SALE OR RETURN vs SALE ON TRIAL, are at the buyers risk from the time of

APPROVAL, SATISFACTION (Art. 1502) such delivery.

Also, where actual delivery has been delayed
Sale or return through the fault of either the buyer or seller the
 When good are delivered to the buyer on sale goods are at te risk of the party in fault.
or return, ownership passes to the
buyer on delivery. However, the buyer SALE OF GOODS BY A NON-OWNER
has the option to return the same to the (Art. 1505)
seller instead of paying the price.
 The buyer then may revest the GENERAL RULE: Buyer acquires no title
ownership in the seller by returning even if in good faith and for value under the
or tendering the goods within the time maxim Nemo dat quid non habet (“You
fixed in the contract, or, if no time has cannot give what you do not have”).
been fixed, wihin a reasonable time.
EXCEPTIONS:
Sale on trial, approval, or satisfaction 1. Owner is estopped or precluded by his
 Where goods are delivered to the buyer conduct
on approval or on trial or on satisfaction, 2. Sales sanctioned by judicial or statutory
or other similar terms, the ownership authority
therein passes to the buyer only 3. Purchases in a merchant's store, fairs or
when the buyer: markets
4. When a person who is not the owner sells
1. Signifies his approval or and delivers a thing, subsequently
acceptance to the seller or does any acquires title thereto (Art. 1434)
other act adopting the transaction; OR 5. When the seller has a voidable title which
2. He does not signufy his approval or has not been avoided at the time of the
aceptance to the seller but retains the sale, the buyer acquires a good title of the
goods without giving notice of goods, provided he buys them in good
rejection within the time fixed or after a faith, for value, and without notice of the
reasonlabe time. seller’s defect of title. (Art. 1506)

 Rules: Place of delivery of goods (Art 1521)

1. Where there is an agreement, place of
Sale or Sale on Trial delivery is that agreed upon
return 2. Where there is no agreement, place of
1. Ownership Ownership delivery determined by usage of trade
passes to the remains in the 3. Where there is no agreement and no
buyer on seller until prevalent usage, place of delivery is the
delivery and buyer signifies seller’s place of business
subsequent his approval or 4. In any other case, place of delivery is the
return acceptance to seller’s residence
reverts the seller 5. In case of specific goods, which to the
ownership in knowledge of the parties at the time the
the seller contract was made were in some other place,
2. Risk of loss Risk of loss that place is the place of delivery, in the
or injury remains with absence of agreement or usage of trade to the
rests upon the seller contrary
the buyer
Time of delivery of goods
NOTE: Art. 1504 1. Stipulated time
The goods were delivered to the buyer but 2. In the absence thereof, within a reasonable
pursuant to their contract, it was agreed that time
ownership in the goods shall be retained by the
seller as security of payment or performance of Unless otherwise agreed upon, expenses shall be
the buyers obligation under the contract. The borne by the seller.
goods were lost. Who shall bear the loss?
 The buyer shall bear the loss. The
stipulation was merely a security for the RULES WHEN QUANTITY IS LESS
seller so that the buyer will perform his THAN AGREED UPON:
obligation under the contract. The goods Where the seller delivers to the buyer a quantity
of goods less than he contracted to sell:
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 1. Buyer may reject; or 3. FREE ON BOARD PLACE OF
2. Buyer may accept what has been DESTINATION: Ownership is on the
delivered but he must pay for them at the buyer once goods reached its destination.
contract rate. (if the buyer accpets or Thus, when there is loss on the way to
retains them knowing that the seller is delivery, buyer will not bear the loss.
not going to perform the contract in full, 4. COST, INSURANCE, FREIGHT
he must pay for them at the contract rate)
(C.I.F): CIF is similar to FOB shipment.
Once goods are boarded to ship,
But if the buyer has used or diposed of the goods
delivered before he knows that the seller is not ownership is on the buyer. Here,
going to perform his contract in full, the buyer insurance premium is paid by the seller
shall not be liable for more than the fair value of but since ownership is passed to buyer
the goods so received. already, proceeds will go to the buyer.
5. FREE ALONGSIDE SHIP: Once
RULES WHEN QUANTITY IS MORE goods are delivered beside the vessel,
THAN AGREED UPON: ownership is on the buyer already.
1. Buyer may reject all; or
2. Buyer may accept the goods agreed upon PAYMENT OF THE PURCHASE PRICE
and reject the rest; or (Art 1524)
3. Buyer may accept all and must pay for
them at the contract rate The seller is not bound to deliver the thing sold
if the vendee has not paid him the price, or
NOTE: Acceptance, even if not express may be if no period for the payment has been
implied when the buyer exercises acts of fixed in the contract.
ownership over the excess goods.
Sale of Real Property by Unit (Art. 1539)
RULES WHEN GOODS MIXED WITH  Entire area stated in the contract must be
GOODS OF DIFFERENT DESCRIPTION: delivered
 Buyer may accept the goods which are in  When entire area could not be delivered,
accordance with the contract and reject the vendee may:
rest 1. Enforce the contract with the
corresponding decrease in price
NOTE: If the subject matter, however, is (proportionate reduction of the price)
indivisible, in case of delivery of larger 2. Rescind the sale provided:
quantity of goods or of mixed goods, the buyer a. The lack in area is at least 1/10 than
may reject the whole of the goods. that stated or stipulated
b. The deficiency in quality specified in
DELIVERY TO THE CARRIER (Art 1523) the contract exceeds 1/10 of the
GENERAL RULE: Where the seller is price agreed upon
authorized or required to send the goods to the c. If the vendee would not have bought
buyer, delivery to the carrier is delivery to the the immovable had he known of its
buyer. smaller area of inferior quality
EXCEPTIONS: irrespective of the extent of lack
When a contrary intention appears of area or quality.

