\ 1519-1579

DELIVERY OF THE THING SOLD

Art. 1519. If goods are delivered to a bailee by the owner or by a person whose act in
conveying the title to them to a purchaser in good faith for value would bind the owner and
a negotiable document of title is issued for them they cannot thereafter, while in possession
of such bailee, be attached by garnishment or otherwise or be levied under an execution
unless the document be first surrendered to the bailee or its negotiation enjoined. The
bailee shall in no case be compelled to deliver up the actual possession of the goods until the
document is surrendered to him or impounded by the court. (n)

Art. 1520. A creditor whose debtor is the owner of a negotiable document of title shall be
entitled to such aid from courts of appropriate jurisdiction by injunction and otherwise in
attaching such document or in satisfying the claim by means thereof as is allowed at law or
in equity in regard to property which cannot readily be attached or levied upon by
ordinary legal process. (n)

Goods in the hands of the carrier covered by a n e g o t i a b l e d o c u m e n t c a n n o t b e

a t t a c h e d o r levied upon, UNLESS
1 . t h e d o c u m e n t b e f i r s t s u r r e n d e r e d t o t h e carrier; or
2. impounded by the court; or
3. its negotiation be enjoined.
Rationale for the rule:

A negotiable document of title represents the goods; hence it is not allowable for a carrier
to deliver the goods without the surrender of the bill of lading to t h e m , o r f o r t h e
l a w t o a l l o w a t t a c h m e n t o n t h e goods.

Place, time, and manner of delivery

Art. 1521. Whether it is for the buyer to take possession of the goods or of the seller to send
them to the buyer is a question depending in each case on the contract, express or implied,
between the parties. Apart from any such contract, express or implied, or usage of trade to
the contrary, the place of delivery is the seller's place of business if he has one, and if not
his residence; but in case of a contract of sale of specific goods, which to the knowledge of
the parties when the contract or the sale was made were in some other place, then that
place is the place of delivery.

Where by a contract of sale the seller is bound to send the goods to the buyer, but no time
for sending them is fixed, the seller is bound to send them within a reasonable time.
Where the goods at the time of sale are in the possession of a third person, the seller has not
fulfilled his obligation to deliver to the buyer unless and until such third person
acknowledges to the buyer that he holds the goods on the buyer's behalf.

Demand or tender of delivery may be treated as ineffectual unless made at a reasonable

hour. What is a reasonable hour is a question of fact.

Unless otherwise agreed, the expenses of and incidental to putting the goods into a
deliverable state must be borne by the seller. (n)

Art. 1522. Where the seller delivers to the buyer a quantity of goods less than he contracted
to sell, the buyer may reject them, but if the buyer accepts or retains the goods so delivered,
knowing that the seller is not going to perform the contract in full, he must pay for them at
the contract rate. If, however, the buyer has used or disposed of the goods delivered before
he knows that the seller is not going to perform his contract in full, the buyer shall not be
liable for more than the fair value to him of the goods so received.

Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell,
the buyer may accept the goods included in the contract and reject the rest. If the buyer
accepts the whole of the goods so delivered he must pay for them at the contract rate.

Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a
different description not included in the contract, the buyer may accept the goods which
are in accordance with the contract and reject the rest.

In the preceding two paragraphs, if the subject matter is indivisible, the buyer may reject
the whole of the goods.

The provisions of this article are subject to any usage of trade, special agreement, or course
of dealing between the parties. (n)

a ) GENERAL RULE: The buyer is not bound to accept delivery of a quantity of goods
more or less than that a g r e e d u p o n o r t o a c c e p t g o o d s w h i c h a r e o f a
description different from that agreed upon.

E X C E P T I O N : T h e r e i s u s a g e o f t r a d e , s p e c i a l stipulation or course of
dealing to the contrary.

REMEDIES:

1. Where the seller delivers a q u a n t i t y l e s s t h a n t h a t a g r e e d u p o n , t h e buyer

may reject them. If the buyer accepts or retains that goods delivered, Knowing the
inability of the seller to deliver the rest, the b u y e r i s b o u n d t o p a y
f o r t h e m a t t h e contract rate. If the buyer has
u s e d o r disposed
o f t h e g o o d s b e f o r e k n o w i n g t h e inability of the seller to deliver the rest, the
buyer shall pay not more than the fair value of the goods. (NOTE: fair value means the price of
the goods in the open market.)
2. If the quantity delivered is more than that agreed upon, the buyer may reject the excess,
unless the subject matter is indivisible, in which case, the buyer may reject the whole.
3. W h e r e t h e s e l l e r
d e l i v e r s the goods mixed with goods of a
d i f f e r e n t description not included in the contract, the b u y e r m a y a c c e p t
t h e g o o d s w h i c h a r e I n accordance with the contract, and reject the rest, unless the
subject matter is indivisible, i n w h i c h c a s e , t h e b u y e r m a y r e j e c t t h e
whole.

b) Delivery by the seller of only a part of an entire contract would itself be an

indication that he might not intend to fully perform.

PRESUMPTION: Buyer k n o w s t h a t t h e s e l l e r m i g h t i n t e n d t o n o t f u l l y
perform, if said purchaser accepts a partial deliver y on an entire contract, absent
any statement to the contrary. (The law applies peculiarly to installment and divisible
contracts.)

Art. 1523. Where, in pursuance of a contract of sale, the seller is authorized or required to
send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer
or not, for the purpose of transmission to the buyer is deemed to be a delivery of the goods
to the buyer, except in the case provided for in Article 1503, first, second and third
paragraphs, or unless a contrary intent appears.

Unless otherwise authorized by the buyer, the seller must make such contract with the
carrier on behalf of the buyer as may be reasonable, having regard to the nature of the
goods and the other circumstances of the case. If the seller omit so to do, and the goods are
lost or damaged in course of transit, the buyer may decline to treat the delivery to the
carrier as a delivery to himself, or may hold the seller responsible in damages.

