LAW ON SALES Case Digest

LAW ON SALES
I. Nature and Form of the Contract
A. Definition (Article 1458)
B. Subject Matter of Sale (Articles 1459-1465, 1466-1468)
C. Price (Articles 1469-1474)
D. Perfection of Contract (Articles 1475-1478)
E. Option to Buy or Sell (Article 1479-1481)
F. Earnest Money (Article 1482, Article 1483, Article 1484-1486)
G. Maceda Law (RA No. 6552)
H. Legality of Sale
LAW ON SALES
II. Capacity to Buy or Sell (Articles 1489-1492)
ARTICLE 1458
By the contract of sale, one of the contracting parties obligates himself to transfer the
ownership of & to deliver a determinate thing, & the other to pay therefor a price
certain in money or its equivalent.
A contract of sale may be absolute or conditional.
ARTICLE 1458
Characteristics of a contract of sale:
1. Consensual –perfected by mere consent
2. Bilateral –parties are bound to fulfill correlative obligations toward each other
3. Onerous – the thing sold is conveyed in consideration of the price & vice versa
4. Commutative – thing sold is considered equivalent of the price paid & vice versa
5. Nominate – given a special name & designation
6. Principal –its existence & validity does not depend upon another contract
ARTICLE 1458
Essential requisites of sale:
1. Consent or meeting of the minds (1475)
2. Object or subject matter (1460)
3. Cause or consideration (1458)
Kinds of contract of sale:
1. Absolute – not subject to condition. Ownership is transferred upon constructive or
actual delivery.
2. Conditional – subject to a contingency. Ownership is reserved until fulfillment of a
suspensive condition or extinguished upon the happening of a resolutory condition.
ARTICLE 1458
ARTICLE 1458
ARTICLE 1458. CORONEL VS CA GR NO. 103577, OCTOBER 7, 1996
Facts:
Romulo Coronel executed a document entitled ‘Receipt of Downpayment´ in favor
of Ramona Patricia Alcaraz for P50,000 downpayment of the amount of P1.24M as
purchase price for an inherited house and lot, without reservation to withhold the
transfer of such property until full payment. The purpose of such downpayment was
for the heirs to transfer the title to their name. Upon the registration of the property
to name of the heirs, the Coronels sold the same property to Catalina B.
Mabanag for P1.58M. The Coronels rescinded the contract with Alcaraz by
depositing the downpayment amount in a bank account in favor of Alcaraz. Alcaraz
filed acomplaint for specific performance, which the trial and the appellate court
ruled in her favor.
Issue:
Whether or not the “Receipt of Down payment” embodied a perfected contract of
sale and not a mere contract to sell?
ARTICLE 1458. CORONEL VS CA GR NO. 103577, OCTOBER 7, 1996
Held:
Yes. The agreement is a contract of sale as there was no express reservation of
ownership or title to the subject parcel of land. Petitioners did not merely promise to
sell the property to private respondent upon the fulfillment of the suspensive condition
but on the contrary, having already agreed to sell the subject property, they
undertook to have the certificate of title changed to their names and immediately
thereafter, to execute the written deed of absolute sale. The suspensive condition was
fulfilled on 6 February 1985 and thus, the conditional contract of sale between the
parties became obligatory, the only act required for the consummation thereof being
the delivery of the property by means of the execution of the deed of absolute sale
in a public instrument, which petitioners unequivocally committed themselves to do as
evidenced by the ‘Receipt of Down Payment.´
ARTICLE 1458 . TOYOTA SHAW VS CA GR NO. 116650 MAY 23, 1995
Facts:
Sometime in June of 1989, private respondent Sosa wanted to purchase a Toyota Lite Ace.
Upon contacting Toyota Shaw, Inc., he was told that there was an available unit. So on 14 June
1989, Sosa and his son went to the Toyota office at Shaw, where they met Popong Bernardo,
a sales representative of Toyota. Bernardo assured Sosa that a unit would be ready for pick
up at 10AM on 17 June 1989. Bernardo then signed the “Agreements Between Mr. Sosa &
Popong Bernardo of Toyota Shaw, Inc.”/ Exhibit “A” P100,000 was the downpayment, but the
purchase price was not mentioned in the contract. It was also agreed upon by the parties that
the balance of the purchase price would be paid by credit financing through B.A. Finance.
Toyota contends, however, that the Lite Ace was not delivered to Sosa because of the
disapproval by B.A. Finance of the credit financing application of Sosa. It further alleged that
a particular unit had already been reserved and earmarked for Sosa but could not be
released due to the uncertainty of payment of the balance of the purchase price. Toyota then
gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa
refused. The financing corporation seemed to have not approved Sosa’s application.
Issue: Whether or not there was a perfected contract of sale?
ARTICLE 1458 . TOYOTA SHAW VS CA GR NO. 116650 MAY 23, 1995
Held:
No. Nothing was mentioned about the full purchase price and the manner the installments were
to be paid. A definite agreement on the manner of payment of the price is an essential
element in the formation of a binding and enforceable contract of sale. This is so because the
agreement as to the manner of payment goes into the price such that a disagreement on the
manner of payment is tantamount to a failure to agree on the price. Definiteness as to the
price is an essential element of a binding agreement to sell personal property.
Exhibit “A” shows the absence of a meeting of minds between Toyota and Sosa. For one thing,
Sosa did not even sign it. He was not dealing with Toyota but with Popong Bernardo. Bernardo
was only a sales representative of Toyota and hence a mere agent of the latter.
Exhibit “A” may be considered as part of the initial phase of the generation or negotiation
stage of a contract of sale. The Vehicle Sales Proposal was a mere proposal which was
aborted in lieu of subsequent events. It follows that the VSP created no demandable right in
favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any
legally indemnifiable injury.
ARTICLE 1458 . ALFREDO VS BORRAS 404 SCRA 145 JUNE 17, 2003
Facts:
A parcel of land measuring 81,524 square meters (“Subject Land”) in Barrio Culis,
Mabiga, Hermosa, Bataan is the subject of controversy in this case. Petitioners
(“Godofredo and Carmen”) had mortgaged the Subject Land for P7,000.00 with the
Development Bank of the Philippines (“DBP”). To pay the debt, Carmen and
Godofredo sold the Subject Land to private respondents (“Armando and Adelia”)
for P15,000.00, the buyers to pay the DBP loan and its accumulated interest, and the
balance to be paid in cash to the sellers. Armando and Adelia gave Godofredo and
Carmen the money to pay the loan to DBP which signed the release of mortgage. The
former subsequently paid the balance of the purchase price of the Subject Land for
which Carmen issued a receipt dated 11 March 1970. They then took possession of
the Subject Land. Subsequently, Armando and Adelia discovered that Godofredo
and Carmen had re-sold portions of the Subject Land to several persons. The private
respondents then filed a complaint for specific performance against petitioners.
Issue: Whether or not there was a perfected contract of sale between the parties?
ARTICLE 1458 . ALFREDO VS BORRAS 404 SCRA 145 JUNE 17, 2003
Held:
Yes. The contract of sale between the spouses Godofredo and Carmen and the
spouses Armando and Adelia was a perfected contract. A contract is perfected once
there is consent of the contracting parties on the object certain and on the cause of
the obligation. In the instant case, the object of the sale is the Subject Land, and the
price certain is P15,000.00. The trial and appellate courts found that there was a
meeting of the minds on the sale of the Subject Land and on the purchase price
of P15,000.00. The contract of sale of the Subject Land has also been consummated
because the sellers and buyers have performed their respective obligations under the
contract. In a contract of sale, the seller obligates himself to transfer the ownership
of the determinate thing sold, and to deliver the same, to the buyer who obligates
himself to pay a price certain to the seller. In the instant case, Godofredo and
Carmen delivered the Subject Land to Armando and Adelia, while Armando and
Adelia paid the full purchase price as evidenced by the receipt issued by Carmen.
ARTICLE 1459
The thing must be licit and the vendor must have a right to
transfer the ownership thereof at the time it is delivered.
ARTICLE 1459
Requisites of Object:
1. It must be determinate
2. It must be licit
3. It must be w/in the commerce of men
4. As to rights, it must be transmissible or personal
2 kinds of illicit things: (relate w/ 1409)
1. Illicit per se 2. Illicit per accidents
Seller need not own the thing to be sold, all that is required of him is the right to
transfer ownership thereof at the time it is delivered.
ARTICLE 1459. HEIRS OF ENRIQUE ZAMBALES VS
COURT OF APPEALS GR NO. L-54070 FEBRUARY 28,
1983
Facts:
The spouses Enrique Zambales and Joaquina Zambales (the Zambaleses), who are illiterate, were the homestead patentees of
a parcel of land in the Municipality of Del Pilar, Roxas, Palawan, pursuant to Homestead Patent No. V-59502 dated
September 6, 1955. They claimed in November 1956 that respondent Nin Bay Mining Corporation (Corporation) had
removed silica sand from their land and destroyed the plants and other improvements thereon, to which said Corporation
denied to have done so. On October 29, 1959, the Zambaleses, duly assisted by their counsel, Atty. Perfecto de los Reyes,
and the Corporation, entered into a Compromise Agreement which state, among others, that the Zambaleses are giving the
Corporation full power and authority to sell, transfer and convey on September 10, 1960 or at any time thereafter the whole
or any part of herein subject property.
On September 10, 1960, the Corporation sold the disputed property to Joaquin B. Preysler for the sum of P8,923.70 fixed in
the Compromise Agreement. On December 6, 1969, or ten (10) years after the Trial Court's Decision based on the
Compromise Agreement, and nine (9) years after the sale to Preysler, the Zambaleses filed a civil action in the CFI of Palawan
for "Annulment of a Deed of Sale with Recovery of Possession and Ownership with Damages”, alleging that Atty. de los Reyes
and the Corporation induced them through fraud, deceit and manipulation to sign the Compromise Agreement.
The trial court declared null and void the deed of sale executed between Preysler and the Corporation, but the Court of
Appeals reversed the said decision after finding that the alleged fraud or misrepresentation in the execution of the
Compromise Agreement had not been substantiated by evidence.
Issue: Whether or not the compromise agreement and the subsequent deed of sale valid and legal?
ARTICLE 1459. HEIRS OF ENRIQUE ZAMBALES VS
COURT OF APPEALS GR NO. L-54070 FEBRUARY 28,
1983
Held:
No. The Compromise Agreement was held to be in violation of the Public Land Act,
which prohibits alienation and encumbrance of a homestead lot within five years from
the issuance of the patent. The bilateral promise to buy and sell the homestead lot at
a price certain, which was reciprocally demandable, was entered into within the five-
year prohibitory period and is therefore, illegal and void. Hence, the bilateral
promise to sell between the Zambaleses and the Corporation, and the subsequent
deed of sale between Preysler and the latter were declared null and void. As the
contract is void from the beginning, for being expressly prohibited by law the action
for the declaration of its inexistence does not prescribe.
ARTICLE 1460
A thing is determinate when it is particularly designated or
physically segregated from all others of the same class
ARTICLE 1461
Things having a potential existence may be the object of
the contract of sale. The efficacy of the sale of a mere
hope or expectancy is deemed subject to the condition that
the thing will come into existence.
The sale of a vain hope or expectancy is void.
ARTICLE 1461
‘Things having a potential existence’ – something that is
reasonably certain to come into existence as the natural
increment or usual incident of something in existence
already belonging to the seller
- The moment the thing does come into existence, title is
vested upon the buyer.
 ARTICLE 1461

Presumption is in favor of Emptio Rei Speratae

ARTICLE 1462
The goods w/c form the subject of a contract of sale may
be either existing goods, owned or possessed by the seller,
or goods to be manufactured, raised, or acquired by the
seller after the perfection of the contract of sale, in this
Title called “future goods”.
ARTICLE 1462
Existing goods – goods owned or possessed by the seller
Future goods – goods to be manufactured, raised, or acquired
by the seller
In the sale of future goods, the seller assumes the risk of
acquiring the title (to the future goods) & making the
conveyance, or responding in damages for the buyer’s loss of
his bargain
1462 does not apply if the goods are to be manufactured
ESPECIALLY for the buyer, b/c that case is a contract for a
piece of work & not of sale.
ARTICLE 1463
The sole owner of a thing may sell an undivided interest therein
Legal effect of the sale of an undivided interest in a thing
is to make the buyer a co-owner in the thing sold
ARTICLE 1464
In the case of fungible goods, there may be a sale of an undivided
share of a specific mass, though the seller purports to sell & the
buyer to buy a definite number, weight or measure of the goods in
the mass, & though the number, weight or measure of the goods in
the mass is undetermined. By such sale the buyer becomes owner in
common of such a share of the mass as the number, weight or
measure bought bears to the number, weight or measure of the
mass. If the mass contains less than the number, weight or measure
bought, the buyer becomes the owner of the whole mass & the
seller is bound to make good the deficiency from goods of the
same kind & quality, unless a contrary intent appears.
ARTICLE 1464
Fungible goods – goods of w/c any unit is, from its nature or by
mercantile usage, treated as the equivalent of any other unit Owner of
mass may sell only an undivided share thereof, provided the mass is
specific or capable of being made determinate.
- By such sale, buyer becomes a co-owner of the seller of the whole
mass in proportion in w/c the definite share bought bears to the mass
- Aliquot share of each owner can be determined only by the
measurement of the entire mass. If it turns out that the whole mass is
actually LESS than the thing sold, the buyer becomes the owner of the
whole mass & the seller must supply the deficiency.
ARTICLE 1465
Things subject to a resolutory condition may be the object
of the contract of sale.
*Resolutory condition – an uncertain event
upon the happening of w/c the obli (or right)
subject to it is extinguished.
ARTICLE 1460-1465. ACAP VS CA GR NO. 118114
DECEMBER
Facts:
Felixberto Oruma sold his inherited land to Cosme Pido, which land is rented by petitioner
Teodoro Acap. When Cosme died intestate, his heirs executed a “Declaration of Heirship and
Waiver of Rights” in favor of private respondent Edy delos Reyes. Respondent informed
petitioner of his claim over the land, and petitioner paid the rental to him in 1982. However in
subsequent years, petitioner refused to pay the rental, which prompted respondent to file a
complaint for the recovery of possession and damages. Petitioner averred that he continues to
recognize Pido as the owner of the land, and that he will pay the accumulated rentals to
Pido’s widow upon her return from abroad. The lower court ruled in favor of private
respondent.
Issues: Whether or not the above document can be considered a deed of sale in favor of
private respondent
ARTICLE 1460-1465. ACAP VS CA GR NO. 118114
DECEMBER
Held:
No. In a Contract of Sale, one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other party to pay a price certain in
money or its equivalent. Upon the other hand, a declaration of heirship and waiver of rights
operates as a public instrument when filed with the Registry of Deeds whereby the intestate
heirs adjudicate and divide the estate left by the decedent among themselves as they see fit.
It is in effect an extrajudicial settlement between the heirs under Rule 74 of the Rules of Court.
Hence, there is a marked difference between a sale of hereditary rights and a waiver of
hereditary rights. The first presumes the existence of a contract or deed of sale between the
parties. The second is, technically speaking, a mode of extinction of ownership where there is
an abdication or intentional relinquishment of a known right with knowledge of its existence
and intention to relinquish it, in favor of other persons who are co-heirs in the succession. Private
respondent, being then a stranger to the succession of Cosme Pido, cannot conclusively claim
ownership over the subject lot on the sole basis of the waiver document which neither recites
the elements of either a sale, or a donation, or any other derivative mode of acquiring
ownership.
ARTICLE 1460-1465. MELLIZA VS CITY OF ILOILO
GR NO. L-24732APRIL 30, 1968
Facts:
Juliana Melliza executed an instrument providing for the absolute sale involving 4 lots of land,
ones needed by the municipal government for the construction of avenues, parks and City hall
site according to the “Arellano plan.” Later, Pio Sian Melliza made representations with the
city authorities, for payment of the value of one of the lots. The trial court ruled that the
instrument executed by Juliana Melliza in favor of Iloilo municipality included in the
conveyance Lot 1214-B. The CA affirmed the interpretation of the CFI that the portion of Lot
1214 sold by Juliana Melliza was not limited to the 10,788 square meters specifically
mentioned but included whatever was needed for the construction of avenues, parks and the
city hall site.
Issue: Whether or not the object of sale is determinate?
ARTICLE 1460-1465. HEIRS OF ARTURO REYES VS
SOCCO BELTRAN GR NO. 176474 NOVEMBER 27, 2008
Facts:
The subject property in this case is a parcel of land allocated to the Spouses Laquian, who
paid for the same with Japanese money. When the husband died, the property was left to his
wife Constancia;. Upon her death, the original parcel of land was left with her heirs – her
siblings. The subject property, Lot No. 6-B, was adjudicated to respondent, but no title had
been issued in her name. On 25 June 1998, respondent Elena Socco-Beltran filed an
application for the purchase of Lot No. 6-B before the Department of Agrarian Reform (DAR),
alleging that it was adjudicated in her favor in the extra-judicial settlement
of Constancia Socco’s estate.
Petitioners herein, the heirs of the late Arturo Reyes, filed their protest to respondent’s petition
before the DAR on the ground that the subject property was sold by respondent’s brother,
Miguel R. Socco, in favor of their father, Arturo Reyes, as evidenced by a Contract to Sell.
Issue: Whether or not petitioners acquired ownership over the disputed property by virtue of
the contract to sell?
ARTICLE 1460-1465. HEIRS OF ARTURO REYES VS
SOCCO BELTRAN GR NO. 176474 NOVEMBER 27, 2008
Held:
No. Under Article 1459 of the Civil Code on contracts of sale, “The thing must be licit and the
vendor must have a right to transfer ownership thereof at the time it is delivered.” The law
specifically requires that the vendor must have ownership of the property at the time it is
delivered. Petitioners claim that the property was constructively delivered to them in 1954 by
virtue of the Contract to Sell. However, it was explicit in the Contract itself that, at the time it
was executed, Miguel R. Socco was not yet the owner of the property and was only expecting
to inherit it. Hence, there was no valid sale from which ownership of the subject property could
have transferred from Miguel Socco to Arturo Reyes. Without acquiring ownership of the
subject property, Arturo Reyes also could not have conveyed the same to his heirs, herein
petitioners.
ARTICLE 1466
In construing a contract containing characteristics of both
the contract of sale & of the contract of agency to sell, the
essential clauses of the whole instrument shall be
considered.
ARTICLE 1466
By the contract of agency, a person binds himself to
render some service or to do something in representation
or on behalf of another, w/ the consent or authority of the
latter. (1868, CC)
ARTICLE 1466
ARTICLE 1466. QUIROGA VS PARSONS
HARDWARE, CO. GR NO. 11491 AUGUST 23, 1918
Facts:
On Jan 24, 1911, plaintiff and the respondent entered into a contract making the latter an
“agent” of the former. The contract stipulates that Don Andres Quiroga, here in petitioner,
grants exclusive rights to sell his beds in the Visayan region to J. Parsons. The contract only
stipulates that J.Parsons should pay Quiroga within 6 months upon the delivery of beds.
Quiroga filed a case against Parsons for allegedly violating the conntract. Only the obligation
on the part of the defendant to order the beds by the dozen and in no other manner, was
expressly set forth in the contract. But the plaintiff alleged that the defendant was his agent
for the sale of his beds in Iloilo, and that said obligations are implied in a contract of
commercial agency.
Issue: Whether the contract is a contract of agency
ARTICLE 1466. QUIROGA VS PARSONS
HARDWARE, CO. GR NO. 11491 AUGUST 23, 1918
Held:
No. There was the obligation on the part of the plaintiff to supply the beds,
and, on the part of the defendant, to pay their price. These features exclude
the legal conception of an agency or order to sell whereby the mandatory or
agent received the thing to sell it, and does not pay its price, but delivers to
the principal the price he obtains from the sale of the thing to a third person,
and if he does not succeed in selling it, he returns it. By virtue of the contract
between the plaintiff and the defendant, the latter, on receiving the beds, was
necessarily obliged to pay their price within the term fixed, without any other
consideration and regardless as to whether he had or had not sold the beds.
ARTICLE 1466
Is there a case wherein a contract is both a contract of
sale & a contract of agency to sell at the same time?
ARTICLE 1466
Is there a case wherein a contract is both a contract of
sale & a contract of agency to sell at the same time?
Transaction b/w car dealerships & manufacturers. The
dealers will own the cars sold by the manufacturers but
are still able to give the warranties of the manufacturers
when they sell the cars in turn.
ARTICLE 1467
A contract for the delivery at a certain price of an art w/c
the vendor in the ordinary course of his business
manufactures or procures for the gen’l market, whether the
same is on hand at the time or not, is a contract of sale, but
if the goods are to be manufactured specially for the
customer & upon his special order, & not for the gen’l
market, it is a contract for a piece of work.
ARTICLE 1467
By the contract of a piece of work, the contractor binds himself to
execute a piece of work for the employer, in consideration of a
certain price or compensation.
The distinction b/w a contract of sale & one for a piece of work is
tested by the inquiry whether the thing transferred is one not in
existence & w/c NEVER WOULD HAVE EXISTED IF NOT FOR THE
ORDER of the party desiring to acquire it or a thing w/c WOULD
HAVE EXISTED & been the subject of sale to some other person,
even if the order had not been given.
