1458. By the contract of sale one contracting party iii.

Right of bailee to use the

obligates himself to transfer ownership of and thing loaned in the contact
deliver a determinate thing and the other, to pay the of commodatum.
price certain in money or its equivalent  Not intransmissible
CHARACTERISTICS OF CONTRACT OF SALE: i. Right to vote
Consensual- meeting of minds ii. Right to public office
Bilateral- both parties have obligation iii. Parental rights
Onerous- both parties have to give up something iv. Marital rights
Nominate- “contract of sale” under the civil code KINDS OF ILLICIT THINGS
Commutative- things sold is equivalent to price 1) Per Se
paid  Unlawful as of its nature
Principal- existence does not rely on another Ex. Sale of spoiled goods
contracts 2) Per Accidens
REQUISITES OF SALE  There is a law declaring it to be
1. Consent unlawful
2. Object – determinate thing Ex. Sale of illegal drugs, Land sold to
3. Cause/ Consideration – price certain in money alien
or its equivalent RIGHT OF VENDOR TO TRANSFER OWNERSHIP
 Seller – B’s promise to pay 1) One can sell what he owns
 Buyer – S’s promise to deliver  He must be the owner or at least
NATURAL ELEMENTS must be authorized by the owner of
- Deemed to exist in certain contracts in absence the thing sold.
of stipulation 2) Sufficient if right exists at time of delivery
Ex. Warranty against eviction & hidden defects  Seller is not required to have the right to
ACCIDENTAL ELEMENTS transfer ownership at contract perfection. It
- Stipulated by parties is sufficient he has the right to transfer
- May be present or absent ownership at the time where the obligation
Ex. Penalty, Interest, Condition, Time and Place of to deliver arises. (Future Goods)
Payment 1460. SUBJECT MATTER MUST BE
2 KINDS OF SALE DETERMINATE
1) Absolute – not subject to any condition and 1. When thing determinate
title / ownership passes to buyer upon  Particularly designated
delivery.  Physically segregated from all other of the
2) Conditional – When sale is subject to same class
certain conditions or contingency 2. Capable of being determinate (without the need
Ex. Delivery does not pass the ownership of a new contract)
until fully paid 1461. SALES OF THING HAVING POTENTIAL
1459. REQUISITES OF OBJECT EXISTENCE = VALID
1) Thing As a result of something owned by the seller which
- Determinate is already in existence.
- Lawful Future goods – to be raised, acquired, or
- Not impossible manufactured
2) Rights Ex. Milk of cow, wine from grape vine, wool of
 Not personal sheep,
i. Right to be a partner in a SALE OF MERE HOPE AND EXPECTANCY =
partnership VALID
ii. Right to act as an agent
Provided that the thing expected will come into Resolutory condition – happening on the event
existence. The sale is still valid even if the thing extinguishes an obligation.
does not come into existence. Upon the happening of the resolutory condition,
EXCEPTION: IF MADE IN VAIN vendor cannot transfer ownership of what he sold
- Sale of a thing that will never come since there is no object.
into existence EXCEPTION: Torrens title
Ex. Sale of falsified sweepstakes ticket that can
never win. Article 1466. In construing a contract containing
1462. GOODS THAT CAN BE THE OBJECT OF provisions characteristic of both the contract of
SALE sale and of the contract of agency to sell, the
1) Existing essential clauses of the whole instrument shall
2) Future be considered.
NOTE: Future goods cannot be subject to
executory contracts because it is not readily Sale vs. Agency
available. SALE AGENCY
1463. SALE OF UNDIVIDED INTEREST IN A The buyer pays for the The agent does not pay
THING. price of the for the price. He merely
1) By sole owner – makes the buyer a co-owner of goods/property accounts for the
an aliquot share of the whole purchased proceeds of the sale.
2)By co-owner – may dispose w/o the consent of The buyer becomes The agent does not
other co-owners provided that the sale is only the owner of the become the owner of
limited to the portion that will be allotted to the goods/property the goods/property
vendor upon termination of the co-ownership. purchased delivered to him for
1464. SALE FUNGIBLE GOODS sale.
- each unit is treated as an equivalent of any other Buyer cannot return The agent returns the
unit. the goods/property goods/property if he
-may only be sold an UNDIVIDED share of the when the sale is was not able to sell the
mass. defective same
EFFECT OF SALE: The seller warrants the The agent does not
a) Buyer become co-owner goods/property sold make any warranty as
b) Aliquot share can only be determined by long as he acts within
the measurement of entire mass his authority and in the
c) If mass < what was sold, buyer become name of the principal
owner of the whole mass and seller must The seller has full The agent must follow
supply the insufficiency w. the same kind freedom to enter into the instructions of the
and quality. any terms or principal
RISK OF LOSS: conditions on the
- Risk is proportionate to the holdings contract of sale
of the co-owners.
NOTE: In sale of undivided share, the subject Article 1467. A contract for the delivery at a
matter is INCORPOREAL OR INTANGIBLE. certain price of an article which the vendor in the
Ownership passes by intention of the parties, not ordinary course of his business manufactures or
actual delivery. procures for the general 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
1465. THINGS SUBJECT TO RESOLUTORY specially for the customer and upon his special
CONDITION MAY BE SUBJECT OF CONTRACT order, and not for the general market, it is a
OF SALE. contract for a piece of work.
 Rules if Consideration is partly Money and Partly
Contract for a Piece of Work— The article sold is Goods
specially manufactured and upon the special order 1. Determine the intention of the parties.
of the customer. Article is not sold in the ordinary 2. If intention could not be determined, consider the
course of business. value of the thing given:
Contract for a piece Contract of Sale a. If value of the thing more than value of the
of work money, it is BARTER
The thing transferred The thing transferred is b. If value of the thing less than value of the money,
is one not in one which would have it is SALE
existence and w/c existed and would have c. If both values are the same, SALE
never would have been the subject of sale
existed but for the to some other person, Article 1470. Gross inadequacy of price does not
order of the party even if the order had not affect a contract of sale, except as it may
desiring to acquire it been given indicate a defect in the consent, or that the
The services The primary objective of parties really intended a donation or some other
dominate the the contract is a sale of act or contract.
contract even though the manufactured item;
there is a sale of it is a sale of goods even Article 1471. If the price is simulated, the sale is
goods involved though the item is void, but the act may be shown to have been in
manufactured by labor reality a donation, or some other act or
furnished by the seller contract.
and upon previous order
of the customer EFFECT OF GROSS INADEQUACY OF PRICE
Not w/in the Statute Governable by the
of Frauds Statute of Frauds NOTE: Mere inadequacy of the price does not
affect the validity of the sale, except
Article 1468. If the consideration of the contract (1) When there is fraud, mistake, or undue
consists partly in money, and partly in another influence indicative of a defect in consent is
thing, the transaction shall be characterized by present,
the manifest intention of the parties. If such (2)When it shows that the parties really intended a
intention does not clearly appear, it shall be donation or some other act or contract.
considered a barter if the value of the thing
given as a part of the consideration exceeds the EFFECT WHERE PRICE IS SIMULATED
amount of the money or its equivalent;
otherwise, it is a sale. 1. The act may be shown to have been in reality a
donation, or some other act or contract
Sale Barter 2. If not and neither party had any intention
Consideration: giving Consideration: giving whatsoever that the amount will be paid
of money as payment of a thing (absolutely simulated): the sale is void
Governed by law on sales: species of the genus 3. If there is a real price but what is stated in the
sales contract is not the one intended to be paid (only
If consideration consists party in money and relatively simulated): the contract of sale is valid
partly by thing – look at manifest intention; but subject to reformation
If intention is not clear: If intention is not clear:
value of thing is equal value of thing is more Effect of Gross Inadequacy of Price. No effect.
or less than amount of than amount of money Exceptions: (meaning, sale is set aside)
money – sale – barter 1. If consent is vitiated, such as VIMFU (Violence,
Intimidation, Mistake, Fraud, Undue influence)
2. If the parties intended a donation or some other
act or contract
3. If the price is so low as to be shocking to the
conscience
Effect of Simulated Price. Sale is void, unless it
could be shown that the parties intended a
donation or some other act of liberality.
o Price Simulated- No price to support a contract
of sale, such that neither party had any intention
that the amount will be paid—void
o Price is False- there is a real price not declared—
contract is valid, but the underlying deed is
subject to reformation to indicate the real price
upon which the minds of the parties have met.