Unless otherwise agreed, where goods are sent by the seller to the buyer under
circumstances in which the seller knows or ought to know that it is usual to insure, the
seller must give such notice to the buyer as may enable him to insure them during their
transit, and, if the seller fails to do so, the goods shall be deemed to be at his risk during
such transit. (n)

GENERAL RULE:
Delivery of goods to carrier is considered delivery to the b u ye r , a n d h e n c e , t i t l e
p a s s e d t o t h e buyer at the point of shipment

EXCEPTION:
S e l l e r m a y r e s e r v e title by the form of the bill of lading with i n t e n t t o r e m a i n
t h e o w n e r f o r a l l p u r p o s e s a n d n o t m e r e l y f o r t h e s o l e purpose of securing
payment, or unless contrary intent appears in the contract of sale

T R A D E T e r m s

a.) f.o.b.- free on board means that t h e s e l l e r bears expenses

o f transportation up to the f.o.b. point.

b.) c.i.f. - c o s t , i n s u r a n c e , f r e i g h t s i g n i f i e s t h a t t h e p r i c e q u o t e d
i n c l u d e s t h e c o s t s o f t h e g o o d s , insurance, and freight charges on t h e
g o o d s u p t o t h e p l a c e o f destination

c.) f.a.s. free alongside means that t h e s e l l e r b e a r s t h e e x p e n s e s o f transportation

until he delivers the g o o d s a l o n g s i d e a v e s s e l a t a n a m e d post.

These terms may be used only in connection with fixing the priceand will not be
construed as fixing the place of delivery to the buyer

B e s t i n d i c a t i o n o f t h e i n t e n t i o n o f p a r t i e s a s t o t h e p l a c e o f delivery
is the manner and place of payment agreed upon by the parties

Where price is payable upon proof of shipment, then the buyer agrees to accept
delivery at the point of shipment

Where the price is payable only upon arrival of t h e g o o d s a t t h e p o i n t

o f d e s t i n a t i o n , then that is the place of delivery to the buyer

d.) effect of form of bill of lading

O w n e r s h i p i s r e t a i n e d : T h e s e l l e r m a y consign the goods to himself or to

his agent and thus prevent title from passing to the buyer until the latter pays the price

Mere possession is retained: The seller may consign the goods to the order of the
buyeron the latters agent but by retaining the bill of lading, he thereby prevents the buyer from
o b t a i n i n g t h e g o o d s f r o m t h e c a r r i e r u n t i l price is paid

Art. 1524. The vendor shall not be bound to deliver the thing sold, if the vendee has not
paid him the price, or if no period for the payment has been fixed in the contract. (1466)
Art. 1525. The seller of goods is deemed to be an unpaid seller within the meaning of this
Title:

(1) When the whole of the price has not been paid or tendered;

(2) When a bill of exchange or other negotiable instrument has been received as
conditional payment, and the condition on which it was received has been broken by
reason of the dishonor of the instrument, the insolvency of the buyer, or otherwise.

In Articles 1525 to 1535 the term "seller" includes an agent of the seller to whom the bill of
lading has been indorsed, or a consignor or agent who has himself paid, or is directly
responsible for the price, or any other person who is in the position of a seller. (n)

REMEDIES OF AN UNPAID SELLER

Art. 1526. Subject to the provisions of this Title, notwithstanding that the ownership in the
goods may have passed to the buyer, the unpaid seller of goods, as such, has:

(1) A lien on the goods or right to retain them for the price while he is in possession
of them;

(2) In case of the insolvency of the buyer, a right of stopping the goods in transitu
after he has parted with the possession of them;

(3) A right of resale as limited by this Title;

(4) A right to rescind the sale as likewise limited by this Title.

Where the ownership in the goods has not passed to the buyer, the unpaid seller has, in
addition to his other remedies a right of withholding delivery similar to and coextensive
with his rights of lien and stoppage in transitu where the ownership has passed to the
buyer. (n)

a) If ownership over the goods had not yet passed to the buyer:
t h e s e l l e r , a s o w n e r , c o u l d r e t a i n t h e goods or resell them to another, without
prejudice to his liability for damages for any breach of contract committed by him

b) I f o w n e r s h i p h a d p a s s e d t o t h e b u ye r b u t t h e goods are still in the

possession of the seller or are in transit to the buyer:
the unpaid seller could withhold delivery or stop the goods in transit should the buyer become
insolvent. As a consequence of his lien over the goods, the unpaid seller could resell the goods to
another or resume ownership over them, without court order, and may still used the buyer for
damages
 1. Lien

Art. 1527. Subject to the provisions of this Title, the unpaid seller of goods who is in
possession of them is entitled to retain possession of them until payment or tender of the
price in the following cases, namely:

(1) Where the goods have been sold without any stipulation as to credit;

(2) Where the goods have been sold on credit, but the term of credit has expired;

(3) Where the buyer becomes insolvent.

The seller may exercise his right of lien notwithstanding that he is in possession of the
goods as agent or bailee for the buyer. (n)

Art. 1528. Where an unpaid seller has made part delivery of the goods, he may exercise his
right of lien on the remainder, unless such part delivery has been made under such
circumstances as to show an intent to waive the lien or right of retention. (n)

Art. 1529. The unpaid seller of goods loses his lien thereon:

(1) When he delivers the goods to a carrier or other bailee for the purpose of
transmission to the buyer without reserving the ownership in the goods or the right
to the possession thereof;

(2) When the buyer or his agent lawfully obtains possession of the goods;

(3) By waiver thereof.

