ART. 1493. Loss of Object before Sale. Complete and Partial Loss. Partial Loss Rules: 1.

Vendee may withdraw from the contract 2. Demand the remaining part, paying its price in proportion to the total sum agreed upon ART. 1494. Loss/Substantial Deterioration of Specific Goods without sellers knowledge. 1. Buyer may avoid the sale or 2. May treat sale as valid w/ respect to the existing goods ART. 1495. Obligations of Vendor. (TDWP) 1. Transfer Ownership (not waivable) 2. Deliver (not waivable) 3. Warrant Object (waivable and may be modified) 4. Preserve Thing from perfection to delivery (Art. 1163) 5. Pay for the execution and registration of the sale unless there is a contrary agreement **Execution sales do not require the delivery of thing since a one year period of redemption is available to seller. ART. 1496. Delivery Transfers Ownership. - by actual or real delivery - by constructive or legal delivery - by delivery in any other manner signifying an agreement that the possession is transferred to the vendee ART. 1497. Control and Possession necessary in Delivery. Exception: Art. 1478. Stipulation as to full payment of price. Delivery/Tradition - a mode of acquiring ownership as a consequence of a contract of sale by virtue of which actually or constructively the object is placed in the control and possession of the vendee. KINDS OF DELIVERY 1. Actual or Real. (1497) 2. Legal or Constructive a. Legal Formalities (1498); execution of public instrument. b. Symbolical Tradition (1498 par 2)- keys delivered. c. Traditio Longa Manu- by mere consent /agreement. If the movable sold cannot yet be transferred to the possession of the buyer at the time of the sale. (1499) d. Traditio Brevi Manu- if the buyer had already the possession of the object even before the purchase. (lessee becomes owner)

e. Traditio constitutum possessoriumchanged. (Owner becomes lessee)

possession

as

owner

3. Quasi-Tradition- Delivery of Incorporeal Things or Rights, credits or incorporeal property made by: a. Execution of public instrument b. Placing titles of ownership in the hands of a lawyer. c. Allowing the buyer to make use of the rights (1501) ART. 1498. Constructive delivery. Requirements: 1. Sellers Control. 2. Sellers Control transferred to buyer. 3. Intention to deliver for ownership. ART. 1499. Traditio Longa Manu takes place by the mere consent or agreement of the contracting parties as when the vendor merely points to the thing sold which shall thereafter at the control and disposal of the vendee. Traditio Brevi Manu happens when the vendee has already the possession of the thing sold by virtue of another title as when the lessor sells the thing leased to the lessee. ART. 1500. Traditio Constitutum Possessorium. It takes place when the vendor continues in possession of the property sold not as owner but in some other capacity, as foe example, when the vendor stays as a tenant of the vendee. ART. 1501. Delivery of Incorporeal Property. (Constructive and QuasiTradition ART. 1502. Transaction on Sale or Return. Subject to Resolutory Condition. Difference with Delivery with option to purchase - Ownership is transferred in Sale or Return Transaction on Approval or Trial/Satisfaction. Subject to Suspensive Condition. Rules: 1. Risk of loss to seller until the sale becomes absolute. (Exceptions: Buyer in default; Buyer agreed to bear the loss) 2. Buyer must give goods a trial except when it is evident that it cannot perform the work intended. 3. Period of signifying acceptance commences to run only when all the parts essential for operation has been delivered.

4. A provision that a 3 person must satisfy approval is valid but he must be in Good faith. 5. Generally the Sale and Delivery to an expert buyer is not a sale on approval/trial. Sale or Return vs. Sale on Approval Basis Sale or Return Condition Subject to Resolutory condition Premise It depends upon the will of the buyer Transfer of ownership Ownership immediately passes to the buyer on delivery

rd

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 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 BUYERS OBTAINING POSSESSION OF BILL OF LADIN G 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 sellers authority to sell. 3. Where the law enables the owner to dispose of the goods as if he were the true owner thereof. *** Factors 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 merchants stores, fairs or markets.

Revesting of ownership in the owner

Ownership is revested in the seller if the buyer so decides

Risk of loss deterioration

or

The risk rests on the buyer before the revestment of ownership

Sale on Approval Subject to suspensive condition It depends upon the suitability, quality or character of the goods Ownership does not immediately pass to the buyer. It passes only upon approval or satisfaction of the buyer duly manifested after trial There is no revesting of ownership because it is retained by the seller until the sale becomes absolute The risk remains in the seller while the goods are on trial

Sale or return it is a contract by which property is sold but the buyer, who becomes the owner of the property on delivery, has the option to return the same to the seller instead of paying the price. Sale on trial or approval it is a contract in the nature of an option to purchase if the goods prove satisfactory the approval of the buyer being a condition precedent 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.

ART. 1506. SALE BY ONE HAVING A VOIDABLE TITLE-BUYER ACQUIRES GOOD TITLE. Requisites: 1. Bought before the title of seller has been avoided. 2. in GF for value 3. without notice of the sellers defect of title. ART. 1507. DOCUMENTS OF TITLE. A document of title in which it is stated that the goods referred to therein will be delivered to the bearer, or to the order of any person named in such document is a negotiable instrument of title. Document of Title of Goodsincludes 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.

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.

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 ReceiptA 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 Creditit 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.