A mere act of trespass shall not

authorize the suspension of the

REGULATORY FRAMEWORK AND LEGAL payment of the price.
ISSUE IN BUSINESS 1
Atty. Jimmy I. Peru, JD,MBM,MICB,CPA
d. However, if the fear of loss covers
immovable property, the vendor may
immediately sue for rescission.
LAW ON SALES (Art. 1458-1637)
180 Articles e. In the sale of immovable property,
even though it may have been
stipulated that upon failure to pay the
OBLIGATIONS OF THE VENDEE: price at the time agreed upon the
1. TO PAY THE PRICE rescission of the contract may be had,
the vendee may pay, even after the
a. At the time and place stipulated;
expiration of the period, as long as no
or if none was stipulated, the
demand for rescission of the contract
payment must be made at the
has been made upon him either
time and place of the delivery of
judicially or by a notarial act. After the
the thing sold.
demand, the court may not grant him
b. The vendee shall be liable for a new term.
interest for the period between
the delivery of the thing and the 2. TO ACCEPT DELIVERY
payment of the price in the a. The buyer is not bound to accept
following cases: delivery by installments, unless
(1) Should it have been so otherwise agreed upon.
stipulated;
(2) Should the thing sold and b. If it was agreed that delivery be
delivered produce fruits or done in installments and
income; payments separately made, and
(3) Should he be in default, from the seller makes defective
the time of judicial or deliveries in respect of one or
extrajudicial demand for the more instalments, or the buyer
payment of the price. neglects or refuses without just
cause to take delivery of or pay
c. Suspension of payments: if the for one or more instalments, it
vendee is disturbed in the depends in each case on the
possession or ownership of the terms of the contract and the
thing acquired, or should he have circumstances of the case,
reasonable grounds to fear such whether the breach of contract is
disturbance, by a vindicatory action so material as to justify the
or a foreclosure of mortgage, he injured party in refusing to
may suspend the payment of the proceed further and suing for
price until the vendor has caused damages for breach of the entire
the disturbance or danger to cease, contract, or whether the breach is
unless: severable, giving rise to a claim
(1) The seller gives security for the for compensation but not to a
return of the price in a proper right to treat the whole contract
case, or as broken.
(2) It has been stipulated that,
notwithstanding any such
contingency, the vendee shall be
bound to make the payment.
c. Deemed Acceptance: the buyer is (2) Unless otherwise agreed, when the
deemed to have accepted the seller tenders delivery of goods to the
delivery if: buyer, he is bound, on request, to
(1) He intimates to the seller that afford the buyer a reasonable
he has accepted the thing; opportunity of examining the goods
(2) He does any act which is for the purpose of ascertaining
inconsistent with the ownership whether they are in conformity with
of the seller; the contract.
(3) After the lapse of a reasonable
time, he retains the goods (3) Where goods are delivered to a
without intimating to the seller carrier by the seller, in accordance
that he has rejected them. with an order from or agreement
with the buyer, upon the terms that
d. In the absence of express or implied the goods shall not be delivered by
agreement of the parties, acceptance the carrier to the buyer until he has
of the goods by the buyer shall not
paid the price, whether such terms
discharge the seller from liability in
are indicated by marking the goods
damages or other legal remedy for
with the words "collect on delivery,"
breach of any promise or warranty in
the contract of sale. But, if, after or otherwise, the buyer is not
acceptance of the goods, the buyer entitled to examine the goods before
fails to give notice to the seller of the the payment of the price, in the
breach in any promise of warranty absence of agreement or usage of
within a reasonable time after the trade permitting such examination.
buyer knows, or ought to know of
such breach, the seller shall not be g. With respect to movable property,
liable therefor. the rescission of the sale shall be an
available remedy to the vendor, if
e. Unless otherwise agreed, where the vendee, upon the expiration of
goods are delivered to the buyer, and the period fixed for the delivery of
he refuses to accept them, having the the thing, should not have appeared
right so to do, he is not bound to to receive it, or, having appeared, he
return them to the seller, but it is should not have tendered the price
sufficient if he notifies the seller that at the same time, unless a longer
he refuses to accept them. If he period has been stipulated for its
voluntarily constitutes himself a payment.
depositary thereof, he shall be liable
as such.

