Article 1473.

The fixing of the price can never be left

to the discretion of one of the contracting parties.
However, if the price fixed by one of the parties is
accepted by the other, the sale is perfected.

Article 1474: Where the price cannot be determined

in accordance with the preceding articles, or in any
other manner, the contract inefficacious. However, if
SUMMARY the thing or any part thereof has been delivered to
and appropriated by the buyer, he must pay a
reasonable price thereof. What is a reasonable price
OF is a question of fact dependent on the circumstances
of each particular case.

ARTICLES Reasonable Price- The reasonableness of the

price is a question of fact. Its determination is
dependent upon the circumstances of each particular
1473-1548 case.

EFFECT OF GROSS INADEQUACY OF PRICE

NOTE: Mere inadequacy of the price does not affect

the validity of the sale, except
(1) When there is fraud, mistake, or undue influence
indicative of a defect in consent is present,
(2)When it shows that the parties really intended a
donation or some other act or contract.

EFFECT WHERE PRICE IS SIMULATED

1. The act may be shown to have been in reality a

donation, or some other act or contract
2. If not and neither party had any intention
whatsoever that the amount will be paid (absolutely
simulated): the sale is void
3. If there is a real price but what is stated in the
contract is not the one intended to be paid (only
Book: Sales and Other relatively simulated): the contract of sale is valid but
subject to reformation
Special Contracts
Effect of Gross Inadequacy of Price. No effect.
Exceptions: (meaning, sale is set aside)
1. If consent is vitiated, such as VIMFU (Violence,
Intimidation, Mistake, Fraud, Undue influence)
2. If the parties intended a donation or some other act
or contract
3. If the price is so low as to be shocking to the
Author: Ernesto Pineda conscience

