Sales: How Transfer of Ownership Affect The Sale

[SALES ATTY.
ELMER RABUYA] JAYVEE LYN SY JOSE
Sales
How transfer of ownership affect the sale
A. A contract of sale only create title, its not a mode of transmitting or acquiring ownership,
It only creates a title not a mode.
Mode vs Title
Mode Art. 712
Ownership is acquired by occupation and by intellectual creation.
712
Tradition in certain contracts
CASES:
San Lorenzo development corporation vs CA 2005
370 SCRA 46
193 SCRA 694
( Its not the contract that transfer ownership because it is not a mode
The contract of sale creates a title )
ART. 712 modes of acquiring (OLD-TIPS)

1. Occupation
2. Law
3. Donation
4. Tradition
5. Intellectual
6. Prescription
7. Succession
(by its self it will the means of ownership )
-Mode is the direct means of transmitting ownership

-title itself is not sufficient to transfer ownership but it provide a means for such transmission
-if title is in juridical act
Title in the law of property it is not referring to any particular document.

Is any juridical act(contarct) is not sufficient in transmitting ownership but it provide a means
for such transmission.
Example of a title is a contract of sale
Contract of sale only creates a title
SALES ATTY. ELMER RABUYA Page 1

[SALES ATTY. ELMER RABUYA] JAYVEE LYN SY JOSE
There is only one contract does not required delivery for transmission ownership and that is DONATION
Contract is preparatory to delivery
In contract of sale Delivery is mode of transmitting
How is ownership transferred for effected contract of sale
Article 1477
B. How is contract of sale effected
Article 1495
Art. 1495. The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing
which is the object of the sale. (1461a)
What is meaning of delivery
Cebu mainland development corporation v ong siang cua (2009)
SC explain the meaning of delivery in a conract of sale
That it shall include two things In presupposes the transper of two things
1. Transfer of possension
2. Transfer of Goods
If a public instrument has been made it presumes to be delivery
But if the possession cannot be transferred because it is in the posseion of another person who is
alleging an adverse interest there is no delivery in law
Even if possession is transferred in favor of the buyer but when it is provided in the contract of
sales provided of the parties that is preserving the ownership that the property was delivered in
its full price that is not delivery that is contemplated
(ART. 1495)
TIME
When does the seller make the delivery
General Rule: In Reciprocal obligation such as the contract of sale the performance of the respective
obligation of the seller and the buyer suppose to be simultaneous.
Article 1524

The vendor shall not be bound to deliver the thing sold, if the vendee has not paid him the price, or if no
period for payment has been fixed in the contract.
CASE: Solar Harvest incorporated vs Davao 2013
Exception: of silmutanuos performance
If the period has been fixed in the contract (then the vendor deem bound to deliver)
Exception to the Exception:
Even if period of payment has been fixed in the contract the vendor is not bound to deliver if the vendee
lose the to make use of the period as for provided in Article 1198:
Article 1198
The debtor shall lose every right to make use of the period :
1. When after the obligation has been contracted, he becomes insolvent,. Unless he gives a
guaranty or security for the debt.
2. When he does not furnish to the creditor the guaranties or securities which he has promised
3. When by his own acts he impaired said guaranties and securities after establishment, and when
through a fortuitous event they disappeaer, unless immediately give a new ones equally
satisfactory:
4. When the debtor violates any undertaking, in consideration of which the creditor agreed to the
period;
5. When the debtor attempts to abscond
Article 1536
The vendor is not bound to deliver the thing sold in case in the vendee should lose the right to make use
of the term as provided in article 1198 of the new civil code.
Rule on sale of goods where the seller is bound to sell the goods to the buyer
When does the seller makes the delivery
1. When the time fixed in the contact

2. When no time is fixed, within reasonable time
Article 1521 par2.
Whereby a contract of sale the seller is bound to sell the goods to the buyer.
To whom the deliver must be made
Art. 1521

The effect if the delivery is not made in or deliver in reasonalbe hours the rules states that It will
be ineffectual.
Unless time is stipulated by the parties.
Place of delivery
a. Rules where is the place to be delivered

Art. 1251
Payment shall be made
Where must delivery shall be made

1. Place of delivery what is provided for in the contract or in the agreement
2. In the absence of agre3emnt, At the seller place of business
3. If does not have a place of business, At the sellers residence
4. In sale of specific good were the buyer knew before hand that the goods is some other
place other than the sellers place of business or residence ,the delivery must be made
in the place where the goods are located
Article 1521 par.1
To whom the delivery must be made
General rule: Article. 1214
-Special rule in delivery of carrier
What must be delivered by the vendor
General rule: Art .1537
Sale of real property
In sale of real property there two types of pricing agreement 1) unit price contact or rate per unit area
example: if you are selling parcel of land 10,000 pesos per square meter 2) lump sum contract- its is
based on estimated area that you are not selling in unit price, selling as a whole
Consequeses:
A. Unit price contract

Reminders 1. The statement of the area is cursive to the sale so therefore the price may
increase or decrease as the case may be
CASE: Rudolf lietx inc vs ca 2005
Situation 1. What if the vendor deliver less than area what has been agreed upon

