OBLIGATIONS:
to deliver the fruit of the thing
Obligation (ART 1156) – juridical necessity
to give to d o or not to do
Requisites of Obligation:
 Active subject – creditor/oblige
 Passive subject – debtor/obligor
 Prestation – object
 Efficient cause – vinculum or legal or
juridical tie
Sources of obligation:
 Law
 Contract
 Quasi-contract – lawful, voluntary
and unilateral acts giving rise to a
juridical necessity to the end that no
one shall be unjustly enriched at the
expense of the other
 Negotiorum gestio – voluntary
administration of the property, etc.
of another without his consent or
authority
 Solutio indebiti – payment by
mistake
 Acts or omission punishable by law
 Quasi-delicts – “tort or culpa
aquiliana”
- acts or omissions there being a
fault or negligence but without
any pre-existing contractual
relation between the parties
Nature and Effect of obligation
Determinate Thing – particularly
designated or physically segregated from all
others
Obligation:
1. to take good care of the thing:
diligence of a good father of a family
2. to deliver the thing
3.
 natural fruit – products of the soil,
animals
 industrial fruit – produced by land,
cultivated or labor
 civil fruit – result of juridical relation
such as the rent of a building
Right of creditor:
Personal Right – maybe enforced to
one person to another
- JUS IN PERSONAM; JUS AD REM
Real Right - right or power over a
specific thing, enforceable against
the whole world
- JUS IN RE
4. To deliver accessions (include
everything that is produced by a
thing or is incorporated or attached)
and accessories (joined or included
with the principal thing for the
latter’s better use)
Grounds for liability to pay damages:
1. Fraud
 Causal fraud – dolo causante;
voidable; fraud without consent
which consent would not have been
given
 Incidental fraud - dolo incidente;
valid; fraud without consent would
have been still been given but the
person giving would have agreed on
different terms
2. Negligence
 Contractual negligence – culpa
contractual; negligence in the
performance of a contract
 Civil negligence – tort, quasi-delict,
culpa aquiliana; cause damage to
others
  Criminal negligence – culpa
criminal; result in commission of
crime
3. Delay – default, mora
 Mora solvendi - debtor
o Ex re – real obligation
o Ex persona – personal
obligation
 Mora accipiendi – creditor
 Compensation Morae – both parties
4. Contravention of the tenor of the
obligation
(Exceptions): Delay will exist without
demand
1. When law so provides
2. When obligation expressly declares
3. When time is the essence of
contract
4. When demand will be useless
5. In reciprocal obligations
Fortuitous events - events could not be
foreseen, though foreseen are inevitable
Remedies of creditor to enforce payment
of his claims: (Successive measures)
1. Pursue the property in the
possession of the debtor except
those exempt by law
2. Accion Subgrogatoria - Exercise all
rights and bring all actions of the
debtor except those personal to him
3. Accion pauliana – impugn the acts
which debtor may have done to
defraud his creditors
General rule: All rights acquired in virtue of
an obligation are transmissible
Different Kinds of Obligations:
1. Pure obligation - one without term
or condition
2. Conditional obligation –
demandability or extinguishment
depends upon happening of a
condition (uncertain event wields an
influence on a legal relationship)
 Suspensive condition – condition
antecedent or condition precedent;
happening of which will give rise to
obligation
 Resolutory condition – condition
subsequent; happening of which
extinguishes the obligation
 Potestative – depends upon the will
of party
 Casual – depends upon chance or
will of third person
 Mixed – depends partly upon will of
one of the parties and partly upon
chance/will of third person
 Positive – to do
 Negative - not to do
 Divisible - capable of partial
performance
 Indivisible - not capable of partial
performance by its nature or law
Loss - thing perishes or goes out of
commerce or disappears
3. Reciprocal obligation – one that
arises from the same cause in which
each party is a creditor or debtor of
each other
4. Obligation with a period –
demandability or extinguishment is
subjected to the expiration of term
which is necessarily to come
 Ex die - suspensive effect; from a
certain day
 In diem – resolutory effect; until a
certain day
 Legal – by law
 Voluntary – by parties
 Judicial – by court
 When debtor loses his right to make use
of the period, creditor may demand
immediate payment:
a) Insolvent unless he gives guaranty
or security of debt
b) Fails to furnish the guaranty or
securities that he has promised
c) Impairs the said guaranty by his
own acts or when due to fortuitous
events unless he gives a new ones
d) Attempts to abscond
e) Violates any undertaking
5. Alternative obligation – several
prestation but one is sufficient
Right to choose – belongs to debtor
When obligation ceases to be alternative
and becomes a simple obligation:
a) Debtor has communicated his choice
b) Only one is predictable
c) Creditor has communicated his
choice to debtor, if creditor has
been given the right to choose
6. Facultative obligation – one
prestation but debtor may render
another in substitution
 Before substitution – thing due is
principal obligation
 After substitution – thing due is the
substitute
7. Joint obligation - each debtor (or
creditor) is liable (or entitled) only
for a proportionate part of the debt
Other terms:
 Proportionately
 Pro rata
 Mancomunada
 Moncomunada simple
8. Solidary obligation – each debtor
(or creditor) is liable (or entitled) to
demand payment of the whole
obligation
 Passive solidarity – part of debtor
 Active solidarity – part of creditor
 Mixed solidarity – part of both
parties
Other terms:
 Joint and severally
 Individually and collectively
 In solidium
 Mancomunada solidaria
 Juntos o separadamente
9. Divisible obligation – one capable of
partial performance
- Susceptible of partial
performance, number of days,
metrical units
10. Indivisible obligation – not capable
of partial performance
11. Obligation with a penal clause –
provides for a greater liability on the
part of the debtor in case of non-
compliance
 Penal clause – accessory
undertaking on the part of debtor
Rule: (Art. 1228) proof of actual
damages suffered by the creditor IS
NOT NECESSARY in order that the
penalty may be demanded
Kinds of penal clause:
 Legal - law
 Conventional – agreement of parties
 Subsidiary – only the penalty may
be enforced
 Joint – both obligation and penalty
may be enforced
Effect of nullity of principal
obligation and penal clause:
  Nullity of principal obligation carries
with it the nullity of penal clause
 Nullity of penal clause does not carry
with it that of the principal
obligation
Causes of Extinguishment of Obligation:
1. Payment or performance
Legal tender – money or currency
which the debtor may compel his
creditor to accept his payment..
