Chapter 1

Nature and Form of the Contract

Sale – a contract whereby one of the contracting parties (vendor), obligates himself to transfer the
ownership of and to deliver a determinate thing and the other party (buyer), obligates himself to pay
therefor a price certain in money.
 Characteristics of a contract of sale are:
1. Consensual – perfected be mere consent of the parties.
2. Principal – can exist without being dependent upon another contract
3. Bilateral – parties are bound by reciprocal obligations
4. Onerous – Valuable consideration are given by the parties
5. Commutative – parties exchange almost equivalent values
6. Nominate – has special name given by law
 Elements of a contract of sale
1. Essential elements are (1) Consent of the contracting parties, (2) Subject matter which should be a
determinate thing and (3) Price certain in money or its equivalent
2. Natural elements like (1) Warranties against eviction and (2) Warranties against hidden defects
3. Accidental elements – stipulation between the contracting parties.
 Object of the contract must be:
1. Within the commerce of men
2. Licit, it must not be contrary to law, morals, good customs, public order and policy.
3. Determinate
Note: It is not necessary that the vendor must be the owner of the time of sale, but he must have the
right to transfer ownership of the thing at the time of delivery.
The Object can be:
 Existing goods owned or possessed by the seller or goods to be manufactured, raised or
acquired by the seller after the contract of sale
 Future thing (emptio rei speratae) the thing sold must come into existence, otherwise, the sale
is ineffectual
 Hope or expectancy (emptio spei speratae), the sale of vain hope or expectancy is void
 Undivided interest, such sale shall produce the effect of making the seller and buyer co-owners
of the thing sold.
 Fungible goods – interchangeable goods
 Things subject to resolutory condition
 Price or Consideration
1. It must be certain. The price is considered certain when:
 If the parties agreed upon the definite amount for the sale
 If it be certain with the reference to another thing certain
 If the determination of the price is left to the judgment of a specified person
 If the price is fixed is that which the thing sold would have on a definite day or in a particular
exchange or market.
Note: Gross inadequacy of price doesn’t affect a contract expect as it may indicate in the consent,
or that the parties really intended a donation or some other contract. But when the price is
stipulated, the sale is void.
 Sale distinguished from agency to sell
1. In sale, title to the goods are transferred to the buyer upon delivery of the thing. In agency to sell,
title to the goods are retained by the owner despite the delivery of the goods to the agent
2. In sale, the buyer is required to pay the price. In agency to sell, the agent is required to turn over to
the principal the price of the goods which he received from the buyer
3. In sale, the recipient of the property may do with the property as he pleases. In agency to sell, the
principal retains control of the property.
 Sale distinguished from contract for a piece of work
A contract for the delivery at a certain price which the vendor in the ordinary course of business
manufactures or procures for the general market, is a contract of sale. However, if the goods are to
be manufactured especially for the customer and upon his special order, and not for general
market, it is a contract for a piece of work.
 3 school of thoughts
I. Massachusetts rule (Phil setting) – specially made (POW); general market (sale)
II. New York rule – thing already exist (sale); thing doesn’t exist yet (POW)
III. English rule – if skills more valuable (sale): if material more valuable (POW)
 Sale distinguished form barter
In sale, the cause or consideration is in money. In barter, the cause or consideration is another thing.
Where the consideration is partly in money and party another thing. The rules are:
1. The contract shall be one of sale or barter depending upon the manifest intention of the parties.
2. If the intention of the parties doesn’t clearly appear:
a. The contract is one of barter if the value of the thing greater than monetary consideration.
b. The contract is one of sale if the monetary is equal or greater than the thing given.
 When a contract of sale is perfected
A contract of sale is perfected at the moment there is a meeting of minds upon the thing which is
the object of the contact and upon the price.
 When ownership of the thing sold is transferred who bears the loss
The ownership of the thing sold is transferred upon the actual or constructive delivery thereof.
