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ART ANNOTATION NOTES

FORM & INTERPRETATION


1458. By the contract of sale, one of the contracting parties obligates himself to transfer Characteristics of a contract of sale: *Correlate w/:
the ownership of & to deliver a determinate thing, & the other to pay therefor a price 1. Consensual –perfected by mere consent - 1459, 1460, re: determinate thing
certain in money or its equivalent. 2. Bilateral –parties are bound to fulfill correlative oblis toward each other - 1469, 1472, re: price
A contract of sale may be absolute or conditional. 3. Onerous – the thing sold is conveyed in consideration of the price & vice versa
4. Commutative – thing sold is considered equivalent of the price paid & vice versa Contract to Sell – a bilateral contract of conditional sale whereby the prospective seller,
5. Nominate – given a special name & designation while expressly reserving the ownership of the subject prop despite delivery thereof to the
6. Principal – it does not depend for its existence & validity upon another contract prospective buyer, binds himself to sell the said prop exclusively to the prospective buyer
upon fulfillment of the condition agreed upon.
Essential requisites of sale:
1. Consent or meeting of the minds (1475) Dignos v CA: “A deed of sale is absolute in nature although denominated as a ‘Deed of
2. Object or subject matter (1460) Conditional Sale’ where nowhere in the contract in question is a proviso or stipulation to
3. Cause or consideration (1458) the effect that title to the prop sold is reserved in the vendor until full payment of the
purchase price, nor is there a stipulation giving the vendor the right to unilaterally rescind
Kinds of contract of sale: the contract the moment the vendee fails to pay w/in a fixed period.”
1. Absolute – not subject to condition. Ownership is transferred upon constructive or
actual delivery. In People’s Homesite & Housing Corp v CA, it would appear that in a conditional sale, there
2. Conditional – subject to a contingency. Ownership is reserved until fulfillment of a is no perfected contract of sale until the fulfillment of the suspensive condition. It is the
suspensive condition or extinguished upon the happening of a resolutory condition. willingness of the seller to sell the object w/c is dependent upon the condition. So if the
condition is not fulfilled, there is NO MEETING OF THE MINDS hence there is no perfected
Contract of Absolute Sale Contract to Sell contract of sale.
Title passes upon delivery Title shall not pass until buyer has paid *This gives us another difference b/w contract to sell & conditional sale. In a contract to
the price sell, the sale is perfected but the transfer of ownership depends upon the fulfillment of the
Non-payment of the price is a negative Full payment of the price is a positive suspensive condition, the full payment of the purchase price.
resolutory condition (b/c ownership will suspensive condition. (b/c ownership will
revert to the seller if he chooses to be vested upon the buyer only when he
rescind the contract) pays the price)
Non-oayment gives seller right to either Non-payment is not a breach but simply
demand specific performance or rescind an event that prevents the obli of the
the contract vendor to convey title from acquiring
binding force
Seller loses ownership of the thing & Seller retains ownership until buyer’s
delivered unless the sale is rescinded fulfillment of the condition
Remedy of rescission available (b/c Remedy of rescission not available
rescission found in 1191 is not based
upon the non-payment of the price but
rather on the failure of the debtor to
comply w/ an ALREADY EXISTING obli)

Contract to Sell Conditional Sale


Similar to the nature of a conditional sale, Willingness of the vendee to sell is
since transfer of title is conditioned upon dependent upon a condition not
the full payment of the purchase price necessarily the payment of the purchase
price
Full payment of the purchase price does Fulfillment of the suspensive condition
not automatically vest ownership or title makes the sale absolute. If there has been
to the prospective buyer as the previous delivery to the buyer,
prospective seller explicitly reserves its ownership/title automatically transfers to
transfer. Seller still has to convey title. the buyer.
If seller sells the object of sale to a 3rd If seller sells the object of sale to a 3 rd
person once condition is fulfilled, 3rd person once condition is fulfilled, 3 rd
person’s right is better than original buyer person’s right cannot defeat that of the
but seller incurs damages. original owner & the latter may even ask

SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
for reconveyance if the object is delivered
to such 3rd person.
1459. The thing must be licit & the vendor must have a right to transfer the ownership Requisites of Object: Read the cases of Artates v Urbi, Heirs of Zambales v CA for examples of sales involving
thereof at the time it is delivered. 1. It must be determinate things illicit per accidens
2. It must be licit
3. It must be w/in the commerce of men *When the thing is sold in violation of a right of 1 st refusal of another person, the sale is
4. As to rights, it must be transmissible or personal valid but rescissible

2 kinds of illicit things: *Relate w/ Arts. 1347-48, 1460, CC


1. Illicit per se
2. Illicit per accidens

Seller need not own the thing to be sold, all that is required of him is the right to transfer
ownership thereof at the time it is delivered.
1460. A thing is determinate when it is particularly designated or physically segregated from all others of the same class. *Relate w/ Art. 1349, CC
1461. Things having a potential existence may be the object of the contract of sale. ‘Things having a potential existence’ – something that is reasonably certain to come into existence as the natural increment or usual incident of something in existence already belonging
The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition to the seller
that the thing will come into existence. - The moment the thing does come into existence, title is vested upon the buyer.
The sale of a vain hope or expectancy is void.
Emptio Rei Speratae Emptio Spei
Sale of a thing not yet in existence subject to the condition that the thing will exist & on Sale of hope itself that the thing will come into existence even if the thing does not
failure of the condition, the contract becomes ineffective & hence, the buyer has no obli eventually exist
to pay the price
Future thing is certain as to itself but uncertain as to its quantity & quality It is not certain that the thing itself will exist, much less its quantity & quality
Deals w/ a future thing Deals w/ a present thing – the hope or expectancy
Subject to the condition that the thing should exist

Presumption is in favor of Emptio Rei Speratae


1462. The goods w/c form the subject of a contract of sale may be either existing goods, Existing goods – goods owned or possessed by the seller
owned or possessed by the seller, or goods to be manufactured, raised, or acquired by the Future goods – goods to be manufactured, raised, or acquired
seller after the perfection of the contract of sale, in this Title called “future goods”.
In the sale of future goods, the seller assumes the risk of acquiring the title (to the future goods) & making the conveyance, or responding in damages for the buyer’s loss of his bargain

1462 does not apply if the goods are to be manufactured ESPECIALLY for the buyer, b/c that case is a contract for a piece of work & not of sale.
1463. The sole owner of a thing may sell an undivided interest therein. Legal effect of the sale of an undivided interest in a thing is to make the buyer a co-owner in the thing sold
1464. In the case of fungible goods, there may be a sale of an undivided share of a specific mass, though the seller purports to sell & the Fungible goods – goods of which any unit is, from its nature or by mercantile usage, treated as the equivalent of any other unit
buyer to buy a definite number, weight or measure of the goods in the mass, & though the number, weight or measure of the goods in the
mass is undetermined. By such sale the buyer becomes owner in common of such a share of the mass as the number, weight or measure Owner of mass may sell only an undivided share thereof, provided the mass is specific or capable of being made determinate.
bought bears to the number, weight or measure of the mass. If the mass contains less than the number, weight or measure bought, the - By such sale, buyer becomes a co-owner of the seller of the whole mass in proportion in w/c the definite share bought bears to the
buyer becomes the owner of the whole mass & the seller is bound to make good the deficiency from goods of the same kind & quality, mass
unless a contrary intent appears. - Aliquot share of each owner can be determined only by the measurement of the entire mass. If it turns out that the whole mass is
actually LESS than the thing sold, the buyer becomes the owner of the whole mass & the seller must supply the deficiency.
1465. Things subject to a resolutory condition may be the object of the contract of sale. *Resolutory condition – an uncertain event upon the happening of w/c the obli (or right) subject to it is extinguished.
1466. In construing a contract containing characteristics of bothe the contract of sale & of By the contract of agency, a person binds himself to render some service or to do Read: Quiroga v Parsons
the contract of agency to sell, the essential clauses of the whole instrument shall be something in representation or on behalf of another, w/ the consent or authority of the
considered. latter. (1868, CC) Atty. Busmente: Is there a case wherein a contract is both a contract of sale & a contract of
agency to sell at the same time?
Sale Agency Transaction b/w car dealerships & manufacturers. The dealers will own the cars sold by the
Buyer receives the goods as owner Agent receives the goods as the goods of manufacturers but are still able to give the warranties of the manufacturers when they sell
the principal who retains ownership over the cars in turn.
them & has the right to fix the price &
terms of the sale & receive the proceeds
less the agent’s commission upon the
sales made
SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
Buyer has to pay the price Agent has simply to account for the
proceeds of the sale he may make on the
principal’s behalf
Buyer, generally, cannot return the object Agent can return the object in case he is
sold unable to sell the same to a 3rd person
Seller warrants the thing sold Agent makes no warranty for w/c he
assumes personal liability as long as he
acts w/in his authority & in the name of
the seller
Buyer can deal w/ the thing sold as he Agent in dealing w/ the thing received,
pleases must act & is bound according to the
instructions of his principal.
1467. A contract for the delivery at a certain price of an art w/c the vendor in the ordinary By the contract of 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.
course of his business manufactures or procures for the gen’l market, whether the same is
on hand at the time or not, is a contract of sale, but if the goods are to be manufactured The distinction b/w a contract of sale & one for a piece of work is tested by the inquiry whether the transferred is one not in existence & w/c NEVER WOULD HAVE EXISTED IF NOT FOR
specially for the customer & upon his special oprder, & not for the gen’l market, it is a THE ORDER of the party desiring to acquire it or a thing w/c WOULD HAVE EXISTED & been the subject of sale to some other person, even if the order had not been given.
contract for a piece of work.
Contract of Sale Contract for a Piece of Work
The object of the sale would have existed & been the subject of sale to some other The object of the sale never would have existed if not for the order of the party desiring
person, even if the order had not been given to acquire it
Risk of loss before delivery is borne by the buyer (at least according to 1480) Risk of loss before delivery is borne by the contractor
W/in the statute of frauds Not w/in the Statute of Frauds

