Definition
Sales- A contract whereby one contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the
other party obligates himself to pay therefor a price certain in money.
Elements:
1. Essential - C-O-C
2. Natural – those which are deemed to exist in certain contracts, in
absence of any contrary stipulations
3. Accidental – they refer to particular stipulations of the parties.
Characteristics:
1. Principal
2. Nominal
3. Bilateral
4. Title
5. Onerous
6. Commutative
7. Consensual
Contract of sale vs Contract to sell
Contract of Sale – the perfection of the contract gives rise to reciprocal
demandable obligations;
1. Transfer ownership and deliver possession of the subject.
2. To pay a price certain in money or its equivalent.
Title passes to the buyer upon delivery of the thing sold.
Failure to pay, transaction ends. (negative resolutory condition)
Vendor has lost and cannot recover the thing sold and delivered,
actually or constructively, until and unless the contract of sale itself is
resolved and set aside.
Vendee becomes the owner once the thing sold was delivered.
Contract to Sell – the perfection of the contract only gives rise to a
reciprocal suspensive conditional obligation on the part of the seller to
transfer ownership only upon fulfillment of the obligation of the buyer to
pay the price in full.
Ownership is reserved in the seller and will pass only to the buyer
upon full payment of the price.
Full payment is a positive suspensive condition, the failure of
which is not a breach, casual or serious, of the contract but simply an
event that prevents the obligation of the vendor to convey title from
acquiring a binding force.
The title remains to the vendor if the vendee does not comply with
the condition precedent of making payment at the time specified in the
contract.
Vendor still needs to execute another instrument conveying the
property to the vendee.
Contract to Sell gives exclusive right and privilege to purchase an object. It
is a bilateral contract where the prospective seller, while expressly
reserving the ownership of the subject property despite delivery thereof
to the prospective buyer, binds himself to sell the said property exclusively
to the prospect buyer upon fulfillment of the positive suspensive
condition. Failure to do so is not a breach but a situation preventing the
obligation of the vendor to convey title from acquiring obligatory force.
(non-fulfillment = no contract to speak of).
Option Contract
It is a contract granting a privilege to one person, for which he has paid a
consideration, giving him the right to buy certain property at any time
within the agreed period at a fixed price. (Preparatory contract).
When the option contract has no separate consideration, the same is void
and can be withdrawn at anytime notwithstanding the acceptance made
previously by the offeree.
Right of First Refusal
It is a right of first priority, wherein all things and conditions being equal,
and there is identity of the terms and conditions offered to the optionee
and all other prospective buyers, the optionee enjoys the right of first
priority.
Art. 1479 – promise to sell a determinate thing coupled with a correlative
promise to buy at a specified price is binding and executory agreement.
 Parties are only given right to demand fulfillment of the contract,
or damages in case of breach. Gross Inadequacy – General Rule: Valid
Exceptions
A.1479 par 2. 1) vitiated consent
2)price is so low that it is shocking to the conscience
1. Bilateral promise to buy and sell – when one party accepts the other’s 3)Simulated price
promise to buy, and the latter accepts the former’s promise t o sell a 4)Simulated Contract
determinate thing for a price certain, it has the same effect as a perfect
contract of sale since it is reciprocally demandable. No Price Agreed: General Rule: Inefficacious
Exception: If the thing has been delivered and the buyer appropriated the
2. Accepted unilateral promise – effect – perfected contract if supported same. Reasonable price must be paid.
by a separate consideration Until acceptance, considered as offer to sell.
Formalities of Contract of Sale
Earnest Money – something of value to show that the buyer was really in
earnest, and given to the seller to bind the bargain. It is part of the General Rule: Any Form
purchase price and is considered as proof of perfection of the contract (A. Exceptions:
1485) Sale of a piece of land or any interest therein through an agent
Sale of large cattle
OBJECT OF SALE Sale of a land by a non-Muslim hill tribe cultural minority if not
approved by the National Commission on Indigenous people.
