F.A.S.
– Free Along Side – The seller pays all charges
ARTICLE 1523
NOTA BENE: THIS PROVISION APPLIES ONLY IF
THERE IS AN AGREEMENT THAT THE SELLER WILL
SHIP THE GOODS
GEN’L RULE: Delivery to the carrier constitutes delivery
to the buyer, whether the carrier was named by the
buyer or not.
EXCEPTIONS:
1) The contrary appears (parties did not intend delivery
to carrier is delivery to buyer)
2) 1st, 2nd & 3rd pars of 1503
DUTIES OF SELLER AFTER DELIVERY TO
CARRIER:
1) Enter into contract w/ the carrier on behalf of the
buyer.
- Failure to do so:
A) Buyer may DECLINE to treat delivery to
carrier as delivery to him; OR
B) the buyer may hold seller responsible for
DAMAGES
2) To give notice to the buyer regarding necessity to
insure the goods
- Failure to do so: RISK borne by the seller
PROVIDED the buyer is unaware of the need to
insure such goods. If the buyer is aware of the need
to insure, seller may not be held responsible.
C.O.D. – Collect of Delivery – Carrier collects the
purchase price.
F.O.B. – Free on Board – where ever the FOB pertains
to, the buyer shall not pay for the expenses of delivery
up to that place of designation.
Ex. FOB-Manila. Buyer’s place of business is in
Bulacan. The goods will be coming from Cebu
(seller’s place of business). The expenses for shipping
the goods from Cebu to Manila will be borne by the
seller. The expenses for shipping the goods from
Manila to Bulacan shall be borne by the buyer. “Free”
yung expenses from Cebu to Manila.
C.I.F. – Cost, Insurance & Freight – Signifies that
the price fixed covers also expenses of freight &
insurance. IOW, the seller pays for the insurance &
shipping expenses.
& is subject to risk until the goods are placed alongside
the vessel. (Mem-Aid 2012)
Ex factory, Ex warehouse, etc. (named point of
origin)
Ex Dock (named pot of importation)
ARTICLE 1524
GEN’L RULE: The obligation to deliver arises from the
moment the contract is perfected. The buyer may, from
that moment, demand delivery. The seller, reciprocally,
may demand payment. Hence, the thing shall not be
delivered unless the price be paid.
EXCEPTION: The thing shall be delivered but the price
shall not be paid first, if the time of payment has been
fixed to be paid at a latter date. (in such cases, the
seller is considered to have sold on credit)
EXCEPTION TO THE EXCEPTION: Vendee has lost
the right to make use of the period of payment. Art.
1536 (Period of payment is at a latter date but the
seller is not bound to make delivery)
ARTICLE 1525
Unpaid seller is one who has not been paid the whole
amount of the price or one who received a negotiable
instrument and it has been dishonored, buyer is
insolvent, or otherwise.
WHERE WHOLE OF PRICE HAS NOT BEEN PAID:
1) Tender of payment by buyer – such as checks
(juan tamad). Seller’s lien is destroyed.
2) Payment of part of price – payment of price does
NOT destroy a seller’s lien. The seller remains an unpaid
seller even if title has passed to the buyer.
3) Payment by negotiable instrument – OBLICON
(Art. 1249)
Art. 1249. Par. 2. The delivery of promissory notes
payable to order, or bills of exchange, or other
mercantile documents shall produce the effect of
payment only when they have been cashed x x x
Note consignation. 1256. If the creditor to
whom tender of payment has been made refuses
w/o just cause to accept it, the debtor shall be
 released from responsibility by the consignation of
the thing or sum due.
UNPAID SELLER includes:
1) Agent of the seller;
2) Consignor or agent who has himself paid or is directly
responsible for the price; or
3) Any Other person in the position of the seller.
ARTICLE 1526
Rights of the Unpaid Seller
1) Right to lien of goods or the rights to retain them for
the price while he is in possession of them
2) Right of stoppage in transit
3) Right of resale
4) Right to rescind the sale
ARTICLE 1527
RIGHT TO LIEN
Right to retain possession of goods until payment or
tender of the whole price, or unless he agrees to
sell on credit
A) When available:
1.) Goods sold without stipulation as to credit
2.) Goods are sold on credit, but credit term has expired
3.) Buyer becomes insolvent
CREDIT SALE – whereby the seller binds himself to
give the goods to the buyer w/o receiving at that
time payment for them.
Stipulation as to credit – means that a period of
payment price has been fixed in the contract. In
the absence of this stipulation, the seller is entitled
to the payment of the price at the same time that
he transfers the possession of the goods.
Accordingly, the seller always has a lien upon the
goods until payment or tender of the entire price.
INSOLVENT – is a person who either ceased to pay his
