CONCUMMATION STAGE/PERFORMANCE STAGE

• Stage where parties both comply with their obligation

• Nature of diligence required: diligence of a good father of the family unless other requirement is stipulated
• Consequence: Seller will be guilty of breach if thing is lost through his fault

DELIVERY OF THE THING

• Transfer ownership (tradicion)

– twin obligation:

1. transfer title(ownership) – SELLER must be owner of thing at the time of consummation to validly transfer title

2. delivery of the thing

• Different kinds of delivery:

1. Actual
• when thing sold is placed in the control & possession of the buyer

2. Constructive

DIFFERENT FORMS OF CONSTRUCTIVE DELIVERY:

1. Traditio Longa Manu

• Delivery of thing by mere agreement; when SELLER points to the property without need of actually delivering

2. Traditio Brevi Manu

• Before contract of sale, the would be buyer was already in possession of the would be subject matter of sale (ex: as lessee)

3. Symbolic delivery

• As to movables – ex: delivery of the keys to a car

4. Constitutum possessarium

• at the time of perfection of contract, seller continues to hold possession merely as a holder

5. Execution:

• Exception:

a. when there is stipulation to contrary, execution does not produce effect of delivery

b. when at the time of execution of instrument, subject matter was not subject to control of the seller

• subject matter should be within control of seller; he should have capacity to deliver at the time of execution of public instrument when he wants to effect actual delivery

• such capacity should subsist for a reasonable time after execution of instrument (reasonable time depends on circumstances of persons, places & things)

• Effect when 2 requisites do not concur: no constructive delivery; no compliance on part of SELLER to deliver
Even when thing is mortgaged, seller can still deliver because naked title still belongs to him & can still do acts of ownership including conveyance

6. Negotiable documents of title & non negotiable instruments

• transferee acquires title of transferor

• when delivered without negotiation, it is a mere assignment

7. Intangibles/ incorporeal property

• through public instrument

• execution is equivalent to delivery if from the deed, contrary does not appear

DELIVERY OF FRUITS & ACCESSIONS/ ACCESSORIES

• Right to fruits & accessions/accessories accrue from time sale is perfected

• but no real right over it until it is delivered

DELIVERY THROUGH CARRIER

1. FAS – FREE ALONG SIDE

• When goods delivered alongside the ship, there is already delivery to the buyer (twin effects deemed fulfilled)

2. FOB - FREE ON BOARD

a. Shipment – when goods are delivered at ship at point of shipment; delivery to carrier by placing goods on vessel is delivery to buyer

b. Destination – when goods reach the port even if not disembarked yet from the vessel, there is delivery to the buyer

3. CIF – COST, INSURANCE, FREIGHT

a. when buyer pays for services of carrier – delivery to carrier is delivery to buyer; carrier is agent of the buyer

b. when buyer pays seller the price – from moment the vessel is at port of destination, there is already delivery to buyer.

COMPLETENESS OF DELIVERY

1. MOVABLES – delivery of thing plus accessories & accessions in the condition in which they were upon the perfection of the contract including the fruits

a. LESS – buyer has 2 options:
i. reject
ii. accept

(1) when accepts with knowledge that seller is not going to perform contract in full, he must pay at price stipulated

(2) when accepts & consumes before knowledge that buyer will not perform contract in full, liable only for fair value of goods delivered

b. LARGER – buyer has 3 options;

i. accept per contract & reject the rest
ii. accept the whole – pay price stipulated

iii. reject whole if subject matter is indivisible

c. MIXED WITH GOODS OF DIFFERENT DESCRIPTION – buyer has 2 options:

i. accept good w/c are in accordance with contract & reject the rest

ii. reject goods entirely – if indivisible

2. IMMOVABLES

a. sold per unit or number

• with statement of its area, rate at certain price

• deliver all that may have been stated in the contract

• if impossible, remedies of buyer:

 LESS IN AREA
i. rescission
ii. proportional reduction of price – LACK IN AREA SHLD NOT BE LESS THAN 1/10 OF AREA AGREED UPON

 GREATER IN AREA
i. accept per stipulation & reject the rest
ii. accept whole area – pay at contract rate

• Not applicable to judicial sales

b. sold for lump sum

• When price per unit not indicated

• If area delivered is either greater or lesser – price will not be adjusted accordingly

TIME & PLACE OF DELIVERY

1. follow stipulation in contact, or

2. follow usage in trade, or

3. seller’s place of business or his residence

4. specific goods – place where the thing is

5. at reasonable hour

EFFECTS OF DELIVERY: Title to thing is transferred/ownership is transferred

Except: contrary is stipulated as in the case of:

1. contract to sell

2. sale on acceptance/approval

3. sale or return

4. there is implied reservation of ownership

WHO BEARS EXPENSES OF DELIVERY – Seller

Sale by description/sample

1. Sample – goods must correspond with sample shown

2. Description – goods must correspond with description or sample

• Effect if there is no compliance: RESCISSION may be availed of by the buyer

OBLIGATION OF BUYER

1. Pay the price

• Buyer is obligated to pay price according to terms agreed upon – regarding time, place & amount

• If payment of interest is stipulated – must pay; if amount of interest not mentioned – apply legal rate

• When buyer defaults – constitutes breach: subject to specific performance/rescission & damages; interest to be paid also from default

2. Accept delivery of thing sold

• Where to accept: at time & place stipulated in the contract; if none specified – at the time & place of delivery

• Goods;

there is acceptance when:

a. He intimates to seller that he has accepted

b. When delivered & does any act inconsistent with ownership of seller

c. Retains without intimating to seller that he has rejected

• Sale of Goods on installment:

a. Goods must be delivered in full, except when stipulated

b. When not examined by buyer – not accepted until examined or at least had reasonable time to examine

• Acceptance of goods in general, absent contrary express stipulation, does not discharge seller from liability in case of breach of warranties (unless no notice or failure to give it within reasonable time)

• When buyer has a right to refuse goods, no need to return; shall be considered as depositary; unless there is stipulation to the contrary


DOUBLE SALE:

General Rule: FIRST IN TIME, PRIORITY IN RIGHT

When does it apply: when not all requisites embodied in 1544 concur

SPECIAL RULE: 1544

• Requisites;

1. exactly same subject matter

2. exactly same immediate seller

3. buyers represent conflicting interest

4. both sales are valid

RULES ACCORDING TO 1544:

1. MOVABLE

• owner is first to posses in good faith

2. IMMOVABLE

• First to register in good faith

• No inscription, first to possess in good faith

• No inscription & no possession in good faith – Person who presents oldest title in good faith

GOOD FAITH

1. one who buys property without notice that another person has a right or interest in such property

2. one who has paid price before notice that another has claim or interest

• lis pendens – notice that subject matter is in litigation

• adverse claim – notice that somebody is claiming better right

POSSESSION

• Both actual or constructive

REGISTRATION

1. registered under Torrens system
• 1544 applies

2. not registered under the Torrens system
• 1544 still applies

• jurisprudence: if 2nd sale is a judicial sale (by way of levy on execution), buyer merely steps into the shoes of the judgment debtor. Outside of such situation – must apply to conflicting sales over the same unregistered parcel of land

3. if sale 1 occurs when land is not yet registered & sale 2 is done when land is already registered – apply FIRST IN TIME, PRIORITY IN RIGHT