NOTES AND CASES IN SALES
(Art. 1458-1623 - Civil Code of the Philippines)
PREPARED BY:
ATTY. CHARLIE M. CABE
PRELIMINARY
What is a contract of sale?
By the contract of sale one of the contracting parties
obligates himself to transfer the ownership and to
deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.
(Art. 1458)
What are the kinds of sale?
A contract of sale may be absolute or conditional.
(Art. 1458, 2nd sen.)
When is a contract of sale considered
absolute?
Thus, it has been held that a deed of sale is absolute
in nature although denominated as a "Deed of
Conditional Sale" where nowhere in the contract in
question is a proviso or stipulation to the effect that
title to the property sold is reserved in the vendor
until full payment of the purchase price, nor is there
a stipulation giving the vendor the right to
unilaterally rescind the contract the moment the
vendee fails to pay within a fixed period. (Silvestre
Dignos and Isabel Lumungsod vs. Hon. Court
of Appeals and Atilano G. Jabil, G.R. No. L-
59266, February 29, 1988)
Dignos vs. Court of Appeals
FACTS: The Dignos spouses were owners of a parcel of
land. On June 7, 1965, they sold the said parcel of land to
Jabil for the sum of P28,000.00, payable in two
installments, with an assumption of indebtedness with the
First Insular Bank of Cebu in the sum of P12,000.00,
which was paid and acknowledged by the vendors in the
deed of sale executed in favor of respondent, and the
next installment in the sum of P4,000.00 to be paid on or
before September 15, 1965. On November 25, 1965, the
Dignos spouses sold the same land in favor of defendants
spouses, Luciano Cabigas and Jovita L. De Cabigas, who
were then U.S. citizens, for the price of P35,000.00. A
deed of absolute sale was executed by the Dignos
spouses in favor of the Cabigas spouses, and which was
registered in the Office of the Register of Deeds pursuant
to the provisions of Act No. 3344. As the Dignos spouses
refused to accept from plaintiff-appellant the balance of
the purchase price of the land, and as plaintiff- appellant
discovered the second sale made by defendants-
appellants to the Cabigas spouses, plaintiff-appellant
brought the present suit.
ISSUE: Is the sale entered by Dignos and Jabil absolute?
HELD: Yes. A careful examination of the contract shows
that there is no such stipulation reserving the title of the
property on the vendors nor does it give them the right to
unilaterally rescind the contract upon non-payment of the
balance thereof within a fixed period.
On the contrary, all the elements of a valid contract of
sale under Article 1458 of the Civil Code, are present,
such as: (1) consent or meeting of the minds; (2)
determinate subject matter; and (3) price certain in
money or its equivalent. xxx While it may be conceded
that there was no constructive delivery of the land sold in
the case at bar, as subject Deed of Sale is a private
instrument, it is beyond question that there was actual
delivery thereof. As found by the trial court, the Dignos
spouses delivered the possession of the land in question
to Jabil as early as March 27,1965 so that the latter
constructed thereon Sally's Beach Resort also known as
Jabil's Beach Resort in March, 1965; Mactan White Beach
Resort on January 15,1966 and Bevirlyn's Beach Resort on
September 1, 1965. Such facts were admitted by
petitioner spouses (Decision, Civil Case No. 23-L; Record
on Appeal, p. 108).
What is a contract to sell?
In Lacanilao v. Court of Appeals, we held that:
It is well established that where the seller
promised to execute a deed of absolute sale upon
completion of payment of the purchase price by
the buyer, the agreement is a contract to sell. In
contracts to sell, where ownership is retained by
the seller until payment of the price in full, such
payment is a positive suspensive condition, failure
of which is not really a breach but an event that
prevents the obligation of the vendor to convey
title in accordance with Article 1184 of the Civil
Code. (Spouses Orlando A. Rayos and
Mercedes T. Rayos vs. The Court of Appeals
and Spouses Rogelio and Venus Miranda,
G.R. No. 135528, July 14, 2004)
What is the effect of the non-fulfillment of the
obligation of a vendee in a contract to sell?
1. It renders the contract to sell ineffective and
without force and effect.
2. The parties stand as if the conditional obligation
had never existed.
3. Article 1191 of the New Civil Code will not apply
because it presupposes an obligation already extant.
4. There can be no rescission of an obligation that is
still non-existing, the suspensive condition not
having happened. (ibid.)
Rayos vs. The Court of Appeals
FACTS: Spouses petitioners secured a short-term loan
from the PSB payable within a period of one (1) year in
quarterly installments of P29,190.28. To secure the
payment of the loan, a Real Estate Mortgage over their
property (TCT No. 100156) was executed. Later,
petitioners and respondents executed a Deed of Sale with
Assumption of Mortgage over the subject property for the
price of P214,000.00. However, on January 29, 1986, the
petitioners-spouses, likewise, executed a Contract to Sell
the said property in favor of the respondents
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for P250,000.00. The petitioners obliged themselves to
execute a deed of absolute sale over the property in favor
of the respondents upon the full payment of the purchase
price thereof. Respondent Rogelio filed an application with
the PSB to secure the approval of his assumption of the
petitioners' obligation on the loan but was disapproved.
Nevertheless, respondent Rogelio Miranda paid the three
quarterly installment on the petitioners' loan. The said
amount was paid for the account of the petitioners. On
the 4th instalment, petitioner received a Letter from the
PSB, reminding him that his loan with the bank would
mature on December 24, 1986. Fearing that the
respondents would not be able to pay the amount due,
petitioner paid P27,981.41 to the leaving the balance
of P1,048.04. In his letter to the PSB the petitioner
advised the PSB not to turn over to the respondents the
owner's duplicate of the title over the subject property,
even if the latter paid the last quarterly installment on the
loan, as they had not assumed the payment of the same.
On December 24, 1986, respondent Rogelio Miranda
arrived at the PSB to pay the last instalment and tendered
the amount with a check but it was returned because of
the full payment of the obligation of the petitioner. The
PSB made a Release of Real Estate Mortgage in favor of
the petitioners, and released the owner's duplicate of title
of TCT.
ISSUE: Was the contract to sell cancelled upon the
payment by the petitioner of the last installment?
HELD: No. The petitioners did not unilaterally cancel their
contract to sell with the respondents when they paid the
total amount of P29,062.80 to the PSB in December
1986. In fact, the petitioners wrote the respondents on
January 3, 5 and 17, 1987, that they were ready to
execute the deed of absolute sale and turn over the
owner's duplicate of TCT No. 100156 upon the
respondents' remittance of the amount of P29,223.67.
The petitioners reiterated the same stance in their Answer
with Counterclaim in Civil Case No. 15639. The petitioners
cannot, likewise, be faulted for refusing to execute a deed
of absolute sale over the property in favor of the
respondents, and in refusing to turn over the owner's
duplicate of TCT No. 100156 unless the respondents
refunded the said amount. The respondents were obliged
under the contract to sell to pay the said amount to the
PSB as part of the purchase price of the property. On the
other hand, it cannot be argued by the petitioners that the
respondents committed a breach of their obligation when
they refused to refund the said amount. It bears stressing
that the petitioners and the respondents executed two
interrelated contracts. Construing the contracts together,
it is evident that the parties executed a contract to sell
and not a contract of sale. The petitioners retained
ownership without further remedies by the
respondents until the payment of the purchase price of
the property in full. Such payment is a positive suspensive
condition, failure of which is not really a breach, serious or
otherwise, but an event that prevents the obligation of the
petitioners to convey title from arising, in accordance with
Article 1184 of the Civil Code.
What is the effect of a contract to sell?
1. An agreement to retain ownership to the vendor
over the property until after the vendee shall have
paid the purchase price in full.
2. An agreement reserving to the vendor the right to
unilaterally resolve the contract upon the buyer’s
failure to pay within a fixed period.
3. The payment of the price is a positive suspensive
condition in a contract to sell, failure of which is not
a breach but an event that prevents the obligation of
the vendor to convey the title from becoming
effective. (Angel Clemeno, Jr., Malyn Clemeno,
and Nilus Sacramento vs. Romeo R. Lobregat,
G.R. No. 137845, September 9, 2004)
Clemeno vs. Lobregat
FACTS: The respondent and petitioner Angel Clemeno,
Jr., entered into a verbal contract of sale over the
property bought by Clemeno from Sacramento, which was
mortgaged with SSS. The respondent would pay the
purchase price of the property in the amount
of P270,000.00, inclusive of the balance of the loan of the
Spouses Clemeno with the SSS within two years ;to pay
the monthly amortizations of the vendor’s loan with the
SSS; and upon the payment of the purchase price of the
property, the Spouses Clemeno would execute a deed of
sale in favor of the respondent. The respondent complied
with the agreement. He continued paying the amortization
(the payment receipt is in the name of the Sacramento or
Clemeno) until March 1990 when he no longer paid after
this date because the SSS informed him that petitioner
Clemeno, Jr. had already paid the balance of his account
in full. Indeed, the SSS had executed a Release of Real
Estate Mortgage in favor of petitioner Clemeno, Jr. and
released the owner’s duplicate of TCT No. 277244. The
respondent offered to pay the balance of the purchase
price of the property to petitioner Clemeno, Jr. and asked
the latter to execute the deed of sale over the property
and deliver the title over the property under his name, but
petitioner Clemeno, Jr. refused to do so unless the
respondent agreed to buy the property at the price
prevailing in 1992. The respondent refused.
ISSUE: Was the contract entered into by Clemeno and
the respondent a contract to sell?
HELD: No. We find and so hold that the contract between
the parties was a perfected verbal contract of sale. xxx
The evidence shows that upon the payment made by the
respondent of the amount of P27,000.00 on June 4, 1987,
the petitioners vacated their house and delivered
possession thereof to the respondent. Conformably to
Article 1477 of the New Civil Code, the ownership of the
property was transferred to the respondent upon such
delivery. The petitioners cannot re-acquire ownership and
recover possession thereof unless the contract is
rescinded in accordance with law. xxx The contract
entered into by the parties was not a contract to sell
because there was no agreement for the petitioners to
retain ownership over the property until after the
respondent shall have paid the purchase price in full, nor
an agreement reserving to the petitioners the right to
unilaterally resolve the contract upon the buyer’s failure to
pay within a fixed period.
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 What are the rules to determine if a contract is
What are the distinctions of a contract of sale one of sale or a piece of work?
and a contract to sell? (Adelfa Properties, Inc.
vs. Court of Appeals, Infra on option contract) Rule:
1. Sale:
DISTINCTIONS: A contract for the delivery at a certain price of an
CONTRACT OF SALE CONTRACT TO SELL article which the vendor in the ordinary course of his
business manufactures or procures for the general
1. The title passes to the 1. By agreement the
market, whether the same is on hand at the time or
vendee upon the delivery ownership is reserved in
not.
of the thing sold the vendor and is not to
pass until the full 2. Piece of work:
payment of the price. a. The goods are to be manufactured specially
2. The vendor has lost 2. Title is retained by the for the customer and upon his special order,
and cannot recover vendor until the full and not for the general market. (Art. 1467)
ownership until and payment of the price, b. If these specifications do not happen to be of the
unless the contract is such payment being a kind habitually manufactured by appellant — special
resolved or rescinded. positive suspensive forms for sash, mouldings of panels — it would not
condition and failure of accept the order — and no sale is made.
which is not a breach but c. When this Factory accepts a job that requires the
an event that prevents use of extraordinary or additional equipment, or
the obligation of the involves services not generally performed by it-it
vendor to convey title thereby contracts for a piece of work— filing special
from becoming effective. orders within the meaning of Article 1467. (Celestino
3. The vendor has no 3. The vendor has the Co & Company vs. Collector of Internal Revenue,
right to unilaterally right to unilaterally G.R. No. L-8506, August 31, 1956)
resolve the contract the resolve the contract the
moment the buyer fails Co vs. CIR
moment the buyer fails
to pay within a fixed to pay within a fixed FACTS: Celestino Co & Company is a duly registered
period. period. general copartnership doing business under the trade
name of "Oriental Sash Factory". From 1946 to 1951 it
paid percentage taxes of 7 per cent on the gross receipts
What is a contract of barter or exchange? of its sash, door and window factory as an imposition of
By the contract of barter or exchange one of the taxes on sale of manufactured articles. However in 1952 it
parties binds himself to give one thing in began to claim liability only to the contractor's 3 per cent
consideration of the other's promise to give another tax (instead of 7 per cent).
thing. (Art. 1638.) ISSUE: Is the manufacture of sash, windows and doors
by the petitioner a piece of work?
