OBLIGATIONS OF THE VENDOR b.

b. Security title - Where delivery of the goods has been made to the buyer or to a bailee for
the buyer, in pursuance of the contract and the ownership in the goods has been retained by
A. To take care of the thing after the contract has been perfected, prior to delivery. the seller merely to secure performance by the buyer of his obligations under the contract,
the goods are at the buyer's risk from the time of such delivery;

c. Delay in the delivery – whoever causes the delay shall bear the risk of loss.

Loss of the thing pending delivery:

a. If the object is entirely lost - the contract shall be without any effect.

b. If the thing is lost in part only, the buyer may choose between:
i. Withdrawing from the contract; and Note: the risk of loss is where it is important why there are distinctions in the following:
ii. Demanding the remaining part, paying its price in proportion to the total sum • Contract of Sale vs. Contract of Agency to Sell
agreed upon. • Sale or Return vs. Sale on Approval/Trial/Satisfaction

SALE OR RETURN: where the goods are delivered to the buyer but the buyer has an option to
c. The goods without the knowledge of the seller have perished in part or have wholly or in a return the goods instead of paying the price, the ownership passes to the buyer but he may
material part so deteriorated in quality as to be substantially changed in character, the revest the ownership in the seller by returning or tendering the goods within the time fixed in the
buyer may at his option treat the sale: contract, or when no time is fixed, within a reasonable time.
i. As avoided; or

i. As valid in all of the existing goods or in so much thereof as have not

deteriorated, and as binding the buyer to pay the agreed price for the goods
in which the ownership will pass, if the sale was divisible.

Note that ownership transfers to the buyer upon delivery. As such, the buyer bears the risk of
loss once the goods are delivered.

Risk of Loss: General Rule: the thing perishes with the owner, following the principle of res perit
domino.

SALE ON APPROVAL OR ON TRIAL OR ON SATISFACTION: Here, there is delivery of the

goods also, but no transfer of ownership yet. As such, the seller, being the owner, bears the risk
of loss.

Exceptions:
a. Stipulation

The ownership passes to the buyer:

a. When he signifies his approval or acceptance to the seller or does any other act adopting the
transaction

Seller need not be the owner for validity of the contract: the seller need not be the
owner and the sale is still valid if he sold the thing in a capacity authorizing him to do so such as
a liquidator, executor, administrator, sheriff, or a notary (in case of pledge).
b. If he does not signify his approval or acceptance to the seller, but retains the goods without
giving notice of rejection, then if a time has been fixed for the return of the goods, on the
expiration of such time, and, if no time has been fixed, on the expiration of a reasonable
time. What is a reasonable time is a question of fact.

This is different from a pledge or mortgage which requires the pledger or mortgagor to be the
absolute owner of the thing.

2. Obligation to pay taxes and incidents of the sale, unless

otherwise agreed upon;
SELLER IS NOT THE OWNER:
General Rule: the buyer acquires no better title to the goods than the seller had

Exceptions: In all of these exceptions, the buyer acquires GOOD TITLE to the object even if the
seller is not the owner.

3. To warrant the thing (see Warranties);

a. Seller is authorized by the owner – such as an agent.

4. To transfer ownership. b. Seller had statutory or judicial authority to sell – such as a guardian, executor,
administrator, or court sheriff.
imposed by the principal to the agent not written. 3) Art. 1518 – for goods covered
c. In cases of estoppel: by negotiable instruments.
i. As to the owner: estoppel in pais - by his conduct or representation, he led the buyer to
believe that the seller had authority to sell.

ii. As to the seller: estoppel by deed – if after the sale, the seller acquired ownership, such
ownership automatically passes to the buyer as to the thing already delivered
f. Purchase from a Merchant Store, Market or Fair in good faith and for value: the
purpose of this exception is to facilitate commercial transactions so as not to degrade the
trust in sales made through such stores.

e. Sale of an Apparent Owner: REQUISITES:

i. There is apparent ownership

Right of buyer to reimbursement: One who has lost any movable or has been
unlawfully deprived thereof, may recover it from the person in possession of the same. If
the possessor of a movable lost or which the owner has been unlawfully deprived, has
ii. Buyer in good faith and for value – the buyer had no knowledge of any defect in the acquired it in good faith at a public sale, the owner cannot obtain its return without
seller’s title at the time of full payment (not only at the time of sale). reimbursing the price paid therefor.