 Kinds of Delivery to the Carrier Under art 1540, if there is a greater area or
DELIVERY THROUGH CARRIER nuber in the immovable than that stated in the
1. CASH ON DELIVERY: In this kind of contract, the vendee may accept the are in
arrangement, the buyer will only become the contract and reject the rest. If he
the owner upon delivery of the thing sold. accepts the whole area, he must pay for
Thus, if there is yet no delivery and the the same at the contract rate.
thing was lost on its way, then the vendor
shall bear the loss. Sale for a Lump Sum (A Cuerpo Cierto
2. FREE ON BOARD PLACE OF Sale) Art 1542.
SHIPMENT: Once goods are on board  Vendor is obligated to deliver all the land
included within the boundaries, regardless
the ship (in the vessel already),
of whether the real area should be greater or
ownership is on the buyer. Thus, when
smaller
there is loss on the way to delivery, buyer  Ordinarily, there can be no rescission or
bears the loss. reduction or increase in the price whether

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 the area be greater or lesser, unless there Pogi sold the same lot to Bonita. Who has better
is gross mistake. right if:
NOTE: The Civil Code presumes that the
purchaser had in mind a particular piece of land a. The first sale to Ganda is registered
and that he ascertained its area and quality ahead of the second sale, with knowledge
before the contract of sale was perfected. If he of the sale to Bonita by Ganda. Why?
did not do so, or if having done so he made no b. The second sale to Bonita is registered
objection and consented to the transaction, he ahead of the first sale to Ganda, with
can blame no one but himself. knowledge of sale to Ganda by Bonita.
Why?
What is important is the delivery of all
ANSWER:
the land included in the boundaries.
1. The first buyer has better right even
NOTE: Actions ariing from Articles 1539 and Ganda knew of the second sale. Ganda is
1542 shall prescribe in six months counted not in bad faith even if she knew of such
form the day of delivery. sale as in the first place, she is the first
buyer. What creates bad faith in the case
DOUBLE SALE (Art. 1544) of double sale of land is the knowledge of
a previous sale.
 Rules of preference: 2. The first buyer is still to be preferred.
1. Personal Property This is because the second buyer, who at
a. first possessor in good faith the time of registering the sale knew that
2. Real Property the property had already been sold to
a. first registrant in good faith someone else, acted in bad faith.
b. first possessor in good faith
c. person with oldest title in good faith Unpaid Seller (Art. 1524)
 Who is an unpaid seller?
NOTES: a. The seller of the goods who has not been
 Purchaser in Good Faith – one who buys paid or to whom the price has not been
the property of another without notice that tendered
some other person has a right to or interest b. The seller of the goods, in case a bill of
in such property and pays a full and fair price exchange or other negotiable instrument
for the same at the time of such purchase or has been received as conditional
before he has notice of the claim or interest payment, AND the condition on
of some other person in the property. which it was received has been
broken by reason of the dishonor of
DOUBLE SALE the instrument, insolvency of the
 What is the rule in case there is double buyer or otherwise.
sale? Meaning, the same have been sold
to different vendees? REMEDIES OF AN UNPAID SELLER:
 With respect to personal property, the (Art. 1526)
ownership shall be transferred to the 1. Possessory lien over the goods
person who may have first taken 2. Right of stoppage in transitu after he has
possession thereof in good faith. parted with the possession of the goods
 With respect to real property, the and the buyer becomes insolvent
3. Special Right of resale
following are the rules:
4. Special Right to rescind the sale
1. The ownership shall belong to the
5. Action for the price
person who in good faith first 6. Action for damages
recorded it in the registry of property.
2. If no registration, the one who in good Remedies of Unpaid Seller
faith was first in possession. I. Possessory Lien (Meaning, the unpadi
3. In the absence of the above, the one seller who is in possession of the goods
who presents the oldest title provided may continue to retain possession of
there is good faith. them)

