Article 1458 shall not be an obstacle to the

By the contract of sale one of the existence of the contract, provided it

contracting parties obligates himself to is possible to determine the same,
transfer the ownership and to deliver a without the need of a new contract
determinate thing, and the other to pay between the parties.
therefore a price certain in money or its III. PRICE
equivalent. A contract of sale may be A definite agreement as to the price
absolute or conditional. is an essential element of a binding
agreement to sell personal or real
Stages of a contract of sale property because it seriously affects
1. Negotiation the rights and obligations of the
It covers the period from the time the parties.
prospective contracting parties indicate
interest in the contract to the time the Characteristics of a contract of sale
contract is perfected. 1. Consensual
The contract is perfected by mere
2. Perfection consent.
It takes place upon the concurrence of the 2. Bilateral
essential elements of the sale, which is the The seller and the buyer are bound
meeting of the minds of the parties as to the by obligations dependent upon each
object of the contract and upon the price. other.
3. Onerous
3. Consummation It imposes a valuable consideration,
It begins when the parties perform their which is a price certain in money or
respective undertakings under the contract its equivalent.
of sale, culminating in the extinguishment 4. Commutative
thereof. The thing of value is exchanged for
equal value.
Two kinds of a contract of sale 5. Nominate
1. Absolute The Civil Code refers to it by a
There are no conditions attached to the special name, "contract of sale."
contract. 6. Principal
It can stand on its own and does not
2. Conditional depend on another contract for its
There are certain conditions attached to the validity.
contract.
Article 1475
Essential elements of a contract of sale The contract of sale is perfected at the
a) Consent or meeting of the minds, moment there is a meeting of minds upon
that is, consent to transfer ownership the thing which is the object of the
in exchange for the price; contract and upon the price.
b) Determinate subject matter, and From that moment, the parties may
c) Price certain in money or its reciprocally demand performance, subject
equivalent. to the provisions of the law governing the
form of contracts.
I. CONSENT
is manifested by the meeting of the OPTION VS. CONTRACT OF SALE
offer and the acceptance upon the
thing and the cause which are to Option
constitute the agreement. - An option is an unaccepted offer.
II. OBJECT - It states the terms and conditions on
The object of every contract must be which the owner is willing to sell the
determinate as to its kind. The fact land, if the holder elects to accept
that the quantity is not determinate them within the time limited.
Contract of Sale EMPTIO REI SPERATAE vs. EMPTIO
- Fixes definitely the relative rights SPEI
and obligations of both parties at the
time of its execution. Emptio Rei Speratae
- The offer and the acceptance are - Sale of a thing with potential
concurrent, since the minds of the existence.
contracting parties meet in the terms - Sale is subject to the condition that
of the agreement. the thing will exist; If it does
not,there is no contract.
Earnest Money Vs. Option Money - The object is a future thing.

Earnest Money Emptio Spei

- Part of the purchase price. - Sale of a mere hope or expectancy
- Is given only where there is already that the thing will come to existence.
a sale. Sale of the hope itself.
- When earnest money is given, the - Sale is effective even if the thing
buyer is bound to pay the balance. does not come into existence unless
it is a vain hope.
Option Money - The object is a present thing which
- Money given as a distinct is the hope or expectancy.
consideration for an option contract.
- Applies to a sale not yet perfected. General Rule:
- When the would-be buyer gives A person cannot sell or convey what
option money, he is not required to he does not have or own.
buy.
Article 1462
Article 1459 The goods which form the subject of
The thing must be licit and the a contract of sale may be either existing
vendor must have a right to transfer the goods, owned or possessed by the seller, or
ownership thereof at the time it is delivered. goods to be manufactured, raised, or
acquired by the seller after the perfection of
Article 1460 the contract of sale, in this Title called
A thing is determinate when it is "future goods."
particularly designated or physically There may be a contract of sale of
segregated from all others of the same goods, whose acquisition by the seller
class. depends upon a contingency which may or
The requisites that a thing be may not happen.
determinate is satisfied if at the time the
contract is entered into, the thing is capable Kinds of goods
of being made determinate without 1. Existing goods
necessity of a new or further agreement Those goods that are owned by the
between the parties. seller.
2. Future goods
Article 1461 Those goods that are to be
Things having a potential existence manufactured (like a future table, chairs or
may be the object of the contract of sale. bicycle to be manufactured), raised (like the
The efficacy of the sale of a mere hope or young of animals) or acquired (like a cellular
expectancy is deemed subject to the phone which the seller expects to buy) by
condition that the thing will come into the seller after the perfection of the contract
existence. of sale.
The sale of a vain hope or
expectancy is void. Article 1463
The sole owner of a thing may sell
an undivided interest therein. (n)
 Article 1467
Article 1464 A contract for the delivery at a
In the case of fungible goods, there certain price of an article which the vendor
may be a sale of an undivided share of a in the ordinary course of his business
specific mass, though the seller purports to manufactures or procures for the general
sell and the buyer to buy a definite number, market, whether the same is on hand at the
weight or measure of the goods in the time or not, is a contract of sale, but if the
mass, and though the number, weight or goods are to be manufactured specially for
measure of the goods in the mass is the customer and upon his special order,
undetermined. By such a sale the buyer and not for the general market, it is a
becomes owner in common of such a share contract for a piece of work.
of the mass as the number, weight or
measure bought bears to the number, Article 1468
weight or measure of the mass. If the mass If the consideration of the contract
contains less than the number, weight or consists partly in money, and partly in
measure bought, the buyer becomes the another thing, the transaction shall be
owner of the whole mass and the seller is characterized by the manifest intention of
bound to make good the deficiency from the parties. If such intention does not clearly
goods of the same kind and quality, unless appear, it shall be considered a barter if the
a contrary intent appears. value of the thing given as a part of the
consideration exceeds the amount of the
Article 1465 money or its equivalent; otherwise, it is a
Things subject to a resolutory sale.
condition may be the object of the contract
of sale. SALE VS. BARTER

