Atty. Teodoro A.

Pastrana
Law on Sales
Accion Redhibitoria is an action instituted by the vendee against the vendor to avoid a sale on account of
some vice or defect in the thing sold which renders it unfit for the use intended or which will diminish its
fitness for such use to such an extent that had the vendee been ware thereof, he would not have acquired
it.
Accion Quanti Minoris is an action to procure the return of a part of the purchase price paid by the
vendee to the vendor by reason of such defect.
Conditional Redemption is that which takes place when the vendor reserves the right to repurchase the
thing sold with the obligation to reimburse to the vendee the price of the sale, the expense of the contract,
and other legitimate payments made by reason of the sale, as well as necessary and useful expenses made
on the thing sold.
Legal Redemption 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
transaction whereby ownership is transmitted by onerous title.
Stoppage in Transitu is the right of the unpaid seller to resume possession of the goods at anytime while
they are in transit by virtue of which he will then be entitled to the same rights in regard to the goods as
he would have had if he had never parted with the possession
Negotiable Document of Title A document in which it is stated that the good referred to therein will be
delivered to the bearer, or to the order of any person named in such document is a negotiable document of
title
Priority of Right is based upon the principles of prius tempore potior jure, that is first in time, stronger in
right
Warranty in case of Eviction is an implied warranty in contracts of sale, by virtue of which if the vendee
is deprived of the whole or a part of the thing purchased by a final judgment based on a right prior to the
sale or an act imputable to the vendor, such vendor shall answer for the eviction.
Waiver of Eviction Consciente is a voluntary renunciation made by the vendee of the right to warranty in
case of eviction. The effects of such eviction is that the liability of the vendor in case of eviction shall
extend only to the payment of the value of the thing sold at the time of eviction
Waiver of Eviction Intencionada is a voluntary renunciation made by the vendee of the right to warranty
in case of eviction, with knowledge of the risk of eviction and assuming the consequences thereof.
An equitable mortgage is defined as one that, although lacking some formality or form, nevertheless
reveals the intention of the parties to charge a real property as security for a debt.
A pre-emption right, or right of pre-emption, is a contractual right to acquire certain property newly
coming into existence before it can be offered to any other person or entity.
Conditon an uncertain event or contingency on the happening of which the obligation or right of the
contract depends. In such case, the obligation of the contract does not attach until the condition is
performed
Warranty A statement or representation made by the seller contemporaneously as part of the contract of
sale, having reference to the character, quality, or title of the goods, and by which he promises or
undertakes to insure that certain facts are or shall be as he then represents
Implied Warranty is that which the law derives from the nature of the transaction or the relative situation
or circumstances of the parties, irrespective of any intention of the seller to create it.
Warranty against hidden defects the seller guarantees that the thing sold is free from any hidden defaults
or defects or any charge or encumbrance not declared or know to the buyer

WARRANTIES: 1. Seller has right to sell 2. Against Eviction 3. Against Hidden Defects 4. Against
non-apparent burden or servitudes 5. Against redhibitory defects on animals 6. For consumer goods

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Distinguish Redemption from Pre-Emption

Perfection of Sale
1. In redemption, the sale to a third person has already been perfected, In pre-emption the
sale to a third person has not yet been perfected
Scope of Right
2. The right of Redemption has a much broader scope than the right of pre-emption. The
Right of Pre-emption can only be exercised where there is a prospective resale of a small
piece of urban land originally bought by the prospective vendor mere for speculation
Directed against whom
3. The right of Redemption is directed against the third person who bought the property. The
right of Pre-emption is directed against the prospective vendor who is about to resell his
property
Effect
4. The effect of Redemption is to extinguish the contract that has already been perfected or
consummated, The effect of Pre-emption is to prevent the birth or perfection of a contract

Art. 1474. 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
thereof has been delivered to and 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 particular case. (n)
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon
the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof. (n)
Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the
purchaser until he has fully paid the price. (n)
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally
demandable.
An accepted unilateral promise to buy or to 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. (1451a)