5. To deliver the determinate or specific thing including the fruits from the moment the
obligation to deliver arises and the accessions and accessories thereof.

Delivery is the mode by which ownership is transferred. It is accomplished by placing the thing
in the control and possession of the vendee.
iii. There must be a law from which apparent ownership may be had, such as:
1) PD 1529 which provides that those dealing with registered land need not inquire
MODES OF DELIVERY: THINGS
beyond the title, also known as the mirror principle, unless the buyer is required
a. Actual Delivery: The actual and physical transfer of the thing to the buyer.
under the law to exercise the highest degree of diligence, e.g., banks and public
utility companies. b. Constructive Delivery
i. Traditio Longa Manu: literally, long-hand delivery, or by pointing to the thing sold
accomplished by mere consent of the seller, ownership transfers to the buyer, because
at the time of sale, the seller cannot transfer possession to the buyer, e.g., the thing is
leased by another.

2) Factor’s Act (agency) – so far as third persons are concerned, they only have to
rely on the power of attorney as written, they need not inquire into limitations
ii. Consitutum Posessorium: at the time of sale, the seller is in possession and remains in
possession in another concept other than an owner, like that of a lessee, depositary or
borrower. E.g., sale lease-back.
iii. A Bill of Exchange is drawn by the seller against the buyer and the latter dishonors the
same.

iii. Brevi Manu: or short hand delivery. When the buyer is in possession of the thing, in a
concept other than that of an owner, at the time of sale, and remains in possession
after sale, now as owner. E.g., a lessee who buys the thing leased.

MODE OF DELIVERY: As to rights:

a. By execution of an instrument;

iv. Symbolic Delivery: where the seller merely gives the key to a warehouse where the
goods are located or in a sale of car, the delivery of the keys is symbolic delivery.

b. Quasi Traditio:

i. When the title of ownership is placed in the possession of the vendee (e.g., certificates
of stock for sale of shares of stock);
v. Execution of the Required Formality: by execution of a public instrument. This
mode of delivery is available to both sale of rights and sale of things;

ii. By the use of the vendee of his rights with the vendor’s consent. (e.g., the vendee of
shares where the same has not been transferred in his name yet, with the consent of
the owner, through a proxy, he may exercise his rights as a stockholder)
c. Delivery to a common carrier: when the parties so agreed that the seller will deliver to the
common carrier for ultimate delivery to the buyer. In this case, there is already delivery
upon receipt of the common carrier. EXCEPT:
TIME OF DELIVERY:
a. Stipulation of the parties;
i. Ownership is reserved by the seller – such as if it is deliverable to the seller or
his agent.

b. If no stipulation, within a reasonable time.

ii. The seller reserved possession – goods are deliverable to the buyer, but possession
of the bill of lading is with the seller.
DELIVERY OF LESS OR MORE OF THE QUANTITY AGREED UPON IN SALE OF PERSONAL
PLACE OF DELIVERY: PROPERTY:
a. Stipulation of the parties; 1. Delivery is less than quantity agreed upon, the buyer may:
a. Reject the delivery; or
b. Accept or retain the goods delivered and pay:
(1) The full contract price if he knew that the seller is not going to perform the
contract in full; or (2) Pay the fair value of the goods delivered if without such
knowledge.
b. If no stipulation, by usage of trade;
2. Delivery is greater than quantity agreed upon, the buyer may:
a. Accept the goods in the quantity agreed upon and reject the rest; or
b. Accept the whole of the goods delivered and pay for them at the contract rate.

