ART

1458. By the contract of sale, one of the contracting parties obligates

himself to transfer the ownership of & to deliver a determinate thing, &
the other to pay therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
(This Art serves as defn for Sale)

ANNOTATION
FORM & INTERPRETATION
Characteristics of a contract of sale:
1. Consensual perfected by mere consent
2. Bilateral parties are bound to fulfill correlative oblis toward each
other
3. Onerous the thing sold is conveyed in consideration of the price &
vice versa
4. Commutative thing sold is considered equivalent of the price paid
& vice versa
5. Nominate given a special name & designation
6. Principal its existence & validity does not depend upon another
contract
Essential requisites of sale:
1. Consent or meeting of the minds (1475)
2. Object or subject matter (1460)
3. Cause or consideration (1458)
Kinds of contract of sale:
1. Absolute not subject to condition. Ownership is transferred upon
constructive or actual delivery.
2. Conditional subject to a contingency. Ownership is reserved until
fulfillment of a suspensive condition or extinguished upon the
happening of a resolutory condition.
Contract of Absolute Sale
Title passes upon delivery
Non-payment of the price may be
seen as a negative resolutory
condition (b/c ownership will
revert to the seller if he chooses
to rescind the contract)
Non-payment gives seller right to
either
demand
specific
performance or rescind the
contract
Seller loses ownership of the
thing sold & delivered unless the
sale is rescinded
Remedy of rescission available
(b/c rescission found in 1191 is
not based upon the non-payment
of the price but rather on the
failure of the debtor to comply w/
an ALREADY EXISTING obli)
Contract to Sell
Similar to the nature of a
conditional sale, since transfer of
title is conditioned upon the full
payment of the purchase price
Full payment of the purchase
price does not automatically vest
ownership
or
title
to
the
prospective
buyer
as
the
prospective
seller
explicitly
reserves its transfer. Seller still

Contract to Sell
Title shall not pass until buyer
has paid the price despite
delivery
Full payment of the price is a
positive suspensive condition.
(b/c ownership will be vested
upon the buyer only when he
pays the price)
Non-payment is not a breach but
simply an event that prevents the
obli of the vendor to convey title
from acquiring binding force
Seller retains ownership until
buyers
fulfillment
of
the
condition
Remedy
of
rescission
not
available

Conditional Sale
Willingness of the vendee to sell
is dependent upon a condition
not necessarily the payment of
the purchase price
Fulfillment of the suspensive
condition
makes
the
sale
absolute. If there has been
previous delivery to the buyer,
ownership/title
automatically
transfers to the buyer.

NOTES
*Correlate w/:
- 1459, 1460, re: determinate thing
- 1469, 1472, re: price
Contract to Sell a bilateral contract of conditional sale whereby the
prospective seller, while expressly reserving the ownership of the
subject prop despite delivery thereof to the prospective buyer, binds
himself to sell the said prop exclusively to the prospective buyer upon
fulfillment of the condition agreed upon.
Dignos v CA: A deed of sale is absolute in nature although
denominated as a Deed of Conditional Sale where nowhere in the
contract in question is a proviso or stipulation to the effect that title to
the prop sold is reserved in the vendor until full payment of the
purchase price, nor is there a stipulation giving the vendor the right to
unilaterally rescind the contract the moment the vendee fails to pay
w/in a fixed period.
(Hence, designation of the parties to the contract is not, in a word,
controlling as to what the contract is)
In Peoples Homesite & Housing Corp v CA, it would appear that in a
conditional sale, there is no perfected contract of sale until the
fulfillment of the suspensive condition. It is the willingness of the
seller to sell the object w/c is dependent upon the condition. So if the
condition is not fulfilled, there is NO MEETING OF THE MINDS hence
there is no perfected contract of sale.
*This gives us another difference b/w contract to sell & conditional
sale. In a contract to sell, the sale is perfected but the transfer of
ownership depends upon the fulfillment of the suspensive condition,
the full payment of the purchase price.

has to convey title.

If seller sells the object of sale to
a 3rd person once condition is
fulfilled, 3rd persons right is
better than original buyer but
seller incurs damages.

1459. The thing must be licit & the vendor must have a right to transfer
the ownership thereof at the time it is delivered.

If seller sells the object of sale to

a 3rd person once condition is
fulfilled, 3rd persons right cannot
defeat that of the orig buyer.
(The orig buyer may even ask for
reconveyance if the object has
been delivered to such 3rd
person.)

Requisites of Object:
1. It must be determinate
2. It must be licit
3. It must be w/in the commerce of men
4. As to rights, it must be transmissible or personal

Read the cases of Artates v Urbi, Heirs of Zambales v CA for examples

of sales involving things illicit per accidens

2 kinds of illicit things: (relate w/ 1409)

1. Illicit per se
2. Illicit per accidens

*Relate w/ Arts. 1347-48, 1460, CC

*When the thing is sold in violation of a right of 1 st refusal of another

person, the sale is valid but rescissible

Seller need not own the thing to be sold, all that is required of him is the
right to transfer ownership thereof at the time it is delivered.
1460. A thing is determinate when it is particularly designated or physically segregated from all others of the same class.
*Relate w/ Art. 1349, CC
1461. Things having a potential existence may be the object of the Things having a potential existence something that is reasonably certain to come into existence as the natural increment or usual incident of
contract of sale.
something in existence already belonging to the seller
The efficacy of the sale of a mere hope or expectancy is deemed subject The moment the thing does come into existence, title is vested upon the buyer.
to the condition that the thing will come into existence.
The sale of a vain hope or expectancy is void.
Emptio Rei Speratae
Emptio Spei
Sale of a thing not yet in existence subject to the condition that the Sale of hope itself that the thing will come into existence even if the
thing will exist & on failure of the condition, the contract becomes thing does not eventually exist
ineffective & hence, the buyer has no obli to pay the price
Future thing is certain as to itself but uncertain as to its quantity & It is not certain that the thing itself will exist, much less its quantity
quality
& quality
Deals w/ a future thing
Deals w/ a present thing the hope or expectancy
Presumption is in favor of Emptio Rei Speratae
1462. The goods w/c form the subject of a contract of sale may be either Existing goods goods owned or possessed by the seller
existing goods, owned or possessed by the seller, or goods to be Future goods goods to be manufactured, raised, or acquired by the seller
manufactured, raised, or acquired by the seller after the perfection of
the contract of sale, in this Title called future goods.
In the sale of future goods, the seller assumes the risk of acquiring the title (to the future goods) & making the conveyance, or responding in
damages for the buyers loss of his bargain
1462 does not apply if the goods are to be manufactured ESPECIALLY for the buyer, b/c that case is a contract for a piece of work & not of sale.
1463. The sole owner of a thing may sell an undivided interest therein.
Legal effect of the sale of an undivided interest in a thing is to make the buyer a co-owner in the thing sold
1464. In the case of fungible goods, there may be a sale of an undivided share of a specific mass, though the
Fungible goods goods of w/c any unit is, from its nature or by mercantile usage, treated as the equivalent
seller purports to sell & the buyer to buy a definite number, weight or measure of the goods in the mass, &
of any other unit
though the number, weight or measure of the goods in the mass is undetermined. By such sale the buyer
becomes owner in common of such a share of the mass as the number, weight or measure bought bears to the
Owner of mass may sell only an undivided share thereof, provided the mass is specific or capable of being
number, weight or measure of the mass. If the mass contains less than the number, weight or measure made determinate.
bought, the buyer becomes the owner of the whole mass & the seller is bound to make good the deficiency - By such sale, buyer becomes a co-owner of the seller of the whole mass in proportion in w/c the definite
from goods of the same kind & quality, unless a contrary intent appears.
share bought bears to the mass
- Aliquot share of each owner can be determined only by the measurement of the entire mass. If it turns out
that the whole mass is actually LESS than the thing sold, the buyer becomes the owner of the whole mass
& the seller must supply the deficiency.
1465. Things subject to a resolutory condition may be the object of the *Resolutory condition an uncertain event upon the happening of w/c the obli (or right) subject to it is extinguished.
contract of sale.
1466. In construing a contract containing characteristics of both the By the contract of agency, a person binds himself to render some service Read: Quiroga v Parsons
contract of sale & of the contract of agency to sell, the essential clauses or to do something in representation or on behalf of another, w/ the
of the whole instrument shall be considered.
consent or authority of the latter. (1868, CC)
Atty. Busmente: Is there a case wherein a contract is both a contract
of sale & a contract of agency to sell at the same time?
Transaction b/w car dealerships & manufacturers. The dealers will
Sale
Agency
own the cars sold by the manufacturers but are still able to give the

warranties of the manufacturers when they sell the cars in turn.

Agent receives the goods as the
goods of the principal who retains
ownership over them & has the
right to fix the price & terms of
the sale & receive the proceeds
less the agents commission upon
the sales made
Buyer has to pay the price
Agent simply has to account for
the proceeds of the sale he may
make on the principals behalf
Buyer, generally, cannot return Agent can return the object in
the object sold
case he is unable to sell the same
to a 3rd person
Seller warrants the thing sold
Agent makes no warranty for w/c
he assumes personal liability as
long as he acts w/in his authority
& in the name of the seller
Buyer can deal w/ the thing sold Agent in dealing w/ the thing
as he pleases
received, must act & is bound
according to the instructions of
his principal.
By the contract of a piece of work, the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or
compensation.
Buyer receives
owner

1467. A contract for the delivery at a certain price of an art w/c the
vendor in the ordinary course of his business manufactures or procures
for the genl market, whether the same is on hand at the time or not, is a
contract of sale, but if the goods are to be manufactured specially for the
customer & upon his special order, & not for the genl market, it is a
contract for a piece of work.

1468. If the consideration of the contract consists partly in money, &

partly in another thing, the transaction shall be characterized by the
manifest intention of the parties. If such intention does not clearly
appear, it shall be considered a barter if the value of the thing given as a
part of the consideration exceeds the amount of the money or its
equivalent; o/w, it is a sale.

the

goods

as

The distinction b/w a contract of sale & one for a piece of work is tested by the inquiry whether the thing transferred is one not in existence & w/c
NEVER WOULD HAVE EXISTED IF NOT FOR THE ORDER of the party desiring to acquire it or a thing w/c WOULD HAVE EXISTED & been the subject
of sale to some other person, even if the order had not been given.
Contract of Sale
The object of the sale would have existed & been the subject of sale to
some other person, even if the order had not been given
Risk of loss before delivery is borne by the buyer (at least according to
1480)
W/in the statute of frauds
Read: Concrete Aggregates v CTA
By the contract of barter/exchange, one of the parties binds himself to
give one thing in consideration of the others promise to give another
thing.
Rule in determining the character of a contract the consideration of
which is partly in money & partly in another thing:
1. Determine intention of the parties
2. If such intention does not appear:
a. Value of thing given > amount of money or its equivalent =
BARTER
b. Value of thing given < amount of money or its equivalent = SALE

Contract for a Piece of Work

The object of the sale never would have existed if not for the order
of the party desiring to acquire it
Risk of loss before delivery is borne by the contractor
Not w/in the Statute of Frauds
In the lease of things, one of the parties binds himself to give to
another the enjoyment or use of a thing for a price certain & for a
period w/c may be definite or indefinite.
*Difference b/w sales & lease is in lease, only TEMPORARY possession
& enjoyment is transferred unto the lessee.
Dacion en pago Alienation of prop to the creditor in satisfaction of a
debt in money.
Sale
No preexisting credit or debt
Oblis are created
Cause is, as to the seller, the
price paid & as to the buyer, the
thing sold.
More freedom in fixing the price
Buyer still has to pay the price

1469. In order that price may be considered certain, it shall be sufficient The price is certain if:
that it be so w/ reference to another thing certain, or that the a. The parties have fixed or agreed upon a definite amount
determination thereof be left to the judgment of a specified person or b. It be certain w/ reference to another thing certain (relate to 1472)
persons.
c. The determination of the price is left to the judgment of a specified person/s

Dacion En Pago
Pre-existing credit or debt
Oblis are extinguished
Cause is, as to the debtor, the
extinguishment of debt & as
to the creditor, he object
acquired in lieu of the credit
Less freedom. Lols
Debtor has already received
payment before the contract
(of dation) is perfected.