Effect of Simulated Price. Sale is void, unless it could

be shown that the parties intended a donation or
some other act of liberality.
o Price Simulated- No price to support a contract of
sale, such that neither party had any intention that
the amount will be paid—void
o Price is False- 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.
-Crux
Article 1475. The contract of sale is perfected at the
moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price.
From that moment, the parties may reciprocally
demand performance, subject to the provisions of
the law governing the form of contracts.
PERFECTION OF CONTRACT OF SALE. Meeting of the
minds upon the thing and price.
Effect: Parties may reciprocally demand
performance
GENERAL RULE: A contract of sale is perfected at the
moment there is a meeting of the minds upon the
thing which is the object of the contract and upon the
price; consensual contract
Exception: When the sale is subject to a suspensive
condition
REQUIREMENTS:
1. When parties are face to face – when there is
absolute acceptance of an offer that is certain
2. When thru correspondence or telegram – when the
offer or receives or had knowledge of the acceptance
3. When the sale is subject to a suspensive condition
– from the moment the condition is fulfilled
NOTES: Qualified acceptance: mere counter-offer
which needs to be absolutely accepted to give rise to
perfected contract of sale. Business ads are mere
invitations to make an offer except when it appears to
be otherwise.
Article 1477. The ownership of the thing sold shall be
transferred to the vendee upon the actual or
constructive delivery thereof.
Article 1478. The parties may stipulate that
ownership in the thing shall not pass to the purchaser
until he has fully paid the price.
Article 1480. Any injury to or benefit from the thing
sold, after the contract has been perfected, from the
moment of the perfection of the contract to the time
of delivery, shall be governed by articles 1163 to
1165, and 1262.
This rule shall apply to the sale of fungible things,
made independently and for a single price, or without
consideration of their weight, number, or measure.
Should fungible things be sold for a price fixed
according to weight, number, or measure, the risk
shall not be imputed to the vendee until they have
been weighed, counted, or measured and delivered,
unless the latter has incurred in delay.
Legal consequences from point of perfection are the
same in both legal systems: upon perfection of an
unconditional contract of sale involving specific or
determinate subject matter, the risk of loss
deterioration and the benefits of fruits and
improvements, were from the account of the buyer.
WHO BEARS RISK OF LOSS/ DETERIORATION/ FRUITS:
1. BEFORE PERFECTION
a. Res perit domino
b. Owner is seller so seller bears risk of loss
2. AT PERFECTION
o Res perit domino
o Contract is merely inefficacious because loss of
the subject matter does not affect the validity of
the sale
o Seller cannot anymore comply with obligation so
buyer cannot anymore be compelled
3. AFTER PERFECTION BUT BEFORE DELIVERY
o Loss – confused state
o Paras: BUYER
o Tolentino: SELLER
o Deterioration and fruits – Buyer bears loss;
4. AFTER DELIVERY
o Res perit domino
o Delivery extinguishes ownership visa-vis the
seller and creates a new one in favor of the buyer
Article 1481. In the contract of sale of goods by
description or by sample, the contract may be
rescinded if the bulk of the goods delivered do not
correspond with the description or the sample, and if
the contract be by sample as well as description, it is
not sufficient that the bulk of goods correspond with
the sample if they do not also correspond with the
description.
The buyer shall have a reasonable opportunity of
comparing the bulk with the description or the
sample.
Sale of Goods By Description- 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, not knowing whether the
seller’s representations are true or not.
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.
Sale by Description and Sample- Where the seller has
to satisfy the requirements in sale by description and
sample. There are two-fold warranty here:
(a) the goods purchased matched with the
description and
(b) the goods also matched in kind, quality and
character with that of the sample or samples exhibited
to the buyer or his representative
Article 1482. Whenever earnest money is given in a
contract of sale, it shall be considered as part of the
price and as proof of the perfection of the contract.
EARNEST MONEY vs. OPTION MONEY
Earnest Money Option Money
It is part of the It is given as a distinct
purchase price consideration for an
option contract which
gives the buyer a specific
period within
which to purchase the
thing
 It is given only when It is given at a time when Article 1484. In a contract of sale of personal property
there is already a the sale had not yet the price of which is payable in installments, the vendor
perfected sale been perfected. What may exercise any of the following remedies:
had been perfected only (1) Exact fulfillment of the obligation, should the
is the vendee fail to pay;
option contract (2) Cancel the sale, should the vendee's failure to
When it is given, the Even if option money is pay cover two or more installments;
buyer is bound to pay paid by the would-be- (3) Foreclose the chattel mortgage on the thing
the balance of the buyer he is not bound sold, if one has been constituted, should the
agreed purchase price to vendee's failure to pay cover two or more
buy the thing
installments. In this case, he shall have no
If the sale does not If the buyer decides not
further action against the purchaser to recover
materialize, the to buy the thing, he
any unpaid balance of the price. Any agreement
earnest money paid cannot recover the
to the contrary shall be void.
must be returned, option money he paid as
unless a contrary consideration for
agreement had been the contract of option Article 1485. The preceding article shall be applied to
stipulated contracts purporting to be leases of personal property
