LAW ON SALES, AGENCY, AND 5.

NOMINATE- it has a special

CREDIT TRANSACTIONS name given to it by law namely
☺ “SALE”
6. PRINCIPAL- it can exist by
CHAPTER 1 itself without being dependent
NATURE AND FORM OF THE upon
CONTRACT another contract.
(ARTS. 1458-1637)
ELEMENTS OF A CONTRACT OF
SALE
ARTICLE 1458 1. ESSENTIAL ELEMENTS/
CONCEPT OF CONTRACT OF REQUISITES
SALE A. CONSENT OR MEETING
-contract of sale is a contract OF THE MINDS
whereby one of the contracting -It refers to the consent
parties (SELLER) obligates himself to on the part of the SELLER to
transfer the ownership and to deliver transfer
a determinate thing, and the other and deliver and on the part of
party (BUYER) obligates himself to the buyer to pay the price.
pay a sum of money or its equivalent
(PRICE) -The parties must have
legal capacity to give consent
CHARACTERISTICS OF A and to
CONTRACT OF SALE obligate themselves.
1. CONSENSUAL- it is
perfected by mere consent of the -when there is an offer of
parties. one party, without the
2. BILATERAL- the parties are acceptance of
bound by reciprocal obligations the other,THERE IS NO
CONSENT
SELLER- to deliver and
transfer ownership of the thing B. OBJECT OR SUBJECT
sold MATTER
BUYER- to pay the price - It refers to the
determinate thing which is the
3. ONEROUS- the thing sold is object of the
conveyed in consideration of the price. contract.
4. COMMUTATIVE- the thing
sold is considered the equivalent of - If the seller and the
the buyer differ in regard to the
price paid thing sold, there
(the contract may be is no meeting of the minds
ALEATORY- depending on an therefore, there is no sale
uncertain
event or contingency)
C. CAUSE OR CONSIDERATION morals, good
-It refers to the “price customs,
certain in money or its public order, or public policy.
equivalent” (if the subject matter is illicit, the
contract is void and cannot,
2. NATURAL ELEMENTS- those therefore be ratified)
inherent in a contract of sale, c. not be impossible
which in the absence of
stipulation excluding them, are 2.RIGHTS- all rights which are
deemed to exist. not intransmissible or personal
Such as: warranty against may be the object
eviction, warranty against of sale.
hidden defects and Like: the right of
encumbrances usufruct, the right of
conventional redemption.
3. ACCIDENTAL ELEMENTS- it (services may be the object of
refers to the stipulation of the contract but cannot be the
parties such as terms, place and object of contract of sale)
time of payment, and other
conditions agreed upon KINDS OF ILLICIT THINGS
-illicit per se (of its nature) ex:
TWO KINDS OF CONTRACT OF decayed food unfit for
SALE consumption
1. ABSOLUTE- the sale is not -illicit per accidens ( because of
subject to any conditions and some provisions of law
where title or ownership declaring it illegal)
passes to the buyer upon the Ex: prohibited
delivery of the thing sold. lottery tickets and prohibited
drugs
2. CONDITIONAL-where the
contract is subject to certain RIGHT OF VENDOR TO TRANSFER
conditions usually the full OWNERSHIP
payment of the purchase price. 1. ONE CAN SELL ONLY
The delivery of the thing sold WHAT HE OWNS
does not transfer ownership -it is essential in order for
until the CONDITION is a sale to be valid, he must be
fulfilled the OWNER or at least must
be authorized by the owner of
ARTICLE 1459 the thing sold. It is a well known
REQUISITES CONCERNING principle of law that nobody can
OBJECT dispose of that which he does
1.THINGS not have.
a. determinate thing
b. licit or lawful (legal) –
it should not be contrary to law,
 2.SUFFICIENT IF RIGHT ARTICLE 1461
EXISTS AT TIME OF SALE OF THINGS HAVING
DELIVERY POTENTIAL EXISTENCE
-It is sufficient if he has -future thing not existing at the
the right to sell the thing at the time the contract is entered
time when the ownership is to into, may be the object of sale
pass. provided it has a potential or
possible existence. It is
reasonably certain to come into
existence as the natural
increment or usual incident of
ARTICLE 1460 something in existence already
SUBJECT MATTER MUST BE belonging to the seller, and the
DETERMINATE title will vest in the buyer the
1. WHEN THING moment the thing comes into
DETERMINATE existence.The thing sold,
-A thing is determinate however must be specific and
or specific when it is identified and it must be also
particularly designated or owned by the vendor at the
physically segregated from all time.
others of the same class. In
accordance with the general SALE OF HOPE OR EXPECTANCY
rule that the object of every The sale refers to an “expected
contract must be determinate thing” which is not yet in
as to its kind. existence, and not to the hope
-it is identified by its or expectancy which is already
individuality exists, in view of the condition
Ex: the watch I am that the thing will come into
wearing, my car existence, But the SALE OF
HOPE OR EXPECTANCY itself
2. SUFFICIENT IF SUBJECT is valid even if the thing hoped
MATTER CAPABLE OF BEING or expected does not come into
MADE DETERMINATE existence, unless the hope or
-it is sufficient that the expectancy is VAIN, in which
thing is determinable or case the sale is void.
capable of being made
determinate without the ARTICLE 1462
necessity of a new or further GOODS WHICH MAY BE THE
agreement between the parties OBJECT OF SALE
to ascertain its identity, Goods which form the subject
quantity, or quality. It cannot be of a contract of sale may be
known what may have been either:
sold; the contract shall be null a. EXISTING GOODS
and void. OWNED OR POSSESSED BY
THE SELLER
 ex: the sale of designated as an aliquot part of
bathroom fixtures currently the whole. Such sale shall
stored in the seller’s produce the effect of making
warehouse the seller and buyer co-owners
is a sale of existing goods of the thing sold.
b. FUTURE GOODS OR 2. BY CO-OWNER
GOODS TO BE -being the owner of his
MANUFACTURED, RAISED undivided interest therein, can
OR ACQUIRED dispose his share even without
BY THE the consent of the other
SELLER co-owner/s
EXAMPLES:
MANUFACTURED- like ARTICLE 1464
the sale of milk bottles to be SALE OF AN UNDIVIDED SHARE
manufactured with the name of OF A SPECIFIC MASS
the buyer pressed in the glass FUNGIBLE GOODS
RAISED- sale of chickens -refer to interchangeable
that may be raised in a poultry goods such as grain, oil, etc.
farm and sale of the future that allow one to be replaced by
harvest of palays from a another without loss of value.
ricefield
ACQUIRED- sale of EFFECT OF SALE
definite parcel of land the seller The owner of a mass of
expects to buy goods may sell only an
undivided share thereof,
provided the mass is specific or
capable of being made
determinate.
SALE OF FUTURE GOODS a. if the quantity i.e.,
Even though the contract is in number, weight or measure, of
the form of present sale, is valid the mass is MORE THAN the
only as an EXECUTORY quantity sold the parties shall
CONTRACT to be fulfilled by become co-owners of the mass.
the acquisition and delivery of
the goods specified b. if the quantity of the
mass is LESS THAN the
ARTICLE 1463 quantity sold, the buyer
SALE OF UNDIVIDED INTEREST IN becomes the owner of the
A THING whole mass, with the seller
1. BY SOLE OWNER being bound to make good the
-the sole owner of a thing deficiency from goods of the
may sell the entire thing; or same kind and quality, unless a
only a specific portion thereof; contrary intent appears.
or an undivided interest therein
and such interest may be RISK OF LOSS
 If the buyer becomes *the buyer, as a general
co-owner, with the seller, or rule, cannot return the object
other owners of the remainder sold
of the mass, it follows that the *the seller, warrants the
whole mass is at risk of all the thing sold
parties interested in it. *the buyer can deal with
the thing sold as he pleases,
SUBJECT MATTER being the owner
The subject matter is an
incorporeal or intangible right. IN AGENCY TO SELL:
*the agent receives the
ARTICLE 1465 goods as the goods of the
SALE OF THING SUBJECT TO A principal who retains his
RESOLUTORY CONDITION ownership
-A resolutory condition is an over them.
uncertain event upon the *the agent simply to
happening of which the account for the proceeds of the
obligation (or right) subject to sale he may make on
it is extinguished. the principal
behalf;
-If the resolutory condition *the agent can return the
attaching to the object of the object in case he is unable to
contract, which object may sell the same to a
include things as well as rights third
should happen, then the vendor person; and
cannot transfer the ownership *the agent makes no
of what he sold since there is no warranty for which he assumes
object. personal liability as
long as he acts within his
ARTICLE 1466 authority and in the name of
SALE DISTINGUISHED FROM the seller;
AGENCY TO SELL *the agent in dealing with
-a contract of agency, a person the thing received, must act
binds himself to render some and is bound
service or to do something in according to the
representation or on behalf of instructions of his principal
another, with the consent or
authority of the latter. ARTICLE 1467
SALE DISTINGUISHED FROM
CONTRACT FOR A PIECE OF
IN SALE: WORK
*the buyer receives the -a contract for a piece of
goods as owner work, the contractor binds
*the buyer has to pay the himself to execute a piece of
price work for the employer, in
 consideration of a certain price *the contract shall be
or compensation one of sale or barter depending
upon the manifest
CONTRACT OF SALE intention of the
-which the vendor in the parties
ordinary course of business IF THE INTENTION DOES
manufactures or procures for NOT CLEARLY:
the general market, whether Contract is one of barter-
the same is on hand or not. if the value of the thing given as
(within the part of the consideration
statute of frauds) exceeds the monetary
CONTRACT FOR A PIECE OF consideration
WORK Consideration is one of
-if the goods are sale- if the monetary
manufactured specially for the consideration is more than or
customer and upon his special equal to the value of the thing
order, and not for the general given as part of the
market. consideration
(are not within
the statute of frauds) ARTICLE 1469
WHEN PRICE CONSIDERED
RISK OF LOSS CERTAIN
Before the delivery is 1. NO SALE IF PRICE NOT
borne by the worker or CERTAIN OR
contractor, not by the employer ASCERTAINABLE
(the person who ordered) -the price in a contract of
sale ought to be settled for
ARTICLE 1468 there can be NO SALE
SALE DISTINGUISHED FROM WITHOUT A PRICE. It must
BARTER be certain or capable of being
-the contract of barter or ascertained in money or its
exchange, one of the parties equivalent; and money is to be
binds himself to give one thing understood as currency and its
in consideration other’s equivalent means promissory
promise to give another thing notes, checks and other
-in contract of sale the vendor mercantile instruments as
gives a thing in consideration representing money.
for a price of in money.
2. CASES WHEN PRICE
However, where the CONSIDERED CERTAIN
consideration is partly in money a. the parties have fixed
and partly in another thing, the or agreed upon a definite
ff. rules shall be observed to amount
determine whether the
contract is sale or barter:
 b. it be certain with Which consist of a choice
reference to another thing between rescission or
certain fulfillment, with damages in
c. the determination of either case. If the innocent
the price is left to the judgment party chooses fulfillment, the
of a specified court shall fix the price
person or
persons.
The last two cases are ARTICLE 1470
applicable only when no specific EFFECT OF GROSS INADEQUACY
amount has been stipulated by OF PRICE IN VOLUNTARY
the parties SALES
-gross adequacy does not affect
EFFECT WHEN PRICE FIXED BY a contract of sale, except as it
THE 3RD PERSON may indicate a defect in the
DESIGNATED consent, or that the parties
EXCEPTIONS SUCH AS: really intended a donation or
RD
1. WHEN THE 3 PERSON some other act or contract.
ACTS IN BAD FAITH OR BY EFFECT OF GROSS INADEQUACY
MISTAKE OF PRICE IN VOLUNTARY OR
RD
2. WHEN THE 3 PERSON EXECUTION SALES
DISREGARDING SPECIFIC 1. GENERAL RULE
INSTRUCTIONS OR THE Judicial or execution sale
PROCEDURE LAID DOWN BY is one made by a court with
THE PARTIES respect to the property of a
debtor for the satisfaction of his
EFFECT WHERE PRICE NOT FIXED unpaid indebtedness.
BY THIRD PERSON
DESIGNATED 2.WHERE PRICE IS SO LOW
RD
1. IF THE 3 PERSON AS TO BE “SHOCKING TO
DESIGNATED BY THE THE CONSCIENCE”
PARTIES TO FIX THE PRICES A judicial sale, say of real
REFUSES OR CANNOT FIX property will be set aside by the
The contract shall court.
become ineffective, as if no
price had been agreed upon 3.WHERE SELLER GIVEN THE
unless of course, the parties RIGHT TO REPURCHASE
subsequently agree upon the -the validity of the sale is
price. not necessarily affected where
the law gives to the owner the
RD
2. IF SUCH 3 PERSON IS right to redeem, as when a sale
PREVENTED FROM FIXING is made at public auction, upon
THE PRICE BY THE FAULT the theory that the lesser the
OF SELLER OR THE BUYER. price, the easier it is for the
 owner to buy back the which are subject to
property. fluctuations of the market.

