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Q. What are the PRINCIPAL OBLIGATIONS of the SELLER?

A. FIRST: Prior to delivery he has the obligation to preserve the thing.


Q. What is the degree of of diligence used?
A. Ordinary diligence of a good father of a family
SECOND: to deliver the thing
THIRD: transfer ownership

Delivery:

Now when you say to deliver the thing, delivery not only means transfer of possession but also transfer of control.
You need to know these two things because if ONLY possession is transferred to the buyer, the prescriptive period
within which to bring an action for breach does not even start to run. Delivery for PURPOSES of bringing an ACTION
for BREACH means delivery to transfer CONTROL not only transfer of possession.

Q. What are the Forms of Delivery?

A. ACTUAL & CONSTRUCTIVE DELIVERY

Actual Delivery

- is the physical transfer of the thing from the seller to the buyer.

CEBU WINLAND DEV. CORP vs ONG SIAO HUA

Here the contract was for a certain area but what was delivered was much smaller area. This is when the court
discussed delivery. The point of delivery where the prescriptive period to bring an action for breach starts to run.
Here there was no delivery of the sense that control was transferred to the buyer, the prescriptive period did not
even start to run. The buyer here was allowed to recover the excess amount that he paid.

Legal & Constructive Delivery

There are different forms of constructive delivery:

1. execution of a public instrument is equivalent to delivery only meaning, it transfers ownership IF THERE
IS NO IMPEDIMENT, if the seller is in a position to physically transfer possession of the thing to the buyer.

ASSET PRIVATIZATION TRUST vs TIJ ENTERPRISE

Here what they executed was a public document, but the buyer cannot be placed in actual possession of the
machinery because it was being claimed by a third party. The seller again at the time of the execution of the
public document must be at a position to make actual and physical delivery of the thing only that the thing is not in
his possession, thats why a public document is executed. But he must be capable of transferring physical possession
at the time of the execution.

The execution of a public instrument only gives rise to a PRIMA FACIE presumption of delivery. Such
presumption is DESTROYED when the delivery is not effected because of a LEGAL IMPEDIMENT. Thus, there is NO
CONSTRUCTIVE DELIVERY although there was an execution of a deed of absolute sale, which was duly notarized if
the thing sold is in the CONTROL OF ANOTHER PERSON

OTHER CASE NOT IN THE SYLLABUS

Here there was an execution of a public document but there was an undertaking of the seller to (which he inherited
from previous parties, because this was the third sale already) get rid of the squatters in the property. The court
said, the previous buyers undertook to rid the property of the squatters and VIVIL EAGLAND (One of the parties)
here was a buyer PRIOR to the sale, he also undertook to rid the property of the squatters. The execution of the
public document would not be equivalent to delivery.
BUT if we deal with REGISTERED PROPERTIES, what is the Operative act that transfers ownership?
REGISTRATION is the operative act that transfers ownership. That is as third parties are concerned, because as
between immediate parties the buyer and the seller the execution of the public document already transfers
ownership. But to bind third persons, registration is the operative act.
2. symbolic delivery (traditio simbolica or traditio clavium) takes place by delivering the keys of the place or
depository where the movable or thing is stored or kept. 1498.
- we are not talking here about keys to a car.
- Example: I have a warehouse full of instant noodles, I sell you all the noodles in the warehouse, but
because you dont have a place to store the noodles we agreed that dri lang japon I store, so what I
deliver to you are the KEYS OF THE WAREHOUSE. I dont physically remove the noodles from this
warehouse, deliver the boxes to you and then I balik japon nimu kay didto ramn gihapon nimu I store.
That would be ridiculous. That is tradition symbolica delivery.

3. Traditio longa manu (delivery by the long-hand) delivery of a movable by mere consent or agreement of
the parties if the thing cannot be transferred to the possession of the vendee at the time of sale. 1499.
- is when the thing is not in the possession of the seller.
- He cannot at that point in time physically deliver the thing to the buyer, but they agreed that when the
thing is in another place, maybe in the possession of another person, the buyer is already the owner of
the thing.
- Q. are we contemplating here a situation where the thing is still to be manufactured, because we
discussed that the object of the sale can be future things, can this cover future things? Can we agree
now that you will be the owner of the counsel table that I have still to acquire?
- A. NO. because it is still non-existing. Traditio longa manu is when the thing is in another place BUT it
must already be EXISTING and OWNED by the seller. Although in the possession of another person it
must already belong to the seller and in fact in subsequent provisions of the civil code, the law says
that the third person must acknowledge you ownership of the thing otherwise if the 3 rd person claims a
right adverse to that of the seller, the agreement of traditio longa manu is not effected.

4. Traditio brevi manu (delivery by the short-hand) delivery that takes place when the vendee is already in
the possession of the thing sold even before the sale and thereafter continues in possession thereof in the
concept of an owner. 1499 MOVABLES ONLY

- two weeks ago, I lent this computer to you, we agreed that you are gonna buy it from me. A sale is
perfected between the two of us. The computer is with the buyer. Do is still need to recover the
computer from you? No. by traditio brevi manu, possession of the computer is transformed from that of
a borrower in a contract of loan for use without compensation (commodatum). And because you
purchased the computer from me, you are now in possession not as a borrower anymore but as a
holder of the title no need for me to give it back to you.

5. De Constituto, traditio constitutum possessorium


a. Delivery that takes place when the vendor continues in possession of the thing sold after the sale
but in another capacity such as that of a lessee or depositary. MOVABLES AND IMMOVABLE

- I am in possession of this computer, and we agreed that you are going to buy it from me and I am
selling it to you but because I still have need to use the computer, so for the meantime I will still be in
possession of the computer. But you are already the owner, so my possession of the computer is now
change of that of owner to that of perhaps a lessee of im paying, but if im just borrowing bailee in
commodatum.
- Q. so what is the difference between constitutum possessorium and brevi manu?
- A. in brevi manu, possession is already with the buyer. In constitutum possessorium, possession
remains with the seller.
- Q. what about INCORPOREAL THINGS?
- A. no physical existence, nothing to physically deliver, ex. Share of stock.
- Q. so how do you deliver incorporeal things?
- A. by executing a public document or delivery documents of title. Ex. Stock certificate

Transfer of Ownership

GR: ownership is transferred by mere delivery.

But: delivery transfers to the buyer even without delivery if the buyer refuses to accept the thing without justifiable
reason.

Ex. A sale by description, and the seller calls the buyer telling that the counsel table ordered is ready for delivery.
Suddenly the buyer has a change of mind, di nlng diay ko mupalit, kay wala lang, im a woman. That will not prevent
the transfer of ownership to the buyer. Why do we insist of transferring ownership to the buyer if he does not want
to pursue with the contract? For the seller to recover the price.
This means that even if the buyer refuses to accept the thing, and the refusal is unjustified the seller has the right to
sue for the price.

Delivery to the carrier (business entity engaged in the transportation of goods and persons and is for profit, if it is
open to the public it is called a Common carrier) for the transmission of the buyer is delivery to the buyer.
So delivery to sulpicio here or PAL cargo, for transmission to the buyer is already delivery to the buyer. What is the
effect if delivery to the carrier is delivery to the buyer? the buyer bears the risk of loss.

BUT: there are instances when delivery is effected but ownership is not transferred to the buyer, like delivery on
approval or trial or satisfaction.
- here the buyer has not payed the price yet, because the thing is deliverd merely on trial, and ownership
is transferred once he signifies his acceptance or satisfaction of the thing delivered to him.
- Even if he did not signify his satisfaction or acceptance of the thing, if he commits or performs an act
ADVERSE to that of the seller he is deemed to have accepted the thing.
- Ex. I deliver to you this computer, on trial or satisfaction for 15 days to decide, on the 7 th day you sold
the computer, remember you cannot sell what you do not own, the act of selling the computer is an act
which is adverse to the right of the seller, because the seller is still the owner and yet you are
performing an act pertains to the seller. The law presumes you to have already accepted the thing even
if you have not signified your acceptance to the seller.
- You did not signify & did not commit an act adverse of that to the seller, BUT you retain possession of
the thing beyond the period of the trial.
- Ex. Trial period is only 15 days, after the 15 days you did not signify your acceptance and you did not
return, so you have deemed to have accepted.
- Q. what if I deliver this to you on trial, but we did not specify a period of the trial, pero nahuman
naman lang ang semester, wala paman japon ka ni signify, you are deemed to have accepted, why?
Bec. You have kept the thing beyond reasonable time. What reasonable time is a question of fact.

Delivery does not also transfer ownership if title is reserved by the seller until after the payment of the full purchase
price. Such as in a contract to sell. But if the reservation of the title by the seller, is for insuring payment of the price,
the risk of loss is borne by the buyer. GAISANO CASE. Express reservation of title.

Implied reservation of the buyer over the goods.

