1. What are the obligations of the vendee?

Is the vendee liable for

interest between the period of the delivery and the payment of the
price? If so give instances where it can be done. ( Art 1582 and Art.
1589

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 payments must be made at
the time and place of the delivery of the thing sold.

COMMENT:

Principal Obligations of the Buyers

The buyers must:

(a) accept delivery;

(b) pay the price.

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) Should it have been so stipulated;

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

(3) Should he be in default, from the time of judicial or extrajudicial demand

for the payment of the price.

The Three Cases Contemplated

(a) In No. (1), no demand is needed.

(b) In No. (2), the reason for the law is that the fruits or income is sufficient
to warrant the payment of interest.

(c) In No. (3), default is mora, called in delay under the provisions of the
Civil Code.
Rule for Monetary Obligations

In a monetary obligation (like the obligation to pay the purchase price) in

the absence of stipulation, legal interest takes the place of damages. This
is so even if the damages are actually more or less. The possibility of gain
because of an investment should be discounted; instead of a gain, there
might be a loss. Therefore, the law has compromised on legal interest.
(Quiros v. Tan Guinlay, 6 Phil. 675).

2. Who is an unpaid seller? Give 3 rights of an unpaid seller.

Art. 1525. The seller of goods is deemed to be an unpaid seller within the
meaning of this Title:

(1) When the whole of the price has not been paid or tendered;

(2) When a bill of exchange or other negotiable instrument has been

received as conditional payment, and the condition on which it was
received has been broken by reason of the dishonor of the instrument, the
insolvency of the buyer, or otherwise.

In Articles 1525 to 1535 the term seller includes an agent of the

seller to whom the bill of lading has been indorsed, or a consignor or agent
who has himself paid, or is directly responsible for the price, or any other
person who is in the position of a seller.

COMMENT:

When Seller is Deemed an Unpaid Seller

(a) If only part of the price has been paid or tendered, the seller is still an
unpaid seller. Notice that the law uses the whole of the price.

(b) Mere delivery of a negotiable instrument does not extinguish the

obligation of the buyer to pay because it may be dishonored. See also U.S.
v. Bedoua, 14 Phil. 398). Therefore, the seller is still an unpaid seller, if say,
a dishonor indeed is made.
Rights of an Unpaid Seller

(a) possessory lien (in the nature of a pledge);

(b) right of stoppage in transitu (available if seller has parted with the
possession);

(c) right of resale;

(d) right to rescind the sale.

3. Is delivery and acceptance the same? In what instances is the

buyer considered to have accepted the goods under Art. 1585. Does
the acceptance of the goods discharge the seller from liability (ex.
Warranty of quality) Ans.: Art 1585 and 1586 provisions

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.

COMMENT:

When There is Acceptance of the Goods

The Article gives three ways of accepting the goods:

(a) express acceptance

(b) when buyer does an act which only an owner can do

(c) failure to return after reasonable lapse of time

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.

COMMENT:

Even if Buyer Accepts, Seller Can Still Be Liable

(a) Reason for the last sentence. To prevent afterthoughts or belated

claims.

(b) The buyer is allowed to set up the breach of the warranty or promise as
a set-off or counterclaim for the price.

4. Define warranty. Give the two kinds/types of warranty and cite

examples of each.

Art. 1546. Any affirmation of fact or any promise by the seller relating to the
thing is an express warranty if the naturel tendency of such affirmation or
promise is to induce the buyer to purchase the same, and if the buyer
purchases the thing relying thereon. No affirmation of the value of the thing,
nor any statement purporting to be a statement of the sellers opinion only,
shall be construed as a warranty, unless the seller made such affirmation
or statement as an expert and it was relied upon by the buyer.

COMMENT.

When is There a Warranty?

A good test:

(a) If buyer is ignorant, there is a warranty.

(b) If the buyer is expected to have an opinion AND the seller has no
special opinion, there is no warranty.

[NOTE: Express warranty defined It is any affirmation of fact, or any

promise by the seller relating to the thing if the natural tendency of such
affirmation or promise is to induce the buyer to purchase the same, and if
the buyer purchases the thing relying thereon.

(Art. 1546, 1st sentence). It includes all warranties derived from the
language of the contract, so long as the language is express. Thus, the
warranty may take the form of an affirmation, a promise or a
representation.

[NOTE: If a purchaser has ample opportunity to investigate the land before

purchase, and the seller did not prevent such an investigation, and the
purchaser really investigates, then the purchaser is not allowed afterwards
to say that the vendor made false representations to him.

Effect of Dealers Talk

Dealers talk like excellent, cannot be considered as an express warranty.

A little exaggeration is apparently allowed by the law as a concession to
human nature. This is in accordance with the civil law maxim simplex
commendation non-obligat or the principle caveat emptor (let the buyer
beware).

Rule When There Is No Deliberate Lie

Where it does not appear that the seller deliberately violated the truth when
he stated his belief that there were a certain number of coconut trees on
the land, no action will lie against him.

Art. 1547. In a contract of sale, unless a contrary intention appears, there

is:

(1) An implied warranty on the part of the seller that he has a right to sell
the thing at the time when the ownership is to pass, and that the buyer shall
from that time have and enjoy the legal and peaceful possession of the
thing;

(2) An implied warranty that the thing shall be free from any hidden faults or
defects, or any charge or encumbrance not declared or known to the buyer.
 This article shall not, however, be held to render liable a sheriff,
auctioneer, mortgagee, pledgee or other person professing to sell by virtue
of authority in fact or law, for the sale of a thing in which a third person has
a legal or equitable interest.

