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Chapter 5 OBLIGATIONS OF THE VENDEE
Chapter 5 OBLIGATIONS OF THE VENDEE
HELD: The original period of payment in the Contract When Buyer Has Right to Examine
to Sell must be deemed extended by a period of time Generally, the buyer is entitled to examine the goods
equal to the period of suspension (i.e., by 4 yrs., two prior to delivery. And this is true even if the goods are
[2] months) during which extended time (tacked on to shipped F.O.B. (free on board). (See Decezo v.
the original contract period) the buyer must continue Chandler, 206 N.Y.S.).
to pay the monthly installment payments until the
entire original contract price shall have been paid. Grageda v. IAC
GR 67929, Oct. 27, 1987
To permit the Antipolo Realty to collect the disputed
amount in a lump sum after it had defaulted in its FACTS: On Mar. 26, 1975, Dino ordered from Francisco
obligations to its lot buyers would defeat the purpose 500 sets of pyrex trays. Prior to Apr. 27, 1975,
of the authorization (under Sec. 23, PD 957) to lot Francisco delivered some of the items but Dino
buyers to suspend installment payments. Such must outrightly rejected them. After making the proper
be the case, otherwise, there is no sense in suspending corrections, Francisco made subsequent deliveries on
payments. Upon the other hand, to condone the entire Apr. 27, Apr. 30, May 1, May 3, May 12, and May 27,
amount that would have become due would be 1975. Dino’s caretaker duly received the deliveries. On
excessively a harsh penalty upon the seller and would several occasions, Francisco demanded payment for
result in the unjust enrichment of the buyer at the the total value of the deliveries but Dino asked for
expense of the seller. The suspension of installment extension of time within which to pay. On Jun. 20,
payments was attributable to the realty company, not 1975, Dino sent a letter to Francisco, telling Francisco
to the buyer. The tacking of the period of suspension that he rejects the items delivered. Because of this,
to the end of the original period prevents default on Francisco sued Dino for payment.
the part of the lot buyer.
HELD: The delay in the advice or notice of rejection—
Under Sec. 23, PD 957, “no installment payment made almost two months after receipt — was rather too late.
by a buyer in a subdivision or condominium project for Art. 1584 accords the buyer the right to a reasonable
the lot or unit he contracted to buy shall be forfeited in opportunity to examine the goods to ascertain whether
favor of the owner or developer when the buyer, after they are in conformity with the contract. Such
due notice to the owner or developer, desists from opportunity to examine, however, should be availed of
further payment due to the failure of the owner or within a reasonable time in order that the seller may
developer to develop the subdivision or condominium not be subjected to undue delay or prejudice in the
project according to the approved plans and within the payment of his raw materials, workers and other
time limit for complying with the same. Such buyer damages which may be incurred due to the
may, at his option, be reimbursed the total amount deterioration of his products.
paid including amortization and interests but excluding
delinquency interest, with interest thereon at the legal The buyer is deemed to have accepted the goods
rate.’’ when, after the lapse of a reasonable time he retains
them without intimating to the seller that he has
Art. 1584. Where goods are delivered to the rejected them.
buyer, which he has not previously examined, he
is not deemed to have accepted them unless and When Buyer Has No Right to Examine
until he has had a reasonable opportunity of (a) when there is a stipulation to this effect. (Art.
examining them for the purpose of ascertaining 1584, par. 1).
whether they are in conformity with the contract (b) when the goods are delivered C.O.D. — unless
if there is no stipulation to the contrary. there is an agreement or a usage of trade
PERMITTING such examination. (Art. 1584,
Unless otherwise agreed, when the seller tenders par. 2).
delivery of goods to the buyer, he is bound, on
request, to afford the buyer a reasonable Art. 1585. The buyer is deemed to have accepted
opportunity of examining the goods for the the goods when he intimates to the seller that he
purpose of ascertaining whether they are in has accepted them, or when the goods have been
conformity with the contract. delivered to him, and he does any act in relation
to them which is inconsistent with the ownership
Where goods are delivered to a carrier by the of the seller, or when, after the lapse of a
seller, in accordance with an order from or reasonable time, he retains the goods without
agreement with the buyer, upon the terms that intimating to the seller that he has rejected
the goods shall not be delivered by the carrier to them.
the buyer until he has paid the price, whether
such terms are indicated by marking the goods When There is Acceptance of the Goods
with the words “collect on delivery,” or The Article gives three ways of accepting the goods:
otherwise, the buyer is not entitled to examine (a) express acceptance
the goods before the payment of the price, in the
(b) when buyer does an act which only an owner can
do Art. 1589. The vendee shall owe interest for the
(c) failure to return after reasonable lapse of time period between the delivery of the thing and the
payment of the price, in the following three
Kerr & Co. v. De la Rama cases:
11 Phil. 453 (1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce
FACTS: Buyer accepted goods despite delay. Buyer fruits or income;
also promised later on to pay. Subsequently, buyer (3) Should he be in default, from the time of
asked for damages on account of the delay. judicial or extrajudicial demand for the payment
of the price.