Article 1466 Sale

In construing a contract containing - A thing is given in exchange of a
provisions characteristic of both the contract price certain in money or its
of sale and of the contract of agency to sell, equivalent.
the essential clauses of the whole Barter
instrument shall be considered. - A thing is given in exchange of
another thing.
CONTRACT OF SALE VS. AGENCY
TO SELL If the consideration is partly in money
and partly in another thing:
Contract of Sale 1.The transaction is characterized by the
- The buyer receives the goods as manifest intention of the parties.
owner. 2. If there is no manifest intention:
- The buyer pays the price. a. Barter if the value of the thing is
- The buyer, as a general rule, cannot more valuable than money.
return the object sold. b. Sale if the value of the thing is equal
or less than the amount of money.
Agency to Sell
- The agent receives the goods as Article 1469
goods of the principal who retains In order that the price may be
his ownership over them. considered certain, it shall be sufficient that
- The agent delivers the price, which it be so with reference to another thing
he got from his buyer, to his certain, or that the determination thereof be
principal. left to the judgment of a special person or
- The agent can return the goods in persons.
case he is unable to sell the same to Should such person or persons be
third person. unable or unwilling to fix it, the contract shall
be inefficacious, unless the parties thing or any part thereof has been delivered
subsequently agree upon the price. to and appropriated by the buyer he must
If the third person or persons acted in bad pay a reasonable price therefor. What is a
faith or by mistake, the courts may fix the reasonable price is a question of fact
price. dependent on the circumstances of each
Where such third person or persons particular case.
are prevented from fixing the price or terms
by fault of the seller or the buyer, the party General Rule:
not in fault may have such remedies against Where the price cannot be
the party in fault as are allowed the seller or determined in accordance with the
the buyer, as the case may be. preceding articles, or in any other manner,
the contract is inefficacious. Hence, the sale
Requisites for a valid price is void.
1. Real
2. Certain or Ascertainable Exception:
3. In money or its Equivalent If the thing or any part thereof has
4. Manner of payment must be agreed been delivered to and appropriated by the
upon buyer, he must pay a reasonable price
therefor.
Article 1470
Gross inadequacy of price does not Article 1475
affect a contract of sale, except as it may The contract of sale is perfected at
indicate a defect in the consent, or that the the moment there is a
parties really intended a donation or some meeting of minds upon the thing which is
other act or contract. the object of the contract and upon the
price.
Article 1471 From that moment, the parties may
If the price is simulated, the sale is reciprocally demand performance, subject
void, but the act may be shown to have to the provisions of the law governing the
been in reality a donation, or some other act form of contracts.
or contract.
Article 1476
Article 1472 In the case of a sale by auction:
The price of securities, grain, liquids, (1) Where goods are put up for sale
and other things shall also be considered by auction in lots, each lot is the subject of a
certain, when the price fixed is that which separate contract of sale.
the thing sold would have on a definite day, (2) A sale by auction is perfected
or in a particular exchange or market, or when the auctioneer announces its
when an amount is fixed above or below the perfection by the fall of the hammer, or in
price on such day, or in such exchange or other customary manner. Until such
market, provided said amount be certain. announcement is made, any bidder may
retract his bid; and the auctioneer may
Article 1473 withdraw the goods from the sale unless the
The fixing of the price can never be auction has been announced to be without
left to the discretion of one of the reserve.
contracting parties. However, if the price (3) A right to bid may be reserved
fixed by one of the parties is accepted by expressly by or on behalf of the seller,
the other, the sale is perfected. unless otherwise provided by law or by
stipulation.
Article 1474 (4) Where notice has not been given
Where the price cannot be that a sale by auction is subject to a right to
determined in accordance with the bid on behalf of the seller, it shall not be
preceding articles, or in any other manner, lawful for the seller to bid himself or to
the contract is inefficacious. However, if the employ or induce any person to bid at such
sale on his behalf or for the auctioneer, to Object is lost before perfection
employ or induce any person to bid at such If the object has been lost before
sale on behalf of the seller or knowingly to perfection, the seller bears the loss.
take any bid from the seller or any person
employed by him. Any sale contravening Object is lost after delivery to the buyer
this rule may be treated as fraudulent by the If the object was lost after delivery to
buyer. the buyer, the buyer bears the loss.