ARTICLE 1467
ARTICLE 1468
If the consideration of the contract consists partly in money,
& partly in another thing, the transaction shall be
characterized by the manifest intention of the parties. If
such intention does not clearly appear, it shall be
considered a barter if the value of the thing given as a
part of the consideration exceeds the amount of the money
or its equivalent; o/w, it is a sale.
ARTICLE 1468
By the contract of barter/exchange, one of the parties binds himself to give
one thing in consideration of the other’s promise to give another thing.
Rule in determining the character of a contract the consideration of which is
partly in money & partly in another thing:
1. Determine intention of the parties
2. If such intention does not appear:
a. Value of thing given > amount of money or its equivalent = BARTER
b. Value of thing given < amount of money or its equivalent = SALE
ARTICLE 1468
In the lease of things, one of the parties binds himself to give to another the
enjoyment or use of a thing for a price certain & for a period w/c may be
definite or indefinite.
*Difference b/w sales & lease is in lease, only TEMPORARY possession &
enjoyment is transferred unto the lessee.
Dacion en pago – Alienation of prop to the creditor in satisfaction of a debt in
money
ARTICLE 1468
ARTICLE 1467-1468. KER AND CO., LTD VS
LINGAD GR NO. L-20871 APRIL 30, 1971
Facts:
CIR assessed the sum of P20,272.33 as the commercial broker’s percentage tax, surcharge,
and compromise penalty against Ker & Co. Ker and Co. requested for the cancellation of the
assessment and filed a petition for review with the Court of Tax Appeals. The CTA ruled that
Ker and Co is liable as a commercial broker. Ker has a contract with US rubber. Ker is the
distributor of the said company. Ker was precluded from disposing the products elsewhere
unless there has been a written consent from the company. The prices, discounts, terms of
payment, terms of delivery and other conditions of sale were subject to change in the
discretion of the Company.
Issue:
Whether the relationship of Ker and Co and US rubber was that of a vendor- vendee or
principal-broker
ARTICLE 1467-1468. KER AND CO., LTD VS
LINGAD GR NO. L-20871 APRIL 30, 1971
Ruling:
The relationship of Ker and Co and US rubber was that of a principal-broker/ agency. Ker
and Co is only an agent of the US rubber because it can dispose of the products of the
Company only to certain persons or entities and within stipulated limits, unless excepted by the
contract or by the Rubber Company, it merely receives, accepts and/or holds upon
consignment the products, which remain properties of the latter company, every effort shall be
made by petitioner to promote in every way the sale of the products and that sales made by
petitioner are subject to approval by the company. Since the company retained ownership of
the goods, even as it delivered possession unto the dealer for resale to customers, the price
and terms of which were subject to the company’s control, the relationship between the
company and the dealer is one of agency.
ARTICLE 1467-1468. INCHAUSTI VS CROMWELL
20 PHIL. 345 OCTOBER 16, 1911
Facts:
Inchausti is engaged in the business of buying and selling wholesale hemp on commission. It is customary
to sell hemp in bales which are made by compressing the loose fiber by means of presses, covering two
sides of the bale with matting, and fastening it by means of strips of rattan; that the operation of bailing
hemp is designated among merchants by the word “prensaje.” In all sales of hemp by Inchausti, the price
is quoted to the buyer at so much per picul, no mention being made of bailing. It is with the tacit
understanding that the hemp will be delivered in bales. The amount depends under the denomination of
“prensaje” or the baled hemp. CIR made demand in writing upon Inchausti for the payment of the sum of
P1,370.68 as a tax of one third of one per cent on the sums of money mentioned as aggreagate sum
collected as prensaje or the baled hemp. Inchausti paid upon protest, contending that the collected
amount is illegal upon the ground that the said charge does not constitute a part of the selling price of
the hemp, but is a charge made for the service of baling the hemp.
Issue:
Whether or not the baled hemp constitutes a contract of sale
ARTICLE 1467-1468. INCHAUSTI VS CROMWELL
20 PHIL. 345 OCTOBER 16, 1911
Ruling:
Yes, the baled hemp constitutes a contract of sale. In the case at bar, the baled form before
the agreement of sale were made and would have been in existence even if none of the
individual sales in question had been consummated. The hemp, even if sold to someone else,
will be sold in bales. When a person stipulates for the future sale of articles which he is
habitually making, and which at the time are not made or finished, it is essentially a contract
of sale and not a contract for piece of work. It is otherwise when the article is made pursuant
to agreement. If the article ordered by the purchaser is exactly such as the plaintiff makes
and keeps on hand for sale to anyone, and no change or modification of it is made at the
defendant’s request, it is a contract of sale, even though it may be entirely made after, and in
consequence of, the defendant’s order for it.
ARTICLE 1467-1468. CELESTINO VS CIR 99 PHIL.
841 AUGUST 31, 1956
Facts:
Celestino is the owner of Oriental Sash Factory. It paid 7% on the gross sales of their sales. In
1952, they began to pay only 3% tax. Petitioner claims that it does not manufacture ready-
made doors, sash and windows for the public, but only upon special orders from the customers,
hence, it is not engaged in manufacturing under sec 186, but only in sales of services covered
by sec 191. Having failed to convince BIR, petitioner went to the Court of Tax Appeal where it
also failed. CTA, in its decision, holds that the “petitioner has chosen for its tradename and has
offered itself to the public as a “Factory”, which means it is out to do business, in its chosen
lines on a big scale. As a general rule, sash factories receive orders for doors and windows of
special design only in particular cases but the bulk of their sales is derived from a ready-
made doors and windows of standard sizes for the average home.
Issue:
Whether the petitioner company provides special services or is engaged in manufacturing.
ARTICLE 1467-1468. CELESTINO VS CIR 99 PHIL.
841 AUGUST 31, 1956
Ruling:
The Oriental Sash Factory is engaged in manufacturing. The company
habitually makes sash, windows and doors as it has been represented to the
public.The fact that windows and doors are made by it only when customers
place their orders, does not alter the nature of the establishment, for it is
obvious that it only accepted such orders as called for the employment of such
material-moulding, frames, panels-as it ordinarily manufactured or was in a
position habitually to manufacture. The Oriental Sash Factory does nothing
more than sell the goods that it mass-produces or habitually makes; sash,
panels, mouldings, frames, cutting them to such sizes and combining them in
such forms as its customers may desire.
ARTICLE 1469
In order that price may be considered certain, it shall be sufficient that it be so
w/ reference to another thing certain, or that the determination thereof be left
to the judgment of a specified person or persons.
Should such person/s be unable or unwilling to fix it, the contract shall be
inefficacious, unless the parties subsequently agree upon the price.
If the 3rd person/s acted in BF or by mistake, the courts may fix the price.
Where such 3rd person/s are prevented from fixing the price or terms by
fault of the seller or the buyer, the party in fault may have such remedies
against the party in fault as are allowed the seller or the buyer, as the case
may be.
ARTICLE 1469
The price is certain if:
a. The parties have fixed or agreed upon a definite
amount
b. It be certain w/ reference to another thing certain
(relate to 1472)
c. The determination of the price is left to the judgment of
a specified person/s *(b) & (c) apply only in absence of
(a).
ARTICLE 1469
Gen’l rule: Price fixed by a 3rd person is binding upon the parties
Exceptions:
1. When the 3rd person acts in BF or by mistake (mistake ≠ error in judgment). In such a case,
the courts may fix the price.
2. When the 3rd person disregards specific instructions or procedure or data given him
(Walang sinabi si De Leon kung anong mangyayari but it’s analogous to the 1st exception, so I
think courts will fix the price din ang ending nito)
3. When the 3rd person refuses or cannot fix it. If this happens, the contract is void unless the
parties subsequently agree upon the price.
4. When the 3rd person is prevented from fixing the price either by the seller or the buyer. In
this case, innocent party may choose b/w rescission & fulfillment, w/ damages in either case.
(De Leon)
ARTICLE 1470
Gross inadequacy of price does not affect a contract of
sale, except as it may indicate a defect in the consent, or
that the parties really intended a donation, or some other
act or contract.
ARTICLE 1470
Inadequacy of price however, may indicate a defect in the
consent such as when fraud, mistake or undue influence is
present.
Where the price is so low that ‘a man in his senses & not
under a delusion’ would not accept it, the sale may be set
aside.
ARTICLE 1471
If the price is simulated, the sale is void, but the act may
be shown to have been in reality a donation, or some other
act or contract.
ARTICLE 1471
Simulation – occurs when an apparent contract is a declaration of a fictitious
will deliberately made by agreement of the parties, in order to produce, for
the purpose of deception, the appearance of a juridical act w/c does not
exist or is different from that w/c was really executed.
Requisites of simulation:
1. An outward declaration of will different from the will of the parties;
2. The false appearance must have been intended by mutual agreement; &
3. The purpose is to deceive 3rd persons.
ARTICLE 1472
The price of securities, grain, liquid, & other things shall
also be considered certain, when the price fixed is that
w/c the thing sold would have on a definite day, or a
particular exchange or market or when an amount fixed is
above or below the price on such day, or in such exchange
or market, provided said amount be certain.
ARTICLE 1473
The fixing of the price can never be left to the discretion
of one of the contracting parties. However, if the price
fixed by one of the parties is accepted by the other, the
sale is perfected.
ARTICLE 1473
Acceptance by one of the parties of the price fixed by the
other produces a meeting of the minds b/w the parties as
to the price. Therefore, the fact that only one of the parties
fixed the price does not automatically invalidate the sale.
ARTICLE 1474
Where the price cannot be determined in accordance w/
the preceding arts, or in any other manner, the contract is
inefficacious. However, if the thing or any part thereof has
been delivered to & appropriated by the buyer, he must
pay a reasonable price therefor. What is a reasonable
price is a question of fact dependent on the circumstances
of each particular case.
ARTICLE 1474
Applies only where the means contemplated by the parties
for fixing the price have, for any reason, proved
ineffectual.
Reasonable price = generally (but not necessarily) market
price at the time & place fixed by the contract or by law
for the delivery of goods.
ARTICLE 1469-1474. SPS. BERNARDO BUENAVENTORA
AND CONSOLACION JOAQUIN, ET. AL VS COURT OF
APPEALS, ET. AL GR NO. 126376 NOVEMBER 20, 2003
Facts:
Joaquin and Landrito are the parents of the plaintiffs and the defendants. They would like to
be declared null and void ab initio certain deeds of sale of real property executed by
Joaquin and landrito in favor of their co-defendants. Petitioners aver that the deeds are
simulated and therefore null and void ab initio because firstly, there was no actual valid
consideration for the deeds of sale over the properties, secondly, assuming that there was
consideration in the sumsr eflected in the questioned deeds, the properties are more than
three-fold times more valuable than the measly sums appearing therein, thirdly, the deeds of
sale do not reflect and express the true intent of the parties (vendors and vendees), fourthly,
the purported sale of the properties in litis was the result of a deliberate conspiracy designed
to unjustly deprive the rest of the compulsory heirsof their legitime.
Issue:
Whether or not the Deeds of sale are void for lack of consideration
ARTICLE 1469-1474. SPS. BERNARDO BUENAVENTORA
AND CONSOLACION JOAQUIN, ET. AL VS COURT OF
APPEALS, ET. AL GR NO. 126376 NOVEMBER 20, 2003
Ruling:
No, the deeds of sale are not void for lack of consideration. A contract of sale is not a real
contract, but a consensual contract. As a consensual contract, a contract of sale becomes a
binding and valid contract upon the meeting of the minds as to price. If there is a meeting of
the minds of the parties as to the price, the contract of sale is valid, despite the manner of
payment, or even the breach of that manner of payment. If the real price is not stated in the
contract, then the contract of sale is valid but subject to reformation. If there is no meeting of
the minds of the parties as to the price, because the price stipulated in the contract is
simulated, then the contract is void. Article 1471 of the Civil Code states that if the price in a
contract of sale is simulated, the sale is void. It is not the act of payment of price that
determines the validity of a contract of sale. Payment of the price has nothing to do with the
perfection of the contract. Payment of the price goes into the performance of the contract.
Failure to pay the consideration is different from lack of consideration.The former results in a
right to demand the fulfillment or cancellation of the obligation under an existing valid
contract while the latter prevents the existence of a valid contract.
ARTICLE 1469-1474. MCCULLOUGH VS AENILLE &
CO. 13 HIL. 285 FEBRUARY 3, 1904
Facts:
Furniture and tobacoo were being sold by Aenille and Co.
The furniture was sold at 90% of the price that is shown in
a subsequent inventory. The tobacco was sold with the
price indicated in the invoice.
Issue:
Whether or not the price is already considered certain
ARTICLE 1469-1474. MCCULLOUGH VS AENILLE &
CO. 13 HIL. 285 FEBRUARY 3, 1904
Ruling:
Yes, the price is already considered certain. A written
agreement by which one party buys and the other sells
can be made certain by reference to certain invoices in
existence and identified by the agreement. The contract of
sale is therefore completed.
ARTICLE 1475
The contract of sale is perfected at the moment there is a
meeting of minds upon the thing w/c is the object of the
contract & upon the price. From that moment, the parties
may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
ARTICLE 1475
Perfection ≠ Consummation
Validity of contract ≠ Enforceability of the contract
Reluctance ≠ Absence of consent
Absence of Price v Non-Payment of Price
Absence of price will render the contract void while non-payment of price is a
resolutory condition for w/c the seller may choose b/w rescission or specific
performance.
At the moment of perfection, the reciprocal oblis imposed upon the parties by
the contract of sale arise & are, hence, demandable reciprocally in the
absence of contrary stipulation. (remember 1169, par 3, delay in reciprocal
oblis)
ARTICLE 1475
Gen’l rule: a contract of sale is binding regardless of its form.
Exception: when the law requires a certain form for its validity or
enforceability such as those falling under the Statute of Frauds.
(Read 1356-58 & 1403)
De Leon: Sale, by itself, does not transfer or affect ownership, what
it does is it CREATES THE OBLI TO TRANSFER the ownership of the
thing sold. “Ownership is transferred not by contract but by
tradition or delivery” –Sampaguita v Jalwindor, Ten Forty Realty v
Cruz
ARTICLE 1475
Toyota Shaw v CA: “A definite agreement on the MANNER
of payment of the price is an essential element in the
formation of a binding & enforceable contract of sale. This
is so b/c the agreement as to the manner of payment goes
into the price such that a DISAGREEMENT ON THE
MANNER OF PAYMENT IS TANTAMOUNT TO A FAILURE
TO AGREE ON THE PRICE. Definiteness as to the price is an
essential element of a binding agreement to sell personal
prop.”
ARTICLE 1469-1474. TOYOTA SHAW VS CA GR NO.
116650 MAY 23, 1995
Facts:
Sosa wanted to purchase a Toyota Car. She met Bernardo, the sales representative of Toyota. Sosa
emphasized to the sales rep that she needed the car not later than 17 June 1989. They contracted an
agreement on the delivery of the unit and that the balance of the purchase price would be paid by
credit financing. The following day, Sosa delivered the downpayment and a Vehicle sales proposal was
printed. On the day of delivery, Bernardo called Sosa to inform him that the car could not be delivered.
Toyota contends, on the other hand, that the Lite Ace was not delivered to Sosa because of the
disapproval by B.A. Finance of the credit financing application of Sosa. Toyota then gave Sosa the
option to purchase the unit by paying the full purchase price in cash but Sosa refused. Sosa asked that
his down payment be refunded. Toyota did so on the very same day by issuing a Far East Bank check for
the full amount, which Sosa signed with the reservation, “without prejudice to our future claims for
damages.” Thereafter, Sosa sent two letters to Toyota. In the first letter, she demanded the refund of the
down payment plus interest from the time she paid it and for damages. Toyota refused to the demands
of Sosa.
Issue:
Whether or not there was a perfected contract of sale
ARTICLE 1469-1474. TOYOTA SHAW VS CA GR NO.
116650 MAY 23, 1995
Ruling:
What is clear from the agreement signed by Sosa and Gilbert is not a contract of sale. No
obligation on the part of Toyota to transfer ownership of the car to Sosa and no correlative
obligation on the part of Sosa to pay . The provision on the down payment of
PIOO,OOO.OO made no specific reference to a sale of a vehicle. If it was intended for a
contract of sale, it could only refer to a sale on installment basis, as the VSP executed the
following day. Nothing was mentioned about the full purchase price and the manner the
installments were to be paid. An agreement on the manner of payment of the price is an
essential element in the formation of a binding and enforceable contract of sale. This is so
because the agreement as to the manner of payment goes, into the price such that a
disagreement on the manner of payment is tantamount to a failure to agree on the price.
Definiteness as to the price is an essential element of a binding agreement to sell personal
property.
ARTICLE 1475
“What are the 2 exceptions to the UNENFORCEABILITY of
an UNWRITTEN contract of sale of goods, chattels or
things in action at a price not less than P500?”
ARTICLE 1475
Answer:
1. When the buyer has either: a) accepted or received
part of such goods & chattels or the evidences or some of
them; or b) paid at the time some part of the purchase
money.
2. Sale is made by auction & entry is made by the
auctioneer in his sales book.
ARTICLE 1475. LAFORTEZZA VS. MACHICA,
Facts: Roberto Laforteza and Gonzalo Laforteza, Jr., in their capacities as attorneys-in-fact of
Dennis Laforteza, entrered into a MOA (Contract to Sell) with Alonzo Machuca over a house
and lot registered in the name of the late Francisco Laforteza. Machuca was able to pay the
earnest money but however failed to pay the balance on time. Upon a request of an extension
of time, Machuca informed petitioner heirs that the balance was already covered, but
petitioners refused to accept the balance and told Machuca that the subject property is no
longer for sale. The petitioners contend that the Memorandum of Agreement is merely a lease
agreement with “option to purchase”; hence, it only gave the respondent a right to purchase
the subject property within a limited period without imposing upon them any obligation to
purchase it. And since the respondent’s tender of payment was made after the lapse of the
option agreement, his tender did not give rise to the perfection of a contract of sale.
Issue: (1) WON the tender of payment after the lapse of the option agreement gave rise to
the perfection of a contract of sale. (2) WON the six-month period during which the
respondent would be in possession of the property as lessee was a period within which to
exercise an option.
ARTICLE 1475. LAFORTEZZA VS. MACHICA,
Held: (1) It did. A perusal of the Memorandum Agreement shows that the transaction between the
petitioners and the respondent was one of sale and lease. A contract of sale is a consensual contract
and is perfected at the moment there is a meeting of the minds upon the thing which is the object of the
contract and upon the price. From that moment the parties may reciprocally demand performance
subject to the provisions of the law governing the form of contracts. In the case at bench, all the
elements of a contract of sale were thus present.
(2) The six-month period during which the respondent would be in possession of the property as lessee,
was clearly not a period within which to exercise an option. An option is a contract granting a privilege
to buy or sell within an agreed time and at a determined price. An option contract is a separate and
distinct contract from that which the parties may enter into upon the consummation of the option. An
option must be supported by consideration. An option contract is governed by the second paragraph
of Article 1479 of the Civil Code, which reads: An accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price. In the present case, the six-month period merely delayed the
demandability of the contract of sale and did not determine its perfection for after the expiration of
the six-month period, there was an absolute obligation on the part of the petitioners and the
respondent to comply with the terms of the sale.
ARTICLE 1475. LAFORTEZZA VS. MACHICA,
Held: (1) It did. A perusal of the Memorandum Agreement shows that the transaction between the
petitioners and the respondent was one of sale and lease. A contract of sale is a consensual contract
and is perfected at the moment there is a meeting of the minds upon the thing which is the object of the
contract and upon the price. From that moment the parties may reciprocally demand performance
subject to the provisions of the law governing the form of contracts. In the case at bench, all the
elements of a contract of sale were thus present.
(2) The six-month period during which the respondent would be in possession of the property as lessee,
was clearly not a period within which to exercise an option. An option is a contract granting a privilege
to buy or sell within an agreed time and at a determined price. An option contract is a separate and
distinct contract from that which the parties may enter into upon the consummation of the option. An
option must be supported by consideration. An option contract is governed by the second paragraph
of Article 1479 of the Civil Code, which reads: An accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price. In the present case, the six-month period merely delayed the
demandability of the contract of sale and did not determine its perfection for after the expiration of
the six-month period, there was an absolute obligation on the part of the petitioners and the
respondent to comply with the terms of the sale.
ARTICLE 1476
In the case of a sale by auction:
1. Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract of
sale.
2. A sale by auction is perfected when the auctioneer announces its perfection by the fall of the
hammer, or in other customary manner. Until such announcement is made, any bidder may retract his
bid; & the auctioneer may w/draw the goods from the sale unless the auction has been announced w/o
reserve.
3. A right to bid may be reserved expressly by or on behalf of the seller, unless o/w provided by law
or by stipulation.
4. Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the
seller, it shall not be lawful for the seller to bid himself or to employ or induce any person to bid at such
sale on his behalf or for the auctioneer, to employ or induce any person to bid at such sale on behalf of
the seller or knowingly to take any bid from the seller or any person employed by him. Any sale
contravening this rule may be treated as fraudulent by the buyer
ARTICLE 1477
The ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof.
ARTICLE 1477
Sale is consummated by delivery of both the thing sold & the
purchase money.
This article applies in the absence of stipulation to the contrary,
reserving ownership in the thing sold despite its delivery.