Read: Concrete Aggregates v CTA


1468. If the consideration of the contract consists partly in money, & partly in another By the contract of barter/exchange, one of the parties binds himself to give one thing in In the lease of things, one of the parties binds himself to give toa nother the enjoyment or
thing, the transaction shall be characterized by the manifest intention of the parties. If consideration of the other’s promise to give another thing. use of a thing for a price certain & for a period w/c may be definite or indefinite.
such intention does not clearly appear, it shall be considered a barter if the value of the *Difference b/w sales & lease is in lease, only TEMPORARY possession & enjoyment is
thing given as a part of the consideration exceeds the amount of the money or its Value of thing given > amount of money or its equivalent = BARTER transferred unto the lessee.
equivalent; o/w, it is a sale. Value of thing given < amount of money or its equivalent = SALE
Dacion en pago – Alienation of prop to the creditor in satisfaction of a debt in money.

Sale Dacion En Pago


No preexisting credit or debt Pre-existing credit or debt
Oblis are created Oblis are extinguished
Cause is, as to the seller, the price paid & Cause is, as to the debtor, the
as to the buyer, the thing sold. extinguishment of debt & as to the
creditor, he object acquired in lieu of the
credit
More freedom in fixing the price Less freedom. Lols
Buyer still has to pay the price Debtor has already received payment
before the contract (of dation) is
perfected.
1469. In order that price may be considered certain, it shall be sufficient that it be so w/ The price is certain if:
reference to another thing certain, or that the determination thereof be left to the a. The parties have fixed or agreed upon a definite amount
judgment of a specified person or persons. b. It be certain w/ reference to another thing certain (relate to 1472)
Should such person/s be unable or unwilling to fix it, the contract shall be inefficacious, c. The determination of the price is left to the judgment of a specified person/s
unless the parties subsequently agree upon the price. *(b) & (c) apply only in absence of (a).
If the 3rd person/s acted in BF or by mistake, the courts may fix the price.
Where such 3rd person/s are prevented from fixing the price or terms by fault of the seller Gen’l rule: Price fixed by a 3rd person is binding upon the parties
or the buyer, the party in fault may have such remedies against the party in fault as are Exceptions:
allowed the seller or the buyer, as the case may be. 1. When the 3rd person acts in BF or by mistake (mistake ≠ error in judgment). In such a case, the courts may fix the price.
2. When the 3rd person disregards specific instructions or procedure or data given him (Walang sinabi si De Leon kung anong mangyayari but it’s analogous to the 1 st exception, so I think
courts will fix the price din ang ending nito)
3. When the 3rd person refuses or cannot fix it. If this happens, the contract is void unless the parties subsequently agree upon the price.
SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
4. When the 3rd person is prevented from fixing the price either by the seller or the buyer. In this case, innocent party may choose b/w rescission & fulfillment, w/ damages in either case.
(read 1191, 2nd par)
1470. Gross inadequacy of price does not affect a contract of sale, except as it may indicate Inadequacy of price however, may indicate a defect in the consent such as when fraud, mistake or undue influence is present. Read arts. 1135 & 1381, pars 1 & 2
a defect in the consent, or that the parties really intended a donation, or some other act or
contract. Where the price is so low that ‘a man in his senses & not under a delusion’ would not accept it, the sale may be set aside.
1471. If the price is simulated, the sale is void, but the act may be shown to have been in Simulation – occurs when an apparent contract is a declaration of a fictitious will 1345. Simulation of a contract may be absolute or relative. The former takes place when
reality a donation, or some other act or contract. deliberately made by agreement of the parties, in order to produce, for the purpose of the parties do not intend to be bound at all; the latter when the parties conceal their true
deception, the appearance of a juridical act w/c does not exist or is different from that w/c agreement.
was really executed.
1409. The ff contracts are inexistent & void from the beginning:
Requisites of simulation: 2. Those w/c are absolutely simulated or fictitious.
1. An outward declaration of will different from the will of the parties;
2. The false appearance must have been intended by mutual agreement; & Hence, only those acts of absolute simulation where the parties do not intend to be bound
3. The purpose is to deceive 3rd persons. at all are void.
1472. The price of securities, grain, liquid, & other things shall also be considered certain, when the price fixed is that w/c the thing sold would have on a definite day, or a particular exchange or market or when an amount fixed is above or below the price on such day, or in such
exchange or market, provided said amount be certain.
1473. The fixing of the price can never be left to the discretion of one of the contracting Acceptance by one of the parties of the price fixed by the other produces a meeting of the Read the case of Serra v CA & RCBC, re the part of adhesion contracts w/c is similar to a
parties. However, if the price fixed by one of the parties is accepted by the other, the sale minds b/w the parties as to the price. price fixed by one of the parties
is perfected.
1474. Where the price cannot be determined in accordance w/ the preceding arts, or in any other manner, the contract is inefficacious. However, if the thing or any part thereof has Applies only where the means contemplated by the parties for fixing the price have, for
been delivered to & appropriated by the buyer, he must pay a resonable price therefor. What is a reasonable price is a question of fact dependent on the circumstances of each particular any reason, proved ineffectual.
case.
Reasonable price = generally market price at the time & place fixed by the contract or by
law for the delivery of goods.
1475. The contract of sale is perfected at the moment there is a meeting of minds upon Perfection ≠ Consummation Toyota Shaw v CA: “A definite agreement on the MANNER of payment of the price is an
the thing w/c is the object of the contract & upon the price. Validity of contract ≠ Enforceability of the contract essential element in the formation of a binding & enforceable contract of sale. This is so
From that moment, the parties may reciprocally demand performance, subject to the Reluctance ≠ Absence of consent b/c the agreement as to the manner of payment goes into the price such that a
provisions of the law governing the form of contracts. DISAGREEMENT ON THE MANNER OF PAYMENT IS TANTAMOUNT TO A FAILURE TO AGREE
Absence of Price v Non-Payment of Price ON THE PRICE. Definiteness as to the price is an essential element of a binding agreement
Absence of price will render the contract void while non-payment of price is a resolutory to sell personal prop.”
condition for w/c the seller may choose b/w rescission or specific performance.
Read & understand 1403, 2(d). Atty. Busmente hinted na lalabas yan sa midterms. He asked
At the moment of perfection, the reciprocal oblis imposed upon the parties by the contract this question in class: “What are the 2 exceptions to the UNENFORCEABILITY of an
of sale arise & are, hence, demandable reciprocally in the absence of contrary stipulation. UNWRITTEN contract of sale of goods, chattels or things in action at a price not less than
P500?”
Gen’l rule: a contract of sale is binding regardless of its form. Answer: 1. When the buyer has either: a) accepted or received part of such goods &
Exception: when the law requires a certain form for its validity or enforceability such as chattels or the evidences or some of them; or b) paid at the time some part of the
those falling under the Statute of Frauds. (Read 1356-58 & 1403) purchase money.
2. Sale is made by auction & entry is made by the auctioneer in his sales book.
De Leon: Sale, by itself, does not transfer or affect ownership, what it does is it CREATES
THE OBLI TO TRANSFER the ownership of the thing sold. “Ownership is transferred not by
contract but by tradition or delivery” –Sampaguita v Jalwindor, Ten Forty Realty v Cruz
1476. In the case of a sale by auction:
1. Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract of sale.
2. A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in other customary manner. Until such announcement is made, any bidder may retract his bid; & the auctioneer may w/draw the goods from the sale unless the auction has
been announced w/o reserve.
3. A right to bid may be reserved expressly by or on behalf of the seller, unless o/w provided by law or by stipulation.
4. Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ or induce any person to bid at such sale on his behalf or for the auctioneer, to employ or induce any person to
bid at such sale on behalf of the seller or knowingly to take any bid from the seller or any person employed by him. Any sale contravening this rule may be treated as fraudulent by the buyer.
1477. The ownership of the thing sold shall be transferred to the vendee upon the actual Sale is consummated by delivery of both the thing sold & the purchase money. Addison v Felix: “The thing is considered to be delivered when it is placed ‘in the hands &
or constructive delivery thereof. possession of the vendee.’ In order that symbolic delivery may produce the effect of
This article applies in the absence of stipulation to the contrary, reserving ownership in the tradition, it is necessary that the vendor shall have had such control over the thing sold
thing sold despite its delivery. that, at the moment of the sale, its material delivery could have been made. It is not
enough to confer upon the purchaser the ownership & the right of possession. THE THING
SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
If the vendee/buyer fails to pay, & the thing has already been delivered, ownership of the SOLD MUST BE PLACED IN HIS CONTROL. When there is no impediment whatever to
thing DOES NOT automatically revert back to the vendor. In this case, the vendor has 2 prevent the thing sold passing into the tenancy of the purchaser by the sole will of the
options: 1, to demand payment of the price; & 2, rescission. vendor, symbolic tradition thru the execution of a public instrument is sufficient. But if
notwithstanding the execution of the instrument, the purchaser cannot have the
*Correlate w/: enjoyment & material tenancy of the thing & make use of it himself or thru another in his
- 1496 name, b/c such tenancy & enjoyment are opposed by the interposition of another will,
- 1497, re: actual delivery then fiction yields to reality – the delivery has not been effected.”
- 1498-1501, re: constructive delivery
Sampaguita v Jalwindor: “Ownership is not transferred by perfection of the contract but by
delivery, either actual or constructive. This is true even if the purchase has been made on
credit. Payment of the purchase price is not essential to the transfer of ownership as long
as the prop sold has been delivered.”

