Sales Q A

SALES
NATURE AND FORM OF CONTRACT The elements of a contract of sale are a.) consent or meeting
of the minds, b.) Determinate subject matter, c.) price
Articles 1458 -1488 certain in money or its equivalent.
Define sale?
What are the stages in a contract of sale?
Sale is a contract where one party (seller/vendor) obligates
himself to transfer the ownership of and deliver the The stages of a contract of sale are a.) generation or
determinate thing, while the other party (buyer or vendee) negotiation, b.) perfection, c.) consummation.
obligates himself to pay for said thing a price certain in
money or its equivalent. (Art. 1458)
Distinguish sale from a lease contract?
Suppose art. 1458 didn’t specify that the seller must transfer In a sale, the seller transfer ownership; in a lease contract,
the ownership of the object, does he still have this the lessor or landlord transfer merely the temporary
obligation? possession and use of the property.
Yes, for after all, this transfer of ownership is clearly the

fundamental aim of the contract. A buyer is not interested in Classify or give kinds of a contract of sale?
a mere physical transfer: he is after ownership.
Generally, they are: 1. Absolute-when the sale is not subject
to any condition, 2. Conditional- when the sale contemplates
What are the characteristics of the contract of sale? a contingency or is subject to a certain condition.
A contract of sale is a.) Consensual; b.) Bilateral reciprocal;

c.) Onerous; d.) Commutative; e.) Principal; f.) Nominate Define natural elements of a contract of sale?
Those which are inherent in the contract, and which in the

Why is the contract of sale an onerous contract? absence of any contrary provision, are deemed to exist in the
contract.
A sale is onerous, because to acquire the rights, valuable
considerations must be given.
What is an accidental elements in a contract of sale?
Why is the contract of sale a consensual contract? Those which may be present or absent in the stipulation,
such as place or time of payment, or the presence of a
Sale is consensual, because the contract is perfected by mere condition.
consent.
Why is the contract of sale a bilateral reciprocal contract?

What are the requisites of the thing which constitutes the
Sale is bilateral consensual, because both parties are object of sale?
bound by obligations dependent upon each other.
1. The thing must be existing. 2. Thing must be licit or legal.
3. thing must be determinate or capable of being determined
Why is the contract of sale a commutative contract? without the need of a new contract. 4. The vendor must have
a right to transfer ownership of the thing at the time it is
Sale is commutative as a rule, because the values delivered.
exchanged are almost equivalent to each other.
When is a thing determinate?
It is determinate when the thing is particularly designated or

Why is the contract of sale a principal contract? physically segregated from all others of the same class. But a
thing is still determinate if at the time the contract is entered
Sale is a principal contract, because for the contract to into, the thing is capable being more determinate without
validly exist there is no necessity for it to depend upon the necessity of a new further agreement of the parties. (Art.
existence of another valid contract. 1460)
Why is the contract of sale a nominate contract? Seller sold 500 piculs of sugar to buyer. Because seller was
not able to produce 500 piculs of sugar on said plantation he
Sale is a nominate contract, because the Code refers to it by a was not able to deliver. Is he liable?
special designation, i.e., the contract of sale.
Yes, because no specific lot of sugar can be pointed out as
What are elements of a contract of sale? having been lost. Sugar here was still generic.
Is a sale of a future thing valid?

Civil Law Review Project
Obligations to Quasi Contracts IV-A 4
SALES
Yes, provided that the sale of a mere hope or expectancy is

deemed subject to the condition that the thing will come into Is there a distinction between a contract of sale and a
existence. contract to sell?
Yes. In the contract of sale, the title pass to the buyer upon
Distinguish Rei Sperati from Emptio Spei? delivery of the thing sold, while, in contract to sell,
ownership is reserved to the seller and is not to pass until full
Emptio rei sperati (sale of an expected thing), if the payment of the purchase price is made.
expected thing does not materialize, the sale is not effective.
While, emptio spei ( sale of the hope itself) it does not
matter whether the expected thing materialized or not; what Y acquired a booklet of 1oo sweeptake tickets directly from
is important is that the hope itself validly existed. (Art. 1461) PCSO. Y, paid 18,000 for the booklet, less the customary
discount. What kind of contract did Y enter into?
What is Emptio rei speratae? Y entered into a contract of purchase and sale. Y, become the
agent of PCSO.
Emptio rei speratae is a sale of a future thing certain as to
itself but uncertain as to its quality or quantity. Such sale is
subject to the condition that it shall come into existence. What is the rule to determine if the contract is one of sale or
a piece of work?
Give examples of things having potential existence and If ordered in the ordinary course of business, Sale. If
therefore may be objects of valid sales? manufactured specially and not for the market it is a contract
for a piece of work. (Art. 1467)
Wine which a vineyard is expected to produce; fruits to grow;
milk that a cow may yield in the coming year: wool which
may grow upon a sheep. What is a contract for a piece of work?
Contract for a piece of work- goods are to be manufactured

What are future goods? specially for the customer and upon his special order, and
not for the general market.
Future goods are those still to be a.) manufactured, b.)
raised, c.) acquired by seller after the perfection of the
contract, d.) things whose acquisition depends upon If I ask someone to construct a house for me, is this a
contingency which may or may not happen. (Art. 1462) contract of sale or for a piece of work.
It is a contract for a piece of work. But, if he will construct on

What are the goods which may form the subject of a contract his own land, and I will get both the land and the house, it
of sale? would seem that this can be very well treated as a sale.
They may either be: 1. Existing goods, 2. Future goods.

What is the rule to determine whether the contract entered
into is one of sale or barter?
May the sole owner of a thing sell an undivided interest
therein? 1st rule- intent of parties. 2nd rule- if intent does not clearly
appear: 1. If thing is more valuable than money- barter, 2.
Yes, Art, 1463 of the civil code states: The Sole owner of a 50-50- sale, 3. If thing is less valuable than money- sale.
thing may sell an undivided interest therein. (Art. 1468)
What is the effect if the sole owner of a thing would sell an What is barter?
undivided interest in such thing?
By the contract of barter or exchange, one of the parties
The buyer becomes a co-owner over the thing. binds himself to give one thing in consideration of the other’s
promise to give another thing.
May a property subject to reserva troncal be sold?

If I give my truck worth 1 million to Sacra in consideration of
Yes, Article 1465 of the civil code states. Things subject to a Sacra’s giving to me .4 million cash, and a car worth .6
resolutory condition may be the object of a contract of sale. million, is the transaction a sale or a barter?
It depends on the mutual intent of the parties. If the intent is

Distinguish sale from agency? not clear, the transaction is barter.
In sale, the buyer pays the price; the agent delivers the price
which in turn he got from his buyer. In sale, the buyer after What are the requisites of price in the contract of sale?
delivery becomes the owner; the agent who is supposed to
sell does not become the owner, even if the property has
already been delivered to him.
SALES
Price must observe the following requisites: 1. Price must be

in money or its equivalent. 2. Price must be certain or
ascertainable. 3. Price must be real not simulated. Why price is cannot be left to the discretion of one of the
contracting parties?
When price is considered certain? Price cannot be left to the discretion of one of the contracting
parties for it cannot be said that the other consented to the
Price is considered certain when it is referred to another price he did not and could not previously know. Moreover, to
thing certain, or it will be determined by a specified person. be just, the price must be determined impartially by both
parties.
Rey’s right in Y Company was sold in 3/100 of the entire net

value of the business. Said value was, in turn, to be fixed by a What is the effect if determination of price be left to the
specified board of assessors. Is the price certain? vendor?
Yes, for there was no need of any further meeting of the If left to the judgment of the vendor, the transaction may be
minds on the price. valid as donation if he can share that such was the intention
of both parties to the contract and if there are no reasons of a
different nature which militate against its validity.
What is the effect of gross inadequacy of price?
As a rule, it does not affect the contract of sale, except it may Is the contract perfected if the price fixed by one party but
indicate: 1. Defect in the consent; or 2. The parties really accepted by the other?
intended a donation or some other forms of contract;
however, if the inadequacy of price results in lesion or badge Yes, where the price fixed by one party is accepted by the
of fraud against the creditors, then, the contract is other, the contract is deemed because in this situation there
rescissible. exist true meeting of minds upon the price.
May the fixing of a price left to the discretion of one of the Almar sold to Basty his car. It was agreed that Basty would
contracting parties? fix the price a week later. At the appointed time Basty named
the price at P500,000.00. Almar agreed. Is the sale
No, as a general rule. However, if the price fixed is accepted perfected?
by the other party, the sale is perfected.
Yes, for there exist a true meeting of mind between Almar
and Basty when Basty accepted the price being named by
If the price is simulated, what is the effect on the contract of Almar.
sale?
The sale is void but the act may be shown to have been in Give the effect of failure to determine price where the
reality a donation or some other act or contract. contract is executor?
If the price cannot be determined in accordance with the

What is the effect if the simulated price is fictitious? Civil Code, or any other manner, the contract without is
without effect. Consequently, there is no obligation on the
There being no price, there is no cause or consideration; part of the vendor to deliver the thing and the part of the
hence, the contract is void as a sale. vendee to pay.
When price is considered certain? What if delivery has been made what would be the effect?
Price is considered certain if it could be determined with If the thing or any part thereof has already been delivered or
reference to another thing certain. appropriated by the buyer, the latter must pay a reasonable
price therefore. The reasonable price or value of goods is
generally the market price of the object of the contract.
What could be the effect if the price of securities cannot be
ascertained?
Ayson and Badz entered into a contract that is complete in
If the price cannot really be ascertained, the sale is itself, except that there was no agreement with reference to
inefficacious because what last clause of article 1472 provides the price. What would be the basis of the price of the object
is that price must be certain. of the contract?
If the terms of sale are complete except for an agreement

Delia sold to Mar a fountain pen today at the price equivalent with reference to the price, the Law implies a price
to the stock quotation two days from today of 100 shares of equivalent to the reasonable value of the goods in case where
Jacks Corporation. Is the sale valid? the buyer has appointed the thing sold. And where the buyer
accepts the delivery knowing the price claimed by the seller,
Yes provided the stock quotation price two days later can be he cannot thereafter refuse to pay for it at price even when
ascertained, otherwise if it cannot be ascertained at the time there is no agreement as to price.
or two days from today the sale is inefficacious.
SALES
If the vendor has made use of the thing delivered, is he still When is sale by auction perfected?
not obliged to pay the vendee?
The sale by auction is perfected when the auctioneer
Where the goods are delivered and was used by the buyer, he announces its perfection by the fall of the hammer or in other
should not be allowed to enrich himself unjustly at another’s customary manner.
expense. So he must pay reasonable price. The seller’s price
however, must be the one to be paid if the buyer knew how
much the seller was charging and there was an acceptance of May the bidder retract his bid before the hammer falls?
the goods delivered. This implies that there is an implied
assent to the price fixed. Yes. Every bidding is merely an offer and, therefore, before it
is accepted, it may be withdrawn. The assent is signified on
the part of the seller by knocking down the hammer.
What are the requisites for a perfection of a Contract of
Purchase or Contact of Sale?
May the auctioneer withdraw the goods from the sale before
The requisites for a perfection of a Contract of Purchase or the fall of the hammer?
Contact of Sale are:
1. From the moment the parties has agreed upon a Yes, unless the auction has been announced to be without
determinate thing; reserve. The bid is merely an offer, not an acceptance of an
2. The object of the contract; and offer ton sell. Therefore it can be rejected. What the
3. Certain price whether in money or something auctioneer does in withdrawing is merely reject the offer.
representing it.
When seller can bid in the auction?
When is Contract of Sale perfected? The seller or his agent may bid in an auction sale provided:
1. Such right was reserved;
The Contract of Sale being a consensual contract is perfected 2. Notice was given that the sale is subject to a right to bid
by mere consent. on behalf of the seller; or
3. The right to bid by the seller is not prohibited by law or
stipulation.
Give the effect of failure to pay price, or the non-delivery of
the thing bought?
Can the seller employ others to bid for him?
Valid. Failure to pay price, or the non-delivery of the thing
bought will not render the contract not perfected because Yes, provided he has notified the public that the auction is
Contract of sale is a consensual contract thus perfected by subject to the right to bid on behalf of the seller. Notice to
mere consent. public must not be fraudulent.
Delivery of the thing bought or payment of the price is not

necessary for the perfection of the contract and failure of the Who may attack the Auction sale?
vendee to pay the stipulated price after the execution of the
contract does not convert the contract into one without cause Last sentence of paragraph 4, article 1476 does not limit the
or consideration as to vitiate the validity of the contract, it rest of paragraph that in case seller actually buys, he only can
not being essential for the existence of the cause that complain. Objection to such sale is also available to the
payment or full payment be made at the time of the contract. debtor in an auction for deficiency after the sale.
For lack of consideration act results at most in default on the
part of the vendee for which the vendee may exercise his
legal remedies. When is ownership to the thing sold transferred?
Ownership is transferred from the moment there is either

Give the exceptions where contract is perfected by mere actual or constructive delivery even if the price is not fully
delivery? paid, when the sale is conditional and ownership is
transferred not upon delivery but payment of price.
The exceptions are:
1. When by virtue of stipulation of parties or law of the
sale is subject to suspensive condition, the contract is What are the kinds of delivery?
perfected only from the fulfillment of the condition.
2. Where the contract was expressly made subject to the The kinds of delivery are:
approval of higher authorities. 1. Actual;
2. Constructive
What is the effect of perfection?

What is the concept of reservati domini or contractual
One’s contract is perfected, nothing is left to the parties to do reservation of title?
except the execution of their mutual obligation, whereby it
gives the vendee the right to compel the vendor to deliver the It is an stipulation where the parties agree that despite
thing but acquire no real right over it until the delivery is delivery, the ownership of the t ing shall remain with the
made. seller even the purchaser has fully paid the price.

SALES
Is the contractual reservation valid?

Who bears the lost or deterioration?
Yes. The parties may stipulate that despite delivery, the
ownership of the thing shall remain with the seller until the a. If the thing is lost before perfection, the seller and not the
purchaser has fully paid the price. one who intends to purchase bears the loss, because there
was no cause or consideration, thus, there was no contract.
Distinguish the concept of pactum reservati domini and b. If thing is lost at the time of perfection, the contract is void
contract to sell? or inexistent. The legal effect is the same as when the object
is lost before the perfection of the Contract of sale.
The distinctions are: c. If the thing is lost after perfection but before its delivery, that
1. Pactum reservati domini is a form of conditional is, even before the ownership is transferred to the buyer, the
contract, while, contract to sell is a contract preparatory risk of loss is shifted to the buyer, an exception to the rule of
to Contract of sale; res peruit domino.
2. In the first delivery of the object of contract has been d. If the thing is lost after delivery, the buyer bears the loss
made, while in the second, there is no delivery yet; fo;;owing the general rule res peruit domino.
3. In the first non-payment the injured party may file an
action for specific performance or rescission of the
contract, while, in the second there can be no action , B bought a vessel from S on condition that S could prove he
for it merely prevents execution of the Contract of Sale. was the owner thereof by pertinent document. Before the
condition was complied with, the vessel sank in a storm. Can
s demand the price?
What are the kinds of promise (scope) provided in article
1479? No, S cannot demand the price. The condition was never
fulfilled, therefore the Contract of Sale was never perfected.
The scopes of article 1479 are: Thus S bears the loss.
1. An accepted unilateral promise to sell where the
promise decides to buy;
2. An accepted unilateral promise to buy when the What if the condition was fulfilled. Is the Sale been
promise decides to buy; perfected?
3. A bilateral promise to buy where the promise decides to
sell reciprocally accepted, where either party to decides Yes. If the condition had been fulfilled, the sale would have
to exact compliance. been perfected, and B would have to pay the price even if it
had not yet been delivered to him.
Give the effect if unilateral promise is unaccepted?

Bea’s hi-lux was sold on credit. Shortly after its delivery, it
A unilateral promise or offer45 to sell or to buy a thing which was destroyed by fortuitous event. Is the buyer still liable for
is not accepted creates no juridical effect or legal bond. Such the price?
accepted offer is called policitation.
Yes, because after its delivery to him, he became the owner,
Define option? and therefore it is who bears the loss.
Option is a contract granting a person the privilege to buy or

not; to buy a certain object at any time within the agreed Define fungibles?
period at a fixed time.
Fungibles are personal property which may be replaced with
equivalent thing. It is apparently same as consumables.
What is the effect of bilateral promise (mutual promise)?
When one party accepts the other’s promise to sell, a What is the coverage of article 1481?
determinate thing for a price certain, it is reciprocally
demandable. It generates a binding contract of sale. The coverage of the article is as follows:
1. Sale of goods be description;
2. Sale of goods by sample; and
How must acceptance of unilateral promise be done? 3. Sale of goods by description and sample
The acceptance of unilateral promise to sell must be plain,

clear, and unconditional. Therefore, if there is a qualified Define the coverage:
acceptance with terms different from the offer, there is no
acceptance, that is no promise to buy and there is no 1. Sale of goods be description accrue where the seller
perfected sale. sells things as being of particular kind, the buyer not
knowing whether the seller’s representations are true or
false, but relying on them as true; or as otherwise
How long is the offer bound by his promise when option is stated, where the purchaser has not seen the article sold
granted? release on the description given him by the vendor, or
has seen the goods but the want of identity do not
The offer is bound by his promise by the stipulation of the apparent on inspection.
parties. If there is no stipulation then the Court will fix the 2. Sale of goods by sample, it is that where the seller
term. warrants that the bulk of the goods shall correspond
SALES
with the sample in kind, quality, and character. Only

the sample is exhibited. The bulk is not present and so
there is no opportunity to exercise or inspect it. What is the form of a contract of Sale?
3. Sale of goods by description and sample, must satisfy all
warranties appropriate to either kind of sale, and it is Contract of Sale may entered into in any form provided the
not sufficient that the bulk of the goods correspond with essential requisites for its validity are present.
the sample if they do not also correspond with the
description.
When statute of fraud applicable?
May the contract be rescinded if the bulk of goods do not Statute of frauds is applicable only to executor contracts,
correspond with the description? where no performance has been done and not to contracts
which are totally or partially performed.
Yes. If the bulk of goods does not correspond with the
description the buyer may rescind the contract.
What is the reason for the rule that statute of fraud is
applicable only to executor contracts?
When may the buyer rescind a contract?
The reason of the rule is that partial performance, like the
The buyer may rescind a contract when: writing, furnishes reliable evidence of the intention of the
1. If the bulks of goods delivered do not correspond with parties or the existence of the contract. A contrary rule would
the description; result in injustice or unfairness to the party who has
2. If the bulks of goods delivered do not correspond with performed his obligation.
the sample.
Dan orally sold a parcel of land to Jerry. Is the sale valid?

Is it sufficient that the bulk of goods correspond with the
sample, but not correspond with the description? Yes, the sale is valid but it is unenforceable but the law
requires that sale of real property must be in writing to be
No, it is not sufficient that the bulk of goods correspond with enforceable.
the sample, but not correspond with the description.
If the contract of sale is in private writing, then it is valid and
binding only as between the parties and not as against third
Define earnest money? persons without notice until sale is registered in the Registry
of Property. Dan has the right to compel Jerry to put the
Earnest money is a money given by the buyer to the seller to contract in a public document so that it be registered to
had the bargain. It is actually a partial payment of the effect third person.]
purchase price and is considered proof of perfection of the
contract.
In a sale of real property, if made through an agent. Is it
valid?
Is earnest money deductable from the total price?
It is void, unless the agent’s authority in writing and to be
Yes, since earnest money constitutes advance payment it effective against third person. And that it must be registered
must be deducted from the total price. with the Register of Deeds.
What is option money? What are the limitations on the forms of a Contract of Sale?
Option money is a money given as distinct consideration for The limitations are:
the option contract. 1. by the provision of the Statute of fraud; or
2. by the provision of applicable statute.
Distinguish earnest money and option money? Enumerate the remedies of vendor in sale of personal
property payable in installment?
Earnest money as distinguish from option money is that:
1. the former is part of purchase while the latter is the The vendor of personal property payable in installments may
money given as distinc consideration for the option exercise any of the following remedies:
contract; 1. elect fulfillment upon the vendee’s failure to pay;
2. the former is given only when there is already sale, 2. cancel the sale, if the vendee shall have failed to pay two
while the latter applies to a sale not yet perfected; and or more installment; or
3. when earnest money is given, buyer is bound to pay 3. foreclosure the chattel mortgage, if one has been
balance, while when the woud- buyer fives option constituted if the vendee shall have failed to pay two or
money, he is not required to buy. more installments.
Can option money become earnest money? Give the requisites before any of the remedies maybe
applied?
Yes, option money can become earnest money when parties
so stipulate. The requisites are:
SALES
1. there must be a contract; Yes, specific performance does not require default in two or
2. the contract must be one of a sale; more installments, unlike cancellation and foreclosure of
3. it is sale of personal property; and chattel mortgage.
4. sale must be an installment plan.
B bought a particular laptop, but defaulted in the payment of

What is the purpose of the enumeration of the remedies? two installments. May the seller ask for the cancellation of
the sale?
The purpose is to prevent abuse of the foreclosure of chattel
mortgage by selling at low price and then suing for Yes, because two installments are already in default.
deficiency.
What is the scope of article 1485?

What is the nature of the remedies?
It shall be applied to contracts purporting to be leases of
The remedies are alternative and not to be exercised personal property with option to buy, when the lessor has
cumulatively or successively and the election of one is waiver deprived the lessee of the possession or enjoyment of the
of the right to resort to the others. thing.
When the vendor had chosen exact fulfillment of the Give the reason for the rule on Lease of Personal Property
obligation, could he still recover from the purchaser unpaid with option to buy?
balance of the price?
The reason is that this may really considered sale of personal
Yes. The vendor right is not limited to the proceeds of the property in installments. Thus it is to prevent indirect
sale, on execution of the mortgage goods. violation of the remedies of the vendor on sale of personal
property when vendee fails to pay installment.
He may still recover from the purchaser the unpaid balance
of the price, if any or the real and personal properties of the
purchase not exempt by law, from attachment or execution. What is the meaning of the clause “when the lessor has
deprived the lessee of the possession or enjoyment of the
thing?
What is the remedy of the vendor who chooses cancellation
of the contract for the vendee’s failure to pay two or more This means that for failure to pay, the lessor is apparently
installments? exercising the right of an unpaid seller, and has taken
possession of the property. This is so even if the property had
The remedy of the vendor who chooses cancellation of the been given up in obedience to the lessor’s extrajudicial
contract for the vendee’s failure to pay two or more demand, such surrender not really voluntary.
installments is to demand the return of payments already
made unless there is stipulation to the contrary.
When lease construed as Sale?
Can vendor who chooses foreclosure of chattel mortgage Even if the word lease is employed when the sale on
recover unpaid balances? installment is evidently intended, it must be construed as a
Sale.
No, if the vendor has chosen the remedy of foreclosure of
chattel mortgage, he shall have no further action against the
vendee for the recovery of the unpaid balance of the price May a party stipulate that the installments or rent paid shall
and any agreement to the contrary is void. not be returned?
Yes, In sale of personal property by installment a lease of

How is foreclosure effected? personal property with option to buy, the parties may
stipulate that the installment or rents paid are not to be
Foreclosure is effected by selling the mortgaged personal returned. Such stipulation is valid insofar as not
property at public auction and applying the proceeds of the unconscionable.
sale to the satisfaction of the claim secured by the mortgage.
What is the happen if the stipulation is unconscionable?

Give instances that the remedies can not be applied?
If the stipulation is unconscionable the Court has the power
Remedies not applied in: to order the return of a portion of the total amount paid in
1. Real Estate Mortgage; installment or rents.
2. sale of personal property on straigt terms or cash basis.
What happen when the parties has no stipulations the
installment or rents be returned?
Del bought a particular automobile on installment plan. Del
defaulted in the payment of one of the installment. Has the If there is no stipulation that installment or rents paid be
seller Sal, the right to exact fulfillment of the obligation to returned, the installment be returned minus reasonable rent.
pay?

SALES
B bought a car from S on installment. It was agreed that the The essential requisites are the following:
installments already paid should not be returned even if then
sale is cancelled. Is the stipulation valid? a. Taking by competent authority
b. Observance of due process of law
Yes. The stipulation is valid unless unconscionable. c. Taking for public use
d. Payment of just compensation
Who pays for expenses in execution and registration?

What is just compensation?
The vendor (seller) has the duty to pay not only expenses for
execution of the sale, but also for the registration of the same Just compensation is the market value PLUS the
in the absence of any agreement between the parties. consequential damages, if any, MINUS the consequential
damages, if any, MINUS the consequential benefits if any.
However, the benefits may be set off only against the
B sells his car to C, they agree that the expenses for consequential if any. However, the benefits may be set off
registration be borne by C. is the stipulation valid? only against the consequential damages, and not against the
basic value of the property.
Yes. Parties may stipulate as who bears the expenses of
execution and registration provided it is not unconscionable.
What is market value?

