Professional Documents
Culture Documents
Law On Sales
Law On Sales
CHAPTER 1
NATURE AND FORM OF THE CONTRACT
(ARTS. 1458-1637)
ARTICLE 1458
CONCEPT OF CONTRACT OF SALE
-contract of sale is a contract whereby one of the contracting parties
(SELLER) obligates himself to transfer the ownership and to deliver a determinate thing,
and the other party (BUYER) obligates himself to pay a sum of money or its equivalent
(PRICE)
- If the seller and the buyer differ in regard to the thing sold,
there is no meeting of the minds therefore, there is no sale
C. CAUSE OR CONSIDERATION
-It refers to the “price certain in money or its equivalent”
2. NATURAL ELEMENTS- those inherent in a contract of sale, which in the absence of
stipulation excluding them, are deemed to exist.
Such as: warranty against eviction, warranty against hidden defects and
encumbrances
ARTICLE 1459
REQUISITES CONCERNING OBJECT
1. THINGS
a. determinate thing
b. licit or lawful (legal) – it should not be contrary to law, morals, good
customs, public order, or public policy.
(if the subject matter is illicit, the contract is void and cannot, therefore be ratified)
c. not be impossible
2.RIGHTS- all rights which are not intransmissible or personal may be the object
of sale.
Like: the right of usufruct, the right of conventional redemption.
(services may be the object of contract but cannot be the object of contract of sale)
ARTICLE 1460
SUBJECT MATTER MUST BE DETERMINATE
1. WHEN THING DETERMINATE
-A thing is determinate or specific when it is particularly designated or
physically segregated from all others of the same class. In accordance with the
general rule that the object of every contract must be determinate as to its kind.
-it is identified by its individuality
Ex: the watch I am wearing, my car
ARTICLE 1461
SALE OF THINGS HAVING POTENTIAL EXISTENCE
-future thing not existing at the time the contract is entered into, may be the
object of sale provided it has a potential or possible existence. It is reasonably
certain to come into existence as the natural increment or usual incident of
something in existence already belonging to the seller, and the title will vest in
the buyer the moment the thing comes into existence. The thing sold, however
must be specific and identified and it must be also owned by the vendor at the
time.
ARTICLE 1462
GOODS WHICH MAY BE THE OBJECT OF SALE
Goods which form the subject of a contract of sale may be either:
a. EXISTING GOODS OWNED OR POSSESSED BY THE SELLER
ex: the sale of bathroom fixtures currently stored in the seller’s
warehouse is a sale of existing goods
b. FUTURE GOODS OR GOODS TO BE MANUFACTURED, RAISED OR
ACQUIRED BY THE SELLER
EXAMPLES:
MANUFACTURED- like the sale of milk bottles to be manufactured with
the name of the buyer pressed in the glass
RAISED- sale of chickens that may be raised in a poultry farm and sale of
the future harvest of palays from a ricefield
ACQUIRED- sale of definite parcel of land the seller expects to buy
ARTICLE 1463
SALE OF UNDIVIDED INTEREST IN A THING
1. BY SOLE OWNER
-the sole owner of a thing may sell the entire thing; or only a specific
portion thereof; or an undivided interest therein and such interest may be
designated as an aliquot part of the whole. Such sale shall produce the effect of
making the seller and buyer co-owners of the thing sold.
2. BY CO-OWNER
-being the owner of his undivided interest therein, can dispose his share
even without the consent of the other co-owner/s
ARTICLE 1464
SALE OF AN UNDIVIDED SHARE OF A SPECIFIC MASS
FUNGIBLE GOODS
-refer to interchangeable goods such as grain, oil, etc. that allow one to be
replaced by another without loss of value.
EFFECT OF SALE
The owner of a mass of goods may sell only an undivided share thereof,
provided the mass is specific or capable of being made determinate.
a. if the quantity i.e., number, weight or measure, of the mass is MORE
THAN the quantity sold the parties shall become co-owners of the mass.
b. if the quantity of the mass is LESS THAN the quantity sold, the buyer
becomes the owner of the whole mass, with the seller being bound to make good
the deficiency from goods of the same kind and quality, unless a contrary intent
appears.
