KINDS OF DELIVERY

LAW ON SALES

KINDS OF DELIVERY ( traditio)

1. Actual or real- physical transfers of control and possession of the thing
2. Constructive
● a. Legal formalities or execution of public instrument
● b. Quasi – traditio
● c. Tradition simbolica
● d. Traditio longa manu
● e. Traditio brevi manu
● f. Constitutum possessorium

TIME OF DELIVERY:
a. Stipulation of the parties;
b. If no stipulation, within a reasonable time.

PLACE OF DELIVERY:
a. Stipulation of the parties;
b. If no stipulation, by usage of trade;
c. If no stipulation nor usage of trade, the seller's place of business,
d. If none, the seller's residence, However, in case of a contract of sale of specific goods, which to the knowledge of
the parties when the contract or the sale was made were in some other place, then that place is the place of delivery

SELLER IS NOT BOUND TO DELIVER

a. If it is a pure obligation and the buyer does not pay; or
b. If there is a period agreed upon, the obligation to deliver shall be demandable at that time. Except, if the buyer
loses the right to make use of the period under Art. 1198

QUANTITY TO BE DELIVERED:
DELIVERY OF LESS OR MORE OF THE QUANTITY AGREED UPON IN SALE OF PERSONAL PROPERTY:
a. Delivery is less than quantity agreed upon, the buyer may
● i. Reject the delivery; or
● ii. Accept or retain the goods delivered and pay:
○ 1) The full contract price if he knew that the seller is not going to perform the contract in full; or
○ 2) Pay the fair value of the goods delivered if without such knowledge,
b. Delivery is greater than quantity agreed upon, the buyer may
● i. Accept the goods in the quantity agreed upon and reject the rest or
● ii. Accept the whole of the goods delivered and contract rate.
c. Delivery of goods mixed with goods of different description not included in the contract, the buyer may accept the
goods which are in accordance with the contract and reject the rest.
In case of b and c above, if the subject matter is indivisible, the buyer may reject the whole of the goods.

DELIVERY OF LESS OR MORE OF THE QUANTITY AGREED UPON IN SALE OF REAL ESTATE
A. AT A RATE OF A CERTAIN PRICE FOR A UNIT OF MEASURE OR NUMBER:
1. Delivery is LESS than that agreed upon, the buyer may:
● a. Ask for specific performance and demand delivery of the
● b. Ask for the proportionate reduction of the price (accion quanti minoris)
● c. Rescission, in case
The area lacking in at least 1/10 of that agreed upon; or The buyer would not have entered into the contract, had
he known of its smaller area.
The same rules apply if any part of the immovable is not of the QUALITY specified in the contract (except that
rescission is an available remedy in the event that the inferior value is MORE THAN 1/10 of the price agreed upon)
even if the area delivered be that agreed upon.
2. If the delivery is in excess of the area agreed upon, the buyer may:
a. Accept the area agreed upon and reject the rest; or
b. Accept the whole and pay at the contract rate.

B. SALE OF REAL ESTATE FOR A LUMP SUM PRICE: whatever the actual area of the land, the buyer is still
required to pay the price agreed upon and the seller is bound to deliver the entire area.
If the actual area is bigger than the agreed upon area, and the seller should not deliver the whole actual area, the
buyer may:
a. Reduce the price to be paid, in proportion to what is lacking in the area or number; or
b. Rescind the contract for failure of the vendor to deliver what has been stipulated.

REMEDIES OF AN UNPAID SELLER:

1. General remedies:
● a. Action for specific performance with damages
● b. Action for rescission with damages
2. Special Remedies:
● a. Sale of personal property in installment basis (RECTO LAW)
○ i. Specific performance in case the buyer fails to pay
○ ii. Rescission of the sale in case of default of 2 or more
○ installments
○ iii. Foreclose the chattel mortgage on the thing sold in case of default of 2 or more installments. In
this case, the seller shall have no further action for deficiency judgment.

● b. Sale of goods
○ a. Unpaid seller of goods – 1. One who has not been paid or tendered the whole price
- 2. One 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
● i. a. Lien on goods while in his possession
Requisites:
1. The seller is unpaid
2. The buyer is insolvent
3. The goods are in the possession of the seller
4. The goods have been sold
5. Without stipulation as to credit
6. With a stipulation as to credit but the term has expired
:
NOTE: Possessory lien will be lost:
i. When the goods are delivered to the common carrier or other bailee without reservation of
ownership;
ii. When the buyer or his agent lawfully obtains possession of the goods
iii. When there is waiver on the part of the seller.

