Escolar Documentos
Profissional Documentos
Cultura Documentos
Sale is a contract whereby one party [the seller] obligates himself to transfer the ownership and to
deliver the possession, of a determinate thing, and the other party [the buyer] obligates himself to pay
therefor a price certain in money or its equivalent. xCruz v. Fernando, 477 SCRA 173 (2005).3
1. Elements of Sale
Elements of sale: (a) consent or meeting of the minds; (b) determinate subject matter; and (c) price
certain in money or its equivalent. xNavarra v. Planters Dev. Bank, 527 SCRA 562 (2007).4
Sale being a consensual contract, its essential elements must be proven. xVillanueva v. CA, 267
SCRA 89 (1997).
Absence of any essential elements negates a sale xDizon v. CA, 302 SCRA 288 (1999),5 even
when earnest money has been paid. xManila Metal Container Corp. v. PNB, 511 SCRA 444 (2006).
But once all elements are proven, a sales validity is not affected by a previously executed fictitious
deed of sale. xPealosa v. Santos, 363 SCRA 545 (2001); and the burden is on the other party to prove
otherwise. xHeirs of Ernesto Biona v. CA, 362 SCRA 29 (2001).
2. Stages of Contract of Sale
Policitacion covers the period from the time the prospective contracting parties indicate interest in
the contract to the time the contract is perfected. Perfection takes place upon the concurrence of the
essential elements, which are the meeting of the minds of the parties as to the object of the contract
and upon the price. Consummation begins when the parties perform their respective undertakings,
culminating in the extinguishment thereof. xSan Miguel Properties Philippines, Inc. v. Huang, 336
SCRA 737 (2000).6
3. Sale Creates Real Obligations To Give (Art. 1165)
4. Essential Characteristics of Sale:
a. Nominate and Principal
1
The Outline presents the manner by which the Law on Sales will be taken-up in class. The x's and those footnoted in
the Outline represent cases or topics which need no extended discussions, either because the essence of the rulings
are already summarized in the Outline or they contain similar rulings or doctrines as other cases to be discussed.
Unless otherwise indicated, the numbered articles refer to articles of the Civil Code.
2
Ownership is the independent and general power of a person over a thing for purposes recognized by law and within the limits
established thereby, which includes the right to enjoy and dispose of a thing, without other limitations than those established by law. . . .
Aside from the jus utendi and the jus abutendi inherent in the right to enjoy the thing, the right to dispose, or the jus disponendi, is the
power of the owner to alienate, encumber, transform and even destroy the thing owned. Flancia v. CA, 457 SCRA 224 (2005).
3
Alfredo v. Borras, 404 SCRA 145 (2003); Manila Metal Container Corp. v. PNB, 511 SCRA 444 (2006); Roberts v. Papio, 515 SCRA
346 (2007); Hyatt Elevators and Escalators Corp. v. Cathedral Heights Building Complex Assn., 636 SCRA 401 (2010).
4
Jovan Land, Inc. v. CA, 268 SCRA 160 (1997); Quijada v. CA, 299 SCRA 695 (1998); Co v. CA, 312 SCRA 528 (1999); San Andres
v. Rodriguez, 332 SCRA 769 (2000); Roble v. Arbasa, 362 SCRA 69 (2001); Polytechnic University v. CA, 368 SCRA 691 (2001);
Katipunan v. Katipunan, 375 SCRA 199 (2002); Londres v. CA, 394 SCRA 133 (2002); Manongsong v. Estimo, 404 SCRA 683 (2003);
Jimenez, Jr. v. Jordana, 444 SCRA 250 (2004); San Lorenzo Dev. Corp. v. CA, 449 SCRA 99 (2005); Yason v. Arciaga, 449 SCRA 458
(2005); Roberts v. Papio, 515 SCRA 346 (2007); Navarra v. Planters Dev. Bank, 527 SCRA 562 (2007); Republic v. Florendo, 549
SCRA 527 (2008); GSIS v. Lopez, 592 SCRA 456 (2009); Baladad v. Rublico, 595 SCRA 125 (2009); Del Prado v. Caballero, 614
SCRA 102 (2010); Montecalvo v. Heirs of Eugenia T. Primero, 624 SCRA 575 (2010); Hyatt Elevators and Escalators Corp. v. Cathedral
Heights Building Complex Assn., 636 SCRA 401 (2010).
5
Roberts v. Papio, 515 SCRA 346 (2007); XYST Corp. v. DMC Urban Properties Dev., Inc., 594 SCRA 598 (2009).
6
Limketkai Sons Milling, Inc. v. CA, 250 SCRA 523 (1995); Jovan Land, Inc. v. CA, 268 SCRA 160 (1997); Bugatti v. CA, 343 SCRA
335 (2000); Moreno, Jr. v. Private Management Office, 507 SCRA 63 (2006); Manila Metal Container Corp. v. PNB, 511 SCRA 444
(2006); Navarra v. Planters Dev. Bank, 527 SCRA 562 (2007); Province of Cebu v. Heirs of Rufina Morales, 546 SCRA 315 (2008);
GSIS v. Lopez, 592 SCRA 456 (2009); XYST Corp. v. DMC Urban Properties Dev., Inc., 594 SCRA 598 (2009).
It remains valid even if parties have not affixed their signatures to its written form, xGabelo v. CA,
316 SCRA 386 (1999), or the manner of payment is breached. xPilipinas Shell Petroleum Corp v.
Gobonseng, 496 SCRA 305 (2006).
In an Extrajudicial Settlement of Estate with Absolute Sale, it would be immaterial that the buyers
signature does not appear thereon since the contract of sale is consensual and perfected by mere
consent. xBaladad v. Rublico, 595 SCRA 125 (2009).
Failure of the subdivision developer to obtain a license to sell does not render the sales void
especially that the parties have impliedly admitted that there was already a meeting of the minds as
to the subject of the sale and price. Cantemprate v. CRS Realty Dev. Corp. 587 SCRA 492 (2009).
The binding effect of sale is based on the principle that the obligations arising therefrom have the
force of law between the parties. xVeterans Federation of the Philippines v. CA, 345 SCRA 348
(2000).
Perfection Distinguished from Demandability Not all contracts of sale become
automatically and immediately effective. In sales with assumption of mortgage, there is a condition
precedent to the sellers consent and without the approval of the mortgagee, the sale is not
perfected. xBian Steel Corp. v. CA, 391 SCRA 90 (2002).
No Contract Situation versus Void Contract Absence of consent (i.e., complete
meeting of minds) negates the existence of a perfected sale. xFirme v. Bukal Enterprises and Dev.
Corp., 414 SCRA 190 (2003). The contract then is null and void ab initio, absolutely wanting in civil
effects; hence, it does not create, modify, or extinguish the juridical relation to which it refers.
xCabotaje v. Pudunan, 436 SCRA 423 (2004).
When there is no meeting of the minds on price, the contract is not perfected and does not
serve as a binding juridical relation between the parties. xManila Metal Container Corp. v. PNB, 511
10
SCRA 444 (2006), and should be more accurately denominated as inexistent, as it did not pass the
stage of generation to the point of perfection. xNHA v. Grace Baptist Church, 424 SCRA 147 (2004).
c. Bilateral and Reciprocal (Arts. 1169 and 1191)
A contract of sale gives rise to reciprocal obligations, which arise from the same cause with
each party being a debtor and creditor of the other, such that the obligation of one is dependent
upon the obligation of the other; and they are to be performed simultaneously, so that the
performance of one is conditioned upon the simultaneous fulfillment of the other. Cortes v. CA, 494
SCRA 570 (2006).11
7
Bowe v. CA, 220 SCRA 158 (1993); Romero v. CA, 250 SCRA 223 (1995); Lao v. CA, 275 SCRA 237 (1997); Cavite Devt Bank v.
Lim, 324 SCRA 346 (2000).
8
Romero v. CA, 250 SCRA 223 (1995); Balatbat v. CA, 261 SCRA 128 (1996); Coronel v. CA, 263 SCRA 15 (1996); City of Cebu v.
Heirs of Candido Rubi, 306 SCRA 408 (1999); Agasen v. CA, 325 SCRA 504 (2000); Laforteza v. Machuca, 333 SCRA 643 (2000);
Londres v. CA, 394 SCRA 133 (2002); Alcantara-Daus v. de Leon, 404 SCRA 74 (2003); Buenaventura v. CA, 416 SCRA 263 (2003);
San Lorenzo Dev. Corp. v. CA, 449 SCRA 99 (2005); Yason v. Arciaga, 449 SCRA 458 (2005); Ainza v. Padua, 462 SCRA 614 (2005);
Roberts v. Papio, 515 SCRA 346 (2007); MCC Industrial Sales Corp. v. Ssangyong Corp., 536 SCRA 408 (2007); Castillo v. Reyes. 539
SCRA 193 (2007); XYST Corp. v. DMC Urban Properties Dev., Inc., 594 SCRA 598 (2009); Del Prado v. Caballero, 614 SCRA 102
(2010); Duarte v. Duran, 657 SCRA 607 (2011).
9
Province of Cebu v. Heirs of Rufina Morales, 546 SCRA 315 (2008).
10
Roberts v. Papio, 515 SCRA 346 (2007).
11
Ong v. CA, 310 SCRA 1 (1999); Mortel v. KASSCO, 348 SCRA 391 (2000); Agro Conglomerates, Inc. v. CA, 348 SCRA 450 (2000);
Velarde v. CA, 361 SCRA 56 (2001); Carrascoso, Jr. v. CA, 477 SCRA 666 (2005); Heirs of Antonio F. Bernabe v. CA, 559 SCRA 53
(2008); Heirs of Antonio F. Bernabe v. CA, 559 SCRA 53 (2008).
