XIV.
OBLIGATIONS OF THE
VENDEE
Principal Obligations of the Vendee (Art. 1582)
1. Accept delivery
2. Pay the price
3. Bear expenses for the execution and registration of the sale
and putting the goods in a deliverable state, if such is the
stipulation
Pertinent Rules:
1. Vendor not required to deliver the thing sold until the price
is paid nor the vendee to pay the price before the thing is
delivered in the absence of an agreement to the contrary;
2. If stipulated, vendee is bound to accept delivery and to pay
the price at the time and place designated;
3. If there is no stipulation as to the time and place of payment
and delivery, the vendee is bound to pay at the time and place
of delivery;
4. In the absence of stipulation as to the place of delivery, it
shall be made wherever the thing might be at the perfection of
the contract (art. 1251); and
5. If only the time for delivery has been fixed the vendee is
required to pay even before the thing is delivered to him;
Delivery in installments (art. 1583)
General Rule: Buyer is not bound to accept delivery or pay
the price thereof by installments.
Exception: If there is a stipulation
Right of Buyer to Examine Goods (Art. 1584)
General Rule: Buyer has the right to a reasonable opportunity
to examine the goods before accepting them.
Exception:
(1) When there is an agreement;
(2) stipulation that the goods shall not be delivered to buyer
until he paid the price (C.O.D.)
If seller refused to allow an opportunity for inspection, buyer
may recind or recover the price paid.
NOTE: the right to examine the goods is a condition
precedent to the transfer of ownership.
When there is Acceptance of Goods (Art. 1585)
1. Express acceptance
2. Buyer does an act which only an owner can do
3. Failure to return after reasonable lapse of time
Effect of acceptance on vendor’s liability for breach of
warranty (Art. 1586)
General Rule: Seller is not discharged from liability for
breach of warranty by the acceptance of the goods
Exception:
(1) If there is an agreement, express or implied;
(2) if buyer fails to give notice to seller of breach of warranty
within a reasonable time after buyer knows of such breach.
Effects if buyer refuses to accept delivery
1) Buyer justifiably refuses (Art. 1587)
a) Buyer has no duty to return the goods
b) Title does not pass
c) Not be obliged to pay the price
d) If he constitute himself as a depositary, he shall be
liable as such
e) Obligation to notify the seller of such refusal
2) Buyer unjustifiably refuses (Art. 1588)
a) Title passes to the buyer, unless there is stipulation and
seller reserved the ownership
b) Obliged to pay the price
Time and place for payment of price
a. Time and place stipulated
b. Time and place of delivery of thing, in absence of
stipulation
When Vendee is liable for interest (Art. 1589)
Buyer shall pay interest for the period between delivery and
payment of price in the following cases:
1. If there is stipulation
2. Thing sold produces fruits or income
3. If he is in default, from the time judicial or
extrajudicial demand for payment of price.
Suspension of Payment (art. 1590)
1. When buyer may suspend payment
a. If he is disturbed in the possession or ownership of
thing bought; or
b. If he has a well-grounded fear that his possession or
ownership would be disturbed by a vindicatory action
or foreclosure of mortgage
2. When buyer may NOT suspend payment
a. Vendor give security for the return of the price;
b. It has been stipulated;
c. Vendor has caused the disturbance or danger to cease;
d. Disturbance is a mere act of trespass;
e. Vendee has fully paid the price.
When Vendor may Rescind the Sale
1) Sale of immovable (Art. 1592)- seller must have a
reasonable ground to fear the:
a. Loss of the immovable property; AND
b. Loss of the price.
If one or both grounds do not exist, the vendor may choose
between:
a. Fulfillment with damages;
b. Rescission with damages.
NOTE: Rescission of real property is not automatic. Demand
is needed before rescission may take place. Demand is for the
rescission and not for the payment of the price.
2) Sale of Movables (Art. 1593)- rescission of the sale of
movable shall take place at the option of the vendor, if at the
time fixed for the delivery of the thing, the vendee:
a. does not accept delivery
b. does not pay the price, unless a longer period of
payment is stipulated
2. If he fails to notify the seller within a reasonable time
3. Fails to return or offer to return the goods to the seller in
substantially as good condition as they were in the time
of delivery
Rights and Obligation in Rescission
1. Buyer
a. Obliged to return the goods, and cease to be liable
for the price;
b. If paid the price or any part thereof, he may recover
it;
c. Right to hold the goods as bailee if the seller refuse
the return of goods;
d. Right to have a lien of the goods for any portion of
price paid, as if he were an unpaid selle
2. Seller
When seller may rescind before delivery :
a. When the buyer repudiated the contract of sale;
b. When buyer manifested his inability to perform his
obligation
c. When buyer committed a breach of the contract