Article 1475. The contract of sale is perfected at
the moment there is a meeting of minds upon
the thing which is the object of the contract
and upon the price.
From that moment, the parties may
reciprocally demand performance, subject to
the provisions of the law governing the form
of contracts.
PERFECTION OF CONTRACT OF SALE. Meeting
of the minds upon the thing and price.
Effect: Parties may reciprocally demand
performance
GENERAL RULE: A contract of sale is perfected at
the moment there is a meeting of the minds upon
the thing which is the object of the contract and
upon the price; consensual contract
Exception: When the sale is subject to a
suspensive condition
REQUIREMENTS:
1. When parties are face to face – when there is
absolute acceptance of an offer that is certain
2. When thru correspondence or telegram –
when the offer or receives or had knowledge of the
acceptance
3. When the sale is subject to a suspensive
condition – from the moment the condition is
fulfilled
NOTES: Qualified acceptance: mere counter-offer
which needs to be absolutely accepted to give rise
to perfected contract of sale. Business ads are
mere invitations to make an offer except when it
appears to be otherwise.
Article 1477. The ownership of the thing sold
shall be transferred to the vendee upon the
actual or constructive delivery thereof.
Article 1478. The parties may stipulate that
ownership in the thing shall not pass to the
purchaser until he has fully paid the price.
Article 1480. Any injury to or benefit from the
thing sold, after the contract has been
perfected, from the moment of the perfection of
the contract to the time of delivery, shall be
governed by articles 1163 to 1165, and 1262.
This rule shall apply to the sale of fungible
things, made independently and for a single
price, or without consideration of their weight,
number, or measure.
Should fungible things be sold for a price fixed
according to weight, number, or measure, the
risk shall not be imputed to the vendee until
they have been weighed, counted, or measured
and delivered, unless the latter has incurred in
delay.
Legal consequences from point of perfection are
the same in both legal systems: upon perfection of
an unconditional contract of sale involving specific
or determinate subject matter, the risk of loss
deterioration and the benefits of fruits and
improvements, were fro the account of the buyer.
WHO BEARS RISK OF LOSS/ DETERIORATION/
FRUITS:
1. BEFORE PERFECTION
a. Res perit domino
b. Owner is seller so seller bears risk ofloss
2. AT PERFECTION
o Res perit domino
o Contract is merely inefficacious because loss of
the subject matter does not affect the validity of
the sale
o Seller cannot anymore comply with obligation so
buyer cannot anymore be compelled
3. AFTER PERFECTION BUT BEFORE DELIVERY
o Loss – confused state
o Paras: BUYER
o Tolentino: SELLER
o Deterioration and fruits – Buyer bears loss;
4. AFTER DELIVERY
o Res perit domino
o Delivery extinguishes ownership visa-vis the
seller and creates a new one in favor of the buyer
Article 1481. In the contract of sale of goods by
description or by sample, the contract may be
rescinded if the bulk of the goods delivered do
not correspond with the description or the
sample, and if the contract be by sample as well
as description, it is not sufficient that the bulk of
goods correspond with the sample if they do not
also correspond with the description.
The buyer shall have a reasonable opportunity of
comparing the bulk with the description or the
sample.
Sale of Goods By Description- where a seller sells a
thing as being of a certain kind verbally describing
them and the buyer simply relies on the seller’s
descriptions of the things, not knowing whether the
seller’s representations are true or not.
Sale by Sample- Where the seller warrants that the
bulk of goods being sold correspond with the
sample or samples exhibited not only in kind but
also in quality and character.
Sale by Description and Sample- Where the seller
has to satisfy the requirements in sale by
description and sample. There are two-fold
warranty here:
(a) the goods purchased matched with the
description and
(b) the goods also matched in kind, quality and
character with that of the sample or samples
exhibited to the buyer or his representative
Article 1482. Whenever earnest money is given
in a contract of sale, it shall be considered as
part of the price and as proof of the perfection of
the contract.
EARNEST MONEY vs. OPTION MONEY
Earnest Money Option Money
It is part of the It is given as a distinct
purchase price consideration for an
option contract which
gives the buyer a
specific period within
which to purchase the
thing
It is given only when It is given at a time when
there is already a the sale had not yet
perfected sale been perfected. What
had been perfected only
is the option contract
When it is given, the Even if option money is
buyer is bound to pay paid by the would-be-
the balance of the buyer he is not bound to
agreed purchase price buy the thing
If the sale does not If the buyer decides not
materialize, the to buy the thing, he
earnest money paid cannot recover the
must be returned, option money he paid as
unless a contrary consideration for the
agreement had been contract of option
stipulated
Article 1483. Subject to the provisions of the
Statute of Frauds and of any other applicable
statute, 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.
FORM OF SALES
I. Form not important in validity of sale
a. Sale being consensual, may be oral or written,
perfected by mere consent as to price and subject
matter
b. If particular form is required under the statute of
frauds:
i. valid and binding between parties but not
binding to 3rd persons
c. Reason: purposes of convenience only and not
for validity and enforceability; cause of action is
granted to sue and compel other party to
execute the document
II. When form is important for validity; exception
by specific provision of law;
a. Power to sell a piece of land granted to an agent
– otherwise VOID
b. Sale of large cattle; must also be registered with
Municipal treasurer – otherwise VOID
c. Sale of land by non-Christian if not approved by
Governor– VOID
III. When form is important for enforceability
(STATUTE OF FRAUDS Article 1403 (2))
a. A sale agreement which by its terms is not to be
performed within a year from the making thereof;
b. An agreement for the sale of goods, chattels or
things in action, at a price not less than P500.00;
and
c. A sale of real property or of an interest therein.
IV. EXCEPTIONS TO COVERAGE OF STATUTE
IN SALES CONTRACTS:
1. When there is a note or memorandum in writing
and subscribed to by party or his agent (contains
essential terms of the contract)
2. When there has been partial
performance/execution (seller delivers with intent
to transfer title/receives price)
3. When there has been failure to object to
presentation of evidence (oral)
4. When sales are effected through electronic
commerce
Article 1484. 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.
Article 1485. The preceding article shall be
applied to contracts purporting to be leases of
personal property with option to buy, when
the lessor has deprived the lessee of the
possession or enjoyment of the thing.
Article 1486. In the case referred to in the
two preceding articles, a stipulation that the
installments or rents paid shall not be
returned to the vendee or lessee shall be
valid insofar as the same may not be
unconscionable under the circumstances.
Article 1487. The expenses for the execution
and registration of the sale shall be borne by the
vendor, unless there is a stipulation to the
contrary.
Article 1488. The expropriation of property for
public use is governed by special laws.
Article 1489. All persons who are authorized
in this Code to obligate themselves, may
enter into a contract of sale, saving the
modifications contained in the following
articles.
Where necessaries are those sold and delivered
to a minor or other person without capacity to
act, he must pay a reasonable price therefor.
Necessaries are those referred to in article 290.
Two Kinds of Incapacity:
1. Absolute Incapacity- Party cannot bind himself
in any case.
2. Relative Incapacity- Certain Persons under
certain circumstances cannot buy certain property.
** Minors in contract for necessaries must pay
reasonable price.