Sale by auction is perfected Object is lost after perfection but before

A sale by auction is perfected when the delivery
auctioneer announces its perfection by the If the object was lost after perfection
fall of the hammer, or in other customary but before delivery, the buyer bears the
manner. loss. This is an exception to the principle of
res perit domino.
BEFORE the fall of the hammer
1. Any bidder may retract his bid; and What is res perit domino?
2. The auctioneer may withdraw the Property lost to the owner
goods from the sale unless the
auction has been announced to be Article 1481
without reserve. In the contract of sale of goods by
description or by sample, the contract may
Article 1477 be rescinded if the bulk of the goods
The ownership of the thing sold shall delivered do not correspond with the
be transferred to the vendee upon the description or the sample, and if the
actual or constructive delivery thereof. contract be by sample as well as
description, it is not sufficient that the bulk of
Article 1478 goods correspond with the sample if they do
The parties may stipulate that not also correspond with the description.
ownership in the thing shall not pass to the The buyer shall have a reasonable
purchaser until he has fully paid the price. opportunity of comparing the bulk with the
description or the sample. (n)
Article 1479
A promise to buy and sell a Article 1482
determinate thing for a price certain is Whenever earnest money is given in
reciprocally demandable. a contract of sale, it shall be considered as
part of the price and as proof of the
Article 1480 perfection of the contract.
Any injury to or benefit from the thing
sold, after the contract has been perfected, Article 1483
from the moment of the perfection of the Subject to the provisions of the
contract to the time of delivery, shall be Statute of Frauds and of any other
governed by Articles 1163 to 1165, and applicable statute, a contract of sale may be
1262. made in writing, or by word of mouth, or
This rule shall apply to the sale of partly in writing and partly by word of mouth,
fungible things, made independently and for or may be inferred from the conduct of the
a single price, or without consideration of parties. (n)
their weight, number, or measure. Should
fungible things be sold for a price fixed General Rule:
according to weight, number, or measure, A contract of sale may be made in
the risk shall not be imputed to the vendee writing, or by word of mouth, or partly in
until they have been weighed, counted, or writing and partly by word of mouth, or may
measured and delivered, unless the latter be inferred from the conduct of the parties.
has incurred in delay.
Exceptions:
 When a sale of a piece of land or The expropriation of property for
any interest therein is through an agent, the public use is governed by special laws.
authority of the latter shall be in writing;
otherwise, the sale shall be void. CHAPTER 2 CAPACITY TO BUY
OR SELL
Article 1484
In a contract of sale of personal property the Article 1489
price of which is payable in installments, the All persons who are authorized in
vendor may exercise any of the following this Code to obligate themselves, may enter
remedies: into a contract of sale, saving the
(1) Exact fulfillment of the obligation, modifications contained in the following
should the vendee fail to pay; articles.
(2) Cancel the sale, should the Where necessaries are those sold
vendee's failure to pay cover two more and delivered to a minor or other person
installments; without capacity to act, he must pay a
(3) Foreclose the chattel mortgage reasonable price therefor. Necessaries are
on the thing sold, if one has been those referred to in Article 290.
constituted, should the vendee's failure to
pay cover two or more installments. In this
General rule:
case, he shall have no further action against
All persons, whether natural or
the purchaser to recover any unpaid
juridical, who can bind themselves, have
balance of the price. Any agreement to the
legal capacity to enter into a contract of
contrary shall be void.
sale.

Article 1485
Exception:
The preceding article shall be
Persons who are incapacitated.
applied to contracts purporting to be leases
of personal property with option to buy,
Kinds of incapacity
when the lessor has deprived the lessee of
1. Absolute incapacity
the possession or enjoyment of the thing.
These are the persons who cannot enter
into a contract of sale in all circumstances;
Article 1486
otherwise, the contract of sale is defective,
In the case referred to in two
either voidable or unenforceable.
preceding articles, a stipulation that the
Example:
installments or rents paid shall not be
Minors, insane, demented persons, and
returned to the vendee or lessee shall be
deaf-mutes who do not know how to write.
valid insofar as the same may not be
unconscionable under the circumstances.
2. Relative incapacity
These are certain persons, under certain
Article 1487 circumstances, cannot buy certain property.
The expenses for the execution and Examples:
registration of the sale shall be borne by the a. Husband and wife;
vendor, unless there is a stipulation to the b. The guardian, the property of the
contrary. person or persons who may be under his
guardianship:
General Rule: c. Agents, the property whose
The expenses for the execution and administration or sale may have been
registration of the sale shall be borne by the entrusted to them, unless the consent of the
vendor. principal has been given;
Exception: d. Executors and administrators,
Contrary stipulation. the property of the estate under
administration;
Article 1488
 e. Public officers and employees, the property and rights in litigation or levied
the property of the State or of any upon an execution before the court within
subdivision thereof, or of any whose jurisdiction or territory they exercise
government-owned or controlled their respective functions; this prohibition
corporation, or institution, the administration includes the act of acquiring by assignment
of which has been intrusted to them; and shall apply to lawyers, with respect to
the property and rights which may be the
Article 1490 object of any litigation in which they may
The husband and the wife cannot sell take part by virtue of their profession.
property to each other, except: (6) Any others specially disqualified
(1) When a separation of property by law. (1459a)
was agreed upon in the marriage
(2) When there has been a judicial Article 1492
separation of property under Article 191. The prohibitions in the two preceding
articles are applicable to sales in legal
General rule: redemption, compromises and
The husband and the wife cannot renunciations.
sell property to each other.
CHAPTER 3
Exception: EFFECTS OF THE CONTRACT
1. When a separation of property WHEN THE THING SOLD HAS
was agreed upon in the marriage
BEEN LOST
settlements; and
2. When there has been a judicial
separation of property.
Article 1493
If at the time the contract of sale is
perfected, the thing which is the object of
Article 1491
the contract has been entirely lost, the
The following persons cannot acquire by
contract shall be without any effect.
purchase, even at a public or judicial
But if the thing should have been
auction, either in person or through the
lost in part only, the vendee may choose
mediation of another:
between withdrawing from the contract and
(1) The guardian, the property of the
demanding the remaining part, paying its
person or persons who may be under his
price in proportion to the total sum agreed
guardianship;
upon.
(2) Agents, the property whose
administration or sale may have been
entrusted to them, unless the consent of the
Loss of the object at the time of
principal has been given; perfection of the contract
(3) Executors and administrators, 1. Completely Lost
the property of the estate under 2. Partially Lost
administration;
(4) Public officers and employees, Article 1494
the property of the State or of any Where the parties purport a sale of
subdivision thereof, or of any specific goods, and the goods without the
government-owned or controlled knowledge of the seller have perished in
corporation, or institution, the administration part or have wholly or in a material part so
of which has been intrusted to them; this deteriorated in quality as to be substantially
provision shall apply to judges and changed in character, the buyer may at his
government experts who, in any manner option treat the sale:
whatsoever, take part in the sale; (1) As avoided; or
(5) Justices, judges, prosecuting (2) As valid in all of the existing goods
attorneys, clerks of superior and inferior or in so much thereof as have not
courts, and other officers and employees deteriorated, and as binding the
connected with the administration of justice, buyer to pay the agreed price for the
 goods in which the ownership will 2. Symbolical Tradition or Traditio
pass, if the sale was divisible. Simbolica
The parties use a symbol to
CHAPTER 4 represent the thing delivered.
OBLIGATIONS OF THE VENDOR 3. Traditio Longa Manu
The delivery is by mere consent or
agreement of the contracting parties,
Article 1495
where the seller points out to the
The vendor is bound to transfer the
buyer the object of sale without the
ownership of and deliver, as well as warrant
need of actually delivering it.
the thing which is the object of the sale.
4. Traditio Brevi Manu
This occurs when the would be
Obligations of the vendor
buyer had already the possession of
1. To transfer ownership of the thing
the object even before the contract
sold;
of sale by virtue of another title
2. To deliver the thing:
which is not ownership (like a lessee
3. To warrant the object sold against
in a Contract of Lease), and
eviction and hidden defects;
pursuant to a contract of sale, he
4. To take care of the object sold
would now hold possession in the
pending delivery; and
concept of an owner (like a buyer
5. To pay for the expenses for the
of a house where he was a former
execution and registration of the
lessee of the same house).
contract of sale unless there is a
5. Traditio Constitutum
stipulation to the contrary.
Possessorium
The delivery consists in the owner's
Article 1496 continuous possession of the
The ownership of the thing sold is property he had already sold to
acquired by the vendee from the moment it another person but his present
is delivered to him in any of the ways possession is no longer that of an
specified in Articles 1497 to 1501, or in any owner but under another capacity,
other manner signifying an agreement that like that of a lessee.
the possession is transferred from the
vendor to the vendee.
Article 1498
When the sale is made through a
Article 1497 public instrument, the execution thereof
The thing sold shall be understood shall be equivalent to the delivery of the
as delivered, when it is placed in the control thing which is the object of the contract, if
and possession of the vendee. from the deed the contrary does not appear
or cannot clearly be inferred.
Kinds of Delivery With regard to movable property, its
1. Real or Actual delivery may also be made by the delivery
2. Legal or Constructive of the keys of the place or depository where
3. Quasi-Tradition it is stored or kept.

