Chapter 5: OBLIGATIONS OF THE VENDEE

Principal obligations of vendee.

a. to accept delivery; of the thing sold; and
b. to pay the price of the thing sold at the time and place stipulated in the contract
c. to bear the expenses for the execution and registration of the sale and putting the
goods in a deliverable state, if such is the stipulation.

Pertinent rules
a. In a contract of sale, the vendor is not required to deliver the thing sold until the price is
paid nor the vendee to pay the price before the thing is delivered in the absence of an
agreement to the contrary.

b. If stipulated, then the vendee is bound to accept delivery and to pay the price at the time
and place designated.

c. 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.

d. 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.

e. 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.

Constitutes Acceptance
- Acceptance - as used in Article 1584, is assent to become owner of the specific goods
when delivery of them is offered to the buyer.

a. Express acceptance - takes place when the buyer, after delivery of the goods,
intimates to the seller, verbally or in writing, that he has accepted them.

b. Implied acceptance takes place:

i. When the buyer, after delivery of goods, does any act inconsistent with the
seller’s ownership, as when he sells or attempts to sell the goods, or he
uses or makes alteration in them in a manner proper only for an owner; or

ii. When the buyer, after the lapse of a reasonable time, retains the goods
without intimating his rejection. Thus, the failure of the buyer to interpose
any objection to the invoices issued to it, to evidence delivery of the
 materials ordered as per agreement with the seller and which contained the
conditions in question, should be deemed as an implied acceptance by the
buyer of the said conditions.

When vendee can suspend payment

a. if he is disturbed in the possession or ownership of the thing bought
b. if he has a well-grounded fear that his possession or ownership would be disturbed by a
vindicatory action or foreclosure of mortgage.

The vendee is only entitled to retain the price that has not been paid to the vendor. He is
not entitled to recover what has already been paid. Under the second case, it is not
necessary that an action be brought against the vendee.

When vendee cannot suspend payment

a. if the vendor gives security for the return of the price in a proper case.
b. if it has been stipulated that notwithstanding any such contingency, the vendee must make
payment.
c. if the vendor has caused the disturbance or danger to cease.
d. if the disturbance is a mere act of trespass.
e. if the vendee has fully paid the price.

Rejection of goods
- Where, on inspection, the goods are proved to be unsuitable or fail to conform to the
contract, the buyer may refuse to accept them.

a. The buyer is not bound to return them to the seller and it is sufficient if he notifies
the seller that he refuses to accept them.

b. The option to reject must be exercised and notice of rejection given to the seller
within reasonable time unless a definite period is fixed by the contract.

c. The receipt of goods under a contract of sale constitutes an acceptance of them if

the right of rejection is not exercised within a reasonable time.

Liability of the vendee for interest where payment made after delivery
a. Should it have been so stipulated
b. Should the thing sold and delivered produce fruits or income.
c. Should he be in default, from the time of judicial or extrajudicial demand for the payment
of the price.
d. Partial payment made of purchase price (check page 166)
 Chapter 6: ACTIONS FOR BREACH OF CONTRACT OF SALE OF GOODS

Actions available in provisions governing breach of contract of sale of goods.

a. action by the seller for payment of the price
b. action by the seller for damages for non-acceptance of the goods
c. action by the seller for rescission of the contract for breach thereof
d. action by the buyer for specific performance
e. action by the buyer for rescission or damages for breach of warranty.

Seller’s right of action for breach

a. when the ownership of the goods has passed to the buyer and he wrongfully neglects or
refuses to pay for the price
b. when the price is payable on a certain day and the buyer wrongfully neglects or refuses to
pay such price, irrespective of delivery or of transfer of the title
c. when the goods cannot readily be resold for a reasonable price and the buyer wrongfully
refuses to accept them even before the ownership in the goods has passed, if the
provisions of Article 1596, 4th paragraph are not applicable.