Who bears the expenses incurred subsequent to the transfer
of title?
It is the price which the property will bring w is brought hen
Expenses incurred are to be borne by the buyer, unless it is offered for sale by one who desires but is not obliged to
caused by the fault of the seller. sell it, and is bought by one who is under no necessity of
having it.
What is the nature of expropriation?
Expropriation is involuntary in nature, that is, the owner Province of Camarines Sur v. CA
may be compelled to surrender the property after all the
essential requisites have been complied with. Therefore, 41 SCRA 388, 1993
generally, expropriation does not result in a sale.
The fixing of just compensation in expropriation proceedings
shall be made in accordance with rule 67 of the Rules of
Court and not on the basis of the valuation declared in the
What is the exception to the rule? tax declaration of the subject property by the owner or
assessor which has been declared unconstitutional.
In the case of Gutierrez v Court of Tax Appeals, May 31,
1957, the Supreme Court held that the acquisition by the
government of private properties thru the exercise of
eminent domain, said properties being justly compensated, CAPACITY TO BUY OR SELL
is a sale or exchange within the meaning of the income tax
laws and profits derived therefrom are taxable as capital Articles 1489 – 1492
gain; and this is so although the acquisition was against the
will of the owner of the property and there was no meeting of
the minds of the parties.
Incapacity to buy may be absolute or relative. Distinguish.
Absolute incapacity is when a party cannot bind himself in

When is a transaction considered sale? any case. Whereas, relative incapacity is when certain
persons, under certain circumstances, cannot buy certain
If the property owner voluntarily sells the property to the property.
government, this would be a sale, and not an example of
expropriation.
What is the effect of purchase by minors?
Distinguish eminent domain from expropriation. When minors buy, the contract is generally voidable, but in
the case of necessaries, “where necessaries are sold and
Eminent Domain refers to the right given to the state, delivered to a minor or other person without capacity to act,
whereas expropriation usually refers to the process. he must pay a reasonable price therefor.
What are the essentials requisites for expropriation? Castillo v. Castillo
L-18238, Jan. 22, 1980

SALES
If the deed of sale of the land lists as purchasers both the cannot avail themselves of the illegality of the sale, the law
husband and the wife, the presumption is that it is will generally leave them as they are. And also, the creditors
paraphernal property. who became such only after the transaction cannot attack the
validity of the sale for the reason that they cannot be said to
have been prejudiced. Thus, only people who can question
the sale are the following: heirs of either spouse, as well as
Godinez v. Fong prior creditors.
120 SCRA 223, 1983
If a Filipino sells a parcel of land to a Chinese who later sells A husband sold his land to his wife. Later, he borrowed
the same to another Filipino, the second sale is VALID money from C. The loan matured. When C discovered that
because the purpose of the Constitution of preserving the the husband did not have any cash or any property, he
land in favor of Filipinos has not been frustrated. decided to question the sale that had previously been made
in favor of the wife. Can the creditor go after such property?
No, for he was not yet a creditor at the time the transaction
What is the reason why generally a husband and wife cannot took place. Therefore, it cannot be said that he had been
sell to each other? prejudiced by the sale.
The reasons are:
a. to avoid prejudice to third persons A husband and wife were living under the conjugal
b. to prevent one spouse from unduly influencing the other partnership system. Later, because of a quarrel, the wife left
c. to avoid by indirection the violation of the prohibition against the husband, without judicial approval. They have thus been
donations living apart for the last 10 years. Do you think that they can
now sell the property to each other?
What are the exceptions wherein a husband and wife can sell They still cannot, for they are still husband and wife, and
property to each other during the marriage? there has been no separation of property agreed before the
marriage, nor a judicial separation of property elected during
1. When a separation of property was agreed upon in the marriage the marriage.
settlements; or
2. When there has been a judicial separation of property.
Would your answer to the preceding problem be the same if

In relation to the preceding question, what is the effect of there has been legal separation?
sale?
No, the answer will not be the same. One of the effects of
Generally, a sale by one spouse to another is void. However, legal separation is the dissolution of the conjugal
not everybody can assail the validity of the transaction. Thus, partnership. Once the conjugal partnership ends, the system
creditors who became such after the transaction cannot that will prevail is the separation of property system, and
assail its validity for the reason that they cannot be said to here the sale can be validly done.
have been prejudiced. But prior creditors as well as the heirs
of either spouse may invoke the nullity of the sale. When the
proper party brings the actions, the sale should be declared
void by the courts. The spouse themselves, since they are May a husband validly sell the wife’s property for her?
parties to an illegal act, cannot avail themselves of the
illegality of the sale. The law will generally leave them as they Yes, but only if he acts as an agent for her, with a specific or
are. special power of attorney to effectuate the sale.
A husband and his wife were living together under the

conjugal partnership system. May the husband sell his own
parcel of land to his wife? What is the reason for a relative incapacity to buy?
No, because such sale expressly prohibited by law and is, Public policy prohibits the transactions in view of the
therefore, considered VOID. fiduciary relationship involved.
In the preceding problem, who can attack the validity of the What is purchase thru another?
sale?
“Through the mediation of another”- this must be proved,
Although the sale is void, not everybody is given the right to that is, that there was really an agreement between the
assail the validity of the transaction. For instance, the intermediary and the person disqualified; otherwise, the sale
spouses themselves, since they are parties to an illegal act, cannot be set aside.

SALES
lawyer who handled his case in said litigation, may such deed
of assignment be ratified?
What is purchase by agent himself?
The nullity of such prohibited contract is definite and
An agent is not allowed, without his principal’s permission, permanent and cannot be cured by ratification. In this
to sell to himself what he has been ordered to buy; or to buy aspect, the permanent disqualification of public and judicial
for himself what he has been ordered to sell. The fiduciary officers and lawyers grounded on public policy differs from
relations between them estop the agent from asserting a title the first thee cases of guardians, agents and administrators,
adverse to that of the principal. And therefore such a sale to as to whose transactions, it has been opined that they may be
himself would be ineffectual and void because it is expressly ratified by means of and in the form of a new contract, in
prohibited by law. which case its validity shall be determined only by the
circumstances at the time of the execution of the contract.
What is purchase by attorney?

Republic v Court of Appeals
A lawyer is not allowed to purchase the property of his client
which is in litigation. To do otherwise would be a breach of L-59447, Dec. 27, 1982
pre7ofessional conduct and would constitute malpractice. But
assigning the amount of the judgment by client to his attorney, who did The Iglesia ni Kristo, a corporation sole, is not a natural
not take any part in the case where said judgment was rendered is person and has no nationality, cannot acquire alienable
valid. lands of the public domain, and cannot therefore register the
same in its name under an Original Certificate of Title. It
may, however, get a Transfer Certificate of Title since the
land covered by this is no longer “public land”. The INK
Meaning of “Any others specially disqualified by law” should be allowed because the true owners are natural
persons.
This refers to those prohibited by reason of the fiduciary
relationship involved. This is so by the principle of “ejusdem
generis”. While aliens cannot buy land because of the
Constitution, they do not fall under the phrase “ any others Maharlika Publishing Corp v. Tagle
specially disqualified by law”.
GR 65594, July 9, 1986
The wife of the Chief of the Retirement Division of the GSIS

What is the status of sale under Art. 1491? is prohibited from bidding for the purchase of land
foreclosed by the GSIS. The sale to her of such property, after
Generally, sales entered into in disregard of the prohibition a public bidding is void.
under this article are not void but they are merely voidable.
What is the Applicability of Relative Incapacity to Legal

Redemption, Compromises and Renunciation?
At a mortgage foreclosure sale carried out as a result of a If a ward’s property is sold, the guardian, even if he be an
judicial proceeding, A, attorney for the mortgage creditor adjacent owner, and even if all the other requisites for legal
bought the mortgaged real estate. If A had bought the redemption are present, cannot exercise the right of legal
property for himself, is the sale void or voidable? redemption.
The sale is void. This is so, because it is a contract prohibited

by law.
What is Cross reference?
Refer to the following articles:

If A had bought the property for his client, did he violate the
absolute terms of Art.1491 of NCC? a. Legal redemption (Art. 1619, NCC);
b. Compromises (Art. 2028, NCC);
If A bought the property for his client, there would be no c. Renunciation (Arts. 6 and 1270, NCC).
violation of the prohibition stated in Art. 1491 because then
there would be no breach of trust or confidence in such a
case. He would be merely acting as agent of his client; and EFFECTS OF THE CONTRACT WHEN THE
under the law, such client is not prohibited from buying the
property. THING SOLD HAS BEEN LOST
Articles 1493 – 1494
Suppose that a client executed a deed of assignment of the What is the effect of Loss of Object before sale?
property which was the object of litigation in favor of his
SALES
This refers to a case of loss of the object even before the b. If failure by seller to deliver on time is not due to his fault, as
perfection of the contract. It is evident that there would be when it was the buyer who failed to supply the necessary credit for
no cause or consideration; hence, the contract is void. the transportation of the goods, delay on the part of the seller may
Observe that it is the seller here who naturally will have to be said to be sufficiently excused.
bear the loss.
What is the effect of non- delivery?
Give an illustration. If the seller fails to deliver, and the buyer has no fault, the
latter may ask for the resolution or rescission of the contract.
I sold to Maria my house in Baguio which, unknown to both
of us, had been completely destroyed last night. The sale is
null and void. There is, thus, no need of annulling the
contract because there is nothing that has to be annulled. What is the duty to deliver at execution sales?
When the property is sold at an execution sale, the judgment

debtor is not required to deliver the property sold right away.
Distinguish Complete Loss from Partial Loss.
Note the difference in the rules –

What is the reason behind?
a. When the object has been COMPLETELY LOST;
b. When the object has been PARTLY or PARTIALLY LOST; The reason is because of the redemption period. The
judgment debtor has a period of one year within which to
redeem the property. In the meantime, the buyer should not
What are the available remedies in the preceding problem? take actual possession of the property. If he does so, an
action of forcible entry may be brought against him.
a. Withdrawal (or rescission);
b. Specific performance as to remainder by payment of proportional
price.
What is the remedy of the judgment debtor if the buyer takes
actual possession of the property within the redemption
What are the remedies in case of Loss of Specific Goods? period?
The remedies are: The judgment debtor would be entitled to get damages as
well as possession of the property, unless the period of
a. Cancellation (avoidance); redemption has already expired , in which case he can only
b. Or Specific performance as to the remaining existing goods (if the get damages.
sale was divisible).
When does the period of redemption commence?
OBLIGATIONS OF THE VENDOR The period of redemption commences to run not from the
date of the auction or tax sale but from the day the sale was
Articles 1495 -1581 registered in the office of the Register of Deed, so that the
delinquent registered owner or third parties interested in the
What are the obligations of the vendor? redemption may know that the delinquent property has been
sold.
The following are the obligations of the vendor:
a. To transfer ownership (cannot be waived)

b. To deliver (cannot be waived) How is ownership transferred?
c. To warrant the object sold (this can be waived or modified since
the warranty is not an essential element of the contract of sale) As a rule, in the absence of agreement, ownership is not
d. To preserve the thing from perfection to delivery, otherwise he transferred, even if sold, unless there has been a delivery.
can be held liable for damages (Art. 1163, NCC).
What are the effects of failure to deliver on time? A sold his piano to B, who immediately paid the price.
Because the piano was at the repair shop at the time the
The effects of failure to deliver on time are: contract was perfected, no delivery was made. Before
delivery could be made, C, a creditor of A, who has filed a suit
a. If the seller promised to deliver at a stipulated period, and such against him, attached the piano. What right has B over the
period is of the essence of the contract, but did not comply with piano?
his obligation on time, he has no right to demand payment of the
price. As a matter of fact, the vendee-buyer may ask for the
rescission or resolution of the sale.
SALES
The piano not having been delivered to him by A, B has only necessarily mean physical or material delivery. It may be
a personal right to demand its delivery – for it is generally constructive, as when it is placed at the disposal of the other.
only delivery that transfers the real right of ownership.
In the preceding problem, may B oppose the attachment

levied by C?
Not having any right or ownership over the piano, B may not
legally oppose the attachment levied thereon by C.
Roque v. Lapuz
What is the effect of delivery to buyer (Who used another
money)? L-32811, March 31, 1980
In general, delivery of the property to a person who has The fact that a formal deed of conveyance was not made
purchased the property in his own name will give title to said indicates very strongly that the parties did not intend to
purchaser, and not to the owner of the money used. immediately transfer the ownership. What they intended was
to transfer ownership only after full payment of the price.
What is the effect if ownership is not transferred despite

delivery? What are the different kinds of delivery or tradition?
The delivery of the sugar to the warehouse of the buyer The different kinds of delivery are:
transfers ownership provided that the sale had already been
perfected but ownership in not transferred, although there a. Actual or real
has been perfection and delivery, if it was intended that no b. Legal formalities
such transfer of ownership will take place until full payment 1. Legal formalities
of the price. 2. Symbolical tradition or traditio simbolica
3. Traditio longa manu
4. Traditio brevi manu
5. Traditio constitutum possessorium
What is the meaning of tradition? c. Quasi-tradition
Tradition, or delivery, is a mode of acquiring ownership, as a

consequence of certain contracts such as sale, by virtue of What is an example of Symbolical tradition or traditio
which, actually or constructively, the object is placed in the simbolica?
control and possession of the vendee.
An example is the delivery of the key of the place where the
movable sold is being kept.
Albert v. University Publishing Co.
L-9300, Sept. 17, 1958 What is Traditio longa manu?
FACTS: The Plaintiff, author of a text in Criminal Law, This is by mere consent or agreement that if the movable
promised to deliver the manuscript of his book to the sold cannot yet be transferred to the possession of the buyer
defendant, his publisher, on or before Dec. 31, 1948. On Dec at the time of the sale.
16, 1948, plaintiff wrote a letter to the company stating that
the manuscript was already at its disposal, and ready for
printing should the company desire to publish it the next
month; that he was however keeping the manuscript in his What is Traditio brevi manu?
office because of fear of loss, destruction, or copying by
others, and because he desired to add new decisions of the If the buyer had already the possession of the object even
Supreme Court that might be published from time to time before the purchase, as w en the tenant of the car buys the car,
before the manuscript would be actually sent to the printer. that is, his possession as an owner.
He also stated, however, that if the company insisted on
having the manuscript right away, it should let him know
because he would then actually deliver it immediately.
What is Traditio constitutum possessorium?
ISSUE: Was there already delivery?
This is the opposite of tradition brevi manu. The possession
HELD: Yes, for the above-mentioned facts constitute a
as owner has changed, for example, to possession as a lessee.
delivery of the manuscript. Delivery indeed does not

SALES
What is an example of traditio constitutum possessorium? Symbolic delivery, as species of constructive delivery, effects
the transfer of ownership thru the execution of a public
I sold my car but continued to possess it as a lessee of the document. Its efficacy can, however, be prevented if the
purchaser. vendor does not possess control over the thing sold, in which
case this legal fiction must yield to reality.
What is Quasi-tradition?
The key word is control, not possession of the land.
It is the delivery of rights, credits or incorporeal property made
by:
a. Placing titles of ownership in the hands of a lawyer; In constructive delivery, what are the three requisites in
b. Or allowing the buyer to make use of the rights. order that ownership may be transmitted?
1. The seller must have control over the thing; otherwise how can he
Vitorias v. Leuenberger and CA put another in control?
2. The buyer must be put under control
GR 31189, March 31, 1987 3. There must be the intention to deliver the thing for purposes of
ownership( not, for example, of merely allowing the ownership or
Where there is no express provision that title shall not pass examination of the keys, nor for the purpose of having said keys
until payment of the price and the thing sold has been repaired).
delivered, title passes from the moment the thing sold is
placed in the possession and control of the buyer. Delivery
produces its natural effects in law, the principal and most What are the rules on Constructive Delivery?
important of which being the conveyance of ownership
without prejudice to the right of the vendor to claim payment a. If a seller has no actual possession, he cannot transfer ownership
of the price. by constructive delivery. The reason is that in every kind of
delivery, the transferee should have control, but here control
cannot be had since it is in the possession of another.
b. There can be no constructive delivery by means of a public
What is the effect of sale that is made through a public instrument if there is a stipulation to that effect. Hence the
instrument? Supreme Court has held that if there is a clause to the effect that
the buyer “will take possession after four months,” at the end of 4
When the sale is made through a public instrument, the months it cannot be said that there is an automatic delivery. At
execution thereof shall be equivalent to the delivery of the said time, there must still be a delivery. The same is true in a case
thin which is the object of the contract, if from the deed the of a sale by installment, where it is stipulated that title should not
contrary does not appear or cannot clearly be inferred. be transferred till after the payment of that last installment; or
where the vendor reserves the right to use and enjoy their
property until the gathering of the crops still growing.
c. The Civil Code does not provide that the execution of the deed is a
conclusive presumption of the delivery of possession. What it says
What is constructive delivery? is that the execution thereof shall be equivalent to delivery which
means that the disputable presumption established can be
With regard to movable property, its delivery may also be rebutted by clear and convincing evidence, such as evidence of the
made by the delivery of the keys of the place or depository fact that the buyer did not really obtain the material possession of
where it is stored or kept. the building. Hence, it may be said that the execution of the
contract is only presumptive delivery.
What are the two kinds of constructive delivery?
The two kinds of constructive delivery are: What is the effect of non-payment of the price?
a. Legal formalities – This applies to real and personal property Execution of the deed of sale, in the absence of any defect,
since the law does not distinguish. transfers delivery, even if the selling price, in whole or in part
b. Tradition simbolica has not yet been paid, for it is not payment that transfers
ownership.
Power Commercial & Industrial Corp v CA
Spouses Reynaldo & Angelito R Quimbao, and PNB Puatu v Mendoza and David
GR 119745, June 20, 1997 64 Phil. 457
84 SCAD 67

SALES
FACTS: Puatu sold a parcel of land to Mendoza for P39,000 in public The basis of is traditio constitutum possessorium consent.
instrument. The amount of P14,200 was paid, leaving a balance of
P24,800. The land was mortgaged to Puatu as security for the balance.
Puatu sued for the balance. Mendoza claimed that the sale was not
absolute since not all the purchase price has been paid and that What is the effect if the seller continues to occupy the land as
therefore he should be refunded what he had already paid. tenant?
HELD: The sale was consummated and absolute, and the defendant Where a seller continues to occupy the land as tenant, the
must now pay the balance. The plaintiff has done all he is required to possession, by fiction of law, is deemed to be constituted in
do in the contract of sale. The land has already been delivered by the the buyer.
execution of the public instrument. The buyer must now comply with
his obligations.
How are incorporeal properties delivered?
What does delivery thru execution of a quedan mean? The incorporeal properties are delivered by:
If the parties in a sale intended that the copra sold should be 1. Constructive tradition- execution of public instrument
placed then and there under the control of the buyer the 2. Quasi-tradition – placing of titles of ownership in the possession
issuance of a quedan, delivery is effected upon the execution of the buyer, or the use by the buyer of his rights, with the seller’s
of thje quedan, and the subsequent loss of the thing sold consent.
should be borne by the purchaser.
What is the effect of delivery of land title deeds?
A sold a piano to B by private instrument for P500,000. Who The delivery of land title deeds is equivalent to a delivery of
had ownership of the piano at the moment next after B had the property itself.
paid the P500,000 to A? Explain.
At the moment next after B had paid the P500,000 to A,

ownership over the piano still resided in A, the execution of What is transaction “on sale or return”?
the private instrument not being a mode of transferring
ownership. Payment of the price without tradition or
When goods are delivered to the buyer "on sale or return" to
delivery is not a mode of acquiring ownership over the piano.
give the buyer an option to return the goods instead of
paying the price, the ownership passes to the buyer of
delivery, but he may revest the ownership in the seller by
returning or tendering the goods within the time fixed in the
A person bought in Iloilo a tractor for a certain price. It was contract, or, if no time has been fixed, within a reasonable
agreed that delivery of the tractor should be made within a time.
certain time at the warehouse of the purchaser in Manila,
and the balance of the price should be paid at the moment of
delivery. While enroute to Manila, the tractor was delivered
by the vendor to a third person to secure a loan obtained by
him for his personal convenience. Do you think that the
purchaser can recover the tractor from the third person?
Why? What kind of sale is the above-stated problem?
No, because no delivery was ever made to the buyer, hence This is a sale that depends on the discretion of the buyer; it is
he never became the owner of the tractor. Not being the a sale with a resolutory condition.
owner he had no real right over the property, so he cannot
bring an action to recover if from an individual in lawful
possession of the tractor.
What are transaction “on approval or on trial or
satisfaction”?
If the thing sold cannot be transferred to the possession of When goods are delivered to the buyer on approval or on
the vendee at the time of the sale, what is the remedy? trial or on satisfaction, or other similar terms, the ownership
therein passes to the buyer:
The delivery of movable property may likewise be made by
the mere consent or agreement of the contracting parties, if (1) When he signifies his approval or acceptance to the seller
the thing sold cannot be transferred to the possession of the or does any other act adopting the transaction;
vendee at the time of the sale, or if the latter already had it in
his possession for any other reason.
(2) If he does not signify his approval or acceptance to the
seller, but 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, and, if no time has
What is the basis of traditio constitutum possessorium?
been fixed, on the expiration of a reasonable time. What is a
reasonable time is a question of fact.
SALES
In the first, ownership is transferred at once; in the second,

there is no transfer of ownership till the owner agrees to buy.
What kind of sale is the above-stated problem?
This is a sale really dependent on the quality of the goods; it

is a sale with suspensive condition. Here, the buyer may in
time become the owner under the conditions specified in the
law; otherwise, he seller is still the owner. X, the owner of a certain jewelry, entrust them to Y for sale
or return of the jewelry upon a specified period of time. Y
sells the jewelry to Z, but retains the price. Can X obtain
possession of the jewelry from Z? Why?
(A) S delivered to b a refrigerator “on sale or return”. Did B
become owner upon delivery? This problem calls for a distinction in view of the use of the
words “ for sale or return,” a phrase which has technical
Yes, in view of the delivery. Of course, B may revest the signification in the law of SALES although of course the
ownership in S by returning or tendering the refrigerator to phrase used in SALEs in “on sale or return” but there’s no
him within the time fixed in the contract; or if no time has such technical meaning in the law of AGENCY.
been fixed, within a reasonable time.
What are some rules on Sale “on approval or trial or

In the preceding problem, can B return the goods even if he satisfaction”
finds nothing wrong with the quality of the goods?
Some of the rules are:
Yes, for discretion here is with the buyer.
1. The risk of loss remains with seller, although there has been
delivery, until the sale becomes absolute.
2. Risk of loss remains with seller although there has been delivery,
In letter (A), if B does not return the refrigerator in due time, if the sale has not yet become absolute.
what will be the consequences of his inaction? 3. Buyer must give goods a trial except when it is evident that it
cannot perform the work intended.
The sale will be considered absolute, and the price may be 4. Period within which buyer must signify his acceptance
recovered since after all, delivery had been made. commences to run only when all the parts essential for the
operation of the object have been delivered.
5. If it is stipulated that a third person must satisfy approval or
satisfaction, the provision is valid, but the third person must be in
good faith. If refusal to accept is not justified, seller may still sue.
In letter (A), if B had not yet returned the goods, does he
6. Generally, the sale and delivery to a buyer who is an expert on the
have to pay for them even if the refrigerator has been
object purchased is NOT obviously a sale on approval, trial, or
destroyed by a fortuitous event?
satisfaction.
Yes, for ownership has been transferred to him, and being
the owner, he bears the loss.
What is the exception in the second paragraph of the above-
mentioned rules?
The exceptions are:

In a case of “on sale or return”, does the buyer has the right
to return if the thing is abused?
1. If buyer is at fault;
2. If buyer had expressly agreed to bear loss.
In case of “on sale or return”, the buyer has no right to return
if he has materially abused the condition of the thing. The
sale in this case becomes absolute.
What is reservation of ownership despite delivery?
This applies only to the sale of “specific goods. Although

delivery has been made, seller may reserve ownership till
What about if the objects deteriorate without the fault of the certain conditions are fulfilled. Of course, the most
buyer? important controlling element is the intention.
In case of “on sale or return”, if the objects deteriorate
without the fault of the buyer, the buyer can still return,
provided the reasonable period for returning has not yet
Chrysler Phil. Corp. v Court of Appeals
lapsed.
L-55684, Dec. 19, 1984
Give the difference between a contract “on sale or return”

and a delivery of property with option to purchase.

SALES
As a general rule, the seller, as the owner, bears the risk of If the object of a contract is lost before delivery, it is the
loss in line with the principle of “res perit domino” (owner vendor who is still the owner and must bear the loss and not
bears the loss). the vendee. This is in conformity with the principle of res
perit domini. The owner of the thing must bear the risk of
loss.
What are the instances when seller is still owner despite

delivery? What did the buyer acquires after the seller sold the thing to
the former?
The instances are:
As a general rule, the buyer acquires only the rights which
1. Express stipulation. would the seller have over the thing sold to him. This rule
2. If under the bill of lading the goods are deliverable to seller or was based on the principle “nemo dat quod non habet”.
agent or their order.
3. If bill of lading, although stating that the goods are to be delivered
to buyer or his agent, is kept by the seller of his agent.
4. When the buyer although the goods are deliverable to order of
buyer, and although the bill of lading is given to him, does not Are there any exceptions to the rule?
honor the bill of exchange sent along with it. But of course
innocent third parties (innocent holders and purchasers for value) Yes, as when, the owner of the goods by his conduct
should not be adversely affected. precluded from denying the seller’s authority and under the
second paragraph (1, 2, 3) of art. 1505.
A sells a parcel of land to B with the consent of the owner C.

