ARTICLE 1543. The actions arising from articles 1539 and 1542 shall prescribe in six

months, counted from the day of delivery.

The actions based on Articles 1539 and 1542 for either recission of the contract or

proportionate reduction of the price must be brought within 6 months counted from the day of

delivery.

ARTICLE 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.

Should 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.

Should 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.

Article 1544 of the Civil Code provides that if the same thing should have been sold to

different buyer, the ownership shall be given:

(a) When subject matter is movable, to the buyer:

Who may have first take possession thereof in good faith;

(b) When subject matter is immovable, to the buyer:

“Who in good faith first recorded in the Registry of Property (registrant in

good faith) ;”

“Should there be no inscription,… to the person who in good faith was

first in the possession” of the subject matter (possessor in good faith);

In the absence thereof, to the person who represents the oldest title,

provided there is good faith

SECTION 3

Conditions and Warranties

ARTICLE 1545. Where the obligation of either party to a contract of sale is subject to any

condition which is not performed, such party may refuse to proceed with the contract or he

may waive performance of the condition. If the other party has promised that the condition

should happen or be performed, such first mentioned party may also treat the

nonperformance of the condition as a breach of warranty.

Where the ownership in the thing has not passed, the buyer may treat the

fulfillment by the seller of his obligation to deliver the same as described and as warranted

expressly or by implication in the contract of sale as a condition of the obligation of the

buyer to perform his promise to accept and pay for the thing.

Condition means an uncertain event or contingency on the happening of which the

obligation of the contract depends. In such a case, the obligation of the contract does not attach

until the condition is performed.

Article 1545 of the Civil Code grants two alternative remedies to a party where the

obligation of the other party to a contract of sale is subject to any condition which is not

performed, in that such first party may either: (a) refuse to proceed with the contract, or (b) he

may waive performance of the condition.

However, if the condition is in the nature of a promise that it should happen, the non-

performance of such condition may be treated by the other party as a breach of warranty

ARTICLE 1546. Any affirmation of fact or any promise by the seller relating to the thing is

an express warranty 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. No

affirmation of the value of the thing, nor any statement purporting to be a statement of the

seller's 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.

Warranty is any representation made by the seller of the things, with respect to its

character, quality, or ownership, by which he induces the buyer to purchase the same relying on

said representation.

Warranties by the seller may be:

(1) Express warranties

Express warranties refers to any affirmation of fact or any promise by the seller

relating to the thing whose natural tendency is to induce the buyer to

purchase the same, and if the buyer purchase the thing relying on such

affirmation or promise.

Statement of seller’s opinion

This shall not be construed as warranty unless made by an expert and it

was relied upon by the buyer.

(2) Implied warranties

A mere expression of opinion does not import a warranty unless the seller is an expert

and the opinion was relied upon by the buyer.

ARTICLE 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.

Implied warranties are those that are inherent in contract of sale and accompany them

unless they are suppressed by the parties. They are of two kinds:

a. Warranty against eviction

This refers to the implied warranty on the part of the seller that he has the

right to sell the thing at the time when ownership is to pass, and that the

buyer shall from that time have and enjoy the legal and peaceful possession of the

thing.

b. Warranty against hidden defect

This refers to the 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.

SUBSECTION 1

Warranty in Case of Eviction

ARTICLE 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.

Eviction is the deprivation of the vendee of the whole or a part of the thing sold by virtue

of a final judgment based on a right prior to the sale or an act imputable to the vendor.

The essential elements of eviction are:

(1) The vendee is deprived in whole or in part of the thing purchased;

(2) He is so deprived by virtue of a final judgment

(3) The judgment is based on a right prior to the sale or an act imputable to the

vendor

(4) The vendor was summoned in the suit for eviction at the instance of the

vendee

(5) There is no waiver on the part of the vendee.

In the absence of any of these requisites, a breach of warranty eviction cannot be

declared. The warrant 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. The buyer and the seller

are allowed to add to, subtract from, or suppress this legal obligation on the part of the seller.

Thus, it has been held that the vendor’s liability for warranty against eviction in a contract of sale

is generally waivable and may be renounced by the vendee.

ARTICLE 1549. The vendee need not appeal from the decision in order that the vendor

may become liable for eviction.

If the lower court evicts the buyer, he does not need to appeal to the appellate courts

before he can sue for damages. However, the decision must of course be final.

ARTICLE 1550. When adverse possession had been commenced before the sale but the

prescriptive period is completed after the transfer, the vendor shall not be liable for

eviction.

By prescription, one acquires ownership and other real rights through the lapse of time in

the manner and under the conditions prescribed by the law. In the same way, rights and actions

are lost by prescription.

(1) Completed before sale

The vendee may lose the thing purchased to a third person who has acquired title

thereto by prescription. When prescription has commenced to run against the

vendor and was already completed before the sale, the vendee can enforce the warrant against

eviction.

(2) Completed after sale

Even if prescription has started before the sale but has reached the limit

prescribed by law after the sale, the vendor is not liable for eviction

ARTICLE 1551. If the property is sold for nonpayment of taxes due and not made known

to the vendee before the sale, the vendor is liable for eviction.

If the vendee is deprived of the ownership of the property because it is sold at public

auction for nonpayment of taxes due from the vendor, the latter is liable for eviction for an act

imputable to him. It is required, however, that at the time of the sale, the nonpayment of taxes

was not known to the vendee.

ARTICLE 1552. The judgment debtor is also responsible for eviction in judicial sales,

unless it is otherwise decreed in the judgment.

It has been held universally that in case of failure of title, a purchase in good faith at a

judicial sale is entitled to recover the purchase money from the officer if the funds are still in his

hands or from the judgment debtor.

ARTICLE 1553. Any stipulation exempting the vendor from the obligation to answer for

eviction shall be void, if he acted in bad faith.

Under Article 1553, if the seller acted in bad faith then any stipulation exempting the

seller from the obligation to answer for eviction shall be void.

On the other hand, if the buyer knew the defect of title at the time of sale, he cannot claim

that the vendor has warranted his legal and peaceful possession of the property sold. He

proceeded with the sale with the assumption of the risk of eviction and, therefore, is not entitled

to warranty against eviction nor to right to recover damages.

ARTICLE 1554. If the vendee has renounced the right to warranty in case of eviction, and

eviction should take place, the vendor shall only pay the value which the thing sold had at

the time of the eviction. Should the vendee have made the waiver with knowledge of the

risks of eviction and assumed its consequences, the vendor shall not be liable.

The waiver by the buyer may have been made:

(a) Without knowledge of risk of eviction (waiver consciente);

If the waiver was only conscious, the vendor shall only pay the value

which the thing sold had at the time of eviction

(b) With knowledge of risk of eviction (waiver intencionada)

The vendor is exempted from the obligation to answer for eviction

provided he did not act in bad faith.

ARTICLE 1555. When the warranty has been agreed upon or nothing has been stipulated

on this point, in case eviction occurs, the vendee shall have the right to demand of the

vendor:

(1) The return of the value which the thing sold had at the time of the eviction, be it

greater or less than the price of the sale;

(2) The income or fruits, if he has been ordered to deliver them to the party who

won the suit against him;

(3) The costs of the suit which caused the eviction, and, in a proper case, those of the

suit brought against the vendor for the warranty;

(4) The expenses of the contract, if the vendee has paid them;

(5) The damages and interests, and ornamental expenses, if the sale was made in

bad faith.

The provisions of the above article specify in detail the rights and liabilities of the vendee

to the vendor in the event eviction takes place “when the warranty has been agreed upon or

nothing has been stipulated on this point’ that is, in the absence of waiver of eviction by the

vendee. The seller must give in case of eviction the following:

1. Value of the thing;

2. Income or fruits of the thing;

3. Costs of the suit;

4. Expenses of the contract;

5. Damages and Interests

ARTICLE 1556. Should the vendee lose, by reason of the eviction, a part of the thing sold

of such importance, in relation to the whole, that he would not have bought it without said

part, he may demand the rescission of the contract; but with the obligation to return the

thing without other encumbrances that those which it had when he acquired it.

He may exercise this right of action, instead of enforcing the vendor's liability for

eviction.

The same rule shall be observed when two or more things have been jointly sold for

a lump sum, or for a separate price for each of them, if it should clearly appear that the

vendee would not have purchased one without the other.

The above article deals with a case of partial eviction. If the vendee loses, by reason of

eviction, a part of the thing sold of such importance, in relation to the whole, that he would have

bought it without said part, he may demand:

a. Rescission of the contract; or

b. Enforcement of the vendor’s liability for eviction

The above rule shall be observed when two or more things have been jointly sold for a

lump sum, or for a separate price for each of them, if it should clearly appear that the vendee

would not have purchased on without the other.

ARTICLE 1557. The warranty cannot be enforced until a final judgment has been

rendered, whereby the vendee loses the thing acquired or a part thereof.

