CHAPTER 6

CONSUMMATION OF SALE
PARAS DELA CRUZ BLANQUISCO CRUZ
 OBLIGATIONS OF SELLER
1. To Preserve The Subject Matter
2. To Deliver The Subject Matter
3. To Deliver The Fruits and Accessories
4. To Warrant the Subject Matter

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 PRESERVE THE SUBJECT MATTER
Article 1163. Every person obliged to give
something is also obliged to take care of it
with the proper diligence of a good father of
a family, unless the law or the stipulation of
the parties requires another standard of
care. (1094a)

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 TO DELIVER THE SUBJECT MATTER
Article 1495. The vendor is bound to transfer
the ownership of and deliver, as well as
warrant the thing which is the object of the
sale.

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 TO DELIVER THE FRUITS AND
ACCESSORIES
Article 1164. The creditor has a right to the
fruits of the thing from the time the
obligation to deliver it arises. However, he
shall acquire no real right over it until the
same has been delivered to him. (1095)

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 TO WARRANT THE SUBJECT MATTER
Article 1495. The vendor is bound to transfer
the ownership of and deliver, as well as
warrant the thing which is the object of the
sale. (1461a)

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 TRADITION AS A CONSEQUENCE
OF A VALID SALE
Principles on Tradition

(a)Acceptance by the buyer, although an obligation on his part, is not

essential for delivery by the seller to achieve its legal effects

(b) An express intention on the matter by the parties to the sale, at the
point of delivery is not essential for tradition to produce its legal
consequences

(c) The only way to prevent the legal consequences of tradition from
coming into effect at the point of delivery is by an express reservation to
the contrary set by the parties.
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 TYPES OF DELIVERY
1. Actual Delivery
Article 1497. The thing sold shall be understood as delivered, when it
is placed in the control and possession of the vendee. (1462a)

2 . Constructive Delivery
Article 1496. The ownership of the thing sold is acquired by the
vendee from the moment it is delivered to him in any of the ways
specified in articles 1497 to 1501, or in any other manner signifying
an agreement that the possession is transferred from the vendor to
the vendee. (n)
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 CONSTRUCTIVE DELIVERY
Execution of Public Instrument
Article 1498. When the sale is made through a public instrument, the
execution thereof shall be equivalent to the delivery of the thing
which is the object of the contract, if from the deed the contrary does
not appear or cannot clearly be inferred.

With regard to movable property, its delivery may also be made by

the delivery of the keys of the place or depository where it is stored or
kept. (1463a)

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 (1) Constructive Delivery Has the Same Legal
Effect as Actual of Physical Delivery
(2) When Execution of Public Instrument Does
not Produce Effects of Delivery
-when there is stipulation to the contrary
-when at the time of the execution of the public instrument, the
subject matter was not subject to the control of the seller
(Addison Doctrine)
-when such control or ability to transfer physical possession and
enjoyment does not subsist for a reasonable length of time
after the instrument’s execution
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 SYMBOLIC DELIVERY
Article 1498. When the sale is made through a public instrument, the
execution thereof shall be equivalent to the delivery of the thing which
is the object of the contract, if from the deed the contrary does not
appear or cannot clearly be inferred.

With regard to movable property, its delivery may also be made by

the delivery of the keys of the place or depository where it is stored or
kept. (1463a)

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 CONSTITUTUM POSSESSORIUM
This mode of constructive delivery takes effect when at the time of
the perfection of the sale, the seller held possession of the subject
matter in the concept of owner, and pursuant to the contract, the
seller continues to hold physical possession thereof no longer in the
concept of an owner , but as a lessee or any other form of
possession other than the concept of owner.

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 TRADITIO BREVI MANU
This mode of constructive delivery is opposite that of the
constitutum possessorium, where before the sale , the would-be
buyer was already in possession of the would-be subject matter of
the sale, say as lessee, and pursuant to the sale, he would now hold
possession in the concept of an owner.

