Article 1521 Duty of seller to put goods in deliverable condition point where they are F.O.B.
in deliverable condition point where they are F.O.B. In general, the point
Place of delivery
• (1) Where there is an agreement, express or
implied, the place of delivery is that agreed upon;
• (2) Where there is no agreement, the place of
delivery is that determined by usage of trade;
• (3) Where there is no agreement and there is also
no prevalent usage, the place of delivery is the
seller’s place of business;
• (4) In any other case, the place of delivery is the
seller’s residence; and
• (5) In case of specific goods, which to the
knowledge of the parties at the time the contract was
made were in some other place, that place is the
place of delivery, in the. Absence of any
agreement or usage of trade to the contrary.
PRESUMPTION : it can be seen that the presumptions is
that the buyer must take goods from the seller’s place of
business or residence rather than the seller to deliver them to
the buyer
Time of delivery of goods sold
• If no time is fixed by the contract, then the seller is
bound to send the goods to the buyer within a
reasonable time.
• If the contract provides a fixed time for
performance, the question is whether time is of the
essence, and if so, whether correct performance was
offered within that time.
• Where the contract does not specify the time for
delivery so that delivery is to be made within a
reasonable time, time is not of the essence.
Delivery of goods in possession or a 3rd person
-to affect third person, the person holding the goods
must acknowledge being the bailee for the buyer.
Hour of delivery of goods sold
The demand or tender of delivery to be effectual,
must be made at a reasonable hour
What is a reasonable hour? Where all that is required of the
other party is to receive a payment or performance
which can readily be accepted
In case goods which are bulky or needed special care – an
hour might be reasonable which would not be so in an
ordinary payment of a small amount of money.
-the seller bears the expenses to place thing in a
deliverable state that is, in such a state the buyer would,
under the contract, be bound to take delivery of them.
Article 1522
• Delivery of goods less than quantity
1. Reject
2. Accepts - he must pay for their (a) price
at the contract rate if he knew that no more were to be
delivered or (b) the fair value to him of the goods, if he did
not know that the seller is going to be guilty of a breach of
contract.
• Delivery of goods more than quantity contracted.
May accept the quantity contracted for and reject the
excess. However, if he accepts all the goods delivered, he
makes himself liable for the price of all of them.
• Delivery of goods mixed with others not included
in the contract. May accept those which are in
accordance with the contract and reject the rest. The
buyer, of course, may accept them all if he so
desires.
• Effect of indivisibility of subject matter. May
reject the whole of the goods.
Article 1523
Delivery to the carrier in behalf of the buyer
 General Rule: constitutes delivery to the buyer,
whether the carrier is named by the buyer or not.
 Exceptions: 1. Seller reserves the right of possession
or ownership; 2. Or when contrary intent appears.
Seller’s duty after delivery to carrier
 To enter contract with the carrier on behalf of the
buyer as may be reasonable under the
circumstances. – if omits, buyer may decline to
treat the delivery to the carrier as a delivery to
himself
 Give notice to buyer regarding necessity to insure
goods.
Definition of trade terms
 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. They are solely intended as security for
the purchase price
 F.O.B.- “free on board” means that the goods are to
be delivered free of expenses to the buyer to the
F.O.B. either the point of shipment or the point of
destination, determines when the ownership passes.
 C.I.F.- “cost insurance and freight” signify that the
price fixed covers not only the cost of goods, but the
expenses of freight and insurance to be paid by the
seller up to the point especially named.
 F.A.S.- “free alongside vessel” (named port of
shipment). Under this term, the seller pays all
charges and bear the risk until the goods are placed
alongside overseas vessel and within reach of its
loading tackl
 Ex factory, Ex Warehouse, etc. (named point of
origin) – the price quoted applies only at the point of
origin, and the seller agrees to place the goods at the
disposal of the buyer at the agreed place on the date
within the period fixed.
 Ex dock - (named port of importation) – the seller
quotes a price including the cost of goods on the
dock at the named port of importation
Article 1524
 General Rule. Vendor shall not be bound to deliver
the thing sold if the vendee has not paid the price.
 Exceptions: the thing must be delivered though the
price if a time for such payment has been fixed in
the contract.
Delivery simultaneous with payment of price
General rule: the obligation to deliver the thing of a
contract arises from the moment its perfection and from
that time the obligation may enforced.
Exception: if the vendee does not pay the price, the
consideration for the obligation of the vendor is absent
and if the consideration is absent, the obligation likewise
does not exist or at least is suspended
When delivery must be made before payment of the
price
It contains an exception: the rule is that the thing shall
not be delivered unless the price is paid; and the
exception is that the thing must be delivered though the
price be not first paid, if a time for such payment has
been fixed in the contract
Article 1525
Meaning of unpaid seller
-is 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.