1. the goods are delivered to the carrier, but the bill of lading states that THE GOODS ARE DELIVERABLE TO
THE SELLER not to the buyer. The goods even if they reach the destination: Ex. Goods are shipped from
cebu to tacloban, but the bill of lading issued by the carrier, states that the consignee is the seller. So when
the goods reach tacloban the buyer cannot obtain possession of the goods.
This is an exception to the GR that delivery to the carrier is delivery to the buyer because here ownership is
impliedly reserved by the seller on the fact that the goods are deliverable to the seller not to the buyer.

2. Goods are deliverable to the ORDER OF THE BUYER but the bill of lading is RETAINED by the seller.
- bill of lading is a NEGOTIABLE DOCUMENT OF TITLE
- here because ORDER TO THE BUYER you have a NEGOTIABLE DOCUMENT OF TITLE, if you sell the
goods you dont need to physically deliver the goods to the buyer, you only need to NEGOTIATE the
document. This is equivalent to the transfer of the ownership of the goods to the transferor. But again
here, the document is RETAINED by the seller so the buyer cannot sell the goods.
- Buyer cannot withdraw the goods from the carrier because he MUST SURRENDER the NEGOATIABLE
BILL OF LADING. He cannot do that because it is again RETAINED by the seller.

3. Goods are deliverable perhaps to the buyer, deliver to the carrier for transmission to the buyer and
therefore a BILL OF LADING is issued, the consignee is the buyer, THE TWIST here is that a BILL OF
EXCHANGE accompanies the bill of lading which is transmitted to the buyer to secure the payement and the
buyer DISHONORS such bill of exchange.

Nego.Inst.Law Overview: Bill of Exchange ( an instrument drawn by one person addressed to another
person called a drawee commanding or ordering the drawee to pay either the drawer or a third person
who we call the payee) different from a Promissory note (because here it is a promise made by the
maker of the note undertaking to pay bearer or order a sum certain in money on or before a certain period
in time)

Bill of lading is a DOCUMENT OF TITLE. represents title over goods try selling this w/o goods murag
wala lang. no value. Bill of exchange or Promissory note is a NEGOTIABLE INST. intrinsic value in itself
kani pwede I baligya, at a discount.
FLOW:

Bill of lading issued by the carrier + Bill of exchange issued by the seller transmitted to the buyer
obligation of the buyer to ACCEPT THE BILL OF EXCHANGE in order for him to pay IF he DISHONORS
(not accepting) the bill of exchange, the bill of lading also follows na I uli pud kay dapat uban jud sila. This
means title is not transferred.

If he sells the goods he does not transfer any title to transferee because he has no title over the goods. You
can only transfer whatever title he has over the goods.

HOWEVER, MAO NANI. DRI TAH NI LUTAW ADTO.


A complication arises if the Bill of Lading is a NEGOTIABLE DOCUMENT OF TITLE, if what is issued to the
buyer is a bill of lading where the carrier undertakes to deliver TO THE ORDER OF THE BUYER, or
INDORESED IN BLANK and is delivered to the buyer, and so the buyer is holding a BEARER DOCUMENT - if
you hold this document you just negotiate it by mere delivery (ako lang ni opinion, ang bearer document
murag Check na pay to cash, anyone can be the owner bsta lang ikaw ga hold nya mere delivery to you kay
ok nah pwede na nimu ma gamit kay to cash man or rather to anyone).

So going back, buyer now is holding a negotiable document of title where the goods are deliverable to his
order or the bill of lading is indorsed to him or bill of lading states the goods are deliverable to bearer
or indorsed to him in blank. He dishonors the BOE(bill of exchange) the law says he does not acquire
any title over the goods because he refuses to pay for the goods, and yet he negotiates the BOE, sells the
goods by negotiating the BOE. Wala pa niya gi withdraw dri ang goods to the carrier, pero gi negotiate na
niya ang negotiable bill of lading, TO A THIRD PERSON NOT AWARE OF HIS DEFECTIVE TITLE, and who
PAID FOR VALUE of the document. Does the third person acquire right over the goods? YES. Purchaser for
value and in good faith not aware of the defect of the title of the seller. ( mura rani syag sa land tits nah
innocent purchaser for value). This person acquires better rights over the goods. If libog japon, this is
ARTICLE 1503 sa codal. Memorize nlng when in doubt.

Sale by a person who is not the owner of the thing sold


When goods are sold by a person who is not the owner thereof, the buyer acquires no better title than the seller had,
except in the following cases:

1. When the sale is made under authority or with the consent of the owner.
2. When the owner is precluded by his conduct from denying the sellers authority to sell.
3. When the sale is made under the provisions of any factors acts, recording laws or any other provisions of
law enabling the apparent owner to dispose of the goods as if he were the true owner thereof. (Art. 1505)
4. When the owner is in estoppel there is statutory power of sale such as in foreclosure of mortgage or under
the order of court of competent jurisdiction such as execution sale. (Art. 1505)
5. When the purchase is made in a merchants store, or in fairs, or markets. (Art. 1505)

Two MOST COMMON FORM of document of title:


1. Bill of Lading
a. issued by a carrier
b. issued in a contract of carriage

2. Warehouse Receipt
a. issued by a warehouseman
b. issued in a contract of deposit or storage
c. because this is a real contract whereby a person delivers a movable to another party for depository
or safe keeping.
d. If you have this, this is an evidence of a contract of deposit

Two KINDS of document of title (DOT):


*Note: if asked if the document is a negotiable instrument or a negotiable title, if it pertains to goods it cannot be a
negotiable instrument.
1. Negotiable DOT
- is one where stated that the goods are deliverable to bearer, or to a specified person or order, or to the
order of a specified person (what is the diff between the last two? wala ra jud)
- if you find this in a warehouse receipt that a warehouseman undertakes to deliver the goods to bearer,
or the order of juan dela cruz, that means that the warehouse receipt or the DOT is negotiable. That is
if you see the words of negotiability.
- Words of negotiability: (book)
o deliver to bearer; deliver to the order of Juan dela cruz; deliver to Juan Dela Cruz or his
order
- Q. what is if you see the words of negotiability and across the document you also see the words NOT
NEGOTIABLE or NON-NEGOTIABLE, does it affect the negotiability of the DOT?
- A. a negotiable document even if marked non-negotiable remains to be negotiable (ART. 1510)
o (please be careful with the use of document of title and instrument, the latter your talking
about the Negotibale Instrument Law, the former we are talking about warehouse receipt and
bill of lading)
o Negotiation is the act of putting the document in circulation by having the document be
passed from one person to another, the effect is that you also pass the title from one
transferee to another without physically transferring also possession over the goods. You
transfer only the document of title.
o How is it negotiated? either delivery or indorsement
Deliverable to bearer delivery only
Deliverable to a specified person indorsed in blank or indorsed to bearer
ILLUSTRATION:

1st paper

1. seller S deliver the goods to warehouseman W


2. so W receives the goods and issues a warehouse receipt
3. warehouse man writes in the receipt, I undertake to Deliver the goods TO BEARER (Neg. DOT) .
And SIGN.
4. then give the receipt it to the depositor, the one who gave you the goods S
5. you give it to S, DO NOT PUT HIS NAME. (remember that this is a bearer document so mere
delivery negotiates the document. This has the effect of already transferring the goods to the
transferee already.)
6. BAROG! Negotiate that by mere delivery to another person. DIDTO PIKAS! this is negotiation by
mere delivery. This can be further negotiated, it can be negotiated again by Delivery or indorsement (
either specially or in blank)
7. So first indorse it SPECIFICALLY meaning indorse it to a SPECIFIED person you right the
specified person to whom to deliver and then sign deliver then to indorsee this is negotiation
by indorsement (not only indorse but it must also be coupled with delivery; indorse(pirma ka) +
delivery = negotiation by indorsement
8. Kay specified naman ang person to whose order I deliver so this is now an ORDER instrument
because it was specially indorsed. Remember initially goods were deliverable to bearer, now we
have a document especially indorsed, meaning the person whom the goods are deliverable too is
stated, Q. is the DOT now non-negotiable? NO, it remains to be negotiable. But the implication is it
can only be now negotiated by INDORSEMENT, not only delivery anymore. Again there are two
kinds of indorsement, humana ang to specified person, IF INDORSED TO BEARER or IN BLANK
the document is converted to a bearer instrument.
a. Indorsed to a specified person order document
b. Indorsed in blank or to bearer bearer document
9. Now indorse it in blank, by just signing, prima ra nimu blanko ang kung kinsa ihatag muna
indorsement in blank. So negotiated by indorsement in blank and delivery, deliver it to the
transferee. The document is now once again converted to a bearer instrument. So from here
negotiation by mere delivery napud. But this is not the only mode kung bearer document, pwede
napud nimu I indorse para ma convert napud utro to an order instrument.

What are the rights that the transferees have, after it is dully negotiated to them?
acquires all the rights of the transferor, whatever right the transferor had over the goods, and
acquires whatever rights the owner had over the goods (katung si S, the one who deposited the goods)
direct obligation of the warehouseman to hold the goods for him, he does not need to inform the
warehouseman that I am now the owner of the goods. He immediately acquires the direct obligation of the
warehouseman.

