SALES

CHAPTER ONE – NATURE AND FORMS OF THE CONTRACT

ARTICLE 1458 – CONCEPTS

 CONCEPT – contract wherein the parties obligates themselves to:
o SELLER – TRANSFER ownership and DELIVER DETERMINATE thing
o BUYER – PAY the price certain in MONEY or its EQUIVALENT
 HISTORICAL NOTES
o SPANISH code – obligation is MERELY to DELIVER
o CIVIL code – obligation is to DELIVER AND TRANSFER ownership
 Fundamental aim – TRANSFER OF OWNERSHIP
 ESSENTIAL characteristics
o CONSENSUAL
o BILATERAL RECIPROCAL
o PRINCAL
o ONEROUS
o NOMINATE
o In GENERAL – COMMUTATIVE ( by stipulation )
 EXCEPTION – ALEATORY ( by chance )
 ELEMENTS
o ESSENTIAL
 CONSENT
 OBJECT ( Determinate )
 CAUSE / CONSIDERATION ( Price )
o NATURAL – inherent / deemed to be present absent stipulation otherwise
 EX. Warranty against eviction / warranty against hidden defects
o ACCIDENTAL – present BY STIPULATION
 STAGES of contracts
o NEGOTIATION
o PERFECTION
o CONSUMATION
 KINDS
o As to NATURE
 REAL
 PERSONAL
o As to VALUE
 COMMUTATIVE
 ALEATORY
o As to the OBJECT
 Sale of PROPERTY ( tangible or corporeal )
 Sale of RIGHT
o As to VALIDITY / DEFECT
 VALID
 RESCISSBILE
 VOIDABLE
 UNENFORCEABLE
 VOID
o As to LEGALITY
 LICIT
 ILLICIT
o As to presence of CONDITION
 ABSOLUTE
 CONDITIONAL (Ex. With right to repurchase)
 o WHOLESALE or RETAIL
 WHOLESALE – UNALTERED / LARGE quantity
 RETAIL – SMALL quantity
o As to the proximate INDUCEMENT
 Sale by DESCRIPTION
 Sale by SAMPLE
 Sale by BOTH
o As to the PRICE
 CASH sale
 On INSTALLMENT
 SALE vs. DACION EN PAGO vs. CESSION
 Contract to SALE vs. contract to SELL
o In terms of CONDITION
 SALE – Resolutory
 SELL – SUSPENSIVE
o In terms of transfer of OWNERSHIP
 SALE – upon DELIVERY
 SELL – upon FULL PAYMENT
o Loss of OWNERSHIP
 SALE – lost UPON DELIVERY and can only be recovered if RESCINDED.
 SELL – RETAINS despite delivery
 SALE vs. LOAN
o Amount is SMALLER than the amount GIVEN
 SALE vs. LEASE
o SALE – WITH transfer of ownership
o LEASE – WITHOUT transfer of ownership
 KIND of EXTRA-JUDICIAL FORECLOSURE SALE
o ORDINARY execution of sale
o JUDICIAL foreclosure
o EXTRAJUDICIAL foreclosure

ARTICLE 1459 – SALE REQUIREMENTS

 TWO RULES
o Object must be LICIT
 LICIT – within the commerce of man
 ILLICIT – makes sale VOID
 Per se – by nature
 Per accidens – made illegal by law
o Vendor must have RIGHT TO TRANSFER OWNERSHIP at the TIME OF DELIVERY

ARTICLE 1460 – DETERMINATE THINGS

 OBJECT OF SALE - MUST be DETERMINATE
o Or POSSIBLE OF DETERMINATION

ARTICLE 1461 – FUTURE THINGS

 Things with POTENTIAL EXISTENCE – POSSIBLE
o Except FUTURE INHERITANCE
 Emptio Rei Sperati vs. Emptio Spei
o Emptio Rei Sperati / Sale of an EXPECTED THING
 If expected thing DOES NOT materialize, sale if NOT EFFECTIVE
o Emptio Spei
  DOES NOT matter whether thing materializes ( LOTTO )
 VAIN HOPE or EXPECTANCY – VOID

