3.

Kinds of delivery

a) real delivery

Art. 1497. The thing sold shall be understood as delivered, when it is placed in the control and
possession of the vendee. (1462a)

"Delivered - when placed in the control and possession of the vendee; conveyance of
ownership without prejudice to the right of vendor to claim payment of the price
1


b) constructive delivery

b.a) symbolic

Art. 1498. When the sale is made through a public instrument, the execution thereof shall be
equivalent to the delivery of the thing which is the object of the contract, if from the deed the
contrary does not appear or cannot clearly be inferred.

With regard to movable property, its delivery may also be made by the delivery of the keys of
the place or depository where it is stored or kept. (1463a)

i) delivery by public instrument
2


When sale is made through a public instrument, the EXECUTION thereof shall be
equivalent to delivery IF from the deed the contrary does not appear
4 operates as formal/symbolic delivery
4 authorizes buyer to use such document as proof of ownership
$ymbolic delivery may produce the effect of tradition if vendor have had such control
over the thing sold that at the moment of the sale, its material delivery could have
been made
ENERAL RULE: he who purchases through a public instrument should be deemed a
"possessor in fact and this presumption should give way before proof to the contrary
A person must be in ACTUAL PO$$E$$ION to be able to transfer CON$TRUCTIVE
PO$$E$$ION through public instrument

ii) Traditio Longa Manu

Art. 1499. The delivery of movable property may likewise be made by the mere consent or
agreement of the contracting parties, if the thing sold cannot be transferred to the possession of
the vendee at the time of the sale, or if the latter already had it in his possession for any other
reason. (1463a)

Traditio Longa Manu - delivery takes place when the thing is placed in the sight of the
purchaser so that he can take possession of it at pleasure

iii) Traditio brevi manu

Traditio Brevi Manu
3
- delivery of movable property takes place when the vendee had the thing
already in his possession before the sale took place, not as owner but as lessee, borrower or
depositary.

iv) Traditio Constitutum Possessorium

Art. 1500. There may also be tradition constitutum possessorium. (n)

O In traditio constitutum possessorium, the vendor remains in possession of the property
sold, by virtue of a lease agreement with the vendee
4
.
O Vendee became as lessor, the legal possessor while the vendor is in material possession
of the property in the name and representation of the vendee.







v) delivery to common carrier

Art. 1503. When there is a contract of sale of specific goods, the seller may, by the terms of
the contract, reserve the right of possession or ownership in the goods until certain conditions
have been fulfilled. The right of possession or ownership may be thus reserved notwithstanding
the delivery of the goods to the buyer or to a carrier or other bailee for the purpose of
transmission to the buyer.

Where goods are shipped, and by the bill of lading the goods are deliverable to the seller or his
agent, or to the order of the seller or of his agent, the seller thereby reserves the ownership in
the goods. But, if except for the form of the bill of lading, the ownership would have passed to
the buyer on shipment of the goods, the seller's property in the goods shall be deemed to be
only for the purpose of securing performance by the buyer of his obligations under the contract.

Where goods are shipped, and by the bill of lading the goods are deliverable to order of the
buyer or of his agent, but possession of the bill of lading is retained by the seller or his agent,
the seller thereby reserves a right to the possession of the goods as against the buyer.

Where the seller of goods draws on the buyer for the price and transmits the bill of exchange
and bill of lading together to the buyer to secure acceptance or payment of the bill of exchange,
the buyer is bound to return the bill of lading if he does not honor the bill of exchange, and if he
wrongfully retains the bill of lading he acquires no added right thereby. If, however, the bill of
lading provides that the goods are deliverable to the buyer or to the order of the buyer, or is
indorsed in blank, or to the buyer by the consignee named therein, one who purchases in good
faith, for value, the bill of lading, or goods from the buyer will obtain the ownership in the
goods, although the bill of exchange has not been honored, provided that such purchaser has
received delivery of the bill of lading indorsed by the consignee named therein, or of the goods,
without notice of the facts making the transfer wrongful. (n)

Art. 1523. Where, in pursuance of a contract of sale, the seller is authorized or required to
send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or
not, for the purpose of
Unless otherwise agreed, where goods are sent by the seller to the buyer under circumstances
in which the seller knows or ought to know that it is usual to insure, the seller must give such
notice to the buyer as may enable him to insure them during their transit, and, if the seller fails
to do so, the goods shall be deemed to be at his risk during such transit. (n)

GENERAL RULE: Delivery of goods to carrier is considered delivery to the buyer, and
hence, title passed to the buyer at the point of shipment

EXCEPTION: $eller may reserve title by the form of the bill of lading with intent to
remain the owner for all purposes and not merely for the sole purpose of securing
payment, or unless contrary intent appears in the contract of sale

a. Terms, "f.o.b."; "c.i.f."; "f.a.s."

i. 14- "free on board means that the seller bears expenses of transportation up
to the 14- point.
ii. c1 "cost, insurance, freight signifies that the price quoted includes the costs of
the goods, insurance, and freight charges on the goods up to the place of
destination
iii. 1,8 - "free alongside means that the seller bears the expenses of transportation
until he delivers the goods alongside a vessel at a named post.