Necessaries—those things which are needed for
sustenance, dwelling, clothing and medical
attendance, in keeping with the financial capacity
of the family of the incapacitated person.
Article 1490. The husband and the wife cannot
sell property to each other, except:
(1) When a separation of property was agreed
upon in the marriage settlements; or
(2) When there has been a judicial separation of
property under article 191.
Prohibition against Husband and Wife.
Exceptions.
Rationale: PID
a. To avoid Prejudice to 3rd Persons
b. To prevent one spouse from unduly influencing
the other.
c. To avoid by indirection the violation of the
prohibition against donations.
Who may assail illegality?
a. Creditors prior to the sale
b. Heirs of either spouse.
** Either spouse may not assail illegality because
they are parties thereto.
** A spouse designated as agent of the other
spouse may sell the latter’s exclusive property.
Article 1491. The following persons cannot
acquire by purchase, even at a public or judicial
auction, either in person or through the
mediation of another:
(1) The guardian, the property of the person
or persons who may be under his
guardianship;
(2) Agents, the property whose
administration or sale may have been
intrusted to them, unless the consent of the
principal has been given;
(3) Executors and administrators, the
property of the estate under administration;
(4) Public officers and employees, the property
of the State or of any subdivision thereof, or of
any government-owned or controlled
corporation, or institution, the administration of
which has been intrusted to them; this provision
shall apply to judges and government experts
who, in any manner whatsoever, take part in the
sale;
(5) 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 in litigation or levied
upon an execution before the court within
whose jurisdiction or territory they exercise
their respective functions; this prohibition
includes the act of acquiring by assignment
and shall apply to lawyers, with respect to
the property and rights which may be the
object of any litigation in which they may
take part by virtue of their profession;
(6) Any others specially disqualified by law.
Persons Relatively Incapacitated to Buy.
(PAGEJO)
1. Public Officers and employees—Property Of
State.
2. Agents—Property of Principal unless with
consent.
3. Guardian—Property of Ward.
4. Executors and administrators—Estate
5. Justices, Judges, Prosecuting Attorneys, Clerks
and employees of court—Property/Rights under
litigation.
6. Others disqualified by law. (Ex. *aliens who are
disqualified to purchase private agricultural lands;
*an unpaid seller having a right of lien or having
stopped the goods in transitu, who is prohibited from
buying the goods either directly or indirectly in the
resale of the same at a public or private sale w/c he
may make. Art. 1533, par.5)
Rationale: Fiduciary relationship
Status of Sale: Voidable (1-3); Void (4-6)
Article 1492. The prohibitions in the two
preceding articles are applicable to sales in
legal redemption, compromises and
renunciations.
Article 1493. If at the time the contract of sale is
perfected, the thing which is the object of the
contract has been entirely lost, the contract
shall be without any effect.
But if the thing should have been lost in part
only, the vendee may choose between
withdrawing from the contract and demanding
the remaining part, paying its price in
proportion to the total sum agreed upon.
Partial Loss Rules:
1. Vendee may withdraw from the contract
2. Demand the remaining part, paying its price in
proportion to the total sum agreed upon
Article 1494. 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.
Loss/Substantial Deterioration of Specific Goods
without seller’s knowledge.
1. Buyer may avoid the sale or
2. May treat sale as valid w/ respect to the
existing goods
Article 1495. The vendor is bound to transfer
the ownership of and deliver, as well as warrant
the thing which is the object of the sale.
Obligations of Vendor. (TDWP)
1. Transfer Ownership (not waivable)
2. Deliver (not waivable)
3. Warrant Object (waivable and may be modified)
4. Preserve Thing from perfection to delivery (Art.
1163)
5. Pay for the execution and registration of the sale
unless there is a contrary agreement
**Execution sales do not require the delivery of
thing since a one year period of redemption is
available to seller.
Article 1496. The ownership of the thing sold is
acquired by the vendee from the moment it is
delivered to him in any of the ways specified in
articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is
transferred from the vendor to the vendee.
Article 1497. The thing sold shall be
understood as delivered, when it is placed in
the control and possession of the vendee.
Control and Possession necessary in Delivery.
Exception: Art. 1478. Stipulation as to full payment
of price.
Delivery- a mode of acquiring ownership as a
consequence of a contract of sale by virtue of which
actually or constructively the object is placed in the
control and possession of the vendee.
KINDS OF DELIVERY
1. Actual or Real. (1497)
2. Legal or Constructive
a. Legal Formalities (1498); execution of public
instrument.
b. Symbolical Tradition (1498 par 2)- keys
delivered.
c. Traditio Longa Manu- by mere consent
/agreement. If the movable sold cannot yet be
transferred to the possession of the buyer at the
time of the sale. (1499)
d. Traditio Brevi Manu- if the buyer had already
the possession the object even before the
purchase. (lessee becomes owner)
e. Traditio constitutum possessorium-
possession as owner changed. (Owner becomes
lessee)
3. Quasi-Tradition- Delivery of Rights, credits or
incorporeal property made by:
a. Execution of public instrument
b. Placing titles of ownership in the hands of
a lawyer.
c. Allowing the buyer to make use of the
rights (1501)
Article 1498. When the sale is made through a
public instrument, the execution thereof shall
be equivalent to the delivery of the thing
which is the object of the contract, if from the
deed the contrary does not appear or cannot
clearly be inferred.
With regard to movable property, its delivery
may also be made by the delivery of the keys
of the place or depository where it is stored or
kept.
Requirements:
1. Seller’s Control.
2. Seller’s Control transferred to buyer.
3. Intention to deliver for ownership.
Article 1499. The delivery of movable property
may likewise be made by the mere consent or
agreement of the contracting parties, if the
thing sold cannot be transferred to the
possession of the vendee at the time of the sale,
or if the latter already had it in his possession for
any other reason.
Article 1500. There may also be tradition
constitutum possessorium.
Different forms of Constructive Delivery -
Constructive delivery has same legal effect as
actual or physical delivery
1. Traditio Longa Manu − Delivery of thing by
mere agreement; when SELLER points to the
property without need of actually delivering
2. Traditio Brevi Manu − Before contract of sale,
the would be buyer was already in possession of
the would be subject matter of sale (ex: as lessee)
3. Symbolic delivery − As to movables – ex:
delivery of the keys to a car
4. Constitutum possessarium − When at the time
of the perfection of the contract of sale, seller had
possession of the subject matter in the concept of
owner and pursuant to the contract, seller
continues to hold physical possession no longer in
the concept of an owner but as a lessee or any
other form of possession other than in the concept
of owner.
Article 1501. With respect to incorporeal
property, the provisions of the first paragraph of
article 1498 shall govern. In any other case
wherein said provisions are not applicable, the
placing of the titles of ownership in the
possession of the vendee or the use by the
vendee of his rights, with the vendor's consent,
shall be understood as a delivery.
Article 1502. When goods are delivered to the
buyer "on sale or return" to give the buyer an
option to return the goods instead of paying
the price, the ownership passes to the buyer on
delivery, but he may revest the ownership in
the seller by returning or tendering the goods
within the time fixed in the contract, or, if no
time has been fixed, within a reasonable time.
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, on
the expiration of such time, and, if no time has
been fixed, on the expiration of a reasonable
time. What is a reasonable time is a question of
fact.
Transaction on Sale or Return. Subject to
Resolutory Condition.
Difference with “Delivery with option to
purchase”- Ownership is transferred in Sale or
Return
Transaction on Approval or Trial/Satisfaction.
Subject to Suspensive Condition.
Rules:
1. Risk of loss to seller until the sale becomes
absolute. (Exceptions: Buyer in default; Buyer
agreed to bear the loss)
2. Buyer must give goods a trial except when it is
evident that it cannot perform the work intended.
