Chapter 5  Seller may require payment to be made at any time
OBLIGATIONS OF THE VENDEE after delivery.
Art. 1582. The vendee is bound to accept delivery
and to pay the price of the thing sold at the time
and place stipulated in the contract.
If the time and place should not have been
stipulated, the payments must be made at the
time and place of the delivery of the thing sold.
Principal Obligations of the Buyers
The buyers must:
(a) accept delivery
(b) pay the price
 Tender of payment ought to be made in legal tender
(not a check), unless another mode is accepted by
the creditor (Soco v. Judge Militante GR 58961, Jan.
28, 1983).
Bar
On Jan. 5, A sold and delivered his truck, together with
the corresponding certificate of public convenience to B
for the sum of P600,000, payable within 60 days. Two
weeks after the sale, and while the certificate of public
convenience was still in the name of A, it (the
certificate) was revoked by the Public Service
Commission thru no fault of A. Upon the expiration of
the 60-day period, A demanded payment of the price
from B. B refused to pay, alleging that the contract of
sale was VOID for the reason that the certificate of
public convenience which was the main consideration of
the sale no longer existed. Is the contention of B
tenable? Reasons.
ANS.: Under the circumstances, the contention of B is
NOT tenable.
(a) Firstly, it cannot be correctly contended that the sale
is void, since the consideration actually existed at the
time of the perfection of the sale. The subsequent
revocation of the certificate thru no fault of A is
immaterial.
(b) Secondly, what B should have done immediately
after the sale was to take steps to have the Public
Service Commission transfer the certificate to his name.
(Serrano v. Miave, et al., L-14678, Mar. 31, 1965).
(c) Thirdly, while the Public Service Law requires that
the sale or assignment of a certificate of public
convenience, together with the property used in the
operation of the same, should be approved by the Public
Service Commission –– for the protection of the public,
still as between A and B, the contract is efficacious as
all the essential requisites of the contract were present
at the time of the perfection thereof.
[NOTE: Unless the deed of conveyance is executed, the
buyer as a rule is not required to pay the price. (Lafont
v. Pascasio, 5 Phil. 391).]
Effect of Delivery When No Time Has Been Fixed
for Payment of the Price
 Buyer here has the duty to pay the price
immediately upon demand (Ocejo v. Int. Bank, 37
Phil. 631).
Effect of Deviations from the Contract
If the seller is forced to deviate from the provision of the
contract, but the purchaser consents or agrees to such
deviations, the purchaser should still pay the price.
(Engel v. Velasco & Co., 47 Phil. 15).
Art. 1583. Unless otherwise agreed, the buyer of
goods is not bound to accept delivery thereof by
installments.
Where there is a contract of sale of goods to be
delivered by stated installments, which are to be
separately paid for, and the seller makes defective
deliveries in respect of one or more installments,
or the buyer neglects or refuses without just
cause to take delivery of or pay for one or more
installments, it depends to each case on the terms
of the contract and the circumstances of the case,
whether the breach of contract is so material as to
justify the injured party in refusing to proceed
further and suing for damages for breach of the
entire contract, or whether the breach is
severable, giving rise to a claim for compensation
but not to a right to treat the whole contract as
broken.
Generally, No Delivery by Installments
 Reason: performance must generally be complete.
 Exception to Rule: express provisions.
Rule in Case of Installment Deliveries
The second paragraph states the rules for delivery by
installments, and distinguishes whether the breach is
severable or not.
Antipolo Realty Corp. v. National Housing
Authority
GR 50444, Aug. 31, 1987
FACTS: For failure of the Realty Company to develop the
subdivision project, the buyer paid only the averages
pertaining to the period up to and including the month
of Aug., 1972 and stopped all monthly payments falling
due thereafter. In Oct. 1976, the Realty Company
advised the buyer that the improvements had already
been completed and requested resumption of
payments. In another letter, the Realty Company
demanded immediate payment of the P16,000
representing installments which it said accrued during
the period while the improvements were being
completed. The buyer refused to pay the 1972-1976
installments, but agreed to pay the post 1976
installments.
ISSUE: What happens to the installment payments
which would have accrued and fallen due during the
period of suspension had no default on the part of the
realty company intervened?
HELD: The original period of payment in the Contract to
Sell must be deemed extended by a period of time equal
to the period of suspension (i.e., by 4 yrs., two [2]
months) during which extended time (tacked on to the
original contract period) the buyer must continue to pay
the monthly installment payments until the entire