The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that
he has obtained judgment or decree for the price of the goods. (n)

a) The unpaid sellers lien implies that he has a r i g h t t o r e t a i n p o s s e s s i o n

o f t h e g o o d s u n t i l payment or tender of the whole price, unless he agreed to sell on
credit.

b.) If the unpaid seller agrees to sell on credit, he may refuse to deliver them if the buyer
becomes insolvent, or if the term of the credit had expired and the price has not been paid.

c) Loss of lien: the unpaid seller losses his lien when:

1. he delivers the goods to the carrier or other bailee, consigning them to the buyer under
astraight or non-negotiable bill of lading, or

2. when the goods were delivered to the buyer, or

3. when he waived his lien.
 d) It is not lost on the remainder of the goods w h e n o n l y p a r t i a l d e l i v e r y
w a s m a d e , u n l e s s s u c h w a s i n t e n d e d t o o p e r a t e a s s ym b o l i c a l delivery
of the whole. The lien is not lost by the mere fact that the seller had already
obtained judgment for the price.
e) R e v i v a l o f l i e n : t h e u n p a i d s e l l e r s l i e n i s revived if the goods are returned
by the buyer in wrongful repudiation of the contract.

2. Stoppage in Transitu

Art. 1530. Subject to the provisions of this Title, when the buyer of goods is or becomes
insolvent, the unpaid seller who has parted with the possession of the goods has the right of
stopping them in transitu, that is to say, he may resume possession of the goods at any time
while they are in transit, and he will then become entitled to the same rights in regard to
the goods as he would have had if he had never parted with the possession. (n)

Art. 1531. Goods are in transit within the meaning of the preceding article:

(1) From the time when they are delivered to a carrier by land, water, or air, or
other bailee for the purpose of transmission to the buyer, until the buyer, or his
agent in that behalf, takes delivery of them from such carrier or other bailee;

(2) If the goods are rejected by the buyer, and the carrier or other bailee continues
in possession of them, even if the seller has refused to receive them back.

Goods are no longer in transit within the meaning of the preceding article:
(1) If the buyer, or his agent in that behalf, obtains delivery of the goods before their
arrival at the appointed destination;

(2) If, after the arrival of the goods at the appointed destination, the carrier or other
bailee acknowledges to the buyer or his agent that he holds the goods on his behalf
and continues in possession of them as bailee for the buyer or his agent; and it is
immaterial that further destination for the goods may have been indicated by the
buyer;

(3) If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer
or his agent in that behalf.

If the goods are delivered to a ship, freight train, truck, or airplane chartered by the buyer,
it is a question depending on the circumstances of the particular case, whether they are in
the possession of the carrier as such or as agent of the buyer.

If part delivery of the goods has been made to the buyer, or his agent in that behalf, the
remainder of the goods may be stopped in transitu, unless such part delivery has been
under such circumstances as to show an agreement with the buyer to give up possession of
the whole of the goods. (n)

Art. 1532. The unpaid seller may exercise his right of stoppage in transitu either by
obtaining actual possession of the goods or by giving notice of his claim to the carrier or
other bailee in whose possession the goods are. Such notice may be given either to the
person in actual possession of the goods or to his principal. In the latter case the notice, to
be effectual, must be given at such time and under such circumstances that the principal,
by the exercise of reasonable diligence, may prevent a delivery to the buyer.

When notice of stoppage in transitu is given by the seller to the carrier, or other bailee in
possession of the goods, he must redeliver the goods to, or according to the directions of,
the seller. The expenses of such delivery must be borne by the seller. If, however, a
negotiable document of title representing the goods has been issued by the carrier or other
bailee, he shall not obliged to deliver or justified in delivering the goods to the seller unless
such document is first surrendered for cancellation. (n)

2. Resale

Art. 1533. Where the goods are of perishable nature, or where the seller expressly reserves
the right of resale in case the buyer should make default, or where the buyer has been in
default in the payment of the price for an unreasonable time, an unpaid seller having a
right of lien or having stopped the goods in transitu may resell the goods. He shall not
thereafter be liable to the original buyer upon the contract of sale or for any profit made by
such resale, but may recover from the buyer damages for any loss occasioned by the breach
of the contract of sale.

Where a resale is made, as authorized in this article, the buyer acquires a good title as
against the original buyer.

It is not essential to the validity of resale that notice of an intention to resell the goods be
given by the seller to the original buyer. But where the right to resell is not based on the
perishable nature of the goods or upon an express provision of the contract of sale, the
giving or failure to give such notice shall be relevant in any issue involving the question
whether the buyer had been in default for an unreasonable time before the resale was
made.

It is not essential to the validity of a resale that notice of the time and place of such resale
should be given by the seller to the original buyer.

The seller is bound to exercise reasonable care and judgment in making a resale, and
subject to this requirement may make a resale either by public or private sale. He cannot,
however, directly or indirectly buy the goods. (n)
 a.) When the goods are of perishable nature, or where the seller expressly reserves the
right of resale incase the buyer should defaul t in payment, or where the buyer
has been in default for an unreasonable length of time, the unpaid seller, having a
right of lien or having stopped the goods in transitu, may resell the goods and
recover from the buyer damages for breach of contract

b) The resale may be in a public or private sale, but the seller cannot buy them directly or
indirectly. The seller is entitled to any profit he may make out of there sale.

c) In case he sells them at a loss, he is entitled to recover the difference from the
original buyer. It is not essential to the validity of a resale that previous notice of an
intention to resell or notice of the time and place or resale be given to the original
buyer.

d) Damages recoverable: Whether the action is for d a m a g e s o r t o r e c o v e r

l o s s f r o m a r e s a l e , t h e purpose is to compensate the seller for loss
f o r breach of contract. Thus, if the purchaser fails to take delivery and pay the price,
the vendor, without n e e d o f f i r s t r e s c i n d i n g t h e c o n t r a c t j u d i c i a l l y, i s
entitled to resell, and if obliged to sell for less than t h e c o n t r a c t p r i c e ,
t h e b u y e r i s l i a b l e f o r t h e difference.

e ) D u e d i l i g e n c e m u s t b e e x e r c i s e d t o s e c u r e t h e highest price obtainable in

the best available market. T h e b u r d e n o f s h o w i n g i t w a s e x e r c i s e d i s o n t h e
vendor.