What are the rules to determine whether a HELD: No. The important thing to remember is that
contract is one of sale or barter? Celestino Co & Company habitually makes sash, windows
General rule: and doors, as it has represented in its stationery and
If the consideration of the contract consists partly in advertisements to the public. xxx The fact that windows
money, and partly in another thing, the transaction and doors are made by it only when customers place their
shall be characterized by the manifest intention of orders, does not alter the nature of the establishment, for
it is obvious that it only accepted such orders as called for
the parties.
the employment of such material-moulding, frames,
Exception: panels-as it ordinarily manufactured or was in a position
Such intention does not clearly appear. habitually to manufacture. xxx The Oriental Sash Factory
Rule:, does nothing more than sell the goods that it mass-
produces or habitually makes; sash, panels, mouldings,
1. Barter: frames, cutting them to such sizes and combining them in
The value of the thing given as a part of the such forms as its customers may desire.xxx It is at once
consideration exceeds the amount of the money apparent that the Oriental Sash Factory did not merely sell
or its equivalent. its services to Don Toribio Teodoro & Co. (To take one
instance) because it also sold the materials. The truth of
2. Sale:
the matter is that it sold materials ordinarily manufactured
a. The value of thing given and the money are equal. by it — xxx to Teodoro & Co., although in such form or
b. The value of the thing given as a part of the combination as suited the fancy of the purchaser. Such
consideration is less than the amount of the new form does not divest the Oriental Sash Factory of its
character as manufacturer. Neither does it take the
money or its equivalent. (Art. 1468)
transaction out of the category of sales under Article 1467
above quoted, because although the Factory does not, in
the ordinary course of its business, manufacture and keep
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on stock doors of the kind sold to Teodoro, it could stock
and/or probably had in stock the sash, mouldings and
panels it used therefor (some of them at least).
What are the distinctions between a contract
of sale and a contract of piece of work?
1. Thus, if the thing is specially done at the order of
another, this is a contract for a piece of work. If, on
the other hand, the thing is manufactured or
procured for the general market in the ordinary
course of one's business, it is a contract of sale.
2. It is one for work, labor and materials if the
thing transferred is one not in existence and
which never would have existed but for the
order of the party desiring to acquire it , and
a contract of sale if a thing which would have
existed and has been the subject of sale to
some other persons even if the order had not
been given. Xxx One who has ready for the
sale to the general public finished furniture is
a manufacturer, and the mere fact that he
did not have on hand a particular piece or
pieces of furniture ordered does not make
him a contractor only" Likewise, xxx When
the vendor enters into a contract for the
delivery of an article which in the ordinary
course of his business he manufactures or
procures for the general market at a price
certain (Art. 1458) such contract is one of
sale even if at the time of contracting he may
not have such article on hand . Such articles
fall within the meaning of "future goods"
mentioned in Art. 1462, par. 1.
(Commissioner of Internal Revenue vs.
Arnoldus Carpentry Shop, Inc., and
Court of Tax Appeals, G.R. No. 71122
March 25, 1988)
CIR vs. Arnoldus Carpentry Shop
FACTS: Arnoldus Carpentry Shop, Inc. has for its
secondary purpose the "preparing, processing, buying,
selling, exporting, importing, manufacturing, trading and
dealing in cabinet shop products, wood and metal home
and office furniture, cabinets, doors, windows, etc.,
including their component parts and materials, of any and
all nature and description". These furniture, cabinets and
other woodwork were sold locally and exported abroad.
For this business venture, private respondent kept
samples or models of its woodwork on display from where
its customers may refer to when placing their orders.
ISSUE: Is the private respondent a contractor or a
manufacturer?
HELD: A manufacturer. Petitioner is ignoring the fact that
private respondent sells goods which it keeps in stock and
not services. xxx xxx These considerations were what
precisely moved the respondent Court of Tax Appeals to
rule that 'the fact that [private respondent] kept models of
its products... indicate that these products were for sale to
the general public and not for special orders. xxx In the
instant case, it may be that what is involved is a
CARPENTRY SHOP. But, in the same vein, there are also
attendant facts herein to show habituality of the
production for the general public.
How to construe a contract containing
provisions characteristics of both the contract
of sale and of the contract of agency to sell?
In construing a contract containing provisions
characteristic of both the contract of sale and of the
contract of agency to sell, the essential clauses of
the whole instrument shall be considered. (Art.
1466)
What are the distinctions of a contract of sale
and a contract of agency to sell?
I. The essential features of a contract of purchase
and sale:
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.
The legal conception of an agency or order to sell:
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. (Andres Quiroga vs.
Parsons Hardware Co., G.R. No. L-11491,
August 23, 1918)
Quiroga vs. Parsons Hardware Co.
FACTS: Quiroga and Parsons entered into a contract
whereby the former shall furnish beds of his
manufacture to Mr. Parsons and shall invoice them at
the same price he has fixed for sales, in Manila, and, in
the invoices, shall make and allowance of a discount of
25 per cent of the invoiced prices, as commission on the
sale. Mr. Parsons shall order the beds by the dozen,
whether of the same or of different styles. Mr. Parsons
binds himself to pay Mr. Quiroga for the beds received,
within a period of sixty days from the date of their
shipment. If, before an invoice falls due, Mr. Quiroga
should request its payment, said payment when made
shall be considered as a prompt payment, and as such a
deduction of 2 per cent shall be made from the amount
of the invoice. The same discount shall be made on the
amount of any invoice which Mr. Parsons may deem
convenient to pay in cash.
ISSUE: Is the contract one of sale or a contract of
agency to sell?
HELD: Contract of sale. In the contract in question,
what was essential, as constituting its cause and subject
matter, is that the plaintiff was to furnish the defendant
with the beds which the latter might order, at the price
stipulated, and that the defendant was to pay the price
in the manner stipulated. xxx The price agreed upon
was the one determined by the plaintiff for the sale of
these beds in Manila, with a discount of from 20 to 25
per cent, according to their class. Payment was to be
made at the end of sixty days, or before, at the
plaintiff's request, or in cash, if the defendant so
preferred, and in these last two cases an additional
discount was to be allowed for prompt payment. xxx 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. xxx
Furthermore, the return made was of certain brass
beds, and was not effected in exchange for the price
paid for them, but was for other beds of another kind.
II. The essential features of a contract of purchase
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and sale:
It follows that the petitioner as vendor is not bound
to reimburse the respondent as vendee for any
difference between the cost price and the sales price
which represents the profit realized by the vendor
out of the transaction.
The legal conception of an agency or order to sell:
The agent is exempted from all liability in the
discharge of his commission provided he acts in
accordance with the instructions received from his
principal, and the principal must indemnify the agent
for all damages which the latter may incur in
carrying out the agency without fault or imprudence
on his part (Gonzalo Puyat & Sons, Inc. vs. Arco
Amusement Company [formerly known asa
Teatro Arco], G.R. No. L-47538, June 20, 1941)
When is a contract of sale perfected?
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. (Art.
1475)
What is the effect once the contract of sale is
perfected?
From that moment, the parties may reciprocally
demand performance, subject to the provisions of
the law governing the form of contracts. (ibid.)
What are the rules in 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.
What may happen before the perfection of
the sale by auction?
a. Before perfection, any bidder may retract his
bid.
b. The auctioneer may withdraw the goods from
the sale.
When is the auctioneer not allowed to
withdraw the goods from the sale?
The auction has been announced to be without
reserve.
3. A right to bid may be reserved expressly by or on
behalf of the seller, unless otherwise 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. (Art. 1476)
What is the effect of a bilateral promise to buy
and sell a determinate thing for a price
certain?
A promise to buy and sell a determinate thing for a
price certain is reciprocally demandable. (Art. 1475,
1st par.)
What is the effect of a unilateral promise to
buy and sell a determinate thing for a price
certain?
An accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding upon
the promisor if the promise is supported by a
consideration distinct from the price. (Art. 1475, 2nd
par.)
What is the significance of giving an earnest
money in a contract of sale?
1. It shall be considered as part of the price and as
2. Proof of the perfection of the contract. (Article
1482)
What are the essential characteristics of a
contract of sale?
1. Consensual. Perfected by mere consent.
2. Bilateral reciprocal. Both parties are bound by
obligations dependent upon each other.
3. Onerous. Valuable consideration must be
given.
4. Commutative. Values exchanged are almost
equivalent to each other.
5. Principal. No necessity for it to depend upon
the existence of another valid contract.
6. Nominate. The law gives a special designation
or name.
What are the essential requisites of a valid
contract of sale?
The requisites of a valid Contract of Sale namely:
1) consent or meeting of the minds of the
parties;
2) determinate subject matter;
3) price certain in money or its equivalent.
(Catalino Leabres vs. Court of Appeals
and Manotok Realty, Inc., G.R. No. L-
41847, December 12, 1986)
SUBJECT MATTER OR OBJECT OF THE SALE
What are the requisites of a valid object of a
sale?
1. The thing must be licit (Art. 1459, 1st part)
2. The thing must be determinate (Art. 1460)
3. It must have a potential existence (Art. 1461, 1st
par.)
What right does the owner have over the
object of the sale at the time of delivery?
The vendor must have a right to transfer the
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ownership thereof at the time it is delivered (Art. 3. It deals with a future 3. It deals with present
1459, 2nd part) thing – that is expected. thing – for certainly the
hope or expentancy
Should ownership of the object have acquired already exists.
at the time of the perfection of the contract?
No. Impliedly, the ownership on the object must
have been acquired at the time of its delivery.

When is a thing considered determinate?
1. A thing is determinate when it is particularly
designated or physical segregated from all other of
the same class.
2. If at the time the contract is entered into, the
thing is capable of being made determinate without
the necessity of a new or further agreement
between the parties. (Art. 1460)
May things subject to a resolutory condition
be the object of a contract of sale?
Things subject to a resolutory condition may be the
object of a contract of sale. (Art. 1465)
What are examples of things with potential
existence?
1. Future thing that may be sold like rice harvest for
the coming month.
2. Young animals not yet in existence.
3. Still ungrown fruits.
4. The wine that a particular vineyard is expected
to produce.
Is the sale of mere hope or expentancy
effective?
1. The efficacy of the sale of a mere hope or
expectancy is deemed subject to the condition that
the thing will come into existence.
2. The sale of a vain hope or expectancy is void.
(Art. 1461, 2nd and 3rd par.)
What goods may be the subject of a contract
of sale?
1. Existing goods, owned or possessed by the seller.
2. Future goods, or goods to be manufactured,
raised, or acquired by the seller after the perfection
of the contract of sale.
3. Contingent goods, whose acquisition by the seller
depends upon a contingency which may or may not
happen. (Art. 1462)
4. Fungible goods. (Art. 1464)
In case of fungible goods, what is the rule
in the sale of share in a specific mass?
a. There may be a sale of an undivided share of a
specific mass.
b. Though the seller purports to sell and the buyer
to buy a definite number, weight or measure of
the goods in the mass, and though the number,
weight or measure of the goods in the mass, and
though the number, weight or measure of the
goods in the mass is undetermined.
c. By such a 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.
d. If the mass contains less than the number,
weight or measure bought, the buyer becomes
the owner of the whole mass and the seller is
bound to make good the deficiency from goods of
the same kind and quality, unless a contrary
intent appears. (ibid.)

What is emptio rei sperati?
The sale of an expected thing.
What is emptio spei?
The sale of the hope itself.
What are the distinctions between emptio rei
sperati and emptio spei?
DISTINCTIONS:
EMPTIO REI SPERATI
1. Sale of an expected
thing.
2. If it does not
materialize, the sale is
not effective.
What is the rule 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 with the
description or the sample, and if the contract be by
sample as well as description, it is not sufficient that
the bulk of goods correspond with the sample if they
do not also correspond with the description. (Art.
1481).
What is the right of the buyer in the contract
EMPTIO SPEI
of sale of goods by description or by sample?
1. Sale of hope itself. The buyer shall have a reasonable opportunity of
comparing the bulk with the description or the
2. It does not matter sample. (ibid.)
whether the expected
thing materialized or not; PRICE CERTAIN IN MONEY OR ITS
what is important is that EQUIVALENT
the hope itself validly
exist. When is a price of a thing considered certain?

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1. It shall be sufficient that it be so with reference to
another thing certain.
2. The determination thereof be left to the judgment
of a special person or persons.
3. The parties agree upon the price. (Art. 1469)
When may parties agree upon the price?
If a special person or persons unable or unwilling to
fix the price. (ibid.)
What is the effect if a special person unable or
unwilling to fix the price?
The contract shall be inefficacious (ibid.)
When may the court fix the price?
1. If the third person or persons acted in bad faith.
2. If the third person or persons acted by mistake.
(ibid.)
What is the remedy of a party not at fault
when a third person or persons are prevented
from fixing the price or terms?
Where such third person or persons are prevented
from fixing the price or terms by fault of the seller or
the buyer, the party not in fault may have such
remedies against the party in fault as are allowed
the seller or the buyer, as the case may be. (ibid.)
Who may determine the price?
1. Special person/persons.
2. The court.
3. The parties. (ibid.)
Can a party, at his discretion, fix the price?
The fixing of the price can never be left to the
discretion of one of the contracting parties. (Art.
1473, 1st sen.)
What is the effect of the fixing the price of one
party at his discretion?
