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Chapter 4
OBLIGATIONS OF THE VENDOR
SECTION 1. — General Provisions
ART. 1495. The vendor is bound to transfer the

ownership of and deliver, as well as warrant the thing
which is the object of the sale. (1461a)
Principal obligations of the vendor.

The principal obligations of a vendor are:
(1) to transfer the ownership of the determinate thing sold;
(2) to deliver the thing, with its accessions and accessories, if
any, in the condition in which they were upon the perfection of
the contract (Art. 1537.);
(3) to warrant against eviction and against hidden defects
(Arts. 1495, 1547.);
(4) to take care of the thing, pending delivery, with proper
diligence (see Art. 1163.); and
(5) to pay for the expenses of the deed of sale, unless there is
a stipulation to the contrary. (Art. 1487.)
Obligation to transfer ownership and deliver.

(1) Ownership by vendor at time of perfection of contract not es-
sential. — The vendor need not be the owner of the thing at the
time of perfection of the contract; it is sufficient that he has “a right
to transfer the ownership thereof at the time it is delivered.” (Art.
1459.) The obligation to transfer ownership and to deliver is re-
ally implied in every contract of sale. (see Arts. 1458, 1459, 1547.)
163
164 SALES Art. 1495
One who sells something he does not yet own is bound by the
sale when he acquires it later. (Bucton vs. Gabar, 55 SCRA 499
[1974].)
When a property belonging to a person is unlawfully taken by
another, the former has the right of action against the latter for the
recovery of the property. Such right may be transferred by the sale
or assignment of the property and the transferee can maintain
such action against the wrongdoer. (Heirs of Q. Seraspi vs. Court
of Appeals, 331 SCRA 293 [2000]; Waite vs. Peterson, 8 Phil.
235 [1907].)
ILLUSTRATIVE CASE:
Goods which seller warranted as already on the way did not ar-
rive.
Facts: B, vendee, gave his consent to the purchase and sale
of certain goods on the assertion of S, vendor, stated in the con-
tract, that the goods were already on the way. The goods did
not arrive.
Issue: Has S the right to demand from B the payment of the
price?
Held: No. The assertion made by S is a warranty (see Arts.
1545, 1546.), the non-fulfillment of which constitutes a breach
of contract and deprives him the right to demand of B the pay-
ment of the price of the sale. Having elected to bind himself in
that way, S, as vendor, is responsible, even if the prompt trans-
portation of the goods does not depend upon him but upon the
importers, for he who contracts and assumes an obligation is
presumed to know the circumstances under which it can be
complied with. (Soler vs. Chesley, 43 Phil. 529 [1922].)
(2) Transfer not essential to perfection of contract. — The trans-

fer of ownership and the delivery of the thing sold are not essen-
tial to the perfection of the contract. But if the seller does not de-
liver at the time stipulated, the buyer may ask for the rescission
of the contract or fulfillment with the right to damages in either
case. (Art. 1191.)
(3) No obligation to make delivery during period of redemption. —
The purchaser in execution sales (see Rules of Court, Rule 39, Secs.
30, 35.), however, is not entitled to immediate possession of the
Art. 1495 OBLIGATIONS OF THE VENDOR 165

General Provisions
property sold. The effective conveyance of the land is accom-

plished by the deed which is issued only after the period of re-
demption has expired. (Flores vs. Lim, 50 Phil. 738 [1927];
Gonzales vs. Calimbas and Poblete, 51 Phil. 355 [1927].) In other
words, the debtor is not obliged to make delivery during the pe-
riod of redemption. In all cases of extra-judicial foreclosure sale,
the mortgagor may redeem the real property sold within one year
from the date of registration of the sale. (see Act No. 3155, Sec. 6.)
In judicial foreclosure of real estate mortgage, the general rule is
that the mortgagor cannot exercise his right of redemption after
the sale is confirmed by the court. (see Rules of Court, Rule 68,
Sec. 3.)
(4) Right of vendee to transfer of certificate of title. — In a sale of
registered land, the vendee has a right to receive and the vendor
the corresponding obligation to transfer to him, not only the pos-
session and employment of the land but also the certificate of ti-
tle. (Gabila vs. Perez, 169 SCRA 517 [1989].)
(5) Right of buyer to recover the price paid. — The right of a party
to recover the amount given as a consideration has been passed
upon in a case where it was held that: “Whenever money is paid
upon the representation of the receiver that he has either a cer-
tain title in property transferred in consideration of the payment
or a certain authority to receive the money paid, when in fact he
has no such title or authority, then, although there be no fraud or
intentional misrepresentation on his part, yet there is no consid-
eration for the payment. The money remains, in equity and good
conscience, the property of the payer and may be recovered by
him. (Development Bank of the Phils. vs. Court of Appeals, 65
SCAD 82, 249 SCRA 331 [1995], citing Leather Manufacturers
National Bank vs. Merchants National Bank, 128 U.S. 26; 9 S. C.T.
5; 32 L. ed., 362.) Therefore, the purchaser is entitled to recover
the money paid by him where the contract is set aside by reason
of the mutual material mistake of the parties as to the identity or
quantity of the land sold. And where the purchaser recovers the
purchase price from a vendor who fails or refuses to deliver the
title, he is entitled, as a general rule, to interest on the money paid
from the time of payment. (Ibid., citing Wolfinger vs. Thomas, 22
SD 57; 115 NW 100; Robinson vs. Bresslor, 122 Neb. 461; 240 NW
564.)
166 SALES Art. 1496
ART. 1496. The ownership of the thing sold is ac-

quired by the vendee from the moment it is delivered
to him in any of the ways specified in articles 1497 to
1501, or in any other manner signifying an agreement
that the possession is transferred from the vendor to
the vendee. (n)
Ways of effecting delivery.

The ownership of the thing sold shall be transferred to the
vendee upon the delivery thereof (see Art. 1477.) which may be
effected in any of the following ways or modes:
(1) by actual or real delivery (Art. 1497.);
(2) by constructive or legal delivery (Arts. 1498-1501.); or
(3) by delivery in any other manner signifying an agreement
that the possession is transferred to the vendee. (Arts. 1496-1499.)
In all the different modes of delivery, the critical factor which
gives legal effect to the act is the actual intention of the vendor to
deliver, and its acceptance by the vendee. The act, without the
intention, is insufficient. There is no tradition. (Norkis Distribu-
tors, Inc. vs. Court of Appeals, 195 SCRA 694 [1991]; Santos vs.
Santos, 156 SCAD 97, 366 SCRA 395 [2001].) Although transfer of
ownership is the primary purpose of sale, delivery remains an
indispensable requisite as our law does not admit the doctrine of
transfer of ownership of property by mere consent. (People’s In-
dustrial & Commercial Corp. vs. Court of Appeals, 88 SCAD 559,
274 SCRA 597 [1997].) The delivery must be made to the vendee
or his authorized representative. Where the vendee did not name
any person to whom the delivery shall be made in his behalf, the
vendor is bound to deliver exclusively to him. (Lagon vs. Hooven
Comalco Industries, Inc., 141 SCAD 353, 349 SCRA 363 [2001].)
ILLUSTRATIVE CASE:
For rice sold, vendor was not paid by vendee who sold it to an-
other, the second vendee, the latter refusing to return the rice after he
was repaid by first vendee.
Facts: S agreed to sell 170 cavans of rice to B at the price of
P37.25 per cavan, delivery to be made at T’s store. After the

General Provisions
goods were unloaded at T’s store, S’s driver tried to collect the
purchase price from T as B was nowhere to be found, but T
refused, stating that he had purchased the goods from B at
P33.00 per cavan and the price had already been paid to him.
This is a simple case of swindling perpetrated by B at the
expense of S and T. However, three days after delivery, T was
repaid by B.
Issue: Is T duty bound to return the 170 cavans of rice to S
or to pay its value?
Held: Yes. (1) Sale between B and T voluntarily rescinded by the
repayment. — There was a perfected sale. (Art. 1475.) Owner-
ship of the rice, too, was transferred to the vendee, B, upon its
delivery at the place stipulated (Art. 1521.), and pursuant to
Articles 1477 and 1496. At the very least, B had a rescissible
title to the goods for non-payment of the purchase price but
which had not been rescinded at the time of the sale to T. Hav-
ing been repaid the purchase price by B, the sale, as between B
and T, had been voluntarily rescinded, and T was thereby di-
vested of any claim to the rice. Technically, therefore, he should
return the rice to B.
(2) Rule against unjust enrichment applies. — Since the rice
had not been returned to B who was ready to return the rice to
S, it follows that T should return the rice to S. T cannot be al-
lowed to unjustly enrich himself at the expense of another by
holding on to property no longer belonging to him. (Art. 22.) In
law and in equity, therefore, S is entitled to recover the rice, or
the value thereof since he was not paid the price therefor. (Obaña
vs. Court of Appeals, 135 SCRA 557 [1985].)
Ways of effecting constructive delivery.

(1) Equivalent to actual delivery. — Constructive delivery is a
general term comprehending all those acts which, although not
conferring physical possession of the thing, have been held by
construction of law equivalent to acts of real delivery. (Banawa
vs. Mirano, 97 SCRA 517 [1980]; Aguilar vs. Court of Appeals, 129
SCAD 274, 335 SCRA 308 [2000].) It may be effected in any of the
following ways:
(a) by the execution of a public instrument (Art. 1498,
par. 1.);
168 SALES Art. 1496
(b) by symbolical tradition or traditio symbolica (ibid., par.

2.);
(c) by traditio longa manu (Art. 1499.);
(d) by traditio brevi manu (Ibid.);
(e) by traditio constitutum possessorium (Art. 1500.); or
(f) by quasi-delivery or quasi-traditio. (Art. 1501.)
As a specie of constructive delivery, the execution of a public
document is also considered a form of symbolic delivery.
(2) Contrary may be stipulated. — The parties, however, may
stipulate that ownership in the thing shall pass to the purchaser
only after he has fully paid the price (Art. 1478.) or fulfilled cer-
tain conditions. In a contract of absolute sale, ownership is trans-
ferred simultaneously with the delivery of the thing sold. (Joseph
& Sons Enterprises, Inc. vs. Court of Appeals, 143 SCRA 663
[1986].)
— oOo —
169
SECTION 2. — Delivery of the Thing Sold
ART. 1497. The thing sold shall be understood as

delivered, when it is placed in the control and pos-
session of the vendee. (1462a)
Concept of tradition or delivery.

Tradition is a derivative mode of acquiring ownership by vir-
tue 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 ac-
cepts the same. (10 Manresa 122.)
Importance of tradition.
(1) Transfer of ownership. — Article 1496 emphasizes the ne-
cessity of tradition for the transfer of ownership of the thing sold.
Our law does not admit the doctrine of transfer of property by
mere consent. (Chua vs. Court of Appeals, 401 SCRA 54 [2003].)
(a) The ownership over it is not transferred by contract
merely but by delivery, actual or constructive. The critical fac-
tor in all the different modes of effecting delivery which gives
legal effect to the act, is the actual intention of the creditor to
deliver, and its acceptance by the vendee. (Norkis Distributors,
Inc. vs. Court of Appeals, 195 SCRA 494 [1991].)
(b) Contracts only constitute titles or rights to the trans-
fer or acquisition of ownership, while delivery or tradition is
the method of accomplishing the same, the title and the
method of acquiring it being different in our law. (Gonzales vs.
Roxas, 16 Phil. 51 [1910].) But, there is no delivery as to
transfer ownership where the vendee takes possession of the
personal property subject matter of the contract of sale by
169
170 SALES Art. 1497
stealing the same while in the custody of the vendor or his

agent. (see Aznar vs. Yapdiangco, 13 SCRA 486 [1965].)
(c) It is during the delivery that the law requires the seller
to have the right to transfer ownership of the thing sold. In
general, a perfected contract of sale cannot be challenged on
the ground of the seller’s non-ownership of the thing sold at
the time of the perfection of the contract. (Alcantara-Daus vs.
De Leon, 404 SCRA 74 [2003].)
(2) Liability in case of loss. — When the thing subject of the sale
is placed in the control and possession of the vendee (Art. 1497.)
or his agent, the delivery is complete and the vendee cannot avoid
liability in case the thing is subsequently lost without the fault of
the vendor. (La Fuerza, Inc. vs. Court of Appeals, 23 SCRA 1217
[1968]; Phil. Virginia Tobacco Adm. vs. Delos Angeles, 87 SCRA
197 [1987]; see Chrysler Phils. Corp. vs. Court of Appeals, 133
SCRA 507 [1984].)
(3) Right of vendor to claim payment. — Delivery produces its
natural effects in law, the principal and most important of which
being the transfer of ownership without prejudice to the right of
the vendor to claim payment of the price. (Ocejo Perez & Co. vs.
International Banking Corp., 37 Phil. 631 [1918]; Municipality of
Victorias vs. Court of Appeals, 149 SCRA 32 [1987].)
Where the buyer has not become the owner for lack of deliv-
ery, his action is not accion reinvidicatoria but one against the ven-
dor for specific performance or rescission, with damages in either
case. (Art. 1191.)
(4) Consummation of contract. — Delivery of the thing together
with the payment of the price, marks the consummation of the
contract of sale.1 (Phil. National Bank vs. Ling, 69 Phil. 611 [1940];
1
In a deed of sale of a parcel of land with a deed of mortgage to secure payment of
the balance of the purchase price, where title has been transferred to the buyer, the rela-
tionship between the parties is no longer one of buyer and seller because the contract of
sale has been perfected and consummated. It is already one of a mortgagor and a mort-
gagee. In consideration of the buyer’s promise to pay on installment basis the balance of
the purchase price, the seller has accepted the mortgage as security for the obligation,
thereby becoming the mortgagee. The buyer’s (mortgagor’s) breach of the obligation will
not be with respect to the perfected contract of sale but the obligations created by the
mortgage contract. (Suria vs. Intermediate Appellate Court, 151 SCRA 661 [1987].)

Delivery of the Thing Sold
Froilan vs. Pan Oriental Shipping Co., 12 SCRA 276 [1964]; La

Fuerza, Inc. vs. Court of Appeals, 23 SCRA 1217 [1968].) Perfec-
tion of the contract, on the other hand, relates to the moment when
the meeting of minds between the parties takes place. (Art. 1475.)
(5) Enjoyment of thing sold. — Delivery is also necessary to
enable the vendee to enjoy and make use of the property pur-
chased.
Actual delivery of the thing sold.

