SALES HANDOUTS

Article 1524: When does vendor not bound to deliver the thing sold?
1. When the vendee has not paid the prize
2. When there is no period of payment fixed in the contract
General Rule: The seller is not bound to deliver the thing sold unless
the purchase price has been paid.
Exception: The seller is bound to deliver the thing even if the price
has not been paid, if a period of payment has been fixed.
Article 1525: Unpaid seller
1) When the whole of the price has not been paid or tendered
2) When a bill of exchange or negotiable instrument has been received
as conditional payment and the condition in which it was received
has been broken by reason of the instrument, the insolvency of the
buyer and or otherwise.
Article 1526: Remedies of unpaid seller
If seller is in possession of the goods
1. Right to lien
2. Right to retention
Parted with the possession
3. Right to stoppage in transit
Others
4. Right to resale
5. Right to rescind the sale
6. Right to damage for breach
If the good has not passed to the buyer (ownership is not transferred)
7. Right of withholding of delivery
Article 1527: When is the right to retain the goods AVAILABLE to the
unpaid seller? (SEI)
1. Sales without stipulation as to credit
2. Expiration of term of credit
3. Insolvency of the buyer
Article 1528: Lien not generally lost by part delivery
Article 1529: When does unpaid seller LOSE his lien on or right of
retention over the goods? (DPW)
1. Delivery to agent or bailee of buyer
2. Possession by buyer or his agent
3. Waiver of the lien
Article 1530: Right of seller to stop goods in transit
Right of stoppage in transit refers to the right of the unpaid seller to
reserve possession of the goods at anytime while they are in transit by
virtue of which he will then be entitled to the same right in regard to the
goods as he would have had if he had never parted with the possession.
The right is available to the unpaid seller when he has already
parted with the possession and the buyer is or become insolvent

Requisites for the existence of the right of stoppage in transit

1) Seller must be unpaid
2) Buyer must be insolvent
3) Goods must be in transit
4) Seller must either :
a. Actually take possession of the goods sold
b. Give notice of his claim to the carrier or other persons in
possession
5) Seller must surrender the negotiable document of tittle, if any, issued
by the carrier or bailee
6) Seller must bear the expenses of delivery of the goods after the
exercise of the right
Basis of right of stoppage in transit
- Allowing rescission and restitution where there is actual or
prospective failure of consideration
Article 1531: When good is in transit?
1) After delivery to a carrier or other bailee and before the buyer or his
agent takes delivery of them; and
2) If the goods are rejected by the buyer, and the carrier or other bailee
continues in possession of them.
When good considered no longer in transit?
1. after delivery to the buyer or his agent in that behalf;
2. if the buyer or his agent obtains possession of the goods at a point
before the destination originally fixed;
3. if the carrier or the bailee acknowledges to hold the goods on behalf
of the buyer; and
4. if the carrier or bailee wrongfully refuses to deliver the goods to the
buyer
Effects of the exercise of the right
1. The goods are no longer in transit.
2. The contract of carriage ends; instead the carrier now becomes a mere
bailee, and will be liable as such.
3. The carrier should not deliver anymore to the buyer or the latters
agent; otherwise he will clearly be liable for damages.
4. The carrier must redeliver to, or according to the directions of the seller.
Article 1532: Ways of exercising the right to stop:
1. By taking actual possession of the goods
2. By giving notice of his claim to the carrier or bailee
Aricle 1533: When is the right of resale available to the unpaid seller:
- May be exercised only when the unpaid seller has either a right of
lien OR has stopped the goods in transitu AND under ANY of the
following conditions:
a) Where the goods are perishable in nature
b) Where the right to resell is expressly reserved in case the buyer
should make a default