If the price fixed by one of the parties is accepted by
the other, the sale is perfected. (id, 2nd sen.)
What is the effect on the contract if the price
cannot be determined?
Where the price cannot be determined by a third
person, the parties, the court or in any other
manner, the contract is inefficacious. (Art. 1474, 1st
sen.)
Does the vendee have any obligation to pay if
the thing was delivered to him and the price
cannot be determined?
If the thing or any part thereof has been delivered to
and 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. (id, 2nd sen.)
What is the effect on the contract of the
inadequacy of price?
Gross inadequacy of price does not affect a contract
of sale. (Art. 1470, 1st clause)
When may an inadequacy of price affect the
validity of the contract?
It indicates a defect in the consent. (id., 2nd clause)
When is the inadequacy of price not a contract
of sale?
The parties really intended a donation or some other
act or contract. (id., last clause)
When is a contract simulated?
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 which does not exist or is different from
that which was really executed. (Spouses Isabelo
and Erlinda Payongayong vs. Hon. Court of
Appeals, Spouses Clemente and Rosalia
Salvador, G.R. No. 144576, May 28, 2004)
What are the requisites of a simulated
contract?
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 third persons. (ibid.)
What is the basic characteristic of a simulated
contract?
The basic characteristic then of a simulated contract
is that it is not really desired or intended to produce
legal effects or does not in any way alter the juridical
situation of the parties. (ibid.)
Payongayong vsCourt of Appeals
FACTS: Eduardo Mendoza was the registered owner of a
200 square meter parcel of land (TCT No. 329500,
Registry of Deeds of Quezon City), which he Mendoza
mortgaged with the Meralco Employees Savings and Loan
Association (MESALA) to secure a loan in the amount of
P81,700.00. It was annotated on the title. Later, Mendoza
executed a Deed of Sale with Assumption of
Mortgage with petitioners in consideration of P50,000.00.
Petitioners to assume payment of the balance of the
mortgage indebtedness of Mendoza to MESALA. Again,
Mendoza, without the knowledge of petitioners,
mortgaged the same property to MESALA to secure a loan
in the amount of P758,000.00. It was annotated. Few
months later, Mendoza executed a Deed of Absolute
Sale over still the same property in favor of respondents in
consideration of P50,000.00. The sale was duly annotated.
MESALA issued a Cancellation of Mortgage acknowledging
that for sufficient and valuable consideration which it
received from Mendoza, it was cancelling and releasing
the real estate mortgage over the property. The
cancellation was annotated. Respondents caused the
cancellation of Mendoza’s title and the issuance of
Transfer Certificate Title No. 67432 in their name.
ISSUE: Was the sale between Mendoza and Sps.
Salvador simulated considering the price of P50,000.00
HELD: No. The cancellation of Mendoza’s certificate of
title over the property and the procurement of one in its
7
stead in the name of respondents, which acts were were made to believe by Maximo Mapalo and by the
directed towards the fulfillment of the purpose of the attorney who acted as notary public who "translated" the
contract, unmistakably show the parties’ intention to give document, that the same was a deed of donation in
effect to their agreement. The claim of simulation does Maximo's favor covering one-half (the eastern half) of
not thus lie. their land. Although the document of sale stated a
consideration of Five Hundred (P500.00) Pesos, the
What is the effect if the price is simulated? aforesaid spouses did not receive anything of value for the
If the price is simulated, the sale is void (Art. land. Following the execution of the afore-stated
1471). document, the spouses Miguel Mapalo and Candida Quiba
immediately built a fence of permanent structure in the
middle of their land segregating the eastern portion from
its western portion. Said fence still exists. The spouses
When is a sale valid even if the price is have always been in continued possession over the
simulated? western half of the land up to the present. Not known to
The act may be shown to have been in reality a them, Maximo Mapalo registered the deed of sale in his
donation, or some other act or contract. (ibid.) favor and obtained in his name TCT over the entire land.
Thirteen years later, he sold for P2,500.00 said entire land
When shall the price of securities, grains, in favor of Evaristo, Petronila Pacifico and Miguel all
liquids, and other thing be considered certain? surnamed Narciso. The sale to the Narcisos was in turn
registered and TCT was issued for the whole land in their
1. When the price fixed is that which the thing sold names.
would have on a definite day, or in a particular
ISSUE: Was there a consideration given in a contract of
exchange or market; or sale entered by Miguel and Maximo Mapalo?
2. When an amount is fixed above or below the price HELD: No. From the foregoing it can be seen that where,
on such day, or in such exchange or market, as in this case, there was in fact no consideration, the
provided said amount be certain. (Art. 1472) statement of one in the deed will not suffice to bring it
under the rule of Article 1276 of the Old Civil Code as
What are the distinctions between a contract stating a false consideration.
without cause and a contract with false cause?
How shall a purchase price be an essential
DISTINCTIONS: element in the formation of a binding and
WITHOUT CAUSE FALSE CAUSE enforceable contract of sale?
Indeed, this Court has already ruled before that a
1. Produce no effect 1. Renders the contract definite agreement on the manner of payment of the
whatsoever. voidable, unless it is purchase price is an essential element in the
proven that it is formation of a binding and enforceable contract of
supported by sale. (Lorenzo Velasco and Socorro J. Velasco
another real and licit co vs. Hon. Court of Appeals and Magdalena
nsideration. Estate, Inc., G.R. No. L-31018 June 29, 1973)
2. It is void and 2. Voidable.
Velasco vs. Hon. Court of Appeals
inexistent.
3. Action for annulment FACTS: Petitioner and the private respondent entered
3. The inexistence of a into a contract of sale. By virtue of which the private
contract is permanent and of a contract on the
respondent offered to sell the petitioner and the petitioner
incurable and cannot be ground of falsity of
in turn agreed to buy a parcel of land with an area of
the subject of consideration shall last 2,059 square meters for the total purchase price of
prescription. four years, the term to P100,000.00. It was agreed that the petitioner was to give
run from the date of a down payment of P10,000.00 to be followed by
the consummation of P20,000.00 and the balance of P70,000.00 would be paid
the contract. (Miguel in installments, the equal monthly amortization of which
Mapalo, et al. vs. was to be determined as soon as the P30,000.00 down
Maximo Mapalo, et payment had been completed. Petitioner paid down
al., G.R. No. L-21489 payment of P10,000.00. Later, the petitioner tendered to
the private respondent the payment of the additional
and L-21628, May
P20,000.00 to complete the P30,000.00 but it was refused
19, 1966)
to accept and that eventually it likewise refused to
execute a formal deed of sale obviously agreed upon.
Mapalo vs. Mapalo ISSUE: Was there a perfected contract of sale upon the
FACTS: The spouses Miguel Mapalo and Candida Quiba, payment of the Php10,000.00 by the petitioner to the
simple illiterate farmers, were registered owners of a private respondent?
1,635-square-meter residential land. Said spouses-owners, HELD: No. The court a quo agreed with the respondent's
out of love and affection for Maximo Mapalo — a brother contention that no contract of sale was perfected because
of Miguel who was about to get married — decided to the minds of the parties did not meet "in regard to the
donate the eastern half of the land to him. As a result, manner of payment." The court a quo appraisal of this
however, they were deceived into signing a deed of aspect of the action below is correct. The material
absolute sale over the entire land in his favor. Their averments contained in the petitioners' complaint
signatures thereto were procured by fraud, that is, they themselves disclose a lack of complete "agreement in
8
regard to the manner of payment" of the lot in question.
xxx It is not difficult to glean from the aforequoted
averments that the petitioners themselves admit that they
and the respondent still had to meet and agree on how
and when the down-payment and the installment
payments were to be paid. Such being the situation, it
cannot, therefore, be said that a definite and firm sales
agreement between the parties had been perfected over
the lot in question. xxx The fact, therefore, that the
petitioners delivered to the respondent the sum of
P10,000 as part of the down-payment that they had to
pay cannot be considered as sufficient proof of the
perfection of any purchase and sale agreement between
the parties herein under article 1482 of the new Civil
Code, as the petitioners themselves admit that some
essential matter — the terms of payment — still had to be
mutually covenanted.
When may a price perfect a contract of sale?
1. The price must be certain, it must be real, not
fictitious. It is not necessary that the certainty of the
price be actual or determined at the time of
executing the contract. The fact that the exact
amount to be paid therefor is not precisely fixed, is
no bar to an action to recover such compensation,
provided the contract, by its terms, furnishes a basis
or measure for ascertaining the amount agreed
upon. xxx A contract of sale is not void for
uncertainty when the price, though not directly
stated in terms of pesos and centavos, can be made
certain by reference to existing invoices identified in
the agreement. xxx The price must be certain,
otherwise there is no true consent between the
parties. There can be no sale without a price.
(Gamaliel C. Villanueva and Irene C. Villanueva
vs. Court of Appeals, Spouses Jose and Leonila
Dela Cruz, and Spouses Guido and Felicitas
Pile, G.R. No. 107624. January 28, 1997)
Villanueva vs. Court of Appeals
FACTS: Petitioner has been a tenant-occupant of a unit
in the 3-door apartment building erected on a parcel of
land owned by private respondents Dela Cruz. About
February of 1986, Jose dela Cruz offered said parcel of
land with the 3-door apartment building for sale, which
petitioner showed interest in the property. Because said
property was in arrears in the payment of the realty
taxes, petitioner gave P10,000.00 on two occasions to
Dela Cruz and agreed by them that said P10,000.00
would form part of the sale price of P550,000.00.
Sometime in March, 1987, Dela Cruz executed in favor
of their co-respondents a Deed of Assignment of the
other one-half portion of the parcel of land, wherein
petitioner apartment unit is situated, purportedly as full
payment and satisfaction of an indebtedness obtained
from respondents Pili. Consequently, TCT was issued in
the name of respondents Pili.
ISSUE: Was the contract of sale perfected between
Villanueva and Dela Cruz upon the payment of P10,000
as arrears in the payment of a realty taxes?
HELD: No. Assuming arguendo that such draft deed
existed, it does not necessarily follow that there was
already a definite agreement as to the price. If there
was, why then did private respondent Jose de la Cruz
not sign it? If indeed the draft deed of sale was that
important to petitioners' cause, they should have shown
some effort to procure it. They could have secured it
through a subpoena duces tecum or thru the use of one
of the modes of discovery. But petitioners made no such
effort. And even if produced, it would not have
commanded any probative value as it was not
signed.xxx In the instant case, however, what is
dramatically clear from the evidence is that there was
no meeting of mind as to the price, expressly or
impliedly, directly or indirectly. Sale is a consensual
contract. He who alleges it must show its existence by
competent proof. Here, the very essential element of
price has not been proven. Lastly, petitioners' claim that
they are ready to pay private respondents is immaterial
and irrelevant as the latter cannot be forced to accept
such payment, there being no perfected contract of sale
in the first place.
2. Quite recently, this Court reiterated the long-
standing doctrine that the manner of payment of the
purchase price is an essential element before a valid
and binding contract of sale can exist since the
agreement on 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. (Swedish Match, AB, Juan Enriquez, Rene
Dizon Francisco Rapacon, Fiel Santos, Beth
Flores, Lambrto De La Eva, Gloria Reyes,
Rodrigo Ortiz, Nicanor Escalante, Peter
Hodgson, Samuel Partosa, Herminda Asuncion,
Juanito Herrera, Jacobus Nicolaas, Joseph
Pekelharing [now representing himself
without court sanctions as Joost Pekelharing],
Joseph Pekelharing [now], Massimo Rossi and
Ed Enriquez vs. Court of Appeals, ALS
Management Development Corporation and
Antonio K. Litonjua, G.R. No. 128120. October
20, 2004)
CAPACITY TO BUY OR SELL
Who has the capacity to buy and sell?
1. All persons who are authorized to obligate
themselves, may enter into a contract of sale.
2. Minor.
3. Other persons without capacity to act.
When is a minor or other person without
capacity to act may enter into a contract of
sale?
Where necessaries are those sold and delivered and
a reasonable price therefor must be paid. (Art.
1489)
What are the necessaries that may be sold and
delivered to a minor or other person without
capacity to act?
1. Food or sustenance.
2. Dwelling or shelter.
3. Clothing.
4. Medical attendance.
5. Education.
6. Transportation, which are indispensable for
support. (Art. 194, Family Code)
9
Who cannot sell property to each other?
The husband and the wife cannot sell property to
each other (Art. 1490)
When may a husband and wife sell property to
each other?
(1) When a separation of property was agreed upon
in the marriage settlements; or
(2) When there has been a judicial separation of
property under article 191. (ibid.)
Who cannot acquire by purchase, even at a
public or judicial auction, either in person or
through the mediation of another?
1. The guardian, the property of the person or
persons who may be under his guardianship.
2. Agents, the property whose administration or sale
may have been intrusted to them, unless the
consent of the principal has been given.
3. Executors and administrators, the property of the
estate under administration.
