RFBT-10

OBLIGATIONS OF THE VENDOR

A. To take care of the thing after the contract has been perfected, prior to delivery.

Loss of the thing pending delivery:

a. If the object is entirely lost - the contract shall be without any effect.
b. If the thing is lost in part only, the buyer may choose between:
i. Withdrawing from the contract; and ii. Demanding the remaining part, paying its price in proportion to
the total sum agreed upon.
c. 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: i. As
avoided; or
i. As valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding the
buyer to pay the agreed price for the goods in which the ownership will pass, if the sale was divisible.

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

Exceptions:
a. Stipulation
b. Security title - Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of
the contract and the ownership in the goods has been retained by the seller merely to secure performance by the
buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery;
c. Delay in the delivery – whoever causes the delay shall bear the risk of loss.

Note: the risk of loss is where it is important why there are distinctions in the following:
• Contract of Sale vs. Contract of Agency to Sell
• Sale or Return vs. Sale on Approval/Trial/Satisfaction

SALE OR RETURN: where the goods are delivered to the buyer but the buyer has an option to return the goods instead of
paying the price, the ownership passes to the buyer but he may revest the ownership in the seller by returning or
tendering the goods within the time fixed in the contract, or when no time is fixed, within a reasonable time.

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

SALE ON APPROVAL OR ON TRIAL OR ON SATISFACTION: Here, there is delivery of the goods also, but no transfer of
ownership yet. As such, the seller, being the owner, bears the risk of loss.

The ownership passes to the buyer:

a. When he signifies his approval or acceptance to the seller or does any other act adopting the transaction
b. If he does not signify his approval or acceptance to the seller, but retains the goods without giving notice of rejection,
then if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed,
on the expiration of a reasonable time. What is a reasonable time is a question of fact.

2. Obligation to pay taxes and incidents of the sale, unless otherwise agreed upon;
3. To warrant the thing (see Warranties); 4. To transfer ownership.

Seller need not be the owner for validity of the contract: the seller need not be the owner and the sale is still valid
if he sold the thing in a capacity authorizing him to do so such as a liquidator, executor, administrator, sheriff, or a notary
(in case of pledge).

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

SELLER IS NOT THE OWNER:

General Rule: the buyer acquires no better title to the goods than the seller had

Exceptions: In all of these exceptions, the buyer acquires GOOD TITLE to the object even if the seller is not the owner. a.
Seller is authorized by the owner – such as an agent.
b. Seller had statutory or judicial authority to sell – such as a guardian, executor, administrator, or court sheriff. c.
In cases of estoppel:
i. As to the owner: estoppel in pais - by his conduct or representation, he led the buyer to believe that the seller
had authority to sell.
ii. As to the seller: estoppel by deed – if after the sale, the seller acquired ownership, such ownership automatically
passes to the buyer as to the thing already delivered
e. Sale of an Apparent Owner: REQUISITES:
i. There is apparent ownership
ii. Buyer in good faith and for value – the buyer had no knowledge of any defect in the seller’s title at the time of
full payment (not only at the time of sale).
iii. There must be a law from which apparent ownership may be had, such as:
1) PD 1529 which provides that those dealing with registered land need not inquire beyond the title, also known
as the mirror principle, unless the buyer is required under the law to exercise the highest degree of
diligence, e.g., banks and public utility companies.
2) Factor’s Act (agency) – so far as third persons are concerned, they only have to rely on the power of attorney
as written, they need not inquire into limitations imposed by the principal to the agent not written. 3) Art.
1518 – for goods covered by negotiable instruments.
f. Purchase from a Merchant Store, Market or Fair in good faith and for value: the purpose of this exception is
to facilitate commercial transactions so as not to degrade the trust in sales made through such stores.

Right of buyer to reimbursement: One who has lost any movable or has been unlawfully deprived thereof, may
recover it from the person in possession of the same. If the possessor of a movable lost or which the owner has been
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unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.

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

Delivery is the mode by which ownership is transferred. It is accomplished by placing the thing in the control and
possession of the vendee.

