OBLIGATIONS OF THE

VENDEE
And the corresponding Rights/Remedies of the Vendor

2 PRINCIPAL OBLIGATIONS OF THE

VENDEE:
To accept delivery
To pay the price of the thing sold
VIS--VIS:
Sellers Action for Damages due to non-acceptance
Sellers Action for the Price (collection suit)
Sellers Action for Total Rescission

WHAT IS ACCEPTANCE?
Assent to become owner of the specific goods when delivery of them is
offered to the buyer.
MODES OF MANIFESTING ACCEPTANCE:
Express buyer intimates to the seller, either verbally or in writing, that he
has accepted the goods.
Implied
buyer does any act inconsistent with sellers ownership
When he sells or attempts to sell the goods
When he uses or makes alterations in them in a manner proper only for an owner

buyer retains goods beyond reasonable time without intimating his rejection

Buyers right to examine the goods

Purpose: To ascertain whether the goods delivered are in conformity
with the contract
Effect if not afforded to him: Buyer is not deemed to have accepted
the goods.
Hence, the right of examination or inspection is a condition precedent to the
transfer of ownership, unless there is a stipulation to the contrary.

This right, however, is not absolute. (on request)

But this right may also be waived by the buyer. (COD)

ACCEPTANCE NOT A BAR TO

ACTION FOR DAMAGES.
G.R.: Acceptance does not discharge seller from liability in case of
breach of promise or warranty.
There should be notice to seller of breach of promise or
warranty within reasonable time after buyer knows, or ought
to know, of such breach.
Purpose: To protect the seller against belated claims which
prevent him from making prompt investigation to determine the
cause and extent of his liability
EXC: Express or implied agreement of the parties.

IN CASE OF DELIVERY TO
CARRIER
BUT... If delivery to carrier terms: goods shall not be delivered
by the carrier to the buyer until he has paid the price (whether COD
or not)
G.R.: Buyer has no right to examine the goods before payment of the price.
But after delivery and payment, buyer may then subsequently examine.

EXC: Buyer has the right to examine the goods before paying the price.
Hence, the right of examination or inspection is a condition precedent to the
payment of the price.
1.) Should it have been so agreed upon
2.) If it is so permitted by usage

RULE: DELIVERY MUST BE COMPLETE.

VENDEE NOT BOUND TO ACCEPT PARTIAL
DELIVERIES.
EXCEPTION: unless otherwise agreed
RULES GOVERNING DELIVERY IN INSTALLMENTS:
Where separate price has been fixed for each installment
depends on WON:
Where breach effects whole contract injured party is justified in
refusing to proceed further and may thus sue the guilty party for
damages
Where breach is divisible it will merely give rise to a claim for
compensation for the particular breach, but not a right to treat the whole
contract as broken

EFFECT OF BUYERS WRONGFUL

REFUSAL TO ACCEPT
Title of the goods passes to him from the moment they
are placed at his disposal.
Being now the owner, buyer bears the risk of loss.

WHERE BUYERS REFUSAL TO

ACCEPT IS JUSTIFIED.
G.R.: Buyer is not bound to return the goods to the seller.
It is sufficient if he notifies him of his refusal to accept.
But if he does not return the goods, he is in the position of a bailee/depositary
with the obligation to take reasonable care of them.

After notice, it is the duty of the seller to take delivery of the goods.
If, after notice, seller fails to take delivery, buyer may resell the goods.

In this case, seller bears the risk of loss.

EXC: unless otherwise agreed

OBLIGATION TO PAY THE PRICE

2nd par., Art.1582: If the time and place should not
have been stipulated, the payment must be at the time
and place of delivery of the thing sold.

LIABILITY FOR INTEREST

Should it have been so stipulated
Should the thing sold and delivered produce fruits or income
Should vendee be in default, from the time of judicial or extrajudicial demand for the payment of the price

WHEN VENDEE CAN SUSPEND

PAYMENT
GROUNDS:
If he is disturbed in the possession or ownership of the thing bought
If he has a well-grounded fear that his possession or ownership would be
disturbed by a vindicatory action or foreclosure of mortgage

EXAMPLES:
Vindicatory action
Foreclosure of mortgage

UNTIL WHEN CAN HE SUSPEND PAYMENT?