The vendees option

1. Oblige the vendor for the fulfillment to deliver all area what is stipulated in the
contract, if possible
2. If not possible, the vendee may demand a proportional deduction of the price
3. The vendee demand Recession (can only be avail if the lot area in not less than 1/10
of the stated area.
Art. 1539
Exception in recession:
But if the vendee would not have bought the property the smaller area
Situation 2. What if the vendor delivers a area more than what isn stated in the contract
Vendees option
1. Accept only what is stated in the contract and reject the rest
2. If the vendee wants to accepts the whole area, he must pay for additional area based
on the contract rate.
B. Lump sum price

General rule: Art. 1542 par. 1
Art. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit
of measure or number, there shall be no increase or decrease of the price, although there be a greater or
less area or number than that stated in the contract.
The same rule shall be applied when two or more immovables as sold for a single price; but if, besides
mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number
should be designated in the contract, the vendor shall be bound to deliver all that is included within said
boundaries, even when it exceeds the area or number specified in the contract; and, should he not be
able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or
number, unless the contract is rescinded because the vendee does not accede to the failure to deliver
what has been stipulated. (1471)
CASE: rudolf
Situation 1: both area and the binderies are stated in the contract and there is an conflict in
boundaries stated and the area stated the rule is that the boundaries shall prevail
Art. 1542. Par 2.
Situation 2. In following the boundaries the area exceeds what is stated in the contract then

The vendor is bound to deliver all what is stated or included in the boundaries
Situation 3. If the vendor cannot deliver all the area that is included in the boundary
Vendees option
1. Rescind the contract
2. To ask or demand a proportionate deduction of the price
Sale of Goods
Situation 1: if the seller delivers a lesser quantity that what has been agreed upon
Options
1. The buyer may reject the delivery

2. If the buyer accepts the delivery knowing that the seller is not going to
deliver all, the buyer is required to pay the goods at a contract rate
3. If the buyer use the goods but not knowing that the seller is not going to
deliver all, then the buyer use or dispose the goods, the vendor is only liable
to fair value to goods that has been received.
Art. 1522 par 1.
Situation 2. The vendor deliver a larger quantity
Causes of actions that is available to the buyer
1. he may accepts the good included in the contract and reject the rest.
2. May accepts everything as a whole but need to pay for them at a contract
price.
3. If the goods that is needed to be deliver is indivisible, the buyer may reject
the whole
Artcle 1522
Situation 3. In case of a mixed delivery meaning some delivered in the contract and the
others are not in case of mixed delivery.
Options of the buyer
1. The buyer may accept only what is included and reject the rest
2. In indivisible the buyer may reject the whole
Obligations of the buyer or the vendee
General the followings are the obligations of the vendee

1. Accept the delivery

2. Pay the price
Article 1582
Acceptance in Sale of goods
A. In delivery by installments
The buyer is not bound to accept, unless the sale is agreed upon
Article 1583 par 1
Situation : where a separate payment for delivery by installment is provided and any
of the following instance is present,1. The seller makes defective delivery in some
installmements 2. The buyer fails to accepts the delivery without just cause 3. The
buyer fails to pay some installments.
1. If the breach is material the injured party may sued for the entire contract. But
if the breach is separable meaning can be separated, the injured party can claim
for compensation but cannot treat the whole contract as broken
B. Opportunity to examine the goods
Rule: the buyer must be given reasonable opportunity of examine the goods
Exception: unless there is contrary stipulated
1584 par 1.
C. Delivery thru a carrier

- What is the rule in opportunity to examine the goods if the delivery is thur a
carrier and the carrier is required
- Cash on delivery by a carrier
1. The carrier shall no deliver to the buyer unless the latter pays the price
2. The buyer cannot examine the goods until he pays the price
Exception : contrary agreement of the parties
Article 1584
D. What constitute acceptance

Article 15 85
The buyer is deemed to have accepted the goods when he intimates to the
seller that he has accepted them, or when the gods have been delivered to him, and
he does any act in relation to them which is inconsistent with the ownership of the
seller, or, when , after the lapse of reasonable time, he retains the goods without

intimating to the seller that he retains the goods without intimating to the seller
that he has rejected them.
Where the buyer has deem to have accepted the goods

1. When he intimates the seller that he has accepted the sale
2. Even without telling the seller that he accepted the goods, if the buyer does any
act that is inconsistent with the sellers ownership.
3. If the buyer retains the goods after the lapse of reasonable time without
notifying the seller that he is rejecting the sale.
E. Effect of acceptance when the seller committed a breach of promise or warranty
General rule : the buyers acceptance does not discharge the seller of the latters
liable of breach of promise or warranty
Exception: there is an agreement to the contrary but there is an requirement that
the buyer must notify the seller of the breach ithin reasonable time otherwise the
seller cannot be liable for the breach
Art .1586
F. What shall be the responsibilities of the buyer refuse to accepts the delivery
Situation 1. If the refusal is justified
Consequences: 1. The buyer is not bound to return what has been
delivered to him, instend it is sufficient that the buyer notified the seller of his
refusal to accept.
Exception: there is an contrar to the agreement
Art. 1587
Situation 2. If the refusal is without just cause

