[DEJA ENTENDU NOTES] [Sales] [v.1.

1, 2016]
deja [already] + entendu [heard] = youve heard all of this before

(Notes in red are opinions of lecturer[s]1 & authors2 on the subject, or of the reviewee.)

SALES
I. NATURE & FORM OF THE CONTRACT
Art. 1458 + others (sale, defined)
Sale is a contract where one of the contracting parties obligates oneself to transfer ownership of
& deliver a determinate thing, & the other to pay therefor a price certain or its equivalent.
Kinds of contract of sale as to presence/absence of conditions
1. Absolute title passes to buyer upon delivery
2. Conditional contemplates a contingency; in general, where the contract is subject to
certain conditions, e.g. full payment of the purchase price
Contract of sale vs. contract to sell
1. Contract of sale title passes to buyer upon delivery of the thing sold
2. Contract to sell (i.e. exclusive right & privilege to purchase) ownership is reserved in
the seller & not to pass until full payment of the purchase price
Reqs. for a thing to be a proper object of sale
1. Existing (or at least w/ a future/contingent existence)
2. Licit/legal
3. Determinate (or determinable by description/segregation)
Determinate req., satisfied if the thing is capable of being made determinate
w/o having enter into a new contract between the parties!
4. Vendor must have a right to transfer ownership of the thing @ time of delivery
Not reqd for vendor to have the right to transfer ownership @ time of perfection!
Emptio rei speratae vs. emptio spei
1. Emptio rei speratae sale of future things (w/c must be determinate/specific)
In case of doubt, this is presumed!
2. Emptio spei sale of mere hope/expectancy; buyer pays the price even if the thing does
not eventually exist; effective even if thing doesn't appear (XPN: sale of vain hope)
Effect of the sale by the sole owner of an undivided share
OBLIGATIONS OF THE SELLER

1. Preserve the subject matter

2. Deliver the subject matter
3. Warrant the thing
4. Deliver the fruits, accessions & accessories

1. Preservation of the subject matter

Diligence of a good father of a family
When?
From perfection until delivery

If and only if: Specific/Determinate thing

2. To deliver the subject matter

1 Atty. Crisostomo Uribe

2 Atty. Hector De Leon, Dean Cesar Villanueva

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Rule:
A. As to place:
(1) Based on stipulation as to when and where
In the absence of stipulation:
Reasonable place: based on
(2) Usage of trade
(3) Place
(4) Residence of the seller
Exception to the rule: That you delivery at (3) and (4) in the absence of (1) and (2) is
where the subject is other than (3) and (4)
(3) refers to where the object is at the time of perfection of the contract

B. As to time:
(1) Stipulation
(2) Usage of trade
(3) Reasonable hour
(4) Beyond reasonable hour denial of delivery/receipt is acceptable
(acceptance is effective but denial of which is acceptable)

3. Deliver the fruits, accessions and accessories

Arises from the time the obligation to deliver arises
If straight contract of sale perfection
If conditional deed of sale fulfillment of condition (where the obligation to deliver arises)

GR: Delivery transfers ownership

2 requisites for delivery to transfer ownership

Intention to transfer ownership
As a consequence of a valid contract of sale

Execution of a public instrument

notarized

Instruments are binding to 3rd persons if registered

[Registration v. Notarization]

Delivery
Actual/Real
Constructive/Legal

Instrument of Conveyance made public

GR: Same effects as actual/physical/real delivery
XPN:
Stipulation to the contrary
Seller has no control over the subject matter of the sale
XPN: If buyer assumes the risk
Control of seller must subsist during a reasonable period of time

Incorporeal rights/Intangibles

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Only by constructive delivery

Symbolica/Instrumental [public instrument]
Quasi-Traditio
Title of ownership / usage of such right vendee

[If delivery is made to a carrier, when is ownership transferred?]

GR: Upon delivery to carrier
XPN: When contrary intention appears
FOB Shipping Point
FOB Point of Destination
[rebuttable presumption]

CIF (Costs, Insurance and Freight) paid by the buyer cost of goods + CIF

Who bears the risk of loss? [2 schools of thought]

Buyer: because he is the one who paid for the freight
Seller: because he is the one obliged to insure it
[Atty. Fabella subscribes to the second one however, either answer is acceptable.
Take note that there is no jurisprudence on this matter yet.]

