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Law on Sales-J. Adviento Finals Notes-A.R.L.

OBLIGATIONS OF THE VENDEE

in nature, the title passed to the vendee upon delivery of the things sold since there
was no stipulation in the contract that title to the property sold has been reserved in
the seller until full payment or that the vendor has right to unilaterally resolve contract
the moment buyer fails to pay within a fixed period.

Arts. 1582-1593
I.

To accept delivery
A.

It must be noted that before Fule convinced Dr. Cruz to sell the earrings he took pains
to thoroughly examine it even sketching it. Why at that precise moment when he was
about to take physical possession failed to exert extra efforts to check the genuineness
despite the large consideration involved was never explained by petitioner. His acts
failed to accord with what an ordinary prudent man would have done in the same
situation. Being a banker and a businessman, it was actually gross recklessness for him
to have merely conducted a cursory examination of the jewelry when every
opportunity for doing so was not denied him. He carried a tester with him which he did
not use at the time when it was most needed. It took him two hours of unexplained
delay before he complained. Anything could have happened during the time that Fule
was in complete possession and control of the jewelry including possibility of
substituting them with fake ones. He was not even able to prove that the jewelry was
not genuine.

Requirement of previous examination by the buyer (1584 par. 1 & 2)


a.

Case: Fule v Ca
Facts:
Fule, a banker and a jeweler acquired a 10 hectare property which used to be under the
name of Fr. Jacobe. Fr. Jacobe mortgaged the property before to Rural Bank to secure a
loan, the mortgaged was foreclosed and was offered for public auction. Dr. Cruz was an
interested buyer for the property. Meanwhile Fule wanted to buy a pair of diamond
earrings from Dr. Cruz. Fule offered to buy the earrings for $6, 000 and inspected the
earrings however Dr. Cruz refused to sell the earrings. Subsequently, negotiations for
barter of the earrings with the property ensued. Dr. Cruz asked his lawyer to check the
property and found out that no barter can be done since the redemption period for the
property is not yet up. Fule, to avoid any legal impediment instituted a deed of
redemption on behalf of Fr. Jacobe and the latter sold it to Fule. Dr. Cruz now agreed to
the barter and Fule went back and inspected the earrings again. A deed of sale was
prepared by Atty. Belarmino, Dr. Cruzs lawyer, and was then signed by Fule and paid
13, 700 as partial for the 200, 000 consideration. Fule then got the jewelry and
examined it for 10 to 15 minutes before expressing his satisfaction. At 8 pm on the
same day Fule got the jewelry he went back to the home of Atty. Belarmino and
complained that the jewelry was fake. Fule now accused Dichoso and Mendoza,
persons who had a part on the conduct of the sale, of deceiving him. The two however
claimed that Fule could not have been fooled since he had vast experience with
jewelry.
Fule filed a complaint before the RTC to declare the contract of sale of the property null
and void on the ground of fraud and deceit. RTC decided that there was delivery as Fule
had ample time to examine the earrings and in fact he did several times including
before he took possession of the same. He took delivery of the jewelry as 6 pm and
went back to complain at 8 pm. The lapse of two hours is already unreasonable delay.
CA affirmed the RTC.
Issues: WON there was valid delivery of the earrings.
Held:
Fule was afforded the reasonable opportunity acquire in Art. 1584 CC within which to
examine the jewelry as he accepted when he was asked by Dr. Cruz if he was satisfied
with it. By taking the jewelry outside the bank, Fule executed an act which was more
consistent with his exercise of ownership over it. That he claimed after two hours that
the jewelry is fake cannot severe that now bound him and Dr. Cruz. The nature and
value of the thing he had taken preclude its return after that supervening period within
which anything could have happened, not excluding the alteration of the jewelry or of
it being switched with an inferior kind. There was no legal basis for the nullification of
the contract of sale as the ownership of the land and the earrings had been transferred
upon the actual and constructive delivery thereof. The contract of sale being absolute

b.

Exception (1584 par. 3)

c.

Effect of acceptance by the buyer for sellers liability


i.

Case: De Guzman v Triangle Ace Corp


Facts:
De Guzman bought large quantities of steel bars from Triangle Ace. Some
of the bars were used by petitioner in the manufacture of reinforced
concrete pipes which he delivered to Vinnel Belvoir Corporation. Triangle
Ace sued De Guzman for recovery of unpaid price of steel bars of 124,
177.00 and obtained a writ of attachment against De Guzman. De Guzman
claimed that his liability only amounted to 115, 863.00 only of which 36,
353.oo was paid, so the liability is only the unpaid 79, 510.00. Alleged that
he suffered as a result of cancellation of his contract with Vinnel due to the
fact that the steel bars delivered by Triangle Ace measure only 8mm x 20
ft. instead of 9mm x 20 ft. as agreed.
RTC ordered De Guzman to pay 8, 924.00 with 12% annual interest
counted from the date of complaint, and attorneys fees. CA affirmed the
RTC but set aside the writ of attachment on the ground that De Guzman
has waived his right to claim damages for deliveries of undersized steels as
he failed to give notice of such fact to respondent within six months from
date of delivery.
Issues: WON there was timely notification of breach of warranty.
Held:
De Guzman contends that he has 10 years to notify seller of breach of
warranty and argues that since the bars were covered by invoices which is
with 10 years prescriptive period for filing actions based on written
contracts.

Law on Sales-J. Adviento Finals Notes-A.R.L.


Art. 1586 provides that the seller shall not be liable if after the acceptance
of the good the buyer fails to give notice to the seller of breach of any
warranty within a reasonable time after buyer knows or ought to know of
such breach. Buyer must notify the seller of the breach of warranty at any
time before the vendor has filed suit for collection of the unpaid price
since the purpose of the law is to prevent the buyer from interposing
belated crimes for damages as an offset to a suit began by the seller for
the purchase price. Petitioner failed to established by satisfactory evidence
that he notified respondent of the alleged undersize bars either within 6
months from receipt thereof or at any time before filing of complaint by
Fule. Although there was alleged rejection of the bars, retention and use of
it by petitioner clearly shows that he accepted them and for this he should
pay the price.

II.

B.

Rule for unjustified refusal of the buyer to accept (1588)

C.

Rule if the buyer justifiably refused to accept (1587)

Respondent Penaloza cannot be blamed for suspending further


remittances of payment to the petitioner ARC because when she pushed
for the issuance of her title to the property after taking possession thereof,
ARC failed to comply. She was aghast when she discovered that ARC had
already mortgaged the lot and the building to the China Banking
Corporation. And when she opened to pay the balance of the purchase
price of the property to secure her title, ARC ignored her offer. Under
Article 1590 of the NCC, a vendee may suspend the payment of the price
of the property sold. 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 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 suspension.
Respondent was impelled to cause the annotation of the adverse claim.
She suspended the payment because she had the right to do so. While she
failed to pay the purchase price on time, ARC nevertheless accepted such
delayed payments. Respondent acted in accord with the law and in utmost
good faith. She is not liable for damages to the petitioners. ARC LOST.

Payment of Price and Interest


A.

Time and Place

B.

Suspension of payment by the buyer after delivery


a.

b.

Grounds
i.

Case: Suspension of payment for refusal to issue title


Arra Realty Corp v Guarantee Devt. Corp
Facts:
ARC is owner of parcel of land. Decided to construct a five story building
and engaged Penaloza as project and structural engineer. ARC and
Penaloza agreed that they would share the purchase price of one floor of
the building payable within 60 days from November 1982 and the balance
payable in 20 equal quarterly installments. On May 1983 Penaloza took
possession of half of the second floor and put up an office and operated St.
Michael Institute of Technology. Unknown to Penaloza, ARC executed a
mortgage over the lot and the entire building in favor of China Banking
Corporation as security for a loan. She learned that the property has been
mortgaged in July 194, thereafter she stopped paying the installments due.
ARC failed to pay its loan to China Banking, the property was foreclosed
and after sold at a public auction to China Banking. After ARC and GDCIA
executed a deed of conditional sale covering the building and lot. With the
money advance by GDCIA the property was redeemed by ARC from China
Banking. ARC obliged itself to deliver possession of the property without
any occupants therein. Penaloza now filed a complaint against ARC, and
GDCIA with RTC for specific performance of damages.
Issues: WON suspension of remittances by Penaloza is valid.
Held:

C.

When there is no right to suspend payment

Payment of interest on the price


a.

Before default

b.

After default (moratory interest)


i.

Case: Rate of interest if payable as indemnity for delay in the performance


of an obligation
Crismina Garments Inc v CA
Facts:
Cristina Garments contracted the services of Siapno, the sole proprietress
of of DWilmar Garments, for sewing 20, 762 pieces of assorted girls
denims supplied by CG. CG was obliged to pay Siapno 67, 410. 00 for her
services. Siapno sewed the materials and delivered it to CG which
acknowledged the same. At first Siapno was told that the sewing of some
pants are defective. She offered to take delivery of the defective pants.
She was later told by a representative of CG that the goods are already
good. She was told to return for her payment however CG failed to pay.
Siapno filed for collection of the amount. Trial court ruled in favor of Siano.
CA affirmed trial court.
Issues:

Law on Sales-J. Adviento Finals Notes-A.R.L.


