Chapter 5
PRINCIPAL OBLIGATIONS OF VENDEE
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To accept delivery
To pay the price of the thing sold
To bear the expenses for the execution and registration of the sale and putting the goods in a deliverable state
ACCEPTANCE – an assent to become owner of the specific goods
2 modes of acceptance
1. Expressed – when the buyer expressly intimates to the seller that he has accepted the goods
2. Implied – either
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when the buyer does any act inconsistent with the seller’s ownership such as when the buyer uses the goods
when the buyer after a lapse of time retains the goods without intimating his rejection.
RIGHT OF INSPECTION:
• the buyer is entitled to a fair opportunity to inspect or examine the articles tenderes to determine whether it
conforms with to the contract.
a. If sent C.O.D (like lazada)
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The buyer is not entitled to such right before payment exceptions:
o Is stipulated
o Permitted by usage of trade 3. If paid already
b. If the buyer haven’t yet examined the goods, he is not deemed to have accepted them
DIFFERENCE BETWEEN DELIVERY AND ACCEPTANCE
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Delivery – an act/obligation of the vendor
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Acceptance – act of the vendee
RULES GOVERNING DELIVERY ON INSTALLMENTS
• the buyer is not bound to receive delivery of the goods in installments except if stipulated or agreed by the
parties.”
LIABILITY OF THE SELLER
• The seller is not discharge from liability in damages or other legal remedy for breach of any promise or warranty
except:
• Within a reasonable time, the buyer did not give notice to the seller of the breach
EX: when you bought mobile phones , you cannot return it after the allowed time to return it
WHEN BUYERS REFUSAL IS JUSTIFIED
1. Buyer is not obliged to return the goods
2. Risk of loss belongs to the seller
3. Seller has the obligation to take delivery of the goods
4. Buyer has the right to resell the goods
5. Buyer is not liable as a depositary except when he voluntarily constitutes himself as such
WHEN BUYERS REFUSAL IS WRONGFUL
1. Title passes to the buyer
2. Risk of loss is borne by buyer
Justifiable acceptance
• here the goods are not of the kinds and quality agreed upon
WHEN IS BUYER LIABLE FOR INTEREST
- Starts from the time of delivery until the payment of price
1. If stipulated
2. If the thing sold produces income or fruits
3. If buyer default
WHEN CAN VENDEE SUSPEND PAYMENT OF PRICE
1. If he is disturbed in the possession or ownership of the thing
2. If he has a well-grounded fear that his possession will be disturbed
WHEN VENDEE CAN SUSPEND PAYMENT
1. Vendor gives security fir the return of the price
2. If it has been stipulated
3. The vendor has caused the disturbance or danger it cease
4. Mere act of trespass
5. If vendee has fully paid the price
WHEN VENDOR CAN RESCIND SALE
a. Immovable
1. If he has good reasons to fear the loss of the property and its price b. b.
Movable
1. If the buyer without lawful cause, refuses to accept the delivery and pay the price
WHEN VENDEE MAY STILL PAY EVEN THOUGH SALE IS RESCINDED BY SELLER
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If the seller has stipulated that he shall rescind the sale ,upon failure of price but he haven’t given his demand for
rescission
Chapter 6
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In cases where the buyer or seller commits breach of the contract, the injured party is given remedies or actions
This provision does not apply to sale of immovable property. It is governed by the Maceda Law
ACTIONS AVAIBLE TO SELLER
1. Action for the payment of price
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When the ownership of the goods has passed to the buyer and he wrongfully neglects or refuses to pay for
the price
When the price is payable on a certain day and the buyer wrongfully neglects or refuses to pay such price,
irrespective if delivery or transfer of title
When the gods cannot be readily be resold for a reasonable price
o Where ownership of goods has not passed to the buyer, seller cannot maintain an action for the price
2. Action for damages
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Buyer without lawful cause neglects or refuses or refuses to accept and pay for the price of the goods
Where ownership has not passed and the seller cannot maintain action for the price
DAMAGES – money given to the injured party in compensation for the injury done
-there is damage when there is injury
Measure of damages: difference between the contract price and the market price
Measure of damages for cancellation:
(a) The labor performed an expenses incurred for materials before receiving notice
(b) Profit he would have realized if the sale had been fully performed
3. Rescission of Contract
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When the buyer has repudiated the contract of sale
When the buyer
Seller has Broken a Contract to Deliver
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(specific or ascertained goods), a court may, on the application of the buyer,
o direct that the contract shall be performed specifically,
o without giving the seller the option of retaining the goods on payment of damages.