When is delivery complete?

Movable property: If the goods are less than the quantity stipulated.

Rights of Buyer:
1. Reject
2. Accept and demand the rest
If there was still no delivery of the balance:
GR: Pay for what has been delivered @ contract rate (if you did not know that seller
failed to deliver the balance)
XPN: If you accepted the goods knowing that the seller hasnt delivered all (cannot
be obliged to pay more than fair value)

[If the goods delivered is more than the quantity stipulated]

Right of Buyer:
1. GR: Reject the excess (if divisible)
XPN: If indivisible, reject all
2. Accept everything, pay both original quantity and excess at contract rate (reason:
fairness)

In case of mixed goods:

1. GR: Reject those which is not part of contract
XPN: If indivisible, reject all
2. Pay all at contract rate (to be fair because he may reject if he doesnt want the others)

If the goods are at the hands of a third person:

Delivery is completed if the third person acknowledges that he is now holding the goods
in behalf of the buyer

Immovable property:

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If contract states price per unit (e.g. P1000/m2)

If less in (quantity) area:
1. Accept w/ proportional reduction of the price
2. Rescission if the area lacking is more than 1/10 of what is agreed upon

In a contract of sale, when ownership does not transfer upon delivery:

Sale of trial or acceptance unless:
1. Buyer signifies approval of the goods
2. Retention, w/o giving notice of rejection (within a specific period of time, or reasonable
time)
3. When he does any other act accepting the transaction
Sale or return (delivery transfers ownership but buyer may revest the ownership to the seller)

How seller can reserve ownership:

By stipulation (express reservation)
Implied reservation: bill of lading is made deliverable to seller or agent or to the order of
seller or his agent
o Bill of lading is made deliverable to the order of the buyer or his agent but seller
keeps the bill of lading
o Bill of lading + Bill of exchange -> delivered to the buyer
For the purpose of getting acceptance & payment
Buyer is required to give back bill of lading
If buyer retains bill of lading, still seller is owner

Delivery by seller
[Non-acceptance =/= refusal to accept]

Is acceptance necessary?
GR: No, because it is the obligation of the seller, otherwise, the seller cannot comply with his
obligation just by the non-acceptance of the buyer.

Will refusal always result in non-transfer of ownership?

GR: Will not prevent delivery
XPN: Unless there is valid ground to refuse

OBLIGATIONS OF THE BUYER

1. Pay the price

2. Accept delivery of the subject matter

When to pay:
1. At time stipulated by the parties
2. Within reasonable period of time

Is it required to pay interest?

No, unless stipulated by the parties that interest is to be paid
Upon default of the buyer
Demand (Judicial/Extrajudicial demand)
[No demand, no delay]
If the subject matter produces fruits

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When and where do you accept delivery?

1. Time and place stipulated by the parties
2. Time and place of actual delivery

When is there implied acceptance?

1. No actual acceptance but the buyer intimates acceptance to the seller
2. If the buyer does any act which is inconsistent with the ownership of the seller (exercise
of acts of ownership)
3. If after the lapse of reasonable time, buyer retains the goods without intimating to the
seller that he rejected them (actual rejection)

Q: Will acceptance of the buyer relieve all obligations of the seller?

A: NO!
Warranties extends even after delivery/transfer of ownership
Except:
1. If there is waiver
2. If buyer failed to give notice of breach of warranty to the seller within reasonable
time
i.e. from the time the buyer learns of the defect

REMEDIES OF THE SELLER

1. General remedies
In case of movables:
No delivery yet (no transfer of ownership)
a. Rescission [when?]
i. If buyer does not appear at the place of delivery; or
ii. If buyer appears but refuses to accept delivery w/o justification; or
iii. Refuses to pay unless there is a stipulation as to time of payment
b. Offer delivery (specific performance)
i. If buyer refuses to accept delivery:
1. Rescission + damages
2. Resale at reasonable price
How much can you claim by reason of non-acceptance
c. Damages
i. Profits that he should have earned
ii. Estimated loss/actual loss resulting from non-acceptance
iii. Difference between contract price & price upon resale
iv. Expenses incurred in making the goods at a deliverable state
If there is delivery (w/ transfer of ownership)
1. Get the price (spec. performance)
If there is no delivery (w/o transfer of ownership)
1. Offer delivery [if refused, rescission or resell or notify the buyer that you hold the
goods in his name]

