Contract of Sale. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing and the other to pay therefore a price certain in money or its equivalent.
Contract of Sale Title over the property passes to the buyer upon delivery unless there is a contrary agreement Non-payment of the purchase price is a negative resolutory condition, meaning the sale becomes ineffective upon the happening of such condition After delivery of the objective, the seller loses ownership over it. Unless, the contract is set aside, he cannot recover the object Contract to Sell Ownership is retained by the seller whether or not there is delivery. Ownership passes to the buyer only upon full payment of the price The payment in full is a positive suspensive condition, meaning, if the purchase price is not paid, the obligation to deliver and to transfer ownership on the part of the seller does not become effective Whether there is delivery or not, the seller retains the ownership of the object. If the seller, due to non-payment of the price is ousting the buyer from the property, he (seller) is not rescinding the contract of sale but is precisely enforcing it. Contract to Sell No contract to sale only, a preparatory contract No delivery yet. No sale yet No specific performance/rescission—no contract yet Payment will not complete transaction

Pactum Reservatii Domini Conditional Sale there is already a contract of sale There is already delivery but ownership retain by seller Specific Performance/Rescission Payment completes the transaction

Phases or Stages of A contract of Sale 1. Preparation, conception or generation —the period of negotiation and bargaining, ending at the moment of agreement of the parties 2. Perfection or Birth of the Contract 3. Consummation or death—which is the fulfilment or performance of the terms agreed upon Characteristics or Features of Contract of Sale (NBC-COP) 1. Nominate—It has a specific name given by law. 2. Bilateral—both parties are obliged to fulfil reciprocal obligations to one another. 3. Consensual—It is perfected by mere consent 4. Commutative—The thing sold is equivalent of the price paid 5. Onerous—The thing sold is conveyed in consideration of the purchase price and the purchase price is paid in consideration of the conveyance of the thing. 6. Principal—Its existence does not depend upon the existence and validity of another contract Elements of Contract of Sale 1.Essential Elements—necessary for the validty of the sale. a. Meeting of the minds of the seller and the buyer b. Object which is certain and determinate c. Price certain 2. Natural Elements—those which are inherent in the contract and are deemed to exist in the contract of sale in the absence of clear contrary agreement. a. Warrant against eviction b. Warranty against hidden defects 3. Accidental Elements—May or may not exist depending on the stipulations of the parties like conditions, payment of interest, place and time of payment.



Object Must be Licit or Lawful. There are two kinds of illicit things: a. Illicit per se—when by its nature it is heinous, immoral or wrongful b. Illicit per accidens—when it is prohibited by law When is a thing determinate? a. When it is particularly designated or physically segregated from all others of the same class. b. The thing is capable of being made determinate, at the time the contract is entered into, w/o the necessity of a new or further agreement between the parties. Emptio rei speratae—a sale of an expected thing subject to the condition that the thing will come to existence. If the thing did not come into existence, the contract is not effective and the buyer has no obligation to pay the price. Presumption is in favor of this kind of sale, because it is more in keeping with the commutative character of a sale. Emptio spei—a sale of a hope or expectancy. The contracting parties intended that contract of sale to exist at all events, whether or not the expected thing will come into existence such that the buyer will have to pay the purchase price, such that the contract becomes aleatory in nature. Emptio rei speratae vs. Emptio spei Emptio rei speratae Sale of a thing having a potential existence The uncertainty is with regard the quantity and quality but not with regard the existence of the thing The contract deals with a future thing The sale is subject to the condition that the thing should exist, so that if it does not, there is no contract for lack of an essential requisite Emptio spei Sale of a mere hope or expectancy The uncertainty is with regard the existence of the thing The contract deals with a present thing—the hope or expectancy The sale produces effects eventhough the thing itself does not come into existence, since the subject matter is the hope itself

Future Goods that may be subject of a contract of sale 1. Goods to be manufactured yet 2. Goods to be acquired by the seller after the perfection of contract of sale 3. Goods that depends upon a contingency that may or may not happen Purchase of an Undivided Share in Specific Mass of Fungible Goods. Rules: 1. If the aliquot part purchased from the seller is more than the whole undetermined mass after it had been weighed or measured, then the buyer becomes the owner of the entire mass. 2. If the aliquot part purchased is less than the whole undetermined mass, the purchaser will become the co-owner of the whole mass in the proportion in which the number, weight or measure of what had been purchased bears to the number, weight or measure of the mass or stock.

SALES Sale vs. Agency SALE The buyer pays for the price of the goods/property purchased The buyer becomes the owner of the goods/property purchased Buyer cannot return the goods/property when the sale is defective The seller warrants the goods/property sold The seller has full freedom to enter into any terms or conditions on the contract of sale


AGENCY The agent does not pay for the price. He merely accounts for the proceeds of the sale. The agent does not become the owner of the goods/property delivered to him for sale. The agent returns the goods/property if he was not able to sell the same The agent does not make any warranty as long as he acts within his authority and in the name of the principal The agent must follow the instructions of the principal

Contract for a Piece of Work— The article sold is specially manufactured and upon the special order of the customer. Article is not sold in the ordinary course of business. (See. Concrete Aggregates vs. CTA) Contract for a piece of work The thing transferred is one not in existence and w/c never would have existed but for the order of the party desiring to acquire it The services dominate the contract eventhough there is a sale of goods involved Contract of Sale The thing transferred is one which would have existed and would have been the subject of sale to some other person, even if the order had not been given The primary objective of the contract is a sale of the manufactured item; it is a sale of goods eventhough the item is manufactured by labor furnished by the seller and upon previous order of the customer Governable by the Statute of Frauds

Not w/in the Statute of Frauds

Rules if Consideration is partly Money and Partly Goods 1. Determine the intention of the parties. 2. If intention could not be determined, consider the value of the thing given: a. If value of the thing more than value of the money, it is BARTER b. If value of the thing less than value of the money, it is SALE c. If both values are the same, SALE Money Exchange.  If local currency is exchanged for foreign currency—there is purchase and sale.  If the local currency is exchanged with other denominations of the local currency also, there is barter (Same rule if Foreign Currency exchanged in the Philippines for another foreign currency) PRICE - the sum stipulated as the equivalent of the thing sold and also every incident taken into consideration for the fixing of the price, which was agreed upon by both parties. Rules if there is no specific amount stipulated as purchase price 1. It is still certain if it is determinable by making reference to another thing which is itself certain 2. It is still certain if determination is entrusted to the judgment of a specified person or persons 3. By reference to certain fact or facts (such as in Art. 1472—when the price is fixed is that which the thing sold would have on a definite day or a particular exchange)

unless the parties subsequently agree upon the price 2. unless otherwise provided by law or stipulation 4. such that neither party had any intention that the amount will be paid—void Price is False. injured party can only seek damages. Intimidation. Notice is essential for the seller or his representative to be able to bid. **It is the secrecy of the puffing and not the authorized bidding by the seller which makes it fraudulent. buyer must pay a reasonable price to that part delivered. Fraud.SALES 4 Effect if 3rd Person fixed the price General Rule: It is binding upon the parties Exceptions: 1.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. Undue influence) 2. Effect of Gross Inadequacy of Price. Meeting of the minds upon the thing and price. Sale is void. If the price is so low as to be shocking to the conscience Effect of Simulated Price. If the parties intended a donation or some other act or contract 3. Mistake. (See Art. the party not in fault may obtain redress against the party in fault. If the 3rd person refuses or cannot fix the price. the contract shall become ineffective. for which he had paid a consideration. If consent is vitiated. If the 3rd person is prevented from fixing the price by the fault of the seller or buyer. No effect. which gives him the right to buy. (1474) Is appropriation of the thing delivered in an inefficacious contract allowed? Yes. Price Simulated. effect: Sale is inefficacious. Auction sale is perfected when the auctioneer announces its perfection by the fall of the hammer or in other customary manner. Each lot is subject of a separate contract of sale 2. thus misleading the latter because of the inflated bid price. sale is set aside) 1. By-bidders or puffers: persons employed by auctioneer who will bid w/o being bound but whose bids will have a tendency to induce or provoke higher bids from interested buyers. such as VIMFU (Violence. When the 3rd person acts in bad faith 2. (Reasonable price is generally the market price at the time and place fixed by the contract or by law for the delivery of the goods) PERFECTION OF CONTRACT OF SALE. In case of breach of promise to buy or to sell. certain merchandise or property from another person at anytime within the agreed period at a fixed price. unless auction is w/o reserve 3. When the 3rd person disregards the specific instructions or the procedure marked out by the parties Effect when the price is not fixed by the 3rd person designated 1. When Price Cannot be determined.No price to support a contract of sale. unless it could be shown that the parties intended a donation or some other act of liberality. A right to bid may be reserved expressly by or on behalf of the seller. A Privilege existing in one person. * Pending announcement:  Any bidder may retract his bid  Auctioneer may withdraw the goods. 1479) . OPTION CONTRACT. Exceptions: (meaning. Effect: Parties may reciprocally demand performance RULES ON AUCTION SALES 1.