o The judgment or decree may be unconditional, or upon such terms and conditions as to damages,
payment of the price and otherwise, as the court may deem just. (Article 1598)
ACTIONS AVAILABLE TO BUYER
1. Specific performance
When the seller should ovulate his obligation to make delivery
2. Rescission or damages for breach of warranty
a. Remedies of buyer for breach of warranty by seller
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Accept the goods and set up the seller’s breach to reduce or extinguish the price
Accept the goods and maintain an action for damages
Refuse to accept the goods and maintain an action for the damages
Rescind the contract of sale recover the price
b. When rescission not allowed
1. Buyer accepted the goods knowing of the breach of warranty without protest
2. If he fails to notify the seller within a reasonable time of his election to rescind
3. If he fails to return or offer to return the goods in substantially as good condition as they were at the
time of transfer of ownership to him.
c. Rights and oblogations of buyer in case of rescission
1. To return the goods
2. To recover the price
3. Right to hold the goods as bailee if the seller refuses the return of the goods 4. Right to lien on the
goods for any portion of the price already paid
Chapter 7
COMMON – those causes which are also the means of extinguishing all other obligations
1. SPECIAL – causes which are recognized by law on sales
2. EXTRA SPECIAL – conventional and legal redemption
SEC. 1 CONVENTIONAL REDEMPTION
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Definition: the right which the vendor reserves to himself to re acquire the property sold provided he
reimburses the vendee the price, expenses of the contract, any other legitimate payments, and the necessary
and useful expenses.
It applies to sale of both real and personal property
“Equitable Mortgage” Art. 1602
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Definition: is one although it lacks formalities of a mortgage, shows the intention of the parties to make the
property subject of the contract as a security for the fulfillment of the obligation.
The object serves as a security
The ownership does not pass to the buyer
INSTANCES WHERE EQUITABLE MORTGAGE IS PRESUMED
(1) When the price of a sale with right to repurchase is unusually inadequate
(2) When the vendor remains in possession as lessee or otherwise
(3) When another instrument is executed extending the period of redemption with
(4) When the purchaser retains for himself a part of the purchase price
(5) When the vendor binds himself to pay the taxes on the thing sold
(6) In any other case where it may be fairly inferred that the real intention of the partoes is that the
transaction shall secure the payment of a debt or the performance of any other obligation
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PACTO DE RETRO SALE - sale with a right to repurchase
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In case of doubt, it shall be construed as an equitable mortgage (art. 1603)
The vendor may ask for reformation of the contract (art. 1605)
*reformation – remedy by which the written instrument is made or construed so as to express or conform to the
real intention of the parties when such intention is not expressed in the instrument.
PERIOD FOR REDEMPTION
a.
b.
c.
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No agreement as to redemption, then it is an absolute sale
4 years – in the absence of an agreement as to the time
Shall not exceed 10 years
30 days, after a final judgement
RIGHT OF VENDEE
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the vendee may transfer or alienate his right to a third person, mortgage the property, enjoy the fruits thereof,
recover the property against every possessor and perform all other acts of ownership.
OBLIGATIONS OF VENDOR IN CASE OF REDEMPTION
1. Return the price
2. Reimburse the vendee for the expenses of the contract and any other legitimate payments made by reason of the
sale
3. Reimbursement for the useful and necessary expenses
SECTION 2: LEGAL REDEMPTION
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DEFINITION: is the right to be subrogated upon the same terms and conditions stipulated in the contract, in the
place of one who acquires a thing by purchase or dation in payment or by any other transaction whereby
ownership is transmitted by onerous title
Conventional redemption, bases on stipulation of the parties, while legal redemption, based on law
LEGAL REDEMPTION OF CO- OWNERS (art. 1620)
(1)
There must be a co- ownership
(4)
Sale must be before partition
(2)
There must be alienation of all or of any of the shares of(5)
The right must be exercised within the period
the other co-owners
provided
(3)
Sale must be to a third person
(6)
The vendee must be reimburses for the price of
the sale
LEGAL REDEMPTION OF ADJACENT OWNERS (RURAL LANDS) (art.1621)
Applicable only to rural lands
(1) Both the land must be rural
(5) The vendee must already must own some rural land
(2) Lands are adjacent
(6) The rural land sold must not be separated by brooks,
drains, ravines roads and other apparent servitudes
(3) There must be land must be an alienation
(4) The piece of rural land alienated must not exceed 1 HECTARE
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The owner with smaller area is preferred but if both lands have the same area, to the one who first requested the
redemption.
LEGAL REDEMPTION AND PRE-EMPTION OF ADJACENT OWNERS (URBAN LANDS) (art. 1622)
Pre- emption – act or right of purchasing before others
Redemption – exercised after the sale against the vendee
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Land is urban
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The one exercising the right must be an adjacent owner
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The piece of land sold must be so small and so situated that a major portion thereof cannot be used for any
practical purpose within a reasonable time
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Such urban land was bought by its owner merely for speculation
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About to resold, or that its resale has been perfected
The law prefers whose intended use of the lands appears best justified.
