II.

CAPACITY TO BUY OR SELL (d) Executors or administrators – as to the state under their
Persons Who May Enter Into a Contract of Sale administration

As a general rule, all persons, whether natural or juridical, who can bind
themselves, have the legal capacity to buy and sell.
Persons Who Are Incapacitated to Enter Into a Contract of Sale
1. Absolute Incapacity – pertains to persons who cannot bind themselves
(a) Minor
(b) Insane or demented persons
(c) Deaf-mutes who do not know how to read and write
Contracts entered into by a minor and other incapacitated persons
arevoidable. However, where the necessaries are sold and delivered to
him (without the intervention of the parent or guardian), he must pay a
reasonable price therefor. The contract is therefore valid, but the minor
has the right to recover any excess above a reasonable value paid by him.
Sale of real property by minors who have already passed the ages of
puberty and adolescence and are now in the adult age, when they
pretended to have already reached their majority, while in fact they have
not, is valid, and they cannot be permitted afterwards to excuse
themselves from compliance with the obligations assumed by them or to
seek their annulment. This is in accord with the doctrine of
estoppel[Mercado and Mercado vs. Espiritu, 37 Phil. 265].
2. Relative Incapacity – where it exists only with reference to certain Where the thing is entirely lost at the time of perfection, the contract is
persons or class of property (Art. 1490-1491). The prohibition extends to inexistent and void because there is no object. There being no contract,
sales by virtue of legal redemption, compromises, and renunciations.
(a) Husband and wife to each other – except when a separation of
property was agreed upon in the marriage settlements, or when there has
been a judicial separation of property
(b) Guardian – as to the property of his ward
(c) Agents – as to the property whose administration or sale has been
entrusted to them, unless consent of the principal is given
(e) Public officers and employees – as to the property of the State or
any subdivision thereof, or of the government-owned or controlled
corporations, the administration of which is entrusted to them
(f) Judges and government experts who take part in the sale of the
property and rights under litigation
The prohibition is based on the fiduciary relationship (based on trust), to
prevent fraud and undue and improper influence.
With respect to (b) to (d), the sale shall only be voidable because in such
cases only private interests are affected. The defect can be cured by
ratification by the seller. With respect to (e) and (f), the sale shall be null
and void, public interests being involved therein.
(g) Aliens who are disqualified to purchase private agricultural lands
under Art. XII, Secs. 3 and 7 of the Constitution
(h) Unpaid seller having a right of lien or having estopped the goods in
transitu
(i) Officer holding the execution or his deputy
III. EFFECTS OF THE CONTRACT WHEN THE THING SOLD
HAS BEEN LOST
there is no necessity to bring an action for annulment.
Where the thing is only partially lost, the vendee may elect between
withdrawing from the contract and demanding the remaining part, paying
its proportionate price.
The thing is lost when it perishes or goes out of commerce or disappears
in such a way that its existence is unknown or it cannot be recovered.
 IV. OBLIGATIONS OF THE VENDOR
Principal Obligations of the Vendor
to transfer the ownership of the determinate thing sold (Art. 1495);
The vendor need not be the owner of the thing at the time of perfection of of the thing and is usually done by the passing of a movable thing from
the contract; it is sufficient that he has a right to transfer the ownership
thereof at the time it is delivered (Art. 1459).
If the seller promised to deliver at a stipulated period and such period is
of the essence of the contract but did not comply with his obligation on
time, he has no right to demand payment of the price. The vendee-buyer
is fact may ask for the rescission or resolution of the sale.
If the failure of the seller to deliver on time is not due to his fault, as
when it was the buyer who failed to supply the necessary credit for the
transportation of the goods, delay on the part of the seller may be said to
be sufficiently excused.
to deliver the thing, with its accessions and accessories, if any, in the
condition in which they were upon the perfection of the contract (Art.
1537);
to warrant against eviction and against hidden defects (Arts. 1495, 1547);
to take care of the thing, pending delivery, with proper diligence (Art.
1163);
to pay for the expenses of the deed of sale, unless there is a stipulation to
the contrary (Art. 1487).
