OBLIGATIONS OF THE VENDOR Seller need not be the owner of validity of the contract: the seller need not
validity of the contract: the seller need not be the owner and the sale
TO TAKE CARE OF THE THING
To take care of the thing after the contract has been perfected, prior to delivery.
Loss of the thing pending delivery:
a. If the object is entirely lost – the contract shall be without any effect.
b. If the thing is lost in part only, the buyer may choose between.
i. Withdrawing from the contracts; and
ii. Demanding the remaining part, paying its price in proportion to the total sum agreed
upon.
c. The goods without the knowledge of the seller have perished in part or have wholly or in a material
part so deteriorated in quantity as to be substantially changed in character, the buyer may at his option
treat the sale:
i. As avoided; or
ii. As valid in all of the existing goods or in so much thereof as have not deteriorated,
and as binding the buyer to pay the agreed price for the goods in which the ownership will pass, if the
sale was divisible.
Risk of Loss: General Rule: the thing perishes with the owner following the principle of res perit
domino. As such, before delivery, the seller generally bears the risk of loss; after delivery, the risk of
loss is with the buyer.
Exceptions:
a. Stipulation
b. Security Title -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;
c. Delay in the delivery – whoever causes the delay shall bear the risk of loss.
ILLUSTRATION: On January 1, 2020, B Bookstore sold to Atty. X law books for the latter’s library
for a price of P350,000, where Atty. X will pay P100,000 upon delivery and the balance will be paid on
December 31,2020. Delivery was already made but it was mentioned in the contract that the ownership
over the books does not pass to Atty. X until full payment of the price. On June 30, 2020 after delivery
but before due date of the balance of the purchase price, the office of Atty. X was destroyed by fire
together with the books purchased from B Bookstore. Atty. X now argues that ownership was retained
by B Bookstore, thus following the res perit domino doctrine, it should bear the risk of the loss and he
(Atty. X) is no longer liable for the balance. Is Atty X correct?
ANSWER: No, because the retention of ownership by B Bookstore is only for the purpose of securing
fulfillment of Atty. X’s obligation which is the full payment of the purchase price, or as security title.
Accordingly, the books are already at Atty. X’s risk at the time of delivery as an exception to the res
perit domino doctrine. Since Atty. X already bears the risk of loss, he remains to be liable for the
balance.
Note: the risk of loss is where it is important why there are distinctions in the following:
• Contract of Sale vs Contract of Agency to Sell.
• Sale or Return vs. Sale on Approval/Trial/Satisfaction.
SALE OR RETURN : where the goods are delivered to the buyer but the buyer has an option to return
the goods instead of paying the price, the ownership passes to the buyer but he may revest the
ownership in the seller by returning or tendering the goods within the time fixed in the contract, or
when no time is fixed, within a reasonable time.
Note that ownership transfer to the buyer upon delivery. As such, the buyer bears the risk of loss once
the goods are delivered.
SALE ON APPROVAL/ OR IN TRIAL / OR IN SATISFACTION: here, there is a delivery of the
goods also, but no transfer of ownership yet. As such, the seller, being the owner, bears the risk of
loss.
The ownership passes to the buyer:
a. When he signifies his approval or acceptance to the seller or does any other act adopting the
transaction.
b. If he does not signify his approval or acceptance to the seller, but retains the goods without giving
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?
2. Obligation to pay taxes and incidents of the sale, unless otherwise agreed upon. 3. To warrant
the thing (See warranties)
4. To transfer ownership.
is still valid if he sold the thing in a capacity authorizing him to do so such as a liquidator, executor,
administrator, sheriff, or a notary (in case of pledge)
This is different from a pledge or mortgage which requires the pledge or mortgagor to be absolute
owner of the thing.
SELLER IS NOT THE OWNER:
General Rule: The buyer acquires no better title to the goods than the seller had. As such, if the true
owner can recover from the seller, he (the owner) will likewise have the same right recover from the
buyer.
Exceptions: in all of these exceptions, the buyer acquires GOOD TITLE to the object even if the seller
is not the owner.
a. Seller is authorized by the owner – such as an agent.
b. Seller had authority or judicial authority to sell - such as a guardian, executor, administrator, or
court sheriff.
ILLUSTRATION: S sold to B a cellphone which belongs to the O (the owner). Is the sale valid?
ANSWER: Yes, since the ownership at the time of sale is not a requirement for the validity of the
contract.
Can O recover the cellphone?
• As a general rule, yes, since the buyer acquires no better than the seller had, if O is allowed to recover
from S, then O can likewise recover from B, since B and S have the same rights and subject to the same
actions the owner may initiate.
• If S however as authorized by O as his agent, or S had statutory or judicial authority to sell the
cellphone, O can no longer recover from B because B acquires good title to it.
5. In case of estoppel
i. As to the owner: estoppel in pais – by his conduct or representation, he led the buyer to
believe that the seller had authority to sell.
ii. As to the seller: estoppel by dead – if after the sale, the seller acquired ownership,
such ownership, automatically passes to the buyer as to the thing already delivered.
ILLUSTRATION: S sold to B a cellphone which belongs to O (the owner of the cellphone and father
of S)
• Assuming B, knowing that the cellphone belongs to O, asked the latter if he was really selling it
through S, and O said yes, when in fact there is no such authority, O will be estoppel to question the
sale and recover the cellphone since by his actions, he led the buyer to believe that S had authority to
sell (estoppel in pais)
• Assuming B had no knowledge that the cellphone was in fact that of O, bought the same and it was
delivered to him. Later on, O died and S, being the sole heir, become the owner of the cellphone. S can
no longer recover from B, because by his deed he led B to believe that he was the owner, and whatever
ownership he acquired by succession automatically transfers to B by operation of law (estoppel by
deed)
d. Sale of an Apparent Owner: REQUISITES
i. There is apparent ownership