ARTICLE 1462 – KIND OF FUTURE THINGS

 MANUFACTURED
 RAISED
 ACQUIRED
 ACQUISITION DEPENDENT ON CONTIGENCY

ARTICLE 1463 – SALE OF UNDIVIDED INTEREST

 Sale results to CO-OWNERSHIP

ARTICLE 1464 – SALE OF FUNGIBLE THINGS

ARTICLE 1465 – THINGS SUBJECT TO RESOLUTORY CONDITION ARE SUBJECT TO

SALE

ARTICLE 1466 – CONTRACT OF SALE AND AGENCY TO SELL

 CONSTRUCTION – whole instrument shall be considered
 CONTRACT OF SALE
o Buyer PAYS
o Buyer becomes OWNER UPON DELIVERY
o Seller WARRANTS
 AGENCY TO SELL
o Agent delivers the price
o Agent DOES NOT become the owner despite DELIVERY TO HIM
o Agent act WITHIN authority and in the NAME OF PRINCIPAL

ARTICLE 1467 – SALE VS. PIECE OF WORK

 RULES
o In ORDINARY course of business – SALE
o Manufacture SPECIFICALLY – PIECE OF WORK
 SCHOOLS OF THOUGHTS
o MASSACHUSETTS RULE
 FOLLOWED by the civil code
o NEW YORK RULE
 Thing ALREADY EXIST – SALE
 NOT – PIECE OF WORK
o ENGLISH RULE
 MATERIAL is more valuable – SALE
 SKILL is more valuable – PIECE OF WORK

ARTICLE 1468 – SALE VS. BARTER

 GENERAL RULE – INTENT
  If intent IS NOT CLEAR
o Thing is MORE valuable – BARTER
o 50 – 50 – SALE
o Thing is LESS valuable – SALE

ARTICLE 1469 – CERTAINTY OF PRICE

 PRICE – must be CERTAIN
o NO certainty – NO TRUE consent
 NOTE – failure to pay price DOES NOT cancel sale for LACK OF CONSIDERATION, for it is still
there, namely the price.
 When it is still CONSIDERED CERTAIN even WITHOUT stipulation
o With REFERENCE to another thing certain
o Left to JUDGMENT of specific persons
o Cases provided for in ARTICLE 1472

ARTICLE 1470 – INADEQUACY OF PRICE

 EFFECT
o In ORDINARY sale – remains VALID even if price is very low.
o In JUDICIAL sale – if inadequacy is TOO GREAT, court may SET ASIDE

ARTICLE 1471 – PRICE SIMULATION

 FICTITIOUS price – VOID sale
 NOTE – rescission of price AFTER PERFECTION will NOT invalidate sale

ARTICLE 1472 – PRICE OF SECURITIES / GRAINS / LIQUIDS / ETC.

 IF price CANNOT be ascertained – sale is INEFFICACIOUS

ARTICLE 1473 – FIXING OF PRICE

 GENERAL RULE – must be mutual / CANNOT be left to will of one
o EXCEPTION – if ONE fixes and OTHER accepts (contract of adhesion)
 REASON – other could NOT have consented or DOES NOT have an idea

ARTICLE 1474 – IF PRICE CANNOT BE DETERMINED

 EFFECT
o GENERAL RULE – sale is VOID
o EXCEPTION – delivered and appropriated by the buyer
 MUST pay the reasonable price

ARTICLE 1475 – PERFECTION OF A CONTRACT TO SALE

 CONSENSUAL – perfected by mere CONSENT
o DELIVERY is NOT essential
o Delivery and payment results to CONSUMATION
 REQUIREMENT for perfection
 o FACE to FACE
 WITHOUT condition – concurrence of offer and acceptance
 WITH condition – amounts to counter offer
o THRU PHONE – same rule as face to face
o THRU CORRESPONDENCE – cognition theory
o With SUSPENSIVE condition – perfection is when the condition if FULFILLED
 FORMALITIES in PERFECTION
o Under STATUTE OF FRAUDS
 In case of REAL PROPERTY
 In case or PERSONAL PROPERTY with value 500 or MORE
 ADVERTISEMENT – are NOT offers but mere INVITATIONS
 TRANSFER OF OWNERSHIP
o GENERAL RULE – Transfer of ownership is AFTER DELIVERY
o EXCEPTION – if there is STIPULATION
 But NOT binding to an INNOCENT third person

ARTICLE 1476 – SALE BY AUCTION

 Perfected when auctioneer ANNOUNCES by the fall of the hammer or other customary manner.

