Law on Sales

Article 1526 - 1550

ARTICLE 1526
Subject to the provisions of this
Title,
notwithstanding
that
the
ownership in the goods may have
passed to the buyer, the unpaid seller
of goods, as such, has:
1) A lien on the goods or right to
retain them for the price while he is
in possession of them;
2) In case of the insolvency of the
buyer, a right of stopping the goods
in transitu after he has parted with

ARTICLE 1526
3) A right of resale
Title;

as limited by this

4) A right to rescind the sale

likewise limited by this Title.

as

Where the ownership in the goods

has not passed to the buyer, the
unpaid seller has, in addition to his
other
remedies,
a
right
of
withholding delivery similar to and
coextensive with his rights of lien
and stoppage in transitu where the

ARTICLE 1527
Subject to the provisions of this
Title, the unpaid seller of goods who
is in possession of them is entitled to
retain possession of them until
payment or tender of the price in the
following cases, namely;
1) Where the goods have been sold
without any stipulation as to
credit;
2) Where the goods have been sold

ARTICLE 1527
3) Where the buyer becomes
insolvent.
The seller may exercise his
right of lien notwithstanding
that he is in possession of the
goods as agent or bailee for
the buyer.

Example:
(1) S sold B a specific ring to be paid 6
months later. No term of credit was
given.
(2) S sold B a specific ring to be paid 6
months later. By mutual agreement, B
is made already the owner, but S will
act as depositary of the ring in the
meantime. If the term expires, and B
has not yet paid because he is
insolvent, may S still continue
possessing the ring even if he is no
longer the owner?
YES

ARTICLE 1528
Where an unpaid seller had
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.

ARTICLE 1529
The unpaid seller of goods loses
his lien thereon:
1) When he delivers the goods to a
carrier or other bailee for the
purpose of transmission to the
buyer without reserving the
ownership in the goods or the
right to the possession thereof;
2) When the buyer or his agent
lawfully obtains possession of
goods;

ARTICLE 1529
The unpaid seller of goods,
having a lien thereon, does not
lose his lien by reason only
that he has obtained judgment
for decree for the price of
goods.

Examples:
(1)S delivered the goods to the carrier for
the transmission to the buyer without
reserving his right to the ownership in
the goods.
(2)An unpaid seller, who possessed the
goods thru a warehouseman, delivered to
the buyer a negotiable warehouse
receipt.
(3)An unpaid seller still in possession of the
goods sold brought an action to get the
purchase price. Does he lose his lien?

ARTICLE 1530
Subject to the provision of this
Title, when the buyer of goods is or
becomes insolvent, the unpaid seller
who has parted with the possession
of the goods has the right of stopping
them in transitu, that is to say, he
may resume possession of the goods
at any time while they are in transit,
and he will then become entitled to
the same rights in regard to the

Example:
S sell his laptop to B for P10,000 with the
agreement that B should pay the price
upon delivery to him. While the laptop is
in transitu, S notice that B becomes
insolvent and lose the capacity to pay
the price at the time of delivery.
S can exercise his right of stoppage in
transitu.

ARTICLE 1531
Goods are in transit within the meaning
of the preceding article:
(1)From the time when they are delivered
to a carrier by land, water, or air, or
other bailee for the purpose of
transmission to the buyer, until the
buyer, or his agent in that behalf, takes
delivery of them from such carrier or
other bailee;
(2)If the goods are rejected by the buyer,
the carrier or other bailee continues in
possession of them, even if the seller

Example:
S sell his laptop to B. S delivered the
laptop to X, a carrier, so he would
deliver it to B. Provided that B or his
agent haven't received the laptop yet,
then it is still in transitu.
If B reject the laptop for some reason,
and S refused to receive it back. And X
is still in the possession of the laptop,
the laptop is still in transitu.

