Notes on Sales
OBLIGATIONS OF THE VENDEE but to stop its operation in order to eliminate
Art. 1582. The vendee is bound to accept delivery and
to pay the price of the thing sold at the time and place
stipulated in the contract.
If the time and place should not have been stipulated,
the payments must be made at the time and place of the
delivery of the thing sold.
Obligations of the Vendee
The buyers must:
(1) Accept delivery
(2) Pay the price
 Tender of payment ought to be made in legal tender
(not a check), unless another mode is accepted by
the creditor (Soco v. Judge Militante GR 58961, Jan.
28, 1983).
(3) If stipulated, bear the expenses for the execution and
registration of the sale and putting the goods in
deliverable state
Pertinent Rules
1. Contract of sale: vendor is NOT required to deliver
the thing until price is paid NOR vendee to pay price
before thing is delivered in the absence of an agreement
The moment one of the party performs his obligation,
the other must comply or he will be guilty of delay
2. With Stipulation: vendee is bound to accept and pay at
the time and place stipulated
3. No stipulation of time and place of payment and
delivery: vendee is bound to pay at the time and place of
delivery
4. No stipulation of place of delivery: wherever the thing
may be at the moment the contract was perfected
5. Only time was fixed in the contract: vendee is
required to pay even before the thing is delivered to him
if sale is on credit, buyer is entitled to the delivery even
though price was not yet paid
Liability of vendee for obligations of company bought
out
(1) Obligation not of considerable amount or value. - In
some cases, when one company buys out another and
continues the business of the latter company, the buyer
may be said to assume the obligations of the company
bought out when said obligations are not of considerable
amount or value, especially when incurred in the
ordinary course of trade and when the business of the
latter company is continued.
(2) Obligation of considerable amount or value. - When
said obligations are of extraordinary value and the
company was brought out not to continue its business
competition, it cannot be said that the vendee assumed
all the obligations of the rival company.
Art. 1583. Unless otherwise agreed, the buyer of goods
is not bound to accept delivery thereof by installments.
Where there is a contract of sale of goods to be
delivered by stated installments, which are to be
separately paid for, and the seller makes defective
deliveries in respect of one or more installments, or the
buyer neglects or refuses without just cause to take
delivery of or pay for one or more installments, it
depends to each case on the terms of the contract and
the circumstances of the case, whether the breach of
contract is so material as to justify the injured party in
refusing to proceed further and suing for damages for
breach of the entire contract, or whether the breach is
severable, giving rise to a claim for compensation but
not to a right to treat the whole contract as broken.
General Rule
1. Buyer is NOT bound to accept delivery in instalments
2. He is entitled to the delivery of ALL the goods at the
same time
3. Buyer has NO right to pay the price in instalments or
make partial payments (by agreement: goods may be
deliverable by instalments/ price payable in instalments)
Rule governing Delivery in Installments
1. Separate price has been fixed for each installments -
It depends on the terms of contract and circumstances of
the case whether breach is severable or not
(a) Breach affects WHOLE contract - Seller makes
defective deliveries/ buyer wrongfully neglects/ refuses
to accept deliver/ fails to pay any installment: injured
party may sue for breach of entire contract if breach is so
material as to affect the contract as a whole
(b) Breach Divisible/ Severable - Merely give rise to a
claim for compensation for particular breach, but not a
right to treat the whole contract as broken
2. Separate price was NOT fixed for each installment
(single price was agreed for all installments)
(a) Seller fails to deliver an installment/ buyer fails to
pay purchase within the period agreed upon: choose
between fulfillment & rescission and damages
(b) Remedy of Rescission is NOT available for slight/
casual breaches of contract. Question on whether breach
is substantial depends upon attendant circumstances.
Art. 1584. Where goods are delivered to the buyer,
which he has not previously examined, he is not
deemed to have accepted them unless and until he

has had a reasonable opportunity of examining them
for the purpose of ascertaining whether they are in
conformity with the contract if there is no stipulation
to the contrary.