A judgment becomes final if on appeal, the decision decreeing the eviction is affirmed; or

if within the period within which to appeal, no appeal was made. It should be noted that under

Art. 1549, the vendee need not appeal from the decision of the lower court. Thus, it is sufficient

that the judgment be finals as understood hereinabove, before the warranty can be enforced.

ARTICLE 1558. The vendor shall not be obliged to make good the proper warranty, unless

he is summoned in the suit for eviction at the instance of the vendee.

Another essential requisite before a vendor may be legally liable for eviction is that he

should be summoned in the suit for eviction at the instance of the vendee.

The object of the law is to give vendor the opportunity to show that the action against the

buyer is unjust.

ARTICLE 1559. The defendant vendee shall ask, within the time fixed in the Rules of

Court for answering the complaint, that the vendor be made a co-defendant.

The notification required by Article 1559 refers to a case where the vendee is the

defendant in a suit instituted to deprive him of the thing purchased.

The defendant vendee threatened with eviction who wishes to preserve his right of

warranty, would call in the vendor to defend the action which he has been instituted against him

to deprive him of the property purchased.

ARTICLE 1560. If the immovable sold should be encumbered with any non-apparent

burden or servitude, not mentioned in the agreement, of such a nature that it must be

presumed that the vendee would not have acquired it had he been aware thereof, he may

ask for the rescission of the contract, unless he should prefer the appropriate indemnity.

Neither right can be exercised if the non-apparent burden or servitude is recorded in the

Registry of Property, unless there is an express warranty that the thing is free from all

burdens and encumbrances.

Within one year, to be computed from the execution of the deed, the vendee may

bring the action for rescission, or sue for damages.

One year having elapsed, he may only bring an action for damages within an equal

period, to be counted from the date on which he discovered the burden or servitude.

The defect contemplated in this Article is really a sort of “hidden defect” but remedy is

similar to the provided in the case of eviction. The servitudes contemplated are not legal

easements for these exist by virtue of the law. Therefore, it cannot be claimed that the buyer was

ignorant thereof.

The alternative rights granted in Article 1560 cannot be exercised in the following cases:

1) If the burden or servitude is apparent, that is, “made known and is continually kept in

view by external signs that reveal the use and enjoyment of the same”

2) If the non-apparent burden or servitude is registered; and

3) If the vendee had knowledge of the encumbrance whether it is registered or not.

The vendee’s remedies is either rescission or damages. The action for rescission or

damages must be brought within 1 year from the execution of the deed of sale. If the period has

already elapsed, the vendee may only bring an action for damages within 1 year from the date of

the discovery of the non-apparent burden or servitude.

SUBSECTION 2

Warranty Against Hidden Defects of or Encumbrances Upon the Thing Sold

ARTICLE 1561. The vendor shall be responsible for warranty against the hidden defects

which the thing sold may have, should they render it unfit for the use for which it is

intended, or should they diminish its fitness for such use to such an extent that, had the

vendee been aware thereof, he would not have acquired it or would have given a lower

price for it; but said vendor shall not be answerable for patent defects or those which may

be visible, or for those which are not visible if the vendee is an expert who, by reason of his

trade or profession, should have known them.

The following requisites for enforcement of vendor’s liability against hidden defects:

1) The defect must exist at the time of sale

2) The defect must be hidden

The vendor, however, shall not be liable for defects that are not visible if the vendee is an

expert who, by reason of his trade or profession, should have known them.

3) The defect must render the thing unfit for the use for which it is intended or diminishes its

fitness for such use to such an extent, that had the vendee been aware thereof, he would now

have acquire it or would have given a lower price for it.

4) The vendee must give notice of the defect to the vendor within reasonable time

5) The action to enforce it must be made within the period provided by law.

6) There must be no waiver of warranty on the part of the vendee.

ARTICLE 1562. In a sale of goods, there is an implied warranty or condition as to the

quality or fitness of the goods, as follows:

(1) Where the buyer, expressly or by implication, makes known to the seller the

particular purpose for which the goods are acquired, and it appears that the buyer relies

on the seller's skill or judgment (whether he be the grower or manufacturer or not), there

is an implied warranty that the goods shall be reasonably fit for such purpose;

(2) Where the goods are brought by description from a seller who deals in goods of

that description (whether he be the grower or manufacturer or not), there is an implied

warranty that the goods shall be of merchantable quality.

Quality of goods includes their state or condition. The purpose of holding the seller on his

implied warranties is to promote high standard in business and to discourage unfair dealing.

(1) Implied warranty of fitness

This is an implied warranty that the goods are fit for the general purpose of the thing, and

not necessarily for the purpose of the buyer. This warranty is present when the goods are bought

by description from a seller who deals in goods of such description (whether he is the grower or

not)

(2) Implied warranty of merchantability

In sale by sample, if the seller is a dealer in goods of that kind, there is an implied

warranty that the goods shall be free from any defect rendering them unmerchantable which

would not be apparent upon reasonable examination of the sample.

ARTICLE 1563. In the case of contract of sale of a specified article under its patent or

other trade name, there is no warranty as to its fitness for any particular purpose, unless

there is a stipulation to the contrary.

Note that here there is generally no warranty as to the article’s “fitness for any particular

purpose.’

Article 1563 provides an exception in case of “stipulation to the contrary.” Thus, there is

still an implied warranty of fitness for a particular purpose where the buyer relied upon the

seller’s judgment rather than the patent or trade name.

ARTICLE 1564. An implied warranty or condition as to the quality or fitness for a

particular purpose may be annexed by the usage of trade.

A warranty as to the quality or fitness for a particular purpose may be attached by usages

to a contract containing no express provision in regard to warranty, though in the absence of

usage no warranty would be implied. The usage is relied on for the purpose of showing the

intention of the parties.

If there is no usage, the partied would naturally express their intention.

ARTICLE 1565. In the case of a contract of sale by sample, if the seller is a dealer in goods

of that kind, there is an implied warranty that the goods shall be free from any defect

rendering them unmerchantable which would not be apparent on reasonable examination

of the sample.

As a general rule, all the buyer entitled to, in case of a sale or contract to sell by sample,

is that the goods be like the sample. So he has no right to have the goods merchantable if the

sample which he has inspected is not.

Where the defect in the goods is of such character that inspection will not reveal it, so in

the case of a sale by sample, if the sample is subject to a latent defect, and the buyer reasonably

relies on the seller’s skill or judgment, the buyer is entitled not simply to goods like the sample,

but to goods like those which the sample seems to represent, that is, merchantable goods of that

kind and character.

ARTICLE 1566. The vendor is responsible to the vendee for any hidden faults or defects in

the thing sold, even though he was not aware thereof.

This provision shall not apply if the contrary has been stipulated, and the vendor

was not aware of the hidden faults or defects in the thing sold.

General Rule:

The vendor shall be liable to the vendee for any hidden faults or defects in the thing sold

even though he was not aware thereof.

Exception

Vendor is not liable if there is a stipulation exempting him from such defects and he was

not aware thereof.

ARTICLE 1567. In the cases of articles 1561, 1562, 1564, 1565 and 1566, the vendee may

elect between withdrawing from the contract and demanding a proportionate reduction of

the price, with damages in either case.

ALTERNATIVE REMEDIES IN CASE OF BREACH OF WARRANTIES

i. Withdrawing from the contract or rescission ( accionredhibitoria) with

damages

ii. Demanding a proportionate reduction in the price (accionquantiminoris) with

damages

ARTICLE 1568. If the thing sold should be lost in consequence of the hidden faults, and

the vendor was aware of them, he shall bear the loss, and shall be obliged to return the

price and refund the expenses of the contract, with damages. If he was not aware of them,

he shall only return the price and interest thereon, and reimburse the expenses of the

contract which the vendee might have paid.

RULES IN CASE THE CAUSE OF THE LOSS IS THE DEFECT

a) The vendor is aware of the defect or in bad faith, he is liable:

i. To return the price

ii. To refund the expenses of the contract

iii. To pay damages

b) The vendor is not aware of the defect, he is liable to:

i. Return the price

ii. Pay interest thereon

iii. Refund the expenses of the contract

ARTICLE 1569. If the thing sold had any hidden fault at the time of the sale, and should

thereafter be lost by a fortuitous event or through the fault of the vendee, the latter may

demand of the vendor the price which he paid, less the value which the thing had when it

was lost. If the vendor acted in bad faith, he shall pay damages to the vendee.

RULES IN CASE THE CAUSE OF LOSS IS A FORTUITOUS EVENT OR THE FAULT

OF THE VENDEE

i. If the vendor was aware of the defect, he shall be liable:

i. To return the price paid less the value of the thing at the time of loss

ii. To pay damages

ii. If the vendor was not aware of the defect, he shall be obliged to return the

price paid less the value of the thing at the time of loss.

ARTICLE 1570. The preceding articles of this Subsection shall be applicable to judicial

sales, except that the judgment debtor shall not be liable for damages.