The time when ownership is transferred is important to determine who shall bear the loss. The rules are:
1. If the things is lost before perfection, the seller bears the loss (res perit domino)
2. If the thins is lost at the time of perfection, the contract is void or inexistent. The legal effect is
the same as when the object is lost before the perfection of the contract of sale.
3. If the thing is lost after perfection but before delivery, that is, even before the ownership is
transferred to the buyer, the risk of loss is shifted to the buyer. An exemption of res perit domino
4. If the thing is lost after delivery, the buyer bears the risk of loss.
 In case of sale by auction
When the auctioneer announces its perfection by (1) by the fall of the hammer, or (2) any other
manner.
 Promise to buy and/or sell
1. Bilateral promise – when one party promising to buy and the other promises to sell a
determinate thing at an agreed price. This is reciprocally demandable since this is as good as a
perfect contract.
2. Unilateral promise – the promise to buy or to sell a determinate thing at a certain price is made
by only one of the parties.
a) If not accepted by the promissee (policitacion) – this doesn’t produce any legal effect.
 b) If accepted – it is binding if supported by a consideration (option money)
 Sale by sample/description
On sale by sample/description, the parties contract solely with reference to the sample,
description or both. The seller warrants that the bulk of the goods delivered correspond with the
sample, description or both and vice versa, shown to the buyer.
 Remedies of vendor in installment sales of personal property (Recto Law)
1. Exact fulfillment of the obligation if any of the installment is defaulted.
2. When two or more installment he may avail himself the following:
 Exact fulfillment of the obligation
 Cancel or rescinded the sale
 Foreclose the chattel mortgage on the thing sold
Note: The remedies are alternative, not cumulative.
 Sale of Real Property in Installments (Maceda Law)
“To protect buyers of real estate on installment payment against onerous and oppressive
conditions.”
STUDY GUIDE
I. Definition. Define or give the meaning of the following:
1. Contract of Sale - a contract whereby one of the contracting parties (vendor), obligates himself
to transfer the ownership of and to deliver a determinate thing and the other party (buyer),
obligates himself to pay therefor a price certain in money.
2. Natural Elements – natural elements are those which are deemed to exist in certain contracts,
in the absence of any contrary stipulations like warranty against eviction or hidden defects.
3. Sale by description - On sale by sample/description, the parties’ contract solely with reference
to the sample, description or both. The seller warrants that the bulk of the goods delivered
correspond with the sample, description or both and vice versa, shown to the buyer.
4. Fungible Goods - goods of which any unit is, from its nature or by mercantile usage, treated as
the equivalent of any other unit.
5. Conditional Sale - it is where the sale contemplates a contingency and in general, where the
contract is subject to certain conditions, usually the full payment of purchase price.
II. Discussions
1. Distinguish earnest money from option money.
Earnest money is part of the purchase price and when given, the buyer is bound to pay the
balance. However, Option money is distinct consideration for an option contract and the buyer
is not required or not bound to buy.
2. (a) What remedies are available to a vendor in sale of personal property payable in
installments? (b) Is the vendor allowed to recover the unpaid balance of the price?
The vendor may choose to: (1) Elect fulfillment upon the vendee failed to pay any
installment, (2) Cancel the contract or (3) Foreclose the chattel mortgage, if one has been
constituted
If the vendor chose to foreclose the mortgage, he cannot recover for the unpaid balance.
 3. Give the characteristics of a contract of sale. Explain at least three of them.
The characteristics are:
a. Consensual – perfected be mere consent of the parties.
b. Principal – can exist without being dependent upon another contract
c. Bilateral – parties are bound by reciprocal obligations
d. Onerous – Valuable consideration are given by the parties
e. Commutative – parties exchange almost equivalent values
f. Nominate – has special name given by law

4. Under the Statute of Frauds, what contract of sale must be in writing to be enforceable by
court action?
Under the Statute of Frauds the following must be in writing to be enforceable by court
action:
 Sale of personal property at a price not less than P500.00
 Sale of real property or an interest therein regardless of the price involved
 Sale of property not to be performed within a year from the date thereof regardless of the
nature of the property and the price involved.