If the vendee/buyer fails to pay, & the thing has already been
delivered, ownership of the thing DOES NOT automatically
revert back to the vendor. In this case, the vendor has 2 options:
1, to demand payment of the price; & 2, rescission.
ARTICLE 1477
Addison v Felix: “The thing is considered to be delivered when it is placed ‘in the
hands & possession of the vendee.’ In order that symbolic delivery may produce the
effect of tradition, it is necessary that the vendor shall have had such control over the
thing sold that, at the moment of the sale, its material delivery could have been made.
It is not enough to confer upon the purchaser the ownership & the right of possession.
THE THING SOLD MUST BE PLACED IN HIS CONTROL. When there is no impediment
whatever to prevent the thing sold passing into the tenancy of the purchaser by the
sole will of the vendor, symbolic tradition thru the execution of a public instrument is
sufficient. But if notwithstanding the execution of the instrument, the purchaser cannot
have the enjoyment & material tenancy of the thing & make use of it himself or thru
another in his name, b/c such tenancy & enjoyment are opposed by the interposition
of another will, then fiction yields to reality – the delivery has not been effected.”
ARTICLE 1477
Sampaguita v Jalwindor: “Ownership is not transferred by
perfection of the contract but by delivery, either actual or
constructive. This is true even if the purchase has been made on
credit. Payment of the purchase price is not essential to the
transfer of ownership as long as the prop sold has been
delivered.”
ARTICLE 1477
Norkis Distributors v CA: “In all forms of delivery, it is necessary
that the act of delivery whether constructive or actual, be
coupled w/ the intention of delivering the thing. The act, w/o the
intention, is insufficient.”
ARTICLE 1478
The parties may stipulate that ownership in the thing shall not
pass to the purchaser until he has fully paid the price.
ARTICLE 1478
*Gen’l rule is 1477. 1478 works only if there is a stipulation to
that effect.
(Read: EDCA Publishing v. Santos)
ARTICLE 1478. EDCA VS. SANTOS
Facts: Mr. Cruz bought 406 books payable upon delivery from EDCA. Upon discovery
that said Mr. Cruz was an impostor and that the check issued by the impostor as
payment was dishonored, EDCA with the assistance of the police, seized the 120
books from spouses Santos who bought said books from the impostor, without a
warrant. After petitioner refused the demand made by the spouses Santos for
recovery of the books, said spouses obtained a writ of preliminary attachment, and
thus petitioner surrendered the books to the spouses. Now, petitioner alleges that they
have been unlawfully deprived of the books. The petitioner argues that it was,
because the impostor acquired no title to the books that he could have validly
transferred to the private respondents. Its reason is that as the payment check
bounced for lack of funds, there was a failure of consideration that nullified the
contract of sale between it and Cruz.
Issue: WON the Contract of Sale between Mr. Cruz and EDCA was null and void for
lack of consideration.
ARTICLE 1478. EDCA VS. SANTOS
Held: The Contract of Sale is valid. The contract of sale is consensual and is perfected once agreement
is reached between the parties on the subject matter and the consideration. According to the Civil
Code: Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the
thing which is the object of the contract and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the provisions of the law governing the form of contracts.
Thus, Art. 1477 states that the ownership of the thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof. Also Art. 1478 speaks of that the parties may STIPULATE that
ownership in the thing shall not pass to the purchaser until he has fully paid the price. It is clear from the
above provisions, particularly the last one quoted, that ownership in the thing sold shall not pass to the
buyer until full payment of the purchase only if there is a stipulation to that effect. Otherwise, the rule is
that such ownership shall pass from the vendor to the vendee upon the actual or constructive delivery of
the thing sold even if the purchase price has not yet been paid. Non-payment only creates a right to
demand payment or to rescind the contract, or to criminal prosecution in the case of bouncing checks.
But absent the stipulation above noted, delivery of the thing sold will effectively transfer ownership to
the buyer who can in turn transfer it to another. Actual delivery of the books having been made, Cruz
acquired ownership over the books which he could then validly transfer to the private respondents. The
fact that he had not yet paid for them to EDCA was a matter between him and EDCA and did not
impair the title acquired by the private respondents to the books.
ARTICLE 1479
A promise to buy & sell a determinate thing for a price certain
is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate
thing for a price certain is binding upon the promissor if the
promise is supported by a consideration distinct from the price.
ARTICLE 1479
A unilateral promise of offer to sell or to buy a thing w/c is not
accepted creates no juridical effect or legal bond. AKA
Policitacion.
Option – a contractual privilege existing in one person for w/c
he has paid a consideration w/c gives him the right to buy/sell
from/to another person, if he chooses, at any time w/in the
agreed period at a fixed price, or under, or in compliance w/
certain terms & conditions.
ARTICLE 1479
Nature of Option Contract:
1. Preparatory contract separate & distinct from the main/principal contract.
2. Gives one party to the right to decide whether or not to enter into principal contract, while it binds
the other: a) not to enter into the principal contract w/ any other person during the agreed time; & b)
to enter into the principal contract w/ the party to whom the option was granted if the latter should
decide to use the option w/in the agreed period.
3. It imposes no binding obli on the person holding the option aside from the consideration for the offer.
4. Must be supported by a consideration distinct from the price (in order to bind the promissor the oblis
stated in No.2), else it is void. (read: Atkins v Cua Hian Tek, Sanchez v Rigos, Sps. Trinidad v IAC)
5. Consideration need not be money or actual cash. It must be something of value though. (read: Serra
v CA & RCBC)
ARTICLE 1479
ARTICLE 1479
Art 1324, CC. When the offeror has allowed the offeree a
certain period to accept, the offer may be w/drawn at any time
before acceptance by communicating such w/drawal except
when the option is founded upon a consideration, as something
paid or promised.
Atkins v Cua Hian Tek: “If the option is given w/o consideration,
it is a mere offer of a contract of sale, w/c is not binding until
accepted. If, however, acceptance is made before a w/drawal,
it constitutes a binding contract of sale, even though the option
was not supported by a sufficient consideration.”
ARTICLE 1479. SANCHEZ VS. RIGOS
Facts: Nicolas Sanchez and Severina Rigos executed an instrument entitled “Option to
Purchase,” whereby Mrs. Rigos agreed, promised and committed to sell to Sanchez
the sum of P1,510.00, a parcel of land situated within two (2) years from said date
with the understanding that said option shall be deemed “terminated and elapsed,” if
“Sanchez shall fail to exercise his right to buy the property” within the stipulated
period. Inasmuch as several tenders of payment of the sum of Pl,510.00, made by
Sanchez within said period, were rejected by Mrs. Rigos, Mr. Sanchez deposited said
amount with the Court of First Instance and commenced against the latter the present
action, for specific performance and damages. Defendant’s special defense: the
contract between the parties “is a unilateral promise to sell, and the same being
unsupported by any valuable consideration, by force of the New Civil Code, is null
and void.”
Issue: Whether or not a promise to buy or to sell must be supported by a
consideration distinct from the price.
ARTICLE 1479. SANCHEZ VS. RIGOS
Held: Since there may be no valid contract without a cause or consideration, the
promisor is not bound by his promise and may, accordingly, withdraw it. Pending
notice of its withdrawal, his accepted promise partakes, however, of the nature of an
offer to sell which, if accepted, results in a perfected contract of sale. There is no
question that under article 1479 of the new Civil Code “an option to sell,” or “a
promise to buy or to sell,” as used in said article, to be valid must be “supported by a
consideration distinct from the price.” This is clearly inferred from the context of said
article that a unilateral promise to buy or to sell, even if accepted, is only binding if
supported by consideration. In other words, “an accepted unilateral promise can only
have a binding effect if supported by a consideration which means that the option
can still be withdrawn, even if accepted, if the same is not supported by any
consideration. It is not disputed that the option is without consideration. It can therefore
be withdrawn notwithstanding the acceptance of it by appellee.
ARTICLE 1479
Sanchez v Rigos: “1354 (presumption of cause) applies to
contracts in gen’l, whereas the 2nd par of 1479 refers to ‘sales’
in particular, &, more specifically, to ‘an accepted unilateral
promise to buy or to sell.’ In order that said promise may be
made ‘binding upon the promissor’, 1479 requires the
concurrence of a condition, namely, that the promise be
‘supported by a consideration distinct from the price.’
Accordingly, the promisee cannot compel the promissor to
comply w/ the promise, UNLESS the former establishes the
existence of said distinct consideration. In other words, the
promisee has the burden of proving such consideration.”
ARTICLE 1479. EQUATORIAL REALTY DEV., INC. VS
MAYFAIR THEATER 264 SCRA 483 MARCH 21, 1996
FACTS:
Mayfair Theater, Inc. was a lessee of portions of a building owned by Carmelo & Bauermann, Inc. Their
lease contracts of 20. Lease contracts contained a provision granting Mayfair a right of first refusal to
purchase the subject properties. However, before the contracts ended, the subject properties were sold
for P11,300 by Carmelo to Equatorial Realty Development, Inc. This prompted Mayfair to file a case
for the annulment of the Deed of Absolute Sale between Carmelo and Equatorial, specific performance
and damages. The Court ruled in favor of Mayfair. Barely five months after Mayfair had submitted its
Motion for Execution, Equatorial filed an action for collection of sum of money against Mayfair claiming
payment of rentals or reasonable compensation for the defendant’s use of the subject premises after its
lease contracts had expired. Maxim Theater contract expired, while the Lease Contract covering the
premises occupied by Miramar Theater lapsed. The lower court debunked the claim of Equatorial for
unpaid back rentals, holding that the rescission of the Deed of Absolute Sale in the mother case did not
confer on. Equatorial any vested or residual propriety rights, even in expectancy. It further ruled that
the Court categorically stated that the Deed of Absolute Sale had been rescinded subjecting the
present complaint to res judicata. Hence, Equatorial filed the present petition.
ISSUE: Whether or not Equatorial is entitled to back rentals
ARTICLE 1479. EQUATORIAL REALTY DEV., INC. VS
MAYFAIR THEATER 264 SCRA 483 MARCH 21, 1996
HELD:
No. In the case, there was no right of ownership transferred from Carmelo to Equatorial in view of a
patent failure to deliver the property to the buyer. By a contract of sale, “one of the contracting parties
obligates himself to transfer ownership of and to deliver a determinate thing and the other to pay
therefore a price certain in money or its equivalent.” Ownership of the thing sold is a real right, which
the buyer acquires only upon delivery of the thing to him “in any of the ways specified in articles 1497
to 1501, or in any other manner signifying an agreement that the possession is transferred from the
vendor to the vendee.” In the case, Mayfair’s opposition to the transfer of the property by way of sale
to Equatorial was a legally sufficient impediment that effectively prevented the passing of the property
into the latter’s hands. Rent is a civil fruit that belongs to the owner of the property producing it by right
of accession. Consequently and ordinarily, the rentals that fell due from the time of the perfection of
the sale to petitioner until its rescission by final judgment should belong to the owner of the property
during that period. Not having been the owner, Equatorial cannot be entitled to the civil fruits of
ownership like rentals of the thing sold.
ARTICLE 1479
Equatorial v Mayfair: “Where a period is given to the offeree w/in w/c to accept the
offer, the ff rules gen’lly govern:
1. If the period is NOT ITSELF FOUNDED UPON OR SUPPORTED BY A
CONSIDERATION, the offeror is still free & has the right to w/draw the offer before
its acceptance, or if an acceptance has been made, before the offeror’s coming to
know of such fact, by communicating that w/drawal to the offeree.
2. If the period HAS A SEPARATE CONSIDERATION, a contract of ‘option’ is deemed
perfected, & it would be a breach of that contract to w/draw the offer during the
agreed period. The option, however, is an independent contract by itself; & is to be
distinguished from the projected main agreement w/c obviously yet to be concluded.
If, in fact, the optioner-offeror w/draws the offer before its acceptance by the
optionee-offeree, the latter may not sue for specific performance on the proposed
contract since it has failed to reach its own stage of perfection. The optioner-offeror,
however, renders himself liable for damages for breach of the option.”
ARTICLE 1479
Right of 1st Refusal - 1. A potential buyer's contractual right to
meet the terms of a 3rd party's higher offer. -For example, A
has a right of 1st refusal on the purchase of B’s house, C then
offers to buy the house for P1M, then A can match this offer &
prevent C from buying it. (Black’s Law Dictionary – 9 th Ed.)
ARTICLE 1479. SERRA VS. CA
Facts: Federico Serra, owner of a parcel of land in Masbate, and private respondent
Rizal Commercial Banking Corporation (RCBC) in its desire to put up a branch in said
place, entered into a “Contract of Lease with Option to Buy.” Pursuant to said
contract, a building and other improvements were constructed on the land which
housed the branch office of RCBC in Masbate, Masbate. Within three years from the
signing of the contract, petitioner complied with his part of the agreement by having
the property registered and placed under the TORRENS SYSTEM. When the
respondent bank decided to exercise its option and informed petitioner, through a
letter, of its intention to buy the property at the agreed price of not greater than
P210.00 per square meter or a total of P78,430.00, petitioner replied that he is no
longer selling the property.
Issue: WON there was no consideration to support the option, distinct from the price,
hence, the option cannot be exercised, as required by Art. 1479 of the NCC.
ARTICLE 1479. SERRA VS. CA
Held: There was a consideration, thus the option can be
exercised. Article 1324 of the Civil Code provides that when an
offeror has allowed the offeree a certain period to accept, the
offer maybe withdrawn at any time before acceptance by
communicating such withdrawal, except
ARTICLE 1480
Any injury to or benefit from the thing sold, after the contract
has been perfected, from the moment of the perfection of the
contract to the time of delivery, shall be governed by Arts 1163
to 1165, & 1262. This rule shall apply to the sale of fungible
things, made independently & for a single price, or w/o
consideration of their weight, number, or measure. Should
fungible things be sold for a price fixed accdg to weight,
number or measure, the risk shall not be imputed to the vendee
until they have been weighed, counted, or measured, &
delivered, unless the latter has incurred in delay
ARTICLE 1480
Who bears the loss:
1. Before perfection – seller (in accordance w/ res perit domino)
2. At the time of perfection – contract is void & inexistent, therefore seller (1493)
3. After perfection, before delivery – if basis is 1480, buyer, regardless w/n
ownership has been transferred (note the exception in the 3rd par of this Art, there
has to be delivery before the buyer can be made liable if things sold are fungible
things for a price according to weight, number or measure). But if 1504, seller, if
ownership is yet to be transferred. If ownership has been transferred, buyer.
4. After delivery – buyer
ARTICLE 1481
In the contract of sale of goods by description or by sample, the
contract may be rescinded if the bulk of the goods delivered do
not correspond w/ the description or the sample, & if the
contract be by sample as well as by description, it is not
sufficient that the bulk of goods correspond w/ the sample if
they do not also correspond w/ the description. The buyer shall
have a reasonable opportunity of comparing the bulk w/ the
description or the sample.
ARTICLE 1481
Sale by description – occurs where a seller sells things as being
of a particular kind, the buyer not knowing whether the seller’s
representations are true or false, but relying on them as true
Sale by sample – to constitute a sale by sample, it must appear
that the parties contracted solely w/ reference to the sample,
w/ the understanding that the bulk was like it.
‘Bulk of goods’ in this art = goods to be actually sold
ARTICLE 1482
Whenever earnest money is given in a contract of sale it shall
be considered as part of the price & as proof of the perfection
of the contract.
ARTICLE 1482
Earnest money – something of value given by the buyer to the
seller to show that the buyer is really in earnest, & to bind the
bargain.
Earnest money forms part of the consideration ONLY IF the sale
is PERFECTED & the sale is CONSUMMATED upon full payment
of the purchase price.
Earnest money constitutes an advance or down payment & must
therefore be deducted from the total price.
ARTICLE 1482

*Option money may become earnest money if the parties so

agree. Or it may actually be in the nature of earnest money when
considered w/ the rest of the contract.
ARTICLE 1482. SPOUSES SERRANO AND HERRERA
VS CAGULAT
FACTS:
GR NO. 139173 FEBRUARY 28, 2007
Spouses Serrano agreed to sell in favour of respondent Caguiat a parcel of land at P
1,500.00 per square meter. Caguiat partially paid petitioners P 1oo, ooo.oo as
evidenced by a receipt issued by petitioners indicating therein respondent’s promise
to pay the remaining balance. Respondent, after making known his readiness to pay
the balance, requested from petitioners the preparation of the necessary deed of
sale. When petitioners cancelled the transaction and intended to return to Caguiat his
partial payment, respondent filed a complaint for specific performance and
damages. The trial court relying on Article 1482 of the Civil Code ruled that the
payment of P 100, ooo.oo being an earnest money signified the perfection of the
contract. CA denied petitioner’s motion and affirmed lower court’s decision.
ISSUE: Whether or not the partial payment constitutes an earnest money as
manifested in Article 1482 of the Civil Code
ARTICLE 1482. SPOUSES SERRANO AND HERRERA
VS CAGULAT
HELD:
GR NO. 139173 FEBRUARY 28, 2007
No. Article 1482 applies only to earnest money given in a contract of sale. It was
apparent that the earnest money in the case at bar was given in lieu of a contract to
sell. Unlike in a contract of sale, the ownership of the parcel of land was retained by
the Spouses Serrano and shall only be passed to Caguiat upon full payment of the
purchase price as evidenced by the receipt. Relatively, no Deed of Sale has been
executed as proof of the intention of the parties to immediately transfer the
ownership of the parcel of land. Spouses Serrano also retained ownership of the
certificate of title of the lot, thereby indicating no actual or constructive delivery of
the ownership of the property. Finally, should the transaction pushed through,
Caguiat’s payment of the remaining balance would have been a suspensive condition
since the transfer of ownership was subordinated to the happening of a future and
uncertain event.
ARTICLE 1483
Subject to the provisions of the Statute of Frauds & of any other
applicable statute, a contract of sale may be made in writing,
or by word of mouth, or partly in writing & partly by word of
mouth, or may be inferred from the conduct of the parties.
ARTICLE 1483
Gen’l rule: a contract of sale is binding regardless of its form.
Exception: when the law requires a certain form for its validity or
enforceability such as those falling under the Statute of Frauds. (Read
1356-58 & 1403)
In case the contract of sale is covered by the SoF, it should be in writing
o/w they shall be unenforceable. (Remember, unenforceable ≠ void)
Registration of a public instrument in the registry of deeds is not
indispensible as regards the contracting parties. However, doing so would
bind 3rd parties to the contract & protect the buyer against claims of 3rd
persons arising from subsequent alienations by the vendor.
ARTICLE 1483. HEIRS OF CECILIO CLAUDEL VS. CA &
HEIRS OF MACARIO CLAUDEL (SIBLINGS OF CECILIO)
GR NO. 85240, JULY 12,199
Facts:
Cecilio Claudel acquired from the Bureau of Lands a parcel of land. Thirty-nine years
after his death, two branches of Cecilio’s family contested the ownership over the land
– the Heirs of Cecilio and the Siblings of Cecilio. The Heirs of Cecilio partitioned the
lot among themselves and obtained the corresponding TCTs. Siblings of Cecilio filed a
complaint for Cancellation of Titles and Reconveyance with Damages alleging that
their parents had purchased from the late Cecilio several portions of the lot. They
admitted that the transaction was verbal but they were able to present the subdivision
plan. The CFI dismissed the complaint disregarding the evidence. The CA reversed the
CFI’s ruling ordering the cancellation of the TCTs issued in the name of the Heirs of
Cecilio. As ruled by the CA, the Statute of Frauds applies only to executory contracts
and not to consummated sales as in the case at bar where oral evidence may be
admitted.
Issue: WON a contract of sale of land may be proven orally.
ARTICLE 1483. HEIRS OF CECILIO CLAUDEL VS. CA &
HEIRS OF MACARIO CLAUDEL (SIBLINGS OF CECILIO)
GR NO. 85240, JULY 12,199
Held:
YES. A contract of sale of land may be proven orally subject to
certain exceptions. This case falls within the exception. The rule
of thumb is that a sale of land, once consummated, is valid
regardless of the form it may have been entered into. For
nowhere does law or jurisprudence prescribe that the contract of
sale be put in writing before such contract can validly cede or
transmit rights over a certain real property between the parties
themselves.
ARTICLE 1484
In a contract of sale of personal prop the price of w/c is payable in
installments, the vendor may exercise any of the ff remedies:
1. Exact fulfillment of the obli, should the vendee fail to pay;
2. Cancel the sale, should the vendee’s failure to pay cover 2 or more
installments.
3. Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee’s failure to pay cover 2 or more
installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to
the contrary shall be void. (AKA RECTO Law)
RA NO. 6552 (MACEDA LAW). 62. G.R. NO. 147695,
SEPTEMBER 13, 2007, MANUEL C. PAGTALUNAN,
PETITIONER, VS. RUFINA DELA CRUZ VDA, DE
MANZANO, RESPONDENT
Patricio Pagtalunan (Patricio), petitioner’s stepfather and predecessor-in-
interest, entered into a Contract to Sell with respondent, wife of Patricio’s
former mechanic, Teodoro Manzano, whereby the former agreed to sell,
and the latter to buy, a house and lot which formed half of a parcel of
land. The consideration of P17,800 was agreed to be paid in the
following manner: P1,500 as down payment upon execution of the
Contract to Sell, and the balance to be paid in equal monthly installments
of P150 on or before the last day of each month until fully paid.
