c








Condition means an uncertain event or contingency on the happening of which the obligation (or right) of the contract
depends.

Warranty is a statement or representation made by the seller of goods, contemporaneously and as a part of the contract of
sale, having reference to the character, quality, or title of the goods, and by which he promises or undertakes to insure that
certain facts are or shall be as he then represents them.

If the obligation of either party is subject to any condition and such condition is not fulfilled, such party may either (1)
refuse to proceed with the contract, or (2) proceed with the contract, waiving the performance of the condition.

If the condition is in the nature of a promise that it should happen, the non-performance of such condition may be treated
by the other party as a breach of warranty.

Implied warranty as to seller¶s title (Art. 1548) ± that the seller guarantees that he has a right to sell the thing sold and to
transfer ownership to the buyer who shall not be disturbed in his legal and peaceful possession thereof.

Implied warranty against hidden defects or unknown encumbrance (Art. 1562) ± that the seller guarantees that the thing
sold is reasonably fit for the known particular purpose for which it was acquired by the buyer or, where it was bought by
description, that it is of merchantable quality.

 



 


1. the vendee is deprived in whole or in part of the thing purchased;

2. the vendee is so deprived by virtue of a final judgment ;
3. the judgment is based on a right prior to the sale or an act imputable to the vendor;
4. the vendor was summoned in the suit for eviction at the instance of the vendee; and
5. there is no waiver on the part of the vendee.







1.  
± the waiver is voluntarily made by the vendee without the knowledge and assumption of the risks of
eviction. If the waiver was only conscious, the vendor shall pay only the value which the thing sold had at the
time of eviction ± this is a case of solution indebiti ± the effect is to deprive the purchaser of the benefits
mentioned in Nos. 2, 3, 4 and 5 of Article 1555.
2.  ± the waiver is made by the vendee with knowledge of the risks of eviction and assumption of its
consequence. The vendor is exempted from the obligation to answer for eviction, provided he did not act in bad
faith [Andaya vs. Manansala, 107 Phil. 1151].





 



 

 
!
"###$

1. return of the value of the thing sold at the time of eviction;
2. income or fruits if he has been ordered to deliver them to the party who won the suit against him;
3. costs of the suit;
4. expenses of the contract;
5. damages and interests and ornamental expenses if the sale was made in bad faith.

%
%

%



- an action instituted to avoid a sale on - a defect in the article sold against which
account of some vice or defect in the thing defect the seller is bound to warrant. The
- the avoidance of a sale on sold which renders its use impossible, or vice or defect must constitute an
account of some vice or defect in so inconvenient and imperfect that it must imperfection, a defect in its nature, of
the thing sold, which renders its be supposed that the buyer would not have certain importance; and a minor defect does
use impossible, or so purchased it had he known of the vice. not five rise to redhibition. The mere
inconvenient and imperfect that itThe object is the rescission of the contract. absence of a certain quality in the thing
must be supposed that the buyer If the object is to procure the return of a sold which the vendee thought it to contain
would not have purchased it had part of the purchase price paid by the is not necessarily a redhibitory defect. One
he known of the vice. vendee, the remedy is known as accion thing is that is positively suffers from
minoris or estimatoris. certain defects.







&

Caveat venditor Caveat emptor

(Let the seller beware) (Let the buyer beware)

- the vendor is liable to the vendee for any hidden faults or - applies in sheriff¶s sale, sales of animals, and tax sales,
defects in the thing sold, even though he was not aware for there is no warranty of title or quality on the part of the
thereof (Art. 1566).- Based on the principle that a sound seller in such sales.
price warrants a sound article.
- Also applies in double sales of property where the issue
is who between two vendees has a better right to the
property .

- Requires the purchaser to be aware of the supposed title

of the vendor and one who buys without checking the
vendor¶s title takes all the risks and losses consequent to
such failure [Solvoso vs. Tanega, 87 SCRA 349].





% 



!
"#'($)

1. Accion redhibitoria ± to withdraw from the contract

2. Accion quanti minoris ± demand a proportionate reduction of the price, with a right to damages in either case








 



!
"#'*$

If the vendor was aware of the hidden defects in (a) the expenses of the price paid
consequence of which the thing sold was lost, he shall bear
the loss because he acted in bad faith. In such case, the b) the contract; and
vendee has the right to recover:
(c) damages.
If the vendor was not aware of them, he shall be obliged (a) the price paid
only to return:
(b) interest thereon; and

(c) expenses of the contract if paid by the vendee.