Delivery or Tradition
Tradition or delivery is a derivative mode of acquiring ownership by
virtue of which one has the right and intention to alienate a corporeal
thing, transmits it by virtue of a just title to one who accepts the same.
Duty to Deliver at Execution Sale: a judgment debtor is not obliged to
deliver right away; he has one (1) year within which to redeem the
property.
Kinds of Delivery or Tradition
Actual or Real (Art. 1497) – the thing sold is placed in the control and
possession of the vendee or his agent. This involves the physical delivery
hand to hand.
Legal or Constructive (Arts. 1498-1501) – through the execution of a
public instrument
Legal formalities – applies to real and personal properties, where the
delivery is made through the execution of a public document;
Traditio simbolica – to effect delivery, the parties make use of a token
symbol to represent the thing delivered;
Traditio longa manu – movable property is delivered by mere consent by
the contracting parties if the thing sold cannot be transferred to the
possession of the vendee at the time of the sale;
Traditio brevi manu – the vendee already has the possession of the thing
sold by virtue of another title as when the lessor sells the thing leased to
the lessee;
Constitotum possessorium – the vendor continues in possession of the
property sold not as owner but in some other capacity (e.g., as tenant of
the vendee).
3. Quasi-Traditio (Art. 1501) – delivery of rights, credits or
incorporeal real property, made by placing the titles of ownership in the
hands of the vendee or lawyer, by execution of a public instrument, or by
allowing the vendee to use his rights as new owner with the consent of
the vendor.
Requisites in constructive delivery before ownership may be transferred:
(a) Seller must have control over the thing; otherwise, can he put
another in control?
(b) Buyer must be put under control;
(c) There must be the intention to deliver the thing for purposes of
ownership.
Rules of constructive delivery:
1. If a seller has an actual possession, he cannot transfer ownership by
constructive delivery.
2. There can be no constructive delivery by means of a public instrument
if there is a stipulation to the contrary.
3. The execution of a deed or contract is only presumptive delivery.
An Unpaid Seller is one who has not been pair or rendered the whole
price or who has received a bill of exchange or other negotiable
instrument as conditional payment and the condition on which it was
received has been broken by reason of the dishonor of the instrument.
Rights of an unpaid seller:
1. A lien on the goods or right to retain them for the price while in his
possession
2. A right of stopping the goods in transitu in case of insolvency of the
buyer; requisites:
(a) the seller must be unpaid;
(b) the buyer must be insolvent;
(c) the goods must be in transit;
(d) the seller must either actually take possession of the goods sold or
give notice of his claim to the carrier or other person in possession;
(e) the seller must surrender the negotiable document of title, if any,
issued by the carrier or bailee; and
(f) the seller must bear the expenses of delivery of the goods after the
exercise of the right.
3. A right of resale
4. A right to rescind the sale
Rules in case of loss, deterioration, or improvement of thing before
delivery
If the thing is lost without the fault of the debtor, the obligation shall be
extinguished.
If the thing is lost through the fault of the debtor, he shall be obliged to
pay damages, if is understood that the thing is lost when it perishes, or
goes out of commerce, or disappears in such a way that its existence is
unknown or it cannot be recovered.
When the thing deteriorates without the fault of the debtor, the
impairment is to be borne by the creditor.
If it deteriorates through the fault of the debtor, the creditor may choose
between the rescission of the obligation and its fulfillment, with
indemnity for damages in either case.
If the thing is improved by its nature, or by time, the improvement shall
inure to the benefit of the creditor.
If it is improved at the expense of the debtor, he shall have no other right
than that granted to the usufructuary.
Rules as to preference of ownership in case of double sale
If the property sold is movable, the ownership shall be acquired by the
vendee who first takes possession in good faith [Villa Rey Transit, Inc. vs
Ferrer, 25 SCRA 861].
If the property sold is immovable, the ownership shall belong to:
(a) the vendee who first registers the sale in good faith in the Registry
of Deeds has preferred right over another vendee who has not registered
his title even if the latter is in actual possession of the immovable
property – governed by the principle prius tempore, patior jure (first in
time, stronger in right) – knowledge by the first buyer of the second sale
cannot defeat the first buyer’s right except when the second first registers
in good faith the second sale;
(b) in the absence of registration, the vendee who first takes possession
in good faith; and
(c) in the absence of both registration and possession, the vendee who
presents the oldest title (who first bought the property) in good faith.