QUESTION:  When may the unpaid seller exercised

On January 10, 2018, Pogi sold a parcel of the same?
registered land to Ganda. On January 10, 2019, 1. Where the goods have been sold without
any stipulation as to credit

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 2. When the goods have been sold on credit, GOODS ARE NO LONGER CONSIDERED
but the term of credit has expired IN TRANSITU:
3. Where the buyer becomes insolvent(Art 1. after delivery to the buyer or his agent in
1527) that behalf;
2. if the buyer or his agent obtains possession of
 When does the unpaid seller losses his the goods at a point before the destination
possessory lien? (Art. 1529) originally fixed;
1. When he delivers the goods to a carrier or 3. if the carrier or the bailee acknowledges to
bailee for the purpose of transmission to hold the goods on behalf of the buyer; and
the buyer without reserving ownership or 4. if the carrier or bailee wrongfully refuses to
right of possession deliver the goods to the buyer
2. When the buyer lawfully obtains
possession of the goods Effects if the seller exercises his right of
3. By waiver of the lien stoppage in transitu:
1. The goods are no longer in transit.
NOTE: Possessory lien is lost after the 2. The contract of carriage ends; instead the
seller loses possession but his lien as an carrier now becomes a mere bailee, and will
unpaid seller remains; hence he is still an be liable as such.
unpaid creditor with respect to the price of 3. The carrier should not deliver anymore to
specific goods sold. the buyer or the latter’s agent; otherwise he
will clearly be liable for damages.
II. Stoppage of goods in transitu (Art 4. The carrier must redeliver to, or according to
1530 and Art 1532) the directions of the seller.
 Requisites before the right can be
exercised: WAYS OF EXERCISING THE RIGHT TO
1. Seller must be unpaid STOP:
2. Buyer must be insolvent 1. By taking actual possession of the goods
3. Goods must be in transit 2. By giving notice of his claim to the carrier or
bailee
When all of these are present, the seller may
exercise his right of stopppage in transitu that III. Special Right of Resale (Art 1533)
is:  May be exercised only when the unpaid
a. resume possession of the goods sold seller has either a right of lien OR has
at any time while they are in transit stopped the goods in transitu AND under
OR ANY of the following conditions:
b. By giving notice of his claim to the 1. Where the goods are perishable in nature
carrier or other person in whose 2. Where the right to resell is expressly
possession the goods are. Provided reserved in case the buyer should make a
that when notice of stoppage in default
transitu is given by the seller to the 3. Where the buyer delays in the payment of
carrier the seller must: (a) Seller the price for an unreasonable time
must surrender the negotiable
document of title issued by the carrier Where a resale is made as authorized in this
or bailee if any, and (b) Seller must article, the buyer acquires a good title as against
bear the expenses of delivery of the the original buyer.
goods after the exercise of the right
It is not essential to the validity of a resale that
GOODS ARE CONSIDERED IN notice of an intention to resell the goods be
TRANSITU: (Art. 1531) given by the seller to the original buyer.
1. From the time they are delivered to a carrier
for purpose of transmission to the buyer until It is not essential to the validity of a resale that
the buyer or his agent takes delivery of them notice of the time and place of such resale
from such carrier (after delivery to a carrier should be given by the seller to the original
or other bailee and before the buyer or buyer.
his agent takes delivery of them); and
The seller may make a resale either by public or
2. If the goods are rejected by the buyer, and the private sale. He cannot, however, directly or
carrier or other bailee continues in possession of indirectly buy the goods.
them, even if the seller has refused to receive
them back. IV. Rescission (Art. 1534)

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Special Right to Rescind Under Art. 1534 – If specific performance. Either way, creditor may
the seller has either the right of lien OR a right demand damages.
to stop the goods in transitu, he may rescind the
transfer of title and resume the ownership in the If deterioration was without fault or negligence
goods where: on the part of the debtor as the same was due to
a. Where the right to rescind on default ordinary wear and tear, creditor must accept the
has been expressly reserved same in whatever condition it may be found.
b. Where the buyer has been in default The debtor has no liability.
for an unreasonable time
c.IMPROVEMENT
The transfer of title shall not be held to have RULE: If the same is due to the expenses by the
been rescinded by an unpaid seller until he has debtor, the debtor has right to usufruct but still
manifested by notice to the buyer or some other obliged to deliver the property. Or he can also
overt act an intention to rescind. It is not remove the improvements provided no damage
however necessary that such overt act should be is done.
communicated to the buyer.
If the improvements are caused by nature and
EFFECT IF BUYER HAS ALREADY SOLD time, the creditor will benefit and there is no
THE GOODS: (Art 1535) obligation to pay higher price. (like land
General Rule: The unpaid seller’s right to lien or transactions)
stoppage in transitu remains even if the buyer
has sold the goods.
Except:
1) When the seller has given consent thereto, or
2) When the buyer is a purchaser in good faith
and for value and a negotiable document of title
was issued.

