=U <D :>> <G CA? P<8A?LD@ Q:U K? @FKD<M:C?N C< CA? DLMAC@ <G CA?
BFDPA:@?D KU D?LQKFD@L=M ALQ G<D CA? BDLP? <G CA? @:>?W BD<RLN?N CA?U N< @<
;LCAL= CA? B?DL<N <G <=? Q<=CA GD<Q CA? CLQ? CA?U ;?D? =<CLGL?N L=
;DLCL=M <G CA? @:>? KU CA? R?=N<D. d76Zb:e
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

103
$ no rlghL of legal redempLlon avallable Lo co-helrs when sale covers a parLlcular
properLy of Lhe esLaLe
$ Pelrs who parLlclpaLed ln Lhe sale Lo a Lhlrd person of Lhelr shares are bound -
co-helrs who dld noL parLlclpaLe have Lhe rlghL Lo redeem under Lhls arLlcle.
"Q<=M 3<80;=?D@
"DC. 7Z56.
" P<8<;=?D <G : CAL=M Q:U ?X?DPL@? CA? DLMAC <G D?N?QBCL<= L= P:@? CA?
@A:D?@ <G :>> CA? <CA?D P<8<;=?D@ <D <G :=U <G CA?QW :D? @<>N C< : CALDN
B?D@<=. 'G CA? BDLP? <G CA? :>L?=:CL<= L@ MD<@@>U ?XP?@@LR?W CA? D?N?QBCL<=?D
@A:>> B:U <=>U : D?:@<=:K>? <=?.
$ 8lghL of redempLlon may be exerclsed by a co-owner '%+4 when parL of Lhe
communlLy properLy ls sold Lo a 5&-*%0"-:
o When sold Lo anoLher co-owner, Lhere ls no new parLlclpanL.
$ Should Lwo or more co-owners deslre Lo exerclse Lhe rlghL of redempLlon, Lhey
may do so only ln proporLlon Lo Lhe share Lhey have ln Lhe co-owned Lhlng.
$ 8lghL of redempLlon of co-owners excludes ad[olnlng owners.
$GG?PC <G N? S:PC< /:DCLCL<= "Q<=M 3<8]?LD@ :=N 3<80;=?D@
$ vda de Ape v. CA - when helr-co-owners parLlLloned properLy and LreaLed
deflnlLe porLlons as Lhelr own, co-ownershlp has ceased and sale by one of Lhe
helrs of hls deflnlLe porLlon cannoL Lrlgger rlghL of redempLlon
$ Co-ownershlp musL exlsL *& &/" &$." '# &/" 2'%8"4*%2":

(L@CL=MFL@AL=M 4?C;??= CA? *LMAC@ <G *?N?QBCL<= <G 3<8]?LD@ :=N 3<80;=?D@
$ ArL. 1620 lncludes docLrlne LhaL a redempLlon by a co-owner of Lhe properLy
owned ln common, even when hls own fund ls used, wlLhln perlod, lnures Lo
beneflL of all oLher co-owners.
$ ArL. 1088 - helr may redeem for hlmself Lhe heredlLy rlghLs sold by a co-helr.
$ Marlano v. CA - co-helr exerclsed elgal redempLllon over parcel of land
belonglng Lo esLaLe of decedenL -- whlch redempLlon clause Lo apply?
o ulsLlncLlon beLween 1088 and 1620
o When sake of parLlcular properLy or lnLeresL ln properLy, ArL. 1620
o When sale of heredlLary rlghL lLself, ArL. 1088.

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

106

"Q<=M "NO<L=L=M 0;=?D@ <G *FD:> #:=N@
"DC. 7Z57.
)A? <;=?D@ <G :NO<L=L=M >:=N@ @A:>> :>@< A:R? CA? DLMAC <G D?N?QBCL<=
;A?= : BL?P? <G DFD:> >:=NW CA? :D?: <G ;ALPA N<?@ =<C ?XP??N <=? A?PC:D?W
L@ :>L?=:C?NW F=>?@@ CA? MD:=C?? N<?@ =<C <;= :=U DFD:> >:=N.
)AL@ DLMAC L@ =<C :BB>LP:K>? C< :NO:P?=C >:=N@ ;ALPA :D? @?B:D:C?N KU
KD<<T@W ND:L=@W D:RL=?@W D<:N@ :=N <CA?D :BB:D?=C @?DRLCFN?@ G<D CA?
K?=?GLC <G <CA?D ?@C:C?@.
'G C;< <D Q<D? :NO<L=L=M <;=?D@ N?@LD? C< ?X?DPL@? CA? DLMAC <G D?N?QBCL<=
:C CA? @:Q? CLQ?W CA? <;=?D <G CA? :NO<L=L=M >:=N <G @Q:>>?D :D?: @A:>> K?
BD?G?DD?Ng :=N @A<F>N K<CA >:=N@ A:R? CA? @:Q? :D?:W CA? <=? ;A< GLD@C
D?_F?@C?N CA? D?N?QBCL<=. d7I59:e
$ 8oLh Lhe land soughL Lo be redeemed and Lhe properLy belonglng Lo Lhe
redempLloner musL be -7-*+ +*%,5:

