1458. By the contract of sale one contracting party iii.
Right of bailee to use the
obligates himself to transfer ownership of and thing loaned in the contact deliver a determinate thing and the other, to pay the of commodatum. price certain in money or its equivalent Not intransmissible CHARACTERISTICS OF CONTRACT OF SALE: i. Right to vote Consensual- meeting of minds ii. Right to public office Bilateral- both parties have obligation iii. Parental rights Onerous- both parties have to give up something iv. Marital rights Nominate- “contract of sale” under the civil code KINDS OF ILLICIT THINGS Commutative- things sold is equivalent to price 1) Per Se paid Unlawful as of its nature Principal- existence does not rely on another Ex. Sale of spoiled goods contracts 2) Per Accidens REQUISITES OF SALE There is a law declaring it to be 1. Consent unlawful 2. Object – determinate thing Ex. Sale of illegal drugs, Land sold to 3. Cause/ Consideration – price certain in money alien or its equivalent RIGHT OF VENDOR TO TRANSFER OWNERSHIP Seller – B’s promise to pay 1) One can sell what he owns Buyer – S’s promise to deliver He must be the owner or at least NATURAL ELEMENTS must be authorized by the owner of - Deemed to exist in certain contracts in absence the thing sold. of stipulation 2) Sufficient if right exists at time of delivery Ex. Warranty against eviction & hidden defects Seller is not required to have the right to ACCIDENTAL ELEMENTS transfer ownership at contract perfection. It - Stipulated by parties is sufficient he has the right to transfer - May be present or absent ownership at the time where the obligation Ex. Penalty, Interest, Condition, Time and Place of to deliver arises. (Future Goods) Payment 1460. SUBJECT MATTER MUST BE 2 KINDS OF SALE DETERMINATE 1) Absolute – not subject to any condition and 1. When thing determinate title / ownership passes to buyer upon Particularly designated delivery. Physically segregated from all other of the 2) Conditional – When sale is subject to same class certain conditions or contingency 2. Capable of being determinate (without the need Ex. Delivery does not pass the ownership of a new contract) until fully paid 1461. SALES OF THING HAVING POTENTIAL 1459. REQUISITES OF OBJECT EXISTENCE = VALID 1) Thing As a result of something owned by the seller which - Determinate is already in existence. - Lawful Future goods – to be raised, acquired, or - Not impossible manufactured 2) Rights Ex. Milk of cow, wine from grape vine, wool of Not personal sheep, i. Right to be a partner in a SALE OF MERE HOPE AND EXPECTANCY = partnership VALID ii. Right to act as an agent Provided that the thing expected will come into Resolutory condition – happening on the event existence. The sale is still valid even if the thing extinguishes an obligation. does not come into existence. Upon the happening of the resolutory condition, EXCEPTION: IF MADE IN VAIN vendor cannot transfer ownership of what he sold - Sale of a thing that will never come since there is no object. into existence EXCEPTION: Torrens title Ex. Sale of falsified sweepstakes ticket that can never win. Article 1466. In construing a contract containing 1462. GOODS THAT CAN BE THE OBJECT OF provisions characteristic of both the contract of SALE sale and of the contract of agency to sell, the 1) Existing essential clauses of the whole instrument shall 2) Future be considered. NOTE: Future goods cannot be subject to executory contracts because it is not readily Sale vs. Agency available. SALE AGENCY 1463. SALE OF UNDIVIDED INTEREST IN A The buyer pays for the The agent does not pay THING. price of the for the price. He merely 1) By sole owner – makes the buyer a co-owner of goods/property accounts for the an aliquot share of the whole purchased proceeds of the sale. 2)By co-owner – may dispose w/o the consent of The buyer becomes The agent does not other co-owners provided that the sale is only the owner of the become the owner of limited to the portion that will be allotted to the goods/property the goods/property vendor upon termination of the co-ownership. purchased delivered to him for 1464. SALE FUNGIBLE GOODS sale. - each unit is treated as an equivalent of any other Buyer cannot return The agent returns the unit. the goods/property goods/property if he -may only be sold an UNDIVIDED share of the when the sale is was not able to sell the mass. defective same EFFECT OF SALE: The seller warrants the The agent does not a) Buyer become co-owner goods/property sold make any warranty as b) Aliquot share can only be determined by long as he acts within the measurement of entire mass his authority and in the c) If mass < what was sold, buyer become name of the principal owner of the whole mass and seller must The seller has full The agent must follow supply the insufficiency w. the same kind freedom to enter into the instructions of the and quality. any terms or principal RISK OF LOSS: conditions on the - Risk is proportionate to the holdings contract of sale of the co-owners. NOTE: In sale of undivided share, the subject Article 1467. A contract for the delivery at a matter is INCORPOREAL OR INTANGIBLE. certain price of an article which the vendor in the Ownership passes by intention of the parties, not ordinary course of his business manufactures or actual delivery. procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured 1465. THINGS SUBJECT TO RESOLUTORY specially for the customer and upon his special CONDITION MAY BE SUBJECT OF CONTRACT order, and not for the general market, it is a OF SALE. contract for a piece of work. Rules if Consideration is partly Money and Partly Contract for a Piece of Work— The article sold is Goods specially manufactured and upon the special order 1. Determine the intention of the parties. of the customer. Article is not sold in the ordinary 2. If intention could not be determined, consider the course of business. value of the thing given: Contract for a piece Contract of Sale a. If value of the thing more than value of the of work money, it is BARTER The thing transferred The thing transferred is b. If value of the thing less than value of the money, is one not in one which would have it is SALE existence and w/c existed and would have c. If both values are the same, SALE never would have been the subject of sale existed but for the to some other person, Article 1470. Gross inadequacy of price does not order of the party even if the order had not affect a contract of sale, except as it may desiring to acquire it been given indicate a defect in the consent, or that the The services The primary objective of parties really intended a donation or some other dominate the the contract is a sale of act or contract. contract even though the manufactured item; there is a sale of it is a sale of goods even Article 1471. If the price is simulated, the sale is goods involved though the item is void, but the act may be shown to have been in manufactured by labor reality a donation, or some other act or furnished by the seller contract. and upon previous order of the customer EFFECT OF GROSS INADEQUACY OF PRICE Not w/in the Statute Governable by the of Frauds Statute of Frauds NOTE: Mere inadequacy of the price does not affect the validity of the sale, except Article 1468. If the consideration of the contract (1) When there is fraud, mistake, or undue consists partly in money, and partly in another influence indicative of a defect in consent is thing, the transaction shall be characterized by present, the manifest intention of the parties. If such (2)When it shows that the parties really intended a intention does not clearly appear, it shall be donation or some other act or contract. considered a barter if the value of the thing given as a part of the consideration exceeds the EFFECT WHERE PRICE IS SIMULATED amount of the money or its equivalent; otherwise, it is a sale. 1. The act may be shown to have been in reality a donation, or some other act or contract Sale Barter 2. If not and neither party had any intention Consideration: giving Consideration: giving whatsoever that the amount will be paid of money as payment of a thing (absolutely simulated): the sale is void Governed by law on sales: species of the genus 3. If there is a real price but what is stated in the sales contract is not the one intended to be paid (only If consideration consists party in money and relatively simulated): the contract of sale is valid partly by thing – look at manifest intention; but subject to reformation If intention is not clear: If intention is not clear: value of thing is equal value of thing is more Effect of Gross Inadequacy of Price. No effect. or less than amount of than amount of money Exceptions: (meaning, sale is set aside) money – sale – barter 1. If consent is vitiated, such as VIMFU (Violence, Intimidation, Mistake, Fraud, Undue influence) 2. If the parties intended a donation or some other mere invitations to make an offer except when it act or contract appears to be otherwise. 