OBLIGATIONS OF THE SELLER

(1) To transfer ownership of the determinate thing [Art 1495]

MANNER OF TRANSFER – ARTS. 1477, 1496-1501

 General Rule: ownership of the thing sold shall be transferred to the vendee upon actual
or constructive delivery thereof [Art 1477]
 Obligation to transfer ownership and to deliver is implied in every contract of sale [Arts.
1458-1459]
 Transfer of ownership requires delivery [Art. 1495]
 Exceptions (elaborated later)

1. Contrary stipulation

2. Contract to sell

3. Contract of insurance

4. Sale on acceptance/Trial

5. When seller is not the owner or has voidable title

GENERAL CONCEPTS

 Transfer of ownership is effected even if the purchase has been made on credit.
 Payment of the purchase price is not essential to transfer of ownership as long as the
property sold was delivered.
 Intention to transfer ownership

1. All forms of delivery shall be coupled with intention of delivering the thing sold.

2. Seller must be owner or authorized by owner of the thing sold

 When right to transfer ownership must exist: At the time of delivery and not at the time
of perfection of contract of sale.
 Delivery comprises 2 obligations in Art. 1495:

1. Actual duty to deliver

2. Transfer of ownership – can only be accomplished via delivery

(2) To deliver the thing with its accessions and accessories [Arts 1164,
1166]
 CONCEPT OF DELIVERY

 Requisites

(1) Identity – must be delivered

(2) Integrity – in a condition suitable for enjoyment

(3) Intentional

 What to Deliver

(1) Thing sold [Art. 1495]

(2) Fruits [Art. 1164 & 1537]

(3) Accessions and accessories [Art. 1166 & 1537]

(a) Improvements by seller at his expense grants him a usufructuary right.

(b) No indemnification

(c) But he may remove it to the extent that there is no damage [Art. 1538]

 Where to Deliver

(1) A hierarchy is followed:

(a) Stipulation

(b) Usage of trade

(c) Seller’s place of business (office)

(d) Seller’s residence

(2) In case of specific goods, which the parties knew to be at some other place when
the contract was perfected, that place is the place of delivery

(3) If goods are at the time of sale possessed by a third person, then there is no
delivery until he acknowledges to the buyer that he holds the goods for the
buyer.

 When to Deliver

-Absent a stipulation as to time, delivery must be made within a reasonable time;

demand or tender of delivery shall be made at a reasonable hour.

-Hour of delivery: usually during business hours

 WHEN DELIVERY DOES NOT TRANSFER TITLE

(1) SALE ON APPROVAL OR TRIAL

General Rule: Title remains with the seller. Buyer has option to purchase goods if
proven satisfactory, the approval of the buyer being a condition precedent. (Same
exceptions with sale on return)

The relationship between seller and buyer, if no absolute sale yet, is that of a bailor and
bailee

If there is no time for approval specified but with period for trial, then approval shall be
made within a reasonable period after the trial period expires.

(2) SALE ON RETURN OR SATISFACTION

General Rule: Title remains with the seller for parties agree that buyer shall temporarily
take the goods into his possession to see if they are satisfactory to him (return if
unsatisfactory)

Exceptions:

(a) Buyer signifies his approval or acceptance to the seller

(b) Buyer does any other act adopting the transaction (i.e. sale to a third person)

(c) Retains the goods without giving notice of rejection after the time fixed has
expired; if no time has been fixed, after the expiration of a reasonable time [Art
1502, CC]

Loss or destruction of the property prior to return falls upon the buyer and makes him
responsible for the purchase price.

Difference between Sale on Approval and Sale on Return

Sale on Approval Sale on Return

Ownership does not pass upon delivery Ownership passes upon delivery, but buyer
may revest ownership in the seller by
returning or tendering the goods within the
time fixed in the contract

Depends on the character or quality of goods Depends on the will of the buyer
Subject to a suspensive condition Subject to a resolutory condition
Risk of loss remains with the seller Risk of loss remains with the buyer
 Express Reservation

 If it was stipulated that ownership in the thing shall not pass to the purchaser until
he has fully paid the price [Art 1478, CC]

Implied Reservation

 The following are instances when there is an implied reservation of ownership:

(a) Goods are shipped, but by the bill of lading goods are deliverable to the seller or
his agent, or to the order of the seller or his agent

(b) Bill of lading is retained by the seller or his agent.

