Law On Sales Memory Aid San Beda Law

San Beda College of Law
113
MEMORY AID IN CIVIL LAW
SALES
SALE 5. Commutative; In some
 A nominate contract whereby one of cases, aleatory (emptio spei);
the contracting parties obligates 6. Onerous.
himself to transfer the ownership of
and to deliver a determinate thing * Aleatory contract: one of the parties or
and the other to pay therefor a price both reciprocally bind themselves to give
certain in money or its equivalent. or to do something in consideration of
what the other shall give or do upon the
NOTES: Delivery and payment in a happening of an event which is uncertain,
contract of sale are so interrelated and or which is to occur at an indeterminate
intertwined with each other that without time. (Ex: Sale of sweepstakes ticket)
delivery of the goods there is no
corresponding obligation to pay. The two Contract to sell
complement each other. It is clear that  exclusive right and privilege to
the two elements cannot be dissociated, purchase an object.
for the contract of purchase and sale is  a bilateral contract whereby the
essentially a bilateral contract, as it gives prospective seller, while expressly
rise to reciprocal obligations. (Pio reserving the ownership of the
Barretto Sons, Inc. vs. Compania subject property despite delivery
Maritima, 62 SCRA 167). thereof to the prospective buyer
 Neither is the delivery of the thing binds himself to sell the said property
bought nor the payment of the price exclusively to the prospective buyer
necessary for the perfection of the upon fulfilment of the condition
contract of sale. Being consensual, it agreed upon, that is, full payment of
is perfected by mere consent. the purchase price.
 Elements: NOTE: Absent a proviso in the contract

that the title to the property is reserved
a. Essential elements – those without
which, there can be no valid sale: in the vendor until full payment of the
1.Consent or meeting of minds purchase price or a stipulation giving the
2.A Determinable subject matter vendor the right to unilaterally rescind
3.Price certain in money or its the contract the moment the vendee fails
to pay within the fixed period, the
equivalent
transaction is an absolute contract of sale
b. Natural elements – inherent in the and not a contract to sell. (Dignos vs. CA
contract, and which in the absence of [1988])
any contrary provision, are deemed * The contract of sale by itself is not a
to exist in the contract: mode of acquiring ownership. The
1.Warranty against eviction contact transfers no real rights; it merely
2.Warranty against hidden causes certain obligations to arise.
defects
c. Accidental elements – may be present Contract of Contract to
or absent depending on the
Sale Sell
stipulation of the parties (e.g.: 1. Title passes to the 1. Ownership is
conditions, interest, penalty, time or buyer upon delivery reserved in the
place of payment, etc.) of the thing sold seller and is not to
pass until full
 Characteristics: payment of the
1. Principal purchase price
2. Non-payment of 2. Full payment is a
2. Consensual; the price is a negative positive suspensive
3. Bilateral; resolutory condition condition, the
4. Nominate; and the remedy of the failure of which is
CIVIL LAW COMMITTEE
 CHAIRPERSON: Romuald Padilla  ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad  EDP: Alnaiza Hassiman, Dorothy Gayon
 SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family Relations), Alejandro Casabar(Property), Ma. Rhodora
Ferrer(Wills and Succession), Ian Dominic Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John
Stephen
Quiambao(PAT), Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony
Purganan(LTD),
Ma. Ricasion Tugadi (Conflicts of Law)
114
seller is to exact not a breach – 1. Constructive 1. Third person

fulfilment or to casual or serious /actual knowledge on buying the
rescind the contract but simply the part of the 2nd property despite
prevents the buyer of the defect in fulfilment of the
obligation of the the seller’s title suspensive
vendor to convey renders him not a condition cannot
title from having registrant in good be deemed a
binding force faith. Such second buyer in bad
3. Vendor loses and 3. Title remains in buyer cannot defeat faith and
cannot recover the vendor if the the first buyer’s title. prospective
ownership of the vendee does not Ratio: Fulfilment of buyer cannot
thing sold and comply with the the suspensive seek the relief of
delivered until the condition conditions affects the reconveyance of
contract of sale is precedent of seller’s title to the property.
resolved and set aside making payment at property and previous Exception: If
the time specified delivery of the There was no
in the contract property automatically previous sale of
transfers the property.
ownership/title to the
Conditional Sale Contract to buyer.
Sell
As to reservation of title to the subject
property OBJECTS OF SALE
In both cases the seller may reserve the Requisites:
title to the subject property until 1. THINGS:
fulfillment of the suspensive condition i.e. a) determinate or determinable (Arts.
full payment of the price 1458, 1460)
As to effect of fulfillment of suspensive b) lawful (Arts 1347, 1409 [1,4]
condition c) should not be impossible (Art.
1. Upon fulfillment of 1. Upon 1348) e.g. must be within the
the suspensive fulfillment of the commerce of man
condition, the suspensive 2. RIGHTS – must be transmissible
contract of sale is condition, which Exceptions:
thereby perfected, is the full -future inheritance
such that if there had payment of the
been previous delivery purchase price, - service
of the subject ownership will
property to the buyer, not automatically Emptio rei Emptio spei
ownership thereto transfer to the speratae
automatically buyer although 1. Sale of an expected 1. Sale of a mere
transfers to the the property may thing hope or expectancy
buyer by operation have been that the thing will
of law without any previously come to existence;
further act by the delivered to him. Sale of the hope
seller. The prospective itself
seller still has 2. Sale is subject to 2. Sale produces
to convey title the condition that effect even if the
to the the thing will thing does not
prospective exist; if it does come into
buyer by not, there is no existence, unless it
entering into a contract is a vain hope
contract of 3. The uncertainty is 3. The uncertainty
absolute sale. with regard to the is with regard to
quantity and quality of the existence of the
the thing and not the thing
As to effect of sale of the subject existence of the thing
property to 3rd persons 4. Object is a future 4. Object is a
thing present thing which
is the hope or
expectancy
NOTE: In case of doubt the presumption
is in favor of emptio rei speratae which is
CIVIL LAW COMMITTEE
 CHAIRPERSON: Romuald Padilla  ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad  EDP: Alnaiza Hassiman, Dorothy Gayon
Stephen
Purganan(LTD),
115
more in keeping with the commutative 1. Buyer receives the 1. Agent receives
character of the contract goods as owner the goods as goods
of the principal who
Goods which may be Object of Sale retains his ownership
a. Existing goods – goods owned or over them
2. Buyer pays the 2. Agent delivers
possessed by the seller. price the price which in
b. Future goods – goods to be turn he got from his
manufactured, raised or acquired by buyer
the seller after the perfection of the 3. Buyer, as a 3. Agent can return
contract. general rule, cannot the goods in case he
NOTES: return the object is unable to sell the
sold same to a third
 A sale of future goods is valid only as
person
an executory contract to be fulfilled
4. Seller warrants 4. Agent makes no
by the acquisition and delivery of the thing sold warranty for which
goods specified. he assumes personal
 While there can be sale of future liability as long as he
property, there can generally be no acts within his
donation of future property (Article authority and in the
name of the seller
751 Civil Code)
5. Buyer can deal 5. Agent in dealing
 Future inheritance cannot be sold. with the thing sold with the thing
 A contract of sale or purchase of as he pleases being received, must act
goods to be delivered at a future the owner and is bound
according to the
time, if entered into without the instructions of the
intention of having any goods pass principal
from one party to another, but with
an understanding that at the
appointed time, the purchaser is Contract for Piece
Sale
merely to receive or pay the of Work
difference between the contract and 1. The thing 1. The thing
transferred is one transferred is one
the market prices, is illegal. Such not in existence and which would have
contract falls under the definition of which never would existed and would
“futures” in which the parties merely have existed but for have been the
gamble on the rise or fall in prices the order of the subject of sale to
and is declared null and void by law. party desiring to some other person,
(Art. 2018, NCC) (Onapal Phil. acquire it even if the order
Commodities, Inc. vs. CA [1993]) had not been given
2. The services 2. The primary
dominate the objective of the
 Instances when the Civil Code
contract even contract is a sale of
recognizes sale of things not though there is a the manufactured
actually or already owned by the sale of goods item; it is a sale of
seller at the time of the sale: involved goods even though
1. Sale of a thing having potential the item is
existence (Article 1461) manufactured by
labor furnished by
2. Sale of future goods (Article 1462) the seller and upon
3. Contract for the delivery at a certain previous order of
price of an article which the vendor the customer
in the ordinary course of the business 3. Not within the 3. Within the
manufactures or procures for the Statute of Frauds Statute of Frauds
general market, whether the same is
on hand at the time or not (Article
1467)
Sale Agency to sell Rules to determine if the contract is

one of Sale or Piece of work:
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
116
a. If ordered in the ordinary course of object the acquisition of the

business – sale object offered in lieu
of the original credit
b. If manufactured specially for the 4. Greater freedom 4. Less Freedom in
customer and upon his special order, in determining determining the
and not for the market – piece of the price price
work
5. Buyer still has to 5. The payment is
SCHOOLS OF THOUGHT: pay the price received by the
a) Massachusetts rule: If specifically debtor before
done at the order of another, this the contract is
is a contract for a piece of work. perfected.
(Philippine application)
b) New York rule: If thing already PRICE
exists-SALE; if not-WORK  The sum stipulated as the equivalent
c) English rule: If material is more of the thing sold and also every
valuable-SALE; if skill is more incident taken into consideration for
valuable-WORK the fixing of the price, put to the
debit of the vendee and agreed to by
BARTER him.
 contract whereby one of the parties
binds himself to give one thing in  Requisites:
consideration of the other's promise 1. Certainty or
to give another thing. ascertainable at the time of
NOTE: The only point difference perfection
between contract of sale and barter is in 2. Real, not fictitious
the element which is present in sale but 3. In some cases, must not
not in barter, namely: price certain in be grossly inferior to the value of
money or its equivalent the thing sold.
4. Paid in money or its
NOTE: If the consideration is partly in equivalent
money and partly in another thing,
determine: Certainty
a. The manifest intention of  It is not necessary that the certainty
the parties of the price be actual or determined
b. If the intent is not clear, at the time of the execution of the
apply the following rules: contract. The price is certain in the
1. If the thing is more following cases:
valuable than money – 1. If the parties have fixed
barter or agreed upon a definite
2. If the money and the amount;
thing are of equal value – NOTE: The fixing of the price can
sale never be left to the discretion of one
3. If the thing is less of the contracting parties. However
valuable than money – sale if the price fixed by one of the
parties is accepted by the other, the
Sale Dation in Payment sale is perfected.
1. No pre- 1. Pre-existing credit 2. If it be certain with
existing credit reference to another thing
2. Obligations are 2. Obligations are certain
created extinguished 3. If the determination of
3. Consideration on 3. Consideration of
the part of the seller the debtor is the
the price is left to the judgment
is the price; on the extinguishment of of a specified person or persons
part of the buyer is the debt; on the part even before such determination
the acquisition of the of the creditor, it is
CIVIL LAW COMMITTEE