original contract price shall have been paid.
To permit the Antipolo Realty to collect the disputed
amount in a lump sum after it had defaulted in its
obligations to its lot buyers would defeat the purpose of
the authorization (under Sec. 23, PD 957) to lot buyers
to suspend installment payments. Such must be the
case, otherwise, there is no sense in suspending
payments. Upon the other hand, to condone the entire
amount that would have become due would be
excessively a harsh penalty upon the seller and would
result in the unjust enrichment of the buyer at the
expense of the seller. The suspension of installment
payments was attributable to the realty company, not
to the buyer. The tacking of the period of suspension to
the end of the original period prevents default on the
part of the lot buyer.
Under Sec. 23, PD 957, “no installment payment made
by a buyer in a subdivision or condominium project for
the lot or unit he contracted to buy shall be forfeited in
favor of the owner or developer when the buyer, after
due notice to the owner or developer, desists from
further payment due to the failure of the owner or
developer to develop the subdivision or condominium
project according to the approved plans and within the
time limit for complying with the same. Such buyer may,
at his option, be reimbursed the total amount paid
including amortization and interests but excluding
delinquency interest, with interest thereon at the legal
rate.’’
Art. 1584. Where goods are delivered to the buyer,
which he has not previously examined, he is not
deemed to have accepted them unless and until he
has had a reasonable opportunity of examining
them for the purpose of ascertaining whether they
are in conformity with the contract if there is no
stipulation to the contrary.
Unless otherwise agreed, when the seller tenders
delivery of goods to the buyer, he is bound, on
request, to afford the buyer a reasonable
opportunity of examining the goods for the
purpose of ascertaining whether they are in
conformity with the contract.
Where goods are delivered to a carrier by the
seller, in accordance with an order from or
agreement with the buyer, upon the terms that
the goods shall not be delivered by the carrier to
the buyer until he has paid the price, whether such
terms are indicated by marking the goods with the
words “collect on delivery,” or otherwise, the
buyer is not entitled to examine the goods before
the payment of the price, in the absence of
agreement or usage of trade permitting such
examination.
When Buyer Has Right to Examine
Generally, the buyer is entitled to examine the goods
prior to delivery. And this is true even if the goods are
shipped F.O.B. (free on board). (See Decezo v.
Chandler, 206 N.Y.S.).
Grageda v. IAC
GR 67929, Oct. 27, 1987
FACTS: On Mar. 26, 1975, Dino ordered from Francisco
500 sets of pyrex trays. Prior to Apr. 27, 1975, Francisco
delivered some of the items but Dino outrightly rejected
them. After making the proper corrections, Francisco
made subsequent deliveries on Apr. 27, Apr. 30, May 1,
May 3, May 12, and May 27, 1975. Dino’s caretaker duly
received the deliveries. On several occasions, Francisco
demanded payment for the total value of the deliveries
but Dino asked for extension of time within which to
pay. On Jun. 20, 1975, Dino sent a letter to Francisco,
telling Francisco that he rejects the items delivered.
Because of this, Francisco sued Dino for payment.
HELD: The delay in the advice or notice of rejection—
almost two months after receipt — was rather too late.
Art. 1584 accords the buyer the right to a reasonable
opportunity to examine the goods to ascertain whether
they are in conformity with the contract. Such
opportunity to examine, however, should be availed of
within a reasonable time in order that the seller may not
be subjected to undue delay or prejudice in the payment
of his raw materials, workers and other damages which
may be incurred due to the deterioration of his products.
The buyer is deemed to have accepted the goods when,
after the lapse of a reasonable time he retains them
without intimating to the seller that he has rejected
them.
When Buyer Has No Right to Examine
(a) when there is a stipulation to this effect. (Art.
1584, par. 1).
(b) when the goods are delivered C.O.D. — unless
there is an agreement or a usage of trade
PERMITTING such examination. (Art. 1584, par.
2).
Art. 1585. The buyer is deemed to have accepted
the goods when he intimates to the seller that he
has accepted them, or when the goods have been
delivered to him, and he does any act in relation
to them which is inconsistent with the ownership
of the seller, or when, after the lapse of a
reasonable time, he retains the goods without
intimating to the seller that he has rejected them.
When There is Acceptance of the Goods
The Article gives three ways of accepting the goods:
(a) express acceptance
(b) when buyer does an act which only an owner can do
(c) failure to return after reasonable lapse of time
Kerr & Co. v. De la Rama
11 Phil. 453
FACTS: Buyer accepted goods despite delay. Buyer also
