BLR Reviewer (Prelims)
designation in the Civil Code, namely, “sale”
Chapter 1:
Nature and Form of Contract
Contract of sale ​-is an agreement whereby the
vendor obligates himself to deliver a ​determinate
thing ​to the vendee who on
his part, binds himself to pay therefor a sum of
money or its equivalent.
Determinate thing​- designated or physically
segregated from others of the same class
Stages of a contract of sale
1. Negotiation ​-It covers the period from the
time the prospective contracting parties
indicate interest in the contract to the time
the contract is perfected.
2. Perfection -​It takes place upon the
concurrence of the essential elements of the
sale, which is the meeting of the minds of the
parties as to the object of the contract and
upon the price(includes manner of payment)
3. Consummation - ​It begins when the parties
perform their respective undertakings under
the contract of sale, culminating in the
extinguishment thereof.
Two kinds of a contract of sale
1. Absolute ​-There are no conditions attached
to the contract.
2. Conditional ​-There are certain conditions
attached in the contract.
Characteristics of a contract of sale​.
(CBOCNP)
● Consensual ​-it is perfected by mere consent
without any further act;
● Bilateral -both the contracting parties are
bound to fulfill correlative obligations towards
each other — ​seller to deliver and transfer
ownership of the thing sold ​buyer to pay the
price
● Onerous - the thing sold is conveyed in
consideration which is the price certain in
money
● Commutative -The thing of value is
exchanged for equal value
● Nominate -it is given a special name or
● Principa​l -it can stand on its own and does
not depend for its existence and validity upon
another contract.
Essential requisites of a contract of sale​.
● Consent ​-Manifested by the meeting of the
offer and the acceptance upon the thing and
the cause which are to constitute the
agreement.
● Object -​This refers to the ​determinate thing
which is the object of the contract.
● Price ​-This refers to the “price certain
in money or its equivalent”
Equivalen​t- check or a promissory note, which is
the consideration for the thing sold. It does not
include goods or merchandise although they have
their own value in money.
The fixing of the price can never be left to the
decision of one of the contracting parties, But, a
price fixed by one of the contracting parties, if
accepted by the other, gives rise to a perfected sale.
It is not enough for the parties to agree on
the price of the property. The parties must also
agree on the manner of payment of the price. ​The
disagreement on the manner of the payment is
tantamount to a failure to agree on the price.
The absence of any of the above essential
elements negates the existence of a perfected
contract of sale.
Natural and accidental elements.
Natural elements ​-those which are deemed to exist
in certain contracts, in the absence of any contrary
stipulations, like warranty against eviction or hidden
defects
Accidental elements -those which may be present
or absent depending on the stipulations of the
parties, like conditions, interest, penalty, time or
place of payment, etc.
Non-payment of the purchase price
is a resolutory condition for which the
remedy is either rescission or specific performance
It constitutes a very good reason to rescind a sale,
for it violates the very essence of
the contract of sale.
 But the failure to pay the price in full within a
condition such as the In fact, if there had
fixed period does not, by itself, dissolve a contract of full payment of the been previous delivery
sale in the absence of any agreement that payment purchase price, for of the subject property,
on time is essential. instance, cannot be the seller’s ownership
deemed buyer in bad or title to the property is
Contract of sale and contract to sell with faith and the automatically
reserved title distinguished. prospective buyer transferred to the buyer
(1) Transfer of title. cannot seek the relief of such that, the seller will
reconveyance of the no longer have any title
— In a ​contract of sale​, title passes to the
property. There is no to transfer to any third
buyer upon delivery of the thing sold,
double sale in such person.Applying article
—A ​contract to sell(exclusive right and case. Title to the 1544 of the civil code,
privilege to purchase”)​, where it is stipulated that property will transfer to such second buyer of
ownership in the thing shall not pass to the the buyer after the property who may
purchaser until he has fully paid the price registration because have had actual or
(2) Payment of price. there is no defect in the constructive knowledge
— In a ​contract of sale​, non-payment of the owner seller’s title per of such defect, cannot
price is a negative resolutory condition and the se, but the latter, of be a registrant in good
course, may be sued faith. Such second
remedy of the seller is to exact fulfillment or to
for damages by the buyer cannot defeat the
rescind the contract
intending buyer first buyers title. In case
—In a ​contract to sell,​ full payment a title is issued to the
is a positive suspensive condition, the failure of second buyer, the first
which is not a breach, casual or serious, of the buyer may seek
contract but simply an event that prevents the reconveyance of the
obligation of the vendor to convey title from property subject of the
acquiring binding force. Where the seller promises sale
to execute a deed of absolute sale upon full
payment of the purchase price, the agreement Requisites concerning object.
is a contract to sell. (1) Things​.
(3) Ownership of vendor (a) determinate thing
— ​Contract of sale​, the vendor has lost (b) licit or lawful- that is, it should not be contrary to
and cannot recover the ownership of the thing sold law, morals, good customs, public order, or public
and delivered, actually or constructively until and policy
unless the contract of sale itself is resolved and set (c) not be impossible - the thing must be within the
aside. commerce of men.
—In the ​Contract to sell​, however, the title (2) Rights​. — All rights which are not
remains in the vendor if the vendee does not comply intransmissible or personal
with the condition precedent of making payment at Intransmissible rights​ - right to vote, right
the time specified in the contract. to public office, marital and parental rights, etc.
Contract of sale and Conditional contract of sale No contract may be entered upon future inheritance
except in cases expressly authorized by law. While
Contract to sell services may be the object of a contract they cannot
be the object of a contract of sale.
There being no Upon the fulfillment of Kinds of illicit things. (illicit - unlawful)
previous sale of the the suspensive illicit per se - i​llegal by nature
property, a third person condition, the sale Ex. Decayed food unfit for consumption
buying such property becomes absolute and Illicit per accidents - ​some provisions of law
despite the fulfillment of this will definitely affect
declaring it illegal
the suspensive the seller’s title thereto.
Ex. lottery tickets, Land sold to an alien,

Right to transfer ownership.
(1) Seller must be owner or authorized by the
owner of the thing sold.
(2) Right must exist at the time of delivery.​ —..
(3) Where property sold registered in the name
of seller who employed fraud in securing his
title.
​(4) Where properly sold in violation of a right of
first refusal of another person.
(5) Where real property, subject of unrecorded
sale, subsequently mortgaged by seller which
mortgage was registered.
The requisite that a thing be determinate is satisfied
if at the time the contract is entered into, the thing
is capable of being made determinate without the
necessity of a new or further agreement between
the parties.
Goods which may be the object of sale.
Kinds of goods
1. Existing goods
Those goods that are owned by the
seller
2. Future goods
Those goods that are to be
manufactured, raised, acquired by the seller
after the perfection of the contract of sale​.
● Sale of undivided interest in a thing.
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.
(1) Meaning of fungible goods. — It means goods
are treated as the equivalent of any other unit such
as grain, oil, wine, gasoline, etc.