 P 1000 = 1,5,10
 P 100 = 1,5,10,25 cents
 All bills are legal tender up
to any amount
Inflation – increased in the currency
Deflation – decreased
Rule: In case an extraordinary inflation or
deflation of the currency should supervene,
value of the currency at the time of
establishment of the obligation shall be the
basis of payment, unless there is agreement
to the contrary
Formula: A = (B/C) x B
A – amount to be paid at maturity
B – amount of obligation
C – value on the date of maturity
Free disposal of the thing – property is free
from any claims or encumbrances in favor
of third person
Payment by a third person:
I. Creditor not bound to accept
payment by third person
II. Rights of third person who
makes the payment
a. Payment with knowledge
and consent of debtor:
i. he can recover what
he has paid
ii. he is entitled to be
subrogated
b. Payment without knowledge
and consent:
I. Recover only insofar
as the payment
beneficial to the
debtor; NOT
ENTITLED to
subrogation
General Rule: Payment to an
incapacitated/unauthorized creditor is NOT
VALID
Special forms of payment:
a. Dation in payment – dacion en
pago, adjudicacion en pago, datio in
solutum
- Form of payment where the
ownership of property is
transferred to his creditor to pay
a debt in money
- Objective novation
- As a rule, debtor IS released
b. Application of payment –
designation of debt to which
payment shall be applied when
debtor owes several debts in favor
of same creditor
How application is made:
- debtor who has preferential
right designates the debt,
- if not creditor makes it by
indicating debt being paid in his
receipt,
- if neither of parties, it shall be
applied by the operation of law
c. Payment by Cession – abandonment
or assignment by the debtor of all
his property in favor or his creditors
- Ownership IS NOT transferred
- Two or more debtors; insolvent
- As a rule, debtor IS NOT released
d. Tender of payment - act of debtor
of offering his creditor what is due
to him
e. Consignation - act of depositing the
sum or thing due with juridical
authorities; creditor refuses to
accept without just cause or cannot
accept it
2. Loss of the thing due - includes
physical or legal impossibilities
General Rule:
- Loss of a determinate thing
extinguishes the obligation
- Loss of a generic thing DOES NOT
extinguish the obligation
(because generic thing does not
really perishes – genus nunquam
perit)
Exceptions: delimited generic thing
– example: 100 cavans of rice from
my harvest are completely
destroyed
3. Condonation or remission -
gratuitous abandonment by the
creditor of his right
4. Confusion or merger – meeting in
one person of the qualities of
creditor and debtor
5. Compensation – two person in their
own right are creditor and debtors
of each other
 Facultative – this compensation may
be claimed or opposed by one of the
parties (such as when not all
requisites for legal compensation
are present)
 When one or both debts are
rescissible or voidable: may be
compensated against each other
before they are judicially rescinded
or avoided
6. Novation – modification or
extinguishment of an obligation by
another..
Kinds of novation:
Real or objective – changing the
objects or principal condition
Personal or subjective – change of
parties
I. Substituting the person of
debtor (always with
creditor’s consent)
a. Expromission – third
person initiates the
substitution, without
knowledge or against will
of debtor
b. Delegacion – debtor
initiates substitution;
requires the consent of
both parties
Effect if new obligation is void: novation is
void; original one shall subsist unless parties
intended that former relation will be
extinguished
Effect if original obligation is void: novation
is void; no obligation to extinguish since it is
non-existent
Effect if original obligation is voidable:
novation is valid; provided that annulment
may be claimed ONLY by the debtor or
when ratification extinguishes acts which
are voidable
Effect if original obligation is subject to
suspensive or resolutory condition: new
obligation shall be subject to same
condition unless otherwise stipulated
CONTRACT
Contract (Art.1305) – meeting of minds
between two persons whereby one binds
himself with respect to other, to give
something or to render some service
Elements of Contract
Essential - without which there will be no
contract
a. Consent of contracting parties
b. Object/subject matter
c. Cause
Natural – found in certain contracts unless
set aside or suppressed by parties (ex.
warranty against hidden defects)
Accidental Elements – particular
stipulations (ex. Terms of payment, interest
rate)
Classifications
A. Acc. to perfection or formation:
1. Consensual – perfected by mere
consent (ex. Lease and Sale)
2. Real – perfected by delivery of
object (ex. Depositum,
Commodatum)
3. Formal or solemn – must be in
form provided by law for their
perfection
B. Acc. to cause:
1. Onerous – exchange of valuable
considerations (Sale, Barter)
2. Gratuitous or Lucrative –
receives no equivalent
consideration
3. Remuneratory – cause is the
service or benefit remunerated
C. Acc. to importance
1. Principal – can stand by itself
2. Accessory – existence depends
upon another contract (pledge,
mortagage)
3. Preparatory – serve as a means
which other contracts may be
entered into (agency,
partnership)
D. Acc. to name or designation:
1. Nominate - which have name
under law
2. Innominate – without name
Example:
Do ut des (I give that you may
give)
Do ut facias (I give that you may
do)
Facio ut des (I do that you may
give)
Facio ut facias (I do that you may
do)
E. Acc. to risk or fulfillment:
1. Commutative – parties give
equivalent values
2. Aleatory – fulfillment depends
upon chance
F. Acc. to parties obligated:
1. Unilateral – only one of the
parties is obligated to give or to
do
2. Bilateral – both are obligated,
reciprocal or non-reciprocal
G. Acc. to subject matter:
1. Things – sale, barter
2. Right or credits – usufruct or
assignment of credits
3. Service - agency, lease of service
H. Acc. to time of fulfillment:
1. Executed – has been performed
2. Executory – has NOT yet been
performed
I. Other classifications:
1. Auto-contract – only one person
represents two opposite parties
to contract
2. Contract of adhesion – only one
party drafted the contract
(insurance)
Stages of Contract:
1. Preparation or conception –
preliminary negotiations and
bargaining
2. Perfection or birth - point when
there is a meeting of the minds
3. Consummation or death or
termination - parties fulfill or
perform the terms agreed upon in
the contract
Basic principles of contract:
1. Liberty or freedom to stipulate
2. Mutuality of contract
3. Relativity of contract –
General rule: contracts take effect
only between the parties, assigns
and heirs except where rights and