Should such person/s be unable or unwilling to fix it, the contract shall *(b) & (c) apply only in absence of (a).
be inefficacious, unless the parties subsequently agree upon the price.
If the 3rd person/s acted in BF or by mistake, the courts may fix the price.
Genl rule: Price fixed by a 3rd person is binding upon the parties
Where such 3rd person/s are prevented from fixing the price or terms by Exceptions:
fault of the seller or the buyer, the party in fault may have such 1. When the 3rd person acts in BF or by mistake (mistake error in judgment). In such a case, the courts may fix the price.
remedies against the party in fault as are allowed the seller or the buyer, 2. When the 3rd person disregards specific instructions or procedure or data given him (Walang sinabi si De Leon kung anong mangyayari but its
as the case may be.
analogous to the 1st exception, so I think courts will fix the price din ang ending nito)
3. When the 3rd person refuses or cannot fix it. If this happens, the contract is void unless the parties subsequently agree upon the price.
4. When the 3rd person is prevented from fixing the price either by the seller or the buyer. In this case, innocent party may choose b/w rescission &
fulfillment, w/ damages in either case. (De Leon)
1470. Gross inadequacy of price does not affect a contract of sale, Inadequacy of price however, may indicate a defect in the consent such as when fraud, mistake or undue influence is present. Read arts. 1355 &
except as it may indicate a defect in the consent, or that the parties 1381, pars 1 & 2
really intended a donation, or some other act or contract.
Where the price is so low that a man in his senses & not under a delusion would not accept it, the sale may be set aside.
1471. If the price is simulated, the sale is void, but the act may be Simulation occurs when an apparent contract is a declaration of a 1345. Simulation of a contract may be absolute or relative. The
shown to have been in reality a donation, or some other act or contract.
fictitious will deliberately made by agreement of the parties, in order to former takes place when the parties do not intend to be bound at all;
produce, for the purpose of deception, the appearance of a juridical act the latter when the parties conceal their true agreement.
w/c does not exist or is different from that w/c was really executed.
1409. The ff contracts are inexistent & void from the beginning:
Requisites of simulation:
2. Those w/c are absolutely simulated or fictitious.
1. An outward declaration of will different from the will of the parties;
2. The false appearance must have been intended by mutual agreement; &
Hence, only those acts of absolute simulation where the parties do
3. The purpose is to deceive 3rd persons.
not intend to be bound at all are void.
1472. The price of securities, grain, liquid, & other things shall also be considered certain, when the price fixed is that w/c the thing sold would have on a definite day, or a particular exchange or market or when an amount
fixed is above or below the price on such day, or in such exchange or market, provided said amount be certain.
1473. The fixing of the price can never be left to the discretion of one of Acceptance by one of the parties of the price fixed by the other produces Read the case of Serra v CA & RCBC, re the part of adhesion contracts
the contracting parties. However, if the price fixed by one of the parties a meeting of the minds b/w the parties as to the price. Therefore, the w/c is similar to a price fixed by one of the parties
is accepted by the other, the sale is perfected.
fact that only one of the parties fixed the price does not automatically
invalidate the sale.
1474. Where the price cannot be determined in accordance w/ the preceding arts, or in any other manner, the contract is inefficacious. However, if
Applies only where the means contemplated by the parties for fixing
the thing or any part thereof has been delivered to & appropriated by the buyer, he must pay a reasonable price therefor. What is a reasonable price
the price have, for any reason, proved ineffectual.
is a question of fact dependent on the circumstances of each particular case.
Reasonable price = generally (but not necessarily) market price at the
time & place fixed by the contract or by law for the delivery of goods.
1475. The contract of sale is perfected at the moment there is a Perfection Consummation
Toyota Shaw v CA: A definite agreement on the MANNER of payment
meeting of minds upon the thing w/c is the object of the contract & upon Validity of contract Enforceability of the contract
of the price is an essential element in the formation of a binding &
the price.
Reluctance Absence of consent
enforceable contract of sale. This is so b/c the agreement as to the
From that moment, the parties may reciprocally demand performance,
manner of payment goes into the price such that a DISAGREEMENT
subject to the provisions of the law governing the form of contracts.
Absence of Price v Non-Payment of Price
ON THE MANNER OF PAYMENT IS TANTAMOUNT TO A FAILURE TO
Absence of price will render the contract void while non-payment of price AGREE ON THE PRICE. Definiteness as to the price is an essential
is a resolutory condition for w/c the seller may choose b/w rescission or element of a binding agreement to sell personal prop.
specific performance.
Read & understand 1403, 2(d). Atty. Busmente hinted na lalabas yan
At the moment of perfection, the reciprocal oblis imposed upon the sa midterms. He asked this question in class: What are the 2
parties by the contract of sale arise & are, hence, demandable exceptions to the UNENFORCEABILITY of an UNWRITTEN contract of
reciprocally in the absence of contrary stipulation. (remember 1169, par sale of goods, chattels or things in action at a price not less than
3, delay in reciprocal oblis)
P500?
Answer: 1. When the buyer has either: a) accepted or received part of
Genl rule: a contract of sale is binding regardless of its form.
such goods & chattels or the evidences or some of them; or b) paid at
Exception: when the law requires a certain form for its validity or the time some part of the purchase money.
enforceability such as those falling under the Statute of Frauds. (Read 2. Sale is made by auction & entry is made by the auctioneer in his
1356-58 & 1403)
sales book.
De Leon: Sale, by itself, does not transfer or affect ownership, what it
does is it CREATES THE OBLI TO TRANSFER the ownership of the thing
sold. Ownership is transferred not by contract but by tradition or
delivery Sampaguita v Jalwindor, Ten Forty Realty v Cruz
1476. In the case of a sale by auction:
1. Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract
of sale.

2.

A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in other customary manner. Until such announcement is made, any bidder may retract his bid; & the
auctioneer may w/draw the goods from the sale unless the auction has been announced w/o reserve.
3. A right to bid may be reserved expressly by or on behalf of the seller, unless o/w provided by law
or by stipulation.
4. Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ or induce any person to bid at such sale
on his behalf or for the auctioneer, to employ or induce any person to bid at such sale on behalf of the seller or knowingly to take any bid from the seller or any person employed by him. Any sale contravening
this rule may be treated as fraudulent by the buyer.
1477. The ownership of the thing sold shall be transferred to the vendee Sale is consummated by delivery of both the thing sold & the purchase Addison v Felix: The thing is considered to be delivered when it is
upon the actual or constructive delivery thereof.
money.
placed in the hands & possession of the vendee. In order that
symbolic delivery may produce the effect of tradition, it is necessary
This article applies in the absence of stipulation to the contrary, that the vendor shall have had such control over the thing sold that,
reserving ownership in the thing sold despite its delivery.
at the moment of the sale, its material delivery could have been
made. It is not enough to confer upon the purchaser the ownership &
If the vendee/buyer fails to pay, & the thing has already been delivered, the right of possession. THE THING SOLD MUST BE PLACED IN HIS
ownership of the thing DOES NOT automatically revert back to the CONTROL. When there is no impediment whatever to prevent the
vendor. In this case, the vendor has 2 options: 1, to demand payment of thing sold passing into the tenancy of the purchaser by the sole will of
the price; & 2, rescission.
the vendor, symbolic tradition thru the execution of a public
instrument is sufficient. But if notwithstanding the execution of the
*Correlate w/:
instrument, the purchaser cannot have the enjoyment & material
- 1496
tenancy of the thing & make use of it himself or thru another in his
- 1497, re: actual delivery
name, b/c such tenancy & enjoyment are opposed by the interposition
- 1498-1501, re: constructive delivery
of another will, then fiction yields to reality the delivery has not
been effected.
Sampaguita v Jalwindor: Ownership is not transferred by perfection
of the contract but by delivery, either actual or constructive. This is
true even if the purchase has been made on credit. Payment of the
purchase price is not essential to the transfer of ownership as long as
the prop sold has been delivered.

1478. The parties may stipulate that ownership in the thing shall not
pass to the purchaser until he has fully paid the price.
1479. A promise to buy & sell a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promissor if the promise is supported by
a consideration distinct from the price.

Norkis Distributors v CA: In all forms of delivery, it is necessary that

the act of delivery whether constructive or actual, be coupled w/ the
intention of delivering the thing. The act, w/o the intention, is
insufficient.
*Genl rule is 1477. 1478 works only if there is a stipulation to that effect. (Read: EDCA Publishing v. Santos)
A unilateral promise of offer to sell or to buy a thing w/c is not accepted
creates no juridical effect or legal bond. AKA Policitacion.
Option a contractual privilege existing in one person for w/c he has
paid a consideration w/c gives him the right to buy/sell from/to another
person, if he chooses, at any time w/in the agreed period at a fixed price,
or under, or in compliance w/ certain terms & conditions.
Nature of Option Contract:
1. Preparatory contract separate & distinct from the main/principal
contract.
2. Gives one party to the right to decide whether or not to enter into
principal contract, while it binds the other: a) not to enter into the
principal contract w/ any other person during the agreed time; & b) to
enter into the principal contract w/ the party to whom the option was
granted if the latter should decide to use the option w/in the agreed
period.
3. It imposes no binding obli on the person holding the option aside from
the consideration for the offer.
4. Must be supported by a consideration distinct from the price (in order to
bind the promissor the oblis stated in No.2), else it is void. (read:
Atkins v Cua Hian Tek, Sanchez v Rigos, Sps. Trinidad v IAC)
5. Consideration need not be money or actual cash. It must be something
of value though. (read: Serra v CA & RCBC)

Art 1324, CC. When the offeror has allowed the offeree a certain
period to accept, the offer may be w/drawn at any time before
acceptance by communicating such w/drawal except when the option
is founded upon a consideration, as something paid or promised.
Atkins v Cua Hian Tek: If the option is given w/o consideration, it is a
mere offer of a contract of sale, w/c is not binding until accepted. If,
however, acceptance is made before a w/drawal, it constitutes a
binding contract of sale, even though the option was not supported by
a sufficient consideration.
Sanchez v Rigos: 1354 (presumption of cause) applies to contracts in
genl, whereas the 2nd par of 1479 refers to sales in particular, &,
more specifically, to an accepted unilateral promise to buy or to sell.
In order that said promise may be made binding upon the promissor,
1479 requires the concurrence of a condition, namely, that the
promise be supported by a consideration distinct from the price.
Accordingly, the promisee cannot compel the promissor to comply w/
the promise, UNLESS the former establishes the existence of said
distinct consideration. In other words, the promisee has the burden of
proving such consideration.
Equatorial v Mayfair: Where a period is given to the offeree w/in w/c
to accept the offer, the ff rules genlly govern:

Option Contract
Promissor cannot sell the prop to
a 3rd person UNLESS the period
agreed upon the option contract
expires

Promisee may compel promissor

to enter into principal contract if
he decides to exercise the option
w/in the agreed period
If promisee elects to buy, the
price of the object of sale is
FIXED
The consideration is DISTINCT
from the purchase price

1. If the period is NOT ITSELF FOUNDED UPON OR SUPPORTED BY A

CONSIDERATION, the offeror is still free & has the right to w/draw
Right of 1st Refusal
the offer before its acceptance, or if an acceptance has been made,
Promissor cannot sell the prop to
before the offerors coming to know of such fact, by communicating
a 3rd person UNLESS he allows
that w/drawal to the offeree.
the promisee to exercise his right
of 1st refusal, i.e. giving the 2. If the period HAS A SEPARATE CONSIDERATION, a contract of option
is deemed perfected, & it would be a breach of that contract to
promisee a similar offer, allowing
w/draw the offer during the agreed period. The option, however, is
the latter to choose whether or
an independent contract by itself; & is to be distinguished from the
not to accept such offer
projected main agreement w/c obviously yet to be concluded. If, in
Promisee
cannot
compel
fact, the optioner-offeror w/draws the offer before its acceptance by
promissor to enter into principal
the optionee-offeree, the latter may not sue for specific
contract since right of 1st refusal
performance on the proposed contract since it has failed to reach
arises only when promissor
its own stage of perfection. The optioner-offeror, however, renders
decides to sell
himself liable for damages for breach of the option.
If promisee elects to buy, the
price is subject to negotiations
Right of 1st Refusal - 1. A potential buyer's contractual right to meet
the terms of a 3rd party's higher offer. -For example, A has a right of
Usually found in contracts of
1st refusal on the purchase of Bs house, C then offers to buy the
lease,
the
consideration
is
house for P1M, then A can match this offer & prevent C from buying
INTEGRAL in the contract
it. (Blacks Law Dictionary 9th Ed.)
Sale to a 3rd person in violation of