Option Money It is given as a distinct consideration for an option contract which gives the buyer a specific period within which to purchase the thing It is given at a time when the sale had not yet been perfected. the buyer is bound to pay the balance of the agreed purchase price If the sale does not materialize. When what is to be delivered is a determinate thing. the earnest money paid must be returned. 1262.SALES 5 Test to Determine whether a Contract is A contract of Sale or An Option. the obligor is liable even for fortuitous events. Art. The same rule applies when the nature of the obligation requires the assumption of risk. If the obligor delays. If such stipulation could be independently enforced from the contract. OPTION MONEY Earnest Money It is part of the purchase price It is given only when there is already a perfected sale When it is given. Tthere could be no contract of sale without a thing to be sold. may compel the debtor to make the delivery. What had been perfected only is the option contract Even if option money is paid by the would-bebuyer he is not bound to buy the thing If the buyer decides not to buy the thing. and he shall be responsible for damages. Would-be-seller bears the loss. If the thing is indeterminate or generic. AFTER PERFECTION BEFORE DELIVERY. the creditor. When by law or stipulation. An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of the debtor. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family. However. DETERIORATION OF THING BEFORE PERFECTION. unless the law or the stipulation of the parties requires another standard of care Art. unless a contrary agreement had been stipulated LOSS. 1480 Applicability. 1164. Would-be-seller bears the loss. or has promised to deliver the same thing to two or more persons who do not have the same interest. EARNEST MONEY vs. Whether or not the agreement could be specifically enforced. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. he cannot recover the option money he paid as consideration for the contract of option . 1163. the loss of the thing does not extinguish the obligation. No contract to talk about. in addition to the right granted him by Article 1170. he shall acquire no real right over it until the same has been delivered to him. correlate to: (Fungibles sold independently and for a single price covered by the law) Art. he shall be responsible for any fortuitous event until he has effected the delivery Art. he may ask that the obligation be complied with at the expense of the debtor. AT THE TIME OF PERFECTION OF CONTRACT OF SALE—1493 *contract without any effect: it never came to existence. and before he has incurred in delay. I. then such stipulation is an option. 1165.

Principle of Res Perit Domino. 1489. c. Exceptions: a) Where delivery of goods has been made but ownership is retained by the seller merely to secure performance of buyer’s obligation b) Where actual delivery is delayed through fault of the buyer. Two Kinds of Incapacity: 1. Heirs of either spouse. ** Minors in contract for necessaries must pay reasonable price. should the vendee fail to pay. if one has been constituted. To avoid Prejudice to 3rd Persons b. he shall have no further action against the purchaser to recover any unpaid balance of the price. (1486) ART. 1504 Applicability. Rationale: PID a. Any agreement to the contrary shall be void.  The stipulation that the instalments or rents shall not be returned to the vendee or lessee shall be valid as long as it is not unconscionable. 2. In this case. clothing and medical attendance. should the vendee's failure to pay cover two or more installments.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.Party cannot bind himself in any case. in keeping with the financial capacity of the family of the incapacitated person. . There are two-fold warranty here: (a) the goods purchased matched with the description and (b) the goods also matched in kind. 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. quality and character with that of the sample or samples exhibited to the buyer or his representative RECTO LAW (ART. Relative Incapacity. (3) Foreclose the chattel mortgage on the thing sold. 1490. ** Either spouse may not assail illegality because they are parties thereto. Vendor bears risk of loss until ownership is transferred by delivery. (2) Cancel the sale. To avoid by indirection the violation of the prohibition against donations. Who may assail illegality? a.Certain Persons under certain circumstances cannot buy certain property. Creditors prior to the sale b. Necessaries—those things which are needed for sustenance. To prevent one spouse from unduly influencing the other. Absolute Incapacity. not knowing whether the seller’s representations are true or not. Sale by Description and Sample. Exceptions. dwelling. Sale of Goods By Description. should the vendee's failure to pay cover two or more installments. Prohibition against Husband and Wife. ART.SALES 6 II.Where the seller has to satisfy the requirements in sale by description and sample. 1484) Applicability: Sales of Personal Property in Installments and Leases of Personal Property w/ Option to Buy Remedies: (1) Exact fulfillment of the obligation.

Deliver (not waivable) 3. (TDWP) 1. 1491. Prosecuting Attorneys. (1499) . Actual or Real. Transfer Ownership (not waivable) 2. Partial Loss Rules: 1. ART. Guardian—Property of Ward. Obligations of Vendor. Clerks and employees of court—Property/Rights under litigation. 1478. 6. (Ex. Complete and Partial Loss. 4. 1497. Warrant Object (waivable and may be modified) 4. Vendee may withdraw from the contract 2. 1496. Agents—Property of Principal unless with consent. *an unpaid seller having a right of lien or having stopped the goods in transitu. Buyer may avoid the sale or 2. Traditio Longa Manu. If the movable sold cannot yet be transferred to the possession of the buyer at the time of the sale.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. Compromises and Renunciations. (PAGEJO) 1. Loss/Substantial Deterioration of Specific Goods without seller’s knowledge. ART. Preserve Thing from perfection to delivery (Art. Loss of Object Before Sale. ART. 1493. Legal Formalities (1498). b. 1533. Symbolical Tradition (1498 par 2).keys delivered. 1. Stipulation as to full payment of price. 1494. 1492. Justices. May treat sale as valid w/ respect to the existing goods ART. Executors and administrators—Estate 5. Void (4-6) ART. (1497) 2. Public Officers and employees—Property Of State. Persons Relatively Incapacitated to mere consent /agreement. Delivery. KINDS OF DELIVERY 1. Legal or Constructive a. Control and Possession necessary in Delivery. 2. Demand the remaining part. 1495.SALES 7 ** A spouse designated as agent of the other spouse may sell the latter’s exclusive property. 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. c. 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. paying its price in proportion to the total sum agreed upon ART. ART. Delivery Transfers Ownership. par.5) Rationale: Fiduciary relationship Status of Sale: Voidable (1-3). Exception: Art. 1490 and 1491 Applicable to Legal Redemption. Art. *aliens who are disqualified to purchase private agricultural lands. 1163) 5. 3. Others disqualified by law. Judges. execution of public instrument.

Period of signifying acceptance commences to run only when all the parts essential for operation has been delivered. Transaction on Sale or Return. 3. Risk of loss to seller until the sale becomes absolute. (Exceptions: Buyer in default. 1502. ART. Constructive delivery. Subject to Suspensive Condition. (Owner becomes lessee) 3. Traditio Longa and Brevi Manu ART. 1499. Intention to deliver for ownership. Buyer agreed to bear the loss) 2. Difference with “Delivery with option to purchase”.SALES 8 d. Traditio Constitutum Possessorium. c. Delivery of Incorporeal Property.Delivery of Rights. 1498.Ownership is transferred in Sale or Return Transaction on Approval or Trial/Satisfaction. Subject to Resolutory Condition. Buyer must give goods a trial except when it is evident that it cannot perform the work intended. ART. (lessee becomes owner) e. 1500. Allowing the buyer to make use of the rights (1501) ART. credits or incorporeal property made by: a. Traditio Brevi Manu. 5. quality or character of the goods Ownership does not immediately pass to the buyer. 3. Seller’s Control. Placing titles of ownership in the hands of a lawyer.if the buyer had already the possession of the object even before the purchase. 1501.possession as owner changed. Generally the Sale and Delivery to an expert buyer is not a sale on approval/trial. Sale on Approval Basis Sale or Return Condition Subject to Resolutory condition Premise It depends upon the will of the buyer Transfer of ownership Ownership passes to delivery the immediately buyer on Sale on Approval Subject to suspensive condition It depends upon the suitability. Sale or Return vs. Execution of public instrument b. A provision that a 3rd person must satisfy approval is valid but he must be in Good faith. Quasi-Tradition. (Constructive and Quasi-Tradition) ART. Seller’s Control transferred to buyer. 4. Traditio constitutum possessorium. 2. Rules: 1. It passes only upon approval or satisfaction of the buyer duly manifested after trial There is no revesting of ownership because it is retained by the seller until the sale becomes absolute The risk remains in the seller while the goods are on trial Revesting of ownership in the owner Risk of loss or deterioration Ownership is revested in the seller if the buyer so decides The risk rests on the buyer before the revestment of ownership . Requirements: 1.