Remedies of buyer for breach of warranty by seller

a. accept the goods and set up the seller’s breach to reduce or extinguish the price
b. accept the goods and maintain an action for damages for the breach of the warranty
c. refuse to accept the goods and maintain an action for damages for the breach of the
warranty
d. 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.
e. In the case of breach of warranty of quality, such loss, in the absence of special
circumstances showing proximate damage of a greater amount, is the difference
between the value of the goods at the time of delivery to the buyer and the value they
would have had if they had answered to the warranty.

When rescission by the buyer is not allowed

a. if the buyer accepted the goods knowing of the breach of warranty without protest
b. if he fails to notify the seller within a reasonable time of his election to rescind
c. if he fails to return or offer to return the goods in substantially as good condition as they
were in at the time of the transfer of ownership to him.
d. 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
Rights and obligations of buyer in case of rescission
a. In case of rescission, the buyer shall cease to be liable for the price, his only obligation
being to return the goods
b. If he has paid the price or any part thereof, he may recover it from the seller
c. He has the right to hold the goods as bailee for the seller should the latter refuse the
return of the goods
d. He has the right to have a lien on the goods for any portion of the price already paid
which lien he may enforce as if he were an unpaid seller.

Chapter 7: Extinguishment of Sale

Causes for extinguishing of the sale

a. Common or those causes which are also the means of extinguishing all other contracts
like payment, loss of the thing, condonation, etc.
b. Special or those causes which are recognized by the law on sales
c. Extra-special or those causes which are given special discussion by the Civil Code and
these are conventional redemption and legal redemption.

SECTION 1. — Conventional Redemption

Conventional redemption - is the right which the vendor reserves to himself, to reacquire the
property sold provided he returns to the vendee the price of the sale, the expenses of the contract,
any other legitimate payments made therefor and the necessary and useful expenses made on the
thing sold (Art. 1616.), and fulfills other stipulations which may have been agreed upon.

Equitable mortgage - is one which lacks the proper formalities, form or 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

Reformation - is that remedy granted by law by means of which a written instrument is made or
construed so as to express or conform to the real intention of the parties when such intention is
not expressed in the instrument.
The contract shall be presumed to be an equitable mortgage, in any of the following cases:
a. When the price of a sale with right to repurchase is unusually inadequate
b. When the vendor remains in possession as lessee or otherwise;
c. 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
d. When the purchaser retains for himself a part of the purchase price
e. When the vendor binds himself to pay the taxes on the thing sold
f. In any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other
obligation.

Period for exercise of right of redemption

a. No agreement/granting right. — If there is no agreement in a contract of sale granting
the vendor the right to redeem, there is no right of redemption since the sale should be
considered an absolute sale.

b. Agreement merely grants right. — If the parties agreed only on the right to redeem on
the part of the vendor but there is a total absence of express stipulation as to the time
within which the repurchase should be made, then the period of redemption shall be four
(4) years from the date of the contract.

c. Definite period of redemption agreed upon. — If the parties agreed on a definite period
of redemption, then the right to redeem must be exercised within the period fixed
provided it does not exceed 10 years.

d. Period of redemption agreed upon not specified. — If the parties agreed that the
vendor shall have a right to redeem and they intend a period which, however, is not
specified, then the redemption period is 10 years.

e. Period agreed upon exceeds ten years. — Where the agreed period exceeds 10 years,
the vendor a retro has 10 years from the execution of the contract to exercise his right of
redemption.

f. Final judgment that contract is pacto de retro. — “From the time final judgment was
rendered in a civil action on the basis that the contract was a true sale with right to
repurchase,” the vendor a retro has 30 days within which to exercise the right to
repurchase.
SECTION 2. — Legal Redemption

Article 1619 gives the definition of legal redemption. As the word “thing” is employed
without qualification, the right applies to both movable and immovable property.