Consequence: 1. The title to the goods passes to the buyer
Exception: in those situation that the seller impliedly reserve its right to the goods
or contrary agreement.
Obligation to pay the price
Right of the vendee to suspend the payment
a. Right to suspend payment under article 1690
Ground for suspension, The vendee is disturb in possession of ownership of he has reasonable grounds.
For suspending the payment
Art. 1590. Should the vendee be disturbed in the possession or ownership of the thing acquired, or should
he have reasonable grounds to fear such disturbance, by a vindicatory action or a foreclosure of
mortgage, he may suspend the payment of the price until the vendor has caused the disturbance or

danger to cease, unless the latter gives security for the return of the price in a proper case, or it has been
stipulated that, notwithstanding any such contingency, the vendee shall be bound to make the payment.
A mere act of trespass shall not authorize the suspension of the payment of the price. (1502a)
Exceptions:
When he can suspend the payment even if there is an ground
1. If there is an contrary stipulation

2. If the vendor gives security for the return of the price
When the right to suspend payment not applicable
For mere act of trespass shall not be authorize the suspension of payment of the price.
Applicability: Only applicable on contracts of sale its does not apply to contract to sell.
PD 957. Section 23
Right to suspend payment
Section 23. Non-Forfeiture of Payments. No installment payment made by a buyer in a subdivision or

condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or
developer when the buyer, after due notice to the owner or developer, desists from further payment due
to the failure of the owner or developer to develop the subdivision or condominium project according to
the approved plans and within the time limit for complying with the same. Such buyer may, at his option,
be reimbursed the total amount paid including amortization interests but excluding delinquency
interests, with interest thereon at the legal rate.
Grounds:
1. Failure to develop the subdivisions or the condominium projects according to approved plans
and within the time limit
the buyer has alternative options or remedies
1. to suspend payment upon notice to the developer
2. the developer cannot forfeit the payments made by the buyer and developer cannot oust the
buyer from the project
3. demand reimbursement of the total amount that he paid.
The right of the buyer to a grace period
A. If the right is granted in the contract, the nature of such right, the sale is a right not a
obligation and when that right is unconditionally convert in the contrac, it is effective
without need of a demand.
B. Rules under the maceda law

-If the buyer pays at least 2 years of installments

The grace period is one month for every year of payment
( can only be availed once every 5 years during the existence of the contract)
-If the payment is less than two years the grace period of the buyer is 60 days.
Req.
1. There must be the observance of the grace period
2. By way of a notatrial act, the notice of cancellation of the contract
3. If the buyer has been payed at least two years, there must be a corresponding payment
of the cash surrender value
4. Can be effective, 30 days after notice by the buyer
The effect of failure of payment of the price within the stipulated period
A. Sit 1. In the contract of sale of a real property
Art. 1592. In the sale of immovable property, even though it may have been stipulated that upon failure
to pay the price at the time agreed upon the rescission of the contract shall of right take place, the
vendee may pay, even after the expiration of the period, as long as no demand for rescission of the
contract has been made upon him either judicially or by a notarial act. After the demand, the court may
not grant him a new term.
In sale of real property the vendee can still pay even after the expiration of the period agreed upon, and
even if the contract states that the recession take place.
Exception: if a demand for recession has been made by the seller and that demand for recession
is either made judicially or by notarial act.
-An offer has been made by the buyer will defeat the action for rescind by the seller (Jurisprudence)
In contact of sell of real property in installments the rule will apply is the maceda law.
Prescriptive period for rescission on art. 1592
Action for rescission: 10 years, if in writing
Sale of movable property
Art. 1593. With respect to movable property, the rescission of the sale shall of right take place in the
interest of the vendor, if the vendee, upon the expiration of the period fixed for the delivery of the thing,
should not have appeared to receive it, or, having appeared, he should not have tendered the price at the
same time, unless a longer period has been stipulated for its payment. (1505)
There is an obligation to pay interest ( vendee)
1. if payment of interest is stipulated

Art. 1956 Must be in writing
Art. 1589. The vendee shall owe interest for the period between the delivery of the thing and the
payment of the price, in the following three cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce fruits or income;
(3) Should he be in default, from the time of judicial or extrajudicial demand for the payment of the price.
(1501a)
Article 1525
The seller of goods is deemed to be an unpaid seller within the meaning of this Title:
(1) When the whole of the price has not been paid or tendered;
(2) When a bill of exchange or other negotiable instrument has been received as condition 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.
In Articles 1525 to 1535 the term seller includes as agent of the seller to whom the bill of landing
has been indorsed, or a consignor or agent who has himself paid, or is directly responsible for the
price, or any other person who is in the position of a seller.
What are the remedies that are available to an unpaid seller of goods (r3S)
1. The right of retention or the right of lien
2. The right of stoppage in transit
3. The right of resale in appropriate cases
4. The right to rescind in appropriate cases
The right of retention or right of lien
In what situation may apply: in retaking of the goods or the right to renown the goods
The situation contemplates that
1.the title of the goods has already passed from the seller to the buyer, this is important to
apply the right to lien or right to retain the goods necessary, the title to the goods has passed from the
seller to the buyer, if the seller retains the title he simple refuse to sell the goods, and the possession of
the goods remains to the seller.