Page - 2 - of 62
A dacion en pago is governed by the law of sales, and contracts of sale come with warranties,
either express (if explicitly stipulated by the parties) or implied (under Article 1547 et seq. of the
Civil Code). The implied warranty in case of eviction is waivable and cannot be invoked if the
buyer knew of the risks or danger of eviction and assumed its consequences. Luzon Dev. Bank v.
Enriquez, 639 SCRA 332 (2011).
6. Lease (Arts. 1484 and 1485)
When rentals in a lease are clearly meant to be installment payments to a sale contract, despite
the nomenclature given by the parties, it is a sale by installments and governed by the Recto Law.
xFilinvest Credit Corp. v. CA, 178 SCRA 188 (1989).
19
Filinvest Credit Corp. v. Philippine Acetylene Co., Inc. 111 SCRA 421 (1982); Vda. de Jayme v. CA, 390 SCRA 380 (2002); Ong v.
Roban Lending Corp., 557 SCRA 516 (2008).
20
Domingo v. CA, 367 SCRA 368 (2001).
Page - 5 - of 62
Only to a lawyer of record, and does not cover assignment of the property given in judgment made by a
client to an attorney, who has not taken part in the case. Municipal Council of Iloilo v. Evangelista, 55
24
Phil. 290 (1930);
Not applicable to a lawyer who acquired property prior to the time he intervened as counsel in the suit
involving such property. Del Rosario v. Millado, 26 SCRA 700 (1969).
Cirelos v. Hernandez, 490 SCRA 625 (2006); Bautista v. Silva, 502 SCRA 334 (2006).
Ching v. Goynako, Jr., 506 SCRA 735 (2006).
23
Uy Sui Pin v. Cantollas, 70 Phil. 55 (1940); Medina v. Collector, 1 SCRA 302 (1961).
24
Gregorio Araneta, Inc. v. Tuason de Paterno, 49 O.G. 45 (1952).
22
Page - 6 - of 62
Recto v. Harden, 100 Phil. 427 (1956); Vda. de Laig v. CA, 86 SCRA 641 (1978).
Page - 7 - of 62
As the above-quoted portion of the kasunduan shows [giving reference to the area, the
locality located, and vicinity with reference of old trees], there is no doubt that the object of
the sale is determinate. xCarabeo v. Dingco, 647 SCRA 200 (2011).
Determinable subject matter of sale are not subject to risk of loss until they are physically
segregated or particularly designated. Yu Tek & Co. v. Gonzales, 29 Phil. 384 (1915).
b. Undivided Interest (Art. 1463) or Undivided Share in a Mass of Fungible Goods (Art. 1464)
May result it co-ownership.
4. Quantity of Goods as Subject Matter Not Essential for Perfection [?] (Art. 1349)
Sale of grains is perfected even when the exact quantity or quality is not known, so long as the
source of the subject is certain. NGA v. IAC, 171 SCRA 131 (1989).
Where seller quoted to buyer the items offered for sale, by item number, part number,
description and unit price, and the buyer had sent in reply a purchase order without indicating the
quantity being order, there was already a perfected contract of sale, even when required letter of
credit had not been opened by the buyer. Johannes Schuback & Sons Phil. Trading Corp. v.
CA, 227 SCRA 719 (1993).
5. Sellers Obligation to Transfer Title to Buyer (Art. 1459, 1462, and 1505)
a. Sellers Ownership Need Not Exist at Perfection:
Sale of copra for future delivery does not make seller liable for estafa for failing to deliver
because the contract is still valid and the obligation was civil and not criminal. xEsguerra v.
People, 108 Phil. 1078 (1960).
A perfected sale cannot be challenged on the ground of the sellers non-ownership of the
thing sold at the time of the perfection; it is at delivery that the law requires the seller to have the
ownership of the thing sold. xAlcantara-Daus v. de Leon, 404 SCRA 74 (2003).27
It is essential that seller is owner of the property he is selling. The principal obligation of a
seller is to transfer the ownership of the property sold (Art. 1458). This law stems from the
principle that nobody can dispose of that which does not belong to him. NEMO DAT QUOD NON
HABET. Noel v. CA, 240 SCRA 78 (1995).
That the sellers are no longer owners of the goods at perfection does not appear to be one of
the void contracts enumerated in Art. 1409 of Civil Code; and Art. 1402 thereof recognizes a sale
where the goods are to be acquired . . . by the seller after the perfection of the contract of sale,
clearly implying that a sale is possible even if the seller was not the owner at the time of sale,
provided he acquires title to the property later on; nevertheless such contract may be deemed to
be inoperative and may thus fall, by analogy, under Art. 1409(5): Those which contemplate an
impossible service. Nool v. CA, 276 SCRA 149 (1997).
b. Subsequent Acquisition of Title by Non-Owner Seller (Art. 1434) Title passes to the seller
by operation of law.
c. Acquisition by the Buyer May Even Depend on Contingency (Art. 1462)
26
27
Page - 8 - of 62
-9X6.
(Arts. 1409,
a. Special Laws: narcotics (R.A. 6425); wild bird or mammal (Act 2590, Sec. 7); rare wild plants (Act
3983); poisonous plants or fruits (R.A. 1288); dynamited fish (R.A 428); gunpowder and
explosives (Act 2255); firearms and ammunitions (P.D. 9); sale of realty by non-Christians (Sec.
145, Revised Adm. Code, R.A. 4252)
b. Following Sales of Land Void:
By Non-Christian if not approved by Provincial Governor per Sec. 145 of Revised Administrative Code.
xTac-an v. CA, 129 SCRA 319 (1984).
Friar land without consent of Secretary of Agriculture required under Act No. 1120. xAlonso v. Cebu
Country Club, Inc., 375 SCRA 390 (2002); Liao v. CA, 323 SCRA 430 (2000).
Made in violation of land reform laws declaring tenant-tillers as the full owners of the lands they tilled.
xSiacor v. Gigantana, 380 SCRA 306 (2002).
Reclaimed lands are of the public domain and cannot, without congressional fiat, be sold, public or
private. Fisheries Dev. Authority v. CA, 534 SCRA 490 (2007).
28
Yu Bun Guan v. Ong, , 367 SCRA 559 (2001); Gonzales v. Trinidad, 67 Phil. 682 (1939)
Page - 9 - of 62
32
Even when there was no meeting on the minds of the price, this Court rules that to deny
petitioners claim would unjustly enrich respondent who had benefited from the repairs of their
four elevators. xHyatt Elevators and Escalators Corp. v. Cathedral Heights Building Complex
Assn., 636 SCRA 401 (2010).
4. Manner of Payment of Price ESSENTIAL (Art. 1179)
A definite agreement on the manner of payment of price is an essential element in the formation of a
binding and enforceable contract sale; without it the sale is void and an action for specific performance
must fail. Navarra v. Planters Dev. Bank, 527 SCRA 562 (2007).34
When the manner of payment of the price is discussed after acceptance, then such acceptance
did not produce a binding and enforceable contract of sale. xNavarro v. Sugar Producer's Corp., 1
SCRA 1180 (1961).
Where there is no other basis for the payment of the subsequent amortizations in a Deed of
Conditional Sale, the reasonable conclusion one can reach is that the subsequent payments shall be
made in the same amount as the first payment. [?] xDBP v. CA, 344 SCRA 492 (2000).
5. Inadequacy of Price Does Not Affect Ordinary Sale (Arts. 1355 and 1470)
Mere inadequacy of the price does not affect the validity of the sale when both parties are in a
position to form an independent judgment concerning the transaction, unless fraud, mistake, or undue
influence indicative of a defect in consent is present. The contract may be annulled for vitiated consent
and not due to the inadequacy of price. xBautista v. CA, 436 SCRA 141 (2004).35
Absent any evidence of the fair market value of a land as of the time of sale, it cannot be concluded
that the price was inadequate. xAcabal v. Acabal, 454 SCRA 897 (2005).36
a. Gross Inadequacy of Price May Avoid Judicial Sale:
(i) Only when it is shocking to the conscience of man. xPascua v. Simeon, 161 SCRA 1 (1988);
and
34
Velasco v. CA, 51 SCRA 439 (1973); Co v. CA, 286 SCRA 76 (1998); San Miguel Properties Philippines v. Huang, 336 SCRA 737
(2000); Montecillo v. Reynes, 385 SCRA 244 (2002); Edrada v. Ramos, 468 SCRA 597 (2005); Cruz v. Fernando, 477 SCRA 173
(2005); Marnelego v. Banco Filipino Savings and Mortgage Bank, 480 SCRA 399 (2006); Boston Bank of the Phil. v. Manalo, 482
SCRA 108 (2006); Platinum Plans Phil., Inc. v. Cucueco, 488 SCRA 156 (2006); Manila Metal Container Corp. v. PNB, 511 SCRA 444
(2006).
35
Ereeta v. Bezore, 54 SCRA 13 (1973); Bacungan v. CA, 574 SCRA 642 (2008); Bacungan v. CA, 574 SCRA 642 (2008).
36
Avila v. Barabat, 485 SCRA 8 (2006).
Page - 11 - of 62
UNLESS: There is right of redemption, in which case the proper remedy is to redeem. xDe Leon v.
Salvador, 36 SCRA 567 (1970).38
BUT:
Gross inadequacy of price by itself will not result in a void contract; it does not even affect the
validity of a contract of sale; unless it signifies a defect in the consent (i.e., there has been fraud,
mistake or undue influence) or that the parties actually intended a donation or some other contract.
Bacungan v. CA, 574 SCRA 642 (2008).
There is gross inadequacy in price if it is such that a reasonable man will not agree to dispose of
his property. xDorado Vda. De Delfin v. Dellota, 542 SCRA 397 (2008).