ARTICLE 1477 – 1478 – OWNERSHIP

 GENERAL RULE - Ownership is transferred BY DELIVERY
o EXCEPTION – when STIPULATED
 KINDs of delivery
o ACTUAL
o CONSTRUCTIVE

ARTICLE 1479 – PROMISE TO BUY / SELL

 MUTUAL promise – RECIPROCALLY demandable
 ACCEPTED UNILATERAL promise – BINDING upon the promisor if supported by a
consideration(OPTION CONTRACT) distinct from the price
 POLICITACION – a UNILATERAL promise to buy or sell that is NOT accepted
o Produces NO juridical effect
o Mere OFFER
 UNILATERAL promise
o MUST be plain, clear and unconditional
 How long must an OPTION CONTRACT be honored
o GENERAL RULE – stipulated
o NO stipulation – court will fix

ARTICLE 1480 – INJURY OR BENEFIT FROM THING SOLD

 RISK OF LOSS OR DETERIORATION
o BEFORE perfection – SELLER bears the loss
o AT TIME of perfection – VOID or EXISTENT
o AFTER perfection but BEFORE delivery – shifted to the BUYER
o AFTER delivery – risk is with the BUYER

ARTICLE 1481 – TYPES OF SALE

  Sale by DESCRIPTION
o Of a PARTICULAR KIND
o Buyer is relying on sellers representation
 If did NOT correspond BUYER may (with damages)
 Specific performance
 Rescind
 Sale by SAMPLE
o With reference to a SAMPLE object
 If did NOT correspond BUYER may (with damages)
 Specific performance
 Rescind
 Sale by description and sample
o MUST comply with both.

ARTICLE 1482 – EARNEST MONEY

 EARNEST MONEY – money given by the buyer to the seller to bind the bargain.
 DISTINGUISHED from option contract/money
o EM = PART of the purchase price
 OC = SEPARATE from the purchase price
o EM = if given, sale is PERFECTED
 OC = sale is NOT yet perfected
o EM = BOUND to pay the remaining price
 OC = NOT bound

ARTICLE 1483 – FORM OF CONTACT OF SALE

 GENERAL RULE – may be entered into provided all essential requisites are present
 EXCEPTION
o Covered by the STATUTES OF FRAUD – law requires that they be in writing and
subscribed to be enforceable
 All sale of REAL property
 If made through an AGENT
o Authority MUST be in writing (SPA)
 To be effective against THIRD persons
o Must be REGISTERED with the ROD WHERE the property is
located
o If NOT registered – binding only BETWEEN the parties
 MUST be in public document / NOTARIZED
 Sale of PERSONAL property with value NOT LESS than 500
 Sale which is NOT to be performed WITHIN A YEAR
o Where an APPLICABLE STATUTE requires a form for the contract of sale to be VALID and
ENFORCEABLE
o Where the form is required for MERE CONVENIENCE of the parties
 As between the parties – form is NOT INDISPENSIBLE
 They are ALLOWED to compel each other to EXECUTE a contract of sale
 NOTES
o STATUTES OF FRAUDS are only applicable to EXECUTORY contracts
 NO performance has been made yet

ARTICLE 1484 – SALE OF PERSONAL PROPERTY ON INSTALLMENTS

 VENDORS RIGHTS / REMEDIES
o Exact FULL payment when vendee FAILS to pay
 o CANCEL the sale should vendee fails to pay TWO or MORE installments
o FORECLOSE the chattel (IF THERE IS ANY) should vendee fails to pay TWO or MORE
installments
 If vendor opts to foreclose – CANNOT anymore claim balance of the price
 Any agreement to the contrary SHALL BE VOID
 NOTES
o Remedies are ALTERNATIVE – may choose only ONE

ARTICLE 1485 – LEASE WITH OPTION TO BUY

 Lease WITH option to buy are really sales of personality payable in installments.
o RULE in article 1484 shall be applicable

ARTICLE 1486 – STIPULATION OF FORFEITURE OF INSTALLMENTS

 Parties are ALLOWED to stipulate that installments will NOT be returned
o PROVIDED that the same will not be unconscionable under the circumstances

ARTICLE 1487 – EXPENSES AND REGISTRATION

 GENERAL RULE
o Borne by the VENDOR / SELLER
 EXCEPTION
o STIPULATED

ARTICLE 1488 – SALE BY EXPROPRIATION

 Governed by RULE 67 of the Rules of Court.