COMMENT:

Implied Warranties Against Eviction and Against Hidden Defect

(a) This Article is fundamentally important.

(b) A buyer at a tax sale is supposed to take all the chances because there
is no warranty on the part of the State and a sheriff does not guarantee title
to the property he sells.

(c) In general, the actions based on the implied warranties prescribe in 10

years since these obligations are imposed by law.

5. Options of a vendee when quantity of goods delivered are: a. Less;

b. Larger; c. Mixed goods of different description.

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.

COMMENT:

Rules when the Quantity Is LESS than that Agreed Upon

(a) Buyer may REJECT;

(b) Or buyer may ACCEPT what have been delivered, at the contract rate.

Example: B buys from S 100 cans of tomato sauce. S delivers only 80

cans. Can B reject the goods?

ANS.: Yes. But if B accepts the goods knowing that S cannot deliver the
remaining 20, he must pay for the 80 cans at the contract rate, namely, the
price fixed for each multiplied by 80. He cannot return the 80 because he
would be in estoppel.

Rules When the Quantity Is MORE than the Agreement

(a) Buyer may reject ALL. He must not be burdened with the duty of
segregation, if he does not so desire.

(b) Buyer may accept the goods agreed upon and reject the rest.

(c) If he gets all, he must pay for them at the contract rate.

Rule When Quality is Different

Where the seller delivers to the buyer the goods agreed upon MIXED with
goods of a different description, the buyer may:

(a) accept the goods which are in accordance with the contract, and

(b) reject the rest.

(NOTE: If the sale is indivisible, the buyer may reject the whole of the
goods.)

6. What is warranty against eviction? What is the liability of the

vendor in case of total eviction and in case of partial eviction.

Art. 1548. Eviction shall take place whenever by a final judgment based on
a right prior to the sale or an act imputable to the vendor, the vendee is
deprived of the whole or of a part of the thing purchased.

The vendor shall answer for the eviction even though nothing has been
said in the contract on the subject.

The contracting parties, however, may increase, diminish, or suppress this

legal obligation of the vendor.

COMMENT:

Warranty in Case of Eviction

(a) The warranty in case of eviction is a natural element in the contract of

sale; hence, the vendor answers for eviction even if the contract be silent
on this point.

(b) The buyer and the seller are, of course, allowed to add to, subtract
from, or suppress this legal obligation on the part of the seller. Thus, it has
been held that the vendors liability for warranty against eviction in a
contract of sale is generally waivable and may be renounced by the
vendee.

(c) Although it is true that the government is not liable for the eviction of the
purchaser at a tax sale, still the owner of the property sold under execution
at the instance of the judgment creditor is liable for eviction, unless
otherwise decreed in the judgment.

(d) The buyer is allowed to enforce the warranty against the seller or
against the sellers of his own immediate seller.
(e) Even if the buyer does not appeal from a judgment ordering his eviction
and the judgment subsequently becomes final, the seller is still liable for the
eviction.

(f) Even if it was the buyer who instituted the suit against the third person,
still the seller would be liable, if the buyer is defeated. What is important is
that the buyer was defeated.

What Seller Must Give in Case of Eviction

Keyword VICED

V value

I income (or fruits)

C costs

E expenses

D damages (and interests and ornamental expenses) if seller was in bad

faith

7. Difference bet hidden defects and patent. Give examples for each.
Requisites to recover because of hidden defects.

hidden defects are defects that are not known and could not have been
known); patent defects are those which may be visible

Requisites to Recover Because of Hidden Defects

(a) The defect must be hidden (not known and could not have been
known);

(b) The defect must exist at the time the sale was made;

(c) The defect must ordinarily have been excluded from the contract;

(d) The defect must be important (renders thing UNFIT or considerably

decreases FITNESS);
(e) The action must be instituted within the statute of limitations.

Generally No Delivery By Installments

Reason: performance must generally be complete.

Exception to Rule: express provisions.

Rule in Case of Installment Deliveries

The second paragraph states the rules for delivery by installments, and
distinguishes whether the breach is severable or not.

When Buyer May Suspend the Payment of the Price

The buyer may SUSPEND the payment of the price if:

(a) There is a well-grounded fear (fundado temor).

(b) The fear is because of:

1) a vindicatory action or action to recover, or

2) a foreclosure of mortgage.
 Contract of Sale
the non-payment of price is a
resolutory condition
title over the property generally passes
to the buyer upon delivery
after delivery has been made, the seller
has lost ownership and cannot recover
it unless the contract is resolved or
rescinded
Contract of Sale
the buyer pays the price
the buyer after delivery becomes the
owner
the seller warrants
Contract to Sell
the payment in full of the price is a
positive suspensive condition.
ownership is retained by the seller,
regardless of delivery and is not to pass
until full payment of the price.
since the seller retains ownership,
despite delivery, he is enforcing and not
rescinding the contract if he seeks to
oust the buyer for failure to pay.
Agency to Sell
delivers the price which in turn he got
from his buyer.
the agent who is supposed to sell does
not become the owner, even if the
property has already been delivered to
him.
the agent who sells assumes
no personal liability as long as he acts
within his authority
and in the name of the principal.