OUTLINE/ LECTURE ON ISSUES ON DELIVERY IN
SALES CONTRACTS
By: Atty. Eduardo T.
Reyes, III
(Prepared for Law
4-C,
University of San Agustin Law School,
Civil Law Review II, SY 2016-2017)
I. Foundational
Considerations in Sales Transactions
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DIMENSION 1
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DIMENSION 2
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DIMENSION 3
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Negotiation
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Perfection; Meeting
of the Minds
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Consummation
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Contract to Sell
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Conditional Sale/
Absolute Sale
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Delivery
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Positive Suspensive
Condition
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Rescission (Arts.
1191 & 1592, New Civil Code)
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Effect of Maceda
Law
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-Contract
to Sell, Conditional Sale & Absolute Sale; Distinguished
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Rescission (Check discussion on Art 1191 on need for Judicial Rescission and
exception thereto in the lecture hand-out in Obligations & Contracts).
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Effect of Maceda Law
Article
1478. The parties may stipulate that ownership in the thing shall not pass to
the purchaser until he has fully paid the price.
Article
1479. A promise to buy and sell a determinate thing for a proce certain is
reciprocally demandable.
An
accepted unilateral promise to buy or to sell a determinate thing for a price
certain is binding upon the promissory if the promise is supported by a
consideration distinct from the price.
In Ong v. Court of Appeals[1],
these different kinds of sales transactions were distinguished in this
fashion, viz:
“In a contract of sale, the title to the
property passes to the vendee upon the delivery of the thing sold; while in a
contract to sell, ownership is, by agreement, reserved in the vendor and is not
to pass to the vendee until full payment of the purchase price. In a contract
to sell, the payment of the purchase price is a positive suspensive condition,
the failure of which is not a breach, casual or serious, but a situation that
prevents the obligation of the vendor to
convey title from acquiring an obligatory force. The non-fulfillment of the
condition of full payment rendered the contract to sell ineffective and without
force and effect. It must be stressed that the breach contemplated in Article
1191 of the New Civil Code is the obligor’s failure to comply with an
obligation already extant, not a failure of a condition to render binding that
obligation. Failure to pay, in this instance, is not even a breach but merely
an event which prevents the vendor’s obligation to convey title from acquiring
binding force.”
“A contract
to sell may not even be considered as a conditional contract of sale where the
seller likewise reserves title to the property subject of the sale until the
fulfillment of a suspensive consition, because in a conditional contract of
sale, the first element of consent is present, although it is conditioned upon
the happening of a contingent event which may or may not occur. If the
suspensive condition is not fulfilled, the perfection of the contract of sale
is completely abated. However, if the suspensive condition is fulfilled, the
contract of sale is thereby perfected, such that if there had already been
previous delivery of the property subject of the sale to the buyer, ownership
thereto automatically transfers to the buyer by operation of law
without any further act of having to be performed by the seller.
In contract to sell, upon the
fulfillment of the suspensive condition which is the full payment of the
purchase price, ownership will not automatically transfer to the buyer although
the property may have been previously deliverd to him. The prospective buyer
has to convey title to the prospective buyer by entering into a contract of
absolute sale.[2]”
Art.15387. the vendor is bound to
deliver the thing sold and its accessions and accessories in the conditions in
which they were upon the perfection of the contract.
All the fruits shall pertain to the
vendee from the day on which the contract was perfected.
II.
TRADITION OR DELIVERY – Art. 1497 When the thing sold “ placed in the contract
and possession of the vendee.
1497 to 1501
Actual
vs. Constructive delivery
Art. 1498 –
Were the execution of the deed of conveyance in a public instrument is equivalent
to the delivery of the property. (Sabio v.
International Corporate Bank, 364SCRA 365 [2001])
Exceptions: 1. “when there is a
stipulation in the instrument to the contrary”
2. Doctrine
in Addison V. Felix (38 Phil. 404 (1918). “
It is the duty of the seller to deliver the thing sold, and that symbolic
delivery by the execution by the execution of public instrument is equivalent
to actual delivery only when the thing
sold is subject to the control of the seller, so that “at the moment of sale, its material delivery could have
been made.”
- Doctrine reiterated in Power Commercial and Industrial Corp. v. CA, 274 SCRA 597, (1997).
Exception
to Exception: If the sale have been made under the express agreement of imposing upon buyer the
obligation of recovering possession from third part possessors.
I.
Performance or Consummation
Art. 1458, By the Contract of Sale
one of the contracting parties obligates himself to transfer the ownership of
and to deliver the determinate thing, and the other to pay therefore a price
certain in money or its equivalent.
