S A L E S

CONTRACT OF SALE:

Art. 1458
1
is the heart and soul of the contract of sale. It is where the
definition of a contract of sale is derived: A contract of sale is an agreement whereby
a party called the seller (vendor) obligates himself to deliver and transfer the
ownership of a determinate thing to another party called the buyer (vendee) who in
turn obligates himself to pay therefor, a price certain in money or its equivalent to the
former.

Phases or Stages:



Characteristics or Features:


Elements:

1
Art. 1458. By the contract of sale, one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or
its equivalent.
A contract of sale may either be absolute or conditional.

PREPARATION,
CONCEPTION OR
GENERATION
period of negotiation and
bargaining, ending at the
moment of agreement of
the parties
PERFECTION
birth of the contract
CONSUMMATION OR
DEATH
fulfillment or
performance of the terms
agreed upon the contract
B I L A T E R A L both parties are obliged to fulfil reciprocal obligations to one another.
CONSENSUAL perfected by mere consent.
COMMUTATIVE thing sold is considered the equivalent of the price paid and the price
paid is the equivalent of the thing sold.
ONE R OU S thing sold is conveyed in consideration of the purchase price n the purchase
price is paid in consideration of the conveyance of the thing delivered.
P R I NC I P A L - its existence does not depend upon the existence and validity of another
contract.
NOMI NA T E it has specific name given by law sale.
2


CAPACITY TO BUY AND SELL

GENERAL RULE: EXCEPTIONS:

All persons who
are authorized by
the Civil Code to
enter into a
contract and to
obligate
themselves, may
also enter into a
contract of sale (Art
1489).

In case of
necessaries sold
and delivered to
minors or others
persons without
capacity to act,
the sale is
considered valid by
way of exception
and should be paid
by the minor or
incapacitated
person for a
reasonable price.


The husband and the wife are prohibited to sell property to
each other (Art 1490), except:
(1) When a separation of property was agreed upon in the
marriage settlements; or
(2) When there has been judicial separation of property under
Art 191.
This provision also applies to common law husband and wife.


Other trust relationships in which sale is prohibited:
(1) Guardian/Agents/Executors and Administrators
a. Direct or indirect
b. May be ratified since only private wrong is involved
(2) Public Officers and Employees/Officers of the Court
a. Cannot be ratified since public wrong is involved.
b. Requisites for the prohibition to apply to lawyers:
i. Existence of attorney-client relationship
ii. Property is the subject matter in litigation
iii. Prohibition applies while the subject is in litigation
(from filing of complaint to final judgment)
Exception: Contingent fee arrangement where
amount of legal fees is based on a value of property
in litigation.

The prohibitions in the two preceding articles are applicable to
sales in legal redemption, compromises and renunciations
(Art 1492).


RAMIFICATIONS: PARTIES TO A CONTRACT OF SALE

VENDOR VENDEE

Obligations:

(1) Transfer the ownership and to
deliver a determinate thing
(Art. 1458).
(2) Bound to transfer the ownership of
and deliver, as well as warrant the

Obligations:

(1) Pay the price of the thing certain in
money or its equivalent (Art. 1458).

(2) Bound to accept delivery and pay
the price of the thing (Art. 1582).
E S S E NT I A L
Meeting of the minds of the
parties (vendor & vendee)
Object (certain &
determinate)
Price certain.
NA T U R A L
Warranty against eviction
(Art. 1548)
Warranty against hidden
defects (Art. 1561)
A C C I D E NT A L
may or may not exist
depending on stipulations
of parties (e.g. conditions,
payments of interest, place
and time of payment, etc.)
3
VENDOR VENDEE
thing which is the object of the sale
(Art. 1495).
(3) To warrant the object sold against
eviction (Art. 1495) and against
hidden defects (Art. 1547).
(4) To preserve the thing with proper
diligence pending its delivery to the
vendee (Art. 1163).