4. Public officers and employees, the property of the
State or of any subdivision thereof, or of any
government-owned or controlled corporation, or
institution, the administration of which has been
intrusted to them; this provision shall apply to judges
and government experts who, in any manner
whatsoever, take part in the sale.
5. Justices, judges, prosecuting attorneys, clerks of
superior and inferior courts, and other officers and
employees connected with the administration of
justice, the property and rights in litigation or levied
upon an execution before the court within whose
jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of
acquiring by assignment and shall apply to lawyers,
with respect to the property and rights which may be
the object of any litigation in which they may take
part by virtue of their profession.
6. Any others specially disqualified by law. (Art.
1491)
What is the applicability of the prohibitions?
The prohibitions are applicable to:
1. Sales in legal redemption,
2. Compromises and
3. Renunciations. (Art. 1492)
What are the kinds of incapacity?
1. Absolute incapacity.
2. Relative incapacity. (Wolfson vs. Estate of
Martinez, 20 Phil. 304)
What is absolute incapacity?
When party cannot bind himself in any case. (ibid.)
What is relative incapacity?
May exist with reference to certain persons or a
certain class of property. (ibid.)
EFFECTS OF THE CONTRACT WHEN THE THING
SOLD HAS BEEN LOST
What are the effects of the contract of sale
when the thing to be sold has been lost?
At the time of the perfection of the sale:
1. The thing which is the object of the contract has
been entirely lost, the contract shall be without any
effect.
2. But if the thing should have been lost in part only,
the vendee may choose between withdrawing from
the contract and demanding the remaining part,
paying its price in proportion to the total sum agreed
upon. (Art. 1493)
Sale of specific goods:
The buyer 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, and as binding the
buyer to pay the agreed price for the goods in which
the ownership will pass, if the sale was divisible.
(Art. 1494)
When may the buyer opt to treat the sale of a
specific goods avoided or valid?
1. The parties purport a sale of specific goods.
2. The specific goods have perished:
a. In part, or
b. In whole, or
c. In a material part so deteriorated in quality as to
be substantially changed in character.
3. The perished goods are without the knowledge of
the seller. (ibid.)
OBLIGATIONS OF THE VENDOR
What are the obligations of a vendor?
1. To transfer ownership of the object.
2. To make a delivery of the object.
3. To warrant the object sold. (Art. 1495)
4. To preserve the thing from the perfection to
delivery (Art. 1163)
TRANSFER OWNERSHIP OF THE OBJECT
How is ownership of the object sold acquired
by, or transferred to, the vendee?
1. From the moment the object is delivered to the
vendee, actual or constructive.
2. In any other manner signifying an agreement that
the possession is transferred from the vendor to the
vendee. (Art. 1496)
When shall the delivery of the object of sale
not transfer ownership to the vendee?
10
The parties may stipulate that ownership in the thing
shall not pass to the purchaser until he has fully paid
the price. (Art. 1478)
What are the kinds of delivery?
1. Actual or real.
2. Constructive. (Art. 1477)
3. Quasi-delivery (Art. 1501)
What is actual or real delivery?
The thing sold shall be understood as delivered,
when it is placed in the control and possession of the
vendee. (Art. 1497)
What is quasi-delivery?
1. The placing of the titles of ownership in the
possession of the vendee.
2. The use by the vendee of his rights, with the
vendor's consent, shall be understood as a delivery.
(Art. 1501)
What are the different kinds of constructive
delivery (art. 1498-1500)?
1. By legal formalities.
The sale is made through a public instrument if from
the deed the contrary does not appear or cannot
clearly be inferred. (Art. 1498, 1st sen.)
2. By traditio symbolica (symbolical delivery).
With regard to movable property, its delivery may
also be made by the delivery of the keys of the place
or depository where it is stored or kept. (Art. 1498,
1st sen.)
3. By traditio longa manu.
The delivery of movable property may likewise be
made by the mere consent or agreement of the
contracting parties. (Art. 1499, 1st sen.)
4. By traditio brevi manu.
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. (Art. 1499, 2nd sen.)
5. By traditio constitutum possessorium.
The opposite of tradition brevi manu. Possession as
owner changed. (Art. 1500)
What is transaction “on sale or return”?
The 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. (Art. 1502, 1st
clause)
Who owns the goods upon its delivery to the
buyer in transaction “on sale or return”?
The ownership passes to the buyer on delivery, but
he may revest the ownership in the seller by
returning or tendering the goods within the time
fixed in the contract, or, if no time has been fixed,
within a reasonable time. (Art. 1502, 2nd clause)
What is a transaction “on approval or on trial
or satisfaction”?
A sale that is really dependent on the quality of the
goods. It is a sale with suspensive condition. (55
C.J. 430-431)
Who owns the goods in transaction “on
approval or on trial or satisfaction”?
As a rule, the ownership of the goods after its
delivery to the buyer in transaction “on approval or
on trial or satisfaction” remains with the seller. (Art.
1502, 2nd par.)
When does ownership pass to the buyer in
transaction “on approval or on trial or
satisfaction”?
1. When he signifies his approval or acceptance to
the seller or does any other act adopting the
transaction
2. If he does not signify his approval or acceptance
to the seller:
a. It retains the goods without giving notice of
rejection, then if a time has been fixed for the
return of the goods, on the expiration of such time.
b. It retains the goods without giving notice of
rejection and, if no time has been fixed, on the
expiration of a reasonable time. What is a
reasonable time is a question of fact. (ibid.)
What is the rule on the sale of “specific goods”
as to ownership?
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. (Art.
1503, 1st sen.)
What are the instances when a seller remains
the owner of “specific goods” despite
delivery?
1. The right of possession or ownership may be thus
reserved notwithstanding the delivery of the goods
to the buyer or to a carrier or other bailee for the
purpose of transmission to the buyer. (Art. 1503,
2nd sen.)
2. Where goods are shipped, and 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. (Art.
1503, 2nd par., 1st sen.)
When is the ownership passed to the buyer
even if deliverable to the seller?
But, if except for the form of the bill of lading, the
ownership would have passed to the buyer on
shipment of the goods. (Art. 1503, 2nd par., 2nd
sen., 1st clause)
What is the purpose of the delivery of the
goods to the seller when ownership is
transferred to the buyer?
The seller's property in the goods shall be
deemed to be only for the purpose of securing
11
 performance by the buyer of his obligations
under the contract. (Art. 1503, 2nd par., 2nd
sen., 2nd clause)
3. Where goods are shipped, and 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. (Art. 1503, 3rd par.)
4. Where the seller of goods draws on the buyer for
the price and transmits the bill of exchange and bill
of lading together to the buyer to secure acceptance
or payment of the bill of exchange, the buyer is
bound to return the bill of lading if he does not
honor the bill of exchange, and if he wrongfully
retains the bill of lading he acquires no added right
thereby. (Art. 1503, 4th par., 1st sen.)
What is the effect of the sale to a third
person made by the buyer without right
though deliverable to him?
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 good faith, 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 honoured. (Art. 1503, 4th
par., 2nd sen., 1st clause)
What is the condition to validly transfer
ownership to a third person?
Provided that such purchaser has received
delivery of the bill of lading indorsed by the
consignee named therein, or of the goods,
without notice of the facts making the transfer
wrongful. (Art. 1503, 4th par., 2nd sen., 2nd
clause)
What is the general rule in bearing the risk of
loss?
Whoever owns a thing bears the risk of loss ( res
perit domino)
In a contract of sale, who bears the risk of
loss?
1. Before perfection:
The seller bears the risk of loss
Why does the seller bear the risk of loss?
a. There was no contract, for there was no cause
or consideration.
b. Being the owner, the seller bears the loss.
c. The seller cannot demand payment of the price.
2. After delivery to the buyer:
If the object was lost after delivery to the buyer,
clearly the buyer bears the loss.
Why does the buyer bear the risk of loss
after delivery?
The rule on res perit domino applies. He becomes
the owner after the delivery of the thing.
3. After perfection but before delivery:
The buyer bears the loss as an exception to the
rule of res perit domino (Art. 1480, 1st par.)
Why does the buyer bear the risk of loss?
a. The buyer would still have had to pay for the
object even if no delivery had been made.
b. Art. 1480, par. 1 & 2 clearly states to be
governed by Art. 12621 among others. This means
that only the obligation of the seller is
extinguished and not the obligation to pay.
c. In case of loss, deterioration or improvement of
the thing before its delivery, the rules in article
11892 shall be observed, the vendor being
considered the debtor. (Art. 1538)
d. In Art. 12693, the buyer, who is the creditor as
to the object, has the right to proceed against the
wrong-doer for damages. It would be absurd to
grant him this right against wrong-doers.
When does the seller bear the risk of loss
after perfection but before delivery?
1. Should fungible things be sold for a price fixed
according to weight, number, or measure. (Art.
1480, par. 3)
When does the buyer bear the risk of loss
sold for a price fixed according to weight,
number, or measure?
The risk shall not be imputed to the vendee until
they have been weighed, counted, or measured
and delivered, unless the latter has incurred in
delay. (ibid.)
2. If the seller is guilty of fraud, negligence,
default, violation of contractual term. (Arts.
1165, 1262, 1170)
3. When the object sold is generic because “genus
does not perish” (genus nunguam perit)
4. In the sale of specific goods (Art. 1504)
What is the rule as to the risk of loss in the
sale of specific goods?
a. Unless otherwise agreed, the goods remain at
the seller's risk until the ownership therein is
transferred to the buyer.
b. 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.
c. Where delivery of the goods has been made
to the buyer or to a bailee for the buyer, in
pursuance of the contract and the ownership in
the goods has been retained by the seller
merely to secure performance by the buyer of
his obligations under the contract, the goods are
1 Art. 1262: “An obligation which consists in the delivery of a
determinate thing shall be extinguished if it should be lost or
destroyed without the fault of the debtor, and before he has
incurred in delay.”
2 1189: “If the thing is lost without the fault of the debtor, the
obligation shall be extinguished.”
3 Art. 1269: “The obligation having been extinguished by the
loss of the thing, the creditor shall have all the rights of action
which the debtor may have against third persons by reason of
the loss.”
12
 at the buyer's risk from the time of such
delivery.
d. Where actual delivery has been delayed
through the fault of either the buyer or seller
the goods are at the risk of the party in fault.
(ibid.)
What is the effect on the sold goods made by a
person not the owner thereof, and who does
not sell them under authority or with the
consent of the owner?
Subject to the provisions of this Title, where goods
are sold by a person who is not the owner thereof,
and who does not sell them under authority or with
the consent of the owner, the buyer acquires no
better title to the goods than the seller had.(Art.
1505, 1st par., 1st clause)
When will the buyer acquire the title of the
goods even when the seller is not the owner
thereof, and who does not sell them under
authority or with the consent of the owner?
1. The owner of the goods is by his conduct
precluded from denying the seller's authority to sell.
(Art. 1505, 1st par., 2nd clause)
2. The provisions of any factors' act, 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. (Art. 1505, 2nd par., no. 1)
3. The validity of any contract of sale under statutory
power of sale or under the order of a court of
competent jurisdiction. (Art. 1505, 2nd par., no. 2)
4. Purchases made in a merchant's store, or in fairs,
or markets, in accordance with the Code of
Commerce and special laws. (Art. 1505, 2nd par.,
no. 3)
What is the effect on the sold goods made by a
seller with voidable title?
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. (Art. 1506)
What are the conditions for the buyer to
acquire a good title to the goods made by the
seller with voidable title?
1. The buyer buys them in good faith.
2. The buyer buys them for value.
3. The buyer is without notice of the seller's defect
of title. (ibid.)
DELIVERY OF THE OBJECT
Where is the place of delivery?
1. Whether it is for the buyer to take possession of
the goods or of the seller to send them to the buyer
depends:
a. On the contract, express or implied, between
the parties.
b. Usage of trade to the contrary, if there is no
contract, express or implied, between the parties.
c. If no usage of trade, the place of delivery is the
seller's place of business if he has one, and if not
his residence.
d. In case of a contract of sale of specific goods,
which 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. (Art.
1521, 1st par.)
When is the time for delivery?
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 within
a reasonable time. (Art. 1521, 2nd par.)
What is the manner of delivery when goods
are in the hands of a third person?
A third person acknowledges to the buyer that he
holds the goods on the buyer's behalf. (Art. 1521,
3rd par.)
What is the effect if a third person did not
acknowledge to the buyer that he holds the
goods on the buyer's behalf?
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.
(ibid.)
When must demand or tender of delivery be
made?
Demand or tender of delivery may be treated as
ineffectual unless made at a reasonable hour. (Art.
1521, 4th par.)
Who pays expenses for putting the goods in a
deliverable state?
Unless otherwise agreed, the expenses of and
incidental to putting the goods into a deliverable
state must be borne by the seller. (Art. 1521, 5th
par.)
What is the rule when the quantity is less than
that agreed upon?