5. Give at least three distinctions between a contract of sale and a contract of agency to sell.
 In sale, title to the goods are transferred to the buyer upon delivery of the thing. In agency to
sell, title to the goods are retained by the owner despite the delivery of the goods to the agent
 In sale, the buyer is required to pay the price. In agency to sell, the agent is required to turn
over to the principal the price of the goods which he received from the buyer
 In sale, the recipient of the property may do with the property as he pleases. In agency to sell,
the principal retains control of the property.
III. Problems. Explain or state briefly the rule or reason for your answer.
1. S sold to B certain goods. At the time of sale, C is not the owner of the goods. May there be
a valid sale to B?
Yes, it is not necessary that the vendor owned the thing in the time of sale. But in the time of
delivery.
2. Same example. The only problem now is that the goods sold have not yet been identified at the
time of the contract? May there be a valid sale to B?
Yes, because the goods here is a certain goods and it is concluded determinate and segregated from
all others of the same class
3. The property sold by S is a portion of a parcel of land without indicating to the specific portion
thereof. May there be a valid sale to B?
Yes, in Article 1463, the sole owner of a thing may sell an undivided interest therein. It makes the
seller and the buyer co-owners of the land.
4. Same example. The only problem now is that S and B have not agreed upon a definite price at
the time of sale. May there still be a valid contract of sale between them?
No, the price is not certain. It is concluded that there is no meeting of the minds between the parties
of the contract
5. Same example. The only problem in the case is that the price was fixed only by S. Is the sale
valid?
It will depend if the buyer agrees the price fixed by the seller or not, if there is an acceptance there
were meeting of the minds and therefor the contract is valid.
 Chapter 2
Capacity to Buy or Sell
As a general rule, all those who may oblige themselves may enter into a contract of sale.
 Kinds of incapacity in a contract of sale
1. Absolute incapacity – this applies to persons who cannot bind themselves and includes
minors, insane or demented person and deaf-mutes who do not know who to write. A
contract entered by these persons are voidable. However, when necessary are sold to these
person, he must pay a reasonable price thereof.
2. Relative incapacity – this applies to certain persons who cannot purchase certain property.
 The husband and the wife or live-in couples cannot sell property to each other, except:
 When a separation of property is agreed on marriage settlement and
 When there has been a judicial separation of property.
Note: The contract is void if the contract is not under the exemptions.
 Persons prohibited from acquiring by purchase.
 Voidable contracts if it is between, (1) the guardian, (2) Agents, unless the consent
of the principal has been given and (3) Executors and administrators, the property of
the estate under administration
 Void contracts if it is between, (1) Public officers and employees, and (2) Justices,
judges, prosecuting attorneys, clerks of court and other officers connected with the
administration of justice.
STUDY GUIDE
I. Definition. Define or give the meaning of the following:
1. Necessaries – those things which are needed for sustenance, dwelling, clothing and medical
attendance, in keeping with the financial capacity of the family of the incapacitated person
2. Compromise - contract whereby the parties, by reciprocal concessions, avoid a litigation or put
an end to one already commenced. It is the amicable settlement of a controversy.
II. Discussion.
1. Are husband and wife allowed to sell property to each other?
No, the husband and the wife or live-in couples cannot sell property to each other, except:
(1) When a separation of property is agreed on marriage settlement and (2) When there has been
a judicial separation of property.
2. Under the law, who may enter into a contract of sale?
As a general rule, all those who may oblige themselves may enter into a contract of sale.
Except when minor, insane, demented and deaf-mute who do not know how to write.
III. Problems. Explain or state briefly the rule or reason for your answer.
1. B, a minor, bought a pair of imported shoes worth P3, 000.00 from a department store.
Can F, father, cancel the sale on the ground of the minority of B?
It depends, when the minor has no capacity to act. Therefore, the minor is oblige to pay a
reasonable price.
2. H and W are husband and wife. After selling his property to W, H borrowed a big amount
of money from C. It appears that H is now bankrupt. Has C the right to question the sale
of H’s property to W in order to have said property answer for H’s indebtedness to him?