Unless otherwise agreed, when the seller tenders
delivery of goods to the buyer, he is bound, on
request, to afford the buyer a reasonable opportunity
of examining the goods for the purpose of
ascertaining whether they are in conformity with the
contract.
Where goods are delivered to a carrier by the seller,
in accordance with an order from or agreement with
the buyer, upon the terms that the goods shall not be
delivered by the carrier to the buyer until he has paid
the price, whether such terms are indicated by
marking the goods with the words “collect on
delivery,” or otherwise, the buyer is not entitled to
examine the goods before the payment of the price, in
the absence of agreement or usage of trade
permitting such examination.
Buyer’s Right to examine the goods
*Acceptance: assent to become an owner of the specific
goods when delivery of them is offered to the buyer.
1. Right of inspection
-a fair opportunity to inspect/ examine the article
tendered to determine whether it conforms to the
contract. If it does not- buyer may reject it
2. Actual delivery contemplated
-ownership shall be transferred only upon delivery
subject to a reasonable opportunity of examining them
-right of examination/ inspection: condition precedent to
transfer the ownership unless there’s contrary stipulation
3. Goods Delivered COD/ not COD
- delivery of goods to carrier is deemed delivery to buyer
- not COD: buyer has the right to examine goods before
paying
-COD buyer is also allowed to examine before paying, if
it is agreed/ permitted by usage
4. Right of Inspection is NOT absolute
- Reason: seller is bound to afford the buyer a
reasonable opportunity of examining the goods only “on
request” that should be availed within reasonable time in
order that seller may not suffer undue delay/ prejudice
- Seller refused to allow inspection: buyer may
RESCIND the contract and recover price/ any of it that
he paid
Notes on Sales
5. Waiver of Right to examine before payment
- Waiver need not be in express terms
6. Rejection of Goods
When upon inspection, goods are unsuitable/ fail to
conform to contract
1. Buyer is NOT bound to return them to seller;
sufficient if he notifies the seller that he refuses to accept
the,
2. Option to reject must be exercised & notice of
rejection must be given within a reasonable time unless
period is fixed in the contract; If not: Receipt of goods
constitutes as acceptance
Art. 1585. The buyer is deemed to have accepted the
goods when he intimates to the seller that he has
accepted them, or when the goods have been
delivered to him, and he does any act in relation to
them which is inconsistent with the ownership of the
seller, or when, after the lapse of a reasonable time,
he retains the goods without intimating to the seller
that he has rejected them.
What constitutes acceptance
1. Express acceptance -buyer, after deliver, intimates to
seller (verbally/ in writing) that he has accepted them
2. Implied acceptance
(a) Buyer, after delivery, does any act inconsistent with
the seller’s ownership (ex: sells/ attempts to sell the
goods or males alterations)
(b) Buyer, after lapse of reasonable time, retains goods
without intimating rejection
NOTE: Retention of Goods: strong evidence that the
buyer had accepted ownership of Goods; separate mode
of manifesting acceptance as it is merely a negative
indication which may be due merely to carelessness
Delivery & Acceptance: Separate Acts
1. Acceptance is not a condition to complete delivery
2. Vendee has nothing to do with the act of delivery by
vendor
3. Acceptance is an obligation of the vendee
4. Seller must comply with his obligation to delivery
although there is no acceptance yet by the buyer
5. Acceptance of the buyer may precede actual delivery
6. There may be actual receipt without acceptance and
vice versa

Art. 1586. In the absence of express or implied
agreement of the parties, acceptance of the goods by
the buyer shall not discharge the seller from liability
in damages or other legal remedy for breach of any
promise or warranty in the contract of sale. But, if,
after acceptance of the goods, the buyer fails to give
notice to the seller of the breach in any promise of
warranty within a reasonable time after the buyer
knows, or ought to know of such breach, the seller
shall not be liable therefor.
Acceptance: Not a bar to action for damages
Unless otherwise agreed, acceptance of goods by buyer
does not discharge the seller from liability in damages/
other legal remedy (rescission) for breach of any
promise/ warranty
Notice of seller to breach of promise/ warranty
1. Necessity
(a) Buyer needs to give notice to seller about such
breach of warranty within reasonable time
(b) Time is counted NOT from the time buyer knows
about the defect, but frim the time he ought to have
known it.