Stephen
Purganan(LTD),
117
4. In the cases provided  GENERAL RULE: Mere inadequacy of the

under Art. 1472 NCC price is not a sufficient ground for the
cancellation of the sale if property is
real.
Effect when the price is fixed by the

third person designated:  EXCEPTIONS:
 GENERAL RULE: Price fixed by a third a. Where the price is so low
person designated by the parties is as to be shocking to the moral
binding upon them. conscience, judicial sale of
 EXCEPTIONS: personal property will be set
1. When the third person aside
acts in bad faith or by mistake b. In the event of a resale,
2. When the third person a better price can be obtained
disregards the specific
instructions or the procedure NOTE: The validity of the sale is not
marked out by the parties necessarily affected where the law gives
to the owner the right to redeem, upon
Effect when the price is not fixed by the theory that the lesser the price, the
the third person designated: easier it is for the owner to effect
1. If the third person redemption.
refuses or cannot fix the price,
the contract shall become Effect where price is simulated
ineffective, unless the parties 1. If it is shown to have been in reality
subsequently agree upon the a donation or some other act or
price contract
2. If the third person is  The sale is void but the
prevented from fixing the price act or contract may be valid as a
by the fault of the seller or donation
buyer, the party not in fault may 2. If not
obtain redress against the party  The contract is void and
in fault inexistent
Effect of Gross Inadequacy of Price: Effect of Failure to determine price:
1. Voluntary sales 1. Where contract executory
 GENERAL RULE: Mere inadequacy of the  The contract is
price does not affect validity of the sale. inefficacious
 A valuable consideration, however 2. Where the thing has been delivered
small or nominal, if given or to and appropriated by the buyer
stipulated in good faith is, in the  The buyer must pay a reasonable
absence of fraud, sufficient. price therefore
(Rodriguez vs. CA, 207 SCRA 553)
 Future inheritance cannot be sold. Reasonable price – generally the market
price at the time and place fixed by the
 EXCEPTIONS: contract or by law for the delivery of the
a. Where low price indicates vice of goods
consent, sale may be annulled; or
contract is presumed to be an PERFECTION OF SALE
equitable mortgage  GENERAL RULE: It is perfected at the
b. Where the price is so low as to be moment there is meeting of the minds
“shocking to conscience”, sale upon a determinate thing (object), and a
may be set aside. certain price (consideration), even if
neither is delivered. A choice between
2. Involuntary or Forced sales rescission and fulfilment, with damages in
either case)
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
118
 Nonpayment only creates a right

NOTE: Sale is a consensual contract; to demand payment or to rescind
Hence, delivery and payment are not the contract, or to criminal
essential for its perfection prosecution in the case of
 EXCEPTION: When the sale is subject to bouncing checks. (EDCA
a suspensive condition by virtue of law or Publishing and Distributing Corp.
stipulation. vs. Santos, 184 SCRA 614)
* The terms and conditions of payment
are merely accidental, not essential  EXCEPTIONS:
elements of the contract of sale except
1. Contrary stipulation or Pactum
where the partied themselves stipulate
reservati dominii (contractual
that in addition to the subject-matter
reservation of title) – a stipulation,
and the price, they are essential or
usually in sales by installment,
material to the contract.
whereby, despite delivery of the
property sold, ownership remains
Requirements for perfection with the seller until full payment of
a. When parties are face to face
the price is made.
 When an offer is 2. Contract to sell
accepted without conditions or
qualifications 3. Contract of insurance – a perfected
NOTES: contract of sale, even without
delivery, vests in the vendee an
 A conditional acceptance is a equitable title, an existing interest
counter-offer over the goods sufficient to be the
 when negotiated thru phone it is subject of insurance
as if it is negotiated face to face
b. When contract is thru RULES GOVERNING AUCTION SALES
correspondence or thru telegram 1. Sales of separate lots by auction are
 When the offeror receives or has separate contracts of sale.
knowledge of the acceptance by the 2. Sale is perfected by the fall of the
offeree hammer
NOTE: If the buyer has already 3. Seller has the right to bid in the
accepted but the seller does not auction, provided:
know yet of the acceptance, the a) such right was reserved
seller may still withdraw b) notice was given that the sale was
c. When a sale is subject to a subject to a right to bid on behalf of the
suspensive condition seller
 From the moment the condition c) right is not prohibited by law or by
is fulfilled stipulation
4. Advertisements for bidders are simply
TRANSFER OF OWNERSHIP invitations to make proposals, and the
 GENERAL RULE: While a contract of sale advertiser is not bound to accept the
is consensual, ownership of the thing sold highest or lowest bidder, unless the
is acquired only upon its delivery, actual contrary appears.
or constructive, to the buyer. (Daus vs.
Sps. De Leon, 16 June 2003) EFFECT OF PROMISE TREATED UNDER
ART. 1479 Civil Code:
 This is true even if the purchase
Accepted unilateral promise to sell or
has been made on credit.
buy
Payment of the purchase price is
not essential to the transfer of  Only one makes the promise, this
ownership, as long as the promise is accepted by the other.
property sold has been delivered. Example: A promises to sell to B, B
(Sampaguita Pictures, Inc vs. accepts the promise, but does not in
Jalwindor Manufacturers, Inc. 93 turn promise to buy.
SCRA 420)
CIVIL LAW COMMITTEE

Stephen
Purganan(LTD),
119
 does not bind the promissor even if supported by a consideration, the

accepted and may be withdrawn moment it was accepted, a perfected
anytime. contract of sale resulted, applying Art.
NOTE: Pending notice of its withdrawal, 1324 of the NCC. In view of the ruling of
the accepted promise partakes the nature the Supreme Court, the only importance
of an offer to sell which if accepted, of the consideration for an option is that
results in a perfected contract of sale the option cannot be withdrawn by the
(Sanchez vs. Rigos 45 SCRA3 68). In other grantor after acceptance.
words, if the acceptance is made before * In an option to buy, the party who has
withdrawal, it constitutes a binding an option may validly and effectively
contract of sale although the option is exercise his right by merely notifying the
given without consideration. owner of the former’s decision to buy and
expressing his readiness to pay the
 if the promise is supported by a
stipulated price.
consideration distinct and separate
from the price (option money), its
Right of First Refusal
acceptance will give rise to a
perfected contract.  It is a right of first priority all things
and conditions being equal; there
Bilateral promise to buy and sell should be identity of the terms and
conditions to be offered to the
 One party accepts the other’s optionee and all other prospective
promise to buy and the latter, the
buyers, with optionee to enjoy the
former’s promise to sell a
right of first priority. A deed of sale
determinate thing for a price certain executed in favor of a third party
 it is reciprocally demandable who cannot be deemed a purchaser in
 It requires no consideration distinct good faith, and which is in violation
from the selling price of the of the right of first refusal
NOTE: this is as good as a perfected granted to the optionee is NOT
sale. No title of dominion is voidable under the Statute of Frauds,
transferred as yet, the parties being such contract is valid BUT rescissible
given only the right to demand under Article 1380 to 1381(3) of the
fulfillment or damages. New Civil Code (Guzman Bocaling &
Co. vs. Bonnavie; Riviera Filipina, Inc
Policitation vs. CA et.al. GR No. 117355, April 5,
 An unaccepted unilateral promise to 2002).
buy or sell. Even if accepted by the  The basis of the right of first refusal
other party, it does not bind the must be the current offer to sell of
promissor and maybe withdrawn the seller or offer to purchase of any
anytime. This is a mere offer, and has prospective buyer. Only after the
not yet been converted into a optionee fails to exercise its right of
contract. first priority under the same terms
and within the period contemplated
Option contract could the owner validly offer to sell
 A contract granting a privilege in one the property to a third person, again,
person, for which he has paid a under the same terms as offered to
consideration, which gives him the the optionee (Paranaque Kings
right to buy certain merchandise, at Enterprises, Inc. vs. CA GR No.
111538, February 26, 1997)
anytime within the agreed period, at
a fixed price.  The lessee’s right of first option to
 An option without consideration is buy the leased property in case of its
sale is but a part of the bigger right
void and the effect is the same as if
there was no option to lease the said property from the
* However, in Sanchez vs. Rigos (1972), lessor. The option was given to the
even though the option was not lessee because she was the lessee of
the subject property. It was a
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
120
component of the consideration of  GENERAL RULE: Who bears the risk

the lease. The option was by no of loss is governed by the stipulations
means an independent right which in the contract
can be exercised by the lessee. If the  In the absence of any
lessee is barred by the contract from stipulation:
assigning her right to lease the First view:
subject property to any other party, Buyer bears the loss as an exception
the lessee is similarly barred to assign to the rule of res perit domino.
her first option to buy the leased EXCEPTIONS:
property to another. (Bangayan et.al 1. when object sold consists
vs. CA and Lim GR No.123581, August of fungible goods for a price fixed
29, 1997) according to weight, number or
measure
Earnest money – or “ARRAS” is something 2. seller is guilty of fraud,
of value to show that the buyer was really negligence, default or violation
in earnest, and given to the seller to bind of contractual terms
the bargain. It is considered as: 3. object sold is generic
a) part of the purchase price (Civil Code of the Philippines, Paras)
b) proof of perfection of the NOTE: This view conforms with
contract Manresa’s view. Buyer would have
*It shall be deducted from the total price. been the one to profit from the thing
had it not been lost or destroyed.
Earnest money Option money
1. Title passes to 1. Ownership is Contrary view:
the buyer upon reserved to the seller Where the ownership is transferred
delivery of the and is not to pass by delivery, as in our code, the
thing sold until full payment application of the axiom res perit
2. In case of 2. In case of domino, imposes the risk of loss upon
non-payment, an non-payment, there the vendor; hence, if the thing is lost
action for specific can be action for
by fortuitous event before delivery,
performance or for specific performance
rescission can be the vendor suffers the loss and
filed by the cannot recover the price from the
injured party vendee (Commentaries and
3. Part of the 3. Money given as a Jurisprudence on the Civil Code of
purchase price distinct consideration the Philippines, Tolentino)
for an option
contract d. The thing is lost after delivery:
4. When given, the 4. The would-be Buyer bears the loss.
buyer is bound to buyer is not required
pay the balance to buy
Question: If one does not comply, the
5. Given when 5. Applies to a sale
other need not pay?
there is already a not yet perfected
sale Answer: True. But this only applies when
the seller is able to deliver but does not.
RULES ON RISK OF LOSS AND
DETERIORATION: EFFECT OF LOSS AT THE TIME OF SALE:
a. The thing sold is lost before a. Thing entirely lost at the time of
perfection: Seller bears the loss. perfection: Contract is void and
b. The thing sold is lost at the time of inexistent
perfection: Contract is void or b. Thing only partially lost: Vendee
inexistent. may elect between withdrawing from
c. The thing sold is lost after the contract or demanding the
perfection, but before delivery: remaining part, paying its
proportionate price
CIVIL LAW COMMITTEE