3. If the price is so low as to be shocking to the conscience Article 1477. The ownership of the thing sold shall be transferred to the vendee upon the Effect of Simulated Price. Sale is void, unless it actual or constructive delivery thereof. could be shown that the parties intended a donation or some other act of liberality. Article 1478. The parties may stipulate that o Price Simulated- No price to support a contract ownership in the thing shall not pass to the of sale, such that neither party had any intention purchaser until he has fully paid the price. that the amount will be paid—void o Price is False- there is a real price not declared— Article 1480. Any injury to or benefit from the contract is valid, but the underlying deed is thing sold, after the contract has been subject to reformation to indicate the real price perfected, from the moment of the perfection of upon which the minds of the parties have met. the contract to the time of delivery, shall be governed by articles 1163 to 1165, and 1262. Article 1475. The contract of sale is perfected at the moment there is a meeting of minds upon This rule shall apply to the sale of fungible the thing which is the object of the contract things, made independently and for a single and upon the price. price, or without consideration of their weight, From that moment, the parties may number, or measure. reciprocally demand performance, subject to the provisions of the law governing the form Should fungible things be sold for a price fixed of contracts. according to weight, number, or measure, the risk shall not be imputed to the vendee until PERFECTION OF CONTRACT OF SALE. Meeting they have been weighed, counted, or measured of the minds upon the thing and price. and delivered, unless the latter has incurred in Effect: Parties may reciprocally demand delay. performance Legal consequences from point of perfection are GENERAL RULE: A contract of sale is perfected at the same in both legal systems: upon perfection of the moment there is a meeting of the minds upon an unconditional contract of sale involving specific the thing which is the object of the contract and or determinate subject matter, the risk of loss upon the price; consensual contract deterioration and the benefits of fruits and Exception: When the sale is subject to a improvements, were fro the account of the buyer. suspensive condition WHO BEARS RISK OF LOSS/ DETERIORATION/ REQUIREMENTS: FRUITS: 1. When parties are face to face – when there is 1. BEFORE PERFECTION absolute acceptance of an offer that is certain a. Res perit domino 2. When thru correspondence or telegram – b. Owner is seller so seller bears risk ofloss when the offer or receives or had knowledge of the 2. AT PERFECTION acceptance o Res perit domino 3. When the sale is subject to a suspensive o Contract is merely inefficacious because loss of condition – from the moment the condition is the subject matter does not affect the validity of fulfilled the sale NOTES: Qualified acceptance: mere counter-offer o Seller cannot anymore comply with obligation so which needs to be absolutely accepted to give rise buyer cannot anymore be compelled to perfected contract of sale. Business ads are 3. AFTER PERFECTION BUT BEFORE DELIVERY o Loss – confused state It is part of the It is given as a distinct o Paras: BUYER purchase price consideration for an o Tolentino: SELLER option contract which o Deterioration and fruits – Buyer bears loss; gives the buyer a 4. AFTER DELIVERY specific period within o Res perit domino which to purchase the o Delivery extinguishes ownership visa-vis the thing seller and creates a new one in favor of the buyer It is given only when It is given at a time when there is already a the sale had not yet Article 1481. In the contract of sale of goods by perfected sale been perfected. What description or by sample, the contract may be had been perfected only rescinded if the bulk of the goods delivered do is the option contract not correspond with the description or the When it is given, the Even if option money is sample, and if the contract be by sample as well buyer is bound to pay paid by the would-be- as description, it is not sufficient that the bulk of the balance of the buyer he is not bound to goods correspond with the sample if they do not agreed purchase price buy the thing also correspond with the description. If the sale does not If the buyer decides not The buyer shall have a reasonable opportunity of materialize, the to buy the thing, he comparing the bulk with the description or the earnest money paid cannot recover the sample. must be returned, option money he paid as unless a contrary consideration for the Sale of Goods By Description- where a seller sells a agreement had been contract of option thing as being of a certain kind verbally describing stipulated them and the buyer simply relies on the seller’s descriptions of the things, not knowing whether the Article 1483. Subject to the provisions of the seller’s representations are true or not. Statute of Frauds and of any other applicable statute, a contract of sale may be made in Sale by Sample- Where the seller warrants that the writing, or by word of mouth, or partly in writing bulk of goods being sold correspond with the and partly by word of mouth, or may be inferred sample or samples exhibited not only in kind but from the conduct of the parties. also in quality and character. FORM OF SALES Sale by Description and Sample- Where the seller I. Form not important in validity of sale has to satisfy the requirements in sale by a. Sale being consensual, may be oral or written, description and sample. There are two-fold perfected by mere consent as to price and subject warranty here: matter (a) the goods purchased matched with the b. If particular form is required under the statute of description and frauds: (b) the goods also matched in kind, quality and i. valid and binding between parties but not character with that of the sample or samples binding to 3rd persons exhibited to the buyer or his representative c. Reason: purposes of convenience only and not for validity and enforceability; cause of action is Article 1482. Whenever earnest money is given granted to sue and compel other party to in a contract of sale, it shall be considered as execute the document part of the price and as proof of the perfection of the contract. II. When form is important for validity; exception by specific provision of law; EARNEST MONEY vs. OPTION MONEY Earnest Money Option Money a. Power to sell a piece of land granted to an agent the lessor has deprived the lessee of the – otherwise VOID possession or enjoyment of the thing. b. Sale of large cattle; must also be registered with Municipal treasurer – otherwise VOID Article 1486. In the case referred to in the c. Sale of land by non-Christian if not approved by two preceding articles, a stipulation that the Governor– VOID installments or rents paid shall not be returned to the vendee or lessee shall be III. When form is important for enforceability valid insofar as the same may not be (STATUTE OF FRAUDS Article 1403 (2)) unconscionable under the circumstances. a. A sale agreement which by its terms is not to be performed within a year from the making thereof; Article 1487. The expenses for the execution b. An agreement for the sale of goods, chattels or and registration of the sale shall be borne by the things in action, at a price not less than P500.00; vendor, unless there is a stipulation to the and contrary. c. A sale of real property or of an interest therein. Article 1488. The expropriation of property for IV. EXCEPTIONS TO COVERAGE OF STATUTE public use is governed by special laws. IN SALES CONTRACTS: 1. When there is a note or memorandum in writing Article 1489. All persons who are authorized and subscribed to by party or his agent (contains in this Code to obligate themselves, may essential terms of the contract) enter into a contract of sale, saving the 2. When there has been partial modifications contained in the following performance/execution (seller delivers with intent articles. to transfer title/receives price) Where necessaries are those sold and delivered 3. When there has been failure to object to to a minor or other person without capacity to presentation of evidence (oral) act, he must pay a reasonable price therefor. 