3. Period of signifying acceptance commences to
run only when all the parts essential for operation
has been delivered.
4. A provision that a 3rd person must satisfy approval
is valid but he must be in Good faith.
5. Generally the Sale and Delivery to an expert
buyer is not a sale on approval/trial.
Sale or Return vs. Sale on Approval
Basis Sale or Sale on
Return Approval
Condition Subject to Subject to
Resolutory suspensive
condition condition
 Premise It depends It depends Art. 1480 – if the thing is sold after perfection of the
upon the will upon the contract but before delivery, buyer bears the risk
of the buyer suitability, (exception to the rule of Res Perit Domino)
quality or 1505. SALE BY A PERSON NOT THE OWNER
character of “No one can give what he has not”
the goods 1. When the owner of the goods precluded from
Transfer of Ownership Ownership denying the seller’s authority to sell
ownership immediately does not 2. The law enables the apparent owner to dispose
passes to the immediately the goods
buyer on pass to the 3. Where the sale sanctioned by statutory or
delivery buyer. It judicial authority.
passes only  Possession of immovable property acquired
upon approval in good faith is equal to title
or satisfaction  Ex. The sheriff order X to sell the stolen car
of the buyer of B even the former acquires it in good
duly faith. (no warranty)
manifested 4. Where the sale made at merchant’s store, fairs,
after trial or markets.
Revesting of Ownership is There is no 5. Where the seller has a voidable title, which has
ownership in revested in revesting of not been avoided
the owner the seller if ownership 6. Where the seller subsequently acquires title
the buyer so because it is  Ex. When person conveys property at the
decides retained by time he is not the owner, subsequent
the seller until acquisition will validate the such
the sale conveyance.
becomes 1506. SALE BY ONE HAVING VOIDABLE TITLE
absolute Requisites for acquisition good title (when seller has
Risk of loss or The risk rests The risk voidable title)
deterioration on the buyer remains in the 1. Before the title of the seller is avoided
before the seller while 2. The buyer acquires it in good faith and for value
revestment of the goods are 3. The buyer has no notice of the seller’s defect of
ownership on trial title
1521. PLACE OF DELIVER OF GOODS SOLD
Rules:
1. When there is express or implied agreement,
place of delivery is agreed upon
1504. RISK OF LOSS GENERALLY ATTENDS 2. If no agreement, place is determined by the
TITLE usage of trade
Risk borne by the owner of the thing at time of loss 3. Place is at the seller’s place of business
1. When the seller reserves his right to secure 4. Place is at the seller’s residence
payment, the risk of loss will be borne by the 5. In case of specific goods, place of delivery is the
buyer place where the contract is contracted.
2. When there is delay in delivery, risk of loss will TIME OF DELIVERY OF GOODS SOLD
be to the party at fault. 1. If no time is fixed by the contract the seller will
RISK OF LOSS BY FORTUITOUS EVENT AFTER be bound to deliver the goods within
PERFECTION BUT BEFORE DELIVERY reasonable hours
2. If the contract provides a fixed time for
purchamce
3. Where the contract does not specify the time
  Buyer cannot make the time is of the
essence
DELIVERY OF GOODS IN POSSESSION OF A
THIRD PERSON
 Bailee will become the agent of the buyer
 To affect third person, the person holding the
goods must acknowledge to be the bailee for
the buyer
HOUR OF DELIVERY OF THE GOODS
The demand or tender of deliver to be effectual,
must be made at a reasonable hour
 Reasonable hour is a question of fact
 Is the performance or payment is readily
acceptable, reasonable hours can be anytime
the seller could find the buyer
 If it in bulk and need special care, an hour
might be unreasonable
DUTY OF THE SELLER TO PUT GOODS IN
DELIVERABLE CONDITION
Unless otherwise agreed upon, it is the seller’s duty
to pay for the expenses to make the goods in its
deliverable condition
1522. DELIVERY OF GOODS LESS THAN
QUANTITY CONTRACTED
When the seller delivers the goods less than the
quantity contracted as a full performance, the buyer
may:
1. Reject the goods
2. Accept the goods and pay the price
 Contract price if he knew that no more
were to be delivered
 Fair value if he does not know that seller
is going to be guilty of breach of
contract
DELIVERY OF GOODS MORE THAN QUANTITY
CONTRACTED
Buyer may accept the quantity contracted and reject
the excess. If he accepts, he will pay the price
DELIVERY OF GOODS MIXED WITH THERS
Same as the goods delivered for more than quantity
EFFECT OF INDIVISIBLE SUBJECT MATTER
The buyer may reject the whole goods delivered
1523. DELIVER TO CARRIER ON BEHALF OF
THE BUYER
General rule: delivery to the carrier constitutes
delivery to the buyer
Exceptions: when the seller retains the ownership of
the goods to secure payment or the parties did not
intend to deliver the goods through a carrier
SELLER’S DUTY AFTER DELIVERY TO CARRIER
1. To enter on behalf of the buyer into such
contract reasonable under circumstances
 Seller will enter in the contract with the
carrier on behalf of the buyer
2. To give notice to the buyer regarding necessity
to insure goods
 If the seller failed to do so, the risk of
loss will be borne by him
DEFINITION OF TRADE
COD – collect on delivery
FOB – free on board
CIF – cost insurance freight
FAS – free alongside vessel
Ex Factory, Ex Warehouse – point of origin
Ex Dock – named point of importation
1524. DELIVERY SIMULTANEOUS WITH
PAYMENT
As a general rule the obligation in the contract arises
upon perfection
WHEN DELIVERY MUST BE MADE BEFORE
PAYMENT OF PRICE
The thing shall not be delivered unless the price is
paid, except when there is a fixed period set for the
payment (in this case the seller is bound to deliver
the goods)
1525. MEANING OF UNPAID SELLER
Unpaid seller is the one who has not been paid the
price or tendered the whole price or received a
negotiable instrument that is dishonored.
WHERE WHOLE OF THE PRICE HAS NOT BEEN
PAID
1. Tender of payment of buyer – this will destroy
the seller’s right of lien
2. Payment of part of price – seller still has right
of lien
3. Payment by negotiable instrument – will only
produce payment if they have been cashed or
impaired by the fault of the seller
1526. SPECIAL REMEDIED OF UNPAID SELLER
1. Right of lien (possessory lien)
2. In case of insolvency of the buyer, unpaid seller
has the right of stopping the goods in transit
3. Right to resale
4. Right to rescind
1527. WHEN UNPAID SELLER’S POSSESORY
LIEN MAY BE EXERCISED
1. Sales without stipulation as to credit
2. Expiration of credit terms
3. Insolvency of the buyer
1528. LIEN NOT GENERALLY LOST BY PART
DELIVERY
Seller still has the right of lien to the remaining
undelivered goods. However, if the part delivery is a
symbolical tradition of a whole, right of lien is lost.