4. Rescission

Art. 1534. An unpaid seller having the right of lien or having stopped the goods in transitu,
may rescind the transfer of title and resume the ownership in the goods, where he expressly
reserved the right to do so in case the buyer should make default, or where the buyer has
been in default in the payment of the price for an unreasonable time. The seller shall not
thereafter be liable to the buyer upon the contract of sale, but may recover from the buyer
damages for any loss occasioned by the breach of the contract.

The transfer of title shall not be held to have been rescinded by an unpaid seller until he
has manifested by notice to the buyer or by some other overt act an intention to rescind. It
is not necessary that such overt act should be communicated to the buyer, but the giving or
failure to give notice to the buyer of the intention to rescind shall be relevant in any issue
involving the question whether the buyer had been in default for an unreasonable time
before the right of rescission was asserted. (n)
An unpaid seller having the right of lien or having stopped the goods in transitu may rescind the
transfer of title and resume ownership in the goods where he expressly reserved the right to do
so in case the buyer defaults, or where the buyer has been in default in payment of the
price for an unreasonable time. The transfer of title shall not be held to have been
rescinded by the unpaid seller until he manifests by notice to the b u y e r o r b y s o m e
o v e r t a c t a n i n t e n t i o n t o rescind. After rescinding the transfer of title, the seller may
still recover damages from the buyer for breach of contract.

As used in Art. 1534, the term rescind is e q u i v a l e n t t o r e t u r n

o f t h e t i t l e o v e r t h e undelivered goods to the seller and the right to r e c o v e r
d a m a g e s f o r l o s s d u e t o b r e a c h o f contract.

Art. 1535. Subject to the provisions of this Title, the unpaid seller's right of lien or stoppage
in transitu is not affected by any sale, or other disposition of the goods which the buyer
may have made, unless the seller has assented thereto.

If, however, a negotiable document of title has been issued for goods, no seller's lien or
right of stoppage in transitu shall defeat the right of any purchaser for value in good faith
to whom such document has been negotiated, whether such negotiation be prior or
subsequent to the notification to the carrier, or other bailee who issued such document, of
the seller's claim to a lien or right of stoppage in transitu. (n)

a) Old common law remedy which is an extension of the lien for the price and entitles the
unpaid seller to resume possession of the goods while they are in transit before the
goods come in possession of the vendee if the later is or becomes insolvent.

b) Goods are considered to be in transit from the time they are delivered to a carrier or other bailee by the
seller for the purpose of transmission to the buyer, until the buyer or his agent takes
delivery of them from the carrier. To terminate the transit by delivery to a middleman, it must
be delivery to keep, not to transport

c) Goods are still considered to be in transit even if t h e y r e a c h e d t h e i r u l t i m a t e

d e s t i n a t i o n w h e n t h e buyer rejects them and they remain in the possession of the carrier.

d) Goods are no longer in transit if the buyer or his agent obtained delivery of the goods even
before they reached their ultimate destination, or when the goods arrived at the ultimate
destination but the carrier or other bailee wrongfully refuses to deliver the goods to t h e b u ye r
or his agent, or when the carrier, upon arrival of the goods at the ultimate
d e s t i n a t i o n , e n t e r s i n t o a n e w c o n t r a c t w i t h t h e b u ye r o r h i s agent.

e.) If there was partial delivery of the goods to the buyer, the remainder of the goods
may be stopped in transitu, unless such part delivery has been made under such
circumstances as to show an agreement with the buyer to give up possession of the
 whole. Where the buyer has taken some portion of the whole mass which was then
susceptible of possession, there is constructive possession of the whole.

f) Sale of goods in transit: the unpaid sellers right of lien or stoppage in transitu is not affected
by any sale or other disposition of the goods which the buyer may have made unless the seller has
assented thereto.

1) Where a negotiable document of title has been i s s u e d f o r t h e g o o d s , n o

s e l l e r s l i e n o r r i g h t o f stoppage in transitu cannot defeat the rights of any
p u r c h a s e r f o r v a l u e i n g o o d f a i t h t o w h o m s u c h document has been negotiated

2.) Where the document of title is a straight bill of lading, the sellers right of stoppage
will not be cut off as the transferee acquires no greater or added rights than his transfer or.

Right of Stoppage; How Exercised-The unpaid seller may exercise his right by

1. obtaining actual possession of the goods or

2. by giving notice of his claim to the carrier or other bailee in whose possession the goods are.

When notice of stoppage in transit is given to the carrier, the latte must redeliver
the goods to, or according to the directions of, the seller. If h o w e v e r , a
n e g o t i a b l e d o c u m e n t o f t i t l e representing the goods has been issued by
the carrier, the latter shall not be obliged to deliver t h e g o o d s u n l e s s s u c h
d o c u m e n t i s f i r s t surrendered for cancellation.

Art. 1536. The vendor is not bound to deliver the thing sold in case the vendee should lose
the right to make use of the terms as provided in Article 1198. (1467a)

Art. 1537. The vendor is bound to deliver the thing sold and its accessions and accessories
in the condition in which they were upon the perfection of the contract.