Kinds of Legal or Constructive What is a public instrument?

Delivery A document prepared by a notary
1. Legal Formalities public in the presence of the parties who
When the sale is made through a sign it before witnesses."
public instrument. The delivery by
execution of public instrument gives NOTARY PUBLIC
rise to prima facie presumption of A person authorized by a State to
delivery, which is destroyed when administer oaths, certify documents, attest
actual delivery is not affected due to to the authenticity of signatures, and
legal impediment.
perform official acts in commercial matters,
such as protesting negotiable instruments. Article 1503
When there is a contract of sale of
Article 1499 specific goods, the seller may, by the terms
The delivery of movable property of the contract, reserve the right of
may likewise be made by the mere consent possession or ownership in the goods until
or agreement of the contracting parties, if certain conditions have been fulfilled. The
the thing sold cannot be transferred to the right of possession or ownership may be,
possession of the vendee at the time of the thus, reserved notwithstanding the delivery
sale, or if the latter already had it in his of the goods to the buyer or to a carrier or
possession for any other reason. other bailee for the purpose of transmission
to the buyer.
Article 1500 Where goods are shipped, and by
There may also be tradition the bill of lading the goods are deliverable to
constitutum possessorium. Under this kind the seller or his agent, or to the order of the
of delivery, the law considers all these seller or of his agent, the seller thereby
formalities to have taken place by reserves the ownership in the goods. But, if
agreement of the parties. except for the form of the bill of lading, the
ownership would have passed to the buyer
Article 1501 on shipment of the goods, the seller's
With respect to incorporeal property, property in the goods shall be deemed to be
the provisions of the first paragraph of only for the purpose of securing
article 1498 shall govern. In any other case performance by the buyer of his obligations
wherein said provisions are not applicable, under the contract.
the placing of the titles of ownership in the Where goods are shipped, and by
possession of the vendee or the use by the the bill of lading the goods are deliverable to
vendee of his rights, with the vendor's order of the buyer or of his agent, but
consent, shall be understood as a delivery. possession of the bill of lading is retained by
the seller or his agent, the seller thereby
Article 1502 reserves a right to the possession of the
When goods are delivered to the goods as against the buyer.
buyer "on sale or return" to give the buyer Where the seller of goods draws on
an option to return the goods instead of the buyer for the price and transmits the bill
paying the price, the ownership passes to of exchange and bill of lading together to
the buyer on delivery, but he may revest the the buyer to secure acceptance or payment
ownership in the seller by returning or of the bill of exchange, the buyer is bound to
tendering the goods within the time fixed in return the bill of lading if he does not honor
the contract, or, if no time has been fixed, the bill of exchange, and if he wrongfully
within a reasonable time. retains the bill of lading, he acquires no
When goods are delivered to the added right thereby. If, however, the bill of
buyer on approval or on trial or on lading provides that the goods are
satisfaction, or other similar terms, the deliverable to the buyer or to the order of
ownership therein passes to the buyer: the buyer, or is indorsed in blank, or to the
(1) When he signifies his approval or buyer by the consignee named therein, one
acceptance to the seller or does any other who purchases in good faith, for value, the
act adopting the transaction; bill of lading, or goods from the buyer will
(2) If he does not signify his approval obtain the ownership in the goods, although
or acceptance to the seller, but retains the the bill of exchange has not been honored,
goods without giving notice of rejection, provided that such purchaser has received
then if a time has been fixed for the return of delivery of the bill of lading indorsed by the
the goods, on the expiration of such time, consignee named therein, or of the goods,
and, if no time has been fixed, on the without notice of the facts making the
expiration of a reasonable time. What is a transfer wrongful.
reasonable time is a question of fact.
Article 1504 2. A provision of law enables the apparent
Unless otherwise agreed, the goods remain owner of goods to dispose of them as if he
at the seller's risk until the ownership therein were the true owner thereof.
is transferred to the buyer, but when the 3. The validity of any contract of sale under
ownership therein is transferred to the statutory power of sale or under the order of
buyer, the goods are at the buyer's risk a court of competent jurisdiction.
whether actual delivery has been made or 4. Purchases made in a merchant's store, or
not, except that: in fairs, or markets, in accordance with the
(1) Where delivery of the goods has been Code of Commerce and special laws.
made to the buyer or to a bailee for the 5. Where the seller of goods has a voidable
buyer, in pursuance of the contract and the title thereto.
ownership in the goods has been retained
by the seller merely to secure performance Article 1506
by the buyer of his obligations under the Where the seller of goods has a voidable
contract, the goods are at the buyer's risk title thereto, but his title has not been
from the time of such delivery; avoided at the time of the sale, the buyer
(2) Where actual delivery has been delayed acquires a good title to the goods, provided
through the fault of either the buyer or seller, he buys them in good faith, for value, and
the goods are at the risk of the party in fault. without notice of the seller's defect of title.

