REVIEWER LAW OF SALES

BY: HECTOR DE LEON 2. By symbolical tradition or traditio

CHAPTER 4
ART. 1495.
Principal obligations of the vendor
1. To transfer the ownership of the
determinate thing;
2. To deliver the thing;
3. To warrant against eviction and hidden
defects;
4. To take care of the thing, pending
delivery, with proper diligence;
5. To pay for the expenses for the
execution and registration of the deed of
sale, unless there is a stipulation to the
contrary.
symbolica;
3. By traditio longa manu;
4. By traditio brevi manu;
5. By traditio constitutum possessorium;
6. By quasi-delivery or quasi-traditio.
ART. 1497.
Concept of tradition or delivery
▸ Derivative mode of acquiring ownership
by virtue of which one who has the right
and intention to alienate a corporeal
thing, transmits it by virtue of a just title to
one who accepts the same.
It is only after the delivery, actual or
constructive, that a vendee acquires a
real right or ownership over it.

Vendor has obligation to transfer

ownership and to deliver
▸ Vendor does not need to be the owner
of the thing at the time of perfection of the
sale.
▸ Vendor needs to have a right to transfer
the ownership of the thing at the time it is
delivered.
Actual delivery of thing sold
▸ When the object is placed in the control
and possession of the vendee.
▸ Involves the physical delivery of the
thing and is usually done by the passing
of a movable thing from hand to hand.

ART.1498.
ART. 1496
Symbolic delivery by the execution of a
Ways of effecting delivery public instrument is equivalent to actual
delivery only when the thing is subject to
1. By actual or real delivery the control of the vendor.
2. By constructive or legal delivery ▸ A seller cannot deliver constructively if
he cannot deliver actually even if he
3. By delivery in any other manner
wants to.
signifying an agreement that the
possession is transferred to the vendee. ▸ Example: Execution of a public
instrument cannot be equivalent to actual
delivery if the object is in the possession
Ways of effecting constructive of third persons.
delivery
1. By the execution of a public
instrument;
 1. By the execution of a public
instrument;
Symbolic tradition
2. When execution of a public instrument
▸ When parties make use of a token is not available, by the placing of the titles
symbol to represent the thing delivered. of ownership in the possession of the
vendee; or
▸ Example: Delivery of the key where the
thing sold is stored or kept. 3. By allowing the vendee to use his
rights as new owner with the consent of
the vendor.
ART. 1499.
Traditio Longa Manu
ART. 1502.
▸ Takes place by mere consent or
Contract of sale or return
agreement of the contracting parties.
▸ Property is sold;
▸ When the vendor merely points to the
thing sold which shall thereafter be at the ▸ Buyer becomes the owner of the
control and disposal of the vendee. property on delivery;
▸ Buyer has the option to return the
property to the seller instead of paying
Traditio Brevi Manu
the price.
▸ When the vendee is already in the
▸The option to purchase or return the
possession of the thing sold by virtue of
goods rests entirely on the buyer
another title;
regardless of the quality of the goods.
▸ Example: When the lessor sells the
▸Subject to resolutory condition
thing leased to the lessee. Lessee does
not need to turn over the thing leased to
the lessor, only to get it back again.
Sale on trial or approval
▸ No sale of property yet;
ART.1500.
▸ Approval of buyer is still needed;
Traditio Constitutum Possessorium
▸Title shall continue in the seller until
▸ Opposite of traditio brevi manu. buyer's approval of the goods, or by the
buyer's failure to comply with the express
▸ When the vendor continues in
and implied conditions of the contract as
possession of the property sold not as
to giving notice of dissatisfaction or as to
owner but in some other capacity;
returning the goods.
▸ Example: When the vendor stays on
► Subject to a suspensive condition.
the property as tenant. He is now leasing
the property from the vendee.