f. Right to Examine: BREACH OF CONTRACTOF SALE:

(1) Where goods are delivered to the 1. Where, under a contract of sale, the
buyer, which he has not ownership of the goods has passed
previously examined, he is not to the buyer and he wrongfully
deemed to have accepted them neglects or refuses to pay for the
unless and until he has had a goods according to the terms of the
reasonable opportunity of contract of sale, the seller may
examining them for the purpose maintain an action against him for
of ascertaining whether they are the price of the goods.
in conformity with the contract if
there is no stipulation to the
contrary.
2. Where, under a contract of sale, the the seller to enable him to fulfill his
price is payable on a certain day, obligations under the contract of
irrespective of delivery or of transfer sale, the buyer repudiates the
of title and the buyer wrongfully contract or notifies the seller to
neglects or refuses to pay such price, proceed no further therewith, the
the seller may maintain an action for buyer shall be liable to the seller for
the price although the ownership in labor performed or expenses made
the goods has not passed. But it shall before receiving notice of the
be a defense to such an action that
buyer's repudiation or countermand.
the seller at any time before the
The profit the seller would have
judgment in such action has
made if the contract or the sale had
manifested an inability to perform the
contract of sale on his part or an been fully performed shall be
intention not to perform. considered in awarding the
damages.
3. Although the ownership in the goods
has not passed, if they cannot readily 8. Where the goods have not been
be resold for a reasonable price, the delivered to the buyer, and the
seller may offer to deliver the goods buyer has repudiated the contract of
to the buyer, and, if the buyer refuses sale, or has manifested his inability
to receive them, may notify the buyer to perform his obligations
that the goods are thereafter held by thereunder, or has committed a
the seller as bailee for the buyer. breach thereof, the seller may totally
Thereafter the seller may treat the rescind the contract of sale by giving
goods as the buyer's and may notice of his election so to do to the
maintain an action for the price. buyer.
4. Where the buyer wrongfully neglects 9. Where the seller has broken a
or refuses to accept and pay for the contract to deliver specific or
goods, the seller may maintain an ascertained goods, a court may, on
action against him for damages for the application of the buyer, direct
non- acceptance.
that the contract shall be performed
5. The measure of damages is the specifically, without giving the seller
estimated loss directly and naturally the option of retaining the goods on
resulting in the ordinary course of payment of damages. The judgment
events from the buyer's breach of or decree may be unconditional, or
contract. upon such terms and conditions as
to damages, payment of the price
6. Where there is an available market for
and otherwise, as the court may
the goods in question, the measure of
damages is, in the absence of special deem just.
circumstances showing proximate 10. Where there is a breach of warranty
damage of a different amount, the by the seller, the buyer may, at his
difference between the contract price election:
and the market or current price at the a. Accept or keep the goods and
time or times when the goods ought to set up against the seller, the
have been accepted, or, if no time was breach of warranty by way of
fixed for acceptance, then at the time recoupment in diminution or
of the refusal to accept. extinction of the price;
b. Accept or keep the goods and
7. If, while labor or expense of material maintain an action against the
amount is necessary on the part of seller for damages for the
 breach of warranty; secure payment of any portion of
c. Refuse to accept the goods, and the price which has been paid, and
maintain an action against the with the remedies for the
seller for damages for the enforcement of such lien allowed to
breach of warranty; an unpaid seller.
d. Rescind the contract of sale and
refuse to receive the goods or if 14. In the case of breach of warranty of
the goods have already been quality, such loss, in the absence of
received, return them or offer to special circumstances showing
return them to the seller and proximate damage of a greater
recover the price or any part amount, is the difference between
thereof which has been paid. the value of the goods at the time of
delivery to the buyer and the value
11. Where the goods have been they would have had if they had
delivered to the buyer, he cannot answered to the warranty.
rescind the sale if he knew of the
breach of warranty when he
accepted the goods without protest,
or if he fails to notify the seller within EXTINGUISHMENT OF A CONTRACT
a reasonable time of the election to OF SALE:
rescind, or if he fails to return or to
offer to return the goods to the
SALES are extinguished by the same
seller in substantially as good
causes as all other obligations, and by
condition as they were in at the time conventional or legal redemption.
the ownership was transferred to
the buyer. But if deterioration or
injury of the goods is due to the CONVENTIONAL REDEMPTION:
breach or warranty, such ➢ otherwise known as “right of
deterioration or injury shall not repurchase” shall take place when the
prevent the buyer from returning or vendor reserves the right to repurchase
offering to return the goods to the the thing sold, with the obligation to
seller and rescinding the sale. return the price, expenses related
thereto and useful and necessary
12. Where the buyer is entitled to expenses, and other stipulations which
rescind the sale and elects to do so, may have been agreed upon.
he shall cease to be liable for the
price upon returning or offering to The sale, with a right of repurchase, is
return the goods. If the price or any also known as pacto de retro sale.
part thereof has already been paid,
the seller shall be liable to repay so OWNERSHIP: transfers to the vendee a
much thereof as has been paid, retro upon delivery. However, this
concurrently with the return of the ownership is not absolute but only