ii. Buyer in good faith and for value – the buyer had no knowledge of any defect in the
seller’s title at the time of full payment (not only at the time of sale)
iii. There must be a law from which apparent ownership may be had, such as: 1. PD 1529
which provides that those dealing with registered land need not inquire beyond the title, also known as
the mirror principle, unless the buyer is required under the law to exercise the highest degree of
diligence, e.g., banks and public utility companies.
2. Factor’s Act (Agency) – so far as third persons are concerned, they only have to rely on the power of
attorney as written, they need not inquire into limitations imposed by the principal to the agent not
written.
3. Art. 1518- for goods covered by negotiable instruments.
ILLUSTRATION: O, the owner of a lot, gave to S, his lawyer, the title to such lot for safekeeping as
he (O) was going abroad. S executed a forged deed of sale and made it appear that O sold to him the lot.
Armed with the forged deed of sale, S was able to secure a title to his name. S then sold to B the lot.
When O returned, he saw that B was already making construction over the lot and learned that it was
sold to B by S. Can O recover the lot from B?
ANSWER: No, In this case, there is apparent ownership because the title of the lot was already in the
name of S and there is a law from which such apparent ownership comes from, the Property
Registration Decree. The only question now is the good faith of his part. As such, the presumption of
good faith applies. All the three requisites being present, B acquires good title to the lot. The remedy of
O would be to go after S.
Note, however that if B was aware that S is not really the owner, the exception will not apply, and O
will be allowed to recover the lot from B since the general rule, that the buyer acquires no better title
than the seller had, will apply.
E. Purchase from a Merchant Store, Market, or Fair in good faith and for value: the purpose of
this exception is to facilitate commercial transactions so as not to degrade the trust in sales made
through such stories.
ILLUSTRATION: X stole the cellphone of O and sold it to S Trading, Inc. in Greenhill. B then bought
the same cellphone from S Trading, Inc. O later on saw B in possession of the cellphone. Can O recover
the same from B?
ANSWER: No, since the phone was acquired through a merchant store, the buyer acquires good title to
the cellphone and O will not allowed to recover.
Right of an owner of a moveable to recover possession: One who has lost any movable or has been
unlawfully deprived thereof, may recover it from the person in possession of the same. If the possessor
of a movable lost or which the owner has been unlawfully deprived, has acquired it in good faith at a
public sale, the owner cannot obtain its return without reimbursing the price paid thereof.
ILLUSTRATION: Rita was the owner of a valuable painting which was stolen from her house. Later
on, she saw the same painting in the house of Mario. When inquired, Mario said that he acquired the
same from a gallery auction. Can Rita recover from the painting from Mario?
ANSWER: Yes, Since Rita is the owner of a movable property who was unlawfully deprived thereof
because it was stolen, as such under the law, she will have the right to recover from possession.
Is Mario entitled to reimbursement?
ANSWER: No, A gallery auction is private sale since it is exclusively by invite, but if it were acquired
from a public sale, then Mario would be entitled to reimbursement. In either case, Rita has a right to
recover possession.
5.To deliver the determinate or specific thing including the fruits from the moment the obligation
to deliver the fruits from the moment the obligation to deliver arises and the accessions ana
accessories thereof.
OBLIGATIONS OF THE VENDOR (2) DELIVERY
Delivery is the mode by which ownership is transferred. It is accompanied by placing the thing in the
control and possession of the vendee.
MODES OF DELIVERY: THINGS
a. Actual Delivery: The actual and physical transfer of the thing to the buyer. b. Constructive
Delivery
i. TRADITIO LONGA MANU: literally, long-hand delivery, or by pointing to the
movable sold accomplished by mere consent of the seller, ownership transfers to the buyer, because at
the time of sale, the seller cannot transfer possession to the buyer, e.g., the thing is leased by another.
ii. CONSTITUTUM POSSESSORIUM: at the time of sale, the seller is in possession and
remains in possession in another concept than the owner, like that of a lessee, depository, or borrower.
E.g., sale lease-back
iii. BREVI MANU: or short hand delivery. When the buyer is in possession of the
movable, in a concept other than that of an owner, at the time of sale, and remains in possession after
sale, now as owner. E.g., a lessee who buys the things leased.
iv. SYMBOLIC DELIVERY: this is delivery that takes place by delivering the keys of the
place or depository where the movable is stored or kept.
v. EXECUTION OF THE REQUIRED FORMALITY: by execution of a public
instrument. This mode of delivery is available to both sale of rights and sale of things.
c. Delivery to a common carrier: when the parties so agreed that the seller will deliver to the common
carrier for ultimate delivery to the buyer. In this case, there is already upon receipt of the common
carrier. EXCEPT:
i. Ownership is reserved by the seller – such as if it is deliverable to the seller or his
agent.
ii. The seller reserved possession – goods are deliverable to the buyer, but possession of
the bill of lading is with the seller.
iii. A bill of exchange is drawn by the seller against the buyer and the latter dishonors the
same.
MODE OF DELIVERY: As to rights
a. By execution of a public instrument
b. Quasi-Traditio:
i. When the title of ownership is placed in the possession of the vendee (e.g., certificates
of stock for sale of shares of stock);
ii. By the use of the vendee of his rights with the vendor’s consent (e.g., the vendee of
his shares where the same has not been transferred in his name yet, with the consent of the owner
through a proxy, he may exercise his rights as a stockholder).
TIME OF DELIVERY:
a. Stipulation of the parties.
b. If no stipulation, within a reasonable time.
PLACE OF DELIVERY:
a. Stipulation of the parties.
b. If no stipulation, by usage of trade.
c. If no stipulation nor usage of trade, the seller’s place of business;
d. If none, the seller’s residence.
e. However, in case of a contract of sale of specific goods, which to the knowledge of the parties when
the contract or the sale was made were in some other place, then that place is the place of delivery.
SELLER IS NOT BOUND TO DELIVER:
a. If it is a pure obligation and the buyer does not pay; or