debts in the ordinary course of business or cannot
pay his debts as they become due. (w or w/o
insolvency proceedings)
Insolvency does not dissolve the bargain, it merely
revives the seller’s lien.
Note: Notwithstanding transfer of ownership,
possessory lien may still be exercised as long as the
goods are in the possession of the seller.
ARTICLE 1528
B) Lien on Partial Delivery:
When unpaid seller made partial delivery of the
goods, he may exercise his lien on the remainder, unless
such part delivery shows an intent to waive the lien or
right of retention.
GEN RULE: Lien NOT lost by partial delivery. When part
of the goods are delivered, the unpaid seller has a lien
upon the remainder for the proportion of the price w/c is
due on account of the goods so retained.
EXCEPT: Art 1529 (3) Delivery of the part intended as
symbolical delivery of the whole, w/c is considered a
waiver of any right of retention as to the remainder &
therefore the lien is lost.
ARTICLE 1529
C) When lien is lost:
1.) Delivers the goods to a carrier or other bailee for
the purpose of transmission to the buyer without
reserving the ownership in the goods or the right of
possession thereof;
2.) Buyer or his agent lawfully obtains possession of the
goods;
3.) By waiver thereof
LOSS OF LIEN (Tolentino)
The lien of the seller depends upon either
possession OR control of the property on w/c the lien is
claimed, & if the seller permits the property to go into
actual possession of the buyer, such LIEN IS LOST,
although he delivers on the faith of a chattel mortgage
w/c turn out to be invalid, or draft given in payment was
dishonored. If however, the seller has been induced to
part w/ possession by fraud, the lien of the seller is NOT
LOST.
REVIVAL OF LIEN AFTER DELIVERY
1) If the buyer refuses to receive the goods after they
have been delivered to a carrier on his behalf, though
the seller has parted w/ both ownership & possession
may reclaim the goods & revest himself w/ his lien (see
Art 1531 par.2)
2) If the buyer returns the goods in wrongful repudiation
of the sale, the lien is revived
ARTICLE 1530
RIGHT OF STOPPAGE IN TRANSITU
An extension of the lien for the price; entitles
unpaid seller to resume possession of the goods
while they are in transit before the goods come in
possession of the vendee
A) When available:
1.) Buyer must be insolvent;
2.) Seller must be unpaid
3.) Goods are in transit
4.) Seller must actually take possession of the goods
sold or give notice of his claim to the carrier or
other person in possession.
5.) Seller must surrender the document of title, if any,
issues by the carrier or bailee;
6.) Seller must bear the expenses of delivery after the
exercise of the right
 Notice must be given either to the person in actual
possession of the goods or to his principal
 When notice is given to the carrier or other bailee in
possession of the goods, he must deliver the goods
according to the directions of the seller
(NOTE: expenses must be borne by the seller)
EXCEPTION: a negotiable document of title
representing the goods has been issued (in w/c
case the carrier or bailee is not obliged to redeliver
the goods unless the seller surrendered the
document for cancellation)
ARTICLE 1531
B) When goods are considered in transit:
1.) After delivery to carrier or other bailee and before
the buyer or his agent takes delivery of them;
2.) Goods are rejected by buyer, and carrier or bailee
continues to be in possession of them, even if seller
refused to received them back.
C) When goods are no longer in transit:
1.) After delivery to the buyer or his agent in that
behalf;
2.) Buyer obtains delivery of the goods before arrival at
the appointed destination
3.) Carrier or bailee acknowledges to hold the goods on
behalf of the buyer
4.) Carrier or other bailee wrongfully refuses to deliver
the goods to the buyer or his agent.
 If the carrier is owned by the buyer, carrier is
considered an agent for the buyer. Therefore,
delivery to carrier = delivery to buyer
 Taking of goods in transit by an unauthorized agent
of the buyer DOES NOT extinguish the right of
stoppage n transitu (Paras)
 In case of misdelivery, the goods are still
considered in transit, hence, the seller may still
exercise said right pursuant to Art 1523, w/c
provides that an unpaid seller may exercise his right
of stoppage in transitu by giving notice of his claim
to the carrier or other bailee in whose possession
the goods are.
ATTORN – to agree to be tenant to a new owner of the
same property
ARTICLE 1532
How to exercise:
1.) By obtaining actual possession of the goods.
2.) By giving notice of his claim to the carrier or bailee.
Such notice may be given in to the person in actual