Article 1505 Article 1507

Subject to the provisions of this Title, where A document of title in which it is stated that
goods are sold by a person who is not the the goods referred to therein will be
owner thereof, and who does not sell them delivered to the bearer, or to the order of
under authority or with the consent of the any person named in such document is a
owner, the buyer acquires no better title to negotiable document of title.
the goods than the seller had, unless the
owner of the goods is by his conduct Article 1508
precluded from denying the seller's authority A negotiable document of title may be
to sell. negotiated by delivery:
Nothing in this Title, however, shall affect: (1) Where by the terms of the document the
(1) The provisions of any factors' act, carrier, warehouseman or other bailee
recording laws, or any other provision of law issuing the same undertakes to deliver the
enabling the apparent owner of goods to goods to the bearer; or
dispose of them as if he were the true (2) Where by the terms of the document the
owner thereof; carrier, warehouseman or other bailee
(2) The validity of any contract of sale under issuing the same undertakes to deliver the
statutory power of sale or under the order of goods to the order of a specified person,
a court of competent jurisdiction; and such person or a subsequent endorsee
(3) Purchases made in a merchant's store, of the document has indorsed it in blank or
or in fairs, or markets, in accordance with to the bearer.
the Code of Commerce and special laws. Where by the terms of a negotiable
document of title the goods are deliverable
General Rule: to bearer or where a negotiable document
Where goods are sold by a person who is of title has been indorsed in blank or to
not the owner thereof, and who does not bearer, any holder may indorse the same to
sell them under authority or with the consent himself or to any specified person, and in
of the owner, the buyer acquires no better such case the document shall thereafter be
title to the goods than the seller had. negotiated only by the endorsement of such
endorsee.
Exceptions:
1. The owner of the goods is by his conduct Bailee, meaning
precluded from denying the seller's authority Someone who receives personal property
to sell. from another, and has possession of but not
title to the property. A bailee is responsible document cannot be negotiated and the
for keeping the property safe until it is endorsement of such a document gives the
returned to the owner. transferee no additional right.
Someone who by warehouse receipt, bill of
lading, or other document of title Non-negotiable Document
acknowledges possession of goods and It cannot be negotiated.
contracts to deliver them.
Article 1512
Article 1509 A negotiable document of title may be
A negotiable document of title may be negotiated:
negotiated by the endorsement of the (1) By the owner therefor; or
person to whose order the goods are by the (2) By any person to whom the possession
terms of the document deliverable. Such or custody of the document has been
endorsement may be in blank, to bearer or entrusted by the owner, if, by the terms of
to a specified person. If indorsed to a the document, the bailee issuing the
specified person, it may be again negotiated document undertakes to deliver the goods
by the endorsement of such person in to the order of the person to whom the
blank, to bearer or to another specified possession or custody of the document has
person. Subsequent negotiations may be been entrusted, or if at the time of such
made in like manner. entrusting the document is in such form that
it may be negotiated by delivery.
Two Kinds of Negotiation
1.Delivery Article 1513
Where by the terms of the document, the A person to whom a negotiable document of
one issuing the same undertakes to deliver title has been duly negotiated acquires
the goods to the bearer. thereby:
2.By indorsement and delivery (1) Such title to the goods as the person
The endorsement may be in blank, to negotiating the document to him had or had
bearer, or to a specified person. ability to convey to a purchaser in good faith
for value and also such title to the goods as
Article 1510 the person to whose order the goods were
If a document of title which contains an to be delivered by the terms of the
undertaking by a carrier, warehouseman or document had or had ability to convey to a
other bailee to deliver the goods to bearer, purchaser in good faith for value; and
to a specified person or order of a specified (2) The direct obligation of the bailee issuing
person or which contains words of like the document to hold possession of the
import, has placed upon it the words "not goods for him according to the terms of the
negotiable," "non-negotiable" or the like, document as fully as if such bailee had
such document may nevertheless be contracted directly with him.
negotiated by the holder and is a negotiable
document of title within the meaning of this Article 1514
Title. But nothing in this Title contained shall A person to whom a document of title has
be construed as limiting or defining the been transferred, but not negotiated,
effect upon the obligations of the carrier, acquires thereby, as against the transferor,
warehouseman, or other bailee issuing a the title to the goods, subject to the terms of
document of title or placing thereon the any agreement with the transferor.
words "not negotiable," "non-negotiable," or If the document is non-negotiable, such
the like. person also acquires the right to notify the
bailee who issued the document of the
Article 1511 transfer thereof, and thereby to acquire the
A document of title which is not in such form direct obligation of such bailee to hold
that it can be negotiated by delivery may be possession of the goods for him according
transferred by the holder by delivery to a to the terms of the document.
purchaser or donee. A non-negotiable
Prior to the notification to such bailee by the 5. That the goods are merchantable or fit for
transferor or transferee of a non-negotiable a particular purpose.
document of title, the title of the transferee
to the goods and the right to acquire the NEGOTIATION
obligation of such bailee may be defeated The transfer of possession of an instrument,
by the levy of an attachment of execution whether voluntary or involuntary, by a
upon the goods by a creditor of the person other than the issuer to a person
transferor, or by a notification to such bailee who thereby becomes its holder.
by the transferor or a subsequent purchaser
from the transfer of a subsequent sale of the ASSIGNMENT
goods by the transferor. The transfer of rights or property.