WON it is proper to impose interest at the rate of 12% per annum for an
obligation that does not a loan of forbearance of money in the absence of
stipulation of the parties.
Held:
Interest should be computed at 6% per annum. Article 1589 CC provides
that the vendee (CG) shall owe interest for the period between delivery of
the thing and payment of the price. Petitioner contends that interest rate
should be 6% pursuant to Art. 2209 CC which states that if the obligation
consist of payment of money and the debtor incurs in delay, the indemnity
for damages shall be the payment of interest upon the legal interest which
is 6% per annum. SC agrees with petitioner.
Guidelines for application of proper interest rates:
1.

When obligation regardless of its source is breached, the


contravenor can be held liable for damages. The provision under
Title 7 on Damages in CC shall govern in determining the measure
of recoverable damages.

2.

With regard to award of interest in the concept of actual and


compensatory damages, the rate of interest is imposed as follows:
a.

When obligation is breached and it consist of payment


of sum of money the interest due shall be that which
may have been stipulated in writing. Furthermore, the
interest due shall itself earn legal interest from the time
it is judicially demanded. In the absence of stipulation
the rate of interest shall be 12% per annum to be
computed from default.

b.

When obligation, not constituting a loan or forbearance


of money is breached, an interest on the amount of
damages awarded may be imposed at the discretion of
the court at the rate of 6% per annum. No interest shall
be adjudged on unliquidated claims or damages except
when or until the demand can be established with
reasonable certainty. When demand is established with
reasonable certainty, the interest shall begin to run
from the time the claim is made judicially or extra
judicially. But when certainty cannot be reasonably
established at the time the demand is made, the
interest shall begin to run only from date judgment of
court is made. The actual basis for the computation of
legal interest shall be the amount finally adjudged.

c.

When the judgment of the court awarding a sum of


money becomes final and executory, the rate of legal
interest shall be by then an equivalent to forbearance
of credit.

Because the amount due in this case arose from a contract for a piece of
work, not from a loan or forbearance of money, the legal interest of 6%
per annum should be applied. Since the amount of demand could be
established with certainty when complaint was filed, the 6% interest
should be computed from the filing of the said complaint. But after
judgment becomes final and executory until the obligation is satisfied, the
interest should be reckoned at 12% per year.
Nacar v Gallery Frames
Facts:
Nacar filed a complaint for constructive dismissal against respondents
Gallery Frames and/or Felipe Bordey. Labor Arbiter ruled in favor of Nacar
and found that he was dismissed from employment without a valid or just
cause. Thus Nacar was awarded backwages and separation pay in lieu of
reinstatement. Gallery Frames appealed to NLRC, NLRC affirmed the labor
arbiter. CA also affirmed the labor arbiter. SC likewise denied Gallery
Frames appeal, the resolution became final and executory. Gallery Frames
then filed a motion to correct computation praying that his backwages be
computed from date of his dismissal up to the finality of the resolution of
the SC. There was a computation and an updated amount was arrived at. A
writ of execution by the labor arbiter was issued ordering the sheriff to
collect the amount recomputed. Gallery Frames filed a motion to quash
the writ of execution since the labor arbiter awarded separation pay and
backwages no more recomputation is needed. That after the decision
becomes final and executory it cannot be altered or amended anymore.
Later an entry of judgment was issued declaring the resolution of the NLRC
final and executory. Nacar moved that a writ of execution be issued
ordering respondents to pay him the original amount as determined by the
labor arbiter pending final computation of his backwages and separation
pay. Labor arbiter issued an Alias Writ of Execution to satisfy the judgment
award due to Nacar, which he eventually received. Nacar then filed for recomputation of the monetary award to include the appropriate interest.
Labor arbiter granted the motion however only up to a certain amount.
Labor arbiter contended that it is the Oct. 1998 should be enforced
considering that it was the one which became final and executory. Nacar
appealed to NLRC, latter denied. CA likewise affirmed the labor arbiter.
Nacar argues that there was a computation of backwages in the labor
arbiters decision. That it is not final until reinstatement is made or until
finality of the decision, in case of an award of separation pay. Gallery
Frames asserts that since only separation pay and backwages were
awarded to Nacar by decision of Labor Arbiter. That the decision clearly
stated that the separation pay and backwages are computed only up to
limited amount.
Issues:
WON a re-computation in the course of execution of labor arbiters
original computation of the awards made is legally proper.
Held:

Law on Sales-J. Adviento Finals Notes-A.R.L.


By nature of the illegal dismissal case, Art. 279 of the Labor Code. The recomputation of the consequences of illegal dismissal upon dismissal upon
execution of the decision does not constitute an alteration. The illegal
dismissal stands, only the computation of monetary consequences of
dismissal does not constitute an alteration or amendment of the final
decision being implemented. The final decision effectivity declares that the
employment relationship ended so that separation pay and backwages are
to be computed up to that point.

a.

Suspension of delivery by seller

b.

Sellers lien on the goods in his possession

c.

Stoppage in transit, if the buyer is insolvent and the price is unpaid

d.

Resale of goods

e.

Rescission of title

Guidelines as to the manner of computing legal interest.


With regards to an award of interest in the concept of actual and
compensatory damages the rate of interest is imposed as follows:
1. When the obligation is breached, and it consists in the
payment of a sum of money the interest due should be that
which may have been stipulated in writing. Furthermore, the
interest due shall itself earn legal interest from the time it is
judicially demanded. In the absence of stipulation, the rate of
interest shall be 12% per annum to be computed from
default..
2. When an obligation, not constituting a loan or forbearance
of money, is breached, an interest on the amount of damages
awarded may be imposed at the discretion of the court at the
rate of 6% per annum. No interest, however, shall be
adjudged on unliquidated claims or damages except when or
until the demand can be established with reasonable
certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the
time the claim is made judicially or extrajudicially (but when
such certainty cannot be so reasonably established at the
time the demand is made, the interest shall begin to run only
from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have
been reasonably ascertained). The actual base for the
computation of legal interest shall, in any case, be on the
amount finally adjudged.
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest,
whether the case falls under paragraph 1 or paragraph 2,
above, shall be 12% per annum from such finality until its
satisfaction, this interim period being deemed to be by then
an equivalent to a forbearance of credit.

D.

In case of goods (corporeak movables)

ii.

In case of real property (1592)

iii.

1.

General rule

2.

Exceptions

Action for the price and damages

ACTIONS FOR BREACH OF CONTRACT OF SALE OF GOODS


Arts. 1594-1599
I.

Action for the price of personal property (1595)


a.

Grounds
Case: De guzman v Triangle Ace Corp
Facts:
(repeated case)
Issues:
Held:
Art. 1595 provides that ownership of the goods has passed to the buyer and he wrongfully
refuses to pay as such, seller may maintain an action for the price of the goods. A buyer is
deemed to have accepted the goods when he does an act inconsistent with the ownership of
the seller, after the lapse of reasonable time, he retains the good without intimating to the
seller that he has rejected them. In the case at bar there is no dispute that the steel bars
purchased were received by petitioner. The retention and use of steel bars by petitioner
clearly shows that he accepted the goods and for this reason he should pay the price therein.

Resolution 796 approved amendments of Circular 905.


The rate of interest for the loan or forbearance of any money,
goods or credits and the rate allowed in judgments, in the
absence of an express contract as to such rate of interest,
shall be six percent (6%) per annum. And in the view of the
above.
Legal guaranties of payment of the price

i.

II.

Action for damages for non-acceptance of the goods (1596)


a.

Grounds

b.

Measure of damages
i.

General rule

Law on Sales-J. Adviento Finals Notes-A.R.L.

III.

ii.

When there is an available market

iii.

When repudiation is made or notified before the seller completes preparations


for fulfillment

Art. 1546 which covers any affirmation of facts or any promise by the seller which induces the
buyer to purchase the thing and actually purchase it relying on such information or promise.
It includes all warranties which are derived from express language, whether language is in the
form of a promise or representation. Presumably therefore, Navarro would not have
purchased the truck were it not for HMs assertion and assurance that all taxes were already
settled. This warranty is breached the moment HM refused to furnish Navarro with receipts
to prove that BIR taxes were already paid. Without evidence she was powerless to prevent
the car from getting impounded. Under Art. 1599 CC, once an express warranty is breached,
the buyer can accept or keep the goods and maintain an action against the seller for
damages. This is what Navarro did, she opted to keep the truck which she needed for her
business and filed a complaint for damages.

Action for total rescission by the seller against the buyer (1597)
a.

Requisites

IV.

Buyers action for sellers specific performance (1598)

V.

Buyers actions for breach of warranty (1599)


a.

Buyers choice

b.

Nature of the options

Case: Harrison Motors Corp v Navarro

Case: Supercars Mgmt & Devt. Corp. v Flores

Facts:

Facts:

Harrison Motors, through its president Renato Claros, sold 2 elf trucks to private respondent
Navarro. HM assembled the trucks using imported component parts. Claros represented to
Navarro that all BIR taxes and custom duties for parts used. BIR and LTO entered into a
memorandum of agreement which provided that prior to registration in LTO of any
assembled or reassembled motor vehicle which used imported parts, a certificate of payment
should first be obtained from BIR to prove payment of all taxes. Later on, BIR, BOC, and LTO
entered into tripartite moa which provided that prior to registration in LTO of any locally
assembled motor vehicle using imported component parts, a certificate of payment should
first be obtained from BIR and BOC. Government agents seized and detained 2 elf trucks of
Navarro after discovering that there were still unpaid BIR taxes and custom duties thereon.
BIR and BOC ordered Navarro to pay the proper assessments or her trucks would be
impounded. Navarro went to Claros to ask for the receipts evidencing payment of the taxes
however Claros refused. Navarro then demanded the Claros pay the assessed taxes and
warned him that he would have to reimburse her should she be forced to pay the assessment
herself. Her demands were again ignored. So Navarro paid the assessed taxes and later went
to Claros for reimbursement which the latter again refused. She then filed a complaint for
sum of money in the RTC. Trial court ordered Harrison Motors to reimburse Navarro for
custom duties and internal revenue taxes Navarro had to pay to discharge her 2 elf trucks. CA
sustained lower court.