Norkis Distributors v CA: “In all forms of delivery, it is necessary that the act of delivery
whether constructive or actual, be coupled w/ the intention of delivering the thing. The
act, w/o the intention, is insufficient.”
1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser *General rule is 1477. 1478 works only if there is a stipulation to that effect. (Read: EDCA Publishing v. Santos)
until he has fully paid the price.
1479. A promise to buy & sell a determinate thing for a price cerain is reciprocally A unilateral promise of offer to sell or to buy a thing w/c is not accepted creates no Art 1324, CC. When the offeror has allowed the offeree a certain period to accept, the
demandable. juridical effect or legal bond. AKA Policitacion. offer may be w/drawn at any time before acceptance by communicating such w/drawal
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is except when the option is founded upon a consideration, as something paid or promised.
binding upon the promissor if the promise is supported by a consideration distinct from Option – a contractual privilege existing in one person for w/c he has paid a consideration
the price. w/c gives him the right to buy/sel from/to another person, if he chooses, at any time w/in Atkins v Cua Hian Tek: “If the option is given w/o consideration, it is a mere offer of a
the agreed period at a fixed price, or under, or in compliance w/ certain terms & contract of sale, w/c is not binding until accepted. If, however, acceptance is made before a
conditions. w/drawal, it constitutes a binding contract of sale, even though the option was not
supported by a sufficient consideration.”
Nature of Option Contract:
1. Preparatory contract separate & distinct from the main/principal contract. Sanchez v Rigos: “1354 (presumption of cause) applies to contracts in general, whereas the
2. Gives one party to the right to decide whether or not to enter into principal contract, 2nd par of 1479 refers to ‘sales’ in particular, &, more specifically, to ‘an accepted unilateral
while it binds the other: a) not to enter into the principal contract w/ any other person promise to buy or to sell.’
during the agreed time; & b) to enter into the principal contract w/ the party to whom In order that said promise may be made ‘binding upon the promissor’, 1479 requires the
the option was granted if the latter should decide to use the option w/in the agreed concurrence of a condition, namely, that the promise be ‘supported by a consideration
period. disctinct from the price.’ Accordingly, the promisee cannot compel the promissor to
3. It imposes no binding obli on the person holding the option aside from the comply w/ the promise, UNLESS the former establishes the existence of said distinct
consideration for the offer. consideration. In other words, the promisee has the burden of proving such consideration.”
4. Must be supported by a consideration distinct from the price (in order to bind the
promissor the oblis stated in No.2), else it’s void. (read: Atkins v Cua Hian Tek, Sanchez v Equatorial v Mayfair: “Where a period is given to the offeree w/in w/c to accept the offer,
Rigos, Sps. Trinidad v IAC) the ff rules gen’lly govern:
5. Consideration need not be money or actual cash. It must be something of value though. 1. If the period is NOT ITSELF FOUNDED UPON OR SUPPORTED BY A CONSIDERATION, the
(read: Serra v CA & RCBC) offeror is still free & has the right to w/draw the offer before its acceptance, or if an
acceptance has been made, before the offeror’s coming to know of such fact, by
Option Contract Right of 1st Refusal communicating that w/drawal to the offeree.
Promissor cannot sell the prop to a 3 rd Promissor can sell the prop to a 3 rd person 2. If the period HAS A SEPARATE CONSIDERATION, a contract of ‘option’ is deemed
person UNLESS the period agreed upon BUT he has to make a similar offer to the perfected, & it would be a breach of that contract to w/draw the offer during the agreed
the option contract expires promisee 1st, allowing the promisee then period. The option, however, is an independent contract by itself; & is to be
to choose whether or not to accept such distinguished from the projected main agreement w/c obviously yet to be concluded. If,
offer in fact, the optioner-offeror w/draws the offer before its acceptance by the optionee-
Promissee may compel promissor to Promissee cannot compel promissor to offeree, the latter may not sure for specific performance on the propose contract since it
enter into principal contract if he decides enter into principal contract since right of has failed to reach its own stage of perfection. The optioner-offeror, however, renders
to exercise the option w/in the agreed 1st refusal arises only when promissor himself liable for damages for breach of the option.”
period decides to sell
If promisee elects to buy, the price of the If promisee elects to buy, the price is
object of sale is FIXED subject to negotiations
The consideration is DISTINCT from the Usually found in contracts of lease, the

SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
purchase price consideration is INTEGRAL in the contract
Sale to a 3rd person in violation of Option Sale to a 3rd person in violation of Right of
is INVALID 1st Refusal is RESCISSIBLE
Read: Equatorial v Mayfair
1480. Any injury to or benefit from the thing sold, after the contract has been perfected, Who bears the loss:
from the moment of the perfection of the contract to the time of delivery, shall be 1. Before perfection – seller (in accordance w/ res perit domino)
governed by Arts 1163 to 1165, & 1262. 2. At the time of perfection – contract is void & inexistent, therefore seller
This rule shall apply to the sale of fungible things, made independently & for a single price, 3. After perfection, before delivery – if basis is 1480, buyer, regardless w/n ownership has been transferred (note the exception in the 3 rd par of this Art, there has to be delivery before
or w/o considerration of their weight, number, or measure. the buyer can be made liable if things sold are fungible things for a price according to weight, number or measure). But if 1504, seller, if ownership is yet to be transferred. If
Should fungible things be sold for a price fixed accdg to weight, number or measure, the ownership has been transferred, buyer.
risk shall not be imputed to the vendee until they have been weighed, counted, or 4. After delivery – buyer
measured, & delivered, unless the latter has incurred in delay.
Atty. Busmente: 1480 v 1504. I don’t know w/c should prevail over the other. If your client is the seller, use 1480. If it’s the buyer, 1504.
1481. In the contract of sale of goods by description or by sample, the contract may be Sale by description – occurs where a seller sells things as being of a particular kind, the buyer not knowing whether the seller’s representations are true or false, but relying on them as
rescinded if the bulk of the goods delivered do not correspond w/ the description or the true
sample, & if the contract be by sample as well as by description, it is not sufficient that the
bulk of goods correspond w/ the sample if they do not also correspond w/ the description. Sale by sample – to constitute a sale by sample, it must appear that the parties contracted solely w/ reference to the sample, w/ the understanding that the bulk was like it.
The buyer shall have a reasonable opportunity of comparing the bulk w/ the description or
the sample. ‘Bulk of goods’ in this art = goods to be actually sold
1482. Whenever earnest money is given in a contract of sale it shall be considered as part Earnest money – something of value given by the buyer to the seller to show that the buyer is really in earnest, & to bind the bargain.
of the price & as proof of the perfection of the contract. Earnest money forms part of the consideration ONLY IF the sale is PERFECTED & the sale is CONSUMMATED upon full payment of the purchase price.
Earnest money constitutes an advance or down payment & must therefore be deducted from the total price.

Earnest Money Option Money


Part of the purchase price Distinct & separate consideration
Given only where there is already a perfected sale Applies to a sale not yet perfected
When given, buyer is bound to pay balance When given, would-be buyer not bound to pay the balance (& may even forfeit the
option money if given such right in the terms of the option contract)
*Option money may become earnest money if the parties so agree. Or it may actually be in the nature of earnest money when considered w/ the rest of the contract.
1483. Subject to the provisions of the Statute of Frauds & of any other applicable statute, a Gen’l rule: a contract of sale is binding regardless of its form.
contract of sale may be made in writing, or by word of mouth, or partly in writing & partly Exception: when the law requires a certain form for its validity or enforceability such as those falling under the Statute of Frauds. (Read 1356-58 & 1403)
by word of mouth, or may be inferred from the conduct of the parties.
In case the contract of sale is covered by the SoF, it should be in writing o/w they shall be unenforceable. (Remember, unenforceable ≠ void)