6. Kinds of Delivery to the Carrier 1.O. 2. quedan. (Collect on Delivery)—the carrier acts for the seller in collecting the purchase price. Recording Laws (PD 1529. Insurance. 3. or any other document used in the ordinary course of business in the sale or transfer of goods. goods represented by such document. without notice of the seller’s defect of title.B. Where the sale is sold at merchant’s stores. Exceptions: SOLVAM 1. (See Art. Document of Title of Goods—includes any bill of lading.SALES 9 Art.O. Where bill of lading is sent forward to the buyer with bill of exchange attached and the buyer did not pay the bill of exchange. and by the bill of lading(BOL) the goods are deliverable to the seller or his agent. 1503. Warehouse Receipts Law. SALE BY ONE HAVING A VOIDABLE TITLE-BUYER ACQUIRES GOOD TITLE. 1507. F. When the goods are shipped.D. 4. (either at point of shipment or the point of destination) determines when the ownership passes. Where seller subsequently acquires title. Where the seller has a voidable title which has not been avoided at the time of the sale. either by indorsement or by delivery. 3. (Cost. When a contrary intention appears by the terms of the contract. EFFECT OF BUYER’S OBTAINING POSSESSION OF BILL OF LADING WITHOUT HONORING THE DRAFT. 5. General Rule: Buyer acquires no better title to the goods than the seller had.F. or authorizing or purporting to authorize the possessor of the document to transfer or receive. a purchaser in GF for value of the BOL or goods from the buyer will obtain the ownership in the goods although the BOE has not been honored.B. C. 1505. (Free on Board)—goods are to be delivered free of expense to the buyer to the point where they are F. dock warrant. 2.RESERVATION OF POSSESSION OR OWNERSHIP BY THE SELLER WHEN SPECIFIC GOODS ARE SHIPPED. 3. Freight)—signify that the price fixed covers not only the costs of the goods. 1506. The point of F.B. *CIF and FOB merely make rules of presumption. ART. ART. but the expense of the freight and the insurance to be paid by the seller 2. 1. SALE BY A PERSON NOT THE OWNER/WITHOUT AUTHORITY OF OWNER. in GF for value 3. Bought before the title of seller has been avoided.O. NIL. Where the law enables the owner to dispose of the goods as if he were the true owner thereof.O. . or to the order of the seller or of his agent.I. 559) 2. Where the sale is sanctioned by statutory or judicial authority. ** If the BOL provides that the goods are deliverable to the buyer or to the order of the buyer or is indorsed in blank or is indorsed to the buyer by the consignee named therein. *** Factor’s Acts (Agency). 4. ART. When the goods are shipped and by the BOL the goods are deliverable to the order of the buyer or of his agent. Exception: Form of bill of lading not conclusive if for security purposes only. fairs or markets. DOCUMENTS OF TITLE. precluded from denying the seller’s authority to sell. which the buyer must pay to obtain possession of the goods. 1. C. Where the owner of the goods is by his conduct. RA 4136-Land Transportation and Traffic Code. Revised Administrative Code). but possession of the BOL is retained by the seller or his agent. or warehouse receipt or order for the delivery of goods.

it is an instrument given by dock owners to an importer of goods warehoused on the dock as a recognition of the importers title to the said goods. rice or hemp 4.those by the terms of which the goods covered are deliverable to a specified person. upon production of the bill of lading. Dock Warrant. TRANSFER OF NON-NEGOTIABLE DOCUMENT. tobacco. PERSONS WHO MAY NEGOTIATE A DOCUMENT. By the owner thereof 2. and in such case the document shall thereafter be negotiated only by the indorsement of such indorsee. ART. warehouseman or other bailee undertakes to deliver the goods to the bearer. Where by the terms the carrier. 1509. 2. 1. warehouseman or other bailee undertakes to deliver the goods to a specified person and such person or subsequent indorsee has indorsed it in blank or to bearer. or orders upon. or bailee not limited. 2. It may be in blank. Receipts of. 1. NEGOTIATION OF NEGOTIABLE DOCUMENT BY INDORSEMENT. NEGOTIABLE DOCUMENTS OF TITLE MARKED “NON-NEGOTIABLE” -No effect on negotiability. Warehouse Receipt—A receipt wherein it is stated that certain goods were received by the bailee to be delivered to the bearer or to the order of any person named in such receipt or to a specified person 5. Evidence of transfer of title and possession of goods and contract between the parties. Quedan. -Though non-negotiable may be transferred but transferee acquires rights under 1514.  Where negotiable document of title the goods are deliverable to bearer or where a negotiable document of title has been indorsed in blank or to bearer.SALES 10 Nature and function: 1. 1508. ART. the shipper and the consignee. Negotiable. Classes of Documents of Title: 1. 2. Indorsement is made by the person to whose the goods are deliverable. Where by the terms the carrier. any holder may indorse the same to himself or to any specified person.those by the terms of which the bailee undertakes to deliver the goods to the bearer and those by the terms of which the bailee undertakes to deliver the goods to the order of a specified person. 1510. a bailee of goods represented. Even if document indorsed transferee has no additional rights. Non Negotiable. ART. to bearer or to a specified person. 1511. Letter of Credit—it is nothing more than a commitment by the issuer that the party in whose favor it is issued and who can collect upon it will have his credit against the applicant of the letter duly paid in the amount therein specified. ART. to order or to bearer. Bill of Lading. By any person to whom possession or custody has been entrusted by the owner. The obligations of carrier. It usually involves three persons: the carrier.It is a contract or receipt for the transport of goods and their delivery to the person named therein. 1512. 3. . if bailee undertakes to deliver the goods to the order of the possessor of the document OR document is in such form that it may be negotiated by delivery at the time it is entrusted. 2. Some Forms of Documents of Title 1. ART.a warehouse receipt for commodities or goods such as sugar. NEGOTIATION OF NEGOTIABLE DOCUMENT BY DELIVERY.warehouseman.

OR CONVERSION. **Ascertain the intention if contrary appears as to necessity of negotiation. Usage of trade. The title of the person negotiating the document over the goods covered by the document. The right to the goods as against the transferor. **Rights not absolute. The he has no knowledge of fact which would Impair the validity or worth of the document. 1518. 2. OR THERE WAS BREACH OF DUTY OF TRANSFEROR. The right to notify the bailee of the transfer thereof. 1520. Rights of transferee: 1. Applicability: (a) Transferee of Negotiable document of title not duly negotiated (b)transferee of a non-negotiable document.. ART. PLACE OF DELIVERY OF GOODS 1. 2. THEFT. The title of the person(depositor or owner) to whose order by the terms of the document the goods were to be delivered. thereafter to acquire the obligation of the bailee to hold the goods for him. without notice of such factors. DURESS. therefore in Good Faith ART. The right to compel the transferor to indorse the indorsement. 1. as if the bailee had contracted with him. That he has legal Right to negotiate or transfer it. 1513. ART. ART. MISTAKE. 1521. 3. 3. INDORSER NOT GUARANTOR . TRANSFER OF ORDER DOCUMENT WITHOUT INDORSEMENT.SALES 11 ART. ART. The right. ART. 1517. ART. 3. CREDITOR’S REMEDIES ON PROHIBITION ON ATTACHMENT/LEVY. The direct obligation of the bailee (warehouseman or carrier) to hold possession of the goods for him. RIGHT OF PERSON TO WHOM DOCUMENT HAS BEEN NEGOTIATED. --If the transferee paid value. 1519. That he has the right to transfer the Title to the goods and goods are merchantable or fit for a particular purpose.Injunction or TRO. WARRANTIES ON SALE OF DOCUMENTS BY THE TRANSFEROR. They are subject to the terms of any agreement with the transferor. **Before Notification the bailee is not bound to the transferee whose right may be defeated by a levy of an attachment or execution upon the goods by the creditor of the transferor or by a notification to such bailee of the subsequent sale of the goods. ART. 1516. That the document is Genuine 2. WHILE IN POSSESSION OF BAILEE UNLESS DOCUMENT BE FIRST SURRENDERED OR ITS NEGOTIATION PROHIBITED BY THE COURT. ATTACHMENT OR LEVY UPON GOODS COVERED BY A NEGOTIABLE DOCUMENT NOT ALLOWED. THEREFORE NOT LIABLE FOR BAILEE’S FAILURE OR PREVIOUS INDORSERS. Seller’s place of business . RIGHTS OF PERSON TO WHOM DOCUMENT HAS BEEN TRANSFERRED. (indorsement /delivery) (GRIT) 1. LOSS. Agreement. 1514. 4. 2. Rights acquired: 1. 3. Title to the goods as against the transferor. 2. A. WHEN NEGOTIATION NOT IMPAIRED BY FRAUD. 1515.