No, there is a prohibition on that right. But the law prohibits the husband and the wife or live-in
couples cannot sell property to each other, except: (1) When a separation of property is agreed
on marriage settlement and (2) When there has been a judicial separation of property.
 Chapter 3
Effects of the Contract When the Things Sold has been Lost
A thing is lost when it perishes or goes out of commerce or disappears in such a way that its existence is
unknown or it cannot be recovered.
 Effect of loss of thing at the time of sale
The loss or injury which has taken place before or at the time the contact of sale is perfected.
 If the thing is entirely lost – the contract is inexistent and void
 If the thing is partially lost – the vendee may choose between withdrawing from the
contract and demanding the remaining part, paying its proportionate price.
STUDY GUIDE
I. Definition. Define or give the meaning of the following:
1. Specific Goods – goods identified and agreed upon at the time a contract of sale is made.
Specific goods are individually and specifically identified and agreed to items bought and
sold under a contract of sale.
2. Divisible Contract - a contract is divisible when its consideration is made up of several
parts. It is a contract in which the parties’ performances are divided into matching pairs of
duties to perform that the parties consider equal.
II. Discussion.
1. When is a thing considered lost?
A thing is lost when it perishes or goes out of commerce or disappears in such a way that
its existence is unknown or it cannot be recovered.
2. Give the effect in case the thing sold is (a) Lost totally; and (b) Lost partially.
The loss or injury which has taken place before or at the time the contact of sale is
perfected.
 If the thing is entirely lost – the contract is inexistent and void
 If the thing is partially lost – the vendee may choose between withdrawing from the
contract and demanding the remaining part, paying its proportionate price.
III. Problems. Explain or state briefly the rule or reason for your answer.
1. S sold to B 100 bags of sugar at P70.00 per bag for a total price of P70, 000.00. S was
able to deliver only 98 bags because the two (2) bags were stolen without the fault of S.
Has S the right to insist that B pay for the 98 bags since there was no fault in his part
and only two (2) bags are lacking? What rights, if any, are given by law to B?
No, where the parties purport a sale and the goods without the knowledge of the seller have
perished. The buyer has option treat the sale, (1) as avoided, or (2) as valid in all of the
exiting goods.
2. Same example. The price was fixed at P70, 000.00 for the whole lot, irrespective of the
number of bags which happens to be also 100 bags. Will your answer be the same?
Yes, the seller also have the right to void the sale or pay it with proportion to the fixed price.
 Chapter 4
Obligations of the Vendor
 Obligations of the vendor
1. To transfer the ownership of the thing sold.
2. To deliver the thing sold
3. To warrant the thing sold against eviction and hidden defects
4. To take care of the thing sold with the diligence of a good father of a family
5. To pay for the expenses for the execution and registration of the deed of sale, unless there is
stipulation to the contrary
 Kinds of Delivery
1. Actual or real delivery – this is delivery by physically placing the thing sold in the hands of
the buyer or placing it in his possession or control.
2. Constructive or legal delivery
 By legal formalities – when the sale is made through a public instrument.
 Symbolic delivery (traditio symbolica) – delivering the key of the place
 Traditio longa manu (delivery by the long hand) – by mere consent of parties if the thing
cannot be transferred at the time of sale.
 Traditio brevi manu (delivery by the short hand) – the vendee is already in the possession of
the thing sold (Lease).
 Traditio constitutum possessorium – the vendor continues in possession of the thing sold
(Sale and Lease Back).
3. Delivery of incorporeal things (quasi-traditio)
 Constructive tradition – delivery by execution of public document
 Placing the title of ownership in the possession of the vendee
 Use by the vendee of his rights (voting rights), with the consent of the vendor.
 “Sale or return” and “sale on trial”
1. Sale or return – the ownership of the goods is transferred to the buyer on delivery, but the buyer has
the option in revert their ownership on the seller by returning on time fixed or if no time fixed,
within reasonable time.
