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SALES
(Arts. 1489-1544)

CHAPTER 2 Art. 1490

CAPACITY TO BUY OR SELL The husband and the wife cannot
sell property to each other, except:
Art. 1489 (1) When a separation of property
All persons who are authorized in was agreed upon in the marriage
this Code to obligate themselves, settlements; or
may enter into a contract of sale, (2) When there has been a judicial
saving the modifications contained separation or property under
in the following articles. Article 191.2
Where necessaries are those sold
and delivered to a minor or other Notes
person without capacity to act, he  The general rule is that the
must pay a reasonable price husband and wife cannot sell
therefor. Necessaries are those or (donate, except moderate
referred to in Article 290.1 gifts [87 FC]) property to each
other. Otherwise, void for
Note being expressly prohibited by
 As a rule, all persons, whether law (1409[7]).
natural or juridical, who can  The exceptions are:
bind themselves by contract 1. Separation of property in
have also legal capacity to buy marriage settlements;
and sell. 2. Judicial separation of
 The rule is that contracts property (135 FC)
entered into by a minor and 3. The reason primarily is for
other incapacitated persons the protection of third
(e.g., insane or demented persons who, relying upon
persons, deaf-mutes who do supposed property of
not know how to write), are either spouse, enters into a
voidable. contract with either of
them only to find out that
Kinds of Incapacity the property relied upon
1. Absolute - in case of persons was transferred to the
who cannot bind themselves; other spouse.
2. Relative - where it exists
only with reference to certain
persons or a certain class of 2
Article 191. The husband or the wife may ask for the separation
of property, and it shall be decreed when the spouse of the
property (1490-1491). petitioner has been sentenced to a penalty which carries with it
civil interdiction, or has been declared absent, or when legal
separation has been granted.
Necessaries In case of abuse of powers of administration of the conjugal
 Those things which are partnership property by the husband, or in case of abandonment
by the husband, separation of property may also be ordered by the
needed for sustenance, court, according to the provisions of articles 167 and 178, No. 3.
dwelling, clothing and medical In all these cases, it is sufficient to present the final judgment
which has been entered against the guilty or absent spouse.
attendance, in keeping with (1433a)
the financial capacity of the The husband and the wife may agree upon the dissolution of the
conjugal partnership during the marriage, subject to judicial
family of the incapacitated approval. All the creditors of the husband and of the wife, as well
person (194 FC). as of the conjugal partnership shall be notified of any petition for
judicial approval or the voluntary dissolution of the conjugal
partnership, so that any such creditors may appear at the hearing
to safeguard his interests. Upon approval of the petition for
1
Article 290. Support is everything that is indispensable for dissolution of the conjugal partnership, the court shall take such
sustenance, dwelling, clothing and medical attendance, according measures as may protect the creditors and other third persons.
to the social position of the family. After dissolution of the conjugal partnership, the provisions of
Support also includes the education of the person entitled to be articles 214 and 215 shall apply. The provisions of this Code
supported until he completes his education or training for some concerning the effect of partition stated in articles 498 to 501 shall
profession, trade or vocation, even beyond the age of majority. be applicable. (1433a)
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Art. 1491 are prohibited from acquiring