When judicial sale is voided without fault of purchaser, the latter is entitled return of price with
simple interest, together with all sums paid out by him in improvements introduced on the property,
taxes, and other expenses. xSeven Brothers Shipping Corp. v. CA, 246 SCRA 33 (1995).
b. Lesion of more than 1/4 of value of thing makes sale rescissible unless approved by court
(Art. 1386)
c. Gross inadequacy of price may raise the presumption of equitable mortgage (Art. 1602)
When the offeree negotiates for a much lower price, it constitutes a counter-offer and is
therefor not an acceptance of the offer of offeror. xTuazon v. Del Rosario-Suarez, 637 SCRA 728
(2010).
1. OPTION CONTRACT
37
Tayengco v. CA, 15 SCRA 306 (1965); Republic v. NLRC, 244 SCRA 564 (1995).
Vda. de Gordon v. CA, 109 SCRA 388 (1981).
39
Navarra v. Planters Dev. Bank, 527 SCRA 562 (2007).
38
Page - 12 - of 62
If the option is without any consideration, the offeror may withdraw his offer by
communicating such withdrawal to the offeree at any time before acceptance. If it is founded
upon a consideration, the offeror cannot withdraw his offer before the lapse of the period
agreed upon. Tuazon v. Del Rosario-Suarez, 637 SCRA 728 (2010).
c. There Must Be Acceptance of Option Offer. Vazquez v. CA, 199 SCRA 102 (1991).
d. Proper Exercise of Option Contract. Nietes v. CA, 46 SCRA 654 (1972).
An option attached to a lease when not exercised within the option period is extinguished and
cannot be deemed to have been included in the implied renewal (tacita reconduccion) of the lease.
xDizon v. CA, 302 SCRA 288 (1999).
Proper exercise of an option gives rise to the reciprocal obligations of sale xHeirs of Luis Bacus
v. CA, 371 SCRA 295 (2001),45 which must be enforced with ten (10) years as provided under Art.
1144. xDizon v. CA, 302 SCRA 288 (1999).
There must be virtual exercise of option with the option period. Carceller v. Court of
Appeals, 302 SCRA 718 (1999).
40
Laforteza v. Machuca, 333 SCRA 643 (2000); Buot v. CA, 357 SCRA 846 (2001); Abalos v. Macatangay, Jr., 439 SCRA 649
(2004); Vasquez v. Ayala Corp., 443 SCRA 231 (2004); Eulogio v. Apeles, 576 SCRA 561 (2009); Polytechnic University of the
Philippines v. Golden Horizon Realty Corp., 615 SCRA 478 (2010).
41
Adelfa Properties, Inc. v. CA, 240 SCRA 565 (1995); Kilosbayan, Inc. v. Morato, 246 SCRA 540 (1995); San Miguel Properties
Philippines, Inc. v. Huang, 336 SCRA 737 (2000); Limson v. CA, 357 SCRA 209 (2001).
42
JMA House, Inc. v. Sta. Monica Industrial and Dev. Corp., 500 SCRA 526 (2006).
43
De la Cavada v. Diaz, 37 Phil. 982 (1918); San Miguel Properties Philippines, Inc. v. Huang, 336 SCRA 737 (2000)
44
Affirming Atkins, Kroll & Co., Inc. v. Cua, 102 Phil. 948 (1958); Overturning Southwestern Sugar Molasses Co. v. Atlantic Gulf &
Pacific Co., 97 Phil. 249 (1955).
45
Limson v. CA, 357 SCRA 209 (2001).
Page - 13 - of 62
46
Rosencor Dev. Corp. v. Inquing, 354 SCRA 119 (2001); Conculada v. CA, 367 SCRA 164 (2001); Polytechnic University v. CA, 368
SCRA 691 (2001); Riviera Filipina, Inv. v. CA, 380 SCRA 245 (2002); Lucrative Realty and Dev. Corp. v. Bernabe, Jr., 392 SCRA 679
(2002); Villegas v. CA, 499 SCRA 276 (2006); Polytechnic University of the Philippines v. Golden Horizon Realty Corp., 615 SCRA 478
(2010).
47
Polytechnic University v. CA, 368 SCRA 691 (2001); Villegas v. CA, 499 SCRA 276 (2006).
48
El Banco Nacional Filipino v. Ah Sing, 69 Phil. 611 (1940); Manuel v. Rodriguez, 109 Phil. 1 (1960).
Page - 14 - of 62
49
Borromeo v. Franco, 5 Phil. 49 (1905); Villamor v. CA, 202 SCRA 607 (1991); Coronel v. CA, 263 SCRA 15 (1996).
Valdez v. CA, 439 SCRA 55 (2004); Blas v. Angeles-Hutalla, 439 SCRA 273 (2004); Ainza v. Padua, 462 SCRA 614 (2005); Cruz v.
Fernando, 477 SCRA 173 (2005).
51
Moreno, Jr. v. Private Management Office, 507 SCRA 63 (2006).
52
Beaumont v. Prieto, 41 Phil. 670 (1916); Zayco v. Serra, 44 Phil. 326 (1923); Tuazon v. Del Rosario-Suarez, 637 SCRA 728 (2010).
Page - 15 - of 62
50
53
Reiterated in Limketkai Sons Milling, Inc. v. CA, 250 SCRA 523 (1995), but reversed in 255 SCRA
Limjoco v. CA, 37 SCRA 663 (1971); Villonco v. Bormaheco, 65 SCRA 352 (1975); Spouses Doromal, Sr. v. CA, 66 SCRA 575
(1975); PNB v. CA, 262 SCRA 464 (1996); San Miguel Properties Philippines, Inc. v. Huang, 336 SCRA 737 (2000); Platinum Plans
Phil. Inc. v. Cucueco, 488 SCRA 156 (2006).
55
San Miguel Properties Philippines, Inc. v. Huang, 336 SCRA 737 (2000).
56
XYST Corp. DMC Urban Properties Dev., Inc., 594 SCRA 598 (2009).
57
F. Irureta Goyena v. Tambunting, 1 Phil. 490 (1902).
58
Heirs of Biona v. CA, 362 SCRA 29 (2001); The Estate of Pedro C. Gonzales v. The Heirs of Marcos Perez, 605 SCRA 47 (2009).
Page - 16 - of 62
54
62
Universal Robina Sugar Milling Corp. v. Heirs of Angel Teves, 389 SCRA 316 (2002).
Limketkai Sons Milling, Inc. v. CA, 250 SCRA 523 (1995); Agasen v. CA, 325 SCRA 504 (2000).
Universal Robina Sugar Milling Corp. v. Heirs of Angel Teves, 389 SCRA 316 (2002).
65
Talusan v. Tayag, 356 SCRA 263 (2001); Santos v. Manalili, 476 SCRA 679 (2005).
66
Rosencor Devt Corp. v. Inquing, 354 SCRA 119 (2001).
67
Alba Vda. De Ray v. CA, 314 SCRA 36 (1999).
68
Torcuator v. Bernabe, 459 SCRA 439 (2005).
69
Rosales v. Suba, 408 SCRA 664 (2003); Ayson, Jr. v. Paragas, 557 SCRA 50 (2008).
63
64
Page - 18 - of 62
70
In the case of a corporate owner of realty. xCity-Lite Realty Corp. v. CA, 325 SCRA 385 (2000).77
When Contract to Sell was signed by the co-owners themselves as witnesses, the written
authority for their agent mandated under Article 1874 of the Civil Code is no longer required. xOesmer
v. Paraiso Dev. Corp., 514 SCRA 228, 237 (2007).
d. Sale of Large Cattle (Art. 15851; Sec. 529, Revised Adm. Code)
XD.
SIMULATED SALES
Characteristic of simulation is that the apparent contract is not really desired or intended to produce
legal effect or in any way alter the parties juridical situation, or that the parties have no intention to be
bound by the contract. The requisites are: (a) an outward declaration of will different from the will of the
parties; (b) false appearance must have been intended by mutual agreement; and (c) purpose is to
deceive third persons. xManila Banking Corp. v. Silverio, 466 SCRA 438 (2005).78
1. Badges and Non-badges of Simulation:
Non-payment of the stipulated consideration, absence of any attempt by the buyers to assert their alleged
79
rights over the subject property. xVillaflor v. CA, 280 SCRA 297 (1997).
Failure of alleged buyers to collect rentals from alleged seller. xSantiago v. CA, 278 SCRA 98 (1997); but not
when there appears a legitimate lessor-lessee relationship between the vendee and the vendor. xUnion Bank
v. Ong, 491 SCRA 581 (2006).
Although the agreement did not provide for the absolute transfer ownership of the land to buyer, that did not
amount to simulation, since delivery of certificate of ownership and execution of deed of absolute sale were
expressly stipulated as suspensive conditions, which gave rise to the corresponding obligation on part of
buyer to pay the last installments. xVillaflor v. CA, 280 SCRA 297 (1997).
When signature on a deed of sale is a forgery. Fidel v. CA, 559 SCRA 186 (2008). But bare assertions that
the signature appearing on the Deeds of Sale is not that of her husband is not enough to allege simulation,
since forgery is not presumed; it must be proven by clear, positive and convincing evidence. xR.F. Navarro &
Co. v. Vailoces, 361 SCRA 139 (2001).
80
Simulation of contract and gross inadequacy of price are distinct legal concepts, with different effects the
concept of a simulated sale is incompatible with inadequacy of price. When the parties to an alleged contract
do not really intend to be bound by it, the contract is simulated and void. Gross inadequacy of price by itself
will not result in a void contract, and it does not even affect the validity of a contract of sale, unless it signifies
74
Then restoration of what has been given is in order, since the relationship between parties in any contract
even if subsequently voided must always be characterized and punctuated by good faith and fair dealing.
xDe los Reyes v. CA, 313 SCRA 632 (1999); xHeirs of Ignacia Aguilar-Reyes v. Mijares, 410 SCRA 97
(2003).
