LAW ON SALES, AGENCY, AND CREDIT TRANSACTIONS

CHAPTER 1
NATURE AND FORM OF THE CONTRACT
(ARTS. 1458-1637)
ARTICLE 1458
CONCEPT OF CONTRACT OF SALE
-contract of sale is a contract whereby one of the contracting
parties (SELLER) obligates himself to transfer the ownership and to deliver a
determinate thing, and the other party (BUYER) obligates himself to pay a
sum of money or its equivalent (PRICE)
CHARACTERISTICS OF A CONTRACT OF SALE
1. CONSENSUAL- it is perfected by mere consent of the parties.
2. BILATERAL- the parties are bound by reciprocal obligations
SELLER- to deliver and transfer ownership of the thing sold
BUYER- to pay the price
3. ONEROUS- the thing sold is conveyed in consideration of the price.
4. COMMUTATIVE- the thing sold is considered the equivalent of the
price paid
(the contract may be ALEATORY- depending on an uncertain
event or contingency)
5. NOMINATE- it has a special name given to it by law namely SALE
6. PRINCIPAL- it can exist by itself without being dependent upon
another contract.
ELEMENTS OF A CONTRACT OF SALE
1. ESSENTIAL ELEMENTS/ REQUISITES
A. CONSENT OR MEETING OF THE MINDS
-It refers to the consent on the part of the SELLER to transfer
and deliver and on the part of the buyer to pay the
price.
-The parties must have legal capacity to give consent and to
obligate themselves.
-when there is an offer of one party, without the acceptance of
the other, THERE IS NO CONSENT
B. OBJECT OR SUBJECT MATTER
- It refers to the determinate thing which is the object of the
contract.
- If the seller and the buyer differ in regard to the thing sold,
there is no meeting of the minds therefore, there is
no sale

C. CAUSE OR CONSIDERATION
-It refers to the price certain in money or its equivalent

2. NATURAL ELEMENTS- those inherent in a contract of sale, which in the

absence of stipulation excluding them, are deemed to exist.
Such as: warranty against eviction, warranty against hidden
defects and
encumbrances
3. ACCIDENTAL ELEMENTS- it refers to the stipulation of the parties such as
terms, place and time of payment, and other conditions agreed upon
TWO KINDS OF CONTRACT OF SALE
1. ABSOLUTE- the sale is not subject to any conditions and where title
or
ownership passes to the buyer upon the delivery of the thing
sold.
2. CONDITIONAL-where the contract is subject to certain conditions
usually the full payment of the purchase price. The delivery of the
thing sold does not
transfer ownership until the CONDITION is
fulfilled
ARTICLE 1459
REQUISITES CONCERNING OBJECT
1. THINGS
a. determinate thing
b. licit or lawful (legal) it should not be contrary to law, morals,
good
customs, public order, or public
policy.
(if the subject matter is illicit, the contract is void and cannot, therefore be
ratified)
c. not be impossible
2.RIGHTS- all rights which are not intransmissible or personal may be
the object
of sale.
Like: the right of usufruct, the right of conventional redemption.
(services may be the object of contract but cannot be the object of
contract of sale)
KINDS OF ILLICIT THINGS
-illicit per se (of its nature) ex: decayed food unfit for consumption
-illicit per accidens ( because of some provisions of law declaring it
illegal)
Ex: prohibited lottery tickets and prohibited drugs
RIGHT OF VENDOR TO TRANSFER OWNERSHIP
1. ONE CAN SELL ONLY WHAT HE OWNS
-it is essential in order for a sale to be valid, he must be the
OWNER or at least must be authorized by the owner of the thing sold.
It is a well known principle of law that nobody can dispose of that
which he does not have.
2.SUFFICIENT IF RIGHT EXISTS AT TIME OF DELIVERY
-It is sufficient if he has the right to sell the thing at the time
when the ownership is to pass.

ARTICLE 1460
SUBJECT MATTER MUST BE DETERMINATE
1. WHEN THING DETERMINATE
-A thing is determinate or specific when it is particularly
designated or physically segregated from all others of the same class.
In accordance with the general rule that the object of every contract
must be determinate as to its kind.
-it is identified by its individuality
Ex: the watch I am wearing, my car
2. SUFFICIENT IF SUBJECT MATTER CAPABLE OF BEING MADE
DETERMINATE
-it is sufficient that the thing is determinable or capable of being
made determinate without the necessity of a new or further agreement
between the parties to ascertain its identity, quantity, or quality. It
cannot be known what may have been sold; the contract shall be null
and void.
ARTICLE 1461
SALE OF THINGS HAVING POTENTIAL EXISTENCE
-future thing not existing at the time the contract is entered into, may
be the object of sale provided it has a potential or possible existence. It
is reasonably certain to come into existence as the natural increment
or usual incident of something in existence already belonging to the
seller, and the title will vest in the buyer the moment the thing comes
into existence. The thing sold, however must be specific and identified
and it must be also owned by the vendor at the time.
SALE OF HOPE OR EXPECTANCY
The sale refers to an expected thing which is not yet in existence,
and not to the hope or expectancy which is already exists, in view of
the condition that the thing will come into existence, But the SALE OF
HOPE OR EXPECTANCY itself is valid even if the thing hoped or
expected does not come into existence, unless the hope or expectancy
is VAIN, in which case the sale is void.
ARTICLE 1462
GOODS WHICH MAY BE THE OBJECT OF SALE
Goods which form the subject of a contract of sale may be either:
a. EXISTING GOODS OWNED OR POSSESSED BY THE SELLER
ex: the sale of bathroom fixtures currently stored in the
sellers
warehouse is a sale of existing
goods
b. FUTURE GOODS OR GOODS TO BE MANUFACTURED, RAISED
OR ACQUIRED
BY THE SELLER
EXAMPLES:
MANUFACTURED- like the sale of milk bottles to be manufactured
with the name of the buyer pressed in the glass
RAISED- sale of chickens that may be raised in a poultry farm and
sale of the future harvest of palays from a ricefield

ACQUIRED- sale of definite parcel of land the seller expects to

buy

SALE OF FUTURE GOODS

Even though the contract is in the form of present sale, is valid only as
an EXECUTORY CONTRACT to be fulfilled by the acquisition and
delivery of the goods specified
ARTICLE 1463
SALE OF UNDIVIDED INTEREST IN A THING
1. BY SOLE OWNER
-the sole owner of a thing may sell the entire thing; or only a
specific portion thereof; or an undivided interest therein and such
interest may be designated as an aliquot part of the whole. Such sale
shall produce the effect of making the seller and buyer co-owners of
the thing sold.
2. BY CO-OWNER
-being the owner of his undivided interest therein, can dispose
his share even without the consent of the other co-owner/s
ARTICLE 1464
SALE OF AN UNDIVIDED SHARE OF A SPECIFIC MASS
FUNGIBLE GOODS
-refer to interchangeable goods such as grain, oil, etc. that allow
one to be replaced by another without loss of value.
EFFECT OF SALE
The owner of a mass of goods may sell only an undivided share
thereof, provided the mass is specific or capable of being made
determinate.
a. if the quantity i.e., number, weight or measure, of the mass is
MORE THAN the quantity sold the parties shall become co-owners of
the mass.
b. if the quantity of the mass is LESS THAN the quantity sold, the
buyer becomes the owner of the whole mass, with the seller being
bound to make good the deficiency from goods of the same kind and
quality, unless a contrary intent appears.
RISK OF LOSS
If the buyer becomes co-owner, with the seller, or other owners
of the remainder of the mass, it follows that the whole mass is at risk
of all the parties interested in it.
SUBJECT MATTER
The subject matter is an incorporeal or intangible right.
ARTICLE 1465
SALE OF THING SUBJECT TO A RESOLUTORY CONDITION

-A resolutory condition is an uncertain event upon the happening of

which the obligation (or right) subject to it is extinguished.
-If the resolutory condition attaching to the object of the contract,
which object may include things as well as rights should happen, then
the vendor cannot transfer the ownership of what he sold since there is
no object.
ARTICLE 1466
SALE DISTINGUISHED FROM AGENCY TO SELL
-a contract of agency, a person binds himself to render some service or
to do something in representation or on behalf of another, with the
consent or authority of the latter.

