IV.

Principal Obligations of the Vendor

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 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 1. 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 of the thing and is usually done by the passing of a movable thing from hand to hand. 2. 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.

(a) (b) (c)

Requisites in constructive delivery before ownership may be transferred:

Seller must have control over the thing; otherwise, can he put another in control? Buyer must be put under control; 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) (b) (c) (d) the seller must be unpaid; the buyer must be insolvent; the goods must be in transit; 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) (f) the seller must surrender the negotiable document of title, if any, issued by the carrier or bailee; and 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 1. 2. 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. 3. 4. 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. 5. 6. 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

1.
2. (a)

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:

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 buyers right except when the second first registers in good faith the second sale; (b) (c) in the absence of registration, the vendee who first takes possession in good faith; and 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

Condition means an uncertain event or contingency on the happening of which the obligation (or right) of the contract depends. Warranty is a statement or representation made by the seller of goods, contemporaneously and as a part of the contract of sale, having reference to the character, quality, or title of the goods, and by which he promises or undertakes to insure that certain facts are or shall be as he then represents them. If the obligation of either party is subject to any condition and such condition is not fulfilled, such party may either (1) refuse to proceed with the contract, or (2) proceed with the contract, waiving the performance of the condition. If the condition is in the nature of a promise that it should happen, the non-performance of such condition may be treated by the other party as a breach of warranty. Implied warranty as to sellers title (Art. 1548) that the seller guarantees that he has a right to sell the thing sold and to transfer ownership to the buyer who shall not be disturbed in his legal and peaceful possession thereof.

Implied warranty against hidden defects or unknown encumbrance (Art. 1562) that the seller guarantees that the thing sold is reasonably fit for the known particular purpose for which it was acquired by the buyer or, where it was bought by description, that it is of merchantable quality. Essential elements of warranty against eviction 1. 2. 3. 4. the vendee is deprived in whole or in part of the thing purchased; the vendee is so deprived by virtue of a final judgment ; the judgment is based on a right prior to the sale or an act imputable to the vendor; the vendor was summoned in the suit for eviction at the instance of the vendee; and there is no waiver on the part of the vendee.

5. 1.

Kinds of waiver of eviction Consciente the waiver is voluntarily made by the vendee without the knowledge and assumption of the

risks of eviction. If the waiver was only conscious, the vendor shall pay only the value which the thing sold had at the time of eviction this is a case of solution indebiti the effect is to deprive the purchaser of the benefits mentioned in Nos. 2, 3, 4 and 5 of Article 1555.

2.

Intencionada the waiver is made by the vendee with knowledge of the risks of eviction and assumption of

its consequence. The vendor is exempted from the obligation to answer for eviction, provided he did not act in bad faith [Andaya vs. Manansala, 107 Phil. 1151]. Rights of the vendee against the vendor in case eviction occurs (Art. 1555) 1. 2. 3. 4. 5. return of the value of the thing sold at the time of eviction; income or fruits if he has been ordered to deliver them to the party who won the suit against him; costs of the suit; expenses of the contract; damages and interests and ornamental expenses if the sale was made in bad faith. Redhibitory action Redhibitory vice or defect

Redhibition

- an action instituted to avoid a sale on- a defect in the article sold against - the avoidance of a sale on account of some vice or defect in the which defect the seller is bound to warrant. The vice or defect must constitute an imperfection, a defect in its nature, of certain importance; and a minor defect does not five rise

account of some vice or defect in thing sold which renders its use the thing sold, which renders its impossible, or so inconvenient and

use impossible, or so inconvenientimperfect that it must be supposed and imperfect that it must be that the buyer would not have

supposed that the buyer would not purchased it had he known of the vice. to redhibition. The mere absence of have purchased it had he known ofThe object is the rescission of the the vice. a certain quality in the thing sold

contract. If the object is to procure the which the vendee thought it to return of a part of the purchase price contain is not necessarily a paid by the vendee, the remedy is known as accion minoris orestimatoris. redhibitory defect. One thing is that is positively suffers from certain defects.