(1) When deemed made. — There is actual delivery when the
thing sold is placed in the control and possession of the vendee
(Art. 1497.) or his agent. (see Alliance Tobacco Corp., Inc. vs. Phil.
Virginia Tobacco Administration, 179 SCRA 336 [1989].) This in-
volves the physical delivery of the thing and is usually done by
the passing of a movable thing from hand to hand.
ILLUSTRATIVE CASE:
Bank (pledgee) took possession, as security, of the sugar sold and
delivered by unpaid seller to buyer (pledgor) who subsequently be-
came insolvent.
Facts: S sold sugar to B. The sugar was delivered by S into
B’s warehouse, leaving it entirely subject to his control. B, how-
ever, failed to make payment after completion of delivery as per
agreement. C, a bank, took possession of the sugar pursuant
to a contract of pledge entered into between the bank and B to
secure the latter’s indebtedness of P20,000. Subsequently, B
became insolvent.
Issue: Is S still the owner of the sugar as to entitle him to
recovery of its possession?
Held: No. When S delivered the sugar into B’s warehouse,
leaving it entirely subject to his control, it is difficult to see how
S could have divested himself more completely of the posses-
sion of the sugar, or how he could have placed it more com-
pletely under the control of the buyer. The fact that the price has
not yet been paid, in the absence of stipulation, was not, nor
could it be an obstacle to the acquisition of ownership by B,
without prejudice, of course, to the right of S to claim payment
of the sum due. (Ocejo Perez & Co. vs. International Bank, 37 Phil.
631 [1918].)
172 SALES Art. 1498
(2) Not always essential to passing of title. — Actual or manual

delivery of an article sold is not always essential to the passing of
title thereto. (Art. 1475.) The parties to the contract may agree
when and on what conditions the ownership in the subject of the
contract shall pass to the buyer. As for example, the parties may
stipulate that ownership in the thing sold shall pass to the vendee
only after he has fully paid the price. (Art. 1478.)
ART. 1498. When the sale is made through a pub-

lic instrument, the execution thereof shall be equiva-
lent to the delivery of the thing which is the object of
the contract, if from the deed the contrary does not
appear or cannot clearly be inferred.
With regard to movable property, its delivery may
also be made by the delivery of the keys of the place
or depository where it is stored or kept. (1463)
Execution of a public instrument

or document.
(1) Possession transferred to buyer by notarized deed of conveyance.
— The execution of a public instrument (i.e., an instrument or
document attested and certified by a public officer authorized to
administer oath, such as a notary public) as a manner of delivery
applies to movable as well as immovable property since the law
does not make any distinction and it can be clearly inferred by
the use of the word “also” in paragraph 2 of Article 1498. This
manner of delivery is symbolic. The buyer may use the document
as proof of his ownership of the property sold (Florendo vs. Foz,
20 Phil. 388 [1911]; Municipality of Victorias vs. Court of Appeals,
149 SCRA 32 [1987]; see Dy, Jr. vs. Court of Appeals, 198 SCRA
826 [1991].), for purposes, for example, of mortgaging the same.
(Garcia vs. Court of Appeals, 312 SCRA 180 [1999].) Under Arti-
cle 1498, possession is transferred to the vendee (or lessee) by
virtue of the notarized deed of conveyance (Ong Ching Po vs.
Court of Appeals, 57 SCAD 619, 239 SCRA 341 [1994].) (or lease)
including the incorporeal rights appurtenant thereto, e.g., right
to eject tenants or squatters from the property in question. Since
the execution of the deed of conveyance is deemed equivalent to

delivery, prior physical delivery or possession is not legally re-

quired. Thus, notwithstanding the presence of illegal occupants
on the subject property, transfer of ownership by symbolic deliv-
ery under Article 1498 can still be effected through the execution
of the deed of conveyance. The key word is “control,’’ not pos-
session, of the property. (Sabio vs. International Corporate Bank,
154 SCAD 377, 364 SCRA 385 [2001].)
(2) Delivery presumptive only. — Under Article 1498, the mere
execution of the deed of sale in a public document is equivalent
to the delivery of the property “if from the deed the contrary does
not appear or cannot clearly be inferred.” Therefore, prior physi-
cal delivery or possession is not required. (M.R. Dulay Enterprises,
Inc. vs. Court of Appeals, 44 SCAD 297, 225 SCRA 678 [1993].)
Article 1498, however, lays down the general rule. It confines it-
self to providing that “the execution thereof shall be equivalent”
to delivery, which means that there is only a presumptive (not
conclusive) delivery which can be rebutted by evidence to the
contrary. (Montenegro vs. Roxas Gomez, 58 Phil. 723 [1932].) Such
presumption is destroyed when the delivery is not effected be-
cause of a legal impediment. Nowhere in the Civil Code is it pro-
vided that the execution of a deed of sale is a conclusive presump-
tion of delivery of the object of the sale. (Ten Realty and Develop-
ment Corp. vs. Cruz, 410 SCRA 484 [2003].)
(a) If it appears from the document or it can be inferred
therefrom that it was not the intention of the parties to make
delivery, no tradition can be deemed to have taken place. Such
would be the case, for instance, where a certain date is fixed
when the purchaser should take possession of the thing, or
where the vendor reserves the right to use and enjoy the prop-
erty until a certain period, or where it is stipulated that until
payment of the last installment is made, the title to the prop-
erty should not be deemed to have been transmitted, or where
the vendor has no control over the thing sold at the moment
of the sale, and, therefore, its material delivery could not have
been made. (Phil. Suburban Dev. Corp. vs. The Auditor Gen-
eral, 63 SCRA 397 [1975]; see 10 Manresa 129; Aviles vs. Arcega,
44 Phil. 924 [1923]; Addison vs. Felix, 38 Phil. 404 [1918];
Masallo vs. Gaspar, 39 Phil. 134 [1918].)
174 SALES Art. 1498
(b) Presumptive delivery by execution of public instru-

ment can also be negated by failure of the vendee to take
material possession of the land subject of the sale in the con-
cept of purchaser-owner. (Danguilan vs. Intermediate Appel-
late Court, 158 SCRA 22 [1988]; Pasaqui vs. Villablanca, 68
SCRA 18 [1975].) The continued possession by the vendor of
the property sold may make dubious the contract of sale be-
tween the parties. (Santos vs. Santos, 156 SCAD 47, 366 SCRA
395 [2001]; Alcos vs. Intermediate Appellate Court, 162 SCRA
823 [1988].)
ILLUSTRATIVE CASES:
1. After delivery of possession coupled with execution of the
deed of sale of real property embodied in a public instrument but be-
fore its registration and payment of the price, buyer is being made
responsible for the payment of the realty tax.
Facts: S (PSDC) and B (PHHC, a government corporation)
entered into a contract of sale embodied in a public instrument
whereby S conveyed unto B two parcels of land subject to cer-
tain terms and conditions among which that S should register
the deed of absolute sale and secure a new title in the name of
B before the latter can be compelled to pay the purchase price.
Prior to the signing of the deed, B had acquired possession
of the property with the consent of S. The provincial treasurer
requested B to withhold the amount of P30,000.00 from the pur-
chase price to be paid by it to S representing the realty tax due
on the property involved.
Issue: Who is liable to the payment of the real property tax,
S or B?
Held: B. When the sale of real property is made in a public
instrument the execution thereof is equivalent to the delivery of
the thing object of the contract, if from the deed the contrary
does not appear or cannot clearly be inferred.
(1) Vendee actually placed in possession. — In the case at bar,
there is no question that the vendor (S) had actually placed the
vendee (B) in possession and control over the property sold,
even before the date of the sale.
(2) Payment of price not essential to transfer of ownership. —
The condition that S should first register the deed of sale and

secure a new title in the name of B before the latter shall pay
the purchase price, did not preclude the transmission of own-
ership. In the absence of an express stipulation to the contrary,
the payment of the purchase price of the goods is not a condi-
tion precedent to the transfer of title to the buyer, but title passes
by the delivery of the goods.
(3) Title transferred to vendee. — Since the delivery of pos-
session coupled with the execution of the deed of absolute sale,
had consummated the sale and transferred title to B, the pay-
ment of the real estate tax after such transfer is the responsibil-
ity of the purchaser.2 (Phil. Suburban Dev. Corp. vs. The Auditor
General, 63 SCRA 397 [1975].)
———— ———— ————
2. Lessor sold property leased to a third party in violation of
the “exclusive option to purchase the same,’’ given to lessee who filed
a suit for specific performance and annulment of the sale.
Facts: Respondent MT, Inc. leased portions of a commer-
cial building together with the land owned by CB, lessor, which
it used as a movie theater. Under two contracts of lease, inter
alia, MT, Inc. “shall be given 30-days exclusive option to pur-
chase the same,’’ if CB should desire to sell the leased premises.
CB sold the building to ERD, petitioner, which received
rents from MT, Inc. for sometime.
Subsequently, MT, Inc., claiming it had been denied its right
to purchase the leased property in accordance with the lease
contracts with CB, filed a suit for specific performance and an-
nulment of sale with prayer to enforce its “exclusive option to
purchase’’ the property.
The dispute between MT, Inc., CB and ERD reached the
Supreme Court (referred to as “Mother case’’) which rescinded
the absolute sale to ERD, ordered CB to return to ERD the pur-
chase price, directed ERD to execute the documents necessary
to return ownership of the disputed lots to CB, and ordered CB
to allow MT, Inc. to buy the said lots for P11,300,000. This deci-
sion became final and executory on March 17, 1997.
MT, Inc. filed with the trial court a motion for execution
which was granted. Subsequently, the Clerk of Court of the
2
Under Republic Act No. 1322 (Sec. 7 thereof.), however, the PHHC (now National
Housing Authority) was not subject to real property tax.
176 SALES Art. 1498
Manila Regional Trial Court, as Sheriff, executed a deed of con-

veyance in favor of CB and a deed of sale in favor of MT, Inc.
On the basis of these documents, the Registry of Deeds of Ma-
nila cancelled ERD’s titles and issued new certificates of title in
the name of MT, Inc.
On September 18, 1997, or after the execution of the deci-
sion of the Supreme Court, ERD filed with the Regional Trial
Court an action for collection of a sum of money against MT, to
wit: (1) the sum of P11,548,941.76 plus legal interest, represent-
ing the total amount of unpaid monthly rentals/reasonable
compensation from June 1, 1987 to July 31, 1997; (2) the sums of
P849,567.12 and P458,853.44 a month, plus legal interest as
rental/reasonable compensation for the use and occupation of
the property from August 1, 1997 to May 1, 1997; and (3) the
sum of P500,000 as and for attorney’s fees, plus other expenses
of litigation, and the costs of the suit.
Issue: Is ERD entitled to back rentals?
Held: No. (1) Rental, a civil fruit of ownership. — “Rent is a
civil fruit that belongs to the owner of the property producing it
by right of accession. Consequently and ordinarily, the rentals
that fell due from the time of the perfection of the sale to peti-
tioner until its rescission by final judgment should belong to the
owner of the property during that period.’’
(2) Ownership transferred by delivery. — “Ownership of the
thing sold is a real right, which the buyer acquires only upon de-
livery of the thing to him ‘in any of the ways specified in articles
1497 to 1501, or in any other manner signifying an agreement
that the possession is transferred from the vendor to the vendee.’
This right is transferred, not by contract alone, but by tradition
or delivery. Non nudis pactis sed traditione dominia rerum
transferantur. And there is said to be delivery if and when the
thing sold ‘is placed in the control and possession of the vendee.’
Thus, it has been held that while the execution of a public in-
strument of sale is recognized by law as equivalent to the de-
livery of the thing sold, such constructive or symbolic delivery,
being merely presumptive, is deemed negated by the failure of
the vendee to take actual possession of the land sold.’’
(3) Concept of delivery. — “Delivery has been described as
a composite act, a thing in which both parties must join and the
minds of both parties concur. It is an act by which one party
parts with the title to and the possession of the property, and

the other acquires the right to and the possession of the same.
In its natural sense, delivery means something in addition to the
delivery of property or title; it means transfer of possession. In
the Law on Sales, delivery may be either actual or con-
structive, but both forms of delivery contemplate ‘the absolute
giving up of the control and custody of the property on the part
of the vendor, and the assumption of the same by the vendee.’’’
(4) ERD never took actual control and possession of the prop-
erty sold to it. — “From the peculiar facts of this case, it is clear
that petitioner never took actual control and possession of the
property sold, in view of respondent’s timely objection to the
sale and the continued actual possession of the property. The
objection took the form of a court action impugning the sale
which, as we know, was rescinded by a judgment rendered by
this Court in the mother case. It has been held that the execu-
tion of a contract of sale as a form of constructive delivery is a
legal fiction. It holds true only when there is no impediment that
may prevent the passing of the property from the hands of the
vendor into those of the vendee. When there is such im-
pediment, ‘fiction yields to reality — the delivery has not been
effected.’
Hence, respondent’s opposition to the transfer of the prop-
erty by way of sale to ERD’s was a legally sufficient impedi-
ment that effectively prevented the passing of the property into
the latter’s hands.’’
(5) Presumption of delivery by execution of public instrument
is only prima facie. — “The execution of a public instrument gives
rise, therefore, only to a prima facie presumption of delivery.
Such presumption is destroyed when the instrument itself ex-
presses or implies that delivery was not intended; or when by
other means it is shown that such delivery was not effected, because a
third person was actually in possession of the thing. In the latter
case, the sale cannot be considered consummated.’’
(6) ERD did not acquire rights to fruits of property. — “How-
ever, the point may be raised that under Article 1164 of the Civil
Code, ERD, as buyer, acquired a right to the fruits of the thing
sold from the time the obligation to deliver the property to pe-
titioner arose. That time arose upon the perfection of the Con-
tract of Sale on July 30, 1978, from which moment the laws pro-
vide that the parties to a sale may reciprocally demand per-
178 SALES Art. 1498
formance. Does this mean that despite the judgment rescind-

ing the sale, the right to the fruits belonged to, and remained
enforceable by, ERD?
Article 1385 of the Civil Code answers this question in the
negative, because ‘[r]escission creates the obligation to return
the things which were the object of the contract, together with
their fruits, and the price with its interest; x x x.’ Not only the
land and building sold, but also the rental payments paid, if any,
had to be returned by the buyer.’’
(7) Rental payments by MT, Inc. did not mean recognition of
ERD’s title. — “The fact that MT, Inc. paid rentals to ERD’s dur-
ing the litigation should not be interpreted to mean either ac-
tual delivery or ipso facto recognition of ERD’s title. ERD as al-
leged buyer of the disputed properties and as alleged succes-
sor-in-interest of CB rights as lessor — submitted two ejectment
suits against MT, Inc. Filed in the Metropolitan Trial Court of
Manila, the first was docketed as Civil Case No. 121570 on July
9, 1987; and the second, as Civil Case No. 131944 on May 28,
1990. MT, Inc. eventually won them both. However, to be able
to maintain physical possession of the premises while await-
ing the outcome of the mother case, it had no choice but to pay
the rentals. The rental payments made by MT, Inc., should not
be construed as a recognition of ERD as the new owner. They
were made merely to avoid imminent eviction.’’
(8) General principle that rescissible contract is valid until re-
scinded not applicable. — “At bottom, it may be conceded that,
theoretically, a rescissible contract is valid until rescinded. How-
ever, this general principle is not decisive to the issue of whether
ERD ever acquired the right to collect rentals. What is decisive
is the civil law rule that ownership is acquired, not by mere
agreement, but by tradition or delivery. Under the factual envi-
ronment of this controversy as found by this Court in the mother
case, ERD was never put in actual and effective control or pos-
session of the property because of MT, Inc. timely objection.
As pointed out by Justice Holmes, general propositions do
not decide specific cases. Rather, ‘laws are interpreted in the
context of the peculiar factual situation of each case. Each case
has its own flesh and blood and cannot be decided on the basis
of isolated clinical classroom principles.’ ”
(9) Sale of ERD not consummated. — “In short, the sale to
ERD may have been valid from inception, but it was judicially

rescinded before it could be consummated. Petitioner never ac-

quired ownership, not because the sale was void, as errone-
ously claimed by the trial court, but because the sale was not
consummated by a legally effective delivery of the property sold.’’
(10) Benefits precluded by ERD’s bad faith. — “Furthermore,
assuming for the sake of argument that there was valid deliv-
ery, petitioner is not entitled to any benefits from the ‘rescinded’
Deed of Absolute Sale because of its bad faith. This being the
law of the mother case decided in 1996, it may no longer be
changed because it has long become final and executory. x x x.’’
(Equatorial and Realty Development, Inc. vs. Mayfair Theater, Inc.,
158 SCAD 783, 370 SCRA 56 [2001].)
(3) Sale of thing not subject to control of vendor. — Symbolic