Art 1537. The vendor is bound to deliver the

thing sold and its accessions and
accessories in the condition in which they
were upon the perfection of the contract.

All fruits shall pertain to the vendee from the

day on which the contract was perfected.

•ACCESSIONS-pertains to additions or
improvements upon the thing for purposes of
enjoyment (like stereo of a car, air conditioner
in a car)
•ACCESSORIES-pertains to those which are
indispensable for the use of the thing (like
bracelet of a watch, tire of a car)

Art. 1538. In case of loss, deterioration or

improvement of the thing before delivery, the
rules in art 1189 applies the vendor being
considered the debtor.

In case of:
a.LOSS
RULE: If loss was due to the fault of the debtor;
obligation is extinguished but debtor should pay
damages plus indemnity (value of the property)

If loss was due to fortuitous event, obligation is

extinguished but debtor has no liability.

b.DETERIORATION
RULE: If the same was due to the fault of
debtor, the creditor may rescind or pray for
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WARRANTY  Elements:
 a statement or representation made by 1. vendee is deprived, in whole or in part, of
the seller of goods, as a part of the contract the thing purchased;
of sale, by which he promises or undertakes 2. the deprivation is by virtue of a final
to insure that certain facts are or shall be as judgment (Art. 1557);
he then represents. 3. the judgment is based on a prior right to
the sale or an act imputable to the
 Kinds: vendor;
1. EXPRESS – any affirmation of fact or any
promise by the seller relating to the thing if 4. the vendor was summoned in the suit for
the natural tendency of such affirmation or eviction at the instance of the vendee;
promise is to induce the buyer to purchase AND (Art. 1558)
the same and if the buyer purchases the 5. no waiver of warranty by the vendee.
thing relying thereon.
EXAMPLE: A sold a barge to B for P30,000
NOTE: A mere expression of opinion, no without express warranty as to title.
matter how positively asserted, does not Subsequently, C sued B in action for recovery of
import a warranty unless the seller is an ownership and obtained a final judgment for the
expert and his opinion was relied upon ownership and possession of the barge. Can B
by the buyer. now compel A to refund him the amount of
P30,000?
2. IMPLIED - that which the law derives  ANSWER: Yes because of the implied
by implication or inference from the warranty against eviction. Here, the
nature of the transaction or the relative vendee is deprived by final judgment of
situation or circumstances of the parties, the whole or a part of the thing purchased
irrespective of any intention of the seller to (the barge). A can be held liable provided
create it. further that B shall notify A of the action
a. Warranty against eviction filed by C.
b. Warranty against hidden defects
c. Warranty as to Fitness and
NOTE: The disturbance referred to in the
Merchantability
case of eviction is a disturbance in law
which requires that a person go to the courts of
NOTE: An implied warranty is a natural, not
justice claiming the thing sold, or part thereof
an essential element of a contract, and is
and invoking reasons. Mere trespass in fact
deemed incorporated in the contract of
does not give rise to the application of the
sale. It may however, be waived or modified by
doctrine of eviction. (Example: If the
express stipulation. (De Leon)
property is sold for non payment of taxes due
and not made known to the vendee before the
A. Warranty against eviction (Arts 1547,
sale, the vendor is liable for eviction (Art 1551)
1548)
as this is a disturbance in law and a mere
 Warranty in which the seller guarantees that
disturbance in fact.)
he has the right to sell the thing sold and to
transfer ownership to the buyer who shall
The judgment debtor is also responsible
not be disturbed in his legal and peaceful
for eviction in judicial sales, unless it is
possession thereof.
otherwise decreed in the judgment. (Art
 The vendor shall answer for the eviction
1552). Thus, when a property was sold on
even though nothing has been said in the
execution and the buyer is evicted thereform
contract on the subject.
because the judgment debtor has no right to the
property sold, the purchaser is entitled to
Warranty in case of eviction is an implied
recover the price paid form the judgment
warranty in contract of sale by virtue of which if
debtor.
the vendee is deprived of the whole or a part of
the thing purchased by a final judgment based
The law provides nonetheless, that the
on a right prior to the sale or an act imputable to
the vendor, such vendor shall answer for the contracting parties may increase,
eviction even though nothing has been said in diminish or suppress this legal obligation
the contract on the subject. of the vendor. Warranty against evistion
may be waived therefore. BUT ANY
In order that such warranty may be enforced, it STIPULATION EXEMPTING THE
is essential that: VENDOR FROM THE OBLIGATION TO
ANSWER FOR EVICTION SHALL BE
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VOID, IF HE ACTED IN BAD FAITH. (Art. 3. When action must be brought (a and
1553) b)
- within ONE YEAR from the execution of the
KINDS OF WAIVER: (Art. 1554) deed of sale, the vendee may bring the action
a. Consciente – the waiver is for rescission or sue for damages.
voluntarily made by the vendee -if the ONE YEAR period elapsed, he may bring
without the knowledge and an action for damages within an equal period,
assumption of the risks of eviction to be computed form the date on which he
NOTE: In case of eviction, the vendor discovered the burder or servitude.
shall pay only the value which the thing
sold had at the time of eviction. B. Warranty against hidden defects (Art
b. Intencionada – Waiver is made by 1547)
the vendee with knowledge of the  Warranty in which the seller guarantees that
risks of eviction and assumption of its the thing sold is free from any hidden faults
consequences or defects or any charge or encumbrance not
EFFECT: In case of eviction, the vendor declared or known to the buyer.
is not liable.
 Elements before one can invoke
NOTE: Every waiver is presumed to be warranty against hidden defects:
consciente. To consider it intencionada, it must (SHENPW)
be accompanied by some circumstance which 1. defect must be Serious or important;
reveals the vendor’s knowledge of the risks of 2. it must be Hidden;
eviction and his intention to submit to such 3. it must Exist at the time of the sale;
consequences. 4. vendee must give Notice of the defect to
the vendor within a reasonable time;
When the warranty has been agreed 5. action for rescission or reduction of price
upon or nothing has been stipulated on must be brought within the proper
this point, in case eviction occurs, the Period (within 6 months from delivery of
vendor's liability shall consist of: (Arts the thing or 40 days from date of delivery
1555 and 1556) in case of animals) (Art 1571); and
1. Total eviction: (VICED) 6. no Waiver of the warranty.
a. Value of the thing at the time of eviction;
b. Income or fruits if he has been ordered to Said vendor shall not be answerable for
deliver them to the party who won the patent defects or those which may be visible,
suit; or for those which are not visible if the
c. Costs of the suit; vendee is an expert who by reason of his
d. Expenses of the contract; AND trade or profession, should have known
e. Damages and interests if the sale was in them. (Art. 1561)
bad faith.
 Remedies of the Vendee in case of
2. Partial eviction: hidden defects: (Art. 1567)
a. to enforce vendor’s liability for eviction a. Accion redhibitoria (rescission)
(VICED); OR b. Accion quanti minoris (reduction of the
b. to demand rescission of contract price)

