Art.

1503- RESERVATION OF POSSESSION OR OWNERSHIP BY THE SELLER

WHEN SPECIFIC GOODS ARE SHIPPED.
1. When a contrary intention appears by the terms of the contract.
2. When the goods are shipped, and by the bill of lading(BOL)
the goods are deliverable to the seller or his agent, or to the
order of the seller or of his agent.
Exception: Form of bill of lading not conclusive if for
security purposes only.
3. When the goods are shipped and by the BOL the goods are
deliverable to the order of the buyer or of his agent, but
possession of the BOL is retained by the seller or his agent.
4. Where a bill of lading is sent forward to the buyer with bill
of exchange attached and the buyer did not pay the bill of
exchange.
EFFECT OF BUYER’S OBTAINING POSSESSION OF BILL OF LADING
WITHOUT HONORING THE DRAFT.
** If the BOL provides that the goods are deliverable to the
buyer or to the order of the buyer or is indorsed in blank or is
indorsed to the buyer by the consignee named therein, a purchaser
in GF for value of the BOL or goods from the buyer will obtain
the ownership in the goods although the BOE has not been honored.
Kinds of Delivery to the Carrier ​
1. C.I.F. (Cost, Insurance, Freight)—signify that the price fixed
covers not only the costs of the goods, but the expense of the
freight and the insurance to be paid by the seller ​
2. F.O.B. (Free on Board)—goods are to be delivered free of
expense to the buyer to the point where they are F.O.B. The
point of F.O.B. (either at point of shipment or the point of
destination) determines when the ownership passes.
*CIF and FOB merely make rules of presumption.
3. C.O.D. (Collect on Delivery)—the carrier acts for the seller
in collecting the purchase price, which the buyer must pay to
obtain possession of the goods.
ART. 1505. SALE BY A PERSON NOT THE OWNER/WITHOUT AUTHORITY OF
OWNER. General Rule: Buyer acquires no better title to the
goods than the seller had.
Exceptions: SOLVAM ​
1. Where the sale is sanctioned by statutory or judicial
authority. (See Art. 559) ​
2. Where the owner of the goods is by his conduct, precluded
from denying the seller’s authority to sell.
3. Where the law enables the owner to dispose of the goods as if he
were the true owner thereof.
​ *** Factor’s Acts (Agency); Recording Laws (PD 1529, RA
4136-Land Transportation and Traffic Code, Revised
Administrative Code); NIL; Warehouse Receipts Law.
4. Where the seller has a voidable title which has not been
avoided at the time of the sale. 5. Where seller
subsequently acquires title.
6. Where the sale is sold at merchant’s stores, fairs or markets.
ART. 1506. SALE BY ONE HAVING A VOIDABLE TITLE-BUYER ACQUIRES
GOOD TITLE. 1. Bought before the title of seller has been
avoided.
2. in GF for value ​
3. without notice of the
seller’s defect of title.
ART. 1507. DOCUMENTS OF TITLE.
Document of Title of Goods—includes any bill of lading, dock
warrant, quedan, or warehouse receipt or order for the delivery
of goods, or any other document used in the ordinary course of
business in the sale or transfer of 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 such document.
Nature and function: ​
1. Receipts of, or orders upon, a bailee
of goods represented.
2. Evidence of transfer of title and possession of goods and
contract between the parties.
Some Forms of Documents of Title
1. Bill of Lading- It is a contract or receipt for the transport
of goods and their delivery to the person named therein, to
order or to bearer. It usually involves three persons: the
carrier, the shipper and the consignee.
2. Dock Warrant- it is an instrument given by dock owners to an
importer of goods warehoused on the dock as a recognition of the
importers title to the said goods, upon production of the bill of
lading.
3. Quedan- a warehouse receipt for commodities or goods such as
sugar, tobacco, rice or hemp 4. Warehouse Receipt—A receipt
wherein it is stated that certain goods were received by the
bailee to be delivered to the bearer or to the order of any person
named in such receipt or to a specified person ​
5. Letter of Credit—it is nothing more than a commitment by the
issuer that the party in whose favor it is issued and who can
collect upon it will have his credit against the applicant of the
letter duly paid in the amount therein specified.
Classes of Documents of Title: ​
1. Negotiable- those by the terms of which the bailee undertakes
to deliver the goods to the bearer and those by the terms of
which the bailee undertakes to deliver the goods to the order of
a specified person.
2. Non Negotiable- those by the terms of which the goods covered
are deliverable to a specified person.