If the seller remains in possession of the goods and not yet transferred or delivered to the buyer, he can
simple refuse to deliver and goods.
The possession of the goods is with the seller but the title of the goods is no longer with the
seller, it has passed on the buyer.
The right of retention will only apply if the title has been passed on the buyer but the possession
remains with the seller
This only mean that the goods has not been deliver to the carrier or any bailee for transmission
to the buyer. The seller must be in possession
When is the right if lien or the right or retention be exercise?
Article 1527
Subject to the provisions of this title, the unpaid seller of good who is in possession of them is entitled to
retain possession of them until payment or tender of the price in the following cases, namely;
1. Where the goods have been sold without any stipulation as to credit;
2. Where the goods have been sold on credit, but the term of credit has expired;
3. The seller becomes insolvent.
The seller may exercise may exercise this right to lien notwiththestanding that he is in possession of the
goods as agent or bailee for the buyer.
Article 1529
The unpaid seller of goods loses his lien thereon;
1. When he delivers the goods to a carrier or other bailee for the purpose of transmission to the
buyer without preserving the ownership in the goods or the right to the possession;
2. When the buyer or his agent lawfully obtain possession of the goods
3. By waiver there of.
The unpaid seller of good, having a lien thereon, does not lose his lien by reason only that he has
obtained judgment or decree for the price of the goods.
Situations that the seller lose the right of lien or the right of redemption
The right of stoppage in transit
In what situation may this right apply?
1. The title of the goods must have been passed to the buyer

2. The goods are no longer in the sellers possession but in the possession of the carrier or
other bailee or other middle man for the purpose of transmission to the buyer or otherwise
it is in transit.
3. The seller discovered that the buyer becomes insolvent
The requites of the exercise of this right
1. the seller is unpaid
2.the title of the goods has been passed to the buyer
3.the goods are in transit (the possession is not longer with the seller but not yet with the buyer,
it is with the middle man for transmission to the buyer
4. the buyer is insolvent
5. the resale of goods by the buyer must not have cut of his right
Basis: Article 1526
Art. 1526. Subject to the provisions of this Title, notwithstanding that the ownership in the goods may
have passed to the buyer, the unpaid seller of goods, as such, has:
(1) A lien on the goods or right to retain them for the price while he is in possession of them;
(2) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted
with the possession of them;
(3) A right of resale as limited by this Title;
(4) A right to rescind the sale as likewise limited by this Title.
Where the ownership in the goods has not passed to the buyer, the unpaid seller has, in addition to his
other remedies a right of withholding delivery similar to and coextensive with his rights of lien and
stoppage in transitu where the ownership has passed to the buyer. (n)
Article 1510. If a document of title which contains an undertaking by a carrier, warehouseman or

other bailee to deliver the goods to bearer, to a specified person or order of a specified person or which
contains words of like import, has placed upon it the words "not negotiable," "non-negotiable" or the
like, such document may nevertheless be negotiated by the holder and is a negotiable document of title
within the meaning of this Title. But nothing in this Title contained shall be construed as limiting or
defining the effect upon the obligations of the carrier, warehouseman, or other bailee issuing a
document of title or placing thereon the words "not negotiable," "non-negotiable," or the like. (n)
When are the goods considered in transit
When arte the goods no longer consider as in transit

Art. 1531. Goods are in transit within the meaning of the preceding article:
(1) From the time when they are delivered to a carrier by land, water, or air, or other bailee for the
purpose of transmission to the buyer, until the buyer, or his agent in that behalf, takes delivery of them
from such carrier or other bailee;
(2) If the goods are rejected by the buyer, and the carrier or other bailee continues in possession of
them, even if the seller has refused to receive them back.
Goods are no longer in transit within the meaning of the preceding article:
(1) If the buyer, or his agent in that behalf, obtains delivery of the goods before their arrival at the
appointed destination;
(2) If, after the arrival of the goods at the appointed destination, the carrier or other bailee
acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in
possession of them as bailee for the buyer or his agent; and it is immaterial that further destination for
the goods may have been indicated by the buyer;
(3) If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent in that
behalf.
If the goods are delivered to a ship, freight train, truck, or airplane chartered by the buyer, it is a
question depending on the circumstances of the particular case, whether they are in the possession of
the carrier as such or as agent of the buyer.
If part delivery of the goods has been made to the buyer, or his agent in that behalf, the remainder of
the goods may be stopped in transitu, unless such part delivery has been under such circumstances as to
show an agreement with the buyer to give up possession of the whole of the goods. (n)
How is this right exercise by the seller
Article 1532
1. By obtaining actual possession

2. Without obtaining actual possession by simply giving notice to his claim to the carrier or to
the middle man.
The obligations of the carrier or the middle man upon received of the notice
The carrier of the goods by redeliver the goods by the sellers instructions but if a negotiable
document of title has been issued the carrier can required to re deliver the document of title has been
surrendered to the carrier for cancellation. Any expenses that will spend for the re delivery of the goods
by the seller to the buyer, will be expense or account by the seller.
Article 1532

