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CHAPTER 3 ARTICLE 1496

ARTICLE 1493 Gen Rule: Ownership of the thing sold is


EFFECT OF LOSS OF THING AT THE TIME OF acquired only upon its delivery, actual or
SALE constructive to the buyer.

1. THING ENTIRELY LOST WAYS OF EFFECTING DELIVERY


-at the time of perfection, the contract is inexistent 1. BY ACTUAL OR REAL DELIVERY
and void because there is no object. THE THING SHALL BE UNDERSTOOD AS
2. THING ONLY PARTIALLY LOST DELIVERED; when it is placed in the control
-the vendee may elect between withdrawing from and possession of the vendee.
the contract and demanding the remaining part, 2. BY CONSTRUCTIVE OR LEGAL DELIVERY
paying its proportionate price. -By operation of law
3. BY DELIVERY IN ANY OTHER MANNER
WHEN A THING CONSIDERED LOST SIGNIFYING AN AGREEMENT
Its existence is unknown or it cannot be recovered.
Exceptions:
ARTICLE 1494 1. When the seller and buyer agree that the
EFFECT OF LOSS IN CASE OF SPECIFIC ownership shall remain wt the seller until
GOODS full payment.
2. Contract to sell
ARTICLE 1494 applies only to sales of goods, that 3. Sale on approval, trial, or satisfaction
is, the object of the sale consists of a mass of 4. Implied reservation of ownership
specific goods the seller may, by the terms of the
2 remedies to the buyer: contract, reserve the right of possession or
1. SALE DIVISIBLE- a contract is DIVISIBLE when ownership in the goods
its consideration is made up of several parts. (valid
in existing goods) 2. CONTRARY MAY BE STIPULATED
2. SALE INDIVISIBLE- when the consideration is The parties may stipulate that ownership in the thing
entire and single.The object may be considered as a shall pass to the buyer only after he has fully paid
specific thing. (avoidance) the price or fulfilled conditions.