1529. WHEN UNPAID SELLER LOSSES
POSSESSORY LIEN
1. Delivery to agent or bailee
2. Possession by the buyer or his agent
3. Waiver of lien
1530. RIGHT OF SELLER TO STOP GOODS IN
TRANSIT
Requisites for the exercise of right of stoppage in
transit
1. The seller must be unpaid
2. The buyer must be insolvent
3. The goods must be in transit
4. Seller must actually take possession of the
goods or give notice of his claims
5. Seller must surrender the negotiable document
of title
6. The seller must bear the expenses of the
delivery
1531. WHEN GOODS IN TRANSIT
1. After the delivery to the carrier or bailee and
before the buyer or agent takes the delivery
2. Goods are rejected by the buyer, carrier or
bailee continuous to be in possession
WHEN GOODS CONSIDERED NO LONGER IN
TRANSIT
1. After the delivery to the buyer or agent
2. If the buyer obtains the possession of the
goods at the point before the destination
originally fixed
3. If the carrier or bailee acknowledge to hold the
goods on behalf of the buyer
4. If the carrier of bailee wrongfully refuses to
deliver
ATTORNMENT BY THE BAILEE
Acknowledgement by the bailee that he holds the
goods on behalf of the buyer
EFFECT OF REFUSAL OF CARRIER TO ATTORN
OR DELIVER THE GOODS
Bailee or carrier cannot wrongfully refuse to deliver
the goods just to enlarge the seller’s right to stop the
goods. If the refusal to deliver is rightful, (ex. Buyer
does not want to pay the freight), right of stoppage
still continue
DELIVERY TO A SHIP ETC., CHARTER OR
OWNED BY THE BUYER
1. Chartered by the buyer – does not make
delivery to the buyer
2. Owned by the buyer – constitutes delivery to
the buyer
EFFECT OF PARTIAL DELIVERY
Right of stoppage still exists with respect to the
remainder goods
1532. WAYS OF EXERCISING THE RIGHT TO
STOP
1. By taking actual possession of the goods
2. Giving notice of his claims to the carrier or
bailee
EFFECT OF OUTSTANDING BILL OF LADING
If goods are covered by the negotiable document of
title. Such document must be first surrendered for
cancellation
1533. WHEN RESALE IS ALLOWABLE
The unpaid seller must either have the right of lien or
right to stop goods in transit and the any of the
following cases:
1. Where the goods are perishable in nature
2. Where the right of resell is expressly reserved,
in case the buyer make default
3. Where the buyer delays in the payment for
unreasonable time
EFFECT OF RESALE
Seller not liable if he made profit from resale but
seller has the right to sue the original buyer in case
the consideration of resale is less than the original
price (new buyer has a better right than the original
buyer)
NOTICE OF RESALE NOT ESSENTIAL
Notice of resale is relevant to determine that the
buyer delay in the payment for unreasonable time
and in regard to the fairness of sale (perishable
goods and expressly reserved right to resale need not
to give notice)
1534. WHEN THE SELLER MAY RESCIND
The unpaid seller must either have the right of lien or
right to stop goods in transit and either of the two:
1. Where the right to rescind is expressly reserved
2. Where the buyer delays in the payment for
unreasonable time
EFFECT OF RESCISSION
Seller is not liable to the buyer and retains ownership
(notice is not necessary to rescind unlike in the right
to resale, failure to give notice is relevant to
determine the unreasonable time)
1535. EFFECT OF SALES OF GOODS SUBJECT
TO LIEN OR STOPPAGE IN TRANSIT
1. Where the goods are not covered by
negotiable document of title
 The seller can give no larger right than
he has
2. Where goods covered by negotiable document
of title
 Seller’s lien cannot prevail against the
right of the purchaser in value and in
good faith
1536. THE VENDOR IS NOT BOUND TO
WITHHOLD DELIVERY IN SALE ON CREDIT
Seller is not bound to deliver if the buyer has not paid
the price except there is a fixed period for payment.
The buyer will lose the right to make use of the
period:
1. When after the obligation is perfected the
buyer becomes insolvent
2. When he does not furnish to the seller the
guarantees and securities promised
3. When the security and guarantee impaired or
deteriorated because of the buyer’s fault and
when in case of fortuitous event, he must give
new one with equal satisfactory
4. When the seller violates any undertaking
5. When the buyer attempts to abscond
1537. CONDITION OF THING TO BE DELIVERED
The condition of the goods must be in which they
were upon the perfection of the contract
 Accessions – fruits of a thing; additions to
or improvements upon a thing (ex. Young
of animals, trees on a land)
 Accessories – are anything attached to the
principal thing for its completions,
ornament or better use
RIGHT OF VENDEE TO THE FRUITS
Buyer has the right to fruits of the thing arises from
the time the obligation to deliver (perfection) arises.
1538. RULES IN CASE OF LOSS,
DETERIORATION, OR IMPROVEMENT OF THE
THING BEFORE DELIVERY.
1. If the thing lost without the fault of the seller,
obligation extinguished
2. If the thing is lost because of the seller, he shall
pay damages
3. When the thing deteriorates without the
seller’s fault, loss is bear by the buyer
4. If the deterioration is caused by the seller, the
buyer may rescind or fulfill the obligation plus
damages in both case
5. If the thing is improved by nature, the buyer
will get the benefit
6. If it is improved at the expense of the seller,
seller will have the right of usufructuary with
respect to the improvement
1539. SALE OF PROPERTY BY UNIT OF
MEASURE OR NUMBER
1. Entire area stated in the contract must be
delivered
2. Where the entire area could not be delivered
 The buyer may rescind the contract or,
 Enforce the contract with corresponding
decrease in its price
WHEN THE VENDEE ENTITLED TO RESCIND
SALE OF REALTY
1. If the lack of area is at least 1/10 than the stated
in the contract
2. If the deficiency in the quality specified in the
contract exceeds 1/10 of the price agreed upon
3. If the buyer would not have bought the
immovable had he known of its smaller area of
inferior quality Irrespective of the extent.
1540. WHERE IMMOVABLE OF GREATER AREA
OR NUMBER
The buyer may accept the part stated in the contract
and reject the rest or accept the whole immovable
and pay for the price at contract rate (buyer cannot
withdraw the contract)
1541. RULES IN ARTICLE 1539 AND 1540
APPLICABLE TO JUDICIAL SALES
The provisions are applicable to both private and
judicial sales when the immovable sold is lacking in
area or inferior quality
1542. SALE OF REAL ESTATE MADE FOR A
LUMP SUM
1. Mistake in area stated in contract immaterial
 Number or measure is not the cause of the
contract
2. Where are or number stated together with
boundaries
 Failure of the seller to deliver the
immovable within the boundaries, buyer
 may reduce the price in proportion to the
deficiency
1543. PRESCRIPTION OF ACTIONS
Actions based on art. 1539 and 1542 for either
rescission or proportionate deduction must be
brought within six (6) months counted from the day
of delivery
1544. DOUBLE SALE APPLICABLE
1. When two or more sales is valid
2. Two or more sales pertains to the same
property
3. Buyer represents conflicting interest
4. Must be same seller
Cannot be invoked if sale was made by two (2)
different person, one of them not being the owner of
the property
RULES AS TO PREFERENCE OF OWNERSHIP IN
CASE OF DOUBLE SALE
Conflicting rights of buyer shall be resolved in
accordance with the following rules:
1. If the property is movable the ownership shall
be acquired by the vendee who first takes
possession In good faith
2. If the property is immovable
 Buyer who first register in the Registry of
Deeds
 In absence of registration, the buyer who is
in possession
 In absence of both registration and
possession, the buyer with the oldest title
(deed of absolute sale), first who bought
the property in good faith
-----------------------------------------------------
SECTION 3. – CONDITIONS AND WARRANTIES
1545. MEANING OF CONDITION
A condition means an uncertain event or
contingency, happening of which gives rise or
extinguished the obligation of the contract
EFFECT OF NON-FULFILLMENT OF CONDITION
1. If the condition is not fulfilled such parties may:
 Refuse to proceed with the contract
 Proceed with the contract, waiving the
performance of the condition
2. If the condition is in the nature of promise that
should happen, non-performance is treated as
breach of warranty
1546. MEANING OF WARRANTY
Warranty is any representation made by the seller
with respect to its character, quality or ownership,
which induce the buyer to purchase the thing relying
on the representation.
KINDS OF WARRANTY
Warranties can be express or implied
EXPRESSION OF OPINION
A mere expression of opinion, no matter how
positively asserted, does not import a warranty
unless the seller is an expert and the opinion was
relied upon by the buyer.