IN SALE:
*the
*the
*the
*the
*the
owner

buyer receives the goods as owner

buyer has to pay the price
buyer, as a general rule, cannot return the object sold
seller, warrants the thing sold
buyer can deal with the thing sold as he pleases, being the

IN AGENCY TO SELL:
*the agent receives the goods as the goods of the principal who
retains his
ownership over them.
*the agent simply to account for the proceeds of the sale he may
make on
the principal behalf;
*the agent can return the object in case he is unable to sell the
same to a
third person; and
*the agent makes no warranty for which he assumes personal
liability as
long as he acts within his authority and in the
name of the seller;
*the agent in dealing with the thing received, must act and is
bound
according to the instructions of his
principal
ARTICLE 1467
SALE DISTINGUISHED FROM CONTRACT FOR A PIECE OF WORK
-a contract for a piece of work, the contractor binds himself to
execute a piece of work for the employer, in consideration of a certain
price or compensation
CONTRACT OF SALE
-which the vendor in the ordinary course of business
manufactures or procures for the general market, whether the same is
on hand or not.
(within the statute of frauds)
CONTRACT FOR A PIECE OF WORK
-if the goods are manufactured specially for the customer and
upon his special order, and not for the general market.
(are not within the statute of frauds)
RISK OF LOSS

Before the delivery is borne by the worker or contractor, not by

the employer (the person who ordered)
ARTICLE 1468
SALE DISTINGUISHED FROM BARTER
-the contract of barter or exchange, one of the parties binds himself to
give one thing in consideration others promise to give another thing
-in contract of sale the vendor gives a thing in consideration for a price
of in money.
However, where the consideration is partly in money and partly in
another thing, the ff. rules shall be observed to determine whether the
contract is sale or barter:
*the contract shall be one of sale or barter depending upon the
manifest
intention of the parties
IF THE INTENTION DOES NOT CLEARLY:
Contract is one of barter- if the value of the thing given as part of
the consideration exceeds the monetary consideration
Consideration is one of sale- if the monetary consideration is
more than or equal to the value of the thing given as part of the
consideration
ARTICLE 1469
WHEN PRICE CONSIDERED CERTAIN
1. NO SALE IF PRICE NOT CERTAIN OR ASCERTAINABLE
-the price in a contract of sale ought to be settled for there can
be NO SALE WITHOUT A PRICE. It must be certain or capable of being
ascertained in money or its equivalent; and money is to be understood
as currency and its equivalent means promissory notes, checks and
other mercantile instruments as representing money.
2. CASES WHEN PRICE CONSIDERED CERTAIN
a. the parties have fixed or agreed upon a definite amount
b. it be certain with reference to another thing certain
c. the determination of the price is left to the judgment of a
specified
person or persons.
The last two cases are applicable only when no specific amount
has been stipulated by the parties
EFFECT WHEN PRICE FIXED BY THE 3RD PERSON DESIGNATED
EXCEPTIONS SUCH AS:
1. WHEN THE 3RD PERSON ACTS IN BAD FAITH OR BY MISTAKE
2. WHEN THE 3RD PERSON DISREGARDING SPECIFIC INSTRUCTIONS OR
THE PROCEDURE LAID DOWN BY THE PARTIES
EFFECT WHERE PRICE NOT FIXED BY THIRD PERSON DESIGNATED
1. IF THE 3RD PERSON DESIGNATED BY THE PARTIES TO FIX THE PRICES
REFUSES OR CANNOT FIX
The contract shall become ineffective, as if no price had been
agreed upon unless of course, the parties subsequently agree upon the
price.

2. IF SUCH 3RD PERSON IS PREVENTED FROM FIXING THE PRICE BY THE

FAULT OF SELLER OR THE BUYER.
Which consist of a choice between rescission or fulfillment, with
damages in either case. If the innocent party chooses fulfillment, the
court shall fix the price

ARTICLE 1470
EFFECT OF GROSS INADEQUACY OF PRICE IN VOLUNTARY SALES
-gross adequacy does not affect a contract of sale, except as it may
indicate a defect in the consent, or that the parties really intended a
donation or some other act or contract.
EFFECT OF GROSS INADEQUACY OF PRICE IN VOLUNTARY OR EXECUTION
SALES
1. GENERAL RULE
Judicial or execution sale is one made by a court with respect to
the property of a debtor for the satisfaction of his unpaid indebtedness.
2.WHERE PRICE IS SO LOW AS TO BE SHOCKING TO THE
CONSCIENCE
A judicial sale, say of real property will be set aside by the court.
3.WHERE SELLER GIVEN THE RIGHT TO REPURCHASE
-the validity of the sale is not necessarily affected where the law
gives to the owner the right to redeem, as when a sale is made at
public auction, upon the theory that the lesser the price, the easier it is
for the owner to buy back the property.
ARTICLE 1471
EFFECT WHERE THE PRICE SIMULATED
1. IF THE PRICE IS SIMULATED OR FALSE
Then the sale is void but the contract shall be valid as a donation
2. IF THE CONTRACT IS NOT SHOWN TO BE DONATION OR ANY OTHER
ACT OR CONTRACT TRANSFERRING OWNERSHIP
-because the parties do not bound at all the ownership of the
thing is not transferred. The contract is void and inexistent

ARTICLE 1472
PRICE ON A GIVEN DAY AT PARTICULAR MARKET
-It follows the principle in ARTICLE 1469 that price is considered if it
could be determined with reference to another thing certain
-provided said amount be certain when an amount is fixed ABOVE or
BELOW the price on a given day or in a particular exchange or market,
the said amount must be certain, otherwise THE SALE IS
INEFFICACIOUS because the price cannot be determined.
-this article is applicable to fungible things, the prices of which are
subject to fluctuations of the market.
ARTICLE 1473
FIXING OF PRICE BY ONE OF THE CONTRACTING PARTIES NOT ALLOWED

