ESSENTIAL ELEMENTS- EFFECTS OF
PRESENCE, ABSENCE AND
By the contract of sale one of the contracting
parties obligates himself to transfer the ownership
of and to deliver a determinate thing, and the
other to pay therefor a price certain in money or
its equivalent.
OBLIGATIONS CREATED IN A SALE
a. For the seller, to:
1. transfer the ownership; and
2. deliver the possession, of the subject
matter
b. For the buyer, to:
1. pay the price
ESSENTIAL ELEMENTS
• Consent - manifested by the meeting of
the offer and the acceptance upon the
thing and the cause which are to
constitute the contract
Effect of offer and counter offer: Manila Metal
Container Corporation vs. PNB - A qualified
acceptance or one that involves a new proposal
constitutes a counter-offer and a rejection of the
original offer.
• Determinate subject matter - includes
objects which are, at least, determinable
Test:
If at the time the contract is entered into, the thing
is capable of being made determinate without the
necessity of a new further agreement between
the parties.
• Price certain in money
Toyota Shaw, Inc. vs. CA:
No obligation on the part of Toyota to transfer
ownership of a determinate thing to Sosa and no
correlative obligation on the part of the latter to
pay therefore a price certain in money appears.
INCOMPLETENESS OF ELEMENTS
• All elements present - a perfected
contract of sale arises
• Any of the elements not present - no
perfected sale
• Defect or illegality in any of the elements
- contract is either voidable or void
CHARACTERISTICS
• Consensual
- the parties may reciprocally demand
performance
- the contract has the force of law
between the contracting parties
- delivery and taking possession
would not bring about the perfection
and binding effect of the sale
• Onerous
• Nominate
• Principal
• Commutative
• Delivery transfers ownership
- Sale is merely a title that creates the
obligation to transfer ownership
- Delivery is the mode to transfer
ownership and possession to the
buyer
SALE VS. OTHER CONTRACTS
• Agency to sell – the essence of an
agency to sell is the delivery to an agent,
not as his property, but as the property of
the principal, who remains the owner and
has the right to control sale, fix the price
and terms, demand and receive the
proceeds less the agents commission
- Quiroga vs. Parsons Hardware
• Lease of service or piece of work
- Massachusetts Rule - if the thing is
manufactured for the general market, it is
a sale; if it is manufactured on special
order, it is a contract for a piece of work
Del Monte Phils. Inc. vs. Aragones: Aragones
having specially fabricated three casting
machines and furnished some materials for the
production of the concrete blocks specially
ordered and specified by MEGA-WAFF which
were to be and indeed they were for the exclusive
use of MEGA-WAFF, he has a cause of action
upon petitioner up to the amount it owed MEGA-
WAFF at the time Aragones made his claim to
petitioner.
• Barter
- Statute of Frauds does not apply to
barter
- legal redemption not available in
barter
• Donation
- tax consequences are different
- to determine the validity and/or
enforceability of the contra
PROMISE TO SELL
• Bilateral
- Promise to sell a determinate thing
coupled with a correlative promise to
buy at a specified price.
Ang Yu Asuncion vs. CA:
“An unconditional mutual promise to buy and sell,
as long as the object is made determinate and
price is fixed, can be obligatory on the parties,
and compliance therewith may accordingly be
exacted.”
• Unilateral
- Promise to sell with the promise at
liberty to buy or not at his option; or
vice versa
- It must have a separate
consideration, independent of the
price
OPTION CONTRACT
- An option is a contract by which the owner of
the property agrees with another person that the
latter shall have the right to buy the former’s
property at a fixed price within a certain time.
- Remedy of optionee in case of refusal to
comply by the offeror - specific performance
PNOC vs. Keppel Phils Holdings:
When an option to buy or to sell is not supported
by a consideration separate from the purchase
price, the option constitutes as an offer to buy or
to sell, which may be withdrawn by the offeror at
any time prior to the communication of the
offeree's acceptance
When the offer is duly accepted, a mutual
promise to buy and to sell under the first
paragraph of Article 1479 of the Civil Code
ensues and the parties' respective obligations
become reciprocally demandable.
Option vs. Right of First Refusal
- A promise to the part of the owner that if they
decide to sell the property in the future, they
would first negotiate its sale to the promise
- Not a perfected sale under 1458 nor an option
under 1319 or 1479 because there is no
agreement as to price or the terms of payment
- Form for enforceability: must be in writing (e.g.,
in a lease contract)
- Remedy of grantee- rescission if buyer was
aware of the right
- damages
ABSOLUTE SALE
- When sale is considered absolute:
o Ramos vs. Heruela
o Hrs. of Mascuñana vs. CA
CONDITIONAL SALE
• Kinds of conditional sales:
o Executed contract – nonpayment
of price is negative resolutory
condition
o Executory contract – payment of
the price is positive suspensive
condition
CONTRACT TO SELL
Coronel vs .CA
- A bilateral contract whereby the prospective
seller... binds himself to sell the property
exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, that
is, full payment of the purchase price
Reyes vs. Salvador
- An agreement is also considered a contract to
sell if there is a stipulation therein giving the
vendor the rights to unilaterally rescind the
contract the moment the vendee fails to pay
within a fixed period and to consequently open
the subject property anew to purchase offers. In
the same vein, where the seller promises to
execute a deed of absolute sale upon the
completion by the buyer of the payment of the
price, the contract is only a contract to sell.
 Contract of Sale
Can the owner sell
property which was
previously the subject of Title passes upon delivery
a contract to sell?
In both contracts to sell and
contracts of conditional sale,
title to
Similarities the property remains with the
seller
until the buyer fully pays the
purchase price
The buyer automatically
acquires title to the property
upon full payment of the
purchase price*
Distinction
This transfer of title is "by
operation of law without any
further act having to be
performed by the seller"
Contract to Sell
Ownership is reserved
despite delivery
Payment is positive
suspensive condition
both contracts are subject
to the positive suspensive
condition of the buyer's full
payment of the purchase
price
Transfer of title to the
prospective buyer is not
automatic.
"The prospective seller
must convey title to the
property through a deed of
conditional sale”