XV. BREACH OF CONTRACT OF

SALE OF GOODS XVI. EXTINGUISHMENT OF SALE

Actions by the Seller Sales are extinguished by:

1. Action for payment of price (Art. 1595) 1. By the same causes as all obligations:
a. Ownership has passed to buyer and he wrongfully a. Payment/performance
neglects or refuses to pay the price; b. Prescription
b. Price is payable on a certain day and buyer did not c. Loss of thing due
pay, even if there is no transfer of title; or d. Annulment
c. If the goods can’t be readily be resold for a e. Novation
reasonable price and buyer wrongfully refuses to f. Condonation/remission
accept them before ownership has passed g. Confusion or merger
2. Action for damages (Art. 1596) h. Compensation
3. Action for rescission (Art. 1597) i. Rescission
a. When buyer repudiated the contract of sale; j. Resolutory Conditions
b. When buyer manifested his inability to perform his 2. By the various causes of extinguishment in title VI(sales):
obligation; and a. Cancellation of sale of personal property in
c. When buyer has committed a breach in the contract installments (art. 1484)
b. Resale of the goods by unpaid seller (art. 1532)
c. Rescission of the sale by unpaid seller (art. 1534
Action by the Buyer d. Rescission by the buyer in case of partial eviction
1. Bring an action for specific performance, if the seller has (art. 1556)
broken the contract to deliver specific or ascertained goods. e. Rescission by buyer in case of breach of warranty
(Art. 1598) against hidden defect (art. 1567)
f. Rescission by buyer in sale of animals with
2. In case of breach of warranty by seller: (Art. 1599) redihibitory defects (art. 1580)
a. Accept the goods and ask to reduce or extinguish the 3. By redemption
price
b. Accept goods and maintain an action for damages A.) CONVENTIONAL REDEMPTION
c. Refuse to accept the goods and maintain an action Also called the right to redeem or repurchase, takes
for damages place when the vendor reserved the right to reacquire the thing
d. Rescind the contract by the return of goods and sold, provided that he:
recover of price 1. Return to the vendee:
a. The price paid
When rescission by Buyer not allowed (Art.1599) b. Expenses of the contract and other legitimate
1. If buyer accepted the goods knowing of the breach of payments made thereof
warranty without protest;
 c. Necessary and useful expenses made on the thing
sold.
2. Comply with other stipulations
NOTE: the seller a retro must pay for useful improvements
introduced by the buyer a retro; otherwise, the latter may
retain possession of the land until reimbursement is made.
Period of Redemption
a. No agreement : 4 years from date of contract
b. There is agreement: should not exceed 10 years. The
time in excess of 10 years shall be null and VOID.
c. Civil Action between the parties: 30 days after final
judgement was made, provided that the contract was a true
sale with a right to repurchase.
Effect of Failure to exercise right of repurchase
Ownership shall be consolidated in the vendee. In
case of real property, a judicial order is required for the
purpose of recording the consolidation in the registry of
property after the vendor has been duly heard. (art. 1607)
Who may Exercise the right to Repurchase
1. Vendor a retro
a. Vendee, who acquired the whole undivided interest,
may compel the vendor, who only sold part thereof, to
redeem the whole property.(art. 1611)
b. Property sold by co-owners jointly and in the same
contract may exercise the right in respect to his share
only. (art. 1612)
c. In the case above (b), vendee cannot be compelled
to consent to a partial redemption, he may demand all
vendors or co-heirs to agree to repurchase the whole
thing sold. (art. 1613)
2. Creditors of the Vendor
a. They cannot make use of the right of redemption
until after they have exhausted the property of the
vendor. (art. 1610)
Rights of Parties as to the Fruits of Land
1. If there were fruits at the time of sale and vendee paid for
them, he must be reimbursed.
2. If vendee did not pay for the fruits, no reimbursement for
those existing at the time of redemption.
3. No fruits at the time of same and some exist at time of
redemption, it is to be distributed proportionately to the
vendor and vendee, giving the latter a share in proportion
to the time he possessed the property during the last year
counted from the anniversary from the date of sale to
compensate the vendee for his expenses. (art. 1617)
B.) EQUITABLE MORTGAGE
One which lacks the proper formalities of a mortgage,
but shows the intention of the parties to make the property
subject of the contract as security for a debt.
A contract may be presumed to be an equitable mortgage
under the following cases: (applies only to absolute sale)
1. Unusually inadequate purchase price;
2. Vendor remains in possession as lessee or otherwise;
3. Extension for period of right to repurchase;
4. Purchases retains for himself a part of the purchase price;
5. Vendor binds himself to pay the taxes of the thing sold;
6. When the real intention of the parties is to secure the
payment of an obligation.
NOTE: in case of doubt, a contract purporting to be a sale
with right to repurchase (pacto de retro sale) shall be
construed as an equitable mortgage.
NOTE: Vendor may ask for reformation, or to correct the
instrument to express the true intent of the parties.
C.) 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 under is mandatory for the right of
redemption to commence.
Right of Legal Redemption of Co-owners
The following are the requisites for the right to exist:
1. There must be co-ownership;
2. There must be alienation of all or any of the shares of the
other co-owners;
3. The sale must be to a third person or stranger;
4. The sale must be before partition;
5. The right must be exercised within the period provided;
6. Vendee must be reimbursed for the price of the sale.
Against whom the right may be exercised
The right of legal redemption is not granted solely
and exclusively to the original co-owner but applies to those
who subsequently acquire their respective share while the co-
ownership subsist. In other words, the right cannot be
exercised against another co-owner but rather it is exercised
against the buyer who bought the share.
Legal Redemption of Adjacent Owners of RURAL Lands
The following are the requisites for the right to exist:
1. The land must be rural;
2. Land must be adjacent;
3. There must be alienation;
4. Rural land alienates must not exceed 1 hectare;
5. Vendee must already own some rural land; and
6. Rural land sold must not be separated by brooks,
drainage, ravines, roads and other apparent servitudes
from the adjoining lands.
NOTE: Legal right of redemption of rural land refers to land
used for agriculture rather than residential purposes.
If two or more adjoining owners desire to exercise the
right of redemption
1. Owner of the smaller area shall be preferred.
2. If both lands have same area, the one who first requested
the redemption shall be preferred. (Art. 1621)

