OBLIGATIONS OF THE VENDEE

- Accept delivery
- Pay price

GR: Vendee not obliged to accept delivery by installments

Exception: If stipulated

Remedy for Breach of delivery by installment:

- (Whole contract) injured party may sue for damages
- (Severable) injured party may claim for compensation for the
particular breach

GR: Buyer has right to examine goods

Exceptions:
- By agreement
- Collection on Delivery (Cash on Delivery)
- Exception to COD: Agreement to inspect upon delivery

Acceptance can be:

1. Express
2. Implied

Action for Damages – Acceptance

GR: Acceptance of goods does not discharge seller of liability from
breach of promise or warranty
Exceptions:
 - Express/Implied stipulation
- Laches

Effects of Refusal, when Justified:

- No duty to return
- Mere notification of refusal will suffice
- Seller will bear risk in case of loss of goods
- Buyer can make himself bailee, will bear risk
- Buyer can resell goods

GR: Delivery to courier = Delivery to Buyer

Exceptions:
- Seller reserves ownership rights
- Bill of Lading content: Deliverable to seller or his agent/
order of the seller or his agent
- Bill of Lading content: Deliverable to buyer or his agent but
Bill of Lading in the possession of seller or his agent

Vendee will owe interest, when:

- Expressly stipulated
- Thing sold produce fruits or income
- Guilty of default (Demand may be judicial or extrajudicial)
Vendee’s right to suspend payment, when:
- Possession or ownership is disturbed
- Well-grounded fear of vindicatory action or foreclosure of
mortgage
Vendee has no right to suspend, when:
- Vendor gives security of return = Refund
- Stipulation made of such contingency
 - Vendor caused the disturbance/danger to cease
- Disturbance is a mere act of trespass
- Full payment
Vendor has the right to rescind, when:
Reasonable grounds of fear for
- Loss of immovable property sold
- Loss of the price
NOTE: Other than that, the remedy is fulfillment

GR: Vendor may sue for recission when vendee fails to pay agreed
price
Exception: Stipulation of automatic recission on agreed time

Requisites for a valid rescission:

- Demand (Extrajudicially or Judicially) (by Notarial act)
- Demand is not for payment of price but for rescission of
contract
Automatic rescission not applicable, when:
- Sale on installment of real property
- Contract to sell/ Conditional sale (real property)
- Cases covered by Realty Installment Buyer Act (Maceda Law)

GR: Expenses of execution and registration borne by the vendor

Exception: Stipulation

Vendee answerable for damages, in case of:

- Breach
- Fraud
- Negligence
 - Delay

Goods – Any tangible personal property except legal tender

Actions in case of Breach of Contract of sale of goods:

- Demand for payment (Seller)
- Damages for non-acceptance (Seller)
- Rescission (Seller)
- Specific performance (Buyer)
- Damages for breach of warranty (Buyer)

Seller can demand payment, when:

- Ownership passed to buyer
- Price is payable on a certain day
- Goods cannot readily be resold

Measure for Damages (Seller):

- Unrealized profit/Estimated loss (Contract price – Market
Price)
- Full amount of damage (When no market for goods)
- Proximate Damages (Fraud, Bad Faith, Malice)
Requisites for Automatic Rescission (Seller):
- Goods not yet delivered
- Notice given by buyer
Seller can rescind, when:
- Buyer has repudiated the contract
- Buyer manifests inability to perform obligation
- Buyer committed breach
Rescission (Buyer)
- Goods by description or sample - Goods delivered do not
correspond with the description or sample
Transfer of Title not rescinded, until:
- Unpaid seller gave notice
- Manifested intention to rescind through overt acts
Right to Specific Performance, requisites (Buyer):
- Breach
- Court issued order of Specific Performance
- Order made upon the application of buyer
NOTE: Seller has no retention right even if damage is paid.

Alternative remedies for Breach of Warranty (Buyer):

- Acceptance of goods through recoupment or extinction of
price
- Accept and maintain action for damages
- Refuse and maintain action for damages
- Rescind and refuse, if received offer to return for the
recovery of price
Rescission not allowed, when (Buyer):
- Bad faith (Buyer knew of the breach)
- Fails to notify within reasonable time
- Fails to return goods in substantially good condition

Lemon Law
Coverage:
- Brand new vehicles
- Motorcycles not covered
Scope:
- 12 months after purchase
 - 20,000km mileage
- Whichever comes first
Defects covered:
- Does not meet manufacturer’s specifications
- Do not meet warranty claims covered by law
How to avail:
- Written complaint to the dealer
- Repair must be within 12-month period
- 4 repair attempts
- Must be returned within 30 days from previous repair
attempt