These terms may be used only in connection with fixing the price and will not be
construed as fixing the place of delivery to the buyer

Best indication of the intention of parties as to the place of delivery is the manner and
place of payment agreed upon by the parties

4 Where price is payable upon proof of shipment, then the buyer agrees to accept
delivery at the point of shipment
4 Where the price is payable only upon arrival of the goods at the point of
destination, then that is the place of delivery to the buyer

vi) effect of form of bill of lading

O Ownership is retained: The seller may consign the goods to himself or to his agent and
thus prevent title from passing to the buyer until the latter pays the price
O Mere possession is retained: The seller may consign the goods to the order of the buyer
on the latters agent but by retaining the bill of lading, he thereby prevents the buyer
from obtaining the goods from the carrier until price is paid

4. Double Sales

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should
be movable property.

$hould it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.

$hould there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith. (1473)

If the same thing should have been sold by the owner to different buyers, the question as to
who of the latter acquired ownership depends on the nature of the thing sold.

a) General Rule - Pri4r temp4re, pri4r jure
5


-) sale 41 m4va-les
6


Art. 1544 (1). If the same thing should have been sold to different vendees, the ownership
shall be transferred to the person who may have first taken possession thereof in good faith, if
it should be movable property.

.) sale 41 imm4va-les

Art. 1544 (2). $hould it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.

To be entitled to priority, the second buyer must not only show prior recording of his
deed but must have acted in good faith, without knowledge of the existence of another
alienation by the vendor to another

PO$$E$$OR IN OOD FAITH: one who is not aware that there exists in his title or
mode of acquisition any flaw which invalidates it


4 good faith is always presumed; burden of proof is on person alleging bad faith
4 good faith of second buyer must continue until his contract ripens into ownership
by tradition or recording
4 as to Torrens title: it is enough that purchaser examines the latest certificate of
title issued in the name of his vendor and he need not trace its origin to prior
certificates of title

d) Sale -y virtue 41 exe.uti4n 4r atta.ment

1. ENERAL RULE: Article 1544 not applicable to execution sales because the purchaser at such
sales is substituted to or acquires whatever rights, title or interests the judgment debtor
may have over the property as of the time of levy. [It is the duty of the purchaser, before
bidding, to ascertain the rights of the judgment debtor over the property.]
2. EXCEPTION: Attachment or execution cannot prejudice prior unrecorded sales made by the
judgment debtor, and is preferred only over claims contracted subsequent to its recording
3. EXCEPTION TO THE EXCEPTION: Above rule does not apply to lands registered under Act
496 which provides that registration of instruments shall be the "operative act to convey and
affect the land; hence, prior unrecorded sale cannot prejudice execution sales i1 n4 tird-



party .laim was presented -e14re te exe.uti4n sale t44 pla.e. [Third persons are not
required to go beyond the register and determine the condition of the property.]

e) Unregistered land

P.D. 1529, Sec. 113. Recording of instruments relating to unregistered lands. No deed,
conveyance, mortgage, lease, or other voluntary instrument affecting land not registered under
the Torrens system shall be valid, except as between the parties thereto, unless such
instrument shall have been recorded in the manner herein prescribed in the office of the
Register of Deeds for the province or city where the land lies.

(a) The Register of Deeds for each province or city shall keep a Primary Entry Book and a
Registration Book. The Primary Entry Book shall contain, among other particulars, the entry
number, the names of the parties, the nature of the document, the date, hour and minute it
was presented and received. The recording of the deed and other instruments relating to
unregistered lands shall be effected by any of annotation on the space provided therefor in the
Registration Book, after the same shall have been entered in the Primary Entry Book.

(b) If, on the face of the instrument, it appears that it is sufficient in law, the Register of Deeds
shall forthwith record the instrument in the manner provided herein. In case the Register of
Deeds refuses its administration to record, said official shall advise the party in interest in
writing of the ground or grounds for his refusal, and the latter may appeal the matter to the
Commissioner of Land Registration in accordance with the provisions of $ection 117 of this
Decree. It shall be understood that any recording made under this section shall be without
prejudice to a third party with a better right.

(c) After recording on the Record Book, the Register of Deeds shall endorse among other things,
upon the original of the recorded instruments, the file number and the date as well as the hour
and minute when the document was received for recording as shown in the Primary Entry Book,
returning to the registrant or person in interest the duplicate of the instrument, with appropriate
annotation, certifying that he has recorded the instrument after reserving one copy thereof to
be furnished the provincial or city assessor as required by existing law.