1. If the consent is essential to a contract of sale, the determination of

the price cannot be left to the discretion of one of the contracting
party. The validity or compliance of the contract cannot be made to
depend upon the will of one party
2. The price must be determined by both parties or left to the
judgment of a specified person or persons however, where the price
fixed by one party is accepted by the other, the contract is deemed
perfected because in this case, there exists a true meeting of minds
upon the price.
ARTICLE 1474
EFFECT OF FAILURE TO DETERMINE PRICE
1. WHERE CONTRACT EXECUTORY
-if the price cannot be determined in accordance with articles
1469 and 1472 the contract is without effect. Consequently, there is no
obligation on the part of the vendor to deliver the thing and on the part
of the buyer to pay.
2. WHERE DELIVERY HAS BEEN MADE
-if the thing has already been delivered and appropriated by the
buyer, the latter must pay a reasonable price. The reasonable price or
value of goods is generally the market price at the time and place fixed
by the contract or by law for the delivery of the goods.
ARTICLE 1475
PERFECTION OF CONTRACT OF SALE
-a contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the
price the reciprocal obligations of the parties arise. But the ownership
is not transferred until delivery of the thing.
-in case one of the contracting parties should not comply with what is
incumbent upon him, the injured party sue for FULFILLMENT or
RESCISSION with the payment of damages in either case.
RIGHT OF OWNER TO FIX HIS OWN PRICE
1. it is up to the buyer to accept or reject it. He may even impose a
condition hard to fulfill and name a price quite out of proportion to the
real value of the thing offered for sale
2. He is also well within his right to quote a small or nominal
consideration and such consideration is just as effectual and valuable a
consideration as a larger sum stipulated or paid.
EFFECT OF FAILURE TO PAY PRICE/ ABSENCE OF PRICE
1. PRICE STIPULATED
-the vendors remedy in such case is generally to demand
specific performance or rescission with damages in either case.

2. NO PRICE STIPULATED
-in such case, the sale is void and non-existent as without cause
or consideration. Of course, if there is no stipulation or meeting of
minds regarding the purchase price, there is no contract of sale.

ARTICLE 1476
RULES GOVERNING AUCTION SALES
1. SALES OF SEPARATE LOTS BY AUCTION ARE SEPARATE SALES
Each lot is the subject of a separate contract of sale.
2. SALE PERFECTED BY THE FALL OF THE HAMMER
-the seller is making an invitation to those present to make offers
which they do by making bids, one of which is ultimately accepted. It
follows that the bidder may retract his bid and the auctioneer may
withdraw the goods from sale any time before the hammer falls.
However, if the sale has been announced to be without reserve, the
auctioneer cannot withdraw the goods from sale once a bid has been
made and the highest bidder has a right to enforce his bid
3. RIGHT OF THE SELLER TO BID IN THE AUCTION
The seller or his agent may bid in an auction sale provided:
1. such right was reserved
2. notice was given that the sale is subject to a right to bid
in
behalf of the seller; and
3. the right to bid by the seller is not prohibited by law or
stipulation
a. WHEN NO NOTICE GIVEN OF RIGHT TO BID
it shall be unlawful for the seller to bid either
directly or indirectly or for the
auctioneer to employ
or induce any person to
bid on behalf of the seller.
The purpose of
the notice is to prevent puffing or
secret
bidding by or on behalf of the seller by people
who are not themselves bound
b. WHEN NOTICE GIVEN OF RIGHT TO BID
a right to bid may be expressly reserved by or
on
behalf of the seller. It is, therefore, the secrecy
of
puffing which renders it a fraud upon
bidding. Where
there is notice of the intention to
bid by the seller,
the bidding in such case
would not operate as fraud.
ARTICLE 1477-1478
OWNERSHIP OF THE THING TRANSFERRED BY DELIVERY
-delivery of the thing sold is essential in a contract of sale, without it
the buyer may not enjoy the thing sold to him. After the delivery of the
thing sold that the buyer acquires a real right or ownership over it.
-delivery may be actual or constructive
EXCEPTION TO THIS RULE
-the parties may stipulate that despite the delivery, the ownership of
the thing shall remain with the seller until the purchaser has fully paid
the price.
ARTICLE 1479

KINDS OF PROMISE TREATED IN ARTICLE 1479

It applies specifically to a promise to buy or to sell it refers to 3 kinds
of promise, namely:
1. AN ACCEPTED UNILATERAL PROMISE TO SELL IN WHICH THE
PROMISEE (acceptor) elects to buy.
2. AN ACCEPTED UNILATERAL PROMISE TO BUY IN WHICH THE
PROMISEE (acceptor) elects to sell.
3. A BILATERAL promise to buy and sell reciprocally accepted in which
either of the parties chooses to exact fulfillment.
EFFECT OF UNACCEPTED UNILATERAL PROMISE
-a unilateral promise or offer to sell or to buy a thing which is not
accepted creates no juridical effect or legal bond. Such unaccepted
offer is called policitation
OPTION
-is a privilege existing in one person for which he has paid a
consideration which gives him the right to buy/sell.
EFFECT OF ACCEPTED UNILATERAL PROMISE
-a unilateral promise to sell or to buy a determinate thing for a price
certain does not bind the promisor even if accepted and may be
withdrawn at any time.
EFFECT OF BILATERAL PROMISE TO BUY AND SELL
-when the promise is bilateral, one party accepts the others promise
to buy and the latter, the formers promise to sell, a determinate thing
for a certain price certain. The concurrence of both acts- the offer and
the acceptance- generates a binding contract of sale.
ARTICLE 1480
RISK OF LOSS OR DETERIORATION
1. IF THE THING IS LOST BEFORE PERFECTION
-the seller bears the loss
2. IF THE THING IS LOST AT THE TIME OF PERFECTION
-the contract is void or inexistent. The legal effect is the same as
when the object is lost before the perfection of the contract of sale.
3. IF THE THING IS LOST AFTER PERFECTION BEFORE ITS DELIVERY
-even before the ownership is transferred to the buyer the risk of
loss is shifted to the buyer as an exception to the rule of res perit
domino
4. IF THE THING IS LOST AFTER DELIVERY
-the buyer bears the risk of loss following the general rule of res
perit domino.
SCOPE OF ARTICLE 1480
1. THE 1ST APPLIES TO NON-FUNGIBLE GOODS
- the risk of the thing sold passes to the buyer, even though the
thing has not yet been delivered to him. In other words, the buyer
assumes the risk of loss caused by fortuitous event, without the fault of
the seller.
2. THE 2ND RULE RELATES TO FUNGIBLE THINGS

-the vendee assumes the risk if he has incurred in delay in

receiving the goods sold.
ARTICLE 1481
SALE OF GOODS BY DESCRIPTION AND/ OR SAMPLE
-the term bulk of goods does not designate the greater portion of the
goods. It denotes the goods themselves as distinguished from the
sample and/or description with which they must correspond.

1. SALE BY DESCRIPTION
-where a seller sells things as being of a particular kind, where
the purchaser has not seen the article sold and relies on the
description given him by the vendor. If the bulk of the goods delivered
do not correspond with the description, the contract may be rescinded.
2. SALE BY SAMPLE
-in a sale by sample, the seller warrants that the thing sold and
to be delivered by him shall conform with the sample in kind,
character, and quality.
3. SALE BY DESCRIPTION AND SAMPLE
-when a sale is made both by sample and by description, the
goods must satisfy all the warranties appropriate to either kind of sale,
and it is not sufficient that the bulk of the goods correspond with the
sample if they do not correspond with the description and vice versa.
ARTICLE 1482
MEANING OF EARNEST MONEY
-is money given by the buyer to the seller to bind the bargain. It is
actually a partial payment of the purchase price and is considered
as a proof of the perfection of the contract.
-advance payment it must be deducted from the total price
EARNEST MONEY AND OPTION MONEY DISTINGUISHED
EARNEST MONEY
-is part of purchase price
-is given only where there is already a sale
-when earnest money is given, the buyer is bound to pay the
balance
OPTION MONEY
-is the money given as distinct consideration for the option
contract
-applies to a sale not yet perfected
-while when the would-be buyer gives option money, he is not
required to buy.
BUT OPTION MONEY MAY BECOME EARNEST MONEY, IF THE PARTIES
SO AGREE.
ARTICLE 1483
FORM OF CONTRACT OF SALE
1. GENERAL RULE
-a contract may be entered into in any form provided all
the essential requisites for its validity are present.