possession or to his principal. But if given to the
principal, it must be given at such time and under
 such circumstances to be effectual so the principal
can prevent delivery.
ARTICLE 1533
RIGHT OF RESALE
A) When available:
1.) Seller has the right to lien or stoppage in transitu.
2.) Under the following cases:
a. Goods are perishable by nature
b. Right to resell is expressly reserved
c. Buyer delays in payment for an unreasonable time
B) Effects of resale
1.) Seller is not liable to the buyer for any profit
2.) If sells for less than the price, seller has right to sue
for the balance from buyer
3.) New buyer acquires good title as against the original
buyer
4.) Seller may recover damages from original buyer for
breach of contract
Purpose: For seller to liquidate his damages
 He must do so within a reasonable time and in
such manner as to obtain the best price
possible.
 Resale = fair sale if in accordance with
established business practices, with no attempt
to take advantage of the original buyer.
 Resale may be in a private or public sale, but
seller cannot buy indirectly or directly.
 For resale to be valid, buyer need not be notified
of an intention to resell or the time and place of
the resale.
When is notice essential?
Atty. Busmente: When the right of resale is exercised
under the condition of the buyer delaying payment for
an unreasonable time
De Leon: safe move is to always send notice.
 Art 1533 only applies id the title to goods has
already passed to the buyer. Otherwise, the goods
cannot be resold.
ILLUSTRATIVE CASE: Facts: S sold to B a tractor for
P12, 000 - - P5, 000 upon delivery & 7,000 w/in 60 days.
B failed to take delivery of the tractor & pay the
purchase price. S was forced to sell the tractor at a
lower price of P10, 000.
Issue: Is B liable for the difference of P2, 000?
Held: YES. In a contract of sale w/c is executory as to
both parties, the vendor is entitled to resell the goods if
the purchaser fails to take delivery & pay the purchase
price. If he is obliged to resell for lesser value, he holds
the buyer for the difference BUT if he sells for the same
or more than the contract price, the breach of contract
of the original buyer is DAMNUM ABSQUE INJURIA. (A
loss or damage w/o injury)
ARTICLE 1534
RIGHT TO RESCIND THE SALE
Return of the title over the undelivered goods to
the seller, and right to recover damages for breach of
contract
A) When available:
1.) Seller has the right to lien or stoppage in transitu
2.) Under either of the 2 situations:
a. Right to rescind is expressly reserved
b. When buyer delays in the payment of the price for
an unreasonable time.
B) Effects of rescission
1.) Seller resumes ownership of the goods
2.) Seller shall not be liable to the buyer upon the
contract
3.) Buyer may be held liable to the seller for damages
for any loss occasioned by the breach of contract
C) How seller may rescind:
 By notice to the buyer or by some overt act
showing an intention to rescind.
Communication to buyer of rescission is not always
necessary but giving/failure to give notice is relevant in
determining reasonableness of time given to the buyer
to make good his obligation under contract.
ARTICLE 1535
EFFECT OF SALE OF GOODS SUBJECT TO LIEN OR
STOPPAGE IN TRANSITU
1) Where goods are NOT covered by negotiable
doc of title - seller can give NO larger than what he
has. When goods are subject to a legal lien a purchaser
from the original buyer can acquire ONLY such rights as
the buyer then had.
2) Where goods are covered by negotiable doc of
title – the seller’s lien cannot prevail against rights of a
PURCHASER FOR VALUE IN GOOD FAITH to whom the
document has been indorsed.
 The rule protects a purchaser w/o notice after the
seller had stopped the goods either by virtue of right
of lien or stoppage in transitu.
ARTICLE 1536
RIGHT OF THE VENDOR TO HOLD DELIVERY IN
SALE ON CREDIT
GEN RULE: The vendor is NOT bound to make delivery
if the vendee has not paid the price.
EXCEPTION: If a period has been fixed for payment,
the vendor must deliver the thing sold THOUGH the
price is not yet paid. EXCEPTION TO THE EXCEPTION:
Vendor may not be compelled to make delivery, even if
vendee was given the benefit of period, in case the
vendee should lose the right to make use of the term
(Art 1198) & such vendee has NOT yet paid the price.
WHEN DOES A VENDEE LOSE EVERY RIGHT TO
MAKE USE OF PERIOD: (1198)
1) When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or
security for the price
2) When he does not furnish to the creditor/vendor the
guaranties or securities w/c he has promised
3) When by his own acts he has impaired said
guaranties or securities after their establishment, &
