QUICK REVIEWER FOR SALES

MATSUMURA C2020

QUICK REVIEWER FOR SALES o F.O.B. destination – arrival of carrier to point
Based on: Villanueva book; Clarence Tiu 2017 of destination means delivery to buyer (i.e.
Professor: Atty. Arpee Santiago loss during transit means loss of seller)
• C.I.F. (Costs, insurance, and freight)
o If paid by buyer, buyer is liable at point of
CONSUMMATION OF SALE [CHAPTER 6] shipment
o If paid by seller, seller is liable until goods
Obligations of Seller have reached its destination
• Preserve the subject matter § In General Foods Corp v. NACOCO, the stipulation says
o Specific or Determinate Object – upon perfection and before delivery, that the price is dependent on the “net landed weight” upon
the seller must take care of it with the diligence of a good father of a arrival to NY. When it arrived in NY, it was less than the weight
family. Shall be LIABLE for any breach (i.e. deterioration or loss) agreed upon. Here, the seller must prove that the shortage was
o Determinable objects - it shall only be determinate once given. Thus, due to the voyage or else seller is liable.
when there is loss or deterioration, the seller may replace the subject § Constructive – buyer has control
matter since it has yet to be determinate.
• Placing title of ownership in the possession of the
o EXAMPLE. X sold an I-phone to Y. The phone breaks before it was
buyer
delivered to Y. What happens? X can replace the I-phone since it has
yet to be determinate. • Use and enjoyment by the buyer of the rights
• Delivery the subject matter pertaining to the incorporeal real property
o Delivery ipso jure transfers ownership to the buyer unless otherwise • Execution of public instrument (whether movable or
stipulated (express reservation) immovable) is equivalent to delivery unless otherwise
o Types stipulated.
§ Actual – buyer has control and possession
Examples of execution of Examples of execution of public
§ Constitutum Possessorium – from being owner to being leasee
public instrument as instrument as NOT equivalent to
§ Traditio Brevi Manu – from being leasee to to owner
delivery delivery
§ Traditio Longa Manu – “point” it
§ Delivery by Negotiable Document of Title– the acquires title
to the goods as transferor • Registered owner allowed • Instrument states a certain date for
§ Symbolic – example: delivery of the keys where movable is kept the buyer to be recognized buyer to take possession of the
§ Delivery through carrier – delivery to carrier = delivery to as a stockholder and was property
buyer voted into the • Instrument states that until last
• F.A.S. (free along side ship) – seller bears risk until the corporation’s Board of payment is made, the title remains with
goods are placed alongside the vessel Directors the seller
• F.O.B. (free on board) –seller bears risk until point of • Physical delivery of the • Conditional sale where Suspensive
shipment or destination stock certificate condition has not happened
o F.O.B. shipping point – delivery to carrier • At time of execution of the instrument,
means delivery to buyer (i.e. loss during seller has no control over the subject
transit is loss of buyer) matter
QUICK REVIEWER FOR SALES
MATSUMURA C2020
• Deliver fruits and accessories
o Buyer has the right to the fruits and accessories from the time the
obligation to deliver the subject matter arises. Note however that the
buyer will ACQUIRE real right over such only after it has been
DELIVERED.
• Warrant the subject matter
o [chapter 12]
Effect and Completeness of Delivery
• For delivery to produce the twin legal consequences of transferring ownership
to the buyer and fulfillment of the obligation of the seller
o Delivery must be made pursuant to a valid sale
§ EXAMPLE. If the sale is void, then there is no transfer of
ownership.
o The seller must have ownership over the subject matter when it was
delivered.
o It must be delivered to the buyer or his duly authorized representative
• What if buyer refuses to accept?
o If the refusal is without just cause, the title still passes upon delivery (i.e.
the risk of loss will be borne by the buyer), but the seller is still obliged
to take steps not to be held liable.
Rules on Effects of Delivery for MOVABLES (Art. 1522)
• Seller delivers LESS than stipulated
o Buyer accepts or retains knowing that the seller won’t fulfill the contract
in full – buyer pays the stipulated price
o Buyer uses or disposes BEFORE knowing that the seller won’t fulfill
the contract in full – buyer will pay only the fair value of the goods
he/she received.
• Seller delivers MORE than stipulated
o Buyer may accept the goods and reject the excess (divisible), or reject
the whole of the goods (indivisible)
o Buyer accepts the excess – buyer pays for the excess at contract rate
• Seller delivers goods MIXED with goods of a different description
o Buyer may accept the contracted goods and reject the rest (divisible), or
reject goods entirely (indivisible)
*REMEMBER that the seller is also obliged to deliver the accessories and accessions
*REMEMBER that this does NOT apply when the sale is for fungible things (in mass)
and not by actual number of units.
Delivery for MOVABLES when
• Goods held by 3rd party – said third person must acknowledge to the buyer that
he holds the goods on the buyer’s behalf to effect delivery
• Reservation of ownership – transfers ownership only upon full payment of price
or until certain conditions are fulfilled.
o Goods deliverable to the order of the buyer, but the bill of lading is
retained by seller – seller reserves right to the possession but ownership
is transferred to the buyer
o Bill of exchange and bill of lading given to buyer to secure acceptance
or payment – buyer must return it if no payment is made. Consequently,
ownership is still with the seller.
• Sale by Description and/or sample
o Does not correspond with description/sample – buyer may rescind
o If the sale is by sample AND description, the subject matter must be
sufficient in both or else may rescind
o If buyer acquiesced to the deviations from the description and/or
sample, he/she is NOT released from obligation to accept and pay for
the goods.
• On sale or return
o Buyer can return the goods instead of paying the price.
§ Ownership passes to the buyer on delivery but he may revert
ownership in the seller by returning the goods within the time
fixed in the contract.
§ If no fixed time, within a reasonable time
o Such agreement/stipulation must be in WRITING
• Sale on approval, trial, satisfaction, or acceptance
o Ownership passes to buyer when
§ Buyer signifies approval or acceptance
§ Buyer doesn’t signify approval or acceptance but retains the
thing without notice of rejection after expiration of term.
(AKA term is over but you kept it)
o Such agreement/stipulation must be in WRITING
QUICK REVIEWER FOR SALES
MATSUMURA C2020