2. Purpose: Protect seller against belated claims that
prevent him from making prompt investigation to
determine cause and extent of his liability & take other
immediate steps that his interest may require
Art. 1587. Unless otherwise agreed, where goods are
delivered to the buyer, and he refuses to accept them,
having the right to do, he is not bound to return them
to the seller, but it is sufficient if he notffies the seller
that he refuses to accept them. If he voluntarily
constitutes himself a depositary thereof, he shall be
liable as such.
Buyer’s refusal to accept justified
1. Duty of buyer to take care of goods without obligation
to return
(a) Nothing more good be demanded of him
(b) He takes the position of a bailee who is in position of
goods without his assent
2. Duty of seller to take delivery of goods
3. Seller’s risk of loss
(a) While it remains in buyer’s possession
(b) Buyer is NOT deemed and liable as depositary,
unless he volunteers
4. Right of Buyer to Resell Goods
Notes on Sales
(a) If seller failed to take delivery of the goods, after
notification
(b) Art. 1533 applies
Art. 1588. If there is no stipulation as specified in the
first paragraph of article 1523, when the buyer’s
refusal to accept the goods is without just cause, the
title thereto passes to him from the moment they are
placed at his disposal.
Effect if Buyer Unjustifiably Refuses to Accept the
Delivery
Generally, the buyer becomes the owner. Exception —
when there is a contrary stipulation or when the seller
reserves the ownership as a sort of security for the
payment of the price.
Art. 1589. The vendee shall owe interest for the
period between the delivery of the thing and the
payment of the price, in the following three cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce fruits
or income;
(3) Should he be in default, from the time of judicial
or extrajudicial demand for the payment of the price.
Liability of Vendee for interest where payment made
after delivery
Vendee is liable to pay interest from the delivery of the
thing until the payment of the price
1. Interest is expressly stipulated
(a) Rate stipulated governs
(b) No stipulation: legal rate (12%) of interest
2. Fruits or Income received by Vendee from thing sold
Two conditions:
(a) Thing sold has been delivered
(b) It produces fruits or income
3. Vendee is guilty of default in payment of agreed price
(a) Interest is due from time of judicial/ extrajudicial
demand by vendor
4. Partial payment made of purchase price
(a) Will not obligate the buyer to pay interest if none of
the first 3 cases applies
Art. 1590. Should the vendee be disturbed in the
possession or ownership of the thing acquired, or
should he have reasonable grounds to fear such
disturbance, by a vindicatory action or a foreclosure
of mortgage, he may suspend the payment of the
price until the vendor has caused the disturbance or
danger to cease, unless the latter gives security for

the return of the price in a proper case, or it has been
stipulated that, notwithstanding any such
contingency, the vendee shall be bound to make the
payment. A mere act of trespass shall not authorize
the suspension of the payment of the price.
When vendee can suspend payment of price
1. He is disturbed in the possession/ ownership of the
thing bought
2. He has a well-grounded fear that his possession/
ownership will be disturbed by a vindicatory action or
foreclosure mortgage
 Vendee has NO cause of action for rescission before
final judgement; Reason: vendor might become a
victim of collusion (secret agreement/ cooperation
for a fraudulent purpose) between vendee and 3rd
person
 Disturbance is caused by the existence of a non-
apparent servitude: Vendee’s remedy is rescission,
not suspension of payment
When Vendee CANNOT suspend payment (even with
disturbance)
1. Vendor gives security for return of the price in a
proper case
2. Has stipulation, notwithstanding any such
contingency, vendee MUST make payment
3. Vendor has caused the disturbance/ danger to cease
4. Disturbance is mere act of trespass (vendor is not
liable)
5. Vendee has fully paid the price
Art. 1591. Should the vendor have reasonable
grounds to fear the loss of immovable property sold
and its price, he may immediately sue for the
rescission of the sale.
