OBLIGATIONS OF THE SELLERS (Art.
1945)
I. PRESERVATION OF THE OBJECT OF SALE (Art. 1163) See also Art. 1164,
1165, 1170, 1173 [ D F DIF L N F]
Article 1163, Every person obliged to give a determinate thing is also obliged to take
care of it with the proper diligence of a good father of a family, unless the law or the
stipulation of the parties requires another standard of care.
- Otherwise, liable to the buyer for breach.
- Even though the seller still owns the matter.
- An obligation to do obligation to deliver the object of sale
Art 1164: The creditor has a right to the fruits of the thing from the time the obligation
to deliver it arises. However, he shall acquire no right over it until the same has been
delivered to him.
Art. 1165: When what is to be delivered is a determinate thing, the creditor, in addition
to the right granted him by Art. 1170 (right to damages), may compel the debtor to make
the delivery.
[Only the debtor can comply with the obligation because the very thing itself must be
delivered. Thus specific performance is made available as remedy of the creditor.]
If the thing is indeterminate or generic, he may ask that the obligation be complied with
at the expense of the debtor.
[Can be performed by a third person since the object is expressed only according to
its family or genus (generic whose quality and circumstances have not been stated,
Art. 1246. Creditor cannot demand a thing of superior quality. Neither can the debtor
deliver a thing of inferior quality.]
If the obligor delays, or has promised to deliver the same thing to two or more persons
who do not have the same interest, he shall be responsible for fortuitous event until he
has effected the delivery.
[2 instances when a fortuitous event DOES NOT EXEMPT the debtor from
responsibility: (1) If the obligor delays. (2) If obligor promised to deliver the same
thing to two or more persons who do not have the same interest.
It only refers to determinate thing for indeterminate thing CANNOT be the object of
destruction by a fortuitous even because genus nunquam perit (genus never
perishes.)]
Art. 1170: Those who in performance of their obligations are guilty of fraud, negligence,
or delay, and those who in any manner contravene the tenor thereof, are liable for
damages. (f n d c)
Art 1173: The fault or negligence of the obligor consists in the omission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances
of the persons, of the time and of the place. When negligence shows bad faith, the
provisions of Arts. 1171 and 2201 (2) shall apply.
If the law or the contract does not state the diligence which is to be observed in the
performance, that which is expected of a good father of a family shall be required.
Art. 2201 (2): In case of fraud, bad faith, malice or wanton attitude, the obligor shall
be responsible for ALL damages which may be reasonably attributed to the non-
performance of the obligation.
Art. 1171: Responsibility arising from fraud is demandable in ALL obligations. Any
waiver of an action for future fraud is void.
II. TRANSFER OF OWNERSHIP & DELIVERY OF THE OBJECT
Art. 1477: The ownership of the thing sold shall be transferred to the vendee upon the
actual (Art. 1497) or constructive (Art. 1498-1501) delivery thereof. (Arts. 1164, 1496)
Payment of the purchase price is NOT essential to the transfer of ownership, as long
as the property sold has been delivered, subject to exceptions. (Sampaguita Pictures vs
Jalwindor Manufacturers Inc.)
Non-payment only creates a right to demand payment or to rescind the contract, or to
criminal prosecution in the case of bouncing checks.
Actual AND constructive delivery should be coupled with intention of delivering the
thing sold. Otherwise, there is no tradition. (Norkis vs CA) The issuance of a sales
invoice DOES NOT prove transfer of ownership of the thing sold to the buyer, an invoice
being nothing more than a detailed statement of the nature, quantity, and cost of the thing
sold, and considered NOT a bill of sale.
1. Concept of Delivery or Tradition Cases:
1. Daus v. Sps. De Leon (2003) While a sale is perfected by mere consent,
ownership of the thing sold is acquired only upon its delivery to the buyer.
Upon the perfection of the sale, the seller assumes the obligation to transfer
ownership and to deliver the thing sold, but the real right of ownership is
transferred only by tradition or delivery thereof to the buyer.
2. Sampaguita Picture v. Jalwindor Manufacturers Inc. (1979)
3. Norkis Distributor, Inc. v. CA, (1991)
WAYS OF EFFECTING DELIVERY (Art. 1496-1501)
CRITICAL FACTOR: actual intention of the vendor to deliver, and its acceptance by the
vendee.
A. Actual or Real (NCC Art. 1497) (See also Art. 1232-1251)
Tradition a derivative mode of acquiring ownership; by virtue of which, one who
has the right and intention to alienate a corporeal thing, transmits it by virtue of a
just title to one who accepts the same.
Importance of Tradition:
1. Transfer of ownership: Ownership is NOT transferred by contract merely by
delivery, actual or constructive.
Actual delivery: When deemed made: When the thing sold is placed in the control
and possession of the vendee (Art. 1497) or his agent.
The fact that the price has not yet been paid, in the absence of stipulation, was
not nor could it be an obstacle to the acquisition of ownership of the buyer,
without prejudice to the right of the seller to claim payment of the sum due.
B. Constructive of Legal (NCC Arts. 1498-1501)
Ways of Effecting Constructive Delivery:
i. Public Instrument (Art. 1498, par. 1)
(Cases):
4. Addison v. Felix (1939)
5. Ten Forty Realty v. Cruz (2003)
Execution of a public instrument or document.
1. Possession transferred to buyer by notarized deed of conveyance. (Public Instrument
an instrument or document attested and certified by a public officer authorized to
administer oath; symbolic manner)
Since the execution of the deed of conveyance is deemed equivalent to delivery, prior
physical delivery or possession is NOT legally required. KEY WORD: control. Not
possession.
2. Delivery presumptive only. (Art. 1498) Execution of the deed of sale in a public
instrument is equivalent of the delivery of the property if from the deed the contrary does
not appear or cannot clearly be inferred.
(1498) execution thereof shall be equivalent to delivery. This means that there is only a
presumptive and NOT conclusive delivery which can be rebutted by evidence to the
contrary. In Ten Realty vs Cruz, such presumption is destroyed when the delivery is not
effected because of a legal impediment.
3. Sale of thing not subject to control of vendor. Symbolic delivery is equivalent to actual
delivery ONLY WHERE the thing is subject to the control of the vendor and there is no
impediment that may prevent the passing of the property from the hands of the vendor
into those of the vendee. It is not enough to confer upon the purchases the ownership v. Buyer must comply with the express or implied conditions attached to the privilege;
and right of possession. The thing sold must be placed in his control to effect the delivery. otherwise, sale becomes absolute.
(Addison vs Felix)
2. Contract of Sale on Trial or Approval (Art. 1502)
4. Sale of registered land. No deed shall take effect as a conveyance or bind the land It is a contract in the nature of an option to purchase if the goods prove
until its registration. (Ten Realty vs CA) satisfactory, the approval of the buyer being a condition precedent.
5. Possession of a part as a constructive possession of whole. When purchaser took
actual possession of the considerable portion of the land by exercise of possessory Case: (13) Industrial Textile Manufacturing Company v. LPJ Enterprises
acts of clearing the area of trees and cultivating the same, such possession and Express written agreement is required to make a sales contract either a
cultivation of a part is legally constructive possession of the whole. (Ramos vs Director of sale or return or a sale on approval On the other hand, the buyer
Lands) cannot accept part and reject the rest of the goods since this falls
outside the normal intent of the parties in the on approval situation.
6. Possession and enjoyment for a reasonable length of time. The absence of control for
a reasonable time after execution DOES NOT PRODUCE EFFECTS OF DELIVERY. COTR Sale or Return Sale on Trial
T: S L B C - Q Condition Imposed Subject to resolutory Subject to a
condition suspensive condition
ii. Symbolical tradition or traditio symbolica (Art. 1498) Option of Buyer to Depends entirely at Depends on the
Purchase the will of the buyer character or quality of
Constructive delivery is symbolic when to effect the delivery, the parties make use of a the goods
token symbol to represent the thing delivered, i.e. delivery of the key where the thing sold Transfer of Ownership passes Ownership remains in
is stored or kept because the key represents the thing. Or delivery of orders. Ownership upon delivery and the seller until buyer
subsequent return signifies his approval
iii. By traditio longa manu (Art. 1499)
reverts the ownership or acceptance
This takes place by the mere consent or agreement of the contracting parties, qualified Ownership may be There is no revesting
by the phrase if the thing sold cannot be transferred to the possession of the vendee at revested to seller at until buyer signifies
the time of the sale. As when the vendor merely points to the thing sold which shall the will of the buyer his approval or
thereafter be at the control and disposal of the vendee. acceptance
iv. By traditio brevi manu (Art. 1499) Risk of Loss Borne by buyer Remains with the
seller
This mode of delivery happens when the vendee has already the possession of the thing
sold by virtue of another title as when the lessor sells the thing leased to the lessee. 3. Sale of Specific Goods with Reserved Title (Art. 1503)
Instead of turning over the thing to the vendor so that the latter may in turn deliver it, all 4. Delivery to Carrier on Behalf of the Buyer (Art. 1503)
these are considered done by action of law. Applicable only to specific goods
v. By traditio constitutum possessorium (Art. 1500)
Instances When Seller Is Still Owner Despite Delivery:
This is the opposite of traditio brevi manu. It takes place when the vendor continues in
possession of the property sold not as owner but in some other capacity, i.e when vendor (a) Express stipulation.
stays as a tenant of the vendee. (b) If under the bill of lading, the goods are deliverable to seller or agent or their order.
(Reason: the buyer cannot get.) Apart from the form of bill of lading, ownership would
vi. By quasi-delivery or quasi-traditio (Art. 1501)
have passed to the buyer on shipment of goods; sellers property in the goods is deemed
Tradition can only be made with respect to corporeal things. In the case of incorporeal only for the purpose of securing the performance of buyers obligations.
things, delivery is effected:
(c) If bill of lading, although stating that the goods are to be delivered to buyer or his
1. By execution of a public instrument; or agent, is RETAINED by the seller or his agent. (Reason: The buyer also cannot get.)
2. When that mode of delivery is not applicable, by the placing of titles of (d) When the buyer, although the goods are deliverable to order of buyer and although
ownership in the possession of the vendee; or the bill of lading is given to him, does not honor the bill of exchange sent along with it.
3. By allowing the vendee to use his rights as new owner with the consent of But innocent third parties should not be adversely affected.
the vendor.