delivery by the execution of a public instrument is equivalent to
actual delivery only where the thing is subject to the control of the
vendor and there is no impediment that may prevent the passing
of the property from the hands of the vendor into those of the
vendee. Hence, the vendor who executes said public instrument
fails in his obligation to deliver it, if the vendee cannot enjoy its
material possession because of the opposition or resistance of a
third person (e.g., squatter) who is in actual possession. The legal
fiction yields to reality. It is not enough to confer upon the pur-
chaser the ownership and the right of possession. The thing sold must
be placed in his control in order that it can be said that delivery
has been effected. (Addison vs. Felix Tioco, 38 Phil. 404 [1918];
Power Commercial & Industrial Corp. vs. Court of Appeals, 84
SCAD 67, 274 SCRA 597 [1997].)
In other words, a seller cannot deliver constructively if he
cannot actually deliver even if he wants to. Of course, if the sale
had been made under the express agreement of imposing upon
the vendee the obligation to take the necessary steps to obtain the
material possession of the thing sold and if it were proven that
he knew that the thing was in the possession of a third person
claiming to have property rights thereon, such agreement would
be perfectly valid. (Ibid.)
(4) Sale of registered land. — The provisions of Article 1498 re-
garding passing of title upon delivery by execution of a public
instrument must be deemed modified by the provisions of the
180 SALES Art. 1499
Property Registration Decree (Pres. Decree No. 1529.) insofar as

registered land is concerned. Section 51 of the decree is very clear
that no deed purporting to convey or affect registered land, shall
take effect as a conveyance or bind the land (as against third per-
sons) until its registration. In accordance with this section, no act
of the parties can transfer the ownership of real estate under the
Torrens System. That is done by the act of registration of the con-
veyance which the parties have made. (see Tuazon vs. Raymundo,
28 Phil. 635 [1914]; Manuel vs. Rodriguez, 109 Phil. 1 [1960].)
(5) Possession of a part as constructive possession of whole. —
Where apart from the delivery de jure of a land sold by symbolic
tradition resulting from the execution of a public instrument of
sale, the evidence shows that the purchaser took actual posses-
sion of the considerable portion of the land sold by the exercise
of possessory acts of clearing the area of trees and of cultivating
the same through tenants, such possession and cultivation of a
part is logically and legally constructive possession of the whole.
(Ramos vs. Director of Lands, 39 Phil. 175 [1918].)
Symbolic tradition.
Constructive delivery is symbolic when to effect the delivery,
the parties make use of a token symbol to represent the thing
delivered.
The delivery of the key where the thing sold is stored or kept
is equivalent to the delivery of the thing (par. 2.) because the key
represents the thing. Similarly, there is symbolic delivery of goods
to vendee upon delivery to him of delivery orders (see Art.
1636[1].) which would authorize him to withdraw the goods from
a warehouse. Upon withdrawal, there is actual delivery (supra.)
which consummates the sale. (Lim Yhi Luya vs. Court of Appeals,
99 SCRA 668 [1980].)
ART. 1499. The delivery of movable property may

likewise be made by the mere consent or agreement
of the contracting parties, if the thing sold cannot be
transferred to the possession of the vendee at the time
of the sale, or if the latter already had it in his posses-
sion for any other reason. (1463a)
Arts. 1500-1501 OBLIGATIONS OF THE VENDOR 181

Traditio longa manu.

The first part of Article 1499 refers to traditio longa manu.
This mode of delivery takes place by the mere consent or
agreement of the contracting parties as when the vendor merely
points to the thing sold which shall thereafter be at the control
and disposal of the vendee.
It should be noted that delivery “by the mere consent or agree-
ment of the contracting parties” is qualified by the phrase “if the
thing sold cannot be transferred to the possession of the vendee
at the time of the sale.”
Traditio brevi manu.

This mode of legal delivery happens when the vendee has
already the possession of the thing sold by virtue of another title
as when the lessor sells the thing leased to the lessee. Instead of
turning over the thing to the vendor so that the latter may, in turn,
deliver it, all these are considered done by action of law.
ART. 1500. There may also be tradition constitutum

possessorium. (n)
Traditio constitutum possessorium.

This mode of delivery is the opposite of traditio brevi manu.
It takes place when the vendor continues in possession of the
property sold not as owner but in some other capacity, as for ex-
ample, when the vendor stays as a tenant of the vendee. In this
case, instead of the vendor delivering the thing to the vendee so
that the latter may, in turn, deliver it back to the vendor, the law
considers that all these have taken place by mere consent or agree-
ment of the parties. (see Amig vs. Teves, 96 Phil. 252 [1954];
Bautista vs. Sioson, 39 Phil. 615 [1919]; Carbonell vs. Court of
Appeals, 69 SCRA 99 [1970]; see 10 Manresa 124.)
ART. 1501. With respect to incorporeal property,

the provisions of the first paragraph of article 1498
shall govern. In any other case wherein said provi-
sions are not applicable, the placing of the titles of
182 SALES Art. 1501
ownership in the possession of the vendee or the use

by the vendee of his rights, with the vendor’s con-
sent, shall be understood as a delivery. (1464)
Quasi-traditio.
Tradition can only be made with respect to corporeal things.
In the case of incorporeal things, delivery is effected:
(1) by the execution of a public instrument; or
(2) when that mode of delivery is not applicable, by the plac-
ing of the titles of ownership in the possession of the vendee; or
(3) by allowing the vendee to use his rights as new owner with
the consent of the vendor.
This mode of delivery of incorporeal things or rights is known
as quasi-traditio. Thus, the delivery to a person of a negotiable
document of title in which it is stated that the goods referred to
therein will be delivered to the bearer amounts to delivery of the
goods to such person. (Arts. 1507, 1508.)
ILLUSTRATIVE CASES:
1. Property, title papers to which were delivered by debtor to
creditor as security for a debt, was included in the inventory of the
estate of debtor upon his death.
Facts: S owed B money and as security therefor delivered
to B the title papers over four parcels of land. It was orally agreed
that since S had no money, B was to have the land, permitting S
to cultivate upon condition that, after deducting expenses, 1/2
of the products was to go to B.
Then S died and the four parcels were included in the in-
ventory of the estate of S. B brought action to exclude them
from the inventory.
Issue: Is there delivery of the property in contemplation of
law?
Held: Yes. The land should have been excluded in the in-
ventory. The contract made between S and B although not in
writing, was valid and the delivery of the title deeds of the prop-
erty was equivalent in its effect to a delivery of the property
itself. (Marella vs. Reyes & Paterno, 12 Phil. 1 [1908].)

———— ———— ————

2. Before the sale at public auction, the property in question
was sold by the owner who merely delivered the title deeds thereof to
the first purchaser.
Facts: The lot and warehouse standing thereon belonging
to S were sold at public auction by the sheriff to B. D claimed
that the property was sold by S long before the auction sale to
C who, in turn, sold it to D. S merely delivered the title deeds to
C but remained in possession as lessee. C also delivered the
title deeds to D. D brought action for the recovery of the lot and
warehouse.
Issue: Is there delivery of the property in contemplation of
law?
Held: Yes. Although there was no material delivery of the
property, “the placing of the titles of ownership in the posses-
sion of the vendee or the use which he may make of his right
with the consent of the vendor shall be considered as deliv-
ery.” (Tablante vs. Aquino, 28 Phil. 35 [1914].)
Note: The Supreme Court in both cases cited Article 1464 of
the Spanish Civil Code. (Art. 1501 of our Civil Code.) It is sub-
mitted that Article 1501 refers to delivery merely of incorporeal
rights. The result arrived at, however, may be sustained in that
the delivery of the title deeds may be considered a symbolical
delivery, as the delivery of the key to a house constitutes a
delivery of said house.
Intention to deliver and to accept a

transfer of possession.
(1) In all the forms of delivery, it is necessary that the act be
coupled with the intention of delivering the thing. For instance,
there is no constructive delivery, where the keys to the place where
the thing is deposited are delivered to the vendee in order only
that he may examine it or the titles of ownership of property are
placed in the possession of the vendee for his study or inspection
but not with the intention of making the delivery. The act, without
the intention to deliver, is insufficient. (see 10 Manresa 132.)
Similarly, the issuance of a sales invoice does not prove transfer
of ownership of the thing sold to the buyer. An invoice is nothing
more than a detailed statement of the nature, quality and cost of
184 SALES Art. 1502
the thing sold and has been considered not a bill of sale. (Norkis
Distributors, Inc. vs. Court of Appeals, 193 SCRA 694 [1991]; P.T.
Cerna Corp. vs. Court of Appeals, 221 SCRA 19 [1993].)
(2) For the same reason, any act, although not provided for
in the preceding articles, but accompanied by the evident inten-
tion of the vendor to deliver or of the vendee to receive the thing
sold, will be considered as constituting tradition. It is the inten-
tion which is essential. (ibid.) It is a well-established rule that a
mere contract for the sale of goods, where nothing remains to be
made by the vendor, as when the parties agreed that the delivery
of the logs should be made alongside a vessel of the vendee and
that was done by the vendor, transfers the right of property al-
though the price has not been paid, nor the thing sold actually
delivered to the vendee whose employees attempted to load them
in the vessel but failed to do so for want of the proper loading
equipment. (Bean Admir vs. Cadwallader Co., 10 Phil. 606 [1908].)
In other words, in all the different modes of effecting deliv-
ery, it is the real intention of the parties, to deliver on the part of
the vendor, and to accept on the part of the vendee, which gives
legal effect to the act. Without such intention, there is no tradi-
tion. (see Abuan vs. Garcia, 14 SCRA 759 [1965]; Norkis Distribu-
tors, Inc. vs. Court of Appeals, supra.)
ART. 1502. When goods are delivered to the buyer

“on sale or return” to give the buyer an option to
return the goods instead of paying the price, the own-
ership passes to the buyer on delivery, but he may
revest the ownership in the seller by returning or ten-
dering the goods within the time fixed in the contract,
or, if no time has been fixed, within a reasonable time.
(n)
When goods are delivered to the buyer on approval
or on trial or on satisfaction, or other similar terms,
the ownership therein passes to the buyer.
(1) When he signifies his approval or acceptance
to the seller or does any other act adopting the trans-
action;

(2) If he does not signify his approval or accept-

ance to the seller, but retains the goods without giv-
ing notice of rejection, then if a time has been fixed
for the return of the goods, on the expiration of such
time, and, if no time has been fixed, on the expiration
of a reasonable time. What is a reasonable time is a
question of fact. (n)
Contract of sale or return, and of sale on

trial or approval or satisfaction.
(1) In general. — It is evidently possible for the parties to agree
that the buyer shall temporarily take the goods into his posses-
sion to see whether they are satisfactory to him and that if they
are not, he may refuse to become owner. It is clear also that the
same object may be attained by an agreement that the property
shall pass to the buyer on delivery but that he may return the
goods if they are unsatisfactory. The question is one of fact in every
case whether the parties intend to make approval a condition,
without which the ownership shall not pass, or whether their in-
tent is that the ownership shall pass at once with the right to re-
turn the goods.3 (see 2 Williston, op. cit., pp. 30-33.)
The question of what is a reasonable time for the return of the
property is one of fact to be determined upon the particular cir-
cumstances of the case. The duty of the buyer with regard to the
return of the goods requires, ordinarily, that they be returned in
the same or substantially the same condition in which they were
when the contract was made. Undoubtedly, if they are injured or
damaged substantially through negligence or misuse of the buyer,
his right to return is lost and the sale becomes absolute. (Ray vs.
Thompson, 12 Cush [Mass.] 281, 59 Am. Dec. 187.)
3
“The provision in the Uniform Sales Act and the Uniform Commercial Code from
which Article 1502 was taken, clearly requires an express written agreement to make a
sales contract either a “sale or return” or a “sale on approval.” Parol or extrinsic testi-
mony could not be admitted for the purpose of showing that an invoice or bill of sale
that was complete in every aspect and purporting to embody a sale without a condition
or restriction constituted a contract of sale or return. If the purchaser desired to incorpo-
rate a stipulation securing to him the right of return, he should have done so at the time
the contract was made. (Industrial Textile Manufacturing Co. vs. LPJ Enterprises, Inc.,
217 SCRA 322 [1993], citing 67 Am. Jur. 2d 733.)
186 SALES Art. 1502
(2) Sale or return. — It is a contract by which property is sold

but the buyer, who becomes the owner of the property on deliv-
ery, has the option to return the same to the seller instead of pay-
ing the price.
(a) Under this contract, the option to purchase or return
the goods rests entirely on the buyer without reference to the
quality of the goods. The buyer may revest the ownership in
the seller by returning or tendering the goods within the time
fixed in the contract, or, if no time has been fixed, within a
reasonable time (Art. 1502, par. 1.); otherwise, the sale becomes
absolute and the buyer is liable for the price. The seller can-
not, in this type of sale, prevent the revesting of title by refus-
ing to accept the return of the property.
(b) Since title passes to the buyer on delivery, the loss or
destruction of the property prior to the exercise of the buyer’s
option to return falls upon him and renders him responsible
to the seller for the purchase price or such part thereof as re-
mains unpaid. (Art. 1504; 46 Am. Jur. 647.) The word “return”
itself implies a previous transfer of title.
(3) Sale on trial or approval. — It is a contract in the nature of
an option to purchase if the goods prove satisfactory, the approval
of the buyer being a condition precedent. (77 C.J.S. 938.)
(a) In this kind of contract, the title shall continue in the
seller until the sale has become absolute either by the buyer’s
approval of the goods, or by his failing to comply with the
express or implied conditions of the contract as to giving no-
tice of dissatisfaction or as to returning the goods (Ibid., 655;
Art. 1502, Nos. 1 and 2.), or by his doing any other act adopt-
ing the transaction such as mortgaging the property or sell-
ing it to a third person.
(b) For the reason that the title to the goods does not pass
and the relationship between the seller and the purchaser is
that of bailor and bailee, the risk of loss or injury to the article
pending the exercise by the buyer of his option to purchase
or return it, is upon the seller except as the buyer may be at
fault in respect of the care and condition of the article, or may
have agreed to stand the loss. (see 67 Am. Jur. 2d 430-431.)

(c) The buyer cannot accept part and reject the rest of the
goods since this falls outside the normal intent of the parties.
(Industrial Textile Manufacturing Co. vs. LPJ Enterprises, Inc.,
supra.)
“Sale or return” distinguished from sale on trial.