with option to buy, when the lessor has deprived the
Article 1483. Subject to the provisions of the Statute of lessee of the possession or enjoyment of the thing.
Frauds and of any other applicable statute, a contract
of sale may be made in writing, or by word of mouth, or Article 1486. In the case referred to in the two
partly in writing and partly by word of mouth, or may preceding articles, a stipulation that the installments or
be inferred from the conduct of the parties. rents paid shall not be returned to the vendee or lessee
shall be valid insofar as the same may not be
FORM OF SALES unconscionable under the circumstances.
I. Form not important in validity of sale
a. Sale being consensual, may be oral or written, Article 1487. The expenses for the execution and
perfected by mere consent as to price and subject matter registration of the sale shall be borne by the vendor,
b. If particular form is required under the statute of unless there is a stipulation to the contrary.
frauds:
i. valid and binding between parties but not Article 1488. The expropriation of property for public
binding to 3rd persons use is governed by special laws.
c. Reason: purposes of convenience only and not for
validity and enforceability; cause of action is granted to Article 1489. All persons who are authorized in this
sue and compel other party to execute the document Code to obligate themselves, may enter into a contract
of sale, saving the modifications contained in the
II. When form is important for validity; exception by following articles.
specific provision of law; Where necessaries are those sold and delivered to a
a. Power to sell a piece of land granted to an agent – minor or other person without capacity to act, he must
otherwise VOID pay a reasonable price therefor. Necessaries are those
b. Sale of large cattle; must also be registered with referred to in article 290.
Municipal treasurer – otherwise VOID
c. Sale of land by non-Christian if not approved by Two Kinds of Incapacity:
Governor– VOID 1. Absolute Incapacity- Party cannot bind himself
in any case.
III. When form is important for enforceability (STATUTE 2. Relative Incapacity- Certain Persons under
OF FRAUDS Article 1403 (2)) certain circumstances cannot buy certain
a. A sale agreement which by its terms is not to be property.
performed within a year from the making thereof; ** Minors in contract for necessaries must pay
b. An agreement for the sale of goods, chattels or things reasonable price.
in action, at a price not less than P500.00; and
c. A sale of real property or of an interest therein. Necessaries—those things which are needed for
sustenance, dwelling, clothing and medical attendance,
IV. EXCEPTIONS TO COVERAGE OF STATUTE IN SALES in keeping with the financial capacity of the family of the
CONTRACTS: incapacitated person.
1. When there is a note or memorandum in writing and
subscribed to by party or his agent (contains essential Article 1490. The husband and the wife cannot sell
terms of the contract) property to each other, except:
2. When there has been partial performance/execution (1) When a separation of property was agreed upon in
(seller delivers with intent to transfer title/receives price) the marriage settlements; or
3. When there has been failure to object to presentation (2) When there has been a judicial separation of
of evidence (oral) property under article 191.
4. When sales are effected through electronic commerce
Prohibition against Husband and Wife. Exceptions.
Rationale: PID
a. To avoid Prejudice to 3rd Persons
b. To prevent one spouse from unduly influencing the
other.
c. To avoid by indirection the violation of the prohibition
against donations.
Who may assail illegality?
a. Creditors prior to the sale
b. Heirs of either spouse.
** Either spouse may not assail illegality because they
are parties thereto.
** A spouse designated as agent of the other spouse may
sell the latter’s exclusive property.
Article 1491. The following persons cannot acquire by
purchase, even at a public or judicial auction, either in
person or through the mediation of another:
(1) The guardian, the property of the person or persons
who may be under his guardianship;
(2) Agents, the property whose administration or sale
may have been intrusted to them, unless the consent of
the principal has been given;
(3) Executors and administrators, the property of the
estate under administration;
(4) Public officers and employees, the property of the
State or of any subdivision thereof, or of any
government-owned or controlled corporation, or
institution, the administration of which has been
intrusted to them; this provision shall apply to judges
and government experts who, in any manner
whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of
superior and inferior courts, and other officers and
employees connected with the administration of
justice, the property and rights in litigation or levied
upon an execution before the court within whose
jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of acquiring
by assignment and shall apply to lawyers, with respect
to the property and rights which may be the object of
any litigation in which they may take part by virtue of
their profession;
(6) Any others specially disqualified by law.
Persons Relatively Incapacitated to Buy. (PAGEJO)
1. Public Officers and employees—Property Of State.
2. Agents—Property of Principal unless with consent.
3. Guardian—Property of Ward.
4. Executors and administrators—Estate
5. Justices, Judges, Prosecuting Attorneys, Clerks and
employees of court—Property/Rights under litigation.
6. Others disqualified by law. (Ex. *aliens who are
disqualified to purchase private agricultural lands; *an
unpaid seller having a right of lien or having stopped the
goods in transitu, 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. Art.
1533, par.5)
Rationale: Fiduciary relationship
Status of Sale: Voidable (1-3); Void (4-6)
Article 1492. The prohibitions in the two preceding
articles are applicable to sales in legal redemption,
compromises and renunciations.