*REMEMBER delivery is evidence by a written acknowledgment/receipt of buyer • Accept the area in full and pay at the contract rate
receiving the goods. (bill of lading, and factory consignment invoice NOT evidence) • Lump sum contract (Art. 1542) – price based on estimate or both the area and
Time, Place, and Expenses of Delivery of MOVABLES (Art. 1521) boundaries are states (e.g. 1 million for 1,000 square meters)
• Place of delivery o Area is greater or lesser than stipulated - No increase or decrease of the
o Express or implied in the contract price
o Seller’s place of business o Two or more immovable sold for a single price – no increase or decrese
o Seller’s residence of the price
o Specific goods - where goods are found (if found in another place from o When boundaries and area or number should be designated in the
where the contract or sale was made) contract – seller is bound to deliver all that is included even when it
• Time of delivery exceeds the area or number specified in the contract
o Stipulated in the contract § “more or less” allows a reasonable excess or deficiency in the
o Within a reasonable time area stipulated
• Expenses of delivery • Judicial sale in mass of separate lots will not be set aside UNLESS a larger sum
o Demand or tender of delivery may be treated as ineffectual unless made could have been realized from a sale in parcels, or a sale of less than the whole
at a reasonable hour (question of fact) would have been sufficient to cover the debt.
o Expenses in putting goods into a deliverable state • Registration under Torrens Title
§ Stipulation o Not necessary for tradition, execution of a public instrument is enough
§ Borne by the seller to transfer ownership between the parties
o Necessary to bind third parties
Rules on Effects of Delivery for IMMOVABLES
• Unit price contract– price is referenced to a stated rate per unit area Double Sales on MOVABLES
o Obligations of seller (Art. 1539) • Buyer who first takes possession
§ Deliver all that has been stated in the contract
§ Area is smaller than what is stated, buyer may choose Double Sales on IMMOVABLES
• Proportional reduction of price • Essential Elements for Applicability of Art. 1544
• Rescission (lack of area is at least 1/10 of that stated o Two or more sales transactions that are valid sales (or voidable)
or if the buyer would not have bought the immovable o Must be the same subject matter
if he had known of its smaller area) o The buyers are at odds over the rightful ownership
§ Part of the immovable is not of the quality specific in the o Buyers must have bought from the same seller
contract, buyer may choose • Good faith
• Proportional reduction o Gave full payment
• Rescission (inferior value of the thing sold is more o Not aware of any flaw or defect in the title or mode of acquisition
than 1/10 of the price agreed upon, or if the buyer o Should have inquired on the nature of possession of the occupants if
would not have bought the immovable if he had any
known of its inferior quality) o Lis pendens
§ Area is greater that what is stated (Art. 1540), buyer may § In bad faith if buyer ignored the notice of lis pendens
§ Good faith if the lis pendens was already being ordered for
• Accept only the area included and reject the rest
cancellation at the time of purchase
QUICK REVIEWER FOR SALES
MATSUMURA C2020

o When dealing with the non-registered ownet, buyer must inquire on the
authority and capacity of the person to sell the property for the owner
(e.g. agent with an SPA)
o For entities regularly dealing with real estates (e.g. banks) – cannot
simply rely on the title and must investigate actual condition and
occupants of the property
• Double Sale of Land registered under torrens title (Art. 1544)
o In good faith was the first to registers with the Register of Deeds
§ 1st buyer is always in good faith
§ 2nd buyer is in good faith if he/she doesn’t know of the prior
sale
o In good faith was first in the possession
o Oldest title
• Double Sale of Unregistered Land
o 1544 is not applicable
o Follow priority in time stronger in right (oldest title meaning first buyer
always win)
• EXAMPLES
o 1tst buyer who buys unregistered land then registers it > 2nd buyer who
buys at an auction of the debtor (seller to the first buyer)
§ 2nd buyer at the auction merely steps into the shoes of the
debtor
o 1st buyer buys unregistered land < 2nd buyer buys at a public action
while it was registered already

*REMEMBER that declaration of purchase for tax purposes is NOT registration