In judicial sale, it is not really the sheriff who sells but the judgment debtor. Hence, the

provisions regarding warranty are also applicable to judicial sales. However, since he is forced to

sell, there can be no liability for damages.

ARTICLE 1571. Actions arising from the provisions of the preceding ten articles shall be

barred after six months, from the delivery of the thing sold.

The action for rescission of the contract or reduction of the purchase price prescribes six

(6) months from the date of delivery of the thing sold. This means that the action shall be barred

unless brought within the said period.

ARTICLE 1572. If two or more animals are sold together, whether for a lump sum or for a

separate price for each of them, the redhibitory defect of one shall only give rise to its

redhibition, and not that of the others; unless it should appear that the vendee would not

have purchased the sound animal or animals without the defective one.

The latter case shall be presumed when a team, yoke pair, or set is bought, even if a

separate price has been fixed for each one of the animals composing the same.

When two or more animals have been sold at the same time and the redhibitory defect is

in one or some of them but not in all, the general rule is that the redhibition will not affect the

others without it. The exception is when it can be shown by the vendee that he would not have

purchased the sound ones without those which are defective. Such intention need not be

established by the vendee but shall be presumed when a team, yoke, pair, or set is bought unless

the vendor proves the contrary.

It should be noticed that under this article, it is immaterial whether the price has been

fixed for a lump sum for all the animals or for a separate price for each.

ARTICLE 1573. The provisions of the preceding article with respect to the sale of animals

shall in like manner be applicable to the sale of other things.

The points considered in the preceding article apply also to sale of two or more things

where only one or more of them but not all, have hidden defects.

ARTICLE 1574. There is no warranty against hidden defects of animals sold at fairs or at

public auctions, or of livestock sold as condemned.

This article is a limitation to the provisions of Article 1570. It is based on the assumption

that the defects must have been clearly known to the buyer.

Since the law does not make any distinction, the public auctions referred to may be

judicial or extrajudicial. Sale of animals as condemned precludes all idea of warranty against

hidden defects. Such animals are brought not because of their quality or capacity for work.

ARTICLE 1575. The sale of animals suffering from contagious diseases shall be void.

A contract of sale of animals shall also be void if the use or service for which they

are acquired has been stated in the contract, and they are found to be unfit therefor.

The article declares the class of animals which cannot be the object of commerce-animals

suffering from contagious diseases and those found unfit for the use or service stated.

The sale of such animals is void as against public interest and not merely subject to

rescission or reduction of the price.

ARTICLE 1576. If the hidden defect of animals, even in case a professional inspection has

been made, should be of such a nature that expert knowledge is not sufficient to discover it,

the defect shall be considered as redhibitory.

But if the veterinarian, through ignorance or bad faith should fail to discover or

disclose it, he shall be liable for damages.

Redhibitory vice or defect is a defect in the article sold against which defect the seller is

bound to warrant

General Rule:

If two or more animals are sold together, whether for lump sum or for a separate

price for each of them, the redhibitory defect of one shall only give rise to its redhibition.

Exception:

The redhibitory defect of one shall give rise to the redhibiton of all the animals

sold, including the sound ones, if the vendee would not have bought them without the

defective ones.

ARTICLE 1577. The redhibitory action, based on the faults or defects of animals, must be

brought within forty days from the date of their delivery to the vendee.

This action can only be exercised with respect to faults and defects which are

determined by law or by local customs.

The action against redhibitory defect must be filed within forty (40) days from the date of

delivery to the vendee. The considered redhibitory defect must be those only determined by law

or local customs. Otherwise, if the defect is patent, there is no warranty against such defects

even if there is a redhibitory vice.

ARTICLE 1578. If the animal should die within three days after its purchase, the vendor

shall be liable if the disease which cause the death existed at the time of the contract.

The following are the instances wherein the vendor shall be liable for the death of the

animal sold, whether the defect is redhibitory or not.

i. The disease already existed at the time of sale.

ii. Such disease is the cause of the animal’s death.

iii. The animal sold dies within three (3) days from the time of purchase. Otherwise,

if death occurs only after three (3) days, the vendor is not liable.

ARTICLE 1579. If the sale be rescinded, the animal shall be returned in the condition in

which it was sold and delivered, the vendee being answerable for any injury due to his

negligence, and not arising from the redhibitory fault or defect.

LIABILITY OF BUYER IN CASE SALE OF ANUMAL RESCINDED

Should the vendee avail the remedy of rescission, he is bound to return the animal

in the condition it is in at the time of sale and delivery.

The vendee shall be liable should there be an injury on the animal due to his

negligence.

Such negligence on the part of the vendee is not a bar against the enforcement of

the rescission of the contract.

ARTICLE 1580. In the sale of animals with redhibitory defects, the vendee shall also enjoy

the right mentioned in article 1567; but he must make use thereof within the same period

which has been fixed for the exercise of the redhibitory action.

In the sale of animals, the vendee has the right to either enforce a redhibitory action or

quantiminoris within forty (40) days from the date of delivery to the vendee.

ARTICLE 1581. The form of sale of large cattle shall be governed by special laws.

The sale of large cattle which is to appear in a public document is governed by Act No.

4117, now found in Sections 511 to 536 of the Revised Administrative Code, as amended,

providing for the registration, conveyance, branding and slaughter of these large cattles.

CHAPTER 5

Obligations of the Vendee

ARTICLE 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.

The principal obligations of the vendee are:

i. Accept delivery

ii. Pay the price of the thing sold

Note:

The vendor is not required to make delivery until the price is paid unless

otherwise stipulated.

In the absence of any stipulation to the contrary, the vendee is not required to

make payment before the delivery of the thing.

The vendee is bound to accept delivery and pay the price at the time and place

stipulated.

In the absence of any stipulation as to the time and place of payment, it shall be

made at the time and place of delivery.

If there is no stipulation as to the place of delivery, payment shall be made at the

place of perfection of the contract.

The vendee is bound to pay the price even before delivery of the thing if it is only

the time which is fixed in the contract.

ARTICLE 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 instalments,

which are to be separately paid for, and the seller makes defective deliveries in respect of

one or more instalments, or the buyer neglects or refuses without just cause to take delivery

of or pay for one or more instalments, 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.

General Rule:

The buyer is not bound to receive installment delivery of the goods. He also has no right

to pay the price

in installment. Furthermore, he cannot be required to pay the price in installment.

Exception:

The parties may have an agreement that the goods can be delivered by installments or the

price be payable in installments.

If there is a stipulation and the seller makes defective deliveries in one or more

installment delivery or the buyer refuses to accept delivery without justifiable reason to

accept delivery or pay one or more installments, the injured party may:

i. Refuse to proceed with the contract and sue for damages for breach of the entire

contract if the breach is so material to affect the contract.

ii. Claim compensation but not damages, if the breach is severable or divisible.

ARTICLE 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.

Acceptance referred to in this article, is the assent to become owner of the specific goods

when delivery of them is offered to the buyer.

RULES IN INSTALLMENT

General Rule:

The buyer has the right of examination the goods before accepting them.

The right of examination or inspection is a condition precedent to the transfer of

ownership unless otherwise stipulated.

Exceptions:

The right of inspection is not available in the following cases:

i. When there is an agreement between the parties.

ii. When there is an agreement that the goods are not to be delivered unless there is

full payment of the price like if the goods are marked C.O.D or collect on delivery

unless there is an agreement to the contrary or usage of trade allowing

examination.

Right of Examination or Inspection

The buyer’s right of examination or inspection is not absolute since the seller is bound to

give the buyer such an opportunity to examine the goods only “on request”.

If the seller refused to give the opportunity of examination or inspection, the buyer may

rescind the contract and recover the price or any part of it that he has paid.

Waiver of Right of Examination

The buyer’s right of examination or inspection may be waived by stipulation. It need not

be in express term.

ARTICLE 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.

Acceptance may either be:

a) Express acceptance

The buyer, after delivery of the goods, makes known to the seller, either verbally

or in writing, of his acceptance of the goods.

b) Implied Acceptance

There is implied acceptance in the following:

i. The buyer, after delivery of the goods, does not act inconsistent with the

seller’s ownership, as when he sells or attempts to sell them, or he uses or

makes alteration in them in a manner proper only for an owner.

ii. The buyer, after the lapse of a reasonable time, retains the goods without

intimating his rejection.

Delivery distinct act from acceptance

i. Delivery is an act of the vendor while acceptance is on the part of the buyer.

ii. Acceptance is not a condition for the seller to complete his obligation of delivering

the goods.

iii. Acceptance may be done even before actual delivery of the goods.

iv. There may be an actual receipt without acceptance and there may be acceptance

without any receipt of the goods.

ARTICLE 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.

General Rule:

The seller is not discharged from liability I damages or other remedy for breach of

warranty by the acceptance of the goods by the buyer.