Stephen
Purganan(LTD),
121
Sale by description 3. Sale of property not to be

 A sale where a seller sells things as performed within a year from the
being of a certain kind, buyer merely date thereof
relying on the seller’s representations 4. “Applicable statute”
or descriptions. requires that the contract of sale
be in a certain form
 There is warranty that the thing sold NOTE: Statute of Frauds is applicable
corresponds to the representations or
only to executory contracts and not to
descriptions.
contracts which are totally or partially
performed.
Sale by sample
 A sale where a small quantity of a
commodity is exhibited by the seller
as a fair specimen of the bulk, which CAPACITY TO BUY OR SELL
is not present and as to which there  GENERAL RULE: All persons who can
is no opportunity to inspect or bind themselves also have legal capacity
examine. to buy and sell.
NOTE: The mere exhibition of the  EXCEPTIONS:
sample does not necessarily make it a 1. Absolute incapacity
sale by sample. This exhibition must (minors, demented persons,
have been the sole basis or imbeciles, deaf and dumb,
inducement of the sale. prodigals, civil interdictees) -
 There is warranty that the bulk of the party cannot bind themselves in
commodity will correspond in kind, any case.
quality, and character with the 2. Relative incapacity –
sample exhibited. incapacity exists only with
reference to certain persons or a
NOTE: In a sale by sample and by certain class of property
description, there is a two-fold warranty.
Relative Incapacity
RIGHTS OF BUYER: A. Husband and wife (Art. 1490):
1) Return the thing and recover the Generally, a sale by one spouse to
money paid, or another is void.
2) Retain the thing and sue for the breach  The husband and wife cannot sell
of warranty. property to each other except:
1. When a separation of
PURCHASE BY MINORS: Contract is property was agreed upon by the
generally voidable but in case of spouses
necessaries, “where necessaries are sold 2. When there has been a
and delivered to a minor or other person judicial separation of property
without capacity to act, he must pay a under Article 134 and 135 of the
reasonable price therefore. Necessaries Family Code
are those in Art. 290.”
B. Incapacity by reason of relation to
FORMALITIES OF CONTRACT OF SALE property (Art. 1491)
 GENERAL RULE: Sale is a consensual
contract and is perfected by mere
 The following persons cannot acquire
property by purchase, even at a
consent.
public auction, either in person or
 EXCEPTIONS: In order to be enforceable through the mediation of another:
by action, the following must be in
(GAEP-JO)
writing:
1. the guardian, with respect to the
1. Sale of personal property
property of his ward;
at a price not less than P500
2. agents, with respect to the
2. Sale of real property or property whose administration or
an interest therein sale may have been entrusted to
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
122
them, unless the consent of the administrator to sell. The sale

principal has been given; was indubitably illegal, irregular
3. executor or administrator, with and fictitious, and the court’s
respect to the property of the approval of the assailed
estate under administration; compromise agreement violated
4. public officers and employees, Article 1491 and cannot work to
with respect to the properties of ratify a fictitious contract which
the government, its political is non-existent and void from
subdivisions, or GOCCs, that are the very beginning
entrusted to them; b) With respect to nos. 4 to
5. judges, justices, prosecuting 6: the sale is NULL AND VOID.
attorneys, clerks of courts, etc., Reason: violation of public policy
with respect to the property in cannot be subject to ratification
custogia legis; and
OBLIGATIONS OF THE VENDOR: (WPD-
6. any other person specially TT)
disqualified by law. 1. Transfer ownership (cannot be
Examples of persons especially waived)
disqualified by law: 2. Deliver the thing sold (cannot be
a. Aliens who are disqualified to waived)
purchase agricultural lands 3. Warrant against eviction and against
b. An unpaid seller having a right hidden defects (can be waived or
of lien or having stopped the modified since warranty is not an
goods in transitu, who is essential element of the contract of
prohibited from buying the goods sale)
either directly or indirectly in the 4. Take care of the thing, pending
resale of the same, at public or delivery, with proper diligence
private sale which he may make (Article 1163)
c. The officer holding the 5. Pay for the expenses of the deed of
execution, or his deputy. sale, unless there is stipulation to the
NOTE: While those disqualified contrary
under Arts. 1490 and 1491 may
not become lessees (Art. 1646), DELIVERY
still aliens may become lessees  Is a mode of acquiring ownership, as
even if they cannot buy lands.
a consequence of certain contracts
such as sale, by virtue of which,
 Effect of violation: actually or constructively, the object
a) With respect to nos. 1 to is placed in the control and
3: the sale is VOIDABLE. possession of the vendee.
Reason: only private rights,
which are subject to ratification
 Delivery of the thing together
are violated
with the payment of the price,
NOTE: In the case of Lao vs.
marks the consummation of the
Genato, 137 SCRA 77, the
contract of sale(PNB vs. Ling, 69
Supreme Court found that the
Phil. 611)
sale by the administrator of
certain properties of the estate  In all forms of delivery, it is
in order to settle the existing necessary that the act of delivery
obligations of the estate was be coupled with the intention of
made to the administrator’s son delivering the thing. The act
for a grossly low price. without the intention is
Furthermore, the said sale was insufficient. (Norkis Distributor,
not submitted to the probate Inc. vs. CA, 195 SCRA 694)
court for approval as mandated
by the order authorizing the  Kinds:
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1. Actual or real – placing the thing 2. If no period for payment has been
under the control and possession of fixed in the contract
the buyer. 3. Even if a period for payment has been
2. Legal or constructive – delivery is fixed in the contract, if the vendee
represented by other signs or acts has lost the right to make use of the
indicative thereof same.
a. delivery by the execution
of a public instrument. Sale or return
NOTE: Gives rise only to a prima  Property is sold, but the buyer, who
facie presumption of delivery which is becomes the owner of the property
destroyed when actual delivery is not on delivery, has the option to return
effected because of a legal the same to the seller instead of
impediment (Ten Forty Realty vs. paying the price.
Cruz, 10 Sept. 2003)
b. traditio symbolica - to
effect delivery, the parties make NOTES:
use of a token or symbol to  It is a kind of sale with a
represent the thing delivered condition subsequent.
c. traditio longa manu –  The buyer must comply with the
seller pointing out to the buyer express or implied conditions
the things which are transferred, attached to the return privilege;
which at the time must be in otherwise, the sale becomes
sight. absolute.
d. traditio brevi manu –  Buyer, being the owner, bears
buyer simply continues in the risk of loss
possession of the thing but under
title of ownership. Sale on trial, approval, or satisfaction
e. traditio constitutum
 A contract in the nature of an option
possessorium – seller continues in
to purchase if the goods prove to be
possession but under a different
satisfactory, the approval of the
title other than ownership.
buyer being a condition precedent.
3. Quasi-tradition – delivery of rights,
credits or incorporeal property, made
by:  Rules:
a. placing titles of ownership in the 1. title remains in the seller
hands of buyer 2. risk of loss remains with seller
b. allowing buyer to make use of except when the buyer is at fault or
rights has agreed to bear the loss
4. Tradition by operation of law 3. buyer must give goods a trial, except
where it is evident that it cannot
Constructive delivery requires three perform the work
things before ownership may be 4. period within which buyer must
transferred: signify his acceptance runs only when
1. The seller must have control over the all the parts essential for the
thing operation of the object have been
2. The buyer must be put under control delivered.
3. There must be the intention to 5. if it is stipulated that a third person
deliver the thing for purposes of must satisfy approval or satisfaction,
ownership the provision is valid, but the third
person must be in good faith. If
When is the vendor not bound to refusal to accept is not justified,
deliver the thing sold: seller may still sue.
1. If the vendee has not paid him the 6. Generally, the sale and delivery to a
price buyer who is an expert on the object
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purchased is not a sale on approval, 1.Owner is estopped or precluded

trial, or satisfaction. by his conduct
2.When sale is made by the
Sale or return Sale on Trial registered owner or apparent
1. Subject to a 1. Subject to a owner in accordance with
resolutory condition suspensive condition recording or registration laws
2. Depends entirely 2. Depends on the 3.Sales sanctioned by judicial or
on the will of the character or quality of
buyer the goods
statutory authority
4.Purchases in a merchant's
3. Ownership passes 3. Ownership remains
to the buyer on in the seller until buyer store, fairs or markets
delivery and signifies his approval or 5. When a person who is not
subsequent return acceptance to the the owner sells and delivers a
reverts ownership in seller thing, subsequently acquires title
the seller
thereto (Art. 1434)
4. Risk of loss or 4. Risk of loss remains 6. When the seller has a
injury rests upon with the seller voidable title which has not been
the buyer
avoided at the time of the sale
Instances where Seller is still the Owner (Art. 1506)
despite Delivery: * “Unlawful deprivation” is no longer
1. Sale on trial, approval or satisfaction limited to a criminal act. There is
2. Contrary intention appears by the Unlawful Deprivation where there is no
term of the contract; valid transmission of ownership.
3. Implied reservation of ownership
(Article 1503) Place of delivery of goods
a. If under the bill of lading, the 1. Where there is an agreement, place
goods are deliverable to seller or of delivery is that agreed upon
agent or their order; 2. Where there is no agreement, place
b. If the bill of lading, although of delivery determined by usage of
stating that the goods are to be trade
delivered to the buyer or his 3. Where there is no agreement and no
agent, is kept by the seller or his prevalent usage, place of delivery is
agent; the seller’s place
a. When the buyer, although the 4. In any other case, place of delivery is
goods are deliverable to order of the seller’s residence
buyer, and although the bill of 5. In case of specific goods, which to
lading is given to him, does not the knowledge of the parties at the
honor the bill of exchange sent time the contract was made were in
along with it. some other place, that place is the
place of delivery, in the absence of
Transfer of ownership where goods sold agreement or usage of trade to the
delivered to carrier contrary
General Rule: Delivery to the carrier is
deemed to be delivery to the buyer Time of delivery of goods
Exception: Where the right of possession 1. Stipulated time
or ownership of specific goods sold is 2. In the absence thereof, within a
reserved reasonable time
SALE OF GOODS BY A NON-OWNER NEGOTIABLE DOCUMENT OF TITLE (NDT)