Until the vendor has caused the disturbance or danger to cease

WHEN VENDEE CANNOT

SUSPEND PAYMENT
If the vendor gives security for the return of the price in a proper case
If it has been stipulated that notwithstanding any such contingency, the
vendee must make payment
If the vendor has caused the disturbance or danger to cease
If the disturbance is a mere act of trespass
If the vendee has fully paid the price

RIGHTS OF AN UNPAID SELLER

WHO IS AN UNPAID SELLER?
Art. 1525. The seller of goods is deemed to be an unpaid seller within
the meaning of this Title:
When the whole of the price has not been paid or tendered;
When 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.

WHAT DOES THE TERM SELLER

INCLUDE?
In articles 1525 to 1535 the term "seller" includes:
an agent of the seller to whom the bill of lading has been indorsed, or
a consignor or agent who has himself paid, or is directly responsible for the
price,
or any other person who is in the position of a seller.

WHAT ARE THE RIGHTS OF AN

UNPAID SELLER?
Art. 1526. Subject to the provisions of this Title, notwithstanding that the
ownership in the goods may have passed to the buyer, the unpaid seller
of goods, as such, has:
A lien on the goods or right to retain them for the price while he is in
possession of them;
In case of the insolvency of the buyer, a right of stopping the goods in
transitu after he has parted with the possession of them;
A right of resale as limited by this Title;
A right to rescind the sale as likewise limited by this Title.

NOTE: THERE IS A FIFTH (5TH)

RIGHT!
Where the ownership in the goods has not passed to the buyer,
the unpaid seller has, in addition to his other remedies a right of
withholding delivery similar to and coextensive with his rights of lien and
stoppage in transitu where the ownership has passed to the buyer.

WHEN CAN THE UNPAID SELLER

EXERCISE HIS RIGHT TO POSSESSORY
LIEN?
Art. 1527. Subject to the provisions of this Title, the unpaid seller of
goods who is in possession of them is entitled to retain possession of
them until payment or tender of the price in the following cases, namely:
Where the goods have been sold without any stipulation as to
credit;
Where the goods have been sold on credit, but the term of credit
has expired;
Where the buyer becomes insolvent.

NB: The seller may exercise his right of lien notwithstanding that he is in
possession of the goods as agent or bailee for the buyer.

WHAT IS THE EFFECT IF THERE

IS PARTIAL DELIVERY?
Art. 1528. 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.

WHEN DOES THE UNPAID SELLER

LOSE HIS RIGHT TO POSSESSORY
LIEN?

Art. 1529. The unpaid seller of goods loses his lien thereon:

When he 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;
When the buyer or his agent lawfully obtains possession of the
goods;
By waiver thereof.

NB: The unpaid seller of goods, having a lien thereon, does not lose his
lien by reason only that he has obtained judgment or decree for the price
of the goods.

RIGHT OF STOPPAGE IN
TRANSITU
Art. 1530.

Subject to the provisions of this Title,

when the buyer of goods is or becomes insolvent,

the unpaid seller who has parted with the possession of the goods has the
right of stopping them in transitu,
that is to say, he may resume possession of the goods at any time
while they are in transit,
and he will then become entitled to the same rights in regard to the goods as
he would have had if he had never parted with the possession.

REQUISITES FOR THE EXERCISE

OF STOPPAGE IN TRANSIT:
The seller must be unpaid.
The buyer must be insolvent.
The goods must be in transit.
The seller must either actually take possession of the goods sold or give
notice of his claim to the carrier or other person in possession thereof.
The seller must surrender the negotiable document of title, if any, issued
by the carrier or the bailee.
The seller must bear the expenses of delivery of the goods after the
exercise of the right.

WHEN ARE THE GOODS

IN TRANSIT?
Art. 1531. Goods are in transit within the meaning of the preceding
article:
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;
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.