. The unpaid seller may exercise his right of stoppage in transitu either by obtaining actual possession of
the goods or by giving notice of his claim to the carrier or other bailee in whose possession the goods
are. Such notice may be given either to the person in actual possession of the goods or to his principal.
In the latter case the notice, to be effectual, must be given at such time and under such circumstances
that the principal, by the exercise of reasonable diligence, may prevent a delivery to the buyer.
When notice of stoppage in transitu is given by the seller to the carrier, or other bailee in possession of
the goods, he must redeliver the goods to, or according to the directions of, the seller. The expenses of
such delivery must be borne by the seller. If, however, a negotiable document of title representing the
goods has been issued by the carrier or other bailee, he shall not obliged to deliver or justified in
delivering the goods to the seller unless such document is first surrendered for cancellation. (n)
Article 1572
Effect of sale of goods by the buyer
What if the buyer was able to sell the goods with subject to a lien or to a stoppage in transit
Situation: that the buyer is able to resell the goods and the seller is entitled to exercise
the right of lien and the right to stoppage in transit
Article 1535
General rule: The sale does not affect the exercise to those remedies, unless the seller (right of lein or
right of stoppage) unless the seller consents to the sale of the goods. Even if the seller was able to sell it
does not affect the exercise right of lien and the right of stoppage.
Exception: provided in 1535 , if a negotiable document of title has been issued for the goods and the
goods were purchase by an innocent purchaser for value acting in good faith. That will affect the
exercise of the seller of his right of lien or the right of stoppage in transit.
The sale will be valid if the goods are sold to an innocent buyer in good faith. If it is covered to a
negotiable document of title.
Art. 1535. Subject to the provisions of this Title, the unpaid seller's right of lien or stoppage in transitu is
not affected by any sale, or other disposition of the goods which the buyer may have made, unless the
seller has assented thereto.
If, however, a negotiable document of title has been issued for goods, no seller's lien or right of
stoppage in transitu shall defeat the right of any purchaser for value in good faith to whom such
document has been negotiated, whether such negotiation be prior or subsequent to the notification to
the carrier, or other bailee who issued such document, of the seller's claim to a lien or right of stoppage
in transitu. (n)

Right of resale
When is resale by the seller allowed or when an unpaid seller may resell?
1. When the goods are perishable in nature.

2. When the seller expressly reserves the right to resale in case of default.
3. When the buyer has been default in payment for an unreasonable length of time.
Article 1533
Where the goods are perishable nature, or where the seller expressly reserves the right of resale in case
the buyer has been in default, or where the payment for an unreasonable time, an unpaid seller having
the right of lien or having stopped the goods. He shall not thereafter be liable to the original buyer upon
the contract of sale or for any profit made by such resale, but may recover from the buyer damages for
any loss occasioned by the breach of the contract of sale.
Where a resale is made, as authorized in this article, the buyer acquires a good title as against the
original buyer.
It is not essential to the validity of resale that notice of an intention to resell the goods be given by the
seller to the original buyer. But 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 a resale that notice of time and place of such resale that notice of the
time and place of such resale should be given by the seller to the original buyer.
The seller is bound to exercise reasonable care and judgment in making a resale, and subject to this
requirement may make resale either by public or private sale. He cannot, however, directly or indirectly
buy the goods.
Is the seller need to notified the buyer his intention to resale the goods
1. The notice is not necessary for the validity of the resale, however it becomes
relevant in determining whether or not the buyer has been in default for
unreasonable length of time.
Manner of sale:
a) Public sale
b) Private sale
Exception : it is prohibited by law that the seller will but for himself either direct or indirectly.
Effects of resale:

1. The second buyer acquires good title as against to the original buyer.
2. If the unpaid seller has gain any profit in the resale the original buyer is not entitled for such
profit.
3. If the seller suffered damages by reason of the resale the same shall be recoverable for the
original buyer.
Right to Rescind the Sale
Two situation enumerated in 1534
Article 1534
An unpaid seller having the right of lien or having stopped the goods in transit, may rescind the
transfer of title and resume the ownership in the goods, where he expressly reserved the right to do so
in case the buyer has been in default in the payment of the price for an unreasonable time. The seller
shall not thereafter be liable to the buyer upon the contract of sale, but may receiver from the buyer
damages for any loss occasioned by the breach of the contract
The transfer of title shall not be held liable to have been rescinded by an unpaid seller until be
has manifested by notice to the buyer or by some other overt act an intention to rescind. It is not
necessary that such overt act an intention to rescind. It is not necessary that such overt act should be
communicated to the buyer, but the failure to give notice to the buyer of the intention to rescind shall
be relevant in any issue involving the question whether the buyer had been in default for an
unreasonable time before the right to rescind.
When can an unpaid seller rescind the contract of sale
1. When the seller expressly reserved his right to rescind in case of default
2. When the buyer was in default for unreasonable time
What are the requirements for the exercise the right to rescind
1. It is necessary in other of his right to recession, that the unpaid seller has the right of lien or
right to retain the goods or he had stop the goods in transit
2. In determining when the buyer is in default for unreasonable length of time, a notice to the
buyer of the intention of the seller to rescind the contract is relevant.
Redemption
Conventional redemption
Article 1601