​ hen a thing is determinate. — it is particularly

(1) W ● A ​resolutory condition​ is an uncertain
designated from all others of the same class. event upon the happening of which the
(2) Sufficient if subject matter capable of being obligation (or right) subject to it is extinguished.
made determinate. Hence, the right acquired in virtue of the obligation is
also extinguished.
Sale of things having potential existence.
This is a future thing that can be the object
Contract of sale Agency to sale
of sale.
Sale of a mere hope or expectancy The buyer receives the The agency receives
This is the subject to the thing will come into good as owner the goods as goods of
existence. the principal who
Emptio Rei Speratae vs. Emptio Spei retains his ownership
over them.

Emptio Rei Speratae Emptio Spei The buyer pays the The agent delivers the
price. price, which he got from
Sale of a thing with Sale of a mere hope or his buyer, to his
potential existence. expectancy that the principal
thing will come to
existence. The buyer, as a general The agent can return
Sale of the hope itself. rule cannot return the the goods in case he is
object rule. unable to sell the same
Sale is subject to the Sale is effective even if to a third person.
condition that the thing the thing does not come
will exist; If it does not, into existence unless it
there is no contract. is a vain hope,
Contract of sale Contract for a piece of
The object is a future The object is a present work
thing. thing which is the hope
or expectancy. The thing is Specially done at the
 Exception: If the thing or any part thereof has been
manufactured or order of another.
procured for the general delivered to and appropriated by the buyer he must
market pay a reasonable price therefor,

Take Note: ​The sale is a consensual contract thus,

Contractor- ​Person undertakes to do a specific job
it is perfected by mere consent meaning the moment
or piece of work for other persons.
there is a meeting of mind.

Sale Barter Sale by auction is perfected:

A thing is given in Given in exchange for
exchange for a price another thing.
certain in money or its
equivalent,
If the consideration is partly in money and partly in
another thing:
1. Transaction is characterized by the
manifest ​intention​ of the parties.
2. If there is no manifest intention:
a. Barter:​ Thing is more than money
b. Sale​: Thing is equal or less than
the amount of money.
When the auctioneer announces perfection
by the fall of the hammer, or in other customary
manner
BEFORE the fall of the hammer:
1. Any bidder may retract his bid
2. The auctioneer may withdraw the goods from
the sale unless the auction has been
announced to be ​without reserved.
Two aspects of delivery:
1. De Jure delivery - execution of deeds of
conveyance
2. Delivery of the material possession

Requisites for a valid price:

● Unless a contract contains a ​stipulation ​that
1. Real ​- the price is not simulated not fictitious
ownership shall not pass until fully paid,
2. Certain or ascertainable​- expressed and
ownership shall be transferred upon the
agreed in terms of specific amount of money
actual or constructive delivery. Payment of
or its equivalent.
the purchase price is not essential in
3. In money or its equivalent
transferring ownership.
4. Manner of payment ​must be agreed upon.

Kinds of promise treated in Article 1479.

Simulated Price- ​ Fictitious price.
(1) An accepted unilateral promise to sell in which
Effect where price is simulated.
the promisee (acceptor) elects to buy;
(1) If the price is simulated or false such as when
(2) An accepted unilateral promise to buy in which
the vendor really intended to transfer the thing
the promisee (acceptor) elects to sell; and
gratuitously, then the sale is void but the contract
(3) A bilateral promise to buy and sell reciprocally
shall be valid as a donation.
accepted in which either of the parties chooses to
exact fulfillment.
ART 1473 Rationale: ​The fixing of the price cannot
be left to the discretion of one of them: The other
Meaning of option.
could not have consented to the price for he did not
An option is a privilege existing in one
know what it was,
person for which he has paid a consideration which
gives him the right to buy the object.,
ART. 1474. General Rule: ​Where the price cannot
- Refundable in nature
be determined in accordance with the preceding
articles, or in any other manner, the contract is
inefficacious.​ Hence, the sale is void.
 ● Object is lost before perfection: ​Seller bears
the loss.
● Object is lost after delivery to the buyer:
Buyer​ bears the loss
● Object is lost after perfection but before
delivery: Buyer bears the loss(exception of
res perit domino)
Res Perit Domino​- Property lost to the owner
Fungible​- Interchangeable with one another
Sale of goods by description and/or sample.​.
(1) Sale by description. —The buyer not knowing
whether the seller’s representations are true or false
but relying on them as true or as otherwise stated
where the buyer has not seen the article sold and
relies on the description given to him by the seller
(2) Sale by sample​. — To constitute a sale by
sample, it must appear that the parties contracted
solely with reference to the sample,
(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 corresponds with the sample if
they do not also correspond with the description,
and vice versa.
Earnest money is something of value given by the
buyer to the seller to show that the buyer is really in
earnest, and to bind the bargain. It is actually a
partial payment of the purchase price and is
considered as proof of the perfection of the contract.
-Non refundable in nature
Earnest money and option money distinguished.
They may be distinguished as follows:
(1) Earnest money is part of the purchase price,
while option money is the money given as distinct
consideration for an option contract;
(2) Earnest money is given only where there is
already a sale, while option money applies to a sale
not yet perfected; and
(3) When earnest money is given, the buyer is
bound to pay the balance, while the would-be buyer
who gives option money is not required to buy.
A contract of sale may be made in writing, or
by word of mouth, or partly in writing and partly by
word of mouth, or may be inferred from the conduct
of the parties.
Exceptions: ​When a sale of a piece of land or any
interest therein is through an agent, the authority of
the latter shall be in writing, otherwise the sale shall
be void.
Form is required for enforceability
1. Sale of real property
2. Sale of personal property not less than 500
3. Sale of property not to be performed within a
year from the date thereof
In a contract of sale of personal property the price of
which is payable in installments, the vendor may
exercise any of the following remedies:
(1) Exact fulfillment of the obligation, should the
Vendee fail to pay;
(2) Cancel the sale, should the vendee’s failure to
pay cover two or more installments;
(3) Foreclose the chattel mortgage on the thing
sold; if one has been constituted, should the
vendee’s failure to pay cover two or more
installments. In this case, he shall have no further
action against the purchaser to recover any unpaid
balance of the price. Any agreement to the contrary
shall be void
General Rule: ​The expenses for the execution and
registration of the sale shall be borne by the vendor
Exception​: Contrary stipulation
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 to be borne by the buyer, unless caused by the
fault of the seller.
Expropriation - ​The procedure for the exercise of
the power of eminent domain is provided for in Rule
67 of the Rules of Court. Expropriation must be
decreed by competent authority and for public use
and always upon payment of just compensation.
Chapter II: Capacity to Buy or Sell
General Rule: ​All persons, whether natural or
juridical, who can bind themselves, have legal
capacity to enter into a contract of sale.
Exception: ​Persons who are incapacitated.
Kinds of incapacity
1. Absolute incapacit​y - persons who cannot
enter into a contract of sale in all
circumstances. e.g., minors, insane,
demented persons, & deaf-mutes who don’t
know how to write.
2. Relative incapacity - certain persons under
certain circumstances, cannot buy certain
property.
Ex
● . Husband and wife
● Guardian for the property of the
person under his guardianship
● Agents, property entrusted to them
unless the consent of the principal
had been given
● Public officers and employees for the
property of the state, government
owned or controlled corporation,
institution or administration which has
been entrusted to them.
● Justices, judges, prosecuting
attorneys, clerks of superior and
inferior courts and other officers and
employees connected with the
administration of justice, the property
and rights of litigation or levied upon
an execution before the court within
whose jurisdiction or territory they
exercise their respective functions.
● Any pther disqualified by law
Necessaries​- These covers everything
indispensable for sustenance, dwelling, clothing,
medical attendance, education and transportation.
General Rule: ​The husband and the wife cannot
sell property to each other.
Exception:
1. When a separation of property was agreed upon
in the marriage settlements; &
2. When there has been a judicial separation of
property.
Take Note​: The prescription against sale of property
between spouses applies even to common law
relationships.
Take note​: In a contract of agency, after the
termination of the relationship, the agent is not
prohibited to purchase a property belonging to the
former principal.
Chapter III: Effects of the contract when the
thing sold has been lost
Loss of the object at the time of perfection of the
contract
1. Completely lost - If the thing which is the
object of the contract shall be without any
effect. The reason is because there is an
absence of an essential element, i.e., the
object.
2. Partially lost - ​If the thing should have been
lost in part only, the vendee may choose
between:
a. Withdrawing from the contract; &
b. Demanding the remaining part,
paying its price in proportion to the
total sum agreed upon.
Take Note: A thing is lost when it perishes or goes
out of commerce or disappears in such a way that
its existence is unknown or it can’t be recovered.
Where the parties purport a sale of specific
goods, and the goods without the knowledge of the
seller have perished in part or have wholly or in a
material part so deteriorated in quality as to be
substantially changed in character, the buyer may at
his option treat the sale:
(1) as avoided; or
(2) as valid in all of the existing goods or in so much
thereof as have not deteriorated, and as binding the
buyer to pay the agreed price for the goods in which
the ownership will pass, if the sale was divisible​.
Chapter IV: Obligations of the vendor
Section 1: General Provisions
Obligations of the vendor:
1. To transfer ownership of the thing sold
2. To deliver the thing
3. To warrant the object sold against eviction
and hidden defects
4. To take care of the object sold pending
delivery
5. To pay for the expenses for the execution
and registration of the contract of sale unless
there is a stipulation of the contrary
● Ownership of the thing sold is acquired only
upon its delivery, actual or constructive to the
buyer.
● Payment of the purchase price is not
essential to transfer of ownership as long as
the property sold has been delivered.
Exception:
1. When the seller and the buyer agree that the
ownership shall remain with the seller until
the full payment of the purchase price
2. Contract to sell
3. Sale on approval, trial or satisfaction
4. Implied reservation of ownership
Section 2: Delivery of the thing sold
Kinds of delivery
1. Real or actual - ​The thing sold is placed in
the control and possession of the vendee
2. Legal/constructive- ​Delivery by operation of
law
3. Quasi tradition- ​Delivery of rights, credits or
incorporeal property.
Kinds of legal/ Constructive delivery
a. Legal formalities- Sale is made through
public instrument which gives rise to prima
facie presumption of delivery which is
destroyed when actual delivery is not
affected due to legal impediment.
b. Symbolical tradition/ Traditio symbolica​-
The parties use a symbol to represent a
thing delivered
c. Traditio Longa Manu​- Deliver is by mere
consent where the seller points out to the
buyer the object without the need to actually
delivering it.
d. Traditio Brevi Manu- Buyer had already the
possession of the object before the contract
of sale.
e. Traditio Constitutum Possessorium​-
Owners continuous possession of the
property he had already sold. Opposite of
Brevi Manu.
Public instrument- ​Document prepared by a notary
public in the presence of the parties who sign it
before witnesses.
Notary Public- A person authorized by state to
administer oaths, certify documents, attest to the
authenticity of signatures, and perform official acts in
commercial matters such as protesting negotiable
instruments
Delivery of incorporeal property
1. Execution of public instrument
2. The placing of the titles of ownership in
the possession of the vendee
3. The use by the vendee of his rights with
the vendor’s consent.
When goods are delivered to the buyer on
approval or on trial or on satisfaction, or other similar
terms, the ownership therein passes to the buyer.
(1) When he signifies his approval or acceptance
to the seller or does any other act adopting the
transaction;
(2) If he does not signify his approval or acceptance
to the seller, but retains the goods without giving
notice of rejection, then if a time has been fixed for
the return of the goods, upon the expiration of such
time, and, if no time has been fixed, upon the
expiration of a reasonable time. What is a
reasonable time is a question of fact.