OBJECT PRICE

Qualities of object - The sum stipulated as the equivalent of the thing

a. Lawful – the thing must be licit and the sold taken into consideration for the fixing of the
vendor must have a right to transfer price put to the debit of the buyer and agreed to
ownership at the time it is delivered by him
- Examples: future inheritance, under - Ideally, it is sum certain in money or its
CARL equivalent
b. Determinate or determinability
- Test of determinability Requisites for price
i. Capacity to segregate; and • Real
ii. No further agreement a. When price is considered real
b. Effect if price is simulated- Cruzado vs.
- Sale of undivided interest Bustos
i. Before partition c. Effect if there is no consideration –
ii. Undivided share in mass of Doles vs. Angeles
fungibles d. Effect if price in covering instrument is
c. Existing, future or contingent – Effect of false
sale of expected inheritance- Tañedo vs. • In money or its equivalent
CA a. Ideally, price is a sum of money or its
- Effect of non-fulfillment of condition equivalent
contract to sell: Heirs of Arturo Reyes b. Example of consideration other than
vs. Beltran sum of money or its equivalent- Torres
d. Transferability of ownership – required at vs. CA
the time of delivery – Cavite • Certain or ascertainable
Development bank vs. Lim a. How determined
- Subsequent acquisition of title by - By a third person
vendor without title validates the sale - By the courts
– Vaglidad vs. Vaglidad - By reference to a definite day
- Effect of non-acquisition of title – - By reference to a particular
Heirs of Arturo Reyes vs. Beltran exchange
- By reference to invoices
 b. Effect of indeterminability
- Contract is ineffacious
c. Inadequacy of price- does not affect • Expenses
the contract – Askay vs. Cosalan, Aguilar a. Of execution and registration of
vs. Rubiato sale- seller
d. Failure of consideration – b. Of putting the goods in a
Buenaventura vs. CA deliverable state- seller
• Ernest Money - -something of value to
show that the buyer was really in earnest, RULES IN SPECIAL SALES
and given to the seller to bind the bargain • Sales at auction
- considered part of the price and a proof 1. For separate lots, separate sales
of the perfection of the contract of sale 2. Upon fall of hammer, sale is
• Ernest money vs. option money perfected
a. earnest money is part of the purchase 3. Seller may bid if the right is
price, while option money is the money expressly reserved
given as a distinct consideration for an 4. The auctioneer may withdraw
option contract; the goods unless the auction has
b. earnest money is given only where there announced to be without reserve
is already a sale, while option money • Sale by sample or description
applies to a sale not yet perfected; - in sale by sample, the bulk must
c. when earnest money is given, the buyer correspond to the sample.
is bound to pay the balance, while when - In sale by description, the thing
the would-be buyer gives option money, must correspond to the
he is not required to buy, but may even description.
forfeit it depending on the terms of the • Sale of personal property payable on
option. installments (Recto Law)