MODES OF DELIVERY: THINGS

a. Actual Delivery: The actual and physical transfer of the thing to the buyer.
b. Constructive Delivery
i. Traditio Longa Manu: literally, long-hand delivery, or by pointing to the thing sold accomplished by mere consent
of the seller, ownership transfers to the buyer, because at the time of sale, the seller cannot transfer possession
to the buyer, e.g., the thing is leased by another.
ii. Consitutum Posessorium: at the time of sale, the seller is in possession and remains in possession in another
concept other than an owner, like that of a lessee, depositary or borrower. E.g., sale lease-back.
iii. Brevi Manu: or short hand delivery. When the buyer is in possession of the thing, in a concept other than that of
an owner, at the time of sale, and remains in possession after sale, now as owner. E.g., a lessee who buys the
thing leased.
iv. Symbolic Delivery: where the seller merely gives the key to a warehouse where the goods are located or in a sale
of car, the delivery of the keys is symbolic delivery.
v. Execution of the Required Formality: by execution of a public instrument. This mode of delivery is available to
both sale of rights and sale of things;
c. Delivery to a common carrier: when the parties so agreed that the seller will deliver to the common carrier for
ultimate delivery to the buyer. In this case, there is already delivery upon receipt of the common carrier. EXCEPT: i.
Ownership is reserved by the seller – such as if it is deliverable to the seller or his agent.
ii. The seller reserved possession – goods are deliverable to the buyer, but possession of the bill of lading is with the
seller.
iii. A Bill of Exchange is drawn by the seller against the buyer and the latter dishonors the same.

MODE OF DELIVERY: As to rights: a.

By execution of an instrument;
b. Quasi Traditio:
i. When the title of ownership is placed in the possession of the vendee (e.g., certificates of stock for sale of shares
of stock);
ii. By the use of the vendee of his rights with the vendor’s consent. (e.g., the vendee of shares where the same has
not been transferred in his name yet, with the consent of the owner, through a proxy, he may exercise his rights
as a stockholder)

TIME OF DELIVERY:
a. Stipulation of the parties;
b. If no stipulation, within a reasonable time.

PLACE OF DELIVERY:
a. Stipulation of the parties;
b. If no stipulation, by usage of trade;
c. If no stipulation nor usage of trade, the seller’s place of business;
d. If none, the seller’s residence.
e. However, in case of a contract of sale of specific goods, which to the knowledge of the parties when the contract or
the sale was made were in some other place, then that place is the place of delivery.

SELLER IS NOT BOUND TO DELIVER:

a. If it is a pure obligation and the buyer does not pay; or
b. If there is a period agreed upon, the obligation to deliver shall be demandable at that time. Except, if the buyer loses
the right to make use of the period under Art. 1198

QUANTITY TO BE DELIVERED:

DELIVERY OF LESS OR MORE OF THE QUANTITY AGREED UPON IN SALE OF PERSONAL PROPERTY:
1. Delivery is less than quantity agreed upon, the buyer may:
a. Reject the delivery; or
b. Accept or retain the goods delivered and pay:
(1) The full contract price if he knew that the seller is not going to perform the contract in full; or (2) Pay the fair
value of the goods delivered if without such knowledge.

2. Delivery is greater than quantity agreed upon, the buyer may:

a. Accept the goods in the quantity agreed upon and reject the rest; or
b. Accept the whole of the goods delivered and pay for them at the contract rate.

3. Delivery of goods mixed with goods of different description not included in the contract, the buyer may accept the
goods which are in accordance with the contract and reject the rest.

4. In no. 2 and 3, if the subject matter is indivisible, the buyer may reject the whole of the goods.
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DELIVERY OF LESS OR MORE OF THE QUANTITY AGREED UPON IN SALE OF REAL ESTATE

A. AT A RATE OF A CERTAIN PRICE FOR A UNIT OF MEASURE OR NUMBER:

1. Delivery is LESS than that agreed upon, the buyer may:
a. Ask for specific performance and demand delivery of the shortage;
b. Ask for the proportionate reduction of the price (accion quanti minoris) c. Rescission, in case:
(1) The area lacking is at least 1/10 of that agreed upon; or
(2) The buyer would not have entered into the contract, had he known of its smaller area.

The same rules apply if any part of the immovable is not of the QUALITY specified in the contract (except that
rescission is an available remedy in the event that the inferior value is MORE THAN 1/10 of the price agreed upon)
even if the area delivered be that agreed upon.

2. If the delivery is in excess of the area agreed upon, the buyer may:
a. Accept the area agreed upon and reject the rest; or
b. Accept the whole and pay at the contract rate.

The above rules likewise applies to judicial sales.