The following persons cannot said property either directly
acquire by purchase, even at a or indirectly and whether in
public or judicial auction, either in private or public sale.
person or through the mediation of 1. Guardians
another: 2. Agents
(1) The guardian, the property of 3. Executors and
the person or persons who may be Administrators
under his guardianship; 4. Public officers and
(2) Agents, the property whose employees
administration or sale may have 5. Judicial Officers and
been entrusted to them, unless the employees and lawyers
consent of the principal has been 6. Others especially
given; disqualified by law
(3) Executors and administrators, 6.1 Aliens, disqualified to
the property of the estate under purchase private
administration; agricultural lands
(4) Public officers and employees, 6.2 Unpaid seller, having a
the property of the State or of any right of lien or having
subdivision thereof, or of any stopped the goods in
government-owned or controlled transit
corporation, or institution, the 6.3 Officer conducting an
administration of which has been execution sale of
intrusted to them; this provision property
shall apply to judges and
government experts who, in any  The reason is to prevent
manner whatsoever, take part in frauds and minimize
the sale; temptations to the exertion of
(5) Justices, judges, prosecuting undue and improper
attorneys, clerks of superior and influence.
inferior courts, and other officers  The persons disqualified
and employees connected with the (1490-1491) are also
administration of justice, the disqualified to become lessees
property and rights in litigation or of the things mentioned
levied upon an execution before therein. (1646)
the court within whose jurisdiction  Nos. 1-3 – voidable; only
or territory they exercise their private interests are involved
respective functions; this  Nos. 4-6 – void; public
prohibition includes the act of interests are involved.
acquiring by assignment and shall
apply to lawyers, with respect to
the property and rights which may CHAPTER 3
be the object of any litigation in EFFECTS OF THE CONTRACT WHEN
which they may take part by virtue THE THING SOLD HAS BEEN LOST
of their profession.
(6) Any others specially Art. 1493
disqualified by law. If at the time the contract of sale is
perfected, the thing which is the
Notes object of the contract has been
 This refers to incapacity by entirely lost, the contract shall be
reason of their position and without any effect.
relation with the persons But if the thing should have been
under their charge or lost in part only, the vendee may
property under their control, choose between withdrawing from
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the contract and demanding the
remaining part, paying its price in
proportion to the total sum agreed
upon.
Notes
 before or at the time the
contract of sale is perfected
(1493):
a) if the thing is entirely lost
– void (no object)
b) if the thing is partially lost
- vendee may elect
between:
1) withdrawing from the
contract; or
2) demanding the
remaining part, paying
its proportionate price.
When a Thing is Considered Lost
(1189[2])
1. perishes;
2. goes out of commerce;
3. disappears in such a way that
its existence is unknown or it
cannot be recovered.
Note
 The term perishes includes a
case where there has been
material deterioration or
complete change in the nature
of the thing in such a manner
that it loses its former utility
taking into consideration the
time the contract was entered
into.
Art. 1494
Where the parties purport a sale of
specific goods, and the goods
without the knowledge of the seller
have perished in part or have
wholly or in a material part so
deteriorated in quality as to be
substantially changed in character,
the buyer may at his option treat
the sale:
(1) As avoided; or
(2) 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.
Notes
 Art. 1493 refers to sale of
specific thing while Art. 1494
refers to sale of a mass of
specific goods.
Sale Divisible
 Second option is available
only if the sale is divisible.
 A contract is divisible when its
consideration is made up of
several parts.
Chapter 4 – OBLIGATIONS OF THE
VENDOR
SECTION 1. - General Provisions
Art. 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.
Principal Obligations of the Vendor
1. Transfer the ownership of the
determinate thing sold;
2. Deliver the thing;
3. Warrant against eviction3 and
hidden defects4 (Arts. 1495,1547);
4. Take care of the thing, pending
delivery, with proper diligence5
(Art. 1163); and
5. Pay for the expenses for the
execution and registration of the
deed of sale, unless there is a
stipulation to the contrary (Art.
1487).
3
IMPLIED WARRANTY AS TO SELLER’S TITLE (1548) – the
seller guarantees that he has a right to sell the thing sold and to
transfer ownership to the buyer who shall not be disturbed in his
legal and peaceful possession thereof.
4
IMPLIED WARRANTY AGAINST HIDDEN DEFECTS OR
UNKNOWN ENCUMBRANCES (1561) – the seller guarantees
that the thing sold is free from any hidden faults or defects or any
charge or encumbrance not declared or known to the buyer.
5
PROPER DILIGENCE OF A GOOD FATHER OF A FAMILY,
unless by law or by stipulation, another standard care is
required.
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Art. 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.
Ways of Effecting Delivery
1. actual or real (Art. 1497)
2. constructive or legal (Arts. 1498-
1501)
3. any other manner signifying an
agreement that the possession is
transferred to the vendee (Arts.
1496-1499)
Notes
 Delivery is an indispensable
requisite for the transfer of
ownership which under our
law cannot be effected by
mere consent.
 But to transfer ownership, the
act of delivery must be made
with intention of delivering
the thing sold.
 Constructive/Legal delivery is
equivalent to actual delivery.
 An exception to the rule is
Contract to Sell whereby
parties, may stipulate that
ownership in the thing shall
pass to the buyer only after he
has fully paid the price (Art.
1478) or fulfilled certain
conditions.
Ways of Effecting Constructive
Delivery
1. execution of public instrument
(Art. 1498 par.1)
2. symbolical tradition or traditio
symbolic (Art. 1498 par. 2)
3. traditio longa manu (Art. 1499)
4. traditio brevi manu (Art. 1499)
5. traditio constitum possessorium
(Art. 1500)
6. quasi-delivery or quasi-traditio
(Art. 1501)
SECTION 2. - Delivery of the Thing
Sold
Art. 1497 (TRADITION)
The thing sold shall be understood
as delivered, when it is placed in
the control and possession of the
vendee.
Tradition/ Actual Delivery When
Deemed Made
 When thing sold is placed in
the control and possession of
the vendee.
 Involves physical delivery;
from hand to hand
Art. 1498 (traditio symbolic)
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.
Public Instrument
 One which is acknowledged
before a notary public or any
official authorized to
administer oath, by the person
who executed the same.
 The party making the
acknowledgement formally
declares that the instrument is
his free act and deed while the
officer taking the same attests
and certifies that such party is
known to him and that he is
the same person who executed
the instrument and
acknowledged that the
instrument is his free act and
deed.
Art. 1499 (traditio longa manu/
traditio brevi manu)
The delivery of movable property
may likewise be made by the mere
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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.
Traditio Longa Manu
By mere consent or agreement of the
contracting parties.
Notes
 It must be qualified by the
phrase “if the thing sold
cannot be transferred to the
possession of the vendee at
the time of the sale.”
 Discussed under Art 1496:
Delivery is an indispensable
requisite for the transfer of
ownership which under our
law cannot be effected by
mere consent.
Traditio Brevi Manu
 When the vendee has already
the possession of the thing
sold by virtue of another title
as when the lessor sells the
thing leased to the lessee.
Art. 1500 (traditio constitum
possessorium)
There may also be tradition
constitutum possessorium.
Note
 Opposite of traditio brevi
manu as when the vendor
continues in possession of the
property sold not as owner
but in some other capacity
(e.g., when the vendor stays as
a tenant on the vendee)
Art. 1501 (QUASI-DELIVERY/quasi-
traditio)
With respect to incorporeal
property, the provisions of the first
paragraph of article 1498 shall
govern. In any other case wherein
said provisions are not applicable,
the placing of the titles of
ownership in the possession of the
vendee or the use by the vendee of
his rights, with the vendor's
consent, shall be understood as a
delivery.
Notes
 This article refers to ways of
effecting delivery of
incorporeal/intangible things.
 Tradition can only be made
with respect to
corporeal/tangible things.
Delivery of Incorporeal Things is
Effected
1. Execution of a public
instrument (Art. 1498)
2. When above is not applicable,
by placing of the titles of
ownership in the possession
of the vendee (e.g., delivery of
a negotiable document of title
stating that the goods referred
to therein will be delivered to
the bearer)
3. By allowing the vendee to use
his rights as new owner with
the consent of the vendor
Note
 In all the different modes of
effecting delivery, it is the real
intention on the parties, to
deliver on the part of the
vendor, and to accept on the
part of the vendee which gives
legal effect to the act.
Art. 1502
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
of 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. (n)
When goods are delivered to the
buyer on approval or on trial or on
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satisfaction, or other similar terms,
the ownership therein passes to
the buyer:
(1) When he signifies his approval
or acceptance to the seller or does
any other act adopting the
transaction;
(2) 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.
Sale or Return
 Contract by which property is
sold but the buyer, who
becomes the owner thereof on
delivery, has the option to
return the same to the seller
instead of paying the price.
 Under this contract, the
option to purchase or return
the goods rests entirely on
the buyer without reference
to the quality of goods.
