Article 1521 Duty of seller to put goods in deliverable condition point where they are F.O.B.

in deliverable condition point where they are F.O.B. In general, the point
Place of delivery -the seller bears the expenses to place thing in a F.O.B. either the point of shipment or the point of
• (1) Where there is an agreement, express or deliverable state that is, in such a state the buyer would, destination, determines when the ownership passes.
implied, the place of delivery is that agreed upon; under the contract, be bound to take delivery of them.  C.I.F.- “cost insurance and freight” signify that the
• (2) Where there is no agreement, the place of Article 1522 price fixed covers not only the cost of goods, but the
delivery is that determined by usage of trade; • Delivery of goods less than quantity expenses of freight and insurance to be paid by the
• (3) Where there is no agreement and there is also 1. Reject seller up to the point especially named.
no prevalent usage, the place of delivery is the 2. Accepts - he must pay for their (a) price  F.A.S.- “free alongside vessel” (named port of
seller’s place of business; at the contract rate if he knew that no more were to be shipment). Under this term, the seller pays all
• (4) In any other case, the place of delivery is the delivered or (b) the fair value to him of the goods, if he did charges and bear the risk until the goods are placed
seller’s residence; and not know that the seller is going to be guilty of a breach of alongside overseas vessel and within reach of its
• (5) In case of specific goods, which to the contract. loading tackl
knowledge of the parties at the time the contract was • Delivery of goods more than quantity contracted.  Ex factory, Ex Warehouse, etc. (named point of
made were in some other place, that place is the May accept the quantity contracted for and reject the origin) – the price quoted applies only at the point of
place of delivery, in the. Absence of any excess. However, if he accepts all the goods delivered, he origin, and the seller agrees to place the goods at the
agreement or usage of trade to the contrary. makes himself liable for the price of all of them. disposal of the buyer at the agreed place on the date
PRESUMPTION : it can be seen that the presumptions is • Delivery of goods mixed with others not included within the period fixed.
that the buyer must take goods from the seller’s place of in the contract. May accept those which are in  Ex dock - (named port of importation) – the seller
business or residence rather than the seller to deliver them to accordance with the contract and reject the rest. The quotes a price including the cost of goods on the
the buyer buyer, of course, may accept them all if he so dock at the named port of importation
Time of delivery of goods sold desires. Article 1524
• If no time is fixed by the contract, then the seller is • Effect of indivisibility of subject matter. May  General Rule. Vendor shall not be bound to deliver
bound to send the goods to the buyer within a reject the whole of the goods. the thing sold if the vendee has not paid the price.
reasonable time. Article 1523  Exceptions: the thing must be delivered though the
• If the contract provides a fixed time for Delivery to the carrier in behalf of the buyer price if a time for such payment has been fixed in
performance, the question is whether time is of the  General Rule: constitutes delivery to the buyer, the contract.
essence, and if so, whether correct performance was whether the carrier is named by the buyer or not. Delivery simultaneous with payment of price
offered within that time.  Exceptions: 1. Seller reserves the right of possession General rule: the obligation to deliver the thing of a
• Where the contract does not specify the time for or ownership; 2. Or when contrary intent appears. contract arises from the moment its perfection and from
delivery so that delivery is to be made within a Seller’s duty after delivery to carrier that time the obligation may enforced.
reasonable time, time is not of the essence.  To enter contract with the carrier on behalf of the Exception: if the vendee does not pay the price, the
Delivery of goods in possession or a 3rd person buyer as may be reasonable under the consideration for the obligation of the vendor is absent
-to affect third person, the person holding the goods circumstances. – if omits, buyer may decline to and if the consideration is absent, the obligation likewise
must acknowledge being the bailee for the buyer. treat the delivery to the carrier as a delivery to does not exist or at least is suspended
Hour of delivery of goods sold himself When delivery must be made before payment of the
The demand or tender of delivery to be effectual,  Give notice to buyer regarding necessity to insure price
must be made at a reasonable hour goods. It contains an exception: the rule is that the thing shall
What is a reasonable hour? Where all that is required of the Definition of trade terms not be delivered unless the price is paid; and the
other party is to receive a payment or performance  C.O.D. – “collect on delivery” the carrier acts for exception is that the thing must be delivered though the
which can readily be accepted the seller in collecting the purchase price. The buyer price be not first paid, if a time for such payment has
In case goods which are bulky or needed special care – an must pay for the goods before he can obtain been fixed in the contract
hour might be reasonable which would not be so in an possession. They are solely intended as security for Article 1525
ordinary payment of a small amount of money. the purchase price Meaning of unpaid seller
 F.O.B.- “free on board” means that the goods are to -is one who has not been paid or tendered the whole price or
be delivered free of expenses to the buyer to the who has received a bill of exchange or other negotiable
instrument as conditional payment and the condition on parted where it is evident that he has not been or will not be 1. Take actual possession of the goods;
which it was received has been broken by reason of the paid the price for them when it is due. 2. Give notice of his claim to the carrier or other
dishonor of the instrument. bailee who is in possession of the goods (NCC, Art.