 GENERAL RULE: Buyer acquires no title  A document of title in which it is
even if in good faith and for value under stated that the goods referred to
the maxim Nemo dat quid non habet therein will be delivered to the
(“You cannot give what you do not bearer, or to the order of any person
have”). named in such document.
 EXCEPTIONS: (SMERVS)  May be negotiated by delivery or
indorsement.
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The document is negotiable if: RULES WHEN QUANTITY IS LESS THAN

1. The goods are deliverable to the AGREED UPON:
bearer; or 1. Buyer may reject; or
2. If the goods are deliverable to the 2. Buyer may accept what
order of a certain person has been delivered, at the
contract rate
Persons who may negotiate NDT:
1. The owner; or RULES WHEN QUANTITY IS MORE THAN
2. Any person to whom the possession or AGREED UPON:
custody thereof has been entrusted 1. Buyer may reject all; or
by the owner, if by the terms of the 2. Buyer may accept the
document the bailee issuing the goods agreed upon and reject the
document undertakes to deliver the rest; or
goods to the order of the person to 3. Buyer may accept all and
whom the possession or custody of must pay for them at the
the document has been entrusted or contract rate
if at the time of such entrusting the NOTE: Acceptance, even if not express
document in such form that it may be may be implied when the buyer exercises
negotiated by delivery. acts of ownership over the excess goods.
* If the holder of a negotiable document RULES WHEN GOODS MIXED WITH

of title (deliverable to bearer) entrusts GOODS OF DIFFERENT DESCRIPTION:
the document to a friend for deposit, but  Buyer may accept the goods which
the friend betrays the trust and are in accordance with the contract
negotiates the document by delivering it and reject the rest
to another who is in good faith, the said
owner cannot impugn the validity of the NOTE: If the subject matter is indivisible,
negotiation. As between two innocent in case of delivery of larger quantity of
persons, he who made the loss possible goods or of mixed goods, the buyer may
shall bear the loss, without prejudice to reject the whole of the goods
his right to recover from the wrongdoer.
DELIVERY TO THE CARRIER
RIGHTS OF PERSON TO WHOM  GENERAL RULE: Where the seller is
DOCUMENT HAS BEEN NEGOTIATED: authorized or required to send the goods
1) The title of the person negotiating the to the buyer, delivery to the carrier is
document, over the goods covered by the delivery to the buyer.
document;
 EXCEPTIONS:
2) The title of the person (depositor or
1. When a contrary
owner) to whose order by the terms of
intention appears
the document the goods were to be
2. Implied reservation of
delivered, over such goods;
ownership under pars. 1,2,3 of
3) The direct obligation of the bailee to
Art. 1503
hold possession of the goods for him, as if
the bailee had contracted to him directly
NOTE; Mere transferee does not acquire  Kinds of Delivery to the Carrier
directly the obligation of the bailee (in a. C.I.F. (cost, insurance,
Art. 1513). To acquire it, he must notify freight) – signify that the price
the bailee. fixed covers not only the costs of
the goods, but the expense of the
WHO CAN DEFEAT RIGHTS OF freight and the insurance to be
TRANSFEREE: paid by the seller
1. Creditor of transferor b. F.O.B. (free on board) –
2. Transferor goods are to be delivered free of
3. Subsequent purchaser expense to the buyer to the point
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where they are F.O.B. The point  Vendor is obligated to deliver all the
of F.O.B., either at the point of land included within the boundaries,
shipment or the point of regardless of whether the real area
destination, determines when the should be greater or smaller
ownership passes.
NOTE: the terms C.I.F. and F.O.B.
 Ordinarily, there can be no rescission
or reduction or increase whether the
merely make rules of presumption
area be greater or lesser, unless
c. C.O.D. (collect on there is gross mistake.
delivery) – the carrier acts for NOTE: The Civil Code presumes that the
the seller in collecting the purchaser had in mind a particular piece
purchase price, which the buyer of land and that he ascertained its area
must pay to obtain possession of and quality before the contract of sale
the goods. was perfected. If he did not do so, or if
having done so he made no objection and
SELLER’S DUTY AFTER DELIVERY TO consented to the transaction, he can
CARRIER blame no one but himself (Teran vs.
1. To enter on behalf of buyer into such Villanueva Viuda de Riosa 56 Phil 677).
contract reasonable under the What is important is the delivery
circumstances of all the land included in the boundaries.
2. To give notice to buyer regarding
necessity of insuring the goods DOUBLE SALE (Art. 1544)
PAYMENT OF THE PURCHASE PRICE  Requisites: VOCS
 GENERAL RULE: The seller is not bound two or more transactions must constitute
to deliver the thing sold unless the valid sales;
purchase price has been paid. they must pertain exactly to the same
object or subject matter;
 EXCEPTION: The seller is bound to
they must be bought from the same or
deliver even if the price has not been
immediate seller; AND
paid, if a period of payment has been
two or more buyers who are at odds over
fixed.
the rightful ownership of the subject
matter must represent conflicting
Sale of Real Property by Unit
interests.
 Entire area stated in the contract
must be delivered  Rules of preference:
 When entire area could not be 1. Personal Property
delivered, vendee may: a. first possessor in good faith
1. Enforce the contract with 2. Real Property
the corresponding decrease in a. first registrant in good
price faith
2. Rescind the sale: b. first possessor in good
a. If the lack in area is at faith
least 1/10 than that stated or c. person with oldest title in
stipulated good faith
b. If the deficiency in quality
specified in the contract NOTES:
exceeds 1/10 of the price  Purchaser in Good Faith – one who
agreed upon buys the property of another without
c. If the vendee would not have notice that some other person has a
bought the immovable had he right to or interest in such property
known of its smaller area of and pays a full and fair price for the
inferior quality irrespective same at the time of such purchase or
of the extent of lack of area before he has notice of the claim or
or quality interest of some other person in the
property (Veloso vs. CA).
Sale for a Lump Sum (A Cuerpo Cierto)
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 Registration requires actual perfection of a contract and a condition

recording; if the property was never imposed merely on the performance of an
really registered as when the obligation. The failure to comply with the
registrar forgot to do so although he first condition would prevent the juridical
has been handed the document, relation itself from coming into
there is no registration. existence, while failure to comply with
the second merely gives the option either
 Possession is either actual or
to refuse or proceed with the sale or to
constructive since the law made no
waive the condition.
distinction (Sanchez vs. Ramos 40
Phil614)
 The mere fact that the second
 Possession in Art.1544 includes not
contract of sale was perfected in
only material but also symbolic good faith is not sufficient if, before
possession (Ten Forty Realty vs. title passes, the second vendee
Cruz, 10 Sept. 2003.)
acquires knowledge of the first
 Title means title because of sale, and transaction. The good faith or
not any other title or mode of innocence of the posterior vendee
acquiring property (Lichauco vs. needs to continue until his contract
Berenguer 39 Phil 642) ripens into ownership by tradition or
 Hernandez vs. Katigbak Rule: When registration. (Palanca vs. Dir. Of
the property sold on execution is Lands, 46 PHIL 149)
registered under Torrens, registration
is the operative act that gives validity
to the transfer or creates a lien on EFFECT IF BUYER HAS ALREADY SOLD
the land, and a purchaser on THE GOODS:
execution sale is not required to go General Rule: The unpaid seller’s right to
behind the registry to determine the lien or stoppage in transitu remains even
conditions of the property. if buyer has sold the goods.
Exception: Where the purchaser had Except:
knowledge, prior to or at the time of 1) When the seller has given consent
the levy, of such previous lien or thereto, or
encumbrance, his knowledge is 2) When the buyer is a purchaser in good
equivalent to registration. faith for value of a negotiable document
of title.
CONDITION
 Effect of Non-fulfillment of Condition WARRANTY
1. If the obligation of either  a statement or representation made
party is subject to any condition
by the seller of goods,
and such condition is not
fulfilled, such party may either: contemporaneously and as a part of
the contract of sale, having reference
a. refuse to proceed with
to the character, quality, or title of
the contract
b. proceed with the the goods, and by which he promises
or undertakes to insure that certain
contract , waiving the
performance of the facts are or shall be as he then
represents.
condition.
2. If the condition is in the
nature of a promise that it should  Kinds:
happen, the non-performance of 1. EXPRESS – any affirmation of fact or
such condition may be treated by any promise by the seller relating to
the other party as breach of the thing if the natural tendency of
warranty. such affirmation or promise is to
induce the buyer to purchase the
NOTE: A distinction must be made same and if the buyer purchases the
between a condition imposed on the thing relying thereon
CIVIL LAW COMMITTEE
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at the instance of the vendee;

NOTE: A mere expression of opinion, no AND
matter how positively asserted, does not 5. no waiver of warranty by
import a warranty unless the seller is an the vendee.
expert and his opinion was relied upon by
the buyer.  Vendor's liability shall consist of:
1. Total eviction: (VICED)
2. IMPLIED - that which the law derives a. Value of the thing at the
by implication or inference from the time of eviction;
nature of the transaction or the
relative situation or circumstances of b. Income or fruits if he has
the parties, irrespective of any been ordered to deliver them to
intention of the seller to create it. the party who won the suit;
a. Warranty against eviction c. Costs of the suit;
b. Warranty against hidden d. Expenses of the contract;
defects AND
c. Warranty as to Fitness e. Damages and interests if
and Merchantability the sale was in bad faith.
NOTE: An implied warranty is a natural,
not an essential element of a contract, 2. Partial eviction:
and is deemed incorporated in the a. to enforce vendor’s
contract of sale. It may however, be liability for eviction (VICED);
waived or modified by express
OR
stipulation. (De Leon) b. to demand rescission of
There is no implied warranty as to the contract.
condition, adaptation, fitness or
suitability or the quality of an article sold Question: Why is rescission not a remedy
as a second-hand article. But such in case of total eviction?
articles might be sold under such Answer: Rescission contemplates that the
circumstances as to raise an implied one demanding it is able to return
warranty. whatever he has received under the
* A certification issued by a vendor that a contract. Since the vendee can no longer
second-hand machine was in A-1 restore the subject-matter of the sale to
condition is an express warranty binding the vendor, rescission cannot be carried
on the vendor. (Moles vs. IAC [1989]) out.
A. Warranty against eviction * The suit for the breach can be directed
 Warranty in which the seller only against the immediate seller, not
guarantees that he has the right to sellers of the seller unless such sellers
sell the thing sold and to transfer had promised to warrant in favor of later
ownership to the buyer who shall not buyers or unless the immediate seller has
be disturbed in his legal and peaceful expressly assigned to the buyer his own
possession thereof. right to sue his own seller.
NOTE: The disturbance referred to in the
 Elements: case of eviction is a disturbance in law
1. vendee is deprived, in which requires that a person go to the
whole or in part, of the thing courts of justice claiming the thing sold,
purchased; or part thereof and invoking reasons.
2. the deprivation is by Mere trespass in fact does not give rise to
virtue of a final judgment; the application of the doctrine of
3. the judgment is based on eviction.
a prior right to the sale or an act
imputable to the vendor;  Vendor’s liability is waivable but any
4. the vendor was stipulation exempting the vendor
summoned in the suit for eviction from the obligation to answer for
CIVIL LAW COMMITTEE
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eviction shall be void if he acted in 3. it must Exist at the time of the