(d) Tax sale, attachment and levy, notice of lis pendens, adverse claim and other instruments in
the nature of involuntary dealings with respect to unregistered lands, if made in the form
sufficient in law, shall likewise be admissible to record under this section.

(e) For the services to be rendered by the Register of Deeds under this section, he shall collect
the same amount of fees prescribed for similar services for the registration of deeds or
instruments concerning registered lands.

Registration requirement is understood to be without prejudice to third party with a better
right
7

Mere registration of sale in ones favor does not give him any right over the land:
4 if the vendor was not the owner of the land
4 if the vendor has already parted with his ownership before such sale in favor of third
party who had previously taken possession of the land, even though the prior sale was
unrecorded
A person having a "better right would be one who had previously acquired ownership thereof
through the modes of acquiring ownership under the Civil Code: tradition as a result of sale,
donation, succession and prescription
8


1) First in p4ssessi4n in g44d 1ait

If neither vendee registered the sale in his favor or registration was done in bad faith, the
vendee who was first in possession in good faith acquired ownership of the land
9


g) Oldest title

1. If neither of the vendees registered their deeds of sale nor acquired possession of the land
sold, the one who can present the oldest title provided there is good faith, has the better
right.




2. "Older title means any document showing acquisition of the land in good faith, like a deed
of sale or a receipt for the price;
3. Public document is not included as there is delivery thru a public instrument, unless the
contrary can be clearly inferred therefrom




'III. RISK OF LOSS OR DETERIORATION


A. eneral rule

Art. 1263. In an obligation to deliver a generic thing, the loss or destruction of anything of the
same kind does not extinguish the obligation. (n)

An obligation to deliver a generic thing is not extinguished by loss because genus never
perishes.

NOTE that the next 3 situations contemplate loss of specific things

1. When loss occurs before perfection

When loss occurred before perfection, it is borne by the seller. This is because ownership is still
with him
10
.

2. When loss occurs at the time of perfection

Art. 1493. If at the time the contract of sale is perfected, the thing which is the object of the
contract has been entirely lost, the contract shall be without any effect.

But if the thing should have been lost in part only, the vendee may choose between withdrawing
from the contract and demanding the remaining part, paying its price in proportion to the total
sum agreed upon. (1460a)

Art. 1494. Where the parties purport a sale of specific goods, and the goods without the
knowledge of the seller have perished in part or have wholly or in a material part so
deteriorated in quality as to be substantially changed in character, the buyer may at his option
treat the sale:

(1) As avoided; or

(2) As valid in all of the existing goods or in so much thereof as have not deteriorated, and as
binding the buyer to pay the agreed price for the goods in which the ownership will pass, if the
sale was divisible. (n)

a) If at the time the sale is perfected, the thing had been lost entirely, the contract shall
be ineffective. This is because there can be no contract without an object.
b) The loss must have occurred before the contract was entered into, without the
knowledge of both parties.
c) Options of buyer when there is partial loss and a loss which results in substantial
change in character

O Withdraw from the contract
O Buy the remainder at a proportionate price

3. When loss occurs after perfection but before delivery

Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is
delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is transferred from the vendor to the vendee. (n)

ROMAN V GRIMALT: The sale was not perfected as the buyer agreed to buy the vessel, provided that the title
was in proper form. As the vendor failed to perfect his title, the loss was borne by him
Art. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership
therein is transferred to the buyer, but when the ownership therein is transferred to the buyer
the goods are at the buyer's risk whether actual delivery has been made or not, except that:

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in
pursuance of the contract and the ownership in the goods has been retained by the seller
merely to secure performance by the buyer of his obligations under the contract, the goods are
at the buyer's risk from the time of such delivery;

(2) Where actual delivery has been delayed through the fault of either the buyer or seller the
goods are at the risk of the party in fault. (n)

Art. 1406. When a contract is enforceable under the $tatute of Frauds, and a public document
is necessary for its registration in the Registry of Deeds, the parties may avail themselves of the
right under Article 1357.

Art. 1189. When the conditions have been imposed with the intention of suspending the
efficacy of an obligation to give, the following rules shall be observed in case of the
improvement, loss or deterioration of the thing during the pendency of the condition:

(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;

(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is
understood that the thing is lost when it perishes, or goes out of commerce, or disappears in
such a way that its existence is unknown or it cannot be recovered;

(3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne
by the creditor;

(4) If it deteriorates through the fault of the debtor, the creditor may choose between the
rescission of the obligation and its fulfillment, with indemnity for damages in either case;

(5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit
of the creditor;

(6) If it is improved at the expense of the debtor, he shall have no other right than that granted
to the usufructuary. (1122)

Art. 1538. In case of loss, deterioration or improvement of the thing before its delivery, the
rules in Article 1189 shall be observed, the vendor being considered the debtor. (n)

When loss occurs after perfection but before delivery, the seller bears the risk of loss. The buyer
does not bear the risk of loss until the goods are delivered, actually or constructively. This is
because the rule is a combination of the commonlaw rule that the owner bears the risk of loss
(res perit domino), and the Roman law requiring delivery to transfer ownership.