ARTICLE 1471 ARTICLE 1473

EFFECT WHERE THE PRICE FIXING OF PRICE BY ONE OF THE
SIMULATED CONTRACTING PARTIES
1. IF THE PRICE IS NOT ALLOWED
SIMULATED OR FALSE 1. If the consent is essential to a
Then the sale is void but contract of sale, the
the contract shall be valid as a determination of the price
donation cannot be left to the discretion
of one of the contracting party.
2. IF THE CONTRACT IS NOT The validity or compliance of
SHOWN TO BE DONATION the contract cannot be made to
OR ANY OTHER ACT OR depend upon the will of one
CONTRACT TRANSFERRING party
OWNERSHIP
-because the parties do 2.The price must be
not bound at all the ownership determined by both parties or
of the thing is not transferred. left to the judgment of a
The contract is void and specified person or persons
inexistent however, where the price fixed
by one party is accepted by the
other, the contract is deemed
ARTICLE 1472 perfected because in this case,
PRICE ON A GIVEN DAY AT there exists a true meeting of
PARTICULAR MARKET minds upon the price.
-It follows the principle in
ARTICLE 1469 that price is ARTICLE 1474
considered if it could be EFFECT OF FAILURE TO
determined with reference to DETERMINE PRICE
another thing certain 1. WHERE CONTRACT
-“provided said amount be EXECUTORY
certain” when an amount is -if the price cannot be
fixed ABOVE or BELOW the determined in accordance with
price on a given day or in a articles 1469 and 1472 the
particular exchange or market, contract is without effect.
the said amount must be Consequently, there is no
certain, otherwise THE SALE obligation on the part of the
IS INEFFICACIOUS because vendor to deliver the thing and
the price cannot be on the part of the buyer to pay.
determined.
-this article is applicable to 2. WHERE DELIVERY HAS
fungible things, the prices of BEEN MADE
 -if the thing has already and valuable a consideration as
been delivered and a larger sum stipulated or paid.
appropriated by the buyer, the EFFECT OF FAILURE TO PAY
latter must pay a reasonable PRICE/ ABSENCE OF PRICE
price.The reasonable price or 1. PRICE STIPULATED
value of goods is generally the -the vendor’s remedy in
market price at the time and such case is generally to
place fixed by the contract or demand specific performance
by law for the delivery of the or rescission with damages in
goods. either case.