Can C declare the sale to be null and void because A has no
What is an example?
authority to sell such property?
S sold B a radio; the radio was shipped on board a carrier. No, C is stopped from denying A’s authority to sell.
The bill of lading stated that the radio is deliverable to the
order of B. The bill of lading was sent to B, accompanied by a
bill of exchange which B was supposed to honor. If B does A bought a pair of shoes from a shoe store and repair shop. It
not honor the bill of exchange, but wrongfully retains the bill was later discovered, however, that the shoes did not did not
of lading, ownership remains with the seller. If B sells the bill belong to the store but to a customer who had left it there for
of lading to X, X can obtain ownership of the goods if he is an repair. Did A acquire good title to the shoes?
innocent purchaser.
Yes, although the store was not the owner of the shoes. The
shoes were purchased at a merchant’s store. A contrary rule
Who bears the risk of loss of specific goods? would retard commerce.
The risk of loss of specific goods shall be borne by the seller.
B, in good faith, has purchase a diamond ring from C, his
friend. C gave B a bill of sale. Later on, A identified the ring
A agreed to sell to B his cat. Before the actual sale takes as one she had lost about a year ago. There is no question as
place, the cat dies thru no fault of A. Is A liable to B for the to the veracity of O’s claim. In the meantime, C has
price? disappeared. What advice would you give B in reference to
O’s demand that the ring be returned to him?
No, the destruction of the cat before ownership passed
excuses performance. If the dog had died after ownership I would advise B to return the ring to O, and not expect to be
had passed, the loss would be B’s even though there was no reimbursed by O the amount he had paid C. the law says that
delivery yet. one who has lost any movable may recover it from the person
in possession of the same, without such possessor being
entitled to reimbursement, except if the acquisition in good
A sold to B a cat for 200.00. It was agreed that B will pay for faith had been at the public sale or auction, or at a
and get the animal the next day. Before B can pay the merchant’s store, fair, or market.
purchase price, the dog dies through fortuitous event. Must B
still pay for the animal?
What is a store?
Yes, since he was already the owner even if there was
delivery yet. Under American law, there is no need for It is the place where goods are kept and sold by one engaged
delivery to transfer ownership insofar as specific goods are in buying and selling.
concerned if the contract is one of sale, and not a contract to
sell.
A bought a car from B, an insane person, and in turn sold the
car to C who is in good faith. Was the sale valid?
Who between the vendor and the vendee must bear the risk
of loss after the contract of sale has been perfected, but Yes, the sale is valid. C becomes the owner of the car after it
before the thing sold has been delivered? has been delivered to him. However, considering that the
contract between A and B is concerned, the contract between
them is considered as voidable contract. Hence, the contract
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between A and C can only be valid before the original What is the effect of undated indorsement?
contract has been annulled.
It is not necessary to date an endorsement because no
additional protection is given thereby to businessman. As a
matter of fact, to require dating would be to impede business
transactions.
Can a buyer acquire title from a theft, a person who stole and
then sold the goods to him?
The document says “deliver to the order of Mr. X.” In order
No, because the owner has been unlawfully deprived of the to negotiate it, what would be the proper way of doing it?
thing. Hence, the true owner can get it back without
reimbursement. Mr. X must sign his name at the back and then deliver. Mere
delivery without signing is not sufficient.
How about if the buyer acquired the stolen automobile in

good faith at a public auction? Does he have a legal title over What is a non-negotiable instrument?
it?
A non-negotiable instrument is an instrument which is not
No, under the law, even if he acquired it at a public auction negotiable, an instrument which does not meet the
in good faith, he acquires nothing over it. The true owner of requirements laid down to qualify an instrument as a
the thing can get it back however the buyer is entitled for negotiable one, or an instrument which in its inception was
reimbursement. negotiable but has lost its negotiability.
What are the documents included by art. 1507? A negotiable document of title was mark “non-negotiable” by
a warehouseman. Is it still negotiable?
The documents referred to by art. 1507 are a) any bill of
lading b) dock warrant c) quedan d) warehouse receipt or Yes, insofar as the various holders of the note are concerned,
order e) any other document used as proof of possession or the note is still negotiable. Regarding the intent and the
as authority to transfer the goods represented by the liability of the maker, this article does not deal with the
document. same.
When are the documents considered to be negotiable? What is the effect of delivery when the document cannot be
negotiated by mere delivery?
The documents are negotiable if the goods are deliverable to
bearer or to the order of a certain person. The effect is that a non-negotiable document cannot be
negotiated and the indorsement of such document gives the
transferee no additional right.
What is the effect of an error or the incorrectness in the
description of the goods?
A document of title was non-negotiable. Mat it still be given
A mere typographical error or grammatical error does not or assigned to another?
affect the negotiability of the document, for what should be
considered is the intent. And also a mere incorrectness in the Yes, but this does not have the effect of a negotiation. It is a
description of the goods will not destroy the negotiability of mere transfer or assignment.
the document
A document of title contained the words “deliver to Mr. X.”

How negotiable document of title is negotiated? May it be negotiated?
It is negotiated by mere delivery or endorsement plus No, but it may be transferred.

delivery.
Suppose it is indorsed by Mr. X?

When a mere delivery is sufficient?
The indorsement is useless and does not give the indorse any
A mere delivery is sufficient if deliverable to bearer or if additional right. There is in this case only a transferor
deliverable to the order of a certain person and that person assignment.
has indorse it in blank by putting his name at the back of the
document and by signing his name at the back of the
document. What are the requirements so that a document is considered
negotiable?
What is the effect of indorsement and delivery? An instrument to be negotiable must conform to the following
requirements:
Indorsement and delivery of a negotiable quedan ipso facto a) It must be in writing and signed by the maker and drawer;
transfer possession and ownership of the property referred to therein. b) Must contain an unconditional promise or order to pay a
sum certain in money;

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c) Must be payable in demand or at a fixed or determinable The rights of a person to whom a negotiable document of title has
future time; been transferred, or of the transferee of a non-negotiable
d) Must be payable to order or bearer; and document are as follows:
e) Where the instrument is addressed to a drawee, he must be a) The title to the goods as against the transferor;
named or otherwise indicated therein with reasonable b) The right to notify the bailee of the transfer thereof; and
certainty. c) The right to acquire the obligation of the bailee to hold the
goods for him.
Who may negotiate negotiable document of title?

Are these rights of a transferee absolute?
The owner of the document may negotiate or by any person
to whom the possession or custody of the document has been No, the right if the transferee is not absolute as it is subject
entrusted by the owner . to the terms of any agreement with the transferor. He merely
steps into the shoes of the transferor.
A document of title contained the following words. “deliver

to the order of X or to the order of the person to whom this What is the effect of attachment of goods covered by non-
document has been entrusted by X.” Later, X entrusted the negotiable document?
document to Y. May Y negotiate the same by indorsement?
If it is a non-negotiable document of title, it does not effect
Yes, (see art.1512, No. 2, 1st paragraph ) the delivery of the goods covered by it. Accordingly, before
notification, the bailee is not bound to the transferee whose
right may defeated by a levy of an attachment or execution
Who bears loss in case of unauthorized negotiation? upon the goods by the creditor of the transferor or by a
notification to such bailee of the subsequent sale of the
If the owner of negotiable document of title entrusts the goods.
document to a friend for deposit, but the friend betrays the
trust and negotiates the document by delivering it to another
in good faith, the said owner cannot impugn the validity of
the negotiation. As between the two innocents persons, he
who made the loss possible should bear the loss, without What is the effect of attachment of goods covered by
prejudice to his right to recover from the wrongdoer. negotiable document?
If the document is negotiable, the goods cannot be attached

or be levied under an execution unless the documents be first
surrender to the bailee of its negotiation enjoined.
What are the rights which are acquired by a person to whom

a negotiable document of title has been duly negotiated? What is the right of a transferee?
A person to whom a negotiable document of title has been duly A mere transferee does not acquire directly the obligation of
negotiated acquires thereby: the bailee to hold for him.
a) Such title to the goods as the person negotiating the
document to him had or had the ability to convey to the
purchaser in good faith for value and also such title to he What should the transferee must do in order to acquire
goods as the person to whose order the goods were to be direct obligation?
delivered by the terms of the document had or had the
ability to convey to purchaser in good faith for value; and The transferee, in order to acquire direct obligation, he must
b) Those mentioned in no.2 of article 1513. notify the bailee.
What constitute a holder in due course? When shall a negotiation be made?
A holder in due course is a holder who has taken the instrument A negotiation shall take effect as of the time when the
under the following conditions: indorsement is actually made.
a) That it is complete and regular upon its face;
b) That he became the holder of it before it was overdue, and
without notice that it had been previously dishonored, if What is the rule where the document is subsequently
such was the fact; indorsed?
c) That he took it in good faith and for value;
d) That at the time it was negotiated to him, he had no notice of For the purpose of determining whether the transferee is a
any infirmity in the instrument, or defect in title of the purchaser for value in good faith without notice, the
person negotiating it. negotiation shall take effect as of the time when the
indorsement is actually made, not at the time the document
is delivered.
What are the rights of a person to whom document has been
transferred?
What are the rights of a person to whom an order document
of title has been delivered which is not properly negotiated
by mere delivery?
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A document of title contained the words “deliver to bearer.”

The following are his or her rights: The document was stolen by T.J subsequently indorse it to
a) The rights to the goods as against the transferor; and C.J, a purchaser in good faith. Is the negotiation to C.J valid?
b) The right to compel the transferor to indorse the document.
Yes, notwithstanding the theft by T.J, C.J is a purchaser in
good for value in good faith; that is, C.J did not know that
Are these rights absolute? the document had been stolen by T.J.
No, if the intention of the parties is that the document should

be merely transferred, the transferee has no right to require
the transferor to indorse the document. Was the theft of the goods would invalidate the transaction?
No, under article 1518, the rule speaks of a theft document

What are the implied warranties of the person who and not the theft of goods itself.
negotiates a document of title by indorsement or delivery?
A person who for value negotiates or transfers a document of title What is the rule with regards to the attachment or levy upon
by indorsing or delivery, including one who assigns for value a claim the goods covered by negotiable document in possession of
secured by a document of title unless a contract intention appears, the bailee?
warrants:
a) That the document is genuine; The rule is that, while the goods are in the possession of the
b) That he has legal right to negotiate or transfer it; bailee, the goods cannot be attached or levied under an execution
c) That he has knowledge of no fact which would impair its unless:
validity; a) The document must be first surrender; or
d) That he has a right to transfer the title if the goods and that b) Its negotiation is enjoined; or
the goods are merchantable or fit to a particular purpose, c) The document is impounded by the court.
whenever such warranties would have been implied if the
contract of the parties had been to transfer without a
document of title of the goods represented thereby. What is the effect if the depositor is not the owner?
The provisions of article 1519 do not apply if the person

What are the liability of a person negotiating or transferring depositing is not the owner of the goods or one who has no
a document which he knows that the document was a forgery right to convey the title to the goods binding the owner. This
or he had stolen it, or he had the knowledge that that the prohibition is for the protecti0n of the bailee since he could
document was invalid for want of consideration, or the goods be made liable to a subsequent purchaser for value in good
has been damaged? faith.
The liability of that person is limited only to a violation of the

four warranties set forth in Article 1516. One who assigns for Can they compel the bailee to surrender the goods?
value a claim secured by a document of title is also liable for
violation of any of the for warranties. No, the bailee cannot be compelled to surrender the goods except:
a) If the document is surrendered to him;
b) Or if the document is impounded by the court.
What is the effect of indorsee’s knowledge of fraud
indorsement?
What is the right given to a creditor whose debtor is the
If the indorsee knows that any of the former indorsements is owner of a negotiable document of title?
a forgery, he does not acquire a valid title to the document.
Under Article 1520 of the Civil Code, a creditor
whose debtor is the owner of a negotiable document of title
What is the rule for failure of the bailee to comply with his shall be entitled to such aid from the courts of appropriate
obligation? jurisdiction by injunction and otherwise in attaching
document in satisfying the claim by means thereof as is
The bailee upon failure to comply with their obligations does allowed at law or in equity in regard to property which
not make the present indorsers liable because indorser cannot readily be attached or levied upon by ordinary legal
warrants only the things mentioned in article 1516. process.
When negotiation is not impaired by fraud, mistake, duress, May the document of title of the debtor in regard to property
lost, theft, accident, or conversion? which cannot readily be attached or levied upon by ordinary
legal process, nevertheless, be the subject of an injunction or
A negotiable document maybe negotiated by any person in attachment?
possession of the same , however such possession may have
been acquired. In other words, it may be negotiated even by Yes, provided the debtor is the owner of a
theft or finder and the holder thereof would acquire a good negotiable document of title. In this case, the creditor shall
title thereof if he paid the value therefor in good faith be entitled to such aid from courts of appropriate jurisdiction
without notice of the seller’s defect of title. by injunction and otherwise in attaching such document or
in satisfying the claim by means thereof as is allowed at law
or in equity. (Article 1520)

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Under Article 1520 of the Civil Code, it is required

X is the creditor of Y, the owner of a negotiable document of that the debtor is the owner of a negotiable document of
title covering goods delivered to a bailee by the latter. title.
Generally there can be no attachment or levy over the goods
except in those instances provided under Article 1519 of the
Civil Code. In the event that attachment or levy is allowed, If the debtor of a creditor is the owner of a negotiable
what is the protection given to X as the creditor of Y? document of title, what are his remedies under the law if the
goods covered by the document is being subjected to
A creditor of the owner of a negotiable document attachment?
of title, like X, has the protection provided under Article
1520 of the Civil Code. X shall be entitled to such aid from Under Article 1520 of the Civil Code, a creditor
courts of appropriate jurisdiction by injunction and whose debtor is the owner of a negotiable document of title
otherwise in attaching such document or in satisfying the shall be entitled to such aid from the courts of appropriate
claim by means thereof as is allowed at law or in equity. jurisdiction by injunction and otherwise in attaching
document in satisfying the claim by means thereof as is
allowed at law or in equity in regard to property which
X is the creditor of Y, the owner of a document of title cannot readily be attached or levied upon by ordinary legal
covering goods subject of attachment or levy. X is now process.
claiming the protection of a creditor under Article 1520 of
the Civil Code. Is X correct?
May the document of title of the debtor in regard to property
No, X is not correct. The protection granted under which cannot readily be attached or levied upon by ordinary
Article 1520 applies only to the creditor of the owner of a legal process, nevertheless, be the subject of an injunction?
negotiable document of title covering goods subject of
attachment or levy under Article 1519. Yes, provided the debtor is the owner of a
negotiable document of title. In this case, the creditor shall
be entitled to such aid from courts of appropriate jurisdiction
What is the requirement so that the creditor of the owner of by injunction and otherwise in attaching such document or
a document of title covering goods subject of attachment or in satisfying the claim by means thereof as is allowed at law
levy is protected under Article 1520 of the Civil Code? or in equity. (Article 1520)
It is required that the debtor is the owner of a negotiable

document of title. What will govern as to the place of delivery of the goods
subject of a contract of sale?
Angelina lent money to Brad, the owner of a negotiable Under Article 1521 of the Civil, it is the agreement
document of title covering goods delivered to a bailee by the of the parties, express or implied, which shall govern the
latter. Generally there can be no attachment or levy over the place of delivery of the goods. In the absence of an
goods except in those instances provided under Article 1519 agreement, it shall be based on the usage of trade. If there is
of the Civil Code. If the bailee is forced to surrender the no such usage, the buyer must get them at the seller’s
goods, what is the remedy available to Angelina. business of place or residence.
A creditor of the owner of a negotiable document

of title, like X, has the protection provided under Article Is there an exception to the rule that in the absence of an
1520 of the Civil Code. X shall be entitled to such aid from agreement, express or implied, as well as usage of trade, the
courts of appropriate jurisdiction by injunction and buyer must get the goods at the seller’s business of place or
otherwise in attaching such document or in satisfying the residence?
claim by means thereof as is allowed at law or in equity.
Yes, if the goods that are the subject of sale are
specific and the parties know when the contract was made
Angelina is the creditor of Brad, the owner of a document of that such goods were in some other place, then the delivery
title covering goods which are now being surrendered to by shall be in the place where the specific goods are found. (Art
Jennifer, the depositary, because the document of title has 1521)
been impounded by the court. Angelina is now claiming the
protection of a creditor under Article 1520 of the Civil Code.
Is Angelina correct? What prevails in case there is a disagreement as to the place
of delivery of the goods, the agreement of the parties or the
No, Angelina is not correct. The protection granted usage of trade or business?
under Article 1520 applies only to the creditor of the owner
of a negotiable document of title covering goods subject of Based on the Obligatory Force of Contracts, the
attachment or levy under Article 1519. The given problem agreement of the parties, whether express or implied, as to
does not mention that the document of title covering the the place of delivery of the goods subject of the contract of
goods is negotiable sale shall prevail over the usage of trade or business. (Art
1521)
What is the condition so that the creditor of the owner of a

document of title covering goods subject of attachment or Will there be sufficient delivery if the goods were delivered at
levy may avail of the protection of injunction from the a place near the original location agreed upon by the parties?
courts?

SALES
Generally, there will be no sufficient delivery in In the absence of agreement, demand or tender of
this case. Article 1521 provides that what governs is the delivery shall be made at a reasonable hour.
agreement between the parties, whether express or implied
as to the place of delivery. However, the Supreme Court has
ruled in one case that there is sufficient delivery when a What may the buyer do if the seller delivers a quantity of
fortuitous event prevents delivery at the actual place goods less than what was contracted?
agreed upon, forcing a delivery at a place near the original
one. (Bean, Admr. v. The Cadwallader Co., 10 Phil. 606) Under Art 1522, par. 1 of the Civil Code, the buyer
may reject the goods. However, the buyer may also accept
the goods delivered at the contract rate.
If delivery was made at a different place agreed upon and the
buyer accepted the goods without complaint, can the buyer
later on claim that there no “delivery” contemplated under If the seller delivers a quantity of goods less than what was
the law? contracted and the buyer accepts or retains such goods
knowing that the seller is not going to perform the contract
No, the buyer cannot later on claim breach of the in full, at what rate must the buyer pay for the goods?
obligation under the contract of sale. In Sullivan v. Gird,
1921, 22 Ariz. 332, it was held that there is sufficient delivery Article 1522 provides that the buyer must pay the
when the original place is changed, but the buyer accepted goods delivered at the contract rate.
the goods at a different place without complaint so long as
the seller was in good faith.
If the seller delivers a quantity of goods less than what was
contracted and the buyer has used or disposed of the goods
If the contract of sale does not state the time when the seller delivered before knowing that the seller is not going to
shall send the goods to the buyer, when must the seller send perform his contract in full, at what rate must the buyer pay
said goods? for the goods?
Where by a contract of sale the seller is bound to In this case, the buyer shall not be liable for more
send the goods to the buyer, but no time for sending them is than the fair value to him of the goods so received. (Art 1522,
fixed, the seller is bound to send them within a par. 1, 2nd sentence)
reasonable time. (Art. 1521, par 2)
Angelina bought 10 bottles of perfume from Brad, only 7 of

What are the circumstances that may be considered when no which arrived. She sold 5 bottles to her friends thinking that
time has been fixed for the delivery of the goods subject of a the others were coming. However, Brad is unable to deliver
contract of sale? the remaining 3 bottles. What price must Angelina pay for
the bottles?
The seller must send the goods “within a
reasonable time” considering the following factors: 1) Since Angelina has disposed of the goods delivered
character of the goods; 2) purpose intended; 3) ability of before he knows that the seller is not going to perform his
seller to produce the goods; 4) transportation facilities; 5) contract in full, she shall not be liable for more than the fair
distance thru which the goods must be carried; and 6) usual value to him of the goods received. (Art 1522, par. 1, 2nd
course of business in that particular trade. (Smith, Bell and sentence)
Co. v. Sotelo Matti, 44 Phil. 874).
What may the buyer do if the seller delivers a quantity of

What is the effect on the seller’s obligation to deliver the goods larger than what was contracted?
goods if the same are in the hands of a third person?
Under Art 1522, par. 2 of the Civil Code, the buyer
Article 1521 of the Civil Code provides, “where the may accept the goods agreed upon and reject the rest.
goods at the time of sale are in the possession of a third However, the buyer may choose to accept all the goods but
person, the seller has not fulfilled his obligation to deliver to he must pay for them at the contract rate.
the buyer unless and until such third person acknowledges to
buyer that he holds the goods on the buyer’s behalf.”
However, this rule applies only to sale of goods already Angelina bought from Brad 500 cans of sardines at Php 12.00
existing at the time of the sale, but in the hands of a third each. 1000 cans were delivered Brad. What are the rights of
party, not when the goods are still to be manufactured. Angelina?
Angelina may accept the 500 and return the other

Who shall shoulder the expenses for putting the goods in a 500 cans. She may also choose to accept all but she must pay
deliverable state? for them at the contract price of Php 12.00 per can.
The seller, unless otherwise agreed, shall shoulder

the expenses (Art. 1521, last par.) This rule also applies even If a buyer agrees to purchase a designated amount but
if the buyer has the duty to take delivery. actually orders a lesser amount, can the seller complain if he
decided to deliver the lesser quantity?
In a contract of sale, when must demand or tender of No, the seller cannot complain, this is a clear case
delivery be made? of a waiver. (Quiroga v. Parsons Phil. 501).

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The goods shall be deemed to be at the risk of the

When is there “implied acceptance” of excess goods seller during such transit. (Art. 1253, par 3)
delivered?
Acceptance, even if not express, is implied when What are the two kinds of Delivery to Carrier? Explain each.
the buyer exercises acts of ownership over the excess goods.
Delivery to carrier may be: 1) C.I.F. (cost,
insurance, freight) where the selling price includes insurance
What may the buyer do if the seller delivers the goods agreed and freight and shall be shouldered by the seller; or 2)
upon mixed with goods of a different description? F.O.B. (free on board) where the property passes as soon as
the goods are delivered aboard the carrier and the buyer as
Under Article 1522, par 3, the buyer may accept the owner of the goods is to bear all expenses after they are
the goods which are in accordance with the contract and so delivered.
reject the rest.
What are the different kinds of F.O.B. sale and what are the
When may the buyer reject all the goods delivered in case consequences of each kind?
what was delivered is of larger quantity or of a different
quality? The F.O.B. sale may be: 1) f.o.b. at the place of
shipment (the buyer must pay the freight); 2) f.o.b.
Under Article 1522, par. 4, the buyer may reject alongside the vessel (from the moment the goods are
the whole of the goods delivered in these instances if the brought alongside the vessel, the buyer must pay for the
subject matter is indivisible. freight or expenses); or 3) f.o.b. at the place of
destination (the seller must pay the freight since the
When is delivery to a carrier considered as delivery to buyer? contract states “free on board till destination”).
Generally, delivery to a carrier is deemed delivery

to the buyer if it is the duty of the seller to send the goods to What are the obligations of the seller and the buyer in
the buyer. This rule, however to some conditions provided contracts of “c.i.f.” sale? In “f.o.b.” sale?
under Article 1523 of the Civil Code.
In “c.i.f.” (cost, insurance, freight) sales of goods,
the buyer pays a fixed price, while the seller pays the
Is the seller required to enter into a contract with the carrier insurance and freight up to the place of destination. In other
on behalf of the buyer to have the effect of the required words, the seller is responsible for all expenses, such as
delivery? insurance and freight, pays for all charges, such as export
taxes and other charges or fees, and be responsible for the
Article 1523, par 2 of the Civil Code states that if goods up to the point of destination. The buyer, on the other
the carrier is not authorized by the buyer, the seller must hand, who paid a fixed price, shall accept delivery of the
make such contract with the carrier on behalf of the buyer as goods at the point of destination, pays all charges, such as
may be reasonable, having regard to the nature of the goods taxes and duties at such point, and be responsible for the
and the other circumstances of the case. goods once the seller’s responsibility ceases.
In “f.o.b.” (free on board) sales of goods, the goods

What is the effect if the seller fails to make the contract with are shipped by the seller to a certain point without any
the carrier on behalf of the buyer if the latter has not expense to the buyer, but after delivery at such point all
authorized said carrier? subsequent expenses incident to the transportation and
delivery shall be paid by the buyer. Thus, if the sale is “f.o.b.”
The 2nd sentence of Article 1523, par 2 states that if at the place of shipment, the buyer must pay the freight, if
the seller omits to make such contract when required to do “f.o.b.” at the place of destination, the seller must pay the
so, and the goods are lost or destroyed in course of transit, freight.
the buyer may decline to treat the delivery to the carrier as a
delivery to himself, or may hold the seller responsible in
damages. What are the kinds of contract of sale when the seller is
obliged to pay the freight when goods are delivered through a
carrier?
What is the duty of the seller in case the circumstances of the
delivery would usually require the goods to be insured The seller is obliged to pay the freight if the sale is either 1)
during their transit? “c.i.f.” sale or 2) “f.o.b.” at the place of destination.
Article 1523, par 3 states that unless otherwise

agreed, where goods are sent by the seller to the buyer under Angelina in Baguio agrees to ship goods to Brad at Dagupan
circumstances in which the seller knows or ought to know City, “F.O.B. Dagupan City.” Before the goods reach Dagupan
that it is usual to insure, the seller must give such notice to City, they are destroyed by a fortuitous event. Who bears the
the buyer as may enable him to insure them during their loss?
transit.
Angelina bears the loss because ownership (title)
does not pass till the goods reach Dagupan City. Hence, the
What are the consequences if the seller fails to notify the seller bears the loss. If the price has been given him, he must
buyer of the need to insure the goods during their transit? return the same. If no payment has yet been made, he cannot
successfully demand the price from the buyer.
SALES
On December 4, 2010, Angelina agreed to buy the Toyota

Innova (ABC 123) of Brad. No agreement was made as to the
When is the vendor not bound to deliver the goods subject of day of payment. Angelina, despite not giving Brad any
a Contract of Sale? payment, is asking for the delivery of the vehicle claiming
that Brad is obliged to deliver since the sale was perfected by
Under Article 1524 of the Civil Code, the vendor mere consent. Is Angelina correct?
shall not be bound to deliver the things sold if the vendee has
not paid him the price or if no period for the payment has No, Angelina is not correct. Under Article 1524 of
been fixed in the contract. the Civil Code, the vendor is not bound to deliver the thing
sold if no period has been fixed for the period of payment.
If the vendee has not paid the vendor the price, is the latter
obliged to deliver the things sold to the former? Angelina agreed to buy the Toyota Innova (ABC 123) of Brad.
Angelina, despite not giving Brad any payment, is asking for
No, the vendor is not bound to deliver the things the delivery of the vehicle claiming that Brad is obliged to
sold if the vendee has not paid him the price. (Art 1524) deliver even if no payment has been made yet since the sale
was perfected by mere consent. Is Angelina correct?
If no period for the payment has been fixed, is the vendor No, Angelina is not correct. Under Article 1524 of
bound to deliver the things sold? the Civil Code, the vendor is not bound to deliver the thing
sold if the vendee has not paid him the price. Since a sale is a
No, the vendor is not bound to deliver the things reciprocal contract, the delivery and payment are
sold if no period has been fixed for the period of payment. reciprocal obligations.
(Art 1524)

What is the reason why the vendor shall not be bound to Innova (ABC 123) of Brad. They agreed that payment shall be
deliver the things sold if the vendee has not paid him the made a week later. On December 6, 2010 Angelina, despite
price or if no period for the payment has been fixed in the not giving Brad any payment, is asking for the delivery of the
contract? vehicle. Brad refused to deliver the car claiming that he is not
bound to deliver the thing sold because no payment has yet
The reason is because a sale is a reciprocal been made. Is Brad correct?
contract giving rise to reciprocal obligations.
No, Brad must deliver the vehicle because Article
1524 of the Civil Code does not apply when a period for
If a period for the payment has been fixed by the parties, can payment has been agreed upon in the contract of sale and
the seller refuse to deliver the things sold until the period of said period has not yet arrived (Florendo v. Foz, 20 Phil.
payment arrives? 388). He will then have to wait for the end of the period
before he can demand the price from Angelina, except if the
No, the seller must deliver the things sold even if latter has lost the benefit of the term (see Article 1198 –
said period has not yet arrived (Florendo v. Foz, 20 Phil. instances when the debtor shall lose every right to make use
388). He will then have to wait for the end of the period of the period).
before he can demand the price, except if the buyer has lost
the benefit of the term (see Article 1198 – instances when the
debtor shall lose every right to make use of the period). When is the seller deemed to be an “unpaid seller”?
The seller is deemed to be an unpaid seller in the