RULES WHERE THE IMMOVABLE NOTES:

SOLD IS ENCUMBERED WITH NON-  Hidden faults or defects pertain only to those
APPARENT BURDEN OR SERVITUDE that make the object unfit for the use for
(Art. 1560) which it was intended at the time of the sale.
1. Rights of vendee  This warranty in Sales is applicable in Lease.
a) ask for recission of the contract, or
b) ask for appropriate indemnity Effect of loss of thing on account of
hidden defects: (Art. 1568)
2. When the right mentioned above 1. If vendor was aware of hidden defects, he
cannot be exercised: shall bear the loss and vendee shall have the
a) if the burden or servitude is apparent right to recover: (PED)
b) if the non-apparent burden or servitude is a. the price paid
registered b. expenses of the contract
c) if vendee had knowledge of the c. damages
encumbrance, whether it is registered or not 2. If vendor was not aware, he shall be obliged
to return: (PIE)
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 a. price paid supposed title of the vendor and one who buys
b. interest thereon without checking the vendor’s title takes all the
c. expenses of the contract if paid by the risks and losses consequent to such failure.
vendee
RULES IN CASE OF SALE OF ANIMALS
Effect if the cause of loss was not the (Art. 1572-1581)s
hidden defect (Art. 1569) 1. When two or more animals have been sold at
 If the thing sold had any hidden fault at the the same time, whether the price has been fixed
time of the sale, and should thereafter be lost for a lump sum for all the animals or for a
by a (1) fortuitous event OR (2) through the separate price for each, the redhibitory of one
fault of the vendee: shall only give rise to its redhibition and not that
 the vendee may demand of the vendor of others; UNLESS, it should appear that the
the price which he paid less the value of vendee would not have purchased the sound
the thing at the time of its loss. animal/s without the defective one.
 S sold to B two carabaos for P100,000. If
 If the vendor acted in bad faith: one carabao is defective, S is liable for his
 vendor shall pay damages to the vendee. warranty on the defective carabao only.
In other words, B is not entitled to return
C. Implied Warranties of Quality (Art the sound carabao unless he can show
1562) that he would not have purchased it
Warranty of Fitness without the defective one.
 Warranty in which the seller guarantees that 2. No warranty against hidden defects of
the thing sold is reasonably fit for the animals sold at fairs or at public auctions
known particular purpose for which it (judicial or extrajudicial), or of livestock
was acquired by the buyer sold as condemned. This is based on the
assumption that the defects must have been
GENERAL RULE: There is no implied clearly known to the buyer.
warranty as to the quality or fitness for any 3. Sale of animals shall be void when:
particular purpose of goods under a contract of a) animals sold are suffering from contagious
sale disease
EXCEPTIONS: b) if the use or service for which they are
1. Where the buyer, expressly or by acquired has been stated in the contract, and
implication manifests to the seller the they are found to be unfit therefor.
particular purpose for which the goods 4. If the hidden defect of animals, even in case
are required, and a professional inspection has been made, should
2. It appears that the buyer relies upon the be of such a nature that expert knowledge is not
seller’s skill or judgment sufficient to discover it, the defect shall be
considered as redhibitory.
Warranty of Merchantability But if the veterinarian, through ignorance or
 Where the goods were bought by bad faith, should fail to discover or disclose it,
description, the seller impliedly warrants he shall be liable for damages.
that the goods are of merchantable quality. 5. Limitation of the action: The redhibitory
 It requires identity between what is action based on the faults or defects of
described in the contract AND what is animals, must be brought within 40 days
tendered, in the sense that the latter is of from the date of their delivery to the
such quality to have some value vendee.
6. Vendor shall be liable if the animal
In a sale of second-hand articles, implied should die within 3 days after its
warranties are inapplicable. purchase if the disease which caused the death
existed at the time of the contract.
Caveat Venditor (“Let the seller 7. If the sale be rescinded, the animal shall be
beware”): the vendor is liable to the vendee for returned in the condition in which it was sold
any hidden faults or defects in the thing sold, and delivered, the vendee being answerable for
even though he was not aware thereof. (Art any injury due to his negligence, and not arising
1566) But the same does not apply if the from the redhibitory fault or defect.
contrary has been stipualted and the vendor was 8. In sale of animals with redhibitory defect, the
not aware of the hidden faults or defects in the vendee shall also enjoy the right mentioned in
thing sold. (Art 1566) Art 1567 (withdrawing from the contract or
proportionate reduction of price) but he must
Caveat Emptor (“Let the buyer beware”): make use thereof within the same period which
requires the purchaser to be aware of the
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has been fixed for the exercise of the redhibitory 2. If stipulated, the vendee is bound to accept
action (40 days form delivery of animal) delivery and to pay the price at the time and
place designated;
Sale of large cattle shall be goverened by special 3. If there is no stipulation as to the time and
law-Anti Cattle Rustling Law. (Act 4117) place of payment and delivery, the vendee is
bound to pay at the time and place of
delivery
4. In the absence of stipulation as to the place
of delivery, it shall be made wherever the
thing might be at the moment the contract
OBLIGATIONS OF THE VENDEE: was perfected (Article 1251)
A. Principal Obligations: 5. If only the time for delivery has been fixed in
1. To accept delivery the contract, the vendee is required to pay
2. To pay the price of the thing sold in legal even before the thing is delivered to him; if
tender unless another mode has been agreed only the time for payment has been fixed, the
upon vendee is entitled to delivery even before the
NOTE: A grace period granted the vendee in price is paid by him (Article 1524)
case of failure to pay the amount/s due is a right
not an obligation. The grace period must not be Ways of accepting goods:
likened to an obligation, the non-payment of 1. Express acceptance
which, under Article 1169 of the Civil Code, 2. Implied acceptance
would still generally require judicial or extra- a. When buyer does an act which only an
judicial demand before “default” can be said to owner can do,
arise (Bricktown Dev’t Corp vs. Amor Tierra b. Failure to return goods after reasonable
Dev’t Corp. 57SCRA437) lapse of time