Where whole of the price has not been paid
 Tender of payment of buyer
-bring an action subsequently for the price, which he
has refused, yet tender destroys the seller’s lien. Accordingly,
so far as concerns his rights to the goods, he is not unpaid
seller after the tender of price.
 Payment of part of price
-the seller remains an unpaid seller even if title has
passed to the buyer.
 Payment by negotiable instrument
- “the delivery of promissory notes payable to order,
or bills of exchange or other mercantile documents
shall produce the effect of payment only when they
have been cashed or when through the fault of the
creditor they have been impaired”
Q: When is a seller considered unpaid despite the
title of the goods passing to the buyer?
A: Whenever the seller was only paid partially,
he remains an unpaid seller
Article 1526
Remedies of an Unpaid Seller Ordinary
 Action for Price (NCC, Art. 1595)
- Exercised when:
 Ownership has passed to buyer;
 Price is payable on a day certain;
 Goods cannot readily be resold for
reasonable price and Art. 1596 of NCC
is inapplicable.
 Action for Damages – In case of wrongful neglect
or refusal by the buyer to accept or pay for the thing
sold.
Remedies of unpaid seller
-if the unpaid seller still retains the ownership in the goods,
he cannot be said to have a lien (on his goods) but he does
have, in addition to his other remedies, right of withholding
delivery.
Basic rights of unpaid seller
-is allowed a lien and kindred remedies in inherent injustice
of depriving him of goods with which he has not finally
parted where it is evident that he has not been or will not be
paid the price for them when it is due.
Special (NCC, Art. 1526)
1. Possessory Lien – right to retain (NCC, Art.
1527) – seller not bound to deliver the object of the
contract of sale if buyer has not paid him the price.
This remedy presupposes that the sale is on credit.
It is exercisable only in following circumstances:
A. Goods sold without stipulation as to credit
B. Goods sold on credit but term of credit has
expired
C. Buyer becomes insolvent
NOTE: When part of goods delivered, may still
exercise right on goods undelivered.
Loss of Lien:
◦ When he delivers the goods to the carrier
or other bailee for purpose of
transmission to the buyer which reserving
the ownership in the goods or the right to
the possession thereof;
◦ When the buyer or his agent lawfully
obtains possession of the goods; or
◦ By waiver thereof
2. Stoppage in Transitu (NCC, Art. 1530) The seller
may resume possession of the goods at any time
while they are in transit, and he will then become
entitled to the same rights in regard to the goods as
he would have had if he had never parted with the
possession
Requisites: (I-SCENT-U)
A. Insolvent buyer
B. The sale of goods must be on Credit
C. Seller must Surrender the negotiable document
of title, if any
D. Seller must bear the Expenses of delivery of the
goods after the exercise of the right.
E. Seller must either actually take possession of the
goods sold or give Notice of his claim to the carrier
or other person in possession
F. Goods must be in Transit
G. Unpaid seller
Enforcement of right to stoppage in transitu
The seller may:
1. Take actual possession of the goods;
2. Give notice of his claim to the carrier or other
bailee who is in possession of the goods (NCC, Art.
1532).
Effect of the exercise of this right:
1. The goods are no longer in transit;
2. Contract of carriage end. The carrier now
becomes a mere bailee, and will be liable as such;
and
3. Seller would have the same rights to the goods as
if he had never had never parted possession with it.
3. Right to Resell the Goods (NCC, Art. 1533)
Exercised when:
A. Goods are perishable,
B. Stipulated the right of resale in case of default, or
C. Buyer in default for unreasonable time
Effect of exercising the special right of resale
- The unpaid seller shall not be liable to the
original buyer upon the sale or for any profit
made by such resale, but may recover from the
buyer damages for any loss occasioned by the
breach of the sale
NOTE: The seller cannot, however, directly or indirectly buy
the goods.
Exceptions: Cases in which it is allowed:
1. Where the goods are of perishable in nature;
2. Where the seller has expressly reserve the
right of resale in case the buyer should make
default; or
3. Where the buyer has been in default in
payment of the price for unreasonable time
Notice to the defaulting buyer
GR: Notice to the defaulting buyer NOT required in the
resale of goods
XPN: Where the right to resell is not based on the perishable
nature of the goods or upon an express provision of the sale.
NOTE: Notice of time and place of resale is not essential to
the validity of such resale (NCC, Art. 1533).
4. Right to Rescind (NCC, Art. 1534)
Requisites:
A. Goods have not been delivered to the buyer;
B. Buyer has repudiated the contract of sale; or
C. Has manifested his inability to perform his
obligations thereunder; or
 D. Has committed a breach thereof, which must be
substantial.
NOTE: Here, the seller may thereafter totally rescind the
contract of sale by giving notice of his election to do so to the
buyer.