SPECIAL REMEDIES OF UNPAID SELLER [possession is a requirement to exercise these

rights]

1. Possessory lien
2. Stoppage in transitu

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3. Special right of resale

4. Special right to rescind
Re: 3 & 4 why special? Because they are specifically available only to an unpaid
seller

Who is an unpaid seller?

A seller is deemed to be an unpaid seller, either when:
1. The whole of the price has not been paid or tendered; or
2. A bill of exchange or other negotiable instrument has been received as conditional
payment, and the condition on which it was received has been broken by reason of the
dishonor of the instrument, the insolvency of the buyer, or otherwise

1. Possessory lien: Right to possess

Is this right to possessory lien available even if there is already transfer of ownership?
YES, because there can be transfer of ownership when there is no actual delivery yet
When is it exercised?
1. When buyer is insolvent
2. When there is no stipulation as to credit
3. When there is a stipulation as to credit but it already expired
Partial delivery [on the remaining undelivered goods]
GR: May exercise possessory lien on remaining undelivered goods
XPN: Circumstances show that by partial delivery, seller waived the right to possessory
lien
When is the right to possessory lien lost?
1. When seller waives
2. When buyer lawfully acquires possession
3. When seller delivers goods to carrier for transmission to buyer without reserving
ownership in goods or right to possess them

2. Right of stoppage in transitu

Insolvency; when is a person insolvent?
Liab > Asset? NO
Illiquid minimum requirement
Need to be declared insolvent? NO, you dont have to wait (mauubos pera)
When declared? Upon declaration that your petition is in proper form and substance
When in transit? From delivery to carrier for purposes of delivering to buyer and before
buyer rejected (goods still with carrier)
Cannot be exercised if:
1. Buyer has actual possession
2. Carrier refused wrongfully to deliver to buyer
3. Carrier acknowledges that they hold the goods for buyer
How do you exercise your right to stoppage in transitu?
1. By giving notice of your claim to carrier

3. Special right to resell goods (Art. 1533)

When right exercisable Only when unpaid seller had previously exercised possessory
lien or stoppage in transitu
+ following conditions:
1. Goods are perishable in nature
2. Where the seller has expressly reserved the right in default of buyer
3. Buyer in default for an unreasonable length of time

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Effect of exercise of right

1. He shall not be liable to the buyer for any profit (SP > CP)
2. Buyer is liable for loss (CP >SP)
o CP = contract price
o SP = selling price
Transfer of ownership: new buyer acquires better title as against original buyer
Seller is not only able to destroy or obliterate the ownership of original buyer; he is
also able to transfer ownership to the subsequent buyer even if he had already lost
ownership over the goods and even without judicial action.
Notice to defaulting buyer:
It is not essential to the validity of a resale that notice of an intention to resell the
goods is given by the seller to the original buyer.
However, where the right to resell is not based on the perishable nature of the
goods or upon an express provision of the contract of sale, the giving or failure to
give such notice shall be relevant in any issue involving the question whether the
buyer had been in default for an unreasonable time before the resale was made.
It is not essential to the validity of the resale that notice of the time and place of
resale is given by seller to the original buyer.
Standard of care and disqualification in resale:
Seller is bound to exercise reasonable care and judgment in making a resale,
and subject to this requirement may make a resale either by public or private
sale; he cannot, however, directly or indirectly buy the goods (to prevent abuse)

4. Special right to rescind (Art. 1534)

When right may be exercised: unpaid seller may rescind the transfer of title and resume
the ownership of the goods where:
Seller had expressly reserved his right to do so in case the buyer should make
default; or
Buyer has been in default in the payment of the price for an unreasonable length
of time
Effect of exercise:
Seller shall not thereafter be liable to the buyer upon the sale, but may recover
from the buyer for any loss occasioned by the breach of contract
Transfer of title:
Transfer of title shall not be held to have been rescinded by an unpaid seller until
he has manifested by notice to the buyer or by some other overt act an intention
to rescind
Notice: knowledge of the buyer that there is rescission
It is not necessary that such overt act (e.g. replevin or offer to third person) be
communicated to the buyer but the giving or failure to give shall be relevant in
issue on whether the buyer had been in default for an unreasonable time before
the right of rescission was asserted.