RA NO. 6552 (MACEDA LAW). 62. G.R. NO. 147695,
SEPTEMBER 13, 2007, MANUEL C. PAGTALUNAN,
PETITIONER, VS. RUFINA DELA CRUZ VDA, DE
MANZANO, RESPONDENT
It was alleged that respondent did not paid the monthly installment as
what they have agreed upon. On the other hand, it was denied by the
respondent that she is religiously paying her balance but the petitioner
changes its mind and want to refund all the payments she gave, however,
she refused. She admittedly, that she had failed to pay some installments
but she continued paying later on.
RA NO. 6552 (MACEDA LAW). 62. G.R. NO. 147695,
SEPTEMBER 13, 2007, MANUEL C. PAGTALUNAN,
PETITIONER, VS. RUFINA DELA CRUZ VDA, DE
MANZANO, RESPONDENT
Patricio and his wife died. Petitioner became their sole successor-in-interest
pursuant to a waiver by the other heirs. He eventually filed before the MTC
unlawful detainer case and it was ruled in favor of him. However, on appeal to
RTC, it ruled to dismiss the complaint for lack of merit. The Court of Appeals
affirmed the decision of the RTC to dismiss the case. The CA found that the
parties, as well as the MTC and RTC failed to advert to and to apply Republic
Act (R.A.) No. 6552, more commonly referred to as the Maceda Law, which is a
special law enacted in 1972 to protect buyers of real estate on installment
payments against onerous and oppressive conditions.The CA held that the
Contract to Sell was not validly cancelled or rescinded under Sec. 3 (b) of R.A.
No. 6552, and recognized respondent’s right to continue occupying unmolested
the property subject of the contract to sell.
RA NO. 6552 (MACEDA LAW). 62. G.R. NO. 147695,
SEPTEMBER 13, 2007, MANUEL C. PAGTALUNAN,
PETITIONER, VS. RUFINA DELA CRUZ VDA, DE
MANZANO, RESPONDENT
ISSUE: Whether or not the Maceda Law (RA 6552) is applicable to this
case
RULING: Yes, it is applicable.
The CA correctly ruled that R.A No. 6552, which governs sales of real
estate on installment, is applicable in the resolution of this case.
This case originated as an action for unlawful detainer. Respondent is
alleged to be illegally withholding possession of the subject property
after the termination of the Contract to Sell between Patricio and
respondent. It is, therefore, incumbent upon petitioner to prove that the
Contract to Sell had been cancelled in accordance with R.A. No. 6552.
RA NO. 6552 (MACEDA LAW). 62. G.R. NO. 147695,
SEPTEMBER 13, 2007, MANUEL C. PAGTALUNAN,
PETITIONER, VS. RUFINA DELA CRUZ VDA, DE
MANZANO, RESPONDENT
The pertinent provision of R.A. No. 6552 reads:
Sec. 3. In all transactions or contracts involving the sale or financing of
real estate on installment payments, including residential condominium
apartments but excluding industrial lots, commercial buildings and sales to
tenants under Republic Act Numbered Thirty-eight hundred forty-four as
amended by Republic Act Numbered Sixty-three hundred eighty-nine,
where the buyer has paid at least two years of installments, the buyer is
entitled to the following rights in case he defaults in the payment of
succeeding installments:
RA NO. 6552 (MACEDA LAW). 62. G.R. NO. 147695,
SEPTEMBER 13, 2007, MANUEL C. PAGTALUNAN,
PETITIONER, VS. RUFINA DELA CRUZ VDA, DE
MANZANO, RESPONDENT
The pertinent provision of R.A. No. 6552 reads:
(a) To pay, without additional interest, the unpaid installments due within
the total grace period earned by him, which is hereby fixed at the rate
of one month grace period for every one year of installment payments
made: Provided, That this right shall be exercised by the buyer only once
in every five years of the life of the contract and its extensions, if any.
RA NO. 6552 (MACEDA LAW). 62. G.R. NO. 147695,
SEPTEMBER 13, 2007, MANUEL C. PAGTALUNAN,
PETITIONER, VS. RUFINA DELA CRUZ VDA, DE
MANZANO, RESPONDENT
The pertinent provision of R.A. No. 6552 reads:
(b) If the contract is cancelled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty
percent of the total payments made and, after five years of installments,
an additional five percent every year but not to exceed ninety percent of
the total payments made: Provided, That the actual cancellation of the
contract shall take place after thirty days from receipt by the buyer of
the notice of cancellation or the demand for rescission of the contract by
a notarial act and upon full payment of the cash surrender value to the
buyer.9
RA NO. 6552 (MACEDA LAW). 62. G.R. NO. 147695,
SEPTEMBER 13, 2007, MANUEL C. PAGTALUNAN,
PETITIONER, VS. RUFINA DELA CRUZ VDA, DE
MANZANO, RESPONDENT
R.A. No. 6552, otherwise known as the "Realty Installment Buyer
Protection Act," recognizes in conditional sales of all kinds of real estate
(industrial, commercial, residential) the right of the seller to cancel the
contract upon non-payment of an installment by the buyer, which is simply
an event that prevents the obligation of the vendor to convey title from
acquiring binding force.10 The Court agrees with petitioner that the
cancellation of the Contract to Sell may be done outside the court
particularly when the buyer agrees to such cancellation.
RA NO. 6552 (MACEDA LAW). 62. G.R. NO. 147695,
SEPTEMBER 13, 2007, MANUEL C. PAGTALUNAN,
PETITIONER, VS. RUFINA DELA CRUZ VDA, DE
MANZANO, RESPONDENT
However, the cancellation of the contract by the seller must be in
accordance with Sec. 3 (b) of R.A. No. 6552, which requires a notarial
act of rescission and the refund to the buyer of the full payment of the
cash surrender value of the payments on the property. Actual cancellation
of the contract takes place after 30 days from receipt by the buyer of
the notice of cancellation or the demand for rescission of the contract by
a notarial act and upon full payment of the cash surrender value to the
buyer.
ARTICLE 1484-1486
RA 6552 governs sales of REAL ESTATE on installments. Where the buyer has paid at
least 2 years of installments, the buyer is entitled to the ff rights in case he defaults in the
payment of succeeding installments:
1. Grace Period – to pay, w/o additional interest, the unpaid installments due w/in the
total grace period earned by him w/c is hereby fixed at the rate of one month grace
period for every year of installment payments made; Provided, that this right shall be
exercised by the buyer only once in every 5 years of the life of the contract & its
extensions, if any;
2. Refund of Cash Surrender Value – if the contract is cancelled, the seller shall refund to
the buyer the cash surrender value of the payments on the prop equivalent to 50% of the
total payments made, &, after 5 years of installments, an additional 5% every year but
not to exceed 90% of the total payments made; Provided, that the actual cancellation of
the contract shall take 30 days from receipt by the buyer of the notice of cancellation or
the demand for rescission of the contract by a notarial act & upon full payment of the
cash surrender value to the buyer. Read: Layug v IAC
ARTICLE 1485
The preceding art shall be applied to contracts purporting to be
leases of personal prop w/ option to buy, when the lessor has
deprived the lessee of the possession or enjoyment of the thing.
ARTICLE 1486
In the cases referred to in the 2 preceding arts, a stipulation
that the installments or rents paid shall not be returned to the
vendee or lessee shall be valid insofar as the same may not be
unconscionable under the circumstances.
ARTICLE 1484-1486
Remedies are alternative; election of one is a waiver of the right to
resort to the others. Only the exercise of one of these remedies will serve
as a bar to the others.
If seller chooses option 2, the buyer may demand the return of the
installments unless there is a stipulation effecting forfeiture (read 1486).
The RULES APPLY to:
1. The SALE of PERSONAL PROP, w/c is PAYABLE IN INSTALLMENTS
2. The LEASE of PERSONAL PROP, w/ OPTION TO BUY, & the LESSOR
has DEPRIVED THE LESSEE of the POSSESSION/ENJOYMENT of the thing.
ARTICLE 1484-1486. SOUTHERN MOTORS VS
MOSCOSO 2 SCRA 168 MAY 30, 1961
FACTS:
Plaintiff Southern Motors, Inc. sold to defendant Angel Moscoso one
Chevrolet truck on installment basis, for P6,445.00. Upon making a down
payment, the defendant executed a promissory note for the sum of
P4,915.00, representing the unpaid balance of the purchase price to
secure the payment of which, a chattel mortgage was constituted on the
truck in favor of the plaintiff. Of said account, the defendant had paid a
total of P550.00, of which P110.00 was applied to the interest and
P400.00 to the principal, thus leaving an unpaid balance of P4,475.00.
The defendant failed to pay 3 installments on the balance of the
purchase price.
ARTICLE 1484-1486. SOUTHERN MOTORS VS
MOSCOSO 2 SCRA 168 MAY 30, 1961
Plaintiff filed a complaint against the defendant, to recover the unpaid balance of
the promissory note. Upon plaintiff’s petition, a writ of attachment was issued by the
lower court on the properties of the defendant. Pursuant thereto, the said Chevrolet
truck, and a house and lot belonging to defendant, were attached by the Sheriff and
said truck was brought to the plaintiff’s compound for safe keeping. After attachment
and before the trial of the case on the merits, acting upon the plaintiff’s motion for the
immediate sale of the mortgaged truck, the Provincial Sheriff of Iloilo sold the truck at
public auction in which plaintiff itself was the only bidder for P1,OOO.OO. The trial
court condemned the defendant to pay the plaintiff the amount of P4,475.00 with
interest at the rate of 12% per annum from August 16, 1957, until fully paid, plus
10% thereof as attorneys fees and costs. Hence, this appeal by the defendant.
ISSUE: Whether or not the attachment caused to be levied on the truck and its
immediate sale at public auction, was tantamount to the foreclosure of the chattel
mortgage on said truck.
ARTICLE 1484-1486. SOUTHERN MOTORS VS
MOSCOSO 2 SCRA 168 MAY 30, 1961
HELD:
No. Article 1484 of the Civil Code provides that in a contract of sale of
personal property the price of which is payable in installments, the
vendor may exercise any of the following remedies: (I) Exact fulfillment of
the obligation, should the vendee fail to pay; (2) Cancel the sale, should
the vendee’s failure to pay cover two or more installments; and (3)
Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee’s failure to pay cover two or more
installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to
the contrary shall be void.
ARTICLE 1484-1486. SOUTHERN MOTORS VS
MOSCOSO 2 SCRA 168 MAY 30, 1961
HELD:
The plaintiff had chosen the first remedy. The complaint is an ordinary
civil action for recovery of the remaining unpaid balance due on the
promissory note. The plaintiff had not adopted the procedure or methods
outlined by Sec. 14 of the Chattel Mortgage Law but those prescribed
for ordinary civil actions, under the Rules of Court. Had the plaintiff
elected the foreclosure, it would not have instituted this case in court; it
would not have caused the chattel to be attached under Rule 59, and
had it sold at public auction, in the manner prescribed by Rule 39. That
the plaintiff did not intend to foreclose the mortgage truck, is further
evinced by the fact that it had also attached the house and lot of the
appellant at San Jose, Antique.
ARTICLE 1484-1486. SOUTHERN MOTORS VS
MOSCOSO 2 SCRA 168 MAY 30, 1961
HELD: We perceive nothing unlawful or irregular in plaintiff’s act of
attaching the mortgaged truck itself. Since the plaintiff has chosen to
exact the fulfillment of the appellant’s obligation, it may enforce
execution of the judgment that may be favorably rendered hereon, on all
personal and real properties of the latter not exempt from execution
sufficient to satisfy such judgment. It should be noted that a house and lot
at San Jose, Antique were also attached. No one can successfully contest
that the attachment was merely an incident to an ordinary civil action. The
mortgage creditor may recover judgment on the mortgage debt and
cause an execution on the mortgaged property and may cause an
attachment to be issued and levied on such property, upon beginning his
civil action.
ARTICLE 1484-1486. SOUTHERN MOTORS V
MOSCOSO:
ARTICLE 1484-1486. PASCUAL VS UNIVERSAL
CORP. 61 SCRA 121 NOVEMBER 20, 1974
FACTS: Plaintiff-appellee spouses Lorenzo Pascual and Leonila Torres
(spouses Pasqual) executed the real estate mortgage subject matter of
this complaint on December 14, 1960 to secure the payment of the
indebtedness of PDP Transit, Inc. (PDP Trans.) for the purchase of 5 units
of Mercedes Benz trucks, with a total purchase price or principal
obligation of P152,506.50 which was to bear interest at 1% per month
starting that day, but the plaintiffs' guarantee is not to exceed
P50,000.00 which is the value of the mortgage. The PDP Trans., as the
spouses Pasqual's principal, paid to defendant-appellant Universal
Motors Corporation (Universal Motors) the sum of P92,964.91 on April 5,
1961 for two of the five Mercedes Benz trucks and on May 22, 1961 for
the remaining three, thus leaving a balance of P68,641.69 including
interest due on February 8, 1965.
ARTICLE 1484-1486. PASCUAL VS UNIVERSAL
CORP. 61 SCRA 121 NOVEMBER 20, 1974
FACTS: On March 19, 1965, Universal Motors filed this complaint with the CFI of
Manila against the PDP Trans. to collect the balance due under the Chattel Mortgages
and to repossess all the units sold to PDP Trans. as the spouse Pascual’s principal,
including the 5 units guaranteed under the subject Real (Estate) Mortgage. During the
hearinbg, Universal Motors admitted that it was able to repossess all the units sold to
the latter, including the 5 units guaranteed by the subject real estate mortgage, and
to foreclose all the chattel mortgages constituted thereon, resulting in the sale of the
trucks at public auction. As the real estate mortgagors, the spouses Pascual filed an
action with the CFI of Quezon City for the cancellation of the mortgage they
constituted on 2 parcels of land in favor of the Universal Motors to guarantee the
obligation of PDP Trans. to the amount of P50,000. The said CFI rendered judgment
in favor of the spouses Pascual and ordered the cancellation of the mortgage.
ISSUE:
Whether or not Article 1484 of the New Civil Code applicable in the case at bar?
ARTICLE 1484-1486. PASCUAL VS UNIVERSAL
CORP. 61 SCRA 121 NOVEMBER 20, 1974
HELD:
The Supreme Court affirmed the lower court’s decision. Appellant
Universal Motors argues that Article 1484 is not applicable to the case at
bar because there is no evidence on record that the purchase by PDP
Trans. of the 5 trucks was payable in installments and that the PDP Trans.
had failed to pay two or more installments. Universal Motors also
contends that what Article 1484 prohibits is for the vendor to recover
from the purchaser the unpaid balance of the price after he has
foreclosed the chattel mortgage on the thing sold, but not a recourse
against the security put up by a third party.
ARTICLE 1484-1486. PASCUAL VS UNIVERSAL
CORP. 61 SCRA 121 NOVEMBER 20, 1974
HELD: The Supreme Court concluded to the contrary, saying that the first
issue was whether or not the sale was one on installments. The lower court
found that it was, and that there was failure to pay two or more
installments, a finding which is not subject to review by the Supreme
Court.
The next contention is that what article 1484 withholds from the vendor is
“the right to recover any deficiency from the purchaser after the
foreclosure of the chattel mortgage,” and not a “recourse to the
additional security put up by a third party to guarantee the purchaser's
performance of his obligation.” But the Supreme Court to sustain this
argument of the appellant would be to indirectly subvert and public
policy overturn the protection given by Article 1484.
ARTICLE 1484-1486
Pascual v Universal Motors Corp: Sellers cannot go after
guarantors if they have already chosen 3rd remedy. B/c if they
did, guarantors would have a right to go after the original
debtors, w/c would result in the situation the law seeks to
prevent (double recovery).
Ridad v Filinvest: “Should the vendor choose to foreclose the
mortgage (3rd remedy), he has to content himself w/ the
proceeds of the sale at the public auction of the chattels w/c
were sold on installment & mortgaged to him.”
ARTICLE 1484-1486. RIDAD VS FILIPINAS INVESTMENT
AND FINANCE CORPORATION GR NO. 39806 JANUARY
27, 1983
FACTS: Ridad purchased from Supreme Sales 2 Ford Consul Sedans,
payable in 24 installments, for which he executed a PN with chattel
mortgage over the said property. Another chattel mortgage was
executed this time upon a separate Chevy car, and another one upon the
franchise to operate taxi cabs. Supreme Sales thereafter assigned its
rights under the PN to Filinvest. Ridad defaulted and Filinvest foreclosed
on the mortgage. It was the highest bidder for the foreclosure sale of the
sedans. But unable to fully satisfy the debt, it also foreclosed the Chevy
and the franchise.
ISSUE: W/N Filinvest may still foreclose the Chevy and the franchise to
fully satisfy the debt
ARTICLE 1484-1486. RIDAD VS FILIPINAS INVESTMENT
AND FINANCE CORPORATION GR NO. 39806 JANUARY
27, 1983
HELD: NO. When the unpaid seller forecloses on the mortgage, the law
precludes him from bringing further actions against the vendee for
whatever balance, which was not satisfied by the first foreclosure. By
choosing to foreclose on the Ford sedans, Filinvest renounced all other
rights which it might have had under the PN; it must content itself with the
proceeds of the sale of the sedans at the public auction.
ARTICLE 1484-1486
Why is it that in Southern Motors v Moscoso, they were able to exact the
fulfillment of the deficiency of the purchase price even after foreclosing
the chattel mortgage while in Ridad v Filinvest, the court ruled that the
vendor has to content himself w/ the proceeds of the foreclosure?
B/c in the Moscoso case, what the vendors filed was a complaint to
recover of the unpaid balance of the promissory note covering the chattel
mortgage. In effect, what they chose was the 1st remedy. The foreclosure
in this case was not an exercise of the 3 rd remedy but was merely
incident of their choice to exact the fulfillment of the obli. In Ridad, they
chose to foreclose the chattel mortgage extrajudicially, w/c is the 3rd
remedy, barring them to recover the deficiency from the vendees.
ARTICLE 1487
The expenses for the execution & registration of the sale shall
be borne by the vendor, unless there is a stipulation to the
contrary.
ARTICLE 1488
The expropriation of prop for public use is governed by special
laws.
ARTICLE 1489
All persons who are authorized in this Code to obligate
themselves may enter into a contract of sale, saving the
modifications contained in the ff arts. Where necessaries are
sold & delivered to a minor or other person w/o capacity to act,
he must pay a reasonable price therefor. Necessaries are those
referred in Art 290.
ARTICLE 1489
Gen’l rule: All persons, whether natural/juridical, who can bind themselves
have also legal capacity to buy & sell.
Exceptions: When law determines that a party suffers from either
absolute or relative incapacity.
Absolute incapacity – exists in case of persons who cannot bind
themselves (e.g. minors, insane or demented persons)
Relative incapacity – exists only w/ reference to certain persons or a
certain class of prop (e.g. 1490, 1491)
Necessaries – those things w/c are needed for sustenance, dwelling,
clothing, medical attendance, education & transportation according to the
financial capacity of the family of the incapacitated person (Art. 94, FC)
ARTICLE 1489
Contracts of sale entered into by incapacitated persons are:
1. VOIDABLE, if only ONE of the parties is incapable of giving
consent to a contract (1390[1])
2. UNENFORCEABLE, if BOTH parties are incapable of giving
consent to a contract (1403[3])
ARTICLE 1489
Who are incapable of giving consent to a contract?
1327. The ff cannot give consent to a contract:
1. Unemancipated minors;
2. Insane or demented persons, & deaf-mutes who do not know
how to write.
1329. The incapacity declared in art 1327 is subject to the
modifications determined by law, & is understood to be w/o
prejudice to special dq’s established in the laws.
ARTICLE 1490
The husband & the wife cannot sell props to each other, except:
1. When a separation of prop was agreed upon in the
marriage settlements; or 2. When there has been a judicial
separation of prop under Art. 191.
ARTICLE 1490
Prohibition also applies to common-law relationships.
Persons allowed to question such sale:
1. Those who bear such relation to the parties making the
transfer or to the prop itself that such transfer interferes w/ their
rights or interests.
2. The government.
ARTICLE 1490
A sale b/w husband & wife is VOID. (1409[7])
If you want:
Read Art. 87, FC, re donations b/w husband & wife/common-
law partners
134-142, FC, re judicial separation of prop
143-146, FC, re separation of prop
ARTICLE 1490. 67. G.R. NO. L-60174 FEBRUARY 16, 1983, EDUARDO
FELIPE, HERMOGENA V. FELIPE AND VICENTE V. FELIPE, PETITIONERS, VS.
HEIRS OF MAXIMO ALDON, NAMELY: GIMENA ALMOSARA, SOFIA ALDON,
SALVADOR ALDON, AND THE HONORABLE COURT OF
APPEALS, RESPONDENTS.
FACTS Maximo Aldon married Gimena Almosara in 1936. The spouses bought several
pieces of land and the lands were divided into three lots. Afterwards, Gimena
Almosara sold the lots to the spouses Eduardo Felipe and Hermogena V. Felipe. The
sale was made without the consent of her husband, Maximo. Later on, the heirs of
Maximo Aldon, namely his widow Gimena and their children Sofia and Salvador
Aldon, filed a complaint in the Court of First Instance of Masbate against the
Felipes. The respondents asserted that they had orally mortgaged the same to the
defendants; and an offer to redeem the mortgage had been refused so they filed the
complaint in order to recover the three parcels of land. On the other hand, the
defendants asserted that they had acquired the lots from the plaintiffs by purchase
and subsequent delivery to them. The RTC ruled in favor of the defendants but the
Court of Appeals set aside the decision of the lower court contending that the
defendants should surrender the lot to the plaintiffs.