Sale On Trial or Approval
 Contract in the nature of an
option to purchase if the
goods prove satisfactory.
 Under this kind of contract,
title shall continue in the
seller until the sale has
become absolute either by:
1. buyer’s approval of the
goods, or
2. failing to comply with the
express or implied
conditions of the contract
as to giving notice of
dissatisfaction or as to
returning the goods.
SALE OR SALE ON TRIAL
RETURN
1. Subject to 1. Subject to
resolutory suspensive
condition; condition;
2. Depends 2. Depends on
entirely on the character
the will of the or quality of
buyer; goods;
3. Ownership of 3. Ownership
goods passes remains in the
to the buyer seller until
on delivery; the buyer
signifies his
approval or
acceptance to
the seller;
4. Risk of loss or 4. Risk remains
injury rests with the
upon the seller.
buyer.
Article 1503. When there is a
contract of sale of specific goods,
the seller may, by the terms of the
contract, reserve the right of
possession or ownership in the
goods until certain conditions have
been fulfilled. The right of
possession or ownership may be
thus reserved notwithstanding the
delivery of the goods to the buyer
or to a carrier or other bailee for
the purpose of transmission to the
buyer.
Where goods are shipped, and by
the bill of lading the goods are
deliverable to the seller or his
agent, or to the order of the seller
or of his agent, the seller thereby
reserves the ownership in the
goods. But, if except for the form
of the bill of lading, the ownership
would have passed to the buyer on
shipment of the goods, the seller's
property in the goods shall be
deemed to be only for the purpose
of securing performance by the
buyer of his obligations under the
contract.
Where goods are shipped, and by
the bill of lading the goods are
deliverable to order of the buyer or
of his agent, but possession of the
bill of lading is retained by the
seller or his agent, the seller
thereby reserves a right to the
possession of the goods as against
the buyer.
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Where the seller of goods draws on
the buyer for the price and
transmits the bill of exchange and
bill of lading together to the buyer
to secure acceptance or payment of
the bill of exchange, the buyer is
bound to return the bill of lading if
he does not honor the bill of
exchange, and if he wrongfully
retains the bill of lading he
acquires no added right thereby. If,
however, the bill of lading
provides that the goods are
deliverable to the buyer or to the
order of the buyer, or is indorsed
in blank, or to the buyer by the
consignee named therein, one who
purchases in good faith, for value,
the bill of lading, or goods from the
buyer will obtain the ownership in
the goods, although the bill of
exchange has not been honored,
provided that such purchaser has
received delivery of the bill of
lading indorsed by the consignee
named therein, or of the goods,
without notice of the facts making
the transfer wrongful. (n)
Notes
 This article refers to a sale of
specific goods.
 As a rule, delivery to the
carrier is deemed to be a
delivery to the buyer.
 Exceptions are:
1) Where the seller, by the
terms of the contract,
reserve the right of
possession or ownership
in the goods until certain
conditions have been
fulfilled (par. 1);
2) Where goods have been
shipped, and by the bill
of lading the goods are
deliverable to the seller or
his agent, the seller
thereby reserves the
ownership in the goods
(par. 2);
3) Where goods are shipped,
and by the bill of lading
the goods are deliverable
to the order of the buyer
or of his agent, but
possession of the bill of
lading is retained by the
seller or his agent, the
seller thereby reserves a
right to the possession of
the goods as against the
buyer (par. 3);
4) Where the seller draws on
the buyer for the price
and transmits the bill of
exchange and the bill of
lading together to the
buyer to secure
acceptance or payment of
the bill of exchange, the
title is regarded as
retained in the seller until
the bill of exchange is
paid (par. 4).
Article 1504. Unless otherwise
agreed, the goods remain at the
seller's risk until the ownership
therein is transferred to the buyer,
but when the ownership therein is
transferred to the buyer the goods
are at the buyer's risk whether
actual delivery has been made or
not, except that:
(1) 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
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;
(2) Where actual delivery has been
delayed through the fault of either
the buyer or seller the goods are at
the risk of the party in fault. (n)
Notes
 As a rule, if the thing is lost by
fortuitous event, the risk is
borne by the owner of the
thing at the time of the loss.
 Exceptions are:
1) Where the seller reserves
the ownership of the
goods merely to secure
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the performance by the
buyer of his obligations
under the contract, the
ownership is considered
transferred to the buyer
who, therefore, assumes
the risk from the time of
delivery;
2) Where actual delivery
has been delayed
through the fault of
either the buyer or the
seller, the goods are at
the risk of the party at
fault with respect to any
loss which might not
have occurred but for
such fault.
 Take note this conflicts with
Art. 1480 which provides that
if the thing is lost after
perfection of the contract but
before its delivery, that is,
even before the ownership is
transferred to the buyer, the
risk of loss by a fortuitous
event without the seller’s fault
is borne by the buyer as an
exception to the rule of res
perit domino.
Art. 1505
Subject to the provisions of this
Title, where goods are sold by a
person who is not the owner
thereof, and who does not sell
them under authority or with the
consent of the owner, the buyer
acquires no better title to the
goods than the seller had, unless
the owner of the goods is by his
conduct precluded from denying
the seller's authority to sell.
Nothing in this Title, however,
shall affect:
(1) The provisions of any factor’s
act, recording laws, or any other
provision of law enabling the
apparent owner of goods to
dispose of them as if he were the
true owner thereof;
(2) The validity of any contract of
sale under statutory power of sale
or under the order of a court of
competent jurisdiction;
(3) Purchases made in a merchant's
store, or in fairs, or markets, in
accordance with the Code of
Commerce and special laws.
Notes
 Sale by a person not the owner
– unenforceable
 No one can give what he has
not.
 Sale is a derivative mode of
acquiring ownership and the
buyer gets only such rights as
the seller had
 Exceptions are
1. Where the owner of the
goods is, by his conduct,
precluded from denying
the seller’s authority to
sell;
2. Where the law enables the
apparent owner to dispose
of the goods as if he were
the true owner thereof;
Relative laws:
a) Property Registration
Decree – P.D. No. 1529;
b) Land Transportation
and Traffic Code -RA
No. 4136;
c) Sec. 529 of the Revised
Administrative Code on
the sale of large cattle;
d) Sec. 1171 of the Revised
Administrative Code on
the sale of vessels;
e) Negotiable Instruments
Law – Act No. 2031;
f) Warehouse Receipts Law
– Act No. 2137.
3. Where the sale is
sanctioned by statutory or
judicial authority (see Art.
559)6;
6 Article 559. The possession of movable property acquired in
good faith is equivalent to a title. Nevertheless, 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 acquired it in good faith at a public sale,
the owner cannot obtain its return without reimbursing the price
paid therefor. (464a)
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4. Where the sale is made at
merchant’s stores, fairs or
markets;
5. Where the seller has a
voidable title which has not
been avoided at the time of
the sale; and
6. Where seller subsequently
acquires title.
Art. 1506
Where the seller of goods has a
voidable title thereto, but his title
has not been avoided at the time of
the sale, the buyer acquires a good
title to the goods, provided he
buys them in good faith, for value,
and without notice of the seller's
defect of title.
Requisites
1. Before the title of the seller
has been avoided (valid until
annulled);
2. In good faith for value;
3. Without notice of the seller’s
defect of title.
Illustrations
a. S, a minor, sold his car to B, a
person of majority age. B, in turn,
sold the car to C who acted in
good faith.
b. A stole the car of C. B bought
from A, in good faith, for value,
the stolen car. (no title at all) C
may recover from B the car
without paying any indemnity
except when B acquired it in a
public sale. (Art. 559)
Article 1507. A document of title in
which it is stated that the goods
referred to therein will be
delivered to the bearer, or to the
order of any person named in such
document is a negotiable document
of title. (n)
Documents of Title
 Refer to goods and not to
money.
 It is a receipt of a bailee or
order upon a bailee.
 It is a symbol of the goods
covered by it, serving as
evidence of:
1) Transfer of title;
2) Transfer of possession; and
3) Contract between the
parties who are bound by
its terms.
Common forms of documents of
title
1) Bill of lading – a contract of
receipt for the transaction of
goods and their delivery to the
person named therein, to
order, or to bearer. It usually
involves (3) persons:
a. Carrier;
b. Shipper; and
c. Consignee
2) Dock warrant – an instrument
given by dock owners to an
importer of goods warehoused
on the dock recognizing the
importer’s title to the said
goods; and
3) Warehouse receipt – a
contract of receipt for goods
deposited with a
warehouseman containing the
latter’s undertaking to hold
and deliver the said goods to a
specified person, to order, or
to bearer.
a. Quedan – a warehouse
receipt usually for sugar
received by a
warehouseman
Classes of documents of titles
1. Negotiable documents of title
– those by the terms of which
the bailee undertakes to
deliver the goods to the bearer
and those by the terms of
which the bailee undertakes to
deliver the goods to the order
of a specified person. (Art.
1508); or
2. Non-negotiable documents of
title – those by the terms of
which the goods covered are
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deliverable to a specified the person to whose order the