B. SALE OF REAL ESTATE FOR A LUMP SUM PRICE: whatever is the actual area of the land, the buyer is still required
to pay the price agreed upon and the seller is bound to deliver the entire area.

If the actual area is bigger than the agreed upon area, and the seller should not deliver the whole actual area, the
buyer may:
a. Reduce the price to be paid, in proportion to what is lacking in the area or number; or
b. Rescind the contract for failure of the vendor to deliver what has been stipulated.

RIGHTS OF AN UNPAID SELLER

Unpaid Seller: the seller of the goods is deemed to be an unpaid seller when:
1. The whole of the price has not been paid or tendered;
2. A bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it
was received has been broken by reason of the dishonor of the instrument, the insolvency of the buyer, or otherwise

Rights of an Unpaid Seller: notwithstanding that the ownership of the goods may have passed to the buyer, the unpaid
seller of goods has the following rights:

1. Possessory lien – right to retain the goods or right to withhold delivery of the goods.

Grounds:
a. Where the goods have been sold without any stipulation as to credit;
b. Where the goods have been sold on credit, but the term of credit has expired;
c. 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.

Partial Lien: 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.

Loss of possessor lien: happens:

a. When the seller 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;
b. When the buyer or his agent lawfully obtains possession of the goods; c. By waiver.
The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that he has obtained judgment or
decree for the price of the goods.

Sale of the thing by the buyer to third persons:

a. As a rule, the seller does not lose his right to possessory lien or right of stoppage in transitu. b.
Exceptions:
i. If the seller assented to the transfer;
ii. If the goods are covered by a negotiable document of title and it is sold to a purchaser for value in good faith to
whom such document has been negotiated.

2. Stoppage in transitu – right to stop the goods while in transit.

Requisites:
a. The seller already parted with the possession of the goods;
b. The goods are already in transit;
c. The buyer is insolvent.

Goods are in transit:

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a. 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;
b. 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:

a. If the buyer, or his agent in that behalf, obtains delivery of the goods before their arrival at the appointed destination;
b. 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;
c. If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent in that behalf.

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.

Right of stoppage in transitu is exercised:

a. By taking actual possession of the goods; or
b. By giving notice of his claim to the carrier or other bailee who is in possession of the goods, as a consequence of
which:
i. The carrier or bailee then must redeliver the goods to, or according to the directions of, the seller.
ii. The expenses of such delivery must be borne by the seller.
iii. 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 not delivering the goods to the seller unless such document is first
surrendered for cancellation.

3. Resale

Grounds:
a. The goods are perishable in nature
b. The seller expressly reserves the right of resale in case the buyer should make default, or
c. Where the buyer has been in default in the payment of the price for an unreasonable time

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

In case the resale proceeds are:

▪ LESS than the price in the original sale, the seller can recover from the original buyer the difference as damages
occasioned by the breach of contract of sale;
▪ MORE than the price in the original sale, the seller is entitled to the profit made in such resale.

Good Title: the buyer in the resale acquires a good title as against the original buyer.

Notice: except in case of resale made because the goods are perishable, notice shall be given to the original buyer about:
a. The intention to resell – which is relevant to prove that the buyer has been in default for an unreasonable length of
time.
b. The date, time and place of resale – to be considered doing the resale in good faith and entitle the seller to any
deficiency.

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

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

4. Rescission

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

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

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

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

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

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

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

RULES ON DOUBLE SALE

MOVABLE PROPERTY: if the same movable is sold by the vendor to two or more vendees, the one who has a better right
over the thing shall be the first one to take possession in good faith.

IMMOVABLE PROPERTY: if the same immovable property is sold by the vendor to two or more vendees, the one who has a
better right over the thing shall be:
1. The one to first register in good faith; if none,
2. The one to first take possession in good faith; if none still,
3. The one with the oldest title.

“Good faith” pertains to the time of registration or possession not the time of perfection of sale: as such, if at the
time of the second sale, the buyer had no knowledge of the prior sale, but learns of it prior to registration or possession (if
there is no registrant), he will NOT be considered a registrant/possessor in good faith.

BOTH SALES MUST BE VALID: In order for the Rules on Double Sale to apply, it presupposes that both the sale are valid or
at least voidable or rescissible, prior to annulment or rescission.