"Q<=M "NO<L=L=M 0;=?D@ <G aDK:= #:=N

"DC. 7Z55.
,A?=?R?D : BL?P? <G FDK:= >:=N ;ALPA L@ @< @Q:>> :=N @< @LCF:C?N CA:C :
Q:O<D B<DCL<= CA?D?<G P:==<C K? F@?N G<D :=U BD:PCLP:> BFDB<@? ;LCAL= :
D?:@<=:K>? CLQ?W A:RL=M K??= K<FMAC Q?D?>U G<D @B?PF>:CL<=W L@ :K<FC C<
K? D?8@<>NW CA? <;=?D <G :=U :NO<L=L=M >:=N A:@ : DLMAC <G BD?8?QBCL<= :C :
D?:@<=:K>? BDLP?.
'G CA? D?8@:>? A:@ K??= B?DG?PC?NW CA? <;=?D <G CA? :NO<L=L=M >:=N @A:>>
A:R? : DLMAC <G D?N?QBCL<=W :>@< :C : D?:@<=:K>? BDLP?.
,A?= C;< <D Q<D? <;=?D@ <G :NO<L=L=M >:=N@ ;L@A C< ?X?DPL@? CA? DLMAC <G
BD?8?QBCL<= <D D?N?QBCL<=W CA? <;=?D ;A<@? L=C?=N?N F@? <G CA? >:=N L=
_F?@CL<= :BB?:D@ K?@C OF@CLGL?N @A:>> K? BD?G?DD?N. d=e
$ CrLega v. Crclne - purpose of Lhls provlslon
o ulscourage speculaLlon ln real esLaLe and Lhe aggravanLlon of Lhe houslng
problems
o urban" refers Lo Lhe characLer of Lhe communlLy/vlclnlLy ln whlch lL ls
found.
$ 8edempLlon of urban land only applles when Lhere ls resale
o no rlghL of redempLlon when urban land ls exchanged."
$ Legaspl v. CA - pracLlcally dld away wlLh requlremenL of havlng puchased land
prevlously for speculaLlon
$ Sen o Lk MarkeLlng v. MarLlnez
o 1262 only deals wlLh small urban lands boughL for speculaLlon
o 8lghL does noL apply Lo a lessee Lrylng Lo buy Lhe land he ls leaslng.

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

107
!:>? <G 3D?NLC L= #LCLM:CL<=
"DC. 7Z9H.
,A?= : PD?NLC <D <CA?D L=P<DB<D?:> DLMAC L= >LCLM:CL<= L@ @<>NW CA? N?KC<D
@A:>> A:R? : DLMAC C< ?XCL=MFL@A LC KU D?LQKFD@L=M CA? :@@LM=?? G<D CA? BDLP?
CA? >:CC?D B:LN CA?D?G<DW CA? OFNLPL:> P<@C@ L=PFDD?N KU ALQW :=N CA? L=C?D?@C
<= CA? BDLP? GD<Q CA? N:U <= ;ALPA CA? @:Q? ;:@ B:LN.
" PD?NLC <D <CA?D L=P<DB<D?:> DLMAC @A:>> K? P<=@LN?D?N L= >LCLM:CL<= GD<Q CA?
CLQ? CA? P<QB>:L=C P<=P?D=L=M CA? @:Q? L@ :=@;?D?N.
)A? N?KC<D Q:U ?X?DPL@? AL@ DLMAC ;LCAL= CALDCU N:U@ GD<Q CA? N:C? CA?
:@@LM=?? N?Q:=N@ B:UQ?=C GD<Q ALQ.
,A?= #?M:> *?N?QBCL<= /?DL<N 4?ML=@ C< *F=
"DC. 7Z59.
)A? DLMAC <G >?M:> BD?8?QBCL<= <D D?N?QBCL<= @A:>> =<C K? ?X?DPL@?N ?XP?BC
;LCAL= CALDCU N:U@ GD<Q CA? =<CLP? L= ;DLCL=M KU CA? BD<@B?PCLR? R?=N<DW <D
KU CA? R?=N<DW :@ CA? P:@? Q:U K?. )A? N??N <G @:>? @A:>> =<C K? D?P<DN?N
L= CA? *?ML@CDU <G /D<B?DCUW F=>?@@ :PP<QB:=L?N KU := :GGLN:RLC <G CA?
R?=N<D CA:C A? A:@ MLR?= ;DLCC?= =<CLP? CA?D?<G C< :>> B<@@LK>?
D?N?QBCL<=?D@.
)A? DLMAC <G D?N?QBCL<= <G P<8<;=?D@ ?XP>FN?@ CA:C <G :NO<L=L=M <;=?D@.
$ Cabrera v. vlllanueva
o CourL accepLed affldavlL saylng LhaL seller gave wrlLLen noLlce Lo co-
owners as proof of compllance wlLh 1623.
$ rlmary SLrucLures Corp v. valencla
o Afflrmed need for sLrlcL compllance wlLh 1623.
o LxlsLence of a clause ln deed of sale saylng LhaL seller had complled ls noL
Lhe wrlLLen afflrmaLlon under ouaLh LhaL Lhe requlred noLlce has been
meL - Lhus lL was noL deemed Lo be ln compllance wlLh 1623.
$ CLv : rlmary SLrucLures ls Lhe beLLer rule - why?
$ 8uLLe v. Manuel uy and Sons lnc.
o noLlce musL be glven by Lhe seller
o noLlce glven by Lhe buyer, even lf wrlLLen, does noL sLarL Lhe 30 day
perlod.
$ CasLlllo v. SamonLe
o LeLLer and splrlL of law argue agalnsL a wlder scope of Lhe noLlce speclfled
ln ArL. 1088.
o WrlLLen noLlce ls essenLlal Lo sLarL Lhe runnlng of Lhe 30 day perlod.
$ Cone[ero v. CA
o Any compllance wlLh wrlLLen noLlce sufflces - no speclflc mode
$ Carcla v. Calallman
o Applled SamonLe docLrlne Lo 1623.
o WrlLLen noLlce ls lndlspensable ln order Lo remove all uncerLalnLy as Lo
Lhe sale.
o MeLhod of noLlflcaLlon ls excluslve - musL be ln wrlLlng - buL no speclflc
form.
$ vda de Ape v. CA
o AnnoLaLlon of adverse clalm on LlLle does noL comply wlLh arL 1623.
1) Notice Nust Covei Peifecteu Sale
$ Spouses uoromal v. CA
o 30 day perlod does noL run when LransacLlon covered ln noLlce was noL a
perfecLed conLracL of sale
o noLlce musL be wlLh execuLlon and dellvery of Lhe deed of sale.
o erlod should noL be deemed Lo have commenced unless noLlce ls made
afLer execuLlon of formal deed of dlsposal.
$ 1hls docLrlne cannoL be applled Lo legal pre-empLlon.
2) Summation on Stiict Rules on Notice
$ Permoso v. CA
o noLlce ln wrlLlng ls needed ln 3 oLher specles of legal redempLlon
! Case where share of co-owners are sold Lo a Lhlrd person
! 8edempLlon of ad[olnlng rural land
! 8edempLlon of ad[olnlng urban land
o lnLerpreLaLlon ln Lhese cases LllLs ln favor of Lhe redempLloner
o WrlLLen noLlce requlred was enacLed Lo remove all doubLs abouL Lhe
allenaLlon.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