Flores purchased from Supercars an Isuzu payable monthly with a down payment equivalent
to 30% of the price. The balance was to be finance by RCBC. The sale was coursed through
Pablito Marquez, Supercars salesman. Upon delivery Flores paid the down payment and plus
premium for vehicles comprehensive insurance policy. RCBC financed the of price, its
payment was secured by a chattel mortgage of the same vehicle. A day after the car was
delivered Flores used it for a family trip during which the fan belt of the vehicle snapped. Its
breaks hardened, heater plug did not function, engine could not start and the fuel
consumption increased. Flores complained to Supercars about the defect, latter had the
vehicle repaired and returned to Flores. After a few days the same defects resurfaced
prompting Flores to send a letter rescinding the contract and return the vehicle due to breach
of warranty against hidden defects. Supercars again had the vehicle repaired and returned to
Flores. After a few days the vehicle still showed defects so Flores sent another letter
rescinding the contract of sale and returned the vehicle. Supercars tried to convince Flores to
accept the vehicle as it was repaired, the latter refused.

Now Harrison Motors argued that it is no longer obliged to pay for additional taxes and
custom duties imposed on the imported part since such administrative regulations only took
effect after the execution of its contract of sale. HM claims that it did pay the assessed taxes
and duties otherwise it would not have been able to secure the release of such spare parts
from customs and to register vehicle with LTO.
Issues:
Buyers choices in case of breach of warranty.
Held:
It is true that ownership of the trucks shifted to Navarro after sale. HM must remember that
prior to its consummation it expressly intimated to her that it had already paid the taxes and
custom duties. Shall representation shall be considered as a sellers express warranty under

Flores now demanded for a refund of his down payment and the premium he paid for the
insurance. Supercars failed to comply consequently Flores stopped paying the monthly
amortization of the vehicle. Now RCBC filed for the extra-judicial foreclosure of the chattel
mortgage. Flores asked for postponement of the auction sale but it proceeded and the vehicle
was sold to a third party. Flores filed with RTC the rescission of the contract of sale
Issued:
WON Flores has right to rescind the contract of sale and to claim damages.
Held:
SC ruled in favor of Flores. The vehicle has hidden defects. A hidden defect is one which is
unknown or could not have been known by the vendee. Evidence clearly shows that Flores
was justified in opting to rescind the sale given the hidden defects the vehicle, allowance for
the repair which he extended but turned out to be unsatisfactory. It is within respondents
right to recover damages from petitioner who committed a breach of warranty against hidden
defects. Article 1599 CC provides that where there is breach of warranty by the seller, the
buyer may at his election rescind the contract of sale and refuse to receive the goods, or if the
goods have already been received, return them or offer to return them to the seller and
recover the price or any part thereof which has been paid. When the buyer has claimed and

Law on Sales-J. Adviento Finals Notes-A.R.L.


been granted a remedy in anyone of these ways, no other remedy can thereafter be granted
without prejudice to the provisions of the second Art. 1191.
Supercars argue that refund would necessitate the return of the vehicle which is impossible
because it is not in the hands of an innocent purchaser for value. Supercars was already paid
the balance of purchase price by RCBC, it is already fully paid for the vehicle. Supercars had
nothing more to do with the vehicle.

I.

II.

Concept
A.

Defined (1601)

B.

Nature

Conventional redemption includes transactions presumed to be equitable mortgages

c.

When the buyer cannot rescind

A.

Equitable mortgage defined

d.

Effects of buyers election to rescind (1599 par 4)

B.

Transactions presume to be equitable mortgages

e.

Liability in case of breach of warranty of quality (1599 par 5)

a.

Contracts of sale with right to repurchase (1602)


Cases:

EXTINGUISHMENT OF SALE

Caballero V Ong Tiao Bok

Art. 1600
I.

A.

B.

Dino v Jardines

General Causes (1231)

Contracts of absolute sale in the cases mentioned in Art. 1602 (1604)

Payment or performance

b.

Loss of the thing dues

Cases:

c.

Condonation or remission

Go v Bacaron

d.

Confusion or merger

e.

Compensation

f.

Novation

g.

Annulment

h.

Rescission

i.

Fulfillment of the resolutory condition

j.

Prescription

Romulo v Layug
Bacungan v CA
c.

C.

Rule when transaction purporting to be a contract of sale with right to repurchase is of


doubtful interpretation (1603)

Effect when the transaction is deemed an equitable mortgages


a.

Case: Reformation of instrument to reflect true intention of the parties


Go v Bacarun
Facts: (already discussed)

Special causes

Issues:

Redemption

WON reformation is proper.

i.

Conventional

ii.

Legal

Application of Article 1600


Section 1- Conventional Redemption (sales with pacto de retro)

Arts. 1601-1618

b.

a.

a.

II.

Ramos v Sarao

Causes of extinguishment

Held:
Petitioner contends that failure of the instrument to express the parties true
agreement was not due to his mistake, or to fraud, inequitable conduct, or
accident.
SC ruled in favor of respondent. It is the intention of the parties that determines
whether the contract is one of sale or mortgage. In the present case one of the

Law on Sales-J. Adviento Finals Notes-A.R.L.


Gobonsengs claim of the right of repurchase is anchored on the 3 rd paragraph of
Art. 1606 which states that the vendor may still exercise the right of repurchase
within 30 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. This provision
only applies where one of the contending parties claims that the transaction was
a sale with right to repurchase, and the other counters that the same was an
equitable mortgage, and the court declares in a final judgment that the
transaction was really a pacto de retro sale. Art. 1606 does not apply in this case
because the transaction was a pacto de retro sale. However the right under Art.
1606 may still be invoked by Gobonseng. It must appear that there was a belief
on the part of the vendor, founded on facts attendant upon the execution of the
sale with pacto de retro, honestly and sincerely entertained that the agreement
was in reality a mortgage, one not intended to affect the title to the property
ostensibly sold but merely to give it as security for a loan or other obligation. If
Gobonseng honestly believed that the transaction was an equitable mortge, Art.
1606 applies and he can still repurchase the property within 30 days from finality
of judgement declaring the transaction as a sale with pacto de retro. It does not
matter what the buyer intends. Thirty day period shall be counted from date of
finality of the decision declaring the transaction to be a pacto de retro sale. The
motion of Gobonseng to repurchase was filed on time, Abilla should accept the
tender of payment and convey the lots to Gobonseng.

parties to the contract raises as an issues that their intention is not reflected in
the instrument. Under this circumstance, parol evidence becomes admissible and
competent evidence to prove the true nature of the instrument. Under Art. 1605,
the supposed vendor may ask for the reformation of the instrument should the
case be among those mentioned in Art. 1602 and 1604. Because respondent has
more than sufficiently established that the assailed contract is in fact an
equitable mortgage rather than an absolute sale, he is allowed to avail of the
remedy of reformation of contracts.
III.

Period of repurchase or redemption


A.

When no period is agreed upon

B.

When a period is agreed upon

C.

When period may be extended


a.

Case: no right or repurchase after an alleged equitable mortgage was declared a


pacto de retro sale
Abilla v Gobonseng
Facts:
D.
Gobonseng contracted a loan from Abilla secured by a real estate mortgage over
two parcels of land. Gobonseng defaulted in the payment of the loan and sought
the renewal of the loan and issued two postdated checks representing the full
amount of his obligation. The second check was dishonored by the drawee bank.
Gobonseng promised to pay upon approval of his loan application with the State
Investment House Inc. However State Investment required a collateral before
approving and releasing the loan so Gobonseng borrowed from Abilla two titles
so he can mortgage it. Abilla cancelled the mortgage in his favor and delivered
the titles to Gobonseng. Despite approval of the loan Gobonseng failed to pay
Abilla. Gobonseng then executed a deed of sale of his 17 lands in favor of Abilla.
They also executed an option to buy where Gobonseng is allowed to repurchase
the lots within 6 months. Gobonseng failed to do so. Now Abilla instituted an
action for specific performance for Gobonseng to pay the capital gains tax and
registration expenses for the transfer of title to the said lots pursuant to the
deed of sale. Gobonseng now claims that it was not a deed of sale but rather an
equitable mortgage.
RTC ruled that right of repurchase was null and void because of failure to
exercise within 6 months. CA affirmed trial court and declared the deed of sale to
be a pacto de retro sale.

IV.

Who may redeem or exercise the right of redemption


A.

B.

C.

The vendor in whose favor the right is reserved


a.

Rule when vendors are co-owners selling jointly and in the same contract an
undivided immovable

b.

Rule when a co-owner sells his share of an undivided immovable separately

Heirs of the vendor (1612 par 2)


a.

Right of each heir

b.

Right of the vendee

Creditors of the vendor


a.