2. Sale on trial or on approval - ownership of the goods remains with the seller despite delivery but
ownership shall transfer to the buyer in the following cases:
 When he signifies approval
 When he does an act ( if he starts consuming or using the thing)
 If he doesn’t signify approval but retains the goods without notice within the time fixed
 Transfer of ownership by delivery of specific goods to carrier or other bailee
General Rule: Delivery if specific goods to a carrier for the purpose of transmission to the buyer
transfer ownership to the buyer.
Exceptions: Ownership of goods retain by the seller in the following cases:
 When there is a stipulation
 When the terms of bill of lading, the goods are to be delivered to the order of the seller
 When the terms of bill of lading, the goods are to be delivered to the order of the buyer, but
the bill of lading is retained by the seller.
 When the seller draws on the buyer a bill of exchange for the price of the goods and
transmits the bill of exchange with the bill of lading, but the buyer dishonors such bill of
exchange.
 Note: The indorser shall not be liable for any failure on the part of the bailee who issued the
document or previous indorser to fulfill their respective obligations.
 Sale by a person who is not the owner of the thing sold
When goods are sold by person who is not the owner, the buyer acquires no better title, except:
1. When the sale is made under the authority of the owner.
2. When the owner precluded by his conduct from denying the seller’s authority to sell.
3. When the sale is made under the provision of any factor’s act or recording laws
4. When the sale is made under a statutory power of sale or under the order of court
5. When the purchase is made in a merchant’s store or fairs
 When vendor is not bound to deliver the thing sold
1. If the vendee has not paid the price
2. If no period for the payment of the price has been fixed in the contract.
3. If a period has been fixed for the payment of the price. The vendor is bound to deliver the thing
sold. However, he is not bound to deliver if the vendee losses the right to make use of it.
 Rights of the unpaid seller
1. Possessory lien, or a lien on the goods or right to retain them while he is in possession of them.
2. Right of stoppage in transitu
3. Right of resale
4. Right to rescind the sale
 Rights of preference in case of double sale
1. In movable property – ownership shall be transferred to the person who first took possession of
the property in good faith.
2. In immovable property – ownership shall belong to the person, with this priority:
 First registered the sale in the Registry of Deeds in good faith
 To the first took possession of the object in good faith
 To the person who presents the oldest title in good faith
 Effect of non-fulfillment of a conditions in a contract of sale
1. The party may refuse to proceed with the contract (breach of warranty)
2. The party may waive the performance of the condition
 Kinds of warranty
1. Express – any affirmation of fact or any promise by the seller relating to the thing if the natural
tendency of such affirmation or promise is to induce the buyer to purchase the same and if the
buyer purchases the thing relying thereon.
2. Implied – that which the law derives by implication or inference from the nature of the
transaction or the relative situation or circumstances of the parties, irrespective of any intention
of the seller to create it.
 Warranty against eviction
 Warranty against hidden defects
 Warranty as to Fitness and Merchantability
 Warranty against eviction
Eviction is the deprivation of the vendee of the whole or a part of the things sold. The requisites in
order that the seller may enforce it are:
1. Vendee is deprived, in whole or in part, of the thing purchased
2. The deprivation is by virtue of a final judgment
3. The judgment is based on a prior right to the sale or an act imputable to the vendor
4. The vendor was summoned in the suit for eviction at the instance of the vendee
5. No waiver of warranty by the vendee
 Vendor’s liability
1. Total Eviction:
a. Value of the thing at the time of eviction
b. Income or fruits if he has been ordered to deliver them to the party who won the suit
c. Costs of the suit
d. Expenses of the contract
e. Damages and interests if the sale was in bad faith
2. Partial Eviction:
a. To enforce vendor’s liability for eviction
b. To demand rescission of the contract
Note: Vendor’s liability is waivable but any stipulation exempting the vendor from the
obligation to answer for eviction shall be void if he acted in bad faith.