Article 1493. If at the time the contract of sale is
perfected, the thing which is the object of the contract
has been entirely lost, the contract shall be without any
effect.
But if the thing should have been lost in part only, the
vendee may choose between withdrawing from the
contract and demanding the remaining part, paying its
price in proportion to the total sum agreed upon.
Partial Loss Rules:
1. Vendee may withdraw from the contract
2. Demand the remaining part, paying its price in
proportion to the total sum agreed upon
Article 1494. Where the parties purport a sale of specific
goods, and the goods without the knowledge of the
seller have perished in part or have wholly or in a
material part so deteriorated in quality as to be
substantially changed in character, the buyer may at his
option treat the sale:
(1) As avoided; or
(2) As valid in all of the existing goods or in so much
thereof as have not deteriorated, and as binding the
buyer to pay the agreed price for the goods in which the
ownership will pass, if the sale was divisible.
Loss/Substantial Deterioration of Specific Goods
without seller’s knowledge.
1. Buyer may avoid the sale or
2. May treat sale as valid w/ respect to the
existing goods
Article 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.
Obligations of Vendor. (TDWP)
1. Transfer Ownership (not waivable)
2. Deliver (not waivable)
3. Warrant Object (waivable and may be modified)
4. Preserve Thing from perfection to delivery (Art. 1163)
5. 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.
Article 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.
Article 1497. The thing sold shall be understood as
delivered, when it is placed in the control and
possession of the vendee.
Control and Possession necessary in Delivery.
Exception: Art. 1478. Stipulation as to full payment of
price.
Delivery- 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.
KINDS OF DELIVERY
1. Actual or Real. (1497)
2. Legal or Constructive
a. Legal Formalities (1498); execution of public
instrument.
b. Symbolical Tradition (1498 par 2)- keys
delivered.
c. Traditio Longa Manu- by mere consent
/agreement. If the movable sold cannot yet be
transferred to the possession of the buyer at the
time of the sale. (1499)
d. Traditio Brevi Manu- if the buyer had already
the possession the object even before the
purchase. (lessee becomes owner)
e. Traditio constitutum possessorium-
possession as owner changed. (Owner becomes
lessee)
3. Quasi-Tradition- Delivery of Rights, credits or
incorporeal property made by:
a. Execution of public instrument
b. Placing titles of ownership in the hands of a
lawyer.
c. Allowing the buyer to make use of the rights
(1501)
Article 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.
Requirements:
1. Seller’s Control.
2. Seller’s Control transferred to buyer.
3. Intention to deliver for ownership.
Article 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.
Article 1500. There may also be tradition constitutum
possessorium.
Different forms of Constructive Delivery - Constructive
delivery has same legal effect as actual or physical
delivery.
1. Traditio Longa Manu − Delivery of thing by mere
agreement; when SELLER points to the property without
need of actually delivering
2. Traditio Brevi Manu − Before contract of sale, the
would be buyer was already in possession of the would
be subject matter of sale (ex: as lessee)
3. Symbolic delivery − As to movables – ex: delivery of
the keys to a car
4. Constitutum possessarium − When at the time of the
perfection of the contract of sale, seller had possession
of the subject matter in the concept of owner and
pursuant to the contract, seller continues to hold
physical possession no longer in the concept of an owner
but as a lessee or any other form of possession other
than in the concept of owner.
Article 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.
Article 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.
Transaction on Sale or Return. Subject to Resolutory
Condition. Difference with “Delivery with option to
purchase”- Ownership is transferred in Sale or Return
Transaction on Approval or Trial/Satisfaction. Subject to
Suspensive Condition.
Rules:
1. Risk of loss to seller until the sale becomes absolute.
(Exceptions: Buyer in default; Buyer agreed to bear the
loss)
2. Buyer must give goods a trial except when it is evident
that it cannot perform the work intended.
3. Period of signifying acceptance commences to run only
when all the parts essential for operation has been
delivered.
4. A provision that a 3rd person must satisfy approval is
valid but he must be in Good faith.
5. Generally the Sale and Delivery to an expert buyer is
not a sale on approval/trial. EFFECT OF BUYER’S OBTAINING POSSESSION OF BILL
OF LADING WITHOUT HONORING THE DRAFT.
Sale or Return vs. Sale on Approval ** If the BOL provides that the goods are deliverable
Basis Sale or Return Sale on to the buyer or to the order of the buyer or is indorsed
Approval
Condition Subject to Subject to in blank or is indorsed to the buyer by the consignee
Resolutory suspensive named therein, a purchaser in GF for value of the BOL
condition condition or goods from the buyer will obtain the ownership in
Premise It depends It depends the goods although the BOE has not been honored.
upon the will upon the
of the buyer suitability, Kinds of Delivery to the Carrier
quality or 1. C.I.F. (Cost, Insurance, Freight)—signify that the
character of price fixed covers not only the costs of the goods, but
the the expense of the freight and the insurance to be paid
goods
Transfer of by the seller
Ownership Ownership
ownership 2. F.O.B. (Free on Board)—goods are to be delivered
immediately does not
free of expense to the buyer to the point where they
passes immediately
to the buyer on pass to are F.O.B. The point of F.O.B. (either at point of
the buyer. It shipment or the point of destination) determines
passes when the ownership passes.
delivery only upon *CIF and FOB merely make rules of presumption.
approval or 3. C.O.D. (Collect on Delivery)—the carrier acts for