Sale to a 3rd person in violation of

Option:
Right
of
1st
Refusal
is
a. is Valid IF 3rd person is in GF. RESCISSIBLE
Buyer may only hold seller
liable for damages;
b. is Rescissible (by original
buyer) if 3rd person is in BF
Read: Equatorial v Mayfair
1480. Any injury to or benefit from the thing sold, after the contract has Who bears the loss:
been perfected, from the moment of the perfection of the contract to the 1. Before perfection seller (in accordance w/ res perit domino)
time of delivery, shall be governed by Arts 1163 to 1165, & 1262.
2. At the time of perfection contract is void & inexistent, therefore seller (1493)
This rule shall apply to the sale of fungible things, made independently & 3. After perfection, before delivery if basis is 1480, buyer, regardless w/n ownership has been transferred (note the exception in the 3 rd par of this
for a single price, or w/o consideration of their weight, number, or
Art, there has to be delivery before the buyer can be made liable if things sold are fungible things for a price according to weight, number or
measure.
measure). But if 1504, seller, if ownership is yet to be transferred. If ownership has been transferred, buyer.
Should fungible things be sold for a price fixed accdg to weight, number 4. After delivery buyer
or measure, the risk shall not be imputed to the vendee until they have
been weighed, counted, or measured, & delivered, unless the latter has Atty. Busmente: 1480 v 1504. I dont know w/c should prevail over the other. If your client is the seller, use 1480. If its the buyer, 1504.
incurred in delay.
*Read De Leons discussion of 1480 v 1504. Lumabas siya sa 2009 Sales Midterms ni Sir.
1481. In the contract of sale of goods by description or by sample, the Sale by description occurs where a seller sells things as being of a particular kind, the buyer not knowing whether the sellers representations
contract may be rescinded if the bulk of the goods delivered do not are true or false, but relying on them as true
correspond w/ the description or the sample, & if the contract be by
sample as well as by description, it is not sufficient that the bulk of Sale by sample to constitute a sale by sample, it must appear that the parties contracted solely w/ reference to the sample, w/ the
goods correspond w/ the sample if they do not also correspond w/ the understanding that the bulk was like it.
description.
The buyer shall have a reasonable opportunity of comparing the bulk w/ Bulk of goods in this art = goods to be actually sold
the description or the sample.
1482. Whenever earnest money is given in a contract of sale it shall be Earnest money something of value given by the buyer to the seller to show that the buyer is really in earnest, & to bind the bargain.
considered as part of the price & as proof of the perfection of the Earnest money forms part of the consideration ONLY IF the sale is PERFECTED & the sale is CONSUMMATED upon full payment of the purchase
contract.
price.
Earnest money constitutes an advance or down payment & must therefore be deducted from the total price.
Earnest Money
Part of the purchase price
Given only where there is already a perfected sale
When given, buyer is bound to pay balance

1483. Subject to the provisions of the Statute of Frauds & of any other

Option Money
Distinct & separate consideration
Applies to a sale not yet perfected
When given, would-be buyer not bound to pay the balance (& may
even forfeit the option money if given such right in the terms of the
option contract)
*Option money may become earnest money if the parties so agree. Or it may actually be in the nature of earnest money when considered w/ the
rest of the contract.
Genl rule: a contract of sale is binding regardless of its form.

applicable statute, a contract of sale may be made in writing, or by word

of mouth, or partly in writing & partly by word of mouth, or may be
inferred from the conduct of the parties.

Exception: when the law requires a certain form for its validity or enforceability such as those falling under the Statute of Frauds. (Read 1356-58 &
1403)
In case the contract of sale is covered by the SoF, it should be in writing o/w they shall be unenforceable. (Remember, unenforceable void)

Registration of a public instrument in the registry of deeds is not indispensible as regards the contracting parties. However, doing so would bind
3rd parties to the contract & protect the buyer against claims of 3 rd persons arising from subsequent alienations by the vendor.
1484. In a contract of sale of personal prop the price of w/c is payable in Remedies are alternative; election of one is a waiver of the right to resort Southern Motors v Moscoso:
installments, the vendor may exercise any of the ff remedies:
to the others.
Foreclosure incident to 1st
Foreclosure of chattel
1. Exact fulfillment of the obli, should the vendee fail to pay;
Only the exercise of one of these remedies will serve as a bar to the
remedy
mortgage (3rd remedy)
2. Cancel the sale, should the vendees failure to pay cover 2 or more others.
Procedure is those prescribed for Procedure is outlined in 14 of
installments.
ordinary civil actions, under the Chattel Mortgage Law
3. Foreclose the chattel mortgage on the thing sold, if one has been If seller chooses option 2, the buyer may demand the return of the
RoC
constituted, should the vendees failure to pay cover 2 or more installments unless there is a stipulation effecting forfeiture (read 1486).
installments. In this case, he shall have no further action against the
Pascual v Universal Motors Corp: Sellers cannot go after guarantors if
purchaser to recover any unpaid balance of the price. Any agreement The RULES APPLY to:
they have already chosen 3rd remedy. B/c if they did, guarantors
to the contrary shall be void.
1. The SALE of PERSONAL PROP, w/c is PAYABLE IN INSTALLMENTS
would have a right to go after the original debtors, w/c would result in
(AKA RECTO Law)
2. The LEASE of PERSONAL PROP, w/ OPTION TO BUY, & the LESSOR has the situation the law seeks to prevent (double recovery).
DEPRIVED THE LESSEE of the POSSESSION/ENJOYMENT of the thing.
1485. The preceding art shall be applied to contracts purporting to be
Ridad v Filinvest: Should the vendor choose to foreclose the
leases of personal prop w/ option to buy, when the lessor has deprived RA 6552 governs sales of REAL ESTATE on installments.
mortgage (3rd remedy), he has to content himself w/ the proceeds of
the lessee of the possession or enjoyment of the thing.
Where the buyer has paid at least 2 years of installments, the buyer is the sale at the public auction of the chattels w/c were sold on
entitled to the ff rights in case he defaults in the payment of succeeding installment & mortgaged to him.
1486. In the cases referred to in the 2 preceding arts, a stipulation that installments:
the installments or rents paid shall not be returned to the vendee or 1. Grace Period to pay, w/o additional interest, the unpaid installments Why is it that in Southern Motors v Moscoso, they were able to exact
lessee shall be valid insofar as the same may not be unconscionable
due w/in the total grace period earned by him w/c is hereby fixed at the fulfillment of the deficiency of the purchase price even after
under the circumstances.
the rate of one month grace period for every year of installment foreclosing the chattel mortgage while in Ridad v Filinvest, the court
payments made; Provided, that this right shall be exercised by the ruled that the vendor has to content himself w/ the proceeds of the
buyer only once in every 5 years of the life of the contract & its foreclosure?
extensions, if any;
B/c in the Moscoso case, what the vendors filed was a complaint to
2. Refund of Cash Surrender Value if the contract is cancelled, the seller recover of the unpaid balance of the promissory note covering the
shall refund to the buyer the cash surrender value of the payments on chattel mortgage. In effect, what they chose was the 1 st remedy. The
the prop equivalent to 50% of the total payments made, &, after 5 foreclosure in this case was not an exercise of the 3 rd remedy but was
years of installments, an additional 5% every year but not to exceed merely incident of their choice to exact the fulfillment of the obli. In
90% of the total payments made; Provided, that the actual Ridad, they chose to foreclose the chattel mortgage extrajudicially,
cancellation of the contract shall take 30 days from receipt by the w/c is the 3rd remedy, barring them to recover the deficiency from the
buyer of the notice of cancellation or the demand for rescission of the vendees.
contract by a notarial act & upon full payment of the cash surrender
value to the buyer.
Read: Layug v IAC
1487. The expenses for the execution & registration of the sale shall be borne by the vendor, unless there is a stipulation to the contrary.
1488. The expropriation of prop for public use is governed by special laws.
CAPACITY TO BUY OR SELL
1489. All persons who are authorized in this Code to obligate Genl rule: All persons, whether natural/juridical, who can bind Contracts of sale entered into by incapacitated persons are:
themselves may enter into a contract of sale, saving the modifications themselves have also legal capacity to buy & sell.
1. VOIDABLE, if only ONE of the parties is incapable of giving consent to
contained in the ff arts.
Exceptions: When law determines that a party suffers from either
a contract (1390[1])
Where necessaries are sold & delivered to a minor or other person w/o absolute or relative incapacity.
2. UNENFORCEABLE, if BOTH parties are incapable of giving consent to a
capacity to act, he must pay a reasonable price therefor. Necessaries are
contract (1403[3])
those referred in Art 290.
Absolute incapacity exists in case of persons who cannot bind
themselves (e.g. minors, insane or demented persons)
Who are incapable of giving consent to a contract?
*Art. 290, CC = Art. 94, FC
Ralative incapacity exists only w/ reference to certain persons or a 1327. The ff cannot give consent to a contract:
certain class of prop (e.g. 1490, 1491)
1. Unemancipated minors;
2. Insane or demented persons, & deaf-mutes who do not know how
Necessaries those things w/c are needed for sustenance, dwelling, to write.
clothing, medical attendance, education & transportation according to 1329. The incapacity declared in art 1327 is subject to the
the financial capacity of the family of the incapacitated person (Art. 94, modifications determined by law, & is understood to be w/o prejudice
FC)
to special dqs established in the laws.
1490. The husband & the wife cannot sell props to each other, except:
Prohibition also applies to common-law relationships.
A sale b/w husband & wife is VOID. (1409[7])
1. When a separation of prop was agreed upon in the marriage
If you want:
settlements; or
Persons allowed to question such sale:
Read Art. 87, FC, re donations b/w husband & wife/common-law

2. When there has been a judicial separation of prop under Art. 191.

1. Those who bear such relation to the parties making the transfer or to the
prop itself that such transfer interferes w/ their rights or interests.
2. The government.

1491. The ff persons cannot acquire by purchase, even at public or Pars. 1-3 = unenforceable, capable of ratification (b/c it involves private
judicial auction, either in person or thru the mediation of another:
interests)
1. The guardian, the prop of the person/s who may be under his Pars. 4-6 = void (b/c it involves public interests)
guardianship;
2. Agents, the prop whose administration or sale may have been No. 2 not absolute, agent may buy the prop intrusted unto him if:
intrusted to them, unless the consent of the principal have been given; 1. The agency has been terminated
3. Executors & administrators, the prop of the estate under 2. His principal gives consent
administration;
3. The sale was made under a special power pursuant to a special law
4. Public officers & employees, the prop of the State or of any
(read: Fiestan v CA)
subdivision thereof, or of any gocc, or institution, the admin of w/c has
been intrusted to them; this provision shall apply to judges & govt No.3 refers only to props under the administration of the executor or
experts who, in any manner whatsoever take part in the sale;
administrator at the time of the acquisition.
5. Justices, judges, prosecuting attorneys, clerks of superior & inferior Executor may purchase the hereditary rights of any heir, since they do
courts, & other officers & employees connected w/ the administration not administer such rights.
of justice, the prop & rights in litigation or levied upon an execution
before the court w/in whose jurisdiction or territory they exercise their No.4 refers only to props:
respective fxns; this prohibition includes the act of acquiring by 1. Belonging to the Sate, or of any subdivision thereof, or of any gocc or
assignment & shall apply to lawyers, w/ respect to the prop & rights
institution
w/c may be the object of any litigation in w/c they may take part by 2. The admin of w/c has been entrusted to PO/Es.
virtue of their profession;
6. Any others especially dqd by law.
For no. 5 to operate, sale or assignment must take place during the
pendency of the litigation involving the prop. A prop is in litigation from
the moment it becomes subject to judicial action.
1492. The prohibitions in the 2 preceding arts are applicable to sales in legal redemption, compromises & renunciations.

partners
134-142, FC, re judicial separation of prop
143-146, FC, re separation of prop
Fiestan v CA: The prohibition mandated by par 2 of Art 1491 does
not apply where the sale of the prop in dispute was made under a
special power inserted in or attached to the real estate mortgage
pursuant to Act No. 3135, as amended. Under Act No. 3135, as
amended, a mortgagee-creditor is allowed to participate in the
bidding & purchase under the same conditions as any other bidder.
Act No. 3135 An Act to Regulate the Sale of Prop under Special
Powers inserted in or Annexed to Real Estate Mortgages. (applies in
cases of extrajudicial foreclosure sales)
*It seems that we can consider pars. 1-3 of this article to be covered
by 1403 [1] & pars. 4-5 to be under 1409 [1]

Compromise amicable settlement of a (legal) controversy

Renunciation condonation (remember obli, read 1270-1274 kung trip
mo)