Sale or return Sale on trial/ Sale on
approval/ Sale on
acceptance/ Sale on
satisfaction
Ownership passes to Ownership remains in
the buyer on delivery the seller until the buyer
and subsequent return signifies his approval or
reverts ownership in the acceptance to the seller
seller
Subject to a resolutory Subject to a suspensive
condition condition
Depends entirely on the Depends on the quality
will of the buyer of goods
Bill of lading- Indicates receipt of goods for shipment
issued by a common carrier,
Dock warrant- warrant given by dock owners to the
owner of merchandise imported and warehoused on
the dock.
Quedan-​ Warehouse receipts that covers sugar
Warehouse receipt- evidencing goods stored with
someone else
Negotiable document​- Goods are negotiable if: a.
The goods are deliverable to the bearer
B. Goods are deliverable to the order of a certain
person.
Non Negotiable Document​- Merely serves as
evidence of the goods covered

Risks of loss rests upon Risks of loss remains
the buyer with the seller
Risks of loss of specific goods is borne by the seller
until the ownership therein is transferred to the
buyer except that:
(1) Where delivery of the goods has been made to
the buyer or to a bailee for the buyer, in pursuance
of the contract and the ownership in the goods has
been retained by the seller merely to secure
performance by the buyer of his obligations under
the contract, the goods are at the buyer’s risk from
the time of such delivery;
(2) Where actual delivery has been delayed
through the fault of either the buyer or seller the
goods are at the risk of the party in fault.
General Rule -​Where good is sold by a person who
is not the owner thereof and who does not sell them
under authority or with the consent of the owner.The
buyer acquires no better title to the goods than the
seller had.
Note​: Before a voidable contract is annulled, it is
considered valid.
Document of title to goods​- Includes Bill of lading,
dock warrant, quedan, or warehouse receipt or order
of the delivery of goods.
-Proof of the possession of goods.
Goods​- Includes all chattels personal but not things
in action or money. Includes growing fruits or crops.
A negotiable document of title may be negotiated by
delivery:
(1) Where by the terms of the document the carrier,
warehouseman or other bailee issuing the same
undertakes to deliver the goods to the bearer; or
(2) Where by the terms of the document the carrier,
warehouseman or other bailee issuing the same
undertakes to deliver the goods to the order of a
specified person, and such person or a subsequent
indorsee of the document has indorsed it in blank or
to the bearer.
Where by the terms of a negotiable
document of title the goods are deliverable to bearer
or where a negotiable document of title has been
endorsed in blank or to bearer, any holder may
indorse the same to himself or to any specified
person, and in such case the document shall
thereafter be negotiated only by the indorsement of
such indorsee.
Bailee- ​Has possession but not title to a property.
Responsible for keeping the property safe until it is
returned to the owner.
Two Kinds of negotiation
1. Delivery- ​One issuing the same undertakes
to deliver the goods to the bearer
2. By indorsement and delivery-
Endorsement may be in blank, to bearer, or
to a specified person.
Non negotiable​- Cannot be negotiated
Who can negotiate?
1. The owner of the negotiable document of title
2. Any person to whom the possession of the
document has been entrusted
a. By the terms of the document the
bailee undertakes to deliver the good
to the order of the person whom
possession of the document has
been entrusted.
b. At the time of entrusting the
document it is in the form that it can
be negotiated by delivery.
Rights of person to whom document has been
negotiated.
(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;
(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.
Rights of person to whom document
has been transferred.
(1) The title to the goods as against the transferor;
(2) The right to notify the bailee of the transfer
thereof; and
(3) The right, thereafter, to acquire the obligation of
the bailee to hold the goods for him.
Transfer of order document without
indorsement.
(1) The right to the goods as against the transferor
(2) The right to compel the transferor to indorse the
indorsement.
Note: The negotiation shall take effect as of the time
when the endorsement is actually made
Warranties on negotiation or assignment
1. Document is genuine
2. He has a legal right to negotiate or transfer it
3. He has knowledge of no fact which would
impair the validity or worth of the document
4. He has a right to transfer the title to the
goods
5. The goods are merchantable or fit for a
particular purpose
Negotiation- ​Transfer of possession of an
instrument, whether voluntary or involuntary, by a
person other than the issuer to a person who
thereby becomes its holder
Assignment- ​Transfer of rights or property
The indorsement of a document of title shall
not make the indorser liable for any failure on the
part of the bailee who issued the document or
previous indorsers thereof to fulfill their respective
obligations.
-​Failure of the bailee to fulfill the obligation
shall not make the present endorser liable
The validity of the negotiation of a negotiable
document of title is not impaired by the fact that the
negotiation was a breach of duty on the part of the
person making the negotiation, or by the fact that
the owner of the document was deprived of the
possession of the same by loss, theft, fraud,
accident, mistake, duress, or conversion, if the
person to whom the document was negotiated or a
person to whom the document was subsequently
negotiated paid value therefore in good faith without
notice of the breach of duty, or loss, theft, fraud,
accident, mistake, duress or conversion.
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 and a negotiable document of
title is issued for them they cannot thereafter, while
in possession of such bailee, be attached by
garnishment or otherwise or be levied under an
execution
General Rule:​ No attachment
Exceptions:
1. The document be first surrendered to the
bailee
2. The documents negotiation is enjoined.
General Rule: ​The bailee shall in no case be
compelled to deliver up to the actual possession of
the goods.
Exceptions:
1. The document is surrendered to the baillee
2. The documents negotiation is enjoined.
A creditor whose debtor is the owner
of a negotiable document of title shall be entitled to
such aid from courts of appropriate jurisdiction by
injunction and otherwise in attaching such document
Creditor’s remedies to reach negotiable
documents.
Inasmuch as the goods themselves cannot
readily be attached or levied upon by ordinary legal
process, as limited by the preceding article, this
article expressly gives the court full power to
aid by injunction and otherwise a creditor seeking to
get a negotiable document covering such goods.
However, if an injunction issued but the negotiable
document of title is negotiated to an innocent
person, the transfer is nevertheless effectual.
Note: ​A stipulation designating the place and
manner of delivery is controlling on the contracting
parties. The thing sold can only be understood as
delivered to the buyer when it is placed in the
buyer’s control and possession at the agreed place
of delivery.
Place of Delivery:
1. The place of delivery agreed upon
2. If there is no agreement, it is determined by
usage of trade
3. If there is no agreement and usage of trade,
it is the seller’s place of business or
residence
4. In case of contract of sale of specific goods,
which to the knowledge of the parties when
the contract or the sale was made where in
some other place, then that lace is the place
of delivery,
Note: Where the delivery was not affected at the
place specified in the contract but the buyer
accepted the goods without complaint, the buyer
would be deemed to have waived the seller’s failure
to deliver according to the terms of the contract, and
woud be liable to pay the price agreep upon.
Time of delivery
1. Stipulated time
2. Reasonable time
The seller has not fulfilled his obligation to
deliver to the buyer unless and until such third
person acknowledges to the buyer that he holds the
goods on the buyer’s behalf