bad faith. sale;
 Kinds of Waiver: 4. vendee must give Notice of the
a. Consciente – voluntarily defect to the vendor within a
made by the vendee without reasonable time;
the knowledge and 5. action for rescission or reduction
assumption of the risks of of price must be brought within
eviction the proper Period (within 6 mos.
NOTE: vendor shall pay only the from delivery of the thing or 40
value which the thing sold had at days from date of delivery in case
the time of eviction of animals); and
b. Intencionada – made by the 6. no Waiver of the warranty.
vendee with knowledge of
the risks of eviction and  Remedies of the Vendee:
assumption of its a. Accion redhibitoria (rescission)
consequences b. Accion quanti minoris (reduction
EFFECT: vendor not liable of the price)
NOTE: Every waiver is presumed to be NOTES:
consciente. To consider it intencionada,  Hidden faults or defects pertain only
it must be accompanied by some to those that make the object unfit
circumstance which reveals the vendor’s for the use for which it was intended
knowledge of the risks of eviction and at the time of the sale.
his intention to submit to such
consequences.
 This warranty in Sales is applicable in
Lease (Yap vs. Tiaoqui 13Phil433)
Effect of loss of thing on account of
WHERE IMMOVABLE SOLD ENCUMBERED
WITH NON-APPARENT BURDEN hidden defects:
1. If vendor was aware of hidden
1. Right of vendee
a) recission, or defects, he shall bear the loss and
vendee shall have the right to
b) indemnity
recover: (PED)
2. When right cannot be exercised: a. the price paid
a) if the burden or servitude is b. expenses of the contract
apparent c. damages
b) if the non-apparent burden or 2. If vendor was not aware, he shall be
servitude is registered obliged to return: (PIE)
c) if vendee had knowledge of the a. price paid
encumbrance, whether it is registered or
b. interest thereon
not
3. When action must be brought c. expenses of the contract
- within ONE YEAR from the execution if paid by the vendee
of the deed of sale
Effect if the cause of loss was not the
B. Warranty against hidden defects hidden defect
 Warranty in which the seller  If the thing sold had any hidden
guarantees that the thing sold is free fault at the time of the sale, and
from any hidden faults or defects or should thereafter be lost by a (1)
any charge or encumbrance not fortuitous event OR (2) through the
declared or known to the buyer. fault of the vendee:
 the vendee may demand of the
vendor the price which he paid
 Elements: (SHENPW)
less the value of the thing at the
1. defect must be Serious or
time of its loss.
important;
NOTE: the difference between the
2. it must be Hidden;
price paid and the value of the thing
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at the time of its loss represents the 3. Sale by virtue of authority in fact or
damage suffered by the vendee and law
the amount which the vendor
enriched himself at the expense of Caveat Venditor (“Let the seller
the vendee beware”): the vendor is liable to the
 If the vendor acted in bad faith: vendee for any hidden faults or defects in
 vendor shall pay damages to the the thing sold, even though he was not
vendee aware thereof.
C. Implied Warranties of Quality Caveat Emptor (“Let the buyer

Warranty of Fitness beware”): requires the purchaser to be
aware of the supposed title of the vendor
 Warranty in which the seller and one who buys without checking the
guarantees that the thing sold is
vendor’s title takes all the risks and
reasonably fit for the known losses consequent to such failure.
particular purpose for which it was
acquired by the buyer RULES IN CASE OF SALE OF ANIMALS
1. When two or more animals have been
 GENERAL RULE: There is no implied sold at the same time and the redhibitory
warranty as to the quality or fitness for defect is in one, or some of them but not
any particular purpose of goods under a in all, the general rule is that the
contract of sale redhibition will not affect the others
 EXCEPTIONS: without it. It is immaterial whether the
1. Where the buyer, price has been fixed for a lump sum for
expressly or by implication all the animals or for a separate price for
manifests to the seller the each.
particular purpose for which the 2. No warranty against hidden defects of
goods are required animals sold at fairs or at public auctions,
2. Where the buyer relies or of livestock sold as condemned. This is
upon the seller’s skill or based on the assumption that the defects
judgment must have been clearly known to the
buyer.
Warranty of Merchantability 3. Sale of animals shall be void when:
 Warranty in which the seller a) animals sold are suffering from
guarantees, where the goods were contagious disease
bought by description, that they are b) if the use or service for which they
reasonably fit for the general purpose are acquired has been stated in the
for which they are sold contract, and they are found to be unfit
 It requires identity between what is therefor
described in the contract AND what 4. Limitation of the action: 40 days from
is tendered, in the sense that the the date of their delivery to the vendee
latter is of such quality to have some 5. Vendor shall be liable if the animal
value should die within 3 days after its
purchase if the disease which caused the
Instances where implied warranties are death existed at the time of the contract
inapplicable:
1. As is and where is sale - vendor OBLIGATIONS OF THE VENDEE:
makes no warranty as to the quality A. Principal Obligations:
or workable condition of the goods, 1. To accept delivery
and that the vendee takes them in 2. To pay the price of the thing sold in
the condition in which they are found legal tender unless another mode has
and from the place where they are been agreed upon
located. NOTE: A grace period granted the
2. Sale of second-hand articles vendee in case of failure to pay the
amount/s due is a right not an obligation.
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The grace period must not be likened to 3. If there is no stipulation as to the

an obligation, the non-payment of which, time and place of payment and
under Article 1169 of the Civil Code, delivery, the vendee is bound to pay
would still generally require judicial or at the time and place of delivery
extra-judicial demand before “default” 4. In the absence of stipulation as to the
can be said to arise (Bricktown Dev’t place of delivery, it shall be made
Corp vs. Amor Tierra Dev’t Corp. wherever the thing might be at the
57SCRA437) moment the contract was perfected
(Article 1251)
B. Other Obligations 5. If only the time for delivery has been
1. To take care of the goods without the fixed in the contract, the vendee is
obligation to return, where the goods required to pay even before the thing
are delivered to the buyer and he is delivered to him; if only the time
rightfully refuses to accept for payment has been fixed, the
vendee is entitled to delivery even
NOTES: before the price is paid by him
 The buyer in (Article 1524)
such a case is in the position of a
bailee who has had goods thrust Ways of accepting goods:
upon him without his assent. He 1. Express acceptance
has the obligation to take 2. Implied acceptance
reasonable care of the goods but
a. When buyer does an act which
nothing more can be demanded
only an owner can do,
of him. b. Failure to return goods after
 The goods in reasonable lapse of time
the buyer’s possession under
these circumstances are at the
NOTES:
seller’s risk
2. To be liable as a depositary if he  The retention of goods is strong
voluntarily constituted himself as evidence that the buyer has accepted
such ownership of the goods.
3. To pay interest for the period  Delivery and acceptance are two
between delivery of the thing and the separate and distinct acts of different
payment of the price in the following parties
cases:  Delivery is an act of the
a. Should it have been stipulated vendor and one of the vendor’s
b. Should the thing sold and obligations; vendee has nothing
delivered produce fruits or to do with the act of delivery by
income the vendor
c. Should he be in default, from the
 Acceptance is an
time of judicial or extra-judicial
demand for the payment of the obligation of the vendee;
acceptance cannot be regarded
price
as a condition to complete
delivery;
 Pertinent Rules:
 seller must comply with
1. The vendor is not required to deliver the obligation to deliver although
the thing sold until the price is paid there is no acceptance yet by the
nor the vendee to pay the price buyer
before the thing is delivered in the
absence of an agreement to the  Acceptance by the buyer may
precede actual delivery; there may
contrary (Article 1524).
2. If stipulated, the vendee is bound to be actual receipt without acceptance
and there may be acceptance without
accept delivery and to pay the price
receipt
at the time and place designated;
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 Unless otherwise agreed upon, 5. if the vendee has fully paid the price
acceptance of the goods by the buyer
does not discharge the seller from REMEDIES FOR BREACH OF CONTRACT
liability for damages or other legal A. Remedies of the seller
remedy like for breach of any 1. Action for payment of the price (Art.
promise or warranty 1595)
2. Action for damages for non-
When vendee may suspend payment of acceptance of the goods (Art. 1596)
the price: 3. Action for rescission (Art. 1597)
1. If he is disturbed in the possession or B. Remedies of the buyer
ownership of the thing bought 1. Action for specific performance (Art.
2. If he has well-grounded fear that his 1598)
possession or ownership would be 2. Action for rescission or damages for
disturbed by a vindicatory action or breach of warranty (Art 1599)
foreclosure of mortgage
A. REMEDIES OF THE SELLER FOR
NOTES: BREACH OF CONTRACT
 If the thing sold is in the possession  IN CASE OF MOVABLES
of the vendee and the price is already 1. Ordinary Remedies
in the hands of the vendor, the sale is a. Movables in General –
a consummated contract and Article Failure of the vendee to appear
1590 is no longer applicable. Article to receive delivery or, having
1590, presupposes that the price or appeared, failure to tender the
any part thereof has not yet been price at the same time, unless, a
paid and the contract is not yet longer period for its payment has
consummated. been stipulated
 Under Article 1590, the vendee has  action to rescind the sale
no cause of action for rescission (Art. 1593)
before final judgement, otherwise b. Sale of Goods –
the vendor might become a victim of  action for the price (Art.
machinations between the vendee 1595)
and the third person  action for damages (Art.
 Disturbance must be in possession 1596)
and ownership of the thing acquired 2. Unpaid Seller
 If the disturbance is caused by the  Types:
existence of non-apparent servitude, a. The seller of the goods
the remedy of the buyer is rescission, who has not been paid or to
not suspension of payment. whom the price has not been
tendered
b. The seller of the goods,
When vendee cannot suspend payment in case a bill of exchange or
of the price even if there is disturbance other negotiable instrument has
in the possession or ownership of the been received as conditional
thing sold: payment, AND the condition on
1. if the vendor gives security for the which it was received has been
return of the price in a proper case broken by reason of the dishonor
2. if it has been stipulated that of the instrument, insolvency of
notwithstanding any such the buyer or otherwise.
contingency, the vendee must make  Remedies:
payment (see Article 1548 par.3)
1. Possessory lien over the
3. if the vendor has caused the goods
disturbance or danger to cease 2. Right of stoppage in
4. if the disturbance is a mere act of transitu after he has parted with
trespass
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The document is negotiable if: RULES WHEN QUANTITY IS LESS THAN