CONDITIONS AND WARRANTIES

CONDITIONS: where the obligation of either party to a contract of sale is subject to any condition which is not performed,
such party may:
1. Refuse to proceed with the contract; or
2. Waive the performance of the condition; or
3. Treat the non-performance as a breach of warranty and ask for damages.

WARRANTIES: Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the natural
tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer purchase the thing
relying thereon.

Opinion of the seller: is not understood to be a warranty unless the seller made such affirmation or statement as an expert and
it was relied upon by the buyer.

Express Warranty: is an affirmation of fact or promise by the seller relating to the thing which would induce the buyer to buy
the same. However, those relating to opinions of the seller are not considered warranties unless they are made by experts and
the buyer relies upon them.

Implied Warranties:
1. Warranty against eviction – that the seller has a right to sell the thing at the time when ownership is to pass, and
that the buyer shall from that time have and enjoy legal and peaceful possession of the thing;

Eviction requisites:
a. The vendee is deprived of the whole or of a part of the thing purchased;
b. By virtue of a final judgment
c. The vendor is summoned in the suit for eviction at the instance of the vendee.
d. Such judgment is based on:
i. A right prior to the sale or
ii. An act imputable to the vendor

Rules Applicable:
a. The warranty applies even if there is no agreement to such effect;
b. The vendee need not appeal from the decision in order that the vendor may become liable for eviction.
c. When the adverse possession had been commenced before the sale but the prescriptive period is completed after the
transfer, the vendor shall not be liable for eviction.
d. If the property is sold for non-payment of taxes due and not made known to the vendee before the sale, the vendor is
liable for eviction.
e. The judgment debtor is also responsible for eviction in judicial sales, unless it is otherwise decreed in the judgment.
f. The defendant vendee shall ask, within the time fixed in the Rules of Court for answering the complaint, that the
vendor be made a co-defendant.

Extent of Liability: First, it will depend whether the seller is in bad faith:
b. If the seller is in bad faith, he shall be liable for:
i. Value of the thing sold at the time of eviction;
ii. Income or fruits, if he has been ordered to deliver them to the party who won the suit against him;
iii. Costs of the suit which caused the eviction, and, in a proper case, those of the suit
bought against the vendor for the warranty;
iv. Expenses of the contract, if the vendee has paid them;
v. Damages and interests and ornamental expenses.
c. If the seller is in good faith, the liability of the vendor shall depend whether there is a waiver executed by the
buyer:
i. If there is no waiver, the seller is liable for VICE above except Damages.
ii. If there is a waiver, the liability of the vendor shall depend whether the buyer is aware of the risk of eviction:

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1) Consciente – the buyer is not aware of the risk, or without knowledge of the defect in the title of the seller:
seller is still liable but only for the VALUE of the thing at the time of eviction;
2) Intencionada – the buyer was aware of the risk of eviction or of the defect in the title of the seller, the seller
is no longer liable for anything.

Partial Loss: should the vendee lose only a part of the thing sold but the same is of such importance, in relation to the
whole, that he would not have bought it without said part, he may demand the rescission of the contract; but with the
obligation to return the thing without other encumbrances that those which it had when he acquired it, instead of enforcing
the vendor’s liability for eviction.

Two or more things sold: the same rules as to partial loss shall apply: a.
If they have been jointly sold for a lumpsum; or
b. Even if they were sold for a separate price for each of them if it should appear that the vendee would not have
purchased one without the other.

2. Warranty against hidden defects or of quality - the thing shall be free from any hidden faults or defects.

Hidden Defects: it would render the thing unfit for its intended use; or diminish its fitness for such use to such extent
that, had the vendee been aware thereof, he would not have acquired it or would have given a lower price for it.

Vendor not liable: in case:

a. The defects are patent or those which may be visible; or
b. Even if not visible, the vendee who is an expert, by reason of his trade or profession, should have known.

Warranty of Fitness of Goods: there is an implied warranty that the goods shall be reasonably fit for such purpose;
a. The buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are
acquired, and
b. It appears that the buyer relies on the seller's skill or judgment (whether he be the grower or manufacturer or not),

In the case of contract of sale of a specified article under its patent or other trade name, there is no warranty as to its
fitness for any particular purpose, unless there is a stipulation to the contrary.

Warranty of Merchantable Quality: there is an implied warranty that the goods shall be of merchantable quality a.
Where the goods are bought by description
b. From a seller who deals in goods of that description (whether he be the grower or manufacturer or not),

In the case of a contract of sale by sample, if the seller is a dealer in goods of that kind, there is an implied warranty that
the goods shall be free from any defect rendering them unmerchantable which would not be apparent on reasonable
examination of the sample.