Article 1515 Article 1517

Where a negotiable document of title is The endorsement of a document of title
transferred for value by delivery, and the shall not make the endorser liable for any
endorsement of the transferor is essential failure on the part of the bailee who issued
for negotiation, the transferee acquires a the document or previous endorsers thereof
right against the transferor to compel him to to fulfill their respective obligations.
endorse the document unless a contrary
intention appears. The negotiation shall take Article 1518
effect as of the time when the endorsement The validity of the negotiation of a
is actually made. negotiable document of title is not impaired
by the fact that the negotiation was a breach
Article 1516 of duty on the part of the person making the
A person who for value negotiates or negotiation, or by the fact that the owner of
transfers a document of title by the document was deprived of the
endorsement or delivery, including one who possession of the same by loss, theft, fraud,
assigns for value a claim secured by a accident, mistake, duress, or conversion, if
document of title unless a contrary intention the person to whom the document was
appears, warrants: negotiated or a person to whom the
(1) That the document is genuine; document was subsequently negotiated
(2) That he has a legal right to negotiate or paid value therefor in good faith without
transfer it; notice of the breach of duty, or loss, theft,
(3) That he has knowledge of no fact which fraud, accident, mistake, duress or
would impair the validity or worth of the conversion.
document; and
(4) That he has a right to transfer the title to Article 1519
the goods and that the goods are If goods are delivered to a bailee by the
merchantable or fit for a particular purpose, owner or by a person whose act in
whenever such warranties would have been conveying the title to them to a purchaser in
implied if the contract of the parties had good faith for value would bind the owner
been to transfer without a document of title and a negotiable document of title is issued
the goods represented thereby. for them they cannot thereafter, while in
possession of such bailee, be attached by
Warranties on Negotiation or garnishment or otherwise or be levied under
Assignment an execution unless the document be first
1. That the document is genuine; surrendered to the bailee or its negotiation
2. That he has a legal right to negotiate or enjoined. The bailee shall in no case be
transfer it; compelled to deliver up the actual
3. That he has knowledge of no fact which possession of the goods until the document
would impair the validity or worth of the is surrendered to him or impounded by the
document; court.
4. That he has a right to transfer the title to
the goods; and General Rule:
No attachment no time for sending them is fixed, the seller
is bound to send them within a reasonable
Exceptions: time.
1. The document be first surrendered to the Where the goods at the time of sale are in
bailee; or the possession of a third person, the seller
2. The documents' negotiation is enjoined. has not fulfilled his obligation to deliver to
the buyer unless and until such third person
General Rule: acknowledges to the buyer that he holds the
The bailee shall in no case be compelled to goods on the buyer's behalf.
deliver up the actual possession of the Demand or tender of delivery may be
goods. treated as ineffectual unless made at a
reasonable hour. What is a reasonable hour
Exceptions: is a question of fact.
1. The document is surrendered to the Unless otherwise agreed, the expenses of
bailee; or and incidental to putting the goods into a
2. The document is impounded by the court. deliverable state must be borne by the
seller.
Article 1520
A creditor whose debtor is the owner of a Place of delivery
negotiable document of title shall be entitled 1. The place of delivery agreed upon;
to such aid from courts of appropriate 2. If there is no agreement, it is determined
jurisdiction by injunction and otherwise in by usage of trade;
attaching such document or in satisfying the 3. If there is no agreement and usage of
claim by means thereof as is allowed at law trade, it is the seller's place of business if he
or in equity in regard to property which has one, and if not his residence;
cannot readily be attached or levied upon by 4. In case of a contract of sale of specific
ordinary legal process. goods, which to the knowledge of the
parties when the contract or the sale was
Injunction, meaning made were in some other place, then that
A court order commanding or preventing an place is the place of delivery.
action.
Article 1522
Attachment, meaning Where the seller delivers to the buyer a
The seizing of a person's property to secure quantity of goods less than he contracted to
a judgment or to be sold in satisfaction of a sell, the buyer may reject them, but if the
judgment. buyer accepts or retains the goods so
delivered, knowing that the seller is not
Article 1521 going to perform the contract in full, he must
Whether it is for the buyer to take pay for them at the contract rate. If,
possession of the goods or of the seller to however, the buyer has used or disposed of
send them to the buyer is a question the goods delivered before he knows that
depending in each case on the contract, the seller is not going to perform his
express or implied, between the parties. contract in full, the buyer shall not be liable
Apart from any such contract, express or for more than the fair value to him of the
implied, or usage of trade to the contrary, goods so received.
the place of delivery is the seller's place of Where the seller delivers to the buyer a
business if he has one, and if not his quantity of goods larger than he contracted
residence; but in case of a contract of sale to sell, the buyer may accept the goods
of specific goods, which to the knowledge of included in the contract and reject the rest.
the parties when the contract or the sale If the buyer accepts the whole of the goods