Delivery of goods less than quantity contracted.
1. buyer may reject the goods so delivered.
2. The buyer may, however, accept the goods
in which case he must pay for their
(a) price at the contract rate if he knew that
no more were to be delivered or
(b) the fair value to him 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.
1. the buyer may accept the quantity contracted
for and reject the excess.
2. if he accepts all the goods delivered, and pay
them at the contract rate
3. If indivisible, the buyer may reject the whole
goods
Delivery of goods mixed with others.
1. buyer may accept those which are in
accordance with the contract and reject the
rest.
2. The buyer, of course, may accept them all if
he so desires.
General Rule-​Delivery to the carrier is delivery to
the buyer, if the seller is required to send the goods
to the buyer
Note -The vendor is bound to deliver if the parties
stipulated in the different periods for deliver and
payment of price. The vendor must deliver on the
time agreed up
Rationale​-Contract of sale is a reciprocal contract
on despite non payment of price at the time of
delivery as price is considered due only upon the
expiration of the term agreed upon
Unpaid seller
(1) When the whole of the price has not been paid or
tendered;
(2) When a bill of exchange or other negotiable
instrument has been received as conditional
payment, and the condition on which it was received
has been broken by reason of the dishonor of the
instrument, the insolvency of the buyer, or
otherwise.
Remedies of an unpaid seller
1. Possessory lien
2. Right of stopping the goods in transit
3. Right of resale
4. Right to rescind
Lien- A legal right or interest that a creditor has in
another’s property lasting usually until a debt or duty
that it secures is satisfied.
Possessory lien- ​A lien allowing the creditor to
keep possession of the encumbered property until
the debt is satisfied.
When unpaid seller has possessory lien?
1.​where the goods have been sold without 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 good
as agent or bailee for the buyer
General Rule: ​Where an unpaid seller has made
part delivery of the goods, he may exercise his right
of lien on the remainder
Exception: ​such part delivery has been made under
such circumstances as to show an intent to waive
the lien or right of retention​.
When unpaid seller loses his lien
1. When he delivers the goods to a carrier or
other bailee for the purpose of transmission
to the buyer without 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
When right of stoppage in transit available?
1. The unpaid seller has parted with the
possession of the goods
2. The buyer of goods is or becomes insolvent
When goods are in transit.
(1) after delivery to a carrier or other bailee
and before the buyer or his agent takes delivery of
them;
(2) if the goods are rejected by the buyer,
and the carrier or other bailee continues in
possession of them.
When goods considered no longer in transit.
(1) After delivery to the buyer or his agent in
that behalf;
(2) If the buyer or his agent obtains
possession of the goods at a point before the
destination originally fixed;
(3) If the carrier or bailee acknowledges to
hold the goods on behalf of the buyer; and
(4) If the carrier or bailee wrongfully refuses
to deliver the goods to the buyer.
How the right of stoppage in transitu be
exercised?
1. By obtaining actual possession of the goods
2. By giving notice of his claim to the carrier or
other baille
To whom notice is given?
1. To the person in actual possession of the
goods
2. To his principal
Principal​- Someone who authorizes another to act
on his or her behalf as an agent
Unpaid seller’s right of resale.
(1) When resale allowable. — The third right of an
unpaid seller is the right of resale.)An unpaid seller
can exercise the right to resell only when he has
either a right of lien or a right to stop the goods in
transitu
[2.) and under any
of the three following cases:
(a) where the goods are perishable in nature;
(b) where the right to resell is expressly
reserved in case
the buyer should make a default; and other disposition of the goods which the buyer may
(c) where the buyer delays in the payment of have made
the price for an unreasonable time. Exception: ​The seller has assented or given his
Note: ​The right of resale applies only if the title to consent thereto:
goods has already passed to the buyer. Otherwise,
the goods cannot be resold. The vendor is NOT bound to deliver the thing
sold because the vendee has lost the right to
Profit or loss in resale: make use of the term:
(1) When after the obligation has been contracted,
he becomes insolvent, unless he gives a guaranty or
Profit Loss
security for the debt [price];
The seller shall not be The seller may receiver (2) When he does not furnish to the creditor [vendor]
liable to the original from the buyer the guaranties or securities which he has promised;
buyer for any profit damages for any loss (3) When by his own acts he has impaired said
made by such resle occasioned by the guaran-ties or securities after their establishment,
breach of the contract and when through a fortuitous
of sale
event they disappear, unless he immediately gives
new ones equally satisfactory;
Unpaid seller’s right of rescission​. (4) When the debtor [vendee] violates any
When seller may rescin​d. — The fourth right of an undertaking, in consideration of which the creditor
unpaid seller is the right to rescind the sale. An agreed to the period;
unpaid seller has a right to rescind only if he has (5) When the debtor [vendee] attempts to abscond.”
either a right of lien
1.) or a right to stop the goods in transitu The vendor is bound to deliver the thing sold and its
2.) and under either of two situations: accessions and accessories in the condition in
(a) where the right to rescind is expressly which they were upon the perfection of the contract.
reserved in case the buyer should make a default; or
Accessions Accessories
(b) where the buyer delays in the payment of
the price for an unreasonable time It signifies all of those It signifies all of those
things which are things which have for
Effect of rescission​. — seller shall not be liable to produced by the thing their b=object the
the buyer upon the contract of sale, the latter, which is the object of embellishment, use or
however, may be made liable to the seller for the obligation as well as preservation of another
damages for any loss occasioned by the breach of all those which are thing which is more
naturally or artificially important and to which
contract.
attached thereto: they are not
incorporated or
Manner of rescission. ​— An election by the seller Example: A partners attached. In other
to rescind may be manifested by notice to the buyer share in the profit in a words, it includes all of
or by some other overt act showing an intention to contract of partnership those things which are
rescind. Communication of such election to the “Earphone of a cell necessary for the
buyer is not necessary. But, as in regard to resale phone” “mouse pad of a perfection of another
the giving or failure to give notice is relevant in computer” thing such as the
determining the reasonableness of the time given equipment for a factory,
the spare parts and
the buyer to make good his obligations under the
tools of a machine. The
contract.
key of a house and
other of a similar nature
Golden Rule​: The unpaid seller’s right of lien or
stoppage in transitu is not affected by any sale or
Note: ​The fruits(natural, industrial or civil) pertain to
the buyer from the day on which the contract was
perfected.
● If the thing is lost without the fault of the
debtor, the obligation shall be extinguished;
● If the thing is lost through the fault of the
debtor, he shall be obliged to pay damages;
it is understood that 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;
● (3) When the thing deteriorates without the
fault of the debtor, the impairment is to be
borne by the creditor;
● If it deteriorates through the fault of the
debtor, the creditor may choose between the
rescission of the obligation and its fulfillment,
with indemnity for damages in either case;
● If the thing is improved by its nature, or by
time, the improvement shall inure to the
benefit of the creditor