The distinctions are the following:
(1) “Sale or return” is a sale subject to a resolutory condition,
while sale on trial is subject to a suspensive condition;
(2) “Sale or return” depends entirely on the will of the buyer,
while sale on trial depends on the character or quality of the goods;
(3) In “sale or return,” the ownership of the goods passes to
the buyer on delivery and subsequent return of the goods reverts
ownership in the seller, while in sale on trial, the ownership re-
mains in the seller until the buyer signifies his approval or accept-
ance to the seller; and
(4) In “sale or return,” the risk of loss or injury rests upon the
buyer, while in sale on trial, the risk still remains with the seller.
Note: Article 1502 uses the phrase “on sale or return.” If the
contract uses instead the phrase “for sale or return,” the inten-
tion may be to enter into a contract of agency.
ART. 1503. Where there is a contract of sale of

specific goods, the seller may, by the terms of the
contract, reserve the right of possession or owner-
ship in the goods until certain conditions have been
fulfilled. The right of possession or ownership may
be thus reserved notwithstanding the delivery of the
goods to the buyer or to a carrier or other bailee for
the purpose of transmission to the buyer.
Where goods are shipped, and by the bill of lad-
ing the goods are deliverable to the seller or his agent,
or to the order of the seller or of his agent, the seller
thereby reserves the ownership in the goods. But if,
except for the form of the bill of lading, the ownership
would have passed to the buyer on shipment of the
188 SALES Art. 1503
goods, the seller’s property in the goods shall be

deemed to be only for the purpose of securing per-
formance by the buyer of his obligations under the
contract.
Where goods are shipped, and by the bill of lad-
ing the goods are deliverable to the order of the buyer
or of his agent, but possession of the bill of lading is
retained by the seller or his agent, the seller thereby
reserves a right to the possession of the goods as
against the buyer.
Where the seller of goods draws on the buyer for
the price and transmits the bill of exchange and bill of
lading together to the buyer to secure acceptance or
payment of the bill of exchange, the buyer is bound
to return the bill of lading if he does not honor the bill
of exchange, and if he wrongfully retains the bill of
lading he acquires no added right thereby. If, how-
ever, the bill of lading provides that the goods are
deliverable to the buyer or to the order of the buyer,
or is indorsed in blank, or to the buyer by the con-
signee named therein, on who purchases in good faith,
for value, the bill of lading, or goods from the buyer
will obtain the ownership in the goods, although the
bill of exchange has not been honored, provided that
such purchaser has received delivery of the bill of lad-
ing indorsed by the consignee named therein, or of
the goods, without notice of the facts making the
transfer wrongful. (n)
When ownership not transferred

upon delivery.
This article relates to a sale of specific goods. (see Arts. 1494,
1636.) As a general rule, the ownership in the goods sold passes
to the buyer upon their delivery to the carrier. There are, how-
ever, certain exceptions and they are:
(1) if a contrary intention appears by the terms of the contract
(Arts. 1523, par. 1; 1503, par. 1; see Art. 1478.);

(2) in the cases provided in the second and third paragraphs

of Article 1523; and
(3) in the cases provided in the first, second, and third para-
graphs of Article 1503.
Transfer of ownership where goods sold

delivered to carrier.
(1) General rule. — As stated above, the general rule is that
delivery, be it only constructive, passes title in the thing sold (see
Art. 1496.); and delivery to the carrier is deemed to be a delivery
to the buyer. (Art. 1523, par. 1.) The risk of loss, therefore, as be-
tween the buyer and the seller, falls upon the buyer. The theory
upon which the law is based is perfectly simple. If a seller con-
signs goods to another specified person it indicates an intention
to deliver to the carrier as bailee for the person named, and, if such
shipment was authorized by that person as a buyer, the owner-
ship vests in him. The same result follows it, after the goods have
been shipped without a named consignee, the carrier at the con-
signor’s request, agrees to deliver to a specified person.
(2) Where right of possession or ownership of specific goods sold
reserved. — On the other hand, if the seller directs the carrier to
redeliver the goods at their destination to the seller himself, or to
his order, it indicates an intention that the carrier shall be the bailee
for the seller and the ownership will remain in the latter. (see 2
Williston, op. cit., p. 147.) The seller may, by the terms of the con-
tract, reserve the right of possession or ownership in the goods
until certain conditions are fulfilled. (Art. 1505, par. 1.)
Where seller or his agent is consignee.

(1) Carrier becomes bailee for seller. — Where goods are shipped
and by the bill of lading4 (see Art. 1507.), the goods are deliver-
4
Logically, since a bill of lading acknowledges receipt of goods to be transported,
delivery of the goods to the carrier normally precedes the issuance of the bill; or to some
extent, delivery of the goods and issuance of the bill are regarded in commercial prac-
tice as simultaneous acts. However, except as may be prohibited by law, there is nothing
to prevent an inverse order of events, that is, the execution of the bill even prior to actual
possession and control by the carrier of the cargo to be transported. There is no such law.
(Saludo, Jr. vs. Court of Appeals, 207 SCRA 198 [1992].)
190 SALES Art. 1503
able to the seller or his agent or to the order of the seller or his
agent, the seller thereby reserves the ownership in the goods (par.
2.) and the carrier is a bailee for him and not the buyer. This prin-
ciple is applicable even though the goods are shipped on the buy-
er’s vessel.
(2) Rights of seller. — The seller may not only retain the goods
until the buyer performs his obligation under the contract, but he
may, even in violation of the contract, dispose of them to third
persons. If the seller does this, of course, he is liable for damages
to the buyer but the second purchaser from the seller acquires a
better right. (see 2 Williston, op. cit., pp. 152-153.)
Where seller’s title only for purpose

of security.
(1) Form of bill of lading not conclusive. — The form in which
the bill of lading is taken is not always conclusive. The specifica-
tion in the bill of lading to the effect that the goods are deliver-
able to the order of the seller or his agent does not necessarily
negate the passing of title to the goods upon delivery to the car-
rier. (Butuan Sawmill, Inc. vs. Court of Tax Appeals, 16 SCRA 715
[1966].)
(2) Where ownership would have passed but for the form of bill of
lading. — The circumstances may be such that were it not for the
form of the bill of lading, the ownership would have passed to the
buyer or shipment of the goods. (par. 2, 2nd sentence.) This is true
when the object of the seller in reserving ownership is simply to
secure himself in regard to the performance by the buyer of the
latter’s obligation. By shipping the goods, the seller has definitely
lost all use of them to the buyer. If the shipper could be perfectly
sure that the buyer would fulfill his obligation, it can hardly be
doubted that he would have made a straight consign- ment to the
latter. (see 2 Williston, op. cit., pp. 155-156.)
Significance where title held

merely as security.
The importance of distinguishing between a title held merely
for the purpose of security and the ordinary case where the seller
retains ownership are two-fold:

(1) Risk of loss on buyer. — In the first place, the beneficial

owner (buyer), not the one who holds for security (seller), will be
subject to the risk of loss or deterioration (see Lawyers Coopera-
tive Publishing Co. vs. Tabora, 13 SCRA 762 [1965].) from the time
the goods are delivered to the carrier even though the legal title
remains in the seller. That the risk should be borne by the buyer
if the seller retains title merely to secure performance by the buyer
of his obligations under the contract is a consequence of the theory
that such a bargain is, in effect, although not in form, a sale to the
buyer and a mortgage back by him of the goods to secure the price.
The title does not pass to the buyer until he receives the order bill
of lading properly indorsed. (2 Williston, op. cit., p. 219.)
(2) Buyer’s right of action based on ownership. — In the second
place, the buyer has more than a mere contract right in regards to
the goods. (Ibid., p. 157.) As beneficial owner, he may, as against
any one except an innocent purchaser for value of the bill of lad-
ing from the consignee, bring an action based on ownership on
making tender of the price.
Where buyer or his agent is consignee

but seller retains order bill of lading.
Where goods are shipped and by the bill of lading the goods
are deliverable to the order of the buyer or of his agent, but pos-
session of the bill of lading is retained by the seller or his agent,
the seller thereby retains a right to the possession of the goods as
against the buyer. (par. 3.)
(1) Effect of retention. — Although the property in the goods
will ordinarily pass to the buyer on delivery, the latter is unable to
obtain the goods without the bill. The effect of the retention of the
bill of lading, under such circumstances, controlling as it does the
possession of the goods, is, therefore, closely analogous to the
retention of a lien by the seller after the property has passed to
the buyer. (Ibid., p. 163.)
(2) Surrender of order bill necessary. — The carrier cannot be
compelled to surrender possession of the goods until the order
bill (properly indorsed) has been surrendered. In an order bill, it
cannot with certainty be determined who is the person named to
192 SALES Art. 1503
whose order the goods are deliverable unless the bill of lading
itself is presented.
(3) Identification of consignee sufficient in case of straight bill. —
On the other hand, the shipper who issues a straight bill of lad-
ing (goods are by its terms deliverable not to the order of the con-
signee but to the consignee only) ordinarily does not require the
surrender of the bill by the consignee in order for the latter to get
the goods. The consignee need only to identify himself. Hence,
where the buyer is the consignee, the seller must use an order bill
of lading. (see Ibid., pp. 162-163.)
Where a third person who retains

the bill is consignee.
Two devices have already been considered by which the seller
of goods retains a hold upon them by means of the bill of lading
after he has shipped them; first, by consigning the goods to him-
self, either by an order bill or a straight bill and second, by con-
signing the goods to the order of the buyer and retaining posses-
sion of the bill of lading.
A third method also in common use is to consign the goods
to a third person (usually a banker) requesting the latter to retain
the bill of lading or goods until payment of the price. When the
price is paid, the consignee of the goods indorses the bill or de-
livers the goods to the buyer.
(1) Immaterial whether bill an order or straight bill. — For the
success of this third device, it is immaterial, so far as the protec-
tion of the seller is concerned, whether the bill is a straight bill or
an order bill.
(a) If it is an order bill, the carrier will not deliver the goods
until the bill is surrendered and the buyer cannot get it so as
to make the necessary surrender except from the holder, the
consignee.
(b) Even if it is not an order bill, the carrier, though it may
not require the surrender of the bill of lading, will deliver only
to the consignee. Accordingly, the buyer in either event, is
unable to get them except by obtaining an order from the
holder of the bill of lading.

(2) Legal title vested in third person. — By naming a third per-

son as consignee of the bill of lading, the seller vests a legal title
in the third person. This title is held merely for the benefit of the
seller if the third person is the seller’s agent only and has not
advanced money of his own to the seller. Frequently, however,
the third person is a banker and by discounting a draft drawn on
the buyer by the shipper, or under an arrangement with the buyer
by paying or accepting a draft drawn on himself, has acquired a
personal interest in the goods. (Ibid., pp. 164-165.)
(3) Risk of loss on buyer. — The buyer as is true where the seller
consigns the goods to himself, or his agent, or to a third person,
bears the risk of loss.
Where bill of lading sent forward

with draft attached.
Where the seller draws on the buyer for the price and trans-
mits the bill of exchange and the bill of lading together to the buyer
to secure acceptance or payment of the bill of exchange (par. 4.),
the title is regarded as retained in the seller until the bill of ex-
change is paid. The fact that the bill of lading and a bill of exchange
are attached together indicates that the seller intends to make the
delivery of the goods conditional upon the payment or accept-
ance of the draft.
(1) Duty of buyer if draft not paid. — The buyer is bound to re-
turn the bill of lading if he does not honor the bill of exchange. If
he wrongfully retains the bill of lading, he acquires no additional
right thereby. In carrying out the device in question, it is custom-
ary to send the bill of lading with the draft attached thereto to
some person other than the buyer, for if the bill of lading and the
draft are sent directly to the buyer, the latter may obtain the goods
without paying the draft and the seller, even if he has a good right
of action against the buyer on this account, is compelled to enter
upon litigation in order to enforce his rights, whereas if the bill of
lading and draft are sent through the third person, ordinarily a
bank, the buyer is unable to obtain the goods without paying the
price. (see Ibid., pp. 178-180.)
(2) Effect of buyer obtaining possession of bill of lading without
honoring draft. — As regard third persons, however, if the bill of
194 SALES Art. 1504
lading provides that the goods are deliverable to the buyer or to

the order of the buyer (Art. 1507.), or is indorsed in blank (Art.
1508[2].), or is indorsed to the buyer by the consignee named
therein (Art. 1509.), a purchaser in good faith for value of the bill
of lading or goods from the buyer will obtain the ownership in the
goods although the bill of exchange has not been honored.
Distinctions in regard to the form

of the bill of lading.
They must here be observed:
(1) If the seller has named the buyer as consignee, the prop-
erty has passed to the consignee or at least it seems to have been
so to one who inspects the document;
(2) If the bill of lading, though naming the seller as consignee,
is indorsed by him to the buyer or in blank, the possession of the
document by the buyer gives him, if not the actual title, at least
an apparent ownership; and
(3) If the bill of lading names the seller or a third person as
consignee and no indorsement of the document had been made,
possession by the buyer would not indicate that the buyer had
title.
Where the document gives the buyer apparent ownership and
a third person purchases the goods relying thereon, it seems clear
on broad principles of justice that since one of two innocent par-
ties must suffer, he should suffer whose act has brought about the
loss. Consequently, the seller ought not to be allowed to recover
the goods from the third person. (see Ibid., pp. 191-192.)
ART. 1504. Unless otherwise agreed, the goods

remain at the seller’s risk until the ownership therein
is transferred to the buyer, but when the ownership
therein is transferred to the buyer, the goods are at
the buyer’s risk whether actual delivery has been made
or not, except that:
(1) Where delivery of the goods has been made to
the buyer or to a bailee for the buyer, in pursuance of
the contract and the ownership in the goods has been

retained by the seller merely to secure performance

by the buyer of his obligations under the contract, the
goods are at the buyer’s risk from the time of such
delivery;
(2) Where actual delivery has been delayed
through the fault of either the buyer or seller the goods
are at the risk of the party in fault. (n)
Risk of loss generally attends title.

As a general rule, if the thing is lost by fortuitous event, the
risk is borne by the owner of the thing at the time of the loss un-
der the principle of res perit domino. (see Chrysler Phils. Corp. vs.
Court of Appeals, 133 SCRA 567 [1984].) Article 1504 above states
the exceptions.
(1) Where the seller reserves the ownership of the goods
merely to secure the performance by the buyer of his obligations
under the contract, the ownership is considered transferred to the
buyer who, therefore, assumes the risk from the time of delivery.
(see Lawyers Cooperative Publishing Co. vs. Tabora, 13 SCRA 762
[1965].)
(2) Where actual delivery had been delayed through the fault
of either the buyer or seller, the goods are at the risk of the party
at fault with respect to any loss which might not have occurred
but for such fault. In this case, the law punishes the party at fault.
Risk of loss by fortuitous event after

perfection but before delivery.
(1) Conflict between Article 1480 and Article 1504. — Under
Article 1480, if the thing sold is lost after perfection of the con-
tract but before its delivery, that is, even before the ownership is
transferred to the buyer, the risk of loss by fortuitous event with-
out the seller’s fault is borne by the buyer as an exception to the
rule of res perit domino. Consequently, the buyer’s obligation to
pay the price subsists if he has not yet paid the same or if he had,
he cannot recover it from the seller although the latter’s obliga-
tion to deliver the thing is extinguished by its loss.
196 SALES Art. 1504
However, the first paragraph of Article 1504 which has been

inserted in our Civil Code presents a contrary rule. Taken from
the American law on sales (Sec. 22 of the Uniform Sales Act.), it
provides that: “Unless otherwise agreed, the goods remain at the
seller’s risk until the ownership therein is transferred to the
buyer.” By Article 1480, as already pointed out, the risk of loss of
the thing after perfection is shifted from the seller to the buyer
even though the buyer has not yet acquired ownership thereof.
(2) Solution suggested to avoid conflict. — A solution has been
suggested to avoid the conflict, to wit: Article 1504 should be re-
stricted in its application to sale of “goods” as this term is defined
in Article 1636, and Article 1480, to sales of “things” which can-
not be called “goods,” as for the example, to sales of real estate.
This would make Article 1480 the general rule on risk of loss and
Article 1504, the exception. By this conclusion, it is claimed, the
cardinal rule of statutory construction that all provisions of a law
should, as much as possible, be given effect is satisfied; for to say
that there is an irreconcilable conflict between Article 1480 and
Article 1504 is to render either of them useless.
(3) Article 1480 states the correct rule. — It is submitted that
Article 1480 is the correct rule governing loss of thing sold after
the perfection of the contract in view of the following:
(a) The opinion of Manresa (an eminent Spanish commen-
tator on the Spanish Civil Code upon which our Civil Code is
based) that the obligation of the buyer to pay the price is not
extinguished by the loss of the thing before delivery is the set-
tled construction of Article 1452 (now Art. 1480.) and this opin-
ion is well known to the Code Commission which prepared
the draft of the Civil Code. It is to be presumed that Congress,
which passed the Civil Code, a majority of whose members
were lawyers, was likewise familiar with Manresa’s opinion.
Aside from Manresa, “many writers on the Spanish Civil Code
including Castan, Fabres, Von Tuhr, Bonet, and De Buen, be-
lieve that the buyer bears the loss and he must pay the price”
(A.M. Tolentino, Civil Code of the Philippines, 1959 ed., Vol.
V, p. 22.);
(b) Article 1480 follows the Roman Law rule “that risk of
the thing sold passes to the buyer even though the thing has
not yet been delivered to the buyer”;