To give notice to buyer regarding necessity to insure goods while in transit if under circumstances it is usual to insure. 2. 1. 1. DELIVERY OF GOODS MIXED WITH OTHERS 1. price at the contract rate if he knew that no more were to be delivered b. UNPAID SELLER.Liable for all of them. ART. DELIVERY OF GOODS MORE THAN QUANTITY CONTRACTED 1. delivery to him. No time fixed. Agreement. ART. D. 2. 1524. B. Accept in accordance with the contract and reject the rest. Seller bears the expenses incidental to putting goods in deliverable state. ** Rules may be controlled by usage or agreement. Demand or tender of delivery effective if made at a reasonable hour. E. DELIVERY OF GOODS AT THE POSSESSION OF THIRD PERSONS. ART.SALES 4. 1525. 1. Accept and reject excess. or a consignor or agent who has himself paid or is directly responsible for the price. Specific Goods: Place where goods are at the time of contract known to parties. To enter on behalf of buyer into such contract reasonable under the circumstances. Seller’s residence. ** If goods are indivisible the buyer may reject the whole of the goods. 5. DELIVERY OF GOODS TO THE CARRIER is DELIVERY TO THE BUYER Exceptions: 1503 (1) (2) (3) and when Contrary intention appears. DELIVERY OF GOODS LESS THAN THE QUANTITY CONTRACTED. TIME OF DELIVERY OF GOODS 1. . B. When a BOE or other Negotiable Instrument has been received as conditional payment but was dishonored or the buyer became insolvent. “Seller”. 2.includes agent of the seller to whom the BOL has been indorsed. (risk during transit is borne by him if he fails) ART. Accept all. – Seller is relieved if 3rd person acknowledges to be the bailee of the buyer. within a reasonable time. Seller’s duty after delivery to carrier. NO DUTY TO DELIVER IF VENDEE HAS NOT PAID OR NO PERIOD FOR PAYMENT FIXED IN THE CONTRACT. Buyer may reject. fair value (reasonable market value) of the goods if he did not know that the seller is going to be guilty of breach of contract. 12 C. 2. C. if goods were lost/damaged) 2. 1522 A. (If seller omits this buyer may decline to treat delivery to carrier. When the whole of the price has not been paid or tendered. Accept all. Buyer may accept by paying: a. 2. 1523.

. (1532. A lien on the goods or right to retain them for the price while he is in possession of them. if any. [LS RRW] 1. The goods must be in transit (1531) 4.2) 6. REMEDIES OF AN UNPAID SELLER. LIEN ON THE REMAINDER WHEN THERE’S PART DELIVERY. Possession by buyer or his agent. giving notice of his claim to the carrier or bailee. 3. issued by the carrier or bailee. if the carrier or bailee acknowledges to hold the goods on behalf of the buyer 3. 1. *** When unpaid seller becomes judgment creditor he does not lose his lien. ART. 1532. if the goods are rejected by the buyer.SALES 13 ART. Right of stopping the goods in transitu after he has parted with the possession of them. freight. The seller must bear the expenses of delivery of the goods after the exercise of the right. (1532. 1530. Right of Resale 4. The seller must either actually take possession of the goods sold or give notice of his claim to the carrier. Right to Rescind 5. *** Goods delivered to a ship. ART. WHEN UNPAID SELLER LOSES POSSESSORY LIEN. if the buyer or his agent obtains possession of the goods at a point before the destination originally fixed. and the carrier or other bailee continues in possession of them. ART. 2. train. Insolvency of the buyer. 1529. Waiver of lien. Delivery to agent or bailee of buyer. ART. if the carrier or bailee wrongfully refuses to deliver the goods to the buyer. Right of withholding the delivery when ownership has not yet passed to buyer. The seller must surrender the negotiable document of title. Expiration of term of credit. WHEN UNPAID SELLER’S POSSESSORY LIEN MAY BE EXERCISED. 3. When Goods are in transit 1. 1528. ART. WAYS OF EXERCISING THE RIGHT TO STOP. *** Part of Delivery made to buyer or agent—remainder may be stopped in transitu. truck or airplane chartered by the buyer— circumstantial whether they are in possession of the carrier or as agent of the buyer. [SEI] 1. [DPW] 1. UNLESS INTENT TO WAIVE THE LIEN OR RIGHT OF RETENTION. 2. 1526. REQUISITES FOR THE EXERCISE OF RIGHT OF STOPPAGE IN TRANSITU 1. unless there is showing an agreement with buyer to give up possession of the whole of goods. 3. 2. 1527.1) 5. The buyer must be insolvent 3. Taking actual possession of the goods 2. 2. after the delivery to a carrier or other bailee and before the buyer or his agent takes delivery of them 2. When Goods No longer in Transit (after delivery to buyer/agent) 1. 1531. Sales without stipulation as to credit. The seller must be unpaid (1525) 2. ART.

When he does not furnish to the vendor the guaranties or securities which he has promised 3. Article 1536—Right to Withhold delivery of thing sold by the vendor in case the vendee lose the right to make use of the term. Where the buyer delays in the payment of the price for an unreasonable time. ART. WHEN THE SELLER MAY RESCIND 1. unless he gives a guaranty or security for the price 2. or goes out of commerce. ART. EFFECT OF SALE OF GOODS SUBJECT TO LIEN OR STOPPAGE IN TRANSITU. 1535. When after the obligation has been contracted vendee becomes insolvent.SALES 14 --Notice to be effectual must be given in such time and circumstance that the principal by the exercise of reasonable diligence may prevent a delivery to the buyer. Where the buyer delays in the payment of the price for an unreasonable time. 3. If it deteriorates through the fault of the seller. If the thing is improved by its nature. --If goods are covered by negotiable document of title carrier or bailee has no obligation to deliver to seller unless document is cancelled. 1. If the thing is lost through the fault of the seller. --Redelivery necessary according to directions of seller. WHEN RESALE IS ALLOWABLE Where seller has either a right of lien or a right of stoppage in transitu and under the following cases: PRD 1. it is understood that the thing is lost when it perishes. 1. unless he immediately gives new ones equally satisfactory 4. Article 1538—Loss. or by time. or disappears in such a way that its existence is unknown or it cannot be recovered. When the vendee attempts to abscond Article 1537—Vendor is bound to deliver the thing sold and its accessions and accessories in the condition in which they were upon the perfection of the contract. When by his own acts he has impaired said guaranties or securities after their establishment. 2. as provided in Art. 1198: (IFIVA) 1. Deterioration or Improvement of Object before its delivery governed by Article 1189. Where the right to resell is expressly reserved in case the buyer should make a default 3. the obligation shall be extinguished 2. Where Goods not covered by negotiable document of title. Where the goods are perishable in nature 2. Also with a buyer who sold goods to another. When the thing deteriorates w/o the fault of the seller. Where Goods covered by negotiable document of title —Seller’s lien cannot prevail against the rights of a purchaser for value in GF to whom the document is indorsed. If the thing is lost w/o the fault of the seller. —Seller can give no larger right than he has. the impairment is to be borne by the buyer 4. 1534. ART. the improvement shall inure to the benefit of the buyer . Where the right to rescind is expressly reserved in case the buyer should make a default 2. he shall be obliged to pay damages. in consideration of which the vendor agreed to the period 5. and when through fortuitous event they disappear. 1533. All fruits pertain to vendee from the day on which the contract was perfected. the buyer may choose b/w rescission or fulfilment with indemnity in either case 5. When the vendee violates any undertaking.

If it is improved at the expense of the seller. although there be a greater or lesser area or number than that stated in the contract. Proportional reduction of the price or 2. the vendee may choose between: LACKING/SMALLER AREA OR NUMBER 1.  But if the vendee would not have bought the immovable had he known of its smaller area or inferior quality he may rescind the sale. If it is not possible to deliver all. Two or more buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests 4. Two or more buyers must each have brought from the very same seller . 1539 and 1540 shall be applicable to judicial sales) b. Two or more sales transactions must constitute valid sales 2. GREATER AREA OR NUMBER (1540)  Vendee may accept the area stated in the contract and reject the excess OR  Vendee may accept the whole but must pay for the same at the contract rate  No Right of Rescission since the vendee is not prejudiced at all. Sale of REAL ESTATE by lump sum (1542): There should be no increase or decrease of the price. Sale OF REAL ESTATE by unit of measure or number: The vendor must deliver all that may have been stated in the contract. The BOUNDARIES prevail because it contains the real and true area of the land.  Rule applicable to Sale of two or more immovables for a single price. although the same exceeds the area or number specified in the contract. PRIORITY IN RIGHT Applicability of General Rule: Only when the requisites in Article 1544 are not present Requisites for DOUBLE SALE to EXIST (VOCS) 1.  What if the area or number of the immovable is stated together with its boundaries? Then the vendor is bound to deliver all that is included w/in the BOUNDARIES. Two or more sales transactions must pertain to the same object or subject matter 3. he shall have no other right than that granted to the usufructuary Article 1539—What delivery includes? It includes the placing in the control of the vendee all that is stated in the contract in conformity with the following rules: a. [1543] DOUBLE SALE (1544) General Rule: FIRST IN TIME.SALES 15 6. Rescind the contract for breach of stipulations. 1539 and 1542: Six Months from the day of delivery. Rescission shall take place only if inferior value of the thing sold exceeds 1/10 of the price. PRESCRIPTION OF ACTIONS for rescission or exaction of proportionate reduction of the purchase price against the vendor under Art.  The Above Rules (Art. Rescission of the contract provided the lack in area is at least 1/10 of the area stated in the contract  The above rules are applicable also in case there is no lack in area but the quality is not the same as specified in the contract. Reduce the price in proportion to the deficiency in the area OR b.  What if the vendor cannot deliver all that is included w/in the designated boundaries? Vendee has the option to: a.