V.

Gobonseng now filed with the court of origin a motion to repurchase the lots
with tender of payments. Trial court allowed for him to repurchase.

A.

The vendee

B.

The heir or heirs of the vendee


a.

WON Gobonseng can repurchase. WON the it was a pacto de retro sale.

C.
VI.

Requisite

From whom or against whom may redemption be made

Issues:

Held:

Rulings of the court

Rule if there is more than one heir

Every possessor whose right is derived from the vendee

Obligations of vendor-a-retro

Law on Sales-J. Adviento Finals Notes-A.R.L.


A.

Effect of the vendors failure to comply with his obligation


a.

General rule

b.

Exception

knew sold his share of the property to Angel however he was not furnish a written
notice of the sale consequently as a co-owner he has the right to redeem the property.
But the property was sold to a third party and Virgilio got his share of the proceeds.
Trial court decided that there was already laches as Senen incurred delay of 7 years
before asserting his right to redeem the property. CA affirmed the trial court.

VII.

Obligations of vendee-a-retro

Issues:

VIII.

Rights of vendee-a-retro

WON Senens complaint for legal redemption is barred by laches

IX.

Rules on pro-rating of fruits existing at the time of redemption

Held:

A.

If there are visible fruits at the time of the execution of the sale

B.

If no visible fruits existed at the time of the sale

Legal redemption is a privilege to afford redemptioner a way out of a disagreeable or


inconvenient association into which he has been thrust. In case the share of a co-owner
is sold to a third person Art. 1620 governs. It provides that a co-owner may exercise the
right of redemption in case the shares of all the other co-owners or of any of them are
sold to a third person. If the price of the alienation is extremely excessive, the
redemptioner shall pay only a reasonable rate. Should two owners decide to exercise
the right of redemption they may do so in proportion of the share they may have in the
thing owned in common. (Art. 1623) the right of legal redemption shall be exercised
except within 30 days from the notice in writing by the prospective vendee or by the
vendor. The deed of sale shall not be recorded in the Registry of Property unless
accompanied by an affidavit of the vendee that he has given written notice thereof to
all possible redemptioners.

Section 2 Legal Redemption


Arts. 1619-1623
I.

II.

Concepts
A.

Legal redemption

B.

Applicable alienation (1619)

C.

Distinguished from pre-emption

D.

Applicability of the rules

Instances of legal redemption


A.

Redemption by Co-owners
a.

Purpose

b.

Requisites
Cases:
Aguilar v Aguilar
Facts:
Senen Aguilar (petitioner) and Virgilio (respondent) purchased a house and lot for the
benefit of their father. They executed a written agreement stipulating that their shares
would be equal and that Senen would live with their father on the condition that he
would pay the SSS the remaining loan obligation of the former owners of the property.
When their father died Virgilio demanded that Senen vacate the house and sell the
property dividing the proceeds between them. Senen refused to comply. Virgilio then
filed for specific performance and that Senen be compelled to sell so that the proceeds
will be divided. Trial court declared the brother to be co-owners, ordered the property
be sold, and the proceeds to be equally divided between them. CA reversed RTC. Later
the SC reinstated the RTC ruling. Senen then filed with RTC a complaint for legal
redemption against Virgilio and another brother named Angel. He alleged that while he

The requisites for exercise of right of legal redemption are: co-ownership; one of the
co-owners sold his right to a stranger; the sale was made before the partition of the coowned property; must be exercised by one or more co-owners within a period of 30
days to be counted from the time they were notified in writing by vendee or by coowner vendor; vendee must be reimbursed. In the current case the sale took place in
1989 with Senen having knowledge of it but only filed for redemption in 1995. Senen
contends that there being no notice to him the 30 day redemption period has not
started to run. SC ruled that co-owner with actual notice of sale is not entitled to a
written notice for it would be superfluous. The 30 day redemption period started to run
from the day Senen had actual knowledge of the sale. That he no longer can avail of his
right to legal redemption.
Avila v Barabat
Facts:
The subject is a parcel of land is inherited by Narcisa Avila, Natividad Macapaz,
Francisca Adlawan, Leon Nemeo, and Jose Bahena. Bejamin Barabat leased a portion of
the house owned by Avila. Jovita Barabat moved in with him in 1969. Avila offered to
Barabat the property, and the latter agreed to buy it. They stopped paying rentals to
Avila and took possession as owners and assumed payment of its realty taxes. In 1982
Barabat was confronted by Adlawan who informed him that they have until March
1982 to stay in the property because he was buying the property. Barabat refused and
contended that they were already sold the property. Later Barabat was informed by the
lawyer of the Adlawans that Avila sold the property to his client. Barabat then filed for
quieting of title and annulment of deed of sale. Trial court ruled in favor of Barabat. CA
affirmed.

Law on Sales-J. Adviento Finals Notes-A.R.L.


Petitioner now claims that it was an absolute deed of sale and not an equitable
mortgage. That and that they have right to redeem the property.
Issues:
WON petitioner has right to redeem
Held:
SC ruled in favor of respondents. Avilas transaction with Barabat was in fact a sale and
that there was intention to convey the property.
Petitioners right to redeem would have existed if there was co-ownership among
petitioner-siblings. There was no co-ownership. Co-ownership must exist at the time of
the conveyance of the property and redemption is demanded by a co-owner.
Petitioners were no longer co-owners as the time of the sale as there was already
partition. Co-ownership exist when of undivided thing belongs to different persons.
Every act intended to put indivision among co-heirs is deemed partition. Portions for
each heir in this case had already been ascertained. There was already physical
segregation although there is no formal partition. Art. 1622 does not apply and
conditions werent met.
c.

Who may exercise redemption


Case: effect of redemption by co-owner of a deceased co-owners share
Cabales v CA
Facts:
Rufino Cabales died and left a parcel of land to his wife and 6 children (Bonifacio,
Albino, Francisco, Leonora, Alberto, and Rito). 1971 Bonifacio, Albino, and Alberto sold
the property to Corrompido with right of repurchase within 8 years and they divided
the proceeds of the sale between them. Alberto died leaving his wife and son Nelson
(petitioner). Within the 8 year redemption period Albino and Bonifacio paid for their
share of the redemption while their mother Saturnina paid for Albertos share and
Corompido released the document of sale to them. Saturnina, Bonifacio, Albino,
Francisco, and Leonora sold the same property to Feliano. 1985 Register of deeds
issued an OCT in favor of the buyers. The vendors executed a document to effect that
petitioner Nelson and Rito Cabaleswould only receive from, Feliano his share of the
proceeds when he reaches 21. In 1993 Nelson he signified his intention to redeem the
property. contended that they could not have sold their shares in the property when
they were minors and filed for complaint of redemption. Respondents contended that
they are already estopped as Cabales already received his share of the proceeds and
that Nelson failed to consign with the court the total amount of the redemption price
necessary for legal redemption. Trial Court ruled against petitioners
Issued:
WON Nelson and Rito are co-owners and has right to legal redemption
Held:

When Alberto died, by operation of law his 1/7 share of the property were transferred
to his wife and son Nelson. The first sale of the property to Corrompido was valid and
so does the redemption. However the redemption of Saturnina as to the share of
Alberto does not subrogate her to Albertos or his heirs right to the property. A coowner who redeems the entire co-owned property does not become the owner of it all.
Property remains in co-ownership as redemption is not a mode of termination of coownership. But the one who redeem has a right to reimbursement for the redemption
price and until reimbursed holds a lien upon the property for the amount due.
Saturnina was not vested ownership however she has a right to be reimbursed for the
redemption price and held a lien upon the propery. Albetos heirs retained ownership
of the property
As to Ritos share of the property, the sale of his share was initially unenforceable since
Saturnina as his legal guardian alienated his share. A legal guardian cannot alienate the
property of the minor. However the sale was ratified when Rito accepted the proceeds
from the sale.
As to the legal redemption, it may only be exercised by the co-owner that did not part
with his share of the property. Thus Rito cannot anymore exercise his right of
redemption as the sale concerning his share was ratified by him. Nelson and his mother
can redeem within 30 days from notice in writing of the sale by their co-owner vendors.
In this case the right of redemption was invoked years after sale was made. Records
show that in 1988 Nelson of majority age already was informed of the sale, he signified
his intent to redeem in 1993and he only filed for redemption in 1995. It was ruled that
the 30 day period commenced in 1993 thus Nelson can no longer redeem since it was
only
after
2
years
did
he
file
for
redemption.

Law on Sales-J. Adviento Finals Notes-A.R.L.

d.

Obligation of the redemptioner

e.

Legal redemption by co-heirs

is to keep strangers to the family out of a joint ownership. The rule on


redemption is liberally construed in favor of the original owner of the
property and the policy of the law is to aid rather than defeat him in the
exercise of his right of redemption.

Case: Redemption by excluded co-heir

The petitioner cannot be accommodated. Art. 1088 provides that should


any of the heirs sell his hereditary rights to a stranger before the partition,
any or all the co-heirs may be subrogated to the rights of the purchaser by
reimbursing him for the price of the sale, provided they do so within the
period of 1 month from the time they were notified of the sale by the
vendor. There was no written notice sent to Porfirio by Paz when she sold
her share over the land to Tam. Porfirio only discovered on May 12, 1994
that the land was sold to Tam. Art. 1620 provides that a co-owner may
exercise the right of redemption incase the share of all the other co-owners
or any of them are sold to a third person. If the price of the alienation is
grossly excessive, the redemptioner shall pay only a reasonable one. No
written notice of the sale was given by Paz to Porfirio. The written notice is
mandatory hence the right to redeem commenced when plaintiff sought to
exercise it by instituting the complaint in the instant case on June 1994.