2nd paper

1. contract of deposit where the W issued an ORDER DOT, write that you undertake to DELIVER THE GOODS
TO THE ORDER OF A SPECIFIED PERSON,
2. delivered to another person, this is a negotiable DOT and can be negotiated. This is an order document so it
must be indorsed (again either specially, in blank or to bearer)
3. indorsed to BEARER, write Deliver to bearer then sign (always sign when you indorse) so you
negotiate it by indorsement coupled with delivery
4. BUT since na indorsed in blank it is now a BEARER DOT, now it can be negotiated by mere delivery, but
again pwede rapud sya I indorse couples with delivery. ( take note the it NIL, there is a doctrine that once a
bearer instrument always a bearer instrument doesnt matter if I indorse nimu sya after bearer instrument
japon sya, HOWEVER each is much easier when we are talking about a DOT, because such doctrine does
not apply, the doctrine in a DOT is that it can be converted to either a bearer or order document
DEPENDING ON HOW IT WAS LAST NEGOTIATED.
5. so from a order nahimo na ug bearer document negotiated by mere delivery it can further be
negotiated by indorsement or by mere delivery

What are the rights acquired by the holder? the same


acquires all the rights of the transferor, whatever right the transferor had over the goods, and
acquires whatever rights the owner had over the goods
direct obligation of the warehouseman to hold the goods for him, he does not need to inform the
warehouseman that I am now the owner of the goods. He immediately acquires the direct obligation of the
warehouseman.

If the depositor STOLE the goods, even if he was issued an order document, HE DOES NOT TRANSFER OWNERSHIP
over the goods to you. Because he cannot transfer any title over the goods, he did not transfer any title to your
immediate transferor. ALTHOUGH the law says the validity of the negotiation is not affected, the negotiation is
perfectly valid BUT no title over the goods, because your transferor had no title to transfer.

Q. If your holding a DOT where the warehouseman undertook to deliver the goods to bearer, and you present as the
bearer of the document to the warehouseman demanding the delivery or release to you, can you hold you transferor
liable?
A. NO. Prior parties are not liable for the failure of the bailee to deliver the goods, which alone is the obligation of the
bailee or warehouseman. This is not one of the warranties of a transferor. Only the warehouseman is liable.

Who may negotiate?

1st owner of the document


2nd the person in trusted with the possession or the custody of the document provided that the bailee issuing the
document undertookto deliver it to the person to whom the document is in trusted by the owner or provided that at
the time of the entrustment the document is negotiable by mere delivery because endorsed to bearer. Basically naka
suwat kay I undertake to deliver the goods to order of the person to whom this document may be entrusted by the
owner

Warranties of a person transferring or negotiating a document of title (Art. 1516)


A person who for value negotiates or transfers a document of title by indorsement or delivery, including one who
assigns for value a claim secured by a document of title unless a contrary intension appears, warrants the following:

1. That the document is genuine.


Thus, if the transferee cannot obtain the goods from the warehouseman because the warehouse
receipt is forged, he can hold liable the person transferring or negotiating the document to him.

2. That he has a legal right to negotiate or transfer it.

Example: D deposit goods with W who issued to D a warehouse receipt stating that the goods are
deliverable to bearer. D entrusted the warehouse receipt to A for safekeeping. However, A
negotiated the warehouse receipt to H. Later, W refused to deliver to H on the ground that his
title is defective. H can hold A liable because he warranted that he had a legal right to negotiate
the warehouse receipt.

3. That he has NO KNOWLEDGE of such fact which would impair the validity or worth of the document.
Thus, a transferor is not liable if at the time he transferred the document, he had no
knowledge that the same was already worthless because goods represented by it had been lost.
If he knew it was stolen then he violated the warranty.

4. That he has a right to transfer the title to the goods and that the goods are merchantable or fit for a
particular purpose, whenever such warranty would have been implied if the contract of the parties had been to
transfer without a document of title the goods represented thereby.

no where can you find a warranty on the part of the transferor that in the event that
bailee fails to deliver he shall be laible. Only these enumerated may make the transferor liable.
Non-negotiable DOT if the warehouse man undertakes to deliver the goods to a specific person.
3rd paper

1. Write in the document goods deliver to T (transferee), you have now a bailee where he issues a document
of title wherein he undertakes to deliver the goods to a specified person. If the document is transferred to
another person by the holder after he signs it. SIGN IT DODONG. And deliver to another person. Oh
DELIVER DODONG.
2. Delivered is that negotiation? It is indorsed dibah? Gi primahan nyah deliver? NO. indorsement of a NON
NEGOTIABLE DOCUMENT will NOT ADD anything at all or will not make it negotiable, it remains to be non-
negotiable.
But can it be transferred? Yes. The transfer is not negotiation, the transferee DOES NOT
ACQUIRE THE DIRECT
OBLIGATION of the warehouseman to hold the goods for him. Although he acquires a better right
over the goods as against the transferor but again not the direct obligation of the warehouseman.
remember if NEGOTIABLE no need to notify the warehouseman that you are now the new
owner of the goods. But here NON-NEGOTIABLE , you maybe holding the DOT but as far as the
warehouseman is concerned the owner is still the depositor not the transferee. So either the
TRANSFREE or TRANSFEROR must notify the goods has
been sold. And it is FROM THIS TIME that he holds the direct obligation of the warehouseman to
hold the goods for him.
what is the effect of that lapse of time?

TRANSFER IS MADE THIS LAPSE OF TIME , creditor of the transferor NOTIFICATION IS


HERE obtains a writ of attachment from the court , and MADE HERE
enforces it by presenting it to the warehouseman .

Is the warehouseman obliged to deliver the goods?

YES. Because for the W, transferor is still the owner.


Even if na purchase ang goods it is defeated by a
creditor of the transferor. Late man na notify. In

custodial legis na ang goods.

BUT if:

TRANSFER IS MADE NOTIFICATION IS ATTACHMENT IS W is not obliged anymore to surrender


HERE MADE HERE MADE HERE the goods to the sheriff, because the
new transferee is now holding the
direct obligation of the warehouseman

to hold the good for him.


- NO REQUIRMENT FOR FORM NOTICE pwede radaw tawagon nimu. No risk of the goods or document
to be circulated because his obligation is deliver the goods to a specified person and if this person calls
the warehouseman then he has to obey the instruction of the depositor.

- if a negotiable DOT, is issued the warehouseman CANNOT BE COMPELED to deliver the goods
without the surrender of the document of title
- NON negotiable is issued, the warehouseman MAY deliver the goods without the surrender of the
document. No requirement that the warehouse receipt or the NON-negotiable DOT be surrendered.

- Why does he have to demand for the surrender of that negotiable document? Because if he releases
the goods without the surrender, the document can still be negotiated nya wala na diay goods.

- Under the Warehouse Receipt act the warehouseman can be held criminally liable.

- If you are holding a negotiable DOT, and your creditor obtains a writ of attachment, that cannot be
enforced against the goods. Upon negotiation the holder obtains the direct obligation of the
warehouseman to hold the goods for him.

- If a creditor of the transferor obtains a writ if execution from the court, that writ cannot be enforced
against the goods. If the sheriff goes to the warehouseman and demands for the surrender of the
goods by showing the writ of attachment, the warehouseman can just ignore it, there is no obligation
to surrender the goods unless the document itself is likewise surrendered.

- In sum ako lang, (b*tch ang W sa transferor kung NON negotiable, notification by the transferee
liberates him from his previous master; kung negotiable I aint yo b*tch! surrender sa imo DOT)
Question ni Mike: kung si A tells W to deliver the goods to C nyah change iyang mind, yaw nlng si C, si D nlng.
Can he do this? ANS: yes if wala pa na release ang goods, pero kung na release nah, sorryall circuits are busy now.
Dina pwede.

BACK to NEGOTIABLE DOT:

Q. The depositor transferred it without indorsement, order document; do you consider it as validly negotiated?
A. NO. because it was not properly negotiated kay dapat I prima bsta order + delivery.

Q. So what is the right of the transferee?


A. he has the right to COMPEL the transferor to indorse.

NEGOTIABLE:
The effect here when the
transferee acquires knowledge
that THE TITLE of the INDORSEMENT
HAPPENS HERE
TRANSFER IS MADE transferor is DEFECTIVE. He
cannot be considered as a
HERE HOLDER FOR VALUE and in
Law says that negotiation
GOOD FAITH. cannot sue for
damages happens here pag indorse, IT
But if wala syah kabalo, he can DOES NOT RETROACT to the
be considered a purchaser for point of transfer of the
value and in good faith upon document.

indorsement

TRANSFER IS MADE A creditor of the transferor,


obtains a writ of attachment
INDORSEMENT
HERE and tries to attach the goods, is
HAPPENS HERE
the W obliged to surrender the
goods?
Still NO, the document Law says that negotiation
still is not
surrendered. happens here pag indorse, IT
(BASIG MU GAWAS NI
DAW) DOES NOT RETROACT to the

point of transfer of the

document.
When is delivery made?