Effect of exercising the special right to rescind
The unpaid seller shall not be liable to the buyer
upon the sale, but may recover from the buyer damages for
any loss occasioned by the breach of the sale (NCC, Art.
1534).
Cases in which it is allowed:
1. Where the seller has expressly reserved the right
to rescind in case the buyer should make default; or
2. Where the buyer has been in default in the
payment of the price for unreasonable length of time
Article 1527
When unpaid seller’s possessory lien may be exercised
 Sales without stipulation as to credit
-the seller binds himself to give the goods over to the buyer
without receiving at that time payment for them. Where
there is “stipulation as to credit’ a period for payment of price
has been fixed in the contract. The seller has always a lien
upon the goods which he sells until the payment or tender of
the entire price
 Expiration of term of credit
-but if he fails to exercise his right until the
term of credit has expired and the price becomes due, he
loses the right which he theretofore had.
 Insolvency of the buyer
-this doctrine is applies only an application
of a general principle in the law of contracts that when one
party to a bilateral contract is incapacitated from performing
his part of the agreement, the other party also is excused from
performing his part
Article 1528
Lien not generally lost by part delivery
-if the part delivery of the goods is intended as symbolical
delivery of the whole, and therefore, a waiver of any right of
retention as to remainder, the lien is lost.
Article 1529
When unpaid seller losses possessory lien
1. Delivery to agent or bailee of BUYER
-it is true that the seller may stop the goods while on
their way to the buyer after delivery to a bailee for the
buyer but it cannot be said that the seller has still any lien
upon him.
2. Possession by buyer or his agent
-it is plain that when the ownership is
transferred the seller has no lien simply because he has no
possession necessary for a lien.
3. Waiver of lien
-the seller may lose his lien by express agreement to
surrender it. The seller could no longer assert a lien.
Article 1530
Right of seller to stop goods in transitu
-he may resume possession of the goods while they
are in transit, when the buyer is or becomes insolvent. The
right 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.
Article 1536
Right of vendor to withhold delivery in sale on credit.
But even if the vendee was given the benefit of a period, the
vendor may not be compelled to make delivery, in case the
vendee should lose the right to make use of the term as
provided in Article 1198 of the Civil Code and such vendee
has not yet paid the price. Said article states: “The debtor
[vendee] shall lose every right to make use of the period:
(1) When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or security for
the debt [price];
(2) When he does not furnish to the creditor [vendor] the
guaranties or securities which he has promised;
(3) When by his own acts he has impaired said guaran-ties or
securities after their establishment, and when through a
fortuitous event they disappear, unless he immediately gives
new ones equally satisfactory;
(4) When the debtor [vendee] violates any undertaking, in
consideration of which the creditor agreed to the period;
(5) When the debtor [vendee] attempts to abscond.”
EXAMPLE:
S sold to B a car on credit. S has a right to withhold delivery
in any of the following situations:
(1) B becomes insolvent, unless B gives sufficient guaranty
or security; or
(2) B promised to mortgage his house to secure the purchase
price and he failed to furnish said security as promised; or
(3) If the payment of the purchase price is secured by a
mortgage on the house of B, but the house was partially
burned because of B’s fault; or was totally destroyed without
B’s fault, unless B gives a new security, equally satisfactory;
or
(4) Where in consideration of the sale on credit, B obliged
himself, say, to repair the piano of S, and B failed to comply
with such undertaking; or
(5) Where B shows an intent not to pay the price after the car
is delivered to him
Art. 1537
The vendor is bound to deliver the thing sold and its
accessions and accessories in the condition in which they
were upon the perfection of the contract. All the fruits shall
pertain to the vendee from the day on which the contract was
perfected.
Accessions are the fruits of a thing; or additions to, or
improvements upon, a thing such as the young of animals,
house or trees on a land, etc.
Accessories are anything attached to a principal thing for its
completion, ornament, or better use such as picture frame,
key of a house, etc.
Right of vendee to the fruits.
I. When vendee entitled. — The vendee has a right to
the fruits of the thing sold from the time the obligation to
deliver it arises. (Art. 1164.) The obligation to deliver arises
upon the perfection of the contract of sale.
II. When vendee not entitled. — In the following cases,
the vendee is not entitled to the fruits:
(a) When the rule provided in Article 1537 (par. 2.) is
modified by agreement of the parties, their agreement shall,
of course, govern;
(b) If the vendee rescinds the contract of sale instead of
exacting the fulfillment thereof, he is entitled only to
damages like interest, attorney’s fees and costs but he may
not also claim the fruits of the thing and
(c) In a contract of promise to sell, the vendee is not entitled
to the fruits. The only right of the contracting parties is to
reciprocally demand the fulfillment of the contract. Prior to
the sale and conveyance of the subject matter of the contract,
the promisee or would-be vendee acquires no right to the
fruits thereof.