promised later on to pay. Subsequently, buyer asked for
damages on account of the delay.
HELD: Buyer is estopped because of the acceptance
without reservation at the time of acceptance.
Art. 1586. In the absence of express or implied
agreement of the parties, acceptance of the goods
by the buyer shall not discharge the seller from
liability in damages or other legal remedy for
breach of any promise or warranty in the contract
of sale. But, if, after acceptance of the goods, the
buyer fails to give notice to the seller of the breach
in any promise of warranty within a reasonable
time after the buyer knows, or ought to know of
such breach, the seller shall not be liable therefor.
Even if Buyer Accepts, Seller Can Still Be Liable
(a) Reason for the last sentence. To prevent
afterthoughts or belated claims.
(b) The buyer is allowed to set up the breach of the
warranty or promise as a set-off or counterclaim
for the price. (William v. Perrota, 95 Conn. 629).
Art. 1587. Unless otherwise agreed, where goods
are delivered to the buyer, and he refuses to
accept them, having the right to do, he is not
bound to return them to the seller, but it is
sufficient if he notffies the seller that he refuses
to accept them. If he voluntarily constitutes
himself a depositary thereof, he shall be liable as
such.
Effect if Buyer Justifiably Refuses to Accept the
Delivery
(a) buyer has no duty to return the goods to the
seller
(b) mere notification to seller of refusal will suffice
(c) but buyer may make himself a voluntary
depositary –– in which case he must safely take
care of them in the mean time
Art. 1588. If there is no stipulation as specified in
the first paragraph of article 1523, when the
buyer’s refusal to accept the goods is without just
cause, the title thereto passes to him from the
moment they are placed at his disposal.
Effect if Buyer Unjustifiably Refuses to Accept the
Delivery
Generally, the buyer becomes the owner. Exception —
when there is a contrary stipulation or when the seller
reserves the ownership as a sort of security for the
payment of the price. (See Arts. 1523 and 1503, Civil
Code).
Art. 1589. The vendee shall owe interest for the
period between the delivery of the thing and the
payment of the price, in the following three cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce
fruits or income;
(3) Should he be in default, from the time of
judicial or extrajudicial demand for the payment
of the price.
When Buyer Has to Pay for Interest on the Price
This Article answers the question: “In what cases is the
buyer liable for interest on the price?”
[NOTE: If the buyer fails to give the money after the
contract is notarized, although he had previously
promised to do so, there is default with liability for legal
interest. (De la Cruz v. Legaspi, L-8024, Nov. 29,
1955).]
The Three Cases Contemplated
(a) In No. (1), no demand is needed.
(b) In No. (2), the reason for the law is that the
fruits or income is sufficient to warrant the
payment of interest.
(c) In No. (3), “default” is mora, called “in delay”
under the provisions of the Civil Code.
Rule for Monetary Obligations
In a monetary obligation (like the obligation to pay the
purchase price) in the absence of stipulation, legal
interest takes the place of damages. This is so even if
the damages are actually more or less. The possibility
of gain because of an investment should be discounted;
instead of a gain, there might be a loss. Therefore, the
law has compromised on legal interest. (Quiros v. Tan
Guinlay, 6 Phil. 675).
Art. 1590. Should the vendee be disturbed in the
possession or ownership of the thing acquired, or
should he have reasonable grounds to fear such
disturbance, by a vindicatory action or a
foreclosure of mortgage, he may suspend the
payment of the price until the vendor has caused
the disturbance or danger to cease, unless the
latter gives security for the return of the price in
a proper case, or it has been stipulated that,
notwithstanding any such contingency, the
vendee shall be bound to make the payment. A
mere act of trespass shall not authorize the
suspension of the payment of the price.
When Buyer May Suspend the Payment of the
Price
The buyer may SUSPEND the payment of the price if:
(a) There is a well-grounded fear (fundado temor).
(b) The fear is because of:
1) a vindicatory action or action to recover, or
2) a foreclosure of mortgage.
[NOTE: (a) The fear must not be the result of any other
ground, like the vendor’s insanity. (b) A mere act of
trespass is made by one claiming no legal right
whatsoever. Here, the buyer is not authorized to
suspend the payment of the price.]
Problem
S sold and delivered to B a parcel of land for P2 million
payable within 30 days from the date of the contract.
Soon after the sale, X claims ownership over the land
by virtue of a prescriptive title. May B suspend the
payment of price? Why?
If, in order to avoid trouble, B pays off X to settle the
latter’s claim to the land, may B recover the amount
paid as against S upon S’s warranty in case of eviction?
Reason.
ANS.: Yes, B may suspend the payment of the price
because of a reasonable fear that an accion