when thru a fortuitous event they disappear, unless he
immediately gives new ones equally satisfactory
4) When the debtor/vendee violates any undertaking, in
consideration of w/c the creditor agreed to the period.
5) When the debtor/vendee attempts to abscond
ARTICLE 1537
CONDITION OF THING TO BE DELIVERED
The THING sold & its ACCESSIONS &
ACCESSORIES must be in the condition in w/c they were
upon the perfection of the contract.
SELLER’S DUTY-
1) To preserve the thing pending delivery (relate to Arts.
1163 & 1164)
2) To deliver the thing sold in a condition suitable for its
enjoyment by the buyer for the purposes contemplated
Accessions – are the fruits of a thing; additions to,
or improvements upon, a thing such as the young
of animals, house or trees on a land, etc.
Accessories – are anything attached to a principal
thing for its completion, ornament, or better use
such as picture frame, key of a house, etc.
VENDEE IS ENTITLED TO THE FRUITS Art. 1164
 The vendee has a right to the fruits of the thing
sold from the time the obligation to deliver it
arises. Art. 1475
 The obligation to deliver arises upon the
perfection of the contract of sale
VENDEE IS NOT ENTITLED TO THE FRUITS
1. When the rule provided in Art 1537(2) is modified by
agreement of the parties, their agreement shall govern.
2. If the vendee rescinds the contract of sale instead of
exacting the fulfillment thereof, he is entitled only to
damages like interest, attorney’s fees & costs but he
may not also claim the fruits of the thing sold
3. In a contract of promise to sell, the vendee is not
entitled to the fruits.
 Thus, in Consing vs CA (1989) the Court ruled
that a subdivision lot seller should not shift to the
buyer the burden of providing access to & from the
subdivision. It is the seller’s duty to construct the
necessary roads in the subdivision that could serve
 as outlets. Proper access to the residence is
essential to its enjoyment
 1166. The obli to give a determinate thing
includes that of delivering all its accessions &
accessories, even though they may not have been
mentioned.
 Sale of the principal entitles the buyer to the
accessions & accessories, but sale of the
accessories & accessions does not entitle buyer to
the principal.
ARTICLE 1538
RULES IN CASE OF LOSS, DETERIORATION, OR
IMPROVEMENT OF THING BEFORE DELIVERY
(based on Art 1189)
1) If the thing is lost w/o the fault of the debtor, the
obligation shall be extinguished
2) If the thing is lost thru the fault of the debtor, he
shall be obliged to pay damages; it is understood that
the thing lost when it perishes, or goes out of
commerce, or disappears in such a way that its
existence is unknown or it cannot be recovered;
3) When the thing deteriorates w/o the fault of the
debtor, the impairment is to be borne by the creditor
4) If it deteriorates thru the fault of the debtor, the
creditor may choose for:
a. Rescission of obligation w/indemnity for damages,
OR
b. Fulfillment w/ indemnity for damages
5) If the thing is improved by its nature, or by time, the
improvement shall inure to the benefit of the creditor
6) If it is improved at the expense of the debtor, he shall
have no other right than that granted to the
usufructuary
Usufructuary – a person who has the right to the
benefits of another’s property (BLD – 9th Ed)
Usufruct - A right for a certain period to use and enjoy
the fruits of another's property without damaging or
diminishing it (BLD – 9th Ed)
- the right to enjoy benefits or profits from
something, as real prop, while not being the
owner of it.
ARTICLE 1539
SALE OF REAL PROP BY UNIT OF MEASURE OR
NUMBER
W/ Statement of area at the rate of a certain price for a
unit or measure or number. If the vendee should
demand, the vendor shall deliver ALL that may have
been stated in the contract.
If what is delivered is:
- LESS IN AREA OR INFERIOR or DIFFIRENT
QUALITY
Buyer may seek:
1. Rescission if lack in area is at least 1/10 of area
agreed upon
2. Rescission if the deficiency in quality specified in the
contract exceeds 1/10 of the price agreed upon.
3. Rescission if the vendee would not have bought the
immovable had he known of its smaller area or inferior
quality
4. Proportional reduction of price.
ARTICLE 1540
- GREATER IN AREA
1. Accept per stipulation & reject the rest
2. Accept the whole & pay the contract price
NOTE: ( ART. 1539,1540,1541)
 The rule is different where there is violation of
the warranty against hidden defect (Art 1571).
The vendor is also liable for damages --- Art
1567; 1191(2)
 Judicial sales of immovable lacking in area or of
inferior quality OR of greater quantity --- relate
to Art 1552 & 1570)
 ARTICLE 1542
Lump Sum Sale (A Cuerpo Cierto)