Conventional redemption shall take place when the vendor reserves the right to repurchase the thing
sold, with the obligation to comply with the provisions of Article 1616 and other stipulations which may
have been agreed upon.
Article 1616
The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of
the sale, and in addition:
(1) The express of the contract, and any other legitimate payments made by reason of the sale;
(2) The necessary and useful expenses made on the thing sold.
A conventional redemption takes place when the vendor expressly reserve the right to repurchased the
thing sold but with the obligation of returning indicated in article 1616.
A pacto de recto, the sale with the right to repurchase. A conventional redemption is a sale with a right
to re purchase.
Under a pacto de recto sale, the effect is the title and ownership is immediately vested transferred in
favor of the buyer or vendee are retro but subject only to resolutory condition that the vendor has
repurchase it within the stipulated period.
Effect of pacto de recto sale, the buyer becomes the owner but his right is subject to a resolutory
condition and that is exercise by the seller of his right of repurchase within the period agreed upon.
The effect of the failure of the seller to exercise his right to repurchase, the right of the vendee is deem
consolidated, the resolutory condition will be loss.
In order a pacto de recto of sale be recognize it is necessary that the right of repurchase must be
reserved or granted by the vendor in the same instrument of sale. The vendor can no longer reserve his
right to repurchase after the execution of the document of sale. Any subsequent grant of the same right
to re purchase is not in law a pacto de recto but some other right like of a option to buy.
CASE: Villiarica vs Court of Appeals 26 SCRA 189
Flores vs Court of Appeals 216 SCRA 287
Is the grand of the right to repurchase covered by the statute of frauds or stated by the parties, Is the
right to grant repurchase be proven by parol evidence.
If the sale of real property had COMPLY with the requirements of the statute of frauds because
it is in writing, a verbal grant of a right to repurchase is allowed. The exercise of that right can be proven
by parol evidence and there will be no violation of the statute of frauds. Reason of the court: the sale
and the verbal agreement allowing the right of repurchase will be considered by an integral code.
Allowed by law, it is legal.
CASE: mactan international airport authority vs CA 263 SCRA 736

Cancel of Equitable Mortgage
Prohibited by law. Concept of equitable
Essential Requites of equitable mortgage Yuda delfin vs demoda jan 28 2008
1. The parties enter what appears to be a contract of sale

2. The intention of the parties actually or in reality is to secure an existing debt by way of an
mortgage.
Security, actually a mortgage because it is a security for an obligation, usually what has been
made in this case is that the parties make it appear that there is no debt. They will make a
contact of sale with the right to re purchase.
Pacum commisorum is void, prohibited by law. If there is a security, if you did not pay you debt
the security will be foreclose and the creditor is not authorize for automatically appropriate the
security, even if the parties agreed.
Article 1602
The contract shall be presumed to be an equitable mortgage, in any of the following cases:
(1) When the price of a sale with right to repurchase is usually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument extending the
period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that real intention of the parties is that the
transaction shall secure the payment of a debt or the performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received by vendee as rent or
otherwise shall be considered as interest which shall be subject to usury laws.
Jurisprudence: the presence one of the listed circumstances is sufficient in other its
presumption to exist.
CASE: ramos vs sarao 451 SCRA 123
Article 1604
The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale.
CASE: sps. Autria vs sps. Gonzalez January 21 2004

However, the presumption is not conclusive presumption that can be rebutted by competent
and safisfactory prooof, but the burden will be on the other party to prove that the transaction that is
what of sale and not equitable mortgage.
Effects of sale pacto de recto if it is actually a equitable mortgage
1. 1604, any money, fruits, or other benefit to be received by vendee as rent or otherwise shall
be considered as interest which shall be subject to usury laws.
2. 1605, the apparent vendor, who is in reality only the mortgagor may ask for the reformation
of the instrument, on the ground that intention of the parties is not expressly in the
instrument.
3. If there is stipulation of pactum commisorum that is not allowed providing a compete title
vested to the vendee.
If the transaction is in really a true equitable mortgage, the proper remedy of the mortgagee or the
vendee a retro should be foreclosure.
Pacto de retro sale vs equitable mortgage
In pacto de recto sale, ownership of the property is sold immediately transferred to the vendee a recto,
subject only to only to the purchase by the vendor a recto within the stipulated period. The vendors
failure to exercise the right to repurchase within the stipulated period vested upon the vendee a recto,
by operation by law, absolute title to the property. Such title is not impaired even if the vendee a recto
fails to consolidate title under article 1607 of the civil code.
An equitable mortgage is a contract that- although lacking the formality, the form or words, or other
requisites demanded by statute nevertheless reveals the intention of the parties to burden a piece or
pieces of real property as a security for a debt.
The essential requites of such contact are as follows:
1. The parties entered into what appears to be a contract of sales, but

2. Their intention is to secure an existing debt by way of a mortgage.
The nonpayment of the debt when due gives the mortgagee the right to foreclose the mortgage, sell the
property, and apply the proceeds of the sale to the satisfaction of the loan obligation.
Period of redemption in a true pacto de recto sale: the period of repurchase
1. Upon the agreement of the parties

2. Agreement must not exceed 10 years
3. No express agreement shall last 4 years from the date of the contract.
4. If there was a question on the true nature of the agreement as whether it is an equitable
mortgage or a parto de recto sale, the losing parties still have the right to re purchase within 30
days from the finality of judgment. (that must be done in good faith ).

Art. 1606. The right referred to in Article 1601, in the absence of an express agreement, shall last four
years from the date of the contract.
Should there be an agreement, the period cannot exceed ten years.
However, the vendor may still exercise the right to repurchase within thirty days from the time final
judgment was rendered in a civil action on the basis that the contract was a true sale with right to
repurchase. (1508a)
What must be returned to a vendee a retro in a event on the exercise of the right to repurchase
1. The price of the sale

2. Expenses of the contract
3. Other legitimate payments that is made by reason of the sale
4. Necessary and useful expenses
Legal redemption
Art. 1619. 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.
3 situations on legal redemption
1. Legal redemption by co- owners.