ART. 1508. NEGOTIATION OF NEGOTIABLE DOCUMENT BY DELIVERY.

1. Where by the terms the carrier, warehouseman or other bailee
undertakes to deliver the goods to the bearer.
2. Where by the terms the carrier, warehouseman or other bailee
undertakes to deliver the goods to a specified person and such
person or subsequent indorsee has indorsed it in blank or to
bearer.
 ​ Where negotiable document of title the goods are
deliverable to bearer or where a negotiable document of
title has been indorsed in blank or to bearer, any holder may
indorse the same to himself or to any specified person, and in
such case the document shall thereafter be negotiated only by
the indorsement of such indorsee.
ART. 1509. NEGOTIATION OF NEGOTIABLE DOCUMENT BY INDORSEMENT.
Indorsement is made by the person to whose the goods are
deliverable. It may be in blank, to bearer or to a specified
person.
ART. 1510. NEGOTIABLE DOCUMENTS OF TITLE MARKED
“NON-NEGOTIABLE”-No effect on negotiability. The
obligations of carrier,warehouseman, or bailee not limited.
ART. 1511. TRANSFER OF NON-NEGOTIABLE DOCUMENT.
-Though non-negotiable may be transferred but transferee
acquires rights under 1514. Even if document indorsed transferee
has no additional rights.
ART. 1512. PERSONS WHO MAY NEGOTIATE A DOCUMENT.
1. By the owner thereof ​
2. By any person to whom possession or custody has been
entrusted by the owner, if bailee undertakes to deliver the
goods to the order of the possessor of the document OR document
is in such form that it may be negotiated by delivery at the
time it is entrusted.

ART. 1513. RIGHT OF PERSON TO WHOM DOCUMENT HAS BEEN NEGOTIATED.

1. The title of the person negotiating the document over the
goods covered by the document. 2. The title of the
person(depositor or owner) to whose order by the terms of the
document the goods were to be delivered.
3. The direct obligation of the bailee (warehouseman or carrier)
to hold possession of the goods for him, as if the bailee had
contracted with him.
ART. 1514. RIGHTS OF PERSON TO WHOM DOCUMENT HAS BEEN TRANSFERRED.
Applicability: (a) Transferee of Negotiable document of title
not duly negotiated (b)transferee of a non-negotiable document.
Rights acquired: ​
1. Title to the goods as
against the transferor.
2. The right to notify the bailee of the transfer thereof.
3. The right, thereafter to acquire the obligation of the bailee
to hold the goods for him.
**Rights not absolute. They are subject to the terms of any
agreement with the transferor. **Before Notification the bailee
is not bound to the transferee whose right may be defeated by a
levy of an attachment or execution upon the goods by the
creditor of the transferor or by a notification to such bailee
of the subsequent sale of the goods.
ART. 1515. TRANSFER OF ORDER DOCUMENT WITHOUT INDORSEMENT.
Rights of transferee: ​
1. The right to the goods as
against the transferor.
 2. The right to compel the transferor to indorse the indorsement.
**Ascertain the intention if contrary appears as to necessity of
negotiation.
ART. 1516. WARRANTIES ON SALE OF DOCUMENTS BY THE TRANSFEROR.
(indorsement /delivery) (GRIT) ​
1. That the document is Genuine ​
2. That he has legal Right to
negotiate or transfer it.
3. The he has no knowledge of fact which would Impair the
validity or worth of the document. 4. That he has the right to
transfer the Title to the goods and goods are merchantable or
fit for a particular purpose.
ART. 1517. INDORSER NOT GUARANTOR. THEREFORE NOT LIABLE
FOR BAILEE’S FAILURE OR PREVIOUS INDORSERS.
ART. 1518. WHEN NEGOTIATION NOT IMPAIRED BY FRAUD, MISTAKE,
DURESS, LOSS, THEFT, OR CONVERSION. OR THERE WAS BREACH OF DUTY OF
TRANSFEROR.
--If the transferee paid value, without notice of such factors,
therefore in Good Faith
ART. 1519. ATTACHMENT OR LEVY UPON GOODS COVERED BY A
NEGOTIABLE DOCUMENT NOT ALLOWED, WHILE IN POSSESSION OF BAILEE
UNLESS DOCUMENT BE FIRST SURRENDERED OR ITS NEGOTIATION
PROHIBITED BY THE COURT.
ART. 1520. CREDITOR’S REMEDIES ON PROHIBITION ON ATTACHMENT/LEVY.-
Injunction or TRO.
ART. 1521.
A. PLACE OF DELIVERY OF
GOODS ​
1. Agreement.
2. Usage of trade.
3. Seller’s place of business
4. Seller’s residence.
5. Specific Goods: Place where goods are at the time of contract
known to parties.
B. TIME OF DELIVERY OF
GOODS ​
1. Agreement.
2. No time fixed, within a reasonable time.
C. DELIVERY OF GOODS AT THE POSSESSION OF THIRD PERSONS. –Seller
is relieved if 3rd person acknowledges to be the bailee of the
buyer.
D. Demand or tender of delivery effective if made at a
reasonable hour. E. Seller bears the expenses
incidental to putting goods in deliverable state.
ART. 1522 ​
A. DELIVERY OF GOODS LESS THAN THE QUANTITY
CONTRACTED.
1. Buyer may reject.
2. Buyer may accept by paying: ​
​ a. price at the contract rate if he knew that no more were to
be delivered ​
​ b. fair value (reasonable market value) of the goods if he
did not know that the seller is going to be guilty of breach of
contract.
B. DELIVERY OF GOODS MORE THAN QUANTITY
CONTRACTED 1. Accept and reject excess.
2. Accept all- Liable for all of them.
C. DELIVERY OF GOODS MIXED WITH OTHERS ​
1. Accept in accordance with the
contract and reject the rest. 2. Accept
all.
** If goods are indivisible the buyer may
reject the whole of the goods. ** Rules may be
controlled by usage or agreement.
ART. 1523. DELIVERY OF GOODS TO THE CARRIER is DELIVERY
TO THE BUYER- Exceptions: 1503 (1) (2) (3) and when Contrary
intention appears.
Seller’s duty after delivery to carrier.
1. To enter on behalf of buyer into such contract reasonable
under the circumstances. (If seller omits this buyer may
decline to treat delivery to carrier, delivery to him,
if goods were lost/damaged) ​
2. To give notice to buyer regarding necessity to
insure goods while in transit if under circumstances it is
usual to insure. (risk during transit is borne by him if he
fails)
ART. 1524. NO DUTY TO DELIVER IF VENDEE HAS NOT PAID OR NO
PERIOD FOR PAYMENT FIXED IN THE CONTRACT.
ART. 1525. UNPAID SELLER.
1. When the whole of the price has not been paid or tendered.
2. When a BOE or other Negotiable Instrument has been received
as conditional payment but was dishonored or the buyer became
insolvent.
“Seller”- includes agent of the seller to whom the BOL has been
indorsed; or a consignor or agent who has himself paid or is
directly responsible for the price.