1. Rights – must be transferrable and Licit.
Exceptions – Future Inheritance and Service’ For Enforceability purposes
2. Things – Must be Actual and Licit. The following must be in writing
Actual – existing, future or subject to resolutory condition 1) >500 pesos personal property
Licit – within commerce of man, not untransmissible, must not 2) Real property or any interest therein
contemplate future inheritance. 3) Sale shall not be performed within one year from execution thereof
3. Determinate or at least Determinable 4) When the Law requires so.
Principle of Emptio Rei Seperatae – sale of thing with potential Exceptions
existence, subject to a suspensive condition that the thing will come into 1) Partial consummation
existence. Only applicable to determinate thing. 2) Failure to object to the presentation of evidence aliunde
Principle of Emptio Spei – sale of mere hope or expectancy, which 3) E-commerce Act
is deemed subject to a suspensive condition that the thing will come into 4) When the same is reduced to a note or memorandum subscribed by the
existence. party charged

PRICE
1. Real
2. Certain or ascertainable
3. Money or its equivalent
 Sale by a co-owner
Capacity to buy or sell Special rights of unpaid seller

General Rule: All persons, whether natural or juridical, who can bind Title as to movable property
themselves, have the capacity Possession in good faith is equivalent to title
Exception:
Exception: Owner lost the same
Absolute Incapacity Unlawful deprivation
1) Minor
2) Insane or Demented Effect on Contract when the Thing Sold was Lost
Object Entirely Lost – contract void/inexistent (A.1409) (no object
Relative Incapacity [A.1318])
1) Husband and wife
2) Relation to the Property Object Partially Lost – Vendee has the right to choose whether to
withdraw from the contract or demand for the remaining part of
a. Guardian, with respect to the property of his ward
the object and pay the proportionate price.
b. Agents, with respect to the property whose administration or sale may
have been entrusted to him.
Loss of Specific Goods – (goods identified and agreed upon at the time of
3) Executor or Administrator, with respect to the estate entrusted to him
the contract [A.1636])
4) Public Officer or employees, with respect to the properties of the gov’t
Rescission or withdrawal
entrusted to him
Give Legal effect upon paying the proportionate price
5) Judges, Justices, Prosecuting Attorneys, with respect to the property in
custodia legis
OBLIGATIONS OF THE VENDOR
1) Accord the vendee the right to examine the goods
Especially Disqualified
2) Deliver the thing sold
1) Aliens
3) Deliver the fruits and accessories
2) Unpaid seller having right of lien or having stopped the goods in transit. 4) Enter into a contract with the carrier on behalf of the vendee as maybe
Prohibited to buy the same in case of resale. reasonable under the circumstance
3) Officer conducting execution sale 5) Take care of the thing, upon perfection and prior to the delivery, with
the Diligence of a Good Father of a Family.
Sale by Non-Owner 6) Make warranties
7) Pay for the expenses for the execution and registration of the sale,
General Rule: the buyer acquires no better right from the seller unless there is a contrary stipulation.
Exceptions: 8) Notify the buyer regarding the necessity to insure the goods if it is usual
Estoppel to insure them
Sale by registered or apparent owner 9) Transfer ownership
Sale sanction by judicial decree
Purchase in merchant’s stores, fairs or markets Transfer of Ownership – transfer of the thing sold is acquired only upon its
Seller who subsequently acquired title or ownership thereto delivery to the buyer.
Seller has voidable title and the buyer acquires the same in good
faith, for value and without notice of the seller’s defect
Exceptions:
1) Pactum Reservati Domini – (contractual reservation of title) usually
done if the purchase price is not yet fully paid.
2) Contract to Sell
3) Sale on Accpetance/ Trial/ Approval/ Satisfaction
4) Implied Reservation of Ownership under A. 1503
a. When goods were shipped and the goods are deliverable to the
seller (or agent) through the bill of lading, the seller reserves ownership of
the goods.
b. When goods were shipped and the goods are deliverable to the buyer
(or agent) through the bill of lading, the seller reserves a right of
possession of the goods.
c. Where the seller of the goods draws on the buyer for the price and
transmit the bill of lading and bill of exchange to the buyer to secure
acceptance or payment of the bill of exchange and the buyer does not
honor the bill of exchange.
Delivery of the thing sold – mode of acquiring ownership. Maybe actual or
constructively placing the object in possession and control of the vendee.
Requisites: 1) Identity; 2) Integrity; and 3) Intentional
KINDS OF DELIVERY
1) Actual or Real – placing the thing under control and possession of the
buyer
2) Legal or Constructive – delivery by fiction of Law
a. Seller must have actual possession over the thing
b. The object must be placed under control of the vendor
c. There must be the intention to deliver the thing for purposes of
transferring the ownership.
Types:
i) Delivery by execution of public instrument (i.e. Notarized Deed of Sale)
Exceptions
a. Contrary stipulation
b. When at the time of the execution of the instrument, the seller has no
control over the subject matter or there is impediment that may prevent
the passing of the property.
c. The control or ability to transfer physical possession and enjoyment
does not subsist for a reasonable length of time after the execution of the
instrument.
ii) Traditio Symbolica – Symbolic delivery of the thing sold
iii) Traitio Longa Manu (Long hand delivery) – by mere agreement pointing
out the property without actual delivery
iv) Traditio Brevi Manu (Short hand delivery) – The thing sold is already in
the possession of the buyer prior to the contract of sale (not as an owner)
v) Traditio Constitutum Possessorium – continuous possession by the seller
of the thing sold.