Article 1544 has no application to lands not registered with the Torrens
system.
V. CONDITION AND WARRANTIES Kinds of waiver of eviction
Condition means an uncertain event or contingency on the happening of Consciente – the waiver is voluntarily made by the vendee without the
which the obligation (or right) of the contract depends. knowledge and assumption of the risks of eviction. If the waiver was only
Warranty is a statement or representation made by the seller of goods, conscious, the vendor shall pay only the value which the thing sold had at
contemporaneously and as a part of the contract of sale, having reference the time of eviction – this is a case of solution indebiti – the effect is to
to the character, quality, or title of the goods, and by which he promises deprive the purchaser of the benefits mentioned in Nos. 2, 3, 4 and 5 of
or undertakes to insure that certain facts are or shall be as he then Article 1555.
represents them. Intencionada – the waiver is made by the vendee with knowledge of the
If the obligation of either party is subject to any condition and such risks of eviction and assumption of its consequence. The vendor is
condition is not fulfilled, such party may either (1) refuse to proceed with exempted from the obligation to answer for eviction, provided he did not
the contract, or (2) proceed with the contract, waiving the performance of act in bad faith [Andaya vs. Manansala, 107 Phil. 1151].
the condition. Rights of the vendee against the vendor in case eviction occurs (Art.
If the condition is in the nature of a promise that it should happen, the 1555)
non-performance of such condition may be treated by the other party as a return of the value of the thing sold at the time of eviction;
breach of warranty. income or fruits if he has been ordered to deliver them to the party who
Implied warranty as to seller’s title (Art. 1548) – that the seller won the suit against him;
guarantees that he has a right to sell the thing sold and to transfer costs of the suit;
ownership to the buyer who shall not be disturbed in his legal and expenses of the contract;
peaceful possession thereof.
damages and interests and ornamental expenses if the sale was made in
Implied warranty against hidden defects or unknown encumbrance (Art. bad faith.
1562) – that the seller guarantees that the thing sold is reasonably fit for
Redhibition Redhibitory action Redhibitory vice or
the known particular purpose for which it was acquired by the buyer or,
defect
where it was bought by description, that it is of merchantable quality.
– the avoidance of a – an action instituted to – a defect in the article
Essential elements of warranty against eviction
sale on account of avoid a sale on account of sold against which
the vendee is deprived in whole or in part of the thing purchased; some vice or defect some vice or defect in the defect the seller is
the vendee is so deprived by virtue of a final judgment ; in the thing sold, thing sold which renders bound to warrant. The
the judgment is based on a right prior to the sale or an act imputable to which renders its use its use impossible, or so vice or defect must
the vendor; impossible, or so inconvenient and constitute an
the vendor was summoned in the suit for eviction at the instance of the inconvenient and imperfect that it must be imperfection, a defect in
vendee; and imperfect that it must supposed that the buyer its nature, of certain
be supposed that the would not have purchased importance; and a minor
there is no waiver on the part of the vendee.
buyer would not have it had he known of the defect does not five rise
purchased it had he vice. The object is the to redhibition. The Effect of loss of thing sold on account of hidden defects (Art. 1568)
known of the vice. rescission of the contract. mere absence of a If the vendor was aware of the (a) the expenses of the price paid
If the object is to procure certain quality in the hidden defects in consequence of b) the contract; and
the return of a part of the thing sold which the which the thing sold was lost, he (c) damages.
purchase price paid by the vendee thought it to shall bear the loss because he acted
vendee, the remedy is contain is not in bad faith. In such case, the
known as accion necessarily a redhibitory vendee has the right to recover:
minoris orestimatoris. defect. One thing is that If the vendor was not aware of (a) the price paid
is positively suffers them, he shall be obliged only to (b) interest thereon; and
from certain defects.
return: (c) expenses of the contract if paid
Doctrines of caveat venditor and caveat emptor
by the vendee. He is not made liable
Caveat venditor Caveat emptor for damages because he is not guilty
(Let the seller beware) (Let the buyer beware) of bad faith.