All the fruits shall pertain to the vendee from the day on which the contract was perfected.
(1468a)

Art. 1538. In case of loss, deterioration or improvement of the thing before its delivery, the
rules in Article 1189 shall be observed, the vendor being considered the debtor. (n)

When loss occurs after perfection but before delivery, the seller bears the risk of loss. The
buyer does not bear the risk of loss until the goods are deliv ered, actually or
constructively. This is because the rule is a combination of the common-law rule that the owner
b e a r s t h e r i s k o f l o s s ( r e s p e r i t d o m i n o ) , a n d t h e Roman law requiring delivery to
transfer ownership.
When ownership is transferred

GENERAL RULES:

1. The risk of loss shall be borne by the owner.

2. Ownership is transferred upon delivery.

EXCEPTIONS:

1. Contrary stipulation
2. Security title
3. Delay through the fault of the buyer or the seller at the risk of the party at fault

Art. 1539. The obligation to deliver the thing sold includes that of placing in the control of
the vendee all that is mentioned in the contract, in conformity with the following rules:

If the sale of real estate should be made with a statement of its area, at the rate of a certain
price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee,
if the latter should demand it, all that may have been stated in the contract; but, should this
be not possible, the vendee may choose between a proportional reduction of the price and
the rescission of the contract, provided that, in the latter case, the lack in the area be not
less than one-tenth of that stated.

The same shall be done, even when the area is the same, if any part of the immovable is not
of the quality specified in the contract.

The rescission, in this case, shall only take place at the will of the vendee, when the inferior
value of the thing sold exceeds one-tenth of the price agreed upon.

Nevertheless, if the vendee would not have bought the immovable had he known of its
smaller area of inferior quality, he may rescind the sale. (1469a)

Art. 1540. If, in the case of the preceding article, there is a greater area or number in the
immovable than that stated in the contract, the vendee may accept the area included in the
contract and reject the rest. If he accepts the whole area, he must pay for the same at the
contract rate. (1470a)

Art. 1541. The provisions of the two preceding articles shall apply to judicial sales. (n)
Art. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain
sum for a unit of measure or number, there shall be no increase or decrease of the price,
although there be a greater or less area or number than that stated in the contract.

The same rule shall be applied when two or more immovables as sold for a single price; but
if, besides mentioning the boundaries, which is indispensable in every conveyance of real
estate, its area or number should be designated in the contract, the vendor shall be bound
to deliver all that is included within said boundaries, even when it exceeds the area or
number specified in the contract; and, should he not be able to do so, he shall suffer a
reduction in the price, in proportion to what is lacking in the area or number, unless the
contract is rescinded because the vendee does not accede to the failure to deliver what has
been stipulated. (1471)

Art. 1543. The actions arising from Articles 1539 and 1542 shall prescribe in six months,
counted from the day of delivery. (1472a)

a.) Where price is at certain rate per unit of measure

The seller is bound to deliver the entire land sold in accordance with the terms of the contract.

GENERAL RULE:

T h e v e n d e e h a s t o o p t i o n t o demand a proportionate reduction of the price or

rescission of the contract:

if price is fixed at a c e r t a i n r a t e p e r u n i t o f m e a s u r e a n d t h e a r e a i s delivered

is less than that stated in the contract, or even if the area is correct but part of the land is
not of the quality stated in the contract

E X C E P T I O N : W h e r e t h e e n t i r e l a n d i s n o t o f t h e quality stated in the

contract, as in such a case, the consent must have been obtained by mistake or fraud (contract
may then be voidable.)

b.) Sale for a lump sum

a) If the sale of real property is for a lump sum, there shall be no increase or decrease in the
price, whether the actual area delivered turned out to be greater or less than that stated in the
contract.
b) If besides mentioning the boundaries, the area should also be stated in the contract, the
vendor shall be bound to deliver all that is included within said boundaries and there
shall be no increase or decrease in the price whether the area so delivered be greater or less than
that stated in the contract.
c) If the vendor fails to deli ver all the land included w i t h i n s a i d b o u n d a r i e s , a s
w h e r e p a r t o f t h e l a n d belongs to a third person,
the vendee shall have the option to demand a reduction in the price in proportion to the
deficiency in the area stated in t h e c o n t r a c t o r a r e s c i s s i o n o f t h e c o n t r a c t
( A c t i o n s p r e s c r i b e i n s i x m o n t h s f r o m d a t e o f delivery.)
Double Sales

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall
be transferred to the person who may have first taken possession thereof in good faith, if it
should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith
was first in the possession; and, in the absence thereof, to the person who presents the
oldest title, provided there is good faith. (1473)

If the same thing should have been sold by the owner t o d i f f e r e n t b u y e r s , t h e q u e s t i o n

a s t o w h o o f t h e latter acquired ownership depends on the nature of the thing sold.

a) General Rule Prior tempore, prior jure

b) sale of movables

Art. 1544 (1).

If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.

c) sale of immovable

Art. 1544 (2)

.
S h o u l d i t b e i m m o v a b l e property, the ownership shall belong to the
p e r s o n a c q u i r i n g i t w h o i n g o o d f a i t h f i r s t recorded it in the Registry of
Property.

T o b e e n t i t l e d t o p r i o r i t y, t h e second buyer must not only show prior

r e c o r d i n g o f h i s d e e d b u t m u s t h a v e acted in good faith, without
knowledge of the existence of another alienation by the vendor to another
P O S S E S S O R I N G O O D F A I T H : one who is not aware that there exists in his
title or mode of acquisition any flaw which invalidates it

g o o d f a i t h i s a l w a y s presumed; burden of proof is

o n person alleging bad faith
 good faith of second b u y e r m u s t c o n t i n u e
u n t i l h i s c o n t r a c t r i p e n s i n t o o w n e r s h i p b y tradition or
recording

as to Torrens title: it is enough that purchaser examines the latest

certificate of title issued in the name of his vendor and he need not trace
its origin to prior certificates of title

d) Sale by virtue of execution or attachment

G E N E R A L R U L E : A r t i c l e
1 5 4 4 n o t applicable to execution sales because
t h e p u r c h a s e r a t s u c h s a l e s i s s u b s t i t u t e d t o o r acquires whatever
r i g h t s , t i t l e o r i n t e r e s t s t h e judgment debtor may have over the property as of the time of levy.
[It is the duty of the purchaser, b e f o r e b i d d i n g , t o a s c e r t a i n t h e r i g h t s o f
t h e judgment debtor over the property.]