person. (Art. 1511) goods are by the terms of the
document deliverable. Such
indorsement may be in blank, to
Article 1508. A negotiable bearer or to a specified person. If
document of title may be indorsed to a specified person, it
negotiated by delivery: may be again negotiated by the
(1) Where by the terms of the indorsement of such person in
document the carrier, blank, to bearer or to another
warehouseman or other bailee specified person. Subsequent
issuing the same undertakes to negotiations may be made in like
deliver the goods to the bearer; or manner. (n)
(2) Where by the terms of the
document the carrier, Notes
warehouseman or other bailee  A negotiable document of title
issuing the same undertakes to whereby the goods are
deliver the goods to the order of a deliverable to a specified
specified person, and such person person may be negotiated only
or a subsequent indorsee of the by the indorsement of such
document has indorsed it in blank person.
or to the bearer.  If said specified person,
Where by the terms of a negotiable indorsed it in blank or to
document of title the goods are bearer, the document becomes
deliverable to bearer or where a negotiable by delivery.
negotiable document of title has  If said specified person
been indorsed in blank or to indorsed it again to another
bearer, any holder may indorse the specified person, it may be
same to himself or to any specified again negotiated by the
person, and in such case the indorsement of such person in
document shall thereafter be blank, to bearer, or to another
negotiated only by the specified person.
indorsement of such indorsee. (n)