CHAPTER TWO – CAPACITY TO BUY OR SELL

ARTICLE 1489 – PERSONS WHO MAY ENTER INTO A CONTRACT OF SALE

 GENERAL RULE – all person, NATURAL or JURIDICAL may enter into a contract of sale
 EXCEPTIONS – when the LAW declares their incapacity
o KIND of INCAPACITY
 ABSOLUTE – cannot bind themselves
 RELATIVE – only exist with reference to certain persons or certain class of
property

ARTICLE 1490-1491 – RELATIVE INCAPACITY

 List if RELATIVE INCAPACITY
o Husband CANNOT sell to WIFE except:
 There is separation of property / MARRIAGE SETTLEMENTS
 JUDICIAL separation of property
 REASON – protection of thirds persons relying upon supposed
ownership by either spouse
  PERSON WHO MAY QUESTION
o Interested parties
o Government – to prevent tax evasion
o GUARDIANS
o AGENTS
o EXECUTORS AND ADMINISTRATORS
o PUBLIC OFFICERS AND EMPLOYEES
o JUDICIAL OFFICERS, EMPLOYEES AND LAWYERS
o OTHERS SPECIFICALLY DISQUALIFIED
 ALIENS – purchasing of LANDS
 UNPAID SELLER
 SHERIFF – person conducting the sale
 REASONS
o To MINIMIZE temptations of exertion of UNDUE influence
o “THE LAW DOES NOT TRUST HUMAN NATURE TO RESIST TEMPTATION”
o Sale is VOIDABLE when:
 Guardians
 Agents
 Executors and administrators
o Sale is VOID when:
 Others mentioned

ARTICLE 1492 – PROHIBITIONS OF THE PRECEEDING ARTILES ARE APPLICABLE TO

COMPROMISES AND REDEMPTIONS
 COMPROMISES – contract entered into to AVOID litigation
 RENUNCIATION – GRATITIOUSLY abandons rights against his creditor

CHAPTER THREE – EFFECTS OF THE CONTRACT WHEN THE THING SOLD

IS LOST

ARTICLE 1493 – EFFECT OF LOSS

 GUIDELINES
o Loss AT the time of the sale
 ENTIRELY lost – contract is INEXISTENT or VOID
 PARTIALLY lost – vendee may
 Withdraw
 Demand remaining – pay PROPORTIONATE
o LOST when
 Goes OUT of commerce
 Disappears in such a way that its existence is unknown
o PERISHES – deterioration to a point that it CHANGED the nature of the object

ARTICLE 1494 – LOSS IN SALE OF GOODS IN MASS

 GUIDELINES
o Loss is WITHOUT the knowledge of the SELLER in whole or in part, BUYER may
treat the sale as:
 Void
 Valid in all the EXISTING goods
 o DIVISIBILITY of sale
 DIVISIBLE – only second choice if available
 INDIVISIBLE – any

CHAPTER FOUR – OBLIGATIONS OF THE VENDOR

ARTICLE 1495 – PRINCIPAL OBLIGATIONS

 PRINCIPAL obligations of the vendor
o TRANSFER ownership
o DELIVER the thing
o Warrant against HIDDEN defects and EVICTION
o TAKE CARE of the thing with proper diligence of a GOOD FATHER of a family
 EXCEPTION – amount of care is STIPULATED
o PAY for the expenses UNLESS stipulated otherwise

ARTICLE 1496 – WAYS OF EFFECTING DELIVERY

 MODES of delivery
o ACTUAL delivery – article 1497
o CONSTRUCTIVE delivery
 Execution of a PUBLIC instrument – Art. 1498
 Traditio symbolica – Art. 1498
 Traditio longa manu – Art. 1499
 Traditio brevi manu – Art. 1499
 Constitutum possessorium – Art. - 1500
 Quisi-traditio – Art. 1501
o STIPULATION
 NOTES
o INTENTION to deliver is essential
o DELIVERY must be made to PROPER person or his REPRESENTATIVE

ARTICLE 1497 – ACTUAL DELIVERY

 GUIDELINES
o TRADITION – the DERIVATIVE mode of acquiring ownership by virtue of which
one who has the right and intention to alienate a CORPOREAL thing
 IMPORTANCE – delivery and payment of price CONSUMATES the
contract
o WHEN deemed made – when placed under the CONTROL and POSSESSION of
the vendee
o NOT always essential to passing of title
o PROOF of delivery – generally by a WRITTEN acknowledgment