reivindicatoria will be brought against him. It is not
necessary that the vindicatory action has already been
brought: reasonable fear thereof is sufficient. (10
Manresa 274-276, 280-281). Should B and X come to
an amicable settlement, B cannot recover from S
because there really was no eviction. B was indeed not
deprived of the thing purchased. (Art. 1548, Civil Code).
Bareng v. Court of Appeals, et al.
L-12973, Apr. 25, 1960
FACTS: Bareng bought cinematographic equipment
from a certain Alegria for P15,000. He paid P11,400
down, and executed a promissory note for the balance.
On the date of maturity, he refused to pay the balance,
alleging that a certain Ruiz had informed him that he
(Ruiz) was a co-owner of Alegria of the properties
purchased, and that he was not in conformity with the
sale. Suit was brought by Alegria for the recovery of the
balance. While the suit was pending, Alegria caused the
disturbance over the ownership to cease by
compromising with Ruiz for the latter’s share.
Issue: Aside from paying the balance, does Bareng have
to pay any legal interest thereon? If so, from what time?
HELD: Bareng is liable for interest, not from the time of
demand — for he was justified in suspending payment
from the time he learned of Ruiz’s adverse claims –– but
from the time Alegria had “caused the disturbance or
danger to cease” by entering into compromise with Ruiz.
The compromise Bareng knew about –– for he was a
party in the case.
Art. 1591. Should the vendor have reasonable
grounds to fear the loss of immovable property
sold and its price, he may immediately sue for the
rescission of the sale.
Should such ground not exist, the provisions of
Article 1191 shall be observed.
When Seller May Immediately Sue for the
Rescission of the Sale
The seller must have reasonable grounds to fear:
(a) LOSS of the immovable property sold, and
(b) LOSS of the price.
So, if the buyer is squandering his money, but the
immovable property remains untouched, this article
cannot apply.
Rule if Neither Ground Exists
If neither ground exists, Art. 1191 applies. Art. 1191
provides:
“The power to rescind obligations is implied in reciprocal
ones, in case one of the obligors should not comply with
what is incumbent upon him.
The injured party may choose between the fulfillment
and the rescission of the obligation, with the payment
of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should
become impossible.
“The court shall decree the rescission claimed, unless
there be just cause authorizing the fi xing of a period.
“This is understood to be without prejudice to the rights
of third persons who have acquired the thing, in
accordance with articles 1385 and 1388 and the
Mortgage Law.”
Art. 1592. In the sale of immovable property, even
though it may have been stipulated that upon
failure to pay the price at the time agreed upon
the rescission of the contract shall of right take
place, the vendee may pay even after the
expiration of the period, as long as no demand for
rescission of the contract has been made upon him
either judicially or by a notarial act. After the
demand, the court may not grant him a new term.
Rescission of Sale of Real Property
(a) This is only applicable to a sale of real property, not
to a contract TO SELL real property or to a promise TO
SELL real property, where title remains with the vendor
until fulfillment of a positive suspensive condition, such
as the full payment of the price. (Manuel v. Rodriguez,
L-13436, Jul. 27, 1960). In the contract TO SELL, where
ownership is retained by the seller and is not to pass
until the full payment of the price, such payment is a
positive suspensive condition, the failure of which is not
a breach, casual or serious but an event that prevents
the obligation of the vendor to convey title from
acquiring binding force. To argue that in case of failure
to pay there is only a casual breach is to proceed from
the false assumption that the contract is one of absolute
sale, where non-payment a mere resolutory condition.
(Ibid.).
(b) This article applies whether or not there is a
stipulation for automatic rescission. The law says “even
though.”
(c) The demand may be:
1) judicial
2) extrajudicial (this must however be by notarial
act).
(d) The demand is not for the payment of the price, but
for the RESCISSION of the contract. (10 Manresa 288).
If the demand for such rescission comes only AFTER the
offer to pay the balance (accompanied by a postal
money order for the amount due), the automatic
rescission cannot of course legally take place. (Maximo,
et al. v. Fabian, et al., L-8015, Dec. 23, 1955).
(e) The demand is not for the payment of the price BUT
for the RESCISSION of the contract. (Manresa, Vol. 10,
p. 288).
Example of this Article
On Jul. 1, A sold B a piece of land, payment and delivery
to be made on Jul. 15. It was stipulated that should
payment not be made on Jul. 15, the contract would
automatically be rescinded. On Jul. 20, can B still pay?
ANS.: Yes, as long as there has been no judicial or
notarial demand for the rescission of the contract. But
if, for example on Jul. 18, A had made a notarial demand