Registration of a public instrument in the registry of deeds is not indispensible as regards the contracting parties. However, doing so would bind 3 rd parties to the contract & protect the
buyer against claims of 3rd persons arising from subsequent alienations by the vendor.
1484. In a contract of sale of personal prop the price of w/c is payable in installments, the Remedies are alternative, election of one is a waiver of the right to resort to the others. Southern Motors v Moscoso :
vendor may exercise any of the ff remedies: Only the exercise of one of these remedies will serve as a bar to the others.
Foreclosure incident to 1st remedy Foreclosure of chattel mortgage (3rd
1. Exact fulfillment of the obli, should the vendee fail to pay;
remedy)
2. Cancel the sale, should the vendee’s failure to pay cover 2 or more installments. If seller chooses option 2, the buyer may demand the return of the installments unless
Procedure is those prescribed for Procedure is outlined in §14 of Chattel
3. Foreclose the chattel mortgage on the thing sold, if one has been constituted, should there is a stipulation effecting forfeiture (read 1486).
ordinary civil actions, under the RoC Mortgage Law
the vendee’s failure to pay cover 2 or more installments. In this case, he shall have no
further action against the purchaser to recover any unpaid balance of the price. Any The RULES APPLY to:
Pascual v Universal Motors Corp: Sellers cannot go after guarantors if they have already
agreement to the contrary shall be void. 1. the sale of PERSONAL PROP, w/c is PAYABLE IN INSTALLMENTS
chosen 3rd remedy. B/c if they did, guarantors would have a right to go after the original
2. the lease of PERSONAL PROP, w/ OPTION TO BUY, & the LESSOR has DEPRIVED THE
debtors, w/c would result in the situation the law seeks to prevent (double recovery).
1485. The preceding art shall be applied to contracts purporting to be leases of personal LESSEE of the POSSESSION/ENJOYMENT of the thing.
prop w/ option to buy, when the lessor has deprived the lessee of the possession or
Ridad v Filinvest: “Should the vendor choose to foreclose the mortgage (3 rd remedy), he
enjoyment of the thing. RA 6552 governs sales of REAL ESTATE on installments.
has to content himself w/ the proceeds of the sale at the public auction of the chattels w/c
Where the buyer has paid at least 2 years of installments, the buyer is entitled to the ff
were sold on installment & mortgaged to him.”
1486. In the cases referred to in the 2 preceding arts, a stipulation that the installments or rights in case he defaults in the payment of succeeding installments:
rents paid shall not be returned to the vendee or lessee shall be valid insofar as the same 1. grace period – to pay, w/o additional interest, the unpaid installments due w/in the total
So the lesson is, gawin mo yung ginawa sa Southern Motors v Moscoso imbis ung sa Ridad
may not be unconscionable under the circumstances. grace period earned by him w/c is hereby fixed at the rate of one month grace period for
v Filinvest. Hingi ka ng P/N sa buyer, i-mortgage mo ung chattel para i-secure ung P/N. Pag
every year of installment payments made; Provided, that this right shall be exercised by
di nagbayad, file ka ng complaint to recover the unpaid balance of the P/N (sa Ridad, ang
the buyer only once in every 5 years of the life of the contract & its extensions, if any;
ginawa nila finoreclose agad nila extrajudicially ung chattel mortgage). Kung sakaling di
SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
2. refund of cash surrender value – if the contract is cancelled, the seller shall refund to the magbayad si buyer, ma-fo-foreclose ung chattel mortgage na INCIDENT ng complaint na
buyer the cash surrender value of the payments on the prop equivalent to 50% of the finile mo. Kung sakaling deficient ung proceeds ng foreclosure, pwede mo pa ring habulin si
total payments made, &, after 5 years of installments, an additional 5% every year but buyer dun sa kulang. Kung sakali namang sumobra, edi bingo.
not to exceed 90% of the total payments made; Provided, that the actual cancellation of
the contract shall take 30 days from receipt by the buyer of the notice of cancellation or
the demand for rescission of the contract by a notarial act & upon full payment of the
cash surender value to the buyer.
Read: Layug v IAC
1487. The expenses for the execution & registration of the sale shall be borne by the vendor, unless there is a stipulation to the contrary.
1488. The expropriation of prop for public use is governed by special laws.
CAPACITY TO BUY OR SELL
1489. All persons who are authorized in this Code to obligate themselves, may enter into a Gen’l rule: All persons, whether natural/juridical, who can bind themselves have also legal Contracts of sale entered into by incapacitated persons are:
contract of sale, saving the modifications contained in the ff arts. capacity to buy & sell. 1. VOIDABLE, if only ONE of the parties is incapable of giving consent to a contract
Where necessaries are sold & delivered to a minor or other person w/o capacity to act, he Exceptions: When law determines that a party suffers from either absolute or relative (1390[1])
must pay a reasonable price therefor. Necessaries are those referred in Art 290. incapacity. 2. UNENFORCEABLE, if BOTH parties are incapable of giving consent to a contract (1403[3])

Absolute incapacity – exists in case of persons who cannot bind themselves (e.g. minors, Who are incapable of giving consent to a contract?
insane or demented persons) 1327. The ff cannot give consent to a contract:
Ralative incapacity – exists only w/ reference to certain persons or a certain class of prop 1. Unemancipated minors;
(e.g. 1490, 1491) 2. Insane or demented persons, & deaf-mutes who do not know how to write.
1329. The incapacity declared in art 1327 is subject to the modifications determined by
Necessaries – those things w/c are needed for sustenance, dwelling, clothing, medical law, & is understood to be w/o prejudice to special dq’s established in the laws.
attendance, education & transportation according to the financial capacity of the family of
the incapacitated person (Art. 94, FC)
1490. The husband & the wife cannot sell props to each other, except: Prohibition also applies to common-law relationships. A sale b/w husband & wife is VOID. (1409[7])
1. When a separation of prop was agreed upon in the marriage settlements; or Read Art. 87, FC, re donations b/w husband & wife/common-law partners
2. When there has been a judicial separation of prop under Art. 191. Persons allowed to question such sale:
1. Those who bear such relation to the parties making the transfer or to the prop itself that
such transfer interferes w/ their rights or interests.
2. The government.
1491. The ff persons cannot acquire by purchase, even at public or judicial auction, either Pars. 1-3 = unenforceable, capable of ratification (b/c it involves private interests) Fiestan v CA: “The prohibition mandated by par 2 of Art 1491 does not apply where the
in person or thru the mediation of another: Pars. 4-6 = void (b/c it involves public interests) sale of the prop in dispute was made under a special power inserted in or attached to the
1. The guardian, the prop of the person/s who may be under his guardianship; real estate mortgage pursuant to Act No. 3135, as amended. Under Act No. 3135, as
2. Agents, the prop whose administration or sale may have been intrusted to them, No. 2 not absolute, agent may buy the prop intrusted unto him if: amended, a mortgagee-creditor is allowed to participate in the bidding & purchase under
unless the consent of the principal have been given; 1. The agency has been terminated the same conditions as any other bidder.”
3. Executors & administrators, the prop of the estate under administration; 2. His principal gives consent Act No. 3135 – An Act to Regulate the Sale of Prop under Special Powers inserted in or
4. Public officers & employees, the prop of the State or of any subdivision thereof, or of 3. The sale was made under a special power pursuant to a special law (read: Fiestan v CA) Annexed to Real Estate Mortgages. (applies in cases of extrajudicial foreclosure sales)
any gocc, or institution, the admin of w/c has been intrusted to them; this provision
shall apply to judges & gov’t experts who, in any manner whatsoever take part in the No.3 refers only to props under the administration of the executor or administrator at the
sale; time of the acquisition.
5. Justices, judges, prosecuting attorneys, clerks of superior & inferior courts, & other Executor may purchase the hereditary rights of any heir, since they do not administer such
officers & employees connected w/ the administration of justice, the prop & rights in rights.
litigation or levied upon an execution before the court w/in whose jurisdiction or
territory they exercise their respective fxns; this prohibition includes the act of acquiring No.4 refers only to props:
by assignment & shall apply to lawyers, w/ respect to the prop & rights w/c may be the 1. Belonging to the Sate, or of any subdivision thereof, or og any gocc or institution
object of any litigation in w/c they may take part by virtue of their profession; 2. The admin of w/c has been entrusted to PO/Es.
6. Any others specially dq’d by law.
For no. 5 to operate, sale or assignment must take place during the pendency of the
litigation involving the prop. A prop is “in litigation” from the moment it becomes subject
to judicial action.
1492. The prohibitions in the 2 preceding arts are applicable to sales in legal redemption, compromises & renunciations. Compromise – amicable settlement of a (legal) controversy
Renunciation – condonation (remember obli, read 1270-1274 kung trip mo)
EFFECTS OF THE CONTRACT WHEN THE THING SOLD HAS BEEN LOST
1493. If at the time the contract of sale is perfected, the thing w/c is the object of the Applies to a sale of a specific thing.

SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
contract has been entirely lost, the contract shall be w/o any effect. Loss or injury referred to in this art is one w/c takes place BEFORE or AT THE TIME OF PERFECTION.
But if the thing should have been lost in part only, the vendee may choose b/w w/drawing
from the contract & demanding the remaining part, paying its price in proportion to the The thing is ‘lost’ when it perishes or goes out of commerce or disappears in such a way that its existence is unknown or it cannot be recovered.
total sum agreed upon. Perish – material deteriorations, complete change in the nature of the thing in such a manner that it loses the utility it had during the time of the perfection of the contract
1494. Where the parties purport a sale of specific goods, & the goods w/o the knowledge of the seller have perished in part or have wholly or in a material part so deteriorated in quality Applies to a sale the object of which consists of a mass of “specific goods”
as to be substantially changed in character, the buyer may at his option, treat the sale:
1. As avoided; or Rules in 1493 & 1494 similar:
2. As valid in all of the existing goods or in so much thereof as have not deteriorated, & as binding the buyer to pay the agreed price for the goods in w/c the ownership will pass, if the If deteriorated in whole = void
sale was divisible. If deteriorated in part = rescind contract or pay for what’s left
OBLIS OF THE VENDOR
Section 1. – General Provisions
1495. The vendor is bound to transfer the ownership of & deliver, as well as warrant the Principal oblis of a vendor:
thing w/c is the object of the sale. (1) To transfer the ownership of the determinate thing sold;
(2) To deliver the thing, w/ its accessions & accessories, if any, in the condition in w/c they were upon the perfection of the contract; (1537)
(3) To warrant against eviction & against hidden defects; (1495, 1547)
(4) To take care of the thing, pending delivery, w/ proper diligence; (1163)
(5) To pay for the expenses of the deed of sale, unless there is a stipulation to the contrary. (1487)

Seller need not be the owner of the thing at the time of perfection of the contract; 1459 provides that it is sufficient that he has a right to transfer the ownership thereof at the time it is
delivered.
1496. The ownership of the thing sold is acquired by the vendee frm the moment it is Ways of effecting delivery:
delivered to him in any of the ways specified in arts 1497 to 1501, or in any other manner (1) Actual or real delivery (1497);
signifying an agreement that the possession is transferred from the vendor to the vendee. (2) Constructive or legal delivery (1498-1501); or
(3) Any other manner signifying an agreement that the possession is transferred to the vendee. (1496-1499)

Delivery must be made to vendor or his authorized representative, if any.