Exceptions:

The following are the instances when the buyer is discharged from his liability:

i. If there is either an express or implied agreement between the parties

ii. If the buyer fails to give notice of any breach of warranty within reasonable time after the

buyer knows or ought to know of such breach.

Note:

The purpose is to protect the seller against the belated claims which prevent him from

making prompt investigation to determine the cause and extent of his liability and to enable him

to take any immediate actions necessary.

ARTICLE 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.

Effects if the goods are delivered to the buyer who rightfully refuses them:

i. The buyer is in a position of a bailee who has had goods thrust upon him

without his assent.

ii. He has the obligation to take reasonable care of the goods but nothing more

can be demanded of him.

iii. He has no duty to return them to the seller. Therefore, after notice of rejection

of the goods, it is the seller’s duty to take delivery of such goods.

iv. Even though, the goods are in the possession of the buyer, risk is still borne by

the seller being the owner thereof.

ARTICLE 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.

Under this article, if there is an unjust refusal on the part of the buyer to accept the goods,

the title over the goods is not transferred to said buyer unless there is a stipulation to the

contrary.

ARTICLE 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.

PAYMENT IS MADE AFTER DELIVERY

The vendee has the liability to interest from the time of delivery up to the time of

payment of the price.

a) Stipulated Interest

The stipulated interest shall be used as the basis in the computation. In the

absence of said stipulation, the legal interest of 12% shall be used instead.

b) Fruits or income of the thing

Two requisites:

i. The thing sold has been delivered.

ii. It produces fruits or income

c) Vendee is in default

If the vendee is in delay, he shall be liable for interest from the time of judicial or

extrajudicial demand by the vendor for payment of price.

ARTICLE 1590. Should 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.

SUSPENSION OF PAYMENT BY THE VENDEE

i. When suspension can be availed of or the grounds for suspension

i. If vendee is disturbed in the possession or ownership of the thing purchased.

ii. There is a reasonable ground to fear such disturbance by a vindicatory action or

foreclosure of mortgage.

The vendee has no right of remedy before final judgment to protect the vendor from

becoming a victim of collusion between the vendee and the third person.

ii. Vendee cannot suspend payment of the price

i. If the vendor gives security for the return of the price in a proper case

ii. If there is a stipulation that buyer has to make payment notwithstanding such

contingencies.

iii. If vendor has caused the disturbance or danger to cease.

iv. If the disturbance is a mere act of trespass or if the third person claims no right.

v. If the vendee has fully paid of the price.

iii. Duration

The suspension of the payment shall be until the time that the vendor has caused

the disturbance or danger to cease.

ARTICLE 1591. Should the vendor have reasonable grounds to fear the loss of immovable

property sold and its price, he may immediately sue for the rescission of the sale.

Should such ground not exist, the provisions of article 1191 shall be observed.

The sale referred to under this article is a sale of a real property and the remedy of the vendor is

the suit for the immediate rescission of the sale.

Grounds for rescission

The vendor has a reasonable ground to fear:

i. The loss of the immovable property sold

ii. Its price

The remedies of the vendor if one or both grounds do not exist

i. fulfillment of the contract with damages

ii. rescission of the contract with damages

ARTICLE 1592. In the sale of immovable property, even though it may have been

stipulated that upon failure to pay the price at the time agreed upon the rescission of the

contract shall of right take place, the vendee may pay, even after the expiration of the

period, as long as no demand for rescission of the contract has been made upon him either

judicially or by a notarial act. After the demand, the court may not grant him a new term.

General Rule:

The vendor may sue for rescission of the contract should the vendee fail to pay the agreed

price. Such agreement is referred to as pactumcommissorium. But said agreement is subject to

the stipulation of the parties.

Note:

There is no existing provision in our laws authorizing the automatic rescission of the

contracts for nonpayment of the purchase price.

The right to rescind is not absolute and the court may extend the period of payment.

Article 1592 is inapplicable in the following:

i. Sales on installment of real property in which the parties have laid down the procedure to

be followed in the event the vendee failed to fulfill his obligation.

ii. A mere promise to sell or an executory contract to sell where the title remains with the

vendor until full payment of the price

ARTICLE 1593. With respect to movable property, the rescission of the sale shall of right

take place in the interest of the vendor, if the vendee, upon the expiration of the period

fixed for the delivery of the thing, should not have appeared to receive it, or, having

appeared, he should not have tendered the price at the same time, unless a longer period

has been stipulated for its payment.

Grounds for immediate rescission:

Rescission shall take place in the interest of the vendor, at his option, if at the time fixed

for the delivery of the thing sold, the vendee:

i. does not appear to receive the thing

ii. having appeared, does not pay the price unless a longer period is stipulated for its

payment.

CHAPTER 6

Actions for Breach of Contract of Sale of Goods

ARTICLE 1594. Actions for breach of the contract of sale of goods shall be governed

particularly by the provisions of this Chapter, and as to matters not specifically provided

for herein, by other applicable provisions of this Title.

Goods include all chattel personal but not things in action or money of legal tender in the

Philippines. It includes growing fruits or crops.

ACTIONS AVAILABLE IN GENERAL FOR BREACH OF CONTRACT

i. action by the seller for payment of the price(1595)

ii. action by the seller for damages for non-acceptance of the goods(1596)

iii. action by the seller for rescission of the contract(1597)

iv. action by the buyer for specific performance(1598)

v. action by the buyer for rescission or damages for breach of warranty(1599)

ARTICLE 1595. Where, under a contract of sale, the ownership of the goods has passed to

the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms

of the contract of sale, the seller may maintain an action against him for the price of the

goods.

Where, under a contract of sale, the price is payable on a certain day, irrespective of

delivery or of transfer of title and the buyer wrongfully neglects or refuses to pay such

price, the seller may maintain an action for the price although the ownership in the goods

has not passed. But it shall be a defense to such an action that the seller at any time before

the judgment in such action has manifested an inability to perform the contract of sale on

his part or an intention not to perform it.

Although the ownership in the goods has not passed, if they cannot readily be resold

for a reasonable price, and if the provisions of article 1596, fourth paragraph, are not

applicable, the seller may offer to deliver the goods to the buyer, and, if the buyer refuses to

receive them, may notify the buyer that the goods are thereafter held by the seller as bailee

for the buyer. Thereafter the seller may treat the goods as the buyer's and may maintain an

action for the price.

SELLER’S RIGHT TO MAINTAIN AN ACTION FOR THE PRICE

i. The first right of the seller is the right to maintain an action for the price should the buyer

wrongfully neglects or refuses to pay.

ii. When the price is payable on a certain day and the buyer wrongfully neglects or refuses

to pay such price irrespective of delivery or transfer of title.

iii. If the provisions of Article 1596 par. 4 is inapplicable, the buyer has the right for the

action for the price also when the goods cannot be readily resold for a reasonable price

and the buyer wrongfully refuses to accept them before transfer of ownership

ARTICLE 1596. Where the buyer wrongfully neglects or refuses to accept and pay for the

goods, the seller may maintain an action against him for damages for nonacceptance.

The measure of damages is the estimated loss directly and naturally resulting in the

ordinary course of events from the buyer's breach of contract.

Where there is an available market for the goods in question, the measure of

damages is, in the absence of special circumstances showing proximate damage of a

different amount, the difference between the contract price and the market or current

price at the time or times when the goods ought to have been accepted, or, if no time was

fixed for acceptance, then at the time of the refusal to accept.

If, while labor or expense of material amount is necessary on the part of the seller to

enable him to fulfill his obligations under the contract of sale, the buyer repudiates the

contract or notifies the seller to proceed no further therewith, the buyer shall be liable to

the seller for labor performed or expenses made before receiving notice of the buyer's

repudiation or countermand. The profit the seller would have made if the contract or the

sale had been fully performed shall be considered in awarding the damages.

ACTION FOR DAMAGES BY THE SELLER

The second right of the seller is the right to maintain an action for damages. Such right is

available in the following instances:

i. if the buyer wrongfully neglects or refuses to accept and pay for the goods

ii. in an executory contract, where the ownership over the goods has not yet been passed

and the seller cannot maintain an action for the price

iii. if the goods are not yet identified at the time of the contract and subsequently, the

seller’s right is necessarily confined to an action for damages

How damages are measured

i. The damages are the difference between the (1) contract price or the amount of the

obligation which the buyer failed to fulfill and (2) the market or current price or the value

of the goods which the seller has left in his hands.

ii. In the absence of the market price, the vendor is entitled to the full amount of damage

which he has really sustained by a breach of contract.

iii. The vendor is also allowed to proximate damages of greater amount than the difference

between the contract price and market price if such damages are due to nonperformance

of the obligation.

Measurement of damages in case of repudiation

If there is a countermand by the buyer, the seller is entitled to damages which include:

i. the labor performed and expense incurred for materials before receiving notice of the

buyer’s repudiation

ii. the profit he would have realized if the sale had been fully performed

ARTICLE 1597. Where the goods have not been delivered to the buyer, and the buyer has

repudiated the contract of sale, or has manifested his inability to perform his obligations

thereunder, or has committed a breach thereof, the seller may totally rescind the contract

of sale by giving notice of his election so to do to the buyer.