If a period for the payment has been fixed by the parties, can following instances: 1) when the whole price has not been
the seller nevertheless refuse to deliver the things sold until paid or tendered; and 2) when a bill of exchange or other
the period of payment arrives? negotiable instrument has been received as conditional
payment, and the condition on which it was received has
Generally, no, the seller must deliver the things been broken by reason of dishonor of the instrument, the
sold and wait for the period of payment to arrive. However, insolvency of the buyer, or otherwise (Article 1525, 1st par).
the seller may refuse to deliver the things if the vendee has
lost the right to make use of the period and still refuses to
pay (see Arts 1536 and 1198). What does the term “seller” in Articles 1525-1535 include?
The term “seller” includes any person who is in the

If a period for payment has been agreed upon in a contract of position of the seller, such an agent of such seller to whom
sale, the vendor cannot avail of the right under Article 1524. the bill of lading has been indorsed, or a consignor or agent
Is there an exception to this rule such that the vendor can who has himself, paid, or is directly responsible for the price
nevertheless refuse to deliver the things sold until period of (Article 1525, 2nd par).
payment arrives?
Yes, the exception is provided under Articles 1536 If only a part of the price has been paid or tendered, is the
and 1198. The seller may refuse to deliver the things if the seller still an “unpaid seller”?
vendee has lost the right to make use of the period and still
refuses to pay Yes, he is still an unpaid seller. Article 1525
provides that a seller who has not been paid the whole
price is deemed an unpaid seller.
SALES
Yes, Brad is an unpaid seller. If a negotiable

instrument has been received as conditional payment, and
When is the holder of a negotiable instrument deemed an the condition on which it was received has been broken by
“unpaid seller”? reason of dishonor of the instrument, the insolvency of the
buyer, or otherwise, the holder of such negotiable instrument
If the negotiable instrument has been received as shall be deemed as an unpaid seller.
conditional payment, and the condition on which it was
received has been broken by reason of dishonor of the
instrument, the insolvency of the buyer, or otherwise, the What are the rights of an unpaid seller if ownership has
holder of such negotiable instrument shall be deemed as an already passed to the buyer?
unpaid seller.
Notwithstanding that the ownership in the goods
may have passed to the buyer, the unpaid seller of goods, as
When is the agent of the seller to whom a bill of lading has such, has the following remedies: 1) possessory lien in the
been indorsed deemed an “unpaid seller”? nature of a pledge; 2) right of stoppage in transitu if the
seller has parted with the possession; 3) right or resale;
If the bill of lading has been received as and 4) right to rescind the sale (Article 1526)
conditional payment and the condition on which it was
received has been broken by reason of dishonor of the
instrument, the insolvency of the buyer, or otherwise, the What are the remedies of an unpaid seller if ownership has
agent of the seller to whom a bill of lading has been indorsed not yet passed to the buyer?
shall be deemed as an unpaid seller.
Where the ownership in the goods has not passed
to the buyer, the unpaid seller has, in addition to his other
What is the reason why mere delivery of a negotiable remedies, a right of withholding delivery similar to and co-
instrument does not extinguish the obligation of the buyer to existent with his rights of lien and stoppage in transitu where
pay? the ownership has passed to the buyer (Art 1526, last
paragraph).
The obligation to pay is not extinguished because
the seller may still be an unpaid seller if the negotiable
instrument is dishonored. When is the right of possessory lien available to an unpaid
seller?
What happens if a negotiable instrument that has been The right of possessory lien is available to the
received as conditional payment was subsequently unpaid seller when the ownership has already passed to the
dishonored? buyer but the seller still has possession over the goods.

the seller becomes an unpaid seller (Article 1525). What is the effect to the possessory lien if the unpaid seller
losses possession of the goods?
If a negotiable instrument has been received as conditional The possessory lien is lost after the seller loses
payment and the condition on which it was received has been possession of the goods but his lien (no longer possessory) as
broken by reason of the insolvency of the buyer, what an unpaid seller remains; hence he is still a preferred
happens to the obligation of the buyer to pay? creditor with respect to the price if the specific goods sold
(Article 2241, no. 3).
the seller becomes an unpaid seller (Article 1525).
When is the right of stoppage in transitu available to an
unpaid seller?
Innova (ABC 123) of Brad for the price of Php 350,000.00. The right of stoppage in transitu is available to an
On the agreed date for payment, Angelina only paid Php unpaid seller if the buyer is insolvent and the seller has
250,000.00. Is Brad deemed an “unpaid seller” in this case? already parted with the possession over the goods subject of
the sale (Article 1526, no. 2)
Yes, Brad is still an unpaid seller. Article 1525
provides that a seller who has not been paid the whole
price is deemed an unpaid seller. Therefore, unless Brad On December 4, 2010, Angelina agreed to buy the Toyota
receives the balance of the purchase price, he is deemed an Innova (ABC 123) of Brad for the price of Php 350,000.00.
unpaid seller. On the agreed date for payment, Angelina only paid Php
250,000.00. Can Brad withhold delivery of the vehicle?
On December 4, 2010, Angelina agreed to buy the Toyota Yes, Brad is an unpaid seller in this case. Under
Innova (ABC 123) of Brad for the price of Php 350,000.00. the second paragraph of Article 1526, an unpaid seller has
On the agreed date for payment, Angelina issued a negotiable the right of withholding the delivery of the goods subject of
instrument in favor of Brad as payment. However, the the sale.
negotiable instrument was subsequently dishonored. Is Brad
deemed an “unpaid seller” in this case?
If a negotiable instrument has been received as conditional
payment and the condition on which it was received has been
SALES
broken by reason of the insolvency of the buyer, may the

seller exercise the right of stoppage in transitu?
The right of stoppage in transitu is available to an Innova (ABC 123) of Brad for the price of Php 350,000.00.
unpaid seller if the buyer is insolvent and the seller has On the agreed date for payment, Angelina only paid Php
already parted with the possession over the goods subject of 250,000.00. Can Brad withhold delivery of the vehicle?
the sale (Article 1526, no. 2). In the given problem, the seller
is deemed an unpaid seller under the provision of Article Yes, the unpaid seller of goods who is in
1525. Therefore, the remedies under Article 1526 are possession of them is entitled to retain possession of them
available to him. until payment or tender of the price in the following cases: 1)
where the goods have been sold without any stipulation as to
credit; 2) where the goods have been sold on credit, but the
On December 4, 2010, Angelina agreed to buy the Toyota term of credit has expired; and 3) where the buyer
Innova (ABC 123) of Brad for the price of Php 350,000.00. becomes insolvent (Article 1527, 1st par).
On the agreed date for payment, Angelina only paid Php
250,000.00. Claiming the right of possessory lien available
to an unpaid seller, Brad refuses to deliver the vehicle and Angelina agreed to buy the Toyota Innova (ABC 123) of Brad.
retains it while he is in possession of said car. Is Brad They made no arrangements as to credit. Angelina, despite
correct? not giving Brad any payment, is asking for the delivery of the
vehicle claiming that Brad is obliged to deliver even if no
Yes, Brad is correct. Under Article 1525, he is still payment has been made yet since the sale was perfected by
an unpaid seller. Article 1526 provides that the right of mere consent. Is Brad justified in withholding delivery of the
possessory lien is available to the unpaid seller when the vehicle?
ownership has already passed to the buyer but the seller still
has possession over the thing sold. Yes, the unpaid seller of goods who is in
possession of them is entitled to retain possession of them
until payment or tender of the price in the following cases: 1)
where the goods have been sold without any stipulation
When is the right to retain the goods available to the unpaid as to credit; 2) where the goods have been sold on credit,
seller? but the term of credit has expired; and 3) where the buyer
becomes insolvent (Article 1527, 1st par).
The unpaid seller of goods who is in possession of
them is entitled to retain possession of them until payment
or tender of the price in the following cases: 1) where the Angelina sold Brad a specific diamond ring to be paid 6
goods have been sold without any stipulation as to credit; 2) months later. By mutual agreement, Brad is made already
where the goods have been sold on credit, but the term of the owner, but Angelina will act as the depositary of the ring
credit has expired; and 3) where the buyer becomes insolvent in the meantime. If the term expires, and Brad has not yet
(Article 1527, 1st par). paid, may Angelina still continue possessing the ring even if
she is no longer the owner?
May the seller exercise his right of lien or retention even if he Yes, for she has not been paid. Her no longer being
is in possession of the goods as a mere agent or bailee for the the owner is not important, for the law says: “The seller may
buyer? exercise his right or retention notwithstanding that he is in
possession of the goods as agent or bailee for the buyer”
Yes, he may exercise his right or retention (Article 1527, 2nd par).
notwithstanding that he is in possession of the goods as
agent or bailee for the buyer (Article 1527, 2nd par).
What is the condition for the possessory lien under Article
1527 to be available to an unpaid seller?
May an unpaid seller still exercise the right to retain
possession of the goods sold on credit? This possessory lien, however, remains only so
long as the property is still with the vendor.
Yes, under Article 1527, even if the goods were sold
on credit, the unpaid seller may still exercise the right to
retain possession of the goods if the term of credit has Can the possessory lien of an unpaid seller be exercised if
already expired. there has already been partial delivery of the goods?
Yes. Under Article 1528, where an unpaid seller

If a negotiable instrument has been received as conditional has made part delivery of the goods, he may exercise his
payment and the condition on which it was received has been right on the remainder, unless such part delivery has been
broken by reason of the insolvency of the buyer, may the made under such circumstances as to show an intent to
seller exercise the right of lien or retention of the goods? waive the lien or right of retention.
Yes, the unpaid seller of goods who is in

possession of them is entitled to retain possession of them Angelina bought 10 bottles of perfume from Brad, only 7 of
until payment or tender of the price in the following cases: 1) which arrived. Since Angelina has not yet fully paid the
where the goods have been sold without any stipulation as to purchase price, may Brad exercise his right of possessory
credit; 2) where the goods have been sold on credit, but the lien over the remaining 3 bottles of perfume?
term of credit has expired; and 3) where the buyer becomes
insolvent (Article 1527, 1st par).
SALES
Yes. Under Article 1528, where an unpaid seller No, under the circumstances mentioned in Article
has made part delivery of the goods, he may exercise his 1529, the lien lost is only the possessory lien and not the
right on the remainder, unless such part delivery has been vendor’s lien.
made under such circumstances as to show an intent to
waive the lien or right of retention.
Angelina delivered the goods to the carrier for transmission
to the buyer, Brad. She, however, reserved her right to the
Angelina bought 10 bottles of perfume from Brad, only 7 of ownership in the goods. Does she lose her possessory lien?
which arrived. Since Angelina has not yet fully paid the
purchase price, Brad exercised his right of possessory lien No, she does not lose her possessory lien in view of
over the remaining 3 bottles of perfume Angelina claims that the reservation. Under Article 1529, one of the instances
Brad can no longer withhold delivery of the remainder when the unpaid seller’s possessory lien is lost is when he
because the right of possessory lien is available only if the delivers the goods to a carrier or other bailee for the purpose
goods are still in the possession of the seller. Is Angelina of transmission to the buyer without reserving the ownership
correct? in the goods or the right to the possession thereof.
No, Angelina is not correct. Brad has the right to

withhold delivery of the remaining 3 bottles because under An unpaid seller who is still in possession of the goods sold
Article 1528, where an unpaid seller has made part delivery brought an action to get the purchase price. Does he lose his
of the goods, he may exercise his right on the remainder, lien?
unless such part delivery has been made under such
circumstances as to show an intent to waive the lien or right No, the bringing of an action is not one of the ways
of retention. of losing the possessory lien. As a matter of fact, even if he
has already obtained a money judgment in his favor, the
possessory lien still remains with him (Article 1529).
Under what circumstances is the unpaid seller no longer
allowed to exercise the right of retention over the remainder
of the goods where partial delivery has already been made? Brad, an unpaid seller who is still in possession of the goods
sold brought an action against Angelina to get the purchase
The right of lien over the remainder of the goods price. Does he lose his lien by virtue of the filing of the
where partial delivery has been made is no longer available if collection complaint?
such part delivery has been made under such circumstances
as to show an intent to waive the lien or right of retention No, the bringing of an action is not one of the ways
(Article 1528). of losing the possessory lien. As a matter of fact, even if Brad
has already obtained a money judgment in his favor, the
possessory lien still remains with him (Article 1529).
When does the unpaid seller lose his lien on or right of
retention over the goods?
An unpaid seller, who possessed the goods through a
The unpaid seller loses his right of lien or retention in the warehouseman, delivered to the buyer a negotiable
following cases: 1) when he delivers the goods to a carrier or other warehouse receipt. Does the unpaid seller still have a
bailee for the purpose of transmission to the buyer without reserving possessory lien?
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; Not anymore. Under Article 1529, no. 2, an unpaid
and 3) by waiver thereof (Article 1529) seller’s possessory lien is lost when the buyer or his agent
lawfully obtains possession on the goods. The negotiable
warehouse receipt automatically transferred both title and
Is the lien of an unpaid seller over the goods sold lost if he right of possession to the goods in the buyer.
obtains judgment for the price of the goods?
No, such lien is not lost. Under Article 1529, last

paragraph, the unpaid seller of goods, having a lien thereon,
does not lose his lien by reason only that he has obtained
judgment for the price of the goods. What is meant by the right of stoppage in transitu?
The right of stoppage in transitu refers to the right

Can an unpaid seller waive his possessory lien on or right of of the unpaid seller to resume possession of the goods at
retention over the goods sold? anytime while they are in transit by virtue of which he will
then be entitled to the same rights in regard to the goods as
Yes, waiver is one of the instances that would he would have had if he had never parted with the possession
result in the loss of the possessory lien or right of retention (Article 1530).
that the unpaid seller has over the goods (Article 1529, no. 3)
When is the right of stoppage in transitu available to the

Under the circumstances mentioned under Article 1529, the unpaid seller?
possessory lien of an unpaid seller is lost. Is the vendor’s lien
also lost? This right is available to the unpaid seller when he
has already parted with the possession of the goods and the
buyer is or becomes insolvent (Article 1530).

SALES
not yet been judicially declared insolvent. Is Angelina

The unpaid seller may exercise his right of stoppage in correct?
transitu when he has already parted with the possession of
the goods and the buyer is or becomes insolvent. What is the No, Angelina is not correct and Brad can exercise
right of stoppage in transitu? his right of stoppage in transitu. Under Article 1530, when
the buyer of goods is or becomes insolvent, the unpaid seller
The right of stoppage in transitu refers to the right who has parted with the possession of the goods has the right
of the unpaid seller to resume possession of the goods at of stopping them in transitu, that is to say, he may resume
anytime while they are in transit by virtue of which he will possession of the goods at any time while they are in transit,
then be entitled to the same rights in regard to the goods as and he will then become entitled to the same rights in regard
he would have had if he had never parted with the possession to the goods as he would have if he had never parted with the
(Article 1530). possession. The insolvency need not be judicially
declared. It is enough that the obligations exceed a man’s
assets (Paras).
What is the effect if the unpaid seller exercises his right of
stoppage in transitu?
When are goods considered “in transit”?
Upon exercise of the right of stoppage in transitu,
the unpaid seller will then be entitled to the same rights in Goods are in transit within the meaning of Article
regard to the goods as he would have had if he had never 1530 in the following instances: 1) from the time when they
parted with the possession (Article 1530). 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
When will the buyer’s insolvency give rise to the unpaid such carrier or other bailee; or 2) if the goods are rejected by
seller’s right of stoppage in transitu? the buyer, and the carrier or other bailee continues in
possession of them, even if the seller has refused to receive
The seller’s right of stoppage in transitu exists them back (Article 1531).
whether the buyer is insolvent at the time of or after the sale.
This is because Article 1530 provides that the right if
stoppage in transitu available when the seller has already When are goods no longer considered “in transit”?
parted with the possession of the goods and the buyer is or
becomes insolvent. Goods are no longer in transit within the meaning
of Article 1530 in the following instances: 1) if the buyer, or
his agent in that behalf, obtains delivery of the goods before
Under Article 1530 of the Civil Code, the right of stoppage in their arrival at the appointed destination; 2) if, after the
transitu is available to the seller when he has already parted arrival of the goods at the appointed destination, the carrier
with the possession of the goods and the buyer is or becomes or other bailee acknowledges to the buyer or his agent that
insolvent. What is the meaning of INSOLVENCY under this he holds the goods on his behalf and continues in possession
provision? of them as bailee for the buyer or his agent; and it is
immaterial that further destination for the goods may have
The insolvency need not be judicially declared. It is been indicated by the buyer; or 3) if the carrier or other
enough that the obligations exceed a man’s assets (Paras). bailee wrongfully refuses to deliver the goods to the buyer or
his agent in that behalf (Article 1531).
Angelina bought 100 cases of Manila Beer from Brad with the
understanding that the goods will be delivered by ship from If the goods already reached the place of destination, can
Manila to Cebu. While the goods were being transported, they still be considered “in transit”?
Brad learns that Angelina has become insolvent. Can Brad
stop the delivery of the goods and resume possession Yes, goods that have reached the place of
thereof? destination are still considered” “in transit” if the good are
rejected by the buyer and the carrier or other bailee
Yes, Brad can exercise his right of stoppage in continues in possession of them (Article 1531).
transitu. Under Article 1530, when the buyer of goods is or
becomes insolvent, the unpaid seller who has parted with
the possession of the goods has the right of stopping them in If the goods are rejected by the buyer but the seller refuses to
transitu, that is to say, he may resume possession of the receive them back, are the goods considered “in transit”?
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 Yes, goods that have reached the place of
he would have if he had never parted with the possession. destination are still considered” “in transit” if the good are
rejected by the buyer provided the carrier or other bailee
continues in possession of them, even if the seller has
refused to receive them back (Article 1531).
Angelina bought 100 cases of Manila Beer from Brad with the
understanding that the goods will be delivered by ship from
Manila to Cebu. While the goods were being transported, Despite not having arrived at the appointed place of
Brad learns that Angelina has become insolvent. Brad wants destination, can the goods, nevertheless, be considered as no
stop the delivery of the goods and resume possession longer “in transit”?
thereof. Angelina, on the other hands, claims that the right of
stoppage in transitu is not available to Brad because she has Yes, goods that have not yet reached the place of
destination may already be considered as no longer “in
SALES
transit” if the buyer, or his agent in that behalf, has obtained What is required in the exercise of the right of stoppage in
delivery of the goods (Article 1531). transitu?
There must be intent to repossess the goods (Paras).

If the goods have arrived at the appointed destination but the
carrier or other bailee continues possession of them, are the
goods still “in transit”? If the right of stoppage in transitu is exercised by giving a
notice of the claim, to whom should the unpaid seller give
Not necessarily. If, after the arrival of the goods at such notice?
the appointed destination, the carrier or other bailee
acknowledges to the buyer or his agent that he holds the The notice must be given either 1) to the person on
goods on his behalf and continues in possession of them as actual possession of the goods; or 2) to his principal (Article
bailee for the buyer or his agent, the goods are no longer “in 1532, 1st par).
transit” (Article 1531).
If the notice of the seller’s exercise of the right of stoppage in

If the goods have arrived in the appointed destination and transitu is given to the principal, what is the condition
the carrier or other bailee continues possession of them as required by law?
bailee for the buyer or his agent but the buyer has indicated a
further destination, are the goods still “in transit”? If the notice is given to the principal, it must be
given at such time and under such circumstances that the
Not anymore. Under Article 1531, if, after the principal, by the exercise of reasonable diligence, may
arrival of the goods at the appointed destination, the carrier prevent a delivery to the buyer (Article 1532, 1st par).
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 If notice of stoppage in transitu is given by the seller to the
immaterial that further destination for the goods carrier, or other bailee in possession of the goods, what is the
may have been indicated by the buyer. obligation of the latter?
Upon receipt of the notice of stoppage in transitu,

If upon arrival of the goods the buyer unjustifiably refuses to the carrier, or other bailee in possession of the goods, must
receive the goods, may the seller still exercise the right of deliver the goods to, or according to the directions of, the
stoppage in transitu? seller (Article 1532, 2nd par).
Yes, because in this instance, the goods are still

considered “in transit” and therefore, the seller may still Who shall bear the expenses if the goods are delivered back
exercise the right of stoppage. to the seller exercising his right of stoppage in transitu?
The expenses for such delivery must be borne by the seller

If the goods are delivered to a ship, freight train, truck, or (Article 1532, 2nd par).
airplane chartered by the buyer, are the goods still
considered “in transit” or not anymore?
If a negotiable document of title representing the goods has
Under Article 1531, if the goods are delivered to a been issued by the carrier or other bailee, what is required
ship, freight train, truck, or airplane chartered by the buyer, for the unpaid seller to exercise his right of stoppage in
it is a question depending on the circumstances of the transitu and order the redelivery of the goods?
particular case, whether they are in possession of the carrier
as such or as agent of the buyer. Under the last sentence of Article 1532, if a
negotiable document of title representing the goods has been
issued by the carrier or other bailee, he shall not be obliged
If part delivery of the goods has been made to the buyer, or to deliver or justified in delivering the goods to the seller
his agent in that behalf, is the right of stoppage in transitu unless such document is first surrendered for cancellation.
still available to the unpaid seller?
Yes, the remainder of the goods may be stopped in What are the effects of the exercise of the right of stoppage in
transitu, unless such part delivery has been under such transitu?
circumstances as to show an agreement with the buyer to
give up possession of the whole of the goods (Article 1531). After the exercise of the right of stoppage in
transitu, the consequential effects are: 1) the goods are no
longer in transitu; 2) the contract of carriage ends and the
How is the right of stoppage in transitu exercised? carrier now becomes a mere bailee and he will be liable as
such; 3) the carrier should not deliver anymore to the buyer
The unpaid seller may exercise his right of or the latter’s agent; otherwise, he will be liable for damages
stoppage in transitu either by obtaining actual possession of (Paras); and 4) the carrier must redeliver to, or according to
the goods or by giving notice of his claim to the carrier or the directions of, the seller (Article 1532, 2nd par).
other bailee in whose possession the goods are (Article 1532,
1st par).
When is the right of resale available to the unpaid seller?

SALES
The right of resale is available to the unpaid seller The right to rescind the transfer of title is available
of goods in the following cases: 1) where the goods are of when an unpaid seller has the right of lien or has stopped the
perishable nature; 2) where the seller has expressly reserved goods in transitu and if he expressly reserved to do so in case
the right of resale in case the buyer should make default; and the buyer should be in default or where the buyer has been in
3) where the buyer has been in default in the payment of the default for an unreasonable time (Article 1534, 1 st
price for an unreasonable time. It is, however, essential paragraph).
before the resale can be made that the unpaid seller should
have a right of lien or should have stopped the goods in
transitu (Article 1533, 1st par). What is the effect of the exercise of the right to rescind?
The buyer who exercises the right to rescind the

transfer of title shall resume the ownership in the goods.
What should be done in order to rescind the transfer of title?

What are the preconditions before the unpaid seller may
exercise the right of resale in the instances allowed by law? The unpaid seller must manifest by notice to the
buyer or by some other overt act an intention to rescind
In the exercise of the right of resale, Article 1532, (Article 1534, 2nd paragraph).
1st paragraph requires that the unpaid seller should have a
right of lien or should have stopped the goods in transitu.
Is it necessary that the overt act showing an intention to
rescind be communicated to the buyer?
What is the effect of a resale under Article 1533?
It is not necessary that such overt act should be
Where a resale is made, as authorized under communicated to the buyer, but the giving or failure to give
Article 1533 (par 2), the buyer acquires a good title as against notice to the buyer of the intention to rescind shall be
the original buyer. relevant in any issue involving the question whether the
buyer had been in default for an unreasonable time before
the right of rescission was asserted (Article 1534, 2 nd
What is the rule regarding any deficiency in the price after paragraph).
the resale?
The deficiency in the price may be obtained as What is the effect of any sale or disposition of the goods by
damages from the buyer, as when the resale price is lower the buyer on the unpaid seller’s right of lien or stoppage in
than the original selling price. transitu?
Generally, the unpaid seller’s lien or stoppage in

Is notice of an intention to resell the goods essential to the transitu remains even if the buyer has sold or otherwise
validity of a resale? disposed of the goods. The exceptions are when the unpaid
seller has given his consent thereto or when the purchaser or
Notice of an intention to resell the goods is not buyer is a purchaser for value in good faith of a negotiable
essential to the validity of the resale. However, where the document of title.
right to resell is not based on the perishable nature of the
goods or upon an express provision of the contract of sale,
the giving or failure to give such notice shall be relevant in If the buyer has already sold the goods, may an unpaid seller
any issue involving the question whether the buyer had been still exercise his right of lien or stoppage in transitu over the
in default for an unreasonable time before the resale was goods?
made (Article 1533, 3rd paragraph).
Yes, the unpaid seller may still exercises right of
lien or stoppage in transitu over said goods. This is because
Is notice of the time and place of the resale of goods essential under Article 1535, the unpaid seller’s right of lien or
to the validity of such resale? stoppage in transitu is not affected by any sale, or other
disposition of the goods which the buyer may have made,
No, it is not essential to the validity of a resale that unless the seller has assented thereto.
notice of the time and place of such resale should be given by
the seller to the original buyer (Article 1533, 4 th paragraph).
May the unpaid seller’s right of lien or stoppage in transitu
still be exercised if a negotiable document of title has been
issued in favor of a purchaser for value in good faith?
May the seller buy the goods subject of the resale?
No. Under Article 1535, 2nd paragraph, if a
No, the seller cannot, directly or indirectly, buy the negotiable document of title has been issued for goods, no
goods (Article 1533, last paragraph). seller’s lien or right of stoppage in transitu shall defeat the
right of any purchaser for value in good faith to whom such
document has been negotiated, whether such negotiation be
When is the right to rescind the sale available to an unpaid prior or subsequent to the notification to the carrier or other
seller? bailee who issued such document, of the seller’s claim to a
lien or right of stoppage in transitu.