ARTICLE 1475
PERFECTION OF CONTRACT OF
SALE 2. NO PRICE STIPULATED
-a contract of sale is perfected -in such case, the sale is
at the moment there is a void and non-existent as
meeting of minds upon the without cause or consideration.
thing which is the object of the Of course, if there is no
contract and upon the price stipulation or meeting of minds
the reciprocal obligations of the regarding the purchase price,
parties arise. But the ownership there is no contract of sale.
is not transferred until delivery
of the thing. ARTICLE 1476
RULES GOVERNING AUCTION
-in case one of the contracting SALES
parties should not comply with 1. SALES OF SEPARATE LOTS
what is incumbent upon him, BY AUCTION ARE SEPARATE
the injured party sue for SALES
FULFILLMENT or Each lot is the subject of
RESCISSION with the payment a separate contract of sale.
of damages in either case.
2. SALE PERFECTED BY THE
RIGHT OF OWNER TO FIX HIS FALL OF THE HAMMER
OWN PRICE -the seller is making an
1. it is up to the buyer to accept invitation to those present to
or reject it. He may even make offers which they do by
impose a condition hard to making bids, one of which is
fulfill and name a price quite ultimately accepted. It follows
out of proportion to the real that the bidder may retract his
value of the thing offered for bid and the auctioneer may
sale withdraw the goods from sale
2. He is also well within his right any time before the hammer
to quote a small or nominal falls. However, if the sale has
consideration and such been announced to be without
consideration is just as effectual reserve, the auctioneer cannot
withdraw the goods from sale a
once a bid has been made and right to bid may be expressly
the highest bidder has a right to reserved by or on
enforce his bid behalf
of the seller. It is, therefore, the
3. RIGHT OF THE SELLER TO secrecy of
BID IN THE AUCTION puffing which renders it a
The seller or his agent fraud upon bidding. Where
may bid in an auction sale there is
provided: notice of the intention to bid by
1. such right was the seller,
reserved the bidding in such case
2. notice was given would not operate as fraud.
that the sale is subject to a right
to bid in ARTICLE 1477-1478
behalf of the seller; OWNERSHIP OF THE THING
and TRANSFERRED BY DELIVERY
3. the right to bid -delivery of the thing sold is
by the seller is not prohibited by essential in a contract of sale,
law or without it the buyer may not
stipulation enjoy the thing sold to him.
a. WHEN After the delivery of the thing
NO NOTICE GIVEN OF sold that the buyer acquires a
RIGHT TO BID real right or ownership over it.
it -delivery
shall be unlawful for the seller may be actual or constructive
to bid either
directly or EXCEPTION TO THIS RULE
indirectly or for the auctioneer -the parties may stipulate that
to employ despite the delivery, the
or induce any person to ownership of the thing shall
bid on behalf of the seller. remain with the seller until the
The purchaser has fully paid the
purpose of the notice is to price.
prevent puffing or
secret bidding by ARTICLE 1479
or on behalf of the seller by KINDS OF PROMISE TREATED IN
people ARTICLE 1479
who are not It applies specifically to a
themselves bound promise “to buy or to sell” it
refers to 3 kinds of promise,
b. WHEN namely:
NOTICE GIVEN OF RIGHT TO 1. AN ACCEPTED
BID UNILATERAL PROMISE TO
SELL IN WHICH THE
 PROMISEE (acceptor) elects to acceptance- generates a binding
buy. contract of sale.
2. AN ACCEPTED
UNILATERAL PROMISE TO ARTICLE 1480
BUY IN WHICH THE RISK OF LOSS OR DETERIORATION
PROMISEE (acceptor) elects to 1. IF THE THING IS LOST
sell. BEFORE PERFECTION
3. A BILATERAL promise to -the seller bears the loss
buy and sell reciprocally 2. IF THE THING IS LOST AT
accepted in which either of the THE TIME OF PERFECTION
parties chooses to exact -the contract is void or
fulfillment. inexistent.The legal effect is
the same as when the object is
EFFECT OF UNACCEPTED lost before the perfection of the
UNILATERAL PROMISE contract of sale.
-a unilateral promise or offer to 3. IF THE THING IS LOST
sell or to buy a thing which is AFTER PERFECTION BEFORE
not accepted creates no ITS DELIVERY
juridical effect or legal bond. -even before the
Such unaccepted offer is called ownership is transferred to the
policitation buyer the risk of loss is shifted
to the buyer as an exception to
OPTION the rule of res perit domino
-is a privilege existing in one 4. IF THE THING IS LOST
person for which he has paid a AFTER DELIVERY
consideration which gives him -the buyer bears the risk
the right to buy/sell. of loss following the general
rule of res perit domino.
EFFECT OF ACCEPTED
UNILATERAL PROMISE SCOPE OF ARTICLE 1480
-a unilateral promise to sell or 1.THE 1 ST APPLIES TO
to buy a determinate thing for a NON-FUNGIBLE GOODS
price certain does not bind the - the risk of the thing sold
promisor even if accepted and passes to the buyer, even
may be withdrawn at any time. though the thing has not yet
been delivered to him. In other
EFFECT OF BILATERAL PROMISE words, the buyer assumes the
TO BUY AND SELL risk of loss caused by fortuitous
-when the promise is bilateral, event, without the fault of the
one party accepts the other’s seller.
promise to buy and the latter,
the former’s promise to sell, a 2.THE 2 ND RULE RELATES TO
determinate thing for a certain FUNGIBLE THINGS
price certain.The concurrence
of both acts- the offer and the
 -the vendee assumes the they do not correspond with
risk if he has incurred in delay in the description and vice versa.
receiving the goods sold.
ARTICLE 1481 ARTICLE 1482
SALE OF GOODS BY DESCRIPTION MEANING OF EARNEST MONEY
AND/ OR SAMPLE -is money given by the buyer
-the term “bulk of goods” does to the seller to bind the
not designate the greater bargain. It is actually a
portion of the goods. It denotes partial payment of the
the goods themselves as purchase price and is
distinguished from the sample considered as a proof of the
and/or description with which perfection of the contract.
they must correspond. -advance payment it must be
deducted from the total
price
1. SALE BY DESCRIPTION
-where a seller sells
EARNEST MONEY AND OPTION
things as being of a particular
MONEY DISTINGUISHED
kind, where the purchaser has
EARNEST MONEY
not seen the article sold and
-is part of purchase price
relies on the description given
-is given only where there
him by the vendor. If the bulk of
is already a sale
the goods delivered do not
-when earnest money is
correspond with the
given, the buyer is bound to pay the
description, the contract may
balance
be rescinded.
OPTION MONEY
-is the money given as
2. SALE BY SAMPLE
distinct consideration for the option
-in a sale by sample, the
contract
seller warrants that the thing
-applies to a sale not yet
sold and to be delivered by him
perfected
shall conform with the sample
-while when the would-be
in kind, character, and quality.
buyer gives option money,
he is not required to buy.
3. SALE BY DESCRIPTION
AND SAMPLE
BUT OPTION MONEY
-when a sale is made
MAY BECOME EARNEST
both by sample and by
MONEY, IF THE PARTIES
description, the goods must
SO AGREE.
satisfy all the warranties
appropriate to either kind of
ARTICLE 1483
sale, and it is not sufficient that
FORM OF CONTRACT OF
the bulk of the goods
SALE
correspond with the sample if
1. GENERAL RULE
 -a contract may be
entered into in any form
3. WHERE FORM IS
provided all the essential
REQUIRED IN ORDER THAT A
requisites for its validity are
CONTRACT MAY BE VALID
present.
-where the
“applicable statute” requires that the
2. WHERE CONTRACT
contract of sale
COVERED BY STATUTE
be in certain form for its validity, the
OF FRAUDS
required form must be
-the contract of
observed in order that the
sale should be covered by
contract may be both valid and
the Statute of Frauds, the
law does requires that it be
enforceable
in writing subscribed by the
party charged, otherwise the
4. WHERE FORM IS
contract cannot be enforced
REQUIRED ONLY FOR THE
by action and where the
CONVENIENCE OF THE PARTIES
‘applicable statute’ required
-in order that the
that the contract of sale be
sale may be registered in the Registry
in certain form for its
of Deeds to
validity, the required form
make effective as against third
must be observed in order
persons the right acquired
the contract may be both
valid and enforceable.
under such sale.