PERIOD TO EXERCISE THE RIGHT OF PRE-EMPTION/REDEMPTION (art.1623)
• Within 30 days from the notice in writing by the prospective vendor or vendor.
• The deed of sale shall not be recorded in the registry of property unles accompanied by an affidavit of the vendor
that he has given written notice thereof to all possible redemptioners.
CHAPTER 8
Assignment of Credits and Other Incorporeal Rights
Assignment of Creditors And Other Incorporeal Rights (Article 1624)
• perfected in accordance with the provisions of article 1475.
General Rule:
Assignment of a Credit, Right Or Action
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produce no effect as against 3rd persons,
Exception:
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unless it appears in a public instrument, or
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instrument is recorded in the Registry of Property- real property. (Article1625)
Released From The Obligation (Article 1626)
• DebtorBefore Having Knowledge of the Assignment, pays his creditor.
Assignment of a credit(Article 1627)
includes all the:
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accessory rights,
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guaranty,
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mortgage,
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pledge
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preference
General Rule:
Vendor (Good Faith)
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responsible for the existence and legality of the credit at the time of the sale,
Exception:
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Unless it should have been:
o sold as doubtful; but not for the solvency of the debtor,
o expressly stipulated or
o insolvency was prior to the sale and of common knowledge.
Note:Vendor is only liable for the
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price received
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expenses specified (No. 1 of article 1616)
Vendor in Bad Faith
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answerable for the payment of all expenses, and for damages. (Article1628)
Assignor in Good Faith
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responsible-solvency--->debtor,
Not agreed upon the duration of the liability
(if ever he wasn't responsible),
"Assignor: Ako bahala sa solvency mo asignee, be my assignor.✨"
"Assignee: Di sana ako papayag, pero dahil ikaw nman ang responsible... edi sige na nga"
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last for 1 year only, from the time of the assignment if the period had already expired.
If the credit should be payable within a term or period which has not yet expired,
liability shall cease one year after the maturity. (Article1629)
Selling Inheritance Without Enumerating The Things of which it is Composed,
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shall only be answerable for his character as an heir. (Article1630)
General Rule:
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Sells for a lump sum the whole of certain rights, rents, or products,
shall comply by answering for the legitimacy of the whole in general;
but he shall not be obliged to warrant each of the various parts of which it may be composed,
Exceptions:
In the case of eviction from the whole or the part of greater value. (Article1631)
Vendor Profited by:
✓ Some of the Fruits or
✓ Received anything from the inheritance sold,
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pay the vendee, if the contrary has not been stipulated. (Article1632)
General Rule:
Vendee reimburse the vendor for all that the latter may have paid for the debts of and charges on the estate and satisfy
the credits he may have against the same.
Exception:
Unless there is an agreement to the contrary. (Article1633)
General Rule:
Credit or Other Incorporeal Right in Litigation is Sold,
• the debtor shall have a right to extinguish
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by reimbursing the assignee for the price paid, the judicial costs incurred by him, and the interest on the price
from the day on which the same was paid.
A credit or other incorporeal right shall be considered in litigation from the time:
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the complaint concerning the same is answered.
Debtor may exercise his right
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within 30 days from the date the assigneedemandspayment from him. (Article1634.)
Excepted the assignments or sales made:
(1) To a co-heir or co-owner of the right assigned;
(2) To a creditor in payment of his credit;
(3) To the possessor of a tenement or piece of land which is subject to the right in litigation assigned. (Article1635)
CHAPTER 9
Sale Of Goods
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unless the context or subject matter otherwise requires:
"Document of title to goods" includes
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any bill of lading,
dock warrant,
"quedan," or
warehouse receipt or
order for the delivery of goods, or
any other document
o used in the ordinary course of business in the sale or transfer of goods, as proof of the possession or
control of the goods, or authorizing or purporting to authorize the possessor of the document to transfer
or receive,( either by indorsement or by delivery ),
"Goods"
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all chattels personal
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but not things in action or money of legal tender in the Philippines.
[ growing fruits or crops ]
"Order"
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relating to documents of title means an order by endorsement on the documents.
"Quality of goods"
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includes their state or condition.
"Specific goods"
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goods identified and agreed upon at the time a contract of sale is made.
An antecedent or pre-existing claim, whether for money or not, constitutes "value"
where goods or documents of title are taken either in satisfaction thereof or as security.
A person is insolvent
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either ceased to pay his debts in the ordinary course of business or
cannot pay his debts as they become due),
[ Whether insolvency proceedings have been commenced or not. ]
Goods are in a "deliverable state"
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buyer would, under the contract, be bound to take delivery of them. (Article1636)
These are subject to Mortgage Law and the Land Registration Law Immovable Property. (Article 1637)