● If it is improved at the expense of the debtor,
he shall have no other right than that granted
to the usufructuary.”
Sale of real property by unit of measure or
number.
If the area or number in the immovable is
greater than that stipulated in the contract, the
vendee may accept the area included in the contract
and reject the rest. If he accepts the whole, he
makes himself liable for the price of the same at the
contract rate. The vendee may not withdraw from
the contract.
What is judicial sale?
A sale conducted under the authority of a
judgement or court order, such as an execution sale.
Sale of real estate made for a lump sum.
(1) Mistake in area stated in contract immaterial.
— If the sale is made for a lump sum, and not so
much per unit of measure or number, the cause of
the contract is the thing sold independent and
irrespective of its number or measure.
In this case, the law presumes that the
purchaser had in mind a determinate price for the
real estate and that he ascertained its area and
quality before the contract was perfected.
(2) Where area or number stated together with
boundaries​. — If the vendor cannot deliver to the
vendee all that is included within the boundaries
mentioned in the contract, the latter has the option
to reduce the price in proportion to the deficiency or
to set aside the contract. The phrase “should he not
be able to do so” refers to a situation when the
vendor, either because a part or parcel of the real
estate does not belong to him, cannot deliver all that
is included within the boundaries
Prescription of actions.
The actions based on Articles 1539 and 1542 for
either rescission of the contract or proportionate
reduction of the price must be brought within six
months counted from the day of delivery.
Requisites of DOUBLE SALE
​1. ​ ​Two or more valid contract sale
2. Two or more buyers who are at odds over the
rightful ownership of the object must represent
conflicting interests.
3. They must pertain exactly to the same object
4. They must be bought from the same seller
Principle of double sale not applicable
1 Some or all of the elements as mentioned above
are not present
2. The two different contracts of sale are made by
two different persons, one of them not being the
owner of the property sold.
3. Where one of the contract of sale is forgery
4. Where one of the contract of sale is simulated
and other is genuine
Where one of the contract of sale is subject to a
suspensive condition which was not complied with
and the other is an absolute sale.
Rules of preference in case of double sale
1. Movable Property
First possessor in good faith
2. Immovable property
a. First registrant in good faith
b. First possessor in good faith
c. Person with the oldest title in good
faith
 Express Warranty: ​It is any affirmation of fact or
any promise by the seller relating to the thing if the
Warranty Condition
natural tendency of such affirmation or promise is to
Goes into the Goes into the root of induce the buyer to purchase the same and if the
performance of such the existence of the buyer purchases the thing relying thereon
obligation and in fact obligation
may constitute an Meaning of implied warranty.
obligation in itself An implied warranty is that which the law derives by
May form part of the Must be stipulated by implication or inference from the nature of the
obligation or contract the parties in order to transaction or the relative situation or circumstances
and provision of the law form part of an of the parties irrespective of any intention of the
without the parties obligation seller to create it.
having agreed thereto Examples:
1. Warranty that the seller has a right to sell
Non-fulfillment of a Although it may
2. Warranty against eviction
warranty would extinguish the
constitute a breach of obligation upon which it 3. Warranty against non-apparent burden or
contract is based, it generally servitudes
does not amount to a 4. Warranty against hidden defects
breach of contract of 5. Warranty against redhibitory defects on
sale animals
Note: ​Although a seller is bound by implied
warranties in law, nevertheless an agent of the seller
may bind himself to such warranties by express
Condition imposed on Condition imposed on contractual stipulation.
perfection of contract performance of
obligation
Subsection 1: Warrant in case of Eviction
It prevents the juridical It gives the option to the
relation from coming party either to refuse or Meaning of eviction.
into existence proceed with the Eviction may be defined as the judicial
contract of sale and process, whereby the vendee is deprived of the
waive the condition whole or part of the thing purchased by virtue of a
final judgment based on a right prior to the sale or
. Any affirmation of fact or any promise by an act imputable to the vendor.
the seller relating to the thing is an express warranty Requisites: ​In order that a vendor’s liability for
if the natural tendency of such affirmation or promise eviction may be enforced, the following requisites
is to induce the buyer to purchase the same, and if must concur
the buyer purchases the thing relying thereon. No a. There must be final judgement
affirmation of the value of the thing, nor any b. The purchaser has been deprived of the
statement purporting to be a statement of the whole or part of the thing sold
seller’s opinion only, shall be construed as a c. Said deprivation was by virtue of a right prior
warranty, unless the seller made such affirmation or to the sale made by the vendor
statement as an expert and it was relied upon by the d. The vendor has been summoned and made
buyer a co-defendant in the suit for eviction at the
The above stated article refers to express
warranty
 The vendee’s right against the vendor is not
lost because he, the vendee, did not appeal. With a
judgment becomes final whatever be the cause of
finality, the requirement of the law is deemed
satisfied.
What is prescription?
The effect of the lapse of time in creating and
destroying rights
If the property is sold for nonpayment of
taxes due and not made known to the vendee
before the sale, the vendor is liable for eviction.
Deprivation for nonpayment of taxes.
If the vendee is deprived of the ownership of
the property because it is sold at public for
nonpayment of taxes due from the vendor, the latter
is liable for eviction for an act imputable to him. It is
required, however, that at the time of the sale, the
non-payment of taxes was not known to the vendee.
The judgment debtor is also responsible for
eviction in judicial sales, unless it is otherwise
decreed in the judgment.
What is judgement debt?
A debt that is evidenced by a legal
judgement or brought by a successful lawsuit
against the debtor
What is judicial sale?
A sale conducted under the authority of a
judgement or court order such as an execution sale
Any stipulation exempting the vendor
from the obligation to answer for eviction shall be
void, if he acted in bad faith.
Kinds of Waiver
1. Waiver Consciente
The waiver is made by the vendee without
the knowledge of the risk of eviction. The
vendor shall only pay the value which the
thing sold had at the time of eviction.
2. Waiver Intencionada
The waiver is made by the vendee with
knowledge of the risk of eviction and
assumed its consequences. The vendor shall
not be liable,
When the warranty has been agreed
upon or nothing has been stipulated on this point, in
case eviction occurs, the vendee shall have the right
to demand of the vendor:
(1) The return of the value which the thing sold
had at the time of the eviction, be it greater or less
than the price of the sale;
(2) The income or fruits, if he has been ordered to
deliver them to the party who won the suit against
him;
(3) The costs of the suit which caused the eviction
and, in a proper case, those of the suit brought
against the vendor for the warranty;
(4) The expenses of the contract, if the vendee has
paid them;
(5) The damages and interests and ornamental
expenses, if the sale was made in bad faith
Rescission is not a remedy in case of total
eviction because recission contemplates mutual
restitution meaning both parties must be able to
return whatever they received under the contract. In
total eviction, the vendee cannot return the object of
the contract of sale
Remedy in case of partial eviction