obligations are not transmissible
4. Consensuality of contract –
General Rule: contracts are perfect
be mere consent
Except: real contracts, formal or
solemn contracts
5. Obligatory force of contract and
compliance in good faith
Essential Requisites:
CONSENT - manifestation of the meeting of
the offer and the acceptance upon thing
and cause which are to constitute the
contract
Rules on offer:
1. MUST be CERTAIN
2. INEFFECTIVE upon death, civil
interdiction, etc. of other party
BEFORE acceptance is conveyed
3. Offer may be withdrawn at any time
before acceptance by withdrawal
except, founded upon consideration
 Option – offeror gives offeree
certain period within which to buy
or not, may or may not be for a
valuable consideration
Rules on acceptance:
1. Must be absolute
2. Made by telegram or letter does not
bind offeror except from the time it
came to his knowledge
3. May be express or implied
4. Made through an agent is accepted
from the time it is communicated to
him
Rules on consent:
1. Parties MUST have the capacity to
enter into contract
 Incapacitated person must pay
reasonable price for food and
necessaries (sale is valid)
 Husband and wife are prohibited to
sell to each other or donate
2. Agreed in a state of drunkenness or
during a hypnotic spell are
VOIDABLE
3. Given through FIVUM (Fraud,
Intimidation, Violence, Undue
influence, Mistake) = VOIDABLE
Simulated contracts – one that does not
intent to have any legal effect on or a
change in the juridical situation of the
parties
 Absolutely simulated contract –
parties do not intend to be bound at
all; void
 Relatively simulated contract –
conceal their true agreement;
agreement is enforceable
OBJECT
1. Things are NOT OUTSIDE the
commerce of men, including future
things
 Contract is generally VOID when
object is future inheritance
 2. Rights which are NOT 3. Unenforceable contract – one that
TRANSMISSIBLE (strictly personal cannot be enforced UNLESS
rights such as right to vote, parental RATIFIED
authority)  Right is available ONLY to the
3. Services which are NOT CONTRARY contracting parties
to law, moral, good custom.. Examples: - entered into the name of
4. NOT IMPOSSIBLE another person, without authority
5. MUST be determine, if not possible - do not comply with Statute of
to determine without need of a new Fraud
contract 4. Void contract – has NO FORCE and
effect from the VERY BEGINNING
CAUSE – essential reason why a party - Equivalent to nothing; produces
enters into a contract no civil effect
Lesion – inadequacy of cause Pari Delicto – universal doctrine which
General Rule: Lesion shall NOT INVALIDATE holds that no action arises in equity or law
a contract from an illegal contract
Exception: Fraud, Mistake, Undue Influence - Applies ONLY when there is
and suffer for more than ¼ of the value of EQUAL GUILT
object Reformation – remedy in equity by means
of which a written instrument is made or
Defective contracts: construed so as to express or conform to
1. Rescissible Contract – has all the real intention of the parties, some
essential requisites but which may errors or mistake has been committed
be set aside by reason of equity on
account of damage to one of the
parties or third person
Rescission – remedy allowed by law to
contracting parties or to third person, to
secure the reparation of damages caused to
them by a contract
- Remedy to make ineffective a
contract, validly entered into..
 Action for rescission: prescriptive
period – 4years from the date of
contract
2. Voidable Contract – one that is
defective by reason of incapacity or
vitiated consent of one to the
parties; binding UNLESS ANNULLED;
SUSCEPTIBLE OF RATIFICATION
Annulment – to set aside voidable contract
Ratification – adoption or affirmation of a
contract which is defective because or
party’s vitiated consent or incapacity
PLEDGE, MORTGAGE AND ANTICHRESIS
Pledge – real contract, requires for its
perfection the delivery of the thing to
creditor or to third person by common
agreement
- without delivery=VOID
- delivery of merely symbolic = no
pledge
Requisites of Pledge or Mortgage:
1. Constituted to secure the fulfillment
of a principal obligation
Pledge may secure:
 All kinds of obligation
 Voidable, unenforceable, natural
obligation
2. Pledgor or mortgagor be the
absolute owner
 Pledge or mortgage constituted on
future property is VOID
 Third person MAY pledge or
mortgage their property to secure
other’s debt
3. Persons constituting have FREE
DISPOSAL OF PROPERTY or LEGALLY
AUTHORIZED
 Corporation under receivership is
NOT VALID, (because doesn’t have
free disposal of the thing)
General Rule: Pledge or mortgage CANNOT
BE SOLD or ALIENATED since payment
cannot yet be compelled (Before Maturity)
Exception: If pledgor, mortgagor fails to
fulfill certain conditions
Pactum Commissorium – stipulation in a
pledge or mortgage which provides for
AUTOMATIC FORFEITURE
- VOID; contrary to morals and
public policy
 Pledgee or mortgagee may also bid
at the public auction things pledge
or mortgage
 APPROPRIATION IN PLEDGE is
ALLOWED: only if the thing pledge is
not sold at two public auctions
 APPROPRIATION IN MORTGAGE IS
NOT ALLOWED
Pledge shall not be perfected until the
delivery of object of the pledge
Kinds of Pledge:
1. Conventional or voluntary – mutual
consent
2. Legal – operation of law
Object of Pledge:
1. All movables within commerce of
men which are susceptible of
possession
2. Incorporeal rights (by negotiable
instrument, bills of lading, shares of
stocks etc.)
Form of Pledge
1. Between parties – delivery of object
2. As to third person – public
instrument
Extent of Pledge
1. Thing pledged
2. Fruits, income, dividends or interest
3. Offspring unless excluding them
Sale of the thing pledge or appropriation =
extinguishment of pledge and principal
obligation
Legal pledge - right of person to retain a
thing until he receives payment of his claim
Examples: - Possessory Lien by a possessor
in good faith
- P.L of worker
- Depositary’s right of retention
Conventional Legal Pledge
Pledge
 Excess belongs to Remainder belongs Foreclosure – remedy available to mortgage
creditor unless to debtor by which he subjects the property
there stipulation mortgaged to the satisfaction of obligation
Creditor is NOT Creditor IS secured
entitled to recover ENTITLED to Kinds:
deficiency recover deficiency 1. Judicial foreclosure – filling a
petition in court
Real mortgage Tipo or Upset price – set by parties as the
Important characteristics: amount at which property will be sold at
1. Accessory – cannot exist without public auction; VOID
principal 2. Extra-judicial foreclosure – Act no.
2. Indivisible – creates lien (legal claim) 3135
on the whole a. There is stipulation
3. Inseparable – subjects the property b. Made under a special power of
upon which it is imposed atty.