Other rules on warranty against hidden defects or of quality:

a. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though he was not
aware thereof, unless there is contrary stipulation.
b. An implied warranty or condition as to the quality or fitness for a particular purpose may be annexed by the usage of
trade.

Remedies of the vendee:

a. Withdraw from the contract plus damages;
b. Accion quanti minoris or demand a proportionate reduction of the price plus damages.

Loss of the thing with hidden defect; liability of the seller:

a. If the cause was the defect itself: the seller shall be liable for:
i. Price ii. Expenses of the contract iii. Interest (if in good faith) iv. Damages (if in bad faith)
b. If the cause of the loss is a fortuitous event or through the fault of the vendee, the seller shall be liable to refund the
price less the value at the time of loss, plus damages (if he was aware).

Judicial sales: the above rules likewise apply to judicial sales, except the judgment detor shall not be liable for damages.

Prescriptive period for the remedies: is 6 months from delivery.

REDHIBITORY DEFECTS IN ANIMALS

Redhibitory Defect is the hidden defect on animals that, even in case a professional inspection has been made, should
be of such nature that expert knowledge is not sufficient to discover it.

But if the veterinarian, through ignorance or bad faith shall fail to discover or disclose it, he shall be liable for damages.

Sale of more than 1 animal: General Rule: The redhibitory defect of one shall only give rise to its redhibition, and not of the
others; Except: if the vendee would not have purchased the sound animal or animals without the defective one, which is
presumed when a team, yoke pair, or set is bought, even if a separate price has been fixed for each one of the animals
composing the same.

No warranty: There is no warranty against hidden defects of animals sold at fairs or at public auctions, or of live stock sold
as condemned.

Void sale of animals:

a. The sale of animals suffering from contagious diseases shall be void.
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b. If the use or service for which they are acquired has been stated in the contract, and they are found to be unfit
therefor.

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Remedies and Prescriptive Period: Remedies of the vendee in case of sale of animals with redhibitory defects are similar
to the remedies for breach of warranty against hidden defects; but he must make use thereof within the same
period which has been fixed for the exercise of the redhibitory action or 40 days.

Other Rules:
a. If the animal should die within three days after its purchase, the vendor shall be liable if the disease which cause the
death existed at the time of the contract.
b. If the sale be rescinded, the animal shall be returned in the condition in which it was sold and delivered, the vendee
being answerable for any injury due to his negligence, and not arising from the redhibitory fault or defect. c. Sale of
large cattle is governed by special laws.

3. Warranty against non-apparent encumbrances: an encumbrance (or an easement or servitude) is a burden imposed
upon an immovable for the benefit of another immovable belonging to a different owner. It is non-apparent, when there
are no external indications of their existence.

The warranty against non-apparent encumbrances arises when the same is: a.
Not mentioned in the agreement; or
b. Not recorded in the Registry of Property (now Registry of Deeds).

In which case, the buyer has the following remedies, within 1 year, counted from: a.
Ask for the rescission of the contract – from execution of the deed;
b. Ask for damages – from discovery.

Not applicable to: the implied warranties are not applicable to a sheriff, auctioneer, mortgagee, pledgee or other person
professing to sell by virtue of authority in fact or law, for the sale of a thing in which a third person has a legal or equitable
interest.

OBLIGATIONS OF THE VENDEE:

1. To pay the price

a. At the time and place stipulated; or if none was stipulated, the payment must be made at the time and place of
the delivery of the thing sold.
b. The vendee shall be liable for interest for the period between the delivery of the thing and the payment of the price
in the following cases:
i. Should it have been so stipulated; ii. Should the thing sold and delivered produce fruits or income; iii.
Should he be in default, from the time of judicial or extrajudicial demand for the payment of the price.