108
$ lranclsco v. 8olser - 8equlremenLs under ArL 1623
o noLlce musL be glven by 5"++"- ln order for 30 day redempLlon perlod Lo
run.
o no parLlcular form ls prescrlbed.
o llllng of sulL for e[ecLmenL or collecLlon of renLals dlspenses wlLh need for
wrlLLen noLlce - flllng of Lhe sulL amounLs Lo acLual knowledfge of Lhe
sale.
$ lernandez v. 1arun
o CLher co-owner slgns deed of parLlLlon embodylng dlsposlLlon of properLy
- proper noLlce.
S) Exceptions to Wiitten Notice Requiiement
$ Alonzo v. lAC - excepLlon Lo 1088
o SlLuaLlon where co-helrs llved wlLh purchaser ln Lhe same loL
! AcLlon was broughL only afLer 13 years of knowlng abouL Lhe
same
o ueemed Lo have recelved acLual noLlce of Lhe same. (even lf no wrlLLen
noLlce)
o Laches seems Lo be Lhe maln prlnclpal.
$ llapll v. CA
o 8equlremenL of wrlLLen noLlce was rendered lnuLlle when no co-owners
quesLloned Lhe sale, even when buyers lmmedlaLely Look possesslon.
$ ulsLrlLo v. CA - LxcepLlon Lo Lhe Alonzo LxcepLlon
o When co-owner hlmself ls mlddleman Lo effecL sale Lo Lhlrd parLy, noLlce
ls no longer necessary
o Pe already has acLual knowledge of Lhe sale
o 30 day perlod beglns from such knowledge
$ verdad v. CA - Alonzo and ulsLrlLo are speclal excepLlons
o Co-owner learned of Lhe sale Lhrough clLy Lreasurer
o Per exerclse of rlghL of redempLlon was Llmely : no wrlLLen noLlce of sale
was ever glven Lo her, Lhus Lhe 30 day perlod had noL yeL run.

0CA?D '=@C:=P?@ ;A?D? *LMAC <G #?M:> *?N?QBCL<= L@ 2D:=C?N
a. Reuemption of Bomesteaus
!?P. 77V ` /FK>LP #:=N "PC
$R?DU P<=R?U:=P? <G >:=N :P_FLD?N F=N?D CA? GD?? B:C?=C <D A<Q?@C?:N
BD<RL@L<=@W ;A?= BD<B?DW @A:>> K? @FKO?PC C< D?BFDPA:@? KU CA? :BB>LP:=CW
AL@ ;LN<;W <D >?M:> A?LD@W ;LCAL= : B?DL<N <G GLR? U?:D@ GD<Q CA? N:C? <G CA?
P<=R?U:=P?.

$ Sale wlLhln 3 years vold even when ln favor of homesLeader's own chlld.
$ 8lghL Lo repurchase under homesLead paLenL granLed by law
o need noL be provlded for ln deed of sale.
o CannoL be walved.
$ Where homesLead was sold aL exLra[udlclal foreclosure, 3 year perlod beglns Lo
run afLer explraLlon of one year perlod of repurchase allowed ln exLra[udlclal
foreclosure.
$ All oLher cases - from daLe of sale, noL from daLe of reglsLraLlon.
$ Sec 119 of ubllc Land acL should be read wlLh 1616 of nCC - Lhere should be a
reLurn of Lhe prlce/Lender of paymenL.
o Mere noLlce of lnLnenL Lo redeem ls lnsufflclenL.
b. Reuemption in Tax Sales
!$3. 57H ` 1'*3 88 *?N?QBCL<= <G /D<B?DCU !<>N.
,LCAL= <=? d7e U?:D GD<Q CA? N:C? <G @:>?W CA? N?>L=_F?=C C:XB:U?DW <D :=U
<=? G<D ALQW @A:>> A:R? CA? DLMAC <G B:UL=M C< CA? *?R?=F? (L@CDLPC 0GGLP?D
CA? :Q<F=C <G CA? BFK>LP C:X?@W B?=:>CL?@W :=N L=C?D?@C CA?D?<= GD<Q CA?
N:C? <G N?>L=_F?=PU C< CA? N:C? <G @:>?W C<M?CA?D ;LCA L=C?D?@C <= @:LN
BFDPA:@? BDLP? m )A? <;=?D @A:>> =<CW A<;?R?DW K? N?BDLR?N <G CA?
B<@@?@@L<= <G CA? @:LN BD<B?DCU :=N @A:>> K? ?=CLC>?N C< CA? D?=C@ :=N <CA?D
L=P<Q? CA?D?<G F=CL> CA? ?XBLD:CL<= <G CA? CLQ? :>><;?N G<D LC@ D?N?QBCL<=.