was made were in some other place, then so delivered he must pay for them at the
that place is the place of delivery. contract rate.
Where by a contract of sale the seller is Where the seller delivers to the buyer the
bound to send the goods to the buyer, but goods he contracted to sell mixed with
goods of a different description not included Article 1525
in the contract, the buyer may accept the The seller of goods is deemed to be an
goods which are in accordance with the unpaid seller within the meaning of this Title:
contract and reject the rest. (1) When the whole of the price has not
In the preceding two paragraphs, if the been paid or tendered;
subject matter is indivisible, the buyer may (2) When a bill of exchange or other
reject the whole of the goods. The negotiable instrument has been received as
provisions of this article are subject to any conditional payment, and the condition on
usage of trade, special agreement, or which it was received has been broken by
course of dealing between the parties. reason of the dishonor of the instrument, the
insolvency of the buyer, or otherwise.
Article 1523 In Articles 1525 to 1535 the term "seller"
Where, in pursuance of a contract of sale, includes an agent of the seller to whom the
the seller is authorized or required to send bill of lading has been indorsed, or a
the goods to the buyer, delivery of the consignor or agent who has himself paid, or
goods to a carrier, whether named by the is directly responsible for the price, or any
buyer or not, for the purpose of transmission other person who is in the position of a
to the buyer is deemed to be a delivery of seller.
the goods to the buyer, except in the case
provided for in Article 1503, first, second Article 1526
and third paragraphs, or unless a contrary Subject to the provisions of this Title,
intent appears. notwithstanding the ownership in the goods
Unless otherwise authorized by the buyer, may have passed to the buyer, the unpaid
the seller must make such contract with the seller of goods, as such, has:
carrier on behalf of the buyer as may be (1) A lien on the goods or right to retain
reasonable, having regard to the nature of them for the price while he is in possession
the goods and the other circumstances of of them;
the case. If the seller omits so to do, and the (2) In case of the insolvency of the buyer, a
goods are lost or damaged in course of right of stopping the goods in transitu after
transit, the buyer may decline to treat the he has parted with the possession of them;
delivery to the carrier as a delivery to (3) A right of resale as limited by this Title;
himself, or may hold the seller responsible (4) A right to rescind the sale as likewise
in damages. limited by this Title.
Unless otherwise agreed, where goods are Where the ownership in the goods has not
sent by the seller to the buyer under passed to the buyer, the unpaid seller has,
circumstances in which the seller knows or in addition to his other remedies a right of
ought to know that it is usual to insure, the withholding delivery similar to and
seller must give such notice to the buyer as coextensive with his rights of lien and
may enable him to insure them during their stoppage in transitu where the ownership
transit, and, if the seller fails to do so, the has passed to the buyer.
goods shall be deemed to be at his risk
during such transit. Lien, meaning
A legal right or interest that a creditor has in
Rule: another's property, lasting usually until a
Delivery to the carrier is delivery to the debt or duty that it secures is satisfied.40
buyer, if the seller is required to send the
goods to the buyer. Remedies of an unpaid seller
1. Possessory lien;
Article 1524 2. Right of stopping the goods in transit;
The vendor shall not be bound to deliver the 3. Right of resale;
thing sold, if the vendee has not paid him 4. Right to rescind.
the price, or if no period for the payment has
been fixed in the contract. POSSESSORY LIEN
A lien allowing the creditor to keep When unpaid seller loses his lien
possession of the encumbered property 1. When he delivers the goods to a carrier
until the debt is satisfied.41 or other bailee for the purpose of
transmission to the buyer without reserving
Article 1527 the ownership in the goods or the right to
Subject to the provisions of this Title, the the possession thereof;
unpaid seller of 2. When the buyer or his agent lawfully
goods who is in possession of them is obtains possession of the goods;
entitled to retain possession of them until 3. By waiver thereof.
payment or tender of the price in the
following cases, namely: Article 1530
(1) Where the goods have been sold without Subject to the provisions of this Title, when
any stipulation as to credit; the buyer of goods is or becomes insolvent,
(2) Where the goods have been sold on the unpaid seller who has parted with the
credit, but the term of credit has expired; possession of the goods has the right of
(3) Where the buyer becomes insolvent. stopping them in transitu, that is to say, he
The seller may exercise his right of lien may resume possession of the goods at any
notwithstanding that he is in possession of time while they are in transit, and he will
the goods as agent or bailee for the buyer. then become entitled to the same rights in
regard to the goods as he would have had if
Article 1528 he had never parted with the possession.
Where an unpaid seller has made part
delivery of the goods, he may exercise his When right of stoppage in transit
right of lien on the remainder, unless such available?
part delivery has been made under such 1. The unpaid seller has parted with the
circumstances as to show an intent to waive possession of the goods; and
the lien or right of retention. 2. The buyer of goods is or becomes
insolvent.
General Rule:
The unpaid seller may exercise his right of Insolvent, meaning
lien on the remainder that has not been Having liabilities that exceed the value of
delivered. assets,42