Transfer the ownership of the thing:
The right to ownership of the thing
must present at the time of delivery
(Art. 1459) and this is so because the
ownership of the thing sold is
transferred to the vendee upon
actual or constructive delivery
(Art. 1477). However, the parties
may stipulate that ownership in the
thing shall not pass to the purchaser
until he has fully paid the price
(Art 1478).



Deliver a determinate
2
thing:

A determinate thing is a
particularized item. It is determinate
or specific when it is particularly
designated or physically segregated
from all others of the same class.







Warrant the thing which is the object of
the sale:

In general, the acceptance of the
goods, absent any express
stipulation, does not discharge the
seller from liability in case of breach
of warranties unless no notice was
given by the buyer of the defect or










Pay the price of thing:
According to the terms of the
contract.
If payment of interest is stipulated,
the buyer must pay thereof. If the
amount of interest was not
stipulated, the legal rate should
apply.
When the buyer defaults, such act
constitutes a breach which is subject
to specific performance or rescission
with damages as the case may be.
Interests must also be paid after
default.

Accept the thing sold:
The thing should be accepted at the
time and place stipulated in the
contract.
If the same were not specified, acceptance is
effected when:
The buyer intimates to the seller that he has
accepted.
When the thing was delivered and buyer
does any act inconsistent with the
ownership of the seller.
When buyer retains the thing without
intimating to the seller that he has rejected
delivery.

When the warranty has been agreed
upon or nothing has been stipulated
on this point, in case eviction occurs,
the vendee shall have the right to
demand of the vendor:
the return of the value of the thing sold
had at the time of the eviction, be it
greater or less than the price of the sale;
income or fruits, if he has been ordered
to deliver them to the party who won the

2
Art. 1460. A thing is determinate when it is particularly designated or physically segregated from all
other of the same class.
The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is
capable of being made determinate without the necessity or a new or further agreement between the
parties. (n)
4
VENDOR VENDEE
the latter has failed to give it within a
reasonable time.

An affirmation of a fact may be
treated as a warranty if the seller
who made the same is an expert and
such was relied upon by the buyer in
the purchase of the thing (Art. 1546).


A warranty can be express or implied.

The seller is bound to give these two
implied warranties in a contract of sale
even though they are not expressly
stated in the contract:

(1) Warranty against eviction
(2) Warranty against hidden defects


Warranty against eviction
Requisites:
(a) There should be a final judgment
3
.
(b) There must be a deprivation of the
property in the buyer in whole or
in part
(c) It should be based on a right prior
to the sale.
(d) The warranty was not waived.

Seller shall not be liable when the
adverse possession had been
commenced before the sale but the
prescriptive period is completed after
the transfer (Art. 1550).
If the vendor is not summoned in the
suit for eviction at the instance of
the vendor, he shall not be obliged to
make good the property warranty
(Art. 1558).

Warranty against hidden defects of
or encumbrances upon the thing sold
Requisites:
(a) The defect must be hidden.
(b) It should render the thing unfit for
the use it was intended or there is
a diminution of its fitness.
(c) The vendee would not have
purchased the thing or bought it
suit against him;
the costs of the suit which caused the
eviction, and, in a proper cases, those of
the suit brought against the vendor for
the warranty;
the expenses of the contract, if the
vendee has paid them;
damages and interest, and ornamental
expenses, if the sale was made in bad
faith (Art. 1555).

Implied warranty is not applicable in the
following kinds of sale where the
principle of caveat emptor applies:
(a) Sale by sheriff;
(b) as is, where is sale;
(c) Sale of second hand items;
(d) Public auction for tax delinquency
(Art 1547).



Should the vendee lose, by reason of
the eviction, a part of the thing sold
of such importance, in relation to the
whole, that he would not have bought
it without said part, he may demand
the rescission of the contract; but
with the obligation to return the thing
without other encumbrances that
those which it had when he acquired
it. He may exercise his right of action,
instead of enforcing the vendors
liability for eviction (Art. 1556).