B. Other Obligations NOTES:

1. To take care of the goods without the  The retention of goods is strong evidence
obligation to return, where the goods are that the buyer has accepted ownership of the
delivered to the buyer and he rightfully goods.
refuses to accept  Delivery and acceptance are two separate
and distinct acts of different parties
NOTES:  Delivery is an act of the vendor and one
 The buyer in such a case is in the position of the vendor’s obligations; vendee has
of a bailee who has had goods thrust nothing to do with the act of delivery by
upon him without his assent. He has the the vendor
obligation to take reasonable care of the  Acceptance is an obligation of the
goods but nothing more can be vendee; acceptance cannot be regarded
demanded of him. as a condition to complete delivery;
 The goods in the buyer’s possession  seller must comply with the obligation to
under these circumstances are at the deliver although there is no acceptance
seller’s risk yet by the buyer
2. To be liable as a depositary if he voluntarily  Acceptance by the buyer may precede actual
constituted himself as such delivery; there may be actual receipt without
3. To pay interest for the period between acceptance and there may be acceptance
delivery of the thing and the payment of the without receipt
price in the following cases:  Unless otherwise agreed upon, acceptance of
a. Should it have been stipulated the goods by the buyer does not discharge
b. Should the thing sold and delivered the seller from liability for damages or other
produce fruits or income legal remedy like for breach of any promise
c. Should he be in default, from the time of or warranty
judicial or extra-judicial demand for the
payment of the price When vendee may suspend payment of
the price:
 Pertinent Rules: 1. If he is disturbed in the possession or
1. The vendor is not required to deliver the ownership of the thing bought
thing sold until the price is paid nor the 2. If he has well-grounded fear that his
vendee to pay the price before the thing is possession or ownership would be disturbed
delivered in the absence of an agreement to by a vindicatory action or foreclosure of
the contrary (Article 1524). mortgage