c) Where the buyer delays in the payment of the price for an

unreasonable time
Effect of Resale
- Under the law, seller may recover from the original buyer
damages for any loss occasioned by the breach of the contract of
sale.
How is the resale effected?
- The resale may be made either by public or private sale. However,
the unpaid seller, who is bound to exercise reasonable care and
judgment in making the resale, cannot directly or indirectly buy
the goods.
Is it essential that notice of such resale should be given to the original
buyer?
- It is not essential to the validity of a resale that notice of an
intention to resell the goods be given by the seller to the original
buyer.
- The giving or failure to give notice shall be relevant in any issue
involving the question whether the buyer has been in default for
an unreasonable time before the sale was made.
Article 1534: When is the right of rescission available to the unpaid seller
If the seller has either the right of lien OR a right to stop the goods in
transitu AND under either of 2 situations:
a. Where the right to rescind on default has been expressly reserved
b. Where the buyer has been in default for an unreasonable time
Effect of rescission:
- Resume ownership plus damages for any loss occasioned by the
breach of the contract.
How the seller may rescind?
1) Giving notice to the buyer essential in ay issue involving the
question whether the buyer has been in default for an unreasonable
time before the right of rescission was asserted.
2) Over act showing an intention to rescind.
Article 1535: General rule: Any sale by the buyer may not affect the right
of the seller.
Except: 1) if the seller consented
2) Innocent purchaser for value
Article 1536: The vendor is not bound to deliver the thing sold in case the
vendee should loss the right to make use of the terms and conditions as
provided in article 1198 (becoming insolvency)
Article 1537: Right of vendee to the accessions and accessories and all
the fruits.
Article 1538: Rules in case of loss, deterioration or improvements
1) If the thing is loss without the fault of the debtor, the obligation shall
be extinguished

2) If the thing is loss with fault of the debtor, he shall be obliged to pay
damages.
3) When the thing deteriorates without fault of the debtor, the
impairment shall be borne by the creditor
4) When the thing deteriorates with fault of the debtor, creditor may
choose between rescission of the obligation and its fulfillment, with
indemnity for damage in either case.
5) If the thing is improved by its nature, or by the time, the
improvement shall inure to the benefit of the creditor.
6) If it is improved at the expense of the debtors he shall have no other
right than that granted to the usufructuary.
Article 1539: Remedies
A sold 2 parcels of land to B
B may choose between a proportional reduction of the price and the
rescission of the contract in case the lack in the area is not less than
one tenth of that stated.
Quality 1) Proportional reduction of the price
2) Rescission of the contract, provided that inferior value of the
thing sold exceeds 1/10 of the price agreed upon.
Lump sum/single price
General rule: no rescission or reduction or increase whether the area
be greater or less
Exception: Vendor is obligated to deliver all the land included within
the boundaries regardless of whether the real area should be greater or
smaller.
- Unless there is gross mistake
Period to bring action within 6 months from the day of delivery
Article 1540: Where immovable of greater area or number
1) The vendor may accept the area included in the contract and reject
the rest
2) If he accepts the whole, he makes himself liable for the price of the
same at the contract rate.
Article 1541: Provision of Art. 1539 & 1540 all applicable to judicial sales.
Article 1542: Mistake in area stated in contract immaterial
- The vendor is bound to deliver all which are included within said
boundaries without increase in price.
- If vendor did not deliver the buyer has the right to rescind the
contract or pay a proportionately reduce price.
Article 1543: Prescription of actions
- 6 months counted from the day of delivery
Article 1544: Where the same thing is sold to different purchasers, to
whom shall the ownership be transferred.
1. As to movable first possessor in good faith

2. As to immovable -1. First registrant in good faith

2. In the absence of above, First possessor in good
faith
3. In the absence, person with oldest title in good
faith
Requisites: VOCS
1.
two or more transactions must constitute valid sales;
2.
they must pertain exactly to the same object or subject matter;
3.
they must be bought from the same or immediate seller; AND
4.
two or more buyers who are at odds over the rightful ownership
of the subject matter must represent conflicting interests.
Rules of preference:
1. Personal Property
a. first possessor in good faith
2. Real Property
a. first registrant in good faith
b. first possessor in good faith
c. person with oldest title in good faith
-

NOTES:
Purchaser in Good Faith one who buys the property of another without
notice that some other person has a right to or interest in such property
and pays a full and fair price for the same at the time of such purchase or
before he has notice of the claim or interest of some other person in the
property (Veloso vs. CA).
Registration requires actual recording; if the property was never really
registered as when the registrar forgot to do so although he has been
handed the document, there is no registration.
Possession is either actual or constructive since the law made no distinction
(Sanchez vs. Ramos 40 Phil614)
Possession in Art.1544 includes not only material but also symbolic
possession (Ten Forty Realty vs. Cruz, 10 Sept. 2003.)
Title means title because of sale, and not any other title or mode of
acquiring property (Lichauco vs. Berenguer 39 Phil 642)
Hernandez vs. Katigbak Rule: When the property sold on execution is
registered under Torrens, registration is the operative act that gives validity
to the transfer or creates a lien on the land, and a purchaser on execution
sale is not required to go behind the registry to determine the conditions of
the property. Exception: Where the purchaser had knowledge, prior to or at
the time of the levy, of such previous lien or encumbrance, his knowledge
is equivalent to registration.