4. Real right - right to have mortgaged
property sold to satisfy his claims Redemption – transaction through which
5. Real property – immovable property the mortgagor or one claiming in his right
Kinds: by means of payment or performance,
1. Conventional or voluntary reacquires or buys back the value of title
mortgage – agreement Kinds:
2. Legal mortgage – law 1. Equity of redemption – right to
3. Equitable mortgage – lacks certain redeem but before the property is
formality, shows the intention of the sold
parties to charge a real property as a a. Judicial Foreclosure – not less
security for a debt than 90 days to pay the
Objects: mortgage debt before property
1. Immovable is sold
2. Alienable real rights b. Extra-judicial foreclosure – may
Form: avail right after his default but
1. Between parties – may be in ANY before property is sold
form, even NOT registered in 2. Right of redemption – right to
registry of property repurchase within a certain period
2. As regard to third person – MUST of time after it was sold
be RECORDED in registry of property a. Judicial Foreclosure – after sale
Extent: but before confirmation by the
1. Property mortgaged court except granted by banks
2. Natural accessions b. Extra-judicial foreclosure – one
3. Improvements year from the date of
4. Growing fruits registration of sale
5. Rents and income not yet received Exceptions: juridical person
6. Indemnity granted or owing to whose property is being sold
proprietor pursuant to an extrajudicial
foreclosure – right to redeem:
 but not after the registration of
the sale or 3 months after Characteristics:
foreclosure (whichever is earlier) 1. Accessory – contract that is
dependent
CHATTEL MORTGAGE – mortgage appears 2. Formal – writing
to be recorded in Chattel Mortgage Register 3. Nominate
4. Real right – lien on immovable
Objects: - ONLY personal property 5. Real property – real property by
1. Movables susceptible of itself
appropriation 6. Indivisible - subsists as long as the
2. Real property as personalty principal obligation remains unpaid
(growing crops) Application of fruits of immovable:
3. Forces of nature control by science 1. Taxes and charges
(electricity, light, gas) 2. Expenses for preservation and
4. Things can be transported to one repairs
place to another without 3. Interest
impairment 4. Principal obligation
5. Obligation and actions – have their
objects movable or demandable
sums Pledge Real Mortgage
6. Shares of stock Movables immovables
Forms: Thing is delivered Not required to
to creditor or third be delivered
1. Between the parties – must be
person
recorded in Chattel mortgage Public instrument Registered to
register take effect
2. As to third person – affidavit in good against third
faith must be appended to Deed of person
chattel mortgage and recorded (Conventional) Deficiency CAN
deficiency be recovered
Affidavit of good faith – sworn statement CANNOT be
recovered
attesting to the fact that mortgage is made
(Conventional) Excess proceeds
for the purpose of securing the obligation excess proceeds is belongs to
specified and for no other obligation retained by the mortgagor
pledgee UNLESS
Anti-chresis- contract whereby the creditor there is stipulation
acquires right to receive fruits of an Pledgee may CANNOT
immovable of his debtor with obligation to appropriate thing appropriate
pledge; not sold in
apply them to the payment of interest and
two public
principal of his credit auctions

Anti (Greek word) – against Pledge Chattel Mortgage

Chresis – use; denoting action of giving a
Thing is delivered NOT required to be
credit
delivered
= “against” the “use” of property
Public instrument Registered and
accompanied by
affidavit of good
faith to take effect
against third
person
(conventional) Deficiency CAN be
deficiency CANNOT recovered except
be recovered personal property
sold in installment
Excess proceeds of Excess belongs to
sale is retained by mortgagor
pledgee UNLESS
there is stipulation
May appropriate CANNOT
appropriate

Real Mortgage Chattel Mortgage

Immovables Movables
Registered to bind Accompanied by
third person affidavit
Secure future CANNOT secure
obligation future obligation
AGENCY
Agency – contract whereby person binds
himself to render SOME SERVICE, TO DO
SOMETHING IN REPRESENTATION or IN
BEHALF OF ANOTHER with consent and
authority
Elements:
1. Consent – express or implied
2. Object – execution of a juridical act
in relation to third person
3. Agent acts as representative - not
for himself
4. Agent acts within the scope of his
authority
Characteristics:
1. Principal
2. Preparatory – means by which other
contracts may enter into
3. Consensual – perfected by mere
consent
4. Nominate
5. Bilateral – bound reciprocally
6. Commutative – give and receive
almost equivalent value
Parties:
1. Principal – represented by the
agent; primarily and originally
concerned in contract of agency
 If principal is incapacitated; agent is
capacitated = VOIDABLE
2. Agent – acts for and represents the
principal
 Contract of agency is VOIDABLE If
the agent is incapable of giving
consent
 Legal capacity is NOT required for
the validity of agent’s act; mere
extension
Acts that may NOT be delegated:
1. Personal in nature
2. Prohibited by law
Any acts which one may lawfully do
personally MAY BE delegated
Fiduciary – relationship of principal and
agent; based on trust and confidence
Kinds:
1. Acc. to form:
a. Express – oral agreement (oral
agency is valid unless law
requires other form)
- Written agreement (require
special power of atty.)
b. Implied – acts of principal
- Silence of principal
- Lack of action of principal
- Failure of principal to repudiate
the agency..