RULES IN ORDINARY SALES - Alternatives remedies of the

• Form seller
a. absence of formal deed of sale – Caoili 1. To exact fulfillment
vs. CA 2. To cancel the sale if the
b. failure to specify the technical buyer fails to pay two or
description – Naranja vs. CA more installments
c. effect of unsigned and unnotarized 3. To foreclose the chattel
deed of sale – Limketkai Sons Milling, mortgage on the thing
Inc. vs. CA sold if the buyer fails to
d. when form is required pay two or more
• Perfection - Sale is perfected when there installments
is consent upon the subject matter and - Effect of waiver - the waiver is
the price, even if neither is delivered. void
- Effect of stipulation of forfeiture
Coronel vs. CA: of installments made - the
- Although the document drawn by the Coronels stipulation is valid unless
was unconscionable
denominated “Receipt of Down Payment”, from - Leases of personal property with
that moment on, there was a perfected contract option to buy:
of sale, albeit conditional (i.e., transfer of title to 1. Rules in 1484 are
heirs and payment of balance of purchase price) applicable where the
since there was no express reservation of title. lessor deprives the
lessee of possession or
• Place of Perfection enjoyment of the thing
a. Place where the meeting of the 2. Agreement on retention
minds took place of payments applicable
b. In case of acceptance through
letter or telegram, in the place
where the offer was made
Elisco Tools Manufacturing Corp. vs. CAPCI
Leasing and Finance Inc. vs. Giraffe-X Imaging,
Inc.
• RA 6552 (Maceda Law) – Realty
Installment Buyer Protective Decree
- Applicability
sale or financing of real estate on
installment payments, including
residential condominium apartments
- Non-applicability
1. Industrial lots
2. Commercial buildings
3. Sales to tenants under RA
3844
• Maceda Law (RA 6552)
- Rights of buyer
1. To update payment without
additional interest
2. To assign/reinstate contract
3. To advance payment without
interest
- Rights of buyer who has paid at
least two years of installments:
1. To pay without interest
the unpaid installments
within the grace period
(one month for every
year of installments)
2. To be refunded of the
cash surrender value of
his payments if the
contract is cancelled
o actual cancellation takes
place after 30 days from
receipt of the notice of
cancellation and full
payment of the cash
surrender
o Pagtalunan vs.
Manzano (when
cancellation takes effect:
- The cancellation of the
contract by the seller must
be in accordance with Sec. 3
(b) of R.A. No. 6552, which
requires a notarial act of
rescission and the refund to
the buyer of the full payment
of the cash surrender value
of the payments on the
property. Actual cancellation
of the contract takes place
after 30 days from receipt by
the buyer of the notice of
cancellation or the demand
for rescission of the contract
by a notarial act and upon
full payment of the cash
surrender value to the buyer.
- Rights of buyer who has paid
less than two years of
installments - to pay without
interest the unpaid installment
within a grace period of not less
than 60 days from the date the
installment became due
- Cases on the effect where there
was no valid rescission of
contract
o Ramos vs. Heruela
o Active Realty &
Development
Corporation vs. Daroya
• PD 957 – The Subdivision and
Condominium Buyers’ Protective Decree
o Cases:
- Far East Bank and Trust
Co. vs. Marquez
(mortgage without
approval from HLURB,
now DHSUD)
- Tamayo vs. Huang
(options of the buyer)
- Cantemprate vs. CRS