UNDER THE STATUTE

SALE OF REAL PROPERTY OR AN
OF FRAUDS the ff.
INTEREST
contracts must be in writing,
-a sale of a piece of land or
otherwise they cannot be
interest therein when made through
enforced in court litigation:
an agent is void unless the agent’s
a. sale of personal
authority is in writing.
property at a price not less
-for the sale of real property to
than 500 pesos
be effective against third persons, the
b. sale of real
sale must be registered in the Registry
property or an interest
of Deeds (or Property) of the province
therein regardless of the
or city where the property is located.
price
The sale must be in public instrument
involved;
or document.
and
c. sale of property
STATUTE OF FRAUDS APPLICABLE
not to be performed within
ONLY TO EXECUTORY
a year from the date
CONTRACTS
thereof regardless of the
-the reason for this rule is that
nature of the property and
partial performance like the writing,
the price involved.
furnishes reliable evidence of the
intention of the parties or the 2. REMEDY OF
existence of the contract. A contrary CANCELLATION
rule would result in injustice or The latter can demand
unfairness to the party who has only the return of payments already
performed his obligation. made unless
there is a stipulation about
ARTICLE 1484 forfeiture
REMEDIES OF VENDOR IN SALE OF
PERSONAL PROPERTY PAYABLE IN 3. REMEDY OF
INSTALLMENT (RECTO LAW) FORECLOSURE
May exercise the ff. remedies: He shall have no further
1. elect fulfillment upon action against the vendee for the
the vendee’s failure to pay recovery of any unpaid balance of
2. cancel the sale if the the price and any agreement to the
vendee shall have failed to pay two or contrary is void.The
more foreclosure is effected by selling the
installments; mortgaged personal property at
3.foreclose the chattel public auction and applying the
mortgage, if one has been constituted, proceeds to sale to the satisfaction of
if the vendee shall the claim secured
have failed to pay two or more by the mortgaged.
installments
RECOVER OF DEFICIENCY AFTER
FORECLOSURE PROHIBITED
It prevents mortgagees from
seizing the mortgaged property,
NATURE OF THE REMEDIES buying it at foreclosure sale for a low
-where the vendor asks the price and then bringing suit against
court to order the vendee to pay the the mortgagor for a deficiency
remaining unpaid sum of the purchase judgment
price, the vendor thereby waives the ARTICLE 1485
other remedies. LEASE OF PERSONAL PROPERTY
WITH OPTION TO BUY
RIGHT OF VENDOR TO RECOVER -on the part of the lessee who
UNPAID BALANCE OF PURCHASE takes possession or enjoyment of the
PRICE property leased are really sales of
1.REMEDY OF SPECIFIC personal property payable in
PERFORMANCE installments.
He may still recover from -the evident purpose is to
the purchaser the unpaid balance of prevent vendors from resorting to this
price, if any on the form of contract which, usually, is in
real and personal properties of the reality a contract of sale of personal
buyer not exempt by law property payable in installments in
from attachment contravention of the provisions of
and execution Article 1484
 ____________________________________
ARTICLE 1486 ______CHAPTER 2
STIPULATION AUTHORIZING CAPACITY TO BUY AND SELL
FORFEITURE OF INSTALLMENTS
OR RENTS PAID ARTICLE 1489
-the parties may stipulate that PERSON WHO MAY ENTER INTO A
the installments or rents paid are not CONTRACT OF SALE
to be returned. Such a stipulation is General rule: all persons,
valid “insofar as the same may not be whether natural or juridical, who can
unconscionable under the bind themselves
circumstances” otherwise the court by contract have also legal capacity to
has the power to order the return of a buy and sell.
portion of the total amount paid in Exceptions: when the law
installments or rents. determines that party suffers from
either absolute or
ARTICLE 1487 relative incapacity.
EXPENSES FOR EXECUTION AND
REGISTRATION KINDS OF INCAPACITY
-the vendor has the duty to pay Absolute incapacity- in the case
not only the expenses for the of persons who cannot bind
execution of the sale but also for the themselves; and
registration of the same in the Relative incapacity- where it
absence of any agreement between exists only with reference to certain
the parties to the contrary. persons or a
-expenses incurred subsequent certain class of property
to the transfer of title are borne by
the buyer, unless caused by the fault of LIABILITY FOR NECESSARIES OF
the seller. MINOR OR OTHER PERSON
WITHOUT CAPACITY TO ACT
“Necessaries” are those things
which are needed for sustenance,
dwelling, clothing and medical
ARTICLE 1488 attendance, in keeping with the
EXPROPRIATION OF PROPERTY financial capacity of the family of the
FOR PUBLIC USE incapacitated person.
-it covers the procedure for the -generally, the contracts
exercise of the power of eminent entered into by a minor and other
domain. Expropriation must be incapacitated persons are voidable.
decreed by competent authority and However, where necessaries are sold
for public use and always upon and delivered to him (without
paymentof just compensation. intervention of the parent or
guardian) he must pay a reasonable
____________________________________ price therefor, the contract is valid,
____________________________________ but the minor has the right to recover
any excess above a reasonable value 1. the heirs of either spouse, as
paid by him. well as creditors at the time of the
transfer, can attack the validity of the
SALE BY MINORS sale but not creditors who became
-when the minors pretend that such only after the transaction
they are now in adult age while in fact 2. the government
they have not, the sale is valid.They
cannot be permitted to excuse ARTICLE 1491
themselves from compliance with the INCAPACITY BY REASON OF
obligations assumed by them or to RELATION TO PROPERTY
seek their annulment. -the persons who, because of
their position and relation with the
ARTICLE 1490 persons under their charge or
RELATIVE INCAPACITY OF property under their control, are
HUSBAND AND WIFE prohibited from acquiring said
1. they are prohibited by the property under their control.
article 1490 from selling property to They are the: guardians, agents,
each other. executors and administration, public
2. they are also prohibited from officers and employees; judicial
making donations to each other officers and employees and lawyers
during the marriage except moderate and others especially disqualified by
gifts on the occasion of any family law.
rejoicing. If there has been a
separation of property agreed upon in REASON FOR PROHIBITION
the marriage settlements, or when -is to prevent frauds on the part
there has been a judicial separation of of the persons enumerated therein
property decreed between them by and minimize temptations to the
the court,THE SALES BETWEEN exertion of undue and improper
THEM, ARE ALLOWED. influence.