goods, or immediately after an offer conditional. This is because the seller a
to return the goods in exchange for retro may be able to exercise the right to
repayment of the price. repurchase and the ownership of the
13. Where the buyer is entitled to buyer will be terminated.
rescind the sale and elects to do so,
if the seller refuses to accept an AMOUNT TO BE PAID AT THE TIME
offer of the buyer to return the THE RIGHT IS EXERCISED:
goods, the buyer shall thereafter be 1. The purchase price;
deemed to hold the goods as bailee 2. The expenses of the contract,
for the seller, but subject to a lien to and any other legitimate
 payments made by reason of the received by the vendee as rent or
sale; and otherwise shall be considered as interest
3. Useful and necessary expenses which shall be subject to the usury laws.
(e.g., fencing of the land) The remedy would be to ask for the
reformation of the instrument purporting
Fruits: If at the time of the execution to be a contract of sale with right of
of the sale there should be on the land, repurchase or a contract of absolute
visible or growing fruits, there shall be no sale.
reimbursement for or prorating of those
existing at the time of redemption, if no In case of doubt, a contract purporting
indemnity was paid by the purchaser to be a sale with right to repurchase shall
when the sale was executed. be construed as an equitable mortgage.
Should there have been no fruits at the
time of the sale and some exist at the
time of redemption, they shall be
prorated between the redemptioner and
PERIOD TO EXERCISE RIGHT OF
the vendee, giving the latter the part REPURCHASE:
corresponding to the time he possessed 1. That which was agreed upon which
the land in the last year, counted from cannot exceed 10 years;
the anniversary of the date of the sale. 2. If no agreement as to the period, it
shall be four years from the date of
the contract.
EQUITABLE MORTGAGE: a sale with a
right of repurchase (or even a contract of The vendor may still exercise the right
absolute sale) is presumed to be an to repurchase within thirty days from the
equitable mortgage in the following time final judgment was rendered in a
cases: civil action on the basis that the contract
1. When the price of a sale with right was a true sale with right to repurchase.
to repurchase is unusually
inadequate;
OTHER RULES ON CONVENTIONAL
2. When the vendor remains in
possession as lessee or otherwise; REDEMPTION:
1. In case of real property, the
3. When upon or after the expiration consolidation of ownership in the
of the right to repurchase another vendee by virtue of the failure of the
instrument extending the period of vendor to pay the required amounts
redemption or granting a new shall not be recorded in the Registry
period is executed; of Property without a judicial order,
4. When the purchaser retains for after the vendor has been duly
himself a part of the purchase heard.
price;
2. The vendor may bring his action
5. When the vendor binds himself to against every possessor whose right
pay the taxes on the thing sold; is derived from the vendee, even if in
6. In any other case where it may be the second contract no mention
fairly inferred that the real intention should have been made of the right
of the parties is that the transaction to repurchase, without prejudice to
shall secure the payment of a debt the provisions of the Mortgage Law
or the performance of any other and the Land Registration Law with
obligation. respect to third persons.
3. The vendee is subrogated to the
In any of the foregoing cases, any
vendor's rights and actions.
money, fruits, or other benefit to be
4. The creditors of the vendor cannot instituted against him for the whole.
make use of the right of redemption 9. The vendor who recovers the thing
against the vendee, until after they sold shall receive it free from all
have exhausted the property of the charges or mortgages constituted
vendor. by the vendee, but he shall respect
the leases which the latter may have
5. In a sale with a right to repurchase, executed in good faith, and in
the vendee of a part of an undivided accordance with the custom of the
immovable who acquires the whole place where the land is situated.
thereof, may compel the vendor to
redeem the whole property, if the
latter wishes to make use of the right LEGAL REDEMPTION: is the right to be
of redemption. subrogated, upon the same terms and
conditions stipulated in the contract, in
6. If several persons, jointly and in the the place of one who acquires a thing by
same contract, should sell an purchase or dation in payment, or by any
undivided immovable with a right of other transaction whereby ownership is
repurchase, none of them may transmitted by onerous title.
exercise this right for more than his
respective share. The same rules THE RIGHT OF LEGAL REDEMPTION
apply to a person who sold an
immovable alone but left several
IS AVAILABLE TO:
heirs, in which case, the heirs may 1. CO-OWNERS – a co-owner of a thing
only redeem the part which he may may exercise the right of redemption
have acquired. in case the shares of all the other co-
owners or of any of them, are sold to
The vendee may demand of all the a third person.
vendors or co-heirs that they come to
an agreement upon the purchase of :
the whole thing sold; and should they ➢ may be movable or immovable
fail to do so, the vendee cannot be property.
compelled to consent to a partial
redemption.
7. Each one of the co-owners of an
undivided immovable who may have ➢ is the purchase price, unless the
sold his share separately, may price of alienation is grossly
independently exercise the right of excessive, in which case, the
repurchase as regards his own redemptioner shall pay only a
share, and the vendee cannot reasonable one.
compel him to redeem the whole
property. :
If the vendee should leave several ➢ should two or more co-owners
heirs, the action for redemption desire to exercise the right of
cannot be brought against each of redemption, they may only do so
them except for his own share, in proportion to the share they may
whether the thing be undivided, or it respectively have in the thing
has been partitioned among them. owned in common.