If the immovable sold should be
encumbered with any non-apparent
burden or servitude, not mentioned in
the agreement, of such nature that it
must be presumed that the vendee
would not have acquired it had he
been aware thereof, he may ask for
the rescission of the sale. This though
cannot be exercised if said burden or
servitude is registered unless an

3
Final judgment in this provision pertains to final and executory judgment (Art 1548).

5
VENDOR VENDEE
for a lower price had he known
about the defect (Art 1561).


In the sale of a specific article, there is
no implied warranty for the specific
purpose except if given (Art 1563).


Implied warranty or condition as to
quality or fitness for a particular
purpose may be annexed by the usage
of trade (Art 1564).

The vendor is still held liable for
warranty against hidden defects even
though he was not aware of it
(Art. 1566).

If the thing is lost:
The thing should be lost by reason of
the hidden defect and the vendor
was in bad faith:
1) Bear the loss;
2) Obliged to return the price of the
thing;
3) Refund the expenses of the
contract;
4) Damages.

If the vendor was in good faith:
1) Return the price of the thing plus
interest;
2) Expenses of the contract
(Art. 1568).

Prescriptive Period:
a) Actions should be barred after 6
months from the delivery of the thing
sold (Art. 1570).
b) 40 days in case of animals.

Other rights and obligations:
Generally, expenses for the execution
and registration of the sale shall be
borne by the vendor (Art. 1487).

Unless otherwise agreed, the goods
remain at the sellers risk until the
ownership therein is transferred to
the buyer.

However, when the ownership therein
is transferred to the buyer, the goods
express warranty that the thing is free
from all burdens and encumbrances.

The vendee is given one year from
the execution of the deed to bring
an action for rescission with
damages.

If the time has passed, only a
claim for damages can be put up
by him (Art. 1560).


The provision in Art. 1566 shall not
apply if the warranty was waived by
the vendee.


When the thing sold had any hidden
defect at the time of the sale but was
lost through the fault of the vendee or
by a fortuitous event, vendee by
demand of the vendor:

1) Price which he paid, less the value
which the thing had when it was
lost.

2) Damages (if vendor was in bad
faith) (Art. 1569).











When it is expressly stipulated in the
contract, expenses for the execution
and registration of the sale shall be
borne by the vendee (Art. 1487).

Generally, the ownership in the goods
passes to the buyer upon their
delivery to the carrier, except:
(1) When the ownership or right or
possession is reserved to the seller
until certain conditions are
fulfilled (Art. 1503, par. 1).
(2) When ownership is reserved until
6
VENDOR VENDEE
are at the buyers risk whether actual
delivery has been made or not, except
that:

(1) Where delivery of the goods has
been made to the buyer or to a
bailee for the buyer, in
pursuance of the contract and
the ownership in the goods has
been retained by the seller
merely to secure performance by
the buyer of his obligations
under the contract, the goods are
at the buyers risk from the time
of such delivery
(2) Where actual delivery has been
delayed through the fault of
either the buyer or seller the
goods at the risk of the party in
fault (Art. 1504).


Warranties in the sale of animals:
If sold together, whether in lump
sum or with separate price, its
redhibition if exclusive unless the
vendee would not have purchased
the thing without the defect one
(Art. 1572).
No warrant against hidden defects
in sales at fairs or at public
auctions or of livestock sold as
condemned (Art. 1574).
Sale of animals with contagious
diseases is void. Also void if they
are unfit for their stipulate use
(Art. 1575).
Redhibitory defect- in such
character as to be hard to detect
even with professional help. But if
the veterinarian through ignorance
or bad faith overlooks the
discovery, he shall be liable for
damages (Art 1576).
If the animal should die within 3
days after its purchase, it shall be
borne by the vendor if the disease
which caused the death existed at
the time of the contract (Art.
1578).
the price has been fully paid
(Art. 1478).