ARTICLE 1531
Goods are no longer in transit within the
meaning of the preceding article:
(1)If the buyer or his agent in that behalf
obtains delivery of the goods before
their
arrival
at
the
appointed
destination;
(2)If, after the arrival of the goods at the
appointed destination, the carrier or
other bailee acknowledges to the buyer
or his agent that he holds the goods on
his behalf and continues in possession
of them as bailee for the buyer or his
agent; and it is immaterial that further

Example:
S sell his laptop to B, and let X, a bailee
to deliver it to B. Upon arrival to its
destination X acknowledge to B that he
will hold or keep the laptop until B
comes to pick it up.
In this case the laptop is no longer in
transit.

ARTICLE 1531
(3) If the carrier or the bailee
wrongfully refuses to deliver the
goods 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 a particular case,
whether they are in the possession of

Example:
S sell his car to B, B chartered a ship to
deliver the car to him, even though the
ship is the carrier, if it holds the car on
behalf of B then the car is no longer in
transit.
But if the ships purpose is to just
deliver the car to B then the car is still
in transit.

ARTICLE 1531
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 with the
buyer to give up possession of the
whole of the goods.

Example:

S sell 5 cavans of rice to B. 2 cavans

were already delivered and in
possession of B. When S found out
that B is already insolvent S may
stopped in transitu the remaining
cavans of rice.

ARTICLE 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 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 goods or to is
principal. In the latter case the notice,
to be effectual, must be given at such
time and under such circumstances
that the principal, by the exercise of

ARTICLE 1532
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 according to the directions of,
the seller. The expenses of such
delivery must be borne by the seller.
If, however, a negotiable document of
title representing the goods has been
issued by the carrier or other bailee,
he shall not be obliged to deliver or
justified in delivering the goods to the

Example:
S sell his car to B. S deliver the car
to X, a carrier who will deliver the
car to B. Soon S was informed that B
is already insolvent.
S may exercise his right either by
obtaining in actual possession or by
giving notice of his claim to the
carrier or other bailee.

ARTICLE 1533
Art.1533. Where the goods are on
perishable nature, or where the seller
expressly reserves the right of resale
in case the buyer should make
default, or where the buyer has been
in default in the time of payment of
the price, for an unreasonable time,
an unpaid seller having a right of lien
or having stopped the goods in
transitu may resell the goods. He shall
not thereafter be liable to any profit
made by such resale, but may

ARTICLE 1533
for an unreasonable time, an unpaid
seller having a right of lien or having
stopped the goods in transitu may
resell the goods. He shall not
thereafter be liable to any profit
made by such resale, but may
recovers from the buyer damages for
any loss occasioned by the breach of
the contract of sale.
Where a resale is made, as
authorized in this arcticle, the buyer

ARTICLE 1533
It is not essential to the validity of
a resale that notice of an intention
to resell the goods be given by the
seller to the original buyer. But
where the right to resell is not based
on the perishable nature of the
goods
or
upon
an
expressed
provision of the contract of sale, the
giving or failure to give such notice
shall be relevant in any issue
involving the question whether the
buyer had been in default for an

ARTICLE 1533
It is not essential to the validity of
resale that notce of the time and
place of such resale should be given
by the seller to the original buyer.
The seller is bound to exercise
reasonable care and judgement in
making a resale, and subject to this
requirement may make a resale
either by public or private sale. He
cannot,
however,
directly
or
indirectly buy the goods.

Example:

S sold to B a rice payable at

250,000, B was in default and
did not pay. S was forced to sell
the rice to c for 300,000. B is
liable to C for 50,000, But if S
sell the rice for 350,000 B is not
liable because the 50,000 is
fulfil.

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

ARTICLE 1534
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
overt act an intention to rescind. It
is not necessary that such overt act
should be communicated to the
buyer of the intention to rescind
shall be relevant in any issue
involving the rescind shall be
relevant in any issue involving the
question whether the buyer had

Example:
B agree to buy S land for 10
million at the time of agreed date B
refuse to buy the land of S. S
resumes the ownership of the goods
and B is liable if their is a loss
occasionedby
the
breach
of
contract.

ARTICLE 1535
Subject to the provisions of
this title, the unpaid sellers
right of lien or stoppage in
transitu, is not affected by
any sale, or other disposition
of the goods which the buyer
may have made, unless the
seller has assented thereto.