Realty Development
Corporation (failure of
developer to obtain a
license to sell)
CAPACITY TO BUY OR SELL
• Capacity in general
a. Persons capacitated to contract are
generally capacitated to buy or sell
b. The seller's incapacity to alienate may
prevent performance
c. An incapacitated person is not obliged to
make restitution, except insofar as they
are benefited
• Special Disqualifications
a. Between spouses (common law
relationships)
o Ching vs. Goyanko
b. By spouse without the consent of the
other
o Under the civil code
o Under the family code
c. Persons in trust relations
o Sale to agent
 o Sale to guardian (Phil. Trust Co.
vs. Roldan)
o Sale to public officer (Maharlika
Broadcasting vs. Tagle)
o Sale to attorney (Gurrea vs.
Suplico; Fornilda vs. RTC;
Ramos vs. Ngaseo)
• Effects
a. When an incompetent buys:
- He must pay a reasonable price for
necessaries delivered to him. The
resulting sale is valid and not merely
voidable.
b. Effects of forbidden sales:
1. Between husband and wife - void
2. Between persons in public trust
relations - void
3. Between persons in private trust
relations - voidable
LOSS
• Roman Law Principles: From the
moment of perfection, risk of loss of a
determinate subject matter passes to the
buyer without need of delivery
- Ownership is transferred to the buyer only upon
delivery
• Common law principles: The owner
bears the risk of loss (res perit domino)
- Ownership is transferred to the buyer from the
moment the contract is entered into and the
goods are available, to be delivered to the buyer
• Under the civil code: Adopted the Roman
law principle that ownership can only be
transferred by delivery
- Adopted the common law principle of res perit
domino
• Effect of loss of the things sold
a. Before perfection - borne by the purported
seller
b. At the time of perfection
i. total loss - contract is inoperative
ii. partial loss - buyer's option
iii. deterioration causing material or
substantial change - equivalent
to total loss
c. After perfection but before delivery
i. by fault of one party - party at
fault is liable
ii. by fortuitous event:
a. According to Paras
b. According to Padilla
c. According to Tolentino
DOCUMENTS OF TITLE
Negotiable document of title – ways of negotiation
a. By Delivery
i. Form
ii. Right of holder
b. Right of holder
i. Form
ii. Kinds of endorsement
iii. Liability of endorser
Warranties of a person negotiating
• Document is genuine;
• Legal right to negotiate or transfer it
• Knowledge of no fact which would impair
the validity or worth of the document
• Right to transfer the title to the goods
Rights acquired by a transferee of a duly
negotiated document of title:
• Such title to the goods as against the
person negotiating
• Such title to the goods as the person to
whose order the goods were deliverable
• The direct obligation of the bailee to hold
possession of the goods for him
Rights acquired by a transferee of a "transferred"
(not duly negotiated) document of title:
• Title to the goods as against the
transferor
• To compel the transferor to indorse the
document
Rights acquired by a transferee of a non-
negotiable document of title:
• Title to the goods as against the
transferor
• To notify the bailee of the transfer
(Thereafter) to hold the bailee liable for
the possession of the goods for him
RULES ON ATTACHMENT, LEVY OR
GARNISHMENT OF GOODS
• When covered by a negotiable document
of title:
o General rule
o Exceptions
o Right of the bailee
• When covered by non-negotiable
document of title:
o Conditions
OBLIGATIONS OF THE VENDOR