(c) A reading of Article 1189 in relation to Article 1538 (in-

fra.), shows that Article 1480 is in consonance with Article 1189
(see Art. 1538.);
(d) Article 1504 cannot be reconciled with Articles 1480
and 1189, unless Article 1504 is applied only to sale of “goods.”
It must be noted, however, that Article 1480 applies also to sale
of fungible goods. (par. 2.) Furthermore, there is nothing to
justify the exclusion of “goods” from the sales of “things” as
the latter term is used in Article 1480 and several scattered
provisions of our present law on sales;
(e) In case of improvement, the rule is that it should per-
tain to the buyer. (Art. 1189[5].) This is a counterpart of the risk
which the buyer assumes for the loss of the thing;
(f) Furthermore, under Article 1537 (infra.), the fruits per-
tain to the vendee from the perfection of the contract. The same
right is given to the vendee under Article 1164 which together
with Articles 1165 and 1262, is referred to in Article 1480 as
governing the question being discussed;
(g) Article 1165, paragraph 3, states:
“If the obligor delays, or has promised to deliver the same
thing to two or more persons who do not have the same in-
terest, he shall be responsible for any fortuitous event until he
has effected the delivery.”
Arguing a contrario, if the obligor (seller) is not guilty of delay
and has not promised to deliver the thing sold to two or more
persons, he shall not be responsible for loss due to a fortuitous
event;
(h) Article 1262, paragraph 1, provides:
“An obligation which consists in the delivery of a deter-
minate thing shall be extinguished if it should be lost or de-
stroyed without the fault of the debtor and before he has in-
curred in delay;
In this connection, Article 1269 (Civil Code) says:
“The obligation having been extinguished by the loss of
the thing, the creditor shall have the rights of action which the
debtor may have against third persons by reason of the loss.”
198 SALES Art. 1504
It is very clear that the creditor (buyer) may not have a right
of action against third persons unless he suffers a loss which is
the price he has paid or the price the law requires him to pay the
debtor (seller) if he has not paid the same.
(4) Contrary view. — On this question, a recognized authority
on Civil Law supports the contrary view as follows:
“A contrary view to that expressed above, is held by other
writers on the Spanish Civil Code, like Perez and Alguer, who say:
This solution is not absolutely certain and perhaps the contrary
view is more in harmony with equity and with the nature of re-
ciprocal obligations.”
To our mind, the latter view is really more logical: the vendor
in the case given, should bear the loss and the vendee should not
be bound to pay the price. The following arguments may be ad-
vanced to support this view:
(a) It is fundamental in the Civil Code, expressed in Arti-
cles 1477 and 1496, that ownership is transferred by delivery;
hence, before delivery, the vendor owns the thing and should
suffer its loss: res perit domino. If he is allowed to recover the
price, he suffers no loss, which is imposed upon the vendee
who has not yet acquired ownership;
(b) The obligations of vendor and vendee are reciprocal,
and, therefore, one depends upon the other. If the obligation
of the vendor to deliver is extinguished, the correlative obli-
gation of the vendee to pay, which depends upon it, cannot
remain subsisting;
(c) Article 1480, paragraph 3, is not an exception but is an
expression of the general rule that the risk is not imputed to
the vendee until after delivery. That paragraph considers the
delivery completed only when the fungibles have been
weighed, counted, or measured because it is only then that the
thing becomes determinate. Before such completion of deliv-
ery, the vendor bears the risk; and
(d) Purchase and sale is an onerous contract, where the
cause, with respect to the vendee, is the thing. If he cannot have
the thing, it is juridically illogical and unjust to make him pay
its price.

In the French code, the risk of loss is upon the buyer from the
perfection of the contract, because ownership in that code is trans-
ferred by mere contract, without need for delivery. Res perit domino.
The vendee suffers the loss and must pay the price of the thing
even if he does not receive it. But where the ownership is trans-
ferred by delivery, as in our Code, the application of the axiom
res perit domino, imposes the risk of loss upon the vendor; hence,
if the thing is lost by fortuitous event before delivery, the vendor
suffers the loss and cannot recover the price from the vendee.
(A.M. Tolentino, op. cit., pp. 23-27.)
(5) Legislation necessary to avoid irreconcilable conflict. — The
contrary view is really “more in harmony with equity” consider-
ing that, while the vendee has a mere contract right to the thing
sold, the vendor has not only the ownership but also the posses-
sion or control of it and even the power to dispose of it to the
prejudice of the vendee; and having in mind also the reciprocal
character of the contract of sale, the vendor should, therefore, be
the one to shoulder the loss and not the vendee. But until the law-
making body adopts the contrary view, the correct rule, it is be-
lieved, is that contained in Article 1480 under which the vendee
bears the risk of loss, and he is bound to pay the price which rule
has already been shown, is sustained and confirmed by other
provisions of the Civil Code.
ART. 1505. Subject to the provisions of this Title,

where goods are sold by a person who is not the owner
thereof, and who does not sell them under authority
or with the consent of the owner, the buyer acquires
no better title to the goods than the seller had, unless
the owner of the goods is by his conduct precluded
from denying the seller’s authority to sell.
Nothing in this title, however, shall affect:
(1) The provisions of any factors’ acts, recording
laws, or any other provision of law enabling the ap-
parent owner of goods to dispose of them as if he
were the true owner thereof;
(2) The validity of any contract of sale under statu-
200 SALES Art. 1505
tory power of sale or under the order of a court of

competent jurisdiction;
(3) Purchases made in a merchant’s store, or in
fairs, or markets, in accordance with the Code of Com-
merce and special laws. (n)
Sale by a person not the owner.

It is a fundamental doctrine of law that no one can give what
he has not or transfer a greater right to another than he himself
has. Sale is a derivative mode of acquiring ownership and the
buyer gets only such rights as the seller had. (see Arts. 1458-1459.)
A derivative right cannot exist higher than its source.5 (Reyes vs.
Sierra, 73 SCRA 472 [1979].) The exceptions to the rule are given
below.
(1) Where the owner of the goods is, by his conduct, precluded from
denying the seller’s authority to sell. — Thus, where a parcel of land
is sold by one not the owner or the agent of the owner, but the
real owner thereof upon being questioned in a criminal case in-
stituted against the vendor states that he authorized such sales
so that the vendor was acquitted of the charge against him, a
purchaser in good faith acquires a valid title to the property as it
is not lawful nor permissible for said owner to deny or retract his
former sworn statement that he had consented to said sale.
(Gutierrez Hermanos vs. Orense, 28 Phil. 571 [1914]; see Arts. 1437,
1438.)
(2) Where the law enables the apparent owner to dispose of the goods
as if he were the true owner thereof. — The Philippines, unlike other
jurisdictions as England and several states of the United States,
has no such law as the Factors’ Act. The law referred to here, there-
fore, must be found in the provisions of our Civil Code on agency.
(C. Alvendia, Law on Sales, 1950 ed., p. 153.)
5
What the law requires is that the seller has the right to transfer ownership at the
time the thing sold is delivered. A perfected contract of sale (which is a consensual con-
tract perfected by mere consent) cannot be challenged on the ground of non-ownership
on the pact of the seller at the time of its perfection, hence the sale is still valid. (Quijada
vs. Court of Appeals, 101 SCAD 463, 299 SCRA 695 [1998].)

(a) Factors Acts are designed to protect third persons who

(under specified conditions) deal with an agent (e.g., a person
to whom the owner delivered goods for sale or as security, or
entrusted documentary evidence of title thereto) believing him
to be the owner of goods. (Babb & Martin, Business Law, 1952
ed., p. 117.)
(b) Examples of the recording laws which may have a bear-
ing on the validity of a sale made by a person who is not the
owner or the agent of the owner are: P.D. No. 1529 (Property
Registration Decree), R.A. No. 4136 (Land Transportation and
Traffic Code), and the Revised Administrative Code with re-
gards to the sale of large cattle (Sec. 529.) and sale of vessels.
(Sec. 1171.) Examples of “any other provision of law” referred
to in No. (1) are Act No. 2031 (Negotiable Instruments Law)
and Act No. 2137. (Warehouse Receipts Law) (see Arts. 1507-
1520.)
(c) In a case, the car in question which was acquired by
the respondent by purchase from its registered owner for a
valuable consideration under a notarial deed of absolute sale
was seized and impounded by land transportation agents as
stolen property. It was held that the acquirer or the purchaser
in good faith of a chattel or movable property is entitled to be
respected and protected in his possession as if he were the true
owner thereof until a competent court rules otherwise. In the
meantime, he cannot be compelled to surrender possession
nor to be required to institute an action for the recovery of the
chattel, whether or not an indemnity bond is issued in his
favor. The filing of an information charging that the chattel
was illegally obtained through estafa from its true owner by
the transferor of the bona fide possessor does not warrant dis-
turbing the possession of the chattel against the will of the
possessor. Finally, under Section 60 of R.A. No. 4136, the right
of the Land Transportation Commission to impound motor
vehicles is only good for the proper enforcement of lien upon
motor vehicles of unpaid fees for registration, re-registration,
or delinquent registration of motor vehicles. (Edu vs. Gomez,
129 SCRA 601 [1984].)
(d) With respect to real property, it has been ruled that a
“fraudulent and forged document of sale may become the root
202 SALES Art. 1505
of a valid title if the certificate of title has already been trans-

ferred from the name of the true owner to the name indicated
by the forger.” Every person dealing in good faith and for
valuable consideration with registered land may safely rely
upon what appears in the certificate of title and does not have
to inquire further. If the rule were otherwise, the efficacy and
conclusiveness of Torrens Certificates of Titles would be fu-
tile and nugatory.” (Duran vs. Intermediate Appellate Court,
138 SCRA 489 [1985].) The remedy of the person prejudiced is
to bring an action for damages against those who employed
the fraud, within four (4) years after the discovery of the de-
ception (see Art. 1391.), and if the latter are insolvent, an ac-
tion against the Treasurer of the Philippines may be filed for
recovery of damages against the Assurance Fund. (Veloso vs.
Court of Appeals, 73 SCAD 303, 260 SCRA 593 [1996]; Delos
Reyes vs. Court of Appeals, 285 SCRA 81 [1998].)
(3) Where the sale is sanctioned by statutory or judicial authority.
— According to Article 559 of the Civil Code, “the possession of
movable property acquired in good faith is equivalent to title.
Nevertheless, one who has lost any movable, or has been unlaw-
fully deprived therefor, may recover it from the person in pos-
session of the same. If the possessor of a movable lost or of which
the owner has unlawfully been deprived has acquired it in good
faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.” (see Art. 1537, par. 2.)
Different laws apply to different types of forced or involuntary
sales under our jurisdiction, namely: (a) an ordinary execution sale,
which is governed by the pertinent provisions of Rule 39 of the
Rules of Court on Execution, Satisfaction and Effect of Judgments;
(b) judicial foreclosure sales, which are governed by Rule 68 of the
Rules of Court, captioned “Foreclosure of Mortgage’’; and (c) ex-
tra-judicial foreclosure sales of real estate mortgages, which are
governed by Act No. 3135, as amended by Act No. 4118, otherwise
known as “An Act to Regulate the Sale of Property Under Special
Powers Inserted in or Annexed to Real Estate Mortgages.’’ (Supena
vs. De la Rosa, 78 SCAD 409, 267 SCRA 1 [1997].)
The government, however, does not warrant the title to prop-
erties sold by the sheriff at public auction or judicial sales. (see
Art. 1570.)

(4) Where the sale is made at merchant’s stores, fairs or markets.

— No. 3 of Article 1505 is a case of an imperfect or void title rip-
ening into a valid one as a result of some intervening due causes.
The sale is necessary not only to facilitate commercial sales on
movables but also to give stability to business transactions espe-
cially in a country like the Philippines, where free enterprise pre-
vails, for a buyer cannot be reasonably expected to look behind
the title of every article when he buys at a store. (Sun Brothers
Co. vs. Velasco, [C.A.] 54 O.G. 5103.)
(5) Where the seller has a voidable title which has not been avoided
at the time of the sale. — See Article 1506.
(6) Where 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. (Llacer vs. Munoz, 12 Phil. 328 [1908]; Abella vs.
Gonzaga, 56 Phil. 132 [1931]; see Art. 1434.) This doctrine is equally
applicable to conveyance of usufructs as well as to transfers of
full ownership. (Feria vs. Silva, [C.A.] No. 6151-R, Aug. 10, 1951.)
ILLUSTRATIVE CASE:
Unpaid books were sold by the impostor-buyer to another who
acted in good faith and with proper care.
Facts: X, identifying himself as Professor JC, placed an or-
der by telephone with petitioner EDCA for 406 books payable
on delivery. EDCA, petitioner, prepared the corresponding in-
voice and delivered the books for which X issued a personal
check covering the purchase price, which was dishonored. X
sold the books to Y who, after verifying the seller’s ownership
from the invoice X showed her, paid X.
Petitioner argues that the impostor acquired no title to the
books that he could have validly transferred to Y, the private
respondent. Its reason is that as the payment check bounced
for lack of funds, there was a failure of consideration that nul-
lified the contract of sale between it and X.
Issue: Has EDCA been unlawfully deprived of the books
because the check issued by the impostor X in payment therefor
was dishonored?
Held: No. (1) Contract of sale is consensual. — “The contract
of sale is consensual and is perfected once agreement is reached
204 SALES Art. 1505
between the parties on the subject matter and the considera-

tion. According to the Civil Code:
‘ART. 1475. The contract of sale is perfected at the moment
there is a meeting of minds upon the thing which is the object
of the contract and upon the price.
From that moment, the parties may reciprocally demand
performance, subject to the provisions of the law governing the
form of contracts.
xxx
ART. 1477. The ownership of the thing sold shall be trans-
ferred to the vendee upon the actual or constructive delivery
thereof.
ART. 1478. The parties may stipulate that ownership in the
thing shall not pass to the purchaser until he has fully paid the
price.’”
(2) Ownership of thing sold is transferred upon delivery. — “It
is clear from the above provisions, particularly the last one
quoted, that ownership in the thing sold shall not pass to the
buyer until full payment of the purchase price only if there is a
stipulation to that effect. Otherwise, the rule is that such own-
ership shall pass from the vendor to the vendee upon the ac-
tual or constructive delivery of the thing sold even if the pur-
chase price has not yet been paid.
Non-payment only creates a right to demand payment or
to rescind the contract, or to criminal prosecution in the case of
bouncing checks. But absent the stipulation above noted, de-
livery of the thing sold will effectively transfer ownership to
the buyer who can in turn transfer it to another.”
(3) There is no unlawful deprivation of personal property. —
“In Asiatic Commercial Corporation vs. Ang (40 O.G.S. No. 15, p.
102.), the plaintiff sold some cosmetics to Francisco Ang, who,
in turn, sold them to Tan Sit Bin. Asiatic, not having been paid
by Ang, sued for the recovery of the articles from Tan, who
claimed he had validly bought them from Ang, paying for the
same in cash. Finding that there was no conspiracy between
Tan and Ang to deceive Asiatic, the Court of Appeals declared:
‘Yet the defendant invoked Article 464 (now Art. 559.) of the
Civil Code providing among other things that ‘one who has
been unlawfully deprived of personal property may recover it
from any person possessing it. We do not believe that the