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 TRADITIO LONGA MANU
Article 1499. The delivery of movable property may likewise be
made by the mere consent or agreement of the contracting parties, if
the thing sold cannot be transferred to the possession of the vendee
at the time of the sale, or if the latter already had it in his possession
for any other reason. (1463a)

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 DELIVERY BY NEGOTIABLE
DOCUMENT OF TITLE
Article 1513. A person to whom a negotiable document of title has been
duly negotiated acquires thereby:
(1) Such title to the goods as the person negotiating the document to him
had or had ability to convey to a purchaser in good faith for value and also
such title to the goods as the person to whose order the goods were to be
delivered by the terms of the document had or had ability to convey to a
purchaser in good faith for value; and ………
Article 1514. A person to whom a document of title has been transferred,
but not negotiated, acquires thereby, as against the transferor, the title to
the goods, subject to the terms of any agreement with the
transferor……………
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 DELIVERY OF INCORPOREAL
PROPERTY
3 Types
1. When the sale is made through public instrument
2. By placing of the titles of ownership in the possession of the
buyer
3. The use and enjoyment of the buyers rights pertaining to the
incorporeal property, with the seller’s consent

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 DELIVERY THROUGH CARRIER
Article 1523. Where, in pursuance of a contract of sale, the seller is authorized or required
to send the goods to the buyer, delivery of the goods to a carrier, whether named by the
buyer or not, for the purpose of transmission to the buyer is deemed to be a delivery of the
goods to the buyer, except in the cases provided for in article 1503, first, second and third
paragraphs, or unless a contrary intent appears.
Unless otherwise authorized by the buyer, the seller must make such contract with the
carrier on behalf of the buyer as may be reasonable, having regard to the nature of the
goods and the other circumstances of the case. If the seller omit so to do, and the goods
are lost or damaged in course of transit, the buyer may decline to treat the delivery to the
carrier as a delivery to himself, or may hold the seller responsible in damages.
Unless otherwise agreed, where goods are sent by the seller to the buyer under
circumstances in which the seller knows or ought to know that it is usual to insure, the
seller must give such notice to the buyer as may enable him to insure them during their
transit, and, if the seller fails to do so, the goods shall be deemed to be at his risk during
such transit. (n)
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 F.A.S. SALES
Free Along Side Ship. The seller pays all charges and is subject to risk until the goods
are placed alongside the vessel. In other words, delivery of the goods alongside the
vessel completes the effect of tradition.

F.O.B. SALES
Free On Board. The seller shall bear all expenses until the goods are delivered,
depending on whether the goods are to be delivered “FOB” at the point of
shipment or at the point of destination

C.I.F. SALES
Costs, Insurance, Freight. The price fixed covers not only the costs of goods, but the
expense of freight and insurance to be paid by the seller

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 Effect and Completeness of Delivery
▪ Delivery must be made pursuant to a valid sale.
▪ Delivery must be effected when seller has ownership over the
subject matter of sale so delivered.
Delivery Must Be made Pursuant to a Valid Sale
▪ Since the tradition takes effect in the consummation stage of sale, it
presupposes that there has been a valid passage through perfection
stage that has given rise to a valid and binding sale that is capable of
performance. Consequently delivery would produce the effect of
transferring ownership to the buyer only when it is made pursuant to
valid a sale.
▪ When a sale is fictitious and void, no title over the subject matter of the
sale can be conveyed. “Nemo potest nisi quod de jure potest” – No man
can do anything except what he can do lawfully
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 Delivery must be made by Seller who has Ownership
over the subject matter
▪ Delivery would produce the effect of transferring ownership only if at
the time of delivery the seller still had ownership over the subject
matter. This stems from the principle that no man can dispose of
that which does not belong to him “Nemo dat quod non habet”
▪ The General Principle is that a seller without title cannot transfer a
better title that he has. Only the owner of the goods or one
authorized by the owner to sell can transfer title to the buyer.