RISK OF LOSS
If the buyer becomes co-owner, with the seller, or other owners of the
remainder of the mass, it follows that the whole mass is at risk of all the parties
interested in it.
SUBJECT MATTER
The subject matter is an incorporeal or intangible right.
ARTICLE 1465
SALE OF THING SUBJECT TO A RESOLUTORY CONDITION
-A resolutory condition is an uncertain event upon the happening of which the
obligation (or right) subject to it is extinguished.
-If the resolutory condition attaching to the object of the contract, which object
may include things as well as rights should happen, then the vendor cannot
transfer the ownership of what he sold since there is no object.
ARTICLE 1466
SALE DISTINGUISHED FROM AGENCY TO SELL
-a contract of agency, a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority
of the latter.
IN SALE:
*the buyer receives the goods as owner
*the buyer has to pay the price
*the buyer, as a general rule, cannot return the object sold
*the seller, warrants the thing sold
*the buyer can deal with the thing sold as he pleases, being the owner
IN AGENCY TO SELL:
*the agent receives the goods as the goods of the principal who retains his
ownership over them.
*the agent simply to account for the proceeds of the sale he may make on
the principal behalf;
*the agent can return the object in case he is unable to sell the same to a
third person; and
*the agent makes no warranty for which he assumes personal liability as
long as he acts within his authority and in the name of the
seller;
*the agent in dealing with the thing received, must act and is bound
according to the instructions of his principal
ARTICLE 1467
SALE DISTINGUISHED FROM CONTRACT FOR A PIECE OF WORK
-a contract for a piece of work, the contractor binds himself to execute a
piece of work for the employer, in consideration of a certain price or
compensation
CONTRACT OF SALE
-which the vendor in the ordinary course of business manufactures or
procures for the general market, whether the same is on hand or not.
(within the statute of frauds)
CONTRACT FOR A PIECE OF WORK
-if the goods are manufactured specially for the customer and upon his
special order, and not for the general market.
(are not within the statute of frauds)
RISK OF LOSS
Before the delivery is borne by the worker or contractor, not by the
employer (the person who ordered)
ARTICLE 1468
SALE DISTINGUISHED FROM BARTER
-the contract of barter or exchange, one of the parties binds himself to give one
thing in consideration other’s promise to give another thing
-in contract of sale the vendor gives a thing in consideration for a price of in
money.
However, where the consideration is partly in money and partly in another thing,
the ff. rules shall be observed to determine whether the contract is sale or barter:
*the contract shall be one of sale or barter depending upon the manifest
intention of the parties
IF THE INTENTION DOES NOT CLEARLY:
Contract is one of barter- if the value of the thing given as part of the
consideration exceeds the monetary consideration
Consideration is one of sale- if the monetary consideration is more than or
equal to the value of the thing given as part of the consideration
ARTICLE 1469
WHEN PRICE CONSIDERED CERTAIN
1. NO SALE IF PRICE NOT CERTAIN OR ASCERTAINABLE
-the price in a contract of sale ought to be settled for there can be NO
SALE WITHOUT A PRICE. It must be certain or capable of being ascertained in
money or its equivalent; and money is to be understood as currency and its
equivalent means promissory notes, checks and other mercantile instruments as
representing money.
ARTICLE 1470
EFFECT OF GROSS INADEQUACY OF PRICE IN VOLUNTARY SALES
-gross adequacy does not affect a contract of sale, except as it may indicate a
defect in the consent, or that the parties really intended a donation or some other
act or contract.
EFFECT OF GROSS INADEQUACY OF PRICE IN VOLUNTARY OR EXECUTION
SALES
1. GENERAL RULE
Judicial or execution sale is one made by a court with respect to the
property of a debtor for the satisfaction of his unpaid indebtedness.