ARTICLE 1498-1501 – MODES OF CONSTRUCTIVE DELIVERY

 MODES
o Execution of a PUBLIC instrument
  NOTARIZED
 Applicable to BOTH movable and immovable
 EXCEPTION
 If it appears in the document that IT IS NOT the intention of the
parties
o TRADITIO SYMBOLICA
 Equivalent to actual delivery when thing is SUBJECT TO CONTROL OF THE
VENDOR
 CANNOT if in possession of a third person
 Ex. Giving of KEYS
o TRADITIO LONGA MANU
 When vendor MERELY POINTS to the thing sold
o TRADITIO BREVI MANU
 When VENDEE is already in possession of the thing sold
o CONSTITUTUM POSSESSORIUM
 VENDOR continues to stay in POSSESSION but in ANOTHER CAPACITY
o QUASI – TRADITIO
 Applies to INCORPOREAL things
 By PUBLIC instrument
 Placing of titles of ownership
 ALLOWING the use of rights

ARTICLE 1502 – SALE OR RETURN / SALE ON TRIAL OR APPROVAL

 CONCEPTS
o SALE OR RETURN – buyer has the option to return the same instead of paying
the price
o SALE ON TRIAL – approval of the buyer being a condition precedent
 DIFFERENCE
SALE OR RETURN SALE ON TRIAL
With RESOLUTORY condition With SUSPENSIVE condition
Entirely on the WILL of the BUYER Depends on the GOODS
Ownership PASSES Ownership REMAINS
Risk is with the BUYER Risk remains with the SELLER

ARTICLE 1503 – DELIVERY BY CARRIER

 GUIDELINES
o GENERAL RULE – delivery to the CARRIER is DEEMED to be delivery to the
BUYER
 EXCEPTION
 Contrary STIPULATION
 Seller OMITS to contract with the carrier
 FAILURE to insure
o REDELIVERY – ownership reverts to the SELLER
o BILL OF LADING
 SELLER retains ownership when
 Deliverable to the seller
o Even if SHIPPED by the BUYER
 IN POSSESSION of the bill of lading
 EFFECT – LIEN
ARTICLE 1504 – RISK OF LOSS BY FORTUITOUS EVENT
 GUIDELINES
o GENERAL rule
 Borne by the owner of the thing AT THE TIME of the loss
o EXCEPTION
 Seller RESERVES right over the thing
 Actual delivery is delayed – party AT FAULT bears the risk

ARTICLE 1505 – SALE OF PERSON NOT THE OWNER (movables only)

 GUIDELINES
o GENERAL rule
 One CANNOT give what he has not
o EXCEPTIONS
 Estoppel
 LAW enables
 Sanctioned by JUDICIAL authority
 Made in FAIRS or MARKETS
 VOIDABLE title which was NOT declared void at that time

ARTICLE 1506 – ACQUISITION OF VOIDABLE TITLE

 GUIDELINES
o REQUISITES to acquire a GOOD title
 Transaction took place BEFORE title was declared void
 Buyer bought in GOOD faith for FAIR VALUE
 WITHOUT notice of the DEFECT of the title

ARTICLE 1507 – 1520 (RESERVE FOR NEGOTIABLE INSTRUMENTS LAW)

ARTICLE 1521-1522 – DELIVERY

 GUIDELINES
o HEIRARCHY of where goods should be delivered
 Place agreed – STIPULATION – if none:
 “usage of trade” – COMMON place of trade – if none:
o Place of BUSINESS – of none:
 Seller’s RESIDENCE – if not:
 Objects LOCATION
o Presumption – BUYER must take the goods from seller
o TIME of delivery
 GENERAL rule – by agreement or stipulation (FIXED time)
 By usage of trade or REASONABLE time
o LESS than quantity required
 BUYER may:
 Reject
 Accept remaining BUT must pay:
 o If WITH knowledge of breach – CONTRACT RATE
o If WITHOUT knowledge of breach – FAIR VALUE
 FAIR VALUE – may be LESS than contract rate
o MORE than the quantity
 BUYER may:
 REJECT the excess
 ACCEPT the excess but must PAY the price

ARTICLE 1523 – DELIVERY TO A CARRIER

 GUIDELINES
o GENERAL rule – when seller is AUTHORIZED or REQUIRED to deliver the goods
 Delivery to the CARRIER constitutes delivery to the BUYER
o EXCEPTIONS
 CONTRARY intent
 RESERVATIONS
o SELLER”S duty after delivery to carrier
 Enter into contract with carrier ON BEHALF of buyer
 FAILURE – he is liable IF THERE ARE DAMAGES
 FAILURE – buyer may DECLINE to treat that there is transfer of
OWNERSHIP
 To give NOTICE regarding necessity to INSURE goods
 Risk is borne by the SELLER
 EXECEPTION – if buyer has ALL the INFORMATION necessary to
insure
o TERMS
 C.O.D – collect on delivery
 Carriers acts as COLLECTOR for seller
 F.O.B. – free on board
 Delivery if FREE of expense to the buyer