To whom Delivery Must Made

▪ Deliveries must be made to the buyer or his duly authorized
representative named in the contracts, the seller is bound to
deliver in such manner only, unless the buyer specifically
designated someone to receive delivery.
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 When Buyer Refuses to Accept
▪ Since delivery of the subject matter of the sale is an obligation
on the part of the seller, the acceptance thereof by the buyer
is not a condition for the completeness of delivery. Even with
such refusal of acceptance, delivery whether actual or
constructive, will produce its legal effects.

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 Rules on Effects of Delivery for Movables:
▪ Article 1522 of the Civil Code provides the rules covering the
delivery of Goods
▪ Where the seller delivers to the buyer a quantity of good less than
what he contracted to sell
▪ Where the seller delivers to the buyer a quantity of goods larger
than what he contracted to sell
▪ Where the seller delivers to the buyer the goods contracted but
mixed with goods of a different description

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 When Goods Held by Third Party
When the goods at the time of sale are in the possession of a
third person, the seller has not fulfilled his obligation to deliver
to the buyer unless and until such third person acknowledges to
the buyer that he holds the goods on the buyer’s behalf.

Reservation of Ownership
▪ Despite actual delivery, ownership will not transfer to the buyer in case
of express reservation, such as when the parties stipulate that
ownership will not transfer until the purchase price is fully paid or until
certain condition are fulfilled.
▪ The Article 1503 of the civil code gives the following instances when
there is an implied reservation of ownership.

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 Sale by Description and/or Sample
▪ Sale by sample when small quantity is exhibited by the seller as a fair
specimen of the bulk, which is not present and there is no opportunity
to inspect or examine the same thus “to constitute a sale by sample,
it must appear that the parties treated the sample as the standard of
quality and that they contracted with reference to the sample with
the understanding that the product to be delivered would correspond
with the sample.
▪ Sale of goods by description” as one where “a seller sells things as
being of a particular kind, the buyer not knowing whether the seller’s
representation are true or false ,but relying on them as true; or as
otherwise stated, where the buyer has not seen the article sold and
relies on the description given him by the seller.

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 On Sale or Return
▪ Under Article 1502 of the civil code, when goods are delivered to the buyer” on
sale or return” to give the buyer an option to return the goods instead of paying
the price, the ownership passes to the buyer on delivery, but he may revest the
ownership in the seller by returning or tendering the goods within the time
fixed in the contract or if no time has been fixed, within a reasonable time

“Sale on Approval, Trial, Satisfaction, or acceptance

▪ On the other hand Article 1502 provides that when goods are delivered to the buyer
on approval or on trial or on satisfaction or other similar terms, the ownership therein
passes to the buyer;
▪ (i) When he signifies his approval or acceptance to the seller or does any other act
adopting the transaction
▪ (ii) If the buyer does not signify his approval or acceptance, but remains the goods
without giving notice of rejection then if a time has been fixed for the return of the
goods
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 Forms of Such Special Sales
▪ A sale to be considered and construed as a “sale or return” or a “sale
on approval” there must be a clear agreement to either of such effect,
otherwise the provisions of Article 1502 of civil code govern such
sales cannot be invoked by either party to the contract and therefore
must be in writing

Written Proof of Delivery

▪ Is generally evidence by a written acknowledgment of a person that he has actually
received the thing or the goods, as in delivery receipts under the following rules.
▪ A bill lading cannot substitute for a delivery receipt because it is a written
acknowledgement of receipt of the goods by the carrier and an agreement to
transport and deliver them at a specific place to a person name or upon his order: it
does not evidence receipt of the goods by the consignee or the person named in
the bill of lading.

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▪ A factory consignment invoice is not evidence of actual delivery
of the goods since in the invoice nothing more than a detailed
statement of the nature, quantity and cost of the thing sold, and
it not proof that the thing or goods were actually delivered to the
buyer or the consignee.
Time, Place and Expenses
▪ Article 1521 of the civil code provides
▪ Whether it is for the buyer to take possession of the goods or
of the seller to send them to the buyer is a question
depending in each case on the contract, express or implied,
between the parties.