He is not made liable for damages because he is not
guilty of bad faith.

c


+,-
.
/
c

! The vendee is obliged to (1) accept delivery; and (2) pay the price of the thing sold.
! The following rules must be borne in mind:

1. In contract of sale, the vendor is not required to deliver the thing sold until the price is paid nor the vendee pay the
price before the thing is delivered in the absence of an agreement to the contrary [La Font vs. Pascacio, 5 Phil. 591].

2. If stipulated, then the vendee is bound to accept delivery and to pay the price at the time and place designated.
3. If there is no stipulation as to the time and place of payment and delivery, the vendee is bound to pay at the time
and place of delivery.
4. In the absence also of stipulation, as to the place of delivery, it shall be made wherever the thing might be at the
moment the contract was perfected (Art. 1251).
5. If only the time for delivery of the thing sold has been fixed in the contract, the vendee is required to pay even
before the thing is delivered to him; if only the time for payment of the price has been fixed, the vendee is entitled to
delivery even before the price is paid by him (Art. 1524).

 




&

&


&)

a) should he be disturbed in the possession or ownership of the thing sold;

b) should he have reasonable grounds to fear such disturbance by a vindicatory action or by a foreclosure of mortgage;

 



0 



  )

(a) should there be a stipulation to that effect; or

(b) should the vendor give security for the return of the price; or
(c) should the vendor have caused the disturbance or danger to cease; or
(d) should the disturbance consist only of a mere act or trespass.

c











.

/
+
/
.


.
,
.
-

Goods ± include all chattels personal but not things in action or money of legal tender in the Philippines. The term
includes growing fruits or crops.


%

%






 )

Action by the seller for payment of the price (Art. 1595)

Action by the seller for damages for non-acceptance of the goods (Art. 1596)
Action by the seller for rescission of the contract for breach thereof (Art. 1597)
Action by the buyer for specific performance (Art. 1598)
Action by the buyer for rescission or damages for breach of warranty (Art. 1599)





% 




%
 


%

& 


!
"#11$)

1
 &
- accept the goods and set up the seller¶s breach to reduce or extinguish the price.The theory of
recoupment is that the seller¶s damages are cut down to an amount which will compensate him for the value of
what he has given.
2 2

 


- accept the goods and maintain an action for damages for the breach of
the warranty. Both sides of the contract are enforced in the same litigation. The buyer (defendant) does not seek
to avoid his obligation under the contract but seeks to enforce the seller¶s (plaintiff¶s) obligation and to deduct it
from his liability for the price for breach of warranty.

3 

 ± refuse to accept the goods and maintain an action for damages for the breach of the
warranty.
4
  
- rescind the contract of sale by returning or offering the return of the goods, and recover the price or
any part thereof which has been paid. This remedy is not available in the following cases:

(a) if the buyer accepted the goods knowing of the breach of warranty without protest;

(b) if he fails to notify the seller within a reasonable time of his election to rescind; and

(c) if he fails to return or offer to return the goods in substantially as good condition as they were in at the time
of the transfer of ownership to him. But where the injury to the goods was caused by the very defect against
which the seller warranted, the buyer may still rescind the sale.
 c







3-4/5
.
,

 



 

0  



)

Common ± those causes which are also the means of extinguishing all other contracts like payment, loss of the thing,
condonation, etc. (Art. 1231).

Special ± those causes which are recognized by the law on sales (those covered by Arts. 1484, 1532, 1539, 1540, 1542,
1556, 1560, 1567, and 1591).

Extra-special ± conventional redemption and legal redemption.



&
,

&

(Arts. 1601-1618) (Arts. 1619-1623)

It is the right which the vendor reserves to himself, to It is the right to be subrogated, upon the same terms and
reacquire the property sold provided her returns to the conditions stipulated in the contract, in the place of one
vendee the price of the sale, the expenses of the contract, who acquires a thing by purchase or dation in payment, or
any other legitimate payments made therefore and the by any other transaction whereby ownership is
necessary and useful expenses made on the thing sold, and transmitted by onerous title.
fulfills other stipulations which may have been agreed
upon.
 )

 )