4. When sales are effected through electronic Necessaries are those referred to in article 290. commerce Two Kinds of Incapacity: Article 1484. In a contract of sale of personal 1. Absolute Incapacity- Party cannot bind himself property the price of which is payable in in any case. installments, the vendor may exercise any of the 2. Relative Incapacity- Certain Persons under following remedies: certain circumstances cannot buy certain property. (1)Exact fulfillment of the obligation, should ** Minors in contract for necessaries must pay the vendee fail to pay; reasonable price. (2) Cancel the sale, should the vendee's failure to pay cover two or more installments; Necessaries—those things which are needed for (3) Foreclose the chattel mortgage on the thing sustenance, dwelling, clothing and medical sold, if one has been constituted, should the attendance, in keeping with the financial capacity vendee's failure to pay cover two or more of the family of the incapacitated person. installments. In this case, he shall have no further action against the purchaser to recover Article 1490. The husband and the wife cannot any unpaid balance of the price. Any agreement sell property to each other, except: to the contrary shall be void. (1) When a separation of property was agreed upon in the marriage settlements; or Article 1485. The preceding article shall be (2) When there has been a judicial separation of applied to contracts purporting to be leases of property under article 191. personal property with option to buy, when Prohibition against Husband and Wife. the property and rights which may be the Exceptions. object of any litigation in which they may Rationale: PID take part by virtue of their profession; a. To avoid Prejudice to 3rd Persons (6) Any others specially disqualified by law. b. To prevent one spouse from unduly influencing the other. Persons Relatively Incapacitated to Buy. c. To avoid by indirection the violation of the (PAGEJO) prohibition against donations. 1. Public Officers and employees—Property Of State. Who may assail illegality? 2. Agents—Property of Principal unless with a. Creditors prior to the sale consent. b. Heirs of either spouse. 3. Guardian—Property of Ward. 4. Executors and administrators—Estate ** Either spouse may not assail illegality because 5. Justices, Judges, Prosecuting Attorneys, Clerks they are parties thereto. and employees of court—Property/Rights under ** A spouse designated as agent of the other litigation. spouse may sell the latter’s exclusive property. 6. Others disqualified by law. (Ex. *aliens who are disqualified to purchase private agricultural lands; Article 1491. The following persons cannot *an unpaid seller having a right of lien or having acquire by purchase, even at a public or judicial stopped the goods in transitu, who is prohibited from auction, either in person or through the buying the goods either directly or indirectly in the mediation of another: resale of the same at a public or private sale w/c he (1) The guardian, the property of the person may make. Art. 1533, par.5) or persons who may be under his guardianship; Rationale: Fiduciary relationship (2) Agents, the property whose Status of Sale: Voidable (1-3); Void (4-6) administration or sale may have been intrusted to them, unless the consent of the Article 1492. The prohibitions in the two principal has been given; preceding articles are applicable to sales in (3) Executors and administrators, the legal redemption, compromises and property of the estate under administration; renunciations. (4) Public officers and employees, the property of the State or of any subdivision thereof, or of Article 1493. If at the time the contract of sale is any government-owned or controlled perfected, the thing which is the object of the corporation, or institution, the administration of contract has been entirely lost, the contract which has been intrusted to them; this provision shall be without any effect. shall apply to judges and government experts who, in any manner whatsoever, take part in the But if the thing should have been lost in part sale; only, the vendee may choose between (5) Justices, judges, prosecuting attorneys, withdrawing from the contract and demanding clerks of superior and inferior courts, and the remaining part, paying its price in other officers and employees connected proportion to the total sum agreed upon. with the administration of justice, the property and rights in litigation or levied Partial Loss Rules: upon an execution before the court within 1. Vendee may withdraw from the contract whose jurisdiction or territory they exercise 2. Demand the remaining part, paying its price in their respective functions; this prohibition proportion to the total sum agreed upon includes the act of acquiring by assignment and shall apply to lawyers, with respect to Article 1494. Where the parties purport a sale Exception: Art. 1478. Stipulation as to full payment of specific goods, and the goods without the of price. knowledge of the seller have perished in part or have wholly or in a material part so Delivery- a mode of acquiring ownership as a deteriorated in quality as to be substantially consequence of a contract of sale by virtue of which changed in character, the buyer may at his actually or constructively the object is placed in the option treat the sale: control and possession of the vendee. (1) As avoided; or (2) As valid in all of the existing goods or in so KINDS OF DELIVERY much thereof as have not deteriorated, and as 1. Actual or Real. (1497) binding the buyer to pay the agreed price for the 2. Legal or Constructive goods in which the ownership will pass, if the a. Legal Formalities (1498); execution of public sale was divisible. instrument. b. Symbolical Tradition (1498 par 2)- keys Loss/Substantial Deterioration of Specific Goods delivered. without seller’s knowledge. c. Traditio Longa Manu- by mere consent 1. Buyer may avoid the sale or /agreement. If the movable sold cannot yet be 2. May treat sale as valid w/ respect to the transferred to the possession of the buyer at the existing goods time of the sale. (1499) d. Traditio Brevi Manu- if the buyer had already Article 1495. The vendor is bound to transfer the possession the object even before the the ownership of and deliver, as well as warrant purchase. (lessee becomes owner) the thing which is the object of the sale. e. Traditio constitutum possessorium- possession as owner changed. (Owner becomes Obligations of Vendor. (TDWP) lessee) 1. Transfer Ownership (not waivable) 2. Deliver (not waivable) 3. Quasi-Tradition- Delivery of Rights, credits or 3. Warrant Object (waivable and may be modified) incorporeal property made by: 4. Preserve Thing from perfection to delivery (Art. a. Execution of public instrument 1163) b. Placing titles of ownership in the hands of 5. Pay for the execution and registration of the sale a lawyer. unless there is a contrary agreement c. Allowing the buyer to make use of the rights (1501) **Execution sales do not require the delivery of thing since a one year period of redemption is Article 1498. When the sale is made through a available to seller. public instrument, the execution thereof shall be equivalent to the delivery of the thing Article 1496. The ownership of the thing sold is which is the object of the contract, if from the acquired by the vendee from the moment it is deed the contrary does not appear or cannot delivered to him in any of the ways specified in clearly be inferred. articles 1497 to 1501, or in any other manner signifying an agreement that the possession is With regard to movable property, its delivery transferred from the vendor to the vendee. may also be made by the delivery of the keys of the place or depository where it is stored or Article 1497. The thing sold shall be kept. understood as delivered, when it is placed in the control and possession of the vendee. Requirements: 1. Seller’s Control. Control and Possession necessary in Delivery. 2. Seller’s Control transferred to buyer. 