Notes Article 1510. If a document of title

 A document of title is which contains an undertaking by
negotiable by delivery if: a carrier, warehouseman or other
1) The goods are deliverable bailee to deliver the goods to
to the bearer; or bearer, to a specified person or
2) When it is indorsed in order of a specified person or
blank or to the bearer by which contains words of like
the person to whose import, has placed upon it the
order the goods are words "not negotiable," "non-
deliverable or by a negotiable" or the like, such
subsequent indorsee. document may nevertheless be
 If the document is specially negotiated by the holder and is a
indorsed it becomes an order negotiable document of title within
document of title and the meaning of this Title. But
negotiation can only be nothing in this Title contained shall
effected by the indorsement be construed as limiting or
of the indorsee. defining the effect upon the
obligations of the carrier,
warehouseman, or other bailee
Article 1509. A negotiable issuing a document of title or
document of title may be placing thereon the words "not
negotiated by the indorsement of
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negotiable," "non-negotiable," or
the like. (n)
Notes
1) The words “not negotiable,”
“non-negotiable” and the like,
when placed upon a document
of title in which the goods are
to be delivered to order or to
bearer, have no effect and the
document continues to be
negotiable.
Article 1511. A document of title
which is not in such form that it
can be negotiated by delivery may
be transferred by the holder by
delivery to a purchaser or donee. A
non-negotiable document cannot
be negotiated and the indorsement
of such a document gives the
transferee no additional right. (n)
Note
2) A non-negotiable document of
title cannot be negotiated, but
it can be transferred or
assigned by delivery. In which
case, the transferee or
assignee acquires only the
rights stated in Art. 1514.
Article 1512. A negotiable
document of title may be
negotiated:
(1) By the owner thereof; or
(2) By any person to whom the
possession or custody of the
document has been entrusted by
the owner, if, by the terms of the
document the bailee issuing the
document undertakes to deliver
the goods to the order of the
person to whom the possession or
custody of the document has been
entrusted, or if at the time of such
entrusting the document is in such
form that it may be negotiated by
delivery. (n)
Note
3) This refers to persons who
may negotiate a document.
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
(2) The direct obligation of the
bailee issuing the document to
hold possession of the goods for
him according to the terms of the
document as fully as if such bailee
had contracted directly with him.
(n)
Rights of person to whom document
has been negotiated
1) Title of the person negotiating
the document, over the goods
covered by the document;
2) Title of the person
(depositor/owner) to whose
order by the terms of the
document the goods were to
be delivered, over such goods;
and
3) Direct obligation of the bailee
(warehouseman/carrier) to
hold possession of the goods
for him, as if the bailee had
contracted directly with him.
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.
If the document is non-negotiable,
such person also acquires the right
to notify the bailee who issued the
document of the transfer thereof,
and thereby to acquire the direct
obligation of such bailee to hold
possession of the goods for him
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according to the terms of the
document.
Prior to the notification to such
bailee by the transferor or
transferee of a non-negotiable
document of title, the title of the
transferee to the goods and the
right to acquire the obligation of
such bailee may be defeated by the
levy of an attachment of execution
upon the goods by a creditor of the
transferor, or by a notification to
such bailee by the transferor or a
subsequent purchaser from the
transferor of a subsequent sale of
the goods by the transferor. (n)
Rights of person to whom document
has been transferred (not
negotiated)
1) Title to the goods as against
the transferor;
2) Right to notify the bailee of
the transfer thereof;
3) Right, thereafter, to acquire
the obligation of the bailee to
hold the goods for him.
Article 1515. Where a negotiable
document of title is transferred for
value by delivery, and the
indorsement of the transferor is
essential for negotiation, the
transferee acquires a right against
the transferor to compel him to
indorse the document unless a
contrary intention appears. The
negotiation shall take effect as of
the time when the indorsement is
actually made. (n)
Rights of persons to whom an order
document of title has been delivered
without indorsement
1) Right to the goods as against
the transferor; and
2) Right to compel the transferor
to indorse the indorsement.
Article 1516. A person who for
value negotiates or transfers a
document of title by indorsement
or delivery, including one who
assigns for value a claim secured
by a document of title unless a
contrary intention appears,
warrants:
(1) That the document is genuine;
(2) That he has a legal right to
negotiate or transfer it;
(3) That he has knowledge of no
fact which would impair the
validity or worth of the document;
and
(4) That he has a right to transfer
the title to the goods and that the
goods are merchantable or fit for a
particular purpose, whenever such
warranties would have been
implied if the contract of the
parties had been to transfer
without a document of title the
goods represented thereby. (n)
Note
 This refers to the warranties
or liabilities of a person
negotiating or transferring a
document.
Article 1517. The indorsement of a
document of title shall not make
the indorser liable for any failure
on the part of the bailee who
issued the document or previous
indorsers thereof to fulfill their
respective obligations. (n)
Note
 The indorsement of a
document of title amounts
merely to a conveyance by the
indorser, not a contract of
guaranty. Thus, an indorser of
a document of title shall not
be liable to the holder if, for
example, the bailee fails to
deliver the goods because they
were lost due to his fault or
negligence.
Article 1518. The validity of the
negotiation of a negotiable
document of title is not impaired
by the fact that the negotiation was
a breach of duty on the part of the
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person making the negotiation, or
by the fact that the owner of the
document was deprived of the
possession of the same by loss,
theft, fraud, accident, mistake,
duress, or conversion, if the person
to whom the document was
negotiated or a person to whom
the document was subsequently
negotiated paid value therefor in
good faith without notice of the
breach of duty, or loss, theft, fraud,
accident, mistake, duress or
conversion. (n)
Note
 A negotiable document may
be negotiated by any person in
possession of the same,
however such possession may
have been acquired. Thus, it
may be negotiated even by a
thief or finder and the holder
thereof would acquire a good
title thereto if he paid value
therefor in good faith without
notice of the seller’s defect of
title.
 This must be read with Art.
1512 which provides that
neither a thief nor a finder
may negotiate a negotiable
document of title.
Article 1519. If goods are delivered
to a bailee by the owner or by a
person whose act in conveying the
title to them to a purchaser in good
faith for value would bind the
owner and a negotiable document
of title is issued for them they
cannot thereafter, while in
possession of such bailee, be
attached by garnishment or
otherwise or be levied under an
execution unless the document be
first surrendered to the bailee or
its negotiation enjoined. The bailee
shall in no case be compelled to
deliver up the actual possession of
the goods until the document is
surrendered to him or impounded
by the court. (n)
Notes
 The bailee has the direct
obligation to hold possession
of the goods for the original
owner or to the person to
whom the negotiable
document of title has been
duly negotiated.
 While in possession of the
bailee, the goods cannot be
attached or levied under an
execution unless the
document be first surrendered
or its negotiation prohibited
by the court.
Article 1520. A creditor whose
debtor is the owner of a negotiable
document of title shall be entitled
to such aid from courts of
appropriate jurisdiction by
injunction and otherwise in
attaching such document or in
satisfying the claim by means
thereof as is allowed at law or in
equity in regard to property which
cannot readily be attached or
levied upon by ordinary legal
process. (n)
Notes
 As the goods cannot be
readily be attached or levied
upon by ordinary legal
process, as limited by Art.
1519, this provision gives the
court full power to aid by
injunction (restraining order)
and otherwise a creditor
seeking to get a negotiable
document covering such
goods.
 If the injunction was issued
but the negotiable document
of title is negotiated to an
innocent person, the transfer
is nevertheless effectual.
Art. 1521
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
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on the contract, express or implied,
between the parties. 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 whole of the goods so delivered he
deliverable state must be borne by
the seller.
Place of Delivery
1. There is an agreement – place
agreed upon;
2. There is no agreement – by
usage or trade;
3. There is no agreement and no
prevalent usage – seller’s place
of business;
4. Any other case – seller’s
residence;
5. In case of specific goods,
which to the knowledge of the
parties at the time the
contract was made were in
some other place – that place
Time of Delivery
1. There is an agreement – time
agreed upon;
2. There is no agreement – by usage
or trade;
3. There is no agreement and no
prevalent usage – within a
reasonable time and at a
reasonable hour of the day.
Art. 1522
Where the seller delivers to the
buyer a quantity of goods less than
he contracted to sell, the buyer
may reject them, but if the buyer
accepts or retains the goods so
delivered, knowing that the seller
is not going to perform the
contract in full, he must pay for
them at the contract rate. If,
however, the buyer has used or
disposed of the goods delivered
before he knows that the seller is
not going to perform his contract
in full, the buyer shall not be liable
for more than the fair value to him
of the goods so received.
Where the seller delivers to the
buyer a quantity of goods larger
than he contracted to sell, the
buyer may accept the goods
included in the contract and reject
the rest. If the buyer accepts the
must pay for them at the contract
rate.
Where the seller delivers to the
buyer the goods he contracted to
sell mixed with goods of a
different description not included
in the contract, the buyer may
accept the goods which are in
accordance with the contract and
reject the rest.
In the preceding two paragraphs, if
the subject matter is indivisible,
the buyer may reject the whole of
the goods.
The provisions of this article are
subject to any usage of trade,
special agreement, or course of
dealing between the parties.
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Delivery of Goods Less Than
Quantity Contracted
1. buyer may reject the goods so
delivered;
2. buyer may accept the goods
and pay for their:
2.1. Price at the contract rate,
if he knew that no more
were to be delivered;
2.2. Fair market value, if he did
not know that the seller is
going to be guilty of
breach of contract.
Delivery of Goods More Than
Quantity Contracted
1. buyer may accept the quantity
contracted for and reject the
excess;
2. buyer may accept all the