first to possess in good faith 3. The vendee a retro has the better right over the donee. that if the property sold does not possess certain incidents or qualities. 744. and even the marginal notes. No inscription and no possession in good faith—Person who presents oldest title in good faith What is REGISTRATION? It is any entry made in the books of the Registry. Waive performance of the condition and proceed with the contract What if the condition agreed upon is in the nature of a promise that it should happen? Then the non-fulfillment of such condition is considered a breach of warranty. Where one sale is absolute and the other is a pacto de retro where the period to redeem has not yet expired. Where the subject land is not registered under PD 1529 8. Where one of the sales is subject to a suspensive condition which condition was not complied with and the other is an absolute sale. 3. 4. No inscription. there being no previous sale of the property. Refuse to proceed with the contract OR b. Where one claim is based on prescription and the other is on sale 7. In a contract to sell. the purchaser may either consider the sale void or claim damages for breach of warranty. Where one transaction is a sale and the other a mortgage 6. 2. and cancellation. It is the entry which records solemnly and permanently the right of ownership and other real rights. 5. when such condition was not fulfilled by the other party? a. annotation. . CASES WHERE ARTICLE 1544 CANNOT BE INVOKED 1. What are the options of a party to a contract of sale subject to a condition.SALES 16 Rules of Preference of Ownership Movable or Personal Property: Owner is the one who is in first possession in good faith. When the earlier transaction is a pacto de retro sale of an unregistered land and the subsequent conveyance is a donation of the land in favor of another by the vendor a retro. including both registration in its ordinary and strict sense.  Article 1544 applicable to Double Donations as provided by Art. Immovable 1. Where one of the deeds of sale is a forgery. The donor had nothing more to donate because of failure to repurchase the property. Even if the conditional sale was made prior to the absolute sale. First to register in good faith 2. WARRANTY. --It is a collateral undertaking in a sale of either real or personal property. Article 1546. express or implied. CONDITIONS AND WARRANTIES Article 1545. Express Warranty—any affirmation of fact or any promise by the seller relating to the thing if the natural tendency of such affirmation or promise is to induce the buyer to purchase the same and if the buyer purchases the thing relying thereon.

Implied warranty as to the right of the seller to sell at the time when ownership has to pass. auctioneer.SALES 17  Affirmation of the value of the thing or statement of the seller’s opinion is not warranty. Implied Warranties in Contracts of Sale (1547) 1. fitness or suitability for purposes for which they have been purchased. (Warranty against eviction) 2. adaptation. Implied Warranty—It is inherent in a contract of sale and presumed to exist although nothing has been mentioned about it. Eviction—A judicial process by virtue of which the vendee is deprived of the ownership of the whole or part of the thing he purchased by final judgment or by an act imputable to the vendor. Warranty against encumbrances or non-apparent servitudes (1560) Cases where implied warranty is not applicable 1. Sale of property sold at public auction for tax delinquency. pledge or other person professing to sell by virtue of authority in fact or law (1547) (The judgment debtor is responsible here for eviction) 2. Sale under “as is and where is”—this carries no warranty as to the quality or workable condition of the goods and the buyer takes them as they are. Prescription consummated after sale—Vendee cannot claim warranty against eviction  If Property is sold for non-payment of taxes due and not made known to the vendee before the sale. The judgment is based on a prior right to the sale or an act imputable to the vendor 4. Implied warranty against hidden defects or faults or charge or encumbrances unknown to the buyer 3. The deprivation is by virtue of a final judgment (1557) 3. Prescription consummated before sale—Vendee can claim warranty against eviction (deprivation is based on right prior to sale) 2. No waiver of warranty by the vendee  Failure of the vendee to appeal does not relieve vendor from responsibility [1549] Effect of Prescription/Adverse Possession (1550) 1. Implied warranty as to fitness and merchantability 4. Vendee is deprived in whole or in part of the thing purchased 2. 4. vendor is liable for eviction (1551)  Judgment debtor is responsible for eviction in judicial sales unless otherwise decreed in judgment (1552)  Any stipulation exempting vendor from responsibility for eviction is void if he acted in bad faith (1553) . 3. Elements (DVJ-SW) 1. unless the seller made such affirmation or statement as an expert and it was relied upon by the buyer. The vendor was summoned in the suit for eviction at the instance of the vendee (1558) 5. mortgagee. There is no warranty on the part of the State as to the title of the owner. However. such condition does not include those that could not be discovered by a physical examination of the goods sold. Sale made by a sheriff. Sale of second hand articles does not carry any warranty as to the condition. WARRANTY AGAINST EVICTION—The seller guarantees that he has the right to sell the thing sold and to transfer ownership to the buyer who shall not be disturbed in his legal and peaceful possession thereof.

Demand the rescission of the contract of sale w/ obligation to return the thing w/o other encumbrances than those w/c it had when acquired  Applicability: A part of the thing sold of such importance was lost because of eviction. . that the vendee would not have bought it w/o said part. vendee may still sue for damages w/in one year from the discovery of burden or servitude. Rights of Action of Vendee in case of Partial Eviction (1556) 1. Value which the thing sold had at the time of eviction. be it greater or less than the price of the sale. Since the vendee can no longer restore the subject-matter of the sale to the vendor. 2.SALES 18 Kinds of Waiver in eviction (1554) –Applicable to total eviction only.  Prescription of actions for rescission of damages: W/in 1 year from the execution of contract  If what was chosen was rescission but was not filed w/in 1 year. Immovable sold is encumbered with non-apparent burden or servitude not mentioned in the agreement 2. when the vendee would not have bought one w/o the other. unless there is an express warranty that the thing is free from all burdens and encumbrances. * Rescission is not a remedy in case of Total eviction because rescission contemplates that the one demanding it is able to return whatever he has received under the contract. 1. rescission cannot be carried out. Remedies of the vendee 1. Nature of non-apparent servitude or burden is such that it must be presumed that the buyer would not have acquired it had he been aware thereof. (Vendor shall only be liable to pay the value w/c the thing sold had at the time of the eviction) 2. Expenses of the contract. Indemnity  Warranty is not applicable if non-apparent servitude is recorded in the Registry of Property. Consciente—the waiver is voluntarily made by the vendee w/o the knowledge and assumption of the risks of eviction. Intencionada—the waiver is made by the vendee w/ knowledge of the risk of eviction and assumption of its consequences.  Same rules apply to a case where two or more things are jointly sold for a lump sum or for separate price for each. Damages and interests and ornamental expenses. if vendee was ordered to deliver them to the party who won the suit against him 3. and those suit brought against the vendor for warranty 4. if the sale was made in bad faith. Costs of the suit which caused the eviction. (Vendor here shall not be liable) Rights of Vendee in case of eviction (1555)  To demand to the vendor the following (VICED) 1. Rescission of the contract OR 2. Warranty against encumbrances or non-apparent servitudes (1560) Requisites: 1. Income or fruits. if the vendee paid them 5. Enforce the vendor’s liability for warranty against eviction OR 2.

IMPLIED WARRANTY OF MERCHANTABILITY. Art. unless there is a contrary stipulation and he is in good faith (1566) Caveat Venditor—“Let the Seller Beware” Vendor is liable eventhough not aware of hidden defects Caveat Emptor—“Let the Buyer Beware” Requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the vendor’s title takes all the risks and losses consequent to such failure. Notice by the vendee to the vendor within a reasonable time. 4. 2. (1564)  Merchantability of goods in sale by sample is implied. Defect must be hidden. whether for his own use or for resale. Action for rescission or reduction of price must be filed w/in the prescriptive period. No waiver of the warranty against hidden defects. Defect should not be apparent on reasonable examination of the sample for the vendor to be liable (1565)  Vendor is liable eventhough not aware of hidden defects. in the performance of his offer to buy. this includes growing fruits or crops 1. * Merchantability—quality and condition of goods that a reasonable man would after a full examination accept the same under the circumstances of the case. –it cannot be discovered by an ordinary inspection or examination. b) diminishes its fitness for the use intended. General Rule: there is no implied warranty of fitness Exceptions: a) Buyer expressly makes known the particular purpose or by implication. IMPLIED WARRANTY OF FITNESS. . –a) defect renders the thing sold unfit for the use for w/c it is intended. 5. 6. Applies when goods are bought by description. REDHIBITORY DEFECTS—an imperfection or defect of such nature as to engender a certain degree of importance REDHIBITION--claim against the seller of a product in which the buyer demands a full refund or a reduction of the purchase price due to a hidden defect that prevents the product from performing the task for which it was purchased. Defect must be important or grave. (1563)  A warranty as to quality or fitness for a particular purpose may be attached to a contract by usage or trade in place of execution.  There is no warranty as to fitness for particular purpose in a contract of sale of a specified article under its patent or other trade name unless there is a contrary stipulation. 3. b) Buyer relies upon the seller’s skill or judgment 2. Defect must be present at the time of the execution of the sale.SALES 19 WARRANTY AGAINST HIDDEN DEFECTS Requisites: (HIPANN) 1. --fitness for the general purpose for which they are sold. 1562—Implied Warranty or Condition as to quality or fitness of goods Applicability: Goods—all chattel personal but not things in action or money of legal tender. to such an extent that the vendee would not have acquired if he had been aware thereof or would have given a lower price for it.