3) Tradition by Operation of Law – when a non-owner sells and delivers a
thing subsequently acquired title thereto, the title passes by operation of
law to the buyer
4) Delivery through Document of Title – Negotiable Instrument
5) Delivery Through a Carrier – as a rule, when a seller is authorized or
required to send goods to the buyer, delivery to the carrier constitutes
delivery to the buyer.
Exceptions
1) Contrary stipulation; and
2) Reservation of Ownership
Delivery of rights, credits, or incorporeal things
1) Execution of public instrument
2) Placing the titles of ownership in the possession of the vendee
3) Use by the vendee of his rights with the consent of the vendor
When Vendor is not bound to deliver.
1) Vendee did not pay the price (exception – contrary stipulation and the
date and time of the delivery has been agreed upon)
2) If no period of payment has been agreed
3) Period has been fixed but the vendee has lost the time to use the term
Place of delivery
1) Stipulation
2) Absence any agreement, place is determined by the usage of trade
3) Absence of both, seller’s place of business
4) Other cases, seller’s residence
5) In cases of specific goods, place where specific goods were located the
time of perfection of the contract of sale
Time of Delivery – Stipulation, in absence thereof, within a reasonable
time
Unless otherwise agreed, the seller bears the expenses to place the thing
in a deliverable state (A. 1521)
As-is where-is type of sale – pertains only to the physical condition of the
thing sold, not to its legal situation, and therefore does not amount to a
waiver on the legal defects pertaining to the subject matter.
Sale on acceptance, trial, approval or satisfaction – A contract in the
nature of option to purchase if the goods prove to be satisfactory with the
approval of the buyer being a condition precedent.
Rules:
1) Title remains with the seller until the sale becomes absolute by:
a. Buyer’s approval of the goods
b. Buyer’s failure to comply with the express or implied conditions of the
contract as to giving notice of dissatisfaction or as to returning the goods.
c. By his doing any other act adopting the transaction (exercising
ownership)
2) Risk of loss remains with the seller, except when the buyer is at fault or
has agreed to bear the loss
3) Buyer must give the goods a trial, except where it is evident that it
cannot perform the work intended
4) Period within which the buyer must signify acceptance runs only when
all essential parts for operation of the object have been delivered
5) If it is stipulated that a third person must signify approval or
satisfaction, the provision is valid, but the third person must be in good
faith. If not, seller may sue
6) Generally, the sale and delivery to a buyer who is an expert on the
object purchased is not a sale on approval, trial or satisfaction
Sale or Return – property is sold. Buyer becomes the owner of the thing
upon delivery but has an option to return the same to the seller instead of
paying the price.
Rules:
1)Title passes to the buyer upon delivery
2) Buyer bears the risk of loss
3) Solely dependent to the will of the buyer
4) Buyer may revest ownership to the seller upon returning or
tendering the goods within the period agreed upon or within a
reasonable time
5) Buyer must comply with the conditions attached to the privilege.
Otherwise, the sale is absolute
Sale by Description sale where the buyer merely relies on the description
of the seller
Sale by Sample sale where a small quantity of a commodity is exhibited by
the seller as fair specimen of the bulk, which is not present and as to which
there is no opportunity to inspect or examine.
Completeness of Delivery
Movables
Where, in relation to what is contracted to sell, the quantity of goods
delivered is:
1) Less – Buyer may choose to
a. Reject the goods
b. Accept them
i. If with knowledge that the seller is not going to perform the
contract, the buyer shall pay at the contract price
ii. If knowledge is afte the acceptance and consummation or
disposal of the goods, the buyer is not loable for more than
the FMV to him of the goods delivered.
