Chapter 5 – Obligations of the Vendee Articles 1582 to 1593 the property used in the operation of the same, should be

approved by the Public Service Commission –– for the protection

Article 1582. Principal Obligations of the Buyers
The vendee is bound to accept delivery and to pay the price of the thing
sold at the time and place stipulated in the contract.
If the time and place should not have been stipulated, the payments
must be made at the time and place of the delivery of the thing sold.
af the public, still as between A and B, the contract is effi cacious
as all the essential requisites of the contract were present at the
time of the perfection thereof.
Note: Unless the deed of conveyance is executed, the buyer as a
rule is not required to pay the price. (Lafont v. Pascasio, 5 Phil.
391)

Principal Obligations of the Buyers
The buyers must:
a) accept delivery;
b) pay the price
Bar Question
On Jan. 5, A sold and delivered his truck, together with the
corresponding certificate of public convenience to B for the sum of
P600,000, payable within 60 days. Two weeks after the sale, and
while the certificate of public convenience was still in the name of A,
it (the certificate) was revoked by the Public Service Commission thru
no fault of A. Upon the expiration of the 60-day period, A demanded
payment of the price from B. B refused to pay, alleging that the
contract of sale was VOID for the reason that the certificate of public
convenience which was the main consideration of the sale no longer
existed. Is the contention of B tenable? Reasons.
Effect of Delivery When No Time Has Been Fixed for Payment of the
Price
If seller has delivered but no time has been fixed for the payment of
the price, the seller may require payment to be made at any time
after delivery. The buyer here has the duty to pay the price
immediately upon demand. (Ocejo v. Int. Bank, 37 Phil. 631).
Effect of Deviations from the Contract
If the seller is forced to deviate from the provision of the contract,
but the purchaser consents or agrees to such deviations, the
purchaser should still pay the price. (Engel v. Velasco & Co., 47 Phil.
15)

ANS.: Under the circumstances, the contention of B is NOT tenable.

a) Firstly, it cannot be correctly contended that the sale is void,

since the consideration actually existed at the time of the
perfection of the sale. The subsequent revocation of the
certificate thru no fault of A is immaterial.
b) Secondly, what B should have done immediately after the sale
was to take steps to have the Public Service Commission transfer
the certificate to his name. (Serrano v. Miave, et al., L-14678,
Mar. 31, 1965).
c) Thirdly, while the Public Service Law requires that the sale or
assignment of a certifi cate of public convenience, together with