The buyer should be given reasonable
time to examine the thing since it will
not be deemed accepted by him until
so.







When the buyer has the right to refuse
the goods, he does not need to return
them. He shall be considered a
depositary and is to exercise the
degree of diligence require by law.
This can also be defeated by a
contrary stipulation.

If the sale be rescinded, the animal
shall be returned in the condition in
which it was sold and delivered, the
vendee shall be answerable for any
injury due to his negligence and not
arising from the redhibitory fault or
defect. (Art 1579)






If the condition is not performed, the
buyer may:
1. Rescind the contract
2. Proceed with the contract
waiving the performance of the
condition

If the condition is in the nature of a
promise that it should happen, the
performance of such condition may
be treated by the other party as
breach of warranty (Art. 1545).

The vendee need not appeal the case to
make the vendor liable (Art. 1549).
7
VENDOR VENDEE

An unpaid seller
4
, notwithstanding
that the ownership in the thing may
have passed to the buyer, can:
Retain
5
the goods, if the goods are
still in his possession
a. Where the goods have been
sold without any stipulation
as to credit
b. Where the goods have been
made sold on credit but the
term has expired
c. Where the buyer was
insolvent (Art 1527)
Exercise stoppage in transit
6
, in
case of insolvency and if the
vendor has parted with the
possession of the goods
a. Sale should be on credit
b. The goods must be in transit
c. The seller should be unpaid
d. The buyer must be insolvent
(Art 1530)
Special right of resale
a. The goods must be
perishable
b. The right was reserved by
the seller (Art 1583)
Special right to rescind
a. This right should have been
expressly reserved by the
seller (Art 1534) [Art 1526]

Contract of sale of personal property
payable in instalments:

Remedies of the vendor:
Exact fulfilment of the
obligation should the vendee
fail to pay;

Cancel the sale, should the
vendees failure to pay cover
two or more instalments;
































Contract of sale of personal property
payable in instalments:

Rights of the vendee is protected
by the Recto Law (in Art. 1484-
1486).

The Recto Law was passed to
prevent abuse in foreclosure of
chattel mortgage where the
creditor forecloses the chattel and
buys it at a very low price and still

4
A seller is considered unpaid if:
a. When the whole of the purchase price was not paid
b. When the bill of exchange has been received as conditional payment and the condition on which has
been broken by reason of the dishonour of the instrument (Art. 1526).
5
In case of partial delivery, the vendor can still exercise his right to retain on the remaining goods that are
in his custody (Art. 1527, par 2).
6
Stoppage in transit may be exercised by either:
a. Obtaining actual possession of the goods or-;
b. Notice to the buyer (Art 1532).
8
VENDOR VENDEE

Foreclose the chattel mortgage
on the thing sold, if one has
been constituted, should the
vendees failure to pay cover
two or more instalments. In this
case, he shall have no further
action against the purchaser to
recover any unpaid balance of
the price. Any agreement to the
contrary shall be void (Art.
1484).
Contract of sale of immovable property
payable in instalments:

The seller has reasonable grounds
to fear loss, he may sue for
rescission;

If there is non-payment,
rescission may also be sought.
demands from the debtor the
deficiency in the price of the
chattel or files for a deficiency
claim over said property.







When things (immovable) are sold on
instalments:

The buyer is protected by the Maceda
Law
Buyer pays at least 2 years instalment:
Pay without interest within the grace
period of 1 month for every year of
instalment paid;
Grace period to be exercise once every
5 years;
When no payment is cancelled, buyer
is entitled to 50% of what he has paid
plus if after 5 years of instalments,
5% for every year but not to exceed
90% of total payments made;
Cancellation to be effected 30 days
from notice and upon payment of
cash surrender value.