Thus, the delivery to a person of a negotiable document of title which states that the goods
Example: S sold B a laptop. The bill of lading stated that the laptop is deliverable to the
referred to therein will be delivered to the bearer, amounts to delivery of the goods to such
person. (Art. 1507-1508) order of B. The bill of lading was sent to B, accompanied by a bill of exchange which B
was supposed to honor. If B does not honor the bill of exchange but wrongfully retains
C. Delivery in any other manner signifying an agreement that the possession is the bill of lading, ownership remains with the seller. If B sells the bill of lading to X, X can
transferred to the vendee (NCC Arts. 1496-1499)
obtain ownership of the goods if he is an innocent purchaser.
CASES:
6. Rudolph Leits, Inc. v. CA 5. Shipping Terms C.O.D., F.O.D., C.I.F.
7. Raymundo De Leon v. Ong (2010)
8. Asset Privatization Trust v. TJ Enterprises(2009) Kinds of Delivery to Carrier:
9. San Lorenzo Development Corporation v. CA, et. al., (2005) 1. F.A.S (Free Alongside Vessel)
10. Perpetua Abuan, et. al., v. Eustaguio Garcia, et. al., (1965) Seller pays all charges and bears the risk until the goods are placed alongside the
11. Perfecto Dy, Jr. v. CA (1991) vessel.
2. F.O.B (Free on Board)
Goods are to be delivered free of expense to the buyer to the point where they are
SPECIAL RULES ON: F.O.B. The point of F.O.B. (at the point of shipment or of destination) determines
when ownership passes:
1. Contract of Sale or Return (Art. 1502) a. Shipping Point delivery of goods to the carrier is equivalent to delivery to
Property is sold but the buyer who becomes the owner of the property on the buyer; at that point, risk of loss pertains to the buyer
delivery may return the same to the seller instead of paying the price; such sale b. Destination only when the vessel has arrived at the point of destination
depends on the discretion of the buyer. would there be delivery to the buyer; prior to that point in time, seller bears
Rules: the risk of loss.
i. Title passes to buyer upon delivery; 3. C.I.F. (Cost, Insurance, Freight) Signifies the price fixed, covers the costs of the
ii. Buyer bears the risk of loss; goods, the expenses of the freight and insurance all of which are to be paid by the seller
iii. Option to purchase or return rests entirely on the buyer without reference to the up to the point of destination.
quality of the goods; 4. C.O.D. (Collect on Delivery) Carrier acts for the seller in collecting purchase price
iv. Buyer may revest the ownership in the seller by returning or tendering the goods which buyer must pay to obtain possession of the goods
within the time fixed in the contract or within a reasonable time if no time is fixed;