Sates the full purchase price based on the estimate or
where both area and boundaries are stated.
Boundaries Mentioning
The boundaries of the land is indispensable in every
conveyance of real estate. The vendor is bound to
deliver all that is included within the said boundaries.
The area of which, even if lesser or grater than what is
stipulated, is immaterial.
(Source:CPAT REVIEWER)
SALE OF REAL ESTATE MADE FOR A LUMP SUM - a
cuerpo cierto/por precio alzado
If the sale is made for lump sum, & not so much per unit
of measure or number, the cause of the contract is the
thing sold independent & irrespective of its number or
measure.
2 types of pricing agreement
1. Unit price contract – purchase price is determined
by way of reference to a stated rate per unit
2. Lump sum contract – states a full purchase price
for an immovable the area of w/c may be declared
based on estimate or where both the area & boundaries
are stated. Example: P1M for 1,000 square meters.
Sale of real estate made for a lump sum
1) Mistake of area stated in contract immaterial
 The vendor is obligated to deliver all the land
included w/in the boundaries, regardless
whether the real estate should be greater or
smaller than they recited in the deed
(Balantakbo vs CA)
 The boundaries of the land stated in the contract
determine the effects & scope of the sale, NOT
the area thereof (Semira vs CA)
2) Where area or number stated together w/
boundaries – (De Leon p.274-276)
 If vendor cannot deliver to vendee all that is
stated in the contract, the vendee has the
option:
a. To reduce the price in proportion to the
deficiency OR
b. To set aside the contract
 Phrase “should not be able to do so” - Refers to a
situation when the vendor cannot deliver all that
is included w/in the boundaries b/c a part or
parcel of the real estate does not belong to him.
3) Where there is conflict b/w area stipulated &
title to property – (p.276) Area included w/in the
stipulated boundaries prevails over that w/c the title
shows when the boundaries are certain & no alterations
thereof has been proven.
4) Where identity of erroneously designated
property clearly established – (p.277) the mistake in
designating the property in the deed of sale does NOT
vitiate consent of the parties or affect the validity &
binding effect of the contract Remedy: have the
document reformed
5) Where words “about” , “more or less” , etc. Are
used – (p. 277-278) Words when used in connection w/
quantity or distance are intended to cover some slight or
unimportant inaccuracy. They do NOT weaken or
destroy the statements of distance & quantity when no
other guides are furnished.
CONFLICT B/W AREA STATED & BOUNDARIES
RULE: Natural boundaries will prevail over area.
Boundaries prevail b/c what really defines a
piece of ground is NOT the area BUT the boundaries.
Erroneous statement regarding area can be
disregarded—
1) Where boundaries given are sufficiently
certain, or
2) Where discrepancy in measurement is so
great, provided, the natural boundaries are very clear &
convincing
EXCEPTION: Area stated in the contract should be
followed.
1) Where boundaries do not identify land or
2) overlapping of boundaries exists
When 2 or more real estates are sold for a single price,
the rule is the same as when the real estate is sold for a
lump sum. There shall be no increase or decrease in the
area actually delivered & the area stated in the contract
(Beda MemAid)
Where price per unit is not indicated---
GREATER/LESSER - No rescission or adjustment of
price, UNLESS there is gross mistake.

ARTICLE 1543

Prescription of Action

The action for either recission of the or reduction of the

price must be brought 6 months from the day of
delivery.

ARTICLE 1544

Requisites of Double Sale

1. Two or more valid contract of sale;

2. Two or more buyers ;
3. They must pertain exactly to the same object; and
4. They must be bought from the same seller.

Rules of Preference

1.) Double Sale of Movables - who first takes

possession in good faith
2.) Double Sale of Real Property
a. First registrant in good faith in Registry of Property
b. First possessor in good faith
c. Person with oldest title in good faith

NOTE:
a. “Oldest Title” – any public document showing
acquisition of the land in good faith. To constitute “title,”
the transmission of ownership must appear in a public
document [Art. 1358 (1)]
b. Examples: Deed of Sale, Deed of Donation, Deed of
Trust

The requirement of the law then is two-fold: acquisition

in good faith and registration in good faith. Good faith
must concur with the registration. If it would be shown
that a buyer was in bad faith, the alleged registration
they have made amounted to no registration at all.