(c) When the seller of the goods draws on the buyer for the price and transmits the
bill of exchange and bill of lading to the buyer, and the latter does not honor the
bill of exchange by returning the bill of lading to the seller.

(3) WHEN SALE NOT VALID

eg. When the thing sold is a public property

(4) WHEN SELLER IS NOT THE OWNER

 General Rule: Ownership is not acquired by the buyer. One cannot give what one
does not have. [Art 1505, CC]
 Exceptions:

(a) Seller has a Right to transfer ownership

 Seller need not be the owner of the thing at the time of perfection of the
contract. It is sufficient that seller has a right to transfer ownership thereof
at the time it is delivered. [Art. 1459]
 One who sells something he does not own yet is bound by the sale when
he acquires the thing later [Bucton vs Gabar, 1974]

(b) Estoppel: Owner is, by his conduct, precluded from denying the seller’s
authority to sell. [Art. 1434]

(c) Registered land bought in good faith

 General rule: Buyer need not go beyond the Torrens title

  Exception: When he has actual knowledge of facts and circumstances that
would impel a reasonably cautious man to make further inquiry

(d) Order of courts; Statutory Sale

 In execution sale, the buyer merely steps into the shoes of the
judgment debtor [Rule 39, sec. 33, ROC]

(e) When goods are purchased in Merchant’s store, Fair, or Market [Art 1505,
CC]

 The policy of the law has always been that where the rights and
interest of the vendor clash with that of an innocent buyer for value,
the latter must be protected. [Sun Brothers and Co. vs. Velasco, 1958]

(5) SALE BY PERSON HAVING A VOIDABLE TITLE

(a) True owner may recover the thing when the ff. requisites concur:

i. Subject matter is movable

ii. Owner has either lost the thing or has been unlawfully deprived.
[Art 559, CC]

(b) Reimbursement is necessary before owner can recover when:

i. Buyer acted in good faith

ii. Acquired at a public auction [Art 559, CC]

(c) Recovery no longer possible when:

i. Buyer in good faith

ii. Acquired it at a merchant’s store, fair or market. [Art 1506, CC]

KINDS OF DELIVERY

(1) ACTUAL DELIVERY

(a) When deemed made: when the thing sold is placed in the control and possession
of the vendee [Art. 1497]

(b) Not always essential to passing of title [Art. 1475]

(c) Parties may agree when and on what conditions the ownership shall pass to the
buyer [E.g.: Art 1478 where ownership will only pass after full payment of the price]
(2) CONSTRUCTIVE DELIVERY

Execution of public instrument [Art 1498, par. 1]

 General rule: produces the same legal effects of actual delivery.

 Exceptions:

i. The intention of the parties is otherwise.

ii. At the time of execution, the subject matter was not subject to the
control of the seller which must subsist for a reasonable length of
time after execution. [Pasagui v Villablanca, 1975]

“Control” over thing sold must be such that seller is capable of

physically transferring it to buyer.

Vda. de Sarmiento v. Lesaca (1960)

Although parties may stipulate that the execution of a public instrument is

equivalent to delivery, this legal fiction holds true only when there is no
impediment that may prevent the passing of the property from the vendor to the
vendee.

Power Commercial v. CA (1997)

If, notwithstanding execution of the instrument, the buyer cannot enjoy material
tenancy and make use of the object himself or through another in his name, there
is no delivery.

Spouses Santiago v. Villamor (2012)

Execution of a public instrument gives rise only to a prima facie presumption of

delivery, negated by failure of the buyer to take actual possession of land sold. A
person who does not have actual possession cannot transfer constructive
possession by execution and delivery of public instrument.