REMEDIES OF THE BUYER

As to movables:
1. For failure of seller to deliver
a. Specific performance (w/o giving the seller the option to retain goods upon
paying damages)
b. Rescission (on the ground of substantial breach)

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+ Damages in both instances

2. For breach of sellers warranty (general remedy/general warranty: (a) eviction (b) hidden
defects)
a. Accept/keep the goods and set up against the seller the breach of warranty by
recoupment in diminution or extinction of the price
b. Accept/keep the goods and maintain an action against the seller for damages
for the breach of warranty
c. Refuse to accept the goods, and maintain an action against the seller for
damages for breach of warranty
d. Rescind the 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
3. Suspension of payment in anticipatory breach
a. Where buyer is/has:
i. Disturbed in his possession
ii. Reasonable grounds to fear such disturbance either by vindicatory action
or a foreclosure of mortgage
he may suspend payment
UNLESS: Seller has caused the disturbance/danger to cease
UNLESS: Seller gives security or it has been stipulated that
buyer is still bound to pay

Rights and obligations of buyer in case rescission is his chosen remedy:

1. Ceases to be liable for price but has to return the goods
2. Can recover what he paid
3. Hold the goods as bailee of seller if seller refuses to accept
4. May refuse to accept if goods are still not delivered to him
5. Lien over the goods until he has not been paid for the price he paid

When buyer cannot elect rescission:

[goods have been delivered]
1. He knows of the breach of warranty but still accepted without protest
2. Failed to notify seller of his election of right to rescind (unreasonable time)
3. Fails to return or offer to return the goods to the seller in substantially good condition as
they were when delivered to him

As to immovables:

A. Remedies of seller:
1. Anticipatory breach reasonable ground to gear that subject matter/price is lost
a. Rescission (in substantial breach)
2. Spec. performance or rescission (Art. 1592)
[in case of failure of buyer to pay the price (period already expired)]
Equitable resolutions

B. Remedies of buyer:
1. Suspension of payment in anticipatory breach
[upon judicial or notarial demand, seller has no ground to reject payment]

DOUBLE SALES

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1. Same subject matter

2. Same immediate seller
3. 2 or more buyers at odds over the rightful ownership of the subject matter
Said buyers must represent conflicting interests
4. 2 or more valid sales

Rules on preference:
As to movables:
1. First possessor in good faith
As to immovables:
1. First to register in good faith at the Registry of Property
2. First possessor in good faith
3. One who presents the oldest title in good faith

Purchaser in good faith [GF required for rules on preference to apply]

Buys the property without notice that there is another with conflicting interest over the
property
Fully paid

Q: If one has personal knowledge on the annotation of [(1) adverse claim (2) lis pendens] on the
title, will it make one in bad faith?
A: Adverse claim annotation expires in 30 days, BUT
GR: Regardless of whether it is still effective, it puts the purchaser in bad faith
XPN: If it can be proved that one exercised due diligence to discover that the claim was
filed maliciously
If you have actual knowledge, even if it is not annotated, bad faith.

If Art. 1544 does not apply, the rule is: first in time, first in right (prior tempore, potior jure).

Bad faith in registration of first buyer upon learning of second sale does not prejudice him.

CONDITIONS AND WARRANTIES

CONDITION WARRANTY
Stipulated Some are implied
Rooted to the existence of the obligation Goes into the performance of such obligation
itself (and in fact may constitute an obligation in itself)
May attach itself either to the obligations of Relates to the subject matter itself or to the
the seller or that of the buyer obligations of the seller as to said subject matter

However, a condition may be warranted, in which case a buyer may:

1. Refuse to proceed with the contract; or
2. Waive the performance of the condition and proceed with the contract

Express warranties: express stipulations agreed upon by the parties

Requisites:
1. Promise/affirmation of fact by seller relating to the subject matter
2. The nature/tendency of this promise is to induce the buyer to purchase the subject
matter
3. Buyer bought it relying on this promise/affirmation of fact

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Breach thereof renders the seller liable for damages.