3. Intention to deliver for ownership. within the time fixed in the contract, or, if no time has been fixed, within a reasonable time. Article 1499. The delivery of movable property may likewise be made by the mere consent or When goods are delivered to the buyer on agreement of the contracting parties, if the approval or on trial or on satisfaction, or thing sold cannot be transferred to the other similar terms, the ownership therein possession of the vendee at the time of the sale, passes to the buyer: or if the latter already had it in his possession for any other reason. (1) When he signifies his approval or acceptance to the seller or does any other act adopting the Article 1500. There may also be tradition transaction; constitutum possessorium. (2) If he does not signify his approval or acceptance to the seller, but retains the goods Different forms of Constructive Delivery - without giving notice of rejection, then if a time Constructive delivery has same legal effect as has been fixed for the return of the goods, on actual or physical delivery the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable 1. Traditio Longa Manu − Delivery of thing by time. What is a reasonable time is a question of mere agreement; when SELLER points to the fact. property without need of actually delivering 2. Traditio Brevi Manu − Before contract of sale, Transaction on Sale or Return. Subject to the would be buyer was already in possession of Resolutory Condition. the would be subject matter of sale (ex: as lessee) Difference with “Delivery with option to 3. Symbolic delivery − As to movables – ex: purchase”- Ownership is transferred in Sale or delivery of the keys to a car Return 4. Constitutum possessarium − When at the time of the perfection of the contract of sale, seller had Transaction on Approval or Trial/Satisfaction. possession of the subject matter in the concept of Subject to Suspensive Condition. owner and pursuant to the contract, seller Rules: continues to hold physical possession no longer in 1. Risk of loss to seller until the sale becomes the concept of an owner but as a lessee or any absolute. (Exceptions: Buyer in default; Buyer other form of possession other than in the concept agreed to bear the loss) of owner. 2. Buyer must give goods a trial except when it is evident that it cannot perform the work intended. Article 1501. With respect to incorporeal 3. Period of signifying acceptance commences to property, the provisions of the first paragraph of run only when all the parts essential for operation article 1498 shall govern. In any other case has been delivered. wherein said provisions are not applicable, the 4. A provision that a 3rd person must satisfy approval placing of the titles of ownership in the is valid but he must be in Good faith. possession of the vendee or the use by the 5. Generally the Sale and Delivery to an expert vendee of his rights, with the vendor's consent, buyer is not a sale on approval/trial. shall be understood as a delivery. Sale or Return vs. Sale on Approval Article 1502. When goods are delivered to the Basis Sale or Sale on buyer "on sale or return" to give the buyer an Return Approval option to return the goods instead of paying Condition Subject to Subject to the price, the ownership passes to the buyer on Resolutory suspensive delivery, but he may revest the ownership in condition condition the seller by returning or tendering the goods Premise It depends It depends Art. 1480 – if the thing is sold after perfection of the upon the will upon the contract but before delivery, buyer bears the risk of the buyer suitability, (exception to the rule of Res Perit Domino) quality or 1505. SALE BY A PERSON NOT THE OWNER character of “No one can give what he has not” the goods 1. When the owner of the goods precluded from Transfer of Ownership Ownership denying the seller’s authority to sell ownership immediately does not 2. The law enables the apparent owner to dispose passes to the immediately the goods buyer on pass to the 3. Where the sale sanctioned by statutory or delivery buyer. It judicial authority. passes only Possession of immovable property acquired upon approval in good faith is equal to title or satisfaction Ex. The sheriff order X to sell the stolen car of the buyer of B even the former acquires it in good duly faith. (no warranty) manifested 4. Where the sale made at merchant’s store, fairs, after trial or markets. Revesting of Ownership is There is no 5. Where the seller has a voidable title, which has ownership in revested in revesting of not been avoided the owner the seller if ownership 6. Where the seller subsequently acquires title the buyer so because it is Ex. When person conveys property at the decides retained by time he is not the owner, subsequent the seller until acquisition will validate the such the sale conveyance. becomes 1506. SALE BY ONE HAVING VOIDABLE TITLE absolute Requisites for acquisition good title (when seller has Risk of loss or The risk rests The risk voidable title) deterioration on the buyer remains in the 1. Before the title of the seller is avoided before the seller while 2. The buyer acquires it in good faith and for value revestment of the goods are 3. The buyer has no notice of the seller’s defect of ownership on trial title 1521. PLACE OF DELIVER OF GOODS SOLD Rules: 1. When there is express or implied agreement, place of delivery is agreed upon 1504. RISK OF LOSS GENERALLY ATTENDS 2. If no agreement, place is determined by the TITLE usage of trade Risk borne by the owner of the thing at time of loss 3. Place is at the seller’s place of business 1. When the seller reserves his right to secure 4. Place is at the seller’s residence payment, the risk of loss will be borne by the 5. In case of specific goods, place of delivery is the buyer place where the contract is contracted. 2. When there is delay in delivery, risk of loss will TIME OF DELIVERY OF GOODS SOLD be to the party at fault. 1. If no time is fixed by the contract the seller will RISK OF LOSS BY FORTUITOUS EVENT AFTER be bound to deliver the goods within PERFECTION BUT BEFORE DELIVERY reasonable hours 2. If the contract provides a fixed time for purchamce 3. Where the contract does not specify the time Buyer cannot make the time is of the SELLER’S DUTY AFTER DELIVERY TO CARRIER essence 1. To enter on behalf of the buyer into such DELIVERY OF GOODS IN POSSESSION OF A contract reasonable under circumstances THIRD PERSON Seller will enter in the contract with the Bailee will become the agent of the buyer carrier on behalf of the buyer To affect third person, the person holding the 2. To give notice to the buyer regarding necessity goods must acknowledge to be the bailee for to insure goods the buyer If the seller failed to do so, the risk of HOUR OF DELIVERY OF THE GOODS loss will be borne by him The demand or tender of deliver to be effectual, DEFINITION OF TRADE must be made at a reasonable hour COD – collect on delivery Reasonable hour is a question of fact FOB – free on board Is the performance or payment is readily CIF – cost insurance freight acceptable, reasonable hours can be anytime FAS – free alongside vessel the seller could find the buyer Ex Factory, Ex Warehouse – point of origin If it in bulk and need special care, an hour Ex Dock – named point of importation might be unreasonable 1524. DELIVERY SIMULTANEOUS WITH DUTY OF THE SELLER TO PUT GOODS IN PAYMENT DELIVERABLE CONDITION As a general rule the obligation in the contract arises Unless otherwise agreed upon, it is the seller’s duty upon perfection to pay for the expenses to make the goods in its WHEN DELIVERY MUST BE MADE BEFORE deliverable condition PAYMENT OF PRICE 1522. DELIVERY OF GOODS LESS THAN The thing shall not be delivered unless the price is QUANTITY CONTRACTED paid, except when there is a fixed period set for the When the seller delivers the goods less than the payment (in this case the seller is bound to deliver quantity contracted as a full performance, the buyer the goods) may: 1525. MEANING OF UNPAID SELLER 1. Reject the goods Unpaid seller is the one who has not been paid the 2. Accept the goods and pay the price price or tendered the whole price or received a Contract price if he knew that no more negotiable instrument that is dishonored. were to be delivered WHERE WHOLE OF THE PRICE HAS NOT BEEN Fair value if he does not know that seller PAID is going to be guilty of breach of 1. Tender of payment of buyer – this will destroy contract the seller’s right of lien DELIVERY OF GOODS MORE THAN QUANTITY 2. Payment of part of price – seller still has right CONTRACTED of lien Buyer may accept the quantity contracted and reject 3. Payment by negotiable instrument – will only the excess. If he accepts, he will pay the price produce payment if they have been cashed or DELIVERY OF GOODS MIXED WITH THERS impaired by the fault of the seller Same as the goods delivered for more than quantity 1526. SPECIAL REMEDIED OF UNPAID SELLER EFFECT OF INDIVISIBLE SUBJECT MATTER 1. Right of lien (possessory lien) The buyer may reject the whole goods delivered 2. In case of insolvency of the buyer, unpaid seller 1523. DELIVER TO CARRIER ON BEHALF OF has the right of stopping the goods in transit THE BUYER 3. Right to resale General rule: delivery to the carrier constitutes 4. Right to rescind delivery to the buyer 1527. WHEN UNPAID SELLER’S POSSESORY Exceptions: when the seller retains the ownership of LIEN MAY BE EXERCISED the goods to secure payment or the parties did not 1. Sales without stipulation as to credit intend to deliver the goods through a carrier 2. Expiration of credit terms 3. Insolvency of the buyer does not want to pay the freight), right of stoppage 1528. LIEN NOT GENERALLY LOST BY PART still continue DELIVERY DELIVERY TO A SHIP ETC., CHARTER OR Seller still has the right of lien to the remaining OWNED BY THE BUYER undelivered goods. However, if the part delivery is a 1. Chartered by the buyer – does not make symbolical tradition of a whole, right of lien is lost. delivery to the buyer 1529. WHEN UNPAID SELLER LOSSES 2. Owned by the buyer – constitutes delivery to POSSESSORY LIEN the buyer 1. Delivery to agent or bailee EFFECT OF PARTIAL DELIVERY 2. Possession by the buyer or his agent Right of stoppage still exists with respect to the 3. Waiver of lien remainder goods 1530. RIGHT OF SELLER TO STOP GOODS IN 1532. WAYS OF EXERCISING THE RIGHT TO TRANSIT STOP Requisites for the exercise of right of stoppage in 1. By taking actual possession of the goods transit 2. Giving notice of his claims to the carrier or 1. The seller must be unpaid bailee 2. The buyer must be insolvent EFFECT OF OUTSTANDING BILL OF LADING 3. The goods must be in transit If goods are covered by the negotiable document of 4. Seller must actually take possession of the title. Such document must be first surrendered for goods or give notice of his claims cancellation 5. Seller must surrender the negotiable document 1533. WHEN RESALE IS ALLOWABLE of title The unpaid seller must either have the right of lien or 6. The seller must bear the expenses of the right to stop goods in transit and the any of the delivery following cases: 1531. WHEN GOODS IN TRANSIT 1. Where the goods are perishable in nature 1. After the delivery to the carrier or bailee and 2. Where the right of resell is expressly reserved, before the buyer or agent takes the delivery in case the buyer make default 2. Goods are rejected by the buyer, carrier or 3. Where the buyer delays in the payment for bailee continuous to be in possession unreasonable time EFFECT OF RESALE WHEN GOODS CONSIDERED NO LONGER IN Seller not liable if he made profit from resale but TRANSIT seller has the right to sue the original buyer in case 1. After the delivery to the buyer or agent the consideration of resale is less than the original 2. If the buyer obtains the possession of the price (new buyer has a better right than the original goods at the point before the destination buyer) originally fixed NOTICE OF RESALE NOT ESSENTIAL 3. If the carrier or bailee acknowledge to hold the Notice of resale is relevant to determine that the goods on behalf of the buyer buyer delay in the payment for unreasonable time 4. If the carrier of bailee wrongfully refuses to and in regard to the fairness of sale (perishable deliver goods and expressly reserved right to resale need not ATTORNMENT BY THE BAILEE to give notice) Acknowledgement by the bailee that he holds the 1534. WHEN THE SELLER MAY RESCIND goods on behalf of the buyer The unpaid seller must either have the right of lien or EFFECT OF REFUSAL OF CARRIER TO ATTORN right to stop goods in transit and either of the two: OR DELIVER THE GOODS 1. Where the right to rescind is expressly reserved Bailee or carrier cannot wrongfully refuse to deliver 2. Where the buyer delays in the payment for the goods just to enlarge the seller’s right to stop the unreasonable time goods. If the refusal to deliver is rightful, (ex. Buyer EFFECT OF RESCISSION Seller is not liable to the buyer and retains ownership 2. If the thing is lost because of the seller, he shall (notice is not necessary to rescind unlike in the right pay damages to resale, failure to give notice is relevant to 3. When the thing deteriorates without the determine the unreasonable time) seller’s fault, loss is bear by the buyer 1535. EFFECT OF SALES OF GOODS SUBJECT 4. If the deterioration is caused by the seller, the TO LIEN OR STOPPAGE IN TRANSIT buyer may rescind or fulfill the obligation plus 1. Where the goods are not covered by damages in both case negotiable document of title 5. If the thing is improved by nature, the buyer The seller can give no larger right than will get the benefit he has 6. If it is improved at the expense of the seller, 2. Where goods covered by negotiable document seller will have the right of usufructuary with of title respect to the improvement Seller’s lien cannot prevail against the 1539. SALE OF PROPERTY BY UNIT OF right of the purchaser in value and in MEASURE OR NUMBER good faith 1. Entire area stated in the contract must be 1536. THE VENDOR IS NOT BOUND TO delivered WITHHOLD DELIVERY IN SALE ON CREDIT 2. Where the entire area could not be delivered Seller is not bound to deliver if the buyer has not paid The buyer may rescind the contract or, the price except there is a fixed period for payment. Enforce the contract with corresponding The buyer will lose the right to make use of the decrease in its price period: WHEN THE VENDEE ENTITLED TO RESCIND 1. When after the obligation is perfected the SALE OF REALTY buyer becomes insolvent 1. If the lack of area is at least 1/10 than the stated 2. When he does not furnish to the seller the in the contract guarantees and securities promised 2. If the deficiency in the quality specified in the 3. When the security and guarantee impaired or contract exceeds 1/10 of the price agreed upon deteriorated because of the buyer’s fault and 3. If the buyer would not have bought the when in case of fortuitous event, he must give immovable had he known of its smaller area of new one with equal satisfactory inferior quality Irrespective of the extent. 4. When the seller violates any undertaking 1540. WHERE IMMOVABLE OF GREATER AREA 5. When the buyer attempts to abscond OR NUMBER 1537. CONDITION OF THING TO BE DELIVERED The buyer may accept the part stated in the contract The condition of the goods must be in which they and reject the rest or accept the whole immovable were upon the perfection of the contract and pay for the price at contract rate (buyer cannot Accessions – fruits of a thing; additions to withdraw the contract) or improvements upon a thing (ex. Young 1541. RULES IN ARTICLE 1539 AND 1540 of animals, trees on a land) APPLICABLE TO JUDICIAL SALES Accessories – are anything attached to the The provisions are applicable to both private and principal thing for its completions, judicial sales when the immovable sold is lacking in ornament or better use area or inferior quality RIGHT OF VENDEE TO THE FRUITS 1542. SALE OF REAL ESTATE MADE FOR A Buyer has the right to fruits of the thing arises from LUMP SUM the time the obligation to deliver (perfection) arises. 1. Mistake in area stated in contract immaterial 1538. RULES IN CASE OF LOSS, Number or measure is not the cause of the DETERIORATION, OR IMPROVEMENT OF THE contract THING BEFORE DELIVERY. 2. Where are or number stated together with 1. If the thing lost without the fault of the seller, boundaries obligation extinguished Failure of the seller to deliver the immovable within the boundaries, buyer may reduce the price in proportion to the Warranty is any representation made by the seller deficiency with respect to its character, quality or ownership, 1543. PRESCRIPTION OF ACTIONS which induce the buyer to purchase the thing relying Actions based on art. 1539 and 1542 for either on the representation. rescission or proportionate deduction must be KINDS OF WARRANTY brought within six (6) months counted from the day Warranties can be express or implied of delivery 1544. DOUBLE SALE APPLICABLE EXPRESSION OF OPINION 1. When two or more sales is valid A mere expression of opinion, no matter how 2. Two or more sales pertains to the same positively asserted, does not import a warranty property unless the seller is an expert and the opinion was 3. Buyer represents conflicting interest relied upon by the buyer. 