SELLER’S RIGHT OF RESCISSION

The seller may rescind the contract even before delivery in the following cases:

i. when the buyer has repudiated the contract of sale

ii. when the buyer has manifested his inability to perform his obligations

iii. when the buyer has committed a breach of the contract of sale

Note:

The seller is required to give notice of his election to seek rescission of the contract.

If the goods had been delivered, the seller may recover the value of what has been

delivered.

ARTICLE 1598. Where the seller has broken a contract to deliver specific or ascertained

goods, a court may, on the application of the buyer, direct that the contract shall be

performed specifically, without giving the seller the option of retaining the goods on

payment of damages. The judgment or decree may be unconditional, or upon such terms

and conditions as to damages, payment of the price and otherwise, as the court may deem

just.

Article 1598 is only applicable if the goods to be delivered are specific or ascertained.

As a rule, the injured party has the right to choose between fulfillment and rescission with

damages in either case. The right of the injured party to demand specific performance cannot be

defeated by the guilty party’s choice to rescind the contract.

ARTICLE 1599. Where there is a breach of warranty by the seller, the buyer may, at his

election:

(1) Accept or keep the goods and set up against the seller, the breach of warranty by way of

recoupment in diminution or extinction of the price;

(2) Accept or keep the goods and maintain an action against the seller for damages for the

breach of warranty;

(3) Refuse to accept the goods, and maintain an action against the seller for damages for

the breach of warranty;

(4) Rescind the contract of sale and refuse to receive the goods or if the goods have already

been received, return them or offer to return them to the seller and recover the price or

any part thereof which has been paid.

When the buyer has claimed and been granted a remedy in anyone of these ways, no other

remedy can thereafter be granted, without prejudice to the provisions of the second

paragraph of article 1191.

Where the goods have been delivered to the buyer, he cannot rescind the sale if he

knew of the breach of warranty when he accepted the goods without protest, or if he fails to

notify the seller within a reasonable time of the election to rescind, or if he fails to return or

to offer to return the goods to the seller in substantially as good condition as they were in at

the time the ownership was transferred to the buyer. But if deterioration or injury of the

goods is due to the breach or warranty, such deterioration or injury shall not prevent the

buyer from returning or offering to return the goods to the seller and rescinding the sale.

Where the buyer is entitled to rescind the sale and elects to do so, he shall cease to

be liable for the price upon returning or offering to return the goods. If the price or any

part thereof has already been paid, the seller shall be liable to repay so much thereof as has

been paid, concurrently with the return of the goods, or immediately after an offer to

return the goods in exchange for repayment of the price.

Where the buyer is entitled to rescind the sale and elects to do so, if the seller refuses

to accept an offer of the buyer to return the goods, the buyer shall thereafter be deemed to

hold the goods as bailee for the seller, but subject to a lien to secure the payment of any

portion of the price which has been paid, and with the remedies for the enforcement of

such lien allowed to an unpaid seller by article 1526.

(5) In the case of breach of warranty of quality, such loss, in the absence of special

circumstances showing proximate damage of a greater amount, is the difference between

the value of the goods at the time of delivery to the buyer and the value they would have

had if they had answered to the warranty.

BUYER’S REMEDIES

The remedies of the buyer when the seller is guilty of breach of the contract of sale are

the following:

i. accept the goods and set up the seller’s breach to reduce or extinguish the price

(Recoupment)

ii. accept the goods and maintain an action for damages for the breach of the

warranty(Counterclaim for damages)

iii. refuse to accept the goods and maintain an action for damages for the breach of the

warranty (Action for damages)

iv. rescind the contract of sale by returning or offering the return of the goods and recover

the price(Rescission)

Remedies alternative

The remedies are alternative in nature. Simply stated, once a remedy has been granted to

the buyer, no further remedy can be availed except in case of fulfillment where the buyer could

further seek for the rescission of the contract should the fulfillment of the obligation become

impossible.

Rescission by the buyer not available

The buyer cannot avail the remedy of rescission in the following cases:

i. if the buyer accepted the goods knowing of the breach of warranty without protest

ii. if he fails to notify the seller within a reasonable time of his election to rescind

iii. if he fails to return or offer return the goods in substantially as good condition as they

were in at the time of transfer of ownership except when the injury of the goods is

caused by the very defect against which the seller warranted and in such case the buyer

may still rescind the contract.

Buyer’s right and obligation in case of rescission

i. The buyer shall cease to be liable for the price and his obligation is only to return the

goods.

ii. If he has paid the price or any part thereof, he may recover it from the seller.

iii. He has also the right to hold the goods as bailee for the seller should the seller refuse the

return of the goods. The seller in turn may in turn exercise his right of lien as if he were

an unpaid seller.

CHAPTER 7

Extinguishment of Sale

ARTICLE 1600. Sales are extinguished by the same causes as all other obligations, by those

stated in the preceding articles of this Title, and by conventional or legal redemption.

The modes or causes of extinguishing the contract of sale may be classified into:

1. Common or those causes which are also the means of extinguishing all other

contracts like payment, loss of the thing, condonation, etc;

2. Special or those causes which are recognized by the law of sales; and

3. Extra-special or those causes which are given special discussion by the Civil

Code and these are conventional redemption and legal redemption.

SECTION 1

Conventional Redemption

ARTICLE 1601. Conventional redemption shall take place when the vendor reserves the

right to repurchase the thing sold, with the obligation to comply with the provisions of

article 1616 and other stipulations which may have been agreed upon.

Conventional redemption is the right which the vendor reserves to himself, to reacquire

the property sold provided he reimburses the vendee of the price, the expenses of the contract,

any other legitimate payments made therefore and the necessary and useful expenses made on

the thing sold and fulfills other stipulations which may have been agreed upon.

Both real and personal property may be the subject matter of sales with right to

repurchase although there are certain articles, which are applicable only to immovable.

ARTICLE 1602. The contract shall be presumed to be an equitable mortgage, in any of the

following cases:

(1) When the price of a sale with right to repurchase is unusually inadequate;

(2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument

extending the period of redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the purchase price;

(5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that the real intention of the parties is

that the transaction shall secure the payment of a debt or the performance of any other

obligation.

In any of the foregoing cases, any money, fruits, or other benefit to be received by

the vendee as rent or otherwise shall be considered as interest which shall be subject to the

usury laws.

An equitable mortgage is one which, although it lacks the proper formalities of a

mortgage, shows the intention of the parties to make the property subject of the contract as a

security for the fulfillment of an obligation.

Article 1602 is a new provision and is one of the suitable remedies sponsored by the

Code Commission which drafted the Civil Code to provide safeguards and restrictions against

the evils of sales with a right of repurchase commonly called pacto de retro sales.

It is a matter of common knowledge that in practically all of the so-called contracts of

sale with right of repurchase, the real intention of the parties is that the pretended purchase price

is money loaned, and in order to secure the payment of the loan a contract purporting to be a sale

with pacto de retro is drawn up. Furthermore, it is well-known that the practice in these so-called

contracts of sale with pacto de retro is to draw up another contract purporting to be a lease of

property to the supposed vendor, who pays in money or in crops a so-called rent. It is, however,

no secret to anyone that this simulated rent is in truth and in fact interest on the money loaned. In

many instances, the interest is usurious. Thus, the usury law is also circumvented.

Article 1602 enumerates six distinct and separate circumstances, the presence of any of

which is sufficient to give rise to the presumption that a contract with right to repurchase is an

equitable mortgage. They are inconsistent with the vendee’s acquisition of the right of ownership

under a true sale subject only to the vendor’s right to redeem, and belie the truthfulness of the

sale a retro.

It should be noted, however, that in a contract of sale with pacto de retro, the price

usually is less than in absolute sales for the reason that in the former, the vendor expects to

reacquire or redeem the property sold, or else he may sell his right to redeem and thus recover

the loss he claims suffered by reason of the inadequacy of the price.

The practice is to fix a relatively reduced price to make it easier for the vendor a retro to

redeem the property. In an absolute sale where the vendor is permanently giving away his

property, he tries to sell at a price equivalent to its real value. Hence, the inadequacy of

repurchase price of itself cannot be considered a ground for annulling the contract.

ARTICLE 1603. In case of doubt, a contract purporting to be a sale with right to

repurchase shall be construed as an equitable mortgage.

Doubt resolved in favor of equitable mortgage – it is favored by law. Whether the sale is

absolute or pacto de retro, it shall be presumed to be equitable mortgage if any of the cases

mentioned in Article 1602 is present. In case of doubt, a contract purporting to be a sale with

right to repurchase shall still be regarded as an equitable mortgage.

ARTICLE 1604. The provisions of article 1602 shall also apply to a contract purporting to

be an absolute sale.