ARTICLE 1471
EFFECT WHERE THE PRICE SIMULATED
1. IF THE PRICE IS SIMULATED OR FALSE
Then the sale is void but the contract shall be valid as a donation
ARTICLE 1472
PRICE ON A GIVEN DAY AT PARTICULAR MARKET
-It follows the principle in ARTICLE 1469 that price is considered if it could be
determined with reference to another thing certain
-“provided said amount be certain” when an amount is fixed ABOVE or BELOW
the price on a given day or in a particular exchange or market, the said amount
must be certain, otherwise THE SALE IS INEFFICACIOUS because the price
cannot be determined.
-this article is applicable to fungible things, the prices of which are subject to
fluctuations of the market.
ARTICLE 1473
FIXING OF PRICE BY ONE OF THE CONTRACTING PARTIES NOT ALLOWED
1. If the consent is essential to a contract of sale, the determination of the price
cannot be left to the discretion of one of the contracting party. The validity or
compliance of the contract cannot be made to depend upon the will of one party
ARTICLE 1474
EFFECT OF FAILURE TO DETERMINE PRICE
1. WHERE CONTRACT EXECUTORY
-if the price cannot be determined in accordance with articles 1469 and
1472 the contract is without effect. Consequently, there is no obligation on the
part of the vendor to deliver the thing and on the part of the buyer to pay.
ARTICLE 1475
PERFECTION OF CONTRACT OF SALE
-a contract of sale is perfected at the moment there is a meeting of minds upon
the thing which is the object of the contract and upon the price the reciprocal
obligations of the parties arise. But the ownership is not transferred until delivery
of the thing.
-in case one of the contracting parties should not comply with what is incumbent
upon him, the injured party sue for FULFILLMENT or RESCISSION with the
payment of damages in either case.
RIGHT OF OWNER TO FIX HIS OWN PRICE
1. it is up to the buyer to accept or reject it. He may even impose a condition hard
to fulfill and name a price quite out of proportion to the real value of the thing
offered for sale
2. He is also well within his right to quote a small or nominal consideration and
such consideration is just as effectual and valuable a consideration as a larger
sum stipulated or paid.
EFFECT OF FAILURE TO PAY PRICE/ ABSENCE OF PRICE
1. PRICE STIPULATED
-the vendor’s remedy in such case is generally to demand specific
performance or rescission with damages in either case.
2. NO PRICE STIPULATED
-in such case, the sale is void and non-existent as without cause or
consideration. Of course, if there is no stipulation or meeting of minds regarding
the purchase price, there is no contract of sale.
ARTICLE 1476
RULES GOVERNING AUCTION SALES
1. SALES OF SEPARATE LOTS BY AUCTION ARE SEPARATE SALES
Each lot is the subject of a separate contract of sale.
ARTICLE 1477-1478
OWNERSHIP OF THE THING TRANSFERRED BY DELIVERY
-delivery of the thing sold is essential in a contract of sale, without it the buyer
may not enjoy the thing sold to him. After the delivery of the thing sold that the
buyer acquires a real right or ownership over it.
-delivery may be actual or constructive
ARTICLE 1479
KINDS OF PROMISE TREATED IN ARTICLE 1479
It applies specifically to a promise “to buy or to sell” it refers to 3 kinds of
promise, namely:
1. AN ACCEPTED UNILATERAL PROMISE TO SELL IN WHICH THE
PROMISEE (acceptor) elects to buy.
2. AN ACCEPTED UNILATERAL PROMISE TO BUY IN WHICH THE
PROMISEE (acceptor) elects to sell.
3. A BILATERAL promise to buy and sell reciprocally accepted in which either of
the parties chooses to exact fulfillment.
OPTION
-is a privilege existing in one person for which he has paid a consideration which
gives him the right to buy/sell.
ARTICLE 1480
RISK OF LOSS OR DETERIORATION
1. IF THE THING IS LOST BEFORE PERFECTION
-the seller bears the loss
2. IF THE THING IS LOST AT THE TIME OF PERFECTION
-the contract is void or inexistent. The legal effect is the same as when the
object is lost before the perfection of the contract of sale.