satisfaction the seller in collecting the purchase price, which the
of the buyer buyer must pay to obtain possession of the goods.
duly
manifested ART. 1505. Sale by a person not the owner/without
after trial authority of owner.
Revesting of Ownership is There is no General Rule: Buyer acquires no better title to the
ownership in revested in revesting of goods than the seller had.
the owner
the seller if ownership
the buyer so because it is Exceptions: SOLVAM
decides retained by 1. Where the sale is sanctioned by statutory or judicial
the seller authority. (See Art. 559)
until the sale 2. Where the owner of the goods is by his conduct,
becomes precluded from denying the seller’s authority to
absolute sell.
Risk of loss or The risk The risk 3. Where the law enables the owner to dispose of the
deterioration rests on the remains in goods as if he were the true owner thereof.
buyer the seller *** Factor’s Acts (Agency); Recording Laws
before the while the (PD 1529, RA 4136-Land Transportation and
revestment goods are on Traffic Code, Revised Administrative Code); NIL;
of trial Warehouse Receipts Law.
ownership
4. Where the seller has a voidable title which has not
been avoided at the time of the sale.
5. Where seller subsequently acquires title.
Art. 1503- reservation of possession or ownership
6. Where the sale is sold at merchant’s stores, fairs or
by the seller whenspecific goods are shipped.
markets.
1. When a contrary intention appears by the terms of
the contract.
2. When the goods are shipped, and by the bill of
lading(BOL) the goods are deliverable to the seller
ART. 1506. SALE BY ONE HAVING A VOIDABLE TITLE-
or his agent, or to the order of the seller or of his
BUYER ACQUIRES GOOD TITLE.
agent.
1. Bought before the title of seller has been avoided.
Exception: Form of bill of lading not conclusive if
2. in GF for value
for security purposes only.
3. without notice of the seller’s defect of title.
3. When the goods are shipped and by the BOL the
goods are deliverable to the order of the buyer or
ART. 1507. DOCUMENTS OF TITLE.
of his agent, but possession of the BOL is retained
by the seller or his agent.
Document of Title of Goods—includes any bill of
4. Where bill of lading is sent forward to the buyer
lading, dock warrant, quedan, or warehouse receipt or
with bill of exchange attached and the buyerdid not
order for the delivery of goods, or any other document
pay the bill of exchange.
used in the ordinary course of business in the sale or
transfer of goods, or authorizing or purporting to
authorize the possessor of the document to transfer
or receive, either by indorsement or by delivery, goods
represented by such document
Nature and function:
1. Receipts of, or orders upon, a bailee of goods
represented.
2. Evidence of transfer of title and possession of goods
and contract between the parties.
Some Forms of Documents of Title
1. Bill of Lading- It is a contract or receipt for the
transport of goods and their delivery to the person
named therein, to order or to bearer. It usually
involves three persons: the carrier, the shipper and
the consignee.
2. Dock Warrant- 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, upon production of the bill of lading.
3. Quedan- a warehouse receipt for commodities or
goods such as sugar, tobacco, rice or hemp
4. 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. 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.
Classes of Documents of Title:
1. Negotiable- 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.
2. Non-Negotiable- those by the terms of which the
goods covered are deliverable to a specified
person.
ART. 1508. NEGOTIATION OF NEGOTIABLE
DOCUMENT BY DELIVERY.
1. Where by the terms the carrier, warehouseman
or other bailee undertakes to deliver the goodsto
the bearer.
2. Where by the terms the carrier, warehouseman
or other bailee undertakes to deliver the goodsto a
specified person and such person or subsequent
indorsee has indorsed it in blank or to bearer.
✓ 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, any holder may indorse
the same to himself or to any specified person,
and in such case the document shall thereafter
be negotiated only by the indorsement of such
indorsee.
ART. 1509. NEGOTIATION OF NEGOTIABLE
DOCUMENT BY INDORSEMENT.
Indorsement is made by the person to whose the
goods are deliverable. It may be in blank, tobearer or
to a specified person.
ART. 1510. NEGOTIABLE DOCUMENTS OF TITLE
MARKED “NON-NEGOTIABLE”
-No effect on negotiability. The obligations of carrier,
warehouseman, or bailee not limited.
ART. 1511. TRANSFER OF NON-NEGOTIABLE
DOCUMENT.
-Though non-negotiable may be transferred but
transferee acquires rights under 1514. Even if
document indorsed transferee has no additional
rights.
ART. 1512. PERSONS WHO MAY NEGOTIATE A
DOCUMENT.
1. By the owner thereof
2. By any person to whom possession or custody
has been entrusted by the owner, if bailee
undertakes to deliver the goods to the order of the
possessor of the document OR document is insuch
form that it may be negotiated by delivery at the
time it is entrusted.
ART. 1513. RIGHT OF PERSON TO WHOM
DOCUMENT HAS BEEN NEGOTIATED.
1. The title of the person negotiating the document
over the goods covered by the document.
2. The title of the person(depositor or owner) to
whose order by the terms of the document the
goods were to be delivered.
3. The direct obligation of the bailee
(warehouseman or carrier) to hold possession of
the goods for him, as if the bailee had contracted
with him.
ART. 1514. RIGHTS OF PERSON TO WHOM
DOCUMENT HAS BEEN TRANSFERRED.
Applicability: (a) Transferee of Negotiable
document of title not duly negotiated (b)transferee
of a
non-negotiable document.
Rights acquired:
1. Title to the goods as against the transferor.
2. The right to notify the bailee of the transfer
thereof.
3. The right, thereafter to acquire the obligation of
the bailee to hold the goods for him.
**Rights not absolute. 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. 1515. TRANSFER OF ORDER DOCUMENT
WITHOUT INDORSEMENT.