CHAPTER 4 SECTION 2- DELIVERY OF THE THING SOLD


OBLIGATIONS OF THE VENDOR
ARTICLE 1497
ARTICLE 1495 KINDS OF DELIVERY
PRINCIPAL OBLIGATIONS OF THE VENDOR 1. BY ACTUAL OR REAL DELIVERY
1. to transfer the ownership THE THING SHALL BE UNDERSTOOD AS
2. to deliver the thing DELIVERED; when it is placed in the control and
(vendor-need not be the owner at the time of possession of the vendee.
perfection; a right to transfer is enough) 2. LEGAL/CONSTRUCTIVE
3. to warrant against eviction and hidden defects 3. QUASI-TRADITION
4. to take care of the thing, pending delivery, with Delivery of rights, credits, incorporeal rights
proper diligence of a good father of a family IMPORTANCE OF TRADITION
"preserve the thing" - the seller should not Delivery of the thing to enable the buyer to
transform/alter the thing sold. enjoy and make use of the property purchased.
5. to pay for the expenses for the execution and A. Execution of public instrument
registration of the deed of sale, unless there is a B. Placing of titles in the hands of buyer
stipulation to the contrary C. Allowing buyer to make use of rights
1. WHEN DEEMED MADE- it involves the physical points to thing sold which shall thereafter be at the
delivery of the thing and is usually done by passing control and disposal of the vendee
a movable thing from hand to hand. TRADITIO BREVIE MANU
2. NOT ALWAYS ESSENTIAL TO PASSING OF -when the vendee has already the possession of the
TITLE- The parties to the contract may agree when thing sold by virtue of another title as when the
and on what conditions the ownership in the subject lessor sells the thing leased to the lessee.
of the contract shall pass to the buyer.
ARTICLE 1500
WAYS OF EFFECTING CONSTRUCTIVE TRADITION CONSTITUTUM POSSESSORIUM
DELIVERY (opposite of brevie manu)
1. EQUIVALENT TO ACTUAL DELIVERY -it takes place when the vendor continues in
It may be effected in any of the following ways: possession of the property sold as owner but in
a. by the execution of public instrument some other capacity, as for example, when the
b. by symbolical tradition/ tradition symbolica vendor stays as a tenant on the vendee.
c. by traditio longa manu
d. by tradition brevi manu ARTICLE 1501
e. by tradition constitutum possessorium or QUASI-TRADITIO/QUASI-DELIVERY
f. by quasi-delivery or quasi-traditio Tradition can only be made wt respect to corporeal
things.
ARTICLE 1498 In case of incorporeal things, delivery is effected:
SPEAKS OF CONSTRUCTIVE DELIVERY AND 1. by the execution of public instrument.
TRADITION SYMBOLICA 2. by placing the titles to the hands of the
EXECUTION OF PUBLIC INSTRUMENT buyer.
OR DOCUMENT 3. allowing the buyer to use his rights as the
Public instrument is a document prepared by the new owner wt consent of the seller.
notary public.
Notary Public is the authorized person who certifies ARTICLE 1502
documents. CONTRACTS OF SALE OR RETURN, AND OF
SALE ON TRIAL, APPROVAL, OR SATISFACTION
When the sale is made through a 1. SALE OR RETURN - goods delivered to the
public instrument, the execution thereof shall be buyer under sale or return to give the buyer
equivalent to the delivery of the thing which is the the option to return the goods instead of
object of the contract. paying the price.
UPON DELIVERY
WHEN THE THING NOT SUBJECT TO CONTROL -ownership passes to the buyer
OF VENDOR HOWEVER, the buyer has the right to:
-a seller cannot deliver constructively if he revest the ownership in the seller by;
cannot deliver actually even if he wants to. ● returning the goods w/in the time fixed in the
contract
A person who does not have ACTUAL ● if no time has been fixed w/in a reasonable
POSSESSION of the thing sold cannot transfer time
constructive possession by execution and 2. SALE ON TRIAL OR SALE ON
delivery of a public instrument. APPROVAL/SATISFACTION
also called "SALE ON ACCEPTANCE"
ARTICLE 1499
SPEAKS OF 2 KINDS OF CONSTRUCTIVE OWNERSHIP PASSES TO THE BUYER
DELIVERY not from delivery, but after delivery and after
TRADITIO LONGA MANU the buyer
-it takes place by the mere consent or agreement of • signifies his approval or acceptance to the seller or
the contracting parties as when the vendor merely • does any other act adopting the transaction;
IF THE BUYER DOES NOT SIGNIFY agent or to the order of the seller or his agent, the
HIS ACCEPTANCE; when deemed accepted seller thereby reserves the ownership in the goods.
- when he retains the goods without 2. RIGHTS OF THE SELLER
giving notice of rejection. AFTER The seller may not only retain the goods until
• the expiration of the time for the return of the the buyer performs his obligation under the contract.