3. IF THE THING IS LOST AFTER PERFECTION BEFORE ITS DELIVERY
-even before the ownership is transferred to the buyer the risk of loss is
shifted to the buyer as an exception to the rule of res perit domino
4. IF THE THING IS LOST AFTER DELIVERY
-the buyer bears the risk of loss following the general rule of res perit
domino.
1. SALE BY DESCRIPTION
-where a seller sells things as being of a particular kind, where the
purchaser has not seen the article sold and relies on the description given him by
the vendor. If the bulk of the goods delivered do not correspond with the
description, the contract may be rescinded.
2. SALE BY SAMPLE
-in a sale by sample, the seller warrants that the thing sold and to be
delivered by him shall conform with the sample in kind, character, and quality.
ARTICLE 1482
MEANING OF EARNEST MONEY
-is money given by the buyer to the seller to bind the bargain. It is actually a
partial payment of the purchase price and is considered as a proof of the
perfection of the contract.
-advance payment it must be deducted from the total price
ARTICLE 1483
FORM OF CONTRACT OF SALE
1. GENERAL RULE
-a contract may be entered into in any form provided all the
essential requisites for its validity are present.
ARTICLE 1484
REMEDIES OF VENDOR IN SALE OF PERSONAL PROPERTY PAYABLE IN
INSTALLMENT (RECTO LAW)
May exercise the ff. remedies:
1. elect fulfillment upon the vendee’s failure to pay
2. cancel the sale if the vendee shall have failed to pay two or more
installments;
3.foreclose the chattel mortgage, if one has been constituted, if the
vendee shall have failed to pay two or more installments
3. REMEDY OF FORECLOSURE
He shall have no further action against the vendee for the recovery of any
unpaid balance of the price and any agreement to the contrary is void. The
foreclosure is effected by selling the mortgaged personal property at
public auction and applying the proceeds to sale to the satisfaction of the claim secured
by the mortgaged.
ARTICLE 1486
STIPULATION AUTHORIZING FORFEITURE OF INSTALLMENTS OR RENTS PAID
-the parties may stipulate that the installments or rents paid are not to be
returned. Such a stipulation is valid “insofar as the same may not be unconscionable
under the circumstances” otherwise the court has the power to order the return of a
portion of the total amount paid in installments or rents.
ARTICLE 1487
EXPENSES FOR EXECUTION AND REGISTRATION
-the vendor has the duty to pay not only the expenses for the execution of the
sale but also for the registration of the same in the absence of any agreement between
the parties to the contrary.
-expenses incurred subsequent to the transfer of title are borne by the buyer,
unless caused by the fault of the seller.
ARTICLE 1488
EXPROPRIATION OF PROPERTY FOR PUBLIC USE
-it covers the procedure for the exercise of the power of eminent domain.
Expropriation must be decreed by competent authority and for public use and always
upon paymentof just compensation.
______________________________________________________________________
____________________________________________CHAPTER 2
CAPACITY TO BUY AND SELL
ARTICLE 1489
PERSON WHO MAY ENTER INTO A CONTRACT OF SALE
General rule: all persons, whether natural or juridical, who can bind themselves
by contract have also legal capacity to buy and sell.
Exceptions: when the law determines that party suffers from either absolute or
relative incapacity.
KINDS OF INCAPACITY
Absolute incapacity- in the case of persons who cannot bind themselves; and
Relative incapacity- where it exists only with reference to certain persons or a
certain class of property
SALE BY MINORS
-when the minors pretend that they are now in adult age while in fact they have
not, the sale is valid. They cannot be permitted to excuse themselves from compliance
with the obligations assumed by them or to seek their annulment.
ARTICLE 1490
RELATIVE INCAPACITY OF HUSBAND AND WIFE
1. they are prohibited by the article 1490 from selling property to each other.
2. they are also prohibited from making donations to each other during the
marriage except moderate gifts on the occasion of any family rejoicing. If there has
been a separation of property agreed upon in the marriage settlements, or when there
has been a judicial separation of property decreed between them by the court, THE
SALES BETWEEN THEM, ARE ALLOWED.