 Warranties against hidden defects. and in such circumstance defects are clearly known to buyer. Accion Redhibitoria—action seeking withdrawal from the contract 2. merchantability and fitness are applicable to judicial sales but judgment debtor is not liable for damages. When is Sale of Animals Void? (1575) 1. both with damages Loss of Thing Sold due to Hidden Defects (1568) Vendor in Bad Faith Bears the loss Must return the price Must refund expenses of the contract Pay damages Vendor in Good Faith Does not bear the loss Must return the price with interest Must refund expenses of the contract Not obliged to pay damages Loss of Thing Sold w/ Hidden defects through fortuitous event or vendee’s fault (1569) * Vendee may demand price paid less value of the thing at the time of loss plus damages if vendor acted in bad faith.(1574) Rationale: Animals are not bought because of their quality or capacity for work. because the latter is only forced to sell and therefore did not take part in the conduct of the sale and determination of price which precludes possibility of bad faith (1570)  Prescription of Actions: 6 Months from delivery of thing (1571) Joint Sale of two or more animals (1572)  Where one suffers redhibitory defect this shall not affect others  Exception: If the buyer would not have purchased the sound animals w/o the defective ones.  Presumption of Exception: If a team. if cause of death existed at time of contract (1578)  Animal should be returned in the condition in which it was sold and delivered if sale was rescinded. Vendee is answerable for any injury due to his negligence and not arising from redhibitory defect (1579) . If use or service for which they are acquired has been stated in the contract and they are found to be unfit Remedy: Declaration of Nullity of Contract Redhibitory defect of Animals—such defect that even in case of professional inspection it is of such nature that even expert knowledge is not sufficient to discover it. sale may be rescinded.(1576)  Prescription of Redhibitory Actions in defective animals—40 days from delivery(1577)  Vendor is liable if animal should die w/in 3 days after its purchase. Accion quanti minores or estimatoria—action for proportionate reduction in the price Nature of Remedies: Alternative.SALES 20 Remedies of Buyer (1567) 1. yoke or pair or set is bought even if a separate price has been fixed for each  The following rules shall be applicable to joint sale of two or more things (1573) * There is no warranty against hidden defects of animals sold at fairs or at public auctions or of livestock sold as condemned. When suffering from contagious diseases 2. In such case.

the reasonable opportunity of examining the goods to determine whether they conform with the contract. To accept the delivery of the thing b. When the goods are deliveres “collect on delivery”. (1581) Article 1582. he should give the buyer if the latter requested. (CPR) a. When the breach is severable the injured party can seek damages or compensation but not to rescind the whole contract. Accion Redhibitoria—action seeking withdrawal from the contract 2. Tender of Delivery by the seller: If seller tenders delivery. When right of examination not allowed? a. Buyer refuses w/o just cause to take delivery or pay one or more instalments—determine whether breach is material to warrant refusal to proceed with the entire contract of sale. Rules in case of Contract of Sale of goods to be delivered in stated instalments. Exception: He need not pay the price if there is a contrary agreement or the examination is permitted by usage of trade at the place of delivery. Examples: (a) continuous possession and use of goods (b) reselling the goods (c) mortgaging the goods c. Payment shall be made at the stipulated time and place of delivery. such as in sale by instalments. When after the lapse of a reasonable time following the delivery. Article 1585. EXCEPTION TO SIMULTANEITY OF ACTS: if parties agreed. b. Buyer’s Right to examine goods. the buyer cannot examine the goods unless he pays first the price. If there is no stipulation at the time and place of delivery of the thing. . When he performs an act in relation to the goods inconsistent with the ownership of the seller. Kapunan] Article 1583. Primary Obligations of the Vendee: a. he retains the goods w/o complaining to the seller or w/o intimating that he has rejected them. Seller makes defective deliveries in one or more instalments—Buyer may reject the defective portion and accept the good ones b. Delivery w/o previous examination: The buyer is not deemed to have accepted the same unless he had a reasonable opportunity of examining them for the purpose of finding out whether they conform with the specifications agreed upon. If there is an express stipulation to the contrary b. [Chua Hoi vs. Two instances contemplated: a. Article 1584. Accion quanti minores or estimatoria—action for proportionate reduction in the price  Form of sale of large cattle shall be governed by special laws. When he communicates with the seller expressly manifesting his acceptance thereof. Signs or Evidence of Acceptance by the buyer of Goods delivered to him. *** The failure of the vendee to pay the price after delivery if ownership had been transferred. a. does not cause the ownership to revert back to the seller until and unless the bilateral contract of sale is first rescinded.SALES 21 Remedies of Buyer in Sale of Animals w/ Redhibitory defect (1580) 1. To pay the purchase price simultaneously upon the delivery of the thing unless a period or term has been agreed upon. b.

If vendee has fully paid the price **Other causes for suspension: non-compliance by vendor of certain conditions. Situations where vendee cannot suspend payment despite presence of disturbance (SSS-TP) 1. (Risk of loss is on the buyer) Article 1588. Article 1592. If the seller reserves ownership as security for payment of the price [1503 & 1523] Article 1589. ** Vendor however has the alternative of compelling specific performance if the ground to fear loss does not exist. Purpose of Notice: To insulate the seller from belated claims of defects and to allow him to make urgent investigation on the validity of claims. if the thing sold and delivered produces fruits or income c. if the vendee is in default. if the parties stipulated b. Length of suspension: While the danger or disturbance exists.SALES 22 Article 1586. warranty of eviction Article 1591. from the time demand is made upon him either juidicially or extra-judicially. Effect of Unjustifiable Refusal to accept goods by the buyer : Title or ownership passes to him from the time goods were placed at his disposal. When the vendor has given security for the return of the price 2. (Risk of Loss here is on the seller) 2. Exceptions: a. Effects of Justifiable refusal to accept delivery by the buyer 1. When vendee is bound to pay interest (period b/w date of delivery and date of payment) after delivery: a. Buyer has no duty to return the goods to the seller but must notify the seller of his refusal to accept the goods. Immediate rescission in sale of immovables . but he will be liable for damages if he does not fulfil the duties of a depositary as required by law. When the vendor has succeeded in eliminating the danger or disturbance 4. . If there is contrary agreement b. However to make the seller liable the buyer must notify the seller w/in a reasonable time about the breach of promise or warranty. Mere Acceptance does not necessarily discharge the seller from liability for the breach of any promise or warranty. If he has a well-grounded fear that his possession or ownership would be disturbed by a vindicatory action or foreclosure of mortgage. If disturbance is mere act of trespass 5. Exception to the general rule on rescission in case of sale of immovables. Buyer may voluntarily constitute himself as depositary of the goods. When can the vendee suspend payment of the price (total or remaining)? 1. Article 1590. If he is disturbed in his possession or ownership of the thing brought 2. Article 1587. if the vendor has reasonable ground to fear the loss of the immovable. When the parties have stipulated 3. Acceptance of Goods.