Where the seller delivers to the buyer a quantity of
goods less than he contracted to sell:
1. The buyer may reject them.
2. 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.
3. 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. (Art. 1522, 1st par.)
13

What is the rule when the quantity is more
than that agreed upon?
Where the seller delivers to the buyer a quantity of
goods larger than he contracted to sell:
1. The buyer may accept the goods included in the
contract and reject the rest.
2. If the buyer accepts the whole of the goods so
delivered he must pay for them at the contract rate.
3. Where the seller delivers to the buyer the goods
he contracted to sell mixed with goods of a different
description not included in the contract, the buyer
may accept the goods which are in accordance with
the contract and reject the rest. (Art. 1522, 2nd
par.)
What may the buyer do if the subject matter is
indivisible?
If the subject matter is indivisible, the buyer may
reject the whole of the goods. (Art. 1522, 4th par.)
What is the limitation in the delivery of more
or less than the quantity of the goods agreed
upon?
The provisions of this article are subject to any
usage of trade, special agreement, or course of
dealing between the parties. (Art. 1522, last par.)
What is the effect of the delivery by the seller
to the carrier?
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 delivery
of the goods to the buyer (Art. 1523, 1st clause).
When does delivery to the carrier not
considered a delivery to the buyer?
1. The right of possession or ownership may be thus
reserved notwithstanding the delivery of the goods
to the buyer or to a carrier or other bailee for the
purpose of transmission to the buyer.
2. Where goods are shipped, and 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.
3. Where goods are shipped, and 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. (Art. 1523, 2nd clause)
What shall the seller do to make the delivery
to the carrier a delivery to the buyer?
The seller must make such contract with the carrier
on behalf of the buyer as may be reasonable, having
regard to the nature of the goods and the other
circumstances of the case. (Art. 1523, 2nd par., 1st
sen.)
What is the exception?
Unless otherwise authorized by the buyer. (ibid.)
What is the effect if the seller omit to contract
with the carrier and the goods are lost or
damaged in course of transit?
1. The buyer may decline to treat the delivery to the
carrier as a delivery to himself.
2. May hold the seller responsible in damages. (Art.
1523, 2nd par., 2nd sen.)
What shall the seller do for the insurance of
the goods in transit?
Where goods are sent by the seller to the buyer
under circumstances in which 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. (Art. 1523,
3rd par., 1st clause)
What is the effect of the failure to give notice
to the buyer for the insurance of the goods?
If the seller fails to do so, the goods shall be deemed
to be at his risk during such transit. (Art. 1523, 3rd
par., 2nd clause)
What is the exception?
Unless otherwise agreed(Art. 1523, 3rd par., 1st
clause)
What is the rule in the sale of a real estate at
the rate of a certain price for a unit of
measurement or number or area?
1. 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. (Art. 1539, 1st
sen.)
2. If there is a greater area or number in the
immovable than that stated in the contract:
a. The vendee may accept the area included in the
contract and reject the rest.
b. If he accepts the whole area, he must pay for
the same at the contract rate. (Art. 1540.)
What is the remedy of the buyer if the seller
could not deliver the area of the real estate as
stated in the contract?
1. The vendee may choose a proportional reduction
of the price.
2. The vendee may rescind the contract.
When may the vendee rescind the contract if
the seller could not deliver the area of the
real estate as stated in the contract?
a. The lack in the area be not less than one-tenth
of that stated in the contract.
b. Even when the area is the same, if any part of
the immovable is not of the quality specified in the
contract.
14
 c. If the vendee would not have bought the
immovable had he known of its smaller area of
inferior quality.
Who may file an action for rescission?
The rescission, in this case, shall only take place at
the will of the vendee, when the inferior value of
the thing sold exceeds one-tenth of the price
agreed upon. (Art. 1539, 2nd par.)
What is the prescriptive period in filing an
action for rescission?
The actions shall prescribe in six months, counted
from the day of delivery. (Art. 1543)
What is the applicability of the proportional
reduction and rescission?
It shall apply to judicial sales. (Art. 1541)
What is the rule in the sale of real estate in
lump sum?
1. 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.
2. When two or more immovables as sold for a single
price, its area or number should be designated in the
contract, the vendor shall be bound to deliver all that
is included within said boundaries, even when it
exceeds the area or number specified in the
contract. (Art. 1542)
What is the remedy of the vendee on the
failure of the seller to deliver the thing
agreed?
1. The buyer is entitled to teh reduction in the price,
in proportion to what is lacking in the area or
number.
2. The contract may be rescinded because the
vendee does not accede to the failure to deliver what
has been stipulated. (ibid.)
What are included in the delivery of the thing
in a contract of sale?
1. The vendor is bound to deliver the thing sold.
2. All its accessions and accessories in the condition
in which they were upon the perfection of the
contract.
3. All the fruits shall pertain to the vendee from the
day on which the contract was perfected. (Art.
1537)
4. The obligation to deliver the thing sold includes
that of placing in the control of the vendee all that is
mentioned in the contract. (Art. 1539)
When is the vendor not obligated to deliver
the thing sold?
1. The vendee has not paid him the price.
2. No period for the payment has been fixed in the
contract. (Art. 1524)
3. The vendee should lose the right to make use of
the terms as provided in article 1198. (Art. 1536)
WARRANTY OF THE OBJECT SOLD
What is the effect of a condition not
performed by the other party?
1. A party may refuse to proceed with the contract.
2. He may waive performance of the condition.
3. If the other party has promised that the condition
should happen or be performed, such first
mentioned party may also treat the nonperformance
of the condition as a breach of warranty. (Art.
1545)
What condition may be imposed upon the
vendee for the performance of his obligation?
Where the ownership in the thing has not passed,
the buyer may treat the fulfillment by the seller of
his obligation to deliver the same as described and
as warranted expressly or by implication in the
contract of sale. (ibid.)
What are the kinds of warranty?
1. Express warranty.
2. Implied warranty.
What is express warranty?
Any affirmation of fact or any promise by the seller
relating to the thing if the natural tendency of such
affirmation or promise is to induce the buyer to
purchase the same, and if the buyer purchases the
thing relying thereon. (Art. 1546, 1st sen.)
What are the instances that may not be
considered a warranty?
1. Affirmation of the value of the thing.
2. Any statement purporting to be a statement of the
seller's opinion only. (Art. 1546, 2nd sen.)
When may a seller’s opinion be construed as a
warranty?
The seller made such affirmation or statement as an
expert and it was relied upon by the buyer. (ibid.)
When is there an implied warranty?
1. The seller has a right to sell the thing at the time
when the ownership is to pass, and that the buyer
shall from that time have and enjoy the legal and
peaceful possession of the thing. (warranty against
eviction)
2. The thing shall be free from any hidden faults or
defects, or any charge or encumbrance not declared
or known to the buyer.
3. A contrary intention appears. (Art. 1547)
To whom shall the implied warranty not
applicable?
1. A sheriff.
2. An auctioneer.
3. A mortgagee.
4. A pledge.
5. Other person professing to sell by virtue of
authority in fact or law, for the sale of a thing in
which a third person has a legal or equitable
15
interest. (ibid.)
When shall eviction take place?
1. There is a final judgment.
2. The vendee is deprived of the whole or of a part
of the thing purchased.
3. The deprivation was based on a right prior to the
sale or an act imputable to the vendor. (Art. 1548)
4. The vendor has been previously notified of the
complaint for eviction at the instance of the
purchaser. (Art. 1558; Canizares Tiana vs.
Torrejon, 21 Phil. 127)
Who are the party defendants in a complaint
for eviction?
The defendant vendee shall ask, within the time
fixed in the Rules of Court for answering the
complaint, that the vendor be made a co-defendant.
(Art. 1559)
Is appeal from judgment a requisite to make
the seller liable for eviction?
The vendee need not appeal from the decision in
order that the vendor may become liable for eviction.
(Art. 1549)
When may warranty be enforced?
The warranty cannot be enforced until a final
judgment has been rendered, whereby the vendee
loses the thing acquired or a part thereof. (Art.
1557)
When may the seller warrant in case of
eviction?
1. Deprivation of the thing purchased by a final
judgment based on a prior right. (Art. 1548)
2. The property is sold for nonpayment of taxes due
and not made known to the vendee before the sale.
(Art. 1551)
3. The judgment debtor is also responsible for
eviction in judicial sales, unless it is otherwise
decreed in the judgment. (Art. 1552)
When is the seller not liable in case of
eviction?
1. When adverse possession had been commenced
before the sale but the prescriptive period is
completed after the transfer. (Art. 1550)
2. The vendee has renounced the right to warranty
in case of eviction.
What is the liability of the seller?
The vendor shall only pay the value which the
thing sold had at the time of the eviction.
3. The vendee have made the waiver with
knowledge of the risks of eviction and assumed its
consequences. (Art. 1554)
When shall the vendor answer for the eviction
of the vendee?
1. The vendor shall answer for the eviction even
though nothing has been said in the contract on the
subject. (Art. 1548, 2nd par.)
2. When the warranty has been agreed upon. (Art.
1555, 1st sen.)
What may the parties agree as the legal
obligation of the vendor in case of the eviction
of the buyer?
1. May increase,
2. Diminish,
3. Suppress the legal obligation of the vendor. (Art.
1548, 3rd par.)
When is the suppression of the legal
obligation of the vendor not allowed?
Any stipulation exempting the vendor from the
obligation to answer for eviction shall be void, if he
acted in bad faith. (Art. 1553)
What action may the vendee have after losing
the thing by eviction?
1. He may demand the rescission of the contract.
What is the obligation of the vendor after
demanding the rescission of the contract by
reason of eviction in the part of the thing
sold?
It is the obligation of the vendor to return the
thing without other encumbrances that those
which it had when he acquired it.
2. Enforce the vendor's liability for eviction. (Art.
1556, 1st par.)
What are the instances the vendee may
demand rescission or enforce the vendor’s
liability for eviction?
1. The vendee lose, by reason of the eviction, a part
of the thing sold of such importance, in relation to
the whole, that he would not have bought it without
said part.
2. When two or more things have been jointly sold
for a lump sum, or for a separate price for each of
them, if it should clearly appear that the vendee
would not have purchased one without the other.
(Art. 1556)
What are the rules in case of a non-apparent
servitude?
The immovable sold should be encumbered with any
non-apparent burden or servitude, not mentioned in
the agreement, of such a nature that it must be
presumed that the vendee would not have acquired
it had he been aware thereof. (Art. 1560, 1st par.)
What is the remedy of the vendee when an
immovable was sold encumbered with any
non-apparent burden or servitude, not
mentioned in the agreement?
1. He may ask for the rescission of the contract.
2. He may prefer the appropriate indemnity. (ibid.)
When is the vendee not allowed to ask for
rescission or indemnity?
16
The non-apparent burden or servitude is recorded in
the Registry of Property. (ibid.)
When is the vendee entitled to ask rescission
or damages even if the non-apparent burden
or servitude is recorded in the Registry of
Property?
There is an express warranty that the thing is free
from all burdens and encumbrances. (ibid.)
What is the prescriptive period in asking
rescission or suing for damages?
Within one year, to be computed from the execution
of the deed. (Art. 1560, 2nd par.)
What remedy does the vendee have after one
year?
One year having elapsed, he may only bring an
action for damages within an equal period, to be
counted from the date on which he discovered the
burden or servitude. (Art. 1560, 2nd par.)
What are the liabilities of the vendor in case of
the eviction of the vendee?
1. The return of the value which the thing sold had
at the time of the eviction, be it greater or less than
the price of the sale.
2. The income or fruits, if he has been ordered to
deliver them to the party who won the suit against
him.
3. The costs of the suit which caused the eviction,
and, in a proper case, those of the suit brought
against the vendor for the warranty.
4. The expenses of the contract, if the vendee has
paid them.
5. The damages and interests, and ornamental
expenses, if the sale was made in bad faith. (Art.
1555)
When is there an implied warranty or
condition as to the quality or fitness of the
goods?
1. Where the buyer, expressly or by implication,
makes known to the seller the particular purpose for
which the goods are acquired, and it appears that
the buyer relies on the seller's skill or judgment
(whether he be the grower or manufacturer or not).
2. Where the goods are brought by description from
a seller who deals in goods of that description
(whether he be the grower or manufacturer or not).
(Art. 1562)
3. In the case of a contract of sale by sample, if the
seller is a dealer in goods of that kind and be free
from any defect rendering them unmerchantable
which would not be apparent on reasonable
examination of the sample. (Art. 1565)
4. An implied warranty or condition as to the quality
or fitness for a particular purpose may be annexed
by the usage of trade. (Art. 1564 )
When is there no warranty as to its fitness for
any particular purpose?
In the case of contract of sale of a specified article
under its patent or other trade name, there is no
warranty as to its fitness for any particular purpose,
unless there is a stipulation to the contrary. (Art.
1563)
What are the requisites to recover damages
because of hidden defects?
1. The defect must be hidden, which are not known
and could not have known.