Buyer paid less than 2 years:
1st grace period is 60 days from the
date of instalment became due;
2
nd
grace period of 30 days from
notice of cancellation/demand for
rescission:
Buyer can still pay within the
30-day period
With interest
Cancellation may be effected after the
30-day period.



RAMIFICATIONS: ELEMENTS OF THE CONTRACT OF SALE

O B J E C T P R I C E
Requisites:

Must be licit
(Art 1459).

Determinate
Things to consider:

When at the perfection of the sale, there is every intention in
the buyer to pay the price, and every expectation in the seller to
receive such price as the value of the subject matter, he (seller)
obligates himself to deliver (a derivation of Art 1458).
9
O B J E C T P R I C E
and must be so
at the time of
the perfection of
the contract
without the
necessity of a
new or further
agreement
between the
parties
(Art. 1460).

What can be the
object of sale:

Things having a
potential
existence
(Art. 1461):

The efficacy of
the sale of a
mere hope or
expectancy is
deemed
subject to the
condition that
the thing will
come into
existence.

Sale of a vain
hope is void.


Existing, future
and contingent:

Whether the
subject matter is a
type and nature
that exists or could
be made to exist to
allow the seller
reasonable
certainty of being
able to comply with
his obligations

If the consideration of the transaction consists partly of money
and partly of thing, the nature of the same shall be determined
by the manifest intention of the parties.

If the intention is not clear, it shall be barter if the value is
greater than or equal to the thing sold and shall be
considered sale if the value of the thing given as
consideration is less than the value of the thing sold (Art.
1468).


When is the price certain or ascertainable
7
:
CERTAIN expressed and agreed in terms of specific pesos and
or centavos.
ASCERTAINABLE -
1. Reference to another thing or left to the judgment of a specified
person or persons (Art. 1469).
2. If such persons are unable or unwilling to determine the price,
the parties shall agree on the price (but shall never be
dependent on one party unless ratified by the other, Art.1473).
3. If the third persons acted in bad faith, the court shall fix the
price (Art. 1469).
4. By reference to a definite day, particular exchange of market in
case of securities, grain, liquids and other things (Art. 1472).
5. Where the price cannot be determined in accordance with the
preceding articles, or in any other manner, the contract is
inefficacious. However, if the thing or any part has been
delivered to the appropriated by the buyer, he must pay a
reasonable price therefor. What is a reasonable price is a
question of fact dependent on the circumstances of each case
(Art. 1474).

The validity of the contract of sale is not affected by the gross
inadequacy of the price. Exceptions:
When there is a defect in the consent such as fraud,
mistake or undue influence
The intention of the parties is really a donation or some
other act or contract (Art. 1470).

The sale is VOID when the price is simulated. Exceptions:
When the act may be shown to have been in reality a
donation or some other act or contract.
If there is a real price but what is stated in the contract is
not the one intended by the parties, the price is relatively
simulated. As opposed to an absolutely simulated price, a
relatively simulated price can be remedied by a reformation
(Art. 1471).


7
Notes:
1. There is a presumption of a valid consideration. Although this presumption can be defeated by
evidence to the contrary.
2. It has also been held that the manner of payment must be agreed upon since it is part of the price.
Absence of which affects the validity of the sale since it is tantamount to an absence of
consideration (Marnelego vs Banco Filipino Savings and Mortgage Bank).

10
O B J E C T P R I C E
(Art. 1462). A promise to buy and sell a determinate thing for a price
certain is reciprocally demandable.

An accepted unilateral promise to buy or sell a determinate
thing for a price certain is binding upon the promissor if the
promise is supported by a consideration distinct from the price
(Art. 1479).