Doctrines of caveat venditor and caveat emptor Caveat venditor (Let the seller beware) - the vendor is liable to the vendee for any hidden - applies in sheriffs sale, sales of animals, and tax sales, Caveat emptor (Let the buyer beware)

faults or defects in the thing sold, even though he wasfor there is no warranty of title or quality on the part of not aware thereof (Art. 1566).- Based on the principle the seller in such sales. that a sound price warrants a sound article. - Also applies in double sales of property where the issue is who between two vendees has a better right to the property . - Requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the vendors title takes all the risks and losses consequent to such failure [Solvoso vs. Tanega, 87 SCRA 349]. Alternative remedies of the buyer to enforce warranty (Art. 1567): 1. Accion redhibitoria to withdraw from the contract Accion quanti minoris demand a proportionate reduction of the price, with a right to damages in either

2.

case Effect of loss of thing sold on account of hidden defects (Art. 1568) If the vendor was aware of the hidden defects in consequence of which the thing sold was lost, he shall bear the loss because he acted in bad faith. In such case, the vendee has the right to recover: If the vendor was not aware of them, he shall be obliged only to return: (a) (b) (c) the price paid interest thereon; and expenses of the contract if paid by the vendee. He (a) b) (c) the expenses of the price paid the contract; and damages.

is not made liable for damages because he is not guilty of bad faith. VI. OBLIGATIONS OF THE VENDEE

The vendee is obliged to (1) accept delivery; and (2) pay the price of the thing sold. The following rules must be borne in mind:

1. In contract of sale, the vendor is not required to deliver the thing sold until the price is paid nor the vendee pay the price before the thing is delivered in the absence of an agreement to the contrary [La Font vs. Pascacio, 5 Phil. 591]. 2. If stipulated, then the vendee is bound to accept delivery and to pay the price at the time and place designated. 3. If there is no stipulation as to the time and place of payment and delivery, the vendee is bound to pay at the time and place of delivery.

4. In the absence also of stipulation, as to the place of delivery, it shall be made wherever the thing might be at the moment the contract was perfected (Art. 1251). 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 to him; if only the time for payment of the price has been fixed, the vendee is entitled to delivery even before the price is paid by him (Art. 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) (b) (c) (d) should there be a stipulation to that effect; or should the vendor give security for the return of the price; or should the vendor have caused the disturbance or danger to cease; or 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) 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 sellers breach to reduce or extinguish the price. The theory of recoupment is that the sellers 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 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 sellers (plaintiffs) 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. 4 Rescission - rescind the contract of sale by returning or offering the 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) (b) (c) if the buyer accepted the goods knowing of the breach of warranty without protest; if he fails to notify the seller within a reasonable time of his election to rescind; and 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. VIII. EXTINGUISHMENT OF SALE

Classification of modes or causes of extinguishing the contract of sale: Common those causes which are also the means of extinguishing all other contracts like payment, loss of the thing, condonation, etc. (Art. 1231). Special those causes which are recognized by the law on sales (those covered by Arts. 1484, 1532, 1539, 1540, 1542, 1556, 1560, 1567, and 1591). Extra-special conventional redemption and legal redemption. Conventional Redemption (Arts. 1601-1618) It is the right which the vendor reserves to himself, to Legal Redemption (Arts. 1619-1623) It is the right to be subrogated, upon the same terms and

reacquire the property sold provided her returns to the conditions stipulated in the contract, in the place of one vendee the price of the sale, the expenses of the who acquires a thing by purchase or dation in payment,

contract, any other legitimate payments made therefore or by any other transaction whereby ownership is and the necessary and useful expenses made on the thing sold, and fulfills other stipulations which may have been agreed upon. Nature: (a) Nature: (a) identical with conventional redemption, transmitted by onerous title.

it is purely contractual because it is a right created, except for the source of the right conventional redemption arises from the voluntary agreement of the parties; legal redemption proceeds from law; (b) it is not predicated on proprietary right but on a

not by mandate of the law, but by virtue of an express contract[Ordoez vs. Villaroman, 78 Phil. 116]; (b) it is an accidental stipulation and, therefore, its

nullity cannot affect the sale of itself since the latter might be entered into without said stipulation [Alojado vs. Lim Siongco, 51 Phil. 339]; (c) it is a real right when registered, because it binds

bare statutory privilege to be exercised only by the person named in the statute the statute does not make actual ownership at the time of sale or redemption a condition precedent, the right following the person and not the property[Magno vs. Viola and Sotto, 61 Phil. 80]; (c) it is in the nature of a mere privilegecreated partly

third persons [Mortera vs. Martinez, 14 Phil. 541]; (d) it is a resolutory condition because when

exercised, the right of ownership acquired by the

for reason of public policy and partly for the benefit and

vendee is extinguished[Aquino vs. Deal, 63 Phil. 582]; (e)

convenience of the redemptioner to afford him a way out

it is potestative because it depends upon the will of of what might be a disagreeable or inconvenient association into which he has been thrust it is

the vendor; (f)

it is a power or privilege, not an obligation, that the intended to minimize co-ownership [Basa vs. Aguilar, 117 SCRA 128; Tan vs. CA, 172 SCRA 660].