4. Must be same seller “Usual exaggerations in trade when the Cannot be invoked if sale was made by two (2) other party had an opportunity to know the different person, one of them not being the owner of facts, are not in themselves fraudulent” the property “Misrepresentation made in good faith is RULES AS TO PREFERENCE OF OWNERSHIP IN not fraudulent but may constitute error” CASE OF DOUBLE SALE 1547. IMPLIED WARRANTY Conflicting rights of buyer shall be resolved in 1. Implied warranty as to seller’s title accordance with the following rules: Guarantees that the seller has the right to 1. If the property is movable the ownership shall sell the thing be acquired by the vendee who first takes 2. Implied warranty against hidden defects or possession In good faith unknown encumbrances 2. If the property is immovable Guarantees that the thing sold is free from Buyer who first register in the Registry of and hidden faults or defect Deeds 3. Implied warranty as to fitness or In absence of registration, the buyer who is merchantability in possession Guarantees that the thing sold is In absence of both registration and reasonably fit for the known particular possession, the buyer with the oldest title purpose of the buyer (deed of absolute sale), first who bought WHEN IMPLIED WARRANTY NOT APPLICABLE the property in good faith 1. “As is and where is sale” ----------------------------------------------------- 2. Sale of secondhand articles SECTION 3. – CONDITIONS AND WARRANTIES 3. Sales by virtue of authority in fact or law Sold by a sheriff, auctioneer, mortgagee, 1545. MEANING OF CONDITION pledgee etc. they do not warrant the title of A condition means an uncertain event or the person who supposed to own the thing contingency, happening of which gives rise or sold extinguished the obligation of the contract Caveat emptor (buyer beware) – applies to execution EFFECT OF NON-FULFILLMENT OF CONDITION sales since sheriff does not warrant the title to real 1. If the condition is not fulfilled such parties may: property sold by him Refuse to proceed with the contract ------------------------------------------------------ Proceed with the contract, waiving the SUBSECTION 1. – WARRANTY IN CASE OF performance of the condition EVICTION 2. If the condition is in the nature of promise that should happen, non-performance is treated as 1548. MEANING OF EVICTION breach of warranty Eviction may be defined as the judicial process where 1546. MEANING OF WARRANTY the buyer is deprived of the whole or part of the thing he purchased by virtue of final judgement Judgement debtor is responsible for eviction and based on the right prior to the sale. hidden defect unless decreed in the judgement ESSENTIAL ELEMENTS OF THE WARRANTY AGAINST EVICTION 1553. STIPULATION WAIVING WARRANTY 1. The vendee is deprived in whole or in part of 1. Effect of vendor’s bad faith – vendor knows the thing purchased beforehand that there is the presence of the 2. Deprived by virtue of final judgement fact giving rise to eviction, hence cannot be 3. Judgement is based on the right prior to the exempted from warranty against eviction sale 2. Effect of vendor’s bad faith – Buyer entered 4. Vendor was summoned in the suit for eviction into the sale with the assumption of the risk of 5. There is no waiver on the part of the vendee eviction, therefor he is not entitled to warranty TYPES OF EVICTION against eviction nor recover damages. 1. Total eviction – when the vendee is deprived 1554. KINDS OF WAIVER OF EVICTION for the whole thing purchased This article pertains to total eviction: 2. Partial eviction 1. Consiente – waiver is voluntarily made by the The vendee deprived of part if the thing buyer without the knowledge and assumption purchased of the risks of evictions; and Deprived of some items jointly sold with 2. Intencionada – waiver is made by the buyer other items with knowledge of the risk of eviction and If immovable sold should be encumbered assumption of its consequences with non-apparent or servitude (e.g. right EFFECT OF WAIVER BY VENDEE of way) not mentioned. It is presumed that 1. Consiente – the vendor shall only pay for the the vendee would not have acquired it had value the thing sold had at the time of eviction he been aware of. 2. Intencionada – the vendor is exempted from WARRANTY AGAINST EVICTION REFERS TO the obligation to answer for eviction provided TRESPASS IN LAW he did not act in bad faith Trespass in fact does not give rise to the doctrine of 1555. RIGHTS AND LIBILITIES IN CASE OF eviction. EVICTION OCCURS Disturbance in law – requires the person to go to 1. Return the value of the thing – including the court claiming the thing sold. increase in value or recreational expenses VENDOR’S LIABILITY WAIVABLE made by the buyer Warranty is not an essential element of a contract of 2. Income or fruits of the thing – vendee is liable to sale and may be waive. However any stipulation the party who won the suit for the income or exempting the vendor from the obligation to answer fruits received if decreed by the court. for eviction shall be void if acted on bad faith 3. Cost of suit – buyer can recover the expenses of 1549. VENDEE HAS NO DUTY TO APPEAL litigation resulting to eviction, including the FROM JUDGEMENT cost of action bought against the vendor to Whatever the finality, the requirement of the law is enforce warranty. deemed satisfied 4. Expenses of the contract – in the absence of 1550. EFFECTS OF PRESCRIPTION stipulation, seller should borne the expenses of 1. Completed before sale – the vendee may lose execution and registration. Buyer shall have to a third person having the ownership by the right to demand the same from the seller prescription (30 years). Vendor is liable for 5. Damage and interest – buyer is entitled to breach in case of eviction demand damages if the sale was made in bad 2. Completed after sale – The vendor is not liable faith. If good faith is presumed, buyer is not for breach in case of eviction because the buyer entitled for damages. can interrupt the prescriptive period by bringing the action in court 1552. LIABILITY OF A JUDGEMENT DEBTOR 1556. ALTERNATIVE RIGHTS OF VENDEE IN WHEN ACTION MUST BE BROUGHT CASE OF PARTIAL EVICTION The action for rescission or damages must be If partial eviction occurs, the buyer has the option to brought within one (1) year from the execution of enforce the seller’s liability for eviction or to demand deed of sale. If period elapse, buyer may bring the rescission of the contract action for damages one (1) year from the date of 1. When the buyer is evicted partially but the part discovery of the non-apparent burden or servitude. deprived is of such importance to the whole ---------------------------------------------------- that he would not have bought the thing SUBSECTION 2. – WARRANTY AGAINST HIDDEN without DEFECTS 2. When two (2) or more things sold together jointly, and the vendee would have not 1561. REQUISITES FOR WARRANTY AGAINST purchased one without the other. HIDDEN DEFECTS These remedies cannot be used in total eviction Requisites for the existence of hidden defects: 1557. FINAL JUDGEMENT OF EVICTION 1. The defect must be important or serious ESSENTIAL 2. It must be hidden Two (2) essential elements for the enforcement of 3. It must exist at the time of sale warranty in case of eviction namely: 4. Buyer must give notice of the defect to the 1. Deprivation in whole or in part of the thing sold seller within reasonable time 2. Existence of a final judgement WHEN DEFECT IMPORTANT 1558. FORMAL SUMMONS TO VENDOR Defect is important if: ESSENTIAL 1. It renders the thing unfit for its intended use It is required that the vendor should be summoned in 2. The vendee would not have acquired it had he the suit for eviction for the seller to be legally liable been aware thereof 1559. VENDOR TO BE MADE CO-DEFENDANT WHEN DEFECT HIDDEN The buyer would call the seller to defend the action There is no warranty if the defect is visible (patent). which has been instituted against him (buyer) to However, seller cannot be enforced with such deprive him of the property purchased. warranty event the defect is hidden, if the buyer is 1560. RIGHTS OF VENDEE WHERE IMMOVABLE an expert, by reason of his trade or profession, SOLD ECUMBERED WITH NON-APPARENT should have known it. BURDEN. 