ART. 1503.
ART.1501. Delivery to carrier
Quasi-traditio ► GENERAL RULE: Delivery to the
carrier is deemed to be a delivery to the
► Delivery of incorporeal things (ex.
buyer.
Shares of stock)
• Exception: When the bill of lading
► Delivery is effected:
provides that the goods are deliverable to
the seller or his agent or to the order of
the seller or his agent, the seller reserves
the ownership in the goods.
Bill of lading- A contract or receipt for the
transport of goods.
Three parties:
 Shipper
 Consignee
 Carrier
ART. 1505
Sale by a person not the owner
GENERAL RULE: A seller can only sell
properties which he owns. The buyer
gets only such rights as the seller had.
Exception 1: Where the owner of the
goods is, by his conduct, precluded from
denying the se//e authority to se//.
(Example: The owner of the goods
merely nods when asked by the buyer if
the seller has authority to sell the goods.)
Exception 2: Where the law enables the
apparent owner to dispose of the goods
as if he were the true owner thereof.
(Example: Factor's Act in the United
States, United Kingdom and other
common-law countries. There is no
Factor's Act in the Philippines.)
GENERAL RULE: A seller can only sell
properties which he owns. The buyer
gets only such rights as the seller had.
Exception 3: Where the sale is
sanctioned by statutory or judicial
authority. (Example: Acquisition in good
faith of a lost movable property at a
public sale.)
Exception 4: Where the sale is made at
merchant's stores, fairs, or markets. - To
promote stability to business
transactions.
GENERAL RULE: A seller can only sell
properties which he owns. The buyer
gets only such rights as the seller had.
Exception 5: Where the seller has a
voidable title which has not been avoided
at the time of the sa / e (Example: If the
thing is sold to an innocent third person
who does not have knowledge of the
defective title and before the contract was
annulled.)
Exception 6: Where the seller
subsequently acquires title. - When a
person conveys property to another of
which at the time he is not the owner, his
subsequent acquisition of title validates
his previous conveyance.
Requisites for acquisition of good title
by the buyer:
1. The buyer buys the goods before the
title of the seller has been avoided;
2. The buyer buys them in good faith and
for value; and
3. The buyer buys the goods without
notice of the seller's defect of title.
**If the buyer buys a car from a minor, the
buyer may subsequently sell the car to a
third person who acts in good faith and
before the purchase of the car by the
buyer is annulled by the minor.
**However, if the buyer buys a stolen car,
the lawful owner has a better right than
the buyer.
ART.1507.
DOCUMENT OF TITLE
A document of title in which is stated that
the goods referred to therein will be
delivered to the bearer, or to order of any
person named in such document is a
negotiable instrument of title. Document
is negotiable if:
1.) Goods are deliverable to bearer
2.) Goods are deliverable to the order of
a certain person
Common forms of document of title
a) Bill of Landing- contract or receipt for
the transport of goods and their delivery
to the person named therein, to order or
bearer.
Who may negotiate negotiable
b) b) Dock Warrant- given by dock document of title
owners to an importer of goods
1. By the owner
recognizing the latter’s title of the said
goods 2. By the person to whom the possession
or custody of the document has been
c) Warehouse Receipt- contract or
entrusted by the owner.
receipt for goods deposited with a
warehouseman containing the latter’s
undertaking to hold and deliver the said
goods to a specified person, to order or Rights of the Holder
bearer.
1. Title of the person negotiating the
document, over the goods covered by the
document;
Classes of Documents of Title
2. Title of the person to whose order by
a) Negotiable Documents of title- stated the terms of the document the goods
that goods can be delivered to bearer, or were to be delivered, over such goods;
to the order of a person.
3. The direct obligation of the bailee to
b) Non-negotiable Instrument of hold possession of the goods for him, as
Titlestated that goods are to be delivered if the bailee had contracted to him
to a specified person. directly.
NOTE: Mere transfer foes not acquire
directly the obligation of the bailee. To
Negotiation of negotiable document of
acquire it, he must notify the bailee.
title
1.) By Delivery
Rights of the Transferee
2.) By indorsement plus delivery

The rights of a transferee, to whom a

Forms of Indorsement
document is transferred but not
a) Blank Indorsement- consist of negotiated, are not absolute as it is
signature of the indorser without subjected to the terms of the agreement.
specifying the name of the indorsee. 1. Title of the goods as against the
transferor;
b) To bearer- where the indorsement
states that the goods are deliverable to 2. Right to notify the bailee of the transfer
bearer. thereof;

c) Special Indorsement- name of 3. Right, thereafter, to acquire the

indorsee is specified. obligation of the bailee to hold goods for
him.