3. Delivery of goods mixed with goods of different description not included in the contract, the
c. If no stipulation nor usage of trade, the seller’s place of business; buyer may accept the goods which are in accordance with the contract and reject the rest.

4. In no. 2 and 3, if the subject matter is indivisible, the buyer may reject the whole of the
goods.

DELIVERY OF LESS OR MORE OF THE QUANTITY AGREED UPON IN SALE OF REAL

ESTATE
d. If none, the seller’s residence.
A. AT A RATE OF A CERTAIN PRICE FOR A UNIT OF MEASURE OR NUMBER:
1. Delivery is LESS than that agreed upon, the buyer may:
a. Ask for specific performance and demand delivery of the shortage;
b. Ask for the proportionate reduction of the price (accion quanti minoris) c.
Rescission, in case:
(1) The area lacking is at least 1/10 of that agreed upon; or
(2) The buyer would not have entered into the contract, had he known of its smaller
area.
e. However, 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 same rules apply if any part of the immovable is not of the QUALITY specified in the
the place of delivery. contract (except that rescission is an available remedy in the event that the inferior value
is MORE THAN 1/10 of the price agreed upon) even if the area delivered be that agreed
upon.

2. If the delivery is in excess of the area agreed upon, the buyer may:
a. Accept the area agreed upon and reject the rest; or
SELLER IS NOT BOUND TO DELIVER: b. Accept the whole and pay at the contract rate.
a. If it is a pure obligation and the buyer does not pay; or
The above rules likewise applies to judicial sales.

B. SALE OF REAL ESTATE FOR A LUMP SUM PRICE: whatever is the actual area of the land,
b. If there is a period agreed upon, the obligation to deliver shall be demandable at that time. the buyer is still required to pay the price agreed upon and the seller is bound to deliver
Except, if the buyer loses the right to make use of the period under Art. 1198 the entire area.

If the actual area is bigger than the agreed upon area, and the seller should not deliver the
whole actual area, the buyer may:
a. Reduce the price to be paid, in proportion to what is lacking in the area or number; or
QUANTITY TO BE DELIVERED: b. Rescind the contract for failure of the vendor to deliver what has been stipulated.
a. From the time when they are delivered to a carrier by land, water, or air, or other bailee for
RIGHTS OF AN UNPAID SELLER the purpose of transmission to the buyer, until the buyer, or his agent in that behalf, takes
delivery of them from such carrier or other bailee;
Unpaid Seller: the seller of the goods is deemed to be an unpaid seller when: b. If the goods are rejected by the buyer, and the carrier or other bailee continues in
1. The whole of the price has not been paid or tendered; possession of them, even if the seller has refused to receive them back.
2. A bill of exchange or other negotiable instrument has been received as conditional payment,
and the condition on which it was received has been broken by reason of the dishonor of the Goods are no longer in transit:
instrument, the insolvency of the buyer, or otherwise a. If the buyer, or his agent in that behalf, obtains delivery of the goods before their arrival at
the appointed destination;
Rights of an Unpaid Seller: notwithstanding that the ownership of the goods may have passed to b. If, after the arrival of the goods at the appointed destination, the carrier or other bailee
the buyer, the unpaid seller of goods has the following rights: acknowledges to the buyer or his agent that he holds the goods on his behalf and continues
in possession of them as bailee for the buyer or his agent; and it is immaterial that further
1. Possessory lien – right to retain the goods or right to withhold delivery of the goods. destination for the goods may have been indicated by the buyer;
c. If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his
Grounds: agent in that behalf.
a. Where the goods have been sold without any stipulation as to credit;
If part delivery of the goods has been made to the buyer, or his agent in that behalf, the
b. Where the goods have been sold on credit, but the term of credit has expired;
remainder of the goods may be stopped in transitu, unless such part delivery has been under
c. Where the buyer becomes insolvent. such circumstances as to show an agreement with the buyer to give up possession of the whole
of the goods.
The seller may exercise his right of lien notwithstanding that he is in possession of the goods as
agent or bailee for the buyer. Right of stoppage in transitu is exercised:
a. By taking actual possession of the goods; or
Partial Lien: Where an unpaid seller has made part delivery of the goods, he may exercise his
b. By giving notice of his claim to the carrier or other bailee who is in possession of the goods,
right of lien on the remainder, unless such part delivery has been made under such
as a consequence of which:
circumstances as to show an intent to waive the lien or right of retention.
i. The carrier or bailee then must redeliver the goods to, or according to the directions of,
the seller.
Loss of possessor lien: happens:
ii. The expenses of such delivery must be borne by the seller.
a. When the seller delivers the goods to a carrier or other bailee for the
iii. If, however, a negotiable document of title representing the goods has been issued by
purpose of transmission to the buyer without reserving the ownership
the carrier or other bailee, he shall not be obliged to deliver or justified in not
in the goods or the right to the possession thereof;
delivering the goods to the seller unless such document is first surrendered for
b. When the buyer or his agent lawfully obtains possession of the
cancellation.
goods; c. By waiver.
The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that he
has obtained judgment or decree for the price of the goods. 3. Resale