Constructive delivery – a general term comprehending all those acts w/c, although not conferring phys’l possession of the thing, have been held by construction of law equivalent to acts
of real delivery.

Ways of effecting constructive delivery:


 Execution of a public instrument (1498, par. 1);
 Symbolic tradition or tradition symbolica (1498, par. 2);
 Traditio Longa Manu (1499, par. 1);
 Traditio Brevi Manu (1499, par. 2);
 Traditio Constitutum Possessorium (1500);
 Quasi-traditio or quasi-delivery (1501).

In all forms of delivery, it is necessary that the act be coupled w/ the intention of delivering the thing. For the same reason, any act, although not provided for in the preceding arts, but
accompanied by the evident intention of the vendor to deliver or of the vendee to receive the thing sold, will be considered as constituting tradition. It is the intention w/c is essential.
Section 2. – Delivery of the Thing Sold
1497. The thing sold shall be understood as delivered, when it is placed in the control & Tradition is a derivative mode of acquiring ownership by virtue of w/c one who has the right & intention to alienate a corporeal thing, transmits it by virtue of a just title to one who
possession of the vendee. accepts the same.

(Actual delivery) Ownership is not transferred by contract merely but by delivery, actual or constructive. Contracts only constitute title or rights to the transfer or acquisition of ownership, while delivery
or tradition is the method of accomplishing the same. Note however, that the parties to the contract may agree when & on what conditions the ownership in the subject of the contract
shall pass to the buyer.

Remedies of buyer if seller fails to deliver:


 Specific performance
 Rescission, w/ damages

Delivery of thing sold + payment of purchase price = consummation of contract of sale.


Since perfection ≠ consummation, delivery is not essential to the perfection of the contract of sale.

SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
1498. When the sale is made thru a public instrument, the execution thereof shall be 1st par applies both to movable & immovable prop. Addison v Felix: “In order that symbolic delivery may produce the effect of tradition, it is
equivalent to the delivery of the thing w/c is the object to the contract, if from the deed necessary that the vendor shall have had such control over the thing sold that, at the
the contrary does not appear or cannot clearly be inferred. Delivery here is only PRESUMPTIVE & can be rebutted by evidence to the contrary. moment of the sale, its material delivery could have been made. It is not enough to confer
W/ regard to movable prop, its delivery may also be made by the delivery of the keys of upon the purchaser the ownership & the right of possession. THE THING SOLD MUST BE
the place or depository where it is stored or kept. A seller cannot deliver constructively if he cannot actually deliver even if he wants to. PLACED IN HIS CONTROL. When there is no impediment whatever to prevent the thing sold
passing into the tenancy of the purchaser by the sole will of the vendor, symbolic tradition
In order to bind 3rd parties to the sale, the public instrument needs to be recorded in the thru the execution of a public instrument is sufficient. But if notwithstanding the execution
Register of Deeds & a certificate of title must be issued in the name of the buyer over the of the instrument, the purchaser cannot have the enjoyment & material tenancy of the
prop. But, as b/w the buyer & seller, the execution of the public instrument is enough to thing & make use of it himself or thru another in his name, b/c such tenancy & enjoyment
bind the 2 of them. are opposed by the interposition of another will, then fiction yields to reality – the delivery
has not been effected.”
Symbolic tradition – when parties, to effect delivery, make use of a token symbol to
represent the thing delivered. (e.g. Delivery of car keys) Ten Forty Realty v Cruz: “Execution of a public instrument gives rise only to a prima facie
presumption of delivery. Such presumption is destroyed when the delivery is not effected
b/c of a legal impediment. A constructive or symbolic delivery, being merely presumptive,
is deemed negated by the failure of the vendee to take actual possession of the land sold.”

Note the cases of Roman v Grimalt, Norkis Distributors v CA


1499. The delivery of movable prop may likewise be made by the mere consent or Traditio Longa Manu – takes place by mere consent or agreement of the contracting Atty. Busmente’s example of Traditio Longa Manu:
agreement of the contracting parties, if the thing sold cannot be transferred to the parties IF the thing sold cannot be transferred to the possession vendee at the time of the e.g. A buys B’s car, however, such car is in Baguio. Or such car is the subject of a lease
possession of the vendee at the time of the sale, or if the latter already had it in his sale contract b/w B & C at the time B sold it to A.
possession for any other reason.
Traditio Brevi Manu – happens when the vendee has already the possession of the thing
sold by virtue of another title (e.g. Lessor sells thing leased to lessee)
1500. There may also be tradition constitutum possessorium. Traditio Constitutum Possessorium – takes place when the vendor continues in possession of the prop sold not as owner but in some other capacity. (e.g. A sells his land to B. Instead of
delivering the land to B, A continues to occupy the land as B’s tenant.)
1501. W/ respect to incorporeal prop, the provisions of the 1st par of art 1498 shall govern. Quasi-traditio – delivery of incorporeal things thru:
In any other case wherein said provisions are not applicable, the placing of the titles of - Execution of a public instrument;
ownership in the possession of the vendee or the use by the vendee of his rights, w/ the - If (1) is inapplicable, the placing of titles of ownership in the possession of the vendee; or
vendor’s consent, shall be understood as a delivery. Allowing vendee to use his rights as new owner w/ the consent of the vendor.
1502. When goods are delivered to the buyer “on sale or return” to give the buyer an Sale or Return – a contract by w/c prop is sold but the buyer, who becomes the owner of the prop on delivery, has the option to return the same to the seller instead of paying the price.
option to return the goods instead of paying the price, the ownership passes to the buyer If buyer does not return w/in the time fixed in the contract, or if no time has been fixed, w/in reasonable time, sale is absolute & he is liable to pay the seller.
on delivery, but he may revest the ownership in the seller by returning or tendering the
goods w/in the time fixed in the contract, or, if no time has been fixed, w/in reasonable Sale on Trial or Approval – a contract in the nature of an option to purchase if the goods prove satisfactory, the approval of the buyer being a condition precedent.
time. *Buyer cannot accept part & reject the rest of the goods.
When goods are delivered to the buyer on approval or on trial or on satisfaction, or other
similar terms, the owership therein passes to the buyer: In both cases, if the goods are injured or damaged substantially thru the negligence or misuse of the buyer, his right to return is lost & the sale becomes absolute.
1. When he signifies his approval or acceptance to the seller or does any other act
adopting the transaction; Sale or Return Sale on Trial/Approval
2. If he does not signify his approval or acceptance to the seller, but retains the Subject to resolutory condition Subject to suspensive condition
goods w/o giving notice of rejection, then if a time has been fixed for the return of Depends entirely on the will of the buyer Depends on the character or quality of the goods
the goods, on the expiration of such time, &, if no time has been fixed, on the Ownership of the goods passes to the buyer on delivery & subsequent return of the Ownership remains in the seller until the buyer signifies his approval or acceptance to
expiration of a reasonable time. What is a reasonable time is a question of fact. goods reverts ownership in the seller. the seller
Risk of loss/injury rests upon buyer Risk still remains w/ the seller except when buyer is at fault or there is a contrary
agreement.
1503. When there is a contract of sale of specific goods, the seller may, by the terms of the GENERAL RULE: ownership in the goods sold passes to the buyer upon their delivery to the carrier. This is so b/c the carrier is presumed to be a bailee for the buyer.
contract, reserve the right of possession or ownership in the goods until certain conditions EXCEPTIONS: 1st, 2nd, & 3rd pars of 1503
have been fulfilled. The right of possession or ownership may be thus reserved
notw/standing the delivery of the goods to the buyer or to a carrier or other bailee for the *BILL OF LADING - A docu acknowledging the receipt of goods by a carrier or by the shipper's agent & the contract for the transportation of those goods; a docu that indicates the receipt
purpose of transmission to the buyer. of goods for shipment & that is issued by a person engaged in the business of transporting or forwarding goods. (BLD – 9 th Ed.)
Where goods are shipped, & by the bill of lading the goods are deliverable to the seller or
his agent, or to the order of the seller or of his agent, the seller thereby reserves the Scenarios wherein SELLER reserves the right of possession or ownership
ownership in the goods. But, if except for the form of the bill of lading, the ownership 1st Scenario (2nd par): By the BoL the goods are DELIVERABLE TO THE SELLER OR HIS ORDER for the purpose of retaining ownership
would have passed to the buyer on shipment of goods, the seller’s prop in the goods shall Effects:

SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
be deemed only for the purpose of securing performance by the buyer of his oblis under 1. The carrier is deemed as a bailee of the SELLER, not the buyer
the contract. 2. The seller will bear the risk of loss, res perit domino
Where goods are shipped, & by the bill of lading the goods are deliverable to order of the 3. The seller may retain the goods until the buyer performs his obli
buyer or of his agent, but possession of the bill of lading is retained by the seller or his 4. The seller may dispose of the goods to a 3rd person (but he will be liable for damages; the 2nd buyer though obtains a better right against the original buyer.)
agent, the seller thereby reserves a right to the possession of the goods as against the *The BoL may be deliverable to the seller or his order but his purpose is not to retain ownership but to secure the performance of the buyer’s obli. In such cases, the buyer will bear the
buyer. risk of loss & he will also have an action based on ownership against anyone except an innocent purchaser for value of the BoL from the consignee.
Where the seller of goods draws on the buyer for the price & transmits the bill of exchange
& bill of lading together to the buyer to secure acceptance or payment of the bill of 2nd Scenario (3rd par): BoL is DELIVERABLE TO THE ORDER OF THE BUYER, but the SELLER RETAINS POSSESSION OF THE BoL.
exchange, the buyer is bound to return the bill of lading if he does not honor the bill of Effect:
exchange, & if he wrongfully retains the bill of lading he acquires no added right thereby. If, 1. Buyer, even if the BoL is deliverable to him, cannot recover the goods until he presents the BoL (w/c he cannot do KASI NGA na kay Seller ang putang inang BoL)
however, the bill of lading provides that the goods are deliverable to the buyer or to the 2. Who bears the risk of loss? DI KO ALAM PUTA
order of the buyer, or is indorsed in blank, or to the buyer by the consignee named therein, De Leon: A 3rd person may be named as consignee in the BoL. In this case, the buyer can only obtain the goods when the consignee surrenders the BoL to the carrier/buyer or he indorses
one who purchases in GF, for value, the bill of lading or goods from the buyer will obtain the bill in blank or specially to the buyer. The consignee will only do so upon payment of the price (b/c if he would do so nonetheless, then USELESS! Seller might as well save himself the
the ownership in the goods, although the bill of exchange has not been honored, provided trouble by naming the buyer the consignee in the BoL)
that such purchaser has received delivery of the bill of lading indorsed by the consignee
named therein, or of the goods, w/o notice of the facts making tbhe transfer wrongful. 3rd Scenario (4th par): Seller transmits the BoL, together w/ a bill of exchange. (In the BoE, drawer & payee is seller, drawee is buyer)
Effects:
1. Title is retained by the seller until the BoE is paid.
2. Delivery of goods is conditioned upon the payment/acceptance of the BoE
3. If BoE is not paid, buyer is BOUND to return the BoL.
4. If the buyer wrongfully retains the BoL, he acquires no additional right thereby.
5. If the BoL names the buyer as consignee or is indorsed in blank or specially to the buyer, a purchaser in GF for value of the BoL from the buyer will obtain ownership in the
goods even if BoE is not honored.
(De Leon: safe move for the seller is to send the BoL & BoE to a 3 rd person b/c if sent to the buyer, he may obtain the goods & forget about honoring the BoE w/c would compel the seller
to enter upon litigation)
1504. Unless o/w agreed, the goods remain at the seller’s risk until the ownership therein is transferred to the buyer, but when the ownership therein is transferred to the buyer the This provision states 2 exceptions to the principle of Res Perit Domino (it is the owner of
goods are at the buyer’s risk whether actual delivery has been made or not, except that: the thing who bears the risk of loss by fortuitous event). In the 1 st par, the owner is the
1. Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract & the ownership in the goods has been retained by the seller seller but merely to secure the performance of the buyer of his oblis. In this par, the buyer
merely to secure performance by the buyer of his oblis under the contract, the goods are at the buyer’s risk from the time of such delivery; is the one who bears the risk. In the 2nd par, the risk of loss is borne by the party at fault.
2. Where actual delivery has been delayed thru the fault of either the buyer or seller the goods are at the risk of the party in fault.
1505. Subject to the provisions of this Title, where goods are sold by a person who is not Gen’l rule: Buyer cannot acquire more rights than the seller had 559. The possession of movable prop acquired in GF is equivalent to a tile. Nevertheless,
the owner thereof, & who does not sell them under authority or w/ the consent of the Exceptions: (in these cases, the buyer’s right to the prop is better than the owner, provided one who has lost any movable or has been unlawfully deprived thereof, may recover it
owner, the buyer acquires no better title to the goods than the seller had, unless the he is in GF) from the person in possession of the same
owner of the goods is by his conduct precluded from denying the seller’s authority. 1. Seller is estopped from denying seller’s authority to sell If the possessor of a movable lost or of w/c the owner has been unlawfully deprived, has
Nothing in this Title, however, shall effect: 2. Where the law enables the apparent owner to dispose of the goods as if he were the acquired in GF at a public sale, the owner cannot obtain its return w/o reimbursing the
1. The provisions of any factors’ acts, recording laws, or any other provision of law true owner thereof price paid therefor.
enabling the apparent owner of goods to dispose of them as if he were the true 3. Where the sale is sanctioned by statutory or judicial authority
owner thereof; 4. Where the sale is made at merchant’s stores, fairs or markets Dizon v Suntay: “The right of the owner cannot be defeated even by proof that there was
2. The validity of any contract of sale under statutory power of sale or under the order 5. When the seller has a voidable title w/c has not been avoided at the time of the sale GF in acquisition by the possessor. Suffice it to say in this regard that the right of the owner
of a court of competent jurisdiction; 6. Where seller subsequently acquires title to recover personal prop acquired in GF by another, is based on his being dispossessed w/o
3. Purchases made in a merchant’s store, or in fairs, markets, in accordance w/ the Code Read: Dizon v Suntay, EDCA Publishing v Sps. Santos his consent. The common law principle that were 1 of 2 innocent persons must suffer by a
of Commerce & special laws. fraud perpetrated by another, the law imposes the loss upon the party who, by his
misplaced confidence, has enable the fraud to be committed, cannot be applied in a case
w/c is covered by an express provision of the new CC, specifically 559 of the CC. B/w a
common law principle & a statutory provision, the latter must prevail in this jurisdiction.”