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

109

c. Reuemption by }uugment Bebtoi
u. Reuemption in Extiajuuicial Foieclosuie
e. Reuemption in }uuicial Foieclosuie
f. Foieclosuies by Banking Institutions
g. Peiiou of Reuemption when iuial bank foiecloses
h: legal iight to ieueem unuei Agiaiian Refoim Coue

3A:BC?D 7H ` "@@LM=Q?=C
W*&7-" '# C55$0%."%& $% &/" )2/"." '# D/$%05
"DC. 7Z5H.
"= :@@LM=Q?=C <G PD?NLC<D@ :=N <CA?D L=P<DB<D?:> DLMAC@ @A:>> K? B?DG?PC?N
L= :PP<DN:=P? ;LCA CA? BD<RL@L<=@ <G "DCLP>? 7HbI. d=e
$ AsslgnmenL : Lhe sale of credlLs and oLher lncorporeal rlghLs.
$ 1hough lnLanglble Lhlngs may be Lhe ob[ecL of sale as deflned ln ArL. 1438, Lhe
more proper Lerm ls asslgnmenL."
$ AsslgnmenL, more or less, ls Lhe same as sale - why Lhen do we have a separaLe
chapLer ln our Clvll Code?
o Lven Lhough Lhey're noL Lechnlcally Lhe same, Lhey come from Lhe same
genus - sale"
$ WhaL's Lhe polnL? - characLerlsLlcs of Lhe genus sale" musL necessarlly perLaln
Lo asslgnmenL
o All [urlsprudenLlal docLrlnes perLalnlng Lo sale perLaln Lo asslgnmenL, wlLh
some modlflcaLlons.
$ AsslgnmenL shares characLerlsLlcs of sale
o nomlnaLe
o Consensual
o 8eclprocal
o Cnerous
! Powever - nyco v. 8A llnance - AsslgnmenLs may be done
graLulLously or onerously
o CommuLaLlve
$ Some deflnlLlons of AsslgnmenL
o rlor Lo new Clvll Code, asslgnmenL was noL llmlLed Lo Lhe genus of sale -
lL could be daLlon, or donaLlon, eLc.
o Powever, wlLh Lhe provlslons of Lhe nCC, Lhere should be llLLle doubL -
asslgnmenL should only cover sales" of credlLs (however : see nyco)
o LxcepL ln case of donaLlon, Lhe LransacLlon of asslgnmenL ls sLlll covered
by Lhe law on sales.
! AsslgnmenL by daLlon
! AsslgnmenL by barLer
! AsslgnmenL of credlL as guaranLy (morLgage conLracL)
V/*& B*F"5 C55$0%."%& !$##"-"%&b
$ n8 v. CA - characLerlzed asslgnmenL
o 1ransfer or maklng over Lo anoLher of Lhe whole of any proeprLy, real or
personal, ln possesslon or ln acLlon, or of any esLaLe or rlghL Lhereln.
o lncludes Lransfers of all klnds.pecullarly appllcable Lo lnLanglble personal
properLy
o Crdlnarlly employed Lo descrlbe Lhe Lrasnfer of non-negoLlable choses ln
acLlon and rlghLs connecLed wlLh properLy dlsLlngulshed from Lhe acLual
lLem
$ n8 v. CA lmplles LhaL asslgnmenL may also refer Lo Langlble properLy
o CLv: roperly speaklng, such ls a sale, noL an asslgnmenL.
+:>LNLCU :=N 4L=NL=M $GG?PC
$ Sub[ecL maLLer of asslgnmenL : lnLanglble properLy
o Maln dlfference of asslgnmenL from sale
$ Consensual conLracL - perfecLed Lhe same as sale.
o Conflrmed by ArL. 1624. ln accordance wlLh ArL. 1473."
o AsslgnmenL does noL cover donaLlon lnvolvlng lnLanglbles
! uonaLlons = formal conLracLs
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