Q: All affirmations = express warranties?

A: NO.
Affirmation on value of the thing or statement of sellers opinion shall not be construed
as a warranty, unless the seller made such affirmation or statement as an expert and the
buyer relied upon the formers special knowledge.

Implied warranties
1. Warranty that the seller has the right to sell the thing [applies only at consummation
stage as seller need not own the thing at the perfection of the sale anyway]
2. Warranty against eviction
[Unless there is contrary stip., implied warranty that when the ownership is to pass, the
buyer shall from that time have and enjoy the legal & peaceful possession of the thing]
Purchaser deprived (or evicted from) in whole or in part of the thing sold
By final judgment
Buyer need not appeal to avail of remedy of breach of warranty against
eviction [sellers duty to defend himself]
Based on an issue arising prior to the sale by the seller
Seller has been summoned and made co-defendant in the suit for eviction at the
instance of the buyer
Reason: it is he who warranted against the eviction
He must defend the buyers title; takes the lead in the case
What can be demanded?
Value of the thing at the time of eviction
Fruits/income
Expenses of the contract
Cost of suit [(1) eviction (2) enforcement of warranty]
Damages, interests, ornamental expenses if the sale was made in bad faith
Q: Can warranty against eviction be waived? A: YES.
Q: How?
A: Waiver may be (1) implied or (2) express.
General [Consciente] value at the time of eviction
Specific [Intencionada] total extinguishment of liability of seller on liabilities
expressly/specifically waived
3. Warranty against non-apparent servitudes
Subject matter involved is an immovable
There is a non-apparent servitude not mentioned in the agreement
Purchaser would not have bought the immovable had he known of the servitude
Remedies:
o Rescission
o Damages
Prescriptive period:
o Within 1 year from the execution of the deed.
What if 1 year has already lapsed? May only bring an action for
damages within an equal period, counted from the date on which
he discovered the burden/servitude (note that rescission can no
longer be availed of here)
4. Warranty against hidden defects
Defect is hidden

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Renders the subject matter unfit for intended use

Diminishes the fitness for such use to such extent that the buyer would have not
bought it or would have given a lower price for it
XPN:
o Defect is visible/patent/not hidden
o Buyer expert, who by his trade or profession should have known that
there is a defect
Obligations of seller:
IF SELLER KNOWS IF SELLER DOES NOT KNOW
Price + Interest + Expenses + Price + Interest + Expenses
Damages
Waiver:
If seller knows If seller does not know
No effect Seller is absolutely absolved from
liability whether general or specific
Remedies of buyer:
o Withdrawal from contract
o Proportionate reduction of price
+ Damages in either case
When to avail damages:
o Within 6 months after the delivery of the thing sold, discovery is
immaterial
Redhibitory defects of animals (Art. 1576): cannot be detected even if
professionally inspected, defect cannot be seen by the expert.
o If veterinarian fails to discover/disclose the defect due to (1) ignorance; or
(2) bad faith:
Damages.
o When to file redhibitory action: within 40 days after delivery of the animal.
[see Remedies of Buyer above]
o If animal dies within 3 days after purchase, vendor is liable if the disease
which caused the death of the animal existed at the time of the contract.
Public auction/sale at fairs of animals - no warranty against hidden/redhibitory
defect.
Sale of animals with contagious diseases: VOID; no sale.