B. When ownership is transferred

ENERAL RULE$:

1. The risk of loss shall be borne by the owner.
2. Ownership is transferred upon delivery.

EXCEPTION$:

1. Contrary stipulation
11

2. $ecurity title
12

3. Delay through the fault of the buyer or the seller
13
- at the risk of the party at fault








IX. DOCUMENTS OF TITLE


Document of title - a document used in the ordinary course of business in the sale or transfer of
goods, as proof of the possession or control of the goods, or authorizing or purporting to
authorize the possessor of the document to transfer or receive, either by endorsement or by
delivery, goods represented by such document. (Art. 1636)
14


The functions of documents of title are (1) Evidence of the possession or control of the goods
described therein (2) Medium of transferring title and possession over the goods described
therein without having to effect actual delivery thereof 'illanueva)

Art. 1511. A document of title which is not in such form that it can be negotiated by delivery
may be transferred by the holder by delivery to a purchaser or donee. A nonnegotiable
document cannot be negotiated and the endorsement of such a document gives the transferee
no additional right. (n)

1. Negotiable documents of title

Art. 1507. A document of title in which it is stated that the goods referred to therein will be
delivered to the bearer, or to the order of any person named in such document is a negotiable
document of title. (n)

Negotiable document of title - a document of title in which it is stated that the goods referred to
therein will be delivered to the bearer, or to the order of any person named in such document.

a) 4w neg4tiated

Art. 1508. A negotiable document of title may be negotiated by delivery:

(1) Where by the terms of the document the carrier, warehouseman or other bailee issuing the
same undertakes to deliver the goods to the bearer; or
(2) Where by the terms of the document the carrier, warehouseman or other bailee issuing the
same undertakes to deliver the goods to the order of a specified person, and such person or a
subsequent endorsee of the document has indorsed it in blank or to the bearer.

Where by the terms of a negotiable document of title the goods are deliverable to bearer or
where a negotiable document of title has been indorsed in blank or to bearer, any holder may
indorse the same to himself or to any specified person, and in such case the document shall
thereafter be negotiated only by the endorsement of such endorsee. (n)

Art. 1509. A negotiable document of title may be negotiated by the endorsement of the person
to whose order the goods are by the terms of the document deliverable. $uch endorsement may
be in blank, to bearer or to a specified person. If indorsed to a specified person, it may be again
negotiated by the endorsement of such person in blank, to bearer or to another specified
person. $ubsequent negotiations may be made in like manner. (n)

Art. 1510. If a document of title which contains an undertaking by a carrier, warehouseman or
other bailee to deliver the goods to bearer, to a specified person or order of a specified person
or which contains words of like import, has placed upon it the words "not negotiable," "non
negotiable" or the like, such document may nevertheless be negotiated by the holder and is a
negotiable document of title within the meaning of this Title. But nothing in this Title contained
shall be construed as limiting or defining the effect upon the obligations of the carrier,
warehouseman, or other bailee issuing a document of title or placing thereon the words "not
negotiable," "nonnegotiable," or the like. (n)


TERMS OF THE DOCUMENT HOW
NEGOTIATED
oods are deliverable to bearer By delivery of the

!IL. TRUST CO. V NATIONAL BANK: The purpose of documents of title is that the seller is allowed by fiction of
law to deal with the goods described therein as though he had physically delivered them to the buyer; and the buyer
may take the document of title as though he had actually taken possession and control over the goods described
therein
Endorsed in blank by the person
to whose order the goods were
deliverable
document to
another
oods are deliverable to the order
of a specified person
By indorsement of
such person

-) w4 may neg4tiate it

Art. 1512. A negotiable document of title may be negotiated:
(1) By the owner therefor; or

(2) By any person to whom the possession or custody of the document has been entrusted by
the owner, if, by the terms of the document the bailee issuing the document undertakes to
deliver the goods to the order of the person to whom the possession or custody of the document
has been entrusted, or if at the time of such entrusting the document is in such form that it may
be negotiated by delivery. (n)

.) rigts a.6uired -y neg4tiati4n

Art. 1513. A person to whom a negotiable document of title has been duly negotiated acquires
thereby:
(1) $uch title to the goods as the person negotiating the document to him had or had ability to
convey to a purchaser in good faith for value and also such title to the goods as the person to
whose order the goods were to be delivered by the terms of the document had or had ability to
convey to a purchaser in good faith for value; and