for such a rescission then B will not be allowed to pay
anymore, and the court may not grant him a new term.
The Demand Needed
Be it noted that the demand is not for the payment of
the price inasmuch as the seller precisely desires to
rescind the contract. To say that it should be the
demand for the price would lead to the anomalous
paradoxical result of requiring payment from the buyer
for the very purpose of preventing him from paying. It
is, therefore, a demand for rescission; the term having
expired, the seller does not want to continue with the
contract. (Villareal v. Tan King, 43 Phil. 251, citing 10
Manresa 288).
Rule in Contracts to Sell
As already stated, Art. 1592 does NOT apply to a
promise to sell (Mella v. Vismanos, 45 O.G. 2099) nor
to a contract TO SELL. (Jocson v. Capitol Subdivision,
Inc., et al., L-6573, Feb. 28, 1955 and Manuel v.
Rodriguez, Sr., L-13435, Jul. 27, 1960). Thus, in the
case of Jocson, the legality of the following clauses in a
contract TO SELL was SUSTAINED — “That it is hereby
agreed and understood that in the event the BUYER
should fail to pay any of the installments as and when
the same falls due, the SELLER shall have the right at
her option to consider this contract cancelled and
rescinded and that all the amount therefor paid by the
BUYER unto the SELLER shall be considered as rental for
the use of said property up to the date of such default,
and said BUYER shall have no right of action against the
SELLER for the recovery of any portion of the amount
thus paid; that in the event this contract be declared
rescinded upon default of the BUYER in the payment of
any installment as and when it falls due, said SELLER
shall have the right not only to sell and dispose of the
property covered by this sale, that is to say, the above
described buildings, as well as the leasehold rights on
the property upon which the buildings are constructed,
but said SELLER shall have the right furthermore, to
take possession of said property upon notice of such
cancellation.”
[NOTE: Incidentally, if the installment buyer were to
delay payment for several installments, and later sell
the property to another buyer with the consent of the
Subdivision, can the Subdivision still make use of the
forfeiture clause even as against the new buyer, if said
new buyer should also fail to pay the installments?
HELD: Yes. First, there was no express waiver. Mere
tolerance or liberality to the first buyer does not
establish an obligation to be liberal to the second buyer.
Mere tolerance or liberality to the first buyer does not
necessarily mean a waiver thereof. Secondly, the
forfeiture here would be predicated on the second
buyer’s default, not on the first buyer’s. For with respect
to the first buyer, the consent to the assignment
necessarilyvwaives any right to forfeiture accruing
before such assignment. (Jocson v. Capital Subdivision,
L-6573, Feb. 28, 1955).]
Legarda Hermanos and Jose Legarda v.
Felipe Saldaña and Court of Appeals
L-26578, Jan. 28, 1974
FACTS: Saldaña bought two lots from the Legarda
Hermanos Subdivision on the installment plan (120
installments).
After paying for 95 installments (for each lot) he
stopped payment, but five years later, wanted to
resume payment.
The Subdivision Company informed him that the
contracts had been cancelled and the payments
forfeited conformably with the terms of the contract.
Saldaña was able to prove, however, that considering
the total amount he had paid, the same already covered
the full purchase price of one lot. Can Saldaña get one
lot?
HELD: Yes. The giving by the Company of one lot to
Saldana, and the cancellation of the contract pertaining
to the other lot, does not deny substantial justice to the
subdivision.
Besides, in a sense there was substantial performance.
(See also Art. 1234, Civil Code).
Roque v. Lapuz
L-32811, Mar. 31, 1980
Art. 1592 of the Civil Code, which speaks of the
rescission of contracts of sale of real property, does not
apply to contracts to sell real property on installments.
Joseph and Sons Enterprises, Inc. v. CA
GR 46765, Aug. 29, 1986
Art. 1592 of the Civil Code, which permits the vendee to
pay, even after the expiration of the period, as long as
no demand for rescission of the contract has been made
upon him either judicially or by notarial act does not
apply to a contract to sell or a deed of conditional sale.
Leberman Realty Corp. & Aran Realty &
Development Corp. v. Joseph Typingco and CA
GR 126647, Jul. 29, 1998
FACTS: Petitioners cancelled the contract before the
period to pay arrived.
ISSUE: Was private respondent guilty of failure to pay
the price of the land within the period agreed upon?
HELD: No. Petitioners’ argument that respondent failed
to exercise his option to buy within the period provided
in the contract, and which period expired/lapsed during
the pendency of the case, is plainly absurd. For how
could private respondent have exercised the option
granted him under the “Option to
Buyer” clause when the contract itself was
rejected/cancelled by the petitioners even before the
arrival of the period for the exercise of said option?