goods as stipulated; or
• after the lapse of reasonable time, when no WHERE SELLER’S TITLE ONLY FOR PURPOSE
stipulated period within which to return. OF SECURITY
REQUIRED: EXPRESS WRITTEN AGREEMENT 1. FORM OF BILL OF LADING NOT CONCLUSIVE
(security) The circumstances may be such that were it
not for the form of the bill of lading, the ownership
DIFFERENCES would have passed to the buyer on shipment of the
SALE ON RETURN goods. The seller reserves ownership simply to
1. subject to resolutory condition secure himself in regard to the performance by the
2. depends entirely on the will of the buyer buyer of the latter’s obligation.
3. ownership passes to the buyer and BILL OF LADING - THERE IS RESERVATION OF
subsequent return of goods reverts the OWNERSHIP WHEN
ownership Where goods are shipped, and by the
4. the risk of loss or injury rests upon the buyer bill of lading the goods are deliverable
SALE ON TRIAL • to the seller or his agent, or
1. subject to suspensive condition • to the order of the seller or of his
2. depends on the character or quality of the agent,
goods the seller thereby reserves the ownership in the
3. ownership remains in the seller until the goods.
buyer signifies his approval or acceptance to
the seller 2. WHERE OWNERSHIP WOULD HAVE PASSED
4. the risk still remains with the seller BUT FOR THE FORM OF BILL OF LADING
By shipping the goods, the seller has
ARTICLE 1503 definitely lost all use of them to the buyer. Where the
DELIVERY OF SPECIFIC GOODS SOLD title to the goods is held merely for the purpose of
GENERALLY PASSES TITLE security, the beneficial owner (buyer), not the one
-this article relates to a sale of specific goods who holds for security (seller) bears the risk of loss
or deterioration.
"Bill of Lading"- is a contract b/w you(owner)
and the carrier stating what goods you're WHERE THE BUYER OR HIS AGENT IS
shipping. Also served as a RECEIPT. CONSIGNEE BUT SELLER RETAINS THE BILL
OF LADING
1. DELIVERY TO A CARRIER The seller thereby retains a right to the
General rule: the delivery be it only constructive, possession of the goods as against the buyer.
and delivery to the carrier is deemed to be a delivery Although the property in the goods will ordinarily
to the buyer. pass to the buyer on delivery, the latter is unable to
2. REDELIVERING BY CARRIER TO SELLER obtain the goods without the bill.
If the seller directs the carrier to redeliver the
goods at their destination to the seller himself, or to WHERE BILL OF LADING IS SENT FORWARD
his order. The ownership still remains in the seller. WITH DRAFT ATTACHED
The fact that the bill of lading and bill of
WHERE SELLER OR HIS AGENT IS CONSIGNEE exchange are attached together indicates that the
1. CARRIER BECOMES BAILEE FROM SELLER seller intends to make the delivery of the goods
Where goods are shipped and by the bill of conditional upon the payment or acceptance of the
lading the goods are deliverable to the seller or his draft.
EFFECT OF BUYER’S OBTAINING POSSESSION EXCEPTIONS:
OF BILL OF LADING WITHOUT HONORING 1. The owner of the goods is by his conduct
DRAFT precluded (make something possible) from
denying the seller’s authority to sell.
A purchaser in good faith for value of the bill
2. Sale is made by the registered owner or
of lading or goods from the buyer will obtain the
apparent (name appears on records) owner.
ownership of the goods although the bill of
3. Sales approved by the order of the court
exchange has not been honored.
4. Purchase in a merchant’s store, fairs or
NOTE: ART. 1503 Does not apply to “contract of
markets.
carriage”(contract b/w a cargo/passengers and
5. When the seller has a voidable title
consignee/passengers)
ARTICLE 1506
ARTICLE 1504
SALE BY ONE HAVING A VOIDABLE TITLE
RISK OF LOSS
If the seller has only a voidable title, buyer acquires
AT SELLER'S RISK until the ownership therein is
a good title to the goods provided he buys them:
transferred to the buyer.
a. Before the title of the seller has been
UNLESS: otherwise agreed
avoided
b. In good faith for value
AT BUYER'S RISK
c. Without notice of the seller’s defect of title
when the ownership therein is transferred to
NOTE: Voidable contract is valid until annulled.
the buyer whether actual delivery has been
made or not.
ARTICLE 1507
EXE:
FUNCTION OF DOCUMENT OF TITLE
• Where delivery of the goods has
A document of title in which is stated that
been made to the buyer or to a bailee for the buyer,
the goods referred to therein will be delivered to
in pursuance of the contract and the ownership in
the bearer, or to order of any person named in
the goods has been retained by the seller.