REASON FOR PROHIBITION OTHER PERSONS ESPECIALLY

UNDER ARTICLE 1490 DISQUALIFIED
-the possibility that the husband 1. aliens who are disqualified to
will induce his wife to engage in purchase private agricultural lands
ruinous operations.The prohibition is 2. unpaid seller, having a right of
primarily for the protection of 3rd lien or having stopped the goods in
person who relying upon supposed transit
property of either spouse enters into 3. the officer conducting an
a contract with either of them only to execution sale of property to enforce
find out that the property relied upon a court
was transferred to the other spouse. judgment rendered against the owner.

PERSONS PERMITTED TO ARTICLE 1492

QUESTION SALE PROHIBITION IN EXTENDS TO
SALE IN LEGAL REDEMPTION
 1. COMPROMISE-is a contract made up of several
whereby the parties, by reciprocal parts.
concessions, avoid a litigation or put 2. SALE
an end to one already commenced. It INDIVISIBLE- when the consideration
is the amicable settlement of a is entire and single.
controversy. The object may be
2. by renunciation- a creditor considered as a specific thing.
gratuitously abandons his right against
his creditor.The other terms used by CHAPTER 4
the law are condonation and OBLIGATIONS OF THE VENDOR
remission.
ARTICLE 1495
ARTICLE 1493 PRINCIPAL OBLIGATIONS OF THE
EFFECT OF LOSS OF THING AT VENDOR
THE TIME OF SALE 1. to transfer the ownership
1.THING ENTIRELY LOST 2. to deliver the thing
-at the time of 3. to warrant against eviction
perfection, the contract is inexistent and hidden defects
and void because there is no object. 4. to take care of the thing,
2.THING ONLY PARTIALLY pending delivery, with proper
LOST diligence
-the vendee may elect 5. to pay for the expenses for
between withdrawing from the the execution and registration of the
contract and demanding the deed of sale, unless
remaining part, paying its there is a stipulation to the contrary
proportionate price.

WHEN A THING CONSIDERED ARTICLE 1496

LOST WAYS OF EFFECTING DELIVERY
Its existence is unknown or it 1. BY ACTUAL OR REAL
cannot be recovered. DELIVERY
2. BY CONSTRUCTIVE OR
LEGAL DELIVERY
3. BY DELIVERY IN ANY
ARTICLE 1494 OTHER MANNER SIGNIFYING AN
EFFECT OF LOSS IN CASE OF AGREEMENT
SPECIFIC GOODS
-ARTICLE 1494 applies only to WAYS OF EFFECTING
sales of goods, that is, the object of CONSTRUCTIVE DELIVERY
the sale consists of a mass of specific 1. EQUIVALENT TO ACTUAL
goods DELIVERY
2 remedies to the buyer: It may be effected in any
1. SALE of the following ways:
DIVISIBLE- a contract is DIVISIBLE a. by the execution
when its consideration is of public instrument
 b. by symbolica 2. NOT ALWAYS ESSENTIAL
tradition/ tradition symbolica TO PASSING OF TITLE
c. by traditio longa The parties to the
manu contract may agree when and on what
d. by tradition conditions the ownership in the
brevi manu subject of the contract shall pass to
e. by tradition the buyer.
constitutum possessorium
or ARTICLE 1498
f. by quasi-delivery EXECUTION OF PUBLIC
or quasi-traditio INSTRUMENT OR DOCUMENT
2. CONTRARY MAY BE Public instrument is one which
STIPULATED is acknowledged before notary public
The parties may stipulate or any official authorized to
that ownership in the thing shall pass administer oath, by the person who
to the buyer only executed the same.
after he has fully paid the price or
fulfilled conditions. WHEN THE THING NOT SUBJECT
TO CONTROL OF VENDOR
SECTION 2- DELIVERY OF THE -a seller cannot deliver
THING SOLD constructively if he cannot deliver
actually even if he wants to.
ARTICLE 1497
CONCEPT OF TRADITION OR SYMBOLIC TRADITION
DELIVERY -the parties make use of a token
“tradition” is a derivative mode symbol to represent the thing
of acquiring ownership by virtue of delivered
which one who has the right and
intention to alienate a corporeal ARTICLE 1499
thing, transmits it by virtue of a just TRADITIO LONGA MANU
little to one who accepts the same. --it takes place by the mere
IMPORTANCE OF TRADITION consent or agreement of the
Delivery of the thing to enable contracting parties as when the
the buyer to enjoy and make use of vendor merely points to thing sold
the property purchased. After which shall thereafter be at the
delivery, the risk of loss of the thing control and disposal of the vendee
sold is borne by the buyer.
TRADITIO BREVIE MANU
ACTUAL DELIVERY OF THING -when the vendee has already
SOLD the possession of the thing sold by
1. WHEN DEEMED MADE- it virtue of another title as when the
involves the physical delivery of the lessor sells the thing leased to the
thing and is usually done by passing of lessee.
a movable thing from hand to hand.
ARTICLE 1500
TRADIO CONSTITUTUM to purchase the if the goods prove
POSSESSORIUM satisfactory.The title shall continue in
-it takes place when the vendor the seller until the sale has become
continues in possession of the absolute either by the buyer’s approval
property sold as owner but in some of the goods, or by his filing to comply
other capacity, as for example, when with the express or implied conditions
the vendor stays as a tenant on the of the contract as to giving notice of
vendee. dissatisfaction.

ARTICLE 1501 SALE OR RETURN DISTINGUISHED

QUASI-TRADITIO/ FROM SALE ON TRIAL
QUASI-DELIVERY SALE OR RETURN
Tradition can only be made 1. subject to resolutory
with respect to corporeal things. In condition
case of incorporeal things, delivery is 2. depends entirely on
effected: the will of the buyer
1. by the execution of a public 3. the ownership of the
instrument goods passes to the buyer on delivery
2. by the placing of the titles of and
ownership in the possession of the subsequent return of the goods
vendee, reverts ownership in the seller
3. by allowing the vendee to use 4. the risk of loss or
his rights as new owner with the injury rests upon the buyer
consent of the
vendor SALE ON TRIAL
Thus, the delivery to a person 1.subject to suspensive
of a negotiable document of title in condition
which it is stated that the goods 2. depends on the
referred to therein will be delivered to character or quality of the goods
the bearer amounts to delivery of the 3. the ownership remains
goods to such person. in the seller until the buyer signifies
his
approval or acceptance to the
ARTICLE 1502 seller
CONTRACTS OF SALE OR 4. the risk still remains
RETURN, AND OF SALE ON TRIAL with the seller
OR APPROVAL OR SATISFACTION
1. SALE OR RETURN- the ARTICLE 1503
buyer has an option to purchase or DELIVERY OF SPECIFIC GOODS
return the same to the seller instead SOLD GENERALLY PASSES TITLE
of paying the price. Without reference -this article relates to a sale of
to the quality of goods, specific goods
1. DELIVERY TO A
2. SALE ON TRIAL OR CARRIER
APPROVAL- the buyer has an option
 General rule: the THE FORM OF BILL OF
delivery be it only constructive, and LADING
delivery to the carrier is deemed to be -by shipping the goods,
a delivery to the buyer the seller has definitely lost all use of
2. REDELIVERING BY them to the buyer. Where the title to
CARRIER TO HIMSELF the goods is held merely for the
If the seller directs purpose of security, the beneficial
the carrier to redeliver the goods at owner (buyer), not the one who holds
their destination to the seller himself, for security (seller) bears the risk of
or to his order.The ownership still loss or deterioration
remain in the latter.
WHERE THE BUYER OR HIS
AGENT IS CONSIGNEE BUT
WHERE SELLER OR HIS AGENT IS SELLER RETAINS THE BILL OF
CONSIGNEE
1. CARRIER BECOMES LADING
BAILEE FOR SELLER The seller thereby retains a
Where goods are shipped right to the possession of the goods as
and by the bill of lading the goods are against the buyer. Although the
deliverable to the seller or his agent property in the goods will ordinarily
or to the order of the seller or his pass to the buyer on delivery, the
agent, the seller thereby reserves the latter is unable to obtain the goods
ownership in the goods. without the bill