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▪ Apart from any such contract, express or implied, or usage of trade to the
contrary, the place of delivery is the seller's place of business if he has one, and if
not his residence; but in case of a contract of sale of specific goods, which to the
knowledge of the parties when the contract or the sale was made were in some
other place, then that place is the place of delivery.
▪ Where by a contract of sale the seller is bound to send the goods to the buyer,
but no time for sending them is fixed, the seller is bound to send them within a
reasonable time.
▪ Where the goods at the time of sale are in the possession of a third person, the
seller has not fulfilled his obligation to deliver to the buyer unless and until such
third person acknowledges to the buyer that he holds the goods on the buyer's
behalf.
▪ Demand or tender of delivery may be treated as ineffectual unless made at a
reasonable hour. What is a reasonable hour is a question of fact.
▪ Unless otherwise agreed, the expenses of and incidental to putting the goods
into a deliverable state must be borne by the seller.
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 DOUBLE SALES
Article 1544. If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person who may
have first taken possession thereof in good faith, if it should be
movable property.
Should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the
Registry of Property.
Should there be no inscription, the ownership shall pertain to the
person who in good faith was first in the possession; and, in the
absence thereof, to the person who presents the oldest title, provided
there is good faith.
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 Article 1544 of the Civil Code provides that if the same thing
should have been sold by the same vendor to different
vendees, the ownership shall be awarded by the courts under
the following rules:

(1) If the property sold is movable, the ownership

shall be acquired by the vendee who first takes
possession in good faith;

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 (2) If the property sold is immovable, the ownership
shall belong, in the order hereunder stated, to:

(a) The vendee who first registers the sale in

good faith in the Registry of Property (Registry of
Deeds)
(b) In the absence of inscription, the vendee
who first takes possession in good faith; and
(c) In the absence of both inscription and
possession, the vendee who presents the oldest
title (who first bought the property) in good faith.
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 TWO DIVERGENT SYSTEMS
WHEN IT COMES TO LAND
1) The case for REGISTERED LAND
(which is covered by the Torrens System)

2) The case for UNREGISTERED LAND

(which is not covered by the Torrens System)

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 1) The case for REGISTERED LAND
- Registration under Torrens System was governed
by:
 Act No. 496 – The Public Land Act
 PD No. 1529 – The Property Registration Decree

Primacy of Torrens System of Registration – The

rules on double sales under Art. 1544 do not overcome
the priority rules provided under the Property
Registration Decree (P.D. 1459), such as:
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 (a) When two different titles are issued over the same
registered land, the buyer who claims under a title
that was first issued shall be preferred. (Liao v. CA,
323 SCRA 430 (2000);

(b) Invoking the rules on double sales and “priority in

time” under Art. 1544 would be misplaced by a first
buyer who bought the land not within the Torrens
system but under Act No. 3344, as against the second
buyer who bought the same property when it was
already registered under the Torrens system, because:
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 • of the “well-known rule in this jurisdiction that persons
dealing with registered land have the legal right to rely on
the fact of the Torrens Certificate of Title and to dispense
with the need to inquire further, except when the party
concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautious man
to make such inquiry;” and
• the Torrens system rule that formal registration proceedings
undertaken on the property and the subsequent issuance
of a title over the land had under the Torrens system had
the legal effect of cleansing title on the property of all liens
and claims which were not annotated therein. (Naawan
Community Rural Bank, Inc. v. CA, 395 SCRA 43 (2003)
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 This ruling was reiterated in Abrigo vs De Vera –
where it emphasized that the legal priority of
registration of sale under PD No 1529 cannot be
overcome by an earlier registration under Act No.
3344 which is not an effective registration.

