1525 The seller of goods is deemed to be an unpaid seller within 1527 When unpaid seller has possessory lien?

the meaning of this Title:

1. Where the goods have been sold without any
1) When the whole of the price has not been paid or tendered; stipulation as to credit.
➢ Seller is entitled to the payment of the price at
2) When a bill of exchange or other negotiable instrument has
the same time he transfers the possession of the
been received as conditional payment, and the condition on
goods.
which it was received has been broken by reason of the
2. Where the goods have been sold on credit, but the
dishonor of the instrument, the insolvency of the buyer, or
term of credit has expired
otherwise.
3. Where the buyer becomes insolvent
Where whole of the price has not been paid ➢ Liability is greater than assets of the buyer

1) Tender of payment of buyer - the buyer offers his payment Lien – A legal right or interest that a creditor has in another’s
but the seller unjustifiably rejects it. As a result, the lien of the property, lasting usually until a debt or duty that it secures is
seller has been destroyed. satisfied.

o Lien – claim or legal right that the creditor Possessory Lien – A lien allowing the creditor to keep
can exercise against the asset of the debtor possession of the encumbered property until the debt is
when the debtor was not able to perform his satisfied.
obligation to the creditor.

2. Payment of part of price– Payment of a part only of the

1529 The unpaid seller of goods loses his lien thereon:
price, however, does not destroy seller’s lien. The seller
remains an unpaid seller even if title has passed to the Unpaid seller losses his legal right over the goods:
buyer (If the buyer does not fulfill his obligation to pay, pwede
1) When he delivers the goods to a carrier or other bailee for
bawiin ni seller yung thing.)
the purpose of transmission to the buyer without reserving the
3. Payment by negotiable instrument - The delivery of ownership in the goods or the right to the possession thereof;
promissory notes payable to order, or bills of exchange or
2) When the buyer or his agent lawfully obtains possession of
other mercantile documents shall produce the effect of
the goods;
payment only when they have been cashed or when through
the fault of the creditor, they have been impaired." 3) By waiver thereof.
➢ Mere delivery of negotiable instrument does not
extinguish the obligation of the buyer to pay because
it may be dishonored. Therefore, the seller is still 1533 Right of Resale
unpaid seller.
1. Goods are perishable in nature
2. The seller expressly reserves the right of resale in
1526 Rights of Unpaid Seller case the buyer should make default
3. The buyer has been in default in the payment of the
1) A lien on the goods or right to retain them for the price while price for an unreasonable time
he is in possession of them;
An unpaid seller having a right of lien or having stopped the
2) In case of the insolvency of the buyer, a right of stopping the goods in transitu may resell the goods.
goods in transitu after he has parted with the possession of
them; He shall not thereafter be liable to the original buyer upon the
contract of sale or for any profit made by such resale, but may
3) A right of resale as limited by this Title; recover from the buyer damages for any loss occasioned by the
breach of the contract of sale.
4) A right to rescind the sale as likewise limited by this Title
Note: The right of resale applies only if the title to goods has
Other rights:
already passed to the buyer. Otherwise, the goods cannot be
5) Action for the price resold.

6) Action for damages

7) Recto and Maceda law

8) Specific Performance
1534 Right to Rescind Priority 3: In the absence of both registration and possession,
ownership shall belong to the person who presents the oldest
An unpaid seller having the right of lien or having stopped the
title in good faith.
goods in transitu, may rescind the transfer of title and resume
the ownership in the goods In all of the above cases, good faith is essential being the basic
premise of preferential rights granted to the person claiming
1. The seller expressly reserved the right to do so
ownership of the immovable.
2. The buyer has been in default in the payment of the price
for unreasonable time. Example:

Effect of exercise of the right to rescind On February 14, A sold to B his lot. The deed of sale was in a
private instrument. On February 16, A sold the same lot to C in
The seller shall not be liable to the buyer upon COS, but may
a public instrument. On February 20, A sold again the same lot
recover from the buyer damages for any loss occasioned by the
to D in a public instrument. D registered the sale with the
breach of contract.
Registry of Deeds. All of the buyers are in good faith and none
Note: The transfer of title shall not be held to have been of them took physical possession of the lot.
rescinded by unpaid seller until he has manifested by notice to
Q: Who has a better right to the lot?
the buyer by some other overt act an intention to rescind.
A: D, because he registered the sale.

