Assignment-No.-4
Assignment-No.-4
4
OBLIGATIONS OF THE VENDOR
Under the Philippine Civil Code, the principal obligations of a vendor are:
b) to deliver the thing, with its accessions and accessories, if any, in the
condition in which they were upon the perfection of the contract (Art.
1537.);
d) to take care of the thing, pending delivery, with proper diligence (see Art.
1163.); and
e) to pay for the expenses of the deed of sale, unless there is a stipulation to
the contrary. (Art. 1487.)
Under Article 1495, the vendor is bound to transfer the ownership of and
deliver, as well as warrant the thing which is the object of the sale.
3. When is ownership of the thing sold acquired by the vendee? [Article 1496]
Under Article 1496, the ownership of the thing sold is acquired by the
vendee from the moment it is delivered to him in any of the ways specified in
articles 1497 to 1501, or in any other manner signifying an agreement that
the possession is transferred from the vendor to the vendee.
Under the civil law, constructive delivery may be effected in any of the
following ways:
Under Article 1497, the thing sold shall be understood as delivered, when it
is placed in the control and possession of the vendee.
2) liability in case of loss as when the thing subject of the sale is placed in
the control and possession of the vendee (Art. 1497.) or his agent, the
delivery is complete and the vendee cannot avoid liability in case the thing is
subsequently lost without the fault of the vendor;
Under the civil law, there is actual delivery when the thing sold is placed in
the control and possession of the vendee(Art. 1497.) or his agent.
Yes. Under the law, actual possession and control is necessary to effect the
constructive delivery in sale executed in a public instrument.
13.What are the types of delivery for movable properties? [Article 1499]
2) when that mode of delivery is not applicable, by the placing of the titles of
ownership in the possession of the vendee; or
3) by allowing the vendee to use his rights as new owner with the consent of
the vendor.
a) Sale or return 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.
Under this contract, the option to purchase or return the goods rests
entirely on the buyer without reference to the quality of the goods. The
buyer may revest the ownership in the seller by returning or tendering
the goods within the time fixed in the contract, or, if no time has been
fixed, within a reasonable time (Art. 1502, par. 1.); otherwise, the sale
becomes absolute and the buyer is liable for the price. The seller cannot,
in this type of sale, prevent the revesting of title by refusing to accept the
return of the property.
Since title passes to the buyer on delivery, the loss or destruction of the
property prior to the exercise of the buyer’s option to return falls upon
him and renders him responsible to the seller for the purchase price or
such part thereof as remains unpaid. (Art. 1504; 46 Am. Jur. 647.) The
word “return” itself implies a previous transfer of title.
In this kind of contract, the title shall continue in the seller until the sale
has become absolute either by the buyer’s approval of the goods, or by
his failing to comply with the express or implied conditions of the
contract as to giving notice of dissatisfaction or as to returning the goods
(Ibid., 655; Art. 1502, Nos. 1 and 2.), or by his doing any other act
adopting the transaction such as mortgaging the property or selling it to
a third person.
For the reason that the title to the goods does not pass and the
relationship between the seller and the purchaser is that of bailor and
bailee, the risk of loss or injury to the article pending the exercise by the
buyer of his option to purchase or return it, is upon the seller except as
the buyer may be at fault in respect of the care and condition of the
article, or may have agreed to stand the loss. (see 67 Am. Jur. 2d 430-
431.)
The buyer cannot accept part and reject the rest of the goods since this
falls outside the normal intent of the parties.
(2) “Sale or return” depends entirely on the will of the buyer, while sale on
trial depends on the character or quality of the goods;
(3) In “sale or return,” the ownership of the goods passes to the buyer on
delivery and subsequent return of the goods reverts ownership in the seller,
while in sale on trial, the ownership remains in the seller until the buyer
signifies his approval or acceptance to the seller; and
(4) In “sale or return,” the risk of loss or injury rests upon the buyer, while in
sale on trial, the risk still remains with the seller.
Note: Article 1502 uses the phrase “on sale or return.” If the contract uses
instead the phrase “for sale or return,” the intention may be to enter into a
contract of agency.
19.What is the general rule and the exceptions on the passing of ownership
upon delivery? [Article 1503]
Exceptions:
1) if a contrary intention appears by the terms of the contract (Arts. 1523,
par. 1; 1503, par. 1; see Art. 1478.);
2) in the cases provided in the second and third paragraphs of Article 1523;
and
3) in the cases provided in the first, second, and third paragraphs of Article
1503.
Types:
a) Straight bill of lading: A non-negotiable document that specifies a single
consignee. It's often used when goods are paid in full and shipped directly to
the customer.