Whenever earnest money is given in a contract of sale, it shall
be considered as part of the price and as proof of the perfection
of the contract (Art. 1482)
8
.
C A S E S



































8
Notes:
Article 1479 and 1482 tell us about option money and earnest money respectively.
Option money does not become part of the price and is not refundable. It is basically giving the seller
allowance to decide with the sale.
Earnest money on the other hand becomes part of the purchase price as it is indicative to the interest
of the buyer to purchase the thing. It is to be returned when the sale is not pushed through except
when agreed to be retained since it is not prohibited by law.
It is also proof of the perfection of the sale.
Manila Metal Container Corporation vs PNB

Facts:
Petitioner was the owner of 8,015 square meters of parcel of land located in
Mandaluyong City, Metro Manila. To secure a P900,000.00 loan it had obtained from
respondent Philippine National Bank, petitioner executed a real estate mortgage over
the lot. Respondent PNB later granted petitioner a new credit accommodation. On
August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of the
real estate mortgage and sought to have the property sold at public auction. After
due notice and publication, the property was sold at public action where respondent
PNB was declared the winning bidder. Petitioner sent a letter to PNB, requesting it to
be granted an extension of time to redeem/repurchase the property. Some PNB
personnel informed that as a matter of policy, the bank does not accept partial
redemption. Since petitioner failed to redeem the property, the Register of Deeds
cancelled TCT No. 32098 and issued a new title in favor of PNB.
Meanwhile, the Special Asset Management Department (SAMD) had prepared a
statement of account of petitioners obligation. It also recommended the management
of PNB to allow petitioner to repurchase the property for P1,574,560.oo. PNB rejected
the offer and recommendation of SAMD. It instead suggested to petitioner to
purchase the property for P2,660,000.00, in its minimum market value. Petitioner
declared that it had already agreed to SAMDs offer to purchase for P1,574,560.47
and deposited a P725,000.00.

Issue: Whether or not petitioner and respondent PNB had entered into a
perfected contract for petitioner to repurchase the property for respondent.

Ruling: The SC affirmed the ruling of the appellate court that there was no
perfected contact of sale between the parties.
A contract is meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service. Under 1818 of
the Civil Code, there is no contract unless the following requisites concur:
1. Consent of the contracting parties;
2. Objection certain which is the subject matter of the contract;
3. Cause of the obligation which is established.
Contract is perfected by mere consent which is manifested by the meeting of the
offer and the acceptance upon the thing and causes which are to constitute the
contract. Once perfected, the bind between other contracting parties and the
obligations arising therefrom have the form of law between the parties and should be
complied in good faith. The absence of any essential element will negate the existence
of a perfected contract of sale.


11














































San Miguel Properties vs. Huang

It is not the giving of earnest money, but the proof of the concurrence of all the essential
elements of the contract of sale which establishes the existence of a perfected sale.

So the question is: Was it an earnest deposit?

The court answered in the negative (NO). At the time when petitioner accepted the
terms of respondents offer of March 29, 1994, their contract had not yet been
perfected. It does not satisfy Article 1482.

The stages of a contract of sale are as follows: (1) negotiation, (2) perfection, and (3)
consummation. The alleged indubitable evidence of a perfected sale cited by the
appellate court was nothing more than offers and counter-offers which did not
amount to any final arrangement containing the essential elements of a contract of
sale. While the parties already agreed on the real properties which were the objects of
the sale and on the purchase price, the fact remains that they failed to arrive at
mutually acceptable terms of payment, despite the 45-day extension given by
petitioner.

There was also failure to agree on the manner of payment. The manner of payment of
the purchase price is an essential element before a valid and binding contract of sale
can exist. Although the Civil Code does not expressly state that the minds of the
parties must also meet on the terms or manner of payment of the price, the same is
needed, otherwise there is no sale.

Agreement on the manner of payment goes into the price such that a disagreement
on the manner of payment is tantamount to a failure to agree on the price.

