PART I.

LAW ON SALES
Articles 1458-1637 of the
Civil Code of the Philippines
 WEEKS 3 & 4
I. SELLER/VENDOR: RIGHTS &
OBLIGATIONS

II. BUYER/VENDEE: RIGHTS & OBLIGATIONS

III. UNPAID SELLER

 I. OBLIGATIONS OF
THE SELLER OR VENDOR
 As imposed by LAW
1. To transfer ownership of the thing sold;
2. To deliver the thing, including its fruits;
3. To warrant the object sold against eviction and hidden defects;
4. To take care of the thing sold with the diligence of a good father
of the family;
5. To pay for execution and registration, unless there’s a contrary stip.
 As imposed by the parties through STIPULATIONS
 1st & 2nd OBLIGATIONS:
TO TRANSFER & TO DELIVER
(Art. 1495)
- Ownership of the thing is transferred by delivery (Art. 1496)
- DELIVERY - Concurrent transfer of ownership/control &
possession
- Actual or constructive delivery (Arts. 1497-1501)
* Payment is not essential to transfer ownership when there has been
delivery of the thing
 KINDS OF DELIVERY
1. REAL OR ACTUAL
“Art. 1497. The thing sold shall be understood as delivered, when it is
placed in the control and possession of the vendee.”
2. LEGAL OR CONSTRUCTIVE
- Delivery by operation of law
3. QUASI-TRADITIO
- Delivery of rights, credits or incorporeal property
 KINDS OF LEGAL OR
CONSTRUCTIVE DELIVERY
1. EXECUTION OF A PUBLIC INSTRUMENT (Art. 1498)
2. TRADITIO SIMBOLICA – use of symbol to represent the thing delivered (Par. 2,
Art. 1498)
3. TRADITION LONGA MANU – pointing out of the object without actual delivery
(Art. 1499)
4. TRADITIO BREVI MANU – possession of the thing is with the would be buyer
prior to the sale (conversion to possession in the concept of an owner) (Art. 1499)
5. TRADITIO CONSTITUTUM POSSESSORIUM – opposite of brevi manu (Art.
1500)
 QUASI-TRADITIO
- Delivery of rights, credits or incorporeal property (Art. 1501)

1. Execution of a public instrument (from delivery of

certificates, ownership passes)
2. Placing of titles of ownership in the possession of the vendee
3. Use by the vendee of his rights with the vendor’s
consent
 DELIVERY OF MOVABLES
1. Delivery of the thing plus accessories and accessions, including
fruits;
2. If goods delivered are less than under the contract = Buyer has the
option to accept or reject it
3. If goods delivered are more than under the contract = Buyer has
the option to:
• a. Accept as per contract and reject the rest
• b. Accept the whole and pay the price
• c. Reject the whole if the subject matter is indivisible
DELIVERY OF IMMOVABLES
1. IF SOLD PER UNIT OR NUMBER
- statement of its area, rate at certain price = deliver all that may have been stated under
the contract
a. If delivered is lesser = rescission or proportional reduction of price (lack in
the area is not less than 1/10 of area agreed upon)
b. If delivered is greater = accept as per contract and reject the rest or accept the
whole area and pay at contract rate

2. IF SOLD FOR LUM SUM

- price per unit is not indicated
- If area delivered is lesser or greater = price will not be adjusted
 DELIVERY OF FRUITS and
ACCESSIONS and ACCESSORIES
- Accrue from the time the sale is perfected but no real right over it
until it is delivered

 DELIVERY THROUGH CARRIER

GENERAL RULE: delivery to the carrier is delivery to the buyer
EXCEPTION: a contrary intention appears or there is implied
reservation of ownership under Pars. 1, 2 & 3 of Art. 1503
 PLACE OF DELIVERY
WHERE should the thing or goods be delivered? (Art. 1521)
Consider: 
1. The stipulation of the parties;
2. The place fixed by usage or trade;
3. The place of business of the seller;
4. The seller’s place of residence;
5. If the thing is not in the place of business of the seller, place of delivery
shall be where the thing is located at the time of perfection of the contract.
 Also applicable to time of delivery
 EFFECT OF DELIVERY
GENERAL RULE:
Ownership of thing shall be transferred to the buyer upon actual or
constructive delivery