ARTICLE 1490. 67. G.R. NO. L-60174 FEBRUARY 16, 1983, EDUARDO
FELIPE, HERMOGENA V. FELIPE AND VICENTE V. FELIPE, PETITIONERS, VS.
HEIRS OF MAXIMO ALDON, NAMELY: GIMENA ALMOSARA, SOFIA ALDON,
SALVADOR ALDON, AND THE HONORABLE COURT OF
APPEALS, RESPONDENTS.
ISSUE
Whether or not sale made by Gimena is a defective contract but of what category?
ARTICLE 1490. 67. G.R. NO. L-60174 FEBRUARY 16, 1983, EDUARDO
FELIPE, HERMOGENA V. FELIPE AND VICENTE V. FELIPE, PETITIONERS, VS.
HEIRS OF MAXIMO ALDON, NAMELY: GIMENA ALMOSARA, SOFIA ALDON,
SALVADOR ALDON, AND THE HONORABLE COURT OF
APPEALS, RESPONDENTS.
RULING
It is voidable. The voidable contracts are "[T]hose where one of the
parties is incapable of giving consent to the contract." In the instant case-
Gimena had no capacity to give consent to the contract of sale. The
capacity to give consent belonged not even to the husband alone but to
both spouses.
The view that the contract made by Gimena is a voidable contract is
supported by the legal provision that contracts entered by the husband
without the consent of the wife when such consent is required, are
annullable at her instance during the marriage and within ten years from
the transaction questioned. (Art. 173, Civil Code.)
ARTICLE 1490. 67. G.R. NO. L-60174 FEBRUARY 16, 1983, EDUARDO
FELIPE, HERMOGENA V. FELIPE AND VICENTE V. FELIPE, PETITIONERS, VS.
HEIRS OF MAXIMO ALDON, NAMELY: GIMENA ALMOSARA, SOFIA ALDON,
SALVADOR ALDON, AND THE HONORABLE COURT OF
APPEALS, RESPONDENTS.
RULING
Gimena's contract is not rescissible for in such contract all the essential
elements are untainted but Gimena's consent was tainted. Neither can the
contract be classified as unenforceable because it does not fit any of
those described in Art. 1403 of the Civil Code. And finally, the contract
cannot be void or inexistent because it is not one of those mentioned in
Art. 1409 of the Civil Code. By process of elimination, it must perforce be
a voidable contract.
ARTICLE 1490. 67. G.R. NO. L-60174 FEBRUARY 16, 1983, EDUARDO
FELIPE, HERMOGENA V. FELIPE AND VICENTE V. FELIPE, PETITIONERS, VS.
HEIRS OF MAXIMO ALDON, NAMELY: GIMENA ALMOSARA, SOFIA ALDON,
SALVADOR ALDON, AND THE HONORABLE COURT OF
APPEALS, RESPONDENTS.
RULING
The voidable contract of Gimena was subject to annulment by her
husband only during the marriage because he was the victim who had an
interest in the contract. Gimena, who was the party responsible for the
defect, could not ask for its annulment. Their children could not likewise
seek the annulment of the contract while the marriage subsisted because
they merely had an inchoate right to the lands sold.
ARTICLE 1490. CASTILLO VS CASTILLO GR NO. L-
18238 JANUARY 22, 1980
FACTS: Ysidro C. Castillo died on October 15, 1947 leaving as his heirs his wife
Enriqueta Katigbak and their nine children Intestate proceedings for the settlement of
the deceased's estate were instituted and in January, 1948, Enriqueta was appointed
administratrix. On June 21, 1948, she filed an inventory of the properties as well as
the obligations left by the deceased. However, on November 11, 1948, Enriquetta
submitted a project of partition, stating that the properties which constituted the
residuary hereditary estate of the deceased Ysidro are: (1) 38 parcels of land which
are properties brought to the marriage by the deceased Ysidro and (2) 19 parcels of
land which are conjugal properties of the spouses. Under said project of partition, all
the 38 parcels of land brought by the deceased into the marriage and 4 parcels of
the conjugal properties were adjudicated to all the nine children in equal shares, pro-
indiviso; 8 parcels of the conjugal properties were adjudicated to the widow as her
share in the conjugal partnership and the remaining 7 parcels given in usufruct to the
widow. Despite approval of the project of partition and the closing of the intestate
proceedings, the properties remained under the administration of Enriqueta.
ARTICLE 1490. CASTILLO VS CASTILLO GR NO. L-
18238 JANUARY 22, 1980
FACTS: On February 4, 1960, after an extrajudicial demand for
partition failed, herein plaintiff-appellant Zenaida K. Castillo, filed an
action for partition with accounting and receivership against her mother
Enriqueta and siblings alleging that the project of partition omitted to
include certain properties acquired by the defendants using community
funds in their acquisition, she prayed that said properties be divided and
partitioned accordingly.
ISSUE: Whether or not lower court erred when it held that the money
used in the purchase of 1/2 of the land covered by Exhibit Plaintiff 2
below to the spouses Ysidro C. Castillo and Enriqueta Katigbak and
therefore, erred when it ordered that the same be partitioned as a
conjugal partnership property
ARTICLE 1490. CASTILLO VS CASTILLO GR NO. L-
18238 JANUARY 22, 1980
HELD: We find no error in the lower court's ruling that the money used in
the purchase of ½ of the land covered by Exhibit Plaintiff 2 belonged to
the spouses Ysidro C. Castillo and Enriqueta Katigbak and ordering that
such land be partitioned as conjugal partnership property. We must here
underscore the specific rule in our civil law that all properties of the
marriage shall be presumed conjugal unless it be proved that they belong
exclusively to either of the spouses. To rebut or overcome this
presumption, there must be clear, convincing and satisfactory proof that
this consideration of the sale was paid by only one of the spouses and
from her exclusive or separate property. The document in question, Exhibit
Plaintiff 2, is a public instrument valid and binding even as against third
parties, the said deed of sale having been duly registered in the Register
of Deeds on June 23, 1947.
ARTICLE 1490. CASTILLO VS CASTILLO GR NO. L-
18238 JANUARY 22, 1980
HELD:
The Register of Deeds has duly certified that said deed of sale was duly
recorded in the Registration Book under Act 3344. It needs no further
argumentation to hold that the defendants-appellants' gratuitous
testimony cannot prevail over the recitals in said public instrument, for it
must be here reiterated that: A recital in a public instrument celebrated
with all the legal formalities under the safeguard of a notarial certificate
is evidence against the parties and a high degree of proof is necessary
to overcome the legal presumption that such recital is true. (Valencia v.
Tantoco, et al., 99 Phil. 824).
ARTICLE 1491
The ff persons cannot acquire by purchase, even at public or
judicial auction, either in person or thru the mediation of
another:
1. The guardian, the prop of the person/s who may be under his
guardianship;
2. Agents, the prop whose administration or sale may have been
intrusted to them, unless the consent of the principal have been
given;
3. Executors & administrators, the prop of the estate under
administration;
ARTICLE 1491
The ff persons cannot acquire by purchase, even at public or
judicial auction, either in person or thru the mediation of
another:
4. Public officers & employees, the prop of the State or of any
subdivision thereof, or of any gocc, or institution, the admin of
w/c has been intrusted to them; this provision shall apply to
judges & gov’t experts who, in any manner whatsoever take
part in the sale;
ARTICLE 1491
The ff persons cannot acquire by purchase, even at public or judicial
auction, either in person or thru the mediation of another:
5. Justices, judges, prosecuting attorneys, clerks of superior & inferior
courts, & other officers & employees connected w/ the administration of
justice, the prop & rights in litigation or levied upon an execution before
the court w/in whose jurisdiction or territory they exercise their respective
fxns; this prohibition includes the act of acquiring by assignment & shall
apply to lawyers, w/ respect to the prop & rights w/c may be the object
of any litigation in w/c they may take part by virtue of their profession;
6. Any others especially dq’d by law.
ARTICLE 1491
Pars. 1-3 = unenforceable, capable of ratification (b/c it
involves private interests)
Pars. 4-6 = void (b/c it involves public interests)
No. 2 not absolute, agent may buy the prop intrusted unto him
if:
1. The agency has been terminated
2. His principal gives consent
3. The sale was made under a special power pursuant to a
special law (read: Fiestan v CA)
ARTICLE 1491
No.3 refers only to props under the administration of the
executor or administrator at the time of the acquisition. Executor
may purchase the hereditary rights of any heir, since they do not
administer such rights.
No.4 refers only to props:
1. Belonging to the Sate, or of any subdivision thereof, or of any
gocc or institution
2. The admin of w/c has been entrusted to PO/Es.
ARTICLE 1491
For no. 5 to operate, sale or assignment must take place during
the pendency of the litigation involving the prop. A prop is “in
litigation” from the moment it becomes subject to judicial action.
ARTICLE 1491
Fiestan v CA: “The prohibition mandated by par 2 of Art 1491 does not
apply where the sale of the prop in dispute was made under a special
power inserted in or attached to the real estate mortgage pursuant to
Act No. 3135, as amended. Under Act No. 3135, as amended, a
mortgagee-creditor is allowed to participate in the bidding & purchase
under the same conditions as any other bidder.” Act No. 3135 – An Act to
Regulate the Sale of Prop under Special Powers inserted in or Annexed
to Real Estate Mortgages. (applies in cases of extrajudicial foreclosure
sales)
*It seems that we can consider pars. 1-3 of this article to be covered by
1403 [1] & pars. 4-5 to be under 1409 [1]
ARTICLE 1492
The prohibitions in the 2 preceding arts are applicable to sales
in legal redemption, compromises & renunciations.
ARTICLE 1492
Compromise – amicable settlement of a (legal) controversy
Renunciation – condonation (remember obli, read 1270-1274
kung trip mo)
ARTICLE 1491-1492. GODINEZ VS FONG GR NO.
L-36731 JANUARY 27, 1983
FACTS:
The petitioner’s parents acquired a parcel land which was sold, for
valuable consideration, to the respondent who is a Chinese citizen. The
respondent executed a power of attorney to another Chinese citizen who
conveyed such land to Navata who, with full knowledge that Fong is
Chinese citizen and under the law is prohibited and disqualified to
acquire a real property. The petitioners filed a complaint before CFI
praying to be adjudged as owners of the land. The petitioner contends
that the TCT issued to Fong was null and void because the transaction
constitutes a non-existent contract since it violates applicable provisions of
the Constitution and the Civil Code.
ARTICLE 1491-1492. GODINEZ VS FONG GR NO.
L-36731 JANUARY 27, 1983
ISSUE:
Whether or not the heirs of a person who sold a parcel of land to an
alien in violation of a constitutional prohibition may recover the property
if it had, in the meantime, been conveyed to a Filipino citizen qualified to
own and possess it
ARTICLE 1491-1492. GODINEZ VS FONG GR NO.
L-36731
HELD:
JANUARY 27, 1983
The Krivenko ruling that "under the Constitution aliens may not acquire private or
agricultural lands, including residential lands" is a declaration of an imperative
constitutional policy. Consequently, prescription may never be invoked to defend that
which the Constitution prohibits. However, we see no necessity from the facts of this
case to pass upon the nature of the contract of sale executed by Jose Godinez and
Fong Pak Luen whether void ab initio, illegal per se or merely pro-exhibited.** It is
enough to stress that insofar as the vendee is concerned, prescription is unavailing. But
neither can the vendor or his heirs rely on an argument based on imprescriptibility
because the land sold in 1941 is now in the hands of a Filipino citizen against whom
the constitutional prescription was never intended to apply. The lower court erred in
treating the case as one involving simply the application of the statute of limitations.
ARTICLE 1491-1492. GODINEZ VS FONG GR NO.
L-36731 JANUARY 27, 1983
HELD:
From the fact that prescription may not be used to defend a
contract which the Constitution prohibits, it does not necessarily
follow that the appellants may be allowed to recover the
property sold to an alien. As earlier mentioned, Fong Pak Luen,
the disqualified alien vendee later sold the same property to
Trinidad S. Navata, a Filipino citizen qualified to acquire real
property.
ARTICLE 1491-1492. GODINEZ VS FONG GR NO.
L-36731 JANUARY 27, 1983
HELD:
Herrera v. Luy Kim Guan (SCRA 406) reiterated the above ruling
by declaring that where land is sold to a Chinese citizen, who
later sold it to a Filipino, the sale to the latter cannot be
impugned.
In the light of the above considerations, we find the second and
third assignments of errors without merit. Respondent Navata,
the titled owner of the property is declared the rightful owner.
ARTICLE 1491-1492. GAN TINGCO VS PABINGUIT
GR NO. 10439 OCTOBER 17, 1916
FACTS: Acabo sold parcels of land to the petitioner. However, the land
was in possession of the respondent alleges certain rights therein. Her
claims o have purchased them from Faustino Abad; that Abad had
become their owner through purchase from Henry Gardner; that the
latter, in turn, had owned them by reason of having purchased them for
P555 at a public auction. Gardner was a justice of peace at that time.
CFI declared the petitioners as the owner of such lands and ordered the
respondents to restore the former its possession. The respondent, however,
appealed contending that notwithstanding the sale of the land at the
public auction, Acabo did not ceased to be the owner of the properties
because of the irregularities and defect in the auction.
ISSUE: Whether or not the respondent’s contention is correct
ARTICLE 1491-1492. GAN TINGCO VS PABINGUIT
GR NO.
HELD:
10439 OCTOBER 17, 1916
If under the law Gardner was prohibited from acquiring the ownership of Acabo's
lands, then he could not have transmitted to Faustino Abad the right of ownership that
he did not possess; nor could Abad, to whom this alleged ownership had not been
transmitte, have conveyed the same to Pabinguit. What Gardner should have done in
view of the fact that the sale, as he finally acknowledged, was void, was to claim the
price that had been deposited in court, and the justice of the peace of Guijulngan
should have declared the auction void and have ordered a new sale to be held,
besides correcting the errors that had been committed in the proceedings. To the
reasons already stated, there is to be added the additional one, with respect to the
sale made by Faustino Abad to Silvino Pabinguit, that Abad was a minor at the time
— a circumstance that deprived him of capacity to sell (Civil Code, art. 1263). Abad
had no ownership to transmit to anyone and, besides, he had no personality to enable
him to contract by himself, on account of his lack of legal age.
ARTICLE 1491-1492. GAN TINGCO VS PABINGUIT
GR NO. 10439 OCTOBER 17, 1916
HELD:
Sanchez, the sheriff, the sole notary who certified all these deeds of
conveyance in order that Pabinguit might become owner of those coconut
lands with which his own lands adjoined, was in such a hurry that, as he
testified at the trial, on the very same day of the auction he had already
executed in behalf of Henry Gardner the final deed of sale of the said
lands, without allowing time for their possible redemption. Section 466 of
Act No. 190 prescribes that if redemption has not been requested, this
deed is to be executed within the twelve months subsequent to the sale.
This court finds no reason whatever why it should not affirm the judgment
appealed from. It is therefore hereby affirmed with the costs of this
instance against the appellant.
ARTICLE 1493
If at the time the contract of sale is perfected, the thing w/c is the object
of the contract has been entirely lost, the contract shall be w/o any
effect.
But if the thing should have been lost in part only, the vendee may choose
b/w w/drawing from the contract & demanding the remaining part,
paying its price in proportion to the total sum agreed upon.
ARTICLE 1494
Where the parties purport a sale of specific goods, & the goods w/o the
knowledge of the seller have perished in part or have wholly or in a
material part so deteriorated in quality as to be substantially changed in
character, thebuyer may at his option, treat the sale:
1. As avoided; or
2. As valid in all of the existing goods or in so much thereof as have not
deteriorated, & as binding the buyer to pay the agreed price for the
goods in w/c the ownership will pass, if the sale was divisible.
ARTICLE 1493-1494
1493 applies to a sale of a specific thing. 1494 applies to a sale the
object of w/c consists of a mass of “specific goods”
Loss or injury referred to in these articles is one w/c takes place BEFORE
or AT THE TIME OF PERFECTION.
The thing is ‘lost’ when it perishes or goes out of commerce or disappears
in such a way that its existence is unknown or it cannot be
recovered.(1189, [3])
Perish –material deteriorations, complete change in the nature of the
thing in such a manner that it loses the utility it had during the time of the
perfection of the contract
ARTICLE 1493-1494
Rule in 1493 & 1494 similar:
If lost/deteriorated in whole = void
If lost/deteriorated in part = rescind contract or pay for what’s left(if
divisible)
ARTICLE 1495
The vendor is bound to transfer the ownership of & deliver, as well as
warrant the thing w/c is the object of the sale.
ARTICLE 1495
Principal oblis of a vendor:
(1)To transfer the ownership of the determinate thing sold(1948, 1495);
(2)To deliver the thing, w/ its accessions & accessories, if any, in the condition in w/c
they were upon the perfection of the contract; (1537)
(3)To warrant against eviction & against hidden defects; (1495, 1547)
(4)To take care of the thing, pending delivery, w/ proper diligence; (1163)
(5)To pay for the expenses of the deed of sale, unless there is a stipulation to the
contrary. (1487)
*Seller need not be the owner of the thing at the time of perfection of the contract;
1459 provides that it is sufficient thathe has a right to transfer the ownership thereof
at the time it is delivered.
ARTICLE 1496
The ownership of the thing sold is acquired by the vendee fromthe moment it is
delivered to him in any of the ways specified in arts 1497 to 1501, or in any other
manner signifying an agreement that the possession is transferred from the vendor to
the vendee.
ARTICLE 1496
The ownership of the thing sold is acquired by the vendee fromthe
moment it is delivered to him in any of the ways specified in arts 1497 to
1501, or in any other manner signifying an agreement that the possession
is transferred from the vendor to the vendee.
Ways of effecting delivery:
(1)Actual or real delivery (1497);
(2)Constructive or legal delivery (1498-1501); or
(3)Any other manner signifying an agreement that the possession is
transferred to the vendee. (1496-1499)
ARTICLE 1496
Delivery must be made to vendor or his authorized representative, if any.
Constructive delivery–a gen’l term comprehending all those acts w/c, although not
conferring phys’l possession of the thing, have been held by constructionof law
equivalent to acts of real delivery.
Ways of effecting constructive delivery:
Execution of a public instrument (1498, par. 1);
Symbolic tradition or tradition symbolica (1498, par. 2);
Traditio Longa Manu(1499, par. 1);
Traditio Brevi Manu (1499, par. 2);
Traditio Constitutum Possessorium (1500);
Quasi-traditio or quasi-delivery (1501).
ARTICLE 1496
In all forms of delivery, it is necessary that the act be coupled w/ the intention of
delivering the thing. For the same reason, any act, although not provided for in the
preceding arts, but accompanied by the evident intention of the vendor to deliver or
of the vendee to receive the thing sold, will be considered as constituting tradition. It is
the intention w/c is essential.
ARTICLE 1497
The thing sold shall be understood as delivered, when it is
placed in the control & possession of the vendee.
(Actual delivery)
ARTICLE 1497
Tradition is a derivative mode of acquiring ownership by virtue of w/c
one who has the right & intention to alienate a corporeal thing, transmits
it by virtue of a just title to one who accepts the same.
Ownership is not transferred by contract merely but by delivery, actual or
constructive. Contracts only constitute title or rights to the transfer or
acquisition of ownership, while delivery or tradition is the method of
accomplishing the same. Note however, that the parties to the contract
may agree when & on what conditions the ownership in the subject of the
contract shall pass to the buyer.
ARTICLE 1497
Delivery of thing sold + payment of purchase price =
consummation of contract of sale. Since perfection ≠
consummation, delivery is not essential to the perfection of the
contract of sale.
Remedies of buyer if seller fails to deliver:
Specific performance
Rescission, w/ damages
ARTICLE 1498
When the sale is made thru a public instrument, the execution
thereof shall be equivalent to the delivery of the thing w/c is the
object to the contract, if from the deed the contrary does not
appear or cannot clearly be inferred.
W/ regard to movable prop, its delivery may also be made by
the delivery of the keys of the place or depository where it is
stored or kept.
ARTICLE 1498
1stpar applies both to movable & immovable prop.
Delivery here is only PRESUMPTIVE & can be rebutted by evidence to the
contrary.
A seller cannot deliver constructively if he cannot actually deliver even if
he wants to.
In order to bind 3rdparties to the sale, the public instrument needs to be
recorded in the Register of Deeds & a certificate of title must be issued in
the name of the buyer over the prop. But, as b/w the buyer & seller, the
execution of the public instrument is enough to bind the 2 of them.