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Recto Law
Art. 1484. In a contract of sale of personal property the price of which is payable in
installments, the vendor may exercise any of the following remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or more
installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendee's failure to pay cover two or more installments. 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. (1454-A-a)
Art. 1485. The preceding article shall be applied to contracts purporting to be leases of
personal property with option to buy, when the lessor has deprived the lessee of the
possession or enjoyment of the thing. (1454-A-a)
Art. 1486. In the case referred to in two preceding articles, a stipulation that the
installments or rents paid shall not be returned to the vendee or lessee shall be valid insofar
as the same may not be unconscionable under the circumstances. (n)
Art. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership
therein is transferred to the buyer, but when the ownership therein is transferred to the
buyer the goods are at the buyer's 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 buyer's 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 are at the risk of the party in fault. (n)
MACEDA LAW
All transactions involving sale or financing of real estate on instalment
payments, including residential condominium apartments but excluding
Industrial Lots, Commercial lots and Sales to tenants under RA 3844 and RA
6389.
Buyer has paid atleast 2 YEARS of instalments
1. To pay without additional interest the unpaid instalments with the total
grace period earned by him. 1 month/1year. Exercised only once
1/5years and its extensions if any
2. If contract is cancelled, the seller shall refund the buyer the Cash
Surrender Value of the payments on the property equivalent to = 50%
and after 5 Years of instalments, an additional 5% every year but not to
exceed 90% of the total payments made. The cancellation shall take
place after 30 days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a
NOTARIAL ACT and UPON FULL PAYMEN of the case Surrender Value to
the buyer.
3. Down payments, Deposits or options on the contract shall be included
on the computation of the total number of instalments made

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4. In case less than 2 YEARS of instalments were made, buyer shall be

given a GRACE PERIOD of not less than 60 days. Then Buyer cancels
same procedure

Art. 1526. Subject to the provisions of this Title, notwithstanding that the ownership in the
goods may have passed to the buyer, the unpaid seller of goods, as such, has:
(1) A lien on the goods or right to retain them for the price while he is in possession
of them;
(2) In case of the insolvency of the buyer, a right of stopping the goods in transitu
after he has parted with the possession of them;
(3) A right of resale as limited by this Title;
(4) A right to rescind the sale as likewise limited by this Title.
Where the ownership in the goods has not passed to the buyer, the unpaid seller has, in
addition to his other remedies a right of withholding delivery similar to and coextensive
with his rights of lien and stoppage in transitu where the ownership has passed to the
buyer. (n)
Art. 1527. Subject to the provisions of this Title, the unpaid seller of goods who is in
possession of them is entitled to retain possession of them until payment or tender of the
price in the following cases, namely:
(1) Where the goods have been sold without any stipulation as to credit;
(2) Where the goods have been sold on credit, but the term of credit has expired;
(3) Where the buyer becomes insolvent.
The seller may exercise his right of lien notwithstanding that he is in possession of the
goods as agent or bailee for the buyer. (n)
Art. 1528. Where an unpaid seller has made part delivery of the goods, he may exercise his
right of lien on the remainder, unless such part delivery has been made under such
circumstances as to show an intent to waive the lien or right of retention. (n)
Art. 1529. The unpaid seller of goods loses his lien thereon:
(1) When he delivers the goods to a carrier or other bailee for the purpose of
transmission to the buyer without reserving the ownership in the goods or the right
to the possession thereof;
(2) When the buyer or his agent lawfully obtains possession of the goods;
(3) By waiver thereof.
The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that
he has obtained judgment or decree for the price of the goods. (n)
Art. 1530. Subject to the provisions of this Title, when the buyer of goods is or becomes
insolvent, the unpaid seller who has parted with the possession of the goods has the right of
stopping them in transitu, that is to say, he may resume possession of the goods at any time
while they are in transit, and he will then become entitled to the same rights in regard to
the goods as he would have had if he had never parted with the possession. (n)

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Art. 1533. Where the goods are of perishable nature, or where the seller
expressly reserves the right of resale in case the buyer should make
default, or where the buyer has been in default in the payment of the
price for an unreasonable time, an unpaid seller having a right of lien or
having stopped the goods in transitu may resell the goods. He shall not
thereafter be liable to the original buyer upon the contract of sale or for
any profit made by such resale, but may recover from the buyer damages
for any loss occasioned by the breach of the contract of sale.
The seller is bound to exercise reasonable care and judgment in making a
resale, and subject to this requirement may make a resale either by public
or private sale. He cannot, however, directly or indirectly buy the goods.
(n)