Alien who purchases land in the name of his Filipina lover, has no standing to seek legal remedies
to either recover the property or the purchase price paid, since the transaction is void ab initio for being
in violation of the constitutional prohibition. xFrenzel v. Catito, 406 SCRA 55 (2003).
A. OBLIGATIONS OF SELLER
1. Preserve Subject Matter (Art. 1163)
81
Tangalin v. CA, 371 SCRA 49 (2001); Heirs of Arturo Reyes v. Socco-Beltran, 572 SCRA 211 (2008); Francisco v. Chemical Bulk
Carriers, Inc., 657 SCRA 355 (2011).
83
Kuenzle & Streiff v. Watson & Co., 13 Phil. 26 (1909); Ocejo, Perez & Co. v. Int'l Banking Corp., 37 Phil. 631 (1918).
Page - 22 - of 62
84
Page - 25 - of 62
(iii) CIF Sales General Foods v. NACOCO, 100 Phil. 337 (1956).
C.I.F. found in British contracts stand for costs, insurance, and freight; they signify that the
price fixed covers not only the costs of the goods, but the expense of freight and insurance to be
paid by the seller. Behn Meyer & Co. v. Yangco, 38 Phil. 602, 606 (1918).
Under an arrangement c.i.f. Pacific Coast (destination), the vendor is to pay not only the
cost of the goods, but also the freight and insurance expenses, and, as it was judicially
interpreted, this is taken to indicate that the delivery is to be made at the port of destination.
Pacific Vegetable Oil Corp. v. Singzon, Supreme Court Advance Decisions, 29 April 1955.
b. Sale on Approval, Trial or Satisfaction (Art. 1502)
In a sale or return, the ownership passes to the buyer on delivery pursuant to a perfected
contract of sale; and the subsequent return of the goods reverts ownership back to the seller. In
such case, tradition as a mode of acquiring ownership must be in consequence of a contract.
xVallarta v. CA, 150 SCRA 336 (1987).
In a sale on approval (also called sale on acceptance, sale on trial or sale on
satisfaction), the delivery of the object does not transfer ownership to the buyer since the delivery
was not for purposes of transferring ownership, since the prestation to effect a meeting of the
minds to give rise to a valid contract is incumbent on the buyer. xVallarta v. CA, 150 SCRA 336
(1987).
For a sale to be a sale or return or a sale on approval, there must be a clear agreement to
either of such effect, otherwise, the provisions of Art. 1502 of Civil Code governing such sales
cannot be invoked by either party to the contract. xIndustrial Textile Manufacturing Co. v. LPJ
Enterprises, Inc., 217 SCRA 322 (1993).
c. Sale by Description and/or Sample (Art. 1481)
There is a sale by sample when a small quantity is exhibited by the seller as a fair specimen of
the bulk, which is not present and there is no opportunity to inspect or examine the same; and the
parties treated the sample as the standard of quality and that they contracted with reference to the
sample with the understanding that the product to be delivered would correspondent with the
sample. xMendoza v. David, 441 SCRA 172 (004)
Even in sales by description and/or sample, buyer will not be released from his obligation to
accept and pay for the goods by deviations on the part of the seller from the exact terms of the
contract, if buyer had acquiesced to such deviations after due notice thereof. xEngel v. Mariano
Velasco & Co., 47 Phil. 115 (1924).
When the machine delivered is in accordance with the description stated in the sales contract,
the buyer cannot refuse to pay the balance of the purchase price and the cost of installation if it
proves that the machine cannot be used satisfactorily for the purposes for which he bought it when
such purpose was not made known to the seller. xPacific Commercial Co. v. Ermita Market & Cold
Stores, 56 Phil. 617 (1932).
d. Buyer's Right to Inspect Before Acceptance (Arts. 1481 and 1584) Except when carrier
delivers COD.
2. In Case of Immovables
a. Where Sold Per Unit or Number (Arts. 1539 and 1540)
In a unit price sale, the statement of the area of immovable is not conclusive and the price may
be reduced or increased depending on the area actually delivered. If the vendor delivers less than
the area agreed upon, the vendee may oblige the vendor to deliver all that is stated in the contract or
demand for the proportionate reduction of the purchase price if delivery is not possible. If the vendor
delivers more than the area stated in the contract, the vendee has the option to accept only the
91
the Torrens system rule that formal registration proceedings undertaken on the property and the
subsequent issuance of a title over the land had under the Torrens system had the legal effect of
cleansing title on the property of all liens and claims which were not annotated therein .
92
Goyena v. Tambunting, 1 Phil. 490 (1902); Santa Ana v. Hernandez, 18 SCRA 973 (1966).
Asiain v. Jalandoni, 45 Phil 296 (1923); Balantakbo v. CA, 249 SCRA 323 (1995); Esguerra v. Trinidad, 518 SCRA 186 (2007); Del
Prado v. Caballero, 614 SCRA 102 (2010).
94
Pudadera v. Magallanes, 633 SCRA 332 (2010).
95
Reiterated in Abrigo v. De Vera, 432 SCRA 544 (2005); Ver Reyes v. Salvador, Sr., 564 SCRA 456 (2008).
Page - 27 - of 62
93
Tanglao v. Parungao, 535 SCRA 123 (2007); Calma v. Santos, 590 SCRA 359 (2009).
Reiterated in Mactan-Cebu International Airport Authority v. Tirol, 588 SCRA 635 (2009).
Espiritu v. Valerio, 9 SCRA 761 (1963); Remalante v. Tibe, 158 SCRA 138 (1988); Delfin v. Valdez, 502 SCRA 24 (2006).
99
Torrecampo v. Alindogan, Sr., 517 SCRA 84 (2007).
100
Ong v. Olasiman, 485 SCRA 464 (2006).
Page - 28 - of 62
97
98
101
Gallardo v. Gallardo, 46 O.G. No. 11 p. 5568; Sigaya v. Mayuga, 467 SCRA 341, 357 (2005).
Ulep v. CA, 472 SCRA 241 (2005).
Blanco v. Rivera, 488 SCRA 148 (2006); Gabriel v. Mabanta, 399 SCRA 573 (2003); De la Cena v. Briones, 508 SCRA 62 (2006);
Tanglao v. Parungao, 535 SCRA 123 (2007); Bernardez v. CA, 533 SCRA 451 (2007); Ordua v. Fuentebella, 622 SCRA 146 (2010);
Estate of Margarita D. Cabacungan v. Laigo, 655 SCRA 366 (2011).
Page - 29 - of 62
102
103
- 30 to him by registration or
CA, 278 SCRA 702 (1997).104
failing
In a situation where a party has actual knowledge of the claimants actual, open and notorious
possession of a disputed property at the time of registration, the actual notice and knowledge are
equivalent to registration, because to hold otherwise would be to tolerate fraud and the Torrens
system cannot be used to shield fraud while certificates of title are indefeasible, unassailable and
binding against the whole world, they merely confirm or record title already existing and vested.
Consolidated Rural Bank (Cagayan Valley), Inc. v. CA, 448 SCRA 347 (2005).
In double sales, the first buyer always has priority rights over subsequent buyers of the same
property. The good faith of the first buyer remains all throughout despite his subsequent acquisition
of knowledge of the subsequent sale. Kings Properties Corp. v. Galido, 606 SCRA 137 (2009).
d. Registration in Good Faith Always Pre-empts Possession in Good Faith Between two
purchasers, the one who registered the sale in his favor has a preferred right over the other who
has not registered his title, even if the latter is in actual possession of the immovable property.
xTaedo v. CA, 252 SCRA 80 (1996).105
The registration of a sale after the annotation of the notice of lis pendens does not obliterate
the effects of delivery and possession in good faith. The rules on constructive notice upon
registration provided for under Section 52 of the Property Registration Decree (P.D. No. 1529)
operate only from the time of the registration of the notice of lis pendens which in this case was
effected only after the time the sale in favor of the second buyer had long been consummated by
delivery of the subject matter. San Lorenzo Dev. Corp. v. CA, 449 SCRA 99 (2005).
4. Possession Refers Both to Material and Symbolic Possession
In the absence of inscription under double sales, the law gives preferential right to the buyer who
in good faith is first in possession, under the following jurisprudential parameters: (a) Possession
mentioned in Article 1544 includes not only material but also symbolic possession; (b) possessors in
good faith are those who are not aware of any flaw in their title or mode of acquisition; (c) Buyers of
real property that is in the possession of persons other than the seller must be wary they must
investigate the rights of the possessors; and (d) good faith is always presumed, upon those who
allege bad faith on the part of the possessors rests the burden of proof. xTen Forty Realty and Dev.
Corp. v. Cruz, 410 SCRA 484 (2003).106
5. Who is Purchaser in Good Faith?
In the determination of whether or not a buyer is in good faith, the point in time to be considered is
the moment when the parties actually entered into the contract of sale. Estate of Lino Olaguer v.
Ongjoco, 563 SCRA 373 (2008).
a. Must Have Paid Price in Full A purchaser is good faith is one who buys property without notice
that some other person has a right to, or interest in, such property and pays a full and fair price
for the same at the time of such purchase, or before he has notice of the claim or interest of
some other person in the property. Tanglao v. Parungao, 535 SCRA 123 (2007)107
Under Article 1544, mere registration is not enough to acquire a new title. Good faith must
concur. Clearly, when the buyer has not yet fully paid the purchase price, and as long as seller
remains unpaid, the buyer cannot feign good faith. xPortic v. Cristobal, 546 SCRA 577 (2005).