(2) The direct obligation of the bailee issuing the document to hold possession of the goods for
him according to the terms of the document as fully as if such bailee had contracted directly
with him. (n)

A person to whom a document has been negotiated acquires

1. rights of the vendor
2. rights of the original consignee

Thus, a buyer of a document of title may acquire a better title than his vendor, since he
acquires the rights of the original consignee.

d) Unaut4rized neg4tiati4n

Art. 1518. The validity of the negotiation of a negotiable document of title is not impaired by
the fact that the negotiation was a breach of duty on the part of the person making the
negotiation, or by the fact that the owner of the document was deprived of the possession of
the same by loss, theft, fraud, accident, mistake, duress, or conversion, if the person to whom
the document was negotiated or a person to whom the document was subsequently negotiated
paid value therefor in good faith without notice of the breach of duty, or loss, theft, fraud,
accident, mistake, duress or conversion. (n)

There is a conflict between Art. 1512 and Art. 1518 since under Art. 1512, only the owner of the
document or one to whom possession of the document has been entrusted may negotiate it.
However, under Art. 1518, the validity of the negotiation of a negotiable document of title is not
impaired by the fact that the negotiation was a breach of duty on the part of the person making
the negotiation, or by the fact that the owner of the document was deprived of the possession
of the same by loss, theft, fraud, accident, mistake, duress, or conversion. aviera)

e) implied warranties

Art. 1516. A person who for value negotiates or transfers a document of title by endorsement
or delivery, including one who assigns for value a claim secured by a document of title unless a
contrary intention appears, warrants:
(1) That the document is genuine;

(2) That he has a legal right to negotiate or transfer it;

(3) That he has knowledge of no fact which would impair the validity or worth of the document;
and

(4) That he has a right to transfer the title to the goods and that the goods are merchantable or
fit for a particular purpose, whenever such warranties would have been implied if the contract of
the parties had been to transfer without a document of title the goods represented thereby. (n)

Art. 1517. The endorsement of a document of title shall not make the endorser liable for any
failure on the part of the bailee who issued the document or previous endorsers thereof to fulfill
their respective obligations. (n)

A person who negotiates a document of title warrants

1. the genuineness and validity of the document;
2. his right to negotiate it; and,
3. all the warranties of a vendor of goods.

But he does not warrant that

1. the common carrier will fulfill its obligation to the deliver the goods; or
2. the previous indorsers will fulfill their obligation.

f) creditors right against the goods

Art. 1519. If goods are delivered to a bailee by the owner or by a person whose act in
conveying the title to them to a purchaser in good faith for value would bind the owner and a
negotiable document of title is issued for them they cannot thereafter, while in possession of
such bailee, be attached by garnishment or otherwise or be levied under an execution unless
the document be first surrendered to the bailee or its negotiation enjoined. The bailee shall in
no case be compelled to deliver up the actual possession of the goods until the document is
surrendered to him or impounded by the court. (n)

Art. 1520. A creditor whose debtor is the owner of a negotiable document of title shall be
entitled to such aid from courts of appropriate jurisdiction by injunction and otherwise in
attaching such document or in satisfying the claim by means thereof as is allowed at law or in
equity in regard to property which cannot readily be attached or levied upon by ordinary legal
process. (n)

oods in the hands of the carrier covered by a negotiable document cannot be attached or
levied upon, UNLE$$

1. the document be first surrendered to the carrier; or
2. impounded by the court; or
3. its negotiation be enjoined.

Rati4nale 14r te rule:
A negotiable document of title represents the goods; hence it is not allowable for a carrier to
deliver the goods without the surrender of the bill of lading to them, or for the law to allow
attachment on the goods.

2. Non-negotiable documents of title

a) 4w trans1erred

Art. 1514. A person to whom a document of title has been transferred, but not negotiated,
acquires thereby, as against the transferor, the title to the goods, subject to the terms of any
agreement with the transferor.

If the document is nonnegotiable, such person also acquires the right to notify the bailee who
issued the document of the transfer thereof, and thereby to acquire the direct obligation of such
bailee to hold possession of the goods for him according to the terms of the document.

Prior to the notification to such bailee by the transferor or transferee of a nonnegotiable
document of title, the title of the transferee to the goods and the right to acquire the obligation
of such bailee may be defeated by the levy of an attachment of execution upon the goods by a
creditor of the transferor, or by a notification to such bailee by the transferor or a subsequent
purchaser from the transfer of a subsequent sale of the goods by the transferor. (n)

-) rigts a.6uired -y trans1er 41 d4.ument 41 title

Art. 1515. Where a negotiable document of title is transferred for value by delivery, and the
endorsement of the transferor is essential for negotiation, the transferee acquires a right
against the transferor to compel him to endorse the document unless a contrary intention
appears. The negotiation shall take effect as of the time when the endorsement is actually
made. (n)

The law makes a distinction between "negotiation neg4tia-le d4.ument 41 title] and "transfer
n4n-neg4tia-le d4.ument 41 title].