Rights of transferee:
1. The right to the goods as against the transferor.
2. The right to compel the transferor to indorse the
indorsement.
**Ascertain the intention if contrary appears as to
necessity of negotiation.
ART.1516. WARRANTIES ON SALE OF DOCUMENTS BY
THE TRANSFERROR.
(indorsement /delivery) (GRIT)
1. That the document is Genuine
2. That he has legal Right to negotiate or transfer it.
3. The he has no knowledge of fact which would Impair
the validity or worth of the document.
4. That he has the right to transfer the Title to the
goods and goods are merchantable or fit for a
particular purpose.
ART. 1517. INDORSER NOT GUARANTOR.
THEREFORE NOT LIABLE FOR BAILEE’S FAILURE OR
PREVIOUS INDORSERS.
ART. 1518. WHEN NEGOTIATION NOT IMPAIRED BY
FRAUD, MISTAKE, DURESS, LOSS, THEFT, OR
CONVERSION. OR THERE WAS BREACH OF DUTY OF
TRANSFEROR.
--If the transferee paid value, without notice of such
factors, therefore in Good Faith
ART. 1519. ATTACHMENT OR LEVY UPON GOODS
COVERED BY A NEGOTIABLE DOCUMENT NOT
ALLOWED, WHILE IN POSSESSION OF BAILEE
UNLESS DOCUMENT BE FIRST SURRENDERED OR
ITS NEGOTIATION PROHIBITED BY THE COURT.
ART. 1520. CREDITOR’S REMEDIES ON PROHIBITION
ON ATTACHMENT/LEVY.- Injunction
or TRO.
ART. 1521.
A. PLACE OF DELIVERY OF GOODS
1. Agreement.
2. Usage of trade.
3. Seller’s place of business
4. Seller’s residence.
5. Specific Goods: Place where goods are at the time of
contract known to parties.
B. TIME OF DELIVERY OF GOODS
1. Agreement.
2. No time fixed, within a reasonable time.
C. DELIVERY OF GOODS AT THE POSSESSION OF
THIRD PERSONS. –Seller is relieved if 3rd person
acknowledges to be the bailee of the buyer.
D. Demand or tender of delivery effective if made at
a reasonable hour.
E. Seller bears the expenses incidental to putting
goods in deliverable state.
ART. 1522
A. DELIVERY OF GOODS LESS THAN THE QUANTITY
CONTRACTED.
1. Buyer may reject.
2. Buyer may accept by paying:
a. price at the contract rate if he knew that no more
were to be delivered
b. 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.
B. DELIVERY OF GOODS MORE THAN QUANTITY
CONTRACTED
1. Accept and reject excess.
2. Accept all- Liable for all of them.
C. DELIVERY OF GOODS MIXED WITH OTHERS
1. Accept in accordance with the contract and reject the
rest.
2.Accept all.
** If goods are indivisible the buyer may reject the whole
of the goods.
** Rules may be controlled by usage or agreement.
ART. 1523. DELIVERY OF GOODS TO THE CARRIER is
DELIVERY TO THE BUYER-
Exceptions: 1503 (1) (2) (3) and when Contrary intention
appears.
Seller’s duty after delivery to carrier.
1. To enter on behalf of buyer into such contract
reasonable under the circumstances. (If seller omits this
buyer may decline to treat delivery to carrier, delivery to
him, if goods were lost/damaged)
2. To give notice to buyer regarding necessity to insure
goods while in transit if under circumstances it is usual to
insure. (risk during transit is borne by him if he fails)
ART. 1524. NO DUTY TO DELIVER IF VENDEE HAS NOT
PAID OR NO PERIOD FOR PAYMENT FIXED IN THE
CONTRACT.
ART. 1525. UNPAID SELLER.
1. When the whole of the price has not been paid or
tendered.
2. When a BOE or other Negotiable Instrument has been
received as conditional payment but was dishonored or
the buyer became insolvent.
“Seller”- includes agent of the seller to whom the BOL
has been indorsed; or a consignor or agent who has
himself paid or is directly responsible for the price.
ART. 1526. REMEDIES OF AN UNPAID SELLER. [LS RRW]
1. A lien on the goods or right to retain them for the price
while he is in possession of them;
2. Right of stopping the goods in transitu after he has
parted with the possession of them;
3. Right of Resale
4. Right to Rescind
5. Right of withholding the delivery when ownership has
not yet passed to buyer.
ART. 1527. WHEN UNPAID SELLER’S POSSESSORY LIEN
MAY BE EXERCISED. [SEI]
1. Sales without stipulation as to credit.
2. Expiration of term of credit.
3. Insolvency of the buyer.
ART. 1528. LIEN ON THE REMAINDER WHEN THERE’S
PART DELIVERY, UNLESS INTENT TO WAIVE THE LIEN OR
RIGHT OF RETENTION.
ART. 1529. WHEN UNPAID SELLER LOSES POSSESSORY
LIEN. [DPW]
1. Delivery to agent or bailee of buyer.
2. Possession by buyer or his agent.
3. Waiver of lien.
*** When unpaid seller becomes judgment creditor he
does not lose his lien.
ART. 1530. REQUISITES FOR THE EXERCISE OF RIGHT OF
STOPPAGE IN TRANSITU
1. The seller must be unpaid (1525)
2. The buyer must be insolvent
3. The goods must be in transit (1531)
4. The seller must either actually take possession of the
goods sold or give notice of his claim to the carrier.
(1532.1)
5. The seller must surrender the negotiable document of
title, if any, issued by the carrier or bailee. (1532.2)
6. The seller must bear the expenses of delivery of the
goods after the exercise of the right.
ART. 1531. When Goods are in transit
1. after the delivery to a carrier or other bailee and
before the buyer or his agent takes delivery of them
2. if the goods are rejected by the buyer, and the carrier
or other bailee continues in possession of them.
When Goods No longer in Transit (after delivery to
buyer/agent)
1. if the buyer or his agent obtains possession of the
goods at a point before the destination originally fixed.
2. if the carrier or bailee acknowledges to hold the goods
on behalf of the buyer
3. if the carrier or bailee wrongfully refuses to deliver the
goods to the buyer.
*** Goods delivered to a ship, freight, train, truck or
airplane chartered by the buyer— circumstantial
whether they are in possession of the carrier or as agent
of the buyer.
*** Part of Delivery made to buyer or agent—remainder
may be stopped in transitu, unless there is showing an
agreement with buyer to give up possession of the whole
of goods.
ART. 1532. WAYS OF EXERCISING THE RIGHT TO STOP.
1. Taking actual possession of the goods
2. giving notice of his claim to the carrier or bailee.
--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.
--Redelivery necessary according to directions of seller.
--If goods are covered by negotiable document of title