2) Larger – buyer may choose to
a. Accept per contract and reject the rest
b. Accept the whole and pay at the contract rate
c. If indivisible, reject the whole or accept it entirely
3) Mixed with goods of different description
a. Accept the goods which are in accordance with the contract and
reject the rest
b. If indivisible, reject the goods entirely or accept them entirely
Immovable
Sold per unit or number – statement of an area at the rate of a certain
price for a unit or measure Rules on Preference:
1) Personal Property – first possessor in Good Faith
Rules: 2) Real Property
a. If the vendee should demand, the vendor shall deliver all that may have a. First registrant in Good Faith, second buyer must register the
been stated in the contract document in Good Faith, otherwise he does not have any better
b. If what is delivered is right
i. Less in area or of inferior or different quality, the buyer may b. First possessor in good faith
seek for rescission if c. Person with the oldest title in good faith
1. At least 1/10 of the area is lacking
2. Deficiency in quality exceeds 1/10 of the price agreed
Principle of Caveat Emptor – one who purchases real property, which is in
upon
actual possession of others, should make some inquiry concerning the
3. The vendee would have not bought the immovable had
rights of those in possession
he known of its smaller area or inferior quality
4. Proportional reduction of the price
Purchasers in Good Faith
ii. Greater in area 1) Buys property without notice that some other person has a right to, or
1. Accept per stipulation and reject the rest interest in, such property
2. Accept the while and pay the contract rate 2) Pays a full and fair price for the same at the time of purchase, or before
3. Where the price per unit is not indicated, no rescission he has notice of the claim or interest of some other person in the property
or adjustment of the price is allowed, unless there is gross
mistake. (notice of Lis Pendens – “Pending litigation” if there is a notice in the
property title, one cannot claim a defense of good faith since this notice is
Prescription of actions – those arising from A. 1539 and 1542 shall a constructive notice to the whole world)
prescribe in 6 months counted from the date of delivery of the thing to the
vendee. Certificate of Title – a buyer may rely on the Torrens title of the seller.
Exception:
Double Sale (A. 1544) When there exist important facts that would create suspicion in a
Requisites: reasonable man to go beyond the present title and to investigate
1) Two or more transactions constitute a valid sale those that preceded it.
2) Two or more buyer are at odds over the rightful ownership of the
subject matter each with conflicting interest Likewise, banks, in the interest of public interest in keeping in trust
3) They must pertain exactly to the same object the money belonging to their depositors, must exercise extra
ordinary diligence in purchasing a Land.
4) Bought from the same seller
5) Buyers must be purchasers in Good Faith
Delivery of Fruits (Accessions) and Accessories – the seller is bound to
deliver accessions and accessories in the condition in which they were
A.1544 does not apply when:
upon perfection of the contract (A.1537). Therefore, there is correlative
1) Not all requirements are present
obligation on the part of the seller to preserve the same at the moment of
2) Sale involving unregistered lands the perfection of the contract of sale.
3)
Accessions – Fruits (Animal Offspring, Trees of a land etc)
Accessories – anything attached to the principal thing for its completion,
ornament or better use.
When vendee is not entitled to the fruits:
1) Stipulation
2) Vendee rescinds the contract instead of exacting fulfillment
3) Contract to sell
Conditions – an uncertain event or contingency upon the happening of
which the obligation or right of the contract depends. In such case, the
obligation of the contract does not attach until the condition is performed.
Effect of Non-Fulfillment of Condition
1) The other party may
a. Refuse to proceed with the contract
b. Proceed with the contract, waiving the performance of the
condition
2) If the condition is in the nature of a promise that it should happen, the
non-performance if such condition may be treated by the other party as
breach of warranty.
Warranty
A statement or representation made by the seller of goods,
contemporaneously and as a part of the contract of sale, having reference
to the character, quality, or title of the goods, and by which the promises
or undertakes to insure that certain facts are or shall be as he then
represents.
Kinds
1) Express – it is any affirmation of fact or promise by the seller relating to
the thing, inducing the buyer to purchase the same and if the buyer
purchases the thing relying thereon (A. 1546)
Requisites
a. Affirmation of fact or any promise
b. Induces the buyer to purchase the subject matter
c. Relying on such affirmation or promise, the buyer purchase the
subject matter.
Note: Usual exaggeration in trade, when the party has an
opportunity to know the facts, are not themselves fraudulent.
2) Implied – it is that which the law derives by implication or inference
from the nature of the transaction or the relative situation or
circumstance of the parties, irrespective of any intention of the seller to
create it. (deemed incorporated in the contract of sale)
Example:
A. Seller has the right to sell
B. Against eviction (the seller guarantees that he has the right to sell the
thing sold and to transfer ownership to the buyer, who shall not be
disturbed in his legal and peaceful possession thereof A.1548)
Elements:
• Vendee deprived in whole or in part of the thing purchased
• Deprivation is by virtue of a final judgement
• Based on a right prior to the sale or an act imputable to the
vendor
• Vendor was summoned in a suit for eviction at the instance of
the vendee
• No waiver of warranty by the vendee
Vendor shall not be obliged to make good the proper warranty, unless he
is summoned in the suit for eviction at the instance of the vendee.