6. When Person Selling is not the Owner (Art. 1505)
Buyer acquires NO better title to the goods than the seller had, if vendor was not the
owner and had no authority to sell, unless owner is precluded from denying sellers
authority to sell
General rule: No one can give what he does not have (nemo dat quod non habet).
Example: A bought a pair of shoes from a shoe store and repair shop. It was later
discovered, however, that the shoes did not belong to the store but to a customer who
had left it there for repair.
Did A acquire good title to the shoes? YES Although the store was not the owner of the
shoes. The shoes were purchased at a merchants store. A contrary rule would retard
commerce.
What is a store? It is any place where goods are kept and sold by one engaged in buying
and selling.
the right to (a) either to rescind the contract for the sellers failure to deliver what has been
stipulated, or (b) to pay a reduced proportional price, namely 2/3 of the original price.
This is so because he really gets only 2/3 of the land included within the boundaries
(1,000 sq.m. out of 1,500 sq.m.).
Another Example: A buys a piece of land a cuerpo cierto (for a lump sum). The contract
states a certain number of square meters but the land included in the boundaries happen
to be LESS.
(a) Is A entitled to rescind? No.
(b) Is A entitled to pay a reduced price? No.
The Civil Code presumes that the purchaser had in mind a determinate piece of land and
that he ascertained its area and quality before the contract was perfected. If he did not do
so, or if having done so, he made no objection and consented to the transaction, he can
blame no one but himself. (Teran v. Villanueua)