110
$ Any amblgulLy ln Lhe meanlng of an asslgnmenL shall be resolved agalnsL Lhe
parLy who prepared Lhe deed of asslgnmenL.
4L=NL=M $GG?PC :@ C< )ALDN /:DCL?@
$ 8lndlng effecL as Lo Lhlrd persons noL presenL unless lL appears ln a publlc
documenL, or ln Lhe 8eglsLry of roperLy lf real rlghLs are asslgned.
$ 8emember, asslgnmenL deals wlLh lnLanglble properLy : Lhe only evldence as Lo
Lhe Lransfer ls Lhe publlc lnsLrumenL
$ WlLhouL Lhe publlc lnsLrumenL, asslgnmenL ls valld
o 8uL enforceable only beLween asslgnor and asslgnee, and Lhelr successors
ln lnLeresL
$ When asslgnmenL ls sLlll execuLory (noL evldenced ln wrlLlng) lL ls covered by
Lhe SLaLuLe of lrauds.
$ LxcepLlon : When asslgnmenL lnvolves documenL of LlLle
o AsslgnmenL does noL blnd Lhe ballee 7%+"55 speclflc noLlce of Lhe Lransfer
of Lhe coverlng documenL of LlLle ls glven by Lransferor/Lransferee Lo Lhe
ballee
$GG?PC <G "@@LM=Q?=C <G 3D?NLC <= (?KC<D
$ C&C Commerclal v. n8
o MeeLlng of Lhe mlnds : beLween asslgnor and asslgnee
o uebLor's consenL noL necessary
o lL ls sufflclenL LhaL Lhe asslgnmenL be broughL Lo Lhe debLor's knowledge
ln order Lo be blndlng
$ uebLor's consenL noL needed for asslgnmenL Lo produce legal effecLs
o uuLy Lo pay asslgnee does noL depend on debLor's consenL
o CLherwlse, credlLors would have a hard Llme asslgnlng credlL.
o urpose of noLlce : only Lo lnform debLor LhaL he should pay someone
else, noL Lhe orlglnal credlLor.
$ 1hls change ls a novaLlon - however, llablllLy ls noL exLlngulshed.
$ Lven Lhough knowledge/consenL of debLor ls noL requlred for valldlLy of Lhe
asslgnmenL, lack of such has effecLs
o When a credL ls asslgned, lf Lhe debLor pays hls credlLor because he dldn'L
know of Lhe asslgnmenL, hls paymenL shall release hlm from furLher
obllgaLlons (ArL 1626, CC)
22

o ArL. 1283 - asslgnmenL of rlghLs made by credlLor Lo 3
rd
person wlLhouL
knowledge of debLor
! uebLor may seL up agalnsL Lhe asslgnee Lhe 2'.1"%5*&$'%
perLalnlng Lo hlm agalnsL Lhe asslgnor
All credlLs 1-$'- Lo Lhe asslgnmenL
All laLer ones 7%&$+ he had knowledge of Lhe
asslgnmenL.
! lf debLor consenLed Lo such asslgnmenL : he cannoL seL up
such compensaLlon unless debLor reserved Lhe rlghL
! lf he had knowledge, buL no consenL : he may seL up
compensaLlon of prevlous debLs, buL noL subsequenL ones
)D:=@G?D <G 0;=?D@ALB
$ ro[ecL 8ullders v. CA - asslgnmenL of credlL : Lransferrlng rlghL Lo an asslgnee
who could proceed agalnsL prlnclpal debLor
o 1ransfer Lakes place on perfecLlon of conLracL
$ CLv ulsagrees : AsslgnmenL ls also noL a mode, buL only a LlLle.
o 1hus Lhe Lransfer does noL Lake place on perfecLlon.
o lL should be effecLed Lhe same way as sale - consLrucLlve dellvery, llke
execuLlng a publlc lnsLrumenL.
o LffecLs of LradlLlon of sale ln general should also apply
! LxcepL LhaL docLrlnes on acLual/physlcal dellvery have no
appllcaLlon
$ ArL 1308 of Clvll Code supporLs Lhls - placlng of LlLles of lncorporeal rlghLs ln
possesslon of vendee ls equal Lo dellvery

22
ArL. 1626. 1he debLor who, before havlng knowledge of Lhe
asslgnmenL, pays hls credlLor shall be released from Lhe obllgaLlon.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

111
o Powever, wlLhouL reglsLraLlon/execuLlon ln a publlc lnsLrumenL, such
dellvery would noL blnd Lhlrd parLles.
$ Leonldo v. CaplLol uev Corp - %'&*-$P*&$'% of Lhe asslgnmenL of credlL
converLed lnLo a publlc documenL
a. Accessoiies anu Accessions
$ AsslgnmenL of credlL lncludes all accessory rlghLs (ArL. 1627)
o CuaranLy
o MorLgage
o ledge
o reference
b. Waiianties
"DC. 7Z5J.
)A? R?=N<D L= M<<N G:LCA @A:>> K? D?@B<=@LK>? G<D CA? ?XL@C?=P? :=N >?M:>LCU
<G CA? PD?NLC :C CA? CLQ? <G CA? @:>?W F=>?@@ LC @A<F>N A:R? K??= @<>N :@
N<FKCGF>g KFC =<C G<D CA? @<>R?=PU <G CA? N?KC<DW F=>?@@ LC A:@ K??= @<
?XBD?@@>U @CLBF>:C?N <D F=>?@@ CA? L=@<>R?=PU ;:@ BDL<D C< CA? @:>? :=N <G
P<QQ<= T=<;>?NM?.
$R?= L= CA?@? P:@?@ A? @A:>> <=>U K? >L:K>? G<D CA? BDLP? D?P?LR?N :=N G<D
CA? ?XB?=@?@ @B?PLGL?N L= 1<. 7 <G "DCLP>? 7Z7Z.
)A? R?=N<D L= K:N G:LCA @A:>> :>;:U@ K? :=@;?D:K>? G<D CA? B:UQ?=C <G :>>
?XB?=@?@W :=N G<D N:Q:M?@. d7I5Ve
"DC. 7Z5V.
'= P:@? CA? :@@LM=<D L= M<<N G:LCA @A<F>N A:R? Q:N? ALQ@?>G D?@B<=@LK>?
G<D CA? @<>R?=PU <G CA? N?KC<DW :=N CA? P<=CD:PCL=M B:DCL?@ @A<F>N =<C A:R?
:MD??N FB<= CA? NFD:CL<= <G CA? >L:KL>LCUW LC @A:>> >:@C G<D <=? U?:D <=>UW
GD<Q CA? CLQ? <G CA? :@@LM=Q?=C LG CA? B?DL<N A:N :>D?:NU ?XBLD?N.
'G CA? PD?NLC @A<F>N K? B:U:K>? ;LCAL= : C?DQ <D B?DL<N ;ALPA A:@ =<C U?C
?XBLD?NW CA? >L:KL>LCU @A:>> P?:@? <=? U?:D :GC?D CA? Q:CFDLCU. d7I96:e