NGEstores Sales Notes Chapter 5 – Obligations of the Vendee Page 68

Article 1583. Generally No Delivery By Installments
Unless otherwise agreed, the buyer of goods is not bound to accept
delivery thereof by installments.
Where there is a contract of sale of goods to be delivered by stated
installments, which are to be separately paid for, and the seller makes
defective deliveries in respect of one or more installments, or the buyer
neglects or refuses without just cause to take delivery of or pay for one
or more installments, it depends to each case on the terms of the
contract and the circumstances of the case, whether the breach of
contract is so material as to justify the injured party in refusing to
proceed further and suing for damages for breach of the entire contract,
or whether the breach is severable, giving rise to a claim for
compensation but not to a right to treat the whole contract as broken.
Generally No Delivery By Installments
Reason: performance must generally be complete.
Exception to Rule: express provisions.
Rule in Case of Installment Deliveries
The second paragraph states the rules for delivery by installments,
and distinguishes whether the breach is severable or not.
Article 1584. When Buyer Has Right to Examine
Where goods are delivered to the buyer, which he has not previously
examined, he is not deemed to have accepted them unless and until he
has had a reasonable opportunity of examining them for the purpose of
ascertaining whether they are in conformity with the contract if there is
no stipulation to the contrary.
Unless otherwise agreed, when the seller tenders delivery of goods to the
buyer, he is bound, on request, to afford the buyer a reasonable
opportunity of examining the goods for the purpose of ascertaining
whether they are in conformity with the contract.
Where goods are delivered to a carrier by the seller, in accordance with
an order from or agreement with the buyer, upon the terms that the
NGEstores Sales Notes Chapter 5 – Obligations of the Vendee
goods shall not be delivered by the carrier to the buyer until he has paid
the price, whether such terms are indicated by marking the goods with
the words “collect on delivery,” or otherwise, the buyer is not entitled to
examine the goods before the payment of the price, in the absence of
agreement or usage of trade permitting such examination.
Generally, the buyer is entitled to examine the goods prior to
delivery. And this is true even if the goods are shipped F.O.B. (free
on board). (See Decezo v. Chandler, 206 N.Y.S.).
When Buyer Has No Right to Examine
a) when there is a stipulation to this effect. (Art. 1584, par. 1).
b) when the goods are delivered C.O.D. — unless there is an
agreement or a usage of trade PERMITTING such examination.
(Art. 1584, par. 2).
Article 1585. When There is Acceptance of the Goods
The buyer is deemed to have accepted the goods when he intimates to
the seller that he has accepted them, or when the goods have been
delivered to him, and he does any act in relation to them which is
inconsistent with the ownership of the seller, or when, after the lapse of
a reasonable time, he retains the goods without intimating to the seller
that he has rejected them.
The Article gives three ways of accepting the goods:
a) express acceptance
b) when buyer does an act which only an owner can do
c) failure to return after reasonable lapse of time
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Article 1586. Even if Buyer Accepts, Seller Can Still Be Liable
In the absence of express or implied agreement of the parties,
acceptance of the goods by the buyer shall not discharge the seller from
liability in damages or other legal remedy for breach of any promise or
warranty in the contract of sale. But, if, after acceptance of the goods,
the buyer fails to give notice to the seller of the breach in any promise of
warranty within a reasonable time after the buyer knows, or ought to
know of such breach, the seller shall not be liable therefor.
Even if Buyer Accepts, Seller Can Still Be Liable
a) Reason for the last sentence. To prevent afterthoughts or belated
claims.
b) The buyer is allowed to set up the breach of the warranty or promise
as a set-off or counterclaim for the price. (William v. Perrota, 95
Conn. 629).
Article 1587. Effect if Buyer Justifiably Refuses to Accept the Delivery
Unless otherwise agreed, where goods are delivered to the buyer, and he
refuses to accept them, having the right to do, he is not bound to return
them to the seller, but it is sufficient if he notifies the seller that he
refuses to accept them. If he voluntarily constitutes himself a depositary
thereof, he shall be liable as such.
Effect if Buyer Justifiably Refuses to Accept the Delivery
a) buyer has no duty to return the goods to the seller
b) mere notification to seller of refusal will suffice
c) but buyer may make himself a voluntary depositary –– in which case
he must safely take care of them in the mean time
NGEstores Sales Notes Chapter 5 – Obligations of the Vendee
Article 1588. Effect if Buyer Unjustifi ably Refuses to Accept the
Delivery
If there is no stipulation as specifi ed in the fi rst paragraph of article
1523, when the buyer’s refusal to accept the goods is without just cause,
the title thereto passes to him from the moment they are placed at his
disposal.
Generally, the buyer becomes the owner. Exception — when there is a
contrary stipulation or when the seller reserves the ownership as a sort
of security for the payment of the price. (See Arts. 1523 and 1503, Civil
Code).
Article 1589. When Buyer Has to Pay for Interest on the Price
The vendee shall owe interest for the period between the delivery of the
thing and the payment of the price, in the following three cases:
1) Should it have been so stipulated;
2) Should the thing sold and delivered produce fruits or income;
3) Should he be in default, from the time of judicial or extrajudicial
demand for the payment of the price.
This Article answers the question: “In what cases is the buyer liable
for interest on the price?”
Note: If the buyer fails to give the money after the contract is
notarized, although he had previously promised to do so, there is
default with liability for legal interest. (De la Cruz v. Legaspi, L-8024,
Nov. 29, 1955).
The Three Cases Contemplated
a) In No. (1), no demand is needed
b) In No. (2), the reason for the law is that the fruits or income is
sufficient to warrant the payment of interest.
c) In No. (3), “default” is mora, called “in delay” under the
provisions of the Civil Code.
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 Rule for Monetary Obligations
In a monetary obligation (like the obligation to pay the purchase