Warranty against Eviction, when not Applicable
1) Sale of inheritance, in which the seller shall only be answerable for his
character as an heir, but not ownership of all the things that supposedly
comprise the inheritance (A. 1630)
2) The sale for a lump sum of the wole of certain rights, rent, or products,
in which case the vendor is not obliged to warrant each of the various
parts of which it may be composed, except in a case of eviction from the
whole or part of greater value of the thing sold (A.1631)
General Rule – Vendor’s warranty is waivable
Exception – when the waiver is contrary to law, public order, public policy,
morals, or good customs, or prejudicial to a third person with a right
recognized by law (A. 6)
 Hidden defects pertains to those that makes the object unfit for the use
Vendor’s Liability for which it was intended at the time of the sale
1) In case of total eviction (A.1555) (VICED)
a. Value of the thing at the time of eviction E. Against redhibitory defects on the animals
b. Income or fruits only if so decreed by the courts
Redhibition – avoidance of a sale on account of some vice or defect in the
c. Cost of the suit
thing sold, which renders its use impossible, or so inconvenient and
d. Expenses of the contract imperfect that it must be supposed that the buyer would not have
e. Damages and interests and ornamental expenses, if the sale is purchased it had he known of the vice.
in bad faith Elements:
• Must be Serious or important such that the hidden defect should render
2) In case of partial eviction (A. 1556) the matter unfit for the use for which it is intended or diminish the thing’s
a. Enforce VICED fitness.
b. Demand rescission • Must be hidden
• Exist at the time of the sale
When Choices are available:
• Vendee must give notice of the defect to the vender within a reasonable
a. When the vendee is deprived of a part of the thing sold if such
time
part is of such importance to the whole that he would not have
bought the thing without said part. • Remedies must be brought within 6 months from the delivery of the
thing or 40 days for animals
b. When 2 or more things are jointly sold, whether for a lump sum
or for a separate price for each, and the vendee would not have • No waiver
purchased one without the other.
Vendor not liable when the defect is 1) patent; or 2) when the vendee is
Kinds of waiver an expert, who by reason of his profession should have known the defect.
1) Consciente/ Simple – voluntary. Made without knowledge and
assumption of the risk of eviction As a Rule, knowledge of the vendor is immaterial. Art. 1566 states that
2) Intencionada/ Clificada – made with knowledge of the risk of eviction Seller is still liable even if he is not aware of the hidden defect of the goods
and assumption of its consequences. he sold. The same is not applicable if there is stipulation to the contrary
AND the seller is not aware of it.
C. Against non-apparent burden or servitude (A.1560)
Obligation of the seller in case of loss of the thing sold on account of
Remedy: Rescission or Indemnity
hidden defects (A.1568)
When not applicable: 1) When the seller is aware of the hidden defects
• Servitude is apparent a. Seller bears the loss
• Servitude is recorded in the registry b. Return the price
• Mentioned in the agreement c. Refund expenses for the contract
• Vendee has knowledge d. Pay damages

D. Against hidden defects or unknown encumbrance (A. 1561)

2) When the seller is unaware of the hidden defects
 a. Seller bears the loss
b. Return the price
c. Return the interest
d. Pay for the expenses of the contract if paid by the vendee
Note: if the thing sold had any hidden fault at the time of the sale and
should thereafter be lost through FORTUITOUS event or through the
FAULT OF THE VENDEE, the vendee may demand the seller the price paid
less the value of the thing at the time of loss.
Redhibitory Defects on Animals (Instances)
• Expert knowledge is not sufficient to discover it
• Veterinarian failed to discover or disclose it through ignorance or
bad faith (A.1576)
• Animal dies within 3 days after its purchase and the disease
which caused the death existed at the time of the contract
(A.1578)
F. Warranty as to fitness or merchantable quality (A1562)
G. Warranty for consumer goods (RA 7392, A.68)
When Implied Warranty NOT Applicable
As is and Where is Sale – Vendee takes the goods in which the conditions
in which they are found and from the place where they are located (does
not extend to liens or encumbrances unknown to the vendee and could
not be disclosed by a principal examination of the goods).
Sale of Second Hand Articles – no implied warranty as to condition,
application, fitness or the quality of an article sold as a second-hand
article.
Not applicable to a sheriff, auctioneer, mortgagee, and pledgee and other
person who sells by virtue of authority in fact or law.