1. The goods are deliverable to the AGREED UPON:
bearer; or 1. Buyer may reject; or
2. If the goods are deliverable to the 2. Buyer may accept what
order of a certain person has been delivered, at the
contract rate
Persons who may negotiate NDT:
1. The owner; or RULES WHEN QUANTITY IS MORE THAN
2. Any person to whom the possession or AGREED UPON:
custody thereof has been entrusted 1. Buyer may reject all; or
by the owner, if by the terms of the 2. Buyer may accept the
document the bailee issuing the goods agreed upon and reject the
document undertakes to deliver the rest; or
goods to the order of the person to 3. Buyer may accept all and
whom the possession or custody of must pay for them at the
the document has been entrusted or contract rate
if at the time of such entrusting the NOTE: Acceptance, even if not express
document in such form that it may be may be implied when the buyer exercises
negotiated by delivery. acts of ownership over the excess goods.
* If the holder of a negotiable document RULES WHEN GOODS MIXED WITH

of title (deliverable to bearer) entrusts GOODS OF DIFFERENT DESCRIPTION:
the document to a friend for deposit, but  Buyer may accept the goods which
the friend betrays the trust and are in accordance with the contract
negotiates the document by delivering it and reject the rest
to another who is in good faith, the said
owner cannot impugn the validity of the NOTE: If the subject matter is indivisible,
negotiation. As between two innocent in case of delivery of larger quantity of
persons, he who made the loss possible goods or of mixed goods, the buyer may
shall bear the loss, without prejudice to reject the whole of the goods
his right to recover from the wrongdoer.
DELIVERY TO THE CARRIER
RIGHTS OF PERSON TO WHOM GENERAL RULE: Where the seller is
DOCUMENT HAS BEEN NEGOTIATED: authorized or required to send the goods
1) The title of the person negotiating the to the buyer, delivery to the carrier is
document, over the goods covered by the delivery to the buyer.
document;
EXCEPTIONS:
2) The title of the person (depositor or 1. When a contrary
owner) to whose order by the terms of intention appears
the document the goods were to be 2. Implied reservation of
delivered, over such goods; ownership under pars. 1,2,3 of
3) The direct obligation of the bailee to
Art. 1503
hold possession of the goods for him, as if
the bailee had contracted to him directly
NOTE; Mere transferee does not acquire  Kinds of Delivery to the Carrier
directly the obligation of the bailee (in a. C.I.F. (cost, insurance,
Art. 1513). To acquire it, he must notify freight) – signify that the price
the bailee. fixed covers not only the costs of
the goods, but the expense of the
WHO CAN DEFEAT RIGHTS OF freight and the insurance to be
TRANSFEREE: paid by the seller
1. Creditor of transferor b. F.O.B. (free on board) –
2. Transferor goods are to be delivered free of
3. Subsequent purchaser expense to the buyer to the point
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where they are F.O.B. The point  Vendor is obligated to deliver all the
of F.O.B., either at the point of land included within the boundaries,
shipment or the point of regardless of whether the real area
destination, determines when the should be greater or smaller
ownership passes.
NOTE: the terms C.I.F. and F.O.B.
 Ordinarily, there can be no rescission
or reduction or increase whether the
merely make rules of presumption
area be greater or lesser, unless
c. C.O.D. (collect on there is gross mistake.
delivery) – the carrier acts for NOTE: The Civil Code presumes that the
the seller in collecting the purchaser had in mind a particular piece
purchase price, which the buyer of land and that he ascertained its area
must pay to obtain possession of and quality before the contract of sale
the goods. was perfected. If he did not do so, or if
having done so he made no objection and
SELLER’S DUTY AFTER DELIVERY TO consented to the transaction, he can
CARRIER blame no one but himself (Teran vs.
1. To enter on behalf of buyer into such Villanueva Viuda de Riosa 56 Phil 677).
contract reasonable under the What is important is the delivery
circumstances of all the land included in the boundaries.
2. To give notice to buyer regarding
necessity of insuring the goods DOUBLE SALE (Art. 1544)
PAYMENT OF THE PURCHASE PRICE  Requisites: VOCS
 GENERAL RULE: The seller is not bound two or more transactions must constitute
to deliver the thing sold unless the valid sales;
purchase price has been paid. they must pertain exactly to the same
object or subject matter;
 EXCEPTION: The seller is bound to
they must be bought from the same or
deliver even if the price has not been
immediate seller; AND
paid, if a period of payment has been
two or more buyers who are at odds over
fixed.
the rightful ownership of the subject
matter must represent conflicting
Sale of Real Property by Unit
interests.
 Entire area stated in the contract
must be delivered
 Rules of preference:
 When entire area could not be 1. Personal Property
delivered, vendee may: a. first possessor in good faith
1. Enforce the contract with 2. Real Property
the corresponding decrease in a. first registrant in good
price faith
2. Rescind the sale: b. first possessor in good
a. If the lack in area is at faith
least 1/10 than that stated or c. person with oldest title in
stipulated good faith
b. If the deficiency in quality
specified in the contract NOTES:
exceeds 1/10 of the price  Purchaser in Good Faith – one who
agreed upon buys the property of another without
c. If the vendee would not have notice that some other person has a
bought the immovable had he right to or interest in such property
known of its smaller area of and pays a full and fair price for the
inferior quality irrespective same at the time of such purchase or
of the extent of lack of area before he has notice of the claim or
or quality
interest of some other person in the
property (Veloso vs. CA).
Sale for a Lump Sum (A Cuerpo Cierto)
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 Registration requires actual perfection of a contract and a condition

recording; if the property was never imposed merely on the performance of an
really registered as when the obligation. The failure to comply with the
registrar forgot to do so although he first condition would prevent the juridical
has been handed the document, relation itself from coming into
there is no registration. existence, while failure to comply with
the second merely gives the option either
 Possession is either actual or
to refuse or proceed with the sale or to
constructive since the law made no
waive the condition.
distinction (Sanchez vs. Ramos 40
Phil614)
 The mere fact that the second
 Possession in Art.1544 includes not
contract of sale was perfected in
only material but also symbolic good faith is not sufficient if, before
possession (Ten Forty Realty vs. title passes, the second vendee
Cruz, 10 Sept. 2003.)
acquires knowledge of the first
 Title means title because of sale, and transaction. The good faith or
not any other title or mode of innocence of the posterior vendee
acquiring property (Lichauco vs. needs to continue until his contract
Berenguer 39 Phil 642) ripens into ownership by tradition or
 Hernandez vs. Katigbak Rule: When registration. (Palanca vs. Dir. Of
the property sold on execution is Lands, 46 PHIL 149)
registered under Torrens, registration
is the operative act that gives validity
to the transfer or creates a lien on EFFECT IF BUYER HAS ALREADY SOLD
the land, and a purchaser on THE GOODS:
execution sale is not required to go General Rule: The unpaid seller’s right to
behind the registry to determine the lien or stoppage in transitu remains even
conditions of the property. if buyer has sold the goods.
Exception: Where the purchaser had Except:
knowledge, prior to or at the time of 1) When the seller has given consent
the levy, of such previous lien or thereto, or
encumbrance, his knowledge is 2) When the buyer is a purchaser in good
equivalent to registration. faith for value of a negotiable document
of title.
CONDITION
 Effect of Non-fulfillment of Condition WARRANTY
1. If the obligation of either  a statement or representation made
party is subject to any condition
by the seller of goods,
and such condition is not
contemporaneously and as a part of
fulfilled, such party may either:
the contract of sale, having reference
a. refuse to proceed with
to the character, quality, or title of
the contract
the goods, and by which he promises
b. proceed with the
or undertakes to insure that certain
contract , waiving the
facts are or shall be as he then
performance of the
represents.
condition.
2. If the condition is in the
nature of a promise that it should  Kinds:
happen, the non-performance of 1. EXPRESS – any affirmation of fact or
such condition may be treated by any promise by the seller relating to
the other party as breach of the thing if the natural tendency of
warranty. such affirmation or promise is to
NOTE: A distinction must be made same and if the buyer purchases the
between a condition imposed on the thing relying thereon
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at the instance of the vendee;

NOTE: A mere expression of opinion, no AND
matter how positively asserted, does not 5. no waiver of warranty by
import a warranty unless the seller is an the vendee.
expert and his opinion was relied upon by
the buyer.  Vendor's liability shall consist of:
1. Total eviction: (VICED)
2. IMPLIED - that which the law derives a. Value of the thing at the
by implication or inference from the time of eviction;
nature of the transaction or the
relative situation or circumstances of b. Income or fruits if he has
the parties, irrespective of any been ordered to deliver them to
intention of the seller to create it. the party who won the suit;
a. Warranty against eviction c. Costs of the suit;
b. Warranty against hidden d. Expenses of the contract;
defects AND
c. Warranty as to Fitness e. Damages and interests if
and Merchantability the sale was in bad faith.
NOTE: An implied warranty is a natural,
not an essential element of a contract, 2. Partial eviction:
and is deemed incorporated in the a. to enforce vendor’s
contract of sale. It may however, be liability for eviction (VICED);
waived or modified by express
OR
stipulation. (De Leon) b. to demand rescission of
There is no implied warranty as to the contract.
condition, adaptation, fitness or
suitability or the quality of an article sold Question: Why is rescission not a remedy
as a second-hand article. But such in case of total eviction?
articles might be sold under such Answer: Rescission contemplates that the
circumstances as to raise an implied one demanding it is able to return
warranty. whatever he has received under the
* A certification issued by a vendor that a contract. Since the vendee can no longer
second-hand machine was in A-1 restore the subject-matter of the sale to
condition is an express warranty binding the vendor, rescission cannot be carried
on the vendor. (Moles vs. IAC [1989]) out.
A. Warranty against eviction * The suit for the breach can be directed
 Warranty in which the seller only against the immediate seller, not
guarantees that he has the right to sellers of the seller unless such sellers
sell the thing sold and to transfer had promised to warrant in favor of later
ownership to the buyer who shall not buyers or unless the immediate seller has
be disturbed in his legal and peaceful expressly assigned to the buyer his own
possession thereof. right to sue his own seller.
NOTE: The disturbance referred to in the
 Elements: case of eviction is a disturbance in law
1. vendee is deprived, in which requires that a person go to the
whole or in part, of the thing courts of justice claiming the thing sold,
purchased; or part thereof and invoking reasons.
2. the deprivation is by Mere trespass in fact does not give rise to
virtue of a final judgment; the application of the doctrine of
3. the judgment is based on eviction.
a prior right to the sale or an act
imputable to the vendor;  Vendor’s liability is waivable but any
4. the vendor was stipulation exempting the vendor
summoned in the suit for eviction from the obligation to answer for
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eviction shall be void if he acted in 3. it must Exist at the time of the