ART. 1526. REMEDIES OF AN UNPAID SELLER. [LS RRW] ​

1. A lien on the goods or right to retain them for the price
while he is in possession of them; 2. Right of stopping the
goods in transitu after he has parted with the possession of
them; 3. Right of Resale ​
4. Right to Rescind ​
5. Right of withholding the delivery when ownership has not
yet passed to buyer.
ART. 1527. WHEN UNPAID SELLER’S POSSESSORY LIEN MAY BE
EXERCISED. [SEI] 1. Sales without stipulation as to credit. ​
2. Expiration of term of credit.
3. Insolvency of the buyer.
ART. 1528. LIEN ON THE REMAINDER WHEN THERE’S PART DELIVERY,
UNLESS INTENT TO WAIVE THE LIEN OR RIGHT OF RETENTION.
ART. 1529. WHEN UNPAID SELLER LOSES POSSESSORY
LIEN. [DPW] 1. Delivery to agent or bailee of
buyer. ​
2. Possession by buyer or his agent. ​
3. Waiver of lien.
*** When unpaid seller becomes judgment creditor he does not lose
his lien.
ART. 1530. REQUISITES FOR THE EXERCISE OF RIGHT OF STOPPAGE IN
TRANSITU 1. The seller must be unpaid (1525) ​
2. The buyer must be insolvent ​
3. The goods must be in transit (1531) ​
4. The seller must either actually take possession of the goods
sold or give notice of his claim to the carrier. (1532.1) ​
5. The seller must surrender the negotiable document of title,
if any, issued by the carrier or bailee. (1532.2) ​
6. The seller must bear the expenses of delivery of the goods
after the exercise of the right.
ART. 1531. When Goods are in transit ​
1. after the delivery to a carrier or other bailee and before
the buyer or his agent takes delivery of them ​
2. if the goods are rejected by the buyer, and the carrier or
other bailee continues in possession of them.
When Goods No longer in Transit (after delivery to buyer/agent) ​
1. if the buyer or his agent obtains possession of the goods at
a point before the destination originally fixed.
2. if the carrier or bailee acknowledges to hold the
goods on behalf of the buyer 3. if the carrier or
bailee wrongfully refuses to deliver the goods to
the buyer.
*** Goods delivered to a ship, freight, train, truck or
airplane chartered by the buyer—circumstantial whether they
are in possession of the carrier or as agent of the buyer.
*** Part of Delivery made to buyer or agent—remainder may be
stopped in transitu, unless there is showing an agreement with
buyer to give up possession of the whole of goods.
ART. 1532. WAYS OF EXERCISING THE RIGHT TO STOP.
1. Taking actual possession of
the goods ​
2. giving notice of his claim to
the carrier or bailee.

