University of the Cordilleras

College of Accountancy

RFBT 3 (Law on Sales, Credit Transactions, Negotiable Instruments and Other Business
Transactions)

LESSON no. 6

Module 6

RIGHTS AND OBLIGATIONS OF THE VENDEE

The principal obligation of the buyer is to accept delivery and pay the price. (Art. 1582,
New Civil Code)

Obligations of the Buyer

The obligations of the buyer are as follows:

1. To accept delivery of the object;

The buyer is deemed to have accepted the thing when:

a. There is notice given to the seller of acceptance;

b. The goods have been delivered to the buyer;

c. An act is done to the goods which is inconsistent with the ownership of the seller;
and

d. The goods are retained and no notice has been given to the seller after an
unreasonable amount of time (Art. 1585, New Civil Code); and

e. The refusal to accept is without just cause and the goods are placed at his disposal
(1588, New Civil Code).

2. To pay the price (Art. 1582, New Civil Code);

3. 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 after the sale to enforce
the warranty (Art.1586, New Civil Code);

4. Give notice to the seller of the refusal to accept the goods (Art. 1587, New Civil Code);

5. Take care of the thing when acceptance is refused and he appoints himself as the
depositary of the thing (Ibid.);
6. Pay interest from the time of delivery up to actual payment in the following instances:

a. If it has been agreed upon;

b. If the object of the sale as delivered produces fruits or income; and

c. If the buyer is in default, from the time of demand whether judicial or extrajudicial. (Art.
1589. New Civil Code).

7. Pay immediately in the sale of movable property and no extended period for payment
has been agreed upon (Art.1593, New Civil Code).

Rights of the Buyer

The rights of the buyer are as follows:

1. Refuse acceptance of delivery by installments if there is no agreement thereto;

Rules when there is an agreement of delivery by installments:

a. If the buyer refuses to accept a delivery without justifiable cause or fail to pay on or
more installments or when what is delivered by the buyer in an installment is
defective, it will depend on the materiality and severity of the damage cause to
the injured party on whether only that part is considered as invalid and the rest of
the contract is valid or if the whole contract is void (Art. 1583, New Civil Code);

b. If only the part which is unpaid or defective is invalid and separated from the rest
of the contract, the injured party may recover compensation from the party at fault
(ibid.).

2. The right to reasonably examine to object of the sale upon delivery before
acceptance is made

If the goods have been delivered through a carrier and that the carrier will not deliver
the goods to the buyer until he has paid, the buyer can only examine the goods if
there is an agreement stating so (Art. 1584, New Civil Code)

3. Suspend the payment to the seller if his possession over the thing acquired is disturbed
by lawful means by any other party until such disturbance is cured by the seller (Art.
1590, New Civil Code);

4. Immediately file a case for rescission of the contract if there is a reasonable ground to
fear loss of the thing and the price (Art. 1591, New Civil Code);

5. In the sale of immovable property pay, the price even after the delivery of the of the
property even when there is no agreement as to an extended period of payment but
 before a demand for rescission whether judicial or extrajudicial has been made (Art.
1592, New Civil Code).

Rights and Obligations in sale by installments of personal property under the Recto Law
(Act 4122)

The Recto Law was incorporated into the New Civil Code as Article 1484 which stated
that (Filipinas Investment and Finance Corp. v. Ridad, G.R. No. L-27645, November 28,
1969):

“In a contract of sale of personal property, the price of which is payable in installments,
the vendor may exercise any of the following remedies:

1. Exact fulfillment of the obligation, should the vendee fail to pay;

2. Cancel the sale, should the vendee's failure to pay cover two or more installments;

3. Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendee's failure to pay cover two or more installments. In this case, he
shall have no further action against the purchaser to recover any unpaid balance
of the price. Any agreement to the contrary shall be void.”

For Example, A bought a car from B payable in installments of P50,000.00 per month. If A
fails to pay at least one installment, then B can file a case against A to pay the price. If A
does not pay two or more installments, or more than two months, B can rescind the
contract. And If the contract is covered by a chattel mortgage on the thing sold, and A
failed to pay two or more installments, subject the thing sold to a foreclosure sale and
use the proceeds as payment for the unpaid price. If for example the whole contract
price is P800,000.00 and at the foreclosure sale it was only sold for P600,000.00 the
balance of P 200,000.00 can no longer be recovered from A.

Rights and Obligations in sale by installments of residential real property under the
Maceda Law (Republic Act 6552)

The Maceda law also known as “Realty Installment Buyers Act” was enacted to protect
the buyers of residential real property from unfair and oppressive terms.

Under the Maceda law, the buyer of residential real property has the following rights:

1. To pay without any additional interest unpaid installments within the grace period
earned by the buyer, to be exercised only once in every five years of the existence of
the contract;

2. The buyer will earn a one-month grace period for every one year paid if at least two
years of installments have been paid;

3. If less than one year of installments are paid, the buyer is to be given not less than sixty
(60) days grace period from the date the installment is due;
4. Assign or sell his right to another person or reinstate the contract by updating his
payments during the grace period;

5. Pay in advance any installment or the full unpaid balance anytime before they are
due;

6. A return of the 50% of the total of the installments paid if less than five years of
installments are paid;

7. A return of 50% of the total installments and an additional 5% for every one year paid
thereafter but the total should not exceed 90%;

8. Down payments, deposits or options on the contract shall be included in the

9. To be notified at least 30 days before the actual cancellation of the contract of such
cancellation by the seller.

Presidential Decree No. 957, Section 24 made the Maceda Law to apply to sales of
condominiums and subdivisions. Further, Sec. 23 installments paid will not be forfeited if
the developer fails to develop the condominium or subdivision, the buyer has the option
to be reimbursed for the total amount paid including amortization.

References:

Republic Act 386, An Act to Ordain and Institute the Civil Code of the Philippines

Act 4122

Filipinas Investment Corporation v. Lourdes Ridad and Luis Ridad, G.R. No. L-27645,
November 28, 2969

Republic Act 6552, An Act to Provide Protection to Buyers of Real Estate on Installment
Payments

Presidential Decree 957, Regulating the Sale of Subdivision Lots and Condominiums,
Providing for Penalties

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information found herein is provided in good faith and we make no representation or
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availability, or completeness of thereof. We do not assume ownership of any of the
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