Rights of Adjacent Owner of URBAN Lands

The owner may exercise two (2) rights, RIGHT OF
PRE-EMPTION or RIGHT OF REDEMPTION.
The following are the requisites in order to exercise
such right:
1. Land must be urban;
2. One exercising the right must be an adjacent owner;
3. The land sold must be so small and so situated that a
major portion thereof cannot be used for any practical
purpose within a reasonable time;
4. Such urban land was bought by its owner merely for
speculation; and
5. It is about to be resold, or that its resale has been
perfected.

NOTE: If two or more owner wish to exercise their rights, the

one whose intended use of the land appears best justified shall
be preferred. (ARt. 1622) Co-owners are preferred over
adjacent owners. (Art. 1623, par 2)

PRE-EMPTION
It is the act of purchasing before others. If exercised,
they will have preference over other potential buyers.

Pre-emption Redemption
Arises before the sale. Arises after sale.

No rescission because no sale There can be rescission of the

as yet exist. original sale.

The action is directed against Action is directed against

the propective buyer. buyer.
May attached to the seller’s Always relate to the subject
duty to deliver or some other matter or the seller’s
circumstances. obligation.

Period which Right may be Exercised

The period shall be exercised within 30 days from
the notice in writing by the prospective vendor, or by the
vendor.
If notice is not given, the 30-day period has not even
begun to run. [Vda. De Cangco v. Escudibo] However, no
specific form of written notice is required.
The 30-day notice in writing should be counted from
notice, not of the perfected sale, but of the actual execution
and delivery of the document of sale. [Doromal v. COA L-
36083, Sept. 5, 1975]