Negotiable Document of title marked

“Non-negotiable” Transfer for Value by Delivery

Such mark will have no effect on the If a negotiable document of title is

instrument and remains to be negotiable. transferred for value by delivery, and
indorsement is essential for negotiation,
The right of the transferee are:
1. Right to the goods as against the
transferor;
2. Right to compel the transferor to
indorse Negotiation shall take effect as to
the time when indorsement is actually
made.
Warranties on sale of document
1. Document is genuine
2. He has a legal right to negotiate or
transfer it
3. He has knowledge of no fact which
would impair the validity or worth of the
document
4. He has the right to transfer the title to
the goods and that goods are
merchantable or fit for a particular
purpose.
Bailee
The bailee has the direct obligation to
hold possession of the goods for the
original owner. The goods cannot be
attached or levied and bailee cannot be
compelled to deliver the goods unless the
document be first surrendered or its
negotiation prohibited by court.
Failure of bailee or previous indorsers
to fulfill their obligations
Indorser hall not be liable for any failure
on the part of the bailee or previous
indorsers to fulfill their respective
obligation.
Effect of typographical or Grammatical
Error
It does not destroy the negotiability of
the document of title, for what should be
considered is the intent.
ART. 1521
Place and manner of delivery of the
goods.
1. Whatever is agreed upon by the
parties, express or implied;
2. If there is no agreement, the place of
delivery is that determined by the usage
of trade;
3. If there is no agreement and no
prevalent usage, the place of delivery is
the seller's place of business;
4. The seller's place of business
5. The seller's residence
6. In case of specific goods, where the
specific goods are.
Place and manner of delivery of the
goods.
▸ The presumption is that the buyer must
take the goods from the seller's place of
business or residence, rather than the
seller to deliver them to the buyer.
Duty of seller to put goods in
deliverable condition
> Unless otherwise agreed, the seller
bears the expenses to place the thing in a
deliverable state
> The buyer is not bound to make tender
or offer of payment until the seller has
complied with his obligations.
ART. 1522
Delivery of goods less than the
quantity contracted
> The buyer may reject the goods so
delivered, if the seller delivers a smaller
quantity; OR
> The buyer may accept the goods in
which case he must pay for their (1) price
at the contract rate if he knew that no
more were to be delivered, or (2) the fair
value of the goods, if he did not know that
the seller is going to be guilty of a breach
of contract.
In any case, the buyer cannot be liable
for more than the contract price with
respect to the smaller quantity of goods
he received.
Delivery of goods more than the
quantity contracted
> The buyer may accept the quantity
contracted and reject the excess;
> If the buyer accepts all the goods
delivered, he is liable for the price of all of
them.
Effect if the subject matter of the sale
is indivisible
> The buyer may reject the whole of the
goods.
Example: S agreed to sell to B a live
carabao with a weight of not less than
120 kilos but not more than 140 kilos. S
delivered a carabao weighing 150 kilos. B
may reject the carabao.
ART. 1523.
Delivery to carrier on behalf of buyer
GENERAL RULE- Delivery of goods to
the carrier constitutes delivery to the
buyer, whether the carrier is named by
the buyer or not.
• EXCEPTION-When a contrary intent
appears
Seller's duties after delivery to carrier
1. To enter into a contract with the carrier
on behalf of the buyer as may be
reasonable under the circumstances to
deliver the thing.
If the seller fails to do so, the buyer may
decline to treat the delivery to the carrier
as a delivery to the buyer in case the
goods are lost or damaged.
2. To give notice to the buyer regarding
the necessity to insure goods.
The seller should give notice to the buyer
if under the circumstances it is usual to
insure the things. If the seller fails to do
so, he shall assume the risk. However,
the seller is not liable if the buyer had all
the information necessary to insure.
C.O.D (Collect on Delivery)