(a) identical with conventional redemption,
except for the source of the right ± conventional
(a) it is purely contractual because it is a right created, redemption arises from the voluntary agreement of the
not by mandate of the law, but by virtue of an express parties; legal redemption proceeds from law;
contract [Ordoñez vs. Villaroman, 78 Phil. 116];
(b) it is not predicated on proprietary right but on a
(b) it is an accidental stipulation and, therefore, its bare statutory privilege to be exercised only by the person
nullity cannot affect the sale of itself since the latter might named in the statute ± the statute does not make actual
be entered into without said stipulation [Alojado vs. Lim ownership at the time of sale or redemption a condition
Siongco, 51 Phil. 339]; precedent, the right following the person and not the
property [Magno vs. Viola and Sotto, 61 Phil. 80];
(c) it is a real right when registered, because it binds
third persons [Mortera vs. Martinez, 14 Phil. 541]; (c) it is in the nature of a mere privilege created partly
for reason of public policy and partly for the benefit and
(d) it is a resolutory condition because when exercised, convenience of the redemptioner to afford him a way out
the right of ownership acquired by the vendee is of what might be a disagreeable or inconvenient
extinguished [Aquino vs. Deal, 63 Phil. 582]; association into which he has been thrust ± it is intended
to minimize co-ownership [Basa vs. Aguilar, 117 SCRA
(e) it is potestative because it depends upon the will of 128; Tan vs. CA, 172 SCRA 660].
the vendor;

(f) it is a power or privilege, not an obligation, that the

vendor has reserved for himself [Ocampo vs. Potenciano, Instances of Legal Redemption:
CA 48 OG 2230];

(g) it is reserved at the moment of the perfection of the

contract for if the right to repurchase is agreed upon (a) Under the Civil Code, those found in Arts. 1620-
afterwards, there is only a promise to sell which produces 1622, 1634, and 1088;
different rights and effects and is governed by Art. 1479
[Diamante vs. CA, 206 SCRA 52];

(h) the person entitled to exercise the right of redemption (b) Under special laws:
necessarily is the owner of the property sold and not any
third party [Gallar vs. Husain, 20 SCRA 186]; (1) redemption by owner of real property sold for
delinquent taxes ± period is within 1 year from date of
(i) it gives rise to reciprocal obligation that of returning sale;
the price of sale and other expenses, on the part of the
vendor, and that of delivering the property and executing a (2) repurchase by homesteader of homestead sold under
deed of sale therefore, on the part of the vendee the Public Land Act ± period is 5 years [Tupas vs.
[Pandaquilla vs. Gaza, 12 Phil. 663]. Damasco, 132 SCRA 593];

(3) redemption by judgment debtor or redemptioner or

real property sold on execution ± period is 12 months;

(4) redemption by mortgagor after mortgaged property

has been judicially foreclosed and sold ± period is 90
days but before confirmation of sale by the court (in all
cases of extra-judicial foreclosure sale, the mortgagor
may redeem the property within 1 year from the date of
registration of the sale);

(5) redemption by an agricultural lessee of landholding

sold by the landowner ± period is 180 days from notice in
writing which shall be served by the vendee on all lessees
affected by DAR upon the registration of the sale.

An 2
2
2 is one which lacks the proper formalities, form of words, or other requisites prescribed by law for
a mortgage, but shows the intention of the parties to make the property subject of the contract as security for a debt and
contains nothing impossible or contrary to law [Cachola vs. CA, 208 SCRA 496].

Y 2  is the transmission of the ownership of a thing by the debtor to the creditor as the accepted equivalent of
the performance of an obligation.

r

 5
Ownership is transferred but the ownership is subject to Ownership is not transferred but the property is merely
the condition that the seller might recover the ownership subject to a charge or lien as security for the compliance
within a certain period of time. of a principal obligation, usually a loan.

If the seller does not repurchase the property upon the The mortgagor does not lose his interest in the property if
very day named in the contract, he loses all interest he fails to pay the debt at its maturity.
thereon.
There is no obligation resting upon the purchaser to It is the duty of the mortgagee to foreclose the mortgage if
foreclose; neither does the vendor have any right to he wishes to secure a perfect title thereto, and after the
redeem the property after the maturity of the debt. maturity of the debt secured by the mortgage and before
foreclosure, the mortgagor has a right to redeem [Basilio
vs. Encarnacion, 5 Phil. 360].

 


&

& 

%

6 %
)

1. when the price of a sale with right to repurchase is unusually 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 of redemption
or granting a new 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 the real intention of the parties is that the transaction shall secure
the payment of a debt or the performance of any other obligation; and
 7. when there is a doubt as to whether the contract is a contract of sale with right or repurchase or an equitable
mortgage.