plaintiff has been unlawfully deprived of the cartons of Gloco

Tonic within the scope of this legal provision. It has voluntarily
parted with them pursuant to a contract of purchase and sale.
The circumstance that the price was not subsequently paid did
not render illegal a transaction which was valid and legal at the
beginning.
In Tagatac vs. Jimenez (53 O.G. No. 12, p. 3792.), the plaintiff
sold her car to Feist, who sold it to Sanchez, who sold it to
Jimenez. When the payment check issued to Tagatac by Feist
was dishonored, the plaintiff sued to recover the vehicle from
Jimenez on the ground that she had been unlawfully deprived
of it by reason of Feist’s deception. In ruling for Jimenez, the
Court of Appeals held:
‘The point of inquiry is whether plaintiff-appellant Trini-
dad C. Tagatac has been unlawfully deprived of her car. At first
blush, it would seem that she was unlawfully deprived thereof,
considering that she was induced to part with it by reason of
the chicanery practiced on her by Warner L. Feist. Certainly,
swindling, like robbery, is an illegal method of deprivation of
property. In a manner of speaking, plaintiff-appellant was “il-
legally deprived” of her car, for the way by which Warner L.
Feist induced her to part with it is illegal and is punished by
law. But does this unlawful deprivation come within the scope
of Article 559 of the New Civil Code?
x x x The fraud and deceit practiced by Warner L. Feist ear-
marks this sale as a voidable contract. (Article 1390, N.C.C.)
Being a voidable contract, it is susceptible of either ratification
or annulment. If the contract is ratified, the action to annul it is
extinguished (Article 1392, N.C.C.) and the contract is cleansed
from all its defects (Article 1396, N.C.C.); if the contract is an-
nulled, the contracting parties are restored to their respective
situation before the contract and mutual restitution follows as a
consequence. (Article 1398, N.C.C.)
However, as long as no action is taken by the party enti-
tled, either that of annulment or of ratification, the contract of
sale remains valid and binding. When plaintiff-appellant Trini-
dad C. Tagatac delivered the car to Feist by virtue of said void-
able contract of sale, the title to the car passed to Feist. Of course,
the title that Feist acquired was defective and voidable. Never-
theless, at the time he sold the car to Felix Sanchez, his title on
the latter, provided he brought the car in good faith, for value
and without notice of the defect in Feist’s title. (Article 1506,
206 SALES Art. 1505
N.C.C.) There being no proof on record that Felix Sanchez acted

in bad faith, it is safe to assume that he acted in good faith.’
(4) JC acquired ownership over the books sold. — Actual de-
livery of the books having been made, JC acquired ownership
over the books which could then validly transfer to the private
respondents. The fact that he had not yet paid for them to EDCA
was a matter between him and EDCA and did not impair the
title acquired by the private respondents to the books.
One may well imagine the adverse consequences if the
phrase “unlawfully deprived” were to be interpreted in the
manner suggested by the petitioner. A person relying on the
seller’s title who buys a movable property from him would have
to surrender it to another person claiming to be the original
owner who had not yet been paid the purchase price therefor.
The buyer in the second sale would be left holding the bag, so
to speak, and would be compelled to return the thing bought by
him in good faith without even the right to reimbursement of
the amount he had paid for it.”
(5) EDCA was negligent. — “It bears repeating that in the
case before us, Y took care to ascertain first that the books be-
longed to X before she agreed to purchase them. The EDCA
invoice X showed her assured her that the books had been paid
for on delivery. By contrast, EDCA was less than cautious — in
fact, too trusting — in dealing with the impostor. Although it
had never transacted with him before, it readily delivered the
books he had ordered (by telephone) and as readily accepted
his personal check in payment. It did not verify his identity
although it was easy enough to do this. It did not wait to clear
the check of this unknown drawer. Worse, it indicated in the
sales invoice issued to him, by the printed terms thereon, that
the books had been paid for on delivery, thereby vesting own-
ership in the buyer.”
(6) Private respondent acted in good faith and with proper care.
— “Surely, the private respondent did not have to go beyond
that invoice to satisfy herself that the books being offered for
sale by X belonged to him; yet she did. Although the title of X
was presumed under Article 559 by his mere possession of the
books, these being movable property, Y nevertheless demanded
more proof before deciding to buy them.
It would certainly be unfair now to make the private re-
spondents bear the prejudice sustained by EDCA as a result of

its own negligence. We cannot see the justice in transferring

EDCA’s loss to Y who had acted in good faith, and with proper
care, when they bought the books from X.
While we sympathize with the petitioner for its plight, it is
clear that its remedy is not against the private respondent but
against X, who has apparently caused all this trouble.” (EDCA
Publishing & Distributing Corp. vs. Santos, 184 SCRA 614 [1990].)
ART. 1506. Where the seller of goods has a void-

able title thereto, but his title has not been avoided at
the time of the sale, the buyer acquires a good title to
the goods, provided he buys them in good faith, for
value, and without notice of the seller’s defect of title.
(n)
Sale by one having a voidable title.

(1) Requisites for acquisition of good title by buyer. — If the seller
has only a voidable title to the goods, the buyer acquires a good
title to the goods provided he buys them: (a) before the title of the
seller has been avoided; (b) in good faith for value; and (c)
without notice of the seller’s defect of title. (see Arts. 1385, 1388.)
(2) Basis of rule. — Article 1506 seems to be predicated on the
principle that where loss has happened which must fall on one of
two innocent persons, it should be borne by him who is the occa-
sion of the loss. It is similar to the rule in P.D. No. 1529 (Property
Registration Decree) referring to an innocent purchaser for value
in good faith (Sec. 51 thereof.) and to the rule in Act No. 2031
(Negotiable Instruments Law) referring to a holder in due course
to whom a negotiable instrument is negotiated for value and in
good faith. (see Sec. 57 thereof.)
EXAMPLES:
(1) S, a minor, sold his television set to B, a person of ma-
jority age. Under the law (see Art. 1390, Civil Code.), the con-
tract is voidable or annullable because a minor is incapable of
giving consent to a contract. B, in turn, sold the television set to
C who acted in good faith.
208 SALES Art. 1507
In this case, C acquires a valid title to the television set af-

ter its delivery if the contract had not yet been annulled by a
proper action in court.
(2) B bought in good faith for value a car which was stolen
from C, the lawful owner. As against B, C has a better right to
the car. Article 1506 is clearly inapplicable where the seller had
no title at all. (Aznar vs. Yapdiangco, 13 SCRA [1965].)
C may recover the car without paying any indemnity, ex-
cept when B acquired it in a public sale. (Art. 559, supra.)
ART. 1507. A document of title in which it is stated

that the goods referred to therein will be delivered to
the bearer, or to the order of any person named in
such document is a negotiable document of title. (n)
Definition of terms.
(1) Document of title to goods. — Includes any bill of lading,
dock warrant, “quedan,” or warehouse receipt or order for the
delivery of goods, or any other document used in the ordinary
course of business in the sale or transfer of goods, as proof of the
possession or control of the goods, or authorizing or purporting
to authorize the possessor of the document to transfer or receive,
either by indorsement or by delivery, goods represented by such
document. (Art. 1636[1].)
(2) Goods. — Included all chattels personal but not things in
action or money of legal tender in the Philippines. The term in-
cludes growing fruits or crops. (ibid.)
(3) Order. — Relating to documents of title means an order
by indorsement on the documents. (ibid.)
Nature and function of documents of title.

(1) Receipts of, or orders upon, a bailee of goods represented. —
Documents of title refer to goods and not to money. They all have
this in common: that they are receipts of a bailee, or orders upon
a bailee. A different name is given in popular speech to the docu-
ment when it is issued by a carrier and when it is issued by a
warehouseman, but in substance the nature of the document is
the same in both cases. (see 2 Williston, op. cit., p. 505.)

(2) Evidence of transfer of title and possession of the goods and con-
tract between the parties. — A document of title is symbol of the
goods covered by it, serving as evidence of (a) transfer of title and
(b) transfer of possession. It also serves as an evidence of the (c)
contract between the parties who are bound by its terms. So far
as concerns the transfer of property between the parties, their
intention would be effectual without the document, but where
third parties’ rights are involved, the form of the document (i.e.,
negotiable or non-negotiable) becomes important.
Most common forms of documents

of title.
There are three most common forms or documents of title,
namely:
(1) Bill of lading. — It is a contract and a receipt for the trans-
port of goods and their delivery to the person named therein, to
order, or to bearer. It usually involves three persons — the car-
rier, the shipper, and the consignee. The shipper and the consignee
may be one and the same person. Its acceptance generally consti-
tutes the contract of carriage even though not signed.
Such instrument may be called a shipping receipt, a forward-
er’s receipt, or receipt for transportation. The designation, how-
ever, is immaterial (Saludo, Inc. vs. Court of Appeals, 207 SCRA
498 [1992].);
(2) Dock warrant. — It is an instrument given by dock owners
to an importer of goods warehoused on the dock as a recognition
of the importer’s title to the said goods, upon production of the
bill of lading (see Bouvier’s Law Dictionary, p. 911.); and
(3) Warehouse receipt. — a contract or receipt for goods depos-
ited with a warehouseman containing the latter’s undertaking to
hold and deliver the said goods to a specified person, to order, or
to bearer. Quedan is a warehouse receipt usually for sugar received
by a warehouseman.
Laws governing documents of title.

The following laws govern documents of title:
(1) The Civil Code (in Arts. 1507 to 1520, 1532 [2nd par.], 1535
210 SALES Art. 1508
[2nd par.], and 1749.) primarily governs documents of title other

than warehouse receipts;
(2) The Warehouse Receipts Law (Act No. 2137.) primarily
governs warehouse receipts; and
(3) The Code of Commerce subsidiarily governs bills of lad-
ing issued by common carriers (in Arts. 350 to 354 for land carri-
ers and in Arts. 706 to 718 for maritime carriers).
The provisions in the Civil Code on documents of title are
reproduced practically verbatim from the Uniform Sales Act which
is in force in many states in the United States.
Classes of documents of titles.

Documents of title may be either:
(1) Negotiable documents of title or those by the terms of which
the bailee undertakes to deliver the goods to the bearer and those
by the terms of which the bailee undertakes to deliver the goods
to the order of a specified person (Art. 1508.); or
(2) Non-negotiable documents of title or those by the terms of
which the goods covered are deliverable to a specified person.
(Art. 1511.)
ART. 1508. A negotiable document of title may be

negotiated by delivery:
(1) Where by the terms of the document the car-
rier, warehouseman or other bailee issuing the same
undertakes to deliver the goods to the bearer; or
(2) Where by the terms of the document the car-
rier, warehouseman or other bailee issuing the same
undertakes to deliver the goods to the order of a speci-
fied person, and such person or a subsequent
indorsee of the document has indorsed it in blank or
to the bearer.
Where by the terms of a negotiable document of
title the goods are deliverable to bearer or where a
negotiable document of title has been indorsed in
blank or to bearer, any holder may indorse the same

to himself or to any specified person, and in such case

the document shall thereafter be negotiated only by
the indorsement of such indorsee. (n)
Negotiation of negotiable document

by delivery.
A negotiable document of title is negotiable by delivery if the
goods are deliverable to the bearer, or when it is indorsed in blank
or to the bearer by the person to whose order the goods are deliv-
erable or by a subsequent indorsee. An indorsement is in blank
when the holder merely signs his name at the back of the receipt
without specifying to whom the goods are to be delivered.
If the document is specially indorsed, it becomes an order
document of title and negotiation can only be effected by the in-
dorsement of the indorsee. A special indorsement specifies the
person to whom or to whose order the goods are to be delivered.
Article 1508 is similar to Section 37 of the Warehouse Receipts
Law (Act No. 2137.) except that the latter treats only of a negoti-
able receipt which may be issued by a warehouseman.

negotiated by the indorsement of the person to whose
order the goods are by the terms of the document
deliverable. Such indorsement may be in blank, to
bearer or to a specified person. If indorsed to a speci-
fied person, it may be again negotiated by the indorse-
ment of such person in blank, to bearer or to another
specified person. Subsequent negotiations may be
made in like manner. (n)
Negotiation of negotiable document

by indorsement.
A negotiable document of title by the terms of which the goods
are deliverable to a person specified therein may be negotiated
only by the indorsement of such person.
(1) If indorsed in blank or to bearer, the document becomes
negotiable by delivery. (Art. 1508.)
212 SALES Art. 1510
(2) If indorsed to a specified person, it may be again negoti-

ated by the indorsement of such person in blank, to bearer, or to
another specified person. Delivery alone is not sufficient.
A party is liable only as guarantor and not as indorser if his
indorsement is made for the purpose of identification only. (see
American Bank vs. Macondray & Co., 4 Phil. 695 [1905].)
Law.
ART. 1510. If a document of title which contains

an undertaking by a carrier, warehouseman or other
bailee to deliver the goods to bearer, to a specified
person or order of a specified person or which con-
tains words of like import, has placed upon it the
words “not negotiable” “non-negotiable,” or the like,
such document may nevertheless be negotiated by
the holder and is a negotiable document of title within
the meaning of this Title. But nothing in this Title con-
tained shall be construed as limiting or defining the
effect upon the obligations of the carrier, warehouse-
man, or other bailee issuing a document of title or
placing thereon the words “not negotiable,” “non-
negotiable,” or the like. (n)
Negotiable documents of title marked

“non-negotiable.”
Under Article 1510, the words “not negotiable,” “non-negoti-
able” and the like when placed upon a document of title in which
the goods are to be delivered to “order” or to “bearer” have no
effect and the document continues to be negotiable. (Roman vs.
Asia Banking Corp., 46 Phil. 705 [1924].)
Under the Warehouse Receipts Law, any provision inserted
in a negotiable receipt that it is non-negotiable is declared void.
(Sec. 5, par. 2.)
When the document of title is to order, the bailee is obliged to
take it up before delivering the goods. Accordingly, he is liable to
the holder of an order document if the goods are delivered to the

consignee without surrender of the document even though the

latter was marked “not negotiable.”
Note: The first sentence of Article 1510 should read “to a speci-
fied person or order or to the order of a specified person.” This is
how Section 30 of the Uniform Sales Act, from which Article 1510
was adopted, is worded.
ART. 1511. A document of title which is not in such

form that it can be negotiated by delivery may be trans-
ferred by the holder by delivery to a purchaser or
donee. A non-negotiable document cannot be negoti-
ated and the indorsement of such a document gives
the transferee no additional right. (n)
Transfer of non-negotiable documents.

A non-negotiable document of title cannot be negotiated.
Nevertheless, it can be transferred or assigned by delivery. In such
a case, the transferee or assignee acquires only the rights stated
in Article 1514. Even if the document is indorsed, the transferee
acquires no additional right.
Article 1511 is exactly the same as Section 39 of the Warehouse
Receipts Law.

negotiated:
(1) By the owner thereof; or
(2) By any person to whom the possession or cus-
tody of the document has been entrusted by the owner,
if, by the terms of the document the bailee issuing the
document undertakes to deliver the goods to the or-
der of the person to whom the possession or custody
of the document has been entrusted, or if at the time
of such entrusting the document is in such form that
it may be negotiated by delivery. (n)
Persons who may negotiate a document.