ARTICLE 1524 – OBLIGATION TO DELIVER

 GENERAL rule
o Obligations to deliver and pay are RECIPROCAL – therefore one is not bound if
the other does not perform
 EXCEPTION
o If there is a fixed SCHEDULE of payment – STIPULATED

ARTICLE 1525 – UNPAID SELLER

 When CONSIDERED as unpaid seller
o Only PART has been paid
 DOES NOT destroy the seller’s lien
 EVEN if title has been passed to the buyer
o Payment thru NEGOTIABLE instrument – deemed payment only when CASHED
 REFUSAL to accept tender of payment
o DESTROYS the seller’s lien
ARTICLE 1526 – RIGHTS OF UNPAID SELLER
 When ownership is already PASSED to the buyer
o LIEN or right to RETAIN while still in possession
o In case of INSOLVENCY of the buyer, to stop the goods “IN TRANSITU”
 Stoppage in transit
o Right of RESALE (limited)
o Right to RESCIND (limited)
 When ownership HAS NOT been passed
o Right to WITHHOLD delivery

ARTICLE 1527 – WHEN LIEN OF UNPAID SELLER MAY BE EXERCISED – 1ST RIGHT
 INSTANCES when it can be exercised
o When it is NOT a credit sale
 CREDIT SALE – with FIXED payment schedule
o Sold ON credit but already EXPIRED
o Buyer becomes INSOLVENT

ARTICLE 1528 – PARTIAL DELIVERY – LIEN

 RULES
o GENERAL rule
 Delivery of PART – unpaid seller RETAINS lien over remainder
o EXCEPTION
 If there is SYMBOLICAL DELIVERY of the whole – lien is LOST

ARTICLE 1529 – LOSS OF LIEN

 When lien is LOST
o Delivery to an agent or bailee of the buyer WITHOUT reservation –
UNCONDITIONAL delivery
o When buyer takes LAWFUL possession
 WRONGFUL taking is not considered
o EXPRESS waiver
 NOTE
o Judgment by the court on regarding price is NOT a reason to lose lien

ARTICLE 1530 – STOPPAGE IN TRANSIT – 2ND RIGHT

 REQUISITES to exercise right to stoppage while in transit
o Seller in UNPAID
o Buyer is or becomes INSOLVENT
o Goods must be in TRANSIT
o SELLER must
 Take ACTUAL possession
 Give NOTICE to the carrier
o If CARRIER issued a negotiable document
 Seller must SURRENDER it
o SELLER must bear the expenses
 BASIS / REASON
 o It would cause INJUSTICE to allow the buyer to take possession even though he
did not yet pay

ARTICLE 1531 – GOODS IN TRANSIT

 When CONSIDERED still in transit
o AFTER delivery to the carrier – BEFORE buyer takes delivery
o When buyer REJECTS and it remains in possession of carrier / bailee
 Even if SELLER REFUSES to accept them back
 When it is NOT anymore considered
o AFTER buyer / agent accepts delivery
o When buyer / agent obtains possession EVEN BEFORE the destination
o Carrier / bailee acknowledges to HOLD goods IN BEHALF of the buyer
 MUST enter into a new contract with the buyer
o Carrier / bailee WRONGFULLY refuses to deliver to the buyer
 EFFECT OF PARTIAL DELIVERY
o DOES NOT deprive seller the UNPAID seller to stop the REMAINDER

ARTICLE 1532 – WAYS TO STOP DELIVERY IN TRANSIT

 WAYS
o By taking ACTUAL possession
o By giving NOTICE to:
 ACTUAL possessor (carrier)
 PRINCIPAL (boss), in which case MUST:
 There MUST be reasonable time to communicate to his agent to
PREVENT delivery

ARTICLE 1533 – RIGHT TO RESALE – 3RD RIGHT

 WHEN an unpaid seller gains right to RESALE
o In PERISHABLE goods – NO notice is needed
o EXPRESSLY reserved – NO notice is needed
o Buyer
 DEFAULTS
 Delays for an UNREASONABLE time
 EFFECT of resale
o SELLER is NOT liable for any PROFIT made
o If sold for LESS than the ORIGINAL price, CAN sue buyer for the balance
o NEW buyer gains better title over the OLD