2. WHERE CONTRACT COVERED BY STATUTE OF FRAUDS

-the contract of sale should be covered by the Statute of
Frauds, the law does requires that it be in writing subscribed by the
party charged, otherwise the contract cannot be enforced by action
and where the applicable statute required that the contract of sale
be in certain form for its validity, the required form must be
observed in order the contract may be both valid and enforceable.
UNDER THE STATUTE OF FRAUDS the ff. contracts must be in
writing, otherwise they cannot be enforced in court litigation:
a. sale of personal property at a price not less than 500
pesos
b. sale of real property or an interest therein regardless of
the price
involved; and
c. sale of property not to be performed within a year from
the date
thereof regardless of the nature of the
property and the price involved.
3. WHERE FORM IS REQUIRED IN ORDER THAT A CONTRACT MAY
BE VALID
-where the applicable statute requires that the contract
of sale
be in certain form for its validity, the required
form must be
observed in
order that the contract
may be both valid and
enforceable
4. WHERE FORM IS REQUIRED ONLY FOR THE CONVENIENCE OF
THE PARTIES
-in order that the sale may be registered in the Registry of
Deeds
to make effective as against third persons the
right acquired
under such sale.
SALE OF REAL PROPERTY OR AN INTEREST
-a sale of a piece of land or interest therein when made through an
agent is void unless the agents authority is in writing.
-for the sale of real property to be effective against third persons, the
sale must be registered in the Registry of Deeds (or Property) of the province
or city where the property is located. The sale must be in public instrument
or document.
STATUTE OF FRAUDS APPLICABLE ONLY TO EXECUTORY CONTRACTS
-the reason for this rule is that partial performance like the writing,
furnishes reliable evidence of the intention of the parties or the existence of
the contract. A contrary rule would result in injustice or unfairness to the
party who has performed his obligation.
ARTICLE 1484
REMEDIES OF VENDOR IN SALE OF PERSONAL PROPERTY PAYABLE IN
INSTALLMENT (RECTO LAW)
May exercise the ff. remedies:
1. elect fulfillment upon the vendees failure to pay
2. cancel the sale if the vendee shall have failed to pay two or
more
installments;

3.foreclose the chattel mortgage, if one has been constituted, if

the
vendee shall
have failed to pay two or more
installments

NATURE OF THE REMEDIES

-where the vendor asks the court to order the vendee to pay the
remaining unpaid sum of the purchase price, the vendor thereby waives the
other remedies.
RIGHT OF VENDOR TO RECOVER UNPAID BALANCE OF PURCHASE PRICE
1.REMEDY OF SPECIFIC PERFORMANCE
He may still recover from the purchaser the unpaid balance of
price, if
any on the real and personal properties of the buyer
not exempt by law
from attachment and
execution
2. REMEDY OF CANCELLATION
The latter can demand only the return of payments already made
unless
there is a stipulation about forfeiture
3. REMEDY OF FORECLOSURE
He shall have no further action against the vendee for the
recovery of any unpaid balance of the price and any agreement to the
contrary is void. The
foreclosure is effected by selling the
mortgaged personal property at public
auction and applying the proceeds
to sale to the satisfaction of the claim secured
by
the mortgaged.
RECOVER OF DEFICIENCY AFTER FORECLOSURE PROHIBITED
It prevents mortgagees from seizing the mortgaged property, buying it
at foreclosure sale for a low price and then bringing suit against the
mortgagor for a deficiency judgment
ARTICLE 1485
LEASE OF PERSONAL PROPERTY WITH OPTION TO BUY
-on the part of the lessee who takes possession or enjoyment of the
property leased are really sales of personal property payable in installments.
-the evident purpose is to prevent vendors from resorting to this form
of contract which, usually, is in reality a contract of sale of personal property
payable in installments in contravention of the provisions of Article 1484
ARTICLE 1486
STIPULATION AUTHORIZING FORFEITURE OF INSTALLMENTS OR RENTS PAID
-the parties may stipulate that the installments or rents paid are not to
be returned. Such a stipulation is valid insofar as the same may not be
unconscionable under the circumstances otherwise the court has the power
to order the return of a portion of the total amount paid in installments or
rents.
ARTICLE 1487
EXPENSES FOR EXECUTION AND REGISTRATION

-the vendor has the duty to pay not only the expenses for the
execution of the sale but also for the registration of the same in the absence
of any agreement between the parties to the contrary.
-expenses incurred subsequent to the transfer of title are borne by the
buyer, unless caused by the fault of the seller.

ARTICLE 1488
EXPROPRIATION OF PROPERTY FOR PUBLIC USE
-it covers the procedure for the exercise of the power of eminent
domain. Expropriation must be decreed by competent authority and for
public use and always upon paymentof just compensation.
______________________________________________________________________________
____________________________________CHAPTER 2
CAPACITY TO BUY AND SELL
ARTICLE 1489
PERSON WHO MAY ENTER INTO A CONTRACT OF SALE
General rule: all persons, whether natural or juridical, who can bind
themselves
by contract have also legal capacity to
buy and sell.
Exceptions: when the law determines that party suffers from either
absolute or
relative incapacity.
KINDS OF INCAPACITY
Absolute incapacity- in the case of persons who cannot bind
themselves; and
Relative incapacity- where it exists only with reference to certain
persons or a
certain class of property
LIABILITY FOR NECESSARIES OF MINOR OR OTHER PERSON WITHOUT
CAPACITY TO ACT
Necessaries are those things which are needed for sustenance,
dwelling, clothing and medical attendance, in keeping with the financial
capacity of the family of the incapacitated person.
-generally, the contracts entered into by a minor and other
incapacitated persons are voidable. However, where necessaries are sold
and delivered to him (without intervention of the parent or guardian) he must
pay a reasonable price therefor, the contract is valid, but the minor has the
right to recover any excess above a reasonable value paid by him.
SALE BY MINORS
-when the minors pretend that they are now in adult age while in fact
they have not, the sale is valid. They cannot be permitted to excuse
themselves from compliance with the obligations assumed by them or to
seek their annulment.
ARTICLE 1490
RELATIVE INCAPACITY OF HUSBAND AND WIFE