First you need to know what is the stipulation or the agreement between the parties.
If there is no agreement then it must be made in a REASONABLE TIME. is a question of fact.
So whether it is a demand for delivery or an offer to deliver the thing if there is no time agreed to by the parties
demand should be made in a reasonable time or the offer within reasonable time.

Time for delivery of goods


a. Time stipulated.
b. If there is no stipulation, delivery must be made within a reasonable time from the execution of the
contract. (Art. 1521)

SMITH BELL & Co. vs Sotelo Matti

Was the delivery here considered timely? The court said yes, even if delivery was made months after, because the
court considered the attending circumstances at the time. This was during a war time.

LORENZO SHIPPING CORP. VS. BJ MARTHEL INTERNATIONAL, INC.


Q. can a buyer invoke a defense that time was of essence in the contract in order to avoid paying just compensation
for the contract?
A. in this case, Lorenzo issued postdated checks but it bounced and he refused to pay the balance of the
purchase price by claiming that time is of essence and there was default on the part of the seller. THE COURT SAID
NO. you are wrong. The court sited smith bell & co. by saying that when time of delivery is not fixed and stated in
general and indefinite terms then time is not of an essence in the contract.

Here while the offer of the respondent that delivery shall be made within 2 months from receipt of a fixed order, but
delivery was made 6 months after, order was made on Nov. delivery was made on April following year which was
more than 2 months. The court said that delivery was still made in reasonable time and therefore petitioner is not
excused from the balance of the contract.

Where must delivery be made?

Place of delivery

a. Place stipulated.
b. If there is no stipulation, place fixed by usage or trade or sellers place of business if he has one
c. In the absence of both, the sellers place of residence.
d. But if the thing is another place other than place of business or residence, then the delivery must be made
at the place where it is at the time of the sale.

Demand or tender of delivery

It must be made at a reasonable hour to be effectual. (Art. 1521)

He must make arrangements for the transportation of the goods on reasonable terms and therefore if the
goods to be delivered to the buyer consist of 100 boxes of sardines na mas bugaat pa ang sudlan kaysa
contents, is it reasonable to transport the goods via air cargo rather than though boat. So he must arrange
this under reasonable terms. He must ensure the goods that is stipulated nah that is the custom or the
usual practice. Otherwise he must notify, the buyer, failing this he can be held liable for damages.

Delivery to the carrier

- is delivery to the buyer unless or otherwise stipulated or the seller reserves title over the property or stoppage in
transitu is exercised.

If delivery to the carrier is delivery to the buyer the effect is the buyer bears the risk of loss.
BEHN MEYER & CO. vs YANGCO

it was CIF MANILA, the cost, the price, the insurance and the freight is paid by the buyer up to manila, this was
construed by the court to mean that ownership or title over the goods to be transferred to the buyer is only when the
goods reached manila.

The court said that delivery to the carrier was not delivery to the buyer, and therefore it was not delivery to the
buyer when the goods were shipped in new york who took the risk of loss was the seller. The court said that the fact
the ownership was transferred to the buyer it was also bolstered by the fact that the seller exerted effort to convince
the buyer to accept the replacement goods not the
usual brand. Kay kung ownership jud na transferred sa new york, then the seller would not have gone to the lengths
of requesting the buyer to accept the replacement goods.

Expenses of delivery

The seller bears the expenses of and incidental to putting the goods into a deliverable state, unless otherwise
stipulated. (Art. 1521)

RIGHTS OF AN UNPAID SELLER

Who is a seller? not only the person who actually sells, it also extends to his agent or a consignor.

An unpaid seller is one who has not been paid or tendered the whole of the price or who has received a
bill of exchange or other negotiable instrument as conditional payment and the condition under which it was received
has been broken by reason of the dishonor of the instrument, the insolvency of the buyer, or otherwise. (Art. 1525)

Unpaid seller

not only the seller who is not only paid or a seller who was paid a negotiable instrument which was
dishonored. And in the contract of sale what is the usual negotiable instrument given to the seller, check as special
form of bill of exchange.
may also be one who has still possession of the goods but has parted with the ownership of the goods and
therefore he holds the goods merely as bailee for the buyer.
may also be one who has parted with the possession of the goods but still retains ownership of the goods or
property
may also be one who has parted with possession, and ownership over the goods.

Rights of an unpaid seller

1. Possessory lien, or a lien on the goods or right to retain them while he is in possession of them. (Art.
1526) Art. 1526 we are talking about a seller who has either, retain possession of the goods or has parted with the
possession of the goods and whose ownership over the goods has already been transferred to the buyer.
- we are talking about here of goods not real property, because you do

not deliver real property. a. When available or exercised

This right is available to the seller and notwithstanding that he may be in possession of the goods as agent or bailee
for the buyer in the following instances:

1)Where the goods have been sold without any stipulation as to credit.
- (paid in cash) there must be simultaneous performance
- at the time of delivery there must be corresponding payment of the price
- if there is no stipulation of credit, regardless of the fact that ownership has already been
transferred to the seller, because ownership may be delivered constructively, so here what is this kind of
delivery where the seller has still possession of the goods constitutum possessorium the seller is in
possession of the goods as bailee for the buyer, because
ownership has already been transferred to the buyer.

2) Where the goods have been sold on credit, but the credit term has expired.
i. Buyer has already defaulted in the payment of the price.
3) Where the buyer is insolvent. (Art. 1527)
i. NO NEED OF JUDICIAL DECREE OF INSOLVENCY ART. 1636 Insolvency as so far as the
law on sales is concerned, does not require a judicial decree of insolvency.

b. Lien where there is partial delivery


Where an unpaid seller has made part delivery of the goods, he may exercise his right of lien on
the remainder, unless such part delivery has been made under such circumstances as to show intent to waive the
lien or right of retention. (Art. 1528)

c. When lien is lost


The unpaid seller loses his lien on the goods in the following cases:
1) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer
without reserving the ownership in the goods or the right to the possession thereof.
2) When the buyer or his agent has lawfully obtains possession of the goods in transit.
* take note that even if possessory lien can no longer be exercised it does not mean that
the seller has no more remedy against the buyer, we are only talking about possessory lien.
Because possessory lien means to
take actual possession or to retain possession of the goods. He has still other aces in his
sleeve. Upat so key dri upat pud imo remedy. (lien, stoppage, resale, rescind) 4 aces the
unpaid seller.
3) By waiver thereof. (Art. 1529)

Note: The unpaid seller having a lien on the goods does not lose his lien by reason only that he has obtained
judgment or decree for the price of the goods. (Art. 1529)
Here we are talking about an instance where ownership has already been delivered to the buyer but actual
possession of the goods has not yet been transferred to the buyer although the buyer is the owner. Therefore if the
buyer is already the owner, he is liable for the price and because he did not pay the price even if he is already the
owner of the goods, the seller who has exercised possessory lien files a case for the price. In fact now if the claim is
less than 100k file this before the MTC and it takes just one hearing for the judge to render a judgment.

So the seller obtains a favorable judgment from the court, does this mean to say that he is now obliged to deliver the
goods to the buyer? No. for as long as he is not paid the price he can continue to exercise possessory lien over the
goods so he is not obliged to deliver the goods by the mere fact he has obtain a judgment directing the buyer to pay
the price for as long as he is not paid. He can continue to exercise possessory lien.

2. Right of stoppage in transit


(he has parted with the possession over the goods, for as long as the goods is not yet in the possession of
the buyer, in transit) 28:50

- when the seller does not have actual possession of the goods because he has delivered the goods to
the carrier for transmission to the buyer and the goods are still in transit. He can exercise possessory
lien.
- But there is only one ground he can exercise stoppage whereas in possessory lien there was three
grounds.
- The ground is INSOLVENCY of the buyer of course the goods must still be in transit because if the
goods are already delivered to the buyer, or the buyer has taken delivery of the goods, even prior to
the arrival in the port of destination the goods are no longer considered in transit, therefore the seller
can no longer exercise stoppage in transitu.
- When are goods considered in transit?
o When delivered to the carrier
o Buyer rejects delivery and the goods remain in the possession of the carrier, buyer who
rejects delivery. Even if reach port but rejected by the buyer.
o IF IT is the carrier who wrongfully withholds delivery not the buyer, the goods are no longer
considered in transit and therefore the seller can no longer institute stoppage in transit.
o Just like possessory lien, if there is partial delivery to the buyer, the seller can still exercise
stoppage intransitu with the respect to the remainder unless there is waiver on the part of the
seller.

How is stoppage in transitu exercised?


- first, taking actual possession or by giving notice to the carrier, or to the principal of the carrier.
- The law requires the seller must allow sufficient time between notification to the principal and
notification to the principal in actual possession of the goods.

Seller shall bear the cost of the re-delivery to the buyer of the goods.

Take note. A negotiable bill of lading is issued by the carrier, the seller cannot just stop the goods in transit by
notifying, the carrier will not honor that, the seller must surrender the negotiable bill of lading to the carrier.