goods delivered but pay for its
contract rate.
Delivery of Goods Mixed With
Others
 buyer may accept those which
are in accordance with the
contract and reject the rest.
Effect of Indivisibility of Subject
Matter
 buyer may reject the whole of
the goods.
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)
Seller’s duty after delivery to carrier
1) To enter on behalf of buyer
into such contract reasonable
under the circumstances. If he
omits to do so, the buyer may
decline to treat the delivery to
the carrier as a delivery to
himself in case the goods are
lost or damaged in the course
of transit, or the buyer may
hold the seller responsible in
damages;
2) To give notice to the buyer
regarding the necessity to
insure the goods during
transit if under the
circumstances it is usual to
insure them. If the seller fails
to do so, the risk will be borne
by him.
Notes
 COD/collect on delivery – the
carrier acts for the seller in
collecting the purchase price.
 FOB/free on board – the goods
are to be delivered free of
expense to the buyer to the
point where they are FOB.
 CIF/cost insurance and freight
– signify that the price fixed
covers not only the cost of the
goods, but the expenses of
freight and insurance to be
paid by the seller up to the
point especially named.
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Art. 1524
The vendor shall not be bound to
deliver the thing sold, if the
vendee has not paid him the price,
or if no period for the payment has
been fixed in the contract.
Notes
 As a rule, the thing shall not
be delivered unless the price
be paid.
 Exception is the thing must be
delivered though the price not
be first paid, if a time for such
payment has been fixed in the
contract.
Art. 1525 (UNPAID SELLER)
The seller of goods is deemed to be
an unpaid seller within the
meaning of this Title:
(1) When the whole of the price has
not been paid or tendered;
(2) When 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
instrument, the insolvency of the
buyer, or otherwise.
In Articles 1525 to 1535 the term
"seller" includes an agent of the
seller to whom the bill of lading
has been indorsed, or a consignor
or agent who has himself paid, or
is directly responsible for the
price, or any other person who is
in the position of a seller.
Notes
 Unpaid seller – one who has
not been paid or tendered the
whole price or who has
received a bill of exchange or
other negotiable instrument as
conditional payment and the
condition on which it was
received has been broken by
reason of the dishonor of the
instrument.
 Lien - right to detain a thing
until demand is satisfied.
 Tender of payment of buyer
destroys seller’s lien.
 Payment of part of price does
not destroy seller’s lien
 The seller remains an unpaid
seller even if title has passed
to the buyer.
 Delivery of promissory notes
payable to order, or bills of
exchange or other mercantile
documents shall produce the
effect of payment only when
they have been cashed or
when through the fault of the
creditor they have been
impaired. (Art. 1249 par. 2)
Art. 1526
Subject to the provisions of this
Title, notwithstanding that the
ownership in the goods may have
passed to the buyer, the unpaid
seller of goods, as such, has:
(1) A lien on the goods or right to
retain them for the price while he
is in possession of them;
(2) In case of the insolvency of the
buyer, a right of stopping the
goods in transitu after he has
parted with the possession of
them;
(3) A right of resale as limited by
this Title;
(4) A right to rescind the sale as
likewise limited by this Title.
Where the ownership in the goods
has not passed to the buyer, the
unpaid seller has, in addition to his
other remedies a right of
withholding delivery similar to and
coextensive with his rights of lien
and stoppage in transitu where the
ownership has passed to the buyer.
Rights of Unpaid Seller
1. Lien while in possession (Art.
1527);
2. In case of insolvency, right of
stopping goods in transitu,
after parted with possession
(Art. 1530);
3. Right of Resale (Art. 1533);
4. Right to Rescind (Art. 1534)
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Art. 1527 (LIEN WHILE IN
POSSESSION)
Subject to the provisions of this
Title, the unpaid seller of goods
who is in possession of them is
entitled to retain possession of
them until payment or tender of
the price in the following cases,
namely:
(1) Where the goods have been sold
without any stipulation as to
credit;
(2) Where the goods have been sold
on credit, but the term of credit
has expired;
(3) Where the buyer becomes
insolvent.
The seller may exercise his right of
lien notwithstanding that he is in
possession of the goods as agent or
bailee for the buyer.
When unpaid seller’s possessory lien
may be exercised
1. Sales without stipulation as to
credit. The seller is entitled to the
payment of the price at the same
time that he transfers the
possession of the goods. As such,
the seller may exercise his lien
upon the goods until payment or
tender of the entire price.
 CREDIT SALE - the seller binds
himself to give the goods over
to the buyer without receiving
at that time payment for
them.
2. Expiration of term of credit. If
the buyer fails to exercise his
right until the term of credit has
expired and the price becomes
due, he loses the right which he
thereto had.
3. Insolvency of the buyer. Lien of
the seller in possession is revived
even though the time for
payment of the price has not yet
arrived.
Article 1528. Where an unpaid seller
has made part delivery of the goods,
he may exercise his right of lien on
the remainder, unless such part
delivery has been made under such
circumstances as to show an intent
to waive the lien or right of
retention. (n)
Note
 Lien is not generally lost by
part delivery. However, if the
part delivery of the goods is
intended as symbolical
delivery of the whole, and,
therefore, a waiver of any
right of retention as to the
remainder, the lien is lost.
Art. 1529 (Correlate w/ 1527 –
when lien arises)
The unpaid seller of goods loses
his lien thereon:
(1) When he delivers the goods to a
carrier or other bailee for the
purpose of transmission to the
buyer without reserving the
ownership in the goods or the right
to the possession thereof;
(2) When the buyer or his agent
lawfully obtains possession of the
goods;
(3) By waiver thereof.
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.
When unpaid seller losses
possessory lien
1. Delivery to agent or bailee of
buyer without reserving
ownership or right of
possession thereof;
2. Possession by buyer or his
agent;
3. Waiver of the lien
Art. 1530
Subject to the provisions of this
Title, when the buyer of goods is
or becomes insolvent, the unpaid
seller who has parted with the
possession of the goods has the
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right of stopping them in transitu,
that is to say, he may resume
possession of the goods at any
time while they are in transit, and
he will then become entitled to the
same rights in regard to the goods
as he would have had if he had
never parted with the possession.
Right of seller to stop goods in
transitu
1. By obtaining actual possession
of the goods; or
2. By giving notice of his claim to
the carrier or other bailee in
possession (Art. 1532)
Note
 Buyer’s insolvency need not be
judicially declared.
Requisites
1. Seller must be unpaid;
2. Buyer must be insolvent;
3. Goods must be in transit (Art.
1531);
4. Seller must either actually
take possession of the goods
sold or give notice of his claim
to the carrier or other person
in possession (Art. 1532
par.1);
5. Seller must surrender the
negotiable document of title,
if any issued by the carrier or
bailee (Ibid., par. 2);
6. Seller must bear the expenses
of delivery of the goods after
the exercise of the right.
Art. 1531
Goods are in transit within the
meaning of the preceding article:
(1) From the time when they are
delivered to a carrier by land,
water, or air, or other bailee for 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;
(2) If the goods are rejected by the
buyer, and the carrier or other
bailee continues in possession of
them, even if the seller has refused
to receive them back.
Goods are no longer in transit
within the meaning of the
preceding article:
(1) If the buyer, or his agent in that
behalf, obtains delivery of the
goods before their arrival at the
appointed destination;
(2) If, after the arrival of the goods
at the appointed destination, the
carrier or other bailee
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 destination
for the goods may have been
indicated by the buyer;
(3) If the carrier or other bailee
wrongfully refuses to deliver the
goods to the buyer or his agent in
that behalf.
If the goods are delivered to a ship,
freight train, truck, or airplane
chartered by the buyer, it is a
question depending on the
circumstances of the particular
case, whether they are in the
possession of the carrier as such or
as agent of the buyer.
If part delivery of the goods has
been made to the buyer, or his
agent in that behalf, the remainder
of the goods may be stopped in
transitu, unless such part delivery
has been under such circumstances
as to show an agreement with the
buyer to give up possession of the
whole of the goods.
When goods are in transit
1. after delivery to a carrier or
other bailee and before the
buyer or his agent takes
delivery of them;
2. if the goods are rejected by
the buyer, and the carrier or
other bailee continues in
possession of them
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When goods considered no longer in
transit
1. after delivery to the buyer or
his agent in that behalf;
2. if the buyer or his agent
obtains possession of the
goods at a point before the
destination originally fixed;
3. if the carrier or bailee
acknowledges to hold the
goods on behalf of the buyer;
4. if the carrier or bailee
wrongfully refuses to deliver
the goods to the buyer
Notes
 Chartered by the buyer - the
mere fact that the carrier is
chartered by the buyer does
not make a delivery to the
same a delivery to the buyer.
 Owned by the buyer - delivery
to a vessel belonging to the
buyer is delivery to the buyer.
Article 1532. The unpaid seller
may exercise his right of stoppage
in transitu either by obtaining
actual possession of the goods or
by giving notice of his claim to the
carrier or other bailee in whose
possession the goods are. Such
notice may be given either to the
person in actual possession of the
goods or to his principal. In the
latter case the notice, to be
effectual, must be given at such
time and under such circumstances
that the principal, by the exercise
of reasonable diligence, may
prevent a delivery to the buyer.
When notice of stoppage in transitu
is given by the seller to the carrier,
or other bailee in possession of the
goods, he must redeliver the goods
to, or according to the directions
of, the seller. The expenses of such
delivery must be borne by the
seller. If, however, a negotiable
document of title representing the
goods has been issued by the
carrier or other bailee, he shall not
be obliged to deliver or justified in
delivering the goods to the seller
unless such document is first
surrendered for cancellation. (n)
Note
 Same discussion with Art.
1530
Art. 1533
Where the goods are of perishable
nature, or where the seller
expressly reserves the right of
resale in case the buyer should
make default, or where the buyer
has been in default in the payment
of the price for an unreasonable
time, an unpaid seller having a
right of lien or having stopped the
goods in transitu may resell the
goods. He shall not thereafter be
liable to the original buyer upon
the contract of sale or for any
profit made by such resale, but
may recover from the buyer
damages for any loss occasioned
by the breach of the contract of
sale.
Where a resale is made, as
