Article 1504.
Exceptions to the Rule:
Res Perit Domino
“The owner bears the loss”
• Before delivery, seller bears the loss because he
is still the owner of the thing until there is an
actual or constructive delivery.
• If delivery has been made, whether actual or
constructive, it is the buyer who bears the loss.
Exception to the rule:
Sub-section 1: When the delivery of the goods has been
made to the buyer or to the bailee for the buyer, and the
ownership of the goods has been retained by the seller,
for purposes of securing performances of the buyer of
his obligations under the contract, the buyer shall bear
the loss notwithstanding the fact that the ownership has
been retained by the seller.
Subsection 2: If the actual delivery has been delayed
determine who the party at fault is. If the seller is at
fault, he shall bear the loss. If the Buyer is at fault, he
shall bear the loss.
Article 1505.
nemo dat quod non habet
“no one gives what he does not have”
• If something is sold by someone who is not the
owner of the thing or someone who has no
authority or without consent of the owner, or is
an agent but lacks the authority, such sale is
void.
• The buyer acquires no better title than the seller
had.
• If the seller is not the owner of the thing or has
no authority to sell, and he sold the same,
therefore, the buyer acquires the same rights as
the seller had.
• One cannot succeed more than right of the
seller.
FAJARDO, RACHEL MAE R. | LAW ON SALES ART. 1504 – ART. 1522
1. When the owner of the thing is precluded from
denying the authority of the seller to dispose the
goods. Estoppel
Example: A is an agent of the owner to collect
the proceeds the rentals, but however, as an
agent, he sold the car of the principal. And here
comes the buyer B who wants to secure the
lawfulness and authenticity of the sale. A called
the owner and the owner said “I authorize you”,
even though the truth and in fact there is no
authority given, the owner is now precluded
from denying the authority of the seller to
dispose the thing.
2. In cases of enabling laws, allowing the apparent
owner to dispose the thing as if he were the true
owner thereof.
3. Purchases made under the authority of statutory
power of sale, or under the authority of
competent court jurisdiction.
Example of sale made under the authority of
statutory power of sale: The Law provides for
the sale of the thing even though the seller has
no authority to dispose the same, the sale is
considered valid.
A, a wealthy person who is alone in his life has
several estates. On the time of his death, he has
no heirs, so, the state acquired his properties by
means of an escheat proceeding. To secure the
proceeds of the property, the state sold the
properties in the in a public auction. After the
sale, the illegitimate son of A showed up.
Therefore, the illegitimate son is entitled to all
the properties of A. But since all the properties
has been sold in a public auction, the only
remedy that A’s illegitimate son has is to
demand from the government the return of the
proceeds of the sale of his father’s property. He
cannot nullify the sale because as provided by
art. 1505, the sale is already valid.
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 Example of sale made under the authority of
competent court jurisdiction: A tax payer was
not able to pay taxes so a car which was in his
possession was taken away from him by the
government and was sold in an auction by and
auctioneer. The auctioneer later on found out
that the car did not belong to the tax payer. The
only remedy of the true owner of the car is to go
after the taxpayer and not the auctioneer. The
sale is considered valid.
• In an auction sale, the government does not
make any warranty.
4. Purchases made in a merchant's store, or in
fairs, or markets, in accordance with the Code of
Commerce and special laws.
Example: You bought and item in SM and went
to another branch of SM because you were
looking for something. You accidentally left the
item you bought from the first SM and it was
displayed by the staff and sold by the
management to a third person. The sale
between them is considered valid and the only
remedy you have is to run after SM. You cannot
recover the thing from the third person.
• Article 559 - The possession of movable
property acquired in good faith is equivalent
to a title. Nevertheless, one who has lost any
movable or has been unlawfully deprived
thereof may recover it from the person in
possession of the same even without
reimbursement.
Article 1506.
“If the seller has a voidable title and at the time of the
sale, it is not avoided, the buyer acquires a better
right/title”
Exemption to nemo dat quod non habet
Example: A wants to enter into a contract of sale with B,
but B does not want to, so A executed violence to
FAJARDO, RACHEL MAE R. | LAW ON SALES ART. 1504 – ART. 1522
acquire the consent of B. The title of A to the property is
voidable. A then sells the property to a third person and
at the time of the sale, A’s title is not avoided, the buyer
acquires a better right to the subject matter of the sale if
in case:
1. He purchases it in good faith and for value; and
2. Without notice that the seller’s title is defective.
How to determine if a person is a purchaser in good faith
and for value:
1. He purchases the thing without knowledge that
a third person is having an interest or right to
the property; and
2. He pays the same in full value before the
acquisition of the knowledge.
Article 1521.
1st Paragraph: Place of delivery.
• Whether it is for the buyer to take possession
of the thing, or for the seller to forward them,
it is dependent upon the agreement of the
parties.
• As to the place of delivery, first, follow the
agreement between parties.
• If there is no agreement, determine and follow
the usage of trade.
• If the usage of trade cannot be determined,
the place of delivery is the seller’s place of
business.
• If the seller has no place of business, the place
of delivery is his residence.
• If the object of the contract is a specific good,
which to the knowledge of the parties when
the contract or the sale was made were in
some other place, then that place is the place
of delivery.
2nd Paragraph: Time and date of delivery
• As to the time of delivery, first, follow the
agreement between parties.
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 • If there is no agreement, delivery must be
made within a reasonable time. What is
reasonable is always a question of fact
3rd Paragraph: If at the time of the sale the goods are in
the possession of a third person, the seller’s obligation
to deliver has not yet been fulfilled unless the third
person acknowledges the goods on the behalf of the
buyer.
4th Paragraph: demand must be made within reasonable
time. If incase demand is not made within a reasonable
time the demand is considered ineffectual.
th
5 Paragraph: Expenses of putting the goods in a
deliverable state shall be borne by the seller unless
otherwise agreed upon.
3. Accept all goods delivered – buyer has to
pay the contract price.
3rd Paragraph: Mixed Delivery
• Mixed Delivery means that the goods delivered
are mixed with some other goods.
Option of the Buyer:
1. Accept the goods contracted and reject the
rest – this option is only available if the
goods are divisible.
2. Accept all goods delivered
The above provisions are subject to special agreement, usage
of trade, or any course dealing with the parties

Article 1522.

1st Paragraph: Lesser Delivery

• Lesser delivery means that the seller delivers

goods less than what has been contracted upon
by the parties.
Options of the buyer:
1. Reject the goods – buyer has no liability
2. Accept the goods delivered –
a. With the knowledge that the seller can
no longer deliver the remaining goods –
buyer has to pay the contract price.
b. Without the knowledge that the seller
can no longer deliver the remaining
goods – buyer has to pay the fair price
or reasonable market value.

2nd Paragraph: Larger Delivery

• Larger delivery means that the seller delivers

more than what has been contracted for.
Options of the buyer:
1. Reject the goods – one cannot burden the
buyer of the segregation of the goods
delivered.
2. Accept the reject the rest – buyer has the
burden of segregating the goods.

FAJARDO, RACHEL MAE R. | LAW ON SALES ART. 1504 – ART. 1522 3