1. they are prohibited by the article 1490 from selling property to each
other.
2. they are also prohibited from making donations to each other during
the marriage except moderate gifts on the occasion of any family rejoicing. If
there has been a separation of property agreed upon in the marriage
settlements, or when there has been a judicial separation of property
decreed between them by the court, THE SALES BETWEEN THEM, ARE
ALLOWED.
REASON FOR PROHIBITION UNDER ARTICLE 1490
-the possibility that the husband will induce his wife to engage in
ruinous operations. The prohibition is primarily for the protection of 3rd
person who relying upon supposed property of either spouse enters into a
contract with either of them only to find out that the property relied upon
was transferred to the other spouse.
PERSONS PERMITTED TO QUESTION SALE
1. the heirs of either spouse, as well as creditors at the time of the
transfer, can attack the validity of the sale but not creditors who became
such only after the transaction
2. the government
ARTICLE 1491
INCAPACITY BY REASON OF RELATION TO PROPERTY
-the persons who, because of their position and relation with the
persons under their charge or property under their control, are prohibited
from acquiring said property under their control.
They are the: guardians, agents, executors and administration, public
officers and employees; judicial officers and employees and lawyers and
others especially disqualified by law.
REASON FOR PROHIBITION
-is to prevent frauds on the part of the persons enumerated therein
and minimize temptations to the exertion of undue and improper influence.
OTHER PERSONS ESPECIALLY DISQUALIFIED
1. aliens who are disqualified to purchase private agricultural lands
2. unpaid seller, having a right of lien or having stopped the goods in
transit
3. the officer conducting an execution sale of property to enforce a
court
judgment rendered against the owner.
ARTICLE 1492
PROHIBITION IN EXTENDS TO SALE IN LEGAL REDEMPTION
1. COMPROMISE-is a contract whereby the parties, by reciprocal
concessions, avoid a litigation or put an end to one already commenced. It is
the amicable settlement of a controversy.
2. by renunciation- a creditor gratuitously abandons his right against
his creditor. The other terms used by the law are condonation and remission.
ARTICLE 1493
EFFECT OF LOSS OF THING AT THE TIME OF SALE
1. THING ENTIRELY LOST

-at the time of perfection, the contract is inexistent and void

because there is no object.
2. THING ONLY PARTIALLY LOST
-the vendee may elect between withdrawing from the contract
and demanding the remaining part, paying its proportionate price.
WHEN A THING CONSIDERED LOST
Its existence is unknown or it cannot be recovered.

ARTICLE 1494
EFFECT OF LOSS IN CASE OF SPECIFIC GOODS
-ARTICLE 1494 applies only to sales of goods, that is, the object of the
sale consists of a mass of specific goods
2 remedies to the buyer:
1. SALE DIVISIBLE- a contract is DIVISIBLE when its
consideration is
made up of several parts.
2. SALE INDIVISIBLE- when the consideration is entire and
single.
The object may be considered as a
specific thing.
CHAPTER 4
OBLIGATIONS OF THE VENDOR
ARTICLE 1495
PRINCIPAL OBLIGATIONS OF THE VENDOR
1. to transfer the ownership
2. to deliver the thing
3. to warrant against eviction and hidden defects
4. to take care of the thing, pending delivery, with proper diligence
5. to pay for the expenses for the execution and registration of the
deed of sale,
unless there is a stipulation to the contrary

ARTICLE 1496
WAYS OF EFFECTING DELIVERY
1. BY ACTUAL OR REAL DELIVERY
2. BY CONSTRUCTIVE OR LEGAL DELIVERY
3. BY DELIVERY IN ANY OTHER MANNER SIGNIFYING AN AGREEMENT
WAYS OF EFFECTING CONSTRUCTIVE DELIVERY
1. EQUIVALENT TO ACTUAL DELIVERY
It may be effected in any of the following ways:
a. by the execution of public instrument
b. by symbolica tradition/ tradition symbolica
c. by traditio longa manu
d. by tradition brevi manu
e. by tradition constitutum possessorium
or
f. by quasi-delivery or quasi-traditio
2. CONTRARY MAY BE STIPULATED

to the
conditions.

The parties may stipulate that ownership in the thing shall pass
buyer only after he has fully paid the price or fulfilled

SECTION 2- DELIVERY OF THE THING SOLD

ARTICLE 1497
CONCEPT OF TRADITION OR DELIVERY
tradition is a derivative mode of acquiring ownership by virtue of
which one who has the right and intention to alienate a corporeal thing,
transmits it by virtue of a just little to one who accepts the same.
IMPORTANCE OF TRADITION
Delivery of the thing to enable the buyer to enjoy and make use of the
property purchased. After delivery, the risk of loss of the thing sold is borne
by the buyer.
ACTUAL DELIVERY OF THING SOLD
1. WHEN DEEMED MADE- it involves the physical delivery of the thing
and is usually done by passing of a movable thing from hand to hand.
2. NOT ALWAYS ESSENTIAL TO PASSING OF TITLE
The parties to the contract may agree when and on what
conditions the ownership in the subject of the contract shall pass to the
buyer.
ARTICLE 1498
EXECUTION OF PUBLIC INSTRUMENT OR DOCUMENT
Public instrument is one which is acknowledged before notary public or
any official authorized to administer oath, by the person who executed the
same.

WHEN THE THING NOT SUBJECT TO CONTROL OF VENDOR

-a seller cannot deliver constructively if he cannot deliver
actually even if he wants to.
SYMBOLIC TRADITION
-the parties make use of a token symbol to represent the thing
delivered
ARTICLE 1499
TRADITIO LONGA MANU
--it takes place by the mere consent or agreement of the contracting
parties as when the vendor merely points to thing sold which shall thereafter
be at the control and disposal of the vendee
TRADITIO BREVIE MANU
-when the vendee has already the possession of the thing sold by
virtue of another title as when the lessor sells the thing leased to the lessee.
ARTICLE 1500
TRADIO CONSTITUTUM POSSESSORIUM

-it takes place when the vendor continues in possession of the property
sold as owner but in some other capacity, as for example, when the vendor
stays as a tenant on the vendee.
ARTICLE 1501
QUASI-TRADITIO/ QUASI-DELIVERY
Tradition can only be made with respect to corporeal things. In case of
incorporeal things, delivery is effected:
1. by the execution of a public instrument
2. by the placing of the titles of ownership in the possession of the
vendee,
3. by allowing the vendee to use his rights as new owner with the
consent of the
vendor
Thus, the delivery to a person of a negotiable document of title in
which it is stated that the goods referred to therein will be delivered to the
bearer amounts to delivery of the goods to such person.

ARTICLE 1502
CONTRACTS OF SALE OR RETURN, AND OF SALE ON TRIAL OR APPROVAL OR
SATISFACTION
1. SALE OR RETURNthe buyer has an option to purchase or return
the same to the seller instead of paying the price. Without reference to the
quality of goods,
2. SALE ON TRIAL OR APPROVAL- the buyer has an option to purchase
the if the goods prove satisfactory. The title shall continue in the seller until
the sale has become absolute either by the buyers approval of the goods, or
by his filing to comply with the express or implied conditions of the contract
as to giving notice of dissatisfaction.
SALE OR RETURN DISTINGUISHED FROM SALE ON TRIAL
SALE OR RETURN
1. subject to resolutory condition
2. depends entirely on the will of the buyer
3. the ownership of the goods passes to the buyer on delivery
and
subsequent return of the goods reverts
ownership in the seller
4. the risk of loss or injury rests upon the buyer
SALE ON TRIAL
1.subject to suspensive condition
2. depends on the character or quality of the goods
3. the ownership remains in the seller until the buyer signifies his
approval or acceptance to the
seller
4. the risk still remains with the seller
ARTICLE 1503
DELIVERY OF SPECIFIC GOODS SOLD GENERALLY PASSES TITLE
-this article relates to a sale of specific goods
1. DELIVERY TO A CARRIER

General rule: the delivery be it only constructive, and

delivery to the carrier is deemed to be a delivery to the buyer
2. REDELIVERING BY CARRIER TO HIMSELF
If the seller directs the carrier to redeliver the goods at
their destination to the seller himself, or to his order. The ownership still
remain in the latter.