EFFECTS OF THE CONTRACT WHEN THE THING SOLD HAS BEEN LOST
1493. If at the time the contract of sale is perfected, the thing w/c is the object of the contract has been 1493 applies to a sale of a specific thing. 1494 applies to a sale the object of w/c consists of a mass of specific
entirely lost, the contract shall be w/o any effect.
goods
But if the thing should have been lost in part only, the vendee may choose b/w w/drawing from the Loss or injury referred to in these articles is one w/c takes place BEFORE or AT THE TIME OF PERFECTION.
contract & demanding the remaining part, paying its price in proportion to the total sum agreed upon.
The thing is lost when it perishes or goes out of commerce or disappears in such a way that its existence is
1494. Where the parties purport a sale of specific goods, & the goods w/o the knowledge of the seller
unknown or it cannot be recovered. (1189, [3])
have perished in part or have wholly or in a material part so deteriorated in quality as to be substantially
Perish material deteriorations, complete change in the nature of the thing in such a manner that it loses the
changed in character, the buyer may at his option, treat the sale:
utility it had during the time of the perfection of the contract
1. As avoided; or
2. As valid in all of the existing goods or in so much thereof as have not deteriorated, & as binding the Rule in 1493 & 1494 similar:
buyer to pay the agreed price for the goods in w/c the ownership will pass, if the sale was divisible.
If lost/deteriorated in whole = void
If lost/deteriorated in part = rescind contract or pay for whats left (if divisible)
OBLIS OF THE VENDOR
Section 1. Genl Provisions
1495. The vendor is bound to transfer the ownership of & deliver, as Principal oblis of a vendor:
well as warrant the thing w/c is the object of the sale.
(1) To transfer the ownership of the determinate thing sold (1948, 1495);
(2) To deliver the thing, w/ its accessions & accessories, if any, in the condition in w/c they were upon the perfection of the contract; (1537)
(3) To warrant against eviction & against hidden defects; (1495, 1547)
(4) To take care of the thing, pending delivery, w/ proper diligence; (1163)
(5) To pay for the expenses of the deed of sale, unless there is a stipulation to the contrary. (1487)
*Seller need not be the owner of the thing at the time of perfection of the contract; 1459 provides that it is sufficient that he has a right to
transfer the ownership thereof at the time it is delivered.
1496. The ownership of the thing sold is acquired by the vendee from Ways of effecting delivery:
the moment it is delivered to him in any of the ways specified in arts (1) Actual or real delivery (1497);
1497 to 1501, or in any other manner signifying an agreement that the (2) Constructive or legal delivery (1498-1501); or
possession is transferred from the vendor to the vendee.
(3) Any other manner signifying an agreement that the possession is transferred to the vendee. (1496-1499)
Delivery must be made to vendor or his authorized representative, if any.

Constructive delivery a genl term comprehending all those acts w/c, although not conferring physl possession of the thing, have been held by
construction of law equivalent to acts of real delivery.
Ways of effecting constructive delivery:

Execution of a public instrument (1498, par. 1);

Symbolic tradition or tradition symbolica (1498, par. 2);

Traditio Longa Manu (1499, par. 1);

Traditio Brevi Manu (1499, par. 2);

Traditio Constitutum Possessorium (1500);

Quasi-traditio or quasi-delivery (1501).

1497. The thing sold shall be understood as delivered, when it is placed

in the control & possession of the vendee.
(Actual delivery)

In all forms of delivery, it is necessary that the act be coupled w/ the intention of delivering the thing. For the same reason, any act, although not
provided for in the preceding arts, but accompanied by the evident intention of the vendor to deliver or of the vendee to receive the thing sold,
will be considered as constituting tradition. It is the intention w/c is essential.
Section 2. Delivery of the Thing Sold
Tradition is a derivative mode of acquiring ownership by virtue of w/c one who has the right & intention to alienate a corporeal thing, transmits it
by virtue of a just title to one who accepts the same.
Ownership is not transferred by contract merely but by delivery, actual or constructive. Contracts only constitute title or rights to the transfer or
acquisition of ownership, while delivery or tradition is the method of accomplishing the same. Note however, that the parties to the contract may
agree when & on what conditions the ownership in the subject of the contract shall pass to the buyer.
Delivery of thing sold + payment of purchase price = consummation of contract of sale. Since perfection consummation, delivery is not
essential to the perfection of the contract of sale.

1498. When the sale is made thru a public instrument, the execution
thereof shall be equivalent to the delivery of the thing w/c is the object
to the contract, if from the deed the contrary does not appear or cannot
clearly be inferred.
W/ regard to movable prop, its delivery may also be made by the
delivery of the keys of the place or depository where it is stored or kept.

Remedies of buyer if seller fails to deliver:

Specific performance

Rescission, w/ damages
1st par applies both to movable & immovable prop.
Delivery here is only PRESUMPTIVE & can be rebutted by evidence to the
contrary.
A seller cannot deliver constructively if he cannot actually deliver even if
he wants to.
In order to bind 3rd parties to the sale, the public instrument needs to be
recorded in the Register of Deeds & a certificate of title must be issued
in the name of the buyer over the prop. But, as b/w the buyer & seller,
the execution of the public instrument is enough to bind the 2 of them.
Symbolic tradition when parties, to effect delivery, make use of a token
symbol to represent the thing delivered. (e.g. Delivery of car keys)

Addison v Felix: In order that symbolic delivery may produce the

effect of tradition, it is necessary that the vendor shall have had such
control over the thing sold that, at the moment of the sale, its
material delivery could have been made. It is not enough to confer
upon the purchaser the ownership & the right of possession. THE
THING SOLD MUST BE PLACED IN HIS CONTROL. When there is no
impediment whatever to prevent the thing sold passing into the
tenancy of the purchaser by the sole will of the vendor, symbolic
tradition thru the execution of a public instrument is sufficient. But if
notwithstanding the execution of the instrument, the purchaser
cannot have the enjoyment & material tenancy of the thing & make
use of it himself or thru another in his name, b/c such tenancy &
enjoyment are opposed by the interposition of another will, then
fiction yields to reality the delivery has not been effected.
Ten Forty Realty v Cruz: Execution of a public instrument gives rise
only to a prima facie presumption of delivery. Such presumption is
destroyed when the delivery is not effected b/c of a legal impediment.
A constructive or symbolic delivery, being merely presumptive, is
deemed negated by the failure of the vendee to take actual
possession of the land sold.

1499. The delivery of movable prop 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 possession for any other reason.

1500. There may also be tradition constitutum possessorium.

Traditio Longa Manu takes place by 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

Note the cases of Roman v Grimalt, Norkis Distributors v CA

Atty. Busmentes example of Traditio Longa Manu:
e.g. A buys Bs car, however, such car is in Baguio. Or such car is the
subject of a lease contract b/w B & C at the time B sold it to A.

Traditio Brevi Manu happens when the vendee has already the
possession of the thing sold by virtue of another title (e.g. Lessor sells
thing leased to lessee)
Traditio Constitutum Possessorium takes place when the vendor continues in possession of the prop sold not as owner but in some other

1501. W/ respect to incorporeal prop, the provisions of the 1 st par of art

1498 shall govern. In any other case wherein said provisions are not applicable, the placing of the titles of ownership in the possession of the vendee or the use by the vendee of his rights, w/ the vendors consent,
shall be understood as a delivery.
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
ownership passes to the buyer on delivery, but he may revest the
ownership in the seller by returning or tendering the goods w/in the time
fixed in the contract, or, if no time has been fixed, w/in reasonable time.
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 transaction;
2. If he does not signify his approval or acceptance to the seller, but retains
the goods w/o giving notice of rejection, then if a time has been fixed for
the return of the goods, on the expiration of such time, &, if no time has
been fixed, on the expiration of a reasonable time. What is a reasonable
time is a question of fact.

1503. When there is a contract of sale of specific goods, the seller may,
by the terms of the contract, reserve the right of possession or
ownership in the goods until certain conditions have been fulfilled. The
right of possession or ownership may be thus reserved notw/standing
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, & by the bill of lading 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 goods, the sellers prop in the goods
shall be deemed only for the purpose of securing performance by the
buyer of his oblis under the contract.
Where goods are shipped, & by the bill of lading the goods are
deliverable to 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 & transmits
the bill of exchange & 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, & if he
wrongfully retains the bill of lading he acquires no added right thereby. If,
however, 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 consignee named therein, one who purchases in GF, 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 lading indorsed
by the consignee named therein, or of the goods, w/o notice of the facts
making the transfer wrongful.

capacity. (e.g. A sells his land to B. Instead of delivering the land to B, A continues to occupy the land as Bs tenant.)
Quasi-traditio delivery of incorporeal things thru:
*Incorporeal having a conceptual existence but no physl
Execution of a public instrument;
existence; intangible (BLD 9th Ed.)
If (1) is inapplicable, the placing of titles of ownership in the possession of the
vendee; or
Allowing vendee to use his rights as new owner w/ the consent of the vendor.
Sale or Return a contract by w/c prop is sold but the buyer, who becomes the owner of the prop on delivery, has the option to return the same to
the seller instead of paying the price. If buyer does not return w/in the time fixed in the contract, or if no time has been fixed, w/in reasonable
time, sale is absolute & he is liable to pay the seller.
Sale on Trial or Approval a contract in the nature of an option to purchase if the goods prove satisfactory, the approval of the buyer being a
condition precedent.
*Buyer cannot accept part & reject the rest of the goods.
In both cases, if the goods are injured or damaged substantially thru the negligence or misuse of the buyer, his right to return is lost & the sale
becomes absolute.
Sale or Return
Subject to resolutory condition (ownership is extinguished if buyer
decides to return)
Depends entirely on the will of the buyer
Ownership of the goods passes to the buyer on delivery & subsequent
return of the goods reverts ownership in the seller.
Risk of loss/injury rests upon buyer

Sale on Trial/Approval
Subject to suspensive condition (ownership transfers if goods are
satisfactory)
Depends on the character or quality of the goods
Ownership remains in the seller until the buyer signifies his approval
or acceptance to the seller
Risk still remains w/ the seller except when buyer is at fault or there
is a contrary agreement.
GENL RULE: ownership in the goods sold passes to the buyer upon their delivery to the carrier. This is so b/c the carrier is presumed to be a
bailee for the buyer.
EXCEPTIONS: 1st, 2nd, & 3rd pars of 1503
Bakit di kasama yung 4th paragraph? B/c it talks about transmission of the Bill of Lading (BoL) w/ a Bill of Exchange (BoE) & not delivery of goods
to a carrier or bailee
*Bill of Lading - A docu acknowledging the receipt of goods by a carrier or by the shipper's agent & the contract for the transportation of those
goods; a docu that indicates the receipt of goods for shipment & that is issued by a person engaged in the business of transporting or forwarding
goods. (BLD 9th Ed.)
Scenarios wherein SELLER reserves the right of possession or ownership despite delivery of the goods to the buyer, a carrier or other bailee:
1st Scenario (1st par): Seller reserves the right of possession or ownership in the goods BY THE TERMS OF THE CONTRACT until certain conditions
have been fulfilled
*Think of a contract to sell, where the seller still owns the thing despite delivery
2nd Scenario (2nd par): By the BoL the goods are DELIVERABLE TO THE SELLER OR HIS ORDER for the purpose of retaining ownership
Effects:
1. The carrier is deemed as a bailee of the SELLER, not the buyer
2. The seller may retain the goods until the buyer performs his obli
3. The seller may dispose of the goods to a 3 rd person (but he will be liable for damages; the 2 nd buyer though obtains a better right against the
original buyer.)
*The BoL may be deliverable to the seller or his order but his purpose is not to retain ownership but to secure the performance of the buyers obli.
In such cases, the buyer will bear the risk of loss & he will also have an action based on ownership against anyone except an innocent purchaser
for value of the BoL from the consignee.
3rd Scenario (3rd par): BoL is DELIVERABLE TO THE ORDER OF THE BUYER, but the SELLER RETAINS POSSESSION OF THE BoL.
Effect: Buyer, even if the BoL is deliverable to him, cannot recover the goods until he presents the BoL (w/c he cannot do KASI NGA na kay Seller
ang putang inang BoL)
De Leon: A 3rd person may be named as consignee in the BoL. In this case, the buyer can only obtain the goods when the consignee surrenders
the BoL to the carrier/buyer or he indorses the bill in blank or especially to the buyer. The consignee will only do so upon payment of the price (b/c
if he would do so nonetheless, then USELESS! Seller might as well save himself the trouble by naming the buyer the consignee in the BoL)
4th Scenario (4th par): Seller transmits the BoL, together w/ a bill of exchange. (In the BoE, drawer & payee is seller, drawee is buyer)
Effects:
1. Title is retained by the seller until the BoE is paid.

2.
3.
4.
5.