b. If there is a period agreed upon, the obligation to deliver shall be demandable at that time. Except, if
the buyer loses the right to make use of the period under Art 1198.
QUANTITY TO BE DELIVERED
DELIVERY OF LESS OR MORE OF THE QUANTITY AGREED UPON IN SALE OF
PERSONAL PROPERTY:
a. Delivery is less than quantity agreed upon, the buyer may:
i. Reject the delivery; or
ii. Accept or retain the goods delivered and pay
1. The full contract price if he knew that the seller is not going to perform the contract in full; or
2. Pay the fair value of the goods delivered if without such knowledge.
ILLUSTRATION: B purchased from S 1,000 sacks of rice at a price of P1,000/sack. At the time of
delivery, S delivered only 900 sacks. The sacks of rice have a fair market value of P900/sacks. The
buyer has the following remedies.
1. Reject the entire delivery. This is on the premise that no creditor can be compelled to accept partial
performance.
2. Accept the delivery, but the price to be paid is dependent on knowledge of whether the seller will be
able to deficiency:
a. If the buyer knew that the seller will no longer be able to deliver the deficiency but still accepted the
delivery – pay at the contract price of P1,000/sack.
b. If buyer DID NOT know that the seller will no longer be able to deliver the deficiency when he
accepted the delivery – pay only the fair market value of P900/sacks.
b.Delivery is greater than quantity agreed upon, the buyer may:
i. Accept the goods in quantity agreed upon and reject the rest; or
ii. Accept the whole of the goods delivered and pay for them at the contract rate.
ILLUSTRATION: B purchased from S 1,000 sacks of rice at a price of P1,000/sack. At the time of
delivery, S delivered only 1,100 sacks of rice. The buyer has the following remedies.
1. Accept only the 1000 sacks agreed upon and pay P1,000/sack contract price and reject the excess 100
sacks.
2. Accept the entire 1,100 sacks and pay P1,100/sack contract price.
c.Delivery of goods mixed with goods of different description not included in the contract, the
buyer may accept the goods which are in accordance with the contract and reject the rest.
In case of b and c above, if the subject matter is indivisible, the buyer may reject the whole of the
goods.
ILLUSTRATION: B purchased a specific cow from B with a weight of 80kgs, at the time of delivery,
the cow’s weight was 100 kgs. In this case, the buyer will have the additional option to reject the entire
delivery. The same will be true if the weight of cow was 70kgs, since the subject is indivisible.
DELIVERY OF LESS OR MORE OF THE QUANTITY AGREED UPON IN SALE OF REAL
ESTATE
a. AT A RATE OF A CERTAIN PRICE FOR A UNIT OF MEASURE OR NUMBER:
1. Delivery is LESS than that agreed upon, the buyer may:
a. Ask for specific performance and demand delivery of the shortage;
b. Ask for the proportionate reduction of the price (accion quanti minoris)
c. Rescission, in case
i. The area lacking is at least 1/10 of that agreed upon; or
ii. The buyer would not have entered into contract, had he known of its smaller area.
The same rules apply if any part of the immovable is not of the QUANTITY specified in the contract
(except that rescission is an available remedy in the event that the inferior value is MORE THAN 1/10
of the price agreed upon) even if the area delivered be that agreed upon.
ILLUSTRATION: S and B entered into a contract of sale for 1,000 sqm of land at the rate of
P1,000/sqm. If it turns out that the actual area of the land is only 950 sqm. What are the remedies of B?
1. Ask S to deliver the remaining 50sqm if still possible.
2. Ask for the proportionate reduction of the price and accordingly pay only P950,000 corresponding
the actual area.
3. As a rule, rescission is NOT an available remedy since the deficiency is not at least 1/10 of the area
agreed upon. But the buyer can still as for the rescission if he can prove that he would not have entered
into the contract of sale knowing of the deficient area.
4. If assuming that was delivered is 800 sqm only, then rescission is already an available remedy
regardless of the buyer’s intent since it is at least 1/10. Or if the deficiency pertains to quality pertains to
quality and the deficiency is MORE THAN 1/10 with reference to the price.
2.If the delivery is in excess of the area agreed upon, the buyer may:
a. Accept the area agreed upon and reject the rest; or
b. Accept the whole and pay at a contract rate.
ILLUSTRATION: S and B entered into a contract of sale for 1,000 sqm of land at the rate of
P1,000/sqm. If it turns out that the actual area of the land is only 1,100 sqm. If it turns out that the
actual area of the land is only 1,100 sqm. What are the remedies of B?
1. Accept only 1,000 sqm and reject the excess; or
2. Accept the entire 1,100 sqm and pay P1,100,000 based on the contract price. The above rules
likewise apply to judicial sales.
B. SALE OF REAL ESTATE FOR A LUMP SUM PRICE: Whatever the actual area of the land, the
buyer is still required to pay the price agreed upon and the seller is bound to deliver the entire area.
If the actual area is bigger than the agreed upon the area, and the seller should not deliver the whole
actual area, the buyer may:
a. Reduce the price to be paid, in proportion to what is the lacking in the area or number; or b. Rescind
the contract for failure of the vendor to deliver what has been stipulated.
ILLUSTRATION: S and B entered into a contract of sale concerning the corner lot of 5 th and 27th
streets in a particular city. They agreed to a price of P1,000,000 for an estimated area of the land of
1,000 sqm, more or less. This is a lump sum sale. And the entire 1M is the price for the land, regardless
of the agreed area.
1. If it turns out that the actual area is 900 sqm only, the buyer is still required to pay P1,000,000 and
the seller is only bound to deliver such 900sqm actual area of the land. 2. If it turns out that the actual
area is 1,100 sqm., the buyer is only required to pay P1,000,000 still and the seller has to deliver the
entire actual area of 1,100 sqm.
If the seller only delivered 1,000 sqm, the buyer can either:
a. Pay only P909,091 (1,000/1,100 * P1,000,000); or
b. Rescind the contract
RIGHTS OF AN UNPAID SELLER
Unpaid Seller: the seller of the goods is deemed to be an unpaid seller when:
• The whole of the price has not been paid or tendered;
• A bill of exchange or other negotiable instrument has been received as conditional payment, and the
condition on which it was received has been broken by reason of the dishonor of the instrument, the
insolvency of the buyer, or otherwise.
Rights of an Unpaid Seller - notwithstanding that the ownership of the goods may have passed to the