authorized in this article, the buyer
acquires a good title as against the
original buyer.
It is not essential to the validity of
resale that notice of an intention to
resell the goods be given by the
seller to the original buyer. But
where the right to resell is not
based on the perishable nature of
the goods or upon an express
provision of the contract of sale,
the giving or failure to give such
notice shall be relevant in any
issue involving the question
whether the buyer had been in
default for an unreasonable time
before the resale was made.
It is not essential to the validity of
a resale that notice of the time and
place of such resale should be
given by the seller to the original
buyer.
The seller is bound to exercise
reasonable care and judgment in
making a resale, and subject to this
requirement may make a resale
either by public or private sale. He
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cannot, however, directly or
indirectly buy the goods.
When resale is allowable
 Unpaid seller has either a
right of lien; or a right to stop
the goods in transitu under
either:
1. goods are perishable in
nature; or
2. right to resell is expressly
reserved, in case buyer
should make a default; or
3. buyer delays in the
payment of the price for
an unreasonable time
 Seller is not liable for any
profit made by such resale,
but if he sells for less than the
price, he has a right to sue for
the balance.
 Notice of resale not essential.
However, the giving or failure
to give notice is relevant in
determining the
reasonableness of the time
given the buyer to make good
his obligations under the
contract.
Art. 1534
An unpaid seller having the right
of lien or having stopped the goods
in transitu, may rescind the
transfer of title and resume the
ownership in the goods, where he
expressly reserved the right to do
so in case the buyer should make
default, or where the buyer has
been in default in the payment of
the price for an unreasonable time.
The seller shall not thereafter be
liable to the buyer upon the
contract of sale, but may recover
from the buyer damages for any
loss occasioned by the breach of
the contract.
The transfer of title shall not be
held to have been rescinded by an
unpaid seller until he has
manifested by notice to the buyer
or by some other overt act an
intention to rescind. It is not
necessary that such overt act
should be communicated to the
buyer, but the giving or failure to
give notice to the buyer of the
intention to rescind shall be
relevant in any issue involving the
question whether the buyer had
been in default for an unreasonable
time before the right of rescission
was asserted.
When seller may rescind
 Unpaid seller has either a
right of lien; or a right to stay
the goods in transitu under
either:
1. right to rescind is
expressly reserved in case
the buyer should make a
default; or
2. buyer delays in the
payment of the price for
an unreasonable time.
 Communication to rescind not
necessary.
Article 1535. Subject to the
provisions of this Title, the unpaid
seller's right of lien or stoppage in
transitu is not affected by any sale,
or other disposition of the goods
which the buyer may have made,
unless the seller has assented
thereto.
If, however, a negotiable document
of title has been issued for goods,
no seller's lien or right of stoppage
in transitu shall defeat the right of
any purchaser for value in good
faith to whom such document has
been negotiated, whether such
negotiation be prior or subsequent
to the notification to the carrier, or
other bailee who issued such
document, of the seller's claim to a
lien or right of stoppage in
transitu. (n)
Notes
 Where goods are not covered
by a negotiable document of
title, and they are subject to a
lien, and the unpaid seller is
in possession of them, a
purchaser from the original
buyer can acquire only such
right as the buyer then had.
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 Where goods are covered by a
negotiable document of title,
the seller’s lien cannot prevail
against the rights of a
purchaser for value in good
faith to whom the document
has been indorsed.
Art. 1536
The vendor is not bound to deliver
the thing sold in case the vendee
should lose the right to make use
of the term as provided in Article
1198.
Note
 When a period has been fixed
for payment, the vendor must
deliver the thing sold though
the price be not first paid. But
even if the vendee was given
the benefit of a period, the
vendor may not be compelled
to make delivery, should the
vendee lose the right to make
use of the term under Art.
1198:
1. vendee becomes insolvent,
unless he gives a guaranty
or security for the price;
2. vendee does not furnish to
the vendor the guaranties
or securities promised;
3. by his own acts, vendee
has impaired said
guaranties or securities;
4. vendee violates any
undertaking, in
consideration of which the
vendor agreed to the
period;
5. vendee attempts to
abscond.
Art. 1537
The vendor is bound to deliver the
thing sold and its accessions and
accessories in the condition in
which they were upon the
perfection of the contract.
All the fruits shall pertain to the
vendee from the day on which the
contract was perfected.
Accessions
 the fruits of a thing; or
additions to or improvements
upon a thing like the young of
animals, house or trees on a
land, etc.
Accessories
 anything attached to a
principal thing for its
completion, ornament, or
better use such as picture
frame, key of a house, etc.
Art. 1538
In case of loss, deterioration or
improvement of the thing before
its delivery, the rules in Article
1189 shall be observed, the vendor
being considered the debtor.
1. If the thing is lost without the
fault of the vendor, the
obligation shall be
extinguished;
2. If the thing is lost through the
fault of the vendor, he shall be
obliged to pay damages; it is
understood that the thing is
lost when it perishes, or goes
out of commerce, or disappears
in such a way that its existence
is unknown or it cannot be
recovered;
3. When the thing deteriorates
without the fault of the vendor,
the impairment is to be borne
by the vendee;
4. If it deteriorates through the
fault of the vendor, the creditor
may choose between the
rescission of the obligation and
its fulfillment, with indemnity
for damages in either case;
5. If the thing is improved by its
nature, or by time, the
improvement shall inure to the
benefit of the vendee;
6. If it is improved at the expense
of the vendor, he shall have no
other right than that granted to
the usufructuary.
Note
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 This refers to the rules in case
of loss, deterioration, or
improvement of thing before
delivery.
 Usufruct - the right to enjoy
the property of another
temporarily, including both
the right to use and the right
to the fruits or income
thereof.
Article 1539. The obligation to
deliver the thing sold includes that
of placing in the control of the
vendee all that is mentioned in the
contract, in conformity with the
following rules:
If the sale of real estate should be
made with a statement of its area,
at the rate of a certain price for a
unit of measure or number, the
vendor shall be obliged to deliver
to the vendee, if the latter should
demand it, all that may have been
stated in the contract; but, should
this be not possible, the vendee
may choose between a to judicial sales.
proportional reduction of the price
and the rescission of the contract,
provided that, in the latter case,
the lack in the area be not less than
one-tenth of that stated.
The same shall be done, even when
the area is the same, if any part of
the immovable is not of the quality
specified in the contract.
The rescission, in this case, shall
only take place at the will of the
vendee, when the inferior value of
the thing sold exceeds one-tenth of
the price agreed upon.
Nevertheless, if the vendee would
not have bought the immovable
had he known of its smaller area of
inferior quality, he may rescind the
sale. (1469a)
When vendee entitled to rescind sale
of realty
1) If the lack in area is at least
1/10 than that stated or
stipulated; (par.2)
2) If the deficiency in the quality
specified in the contract
exceeds 1/10 of the price
agreed upon (par. 3); and
3) If the vendee would not have
bought the immovable had he
known of its smaller area or
inferior quality irrespective of
the extent of the lack in area
or quality. (pars. 4, 5)
Article 1540. If, in the case of the
preceding article, there is a greater
area or number in the immovable
than that stated in the contract, the
vendee may accept the area
included in the contract and reject
the rest. If he accepts the whole
area, he must pay for the same at
the contract rate. (1470a)
Note
 The vendee may not withdraw
from the contract.
Article 1541. The provisions of the
two preceding articles shall apply
Article 1542. In the sale of real
estate, made for a lump sum and
not at the rate of a certain sum for
a unit of measure or number, there
shall be no increase or decrease of
the price, although there be a
greater or less area or number than
that stated in the contract.
The same rule shall be applied
when two or more immovables as
sold for a single price; but if,
besides mentioning the boundaries,
which is indispensable in every
conveyance of real estate, its area
or number should be designated in
the contract, the vendor shall be
bound to deliver all that is
included within said boundaries,
even when it exceeds the area or
number specified in the contract;
and, should he not be able to do so,
he shall suffer a reduction in the
price, in proportion to what is
lacking in the area or number,
unless the contract is rescinded
because the vendee does not
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accede to the failure to deliver
what has been stipulated. (1471)
Notes
 If the sale is made for a lump
sum, the cause of the contract
is the thing sold irrespective
of its number or measure.
 If the vendor cannot deliver to
the vendee all that is included
within the boundaries
mentioned in the contract, the
latter has the option to reduce
the price in proportion to the
deficiency or to set aside the
contract.
Article 1543. The actions arising
from articles 1539 and 1542 shall
prescribe in six months, counted
from the day of delivery.
Note
 The actions based on Arts.
1539 and 1542 for either
rescission of the contract or
proportionate reduction of the
price must be brought within
(6) months counted from the
day of delivery.
Art. 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.
Rules as to preference of ownership
in case of a double sale
1. Movable - the ownership shall
be acquired by the vendee
who first takes possession in
good faith
2. Immovable:
2.1. vendee who first registers
the sale in good faith
2.2. in the absence of
registration, the vendee
who first takes
possession in good faith
2.3. in the absence of both
registration and
possession, the vendee
who presents the oldest
title (who first bought the
property) in good faith.
Illustrations
PROBLEM 1: S sold to B a cash
register. The register, however, was
allowed to remain in the hands of S.
subsequently, S sold the same
register to C who bought it in good
faith and took possession thereof.
Answer: C should be considered as
the owner of the property sold.
PROBLEM 2: S sold a parcel of land
to B. Later, S sold the same land to C
who, in good faith, first registered
the deed of sale.
Answer: The ownership belongs to
C. The remedy of B is to sue S for
breach of warranty against eviction.
In case of double registration, the
title should remain in the name of
the person first securing registration
in good faith.
PROBLEM 3: If neither sale was
registered and C took possession of
the land, in good faith.
Answer: The ownership shall also
belong to C.
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PROBLEM 4: In the absence of