12







































DOUBLE SALE (Art. 1544)
Requisites:
(a) There should be two or
more valid sales;
(b) Which involve the same
thing;
(c) Two or more buyers
must have conflicting
interests as to claim of
ownership;
(d) Should only pertain to
one seller.
Who owns the property?
If the thing is a movable:
(a) first possessor in good
faith;

Good faith is defined as the
absence of notice that another
person has a right or interest
in the property; the one who
has paid the price before
notice that another has a claim
or interest. It is a requisite all
throughout the stages.
Who owns the property?
If the thing is an immovable:
(a) First registrant in good
faith;
(b) If there is no
inscription, the first
possessor in good faith;
(c) If there is neither
inscription nor possession
in good faith, the one with
the oldest title in good
faith.

RADIOWEALTH FINANCE CO. VS. PALILEO

Facts:
In April 1970, defendant spouses Enrique Castro and Herminio R. Castro
(spouse Castro) sold to herein respondent Manuelito Palileo a parcel of
unregistered coconut land in Surigao del Norte. The sale is evidenced by a
notarized Deed of Absolute Sale, but the deed was not registered in the Registry
of Property for unregistered lands in the province of Surigao del Norte. Since the
execution of the deed of sale, Palileo who was then employed in Lianga, Surigao
del Sur, exercised acts of ownership over the land through his mother Rafaela
Palileo, as administratrix or overseer. Manuelito Palileo has continuously paid the
real estate taxes on said land from 1971 until the present.

In November 1976, the CFI of Manila rendered a judgment was rendered
against defendant Enrique T. Castro to pay herein petitioner Radiowealth Finance
Company (Radiowealth), the sum of P22,350.35 with interest rate of 16% per
annum from November 2, 1975 until fully paid, and upon the finality of the
judgment, a writ of execution was issued. The Provincial Sheriff Marietta E.
Eviota, through defendant Deputy Provincial Sheriff Leopoldo Risma, levied upon
and finally sold at public auction the subject land that defendant Enrique Castro
had sold to Palileo in 1970. The said Provincial Sheriff executed a certificate of
sale was by the in favour of Radiowealth as the only bidder, and upon expiration
of the redemption period, she also executed a deed of final sale. Both documents
were registered with the Registry of Deeds.

Learning of what happened to the land, Palileo filed an action for recovery
of the subject property. The court a quo rendered a decision in favour of Palileo,
which the Court of Appeals affirmed.

Issue: Who is the rightful owner of the subject property?

Ruling:

The Supreme Court likewise affirmed the appellate courts decision on this
case. There is no doubt that had the subject property been a registered land, this
case would have been decided in favour of Radiowealth since it was the company
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RAMIFICATIONS RELATING TO LOSS (Arts. 1493 - 1494)








E X T I N G U I S H M E N T O F S A L E

Sales are extinguished by the same causes as all other obligations, by those stated
in the preceding articles of the Title, and by conventional or legal redemption
(Art. 1600).

a. Conventional Redemption (Art 1601)
The right should have been reserved, Art 1616 also applies:
The price of the thing should be returned
The expenses of the contract should be paid
Res Perit Domino
Ownership has not yet passed so the seller bears the risk of loss.
Before
Perfection
Res Perit Domino
Contract is merely inefficacious since loss of the thing does not affect the
validity of the sale.
At
Perfection
Res Perit Domino
Delivery extinguished ownership vis--vis the seller and creates a new
one in favor of the buyer .
After
Delivery
Who bears the loss?
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Lawful expenses should be paid
Stipulations should be complied.
A pacto de retro sale shall be considered equitable mortgage
in the following circumstances:
When the price is unusually inadequate
Vendor remains in possession as lessee or otherwise
When the expiration of the right to repurchase another
instrument extending the period of redemption or granting
a new period is executed
When the purchaser retains for himself part of the
purchase price
When the vendor binds himself to pay the taxes on the
thing sold
According to the intention of the parties (Art 1602)