Galvez v CA
Facts:
Timotea owned a parcel of land which passed to Paz Galvez and Profirio
when Timotea died. Paz executed an affidavit stating that she is the true
and lawful owner of the property. On June 1992 without knowledge of
Porfinio, Paz sold the property to Tam. Tam filed for application for
registration of the parcel of land and an OCT was issued in his favor. Tam
later sold the property to Tycoon Properties. Pofinio filed for legal
redemption with damages and cancellation of document against Paz and
Tam.
Trial Court held that the affidavit of adjudication of Paz to herself was null
and void and that the sale between Paz and Tam is likewise null and void.
Petitioners appealed to the CA. CA affirmed the trial court.

Tam is not a buyer in good faith as he did not exert efforts to determine the
previous ownership of the property in question and relied only on tax
declarations. He also received copies of the complaint by Profirio and still
sold the property to Tycoon Properties.

Issues:
WON Profinio can exercise right of redemption
Held:
The case is governed by the rules on co-ownership since both Paz and
Porfinio are owners of the property. Art 494 CC provides that prescription
shall not run in favor of a co-owner or co-heir against his co-owners or coheirs as long as he expressly or impliedly recognizes the ownership. A coowner cannot acquire by prescription the share of the other co-owners
absent any clear repudiation of the co-ownership. For title to prescribe in
favor of a co-owner there must be a clear showing that he has repudiated
the claims of other co-owners and the latter has been categorically advised
of the exclusive claim he is making to the property in question. Paz effected
no clear repudiation of the co-ownership.
As to legal redemption, (Art. 1619) it 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. (Art. 1620)
a co-owner of a thing may exercise the right of redemption in case the
shares of all the other co-owners or of any of them, are sold to a third
person. If the price of alienation is grossly excessive, the redemptioner shall
pay only a reasonable one. Should 2 or more desire to exercise the right of
redemption, they may only do so in proportion to the share they may be
respectively have in the thing owned in common. The purpose of Art 1067

B.

Redemption by adjoining owners


a.

Instances
i.

Rural lands
Cases:
Fabia v IAC
Facts:
Plaintiffs Fabia reside on a lot east of the land in question and
adjacent to it. The land in question formerly belonged to
Mararac who sold it to Sps. Mararac and Monica Resuello on
1971. At the time of the sale of the land in question in 1975
there was no offer to exercise the right of legal redemption.
There was also no legal redemption offered during the period
between the first and second sale. The land in question in
relation to plaintiffs lot is not separated by ravine, by brook,
trait road, or other servitude for the benefit of others. The land
is fenced and was fenced even before the sale. Defendants
own rural lands other than the land in question. House of the
plaintiffs is along a road in the southern portion of the land in
question. Plaintiffs offered to redeem the land in the amount

Law on Sales-J. Adviento Finals Notes-A.R.L.


paid by defendants as well as an amount for the return of
investment of the property and interest, and payments of
attorneys fees.
Trial Court ruled in favor of petitioners. CA reversed.
Issues:
WON the land may be considered rural for purposes of legal
redemption. WON respondents are guilty of laches as to
prevent them from redeeming the property in question.
Held:
The small parcel of land, one hectare or less in area must be
dedicated to agriculture before the owners of adjoining lands
may claim a right of redemption under Art. 1621 CC. Rural
lands are distinguished from urban tenements by its purpose
or being for agricultural, fishing or timber exploitation, and not
for dwelling, industry or commerce. Respondents failed to
satisfy the criterion. The lands in question cannot be legally
classified as rural land since it is principally used for residential
rather than agricultural purposes. From the respondents
complaint alone, the land is admittedly residential. And as
according to the rules of court the admissions made by the
parties in the pleadings or in the course of the trial or
proceedings do not require proof and cannot be contradicted
unless previously shown to have been made through palpable
mistake. No such palpable mistake was shown. The character
of the locality, the streets, the neighboring and surrounding
properties give a clear picture of a residential area including
the disputed property. A residential home lot is not converted
into agricultural land by simple reservation of a plot for the
cultivation of garden crops or the planting of bananas and
some fruit trees. Nor can an orchard or agricultural land be
considered residential simply because a portion thereof has
been criss-crossed with asphalt and cement roads with
buildings here and there. The land being primarily residential
cannot be considered as rural for purposes of legal redemption
under the law.
Another requisite to enable legal redemption of adjoining
lands is that both the land of the one exercising the right and
the adjacent property sought to be redeemed should be rural
or destined for agricultural exploitation. If either is urban, or
both are urban, there is no right of redemption. Thus
respondents has no right of redemption.
*Primary Structures Corp. v Valencia*
Fact:

Primary Structures is a corporation and registered owner of a


lot. Adjacent to the lot of petitioner are parcels of land (3) with
a total combined area of 3, 752 sq. m. The 3 lots were sold by
Hermogenes Mendoza to Valencia in December 1994. PSC
learned of the sale on January 1996 when Mendoza sold to it a
lot adjacent to its property. PSC sent a letter to Valencia on
January 1996 signifying its intention to redeem the 3 lots. On
May 1996 PSC sent another letter to Valencia tendering
payment of the price paid to Mendoza by Valencia for the lots.
Valencia informed PSC that they had no intention of selling the
lands. PSC invoked Art. 1621 and 1623 and filed an action to
compel the latter to allow legal redemption. PSC claimed that
neither Mendoza nor Valencia gave formal or even just a
verbal notice of the sale of the lots as so required by Art. 1623.
RTC dismissed the petition. CA affirmed RTC.
Issues:
WON Art. 1621 and 1623 applies in this case.
Held:
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.
1623. Right of legal pre-emption or redemption shall not be
exercised except within 30 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 the he has given written notice thereof to all possible
redemptioners. The right of redemption of co-owners excludes
that of adjoining owners.
Whenever a piece of rural land not exceeding one hectare is
alienated, the law grants to the adjoining owners a right of
redemption except when the grantee or buyers does not own
any other rural land. In order that the right may arise, the land
to be redeemed and the adjacent property belonging to the
person exercising the right of redemption must both be rural
lands. If one or both are urban lands, the right cannot be
invoked.

Law on Sales-J. Adviento Finals Notes-A.R.L.


The right of redemption may be defeated if it can be shown
that the buyer or grantee does not own any other rural land.
There has been no evidence proffered to show that
respondents are not themselves owners of rural lands for the
exclusionary clause of the law to apply. As to the prescription
of the right of redemption, it was timely exercised by private
respondents. Concededly, no written notice of the sale was
given by the vendors to the co-owners required under Art.
1623. Hence, the 30 day period had yet to commence when
private respondent Rosales sought to exercise the right of
redemption on March, 1987, a day after she discovered the
sale from the Office of the City Treasurer or when the case is
initiated. The written notice of sale is mandatory, court has
long established the rule that notwithstanding actual
knowledge of a co-owner, the latter is still entitled to a written
notice from the selling co-owner in order to remove all
uncertainties about the sale.

that they are willing to avail of their preferential right to


purchase. Alcantaras then filed a complaint in RTC for
annulment of the sale between Contreras and CCDB. Asserted
that Sps. Matawaran had no capacity to include the house as
part of the mortgage to CCDB as they were not the owners. In
turn, CCDB could not have acquired ownership of the house
when it foreclosed it and consequently the sale between CCDB
and Contreras could not have included the house either. And
that they are entitled to exercise their right of pre-emption
and redemption under Art. 1622 as owner of adjacent land of
the subject land.
Matawaran spouses admitted that the Alcantaras are the
owners of the subject house even as it was built on their
former property and claimed that the bank knew that the
house was actually owned by the Alcantaras.
RTC held that Alcantaras were entitled to exercise the right of
pre-emption.CA affirmed.

SC reversed CA. Gave 30 day period to petitioner from finality


of decision to exercise right of redemption.
ii.

Issues:

Urban lands

WON Alcantaras is entitled to right of redemption.

Case: *Contreras v CA*

Held:

Facts:
Leis constructed a house on a land owned by Gatchalian. As
early as 1949 Leis openly manifested her right to the subject
house on the land through a tax declaration. House was
mortgaged to the Rural Bank of Teresa Inc. (RBTRI) which
would eventually acquire ownership over the house after Leis
failed to pay the loan. In 1980 Isabelita, the daughter of Leis,
purchases the house back from the bank. The land was owned
by Gatchalian when the house was constructed, eventually its
ownership of the land passed to Sps. Matawaran. Sps.
Matawaran executed a real estate mortgage with CCDB
covering the land, together with the house as security of loan.
The mortgage deeds stated that the mortgaged property
includes a 2 storey residential building. After Sps. Failed to pay
the loan, CCDb foreclosed the mortgage and acquired the
property. No redemption was made.
Meanwhile Isabelita ppurchased a land adjacent to the house
which she earlier bought from RBTRI. She then rented out the
lower floors of the house to Contreras. In November 1990
CCDB sold land to Contreras. Before the deed of sale was
executed the Alcantaras wrote CCDB concerning the contract
to sell between CCDB and Contreras. They informed CCDB that
they were owners of the adjacent lot and that they had not
been made aware of the contract until after its execution, and

It was sufficiently alleged in the complaint that the Alcanataras


are entitled to exercise their right of pre-emption and
redemption under Art. 1622. They specifically prayed that
judgment be rendered entitle them to exercise such right.
1622. Whenever a piece of urban land which is so small and so
situated that a major portion thereof cannot be used for ay
practical purpose within a reasonable time, having been
bought merely for speculation is about to be re-sold, the
owner of the adjoin land has a right of pre-emption at a
reasonable price. If the re-sale has been perfected, the owner
of the adjoining land shall have a right of redemption also at a
reasonable price.
b.
III.