ARTICLE 1491
INCAPACITY BY REASON OF RELATION TO PROPERTY
-the persons who, because of their position and relation with the persons under
their charge or property under their control, are prohibited from acquiring said property
under their control.
They are the: guardians, agents, executors and administration, public officers
and employees; judicial officers and employees and lawyers and others especially
disqualified by law.
ARTICLE 1492
PROHIBITION IN EXTENDS TO SALE IN LEGAL REDEMPTION
1. COMPROMISE-is a contract whereby the parties, by reciprocal concessions,
avoid a litigation or put an end to one already commenced. It is the amicable settlement
of a controversy.
2. by renunciation- a creditor gratuitously abandons his right against his creditor.
The other terms used by the law are condonation and remission.
ARTICLE 1493
EFFECT OF LOSS OF THING AT THE TIME OF SALE
1. THING ENTIRELY LOST
-at the time of perfection, the contract is inexistent and void because there
is no object.
2. THING ONLY PARTIALLY LOST
-the vendee may elect between withdrawing from the contract and
demanding the remaining part, paying its proportionate price.
CHAPTER 4
OBLIGATIONS OF THE VENDOR
ARTICLE 1495
PRINCIPAL OBLIGATIONS OF THE VENDOR
1. to transfer the ownership
2. to deliver the thing
3. to warrant against eviction and hidden defects
4. to take care of the thing, pending delivery, with proper diligence
5. to pay for the expenses for the execution and registration of the deed of sale,
unless there is a stipulation to the contrary
ARTICLE 1496
WAYS OF EFFECTING DELIVERY
1. BY ACTUAL OR REAL DELIVERY
2. BY CONSTRUCTIVE OR LEGAL DELIVERY
3. BY DELIVERY IN ANY OTHER MANNER SIGNIFYING AN AGREEMENT
ARTICLE 1497
CONCEPT OF TRADITION OR DELIVERY
“tradition” is a derivative mode of acquiring ownership by virtue of which one who
has the right and intention to alienate a corporeal thing, transmits it by virtue of a just
little to one who accepts the same.
IMPORTANCE OF TRADITION
Delivery of the thing to enable the buyer to enjoy and make use of the property
purchased. After delivery, the risk of loss of the thing sold is borne by the buyer.
ARTICLE 1498
EXECUTION OF PUBLIC INSTRUMENT OR DOCUMENT
Public instrument is one which is acknowledged before notary public or any
official authorized to administer oath, by the person who executed the same.
SYMBOLIC TRADITION
-the parties make use of a token symbol to represent the thing delivered
ARTICLE 1499
TRADITIO LONGA MANU
--it takes place by the mere consent or agreement of the contracting parties as
when the vendor merely points to thing sold which shall thereafter be at the control and
disposal of the vendee
ARTICLE 1500
TRADIO CONSTITUTUM POSSESSORIUM
-it takes place when the vendor continues in possession of the property sold as
owner but in some other capacity, as for example, when the vendor stays as a tenant on
the vendee.
ARTICLE 1501
QUASI-TRADITIO/ QUASI-DELIVERY
Tradition can only be made with respect to corporeal things. In case of
incorporeal things, delivery is effected:
1. by the execution of a public instrument
2. by the placing of the titles of ownership in the possession of the vendee,
3. by allowing the vendee to use his rights as new owner with the consent of the
vendor
Thus, the delivery to a person of a negotiable document of title in which it is
stated that the goods referred to therein will be delivered to the bearer amounts to
delivery of the goods to such person.
ARTICLE 1502
CONTRACTS OF SALE OR RETURN, AND OF SALE ON TRIAL OR APPROVAL OR
SATISFACTION
1. SALE OR RETURN- the buyer has an option to purchase or return the
same to the seller instead of paying the price. Without reference to the quality of goods,
SALE ON TRIAL
1.subject to suspensive condition
2. depends on the character or quality of the goods
3. the ownership remains in the seller until the buyer signifies his
approval or acceptance to the seller
4. the risk still remains with the seller
ARTICLE 1503
DELIVERY OF SPECIFIC GOODS SOLD GENERALLY PASSES TITLE
-this article relates to a sale of specific goods
1. DELIVERY TO A CARRIER
General rule: the delivery be it only constructive, and delivery to the
carrier is deemed to be a delivery to the buyer
2. REDELIVERING BY CARRIER TO HIMSELF
If the seller directs the carrier to redeliver the goods at their
destination to the seller himself, or to his order. The ownership still remain in the latter.