Exception: Article 1531

When part delivery has been made under Goods are in transit within the meaning of
such circumstances as to show an intent to the preceding article:
waive the lien or right of retention. (1) From the time when they are delivered
to a carrier by land, water, or air, or other
Article 1529 bailee for the purpose of transmission to the
The unpaid seller of goods loses his lien buyer, until the buyer, or his agent in that
thereon: behalf, takes delivery of them from such
(1) When he delivers the goods to a carrier carrier or other bailee;
or other bailee for the purpose of (2) If the goods are rejected by the buyer,
transmission to the buyer without reserving and the carrier or other bailee continues in
the ownership in the goods or the right to possession of them, even if the seller has
the possession thereof; refused to receive them back.
(2) When the buyer or his agent lawfully Goods are no longer in transit within the
obtains possession of the goods; meaning of the preceding article:
(3) By waiver thereof. (1) If the buyer, or his agent in that behalf,
The unpaid seller of goods, having a lien obtains delivery of the goods before their
thereon, does not lose his lien by reason arrival at the appointed destination;
only that he has obtained judgment or (2) If, after the arrival of the goods at the
decree for the price of the goods. appointed destination, the carrier or other
bailee acknowledges to the buyer or his
agent that he holds the goods on his behalf reserves the right of resale in case the
and continues in possession of them as buyer should make default, or where the
bailee for the buyer or his agent; and it is buyer has been in default in the payment of
immaterial that further destination for the the price for an unreasonable time, an
goods may have been indicated by the unpaid seller having a right of lien or having
buyer; stopped the goods in transitu may resell the
(3) If the carrier or other bailee wrongfully goods. He shall not thereafter be liable to
refuses to deliver the goods to the buyer or the original buyer upon the contract of sale
his agent in that behalf. If the goods are or for any profit made by such resale, but
delivered to a ship, freight train, truck, or may recover from the buyer damages for
airplane chartered by the buyer, it is a any loss occasioned by the breach of the
question depending on the circumstances of contract of sale.
the particular case, whether they are in the Where a resale is made, as authorized in
possession of the carrier as such or as this article acquires a good title as against
agent of the buyer. the original buyer.
If part delivery of the goods has been made It is not essential to the validity of
to the buyer, or his agent in that behalf, the resale that notice of an intention to resell the
remainder of the goods may be stopped in goods be given by the seller to the original
transitu, unless such part delivery has been buyer. But where the right to resell is not
under such circumstances as to show an based on the perishable nature of the goods
agreement with the buyer to give up or upon an express provision of the contract
possession of the whole of the goods. of sale, the giving or failure to give such
notice shall be relevant in any issue
Article 1532 involving the question whether the buyer
The unpaid seller may exercise his right of had been in default for an unreasonable
stoppage in transitu either by obtaining time before the resale was made.
actual possession of the goods or by giving It is not essential to the validity of a
notice of his claim to the carrier or other resale that notice of the time and place of
bailee in whose possession the goods are. such resale should be given by the seller to
Such notice may be given either to the the original buyer.
person in actual possession of the goods or The seller is bound to
to his principal. In the latter case the notice, exercise reasonable care and
to be effectual, must be given at such time judgment in making a resale, and
and under such circumstances that the subject to this requirement may
principal, by the exercise of reasonable make a resale either by public or
diligence, may prevent a delivery to the private sale. He cannot, however,
buyer. directly or indirectly buy the goods.
When notice of stoppage in transitu
is given by the seller to the carrier, or other Article 1534
bailee in possession of the goods, he must An unpaid seller having the right of
redeliver the goods to, or according to the lien or having stopped the goods in transitu,
directions of, the seller. The expenses of may rescind the transfer of title and resume
such delivery must be borne by the seller. If, the ownership in the goods, where he
however, a negotiable document of title expressly reserved the right to do so in case
representing the goods has been issued by the buyer should make default, or where the
the carrier or other bailee, he shall not be buyer has been in default in the payment of
obliged to deliver or justified in delivering the price for an unreasonable time. The
the goods to the seller unless such seller shall not thereafter be liable to the
document is first surrendered for buyer upon the contract of sale, but may
cancellation. recover from the buyer damages for any
loss occasioned by the breach of the
Article 1533 contract.
Where the goods are of perishable The transfer of title shall not be held
nature, or where the seller expressly to have been rescinded by an unpaid seller
until he has manifested by notice to the accessories in the condition in which they
buyer or by some other overt act an were upon the perfection of the contract.
intention to rescind. It is not necessary that All the fruits shall pertain to the
such overt act should be communicated to vendee from the day on which the contract
the buyer, but the giving or failure to give was perfected.
notice to the buyer of the intention to
rescind shall be relevant in any issue Article 1538
involving the question whether the buyer In case of loss, deterioration or
had been in default for an unreasonable improvement of the thing before its delivery,
time before the right of rescission was the rules in Article 1189 shall be observed,
asserted. the vendor being considered the debtor.

Article 1535 Article 1539

Subject to the provisions of this Title, The obligation to deliver the thing
the unpaid seller's right of lien or stoppage sold includes that of placing in the control of
in transitu is not affected by any sale, or the vendee all that is mentioned in the
other disposition of the goods which the contract, in conformity with the following
buyer may have made, unless the seller has rules:
assented thereto. If the sale of real estate should be
If, however, a negotiable document made with a statement of its area, at the
of title has been issued for goods, no rate of a certain price for a unit of measure
seller's lien or right of stoppage in transitu or number, the vendor shall be obliged to
shall defeat the right of any purchaser for deliver to the vendee, if the latter should
value in good faith to whom such document demand it, all that may have been stated in
has been negotiated, whether such the contract; but, should this be not
negotiation be prior or subsequent to the possible, the vendee may choose between
notification to the carrier, or other bailee a proportional reduction of the price and the
who issued such document, of the seller's rescission of the contract, provided that, in
claim to a lien or right of stoppage in the latter case, the lack in the area be not
transitu. less than one-tenth of that stated.
The same shall be done, even when
General Rule: the area is the same, if any part of the
The unpaid seller's right of lien or immovable is not of the quality specified in
stoppage in transitu is not affected by any the contract.
sale, or other disposition of the goods which The rescission, in this case,
the buyer may have made. shall only take place at the will of the
vendee, when the inferior value of
Exception: the thing sold exceeds one-tenth of
The seller has assented or given his the price agreed upon.
consent thereto. Nevertheless, if the vendee would
not have bought the immovable had
Article 1536 he known of its smaller area of
The vendor is not bound to deliver inferior quality, he may rescind the
the thing sold in case the vendee should sale.
lose the right to make use of the term as
provided in Article 1198.
The vendor is NOT bound to deliver
the thing sold because the vendee has lost
the right to make use of the term.

Article 1537
The vendor is bound to deliver the
thing sold and its accessions and