EXCEPTION:

A t t a c h m e n t o r execution cannot prejudice prior unrecorded sales made by the

judgment debtor, and is preferred o n l y o v e r c l a i m s c o n t r a c t e d s u b s e q u e n t t o
i t s recording

E X C E P T I O N T O T H E E X C E P T I O N : Above rule does not apply to

l a n d s r e g i s t e r e d under Act 496 which provides that registration of instruments shall be the
operative act to convey and affect the land; hence, prior unrecorded sale cannot prejudice
execution sales if no third-party c l a i m w a s p r e s e n t e d b e f o r e t h e e x e c u t i o n
s a l e took place. [Third persons are not required to gobeyond the register and determine the
conditionof the property.]

e) Unregistered land
P.D. 1529, Sec. 113.
Recording of instruments r e l a t i n g t o u n r e g i s t e r e d l a n d s . - N o
d e e d , c o n v e ya n c e , m o r t g a g e , l e a s e , o r o t h e r v o l u n t a r y instrument
affecting land not registered under the Torrens system shall be valid, except as between the
parties thereto, unless such instrument shall have been recorded in the manner herein
prescribed in the office of the Register of Deeds for the province or city where the land lies.
(a) The Register of Deeds for each province or city shall keep a Primary Entry Book
and a Registration Book. The Primary Entry Book shall contain, among other
particulars, the entry number, the names of the parties, the nature of the document, the
date, hour a n d m i n u t e i t w a s p r e s e n t e d a n d r e c e i v e d . T h e recording of the
deed and other instruments relating t o u n r e g i s t e r e d l a n d s s h a l l b e e f f e c t e d b y a n y
o f a n n o t a t i o n o n t h e s p a c e p r o v i d e d t h e r e f o r i n t h e Registration Book, after
the same shall have been entered in the Primary Entry Book.

(b) If, on the face of the instrument, it appears that it i s s u f f i c i e n t i n l a w , t h e

Register of Deeds shall forthwith record the instrument in the
m a n n e r p r o v i d e d h e r e i n . I n c a s e t h e R e g i s t e r o f D e e d s refuses its
administration to record, said official shall advise the party in interest in writing of the ground or
grounds for his refusal, and the latter may appeal the matter to the Commissioner of Land
Registration in accordance with the provisions of Section 117 of this Decree. It shall be
understood that any recording made under this section shall be without prejudice to a third
party with a better right.

( c ) A f t e r r e c o r d i n g o n t h e R e c o r d B o o k , t h e Register of Deeds shall endorse

among other t h i n g s , u p o n t h e o r i g i n a l o f t h e r e c o r d e d instruments,
the file number and the date as well as the hour and minute when the document was received
for recording as shown in the Primary Entry Book, returning to the registrant or person in
interest the duplicate of the instrument, with appropriate annotation, certifying that he has
recorded the instrument after reserving one copy t h e r e o f t o b e f u r n i s h e d t h e
p r o v i n c i a l o r c i t y assessor as required by existing law.

(d) Tax sale, attachment and levy, notice of lis pendens, adverse claim and other
instruments in the nature of involuntary dealings with respect to unregistered lands, if made in
the form sufficient i n l a w , s h a l l l i k e w i s e b e a d m i s s i b l e t o r e c o r d under this
section.

( e ) F o r t h e s e r v i c e s t o b e r e n d e r e d b y t h e Register of Deeds under this

section, he shall collect the same amount of fees prescribed for similar services for
the registration of deeds or instruments concerning registered lands.

Registration requirement is understood to be without prejudice to third party with a better

right

Mere registration of sale in ones favor does not give him any right over the land:

if the vendor was not the owner of the land

if the vendor has already parted with his ownership before such sale
in favor of t h i r d p a r t y w h o h a d p r e v i o u s l y t a k e n possession
of the land, even though the prior sale was unrecorded

A person having a better right would be one w h o h a d p r e v i o u s l y a c q u i r e d

o w n e r s h i p t h e r e o f t h r o u g h t h e m o d e s o f a c q u i r i n g ownership
under the Civil Code: tradition as a r e s u l t o f s a l e , d o n a t i o n , s u c c e s s i o n
a n d prescription

f) First in possession in good faith

If neither vendee registered the sale in his favor or registration was done in bad faith, the vendee
who was first in possession in good faith acquired ownership of the land

g) Oldest title

1 . I f n e i t h e r o f t h e v e n d e e s
r e g i s t e r e d their deeds of sale nor acquired possession of the land sold, the one
who can present the oldest title provided there is good faith, has the better right.

2 . O l d e r t i t l e m e a n s a n y
d o c u m e n t showing acquisition of the land in good faith, like a deed of sale or a
receipt for the price;3 . P u b l i c d o c u m e n t i s n o t
i n c l u d e d a s there is delivery thru a public instrument, unless the contrary
can be clearly inferred therefrom

SECTION 3. - Conditions and Warranties

XII. WARRANTIES

A. EXPRESS WARRANTIES

Warranty where one party promised that t h e c o n t i n g e n c y o r s o m e a c t

f i x e d b y t h e contract shall be performed, like a promise that the goods are of a certain
kind and character or t h a t c e r t a i n s t a t e o f f a c t s w o u l d e x i s t , t h e promise
constitutes a warranty, and failure of which gives rise to an action for its breach.