Alternative Remedies of the buyer to Enforce Warranty (A.1567)
1) Accion Redhibitoria – withdrawal from the contract
2) Accion Quanti Minoris – proportionate reduction of the price
The warranty is applicable to Judicial sale, however, the judgement debtor
is not liable for damages since he is merely compelled to sell his property
(A.1570)
There is no warranty against hidden defect of animals sold at fairs or
public auctions, o of livestock sold as condemned (A.1574)
When sale of animal is void
1) Sale of animals with contagious disease
2) Sale of unfit animals
In case of rescission, the animal shall be returned in the condition in which
it was sold and delivered, the vendee being answerable for any injury dur
to his negligence, and not arising from the redhibitory fault or defect
(A.1579)
OBLIGATION OF THE VENDEE
Principal Obligations (A. 1582)
1) To accept the thing sold
2) To pay the price of the thing sold in legal tender unless another
mode has been agreed upon at the time and place stipulated in
the contract.
3) To bear the expenses for the execution and registration of the
sale and putting the goods in a deliverable state, if such is the
stipulation.
Other Obligations
1) To take care of the goods without the obligation to return,
where the goods are delivered to the buyer and he rightfully
refuses to accept it. It is sufficient that the buyer notifies the seller
that he refuses to accept them (A. 1587)
2) To be liable as a depositary if he voluntarily constituted himself
as such (ibid)
3) To pay the interest for the period between delivery of the thing
and the payment of the price in the following cases: (A.1589)
a. Interest is stipulated
b. Fruits or income are received by the vendee from the
thong sold
c. Vendee guilty of default

Acceptance, not a bar to action for damages or other legal remedy
(A.1586)
Unless otherwise agreed upon, acceptance of the goods by the buyer does
not discharge the seller from liability for damages or other legal remedy in
breach of any promise or warranty (A. 1547, 1586,1587)
Exception – after the buyer accepts the goods and he fails to notify the
seller within a reasonable time of the breach of promise or warranty.
Rights of the Buyer
1) Not bound to accept the goods by installment (A. 1583)
2) Reasonable opportunity to examine the goods upon delivery to
ascertain whether they are in conformity with the contract before
accepting the same (A. 1584)
a. Stipulation
b. In case of COD, except:
i. There is stipulation to the contrary
ii. The usage of trade permits the examination
3) Reject delivery of a wrong quantity of goods or of goods of a different
description not included in the contract, which are mixed with the goods
sold (A.1522)
4) If he refuses to accept the goods, having the right to do so, he is not
bound to return them to the seller, it being sufficient that he notifies the
seller of his refusal to accept (A. 1522)
Acceptance – approval of the contract; may be expressed or implied
Use of Property – an act inconsistent with the seller’s right of ownership
prevents the buyer from claiming that he has not accepted the goods.
Exception – if such use does not affect the condition or value of the
property (i.e. use on trial)
Exception to the exception – buyer prolongs the trial period for
unreasonable length of time, or uses more of the goods than is fairly and
reasonably necessary.
Right of the buyer to suspend payment
1) When the buyer is disturbed in possession or ownership of the thing
bought.
2) When the vendee has reasonable ground to fear that his possession or
ownership would be disturbed.
Exceptions
1) Vendor gives security for the return of the price in a proper case.
2) Stipulation that the vendee would still pay notwithstanding the
contingency (A.1590)
3) Cessation of the disturbance or danger
4) Disturbance is a mere act of trespass
5) Full payment of the price
In the sale of immovable property, to pay even after the expiration of the
period agreed upon as long as no demand for rescission of the contract
has been made upon him either judicially or by a notarial act, even though
it may have been stipulated that rescission shall take place upon failure to
pay the price at the agreed time (A.1592)
General rule – once a demand for rescission by suit or notarial act is made,
the court may not grant the vendee a new term. (A.1592)
Exception – in the interest of justice and equity, where the vendee has
substantially performed in good faith
When Art. 1592 is inapplicable – sale on installment or real estate and
contact to sell/ conditional sale of real estate
REMEDIES FOR BREACH OF CONTRACT
Remedies of the seller
In case of immovable
When there is anticipatory breach
a. The seller may file a case for rescission if:
i. There is delivery of the immovable property
ii. Vendor has not yet paid the price
iii. Vendor has reasonable ground to fear that the
immovable or the price may be lost (A.1591)
b. When there is failure on the part of the buyer to pay the price,
automatic rescission of the sale is stipulated (A.1592)
 Applies only when the title passes to the vendee upon the delivery
of the thing sold.