ARTICLE 1534 – RIGHT TO RESCIND – 4TH RIGHT

 REQUISITES
o Seller MUST have the right of LIEN OR a right to stop GOODS IN TRANSIT
 When EXPRESSLY reserved in case of DEFAULT
 When buyer DELAYS for an UNREASONABLE time
 NOTE – rescission under ARTICLE 1191 (oblicon)
ARTICLE 1535 – SALE OF GOODS SUBJECT TO LIEN / IN TRANSIT
 EFFECTS
o WITH negotiable document
 Seller’s lien CANNOT prevail over a buyer FOR VALUE IN GOOD FAITH
o WITHOUT negotiable document
 Seller’s lien is NOT affected
 Purchaser enjoys SAME right as the ORIGINAL buyer

ARTICLE 1536 – RIGHT TO WITHHOLD SALE ON CREDIT

 GENERAL RULE on sale on credit
o Delivery MUST be made even though prince is NOT yet fully paid
 EXCEPTION – buyer loses right when
o INSOLVENCY – unless he give a GUARANTEE
o BREACH OF PROMISE – guarantee or security
o Security is IMPAIRED
 By him
 FORTUITOUS events AND he does not furnish a NEW one
o Violates any UNDERTAKING for the consideration
o Attempts to ABSCOND

ARTICLE 1537 – RIGHT TO FRUIT AND ACCESSION

 GENERAL RULE
o Vendee has right FROM THE PERFECTION of the contract
o Vendor is obliged to deliver at a condition they were at the PERFERCTION

ARTICLE 1538 – LOSS – DETERIORATION – IMPROVEMENT

 RULES
o LOSS
 WITHOUT fault of debtor – extinguished
 WITH fault – liable for damages
o DETERIORATION
 WITHOUT fault of debtor – borne by CREDITOR
 WITH fault – creditor may RESCIND or require FULFILLMENT with damages
o IMPROVEMENT
 By NATURE – benefit of CREDITOR
 EXPENSE of debtor – shall have usufructuary rights ONLY

ARTICLE 1539-1541 – SALE OF REAL PROPERTY BY RATE

 GUIDELINES
o ENTIRE area stated should be delivered
o When NOT delivered vendee may
 RESCIND provided that
 Lack in area is at lease 1/10
 Quality / price less than 1/10
 Was INDUCED by the representation
 Enforce the contract with DECREASE in price
o Area is GREATER, vendee may
 Accept the ORIGINAL and REJECT the rest
 Accept ALL but must pay the ADDITIONAL
o Applies to BOTH private and judicial sales
 o May be STIPULATED by the parties

ARTICLE 1542 – SALE OR REAL PROPERTY BY LUMP

 GUIDELINES
o Mistake in area is IMMATERIAL
 Law presumes that the VENDEE has ASCERTAINED before contract was
perfected

ARTICLE 1543 – PRESCRIPTIVE PERIOD

 Articles 1539 – 1542 – Action should be filed WITHIN 6 years

ARTICLE 1544 – DOUBLE SALE

 GUIDELINES
o APPLICABILITY
 Two or more VALID sales transactions
 Two or more sales pertain to SAME object
 Two or more BUYERS at odds over rightful OWNERSHIP
 Two or more BUYERS transacted with SAME seller
o EFFECT
 MOVABLE
 Ownership belongs to one who first takes POSSESSION in GOOD faith
 IMMOVABLE
 Ownership belongs to one who first REGISTERS title in good faith – if
none
o Ownership belongs to one who first takes POSSESSION in GOOD
faith – in absence of BOTH
 Who can present OLDEST TITLE (deed)

ARTICLE 1545 – WARRANTY AND CONDITION

 CONCEPT – condition is a FUTURE and UNCERTAIN event
 EFFECT of non-fulfillment of condition
o REFUSE to proceed
o Proceed, WAIVING performance of condition
 If condition is in a nature of a PROMISE and is NOT fulfilled
o Constitutes a BREACH OF WARRANTY

ARTICLE 1546-1547 – WARRANTY

 WARRANTY – any REPRESENTATION made by the seller in which the buyer RELIED upon for
purchase
 KIND
o EXPRESS
o IMPLIED – when the LAW derives from nature of transaction
 IMPLIED warranties
 Seller’s title
 Hidden defects
 Fitness
 Where implied warranty is NOT applicable
 “as is where is” sale
 SECONDHAND sale
 o UNLESS certified by seller of its condition
 Sale by virtue of LAW (ex. Foreclosure sale / auction)
 MERE OPINION
o Warranty is made by an EXPERT