Transfer - the assignment of rights of the consignee of a nonnegotiable document of
title to another
- where an order document of title was sold or assigned, without
indorsement

The transferee does not acquire a better title than his transferor unlie in a neg4tia-le
d4.ument 41 title, were te -uyer may a.6uire a -etter title].



XI. PERFORMANCE OF THE CONTRACT


A. DELIVERY OF THE THIN $OLD

1. Place, time, and manner of delivery

Art 1521 Whether it is for the buyer to take possession of the goods or of the seller to send
them to the buyer is a question depending in each case on the contract, express or implied,
between the parties. Apart from any such contract, express or implied, or usage of trade to the
contrary, the place of delivery is the seller's place of business if he has one, and if not his
residence; but in case of a contract of sale of specific goods, which to the knowledge of the
parties when the contract or the sale was made were in some other place, then that place is the
place of delivery.

Where by a contract of sale the seller is bound to send the goods to the buyer, but no time for
sending them is fixed, the seller is bound to send them within a reasonable time.

Where the goods at the time of sale are in the possession of a third person, the seller has not
fulfilled his obligation to deliver to the buyer unless and until such third person acknowledges to
the buyer that he holds the goods on the buyer's behalf.

Demand or tender of delivery may be treated as ineffectual unless made at a reasonable hour.
What is a reasonable hour is a question of fact.

Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable
state must be borne by the seller. (n)

Art 1169 xxx In reciprocal obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner with what is incumbent upon him. From
the moment one of the parties fulfills his obligation, delay by the other begins. (1100a)


Art 1524 The vendor shall not be bound to deliver the thing sold, if the vendee has not paid
him the price, or if no period for the payment has been fixed in the contract. (1466)

a) enerally, payment and delivery of the thing sold are concurrent acts, in consonance with the
rule in reciprocal obligations. Agreement of the parties determines whether it is for the buyer to
take possession of the goods or for the seller to send them to the buyer. Absent stipulation to
the contrary, the ff. rules shall be observed:

1. the buyer should take delivery of the goods from the sellers place of business if he has one,
and if none, his residence.

2. In case of sale of specific goods which, at the time of the sale, are known to the parties to
be in ANOTHER PLACE, the buyer should take delivery from such place.


3. DEMAND or TENDER of PAYMENT shall be made at a reas4na-le 4ur. Where by agreement,
the seller is bound to send the goods to the buyer, he is bound to send them within the
time agreed upon, or if no time was fixed, within a reasonable time. REA$ONABLE TIME for
delivery is determined by the circumstances attending the particular transaction


4. Where the goods at te time 41 te sale are in the possession of a THIRD PER$ON, there is
NO delivery UNLE$$ and UNTIL such their person ACKNOWLEDE$ to the buyer that the
holds the goods on the latters behalf.

5. EXPEN$E$ of placing the goods in a DELIVERABLE $TATE shall be borne by the $ELLER
unless otherwise stipulated.


6. If the sale involves a specific thing, the vendor is bound to deliver the thing sold and its
accessions and accessories in the condition in which they were upon the perfection of the
contract.

7. All of the fruits of the thing shall pertain to the vendee from the time of the perfection of
the contract but he does not acquire a real right over it until they are delivered to him.
8. The vendee has the obligation to pay the expenses incurred by the vendor in the
production, gathering and preservation of the fruits.


When time is of essence
15


Time is of the essence of the contract whenever the intention of the parties is clear that
performance of its terms shall be accomplished exactly at the stipulated day or implied from the
nature of the contract itself, the subject matter or the circumstances under which the contract is
made

When not bound to deliver

Art 1524 The vendor shall not be bound to deliver the thing sold, if the vendee has not paid
him the price, or if no period for the payment has been fixed in the contract. (1466)

Art 1536 The vendor is not bound to deliver the thing sold in case the vendee should lose the
right to make use of the terms as provided in Article 1198. (1467a)

Art 1198 The debtor shall lose every right to make use of the period:

(1) When after the obligation has been contracted, he becomes insolvent, unless he gives a
guaranty or security for the debt;

(2) When he does not furnish to the creditor the guaranties or securities which he has
promised;

(3) When by his own acts he has impaired said guaranties or securities after their
establishment, and when through a fortuitous event they disappear, unless he immediately
gives new ones equally satisfactory;

(4) When the debtor violates any undertaking, in consideration of which the creditor agreed to
the period;

(5) When the debtor attempts to abscond. (1129a)