Delivery of goods is conditioned upon the payment/acceptance of the BoE

If BoE is not paid, buyer is BOUND to return the BoL.
If the buyer wrongfully retains the BoL, he acquires no additional right thereby.
If the BoL names the buyer as consignee or is indorsed in blank or specially to the buyer, a purchaser in GF for value of the BoL from the
buyer will obtain ownership in the goods even if BoE is not honored.
(De Leon: safe move for the seller is to send the BoL & BoE to a 3 rd person b/c if sent to the buyer, he may obtain the goods & forget about
honoring the BoE w/c would compel the seller to enter upon litigation)

It seems that in these scenarios, the risk of loss is borne by the seller, as he reserves ownership in the things sold + res perit domino. The
exception is when his only purpose is to secure the performance of the buyers obli.
1504. Unless o/w agreed, the goods remain at the sellers risk until the ownership therein is transferred to the buyer, but when the ownership
This provision states 2 exceptions to the principle of Res Perit Domino.
therein is transferred to the buyer the goods are at the buyers risk whether actual delivery has been made or not, except that:
In the 1st par, the owner is the seller but merely to secure the
1. Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract & the ownership in the goods performance of the buyer of his oblis. In this par, the buyer is the one
has been retained by the seller merely to secure performance by the buyer of his oblis under the contract, the goods are at the buyers risk from
who bears the risk. In the 2 nd par, the risk of loss is borne by the party
the time of such delivery;
at fault.
2. Where actual delivery has been delayed thru the fault of either the buyer or seller the goods are at the risk of the party in fault.
1505. Subject to the provisions of this Title, where goods are sold by a Genl rule: Buyer cannot acquire more rights than the seller had
559. The possession of movable prop acquired in GF is equivalent to a
person who is not the owner thereof, & who does not sell them under Exceptions: (in these cases, the buyers right to the prop is better than tile. Nevertheless, one who has lost any movable or has been
authority or w/ the consent of the owner, the buyer acquires no better the owner, provided he is in GF)
unlawfully deprived thereof, may recover it from the person in
title to the goods than the seller had, unless the owner of the goods is by 1. Owner is estopped from denying sellers authority to sell
possession of the same
his conduct precluded from denying the sellers authority.
2. Where the law enables the apparent owner to dispose of the goods as if
If the possessor of a movable lost or of w/c the owner has been
Nothing in this Title, however, shall effect:
he were the true owner thereof
unlawfully deprived, has acquired in GF at a public sale, the owner
1. The provisions of any factors acts, recording laws, or any other 3. Where the sale is sanctioned by statutory or judicial authority
cannot obtain its return w/o reimbursing the price paid therefor.
provision of law enabling the apparent owner of goods to dispose of 4. Where the sale is made at merchants stores, fairs or markets
them as if he were the true owner thereof;
5. When the seller has a voidable title w/c has not been avoided at the time Dizon v Suntay: The right of the owner cannot be defeated even by
2. The validity of any contract of sale under statutory power of sale or
of the sale
proof that there was GF in acquisition by the possessor. Suffice it to
under the order of a court of competent jurisdiction;
6. Where seller subsequently acquires title
say in this regard that the right of the owner to recover personal prop
3. Purchases made in a merchants store, or in fairs, markets, in Read: Dizon v Suntay, EDCA Publishing v Sps. Santos
acquired in GF by another, is based on his being dispossessed w/o his
accordance w/ the Code of Commerce & special laws.
consent. The common law principle that where 1 of 2 innocent
persons must suffer by a fraud perpetrated by another, the law
imposes the loss upon the party who, by his misplaced confidence,
has enable the fraud to be committed, cannot be applied in a case
w/c is covered by an express provision of the new CC, specifically 559
of the CC. B/w a common law principle & a statutory provision, the
latter must prevail in this jurisdiction.

1506. Where the seller of goods has a voidable 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, & w/o
notice of the seller's defect of title.

Requisites for acquisition of good title by buyer:

1) The sellers voidable title is yet to be avoided;
2) Buyer buys in good faith & for value;
3) Buyer has no notice of the sellers defect of title.
If the seller has NO title, then a buyer, even if he purchases in GF & for
value, cannot acquire a good title. Read the notes for the preceding
article, specifically 559 & the Dizon v Suntay doctrine.

1507. A docu of title in w/c 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
docu is a NDT.

Why is it that in Dizon v Suntay, the owner (Suntay) was allowed to

recover his prop but in EDCA v Sps Santos, EDCA was not?
>In the latter case, the court held that EDCA WAS NOT UNLAWFULLY
DEPRIVED OF THEIR PROP. They delivered the prop in question
(books) to Cruz (who talked them into selling said books) & as we all
know, ownership is transferred upon delivery, actual or constructive.
By the time Cruz sold the books to the Santoses, he was already the
owner of such books, allowing him to make a valid transfer of them.
1385. (par 2) Neither shall rescission take place when the things w/c
are the object of the contract are legally in the possession of 3 rd
persons who did not act in BF.
(owner cannot rescind contract b/w seller & buyer if buyer fulfills
requisites)
1388. Whoever acquires in BF the things alienated in fraud of
creditors, shall indemnify the latter for damages suffered by them on
acct. of the alienation, whenever, due to any cause, it should be
impossible for him to return them.
(If the buyer does not fulfill the requisites, this is the remedy of the
owner if ever the buyer cannot return the thing)

CLASSES OF DOCUMENTS OF TITLE:

1) Negotiable Documents of Title (NDT) deliverable to bearer or to the order of a specified person.
2) Non-negotiable Documents of Title (Non-NDT) deliverable to a specified person. (straight bill)
*A document deliverable to bearer or to the order of a specified person w/c is subsequently indorsed to a specified person DOES NOT lose its negotiable character,

read 1509.
DEFINITION OF TERMS:
1) Document of Title of Goods any document used in the ordinary course of business in the sale or transfer of goods, or authorizing a person to do so in his behalf.
a. Bill of Lading a receipt for the transport of goods & their delivery to the person named therein. Three Persons Involved: Shipper Carrier Consignee.
b. Dock Warrant instrument given by dock owners to an importer of goods warehoused on the dock.
c. Warehouse Receipt a receipt of goods deposited w/ a warehouseman to hold & deliver the goods to the person named therein or bearer
d. Quedan warehouse receipt usually for sugar.
2) Order Relating to documents of title means an order by indorsement on the documents.
1508. A NDT may be negod by delivery:
(Abbreviations: nego = negotiable, negon = negotiation, negod = negotiated, negoing = negotiating, negos =
1) Where by the terms of the docu the carrier, warehouseman or other bailee issuing the same undertakes
negotiates)
to deliver the goods to the bearer; or
When NDT is negod by delivery: (1508)
2) Where by the terms of the docu the carrier, warehouseman or other bailee issuing the same undertakes 1. When it is a bearer NDT
to deliver the goods to the order of a specified person, & such person or a subsequent indorsee of the 2. When it is an order NDT indorsed in blank or to bearer
docu has indorsed it in blank or to the bearer.
Where by the terms of a NDT the goods are deliverable to bearer or where a NDT has been indorsed in When indorsement is essential for the negon of NDT:
blank or to bearer, any holder may indorse the same to himself or to any specified person, & in such case 1. When it is an order document (1509)
the docu shall thereafter be negod only by the indorsement of such indorsee.
2. When it is a bearer NDT indorsed to a specified person (1508, 3 rd par)
1509. A NDT may be negod by the indorsement of the person to whose order the goods are by the *In dealing w/ such NDTs, delivery alone is not sufficient to produce the effects of negon.
terms of the docu deliverable. Such indorsement may be in blank, to bearer or to a specified person. If *1511: If an NDT requires an indorsement to be negod BUT is TRANSFERRED BY DELIVERY ONLY, then the
indorsed to a specified person, it may be again negod by the indorsement of such person in blank, to transferee acquires no additional right than that of the transferor (transferor is a mere assignee). Meanwhile, a
bearer or to another specified person.
person transferring a non-NDT, even if he indorses it, can transfer only such rights that he had to the transferor,
Subsequent negotiations may be made in like manner.
non-negotiable nga e diba. In both cases, the transferor only acquires the rights in 1514.
1510. If a docu of title w/c contains an undertaking by a carrier, warehouseman or other bailee to deliver *If indorsement is made merely for identification, the party indorsing the document is liable only as guarantor
the goods to bearer, to a specified person or order of a specified person or w/c contains words of like
(subsidiarily liable), not as an indorser (primarily liable).
import, has placed upon it the words "not nego," "non-nego" or the like, such docu may nevertheless be *The words non-nego or other words of similar import does not affect the nego character of NDT (1510)
negod by the holder & is a NDT w/in the meaning of this Title. But nothing in this Title contained shall be
construed as limiting or defining the effect upon the obligations of the carrier, warehouseman, or other How indorsement is made: (1509)
bailee issuing a docu of title or placing thereon the words "not nego," "non-nego," or the like.
1. Blank or to bearer effect: NDT can be subsequently negod by mere delivery
1511. A docu of title w/c is not in such form that it can be negod by delivery may be transferred by the 2. Special indorsement effect: NDT, to be subsequently negod, must be negod by indorsement + delivery
holder by delivery to a purchaser or donee. A non-nego docu cannot be negod & the indorsement of Blank Indorsement does not name a specific person w/c makes the goods deliverable to whoever possesses the
such a docu gives the transferee no additional right.
NDT
1512. A NDT may be negod:
Special Indorsement names a specific person w/c makes the goods deliverable only to such named person
1) By the owner thereof; or
2) By any person to whom the possession or custody of the docu has been entrusted by the owner, if, by
Who may indorse: (1512)
the terms of the docu the bailee issuing the docu undertakes to deliver the goods to the order of the 1. Owner of an order NDT
person to whom the possession or custody of the docu has been entrusted, or if at the time of such 2. Any holder of a bearer NDT
entrusting the docu is in such form that it may be negod by delivery.
1513. A person to whom a NDT has been duly negod acquires thereby:
Rights acquired from a NDT duly negod: (1513)
1) Such title to the goods as the person negotiating the docu to him had or had ability to convey to a 1) Title of the person negoing the document, over the goods covered by the docu
purchaser in good faith for value & also such title to the goods as the person to whose order the goods 2) Title of the person (depositor or owner) to whose order by the terms of the docu the goods were to be
were to be delivered by the terms of the docu had or had ability to convey to a purchaser in good faith
delivered, over such goods
for value; &
3) The direct obli of the bailee to hold possession of the goods for him, as if the bailee contracted directly w/ him
2) The direct obligation of the bailee issuing the docu to hold possession of the goods for him according to
the terms of the docu as fully as if such bailee had contracted directly w/ him.
Rights acquired from a non-NDT or a NDT not duly negod: (1514)
1514. A person to whom a docu of title has been transferred, but not negod, acquires thereby, as
1) The title of the goods as against the transferor;
against the transferor, the title to the goods, subject to the terms of any agreement w/ the transferor.
2) The right to notify the bailee of the transfer thereof; &
If the docu is non-nego, such person also acquires the right to notify the bailee who issued the docu of 3) The right, thereafter, to acquire the obli of the bailee to hold the goods for him.
the transfer thereof, & thereby to acquire the direct obligation of such bailee to hold possession of the - These are not absolute. These rights are subject to the terms of the transferor.
goods for him according to the terms of the docu.
- If what is transferred is a NDT, the goods cannot be attached or levied unless the NDT is 1 st surrendered to the
Prior to the notification to such bailee by the transferor or transferee of a non-NDT, the title of the bailee or its negon is enjoined. If Non-NDT, transferees right may be defeated by a levy of an attachment or
transferee to the goods & the right to acquire the obligation of such bailee may be defeated by the levy
execution by a creditor of the transferor
of an attachment of execution upon the goods by a creditor of the transferor, or by a notification to such
- If the transferor of a NDT is a PURCHASER FOR VALUE, he may compel the transferee to indorse the NDT so that
bailee by the transferor or a subsequent purchaser from the transferor of a subsequent sale of the goods
he may acquire the rights in 1513. The negotiation shall take effect as of the time the indorsement is actually
by the transferor.
made, not at the time the document is delivered. (1515) This does not apply however, when the intention of the
1515. Where a NDT is transferred for value by delivery, & the indorsement of the transferor is essential parties is to affect a mere transfer only.
for negon, the transferee acquires a right against the transferor to compel him to indorse the docu
unless a contrary intention appears. The negon shall take effect as of the time when the indorsement is Warranties & liabilities of a person negotiating or transferring a document: (1516)
actually made.
- Liability is limited only to a violation of these four warranties (G LR K RT)
1516. A person who for value negotiates or transfers a docu of title by indorsement or delivery, including - It is the duty of every indorsee to know that all previous indorsements are genuine, o/w, he will NOT ACQUIRE a
one who assigns for value a claim secured by a docu of title unless a contrary intention appears,
valid title to the instrument. Similarly, under the NIL, the last indorser warrants that all previous indorsements