1. Rescission
2. Enforcement of vendor’s liability for eviction
Note: In case of partial eviction, the vendee can
shall return a portion of the remaining object of sale,
thus, rescission is allowed
The warranty cannot be enforced until a final
judgment has been rendered, whereby the vendee
loses the thing acquired or a part thereof.
Final judgment of eviction essential.
The above article merely reiterates two of the
essential elements for the enforcement of warranty
in case of eviction, namely:
(1) deprivation of the whole or of a part of the thing
sold; and
(2) the existence of a final judgment.
 The vendor shall not be obliged to make
good the proper warranty, unless he is summoned in
the suit for eviction at the instance of the vendee.
-​In order to give the vendor an opportunity to
intervene and defend the title that he has transferred
The defendant vendee shall ask, within the
time fixed in the Rules of Court for answering the
complaint, that the vendor be made a co-defendant.
Vendor to be made co-defendant.
As previously stated, the notification required by
Article 1559 refers to a case where the vendee is
the defendant in a suit instituted to deprive him of
the thing purchased.
What is servitude?
Servitude is an encumbrance imposed upon
an immovable for the benefit of another immovable
belonging to a different owner.
Warranty against Non-apparent burden or
servitude requisites:
1. The immovable sold should be encumbered
with any non-apparent burden or servitude,
not mention, not mentioned in the agreement
2. The nature of the non-apparent burden or
servitude is presumed that the vendee would
not have acquired it had he been aware
thereof
Remedy where the immovable sold is
encumbered with non apparent burden
1. Rescission
2. Indemnity
Prescriptive Period: Within one year, to be
computed from the execution of the deed, the
vendee may bring an action for rescission, or sue for
damages.
Note​: One year having elapsed, he may only bring
an action for damages within an equal period, to be
counted from the date on which he discovered the
burden or servitude.
Subsection 2: Warranty against Hidden Defects
of or Encumbrances Upon the thing sold
Requisites for warranty against hidden defects.
(1) The defect must be important or serious;
(2) It must be hidden;
(3) It must exist at the time of the sale;
(4) The vendee must give notice of the defect to the
vendor within a reasonable time
(5) The action for rescission or reduction of the price
must be brought within the proper period — 6
months from the delivery of the thing sold or within
40 days from the date of
the delivery in case of animals
(6) There must be no waiver of warranty on the part
of the vendee.
When defect important.
(1) it renders the thing sold unfit for the use for
which it is intended;
(2) if it diminishes its fitness for such use to such an
extent that the vendee would not have acquired it
had he been aware thereof or would have given a
lower price for it.
When defect hidden.
The defect is hidden (or latent) if it was not
known and could not have been known to the
vendee
Warranty of fitness or implied warranty of fitness
for a particular purpose
A warranty - imposed by law if the seller has
reason to know of the buyer’s ​special purposes ​for
the item- that the item is suitable for those purposes.
The seller warrants that the thing sold is
reasonably fit for the known ​particular purpose for
which it was acquired by the buyer. The requisites
are:
1. Where the buyer, expressly or by implication,
makes known to the seller the particular
purpose for which the goods are acquired:
2. Where the buyer relies on the seller’s skill or
judgement.
Warranty of merchantability or implied warranty
of merchantability.
A merchant seller’s warranty- implied by law-
that the thing sold is fit for its​ ordinary purpose
 The seller warrants that the goods are
reasonably fit for the ​general purpose for which they
are sold. In here, the goods were brought by
description.
Sale of a specified article under its patent or
other trade name
General rule: ​There is no warranty as to its fitness
for any particular purpose.
Exception: ​Stipulation to the contrary
An implied warranty or condition as to the
quality or fitness for a particular purpose may be
annexed by the usage of trade.
Effect of usage of trade.
A warranty as to the quality or fitness for a
particular purpose may be attached by usage to a
contract containing no express provision in regard
to warranty, though in the absence of usage no
warranty would be implied. The usage is relied on
for the purpose of showing the intention of the
parties. If there is no usage, the parties would
naturally express their intention.
In the case of a contract of sale by
sample, if the seller is a dealer in goods of that
kind, there is an implied warranty that the goods
shall be free from any defect rendering them
unmerchantable, which would not be apparent
on reasonable examination of the sample.
General Rule: ​The vendor is responsible to the
vendee for any hidden defects, even though he was
not aware thereof.
Exception​: If the contrary has been stipulation and
the vendor was not aware of the hidden defects:
Note​: If the vendee is aware of the defect of the
thing he buys or the lack of title in the vendor, he is
deemed to have willfully and voluntarily assumed
the risk attendant to the sale.
Remedies in case of hidden defects:
1. Action of redhibitoria or withdrawal or
rescission plus damages
2. Accion Quanti Minores or proportionate
reduction in the price plus damages.
If the thing sold should be lost in
consequence of the hidden faults, and the vendor
was aware of them, he shall bear the loss, and shall
be obliged to return the price and refund the
expenses of the contract, with damages. If he was
not aware of them, he shall only return the price and
interest thereon, and reimburse the expenses of the
contract which the vendee might have paid.
Vendor is aware of Vendor is not aware
hidden defects of the hidden defects
He shall bear the loss He shall return the
price.
He shall return the price He shall return the
interest
He shall refund the He shall reimburse the
express expenses of the
contract
He shall pay damages
Effect in the defective thing was lost through a
fortuitous event or through buyer’s fault.
The buyer may demand of the vendor the
price which he paid, less the value which the thing
had when it was lost.
Warranty in judicial sales​.
(1) As to judgment debtor. ​— In a judicial sale, it is
not really the sheriff who sells but the judgment
debtor. Hence, the provisions regarding warranty
are also applicable to judicial sales
(2) As to government. — In judicial sales, the
principle of caveat emptor applies, according to
which the purchaser acquires by his purchase no
higher or better title or right than that of the
judgment debtor. If the latter has no right, interest, or
lien in and to the property sold, the purchaser
acquires none
Right of purchaser in judicial sales.
(1) The purchaser of property on sale under
execution and levy takes as assignee only.
2) Where a judicial sale is voided or set aside
without fault of the purchaser, the latter is entitled to
reimbursement of the purchase money paid by him
subject to set-off for benefits enjoyed while he had
possession of the property. As a general rule, a
judicial sale can only be set aside upon the return to
the buyer of the purchase price with simple interest
and other expenses incurred by him. He is ordinarily
entitled to a lien on the property until he is repaid
whatever may be due him
Prescription of actions in cases of
implied/express warranty.
(1) The action for rescission of the contract or
reduction of the purchase price prescribes six
months from the date of delivery of the thing sold.
Outside this period the action is barred. It follows
that a vendee should not be permitted to offer as a
defense, hidden defects in the thing sold six months
after he had received it.
(2) With respect to an express warranty, in
accordance with the general rule on rescission of
contract, the prescriptive period which is four (4)
years, shall apply
General Rule: ​The redhibitory defect of one shall
only give rise to its redhibition, and not that of
others.
Exception: The vendee would not have purchased
the sound animal or animals without the defective