– the vendor is liable to the vendee – applies in sheriff’s sale, sales of VI. OBLIGATIONS OF THE VENDEE
for any hidden faults or defects in animals, and tax sales, for there is no The vendee is obliged to (1) accept delivery; and (2) pay the price of the
the thing sold, even though he was warranty of title or quality on the part thing sold.
not aware thereof (Art. 1566).- of the seller in such sales. The following rules must be borne in mind:
Based on the principle that a – Also applies in double sales of 1. In contract of sale, the vendor is not required to deliver the thing sold
sound price warrants a sound property where the issue is who until the price is paid nor the vendee pay the price before the thing is
article. between two vendees has a better delivered in the absence of an agreement to the contrary [La Font vs.
right to the property . Pascacio, 5 Phil. 591].
– Requires the purchaser to be aware 2. If stipulated, then the vendee is bound to accept delivery and to pay the
of the supposed title of the vendor and price at the time and place designated.
one who buys without checking the 3. If there is no stipulation as to the time and place of payment and
vendor’s title takes all the risks and delivery, the vendee is bound to pay at the time and place of delivery.
losses consequent to such 4. In the absence also of stipulation, as to the place of delivery, it shall be
failure [Solvoso vs. Tanega, 87 SCRA made wherever the thing might be at the moment the contract was
349]. perfected (Art. 1251).
Alternative remedies of the buyer to enforce warranty (Art. 1567): 5. If only the time for delivery of the thing sold has been fixed in the
contract, the vendee is required to pay even before the thing is delivered
Accion redhibitoria – to withdraw from the contract
to him; if only the time for payment of the price has been fixed, the
Accion quanti minoris – demand a proportionate reduction of the price, vendee is entitled to delivery even before the price is paid by him (Art.
with a right to damages in either case 1524).
Instances when the vendee may suspend the payment of the price:
a) should he be disturbed in the possession or ownership of the thing
sold;
b) should he have reasonable grounds to fear such disturbance by a
vindicatory action or by a foreclosure of mortgage;
These rights do not exist in the following cases:
(a) should there be a stipulation to that effect; or
4 Rescission – rescind the contract of sale by returning or offering the
(b) should the vendor give security for the return of the price; or
(c) should the vendor have caused the disturbance or danger to cease; or
(d) should the disturbance consist only of a mere act or trespass.
VII. ACTIONS FOR THE BREACH OF CONTRACT OF SALE
OF GOODS
Goods – include all chattels personal but not things in action or money of
legal tender in the Philippines. The term includes growing fruits or crops.
Actions available for breach of the contract of sale of goods:
Action by the seller for payment of the price (Art. 1595)
Action by the seller for damages for non-acceptance of the goods (Art.
1596)
an action for damages for the breach of the warranty. Both sides of the
contract are enforced in the same litigation. The buyer (defendant)
does not seek to avoid his obligation under the contract but seeks to
enforce the seller’s (plaintiff’s) obligation and to deduct it from his
liability for the price for breach of warranty.
3 Action for damages – refuse to accept the goods and maintain an
action for damages for the breach of the warranty.
return of the goods, and recover the price or any part thereof which
has been paid. This remedy is not available in the following cases:
(a) if the buyer accepted the goods knowing of the breach of
warranty without protest;
(b) if he fails to notify the seller within a reasonable time of his
election to rescind; and
(c) if he fails to return or offer to return the goods in substantially as
good condition as they were in at the time of the transfer of
ownership to him. But where the injury to the goods was caused by
the very defect against which the seller warranted, the buyer may still
rescind the sale.

Action by the seller for rescission of the contract for breach thereof (Art.
1597)
Action by the buyer for specific performance (Art. 1598)
Action by the buyer for rescission or damages for breach of warranty
(Art. 1599)
Remedies allowed to the buyer when the seller has been guilty of a
breach of promise or warranty (Art. 1599):
1 Recoupment – accept the goods and set up the seller’s breach to
reduce or extinguish the price.The theory of recoupment is that the
seller’s damages are cut down to an amount which will compensate
him for the value of what he has given.
2 Set-off or Counterclaim for damages – accept the goods and maintain