IMPLIED WARRANTY IN SALE OF GOODS

A.:
1. Buyer makes known the purpose for which the goods are acquired
2. Buyer relied on sellers skill/judgment
3. There would be an implied warranty that the goods shall be reasonably fit for said
purpose
B.:
1. Goods are bought by description
2. Bought from seller who deals in goods of that description
3. There would be an implied warranty that the goods shall be of merchantable quality

Requisites of breach:
1. Buyer sustained injury because of the product
2. Injury occurred because the product was defective/unreasonably unsafe

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3. Defect existed when the product left the hands of the seller

Instances of waiver:
Even if buyer know of the breach of warranty, he accepted the goods without protest
Failure to notify seller within reasonable time
Failure to return the goods in substantially good condition as they were at the time the
ownership was transferred to the buyer
XPN: If deterioration/injury was caused by the breach of warranty, buyer is not
stopped from returning or offering to return the goods to the seller + rescinding
the sale.

EXTINGUISHMENT OF SALE

Grounds:
1. Payment/Performance
2. Loss of the thing due
3. Compensation
4. Confusion
5. Condonation
6. Novation
7. Annulment
8. Prescription
9. Fulfillment of resolutory condition
10. Rescission
11. Conventional and Legal Redemption

Conventional redemption: right of the seller to repurchase the property, with the obligation to
return:
1. Price of the sale
2. Expenses and other legitimate payments
3. Useful and necessary expenses

GR: 2 instruments? NO.

XPN: If the 2 instruments constitute 1 whole document, it is fine.

OPTION RIGHT TO REDEEM

Separate from the principal contract Included in the contract of sale
Has a distinct consideration from that of the No separate consideration needed
price
Creates the sale Extinguishes the sale
Exercised by notice Exercised by notice + tender of payment
May exceed 10 years Cannot exceed 10 years

Period of redemption:
1. No agreement as to duration: 4 years
2. With period agreed upon: shall not exceed 10 years
If period exceeds 10 years, stipulation is void.

Q: How is redemption effected?

A: By having the seller return to the buyer the:

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1. Price of the sale

2. Expenses and other legitimate payments
3. Useful and necessary expenses

Q: If the seller does not want to pay (3), can buyer retain the property?
A: Yes. Only after the payment of (1), (2), and (3) can the seller oblige the buyer to return the
property.

How is redemption exercised?

1. Notice
2. Valid tender of payment
Is an offer to pay sufficient? YES!
Is a consignment in court needed? NO, not really but one can consign.
Also, when buyer is absent, a valid consignation in court is equivalent to a tender
of payment.

Sale of undivided immovable property by several persons in a single instrument:

Rule: They can redeem their own share
Buyer may not be compelled to give back the share being redeemed
Buyer may ask for the whole to be redeemed
o Seller holds property as trustee

Same as above, but on separate instruments:

Buyer may be compelled to give back the share being redeemed.

If the seller fails to redeem, title is consolidated in the name of the buyer.

Q: Is transfer of title automatic upon failure to redeem?

A: NO. What is required is consolidation of title. (Serves only as proof of ownership; may only be
done upon order of the court.) Proceedings will be the time for the seller to oppose the
consolidation.

Q: In what nature is the opposition?

A: The contract is not a pacto de retro sale but an equitable mortgage.

A: When is the seller entitled to the 30-day period after the judgment?
A: If the issue is whether the contract is a pacto de retro sale or an equitable mortgage
[Rationale: If the sale is an equitable mortgage, seller may pay any time before the foreclosure
of the mortgage, so that if the seller believed in good faith that it is indeed an equitable
mortgage, then he can disregard the period of redemption because justice dictates that he be
given 30 days.]

Equitable mortgage: contract that which although lacking in some formality/form/words/other

requisites demanded by law, nevertheless reveals the intention of the parties to charge real
property as security for a debt, and contains nothing impossible or contrary to law.

Requisites:
1. Parties entered into a contract denominated as sale
2. Intention is to secure a debt by way of a mortgage

Presumption of equitable mortgage, instances:

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1. Price is unusually inadequate

2. Seller retains the property in another capacity
3. Seller retains part of the purchase price
4. Seller binds himself/continues to pay taxes on thing sold
5. Period of redemption is extended/renewed by way of another agreement
6. Any other case where it may be fairly inferred that the real intention of the parties is to
secure payment of a debt or the performance of any other obligation

Q: Does this apply to an absolute sale or does it apply only to a sale with pacto de retro?
A: It can also apply to absolute sale, provided that the intention of the parties is to secure debt.