one. This is presumed when a team, yoke pair, or
set is bought, even if a separate price has been
fixed for each one of the animals composing the
same.
The provisions of the preceding article with
respect to the sale of animals shall in like manner
be applicable to the sale of other things.
Sale of two or more things together.
The points considered in the preceding
article apply also to sale of two or more things where
only one or more of them but not all have hidden
defects.
Sale of animals at fairs or at public auctions or
as condemned.
-​There is no warranty against hidden defects
This article is a limitation to the provisions of
Article 1570. It is based on the assumption that the
defects must have been clearly known to the buyer.
Void sale of animals:
1. The sale of animals suffering from
contagious diseases
2. Sale of unfit animals
Redhibitory effect:
If the hidden defect of animals, even in the
case of professional inspection has been made,
should be of such a nature that expert knowledge is
not sufficient to discover it.
The redhibitory action, based on the faults or
defects of animals, must be brought within forty days
from the date of their delivery to the vendee. This
action can only be exercised with respect to faults
and defects which are determined by law or by local
customs.
Prescriptive period: ​Forty days from the date of
their delivery to the vendee
Animal dies within 3 days after its purchase
The vendor shall be liable if the disease
which caused the death existed at the time of the
contract and not at the time of delivery.
Effect of rescission of sale of animal with
redhibitory defect.
1. The animal shall be returned in the condition
in which it was sold and delivered
2. The vendee is answered for any injury due to
his negligence
Remedies in case of hidden defects
1. Accion redhibitoria or withdrawal or
rescission plus damages
2. Accion Quanti Minores or proportionate
reduction in the price plus damages.
Note: The prescription period to exercise the two
remedies above stated is 40 days from the date of
delivery of the animals to the vendee.
The form of sale of large cattle shall be
governed by special laws.
Form of sale of large cattle.
The special law governing the sale of large
cattle is Act No. 4117, now found in Sections 511 to
536 of the Revised Administrative Code, as
amended, providing for the registration, branding,
conveyance, and slaughter of large cattle. The sale
must appear in a public document​.
Chapter 6: Actions for breach of contract of sale
of goods
​Actions for breach of the contract of sale of
goods shall be governed particularly by the
provisions of this Chapter, and as to matters not
specifically provided for herein, by other applicable
provisions of this Title.
Provisions governing breach of contract
of sale of goods.
“Goods” includes all chattels personal but not things
in action or money of legal tender in the Philippines.
The term includes growing fruits or crops
Measure of damages: ​It is the estimated loss
directly and naturally resulting in the ordinary course
of events from the buyer’s breach of contract
Measure of damages where there is an available
market for the goods The difference between the
contract price and the market or current price at the
time when the goods ought to have been accepted,
or, if no time was fixed for acceptance, then at the
time of the refusal to accept.
Measure of damages for repudiation or
countermand
a. The labor performed and expenses incurred
for materials before receiving notice of the
buyer’s repudiation or countermand
b. The profit he would have realized if the sale
had been fully performed
Seller’s right of rescission before delivery.
(1) when the buyer has repudiated the contract of
sale;
2) when the buyer has manifested his inability to
perform his obligations thereunder; and
(3) when the buyer has committed a breach of the
contract of sale.
Note:
● The seller committed a breach of contract by
not delivering the specific goods to the buyer
● The buyer applies with the court for specific
performance to compel the seller to deliver
the specific goods
● There must be an order from the court for
specific performance
Remedies of buyer for breach of warranty by
seller.
(1) accept the goods and set up the seller’s breach
to reduce or extinguish the price;
(2) accept the goods and maintain an action for
damages for the breach of the warranty;
(3) refuse to accept the goods and maintain an
action for damages for the breach of the warranty;
(4) rescind the contract of sale by returning or
offering the return of the goods, and recover the​,
after the vendor has been duly heard​.
Chapter 8: Assignment of credits and other
incorporeal rights.
ART. 1624. An assignment of credits and other
incorporeal rights shall be perfected in
accordance with the provisions of article 1475.
Assignment of credit is a contract by which the
owner (assignor/creditor) of a credit and other
incorporeal rights transfers, either onerously or
gratuitously, to another (assignee) his rights and
actions against a third person
Contract of sale Assignment of credit
The object is property The object is credit,
incorporeal rights or
rights of actions
It need not appear in a It must appear in a
public instrument to public instrument to
affect third person. produce effect as
against third person. In
case the assignment
involves real property,
 Warranties of the assignor of credit
the instrument is
recorded in the registry 1. The existence of the credit at the time of the
of property. assignment
2. The legality of the credit at the time of the
assignment unless the assignor sold it as
Requirement to produce effect against third
doubtful
person
3. If the expressly stipulated or unless the
1. If personal property is involved
insolvency was prior to the sale and common
A public instrument is required to make the
knowledge, the solvency of the debtor.
assignment effective against third person
Liabilities for violation of warranties
2. If real property is involved
1. Assignor in good faith
The instrument is recorded in the Registry of
a. Price received
Property to make the assignment effective against
b. Expenses of the contract
third person.
c. Any other legitimate payments by
Note: ​A gratuitous assignment is in essence a
reason of the assignment
donation, hence, t must comply with the formalities
2. Assignor in bad faith
of a donation
a. Payment of the price
b. All the expenses
The debtor who, before having knowledge of
c. Damages
the assignment, pays his creditor shall be released
from the obligation
Duration of warranty as to debtor’s solvency
1. Period stipulated
Consent of debtor to assignment not required.
2. If there is no stipulation
In an assignment of credit, the consent of the debtor
a. If the period has already expired
is not essential in order that it may produce legal
One year from the time of the assignment
effects. Hence, the duty to pay does not depend on
b. If the period has not yet expired
the consent of the debtor; otherwise, all creditors
One year from maturity
would be prevented from assigning their credits
because of the possibility of the debtors’ refusal to
One who sells an inheritance without
give consent.
enumerating the things of which it is composed,
shall only be answerable for his character as an
The assignment of a credit includes all the
heir.
accessory rights, such as a guaranty, mortgage,
pledge or preference.
Note: ​The above stated article speaks of present
inheritance which is valid as long as the essential
Extent of assignment of credit. The
elements of a contract are present. It is the sale of
assignment of credit includes not only the credit
future inheritance which is prohibited, as a rule.
itself but also all rights accessory thereto. This
follows the familiar rule that the accessory follows
One who sells for a lump sum the whole of
the principal. But the parties may stipulate that the
certain rights, rents, or products, shall comply by
accessory rights shall not be included in the
answering for the legitimacy of the whole in general;
assignment.
but he shall not be obliged to warrant each of the
various parts of which it may be composed, except
in the case of eviction from the whole or the part of
greater value.
Note: ​The warranty is on the legitimacy of the world
of the whole in general.