Villamor v. Mangaoil (2012)

There is symbolic delivery, unless from the express terms of the instrument, or by
clear inference therefrom, that the same was not the intention of the parties, e.g.
where the vendor has no control over the thing sold at the moment of the sale,
and, therefore, its material delivery could not have been made.

Symbolic Delivery
 Delivery of keys of the place or depositary where the movable is stored or kept.
[Art 1498, CC]
 Unless otherwise agreed, when symbolic delivery has been made, the seller is not
obliged to remove tenants to place the buyer in actual possession of the property
as he has already complied with his obligation to transfer ownership of and
deliver the thing sold. [Power Commercial and Industrial Corp. v. CA, 1997;
Sabio v. The International Corporate Bank, Inc., 2001]

Tradition Longa Manu (Long Hand)

 Delivery of thing by mere agreement.

o Example: Seller points to the property without actually transferring
physical possession thereof.
 When an employer assigned all its rights and title to all surplus property
salvaged by the contractor, tradition longa manu takes place. Delivery is upon
the moment a thing is salvaged. [Board of Liquidators v. Floro, 1960]

Tradition Brevi Manu (Short Hand)

 MOVABLE is delivered when the buyer had the thing already in his possession
before the sale took place, not as owner but as lessee, borrower, or depositary.

Tradition Constitutum Possessorium

 Seller continues to be in possession of the property sold, by virtue of a lease

contract agreement with the vendee.

Delivery to a Common Carrier

 General Rule: Delivery to the courier or carrier is tantamount to delivery to

buyer, whether carrier is named by buyer or not. The buyer assumes the risk of
loss.
 Exceptions
o Seller reserved title by the form of the bill of lading, with intent to remain
the owner, not merely for the purpose of securing payment, OR
o Contrary intention appears in the contract (i.e. seller is required to deliver
goods to buyer at the point of destination)
o F.O.B. (Free on Board or Freight on Board): When seller bears the
expenses of transportation up to the F.O.B. point.
o C.I.F. (Cost, Insurance, Freight): Price quoted includes the costs of the
goods, insurance, and freight charges on the goods up to the point of
destination.
o F.A.S. (Free Alongside): Seller bears the expenses of transportation until
he delivers the goods alongside a vessel at a named port.
(3) To warrant against eviction and against hidden defects [Arts 1545-
1581]
EXPRESS WARRANTIES

 For there to be express warranty, the following requisites must concur: (APIR)

(1) An affirmation of fact or any promise relating to the thing sold;

(2) The natural tendency of such affirmation or promise is to induce the buyer to
buy;

(3) The buyer buys the thing relying thereon. [Art. 1546]

(4) Made before the sale not upon delivery or any other point

 An express warranty can be made by and also be binding on the seller even in the
sale of a second hand article. [Moles v. IAC, 1989]

IMPLIED WARRANTIES – ART. 1547

 An implied warranty is derived by law by implication or inference from the nature

of the transaction or relative situation, or circumstances of the parties, irrespective of
any intention of the seller to create it.[De Leon]
 (TODS)
1. Implied Warranty of Title
2. Implied Warranty against Encumbrance/Non-Apparent Servitudes
3. Implied Warranty against Hidden Defects [Art. 1547]
 Implied warranty as to Merchantable Quality and Fitness of Goods
 Implied warranty against Redhibitory Defect in the Sale of Animals [Art.
1572]
 Quality and Fitness of Goods in Sale by Sample or Description
4. Other Warranties

(4) To take care of the thing, pending delivery, with proper diligence [Art
1163]
 Diligence of good father of the family, unless another standard of care is required.
 Seller is bound to deliver the thing and its accessions and accessories in the condition in
which they were upon perfection of contract.
  Otherwise, seller can be made liable for damages to the thing as a result of fraud,
negligence, or fault on his part during time between perfection of contract and delivery
to the buyer.

(5) To pay for expenses for the execution and registration of the deed of
the sale, unless there is stipulation to the contrary [Art 1487]