HELD: Buyer is estopped because of the acceptance
without reservation at the time of acceptance. When Buyer Has to Pay for Interest on the Price
This Article answers the question: “In what cases is the
Art. 1586. In the absence of express or implied buyer liable for interest on the price?”
agreement of the parties, acceptance of the
goods by the buyer shall not discharge the seller [NOTE: If the buyer fails to give the money after the
from liability in damages or other legal remedy contract is notarized, although he had previously
for breach of any promise or warranty in the promised to do so, there is default with liability for
contract of sale. But, if, after acceptance of the legal interest. (De la Cruz v. Legaspi, L-8024, Nov. 29,
goods, the buyer fails to give notice to the seller 1955).]
of the breach in any promise of warranty within a
reasonable time after the buyer knows, or ought The Three Cases Contemplated
to know of such breach, the seller shall not be (a) In No. (1), no demand is needed.
liable therefor. (b) In No. (2), the reason for the law is that the
fruits or income is sufficient to warrant the
Even if Buyer Accepts, Seller Can Still Be Liable payment of interest.
(a) Reason for the last sentence. To prevent (c) In No. (3), “default” is mora, called “in delay”
afterthoughts or belated claims. under the provisions of the Civil Code.
(b) The buyer is allowed to set up the breach of
the warranty or promise as a set-off or Rule for Monetary Obligations
counterclaim for the price. (William v. Perrota, In a monetary obligation (like the obligation to pay the
95 Conn. 629). purchase price) in the absence of stipulation, legal
interest takes the place of damages. This is so even if
Art. 1587. Unless otherwise agreed, where goods the damages are actually more or less. The possibility
are delivered to the buyer, and he refuses to of gain because of an investment should be
accept them, having the right to do, he is not discounted; instead of a gain, there might be a loss.
bound to return them to the seller, but it is Therefore, the law has compromised on legal interest.
sufficient if he notffies the seller that he refuses (Quiros v. Tan Guinlay, 6 Phil. 675).
to accept them. If he voluntarily constitutes
himself a depositary thereof, he shall be liable as Art. 1590. Should the vendee be disturbed in the
such. possession or ownership of the thing acquired, or
should he have reasonable grounds to fear such
Effect if Buyer Justifiably Refuses to Accept the disturbance, by a vindicatory action or a
Delivery foreclosure of mortgage, he may suspend the
(a) buyer has no duty to return the goods to the payment of the price until the vendor has caused
seller the disturbance or danger to cease, unless the
(b) mere notification to seller of refusal will suffice latter gives security for the return of the price in
(c) but buyer may make himself a voluntary a proper case, or it has been stipulated that,
depositary –– in which case he must safely notwithstanding any such contingency, the
take care of them in the mean time vendee shall be bound to make the payment. A
mere act of trespass shall not authorize the
Art. 1588. If there is no stipulation as specified in suspension of the payment of the price.
the first paragraph of article 1523, when the
buyer’s refusal to accept the goods is without When Buyer May Suspend the Payment of the
just cause, the title thereto passes to him from Price
the moment they are placed at his disposal. The buyer may SUSPEND the payment of the price if:
(a) There is a well-grounded fear (fundado temor).
Effect if Buyer Unjustifiably Refuses to Accept (b) The fear is because of:
the Delivery 1) a vindicatory action or action to recover, or
Generally, the buyer becomes the owner. Exception — 2) a foreclosure of mortgage.
when there is a contrary stipulation or when the seller
reserves the ownership as a sort of security for the [NOTE: (a) The fear must not be the result of any
payment of the price. (See Arts. 1523 and 1503, Civil other ground, like the vendor’s insanity. (b) A mere act
Code). of trespass is made by one claiming no legal right
whatsoever. Here, the buyer is not authorized to (a) LOSS of the immovable property sold, and
suspend the payment of the price.] (b) LOSS of the price.
(e) The demand is not for the payment of the price HELD: Yes. First, there was no express waiver. Mere
BUT for the RESCISSION of the contract. (Manresa, tolerance or liberality to the first buyer does not
Vol. 10, p. 288). establish an obligation to be liberal to the second
buyer. Mere tolerance or liberality to the first buyer
Example of this Article does not necessarily mean a waiver thereof. Secondly,
On Jul. 1, A sold B a piece of land, payment and the forfeiture here would be predicated on the second
delivery to be made on Jul. 15. It was stipulated that buyer’s default, not on the first buyer’s. For with
should payment not be made on Jul. 15, the contract respect to the first buyer, the consent to the
would automatically be rescinded. On Jul. 20, can B assignment necessarilyvwaives any right to forfeiture
still pay? accruing before such assignment. (Jocson v. Capital
Subdivision, L-6573, Feb. 28, 1955).]