Art. 1534. An unpaid seller having the right of lien or having stopped the goods in transitu,
may rescind the transfer of title and resume the ownership in the goods, where he expressly
reserved the right to do so in case the buyer should make default, or where the buyer has
been in default in the payment of the price for an unreasonable time. The seller shall not
thereafter be liable to the buyer upon the contract of sale, but may recover from the buyer
damages for any loss occasioned by the breach of the contract.
The transfer of title shall not be held to have been rescinded by an unpaid seller until he
has manifested by notice to the buyer or by some other overt act an intention to rescind. It
is not necessary that such overt act should be communicated to the buyer, but the giving or
failure to give notice to the buyer of the intention to rescind shall be relevant in any issue
involving the question whether the buyer had been in default for an unreasonable time
before the right of rescission was asserted. (n)
Art. 1535. Subject to the provisions of this Title, the unpaid seller's right of lien or stoppage
in transitu is not affected by any sale, or other disposition of the goods which the buyer
may have made, unless the seller has assented thereto.
If, however, a negotiable document of title has been issued for goods, no seller's lien or right
of stoppage in transitu shall defeat the right of any purchaser for value in good faith to
whom such document has been negotiated, whether such negotiation be prior or
subsequent to the notification to the carrier, or other bailee who issued such document, of
the seller's claim to a lien or right of stoppage in transitu. (n)
Art. 1537. The vendor is bound to deliver the thing sold and its accessions and accessories
in the condition in which they were upon the perfection of the contract.
All the fruits shall pertain to the vendee from the day on which the contract was perfected.
Art. 1547. In a contract of sale, unless a contrary intention appears, there is:
(1) An implied warranty on the part of the seller that he has a right to sell the thing
at the time when the ownership is to pass, and that the buyer shall from that time
have and enjoy the legal and peaceful possession of the thing;
(2) An implied warranty that the thing shall be free from any hidden faults or
defects, or any charge or encumbrance not declared or known to the buyer.
This Article shall not, however, be held to render liable a sheriff, auctioneer, mortgagee,
pledgee, or other person professing to sell by virtue of authority in fact or law, for the sale
of a thing in which a third person has a legal or equitable interest. (n)

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Art. 1548. Eviction shall take place whenever by a final judgment based on
a right prior to the sale or an act imputable to the vendor, the vendee is
deprived of the whole or of a part of the thing purchased.
Art. 1558. The vendor shall not be obliged to make good the proper
warranty, unless he is summoned in the suit for eviction at the instance of
the vendee. (1481a)

The vendor must be summoned in the suit for eviction at the

instance of the vendee
Art. 1554. If the vendee has renounced the right to warranty in case of
eviction, and eviction should take place, the vendor shall only pay the
value which the thing sold had at the time of the eviction. Should the
vendee have made the waiver with knowledge of the risks of eviction and
assumed its consequences, the vendor shall not be liable.
Art. 1556. 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.
Art. 1555. 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:
(1) The return of the value which the thing sold had at the time of the eviction, be it greater
or less than the price of the sale;
(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.

Art. 1590. Should the vendee be disturbed in the possession or ownership of the thing
acquired, or should he have reasonable grounds to fear such disturbance, by a vindicatory
action or a foreclosure of mortgage, he may suspend the payment of the price until the
vendor has caused the disturbance or danger to cease, unless the latter gives security for
the return of the price in a proper case, or it has been stipulated that, notwithstanding any
such contingency, the vendee shall be bound to make the payment. A mere act of trespass
shall not authorize the suspension of the payment of the price. (1502a)
Art. 1592. In the sale of immovable property, even though it may have been stipulated that
upon failure to pay the price at the time agreed upon the rescission of the contract shall of
right take place, the vendee may pay, even after the expiration of the period, as long as no
demand for rescission of the contract has been made upon him either judicially or by a
notarial act. After the demand, the court may not grant him a new term.
Art. 1600. Sales are extinguished by the same causes as all other
obligations, by those stated in the preceding articles of this Title, and by
conventional or legal redemption. (1506)
Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following
cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;

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(3) When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other
obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent
or otherwise shall be considered as interest which shall be subject to the usury laws. (n)

Art. 1603. In case of doubt, a contract purporting to be a sale with right to repurchase shall
be construed as an equitable mortgage.
Art. 1606. The right referred to in Article 1601, in the absence of an express agreement,
shall last four years from the date of the contract.
Should there be an agreement, the period cannot exceed ten years.
However, the vendor may still exercise the right to repurchase within thirty days from the
time final judgment was rendered in a civil action on the basis that the contract was a true
sale with right to repurchase.
Art. 1607. In case of real property, the consolidation of ownership in the
vendee by virtue of the failure of the vendor to comply with the provisions
of article 1616 shall not be recorded in the Registry of Property without a
judicial order, after the vendor has been duly heard. (n)