Suspension of payments: if the vendee is disturbed in the possession or ownership of the thing acquired, or should he
have reasonable grounds to fear such disturbance, by a vindicatory action or a foreclosure of mortgage, he may suspend
the payment of the price until the vendor has caused the disturbance or danger to cease, unless: i. The seller
gives security for the return of the price in a proper case, or ii. It has been stipulated that, notwithstanding any such
contingency, the vendee shall be bound to make the payment.
iii. There was only a mere act of trespass

Vendor’s Remedy of Rescission: The vendor may immediately sue for rescission if:
i. The vendee has not yet paid after delivery is made ii. The subject matter is
immovable property
iii. There is reasonable fear of loss of the property sold and its price. (Art. 1591)

Note, however, that Art. 1191 (on reciprocal obligations) still applies, where rescission can be had even without
reasonable fear of loss if the vendee fails to pay upon delivery.

However still, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the
rescission of the contract may be had, the vendee may pay, even after the expiration of the period, as long as no
demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the
demand, the court may not grant him a new term.

2. To accept delivery

Delivery by installments: The buyer is not bound to accept delivery by installments, unless otherwise agreed upon.

If it was agreed that delivery be done in installments and payments separately made, and a.
the seller makes defective deliveries in respect of one or more instalments, or
b. the buyer neglects or refuses without just cause to take delivery of or pay for one or more instalments,

It depends in each case on the terms of the contract and the circumstances of the case, whether the breach of contract is:
a. So material as to justify the injured party in refusing to proceed further and suing for damages for breach of the
entire contract, or
b. Severable, giving rise to a claim for compensation but not to a right to treat the whole contract as broken

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Deemed Acceptance: the buyer is deemed to have accepted the delivery if: a.
He intimates to the seller that he has accepted the thing;
b. He does any act which is inconsistent with the ownership of the seller;
c. After the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.

Buyer’s obligation to notify the seller of breach of promise or warranty: After delivery is made, as a general
rule, the seller is not discharged of liability for damages or of breach of warranty.

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EXCEPT:
a. There is an express or implied agreement to the contrary; or
b. The buyer fails to give notice to the seller of the breach within a reasonable time after the buyer knows, or ought to
know of such breach.

Notify the seller in case of refusal: Unless otherwise agreed, where goods are delivered to the buyer, and he refuses to
accept them, having the right so to do, he is not bound to return them to the seller, but it is sufficient if he notifies the
seller that he refuses to accept them.

If he voluntarily constitutes himself a depositary thereof, he shall be liable as such.

Right to Examine:
a. Delivered goods not previously examined: he is not deemed to have accepted them unless and until he has had a
reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with
the contract if there is no stipulation to the contrary.
b. Unless otherwise agreed, the seller is bound, on request, to afford the buyer a reasonable opportunity of
examining the goods for the purpose of ascertaining whether they are in conformity with the contract
c. Where goods are delivered to a carrier by the seller, upon the terms that the goods shall not be delivered by the
carrier to the buyer until he has paid the price, the buyer is not entitled to examine the goods before the
payment of the price, in the absence of agreement or usage of trade permitting such examination.

Vendor’s Remedy of Rescission is an available remedy to the seller with respect to movable property, if the vendee
upon the expiration of the period fixed for the delivery of the thing : a. Should not have appeared to receive it, or,
b. Having appeared, he should not have tendered the price at the same time, unless a longer period has been stipulated
for its payment.

EXTINGUISHMENT OF A CONTRACT OF SALE:

Sales are extinguished by the same causes as all other obligations, and by conventional or legal redemption.

CONVENTIONAL REDEMPTION

CONVENTIONAL REDEMPTION: otherwise known as “right of repurchase” shall take place when the vendor reserves the
right to repurchase the thing sold, with the obligation to return the price, expenses related thereto and useful and necessary
expenses, and other stipulations which may have been agreed upon.

The sale, with a right of repurchase, is also known as pacto de retro sale.

Ownership: transfers to the vendee-a-retro upon delivery. However, this ownership is not absolute but only conditional. This
is because the vendor-a-retro may be able to exercise the right to repurchase and the ownership of the buyer will be
terminated. Thus, it can be said that the ownership of the vendee-a-retro is subject to a resolutory condition.

Amount to be paid at the time the right is exercised:

1. The purchase price;
2. The expenses of the contract, and any other legitimate payments made by reason of the sale; and
3. Useful and necessary expenses (e.g., fencing of the land)

Fruits:

At the time of At the time of Effect

sale redemption
There are There were fruits If purchaser paid for the fruits existing at the time of sale, he shall be entitled to
visible or as well reimbursement or pro-rating of the fruits existing at the time of redemption.
growing fruits
If no indemnity was paid by the purchaser, there is no such liability for reimbursement
or pro-rating.
No fruits Some exist The fruits shall be prorated between the redemptioner (Seller-a-retro) and the
vendee, giving the latter the part corresponding to the time he possessed the land in
the last year, counted from the anniversary of the date of the sale.