2. Acc. to extent:
a. General agency – one that
compromise all business of
principal
b. Special agency – one or more
specific transactions
3. Acc. to authority-conferred
a. Agency couched in general
terms – (General power of atty.);
only acts of administration
Power of Attorney – written instrument
given by principal to his agent authorizing
the latter to perform specified acts in behalf
of the former; acts have binding effect
b. Agency couched in special terms
– requires special power of atty
for performance of specific acts
(Art 1878) *Read*
Kinds of acceptance of agency by agent:
1. Express
2. Implied – his act carry out the
agency
- His silence or inaction
Basic principles of agency:
1. agent must act within the scope of
his authority
2. must act in behalf of his principal
Effects if one or both principles are absent
1. agent’s own behalf – undisclosed
principal
 a. principal has no right of action
against the person with whom
the agent has contracted
b. the (person) has no right of
action against the principal
c. agent is one directly bound
2. agent acts in excess of his authority
and in principal’s behalf or person
acts without authority but in behalf
of latter
- act is UNENFORCEBLE unless the
latter ratifies the same
3. Agent acts in excess of authority
and his own (agent’s) behalf or
person acts without authority but
in his (former’s) behalf
- Act is deemed to be that of
agent himself or without
authority; VALID
Obligations of a person who declines the
agency: bound to observe diligence of a
good father of a family in custody and
preservation of goods
Owner shall:
a. Appoint an agent
b. Take charge of the goods
Obligation of agent:
1. Carry out agency
2. Liable for damages, principal may
suffer
3. Finish business already begun on the
death of the principal; delay entail
any danger
4. Advance necessary funds; except
principal is insolvent
5. Act in accordance with the
instruction of the principal; shall do
all that a good father of a family
would do
Instruction – orders given by the principal
to his agent relating to the manner by which
agency shall be carried out
Authority – subject matter upon which the
agent is commissioned to act
6. Not to carry out agency if it would
result to loss or damage to principal
7. Liable for damage if there being
conflict between his interest and of
principal; he should prefer his own
8. Not to borrow the money of the
principal without latter’s consent, if
agent is authorized to lend
principal’s money at interest
9. To render an accounting of his
transaction and to deliver to
principal whatever he may have
received; stipulation exempting the
agent is VOID
10. Liable for interest on the sums he
has applied to his own use from the
day on which he did so, and owes
after extinguishment of agency
11. Be responsible for fraud, negligence
12. Bear the risk of collection and to pay
the principal the proceeds of the
sale on the same terms agreed upon
with the purchaser, in addition to
ordinary commission (Guaranty
Commission)
13. Liable for damages if he does not
collect the credits of the principal at
the time when they become due and
demandable UNLESS he proves he
exercised due diligence for that
purpose (ordinary commission agent
ONLY)
Agent’s liability when he appoints a
substitute:
a. Agent not prohibited – agent must
be responsible; principal may bring
an action against the substitute
b. Agent is authorized to appoint a
substitute
1. Principal DID NOT designate –
agent shall be liable if substitute
is notoriously incompetent or
insolvent
 - Agent shall NOT be liable if not
notoriously incompetent or
insolvent; substitute is liable for
himself
2. Principal DESIGNATES – agent is
NOT responsible
c. Agent is PROHOBITED – if he
appoints, all acts of substitute shall
be VOID
Liability of 2 or more agents, appointed
simultaneously:
General Rule: each agent is liable for his
OWN acts, if all are fault, liability is JOINT
Exceptions: each agent is responsible for:
a. Non-fulfillment of agency
b. Fault or negligence of his fellow
agents; except when acted beyond
authority
Agent’s liability if he contracts in the name
of principal:
General Rule: agent shall not be liable to
the party with whom he contracts
Exception: agent shall be personally liable:
1. If he expressly binds himself – both
agent and principal shall be liable to
the party
2. If he exceeds limits of his authority
without giving such party sufficient
notice of his powers
Commission agent – who buys and sells
goods or chattel consigned or delivered by
his principal for compensation (commission)
Commission agent Broker
Maintains relation Merely an
with his principal intermediary between
buyer or seller and buyer and seller
property Function is to bring
together the parties to
transaction
Receives a Earns his pay merely
commission upon by bringing the buyer
successful conclusion and seller together
of sale
Obligation of a commission agent:
a. Responsible for the goods received
by him in terms and conditions; he
shall make a written statement of
the damage and deterioration
b. Distinguish by countermarks goods
of the same kind and mark which
belong to different owners
c. Authority to sell on credit
General Rule: commission agent
CANNOT sell on credit
Exceptions: C.A. can sell on credit
ONLY with the express or implied
consent of principal
Effects if the C.A sells on credit WITHOUT
principal’s consent
a. Principal MAY DEMAND payment in
cash
b. C.A is ENTITLED to any interest or
benefit
Obligation of the commission agent if he is
authorized to sell on credit – must inform
the principal, with statement of the names
of buyers; if he fails , sale shall be deemed
to have been made in cash
Guaranty commission – del credere
commission
Obligation of Principal:
1. Comply with all obligations which
the agent may have contracted
within the scope of his authority
2. Be bound for any obligations
wherein agent has exceeded his
power, if he ratifies tacitly or
expressly
3. Be solidarily liable with the agent if
he allowed the latter to act as
 though he has full powers when
agent exceeded his authority
4. Advance the agent the sums
necessary for the execution of the
agency should the agent so request
5. Reimburse the agent the sums
advanced by the latter even if the
business of undertaking was NOT
successful, agent is free from fault
6. Indemnify agent for all damages
which the execution of the agency
may have caused the latter, without
his fault or negligence on his part
When principal is NOT liable for expenses
incurred by the agent:
1. Agent acted in contravention of the
principal’s instructions, UNLESS the
latter should wish to avail himself of
the benefits derived from the
contract
2. Expenses were due to his fault
3. Agent incurred them with
knowledge that an unfavorable
result would ensue; principal was
NOT aware
4. Stipulated that expenses would be
borne by agent or allowed ONLY a
certain sum
Liability when there are 2 or more
principals: - appointed an agent for
common transaction, they shall be
SOLIDARILY LIABLE for all consequences of
agency
Rights of retention of agent (nature of legal
pledge) – right to retain in pledge the things
which are OBJECT of agency until the
principal:
1. Reimburses him for the sums
necessary for the execution, even if
it is NOT successful; provided the
agent is free from fault
2. Pays him the indemnity for all
damages which the execution of the
agency may have caused the agent,
without fault or negligence on his
part
Incompatible contracts with agent and
principal:
2 persons contract with regard the same
thing, one of them the agent, and the other
with principal
a. Movable:
1. First possessor in good faith
2. Contract with prior date shall be
preferred
b. Immovable:
1. First registrant in good faith
2. First possessor in good faith
3. One who present oldest title in
good faith
Liability for damages to third person
whose contract is rejected in incompatible
contracts:
a. Agent is liable if he acted in bad faith
b. Principal is liable if agent acted in
good faith
Extinguishment of agency:
1. Revocation – acts of the principal
terminating the agency at will
confidence and representation
- P. may revoke at will and compel
the agent to return documents
evidencing the ageny
Who may revoke? (2 or more principals) –
ANY ONE of the principal may revoke
(Solidarily liable)
Kinds:
I. Express – orally or writing
II. Implied
a. When new agent is appointed
for the same business or
transaction, previous agency is
 REVOKED from the day on which
notice was given to the former
agent
b. If the principal directly manages
the business entrusted to agent,
UNLESS the purpose is just to
assist the agent
c. General power of atty. Is
REVOKED by a special one
granted to another agent,
regards the special matter
Agency may NOT be revoked at will:
a. If a bilateral contract depends upon
the agency
b. If agency is a means of fulfilling an
obligation already contracted
c. If a partner is appointed manager of
partnership in contract of
partnership and his removal from
the management is unjustifiable
Notice of revocation
a. Agent contracting with specified
persons – principal must give timely
notice of revocation to such third
person
- Without such notice = third
person not be prejudiced, act
done shall be legally operative
against principal
b. Agent contracting with public or
any person - revocation does NOT
prejudice third person who acted in
good faith and without knowledge
- Notice in a newspaper of general
circulation is sufficient warning
to third person
- Revocation is binding against
third person who has knowledge
2. Withdrawal – by the agent giving
due notice to the principal of his
withdrawal (Art. 1928)
Liability/ obligation of an agent who
withdraws:
a. Agent must indemnify the principal
for any damage suffered by the
latter by reason of the withdrawal
UNLESS withdrawal is based upon
the impossibility of continuing the
agency without detriment to himself
b. Must continue to act UNTIL principal
had reasonable opportunity to take
necessary steps to meet the
situation even if for a valid reason
3. A. Death
a. of Principal
General Rule: death of principal
DOES extinguish the agency
Exceptions: (NOT EXTINGUISH)
I. if agency has been
constituted in the common
interest of the principal and
agent
II. if agency has been
constituted in the interest of
third person who has
accepted the stipulation in
his favor (pour autrui)
Validity of agent’s acts without knowledge
of death of principal or other cause of
extinguishment of agency: acts are VALID
and shall be fully effective with respect to
third persons who may have contracted
with him in good faith (1931)
- agent MUST finish business
already begun on the death of
principal..