> The carrier acts for the seller in
collecting the purchase price.
> The buyer must pay for the goods
before he can obtain possession.
F.O.B (Free on Board)
‣ Goods are to be delivered free of freight
expenses to the buyer to the point where
they are FOB. They may be either:
FOB Shipping Point-Free expenses for
the buyer up to the point of shipment.
Ownership passes to the buyer at the
time the goods are delivered to the
carrier;
• FOB Destination- Free expenses for the
buyer until it has reached his destination.
Ownership passes to the buyer only at
the time it has reached his destination.
F.A.S (Free Alongside Vessel)
> Seller pays all charges and bears the
risk until the goods are placed alongside
the vessel and within reach of its loading
tackle.
ART. 1524
Delivery is simultaneous with payment
of price
▸ A contract of sale is bilateral and the
obligations of the buyer and the seller are
reciprocal.
▸ If there is no date set for delivery,
neither party incurs in delay if neither
party is ready to fulfill his or her obligation
to pay the price or deliver the object.
ART. 1527
Meaning of unpaid seller
▸ One who has not been paid or tendered
the whole price or who has received a bill
of exchange or other negotiable
instrument as conditional payment and
the condition on which it was received
has been broken by reason of the
dishonor of the instrument.
▸ Payment by negotiable instrument shall
produce the effect of payment only when
they have been cashed or when through
the fault of the creditor they have been
impaired.
ART. 1526
Remedies of an unpaid seller
1. A lien on the goods or right to retain
them for the price while he is in
possession of them;
2. If the buyer is insolvent, a right of
stopping the goods in transitu after the
seller has parted with the possession of
the goods;
3. A right of resale as limited by law;
4. A right to rescind the sale as limited by
law.
ART. 1527
Meaning of lien
A charge upon real or personal property
for the satisfaction of some debt or duty
ordinarily arising by operation of law.
When unpaid seller's lien may be
exercised when he is still in
possession of the goods
1. Sales without stipulation as to credit-
The seller is entitled to the payment of
the price at the same time that he or she
transfers the possession of the goods.
2. Expiration of term of credit- If the buyer
still fails to pay when the term of credit is
over.
3. Insolvency of the buyer- The lien of the
seller is revived even though the time for
payment has not arrived yet.
ART. 1529
When unpaid seller loses possessory
lien
1. Delivery to agent or bailee of buyer
2. Lawful possession by buyer or his
agent
3. Waiver of the lien
ART. 1530
Right of seller to stop goods in
transitu
1.If the unpaid seller has already parted
with the possession of the goods, he may
still exercise the right of stoppage in
transitu.
2. The seller may resume possession of
the goods while they are in transit, when
the buyer is or becomes insolvent.
3. The right of stoppage in transitu is
exercised either by obtaining actual
possession of the goods or by giving
notice of his claim to the carrier or other
bailee in possession.
4. The buyer's insolvency need not be
judicially declared.
Requisites for the exercise of right of
stoppage in transitu
1.The seller must be unpaid;
2. The buyer must be insolvent;
3. The goods must be in transit;
4. The seller must either actually take
possession of the goods sold or give
notice of his claim to the carrier or other
person in possession.
s. The seller must surrender the
negotiable document of title, if any,
issued by the carrier or bailee;
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
▸ After delivery to a carrier or other bailee
and before the buyer or his agent takes
delivery of them
> If the goods are rejected by the buyer,
and the carrier or other bailee continues
in possession of them.
When goods are no longer in transit
> After delivery to the buyer or his agent
>If the buyer or his agent obtains
possession of the goods at a point before
the destination originally fixed
> If the carrier or bailee acknowledges to
hold the goods on behalf of the buyer
> If the carrier or bailee wrongfully
refuses to deliver the goods to the buyer
Attornment by the bailee
> Acknowledgment of the bailee to the
buyer that the bailee holds the goods on