EXCEPTIONS:
1. In a contract to sell
2. Sale on acceptance or approval
3. Sale or return
 SALE OR RETURN or
SALE ON APPROVAL
 SALE OR RETURN – Ownership passes to buyer upon delivery; buyer
has the option to return the same to the seller instead of paying the price
(Art. 1502)
 SALE ON APPROVAL – Title shall continue in the seller until:
a. Buyer approves the goods or accepts it
b. Buyer retains goods without giving notice of rejection (fixed time,
upon its expiration; no time, upon expiration of reasonable time)
- Also called sale on acceptance, sale on trial or sale on satisfaction (1502)
 DOUBLE SALES
(Art. 1544)

REQUISITES:
1. Two or more sales transactions constituting valid sales;
2. Two or more sales transactions pertaining to the same thing;
3. Two or more buyers at odds over the rightful ownership; and
4. Two or more buyers bought from the same seller
 DOUBLE SALES
If the thing sold is a MOVABLE:
- The first person who took possession in good faith has a better right.

If the thing sold is an IMMOVABLE:

- The buyer who first registers in good faith has a better right.
- If there was no registration, then the person who first took possession.
- If neither is in possession, the buyer with the oldest title in good faith.
(Good faith means having no knowledge of the defect on the title of the seller)
 3rd OBLIGATION:
TO WARRANT AGAINST EVICTION
and HIDDEN DEFECTS
WARRANTY
- A statement or representation made by the seller
contemporaneously and as part of a contract of sale
- Having reference to the character, quality or title of the goods
- And by which seller promises or undertakes to insure that certain
facts are or shall be as he then represents
 EXPRESS WARRANTY
(Art. 1546)

1. Any affirmation of fact or any promise by the seller relating to the thing;
2. The natural tendency of such affirmation or promise is to induce the buyer to purchase the
same
3. Buyer purchases the thing relying thereon.

• In case of breach = Seller is liable for damages

 Effect of expression of opinion – not a warranty unless the seller is an expert and the opinion
is relied upon by the buyer
 IMPLIED WARRANTY
(Art. 1547)

- Deemed included in all contracts of sale whether parties are actually aware or not or
whether they were intended or not
- Warranty by operation of law

KINDS:
A. Warranty against Eviction
B. Warranty against Hidden Defects
C. Warranty against Redhibitory Defects
 A. WARRANTY
AGAINST EVICTION
• INCLUSIONS:
1. That the seller has the right to sell at the time ownership
is to pass;
2. That the buyer shall enjoy the legal and peaceful
possession of the same
 B. WARRANTY
AGAINST HIDDEN DEFECTS
1. Subject matter may be a movable or immovable;
2. Nature of hidden defect is such that it should render the thing unfit for the use for
which it was intended or should diminish its fitness;
3. Had the buyer been aware, he would not have acquired it or would have given a
lower price

• There is breach when:

a. The defect is hidden and not patent
b. The defect must have already existed at the time of the sale
 SPECIFIC IMPLIED WARRANTY
IN SALE OF GOODS
WARRANTY AS TO THE FITNESS AND QUALITY
• REQUISITES:
1. Buyer makes known to seller the particular purpose for which
goods are acquired and it appears that the buyer relied on the
seller’s skill or judgment;
2. Goods are bought by description from seller who deals in goods
of that description
 SPECIFIC IMPLIED WARRANTY
IN SALE OF GOODS
1. SALE OF ANIMALS IN FAIRS
- no warranty against hidden defects
- with warranty against eviction or title
2. PUBLIC AUCTIONS
- no warranty against hidden defects
- with warranty against eviction or title
3. “AS IS WHERE IS” sales
- no warranty as to the fitness of the thing
- with warranty against eviction
4. SALE OF SECOND HAND ITEMS
 4th & 5th OBLIGATIONS:
TO PRESERVE AND TO PAY EXPENSES
4. OBLIGATION TO PRESERVE THE THING
- With the diligence of a good father of a family
- In the condition in which they were upon the perfection of the contract