WHERE BILL OF LADING IS SENT

2. RIGHTS OF THE SELLER FORWARD WITH DRAFT
-the seller may not only retain ATTACHED
the goods until the buyer performs his -the fact that the bill of lading
obligation under the contract. and bill of exchange are attached
together indicates that the seller
WHERE SELLER’S TITLE ONLY FOR intends to make the delivery of the
PURPOSE OF SECURITY goods conditional upon the payment
1. FORM OF BILL OF LADING or acceptance of the draft.
NOT CONCLUSIVE
-the circumstances may EFFECT OF BUYER’S OBTAINING
be such that were it not for the form POSSESSION OF BILL OF LADING
of the bill of lading, the ownership WITHOUT HONORING DRAFT
would have passed to the buyer on A purchaser in good faith for
shipment of the goods.The seller value of the bill of lading or goods
reserves ownership is simply to secure from the buyer will obtain the
himself in regard to the performance ownership of the goods although the
by the buyer of the latter’s obligation. bill of exchange has not been honored.

2. WHERE OWNERSHIP ARTICLE1504

WOULD HAVE PASSED BUT FOR
RISK OF LOSS GENERALLY Where a property is sold
ATTENDS TITLE by one not the owner or the agent of
General rule: if the thing is lost the owner, but the real owner states
by fortuitous event the risk is borne by that he authorized such sale so that
the owner of the thing at the time of the vendor was acquitted of the
the loss charge against him, a buyer in good
Exceptions: faith acquires a valid title to the
1.The ownership is property as it is not lawful nor
considered transferred to the buyer permissible for said owner to deny or
who, therefore, assumes the risk from retract his former sworn statement
the time of delivery. that he had consented to said sale

2. Where actual delivery 2. WHERE THE LAW

has been delayed through the fault of ENABLES THE APPARENT OWNER
either the buyer or the seller. In this TO DISPOSE OF THE GOODS
case, the law punishes the party at AS IF HE WERE
fault. THE TRUE OWNER THEREOF
-has no such law as the Factor’s
RISK OF LOSS BY FORTUITOUS Act.The law referred to here,
EVENT AFTER PERFECTION BUT therefore, must
BEFORE DELIVERY be found in the provisions of our Civil
-if the thing is lost after Code on Agency.
perfection of the contract but before
its delivery, even before the ownership 3. WHERE THE SALE IS
is transferred to the buyer, the risk of SANCTIONED BY STATUTORY OR
loss by a fortuitous event without the JUDICIAL AUTHORITY
seller’s fault is borne by the buyer. - one who has lost any movable,
Taken from the American Law on or has been unlawfully deprived
Sales it provides that “Unless thereof, may recover it from the
otherwise agreed, the goods remain at person in possession of the same. If
the seller’s risk until the ownership the possessor of a movable lost or of
therein is transferred to the buyer” which the owner has unlawfully been
the risk of loss is shifted from the deprived has acquired it in good faith
seller to the buyer even though the at a public sale, the owner cannot
buyer has not yet acquired ownership obtain its return without reimbursing
thereof, this conflict can only be the price paid therefore.
resolved by legislation. 4. WHERE THE SALE IS
MADE AT MERCHANT’S STORES,
ARTICLE 1505 FAIRS, OR MARKETS
SALE BY THE PERSON NOT THE -the rule is necessary not
OWNER only to facilitate commercial sales on
1. WHERE THE OWNER OF movables but also to give stability to
THE GOODS IS, BY HIS CONDUCT, business transactions especially in our
PRECLUDED FROM DENYING THE country where free enterprise prevails
SELLER’S AUTHORITY TO SELL for a buyer.
 different name is given in popular
5.WHERE THE SELLER HAS A speech to the document when it is
VOIDABLE TITLE WHICH HAS NOT issued by a carrier and when it is
BEEN AVOIDED AT THE TIME OF issued by a warehouseman
SALE
6. WHERE SELLER 2. EVIDENCE OF TRANSFER
SUBSEQUENTLY ACQUIRES TITLE OF TITLE AND POSSESSION OF
When a person conveys GOODS AND CONTRACT
property to another of which at the BETWEEN THE PARTIES
time he is not the owner, his -A document of title is a symbol
subsequent acquisition of title of goods covered by it, serving as a
validates his previous conveyance. evidence of
a. transfer of title b.
ARTICLE 1506 transfer of possession
SALE BY ONE HAVING A c. contract betwe0en the
VOIDABLE TITLE parties who are bound by its terms
1. REQUISITES FOR
ACQUISITION OF GOOD TITLE BY MOST COMMON FORMS OF
BUYER DOCUMENTS OF TITLE
-if the seller has only a 1. BILL OF LADING- it is a
voidable title to the goods, the buyer contract or receipt for the transport
acquires a good title to the goods of goods and their delivery to the
provided he buys them: person named therein, to order, or to
a. before the title of the bearer. It usually involves 3 persons:
seller has been avoided carrier, shipper, and the consignee.
b. in good faith for value; (the shipper and consignee may be
and one and same person)
c. without notice of the
seller’s defect of title 2. DOCK WARRANT- an instrument
given by dock owners to an importer
2. BASIS RULE of goods warehoused on the dock
Seems to be based on recognizing the importer’s title to the
the principle that where loss has said goods; and
happened which must fall on one of
two innocent persons, it should be 3.WAREHOUSE RECEIPT- it is a
borne by him who is the occasion of contract or receipt for goods
the loss. deposited with a warehouseman
ARTICLE 1507 containing the latter’s undertaking to
NATURE AND FUNCTION OF hold and deliver the said goods to a
DOCUMENTS OF TITLE specified person, to order, or to
1. RECEIPTS OF, OR ORDEFS bearer.
UPON A BAILEE OF GOODS (QUEDAN- is a warehouse receipt
REPRESENTED usually for sugar received by a
-documents of title refer warehouseman)
to goods and not to money. A
CLASSES OF DOCUMENTS OF placed upon a document of title in
TITLE which the goods are to be delivered to
1. NEGOTIABLE DOCUMENTS- “order” or to “bearer” have no effect
those by the terms of which the bailee and the document continues to be
undertakes to deliver the goods to the negotiable.
bearer and to the order of a specified
person. ARTICLE 1511
TRANSFER OF NON-NEGOTIABLE
2. NON-NEGOTIABLE DOCUMENTS
DOCUMENTS- those by the terms of -a non-negotiable of title cannot
which the goods covered are be negotiated. It can be transferred or
deliverable to a specified person. assigned by delivery. In such case, the
transferee or assignee acquires only
ARTICLE 1508 the rights stated in Article 1514
NEGOTIATION OF NEGOTIABLE -even if the document is
DOCUMENT BY DELIVERY indorsed, the transferee acquires no
-if the document is specially additional right.
indorsed, it becomes an order
document of title and negotiation can ARTICLE 1512
only be effected by the indorsement of PERSONS WHO MAY NEGOTIATE
the indorsee. A special indorsement A DOCUMENT
specifies the person to whom or to -it will be noticed that the
whose order, the goods are to be provision does not give a power to
delivered. negotiate documents of title equal to
that allowed in the case of bills of
ARTICLE 1509 exchange and promissory notes under
NEGOTIATION OF NEGOTIABLE the Negotiable Instruments Law
DOCUMENT BY INDORSEMENT -however, if the owner of the
1. if indorsed in blank or to goods permits another to have the
bearer, the document becomes possession or custody of negotiable
negotiable by delivery receipts running to the order of the
2. if indorsed to a specified latter or to bearer, it is a
person, it may be again negotiated by representation or title upon which
the indorsement of such person in bona fide purchasers
blank, to bearer, or to another -the loss must fall upon him
specified person. Delivery alone is not whose misplaced confidence made the
sufficient. loss possible