Art. 1495, The vendor is bound to
transfer the ownership of and deliver, as well as warrant the thing which is
the object of the sale.
Art. 1163, every person obliged to
give a determinate thing is also obliged to take care of it with the proper
diligence of a good father , of a
family, unless the law on the stipulation of the parties requires anther
standard of care.
(Buyer and Sale)
Art. 1164,
The creditors has the right to the fruit of the thing from the time n the
obligation to deliver arises. However, he shall acquire no real right over it
until the same has been delivered to him.
(Doctrine
of Self – Help)
Consequence of
Delivery: Art. 429 the owner or lawful processor of a thing has the right to
exclude any person from the enjoyment and disposal thereof. For this purpose,
he may use such force as may be reasonably necessary to repel or prevent an
actual or threatened unlawful physical invasion or usurpation of his property.
III.
Symbolic Delivery, Constitution Possessorium, Tradition Brevi Manu, Tradition
Longa Manu.
IV.
Delivery by Negotiable Document of Title
V.
Delivery through Courier
5.1 Art. 1523 – Delivery is allowed for
the contract to be made to a carrier – equivalent to delivery to buyer.
Exception:
Art. 1503 (1) (2) (3)
(1) Sale with
Reservation of Title.
(2) Goods are
shipped and Bill of Lading is Deliverable to seller or his agent (Implies that
the title is reserved by seller.)
(3) Goods are
Shipped and Bill of Lading is deliverable to buyer or his agent BUT possess of
bill of lading is retained by seller.
5.2
F. A. S. Sales – seller pays all charges
and is subject to risk until the goods are placed “alongside the vessel.”
F.
O. B. – Free or Board – seller shall bear all expenses
FOB at the point of
Shipment
FOB at the point of
destination
Then
ownership is deemed transferred to owner.
C.I. F. Cost Insurance Freight
- Buyer pays CIF – Delivery and
Carrier is enough.
VI. Completeness of
Delivery
Art. 1522 – Quantity Issues of Sale and
Goods (Personal Property)
(a) Seller
delivers quatity less than promised
a.1 buyer
may reject
a.2 if
buyer accept or retains he must pay the full price.
(b)
if however buyer has used or disposed of goods delivered before he knows that
seller is not going to perform
(c) seller delivers
larger Quantity
- buyer may accept goods covered by
contract and reject the rest
- if buyer accepts whole goods, he must pay
based on contracts rates.
- if indivisible, buyer may reject whole of
goods.
(d) if Mixed: those
covered by contracts and those not described.
- buyer may
accept and reject those not described
- if
indivisible, buyer may reject the goods altogether.
VII. Sale of
Immovable
Art. 1539
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Sale with statement of area per unit or
measure
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Seller is obliged to deliver that area stated
in contract
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If not possible buyer may choose:
proportional reduction of price
Rescission
At
least 1/10th for rescission: (provided that lack of area is NOT LESS than 1/10
of area stated)
(Quantity
Test)
In an August 2016 case, it was ruled that:
“What defines land; Land sold in
LUMP SUM
At any rate, we have consistently
held that what really defines a piece of land is not the area, calculated with
more or less certainty , mentioned in
the description, but its boundaries laid down, as enclosing the land and
indicating its limits. Where land is sold for a lump sum and not so much per
unit or measure, number, the boundaries of the land stated in the contract
determine the effects and scope of the sale, and not its area. This is
consistent with Article 1542 of the Civil Code which provides:
X x x”[3].
Art. 1543- Actions arising from
Articles 1539 & 1542 prescribe in 6 months from the day of delivery.
QUANTITY
TEST
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If Subject Matter delivered is NOT OF THE
SAME QUALITY as agreed upon
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Proportional reduction of price
Rescission
(provided that inferior value of thing sold exceeds one tenth of the price
agreed upon.
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More than 1/10.
VIII. Time
and Place of Delivery
Gen. Rule: Stipulation in Contract
In case of silence:
Time: Reasonable Time
Place: Art. I521 in rel.
to Art. 1251
Place of
Business or if none
Domicile of
Seller/Debtor
IX.
Condition and Warranties
(Subject and another outline)
X. Extinguishment
of Sales
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Conventional Redemption – latest case law
Cebu State College of Science and Technology (CSCST) etc. v Luis &
Misterio, G.R. No. 179025, June 17, 2015.
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Legal Redemption
(Subject
of another Outline)
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