ARTICLE 1535
If, however, a negotiable document
of title has been issued for goods, no
sellers lien or right to stoppage in
transitu shall defeat the right of any
purchaser for value in good faith to
whom such document has been
negotiated,
whether
such
negotiation be prior or subsequent
to the notifications to the carrier, or
other bailee who is sued such
document, of the sellers claim to a
lien or right of stoppage in transitu .

Example:
S sold to B cavan of rice for
200,000. But be B sell the cavan of
rice to C. S has the right to recover
the goods. But if the negotiable
document is sell by B. S shall lose
the right to recover the goods and
C is having the right of the goods,

ARTICLE 1536
The vendor is not bound to
deliver the thing sold in case the
vendee should lose the right to
make use of the term as
provided in article 1198.

Example:

S sold to B Guitar for credit. S has

right to withhold delivery in any of the
following situations:
(1) B becomes insolvent after the
obligation in contract unless B gives
guaranty or securities . Example: Car ,
land house etc.
(2) B promise to mortgage his
appartment building to secure the
price but at the time the appartment
is not owned by B. B shall lose every
right to make use of the period..

Example:

(3) B promise to mortgage his car to

secured the payment but their is a
storm at that time.
Was totally destroyed by the storm. B
shall lose every right to make use of
the period unless he gives a new one
equally satisfactory.
(4) B obliged to repaint the car of S,
But B failed to paint the car of S.
(5) B drive the car after the time of
delivery and go to other country to
avoid the payment.

ARTICLE 1537
The vendor is bound to deliver
the thing sold and its accessions
and accessories in the condition in
which
they
were
upon
the
perfection of the contract.
All the fruits shall pertain to the
vendee from the day on which the
contract was perfected. (1468a)

Example:

Sabrina sold a cow to Bryan

worth
P10,000
No
other
stipulations or conditions stated
on the contract. While its still in
the possession of Sabrina, the
cow gave birth to a calf.

ARTICLE 1538
In case of loss, deterioration
or improvement of the thing
before its delivery, the rules in
article 1189 shall be observed,
the vendor being considered the
debtor. (n)

Example:

Ms. Corina sold her ring

to
Mr.
Nicko
worth
P80,000.

ARTICLE 1539
The obligation to deliver the thing
sold includes that of placing in the
control of the vendee all that is
mentioned
in
the
contract,
in
conformity with the following rules:
If the sale of real estate should be
made with a statement of its area, at
the rate of a certain price for a unit
of measure or number, the vendor
shall be obliged to deliver to the
vendee, if the latter should demand

ARTICLE 1539
but, should this be not possible, the
vendee
may
choose
between
a
proportional reduction of the price and
the
rescission
of
the
contract,
provided that, in the latter case, the
lack in the area be not less than onetenth of that stated.
The obligation to deliver the thing sold
includes that of placing in the control
of the vendee all that is mentioned in

ARTICLE 1539
The same shall be done, even when
the area is the same, if any part of the
immovable is not of the quality
specified in the contract.
The rescission, in this case, shall only
take place at the will of the vendee,
when the inferior value of the thing sold
exceeds one-tenth of the price agreed
upon.
Nevertheless, if the vendee would not
have bought the immovable had he

Example:

Susan sold to Bentong a lot consisting

of 1,700 square meters at the rate of
P1,000.00 per square meter.
A. The actual area being delivered is only 1,500
sq. meters. The rights of Bentong are:
1. Bentong may ask for proportionate
reduction in the price since the lack in area is less
than the 1/10th of that stated in the contract.
(1/10th of 1,700sq. meters is 170; while the lack
in area is 100).
Thus, Bentong will only pay P1,400,000.00
(1,400 sq. meters x 1,000/square meter)
2. Otherwise he may ask for rescission.

Example:
1. Suppose that 250 sq. meters should be
valued at P930.00 per square meters because of
inferior quality.
Inferior value is P70.00 (1,000.00-930.00)
its less than 1/10th of the price agreed upon
which is P100.00 (P1,000 x 1/10).
Bentong may ask for proportionate
reduction of the price by paying only
P1,682,500 (250 x P930.00) + (1,450 x
P1,000.00),otherwise he may ask for rescission
2. Suppose that 250 sq. meters should be
valued only at P750.00 per square meter
because of inferior quality.