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 2) The case for UNREGISTERED LAND
A. The second and third rules on double sales under
Article 1544 of Civil Code have no application to
unregistered land unless they undermine specific rules and
legislations that have a higher hierarchical enforcement
value such as the “without prejudice to a better right”
To illustrate, in both Lichauco vs Berenguer and Hanopol
vs Pilapil, the Supreme Court defined the buyer with a
“better right” as more than just having in his favor an
earlier deed of sale, but rather a mode by which ownership
is directly affected, like acquisitive prescription or when
one who has taken possession of the property bought
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either by actual or constructive delivery.
 B. Another situation covers the sale of unregistered
land under a public auction sale, where rules under Article
1544 cannot overcome the particular provisions of the
Rules of Court. To illustrate, in Carumba vs Court of Appeals,
Section 33, Rule 39 of the 1997 Rules of Civil Procedure
providing that the purchaser at public auction “shall be
substituted to and acquire all the rights, title, interest and
claim of the judgment obligor to the property as of the time
of the levy” overrides the provision of Article 1544.

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 GLOBAL RULES ON
DOUBLE SALES
1) Highest Priority:
Registration in Good Faith under P.D. No. 1529
2) Second Priority:
Principle Applicable to Buyer at Auction Sale under the
Rules of Court
3) Third Priority:
Article 1544 Rules on Double Sales
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 ESSENTIAL ELEMENTS FOR
APPLICABILITY OF ARTICLE 1544
A. The two (or more) sales transactions must constitute valid
sales;
B. The two (or more) sales transactions must pertain to exactly
the same subject matter;
C. The two (or more) buyers at odds over the rightful
ownership of the subject matter must each represent
conflicting interests; and
D. The two (or more) at odds over the rightful ownership of the
subject matter must each have bought from the very same
40 seller.
 E. Article 1544 Is Not a Contest Between Two
Protagonists Running the Same Race
Buyer 1’s prior purchase of the land was made in good faith.
Buyer 1’s good faith subsisted and continued to exist when she
recorded her adverse claim prior to the registration of Buyer 2’s
deed of sale. Nor did Buyer 1’s good faith cease when she found
out earlier of the subsequent sale to Buyer 2. Buyer 1’s recording
of the adverse claim should be deemed to have been done in good
faith and should emphasize Buyer 2’s bad faith when she
registered her deed of sale thereafter. Carbonell v. Court of Appeals
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 The governing principle here is prius tempore, potior jure
(first in time, stronger in right)

This is the price exacted by Article 1544 of the Civil Code for the second
buyer being able to displace the first buyer: that before the second buyer can
obtain priority over the first, he must show that he acted in good faith throughout
(i.e., in ignorance of the first sale and of the first buyer’s rights) — from the time of
acquisition until the title is transferred to him by registration or failing registration,
by delivery of possession.

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 The ... provision on double sale presumes title or ownership to pass to the first
buyer, the exception being: (a) when the second buyer, in good faith, registers the
sale ahead of the first buyer, and (b) should there be no inscription by either of the
two buyers, when the second buyer, in good faith, acquires possession of the
property ahead of the first buyer. Unless, the second buyer satisfies these
requirements, title or ownership will not transfer to him to the prejudice of the first
buyer.

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 F. Peculiar Developments
“When the thing sold twice is an immovable, the one who acquires it and
first records it in the Registry of Property, both made in good faith, shall
be deemed the owner. Verily, the act of registration must be coupled with
good faith — that is, the registrant must have no knowledge of the defect
or lack of title of his vendor or must not have been aware of facts which
should have put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor.”1

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 G. Who Is Purchaser in Good Faith?
(1) Burden of Proof
(2) Requisite of Full Payment
(3) Obligation to Investigate Known Facts
(4) Special Rule on Real Estate Market Players
(5) Land in Adverse Possession
(6) Existence of Lis Pendens
(7) Annotation of Adverse Claim
(8) Existence of Relationship In
(9) Stipulations in Deed Showing Bad Faith
(10) When Dealing With Non-Registered Owner

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 H. Requisites of Prior Registration
“Registration” means any entry made in the books of the registry,
including both registration in its ordinary and strict sense, and
cancellation, annotation, and even marginal notes. It is the entry
made in the registry which records solemnly and permanently the
right of ownership and other real rights.