7. Sellers Title is Voidable (Art. 1506)
(But his title has not been avoided at the time of the sale), buyer acquires a good title
to the goods provided he is a buyer in good faith, for value, and without notice of the
sellers defect of title.
Example: A bought a car from B (an insane man), and in turn sold the car to C who is in
good faith. After delivery of the car to C, he becomes its owner if, at the time he bought
it, the contract between A and B had not yet been annulled. Reason: Before a voidable
contract is annulled it is considered valid.
But a buyer cannot acquire title from a thief because the owner has been unlawfully
deprived of it. Hence, the true owner can get it back without reimbursement.
B. When Obligation to Deliver Arises (NCC Art. 1524)
Vendor NOT bound to deliver the thing sold when: [ v n p ]
a. Vendee has not paid him the price; or
b. No period for the payment has been fixed
c. Period has been fixed but the vendee has lost the right to make use of it (Art. 1198)
Debtor shall lose every right to make use of the period: [ I F I F V A] if if va
i. He becomes insolvent
ii. He does not furnish to the creditor the guaranties or securities he promised
iii. By his own acts, he has impaired said guaranties or securities
iv. When through a fortuitous event, they disappear
v. Debtor violates any undertaking
vi. Debtor attempts to abscond
What is important is the delivery of all the land included in the boundaries.
A cuerpo cierto/por precio alzado: When two or more real estates are sold for a
SINGLE price, the rule is the same as when the real estate is sold for a LUMP SUM.
There shall be no increase or decrease in the area actually delivered and the area stated
in the contract.
Rule does not apply when deficiency is so material as to go to the essence of the
contract, gross mistake may be inferred which is the duty of the court to correct.
Cases: (14) Teran v. Villanueva Viuda de Riosa
Rules in case of double sale (NCC Art. 1544)
Requisites: (V I O S)
1. 2 or more transactions must constitute valid sales;
2. 2 or more buyers who are at odds over the rightful ownership of the subject
matter must each represent conflicting interests;
3. They must pertain exactly to the same object or subject matter;
4. They must be bought from the same or immediate seller.
Applies only to purchases in good faith and disqualifies any purchaser in bad faith.

C. Other Rules on Delivery;

1. Sale of Real Property by unit of measure or number (NCC Art. 1539-41)

contains a statement of the area at the rate of a certain price for a unit or measure or
number; also applies to judicial sales
Rules:

1. If vendee should demand, vendor shall deliver all that may have been stated
in the contract;
2. If what is delivered is
a. Less in area or of inferior or different quality, buyer may ask for
rescission if:
i. Lack in area is at least 1/10 of the area (in the contract, not to actual
area) agreed upon;
ii. Deficiency in quality specified in the contract exceeds 1/10 of the price
agreed upon;
iii. Vendee would not have bought the immovable had he known of its
smaller area of inferior quality; and
iv. Proportional reduction of price.
b. Greater in area
i. Accept per stipulation and reject the rest;
ii. Accept the whole and pay at the contract rate; or
[Vendee is not given the right to rescind because it is not prejudicial at all.]
iii. When the price unit is not indicated greater/lesser.

2. Sale of Real Estate Made for a Lump Sum (NCC Art. 1542)
Example: A buys a piece of land from B at the lump sum of P10 million. In the contract,
the area is stated to be 1,000 square meters. The boundaries are of course mentioned in
the con- tract. Now then it was discovered that the land within the boundaries really
contains 1,500 square meters. Is B bound to deliver the extra 500?
Yes. Furthermore, the price should not be increased. This is so because B should deliver
all which are included in the boundaries. If B does not deliver the remaining 600, A has