ARTICLE 1513
ARTICLE 1510 RIGHTS OR PERSON TO WHOM
NEGOTIABLE DOCUMENTS OF DOCUMENT HAS BEEN
TITLE MARKED NEGOTIATED
“NON-NEGOTIABLE” -it specifies the rights of a
-the words “not negotiable”, person to whom a negotiated
“non negotiable” and the like when document of title has been duly
negotiated, in the case of a document goods by the creditor or the
of title to bearer, or by indorsement transferor
and delivery, in the case of a
document of title. Such person 2.if the document is negotiable, the
acquires: goods cannot be attached or be levied
1. the title of the person negotiating under an execution unless the
the document, over the goods covered document be first surrendered to the
by the document bailee or its negotiation enjoined.
2.the title of the person (depositor or
owner) to whose order by the terms ARTICLE 1515
of the document the goods were to be TRANSFER OF ORDER DOCUMENT
delivered, over such goods; and WITHOUT INDORSEMENT
3. the direct obligation of the bailee -it specifies the right of a person
(warehouseman or carrier) to hold to whom an order document of title,
possession of the goods for him, as if which may not properly be negotiated
the bailee had contracted directly by mere delivery, has been delivered,
with him without indorsement.They are:
1.the right to the goods against
ARTICLE 1514 the transferor and
RIGHTS OF PERSON TO WHOM 2. the right to compel the
DOCUMENT HAS BEEN transferor to indorse the indorsement
TRANSFERRED (if the intention of the parties is that
It refers to the rights of a the document should be merely
person to whom a negotiable transferred, the transferee has no
document of title (not duly right to acquire the transferor to
negotiated) has been transferred or of indorse the document)
the transferee of a non-negotiable
document. Such person acquires: SUBSEQUENT INDORSEMENT OF
1. the title to the goods as against the NEGOTIABLE DOCUMENT
transferor TRANSFERRED
2. the right to notify the bailee of the -the negotiation shall take
transfer thereof effect as of the time when the
3. the right, thereafter, to acquire the indorsement is actually made, not at
obligation of the bailee to hold the the time the document is delivered.
goods for him. The reason is because the negotiation
becomes complete only at the time of
RIGHTS OF THE THIRD PERSON indorsement.
TO GOODS WHERE DOCUMENT
HAS BEEN TRANSFERRED ARTICLE 1516
1. the transfer does not effect the WARRANTIES ON SALE OF
delivery of the goods covered it. DOCUMENTS
Before notification, the bailee is not -it treats of the warranties or
bound to the transferee whose right liabilities of a person negotiating or
may be defeated by a levy of an transferring a document.The liability
attachment or execution upon the
is limited only to a violation of the 4
warranties.

ARTICLE 1517 ARTICLE 1520

INDORSER NOT A GUARANTOR CREDITOR’S REMEDIES TO REACH
-the indorsement of a NEGOTIATE DOCUMENTS
negotiable instrument has a double -this article expressly gives the
effect; the indorser will pay the court full power to aid by injunction (a
instrument if the party primarily liable restraining order) and otherwise a
fails to do so.The indorsement of a creditor seeking to get a negotiate
document of title amounts merely to document covering such goods.
a conveyance by the indorser, not a
contract of guaranty. ARTICLE 1521
PLACE OF DELIVERY OF GOODS
ARTICLE 1518 SOLD
WHEN NEGOTIATION NOT 1. RULES
IMPAIRED BY FRAUD, MISTAKE, a. where there is an
DURESS, ETC. agreement, express or implied, the
-it may be negotiated by even place of delivery
by a thief or finder and the holder is that agreed upon
thereof would acquire a good title b. where there is no
thereto if he paid value therefor in agreement, the place of delivery is
good faith without notice of the that determined
seller’s defect. by usage of trade.
-it speaks of the theft of the c. where there is no
document and not of the goods agreement and there is also no
covered by such document. In the prevalent usage, the
latter case, it needs no argument to place of delivery is the
show that even a bona fide holder of a seller’s place of business.
document issued over such stolen d. in any other case, the
goods cannot acquire title place of delivery is the seller’s
residence
ARTICLE 1519 e. which to the
ATTACHMENT OR LEVY UPON knowledge of the parties at the time
GOODS COVERED BY A the contract was made
NEGOTIABLE DOCUMENT were in some other place, that place is
-in the possession of such the place of delivery in the
bailee, the goods cannot be attached absence of any agreement or
or levied under an execution unless usage of trade to the contrary.
the document be first surrendered or
its negotiation prohibited by law. 2. PRESUMPTION
-this provision is for the -it can be seen that the
protection of the bailee since he could presumption is that the buyer must
be made liable to a subsequent take goods from the
purchaser for value in good faith. seller’s place of business or residence
rather than the seller to at a reasonable
deliver them to the buyer. hour
1. WHAT IS A REASONABLE
TIME OF DELIVERY OF GOODS HOUR? Where all that is required of
SOLD the other party is to
1. IF NO TIME IS FIXED BY receive a payment or performance
THE CONTRACT, then the seller is which can readily be accepted
bound to send the 2. IN CASE GOODS WHICH
goods to the buyer within a ARE BULKY OR NEEDED SPECIAL
reasonable time. CARE – an hour might
be reasonable which would not be so
2. IF THE CONTRACT in an ordinary payment of a small
PROVIDES A FIXED TIME FOR amount of money.
PERFORMANCE, the question is
whether time is of the DUTY OF SELLER TO PUT GOODS
essence, and if so whether the correct IN DELIVERABLE CONDITION
performance was offered -the seller bears the expenses
within that time. If time is not of the to place thing in a deliverable state
essence, the question is that is, in such a state the buyer
whether correct performance was would, under the contract, be bound
offered within a reasonable time. to take delivery of them.