WHEN ARE THE GOODS

NO LONGER IN TRANSIT?
If the buyer, or his agent in that behalf, obtains delivery of the goods
before their arrival at the appointed destination;
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;
If the carrier or other bailee wrongfully refuses to deliver the goods to the
buyer or his agent in that behalf.

TAKE NOTE:
If the goods are delivered to a ship, freight train, truck, or airplane
chartered by the buyer, it is a question depending on the circumstances
of the particular case, whether they are in the possession of the carrier as
such or as agent of the buyer.
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 transitu,
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.

WHAT ARE THE TWO (2) WAYS

OF EXERCISING THE RIGHT TO
STOP?
by obtaining actual possession of the goods or
by giving notice of his claim to the carrier or other bailee in whose
possession the goods are.
Such notice may be given either to the person in actual possession of the
goods or to his principal.
In the latter case the notice, to be effectual, must be given at such time and
under such circumstances that the principal, by the exercise of reasonable
diligence, may prevent a delivery to the buyer.

IMPORTANT:
When notice of stoppage in transitu is given by the seller to the carrier, or
other bailee in possession of the goods, he must redeliver the goods to,
or according to the directions of, the seller.
The expenses of such delivery must be borne by the seller.
If, however, a negotiable document of title representing the goods has
been issued by the carrier or other bailee, he shall not obliged to deliver
or justified in delivering the goods to the seller unless such document is
first surrendered for cancellation.

WHEN IS RESALE ALLOWABLE?

Art. 1533. Where the goods are of perishable nature,
or where the seller expressly reserves the right of resale in case the buyer
should make default,
or where the buyer has been in default in the payment of the price for an
unreasonable time,
an unpaid seller having a right of lien or having stopped the goods in transitu
may resell the goods.
He shall not thereafter be liable to the original buyer upon the contract of sale or
for any profit made by such resale, but may recover from the buyer damages for
any loss occasioned by the breach of the contract of sale.
Where a resale is made, as authorized in this article, the buyer acquires a good
title as against the original buyer.

IS PRIOR NOTICE REQUIRED?

It is not essential to the validity of resale that notice of an intention to resell
the goods be given by the seller to the original buyer.
But where the right to resell is not based on the perishable nature of
the goods
or upon an express provision of the contract of sale,
the giving or failure to give such notice shall be relevant in any issue involving the
question whether the buyer had been in default for an unreasonable time before the
resale was made.

It is not essential to the validity of a resale that notice of the time and place
of such resale should be given by the seller to the original buyer.
The seller is bound to exercise reasonable care and judgment in making a
resale, and subject to this requirement may make a resale either by public or
private sale. He cannot, however, directly or indirectly buy the goods.

WHEN MAY THE UNPAID SELLER

RESCIND THE SALE?
Art. 1534. An unpaid seller having the right of lien or having stopped the
goods in transitu, may rescind the transfer of title and resume the
ownership in the goods,
where he expressly reserved the right to do so in case the buyer should make
default,
or where the buyer has been in default in the payment of the price for an
unreasonable time.
The seller shall not thereafter be liable to the buyer upon the contract of sale, but
may recover from the buyer damages for any loss occasioned by the breach of
the contract.

HOW MAY THE UNPAID SELLER

RESCIND?
The transfer of title shall not be held to have been rescinded by an unpaid
seller until he has manifested
by notice to the buyer or by some other overt act an intention to rescind.
It is not necessary that such overt act should be communicated to the buyer,
but the giving or failure to give notice to the buyer of the intention to rescind shall be
relevant in any issue involving the question whether the buyer had been in default for
an unreasonable time before the right of rescission was asserted.

WHAT IS THE EFFECT OF SALE OF

GOODS SUBJECT TO LIEN OR
STOPPAGE IN TRANSIT?