WHERE THE BUYER OR HIS AGENT IS CONSIGNEE BUT SELLER RETAINS THE
BILL OF LADING
The seller thereby retains a right to the possession of the goods as against the
buyer. Although the property in the goods will ordinarily pass to the buyer on delivery,
the latter is unable to obtain the goods without the bill
ARTICLE1504
RISK OF LOSS GENERALLY ATTENDS TITLE
General rule: if the thing is lost by fortuitous event the risk is borne by the owner
of the thing at the time of the loss
Exceptions:
1. The ownership is considered transferred to the buyer who, therefore,
assumes the risk from the time of delivery.
2. Where actual delivery has been delayed through the fault of either the
buyer or the seller. In this case, the law punishes the party at fault.
ARTICLE 1505
SALE BY THE PERSON NOT THE OWNER
1. WHERE THE OWNER OF THE GOODS IS, BY HIS CONDUCT,
PRECLUDED FROM DENYING THE SELLER’S AUTHORITY TO SELL
Where a property is sold by one not the owner or the agent of the owner,
but the real owner states that he authorized such sale so that the vendor was acquitted
of the charge against him, a buyer in good faith acquires a valid title to the property as it
is not lawful nor permissible for said owner to deny or retract his former sworn
statement that he had consented to said sale
5.WHERE THE SELLER HAS A VOIDABLE TITLE WHICH HAS NOT BEEN
AVOIDED AT THE TIME OF SALE
6. WHERE SELLER SUBSEQUENTLY ACQUIRES TITLE
When a person conveys property to another of which at the time he is not
the owner, his subsequent acquisition of title validates his previous conveyance.
ARTICLE 1506
SALE BY ONE HAVING A VOIDABLE TITLE
1. REQUISITES FOR ACQUISITION OF GOOD TITLE BY BUYER
-if the seller has only a voidable title to the goods, the buyer acquires a
good title to the goods provided he buys them:
a. before the title of the seller has been avoided
b. in good faith for value; and
c. without notice of the seller’s defect of title
2. BASIS RULE
Seems to be based on the principle that where loss has happened which
must fall on one of two innocent persons, it should be borne by him who is the occasion
of the loss.
ARTICLE 1507
NATURE AND FUNCTION OF DOCUMENTS OF TITLE
1. RECEIPTS OF, OR ORDEFS UPON A BAILEE OF GOODS REPRESENTED
-documents of title refer to goods and not to money. A different name is
given in popular speech to the document when it is issued by a carrier and when it is
issued by a warehouseman
ARTICLE 1508
NEGOTIATION OF NEGOTIABLE DOCUMENT BY DELIVERY
-if the document is specially indorsed, it becomes an order document of title and
negotiation can only be effected by the indorsement of the indorsee. A special
indorsement specifies the person to whom or to whose order, the goods are to be
delivered.
ARTICLE 1509
NEGOTIATION OF NEGOTIABLE DOCUMENT BY INDORSEMENT
1. if indorsed in blank or to bearer, the document becomes negotiable by delivery
2. if indorsed to a specified person, it may be again negotiated by the
indorsement of such person in blank, to bearer, or to another specified person. Delivery
alone is not sufficient.
ARTICLE 1510
NEGOTIABLE DOCUMENTS OF TITLE MARKED “NON-NEGOTIABLE”
-the words “not negotiable”, “non negotiable” and the like when placed upon a
document of title in which the goods are to be delivered to “order” or to “bearer” have no
effect and the document continues to be negotiable.
ARTICLE 1511
TRANSFER OF NON-NEGOTIABLE DOCUMENTS
-a non-negotiable of title cannot be negotiated. It can be transferred or assigned
by delivery. In such case, the transferee or assignee acquires only the rights stated in
Article 1514
-even if the document is indorsed, the transferee acquires no additional right.