2. Sale of Goods (Movables)

a. Delivery by installment

Art 1583 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 more installments, it depends in 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. (n)

a) ENERAL RULE: the buyer is not bound to accept delivery of goods by installments.
EXCEPTION: When otherwise stipulated

b) In case of a contract that calls for the delivery of the goods at stated intervals which are to
be paid for separately, the terms of the contract and the circumstances surrounding the case
would determine whether prompt payment or delivery is of the essence such that a delay or
breach would entitle the aggrieved to treat the entire contract as broken OR to regard each
breach as severable. $EVERABILITY depends on whether the breach is so material as to justify
the aggrieved party in refusing to proceed further with the entire contract or so immaterial that
the breach is severa-le, giving rise merely to a claim for damages

b. Delivery of wrong quantity

Art 1522 Where the seller delivers to the buyer a quantity of goods less than he contracted to
sell, the buyer may reject them, but if the buyer accepts or retains the goods so delivered,
knowing that the seller is not going to perform the contract in full, he must pay for them at the
contract rate. If, however, the buyer has used or disposed of the goods delivered before he
knows that the seller is not going to perform his contract in full, the buyer shall not be liable for
more than the fair value to him of the goods so received.

Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the
buyer may accept the goods included in the contract and reject the rest. If the buyer accepts
the whole of the goods so delivered he must pay for them at the contract rate.

Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a
different description not included in the contract, the buyer may accept the goods which are in
accordance with the contract and reject the rest.

In the preceding two paragraphs, if the subject matter is indivisible, the buyer may reject the
whole of the goods.

The provisions of this article are subject to any usage of trade, special agreement, or course of
dealing between the parties. (n)

a) ENERAL RULE: The buyer is not bound to accept delivery of a quantity of goods more or
less than that agreed upon or to accept goods which are of a description different from that
agreed upon. EXCEPTION: There is usage of trade, special stipulation or course of dealing to the
contrary.

REMEDIE$:
1. Where the seller delivers a quantity less than that agreed upon, the buyer may reject
them. If the buyer accepts or retains that goods delivered, n4wing the inability of the
seller to deliver the rest, the buyer is bound to pay for them at the contract rate. If the
buyer has used 4r disp4sed of the goods before knowing the inability of the seller to
deliver the rest, the buyer shall pay not more than the fair value of the goods. (NOTE:
"fair value means the price of the goods in the open market.)
2. If the quantity delivered is more than that agreed upon, the buyer may reject the
excess, unless the subject matter is indivisi-le, in which case, the buyer may reject the
whole.
3. Where the seller delivers the goods mixed with goods of a different description not
included in the contract, the buyer may accept the goods which are in accordance with
the contract, and reject the rest, unless the subject matter is indivisible, in which case,
the buyer may reject the whole.

b) Delivery by the seller of only a part of an entire contract would itself be an indication that he
might not intend to fully perform. PRE$UMPTION: Buyer knows that the seller might intend to
not fully perform, if said purchaser accepts a partial delivery on an entire contract, absent any
statement to the contrary. (The law applies peculiarly to installment and divisible contracts.)

3. Sale of Immovables

Art 1539 The obligation to deliver the thing sold includes that of placing in the control of the
vendee all that is mentioned in the contract, in conformity with the following rules:

If the sale of real estate should be made with a statement of its area, at the rate of a certain
price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if
the latter should demand it, all that may have been stated in the contract; but, should this be
not possible, the vendee may choose between a proportional reduction of the price and the
rescission of the contract, provided that, in the latter case, the lack in the area be not less than
onetenth of that stated.

The same shall be done, even when the area is the same, if any part of the immovable is not of
the quality specified in the contract.

The rescission, in this case, shall only take place at the will of the vendee, when the inferior
value of the thing sold exceeds onetenth of the price agreed upon.

Nevertheless, if the vendee would not have bought the immovable had he known of its smaller
area of inferior quality, he may rescind the sale. (1469a)

Art 1540 If, in the case of the preceding article, there is a greater area or number in the
immovable than that stated in the contract, the vendee may accept the area included in the
contract and reject the rest. If he accepts the whole area, he must pay for the same at the
contract rate. (1470a)

Art 1541 The provisions of the two preceding articles shall apply to judicial sales. (n)

Art 1542 In the sale of real estate, made for a lump sum and not at the rate of a certain sum
for a unit of measure or number, there shall be no increase or decrease of the price, although
there be a greater or less area or number than that stated in the contract.

The same rule shall be applied when two or more immovables as sold for a single price; but if,
besides mentioning the boundaries, which is indispensable in every conveyance of real estate,
its area or number should be designated in the contract, the vendor shall be bound to deliver all
that is included within said boundaries, even when it exceeds the area or number specified in
the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in
proportion to what is lacking in the area or number, unless the contract is rescinded because
the vendee does not accede to the failure to deliver what has been stipulated. (1471)

Art 1543 The actions arising from Articles 1539 and 1542 shall prescribe in six months,
counted from the day of delivery. (1472a)


a. Where price is at certain rate per unit of measure

The seller is bound to deliver the entire land sold in accordance with the terms of the contract.