SALES
1. Seller promise to mortgage his house to secure the purchase

If a negotiable document of title has been issued for goods price and he fails to furnish said security as promised;
and has been negotiated in favor of a purchaser for value in
good faith subsequent to the notification to the bailee of the 2. If the payment of the purchase price is secured by a mortgage
unpaid seller’s claim to a lien, which shall prevail, the unpaid on the house of buyer, but the house was partially burned
seller’s right of lien or the purchaser’s right under the because of the buyer’s fault;
negotiable document of title?
3. Where the buyer shows intent not to pay the price after the
The right of the purchaser in good faith for value thing is delivered to him.
shall prevail over the unpaid seller’s right of lien. Under the
second paragraph of Article 1535, if a negotiable document of
title has been issued for goods, no seller’s lien or right of
stoppage in transitu shall defeat the right of any purchaser Define accessions and accessories?
for value in good faith to whom such document has been
negotiated, whether such negotiation be prior or subsequent
Accessions are fruits of a thing; or additions or
to the notification to the carrier or other bailee who issued
improvements upon a thing such as the young of an animals,
such document, of the seller’s claim to a lien or right of
house or trees on a land.
stoppage in transitu.
Accessories are anything attached to the principal thing for
its completion, ornament,or better use such as picture frame,
key of a house.
When shall the debtor lose every right to make use of the
period?
The debtor shall lose every right to make use of the period
when: What is the duty of the vendor in delivering the thing sold?
1. When after the obligation has been contracted, he becomes The vendor is bound to deliver the thing sold in the condition
insolvent, unless he gives a guaranty or security for the debt in which they were upon the perfection of the contract
or price; including its accessions and accessories. The vendor is,
therefore obliged to preserve the thing pending its delivery.
2. When he does not furnish to the creditor the guaranties or
securities which he has promised;
3. When by his own act he has impaired said guaranties or

securities after their establishment, and when through
fortuitous event they disappear, unless he emmediately gives
ones equally satisfactory;
Who owns the fruit after the contract is perfected?
4. When the debtor violates any undertaking, in
consideration of which the creditor agreed to the period; All the fruits shall pertain to the vendee from the day on
when the contract was perfected, but it is evident that a contrary
5. When the debtor attempts to abscond. stipulation may be agreed upon, or a later date may be set.
***The term fruits include natural, industrial, and civil fruits.
A purchased goods from B. A promised to give certain

securities, as a result of which, A was given one year within
which to pay. A failed to give the securities. Can B be Give the effect of loss, deteriorstion or improvement before
compelled to deliver? delivery?
No. for failure of A to give the securities he loses the right to It is that from the time of perfection to delivery, risk is to be
make use of the period. But if B so desires, he may borne by the buyer.
voluntarily deliver.
What are t6he rules in case of loss, deterioration or

Sam sold to Muel a car on credit. Does Sam have the right to improvement of the thing before delivery?
withhold the delivery of the car?
The following rules shall be observed:
Yes, Sam may withhold delivery, unless Muel gives sufficient
guaranty or security. 1. If the thing is lost without the fault of the debtor, the
obligation shall be extinguished;
2. If the thing is lost through fault of the debtor, he shall be
obliged to pay damages to damages; it is understood that the
Give other instances where seller may withhold delivery of thing is lost when it perishes, or goes out of commerce, or
the thing sold? disappears in such a way that its existence is unknown or
cannot be recovered;

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3. When the thing deteriorates without t5he fault of the debtor, What is the right of the buyer if there is greater area or
the impairment is to be borne by the creditor; number of real property stated in the contract?
4. If it deteriorates through the fault of the debtor, the creditor
may choose between the rescission of the obligation and its 1. Accept the area included in the contract and reject the rest
fulfillment, with indemnity for damages in either case;
5. If the thing is improved by its nature, or by time, the 2. Accept all at a contract price
improvement shsll inure to the benefit of the creditor;
6. If it is improve at the expense of the debtor, he shall have no
other right than that granted to the usufructuary.
Sally buys from Garry a piece of land to contain 1,000 sq. m.
at the rate of P1,000 a sq. m. but the land really contains
S sold to B a car. Before delivery the car was lost without the 1,599 sq. m. What can Sally do?
fault of S. Is the obligation to deliver extinguished?
Sally may accept 1,000 sq.m. and reject the extra 500, in
Yes. The obligation to deliver is extinguish and b shall be which case he will pay only P10 million. However, sally is
oblige to pay the price if he has paid the same. allowed to accept all of the 1,500 sq. m., but he must pay P15
million. Sally is in no case allowed to rescind the contract, for
such a remedy is not allowed him under this article.
How sale of Real Estate by unit is should be made?
Sale of real property by unit shall be made with the Where is the right of the buyer when immovable sold is lack
statement of its area, at the rate of certain price for a unit of in area, or is of inferior quality, or is greater than that stated
measure or number, the caused of the contract with respect in the contract applicable?
to the vendee is the number of such units, and that the entire
area stated in contract must be delivered. It is applicable to both private and judicial sales when
immovable sold is lack in area, or is of inferior quality, or is
greater than that stated in the contract.
What are the rules if;
a. The delivery is less than what is stated: Give the rule when sale of real estate is made through lump
sum (Cuerpo Cierto or Por Precio Alzado)?
1. Proportional reduction in the price regardless of
the extent of deficiency. In the sale of real estate, made for a lump sum and not at a
2. Rescission of contract: rate of a certain sum for a unit measure or number, there
*if deficiency is at least 1/10 of area shall be no increase or decrease in the agreed price whether
stated actual area is greater or lesser than that stated area.
*regardless of the extent of deficiency, if
the buyer would not have bought the
property had he known that the area was
smaller. Enumerate the guidelines in a sale real estate made for a
lump sum?
b. Delivery of inferior quality: The guidelines are:
1. Proportional reduction in the price,  What is mentioned are the boundaries, e.i.,
regardless of extent of inferiority. the technical description of the property
2. Rescission of contract: which is indispensable requirement in the
*if inferior value exceeds 1/10 of the sale of real property.
price agreed upon;  If area or number should likewise be
* regardless of extent of inferiority designated, all the area designated within the
(inferior value), if the buyer would not boundaries either actually greater in number
have bought the property had he known of area sated should be delivered.
the inferiority.  If the area with in boundaries is smaller than
that stated, vendor should deliver only that
included in the boundaries
Alvin buys from Dale a piece of land supposed to contain
1,000 square meters at the rate of P10,000 a square meter,
but the land has only 800 sq.m. Can Dale ask for rescission? For failure to deliver all area within the boundaries even is
said area is more than that stated, what is the remedy of the
Yes, 200 sq.m. is 2/10 of 1,000. The additional 200 must be buyer?
given to Dale should he demand them, otherwise Dale may
pay only P 8 million (for 800 sq. m.) or rescind the contract. The remedies of the buyer are:
1. Reduction in price proportionate to the area not delivered; or
2. Rescission of the contract.

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deed of sale with the registry of Property ahead of any

registration in good faith by a second or subsequent buyer.
Jun buys a piece of land a cuerpo cierto. The contract states
certain number of square meters but the land included in the
boundaries happen to be Less. Is jun entitled to pay reduced
price? Who is a buyer in good faith?
No. the law presumes that the purchaser had in mind a He is one who buys the property of another without notice
determinate piece of land and that he ascertained its area that some other person has a right or interest in such
and quality before the contract was perfected. If he did nit do property and pays a full and fair price for the same at the
so, or if having done so, he made no objection and consented time of such purchase or before he has notice of the claim or
to the transaction, he can blame no one but himself. interest of some other person in the property.
Good faith is innocence or lack of knowledge of the first sale

until his contract ripens into full ownership through
When action for sale of real estate by unit or lump sum registration.
commenced?
In action of real estate by unit or lump-sum, action arising

therefrom should be commenced within six (6) months from
the day of delivery real or constructive. Enumerate the application of mirror doctrine on the law on
double sale?
The applications of the mirror doctrine are:

Give the rules as to preference of ownership in case double
or multiple sale? 1. The mirror doctrine will apply where person purchased
a lot with knowledge of facts and circumstances that
should have put him upon inquiry and investigation as
The rules are:
might be necessary to acquint him with the defects in
the title of the owner.
1. If the property is sold by the movable (personal 2. A purchaser cannot close his eyes to facts that should
property), the ownership shall be acquired by the put reasonable man on his guard and then claim that he
vendee who first takes possession in good faith. acted in good faith under the belief that there was no
2. If property sold is immovable (real property), the defect in the title of the vendor.
ownership shall belong to: 3. His mere refusal to believe that such defect exists or the
 The vendee who first registers the sale in willful closing of eyes to the possibility of the existence
good faith in the Registry of Property of a defect in the vendor’s title will not make him an
(registry of Deeds); innocent purchaser for value if afterwards it develops
 In the absence of registration, the vendee that the title is in fact defective and it appears that he
who first takes possession in good faith; and has such notice of the defects as would have led to its
 In the absence of both registration and discovery had he acted with the measure of precaution
possession, the vendee who presents the which may reasonably be required of a prudent man in
oldest title ( who first bought the property) in like situation.
good faith 4. Actual possession of land by person other than the
*** These applies also to double donation vendor would have been enough to arouse the suspicion
as to the ownership of the land about the purchased.
5. A buyer of a real property which is in possession other
than a seller must be wary and should investigate the
As with regards to the provision of Civil code what is meant rights of those in possession. Without such inquiry, the
by: buyer can hardly be regarded as in good faith.
6. As a general rule, buyer’s can rely on the face of the
a. Registration – refer to registration under the Torrens title. This is, however, inapplicable especially when the
System. requires the actual recording. If the property was property is in possession of a person or persons other
never registered as when the registrar forgot to do so than the vendor. In this case, the mirror doctrine
although he has been handed the document, there is no applies.
registration.
b. Possession – either actual or constructive. Is double sale applicable to unregistered lands?
c. Title – means title because of the sale, and not any other No. Since properties are of unregistered lands, subsequent
tirtle or mode of acquiring property. buyer thereof bought the properties at their peril. The object
of double sale must be registered so that the good faith can
be invoked. For this turns out that seller did not own the
property at the time of the sale.
What is the basis of the right or priority of the first buyer?
One who buys from unregistered owner is not a purchaser in
The basis that prius tempore, potior jure or first in time, good faith.
stronger in right. The rule can be invoked by the first buyer
only. In order to preserve this right, he must register the

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Define Condition Sale? The actions based on implied warranties prescribe in 10n
years since these obligation are imposed by7 law.
Condition Sale condition upon which the obligation of either
party in a contract of sale depends, when not performed.
When is implied warranty not applicable?
What is the effect of the condition? It is not applicable in:
1. If conditions are not fulfilled the party may either: 1. The sale where the phrase is “as is and Where is”.
2. Sale of second-hand articles.
 Refuse to proceeds with the contract; or 3. Sale by virtue of authority in fact or law.
 Proceed with the contract, waiving the
performance of the condition
2. If the condition is in the nature of a promise that it should What does the seller warrant in
happen, the non-fulfillment of such condition may be treated
by the other party as breach of warranty. a. Warranty against eviction?
Seller warrants:
What is condition as used in article 1545? 1. His right to sell at the time the ownership is
to pass
Conditions means uncertain event or contingency on the 2. Buyer will have to enjoy legal and peaceful
happening of which the obligation of the contract depends. possession of the thing.
b. Warranty against hidden defects?

What is express warranty?
1. Free from any hidden faults or defects
Express warranty is any affirmation of facts or any promise 2. Free from any charge or encumbrance not
by the seller relating to the thing, the natural tendency of declared or known to the buyer.
which is to induce the buyer to purchase the thing, and the
buyer thus induced, thus purchased the same. It includes all
warranties derived from the language of the contract, so long Define eviction?
as the language is express.
Eviction is defined as the judicial process whereby the
vendee is deprived of the whole or part of the thing
purchased by virtue of a final judgment based on a right
When is there a warranty? based on a right prior to the sale or an act imputable to the
vendor.
The good tests on warranties are:
a. If the buyer is ignorant, there is warranty;

b. If the buyer is expected to have an opinion and the Enumerate the essential elements of the warranty against
seller has no special opinion, there is no warranty eviction?
The essential elements are:

Give the effect of expression of opinion?
1. The vendee is deprived in whole or in part of the thing
Dealer’s talk like “excellent” cannot be considered as an purchased;
express warranty. Sales talk like “little exaggerations allowed 2. He is so deprived by virtue of a final judgment;
under by the law as a concession to human nature. This is in 3. The judgment is based on a right prior to the sale or an
accordance with the civil law maxim “simplex act imputable to the vendor;
commendation non obligat” or the principle of caveat emptor 4. The vendor was summoned in the suit for eviction at
(let the buyer beware). the instance to the vendee; and
5. There is no waiver on the part of the vendee.
Give the natural element of a contract of sale? Is seller liable for violation of warranty against eviction in
case of double sale?
Natural element of a contract of sale is implied to be part of
the contract unless otherwise expressly stipulated or waived. Yes, the fact that he sold the same land twice makes him
responsible for his fraud or bad faith in depriving any of the
purchasers. Provided, however, that the deprivation be upon
final judgment byb a court of competent authority.
When actions based on implied warranties prescribed?

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May a warranty against eviction be waived?
Yes. It could be: What can the vendee enforce in case of prescription if:
 Consciente where renunciation without a. Completed before sale?

knowledge of the risk, seller pays only the
value of the thing at the time of eviction. The vendee may lose the thing purchased to a third person
 Intencionada where renunciation with who has acquired title thereto by prescription. When
knowledge. prescription has commenced to run against the vendor and
** if waiver is unclear, it is presumed to be consciente. Intencionada was completed before the sale, the vendee can enforce the
must be proved. warranty against eviction. In this case, the deprivation is
based on a right prior to the sale and an act imputable to the
** waiver is void if seller acted in bad faith. vendor.
Is government liable for the eviction of the purchaser at a tax b. Completed after sale?
sale?
Even if prescription has started before the sale but has
No. government is not liable for the eviction of the purchaser reached the limit prescribed by law after the sale, the vendor
at a tax sale but still the owner of the property sold under is not liable for eviction. The reason is because the vendee
execution at the instance of the judgment creditor is liable could easily interrupt the running of the prescriptive period
for the eviction, unless otherwise decreed in the judgment. by bringing the necessary action.
Neshia sells a parcel of land to Fe. Subsequently, Fernando Is the vendor liable for eviction when the property is sold for
files an action for the recovery of possession claiming that he non-payment of taxes due and not made known to the
is the owner of the land. At the instance of Fe, Neshia was vendee?
summoned to defend his title. The court renders final
judgment declaring that Fernando has a better right. Fe is Yes. If the property is sold for non-payment of taxes due and
evicted. Is Neshia liable to Fe? not made known to the vendee before the sale the vendor is
liable for eviction.
Yes, Neshia is liable to Fe for failure to comply with his
warranty against eviction. Here, the judgment is based on a
right of third person prior to the sale.
A sells a land to B, the taxes of the land was not paid. The
land was sold at a public auction for non-payment of taxes. B
is evicted. Is A liable?
What are the responsibilities of the seller?
Yes. A is responsible to B, provided, however, that at the time
The seller is responsible for: of the Sale, the non-payment of taxes was not known to B,
the vendee.
1. His own acts;
2. Those of his predecessors-in-interest.
In case of failure of title, what is the remedy of the purchase

He is not responsible for: in good faith?
1. Acts imputable to the buyer himself; It has been held universally that in case of failure of title, a
2. Fortuitous event. purchaser in good faith at a judicial sale is entitled to recover
the purchase one from the officer if the funds are still in his
hands or from the judgment debtor (Banzon & Standard Oil
Is there a need for a vendee to appeal from decision in order Co, v Osorio, 27 Phil 142).
that vendor be held liable?
No. the vendee need not appeal from the decision in order
that the vendor may become liable for eviction. Therefore, What are the effects of this article:
vendee can sue vendor for damages. Provided, however, that
the decision is final. In Bobis v. Provincial Sheriff of Camarines Norte, it states as
follows:
Give the effect of prescription?
(1) A buyer at an execution sale acquires nothing if the
By prescription, one acquires ownership and the other real judgment debtor had already assigned or transferred
rights through the lapse of time in the manner and under the the property to another before the levy or execution;
conditions prescribed by law. In the same way, rights and
actions are lost by prescription.

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(2) A sheriff who merely adheres to the terms or a writ of What are the requisites for reasonable in hidden defects?
execution is not liable for damages. The same is true of (redhibitory defects)
the buyer at the public auction,
The requisites are:
(3) The buyer at an execution sale is a purchaser in bad
faith (and not for value) if he had prior knowledge of a (1) The defects must be hidden (not known and could not have
third party claim filed with the sheriff before the been known)
scheduled execution sale.
(2) The defect must exist at the time the sale was made;
(3) The defect must ordinarily have been excluded from the
What are the effects of stipulation waiving liability for contract;
eviction?
(4) The defect must be important;
The effects are:
(5) The action must be instituted within the prescribed time –
(1) If seller was in good faith – the exemption is valid, but i.e., six months from the delivery of the thing sold or within
without prejudice to Art. 1554 40 days form the date of delivery in case of animals, and
(2) If seller was in bad faith – the stipulation is VOID (6) There must be no waiver of warranty on the part of the
vendee.
What is the rule regarding cost of suit?

Under the law, warranty against eviction may be waived.
Paragraph 3 does not include transportation and other What are the two kinds of warranty against eviction and
incidental expenses. what are their effects?
The waiver may be “consciente” or “intencionada”. In the

first, there is merely a voluntary renunciation made by the
Is the right to hold the vendee liable for eviction waivable? vendee of the right to warranty in case of eviction. The effect
of such renunciation is that the liability of he vendor in case
Yes, waiver is allowable. Waiver of evection may partake of two of eviction shall extend only to the payment of the value of
forms, namely: the thing sold at the time of eviction. In the second, there is
a voluntary renunciation by the vendee of the right to
(1) Waiver consciente – without knowledge of eviction; warranty against eviction, with knowledge of the risk of
eviction and assuming the consequences thereof. The effect
(2) Wiaver intencionada – without knowledge of the risk of of such renunciation in case of eviction is to relieve the
eviction vendor of any liability whatsoever. (Art 1554 NCC)
What is the presumption in waivers ? What is the effect of stipulation waiving liability for Eviction?
The presumption that the waiver was only in consciente. The The effects are:
waiver intencionada must be clearly proved.
(1) If seller is in good faith – the exemption is valid, but
without prejudice to Art 1554,
In waiver consciente, what value should be returned? (2) If seller was in good faith – the stipulation is VOID.
The value at the time of eviction should be returned. This is

a case of solution indebiti, “undue payment.”
What must the seller give in case of eviction?
V I C E D : Value, Income ( or fruits), costs, expenses and

In waiver intencionada, what value should be returned? damages (and interest and ornamental expenses) if seller was in bad
faith.
Nothing need be returned. This is aleatory in nature, and
buyer assumes the consequences. This is so even if there is a
stipulation that the warranty against eviction exist, provided
that said stipulation is understood by the parties mere pro What is the rule as to income or fruits?
forma.
If the court does not order the buyer to deliver the income or
fruits to the winner, said buyer would be entitled to them.
This is fair for after all, in the meantime, the seller was using
the price money without interest.

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The vendee’s remedy is either:
If there is no agreement with regard to warranty in case of (1) Rescission, or

eviction, what is the extent of the liability of the vendor?
(2) Enforcement of warranty.
When the warranty has been agreed upon or nothing has been
stipulated on this point, in case eviction occurs, the vendee shall have
the right to demand of the vendor:
Are there any other remedies to be attached with rescission?
(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; If he chooses rescission, there should be no new
encumbrances, like a “mortgage.” (Andaya v Manansala, April 30,
(2) The income or fruits, if he has been ordered to deliver them 1960).
to the party who won the suit against him;
(3) The cost of the suit which caused the eviction and, in a
proper case, those of the suit brought against the vendor for When is enforcement of the warranty the proper remedy?
the warranty;
If the circumstances set forth in paragraph 1 of Art 1556 are
(4) The expenses of the contract, if the vendee has paid them; not present (as when there are new encumbrances), the only
remedy is to enforce the warranty
(5) The damages and interests, ornamental expenses, if the sale
was made in bad faith (Art 1555, CC).
Should the vendee lose, by reason of the eviction, a part of the When is judgment deemed to be final and what is its
thing sold of such importance, in relation to the whole that he necessity?
would not have bought it without said part, he may demand the
rescission of the contract; but with the obligation to return the A judgment becomes final if on appeal, the decision
thing without other encumbrances that those which it had when decreeing the eviction is affirmed; or if within the period
he acquired it. He may exercise this right of action, instead of within which to appeal, no appeal was made. It should be
enforcing the vendor’s liability for eviction. noted that under Art 1549 CC, the vendee need not appeal
from the decision of the lower court. Thus, it is sufficient
The same rule shall be observed when two or more things have that the judgment be FINAL before the warranty can be
been jointly sold for a lump sum, or for a separate price for each enforced.
of them, if it should clearly appear that the vendee would have
purchased one without the other (Art 1556, CC).
What is the necessity for summoning the seller in the suit for
the eviction of the buyer?
The importance are:
(1) This is the preparation for the suite – a condition sine

What is the rule regarding damages? qua non;
The interest in paragraph 5 refers to interest on costs, (2) It is immaterial whether or not the seller has good
expenses, and damages. The sale must have been made in defense or means of defense. The summons and notice
BAD FAITH, which must be proves (Pascual v Lesaca, May must nevertheless be given. Once this is done, the
30, 1952) buyer has done all that he had to do;
(3) The notice must be the notice for the suit fir eviction,
NOT the notice in the suit for breach of warranty. The
Why is rescission not a remedy in case of TOTAL eviction? notice need not be given in a case where the buyer is an
applicant for registration in land registration
The remedy of rescission contemplates that the one proceedings. Here it is sufficient that the buyer
demanding is able to return whatever he has received under notifies the seller of: (a) his application; (b) any
the contract; and when this cannot be done, rescission opposition thereto.
cannot be carried out. It is for this reason that the law on
sales does not make rescission a remedy incase the vendee is
totally evicted from the thing sold, for he can no longer
restore the subject matter of the sale to the vendor. Of What is the reason for summoning?
course, incase of partial eviction, rescission may still be
allowed with respect to the subjected matter that remains, as Its object is to give the vendor opportunity to show that the
in the case contemplated in Art 1556. action against the buyer is unjust.
What is the remedy of the vendee in case of partial eviction?

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The seller was notified but did not appear. The buyer won in There is not remedy if burden is registered except if there is
the suit filed by the third person. Can the buyer recover an express warranty that the thing is free from all burdens
expenses? and encumbrances.
No, because there really was no breach of warranty.
What is the effect of form of sale?
In an eviction suit, is it permissible for the buyer to file a This article is applicable whether sale is:
cross claim against the seller?
(a) in public instrument;
Yes, it is permissible for the buyer to file a cross claim
against the seller for the enforcement of the warranty should (b) in private instrument;
the buyer likes. This can be done in some cases to save time
and to prevent inconvenience. The suit against the seller (c) made orally.
may be in the form of a third party complaint if the vendor
has not been made a co-defendant. There is not need to first compel the seller to execute a public
instrument before the action is brought.
What is the rule in registration proceedings?