carrier or bailee has no obligation to deliver to seller
unless document is cancelled.
ART. 1533. 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. Where the goods are perishable in nature
2. Where the right to resell is expressly reserved in case
the buyer should make a default
3. Where the buyer delays in the payment of the price for
an unreasonable time.
ART. 1534. WHEN THE SELLER MAY RESCIND
1. Where the right to rescind is expressly reserved in case
the buyer should make a default
2. Where the buyer delays in the payment of the price for
an unreasonable time.
ART. 1535. EFFECT OF SALE OF GOODS SUBJECT TO LIEN
OR STOPPAGE IN TRANSITU.
1. Where Goods not covered by negotiable document of
title.—Seller can give no larger right than he has. Also
with a buyer who sold goods to another.
2. 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.
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, as provided in Art. 1198: (IFIVA)
1. When after the obligation has been contracted vendee
becomes insolvent, unless he gives a guaranty or security
for the price
2. When he does not furnish to the vendor the guaranties
or securities which he has promised
3. When by his own acts he has impaired said guaranties
or securities after their establishment, and when through
fortuitous event they disappear, unless he immediately
gives new ones equally satisfactory
4. When the vendee violates any undertaking, in
consideration of which the vendor agreed to the period
5. 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. All
fruits pertain to vendee from the day on which the
contract was perfected.
Article 1538—Loss, Deterioration or Improvement of
Object before its delivery governed by Article 1189.
1. If the thing is lost w/o the fault of the seller, the
obligation shall be extinguished
2. If the thing is lost through the fault of the seller, he
shall be obliged to pay damages; it is understood that the
thing is 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 seller,
the impairment is to be borne by the buyer
4. If it deteriorates through the fault of the seller, the
buyer may choose b/w rescission or fulfilment with
indemnity in either case
5. If the thing is improved by its nature, or by time, the
improvement shall inure to the benefit of the buyer
6. If it is improved at the expense of the seller, 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. Sale OF REAL ESTATE by unit of measure or number:
The vendor must deliver all that may have been stated in
the contract. If it is not possible to deliver all, the vendee
may choose between:
LACKING/SMALLER AREA OR NUMBER
1. Proportional reduction of the price or
2. 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. Rescission shall take place only if inferior
value of the thing sold exceeds 1/10 of the price.
❖ 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.
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.
✓ The Above Rules (Art. 1539 and 1540 shall be
applicable to judicial sales)
b. Sale of REAL ESTATE by lump sum(1542): There
should be no increase or decrease of the price, although
there be a greater or lesser area or number than that
stated in the contract.
❖ Rule applicable to Sale of two or more
immovables for a single price.
❖ 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, although the same
exceeds the area or number specified in the
contract. The BOUNDARIES prevail because it
contains the real and true area of the land.
❖ What if the vendor cannot deliver all that is
included w/in the designated boundaries?
Vendee has the option to:
a. Reduce the price in proportion to the
deficiency in the area OR
b. Rescind the contract for breach of
stipulations.
PRESCRIPTION OF ACTIONS for rescission or exaction of
proportionate reduction of the purchase price against
the vendor under Art. 1539 and 1542: Six Months from
the day of delivery. [1543]
DOUBLE SALE (1544)
General Rule: FIRST IN TIME, 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. Two or more sales transactions must constitute valid
sales
2. Two or more sales transactions must pertain to the
same object or subject matter
3. 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
Rules of Preference of Ownership
Movable or Personal Property: Owner is the one who is
in first possession in good faith.
Immovable
1. First to register in good faith
2. No inscription, first to possess in good faith
3. 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, including both registration in its
ordinary and strict sense, and cancellation, annotation,
and even the marginal notes. It is the entry which records
solemnly and permanently the right of ownership and
other real rights.
CASES WHERE ARTICLE 1544 CANNOT BE INVOKED
1. 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. The vendee a retro has the better right over the
donee. The donor had nothing more to donate because
of failure to repurchase the property.
2. Where one of the deeds of sale is a forgery.
3. Where one sale is absolute and the other is a pacto de
retro where the period to redeem has not yet expired.
4. Where one of the sales is subject to a suspensive
condition which condition was not complied with and the
other is an absolute sale. Even if the conditional sale was
made prior to the absolute sale.
5. Where one transaction is a sale and the other a
mortgage goods and the buyer takes them as they are. However,
6. Where one claim is based on prescription and the such condition does not include those that could not be
other is on sale discovered by a physical examination of the goods sold.
7. Where the subject land is not registered under PD 3. Sale of second hand articles does not carry any
1529 warranty as to the condition, adaptation, fitness or
8. In a contract to sell, there being no previous sale of the suitability for purposes for which they have been
property. purchased.
4. Sale of property sold at public auction for tax
✓Article 1544 applicable to Double Donations as delinquency. There is no warranty on the part of the
provided by Art. 744. State as to the title of the owner.