EXTINGUISHMENT OF SALE:
- Common
- Special
- Extra Special (conventional or legal redemption)
Conventional Redemption
- Pacto de Retro sale (Right of Repurchase)
- Vendor reserves right to repurchase
- Application: Movable and Immovable
- Ownership of vendee not absolute

Vendor reimburses vendee the:

- Price
- Expenses of contract
- Other legitimate payments
- Necessary and useful expenses
Reformation of instrument:
 - Remedy granted by law
- Construction of contract to apply the real intention of parties
- Such intention not expressed in the instrument
Nature of Conventional redemption:
1. Contractual – express contract at time of perfection
2. Accidental – does not affect the contract itself
3. Real right – binds third persons
4. Potestative- depends upon the will of the vendor
5. Resolutory condition – when exercised by vendee, right of
ownership by vendee is extinguished
6. Right/Power/Privilege – not an obligation
7. Personal to vendor – not exercised by a third person
8. Reciprocal/Bilateral – dependent on each other, as to
obligations

Option to Buy vs. Right to Repurchase

Option to Buy:
- Granted by seller to buyer
- May be granted after sale
Right to Repurchase:
- Right reserved by seller in the same instrument of sale
- Reserved at the time of perfection

Right to Redeem vs. Right to Repurchase

Right to Redeem:
- No authority upon expiry (functus officio)
- Exercised on or before period expires
- By force of law
- Bound by the price
Right to Repurchase:
- After expiry
- After the period
- Purchaser may or may not re-sell (Not bound by law)
- Not bound by price

Pacto de Retro v. Mortgage

Pacto de Retro
- Ownership is transferred
- If not repurchased within time, seller loses right
- No obligation of purchaser to foreclose
- No right to redeem after maturity
Mortgage
- Ownership not transferred
- Does not lose interest post-maturity
- Mortgagee has duty to foreclose
- After maturity but before foreclosure, mortgagee can redeem
Equitable mortgage
- No proper form
- Only intention
- Intention: Security for a debt
Right of redemption, period:
- Without agreement: 4 years from contract date
 - With agreement: not exceeding 10 years from agreement
- Within 30 days if contract is found as pacto de retro by court

If vendor fails to comply with the requisites to the right of

repurchase vendee can consolidate through judicial order. Vendee
is:
- Subrogated to vendor’s rights
- Has the right to eject vendor
Creditor of vendor cannot make use of the right of redemption
unless they have exhausted the property of the vendor.

Vendee who acquired the whole of an undivided immovable, may:

- Compel the vendor to redeem the whole

Redemption of Joint sale by Co-owners/Co-heirs

Co-owners:
- As to their respective shares (Vice-versa for heirs against
vendee)
Co-heirs:
- As to the portion inherited (Vice-versa for heirs against
vendee)
NOTE: Vendee may demand co-heirs/co-owners to repurchase the
whole. Vendee-a-retro can refuse partial redemption.

Redemption in Separate Sales:

- Co-owner may independently redeem
- Vendee cannot compel the repurchase of the whole
Pro-ration of fruits
At the time of sale and redemption, fruits exist:
- Reimbursement of the fruits at the time of redemption
No fruits at the time of sale but fruits exist at the time of
redemption:
- Pro-rated between vendor-a-retro and vendee
- Vendee is based on the time of possession of the last year
from the anniversary of the date of sale
Vendor-a-retro shall recover land free from:
- Charges
- Mortgages
- Except leases executed in good faith

Legal redemption
- Right to be subrogated
- Same terms of the contract
- Simply put, substitution
- Statutory privilege
Instances of Legal redemption
- Co-owner
- Adjacent owners of rural lands
- Adjacent owners of urban lands
- Sale of credit or other incorporeal right
Requisites for co-owners:
- There must be co-ownership
- Alienation of all or any of the shares
- Sale to third person or stranger
- Sale before partition
Requisites for rural lands:
- Rural
 - Adjacent
- Alienated
- Must not exceed 1 hectare
- Vendee must own any other rural land
- Not separated by brooks, drains, ravines, roads, and
apparent servitudes
NOTE: If 2 or more adjoining owners desire to exercise the right,
preference to the owner of the smaller area. If same area, the first
one shall be preferred.

Urban can exercise:

Pre-emption – act or right to purchase before others
Redemption – after perfection of sale
Requisites for urban lands:
- Adjacent
- Area: So small
- Major portion: Cannot be used for practical purposes
- Bought merely for speculation
- Preference if 2 or more: Intended use is best justified
Period to exercise:
- 30 days from written notice
-