Symbolic tradition–when parties, to effect delivery, make use of a token
symbol to represent the thing delivered. (e.g. Delivery of car keys)
ARTICLE 1498
Addison v Felix: “In order that symbolic delivery may produce the effect
of tradition, it is necessary that the vendor shall have had such control
over the thing sold that, at the moment of the sale, its material delivery
could have been made. It is not enough to confer upon the purchaser the
ownership & the right of possession. THE THING SOLD MUST BE PLACED
IN HIS CONTROL. When there is no impediment whatever to prevent the
thing sold passing into the tenancy of the purchaser by the sole will of the
vendor, symbolic tradition thru the execution of a public instrument is
sufficient. But if notwithstanding the execution of the instrument, the
purchaser cannot have the enjoyment & material tenancy of the thing &
make use of it himself or thru another in his name, b/c such tenancy &
enjoyment are opposed by the interposition of another will, then fiction
yields to reality –the delivery has not been effected.”
ARTICLE 1498
Ten Forty Realty v Cruz: “Execution of a public instrument gives rise only
to a prima facie presumption of delivery. Such presumption is destroyed
when the delivery is not effected b/c of a legal impediment. A
constructive or symbolic delivery, being merely presumptive, is deemed
negated by the failure of the vendee to take actual possession of the
land sold.”
Note the cases of Roman v Grimalt, Norkis Distributors v CA
ARTICLE 1499
The delivery of movable prop may likewise be made by the mere consent
or agreement of the contracting parties, if the thing sold cannot be
transferred to the possession of the vendee at the time of the sale, or if
the latter already had it in his possession for any other reason.
ARTICLE 1499
Traditio Longa Manu–takes place by mere consent or agreement
of the contracting parties IF the thing sold cannot be transferred
to the possession of the vendee at the time of the sale
e.g. A buys B’s car, however, such car is in Baguio. Or such car is
the subject of a lease contract b/w B & C at the time B sold it to
A.
Traditio Brevi Manu–happens when the vendee has already the
possession of the thing sold by virtue of another title (e.g. Lessor
sells thing leased to lessee)
ARTICLE 1500
There may also be tradition constitutum possessorium
ARTICLE 1500
There may also be tradition constitutum possessorium

Traditio Constitutum Possessorium–takes place when the vendor

continues in possession of the prop sold not as owner but in some
other capacity. (e.g. A sells his land to B. Instead of delivering
the land to B, A continues to occupy the land as B’s tenant.)
ARTICLE 1501
W/ respect to incorporeal prop, the provisions of the 1stpar of
art 1498 shall govern. In any other case wherein said provisions
are not applicable, the placing of the titles of ownership in the
possession of the vendee or the use by the vendee of his rights,
w/ the vendor’s consent, shall be understood as a delivery.
ARTICLE 1501
Quasi-traditio–delivery of incorporeal things thru:
-Execution of a public instrument;
-If (1) is inapplicable, the placing of titles of ownership in the
possession of the vendee; or
-Allowing vendee to use his rights as new owner w/ the consent
of the vendor.
*Incorporeal –having a conceptual existence but no phys’l
existence; intangible
ARTICLE 1502
When goods are delivered to the buyer “on sale or return” to
give the buyer an option to return the goods instead of paying
the price, the ownership passes to the buyer on delivery, but he
may revest the ownership in the seller by returning or tendering
the goods w/in the time fixed in the contract, or, if no time has
been fixed, w/in reasonable time.
ARTICLE 1502
When goods are delivered to the buyer on approval or on trial or on
satisfaction, or other similar terms, the ownership therein passes to the
buyer:
1.When he signifies his approval or acceptance to the seller or does any
other act adopting the transaction;
2.Ifhe does not signify his approval or acceptance to the seller, but
retains the goods w/o giving notice of rejection, then if a time has been
fixed for the return of the goods, on the expiration of such time, &, if no
time has been fixed, on the expiration of a reasonable time. What is a
reasonable time is a question of fact.
ARTICLE 1502
Sale or Return–a contract by w/c prop is sold but the buyer, who
becomes the owner of the prop on delivery, has the option to return the
same to the seller instead of paying the price. If buyer does not return
w/in the time fixed in the contract, or if no time has been fixed, w/in
reasonable time, sale is absolute & he is liable to pay the seller.
Sale on Trial or Approval–a contract in the nature of an option to
purchase if the goods prove satisfactory, the approval of the buyer
being a condition precedent.*Buyer cannot accept part & reject the rest
of the goods.
In both cases, if the goods are injured or damaged substantially thru the
negligence or misuse of the buyer, his right to return is lost & the sale
becomes absolute.
ARTICLE 1502
ARTICLE 1503
When there is a contract of sale of specific goods, the seller
may, by the terms of the contract, reserve the right of possession
or ownership in the goods until certain conditions have been
fulfilled. The right of possession or ownership may be thus
reserved notw/standing the delivery of the goods to the
buyeror to a carrier or other bailee for the purpose of
transmission to the buyer.
ARTICLE 1503
Where goods are shipped, & by the bill of lading the goods
are deliverable to the seller or his agent, or to the order of the
seller or of his agent, the seller thereby reserves the ownership
in the goods. But, if except for the form of the bill of lading, the
ownership would have passed to the buyer on shipment of
goods, the seller’s prop in the goods shall be deemed only for
the purpose of securing performance by the buyer of his oblis
under the contract.
ARTICLE 1503
Where goods are shipped, & by the bill of lading the goods
are deliverable to order of the buyer or of his agent, but
possession of the bill of lading is retained by the seller or his
agent, the seller thereby reserves a right to the possession of the
goods as against the buyer.
ARTICLE 1503
Where the seller of goods draws on the buyer for the price & transmits
the bill of exchange & bill of lading together to the buyer to secure
acceptance or payment of the bill of exchange, the buyer isbound to
return the bill of lading if he does not honor the bill of exchange, & if he
wrongfully retains the bill of lading he acquires no added right thereby.
If, however, the bill of lading provides that the goods are deliverable to
the buyer or to the order of the buyer, or is indorsed in blank, or to the
buyer by the consignee named therein, one who purchases in GF, for
value, the bill of lading or goods from the buyer will obtain the ownership
in the goods, although the bill of exchange has not been honored,
provided that such purchaser has received delivery of the bill of lading
indorsed by the consignee named therein, or of the goods, w/o notice of
the facts making the transfer wrongful.
ARTICLE 1503
GEN’L RULE: ownership in the goods sold passes to the buyer upon their
delivery to the carrier. This is so b/c the carrier is presumed to be a
bailee for the buyer.EXCEPTIONS: 1st, 2nd, & 3rdpars of 1503
Bakit di kasama yung 4thparagraph? B/c it talks about transmission of
the Bill of Lading (BoL) w/ a Bill of Exchange (BoE) & not delivery of
goods toa carrier or bailee
*Bill of Lading-A docu acknowledging the receipt of goods by a carrier
or by the shipper's agent & the contract for the transportation of those
goods; a docu that indicates the receipt of goods for shipment & that is
issued by a person engaged in the business of transporting or forwarding
goods. (BLD –9thEd.)
ARTICLE 1503
Scenarios wherein SELLER reserves the right of possession or
ownershipdespite delivery of the goods to the buyer, a carrieror
other bailee:
1stScenario (1stpar): Seller reserves the right of possession or
ownership in the goods BY THE TERMS OF THE CONTRACT until
certain conditionshave been fulfilled*Think of a contract to sell,
where the seller still owns the thing despite delivery
2ndScenario (2ndpar): By the BoL the goods are DELIVERABLE
TO THE SELLER OR HIS ORDER for the purpose of retaining
ownership
ARTICLE 1503
Effects:
1.The carrier is deemed as a bailee of the SELLER, not the buyer
2.The seller may retain the goods until the buyer performs his
obli
3.The seller may dispose of the goods to a 3rdperson (but he
will be liable for damages; the 2ndbuyer though obtains a
better right against the original buyer.)
ARTICLE 1503
*The BoL may be deliverable to the seller or his order but his
purpose is not to retain ownership but to secure the performance
of the buyer’s obli. In such cases, the buyer will bear the risk of
loss & he will also have an action based on ownership against
anyone except an innocent purchaser for value of the BoL from
the consignee.
ARTICLE 1503
3rdScenario (3rdpar):BoL is DELIVERABLE TO THE ORDEROF THE BUYER,
but the SELLER RETAINS POSSESSION OF THE BoL.
Effect:Buyer, even if the BoL is deliverable to him, cannot recover the
goods until he presents the BoL (w/c he cannot do KASI NGA na kay
Seller ang putang inang BoL)
De Leon: A 3rdperson may be named as consignee in the BoL. In this case,
the buyer can only obtain the goods when the consignee surrenders the
BoL to the carrier/buyer or he indorses the bill in blank or especially to
the buyer. The consignee will only do so upon payment of the price (b/c
if he would do so nonetheless, then USELESS! Seller might as well save
himself the trouble by naming the buyer the consignee in the BoL)
ARTICLE 1503
4thScenario (4thpar): Seller transmits the BoL, together w/ a bill of exchange. (In the
BoE, drawer & payee is seller, drawee is buyer)
Effects:
1.Title is retained by the seller until the BoE is paid.
2.Delivery of goods is conditioned upon the payment/acceptance of the BoE
3.If BoE is not paid, buyer is BOUND to return the BoL.
4.If the buyer wrongfully retains the BoL, he acquires no additional right thereby.
5.If the BoL names the buyer as consignee or is indorsed in blank or specially to the
buyer, a purchaser in GF for value of the BoL from the buyer will obtain ownership in
the goods even if BoE is not honored.
ARTICLE 1503
(De Leon: safe move for the seller is to send the BoL & BoE to a
3rdperson b/c if sent to the buyer, he may obtain the goods &
forget about honoring the BoE w/c would compel the seller to
enter upon litigation)
It seems that in these scenarios, the risk of loss is borne by the
seller, as he reserves ownership in the things sold + res perit
domino. The exception is when his only purpose is to secure the
performance of the buyer’s obli.
ARTICLE 1504
Unless o/w agreed, the goods remain at the seller’s risk until the
ownership therein is transferred to the buyer, but when the ownership
therein is transferred to the buyer the goods are at the buyer’s risk
whether actual delivery has been made or not, except that:
1. Where delivery of the goods has been made to the buyer or to a
bailee for the buyer, in pursuance of the contract & the ownership in the
goods has been retained by the seller merely to secure performance by
the buyer of his oblis under the contract, the goods are at the buyer’s risk
from the time of such delivery;
2. Where actual delivery has been delayed thru the fault of either the
buyer or seller the goods are at the risk of the partyin fault.
ARTICLE 1504
This provision states 2 exceptions to the principle of Res Perit
Domino. In the 1stpar, the owner is the seller but merely to
secure the performance of the buyer of his oblis. In this par, the
buyer is the one who bears the risk. In the 2ndpar, the risk of
loss is borne by the party at fault.
ARTICLE 1505
Subject to the provisions of this Title, where goods are sold by a person who is not the
owner thereof, & who does not sell them under authority or w/ the consent of the
owner, the buyer acquires no better title to the goods than the seller had, unless the
owner of the goods is by his conduct precluded from denying the seller’s authority.
Nothing in this Title, however, shall effect:
1.The provisions of any factors’ acts, recording laws, or any other provision of law
enabling the apparent owner of goods to dispose of them as if he were the true
owner thereof;
2.The validity of any contract of sale under statutory power of sale or under the
order of a court of competent jurisdiction;
3.Purchases made in a merchant’s store, or in fairs, markets, in accordance w/ the
Code of Commerce & special laws.
ARTICLE 1505
Gen’l rule: Buyer cannot acquire more rights than the seller hadExceptions: (in these
cases, the buyer’s right to the prop is better than the owner, provided he is in GF)
1.Owneris estopped from denying seller’s authority to sell
2.Where the law enables the apparent owner to dispose of the goods as if he were
the true owner thereof
3.Where the sale is sanctioned by statutory or judicial authority
4.Where the sale is made at merchant’s stores, fairs ormarkets
5.When the seller has a voidable title w/c has not been avoided at the time of the
sale
6.Where seller subsequently acquires title
Read: Dizon v Suntay, EDCA Publishing v Sps. Santos
ARTICLE 1505
559. The possession of movable prop acquired in GF is
equivalent to a tile. Nevertheless, one who has lostany movable
or has been unlawfully deprivedthereof, may recover it from the
person in possession of the sameIf the possessor of a movable
lost or of w/c the owner has been unlawfully deprived, has
acquired in GF at a public sale, the owner cannot obtain its
return w/o reimbursing the price paid therefor.
ARTICLE 1505
Dizon v Suntay: “The right of the owner cannot be defeated even by
proof that there was GF in acquisition by the possessor. Suffice it to say in
this regard that the right of the owner to recover personal prop acquired
in GF by another, is based on his being dispossessed w/o his consent. The
common law principle that where 1 of 2 innocent persons must suffer by a
fraud perpetrated by another, the law imposes the loss upon the party
who, by his misplaced confidence, has enable the fraud to be committed,
cannot be applied in a case w/c is covered by an express provision of
the new CC, specifically 559 of the CC. B/w a common law principle & a
statutory provision, the latter must prevail in this jurisdiction.”
ARTICLE 1505
Why is it that in Dizonv Suntay, the owner (Suntay) was allowed
to recover his prop but in EDCA v Sps Santos, EDCA was not?
>In the latter case, the court held that EDCA WAS NOT
UNLAWFULLY DEPRIVED OF THEIR PROP. They delivered the
prop in question (books) to Cruz (who talked them into selling
said books) &as we all know, ownership is transferred upon
delivery, actual or constructive. By the time Cruz sold the books
to the Santoses, he was already the owner of such books,
allowing him to make a valid transfer of them.
ARTICLE 1506
Where the seller of goods has a voidable title thereto, but his
title has not been avoided at the time of the sale, the buyer
acquires a good title to the goods, provided he buys them in
good faith, for value, & w/o notice of the seller's defect of title.
ARTICLE 1506
Requisites for acquisition of good title by buyer:
1) The seller’s voidable title is yet to be avoided;
2) Buyer buys in good faith & for value;
3) Buyer has no notice of the seller’s defect of title.
If the seller has NO title, then a buyer, even if he purchases in
GF & for value, cannot acquire a good title. Read the notes for
the preceding article, specifically 559 & the Dizon v Suntay
doctrine.
ARTICLE 1506
1385. (par 2) Neither shall rescission take place when the things
w/c are the object of the contract are legally in the possession
of 3rdpersons who did not act in BF.(owner cannot rescind
contract b/w seller & buyer if buyer fulfills requisites)
1388. Whoever acquires in BF the things alienated in fraud of
creditors, shall indemnify the latter for damages suffered by
them on acct. of the alienation, whenever, due to any cause, it
should be impossible for him to return them.(If the buyer does
not fulfill the requisites, this is the remedy of the owner if ever
the buyer cannot return the thing)
ARTICLE 1507
A docu of title in w/c it is stated that the goods referred to
therein will be delivered to the bearer, or to the order of any
person named in such docu is a NDT.
ARTICLE 1507
CLASSES OF DOCUMENTS OF TITLE:
1) Negotiable Documents of Title (NDT) –deliverable to bearer
or to the order of a specified person.
2) Non-negotiable Documents of Title (Non-NDT) –deliverable
to a specified person. (“straight” bill)
*A document deliverable to bearer or to the order of a
specified person w/c is subsequently indorsed to a specified
person DOES NOT lose its negotiable character, read 1509.
ARTICLE 1507
DEFINITION OF TERMS:
1)Document of Title of Goods –any document used in the ordinary course of business
in the sale or transfer of goods, or authorizing a person to do so in his behalf.
a.Bill of Lading –a receipt for the transport of goods & their delivery to the person
named therein. Three Persons Involved: Shipper –Carrier –Consignee.
b.Dock Warrant –instrument given by dock owners to an importer of goods
warehoused on the dock.
c.Warehouse Receipt –a receipt of goods deposited w/ a warehouseman to hold &
deliver the goods to the person named therein or bearer
d.Quedan –warehouse receipt usually for sugar.
2)Order –Relating to documents of title means an order by indorsement on the
documents.
ARTICLE 1508
A NDT may be nego’d by delivery:
1)Where by the terms of the docu the carrier, warehouseman or other
bailee issuing the same undertakes to deliver the goods to the bearer; or
2)Where by the terms of the docu the carrier, warehouseman or other
bailee issuing the same undertakes to deliver the goods to the order of a
specified person, & such person or a subsequent indorsee of the docu has
indorsed it in blank or to the bearer.
Where by the terms of a NDT the goods are deliverable to bearer or
where a NDT hasbeen indorsed in blank or to bearer, any holder may
indorse the same to himself or to any specified person, & in such case the
docu shall thereafter be nego’d only bythe indorsement of such indorsee.
ARTICLE 1508
(Abbreviations: nego = negotiable, nego’n = negotiation,
nego’d = negotiated, nego’ing = negotiating, nego’s =
negotiates)
When NDT is nego’d by delivery: (1508)
1.When it is a ‘bearer’ NDT
2.When it is an ‘order’ NDT indorsed in blank or to bearer
ARTICLE 1509
A NDT may be nego’d by the indorsement of the person to
whose order the goods are by the terms of the docu
deliverable. Such indorsement may be in blank, to bearer or to
a specified person. If indorsed to a specified person, it may be
again nego’d by the indorsement of such person in blank, to
bearer orto another specified person.
Subsequent negotiations may be made in like manner.
ARTICLE 1509
When indorsement is essential for thenego’n of NDT:
1.When it is an ‘order’ document (1509)
2.When it is a ‘bearer’ NDT indorsed to a specified person
(1508, 3rdpar)
*In dealing w/ such NDTs, delivery alone is not sufficient to
produce the effects of nego’n.
ARTICLE 1509
*1511: If an NDT requires an indorsement to be nego’d BUT is
TRANSFERRED BY DELIVERY ONLY, then the transferee acquires
no additional right than that of the transferor (transferor is a
mere assignee). Meanwhile, a person transferring a non-NDT,
even if he indorses it, can transfer only such rights that he had to
the transferor, non-negotiable nga e diba. In both cases, the
transferor only acquires the rights in 1514.
*If indorsement is made merely for identification, the party
“indorsing” the document is liable only as guarantor (subsidiarily
liable), not as an indorser (primarily liable).
ARTICLE 1509
*The words ‘non-nego’ or other words of similar import does not affect the nego
character of NDT (1510)
How indorsement is made: (1509)
1.Blank or to bearer –effect: NDT can be subsequently nego’d by mere delivery
2.Special indorsement –effect: NDT, to be subsequently nego’d, must be nego’d by
indorsement + delivery
Blank Indorsement–does not name a specific person w/c makes the goods deliverable
to whoever possesses the NDT
Special Indorsement–names a specific person w/c makes the goods deliverable only
to such named person
ARTICLE 1510
If a docu of title w/c contains an undertaking by a carrier,
warehouseman or other bailee to deliver the goods to bearer, to
a specified person or order of a specified person or w/c
contains words of like import, has placed upon it the words "not
nego," "non-nego" or the like, such docu may nevertheless be
nego’d by the holder & is a NDT w/in the meaning of this Title.
But nothing in this Title contained shall be construed as limiting or
defining the effect upon the obligations of the carrier,
warehouseman, or other bailee issuing a docu of title or placing
thereon the words "not nego," "non-nego," or the like.
ARTICLE 1511
A docu of title w/c is not in such form that it can benego’d by
delivery may be transferred by the holder by delivery to a
purchaser or donee. A non-nego docu cannot be nego’d & the
indorsement of such a docu gives the transferee no additional
right.
ARTICLE 1512
A NDT may be nego’d:
1)By the owner thereof; or
2)By any person to whom the possession or custody of the docu
has been entrusted by the owner, if, by the terms of the docu the
bailee issuing the docu undertakes to deliver the goods to the
order of the person to whom the possession or custody of the
docu has been entrusted, or if at the time of such entrusting the
docu is in such form that it may be nego’d by delivery.
ARTICLE 1512
Who may indorse: (1512)
1.Owner of an ‘order’ NDT
2.Any holder of a ‘bearer’ NDT
ARTICLE 1513
A person to whom a NDT has been duly nego’d acquires thereby:
1)Such title to the goods as the person negotiating the docu to him had or
had ability to convey to a purchaser in good faith for value & also such
title to the goods as the person to whose order the goods were to be
delivered by the terms of the docu hador had ability to convey to a
purchaser in good faith for value; &
2)The direct obligation of the bailee issuing the docu to hold possession
of the goods for him according to the terms of the docu as fully as if such
bailee had contracted directly w/ him.
ARTICLE 1513
Rights acquired from a NDT duly nego’d: (1513)
1) Title of the person nego’ing the document, over thegoods covered by
the docu
2) Title of the person (depositor or owner) to whose order by the terms of
the docu the goods were to be delivered, over suchgoods
3) The direct obli of the bailee to hold possession of the goods for him,
as if the bailee contracted directly w/ him
ARTICLE 1514
A person to whom a docu of title has been transferred, but not nego’d, acquires
thereby, as against the transferor, the title to the goods, subject to the terms of any
agreement w/ the transferor.
If the docu is non-nego, such person also acquires the right to notify the bailee who
issued the docu of the transfer thereof, & thereby to acquire the direct obligation of
such bailee to hold possession of the goods for him according to the terms of thedocu.
Prior to the notification to such bailee by the transferor or transferee of a non-NDT,
the title of the transferee to the goods & the right to acquire the obligation of such
bailee may be defeated by the levy of an attachment of execution upon the goods
by a creditor of the transferor, or by a notification to such bailee by the transferor or
a subsequent purchaser from the transferor of a subsequent sale of the goods by the
transferor.