2. The defect must exist at the time the sale was
made.
3. The defect must ordinarily have been excluded
from the contract.
4. The defect must be important, which render the
thing sold unfit for the use for which it is intended,
or diminish its fitness for such use.
5. The action must be instituted within the statute of
limitation. (Art. 1561)
What are the rights/remedies of the vendee in
hidden defects/faults?
1. Withdrawing from the contract with damages.
2. Demand a proportionate reduction of the price
with damages. (Art. 1567)
What is the liability of the vendor if the thing
sold is lost as a consequence of the hidden
fault?
1. The vendor shall bear the loss.
2. He shall be obliged to return the price and refund
the expenses of the contract.
3. Pay damages. (Art. 1568, 1st sen.)
Is the vendor responsible for hidden
defects/faults if he is not aware?
The vendor is responsible to the vendee for any
hidden faults or defects in the thing sold, even
though he was not aware thereof. (Art. 1566, 1st
par.)
What is the liability of the vendor not aware of
hidden faults/defects?
1. He shall return the price and interest thereon.
2. Reimburse the expenses of the contract which the
vendee might have paid. (Art. 1568, 2nd sen.)
When is the vendor not responsible for hidden
defects/faults if he is not aware?
a. There is a stipulation to the contrary.
b. The vendor was not aware of the hidden faults or
defects in the thing sold. (Art. 1566, 2nd par.)
What is the remedy of the vendee if the thing
sold had any hidden fault at the time of the
sale, and should thereafter be lost by a
17
fortuitous event or through the fault of the
vendee?
1. The vendee may demand of the vendor the price
which he paid, less the value which the thing had
when it was lost.
2. If the vendor acted in bad faith, he shall pay
damages to the vendee. (Art. 1569)
What is the applicability of the liabilities of the
vendor in hidden faults and defects?
It shall be applicable to judicial sales, except that
the judgment debtor shall not be liable for damages.
(Art. 1570)
What is the prescriptive period to exercise the
remedy and rights of the vendee?
It shall be barred after six months, from the delivery
of the thing sold. (Art. 1571)
What are the instances that a vendor shall not
be answerable for defects?
1. The defect is patent or those which may be
visible.
2. For those which are not visible if the vendee is an
expert who, by reason of his trade or profession,
should have known them. (Art. 1561)
3. Those animals sold at fairs or at public auctions,
or of live stock sold as condemned. (Art. 1574)
What is redhibitory defect?
If the hidden defect of animals, even in case a
professional inspection has been made, should be of
such a nature that expert knowledge is not sufficient
to discover it. (Art. 1576, 1st par.)
When is a veterinarian liable for damages due
to redhibitory defect?
The veterinarian, through ignorance or bad faith
should fail to discover or disclose it. (Art. 1576, 1st
par.)
What are the rules as to the liability of the
vendor to redhibitory defect?
1. Two or more animals are sold together, whether
for a lump sum or for a separate price for each of
them, the redhibitory defect of one shall only give
rise to its redhibition, and not that of the others.
2. If it should appear that the vendee would not
have purchased the sound animal or animals without
the defective one, the vendor shall be liable for both.
3. When a team, yoke pair, or set is bought, even if
a separate price has been fixed for each one of the
animals composing the same. (Art. 1572)
4. The redhibitory defect to the sale of animals shall
in like manner be applicable to the sale of other
things. (Art. 1573)
When is a vendor liable for the death of an
animal after its purchase?
1. The animal should die within three days after its
purchase.
2. The disease which cause the death existed at the
time of the contract. (Art. 1578)
What are the rights and remedies of the
vendee in redhibitory defect?
1. Withdrawing from the contract with damages.
2. Demand a proportionate reduction of the price
with damages. (Art. 1580)
What is the effect of a rescinded sale of an
animal with redhibitory defects?
1. The animal shall be returned in the condition in
which it was sold and delivered.
2. The vendee being answerable for any injury due
to his negligence, and not arising from the
redhibitory fault or defect. (Art. 1579)
When is the sale of an animal considered void?
1. The sale of animals suffering from contagious
diseases.
2. A contract of sale of animals if the use or service
for which they are acquired has been stated in the
contract, and they are found to be unfit therefor.
(Art. 1575 )
What is the form of sale of large cattle?
The form of sale of large cattle shall be governed by
special laws. (Art. 1581)
What is the prescriptive period in bringing a
redhibitory action?
The redhibitory action, based on the faults or defects
of animals, must be brought within forty days from
the date of their delivery to the vendee. (Art. 1577,
1st par.)
What is the basis of redhibitory action?
This action can only be exercised with respect to
faults and defects which are determined by law or by
local customs. (Art. 1577, 2nd par.)
OBLIGATIONS OF THE VENDEE
What are the principal obligations of the
vendee?
1. The vendee is bound to accept delivery.
2. To pay the price of the thing sold at the time and
place stipulated in the contract. (Art. 1582, 1st
par.)
ACCEPTANCE OF THE DELIVERY
What is the rule as to the delivery of goods by
instalments?
The buyer of goods is not bound to accept delivery
thereof by installments. (Art. 1583, 1st par.)
When is delivery of goods by instalments
allowed?
Unless otherwise agreed. (ibid.)
18

What are the effects of delivery of goods by
instalments separately paid and defective
deliveries in one or more instalments or the
buyer neglects of refuses without just cause
to take delivery of or pay for one or more
instalments?
1. It depends in each case on the terms of the
contract and the circumstances of the case, whether
the breach of contract is so material as to justify the
injured party in refusing to proceed further and suing
for damages for breach of the entire contract.
2. Whether the breach is severable, giving rise to a
claim for compensation but not to a right to treat the
whole contract as broken. (Art. 1583, 2nd par.)
What is the right of the buyer before the
acceptance of the delivery of the goods?
The buyer must be given a reasonable opportunity of
examining the goods delivered. (Art. 1584, 1st
par.)
What is the effect of delivered goods to the
buyer without examining them?
Where goods are delivered to the buyer, which he
has not previously examined, he is not deemed to
have accepted them. (ibid.)
What is the purpose of examining the goods
before acceptance?
For the purpose of ascertaining whether they are in
conformity with the contract. (ibid.)
What is the obligation of the seller before the
delivery of the goods to the buyer?
When the seller tenders delivery of goods to the
buyer, he is bound, on request, to afford the buyer a
reasonable opportunity of examining the goods for
the purpose of ascertaining whether they are in
conformity with the contract. (Art. 1584, 1st par.)
When is the buyer not entitled to examine the
goods?
1. When there is an agreement for non-examination
of the goods before acceptance. (ibid.)
2. Where goods are delivered to a carrier by the
seller upon the terms that the goods shall not be
delivered by the carrier to the buyer until he has
paid the price with indication "collect on delivery," or
otherwise. (Art. 1584, 2nd par.)
When is the buyer entitled to examination
even the goods are delivered “collect on
delivery”?
1. By agreement of the parties.
2. By the usage of trade permitting such
examination. (ibid.)
What are the instances that the buyer deemed
to have accepted the goods?
1. When he intimates to the seller that he has
accepted them.
2. When the goods have been delivered to him, and
he does any act in relation to them which is
inconsistent with the ownership of the seller.
3. When, after the lapse of a reasonable time, he
retains the goods without intimating to the seller
that he has rejected them. (Art. 1585)
4. When the buyer's refusal to accept the goods is
without just cause, the title thereto passes to him
from the moment they are placed at his disposal.
(Art. 1588)
What is the effect on the liability of the seller
after acceptance of the goods by the buyer?
Acceptance of the goods by the buyer shall not
discharge the seller from liability in damages or other
legal remedy for breach of any promise or warranty
in the contract of sale. (Art. 1586)
When is the seller not liable after the delivery
of the goods to the buyer?
1. Upon the express or implied agreement of the
parties.
2. The buyer fails to give notice to the seller of the
breach in any promise of warranty within a
reasonable time after the buyer knows, or ought to
know of such breach. (ibid.)
What is the effect if the buyer justifiably
refuses to accept the delivery?
1. He is not bound to return them to the seller.
2. It is sufficient if he notifies the seller that he
refuses to accept them.
3. He voluntarily constitutes himself a depositary
thereof and he shall be liable as such. (Art. 1587)
PAYMENT OF THE PRICE
Where shall the payment be made?
1. By the stipulation of the parties.
2. If the time and place should not have been
stipulated, the payment must be made at the time
and place of the delivery of the thing sold. (Art.
1582, 2nd par.)
When is the vendee liable to pay interest?
The vendee shall owe interest for the period
between the delivery of the thing and the payment
of the price, in the following three cases;
1. Should it have been so stipulated.
2. Should the thing sold and delivered produce fruits
or income.
3. Should he be in default, from the time of judicial
or extrajudicial demand for the payment of the price.
(Art. 1589)
When may a buyer suspend the payment of
the price?
1. The vendee is disturbed in the possession or
ownership of the thing acquired.
2. The vendee has reasonable grounds to fear such
disturbance:
19
 a. by a vindicatory action.
b. a foreclosure of mortgage. (Art. 1590)
What are the instances that the vendee cannot
suspend the payment of the price?
1. The vendor has caused the disturbance or danger
to cease.
2. The vendor gives security for the return of the
price in a proper case in case of the disturbance of
the possession of the buyer.
3. It has been stipulated that, notwithstanding any
such contingency, the vendee shall be bound to
make the payment.
4. A mere act of trespass (ibid.)
When can a vendee file an action for
rescission?
1. The vendor has reasonable grounds to fear the
loss of immovable property sold and its price.
What is the remedy of the vendee if no such
ground exist?
Should such ground not exist, the provisions of
article 11914 shall be observed. (Art. 1591)
2. Failure to pay the price at the time agreed upon in
the sale of an immovable property.
May the buyer still pay the price even after
the expiration of the period?
The vendee may pay, even after the expiration of
the period, though rescission has taken place.
When is the buyer not allowed to pay after
the expiration of the period?
When demand for rescission of the contract has
been made upon the vendee either judicially or by
a notarial act.
May the buyer demand from the court
extension to make payment after demand
for rescission?
After the demand for rescission, the court may not
grant him a new term. (Art. 1592)
Is the rescission of sale of real property
under Art. 1592 applicable to contract to
sell?
This is applicable to a sale of real property, not to
a contract to sell real property or to a promise to
sell real property, where title remains with the
vendor until fulfilment of a positive suspensive
condition, such as the full payment of the price.
4 Art. 1191. The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply
with what is incumbent upon him.
The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in
either case. He may also seek rescission, even after he has
chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be
just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of
third persons who have acquired the thing, in accordance
with Articles 1385 and 1388 and the Mortgage Law.
(Manuel vs. Rodriguez, L-13435, July 27,
1960)
3. With respect to movable property, the vendee,
upon the expiration of the period fixed for the
delivery of the thing, should not have appeared to
receive it.
4. With respect to movable property, the vendee,
having appeared, has not tendered the price at the
same time, unless a longer period has been
stipulated for its payment. (Art. 1593)
Who has the right to rescind the sale of
movable property in Art. 1593?
With respect to movable property, the rescission of
the sale shall of right take place in the interest of
the vendor. (ibid.)
Who is an unpaid seller?
1. When the whole of the price has not been paid or
tendered.
2. a. When a bill of exchange or other negotiable
instrument has been received as conditional
payment.
b. The condition on which it was received has been
broken:
i. By reason of the dishonor of the instrument.
ii. The insolvency of the buyer, or
iii. Otherwise. (Art. 1525)
Who is a seller?
The term "seller" includes:
1. An agent of the seller to whom the bill of lading
has been indorsed.
2. A consignor or agent who has himself paid.
3. Directly responsible for the price.
4. Any other person who is in the position of a seller.
(ibid.)
What are the rights of an unpaid seller?
Ownership passes to the buyer:
1. A lien on the goods or right to retain them for the
price while he is in possession of them.
2. In case of the insolvency of the buyer, a right of
stopping the goods in transitu after he has parted
with the possession of them.
3. A right of resale.
4. A right to rescind the sale.
Ownership has not passed the buyer:
1. A right of withholding delivery similar to and
coextensive with his rights of lien
2. Stoppage in transitu where the ownership has
passed to the buyer. (Art. 1526)
When does an unpaid seller have possessory
lien?
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. (Art. 1527)
20

What are the cases an unpaid seller have a
possessory lien?
1. Where the goods have been sold without 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. (ibid.)
Who may have possessory lien of the goods
aside from the seller?
1. He is in possession of the goods as agent.
2. He is in possession of the goods as bailee for the
buyer. (ibid.)
Does the seller have possessory lien after
partial delivery?
Where an unpaid seller has made part delivery of the
goods, he may exercise his right of lien on the
remainder. (Art. 1528)
When may an unpaid seller have no right of
lien in part delivery?
1. Such part delivery has been made under such
circumstances as to show an intent to waive the lien
2. Such part delivery has been made under such
circumstances as to show an intent to waive right of
retention. (ibid.)