Ex. If the negotiable bill of lading has been sent to the buyer and the buyer has already in his
possession the bill of lading, he can negotiate it without first acquiring delivery over the goods. And her can sell the
goods even though not delivered yet, just by negotiating the bill of lading.

Under the law, the baillee or carrier, is not obliged to surrender the goods unless the bill of lading ir the
document of title itself is surrendered.

This right involves the right of the unpaid seller to resume possession of the goods at any time while
they are in transit, and he will then become entitled to the goods as he would have had if he had never parted with
the possession. (Art. 1530)
a. When the rights available
This right is available after the unpaid seller has parted with the possession of the goods
and the buyer is or becomes insolvent. (Art. 1530)

b. How exercised
The unpaid seller may exercise this right:
1) By obtaining actual possession of the goods.
2) By giving notice of his claim to the carrier or other bailee in whose possession the goods are.
This notice may be given either to the person in actual possession of the goods or to his principal. If given to the
principal, the notice to be effectual must be given at such time and under such circumstances that the principal, by
the exercise of reasonable diligence, may prevent delivery to the buyer.

When notice is given to the carrier or other bailee for the buyer, he must redeliver the goods to, or according to the
instruction of, the seller, with the seller bearing the expenses of delivery. However, if a negotiable of title
representing the goods has been issued, the carrier or other bailee shall not be obliged or justified in delivering the
goods to the seller unless such document is first surrendered to him. (Art. 1532)

c. Effects of exercise of right of stoppage in transit


1) The goods are no longer in transit.
2) The contract of carriage ceases; the carrier shall be liable as depositary or other bailee.
3) The carrier must redeliver the goods to, or according to the instructions of, the seller. (Art. 1532)

However, if a negotiable document of title has been issued for the goods, the carrier will not be bound to deliver the
goods unless the document of title is first surrendered to him for cancellation. (Art. 1532)

d. When goods are in transit


4) From the time they are delivered to the carrier or to other bailee for the purpose of transmission to
the buyer, until the buyer or his agent, take delivery of them from such carrier or other bailee.
5) If the goods are rejected by the buyer, and the carrier or other bailee continues in possession of
them, even if the seller has refused to receive them back. (Art. 1531)

e. When goods no longer in transit


1) If the buyer obtains delivery of the goods before arrival at the appointed destination.
2) I the carrier or other bailee acknowledges to the buyer or his agent, that he is holding the goods in
his behalf, after arrival of the goods a t their appointed destination.
3) If the carrier or the other bailee wrongfully refuses to deliver the goods to buyer or his agent. (Art.
1531)

3. Right of resale or to resell

1) When right available

This right is available to an unpaid seller when the following requisites are present:
i. The buyer has defaulted in the payment of the price.
ii. The seller has exercised either the right of lien or has stopped the goods in
transitu.
iii. Instances when the seller can exercise:
a) The goods are of a perishable nature. Ex. Manga dali malate
- suing would take time, and the goods are perishable so he can RESALE or TO RESELL
(this term because it
was previously sold to the buyer, there was a prior sale in fact the buyer is the owner of the
goods but the law allows him to resell the goods)
b) The sellers have expressly reserved the right to resell the goods in case the buyer
should make default.
c) Even if no reservation, if Buyer has been in default for an unreasonable time (queation of
fact). (Art. 1533)

2) How resale is made

GR: Does the seller need to notify the buyer of the intent to resell? No.
Does the seller need to notify the buyer of the place and time of the sale? No.

BUT: if the reason of the resale is the default for an unreasonable period, NOTICE is
relevant to establish that fact. Why? Remember that if the seller decides to resell the goods,
and the proceeds are not enough to cover the original contract price, HE CAN RECOVER the
deficiency from the buyer by way of DAMAGES.

Now if he resells the goods on the ground that the buyer has been in DEFAULT for an unreasonable period of time,
and sells at a price LOWER than the original price, and recovers the deficiency from the buyer, can the buyer contest
the fact of default? Yes he can if there is no proof of unreasonable delay that is why notice of intention to sell is
RELEVANT IF THE GROUND IS DEFAULT FOR AN UNREASONABLE PERIOD.

mportance of notice to the original buyer


Notice need not given to the original buyer of the intention to resell the goods for the validity
of the resale. However, if the basis of the resale is not the perishable nature of the goods or upon an express
provision in a contract of sale, the giving or the failure to give notice shall be relevant in any issue involving the
question whether the buyer has been in default for an unreasonable time before the resale was made.
It is not likewise essential to the validity of the resale that notice of the time and place of such
resale should be given by the seller to the original buyer. (Art. 1533)

The seller may resell the goods in a public or private sale. He is bound to exercise reasonable
care and judgment in making the resale. He cannot, directly or indirectly, buy the goods. (Art. 1533) (like
auction)

to exercise reasonable care and judgment in making the resale this is very subjective, this
can be questioned by the buyer if the seller latter on sues the buyer for the deficiency by way of damages.

If it is 1000 kilos of mangoes and the price now is 50 per kilo, and her only sells for 20K and
recovers the deficiency by way of damages from the buyer. The buyer CAN challenge this, that you sold the goods
for an unreasonable low price, because at that condition of the mangoes, it would have been sold for 40k. nganu gi
baligya raman nimu ug 20k. so this can be question. That is why the law requires that the seller to exercise
reasonable care and judgment in making the resale. But this is still subjective, no benchmark, question of fact
napud ni.

Pero kung 65k gi baligya, is the seller obliged to return the excess to the buyer? NO. you cannot
also ask for damages form the buyer. Damnum absque injuria. Damage without injury.

Effects of resale

1) The seller shall not be liable to the original buyer upon the contract of sale or for any profit made by
such resale.
2) He may recover damages from the buyer for any loss occasioned by the breach of contract of sale.
3) The new buyer acquires a good title against the original buyer. (Art. 1533)

4. Right to rescind the title of the buyer

a. When available

This right is available to an unpaid seller when the following requisites are present:
1) The buyer has defaulted in the payment of the price.
2) The seller has the right of lien or has stopped the goods in transit.
3) Title to the goods has passed on to the buyer.
4) The grounds must be any of the following:
a) The seller has expressly reserved the right to rescind the sale in case the
buyer should make default.
b) The buyer has been in default in the payment of the price for a
reasonable time.
notice is relevant to establish that fact.
c.) if the goods have not been delivered, and the buyer has manifested his inability
to perform or has created a breach
d.) if the buyer fails to accept at the stipulated time without any reasons, even if he
appeared but did not tender payment and no period is agreed.

b. How rescission is made


1) By giving notice to the buyer of the intention to rescind.
2) By doing an overt act manifesting the intention to rescind.

Such as offering the goods for sale. Kay remember ni exercise man ang seller ug possessory lien so
pwede niya ma resell. If he sells then it is a manifestation to resell the goods. Need to notify? No if it is done by
overt act.

It is not necessary that such overt act be communicated to the buyer, but the giving or
failure to give notice shall be relevant in any issue involving the question whether the buyer has been in default for
an unreasonable time before the right of rescission was asserted. (Art. 1534)

c. Effects of rescission
1) The seller shall not be liable to the buyer upon the contract of sale.
2) He may recover from the buyer damages for any loss occasioned by the breach of the
contract of sale.
3) The seller resumes ownership of the goods.
Under 1526, ownership is transferred to the buyer, therefore even if the buyer has not in his possession the goods,
because he is the owner he can sell the goods. But the seller has exercised possessory lien or stoppage, therefore
the buyer although the owner do not have possession and cannot deliver the goods because he cannot deliver to the
subsequent buyer. Although the buyer is the owner because delivery was made constructively, even if possession is
not transferred. Between the seller (exercised possessory lien or stoppage) and the Subsequent buyer, who has a
better right? Seller.

BUT if the goods are covered by a negotiable document of title, the Subsequent buyer has a better right over the
seller. In fact, if the Negotiable document of title has been issued, the seller cannot even exercise stoppage in
transitu, and the seller cannot even attach the goods unless he can surrender the negotiable document. That is how
powerful a negotiable document of title is.

COMPLETENESS OF DELIVERY

Just like in oblicon, a creditor cannot be compelled to accept partial delivery. Payment will not extinguish the
obligation unless the entire obligation is satisfied.

The seller does not only deliver the thing itself but also its accessions and accessories. The fruits at the time of the
perfection of the contract up to the time of delivery must also be delivered to the buyer unless otherwise agreed.

REAL PROPERTY

if it is sold per unit or no., here in the Philippines we sell it by square meter. Every thing mentioned in the contract
must be delivered. Example. If I sell to you 100 square meters of land I must deliver to you 100 square meters.

LESS:

Q. If I deliver only 95, and we agreed on 100, what is your remedy?

A. Reduction of the price.

Q. If I delivery 85 instead of 100?

A. Aside from proportional reduction of the price, I can also sue for

rescission of the contract. The buyer can avail of rescission if the

deficiency is at least 10% of the area.