buyer, the unpaid seller of goods has the following rights:
1. Possessory lien – right to retain the goods or rights to withhold delivery of goods.
Grounds:
a. Where the goods have been sold without any stipulation as to credit;
b. Where the goods have been sold on credit, but the terms of credit have expired;
c. Where the buyer becomes insolvent.
The seller may exercise his right of lien notwithstanding that he is in possession of the goods as agents
or bailee for the buyer.
Partial Lien: where an unpaid seller has made part delivery of the goods, he may exercise his right of
lien on the remainder, unless such part delivery has been made under such circumstances as to show an
intent to waive the lien or right of retention.
Loss of possessor lien: happens:
a. When the seller delivers the goods to a carrier or other bailee for the purpose of transmission to the
buyer without reserving the ownership in the goods or the right to the possession thereof;
b. When the buyer or his agent lawfully obtains possession of the goods.
c. By waiver.
The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that he has
obtained judgement or decree for the price of the goods.
Sale of the thing by the buyer to third persons:
a. As a rule, the seller does not lose his right to possessory lien or right of stoppage in transitu.
b. Exceptions:
i. if the transfer assented to the transfer.
ii. If the goods are recovered by a negotiable document of title and it is sold to a
purchaser for value in good faith to whom such document has been negotiated.
2. Stoppage in Transitu - right to stop the goods while in transit.
Requisites:
a. The seller already parted with the possession of the goods.
b. The goods are already in transit
c. The buyer is insolvent
The Goods are in transit:
a. From the time when they are delivered to a carrier by land, water, or air, or other bailee for the
purpose of transmission to the buyer, until the buyer, or his agent in that behalf, takes delivery of them
from such carrier or other bailee;
b. If the goods are rejected by the buyer, and the carrier or other bailee continues in possession of them,
even if the seller has refused to receive them back.
Goods are no longer in transit:
a. If the buyer, or his agent in that behalf, obtains delivery of the goods before their arrival at the
appointed destination.
b. If, after the arrival of the goods at the appointed destination, the carrier or other bailee acknowledges
to the buyer or his agent that he holds the goods on his behalf and continues in possession of them as
bailee for the buyer or his agent; and it is immaterial that further destination for the goods may have
been indicated by the buyer.
c. If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent in that
behalf.
If part delivery of the goods has been made to the buyer, or his agent in that behalf, the remainder of the
goods may be stopped in transit, unless such part delivery has been under such circumstances as to show
an agreement with the buyer to give up possession of the whole of the goods.
Rights of stoppage in transit is exercised:
a. By taking actual possession of the goods; or
b. By giving notice of his claim to the carrier or other bailee who is in possession of the goods, as a
consequence of which;
i. The carrier or bailee then must redeliver the goods to, or according to the directions of,
the seller.
ii. The expenses of such delivery must be borne by the seller.
iii. If, however, a negotiable document of title representing the goods has been issued by
the carrier or other bailee, he shall not be obliged to deliver or justified in not delivering the goods to the
seller unless such document is first surrendered for cancellation.
3. Resale
Grounds:
a. The goods are perishable in nature.
b. The seller expressly reserves the right of resale in case the buyer should make default, or
c. Where the buyer has been in default in the payment of the price for an unreasonable time.
To exercise such right: the unpaid seller must have a right of lien or stoppage in transitu.
In case the resale proceeds are:
• LESS than the price in the original sale, the seller can recover from the original buyer the difference
occasioned by the breach of contract of sale;
• MORE than the price in the original sale, the seller is entitled to the profit made in such resale.
GOOD TITLE: The buyer in the resale acquires a good title as against the original buyer.
NOTICE: except in case of resale made because the goods are perishable, notice shall be given to the
original buyer about:
a. The intention to resell – which is relevant to prove that the buyer has been in default for an
unreasonable length of time.
b. The date, time, and place of resale – to be considered doing the resale in good faith and entitle the
seller to any deficiency.
Note, however, that failure to give notice does not affect the validity of the resale.
Participation of the seller in the resale: is prohibited from being the buyer in the resale, either directly
or indirectly, whether the resale be public or private.
4. Rescission
Grounds:
a. When the right to rescind is expressly reserved by the seller.
b. When the buyer has been in default in the payment of the price for an unreasonable time.
To exercise such right: the unpaid seller must have a right of lien or stoppage in transitu.
Recovery of damages: the seller is not liable to the buyer upon the contract of sale, but may recover
from the buyer damages for any loss occasioned by the breach of contract.
Notice: is not necessary for the validity of rescission. But the same shall be relevant in determining
whether the buyer has been in default for an unreasonable length of time .
MUTUALLY EXCLUSIVE RIGHTS: the right of possessory lien and stoppage in transit are mutually
exclusive in the sense that both rights cannot exist together at the same time. This is because the right of
possessory lien presupposes that the seller retains possession, while in stoppage in transit, the seller
should have parted with the possession already.
Note, however that for the right of resale and right to rescind, it is necessary that the seller has either
possessory lien or the right of stoppage in transitu.
Insolvency of the buyer: is a requisite only for the right of stoppage in transitu, but not in all other
rights. It is, however, a ground to exercise possessory lien, but still not a requisite.
DOUBLE SALE
Requisites for applicability:
1. There must be a single property involved.
2. There must be two or more contracts of sales.
3. There must be two or more different buyers who rights are conflicting. 4. The buyers must have
acquired the same property from the same seller.
MOVABLE PROPERTY: if the same movable is sold by the vendor to two or more vendees, the one
