LAW ON SALES – Notes 5

Ref. book: Law on Sales, by Hector De Leon.

CHAPTER 4 - OBLIGATIONS OF THE VENDOR

SECTION 1. — General Provisions

ART. 1495. The vendor is bound to transfer the ownership of and deliver, as
well as warrant the thing which is the object of the sale.

Principal obligations of the vendor.

The principal obligations of a vendor are:
(1) to transfer the ownership of the determinate thing sold;
(2) to deliver the thing, with its accessions and accessories, if any, in the condition in which
they were upon the perfection of the contract (Art. 1537.);
(3) to warrant against eviction and against hidden defects (Arts. 1495, 1547.);
(4) to take care of the thing, pending delivery, with proper diligence (see Art. 1163.); and
(5) to pay for the expenses of the deed of sale, unless there is a stipulation to the contrary.
(Art. 1487.)

ART. 1496. The ownership of the thing sold is acquired by the vendee from the
moment it is delivered to him in any of the ways specified in articles 1497 to 1501,
or in any other manner signifying an agreement that the possession is transferred
from the vendor to the vendee.

Ways of effecting delivery.

The ownership of the thing sold shall be transferred to the vendee upon the delivery thereof
(see Art. 1477.) which may be effected in any of the following ways or modes:
(1) by actual or real delivery (Art. 1497.);
(2) by constructive or legal delivery (Arts. 14981501.); or
(3) by delivery in any other manner signifying an agreement that the possession is
transferred to the vendee. (Arts. 14961499.)

Ways of effecting constructive delivery.

(a) by the execution of a public instrument (Art.1498, par. 1.);
(b) by symbolical tradition or traditio symbolica
(c) by traditio longa manu (Art. 1499.);
(d) by traditio brevi manu
(e) by traditio constitutum possessorium (Art. 1500.); or
(f) by quasi-delivery or quasi-traditio. (Art. 1501.)

SECTION 2. — Delivery of the Thing Sold

 ART. 1497. The thing sold shall be understood as delivered, when it is placed in
the control and possession of the vendee.

Concept of tradition or delivery.

Tradition is a derivative mode of acquiring ownership by virtue of which one who has the
right and intention to alienate a corporeal thing, transmits it by virtue of a just title to one who
accepts the same.

Importance of tradition.

Delivery of the thing, together with the payment of the price, marks the consummation of
the contract of sale. Delivery is necessary to enable the vendee to enjoy and make use of the
property purchased. It is only after the delivery, actual or constructive, that a vendee acquires a
real right over it.

Actual delivery of thing sold.

There is actual delivery when the thing sold is placed in the control and possession of the
vendee. This involves the physical delivery of the thing and is usually done by the passing of a
movable thing from hand to hand.

ART. 1498. When the sale is made through a public instrument, the execution
thereof shall be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot clearly be
inferred.
With regard to movable property, its delivery may also be made by the delivery
of the keys of the place or depository where it is stored or kept.

Execution of a public instrument or document.

A public instrument is one which is acknowledged before a notary public or any official
authorized to administer oath, by the person who executed the same. The party making the
acknowledgement formally declares that the instrument is his free act and deed while the officer
taking the same attests and certifies that such party is known to him and that he is the same
person who executed the instrument and acknowledged that the instrument is his free act and
deed.

Symbolic tradition
Constructive delivery is symbolic when to effect the delivery, the parties make use of a
token symbol to represent the thing delivered. The delivery of the key where the thing sold is
stored or kept is equivalent to the delivery of the thing (par. 2.) because the key represents the
thing. Similarly, there is symbolic delivery of goods to vendee upon delivery to him of delivery
orders which would authorize him to withdraw the goods from a warehouse. Upon withdrawal,
there is actual delivery (supra.) which consummates the sale.

ART. 1499. The delivery of movable property may likewise be made by the mere
consent or agreement of the contracting parties, if the thing sold cannot be
transferred to the possession of the vendee at the time of the sale, or if the latter
already had it in his possession for any other reason.

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Traditio longa manu.

The first part of Article 1499 refers to traditio longa manu. This mode of delivery takes
place by the mere consent or agreement of the contracting parties as when the vendor merely
points to the thing sold which shall thereafter be at the control and disposal of the vendee.

Traditio brevi manu.

This mode of legal delivery happens when the vendee has already the possession of the
thing sold by virtue of another title as when the lessor sells the thing leased to the lessee.
Instead of turning over the thing to the vendor so that the latter may, in turn, deliver it, all these
are considered done by action of law.