Presumption, an exception to general rule – Article 1603 is an exception to the rule that

doubts affecting an onerous contract shall be settled in favor of the greatest reciprocity of

interests.

ARTICLE 1605. In the cases referred to in articles 1602 and 1604, the apparent vendor

may ask for the reformation of the instrument.

Reformation is that remedy in equity by means of which a written instrument is made or

construed so as to express or conform to the real intention of the parties when such intention is

not expressed in the instrument. If the parties really intended a mortgage but the instrument states

that the property is sold absolutely or with a right of repurchase, the same way be reformed or

corrected so that the contract should appear to be a mortgage and not a pacto de retro or absolute

sale. In reformation, there has been a meeting of the minds between the parties, but the written

instrument purporting to embody their agreement does not express their true intention by reason,

for instance, of mistake or fraud. Where there has been no meeting of the minds, the remedy is

annulment.

ARTICLE 1606. The right referred to in article 1601, in the absence of an express

agreement, shall last four years from the date of the contract.

Should there be an agreement, the period cannot exceed ten years.

However, the vendor may still exercise the right to repurchase within thirty days

from the time final judgment was rendered in a civil action on the basis that the contract

was a true sale with right to repurchase.

Period of exercise of right of redemption:

1. No agreement/granting right – if there is no agreement granting the vendor the

right to redeem, there is no right of redemption since the sale should be

considered an absolute sale.

2. Agreement merely grants right – if the parties agree only on the right to

redeem on the part of the vendor but there is a total absence of express

stipulation as to the time within which the repurchase should be made, then

the period of redemption shall be four years from the date of the contract.

3. Definite period of redemption agreed upon – if the parties agree on a definite

period of redemption, then the right to redeem must be exercised within the

period fixed provided it does not exceed ten years.

4. Period of redemption agreed upon not specified – if the parties agree that the

vendor shall have a right to redeem and they intend a period which, however,

is not specified, then the redemption period is ten years.

5. Period agreed upon exceeds ten years – when the agreed period exceeds ten

years, the vendor a retro has ten years from the execution of the contract to

exercise his right of redemption.

6. Final judgment rendered that contract pacto de retro – from the time final

judgment was rendered in a civil action on the basis that the contract was a

true sale with right to repurchase; the vendor a retro has 30 days within

which to exercise the right to repurchase.

ARTICLE 1607. In case of real property, the consolidation of ownership in the vendee by

virtue of the failure of the vendor to comply with the provisions of article 1616 shall not be

recorded in the Registry of Property without a judicial order, after the vendor has been

duly heard.

If real property is involved and the vendor failed to redeem within the period agreed

upon, the vendee’s title becomes irrevocable. However, the consolidation of ownership in the

vendee shall not be recorded in the Registry of Property without a judicial order and until after

the vendor has been duly heard.

The reason for the requirement is that the transaction may not be a genuine pacto de retro but

only an equitable mortgage. Thus, the requirement provides additional protection to debtors.

ARTICLE 1608. The vendor may bring his action against every possessor whose right is

derived from the vendee, even if in the second contract no mention should have been made

of the right to repurchase, without prejudice to the provisions of the Mortgage Law and the

Land Registration Law with respect to third persons.

By virtue of the provision of this article, it can be concluded that the right to repurchase is

of a real character and should not be considered personal. However, exception is made to the

provisions of the Mortgage Law and the Land Registration Law with respect to third persons.

This means that the vendor a retro cannot exercise his right of redemption against a subsequent

transferee for value and in good faith if his right is not properly registered or annotated.

ARTICLE 1609. The vendee is subrogated to the vendor's rights and actions.

Subrogation transfers to the person subrogated the credit with all the rights thereto

appertaining. The above article is logical because a pacto de retro sale transfers ownership to

the vendee although subject to the condition of repurchase. As owner, the vendee, for example

may transfer or alienate his right to a third person, mortgage the property, enjoy the fruits

thereof, recover the property against every possessor, and perform all other acts of ownership

subject only to the right of redemption of the vendor. Of course, the vendor cannot transfer

ownership if he is not the real owner.

ARTICLE 1610. The creditors of the vendor cannot make use of the right of redemption

against the vendee, until after they have exhausted the property of the vendor.

This article is a practical application of Article 1177 of the Civil Code permitting

creditors to exercise the rights and actions of their debtor after exhausting his properties to

satisfy their claims.

The right to redeem, being in the nature of property, is answerable for the debts of the

vendor provided the vendor’s properties are first exhausted. The exhaustion must be established

to the satisfaction of the vendee.

ARTICLE 1611. In a sale with a right to repurchase, the vendee of a part of an undivided

immovable who acquires the whole thereof in the case of article 498, may compel the

vendor to redeem the whole property, if the latter wishes to make use of the right of

redemption.

The purpose of the above article is to discourage co-ownership which is undesirable since

it does not encourage the improvement of the property co-owned.

1. Partition of the property – a co-owner may demand the partition of the thing owned in

common, insofar as his share is concerned.

a. if the thing is essentially indivisible, it may be allotted to the co-owner

who shall indemnify the others.

b. If the co-owners cannot agree that the thing be allotted to one of them, it

shall be sold and its proceeds distributed.

2. Redemption of the whole property – in either case, the vendee, who acquires the

whole of an undivided immovable a part of which is subject to a right to repurchase,

has right to demand that the vendor a retro, who likes to exercise his right of

redemption, redeem the whole property.

ARTICLE 1612. If several persons, jointly and in the same contract, should sell an

undivided immovable with a right of repurchase, none of them may exercise this right for

more than his respective share.

The same rule shall apply if the person who sold an immovable alone has left several

heirs, in which case each of the latter may only redeem the part which he may have

acquired.

The co-owners of an undivided immovable sold be them jointly or collectively and in the

same contract with the right to repurchase, can exercise such right only as regards their

respective shares. Similarly, the co-heirs of the vendor of an undivided immovable, can exercise

the right of redemption only for the respective portions they have inherited.

Under Article 1612, a co-owner cannot redeem more than his share in the co-ownership.

The redemption by a co-owner of the property in it’s entirely, shouldering the expenses thereof,

does not make him the owner of all of it. In other words, it does not put to end the existing state

of co-ownership.

ARTICLE 1613. In the case of the preceding article, the vendee may demand of all the

vendors or co-heirs that they come to an agreement upon the repurchase of the whole thing

sold; and should they fail to do so, the vendee cannot be compelled to consent to a partial

redemption.

The vendee a retro can refuse partial redemption. He may require all the vendors or all

the heirs to redeem the entire property or to agree to its redemption by any one of them. The right

is given to the vendee in line with the object of the law to put an end to co-ownerships whenever

possible. Under Article 1620, the right of a co-owner who chooses not to redeem accrues to the

benefit of the others. The extent of the share of the redeeming co-owner is not taken into account

except as provided in the second paragraph thereof. Article 1613 does not provide for a mode of

terminating co-ownership nor does the fact that the redeeming co-owner has succeeded in

securing title over a parcel of land in his name terminate the existing co-ownership. Registration

of property is not a means of acquiring ownership. It operates as a mere notice of existing title,

that is, if there is one.

ARTICLE 1614. Each one of the co-owners of an undivided immovable who may have sold

his share separately, may independently exercise the right of repurchase as regards his own

If the sale was made separately and independently, it would be unjust to require the co-

owners, to come to an agreement with regard to the repurchase of the thing sold, and certainly, it

would be worse to deprive them of their right in case they fail to agree. This article seeks to

prevent such injustice.

ARTICLE 1615. If the vendee should leave several heirs, the action for redemption cannot

be brought against each of them except for his own share, whether the thing be undivided,

or it has been partitioned among them. But if the inheritance has been divided, and the

thing sold has been awarded to one of the heirs, the action for redemption may be

instituted against him for the whole.

This article refers to redemption against heirs of vendee. The vendor a retro can exercise the

right to redeem against the heirs of the vendee a retro with respect only to their respective shares,

whether the thing be undivided or it has been partitioned among them. Still, if by partition, the

entire property has been adjudicated to one of the heirs, the vendor can exercise the right to

redeem against said heir for the whole.

ARTICLE 1616. The vendor cannot avail himself of the right of repurchase without

returning to the vendee the price of the sale, and in addition:

(1) The expenses of the contract, and any other legitimate payments made by reason of the

sale;

(2) The necessary and useful expenses made on the thing sold.

This article defines the obligation of vendor a retro in case of redemption. The seller

therefore must return to the vendee a retro the price, expenses of contract and other legitimate

expenses which are the necessary expenses and those useful expenses.

For the price, it is a must for the parties to agree that the price to be returned will be more

or less than the original sum paid by the buyer.

As for expenses, the same should be reimbursed by the seller. Necessary expenses, are

those expenses incurred for the keeping and preservation of the thing which seek to prevent the

waste, deterioration or loss of the good sold; useful expenses on the other hand are those which

may appraise the value of the good sold.