1562. IMPLIED WARRANTIES OF QUALITY Buyer can rescind or ask for indemnity if the thing Purpose of holding the seller on his implied warranty sold is encumbered with any non-apparent burden or is to promote high standard in business servitude not mentioned in the agreement 1. Implied warranty of fitness – there is no implied Servitude (easement) – is an encumbrance imposed warranty as to quality or fitness for any upon an immovable for the benefit of another particular purpose of goods except: immovable belonging to different owner (e.g. right of The buyer, expressly or by implication, way) manifest to the seller the particular purpose WHEN RIGHTS OF VENDEE CANNOT BE for which the goods are acquired EXERCISED The buyer relies upon the seller’s skill or Rights granted in 1560 cannot be exercised in the judgement following cases: 2. Implied warranty of merchantability 1. The burden or servitude is apparent WARRANTY OF FITNESS AND WARRANTY OF 2. If the non-apparent burden or servitude is MERCHANTABILITY DISTINGUISHED registered and, Warranty of merchantability – is a warranty that 3. If the vendee had knowledge of the goods are reasonably fit for the general purpose for encumbrance whether it is registered or not which they are sold. The registration of the non-apparent burden or Warranty of fitness – is a warranty that goods are servitude in Registry of Deeds operates as a suitable for the special purpose of the buyer constructive notice to the vendee. 1563. SALES UNDER PATENT OR TRADE NAME Art. 1563 limits the application of art. 1562, buyer proportionate reduction of the price (accion quanti makes known to the seller the particular purpose for minoris) with right of damages in either case. which the goods are desired. 1568. EFFECT OF LOSS OF THING SOLD ON 1. By exactly defining what he wants, the buyer ACCOUNT OF HIDDEN DEFECTS has relied on his own judgement (not relying on 1. Vendor aware of hidden defect – the seller will the seller) bear the loss if he acted on bad faith. The buyer 2. Art. 1563 provides an exception in case of “a has the right to recover: stipulation to the contrary” There is still implied a. The price paid warranty of fitness for a particular purpose b. The expense of the contract when the buyer relied upon the seller’s c. Damages judgement. 2. Vendor not aware of hidden defect – seller is 1564. EFFECT OF USAGE OF TRADE obliged to return only: A warranty as to quality or fitness can be attached a. The price to usage. The usage is relied on for the purpose of b. The interest thereon showing the intention of the parties c. Expenses of the contract 1565. MERCHANTABILITY OF GOODS SOLD BY the seller is not liable for damages because he acted SAMPLE in good faith 1. Where sample not merchantable – the buyer is 1569. EFFECTS OF LOSS OF DEFECTIVE THING entitled to the goods like the sample (contract SOLD to sell by sample). The seller would have no The vendor is obliged to pay the price paid less the right to have the goods merchantable if the value of the thing at the time of its loss in case where sample is not hidden defects exist even the loss is caused by the 2. Where sample subject to latent defect – the buyer (it is the damage suffered by the buyer and at buyer only relies on seller’s skill and the same time the amount which the seller enrich judgement. The buyer is entitled to not simply himself at the expense of the buyer). If seller acted in on the goods look like sample but also the bad faith, he is also liable for damage. goods should be like what the sample 1570. WARRANTY IN JUDICIAL SALES represents. In a judicial sale, it is not the sheriff who sell but the 1566. EFFECT OF IGNORANCE OF VENDOR OF judgement debtor. The provisions regarding the HIDDEN DEFECTS warranty are also applicable to judicial sales. Ignorance of vendor does not relieve him from However, since he is forced to sell, there can be no liability to the vendee. In other words, good faith liability for damages cannot be availed as a defense of the seller. 1571. LIMITATION OF ACTION However, parties may include in their contract, Action for rescission of the contract or reduction of provided that the vendor acted in good faith, that he purchase price prescribes six (6) months from the is unaware of the existence of the hidden fault or date of delivery. defect. 1572. SALE OF TWO OR MORE ANIMALS DOCTRINE OF “CAVEAT VENDITOR” AND TOGETHER “CAVEAT EMPTOR” If two or more animals were sold at the same time, Caveat venditor – the vendor is liable to the vendee and the defect is in one or some of them, (not all) the of any hidden defects in the thing sold, even though general rule is that the defect will not affect the he was not aware thereof. others without it. Except when the vendee would However, with respect to third person, caveat have not purchased the sound one without the emptor still applies. defective ones. 1567. ALTERNATIVE REMEDIES OF THE BUYER 1573. SALE OF TWO OR MORE THINGS TO ENFORCE WARRANTY TOGETHER In case of warranty against hidden defect, the buyer Same with the preceding article has the option either: (1) to withdraw from the contract (accion redhibitoria), or (2) demand 1574. NO WARRATNY AGAINST HIDDEN minoris). The action must be brought within 40 days DEFFECTS ON SALE OF ANIMALS AT FAIRS OR from the date of delivery of the animal to the buyer. AT PUBLIC AUCTION OR AS CONDEMNED 1581. FORM OF SALE OF LARGGE CATTLE 1575. WHEN SALE OF ANIMALS VOID GOVERNED BY SPECIAL LAW Animals which cannot be the object of commerce – The special law governing the sale of large cattle is animals suffering from contagious disease and those Act No. 4117. This provides the registration, found unfit for the use or service stated. This kind of branding, conveyance and slaughter of large cattle sale is void and against public interest (no rescission P.D. No. 533 (anti-cattle rustling law of 1974) No or reduction in price) person natural or juridical shall engage in the 1576. WHAT CONSTITUTES REDHIBITORY business of buy and sell of large cattle without first DEFECT OF ANIMALS securing a permit for the said purpose from the Redhibitory defect – defect in the goods sold in Provincial Commander which the seller is bound to warrant (nullification of ---------------------------------------------------- sale because of defect) OBLIGATIONS OF THE VENDEE To be considered redhibitory: Defect is hidden 1582. PRINCIPAL OBLIGATIONS OF VENDEE Must be of such nature that expert 1. Accept deliver knowledge is not sufficient to discover it 2. Pay the price of the thing sold If the veterinarian failed to discover it through 3. To bear expenses for the execution and ignorance or bad faith, he shall be liable registration of sale and putting the goods in 1577. LIMITATION OF ACTION IN SALE OF deliverable condition if such is stipulated ANIMALS Redhibitory actions based on defect of animals shall be barred unless bought within 40 days from the date of delivery to the buyer PERTINENT RULES 1. In contract of sale, seller is not bound to deliver 1578. IF THE ANIMAL SHOULD DIE WITHIN the goods is buyer has not yet paid the price THREE (3) DAYS AFTER ITS PURCHASE, THE (general rule) VENDOR SHALL BE LIABLE IF THE DESEASE, 2. Is stipulated, buyer will pay the price WHICH CAUSE DEATH EXISTED AT THE TIME simultaneous delivery OF CONTRACT. 