$ WarranLy agalnsL hldden defecLs does noL apply Lo an lnLanglble - no physlcal
exlsLence
$ Asslgnor responslble for exlsLence and legallLy of credlL, aL Lhe Llme of sale.
o unless lL was really sold as a doubLful accounL
$ Asslgnor does noL warranL Lhe solvency of Lhe debLor, unless
o 1here ls a sLlpulaLlon Lo LhaL effecL, or
o lnsolvency of Lhe debLor was prlor Lo Lhe asslgnmenL and of common
knowledge
$ Lven when Lhere ls a warranLy as Lo Lhe debLor's solvency, lL doesn'L lasL
forever
o 1 year from Lhe asslgnmenL, lf credlL was already due
o CLherwlse, 1 year from Lhe maLurlLy of Lhe credlL
$ lf asslgnor ln good falLh ls llable for a warranLy
o Cnly expenses of Lhe conLracL
o CLher leglLlmaLe paymenLs made by reason of asslgnmenL
$ lf asslgnor was ln bad falLh, and he breached warranLles
o AddlLlonal llablllLy for necessary and useful expenses
$ Lo v. k!S
o When daclon Lakes Lhe form of an asslgnmenL of credlL (whlch ls ln Lhe
naLure of a sale) lL exLlngulshes Lhe obllgaLlon
o Powever, asslgnor/seller sLlll warranLs Lhe exlsLence and legallLy of Lhe
credlL.
$ CLher speclflc warranLles
o ArLs. 1631-1633.

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

112
C55$0%."%& '# ;-",$& $% L$&$0*&$'%
"DC. 7Z9H.
,A?= : PD?NLC <D <CA?D L=P<DB<D?:> DLMAC L= >LCLM:CL<= L@ @<>NW CA? N?KC<D
@A:>> A:R? : DLMAC C< ?XCL=MFL@A LC KU D?LQKFD@L=M CA? :@@LM=?? G<D CA? BDLP?
CA? >:CC?D B:LN CA?D?G<DW CA? OFNLPL:> P<@C@ L=PFDD?N KU ALQW :=N CA? L=C?D?@C
<= CA? BDLP? GD<Q CA? N:U <= ;ALPA CA? @:Q? ;:@ B:LN.
" PD?NLC <D <CA?D L=P<DB<D?:> DLMAC @A:>> K? P<=@LN?D?N L= >LCLM:CL<= GD<Q CA?
CLQ? CA? P<QB>:L=C P<=P?D=L=M CA? @:Q? L@ :=@;?D?N.
)A? N?KC<D Q:U ?X?DPL@? AL@ DLMAC ;LCAL= CALDCU N:U@ GD<Q CA? N:C? CA?
:@@LM=?? N?Q:=N@ B:UQ?=C GD<Q ALQ. d7I9Ie
$ 8eason for Lhe rule on asslgnmenLs ln lltls peoJeoclo
o Such are deemed speculaLlve
o Law would raLher beneflL Lhe debLor, Lhan Lhe one who merely speculaLes
for proflL
o lf asslgnor ls wllllng Lo dlspose of Lhe credlL aL a low prlce, debLor should
beneflL
$ 8lghL Lo redeem on debLor's parL shall noL exlsL when Lhe law conslders Lhe
asslgnmenL as noL for speculaLlon. L.g.,
o AsslgnmenL of credlL Lo Lhe co-helr or co-owner of such credlL/rlghL
o AsslgnmenL Lo a credlLor ln paymenL for hls own credlL, and
o AsslgnmenL Lo Lhe possessor of a LenemenL/plece of land whlch ls sub[ecL
Lo Lhe rlghL ln llLlgaLlon LhaL was asslgned
$ ln Lhe foregolng cases, asslgnee has a leglLlmaLe purpose for Laklng Lhe
asslgnmenL - noL merely speculaLlon
(LGG?D?=CL:CL=M GD<Q !FKD<M:CL<=
$ Llcaros v. CaLmalLan - ulfferences beLween asslgnmenL and subrogaLlon
SubrogaLlon AsslgnmenL
LxLlngulshes orlglnal obllgaLlon, glves
rlse Lo a new one
Same rlghL passed from one person Lo
anoLher
nulllLy of an old obllgaLlon may be cured nulllLy of obllgaLlon noL remedled
by subrogaLlon (new one ls valld) Lhrough asslgnmenL
AgreemenL requlred beLween orlglnal
parLles and new credlLor
ConsenL of debLor noL requlred Lo
produce legal effecLs