6  
%

&

%
0 :
1 There must be a sale or assignment of credit. The concept of sale must be understood in its
restricted sense. The right cannot be exercised if the transaction is exchange or donation.
2 There must be a pending litigation at the time of the assignment. The complaint by the
assignor must have been filed and answered by the creditor before the sale of the credit.
3 The debtor must pay the assignee (a) the price paid by him, (b) the judicial costs incurred by
him, and (c) the interests on the price from the date of payment.
4 The right must be exercised by the debtor within 30 days from the date the assignee demands
(judicially or extra-judicially) payment from him.

& r2&
1 The sale to a third person has already been perfected The sale to a third person has not yet been perfected

2 Has a much broader scope Narrower in scope ± may be exercised only where
there is a prospective resale of a small piece of urban
land originally bought by the prospective vendor
merely for speculation
3 Directed against the third person who bought the property Directed against the prospective vendor who is about
to resell the property
4 Effect is to extinguish a contract that has already been Effect is to prevent the birth or perfection of a
perfected or even consummated contract

3


-5
.




/


r
,

-/

Assignment of credit ± a contract by which the owner of a credit transfers to another his rights and actions against a third
person in consideration of a price certain in money or its equivalent (Art. 1458).

Assignment of credit and other incorporeal rights are consensual, bilateral, onerous, and commutative or aleatory
contracts. The assignment involves no transfer of ownership but merely effects the transfer of rights which the assignor
has at the time to the assignee [Casabuena vs. CA, 286 SCRA 594].

It may be done gratuitously, but if done onerously, it is really a sale. Thus, the subject matter is the credit or right
assigned; the consideration is the price paid for the credit or right; and the consent is the agreement of the parties to the
assignment of the credit or right at the agreed price.

Renunciation ± the abandonment of a right without a transfer to another.

Agency ± involves representation, not transmission wherein the agent acts for the principal.
Substitution ± the change of a new debtor for the previous debtor with the credit remaining in the same creditor.
Subrogation ± the change in the person of the creditor with the credit being extinguished.

+


 :

1 As between the parties, the assignment is valid although it appears only in a private document so long as the
law does not require a specific form for its validity.
2 To affect third persons, the assignment must appear in a public instrument, and in case it involves real
property, it is indispensable that it be recorded in the Registry of Deeds [Lopez vs. Alvarez, 9 Phil. 28].

3 The assignee merely steps into the shoes of the assignor, the former acquiring the credit subject to defenses
(fraud, prescription, etc.) available to the debtor against the assignor. The assignee is deemed subrogated to
the rights as well as to the obligations of the seller. He cannot acquire greater rights than those pertaining to
the assignor. [Koa vs CA, 219 SCRA 541].
 3


+




3/-

Barter ± a contract whereby one person transfers the ownership of non-fungible things to another with the obligation on
the part of the latter to give things of the same kind, quantity, and quality.

The contract is perfected from the moment there is a meeting of the minds upon the things promised by each party in
consideration of the other. It is consummated from the time of mutual delivery by the contracting parties of things they
promised.

Effect where the giver is not the lawful owner of the thing delivered: the aggrieved party cannot be compelled to deliver
the thing he has promised. He is entitled to claim damages (Art. 1639). [Biagtan vs. Viuda de Oller, 62 Phil. 933].

Remedy in case of eviction: the injured party is given the option to recover the property he has given in exchange with
damages or only claim an indemnity for damages. The right to recover is, however, subject to the rights of innocent third
persons (Art. 1640).

3



/
+4,
,
,

Purpose of the law (Act No. 3952) is to prevent the defrauding of creditors by the secret sale or disposal or mortgage in
bulk of all or substantially all of a merchant¶s stock of goods.

The general scheme is to declare such bulk sales fraudulent and void as to creditors of the vendor, or presumptively so,
unless specified formalities are observed, such as the demanding and the giving of a list of creditors, the giving of actual
and constructive notice to such creditors, by record or otherwise, and the making of an inventory.

A sale and transfer in bulk under the Bulk Sales Law is any sale, transfer, mortgage, or assignment ±

(a) of a stock of goods, wares, merchandise, provisions, or materials otherwise than in the ordinary course of trade and
the regular prosecution of the business; or

(b) of all or substantially all, of the business or trade; or

(c) of all or substantially all, of the fixtures and equipment used in the business of the vendor, mortgagor transferor, or
assignor.


&  
%

)

1. knowingly or willfully making or delivering a statement as required by the Act which does not include the names
of all the creditors of the vendor, etc. with the correct amount due and to become due or which contains any false
or untrue statement; and
2. transferring title to a any stock of goods, wares, merchandise, provisions or materials sold in bulk without
consideration of for a nominal consideration only.