104
Cruz v. Cabana, 129 SCRA 656 (1984); Gatmaitan v. CA, 200 SCRA 37 (1991); Vda. de Jomoc v. CA, 200 SCRA 74 (1991); Bucad
v. CA, 216 SCRA 423 (1992); Berico v. CA, 225 SCRA 469 (1993); Bautista v. CA, 322 SCRA 294 (2000); Bautista v. CA, 322 SCRA
294 (2000); Ulep v. CA, 472 SCRA 241 (2005); Escueta v. Lim, 512 SCRA 411 (2007); Lumbres v. Tablada, Jr., 516 SCRA 575 (2007);
Fudot v. Cattleya Land, Inc., 533 SCRA 350 (2007); Tanglao v. Parungao, 535 SCRA 123 (2007).
105
Liao v. CA, 323 SCRA 430 (2000); Talusan v. Tayag, 356 SCRA 263 (2001); Dauz v. Exchavez, 533 SCRA 637 (2007).
106
Sanchez v. Ramos, 40 Phil. 614 (1919); Quimson v. Rosete, 87 Phil. 159 (1950); Navera v. CA, 184 SCRA 584 (1990).
107
Agricultural and Home Extension Dev. v. CA., 213 SCRA 536 (1992); Veloso v. CA, 260 SCRA 593 (1996); Balatbat v. CA, 261
SCRA 128 (1996); Mathay v. CA, 295 SCRA 556 (1998); Diaz-Duarte v. Ong, 298 SCRA 388 (1998); Liao v. CA, 323 SCRA 430 (2000);
Tanongon v. Samson, 382 SCRA 130 (2002); Universal Robina Sugar Milling Corp. v. Heirs of Angel Teves, 389 SCRA 316 (2002);
Aguirre v. CA, 421 SCRA 310 (2004); Galvez v. CA, 485 SCRA 346 (2006); Chua v. Soriano, 521 SCRA 68 (2007); Raymundo v.
Bandong, 526 SCRA 514 (2007); De Leon v. Ong, 611 SCRA 381 (2010); Kings Properties Corp. v. Galido, 606 SCRA 137 (2009); The
Heirs of Romana Saves v. The Heirs of Escolastico Saves, 632 SCRA 236 (2010).
Page - 30 - of 62
A buyer of a registered land would be in bad faith when he purchases without asking to see the
owners copy of the title and/or without visiting the land where he would then have seen first buyer
111
occupying the same. xSantiago v. CA, 247 SCRA 336 (1995).
When there are occupants to the land being bought, since it is the common practice in the real
estate industry, an ocular inspection of the premises involved is a safeguard a cautious and prudent
112
purchaser usually takes. xMartinez v. CA, 358 SCRA 38 (2001).
108
Tsai v. CA, 366 SCRA 324 (2001); Aguirre v. CA, 421 SCRA 310 (2004); Raymundo v. Bandong, 526 SCRA 514 (2007); Eagle
Realty Corp. V. Republic, 557 SCRA 77 (2008); Pudadera v. Magallanes, 633 SCRA 332 (2010).
109
Adriano v. Pangilinan, 373 SCRA 544 (2002); Lloyds Enterprises and Credit Corp. v. Dolleton, 555 SCRA 142 (2008); Eagle Realty
Corp v. Republic, 557 SCRA 77 (2008); Eagle Realty Corp v. Republic, 557 SCRA 77 (2008).
110
Agag v. Alpha Financing Corp., 407 SCRA 602 (2003); Bank of Commerce v. San Pablo, Jr., 522 SCRA 713 (2007); Lloyds
Enterprises and Credit Corp. v. Dolleton, 555 SCRA 142 (2008);Ty v. Queens Row Subdivision, Inc., 607 SCRA 324 (2009).
111
R.R. Paredes v. Calilung, 517 SCRA 369 (2007); Chua v. Soriano, 521 SCRA 68 (2007).
Page - 31 - of 62
- 32
The property was titled and transferred with undue haste within a short period of time, plus the fact
that the subject property is a vast tract of land in a prime location, should have, at the very least,
triggered petitioners curiosity. Eagle Realty Corp v. Republic, 557 SCRA 77, 94 (2008).
(5) Land in Adverse Possession Buyer who could not have failed to know or discover that
the land sold to him was in the adverse possession of another is a buyer in bad faith. xHeirs
of Ramon Durano, Sr. v. Uy, 344 SCRA 238 (2000).114
(6) Existence of Lis Pendens or Adverse Claim Registration of an adverse claim places any
subsequent buyer of the registered land in bad faith. Kings Properties Corp. v. Galido, 606
SCRA 137 (2009).
Settled is the rule that one who deals with property with a notice of lis pendens, even
when at the time of sale the annotation was cancelled but there was a pending appeal,
cannot invoke the right of a purchaser in good faith. A purchaser cannot close his eyes to
facts which should put a reasonable man on guard and claim that he acted in the belief that
there was no defect in the title of the seller. xPo Lam v. CA, 316 SCRA 721 (1999).
EXCEPT: When knowledge of lis pendens was acquired at the time there was order to have it
cancelled. xPo Lam v. CA, 347 SCRA 86 (2000).115
(7) Annotation of Lien in Settlement of Estate An annotation placed on new certificates of
title issued pursuant to the distribution and partition of a decedents real properties is a
warning to third persons on the possible interest of excluded heirs or unpaid creditors in
these propertieswhere a buyer purchases the real property despite the annotation, he
must be ready for the possibility that the title be subject to the rights of excluded parties. Tan
v. Benolirao, 604 SCRA 36 (2009).
(8) Banks Are Vested with Public Interest and Obligation to Exercise Extraordinary
Diligence One of the protections afforded by P.D. 957 to buyers is the right to have her
contract to sell registered with the Register of Deeds in order to make it binding on third
parties. Nonetheless, despite the non-registration of the contract to sell, the mortgagee bank
cannot be considered, under the circumstances, an innocent purchaser for value of the lot
when it accepted the latter (together with other assigned properties) as payment for the
mortgagor developers obligationthe bank was well aware that the assigned properties
were subdivision lots and therefore within the purview of P.D. 957. Luzon Dev. Bank v.
Enriquez, 639 SCRA 332 (2011).
6. When Subject of Sale Is Unregistered Land Naawan Community Rural Bank v. CA, 395 SCRA
43 (2003).
The rules in double sale under Article 1544, whereby the buyer who is able to first register the
purchase in good faith is in full accord with Section 51 of PD 1529 which provides that no deed,
mortgage, lease, or other voluntary instrument except a will purporting to convey or affect registered
land shall take effect as a conveyance or bind the land until its registration. Thus, if the sale is not
registered, it is binding only between the seller and the buyer but it does not affect innocent third
persons. Abrigo v. De Vera, 432 SCRA 544 (2004).
112
Mathay v. CA, 295 SCRA 556 (1998); Republic v. De Guzman, 326 SCRA 267 (2000); Heirs of Ramon Durano, Sr. v. Uy, 344
SCRA 238 (2000); Heirs of Celestial v. Heirs of Celestial, 408 SCRA 291 (2003); Erasusta, Jr. v. CA, 495 SCRA 319 (2006); De la Cena
v. Briones, 508 SCRA 62 (2006); Tanglao v. Parungao, 535 SCRA 123, 132 (2007).
113
Eagle Realty Corp v. Republic, 557 SCRA 77 (2008).
114
Modina v. CA, 317 SCRA 696, 706 (1999); Republic v. De Guzman, 326 SCRA 267 (2000); Martinez v. CA, 358 SCRA 38 (2001);
Heirs of Trinidad de Leon Vda. De Roxas v. CA, 422 SCRA 101 (2004); Occena v. Esponilla, 431 SCRA 116 (2004); PNB v. Heirs of
Estanislao Militar, 494 SCRA 308 (2006); Raymundo v. Bandong, 526 SCRA 514 (2007); Tanglao v. Parungao, 535 SCRA 123 (2007);
Tio v. Abayata, 556 SCRA 175 (2008); Ordua v. Fuentebella, 622 SCRA 146 (2010); Deanon v. Mag-abo, 622 SCRA 180 (2010); The
Heirs of Romana Saves v. The Heirs of Escolastico Saves, 632 SCRA 236 (2010).
115
Pudadera v. Magallanes, 633 SCRA 332 (2010).
Page - 32 - of 62
D. OBLIGATIONS OF BUYER
1. Pay the Price (Art. 1582)
When seller cannot show title to the subject matter, then he cannot compel the buyer to pay the
price. xHeirs of Severina San Miguel v. CA, 364 SCRA 523 (2001).
Mere sending of a letter by the buyer expressing the intention to pay without the accompanying
payment is not considered a valid tender of payment and consignation of the amount due are
essential in order to extinguish the obligation to pay and oblige the seller to convey title. xTorcuator
v. Bernabe, 459 SCRA 439 (2005).
Unless the parties to a sale have agreed to the payment of the purchase price to any other party,
then its payment to be effective must be made to the seller in accordance with Article 1240 which
provides that Payment shall be made to the person in whose favor the obligation has been
constituted, or his successor in interest, or any person authorized to receive it. xMontecillo v.
Reynes, 385 SCRA 244 (2002).
2. Accept Delivery (Arts. 1582-1585)
116
Hanopol v. Pilapil, 7 SCRA 452 (1963); Radiowealth Finance Co. v. Palileo, 197 SCRA 245 (1991); Spouses Honorio Santiago v.
CA, 247 SCRA 336 (1995); Bayoca v. Nogales, 340 SCRA 154 (2000); Fidel v. CA, 559 SCRA 186 (2008); Daclag v. Macahilig, 560
SCRA 137 (2008); Amodia Vda. De Melencion v. CA, 534 SCRA 62, 82 (2007); Fidel v. CA, 559 SCRA 186 (2008).
Page - 33 - of 62
Azcona v. Reyes, 59 Phil. 446 (1934); Coronel v. Ona, 33 Phil. 456 (1916).