manifested his inability not to comply with the contract 3. The reason is that the vendee already enjoyed the advantage of paying beyond the time originally fixed in the contract. Action for damages for breach of warranty but accepting the goods [1599] 3. *Art. Sales by instalments where parties have laid down the procedure to be followed in the event the vendee failed to fulfill his obligation 2. in case of breach by the vendor (SDR) 1. 4] Article 1595. Action for rescission for breach of warranty where the vendee may validly refuse acceptance of the goods. Article 1593. A mere promise to sell where the title remains with the vendor until full payment of the price. Actions available to vendor when there is breach of contract of sale on the part of the vendee: (PDR) 1. Damages for non-acceptance of goods. if the vendee upon the expiration of the period fixed for the delivery of the thing purchased. Action for damages due to wrongful neglect and refusal to accept and pay for the goods [1596] 3.SALES 23 General Rule on Rescission: The court may fix the period of payment when there is just cause. Once there is a judicial demand by notarial act received by the vendee. When the ownership of the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the price according to the terms of the contract 2. available in the following cases : (OPR) 1. Defense of Buyer: He may establish the fact that the seller has at anytime before judgment. the court may not grant him a new term. on a certain day and the buyer wrongfully neglects or refuses to pay such price. Action for payment of the price of the goods [1595] 2. Exception: Court is not allowed to grant a new period. Action for specific performance in case of failure of the vendor to deliver the goods [1598] 2. during the time when no demand for rescission either judicially or extra-judicially has taken place. Actions for breach of contract of sale of goods Article 1594. 1592 Not applicable in: 1. When the price is payable irrespective of delivery or transfer of title. or even if the goods had already been received. Conditions for applicability : 1. Action for collection of price. refused to receive it w/o justifiable cause 2. Action for rescission if buyer has repudiated the contract or has manifested his inability to perform his obligation [1597] Actions available to the vendee. with notification that the seller is holding them as bailee for the buyer Article 1596. Automatic Rescission of sale of movables. if he failed to pay the price unless granted a longer period w/in w/c to pay. When the goods cannot readily be resold for a reasonable price and the buyer refuses to receive the goods when offered for delivery except when 1596 par. he may return them [1599 par. 4 is applicable (there is notice of stopping the contract). any delay in their disposal may prejudice the vendor. Reason why judicial or notarial act not required: Personal things do not generally keep a stable price in the market. Measure of damages: 1. As a rule: estimated loss directly and naturally resulting in the ordinary course of events from the buyer’s breach (no available market) .

If he knows of the breach of warranty when he accepted the goods w/o protest 2. Action for damages—whereby the buyer may (a) accept the goods but w/ damages or (b) refuse to accept the goods for the breach of warranty but also with damages. expenses for materials used before receiving the notice of repudiation for stoppage 3. labor performed 2. Novation d. If he fails to notify the seller w/in a reasonable time of the election to rescind 3. 1600. unrealized profits Article 1597. Rescission—whereby the buyer seeks the cancellation of the sale and as a consequence there will be restoration on both sides. 3. such as in the case of a sale where goods are to be manufactured. Remedy of buyer in Contract to deliver specific goods : Specific Performance w/o giving the seller option to retain the goods on payment of damages. The vendor reserves the right to repurchase the thing sold . Loss of the things c. Buyer here shall be liable for the cost of: 1. Merger of rights of creditor and debtor e. Article 1599. Art. When the buyer has committed a breach of the contract * Notice must be given to the buyer to totally rescind the contract. Fulfillment of resolutory condition g. Rescission f. Remedies of buyer when seller commits breach of warranty . **Situations when buyer cannot choose or elect rescission (KNR) 1. Article 1598. Payment b. When there is available market: “difference” between contract price and market or current price at the time when the goods ought to have been accepted or if not time has been fixed at the time of refusal (If there are special circumstances establishing proximate damages of a different amount than the “difference” described then liability is based on the proximate damages) Proximate Damages: refer to damages other than unrealized profits * Repudiation of the contract or notice of stopping the contract. If he fails to return or offer to return the goods to the seller in substantially the same condition as they were at the time the ownership was transferred to him. When seller may rescind contract in case there is no delivery yet 1. Requisites REV-CR a. When buyer repudiated the contract 2. Ordinary Causes—causes which extinguish ordinary contracts such as: a. Special Causes—refer to conventional redemption and legal redemption CONVENTIONAL REDEMPTION. Extinguishment of Sales Art. 2. When the buyer has manifested his inability to perform his obligations 3. 1.Causes for Extinguishing Sales 1.SALES 24 2. Recoupment—whereby the buyer accepts the goods but he sets up against the seller the reduction or extinction of the purchase price. Prescription 2. 1601.

It is an accidental stipulation because it is a right created by the parties c. . He shall shoulder the expenses of the contract and other legitimate payments made by the buyer. He shall comply with other stipulations agreed upon. there must be foreclosure sale first Mortgagee is not entitled to reimbursement for improvements he made Vendee may alienate property Vendee becomes automatically the owner in case of vendor’s failure to redeem Vendee is entitled to reimbursement for necessary and useful expenses Art. 2. f. Consequences of Declaration of Pacto de Retro Sale as an Equitable Mortgage (PTFR) 1. When the vendor binds himself to pay the taxes on the thing sold. It begins to exist at the time of the perfection of the contract. Title remains in the vendor or if the title has already been transferred to the vendee. e. It is a resolutory condition because when it is fulfilled. (It becomes a mere promise to sell if stipulated upon after the sale had been consummated) b. It gives rise to a real right when properly registered because it affects third persons. form of words or other requisites prescribed by law for a mortgage. In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.SALES 25 b. When the purchaser retains for himself a part of the purchase price 5. It is reciprocal when the right to redeem is exercised. When there is doubt as to whether contract is Pacto de retro or an equitable mortgage Equitable Mortgage—one which lacks the proper formalities. the same must be revested into the vendor by a deed of reconveyance. the ownership of the vendee over the thing is extinguished PACTO DE RETRO SALE vs. 6. (both vendor and vendee has obligations with each other) d. He shall pay the value of the necessary and useful expenses made on the thing incurred by the buyer d. The repurchase price paid by the vendor is considered the principal of the loan. When the price of a sale with right to repurchase is unusually inadequate 2. 4. c. In judicial foreclosure redemption may be made before confirmation of the sale by the court. Mortgagee cannot alienate property Mortgagee does not automatically become owner. 1602—Presumption of Equitable Mortgage. 7. When the vendor remains in possession as lessee or otherwise 3. When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed. w/in one year from registration of the sale in extra-judicial foreclosure. MORTGAGE PACTO DE RETRO SALE Ownership is consolidated in the vendee if vendor does not repurchase w/in time agreed upon No obligation on the part of the vendee to foreclose Vendor has no more right to redeem after expiration of period to redeem MORTGAGE Failure of mortgagor to pay his obligations on time does not deprive him of his interest in the property Mortgagee must foreclose if he wants to secure a perfect title Mortgagor may redeem before foreclosure and even after. e. but however shows the intention of the contracting parties to make the property subject of the contract as security for a debt and contains nothing impossible or contrary to law. It is potestative as its exercise depends upon the sole will of the vendor. He shall return the price of the sale Characteristics of Conventional Redemption [EAR RPR] a. (IPERTOD) 1.

mortgage the property c. The vendee later acquired the whole of the property. 1602 also applicable to contract purporting to be an absolute sale Art. 1378. Rationale: Least transmission of rights. Art. he is given 30 days from the time final judgment was rendered to repurchase. because the co-owners are reluctant to make improvements on the property due to the state of instability in its ownership. . This is justified by the condemnation of pactum commissorium (which is a stipulation that creditor automatically becomes owner of a property upon non-payment by the debtor) Art. 3. 1607—Judicial Order is required for the registration of the consolidation of ownership of a real property in the vendee by failure of the vendor to redeem. transfer his rights to a 3rd person b. 4. a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage. Art. even if the second contract does not mention of the right of redemption. 1604—Art. If the abovementioned are present the vendee may compel the vendor in the Pacto de Retro Sale of a part to redeem the whole property. 1609—Vendee is subrogated to the vendor’s rights and actions As owner. 1610—Creditors of the vendor must exhaust first all the other properties of vendor before they could exercise the right of redemption against the vendee. the doubt shall be settled in favor of the greatest reciprocity of interests. but this should not exceed 10 years 2. The vendee entered a Pacto de Retro Sale of a part of an undivided immovable. the redemption shall be exercised within 4 years from the date of contract. 1605—Vendor may ask for reformation of instrument in cases referred to in 1602 & 1604 Art. The vendor in the “Pacto de Retro Sale of a part” wishes to exercise his right of redemption over the part. If there is a period agreed upon then this shall be observed. 1606—Time to redeem in conventional redemption 1. 3. 1603—In case of doubt . where it provides that if the contract is onerous. If an action was brought by the seller claiming that the contract was an equitable mortgage but later on proven that it was Pacto de retro Sale. Art. 1611—Applicability. Art. Any money fruits or other benefits received thereafter by the vendee are considered interests on the loan. 1608—The vendor may exercise his right of redemption against every possessor whose right is derived from the vendee. enjoy the fruits thereof d. 2. Art. Rationale: Co-ownership is not favored. vendee may: a. recover the property against every possessor e. If there is no period agreed upon. Art. perform other acts of ownership Art. 1. *Although in conflict with Art. If the vendor does not redeem on time the remedy of the vendee is to foreclose the mortgage.SALES 26 3. 1603 is the exception. Rationale: To accord the vendor the maximum safeguards for the protection of his legal rights under the true agreement of the parties.