1. To preserve the thing
2. To deliver the thing
3. To transfer ownership
OBLIGATION TO DELIVER
1. Form and manner of delivery
2. Actual delivery
FORM AND MANNER OF DELIVERY
• Actual delivery - placing the thing sold in
the control and possession of the buyer
- mere transfer of possession is not
"delivery"
• Legal/Constructive delivery
1. Execution of public document
(Asset Privatization Trust vs. T.J.
Enterprises)
2. Symbolical tradition
3. Traditio longa manu
4. Traditio brevi manu
5. Traditio constitutum
possessorium
TRANSFER OF OWNERSHIP
General rule: ownership is transferred upon
delivery
Exceptions (title passes sans delivery):
1. When buyer refuses to accept without
justification
2. Delivery to the carrier is delivery to the
buyer
Instances when "delivery" does not transfer
title:
1. Delivery on approval or trial
2. In case of (express)reservation of title
3. In case of implied reservation of title
(1503)
4. Double sales (1544 applies)
5. When the seller is not the owner
TIME AND PLACE OF DELIVERY
• Time
a. As stipulated
b. If no stipulation, at a reasonable time
and hour
• Place of Delivery
1. As stipulated or established by usage
2. Rules if no stipulation or usage
RIGHTS OF THE UNPAID SELLER OF GOODS
1. Right to retain the goods (possessory
lien)
2. Right to stop the goods in transit
(stoppage in transitu)
3. Right of resale (or right to resell)
4. Right to rescind the sale
COMPLETENESS OF DELIVERY
General rule: All that is mentioned in the contract,
including accessions and accessories, must be
placed in the control of the buyer.
RULES IN CASE OF DEFICIENCY
a. Real Estate
a. if sold per unit of measure
b. if sold for a sump sum or a single
price
c. prescription of action (Cebu Winland
Development Corp.vs. Ong Siao
Hua)
b. Movables; rules
a. if buyer accepts knowing that the
seller is not going to perform the
contract in full
b. if buyer has used or disposed of the
goods before knowing that the seller
is not going to perform his contract in
full
DOUBLE SALES
Rules in sale of immovables:
• Ownership belongs to:
1. The person who fist registers the sale in
good faith
2. The person who first takes possession in
good faith
3. The person who presents the oldest title
Rules in sale of movables:
• Ownership is transferred the person who
has first taken possession in good faith
Buyer in good faith
1. without notice of another person's claim;
and
2. pays a full and fair price
CONDITIONS AND WARRANTIES
Condition
1. Concept
2. Consequence of non-fulfilment
(suspensive) condition
3. Condition in the nature of a promise
Warranty
• Concept – A statement or representation
made by the seller of goods,
contemporaneously and as 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.
• Kinds
1. Express Warranty
• Statement of seller's opinion
• Statement that taxes and duties were
already paid
• Statement that the property is free from
all liens and encumbrances (where there
are tenants)
• Statement that the property is free from
claims of any tenant or agricultural
workers
• Prescriptive period
2. Implied Warranties
1. Concept of eviction
2. Requisites (judicial)
3. Effect of warranty
4. Waiver of warranty
Warranty against hidden encumbrance
on an immovable:
1. Requisites
2. Effects
Warranty against hidden defects of or
encumbrance upon the thing (movable)
sold
1. Requisites
2. Specific thing sold as second
hand (pre-loved)
3. Effects
4. Prescriptive period
Warranty against redhibitory defect in
animals
1. When no warranty exists
2. When vice is presumed
redhibitory
3. Presumption of redhibitory vice