● i. b. Stoppage in transit ( Goods are in transit from the time they are delivered to the carrier for the
purpose of delivery to the buyer or his agent)
Requisites:
1. The seller is unpaid
2. Buyer is insolvent
3. The goods are in transit
4. Seller will bear the expenses of delivery of the goods after the exercise of the right

● i. c. Resale of thing
Requisites:
 1. The seller is unpaid
2. The buyer is in default in the payment of the price
3. The goods are perishable in nature
4. The right is expressly reserved
5. The seller can either exercise possessory lien or stoppage in transit

● i. d. Rescission of the contract

Requisites:
1. The seller is unpaid
2. the right is expressly reserved
3. the buyer has been in default in the payment of the price for an unreasonable time
4. the seller can exercise right of lien or stoppage in transit
5. purchase price plus damages

● c. Sale of real estate in installment (R.A 6552) (MACEDA LAW)

○ i. Right of specific performance – the seller must observe the grace period granted to the buyer to
pay, without additional interest, the unpaid installment
○ ii. Right of rescission- cancellation can only take place after 30 days from receipt of the notice of
cancellation or demand for rescission by a notarial act.
○ iii. Right on installments- seller can retain not more than 50% of the installments paid. But if the
installments paid. But if the installments paid were less than 2 years, the seller can have absolute
forfeiture over the installments paid.

DOUBLE SALE & WARRANTY

LAW ON SALES

DOUBLE SALE
REQUISITES FOR APPLICABILITY:
1. Single property involved
2. Two or more contracts
3. Two or more different buyers whose rights are conflicting
4. Acquired the same property from same seller

RULES IN CASE OF DOUBLE SALE:

1. Personal Property- to the first possessor in good faith
2. Real property- the person who first recorded the sale in the Registry of Property ( Register of Deeds) in good faith.
a. If not recorded, to the first possessor in good faith;
b. If none of the above, to the person with the oldest title, in good faith

WARRANTY
➔ A statement or representation made by the seller of goods, contemporaneously and as part of the contract of sale,
having reference to the character, quality or title of the goods, and by which he promises or undertakes to insure that
certain facts are or shall be as he then represents.

Kinds of warranty:
1. Express- Warranties under the Consumer Act (RA No 7394)
2. Implied
a. Warranty against eviction
b. Warranty against hidden defects
c. Warranty as to fitness or Merchantability

Kinds of Implied Warranties:

1. Warranty against eviction
Elements:
A. Vendee is deprived of the thing purchased
B. The deprivation is by virtue of a final judgment
C. The judgment is base on a prior right to the sale or an act imputable to the vendor
D. The vendor was summoned in the suit for eviction at the instance of the vendee;
E. No waiver of warranty by the vendee
Waiver of eviction:
1. Consciente – waiver without knowledge of the risk of eviction
2. Intencionada- waiver with knowledge of the risks of eviction coupled with an assumption of its consequences.

Kinds of Implied Warranties:

2. Warranty against hidden defects
Elements:
a. Defect must be serious or important
b. It must be hidden
c. It must exist at the time of the sale
d. Vendee must give notice of the defect to the vendor within a reasonable time.
e. No prescription yet ( 6 months from delivery of thing of 40 days in case of animals)
f. No waiver of warranty

Remedies of the vendee:

1. Accion redhibitoria (rescission)
2. Accion quanti minoris ( reduction of the price)
3. Warranty as to fitness or Merchantability
➢ goods are reasonably fit for the purpose for which they are sold.
➢ It requires identity between what is described in the contract AND what is tendered, in the sense that the latter is of
such quality to have some value

No Warranty against hidden defects:

A. Sale of second hand item or pre-owned item or pre-loved item
B. Sale of Junk-shop operators
C. Sale in auction

Caveat Venditor (“Let the seller beware”)

: the vendor is liable to the vendee for any hidden faults or defects in the thing sold, even though he was not aware
thereof.
Caveat Emptor (“Let the buyer beware”)
:requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the
vendor’s title takes all the risks and losses consequent to such failure.

RULES IN CASE OF SALE OF ANIMALS

1. When two or more animals have been sold at the same time and the redhibitory defect is in one, or some of them
but not in all, the general rule is that the redhibition will not affect the others without it. It is immaterial whether the
price has been fixed for a lump sum for all the animals or for a separate price for each.
2. No warranty against hidden defects of animals sold at fairs or at public auctions, or of livestock sold as
condemned. This is based on the assumption that the defects must have been clearly known to the buyer.
3. Sale of animals shall be void when:
a) animals sold are suffering from contagious disease
b) if the use or service for which they are acquired has been stated in the contract, and they are found to be
unfit therefore
4. Limitation of the action: 40 days from the date of their delivery to the vendee
5. Vendor shall be liable if the animal should die within 3 days after its purchase if the disease which caused the
death existed at the time of the contract
OBLIGATIONS OF THE VENDEE
1. TO PAY THE PRICE
A. Time and place stipulated
B. To pay interest
a. For the period between the delivery of the thing and the payment of the price in the following cases:
i. Stipulated
ii. Sold & delivered produce fruits or income
2. TO ACCEPT DELIVERY
Delivery by installments : The buyer is not bound to accept delivery by installments, unless otherwise agreed upon