It will be noticed that the provision does not give a power to
negotiate documents of title equal to that allowed under the Ne-
214 SALES Art. 1513
gotiable Instruments Law (Act No. 2031.) in the case of bills of

exchange and promissory notes inasmuch as neither a thief nor a
finder is within the terms of the article. (but see Art. 1518.) How-
ever, if the owner of the goods permits another to have the pos-
session or custody of negotiable receipts running to the order of
the latter or to bearer, it is a representation of title upon which
bona fide purchasers for virtue are entitled to rely despite breaches
of trust or violations of agreement on the part of the apparent
owner. As between two innocent persons, the loss must fall upon
him whose misplaced confidence made the loss possible. (Siy
Cong Bieng & Co. vs. Hongkong & Shanghai Banking Corp., 56
Phil. 598 [1932].)
Law. Compare this article with Article 1518.
ART. 1513. A person to whom a negotiable docu-

ment of title has been duly negotiated acquires
thereby:
(1) Such title to the goods as the person negotiat-
ing the document to him had or had ability to convey
to a purchaser in good faith for value and also such
title to the goods as the person to whose order the
goods were to be delivered by the terms of the docu-
ment had or had ability to convey to a purchaser in
good faith for value; and
(2) The direct obligation of the bailee issuing the
document to hold possession of the goods for him
according to the terms of the document as fully as if
such bailee had contracted directly with him. (n)
Rights of person to whom document

has been negotiated.
This article specifies the rights of a person to whom a negoti-
able document of title has been duly negotiated, either by deliv-
ery, in the case of a document of title to bearer, or by indorsement
and delivery, in the case of a document of title to order. Such per-
son acquires:

(1) The title of the person negotiating the document, over the
goods covered by the document;
(2) The title of the person (depositor or owner) to whose or-
der by the terms of the document the goods were to be delivered,
over such goods; and
(3) The direct obligation of the bailee (warehouseman or car-
rier) to hold possession of the goods for him, as if the bailee had
contracted directly with him.
One who purchases, therefore, a negotiable document of title
issued to a thief acquires no right over the goods as the thief has
no right to transfer, notwithstanding that such purchaser is inno-
cent. But the purchaser acquires a good title where the owner, by
his conduct, is estopped from asserting his title.
A provision similar to Article 1513 is found in Section 41 of
the Warehouse Receipts Law.
ART. 1514. A person to whom a document of title

has been transferred, but not negotiated, acquires
thereby, as against the transferor, the title to the
goods, subject to the terms of any agreement with the
transferor.
If the document is non-negotiable, such person
also acquires the right to notify the bailee who issued
the document of the transfer thereof, and thereby to
acquire the direct obligation of such bailee to hold
possession of the goods for him according to the
terms of the document.
Prior to the notification to such bailee by the
transferor or transferee of a non-negotiable document
of title, the title of the transferee to the goods and the
right to acquire the obligation of such bailee may be
defeated by the levy of an attachment of execution
upon the goods by a creditor of the transferor, or by a
notification to such bailee by the transferor or a sub-
sequent purchaser from the transferor of a subse-
quent sale of the goods by the transferor. (n)
216 SALES Art. 1515
Rights of person to whom document

has been transferred.
This article refers to the rights of a person to whom a negoti-
able document of title (not duly negotiated) has been transferred
(par. 1.) or of the transferee of a non-negotiable document. (pars.
2 and 3.) Such person acquires:
(1) The title to the goods as against the transferor;
(2) The right to notify the bailee of the transfer thereof; and
(3) The right, thereafter, to acquire the obligation of the bailee
to hold the goods for him.
The right of the transferee is not absolute as it is subject to the
terms of any agreement with the transferor. He merely steps into
the shoes of the transferor.
Attachment of goods covered

by document transferred.
(1) The transfer of a non-negotiable document of title does not
effect the delivery of the goods covered by it. Accordingly, before
notification, the bailee is not bound to the transferee whose right
may be defeated by a levy of an attachment or execution upon
the goods by the creditor of the transferor or by a notification to
such bailee of the subsequent sale of the goods.
(2) If the document is negotiable, the goods cannot be attached
or be levied under an execution unless the document be first sur-
rendered to the bailee or its negotiation enjoined. (Art. 1519.)
Law.
Note: The word “of” between “attachment” and “execution”
in the third paragraph should more properly read “or”. This is
how Section 34 of the Uniform Sales Act, from which Article 1514
was adopted, is worded.
ART. 1515. Where a negotiable document of title

is transferred for value by delivery, and the indorse-
ment of the transferor is essential for negotiation, the
transferee acquires a right against the transferor to

compel him to indorse the document unless a con-

trary intention appears. The negotiation shall take ef-
fect as of the time when the indorsement is actually
made. (n)
Transfer of order document without

indorsement.
This article specifies the rights of a person to whom an order
document of title, which may not properly be negotiated by mere
delivery, has been delivered, without indorsement. They are:
(1) The right to the goods as against the transferor (Art. 1514.);
and
(2) The right to compel the transferor to indorse the indorse-
ment. (see Art. 1357.)
If the intention of the parties is that the document should be
merely transferred, the transferee has no right to require the
transferor to indorse the document.
Rule where document subsequently

indorsed.
For the purpose of determining whether the transferee is a
purchaser for value in good faith without notice (see Arts. 1506,
1513.), the negotiation shall take effect as of the time when the
indorsement is actually made, not at the time the document is
delivered. The reason is that the negotiation becomes complete
only at the time of indorsement. So, if by that time the purchaser
already had notice that the title of the seller was defective, he can-
not be considered a purchaser in good faith though he had no such
notice when he bought the document.
A provision similar to Article 1515 is found in Section 43 of
the Warehouse Receipts Law. (Sec. 49 of the Negotiable Instru-
ments Law is to the same effect.)
ART. 1516. A person who for value negotiates or

transfers a document of title by indorsement or deliv-
ery, including one who assigns for value a claim se-
cured by a document of title unless contrary inten-
tion appears, warrants:
218 SALES Art. 1516
(1) That the document is genuine;

(2) That he has a legal right to negotiate or trans-
fer it;
(3) That he has knowledge of no fact which would
impair the validity or worth of the document; and
(4) That he has a right to transfer the title to the
goods and that the goods are merchantable or fit for
a particular purpose, whenever such warranties would
have been implied if the contract of the parties had
been to transfer without a document of title the goods
represented thereby. (n)
Warranties on sale of documents.

This article treats of the warranties or liabilities of a person
negotiating or transferring a document. They are similar to those
of a person negotiating an instrument by delivery or by a quali-
fied indorsement under the Negotiable Instruments Law. (see Sec.
65 thereof.) The liability is limited only to a violation of the four
warranties set forth in Article 1516. (see Art. 1517.) Thus, the per-
son negotiating or transferring a document could be held liable
as when, for example, the document was a forgery, or he had sto-
len it, or he had knowledge that the document was invalid for
want of consideration, or that the goods had been damaged.
One who assigns for value a claim secured by a document of
title is also liable for the violation of the four warranties enumer-
ated unless a contrary intention appears.
It is the duty of every indorsee to know that all previous in-
dorsements are genuine; otherwise, he will not acquire a valid title
to the instrument. (Great Eastern Life Ins. Co. vs. Hongkong &
Shanghai Banking Corporation, 43 Phil. 678 [1922].) Under the
Negotiable Instruments Law, the last indorser warrants that all
previous indorsements are genuine. (see Secs. 65, 66 thereof.)
Law. (see Sec. 65 of the Negotiable Instruments Law, which is also
similar.)

ART. 1517. The indorsement of a document of title

shall not make the indorser liable for any failure on
the part of the bailee who issued the document or pre-
vious indorsers thereof to fulfill their respective obli-
gations. (n)
Indorser not a guarantor.

The indorsement of a negotiable instrument has a double ef-
fect. It is at the same time a conveyance of the instrument and a
contract of the indorser with the indorsee that on certain condi-
tions the indorser will pay the instrument if the party primarily
liable fails to do so.
The indorsement of a document of title amounts merely to a
conveyance by the indorser, not a contract of guaranty. (see 2
Williston, op. cit., pp. 627-628.) Accordingly, an indorser of a docu-
ment of title shall not be liable to the holder if, for example, the
bailee fails to deliver the goods because they were lost due to his
fault or negligence.
Law.
ART. 1518. The validity of the negotiation of a ne-

gotiable document of title is not impaired by the fact
that the negotiation was a breach of duty on the part
of the person making the negotiation, or by the fact
that the owner of the document was deprived of the
possession of the same by loss, theft, fraud, accident,
mistake, duress, or conversion, if the person to whom
the document was negotiated or a person to whom
the document was subsequently negotiated paid value
therefor in good faith without notice of the breach of
duty, or loss, theft, fraud, accident, mistaken, duress
or conversion. (n)
When negotiation not impaired by fraud,

mistake, duress, etc.
Under this article, a negotiable document may be negotiated
by any person in possession of the same, however such posses-
220 SALES Art. 1519
sion may have been acquired. (see National Bank vs. Producers’
Warehouse Association, 42 Phil. 608 [1922]; Hill vs. Veloso, 31 Phil.
160 [1915].) In other words, it may be negotiated even by a thief
or finder and the holder thereof would acquire a good title thereto
if he paid value therefor in good faith without notice of the sell-
er’s defect of title. (see Art. 1506.) It will be remembered that un-
der Article 1512, neither a thief nor a finder may negotiate a ne-
gotiable document of title. The two provisions thus appear con-
tradictory to each other.
Under the Warehouse Receipts Law, it is provided:
“Sec. 47. When negotiation not impaired by fraud, mistake or
duress. — The validity of the negotiation of a receipt is not
impaired by the fact that such negotiation was a breach of duty
on the part of the person making the negotiation or by the fact
that the owner of the document was induced by fraud, mistake
or duress to entrust the possession or custody thereof to such per-
son, if the person to whom the document was negotiated or a
person to whom the document was subsequently negotiated
paid value therefor, without notice of the breach of duty or
fraud, mistake or duress.”
Clearly, under Section 40 (see Art. 1512.) and Section 47 of the
Warehouse Receipts Law, the negotiation is invalidated by the fact
that the owner of the document was deprived of its possession
by loss or theft.
It should be noted that Article 1518 speaks of theft of the docu-
ment and not of the goods covered by such document. In the latter
case, it needs no argument to show that even a bona fide holder of
a document issued over such stolen goods cannot acquire title.
(see Art. 1513.)
ART. 1519. If goods are delivered to a bailee by

the owner or by a person whose act in conveying the
title to them to a purchaser in good faith for value
would bind the owner and a negotiable document of
title is issued for them they cannot thereafter, while
in possession of such bailee, be attached by garnish-
ment or otherwise or be levied under an execution

unless the document be first surrendered to the bailee

or its negotiation enjoined. The bailee shall in no case
be compelled to deliver up the actual possession of
the goods until the document is surrendered to him
or impounded by the court.
Attachment or levy upon goods covered

by a negotiable document.
The bailee has the direct obligation to hold possession of the
goods for the original owner or to the person to whom the nego-
tiable document of title has been duly negotiated. (see Art. 1513.)
While in the possession of such bailee, the goods cannot be at-
tached or levied under an execution unless the document be first
surrendered, or its negotiation prohibited by the court.
The bailee cannot be compelled to deliver up the possession
of the goods until the document is surrendered to him or im-
pounded by the court. This prohibition is for the protection of the
bailee since he could be made liable to a subsequent purchaser
for value in good faith.
Where depositor not owner.

The provisions of Article 1519 do not apply if the person de-
positing is not the owner of the goods (like a thief) or one who
has no right to convey title to the goods binding upon the owner.
Neither does it apply to actions for recovery or manual delivery
of goods by the real owner nor to cases where the attachment is
made before the issuance of the negotiable document of title.
The rights acquired by attaching creditors cannot be defeated
by the issuance of a negotiable document of title thereafter. (see
International vs. Terminal Warehouse Co., 126 Atl. 902.)
A similar provision in the Warehouse Receipts Law is Section
25. (see also Sec. 54.)
ART. 1520. A creditor whose debtor is the owner

of a negotiable document of title shall be entitled to
such aid from courts of appropriate jurisdiction by
injunction and otherwise in attaching such document
222 SALES Art. 1521
or in satisfying the claim by means thereof as is al-

lowed at law or in equity in regard to property which
cannot readily be attached or levied upon by ordinary
legal process. (n)
Creditor’s remedies to reach negotiable

documents.
Inasmuch as the goods themselves cannot readily be attached
or levied upon by ordinary legal process, as limited by the pre-
ceding article, this article expressly gives the court full power to
aid by injunction and otherwise a creditor seeking to get a nego-
tiable document covering such goods. However, if an injunction
is issued but the negotiable document of title is negotiated to an
innocent person, the transfer is nevertheless effectual.
Law.
ART. 1521. Whether it is for the buyer to take pos-

session of the goods or for the seller to send them to
the buyer is a question depending in each case on the
contract, express or implied, between the parties.
Apart from any such contract, express or implied, or
usage of trade to the contrary, the place of delivery is
the seller’s place of business if he has one, and if not,
his residence; but in case of a contract of sale of spe-
cific 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.
Where by a contract of sale the seller is bound to
send the goods to the buyer, but no time for sending
them is fixed, the seller is bound to send them within
a reasonable time.
Where the goods at the time of sale are in the pos-
session of a third person, the seller has not fulfilled
his obligation to deliver to the buyer unless and until
such third person acknowledges to the buyer that he
holds the goods on the buyer’s behalf.

Demand or tender of delivery may be treated as

ineffectual unless made at a reasonable hour. What is
a reasonable hour is a question of fact.
Unless otherwise agreed, the expenses of and in-
cidental to putting the goods into a deliverable state
must be borne by the seller. (n)
Place of delivery of goods sold.

Should the buyer take possession of the goods or should the
seller send them? In other words, where is the place of delivery?
The following are the rules:
(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 preva-
lent 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 resi-
dence; 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. (see Art. 1251.)
From the above, it can be seen that 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.
Wherever the proper place of delivery may be, either party
acquires a right of action by being ready and willing at that place
to perform his legal duty, if the other party is not there present or
even if present, is not prepared to perform in a proper manner
with what is incumbent upon him. (see Art. 1169, par. 3.) Where,
however, the delivery was not effected at the place specified in
the contract but the buyer accepted the goods nevertheless with-
out complaint, the buyer would be deemed to have waived the
seller’s failure to deliver according to the terms of the contract,
and would be liable to pay the price agreed upon. (Sullivan vs.
Gird, 22 Ariz. 332.)
224 SALES Art. 1521
Time of delivery of goods sold.

The time of delivery is also determined by the agreement of
the parties or, in the absence thereof, by the usage of trade.
(1) If no time is fixed by the contract, then the seller is bound to
send the goods to the buyer within a reasonable time. (par. 2.)
What is a reasonable time is properly a question of fact as it is
dependent upon the circumstances attending the particular trans-
action, such as the character of the goods, the purpose for which
they are intended, the ability of the seller to produce the goods if
they are to be manufactured, the facilities available for transpor-
tation and distance the goods must be carried, and the usual
course of business in the particular trade. (Smith Bell & Co. vs.
Sotelo Matti, 44 Phil. 874 [1923].) Thus, where the goods are to be
manufactured, the time reasonably necessary to manufacture and
deliver them furnishes the test. Where the goods are at the time
of the bargain in a deliverable state (see Art. 1636[3].) and perish-
able in nature, a reasonable time for delivery would be a very short
time.
(2) If the contract provides a fixed time for performance, the ques-
tion is whether time is of the essence, and if so, whether correct
performance was offered within that time. (see Art. 1169, par. 2;
see Soler vs. Chesley, 43 Phil. 529 [1922].) If time is not of the es-
sence, the question is whether correct performance was offered
within a reasonable time. (2 Williston, op. cit., p. 714.)
(3) 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. (MC Cutcheon vs. Kimbal, 135 Misc. 299, 238 N.Y.S. 192.)
In such case, the buyer cannot make time the essence of the con-
tract without giving the seller notice of his intention to cancel
unless delivery is made on or before a fixed time. (Robinson Day
Products Co. vs. Thatcher, 150 N.Y.S. 658.)
Delivery of goods in possession

of a third person.
It is important to observe a distinction between the delivery
which will satisfy the seller’s duty to the buyer and the delivery
which is necessary to protect the buyer against third persons.