warrants:
are genuine.
1. That the docu is genuine;
*Indorsers are subsidiarily liable if the person primarily liable fails honor the document.
2. That he has a legal right to negotiate or transfer it;
*Indorser however, is not liable if the goods are lost or becomes defective due to the fault of the bailee as he is a
3. That he has knowledge of no fact w/c would impair the validity or worth of the docu; &
mere conveyor of the docu & not a guarantor. (1517)
4. That he has a right to transfer the title to the goods & 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 w/o a docu of title the goods represented thereby.
1517. The indorsement of a docu of title shall not make the indorser liable for any failure on the part of
the bailee who issued the docu or previous indorsers thereof to fulfill their respective oblis.
1518. The validity of the negon of a NDT is not impaired by the fact that the negon was a breach of THIS ARTICLE PERTAINS ONLY TO THE DOCUMENT, NOT THE GOODS
duty on the part of the person making the negon, or by the fact that the owner of the docu was deprived - Under 1512, only the owner of the docu or the person to whom he entrusted the docu to may negotiate said
of the possession of the same by loss, theft, fraud, accident, mistake, duress, or conversion, if the person
document. But under 1518, if a person, not having such authority, negos the docu to an INNOCENT
to whom the docu was negod or a person to whom the docu was subsequently negod paid value
PURCHASER FOR VALUE, such purchasers right to the docu is indefeasible. (similar to a Holder in Due Course in
therefor in good faith w/o notice of the breach of duty, or loss, theft, fraud, accident, mistake, duress or
nego)
conversion.
1519. If goods are delivered to a bailee by the owner or by a person GENL RULE: The goods cannot be attached or levied under execution
whose act in conveying the title to them to a purchaser in good faith for EXCEPTIONS:
value would bind the owner & a NDT is issued for them they cannot 1) The Document of Title is surrendered to the bailee; or
thereafter, while in possession of such bailee, be attached by 2) The negotiation is prohibited or the goods are impounded by the court
garnishment or o/w or be levied under an execution unless the docu be
first surrendered to the bailee or its negon enjoined. The bailee shall in *If the depositor of the goods however is neither the owner nor someone authorized to convey title to the goods, 1519 does not apply.
no case be compelled to deliver up the actual possession of the goods
until the docu is surrendered to him or impounded by the court.
1520. A creditor whose debtor is the owner of a NDT shall be entitled to In case a debtor refuses to surrender a NDT to a creditor, the latter may, w/ aid from the Courts, afford of the ff remedies:
such aid from courts of appropriate jurisdiction by injunction & o/w in
1. Injunction
attaching such docu or in satisfying the claim by means thereof as is
2. Attaching the NDT
allowed at law or in equity in regard to property w/c cannot readily be
3. Satisfy his claim on the NDT
attached or levied upon by ordinary legal process.
(Only IF the prop cannot be readily attached /levied upon ordinary legal process)
However, if the NDT is negotiated to an innocent person, the transfer is nevertheless effectual.
1521. Whether it is for the buyer to take possession of the goods or of RULES IN DELIVERY OF GOODS (PLACE):
Usage of trade is any practice or method of dealing having such
the seller to send them to the buyer is a question depending in each 1) According to that Agreed upon;
regularity of observance in a place, vocation or trade to justify an
case on the contract, express or implied, b/w the parties. Apart from any 2) In the absence of an agreement Usage of Trade;
expectation that it will be observed w/ respect to the transaction in
such contract, express or implied,
3) Sellers Place of business;
question.
or usage of trade to the contrary, the place of delivery is the seller's 4) Sellers Residence;
place of business if he has one, & if not his residence; but in case of a 5) For specific goods, where the said goods are Found (Paras Civil Code
Ex. Appliance or machinery: delivered to the residence or place of
contract of sale of specific goods, w/c to the knowledge of the parties Book V, 2008)
business of buyer; car tires delivered at the place of business of
when the contract or the sale was made were in some other place, then
seller (good luck ikaw magpalit ng goma ng gulong mo); mambabalot,
that place is the place of delivery.
PRESUMPTION: The buyer must take the goods from the sellers place
magtataho, street vendors kung saan mo sila matitiempuhan.
Where by a contract of sale the seller is bound to send the goods to the of business or residence rather than the seller to deliver them to the
buyer, but no time for sending them is fixed, the seller is bound to send buyer.
Course of dealing is a sequence of previous conduct b/w the parties
them w/in a reasonable time.
to a particular transaction w/c is fairly to be regarded as establishing
Where the goods at the time of sale are in the possession of a third When the delivery was made not as stipulated & the buyer accepted the
a common basis of understanding for interpreting their expressions &
person, the seller has not fulfilled his obligation to deliver to the buyer goods w/o complaint, it is deemed that the buyer WAIVED his right
other conduct.
unless & until such third person acknowledges to the buyer that he holds against the sellers failure to deliver.
the goods on the buyer's behalf.
Explanation: there has been previous transactions b/w the seller &
Demand or tender of delivery may be treated as ineffectual unless made RULES IN DELIVERY OF GOODS (TIME):
buyer. There has been an established understanding how delivery is
at a reasonable hour. What is a reasonable hour is a question of fact.
1) The time stipulated or agreed upon
to be conducted. That established understanding is the course of
Unless o/w agreed, the expenses of & incidental to putting the goods - Time is of the essence: w/in the period stipulated
dealing.
into a deliverable state must be borne by the seller.
- Time is NOT of the essence: w/in a reasonable time (Deleon p.236)
2) The time is not stipulated
Note: above examples & explanation need to be confirmed if correct
- Time is of the essence: buyer cannot invoke time is of the essence
unless he gives the seller sufficient notice of his intention to cancel
delivery is not made on or before a fixed time.
- Time is NOT of the essence: w/in a reasonable time (a question of fact;
case to case basis)
HOUR OF DELIVERY: (speaks of the hour of the day)
- A question of fact; depends on kind of obli
DUTY OF SELLER: To prepare the good in a deliverable state at his

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 retains 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 & reject the rest. If the buyer accepts the whole of the goods so
delivered he must pay for them at the contract rate.
Where the seller delivers to the buyer the goods he contracted to sell mixed w/ goods of a different description not included in the contract,
the buyer may accept the goods w/c are in accordance w/ the contract & 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 art are subject to any usage of trade, special
agreement, or course of dealing b/w the parties.
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 delivery of the goods to the
buyer, except in the cases provided for in art 1503, first, second & third
paragraphs, or unless a contrary intent appears.
Unless o/w authorized by the buyer, the seller must make such contract
w/ the carrier on behalf of the buyer as may be reasonable, having
regard to the nature of the goods & the other circumstances of the case.
If the seller omits so to do, & the goods are lost or damaged in course of
transit, the buyer may decline to treat the delivery to the carrier as a
delivery to himself, or may hold the seller responsible in damages.
Unless o/w agreed, where goods are sent by the seller to the buyer
under circumstances in w/c 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, &, if the seller fails to do
so, the goods shall be deemed to be at his risk during such transit.

expense. In such state, the buyer is bound to accept delivery. (unless o/w
agreed)
DELIVERY OF GOODS LESS THAN THE QUANTITY CONTRACTED:
The buyer may reject delivery
The buyer may accept delivery
Know that seller would not complete delivery: Pay contract price
Does not know that seller will not complete delivery: Fair value of the
goods
DELIVERY OF GOODS MORE THAN THE QUANTITY CONTRACTED:
- Buyer may accept quantity contracted & reject the excess
- Buyer may accept including the excess provided, he pays for their
value
- If indivisible, buyer may reject the whole or accept it entirely
DELIVERY OF GOODS MIXED W/ OTHERS:
Buyer may accept those w/c are in accordance w/ the contract & reject
the rest
Buyer may accept including that w/c are not in accordance w/ the
contract provided, he pays for their value
If indivisible, buyer may reject the whole or accept it entirely
DELIVERY OF INDIVISIBLE GOODS WHETHER IN EXCESS OR MIXED
GOODS
Buyer may reject the whole or accept it entirel
NOTA BENE: THIS PROVISION APPLIES ONLY IF THERE IS AN AGREEMENT
THAT THE SELLER WILL SHIP THE GOODS
GENL RULE: Delivery to the carrier constitutes delivery to the buyer,
whether the carrier was named by the buyer or not.
EXCEPTIONS:
1) The contrary appears (parties did not intend delivery to carrier is
delivery to buyer)
2) 1st, 2nd & 3rd pars of 1503

FAIR VALUE: not necessarily the market value; the benefit w/c the
buyer may receive from the goods.
Since the seller did not delivery the correct quantity as agreed upon,
the buyer is not required to pay the contract price if such price is
more than fair value to him
1233. A debt shall not be understood to have been paid unless the
thing or service in w/c the obli consists has been completely delivered
or rendered, as the case may be.
1235. When the obligee accepts the performance, knowing its
incompleteness or irregularity, & w/o expressing any protest or
objection, the obli is deemed fully complied w/.

C.O.D. Collect of Delivery Carrier collects the purchase price.

F.O.B. Free on Board where ever the FOB pertains to, the buyer
shall not pay for the expenses of delivery up to that place of
designation.
Ex. FOB-Manila. Buyers place of business is in Bulacan. The goods
will be coming from Cebu (sellers place of business). The expenses
for shipping the goods from Cebu to Manila will be borne by the seller.
The expenses for shipping the goods from Manila to Bulacan shall be
borne by the buyer. Free yung expenses from Cebu to Manila.

DUTIES OF SELLER AFTER DELIVERY TO CARRIER:

1) Enter into contract w/ the carrier on behalf of the buyer.
C.I.F. Cost, Insurance & Freight Signifies that the price fixed
- Failure to do so:
covers also expenses of freight & insurance. IOW, the seller pays for
A) Buyer may DECLINE to treat delivery to carrier as delivery to the insurance & shipping expenses.
him; OR
B) the buyer may hold seller responsible for DAMAGES
F.A.S. Free Along Side The seller pays all charges & is subject to
2) To give notice to the buyer regarding necessity to insure the goods
risk until the goods are placed alongside the vessel. (Mem-Aid 2012)
- Failure to do so: RISK borne by the seller PROVIDED the buyer is
unaware of the need to insure such goods. If the buyer is aware of the
need to insure, seller may not be held responsible.
1524. The vendor shall not be bound to deliver the thing sold, if the GENL RULE: The obligation to deliver arises from the moment the contract is perfected. The buyer may, from that moment, demand delivery.
vendee has not paid him the price, or if no period for the payment has The seller, reciprocally, may demand payment. Hence, the thing shall not be delivered unless the price be paid.
been fixed in the contract.
EXCEPTION: The thing shall be delivered but the price shall not be paid first, if the time of payment has been fixed to be paid at a latter date. (in
such cases, the seller is considered to have sold on credit)
EXCEPTION TO THE EXCEPTION: Vendee has lost the right to make use of the period of payment. Art. 1536 (Period of payment is at a latter
date but the seller is not bound to make delivery)
1525. The seller of goods is deemed to be an unpaid seller w/in the An UNPAID SELLER is one who:
Art. 1249. Par. 2. The delivery of promissory notes payable to order,
meaning of this Title:
1)has not been paid or to whom the price has not been tendered
or bills of exchange, or other mercantile documents shall produce the
(1) When the whole of the price has not been paid or tendered;
2)has received a bill of exchange or other negotiable instrument as effect of payment only when they have been cashed x x x
(2) When a bill of exchange or other nego instrument has been received
conditional payment, & the condition to w/c it was received has been
as conditional payment, & the condition on w/c it was received has
broken by reason of the dishonor of the instrument, insolvency of the Note consignation. 1256. If the creditor to whom tender of payment
been broken by reason of the dishonor of the instrument, the
buyer or o/w.
has been made refuses w/o just cause to accept it, the debtor shall be
insolvency of the buyer, or o/w.
UNPAID SELLER includes:
released from responsibility by the consignation of the thing or sum
1) Agent of the seller;
due.
(*In arts 1525 to 1535 the term "seller" includes an agent of the seller to 2) Consignor or agent who has himself paid or is directly responsible for
whom the bill of lading has been indorsed, or a consignor or agent who the price; or
has himself paid, or is directly responsible for the price, or any other 3) Any Other person in the position of the seller.
person who is in the position of a seller.)
WHERE WHOLE OF PRICE HAS NOT BEEN PAID:

1) Tender of payment by buyer such as checks (juan tamad). Sellers

lien is destroyed.
2) Payment of part of price payment of price does NOT destroy a
sellers lien. The seller remains an unpaid seller even if title has passed
to the buyer.
3) Payment by negotiable instrument OBLICON (Art. 1249)
1526. Subject to the provisions of this Title, notwithstanding that the REMEDIES OF UNPAID SELLER (SAR-SPASMS)
ownership in the goods may have passed to the buyer, the unpaid seller 1) Possessory lien (Art 1527-1529)
of goods, as such, has:
2) Stoppage of goods in transitu (Art 1530)
(1) A lien on the goods or right to retain them for the price while he is in 3) Special right of resale (Art 1533)
possession of them;
4) Special right of rescission (Art 1534)
(2) In case of the insolvency of the buyer, a right of stopping the goods 5) Action for the price (Art 1595)
in transitu after he has parted w/ the possession of them;
6) Action for damages (Art 1596)
(3) A right of resale as limited by this Title;
7) Recto Law (Art 1484)
(4) A right to rescind the sale as likewise limited by this Title.
8) Maceda Law (Governs financing of real estate on installment payment) (ung special law na cinite sa Layug v IAC)
Where the ownership in the goods has not passed to the buyer, the 9) Specific performance (Art 1595)
unpaid seller has, in addition to his other remedies a right of withholding
delivery similar to & coextensive w/ his rights of lien & stoppage in
transitu where the ownership has passed to the buyer.
1527. Subject to the provisions of this Title, the unpaid seller of goods POSSESSORY LIEN a right to retain possession of goods
CREDIT SALE whereby the seller binds himself to give the goods to
who is in possession of them is entitled to retain possession of them until
the buyer w/o receiving at that time payment for them.
payment or tender of the price in the ff cases, namely:
WHEN IT MAY BE EXERCISED
Stipulation as to credit means that a period of payment price has
(1) Where the goods have been sold w/o any stipulation as to credit;
a) The goods has been sold w/o any stipulation as to credit
been fixed in the contract. In the absence of this stipulation, the
(2) Where the goods have been sold on credit, but the term of credit has b) The goods has been sold on credit, but the term of credit has expired
seller is entitled to the payment of the price at the same time that he
expired;
c) The buyer becomes insolvent
transfers the possession of the goods. Accordingly, the seller always
(3) Where the buyer becomes insolvent.
has a lien upon the goods until payment or tender of the entire price.
The seller may exercise his right of lien notwithstanding that he is in
possession of the goods as agent or bailee for the buyer.
INSOLVENT is a person who either ceased to pay his debts in the
ordinary course of business or cannot pay his debts as they become
due. (w or w/o insolvency proceedings)
Insolvency does not dissolve the bargain, it merely revives the
sellers lien.
Note: Notwithstanding transfer of ownership, possessory lien may
still be exercised as long as the goods are in the possession of the
seller.
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.

GEN RULE: Lien NOT lost by partial delivery.

When part of the goods are delivered, the unpaid seller has a lien upon the remainder for the proportion of the price w/c is due on account of the
goods so retained.
EXCEPT: Art 1529 (3)
Delivery of the part intended as symbolical delivery of the whole, w/c is considered a waiver of any right of retention as to the remainder &
therefore the lien is lost.
1529. The unpaid seller of goods loses his lien thereon:
WHEN UNPAID SELLER LOSES POSSESSORY LIEN
When seller has no possession of goods anymore, he therefore has no
(1) When he delivers the goods to a carrier or other bailee for the 1) Delivery to agent/a carrier or bailee of buyer
more lien
purpose of transmission to the buyer w/o reserving the ownership in a. For the purpose of transmission to the buyer
Buyers wrongful taking of the goods w/o the sellers consent does
the goods or the right to the possession thereof;
b. W/o reserving ownership or right of possession
NOT destroy the lien
(2) When the buyer or his agent lawfully obtains possession of the 2) Possession by buyer or his agent when buyer lawfully obtains If goods are put in the possession of the buyer merely for purpose of
goods;
possession
allowing the buyer to examine the goods, the lien in intact.
(3) By waiver thereof.
3) Waiver of the lien
Seller may lose his lien by express agreement to surrender such lien The unpaid seller of goods, having a lien thereon, does not lose his lien
thus, where the buyer was allowed to alter the character of the
by reason only that he has obtained judgment or decree for the price of LOSS OF LIEN (Tolentino)
goods & make them much more valuable, the seller could no longer
the goods.
The lien of the seller depends upon either possession OR control of the
assert a lien.
property on w/c the lien is claimed, & if the seller permits the property to Mere judgment by a court obtained by the unpaid seller for the price
go into actual possession of the buyer, such LIEN IS LOST, although he
of the goods is NOT a ground for the loss of his lien (Art 1529, par.2)
delivers on the faith of a chattel mortgage w/c turn out to be invalid, or Possessory lien IS LOST after the seller loses possession BUT his LIEN
draft given in payment was dishonored. If however, the seller has been
on the price as an unpaid seller remains. The bringing of an action
induced to part w/ possession by fraud, the lien of the seller is NOT LOST.
to recover the purchase price is NOT one of the ways of losing
possessory lien.
REVIVAL OF LIEN AFTER DELIVERY
(from PINEDA)
1) If the buyer refuses to receive the goods after they have been delivered
POSSESSORY LIEN
LIEN ON THE PRICE

to a carrier on his behalf, though the seller has parted w/ both

The seller is entitled to retain After delivery, the seller loses
ownership & possession may reclaim the goods & revest himself w/ his
possession of the goods as his possessory lien but retains
lien (see Art 1531 par.2)
security for the purchase price
his lien on the price of the
2) If the buyer returns the goods in wrongful repudiation of the sale, the
goods
lien is revived
1530. Subject to the provisions of this Title, when the buyer of goods is Requisites for the exercise of RIGHT OF STOPPAGE OF GOODS IN Notice must be given either to the person in actual possession of the
or becomes insolvent, the unpaid seller who has parted w/ the TRANSITU:
goods or to his principal
possession of the goods has the right of stopping them in transitu, 1. Seller must be unpaid (Art 1525)
When notice is given to the carrier or other bailee in possession of the
that is to say, he may resume possession of the goods at any time while 2. Buyer must be insolvent (need not be judicially declared)
goods, he must deliver the goods according to the directions of the
they are in transit, & he will then become entitled to the same rights in 3. Goods must be in transit
seller
regard to the goods as he would have had if he had never parted w/ the 4. Seller must either
(NOTE: expenses must be borne by the seller)
possession.
a. take possession of the goods sold
EXCEPTION: a negotiable document of title representing the goods
b. give notice of his claim to the carrier or other person in possession
has been issued
of the goods
(in w/c case the carrier or bailee is not obliged to redeliver the goods
5. Seller must surrender the negotiable document of title, if any, issued by unless the seller surrendered the document for cancellation)
the carrier
6. Seller must bear the expenses of delivery of the goods after the exercise
of the right
1531. Goods are in transit w/in the meaning of the preceding art: WHEN GOODS ARE CONSIDERED IN TRANSIT
Taking of goods in transit by an unauthorized agent of the buyer
(1) From the time when they are delivered to a carrier by land, water, or 1. After delivery to a carrier or other bailee & before the buyer or his agent
DOES NOT extinguish the right of stoppage n transitu (Paras)
air, or other bailee for the purpose of transmission to the buyer, until
takes delivery of them
In case of misdelivery, the goods are still considered in transit, hence,
the buyer, or his agent in that behalf, takes delivery of them from 2. If the goods are rejected by the buyer, & the carrier or other bailee
the seller may still exercise said right pursuant to Art 1523, w/c
such carrier or other bailee;
continues in possession of them (even if the seller refuse to receive
provides that an unpaid seller may exercise his right of stoppage in
(2) If the goods are rejected by the buyer, & the carrier or other bailee
them back)
transitu by giving notice of his claim to the carrier or other bailee in
continues in possession of them, even if the seller has refused to
whose possession the goods are.
receive them back.
WHEN GOODS ARE NO LONGER IN TRANSIT
Goods are no longer in transit w/in the meaning of the preceding 1. After delivery to the buyer or his agent in that behalf
ATTORN to agree to be tenant to a new owner of the same prop
art:
2. If the buyer or his agent obtains possession of the goods at a point
(1) If the buyer, or his agent in that behalf, obtains delivery of the goods
before the destination originally fixed
before their arrival at the appointed destination;
3. If the carrier or the bailee acknowledges to hold the goods in behalf of
(2) If, after the arrival of the goods at the appointed destination, the
the buyer
carrier or other bailee acknowledges to the buyer or his agent that 4. If the carrier or bailee wrongfully refuses to deliver the goods to the
he holds the goods on his behalf & continues in possession of them
buyer
as bailee for the buyer or his agent; & it is immaterial that further
destination for the goods may have been indicated by the buyer;
*If the carrier is owned by the buyer, carrier is considered an agent for
(3) If the carrier or other bailee wrongfully refuses to deliver the goods the buyer. Therefore, delivery to carrier = delivery to buyer
to the buyer or his agent in that behalf.
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 w/ the buyer to give up possession of the whole of the
goods.
1532. The unpaid seller may exercise his right of stoppage in transitu either by obtaining actual possession of the goods or by giving notice of his
WAYS OF EXERCISING THE RIGHT OF STOPPAGE
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 1. By taking actual possession of the goods
goods or to his principal. In the latter case the notice, to be effectual, must be given at such time & under such circumstances that the principal, by 2. By giving notice of his claim to the carrier or bailee
the exercise of reasonable diligence, may prevent a delivery to the buyer.
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
The sellers power to stop in transitu includes:
according to the directions of, the seller. The expenses of such delivery must be borne by the seller. If, however, a NDT representing the goods has 1. Power to counter delivery
been issued by the carrier or other bailee, he shall not be obliged to deliver or justified in delivering the goods to the seller unless such docu is first 2. Power to order redelivery to himself
surrendered for cancellation.
1533. Where the goods are of perishable nature, or where the seller SPECIAL RIGHT OF RESALE
Art 1533 only applies id the title to goods has already passed to the
expressly reserves the right of resale in case the buyer should make May be exercised only when the unpaid seller has either a right of lien or buyer. Otherwise, the goods cannot be resold.
default, or where the buyer has been in default in the payment of the has stopped the goods in transitu & under any of the ff conditions:
price for an unreasonable time, an unpaid seller having a right of lien or 1. Goods are perishable in nature
ILLUSTRATIVE CASE:
having stopped the goods in transitu may resell the goods. He shall not 2. The right to resell is expressly reserved in case the buyer should Facts: S sold to B a tractor for P12, 000 - - P5, 000 upon delivery &
thereafter be liable to the original buyer upon the contract of sale or for
make a default
7,000 w/in 60 days. B failed to take delivery of the tractor & pay the

any profit made by such resale, but may recover from the buyer 3. The buyer delays in the payment of the price for an unreasonable
damages for any loss occasioned by the breach of the contract of sale.
time
Where a resale is made, as authorized in this art, the buyer acquires a
good title as against the original buyer.
EFFECT OF RESALE
The buyer acquires a good title as against the original buyer. The seller is
It is not essential to the validity of resale that notice of an intention to not liable to the original buyer for any profit earned in the resale & may
resell the goods be given by the seller to the original buyer.
recover damages occasioned by the buyers breach of the contract of
sale. Action for the rescission of the sale is not necessary. (Pineda, Civil
But where the right to resell is not based on the perishable nature of the Code Annotated 2010)
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 Resale may be public or private sale
question whether the buyer had been in default for an unreasonable To avoid injustice & unfairness, the seller is prohibited from
time before the resale was made.
becoming the buyer of the goods whether directly or indirectly
Notice of sale need not be sent to the original buyer
It is not essential to the validity of a resale that notice of the time &
place of such resale should be given by the seller to the original buyer.
Atty. Busmente: When is notice essential?
When the right of resale is exercised under the condition of the
The seller is bound to exercise reasonable care & judgment in making a
buyer delaying payment for an unreasonable time
resale, & subject to this requirement may make a resale either by public De Leon: safe move is to always send notice.
or private sale. He cannot, however, directly or indirectly buy the goods.

purchase price. S was forced to sell the tractor at a lower price of

P10, 000.

1534. An unpaid seller having the right of lien or having stopped the
goods in transitu, may rescind the transfer of title & 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.
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.