Should such ground not exist, the provisions of
Article 1191 shall be observed.
When Vendor may rescind sale of Immovable
property
 Refers to sale of real property where vendor has
good reasons to fear loss of the property & its price
Notes on Sales
 There’s deliver of immovable property, but vendee
has not yet paid the price
 Applicable to cash sales and sales in installments
Ex: vendee destroyed the building sold/ pulls out plants
on the land, places himself at the brink of insolvency &
other things showing signs of irresponsibility
Art. 1592. In the sale of immovable property, even
though it may have been stipulated that upon failure
to pay the price at the time agreed upon the
rescission of the contract shall of right take place, the
vendee may pay even after the expiration of the
period, as long as no demand for rescission of the
contract has been made upon him either judicially or
by a notarial act. After the demand, the court may
not grant him a new term.
Where automatic rescission of sale of IMMOVABLE
property stipulated
 General Rule: Vendor may sue for rescission of the
contract should vendee fail to pay the price
 Before demand for the rescission of contact (not
payment of price) by vendor (judicially/ by notarial
act: vendee may still pay the price even after the
expiration of the stipulated period for payment,
notwithstanding a stipulation that failure to pay on
stipulated date, resolves the sale
 NO existing provision authorizing the automatic
rescission of contracts for non-payment of the
purchase price
Right to rescind NOT absolute
 Court may extend period of payment
 Once demand for rescission (by suit/ notarial act) is
made: court may NOT grant the vendee a new
period
When Article is NOT applicable
1. Sales on installments of real property where parties
laid down procedure to be followed in the event that
vendee failed to fulfill his obligation
2. Mere promise to buy or sell where title remains to
vendor until full payment of price
In such cases, vendee may NO longer pay the price after
the expiration of the time agreed upon though NO
demand has been made yet

Art. 1593. With respect to movable property, the
rescission of the sale shall of right take place in the
interest of the vendor, if the vendee, upon the
expiration of the period fixed for the delivery of the
thing, should not have appeared to receive it, or
having appeared he should not have tendered the
price at the time, unless a longer period has been
stipulated for its payment.
Where automatic rescission of sale of MOVABLE
property stipulated
 Personal Property not yet delivered to vendee:
Vendor can rescind contract it vendee DOES NOT
(without valid cause):
1. Accept delivery
2. Pay the price, unless a credit period for its payment
has been stipulated
NOTE: All with right to damages
Reason for the rule with respect to movable property
1. Not capable of maintaining a stable price in the
market; delay in their disposal might cause prejudice to
vendor
2. While real property: stable price in the market; delay
is not detrimental to interest of vendor
FIL-ESTATE PROPERTIES, INC. AND FIL-
ESTATE NETWORK INC. v. SPOUSES
CONRADO AND MARIA VICTORIA
RONQUILLO
G.R. No. 185798, January 13, 2014
FACTS:
Petitioner Fil-Estate Properties, Inc. is the owner and
developer of the Central Park Place Tower while co-
petitioner Fil-Estate Network, Inc. is its authorized
marketing agent. Respondent Spouses Ronquillo
purchased from petitioners condominium unit at Central
Park Place Tower in Mandaluyong City for a pre-selling
contract price of (P5,174,000.00). Respondents
religiously paid their dues however the Petitioners
stopped the construction of the condominium.
Upon learning that construction works had stopped,
respondents likewise stopped paying their monthly
amortization. Claiming to have paid a total of
P2,198,949.96 to petitioners, respondents through two
(2) successive letters, demanded a full refund of their
payment with interest. When their demands went
unheeded, respondents were constrained to file a
Complaint for Refund and Damages before the Housing
and Land Use Regulatory Board (HLURB).
Respondents prayed for reimbursement/refund of
P2,198,949.96 representing the total amortization
payments, P200,000.00 as and by way of moral
damages, attorney’s fees and other litigation expenses.