But even if the deficiency is less than 10% if the buyer would have not purchased the property HAD HE
KNOWN of that small deficiency of the area the buyer can sue for rescission. But this is very hard to prove.

Q. If there is no deficiency in the area but deficiency in the quality? This is hard, lisod I determine kung unsay nang
10% deficiency in the quality.

*CEBU WINLAND DEV. CORP vs ONG

In this case, in the price list showed to the buyer, the area of the condo units was 155 square meters. The agreement
was not evidenced by any written agreement. But he paid 30% downpayment. The balance he issued post dated
checks. When the 24 pdc were cleared, he demanded the delivery of the condominium with the certificate of titles.
And the seller sent to him a deed of absolute sale for the 2 condo units and 4 parking slots. But he noticed, that what
was stated in the deed was area for each unit was only 127 instead of 155. So iya gi pa measure, nyah it turned out
that the area was actually only 110 square meters. 45 sq. m ang deficiency. It is more than 10%. Almost 1/3 of the
area ang kulang. Because of this the court allowed him to recover the difference between the price for 155 over 110
the price for the 45 square meters.

The real issue here is whether he brought the action within the prescriptive period or it was timely filed?
The court said yes. GR is that prescription takes place after 6 months from the date of delivery to the vendee. While
the units were actually delivered more than 6 months from the filing of this case, there was no delivery contemplated
under this article. Because delivery must be transfer of possession and ownership. They still had to execute the deed
of sale after full payment of the price, therefore at this instance the 6 months prescriptive period did not even start to
run yet.

MORE:

A. If instead you get 120 sq. meters, can you be compelled of the 120? No. but if you accept you are liable to the
excess. At the contract rate.
IF for lump sum, regardless of the area, everything within the boundaries must be delivered. That is the general rule,
I sell to you this entire parcel of land and tha boundaries were indicated of area of 400 sq m. but it turned out 600
diay. Can I withhold delivery of the 200? No. Because this is a sale for lump sum. Everything within the boundaries
must be delivered. The difference in the area must not be substantial. (question of fact)

LIETZ vs CA

The deficiency was more than 1 hectare, but the court did not consider it as substantial.

ROBLE vs ARBASA

The difference was more than twice the area stipulated. It was 240 sq meters and the excess was 600+ because the
area was actually 800+ square meters. The court considered the 600 as already substantial.

GR if lump sum, you deliver everything within the boundaries.

MOVABLES

LESS:

Q. You ordered 1k kilos of durian, and I delivered 800 kilos of durian, 50 pesos per kilo. You accepted the 800
but dinko ka complete sa 1000 kay gi bombahan ako plantation. You are aware nah dili nko ka deliver. How much are
you gonna pay for the durian?

A. 800 times 50.

Q. If you accepted it and sold it not knowing I cannot anymore complete the delivery. How much are you gonna
pay? Fair value to give to the buyer.
What is fair value compared to contract rate? What do you consider in the reduction of the amount you pay?
Damages.
What are the damages that he would suffer because of my non-completion of the delivery? The subsequent
buyer may refuse to accept partial delivery also from you, therefore incur losses. That can be considered in
determining what is the fair value to you of the durian. Fair value to you, might be lower than the contract price.
Otherwise, you will be paying more for innocently accepting partial delivery not knowing can no longer perform
delivery.

MORE:

Q. what I told you to deliver 1500 kilos of durian, can I compel you to accept everything?
A. NO. seller cannot compel you to accept 1500 kilos, the buyer cannot refuse to accept delivery of 1000. The
seller can compel the acceptance of the 1000 in the contract price. If you accept the delivery of the excess, you have
to pay for it at the contract price.

Q. what if we agreed that I will deliver you class A durian, pag deliver nko na mix na ug class B na durian. Can
you refuse delivery on the ground na dili nta maka distinguish aha ang class A or B ani?
A. YES. If it is impossible to segregate the goods actually purchased. BUT if it POSSIBLE to segregate then I
can compel you to accept the segregated of class for as long as it is in the quantity that I promised, because I cannot
compel you to accept 500 kilos. It must be at 1000 kung mu compel.

When is the seller excused from delivery?


- when payment is not made or tender when it is cash sale.
- If sale on credit, right to make use of the period is lost under 1198.
- Unpaid seller and has exercised either possessory lien or stoppage in transitu.
Article 1544 Double Sales

the governing principle is PRIORE TEMPORE, PORTIOR JURE (First in time, Stronger in right)

IMMOVABLE

Sale of Immovables and you have a double sale here. You have a double sale here because it is sold to 2 different
buyers representing two different points of interest. Who has a better right to the property?
first to register the sale in good faith
if no registration, first possession in good faith
if no possession, presents the oldest title in good faith

FIRST: GABRIEL VS. MABANTA (first to register in good faith)


The court said that the requirement is two fold: acquisition in good faith and registration in good faith.

If at the time of the sale, the buyer acted in good faith because he was not aware of any claim of any other person
with respect to the property. But at the time of the registration he finds out that somebody has beaten him in having
adverse claim annotated in the title. Then his not anymore considered as a registrant in good faith.

Good faith is something internal. Actually, it is a question of intention. In ascertaining one's intention, this Court must
rely on the evidence of one's conduct and outward acts.

Remember that mabanta was able to register the sale, but the court said you are not a register in good faith, because
at the time you registered the sale, there was already A NOTICE OF LIS PENDENCE. Because patricia altraz has
already filled a case. It was a notice to mabanta that somebody was claiming a right over the property. Was not a
registrant in good faith because she knew that another person other than the seller is claiming an adverse right over
the property.

TANEDO VS. CA

The sale in favor of the brother was later than the alleged sale to the children, the brother was able to register the
sale, and while the daughter of the seller claimed that she informed her uncle of the sale to them, her claim of such
was only verbal, the court did not believe, the court gave more credence of the uncle. While the sale to the brother
was latter than to the sale to the children, because the brother registered the sale first. The brother had a better right
over the property.

The court said that the registration was made in good faith because the brother here of the seller was not aware that
the property was previously sold to the children. The sale in favor of the uncle is considered to be binding over the
sale. Unique ni kay this was a sale of future inheritance, pero gi sale utro after the death of the father so na cure ang
void sale. First to register in good sale.

Take note* the seller sold the same property to two buyers and the 1 st registered the sale after he learned of the
subsequent sale. Do you consider the buyer or registrant as a registrant in bad faith? No. Because he was the 1 st
buyer. Good faith applies only to the 2nd buyer or subsequent buyer. (This came out in the bar)

SECOND: SANCHEZ vs RAMOS (possessor in good faith)


The first sale was made in a public document, which was not recorded. But the buyer did not take physical
possession of the property. The second sale was made in the private document and the buyers took physical
possession of the property. So the question is, who has a better right over the property? NO ONE REGISTERED.
the first sale, because it was by public document. So, execution of a public document is equivalent to
constructive delivery. Thats why court said that when the seller executed that public document, there was already to
the buyer. Take note that at the time the seller instituted the public document there was no other person claiming
adverse right over the property. Remember the condition for execution of a public document, to constitute
constructive delivery, that the seller must BE IN A POSITION to transfer actual possession of the property at the time
of the execution of the public document. Here the seller was in fact in the proper position because there was no
second sale yet. THERE WAS NO HINDRANCE to transfer ownership and constitute constructive delivery.
when the 2nd buyers occupied the properties actually, they are not considered to be the first possessors in good
faith. The first possessors were the 1st buyers.
when the seller made the public document with the first buyer, possession was constructive transferred to the
buyers.

THIRD: who can present the oldest title.

Oldest title we are talking here about a PRIVATE DOCUMENT. Because if public document is executed, then that
is already transferring possession to the buyer.

MOVABLE

RULE: person first to take possession thereof in good faith.


Purchaser in good faith is one who purchases property without notice that some other person has a right to have
interest in such property and pays the full and fair price.

Instances when 1544 does not apply:


1. Where there are two different contracts of sale made by two different persons, one of who not being the
owner of the property sold.
2. The owner had previously sold his property and transferred possession and ownership, and thereafter
executed a second sale in favor of another person; the latter cannot acquire any right.
3. When the earlier transaction is a pacto de retro sale of an unregistered land and the subsequent
conveyance is a donation of land in favor of another by the vendor a retro. Vendee a retro has the better
right here.
4. One of the deeds of sale is a forgery or simulated, the sale in favor of the other shall prevail.
5. One sale is absolute and the other is a pacto de retro transaction where the period to redeem has not yet
expired.

SECTION 3 CONDITITONS AND WARRANTIES

Condition

ObliCon
- future uncertain event which may or may not happen
- two kind of condition: suspensive and resolutory
- effect of the non-fulfillment of a suspensive condition, obligation will not arise.

Sales
- if subject to a suspensive condition, non-fulfillment of the condition, either the party whose obligation
depends on the happening of the condition will waive the condition (meaning will proceed with the contract)
or refuse to proceed with the contract.
- Two consequences of non-fulfillment of the suspensive condititon:
o The party whose dependent on the happening of the suspensive condition may not perform or
refuse to proceed with the contract or
o he may waive the fulfillment of the and proceed with the contract.