5. OBLIGATION TO PAY FOR THE EXECUTION AND REGISTRATION

- General Rule: Seller bears obligation to pay
- Except: Contrary stipulation
 II. OBLIGATIONS OF
THE BUYER OR VENDEE
1. To pay the price
2. To accept delivery of the thing sold
 1st OBLIGATION:
TO PAY THE PRICE
- According to the terms agreed upon regarding time,
place and amount
- If payment of interest is stipulated – pay the same
- In case of default in the payment of the price = breach of
contract where specific performance or rescission may be
resorted to plus payment of damages and interests
 2nd OBLIGATION:
TO ACCEPT DELIVERY
There is ACCEPTANCE when:
1. Buyer intimates to seller that he has accepted;
2. Buyer does any act inconsistent with ownership of
seller; or
3. Buyer retains thing without intimating to seller that he
has rejected
 III. UNPAID SELLER
(Art. 1525)

1. One who has not been paid or tendered the whole price;
or
2. One who has received a bill of exchange or negotiable
instrument as conditional payment and the same was
dishonored
REMEDIES OF UNPAID SELLER
(Art. 1526)

Notwithstanding that the ownership in the goods may have passed to

the buyer, the unpaid seller of goods, as such, has:
1. Lien on the goods or the right to retain them (possessory lien)
2. Stoppage in transitu
3. Right of resale
4. Rescission
 1. POSSESSORY LIEN
(Art. 1527)

The unpaid seller of goods who is in possession of them is entitled to

retain possession until payment or tender of the price in the
following cases, namely:
1. Goods have been sold without any stipulation as to credit;
2. Goods have been sold on credit but the term of credit has expired;
3. Where the buyer becomes insolvent
 WHEN UNPAID SELLER
(Art. 1529) LOSES LIEN
The unpaid seller of goods loses his lien thereon:

(1) When he delivers the goods to a carrier for transmission to the buyer
without reserving the ownership in the goods or the right to the possession
thereof;
(2) When the buyer or his agent lawfully obtains possession of the goods;
(3) By waiver thereof.
 2. STOPPAGE IN TRANSITU
(Art. 1530)
• 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
transit
• Unpaid seller may resume possession of the goods at any time while they
are in transit, and he will then become entitled to the same rights in regard
to the goods as he would have had if he had never parted with the
possession.
- either by obtaining actual possession or by giving notice of his claim to the
carrier
 2. STOPPAGE IN TRANSITU
(Art. 1530)
• 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
transit
• Unpaid seller may resume possession of the goods at any time while they
are in transit, and he will then become entitled to the same rights in regard
to the goods as he would have had if he had never parted with the
possession.
- either by obtaining actual possession or by giving notice of his claim to the
carrier
 GOODS IN TRANSIT
(Art. 1531)

The GOODS ARE IN TRANSIT when:

a. After delivery to a carrier and before the buyer or his
agent takes delivery of them;
b. If the goods are rejected by the buyer and the carrier
continues in possession of them
 3. RIGHT OF RESALE
(Art. 1533)

• Can be exercised when he has either a right of lien or a right to stop

the goods in transitu
• And under any of the 3 following cases:
1. Goods are perishable in nature
2. Right to resell is stipulated in case of default
3. Buyer delays in the payment of the price for an unreasonable time
 4. RIGHT OF RESCISSION
(Art. 1533)

REQUISITES:
1. Right to rescind is stipulated in case of default
2. Buyer delays in the payment of the price for an
unreasonable time
> Notice must be given by the unpaid seller