Notes on Sales
HLURB favored the respondents. LURB, through
Arbiter Atty. Joselito F. Melchor, rendered judgment
ordering petitioners to jointly and severally pay
respondents the following amount: The amount of TWO
MILLION ONE HUNDRED NINETY-EIGHT
THOUSAND NINE HUNDRED FORTY NINE PESOS
& 96/100 (P2,198,949.96) with interest thereon at twelve
percent (12%) per annum to be computed from the time
of the complainants’ demand for refund on October 08,
1998 until fully paid
e) An administrative fine of TEN THOUSAND
PESOS (P10,000.00) payable to this Office fifteen (15)
days upon receipt of this decision, for violation of
Section 20 in relation to Section 38 of PD 957 plus
damages and attorney’s fees. Petitioners invoked that
1997 Asian Financial Crisis as a Fortuitous event that
rendered the obligation to be impossible to comply thus
exempting them from liability.
MFR was denied. Office of the President likewise
denied the petition. CA affirmed the decision.
ISSUE:
Whether or not the respondents are entitled to rescission
and refund; and
RULING:
The Asian financial crisis is not a fortuitous event that
would excuse petitioners from performing their
contractual obligation; second, as a result of the breach
committed by petitioners, respondents are entitled to
rescind the contract and to be refunded the amount of
amortizations paid including interest and damages; and
third, petitioners are likewise obligated to pay attorney’s
fees and the administrative fine.
The non-performance of petitioners’ obligation entitles
respondents to rescission under Article 1191 of the New
Civil Code which states: The power to rescind
obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent
upon him.
The injured party may choose between the fulfillment
and the rescission of the obligation, with payment of
damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should
become impossible. More in point is Section 23 of
Presidential Decree No. 957, the rule governing the sale
of condominiums
The Asian financial crisis in 1997 cannot be generalized
as unforeseeable and beyond the control of a business
corporation. It is unfortunate that petitioner apparently
met with considerable difficulty e.g. increase cost of
materials and labor, even before the scheduled
commencement of its real estate project as early as 1995.
However, a real estate enterprise engaged in the pre-

selling of condominium units is concededly a master in
projections on commodities and currency movements
and business risks. The fluctuating movement of the
Philippine peso in the foreign exchange market is an
everyday occurrence, and fluctuations in currency
exchange rates happen everyday, thus, not an instance of
caso fortuito.
REPUBLIC ACT NO. 6552
 AN ACT TO PROVIDE PROTECTION TO
BUYERS OF REAL ESTATE ON
INSTALLMENT PAYMENTS
What is the Maceda Law?
The Maceda Law, also known as Republic Act 6552 or
The Realty Installment Buyer Act, is a law that provides
for certain rights and protection to buyers of real estate
properties who default in paying the installments due. It
was enacted by Ernesto C. Maceda and it took effect on
August 26, 1972.
What is the purpose of the law?
The purpose of the law is to protect buyers on
installment payments against onerous and oppressive
conditions which sellers may impose upon them.
"The law seeks to address the acute housing shortage
problem in our country that has prompted thousands of
middle and lower class buyers of houses, lots and
condominium units to enter into all sorts of contracts
with private housing developers involving installment
schemes. Lot buyers, mostly low income earners eager
to acquire a lot upon which to build their homes, readily
affix their signatures on these contracts, without an
opportunity to question the onerous provisions therein as
the contract is offered to them on a “take it or leave it”
basis. Most of these contracts of adhesion, drawn
exclusively by the developers, entrap innocent buyers by
requiring cash deposits for reservation agreements which
oftentimes include, in fine print, onerous default clauses
where all the installment payments made will be
forfeited upon failure to pay any installment due even if
the buyers had made payments for several years. Real
estate developers thus enjoy an unnecessary advantage
over lot buyers who they often exploit with iniquitous
results. They get to forfeit all the installment payments
of defaulting buyers and resell the same lot to another
buyer with the same exigent conditions. To help
especially the low income lot buyers, the legislature
enacted R.A. No. 6552 delineating the rights and
remedies of lot buyers and protect them from one-sided
and pernicious contract stipulations." (Active Realty &
Development Corporation vs. Doroya, G.R. No. 141205,
May 9, 2002)
Notes on Sales
What are the transactions covered by the Maceda
Law?