The right referred in 1601 shall prescribe in 10 years where
there should be an agreement, and 4 years when there is none.
However, the vendor may still exercise the right to repurchase
within 30 days after the finality of the judgment rendered in the
civil action on the basis that the contract was a true sale with
pacto de retro. (Art 1606)
When real property is involved, the consolidation of ownership
in the vendee by virtue of the failure of the vendor to comply
with the provisions of Art 1616 shall not be recorded in the
Registry of Property without judicial order.(Art 1607)
The vendor may bring action against every possessor whose
right is derived from the vendee even if in the second contract
there has been no mention of such. (Art 1608)
Exhaustion or excussion also applies in conventional
redemption (Art 1610)
Provisions regarding to co-ownership:
In the sale with a right to repurchase, the vendee of a part
of an undivided immovable who acquires the whole thereof
in the case of Art 498, may compel the vendor to redeem
the whole property if the latter wishes to make use of the
right of redemption. (Art 1611)
The right of redemption must only be for his respective
share in the case of joint contracts. (Art 1612)
The vendee may demand all of the vendors or co-heirs that
they may come to an agreement upon the repurchase of
the whole thing sold and should they fail to do so, the
vendee cannot be compelled to consent to partial
redemption. (Art 1613) BECAUSE THE LAWS
DISCOURAGE COOWNERSHIP.
If the vendee should leave several heirs, the action for
redemption shall be limited only to the respective share of
each one. (Art 1615) If the inheritance has been divided,
and the thing has been awarded to one of the heirs, the
action for redemption may be instituted against him for
the whole.
Provision on fruits:
If at the time of the execution of the sale there should be
on the land, visible or growing fruits, there shall be no
reimbursements for or prorating of those existing at the
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time of the redemption, if no indemnity was paid by the
purchaser when the sale was executed. Should there be
no fruits at the time of the sale, and some exist at the time
of redemption, they shall be prorated between the
redemptioner and vendee, giving the latter the part
corresponding to the time he possessed the land in the
last year, counted from the anniversary of the date of the
sale. (Art 1617)
The vendor who recovers the thing sold shall receive free from
all charges or mortgages constituted by the vendee, but he shall
respect the leases which the latter may have executed in good
faith, and in accordance with the custom of the place where the
land is situated. (Art 1618)
b. Legal Redemption
As opposed to conventional redemption, this is by operation of
law. This is the right to be subrogated upon the same terms and
conditions stipulated in the contract, in the place of one who
acquires a thing by purchase or dation in payment or by any
other transactions whereby ownership is transmitted by
onerous. (Art 1619)
In case the shares of all the other co-owners or of any of them,
are sold to a third person. If the price of the alienation is grossly
excessive, the redemption shall pay only a reasonable one.
Should two or more co-owners desire to exercise the right of
redemption, they may respectively have the thing owned in
common (Art 1620)
In case of owners of adjoining lands, they shall have the right of
redemption when a piece of rural land, the area of which does
not exceed 1 ha, is alienated unless the grantee does not own
any rural land. This is not applicable to adjoining land which
are separated by brooks, drains, ravines, roads and other
apparent servitudes for the benefit of other estates. If two or
more adjoining owners desire to exercise the right of redemption
at the same time, the owner of the land adjoining land of
smaller area shall be preferred; and should both lands have the
same area, the one who first requested the redemption (art
1621)
Urban lands that are so small or so situated that a major
portion of which cannot be used for any practical purpose
within reasonable time, having been bought merely for
speculation, is about to be re-sold, the owner of any adjoining
land shall have the rights of redemption also at a reasonable
price. When two or more owners of adjoining lands wish to
exercise the rights of pre-emption or redemption, the owner
whose intended use of the land is question appears best justifies
shall be preferred. (Art 1622)
Exercise of the right shall not be allowed except:
Within 30 days from the notice in writing by the
prospective vendor, or by the vendor, as the case may be
It shall not be recorded in the Registry of Property unless
the vendor executes and accompanies it with an affidavit
of the vendor that he has given written notice thereof to all
possible redemptioners. The right of redemption of co-
owners excludes that of adjoining owners:

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