ARTICLE 1514
Rights acquired from a non-NDT or a NDT not duly nego’d:
(1514)
1) The title of the goods as against the transferor;
2) The right to notify the bailee of the transfer thereof; &
3) The right, thereafter, to acquire the obli of the bailee to hold
the goods for him.
-These are not absolute. These rights are subject to the terms of
the transferor.
ARTICLE 1514
-If what is transferred is a NDT, the goods cannot be attached or levied
unless the NDT is 1stsurrendered to the bailee or its nego’n is enjoined. If
Non-NDT, transferee’s right may be defeated by a levy of an attachment
or execution by a creditor of the transferor
-If the transferor of a NDT is a PURCHASER FOR VALUE, he may compel
the transferee to indorse the NDT so that he may acquire therights in
1513. The negotiation shall take effect as of the time the indorsement is
actually made, not at the time the document is delivered. (1515) This
does not apply however, when the intention of the parties is to affect a
mere transfer only.
ARTICLE 1515
Where a NDT is transferred for value by delivery, & the indorsement of
the transferor is essential for nego’n, the transferee acquires a right
against the transferor to compel him to indorse the docu unless a contrary
intention appears. The nego’n shall take effect as of the time when the
indorsement is actually made.
ARTICLE 1516
A person who for value negotiates or transfers a docu of title by
indorsement or delivery, including one who assigns for value a claim
secured by a docu of title unless a contrary intention appears, warrants:
1.That the docu is genuine;
2.That he has a legal right to negotiate or transfer it;
3.That he has knowledge of no fact w/c would impair the validity or
worth of the docu; &
4.That he has a right to transfer the title to the goods & that the goods
are merchantable or fit for a particular purpose, whenever such
warranties would have been implied if the contract of the parties had
been to transfer w/o a docu of title the goods represented thereby.
ARTICLE 1516
Warranties & liabilities of a person negotiating or transferring a document: (1516)
-Liability is limited only to a violation of these four warranties (G –LR –K –RT)
-It is the duty of every indorsee to know that all previous indorsements are genuine,
o/w, he will NOT ACQUIRE a valid title to the instrument. Similarly, under the NIL, the
last indorser warrants that all previous indorsements are genuine.
*Indorsers are subsidiarily liable if the person primarily liable fails honor the
document.
*Indorser however, is not liable if the goods are lost or becomes defective due to the
fault of the bailee as he is a mere conveyor of the docu & not a guarantor. (1517)
ARTICLE 1517
The indorsement of a docu of title shall not make the indorser
liable for any failure on the part of the bailee who issued the
docu or previous indorsers thereof to fulfill their respective oblis.
ARTICLE 1518
The validity of the nego’n of a NDT is not impaired by the fact
that the nego’n was a breach of duty on the part of the person
making the nego’n, or by the fact that the owner of the docu
was deprived of the possession of the same by loss, theft, fraud,
accident, mistake, duress, or conversion, if the person to whom
the docu was nego’d or a person towhom the docu was
subsequently nego’d paid value therefor in good faith w/o
notice of the breach of duty, or loss, theft, fraud, accident,
mistake, duress or conversion.
ARTICLE 1518
THIS ARTICLE PERTAINS ONLY TO THE DOCUMENT, NOT THE
GOODS
-Under 1512, only the owner of the docu or the person to whom
he entrusted the docu to may negotiate said document. But
under 1518, if a person, not having such authority, nego’s the
docu to an INNOCENT PURCHASER FOR VALUE, such
purchaser’s right to the docu is indefeasible. (similarto a Holder
in Due Course in nego)
ARTICLE 1519
If goods are delivered to a bailee by the owner or by a person
whose act in conveying the title to them to a purchaser in good
faith for value would bind the owner & a NDT is issued for them
they cannot thereafter, while in possession of such bailee, be
attached by garnishment or o/w or be levied under an
execution unless the docu be first surrendered to the bailee or its
nego’n enjoined. The bailee shall in no case be compelled to
deliver up the actual possession of the goods until the docu is
surrendered to him or impounded by the court.
ARTICLE 1519
GEN’L RULE: The goods cannot be attached or levied under
execution
EXCEPTIONS:
1) The Document of Title is surrendered to the bailee; or
2) The negotiation is prohibitedor the goods are impounded by
the court
*If the depositor of the goods however is neither the owner nor
someone authorized to convey title to the goods, 1519 does not
apply.
ARTICLE 1520
A creditor whose debtor is the owner of a NDT shall be entitled
to such aid from courts of appropriate jurisdiction by injunction
& o/w in attaching such docu or in satisfying the claim by means
thereof as is allowed at law or in equity in regard to property
w/c cannot readily be attached or levied upon by ordinary
legal process.
ARTICLE 1520
In case a debtor refuses to surrender a NDT to a creditor, the
latter may, w/ aid from the Courts, afford of the ff remedies:
1.Injunction
2.Attaching the NDT
3.Satisfy his claim on the NDT
(Only IF the prop cannot be readily attached /levied upon
ordinary legal process)
However, if the NDT is negotiated to an innocent person, the
transfer is nevertheless effectual.
ARTICLE 1521
Whether it is for the buyer to take possession of the goods or of
the seller to send them to the buyer is a question depending in
each case on the contract, express or implied, b/w the parties.
Apart from any such contract, express or implied, or usage of
trade to the contrary, the place of delivery is the seller's place
of business if he has one, & if not his residence; but in case of a
contract of sale of specific goods, w/c to the knowledge of the
parties when the contract or the sale was made were in some
other place, then that place is the place of delivery.
ARTICLE 1521
Where by a contract of sale the seller is bound to send the goods to the
buyer, but no time for sending them is fixed, the seller is bound to send
them w/in a reasonable time. Where the goods at the time of sale are in
the possession of a third person, the seller has not fulfilled his obligation
to deliver to the buyer unless & until such third person acknowledges to
the buyer that he holds the goods on the buyer's behalf.
Demand or tender of delivery may be treated as ineffectual unless made
at a reasonable hour. What is a reasonable hour is a question of fact.
Unless o/w agreed, the expenses of & incidental to putting the goods
into a deliverable state must be borne by the seller.
ARTICLE 1521
RULES IN DELIVERY OF GOODS (PLACE):
1) According to that Agreed upon;
2) In the absence of an agreement Usage of Trade;
3) Seller’s Place of business;
4) Seller’s Residence;
5) For specific goods, where the said goods are Found (Paras
Civil Code Book V, 2008)
PRESUMPTION: The buyer must take the goods from the seller’s
place of business or residence rather than the seller to deliver
ARTICLE 1521
PRESUMPTION: The buyer must take the goods from the seller’s place of
business or residence rather than the seller to deliver them to the buyer.
When the delivery was made not as stipulated & the buyer accepted the
goods w/o complaint, it is deemed that the buyer WAIVED his right
against the seller’s failure to deliver.
RULES IN DELIVERY OF GOODS (TIME):
1) The time stipulated or agreed upon
-Time is of the essence: w/in the period stipulated
-Time is NOT of the essence: w/in a reasonable time (Deleon p.236)
ARTICLE 1521
2) The time is not stipulated
-Time is of the essence: buyer cannot invoke time is of the essence unless
he gives the seller sufficient notice of his intention to cancel delivery is not
made on or before a fixed time
.-Time is NOT of the essence: w/in a reasonable time (a question of fact;
case to case basis)
HOUR OF DELIVERY: (speaks of the hour of the day)
-A question of fact; depends on kind of obli
DUTY OF SELLER: To prepare the good in a deliverable state at his
expense. In such state, the buyer is bound to accept delivery.(unless o/w
ARTICLE 1521
Usage of trade –is any practice or method of dealing having
such regularity of observance in a place, vocation or trade to
justify an expectation that it will be observed w/ respect to the
transaction in question.
Ex. Appliance or machinery: delivered to the residence or place
of business of buyer; car tires –delivered at the place of
business of seller (good luck ikaw magpalit ng goma ng gulong
mo); mambabalot, magtataho, street vendors –kung saan mo
sila matitiempuhan.
ARTICLE 1521
Course of dealing –is a sequence of previous conduct b/w the
parties to a particular transaction w/c is fairly to be regarded
as establishing a common basis of understanding for interpreting
their expressions & other conduct.
Explanation: there has been previous transactions b/w the seller
& buyer. There has been an established understanding how
delivery is to be conducted. That established understanding is
the “course of dealing.”
Note: above examples & explanation need to be confirmed if
correct
ARTICLE 1522
Where the seller delivers to the buyer a quantity of goods less
than he contracted to sell, the buyer may reject them, but if the
buyer accepts or retains the goods so delivered, knowing that
the seller is not going to perform the contract in full, he must pay
for them at the contract rate. If, however, the buyer has used or
disposed of the goods delivered before he knows that the seller
is not going to perform his contract in full, the buyer shall not be
liable for more than the fair value to him of the goods so
received.
ARTICLE 1522
Where the seller delivers to the buyer a quantity of goods
larger than he contracted to sell, the buyer may accept the
goods included in the contract & reject the rest. If the buyer
accepts the whole of the goods so delivered he must pay for
them at the contract rate. Where the seller delivers to the buyer
the goods he contracted to sell mixed w/ goods of a different
description not included in the contract, the buyer may accept
the goods w/c are in accordance w/ the contract & reject the
rest.
ARTICLE 1522
In the preceding two paragraphs, if the subject matter is
indivisible, the buyer may reject the whole of the goods.
The provisions of this art are subject to any usage of trade,
special agreement, or course of dealing b/w the parties.
ARTICLE 1522
DELIVERY OF GOODS LESS THAN THE QUANTITY
CONTRACTED:
-The buyer may reject delivery
-The buyer may accept delivery
-Know that seller would not complete delivery: Pay contract
price
-Does not know that seller will not complete delivery: Fair value
of the goods
ARTICLE 1522
DELIVERY OF GOODS MORE THAN THE QUANTITY
CONTRACTED:
-Buyer may accept quantity contracted & reject the excess
-Buyer may accept including the excess provided, he pays for
their value
-If indivisible, buyer may reject the whole or accept it entirely
ARTICLE 1522
DELIVERY OF GOODS MIXED W/ OTHERS:
-Buyer may accept those w/c are in accordance w/ the contract
& reject the rest
-Buyer may accept including that w/c are not in accordance w/
the contract provided, he pays for their value
-If indivisible, buyer may reject the whole or accept it entirely
DELIVERY OF INDIVISIBLE GOODS WHETHER IN EXCESS OR
MIXED GOODS
Buyer may reject the whole or accept it entirely
ARTICLE 1522
FAIR VALUE: not necessarily the market value; the benefit w/c the buyer
may receive from the goods.
Since the seller did not delivery the correct quantity as agreed upon, the
buyer is not required to pay the contract price if such price is more than
fair value to him
1233.A debt shall not be understood to have been paid unless the thing
or service in w/c the obli consists has been completely delivered or
rendered, as the case may be.
1235.When the obligee accepts the performance, knowing its
incompleteness or irregularity, & w/o expressing any protest or objection,
the obli is deemed fully complied w/.
ARTICLE 1523
Where, in pursuance of a contract of sale, the seller is
authorized or required to send the goods to the buyer, delivery
of the goods to a carrier, whether named by the buyer or not,
for the purpose of transmission to the buyer is deemed to be a
deliveryof the goods to the buyer, except in the cases provided
for in art 1503, first, second & third paragraphs, or unless a
contrary intent appears.
ARTICLE 1523
Unless o/w authorized by the buyer, the seller must make such contract
w/ the carrier on behalf of the buyer as may be reasonable, having
regard to the nature of the goods & the other circumstances of the case.
If the seller omits so to do, & the goods are lost or damaged in course of
transit, the buyer may decline to treat the delivery to the carrier as a
delivery to himself, or may hold the seller responsible in damages.
Unless o/w agreed, where goods are sent by the seller to the buyer
under circumstances in w/c the seller knows or ought to know that it is
usual to insure, the seller must give such notice to the buyer as may
enable him to insure them during their transit, &, if the seller fails to do
so, the goods shall be deemed to be at his risk during such transit.
ARTICLE 1523
NOTA BENE: THIS PROVISION APPLIES ONLY IF THERE IS AN
AGREEMENT THAT THE SELLER WILL SHIP THE GOODS
GEN’L RULE: Delivery to the carrier constitutes delivery to the
buyer, whether the carrier was named by the buyer or not.
EXCEPTIONS:
1) The contrary appears (parties did not intend delivery to
carrier is delivery to buyer)
2) 1st, 2nd& 3rdpars of 1503
ARTICLE 1523
DUTIES OF SELLER AFTER DELIVERY TO CARRIER:
1) Enter into contract w/ the carrier on behalf of the buyer.
-Failure to do so:
A)Buyer may DECLINE to treat delivery to carrier as delivery to him; OR
B)the buyer may hold seller responsible for DAMAGES
2) To give notice to the buyer regarding necessity to insure the goods
-Failure to do so: RISK borne by the seller PROVIDED the buyer is
unaware of the need to insure such goods. If the buyer is aware of the
need to insure, seller may not be held responsible.
ARTICLE 1523
C.O.D. –Collect of Delivery –Carrier collects the purchase price.
F.O.B. –Free on Board –where ever the FOB pertains to, the
buyer shall not pay for the expenses of delivery up to that
place of designation.
Ex. FOB-Manila. Buyer’s place of business is in Bulacan. The
goods will be coming from Cebu (seller’s place of business). The
expenses for shipping the goods from Cebu to Manila will be
borne by the seller. The expenses for shipping the goods from
Manila to Bulacan shall be borne by the buyer. “Free” yung
expenses from Cebu to Manila.
ARTICLE 1523
C.I.F. –Cost, Insurance & Freight –Signifies that the price fixed
covers also expenses of freight & insurance. IOW, the seller
pays for the insurance & shipping expenses.
F.A.S. –Free Along Side –The seller pays all charges & is subject
to risk until the goods are placed alongside the vessel. (Mem-
Aid 2012)
ARTICLE 1524
The vendor shall not be bound to deliver the thing sold, if the
vendee has not paid him the price, or if no period for the
payment has been fixed in the contract
ARTICLE 1524
GEN’L RULE: The obligation to deliver arises from the moment the contract
is perfected. The buyer may, from that moment, demand delivery. The
seller, reciprocally, may demand payment. Hence, the thing shall not be
delivered unless the price be paid.
EXCEPTION: The thing shall be delivered but the price shall not be paid
first, if the time of payment has been fixed to be paid at a latter date.(in
such cases, the seller is considered to have sold on credit)
EXCEPTION TO THE EXCEPTION: Vendee has lost the right to make use of
the period of payment. Art. 1536 (Period of payment is at a latter date
but the seller is not bound to make delivery)
ARTICLE 1525
The seller of goods is deemed to be an unpaid seller w/in the meaning
of this Title:
(1)When the whole of the price has not been paid or tendered;
(2)When a bill of exchange or other nego instrument has been received
as conditional payment, & the condition on w/c it was received has been
broken by reason of the dishonor of the instrument, the insolvency of the
buyer, or o/w.
(*In arts 1525 to 1535 the term "seller" includes an agent of the seller to
whom the bill of lading has been indorsed, or a consignor or agent who
has himself paid, or is directly responsible for the price, or any other
person who is in the position of a seller.)
ARTICLE 1525
An UNPAID SELLER is one who:
1)has not been paid or to whom the price has not been
tendered
2)has received a bill of exchange or other negotiable instrument
as conditional payment, & the condition to w/c it was received
has been broken by reason of the dishonor of the instrument,
insolvency of the buyer or o/w.
ARTICLE 1525
UNPAID SELLER includes:
1) Agent of the seller;
2) Consignor or agent who has himself paid or is directly
responsible for the price; or
3) Any Other person in the position of the seller.
ARTICLE 1525
WHERE WHOLE OF PRICE HAS NOT BEEN PAID:
1) Tender of payment by buyer–such as checks (juan tamad).
Seller’s lien is destroyed.
2) Payment of part of price –payment of price does NOT
destroy a seller’s lien. The seller remainsan unpaid seller even if
title has passed to the buyer.
3) Payment by negotiable instrument –OBLICON (Art. 1249)
ARTICLE 1525
Art. 1249. Par. 2. The delivery of promissory notes payable to
order, or bills of exchange, or other mercantile documents shall
produce the effect of payment only when they have been
cashed x x x
Note consignation. 1256. If the creditor to whom tender of
payment has been made refuses w/o just cause to accept it, the
debtor shall be released from responsibility by the consignation
of the thingor sum due.
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 w/ the possession of them;
(3)A right of resale as limited by this Title;
(4)A right to rescind the sale as likewise limited by this Title.
ARTICLE 1526
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 & coextensive w/ his rights of lien
& stoppage in transit where the ownership has passed to the
buyer.
ARTICLE 1526
REMEDIES OF UNPAID SELLER (SAR-SPASMS)
1)Possessory lien (Art 1527-1529)
2)Stoppage of goods in transit (Art 1530)
3)Special right of resale (Art 1533)
4)Special right of rescission (Art 1534)
5)Action for the price (Art 1595)
6)Action for damages (Art 1596)
7)Recto Law (Art 1484)
8)Maceda Law (Governs financing of real estate on installment payment)
(ung special law na cinite sa Layug v IAC)
9)Specific performance (Art 1595)
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 ff cases, namely:
(1)Where the goods have been sold w/o any stipulation as to credit;
(2)Where the goods have been sold on credit, but the term of credit has
expired;
(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.
ARTICLE 1527
POSSESSORY LIEN –a right to retain possession of goods
WHEN IT MAY BE EXERCISED
a)The goods has been sold w/o any stipulation as to credit
b)The goods has been sold on credit, but the term of credit has
expired
c)The buyer becomes insolvent
ARTICLE 1527
CREDIT SALE–whereby the seller binds himself to give the goods
to the buyer w/o receiving at that time payment for them.
Stipulation as to credit–means that a period of payment price
has been fixed in the contract. In the absence of this stipulation,
the seller is entitled to the payment of the price at the same time
that he transfers the possession of the goods. Accordingly, the
seller always has a lien upon the goods until payment or tender
of the entire price.
ARTICLE 1527
INSOLVENT–is a person who either ceased to pay his debts in
the ordinary course of business or cannot pay his debts as they
become due. (w or w/o insolvency proceedings)
Insolvency does not dissolve the bargain, it merely revives the
seller’s lien.
Note: Notwithstanding transfer of ownership, possessory lien
may still be exercised as long as the goods are in the possession
of the seller.
ARTICLE 1528
Where an unpaid seller has made part delivery of the goods,
he may exercise his right of lien on the remainder, unless such
part delivery has been made under such circumstances as to
show an intent to waive the lien or right of retention.
ARTICLE 1528
GEN RULE: Lien NOT lost by partial delivery.
When part of the goods are delivered, the unpaid seller has a
lien upon the remainder for the proportion of the price w/c is
due on account of the goods so retained.
EXCEPT: Art 1529 (3)
Delivery of the part intended as symbolical delivery of the
whole, w/c is considered a waiver of any right of retention as to
the remainder & therefore the lien is lost.
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 w/o reserving the ownership in the
goods or the right to the possession thereof;
(2)When the buyer or his agent lawfully obtains possession of the goods;
(3)By waiver thereof.
The unpaid seller of goods, having a lien thereon, does not lose his lien
by reason only that he has obtained judgment or decree for the price of
the goods.
ARTICLE 1529
WHEN UNPAID SELLER LOSES POSSESSORY LIEN
1)Delivery to agent/a carrier or bailee of buyer
a.For the purpose of transmission to the buyer
b.W/o reserving ownership or right of possession
2)Possession by buyer or his agent –when buyer lawfully obtains
possession
3)Waiver of the lien
ARTICLE 1529
LOSS OF LIEN (Tolentino)
The lien of the seller depends upon either possession OR control
of the property on w/c the lien is claimed, & if the seller permits
the property to go into actual possession of the buyer, such LIEN
IS LOST, although he delivers on the faith of a chattel mortgage
w/c turn out to be invalid, or draft given in payment was
dishonored. If however, the seller has been induced to part w/
possession by fraud, the lien of the seller is NOT LOST.
ARTICLE 1529
REVIVAL OF LIEN AFTER DELIVERY
1)If the buyer refuses to receive the goods after they have been
delivered to a carrier on his behalf, though the seller has parted
w/ both ownership & possession may reclaim the goods & revest
himself w/ his lien (see Art 1531 par.2)
2)If the buyer returns the goods in wrongful repudiation of the
sale, the lien is revived
ARTICLE 1529
When seller has no possession of goods anymore, he therefore has no
more lien
Buyer’s wrongful taking of the goods w/o the seller’s consent does
NOT destroy the lien
If goods are put in the possession of the buyer merely for purpose of
allowing the buyer to examine the goods, the lien in intact.
Seller may lose his lien by express agreement to surrender such lien -
thus, where the buyer was allowed to alter the character of the goods &
make them much more valuable, the seller could no longer assert a lien.
ARTICLE 1529
Mere judgment by a court obtained by the unpaid seller for
the price of the goods is NOT a ground for the loss of his lien
(Art 1529, par.2)
Possessory lien IS LOST after the seller loses possession BUT
his LIEN on the price as an unpaid seller remains. The bringing of
an action to recover the purchase price is NOT one of the ways
of losing possessory lien.