Page - 34 - of 62
118
Estoque v. Pajimula, 24 SCRA 59 (1968); Aguirre v. CA, 421 SCRA 310 (2004); Acabal v. Acabal, 454 SCRA 555 (2005); Barcenas
v. Tomas, 454 SCRA 593 (2005).
119
Almendra v. IAC, 204 SCRA 142 (1991); Fernandez v. Fernandez, 363 SCRA 811 (2001); Aguirre v. CA, 421 SCRA 310 (2004);
Santos v. Lumbao, 519 SCRA 408 (2007); Republic v. Heirs of Francisca Dignos-Sorono, 549 SCRA 58 (2008).
120
Heirs of Romana Ingjug-Tiro v. Casals, 363 SCRA 435 (2001); Aguirre v. CA, 421 SCRA 310 (2004).
Page - 35 - of 62
122
Page - 36 - of 62
- 37 A. ON PART OF SELLER
1. In Case of Movables (Arts. 1593, 1595 to 1597)
Under Article 1597, when the buyer of scrap iron fails to put up the letter of credit in favor of the
seller as the condition of the sale, the seller had a right to terminate the contract, and non-compliance
with the condition meant that the sellers obligation to sell never did arise. xVisayan Sawmill Co. v. CA,
219 SCRA 378 (1993).
2. Unpaid Seller of Goods (Arts. 1524-1535)
a. Definition of Unpaid Seller (Art. 1525)
b. Rights of Unpaid Seller:
Possessory lien (Arts. 1526-1529, 1503, 1535)
Stoppage in transitu (Arts. 1530-1532, 1535, 1636[2])
Right of Resale (Art. 1533)
Right to Rescind (Art. 1534)
Even before the formal statutory adoption of the remedies of an unpaid seller, the Supreme
Court had already recognized the right of a seller, when the contract of sale is still executory in
stage, to resell the movables subject matter of the sale, when the buyer fails to pay the purchase
price. xHanlon v. Hausserman, 40 Phil. 796 (1920).
Seller in possession of the goods may sell them at buyer's risk. xKatigbak v. CA, 4 SCRA 243
(1962).
123
De la Cruz v. Asian Consumer, 214 SCRA 103 (1992); Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996).
Southern Motors v. Moscoso, 2 SCRA 168 (1961); Industrial Finance Corp. v. Ramirez, 77 SCRA 152 (1977); Rosario v. PCI
Leasing and Finance, Inc., 474 SCRA 500 (2005).
Page - 37 - of 62
124
- 38 Mutual
restitution
prevents
recovering on the balance of the purchase price.
Nonato v. IAC, 140 SCRA 255 (1985); but stipulation on non-return of payments is valid
provided not unconscionable. xDelta Motor Sales Corp. v. Niu Kim Duan, 213 SCRA 259 (1992).
f. Remedy of Foreclosure
Barring effect would cover a third-party mortgage, when it was the chattel mortgage that was
first foreclosed. Ridad v. Filipinas Investment, 120 SCRA 246 (1983).
When the seller assigns his credit to another person, the latter is likewise bound by the same
law. Zayas v. Luneta Motors, 117 SCRA 726 (1982).125
(i) Barring Effects of Foreclosure Filing of the action of replevin in order to foreclose on the
chattel mortgage does not produce the barring effect under the Recto Law; for it is the fact of
foreclosure and actual sale of the mortgaged chattel that bar further recovery by the seller of
any balance on the buyers outstanding obligation not satisfied by the sale. The voluntary
payment of the installment by the buyer-mortgagor is valid and not recoverable in spite the
restrictive provisions of Art. 1484(3). Northern Motors v. Sapinoso, 33 SCRA 356 (1970).
126
Foreclosure on the chattel mortgage prevents further action on the supporting real estate
mortgage, whether the chattel mortgage is first foreclosed Cruz v. Filipinas Investment &
Finance Corp., 23 SCRA 791 (1968);127 and vice versa when the real estate mortgage is first
foreclosed. Borbon II v. Servicewide Specialists, Inc., 258 SCRA 634 (1996).
All amounts barred from recovery.
(1937).
(ii) Rule on Perverse Buyer. Filipinas Investment & Finance Corp. v. Ridad, 30 SCRA
564 (1969).
g. Purported Lease with Option to Buy
The Court took judicial notice of the practice of vendors of personal property of denominating
a contract of sale on installment as one of lease to prevent the ownership of the object of the
sale from passing to the vendee until and unless the price is fully paid. xElisco Tool
Manufacturing Corp. v. CA, 307 SCRA 731 (1999).128
Where a lease agreement over equipment is without an express option to purchase, but
nevertheless when a final demand is given prior to suit, the demand letter indicates clearly it was
within the option of the lessee to fully pay the balance of the unpaid rentals and would be able to
keep the equipment, then the real contract between the parties was a sale of movable on
installment disguised as a lease agreement. PCI Leasing and Finance, Inc. v. Giraffe-X
Creative Imaging, Inc., 527 SCRA 405 (2007).
4. IN CASE OF IMMOVABLES:
a . Anticipatory Breach (Art. 1591) Legarda v. Saldaa, 55 SCRA 324 (1974).
b. Sales of Subdivision Lots and Condominium Units (Secs. 23 and 24, P.D. 957)
P.D.957 was issued in the wake of numerous reports that many real estate subdivision
owners, developers, operators and/or sellers have reneged on their representations and
obligations to provide and maintain properly subdivision roads, drainage, sewerage, water
systems, lighting systems and other basic requirements or the health and safety of home and lot
buyers. It was designed to stem the tide of fraudulent manipulations perpetrated by
unscrupulous subdivision and condominium sellers free from liens and encumbrances. xCasa
Filipinas Realty Corp. v. Office of the President, 241 SCRA 165 (1995).
125
the option to demand reimbursement of the total amount paid, or to wait for further development of
the subdivision, and when the buyer opts for the latter alternative, he may suspend payment of the
installments until such time that the owner or developer has fulfilled its obligations. xTamayo v.
Huang, 480 SCRA 156 (2006);
buyer required only to give due notice to the owner or developer of the buyers intention to
suspend payment. xZamora Realty and Dev. Corp. v. Office of the President, 506 SCRA 591
(2006);
Sec. 23 does not require that a notice be given first by the buyer to the seller before a demand for
refund can be made as the notice and demand can be made in the same letter or communication.
xCasa Filipinas Realty Corp v. Office of the President, 241 SCRA 165 (1995);
Option granted by law is with buyer and not the developer/seller. xRelucio v. Brillante-Garfin, 187
SCRA 405 (1990).
Buyer under P.D. 957 would include one who acquires for a valuable consideration a
condominium unit by way of assignment by the condominium project owner in payment of its
indebtedness for contractors fee. xAMA Computer College, Inc. v. Factora, 378 SCRA 121
(2002).
Buyers of condominium units would be justified in suspending payments, when the
developer-seller fails to give them a copy of the Contract to Sell despite repeated demands.
xGold Loop Properties, Inc. v. CA, 350 SCRA 371 (2001); or when they failed to provide for the
amenities mandated under their development plan. Fedman Dev. Corp. v. Agcaoili, 656 SCRA
354 (2011). However, when the Reservation Agreement provides that the buyer shall be entitled
to a Contract to Sell only upon its payment of at least 30% of the total contract price, the nonhappening yet of that condition does not render the seller in default as to warrant the buyer the
right to rescind the sale and demand a refund. G.G. Sportwear Mfg. Corp. v. World Class
Properties, Inc., 614 SCRA 75 (2010).
Nothing in P.D. 957 provides for the nullification of a contract to sell in the event the seller, at
the time the contract was entered into, did not possess a certificate of registration or a license to
sell, sale being a consensual contract. Co Chien v. Sta. Lucia Realty, 513 SCRA 570 (2007).129
The dissatisfaction of the buyer under a Contract of Sale as to the completion date of the
project does not itself constitute substantial breach as to authorize the buyer to rescind the
contract and ask for refund of the amounts paid to the seller. G.G. Sportwear Mfg. Corp. v.
World Class Properties, Inc., 614 SCRA 75 (2010).
Under P.D. No. 957, a buyer cause of action against the developer for failure to develop
ripens only when the developer fails to complete the project on the lapse of the completion
period stated on the sale contract or the developers Licenses to Sell. Any premature demand
prior to the indicated completion date would be premature. G.G. Sportwear Mfg. Corp. v. World
Class Properties, Inc., 614 SCRA 75 (2010).
The lack of Certificate of Registration or the License to Sell of the developer-seller merely
subjects the developer to administrative sanctions, but do not render the contracts to sell entered
into on the project null and void. G.G. Sportwear Mfg. Corp. v. World Class Properties, Inc., 614
SCRA 75 (2010).
Since the lots are involved in litigation and there is a notice of lis pendens at the back of the
titles involved, the subdivision developer have to be given a reasonable period of time to work on
the adverse claims and deliver clean titles to the buyer, and should the former fail to deliver
clean titles at the end of the period, it ought to reimburse the buyers not only for the purchase
price of the subdivision lots sold to them but also the incremental value arising from the
appreciation of the lots. Cantemprate v. CRS Realty Dev. Corp., 587 SCRA 492 (2009).
129
The contract for the purchase of a piece of land on installment basis is not only lawful; it is also of
widespread usage or custom in our economic system. . . . If [buyer] eventually found the interest
stipulation in the contract financially disadvantageous to him, he cannot now turn to this Court for
succor without impairing the constitutional right to the obligation of contracts. This Court will not
relieve petitioner of the necessary consequences of his free and voluntary, and otherwise lawful, act.