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NOTES:  action for damages (Art. 1596)
 If the thing sold is in the possession of the 2Article 1484 or Recto Law
vendee and the price is already in the hands  Remedies of vendor in sale of personal
of the vendor, the sale is a consummated property by installments
contract and Article 1590 is no longer  Requisites:
applicable. Article 1590, presupposes that 1. Contract of sale
the price or any part thereof has not yet been 2. Personal property
paid and the contract is not yet 3. Payable in installments
consummated. 4. In the case of the second and third
 Under Article 1590, the vendee has no cause remedies, that there has been a failure to
of action for rescission before final pay two or more installments
judgement, otherwise the vendor might NOTE: Apply likewise to contracts
become a victim of machinations between purporting to be leases of personal property
the vendee and the third person with option to buy
 Disturbance must be in possession and  Art. 1484 does not apply to a sale:
ownership of the thing acquired 1. Payable on straight terms (partly in cash
 If the disturbance is caused by the existence and partly in one term)
of non-apparent servitude, the remedy of the 2. Of Real property
buyer is rescission, not suspension of  Remedies:
payment. 1. Specific performance upon vendee’s
failure to pay
NOTE: Does not bar full recovery for
When vendee cannot suspend payment of judgment secured may be executed on all
the price even if there is disturbance in personal and real properties of the buyer
the possession or ownership of the thing which are not exempt from execution
sold: (Palma v. CA.)
1. if the vendor gives security for the return of 2. Rescission of the sale if vendee shall have
the price in a proper case failed to pay two or more installments
2. if it has been stipulated that notwithstanding NOTES:
any such contingency, the vendee must make  Nature of the remedy – which requires
payment (see Article 1548 par.3) mutual restitution – bars further action
3. if the vendor has caused the disturbance or on the purchase price (Nonato vs. IAC.)
danger to cease  GENERAL RULE: cancellation of sale
4. if the disturbance is a mere act of trespass requires mutual restitution, that is all
5. if the vendee has fully paid the price partial payments of price or rents must
be returned
REMEDIES FOR BREACH OF EXCEPTIONS: a stipulation that the
CONTRACT installments or rents paid shall not be
A. Remedies of the seller returned to the vendee or lessee shall be
1. Action for payment of the price (Art. 1595) valid insofar as the same may not be
2. Action for damages for non-acceptance of unconscionable under the circumstan-
the goods (Art. 1596) ces (Article 1486).
3. Action for rescission (Art. 1597) 3. Foreclosure of the chattel mortgage on
B. Remedies of the buyer the thing sold if vendee shall have failed
1. Action for specific performance (Art. 1598) to pay two or more installments. In this
2. Action for rescission or damages for breach case, there shall be no further action
of warranty (Art 1599) against the purchaser to recover unpaid
balance of the price.
A. REMEDIES OF THE SELLER FOR
BREACH OF CONTRACT NOTES:
 IN CASE OF MOVABLES  Further recovery barred only from the time
1. Ordinary Remedies of actual sale at public auction conducted
a. Movables in General – Failure of the pursuant to foreclosure (Macondray vs. Tan.)
vendee to appear to receive delivery or,  Other chattels given as security cannot be
having appeared, failure to tender the foreclosed if they are not subject of the
price at the same time, unless, a longer installment sale (Ridad vs. Filipinas investment
period for its payment has been and Finance Corp. GR 39806, Jan. 28, 1983)
stipulated  If the vendor assigns his right to a financing
 action to rescind the sale (Art. 1593) company, the latter may be regarded as a
b. Sale of Goods – collecting agency of the vendor and cannot
 action for the price (Art. 1595) therefore recover any deficiency from the
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vendee (Zayas vs. Luneta Motors Co.) period for every one (1) year of
 When the vendor assigns his credit to installment payments made
another person, the latter is likewise bound by NOTE: This right shall be exercised by
the same law. Accordingly, when the assignee the buyer ONLY once in every 5 years of
forecloses on the mortgage, there can be no the life of the contract AND its
further recovery of the deficiency and the extensions.