The seller can hardly be discharged from his obligation where

the goods are in the possession of a third person by simply tell-
ing the buyer that they are there or by notifying the bailee to de-
liver to the buyer. It is not enough to discharge the seller that the
bailee has become by operation of law the agent for the buyer. (2
Williston, op. cit., pp. 706-707.) To affect third persons, 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 of the day. (par. 4.)
(1) What is a reasonable hour is a question of fact largely de-
pendent upon the circumstances. Generally, however, where all
that is required of the other party is to receive a payment or per-
formance which can readily be accepted, it seems probable that
any hour when the debtor could find the creditor would be rea-
sonable for that purpose.
(2) In case of goods which are bulky or needed special care,
an hour might be unreasonable which would not be so in an or-
dinary payment of a small sum of money.
(3) Where the question is not merely one of tender but also of
demand, reasonableness will depend on the justifiable expecta-
tion that the hour is reasonable for giving as well as receiving.
(Ibid., op. cit., pp. 711-712.)
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 (par. 5.), that is, in such a state that
the buyer would, under the contract, be bound to take delivery of
them. (Art. 1636[2].) This provision is a necessary consequence of
the duty of the seller to deliver the goods bargained for. (see Art.
1247.)
The buyer is not bound to make tender of payment until the
seller has complied with his obligations.
226 SALES Art. 1522
ART. 1522. Where the seller delivers to the buyer a

quantity of goods less than he contracted to sell, the
buyer may reject them, but if the buyer accepts or re-
tains the goods so delivered, knowing that the seller
is not going to perform the contract in full, he must
pay for them at the contract rate. If, however, the buyer
has used or disposed of the goods delivered before
he knows that the seller is not going to perform his
contract in full, the buyer shall not be liable for more
than the fair value to him of the goods so received.
Where the seller delivers to the buyer a quantity
of goods larger than he contracted to sell, the buyer
may accept the goods included in the contract and
reject the rest. If the buyer accepts the whole of the
goods so delivered he must pay for them at the con-
tract rate.
Where the seller delivers to the buyer the goods
he contracted to sell mixed with goods of a 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 the preceding two paragraphs, if the subject
matter is indivisible, the buyer may reject the whole
of the goods.
The provisions of this article are subject to any
usage of trade, special agreement, or course of deal-
ing between the parties. (n)
Delivery of goods less than quantity

contracted.
Where the seller is under a contract to deliver a specific quan-
tity of goods and he delivers a smaller quantity as full perform-
ance of his obligation, the buyer may reject the goods so deliv-
ered. (see Art. 1233.) The buyer may, however, 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 to

him of the goods, if he did not know that the seller is going to be
guilty of a breach of contract. (par. 1.)
“Fair value to him” should be interpreted to mean the benefit
which the buyer may have received from the goods. It is not nec-
essarily the market value. Since the defaulting seller is the wrong-
doer, the buyer is not required to pay the contract price if such
price for the goods is more than fair value to him of the goods.
EXAMPLE:
S sold to B 200 cavans of rice at P1,000.00 per cavan or for a
total price of P200,000.00, delivery to be made at the place of
business of B.
If S delivers only 120 cavans, B can refuse to accept them. If
he accepts them knowing that B is not going to perform the
contract in full, he is liable to pay at the rate agreed upon for
the 120 cavans or P120,000. But if B was not aware that full
delivery would not be made, he would be liable only for the fair
value to him of the goods at the time of delivery even if it should
be less than the contract price.
Of course, B cannot be liable, in any case, for more than the
contract price of P120,000.00 with respect to the 120 cavans ac-
tually received by him.
ILLUSTRATIVE CASE:
Some of the goods contracted to be sold were missing through
fault of carrier.
Facts: S, a domestic corporation, alleges that B, a general
partnership, refused to pay the price of various automotive
products, with the latter claiming that it had not received the
merchandise. It appears that upon receipt of the Bill of Lading,
B initiated, but did not pursue, steps to take delivery as it was
advised by NN Company, owner of the vessel on which the
spare parts were loaded by S’s forwarding agent, that because
some parts were missing, they would just be informed as soon
as the missing parts were located.
It was only four years later when a warehouseman of NN
found in its bodega, parts of the shipment in question, but al-
ready deteriorated and valueless.
228 SALES Art. 1522
Issue: Under the circumstances, can B be faulted for not ac-

cepting or refusing to accept the shipment from NN four years
after shipment?
Held: No. NN could not produce the merchandise nor as-
certain its whereabouts at the time B was ready to take deliv-
ery. From the evidentiary record, NN was the party negligent in
failing to deliver the complete shipment to B who was never
placed in the control and possession of the same. Where the
seller delivers to the buyer a quantity of goods less than he
contracted to sell, the buyer may reject them. (Chrysler Phils.
Corp. vs. Court of Appeals, 133 SCRA 567 [1984].)
Delivery of goods more than quantity

contracted.
Where the seller delivers a quantity larger than that contracted
for, the buyer 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. (par. 2; see Art.
1540 re sale of immovable property.)
The offer of a quantity not contracted for is a manifestation of
the seller’s willingness to sell that quantity; and the act of the
buyer in knowingly taking them is sufficient evidence of assent. If
by the terms of the original contract, the price of the goods was
based on their number, weight, or measure, the same must be paid
for the larger quantity.
EXAMPLE:
In the preceding example, if S delivered 250 cavans of rice,
B may accept only 200 and reject the rest. If he accepts the en-
tire delivery, he may pay for them at the same contract rate of
P1,000.00 per cavan or P250,000.00 for the 250 cavans.
ILLUSTRATIVE CASE:
See facts.
Facts: The contract calls for the delivery of a quantity of
almaciga (mastic) of less than 500 piculs.
Issue: Is the delivery of 500 piculs sufficient compliance with
the contract?

Held: Yes. As the law takes no account of trifles (de minimis

non curat les), it is obvious that the discrepancy may be disre-
garded, and, therefore, the buyer cannot escape liability on ac-
count of such trifling difference. (Matute vs. Cheong Boo, 67 Phil.
373 [1939].)
Delivery of goods mixed with others.

Where the goods delivered are mixed with goods of different
description not included in the contract, the buyer 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.
This case is analogous to the preceding topic and the discus-
sion there suffices.
Effect of indivisibility of subject matter.

If the subject matter of the sale is indivisible, in case of deliv-
ery of a larger quantity of goods (par. 2.) or of mixed goods (par.
3.), the buyer may reject the whole of the goods. (par. 4.)
It can be inferred from our law that the buyer has the right of
rejecting the whole of the goods delivered in the last two cases
mentioned only if the subject matter is indivisible.
EXAMPLES:
(1) S agreed to sell to B a live carabao with a weight of not
less than 100 kilos but not more than 120 kilos. S delivered a
carabao weighing 130 kilos. B may reject the carabao.
(2) If the agreement is for S to deliver “wagwag” rice mixed
with corn of a particular variety and the rice or corn delivered
is of a different variety, B may reject the whole of the goods.
Application of usage of trade, special

agreement, or course of dealing.
The provision of the 5th paragraph of Article 1522 permitting
evidence of usage of trade special agreement or course of dealing
between the parties is but a special application of the general rules
concerning contracts.
(1) A usage of trade is any practice or method of dealing hav-
ing such regularity of observance in a place, vocation or trade as
230 SALES Art. 1523
to justify an expectation that it will be observed with respect to

the transaction in question. The existence and scope of such a
usage are to be proved as facts. (Uniform Commercial Code, Sec.
205[2].)
(2) A course of dealing is a sequence of previous conduct be-
tween the parties to a particular transaction which is fairly to be
regarded as establishing a common basis of understanding for
interpreting their expressions and other conduct. (Ibid., Sec.
205[1].)
Under modern methods of doing business especially in regard
to such fungible goods as grains and oil, and other commodities
which are dealt in the same way, it is very common to mingle
goods of different owners and to constitute a co-ownership in a
whole mass of a specified quantity. Where such method of busi-
ness prevails, it would be a natural consequence that a tender of
a right in the mass would be a good delivery. (see 2 Williston, op.
cit., p. 732.)
ART. 1523. Where, in pursuance of a contract of

sale, the seller is authorized or required to send the
goods to the buyer, delivery of the goods to a carrier,
whether named by the buyer or not, for the purpose
of transmission to the buyer is deemed to be a deliv-
ery of the goods to the buyer, except in the cases pro-
vided for in article 1503, first, second and third para-
graphs, or unless a contrary intent appears.
Unless otherwise authorized by the buyer, the
seller must make such contract with the carrier on
behalf of the buyer as may be reasonable, having re-
gard to the nature of the goods and the other circum-
stances of the case. If the seller omits so to do, and
the goods are lost or damaged in course of transit,
the buyer may decline to treat the delivery to the car-
rier as a delivery to himself, or may hold the seller
responsible in damages.
Unless otherwise agreed, where goods are sent
by the seller to the buyer under circumstances in
which the seller knows or ought to know that it is usual

to insure, the seller must give such notice to the buyer

as may enable him to insure them during their transit,
and, if the seller fails to do so, the goods shall be
deemed to be at his risk during such transit. (n)
Delivery to carrier on behalf of buyer.

(1) General rule. — Where the seller is authorized or required
to send the goods to the buyer (Art. 1521, par. 1.), the general rule
is that delivery of such goods to the carrier6 constitutes delivery
to the buyer, whether the carrier is named by the buyer or not.
(see Behn, Meyer & Co., [Ltd.] vs. Yangco, 38 Phil. 602 [1918].) In
such case, the delivery of the goods on board the carrying vessel
partakes the nature of actual delivery since from that time, the
buyer assumes the risk of loss of the goods. (Filipino Merchant
Insurance Co., Inc. vs. Court of Appeals, 179 SCRA 638 [1989].)
(2) Exceptions. — They are those provided for in paragraphs
1, 2, and 3 of Article 1503 and when a contrary intent appears,
that is, the parties did not intend the delivery of the goods to the
buyer through the carrier. The seller is not responsible for misde-
livery by the carrier where the carrier was chosen and authorized
by the buyer to make the delivery. (Smith Bell and Co. [Phils.],
Inc. vs. Jimenez, 8 SCRA 407 [1963].)
Paragraphs 2 and 3 are in accordance with mercantile usages.
Seller’s duty after delivery to carrier.

The fact that the ownership in the goods may have passed to
the buyer does not mean that the seller has already fulfilled his
duty to the buyer.
(1) To enter on behalf of buyer into such contract reasonable under
the circumstances. — The seller must make such contract with the
6
There is delivery to the carrier when the goods are ready for and have been placed
in the exclusive possession, custody and control of the carrier for the purpose of their
immediate transportation and the carrier has accepted them. Where such delivery has
thus been accepted by the carrier, its liability commences eo instanti. Ordinarily, a receipt
is not essential to a complete delivery of goods to the carrier for transportation but, when
issued is competent and prima facie but not conclusive evidence of delivery to the carrier.
(Saludo, Jr. vs. Court of Appeals, 207 SCRA 498 [1992].)
232 SALES Art. 1523
carrier on behalf of the buyer as may be reasonable under the cir-

cumstances. If he omits to do so, the buyer may decline to treat
the delivery to the carrier as a delivery to himself in case the goods
are lost or damaged in course of transit, or the buyer may hold
the seller responsible in damages. (par. 2.) If the buyer exercises
the first right, the transfer of ownership will be deemed not to have
taken place.
The law does not make a carrier for all purposes the agent of
the buyer to whom goods are consigned. The agency relates to
the transmission of the merchandise only.
(2) To give notice to buyer regarding necessity to insure goods. —
The seller must give notice to the buyer as may enable him to in-
sure the goods during their transit if under the circumstances it is
usual to insure them. If the seller fails to do so, the risk will be
borne by him. But the seller who had failed to give notice is not
liable for loss of goods, if the buyer had all the information nec-
essary to insure.
The two preceding obligations of the seller are respectively
subject to specific instructions of the buyer or any agreement to
the contrary.
Definition of shipping terms.

Three commonly used terms are, namely:
(1) C.O.D. — The initials stand for the words, “collect on de-
livery.” If the goods are marked C.O.D., the carrier acts for the
seller in collecting the purchase price. The buyer must pay for the
goods before he can obtain possession. C.O.D. terms do not pre-
vent title from passing to the buyer on delivery to the carrier where
they are solely intended as security for the purchase price (see Art.
1503.);
(2) F.O.B. — The initials stand for the words, “free on board”.
They mean that the goods are to be delivered free of expense to
the buyer to the point where they are F.O.B. In general, the point
of F.O.B., either the point of shipment or the point of destination,
determines when the ownership passes. (Behn, Meyer & Co. [Ltd.]
vs. Yangco, 38 Phil. 602 [1918].) Here, title presumably passes
when the goods are so delivered F.O.B.; and

(3) C.I.F. — The initials stand for the words, “cost, insurance
and freight.” They signify that the price fixed covers not only the
cost of the goods, but the expense of freight and insurance to be
paid by the seller (ibid.) up to the point of destination. Title passes
to the buyer at the moment of delivery to the point especially
named.
Presumption arising from payment

of freight.
Both the terms “F.O.B.” and “C.I.F.” merely make rules of
presumption which yield to proof of contrary intention.
If the buyer is to pay the freight, it is reasonable to suppose
that he does so because the goods become his at the point of ship-
ment. On the other hand, if the seller is to pay the freight, the in-
ference is equally strong that the duty of the seller is to have the
goods transported to their ultimate destination and that title to
property does not pass until the goods have reached their desti-
nation. (Ibid.; see General Foods Corp. vs. National Coconut Corp.,
100 Phil. 337 [1956].)
ART. 1524. The vendor shall not be bound to de-

liver the thing sold, if the vendee has not paid him the
price, or if no period for the payment has been fixed
in the contract. (1466)
Delivery, simultaneous with payment

of price.
As a general rule, the obligation to deliver the thing subject
matter of a contract arises from the moment of its perfection and
from that time the obligation may be enforced. (see Art. 1315.) But
the contract of purchase and sale is bilateral and from it arises not
only the obligation to deliver the thing but also that of paying the
price. The obligations are reciprocal.
Consequently, if the vendor is bound to deliver the thing sold,
it is no less certain that the vendee must pay the price. 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

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OBLIGATIONS OF THE VENDOR

SECTION 1. — General Provisions

ART. 1495. The vendor is bound to transfer the

Principal obligations of the vendor.

Obligation to transfer ownership and deliver.

164 SALES Art. 1495

(2) Transfer not essential to perfection of contract. — The trans-

Art. 1495 OBLIGATIONS OF THE VENDOR 165

property sold. The effective conveyance of the land is accom-

166 SALES Art. 1496

ART. 1496. The ownership of the thing sold is ac-

Ways of effecting delivery.

Art. 1496 OBLIGATIONS OF THE VENDOR 167

Ways of effecting constructive delivery.

168 SALES Art. 1496

(b) by symbolical tradition or traditio symbolica (ibid., par.

SECTION 2. — Delivery of the Thing Sold

ART. 1497. The thing sold shall be understood as

Concept of tradition or delivery.

170 SALES Art. 1497

stealing the same while in the custody of the vendor or his

Art. 1497 OBLIGATIONS OF THE VENDOR 171

Froilan vs. Pan Oriental Shipping Co., 12 SCRA 276 [1964]; La

Actual delivery of the thing sold.

172 SALES Art. 1498

(2) Not always essential to passing of title. — Actual or manual

ART. 1498. When the sale is made through a pub-

Execution of a public instrument

Art. 1498 OBLIGATIONS OF THE VENDOR 173

delivery, prior physical delivery or possession is not legally re-

174 SALES Art. 1498

(b) Presumptive delivery by execution of public instru-

Art. 1498 OBLIGATIONS OF THE VENDOR 175

176 SALES Art. 1498

Manila Regional Trial Court, as Sheriff, executed a deed of con-

Art. 1498 OBLIGATIONS OF THE VENDOR 177

178 SALES Art. 1498

formance. Does this mean that despite the judgment rescind-

Art. 1498 OBLIGATIONS OF THE VENDOR 179

rescinded before it could be consummated. Petitioner never ac-

(3) Sale of thing not subject to control of vendor. — Symbolic

180 SALES Art. 1499

Property Registration Decree (Pres. Decree No. 1529.) insofar as

ART. 1499. The delivery of movable property may

Arts. 1500-1501 OBLIGATIONS OF THE VENDOR 181

Traditio longa manu.

Traditio brevi manu.

ART. 1500. There may also be tradition constitutum

Traditio constitutum possessorium.

ART. 1501. With respect to incorporeal property,

182 SALES Art. 1501

ownership in the possession of the vendee or the use

Art. 1501 OBLIGATIONS OF THE VENDOR 183

———— ———— ————

Intention to deliver and to accept a

184 SALES Art. 1502

ART. 1502. When goods are delivered to the buyer

Art. 1502 OBLIGATIONS OF THE VENDOR 185

(2) If he does not signify his approval or accept-

Contract of sale or return, and of sale on

186 SALES Art. 1502

(2) Sale or return. — It is a contract by which property is sold

Art. 1503 OBLIGATIONS OF THE VENDOR 187