vendor has reserved for himself [Ocampo vs. Potenciano, CA 48 OG 2230]; (g)

it is reserved at the moment of the perfection of the Instances of Legal Redemption:

contract for if the right to repurchase is agreed upon afterwards, there is only a promise to sell which (a) Under the Civil Code, those found in Arts. 1620-

produces different rights and effects and is governed by 1622, 1634, and 1088; Art. 1479 [Diamante vs. CA, 206 SCRA 52]; (h) the person entitled to exercise the right of (b) Under special laws: redemption by owner of real property sold for

redemption necessarily is theowner of the property sold (1)

and not any third party [Gallar vs. Husain, 20 SCRA 186];delinquent taxes period is within 1 year from date of (i) it gives rise to reciprocal obligationthat of sale; (2) repurchase by homesteader of homestead sold

returning the price of sale and other expenses, on the part of the vendor, and that of delivering the property

under the Public Land Act period is 5 years [Tupas vs.

and executing a deed of sale therefore, on the part of the Damasco, 132 SCRA 593]; vendee [Pandaquilla vs. Gaza, 12 Phil. 663]. (3) redemption by judgment debtor or redemptioner or

real property sold on execution period is 12 months; (4) redemption by mortgagor after mortgaged property

has been judicially foreclosed and sold period is 90 days but before confirmation of sale by the court (in all cases of extra-judicial foreclosure sale, the mortgagor may redeem the property within 1 year from the date of registration of the sale); (5) redemption by an agricultural lessee of landholding

sold by the landowner period is 180 days from notice in writing which shall be served by the vendee on all lessees affected by DAR upon the registration of the sale. An equitable mortgage is one which lacks the proper formalities, form of words, or other requisites prescribed by law for a mortgage, but shows the intention of the parties to make the property subject of the contract as security for a debt and contains nothing impossible or contrary to law [Cachola vs. CA, 208 SCRA 496]. Dacion en pago is the transmission of the ownership of a thing by the debtor to the creditor as the accepted equivalent of the performance of an obligation. Pacto de retro Mortgage

Ownership is transferred but the ownership is subject toOwnership is not transferred but the property is merely

the condition that the seller might recover the ownershipsubject to a charge or lien as security for the compliance within a certain period of time. of a principal obligation, usually a loan.

If the seller does not repurchase the property upon theThe mortgagor does not lose his interest in the property if very day named in the contract, he loses all interesthe fails to pay the debt at its maturity. thereon. There is no obligation resting upon the purchaser toIt is the duty of the mortgagee to foreclose the mortgage if foreclose; neither does the vendor have any right tohe wishes to secure a perfect title thereto, and after the redeem the property after the maturity of the debt. maturity of the debt secured by the mortgage and before foreclosure, the mortgagor has a right to redeem [Basilio vs. Encarnacion, 5 Phil. 360]. Instances when conventional redemption is presumed to be an equitable mortgage: 1. 2. 3. when the price of a sale with right to repurchase is unusually inadequate; when the vendor remains in possession as lessee or otherwise; when upon or after the expiration of the right to repurchase another instrument extending the period of

redemption or granting a new period is executed; 4. 5. 6. when the purchaser retains for himself a part of the purchase price; when the vendor binds himself to pay the taxes on the thing sold; in any other case where it may be fairly inferred the real intention of the parties is that the transaction shall

secure the payment of a debt or the performance of any other obligation; and 7. when there is a doubt as to whether the contract is a contract of sale with right or repurchase or an equitable

mortgage. Requisites before legal redemption can be exercised: 1 There must be a sale or assignment of credit. The concept of sale must be understood in its restricted sense. The right cannot be exercised if the transaction is exchange or donation. 2 There must be a pending litigation at the time of the assignment. The complaint by the assignor must have been filed and answered by the creditor before the sale of the credit. 3 The debtor must pay the assignee (a) the price paid by him, (b) the judicial costs incurred by him, and (c) the interests on the price from the date of payment. 4 The right must be exercised by the debtor within 30 days from the date the assignee demands (judicially or extra-judicially) payment from him.

Redemption 1 2 The sale to a third person has already been perfected Has a much broader scope

Pre-emption The sale to a third person has not yet been perfected Narrower in scope may be exercised only where there is a prospective resale of a small piece of urban land originally bought by the prospective vendor merely for speculation

Directed against the third person who bought theDirected against the prospective vendor who is about property to resell the property

Effect is to extinguish a contract that has already beenEffect is to prevent the birth or perfection of a contrac perfected or even consummated