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The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him
(actual or constructive) or in any other manner signifying an agreement that the possession is
transferred from the vendor to the vendee. (Art. 1496)
When the thing sold is placed in the control and possession of the vendee (Art.
1497). This involves the physical delivery if the thing and is usually done by passing
of a movable thing from hand to hand.
EXAMPLE: S sold to B 100 shares of stocks. If S endorsed the certificate of stock to B, the ownership is
transferred. This transfer or delivery is called “quasi-tradition”)
Sale or return or on approval (Art. 1502)
a. On sale or return - the ownership passes to the buyer on delivery, but he may revest the
ownership in the seller by returning or tendering the goods within the time fixed in the contract,
or, if no other time has been fixed, within a reasonable time.
Sale on Approval or on Trial or on Satisfaction, or other similar terms, the ownership do not pass to
the buyer except:
1. When he signifies his approval or acceptance to the seller or does any other act adopting the
transaction;
2. If he does not signify his approval or acceptance to the seller, but retains the goods without
giving notice of rejection, then if a time has been fixed for the return of the goods, on the
expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time.
What is a reasonable time is a question of fact.
General Rule: Ownership of the goods sold passes to the buyer upon their delivery to the carrier
Exception:
a. When there is stipulation to that effect.
b. When by the terms of the bill of lading, the goods are to be delivered to the seller or his agent
or to the order of the seller or his agent.
c. When by the terms of the bill of lading, the goods are to be delivered to the order of the buyer
or his agent, but the bill of lading is retained by the seller or his agent.
d. When the seller draws on the buyer a bill of exchange for the price of the goods and transmits
the bill of exchange and the bill of lading to the buyer to secure acceptance or payment of the
bill of exchange, but the buyer dishonors such bill of exchange.
However, if the bill of lading is negotiated to a purchaser for value in good faith, ownership of the goods
is passed to him. (Art. 1503)
EXAMPLE: S sold to B a radio; the radio was shipped on board a carrier. The bill of lading stated that
the radio is deliverable to the order of B. The bill of lading was sent to B, accompanied by a bill of
exchange which B was supposed to honor. If B does not honor the bill of exchange, but wrongfully
retains the bill of lading, ownership remains with the seller. If B sells the bill of lading to X, X can obtain
ownership of the goods if he is an innocent purchaser.
Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of
the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for
value, and without notice of the seller’s defect of title. (Art. 1506)
EXAMPLE: B bought a car from S (an insane man), and in turn sold the car to X who is in good faith.
After delivery of the car to X, he becomes its owner if, at the time he bought it, the contract between B
and S had not yet been annulled.
Document of title to goods. This includes any document used in the ordinary course of business in the
sale or transfer of goods, as proof of the possession or control of the goods, or authorizing or purporting
to authorize the possessor of the document to transfer or receive, either by indorsement or by delivery,
goods represented by the document. (Art. 1636)
a. Negotiable document of title - a document of title in which it is stated that the goods referred
therein will be delivered to the bearer or to the order of any person named in such document.
The following are the kinds of negotiable documents of titles:
i. bill of lading - a contract or receipt for the transport of goods and their delivery to the person
named therein,; to order, or to bearer.
ii. dock warrant - an instrument given by dock owners to an importer of goods warehoused on
the dock recognizing the importer’s title to the said goods.
iii. quedan - a warehouse receipt usually for sugar received by a warehouseman.
iv. warehouse receipts or order - a contract or receipt for the goods deposited with a
warehouseman containing the latter’s undertaking to hold and deliver the said goods to a
specified person, to order, or to bearer.
v. any other document used as proof of possession or as authority to transfer the goods
represented by it.
How negotiable document of title is negotiated.
a. Mere delivery
b. Indorsement plus delivery
EXAMPLE: The document says “deliver to the order of Mr. X.” To negotiate it, Mr. X must sign his name
at the back and then deliver. Mere delivery without signing is not sufficient
Negotiable documents of title marked non-negotiable. A negotiable document of title even if marked
“non-negotiable” remains to be negotiable. (Art. 1510)
Effect of delivery when document cannot be negotiated by mere delivery. The delivery of an order
document of title without any indorsement does not constitute negotiation, but a mere assignment by the
holder to the purchaser or donee. (Art. 1511) The transferee shall have a right to the goods as against
the transferor; and the right to compel the transferor to indorse the indorsement.
IMPLIED Warranties of the person who negotiates a document of title by indorsement or delivery
c. Goods in the possession of a third person. The seller has not fulfilled his obligation to deliver
the goods unless such third person acknowledges to the buyer that he holds the goods on the
buyer’s behalf
** However, if the buyer has used or disposed of the goods delivered before he knows that the seller is
not going to perform his contract in full, the buyer shall not be liable for more than the fair value to him of
the goods so received.
Implied Acceptance
Acceptance, even if not express, is implied when the buyer exercises acts of ownership over the excess
goods.
**If the sale is indivisible, the buyer may reject the whole of the goods.
DELIVERY TO CARRIER (ARTICLE 1523)
General Rule: Delivery to carrier is delivery to buyer, if it is the duty of the seller to send the goods to
the buyer.
**So all charges up to the place of destination must be paid by the seller.
General Rule: If the buyer does not pay, the seller is not required to deliver.
General Rule: The seller must deliver the thing sold even if said period has not yet arrived. He will then
have to wait for the end of the period before he can demand the price.
EXCEPTION: If the buyer has lost the benefit of the term (ARTICLE 1536).
RIGHTS OF UNPAID SELLER (ARTICLE 1526)
The unpaid seller of goods who is in possession of them is entitled to retain possession of them until
payment or tender of the price in the following cases, namely:
(1) Where the goods have been sold without any stipulation as to credit;
(2) Where the goods have been sold on credit, but the term of credit has expired;
(3) Where the buyer becomes insolvent.
General Rule: Where an unpaid seller has made part delivery of the goods he may exercise his right of
lien on the remainder.
Exception: Part delivery has been made under such circumstances as to show an intent to waive the
lien or right of retention
RIGHT TO RESCIND THE TRANSFER OF TITLE AND TO RESUME THE OWNERSHIP OF THE
GOODS (ARTICLE 1534)
General Rule: The unpaid seller’s right of LIEN or STOPPAGE IN TRANSITU remains.
Exception:
1. When the seller has given his consent thereto.
2. When the purchaser or the buyer is a purchaser for value in good faith of a negotiable
document of title.