3. If no stipulation as to time and place of Three days from the date of sale (not date payment and delivery, buyer is bound to pay at of deliver) the time and place of delivery If the loss is caused by fortuitous or with the 4. When no stipulation as to place of delivery, it fault of the buyer, article 1567 will apply shall be made wherever the thing is at the time 1579. LIABILITY OF BUYER IN CASE OF SALE OF the contract is perfected ANIMALS RESCINDED 5. If there is fixed period, the buyer is bound to If the sale is rescinded, the vendee must return the pay even before the animal in the condition in which it was sold and 1583. RULES GOVERNING DELIVERY IN delivered. The vendee will be responsible for the INSTALLMENTS injury due to his negligence not arising from 1. General rule: Buyer is not bound to receive redhibitory fault or defect. goods in installments. He is entitled to the 1580. ALTERNATIVE REMEDIES OF VENDEE IN delivery of all the goods at the same time SALE OF ANIMALS Similarly, buyer have no right to pay the price The buyer has the option to either (1) a redhibitory in installment (by agreement, goods may be action (accion redhibitoria) or, demand delivered on installment and price may be paid proportionate reduction of the price (accion quanti on installment) 2. Where separate price has been fixed for each installment – delivery of goods is in installment and payment is separate and agreed upon for REJECTION OF GOODS each installment Where the goods inspected are proved to be Where breach affects whole contract – if unsuitable or fail to conform to the contract, the the seller makes defective delivery or, buyer may refuse to accept them buyer failed to accept or make payment 1. Buyer is not bound to return the goods to the and the breach is so material to affect the seller, it is sufficient if he notified the seller that contract as a whole he refuses to accept Where breach divisible – where breach is 2. Must be within reasonable time unless a definite severable, it will give rise to a claim for period fixed compensation for particular breach not the 3. receipt of goods under a contract of sale whole contract is broken constitutes acceptance if the rejection was made 3. Where separate price not fixed for each beyond reasonable time installment (single price for all installment 1585. WHAT CONSTITUTES ACCEPTANCE goods) Can be manifested expressly or impliedly If the seller fails to deliver an installment, 1. Express acceptance – when the buyer, after the the buyer can choose between fulfillment delivery of the goods, tell the seller, verbally or or rescission both with damages. in writing that he accepted them Same remedy of the seller if the buyer fails 2. Implied acceptance to pay the price within period agreed upon When the buyer sells or attempt to sell the Remedy of rescission is not available to slight or goods casual breaches of the contract. It defect must be When the buyer uses the goods or, substantial (depending on the circumstances) Makes alteration in a manner proper only 1584. BUYER’S RIGHT TO EXAMIN THE GOODS for an owner Acceptance is assent to become owner of specific Rejection made beyond reasonable time goods when delivery of them is offered to the buyer. and goods are retained in the buyer’ 1. Right of inspection – Buyer is entitled to s possession. inspect or examine whether it conforms to Retention of the goods is a strong evidence that the contract if not the buyer may reject it. buyer has accepted the goods, in some cases it can 2. Actual delivery contemplated – actual delivery also be due merely to carelessness needed to examine and inspect the goods DELIVERY AND ACCEPTANCE, SEPARATE 3. Goods delivered C.O.D./ not C.O.D. ACTS Buyer has the right to examine the goods Acceptance of the goods is not a condition to before paying. The right to examine is a complete delivery condition precedent to paying the price There may be actual receipt without any after the ownership has passed acceptance, vice versa. RIGHT OF EXAMINATION NOT ABSOLUTE 1586. ACCEPTANCE NOT A BAR TO ACTION The right to examine the goods should be FOR DAMAGES done within reasonable time so that the Acceptance of the goods by the buyer does seller will not suffer from undue delay or not discharge the seller from liability in damages or prejudice other legal remedy (rescission) due to breach of If the seller refused to allow the opportunity promise or warranty. of the buyer to inspect whether the goods are NOTICE OF THE SELLER OF BREACH OF in conformity of the contract, the buyer may PROMISE OR WARRANTY rescind the contract and recover the price 1. Necessity – in order to hold the seller for paid breach of promise or warranty, buyer must give WAIVER OF RIGHT TO EXAMINE BEFORE notice to the seller within reasonable time PAYMENT 2. Purpose – to protect the seller against the Right of inspection may be given up by the buyer by belated claims which prevent him from making stipulation (either expressly or impliedly) prompt investigation to determine the cause 3. Vendee guilty of default - Buyer is liable to pay and extent of his liability for the interest from the date the of judicial or 1587. WHERE BUYER’S REFUSAL TO ACCEPT extrajudicial demand made by the seller. JUSTIFIED 1590. RIGHT OF VENDEE TO SUSPEND 1. Duty of buyer to take care of goods without PAYMENT OF PRICE obligation to return – when the buyer rightfully Buyer may suspend the payment of price only in rejected the goods delivered to him, he is in these 2 cases: position of a bailee. Therefore, he has the 1. If he is disturbed in the possession or obligation to take reasonable care of the ownership of the thing bought goods. Accordingly, the buyer has no 2. If he has a well-grounded fear that his obligation to return the goods to the seller possession or ownership would be disturbed by 2. Duty of the seller to take delivery of the goods a vindicatory action or foreclosure of mortgage – after receiving notice from the buyer, the Under 1590, buyer have no cause of action for seller must have the burden of taking delivery rescission before final judgement. (for the benefit of of the said goods the seller who might be a victim of collusion) 3. Seller’s risk of loss – while the goods are in When disturbance is caused by non-apparent possession of the buyer, seller bears the risk of servitude, the action is rescission and not loss, unless the buyer voluntarily constitutes suspension. himself as a depositary WHEN VENDEE CANNOT SUSPEND PAYMENT 4. Right of the buyer to resell goods – application OF PRICE of Art. 1533, where the seller resale the goods Even there is disturbance in the possession of the when buyer is in default. buyer 1588. EFFECTS OF BUYER’S WRONGFUL 1. If the vendor gives security for the return of the REFUSAL TO ACCEPT price in a proper case General rule: delivery to the carrier is deemed to be a 2. If it has been stipulated that notwithstanding delivery of the goods to the buyer (Art. 1523) any such contingency the vendee must make Therefore, if the buyer rejected the goods payment without just cause (wrongful refusal), the buyer will 3. If the vendor has caused the disturbance or bear the risk of loss from the moment they are danger to cease placed at his disposal 4. If the disturbance is a mere act of trespass and, 1589. LIABILITY OF VENDEE FOR INTEREST 5. If the vendee has fully paid the price WHERE PAYMENT MADE AFTER DELIVERY 1591. WHEN VENDOR MAY RESCIND SALE OF In this case: the thing is already delivered but IMMOVABLE payment has not yet been made by the buyer. Buyer In this case: the immovable property was is liable to pay for the interest from the date the of delivered to the buyer but has not yet paid the price judicial or extrajudicial demand made by the seller. If the seller has a good reason to fear the loss 1. Interest expressly stipulated – the rate of the property and its price. stipulated will be followed (may be oral or Ex. The buyer has not paid the price yet, but he written). “No interest shall be due unless it has destroyed the building, pull out tress on the land and been expressly stipulated in writing” (only in cut down the forest. The buyer has shown signs of contract of loan) irresponsibility. The only remedy of the seller is to If the parties failed to fix the rate, legal rate shall be rescind the contract due. 1592. WHERE AUTOMATIC RESCISSON OF 2. Fruits or income received by vendee from the SALE OF IMMOVABLE PROPERTY STIPULATED thing sold – two conditions must exist: General rule: the seller may ask for rescission when a. The thing sold has been delivered the buyer did not pay the price agreed upon. b. It produces fruit or income Before a demand for rescission of the contract made by the seller, the buyer may still pay the price even after the expiration of the stipulated period for payment RIGHT TO RESCIND NOT ABSOLUTE Right to rescind is not absolute and the court may extend the period for payment Once a demand for rescission by suit or notarial act is made, the court may not grant the buyer a new period. WHEN ARTICLE 1592 NOT APPLICABLE 1. Sale on installment of real property in which the parties laid down the procedures to be followed in case the buyer failed to fulfill his obligation 2. Mere promise to sell (executory contract to sell) when the title remains to the seller 1953. WHERE AUTOMATIC RESCISSION OF SALE OF MOVABLE PROPERTY STIPULATED In real property: the seller must make a demand for rescission to have the contract rescind. In personal property: (not yet delivered to the buyer) if the buyer without any valid cause does not 1. Pay the price (unless credit sale) 2. Accept the delivery REASON FOR THE RULE WITH RESPECT TO MOVABLE PROPERTY the personal properties are not capable of maintaining a stable price in the market. (unlike real property)