who has a better right over the thing shall be the first one to take possession in good faith.
ILLUSTRATION: S sold his care to B1 on June 1, 2020. Later on, he sold the same car to B2, who
had no knowledge of the first sale, on June 15, 2020, where B2 immediately took possession. Who has
a better right between B1 and B2?
ANSWER: B2. Without regard to whoever was the first buyer, the one who has a better right in case of
double sale of movable property shall be the possessor in good faith. In this case, B2 was in good faith
since he was not aware of the existence of the first sale, therefore, being the first possessor in good
faith, he will have a better right than B1.
IMMOVABLE PROPERTY: if the same immovable property is sold by the vendor to two or more
vendees, the one who has a better right over the thing shall be:
1. The one to first register in good faith, if none,
2. The one to first take possession in good faith; if none still,
3. The one with the oldest title.
“Good faith” pertains to the time of registration or possession not the time of perfection of sale: as
such, if at the time of the second sale, the buyer had no knowledge of the prior sale, but learns of it prior
to registration or possession (if there is no registrant), he will NOT be considered a registrant/possessor
in good faith.
ILLUSTRATION: On June 30, 2020, Jesus sold a specific parcel of registered land to Jaime, On July
15, 2020, he holds the same land to Jose.
1. If Jose registers the second sale first, without knowledge or the existence of the first sale, he shall
have a better right over Jaime, since he is the first registrant in good faith. 2. If at the time of sale to
Jose, he did not know of the existence of the sale to Jaime, but learns of it before registering, Jose will
NOT be considered the first REGISTRATION IN GOOD FAITH since he already had knowledge of
the existence of the first sale at the time of registration.
3. If no one registered their sale, and Jose first took possession without knowledge of the existence of
the first sale, he shall have a better right over Jaime, since he will be considered the first possessor in
good faith.
4. If there was no registrant nor possessor in good faith, Jaime will have a better right having the older
title.
ILLUSTRATION: On June 30, 2020, Jesus sold a specific parcel of registered land to Jaime, On July
15, 2020, he sold the same land to Jose. On July 17, 2020, Jaime knew that Jesus sold again the parcel
of land to Jose. Jaime then immediately went to the Register of Deeds to have his sale registered. Who
has a better right?
ANSWER: Jaime still. Knowledge of second sale does not make the first buyer “NOT in good faith”
because by the act of registering (or by taking possession) he can be said to have done it in bad faith for
he is merely protecting his rights. Also, because there is no defect in his title, being the one with an
older right.
BOTH SALE MUST BE VALID: In order for the Rules on Double Sale to apply, it presupposes that
both the sale is valid or at least voidable or rescissible, prior to annulment or rescission.
ILLUSTRATION: Rica filled a petition for annulment of his marriage with Richard. They were under
the regime of Absolute Community of Property. Richard hired Atty. Cruz who was paid through
conveyance of a parcel of land which he recently purchased from his lotto winnings. The transfer
documents were duly signed and Atty. Cruz took possession by fencing the entire parameter. Richard
then offered the same parcel of land to spouses Garcia. Immediately after the sale, the SPS. Garcia
commenced the construction on the land which was objected by Atty. Cruz, who claims he has a better
right over the property. Is Atty. Cruz, correct?
ANSWER: Atty. Cruz is not correct. The transaction with Atty. Cruz is a dation in payment. Second
contract is a sale. Double sale would have been applicable despite dacion since it is governed by law on
sales. However, 1544 requires that both sales are valid.
The dation in payment to Atty. Cruz, being governed by the law on sales, is void. Article 1491 provides
that a lawyer cannot acquire by purchase a thing which is the subject matter of an action which he is a
litigating lawyer.
There was a case for annulment of marriage and the parcel of land, being acquired by proceeds of lotto
winnings, is one of the properties which would be considered in settlement of conjugal properties.
As such, the first transaction is void. There is only one valid sale, i.e., the sale to the spouse Garcia, the
rules on double sale do not apply.
CONDITIONS and WARRANTIES
CONDITIONS: where the obligation of either party to a contract of sale is subject to any condition
which is not performed, such party may:
1. Refuse to proceed with the contract; or
2. Waive the performance of the condition; or
3. Treat the non-performance as a breach of warranty and ask for damages.
ILLUSTRATION: S Company sold to B Company a specific parcel of land worth P2M. B company is
required to give a down payment of P1M, and the balance is to be paid upon removal of the informal
settlers in the said land. In this case,
1. The removal of the informal settlers is the example of a condition which is placed upon the
performance of the buyer’s obligation to pay the balance of the purchase price. 2. In the event that the
condition is not fulfilled, the buyer will have three options as stated above.
WARRANTIES: Any affirmation of fact or any promise by the seller relating to the thing is an express
warranty if the natural tendency of such affirmation or promise is to induce the buyer to purchase the
same, and if the buyer purchase the thing relying thereon.
Opinion of the seller: is not understood to be a warranty unless the seller made such affirmation or
statement as an expert and it was relied upon by the buyer.
Express Warranty: is an affirmation of fact or promise by the seller relating to the thing which would
induce the buyer to buy the same. However, those relating to opinions of the seller are not considered
warranties unless they are made by experts and the buyer relies upon them.
WARRANTY UNDER THE CONSUMER ACT (RA NO. 7394)
Applicability: Consumer products are goods which are primarily for personal, family, household, or
agricultural purposes which shall include but not limited to goods, drugs, cosmetics, and devices;
Requirements: Any seller or manufacturer who gives an express warranty for consumer products is
required to do the following:
1. Set the terms of warranty in clear and readily understandable language and clearly identify himself as 2. Intencionada – the buyer was aware of the risk of eviction or of the defect in the title of the seller, the
the warrantor. seller is no longer liable for anything.