b. of Agent – extinguishes the
agency
Duty of Agent’s heirs:
a. notify the principal of the agent’s
death
b. adopt in the meantime such
measures as the circumstances
 may demand in interest of the
principal (1932)

B.) Civil interdiction – he cannot manage or

dispose; in prison, acts are restricted

C.) Insanity – principal cannot give his

consent, agent cannot carry out agency

D.) Insolvency – principal modifies or limits

his capacity to act, agent cannot carry out
agency effectively

4. Dissolution of firm and corporation

which entrusted or accepted the
agency – equivalent to death of
natural person
5. Accomplishment of object or
purpose
6. Expiration of period for which the
agency was constituted
PARTNERSHIP (Not finished)
Partnership – contract of 2 or more persons
who bind themselves to contribute money,
property or industry to common fund, with
the intention of diving the profits among
themselves
- Contract and Business
organization
Characteristics of a contract of partnership:
1. Consensual
2. Principal
3. Bilateral or multilateral
4. Nominate
5. Preparatory
6. Onerous
Essential requisites of partnership:
1. Valid contract - voluntary
agreement
- Formation CANNOT be imposed
upon a person because a
partnership is a fiduciary
relationship
- Doctrine of delectus personae
(personarum); person is free to
choose those whom he wants to
be associated with in partnership
2. Mutual contribution: money,
property or industry to common
fund
- Limited partner MAY contribute
cash, property but NOT SERVICE
3. Lawful object or purpose
- Unlawful object is VOID
4. Established for a common benefit,
to obtain profits and to divide the
profits among the partners
- Element that distinguishes it
from religious, civic and social
org.
- Formed for the practice of
profession, primary purpose is
to render service to the public
Form of partnership contract: ANY FORM
(oral or written)
Exceptions:
1. Immovable property or real rights
are contributed
a. Must be in public instrument
b. Inventory: must be signed by
parties and attached to public
instrument
If not: contract is VOID; CANNOT have
juridical personality
2. Capital of partnership is P3,000 or
more in money and property
a. Must be in public instrument
b. Registered in SEC
If not: contract is STILL VALID; STILL
ACQUIRES juridical personality; liability and
members to third person are NOT
AFFECTED
3. Limited partnership
a. Certificate signed under oath by
partners and recorded with SEC
If not: considered as GENERAL
PARTNERSHIP
Who may become partners:
1. Natural persons who is
CAPACITATED
2. Artificial persons – partnership and
corporation
Rules to determine whether partnership
exist:
1. Persons who are NOT partners as to
each other are not partners to third
person EXCEPT, person represents
himself as a partner in an existing
partnership or with one or more
partners not actual partners
 2. Co-ownership or co-possession
DOES NOT itself establish a
partnership
3. Sharing or gross returns DOES NOT
of itself establish a partnership
4. Receipt by a person of a share of the
profits of business is a PRIMA FACIE
evidence that he is a partner
Exceptions:
- debt by installments
- Wages or rent
- Annuity or representative of a
deceased person
- Interest on loan
- Consideration for sale
Kinds of partnership:
1. As to object:
a. Universal partnership – may
either be a universal partnership
of all present property: or
universal partnership of profits
Of all present property: contribute all
property, profit and fruits which actually
belonged to them at present and after
formation; except acquired by inheritance,
donation and legacy
Of profits: all that the partners may acquire
by their work and industry during the
existence of partnership, usufruct belonging
at the time of formation
If silent: Universal partnership of profits
- Transmits less rights and interest
Rule: Person prohibited to give donation or
advantage CANNOT enter into a universal
partnership
- Donations between spouse
- Guilty of concubinage or
adultery
- Guilty of criminal offense
- Made to public officer, wife,
descendant or ascendants by
reason of his office
b. Particular partnership – has its
object for determinate things,
their use or fruits or a specific
undertaking or exercise of
profession
2. As to liability:
a. General partnership – all
partners are general partners
who are liable to the extent of
their separate property after
partnership asset has been
exhausted
b. Limited partnership – at least
one general partner and at least
one limited partner (liable only
to the extent of their investment
in partnership)
3. As to duration:
a. For a fixed term – duration is
fixed by partners
b. For a particular undertaking –
organized for a certain
undertaking, when attained will
cause termination
c. At will – no period is fixed, may
be terminated at will by the
partners
4. As to representation to others:
a. Ordinary partnership – actually
exists among the partners as
well as to third person
b. Partnership by estoppel – in
reality is not a partnership but
considered as one with respect
to those who, by the reason of
their conduct are concluded
from denying its existence
 If all partners consent –
assets of partnership will
be used to pay the
liability after exhaustion;
 all be liable with their
separate property
 If not all partners
consented – actual
partners who consented
and person who made
misinterpretation shall be
liable jointly with their
separate property
 If non existing
partnership – all persons
who consented are liable
jointly
Kinds of partners:
1. As to liability:
a. General partners – liable to extent
of his separate property
b. Limited partners – extent of his
capital contribution only
c. General-limited partner – has all the
rights and powers and subject to all
restrictions of general partner
EXCEPT, to his contributions
- Have rights against other
members
- Liable pro-rata to partnership