 “Usual exaggerations in trade when the
other party had an opportunity to know the
facts, are not in themselves fraudulent”
 “Misrepresentation made in good faith is
not fraudulent but may constitute error”
1547. IMPLIED WARRANTY
1. Implied warranty as to seller’s title
 Guarantees that the seller has the right to
sell the thing
2. Implied warranty against hidden defects or
unknown encumbrances
 Guarantees that the thing sold is free from
and hidden faults or defect
3. Implied warranty as to fitness or
merchantability
 Guarantees that the thing sold is
reasonably fit for the known particular
purpose of the buyer
WHEN IMPLIED WARRANTY NOT APPLICABLE
1. “As is and where is sale”
2. Sale of secondhand articles
3. Sales by virtue of authority in fact or law
 Sold by a sheriff, auctioneer, mortgagee,
pledgee etc. they do not warrant the title of
the person who supposed to own the thing
sold
Caveat emptor (buyer beware) – applies to execution
sales since sheriff does not warrant the title to real
property sold by him
------------------------------------------------------
SUBSECTION 1. – WARRANTY IN CASE OF
EVICTION
1548. MEANING OF EVICTION
Eviction may be defined as the judicial process where
the buyer is deprived of the whole or part of the
thing he purchased by virtue of final judgement
based on the right prior to the sale.
ESSENTIAL ELEMENTS OF THE WARRANTY
AGAINST EVICTION
1. The vendee is deprived in whole or in part of
the thing purchased
2. Deprived by virtue of final judgement
3. Judgement is based on the right prior to the
sale
4. Vendor was summoned in the suit for eviction
5. There is no waiver on the part of the vendee
TYPES OF EVICTION
1. Total eviction – when the vendee is deprived
for the whole thing purchased
2. Partial eviction
 The vendee deprived of part if the thing
purchased
 Deprived of some items jointly sold with
other items
 If immovable sold should be encumbered
with non-apparent or servitude (e.g. right
of way) not mentioned. It is presumed that
the vendee would not have acquired it had
he been aware of.
WARRANTY AGAINST EVICTION REFERS TO
TRESPASS IN LAW
Trespass in fact does not give rise to the doctrine of
eviction.
Disturbance in law – requires the person to go to
court claiming the thing sold.
VENDOR’S LIABILITY WAIVABLE
Warranty is not an essential element of a contract of
sale and may be waive. However any stipulation
exempting the vendor from the obligation to answer
for eviction shall be void if acted on bad faith
1549. VENDEE HAS NO DUTY TO APPEAL
FROM JUDGEMENT
Whatever the finality, the requirement of the law is
deemed satisfied
1550. EFFECTS OF PRESCRIPTION
1. Completed before sale – the vendee may lose
to a third person having the ownership by
prescription (30 years). Vendor is liable for
breach in case of eviction
2. Completed after sale – The vendor is not liable
for breach in case of eviction because the buyer
can interrupt the prescriptive period by
bringing the action in court
1552. LIABILITY OF A JUDGEMENT DEBTOR
Judgement debtor is responsible for eviction and
hidden defect unless decreed in the judgement
1553. STIPULATION WAIVING WARRANTY
1. Effect of vendor’s bad faith – vendor knows
beforehand that there is the presence of the
fact giving rise to eviction, hence cannot be
exempted from warranty against eviction
2. Effect of vendor’s bad faith – Buyer entered
into the sale with the assumption of the risk of
eviction, therefor he is not entitled to warranty
against eviction nor recover damages.
1554. KINDS OF WAIVER OF EVICTION
This article pertains to total eviction:
1. Consiente – waiver is voluntarily made by the
buyer without the knowledge and assumption
of the risks of evictions; and
2. Intencionada – waiver is made by the buyer
with knowledge of the risk of eviction and
assumption of its consequences
EFFECT OF WAIVER BY VENDEE
1. Consiente – the vendor shall only pay for the
value the thing sold had at the time of eviction
2. Intencionada – the vendor is exempted from
the obligation to answer for eviction provided
he did not act in bad faith
1555. RIGHTS AND LIBILITIES IN CASE OF
EVICTION OCCURS
1. Return the value of the thing – including the
increase in value or recreational expenses
made by the buyer
2. Income or fruits of the thing – vendee is liable to
the party who won the suit for the income or
fruits received if decreed by the court.
3. Cost of suit – buyer can recover the expenses of
litigation resulting to eviction, including the
cost of action bought against the vendor to
enforce warranty.
4. Expenses of the contract – in the absence of
stipulation, seller should borne the expenses of
execution and registration. Buyer shall have
the right to demand the same from the seller
5. Damage and interest – buyer is entitled to
demand damages if the sale was made in bad
faith. If good faith is presumed, buyer is not
entitled for damages.
1556. ALTERNATIVE RIGHTS OF VENDEE IN
CASE OF PARTIAL EVICTION
If partial eviction occurs, the buyer has the option to
enforce the seller’s liability for eviction or to demand
rescission of the contract
1. When the buyer is evicted partially but the part
deprived is of such importance to the whole
that he would not have bought the thing
without
2. When two (2) or more things sold together
jointly, and the vendee would have not
purchased one without the other.
These remedies cannot be used in total eviction
1557. FINAL JUDGEMENT OF EVICTION
ESSENTIAL
Two (2) essential elements for the enforcement of
warranty in case of eviction namely:
1. Deprivation in whole or in part of the thing sold
2. Existence of a final judgement
1558. FORMAL SUMMONS TO VENDOR
ESSENTIAL
It is required that the vendor should be summoned in
the suit for eviction for the seller to be legally liable
1559. VENDOR TO BE MADE CO-DEFENDANT
The buyer would call the seller to defend the action
which has been instituted against him (buyer) to
deprive him of the property purchased.
1560. RIGHTS OF VENDEE WHERE IMMOVABLE
SOLD ECUMBERED WITH NON-APPARENT
BURDEN.
Buyer can rescind or ask for indemnity if the thing
sold is encumbered with any non-apparent burden or
servitude not mentioned in the agreement
Servitude (easement) – is an encumbrance imposed
upon an immovable for the benefit of another
immovable belonging to different owner (e.g. right of
way)
WHEN RIGHTS OF VENDEE CANNOT BE
EXERCISED
Rights granted in 1560 cannot be exercised in the
following cases:
1. The burden or servitude is apparent
2. If the non-apparent burden or servitude is
registered and,
3. If the vendee had knowledge of the
encumbrance whether it is registered or not
The registration of the non-apparent burden or
servitude in Registry of Deeds operates as a
constructive notice to the vendee.
WHEN ACTION MUST BE BROUGHT
The action for rescission or damages must be
brought within one (1) year from the execution of
deed of sale. If period elapse, buyer may bring the
action for damages one (1) year from the date of
discovery of the non-apparent burden or servitude.
----------------------------------------------------
SUBSECTION 2. – WARRANTY AGAINST HIDDEN
DEFECTS
1561. REQUISITES FOR WARRANTY AGAINST
HIDDEN DEFECTS
Requisites for the existence of hidden defects:
1. The defect must be important or serious
2. It must be hidden
3. It must exist at the time of sale
4. Buyer must give notice of the defect to the
seller within reasonable time
WHEN DEFECT IMPORTANT
Defect is important if:
1. It renders the thing unfit for its intended use
2. The vendee would not have acquired it had he
been aware thereof
WHEN DEFECT HIDDEN
There is no warranty if the defect is visible (patent).
However, seller cannot be enforced with such
warranty event the defect is hidden, if the buyer is
an expert, by reason of his trade or profession,
should have known it.