Art. 1612—Joint Pacto de Retro Sale by Co-Owners or Co-Heirs of an Undivided Immovable. 2. 1621—Redemption by adjacent owner of rural lands . If the price of alienation is grossly excessive. not in favor of another adjacent owner 4.SALES 27 Art. The rural land alienated and to be redeemed must not exceed one hectare in area 3. Requisites: (RATSO) 1. the action for redemption can only be brought to each of them independently with respect to their share. 1618—The vendor who recovers the thing shall receive it free from all charges or mortgages constituted by the vendee. the vendee shall be entitled to the fruits gathered for one year reckoned from the last anniversary of the date of the effectivity of the contract of sale. If there are fruits at the time of the sale and the vendee paid them. 1612. redemption is not allowed. --If two or more co-owners desire to exercise right of redemption they may only do so in proportion to their share. LEGAL REDEMPTION (1619) --is the right to be subrogated upon the same terms and conditions stipulated in the contract. 1614—Separate Sales of Shares of Co-owners of an undivided immovable. roads and other servitudes for the benefit of other estates. c. 1615—If the vendee dies and property is left to several heirs . He shall pay the value of the necessary and useful expenses made on the thing incurred by the buyer Art. Where there are no fruits at the time of the sale but there are existing at the time of redemption. redemptioner shall pay only a reasonable price. in the place of one who acquires a thing by purchase or dation in payment.  Each vendor may exercise their right of redemption independently and the vendee cannot compel any of them to redeem the whole property Art. Return to the vendee the price of the sale b. 1620—A co-owner of a thing may exercise the right of redemption when the shares of all the other co-owners or any of them are sold to a 3 rd person. drains. . If he does not own any. but shall respect the lease contract constituted on the property in good faith and in accordance with the customs of the place.  Each Co-Owner/Co-Heir can exercise right of redemption with respect to their share Art. Art. ravines. Art. if they failed to do so vendee cannot be compelled to accept partial redemption. 1613—In the case referred to in Art. vendee may demand that all the vendors or co-heirs come to an agreement upon the repurchase of the whole thing. 2. whether or not the property is still undivided or already partitioned. He shall shoulder the expenses of the contract and other legitimate payments made by the buyer. or by any other transaction whereby ownership is transmitted by onerous title. The adjacent lands involved must be rural land. Art. 1617—Rule in case there is no agreement on the sharing of the fruits of the property. 1. Art. The vendee or grantee must already be an owner of a rural land. 1616—Obligations of the Vendor a Retro if he desires to redeem a. he shall be reimbursed by the vendor. 5. The alienation must be made in favor of a third person. The two lands involved must not be separated by brooks.

the one with a smaller area shall be preferred. Redemption by an agricultural tenant of land sold by the landowner ASSIGNMENT OF CREDITS AND OTHER INCORPOREAL RIGHTS Assignment of Credit—an agreement whereby credits. 1622—Applicability: Piece of Urban Land which is so small and so situated that a major portion cannot be used for any practical purpose w/in a reasonable time. right . An equity of redemption in cases of judicial foreclosures 5. Right of Pre-emption—the right of an adjacent owner to purchase the property before it is sold to a third person or before the projected sale to a 3 rd person is consummated. rights or actions pertaining to a person (called assignor) are transferred by him to another (called assignee) either onerously or gratuitously who acquires the power to enforce the same against the debtors. Sale of adjacent small urban lands bought merely for speculation (1622) 4. Instances of Legal Redemption under the Civil Code (CHURC) 1. 2.  Must be exercised within 30 days from the notice in writing by the prospective vendor. Pre-emption Arises before sale No Rescission because no sale as yet exists The action is directed against the prospective seller Redemption Arises after sale There can be rescission of the original sale Action is directed against the buyer * Preference when two or more owners of adjoining lands wish to exercise the right of redemption or pre-emption: To the owner whose intended use is best justified. 1. Sale of a co-owner of his share to a stranger (1620) 2.  The right of redemption of co-owners is superior to the right of adjoining owners. Art. Sale of an heir of his hereditary rights to a stranger (1088) 3. Sale of adjacent rural land not exceeding one hectare (1621) 5. A right of redemption in cases of extra-judicial foreclosures 4. the one who first requested. *Speculation—means buying or selling with expectation of profiting by a rise and fall in price. 1623—Period of Legal Pre-emption or Redemption. action assigned and (3) consideration . If both have same area. Right of Redemption —the right of an adjacent owner to redeem the property after the sale had been perfected and consummated. having bought merely for speculation and is about to resold.  The deed of sale executed by the vendor is not registered if not accompanied by an affidavit that he has given the required written notice.SALES 28 If two or more adjoining owners desire to exercise the right of redemption at the same time. Redemption of homesteads 3. Redemption in tax sales 2. When a credit or other incorporeal right in litigation is sold (1634) Instances of Legal Redemption under special laws (THEJA) 1. Nature of Assignment of Credits and other incorporeal rights: Has all the elements of a contract of sale: (1) consent (2) Object which is the credit. Rights recognized by Article 1622. Art.

Action may be maintained by the assignee based on his title even if there is no consideration. In good faith: Assignor shall pay (a) consideration of price which he received from the assignee. Distinction between Dation in Payment and Assignment of Credits Basis Dation in Payment Assignment of Credits Nature It is an alienation of property of The alienation of credits or a debtor in satisfaction of a rights. The existence of the credit at the time of the assignment 2. such as guaranty. 1628 What the Assignor of the Credit Warrants? (ELS) 1. incorporeal rights or rights of action Manner of Delivery of Object It need not be through public It must be through a public instrument instrument (1625) Subject obligated The whole world A definite third person Ownership when transferred Transfer of ownership need Ownership is transferred upon not be upon delivery of the delivery of the documents thing. In bad faith: Same liabilities as in above but with damages Art. incorporeal rights or rights of action Effect Obligation is extinguished Obligation is not extinguished  Consent of debtor is not necessary for the assignment. if expressly stipulated or if the insolvency of the debtor was prior to the sale and of common knowledge Scope of Liability in case of breach of warranty 1. The solvency of the debtor. The parties may agree evidencing the credit or that ownership be transferred incorporeal rights only after full payment (1478) Consideration It is always a requisite It is not always a requisite. he is not sure of the validity of his acquisition of the thing sold which fact he has disclosed to the assignee 3. (b) expenses of the contract (c) other legitimate expenses occasioned by the assignment 2. The legality of the credit unless he sold the thing as “doubtful”. One year from the date of the assignment of the credit if the period of payment of the credit has already expired . mortgage. Distinction between Contract of Sale and Assignment of Credits Basis Contract of Sale Assignment of Credits Object Property Credit. pledge or preference (1627) Art.SALES 29 which is the price paid for the assignment. or liberality of the assignor if the assignment is gratuitous. need not be in debt in money satisfaction of debtor’s debt Object Determinate property Credits. He is therefore released from the obligation if he pays the creditor before having knowledge of the assignment (1626)  Scope of Assignment: All accessory rights. meaning. 1629 Duration of the Liability of the Assignor in Good Faith (in case there is no agreement) 1.

One year after maturity of the credit if the period of payment has not yet expired 30 Art. . Art. rents or products but not the various parts of which the whole is composed of. Interest on the said price from the time the day it was paid c. The price paid for the credit or right b. He warrants the fact of his heirship in the estate of the decedent. then he is liable for the breach of warranty. 1632—If vendor profited from the fruits or received anything from the inheritance sold he must restore it by paying the vendee. where there is intentional relinquishment of a known right with knowledge of its existence and intention to relinquish it in favor of other persons who are co-heirs in the succession Lump-Sum Purchase of the whole of certain rights. Judicial costs incurred by the assignee  When is credit or right in litigation? From the time the complaint concerning the same is answered. If it turns out that he is not an heir. 1630 Sale of Inheritance (Hereditary Rights) without specification of things.  Exception: If the vendee is evicted from the whole or the part of the greater value (more than half) of the credits in which case warranty stays. 1633—Charges and debts on the estate paid by the vendor must be reimbursed by the vendee. (1634)  debtor is given the right to extinguish the obligation by reimbursing the assignee: (PIJ) a. The possessor of a tenement or piece of land which is subject to the right in litigation assigned.  Prescriptive Period: 30 days from the date the assignee demands payment from debtor Exceptions to the Right of Extinguishment by the debtor (1635)  Assignments or sales made to: (CCP) a. Sale of Hereditary Rights—presumes the existence of a contract or deed of sale between the parties Waiver of Hereditary Rights—a mode of extinction of ownership.SALES 2. --Seller shall only be answerable for his character as an heir. unless there is a contrary stipulation. A co-heir or co-owner of the right assigned b. Art. rents or products (1631)  Vendor warrants the legitimacy of the whole of the rights. Assignment of Credit or right in Litigation. unless there is a contrary stipulation. A creditor in payment of his credit c.

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