creditors to extent to his
separate property after
exhaustion of partnership asset
BUT can demand for
reimbursement
2. As to contribution:
a. Capitalist partner – money or
property
b. Industrial partner – service or
industry (physical or intellectual)
c. Capitalist- industrial partner –
money, property and service
3. Other classifications:
a. Managing partner – manages
business
b. Liquidating partner – takes
charge winding up of the affairs
after it’s dissolved
c. Nominal partner – not actually a
partner but liable as such to
third person (partner by
estoppel)
d. Ostensible partner – active and
known to the public, name is
included in the firm name
e. Secret partner – connection is
kept to the public
f. Silent partner – has no voice in
partnership, though he shares in
profits and losses
g. Dormant partner – does not
participate in management and
not known in public
Rules on division of profit or loss
1. All are capitalist partner
- be divided according to their
agreement
- Only in sharing of profits have
agreed upon: share of each
partner in losses shall be in the
same proportion as the share of
each in profits
- Absence of both: share of each
shall be in proportion to his
capital contribution
2. Industrial partner/s + Capitalist
partners
a. Profits – according to their
agreement
- Absence: industrial partner shall
first receive a just share of
profits; each capitalist partner
shall share in proportion to his
capital contribution
b. Losses – industrial partner shall
not share the losses
- Capitalist partners shall share:
according to their agreement; in
proportion to their share in
profits; in proportion to their
share in contribution
 3. Capitalist-industrial partner/s +
capitalist partners
a. Profits – according to their
agreement
- Absence: capitalist-industrial
partner shall first receive a just
share; each capitalist partner
including capitalist-industrial
shall share in proportion to their
capital contribution
b. Losses – according to their
agreement
- Absence: including capitalist
partner in his capacity as
capitalist partner, according to
their capital contribution
- Capitalist-industrial partner shall
not share in loss in capacity of as
industrial partner
Designation of share in profit and loss by a
third person or by a partner:
1. Entrusted to third person: same
shall be binding upon the partners
and may be impugned ONLY when it
is manifestly inequitable
It can no longer be impugned: by
partner who has begun to execute
it; by any partner if 3 months has
already lapsed from the time he
obtain knowledge
2. Entrusted to a partner: designation
is VOID
Rules of management:
1. Appointed as manager in the art. of
partnership
a. Scope of authority – may
execute ALL acts of
administration, despite of
opposition of other UNLESS in
bad faith
b. Revocation
With just cause – vote of
partners owning the controlling
interest
Without just cause – only by
consent of ALL partners including
managing partner (novation)
2. Appointed manager after
partnership has been constituted
a. Scope of authority – may
execute ALL acts of
administration but in case of
opposition, partners owning the
controlling interest may resort to
voting for his removal
b. Revocation – may be removed
WITH OR WITHOUT JUST CAUSE
by the vote of partners owning
the controlling interest
3. 2 or more partners have been
appointed has managers
i. When there specification to their
duties
a. Scope of authority – shall
perform only the duties specified
ii. No specifications or no stipulations
that one shall not act without the
consent of others
a. Scope of authority – may
separately execute all acts of
administration
b. In case of opposition – decision
of majority of managing partner
shall prevail, if tie, decision of
managing partners owning the
controlling interest shall prevail
iii. Stipulation that none of the
managing partners shall act without
consent of others
a. Vote required – concurrence of all
of them shall be necessary for
validity of acts
b. Rules in case of absence/disability
of one of the managing partners –
other managing partners ARE NOT
 authorized to act for partnership
UNLESS there is imminent danger
4. Manner of management has not
been agreed upon – all of them are
managing partners; WITHOUT the
consent of others none of them may
make any important alteration in
immovable property even it is useful
- Whatever any of them may do
alone shall bind the partnership
a. Rules in case of opposition –
decision of majority shall prevail;
decision of partners owning the
controlling interest
Rights of partners to engage in business:
1. Industrial partner
General Rule: CANNOT engage in
business for himself
Exception: UNLESS partnership
expressly permits him to do so
If industrial partner engages in business
without express permission capitalist
partners may: exclude him with right of
damages; avail themselves of the benefits
obtained from business with right of
damage
2. Capitalist partner – may engage in
business for his own account
1.) Different from the partnership
business
2.) Same kind as the partnership but
allowing him to engage
If capitalist partner engages in the same
kind of business without stipulation
allowing him: capitalist partner shall bring
to the common fund any profits accruing to
him from his transaction, bear ALL the
losses
Rules on sharing of partnership liabilities
to third person
1. Nature of liability
a. Pro-rata – equally divided
among the partners (including
industrial partner)
b. Subsidiary – each will liable with
his separate property after all
the assets of partnership have
been exhausted
2. Partners liable – ALL general partner
(whether: Capitalist or Industrial)
3. Status of stipulation exempting
partner from pro-rata and
subsidiary liability after exhaustion
of P. assets
- VALID among the partners
- VOID as to third person
If there is such stipulation, liabilities shall
be paid as follows:
1. Assets of partnership
2. Separate assets of partners (incl.
industrial partner) – equally
3. Partners not exempted from pro-
rata and subsidiary liability shall
reimburse acc. to partner’s profit
and loss sharing agreement or
capital contribution
- Industrial partner exempts from
losses
- General partners exempted from
pro-rata and subsidiary liability
Requirement to operate under firm name –
may or may not include the name of one or
more partners
- Those who are not member and
included their names in the firm
= subject to liability of a partner
Obligations of partners
1. Contribution of capital – contribute
EQUALLY to the capital of
partnership UNLESS there is a
stipulation to contrary
SALES – (Not finished)
Delivery of incorporeal property (quasi-
tradition)
a. Constructive tradition – execution
of public instrument
b. Placing the titles of ownership in
the possession of vendee
c. Use by vendee of his rights with
consent of vendor
Sale on return – ownership is transferred
but buyers has the option to revert their
ownership within fixed time
Sale on approval/trial/satisfaction –
ownership remains to the seller but
transferred to buyer if:
 he signifies his approval;
 does an act adopting the
transaction;
 if does not signify but retains the
good without giving notice of
rejection within fixed time
Transfer of ownership by delivery of
specific goods to carrier or other bailees
General Rule: Delivery of specific goods to a
carrier or other bailee for the purpose of
transmission to the buyer transfers
ownership to the buyer
Exceptions: ownership of specific goods is
retained by the seller despite delivery to
carrier or other bailee:
1. there is stipulation
2. by the terms of bill of lading, goods
are to be delivered to the seller or
his agent or order of seller or his
agent
3. by the terms of bill of lading, goods
are to be delivered to the order of
the buyer or agent but the bill of
lading is retained by seller or agent
4. seller draws on the buyer a bill of
exchange but the buyer dishonors
such bill of exchange
however if bill of lading is negotiated to
a purchaser for value in good faith,
ownership of the goods is passed on to
him
General Rule: Goods are sold by a
person who is NOT the owner, buyer
acquires NO better title that the seller
had
Exceptions:
1. sale is made under authority or
consent of owner
2. owner is precluded by his conduct
from denying the seller’s authority
to sell
3. sale is made under the provision of
any factor’s acts
4. sale is made under a statutory
power of sale
5. purchase is made in merchant’s
store
if the seller’s title is VOIDABLE, but has not
been avoided at the time of sale, buyer
acquires good title; provided that in good
faith, for value and without notice of defect
Document of title of goods - any document
used in ordinary course of business in the
sale or transfer of goods as proof of
possession to authorize the possessor of
document to transfer or receive, either
indorsement or delivery, goods represented
by document
Common forms:
1. bill of lading – written
acknowledgement of the receipt of
goods by a carrier and agreement to
transport and deliver
 2. dock warrant – given by a dock
owner to the owner of the goods
and warehoused on the dock upon
the faith of the bill of lading
3. warehouse receipt or order –
written acknowledgement by a
warehouseman of the receipt of the
goods placed in his possession
Ex: Quedans
Classes of documents of title:
1. Negotiable document of title –
stated that goods will be delivered
to bearer or to the order of any
person named in document
2. Non-negotiable document of title –
stated that goods are to be
delivered to a specified person
How negotiable document of title
negotiated:
1. By delivery
a. Terms: deliver the goods to
bearer
Special indorsement of a document of title:
goods are deliverable to bearer:
 Document of title which is a bearer
document of title on its FACE
becomes an ORDER document =
negotiated by indorsement +
delivery
 Negotiable instrument payable to
bearer remains a bearer instrument
even if specially indorsed
b. Terms: deliver the goods to the
order of a specified person or
subsequent indorsee has
indorsed it in blank or to bearer
2. By indorsement + delivery –
delivered to the order of a specified
person
Indorsement may take any forms:
a. Blank indorsement – without
specifying any name = mere delivery
b. To bearer – deliverable to bearer =
mere delivery
c. Special indorsement – name of
indorsee is specified = indorsement
+ delivery
 Negotiable instrument of title,
marked “non-negotiable” = remains
negotiable
 Delivery of an order document of
title WITHOUT indorsement = mere
assignment
 Non-negotiable document of title
CANNOT be negotiated = only
transfer or assign
Who may negotiate negotiable document
of title
1. owner
2. person to whom the possession or
custody of document has been
entrusted by owner:
- deliver goods to person to whom
the possession or custody of
document has been entrusted
- at the time of entrusting, it may
be negotiated by delivery
Rights acquired by a person to whom
negotiable document of title is negotiated
1. title of person negotiating the
document, over the goods covered
by document
2. title of depositor or shipper
3. direct obligation of the bailee to
hold possession of the goods for him
Rights of the transferee of a document of
title
1. non-negotiable document of title
a. title of the goods against the
transferor
b. right to notify the bailee of
transfer to him
 2. negotiable document of title –
transferee to whom a negotiable
document of title has been
transferred but NOT negotiated
acquires:
a. title of goods against transferor
b. right to notify bailee of the transfer
to him of document of title
Warranties of a person transferring or
negotiating a document of title:
1. document is genuine
2. has legal tight to negotiate or
transfer it
3. has knowledge of no fact which
would impair the validity or worth
of document
4. he has the right to transfer the title
and goods are merchantable or fit
for its purpose
 indorser shall NOT be liable for any
failure on the part of the bailee who
issued the document or previous
indorsers to fulfill their respective
obligations
Time and place of delivery of thing sold:
1. Place of delivery
a. Place stipulated
b. Place fixed by usage or trade
c. Seller’s place of business; seller’s
place of residence
2. Time of delivery
a. Time stipulated
b. Within a reasonable time
3. Goods in the possession of third
person – seller has not fulfilled his
obligation UNLESS third person
acknowledge the buyer that he
holds goods on the buyer’s behalf
4. Demand or tender of delivery – at
reasonable hour to be effectual
5. Expenses of delivery – seller bears
the expenses UNLESS otherwise
stipulated
When vendor is not bound to deliver the
thing sold:
1. Vendee has not paid him the price
2. No period for the payment of the
price has been fixed in contract
3. Period has been fixed: he is bound
Exception: vendee loses the right to
make use of the period
a. Vendee becomes insolvent UNLESS
he gives guaranty or security for the
payment of the price
b. Vendee fails to furnish guaranties or
securities
c. Guaranties or securities have been
impaired through his own acts
d. Vendee violates any undertaking
e. Vendee attempts to abscond
Rights of the buyer when quantity or
quality of goods delivered is different from
that which seller contracted to sell
1. Quantity delivered is LESS THAN
agreed upon
a. Reject the goods
b. Accept the goods – pay for them
at the contract rate
2. Quantity is MORE THAN agreed
upon
a. Accept the goods agreed upon
and reject the rest
b. Accept the whole and pay for
them at contact rate
c. Reject the whole if they are
indivisible
3. Seller delivers good agreed upon
BUT mixed with goods of different
description
a. Accept the goods agreed and
reject the rest; divisible
b. Reject the whole; indivisible
Unpaid seller – has not been paid or
tendered the whole of the price or who has
received a bill of exchange or other
negotiable instrument and condition under
which it was received has been broken by
reason of dishonor; insolvency of buyer

Rights of unpaid seller:

1. Possessory lien - right to retain
them while he is in possession of
them
2. Right of stoppage in transitu – right
of unpaid seller to resume
possession of the goods at any time
while they are in
3. Right to resale
Requisites:
a. Buyers has defaulted in
payment
b. Seller has the right of lien or has
stopped the goods in transitu
c. Title to goods has passed on to
the buyer
d. Grounds must be any: goods are
perishable
- Seller has expressly reserved the
right to resell the goods