Where whole of the price has not been paid 1532).
 Tender of payment of buyer Special (NCC, Art. 1526)
-bring an action subsequently for the price, which he 1. Possessory Lien – right to retain (NCC, Art. Effect of the exercise of this right:
has refused, yet tender destroys the seller’s lien. Accordingly, 1527) – seller not bound to deliver the object of the 1. The goods are no longer in transit;
so far as concerns his rights to the goods, he is not unpaid contract of sale if buyer has not paid him the price. 2. Contract of carriage end. The carrier now
seller after the tender of price. This remedy presupposes that the sale is on credit. becomes a mere bailee, and will be liable as such;
 Payment of part of price It is exercisable only in following circumstances: and
-the seller remains an unpaid seller even if title has A. Goods sold without stipulation as to credit 3. Seller would have the same rights to the goods as
passed to the buyer. B. Goods sold on credit but term of credit has if he had never had never parted possession with it.
expired 3. Right to Resell the Goods (NCC, Art. 1533)
 Payment by negotiable instrument C. Buyer becomes insolvent Exercised when:
- “the delivery of promissory notes payable to order, NOTE: When part of goods delivered, may still A. Goods are perishable,
or bills of exchange or other mercantile documents exercise right on goods undelivered. B. Stipulated the right of resale in case of default, or
shall produce the effect of payment only when they Loss of Lien: C. Buyer in default for unreasonable time
have been cashed or when through the fault of the ◦ When he delivers the goods to the carrier Effect of exercising the special right of resale
creditor they have been impaired” or other bailee for purpose of - The unpaid seller shall not be liable to the
Q: When is a seller considered unpaid despite the transmission to the buyer which reserving original buyer upon the sale or for any profit
title of the goods passing to the buyer? the ownership in the goods or the right to made by such resale, but may recover from the
A: Whenever the seller was only paid partially, the possession thereof; buyer damages for any loss occasioned by the
he remains an unpaid seller ◦ When the buyer or his agent lawfully breach of the sale
Article 1526 obtains possession of the goods; or NOTE: The seller cannot, however, directly or indirectly buy
Remedies of an Unpaid Seller Ordinary ◦ By waiver thereof the goods.
 Action for Price (NCC, Art. 1595) 2. Stoppage in Transitu (NCC, Art. 1530) The seller Exceptions: Cases in which it is allowed:
- Exercised when: may resume possession of the goods at any time 1. Where the goods are of perishable in nature;
while they are in transit, and he will then become 2. Where the seller has expressly reserve the
 Ownership has passed to buyer;
entitled to the same rights in regard to the goods as right of resale in case the buyer should make
 Price is payable on a day certain;
he would have had if he had never parted with the default; or
 Goods cannot readily be resold for
possession 3. Where the buyer has been in default in
reasonable price and Art. 1596 of NCC
Requisites: (I-SCENT-U) payment of the price for unreasonable time
is inapplicable.
A. Insolvent buyer Notice to the defaulting buyer
 Action for Damages – In case of wrongful neglect GR: Notice to the defaulting buyer NOT required in the
B. The sale of goods must be on Credit
or refusal by the buyer to accept or pay for the thing resale of goods
C. Seller must Surrender the negotiable document
sold. XPN: Where the right to resell is not based on the perishable
of title, if any
Remedies of unpaid seller nature of the goods or upon an express provision of the sale.
D. Seller must bear the Expenses of delivery of the
-if the unpaid seller still retains the ownership in the goods, NOTE: Notice of time and place of resale is not essential to
goods after the exercise of the right.
he cannot be said to have a lien (on his goods) but he does the validity of such resale (NCC, Art. 1533).