2. Legal redemption among co- heirs.
3. Legal redemption among adjoining owners.
Co- owners
The purpose of redemption within the co- owners is to minimize co- ownership
Extinguishes of the co-ownership
Requirements of right of redemption in co- ownership
1. there must be a co-ownership
2. co- ownership must be existing at the time of the sale that was been made by the co- owner and at
the time of the exercise of the right of redemption.
3. it is necessary that a co- owner must have sold his right in favor of a third party or a stranger who is
considered as a third party
CASE: Uy vs CA 246 SCRA 703
Basa vs Aguilar 117 SCRA 128

A meaning of a third person: Article 1620
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 the alienation is grossly excessive,
the redemptioner shall pay only a reasonable one.
If the right of a co- owner was sold to another co- owner, there is no right of redemption because the
purpose of the law has already been satisfied. The right of redemption can be exercise only when it was
sold to a stranger, who is not a co- owner
4. The sale is made prior to partition, the right is exercise within the period of the right of
redemption, 30 days from notice of sale,
5. The vendee or buyer is reimburse for the price of the sale
The right of a co- owner is only redemption not retention, a redemption is a right that arise after at the
sale, preemption, right arises prior of a sale. purpose is to prevent the sale.
Reyes vs Conception 190 SCARA171
Period of redemption: 30 days from the notice in writing by the vendor
Indispensible: yes, otherwise it will not run
Sy vs CA (2000): calma vs santos: a co- owner who has actual notice of the sale, the period of 30 days
will run. Even without a written notice.
Redemption among Co-heirs
Article 1088 should any of the heirs sell his hereditary rights to a stranger before the partition, any or all
of 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 one month from the time they were notified in writing of
the sale by the vendor.
Upon the death of the decedent and there is co- heirs provided there is no distribution was made yet.
What exits to them is an co ownership of the inheritance.
If what was sold is a specific or particular property that is part of the inheritance, Article 1620 will apply .
But if what was sold by an heir is not a particular property but his hereditary right, Article 1088 will
apply.
232 SCRA 736
Art. 1088, a written notice is indispensable in order for the prescriptive period to run. One month or 30
days from the written notice of the sale.
Legal redemption among Adjoin owners

Art. 1621. The owners of adjoining lands shall also have the right of redemption when a piece of rural
land, the area of which does not exceed one hectare, is alienated, unless the grantee does not own any
rural land.
his right is not applicable to adjacent lands which are separated by brooks, drains, ravines, roads and
other apparent servitudes for the benefit of other estates.
If two or more adjoining owners desire to exercise the right of redemption at the same time, the owner
of the adjoining land of smaller area shall be preferred; and should both lands have the same area, the
one who first requested the redemption. (1523a)
Art. 1622. Whenever a piece of urban land which is so small and so situated that a major portion thereof
cannot be used for any practical purpose within a reasonable time, having been bought merely for
speculation, is about to be re-sold, the owner of any adjoining land has a right of pre-emption at a
reasonable price.
If the re-sale has been perfected, the owner of the adjoining land shall have a right of redemption, also
at a reasonable price.
When two or more owners of adjoining lands wish to exercise the right of
pre-emption or redemption, the owner whose intended use of the land in question appears best justified
shall be preferred. (n)
Requites for Rural Lands:
1. A land are rural land

2. In favor of someone who is not an owner
3. The lands adjoin each other
4. The area of the land does not exceed one hectare.
Urban
1. In urban areas
2. The land that is alienated is so small that the major portion cannot be use for a practical propose
within reasonable time
3. Its was purchase merely for speculation and
4. The resale has already been perfected
1:30mins
Assignment of credit

Conditions : is an compliance of one party payable to one party of under taking of fulfillment of which
Effects of condition
Sit 1: a condition maybe impose upon the perfection of the contract itself, the failure of such provison
prevents the contract from coming to inconsistence.
Ex. In a sale of assumption of mortgage is a condition president to the sellers consent and therefore
without the approval of the mortgage that the sale is consider not perfected
Sit 2. The condition maybe impose on the passing of title to the thing to be complete
The breach of the condition prevents the duty to convene title of acquiring an obligatory course.
Sit 3. The condition may be impose on a obligation of the party and the other party has failed to comply
1545
Art. 1545. Where the obligation of either party to a contract of sale is subject to any condition which is
not performed, such party may refuse to proceed with the contract or he may waive performance of the
condition. If the other party has promised that the condition should happen or be performed, such first
mentioned party may also treat the nonperformance of the condition as a breach of warranty.
Where the ownership in the thing has not passed, the buyer may treat the fulfillment by the seller of his
obligation to deliver the same as described and as warranted expressly or by implication in the contract
of sale as a condition of the obligation of the buyer to perform his promise to accept and pay for the
thing. (n)
Warranties
IMPLIED WARRANTIES
Warranties deemed included in all contracts of sale by operation of law. (Art. 1547)
Art. 1547. In a contract of sale, unless a contrary intention appears, there is:
(1) An implied warranty on the part of the seller that he has a right to sell the thing at the time when the
ownership is to pass, and that the buyer shall from that time have and enjoy the legal and peaceful
possession of the thing;
(2) An implied warranty that the thing shall be free from any hidden faults or defects, or any charge or
encumbrance not declared or known to the buyer.
This Article shall not, however, be held to render liable a sheriff, auctioneer, mortgagee, pledgee, or
other person professing to sell by virtue of authority in fact or law, for the sale of a thing in which a third
person has a legal or equitable interest. (n)