3. WHERE THE CONTRACT ARTICLE 1522

DOES NOT SPECIFY THE TIME FOR DELIVERY OF GOODS LESS THAN
DELIVERY QUANTITY CONTRACTED
-so that delivery is to be Where the seller delivers
made within a reasonable time a smaller quantity the buyer may
-the buyer cannot make reject the
time the essence of the contract goods so delivered. (kulang)
without giving the The buyer may accept
seller notice of his intention to cancel the goods in which case he must pay
unless delivery is made on or for their: price at the
before a fixed time contract rate if he knew that no more
were to be delivered or the
DELIVERY OF GOODS IN fair value of the goods, if he did
POSSESSION OR A 3 RD PERSON not know that the seller is going to be
-to affect third person, the guilty of a breach of
person holding the goods must contract.
acknowledge being the bailee for the
buyer. DELIVERY OF GOODS MORE THAN
QUANTITY CONTRACTED
HOUR OF DELIVERY OF GOODS Where the seller delivers
SOLD a quantity larger than the contracted,
The demand or tender of the buyer may accept the
delivery to be effectual, must be made quantity contracted for and reject the
excess. If he
accepts all the goods delivered, he SELLER’S DUTY AFTER DELIVERY
makes himself liable for the price of all TO CARRIER
of them. 1.To enter on behalf of buyer
into such contract reasonable under
DELIVERY OF GOODS MIXED the circumstances- the seller must
WITH OTHERS make such contract with the carrier
-the buyer may accept on behalf of the buyer as may be
those which are in accordance with reasonable under the circumstances.
the contract and 2.To give notice to buyer
reject the rest. And of course, may regarding necessity to insure goods-
accept them all if he so desires the seller must give notice to the
buyer as may enable him to insure the
EFFECT OF INDIVISIBILITY OF goods during their transit. If the seller
SUBJECT MATTER fails to do so, the risk will be borne to
It can be inferred form him.
our law that the buyer has the right of
rejecting the whole of DEFINITION OF TRADE TERMS
the goods delivered in the 2 cases 1. C.O.D. –“collect on delivery”
mention only if the subject the carrier acts for the seller in
matter is indivisible. collecting the purchase price.The
buyer must pay for the goods before
RULES MAY BE CONTROLLED BY he can obtain possession.They are
USAGE OF TRADE solely intended as security for the
-permitting evidence of usage of purchase price
trade, special agreement, or course of
dealing between the parties is 2. F.O.B.-“free on board” means
but a special application of the general that the goods are to be delivered free
rules concerning contracts. of expenses to the buyer to the point
where they are F.O.B. In general, the
ARTICLE 1523 point F.O.B. either the point of
DELIVERY TO CARRIER ON shipment or the point of destination,
BEHALF OF BUYER determines when the ownership
1. GENERAL RULE- when the passes.
seller is authorized or required to
send the goods to the buyer, is that 3. C.I.F.- “cost insurance and
delivery of such goods to the carrier freight” signify that the price fixed
constitutes delivery to the buyer, covers not only the cost of goods, but
whether the carrier is named by the the expenses of freight and insurance
buyer is not. to be paid by the seller up to the point
especially named.
2. EXCEPTIONS- the parties
did not intend the delivery of the 4. F.A.S.-“free alongside vessel”
goods to the buyer through the (named port of shipment). Under this
carrier. term, the seller pays all charges and
bear the risk until the goods are MEANING OF UNPAID SELLER
placed alongside overseas vessel and -is one who has not been paid
within reach of its loading tackle or tendered the whole price or who
has received a bill of exchange or
5. Ex factory, Ex Warehouse, other negotiable instrument as
etc. (named point of origin) – the conditional payment and the
price quoted applies only at the point condition on which it was received has
of origin, and the seller agrees to been broken by reason of the dishonor
place the goods at the disposal of the of the instrument.
buyer at the agreed place on the date
within the period fixed. WHERE WHOLE OF THE PRICE
HAS NOT BEEN PAID
6.Ex dock-(named port of 1.TENDER OF PAYMENT OF
importation) – the seller quotes a BUYER
price including the cost of goods on -bring an action
the dock at the named port of subsequently for the price, which he
importation has refused, yet tender destroys the
seller’s lien. Accordingly, so far as
ARTICLE 1524 concerns his rights to the goods, he is
DELIVERY SIMULTANEOUS WITH not unpaid seller after the tender of
PAYMENT OF PRICE price.
General rule: the obligation to
deliver the thing of a contract arises 2. PAYMENT OF PART OF
from the moment its perfection and PRICE
from that time the obligation may -the seller remains an
enforced. unpaid seller even if title has passed to
Exception: if the vendee does the buyer.
not pay the price, the consideration
for the obligation of the vendor is 3. PAYMENT BY NEGOTIABLE
absent and if the consideration is INSTRUMENT
absent, the obligation likewise does -“the delivery of
not exist or at least is suspended. promissory notes payable to order, or
bills of exchange or other mercantile
WHEN DELIVERY MUST BE MADE documents shall produce the effect of
BEFORE PAYMENT OF THE PRICE payment only when they have been
It contain an exception: the rule cashed or when through the fault of
is that the thing shall not be delivered the creditor they have been impaired”
unless the price is paid; and the
exception is that the thing must be ARTICLE 1526
delivered though the price be not first REMEDIES OF UNPAID SELLER
paid, if a time for such payment has -if the unpaid seller still retains
been fixed in the contract. the ownership in the goods, he cannot
be said to have a lien (on his goods)
but he does have, in addition to his
ARTICLE 1525
other remedies, right of withholding incapacitated from performing
delivery. his part of the agreement, the other
party also is excused
BASIC RIGHTS OF UNPAID SELLER from performing his part
-is allowed a lien and kindred
remedies in inherent injustice of ARTICLE 1528
depriving him of goods with which he LIEN NOT GENERALLY LOST BY
has not finally parted where it is PART DELIVERY
evident that he has not been or will -if the part delivery of the
not be paid the price for them when it goods is intended as symbolical
is due. delivery of the
whole, and therefore, a waiver of any
ARTICLE 1527 right of retention as to remainder,
WHEN UNPAID SELLER’S the lien is lost.
POSSESSORY LIEN MAY BE
EXERCISED
1. SALES WITHOUT ARTICLE 1529
STIPULATION AS TO CREDIT WHEN UNPAID SELLER LOSSES
-the seller binds himself POSSESSORY LIEN
to give the goods over to the buyer 1. DELIVERY TO AGENT OR
without receiving at BAILEE OF BUYER
that time payment for them. Where -it is true that the seller
there is “stipulation as to may stop the goods while on their way
credit’ a period for payment of price to the buyer after
has been fixed in the contract.The delivery to a bailee for the buyer but it
seller has always a lien cannot be said that
upon the goods which he sells until the seller has still any lien upon him.
the payment or tender of
the entire price. 2. POSSESSION BY BUYER
OR HIS AGENT
2. EXPIRATION OF TERM OF -it is plain that when the
CREDIT ownership is transferred the seller has
-but if he fails to exercise no lien simply
his right until the term of credit has because he has no possession
expired and the necessary for a lien.
price becomes due, he loses the right
which he theretofore had. 3. WAIVER OF LIEN
-the seller may lose his
3. INSOLVENCY OF THE lien by express agreement to
BUYER surrender it.The seller
-this doctrine is applies could no longer assert a lien.
only an application of a general
principle in the law of ARTICLE 1530
contracts that when one party to a RIGHT OF SELLER TO STOP
bilateral contract is GOODS IN TRANSITU
 -he may resume possession of
the goods while they are in transit,
when the buyer is or becomes
insolvent.The right is exercised either
by obtaining actual possession of the
goods or by giving notice of his claim
to the carrier or other bailee in
possession.