Breach: the buyer may

1 . a c c e p t g o o d s + m a i n t a i n a n
action for damages

2 . a c c e p t g o o d s + s e t
u p breach of warranty as a recoupment in diminution/ extinction of price

3 . r e f u s e t o a c c e p t g o o d s a n d
maintain action for damages

4 . r e s c i n d + r e f u s e t o a c c e p t
g o o d s ; o r r e t u r n ( o r o f f e r t o r e t u r n ) goods + recover price paid
1. Distinguished from condition

Art. 1545. Where the obligation of either party to a contract of sale is subject to any
condition which is not performed, such party may refuse to proceed with the contract or he
may waive performance of the condition. If the other party has promised that the condition
should happen or be performed, such first mentioned party may also treat the
nonperformance of the condition as a breach of warranty.

Where the ownership in the thing has not passed, the buyer may treat the fulfillment by the
seller of his obligation to deliver the same as described and as warranted expressly or by
implication in the contract of sale as a condition of the obligation of the buyer to perform
his promise to accept and pay for the thing. (n)

Condition an uncertain event or contingency fixed by parties, the existence or happening of

which was necessary to the efficacy of the contract, and failure o f w h i c h p e r m i t s t h e
i n j u r e d p a r t y t o t r e a t t h e contract as at an end, but creates no right of action. Where
a condition is not performed, the buyer may refuse to proceed with the contract, or
accept the goods and waive performance of the condition.

Distinctions according to Villanueva (Law on Sales , 2004)

Condition Warranty

2. D i s t i n g u i s h e d f r o m o p i n i o n , d e a l e r s talk

Art. 1546. 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. No affirmation of the value of the thing,
nor any statement purporting to be a statement of the seller's opinion only, shall be construed as a
warranty, unless the seller made such affirmation or statement as an expert and it was relied upon by
the buyer. (n)

a ) W a r r a n t y a n a f f i r m a t i o n o f f a c t o r a n y promise by seller relating to the

thing which has a n a t u r a l t e n d e n c y t o i n d u c e t h e b u y e r t o purchase the
same, relying on such promise of affirmation

b.) Opinion/dealers talk an affirmation of the v a l u e o f t h e t h i n g o r a n y

statement of the sellers opinion shall not be construed as a
w a r r a n t y , u n l e s s t h e s e l l e r m a d e s u c h a n affirmation as an expert
and it was relied upon by the buyer

Test: whether the vendor assumes to assert a fact of which the buyer is ignorant, in which
case i t i s a w a r r a n t y , o r w h e t h e r i t i s m e r e l y a n expression of an opinion or
judgment on the part of the seller on a matter of which the seller has no special
knowledge and on which the buyer m a y b e e x p e c t e d a l s o t o h a v e a n o p i n i o n o r
exercise his judgment.

In good condition v. Excellent quality the first relates to the quantity, kind
or c o n d i t i o n o f t h e g o o d s s o l d , i t i s a n a f f i r m a t i o n o f
f a c t o r p r o m i s e , a n d n o t a mere expression of an opinion; the second is not an
express warranty and the purchaser must rely on the implied warranty that the
goods are merchantable; mere expression of an opinion

3. D i s t i n g u i s h e d f r o m f a l s e representation

Implied warranties

Art. 1547. In a contract of sale, unless a contrary intention appears,

there is:

(1) An implied warranty on the part of the seller that he has a

right to sell the thing at the time when the ownership is to
pass, and that the buyer shall from that time have and enjoy
the legal and peaceful possession of the thing;

(2) An implied warranty that the thing shall be free from any
hidden faults or defects, or any charge or encumbrance not
declared or known to the buyer.

This Article shall not, however, be held to render liable 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. (n)

SUBSECTION 1. - Warranty in Case of Eviction

Art. 1548. Eviction shall take place whenever by a final judgment
based on a right prior to the sale or an act imputable to the vendor,
the vendee is deprived of the whole or of a part of the thing
purchased.

The vendor shall answer for the eviction even though nothing has
been said in the contract on the subject.

The contracting parties, however, may increase, diminish, or

suppress this legal obligation of the vendor. (1475a)

Art. 1549. The vendee need not appeal from the decision in order that the vendor may become liable
for eviction. (n)

Art. 1550. When 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. (n)

Art. 1551. If the property is sold for nonpayment of taxes due and not made known to the vendee
before the sale, the vendor is liable for eviction. (n)

Art. 1552. The judgment debtor is also responsible for eviction in judicial sales, unless it is otherwise
decreed in the judgment. (n)

Art. 1553. Any stipulation exempting the vendor from the obligation to answer for eviction shall be
void, if he acted in bad faith. (1476)

Art. 1554. If the vendee has renounced the right to warranty in case of eviction, and eviction should
take place, the vendor shall only pay the value which the thing sold had at the time of the eviction.
Should the vendee have made the waiver with knowledge of the risks of eviction and assumed its
consequences, the vendor shall not be liable. (1477)

Art. 1555. When the warranty has been agreed upon or nothing has
been stipulated on this point, in case eviction occurs, the vendee
shall have the right to demand of the vendor:

(1) The return of the value which the thing sold had at the time
of the eviction, be it greater or less than the price of the sale;

(2) The income or fruits, if he has been ordered to deliver them

to the party who won the suit against him;
 (3) The costs of the suit which caused the eviction, and, in a
proper case, those of the suit brought against the vendor for
the warranty;

(4) The expenses of the contract, if the vendee has paid them;

(5) The damages and interests, and ornamental expenses, if

the sale was made in bad faith. (1478)

Art. 1556. Should the vendee lose, by reason of the eviction, a part
of the thing sold 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.

He may exercise this right of action, instead of enforcing the

vendor's liability for eviction.