When does an unpaid seller lose his
possessory lien?
1. When he delivers the goods to a carrier or other
bailee for the purpose of transmission to the buyer
without reserving the ownership in the goods or the
right to the possession thereof.
2. When the buyer or his agent lawfully obtains
possession of the goods.
3. By waiver thereof. (Art. 1529)
Does the unpaid seller lose his possessory lien
after an action was brought to get the price?
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. (ibid.)
When may an unpaid seller exercise the right
of stoppage in transitu?
When the buyer of goods is or becomes insolvent,
the unpaid seller who has parted with the possession
of the goods, that is to say, he may resume
possession of the goods at any time while they are in
transit, and he will then become entitled to the same
rights in regard to the goods as he would have had if
he had never parted with the possession. (Art.
1530)
When are goods in transit?
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, and the
carrier or other bailee continues in possession of
them, even if the seller has refused to receive them
back. (Art. 1531)
When are goods not in transit?
1. If the buyer, or his agent in that behalf, obtains
delivery of the goods before their arrival at the
appointed destination;
2. If, after the arrival of the goods at the appointed
destination, the carrier or other bailee acknowledges
to the buyer or his agent that he holds the goods on
his behalf and continues in possession of them as
bailee for the buyer or his agent; and it is immaterial
that further 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. (ibid.)
To whom are goods delivered if the buyer
chartered a ship, freight train, truck, or
airplane?
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.
(ibid.)
Can the unpaid seller exercise stoppage in
transitu if the goods are delivered inpart?
If part delivery of the goods has been made to the
buyer, or his agent in that behalf, the remainder of
the goods may be stopped in transitu, unless such
part delivery has been under such circumstances as
to show an agreement with the buyer to give up
possession of the whole of the goods. (ibid.)
How the right of stoppage in transit may be
exercised?
1. By obtaining actual possession of the goods.
2. By giving notice of his claim to the carrier or other
bailee in whose possession the goods are. (Art.
1532)
How may notice be given?
a. It may be given to the person in actual
possession of the goods.
b. It may be given to the principal. (ibid.)
When is the notice to the principal effectual?
The notice, to be effectual, must be given at such
time and under such circumstances that the
principal, by the exercise of reasonable diligence,
may prevent a delivery to the buyer. (ibid.)
What shall be done after the service of the
notice of stoppage in transit?
21
 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. (ibid.)
Who bears the expenses in the redelivery of
the goods after stoppage in transit?
The expenses of such delivery must be borne by
the seller. (ibid.)
When is the carrier or other bailee not
obliged to deliver the goods to the seller?
If, however, a negotiable document of title
representing the goods has been issued by the
carrier or other bailee, he shall not be obliged to
deliver or justified in delivering the goods to the
seller. (ibid.)
What is the condition to compel the carrier
or other bailee to deliver the goods to the
seller if there is a negotiable documents?
Such document is first surrendered for
cancellation. (ibid.)
What are the instances that an unpaid seller
may exercise the right to resell the goods?
1. The goods are of perishable nature.
2. The seller expressly reserves the right of resale in
case the buyer should make default.
3. The buyer has been in default in the payment of
the price for an unreasonable time. (Art. 1533)
What is the effect of the resale of the goods
made by the seller?
1. The seller shall not thereafter be liable to the
original buyer upon the contract of sale.
2. The seller shall not thereafter be liable for any
profit made by such resale.
3. The seller may recover from the buyer damages
for any loss occasioned by the breach of the contract
of sale. (ibid.)
Who acquires a good title after the resale?
Where a resale is made, as authorized, the buyer
acquires a good title as against the original buyer.
(ibid.)
Is notice to the original buyer necessary for
the resale of the goods?
1. 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.
2. It is not essential to the validity of a resale that
notice of the time and place of such resale should be
given by the seller to the original buyer. (ibid.)
When is notice of resale to the buyer
necessary?
1. The right to resell is not based on the perishable
nature of the goods.
2. The right to resell is not based upon an express
provision of the contract of sale.
3. 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. (ibid.)
What is the obligation of the seller in making a
resale?
The seller is bound to exercise reasonable care and
judgment in making a resale. (ibid.)
How may resale be made?
The seller may make a resale either by public or
private sale. (ibid.)
What is the prohibition on the seller in the
resale of the goods?
He cannot, however, directly or indirectly buy the
goods. (ibid.)
When may the seller rescind the transfer of
title to the buyer?
1. Where the seller expressly reserved the right to
do so in case the buyer should make default.
2. Where the buyer has been in default in the
payment of the price for an unreasonable time. (Art.
1534)
When is the rescission effective?
1. He has manifested by notice to the buyer.
2. By some other overt act showing an intention to
rescind. (ibid.)
What is the importance of giving notice of
rescission to the buyer?
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. (ibid.)
What is the effect of the rescission?
1. The seller may resume the ownership of the
goods.
2. The seller shall not thereafter be liable to the
buyer upon the contract of sale.
3. He may recover from the buyer damages for any
loss occasioned by the breach of the contract. (ibid.)
What is the effect on the right of the unpaid
seller on the sale of the goods made by the
buyer?
The unpaid seller's right of lien or stoppage in
transitu is not affected by any sale, or other
disposition of the goods which the buyer may have
made. (Art. 1535)
What are the instances that the seller lost the
right of lien or stoppage in transit?
1. The seller has assented to the sale made by the
buyer.
22
2. A negotiable document of title has been issued for
goods to any purchaser for value in good faith.
(ibid.)
ACTION FOR BREACH OF CONTRACT OF SALE
OF GOODS
What are the governing laws for actions for
breach of contract of sale of goods?
1. It shall be governed particularly by the provisions
on actions for breach of contract of sale of goods.
2. As to matters not specifically provided by the
provisions on actions for breach of contract of sale of
goods, by other applicable provisions on the law of
sales. (Art. 1594)
What is the remedy of the seller if ownership
passed to the buyer and neglects and refuses
to pay the goods?
The seller may maintain an action against him for
the price of the goods. (Art. 1595, 1st par.)
What is the remedy of the seller if ownership
has not passed to the buyer and neglects and
refuses to pay the goods on a certain day?
Where, under a contract of sale, the price is payable
on a certain day, irrespective of delivery or of
transfer of title and the buyer wrongfully neglects or
refuses to pay such price, the seller may maintain an
action for the price although the ownership in the
goods has not passed. (Art. 1595, 2nd par.)
What is the defense of the buyer for refusing
or neglecting to pay the price on a certain
day?
1. The seller at any time before the judgment in
such action has manifested an inability to perform
the contract of sale on his part.
2. The seller has an intention not to perform his
obligation. (ibid.)
When may the seller offer to deliver the goods
to transfer ownership?
1. The goods cannot readily be resold for a
reasonable price.
2. The buyer is not liable to the seller for labor
performed or expenses made. (Art. 1595, 3rd par.)
What is the effect if the buyer refuses to
receive the offer to deliver the goods?
1. The seller may notify the buyer that the goods are
thereafter held by the seller as bailee for the buyer.
2. Thereafter the seller may treat the goods as the
buyer's and may maintain an action for the price.
(ibid.)
When may the seller maintain an action for
non-acceptance against the buyer for
damages?
1. Where the buyer wrongfully neglects or refuses to
accept the goods.
2. Where the buyer wrongfully neglects or refuses to
pay for the goods. (Art. 1596, 1st par.)
What is the measure of damages that may be
awarded to the seller for non-acceptance?
1. The estimated loss directly and naturally resulting
in the ordinary course of events from the buyer's
breach of contract. (Art. 1596, 2nd par.)
2. The difference between the contract price and the
market or current price at the time or times when
the goods ought to have been accepted, or, if no
time was fixed for acceptance, then at the time of
the refusal to accept.
When is the measure of damages applicable
in no. 2?
Where there is an available market for the goods in
question, the measure of damages is, in the
absence of special circumstances showing
proximate damage of a different amount. (Art.
1596, 3rd par.)
When is the buyer liable in repudiating the
contract or notifiying the seller not to proceed
with the sale?
The buyer shall be liable to the seller for labor
performed or expenses of material amount
necessary on the part of the seller to enable him to
fulfill his obligations under the contract of sale made
before receiving notice of the buyer's repudiation or
countermand.
What is the amount of the award of damages?
The profit the seller would have made if the contract
or the sale had been fully performed. (Art. 1596,
4th par.)
What are the instances that the seller may
totally rescind the contract of sale of goods?
1. Where the goods have not been delivered to the
buyer and the buyer has repudiated the contract of
sale.
2. The buyer has manifested his inability to perform
his obligations thereunder.
3. The buyer has committed a breach thereof. (Art.
1597)
When may the seller totally rescind the
contract of sale?
By giving notice of his election so to do to the buyer.
(ibid.)
What is the liability of the seller in breaking a
contract to deliver specific or ascertained
goods?
Where the seller has broken a contract to deliver
specific or ascertained goods, a court may, on the
application of the buyer, direct that the contract shall
be performed specifically. (Art. 1598)
23
May the seller retain the goods and just pay
the damages?
The seller has no option of retaining the goods and
just pay the damages. (ibid.)
When may the seller be compelled to
specifically perform the contract?
The court makes the order upon application of the
buyer. The judgment or decree may be
unconditional, or upon such terms and conditions as
to damages, payment of the price and otherwise, as
the court may deem just. (ibid.)
What are the remedies of the buyer if the
seller commits a breach of warranty?
1. Accept or keep the goods and set up against the
seller, the breach of warranty by way of recoupment
in diminution or extinction of the price.
2. Accept or keep the goods and maintain an action
against the seller for damages for the breach of
warranty.
3. Refuse to accept the goods, and maintain an
action against the seller for damages for the breach
of warranty.
4. Rescind the contract of sale and refuse to receive
the goods or if the goods have already been
received, return them or offer to return them to the
seller and recover the price or any part thereof which
has been paid. (Art. 1599, 1st par.)
Are the above remedies cumulative or
alternative?
When the buyer has claimed and been granted a
remedy in anyone of these ways, no other remedy
can thereafter be granted, without prejudice to the
provisions of the second paragraph of article 1191.
(Art. 1599, 2nd par.)
What are the instances when the buyer is not
allowed to rescind the contract?
1. Where the goods have been delivered to the
buyer and he knew of the breach of warranty when
he accepted the goods without protest.
2. The buyer fails to notify the seller within a
reasonable time of the election to rescind.
3. The buyer fails to return or to offer to return the
goods to the seller in substantially as good condition
as they were in at the time the ownership was
transferred to the buyer. (Art. 1599, 3rd par.)
What is the remedy of the buyer if the
deterioration or injury of the goods is due to
the breach of warranty?
Such deterioration or injury shall not prevent the
buyer from returning or offering to return the
goods to the seller and rescinding the sale. (ibid.)
What is the effect if the buyer is entitled to
rescind the sale and elects to do so?
1. He shall cease to be liable for the price upon
returning or offering to return the goods.
2. If the price or any part thereof has already been
paid, the seller shall be liable to repay so much
thereof as has been paid, concurrently with the
return of the goods, or immediately after an offer to
return the goods in exchange for repayment of the
price. (Art. 1599, 4th par.)
What is the remedy of the buyer who is
entitled to rescind the sale and the seller
refuses to accept an offer of the buyer to
return the goods?
1. The buyer shall thereafter be deemed to hold the
goods as bailee for the seller, but subject to a lien to
secure the payment of any portion of the price which
has been paid.
2. The remedies for the enforcement of such lien
allowed to an unpaid seller by article 1526. (Art.
1599, 5th par.)
What is the amount of damages for the breach
of warranty of quality?
In the case of breach of warranty of quality, such
loss, in the absence of special circumstances
showing proximate damage of a greater amount, is
the difference between the value of the goods at the
time of delivery to the buyer and the value they
would have had if they had answered to the
warranty. (Art. 1599, last par.)
FORM OF A CONTRACT OF SALE
What is the formality needed in a contract of
sale?
1. A contract of sale may be made in writing.
2. By word of mouth.
3. Partly in writing and partly by word of mouth.
4. May be inferred from the conduct of the parties.
(Art. 1483)
What are the limitations in the forms of a
contract of sale?
Subject to the provisions of the Statute of Frauds
and of any other applicable statute. (ibid.)
Who bears the expenses and registration of a
contract of sale?
The expenses for the execution and registration of
the sale shall be borne by the vendor (Art. 1487)
When does the vendee bear the the expenses
and registration of a contract of sale?
There is a stipulation to the contrary. (ibid.)
SALE OF PERSONAL PROPERTY BY
INSTALLMENT
What are the remedies of a vendor in the sale
of personal property by instalment?
1. Exact fulfillment of the obligation, should the
vendee fail to pay.
24
2. Cancel the sale, should the vendee's failure to pay
cover two or more instalments.
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 foreclosure of the chattel mortgage, deos
the vendor have remedy of any unpaid
balance of the price?