EXTINGUISHMENT OF A CONTRACT OF SALE

EXTINGUISHMENT OF SALE
1. Same causes as in all other obligations
2. Conventional Redemption
3. Legal Redemption

Sales are extinguished by the same causes as all other obligations, as well as the following:
1. Cancellation of sale of personal property payable in installments
2. Rescission of sale of residential realty in installments after compliance with the requirements of Maceda Law
3. Resale of the goods by the unpaid seller
4. Rescission of the sale by the unpaid seller
5. Rescission of the sale of immovable property with a price per unit of measure in case of delinquent area of at least
1/10 or when the buyer would not have entered into the contract knowing of the deficiency, or deficient quality of more
than 1/10
6. Rescission of the lump sum sale of immovable when the seller an area less than the actual area
7. Rescission by the buyer in case of partial eviction
8. Rescission by the buyer in case of breach of warranty against hidden defects
9. Rescission by the buyer of sale of animals with redhibitory defects
10. Rescission by the buyer of sale of land with non-apparent servitude encumbrance
11. Rescission by the buyer of sale of land with lacking area or area with poor quality
12. By redemption, whether conventional redemption or legal redemption

CONVENTIONAL REDEMPTION
❏ The right which the vendor reserves to himself, to reacquire the property sold provided he returns to the vendee:
A. the price of the sale;
B. expenses of the contract;
C. any other legitimate payments made therefore and;
D. the necessary and useful expenses made on the thing sold; and
E. fulfills other stipulations which may have been agreed upon.

A sale with conventional redemption is deemed to be an equitable mortgage inany of the following cases:
A. Unusually Inadequate purchase price;
B. Possession by the vendor remains, as lessee or otherwise;
C. Extension of redemption period after expiration;
D. Retention by the vendee of part of the purchase price;
E. Vendor binds himself to pay the Taxes of the thing sold;
F. Any Other case where the parties really intended that the transaction should secure the payment of a debt
or the performance of any obligation;or
G. When there is Doubt as to whether a contract is a contract of sale with right of repurchase or an equitable
mortgage.

Equitable Mortgage
❏ One which lacks the proper formalities, form of words, or other requisites prescribed by law for a mortgage, but
shows the intention of the parties to make the property subject of the contract as security for a debt and contains
nothing impossible or contrary to law
* When can there be presumption as to Equitable Mortgage?
1) Parties must have entered into a contract denominated as a contract of sale
2) The intention of the parties was to secure an existing debt by way of mortgage
Remedy of Reformation: To correct the instrument so as to make it express the true intent of the parties.

Redemption Period
a. if there is an agreement: period agreed upon cannot exceed 10 years
b. if no agreement as to the period: 4 years from the date of the contract
c. the vendor who fails to repurchase the property within the period agreed upon may, however, exercise the
right to repurchase within 30 days FROM the time final judgment was rendered in a civil action on the basis
that the contract was a true sale with right of repurchase
NOTE:
Tender of payment is sufficient to compel redemption, but is not in itself a payment that relieves the vendor from his
liability to pay the redemption price.

LEGAL REDEMPTION
➢ The right to be subrogated, upon the same terms and conditions stipulated in the contract, in the place of one who
acquires a thing by
○ (1) purchase or
○ (2) dation in payment, or
○ (3) by any other transaction whereby ownership is transferred by onerous title.
➢ May be effected against movables or immovables.
➢ It must be exercised within thirty (30)days from the notice in writing by the vendor
NOTE: Written notice is mandatory for the right of redemption to commence

Instances of legal redemption:

A. Under the Civil Code (legal redemption):
1. Sale of a co-owner of his share to a stranger (Article 1620)
2. When a credit or other incorporeal right in litigation is sold (Article 1634)
3. Sale of an heir of his hereditary rights to a stranger (Article 1088)
4. Sale of adjacent rural lands not exceeding one hectare (Article 1621)
5. Sale of adjacent small urban lands bought merely for speculation (Article 1622)

B. Under special laws:

1. An equity of redemption in cases of judicial foreclosures
2. A right of redemption in cases of extrajudicial foreclosures
3. Redemption of homesteads
4. Redemption in tax sales
5. Redemption by an agricultural tenant of land sold by the landowner