​ --Notice to be effectual must be given in such time and

circumstance that the principal by the exercise of reasonable
diligence may prevent a delivery to the buyer.
--Redelivery necessary according to directions of seller.
​ --If goods are covered by negotiable document of title
carrier or bailee has no obligation to deliver to seller unless
document is cancelled.
ART. 1533. WHEN RESALE IS ALLOWABLE ​
Where seller has either a right of lien or a right of stoppage
in transitu and under the following cases: PRD ​
1. Where the goods are perishable in nature ​
2. Where the right to resell is expressly reserved in case the
buyer should make a default 3. Where the buyer delays in the
payment of the price for an unreasonable time.
ART. 1534. WHEN THE SELLER MAY RESCIND ​
1. Where the right to rescind is expressly reserved in case
the buyer should make a default 2. Where the buyer delays in
the payment of the price for an unreasonable time.
ART. 1535. EFFECT OF SALE OF GOODS SUBJECT TO LIEN OR
STOPPAGE IN TRANSITU.
1. Where Goods not covered by negotiable document of
title.—Seller can give no larger right than he has. Also with a
buyer who sold goods to another.
2. Where Goods covered by negotiable document of title—Seller’s
lien cannot prevail against the rights of a purchaser for value
in GF to whom the document is indorsed.
Article 1536—Right to Withhold delivery of thing sold by the
vendor in case the vendee lose the right to make use of the
term, as provided in Art. 1198: (IFIVA) ​
​ 1. When after the obligation has been contracted vendee
becomes insolvent, unless he gives a guaranty or security for
the price ​
​ 2. When he does not furnish to the vendor the guaranties or
securities which he has promised ​
​ 3. When by his own acts he has impaired said
guaranties or securities after their establishment, and when
through fortuitous event they disappear, unless he immediately
gives new ones equally satisfactory ​
​ 4. When the vendee violates any undertaking, in consideration
of which the vendor agreed to the period ​
​ 5. When the vendee attempts to abscond
Article 1537—Vendor is bound to deliver the thing sold and its
accessions and accessories in the condition in which they were
upon the perfection of the contract. All fruits pertain to
vendee from the day on which the contract was perfected.
Article 1538—Loss, Deterioration or Improvement of Object before
its delivery governed by Article 1189.
​ 1. If the thing is lost w/o the fault of the seller, the
obligation shall be extinguished ​
​ 2. If the thing is lost through the fault of the seller, he
shall be obliged to pay damages; it is understood that the thing
is lost when it perishes, or goes out of commerce, or disappears
in such a way that its existence is unknown or it cannot be
recovered.
​ 3. When the thing deteriorates w/o the fault of the seller,
the impairment is to be borne by the buyer ​
​ 4. If it deteriorates through the fault of the seller, the
buyer may choose b/w rescission or fulfilment with indemnity in
either case ​
​ 5. If the thing is improved by its nature, or by time, the
improvement shall inure to the benefit of the buyer