What are the requisites to recover because of hidden defects?
This article applies only when the buyer is the defendant,
hence when the buyer is the petitioner in a registration The requisites are:
proceedings and he loses, the formal notice here is not a
condition precedent. It is enough that he advice the seller of (1) The defects must be hidden (not known and could not
the application for registration and the opposition thereto. have been known)
(2) The defect must exist at the time the sale was made;
How does the Rules of Court apply? (3) The defect must ordinarily have been excluded from the
contract;
The buyer can make use of the Rules of Court in bringing the
seller to the case. (4) The defect must be important (renders thing UNFIT or
considerably decreases FTINESS);
(5) The action must be instituted within the prescribed

What is the rule in case of non-apparent servitudes? time – i.e., six months from the delivery of the thing
sold or within 40 days form the date of delivery in case
The defect contemplated in this Article is really a sort of of animals, and
“hidden defect” but remedy is similar to that provided in the
case of eviction. The servitudes contemplated are not legal (6) There must be no waiver of warranty on the part of the
easements for these exist by virtue of the law. Therefore, it vendee.
cannot be claimed that the buyer was ignorant thereof.
What is the meaning o “unfit for the use intended”

What are the remedies if made within one year?
The use must have been stated in the contract itself, or can
The remedies are: be inferred from the nature of the object or from the trade or
occupation of the buyer.
(1) rescission;
(2) damages.
What is the meaning of “hidden”
“Hidden” means:
What is the remedy if made after one year?
(a) What may be hidden with respect to one person may not be
The remedy is only Damages. hidden with respect to another;
(b) Just because there is a difference in grade or quality, it does

not necessarily mean that the defect is hidden;
What is the effect if burden or easement is registered?
(c) Defects are sometimes referred to as “redhibitory defects”

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What is the effect of long inaction? When the defects are so patent or those which may be visible
or for those which are not visible if the vendee is an expert
If the buyer examines the tobacco at time of purchase, and who by reason of his trade or profession, he should have
questions only after 3 years, and the seller has not made any known them (Art 1561 CC).
misrepresentation, there is no breach of warranty. In fact
under Art 1571, the action prescribes in six months. Raymundo sold a parcel of land to IDI for P122,769.00
payable in three installments, the last installment ot be paid
within one year from the date of issuance of the Original
Certificate of Title over the property which Raymundo
A lease purchase agreement was entered into between obligated himself to secure. After the OCT was issued, the
Filinvest and Philrock over a rick crushing machine. It was TCT was issued in the name if IDI. IDI later sold the land to
agreed that after payment of the price, Philrock would Agencia for P456,000. As a result, the TCT was issued in the
become the owner of the same. After testing the machine, name of Agencia. The land was later transferred to Aguirre.
Philrock complained that it could process only 5 tons of rock In the meantime, the tenant on the property was forced to
a day instead of the agreed 10 to 20 tons a day, hence it stop cultivating the land because of the buildozing caused by
demanded that Filinvest should make good of the same. the present owner. The tenant sued IDI and Aguirre for
Philrock went to court seeking for rescission of the lease, disturbance compensation. IDI in turn filed a cross-claim
damages and injunction. Filinvest contented that it is not against Raymundo in case of a judgment adverse to it.
liable for warranty. Decide. Agencia and Aguirre filed a cross-claim against IDI. The trial
court rendered judgment in favor of the tenant and ordered
Filinvest is not liable. Philrock inspected and tested the Aguirre to pay the tenant disturbance compensation in the
machine, and it is more knowledgeable, if not, and expert on amount of P24,000. It also ordered IDI to pay Aguirre
the object of the contract; hence, Philrock cannot hold P24,000 as damages. Hence this appeal. If you were the
Filinvest liable for damages. It is true that Art 1561, NCC, ponente, how would you decide? Why?
vendor shall be responsible for warranty against hidden
defects which the thing sold may have should they render the I would decide against the petitioner. The SC had the
thing unfit for the use it is intended or diminish its fitness for occasion to hold that “hidden faults or defects” pertain only
such use, yet the law likewise states that the vendor shall not to those that make the object of sale until for use for which it
be answerable for patent defects or those which are visible or was intended at the time of the sale. If the object of the sale
for those which are not visible if the vendee is an expert who, is an agricultural land, the existing tenancy relationship with
by reason of his trade or profession, should have known respect to the land cannot be a “hidden fault or defect”. It is
them. (Art 1561, NCC). not a lien or encumbrance that the vendor’s warrant did not
exist at the time of the sale. It is a relationship which any
buyer of agricultural land would reasonable expect to be
present and which it is its duty to specifically look into and
What are the requisites of the warranty against hidden provide for.
encumbrances?
The requisites for this warranty are:

If a person sells a second-hand motor vehicle, is he liable for
(1) The encumbrance must be so important; damages in case there are defects or it is unfit for the
purpose intended? Is there any exception?
(2) The encumbrance is not registered;
Explain.
(3) The vendee has no knowledge of such encumbrance;
and Generally, in the sale of a designated and specific article sold
as second hand, there is no implied warranty as to its
quality or fitness for the purpose intended, at least where it is
(4) Action brought within the reglementary period – one
subject to inspection at the time of the sale. On the other
year from the execution of the deed of sale. (Art 1561
hand, there is also authority that in sale of articles, there may
CC)
be, under some circumstances, an implied warranty of
fitness for the ordinary purpose of the article sold for the
particular purpose of the buyer.
When is defect deemed to be important? There is no implied warranty as to the condition, adaption,
fitness, or suitability for the purpose for which a thing was
The defect is important when: made or the quality of an article sold as and for a second-
hand article.
(1) It renders the thing sold unfit for the use for which it is
intended; The exception to the rile is found in Art 1562, NCC, which
provides that in sale of goods, there is an implied warranty or
(2) If it diminishes or decreases its fitness to such an condition as to the quality or fitness of the goods as follows:
extent that the vendee would not have acquired it had where the buyer, expressly or by implication, makes known
he been aware or would have given a lower price for it. 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 a\the grower or
manufacturer or not), there is an implied warranty that the
In what cases where the vendor may not be held liable for the goods shall be reasonably fit for such purpose.
defects of the thing sold?

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Good faith consist of an honest intention to abstain from

taking unconscientious advantage of another. Good faith is
What is the meaning of merchantible quality? the opposite of fraud and of bad faith, and its non-existence
must be established by competent proof. One cannot be said
For general purpose of a thing, and not necessarily the to be a buyer in good faith if he had notices of the claim of
particular purpose for which it has been acquired. third person aside from the claim or right of the registered
owner, especially if the claims were annotated on the title are
the lots which were shown to be they buyer together with the
decision of the Court of Appeals, and the buyers were fully
What is the effect of sale under patent name or trade name? aware that the subject were under litigation. A purchaser of
a valued price of property cannot just close is eyes to facts
which should put a reasonable man upon his guard and then
There is generally NO warranty as to the article’s fitness for
claim that he acted in good faith under the belief that there
any particular purpose.’
were no defect in the title of the vendors.
What is the significance of the usage of trade?

X is the owner of a parcel of land. He sold it to Y who did not
register the deed of sale. Later on, X mortgaged the same
The parties are presumed to be acquainted with the usages of land to Z. Between the two contracts, which shall prevail?
trade. Explain.
An unrecorded sale shall prevail because the owner has

already parted with his property at the time of the mortgage,
In the case of a contract of sale by sample, is there an implied and the mortgage is always subject to the better rights of
warranty the goods shall be free from any hidden defect third parties.
rendering them unmerchantable which would not be
apparent or reasonable examination of the sample?
Yes, if the seller is a dealer in goods old by sample. (Art 1565 Spouses Victoriano and Crisanta dela Rosa were the
CC) registered owners of a parcel of land. On May 4, 1931,
Victoriano sold ½ of the land to Juliana Salazar who
constructed a house. The document was not registered. On
June 6, 1961, the children of the spouses sold the entire land
Why is the seller responsible for hidden defects even if he is to Nuguid. It was registered on March 10, 1964 and a title
in good faith? was issued. Between the first and the second buyer, who has
a better right? Why?
Because he has to repair the damage done. The object of the
law is reparation, not punishment. Thus for example, the The ownership should belong to the vendee who in good
seller of an unworthy vessel is liable for hidden defects even faith first recorded it in the Registry of Property. Although
if he did not know of them. the second sale was made by the heirs of Dela Rosa, the said
heirs are deemed the continuation of the personality of the
decedent. Hence, the second buyer is the owner. Petitioner
was a purchaser in good faith and for value. The title was
Seller and buyer agreed that seller would be exempted from free from any annotation or encumbrance. If the property
hidden defects. But seller knew of hidden defects. Would sold is registered land, the purchase in good faith has a right
seller be liable? to rely on the certificate of the title and is under no duty to go
behind it to look for laws, for previous registration is
Yes, because of his bad faith. To hold otherwise would be to required to be coupled with good faith.
legalize fraud.
In action for annulment of documents and reconveyance

Who is a purchaser in good faith and for value? with damages, Francisco Veloso contended that he never
authorized anyone to sell his real property. He alleged that
A purchaser in good faith and for value is one who buys his wife was in possession of the title; but when his wife went
property of another, without notice that some other person abroad, he found out that his title was missing. He
has a right to or interest in such property and pays a full and discovered that there was a sale by his wife over the said
fair price for the same, at the time of such purchase or before property supported by a General Power of Attorney. His title
he has notice of the claim or interest of some other person in was cancelled under the name Aglaloma Escario. Can he
the property. recover the property? Why?
No because she was a buyer in good faith and for value. She
relied on the power of attorney presented by the wife of the
plaintiff. Being the wife if the owner and having with her the
title of the property, there was no reason for the private
What does good faith consist of? respondent not to believe in her authority. Moreover, the
power of attorney was notarized and as such carried with it
the presumption of its due execution. This, having had no

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inkling on any irregularity and having not participation Whether six months or forty days, the period must be
thereof, private respondent was a buyer in good faith . It has counted from the date of delivery to the vendee.
been consistently held that a purchaser in good faith is one
who buys property of another without notice that some other
person has a right to ir interest in such property and pays a
full and fair price of the same, at the time of such purchase, What are the remedies in case of hidden defects?
or before he has notice of the claim or interest of some other
person in the property. The remedies are:
(1) Withdrawal or rescission (accion redibitoria) plus damages;
A property was mortgaged but there was an annotation of the (2) Proportionate reduction (accion quanti minors o
right of usufruct. The obligation was not paid, hence, there estimatoria) – reduction in the price, plus damages.
was foreclosure of the mortgage. Finally, there was sale. Is
the morgagee-buyer, a buyer in good faith? Why?
Yes, it is well-established rule that every person dealing with Is this warranty applicable in lease?)
registered land may safely rely on the correctness of the
certificate of title issued and the law will in no way oblige
Yes, this warranty in sales is applicable to lease. (Yap v.
him to go behind the certificate to determine the condition of
Tiaoqui)
the property. An innocent purchaser for value ins one who
buys the property of another without notice that some other
person has a right to or interest in such property and pays a
full and fair price for the same at the time of such purchase
or before he has notice of the claim of another person. The On June 10,2010, S sold to B a specific a car which S acquired
annotation of usufructuary rights does not impose upon the from a friend last June 1, 2010. On August 10, 2010, the car
mortgagee-buyer the obligation to investigate the validity of was totally destroyed which was traced to a crack in the
its mortgagor’s title. Usufruct have a right to enjoy the engine block. S was not aware of the defect. Is S, the seller,
property of another with the obligation of preserving its form liable to B?
and substance.. (Art 562).
a. No, because S was innocent and a seller in good faith.
b. No, because S has all the opportunity to examine the car

Can a forged or fraudulent document vest title? Why? before buying it.
Yes, in Spouses Romulo and Sally Eduarte vs CA, it was said c. Yes, S is liable to return the price and expenses
that the rights of an innocent purchase for value must be incurred by B.
respected and protected notwithstanding the fraud employed
by the seller in securing his title. d. Yes, S is liable to return the price, expenses and damages
actually suffered by B.
Define “accion redhibitoria” and “accion quantu minoris”
“Accion redhibitoria” is an action instituted by the vendee

against the vendor to avoid a sale on account of some vice or On February 15, 2010, A sold to B a specific car. On March 3,
defect in the thing sold which renders it unfit for the use 2010, the car was totally destroyed which was traced to a
intended or which will diminish its fitness for such use to crack in the engine block. A, the vendor, was aware of the
such an extent that, had the vendee been aware thereof, he defect. Is A, the vendor, liable to B?
would hot have acquired it. “accion quantu minoris”, on the
other hand, is an action to procure him return of a part of the Yes, A shall bear the loss and is liable to return the price,
purchase price paid by the vendee to the vendor by reason of expenses and damages actually suffered by B.
such defect. (Arts 1561, 1562, 1564, 1565, 1567, CC)
Statement No. 1: If the thing sold should be lost in

If there is a breach by the vendor of the implied warranty consequence of the hidden faults, and the vendor was aware
against hidden defects of or encumbrances upon the thing of them, he shall bear the loss, and shall be obliged to return
sold, what are the remedies of the vendee? What is the the price and refund the expenses of the contract, with
period of prescription for such remedies? damages.
The vendee may elect between withdrawing from the Statement No.2: If the vendor was not aware of the hidden
contract (accion redhibitoria) and demanding a defects , he shall only return the price and interest thereon,
proportionate reduction of the price (accion quantu and reimburse the expenses of the contract which the vendee
minoris), with dames in either case (Art 1567, CC). might have paid.
Generally, the period of prescription is six months (Art 1571,
CC). However, in redhibitory actions based on the faults or a. Both are true
defects of animals, the period is forty days (Art 1577, CC).

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b. Both are false c. No. 1 is true, No. 2 is false
c. No. 1 is true, No. 2 is false d. No. 1 is false, No. 2 is true
d. No. 1 is false, No. 2 is true
If the thing sold should be lost in consequence of the hidden

faults and the vendor was aware of them. The following are
What is the effect of loss of thing on account of hidden his obligations except:
defects when the vendor was aware of such hidden defects?
a. he shall bear the loss
The vendor shall bear the loss and the vendee hall have the
right to recover the price paid, expenses of the contract, with b. he shall be obliged to return the price
damages.
c. he shall refund the expenses of the contract, with damages
d. he shall return the price and interest thereon,

What is the effect of loss of thing on account of hidden expenses of the contract which the vendee might
defects when the vendor was not aware of such hidden have paid.
defects?
The vendor shall be obliged to return the price paid, interest

thereon and expenses of the contract if paid by the vendee. If the thing sold should be lost in consequence of the hidden
faults and the vendor was not aware of them. The following
are his obligations except:
If the thing sold was lost on account of hidden defects and a. he shall return the price
the vendor was aware of such hidden defects, the vendee can
recover the following except: b. he shall return the interest thereon
a. the price paid c. he shall reimburse the expenses of the contract which the
vendee might have paid
b. interest thereon
d. he shall return the price and refund the expenses
c. expenses of the contract of the contract, with damages
d. damages
If the thing sold has hidden faults at the time o f sale and
should thereafter be lost by a fortuitous event or through the
If the thing sold was lost on account of hidden defects and fault of the vendee, the vendor has the following obligation:
the vendor was not aware of such hidden defects, the vendee
can recover the following except: a. the vendor pays the price which the vendee paid as is
a. the price paid b. the vendor pays the price which the vendee paid
less the value which the thing had when it was lost
b. interest thereon
c. the vendor pays only the value which the thing had when it
c. expenses of the contract if paid by the vendee was lost
d. damages d. the vendor pays damages to the vendee regardless of

whether or not the vendor had acted in bad faith
Statement No. 1: If the thing sold was lost on account of

hidden defects and the vendor was aware of such hidden Statement No. 1: If the thing sold has hidden faults at the
defects, the vendee can recover the price paid, interest time o f sale and should thereafter be lost by a fortuitous
thereon, expenses of the contract, with damages. event or through the fault of the vendee, the vendor has the
obligation to pay only the value which the thing had when it
Statement No.2: If the thing sold was lost on account of was lost.
hidden defects and the vendor was not aware of such hidden
defects, the vendee can recover the price paid, interest Statement No. 2: If the thing sold has hidden faults at the
thereon, and expenses of the contract if paid by the vendee. time o f sale and should thereafter be lost by a fortuitous
event or through the fault of the vendee, the vendor pays
a. Both are true damages to the vendee regardless of whether or not the
vendor had acted in bad faith.
b. Both are false

SALES
a. Both are true
b. Both are false Statement No. 1: If the thing with hidden defect was lost
through fortuitous event or fault of the vendee and the
c. No. 1 is true, No. 2 is false vendor has no knowledge of such hidden defect, the vendor
is obliged to return the price paid less the value which the
d. No. 1 is false, No. 2 is true thing had when it was lost.
S sold a car for P300,000 to B. Unknown to B, the car then Statement No.2: If the vendor acted in bad faith (with
had a cracked engine block, the replacement of which would knowledge of the hidden defect), the vendor shall pay
cost P75,000. Despite his knowledge of this defect, S damages to the vendee.
obtained a waiver from B of the latter’s right under the
warranty against hidden defects. Subsequently, the car was a. Both are true
wrecked due to the recklessness of B who only then
discovered the defects. What right, and to what extent, if any, b. Both are false
has B against S?
c. No. 1 is true, No. 2 is false
B can recover approximately P75,000, which may represent
the difference between the purchase price and the true value. The d. No. 1 is false, No. 2 is true
waiver is void because S knew of the defect.
If the thing with hidden defect was lost through fortuitous

S sold a car for P300,000 to B. Unknown to B, the car then event or fault of the vendee and the vendor has no knowledge
had a cracked engine block, the replacement of which would of such hidden defect, the vendor is obliged to return:
cost P75,000. Despite his knowledge of this defect, S
obtained a waiver from B of the latter’s right under the a. the price paid less the value which the thing had
warranty against hidden defects. Subsequently, the car was when it was lost
wrecked due to the recklessness of B who only then
discovered the defects. Which of the following statements is b. the price paid, expenses of the contract, with damages
true?
c. price paid, interest thereon and expenses of the contract if
a. S still liable to reimbursed B of P75,000 the paid by the vendee
difference between the purchase price and true
value. d. the original price paid only
b. The waiver is void because B has no knowledge of the
defect.
Antonio sold a car for P200,000 to Bartolome. Unknown to
c. S is not liable anymore because the car got loss due to the Bartolome, the car then had a break defect, the replacement
recklessness of B. of which would cost P15,000. Despite his knowledge of this
defect, Antonio obtained a waiver from Bartolome of the
d. The liability of S remains to be 300,000 because of breach latter’s right under the warranty against hidden defects.
of warranty against hidden defects. Subsequently, the car was wrecked due to the recklessness of
Bartolome who only then discovered the defects. What right,
and to what extent, if any, has Bartolome against Antonio?
If the thing with hidden defect was lost through fortuitous Bartolome can recover approximately P15,000, which may
event or through the fault of the vendee, what right, and to represent the difference between the purchase price and the
what extent, if any, has the vendee against the vendor? true value. The waiver is void because Antonio knew of the
defect.
The vendee may demand of the vendor the price which he
paid, less the value which the thing had when it was lost. If
the vendor acted in bad faith, he shall pay damages to the
vendee. Allan sold a car for P200,000 to Bart. Unknown to Bart, the
car then had a break defect, the replacement of which would
cost P15,000. Subsequently, the car was wrecked due to the
recklessness of Bart who only then discovered the defects.
What is the effect if the thing with hidden defect was lost due What right, and to what extent, if any, has Bart against Allan?
to fortuitous event or fault of the vendee and the vendor has
no knowledge of such hidden defect? a. the vendor pays the price which the vendee paid as is
The vendor is liable to return the difference between the b. the vendor pays the price which the vendee paid
price paid and the value of the thing when it was lost. Such less the value which the thing had when it was lost
that, if the price is P10,000 and at the time of the loss of the
thing sold as only P8,000, the vendee may still recover from c. the vendor pays only the value which the thing had when it
the vendor P2,000. was lost

SALES
d. the vendor pays damages to the vendee regardless of The prescriptive period for actions arising from breach of
whether or not the vendor had acted in bad faith warranty against hidden defects, rescission of contract
because of hidden defects, and proportionate reduction in
the price because of hidden defects is six months from
delivery of the thing sold.
Do the provisions under Articles 1561 to 1569 of the Civil
Code applicable also to judicial sales?
Yes, under Article 1570 of the Civil Code, the provisions B bought from S two carabaos for P50,000 to be used for
under articles 1561 to 1569 of the Civil Code shall be breeding purposes. The male carabao in infected with mouth
applicable to judicial sales, except that the judgment debtor and foot disease (not contagious), while the female carabao
shall not be liable for damages. is in sound state. What right, and to what extent, if any, has B
against A?
The right of B is to ask for the rescission of the contract

What are the actions that shall be barred after six months because the two carabaos are bought in “set” for breeding
from the delivery of the thing sold? purposes. However if these carabaos will not be used for
breeding purposes, the only right of B is to ask for rescission
The following are the actions that shall be barred after six or reduction in the price pertaining to the male carabao, or
months from the delivery of the thing sold: unless it is shown that he would not have bought the sound
animal without the other.
1. breach of warranty against hidden defects
2. rescission of contract because of hidden defects

What is the effect of sale of two or more animals when one of
3. proportionate reduction in the price because of hidden the animals has redhibitory defect?
defects
In sale of animals, the redhibitory defect of one animal shall
give rise only to its redhibition and this will not apply to the
other sound animal, unless the buyer could prove that he
would not have purchased the sound animal or animals
The following are the actions that shall be barred after six
without the defective one. This proof is unnecessary when
months from the delivery of the thing sold. Which is the
animals are bought as team, yoke, pair or set, even if a
exception?
separate has been fixed for each one of them.
a. breach of warranty against hidden defects
b. rescission of contract because of hidden defects

In sale of animals, the redhibitory defect of one animal shall
give rise only to its redhibition and this will not apply to the
c. proportionate reduction in the price because of hidden other sound animal, unless the buyer could prove that he
defects would not have purchased the sound animal or animals
without the defective one. What are the exceptions when
d. redhibitory action, based on the frauds or defects proof by the buyer that he would not have purchased the
of animals sound animal or animals without the defective one is not
necessary?
The exceptions are when the animals are bought as team,

For what causes of action, if any, does the new Civil Code yoke, pair or set, even if a separate has been fixed for each
provide a period of limitation of six months? one of them.
The following causes of action have a period of limitation of

six months:
If two or more animals are sold together, does the
1. breach of warranty against hidden defects redhibitory defect of one shall only give rise to its
redhibition, and not of the others whether the price was a
2. rescission of contract because of hidden defects lump sum?
3. proportionate reduction in the price because of hidden Yes, under Article 1572 of the Civil Code, if two or more
defects 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 of the others;
unless it should appear that the vendee would not have
What is the prescriptive period for actions arising from purchased the sound animal or animals without the defective
breach of warranty against hidden defects, rescission of one.
contract because of hidden defects, and proportionate
reduction in the price because of hidden defects?

SALES
Statement No. 1: If two or more animals are sold together, c. There is no warranty against hidden defects of
the redhibitory defect of one shall only give rise to its livestock sold as condemned regardless of whether
redhibition, and not of the others when the animals are or not communicated to the buyer.
bought only for a separate price for each of them and not for
a lump sum. d. There is no warranty against hidden defects of livestock
sold as condemned provided it is communicated to the
Statement No. 2: In sale of animals, the redhibitory defect of buyer.
one animal shall give rise only to its redhibition and this will
not apply to the other sound animal, regardless of whether
or not the buyer could prove that he would not have
purchased the sound animal or animals without the defective Which of the following statements is true?
one.
a. There is warranty against hidden defects of animals sold at
a. Both are true fairs.
b. Both are false b. Ther e is warranty against hidden defects of animals

sold at public auctions.
c. There is warranty against hidden defects of livestock sold
d. No. 1 is false, No. 2 is true as condemned regardless of whether or not communicated to
the buyer.
d. There is warranty against hidden defects of

Is Article 1572 of the Civil Code applicable also to sale of livestock sold as condemned when such fact is not
other things? communicated to the buyer.
Yes, under Article 1573 of the Civil Code, it provides that the
provisions of the preceding article (article 1572) with respect
to the animals shall in like manner be applicable to the sale What are the two kinds of void sales with respect to animals?
of other things.
The two kinds of void sales with respect to animals are the following:
1. Sale of animals suffering from contagious disease

What are the instances when there is no warranty against
hidden defects of animals sold? 2. Sale of animals which are found to be unfit for the use or
service stated in the contract for which they are acquired
The following are the instances when there is no warranty
against hidden defects of animals sold:
1. Animals sold at fairs Statement No. 1: The sale of animals suffering from
contagious disease shall be void.
2. Animals sold at public auctions
Statement No. 2: A contract of sale of animals shall also be
3. Livestock sold as condemned, declared known to the buyer void if the use or service for which they are acquired has
been stated in the contract, and they are found to be unfit
therefor.
In three of the following there is no warranty against hidden a. Both are true
defects of animals. Which is the exception?
b. Both are false
a. Animals sold at fairs
b. Animals sold at public auctions
d. No. 1 is false, No. 2 is true
c. Livestock sold as condemned, declared known to the buyer
d. Livestock sold as is
Which of the following statements is not true?
a. The sale of animals suffering from contagious disease shall

Which of the following statements is not true? be void.
a. There is no warranty against hidden defects of animals b. The sale of animals suffering from contagious
sold at fairs. disease shall be voidable.
b. Ther e is no warranty against hidden defects of animals

sold at public auctions.

SALES
c. The sale of animals which are found to be unfit for the use The veterinarian shall be liable for damages if through
stated in the contract for which they are acquired shall be ignorance or bad faith has failed to discover or disclose the defect to
void. the vendee.
d. The sale of animals which are found to be unfit for the

service stated in the contract for which they are acquired
shall be void. For what causes of action, if any, does the new Civil Code
provide a period of limitation of forty (40) days?
The redhibitory action, based on faults or defects of animals,

Which of the following statements is true? must be brought within forty (40) days from the date of their
delivery to the vendee.
a. The sale of animals suffering from any disease whether
contagious or not shall be void.
b. The sale of animals suffering from contagious disease shall What is the action that shall be barred after forty (40) days
be voidable. from the delivery of the thing sold?
c. The sale of animals which are found to be unfit for The redhibitory action, based on faults or defects of animals,
the use or service stated in the contract for which shall be barred after forty (40) days from the date of their
they are acquired shall be void. delivery to the vendee.
d. The sale of animals which are found to be unfit for the use
or service stated in the contract for which they are acquired
shall be voidable. What is the prescriptive period for redhibitory action based
on faults or defects of animals?
The prescriptive period for redhibitory action based on faults

B manifested to S that he is buying a male carabao for or defects of animals is forty (40) days from the date of their
breeding purposes. S offered to B his carabao for P20,000, a delivery to the vendee.
“tested bore” for breeding. However, it turns out that the
carabao is castrated. What is the effect of such sale?
The sale is void because the carabao will be unfit for When can redhibitory action be exercised?
breeding purposes. Under Article 1575 of the Civil Code, a
contract of sale of animals shall also be void if the use or Redhibitory action can only be exercised with
service for which they are acquired has been stated in the respect to faults and defects which are determined by law or
contract, and they are found to be unfit therefor. by local customs.
What is a redhibitory defect? Statement No. 1: The redhibitory action, based on faults or
defects of animals, must be brought within forty (40) days
It is a defect of such a nature that expert knowledge, even in from the date of their delivery to the vendee.
case of professional inspection, is not sufficient to discover.
Statement No. 2: Redhibitory action can only be exercised
with respect to faults and defects which are determined by
law or by local customs.
What is the nature of the defect to be redhibitory?
a. Both are true
To be redhibitory, it is not sufficient if the defect was not
discovered by an expert. What is required is that the defect b. Both are false
would not have been discovered even with the aid of an
expert. However, if the expert through ignorance failed to c. No. 1 is true, No. 2 is false
discover it, or through bad faith, failed to reveal the same to
the vendee, he shall be held liable for damages. d. No. 1 is false, No. 2 is true
B bought from S a male carabao for P20,000 to be used for Which of the following statements is true?
breeding purposes. The service of a veterinarian was
engaged to check if the carabao was in good condition for a. The redhibitory action, based on faults or defects of
breeding purposes. Unfortunately, the carabao has a animals, must be brought within six (6) months from the
redhibitory defect. What is the liability, if any, of the date of their delivery to the vendee.
veterinarian?