 Consciente – voluntarily made by the vendee without the knowledge and assumption of the
risks of eviction
 Intencionada – made by the vendee with knowledge of the risks of eviction and assumption
of its consequences
 Warranty against hidden defect of or Encumbrance upon the thing sold
Warranty in which the seller guarantees that the thing sold is free from any hidden defect or
defects or any change or encumbrance not declared or known to the buyer. The requisites to enforce the
liability are:
1. Defect must exist at the time of sale
2. Defect must be hidden, not patent or visible
3. The defect must render the thing unfit to use for which is intended or diminishes its fitness for
use
4. The action to enforce it must be within the period provided by law
 Effect of Loss of Thing on Account of Hidden Defects:
1. If the vendor was aware of hidden defects, he shall bear the loss and vendee shall have the right
to recover:
 The price paid
 Expenses of the contract
 Damages
2. If the vendor was not aware, he shall be obliged to return:
 The price paid
 Interest thereon
 Expenses of the contract if paid by the vendee
 Warrant of Merchantability
Warranty in which the seller guarantees, where the goods were bought by description, that they
are reasonably fit for the general purpose for which they are sold.
 STUDY GUIDE
I. Definition. Define or give the meaning of the following:
1. Unpaid seller of goods – an unpaid seller is one who has not been paid or tendered the whole
price or who has received a bill of exchange or other negotiable instrument as conditional
payment and condition on which it was received has been broken by reason of the dishonor of
the instrument.
2. Traditio brevi manu – this mode of legal delivery happens when the vendee has already the
possession of the thing sold by virtue of another title as when the lessor sells the thing leased to
the lessee. Instead of the vendee turning over the thing to the vendor so that the latter may, in
turn, deliver it back to him, all these are considered done by fiction of law.
3. Sale or return – contract by which property is sold but the buyer, who becomes the owner of the
property on delivery, has the option to return the same to the seller instead of paying the price.
Under this contract, the option to purchase or return the goods rests entirely on the buyer without
reference to the quality of the goods.
4. Tradition – derivative mode of acquiring ownership by virtue of which one that has the right
and intention to alienate a corporeal thing, transmits it by virtue of a just title to one who accepts
the same.
5. Redhibitory defect – a defect in the article sold against which defect the seller is bound to
warrant. To be considered redhibitory, the defect must not only be hidden. It must be of such
nature that expert knowledge is not sufficient to discover it.
6. Implied warranty of fitness – warranty in which the seller guarantees that the thing sold is
reasonably fit for the known particular purpose for which it was acquired by the buyer.
7. Eviction – the judicial process whereby the vendee is deprived of the whole or part of thing
purchased by virtue of a final judgment based on a right prior to the sale or an act imputable to
the vendor.
8. Caveat venditor – the vendor is liable to the vendee for any hidden defects in the thing sold,
even though he was not aware thereof.
II. Discussion.
1. Give the cases when a sale of property is valid although the seller is not the owner thereof.
When goods are sold by person who is not the owner, the buyer acquires no better title, except:
1. When the sale is made under the authority of the owner.
2. When the owner precluded by his conduct from denying the seller’s authority to sell.
3. When the sale is made under the provision of any factor’s act or recording laws
4. When the sale is made under a statutory power of sale or under the order of court
5. When the purchase is made in a merchant’s store or fairs
2. What are the different ways of effecting delivery to the buyer of the thing sold?
Kinds of Delivery are:
1. Actual or real delivery – this is delivery by physically placing the thing sold in the hands
of the buyer or placing it in his possession or control.
2. Constructive or legal delivery
 By legal formalities – when the sale is made through a public instrument.
 Symbolic delivery (traditio symbolica) – delivering the key of the place
 Traditio longa manu (delivery by the long hand) – by mere consent of parties if the thing
cannot be transferred at the time of sale.
 Traditio brevi manu (delivery by the short hand) – the vendee is already in the possession
of the thing sold (Lease).
 Traditio constitutum possessorium – the vendor continues in possession of the thing sold
(Sale and Lease Back).
 3. Delivery of incorporeal things (quasi-traditio)
 Constructive tradition – delivery by execution of public document
 Placing the title of ownership in the possession of the vendee
 Use by the vendee of his rights (voting rights), with the consent of the vendor.