The case of Dizon v Suntay compared w/ the case of EDCA v Sps Santos:
Why is it that in Dizon, the owner (Suntay) was allowed to recover the prop but in the
EDCA case, EDCA was not?
In the latter case, the court held that EDCA WAS NOT UNLAWFULLY DEPRIVED OF THEIR
PROP. They delivered the prop in question (books) to Cruz (the person who posed as a prof
in DLSU) & as we all know, ownership is transferred upon delivery, actual or constructive.
Therefore, by the time Cruz sold the books to the Santoses, he was already the owner of
such books, allowing him to make a valid transfer of them.
1506. Where the seller of goods has a voidable title thereto, but his title has not been INNOCENT PURCHASER IN GOOD FAITH
SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
avoided at the time of the sale, the buyer acquires a good title to the goods, provided he Requisites for acquisition of good title by buyer:
buys them in good faith, for value, & w/o notice of the seller's defect of title. 1) Before the title of the seller has been avoided;
2) In good faith for value;
3) Without notice of the seller’s defect of title.
1507. A docu of title in w/c it is stated that the goods referred to therein will be delivered DEFINITION OF TERMS: - Documents of title refers to goods and not to money
to the bearer, or to the order of any person named in such docu is a nego docu of title. 1) Document of Title of Goods – any document used in the ordinary course of business in
the sale or transfer of goods, or authorizing a person to do so in his behalf.
a) Bill of Lading – a receipt for the transport of goods and their delivery to the person
named therein. Three Persons Involved: Shipper – Carrier – Consignee.
b) Dock Warrant – instrument given by dock owners to an importer of goods warehoused
on the dock.
c) Warehouse Receipt – a receipt of goods deposited with a warehouseman to hold and
deliver the goods to the person named therein or bearer; Quedan – warehouse receipt
for sugar.
2) Order – Relating to documents of title means an order by indorsement on the
documents.
CLASSES OF DOCUMENTS OF TITLE:
1) Negotiable Documents of Title – Deliverable to bearer or to the order of a specified
person.
2) Non-negotiable Documents of Title – Deliverable to a specified person.
1508. A nego docu of title may be nego’d by delivery: Blank Indorsement – The Indorsement is in blank or does not name a specific person
(1) Where by the terms of the docu the carrier, warehouseman or other bailee issuing the making the Document of Title a negotiable instrument and the goods are deliverable to
same undertakes to deliver the goods to the bearer; or bearer.
(2) Where by the terms of the docu the carrier, warehouseman or other bailee issuing the Special Indorsement – The indorsement names a specific person which makes the goods
same undertakes to deliver the goods to the order of a specified person, & such person deliverable only to him.
or a subsequent indorsee of the docu has indorsed it in blank or to the bearer.
Where by the terms of a nego docu of title the goods are deliverable to bearer or where a
nego docu of title has been indorsed in blank or to bearer, any holder may indorse the
same to himself or to any specified person, & in such case the docu shall thereafter be
nego’d only by the indorsement of such indorsee.
1509. A nego docu of title may be nego’d by the indorsement of the person to whose order  The Document of Title must be indorsed. Delivery alone is not sufficient. Document of Title: (Example)
the goods are by the terms of the docu deliverable. Such indorsement may be in blank, to  If indorsement is made merely for identification, the party “indorsing” the document To the order of (specified person) <- Non-negotiable
bearer or to a specified person. If indorsed to a specified person, it may be again nego’d by is liable only as guarantor (subsidiarily liable), not as an indorser (primarily liable). Then indorsed in blank <- becomes negotiable (to bearer)
the indorsement of such person in blank, to bearer or to another specified person. Then indorsed to a specified person <- becomes non-negotiable
Subsequent negotiations may be made in like manner. Then indorsed in blank <- becomes negotiable again (to bearer)
1510. If a docu of title w/c contains an undertaking by a carrier, warehouseman or other The words “non-negotiable” or “not negotiable” continues to be a negotiable Document of
bailee to deliver the goods to bearer, to a specified person or order of a specified person or Title if the goods may be delivered to “order” or to “bearer.”
w/c contains words of like import, has placed upon it the words "not nego," "non-nego" or NOTE: The first sentence of the provision must be read “to a specified person or order or
the like, such docu may nevertheless be nego’d by the holder & is a nego docu of title w/in to the order of a specified person.”
the meaning of this Title. But nothing in this Title contained shall be construed as limiting
or defining the effect upon the obligations of the carrier, warehouseman, or other bailee
issuing a docu of title or placing thereon the words "not nego," "non-nego," or the like.
1511. A docu of title w/c is not in such form that it can be nego’d by delivery may be A non-negotiable document of title cannot be negotiated. But it can be transferred or
transferred by the holder by delivery to a purchaser or donee. A non-nego docu cannot be assigned by delivery (relate to Art. 1514). The transferee acquires no additional right even
nego’d & the indorsement of such a docu gives the transferee no additional right. if indorsed.
1512. A nego docu of title may be nego’d: No. 2 is merely a representation of a bona fide purchaser
(1) By the owner thereof; or
(2) By any person to whom the possession or custody of the docu has been entrusted by
the owner, if, by the terms of the docu the bailee issuing the docu undertakes to
deliver the goods to the order of the person to whom the possession or custody of
the docu has been entrusted, or if at the time of such entrusting the docu is in such
form that it may be nego’d by delivery.
1513. A person to whom a nego docu of title has been duly nego’d acquires thereby: RIGHTS ACQUIRED BY A PERSON TO WHOM A NEGOTIABLE DOCUMENT OF TITLE HAS
(3) Such title to the goods as the person negotiating the docu to him had or had ability to BEEN DULY NEGOTIATED:
convey to a purchaser in good faith for value & also such title to the goods as the 1) Title of the person negotiating the document, over the goods covered by the docu
SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
person to whose order the goods were to be delivered by the terms of the docu had 2) Title of the person to whose order by the terms of the document the goods were to be
or had ability to convey to a purchaser in good faith for value; & delivered, over such goods
(4) The direct obligation of the bailee issuing the docu to hold possession of the goods 3) The direct obligation of the bailee to hold possession of the goods for him, as if the
for him according to the terms of the docu as fully as if such bailee had contracted bailee contracted directly with him.
directly w/ him.
1514. A person to whom a docu of title has been transferred, but not nego’d, acquires RIGHTS ACQUIRED BY THE PERSON TO WHOM DOCUMENT HAS BEEN TRANSFERRED
thereby, as against the transferor, the title to the goods, subject to the terms of any 1)
agreement w/ the transferor.
If the docu is non-nego, such person also acquires the right to notify the bailee who issued
the docu of the transfer thereof, & thereby to acquire the direct obligation of such bailee
to hold possession of the goods for him according to the terms of the docu.
Prior to the notification to such bailee by the transferor or transferee of a non-nego docu
of title, the title of the transferee to the goods & the right to acquire the obligation of such
bailee may be defeated by the levy of an attachment of execution upon the goods by a
creditor of the transferor, or by a notification to such bailee by the transferor or a
subsequent purchaser from the transferor of a subsequent sale of the goods by the
transferor.
1515. Where a nego docu of title is transferred for value by delivery, & the indorsement of
the transferor is essential for nego’n, the transferee acquires a right against the transferor
to compel him to indorse the docu unless a contrary intention appears. The nego’n shall
take effect as of the time when the indorsement is actually made.
1516. A person who for value negotiates or transfers a docu of title by indorsement or
delivery, including one who assigns for value a claim secured by a docu of title unless a
contrary intention appears, warrants:
1. That the docu is genuine;
2. That he has a legal right to negotiate or transfer it;
3. That he has knowledge of no fact w/c would impair the validity or worth of the docu; &
4. That he has a right to transfer the title to the goods & that the goods are merchantable
or fit for a particular purpose, whenever such warranties would have been implied if the
contract of the parties had been to transfer w/o a docu of title the goods represented
thereby.
1517. The indorsement of a docu of title shall not make the indorser liable for any failure
on the part of the bailee who issued the docu or previous indorsers thereof to fulfill their
respective obligations.
1518. The validity of the nego’n of a nego docu of title is not impaired by the fact that the
nego’n was a breach of duty on the part of the person making the nego’n, or by the fact
that the owner of the docu was deprived of the possession of the same by loss, theft,
fraud, accident, mistake, duress, or conversion, if the person to whom the docu was nego’d
or a person to whom the docu was subsequently nego’d paid value therefor in good faith
w/o notice of the breach of duty, or loss, theft, fraud, accident, mistake, duress or
conversion.
1519. If goods are delivered to a bailee by the owner or by a person whose act in
conveying the title to them to a purchaser in good faith for value would bind the owner &
a nego docu of title is issued for them they cannot thereafter, while in possession of such
bailee, be attached by garnishment or o/w or be levied under an execution unless the docu
be first surrendered to the bailee or its nego’n enjoined. The bailee shall in no case be
compelled to deliver up the actual possession of the goods until the docu is surrendered to
him or impounded by the court.
1520. A creditor whose debtor is the owner of a nego docu of title shall be entitled to such
aid from courts of appropriate jurisdiction by injunction & o/w in attaching such docu or in
satisfying the claim by means thereof as is allowed at law or in equity in regard to property
w/c cannot readily be attached or levied upon by ordinary legal process.
1521. Whether it is for the buyer to take possession of the goods or of the seller to send
them to the buyer is a question depending in each case on the contract, express or

SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
implied, b/w the parties. Apart from any such contract, express or implied,
or usage of trade to the contrary, the place of delivery is the seller's place of business if he
has one, & if not his residence; but in case of a contract of sale of specific goods, w/c to
the knowledge of the parties when the contract or the sale was made were in some other
place, then that place is the place of delivery.
Where by a contract of sale the seller is bound to send the goods to the buyer, but no time
for sending them is fixed, the seller is bound to send them w/in a reasonable time.
Where the goods at the time of sale are in the possession of a third person, the seller has
not fulfilled his obligation to deliver to the buyer unless & until such third person
acknowledges to the buyer that he holds the goods on the buyer's behalf.
Demand or tender of delivery may be treated as ineffectual unless made at a reasonable
hour. What is a reasonable hour is a question of fact.
Unless o/w agreed, the expenses of & incidental to putting the goods into a deliverable
state must be borne by the seller.
1522. Where the seller delivers to the buyer a quantity of goods less than he contracted to
sell, the buyer may reject them, but if the buyer accepts or retains the goods so delivered,
knowing that the seller is not going to perform the contract in full, he must pay for them at
the contract rate. If, however, the buyer has used or disposed of the goods delivered
before he knows that the seller is not going to perform his contract in full, the buyer shall
not be liable for more than the fair value to him of the goods so received.
Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell,
the buyer may accept the goods included in the contract & reject the rest. If the buyer
accepts the whole of the goods so delivered he must pay for them at the contract rate.
Where the seller delivers to the buyer the goods he contracted to sell mixed w/ goods of a
different description not included in the contract, the buyer may accept the goods w/c are
in accordance w/ the contract & reject the rest.
In the preceding two paragraphs, if the subject matter is indivisible, the buyer may reject
the whole of the goods.
The provisions of this art are subject to any usage of trade, special agreement, or course of
dealing b/w the parties.
1523. Where, in pursuance of a contract of sale, the seller is authorized or required to send
the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or
not, for the purpose of transmission to the buyer is deemed to be a delivery of the goods
to the buyer, except in the cases provided for in art 1503, first, second & third paragraphs,
or unless a contrary intent appears.
Unless o/w authorized by the buyer, the seller must make such contract w/ the carrier on
behalf of the buyer as may be reasonable, having regard to the nature of the goods & the
other circumstances of the case. If the seller omits so to do, & the goods are lost or
damaged in course of transit, the buyer may decline to treat the delivery to the carrier as a
delivery to himself, or may hold the seller responsible in damages.
Unless o/w agreed, where goods are sent by the seller to the buyer under circumstances in
w/c the seller knows or ought to know that it is usual to insure, the seller must give such
notice to the buyer as may enable him to insure them during their transit, &, if the seller
fails to do so, the goods shall be deemed to be at his risk during such transit.
1524. The vendor shall not be bound to deliver the thing sold, if the vendee has not paid
him the price, or if no period for the payment has been fixed in the contract.
1525. The seller of goods is deemed to be an unpaid seller w/in the meaning of this Title:
(1) When the whole of the price has not been paid or tendered;
(2) When a bill of exchange or other nego instrument has been received as conditional
payment, & the condition on w/c it was received has been broken by reason of the
dishonor of the instrument, the insolvency of the buyer, or o/w.
In arts 1525 to 1535 the term "seller" includes an agent of the seller to whom the bill of
lading has been indorsed, or a consignor or agent who has himself paid, or is directly
responsible for the price, or any other person who is in the position of a seller.
1526. Subject to the provisions of this Title, notwithstanding that the ownership in the
SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
goods may have passed to the buyer, the unpaid seller of goods, as such, has:
(1) A lien on the goods or right to retain them for the price while he is in possession of
them;
(2) In case of the insolvency of the buyer, a right of stopping the goods in transitu after
he has parted w/ the possession of them;
(3) A right of resale as limited by this Title;
(4) A right to rescind the sale as likewise limited by this Title.
Where the ownership in the goods has not passed to the buyer, the unpaid seller has, in
addition to his other remedies a right of withholding delivery similar to & coextensive w/
his rights of lien & stoppage in transitu where the ownership has passed to the buyer.
1527. Subject to the provisions of this Title, the unpaid seller of goods who is in possession
of them is entitled to retain possession of them until payment or tender of the price in the
ff cases, namely:
(1) Where the goods have been sold w/o any stipulation as to credit;
(2) Where the goods have been sold on credit, but the term of credit has expired;
(3) Where the buyer becomes insolvent.
The seller may exercise his right of lien notwithstanding that he is in possession of the
goods as agent or bailee for the buyer.
1528. Where an unpaid seller has made part delivery of the goods, he may exercise his
right of lien on the remainder, unless such part delivery has been made under such
circumstances as to show an intent to waive the lien or right of retention.
1529. The unpaid seller of goods loses his lien thereon:
(1) When he delivers the goods to a carrier or other bailee for the purpose of
transmission to the buyer w/o reserving the ownership in the goods or the right to
the possession thereof;
(2) When the buyer or his agent lawfully obtains possession of the goods;
(3) By waiver thereof.
The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that
he has obtained judgment or decree for the price of the goods.
1530. Subject to the provisions of this Title, when the buyer of goods is or becomes
insolvent, the unpaid seller who has parted w/ the possession of the goods has the right of
stopping them in transitu, that is to say, he may resume possession of the goods at any
time while they are in transit, & he will then become entitled to the same rights in regard
to the goods as he would have had if he had never parted w/ the possession.
1531. Goods are in transit w/in the meaning of the preceding art:
(1) From the time when they are delivered to a carrier by land, water, or air, or other
bailee for the purpose of transmission to the buyer, until the buyer, or his agent in
that behalf, takes delivery of them from such carrier or other bailee;
(2) If the goods are rejected by the buyer, & the carrier or other bailee continues in
possession of them, even if the seller has refused to receive them back.
Goods are no longer in transit w/in the meaning of the preceding art:
(1) If the buyer, or his agent in that behalf, obtains delivery of the goods before their
arrival at the appointed destination;
(2) If, after the arrival of the goods at the appointed destination, the carrier or other
bailee acknowledges to the buyer or his agent that he holds the goods on his behalf
& continues in possession of them as bailee for the buyer or his agent; & it is
immaterial that further destination for the goods may have been indicated by the
buyer;
(3) If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or
his agent in that behalf.
If the goods are delivered to a ship, freight train, truck, or airplane chartered by the buyer,
it is a question depending on the circumstances of the particular case, whether they are in
the possession of the carrier as such or as agent of the buyer.
If part delivery of the goods has been made to the buyer, or his agent in that behalf, the
remainder of the goods may be stopped in transitu, unless such part delivery has been
SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
under such circumstances as to show an agreement w/ the buyer to give up
possession of the whole of the goods.
1532. The unpaid seller may exercise his right of stoppage in transitu either by obtaining
actual possession of the goods or by giving notice of his claim to the carrier or other bailee
in whose possession the goods are. Such notice may be given either to the person in actual
possession of the goods or to his principal. In the latter case the notice, to be effectual,
must be given at such time & under such circumstances that the principal, by the exercise
of reasonable diligence, may prevent a delivery to the buyer.
When notice of stoppage in transitu is given by the seller to the carrier, or other bailee in
possession of the goods, he must redeliver the goods to, or according to the directions of,
the seller. The expenses of such delivery must be borne by the seller. If, however, a nego
docu of title representing the goods has been issued by the carrier or other bailee, he shall
not be obliged to deliver or justified in delivering the goods to the seller unless such docu
is first surrendered for cancellation.
1533. Where the goods are of perishable nature, or where the seller expressly reserves the
right of resale in case the buyer should make default, or where the buyer has been in
default in the payment of the price for an unreasonable time, an unpaid seller having a
right of lien or having stopped the goods in transitu may resell the goods. He shall not
thereafter be liable to the original buyer upon the contract of sale or for any profit made
by such resale, but may recover from the buyer damages for any loss occasioned by the
breach of the contract of sale.
Where a resale is made, as authorized in this art, the buyer acquires a good title as against
the original buyer.
It is not essential to the validity of resale that notice of an intention to resell the goods be
given by the seller to the original buyer.
But where the right to resell is not based on the perishable nature of the goods or upon an
express provision of the contract of sale, the giving or failure to give such notice shall be
relevant in any issue involving the question whether the buyer had been in default for an
unreasonable time before the resale was made.
It is not essential to the validity of a resale that notice of the time & place of such resale
should be given by the seller to the original buyer.
The seller is bound to exercise reasonable care & judgment in making a resale, & subject to
this requirement may make a resale either by public or private sale. He cannot, however,
directly or indirectly buy the goods.
1534. An unpaid seller having the right of lien or having stopped the goods in transitu, may
rescind the transfer of title & resume the ownership in the goods, where he expressly
reserved the right to do so in case the buyer should make default, or where the buyer has
been in default in the payment of the price for an unreasonable time. The seller shall not
thereafter be liable to the buyer upon the contract of sale, but may recover from the buyer
damages for any loss occasioned by the breach of the contract.
The transfer of title shall not be held to have been rescinded by an unpaid seller until he
has manifested by notice to the buyer or by some other overt act an intention to rescind. It
is not necessary that such overt act should be communicated to the buyer, but the giving
or failure to give notice to the buyer of the intention to rescind shall be relevant in any
issue involving the question whether the buyer had been in default for an unreasonable
time before the right of rescission was asserted.
1535. Subject to the provisions of this Title, the unpaid seller's right of lien or stoppage in
transitu is not affected by any sale, or other disposition of the goods w/c the buyer may
have made, unless the seller has assented thereto.
If, however, a nego docu of title has been issued for goods, no seller's lien or right of
stoppage in transitu shall defeat the right of any purchaser for value in good faith to whom
such docu has been nego’d, whether such nego’n be prior or subsequent to the
notification to the carrier, or other bailee who issued such docu, of the seller's claim to a
lien or right of stoppage in transitu.
1536. The vendor is not bound to deliver the thing sold in case the vendee should lose the
SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016
right to make use of the terms as provided in art 1198.
1537. The vendor is bound to deliver the thing sold & its accessions & accessories in the
condition in w/c they were upon the perfection of the contract.
All the fruits shall pertain to the vendee from the day on w/c the contract was perfected.
1538. In case of loss, deterioration or improvement of the thing before its delivery, the
rules in art 1189 shall be observed, the vendor being considered the debtor.
1539. The obligation to deliver the thing sold includes that of placing in the control of the
vendee all that is mentioned in the contract, in conformity w/ the ff rules:
If the sale of real estate should be made w/ a statement of its area, at the rate of a certain
price for a unit of measure or number, the vendor shall be obliged to deliver to the
vendee, if the latter should demand it, all that may have been stated in the contract; but,
should this be not possible, the vendee may choose b/w a proportional reduction of the
price & the rescission of the contract, provided that, in the latter case, the lack in the area
be not less than one-tenth of that stated.
The same shall be done, even when the area is the same, if any part of the immovable is
not of the quality specified in the contract.
The rescission, in this case, shall only take place at the will of the vendee, when the inferior
value of the thing sold exceeds 1/10th of the price agreed upon.
Nevertheless, if the vendee would not have bought the immovable had he known of its
smaller area of inferior quality, he may rescind the sale.
1540. If, in the case of the preceding art, there is a greater area or number in the
immovable than that stated in the contract, the vendee may accept the area included in
the contract & reject the rest. If he accepts the whole area, he must pay for the same at
the contract rate.
1541. The provisions of the two preceding arts shall apply to judicial sales.
1542. In the sale of real estate, made for a lump sum & not at the rate of a certain sum for
a unit of measure or number, there shall be no increase or decrease of the price, although
there be a greater or less area or number than that stated in the contract.
The same rule shall be applied when two or more immovables as sold for a single price;
but if, besides mentioning the boundaries, w/c is indispensable in every conveyance of real
estate, its area or number should be designated in the contract, the vendor shall
be bound to deliver all that is included w/in said boundaries, even when it exceeds the
area or number specified in the contract; &, should he not be able to do so, he shall suffer
a reduction in the price, in proportion to what is lacking in the area or number, unless the
contract is rescinded b/c the vendee does not accede to the failure to deliver what has
been stipulated.
1543. The actions arising from arts 1539 & 1542 shall prescribe in six months, counted
from the day of delivery.

SALES & LEASE reviewer – Atty. Busmente San Beda College Alabang – School of Law Block 1C Batch 2016

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