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b. The redhibitory action, based on faults or defects

of animals, must be brought within forty (40) days
from the date of their delivery to the vendee. Is the vendor liable if the animal should die after its
purchase?
c. Redhibitory action can only be exercised with respect to
faults and defects which are stipulated by the parties. The vendor shall be liable only if the animal should die
within three days after its purchase and the disease which
d . The redhibitory action, based on faults or defects of causes the death of the animal existed at the time of the
animals, must be brought within forty (40) days from the contract.
date of payment of the price.
What is the effect if the sale of the animal is rescinded?

If the sale be rescinded, the animal shall be returned in the
a. The redhibitory action, based on faults or defects condition in which it was sold and delivered, the vendee
of animals, must be brought within six (6) months being answerable for any injury due to his negligence, and
from the date of their delivery to the vendee. not arising from the redhibitory fault or defect.
b. The redhibitory action, based on faults or defects of

animals, must be brought within forty (40) days from the
date of their delivery to the vendee. What is the liability of the vendee if the sale of the animal is
rescinded?
c. Redhibitory action can only be exercised with respect to
faults and defects which are determined by law. If the sale be rescinded, the vendee shall be answerable for
any injury due to his negligence, and not arising from the redhibitory
d. Redhibitory action can only be exercised with respect to fault or defect.
faults and defects which are determined by local customs.
If the sale of animal be rescinded, what is the condition of the

What are the requisites to concur before the vendor is liable animal when it shall be returned?
in sale of animals?
If the sale be rescinded, the animal shall be returned in the
The following are the requisites to concur before the vendor is liable in condition, in which it was sold and delivered.
sale of animals:
1. Existence of the disease at the time of sale.

2. That disease must have been the cause of death.
a. If the sale be rescinded, the animal shall be returned in the
3. Death of the animal should take place within three days after condition in which it was sold.
purchase.
b. If the sale be rescinded, the animal shall be returned in the
condition in which it was delivered.
What is the effect if the animal should die within three days c. If the sale be rescinded, the vendee shall be answerable for
after its purchase? any injury due to his negligence, and not arising from the
redhibitory fault or defect.
If the animal should die within three days after its purchase,
the vendor shall be liable if the disease which cause the death d. If the sale be rescinded, the vendee shall not be
existed at the time of the contract. answerable for any injury.
The vendor shall be liable for the death of animal after its What are the remedies of buyer of animals with redhibitory
purchase when the following requisites are present. What is defects?
the exception?
The following are the remedies of buyer of animals with
a. Existence of the disease at the time of sale. redhibitory defects:
b. That disease must have been the cause of death. 1. withdrawal or rescission (plus damages)
c. That disease must have been contagious. 2. proportionate reduction in price (plus damages)
d. Death of the animal should take place within three days

after purchase.

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What is the prescriptive period for the remedies of buyer of If the seller has delivered but no time has been fixed for the
animals with redhibitory defects? payment of the price, the seller may require the payment to
be made at anytime after delivery. The buyer here has the
The prescriptive period shall be 40 days from the date of duty to pay the price immediately upon the demand. (Ocejo
delivery to the buyer. v. Int. Bank, 37 Phil. 631)
What shall govern the form of sale of large cattle? What is the effect of deviations from the provisions of the
contract of sale?
The form of sale of large cattle shall be governed by special
laws. If the seller is forced to deviate from the provision of the
contract, but the purchaser consents or agrees to such
deviations, the purchaser should still pay the price. ( Engel v.
Velasco & Co., 47 Phil. 15)
OBLIGATIONS OF THE VENDEE
Articles 1582 – 1593

Statement No. 1: The vendee is bound to accept delivery and
What are the principal obligations of the buyers? to pay the price of the thing sold at the time and place of
stipulated in the contract.
The following are the principal obligations of the buyers:
Statement No. 2: If the time and place should not have been
1. to accept the delivery of the thing sold stipulated, the payments must be made at the time and place
of the delivery of the thing sold.
2. to pay the price of the sale
a. Both are true
b. Both are false

On January 5, A sold and delivered his truck, together with
the corresponding certificate of public convenience to B for c. No. 1 is true, No. 2 is false
the sum of P600,000, payable within sixty (60) days. Two
weeks after the sale, and while the certificate of public d. No. 1 is false, No. 2 is true
convenience was still in the name of A, it (the certificate) was
revoked by the Public Service Commission through no fault
of A. Upon the expiration of the ^0-day period, A demanded
payment of the price from B. B refused to pay, alleging that A sold to B the former’s horse for P5,000. No date is fixed by
the contract of sale was void for the reason that the the parties for the performance of their respective
certificate of public convenience which was the main obligations. The obligation of A is
consideration of the sale no longer existed. Is the contention
of B tenable? Reasons. a. to deliver the horse immediately as there is a perfected
contract
Under the circumstances, the contention of B is not tenable.
b. to deliver the horse upon payment by B of P5,000
(a) Firstly, it cannot be correctly contended that the sale is
void, since the consideration actually existed at the time of c. to deliver the horse upon within a reasonable time of two
the perfection of the sale. The subsequent revocation of the months from the contract date
certificate thru no fault of A is immaterial.
d. to rescind the contract as there is no time fixed for the
(b) Secondly, what B should have done immediately after the delivery and payment
sale was to take steps to have the Public Service Commission
transfer the certificate to his name. (Serrano v. Miave, et al.,
L-14678, March 31, 1965)
Where and when must payment be made in the absence of
(c) Thirdly, while the Public Service Law requires that the any stipulation?
sale or assignment of a certificate of public convenience,
together with the property used in the operation of the same, If the time and place should not have been stipulated, the
should be approved by the Public Service Commission – for payment must be made at the time and place of the delivery
the protection of the public, still as between A and B, the of the thing sold. (Art. 1583)
contract is efficacious as all the essential requisites of the
contract were present at the time of perfection thereof.
What is the obligation of the vendee when the thing is sold to

him?
What is the effect of delivery when no time has been fixed for
payment of the price? The vendee is bound to accept delivery and to pay the price
of the thing sold at the time and place stipulated in the
contract.(Art. 1583)

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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
Why is there no delivery if payment is made in installments? the contract, unless otherwise agreed. (Art. 1584)
The reason is because performance must generally be

complete. (Art. 1583) What are the buyer’s rights in relation to the examination of
goods?
Upon ACCEPTANCE, the buyer may assent to

Is the buyer of goods bound to accept delivery thereof by become owner of the specific goods when delivery of them is
installments? offered to the buyer.
No, he is not bound to accept delivery thereof by Upon EXAMINATION , examination is a condition
installments unless otherwise stipulated. precedent to transfer ownership. (Art. 1584)
Is the vendor bound to offer the thing for examination before

What is the effect in case when there is a separate price for delivery without the request of the vendee?
each installment and there is a breach thereof by any of the
parties? Examination before delivery should be made by request.
Vendor is not bound to offer the thing for examination
Breach in any installment affects the whole contract. The before delivery without the request of the vendee. (Art. 1584)
injured party may sue for breach of entire contract. (Art.
1583)
When is the thing considered accepted?
When the thing is delivered, the thing is

What is the rule in the case of installment deliveries and considered accepted if the vendee has examined it or has
there is a separate price for each installment? reasonable opportunity to examine it. (Art. 1584)
If the breach affects the whole contract, the injured party

may sue for breach of entire contract when seller makes What is the rule in case of COD (collect on delivery)?
defective or incomplete deliveries; or buyer wrongfully
neglects or refuses to accept delivery; or buyer fails to pay The buyer is not entitled to examine until payment is made,
any installment. If breach is severable, only claim for EXCEPT when there is an agreement or that the usage of
compensation for particular breach may be allowed. (Art. trade permits the same. In COD, goods are not to be
1583) delivered by the carrier to the buyer unless the latter pays.
(Art. 1584)
What is the effect when the goods are delivered to the buyer When does the buyer have the right to examine?
without him having previously examined them?
Generally, the buyer is entitled to examine the goods prior to
Where goods are delivered to the buyer, which he has not delivery. This is true even if the goods are shipped “free on
previously examined, he is not deemed to have accepted board”.
them unless and until he has had a reasonable opportunity of
examining them for the purpose of ascertaining whether they
are in conformity with the contract if there is no stipulation In what instances does the buyer have no right to examine?
to the contrary. (Art. 1583)
The buyer has a right to examine if there is a stipulation to
this effect and when the goods are delivered C.O.D- unless
In what instance/s is the buyer is deemed to have accepted there is an agreement or usage of trade permitting such
the goods which he has not previously examined? examination.
Where goods are delivered to the buyer, which he has not When is there acceptance of the goods?
previously examined, he is deemed to have accepted them if
he has had a reasonable opportunity of examining them for There are three ways of acceptance of goods:
the purpose of ascertaining whether they are in conformity a.) express acceptance of goods
with the contract if there is no stipulation to the contrary. b.) when buyer does an act which only an owner can do
(Art. 1584) c.) failure to return after reasonable lapse of time (Art. 1585)
Is the seller bound to afford the buyer a reasonable When a buyer accepted goods despite delay and also
opportunity to inspect the goods for the purpose of promised later on to pay, may the buyer subsequently ask for
ascertaining whether they are in conformity with the damages on account of delay?
contract?
No, the buyer is stopped because of the acceptance without
Yes, when the seller tenders delivery of goods to reservation at the time of acceptance. (Art. 1585)
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What are the modes of manifesting acceptance? When is the buyer said to be in default with regards to legal
interest?
The modes of manifesting acceptance are:
1. EXPRESS ACCEPTANCE – the buyer intimates to the If the buyer fails to give the money after the
seller that he accepts the thing contract is notarized, although he had previously promised
2. IMPLIED ACCEPTANCE – may be either of the following: to do so, there is default with liability for legal interest. (Art.
a. Buyer does an act inconsistent with the seller’s 1589)
ownership; or
b. Buyer’s retention of goods without intimating
rejection after the lapse of reasonable time. If it has been stipulated that vendee shall owe interest, is
demand still necessary?
Does acceptance of the goods by the buyer discharge the No demand is needed. Fruits or income is
seller from liability in damages or other legal remedy for sufficient to warrant the payment of interest. (Art. 1589)
breach of any promise or warranty in the contract of sale?
No, acceptance is not a bar to action for damages. However, Should it have been so stipulated that the vendee shall owe
notice must be given to the seller within a reasonable time. interest for the period between the delivery of the thing and
(Art. 1586) the payment of the price, must the stipulation be in writing?
The stipulation on interest may be oral. Interest

When is the buyer’s refusal to accept justified? which must be in writing refers only to loan.
He is justified in refusing to accept when the risk of loss is

still with the seller. (Art. 1586) When may the buyer suspend the payment of the price?
The buyer may suspend payment of the price when:

In a contract of sale is the buyer is liable as a depositary? a) there is well-grounded fear
b) the fear is because of:
Buyer is not liable as DEPOSITARY unless he voluntarily 1. a vindicatory action or action to recover
constitutes himself as such. 2. foreclosure of mortgage (Art. 1590)
What are the effects if the buyer justifiably refuses to accept When may the vendee suspend the payment of the price?
the delivery?
The vendee may suspend the payment of the price in the
The buyer has no duty to return the goods to the seller. Mere following cases:
notification to seller of refusal will suffice but the buyer may 1) Should he be disturbed in the possession or
make himself a voluntary depositary-in which case he must ownership of the thing sold; or
safely take care of them in the meantime.(Art. 1587) 2) Should he have reasonable grounds to fear
such disturbance by a vindicatory action or by
a foreclosure of mortgage. (Art. 1590)
What is the effect if the buyer unjustifiably refuses to accept
the delivery?
SS sold and delivered to BB a parcel of land for 2 Million
Title passes to the buyer the moment it is placed at his pesos payable within 30 days from the date of contract. Soon
disposal. after the sale, XX claims ownership over the land by virtue of
a prescriptive title. May BB suspend the payment of the
price?
What is the exception to the rule that title passes to the buyer Yes, B may suspend the payment of the price
when he unjustifiably refuses to accept delivery? because of a reasonable fear that an action reinvidicatoria
will be brought against him. It is not necessary that the
The exception is when there is a contrary stipulation or when vindicatory action has already been brought: reasonable fear
the seller reserves the ownership as a sort of security for the thereof is sufficient.(Art. 1590)
payment of the price. (Art. 1588)
What are the exceptions to the right of a vendee to suspend

When is the vendee liable for interest on the price? payment of the price?
The vendee is liable for interest on the price in the following The exceptions are:
cases: 1) Should there be a stipulation to that effect;
(1) Should it have been so stipulated; 2) Should the vendor give security for the return of the price;
(2) Should the thing sold and delivered produce fruits or 3) Should the vendor have caused the disturbance or danger to
income; and cease; or
(3) Should he be in default, from the time of judicial or 4) Should the disturbance consist of only of a mere act of
extrajudicial demand for the payment of the price. (Art. trespass. (Art. 1590)
1589)
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2010. B did not pay A on 31 December 2010. What is/are the

A sold a parcel of land to B. Thereafter, C filed a suit against remedy/ies of A?
A and B for quieting of title. During pendency, may B
suspend payment? A may choose between fulfillment and rescission of the
obligation with payment of damages in either case on the
Yes. B has reasonable ground to fear that his ground that B does not comply with what is incumbent upon
possession or ownership would be disturbed by a vindicatory him (Article 1191). Should there be a reasonable ground to
action. (Art. 1590) fear the loss of property sold and its price, A may
immediately sue for rescission of the sale. (Article 1591)
Suppose in the problem aforementioned, C only claims for a

part of the land. May there be suspension of payment? A and B entered into a contract of sale whereby A bound
himself to deliver a parcel of land through a public document
Yes, B may still suspend payment for the entire amount. on 1 July 2010, and B bound himself to pay on 31 December
2010. A real estate mortgage was constituted on the property,
having A as the mortgagee. B did not pay A on 31 December
Should the vendee be disturbed in the possession or 2010. May A rescind the sale?
ownership of the thing acquired, or should he have
reasonable grounds to fear such disturbance, may the vendee No. Upon the constitution of Real estate mortgage, the
recover what has already been paid? contract has been changed into one of payment of a loan.
No, the vendee may retain only the price that has
not been paid to the vendor. He is not entitled to recover
what has already been paid. On July 1, AA sold BB a piece of land, payment and delivery
to be made on July 15. It was stipulated that should payment
not be made on July 15, the contract would automatically be
May the seller immediately sue for the rescission of the sale? rescinded. On July 20, can BB still pay?
The seller must have reasonable grounds to fear Yes, as long as there has been no judicial or notarial
the loss of the immovable property and the loss of the price. demand for the rescission of the contract. But if, for example
(Art. 1591) on July 18, AA had made a notarial demand for such a
rescission then BB will not be allowed o pay anymore, and
the court may not grant him a new term. (Art. 1592)
What are the requisites in order for the vendor to rescind What is the demand needed for the rescission of the contract
sale of immovable property or in cases of anticipatory after expiration of the term agreed upon?
breach?
The demand is not for the payment f the price inasmuch
The REQUISITES are : as the seller precisely desires to rescind the contract. It is,
therefore a demand for rescission; the term having expired,
(a) There is delivery of immovable property the seller does not want to continue with the contract. (Art.
(b) Vendee has not paid the price 1592)
(c) Vendor has reasonable ground to fear the:
a. LOSS of PROPERTY; AND
b. LOSS of PRICE May the vendee still pay even if there is no judicial or
notarial demand?
What is the rule if in the previous question neither ground Yes, the vendee may still pay when there is no judicial or
exists? notarial demand Offer to pay is sufficient to defeat vendor’s
prerogative. (Art. 1592)
The provisions of Article 1191 shall apply. The article says:
Art. 1191. The power to rescind obligations is implied in Is the vendor’s right to rescind absolute?
reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him. No, the vendor’s right to rescind is not absolute. Art. 1191,
The injured party may choose between the fulfillment and par. 3 provides that the court may grant vendee a new term.
the rescission of the obligation, with the payment of damages However, if there is already a demand, the court may no
in either case. He may also seek rescission, even after he has longer fix a term.
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 In what instances may the vendee no longer pay the price
understood to be without prejudice to the rights of third after the expiration of the time agreed upon although no
persons who have acquired the thing, in accordance with demand has yet been made upon him by suit or notarial act?
Articles 1385 and 1388 and the Mortgage Law.
The vendee may no longer pay the price in the following
instances:
A and B entered into a contract of sale whereby A bound
himself to deliver a parcel of land through a public document 1. Sale on installment of real estate (Caridad Estates vs
on1 July 2010, and B bound himself to pay on 31 December Santero)– governed by Maceda Law
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2. Mere promise to sell real estate / Conditional sale– there wrongfully neglects or refuses to ACCEPT and PAY for the
can be no rescission in contract to sell goods.
3. Cases under RA 6552 (RA 6552 recognizes the vendor’s
right to cancel unqualifiedly in case of industrial lots, The measure of damages should be the estimated loss
commercial buildings, etc. with a refund of certain directly and naturally resulting in the ordinary course of
percentages of payments made on account of cancelled events from the buyer’s breach.
contract)
When may a seller rescind in case of breach of contract of

Does Article 1592 apply to a promise to sell? sale of goods?
No, it does not apply to a promise to sell. Article 1592 When there is no delivery of goods yet the seller may
speaks only of the rescission of contracts of sale of real totally rescind by giving notice of his election to do so to the
property and does not apply to contracts to sell real property buyer if:
on installments. (Roque vs. Lapuz, March 31, 1980) (1) Buyer has repudiated the contract of sale;
(2) Buyer has manifested his inability to perform obligations;
or
AA failed to pay the price of a parcel of land within the (3) Buyer committed a breach (Art. 1597)
agreed period. BB cancelled the contract before the period to
pay arrived. Is AA guilty of failure to pay the price of land
within the period agreed upon? What is the measure of damages when there is an available
market?
No, Article 1592 contemplates of a situation where the
buyer who fails to pay the price at the time agreed upon, may The MEASURE OF DAMAGES (WHEN THERE IS
still pay, even after the expiration of the period, as long as no AVAILABLE MARKET) should be the difference between the
demand for rescission of the contract has been made upon contract price and the market or current price at the time the
him either judicially or by a notarial act. goods ought to have been accepted, or at the time of refusal
to accept when there is no time fixed.
What are the rights of the vendor where automatic rescission

of sale of movable property is stipulated? The seller and the buyer agreed that payment and delivery
would be made on July 15, at the buyer’s house. What is the
Vendor can rescind the contract as a matter of right if the consequence if f the buyer does not appear on said day, or
vendee does not: having appeared, he should not have tendered the prices at
(a) Accept; or the same time?
(b) Pay unless credit period for payment is stipulated. (Art.
1593) The sale can be considered as automatically rescinded.
ACTIONS FOR BREACH OF CONTRACT SS sold BB a piano. What is SS's remedy if B wrongfully
refuses to accept and pay for the goods?
OF SALE OF GOODS
SS may bring an action against him for damages for non-
Articles 1594 – 1599 acceptance. (Art. 1596)
What actions are available to the seller in case of breach of

contract of sale of goods? What is the measure of damages where the buyer wrongfully
neglects or refuses to accept and pay for the goods ?
His remedies are:
1.Action for the price / Specific performance (Art. 1595) The measure of damages is the estimated loss directly and
(a) when the ownership of the goods has passed to the buyer and he naturally resulting in the ordinary course of events from the
wrongfully neglects or refuses to pay for the goods according to the buyer's breach of contract. (Art. 1596)
terms of the contract;
(b) when price is payable on certain day, irrespective of delivery or
transfer of title, and the buyer wrongfully neglects or; refuses to pay What actions are available to the seller of the goods?
[BUT: it is a defense to such action that seller has manifested an
inability or lack of interest to perform his obligation before judgment] His remedies are:
(c) if goods cannot readily be resold for a reasonable price, although 1. Maintain an action for damages.
transfer of ownership has not passed– seller may offer to deliver the 2. Hold the goods as bailee for the buyer and bring an action
goods to the buyer; if buyer refuses to receive, seller may notify the for the price.
buyer that he holds the goods as bailee for the buyer. Thereafter, the 3. Ask for the resolution of the contract for failure of the
seller may treat the goods as buyer’s and may maintain an action for buyer to fulfill his obligations.
the price.
Is there such thing as an automatic rescission?
When may a seller institute an Action for Damages in case of
breach of contract of sale of goods? Yes, but such rescission requires notice thereof to the buyer.
A seller may institute an action for damages when buyer

What are the instances when seller may totally rescind the
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contract of sale? Where the buyer is entitled to rescind the sale and elects to
do so, he shall cease to be liable for the price upon returning
The buyer may totally rescind the contract where the goods or offering to return the goods. If the price or any part
have not been delivered to the buyer, and the buyer has thereof has already been paid, the seller shall be liable to
repudiated the contract of sale, or has manifested his repay so much thereof as has been paid, concurrently with
inability to perform his obligations thereunder, or has the return of the goods, or immediately after an offer to
committed a breach thereof. return the goods in exchange for repayment of the price.
Where the buyer is entitled to rescind the sale and elects to

How does Technical Rescission take place?
do so, if the seller refuses to accept an offer of the buyer to
return the goods, the buyer shall thereafter be deemed to
Technical rescission takes place when the seller may totally hold the goods as bailee for the seller, but subject to a lien to
rescind by giving notice of his election to do so to the buyer secure payment of any portion of the price which has been
provided there is no delivery of goods yet. (Art. 1597) paid, and with the remedies for the enforcement of such lien
allowed to an unpaid seller by Article 1526.
What is the remedy of the buyer in case the seller has broken
a contract to deliver a specific or ascertained goods? (5) In the case of breach of warranty of quality, such loss, in
the absence of special circumstances showing
Where the seller has broken a contract to deliver specific or proximate damage of a greater amount, is the difference
ascertained goods, a court may, on the application of the between the value of the goods at the time of delivery to
buyer, direct that the contract shall be performed the buyer and the value they would have had if they had
specifically, without giving the seller the option of retaining answered to the warranty. (Art. 1599 NCC)
the goods on payment of damages. 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. (Art. 1598 NCC)
Can the buyer exercise all the remedies granted to him under
Article 1599?
What is the remedy of the buyer when there is a breach of
warranty by the seller? No, under Article 1599, the law provides when the buyer has
claimed and been granted a remedy in anyone of those
enumerated, no other remedy can thereafter be granted,
Where there is a breach of warranty by the seller, the buyer may, at his without prejudice to the provisions of the second paragraph
election: of Article 1191.
(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; Can the buyer rescind the sale if the goods have been
delivered?
(2) Accept or keep the goods and maintain an action against
the seller for damages for the breach of warranty; Where the goods have been delivered to the buyer, he cannot
rescind the sale if he knew of the breach of warranty when he
accepted the goods without protest, or if he fails to notify the
(3) Refuse to accept the goods, and maintain an action seller within a reasonable time of the election to rescind, or if
against the seller for damages for the breach of warranty; he 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. But if
(4) Rescind the contract of sale and refuse to receive the
deterioration or injury of the goods is due to the breach or
goods or if the goods have already been received, return
warranty, such deterioration or injury shall not prevent the
them or offer to return them to the seller and recover the
buyer from returning or offering to return the goods to the
price or any part thereof which has been paid.
seller and rescinding the sale. (Art. 1599 NCC)
When the buyer has claimed and been granted a remedy in
anyone of these ways, no other remedy can thereafter be
When the buyer is entitled to rescind the sales and elects to
granted, without prejudice to the provisions of the second
do so, is he still liable for the price of the thing delivered?
paragraph of Article 1191.
Where the buyer is entitled to rescind the sale and elects to
Where the goods have been delivered to the buyer, he cannot do so, he shall cease to be liable for the price upon returning
rescind the sale if he knew of the breach of warranty when he or offering to return the goods. If the price or any part
accepted the goods without protest, or if he fails to notify the thereof has already been paid, the seller shall be liable to
seller within a reasonable time of the election to rescind, or if repay so much thereof as has been paid, concurrently with
he fails to return or to offer to return the goods to the seller the return of the goods, or immediately after an offer to
in substantially as good condition as they were in at the time return the goods in exchange for repayment of the price. .
the ownership was transferred to the buyer. But if (Art. 1599 NCC)
deterioration or injury of the goods is due to the breach or
warranty, such deterioration or injury shall not prevent the
buyer from returning or offering to return the goods to the
What is the remedy of the buyer in case he is entitled to
seller and rescinding the sale.
rescind the sale and elects to do but the seller refuses to
accept an offer of the buyer to return the goods?

SALES
promise to sell which is discretionary on the part of the part

Where the buyer is entitled to rescind the sale and elects to of the vendee a retro. ( Sy vs. CA, 131 SCRA 116).
do so, if the seller refuses to accept an offer of the buyer to
return the goods, the buyer shall thereafter be deemed to
hold the goods as bailee for the seller, but subject to a lien to The contract of sale with right to repurchase provided that
secure payment of any portion of the price which has been the repurchase price shall be P 14,000.00 plus all costs of
paid, and with the remedies for the enforcement of such lien money equivalent to 30%, real estate and documentary
allowed to an unpaid seller by Article 1526. (Art. 1599 NCC) stamps, and other incidental expenses. The question is
whether the amount to be paid in case of repurchase is
limited to those under Art. 1616, NCC.
How can you determine loss in case of breach of warranty of
quality in the absence of special circumstances showing
As a rule, yes, unless otherwise agreed upon. In fact, Art
proximate damage of greater amount?
1601, NCC provides:
In the case of breach of warranty of quality, such loss, in the
absence of special circumstances showing proximate damage “Conventional redemption shall take place when the vendor
of a greater amount, is the difference between the value of reserves the right to repurchase the thing sold, with the
the goods at the time of delivery to the buyer and the value obligation to comply with the provisions of Article 1616 and
they would have had if they had answered to the warranty. other stipulations which may have been agreed upon.”
(Art. 1599 NCC) It is clear, therefore, that the provisions of Art. 1601 require
petitioner to “comply with xxx the other stipulations” agreed
upon.
EXTINGUISHMENT OF SALE May a check be tendered when the vendor a retro exercise
the right to repurchase? Why?
Articles 1600 -1623
Yes, because the exercise of the right to repurchase is a right
How can sales are extinguished? not an obligation. The tender of a check is sufficient to
compel redemption, but it is not in itself a payment that
Sales are extinguished by the same causes as all other relieves the redemptioner from his liability to pay the
obligations, by those stated in the preceding articles of this redemption price. (Fortunato, et al. vs. CA, et al., G. R. no.
Title, and by conventional or legal redemption. (Art. 1600 78566, April 25, 1991).
NCC)
When is a contract deemed to be an equitable mortgage?