ARTICLE 1529
ARTICLE 1530
Subject to the provisions of this Title, when the buyer of goods is
or becomes insolvent, the unpaid seller who has parted w/ the
possession of the goods has the right of stopping them in
transitu, that is to say, he may resume possession of the goods
atany time while they are in transit, & he will then become
entitled to the same rights in regard to the goods as he would
have had if he had never parted w/ the possession.
ARTICLE 1530
Requisites for the exercise of RIGHT OF STOPPAGE OF GOODS IN TRANSITU:
1.Seller must be unpaid (Art 1525)
2.Buyer must be insolvent(need not be judicially declared)
3.Goods must be in transit
4.Seller must either –
a.take possession of the goods sold
b.give notice of his claim to the carrier or other person in possession of the goods
5.Seller must surrender the negotiable document of title, if any, issued by the carrier
6.Seller must bear the expenses of delivery of the goods after the exercise of the
right
ARTICLE 1530
Notice must be given either to the person in actual possession
of the goods or to his principal
When notice is given to the carrier or other bailee in
possession of the goods, he must deliver the goods according to
the directions of the seller
(NOTE: expenses must be borne by the seller)
EXCEPTION: a negotiable document of title representing the
goods has been issued(in w/c case the carrier or bailee is not
obliged to redeliver the goods unless the seller surrendered the
document for cancellation)
ARTICLE 1531
Goods are in transit w/in the meaning of the preceding art:
(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 has
refused to receive them back.
ARTICLE 1531
Goods are no longer in transit w/in the meaning of the preceding art:
(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 & continues in possession of them as bailee
for the buyer or his agent; & it is immaterial that further destination for
the goods may have been indicated by the buyer;
(3)If the carrier or other bailee wrongfully refuses to deliver the goods to
the buyer or his agent in that behalf.
ARTICLE 1531
If the goods are delivered to a ship, freight train, truck, or
airplane chartered by the buyer, it is a question depending on
the circumstances of the particular case, whether they are in the
possession of the carrier as such or as agent of the buyer. If
part delivery of the goods has been made to the buyer, or his
agent in that behalf, the remainder of the goods may be
stopped in transitu, unless such part delivery has been under
such circumstances as to show an agreement w/ the buyer to
give up possession of the whole of the goods.
ARTICLE 1531
WHEN GOODS ARE CONSIDERED IN TRANSIT
1.After delivery to a carrier or other bailee & before the buyer
or his agent takes delivery of them
2.If the goods are rejected by the buyer, & the carrier or other
bailee continues in possession of them (even if the seller refuse
to receive them back)
ARTICLE 1531
WHEN GOODS ARE NO LONGER IN TRANSIT
1.After delivery to the buyer or his agent in that behalf
2.If the buyer or his agent obtains possession of the goods at a point
before the destination originally fixed
3.If the carrier or the bailee acknowledges to hold the goods in behalf of
the buyer
4.If the carrier or bailee wrongfully refuses to deliver the goods to the
buyer
*If the carrier is owned by the buyer, carrier is considered an agent for
the buyer. Therefore, delivery to carrier = delivery to buyer
ARTICLE 1531
Taking of goods in transit by an unauthorized agent of the
buyer DOES NOT extinguish the right of stoppage n transitu
(Paras)
In case of misdelivery, the goods are still considered in transit,
hence, the seller may still exercise said right pursuant to Art
1523, w/c provides that an unpaid seller may exercise his right
of stoppage in transitu by giving notice of his claim to the
carrier or other bailee in whose possession the goods are.
ATTORN –to agree to be tenant to a new owner of the same
prop
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 his principal. In
the latter case the notice, to be effectual, must be given at such
time & under such circumstances that the principal, by the
exercise of reasonable diligence, may prevent a delivery to the
buyer.
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 NDT 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 seller unless such docu is
first surrendered for cancellation.
ARTICLE 1532
WAYS OF EXERCISING THE RIGHTOF STOPPAGE
1.By taking actual possession of the goods
2.By giving notice of his claim to the carrier or bailee
The seller’s power to stop in transitu includes:
1.Power to counter delivery
2.Power to order redelivery to himself
ARTICLE 1533
Where the goods are of 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
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 the
original buyer upon the contract of sale or for any profit made
by such resale, but may recover from the buyer damages for
any loss occasioned by the breach of the contract of sale.
ARTICLE 1533
Where a resale is made, as authorized in this art, the buyer acquires a
good title as against the original buyer.
It is not essential to the validity of 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 express 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 unreasonable time
before the resale was made.
ARTICLE 1533
It is not essential to the validity of a resale that notice of the
time & place of such resale should be given by the seller to the
original buyer.
The seller is bound to exercise reasonable care & judgment in
making a resale, & subject to this requirement may make a
resale either by public or private sale. He cannot, however,
directly or indirectly buy the goods.
ARTICLE 1533
SPECIAL RIGHT OF RESALE
May be exercised only when the unpaid seller has either a right
of lien or has stopped the goods in transitu & under any of the
ff conditions:
1.Goods are perishable in nature2.The right to resell is
expressly reserved in case the buyer should make a
default3.The buyer delays in the payment of the price for an
unreasonable time
ARTICLE 1533
EFFECT OF RESALE
The buyer acquires a good title as against the original buyer. The seller is
not liable to the original buyer for any profit earned in the resale & may
recover damages occasioned by the buyer’s breach of the contract of
sale. Action for the rescission of the sale is not necessary. (Pineda, Civil
Code Annotated 2010)
Resale may be public or private sale
To avoid injustice & unfairness, the seller is prohibited from becoming
the buyer of the goods whether directly or indirectly
Notice of sale need not be sent to the original buyer
ARTICLE 1533
When is notice essential?
-When the right of resale is exercised under the condition of the
buyer delaying payment for an unreasonable time
-De Leon: safe move is to always send notice.
ARTICLE 1533
Art 1533 only applies id the title to goods has already passed
to the buyer. Otherwise, the goods cannot be resold.
ILLUSTRATIVE CASE:
Facts: S sold to B a tractor for P12, 000 --P5, 000 upon
delivery & 7,000 w/in 60 days. B failed to take delivery of the
tractor & pay the purchase price. S was forced to sell the tractor
at a lower price of P10, 000.
Issue: Is B liable for the difference of P2, 000?
ARTICLE 1533
Held: YES. In a contract of sale w/c is executory as to both
parties, the vendor is entitled to resell the goods if the purchaser
fails to take delivery & pay the purchase price. If he is obliged
to resell for lesser value, he holds the buyer for the difference
BUT if he sells for the same or more than the contract price, the
breach of contract of the original buyer is DAMNUM ABSQUE
INJURIA. (A loss or damage w/o injury)
ARTICLE 1534
An unpaid seller having the right of lien or having stopped the
goods in transitu, may rescind the transfer of title& resume the
ownership in the goods, where he expressly reserved the right to
do so in case the buyer should make default, or where the buyer
has been in default in the payment of the price for an
unreasonable time. The seller shall not thereafter be liable to
the buyer upon the contract of sale, but may recover from the
buyer damages for any loss occasioned by the breach of the
contract.
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 other overt act an intention to rescind. It is not
necessary that such overt act should be communicated to the
buyer, but the giving or failure to give notice to the buyer of the
intention to rescind shall be relevant in any issue involving the
question whether the buyer had been in default for an
unreasonable time before the right of rescission was asserted.
ARTICLE 1534
SPECIAL RIGHT TO RESCIND–available ONLY if the seller has
either the right of lien or a right to stop the goods in transit
PLUS either of two situations:
1.Where the right to rescind on default has been expressly
reserved
2.Where the buyer has been in default for an unreasonable
time
ARTICLE 1534
EFFECT OF EXERCISE OF RIGHT
The seller shall not thereafter be liable to the buyer upon the
contract of sale, but may recover from the buyer damages for
any loss occasioned by the breach.
There must be NOTICE or some other OVERT ACT of intention
to rescind. Overt act need not be communicated BUT the giving
of notice is relevant in case of default for an unreasonable time.
ARTICLE 1534
Rescission–a party’s unilateral unmaking of a contract for a
legally sufficient reason, or a judgment rescinding the contract.
(BLD –9thEd.)
Effect of rescission:
1385. Rescission creates the obli to return the things w/c were
the object of the contract, together w/ their fruits, & the price
w/ its interests; consequently, it can be carried out only when he
who demands rescission can return whatever he may be obliged
to restore.
(If the thing cannot be returned anymore, then damages, 1388)
ARTICLE 1535
Subject to the provisions of this Title, the unpaid seller's right of
lien or stoppage in transitu is not affected by any sale, or other
disposition of the goods w/c the buyer may have made, unless
the seller has assented thereto.
If, however, a NDT has been issued for goods, no seller's lien or
right of stoppage in transitu shall defeat the right of any
purchaser for value in good faith to whom such docu has been
nego’d, whether such nego’n be prior or subsequent to the
notification to the carrier, or other bailee who issued such docu,
of the seller's claim to a lien or right of stoppage in transitu
ARTICLE 1535
EFFECT OF SALE OF GOODS SUBJECT TO LIEN OR STOPPAGE
IN TRANSITU
1)Where goods are NOT covered by negotiable doc of title -
seller can give NO larger than what he has. When goods are
subject to a legal lien a purchaser from the original buyer can
acquire ONLY such rights as the buyer then had.
2)Where goods are covered by negotiable doc of title –the
seller’s lien cannot prevail against rights of a PURCHASER
FORVALUE IN GOOD FAITH to whom the document has been
indorsed.
ARTICLE 1535
The rule protects a purchaser w/o notice after the seller had
stopped the goods either by virtue of right of lien or stoppage
in transit.
ARTICLE 1536
The vendor is not bound to deliver the thing soldin case the
vendee should lose the right to make use of the terms as
provided in art 1198.
ARTICLE 1536
RIGHT OF THE VENDOR TO HOLD DELIVERY IN SALE ON
CREDIT
GEN RULE: The vendor is NOT bound to make delivery if the
vendee has not paid the price.
ARTICLE 1536
EXCEPTION: If a period has been fixed for payment, the vendor
must deliver the thing sold THOUGH the price is not yet paid.
EXCEPTION TO THE EXCEPTION: Vendor may not be compelled
to make delivery, even if vendee was given the benefit of
period, in case the vendee should lose the right to make use of
the term (Art 1198) & such vendee has NOT yet paid the price.
ARTICLE 1536
WHEN DOES A VENDEE LOSE EVERY RIGHT TO MAKE USE OF
PERIOD:(1198)
1)When after the obligation has been contracted, he becomes insolvent,
unless he gives a guaranty or security for the price
2)When he does not furnish to the creditor/vendor the guaranties or
securities w/c he has promised
3)When by his own acts he has impaired said guaranties or securities
after their establishment, & when thru a fortuitous event they disappear,
unless he immediately gives new ones equally satisfactory
4)When the debtor/vendee violates any undertaking, in consideration of
w/c the creditor agreed to the period.
ARTICLE 1537
The vendor is bound to deliver the thing sold & its accessions &
accessories in the condition in w/c they were upon the perfection
of the contract.
All the fruits shall pertain to the vendee from the day on w/c the
contract was perfected.
ARTICLE 1537
CONDITION OF THING TO BE DELIVERED
The THING sold & its ACCESSIONS & ACCESSORIES must be in
the condition in w/c they were upon the perfection of the
contract.
SELLER’S DUTY-
1)To preserve the thing pending delivery (relate to Arts. 1163 &
1164)
2)To deliver the thing sold in a condition suitable for its
enjoyment by the buyer for the purposes contemplated
ARTICLE 1537
Accessions –are the fruits of a thing; additions to, or
improvements upon, a thing such as the young of animals, house
or trees on a land, etc.
Accessories –are anything attached to a principal thing for its
completion, ornament, or better use such as picture frame, key
of a house, etc.
ARTICLE 1537
VENDEE IS ENTITLED TO THE FRUITS
Art. 1164 -the vendee has a right to the fruits of the thing sold
from the time the obligation to deliver it arises.
Art. 1475 -the obligation to deliver arises upon the perfection
of the contract of sale
ARTICLE 1537
VENDEE IS NOT ENTITLED TO THE FRUITS
1.When the rule provided in Art 1537(2) is modified by
agreement of the parties, their agreement shall govern.
2.If the vendee rescinds the contract of sale instead of exacting
the fulfillment thereof, he is entitled only to damages like
interest, attorney’s fees & costs but he may not also claim the
fruits of the thing sold
3.In a contract of promise to sell, the vendee is not entitled to
the fruits.
ARTICLE 1537
thus, in Consing vs CA (1989) the Court ruled that a subdivision lot
seller should not shift to the buyer the burden of providing access to &
from the subdivision. It is the seller’s duty to construct the necessary roads
in the subdivision that could serve as outlets. Proper access to the
residence is essential to its enjoyment
1166. The obli to give a determinate thing includes that of delivering all
its accessions & accessories, even though they may not have been
mentioned.
*Sale of the principal entitles the buyer to the accessions & accessories,
but sale of the accessories & accessions does not entitle buyer to the
principal.
ARTICLE 1538
In case of loss, deterioration or improvement of the thing before
its delivery, the rules in art 1189 shall be observed, the vendor
being considered the debtor.
ARTICLE 1538
RULES IN CASE OF LOSS, DETERIORATION, OR IMPROVEMENT
OF THING BEFORE DELIVERY (based on Art 1189)
1)If the thing is lost w/o the fault of the debtor, the obligation
shall be extinguished
2)If the thing is lost thru the fault of the debtor, he shall be
obliged to pay damages; it is understood that the thing lost
when it perishes, or goes out of commerce, or disappears in such
a way that its existence is unknown or it cannot be recovered;
ARTICLE 1538
RULES IN CASE OF LOSS, DETERIORATION, OR IMPROVEMENT
OF THING BEFORE DELIVERY (based on Art 1189)
3)When the thing deteriorates w/o the fault of the debtor, the
impairment is to be borne by the creditor
4)If it deteriorates thru the fault of the debtor, the creditor may
choose for:
a. Rescission of obligation w/indemnity for damages, OR
b. Fulfillment w/ indemnity for damages
ARTICLE 1538
RULES IN CASE OF LOSS, DETERIORATION, OR IMPROVEMENT
OF THING BEFORE DELIVERY (based on Art 1189)
5)If the thing is improved by its nature, or by time, the
improvement shall inure to the benefit of the creditor
6)If it is improved at the expense of the debtor, he shall have no
other right than that granted to the usufructuary
ARTICLE 1538
Usufructuary–a person who has the right to the benefits of
another’s property (BLD –9thEd)
Usufruct-A right for a certain period to use and enjoy the fruits
of another's property without damaging or diminishing it(BLD –
9thEd)
-the right to enjoy benefits or profits from something, as real
prop, while not being the owner of it.
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 w/ the ff rules:
If the sale of real estate should be made w/ 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 it, all that may have been stated in the
contract; but, should this be not possible, the vendee may choose
b/w a proportional reduction of the price & the rescission of the
contract, provided that, in the latter case, the lack in the area be
not less than one-tenth of that stated.
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 w/ the ff rules:
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 1/10thof the price agreed upon. Nevertheless, if the
vendee would not have bought the immovable had he known of
its smaller area of inferior quality, he may rescind the sale.
ARTICLE 1540
If, in the case of the preceding art, there is a greater area or
number in the immovable than that stated in the contract, the
vendee may accept the area included inthe contract & reject the
rest. If he accepts the whole area, he must pay for the same at
the contract rate.
ARTICLE 1541
The provisions of the two preceding arts shall apply to judicial
sales.
ARTICLE 1539-41
SALE OF REAL PROP BY UNIT OF MEASURE OR NUMBER
W/ Statement of area at the rate of a certain price for a unit
or measure or number.
If the vendee should demand, the vendor shall deliver ALL that
may have been stated in the contract.
ARTICLE 1539-41
If what is delivered is:
-LESS IN AREA OR INFERIOR or DIFFIRENT QUALITY
–Buyer may seek:
1.Rescission if lack in area is at least 1/10 of area agreed
upon
2.Rescission if the deficiency in quality specified in the contract
exceeds 1/10 of the price agreed upon.
3.Rescission if the vendee would not have bought the immovable
had he known of its smaller area or inferior quality
4.Proportional reduction of price.
ARTICLE 1539-41
If what is delivered is:
-GREATER IN AREA
1.Accept per stipulation & reject the rest
2.Accept the whole & pay the contract price
ARTICLE 1539-41
The rule is different where there is violation of the warranty
against hidden defect (Art1571). The vendor is also liable for
damages ---Art 1567; 1191(2)
Judicial sales of immovable lacking in area or of inferior quality
OR of greater quantity ----relate to Art 1552 & 1570)
ARTICLE 1542
In the sale of real estate, made for a lump sum & not at the rate of a
certain sum for a unit of measure or number, there shall be no increase or
decrease of the price, although there be a greater or less area or
number than that stated in the contract.
The same rule shall be applied when two or more immovables as sold for
a single price; but if, besides mentioning the boundaries, w/c is
indispensable in every conveyance of real estate, its area or number
should be designated in the contract, the vendor shall be bound to deliver
all that is included w/in said boundaries, even when it exceeds the area
or number specified in the contract; &, should he not be able to do so, he
shall suffer a reduction in the price, in proportion to what is lacking in the
area or number, unless the contract is rescinded b/c the vendee does not
ARTICLE 1542
In the sale of real estate, made for a lump sum & not at the rate of a
certain sum for a unit of measure or number, there shall be no increase or
decrease of the price, although there be a greater or less area or
number than that stated in the contract.
The same rule shall be applied when two or more immovables as sold for
a single price; but if, besides mentioning the boundaries, w/c is
indispensable in every conveyance of real estate, its area or number
should be designated in the contract, the vendor shall be bound to deliver
all that is included w/in said boundaries, even when it exceeds the area
or number specified in the contract; &, should he not be able to do so, he
shall suffer a reduction in the price, in proportion to what is lacking in the
area or number, unless the contract is rescinded b/c the vendee does not
ARTICLE 1542
SALE OF REAL ESTATE MADE FOR A LUMP SUM -a cuerpo
cierto/por precio alzado
If the sale is made for lump sum, & not so much per unit of
measure or number, the cause of the contract is the thing sold
independent & irrespective of its number or measure.
ARTICLE 1542
2 types of pricing agreement
1.Unit price contract–purchase price is determined by way of
reference to a stated rate per unit
2.Lump sum contract–states a full purchase price for an
immovable the area of w/c may be declared based on
estimate or where both the area & boundaries are stated.
Example: P1M for 1,000 square meters.
ARTICLE 1542
Sale of real estate made for a lump sum
1)Mistake of area stated in contract immaterial –
the vendor is obligated to deliver all the land included w/in
the boundaries, regardless whether the real estate should be
greater or smaller than they recited in the deed (Balantakbo vs
CA)
The boundaries of the land stated in the contract determine
the effects & scope of the sale, NOT the area thereof (Semira vs
CA)
ARTICLE 1542
Sale of real estate made for a lump sum
2)Where area or number stated together w/ boundaries –(De Leon
p.274-276)
If vendor cannot deliver to vendee all that is stated in the contract, the
vendee has the option:
a.To reduce the price in proportion to the deficiency OR
b.To set aside the contract
Phrase “should not be able to do so” - refers to a situation when the
vendor cannot deliver all that is included w/in the boundaries b/c a part
or parcel of the real estate does not belong to him.
ARTICLE 1542
Sale of real estate made for a lump sum
3)Where there is conflict b/w area stipulated & title to
property –(p.276)
Area included w/in the stipulated boundaries prevails over that
w/c the title shows when the boundaries are certain & no
alterations thereof has been proven.
ARTICLE 1542
Sale of real estate made for a lump sum
4)Where identity of erroneously designated property clearly
established –(p.277)
-the mistake in designating the property in the deed of sale
does NOT vitiate consent of the parties or affect the validity &
binding effect of the contract
Remedy: have the document reformed
ARTICLE 1542
Sale of real estate made for a lump sum
5)Where words “about” , “more or less” , etc. Are used–(p.
277-278)
Words when used in connection w/ quantity or distance are
intended to cover some slight or unimportant inaccuracy. They do
NOT weaken or destroy the statements of distance & quantity
when no other guides are furnished.
ARTICLE 1542
CONFLICT B/W AREA STATED & BOUNDARIES
RULE: Natural boundaries will prevail over area.
Boundaries prevail b/c what really defines a piece of ground is
NOT the area BUT the boundaries. Erroneous statement
regarding area can be disregarded—
1)Where boundaries given are sufficiently certain, or
2)Where discrepancy in measurement is so great, provided, the
natural boundaries are very clear & convincing
ARTICLE 1542
CONFLICT B/W AREA STATED & BOUNDARIES
EXCEPTION: Area stated in the contract should be followed.
1)Where boundaries do not identify land or
2)overlapping of boundaries exists
When 2 or more real estates are sold for a single price, the rule is the
same as when the real estate is sold for a lump sum. There shall be no
increase or decrease in the area actually delivered & the area stated in
the contract (Beda MemAid)
Where price per unit is not indicated--- GREATER/LESSER -No rescission
or adjustment of price, UNLESS there is gross mistake.
ARTICLE 1543
The actions arising from arts 1539 & 1542 shall prescribe in six
months, counted from the day of delivery.