Grounds:
Sale of the thing by the buyer to third persons:
a. The goods are perishable in nature
a. As a rule, the seller does not lose his right to possessory lien or right of
stoppage in transitu. b. Exceptions: b. The seller expressly reserves the right of resale in case the buyer should make default, or
i. If the seller assented to the transfer; c. Where the buyer has been in default in the payment of the price for an unreasonable time
ii. If the goods are covered by a negotiable document of title and it is sold to a purchaser
for value in good faith to whom such document has been negotiated. To exercise such right: the unpaid seller must have a right of lien or stoppage in transitu.

2. Stoppage in transitu – right to stop the goods while in transit. In case the resale proceeds are:
▪ LESS than the price in the original sale, the seller can recover from the original buyer the
Requisites: difference as damages occasioned by the breach of contract of sale;
a. The seller already parted with the possession of the goods; ▪ MORE than the price in the original sale, the seller is entitled to the profit made in such
b. The goods are already in transit; resale.
c. The buyer is insolvent.
Good Title: the buyer in the resale acquires a good title as against the original buyer.
Goods are in transit:
Notice: except in case of resale made because the goods are perishable, notice shall be given to
the original buyer about:
a. The intention to resell – which is relevant to prove that the buyer has been in default for an
unreasonable length of time.
b. The date, time and place of resale – to be considered doing the resale in good faith and
entitle the seller to any deficiency.

Note, however, that failure to give notice does not affect the validity of the resale.

Participation of the seller in the resale: is prohibited from being the buyer in the resale, either
directly or indirectly, whether the resale be public or private.

4. Rescission

Grounds:
a. When the right to rescind is expressly reserved by the seller;
b. When the buyer has been in default in the payment of the price for an unreasonable time.

To exercise such right: the unpaid seller must have a right of lien or stoppage in transitu.

Recovery of damages: the seller is not liable to the buyer upon the contract of sale, but may
recover from the buyer damages for any loss occasioned by the breach of contract.

Notice: is not necessary for the validity of rescission. But the same shall be relevant in
determining whether the buyer has been in default for an unreasonable length of time.

Mutually Exclusive Rights: the right of possessory lien and stoppage in transitu are mutually
exclusive in the sense that both rights cannot exist together at the same time. This is because the
right of possessory lien presupposes that the seller retains possession, while in stoppage in transitu,
the seller should have parted with the possession already.

Note, however, that for the right of resale and right to rescind, it is necessary that the seller has
either possessory lien or the right of stoppage in transitu.

Insolvency of the buyer: is a requisite only for the right of stoppage in transitu, but not in all other
rights. It is, however, a ground to exercise possessory lien, but still, not a requisite.