behalf of the buyer.
> The carrier first acts as agent of the
seller for the purpose of carrying out the
transit, and in order to terminate the
seller's right to stop the transit, the carrier
then acts as agent of the buyer in holding
the goods.
> The carrier is not allowed to enlarge the
seller's right by wrongfully refusing to
deliver or attorn as the buyer's agent.
Delivery to a ship chartered or owned
by the buyer
1. If chartered by the buyer-NOT
AUTOMATIC that delivery to the carrier is
same as delivery to the buyer.
2. If owned by the buyer-Same as
delivery to an agent. In this case, there is
already delivery to the buyer. Goods are
no longer in transit.
ART. 1532
Ways of exercising the right of
stoppage in transitu
1. By taking actual possession of the
goods; or
2. By giving notice of his claim to the
carrier or bailee
Effect of outstanding bill of lading
If the goods are covered by a
negotiable document of title, the carrier or
bailee has no obligation to deliver the
goods to the seller unless such document
is first surrendered for cancellation;
If the carrier surrenders the goods to
the seller, and afterwards the bill of lading
is negotiated to an innocent purchaser for
value, that innocent purchaser for value
would be entitled to demand delivery of
the goods.
The right of the purchaser for value
and in good faith to whom such document
has been negotiated is superior to the
seller's lien or stoppage in transitu
ART. 1533
When resale is allowable when the
seller has either a right of lien or a
right to stop the goods in transitu
▸ When the seller has the right of lien; or
▸ Right to stop the goods in transitu; and
in any of the following cases
Where the goods are perishable in
nature
Where the right to resell is expressly
reserved, in case the buyer should make
a default; and
Where the buyer delays in the
payment of the price for an unreasonable
time
Effect of resale
▸ Seller enjoys the extra profit if he is able
to sell for more than the selling price to
third parties;
▸ Seller can sue the buyer for the balance
if the seller is only able to sell for less
than the price.
ART. 1534
When the seller may rescind
If the seller has the right of lien; or
When the seller has a right to the stop the
goods in transit; and in any of the
following cases
Where the right to rescind is
expressly reserved in case the buyer
should make a default;
Where the buyer delays in the
payment of the price for an unreasonable
time
Effect of rescission
▸ Seller resumes ownership of the goods.
▸ The buyer may be made liable to the
seller for damages for any loss due to the
breach of contract.
▸ Seller must manifest intention to
rescind by notice to the buyer or by some
overt act showing intention to rescind.
ART. 1537
Buyer has the right to the fruits
Vendee has the right to the fruits of the
thing sold from the time the obligation to
deliver it arises.
The obligation to deliver arises upon the
perfection of the contract of sale, even if
the delivery is subject to a suspensive
period or a suspensive condition.
This rule may be modified by the parties.
ART. 1544.
Rule in case of double sale of movable
property
> Ownership shall be acquired by the
vendee who first takes possession in
good faith.
Rule in case of double sale of
immovable property
Ownership shall belong to:
1. The vendee who first registers the sale
in good faith in the Registry of Property
(Register of Deeds);
2. If the property is unregistered,
ownership will go to the vendee who first
takes possession in good faith;
3. In the absence of both registration and
possession, ownership shall belong to
the vendee who presents the oldest title
(who first bought the property) in good
faith.
ART. 1546
Meaning of warranty
▸ Representation made by the seller of
the thing with respect to its character,
quality, or ownership, by which he
induces the buyer to purchase the same
relying on said representation.
Kinds of warranty
1. Express; or
2. Implied
Effect of express warranty:
>Any affirmation of fact or any promise by
the seller relating to the thing, to induce
the buyer to purchase the thing, and the
buyer is indeed induced to purchase the
thing.
>The inducing cause of the purchase
must be the erroneous statement made
by the seller, in order to constitute breach
of warranty.