ARTICLE 1512
PERSONS WHO MAY NEGOTIATE A DOCUMENT
-it will be noticed that the provision does not give a power to negotiate
documents of title equal to that allowed in the case of bills of exchange and promissory
notes under the Negotiable Instruments Law
-however, if the owner of the goods permits another to have the possession or
custody of negotiable receipts running to the order of the latter or to bearer, it is a
representation or title upon which bona fide purchasers
-the loss must fall upon him whose misplaced confidence made the loss possible
ARTICLE 1513
RIGHTS OR PERSON TO WHOM DOCUMENT HAS BEEN NEGOTIATED
-it specifies the rights of a person to whom a negotiated document of title has
been duly negotiated, in the case of a document of title to bearer, or by indorsement
and delivery, in the case of a document of title. Such person acquires:
1. the title of the person negotiating the document, over the goods covered by the
document
2.the title of the person (depositor or owner) to whose order by the terms of the
document the goods were to be delivered, over such goods; and
3. the direct obligation of the bailee (warehouseman or carrier) to hold possession of the
goods for him, as if the bailee had contracted directly with him
ARTICLE 1514
RIGHTS OF PERSON TO WHOM DOCUMENT HAS BEEN TRANSFERRED
It refers to the rights of a person to whom a negotiable document of title (not duly
negotiated) has been transferred or of the transferee of a non-negotiable document.
Such person acquires:
1. the title to the goods as against the transferor
2. the right to notify the bailee of the transfer thereof
3. the right, thereafter, to acquire the obligation of the bailee to hold the goods for him.
2.if the document is negotiable, the goods cannot be attached or be levied under an
execution unless the document be first surrendered to the bailee or its negotiation
enjoined.
ARTICLE 1515
TRANSFER OF ORDER DOCUMENT WITHOUT INDORSEMENT
-it specifies the right of a person to whom an order document of title, which may
not properly be negotiated by mere delivery, has been delivered, without indorsement.
They are:
1.the right to the goods against the transferor and
2. the right to compel the transferor to indorse the indorsement
(if the intention of the parties is that the document should be merely transferred, the
transferee has no right to acquire the transferor to indorse the document)
ARTICLE 1517
INDORSER NOT A GUARANTOR
-the indorsement of a negotiable instrument has a double effect; the indorser will
pay the instrument if the party primarily liable fails to do so. The indorsement of a
document of title amounts merely to a conveyance by the indorser, not a contract of
guaranty.
ARTICLE 1518
WHEN NEGOTIATION NOT IMPAIRED BY FRAUD, MISTAKE, DURESS, ETC.
-it may be negotiated by even by a thief or finder and the holder thereof would
acquire a good title thereto if he paid value therefor in good faith without notice of the
seller’s defect.
-it speaks of the theft of the document and not of the goods covered by such
document. In the latter case, it needs no argument to show that even a bona fide holder
of a document issued over such stolen goods cannot acquire title
ARTICLE 1519
ATTACHMENT OR LEVY UPON GOODS COVERED BY A NEGOTIABLE
DOCUMENT
-in the possession of such bailee, the goods cannot be attached or levied under
an execution unless the document be first surrendered or its negotiation prohibited by
law.
-this provision is for the protection of the bailee since he could be made liable to
a subsequent purchaser for value in good faith.
ARTICLE 1520
CREDITOR’S REMEDIES TO REACH NEGOTIATE DOCUMENTS
-this article expressly gives the court full power to aid by injunction (a restraining
order) and otherwise a creditor seeking to get a negotiate document covering such
goods.
ARTICLE 1521
PLACE OF DELIVERY OF GOODS SOLD
1. RULES
a. where there is an agreement, express or implied, the place of delivery
is that agreed upon
b. where there is no agreement, the place of delivery is that determined
by usage of trade.
c. where there is no agreement and there is also no prevalent usage, the
place of delivery is the seller’s place of business.
d. in any other case, the place of delivery is the seller’s residence
e. which to the knowledge of the parties at the time the contract was
made were in some other place, that place is the place of delivery
in the absence of any agreement or usage of trade to the contrary.
