THE LAW

ON SALES
Part II: Obligations of the Vendor
Delivery of the Thing Sold
• Art. 1497. The thing sold shall be understood as
delivered, when it is placed in the control and
possession of the vendee.
Delivery of the Thing Sold
• Art. 1498. When the sale is made through a public instrument,
the execution thereof shall be equivalent 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.
Kinds of
Delivery
1. Real or Actual

2. Legal or Constructive

3. Quasi-Tradition
Real or Actual
Delivery Article 1497 contemplates what is
known as real or actual delivery,
when the thing sold is placed in the
control and possession of the
vendee.
Constructive Delivery
Kinds of Legal or Constructive
Delivery

a. Legal Formalities- when the sale

is made through public instrument.
The delivery by execution of public
instrument gives rise to prima facie
presumption of delivery, which is
destroyed when actual delivery is
not affected due to legal
impediment.
Constructive
Delivery Kinds of Legal or Constructive
Delivery

b. Symbolical Tradition or
Tradition Simbolica- the parties use
a symbol to represent the thing
delivered.
Constructive Delivery
Kinds of Legal or Constructive
Delivery

b. Tradition Longa Manu- The

delivery is by mere consent or
agreement of the contracting parties,
where the seller points out to the
buyer the object of sale without the
need of actually delivering it.
Constructive Delivery
Kinds of Legal or Constructive
Delivery

c. Tradition Brevi Manu- This occurs

when the would be buyer had already in
possesion of the object even before the
contract of sale by virtue of another title
which is not ownership (like lessee in a
Contract of Lease), and pursuant to a
contract of sale, he would now hold
possession in the concept of an owner
(like a buyer of a house where he was a
former lessee of the same house).
Constructive Delivery
Kinds of Legal or Constructive
Delivery

e. Tradition Constitutum
Possessorium- The delivery consists
in the owner’s continuous
possession of the property he had
already sold to another person but
his present possession is no longer
that of an owner but under another
capacity like that of a lessee.
Quasi Tradition
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 placing 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.
Sale on Approval Also called “Sale on acceptance,” “Sale on trial”,
or “Sale on satisfaction.”

There is NO transfer of ownership

notwithstanding delivery of the goods. Ownership
passes to the buyer only in the following
instances:

1. When the buyer signifies his approval or

acceptance to the seller or does any other act
adopting the transaction;

2. If the buyer 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.
Sale or return
In a “sale or return,” the ownership
passes to the buyer on delivery. The
subsequent return of the goods
reverts ownership in the seller.
Delivery or tradition as a mode of
acquiring ownership must be in
consequence of a contract, e.g. sale.
Place and Manner of
A stipulation designating the place
Delivery and manner of delivery is
controlling on the contracting
parties. The thing sold can only be
understood as delivered to the buyer
when it is placed in the buyer’s
control and possession at the agreed
place of delivery. [San Fernando
Regala Trading, Inc. vs. Cargill
Philippines, Inc., G.R. No. 178008,
October 9, 2013)
Place of Delivery
1. The place of delivery agreed upon;
(Art. 1521) 2. If there is no agreement, it is
determined by usage of trade;

3. If there is no agreement and usage of

trade, it is the seller’s place of
business if he has one, and if not his
residence;

4. 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.
Place of Delivery
Where the delivery was not affected
(Art. 1521) at the place specified in the contract
but the buyer accepted the goods
without 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.
Goods at the time of sale are in the
possession of a 3rd Person
(Art. 1521)
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.
When must demand or tender of
delivery be made
(Art. 1521)
At a reasonable hour.
Quantity goods delivered is LESS
(Art. 1522)
1. Buyer may reject the goods; or
2. Buyer may accept:
a. If the acceptance is with knowledge
that the seller is not going to perform
the contract, the buyer shall pay at
contract rate;
b. If 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.
Fair Value

An estimate of a good,
service, or asset’s
potential price, based on a
rational and unbiased
assessment of the amount
at which it could currently
be bought and sold
between willing parties.
Quantity of goods delivered is
MORE
(Art. 1522) 1. Buyer may accept the goods
included in the contract and
reject the rest; or
2. Buyer may accept the whole
of the goods and pay for
them at the contract rate; or
3. If indivisible, the buyer may
reject the whole of the
goods.
Mixed with Goods of Different
Description
(Art. 1522)
1. Buyer may accept the
goods which are in
accordance with the
contract and reject the
rest; or
2. If indivisible, the
buyer may reject the
whole of the goods.
Delivery to the carrier is delivery
to the buyer
(Art. 1523)
If the seller is required
to send the goods to the
buyer, delivery to the
carrier is considered
delivery to the buyer.
Contract of Sale is a Reciprocal
Contract
Art. 1524. The vendor
shall not be bound to
deliver 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.
Who is an unpaid seller?

1. When the whole of the price

has not been paid or tendered;
2. 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.
Remedies of an unpaid Seller

1. Possessory lien;
2. Right of stopping
the goods in transit;
3. Right of resale;
4. Right to rescind.
Double Sale
(Art. 1544)
Requisites:
1. Two or more valid contract of
sale;
2. Two or more buyers who are at
odds over the rightful ownership
of the object must represent
conflicting interests;
3. They must pertain exactly to the
same object; and
4. They must be bought from the
same seller.
Rules of Preference in case of
double Sale
1. Movable Property
-First possessor in good faith.
2. Immovable Property
a. First registrant in good
faith;
b. First possessor in good
faith; and
c. Person with the oldest title
in good faith.
Prius tempore, potior jure (first in
time, stronger in right)
Knowledge by the first buyer of the second
sale cannot defeat the first buyer’s rights
except when the second buyer first registers
in good faith the second sale. Conversely,
knowledge gained by the second buyer of the
first sale defeats his rights even if he is the
first to register, since knowledge taints his
registration with bad faith. It was held that
it is essential, to merit the protection of Art.
1544, second paragraph, that the second
realty buyer must act in good faith in
registering his deed of sale. (Coronel, et.al
vs. CA, et.al., G.R. No. 103577, October 7,
1996)
Who is a purchaser in good faith?

A purchaser in good faith is one

who buys property of another
without notice that some other
person has a right to, or interest
in, such property and pays in
full and fair price for the same
at the time of such purchase, or
before he has notice of the
claim or interest of some other
person in the property.
Reading Assignment

1. Differentiate Warranty from

Condition. (Art. 1545. Page
129, Domingo, Regulatory
Framework and Legal issues)
2. Differentiate condition
imposed on perfection of
contract from condition
imposed on performance of
obligation.
3. What is warranty against
eviction? (Art. 1548, page 138)
Reading Assignment

4. What is warranty
against Hidden Defects?
(Art. 1561-1581, page
145- 159)