8. But if the inheritance has been 2. OWNERS OF ADJOINING LANDS –

divided, and the thing sold has been have the right of redemption in case of
awarded to one of the heirs, the transfers of land.
action for redemption may be
 RURAL LAND; REQUISITES:
a. The subject is rural land;
b. The land does not exceed one
hectare; ➢ the one whose intended use is
c. The redemptioner is an owner of a best justified shall be preferred.
land adjoining the subject rural
land;
d. The adjacent lands is not
separated by brooks, drains, ➢ 30 days from NOTICE in writing
ravines, roads and other apparent by the prospective vendor, or by
servitudes for the benefit of other the vendor. The deed of sale
estates; and shall not be recorded in the
e. The grantee does not own any Registry of Property, unless
rural land; accompanied by an affidavit of
the vendor that he has given
written notice thereof to all
possible redemptioners.
➢ in case two or more adjoining
owners desire to exercise the right
:
of redemption at the same time:
a. The owner of the adjoining land of ➢ the right of redemption of the co-
smaller area shall be preferred; and owners excludes that of adjoining
b. Should both lands have the same owners.
area, the one who first requested
redemption.

REDEMPTION AND PRE-EMPTION OF

URBAN LAND; REQUISITES:
a. The subject is urban land;
b. The area of the land 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;
c. The one exercising the right of
redemption or pre-emption is an
adjoining land owner.

WHEN REDEMPTION, WHEN PRE-

EMPTION:
a. Pre-emption is the right exercised by
the adjoining land owner if the sale is
NOT YET perfected;
b. Redemption is the right exercised if the
sale is already perfected.