bad faith. sale;
 Kinds of Waiver: 4. vendee must give Notice of the
a. Consciente – voluntarily defect to the vendor within a
made by the vendee without reasonable time;
the knowledge and 5. action for rescission or reduction
assumption of the risks of of price must be brought within
eviction the proper Period (within 6 mos.
NOTE: vendor shall pay only the from delivery of the thing or 40
value which the thing sold had at days from date of delivery in case
the time of eviction of animals); and
b. Intencionada – made by the 6. no Waiver of the warranty.
vendee with knowledge of
the risks of eviction and  Remedies of the Vendee:
assumption of its a. Accion redhibitoria (rescission)
consequences b. Accion quanti minoris (reduction
EFFECT: vendor not liable of the price)
NOTE: Every waiver is presumed to be NOTES:
consciente. To consider it intencionada,  Hidden faults or defects pertain only
it must be accompanied by some to those that make the object unfit
circumstance which reveals the vendor’s for the use for which it was intended
knowledge of the risks of eviction and at the time of the sale.
his intention to submit to such
 This warranty in Sales is applicable in
consequences.
Lease (Yap vs. Tiaoqui 13Phil433)
WHERE IMMOVABLE SOLD ENCUMBERED Effect of loss of thing on account of
WITH NON-APPARENT BURDEN hidden defects:
1. If vendor was aware of hidden
1. Right of vendee
a) recission, or defects, he shall bear the loss and
b) indemnity vendee shall have the right to
recover: (PED)
2. When right cannot be exercised: a. the price paid
a) if the burden or servitude is b. expenses of the contract
apparent c. damages
b) if the non-apparent burden or 2. If vendor was not aware, he shall be
servitude is registered obliged to return: (PIE)
c) if vendee had knowledge of the a. price paid
encumbrance, whether it is registered or
b. interest thereon
not
3. When action must be brought c. expenses of the contract
- within ONE YEAR from the execution if paid by the vendee
of the deed of sale
Effect if the cause of loss was not the
B. Warranty against hidden defects hidden defect
 Warranty in which the seller  If the thing sold had any hidden
guarantees that the thing sold is free fault at the time of the sale, and
from any hidden faults or defects or should thereafter be lost by a (1)
any charge or encumbrance not fortuitous event OR (2) through the
declared or known to the buyer. fault of the vendee:
 the vendee may demand of the
vendor the price which he paid
 Elements: (SHENPW)
less the value of the thing at the
1. defect must be Serious or
time of its loss.
important;
NOTE: the difference between the
2. it must be Hidden;
price paid and the value of the thing
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at the time of its loss represents the 3. Sale by virtue of authority in fact or
damage suffered by the vendee and law
the amount which the vendor
enriched himself at the expense of Caveat Venditor (“Let the seller
the vendee beware”): the vendor is liable to the
 If the vendor acted in bad faith: vendee for any hidden faults or defects in
 vendor shall pay damages to the the thing sold, even though he was not
vendee aware thereof.
C. Implied Warranties of Quality Caveat Emptor (“Let the buyer

Warranty of Fitness beware”): requires the purchaser to be
aware of the supposed title of the vendor
 Warranty in which the seller and one who buys without checking the
guarantees that the thing sold is vendor’s title takes all the risks and
reasonably fit for the known losses consequent to such failure.
particular purpose for which it was
acquired by the buyer RULES IN CASE OF SALE OF ANIMALS
1. When two or more animals have been
 GENERAL RULE: There is no implied sold at the same time and the redhibitory
warranty as to the quality or fitness for defect is in one, or some of them but not
any particular purpose of goods under a in all, the general rule is that the
contract of sale redhibition will not affect the others
 EXCEPTIONS: without it. It is immaterial whether the
1. Where the buyer, price has been fixed for a lump sum for
expressly or by implication all the animals or for a separate price for
manifests to the seller the each.
particular purpose for which the 2. No warranty against hidden defects of
goods are required animals sold at fairs or at public auctions,
2. Where the buyer relies or of livestock sold as condemned. This is
upon the seller’s skill or based on the assumption that the defects
judgment must have been clearly known to the
buyer.
Warranty of Merchantability 3. Sale of animals shall be void when:
 Warranty in which the seller a) animals sold are suffering from
guarantees, where the goods were contagious disease
bought by description, that they are b) if the use or service for which they
reasonably fit for the general purpose are acquired has been stated in the
for which they are sold contract, and they are found to be unfit
 It requires identity between what is therefor
described in the contract AND what 4. Limitation of the action: 40 days from
is tendered, in the sense that the the date of their delivery to the vendee
latter is of such quality to have some 5. Vendor shall be liable if the animal
value should die within 3 days after its
purchase if the disease which caused the
Instances where implied warranties are death existed at the time of the contract
inapplicable:
1. As is and where is sale - vendor OBLIGATIONS OF THE VENDEE:
makes no warranty as to the quality A. Principal Obligations:
or workable condition of the goods, 1. To accept delivery
and that the vendee takes them in 2. To pay the price of the thing sold in
the condition in which they are found legal tender unless another mode has
and from the place where they are been agreed upon
located. NOTE: A grace period granted the
2. Sale of second-hand articles vendee in case of failure to pay the
amount/s due is a right not an obligation.
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The grace period must not be likened to 3. If there is no stipulation as to the

an obligation, the non-payment of which, time and place of payment and
under Article 1169 of the Civil Code, delivery, the vendee is bound to pay
would still generally require judicial or at the time and place of delivery
extra-judicial demand before “default” 4. In the absence of stipulation as to the
can be said to arise (Bricktown Dev’t place of delivery, it shall be made
Corp vs. Amor Tierra Dev’t Corp. wherever the thing might be at the
57SCRA437) moment the contract was perfected
(Article 1251)
B. Other Obligations 5. If only the time for delivery has been
1. To take care of the goods without the fixed in the contract, the vendee is
obligation to return, where the goods required to pay even before the thing
are delivered to the buyer and he is delivered to him; if only the time
rightfully refuses to accept for payment has been fixed, the
vendee is entitled to delivery even
NOTES: before the price is paid by him
 The buyer in (Article 1524)
such a case is in the position of a
bailee who has had goods thrust Ways of accepting goods:
upon him without his assent. He 1. Express acceptance
has the obligation to take 2. Implied acceptance
reasonable care of the goods but
a. When buyer does an act which
nothing more can be demanded
only an owner can do,
of him. b. Failure to return goods after
 The goods in reasonable lapse of time
the buyer’s possession under
these circumstances are at the
NOTES:
seller’s risk
2. To be liable as a depositary if he  The retention of goods is strong
voluntarily constituted himself as evidence that the buyer has accepted
such ownership of the goods.
3. To pay interest for the period  Delivery and acceptance are two
between delivery of the thing and the separate and distinct acts of different
payment of the price in the following parties
cases:  Delivery is an act of the
a. Should it have been stipulated vendor and one of the vendor’s
b. Should the thing sold and obligations; vendee has nothing
delivered produce fruits or to do with the act of delivery by
income the vendor
c. Should he be in default, from the
 Acceptance is an
time of judicial or extra-judicial
obligation of the vendee;
demand for the payment of the
acceptance cannot be regarded
price
as a condition to complete
delivery;
 Pertinent Rules:
 seller must comply with
1. The vendor is not required to deliver the obligation to deliver although
the thing sold until the price is paid there is no acceptance yet by the
nor the vendee to pay the price buyer
before the thing is delivered in the
absence of an agreement to the  Acceptance by the buyer may
precede actual delivery; there may
contrary (Article 1524).
2. If stipulated, the vendee is bound to be actual receipt without acceptance
and there may be acceptance without
accept delivery and to pay the price
receipt
at the time and place designated;
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 Unless otherwise agreed upon, 5. if the vendee has fully paid the price
acceptance of the goods by the buyer
does not discharge the seller from REMEDIES FOR BREACH OF CONTRACT
liability for damages or other legal A. Remedies of the seller
remedy like for breach of any 1. Action for payment of the price (Art.
promise or warranty 1595)
2. Action for damages for non-
When vendee may suspend payment of acceptance of the goods (Art. 1596)
the price: 3. Action for rescission (Art. 1597)
1. If he is disturbed in the possession or B. Remedies of the buyer
ownership of the thing bought 1. Action for specific performance (Art.
2. If he has well-grounded fear that his 1598)
possession or ownership would be 2. Action for rescission or damages for
disturbed by a vindicatory action or breach of warranty (Art 1599)
foreclosure of mortgage
A. REMEDIES OF THE SELLER FOR
NOTES: BREACH OF CONTRACT
 If the thing sold is in the possession  IN CASE OF MOVABLES
of the vendee and the price is already 1. Ordinary Remedies
in the hands of the vendor, the sale is a. Movables in General –
a consummated contract and Article Failure of the vendee to appear
1590 is no longer applicable. Article to receive delivery or, having
1590, presupposes that the price or appeared, failure to tender the
any part thereof has not yet been price at the same time, unless, a
paid and the contract is not yet longer period for its payment has
consummated. been stipulated
 Under Article 1590, the vendee has  action to rescind the sale
no cause of action for rescission (Art. 1593)
before final judgement, otherwise b. Sale of Goods –
the vendor might become a victim of  action for the price (Art.
machinations between the vendee 1595)
and the third person  action for damages (Art.
 Disturbance must be in possession 1596)
and ownership of the thing acquired 2. Unpaid Seller
 If the disturbance is caused by the  Types:
existence of non-apparent servitude, a. The seller of the goods
the remedy of the buyer is rescission, who has not been paid or to
not suspension of payment. whom the price has not been
tendered
b. The seller of the goods,
When vendee cannot suspend payment in case a bill of exchange or
of the price even if there is disturbance other negotiable instrument has
in the possession or ownership of the been received as conditional
thing sold: payment, AND the condition on
1. if the vendor gives security for the which it was received has been
return of the price in a proper case broken by reason of the dishonor
2. if it has been stipulated that of the instrument, insolvency of
notwithstanding any such the buyer or otherwise.
contingency, the vendee must make  Remedies:
payment (see Article 1548 par.3)
1. Possessory lien over the
3. if the vendor has caused the goods
disturbance or danger to cease 2. Right of stoppage in
4. if the disturbance is a mere act of
transitu after he has parted with
trespass
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the possession of the goods and 3. Foreclosure of the chattel