such document is a negotiable instrument of
-merely to secure performance by the buyer of
title.
his obligations under the contract,
the goods are at the buyer's risk from the time of
DOCUMENT AS A PROOF
such delivery;
A document of title is a symbol of goods
• Where actual delivery has been
covered by it, serving as a evidence of
delayed through the fault of either the buyer or seller
a. transfer of title
the goods are at the risk of the party in fault.
b. transfer of possession
NOTE: Gen rule, risk of loss of specific goods is
c. contract between the parties who are
borne by the seller until ownership is transferred
bound by its terms
to the buyer.
Document is negotiable if:
RISK OF LOSS BY FORTUITOUS EVENT AFTER
1.) Goods are deliverable to bearer
PERFECTION BUT BEFORE DELIVERY
2.) Goods are deliverable to the order of a certain
If the thing is lost after perfection of the contract but
person
before its delivery, even before the ownership is
transferred to the buyer, the risk of loss by a
Common forms of document of title
fortuitous event without the seller’s fault is borne by
1. Bill of Lading- contract or receipt for the
the buyer.
transport of goods and their delivery to the person
named therein, to order or bearer.
ARTICLE 1505
2. Dock Warrant- given by dock owners to an
SALE BY THE PERSON NOT THE OWNER
importer of goods recognizing the latter’s title of the
GEN RULE: Buyer acquires no title even
said goods.
if in good faith (you cannot give what u do not have).
3. Warehouse Receipt- contract or receipt issued 1. if indorsed in blank or to bearer, the document
by a person engaged in the business of storing becomes negotiable by delivery
goods for a fee. 2. if indorsed to a specified person, it may be
Quedan- a warehouse receipt that covers sugars. again negotiated by the indorsement of such person
in blank, to bearer, or to another specified person.
CLASSES OF DOCUMENTS OF TITLE Delivery alone is not sufficient.
1. NEGOTIABLE DOCUMENTS- those by the terms
of which the bailee undertakes to deliver the goods ARTICLE 1510
to the bearer and to the order of a specified person. NEGOTIABLE DOCUMENTS OF TITLE MARKED
“NON-NEGOTIABLE”
2. NON-NEGOTIABLE DOCUMENTS- those by the The words “not negotiable”, “non
terms of which the goods covered are deliverable to negotiable” and the like when placed upon a
a specified person. document of title in which the goods are to be
delivered to “order” or to “bearer” have no effect
ARTICLE 1508 and the document continues to be negotiable.
A NEGOTIATION OF NEGOTIABLE DOCUMENT
BY DELIVERY ARTICLE 1511
1. The terms of the document the carrier, TRANSFER OF NON-NEGOTIABLE DOCUMENTS
warehouseman, or the bailee issuing the A non-negotiable title cannot be negotiated.
same to deliver to the bearer. Even if the document is indorsed, the transferee
2. The terms of the document the carrier, acquires no additional right.
warehouseman, or the bailee issuing the
same to deliver to order of the: ARTICLE 1512
a. specified person WHO may negotiate negotiable document of title
b. Endorsee of the docs and indorsed 1. By the owner
it in blank to the bearer. 2. By the person to whom the possession or custody
of the document has been entrusted by the owner
Forms of Indorsement the loss must fall upon him whose misplaced
a) Blank Indorsement- consist of signature of the confidence made the loss possible
indorser without specifying the name of the
indorsee. ARTICLE 1513
b) To bearer- where the indorsement states that the RIGHTS OF THE HOLDER
goods are deliverable to bearer. It specifies the rights of a person to whom a
c) Special Indorsement- name of indorsee is negotiated document of title has been duly
specified. negotiated, in the case of a document of title
to bearer, or by indorsement and delivery, in
BAILEE- someone who receives personal
the case of a document of title. Such person
property from another, and has possession but
acquires:
not title.
1. Title of the person negotiating the document, over
DUTY: to keep safe the property until it is
the goods covered by the document;
returned to the owner.
2. Title of the person to whose order by the terms of
the document the goods were to be delivered, over
ARTICLE 1509
such goods;
NEGOTIATION OF NEGOTIABLE DOCUMENT BY
3. The direct obligation of the bailee to hold
INDORSEMENT
possession of the goods for him, as if the bailee had
contracted to him directly.
TWO KINDS OF NEGOTIATION
NOTE: Mere transfer does not acquire directly
1. By delivery
the obligation of the bailee. To acquire it, he
2. By indorsement plus delivery
must notify the bailee.

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