In case of doubt, the contract shall be presumed an equitable mortgage.

Requisites:
1. Clear language of the intention to secure a mortgage
2. Actions of the parties can be inferred even if it is an absolute sale

If contract is adjudged to be an equitable mortgage, the remedies are:

1. Reformation of the instrument
2. Annulment or specific performance (in some other instrument)

Q: Affidavit of consolidation of title v. Judgment that the sale is really an equi. mortgage what
will prevail?
A: The latter. If it is really an equitable mortgage, there is no absolute sale, and therefore there
is no basis for affidavit of consolidation.

Prescription:
[2 kinds of acquisitive prescription]
1. Ordinary: 10 years
Legal title
Good faith
2. Extraordinary: 30 years
Possession in good faith not required

Example:
1. Sale
2. After 15 years, the sale is adjudged as an equi. mortgage
3. Can buyer refuse because he has legal title & 10 years had passed?
A: NO, because possession, in order to ripen to ownership, should be in the concept of an
owner.

Pactum commissorium: stipulation vesting automatic ownership to the creditor in default of the
debtor in a mortgage or a pledge; void as against public policy.

Legal redemption: right to be subrogated with the same terms and conditions in a contract in the
place of one person who acquired a thing by purchase/dation in payment/any other transaction
where ownership is transferred by onerous title.

Rationale:
1. Convenience
2. To minimize co-ownership (law frowns upon it)

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 [DEJA ENTENDU NOTES] [Sales] [v.1.1, 2016]
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What is sold?
1. If hereditary rights are sold to a stranger:
Any of the co-heirs may be subrogated to the rights of the stranger by
reimbursing him
May be exercised by co-heir within a month from notice given by a co-heir
For the benefit of the redeeming co-heir only
In case of estate/property left by deceased decedent left to the heirs, right to
redeem would not be as heir but as co-owner in which case it shall be for the
benefit of all co-owners
2. Legal redemption among adjoining owners re: rural land:
Area not exceeding 1 hectare
Not all owners of adjoining land are entitled to legal redemption if owner is
separated from the rural land by rivers, brooks, etc., and other apparent
servitudes
Preference if there are 2 or more adjacent owners:
o One owning the smaller area
o If areas are of same size, then the first one who requested for redemption
3. Legal redemption of urban land:
Urban land must be so small and so situated that a major portion thereof does
not have practical use
Brought for speculation (Legaspi v. CA did away with adjoining owner having to
prove this element when it found that the owner of the subject parcel of land
actually inherited the property and therefore it would require from the adjoining
owner the requirement to comply with something impossible)

RIGHT OF PRE-EMPTION RIGHT OF REDEMPTION

Right of first refusal If you are not given the right of pre-
emption

Are all urban lands which are so small etc., subject to the right of
redemption/pre-emption? NO, if the transfer is by way of inheritance.
Preference if there are 2 or more claimants:
o One whose intended use of the land is best justified shall be given
preference

Q: When does legal redemption begin to run?

A: Within 30 days from the receipt of notice from the prospective seller.

Q: Is the above a prescriptive period?

A: NO. It is a condition to exercise a right.

Q: Is actual knowledge allowed to be deemed as notice?

A: GR: Only written notice from seller would suffice [Rationale: Seller is in the best position to
know to whom notice should be given]
XPN: Jurisprudence provides that:
o Actual knowledge > estoppel by laches
o Lack of objection & lack of exercise of light to redeem

Redemption of tax sales: in case of delinquency sale of property of a taxpayer from non-
payment of tax assessments, within 1 year from sale.

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 [DEJA ENTENDU NOTES] [Sales] [v.1.1, 2016]
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Judgment debtor: within 1 year from registration of the cost of sale.

Effect when there is no redemption: consolidation of title
How redemption is exercised: paying the price and legal expenses

Judicial foreclosure:
GR: No right of redemption
XPN: Within the 90-day period from the day judgment becomes final or even after foreclosure
sale but before confirmation of sale

Equity of redemption

Redemption by juridical person: at any time [within 3 months after foreclosure] until registration.

Redemption by natural person: from registration, 1 year.

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