General Rule: ​The vendor shall pay the vendee he
have profited by some of the fruits or received or
anything from the inheritance sold
Exception: ​The above liability is subject to contrary
stipulation:
General Rule: The vendee shall, on his part,
reimburse the vendor for all that the latter may have
paid for the debts of and charges on the estate and
satisfy the credits he may have against the same,
unless there is an agreement to the contrary.
Exception: ​The above liability is subject to contrary
stipulation.
When a credit or other incorporeal right in
litigation is sold, the debtor shall have a right to
extinguish it by reimbursing the assignee for the
price the latter paid therefor, the judicial costs,
incurred by him, and the interest on the price from
the day on which the same was paid. A credit or
other incorporeal right shall be considered in
litigation from the time the complaint concerning the
same is answered.
The debtor may exercise his right within thirty days
from the date the assignee demands payment from
him.
The following are the requisites before the right
of legal redemption can be exercised:
(1) There must be a sale or assignment of a credit.
The concept of sale must be understood in its
restricted sense. The right cannot be exercised if the
transaction is exchange or donation
(2) There must be a pending litigation at the time of
the assignment. The complaint by the assignor must
have been filed and answered by the creditor before
the sale of the credit. Article 1634 applies only to a
claim in litigation the meaning of which is not a claim
open to litigation, but one which is actually litigated;
that is to say, disputed or contested, which happens
only after an answer interposed in a suit(3) The
debtor must pay the assignee:
(a) the price paid by him;
(b) the judicial costs incurred by him; and
(c) the interest on the price from the date of
payment; and
(4) The right must be exercised by the debtor within
thirty (30) days from the date the assignee demands
(judicially or extra-judicially) payment from him. A
debtor who has paid the full amount of a litigated
credit to one who has purchased such litigated credit
cannot counterclaim the difference between the
amount paid by such debtor and the amount paid by
the purchaser. of such litigated credit unless such
debtor shall make use of his right to do so within the
prescribed period.
From the provisions of the preceding article
shall be excepted the assignments or sales made:
(1) To a co-heir or co-owner of the right assigned;
(2) To a creditor in payment of his credit;
(3) To the possessor of a tenement or piece of land
which is subject to the right in litigation assigned.
Exceptions to debtor’s right to legal
redemption
(1) Sale to a co-heir or co-owner. — This exception
is based on the desire to do away with co-ownership
or pro-indivision. Moreover, if the right of redemption
is granted to the debtor, it would not terminate
litigation which is the purpose of this article because
the co-owner or co-heir may still sue the debtor for
the share that corresponds to the former in the credit
(2) Sale to a creditor. — There is a lawful basis for
the assignment as the assignee cannot be
considered as a vendee of a right in litigation and as
a speculator. It really refers to a dation in payment.
(3) Sale to the possessor of property in question. —
The reason for this exception is that the assignee is
moved by a desire to preserve the property and not
to speculate at the expense of the debtor.
Chapter 9: General Provisions
ART. 1636. In the preceding articles in this Title
governing the sale goods, unless the context or
subject matter otherwise requires:
(1) “Document of title to goods” includes any bill
of lading, dock warrant, “quedan,” or warehouse
receipt or order for the delivery of goods, or any
other document used in the ordinary course of
business in the sale of transfer of goods, as proof of
the possession or control of the goods, or
authorizing or purporting to authorize the possessor
of the document to transfer or receive either by
indorsement or by delivery, goods represented by
such document. “Goods” includes all chattels
personal but not things in action or money of legal
tender in the Philippines. The term includes growing
fruits or crops. “Order” relating to documents of title
means an order by indorsement on the documents.
“Quality of goods” includes their state or condition.
“Specific goods” means goods identified and agreed
upon at the time a contract of sale is made. An
antecedent or pre-existing claim, whether for money
or not, constitutes “value” where goods or
documents of title are taken either in satisfaction
thereof or as security therefor.
(2) A person is insolvent within the meaning of this
Title who either has ceased to pay his debts in the
ordinary course of business or cannot pay his debts
as they become due, whether insolvency
proceedings have been commenced or not.
(3) Goods are in a “deliverable state” within the
meaning of this Title when they are in such a state
that the buyer would, under the contract, be bound
to take delivery of them.

Note: The above stated article defines the terms

used in the preceding articles governing the sale of
goods only.

ART. 1637. The provisions of this Title are subject to

the rules laid down by the Mortgage Law and the
Land Registration Law with regard to immovable
property.