​ 6. If it is improved at the expense of the seller, he shall

have no other right than that granted to the usufructuary
Article 1539—What delivery includes? It includes the placing in
the control of the vendee all that is stated in the contract in
conformity with the following rules:
​ a. Sale OF REAL ESTATEby unit of measure or number: The vendor
must deliver all that may have been stated in the contract. If
it is not possible to deliver all, the vendee may choose
between: ​
​ ​ LACKING/SMALLER AREA OR NUMBER ​
​ ​ 1. Proportional reduction of the price or ​
​ ​ 2. Rescission of the contract provided the lack in area is
at least 1/10 of the area stated in the contract
 The above rules are applicable
also in case there is no lack in
area but the quality is not the
same as specified in the
contract. Rescission shall take
place only if inferior
value of the thing sold exceeds 1/10 of the price.
 But if the vendee would not have
bought the immovable had he
known of its smaller area or
inferior quality he may rescind
the sale.
GREATER AREA OR NUMBER (1540)​
​ Vendee may accept the area stated in the contract
and reject the excess OR​ Vendee may accept the
whole but must pay for the same at the contract
rate​ No Right of Rescission since the vendee is
not prejudiced at all.
The Above Rules (Art. 1539 and 1540 shall be applicable to
judicial sales)
​ b. Sale of REAL ESTATE by lump sum(1542): There should be no
increase or decrease of the price, although there be a greater
or lesser area or number than that stated in the contract.
​ Rule applicable to Sale of two
 or more immovables for a single
price.
What if the area or number of
the immovable is stated together
with its boundaries? Then the
vendor is bound to deliver all
that is included w/in the
BOUNDARIES,
although the same exceeds the area or number specified
in the contract. The BOUNDARIES prevail because it
contains the real and true area of the land.
 What if the vendor cannot
deliver all that is included
w/in the designated
boundaries? Vendee has the
option to:
 a. Reduce the price in proportion to the
deficiency in the area OR b. Rescind the
contract for breach of stipulations.
PRESCRIPTION OF ACTIONS for rescission or exaction of
proportionate reduction of the purchase price against the
vendor under Art. 1539 and 1542: Six Months from the day of
delivery. [1543]
DOUBLE SALE (1544)
General Rule: FIRST IN TIME, PRIORITY IN RIGHT ​
Applicability of General Rule: Only when the requisites in
Article 1544 are not present
Requisites for DOUBLE SALE to EXIST (VOCS) ​
1. Two or more sales transactions must constitute valid sales ​
2. Two or more sales transactions must pertain to the same
object or subject matter ​
3. Two or more buyers at odds over the rightful ownership of
the subject matter must each represent conflicting interests ​
4. Two or more buyers must each have brought from the very same
seller
Rules of Preference of Ownership
Movable or Personal Property: Owner is the one who is in first
possession in good faith.
Immovable ​
​ 1. First to register in good faith ​
​ 2. No inscription, first to possess in good faith ​
​ 3. No inscription and no possession in good faith—Person who
presents oldest title in good faith
What is REGISTRATION? It is any entry made in the books of the
Registry, including both registration in its ordinary and
strict sense, and cancellation, annotation, and even the
marginal notes. It is the entry which records solemnly and
permanently the right of ownership and other real rights.
CASES WHERE ARTICLE 1544 CANNOT BE INVOKED ​
1. When the earlier transaction is a pacto de retro sale of an
unregistered land and the subsequent conveyance is a donation
of the land in favor of another by the vendor a retro. The
vendee a retro has the better right over the donee. The donor
had nothing more to donate because of failure to repurchase the
property.
2. Where one of the deeds of sale is a forgery.
3. Where one sale is absolute and the other is a pacto de retro
where the period to redeem has not yet expired.
4. Where one of the sales is subject to a suspensive condition
which condition was not complied with and the other is an
absolute sale. Even if the conditional sale was made prior to
the absolute sale.
5. Where one transaction is a sale and the
other a mortgage ​
6. Where one claim is based on prescription
and the other is on sale 7. Where the subject
land is not registered under PD 1529 ​
 8. In a contract to sell, there being no
previous sale of the property.
​ Article 1544 applicable to Double Donations as provided by
Art. 744.
CONDITIONS AND WARRANTIES
Article 1545.
​ What are the options of a party to a contract of sale subject
to a condition, when such condition was not fulfilled by the
other party?
a. Refuse to proceed with the contract OR ​
b. Waive performance of the condition and
proceed with the contract
​ What if the condition agreed upon is in the nature of a
promise that it should happen? Then the non-fulfillment of such
condition is considered a breach of warranty.
Article 1546.WARRANTY.
--It is a collateral undertaking in a sale of either real or
personal property, express or implied, that if the property
sold does not possess certain incidents or qualities, the
purchaser may either consider the sale void or claim damages
for breach of warranty.
Express Warranty—any affirmation of fact or any promise by the
seller relating to the thing if the natural tendency of such
affirmation or promise is to induce the buyer to purchase the
same and if the buyer purchases the thing relying thereon.

Affirmation of the value of the thing or statement of the seller’s

opinion is not warranty, unless the seller made such affirmation or
statement as an expert and it was relied upon by the buyer.