ARTICLE 1548-1560 – WARRANTY AGAINST EVICTION

 EVICTION – judicial process where the vendee is deprived in whole or in part by virtue of FINAL
JUDGMENT based on right prior to sale or act imputable to the vendor
 ESSENTIAL elements
o Vendee is DEPRIVED in whole or in part
o By virtue of a FINAL JUDGMENT
o Based on right of PRIOR sale or an act IMPUTABLE to the vender
 Ex. Property sold for non-payment of TAXES
o VENDOR was summoned at the instance of the vendee
o There if NO WAIVER on part of the vendee
 Waiver is VOID if vendor acted in BAD FAITH
o NOTE
 ALL must be present
 VENDEE’S BAD faith – knew of the defect – NOT entitled
 KINDS of eviction
o CONSCIENTE – voluntary waiver WITHOUT the knowledge of RISK of eviction
 Vendor is liable to pay only the VALUE AT THE TIME OF EVICTION
o INTENCIONADA – voluntary waiver WITH the knowledge of the RISK
 Vendor is EXEMPTED from liability
 When eviction OCCURS, vendee can demand
o Value = AT THE TIME of the eviction
o Income / fruits
o COST of suit
o EXPENSES of the contract, if vendee shouldered
o Damage and interest, IF sale is in BAD faith
 PRESCRIPTIVE PERIOD
o ONE year

ARTICLE 1561 – WARRANTY AGAINST HIDDEN DEFECTS

 GUIDELINES
o REQUISITES
 Defect must be SERIOUS
 Must be HIDDEN
 Exist AT THE TIME of the sale
 Vendee must GIVE NOTICE to the vendor WITHIN reasonable time
 Action for rescission – 60 days
 NO waiver
o MERCANTABILITY vs. FITNESS
 Merc – for GENERAL purposes
 Fit – for SPECIFIC purposes
o GENERAL RULE
 Ignorance of VENDOR is NOT an excuse
o EXEMPTION
 STIPULATED
 Unless vendor acted in BAD faith
 CHAPTER FIVE – OBLIGATIONS OF THE VENDEE

ARTICLE 1582 – PRINCIPAL OBLIGATIONS

 PRINCIPAL OBLIGATIONS
o ACCEPT delivery
o PAY the price
o If STIPULATED – bear the expenses of executing and registration
 Pertinent RULES
o GENERAL RULE – reciprocal obligation
o WITH stipulation
 BOUND to pay and accept at the time and place designated
o WITHOUT stipulation
 As to TIME and PLACE
 Bound to PAY AT THE time and place of delivery
 As to PLACE only
 Bound to ACCEPT wherever the thing is at the PERFECTION of the
contract
 As to TIME only
 REQUIRED to pay even BEFORE delivery

ARTICLE 1583 – INSTALLMENTS

 GENERAL RULE
o BUYER – NOT bound to accept goods in installments
o SELLER
 NO right to pay in installments
 CANNOT be required to make partial payments
 EXCEPTION
o SEPARATE price FIXED for each installment
 Effect to FAILURE
 INDIVISIBLE – injured party may:
o Sue for breach of the ENTIRE contract
o NOTE – breach must be MATERIAL / SUBSTANTIAL
 DIVISIBLE – injured party may:
o Sue for the PARTIAL breach
o SEPARATE price NOT fixed for each installment
 INJURED party may opt for:
 FULFILLMENT with damages
 RESCISSION with damages
o Breach MUST be substantial (Article 1191)

ARTICLE 1584 – RIGHT TO EXAMINATION

 GUILELINES
o Right of INSPECTION
 GENERAL RULE
 Buyer is ENTITLED to a fair opportunity
o MAY reject
 ACTUAL delivery is contemplated
  Right of inspection is thus a CONDITION PRECEDENT to transfer of
ownership
o Unless STIPULATED
 C.O.D – NO right to inspection BEFORE payment
 NOT c.o.d. – WITH right to inspection BEFORE payment
 Right to inspection is NOT absolute
 Should be availed WITHIN a REASONABLE time
 CAN be waived
o NEED NOT be expressed
 REFUSAL of seller to allow inspection
 BUYER may opt to RESCIND the contract and recover
o RULES ON REJECTION
 Buyer is NOT bound to return to seller
 It is ENOUGH to just notify
 Must be exercised and given notice WITHIN A REASONABLE TIME
 Unless STIPULATED (fixed in the contract)
 Failure to do so CONSTITUTES acceptance