E. Seller must either actually take possession of the
have, in addition to his other remedies, right of withholding 4. Right to Rescind (NCC, Art. 1534)
goods sold or give Notice of his claim to the carrier
delivery. Requisites:
or other person in possession
Basic rights of unpaid seller A. Goods have not been delivered to the buyer;
F. Goods must be in Transit
-is allowed a lien and kindred remedies in inherent injustice B. Buyer has repudiated the contract of sale; or
G. Unpaid seller
of depriving him of goods with which he has not finally C. Has manifested his inability to perform his
Enforcement of right to stoppage in transitu
The seller may: obligations thereunder; or
 D. Has committed a breach thereof, which must be buyer but it cannot be said that the seller has still any lien (3) If the payment of the purchase price is secured by a
substantial. upon him. mortgage on the house of B, but the house was partially
NOTE: Here, the seller may thereafter totally rescind the 2. Possession by buyer or his agent burned because of B’s fault; or was totally destroyed without
contract of sale by giving notice of his election to do so to the -it is plain that when the ownership is B’s fault, unless B gives a new security, equally satisfactory;
buyer. transferred the seller has no lien simply because he has no or
Effect of exercising the special right to rescind possession necessary for a lien. (4) Where in consideration of the sale on credit, B obliged
The unpaid seller shall not be liable to the buyer himself, say, to repair the piano of S, and B failed to comply
upon the sale, but may recover from the buyer damages for with such undertaking; or
any loss occasioned by the breach of the sale (NCC, Art. 3. Waiver of lien (5) Where B shows an intent not to pay the price after the car
1534). -the seller may lose his lien by express agreement to is delivered to him
surrender it. The seller could no longer assert a lien. Art. 1537
Cases in which it is allowed: Article 1530 The vendor is bound to deliver the thing sold and its
1. Where the seller has expressly reserved the right Right of seller to stop goods in transitu accessions and accessories in the condition in which they
to rescind in case the buyer should make default; or -he may resume possession of the goods while they were upon the perfection of the contract. All the fruits shall
2. Where the buyer has been in default in the are in transit, when the buyer is or becomes insolvent. The pertain to the vendee from the day on which the contract was
payment of the price for unreasonable length of time right is exercised either by obtaining actual possession of the perfected.
Article 1527 goods or by giving notice of his claim to the carrier or other Accessions are the fruits of a thing; or additions to, or
When unpaid seller’s possessory lien may be exercised bailee in possession. improvements upon, a thing such as the young of animals,
 Sales without stipulation as to credit Article 1536 house or trees on a land, etc.
-the seller binds himself to give the goods over to the buyer Right of vendor to withhold delivery in sale on credit. Accessories are anything attached to a principal thing for its
without receiving at that time payment for them. Where But even if the vendee was given the benefit of a period, the completion, ornament, or better use such as picture frame,
there is “stipulation as to credit’ a period for payment of price vendor may not be compelled to make delivery, in case the key of a house, etc.
has been fixed in the contract. The seller has always a lien vendee should lose the right to make use of the term as Right of vendee to the fruits.
upon the goods which he sells until the payment or tender of provided in Article 1198 of the Civil Code and such vendee I. When vendee entitled. — The vendee has a right to
the entire price has not yet paid the price. Said article states: “The debtor the fruits of the thing sold from the time the obligation to
 Expiration of term of credit [vendee] shall lose every right to make use of the period: deliver it arises. (Art. 1164.) The obligation to deliver arises
-but if he fails to exercise his right until the (1) When after the obligation has been contracted, he upon the perfection of the contract of sale.
term of credit has expired and the price becomes due, he becomes insolvent, unless he gives a guaranty or security for II. When vendee not entitled. — In the following cases,
loses the right which he theretofore had. the debt [price]; the vendee is not entitled to the fruits:
 Insolvency of the buyer (2) When he does not furnish to the creditor [vendor] the (a) When the rule provided in Article 1537 (par. 2.) is
-this doctrine is applies only an application guaranties or securities which he has promised; modified by agreement of the parties, their agreement shall,
of a general principle in the law of contracts that when one (3) When by his own acts he has impaired said guaran-ties or of course, govern;
party to a bilateral contract is incapacitated from performing securities after their establishment, and when through a (b) If the vendee rescinds the contract of sale instead of
his part of the agreement, the other party also is excused from fortuitous event they disappear, unless he immediately gives exacting the fulfillment thereof, he is entitled only to
performing his part new ones equally satisfactory; damages like interest, attorney’s fees and costs but he may
Article 1528 (4) When the debtor [vendee] violates any undertaking, in not also claim the fruits of the thing and
Lien not generally lost by part delivery consideration of which the creditor agreed to the period; (c) In a contract of promise to sell, the vendee is not entitled
-if the part delivery of the goods is intended as symbolical (5) When the debtor [vendee] attempts to abscond.” to the fruits. The only right of the contracting parties is to
delivery of the whole, and therefore, a waiver of any right of EXAMPLE: reciprocally demand the fulfillment of the contract. Prior to
retention as to remainder, the lien is lost. S sold to B a car on credit. S has a right to withhold delivery the sale and conveyance of the subject matter of the contract,
Article 1529 in any of the following situations: the promisee or would-be vendee acquires no right to the
When unpaid seller losses possessory lien (1) B becomes insolvent, unless B gives sufficient guaranty fruits thereof.
1. Delivery to agent or bailee of BUYER or security; or
-it is true that the seller may stop the goods while on (2) B promised to mortgage his house to secure the purchase
their way to the buyer after delivery to a bailee for the price and he failed to furnish said security as promised; or