2. Identify the party to whom the warranty is extended; PARTIAL LOSS: should the vendee lose only a part of the thing sold but the same is of such
importance, in relation to the whole, that he would not have bought it without said part, hew may
demand the rescission of the contract; but with the obligation to return the thing without other
3. State the products or parts covered;
encumbrances that those which it had when he acquired it, instead of enforcing the vendor’s liability for
eviction.
4. State what the warrantor will do in the event of defect, malfunctions, or failure to conform to the
written warranty and at whose expense;
Two thing or more things sold: the same rules as to partial loss shall apply.

5. State what the consumer must do to avail of the warranty rights;

a. If they have been jointly sold for a lumpsum; or

6. Stipulate the warranty period.

b. Even if they were sold for a separate price for each of them if it should appear that the vendee would
not have purchased one without the other.
Period of Warranty – It is also mandated that all written warranties or guarantees issued by a
manufacturer, producer, or importer shall be operative from the moment of sale. The period of warranty
WARRANTY AGAINST HIDDEN DEFECTS OR OF QUALITY.
shall be:

2. Warranty against hidden defects or of quality – the thing shall be free from any hidden faults or
1. The parties may stipulate the period within which the express warranty shall be enforceable. If the
defects.
implied warranty on merchantability accompanies an express warranty, both will be of equal
durations.
Hidden Defects: it would render the thing unfit for its intended use; or diminish its fitness for such
extent that, had the vendee been aware thereof, he would not have acquired it or would have given a
2. Any other implied warranty shall endure not less than 60 days nor more than one year following the
lower price for it.
sale of new consumer products.