1562. IMPLIED WARRANTIES OF QUALITY
Purpose of holding the seller on his implied warranty
is to promote high standard in business
1. Implied warranty of fitness – there is no implied
warranty as to quality or fitness for any
particular purpose of goods except:
 The buyer, expressly or by implication,
manifest to the seller the particular purpose
for which the goods are acquired
 The buyer relies upon the seller’s skill or
judgement
2. Implied warranty of merchantability
WARRANTY OF FITNESS AND WARRANTY OF
MERCHANTABILITY DISTINGUISHED
Warranty of merchantability – is a warranty that
goods are reasonably fit for the general purpose for
which they are sold.
Warranty of fitness – is a warranty that goods are
suitable for the special purpose of the buyer
1563. SALES UNDER PATENT OR TRADE NAME
Art. 1563 limits the application of art. 1562, buyer
makes known to the seller the particular purpose for
which the goods are desired.
1. By exactly defining what he wants, the buyer
has relied on his own judgement (not relying on
the seller)
2. Art. 1563 provides an exception in case of “a
stipulation to the contrary” There is still implied
warranty of fitness for a particular purpose
when the buyer relied upon the seller’s
judgement.
1564. EFFECT OF USAGE OF TRADE
A warranty as to quality or fitness can be attached
to usage. The usage is relied on for the purpose of
showing the intention of the parties
1565. MERCHANTABILITY OF GOODS SOLD BY
SAMPLE
1. Where sample not merchantable – the buyer is
entitled to the goods like the sample (contract
to sell by sample). The seller would have no
right to have the goods merchantable if the
sample is not
2. Where sample subject to latent defect – the
buyer only relies on seller’s skill and
judgement. The buyer is entitled to not simply
on the goods look like sample but also the
goods should be like what the sample
represents.
1566. EFFECT OF IGNORANCE OF VENDOR OF
HIDDEN DEFECTS
Ignorance of vendor does not relieve him from
liability to the vendee. In other words, good faith
cannot be availed as a defense of the seller.
However, parties may include in their contract,
provided that the vendor acted in good faith, that he
is unaware of the existence of the hidden fault or
defect.
DOCTRINE OF “CAVEAT VENDITOR” AND
“CAVEAT EMPTOR”
Caveat venditor – the vendor is liable to the vendee
of any hidden defects in the thing sold, even though
he was not aware thereof.
However, with respect to third person, caveat
emptor still applies.
1567. ALTERNATIVE REMEDIES OF THE BUYER
TO ENFORCE WARRANTY
In case of warranty against hidden defect, the buyer
has the option either: (1) to withdraw from the
contract (accion redhibitoria), or (2) demand
proportionate reduction of the price (accion quanti
minoris) with right of damages in either case.
1568. EFFECT OF LOSS OF THING SOLD ON
ACCOUNT OF HIDDEN DEFECTS
1. Vendor aware of hidden defect – the seller will
bear the loss if he acted on bad faith. The buyer
has the right to recover:
a. The price paid
b. The expense of the contract
c. Damages
2. Vendor not aware of hidden defect – seller is
obliged to return only:
a. The price
b. The interest thereon
c. Expenses of the contract
the seller is not liable for damages because he acted
in good faith
1569. EFFECTS OF LOSS OF DEFECTIVE THING
SOLD
The vendor is obliged to pay the price paid less the
value of the thing at the time of its loss in case where
hidden defects exist even the loss is caused by the
buyer (it is the damage suffered by the buyer and at
the same time the amount which the seller enrich
himself at the expense of the buyer). If seller acted in
bad faith, he is also liable for damage.
1570. WARRANTY IN JUDICIAL SALES
In a judicial sale, it is not the sheriff who sell but the
judgement debtor. The provisions regarding the
warranty are also applicable to judicial sales.
However, since he is forced to sell, there can be no
liability for damages
1571. LIMITATION OF ACTION
Action for rescission of the contract or reduction of
purchase price prescribes six (6) months from the
date of delivery.
1572. SALE OF TWO OR MORE ANIMALS
TOGETHER
If two or more animals were sold at the same time,
and the defect is in one or some of them, (not all) the
general rule is that the defect will not affect the
others without it. Except when the vendee would
have not purchased the sound one without the
defective ones.
1573. SALE OF TWO OR MORE THINGS
TOGETHER
Same with the preceding article
1574. NO WARRATNY AGAINST HIDDEN
DEFFECTS ON SALE OF ANIMALS AT FAIRS OR
AT PUBLIC AUCTION OR AS CONDEMNED
1575. WHEN SALE OF ANIMALS VOID
Animals which cannot be the object of commerce –
animals suffering from contagious disease and those
found unfit for the use or service stated. This kind of
sale is void and against public interest (no rescission
or reduction in price)
1576. WHAT CONSTITUTES REDHIBITORY
DEFECT OF ANIMALS
Redhibitory defect – defect in the goods sold in
which the seller is bound to warrant (nullification of
sale because of defect)
To be considered redhibitory:
 Defect is hidden
 Must be of such nature that expert
knowledge is not sufficient to discover it
If the veterinarian failed to discover it through
ignorance or bad faith, he shall be liable
1577. LIMITATION OF ACTION IN SALE OF
ANIMALS
Redhibitory actions based on defect of animals shall
be barred unless bought within 40 days from the
date of delivery to the buyer
1578. IF THE ANIMAL SHOULD DIE WITHIN
THREE (3) DAYS AFTER ITS PURCHASE, THE
VENDOR SHALL BE LIABLE IF THE DESEASE,
WHICH CAUSE DEATH EXISTED AT THE TIME
OF CONTRACT.
 Three days from the date of sale (not date
of deliver)
 If the loss is caused by fortuitous or with the
fault of the buyer, article 1567 will apply
1579. LIABILITY OF BUYER IN CASE OF SALE OF
ANIMALS RESCINDED
If the sale is rescinded, the vendee must return the
animal in the condition in which it was sold and
delivered. The vendee will be responsible for the
injury due to his negligence not arising from
redhibitory fault or defect.
1580. ALTERNATIVE REMEDIES OF VENDEE IN
SALE OF ANIMALS
The buyer has the option to either (1) a redhibitory
action (accion redhibitoria) or, demand
proportionate reduction of the price (accion quanti
minoris). The action must be brought within 40 days
from the date of delivery of the animal to the buyer.
1581. FORM OF SALE OF LARGGE CATTLE
GOVERNED BY SPECIAL LAW
The special law governing the sale of large cattle is
Act No. 4117. This provides the registration,
branding, conveyance and slaughter of large cattle
P.D. No. 533 (anti-cattle rustling law of 1974) No
person natural or juridical shall engage in the
business of buy and sell of large cattle without first
securing a permit for the said purpose from the
Provincial Commander
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OBLIGATIONS OF THE VENDEE
1582. PRINCIPAL OBLIGATIONS OF VENDEE
1. Accept deliver
2. Pay the price of the thing sold
3. To bear expenses for the execution and
registration of sale and putting the goods in
deliverable condition if such is stipulated
PERTINENT RULES
1. In contract of sale, seller is not bound to deliver
the goods is buyer has not yet paid the price
(general rule)
2. Is stipulated, buyer will pay the price
simultaneous delivery
3. If no stipulation as to time and place of
payment and delivery, buyer is bound to pay at
the time and place of delivery
4. When no stipulation as to place of delivery, it
shall be made wherever the thing is at the time
the contract is perfected
5. If there is fixed period, the buyer is bound to
pay even before the
1583. RULES GOVERNING DELIVERY IN
INSTALLMENTS
1. General rule: Buyer is not bound to receive
goods in installments. He is entitled to the
delivery of all the goods at the same time
Similarly, buyer have no right to pay the price
in installment (by agreement, goods may be
delivered on installment and price may be paid
on installment)
2. Where separate price has been fixed for each
installment – delivery of goods is in installment
 and payment is separate and agreed upon for
each installment
 Where breach affects whole contract – if
the seller makes defective delivery or,
buyer failed to accept or make payment
and the breach is so material to affect the
contract as a whole
 Where breach divisible – where breach is
severable, it will give rise to a claim for
compensation for particular breach not the
whole contract is broken
3. Where separate price not fixed for each
installment (single price for all installment
goods)
 If the seller fails to deliver an installment,
the buyer can choose between fulfillment
or rescission both with damages.