vendor-mortgagee is deemed to have renounced 2. Actual cancellation can only take place
any right thereto (Borbon II vs. Servicewide after 30 days from receipt by the buyer of
Specialist, Inc. 258SCRA658) the notice of cancellation OR demand for
NOTE: However, Article 1484(3) does NOT bar rescission by a notarial act AND upon full
one to whom the vendor has assigned on with a payment of the cash surrender value to
recourse basis his credit against the vendee the buyer (Olympia Housing vs.
from recovering from the vendor the Panasiatic, 16 January 2003.)
assigned credit in full although the vendor NOTE: The seller shall refund to the
may have no right of recovery against the vendee buyer the cash surrender value of the
for the deficiency (Filipinas Invest. & Finance payments on the property equivalent to
Corp. vs. Vitug, Jr. 28SCRA658) 50% of the total payments made. After
five (5) years of installments, there shall
NOTE: Remedies are alternative and be an additional 5% every year but not to
exclusive exceed 90% of the total payments made
3. The buyer shall have the right to sell his
 IN CASE OF IMMOVABLES rights or assign the same to another
1. Ordinary Remedies person OR to reinstate the contract by
a. In case of anticipatory breach – updating the account during the grace
 rescission (Article 1591) period and before actual cancellation of
b. Failure to pay the purchase price – the contract
 rescission upon judicial or notarial 4. The buyer shall have the right to pay in
demand for rescission (Article 1592) advance any installment or the full
 the vendee may pay, even after the unpaid balance of the purchase price any
expiration of the period, as long as no time without interest and to have such
demand for rescission has been made full payment of the purchase price
upon him annotated in the certificate of title
NOTE: Article 1592 does not apply to: covering the property.
1) Sale on instalment of real estate
2) Contract to sell B. If Buyer has paid less than 2 years
3) Conditional sale of installments
4) Cases covered by RA 6552: Realty 1. The seller shall give the buyer a grace
Installment buyer protection act period of NOT less than 60 days from the
date the installment became due. If the
2. R.A. No. 6552 or Maceda Law buyer fails to pay the installments due at
 An Act to Provide Protection to buyers of the expiration of the grace period, the
Real Estate on Installment Payments seller may cancel the contract after 30
 Law governing sale or financing of real estate days from receipt by the buyer of the
on installment payments notice of cancellation or the demand for
 Requisites: rescission of contract by a notarial act.
1. transactions or contracts involving the 2. Same No. 3 and 4 paragraph A
sale OR financing of real estate on above
installment payments, including
residential condominium apartments; NOTE: Down payments, deposits or options on
and the contract shall be included in the
2. buyer defaults in payment of succeeding computation of the total number of installment
installments. payments made

 Rights of the buyer: B. REMEDIES OF THE BUYER FOR

A. If Buyer has paid at least two (2) BREACH OF CONTRACT
years of installments
1. The buyer must pay, without additional 1. Action for specific performance (Art.
interest, the unpaid installments due 1598)
within the total grace period earned by  Where the seller has broken the contract to
him. There shall be one (1) month grace deliver specific or ascertained goods

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 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

2. Remedies of buyer for breach of

warranty by seller (Art. 1599):
1. Recoupment – accept the goods and set up
the seller’s breach to reduce or extinguish
the price
2. Accept the goods and maintain an action for
damages for breach of warranty
3. Refuse to accept the goods and maintain an
action for damages for breach of warranty
4. Rescind the contract by returning or offering
the return of the goods, and recover the price
of any part thereof
NOTE: These are alternative remedies.

When rescission by buyer not allowed:

1. if the buyer accepted the goods knowing of
the breach of warranty without protest
2. if he fails to notify the seller within a
reasonable time of his election to rescind
3. if he fails to return or offer to return the
goods in substantially as good condition as they
were in at the time of the transfer of ownership
to him

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