Obligation of the redemptioner

Procedure of redemption
A.

When to exercise the redemption


Cases:
Verdad v CA
Facts:

Law on Sales-J. Adviento Finals Notes-A.R.L.


Verdad is a purchaser of a residential lot. Private Respondent Rosales seeks to exercise a
right of legal redemption over the subject property and traces her title to Atega who
died. Atega during her lifetime, contracted two marriages, with Burdeos and Rosales.
Atega was survived by her son A. Burdeos and her grandchild Felicidad and David, Justo,
Romulo, and Aurora Rosales. Heirs of Burdeos sold to Verdad the lot for theprice of 55,
460 but written on the deed of sale for only 23, 00 to save on tax on capital gains.
Rosales discovered the sale on March 1987. She sought for intervention for redemption
of the property and tendered the sum of 23, 000. The sum was refused for being less
that the lots current value. Now Rosales initiated an action for legal redemption in RTC.
RTC ruled that the right to redeem of Rosales has already lapsed. CA reversed and held
that Rosales is still entitled to exercise her right to redee,.
Issues:
WON Rosales (a daughter in law) has incapacity to redeem the property not being a coheir on the intestate estate of Atego.

Francisco. On Aug 1992 Francisco received summons filed by Boiser demanding her
share in the rentals being collected by the former from the tenant of the building.
Francisco then informed Boiser that she was exercising her right of redemption as coowner of the property. She then deposited 10,000 as redemption price in the clerk of
court but the court dismissed this.
Francisco alleged in RTC that the 30 day period for redemption had not begun to run
against her since the vendor, Adela, never informed her and the other owners about the
sale. That she only learned about the sale on Aug. 1992 after she received the summons
for rentals of Boiser.
Boiser contended that petitioner knew about the sale as early as May 1992 because she
wrote petitioner a letter informing her about the sale with a demand that the rentals
corresponding to her 1/5 share be remitted to her along with the deed of sale. This was
proved by the fact that on June 1992 Francisco advised the tenant to disregard Boisers
request and continue paying full rentals directly to her.
Trial Court dismissed Franciscos complaint for legal redemption. CA affirmed.

Held:
Issues:
She can. Her right to the property is not because she rightfully can claim heirship but
that she is a legal heir of her husband, part of whose estate is a share in his mothers
inheritance. David Rosales survived his mothers death. When Atego died her estate
passed to her surviving children, among them David Rosales who became co-owner of
the property. When David died his own estate which included his undivided interest
over the property inherited from Atego passed on to his widow and her co-heirs. When
their interest in the property was sold a right of redemption arose. Art 1619 states that
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. 1620 states that a co-owner of a thing may exercise the right of
redemption in case the shares of all the other owners or of any of them are sold to a
third person. If the price of the alienation is grossly excessive, the redemptioner shall
pay only a reasonable one.
Rosales timely exercised the right of redemption. There was no written notice of the
sale given by the Burdeos heris to the co-owners. And under Art. 1623 the right of legal
pre-emption or redemption shall not be exercised except within 30 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 recorded in the Registry of Property, unless accompanies by an affidavit of
the vendor that he has given written notice thereof to all possible redemptioners. Hence
the 30 day period had yet to commence when Rosales sought to exercise the right of
redemption in March 1987, a day after she discovered the sale.
Francisco v Boiser
Facts:
Francisco and her three sisters, Ester, Elizabeth, and Adeluisa were co-owners of 4
parcels of land where a building stands. On Aug. 1979 they sold their 1/5 undivided
share of land to their mother Adela making the latter a co-owner. On Aug. 1986 without
knowledge of the co-owners, Adela sold her 1/5 share to Boiser who is another sister of

WON the letter sent by Boiser to Francisco notifying her of the sale can be considered
sufficient as complaint with the notice requirement of Art. 1623 for purpose of legal
redemption.
Held:
Art. 1623 is clear in requiring that the written notification should come from the vendor
or prospective vendor, not form any other person. There is therefore no room for
construction. The vendor is in the best position to know who are his co-owners who
under the law must be notified of the sale. It is likewise the notification from the seller,
not from anyone else whicih can remove all doubts as to the fact of the sale, its
perfection, and its validity, for the seller is in the best position to confirm whether
consent to the essential obligation of selling the property and transferring ownership
thereof to the vendee has been given.
By not immediately notifying the co-owner, a vendor can delay or even effectively
prevent the meaningful exercise of the right of redemption. In the present case, the sale
took place in 1986 but it was kept secret until 1992 when vendee herein respondent
needed to notify petitioner about the sale to demand 1/5 rentals from the property
sold. It is unjust to further delay petitioners exercise of her right of legal redemption by
requiring the notice be given by the vendor before petitioner can exercise her right. The
receipt of petitioner of the summons constitutes actual knowledge on the basis of which
petitioner may now exercise her right of redemption. The summons amounted to actual
knowledge of sale from which the 30 day period of redemption commenced to run.
Petitioner had until Sept. 1992 within which to exercise her right of legal redemption
but on Aug. 1992 she deposited the redemption price which is timely and should be
given effect.
Vda. De Ape v Ca
Facts:

Law on Sales-J. Adviento Finals Notes-A.R.L.


Ape was the registered owner of a parcel of land. Upon Apes death the property was
passed on to his wife, Maria Ondoy and their 11 children namely: Fortunato, Cornelio,
Bernalda, Bienvenido, Encarnacion, Loreta, Lourdes, Felicidad, Adela, Dominador, and
Angelina. On March 1973, Lumayno (private respondent) joined by her husband Braulio
instituted a case for specific performance of a deed of sale against Fortunato and his
wife Perpetua (petitioner). Alleged that Lumayno and Fortunato entered into a contract
of sale of land where Fortunato agreed to sell his share in of the land to private
respondent. As private respondent wanted to register the sale transaction she
demanded that Fortunato execute the deed of sale and to receive the balance of the
consideration. However Fortunato refused to. Private respondent therefore prayed that
Fortunato be ordered to execute and deliver to her a sufficient and registrable deed of
sale involving his 1/11 share. Fortunato and petitioner denied the allegations of the
complaint and claimed that Fortunato never sold his share to private respondent and
that his signature was forged. They maintained having entered into a contract of lease
with respondent which commenced in 1960 and was supposed to last until 1960 and
was supposed to last until 1965 with an option for another 5 years. Fortunato and
petitioner also assailed private respondent and her husbands continued possession of
the rest of the lot alleging that in the event they had acquired the shares of Fortunatos
co-owners by way of sale, he was invoking his right to redeem the same.
Private respondent alleged that Fortunato was no longer a co-owner thus his right of
redemption no longer existed.
Trial Court rejected Fortunato and Petitioners claim that they had right of redemption
as they have been informed of the sale as far back as March 1973. Under the law they
only had 30 days from their actual knowledge of the exact terms and condition of the
deeds of sale or conveyance of heir co-heirs and co-owners share within which to
exercise their right of legal redemption. CA affirmed with regards to the issue of the
right of redemption.
Issues:
WON Fortunato was furnished with a written notice of sale of the shares of his coowners as required by Art. 1623
Held:
In considering whether or not the offer to redeem was timely, we think that the notice
given by the vendee should not be taken into account. Art. 1623 clearly and expressly
prescribes that the 30 days for making the redemption are to be counted from notice in
writing by the vendor. In this case, the records are bereft of any indication that
Fortunato was given any written notice of prospective or consummated sale of the
portion of the lot by the vendors or would-be vendors. The 30 day redemption period
under the law therefore has not commenced to run. However we still rule that
petitioner could no longer invoke her right to redeem for the exercise of this right
presupposes the existence of a co-ownership at the time the conveyance is made by a
co-owner and when it is demanded by the other co-owner/s. Legal redemption is
intended to minimize co-ownership. Once the property is subdivided and distributed
among the co-owners, the community ceases to exist and there is no more reason to
sustain any right of legal redemption. In this case records reveal that although the lot
has not yet been formally subdivided, the particular portions belonging to the heirs of

Ape had already been ascertained and they in fact took possession of their respective
parts. It is evident that there was already partition although informal is still valid and
binding upon the parties.
Aguilar v Aguilar (double)

IV.

B.

Requisites for registration of the sale in the registry of property

C.

Special rules

Other cases of legal redemption


Cases:
a.