 Same remedy of the seller if the buyer fails
to pay the price within period agreed upon
Remedy of rescission is not available to slight or
casual breaches of the contract. It defect must be
substantial (depending on the circumstances)
1584. BUYER’S RIGHT TO EXAMIN THE GOODS
Acceptance is assent to become owner of specific
goods when delivery of them is offered to the buyer.
1. Right of inspection – Buyer is entitled to
inspect or examine whether it conforms to
contract if not the buyer may reject it.
2. Actual delivery contemplated – actual delivery
needed to examine and inspect the goods
3. Goods delivered C.O.D./ not C.O.D.
 Buyer has the right to examine the goods
before paying. The right to examine is a
condition precedent to paying the price
after the ownership has passed
RIGHT OF EXAMINATION NOT ABSOLUTE
 The right to examine the goods should be
done within reasonable time so that the
seller will not suffer from undue delay or
prejudice
 If the seller refused to allow the opportunity
of the buyer to inspect whether the goods are
in conformity of the contract, the buyer may
rescind the contract and recover the price
paid
WAIVER OF RIGHT TO EXAMINE BEFORE
PAYMENT
Right of inspection may be given up by the buyer by
stipulation (either expressly or impliedly)
REJECTION OF GOODS
Where the goods inspected are proved to be
unsuitable or fail to conform to the contract, the
buyer may refuse to accept them
1. Buyer is not bound to return the goods to the
seller, it is sufficient if he notified the seller that
he refuses to accept
2. Must be within reasonable time unless a definite
period fixed
3. receipt of goods under a contract of sale
constitutes acceptance if the rejection was made
beyond reasonable time
1585. WHAT CONSTITUTES ACCEPTANCE
Can be manifested expressly or impliedly
1. Express acceptance – when the buyer, after the
delivery of the goods, tell the seller, verbally or
in writing that he accepted them
2. Implied acceptance
 When the buyer sells or attempt to sell the
goods
 When the buyer uses the goods or,
 Makes alteration in a manner proper only
for an owner
 Rejection made beyond reasonable time
and goods are retained in the buyer’
s possession.
Retention of the goods is a strong evidence that the
buyer has accepted the goods, in some cases it can
also be due merely to carelessness
DELIVERY AND ACCEPTANCE, SEPARATE
ACTS
 Acceptance of the goods is not a condition to
complete delivery
 There may be actual receipt without any
acceptance, vice versa.
1586. ACCEPTANCE NOT A BAR TO ACTION
FOR DAMAGES
Acceptance of the goods by the buyer does
not discharge the seller from liability in damages or
other legal remedy (rescission) due to breach of
promise or warranty.
NOTICE OF THE SELLER OF BREACH OF
PROMISE OR WARRANTY
1. Necessity – in order to hold the seller for
breach of promise or warranty, buyer must give
notice to the seller within reasonable time
2. Purpose – to protect the seller against the
belated claims which prevent him from making
 prompt investigation to determine the cause
and extent of his liability
1587. WHERE BUYER’S REFUSAL TO ACCEPT
JUSTIFIED
1. Duty of buyer to take care of goods without
obligation to return – when the buyer rightfully
rejected the goods delivered to him, he is in
position of a bailee. Therefore, he has the
obligation to take reasonable care of the
goods. Accordingly, the buyer has no
obligation to return the goods to the seller
2. Duty of the seller to take delivery of the goods
– after receiving notice from the buyer, the
seller must have the burden of taking delivery
of the said goods
3. Seller’s risk of loss – while the goods are in
possession of the buyer, seller bears the risk of
loss, unless the buyer voluntarily constitutes
himself as a depositary
4. Right of the buyer to resell goods – application
of Art. 1533, where the seller resale the goods
when buyer is in default.
1588. EFFECTS OF BUYER’S WRONGFUL
REFUSAL TO ACCEPT
General rule: delivery to the carrier is deemed to be a
delivery of the goods to the buyer (Art. 1523)
Therefore, if the buyer rejected the goods
without just cause (wrongful refusal), the buyer will
bear the risk of loss from the moment they are
placed at his disposal
1589. LIABILITY OF VENDEE FOR INTEREST
WHERE PAYMENT MADE AFTER DELIVERY
In this case: the thing is already delivered but
payment has not yet been made by the buyer. Buyer
is liable to pay for the interest from the date the of
judicial or extrajudicial demand made by the seller.
1. Interest expressly stipulated – the rate
stipulated will be followed (may be oral or
written). “No interest shall be due unless it has
been expressly stipulated in writing” (only in
contract of loan)
If the parties failed to fix the rate, legal rate shall be
due.
2. Fruits or income received by vendee from the
thing sold – two conditions must exist:
a. The thing sold has been delivered
b. It produces fruit or income
3. Vendee guilty of default - Buyer is liable to pay
for the interest from the date the of judicial or
extrajudicial demand made by the seller.
1590. RIGHT OF VENDEE TO SUSPEND
PAYMENT OF PRICE
Buyer may suspend the payment of price only in
these 2 cases:
1. If he is disturbed in the possession or
ownership of the thing bought
2. If he has a well-grounded fear that his
possession or ownership would be disturbed by
a vindicatory action or foreclosure of mortgage
Under 1590, buyer have no cause of action for
rescission before final judgement. (for the benefit of
the seller who might be a victim of collusion)
When disturbance is caused by non-apparent
servitude, the action is rescission and not
suspension.
WHEN VENDEE CANNOT SUSPEND PAYMENT
OF PRICE
Even there is disturbance in the possession of the
buyer
1. If the vendor gives security for the return of the
price in a proper case
2. If it has been stipulated that notwithstanding
any such contingency the vendee must make
payment
3. If the vendor has caused the disturbance or
danger to cease
4. If the disturbance is a mere act of trespass and,
5. If the vendee has fully paid the price
1591. WHEN VENDOR MAY RESCIND SALE OF
IMMOVABLE
In this case: the immovable property was
delivered to the buyer but has not yet paid the price
If the seller has a good reason to fear the loss
of the property and its price.
Ex. The buyer has not paid the price yet, but he
destroyed the building, pull out tress on the land and
cut down the forest. The buyer has shown signs of
irresponsibility. The only remedy of the seller is to
rescind the contract
1592. WHERE AUTOMATIC RESCISSON OF
SALE OF IMMOVABLE PROPERTY STIPULATED
General rule: the seller may ask for rescission when
the buyer did not pay the price agreed upon.
Before a demand for rescission of the contract made
by the seller, the buyer may still pay the price even
after the expiration of the stipulated period for
payment
RIGHT TO RESCIND NOT ABSOLUTE
 Right to rescind is not absolute and the court
may extend the period for payment
 Once a demand for rescission by suit or
notarial act is made, the court may not grant
the buyer a new period.
WHEN ARTICLE 1592 NOT APPLICABLE
1. Sale on installment of real property in which
the parties laid down the procedures to be
followed in case the buyer failed to fulfill his
obligation
2. Mere promise to sell (executory contract to
sell) when the title remains to the seller
1953. WHERE AUTOMATIC RESCISSION OF
SALE OF MOVABLE PROPERTY STIPULATED
In real property: the seller must make a demand for
rescission to have the contract rescind.
In personal property: (not yet delivered to the buyer)
if the buyer without any valid cause does not
1. Pay the price (unless credit sale)
2. Accept the delivery
REASON FOR THE RULE WITH RESPECT TO
MOVABLE PROPERTY
the personal properties are not capable of
maintaining a stable price in the market. (unlike real
property)