>Intent or knowledge is not necessary to
make the seller liable for his warranty
Effect of expression of opinion
▸ A mere expression of opinion, no matter
how positively asserted, does not import
a warranty unless the seller is an expert
and the opinion was relied upon by the
buyer.
• Examples are usual exaggerations in
trade and advertisements
ART. 1547
Meaning of implied warranty
▸ Law derives it from implication or
inference from the nature of the
transaction or the relative situation or
circumstances of the parties.
Implied warranties in sale
1. Implied warranty as to seller's title -
That the seller guarantees that he has a
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;
2. Implied warranty against hidden
defects or unknown encumbrances-The
seller guarantees that the thing sold is
free from any hidden faults or defects or
any charge or encumbrance not declared
or known to the buyer; and
3. Implied warranty as to fitness or
merchantability-That the seller
guarantees that the thing sold is
reasonably fit for the known particular
purpose for which it was acquired by the
buyer or where it was brought by
description, that it is of merchantable
quality.
When implied warranty not applicable
1. "As is and where is" sale-The vendee
takes them in the conditions in which they
are found;
2. Sale of secondhand articles-No implied
warranty as to the condition, adaptation,
fitness or suitability for the purpose for
which made. However, such articles
might be sold under such circumstances
as to raise an implied warranty;
3. Sale by virtue of authority in fact or
law- The rule on implied warranty does
not apply to a sheriff, auctioneer,
mortgagee, pledgee or other person who
sells. (caveat emptor)
ART. 1548
Meaning of eviction
▸ Judicial process where the buyer is
deprived of the whole or part of the thing
purchased by virtue of a final judgment
based on a right prior to the sale or an
act imputable to the vendor.
Essential elements of the warranty
against eviction
1. Vendee is deprived in whole or in part
of the thing purchased;
2. He is so deprived by virtue of a final
judgment;
3. The judgment is based on a right prior
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. There is no waiver on the part of the
vendee.
ART. 1557
Other requirements to enforce
warranty against eviction
1. Deprivation in whole or in part of the
thing sold;
2. Existence of a final judgment.
3. Formal summons to vendor.
4.Vendor to be made co-defendant.
ART. 1561
Requisites for warranty against hidden
defects
1.The defect must be important or
serious;
2. It must be hidden;
3. It must exist at the time of sale;
4. The vendee must give notice of the
defect to the vendor within a reasonable
time;
5. The actions for rescission or reduction
of the price must be brought within six
months from delivery of the thing sold or
within 40 days from the date of delivery in
case of animals;
6. There must be no waiver of warranty
on the part of the vendee.
ART. 1562
Implied warranty of fitness and implied
warranty of merchantibility
▸ Warranty of fitness- Where the buyer
expressly or impliedly manifests to the
seller the particular purpose for which the
goods are acquired, and the buyer relies
upon the seller's skill or judgment that the
goods are fir for the purpose.
▸ Warranty of merchantibility- Where
goods are bought by description, there is
an implied warranty that the goods are
reasonably fit for the general purpose for
which they are sold.
ART. 1568
Effect of loss of thing sold on account
of hidden defects
1. If vendor was aware of hidden defects-
The vendee has the right to recover the
price paid, the expenses of the contract
and damages.
2. If vendor was not aware of hidden
defects - The vendee has the right to
recover the price and the interest
thereon.
ART. 1571
Limitation of action
▸ The action for rescission of the contract
or reduction of the purchase price
prescribes in SIX (6) months from the
date of delivery of the thing sold.
In case of sale of animals, the redhibitory
action must be brought within 40 days
from the date of delivery to the vendee.
ART. 1578
Responsibility of vendor where animal
dies
The vendor is liable if the animal dies
from disease within three (3) days from
the date of sale, the disease has existed
at the time of the contract.