CONDITIONS AND WARRANTIES WARRANTY AGAINST EVICTION—The seller guarantees

Article 1545.
What are the options of a party to a contract of sale
subject to a condition, when such condition was not
fulfilled by the other party?
a. Refuse to proceed with the contract OR
b. Waive performance of the condition and proceed with
the contract
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.
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.

What if the condition agreed upon is in the nature of a Elements (DVJ-SW)

promise that it should happen? Then the non-fulfillment
of such condition is considered a breach of warranty.
Article 1546. WARRANTY.
--It is a collateral undertaking in a sale of either real or
personal property, express or implied, that if the
property sold does not possess certain incidents or
qualities, the purchaser may either consider the sale void
or claim damages for breach of warranty.
1. Vendee is deprived in whole or in part of the thing
purchased
2. The deprivation is by virtue of a final judgment
3. The judgment is based on a prior right to the sale or an
act imputable to the vendor
4. The vendor was summoned in the suit for eviction at
the instance of the vendee
5. No waiver of warranty by the vendee

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.

✓ Affirmation of the value of the thing or statement of

the seller’s opinion is not warranty, unless the seller
made such affirmation or statement as an expert and it
was relied upon by the buyer.

Implied Warranty—It is inherent in a contract of sale and

presumed to exist although nothing has been mentioned
about it.

Implied Warranties in Contracts of Sale (1547)

1. Implied warranty as to the right of the seller to sell at
the time when ownership has to pass. (Warranty against
eviction)
2. Implied warranty against hidden defects or faults or
charge or encumbrances unknown to the buyer
3. Implied warranty as to fitness and merchantability
4. Warranty against encumbrances or non-apparent
servitudes

Cases where implied warranty is not applicable

1. Sale made by a sheriff, auctioneer, mortgagee, 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