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.
(Art. 1484)

In what other contract is sale of personal

property by instalment applicable?
It shall be applied to contracts purporting to be
leases of personal property with option to buy, when
the lessor has deprived the lessee of the possession
or enjoyment of the thing. (Art. 1485)

Shall instalments or rents paid be returned by

agreement of the parties?
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. (Art.1486)

25

SECTION 1 be negotiated:
General Provisions
SECTION 2 by the owner, if, by the terms of the
Article 1507. A document of title in which 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 document is a negotiable document
of title. (n)
Article 1508. A negotiable document of title may
be negotiated by delivery:
(1) Where by the terms of the document 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 document the
carrier, warehouseman or other bailee issuing
the same undertakes to deliver the goods to
the order of a specified person, and such
person or a subsequent indorsee of the
document has indorsed it in blank or to the
bearer.
Where by the terms of a negotiable
document of title the goods are deliverable to
bearer or where a negotiable document of
title has been indorsed in blank or to bearer,
any holder may indorse the same to himself
or to any specified person, and in such case
the document shall thereafter be negotiated
only by the indorsement of such indorsee. (n)
Article 1509. A negotiable document of title may
be negotiated by the indorsement of the person to
whose order the goods are by the terms of the
document deliverable. Such indorsement may be in
blank, to bearer or to a specified person. If indorsed
to a specified person, it may be again negotiated by
the indorsement of such person in blank, to bearer
or to another specified person. Subsequent
negotiations may be made in like manner. (n)
Article 1510. If a document of title which 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 which
contains words of like import, has placed upon it the
words "not negotiable," "non-negotiable" or the like,
such document may nevertheless be negotiated by
the holder and is a negotiable document of title
within 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
document of title or placing thereon the words "not
negotiable," "non-negotiable," or the like. (n)
Article 1511. A document of title which is not in
such form that it can be negotiated by delivery may
be transferred by the holder by delivery to a
purchaser or donee. A non-negotiable document
cannot be negotiated and the indorsement of such a
document gives the transferee no additional right.
(n)
Article 1512. A negotiable document of title may
(1) By the owner thereof; or
(2) By any person to whom the possession or
custody of the document has been entrusted
document the bailee issuing the document
undertakes to deliver the goods to the order
of the person to whom the possession or
custody of the document has been entrusted,
or if at the time of such entrusting the
document is in such form that it may be
negotiated by delivery. (n)
Article 1513. A person to whom a negotiable
document of title has been duly negotiated acquires
thereby:
(1) Such title to the goods as the person
negotiating the document to him had or had
ability to convey to a purchaser in good faith
for value and also such title to the goods as
the person to whose order the goods were to
be delivered by the terms of the document
had or had ability to convey to a purchaser in
good faith for value; and
(2) The direct obligation of the bailee issuing
the document to hold possession of the
goods for him according to the terms of the
document as fully as if such bailee had
contracted directly with him. (n)
Article 1514. A person to whom a document of title
has been transferred, but not negotiated, acquires
thereby, as against the transferor, the title to the
goods, subject to the terms of any agreement with
the transferor.
If the document is non-negotiable, such person also
acquires the right to notify the bailee who issued the
document of the transfer thereof, and thereby to
acquire the direct obligation of such bailee to hold
possession of the goods for him according to the
terms of the document.
Prior to the notification to such bailee by the
transferor or transferee of a non-negotiable
document of title, the title of the transferee to the
goods and the right to acquire the obligation of such
26
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. (n)
Article 1515. Where a negotiable document of title
is transferred for value by delivery, and the
indorsement of the transferor is essential for
negotiation, the transferee acquires a right against
the transferor to compel him to indorse the
document unless a contrary intention appears. The
negotiation shall take effect as of the time when the
indorsement is actually made. (n)
Article 1516. A person who for value negotiates or
transfers a document of title by indorsement or
delivery, including one who assigns for value a claim
secured by a document of title unless a contrary
intention appears, warrants:
(1) That the document is genuine;
(2) That he has a legal right to negotiate or
transfer it;
(3) That he has knowledge of no fact which
would impair the validity or worth of the
document; and
(4) That he has a right to transfer the title to
the goods and 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 without a document of title the
goods represented thereby. (n)
Article 1517. The indorsement of a document of
title shall not make the indorser liable for any failure
on the part of the bailee who issued the document
or previous indorsers thereof to fulfill their respective
obligations. (n)
Article 1518. The validity of the negotiation of a
negotiable document of title is not impaired by the
fact that the negotiation was a breach of duty on the
part of the person making the negotiation, or by the
fact that the owner of the document was deprived of
the possession of the same by loss, theft, fraud,
accident, mistake, duress, or conversion, if the
person to whom the document was negotiated or a
person to whom the document was subsequently
negotiated paid value therefor in good faith without
notice of the breach of duty, or loss, theft, fraud,
accident, mistake, duress or conversion. (n)
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 and a negotiable document of
title is issued for them they cannot thereafter, while
in possession of such bailee, be attached by
garnishment or otherwise or be levied under an
execution unless the document be first surrendered
to the bailee or its negotiation enjoined. The bailee
shall in no case be compelled to deliver up the actual
possession of the goods until the document is
surrendered to him or impounded by the court. (n)
Article 1520. A creditor whose debtor is the owner
of a negotiable document of title shall be entitled to
such aid from courts of appropriate jurisdiction by
injunction and otherwise in attaching such document
or in satisfying the claim by means thereof as is
allowed at law or in equity in regard to property
which cannot readily be attached or levied upon by
ordinary legal process. (n)
Article 1544. If the same thing should have been
sold to different vendees, the ownership shall be
transferred to the person who may have first taken
possession thereof in good faith, if it should be
movable property.
Should it be immovable property, the ownership shall
belong to the person acquiring it who in good faith
first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall
pertain to the person who in good faith was first in
the possession; and, in the absence thereof, to the
person who presents the oldest title, provided there
is good faith. (1473)
SECTION 3
Conditions and Warranties
CHAPTER 6
CHAPTER 7
Extinguishment of Sale
Article 1600. Sales are extinguished by the same
causes as all other obligations, by those stated in the
preceding articles of this Title, and by conventional
or legal redemption. (1506)
SECTION 1
Conventional Redemption
Article 1601. Conventional redemption shall take
place when the vendor reserves the right to
repurchase the thing sold, with the obligation to
comply with the provisions of article 1616 and other
stipulations which may have been agreed upon.
(1507) ARTICLE 1602. The contract shall be
presumed to be an equitable mortgage, in any of the
following cases:
(1) When the price of a sale with right to
repurchase is unusually inadequate;
(2) When the vendor remains in possession
as lessee or otherwise;
(3) When upon or after the expiration of the
right to repurchase another instrument
extending the period of redemption or
granting a new period is executed;
(4) When the purchaser retains for himself a
part of the purchase price;
(5) When the vendor binds himself to pay the
taxes on the thing sold;
(6) In any other case where it may be fairly
inferred that the real intention of the parties
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 is that the transaction shall secure the
payment of a debt or the performance of any
other obligation.
In any of the foregoing cases, any money, fruits, or
other benefit to be received by the vendee as rent or
otherwise shall be considered as interest which shall
be subject to the usury laws. (n)
Article 1603. In case of doubt, a contract
purporting to be a sale with right to repurchase shall
be construed as an equitable mortgage. (n)
Article 1604. The provisions of article 1602 shall
also apply to a contract purporting to be an absolute
sale. (n)
Article 1605. In the cases referred to in articles
1602 and 1604, the apparent vendor may ask for the
reformation of the instrument. (n)
Article 1606. The right referred to in article 1601,
in the absence of an express agreement, shall last
four years from the date of the contract.
Should there be an agreement, the period cannot
exceed ten years.
However, the vendor may still exercise the right to
repurchase within thirty days from the time final
judgment was rendered in a civil action on the basis
that the contract was a true sale with right to
repurchase. (1508a)
Article 1607. In case of real property, the
consolidation of ownership in the vendee by virtue of
the failure of the vendor to comply with the
provisions of article 1616 shall not be recorded in the
Registry of Property without a judicial order, after
the vendor has been duly heard. (n)
Article 1608. The vendor may bring his action
against every possessor whose right is derived from
the vendee, even if in the second contract no
mention should have been made of the right to
repurchase, without prejudice to the provisions of
the Mortgage Law and the Land Registration Law
with respect to third persons. (1510)
Article 1609. The vendee is subrogated to the
vendor's rights and actions. (1511)
Article 1610. The creditors of the vendor cannot
make use of the right of redemption against the
vendee, until after they have exhausted the property
of the vendor. (1512)
Article 1611. In a sale with a right to repurchase,
the vendee of a part of an undivided immovable who
acquires the whole thereof in the case of article 498,
may compel the vendor to redeem the whole
property, if the latter wishes to make use of the right
of redemption. (1513)
Article 1612. If several persons, jointly and in the
same contract, should sell an undivided immovable
with a right of repurchase, none of them may
exercise this right for more than his respective share.
The same rule shall apply if the person who sold an
immovable alone has left several heirs, in which case
each of the latter may only redeem the part which
he may have acquired. (1514)
Article 1613. In the case of the preceding article,
the vendee may demand of all the vendors or co-
heirs that they come to an agreement upon the
repurchase of the whole thing sold; and should they
fail to do so, the vendee cannot be compelled to
consent to a partial redemption. (1515)
Article 1614. Each one of the co-owners of an
undivided immovable who may have sold his share
separately, may independently exercise the right of
repurchase as regards his own share, and the
vendee cannot compel him to redeem the whole
property. (1516)
Article 1615. If the vendee should leave several
heirs, the action for redemption cannot be brought
against each of them except for his own share,
whether the thing be undivided, or it has been
partitioned among them.
But if the inheritance has been divided, and the thing
sold has been awarded to one of the heirs, the
action for redemption may be instituted against him
for the whole. (1517)
Article 1616. The vendor cannot avail himself of
the right of repurchase without returning to the
vendee the price of the sale, and in addition:
(1) The expenses of the contract, and any
other legitimate payments made by reason of
the sale;
(2) The necessary and useful expenses made
on the thing sold. (1518)
Article 1617. If at the time of the execution of the
sale there should be on the land, visible or growing
fruits, there shall be no reimbursement for or
prorating of those existing at the time of redemption,
if no indemnity was paid by the purchaser when the
sale was executed.
Should there have been no fruits at the time of the
sale and some exist at the time of redemption, they
shall be prorated between the redemptioner and the
vendee, giving the latter the part corresponding to
the time he possessed the land in the last year,
counted from the anniversary of the date of the sale.
(1519a)
Article 1618. The vendor who recovers the thing
sold shall receive it free from all charges or
mortgages constituted by the vendee, but he shall
respect the leases which the latter may have
executed in good faith, and in accordance with the
custom of the place where the land is situated.
(1520)
SECTION 2
Legal Redemption
Article 1619. Legal redemption is the right to be
subrogated, upon the same terms and conditions
stipulated in the contract, in the place of one who
acquires a thing by purchase or dation in payment,
or by any other transaction whereby ownership is
transmitted by onerous title. (1521a)
Article 1620. A co-owner of a thing may exercise
the right of redemption in case the shares of all the
other co-owners or of any of them, are sold to a
third person. If the price of the alienation is grossly
excessive, the redemptioner shall pay only a
reasonable one.
Should two or more co-owners desire to exercise the
right of redemption, they may only do so in
28
proportion to the share they may respectively have
in the thing owned in common. (1522a)
Article 1621. The owners of adjoining lands shall
also have the right of redemption when a piece of
rural land, the area of which does not exceed one
hectare, is alienated, unless the grantee does not
own any rural land.
This right is not applicable to adjacent lands which
are separated by brooks, drains, ravines, roads and
other apparent servitudes for the benefit of other
estates.
If two or more adjoining owners desire to exercise
the right of redemption at the same time, the owner
of the adjoining land of smaller area shall be
preferred; and should both lands have the same
area, the one who first requested the redemption.
(1523a) ARTICLE 1622. Whenever a piece of urban
land which is so small and so situated that a major
portion thereof cannot be used for any practical
purpose within a reasonable time, having been
bought merely for speculation, is about to be re-sold,
the owner of any adjoining land has a right of pre-
emption at a reasonable price.
If the re-sale has been perfected, the owner of the
adjoining land shall have a right of redemption, also
at a reasonable price.
When two or more owners of adjoining lands wish to
exercise the right of pre-emption or redemption, the
owner whose intended use of the land in question
appears best justified shall be preferred. (n)
Article 1623. The right of legal pre-emption or
redemption shall not be exercised except within
thirty days from the notice in writing by the
prospective vendor, or by the vendor, as the case
may be. The deed of sale shall not be recorded in
the Registry of Property, unless accompanied by an
affidavit of the vendor that he has given written
notice thereof to all possible redemptioners.
The right of redemption of co-owners excludes that
of adjoining owners. (1524a)
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