Art. 1535. Subject to the provisions of this Title, the unpaid seller's right
of lien or stoppage in transitu is not affected by any sale, or other
disposition of the goods which the buyer may have made, unless the
seller has assented thereto.
If, however, a negotiable document of title has been issued for goods, no
seller's lien or right of stoppage in transitu shall defeat the right of any
purchaser for value in good faith to whom such document has been
negotiated, whether such negotiation be prior or subsequent to the
notification to the carrier, or other bailee who issued such document, of the
seller's claim to a lien or right of stoppage in transitu.

LAST RIGHT OF THE UNPAID

SELLER
RIGHT OF VENDOR TO WITHHOLD DELIVERY IN SALE ON CREDIT
Art. 1536. The vendor is not bound to deliver the thing sold in case the
vendee should lose the right to make use of the terms as provided in article
1198.
When after the obligation has been contracted, he becomes insolvent, unless he
gives a guaranty or security for the debt;
When he does not furnish to the creditor the guaranties or securities which he has
promised;
When by his own acts he has impaired said guaranties or securities after their
establishment, and when through a fortuitous event they disappear, unless he
immediately gives new ones equally satisfactory;
When the debtor violates any undertaking, in consideration of which the creditor
agreed to the period;
When the debtor attempts to abscond.

SELLERS ACTION FOR THE

PRICE
When the ownership of the goods has passed to the buyer
and he wrongfully neglects or refuses to pay for the price
When the price is payable on a certain day and the buyer
wrongfully neglects or refuses to pay such price, irrespective of
delivery or of transfer of title
When the goods cannot readily be resold for a reasonable
price and the buyer wrongfully refuses to accept them even before
the ownership in the goods as passed

SELLERS ACTION FOR DAMAGES

Where the buyer wrongfully neglects or refuses to accept and pay
for the goods he agreed to buy
OTHER GROUNDS:
In an executory contract, where the ownership in the goods has
not passed, and the seller cannot maintain an action to the price
If the goods are not yet identified at the time of the contract or
subsequently

MEASURE OF DAMAGES
Difference between
CONTRACT/AGREED PRICE the amount of the obligation which the buyer
failed to fulfill
MARKET/CURRENT PRICE the value of the goods which the seller has left
upon his hands

FULL AMOUNT OF DAMAGE if there is no available market in which

the goods can be sold at the time
PROXIMATE DAMAGES more than the difference between the contract
price and the market price under special circumstances, when such
damages may be reasonably attributed to the non-performance of the
obligation

MEASURE OF DAMAGES FOR

REPUDIATION OR
COUNTERMAND
Labor performed and expenses incurred for
material before
receiving notice of the buyers repudiation
Profit he would have realized if the sale had been performed

Sellers action for rescission

BEFORE DELIVERY
When the buyer has repudiated the contract of sale
When the buyer has manifested his inability to perform his obligations
thereunder
When the buyer has committed a breach of the contract of sale
TAKE NOTE: Under Art.1191, seller is required to give notice of his election to seek
rescission.

AFTER DELIVERY seller may recover the value of what he has given

WHEN VENDOR MAY RESCIND

SALE OF IMMOVABLE PROPERTY
If he has reasonable grounds to fear the loss of immovable property sold
AND its price
Otherwise, provisions of Art.1191 shall be observed.
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.
The Court shall decree the rescission claimed, unless there be just cause authorizing
the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.

Note: This right is applicable to both cash sales and sales in installment.

WHERE AUTOMATIC RESCISSION OF SALE

OF IMMOVABLE PROPERTY IS STIPULATED
UPON
Vendee may pay, even after expiration of 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.

When this right does not apply:

To sales on installments of real property in which the parties have laid down
the procedure to be followed in the vendee failed to fulfill his obligation
To a mere promise to sell (executory contract to sell) where title remains with
the vendor until full payment of the price

WHERE AUTOMATIC RESCISSION OF SALE

OF MOVABLE PROPERTY IS STIPULATED
UPON

Vendor can rescind, as a matter of right, if the vendee, without

any valid cause:
Should not have appeared to receive delivery
Should not have tendered the price at the same time, unless a
longer period has been stipulated for its payment
Reason for the rule: Personal properties are not capable of
maintaining a stable price in the market. Any delay in their disposal
might cause the vendor great prejudice.