$ LxLlngulshmenL of old obllgaLlon ls an effecL of convenLlonal subrogaLlon, noL a
requlremenL.
C55$0%."%& '# ;'14-$0/&
$ Cwner of copyrlghL may asslgn lL ln whole or ln parL
o Asslgnee enLlLled Lo all rlghLs and remedles whlch asslgnor had wlLh
respecL Lo copyrlghL
$ noL deemed asslgned lnLer vlvos unless Lhere ls wrlLLen lndlcaLlon of such
lnLenLlon
$ Submlsslon of a work Lo a newspaper or magazlne for publlcaLlon shall
consLlLuLe an asslgnmenL
o 8uL only for one publlcaLlon
o unless a greaLer rlghL ls granLed
$ 1wo or more persons [olnLly own a copyrlghL
o ConsenL of oLher owners ls needed for an owner Lo granL llcenses
$ CopyrlghL ls dlsLlncL from properLy sub[ecL Lo lL
o 1ransfer of copy rlghL ls noL Lransfer of maLerlal ob[ecL
o ln Lhe same way, Lransfer of Lhe work does noL lmply asslgnmenL of Lhe
copyrlghL.
C55$0%."%& *5 @67$&*9+" B'-&0*0"
$ AsslgnmenL of lnLanglbles may be used Lo secure loans
$ rlnclples perLalnlng Lo LqulLable MorLgage wlll apply
$ u8 v. CA
o AsslgnmenL Lo secure paymenL of promlssory noLes
o Such ls equlvalenL Lo an equlLable morLgage
o 1hus, nonpaymenL of loan cannoL auLhorlze asslgnee Lo reglsLer Lhe
asslgned rlghLs ln hls name - acLum Commlssorlum

!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

113
3A:BC?D 7I ` 4F>T !:>?@ #:;
$ lnLended as a specles of bankrupLcy law Lo proLecL supply
credlLors/buslnessmen agalnsL preferenLlal/fraudulenL Lransfers done by
merchanLs
$ lnLended Lo prevenL a slLuaLlon where merchanLs would sell Lhelr buslnesses
Lhen vanlsh, leavlng Lhelr credlLors wlLhouL recourse agalnsL Lhe buyers ln
good falLh and for value."
$ Law covers all LransacLlons, good falLh or noL, LhaL are wlLhln Lhe descrlpLlon of
a bulk sale"
$ rlmary Cb[ecLlve - compel seller ln bulk Lo.
o execuLe and dellver a verlfled llsL of credlLors Lo Lhe buyer
o glve noLlce of Lhe lnLended sale Lo Lhe credlLors
o use Lhe proceeds Lo pay ouLsLandlng llablllLles
D-*%5*2&$'%5 2'8"-", 94 &/" +*E
!?P. 5. !:>? :=N CD:=@G?D L= KF>T. n "=U @:>?W CD:=@G?DW Q<DCM:M? <D
:@@LM=Q?=C <G : @C<PT <G M<<N@W ;:D?@W Q?DPA:=NL@?W BD<RL@L<=@W <D
Q:C?DL:>@ <CA?D;L@? CA:= L= CA? <DNL=:DU P<FD@? <G CD:N? :=N CA? D?MF>:D
BD<@?PFCL<= <G CA? KF@L=?@@ <G CA? R?=N<DW Q<DCM:M<DW CD:=@G?D<DW <D
:@@LM=<DW <D @:>?W CD:=@G?DW Q<DCM:M? <D :@@LM=Q?=C <G :>>W <D @FK@C:=CL:>>U
:>>W <G CA? KF@L=?@@ <D CD:N? CA?D?C<G<D? P<=NFPC?N KU CA? R?=N<DW
Q<DCM:M<DW CD:=@G?D<DW <D :@@LM=<DW <D <G :>>W <D @FK@C:=CL:>>U :>>W <G CA?
GLXCFD?@ :=N ?_FLBQ?=C F@?N L= :=N :K<FC CA? KF@L=?@@ <G CA? R?=N<DW
Q<DCM:M<DW CD:=@G?D<DW <D :@@LM=<DW @A:>> K? N??Q?N C< K? : @:>? :=N
CD:=@G?D L= KF>TW L= P<=C?QB>:CL<= <G CAL@ "PCE /D<RLN?NW A<;?R?DW )A:C LG
@FPA R?=N<DW Q<DCM:M<DW CD:=@G?D<D <D :@@LM=<DW BD<NFP?@ :=N N?>LR?D@ :
;DLCC?= ;:LR?D <G CA? BD<RL@L<=@ <G CAL@ "PC GD<Q AL@ PD?NLC<D@ :@ @A<;= KU
R?DLGL?N @C:C?Q?=C@W CA?=W :=N L= CA:C P:@?W CA? BD<RL@L<=@ <G CAL@ @?PCL<=
@A:>> =<C :BB>U.
$ 1hree 1ypes of 1ransacLlon
o LxLraordlnary sale of goods
o LxLraordlnary sale of flxLures and equlpmenL
o Sale of 8uslness LnLerprlse
$ MoLlve/lnLenLlon/consequence of sale ls noL an elemenL
o As long as Lhe LransacLlon ls wlLhln Lhe descrlpLlon, no maLLer whaL lL's
belng done for, lL ls covered by Lhe 8ulk Sales Law.
$ CuallflcaLlon of ln Lhe normal course of buslness" applles '%+4 Lo Lhe flrsL Lype
o Second Lwo Lypes are by naLure noL ln Lhe normal course of buslness
$ 8ulk sales are of a naLure LhaL Lhey do noL fall wlLhln Lhe normal course, whlch
Lhus should warn parLles Lo such LransacLlons
[4F>T !:>?@\ =<C 3<R?D?N KU #:;
$ Some excepLlons : even lf LransacLlon comes wlLhln Sec. 2, 8ulk Sales Law does
noL apply Lo Lhese cases
o Seller produces and dellvers a wrlLLen walver of Lhe provlslons of Lhe Law
from hls credlLors as shown by verlfled sLaLemenLs, and
o 1ransacLlons effecLed by execuLors, admlnlsLraLors, recelvers, asslgnees ln
lnsolvency, or publlc offlcers, acLlng under legal process.
[4F@L=?@@\ 3<R?D?N KU CA? #:;
$ eople v. Wong
o 8ulk sales law should be consLrued sLrlcLly agalnsL Lhe SLaLe and ln favor
of Lhe accused
o ln Lhls case, accused was held llable for selllng hls foundry shop, along
wlLh all oLher asseLs
o SC : 8ulk Sales Law conLemplaLes sale of merchandlse, sLock, and goods -
noL Lhe sale of Lhe whole shop wlLh Lhe equlpmenL, credlLs, eLc.
o loundry shop whlch does noL sell merchandlse ls noL uncluded.
$ Meanlng of merchandlse and SLock
o Merchandlse : someLhlng sold everyday, golng ln and ouL of Lhe sLore,
replaced by oLher goods - Lhlngs usually boughL and sold ln Lrade by
merchanLs
o SLock : Lhose goods kepL for sale.
$ u8 v. 81C - relLeraLed Lhe Wong rullng re : appllcablllLy Lo bulk sales noL
lnvolvlng merchandlse and sLock.
$ 1hus - enumeraLlon ln Lhe flrsL Lype of bulk sales : only covers Lhose sold ln Lhe
normal course of buslness.
o Wong : sale of flxLures and equlpmenL" excludes maLerlals used ln Lhe
process of producLlon.
$ Powever, Wong and u8 rullngs seem only Lo lnLerpreL Lhe flrsL Lype
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