WHERE SELLER OR HIS AGENT IS CONSIGNEE

1. CARRIER BECOMES BAILEE FOR SELLER
Where goods are shipped and by the bill of lading the goods are
deliverable to the seller or his agent or to the order of the seller or his agent,
the seller thereby reserves the ownership in the goods.

2. RIGHTS OF THE SELLER

-the seller may not only retain the goods until the buyer performs his
obligation under the contract.
WHERE SELLERS TITLE ONLY FOR PURPOSE OF SECURITY
1. FORM OF BILL OF LADING NOT CONCLUSIVE
-the circumstances may be such that were it not for the form of
the bill of lading, the ownership would have passed to the buyer on shipment
of the goods. The seller reserves ownership is simply to secure himself in
regard to the performance by the buyer of the latters obligation.
2. WHERE OWNERSHIP WOULD HAVE PASSED BUT FOR THE FORM OF
BILL OF
LADING
-by shipping the goods, the seller has definitely lost all use of
them to the buyer. Where the title to the goods is held merely for the
purpose of security, the beneficial owner (buyer), not the one who holds for
security (seller) bears the risk of loss or deterioration
WHERE THE BUYER OR HIS AGENT IS CONSIGNEE BUT SELLER RETAINS THE
BILL OF
LADING
The seller thereby retains a right to the possession of the goods as
against the buyer. Although the property in the goods will ordinarily pass to
the buyer on delivery, the latter is unable to obtain the goods without the bill
WHERE BILL OF LADING IS SENT FORWARD WITH DRAFT ATTACHED
-the fact that the bill of lading and bill of exchange are attached
together indicates that the seller intends to make the delivery of the goods
conditional upon the payment or acceptance of the draft.
EFFECT OF BUYERS OBTAINING POSSESSION OF BILL OF LADING WITHOUT
HONORING DRAFT
A purchaser in good faith for value of the bill of lading or goods from
the buyer will obtain the ownership of the goods although the bill of
exchange has not been honored.
ARTICLE1504
RISK OF LOSS GENERALLY ATTENDS TITLE

General rule: if the thing is lost by fortuitous event the risk is borne by
the owner of the thing at the time of the loss
Exceptions:
1. The ownership is considered transferred to the buyer who,
therefore, assumes the risk from the time of delivery.
2. Where actual delivery has been delayed through the fault of
either the buyer or the seller. In this case, the law punishes the party at fault.
RISK OF LOSS BY FORTUITOUS EVENT AFTER PERFECTION BUT BEFORE
DELIVERY
-if the thing is lost after perfection of the contract but before its
delivery, even before the ownership is transferred to the buyer, the risk of
loss by a fortuitous event without the sellers fault is borne by the buyer.
Taken from the American Law on Sales it provides that Unless otherwise
agreed, the goods remain at the sellers risk until the ownership therein is
transferred to the buyer the risk of loss is shifted from the seller to the
buyer even though the buyer has not yet acquired ownership thereof, this
conflict can only be resolved by legislation.
ARTICLE 1505
SALE BY THE PERSON NOT THE OWNER
1. WHERE THE OWNER OF THE GOODS IS, BY HIS CONDUCT,
PRECLUDED FROM DENYING THE SELLERS AUTHORITY TO SELL
Where a property is sold by one not the owner or the agent of
the owner, but the real owner states that he authorized such sale so that the
vendor was acquitted of the charge against him, a buyer in good faith
acquires a valid title to the property as it is not lawful nor permissible for said
owner to deny or retract his former sworn statement that he had consented
to said sale
2. WHERE THE LAW ENABLES THE APPARENT OWNER TO DISPOSE OF
THE GOODS
AS IF HE WERE THE TRUE OWNER
THEREOF
-has no such law as the Factors Act. The law referred to here,
therefore, must
be found in the provisions of our Civil
Code on Agency.
3. WHERE THE SALE IS SANCTIONED BY STATUTORY OR JUDICIAL
AUTHORITY
- one who has lost any movable, or has been unlawfully deprived
thereof, may recover it from the person in possession of the same. If the
possessor of a movable lost or of which the owner has unlawfully been
deprived has acquired it in good faith at a public sale, the owner cannot
obtain its return without reimbursing the price paid therefore.
4. WHERE THE SALE IS MADE AT MERCHANTS STORES, FAIRS, OR
MARKETS
-the rule is necessary not only to facilitate commercial sales on
movables but also to give stability to business transactions especially in our
country where free enterprise prevails for a buyer.
5.WHERE THE SELLER HAS A VOIDABLE TITLE WHICH HAS NOT BEEN
AVOIDED AT THE TIME OF SALE

6. WHERE SELLER SUBSEQUENTLY ACQUIRES TITLE

When a person conveys property to another of which at the time
he is not the owner, his subsequent acquisition of title validates his previous
conveyance.
ARTICLE 1506
SALE BY ONE HAVING A VOIDABLE TITLE
1. REQUISITES FOR ACQUISITION OF GOOD TITLE BY BUYER
-if the seller has only a voidable title to the goods, the buyer
acquires a good title to the goods provided he buys them:
a. before the title of the seller has been avoided
b. in good faith for value; and
c. without notice of the sellers defect of title
2. BASIS RULE
Seems to be based on the principle that where loss has
happened which must fall on one of two innocent persons, it should be borne
by him who is the occasion of the loss.
ARTICLE 1507
NATURE AND FUNCTION OF DOCUMENTS OF TITLE
1. RECEIPTS OF, OR ORDEFS UPON A BAILEE OF GOODS REPRESENTED
-documents of title refer to goods and not to money. A different
name is given in popular speech to the document when it is issued by a
carrier and when it is issued by a warehouseman
2. EVIDENCE OF TRANSFER OF TITLE AND POSSESSION OF GOODS AND
CONTRACT BETWEEN THE PARTIES
-A document of title is a symbol of goods covered by it, serving as a
evidence of
a. transfer of title b. transfer of possession
c. contract betwe0en the parties who are bound by its terms
MOST COMMON FORMS OF DOCUMENTS OF TITLE
1. BILL OF LADINGit is a contract or receipt for the transport of goods
and their delivery to the person named therein, to order, or to bearer. It
usually involves 3 persons: carrier, shipper, and the consignee. (the shipper
and consignee may be one and same person)
2. DOCK WARRANT- an instrument given by dock owners to an importer of
goods warehoused on the dock recognizing the importers title to the said
goods; and
3.WAREHOUSE RECEIPT- it is a contract or receipt for goods deposited with a
warehouseman containing the latters undertaking to hold and deliver the
said goods to a specified person, to order, or to bearer.
(QUEDAN- is a warehouse receipt usually for sugar received by a
warehouseman)
CLASSES OF DOCUMENTS OF TITLE
1. NEGOTIABLE DOCUMENTS- those by the terms of which the bailee
undertakes to deliver the goods to the bearer and to the order of a specified
person.

2. NON-NEGOTIABLE DOCUMENTS- those by the terms of which the goods

covered are deliverable to a specified person.
ARTICLE 1508
NEGOTIATION OF NEGOTIABLE DOCUMENT BY DELIVERY
-if the document is specially indorsed, it becomes an order document
of title and negotiation can only be effected by the indorsement of the
indorsee. A special indorsement specifies the person to whom or to whose
order, the goods are to be delivered.
ARTICLE 1509
NEGOTIATION OF NEGOTIABLE DOCUMENT BY INDORSEMENT
1. if indorsed in blank or to bearer, the document becomes negotiable
by delivery
2. if indorsed to a specified person, it may be again negotiated by the
indorsement of such person in blank, to bearer, or to another specified
person. Delivery alone is not sufficient.