Vendor not liable; in case

Implied Warranties

a. The defects are patent or those which may be visible; or

WARRANTY AGAINST EVICTION

b. Even if not visible, the vendee who is an expert, by reason of his trade or profession, should have
1. Warranty Against Eviction – that the seller has a right to sell the thing at the time when ownership
known.
is to pass, and that the buyer shall from that time have and enjoy legal and peaceful possession of the
thing.
Warranty of Fitness of Goods: there is an implied warranty that the goods shall be reasonably fit for
such purpose;
Eviction requisites:

a. The buyer, expressly or by implication, makes known to the seller the particular purpose for which
a. The vendee is deprived of the whole or of a part of the thing purchased; b. By virtue of a final
the goods are acquired, and
judgement.

b. It appears that the buyer relies on the seller’s skill or judgement (whether he be the grower or
c. The vendor is summoned in the suit for eviction at the instance of the vendee. d. Such judgement is
manufacturer or not),
based on:

In the case of contract of sale of a specified article under its patent or other trade name, there is no
i. A right prior to the sale or
warranty as to its fitness as to its fitness for any particular purpose, unless there is a stipulation to the
contrary.
ii. An act imputable to the vendor.
Warranty of Merchantable Quality: there is an implied warranty that the goods shall be of
Rules Applicable: merchantable quality

a. The warranty applies even if there is no agreement to such effort; a. Where the goods are brought by description

b. The vendee need not appeal from the decision in order that the vendor may become liable for b. From a seller who deals in goods of that description (whether he be the grower or manufacturer or
eviction. not),

c. When the adverse possession had been commenced before the sale but the prescriptive period is
completed after the transfer, the vendor shall not be liable for eviction. d. If the property is sold for non-
payment of taxes due and not made known to the vendee before the sale, the vendor is liable for
eviction.
e. The judgement debtor is also responsible for eviction in judicial sales, unless it is otherwise decreed
in the judgement.
f. The defendant vendee shall ask, within the time fixed in the Rules of Court for answering the
complaint, that the vendor be made of a co-defendant.
Extent of Liability: First, it will depend whether the seller is in bad faith.
a. If the seller is in bad faith, he shall be liable for (VICED):
i. VALUE of the thing sold at the time of eviction;
In the case of a contract of sale by sample, if the seller is a dealer in goods of that kind, there is an
implied warranty that the goods shall be free from any defect rendering them unmerchantable, which
would not be apparent on reasonable examination of the sample.
Other rules on warranty against hidden defects or of quality:
a. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though
he was not aware thereof, unless there is contrary stipulation. b. An implied warranty or condition as to
the quality or fitness for a particular purpose may be annexed by the usage of trade.
Remedies of the vendee:
a. Accion redhibitoria – withdraw from the contract plus damages.
b. Accion quanti minoris – proportionate reduction of the price plus damages. Loss of the thing with
hidden defect; liability of the seller.

ii. INCOME or fruits, if he has been ordered to deliver them to the party who won the a. If the cause was the defect itself: the seller shall be liable for:
suit against him.
i. Price
iii. COSTS of the suit which caused the eviction, and, in a proper case, those of the suit
bought against the vendor for the warranty;
ii. Expenses of the contract

iv. EXPENSES of the contract, if the vendee has paid them;

iii. Interest (if in good faith)

v. DAMAGES and interest and ornamental expenses.

iv. Damages (if in bad faith)

b. If the seller is in good faith, the liability of the vendor shall depend whether there is a waiver
b. If the cause of the loss is a fortuitous event or through the fault of the vendee, the seller shall be
executed by the buyer:
liable to refund the price less the value at the time of loss, plus damages (if he was aware.)

i. If there is no waiver, the seller is liable for VICE above except Damages. ii. If there is
Judicial sales: the above rules likewise apply to judicial sales, except the judgement debtor shall not be
a waiver the liability of the vendor shall depend whether the buyer is aware of the risk of eviction.
liable for damages.

1. Consciente – the buyer is not aware of the risk, or without knowledge of the defect in the title of the
Prescriptive period for the remedies: is 6 month from delivery.
seller: seller is still liable but only for the VALUE of the thing at the time of eviction.

No warranty against hidden defects:

a. Sale of second-hand item or pre-owned item or pre-loved item. b. Not recorded in the Registry of Property (now registry of Deeds)

b. Sale by junk-shop operators. In which case, the buyer has the following remedies, within 1 year, counted from:

c. Sale in auction. a. Ask for the rescission of the contract – from execution of the deed.

REDHIBITORY DEFECTS IN ANIMALS. b. Ask for damages – from discovery

Redhibitory defects is the hidden defects on animals that, even in case a professional inspection has
been made, should be of much nature that expert knowledge is not sufficient to discover it.
But if the veterinarian, through ignorance or bad faith shall fail to discover or disclose it, he shall be
liable for damages.
The implied warranties are not applicable to a sheriff, auctioneer, mortgages, pledgee or another
person professing to sell by virtue of authority in fact or law, for the sale of a thing in which a third
person has a legal or equitable interest.
Other remedies of the Buyer in case of seller’s breach of warranty:

Sale of more than 1 animal: General Rule: The redhibitory defect of one shall only give rise to its 1. Accept or keep the goods and set up against the seller the breach of warranty by way of recoupment
redhibition, and not of the owners; Except: if the vendee would not have purchased the sound animal or or diminution or extinction of the price.
animals without the defective one, which is presumed when a team, yoke pair, or set is brought, even if
a separate price has been fixed for each one of the animals composing the same.
2. Accept or keep the goods and maintain an action against the seller for damages for breach of
warranty.
No warranty: there is no warranty against hidden defects of animals sold at fairs or at public auctions,
or of live stock sold as condemned.
3. Refuse to accept the goods, and maintain an action against the seller for damages for breach of
warranty.
Void Sale of animals:
4. Rescind the sale and refuse to receive the goods or if the goods have already received, return them or
a. The sale of animals suffering from contiguous diseases shall be void. b. If the use or service for offer to return them to the seller and recover the price of any part thereof which has been paid.
which they are acquired has been stated in the contract, and they are found to be unfit therefor.
OBLIGATION OF THE VENDEE
Remedies and Prescriptive Period: Remedies of the vendee in case of sale of animals with redhibitory
defects are similar to the remedies for breach of warranty against hidden defects; but he must make
1. TO PAY THE PRICE
use thereof within the same period which has been fixed for the exercise of the redhibitory action or 40
days.
a. at the time and place stipulated; or if none was stipulated, the payment must be made at the time
and place of the delivery of the thing sold.
Requisites for vendor’s liability in case the animal dies:

b. The vendee shall be liable for interest for the period between the delivery of the thing and the
a. The disease exists at the time of sale.
payment of the price in the following cases:

b. The disease which causes the death existed at the time of the contract; and c. If the animals die within
i. Should it have been so stipulated
three days after its purchase.

ii. Should the thing have sold and delivered produce fruits or income; iii. Should he be in
Other rules:
default, from the time of judicial or extrajudicial demand for the payment of the price.

a. If the sale be rescinded, the animal shall be returned in the condition in which it was sold and
Suspension of payments: if the vendee is disturbed in the possession or ownership of the thing
delivered, the vendee being answerable for any injury due to his negligence, and not arising from the
acquired, or should he heave reasonable grounds to fear such disturbance, by a vindicatory action or a
redhibitory fault or defect.
foreclosure or mortgage, he may suspend the payment of the price until the vendor has caused the
disturbance or danger to cease, unless:
b. Sale of large cattle is governed by special laws.
i. The seller gives security for the return of the price in a proper case, or
WARRANTY AGAINST NON-APPARENT ENCUMBRANCES
ii. It has been stipulated that, notwithstanding any such contingency, the vendee shall be
3. Warranty against non-apparent encumbrances: an encumbrance (or an easement or servitude) is bound to make the payment.
a burden imposed upon an immovable for the benefit of another immovable belonging to a different
owner. It is non-apparent, when there is no external indication of their existence.
iii. There was only a mere act of trespass.

The warranty against non-apparent encumbrances arises when the same is

Vendor’s Remedy of Rescission The vendor may immediately sue for rescission if:

a. Not mentioned in the agreement; or

i. The vendee has not yet paid after the delivery is made.

ii. The subject matter is immovable property; and

iii. There is reasonable fear of loss of the property sold and its price. (Art.1591)

Note: however, that Art. 1191 (on reciprocal obligations) still applies, where rescission can be had even without reasonable fear of loss if the vendee fails to pay upon delivery.

However, still, even thought it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract may be had, the vendee may pay, even after the expiration of the period, as
long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term.

2. TO ACCEPT DELIVERY

Delivery by installment: The buyer is not bound to accept delivery by installments, unless otherwise agreed upon.

If it was agreed that delivery be done in installments and payments separately made, and

a. The seller makes defective deliveries in respect of one or more installments, or b. The buyer neglects or refuses without just cause to take delivery of or pay for one or more installments.

It depends in each case on the terms of the contract and the circumstances of the case, whether the breach of contract is:

a. So, material as to justify the injured party in refusing to proceed further and suing for damages for breach of the entire contract, or

b. Severable, giving rise to a claim for compensation but not to a right to treat the whole contract as broken.

DEMAND ACCEPTANCE: the buyer is deemed to have accepted the delivery if:

a. He intimates to the seller that he has accepted the thing.

b. He does any act which is inconsistent with the ownership of the seller. c. After the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.

BUYER’s OBLIGATION TO NOTIFY THE SELLER OF BREACH OF PROMISE OR WARRANTY: after the delivery is made, as a general rule, the seller is not discharged of liability for damages or of
breach of warranty.
EXCEPT:

a. there is an express or implied agreement to the contrary; or

b. the buyer fails to give notice to the seller of the breach within a reasonable time after the buyer knows, or ought to know of such breach.

Notify the seller in case of refusal: Unless otherwise agreed, where goods are delivered to the buyer, and he refuses to accept them, having the right so to do, he is not bound to return them to the seller, but it is sufficient if
he notifies the seller that he refuses to accept them.

If he voluntary constitutes himself a depository thereof, he shall be liable as such. Right to Examine:

General Rule: the buyer is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract,

Except, no right to examine:

a. when there is agreement that the buyer cannot examine the goods sold. b. When there is stipulation that the goods shall not be delivered to the buyer until he has paid the price.

c. When the goods are marked with the words collect on delivery.

Vendor’s Remedies for Vendee’s Breach

1. Rescission is an available remedy to the seller with respect to movable property, if the vendee upon the expiration of the period fixed for the delivery of the thing; a. Should not have appeared to receive it, or

b. Having appeared, he should not have tendered the price at the same time, unless a longer period has been stipulated for its payment.

2. Action for damages – if the buyer wrongfully neglects or refuses to accept and pay for the goods.

3. Rescission when there has been no delivery yet:

a. If the buyer has repudiated the sale.

b. If the buyer manifested his inability to perform his obligations to pay the price or c. If the buyer has committed a breach of contract, rescind the contract of sale.

Vendee’s Remedies for Vendor’s Non-Delivery

1. Bring an action for specific performance plus damages.

2. Action for rescission plus damages.

3. Action for damages.