Equitable Mortgage: a sale with a right of repurchase (or even a contract of absolute sale) is presumed to be an equitable
mortgage in the following cases:
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;

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3. When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or
granting a new period is executed;
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 parties is that the transaction shall secure
the payment of a debt or the performance of any other obligation.

The remedy would be to ask for the reformation of the instrument purporting to be a contract of sale with right of repurchase
or a contract of absolute sale.

In case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage.

Period to exercise right of repurchase:

1. That which was agreed upon which cannot exceed 10 years;
2. If no agreement as to the period, it shall be four years from the date of the contract.
3. The vendor may still exercise the right to repurchase within thirty days from the time final judgment was rendered in a
civil action on the basis that the contract was a true sale with right to repurchase.

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No Redemption/Repurchase was made:

1. In case of real property, the consolidation of ownership in the vendee by virtue of the failure of the vendor to pay
the required amounts shall not be recorded in the Registry of Property without a judicial order, after the vendor has
been duly heard.
2. In case of personal property, the consolidation of ownership is by operation of law.

By consolidation of ownership, it means that the ownership of the vendee becomes absolute and the resolutory condition is
removed.

Vendor’s Right of Repurchase:

1. The vendor may bring his action against every possessor whose right is derived from the vendee, even if in the second
contract no mention should have been made of the right to repurchase, without prejudice to the provisions of the
Mortgage Law and the Land Registration Law with respect to third persons.
2. The vendee is subrogated to the vendor's rights and actions.
3. The creditors of the vendor cannot make use of the right of redemption against the vendee, until after they have
exhausted the property of the vendor.

Multiple Parties
1. SALE OF UNDIVIDED IMMOVABLE – vendee eventually acquires the whole; may compel the vendor to redeem the
whole property.
2. SEVERAL PERSONS JOINTLY AND IN THE SAME CONTRACT: sell an undivided immovable with a right of repurchase:
a. SELLERS – can only redeem their share
b. BUYER – can compel redemption of the entire property; cannot be compelled to agree to a partial redemption
3. CO-OWNERS SOLD SEPARATELY – each can exercise his own right of redemption and cannot be compelled to redeem
the whole property.
LEGAL REDEMPTION

LEGAL REDEMPTION: 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.

The Right of Legal Redemption is available to:

1. Co-owners – a co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or
of any of them, are sold to a third person.

Subject property: may be movable or immovable property.

Amount to be paid for redemption: is the purchase price, unless the price of alienation is grossly excessive, in which case,
the redemptioner shall pay only a reasonable one.

Multiple redemptioners: should two or more co-owners desire to exercise the right of redemption, they may only do so in
proportion to the share they may respectively have in the thing owned in common

2. Owners of adjoining lands – have the right of redemption in case of transfers of land.

Rural Land; Requisites:

a. The subject is rural land;
b. The land does not exceed one hectare;
c. The redemptioner is an owner of a land adjoining the subject rural land;
d. The adjacent lands is not separated by brooks, drains, ravines, roads and other apparent servitudes for the benefit of
other estates; and
e. The grantee/buyer owns a rural land;

Multiple redemptioners: in case two or more adjoining owners desire to exercise the right of redemption at the same time:
a. The owner of the adjoining land of smaller area shall be preferred; and
b. Should both lands have the same area, the one who first requested redemption.

Redemption and Pre-emption of Urban Land; Requisites:

a. The subject is urban land;
b. The area of the land is so small and so situated that a major portion thereof cannot be used for any practical purpose
within a reasonable time, having been bought merely for speculation;
c. The one exercising the right of redemption or pre-emption is an adjoining land owner.

When redemption, when pre-emption:

a. Pre-emption is the right exercised by the adjoining land owner if the sale is NOT YET perfected;
b. Redemption is the right exercised if the sale is already perfected.

Multiple persons exercising the right of redemption/pre-emption: the one whose intended use is best justified shall be
preferred.

PERIOD TO EXERCISE LEGAL RIGHT OF REDEMPTION: 30 days from NOTICE in writing by the prospective vendor, or by
the vendor. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the
vendor that he has given written notice thereof to all possible redemptioners.

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