3. Give the requisites for the exercise by an unpaid seller of his right of stoppage in transitu.
The following are the requisites for the existence of the right:
 The seller must be unpaid
 The buyer must be insolvent
 The goods must be in transit
 The seller must either actually take possession of the goods sold or give notice of his
claim to the carrier or other person in possession
 The seller must surrender the negotiable document of title, if any, issued by the carrier or
bailee
 The seller must bear the expenses of delivery of the goods after the exercise of the right.
4. What are the implied warranties in a contract of sale?
The implied warranties in a contract of sale were:
 An implied warranty on the part of the seller that he has a right to sell the thing at the
time when the ownership is to pass, and that the buyer shall from that time have and
enjoy the legal and peaceful possession of the thing.
 An implied warranty that the thing shall be free from any hidden faults or defects, or any
charge or encumbrance not declared or known to the buyer.
5. Distinguish “sale or return” from “sale on trial”.
1. Sale or return – the ownership of the goods is transferred to the buyer on delivery, but the
buyer has the option in revert their ownership on the seller by returning on time fixed or if no
time fixed, within reasonable time.
2. Sale on trial or on approval - ownership of the goods remains with the seller despite delivery
but ownership shall transfer to the buyer in the following cases:
 When he signifies approval
 When he does an act ( if he starts consuming or using the thing)
 If he doesn’t signify approval but retains the goods without notice within the time fixed
6. Suppose the parties failed to stipulate the place of delivery of the thing sold, where is the
place of delivery?
The rules in determining the place of delivery is in priority of:
 Where there is an agreement, place of delivery is that agreed upon
 Where there is no agreement, place of delivery determined by usage of trade
 Where there is no agreement and no prevalent usage, place of delivery is the seller’s
place
 In any other case, place of delivery is the seller’s residence
 In case of specific goods, which to the knowledge of the parties at the time the contract
was made were in some other place, that place is the place of delivery, in the absence of
agreement or usage of trade to the contrary
 7. What are the principal obligations of the vendor?
The principal obligations of the vendor are:
 To transfer the ownership of the thing sold.
 To deliver the thing sold
 To warrant the thing sold against eviction and hidden defects
 To take care of the thing sold with the diligence of a good father of a family
 To pay for the expenses for the execution and registration of the deed of sale,
unless there is stipulation to the contrary
8. Suppose the thing sold is lost after perfection of the sale but before its delivery to the buyer,
who shall bear the loss by a fortuitous event? Explain.
The buyer will bear the loss. If the thing is lost after perfection of the contract but before
its delivery, that is even before the ownership is transferred to the buyer, the risk of loss by a
fortuitous event without the seller’s fault is borne by the buyer as an exception to the rule of res
perit domino.
III. Problems. Explain or state briefly the rule or reason for your answer.
1. S sold to B a parcel of land with an area of 500 sq. meters at P2, 000.00 per sq. meter. It
turns out that the area is only 451 sq. meters. Has B the right to cancel or rescind the sale
even if S is willing to accept a proportionate reduction of the price, or only P902, 000.00?
The buyer has the right to cancel or rescind the sale or to pay proportional reduction of the price
because the reduction is less than 1/10 of the whole.
2. Same example, but the price is fixed at P1, 000, 000.00 without a statement of the price per
sq. meter. Has B the right to enforce the contract with the corresponding reduction of the
price to P902, 000.00?
No, the buyer doesn’t have the right to proportional reduction if the stipulated price is fixed and
lump sum.
3. Same example. The only problem is that S subsequently sold the same property to C who
immediately registered the sale in his name. (a) Who has a better right to the property: B
or C? (b) Suppose C did not also register the sale. To whom should the property be
awarded?
a. C has the better right of the property because C is the first person who register in the
Registry of Deeds in good faith
b. The first person who possessed the property in good faith has the right of the property.
4. Same example. C was declared by a court to have a better right. Is S liable to B for the
former’s failure to comply with his warranty against eviction?
No, S is not liable for warranty against eviction. He is only liable to the breach of contract
because S sold the same property to another person.