The invocation by petitioners of Art. 1592 is misplaced.

The provision contemplates of a situation where the
buyer who failed to pay the price at the time agreed
upon, may still pay, even after the expiration of the
period, as long as no demand for rescission has been
made upon him either judicially or by a notarial act.

Effect of Stipulation Allowing the Taking of

Possession

Incidentally, a stipulation in a contract to sell realty

entitling one party to take possession of the land and
building if the other party violates the contract does NOT
exproprio vigore (by its own force) confer upon the
former the right to take possession thereof if objected
to, without judicial intervention and determination.
(Nera v. Vacante, et al., L-16725, Nov. 29, 1961).

Art. 1593. With respect to movable property, the

rescission of the sale shall of right take place in
the interest of the vendor, if the vendee, upon the
expiration of the period fixed for the delivery of
the thing, should not have appeared to receive it,
or having appeared he should not have tendered
the price at the time, unless a longer period has
been stipulated for its payment.

Rescission of Sale of Personal Property

(a) This article should apply only if the object sold
has not been delivered to the buyer.
(b) If there has already been delivery, other
articles, like Art. 1191 would be applicable. In
this case automatic rescission is not allowed. An
affirmative action is necessary (Guevarra v.
Pascual, 12 Phil. 311), the action being one to
rescind judicially, if the buyer refuses to come
to amicable settlement. (Escueta v. Pando, 42
O.G., No. 11, p. 2759).

Example of the Article

The seller and the buyer agreed that payment and
delivery would be made on Jul. 15, at the buyer’s house.
If the buyer does not appear on said day, or having
appeared, he should not have tendered the price at the
same time, then the sale can be considered as
automatically rescinded.

Right, Not Obligation, to Rescind

If in a contract the seller is authorized to rescind the
sale in case of breach, this does not necessarily mean
that he is obliged to do so. (Ramirez v. Court of Appeals
& Muller Nease, L-6536, Jan. 25, 1956, 52 O.G. 779).