Bortikey v. AFP Retirement and Separation Benefits System, 477 SCRA 511 (2005).
a. Role of Maceda Law Maceda Laws declared policy is to protect buyers of real estate on
installment basis against onerous and oppressive conditions, and seeks to address the acute
housing shortage problem in our country that has prompted thousands of middle and lower class
buyers of houses, lots and condominium units to enter into all sorts of contracts with private
housing developers involving installment schemes. Active Realty & Dev. Corp. Daroya, 382 SCRA
152 (2002).130
Maceda Law recognizes in conditional sales of all kinds of real estate sellers right to cancel
the contract upon non-payment of an installment by the buyer, which is simply an event that
prevents the obligation of the vendor to convey title from acquiring binding force. Pagtulunan v.
Dela Cruz Vda. De Manzano, 533 SCRA 242 (2008).131
b. Transactions Covered
The formal requirements of rescission under the Maceda Law apply even to contracts entered
into prior to its effectivity. xSiska Dev. Corp. v. Office of the President, 231 SCRA 674 (1994).132
BUT SEE xPeoples Industrial and Commercial Corp. v. CA, 281 SCRA 206 (1997).
Maceda Law finds no application to a contract to sell where the suspensive condition has not
been fulfilled, because said Law presuppose the existence of a valid and effective contract to sell a
condominium. [?] xMortel v. KASSCO, Inc., 348 SCRA 391, 398 (2000).133
Maceda Law makes no distinctions between option and sale which under P.D. 957 also
includes an exchange or attempt to sell, an option of sale or purchase, a solicitation of a sale or
an offer to sell directly, and the all-embracing definition virtually includes all transactions
concerning land and housing acquisition, including reservation agreements. xRealty Exchange
Venture Corp. v. Sendino, 233 SCRA 665 (1994).
Maceda Law has no application to protect the developer or one who succeeds the developer.
xLagandaon v. CA, 290 SCRA 463 (1998).
The sale of large tracts of land (69,028 square meters) do not constitute residential real estate
within the contemplation of the Maceda Law. xGarcia v. CA, 619 SCRA 280 (2010).
c. How to Determine Years of Installments: Jestra Dev. and Management Corp. v. Pacifico, 513
SCRA 413 (2007).
d. How Cancellation of Contract Can Be Effected The cancellation of the contract under the
Maceda Law must follow the following steps:
First, the seller should extend the buyer a grace period of at least sixty (60) days from the due
date of the installments.
Second, at the end of the grace period, the seller shall furnish the buyer with a notarial notice
of cancellation or demand for rescission, effective thirty (30) days from the buyers receipt
thereof; a mere notice or letter, short of a notarial act, would not suffice. McLaughlin v. CA,
144 SCRA 693 (1986).134
130
OIympia Housing Inc. v. Panasiatic Travel Corp., 395 SCRA 298 (2003); Jestra Dev. and Management Corp. v. Pacifico, 513 SCRA
413 (2007).
131
Leao v. CA, 369 SCRA 36 (2001); Cordero v. F.S. Management & Dev. Corp., 506 SCRA 451 (2006).
132
Eugenio v. Executive Secretary Franklin M. Drilon, 252 SCRA 106 (1996); PNB v. Office of the President, 252 SCRA 620 (1996).
133
Boston Bank of the Phil. v. Manalo, 482 SCRA 108 (2006).
134
Luzon Brokerage v. Maritime Bldg., 86 SCRA 305 (1978); Luzon Brokerage v. Maritime Bldg., 43 SCRA 93 (1972); Fabrigas v. San
Francisco del Monte, 475 SCRA 247 (2005).
Page - 40 - of 62
B. ON PART OF BUYER
1. In case of Movables (Arts. 1598-1599)
2. In case of Immovables (Arts. 1191; Secs. 23 and 24, P.D. 957)
3. Suspension of Payment (Art. 1590)
The pendency of suit over the subject matter of the sale justifies the buyer in suspending payment
of the balance of the purchase price by reason of aforesaid vindicatory action filed against it. The
135
Active Realty & Dev. Corp. v. Daroya, 382 SCRA 152 (2002); Olympia Housing v. Panasiatic Travel Corp., 395 SCRA 298 (2003);
Jestra Dev. and Management Corp. v. Pacifico, 513 SCRA 413 (2007).
136
Caridad Estates, Inc. v. Santero, 71 Phil. 114 (1940); Albea v. Inquimboy, 86 Phil. 477 (1950); Manuel v. Rodriguez, 109 Phil. 1
(1960); Joseph & Sons Enterprises, Inc. v. CA, 143 SCRA 663 (1986) Gimenez v. CA, 195 SCRA 205 (1991); Jacinto v. Kaparaz, 209
SCRA 246 (1992); Odyssey Park, Inc. v. CA, 280 SCRA 253 (1997); Rillo v. CA, 274 SCRA 461 (1997); Platinum Plans Phil., Inc. v.
Cucueco, 488 SCRA 156 (2006); Tan v. Benolirao, 604 SCRA 36 (2009); Garcia v. CA, 619 SCRA 280 (2010).
137
Escueta v. Pando, 76 Phil. 256 (1946).
Page - 41 - of 62
149
Topacio v. CA, 211 SCRA 219 (1992); Laforteza v. Machuca, 333 SCRA 643 (2000); Almira v. CA, 399 SCRA351 (2003).
Roque v. Lapuz, 96 SCRA 741 (1980); Angeles v. Calanz, 135 SCRA 323 (1985);Alfonso v. CA, 186 SCRA 400 (1990)
158
San Andres v. Rodriguez, 332 SCRA 769 (2000); Vda. De Mistica v. Naguiat, 418 SCRA 73 (2003); Blas v. Angeles-Hutalla, 439
SCRA 273 (2004); Villadar, Jr. V. Zabala, 545 SCRA 325 (2008); Heirs of Antonio F. Bernabe v. CA, 559 SCRA 53 (2008); Ver Reyes v.
Salvador, Sr., 564 SCRA 456 (2008).
159
Bowe v. CA, 220 SCRA 158 (1993); Rayos v. CA, 434 SCRA 365 (2004); Solidstate Multi-Products Corp. v. Catienza-Villaverde,
559 SCRA 197 (2008); Tan v. Benolirao, 604 SCRA 36 (2009); Nabus v. Pacson, 605 SCRA 334 (2009).
160
Antonio F. Bernabe v. CA, 559 SCRA 53 (2008); Bank of P.I. v. SMP, Inc., 609 SCRA 134 (2009).
161
Siska Dev. Corp. v. Office of the President, 231 SCRA 674 (1994); Sta. Lucia Realty & Dev., Inc. v. Uyecio, 562 SCRA 226 (2008).
162
Manuel v. Rodriguez, 109 Phil. 1 (1960); Laforteza v. Machuca, 333 SCRA 643 (2000); Villamaria, Jr. v. CA, 487 SCRA 571 (2006).
163
Jison v. CA, 164 SCRA 339 (1988); Lim v. CA, 182 SCRA 564 (1990); Cheng v. Genato, 300 SCRA 722 (1998).
Page - 45 - of 62
157
Oro Land Realty Dev. Corp. v. Claunan, 516 SCRA 681 (2007)
Canizares Tiana v. Torrejos, 21 Phil. 127 (1911); J.M. Tuazon v. CA, 94 SCRA 413 (1979).
168
Page - 47 - of 62
169
Claravall v. CA, 190 SCRA 439 (1990); Torres v. CA, 216 SCRA 287 (1992); Roberts v. Papio, 515 SCRA 346 (2007).
Ramos v. Icasiano, 51 Phil (1927).
Reyes v. Hamada, 14 SCRA 215 (1965); Solid Homes, Inc. v. CA, 275 SCRA 267 (1997); Misterio v. Cebu State College of Science
and Technology, 461 SCRA 122 (2005); Cadungog v. Yap, 469 SCRA 561 (2005); Ramos v. Dizon, 498 SCRA 17 (2006); Lumayag v.
Heirs of Jacinto Nemeo, 526 SCRA 51 (2007).
Page - 49 - of 62
171
172
173
182
De Ocampo v. Lim, 38 Phil. 579 (1918); Feliciano v. Limjuco, 41 Phil.147 (1920); Belonio v. Movella, 105 Phil. 756 (1959).
Guerrero v. Yigo, 96 Phil. 37 (1954); Montevirgin v. CA, 112 SCRA 641 (1982); Vda. de Zulueta v. Octaviano, 121 SCRA 314
(1983); Ong v. Roban Lending Corp., 557 SCRA 516 (2008); Heirs of Jose Reyes, Jr. V. Reyes, 626 SCRA 758 (2010).
192
Legaspi v. Ong, 459 SCRA 122 (2005).
193
Tapas v. CA, 69 SCRA 393 (1976).
Page - 53 - of 62
191
Abilla v. Gobonseng,
An equitable mortgage is a voidable contract. It may be annulled within four (4) years from the
time the cause of action accrues. Ayson, Jr. v. Paragas, 557 SCRA 50 (2008). [CLV: Thereafter, it
may be enforced against the provision on pactum commissorium?]
C. LEGAL REDEMPTION
1. Definition (Art. 1619)
Legal redemption is in the nature of a privilege created by law partly for reasons of public policy
and partly for the benefit and convenience of the redemptioner, to afford him a way out of what might
be a disagreeable or [an] inconvenient association into which he has been thrust. It is intended to
minimize co-ownership. xFernandez v. Tarun, 391 SCRA 653 (2002).195
2. Legal Redemption Rights under the Civil Code
a. Among Co-Heirs (Art. 1088)
Redemption right pertain to disposition of right to inherit, and not when there is a sale of a
particular property of the estate. xPlan v. IAC, 135 SCRA 270 (1985).
When the heirs have partitioned the estate among themselves and each have occupied and
treated definite portions thereof as their own, co-ownership has ceased even though the property is
still under one title, and the sale by one of the heirs of his definite portion cannot trigger the right of
redemption in favor of the other heirs. xVda. De Ape v. CA, 456 SCRA 193 (2005).