Express warranty

- If the condition takes form of a promise of an assurance that the uncertain event or certain EVENT WILL
HAPPEN, that constitutes an EXPRESS WARRANTY.

- It must happen even if it is uncertain because there is already an assurance on the part of the seller.

- If a seller makes an assurance that something or an event will happen, and because of that assurance the
buyer is induced into enter into the contract of sale, this is not a condition but an express warranty, it must
happen or otherwise the seller can be held liable for breach of warranty.

SOLER vs CHESLEY

Soler expreslly assured chesley that the items of the coconut oil machinery, some were in manila, others were in
transit, when in fact not anyone of the parts was in transit at the time. So there was a breach of an express warranty.

What is a warranty then?

- it is a promise, a collateral undertaking in a sale of either realty or personalty, express or implied, that if the
property sold does not possess certain or qualities, the purchaser may either consider the sale void or claim
damages for breach of warranty.

ANG vs CA
A warranty is a statement or representation made by the seller of goods, contemporaneously and as part of the
contract of sale, having reference to the character, quality or title of the goods, and by which he promises or
undertakes to insure that certain facts are or shall be as he then represents them.
Two kinds of warranties:
1. express warranty refers to any affirmation of fact or any promise by the seller relating to the thing whose
natural tendency is to induce the buyer to purchase the same, and if the buyer purchases the thing relying
on such affirmation or promise
2. implied warranty those that are inherent in the contract of sale and accompany them unless they are
suppressed by the parties. Impliedly instituted in the contract.
a. Warranty against eviction
i. The seller has the right to sale the thing and has the capacity to transfer title to the buyer,
therefore if the buyer is deprived not only of possession but also of ownership, then the
seller can be held liable for the breach of an implied warranty of breach.
b. Warranty against hidden defects or encumbrances
i. There is an implied warranty that the things delivered to the buyer are free from hidden
defects or encumbrances.
c. Warranty of merchantability
i. That the goods are merchantable and fit for the purpose claimed by the seller.

What about sellers opinion?

ART. 1341 unless the seller is an expert not liable; a mere expression of an opinion does not signify fraud, unless
made by an EXPERT and other party has relied on the formers special knowledge.

HARRISON MOTORS CORP. vs. NAVARRO

The court said that the statement by the representative of the company that all taxes and custom duties have already
been paid was what induced this Navarro to purchase the trucks. When the trucks were in her possession, it was
seized and detained by the government for non-payment of taxes.

Court said the express warranty was breached the moment petitioner refused to furnish private respondent with the
corresponding receipts since such documents were the best evidence she could present to the government to prove
that all BIR taxes and customs duties on the imported component parts were fully paid. Without evidence of payment,
she was powerless to prevent the trucks from being impounded.

INVESTMENT and DEV. Inc. vs CA.

You have two sales here, one from Gatpayat(G) in favor of investment(IDI) , then from IDI to Agencia de Empenos de
A.. Aguirre(A), from G to IDI the warranty was the land was free from all liens and encumbrances but when sold
to A, IDI made a warranty of 'free from all liens, adverse claim, encumbrances, claims of any tenant and or
agricultural workers, either arising as compensation for disturbance or from improvements' including
compliance 'with all the requirements for the provisions of the Tenancy Law, the Land Reform Code and
other pertinent laws of the Republic of the Philippines . . . .', However, A was not aware that there was any
tenants in the property, and since there was tenants in the property A was compelled to pay payment for disturbance
compensation as a consequence of the bulldozing of the land, so A sought reimbursement from IDI; in turn IDI seek
from G payment for breach of an express warranty.

Was there an express warranty? Court said No. G express warranty is for LIENS and ENCUMBRANCES, and
tenancy is not a lien or encumbrance. The express warranty was not to be free from claims from tenants. So who is
liable for breach of express warranty? It is IDI.

Prescriptive Period

We know it is 4 yrs. The problem is. In 1389 it only says 4 yrs but no point on when to reckon the 4 years. Is it from
delivery or discovery of the breach?

ANG vs CA

"the prescriptive period for instituting actions based on a breach of express warranty is that specified in the contract,
and in the absence of such period, the general rule on rescission of contract, which is four years (Article 1389, Civil
Code)."

As for actions based on breach of implied warranty, the prescriptive period is, under Art. 1571 (warranty against
hidden defects of or encumbrances upon the thing sold) and Art. 1548 (warranty against eviction), six months from
the date of delivery of the thing sold.

IMPLIED WARRANTIES

1. Warranty against eviction

Eviction is a JUDICIAL PROCESS by virtue of which the vendee is deprived of the ownership of the
whole or part of the thing he purchased by final judgment or by an act imputable to the vendor.
Requisites in order that the sellers warranty against eviction may be enforced
a) The purchaser has been deprived of the whole or part of the thing sold.

b) The eviction is by final judgment. no appeal is taken


a. A third person files a case against a vendee for the recovery of the property, filed with
RTC, decision in favor of the other claimant. Is it req. that the vendee must appeal in the
trial court until it reaches the SC before he can hold the vendor liable?
No. The vendee need not appeal from the decision or judgment in order that the vendor may
become liable for eviction. (Art. 1549)
Vendor cannot fault the vendee and absolve himself from liability by charging the vendee of
by non-appeal of an adverse decision.

c) The deprivation is based on a right prior to the sale or an act imputable to the vendor. (Art. 1548)
a. Right prior to the sale
i. For example the basis for eviction is acquisitive prescription indeed it was granted
by the court because prior to the sale there was an acquisitive prescription, can the
seller be held liable? YES. Because the basis of the eviction was the adverse
possession of the third party which has ripened or was completed prior to the sale.
(ADVERSE POSSESSION WAS BEFORE the sale)
ii. If the eviction is because is an act imputable to the vendor, ex. Upon failure to pay
realty taxes and therefore the local gov. can sell the properties in a public sale
(distrain); if the buyer is dis-possessed of the property bec. Of the sellers non-
payment of taxes, this is an instance that the buyer can hold the seller for breach of
implied warranty.
iii. IF THE ADVERSE POSSESSION WAS AFTER the sale; can the vendee hold the
vendor liable? Although the required adverse possession has started before the
transfer of the property to the vendee but COMPLETED AFTER the transfer, the
vendor is not liable for the warranty against eviction. The reason is that the title
arising out of the adverse possession is not yet perfected; in which case, the
vendee through the use of diligence could effectively interrupt the running of the
prescriptive period. HOWEVER, if the time left for the interruption is TOO SHORT
as to give the vendee the full opportunity to perform acts of interruption, justice
dictates that the vendor shall remain liable, unless waived by the vendee to
warranty against eviction.

d) The vendor must have been summon and made a co-party or notified of the suit for eviction at the
instance of the vendee. (Art. 1558)
a. How is the vendor summoned? The vendee may file a third party complaint against the
vendor to make the vendor a party to the case.
b. Example: X third party, he files a case of recovery of the property against Vendee, as the
defendant vendee cannot insist that the vendor be impleaded as a co-defendant, because the
court can render a judgment without the vendor, because the issue is possession and who is
in possession only the vendee. 3rd party has no claim against the vendor, he may have a
claim before but it was shifted to the vendee. But if vendee will not include the vendor his
interest will be prejudiced. X may have no interest against vendor but vendee has a interest.
So in order to claim from vendor, vendee has to bring the vendor as a party, so vendee will
ask the court to file a third party complaint against the vendor. If vendee does not do this, and
if he loses, he cannot hold the vendor liable for breach of warranty.

The defendant vendee shall ask, within the period fixed in the Rules of Court for answering the
complaint, that the vendor be made a co-defendant. (Art. 1559) This will enable the vendor to defend
his title (City of Manila vs. Lack, 19 Phil 324) and show that the suit for eviction against the buyer is
unjust (Jaiver vs. Rodriguez, 40 OG No. 5, p.
1006) (See also Ang vs. Court of appeals, G. R. No. 177874, September 29, 2008.)

Vendors liability in case of eviction

If there is stipulation exempting the vendor from the obligation to answer for eviction

I. Vendor acted in bad faith, i.e., he had knowledge at the time of sale of the existence of a fact that may give
rise to eviction, the waiver is void Vendor shall be liable for the following:
a) Value of the thing at the time of eviction.
b) Income or fruits, if he has been ordered to deliver them to the party whowon the suit against him.
c) Cost of suit which cause the eviction, and, in a proper case, those of the suit brought against the
vendor for the warranty.
d) Expenses of the contract, if the vendee has paid them, and
e) Damages and interest, and ornamental expenses, if the sale was made in bad faith. (Arts. 1553,
1555)

II. Vendor acted in good faith (you were not aware at the time of the sale the danger of the risk of eviction)
Vendors liability shall be as follows:
a. Liable for of the value at the time of eviction (not price kay price is sa hidden defects)
b. Income or fruits, if he has been ordered to deliver them to the party who won the suit against him.
c. Cost of suit which cause the eviction, and, in a proper case, those of the suit brought against the
vendor for the warranty.
d. Expenses of the contract, if the vendee has paid them
If vendee made the waiver without knowledge of the risk of eviction (waiver
consciente), he shall pay only the value of the thing sold at the time of eviction.
If vendee made the waiver with knowledge of the risks of eviction and assumed
the consequences (waiver intencionada), the vendor shall not be liable

Where no warranty has been agreed upon or there was no stipulation exempting the vendor from liability
Vendor acted in bad faith Vendors liability shall be the same as items a) to e
Vendor acted in good faith Vendors liability shall be same as items a) to d) above, i.e., there is no
liability for damages and interest.