Q: Suppose D did not register the sale, or he registered the sale

1544 Double Sale
but he was in bad faith. Who has the better right to the lot?
Requisites of Double Sale
A: C, because he was the first one who took possession of the
1. Two or more valid COS lot in good faith. The execution of the public instrument
2. Two or more buyers who are at odds over the rightful constitutes constructive delivery.
ownership of the object must represent conflicting
Q: Suppose all of the sales are in private instrument and all the
interests.
buyers are in good faith, who has a better right to the lot?
3. They must pertain exactly to the same object
4. They must be bought from the same seller A: Since there was no registration and possession, B will have
the better right to the lot because he has the oldest title.

Note: The governing principle in double sales is priore

Rules of preference in double sales
tempore, potior jure (first in time, stronger in right)
Movable property

Ownership shall be transferred to the first possessor in good

1549 The vendee need not appeal from the decision in order
faith. Possession may be either actual or constructive
that the vendor may become liable for eviction
Example:

1. Jayzam sold to Camille his rolex watch on February 14,

1555 When the warranty has been agreed upon or nothing
Jayzam said that he will deliver the watch on February 18. The
has been stipulated on this point, in case eviction occurs, the
next day. Jayzam sold the same watch to Marie who
vendee shall have the right to demand of the vendor:
immediately took possession of the watch but without
knowledge of the prior sale to Camille. Who is the rightful (1) The return of the value which the thing sold had at the time
owner of the watch? of the eviction, be it greater or less than the price of the sale;

A: Marie is the rightful ownership of the watch because he is (2) The income or fruits, if he has been ordered to deliver them
the first possessor in good faith. to the party who won the suit against him;

General Rule: First buyer is always considered in good faith (3) The costs of the suit which caused the eviction, and, in a
proper case, those of the suit brought against the vendor for
the warranty;
Immovable property
(4) The expenses of the contract, if the vendee has paid them;
Priority 1: Ownership shall belong to the person who in good
(5) The damages and interests, and ornamental expenses, if
faith first registered the sale in the Registry of Property.
the sale was made in bad faith.
Priority 2: If there was no registration, ownership shall pertain
to the first possessor in good faith,
1590 Suspension of payment by the vendee

1. Should the vendee be disturbed in the possession or

ownership of the thing acquired
Example: Third party claims that he is the
real owner of the property.
2. Should he have reasonable grounds to fear such
disturbance, by vindicatory action or a foreclosure of
mortgage.
Example: Ginawang security ni seller yung
property na binenta nya, kaya hahabulin ng
creditor yung property na binenta sa buyer.

Note: The right to suspend payment exists only while the

danger disturbance lasts. Once the vendor has caused the
cessation of this disturbance such as by entering into a
settlement or compromise agreement with the third person
who posed the danger or disturbance to the vendee’s
possession or ownership, the vendee must already pay.

Exceptions to suspension of payment

1. The vendor gives security for the return of the price in

proper case
o Nagbigay si vendor ng security kay vendee
na if magka problem sa property, isosoli niya
yung payment ni vendee.
2. It has been stipulated that, notwithstanding any such
contingency, the vendee shall be bound to make the
payment.
o Both parties agreed na kahit may mangyari
sa property, magbabayad pa rin si vendee.
3. The vendor has caused the disturbance or danger to
cease.
o Inayos ni vendor yung cause of disturbance

Note: A mere act of trespass shall not authorize the suspension

of the payment of the price.