Right of legal redemption of co-owner. REQUISITES

a. There must be co-ownership of a thing
b. There must be alienation of all or of any of the shares of the other co-owners
c. The sale must be to a third person or stranger
d. The sale must be before partition.
e. The right must be exercised within the period provided in the article 1623.
f. The vendee must be be reimbursed for the price of the sale

Right of legal redemption of adjacent owners of rural lands. REQUISITES

a. Both the land of the one exercising the right of redemption and the land sought to be
redeemed must be rural
b. The lands must be adjacent
c. There must be an alienation
d. The piece of rural land alienated must not exceed one (1) hectare
e. The grantee or vendee must already own any other rural landT
f. The rural land sold must not be separated by brooks, drains, ravines, roads and other
apparent servitudes from the adjoining lands.

Rights of pre-emption and legal redemption of adjacent owners of urban lands. REQUISITES
a. Meaning. — Article 1622 recognizes two rights; namely:
i. Pre-emption, which has been defined as the act or right of purchasing before
others. It is exercised before the sale or resale against the would-be vendor.

ii. Redemption, which is exercised after the sale has been perfected against the
vendee. The recognition of the right of redemption will result in the rescission of
the sale.
b. (Requisites. — The conditions or requisites for the exercise of the right of pre-emption or
redemption, as the case may be, are the following:

i. The one exercising the right must be an adjacent owner

ii. The piece of land sold must be so small and so situated that a major portion
thereof cannot be used for any practical purpose within a reasonable time
iii. Such urban land was bought by its owner merely for speculation.
iv. Such urban land was bought by its owner merely for speculation
v. It is about to be resold, or that its resale has been perfected
 Chapter 8: ASSIGNMENT OF CREDITS AND OTHER INCORPOREAL RIGHTS

Assignment of credit - is a contract by which the owner (assignor/ creditor) of a credit and other
incorporeal rights transfers, either onerously or gratuitously, to another (assignee) his rights and
actions against a third person (debtor).

Legal redemption in sale of credit of other right in litigation

- This is an instance of legal redemption
a. There must be a sale or assignment of a credit.
b. The credit or other incorporeal right must be in litigation
c. 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.
d. The assignee must have demanded payment from the debtor
e. The debtor must reimburse the assignee:
i. the price paid by him
ii. the judicial costs incurred by him
iii. the interest on the price from the date of payment
f. The reimbursement must be made by the debtor within 30 days from the date
assignee demands payment from him.

Chapter 9: GENERAL PROVISION

???????????
 Chapter 10: BARTER OF EXCHANGE

The contract of barter is defined by Article 1638. It is similar to sale with the only difference
that instead of paying a price in money, another thing is given in lieu thereof. A contract whereby
one person transfers the ownership of non-fungible things to another with the obligation on the
part of the latter to give things of the same kind, quantity, and quality is considered a barter.

Perfection and consummation of the contract.

a. The contract of barter is perfected from the moment there is a meeting of minds upon the
things promised by each party in consideration of the other.
b. It is consummated from the time of mutual delivery by the contracting parties of things
they promised.

DEFINITIONS:
1. Acceptance - as used in Article 1584, is assent to become owner of the specific goods
when delivery of them is offered to the buyer.

2. Assignment of credit - is a contract by which the owner (assignor/ creditor) of a credit

and other incorporeal rights transfers, either onerously or gratuitously, to another
(assignee) his rights and actions against a third person (debtor).

3. Conventional redemption - is the right which the vendor reserves to himself, to

reacquire the property sold provided he returns to the vendee the price of the sale, the
expenses of the contract, any other legitimate payments made therefor and the necessary
and useful expenses made on the thing sold (Art. 1616.), and fulfills other stipulations
which may have been agreed upon.

4. Equitable mortgage - is one which lacks the proper formalities, form or 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

5. Reformation - is that remedy granted by law by means of which a written instrument is

made or construed so as to express or conform to the real intention of the parties when
such intention is not expressed in the instrument.