The heirs who actually participated in the execution of the extrajudicial settlement, which
included the sale to a third person of their pro indiviso shares in the property, are bound by the
same; while the co-heirs who did not participate are given the right to redeem their shares pursuant
to Article 1088. xCua v. Vargas, 506 SCRA 374 (2006).
b. Among Co-Owners (Art. 1620)
The right of redemption may be exercised by a co-owner only when part of the community
property is sold to a stranger, now when sold to another co-owner because a new participant is not
added to the co-ownership. xFernandez v. Tarun, 391 SCRA 653 (2002).
When the seller a retro dies, the right to redeem cannot be exercised by a co-heir alone, since
the right to redeem belonged in common to all the heirs. xDe Guzman v. CA, 148 SCRA 75 (1987).
For the right of redemption to be exercised, co-ownership must exist at the time of the
conveyance is made by a co-owner and the redemption is demanded by the other co-owner or coowners. xAvila v. Barabat, 485 SCRA 8 (2006).
Redemption by co-owner redounds to the benefit of all other co-owners. xMariano v. CA, 222
SCRA 736 (1993); and the 30-day period for the commencement of the right to exercise the legal
redemption right, even when such right has been recognized to exist in a final and executory court
decision, does not begin from the entry of judgment, but from the written notice served by the seller
to the party entitled to exercise such redemption right. Guillen v. CA, 589 SCRA 399 (2009).
The requisites for the exercise of legal redemption are as follows: (1) there must be coownership; (2) one of the co-owners sold his right to a stranger; (3) the sale was made before the
partition of the co-owned property; (4) the right of redemption must be exercised by one or more coowners within a period of thirty days to be counted from the time he or they were notified in writing by
the co-owner vendor; and (5) the vendee must be reimbursed the price of the sale. Calma v. Santos,
590 SCRA 359 (2009).
c. Distinguishing Between Right of Redemption of Co-heirs and Co-owners
194
195
Page - 54 - of 62
196
De Guzman v. CA, 148 SCRA 75 (1987); Adille v. CA, 157 SCRA 455 (1988).
Citing Hernaez v. Hernaez, 32 Phil. 214 (1915); Castillo v. Samonte, 106 Phil. 1024 (1960).
198
Garcia v. Calaliman, 17 SCRA 201 (1989); Mariano v. CA, 222 SCRA 736 (1993).
197
Page - 55 - of 62
Affirmed ruling in xAlonzo v. IAC, 150 SCRA 259 (1987), that the filing of the suit for ejectment or collection
of rentals against a co-owner actually dispenses with the need for a written notice, and must be construed
as commencing the running of the period to exercise the right of redemption, since the filing of the suit
amounted to actual knowledge of the sale from which the 30-day period of redemption commences to run.
a. Rare Exceptions:
When the sale to the buyer was effected through the co-owner who acted as the broker, and
never indicated that he would exercise his right to redeem. xDistrito v. CA, 197 SCRA 606 (1991).
When the buyers took possession of the property immediately after the execution of the deed of
sale in their favor and lived in the midst of the other co-owners who never questioned the same.
xPilapil v. CA, 250 SCRA 560 (1995).
4. OTHER LEGAL REDEMPTION RIGHTS
a. Redemption in Patents (Sec. 119, C.A. 141)
Right to repurchase is granted by law and need not be provided for in the deed of sale. xBerin v.
CA, 194 SCRA 508 (1991).
Under the free patent or homestead provisions of the Public Land Act a period of five (5) years
from the date of conveyance is provided, to be reckoned from the date of the sale and not from the
date of registration in the office of the Register of Deeds. xLee Chuy Realty Corp. v. CA, 250 SCRA
596 (1995).199
b. Redemption in Tax Sales (Sec. 215, NIRC of 1997)
c. Redemption by Judgment Debtor (Secs. 27-28, Rule 39, Rules of Civil Procedure)
Written notice must be given to the judgment debtor before the sale of the property on execution,
to give him the opportunity to prevent the sale by paying the judgment debt sought to be enforced and
the costs which have been incurred. xTorres v. Cabling, 275 SCRA 329 (1997).
Where there is a third-party claim, sheriff should demand from the judgment creditor who
becomes the highest bidder, payment in cash of his bid instead of merely crediting the amount to the
partial satisfaction of the judgment debt. xTorres v. Cabling, 275 SCRA 329 (1997).
Under Sec. 28, Rule 39 of the 1997 Rules of Civil Procedure, the period of redemption shall be at
any time within one (1) year from the date of registration of the certificate of sale, so that the period is
now to be understood as composed of 365 days, unlike the 360 days under the old provisions of the
Rules of Court. xYsmael v. CA, 318 SCRA 215 (1999).
d. Redemption in Extrajudicial Foreclosure (Sec. 6, Act 3135)
199
4. Effects of Assignment
a. Assignment of Credit
An assignment of credit is an agreement by virtue of which the owner of a credit, known as the
assignor, by a legal cause, such as sale, dacion en pago, exchange or donation, and without the
consent of the debtor, transfers his credit and accessory rights to another, known as the assignee,
who acquires the power to enforce it to the same extent as the assignor could enforce it against the
debtor. xAquintey v. Tibong, 511 SCRA 414 (2006).204
As a consequence, the third party steps into the shoes of the original creditor as subrogee of the
latter. Although constituting a novation, such assignment does not extinguish the obligation under the
credit assigned, even when the assignment is effected without his consent. xSouth City Homes, Inc.
V. BA Finance Corp., 371 SCRA 603 (2001).
b. Issues re Debtor (Art. 1626)
In an assignment of credit, the consent of the debtor is not essential for its perfection, his
knowledge thereof or lack of it affecting only the efficaciousness or inefficaciousness of any payment
he might make. xProject Builders, Inc. v. CA, 358 SCRA 626 (2001).
Consent of debtor is not necessary in order that assignment may fully produce legal effects, and
the duty to pay does not depend on the consent of the debtor. Otherwise, all creditors would be
prevented from assigning their credits because of the possibility of the debtors refusal to given
consent. What the law requires in an assignment of credit is mere notice to debtor, and the purpose of
the notice is only to inform the debtor that from the date of the assignment, payment should be made
to the assignee and not to the original creditor. xNIDC v. De los Angeles, 40 SCRA 489 (1971).205
c. Accessories and Accessions (Art. 1627)
Assignment of a credit includes all the accessory rights, such as guaranty, mortgage, pledge or
preference. xUnited Planters Sugar Milling Co., Inc. (UPSUMCO) v. CA, 527 SCRA 336 (2007).
d. Tradition in Assignment
Notarization converts a private document Assignment of Credit into a public document, thus
complying with the mandate of Article 1625 of the Civil Code and making it enforceable even as
against third persons. xLedonio v. Capitol Dev. Corp., 526 SCRA 379 (2007).
5. Warranties of Assignor (Art. 1628)
Assignor warrants only the existence or legality of the credit but not the solvency of the debtor.
Nyco Sales Corp. v. BA Finance, 200 SCRA 637 (1991).
EXCEPTIONS: (a) If this is expressly warranted.
(b) If insolvency is known by the assignor prior to assignment.
(c) If insolvency is prior to assignment is common knowledge.
When dacion en pago takes the form of an assignment of credit, it produces the effects of a dation
in payment, which may extinguishes the obligation; however, by virtue of the warranty in Art. 1628,
which makes the vendor liable for the existence and legality of the credit at the time of sale, when it is
shown that the assigned credit no longer existed at the time of dation, then it behooves the assignor to
make good its warranty and pay the obligation. xLo v. KJS Eco-Formwork System Phil., Inc., 413 SCRA
182 (2003).
6. Right of Repurchase on Assignment of Credit under Litigation (Arts. 1634 and1635)
204
XV.
206
- 60 a.
b. Non-giving of the list of creditors or intentional omission of the names of some of the creditors,
and placing of wrong data required by law, would subject the seller or mortgagor to penal
sanctions. (Sec. 4)
c. Bulk transfer without consideration or for nominal consideration punishable. (Sec. 7)
d. Failure to comply with other provisions of the law the non-application of the consideration
proportionately to the creditors, the preparation of the inventory, and the notification to creditors,
are also made punishable. (Sec. 11)
A bulk sale done without complying with the terms of the Law, makes the transaction fraudulent
and void, but does not change the basic relationship between the seller, assignor/encumbrancer and
his creditor. The portion of a judgment providing for subsidiary liability is invalid, since the proper
remedy of the creditor is to collect on the credit against the defendant, and if they cannot pay, to attach
on the property fraudulently mortgage since the same still pertain to the debtors-defendants. xPeople
v. Mapoy, 73 Phil. 678 (1942).
XVI.
207
Marsman & Co., Inc. v. First Coconut Central Co., Inc., 162 SCRA 206 (1988); B.F. Goodrich Philippines, Inc. v. Reyes, Sr., 121
SCRA 363 (1983).
Page - 60 - of 62
- 62 partially nationalized
activities
in the capital of such entities.
in
The amendment was meant to settle the uncertainty created in the obiter opinion in Luzon
Stevedoring Corp. v. Anti-Dummy Board, 46 SCRA 474 (1972), which rejected the argument that
the Anti-Dummy Law covered only employment in wholly nationalized businesses and not in
those that are only partly nationalized.
The Filipino common-law wife of a Chinese national is not barred from engaging in the retail
business provided she uses capital exclusively derived from her paraphernal properties; allowing
her common-law Chinese husband to take part in management of the retail business would be a
violation of the law. xTalan v. People, 169 SCRA 586 (1989).
oOo
UPDATED: 28 MAY 2012; 658 SCRA
Page - 62 - of 62