2. PRESUMPTION
-it can be seen that the presumption is that the buyer must take goods
from the seller’s place of business or residence rather than the
seller to deliver them to the buyer.
3. WHERE THE CONTRACT DOES NOT SPECIFY THE TIME FOR DELIVERY
-so that delivery is to be made within a reasonable time
-the buyer cannot make time the essence of the contract without giving
the seller notice of his intention to cancel unless delivery is made
on or before a fixed time
ARTICLE 1522
DELIVERY OF GOODS LESS THAN QUANTITY CONTRACTED
Where the seller delivers a smaller quantity the buyer may reject the
goods so delivered. (kulang)
The buyer may accept the goods in which case he must pay for their: price
at the contract rate if he knew that no more were to be delivered or the
fair value of the goods, if he did not know that the seller is going to
be guilty of a breach of contract.
ARTICLE 1523
DELIVERY TO CARRIER ON BEHALF OF BUYER
1. GENERAL RULE- when the seller is authorized or required to send the goods
to the buyer, is that delivery of such goods to the carrier constitutes delivery to
the buyer, whether the carrier is named by the buyer is not.
2. EXCEPTIONS- the parties did not intend the delivery of the goods to the buyer
through the carrier.
3. C.I.F.- “cost insurance and freight” signify that the price fixed covers not only
the cost of goods, but the expenses of freight and insurance to be paid by the seller up
to the point especially named.
4. F.A.S.-“free alongside vessel” (named port of shipment). Under this term, the
seller pays all charges and bear the risk until the goods are placed alongside overseas
vessel and within reach of its loading tackle
ARTICLE 1524
DELIVERY SIMULTANEOUS WITH PAYMENT OF PRICE
General rule: the obligation to deliver the thing of a contract arises from the
moment its perfection and from that time the obligation may enforced.
Exception: if the vendee does not pay the price, the consideration for the
obligation of the vendor is absent and if the consideration is absent, the obligation
likewise does not exist or at least is suspended.
ARTICLE 1525
MEANING OF UNPAID SELLER
-is one who has not been paid or tendered the whole price or who has received a
bill of exchange or other negotiable instrument as conditional payment and the condition
on which it was received has been broken by reason of the dishonor of the instrument.
ARTICLE 1526
REMEDIES OF UNPAID SELLER
-if the unpaid seller still retains the ownership in the goods, he cannot be said to
have a lien (on his goods) but he does have, in addition to his other remedies, right of
withholding delivery.
ARTICLE 1527
WHEN UNPAID SELLER’S POSSESSORY LIEN MAY BE EXERCISED
1. SALES WITHOUT STIPULATION AS TO CREDIT
-the seller binds himself to give the goods over to the buyer without
receiving at that time payment for them. Where there is “stipulation as to
credit’ a period for payment of price has been fixed in the contract. The
seller has always a lien upon the goods which he sells until the
payment or tender of the entire price.
ARTICLE 1528
LIEN NOT GENERALLY LOST BY PART DELIVERY
-if the part delivery of the goods is intended as symbolical delivery of the
whole, and therefore, a waiver of any right of retention as to
remainder, the lien is lost.
ARTICLE 1529
WHEN UNPAID SELLER LOSSES POSSESSORY LIEN
1. DELIVERY TO AGENT OR BAILEE OF BUYER
-it is true that the seller may stop the goods while on their way to the
buyer after delivery to a bailee for the buyer but it cannot be said
that the seller has still any lien upon him.
3. WAIVER OF LIEN
-the seller may lose his lien by express agreement to surrender it. The
seller could no longer assert a lien.
ARTICLE 1530
RIGHT OF SELLER TO STOP GOODS IN TRANSITU
-he may resume possession of the goods while they are in transit, when the
buyer is or becomes insolvent. The right is exercised either by obtaining actual
possession of the goods or by giving notice of his claim to the carrier or other bailee in
possession.