ART. 1500. There may also be tradition constitutum possessorium.

Traditio constitutum possessorium.

This mode of delivery is the opposite of traditio brevi manu. It takes place when the vendor
continues in possession of the property sold not as owner but in some other capacity, as for
example, when the vendor stays as a tenant of the vendee. In this case, instead of the vendor
delivering the thing to the vendee so that the latter may, in turn, deliver it back to the vendor, the
law considers that all these have taken place by mere consent or agreement of the parties.

ART. 1501. With respect to incorporeal property, the provisions of the first
paragraph of article 1498 shall govern. In any other case wherein said provisions are
not applicable, the placing of the titles of ownership in the possession of the vendee
or the use by the vendee of his rights, with the vendor’s consent, shall be
understood as a delivery.

Quasi-traditio.
Tradition can only be made with respect to corporeal things. In the case of incorporeal
things, delivery is effected:
(1) by the execution of a public instrument; or
(2) when that mode of delivery is not applicable, by the placing of the titles of ownership in
the possession of the vendee; or
(3) by allowing the vendee to use his rights as new owner with the consent of the vendor.

ART. 1502. When goods are delivered to the buyer “on sale or return” to
give the buyer an option to return the goods instead of paying the price, the
ownership passes to the buyer on delivery, but he may revest the
ownership in the seller by returning or tendering the goods within the time
fixed in the contract, or, if no time has been fixed, within a reasonable time.

When goods are delivered to the buyer on approval or on trial or on

satisfaction, or other similar terms, the ownership therein passes to the
buyer.
(1) When he signifies his approval or acceptance to the seller or does
any other act adopting the transaction;
 (2) If he does not signify his approval or acceptance to the seller, but
retains the goods without giving notice of rejection, then if a time has been
fixed for the return of the goods, on the expiration of such time, and, if no
time has been fixed, on the expiration of a reasonable time. What is a
reasonable time is a question of fact.

Contract of sale or return, and of sale on trial or approval or satisfaction.

1. Sale or return. — It is a contract by which property is sold but the buyer, who
becomes the owner of the property on delivery, has the option to return the same to
the seller instead of paying the price.
2. Sale on trial or approval. — It is a contract in the nature of an option to purchase if
the goods prove satisfactory, the approval of the buyer being a condition precedent.

“Sale or return” distinguished from sale on trial.

(1) “Sale or return” is a sale subject to a resolutory condition, while sale on trial is
subject to a suspensive condition;
(2) “Sale or return” depends entirely on the will of the buyer, while sale on trial
depends on the character or quality of the goods;
(3) In “sale or return,” the risk of loss or injury rests upon the buyer, while in sale on
trial, the risk still remains with the seller.

ART. 1503. Where there is a contract of sale of specific goods, the seller may, by
the terms of the contract, reserve the right of possession or ownership in the goods
until certain conditions have been fulfilled. The right of possession or ownership may
be thus reserved notwithstanding the delivery of the goods to the buyer or to a carrier
or other bailee for the purpose of transmission to the buyer.
Where goods are shipped, and by the bill of lading the goods are deliverable to the
seller or his agent, or to the order of the seller or of his agent, the seller thereby
reserves the ownership in the goods. But if, except for the form of the bill of lading,
the ownership would have passed to the buyer on shipment of the goods, the seller’s
property in the goods shall be deemed to be only for the purpose of securing
performance by the buyer of his obligations under the contract.
Where goods are shipped, and by the bill of lading the goods are deliverable to the
order of the buyer or of his agent, but possession of the bill of lading is retained by
the seller or his agent, the seller thereby reserves a right to the possession of the
goods as against the buyer.
Where the seller of goods draws on the buyer for the price and transmits the bill of
exchange and bill of lading together to the buyer to secure acceptance or payment of the bill
of exchange, the buyer is bound to return the bill of lading if he does not honor the bill of
exchange, and if he wrongfully retains the bill of lading he acquires no added right thereby. If,
however, the bill of lading provides that the goods are deliverable to the buyer or to the order
of the buyer, or is indorsed in blank, or to the buyer by the consignee named therein, on who
purchases in good faith, for value, the bill of lading, or goods from the buyer will obtain the
ownership in the goods, although the bill of exchange has not been honored, provided that
such purchaser has received delivery of the bill of lading indorsed by the consignee named
therein, or of the goods, without notice of the facts making the transfer wrongful.
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