Actions available for breach of contract of sale of goods:
a. Payment of the price (A.1595)
b. Damages for non-acceptance of the goods (A.1596)
c. Rescission of the contract for breach (A.1597)
d. Specific performance (A.1598)
e. Rescission or damages for breach of warranty (A.1599)
In case of Movables
1) In general
Automatic rescission shall take place in the interest of the seller if
the buyer without any valid cause , upon the expiration of the
period for delivery of thing;
i. Should have not appeared to receive it
ii. Having appeared, should have not tendered the price at
the time, unless a longer period is stipulated for payment
(A.1593)
2) Sale of Goods
a. Seller’s right of action for the price (A.1595)
i. When the ownership of the goods has passed to the buyer, and
he wrongfully neglects or refuses to pay for the goods according to the
terms of the contract, the seller may maintain an action against him for
the price of the goods (A.1595)
When the price is payable on a certain day, irrespective of delivery
or transfer of title, and the buyer wrongfully neglects or refuses to pay, the
seller may maintain an action for the price although the ownership in the
goods has not passed.
ii. If the goods cannot readily be resold for a reasonable price,
although transfer of the ownership has not passed, and if the provision of
A. 1594 are not applicable – seller may offer to deliver the goods to the
buyer (A.1595)
iii. If buyer refuses to receive, the seller may notify the buyer that
he holds the goods as bailee for the buyer. Thereafter, the seller may treat
the goods as the buyer’s and may maintain an action for the price (A.1595)
b. Seller’s right of action for damages
i. When the buyer neglects or refuses to accept and pay for the
goods (A.1596)
ii. In an executory contract, where the ownership in the goods has
not passed, and the seller cannot maintain an action to recover the price
(A.1595)
iii. If the goods are not yet identified at the time of the contract or
subsequently, the seller’s right is necessarily confined to an action for
damages
c. Technical rescission (A.1597) – applies when there is no delivery of
goods
i. Buyer has repudiated the contract of sale
ii. Buyer has manifested his inability to perform obligations
thereunder
iii. Buyer has committed breach
Seller is required to give notice of his election to seek rescission
UNPAID SELLER
1) The seller who to whom the whole of the price has not been paid or
tendered
2) The seller of the goods, in case a bill of exchange or other negotiable
instrument has been received as a conditional payment , AND the
condition on which it was received has been broken by reason of the
dishonor of the instrument, insolvency of the buyer or otherwise (A.1525)
(the term includes agent of the seller, to whom the bill of lading has been
indorsed; consignor or agent who has himself pair or is directly responsible
for the price; any other person in the [position of the seller (A.1525)
Remedies of Unpaid Seller
1) Possessory lien (A.1527 – A. 1529) – the seller is entitled to retain
possession of the goods as security for the purchase price.
Unpaid seller may exercise his right of lien on the remainder that has not
been delivered. (Exception – when part delivery has been made under
such circumstance as to show an intent to waive the lien or right of
retention)
 When may be exercised
a. Goods have been sold without any stipulations to the credit
(A.1524)
b. The goods were sold on credit, but the term of credit has
expired
c. The buyer becomes insolvent (A.1527)
When Unpaid Seller Loses His Lien
a) Delivery of goods to a carrier or other bailee for the purpose of
transmission to the buyer without reserving ownership in the
goods or right to the possession thereof
b) When the buyer or his agent lawfully gains possession of the
goods
c) By waiver of the lien (A.1529)
Revival of Lien after delivery
a) If the goods are rejected by the buyer and the carrier or other bailee
continues in possession of them, even if the seller has refused to receive
them back (A.1531)
b) If the buyer refuses to receive the goods in wrongful repudiation of the
sale, provided that the seller makes it clear in accepting the goods from
the buyer that he is not assenting to the rescission of the sale
2) Stoppage of Goods in Transitu (A.1530) – a right which a seller of goods
on credit has to recall them or retake them while they are in possession of
the carrier or middleman who received them for delivery to the buyer, on
discovery of the insolvency of the buyer.