Period of redemption in auction sale of homestead to satisfy money judgment


Tupas v Damasco
Facts:
Tupas and Baldonado acquired a parcel of land through the homestead provisions
of the Public Land Act. On March 1951 a homestead patent was issued to Sps.
Tupas. On Nov. 1951 they sold it to Bulaong a minor who was represented by her
father Eusebio Bulaong. The sale was executed within the prohibitive 5 year
period from the issuance of the homestead patent, another deed of sale was
executed on May 1958 in favor of Bulaong. Since 1951, Bulaong and her father
have been actually occupying the parcel of land and later caused the construction
of a residential building thereon. Meanwhile Tupas obtained a loand from PNB
and for failure to pay a writ of attachment was issued annotated on the TCT of the
Sps. Tupas. The annotation was later re-entered to the TCT issued to Bulaong. The
land was then sold to PNB. March 1960, Bulaong now married to Damasco,
instituted before the same court an action against PNB for recovery of ownership.
Trial court ruled in favor of PNB nullifying the sale to Sps. Tupas. Damasco now
entered into compromise agreement where they agreed to purchase the land in
question from PNB. And Damasco executed a deed of sale transferring the land in
favor of Eusebio Bulaong. On Sept. 1964 PNB executed a deed of sale in favor of
Sps. Damasco.on 1965 Eusebio filed in CFI against Sps. Damasco and it was found
that Eusebio actually purchased the land from PNB and not Sps. Damasco. On
June 1965, Sps. Tupas now filed against Damasco for repurchase of land under
sec. 119 of commonwealth act.
Issues:
What time should the five year period mentioned in Sec. 119 pf Public Land Law
within which to exercise the right to repurchase be counted.
Held:
Sec. 119 states that every conveyance of land acquired under the free patent or
homestead provisions, when proper, shall be subject to repurchase by the

Law on Sales-J. Adviento Finals Notes-A.R.L.

b.

applicant, his widow, or legal heirs, within a period of five years from the date of
the conveyance.

the date of public auction. In this case, under Act 3135, petitioners may redeem
the property until July 22, 1972.

Appellees could only exercise the right to repurchase his former homestead
within 5 years from April 4, 1959, the date of the execution sale or up to April 4,
1964. Since this action to repurchase was filed on June 10, 1965, the same was
filed out of time. At any rate, even if we have to compute the 5 year period from
the expiration of the right to redeem granted to a judgment debtor, still this case
was filed beyond 5 years because the one year period of redemption in this case
expired on April 4, 1960, and the five year period from April 4, 1960- April 4, 1965.
The sale by appellees of their homestead even before the expiration of the 5 year
prohibited period indicates lack of intent on the part of the homesteader to
preserve the homestead for himself and his family.

In addition Sec. 119 provides that every conveyance of land acquired under the
free patent or homestead patent provisions of the public land act, when proper,
shall be subject to repurchase by the applicant, his widow, or legal heirs, within
the period of five years from date of conveyance. The 5 year period of
redemption fixed in sec. 119 of PLA of homestead at extrajudicial foreclosure
begins to run from the day after the expiration of the one year period of
repurchase allowed in an extrajudicial foreclosure. Hence, petitioners still had five
years from July 22, 1972 within which to exercise their right to repurchase under
the PLA. The general rule in redemption is that in making a repurchase, it is not
sufficient that a person offering to redeem makes manifestation of his desire to
repurchase, this statement of intention must be accompanied by an actual and
simultaneous tender of payment, which constitutes the legal use or exercise of
the right to repurchase. Where the right to repurchase was held to have been
properly exercised, there was a definite finding of tender of payment having been
made by the vendor. The tender of payment must be for the full amount of the
repurchase price, otherwise the offer to redeem will be held ineffectual. Bona fide
redemption necessarily imports a reasonable and valid tender of the entire
repurchase price. There is no cogent reason requiring the vendee to accept
payment by installments from the redemptioner as it would ultimately result in an
indefinite extension of the redemption period. The filing of a complaint to enforce
repurchase within the period for redemption is equivalent to an offer to redeem
and has the effect of preserving the right to redemption.

Period of redemption in auction sale of homestead


Belisario v IAC
Facts:
Rufino Belisario and Felipa lauga owns a parcel of land pursuant to a homestead
patent. On Aug. 3, 1948 upon the death of Belisario, the ownership of the land
was extrajudicially settled among his children (petitioners therein) namely:
Benjamin, Pacita, Victoria, Francisco, Anatolia, Teresita and his widow Felipa. In
1950 via a special power of attorney some of the petitioners mortgaged the land
to PNB to secure a promissory note. Petitioners-mortgagors defaulted in the
payment of the loan. Consequently, the mortgage was extra-judicially foreclosed
and on an. 1963 was sold at public auction with PNB as highest bidder. On April
21, 1971, petitioners wrote to PNB making known their desire to redeem the
property for the same price as the auction sale and enclosed therein a postal
money order as partial payment with balance to be paid in 12 monthly
installments. PNB refused on the reason that under existing regulations of the
bank, payment by way of redemption must be paid in full and not by installments.
Feb 8, 1973 sold the land to Cabrera. And in Nov. 1974 Cabrera filed an action for
recovery of possession against Belisario as they were in actual possession of the
land. In turn, Belisario filed an action for repurchase of homestead against PNB
and Cabrera.

In a case decided by SC, a formal offer to redeem accompanied by a bona fide


tender of redemption price is not essential where the right to redeem is exercised
thru the filing of judicial action which was simultaneously with the deposit of the
redemption price within the period of redemption. Formal offer to redeem
accompanied by bona fide tender of redemption price within period of
redemption is only essential to preserve the right of redemption for future
enforcement even beyond such period of redemption. The filing of the act-on
itself within the period of redemption is equivalent to a formal offer to redeem.
Should the court allow redemption the redemptioners should then pay the
amount already adverted to. Petitioners are allowed to redeem.
ASSIGNMENT OF CREDITS AND OTHER INCORPOREAL RIGHTS

Trial court dismissed the petition of Belisario. IAC affirmed the trial court.
Issues:
WON Belisario can still redeem the property
Held:
The land was sold on Jan. 31; 1963, and the certificate of sale was registered on
July 22, 1971. The redemption period for purposes of determining the time when
a formal deed of sale may be executed or issued and the ownership of the
registered land consolidated in the purchase at an extrajudicial foreclosure sale
under Act. 3135, should be reckoned from the date of registration of the
certificate of sale in the office of the register of deeds concerned and not from

Arts. 1624-1635
I.

Concept
Ledonio v Capitol Devt.
Facts:
CDC filed a complaint for the collection of a sum of money against petitioner Ledonio. CDC
alleged that Ledonio obtained from Picache two loans covered by promissory notes. In the first
promissory note petitioner promised to pay to the order of Picache the principal amount of
30k in monthly installments of 3k with the first monthly installment due on Jan. 1989. In the

Law on Sales-J. Adviento Finals Notes-A.R.L.


second promissory note petitioner promised to pay to the order of Picache the principal
amount of 30k with 36% interest per annum on Dec. 1988. On April 1989 Picache executed an
Assignment of Credit in favor of CDC and was signed by 2 witnesses and duly acknowledged by
Picache before a notary public. Since petitioner did not pay any of the loans covered by the
promissory notes, CDC sent petitioner several demand letters. Despite this petitioner still
fialed and refused to settle his indebtedness thus prompting respondent to file the complaint
with RTC.

of the possibility of the debtors refusal to give consent. It also does not appear in Phil. Statues
or jurisprudence which prohibits a creditor without the consent of the debtor from making an
assignment of his credit and the rights and accessories thereto. And an assignment of credits
and its accessory rights does not obliterate the obligation of the debtor to pay. Hence,
obligation of the debtor to pay subsists despite the assignment thereof.
However even if consent of debtor is not necessary, the petitioner must have knowledge
acquired either by formal notice or some other means of the assignment so that he may pay
the debt to the proper party which shall now be the assignee. The debtor who before having
knowledge of the assignment pays his creditor shall be released from the obligation. The legal
effects produced by failure to give the notice is provided in Art. 1527. If creditor assigned his
credit acting in bad faith and taking advantage of the fact that the debtor does not know
anything about the assignment because the latter has not been notified and collects its
amount, the debtor shall be free from the obligation, in as much as it has been legally
extinguished by a payment which fully redounds to his benefit. Assignee can take advantage of
all civil and criminal actions against assignor but he can ask nothing from the debtor because
the latter did not know of the assignment nor was he bound to know it. Assignee has burden
of proving that there was notification. Petitioner already had knowledge of the assignment of
credit. He did not deny having knowledge and he was sent letters via registered mail by
respondent to which return card were sent that were signed by his agent. Also under Art. 1625
an assignment of credit, right or action shall produce no effect as against third persons, unless
it appears in a public instrument or the instrument is recorded in the registry of property in
case the assignment involves real property.