Rescission a partys unilateral unmaking of a contract for a legally

sufficient reason, or a judgment rescinding the contract. (BLD 9 th
Ed.)

SPECIAL RIGHT TO RESCIND available ONLY if the seller has either

the right of lien or a right to stop the goods in transitu PLUS either of two
situations:
1. Where the right to rescind on default has been expressly reserved
2. Where the buyer has been in default for an unreasonable time
EFFECT OF EXERCISE OF RIGHT
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.

Issue: Is B liable for the difference of P2, 000?

Held: YES. In a contract of sale w/c is executory as to both parties,
the vendor is entitled to resell the goods if the purchaser fails to take
delivery & pay the purchase price. If he is obliged to resell for lesser
value, he holds the buyer for the difference BUT if he sells for the
same or more than the contract price, the breach of contract of the
original buyer is DAMNUM ABSQUE INJURIA. (A loss or damage w/o
injury)

Effect of rescission:
1385. Rescission creates the obli to return the things w/c were the
object of the contract, together w/ their fruits, & the price w/ its
interests; consequently, it can be carried out only when he who
demands rescission can return whatever he may be obliged to
restore.
(If the thing cannot be returned anymore, then damages, 1388)

There must be NOTICE or some other OVERT ACT of intention to

rescind.
Overt act need not be communicated BUT the giving of notice is
relevant in case of default for an unreasonable time.
1535. Subject to the provisions of this Title, the unpaid seller's right of EFFECT OF SALE OF GOODS SUBJECT TO LIEN OR STOPPAGE IN The rule protects a purchaser w/o notice after the seller had stopped
lien or stoppage in transitu is not affected by any sale, or other TRANSITU
the goods either by virtue of right of lien or stoppage in transitu.
disposition of the goods w/c the buyer may have made, unless the seller 1) Where goods are NOT covered by negotiable doc of title - seller can give
has assented thereto.
NO larger than what he has. When goods are subject to a legal lien a
If, however, a NDT has been issued for goods, no seller's lien or right of
purchaser from the original buyer can acquire ONLY such rights as the
stoppage in transitu shall defeat the right of any purchaser for value
buyer then had.
in good faith to whom such docu has been negod, whether such
negon be prior or subsequent to the notification to the carrier, or other 2) Where goods are covered by negotiable doc of title the sellers lien
bailee who issued such docu, of the seller's claim to a lien or right of
cannot prevail against rights of a PURCHASER FOR VALUE IN GOOD
stoppage in transitu.
FAITH to whom the document has been indorsed.
1536. The vendor is not bound to deliver the thing sold in case the RIGHT OF THE VENDOR TO HOLD DELIVERY IN SALE ON CREDIT
vendee should lose the right to make use of the terms as provided in art GEN RULE: The vendor is NOT bound to make delivery if the vendee has not paid the price.
1198.
EXCEPTION: If a period has been fixed for payment, the vendor must deliver the thing sold THOUGH the price is not yet paid.
EXCEPTION TO THE EXCEPTION: Vendor may not be compelled to make delivery, even if vendee was given the benefit of period, in case the
vendee should lose the right to make use of the term (Art 1198) & such vendee has NOT yet paid the price.
WHEN DOES A VENDEE LOSE EVERY RIGHT TO MAKE USE OF PERIOD: (1198)
1) When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the price
2) When he does not furnish to the creditor/vendor the guaranties or securities w/c he has promised
3) When by his own acts he has impaired said guaranties or securities after their establishment, & when thru a fortuitous event they disappear,
unless he immediately gives new ones equally satisfactory
4) When the debtor/vendee violates any undertaking, in consideration of w/c the creditor agreed to the period.
5) When the debtor/vendee attempts to abscond

1537. The vendor is bound to deliver the thing sold & its accessions &
accessories in the condition in w/c they were upon the perfection of the
contract.

CONDITION OF THING TO BE DELIVERED

The THING sold & its ACCESSIONS & ACCESSORIES must be in the
condition in w/c they were upon the perfection of the contract.
SELLERS DUTYAll the fruits shall pertain to the vendee from the day on w/c the contract 1) To preserve the thing pending delivery (relate to Arts. 1163 & 1164)
was perfected.
2) To deliver the thing sold in a condition suitable for its enjoyment by the
buyer for the purposes contemplated
Accessions are the fruits of a thing; additions to, or improvements
upon, a thing such as the young of animals, house or trees on a land,
etc.
Accessories are anything attached to a principal thing for its
completion, ornament, or better use such as picture frame, key of a
house, etc.
VENDEE IS ENTITLED TO THE FRUITS
Art. 1164 - the vendee has a right to the fruits of the thing sold from
the time the obligation to deliver it arises.
Art. 1475 - the obligation to deliver arises upon the perfection of the
contract of sale
VENDEE IS NOT ENTITLED TO THE FRUITS
1. When the rule provided in Art 1537(2) is modified by agreement of the
parties, their agreement shall govern.
2. If the vendee rescinds the contract of sale instead of exacting the
fulfillment thereof, he is entitled only to damages like interest,
attorneys fees & costs but he may not also claim the fruits of the thing
sold
3. In a contract of promise to sell, the vendee is not entitled to the fruits.
1538. In case of loss, deterioration or improvement of the thing before RULES IN CASE OF LOSS, DETERIORATION, OR IMPROVEMENT OF
its delivery, the rules in art 1189 shall be observed, the vendor being THING BEFORE DELIVERY (based on Art 1189)
considered the debtor.
1) If the thing is lost w/o the fault of the debtor, the obligation shall be
extinguished
2) If the thing is lost thru the fault of the debtor, he shall be obliged to pay
damages; it is understood that the thing lost when it perishes, or goes
out of commerce, or disappears in such a way that its existence is
unknown or it cannot be recovered;
3) When the thing deteriorates w/o the fault of the debtor, the impairment
is to be borne by the creditor
4) If it deteriorates thru the fault of the debtor, the creditor may choose for:
a. Rescission of obligation w/indemnity for damages, OR
b. Fulfillment w/ indemnity for damages
5) If the thing is improved by its nature, or by time, the improvement shall
inure to the benefit of the creditor
6) If it is improved at the expense of the debtor, he shall have no other
right than that granted to the usufructuary
1539. The obligation to deliver the thing sold includes that of placing in SALE OF REAL PROP BY UNIT OF MEASURE OR NUMBER
the control of the vendee all that is mentioned in the contract, in W/ Statement of area at the rate of a certain price for a unit or measure
conformity w/ the ff rules:
or number.
If the sale of real estate should be made w/ a statement of its area, at
If the vendee should demand, the vendor shall deliver ALL that may
the rate of a certain price for a unit of measure or number, the vendor have been stated in the contract.
shall be obliged to deliver to the vendee, if the latter should demand it,
all that may have been stated in the contract; but, should this be not If what is delivered is:
possible, the vendee may choose b/w a proportional reduction of the - LESS IN AREA OR INFERIOR or DIFFIRENT QUALITY
price & the rescission of the contract, provided that, in the latter case, Buyer may seek:
the lack in the area be not less than one-tenth of that stated.
1. Rescission if lack in area is at least 1/10 of area agreed upon
The same shall be done, even when the area is the same, if any part of 2. Rescission if the deficiency in quality specified in the contract exceeds
the immovable is not of the quality specified in the contract.
1/10 of the price agreed upon.
The rescission, in this case, shall only take place at the will of the 3. Rescission if the vendee would not have bought the immovable had he
vendee, when the inferior value of the thing sold exceeds 1/10 th of the
known of its smaller area or inferior quality
price agreed upon.
4. Proportional reduction of price.

thus, in Consing vs CA (1989) the Court ruled that a subdivision lot

seller should not shift to the buyer the burden of providing access to
& from the subdivision. It is the sellers duty to construct the
necessary roads in the subdivision that could serve as outlets. Proper
access to the residence is essential to its enjoyment
1166. The obli to give a determinate thing includes that of delivering
all its accessions & accessories, even though they may not have been
mentioned.
*Sale of the principal entitles the buyer to the accessions &
accessories, but sale of the accessories & accessions does not entitle
buyer to the principal.

Usufructuary a person who has the right to the benefits of anothers

property (BLD 9th Ed)
Usufruct - A right for a certain period to use and enjoy the fruits of
another's property without damaging or diminishing it (BLD 9 th Ed)
- the right to enjoy benefits or profits from something, as real
prop, while not being the owner of it.

The rule is different where there is violation of the warranty against

hidden defect (Art 1571). The vendor is also liable for damages --- Art
1567; 1191(2)
Judicial sales of immovable lacking in area or of inferior quality OR of
greater quantity ---- relate to Art 1552 & 1570)

Nevertheless, if the vendee would not have bought the immovable had - GREATER IN AREA
he known of its smaller area of inferior quality, he may rescind the sale. 1. Accept per stipulation & reject the rest
2. Accept the whole & pay the contract price
1540. If, in the case of the preceding art, there is a greater area or
number in the immovable than that stated in the contract, the vendee
may accept the area included in the contract & reject the rest. If he
accepts the whole area, he must pay for the same at the contract rate.
1541. The provisions of the two preceding arts shall apply to judicial
sales.
1542. In the sale of real estate, made for a lump sum & not at the rate
of a certain sum for a unit of measure or number, there shall be no
increase or decrease of the price, although there be a greater or less
area or number than that stated in the contract.

SALE OF REAL ESTATE MADE FOR A LUMP SUM - a cuerpo cierto/por precio alzado
If the sale is made for lump sum, & not so much per unit of measure or number, the cause of the contract is the thing sold independent &
irrespective of its number or measure.

2 types of pricing agreement

The same rule shall be applied when two or more immovables as sold for 1. Unit price contract purchase price is determined by way of reference to a stated rate per unit
a single price; but if, besides mentioning the boundaries, w/c is 2. Lump sum contract states a full purchase price for an immovable the area of w/c may be declared based on estimate or where both the
indispensable in every conveyance of real estate, its area or number
area & boundaries are stated. Example: P1M for 1,000 square meters.
should be designated in the contract, the vendor shall
be bound to deliver all that is included w/in said boundaries, even when Sale of real estate made for a lump sum
it exceeds the area or number specified in the contract; &, should he not 1)Mistake of area stated in contract immaterial
be able to do so, he shall suffer a reduction in the price, in proportion to the vendor is obligated to deliver all the land included w/in the boundaries, regardless whether the real estate should be greater or smaller
what is lacking in the area or number, unless the contract is rescinded
than they recited in the deed (Balantakbo vs CA)
b/c the vendee does not accede to the failure to deliver what has been The boundaries of the land stated in the contract determine the effects & scope of the sale, NOT the area thereof (Semira vs CA)
stipulated.
2)Where area or number stated together w/ boundaries (De Leon p.274-276)
If vendor cannot deliver to vendee all that is stated in the contract, the vendee has the option:
a. To reduce the price in proportion to the deficiency OR
b. To set aside the contract

Phrase should not be able to do so refers to a situation when the vendor cannot deliver all that is included w/in the boundaries b/c a
part or parcel of the real estate does not belong to him.
3)Where there is conflict b/w area stipulated & title to property (p.276)
Area included w/in the stipulated boundaries prevails over that w/c the title shows when the boundaries are certain & no alterations thereof has
been proven.
4)Where identity of erroneously designated property clearly established (p.277)
-the mistake in designating the property in the deed of sale does NOT vitiate consent of the parties or affect the validity & binding effect of the
contract
Remedy: have the document reformed
5)Where words about , more or less , etc. Are used (p. 277-278)
Words when used in connection w/ quantity or distance are intended to cover some slight or unimportant inaccuracy. They do NOT weaken or
destroy the statements of distance & quantity when no other guides are furnished.
CONFLICT B/W AREA STATED & BOUNDARIES
RULE: Natural boundaries will prevail over area.
Boundaries prevail b/c what really defines a piece of ground is NOT the area BUT the boundaries. Erroneous statement regarding area can be
disregarded-1) Where boundaries given are sufficiently certain, or
2) Where discrepancy in measurement is so great, provided, the natural boundaries are very clear & convincing
EXCEPTION: Area stated in the contract should be followed.
1) Where boundaries do not identify land or
2) overlapping of boundaries exists
When 2 or more real estates are sold for a single price, the rule is the same as when the real estate is sold for a lump sum. There shall be no
increase or decrease in the area actually delivered & the area stated in the contract (Beda MemAid)
Where price per unit is not indicated--GREATER/LESSER - No rescission or adjustment of price, UNLESS there is gross mistake.
1543. The actions arising from arts 1539 & 1542 shall prescribe in six months, counted from the day of delivery.