The same rule shall be observed when two or more things have been
jointly sold for a lump sum, or for a separate price for each of them,
if it should clearly appear that the vendee would not have purchased
one without the other. (1479a)

Art. 1557. The warranty cannot be enforced until a final judgment has been rendered, whereby the
vendee loses the thing acquired or a part thereof. (1480)

Art. 1558. The vendor shall not be obliged to make good the proper warranty, unless he is summoned
in the suit for eviction at the instance of the vendee. (1481a)

Art. 1559. 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. (1482a)

Art. 1560. If the immovable sold should be encumbered with any

non-apparent burden or servitude, not mentioned in the agreement,
of such a nature that it must be presumed that the vendee would not
have acquired it had he been aware thereof, he may ask for the
rescission of the contract, unless he should prefer the appropriate
indemnity. Neither right can be exercised if the non-apparent burden
or servitude is recorded in the Registry of Property, unless there is
an express warranty that the thing is free from all burdens and
encumbrances.
Within one year, to be computed from the execution of the deed, the
vendee may bring the action for rescission, or sue for damages.

One year having elapsed, he may only bring an action for damages
within an equal period, to be counted from the date on which he
discovered the burden or servitude. (1483a)

SUBSECTION 2. - Warranty Against Hidden

Defects
of or Encumbrances Upon the Thing Sold

Art. 1561. The vendor shall be responsible for warranty against the
hidden defects which the thing sold may have, should they render it
unfit for the use for which it is intended, or should they diminish its
fitness for such use to such an extent that, had the vendee been
aware thereof, he would not have acquired it or would have given a
lower price for it; but said vendor shall not be answerable for patent
defects or those which may be visible, or for those which are not
visible if the vendee is an expert who, by reason of his trade or
profession, should have known them. (1484a)

Art. 1562. In a sale of goods, there is an implied warranty or

condition as to the quality or fitness of the goods, as follows:

(1) Where the buyer, expressly or by implication, makes known

to the seller the particular purpose for which the goods are
acquired, and it appears that the buyer relies on the seller's
skill or judgment (whether he be the grower or manufacturer
or not), there is an implied warranty that the goods shall be
reasonably fit for such purpose;

(2) Where the goods are brought by description from a seller

who deals in goods of that description (whether he be the
grower or manufacturer or not), there is an implied warranty
that the goods shall be of merchantable quality. (n)
Art. 1563. 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. (n)

Art. 1564. An implied warranty or condition as to the quality or

fitness for a particular purpose may be annexed by the usage of
trade. (n)

Art. 1565. 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. (n)

Art. 1566. The vendor is responsible to the vendee for any hidden
faults or defects in the thing sold, even though he was not aware
thereof.

This provision shall not apply if the contrary has been stipulated,
and the vendor was not aware of the hidden faults or defects in the
thing sold. (1485)

Art. 1567. In the cases of Articles 1561, 1562, 1564, 1565 and 1566,
the vendee may elect between withdrawing from the contract and
demanding a proportionate reduction of the price, with damages in
either case. (1486a)

Art. 1568. If the thing sold should be lost in consequence of the

hidden faults, and the vendor was aware of them, he shall bear the
loss, and shall be obliged to return the price and refund the
expenses of the contract, with damages. If he was not aware of
them, he shall only return the price and interest thereon, and
reimburse the expenses of the contract which the vendee might
have paid. (1487a)

Art. 1569. If the thing sold had any hidden fault at the time of the
sale, and should thereafter be lost by a fortuitous event or through
the fault of the vendee, the latter may demand of the vendor the
price which he paid, less the value which the thing had when it was
lost.

If the vendor acted in bad faith, he shall pay damages to the vendee.
(1488a)
Art. 1570. The preceding articles of this Subsection shall be
applicable to judicial sales, except that the judgment debtor shall
not be liable for damages. (1489a)

Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six
months, from the delivery of the thing sold. (1490)

Art. 1572. If two or more animals are sold together, whether for a
lump sum or for a separate price for each of them, the redhibitory
defect of one shall only give rise to its redhibition, and not that of
the others; unless it should appear that the vendee would not have
purchased the sound animal or animals without the defective one.

The latter case shall be 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. (1491)

Art. 1573. The provisions of the preceding article with respect to the sale of animals shall in like
manner be applicable to the sale of other things. (1492)

Art. 1574. There is no warranty against hidden defects of animals sold at fairs or at public auctions, or
of live stock sold as condemned. (1493a)

The sale of suffering from contagious diseases shall be void.

A contract of sale of animals shall also be void if the use or service

for which they are acquired has been stated in the contract, and they
are found to be unfit therefor. (1494a)

a.) The sale of narcotics or dangerous drugs except upon prescription, or any wild
bird or mammal, or rare wild plants protected by law or of tubli or other poisonous plants
or fruits, dynamited fish or other aquatic animals, gunpowder, dynamite, explosives or
b l a s t i n g s u p p l i e s , f i r e a r m s o r a m m u n i t i o n s a r e prohibited by law
therefore are illicit.

b.) P r o p e r t i e s b e l o n g i n g t o t h e S t a t e o r i t s political subdivision which are intended for

public use or public service or for the development of n a t u r a l w e a l t h a r e
o u t s i d e t h e c o m m e r c e o f man.

c.) Churches are also outside the commerce of man.

d.) But public property when no longer intended f o r p u b l i c u s e o r s e r v i c e f o r m

p a r t o f t h e patrimonial property of the State and therefore can be leased or sold
Art. 1576. If the hidden defect of animals, even in case a
professional inspection has been made, should be of such a nature
that expert knowledge is not sufficient to discover it, the defect shall
be considered as redhibitory.

But if the veterinarian, through ignorance or bad faith should fail to

discover or disclose it, he shall be liable for damages. (1495)

WARRANTIES IN SALE OF ANIMALS

Art. 1577. The redhibitory action, based on the faults or defects of

animals, must be brought within forty days from the date of their
delivery to the vendee.

This action can only be exercised with respect to faults and defects
which are determined by law or by local customs. (1496a)

Art. 1578. 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. (1497a)

Art. 1579. 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. (1498)