ARTICLE 1540
If in case of the preceding
article, there is a greater area or
number in the immovable than
that stated in the contract, the
vendee may accept the area
included on the contract and
reject the rest. If he accepts the
whole area, he must pay for the
same at the contract rate.

Example:
S sold B a lot consisting of 2,500
square meters at the rate of 2,000 per
square meter. However, the area being
delivered by S is 2,600 square meters.

ARTICLE 1541
The provisions of the two
preceding articles shall apply
to judicial sales.

Example:
A is the creditor of B. B didnt pay his debt to
A. As a consequence, A brought a court action
against B to compel him for payment. The
court rendered the judgment in favor of A and
against B who was ordered to sell his land.
Suppose the land which contains 2,000 sq.
meter was bought by C for P1,500 per sq.
meter
If the land contains less than 2,000 sq. meter
apply Art. 1539
If the land contains more than 2,000 sq.
meter apply Art. 1540

ARTICLE 1542
In the sale of real estate, made
for a lump sum and not at the rate
of a certain sum for a unit 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.
The same rule shall be applied
when two or more immovable are
sold for a single price; but if

ARTICLE 1542
its area or number should be
designated in the contract, the
vendor shall be bound to deliver
all that is included within the said
boundaries, even when it exceeds
the area or number specified in
the contract; and, should he not be
able to do so, he shall suffer a
reduction
in
the
price,
in
proportion to what is lacking in he
area
or
number,
unless
the

Example:
A buys a piece of land from B at the
lump sum of P10 million. In the
contract, the area is stated to be 1,000
square meters. The boundaries are of
course mentioned in the contract.
Now then it was discovered that the
land within the boundaries really
contains 1,500 square meters. Is B
bound to deliver the extra 500?
What if the land included in the
boundaries happen to be LESS.

ARTICLE 1543
The actions arising from
articles 1539 and 1542 shall
prescribe in six months,
counted from the day of
delivery.

Example:
A bought a piece of land from B at the
lump sum of P10 million on January 1,
2015. The said land was delivered on
January 24, 2015. In the contract, the area
is stated to be 1,000 square meters. The
boundaries are of course mentioned in the
contract.
Now then it was discovered that the land
within the boundaries really contains
1,500 square meters. Is B bound to
deliver the extra 500?
What if the land included in the
boundaries happen to be LESS.

ARTICLE 1544
If the same thing should have
been sold to different vendees, the
ownership shall be transferred to
the person
who may have first
taken possession thereof in good
faith, if it should be movable
property.
Should it be immovable property,
the ownership shall belong to the
person acquiring it who in good
faith first recorded it in Registry of

ARTICLE 1544
Should there be no inscription,
the ownership shall pertain to the
person who in good faith was first
in the possession; and, in the
absence thereof, to the person
who presents the oldest title,
provided there is good faith.

Example:

Movable property
S sold his computer to B who told S that he
would obtain delivery of the delivery of the
computer after 3 days. Before the third
day, S sold that same computer to X who
immediately took physical possession of
the computer. X was not aware of the
previous sale to B. Neither was B aware of
the sale made to X because the sale to X
had not yet taken place at the time that B
purchased the computer. Who has a better
right to the computer?

 Immovable property
On May 1, S sold his lot to B. The deed of
sale was in a private instrument. On May
3, S sold the same lot to X in a public
instrument. On May 5, S sold again the
said lot to Z in a public instrument. Z
immediately registered the sale with
Register of Deeds. B, X and Z din not
know of the sale made to the other two
and none of them took physical
possession of the lot.

A. Who has a better right to the lot?

B. Suppose Z did not register the sale or
he registered the sale but he was in
bad faith, who has a better right to the
lot?

C.Suppose all the sales were in a private

instrument and all buyers are in good
faith, who has a better right to the lot?