the buyer becomes insolvent mortgage on the thing sold if
3. Special Right of resale vendee shall have failed to pay
4. Special Right to rescind two or more installments. In this
the sale case, there shall be no further
5. Action for the price action against the purchaser to
6. Action for damages recover unpaid balance of the
price.
3. Article 1484 or Recto Law
 Remedies of vendor in sale of NOTES:
personal property by installments  Further recovery barred only from
 Requisites: the time of actual sale at public auction
1. Contract of sale conducted pursuant to foreclosure
2. Personal property (Macondray vs. Tan.)
3. Payable in installments  Other chattels given as security
4. In the case of the second cannot be foreclosed if they are not
and third remedies, that there subject of the installment sale (Ridad vs.
has been a failure to pay two or Filipinas investment and Finance Corp.
more installments GR 39806, Jan. 28, 1983)
NOTE: Apply likewise to contracts
 If the vendor assigns his right to a
purporting to be leases of personal
financing company, the latter may be
property with option to buy
regarded as a collecting agency of the
 Art. 1484 does not apply to a sale: vendor and cannot therefore recover any
1. Payable on straight terms deficiency from the vendee (Zayas vs.
(partly in cash and partly in one Luneta Motors Co.)
term)
 When the vendor assigns his credit to
2. Of Real property
another person, the latter is likewise
 Remedies: bound by the same law. Accordingly,
1. Specific performance upon when the assignee forecloses on the
vendee’s failure to pay mortgage, there can be no further
NOTE: Does not bar full recovery for recovery of the deficiency and the
judgment secured may be executed vendor-mortgagee is deemed to have
on all personal and real properties of renounced any right thereto (Borbon II
the buyer which are not exempt from vs. Servicewide Specialist, Inc.
execution (Palma v. CA.) 258SCRA658)
2. Rescission of the sale if NOTE: However, Article 1484(3) does
vendee shall have failed to pay NOT bar one to whom the vendor has
two or more installments assigned on with a recourse basis his
NOTES: credit against the vendee from
 Nature of the remedy – which recovering from the vendor the
requires mutual restitution – bars assigned credit in full although the
further action on the purchase vendor may have no right of recovery
price (Nonato vs. IAC.) against the vendee for the deficiency
 GENERAL RULE: cancellation of (Filipinas Invest. & Finance Corp. vs.
sale requires mutual restitution, Vitug, Jr. 28SCRA658)
that is all partial payments of
price or rents must be returned NOTE: Remedies are alternative and
exclusive
EXCEPTIONS: a stipulation that
the installments or rents paid
shall not be returned to the  IN CASE OF IMMOVABLES
vendee or lessee shall be valid 1. Ordinary Remedies
insofar as the same may not be a. In case of anticipatory
unconscionable under the breach –
circumstan-ces (Article 1486).  rescission (Article 1591)
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),
134
b. Failure to pay the 2. Actual cancellation can

purchase price – only take place after 30 days
 rescission upon judicial from receipt by the buyer of the
or notarial demand for notice of cancellation OR demand
rescission (Article 1592) for rescission by a notarial act
 the vendee may pay, AND upon full payment of the
even after the expiration of cash surrender value to the buyer
the period, as long as no (Olympia Housing vs. Panasiatic,
demand for rescission has 16 January 2003.)
been made upon him NOTE: The seller shall refund to
NOTE: Article 1592 does not the buyer the cash surrender
apply to: value of the payments on the
1) Sale on instalment of real property equivalent to 50% of the
estate total payments made. After five
2) Contract to sell (5) years of installments, there
3) Conditional sale shall be an additional 5% every
4) Cases covered by RA 6552: year but not to exceed 90% of the
Realty Installment buyer total payments made
protection act 3. The buyer shall have the
right to sell his rights or assign
2. R.A. No. 6552 or Maceda Law the same to another person OR to
 An Act to Provide reinstate the contract by
Protection to buyers of Real Estate on updating the account during the
Installment Payments grace period and before actual
 Law governing sale or cancellation of the contract
financing of real estate on 4. The buyer shall have the
installment payments right to pay in advance any
installment or the full unpaid
 Requisites: balance of the purchase price any
1. transactions or contracts time without interest and to have
involving the sale OR financing of such full payment of the purchase
real estate on installment price annotated in the certificate
payments, including residential of title covering the property.
condominium apartments; and
2. buyer defaults in B. If Buyer has paid less than 2
payment of succeeding years of installments
installments. 1. The seller shall give the buyer a
grace period of NOT less than 60
 Rights of the buyer: days from the date the
A. If Buyer has paid at least two installment became due. If the
(2) years of installments buyer fails to pay the
1. The buyer must pay, installments due at the expiration
without additional interest, the of the grace period, the seller
unpaid installments due within may cancel the contract after 30
the total grace period earned by days from receipt by the buyer of
him. There shall be one (1) the notice of cancellation or the
month grace period for every one demand for rescission of contract
(1) year of installment payments by a notarial act.
made 2. Same No. 3 and 4 paragraph A
NOTE: This right shall be above
exercised by the buyer ONLY
once in every 5 years of the life NOTE: Down payments, deposits or
of the contract AND its options on the contract shall be included
extensions. in the computation of the total number of
installment payments made
CIVIL LAW COMMITTEE
Stephen
Purganan(LTD),

135
6. Seller must bear the

Remedies of Unpaid Seller expenses of delivery of the goods
I. Possessory Lien after the exercise of the right
 When may be exercised:
1. Where the goods have GOODS ARE CONSIDERED IN TRANSITU:
been sold without any stipulation 1. after delivery to a carrier or other
as to credit bailee and before the buyer or his agent
2. When the goods have takes delivery of them; and
been sold on credit, but the term 2. If the goods are rejected by the
of credit has expired buyer, and the carrier or other bailee
3. Where the buyer continues in possession of them
becomes insolvent
GOODS ARE NO LONGER CONSIDERED IN
 When lost: TRANSITU:
1. Delivery of the goods to a
1. after delivery to the buyer or his
carrier or bailee for the purpose
agent in that behalf;
of transmission to the buyer
2. if the buyer or his agent obtains
without reserving ownership or
possession of the goods at a point before
right of possession
the destination originally fixed;
2. When the buyer lawfully
3. if the carrier or the bailee
obtains possession of the goods
acknowledges to hold the goods on behalf
3. By waiver of the lien
of the buyer; and
NOTE: Possessory lien is lost after the 4. if the carrier or bailee wrongfully
seller loses possession but his lien as an
refuses to deliver the goods to the buyer
unpaid seller remains; hence he is still an
unpaid creditor with respect to the price
of specific goods sold. His preference can  Effects of the exercise of the right
only be defeated by the governments 1. The goods are no longer in transit.
claim to the specific tax on the goods 2. The contract of carriage ends;
themselves (Arts. 2247 and 2241). instead the carrier now becomes a
NOTE: The bringing of an action to mere bailee, and will be liable as
recover the purchase price is not one of such.
the ways of losing the possessory lien. An 3. The carrier should not deliver
unpaid seller does not lose his lien by anymore to the buyer or the latter’s
reason that he has obtained a money agent; otherwise he will clearly be
judgement or decree for the price of liable for damages.
goods (Art. 1529, last paragraph). 4. The carrier must redeliver to, or
according to the directions of the
seller.
II. Stoppage of goods in transitu
 Requisites: WAYS OF EXERCISING THE RIGHT TO
1. Seller must be unpaid STOP:
2. Buyer must be insolvent 1. By taking actual possession of the
3. Goods must be in transit goods
4. Seller must either: 2. By giving notice of his claim to the
a. actually take possession carrier or bailee
of the goods sold OR
b. give notice of his claim to III. Special Right of Resale
the carrier or other person in
 May be exercised only when the
possession
5. Seller must surrender the unpaid seller has either a right of lien
negotiable document of title, if OR has stopped the goods in transitu
AND under ANY of the following
any, issued by the carrier or
bailee conditions:
1. Where the goods are
perishable in nature
CIVIL LAW COMMITTEE

Stephen
Purganan(LTD),

Law On Sales Memory Aid San Beda Law

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San Beda College of Law

MEMORY AID IN CIVIL LAW

 Elements: NOTE: Absent a proviso in the contract

MEMORY AID IN CIVIL LAW

seller is to exact not a breach – 1. Constructive 1. Third person

MEMORY AID IN CIVIL LAW

Sale Agency to sell Rules to determine if the contract is

MEMORY AID IN CIVIL LAW

a. If ordered in the ordinary course of object the acquisition of the

CIVIL LAW COMMITTEE

MEMORY AID IN CIVIL LAW

4. In the cases provided  GENERAL RULE: Mere inadequacy of the

Effect when the price is fixed by the

MEMORY AID IN CIVIL LAW

 Nonpayment only creates a right

CIVIL LAW COMMITTEE

MEMORY AID IN CIVIL LAW

 does not bind the promissor even if supported by a consideration, the

MEMORY AID IN CIVIL LAW

component of the consideration of  GENERAL RULE: Who bears the risk

CIVIL LAW COMMITTEE

MEMORY AID IN CIVIL LAW

Sale by description 3. Sale of property not to be

MEMORY AID IN CIVIL LAW

them, unless the consent of the administrator to sell. The sale

MEMORY AID IN CIVIL LAW

CIVIL LAW COMMITTEE

MEMORY AID IN CIVIL LAW

purchased is not a sale on approval, 1.Owner is estopped or precluded

SALE OF GOODS BY A NON-OWNER NEGOTIABLE DOCUMENT OF TITLE (NDT)

MEMORY AID IN CIVIL LAW

The document is negotiable if: RULES WHEN QUANTITY IS LESS THAN

* If the holder of a negotiable document RULES WHEN GOODS MIXED WITH

CIVIL LAW COMMITTEE

MEMORY AID IN CIVIL LAW

MEMORY AID IN CIVIL LAW

 Registration requires actual perfection of a contract and a condition

MEMORY AID IN CIVIL LAW

at the instance of the vendee;

MEMORY AID IN CIVIL LAW

eviction shall be void if he acted in 3. it must Exist at the time of the

MEMORY AID IN CIVIL LAW

C. Implied Warranties of Quality Caveat Emptor (“Let the buyer

CIVIL LAW COMMITTEE

MEMORY AID IN CIVIL LAW

The grace period must not be likened to 3. If there is no stipulation as to the

CIVIL LAW COMMITTEE

MEMORY AID IN CIVIL LAW

MEMORY AID IN CIVIL LAW

The document is negotiable if: RULES WHEN QUANTITY IS LESS THAN

* If the holder of a negotiable document RULES WHEN GOODS MIXED WITH

CIVIL LAW COMMITTEE

MEMORY AID IN CIVIL LAW

MEMORY AID IN CIVIL LAW

 Registration requires actual perfection of a contract and a condition

San Beda College of Law

MEMORY AID IN CIVIL LAW

at the instance of the vendee;

MEMORY AID IN CIVIL LAW