114
o When lL comes Lo Lhe oLher Lwo Lypes, law does noL llmlL Lhe coverage Lo
a parLlcular Lype of buslness.
o We do noL conslder Lhe Wong and u8 rullngs when lL comes Lo Lhe oLher
Lwo Lypes of 8ulk sales
A9+$0*&$'%5 '# )"++"-\@%27.9-*%2"- V/"%
D-*%5*2&$'% $5 * K7+F )*+"
$ See SecLlons 3-7 of Lhe 8ulk Sales Law.
;'%5"67"%2"5 '# N$'+*&$'% '# &/" L*E
$ Sec 11 : lmprlsonmenL of noL less LhaL 6 monLhs, noL more Lhan 3 years, w/ flne
noL exceedlng 3,000.
$ We evaluaLe Lhe effecLs of breaklng Lhe law from 3 dlfferenL sLandpolnLs : on
Lhe LransacLlon lLself, on Lhe seller, on Lhe buyer.
$ Cn Lhe 1ransacLlon lLself
o lf sworn llsLlng of credlLors ls noL prepared, or lf Lhe proceeds are noL
applled Lo Lhem, Lhe sale shall be fraudulenL and vold.
o 1hls ls noL merely a presumpLlon : lL ls ln facL LreaLed as vold
o no legal effecLs arlse from Lhe LransacLlon
! no rlghL of acLlon accrues
o 1hus, Lhe sub[ecL maLLer ls sLlll owned by Lhe asslgnor, and sLlll sub[ecL Lo
Lhe saLlsfacLlon of hls llablllLles
o eople v. Mapoy
! Sale ls vold, buL Lhe relaLlonshlp beLween seller and credlLor
ls unchanged.
! roper remedy of credlLor ls Lo collecL on Lhe credlL agalnsL
Lhe defendanL, and lf he cannoL pay, Lo aLLach on Lhe
properLy fraudulenLly sold/morLgaged
o lallure Lo make an advanced wrlLLen dlsclosure Lo credlLors does noL
render Lhe sale fraudulenL and vold
o Legal consequences of a sale ln 8ulk for nomlnal value
! Law declares lL unlawful, buL noL fraudulenL and vold
! Powever, lf Lhere was no oLher valuable conslderaLlon, we
have Lo declare lL vold for lack of cause/conslderaLlon
$ Cn Seller/MorLgagor/Asslgnor
o vlolaLlon of hls obllgaLlons Lo prepare a llsL of credlLors and apply Lhe
proceeds of Lhe sale Lo Lhese credlLors sub[ecLs hlm Lo crlmlnal llablllLy.
o Sworn sLaLemenL should be reglsLered wlLh u1l
! noncompllance wlLh Lhls does noL affecL valldlLy nor does lL
sub[ecL hlm Lo crlmlnal penalLy
o lf Lhe llsL does noL lnclude all names of credlLors, or wlLh wrong amounLs,
lL sub[ecLs hlm Lo crlmlnal llablllLy
o lallure Lo dellver advance noLlce does noL sub[ecL hlm Lo crlmlnal llablllLy.
o 1o sell Lhe sLocks/goods/merchandlse for no conslderaLlon, or for
nomlnal conslderaLlon only, sub[ecL seller Lo crlmlnal llablllLy.
$ Cn 8uyer/MorLgagee/1ransferee
o no dlrecL obllgaLlon
o lL can be sald LhaL no crlmlnal llablllLy aLLaches Lo Lhe buyers
! Some argue LhaL Lhey are prlnclpals by lndlspensable
cooperaLlon, lf Lhey were aware of Lhe lnLenL/consplred wlLh
Lhe seller
o 1here are sLlll effecLs Lhough - recall : sale may be rendered fraudulenL
and vold
! 1hus, he would flnd hlmself noL enLlLled Lo Lhe Lhlngs he pald
for.
! Pe may also be sued for recovery of whaL he has obLalned.
! Pe may also be llablle for damages for havlng helped defraud
credlLors.
!"#$! &'()$*&! *$+'$,$* "))-. *"- /"0#0 !"1)'"20 3*0&401(! 567585679

113

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