4. Prescriptive period
of
R.A. 10642 PHILIPPINE LEMON LAW
LEMON LAW
• Coverage - brand new motor vehicles
purchased in the Philippines reported by
a consumer to be in non- conformity with
the vehicle manufacturer or distributor's
standards or specifications
• Motor vehicles covered - sedans,
coupes, station wagons, convertibles,
pick-up trucks, vans, SUVs, AUVs
• Motor vehicles excluded - motorcycles,
delivery trucks, dump trucks, buses, road
rollers, trolley cars, street sweepers,
sprinklers, lawn mowers; heavy
equipment such as bulldozers,
payloaders, graders, forklifts, amphibian
trucks, cranes, vehicles that run only on
rails or tracks, tractors, trailers
• Non-conformity
• Excluded causes of non-conformity
• Lemon rights period
1. 12 months from date or original
delivery; OR
2. Up to 20,000 kilometers of
operation, whichever comes first
• Repair attempts
• What repair includes
• When to avail of lemon law rights
• Reasonable transportation allowance
• Consumer’s remedy if issue remains
unresolved
• Resolution mechanisms:
1. Mediation
2. Arbitration
3. Adjudication
• Remedies granted to consumer in case
of finding of non-conformity
• Reasonable allowance for use-
whichever is lower of:
1. twenty percent (20%) per annum
deduction from the purchase
price, or
2. the product of the distance
traveled in kilometers and the
purchase price divided by one
hundred thousand (100,000)
kilometers
 • In case a non-conformity is not found by o Reasonable opportunity to
DTI examine
• Appeal o Effect of acceptance upon the
• Resale of returned vehicle seller
o Effect of unjustifiable refusal to
ACTIONS FOR BREACH OF CONTRACT OF accept
SALE OF GOODS o Effect of justifiable refusal to
accept
Seller's action for price • To pay the price
Grounds: o Time and place of payment
1. After ownership has passed and price is o When buyer is justified in
not paid suspending payment after
2. Failure to pay, if stipulated to be payable delivery
on a certain day de Guzman vs. Triangle o When buyer has no right to
Ace Corp. suspend payment
o Arra Realty Corp. vs. Guaranty
Seller’s action for damages Dev't. Corp. and Insurance
Agency
Grounds: • Payment of interest
1. Buyer's wrongful failure to accept and o Before default - if stipulated
pay o After default - from time of
2. Buyer's repudiation or countermand judicial or extrajudicial demand
o Legal rate of interest - 6% per
Measure of damages: annum
1. Generally, the loss naturally resulting
from the breach Legal guarantees for payment of price
2. Where there is available market - 1. Suspension of delivery
difference between contract price and 2. Seller’s lien on goods in their possession
market price 3. Stoppage in transit
3. When repudiation is made before 4. Resale of goods
completion - expenses (materials and 5. Rescission
labor) incurred and expected profit
EXTINGUISHMENT OF SALE
Seller’s action for recission
General causes of extinguishment:
Requisites: 1. Payment
1. Goods are not delivered 2. Loss
2. Buyer either (i) repudiates, or (ii) 3. Condonation or remission
manifests an inability to perform, or (iii) 4. Confusion or merger
commits a breach of contract 5. Compensation
3. Seller gives notice of election to rescind 6. Novation
7. Annulment
BUYER'S ACTION FOR SPECIFIC 8. Rescission
PERFORMANCE 9. Fulfillment of resolutory condition
10. Prescription
Buyer's action for breach of warranty
• Buyer's choice (1599) Harrison Motors
Corp. vs. Navarro
• Supercars Mgmt. & Dev't. Corp vs. Flores
• When buyer cannot rescind
• Effect of buyer's election to rescind