Petitioner sought the dismissal of the complaint claiming that CDC has no cause of action. That
there was no loan and that he only entered into a contract of real property of which Picache is
an incorporator and member of the board of directors. That he was only made to sign blank
promissory notes and that Picache took advantage of these.
RTC ruled in favor of CDC. CA affirmed.
Issues:
WON there was assignment of credit
Held:
Petitioner asserts the position that consent of the debtor to the assignment of credit is a basic
essential element in order for the assignee to have a cause of action against the debtor.
Without the debtors consent, the recourse of the assignee in case of on-payment of the
assigned credit, is to recover from the assignor. Petitioner argues that even if there was indeed
assignment of credit, then there had been a novation of the original loan contracts when the
respondent was subrogated in the right of Picache. Petitioner invokes Art. 1300.
SC declared the transaction between Picache and respondent was an assignment of credit, not
conventional subrogation, and does not require petitioners consent as debtor for its validity
and enforceability. An assignment of credit is defined as an agreement by virtue of which the
owner of a credit (assignor) by a legal cause and without need of the debtors consent,
transfers that credit and its accessory rights to another (assignee) who acquires the power to
enforce it to the same extent as the assignor could have enforced it against the debtor. On the
other hand, subrogation is the transfer of all rights of the creditor to a third person who
substitutes him in all his rights. It may either be legal or conventional. Legal subrogation is that
which takes place without agreement but by operation of law because of certain acts.
Conventional subrogation is that which takes place by agreement of parties. Although the
effect of assignment of credit and subrogation is the same, the court cannot rule that both are
one and the same.
Under our code, conventional subrogation is not identical to assignment of credit. In CS the
debtors consent is necessary; in AC it is not. CS extinguishes an obligation and gives rise to new
one while inn AC refers to the same right which passes from one person to another. The nullity
of an old obligation may be cured by CS such that the new obligation will be perfectly valid but
nullity of obligation is not remedied by AC. And in Art. 1200 subrogation must be clearly
established in order that it may take effect. Since it is petitioner who claims that there is
conventional subrogation, the burden of proof rests upon him to establish the same. Since this
is an assignment credit the petitioners consent as debtor is not necessary in order that the
assignment may fully produce legal effects. The duty to pay does not depend on the consent
of the debtor otherwise all creditors would be prevented from assigning their credits because

II.

Essential requisites and formalities

III.

Effect of a valid assignment


Ledonio v Capitol Devt (double)
Servicewide Specialist Inc. v CA
Facts:
Respondent Sps. Atty. Jesus and Elizabeth Ponce bought on installment a vehicle from CR
Tecson Enterprises. They executed a promissory note and chattel mortgage on the vehicle in
favor of CR Tecson Enterprises to secure payment of the note. The latter in turn executed a
deed of assignment of said promissory note and chattel mortgage in favor of Filinvest as they
in fact availed of its financing services to pay for the car. In 1976 spouses transferred and
delivered the vehicle to Conrado Tecson by way of sale with assumption of mortgage. In 1978
FIlinvest assigned all its rights and interest over the same promissory note and chatter
mortgage to petitioner Servicewide Specialiest Inc. without notice to respondent spouses. Due
to failure of respondent to pay the installment and despite demands to pay and return the
vehicle, petitioner Service wide was constrained to file a complaint for replevin with damages.
Respondent denied any liability claiming they had already returned the car to Conrado. They
filed a third party complaint against Conrado praying that in case they are adjudged liable,
Conrado shoulw reimburse them.
Lower court found respondent jointly and solidarily liable to petitioner however Conrado was
ordered to reimburse respondent. CA reversed.
Issues:

Law on Sales-J. Adviento Finals Notes-A.R.L.


WON assignment of a credit requires notice to the debtor in order to bund him.
WON debtor-mortgagor who sold the property to another is entitle to notice of the
assignment of credit made by creditor to another party such that if the debtor was not notified
of the assignment, he can no longer be held liable since he already alienated the property.
WON consent of the creditor-mortgagee necessary when the debtor-mortgagor alienates the
property to a third person.

should have obtained the consent of Filinvest since they were already aware of the assignment
to the latter. In so far as Filinvest is concerned, the debtor is still respondent spouses because
of the absence of its consent to the sale. For failure of respondent spouses to obtain the
consent of FIlinvest thereto, the sale of the vehicle to Conrado was not binding on Filinvest.
When the credit was assigned by FIlinvest to petitioner, respondent spouses stood on record
as debtor-mortgagor.
Lo v KJS ECO-Formwork System Phil. Inc.

Held:

Facts:

Only notice to the debtor of the assignment of credit is require. In contrast, consent of the
creditor-mortgagee to the alienation of the mortgaged property is necessary in order to bind
said creditor. Art. 1626 is applicable only where the debtor pays the creditor prior to acquiring
knowledge of the latters assignment of his credit. It does not apply to cases of non-payment
after the debtor came to know of the assignment of credit.

ECO-FORMWORK is a corporation engaged in the sale of steel scaffoldings, while petitioner Lo


is a building contractor. Lo ordered scaffolding equipment from respondent, he paid
downpayment and the balance was made payable in 10 monthly installments. ECOFORMWORK delivered the scaffoldings to Lo. Lo was able to pay the first two monthly
installments however he encountered financial difficulties and was unable to settle his
obligation to respondent despite oral and written demands made against him. Lo and ECOFORMWORK executed a deed of assignment where Lo assigned to ECO-FORMWORK his
receivables from Jomero Realty Corp. However, when ECO-FORMWORK tried to collect the
said credit from Jomero realty, the latter refuse to honor the deed of assignment because it
claimed that petitioner was also indebted to it. ECO-FORMWORK sent a letter to Lo
demanding payment of his obligation but he refused to pay claiming that his obligation had
been extinguished when they executed the deed of assignment. ECO-FORMWORK filed an
action for recovery of a sum of money against the petitioner before the RTC. LO argued that
his obligation was extinguished with the executionof the deed of assignment of credit.

When the credit was assigned to petitioner, only notice to but not consent of the debtormortgagor was necessary to bind the latter. Applying Art. 1627, the assignment made to
petitioner includes the accessory rights such as the mortgage. Art.2142, states that the
provisions concerning a contract of pledge shall be applicable to a chattel mortgage such as
the one at bar. A thing pledged may be alienated by the pledger or owner with the consent of
the pledgee. Applying by analogy Art. 2128 to a chattel mortgage, it appears that a mortgage
credit may be alienated or assigned to a third person. Since the assignee of the credit steps
into the shoes of the creditor-mortgagee to whom the chattel was mortgaged, it follows that
the assignees consent is necessary in order to bind him of the alienation of the mortgaged
thing by debtor-mortgagor. This is tantamount to a novation. As the new assignee, petitioners
consent is necessary before respondent alienation of the vehicle can be considered as binding
against third person. Petitioner is considered a third person with respect to the sale with
mortgage between respondent and third party defendant Conrado.
In this case, since the alienation by the respondent spouses of the vehicle occurred prior to the
assignment of credit to petitioner, it follows that the former were not bound to obtain the
consent of the latter as it was not yet an assignee of the credit at the time of the alienation of
the mortgaged vehicle.
As to whether respondent spouses needed to notify or secure the consent of petitioners
predecessor to the alienation, the sale with assumption of mortgage made by respondent is
tantamount to a substitution of debtors. In such case, mere notice to creditor is not enough,
his consent is always necessary as provided in Art. 1293 of the CC. Without such consent by
creditor, the alienation made by respondent spouses is not binding on the former. The Civil
Code on assignment of credits do not require the debtors consent for the validity thereof and
so as to render him liable to the assignee. When CR Tecson Enterprises assigned the
promissory note and chattel mortgage it was made with respondents approval. When
Filinvest assigned it further to petitioner, petitioner should have notified the respondent
spouses of the assignment in order to bind them. Being the plaintiff, petitioner must establish
its case, relying on the strength of its own evidence and not upon the weakness of that of its
opponent. The consent to the assignment given by respondent to Filinvest cannot be
construed as the spouses knowledge of the assignment to petitioner because at the time of
the assignment to the latter, the spouses had earlier sold the vehicle to another. That although
they are not bound to obtain the consent of the petitioner before alienating the property, they

Trial court rendered a decision dismissing the complaint on the ground that the assignment of
credit extinguished the obligation. CA held that deed of assignment did not extinguish the
obligation of the petitioner to the respondent. As 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. Dacion
enpago, the debtor offers another thing to the creditor who accepts it as equivalent of
payment of an outstanding debt. In order that there be a valid dationin payment, the following
are the requisites: there must be the performance of the prestation in lieu of payment which
may consist in the delivery of a corporeal thing or a real right or a credit against the third
person; there must be some difference between the prestation due and that which is given in
substitution; there must be an agreement between the creditor and debtor that the obligation
in immediately extinguished by reason of the performance of a prestation different from that
due. The vendor or assignor is bound by certain warranties. More specifically, the first
paragraph of Art. 1628 provides the vendor in good faith shall be responsible for the existence
and legality of the credit at the time of the sale, unless it should have been sold as doubtful,
but not for the solvency of the debtor, unless it has been so expressly stipulated or unless the
insolvency was prior to the sale and of common knowledge. Petitioner as vendor or assignor is
bound to warrant the existence and legality of the credit at the time of the sale or assignment.
When Jomero claimed that it was no longer indebted to petitioner since the latter also had an
unpaid obligation to it, it essentially meant that its obligation to petitioner has been
extinguished by compensation. In other words, respondent allegedthe non-existence of the
credit and asserted its claim to petitioners warranty under the assignment. Therefore it
behooved on petitioner to make good its warranty and paid the obligation.

Law on Sales-J. Adviento Finals Notes-A.R.L.


Petitioner also breached his obligation under the deed of assignment, by warranting the
existence of the credit, petitioner should be deemed to have ensured the performance thereof
in case the same is later found to be inexistent. He should be held liable to pay to respondent
the amount of his indebtedness. CA is affirmed.
Issues:
Held:
IV.

Special assignments
A.

Sale of inheritance

B.

Sale of rights, rents or products for a lump sim

C.

Sale and redemption of litigious credits


a.

Concept of litigious

b.

Effect of sale