5. S sold to B a piano for P10, 000.00. It was agreed that payment shall be made within ten
(10) days. Has B the right to demand delivery even before he has paid?
Yes, B can demand delivery even before he has paid since there was a period stipulated in the
contract.
6. B, through fraud, made S sign a contract of sale of a parcel of land. Here, B’s title is
voidable which may be declared void by the court in action by S. However, B was able to
sell the property to C. Has B the right to recover the property from C?
It depends. If C acts in good faith, B doesn’t have the right to recover property from C but if C
acts in bad faith, he can recover the property due to C’s actions.
7. B brought a bottle of medicine from a drug store. Its label says that it provides a “very
effective relief from asthma”. However, B continues to suffer from asthma attacks. Has B
the right to complain for misrepresentation against the drug manufacturer?
 B doesn’t have the right to complain for misrepresentation since the label “a very effective relief
from asthma” is not a promise by the manufacturer to the buyer.
8. S sold to B a parcel of land located in Quezon City under a public instrument signed by the
parties and notarized in Manila. Is B considered already the owner of the property?
It depends, if the sale is made under a public instrument, B can be considered already the owner
of the property but if the seller is not in control of the land, B cannot enjoy its possession since
there is an opposition by third parties.
 Chapter 5
Obligation of the Vendee
 Principal Obligations of the Vendee
1. Accept Delivery
2. Pay the price at the time and place stipulated in the contract, if not stipulated at the time and
place of the delivery of the thing sold.
 No delivery by installment except if there is stipulation
 Generally, the buyer is entitled to examine the goods prior to delivery except:
i. When there is stipulation
ii. When the goods are delivered COD unless there is an agreement or a usage of
trade permitting such examination
 When there Is an acceptance
1. Express acceptance
2. When the buyer does an act only an owner can do.
3. Failure to return after reasonable lapse of time
Note: The vendee shall owe interest for the period between the delivery of the thing and the payment of
the price, in the following three cases
 Should it have so stipulated
 Should the thing sold and delivered produce fruits or income
 Should he be in default, from the time of judicial or extrajudicial demand for the payment of
the price
 Suspend the payment of the price
1. There is a well-grounded fear (fundado temor)
2. The fear is because of:
a. A vindicatory action or action to recover
b. A foreclosure of mortgage
STUDY GUIDE
I. Definition. Define or give the meaning of the following:
1. Acceptance of goods - is assent to become owner of the specific goods when delivery of them is
offered to the buyer. Acceptance of goods occurs when the buyer take or retain the goods offered
by the seller.
2. Wrongful refusal of buyer to accept - when wrongful refusal of buyer to accept the goods is
without just cause, the title thereto passes to him from the moment they are placed at his
disposal.
II. Discussion.
1. When is there implied acceptance by the vendee of the goods sold?
There is implied acceptance by the vendee (1) when he does act only an owner can do
and/or (2) failure to return after reasonable lapse of time.
2. Give the cases when the vendee is given the right to suspend payment of the purchase price.
i. There is a well-grounded fear (fundado temor)
ii. The fear is because of:
 A vindicatory action or action to recover
 A foreclosure of mortgage
III. Problems. Explain or state briefly the rule or reason for your answer.
1. S sold to B a parcel of land with the stipulation that upon failure of B to pay the price
within 30 days the sale shall be deemed automatically cancelled.
a. May S refuse to accept payment from B after 30 days on the ground that the sale is
already rescinded?
It depends if the demand for rescission is before or after the contact has been made by the
vendor, either judicially or by a notarial act, the vendee may still pay the price even after
the expiration of the stipulated period.
b. Suppose the property sold is movable. Will your answer be the same?
No, according to Article 1593, with respect to movable property, the rescission of the sale
shall of right take place in the interest of the vendor, if the vendee, upon the expiration of
the period fixed for the delivery of the thing
2. S sold a 3-door apartment to B who paid the purchase price only after one year from the
date agreed upon. Is B liable to pay S interest which was not stipulated by them?
No the vendee don’t owe interest for the thing because there is no stipulation have
been made.