1. Warranty that seller has right to sell refers to consummation stage. Not applicable to sheriff,
auctioneer, mortgagee, pledge
2. Warranty against eviction Requisites:
a. Buyer is Evicted in whole or in part from the subject matter of sale
b. Final Judgment
c. Basis of eviction is a right Prior to sale or act imputable to seller
d. Seller has been Summoned in the suit for eviction at the instance of buyer; or made 3rd party
defendant through 3rd party complaint brought by buyer
e. No waiver on the part of the buyer Note: For eviction disturbance in law is required and not just
trespass in fact.
3. Warranty against encumbrances (non-apparent) Requisites:
a. immovable sold is encumbered with non- apparent burden or servitude not mentioned in the
agreement
b. nature of non-apparent servitude or burden is such that it must be presumed that the buyer
would not have acquired it had he been aware thereof
Exception: warranty not applicable when non-apparent burden or servitude is recorded in the Registry
of Property unless there is expressed warranty that the thing is free from all burdens & encumbrances
4. Warranty against Hidden Defects Requisites:
a. Defect is important or Serious
i. The thing sold is unfit for the use which it is intended
ii. Diminishes its fitness for such use or to such an extent that the buyer would not have acquired it
had he been aware thereof
b. Defect is Hidden
c. Defect Exists at the time of the sale
d. Buyer gives Notice of the defect to the seller within reasonable time
e. Action for rescission or reduction of the price is brought within the proper period
i. 6 months from delivery of the thing sold

ii. Within 40 days from the delivery in case of animals
f. There must be No waiver of warranty on the part of the buyer.
When is implied warranty not applicable?
1. As is and where is sale
2. Sale of second hand articles
3. Sale by virtue of authority in fact or law
4. Sale at public auction for tax delinquency
What are the effects of waiver of an implied warranty?
1. Seller in bad faith & there is waiver against eviction void
2. When buyer w/o knowledge of a particular risk, made general renunciation of warranty is not a
waiver but merely limits liability of seller in case of eviction
3. When buyer with knowledge of risk of eviction assumed its consequences & made a waiver seller
not liable (applicable only to waiver of warranty against eviction)
SALE TRANSACTION: CONTRACT OF SALE VS. CONTRACT TO SELL?
It is important to distinguish between these two types of contracts because they differ in the point of
transfer of title and the effect of non-payment by the buyer.
In a contract to sell, title is retained by the vendor until the full payment of the purchase price. Thus,
the non-payment of the purchase price is an event which terminates the contract to sell. Since title has
not transferred, there is no need of judicial action to terminate the contract.
In a contract of sale, the seller conveys ownership over the property and cannot recover it until and
unless the contract is resolved or rescinded. If the contract is silent on the manner of rescission, the
seller must file an action for rescission in court. However, it is permissible to stipulate in the contract of
sale that default by the buyer shall result to automatic rescission without need of judicial action. Thus, it
is advisable to include an automatic rescission clause in a contract of sale in order to avoid unnecessary
litigation.


Sales: How Transfer of Ownership Affect The Sale

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Sales: How Transfer of Ownership Affect The Sale

Diunggah oleh

Hak Cipta:

Format Tersedia

[SALES ATTY.

ELMER RABUYA] JAYVEE LYN SY JOSE

ART. 712 modes of acquiring (OLD-TIPS)

-Mode is the direct means of transmitting ownership

Title in the law of property it is not referring to any particular document.

Example of a title is a contract of sale

Contract of sale only creates a title

SALES ATTY. ELMER RABUYA Page 1

Contract is preparatory to delivery

In contract of sale Delivery is mode of transmitting

How is ownership transferred for effected contract of sale

B. How is contract of sale effected

What is meaning of delivery

Cebu mainland development corporation v ong siang cua (2009)

SC explain the meaning of delivery in a conract of sale

If a public instrument has been made it presumes to be delivery

When does the seller make the delivery

SALES ATTY. ELMER RABUYA Page 2

CASE: Solar Harvest incorporated vs Davao 2013

Exception: of silmutanuos performance

Exception to the Exception:

When does the seller makes the delivery

1. When the time fixed in the contact

Article 1521 par2.

To whom the deliver must be made

SALES ATTY. ELMER RABUYA Page 3

Unless time is stipulated by the parties.

a. Rules where is the place to be delivered

Where must delivery shall be made

Article 1521 par.1

To whom the delivery must be made

General rule: Article. 1214

-Special rule in delivery of carrier

What must be delivered by the vendor

General rule: Art .1537

Sale of real property

A. Unit price contract

CASE: Rudolf lietx inc vs ca 2005

SALES ATTY. ELMER RABUYA Page 4

The vendees option

B. Lump sum price

SALES ATTY. ELMER RABUYA Page 5

1. The buyer may reject the delivery

Art. 1522 par 1.

Situation 2. The vendor deliver a larger quantity

Causes of actions that is available to the buyer

Options of the buyer

Obligations of the buyer or the vendee

General the followings are the obligations of the vendee

SALES ATTY. ELMER RABUYA Page 6

1. Accept the delivery

Acceptance in Sale of goods

Article 1583 par 1

Exception: unless there is contrary stipulated

C. Delivery thru a carrier

D. What constitute acceptance

SALES ATTY. ELMER RABUYA Page 7

Where the buyer has deem to have accepted the goods

Situation 2. If the refusal is without just cause

Obligation to pay the price

Right of the vendee to suspend the payment

a. Right to suspend payment under article 1690

SALES ATTY. ELMER RABUYA Page 8