ARTICLE 1510
NEGOTIABLE DOCUMENTS OF TITLE MARKED NON-NEGOTIABLE
-the words not negotiable, non negotiable and the like when placed
upon a document of title in which the goods are to be delivered to order or
to bearer have no effect and the document continues to be negotiable.
ARTICLE 1511
TRANSFER OF NON-NEGOTIABLE DOCUMENTS
-a non-negotiable of title cannot be negotiated. It can be transferred or
assigned by delivery. In such case, the transferee or assignee acquires only
the rights stated in Article 1514
-even if the document is indorsed, the transferee acquires no
additional right.
ARTICLE 1512
PERSONS WHO MAY NEGOTIATE A DOCUMENT
-it will be noticed that the provision does not give a power to negotiate
documents of title equal to that allowed in the case of bills of exchange and
promissory notes under the Negotiable Instruments Law
-however, if the owner of the goods permits another to have the
possession or custody of negotiable receipts running to the order of the latter
or to bearer, it is a representation or title upon which bona fide purchasers
-the loss must fall upon him whose misplaced confidence made the
loss possible
ARTICLE 1513
RIGHTS OR PERSON TO WHOM DOCUMENT HAS BEEN NEGOTIATED
-it specifies the rights of a person to whom a negotiated document of
title has been duly negotiated, in the case of a document of title to bearer, or
by indorsement and delivery, in the case of a document of title. Such person
acquires:
1. the title of the person negotiating the document, over the goods covered
by the document

2.the title of the person (depositor or owner) to whose order by the terms of
the document the goods were to be delivered, over such goods; and
3. the direct obligation of the bailee (warehouseman or carrier) to hold
possession of the goods for him, as if the bailee had contracted directly with
him
ARTICLE 1514
RIGHTS OF PERSON TO WHOM DOCUMENT HAS BEEN TRANSFERRED
It refers to the rights of a person to whom a negotiable document of
title (not duly negotiated) has been transferred or of the transferee of a nonnegotiable document. Such person acquires:
1. the title to the goods as against the transferor
2. the right to notify the bailee of the transfer thereof
3. the right, thereafter, to acquire the obligation of the bailee to hold the
goods for him.
RIGHTS OF THE THIRD PERSON TO GOODS WHERE DOCUMENT HAS BEEN
TRANSFERRED
1. the transfer does not effect the delivery of the goods covered it. Before
notification, the bailee is not bound to the transferee whose right may be
defeated by a levy of an attachment or execution upon the goods by the
creditor or the transferor
2.if the document is negotiable, the goods cannot be attached or be levied
under an execution unless the document be first surrendered to the bailee or
its negotiation enjoined.
ARTICLE 1515
TRANSFER OF ORDER DOCUMENT WITHOUT INDORSEMENT
-it specifies the right of a person to whom an order document of title,
which may not properly be negotiated by mere delivery, has been delivered,
without indorsement. They are:
1.the right to the goods against the transferor and
2. the right to compel the transferor to indorse the indorsement
(if the intention of the parties is that the document should be merely
transferred, the transferee has no right to acquire the transferor to indorse
the document)
SUBSEQUENT INDORSEMENT OF NEGOTIABLE DOCUMENT TRANSFERRED
-the negotiation shall take effect as of the time when the indorsement
is actually made, not at the time the document is delivered. The reason is
because the negotiation becomes complete only at the time of indorsement.
ARTICLE 1516
WARRANTIES ON SALE OF DOCUMENTS
-it treats of the warranties or liabilities of a person negotiating or
transferring a document. The liability is limited only to a violation of the 4
warranties.
ARTICLE 1517
INDORSER NOT A GUARANTOR
-the indorsement of a negotiable instrument has a double effect; the
indorser will pay the instrument if the party primarily liable fails to do so. The

indorsement of a document of title amounts merely to a conveyance by the

indorser, not a contract of guaranty.
ARTICLE 1518
WHEN NEGOTIATION NOT IMPAIRED BY FRAUD, MISTAKE, DURESS, ETC.
-it may be negotiated by even by a thief or finder and the holder
thereof would acquire a good title thereto if he paid value therefor in good
faith without notice of the sellers defect.
-it speaks of the theft of the document and not of the goods covered by
such document. In the latter case, it needs no argument to show that even a
bona fide holder of a document issued over such stolen goods cannot acquire
title
ARTICLE 1519
UPON GOODS COVERED

ATTACHMENT OR LEVY
BY A NEGOTIABLE
DOCUMENT
-in the possession of such bailee, the goods cannot be attached or
levied under an execution unless the document be first surrendered or its
negotiation prohibited by law.
-this provision is for the protection of the bailee since he could be
made liable to a subsequent purchaser for value in good faith.

ARTICLE 1520
CREDITORS REMEDIES TO REACH NEGOTIATE DOCUMENTS
-this article expressly gives the court full power to aid by injunction (a
restraining order) and otherwise a creditor seeking to get a negotiate
document covering such goods.
ARTICLE 1521
PLACE OF DELIVERY OF GOODS SOLD
1. RULES
a. where there is an agreement, express or implied, the place of
delivery
is that agreed upon
b. where there is no agreement, the place of delivery is that
determined
by usage of trade.
c. where there is no agreement and there is also no prevalent
usage, the
place of delivery is the sellers place of
business.
d. in any other case, the place of delivery is the sellers residence
e. which to the knowledge of the parties at the time the contract
was
made were in some other place, that place is the place of
delivery in the
absence of any agreement or usage of trade to
the contrary.
2. PRESUMPTION
-it can be seen that the presumption is that the buyer must take
goods
from the sellers place of business or residence
rather than the seller to
deliver them to the buyer.
TIME OF DELIVERY OF GOODS SOLD

1. IF NO TIME IS FIXED BY THE CONTRACT, then the seller is bound to

send the
goods to the buyer within a reasonable time.
2. IF THE CONTRACT PROVIDES A FIXED TIME FOR PERFORMANCE, the
question is
whether time is of the essence, and if so whether the
correct performance
was offered within that time. If time is not of
the essence, the question is
whether correct performance was
offered within a reasonable time.
3. WHERE THE CONTRACT DOES NOT SPECIFY THE TIME FOR DELIVERY
-so that delivery is to be made within a reasonable time
-the buyer cannot make time the essence of the contract without
giving
the seller notice of his intention to cancel unless
delivery is made on or
before a fixed time
DELIVERY OF GOODS IN POSSESSION OR A 3RD PERSON
-to affect third person, the person holding the goods must
acknowledge being the bailee for the buyer.
HOUR OF DELIVERY OF GOODS SOLD
The demand or tender of delivery to be effectual, must be made at a
reasonable
hour
1. WHAT IS A REASONABLE HOUR? Where all that is required of the
other party
is to receive a payment or performance which can
readily be accepted
2. IN CASE GOODS WHICH ARE BULKY OR NEEDED SPECIAL CARE an
hour might
be reasonable which would not be so in an ordinary
payment of a small
amount of money.
DUTY OF SELLER TO PUT GOODS IN DELIVERABLE CONDITION
-the seller bears the expenses to place thing in a deliverable state that
is, in such a state the buyer would, under the contract, be bound to take
delivery of them.
ARTICLE 1522
DELIVERY OF GOODS LESS THAN QUANTITY CONTRACTED
Where the seller delivers a smaller quantity the buyer may reject
the
goods so delivered. (kulang)
The buyer may accept the goods in which case he must pay for
their: price
at the contract rate if he knew that no more were to be
delivered or the
fair value of the goods, if he did not know that
the seller is going to be
guilty of a breach of contract.
DELIVERY OF GOODS MORE THAN QUANTITY CONTRACTED
Where the seller delivers a quantity larger than the contracted,
the buyer
may accept the quantity contracted for and reject the
excess. If he
accepts all the goods delivered, he
makes himself liable for the price of all
of them.
DELIVERY OF GOODS MIXED WITH OTHERS
-the buyer may accept those which are in accordance with the
contract
and reject the rest. And of course, may accept them
all if he so desires