Art. 1616. The vendor cannot avail himself of the right of repurchase without returning to
the vendee the price of the sale, and in addition:
(1) The expenses of the contract, and any other legitimate payments made by reason
of the sale;
(2) The necessary and useful expenses made on the thing sold.
Art. 1612. If several persons, jointly and in the same contract, should sell an undivided
immovable with a right of repurchase, none of them may exercise this right for more than
his respective share.
The same rule shall apply if the person who sold an immovable alone has left several heirs,
in which case each of the latter may only redeem the part which he may have acquired.
Art. 1621. The owners of adjoining lands shall also have the right of redemption when a
piece of rural land, the area of which does not exceed one hectare, is alienated, unless the
grantee does not own any rural land.
This right is not applicable to adjacent lands 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 adjoining land of smaller area shall be preferred; and should both lands
have the same area, the one who first requested the redemption. (1523a)
Art. 1622. Whenever a piece of urban land which is so small and so situated that a major
portion thereof cannot be used for any practical purpose within a reasonable time, having
been bought merely for speculation, is about to be re-sold, the owner of any adjoining land
has a right of pre-emption at a reasonable price.

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If the re-sale has been perfected, the owner of the adjoining land shall have a right of
redemption, also at a reasonable price.
When two or more owners of adjoining lands wish to exercise the right of
pre-emption or redemption, the owner whose intended use of the land in question appears
best justified shall be preferred. (n)
Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within
thirty days from the notice in writing by the prospective vendor, or by the vendor, as the
case may be. The deed of sale shall not be recorded in the Registry of Property, unless
accompanied by 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. (1524a)
Delivery.
1. Execution of Public Instrument
2. Symbolic Delivery delivery of keys of the place or depository where the movables are
kept
3. Constitutum Possessorium- the seller is in possession of the subject matter in the concept
of owner, and pursuant to the contract, the seller continue to hold possession no longer in
the concept of owner
4. Traditio Brevi Manu lessee then owner
5. Traditio Longa Manu Delivery of thing merely by agreement, such as when the seller
points the property subject matter of the sale by way of delivery
Control over the subject matter at the time of execution and the passage of reasonable time for
the control to remain. Unless there is knowledge on the part of the purchaser that the vendor
cannot exercise actual control over the property sold.
FAS Free alongside Ship - the seller pays all the charges and is subject to risk until the goods
are placed alongside the vessel
FOB Free on Board the sellers pays all the charges and expenses up to the place of
destination whether Free on board that shipping point or Free on Board at point of destination. If
destination the seller pays for the freight, if Shipping point the buyer pays for the freight.
CIF Costs, Insurance and Freight the buyer pays a fixed price, which includes not only the
purchase price of the goods but also the Costs, Insurance and Freight.
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good
faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first
in the possession; and, in the absence thereof, to the person who presents the oldest title, provided
there is good faith. (1473)
Art. 1502. When goods are delivered to the buyer "on sale or return" to give the buyer an option to
return the goods instead of paying the price, the ownership passes to the buyer of delivery, but he
may revest the ownership in the seller by returning or tendering the goods within the time fixed in
the contract, or, if no time has been fixed, within a reasonable time. (n)
When goods are delivered to the buyer on approval or on trial or on satisfaction, or other similar
terms, the ownership therein passes to the buyer:

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(1) When he signifies his approval or acceptance to the seller or does any other act adopting
the transaction;
(2) If he does not signify his approval or acceptance to the seller, but retains the goods
without giving notice of rejection, then if a time has been fixed for the return of the goods,
on the expiration of such time, and, if no time has been fixed, on the expiration of a
reasonable time. What is a reasonable time is a question of fact. (n)
Art. 1481. In the contract of sale of goods by description or by sample, the contract may be
rescinded if the bulk of the goods delivered do not correspond with the description or the sample,
and if the contract be by sample as well as description, it is not sufficient that the bulk of goods
correspond with the sample if they do not also correspond with the description.
The buyer shall have a reasonable opportunity of comparing the bulk with the description or the
sample. (n)

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