Vendees remedies in case of partial eviction

If the vendee loses, by reason of eviction, a part of the thing sold of such importance, in
relation to the whole, that he would not have bought it without said part, he may demand:
Rescission of the contract; or
o Mutual restitution so return all, including the part not evicted.
Enforcement of the vendors liability for eviction.
The above rule shall be observed when two or more things have been jointly sold for a lump sum
or for a separate price for each of them, if it should clearly appear that the vendee would not
have purchased one without the other. (Art. 1556)

Are all sellers liable for warranty against eviction or breach of warranty? NO.
Persons not liable:
Sheriff
o So if sheriff cannot be liable, and the buyer is prejudiced. Who can the buyer hold liable?
judgment debtor
o Why judgment debtor held liable? because he was the one benefited by the auction sale, it was
his obligation that was extinguished.
Auctioneer
Mortgagee
o Here the mortgagor can be held liable instead.
Pledgee
Other person professing to sell by virtue of authority in fact or law.

Can Warranty against eviction be made? Yes.

If vendee made the waiver without knowledge of the risk of eviction (waiver consciente), he shall
pay only the value of the thing sold at the time of eviction.
If vendee made the waiver with knowledge of the risks of eviction and assumed the
consequences (waiver intencionada), the vendor shall not be liable

ANGELO vs PACHECO
- here the buyer even participated, actively in the registration proceeding, so he was aware that there was
another claimant, unfortunately the land was awarded to that claimant.
- Court said there was an express waiver.

If the buyer waives the right, but the seller acted in bad faith because he withheld, information from the buyer that
there really exist a risk of eviction and that waiver is void, meaning the BUYER CAN STILL HOLD THE SELLER
LIABLE if seller ACTED IN BAD FAITH.

WARRANTY AGAINST HIDDEN ENCUMBRANCE


You can hold your hold your vendor liable for this if the encumbrance is important that such that you would not have
bought the property had you known of such encumbrance.

Remedies: rescission or damages; buyer can sue for rescission ONLY within one year from the institution of the deed
of sale. After one year, the buyer can only sue for damages within one year from the date of discovery. So within a
year, either rescission or damages, after a year only damages so as long as within a year from discovery.

WARRANTY AGAINST HIDDEN DEFECTS of movables


Requisites for enforcement of vendors liability against hidden defects.
The defect must exist at the time or prior of sale. (Art. 1561)
The defect must be hidden, i.e., not patent or visible. (Art. 1561)

The vendor, however, shall not be liable for defects that are not visible if the vendee is an expert
who, by reason of his trade or profession, should have known them. (Art.
1561)
The defect must serious as to render the thing unfit for the use for which it is intended or diminishes
its fitness for such use to such an extent,that had the vendee been aware thereof, he would not
have acquired it or would have given a lower price for it. (Art. 1561)
Must not be known to the buyer, otherwise the buyer has deemed waive his right to sue
Must be notified to the seller within reasonable time 6 months from delivery, prior to bringing the
action he must notify the seller of the defect it cannot just immediately sue for breach

Q. Must the seller know of the defect to hold him liable for breach?

A. No. because if he knew, he is considered as in bad faith and is liable to damages.

Q. Is there warranty for hidden defects for movables sold the second time?

A. No. Here bears the risk because the rule is as is, where is. But if expressly warranties of the condition of
the second sale, and that is what induces you to buy, and you we not able to use the thing because guba-on jud sya,
you can sue for breach of warranty BUT not of an implied warranty but of an EXPRESS warranty.

Options of the Buyer in case of a breach:

he can withdraw from the contract,


rescind the contract ask for the
reduction of the price
ask for damages if with bad faith.

SUPERCARS MGMt. vs FLORES

The suit was timely filed by flores, the court said here that The Appellate Court correctly ruled "The evidence clearly
shows that Flores was justified in opting to rescind the sale given the hidden defects of the vehicle, allowance for
the repair of which he patiently extended, but which repair did not turn out to be satisfactory.

What if the thing is lost because of the hidden defect? And if the vendor is aware of the defect?

Rules in case of loss of the thing with hidden defects


The cause of the loss is the defect
a. If the vendor was aware of the defect, he shall be obliged:
To return the price;
To refund the expenses of the contract; and
To pay damages. (Art. 1568)

b. If the vendor was not aware of the defect, he shall be obliged:


To return the price;
To pay the interest thereon; and
To refund the expenses of the contract. (Art. 1568)

The cause of loss is a fortuitous event or the fault of the vendee


a. If the vendor was aware of the defect, he shall be obliged:
To return the price paid less the value of the thing at the time of loss; and
o Why do we presume that the value is less than the price? Why not value less price,
nganu price less value man?
To pay damages. (Art. 1569)

b. If the vendor was not aware of the defect, he shall be obliged:


To return the price paid less the value of the thing at the time of
loss. (Art. 1569)
Period of filling action

The action to withdraw from the contract (accion redhibitoria) or reduction of the price with damages (accion
quanti minoris) (Arts. 1561 to 1567); and all other actions to enforce the sellers liability for hidden defects when the
thing is lost (Arts. 1568 and 1569) and in judicial sales (Art. 1570), in six (6) months from the delivery of the thing
sold. (Art. 1571)

GUZMAN vs TOYOTA CUBAO

- more than nineteen months counted from November 29, 1997 (the date of the delivery of the motor vehicle),
his cause of action had become time-barred.

Rules in sale of animals with defects or disease

There is no liability of those bought in fares and public auction.

Redhibitory defect, concept; liability of veterinarian

Redhibitory defect is a defect of such nature that expert knowledge, even after a professional inspection has
been made, is not sufficient to discover it.
If the animals are unfit for the use stated in the contract, there is no warranty of hidden defects but the sales is
VOID.
If the animals suffered from contagious disease there is no breach of warranty of hidden defects but the sale is
VOID.

If the veterinarian, through ignorance or bad faith should fail to discover or disclose it, he shall
be liable for damages. (Art. 1576)

A. Remedies of vendee in case of sale of animals with redhibitory defects

General rule: If two or more animals are sold together, whether for a lupmp sum or for a
separate price for each of them, the redhibitory defect of one shall only give rise to its redhibition.
Accordingly, the vendee may only ask for:
The rescission of the sale of the defective animal (accion redhibitoria), or
Ask for a proportionate reduction in its price (accion quanti minoris). (Arts. 1572, 1567, 1580)

Exception: The redhibitory defect of one shall give rise to the redhibition of all the animals sold,
including the sound ones, if the vendee would not have bought the sound animals without the
defective one. This intention by the vendee is presumed when a team, yoke, pair, or set is bought,
even if a separate price has been fixed for each one of the animals composing the same. (Art.
1572) Accordingly, the vendee may ask for the rescission of the whole contract.
Note: The above rule and exception apply in like manner to the sale of other
things. (Art. 1573) Example:
B bought 6 horses from S. A few days after the sale, one of the horses was found to have
a redhibitory defect. Here, B can only ask for the rescission of the sale of the horse with such
defect or for a proportionate reduction in its price.
However, if B bought the 6 horses as a team, such as for his horse-drawn carriage, B
may seek the rescission of the sale of all the horses because he would not have bought the sound
horses without the defective horse.
B. When must redhibitory action be filed
The redhibitory action must be filed within forty (40) days from the date of delivery to the
vendee. This action can only be exercised with respect to faults and defect which are
determined by law or local customs. (Art. 1577)
C. Effect of the rescission of the sale of a n animal with redhibitory defect
The animal shall be returned in the condition in which it was sold and delivered, the vendee
being answerable for any injury due to his negligence, and not arising from the redhibitory
fault or defect. (Art. 1579)
2. When sale of animals is void
When the animals is suffering from contagious diseases.
When the animals are found to be unfit for the use or service for which they were acquired as stated
in the contract. (Art. 1575)

3. Vendors liability in case the animal sold dies of disease


The vendor shall be liable for the death of the animal sold, whether the defect is redhibitory or
not, if the following requirements are present:
v The disease existed at the time of sale;
v The disease is the cause of death of the animal, and
v The animal dies within three (3) days from time of purchase. (Art. 1578)

4. Sale without warranty against hidden defects of animals


There is no warranty against hidden defects of animals sold at fairs or at public auctions, or of
livestock sold as condemned. (Art. 1574)