EFFECT OF INDIVISIBILITY OF SUBJECT MATTER

It can be inferred form our law that the buyer has the right of
rejecting
the whole of the goods delivered in the 2 cases
mention only if the subject
matter is indivisible.
RULES MAY BE CONTROLLED BY USAGE OF TRADE
-permitting evidence of usage of trade, special agreement, or course of
dealing
between the parties is but a special application of the general
rules concerning contracts.
ARTICLE 1523
DELIVERY TO CARRIER ON BEHALF OF BUYER
1. GENERAL RULE- when the seller is authorized or required to send the
goods to
the buyer, is that delivery of such goods to the carrier constitutes
delivery to the buyer, whether the carrier is named by the buyer is not.
2. EXCEPTIONS- the parties did not intend the delivery of the goods to
the buyer through the carrier.
SELLERS DUTY AFTER DELIVERY TO CARRIER
1. To enter on behalf of buyer into such contract reasonable under the
circumstances- the seller must make such contract with the carrier on behalf
of the buyer as may be reasonable under the circumstances.
2. To give notice to buyer regarding necessity to insure goods- the
seller must give notice to the buyer as may enable him to insure the goods
during their transit. If the seller fails to do so, the risk will be borne to him.
DEFINITION OF TRADE TERMS
1. C.O.D. collect on delivery the carrier acts for the seller in
collecting the purchase price. The buyer must pay for the goods before he
can obtain possession. They are solely intended as security for the purchase
price
2. F.O.B.-free on board means that the goods are to be delivered free
of expenses to the buyer to the point where they are F.O.B. In general, the
point F.O.B. either the point of shipment or the point of destination,
determines when the ownership passes.
3. C.I.F.- cost insurance and freight signify that the price fixed covers
not only the cost of goods, but the expenses of freight and insurance to be
paid by the seller up to the point especially named.
4. F.A.S.-free alongside vessel (named port of shipment). Under this
term, the seller pays all charges and bear the risk until the goods are placed
alongside overseas vessel and within reach of its loading tackle
5. Ex factory, Ex Warehouse, etc. (named point of origin) the price
quoted applies only at the point of origin, and the seller agrees to place the
goods at the disposal of the buyer at the agreed place on the date within the
period fixed.

6.Ex dock-(named port of importation) the seller quotes a price

including the cost of goods on the dock at the named port of importation
ARTICLE 1524
DELIVERY SIMULTANEOUS WITH PAYMENT OF PRICE
General rule: the obligation to deliver the thing of a contract arises
from the moment its perfection and from that time the obligation may
enforced.
Exception: if the vendee does not pay the price, the consideration for
the obligation of the vendor is absent and if the consideration is absent, the
obligation likewise does not exist or at least is suspended.
WHEN DELIVERY MUST BE MADE BEFORE PAYMENT OF THE PRICE
It contain an exception: the rule is that the thing shall not be delivered
unless the price is paid; and the exception is that the thing must be delivered
though the price be not first paid, if a time for such payment has been fixed
in the contract.

ARTICLE 1525
MEANING OF UNPAID SELLER
-is one who has not been paid or tendered the whole price or who has
received a bill of exchange or other negotiable instrument as conditional
payment and the condition on which it was received has been broken by
reason of the dishonor of the instrument.
WHERE WHOLE OF THE PRICE HAS NOT BEEN PAID
1. TENDER OF PAYMENT OF BUYER
-bring an action subsequently for the price, which he has refused,
yet tender destroys the sellers lien. Accordingly, so far as concerns his rights
to the goods, he is not unpaid seller after the tender of price.
2. PAYMENT OF PART OF PRICE
-the seller remains an unpaid seller even if title has passed to the
buyer.
3. PAYMENT BY NEGOTIABLE INSTRUMENT
-the delivery of promissory notes payable to order, or bills of
exchange or other mercantile documents shall produce the effect of payment
only when they have been cashed or when through the fault of the creditor
they have been impaired
ARTICLE 1526
REMEDIES OF UNPAID SELLER
-if the unpaid seller still retains the ownership in the goods, he cannot
be said to have a lien (on his goods) but he does have, in addition to his
other remedies, right of withholding delivery.
BASIC RIGHTS OF UNPAID SELLER
-is allowed a lien and kindred remedies in inherent injustice of
depriving him of goods with which he has not finally parted where it is
evident that he has not been or will not be paid the price for them when it is
due.

ARTICLE 1527
WHEN UNPAID SELLERS POSSESSORY LIEN MAY BE EXERCISED
1. SALES WITHOUT STIPULATION AS TO CREDIT
-the seller binds himself to give the goods over to the buyer
without
receiving at that time payment for them. Where
there is stipulation as to
credit a period for payment of price has
been fixed in the contract. The
seller has always a lien upon
the goods which he sells until the payment or
tender of the entire
price.
2. EXPIRATION OF TERM OF CREDIT
-but if he fails to exercise his right until the term of credit has
expired
and the price becomes due, he loses the right which
he theretofore had.
3. INSOLVENCY OF THE BUYER
-this doctrine is applies only an application of a general principle
in the
law of contracts that when one party to a bilateral
contract is
incapacitated from performing his part of the
agreement, the other party
also is excused from performing his
part
ARTICLE 1528
LIEN NOT GENERALLY LOST BY PART DELIVERY
-if the part delivery of the goods is intended as symbolical
delivery of the
whole, and therefore, a waiver of any right of
retention as to remainder,
the lien is lost.

ARTICLE 1529
WHEN UNPAID SELLER LOSSES POSSESSORY LIEN
1. DELIVERY TO AGENT OR BAILEE OF BUYER
-it is true that the seller may stop the goods while on their way to
the
buyer after delivery to a bailee for the buyer but it cannot
be said that
the seller has still any lien upon him.
2. POSSESSION BY BUYER OR HIS AGENT
-it is plain that when the ownership is transferred the seller has
no lien
simply because he has no possession necessary for a
lien.
3. WAIVER OF LIEN
-the seller may lose his lien by express agreement to surrender
it. The
seller could no longer assert a lien.
ARTICLE 1530
RIGHT OF SELLER TO STOP GOODS IN TRANSITU
-he may resume possession of the goods while they are in transit,
when the buyer is or becomes insolvent. The right is exercised either by
obtaining actual possession of the goods or by giving notice of his claim to
the carrier or other bailee in possession.