a. Unpaid Seller (A.1525)
b. Buyer must be insolvent (A.1520) – before the buyer has taken
possession of the goods
c. Goods must be in transit (A.1531) – from the time the goods are
delivered to the carrier or bailee and before the buyer or his agent
takes delivery of them; or if the goods are rejected by the buyer,
and the carrier or other bailee continues in possession of them
(A.1531)
d. Seller or his agent must take possession of the goods or give
notice of his claim to the carrier or other person in possession of
the goods (A.1532)
e. The carrier or other person in possession must redeliver the
goods to, or according to the directions of the seller (A.1532)
f. The seller must bear the expenses of delivery of the goods after
the exercise of the right (A.1532)
3) Special Right of Resale (A.1533)
When can be exercised:
a. When he has a right of Lien (A.1526)
b. Exercised the right of stoppage of goods in transitu under any of the
following causes:
i. Perishable goods
ii. Expressly provided in case the buyer should make a default
iii. Buyer delays payment for unreasonable length of time (A.1533)
The new buyer acquires a good title as against the original buyer
4) Special right of rescission (A.1534)
5) Specific Performance
6) Action for the Price
7) Action for Damages
8) Recto Law (A.1484) – Sale of personal property on installments
Requisites
a. Contract of sale
b. Personal property
c. Payable in installments
d. In the case of second or third remedy, there is a failure
to pay 2 or more installments
Remedies (Alternative and Exclusive)
a) Specific performance
b) Rescission of the sale if vendee shall have failed to pay 2
or more installments
c) Foreclosure of the chattel mortgage constituted on the
thing sold if vendee shall have fauked to pay 2 or more
installments
9) Maceda Law (R.A. 6652) – transaction or contracts involving sale or
financing of real estate on installment payments including residential
condominium apartments (Cannot be availed by the developer)
Rights of the buyer
1. If the buyer has paid at least 2 years of installments:
a. The buyer must pay, without additional interest, the unpaid
installments due within the total grace period earned by him. (1 month for
every year of installments paid; limited to be exercised once every 5 years)
b. Actual cancellation can only take place after 30 days from receipt of the
buyer of the notice of cancellation or demand for rescission by a notarial
act and upon full payment of the cash surrender value to the buyer
c. Cancellation of Contract
d. Right to sell his rights or assign the same to another person or to
reinstate the contract by updating the account during the grace period and
before actual cancellation of the contract
e. Right to pay in advance any installment or the full unpaid balance of the
purchase price any time without interest and to have such payment
annotated in the certificate of title covering the property
2. If the buyer has paid less than 2 years of installments
a. The seller shall give the buyer a grace period of not less than 60
days from the day the installments become due. If the buyer fails to pay
the installments due at the expiration of the grace period, the seller may
cancel the contract after 30 days from receipt by the buyer of the notice of
cancellation or the demand for rescission of contract by a notarial act.
b. The buyer shall have the right to sell his right or assign the same
to another person or to reinstate the contract by updating the account
during the grace period before the actual cancellation of the contact.
c. The buyer shall have the right to pay in advance any installment or the
full unpaid balance of the price any time without interest and to have such
payment annotated in the certificate if title covering the property.
Remedies of the buyer
In case of Immovables
1. Suspension of Payment
2. In case of Subdivision or Condominium projects, the lot or unit
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 to the approved plans and within the time limit for
complying with the same.
3. Right to the grace period
In case of movables
1. Action for specific performance without giving the seller the
option to retain the goods on payment of damages (A. 1598)
2. Judgement may be unconditional or with conditions as to
damages, payment of the price or as the court may deem just (A.1598)
3. In case of breach of seller’s warranty:
a. Recoupment – accept or keep the goods and set up the
seller’s breach to reduce or extinguish the price (A.1599)
b. Accept the goods and maintain an action for damages
(A.1599)
c. Action for counterclaim for damages (A.1599)
d. Rescission
When rescission is not allowed
i. If the buyer accepted the goods knowing the
breach of warranty without protest.
ii. If he fails to notify the seller within a reasonable
length of time of his election to rescind.
iii. If fails to return or offer to return the goods in
substantially good condition as they were in at the
time of the transfer of ownership to him.
4. Suspension of breach in anticipation of breach.
5. In case of sale of goods by sample or by description, the buyer
may demand rescission.
RISK OF LOSS AND DETERIORATION, EFFECTS
(res peruit domino applies)
1. Before perfection (A.1504) – seller bears the risk
2. At perfection
a. If the thing is entirely lost, the contract is without effect
(A.1439)
b. If the thing should have been lost in part only, the buyer
may choose between withdrawing from the contract; or
demanding the remaining part, paying its proportionate
price (A.1493)
3. After Perfection but before delivery
a. Loss
 General Rule: who bears the risk of loss is governed by the
stipulations in the contract
In absence there to RES PERUIT DOMINO (consistent with
the provisions of A. 1504)

b. Deterioration
Impairment is borne by the buyer if the thing deteriorates
without the fault of the seller (A.1189)

4. After Deliver (A.1504)

EXTINGUISHMENT OF SALE
1. Same causes as all other obligations (A. 1600)
a. Payment or performance of obligation
b. Loss of the thing due
c. Condonation or remission of debt
d. Confusion or merger of rights
e. Compensation
f. Prescription
g. Annulment
h. Rescission
i. Fulfillment of a resolutory condition
j. Novation

2. Conventional Redemption (A. 1601 to 1618) – the right which the

vendor reserves to himself, to reacquire the property sold, provided he
returns to the vendee:
a. Price of the sale
b. Expenses of the contract
c. Other legitimate payments made tgerefore
d. Necessary expenses made on the thing sold
e. Useful expenses made on the thing sold

3. Legal Redemption (A. 1619 to 1623)