OBLIGATIONS OF THE VENDEE

• To accept delivery
 o Caballero vs. Ong Tiao Bok
Special causes of extinguishment of sale: o Ramos vs. Sarao
• Conventional redemption - One which o Diño vs. Jardines
takes place when the vendor reserves
the right to repurchase the thing sold, Cases -absolute sale deemed equitable
with the obligation to comply with the mortgage
provisions of Article1616 and other o Quinga vs. CA
stipulations which may have been agreed o Misena vs. Rongavilla
upon. o Romulo vs. Layug
• Period of redemption: o Bacungan vs .CA
- When no period is agreed upon
- When period is agreed upon Rule: when a "contract of sale with right to
- When period may be extended purchase" is of doubtful interpretation -it shall be
• Who may exercise redemption? construed as an equitable mortgage
- Vendor
- Heirs of vendor Remedy of the "vendor a retro" when transaction
- Creditors of vendor is deemed an equitable mortgage
• Against whom redemption is exercised o Govs.Bacaron
- Vendee
- Heirs of vendee • Legal redemption
- Possessor whose right is derived - Defined
from the vendee - Vs. Pre-emption
• It is predicated on good faith on the part - Instances of legal redemption
of the vendor a retro. • Redemption by co-owners
- Obligations of a vendor a retro: - Purpose
1. return the price - Requisites
2. return the expenses of the - Who may be exercise
contract redemption
3. reimburse the necessary and • Legal redemption by adjoining owners of
useful expenses rural owners of rural lands
- (Some) Rights of a vendee a - Purpose
retro: - Requisites
1. compel the vendor of a part of an - Who may be exercise
undivided immovable to redeem the redemption
whole property upon the vendee • Legal redemption by adjoining owners of
acquiring the entire immovable in urban lands
partition proceedings - Requisites
2. subrogated to the vendor's rights - Who may exercise redemption

Nature: When to exercise redemption- within 30 days

1. an accidental element from notice in writing by the vendor(1623)
2. an express condition
3. a potestative resolutory condition • Verdad vs. CA (1996)
4. a real right - Notwithstanding actual
knowledge by co-owner, the
o Equitable Mortgage – One which, latter is still entitled to written
although lacking in some formality, or notice by selling co-owner.
from or words, or other requisite • Francisco vs. Boiser (2000)
demanded by a statute, nevertheless - Receipt of summons by a co-
reveals the intention of the parties to owner is tantamount to actual
charge real property as security for a knowledge of the sale from
debt, and contains nothing which the 30-day period of
impossible or contrary to law. redemption commence to run.
• Cabales vs. CA (2007)
Cases- pacto de retro sale deemed equitable
mortgage:
 - The 30-day redemption period • Extent of liability for breach of warranty
commenced after the co-owner
sought the barangay conciliation
process to redeem his property.
• Pascual vs. Ballesteros (2012)
- Despite actual knowledge of the
sale, a written notice is still
mandatory and indispensable.
• Bayan vs. Bayan (2019)
- Citing Francisco, right of legal
redemption accrued from notice
of the foreclosure sale or receipt
of any written notice of the fact of
sale.

ASSIGNMENT OF CREDITS

• An agreement by virtue of which the owner of

a credit (known as the assignor), by a legal
cause and without need of the debtor's
consent, transfers that credit and its
accessory rights to another (known as the
assignee), who acquires the power to enforce
it, to the same extent as the assignor could
have enforced it against the debtor.
• The process of transferring the right of the
assignor to the assignee, who would then be
allowed to proceed against the debtor. It may
be done either gratuitously or onerously, in
which case, the assignment has the effect
similar to that of a sale.

Requisites and formalities

• To bind the parties: must comply with

1475
• To bind third persons: must be in a public
instrument, or the instrument is recorded
in the ROD if real property is involved

Effects of valid assignment

• Transfer title of assigned credit to
assignee (see Ledonio vs. Capitol
Development Corp.)
• Assignee takes the credit subject to all
defenses acquired by debtor prior to
notice or knowledge

Warranties of assignor
• Existence and legality of credit (see Lo
vs. KJS ECO-Formwork System Phil.
Inc.)
• When assignor is liable for solvency of
the debtor
• Period of liablity for solvency