When does conventional redemption take place?
Conventional redemption shall take place when the vendor The contract shall be presumed to be an equitable mortgage,
reserves the right to repurchase the thing sold, with the in any of the following cases:
obligation to comply with the provisions of Article 1616 and (1) When the price of a sale with right to
other stipulations which may have been agreed upon. (Art. repurchase is unusually inadequate;
1601 NCC)
(2) When the vendor remains in possession as
lessee or otherwise;
What is the obligation of the vendor to the vendee in case of
conventional redemption? (3) When upon or after the expiration of the right
to repurchase another instrument extending the
The vendor is obligated to return the price delivered as well period of redemption is granted or an agreement
as the expenses of the contract and necessary and useful granting a new period is executed;
expenses made on the thing.
(4) When the purchaser retains for himself a part

Is it necessary that the right to repurchase be reserved in the of the purchase price;
same instrument of sale? Why?
(5) When the vendor binds himself to pay the taxes
Yes, the right to repurchase must be reserved in the same on the thing sold;
deed of sale. If it is reserved in a separate instrument, then
the document is not a sale with right to repurchase. The
same is merely a promise to sell which is discretionary on the
part of the vendee a retro. ( Sy vs. CA, 131 SCRA 116). (6) In any other case where it may be fairly
inferred that the real intention of the parties is that
the transaction shall secure the payment of a debt
What is the effect of reserving the right to repurchase in a or the performance of any other obligation.
separate instrument instead of reserving it in the same
instrument? In any of the foregoing cases, any money, fruits, or other
benefit to be received by the vendee as rent or otherwise
If it is reserved in a separate instrument, then the document shall be considered as interest which shall be subject to the
is not a sale with right to repurchase. The same is merely a usury laws. (Art. 1602 NCC)

SALES
The extension can be construed as indicative of an equitable

A contract of sale over a parcel of land was entered into by mortgage. (Claravall vs. CA, 190 SCRA 439).
and between the parties for only P80,000.00. It was being
questioned, as the intention was one of equitable mortgage.
It was found out that the payments amounted to What is the remedy of the vendor in cases referred to in
P120,000.00, but evidence was shown that the amount of P Articles 1602 and 1604?
80,000.00 was placed in the contract to reduce the
documentary stamps, transfer tax, etc. In the cases referred to in Articles 1602 and 1604, the
apparent vendor may ask for the reformation of the
instrument. (Art. 1605 NCC)
Is the conveyance one of sale or merely a security for the
payment of a loan?
It is one of sale. The presumption of equitable mortgage will Within what period should the vendor a retro repurchase
apply only if it is clearly shown that the consideration was the property?
unusually inadequate such that the mind revolts at it and
such that a reasonable man would neither directly nor The right referred to in Article 1601, in the absence of an
indirectly be likely to consent to it. ( Vda. De Alvarez vs. CA, express agreement, shall last four years from the date of the
et al., G.R. no. 110970, March 16, 1994, 49 scad 663) contract. Should there be an agreement the period cannot
exceed ten years. (Art. 1606 NCC)
When can a contract be a presumption that a

contract of sale is one of equitable mortgage? Should there be an agreement regarding the period of right
to repurchase, what is the maximum period allowed by law?
They are:
Should there be an agreement, the period cannot exceed ten
years. (Art. 1606 NCC)
1. The parties must have entered into a contract
denominated as a contract of sale;
What is the essence of a sale with right to repurchase?
Explain
2. The intention of the parties was to secure an
existing debt by way of mortgage. (Lustan vs. CA, et al., G.R. The essence of a sale with right to repurchase is that title
no. 111924, January 27, 1997, 78 scad 351). and ownership of the property sold are immediately vested
in the vendee a retro subject to the resolutory condition of
repurchase by the vendor a retro within the period
stipulated. Failure to perform said resolutory condition vests
upon the vendee by operation of law absolute title or
X and Y entered into a contract of sale with right to ownership over the property sold.
repurchase over a parcel of land. Despite the sale, X, the
seller, retained possession. The contract also provides for a Failure of the vendee a retro to consolidate ownership does
monthly escalation of the repurchase price. What is the not impair such title, for the method prescribed under
nature of the contract? Why? article 1607 is merely for the purpose of registration of the
consolidated title.
It is an equitable mortgage. In Bundalian vs. CA, 129 SCRA
645, it was said that an equitable mortgage exists where
vendors are given the right to possess property pending Can the vendor still exercise the right to repurchase after a
redemption. In the same case, the SC said that monthly finality of a judgment declaring the contract one with right to
escalation of repurchase price indicates a loan transaction repurchase?
secured by an equitable mortgage.
Yes, the law provides that the vendor may still exercise the
right to repurchase within thirty days from the time final
How can you a construe a contract purporting to be a sale judgment was rendered in a civil action on the basis that the
with a right to repurchase? contract was a true sale with right to repurchase. (Art. 1606
NCC)
In case of doubt, a contract purporting to be a sale with right
to repurchase shall be construed as an equitable mortgage.
(Art. 1603 NCC) Under article 1606, NCC, the vendor may still exercise the
right to repurchase within 30 days from the finality of a
judgment declaring the contract one with right to
What rule shall apply to a contract purporting to be an repurchase. How does this apply?
absolute sale?
The rule applies where the party denies that the sale is one
The provisions of Article 1602 shall also apply to a contract with right to repurchase, not in those cases where the
purporting to be an absolute sale. (Art. 1604 NCC) contract is conclusively a sale with right to repurchase.
( Adorable vs. Inacala, 103 Phil. 481)
What is the effect of the execution of contract extending a

contract of sale with right to repurchase?

SALES
On January 02, 1980, A and B entered into a contract was agreed upon for the repurchase of the property. If A fails
whereby A sold to B a parcel of land for and in consideration to redeem the property within the allowable period, what
of P 10,000.00 with A reserving to himself the right to would you advise B to do for his better protection?
repurchase the same. Because they were friends, no period
was agreed upon for the repurchase of the property. I would advise B to consolidate his ownership and file a
petition in court for the registration of the consolidated
ownership with notice to A. (Art. 1607 NCC)
Until when must A exercise his right of repurchase?
A must exercise the right to repurchase within four (4) years

Can the vendor bring his action against every possessor
from the execution of the contract because there was no
whose right is derived from the vendee even if in the second
contract providing for the period to repurchase. (Art. 1606
contract no mention should have been made of the right to
NCC)
repurchase?
Yes, The vendor may bring his action against every possessor
X sold a parcel of land to Y a retro providing that X should
whose right is derived from the vendee, even if in the second
exercise the right within two years from the execution of the
contract no mention should have been made of the right to
contract. One month after the expiration of the period, X
repurchase, without prejudice to the provisions of the
filed a suit to compel Y to resell the parcel of land. The RTC
Mortgage Law and the Land Registration Law with respect to
of Manila ruled in favor of X holding that the contract is a
third persons. (Art. 1608 NCC)
sale with right repurchase; hence, X was allowed to
repurchase within 30 days from the finality of the decision. Y
appealed. If you were the ponente on appeal, how would you
What is the effect of legal redemption with respect to the
decide the case? Explain.
vendee?
I would reverse the decision of the lower court. The right to
The vendee is subrogated to the vendor’s rights and actions.
repurchase has already expired. To allow the vendor a retro
(Art. 1608 NCC)
to exercise the right to repurchase would set a naught a pacto
de retro or resurrect an expired right of repurchase by simply
instituting an action to reform the contract. It would thus be
made a tool to spawn, protect, and even reward fraud and
bad faith, a situation never contemplated by law. ( Felimen When can the creditor make use of the right of redemption
vs. Orias, G.R. No. L- 33182, December 18, 1987). against the vendee?
The creditors of the vendor cannot make use of the right of

redemption against the vendee, until after they have
What is the effect of failure of the vendor to comply with the exhausted the property of the vendor. (Art. 1610 NCC)
provisions of Art. 1616 in case of consolidation of ownership
in the vendee with respect to real property?
In a sale with a right to repurchase, can the vendee compel
In case of real property, the consolidation of ownership in the vendor to redeem the whole property?
the vendee by virtue of the failure of the vendor to comply
with the provisions of article 1616 shall not be recorded in In a sale with a right to repurchase, the vendee of a part of an
the Registry of Property without a judicial order, after the undivided immovable who acquires the whole thereof in the
vendor has been duly heard. (Art. 1607 NCC) 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. (Art. 1611 NCC)
The seller a retro failed to redeem within the period agreed
upon, hence, the buyer a retro filed a petition for registration
of the consolidation of ownership, but did not name the If several persons, jointly and in the same contract, should
respondents. sell an undivided immovable with a right of repurchase, can
anyone of them exercise this right for more than their
respective share?
What is the effect of the failure to redeem and to name and
notify the respondents? Explain.
No, If several persons, jointly and in the same contract,
should sell an undivided immovable with a right of
In case of failure to redeem, there shall be consolidation of repurchase, none of them may exercise this right for more
ownership in the vendee a retro. Consolidation is a matter of than his respective share. (Art. 1612NCC)
law. ( Art 1607, NCC; BAyquen vs. Balaoro, L- 28161, August
13, 1986). Such failure results in the loss of the right to
repurchase. ( Cruz vs. Leis, et al., G.R. No. 125233, March Can the heirs of the person who sold an immovable redeem
09, 2000) more than what they may have acquired?
Registration of the consolidated ownership requires a
judicial order after the vendor shall have been notified.
No, 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
On January 02, 1980, A and B entered into a contract
acquired. (Art. 1612 NCC)
whereby A sold to B a parcel of land for and in consideration
of P 10,000.00 with A reserving to himself the right to
repurchase the same. Because they were friends, no period

SALES
Can a vendee compel a co-owner to redeem the whole of the

property sold?
Is an assignment of credit in a private document binding?
A vendee cannot compel the co-owner to redeem the whole
property sold because each one of the co-owner may An assignment of credit to be binding must appear in a
independently exercise the right repurchase. public instrument.
May a co-owner exercise his right to repurchase Is a debtor be released from his obligation should he pays his
independently from the co-owner? creditor before knowledge of assignment of credit?
Yes, he may exercise his right to repurchase independently as Yes a debtor is released from obligation should he pay his
regards his own share. creditor before knowledge of assignment of credit.
Can an action of redemption be bought against all the heirs What does the assignment of credit includes?
of the vendee should he leave several heirs?
It includes all the accessory rights such as guarantee
No, the redemption should pertain only to each share of the mortgage, pledge or preference.
heir.
Can an action for redemption be enforced against all the heir

Can the vender avail the right of repurchase without in case the inheritance has been divided and the thing sold
returning the price of the sale? has been awarded to one of the heirs?
No, the vender must return the amount of the price to avail The action for redemption may be instituted only to the heir
the right to repurchase as well as the expenses on the where the thing sold is awarded.
contract and the necessary expenses made.
Is the vendor who recovers the thing sold be liable from all
What is a legal redemption? charges and mortgages constituted by the vendee?
It is the right to be subrogated upon the terms and The vendor shall be free from all charges and mortgages
conditions stipulated in the contract in one who acquires the constituted by the vendee.
thing by purchase or dation in payment or other transaction
whereby ownership is transferred by onerous title.
What is the extent of the co-owners’ right of redemption in
case both wants to redeem the property co-owned?
Can a co-owner of a thing exercise the right of redemption in
case the shares of the other co-owner are sold to third They can only do so to the extent of the share they own in the
person? co-owned property.
Yes, a co-owner may exercise the right to redemption in case

the share of other co-owner are sold to third person. Is the assignment of credit that involves real property
requires to be binding registration with the registry of
property?
When is the right of legal redemption be exercised?
Yes, it must be registered with the registry of property to be
It must be exercised within 30 days from notice in writing binding.
by the prospective vendor or by the vendor as the case
maybe.
Is mortgage and pledge included in the assignment of credit?
The assignment of credit includes all accessory rights such as

mortgages and pledges.
What are the kinds of warranties in the assignment of credit?
ASSIGNMENT OF CREDITS The following are the kinds of warranties:

1) The existence and legality of credit;
2) The solvency of the debtor.
AND OTHER INCORPOREAL RIGHTS
Articles 1624 -1635 Distinguish between the liabilities of the seller in food faith
and the seller in bad faith.
When is assignment of credit deemed perfected?
The vendor in good faith shall be liable for the price received
It is deemed perfected from the moment there is meeting of and for the expenses of the contract and any other legitimate
the minds between the parties. payments made by reason of the sale, and the necessary and
SALES
useful expenses made on the thing sold; while, the vendor in R owes S. S assigns the credit to L. S is in good faith. It was
bad faith shall be answerable for the payment of all expenses agreed that S would be responsible for R’s solvency. The
and for damages. party did not agree on the duration of the liability. If the debt
was due June 22, 2010 and the assignment was made July 10,
2010, until when is the guaranty?
Alt owes Ben. Ben assigns the credit to Cozy. Ben is in good
faith. But Alt is insolvent. Is Ben liable? Until July 10, 2011. The law says, “one year from the time of
the assignment” if the period has already expired.
No, unless it was so expressly stipulated or unless the
insolvency was prior to the sale and of common knowledge.
What if the debt was due June 22, 2010 and the assignment
was made May 10, 2010, is the one year counted from the
Suppose the credit really did not exist anymore at the time of time of assignment?
assignment. Is Ben still liable?
No. The one year will be counted from the time when the
Yes, unless the credit was sold as doubtful, such as a credit in debt becomes due. Hence, the liability shall cease one year
litigation. after the maturity, which is on June 22, 2011.
What does the creditor warrants when he assigns his credit?

What is the rule as to the sale of an enumerated list of future
The creditor warrants only the existence and legality of the inheritance?
credit at the perfection of the contract.
As a rule, the sale of an enumerated list of future inheritance
is prohibited.
D owes C P10,000.00 which represents the purchase price of
a car bought by D. C assigns the credit to T. If at the time of
the assignment, the credit has already prescribed or has Can an heir sell his share of the common estate even prior to
already been paid and its nullity is subsequently declared, is judicial approval of the partition?
C liable to T?
Yes. As a matter of fact, the part of an estate assigned to an
Yes because C warrants the existence and legality of the heir by the will of the deceased can be sold by such heir even
credit. before the partition of the estate is approved by the court.
Indeed there is no legal provision which prohibit such heir
from selling to a stranger his share of the common estate.
What are the rules on the duration of the warranty for the
debtor’s solvency?
Is the sale of future inheritance without specification of the
The following are the rules on the duration of the warranty properties, valid?
for the debtor’s solvency:
1) Within the time agreed upon; Yes. If the future inheritance is sold without specification of
2) If no time was agreed upon- the properties, this would only be a sale of future hereditary
a) One year from assignment if debt was already rights, and hence, permissible.
due.
b) One year from maturity if debt was not yet due.
In the sale of an inheritance, what does the seller warrants?
If the assignor acted in bad faith, are the rules on the The seller of an inheritance warrants only the facts of his
duration of the warranty for the debtor’s solvency heirship but he does not warrant the objects which makes up
applicable? his inheritance.
No, article 1629 on the duration of assignor’s liability does

not apply if the assignor acted in bad faith. What is the liability of a seller of an inheritance?
One who sells an inheritance without enumerating the things

D owes C P10,000.00 payable on May 10,2010.C assigns his of which it is composed, shall only be answerable for his
credit to T with C making himself responsible for the character as an heir.
solvency of D for one year from May 10,2010, When shall the
guaranty of debtor’s solvency last?
X and Y are the heirs of the estate left by Z. Before partition
The guaranty of C’s liability for the solvency of D shall last and without specifying his definite share in the inheritance,
within one year as agreed upon between C and T. X sold his share to B for P100,000.00. If upon partition, X’s
share is onlyP75,000.00, is he liable to B for his balance?
What if there is no stipulation and the assignment is made on No. In this case, X only warrants the fact that he is an heir of
June 22, 2010. What is the duration of the assignor’s Z. He is not liable for B should his share after partition be
liability? less than P100,000.00
The liability is limited to one year from assignment.

What is the subject matter in the sale of the whole of certain
rights, rents, or products for a lump sum?
SALES
The vendee is required to reimburse the vendor for all that

The subject matter is the totality of such rights, rents, or the latter may have paid for the debts and charges on the
products. estate and satisfy the credits he may have against the same.
What does the vendor warrants in the sale of such rights, Is an agreement between the vendor and the vendee that the
rents, or products? latter may not reimburse the former, valid?
The vendor warrants only the legitimacy of the whole and Yes, because the liability of the vendee for the debts and
not the various parts of which it may be composed. charges is subject to any agreement to the contrary.
Is there an exception to the rule that the vendor is not liable In what instance is Article 1634 applicable?
for eviction of each of the various parts of the rights, rents,
or products? Article 1634 applies only to a claim in litigation, the meaning
of which is not a claim open to litigation but one which is
Yes and that is if the eviction involves the whole or the part actually litigated, that is to say, disputed or contested which
of greater value. happens only after an answer is interposed in a suit.
(Robinson vs. Garry, 8 Phil. 275)
S is a partner in a partnership. He sells all his interest to B

for a lump sum of P150,000.00.Upon dissolution of the In what contract does Article 1634 applies to?
partnership, B received the share of S in its assets consisting
of P50,000, some office equipment, and a car. Subsequently, Article 1634 applies only in the case of sale. Hence, it does
the car was recovered by C, a creditor of the partnership. Is S not apply to a barter or a donation.
liable to B?
No, S is not liable to B because S does not warrant each of Can a credit or other incorporeal right sold in litigation, be
the various parts of his interest in the partnership but only redeemed?
the legitimacy of his rights as partner taken as a whole.
Yes, a credi
redeemed by the debtor.
In the above-stated case, what if the value of the car exceeds
P75,000.00. Is S liable to B?
What kind of redemption does the debtor exercise when he
Yes. S will be liable because B is evicted from the part of redeems a credit or other incorporeal right sold in litigation?
greater value.
When the debtor redeems a credit or other incorporeal right
sold in litigation he is exercising his right of legal
Are the fruits of an inheritance included in the sale? redemption.
Yes, unless otherwise stipulated, the fruits of an inheritance

are included in the sale. What are the requisites before the right of legal redemption
can be exercised?
What are the rules with regard to the obligation of the The following are the requisites before the right of legal redemption
vendor regarding the fruits of an inheritance? can be exercised:
1) There must be a sale or assignment of a credit;
The following are the rules regarding the obligation of the 2) There must be a pending litigation at the time of the
vendor as to the fruits of an inheritance: assignment. The complaint by the assignor must have
1) If the vendor merely received the fruits he must deliver them been filed, and answered by the debtor before the sale
to the vendee. of the credit;
2) If the fruits were consumed by the vendor, he must 3) The debtor must pay the assignee of all his expenses
reimburse the vendee. required by law;
3) If the fruits were sold by the vendor, he is obliged to deliver 4) The right must be exercised by the debtor within 30
the price to the vendee. days from the date the assignee demands payment from
him.
What is the rule as to the liability of the vendor for anything

received from the inheritance sold? What are the expenses that the debtor must pay the assignee
when the former exercises his right of legal redemption?
The liability of the vendor for anything received
from the inheritance sold is subject to any contrary The debtor must pay the assignee:
agreement. 1)The price paid by him;
2)The judicial costs incurred by him; and
What is the obligation of the vendee after the vendor has paid 3)The interest on the price from the date of payment.
for the debts and charges of the estate?

SALES
X sues Y to recover a credit of P1M. Pending litigation, X sells

the credit to a 3rd party A for P300,000.00. Can Y redeem the
credit from A? What is the reason for the exception of the right of the debtor
to exercise redemption in case of assignment of credit?
Yes, Y may redeem the credit from A by paying A the sum of
P300,000.00 The reason for the exception is that the assignee is moved by
a desire to preserve the property and not to speculate at the
expense of the debtor.
Within what period should Y exercise his right of legal
redemption?
Give an example of the 3rd exception.
Within 30 days from the time A demands payment of the
P1M. An example is where a vendee (assignee) of a property
subject to a mortgage acquires the mortgage credit of the
assignor (mortgage-creditor) against the vendor (mortage-
What is the purpose of the law in granting the right of legal debtor).
redemption to the debtor?
The purpose of the law in granting the right of redemption to D owes P P50,000.00. Which is secured by a mortgage on a
the debtor is equity and to avoid the purchase by a 3rd person land owned by D. If D sells the land to C and P assigns his
of credits in litigation merely for speculation. credit in litigation to D against B to C, is D entitled to
redeem?
When is a credit or other incorporeal right be considered in No, D is not entitled to redeem. A debtor cannot redeem the
litigation? assignmentmade to the possessor of a tenement or piece of
land which is subject to the right in litigation assigned.
A credit or other incorporeal right shall be considered in
litigation from the complaint concerning the same is answered.
Can the debtor exercise the right of redemption even if the

credit was sold not in litigation?
No. The debtor cannot redeem if the credit is not in litigation

when the same is sold.
GENERAL PROVISIONS
What are the instances when legal redemption is denied?
When the assignment or sale was made to: Articles 1636 – 1637
1) A co-debtor or co-owner of the right assigned;
2) A creditor in payment of his credit; What does the “document of title to goods” include?
3) A possessor of a tenement or piece of land which is
subject to the right in litigation assigned. Document of title to goods include any bill of lading, dock
warrant, quedan, or warehouse receipt or order for the
delivery of goods or any other document used in the ordinary
Why does the law prohibit redemption of the sale made to co- course of business in the sale or transfer of goods, as proof of
heir or co-owner? the possession or control of the goods, as authorizing or
purporting to authorize the possessor of the document to
The law prohibit redemption of the sale made to co-heir or transfer or receive either by indorsement or by delivery,
co-owner because the law does not favor co-ownership or goods represented by such document.
pro-indivision.
What does the term “goods” include?
Give an example when the debtor is prohibited from
redeeming the property conveyed to a co-heir or co-owner. “Goods” includes all chattels personal but not things in
action or money of legal tender in the Philippines. The term
D is indebted to B and C in the amount of P50,000.00. For includes growing fruits or crops.
failure to pay his debt, B sues D. If B transfers his credit to C
during the pendency of the litigation, D cannot redeem.
What is an “order”?
What is the reason of the law in not allowing the debtor to “Order” relating to documents of title means an order by
exercise his right of redemption when the assignment or sale indorsement on the documents.
was made to a creditor?
What does “quality of goods” include?
The reason is that there is a lawful basis for the assignment
as the assignee cannot be considered as a vendee of a right in “Quality of goods” includes their state or condition.
litigation and as a speculator.

SALES
What is meant by “specific goods”
“Specific goods” means goods identified and agreed upon at

the time a contract of sale is made.
What constitute value?
An antecedent or pre-existing claim, whether for money or

not, constitutes “value” where goods or documents of title
are taken either in satisfaction thereof or as a security
thereof.
When is a person insolvent?
A person is insolvent if he has ceased to pay his debts in the

ordinary course of business or cannot pay his debts as they
become due, whether insolvency proceedings have been
commenced or not.
When are goods in a “deliverable state”
Goods are in a “deliverable state” when they are in such a

state that the buyer would, under the contract, be bound to
take delivery of them.
What is a thing or chose in action?
A “thing or chose in action” is any claim or right which may

be pleaded in a suit at law, such as claim of reparation for a
tort (civil wrong) or right guaranteed under certain types of
contract.
What is legal tender?
Legal tender is that currency which a debtor can legally

compel a creditor to accept in payment of a debt in money
when tendered by the debtor in the right amount.
What laws govern the registration of document or title

pertaining to immovable property?
Immovable property is subject to the rule laid down by the

Mortgage Law and the Land Registration Law.


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SALES

Yes, for after all, this transfer of ownership is clearly the

A contract of sale is a.) Consensual; b.) Bilateral reciprocal;

Those which are inherent in the contract, and which in the

Why is the contract of sale a bilateral reciprocal contract?

When is a thing determinate?

It is determinate when the thing is particularly designated or

Is a sale of a future thing valid?

Yes, provided that the sale of a mere hope or expectancy is

Contract for a piece of work- goods are to be manufactured

It is a contract for a piece of work. But, if he will construct on

They may either be: 1. Existing goods, 2. Future goods.

May a property subject to reserva troncal be sold?

It depends on the mutual intent of the parties. If the intent is

Price must observe the following requisites: 1. Price must be

Rey’s right in Y Company was sold in 3/100 of the entire net

If the price cannot be determined in accordance with the

If the terms of sale are complete except for an agreement

Delivery of the thing bought or payment of the price is not

Ownership is transferred from the moment there is either

What is the effect of perfection?

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Is the contractual reservation valid?

Give the effect if unilateral promise is unaccepted?

Option is a contract granting a person the privilege to buy or

The acceptance of unilateral promise to sell must be plain,

with the sample in kind, quality, and character. Only

Dan orally sold a parcel of land to Jerry. Is the sale valid?

B bought a particular laptop, but defaulted in the payment of

What is the scope of article 1485?

Yes, In sale of personal property by installment a lease of

What is the happen if the stipulation is unconscionable?

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Who pays for expenses in execution and registration?

What is market value?

What is the nature of expropriation?

Absolute incapacity is when a party cannot bind himself in

What is the effect of purchase by minors?

What are the essentials requisites for expropriation? Castillo v. Castillo

L-18238, Jan. 22, 1980

120 SCRA 223, 1983

The reasons are:

Would your answer to the preceding problem be the same if

A husband and his wife were living together under the

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What is purchase by attorney?

The wife of the Chief of the Retirement Division of the GSIS

What is the Applicability of Relative Incapacity to Legal

The sale is void. This is so, because it is a contract prohibited

Refer to the following articles:

Articles 1493 – 1494

What is the effect of non- delivery?

When the property is sold at an execution sale, the judgment

Note the difference in the rules –

When does the period of redemption commence?

a. To transfer ownership (cannot be waived)

In the preceding problem, may B oppose the attachment

What is the effect if ownership is not transferred despite