ARTICLE 1617. If at the time of the execution of the sale there should be on the land,

visible or growing fruits, there shall be no reimbursement for or prorating of those existing

at the time of redemption, if no indemnity was paid by the purchaser when the sale was

executed.

Should there have been no fruits at the time of the sale and some exist at the time of

redemption, they shall be prorated between the redemptioner and the vendee, giving the

latter the part corresponding to the time he possessed the land in the last year, counted

from the anniversary of the date of the sale.

It is a common rule in the law that the fruits must follow its principal. But this article

refers only to natural and industrial fruits and not those civil fruits.

If there were fruits at the time of the sale and the vendee paid for them, he must be

reimbursed at the time of redemption as the payment forms part of the purchase price. If no

indemnity was paid by the vendee for the fruits, there shall be no reimbursement for those

existing at the time of redemption.

If the property had no fruits at the time of the sale and some exist at the time of

redemption, they shall be apportioned proportionately between the redemptioner and the vendee,

giving the latter a share in proportion to the time he possessed the property during the last year

counted from the anniversary of the date of the sale to compensate the vendee for his expenses.

ARTICLE 1618. The vendor who recovers the thing sold shall receive it free from all

charges or mortgages constituted by the vendee, but he shall respect the leases which the

latter may have executed in good faith, and in accordance with the custom of the place

where the land is situated.

The right of vendor a retro to recover thing sold free from charges. This is applicable

when he alienates, encumber, or perform other acts of ownership over the thing sold. But his

ownership being revocable upon redemption, all acts done by him are also revocable. Hence, he

may borrow money and mortgage property but when the vendor a retro redeems, the vendee a

retro is obliged to redeem the mortgage. The vendor has the right to receive the property in the

same condition in which it was at the time of the sale.

SECTION 2

Legal Redemption

ARTICLE 1619. Legal redemption is the right to be subrogated, upon the same terms and

conditions stipulated in the contract, in the place of one who acquires a thing by purchase

or dation in payment, or by any other transaction whereby ownership is transmitted by

onerous title.

It is in the nature of a mere privilege created partly for reason of public policy and partly

for the benefit and convenience of the redemptioner to afford him a way out of what might be a

disagreeable into which he has been thrust.

ARTICLE 1620. A co-owner of a thing may exercise the right of redemption in case the

shares of all the other co-owners or of any of them, are sold to a third person. If the price of

the alienation is grossly excessive, the redemptioner shall pay only a reasonable one.

Should two or more co-owners desire to exercise the right of redemption, they may only do

so in proportion to the share they may respectively have in the thing owned in common.

The purpose of the law in establishing the right of legal redemption between co-owners is

to reduce the number of participants until the community is done away with, as being hindrance

to the development and better administration of the property.

There are requisites that needed to be complied with as for the right to be exercised. First,

there must be co-ownership; second, there must be alienation of all or of any of the shares of the

other co-owners; third, the sale must be to a third person or stranger and a non-co-owner; fourth,

the sale must be before partition; fifth, the right must be exercised within the period provided in

Article 1623; and the last, the vendee must be reimbursed for the price of the sale.

ARTICLE 1621. The owners of adjoining lands shall also have the right of redemption

when a piece of rural land, the area of which does not exceed one hectare, is alienated,

unless the grantee does not own any rural land.

This right is not applicable to adjacent lands which are separated by brooks, drains,

ravines, roads and other apparent servitudes for the benefit of other estates.

If two or more adjoining owners desire to exercise the right of redemption at the

same time, the owner of the adjoining land of smaller area shall be preferred; and should

both lands have the same area, the one who first requested the redemption.

Requisites for the exercise of the right of legal redemption of adjacent owners of rural lands:

1. Both the land of the one exercising the right of redemption and the land sought to be

redeemed must be in rural area.

2. The lands must be adjacent.

3. There must be alienation.

4. Such alienation of a piece of rural land must not exceed one hectare.

5. The buyer must already own some rural land.

6. The rural land sold must not be separated by brooks, drains, rivers, etc. from the

adjoining lands.

The object of the lawmaker in allowing the redemption by adjacent owner is to prevent

an adjoining real estate belonging to another owner/s, the area of which does not exceed one

hectare, from passing into the hands of a person other than someone of the adjacent owners who

are interested in making use of the alienated property for the improvement and development of

their land.

ARTICLE 1622. Whenever a piece of urban land which is so small and so situated that a

major portion thereof cannot be used for any practical purpose within a reasonable time,

having been bought merely for speculation, is about to be re-sold, the owner of any

adjoining land has a right of pre-emption at a reasonable price.

If the re-sale has been perfected, the owner of the adjoining land shall have a right

of redemption, also at a reasonable price.

When two or more owners of adjoining lands wish to exercise the right of pre-

emption or redemption, the owner whose intended use of the land in question appears best

justified shall be preferred.

There are two rights that the article pertains to: the right of Pre-emption and the right of

Redemption. Pre-emption is a right commonly used in a corporation; it is a right of buying

before the others and exercised before the sale or resale against the potential buyer. On the other

hand, redemption is exercised after the sale against the buyer.

Requirements as to the exercise of right of pre-emption or redemption in a contract of

sale:

1. The piece of land is urban land.

2. The one exercising the right must be an adjoining owner.

3. The piece of land sold must be so small and so situated that a major portion thereof

cannot be used for any practical purpose within a reasonable time.

4. Such urban land was bought by its owner merely for speculation.

5. It is about to be resold, or that its resale has been perfected.

The price to be paid should be a justifiable amount. In the case two or more adjoining

owners desire to exercise the right of redemption, the law prefers him whose intended use of the

land appears best equitable.

The purpose is to discourage speculation in real estate and the consequent aggravation of

the housing problems in centers of population.

ARTICLE 1623. The right of legal pre-emption or redemption shall not be exercised except

within thirty days from the notice in writing by the prospective vendor, or by the vendor,

as the case may be. The deed of sale shall not be recorded in the Registry of Property,

unless accompanied by an affidavit of the vendor that he has given written notice thereof to

all possible redemptioners.

The right of redemption of co-owners excludes that of adjoining owners.

The period provided in the above article is absolute. The fundamental policy of the law is

to discourage the keeping for a long time of property in a state of uncertainty, a situation which

obviously is unjust to the purchaser and prejudicial to public interest.

CHAPTER 8

Assignment of Credits and Other Incorporeal Rights

ARTICLE 1624. An assignment of creditors and other incorporeal rights shall be perfected

in accordance with the provisions of article 1475.

The contract for the assignment of credit and other incorporeal rights is perfected from

the moment the parties agree upon the credit or right assigned and upon the price even if neither

has been delivered. But, the assignee will acquire ownership only upon delivery.

ARTICLE 1625. An assignment of a credit, right or action shall produce no effect as

against third persons, unless it appears in a public instrument, or the instrument is

recorded in the Registry of Property in case the assignment involves real property.

As between the parties, the assignment is valid although it appears only in a private

document so long as the law does not require a specific form for its validity. To affect third

persons, it must appear in a public instrument and in case it involves real property, it is

indispensable that it be recorded in the Registry of Property.

The assignee merely steps into the shoes of the assignor, the former acquiring the credit

subject to defenses available to the debtor against the assignor. The assignee is deemed

subrogated to the rights as well as to the obligations of the seller. He cannot acquire greater

rights than those pertaining to the assignor.

ARTICLE 1626. The debtor who, before having knowledge of the assignment, pays his

creditor shall be released from the obligation.

The consent of the debtor as to assignment of credit is not necessary so it may produce a

legal effect. Therefore, the obligation to pay does not depend on the consent of the debtor;

otherwise, all creditors would not be able to assign their credits because of the possibility of the

debtors’ refusal to give consent.

There are effects of payment by debtor after assignment of credit. These are the

following:

1. Before notice

The consent of the debtor is not necessary as to an assignment of credit and it is

sufficient that he has received notice. Such notice equates for the protection of the

assignee because before the said notice, payment to the original creditor is valid. In

such case, the assignee has a right of action against the assignor, the original creditor.

2. After notice, or before notice but debtor had knowledge of assignment

Payment by the debtor to the original creditor after the former had received notice

of assignment, whether or not he consented, is not valid against the assignee. Even

without notice, the debtor will not also be released from his obligation should he pay

the creditor after having had knowledge of the assignment of the obligation. He

thereby acts in bad faith. He can be made to pay by the assignee.

ARTICLE 1627. The assignment of a credit includes all the accessory rights, such as a

guaranty, mortgage, pledge or preference.

The assignment of a credit includes not only the credit itself but also all rights accessory

thereto. It follows to the common rue that the accessory follows the principal. But such right can

be stipulated by the parties that such accessory shall not be included in the assignment.

ARTICLE 1628. The vendor in good faith shall be responsible for the existence and legality

of the credit at the time of the sale, unless it should have been sold as doubtful; but not for

the solvency of the debtor, unless it has been so expressly stipulated or unless the

insolvency was prior to the sale and of common knowledge.