The Maceda Law covers all transactions or contracts
involving the sale or financing of real estate on
installment payments, including residential
condominium apartments.
What are the transactions not covered by the Maceda
Law?
The following transactions, although involving sales on
installments, are expressly excluded from the coverage
of the law:
1. Sales covering industrial lots;
2. Sales covering commercial buildings (and commercial
lots by implication); and
3. Sales to tenants under agrarian reforms laws.
The enumeration is not exclusive since other
transactions over immovables like sale on installment of
commercial or office condominiums units are to be
excluded because they are not within the express
coverage. (Cesar L. Villanueva, Law on Sales)
What are the two categories of buyers accorded
protection under the Maceda Law?
The following buyers are accorded protection under the
Maceda Law:
1. Buyers with less than 2 years of installments
2. Buyers with at least 2 years of installments
What are the rights of a defaulting buyer under the
Maceda Law?
A. Buyer who has paid less than two years of
installments:
1. Right to pay, without additional interest, any
installment due within a grace period of not less than
sixty (60) days from the date the installment became
due;
2. Right to receive a 30-day notarial notice of
cancellation or demand for rescission before his contract
can be cancelled for non-payment of amortization. Here
the buyer is not entitled to any refund;
3. Right to sell or assign his rights over the lot or unit to
another person;
4. Right to reinstate the contract by updating the account
provided this is done during the grace period and before
actual cancellation of the contract;
5. Right to pay in advance any installments or the full
unpaid balance without interest any time; and
6. Right to have such full payment annotated in the title.
B. Buyer who has paid at least two years of
installments:
1. Right to pay without additional interest the unpaid
installments due within the total grace period earned by
him. Said grace period is equal to one (1) month for
 Notes on Sales
every year of installment payments he has made. Here Any stipulation in any contract entered into contrary to
the buyer has at least two (2) months grace period for he the provisions of the law shall be null and void. (Sec. 7,
should have paid at least two (2) years of installments to RA 9552)
avail of the rights. This right can be exercised by the
buyer only once in every five years of the life of the
contract;
2. Right to receive a 30-day notarial notice of
cancellation or demand for rescission before his contract
can be cancelled for non-payment of amortization;
3. Right to be refunded of the cash surrender value of his
payments equal to 50% of his total payments if the
contract is cancelled. But if he has paid five years or
more, he is entitled to an increase of 5% every year and
so on but the cash surrender value shall not exceed 90%
of his total payments. Down payments, deposits or
options on the contract shall be included in the
computation of the total number of installment payments
made;
4. Right to sell or assign his rights over the lot or unit to
another person;
5. Right to reinstate the contract by updating the account
provided this is done during the grace period and before
actual cancellation of the contract; and,
6. Right to pay in advance any installments or the full
unpaid balance without interest any time; and,
7. Right to have such full payment annotated in the title.

What are the mandatory twin requirements for a valid

and effective cancellation of the contract under the
Maceda Law?
Under the Maceda Law, the actual cancellation of a
contract to sell takes place after 30 days from receipt by
the buyer of the notarized notice of cancellation, and
upon full payment of the cash surrender value to the
buyer. In other words, before a contract to sell can be
validly and effectively cancelled, the seller has:
1. To send a notarized notice of cancellation to the buyer
and
2. To refund the cash surrender value. (Communities
Cagayan, Inc. vs Sps. Nanol, G.R. No. 176791,
November 14, 2012)

What is the effect of failure to comply with these

mandatory twin requirements?
Until and unless the seller complies with these twin
mandatory requirements, the contract to sell between the
parties remains valid and subsisting. Thus, the buyer has
the right to continue occupying the property subject of
the contract to sell, and may “still reinstate the contract
by updating the account during the grace period and
before the actual cancellation” of the contract.
(Communities Cagayan, Inc. vs Sps. Nanol, ibid.)

What is the effect of contrary stipulation?