registration and possession by B and
C.

Answer: The ownership shall pertain

to B, his title being older than that
of C.

PROBLEM 5: In the same example, S

sold the parcel of land to B and then
to C, who both acted in good faith.
After acquiring knowledge of the
second sale to C, B registered the
sale.

Answer: B, as the first vendee, has

still a better right. His good faith
when he purchased the land
subsisted and continued to exist
when he registered the sale.

PROBLEM 6: If C is the one who

registered the sale after he has
acquired knowledge of the previous
sale to B.

Answer: As 2nd vendee, good faith at

the time of purchase is not
sufficient. He must have also acted
in good faith in recording his sale.
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10. Divisible object vs. Indivisible

1495
11. Principal obligations of the
vendor
11.1. Transfer ownership
11.2. Deliver the thing
11.3. Warrant against eviction
or hidden defects
11.4. Take care of the thing
with proper diligence
11.5. Pay for expenses of
execution and registration of
sale

1496
12. How ownership is transferred to
vendee (delivery)
13. Ways of effecting delivery
13.1. Actual or real 1497
Outline for Articles 1489-1544 13.2. Constructive or legal
1498-1501
1489 13.3. Any other manner 1496-
1. Persons who can enter into a 1499
contract of sale 14. Ways of effecting Constructive
2. (2) Kinds of incapacity delivery (refer to 1498-1501)
2.1. Absolute 15. Define Public Instrument
2.2. Relative 16. Exception in transferring
3. Defect of contract entered into by ownership despite delivery
minor and incapacitated persons (Contract to Sell)
(VOID)
1502
1490 17. Sale or Return vs. Sale on Trial
4. General rule on husband and wife 18. Arts. 1503, 1507-1520; 1523
5. Exceptions involves Transportation Law and
5.1. Marriage settlements Negotiable Instruments Law
5.2. Judicial separation of
property 1504
19. General rule - the goods remain
1491 at the seller’s risk until the
6. Persons relatively incapacitated ownership therein is transferred
6.1. Guardians to the buyer.
6.2. Agents 20. Thing is lost after perfection of
6.3. Executors and Administrators the contract but before its
6.4. Public officers and employees delivery, the risk of loss by a
and lawyers fortuitous event without the
6.5. Others disqualified by law seller’s fault is borne by the
buyer as an exception to the rule
1493 of res perit domino.
7. Rules on lost
1505
1494 21. NOTE: A sale by a person not the
8. Rules on lost in sale of specific owner (UNENFORCEABLE)
thing 22. See (5) Exceptions
9. Divisible sale vs. Indivisible
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1506 37.2.1. First registers

23. Seller has VOIDABLE title, buyer 37.2.2. First takes
acquires good title possession
24. Requisites 37.2.3. Presents the
24.1. Before title has been oldest title
avoided
24.2. In good faith for value
24.3. Without notice of defect

1521
25. Rules on Place of delivery
26. Rules on Time of delivery

1522
27. Remedies of buyer in case goods
delivered are less than quantity
contracted
28. Remedies of buyer in case goods
delivered are more than quantity
contracted

1525
29. Define Unpaid Seller
30. Define Lien

1526
31. Rights of unpaid seller
31.1. Lien 1527
31.2. Stoppage in transitu 1530
31.3. Resale 1533
31.4. Rescind 1534

1533
32. When resale is allowed

1534
33. When seller may rescind

1536
34. When vendee losses right to
make use of period

1537
35. Delivery of Accessions and
Accessories

1538
36. Rules in case of loss or
deterioration

1544
37. Rules in case of Double Sale
37.1. Movable (first
possession in good faith)
37.2. Immovable