price) in the absence of stipulation, legal interest takes the place of
damages. This is so even if the damages are actually more or less.
The possibility of gain because of an investment should be
discounted; instead of a gain, there might be a loss. Therefore, the
law has compromised on legal interest. (Quiros v. Tan Guinlay, 6 Phil.
675).
Article 1590. When Buyer May Suspend the Payment of the Price
Should the vendee be disturbed in the possession or ownership of the
thing acquired, or should he have reasonable grounds to fear such
disturbance, by a vindicatory action or a foreclosure of mortgage, he may
suspend the payment of the price until the vendor has caused the
disturbance or danger to cease, unless the latter gives security for the
return of the price in a proper case, or it has been stipulated that,
notwithstanding any such contingency, the vendee shall be bound to
make the payment. A mere act of trespass shall not authorize the
suspension of the payment of the price.
The buyer may SUSPEND the payment of the price if:
a) There is a well-grounded fear (fundado temor).
b) The fear is because of
1) a vindicatory action or action to recover, or
2) a foreclosure of mortgage.
Note:
a) The fear must not be the result of any other ground, like the
vendor’s insanity.
b) A mere act of trespass is made by one claiming no legal right
whatsoever. Here, the buyer is not authorized to suspend the
payment of the price.
Bareng v. Court of Appeals, et al. L-12973, Apr. 25, 1960
FACTS: Bareng bought cinematographic equipment from a certain
Alegria for P15,000. He paid P11,400 down, and executed a
promissory note for the balance. On the date of maturity, he refused
to pay the balance, alleging that a certain Ruiz had informed him that
NGEstores Sales Notes Chapter 5 – Obligations of the Vendee
he (Ruiz) was a co-owner of Alegria of the properties purchased, and
that he was not in conformity with the sale. Suit was brought by
Alegria for the recovery of the balance. While the suit was pending,
Alegria caused the disturbance over the ownership to cease by
compromising with Ruiz for the latter’s share. Issue: Aside from
paying the balance, does Bareng have to pay any legal interest
thereon? If so, from what time?
HELD: Bareng is liable for interest, not from the time of demand —
for he was justifi ed in suspending payment from the time he learned
of Ruiz’s adverse claims –– but from the time Alegria had “caused the
disturbance or danger to cease” by entering into compromise with
Ruiz. The compromise Bareng knew about –– for he was a party in
the case.
Article 1591. When Seller May Immediately Sue for the Rescission of
the Sale
Should the vendor have reasonable grounds to fear the loss of
immovable property sold and its price, he may immediately sue for the
rescission of the sale.
Should such ground not exist, the provisions of Article 1191 shall be
observed.
The seller must have reasonable grounds to fear:
a) LOSS of the immovable property sold, and
b) LOSS of the price.
So, if the buyer is squandering his money, but the immovable
property remains untouched, this article cannot apply.
Rule if Neither Ground Exists
If neither ground exists, Art. 1191 applies.
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Article 1592. Rescission of Sale of Real Property
In the sale of immovable property, even though it may have been
stipulated that upon failure to pay the price at the time agreed upon the
rescission of the contract shall of right take place, the vendee may pay
even after the expiration of the period, as long as no demand for
rescission of the contract has been made upon him either judicially or by
a notarial act. After the demand, the court may not grant him a new
term.
This is only applicable to a sale of real property, not to a contract TO
SELL real property or to a promise TO SELL real property, where title
remains with the vendor until fulfillment of a positive suspensive
condition, such as the full payment of the price. (Manuel v.
Rodriguez, L-13436, Jul. 27, 1960).
This article applies whether or not there is a stipulation for automatic
rescission. The law says “even though.”
The demand may be:
a) Judicial
b) extrajudicial (this must however be by notarial act).
The demand is not for the payment of the price, but for the
RESCISSION of the contract. (10 Manresa 288). If the demand for
such rescission comes only AFTER the offer to pay the balance
(accompanied by a postal money order for the amount due), the
automatic rescission cannot of course legally take place. (Maximo, et
al. v. Fabian, et al., L-8015, Dec. 23, 1955).
The demand is not for the payment of the price BUT for the
RESCISSION of the contract. (Manresa, Vol. 10, p. 288).
Effect of Stipulation Allowing the Taking of Possession
Incidentally, a stipulation in a contract to sell realty entitling one
party to take possession of the land and building if the other party
violates the contract does NOT exproprio vigore (by its own force)
confer upon the former the right to take possession thereof if
NGEstores Sales Notes Chapter 5 – Obligations of the Vendee
objected to, without judicial intervention and determination. (Nera v.
Vacante, et al., L-16725, Nov. 29, 1961).
Article 1593. Rescission of Sale of Personal Property
With respect to movable property, the rescission of the sale shall of right
take place in the interest of the vendor, if the vendee, upon the
expiration of the period fixed for the delivery of the thing, should not
have appeared to receive it, or having appeared he should not have
tendered the price at the time, unless a longer period has been stipulated
for its payment.
This article should apply only if the object sold has not been
delivered to the buyer.
If there has already been delivery, other articles, like Art. 1191 would
be applicable. In this case automatic rescission is not allowed. An
affirmative action is necessary (Guevarra v. Pascual, 12 Phil. 311),
the action being one to rescind judicially, if the buyer refuses to
come to amicable settlement. (Escueta v. Pando, 42 O.G., No. 11, p.
2759).
Example of the Article
The seller and the buyer agreed that payment and deliv ery would be
made on Jul. 15, at the buyer’s house. If the buyer does not appear
on said day, or having appeared, he should not have tendered the
price at the same time, then the sale can be considered as
automatically rescinded.
Right, Not Obligation, to Rescind
If in a contract the seller is authorized to rescind the sale in case of
breach, this does not necessarily mean that he is obliged to do so.
(Ramirez v. Court of Appeals & Muller Nease, L-6536, Jan. 25, 1956,
52 O.G. 779).
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