ENERAL RULE: The vendee has to option to demand a proportionate reduction of the
price or rescission of the contract: if price is fixed at a certain rate per unit of measure and
the area is delivered is less than that stated in the contract, or even if the area is correct but
part of the land is not of the quality stated in the contract

EXCEPTION: Where the entire land is not of the quality stated in the contract, as in such a case,
the consent must have been obtained by mistake or fraud (contract may then be voidable.)

Art. 1539. see above.


b. $ale for a lump sum
16


Art. 1542. see above.

a) If the sale of real property is for a lump sum, there shall be no increase or decrease in the
price, whether the actual area delivered turned out to be greater or less than that stated in the
contract.

b) If besides mentioning the boundaries, the area should also be stated in the contract, the
vendor shall be bound to deliver all that is included within said boundaries and there shall be no
increase or decrease in the price whether the area so delivered be greater or less than that
stated in the contract.
17


c) If the vendor fails to deliver all the land included within said boundaries, as where part of the
land belongs to a third person, the vendee shall have the option to demand a reduction in
the price in proportion to the deficiency in the area stated in the contract or a
rescission of the contract (Actions prescribe in six months from date of delivery.)


4. Inspections and Acceptance

a. Right of inspection

Art 1584 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 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. (n)

The buyer is entitled to examine the goods to decide whether he will become the owner, and
until the examination is completed or waived, he is under NO obligation to accept them. He may
however waive this right by simply refusing to inspect the goods, taking them as they are or by
any other similar act.

b. Manifestation of acceptance

Art 1585 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. (n)

a) The buyer is deemed to have accepted the goods when:
1. he intimates to the seller that the has accepted them
2. 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
3. after the lapse of a reasonable time, he retains the goods without intimating to the seller
that he has rejected them.

Exercise of acts of ownership over the goods is a manifestation of acceptance, such as making
use of them as owner, making alterations in the goods or subjecting it to the process of
manufacture. EXCEPTION: Buyers right to make a test of goods, but only if necessary, to
enable him to determine whether to accept or reject the goods.

c. Breach of warranty

Art 1586 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. (n)

a) The purpose of the notice of breach of warranty is to PROTECT the seller against belated
damage claims which would prevent the seller from making an adequate and proper
investigation of his alleged liability.

b) Acceptance of delivery means an A$$ENT to become OWNER of the goods on the part of the
buyer, but n4t an assent tat te g44ds 1ul1ill te des.ripti4n and terms 41 te .4ntra.t

d. Refusal to accept

Art 1587 Unless otherwise agreed, where goods are delivered to the buyer, and he refuses to
accept them, having the right so 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. (n)

Art 1588 If there is no stipulation as specified in the first 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. (n)

Art 1589 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) $hould it have been so stipulated;

(2) $hould the thing sold and delivered produce fruits or income;

(3) $hould he be in default, from the time of judicial or extrajudicial demand for the payment of
the price. (1501a)


a) Unless otherwise agreed, when the goods are delivered to the buyer and e as a rigt t4
re1use t4 a..ept them, he need not return them. It is sufficient that the buyer notifies the
seller that he refuses to accept the goods, and thereafter, the former becomes the depository of
the rejected goods.
b) However, where title already passed to the buyer and there was a breach of warranty, the
buyer may RE$CIND the contract by returning or offering to return the goods to the seller and
recover the price which had been paid.
,
a. Refusal to accept

Art 1582 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 payment must be made at the time
and place of the delivery of the thing sold. (1500a)


Art 1504 Unless otherwise agreed, the goods remain at the seller's risk until the ownership
therein is transferred to the buyer, but when the ownership therein is transferred to the buyer
the goods are at the buyer's risk whether actual delivery has been made or not, except that:

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in
pursuance of the contract and the ownership in the goods has been retained by the seller
merely to secure performance by the buyer of his obligations under the contract, the goods are
at the buyer's risk from the time of such delivery;

(2) Where actual delivery has been delayed through the fault of either the buyer or seller the
goods are at the risk of the party in fault. (n)



1. $uspension of Payment

Art 1590 $hould 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. (1502a)

a) "disturbance or threat of disturbance - must come through a vindicatory action or
foreclosure of mortgage, and not through a mere threat or claim of a third person.

b) If the third person claims a servitude on the thing sold, the remedy of the buyer is to
demand rescission of the contract or payment of the proper indemnity.

c) In order that the buyer may have a right to suspend payment, it is absolutely necessary that
the cause of disturbance or danger -e -ased 4n a 1a.t arising -e14re te sale 4r i1 it ar4se a1ter
te sale, te .ause is imputa-le t4 te vend4r 4r is su..ess4r in interest