ANS.: Yes, as long as there has been no judicial or
notarial demand for the rescission of the contract. But Legarda Hermanos and Jose Legarda v.
if, for example on Jul. 18, A had made a notarial Felipe Saldaña and Court of Appeals
demand for such a rescission then B will not be allowed L-26578, Jan. 28, 1974
to pay anymore, and the court may not grant him a
new term. FACTS: Saldaña bought two lots from the Legarda
Hermanos Subdivision on the installment plan (120
The Demand Needed installments).
Be it noted that the demand is not for the payment of
the price inasmuch as the seller precisely desires to After paying for 95 installments (for each lot) he
rescind the contract. To say that it should be the stopped payment, but five years later, wanted to
demand for the price would lead to the anomalous resume payment.
paradoxical result of requiring payment from the buyer
for the very purpose of preventing him from paying. It The Subdivision Company informed him that the
is, therefore, a demand for rescission; the term having contracts had been cancelled and the payments
expired, the seller does not want to continue with the forfeited conformably with the terms of the contract.
contract. (Villareal v. Tan King, 43 Phil. 251, citing 10 Saldaña was able to prove, however, that considering
Manresa 288). the total amount he had paid, the same already
covered the full purchase price of one lot. Can Saldaña
Rule in Contracts to Sell get one lot?
As already stated, Art. 1592 does NOT apply to a
promise to sell (Mella v. Vismanos, 45 O.G. 2099) nor HELD: Yes. The giving by the Company of one lot to
to a contract TO SELL. (Jocson v. Capitol Subdivision, Saldana, and the cancellation of the contract
Inc., et al., L-6573, Feb. 28, 1955 and Manuel v. pertaining to the other lot, does not deny substantial
Rodriguez, Sr., L-13435, Jul. 27, 1960). Thus, in the justice to the subdivision.
case of Jocson, the legality of the following clauses in a
contract TO SELL was SUSTAINED — “That it is hereby Besides, in a sense there was substantial performance.
agreed and understood that in the event the BUYER (See also Art. 1234, Civil Code).
should fail to pay any of the installments as and when
the same falls due, the SELLER shall have the right at Roque v. Lapuz
her option to consider this contract cancelled and L-32811, Mar. 31, 1980
rescinded and that all the amount therefor paid by the
BUYER unto the SELLER shall be considered as rental Art. 1592 of the Civil Code, which speaks of the
for the use of said property up to the date of such rescission of contracts of sale of real property, does
default, and said BUYER shall have no right of action not apply to contracts to sell real property on
against the SELLER for the recovery of any portion of installments.
the amount thus paid; that in the event this contract
be declared rescinded upon default of the BUYER in the Joseph and Sons Enterprises, Inc. v. CA
payment of any installment as and when it falls due, GR 46765, Aug. 29, 1986
said SELLER shall have the right not only to sell and
dispose of the property covered by this sale, that is to Art. 1592 of the Civil Code, which permits the vendee
say, the above described buildings, as well as the to pay, even after the expiration of the period, as long
leasehold rights on the property upon which the as no demand for rescission of the contract has been
buildings are constructed, but said SELLER shall have made upon him either judicially or by notarial act does
not apply to a contract to sell or a deed of conditional The seller and the buyer agreed that payment and
sale. delivery would be made on Jul. 15, at the buyer’s
house. If the buyer does not appear on said day, or
Leberman Realty Corp. & Aran Realty & having appeared, he should not have tendered the
Development Corp. v. Joseph Typingco and CA price at the same time, then the sale can be
GR 126647, Jul. 29, 1998 considered as automatically rescinded.
FACTS: Petitioners cancelled the contract before the Right, Not Obligation, to Rescind
period to pay arrived. If in a contract the seller is authorized to rescind the
sale in case of breach, this does not necessarily mean
ISSUE: Was private respondent guilty of failure to pay that he is obliged to do so. (Ramirez v. Court of
the price of the land within the period agreed upon? Appeals & Muller Nease, L-6536, Jan. 25, 1956, 52
O.G. 779).
HELD: No. Petitioners’ argument that respondent failed
to exercise his option to buy within the period provided
in the contract, and which period expired/lapsed during
the pendency of the case, is plainly absurd. For how
could private respondent have exercised the option
granted him under the “Option to
Buyer” clause when the contract itself was
rejected/cancelled by the petitioners even before the
arrival of the period for the exercise of said option?