Annotation of an adverse claim or lis pendens have been held to

produce the same effect as formal

***it was held that the declaration of purchase for taxation purpose does not
comply with the required registration, and the fact alone does not even itself
constitute evidence of ownership.
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 I. First to Possess in Good Faith
Ten Forty Realty and Dev. Corp. v. Cruz,233 held that in the
absence of inscription in double sales, the law gives preferential
right to the buyer who in good faith is fi rst in possession, under
the following jurisprudential parameters:
(a) Possession mentioned in Article 1544 includes not only material but also
symbolic possession;
(b) Possessors in good faith are those who are not aware of any fl aw in their title
or mode of acquisition;
(c) Buyers of real property that is in the possession of persons other than the seller
must be wary — they must investigate the rights of the possessors; and (d)
Good faith is always presumed, upon those who allege bad faith on the part of
the possessors rests the burden of proof.

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 (1) Registration in Good Faith Always Pre-empts Possession
in Good Faith
The Court held that as between two purchasers, the one who has
registered the sale in his favor, has a preferred right over the other
who has not registered his title even if the latter is in actual
possession of the immovable property. Balatbat v. Court of
Appeals

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 (2) Possession Under Article 1544 Refers to Material and
Symbolic Possession
“In Navera v. Court of Appeals,248 where both deeds of sale over the
same registered parcel of land were not registered with the Registry
of Deeds, the buyer of the fi rst deed of sale executed in a public
instrument had a better right, although the subsequent buyer took
material possession thereof. It was ruled that since the sale to the
first buyer was in a public instrument it was clearly tantamount to a
delivery of the land, resulting in the material and symbolic possession
thereof being transferred to the latter.
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 (3) Possession Acquired in Good Faith Is Stable Status
When the second buyer who takes possession of the subject matter in good faith,
must he remain in good faith subsequently thereafter in order to claim priority
based on possession under Article 1544 of the Civil Code? San Lorenzo Dev. Corp.
v. Court of Appeals, answered this particular issue in favor of the second buyer
when it held:
Did the registration of the sale after the annotation of the notice of lis pendens
obliterate the effects of delivery and possession in good faith which admittedly had
occurred prior to SLDC’s knowledge of the transaction in favor of Babasanta? We
do not hold so.252 ... At the time both deeds were executed, SLDC had no
knowledge of the prior transaction of the Spouses Lu with Babasanta. Simply
stated, from the time of execution of the fi rst deed up to the moment of transfer
and delivery of possession of the lands to SLDC, it had acted in good faith and the
subsequent annotation of lis pendens has no effect at all on the consummated sale
between SLDC and the Spouses Lu.253

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 J . When Article 1544 Does Not Apply, Priority in Time
Rule Applies

(a) Where not all the requisites necessary to make Article 1544
applicable are present;

(b) Where the requisites to make Article 1544 applicable were present,
but that either the fi rst to register or fi rst to possess rules were
not complied with;

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 OBLIGATIONS OF BUYER
1. Pay the Price

Buyer is also obliged to pay interest for the period between

delivery of the subject matter and the payment of the price when:
(a) the same has been stipulated; (b) should object delivered
produce fruits or income; or (c) in case the buyer is in default, from
the time of judicial or extrajudicial demand.260

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 2. Accept Delivery of Thing Bought
“The buyer is bound to accept delivery of the thing bought at the time and place
stipulated in the contract. If the time and place should not have been stipulated, the
payment must be made at the time and place of the delivery of the thing sold..

In case of goods, the buyer is deemed to have accepted the goods when he intimates
to the seller that he has accepted them, or when the goods have been delivered to him,
and he does any act in relation to them which is inconsistent with the ownership of the
seller, or when, after the lapse of a reasonable time, he retains the goods without
intimating to the seller that he has rejected them
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 a. Opportunity to Inspect Goods

Where goods are delivered to the buyer, which he has not previously
examined, he is not deemed to have accepted them unless and until
he has had a reasonable opportunity of examining them for the
purpose of ascertaining whether they are in conformity with the
contract, if there is no stipulation to the contrary.

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 Exception:

C.O.D. Sales

Goods Sold Deliverable by Installment

Effect of Acceptance of Goods on Seller’s Warranty

Refusal to Accept Goods

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 THE END.

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