Even in these cases he shall only be liable for the price received and for the expenses

specified in No. 1 of article 1616.

The vendor in bad faith shall always be answerable for the payment of all expenses,

and for damages.

The article states the provisions as to the warranties of the assignor or creditors as he

assigns his credit.

1. He warrants only the existence and legality of the credit at the perfection of the

contract. He is not even liable for the warranty if the credit had been sold in doubt.

2. He cannot warrant as to the solvency of the debtor unless it is expressly stipulated or

unless the insolvency was already existing and of public knowledge at the time of

assignment.

In any case that a violation exist as to the stated warranties, the assignor-vendor shall be

held responsible thereof. Such cases are the following:

1. The liability of the vendor who acted in good faith is limited only to the price

received and to the expenses of the contract, and any other legitimate payments by

reason of the assignment.

2. The liability of the vendor who acted in bad faith not only limited for the payment of

the price received and to the expenses incurred, but also for damages.

ARTICLE 1629. In case the assignor in good faith should have made himself responsible

for the solvency of the debtor, and the contracting parties should not have agreed upon the

duration of the liability, it shall last for one year only, from the time of the assignment if

the period had already expired.

If the credit should be payable within a term or period which has not yet expired,

the liability shall cease one year after the maturity.

If the assignor has clearly and expressly warranted the solvency of the debtor, the

duration of the assignor’s liability are the following, subject to the provision that he acted in

good faith.

1. Stipulation – parties fixed the term or period.

2. No stipulation – no fixed period or term. Subject to the following; a. for one year

from the assignment of the credit when the period for payment of the credit has

expired; and b. for one year after its maturity, when such period for payment has nt

yet expired.

ARTICLE 1630. One who sells an inheritance without enumerating the things of which it is

composed, shall only be answerable for his character as an heir.

This refers to the sale of successional right or the right to an inheritance before partition.

Inheritance received by an heir may sell either with specification of the properties to be separated

or without enumerating the things comprising it which is the hereditary rights only. The vendor

of an inheritance warrants only the facts of his heir ship but do not warrant the objects which

make up his inheritance.

ARTICLE 1631. One who sells for a lump sum the whole of certain rights, rents, or

products, shall comply by answering for the legitimacy of the whole in general; but he shall

not be obliged to warrant each of the various parts of which it may be composed, except in

the case of eviction from the whole or the part of greater value.

As to the sale of the whole of certain rights, rents, or products in a lump sum, the subject

matter is the entirety of such rights, rents, or products. Here, the seller warrants only the

legitimacy of the whole and not the various parts of which it may be composed. The seller is then

not liable for eviction of each of the various parts unless the eviction involves the totality or the

part of greater value.

ARTICLE 1632. Should the vendor have profited by some of the fruits or received

anything from the inheritance sold, he shall pay the vendee thereof, if the contrary has not

been stipulated.

As a general rule, any fruits produced of an inheritance are included in the sale thereof

unless it is stipulated otherwise. If the seller simply received the fruits thereof, he is bound to

deliver them to the buyer; if such fruits are consumed or used, the seller must reimburse the

buyer; and if they have been sold to other person, he should give what he received from such

sale.

ARTICLE 1633. The vendee shall, on his part, reimburse the vendor for all that the latter

may have paid for the debts of and charges on the estate and satisfy the credits he may

have against the same, unless there is an agreement to the contrary.

As to previous article which gives an emphasis as where the vendor is obliged to pay the

vendee the fruits or anything received out of inheritance, it is also equitable that the buyer be

required to reimburse the seller for whatever the latter has paid for the debts of and charges on

the estate of the deceased. This liability for the debts and charges that will be reimbursed by the

buyer should be subject to evaluation or any agreement to the contrary.

ARTICLE 1634. When a credit or other incorporeal right in litigation is sold, the debtor

shall have a right to extinguish it by reimbursing the assignee for the price the latter paid

therefor, the judicial costs incurred by him, and the interest on the price from the day on

which the same was paid.

A credit or other incorporeal right shall be considered in litigation from the time the

complaint concerning the same is answered.

The debtor may exercise his right within thirty days from the date the assignee

demands payment from him.

There are requisites before the right of legal redemption can be exercised.

1. There must be a sale of a credit or assignment of a credit

2. A pending litigation at the time of the assignment. The complaint by the assignor

must have been filed, and answered by the debtor before the sale of the credit.

3. The debtor must pay the assignee: a. the price paid by him; b. the judicial costs

incurred by him; and c. the interest on the price from the date of payment

4. This right must be exercised by the debtor within thirty days from the date the

assignee demands payment from him.

It gives an advantage to the debtor because he will pay less than the value of the credit

assigned if he exercises such right to redeem the same.

The purpose of the law in allowing the redemption to the debtor is to avoid the purchase by a

third person of credits in litigation purely for speculation.

ARTICLE 1635. From the provisions of the preceding article shall be excepted the

assignments or sales made:

(1) To a co-heir or co-owner of the right assigned;

(2) To a creditor in payment of his credit;

(3) To the possessor of a tenement or piece of land which is subject to the right in litigation

assigned.

There are three instances of assignments or sales as exceptions to the provisions of the

previous article. In correspondence of it, this article gives emphasis where the debtor cannot

redeem too if the credit is not in litigation when the same is sold.

a. To a co-heir or co-owner of the right assigned

This is based on the liking of the person to sale his inheritance to the same co-heir

or co-owner of the property received from deceased.

b. To a creditor in payment of his credit

This refers to an asset swap between the debtor and the creditor. The lawful basis

for the assignment as the assignee cannot be considered as a vendee of a right in

litigation and as a speculator.

c. To the possessor of a tenement in litigation

The assignee is stimulated by a need to preserve the property and not to risk at the expense of the

debtor.

CHAPTER 9

General Provisions

ARTICLE 1636. In the preceding articles in this Title governing the sale of goods, unless

the context or subject matter otherwise requires:

(1) "Document of title to goods" includes any bill of lading, dock warrant, "quedan," or

warehouse receipt or order for the delivery of goods, or any other 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 indorsement or by delivery, goods represented

by such document.

"Goods" includes all chattels personal but not things in action or money of legal

tender in the Philippines. The term includes growing fruits or crops.

"Order" relating to documents of title means an order by indorsement on the

documents.

"Quality of goods" includes their state or condition. 

"Specific goods" means goods identified and agreed upon at the time a contract of

sale is made.

An antecedent or pre-existing claim, whether for money or not, constitutes "value"

where goods or documents of title are taken either in satisfaction thereof or as security

therefor.

(2) A person is insolvent within the meaning of this Title who either has ceased to pay his

debts in the ordinary course of business or cannot pay his debts as they become due,

whether insolvency proceedings have been commenced or not.

(3) Goods are in a "deliverable state" within the meaning of this Title when they are in

such a state that the buyer would, under the contract, be bound to take delivery of them.

ARTICLE 1637. The provisions of this Title are subject to the rules laid down by the

Mortgage Law and the Land Registration Law with regard to immovable property.

This article defines the various terms used in the preceding articles governing the sale of

goods. They hardly require comment. The definitions in this article do not apply if the context or

subject matter of any particular portion of the law otherwise requires.

TITLE VII

Barter or Exchange

ARTICLE 1638. By the contract of barter or exchange one of the parties binds himself to

give one thing in consideration of the other's promise to give another thing.

The contract of barter is similar to sale with only difference that instead of paying a price

in money, another thing is given in lieu thereof. A contract whereby one person transfers the

ownership of non-fungible things to another with the obligation on the part of the latter to give

things of the same kind, quantity and quality is considered a barter.

ARTICLE 1639. If one of the contracting parties, having received the thing promised him

in barter, should prove that it did not belong to the person who gave it, he cannot be

compelled to deliver that which he offered in exchange, but he shall be entitled to damages.

Under this provision, the aggrieved party cannot be compelled to deliver the thing he has

promised. Moreover, he is entitled to claim damages. The rule is analogous to article 1590 and

1591.

ARTICLE 1640. One who loses by eviction the thing received in barter may recover that

which he gave in exchange with a right to damages, or he may only demand an indemnity

for damages. However, he can only make use of the right to recover the thing which he has

delivered while the same remains in the possession of the other party, and without

prejudice to the rights acquired in good faith in the meantime by a third person.

Each contracting party warrants to the other that he has right to transfer ownership of the

thing exchanged.

In case of eviction, the injured party is given the option either to recover the property he

has given in exchange with damages or only clam an indemnity for damages. The right to

recover is, however, subject to the rights of innocent third persons.

ARTICLE 1641. As to all matters not specifically provided for in this Title, barter shall be

governed by the provisions of the preceding Title relating to sales.

Barter is a mutual sale. Each part really is both a vendor and a vendee. For this reason,

the provisions on sales are also applicable to barter.