ARTICLE 1545
Where the obligation of either
party to a contract of sale is subject
to any condition which is not
performed, such party may refuse
to proceed with the contract or he
may waive performance of the
condition. If the other party has
promised that the condition should
happen or be performed, such first
mentioned party may also treat the
non-performance of the condition
as a breach of warranty.

ARTICLE 1545
Where the ownership in the
thing has not passed, the buyer
may treat the fulfilment by the
seller or his obligation to deliver
the same as described and was
warranted
expressly
or
by
implication in the contract of sale
as a condition of the obligation of
the buyer to perform his promise
to accept and pay for the thing.

Example:

(1) B (buyer) entered into a contract

with S for the purchase of certain
machinery. The arrival of the goods
to be shipped from Japan is made a
condition of the bargain, there
being no promise by S that the
goods will arrive.
(2) S promised to sell his parcel of
land to B should S win a case
pending in the Supreme Court. S
lost the case.

ARTICLE 1546
Any affirmation of fact or any
promise by the seller relating to the
thing is an express warranty if the
natural tendency of such affirmation
or promise is to induce the buyer to
purchase the same, and if the buyer
purchases
the
thing
relying
thereon. No affirmation of the value
of the thing, nor any statement
purporting to be a statement of the
sellers opinion only, shall be
construed as a warranty, unless the

Example:
S sells to B an automobile for
P60,000.00 telling the latter that
it is a 1990 model and that it is
worth about P70,000.00. B sees
the automobile and after a test
run, expresses satisfaction over
its condition. The automobile is
really of 1988 vintage and is
worth only P50,000.00.

Example:
1340
Example : The liquid soap that can wash
a thousand plates
1341
Example : S, a farmer, who knows
nothing about gems, tells B that in his
(Ss) opinion, his ring is embellished
with diamond and that he is selling it. B
buys the ring believing that the ring is
adorned with diamond. Later, he
discovers that the gemstone is really
emerald.

Example:
1343
Example : S has a ring which he honestly
believes is adorned with diamond. He
offers to sell the ring to B telling B that
the gemstone is diamond. B buys the ring
believing it to be so. Later, he discovers
that the gemstone is emerald.

ARTICLE 1547
In a contract of sale, unless a
contrary intention appears, there
is:
(1) An implied warranty on the
part of the seller that he has a
right to sell the thing at the time
when the ownership is to pass
and that the buyer shall from
that time have and enjoy the
legal and peaceful possession of

Example:

S sold a parcel of land to B

owned by X. B entered and
occupied
the
property.
Subsequently, B was evicted
of possession by court order.

ARTICLE 1547
(2) An implied warranty that
the thing shall be free from any
hidden faults or defects, or any
charge or encumbrance not
declared or known to the buyer.

Example:
S sold to B a specific car for P100 ,
000. While B is driving the car, the
two front tires gave away at the
same time. At the time of the sale,
these tires are already worn-out.
Can B file an action for warranty
against hidden defect?

ARTICLE 1548
Eviction shall take place whenever
by a final judgment based on a right
prior to the sale or an act imputable
to the vendor, the vendee is
deprived of the whole or a part of
the thing purchased.
The vendor shall answer for the
eviction even though nothing has
been said in the contract on the
subject.
The contracting parties, however,

Example:
S sold to B a parcel of land. B
registered the sale. Later, S sold the
same land to X and the latter
occupied the land. B filed an action
against X for ownership and
possession because it was X who is
occupying the land and refused to
deliver the land to B. X asked the
court to summon S to defined the
action filed against to him.

ARTICLE 1549
The vendee need not
appeal from the decision in
order that the vendor may
come liable for eviction.

ARTICLE 1550
When adverse possession
had been commenced before
the sale but the prescriptive
period is completed after the
transfer, the vendor shall not
be liable for eviction.

Example:
S sold to B a parcel of land which is
claimed by C who has been in
possession of the property in the
concept of owner publicly and
continuously for 30 years. Under the
law, C is deemed to have acquired
ownership
over
the
land
by
prescription without need of title or
of good faith.