(1) Carrier becomes bailee for seller. — Where goods are shipped and by the
bill of lading (see Art. 1507.), the goods are deliver-able to the seller or his
agent or to the order of the seller or his agent, the seller thereby reserves
the ownership in the goods (par. 2.) and the carrier is a bailee for him and
not the buyer. This principle is applicable even though the goods are shipped
on the buyer’s vessel.
(2) Rights of seller. — The seller may not only retain the goods until the
buyer performs his obligation under the contract, but he may, even in
violation of the contract, dispose of them to third persons. If the seller does
this, of course, he is liable for damages to the buyer but the second
purchaser from the seller acquires a better right. (see 2 Williston, op. cit.,
pp. 152-153.)
(c) where buyer or his agent is consignee but seller retains order bill
of lading.
Where goods are shipped and by the bill of lading the goods are deliverable
to the order of the buyer or of his agent, but possession of the bill of lading
is retained by the seller or his agent, the seller thereby retains a right to the
possession of the goods as against the buyer. (par. 3.)
1) Effect of retention. — Although the property in the goods will ordinarily
pass to the buyer on delivery, the latter is unable to obtain the goods without
the bill. The effect of the retention of the bill of lading, under such
circumstances, controlling as it does the possession of the goods, is,
therefore, closely analogous to the retention of a lien by the seller after the
property has passed to the buyer. (Ibid., p. 163.)
Two devices have already been considered by which the seller of goods
retains a hold upon them by means of the bill of lading after he has shipped
them; first, by consigning the goods to himself, either by an order bill or a
straight bill and second, by consigning the goods to the order of the buyer
and retaining possession of the bill of lading.
A third method also in common use is to consign the goods to a third person
(usually a banker) requesting the latter to retain the bill of lading or goods
until payment of the price. When the price is paid, the consignee of the
goods indorses the bill or delivers the goods to the buyer.
1) Immaterial whether bill an order or straight bill. — For the success of this
third device, it is immaterial, so far as the protection of the seller is
concerned, whether the bill is a straight bill or an order bill.
(a) If it is an order bill, the carrier will not deliver the goods until the bill is
surrendered and the buyer cannot get it so as to make the necessary
surrender except from the holder, the consignee.
(b) Even if it is not an order bill, the carrier, though it may not require the
surrender of the bill of lading, will deliver only to the consignee.
Accordingly, the buyer in either event, is unable to get them except by
obtaining an order from the holder of the bill of lading.
2) Legal title vested in third person. — By naming a third person as
consignee of the bill of lading, the seller vests a legal title in the third
person. This title is held merely for the benefit of the seller if the third
person is the seller’s agent only and has not advanced money of his own to
the seller. Frequently, however, the third person is a banker and by
discounting a draft drawn on the buyer by the shipper, or under an
arrangement with the buyer by paying or accepting a draft drawn on
himself, has acquired a personal interest in the goods. (Ibid., pp. 164-165.)
(3) Risk of loss on buyer. — The buyer as is true where the seller consigns
the goods to himself, or his agent, or to a third person, bears the risk of loss.
Where the seller draws on the buyer for the price and transmits the bill of
exchange and the bill of lading together to the buyer to secure acceptance
or payment of the bill of exchange (par. 4.), the title is regarded as retained
in the seller until the bill of exchange is paid. The fact that the bill of lading
and a bill of exchange are attached together indicates that the seller intends
to make the delivery of the goods conditional upon the payment or
acceptance of the draft.
As regard third persons, however, if the bill of lading provides that the goods
are deliverable to the buyer or to the order of the buyer (Art. 1507.), or is
indorsed in blank (Art. 1508[2].), or is indorsed to the buyer by the
consignee named therein (Art. 1509.), a purchaser in good faith for value of
the bill of lading or goods from the buyer will obtain the ownership in the
goods although the bill of exchange has not been honored.
23. What is the general rule and the exceptions on the risk of loss
in case of fortuitous events?
25. What is the general rule and the exceptions on sale by a person
who is not the owner thereof? [Article 1505]
It is a fundamental doctrine of law that no one can give what he has not or
transfer a greater right to another than he himself has. Sale is a derivative
mode of acquiring ownership and the buyer gets only such rights as the
seller had. (see Arts. 1458-1459.) A derivative right cannot exist higher than
its source.
it has been ruled that a “fraudulent and forged document of sale may
become the root of a valid title if the certificate of title has already been
transferred from the name of the true owner to the name indicated by the
forger.” Every person dealing in good faith and for valuable consideration
with registered land may safely rely upon what appears in the certificate of
title and does not have to inquire further. If the rule were otherwise, the
efficacy and conclusiveness of Torrens Certificates of Titles would be futile
and nugatory.” (Duran vs. Intermediate Appellate Court, 138 SCRA 489
[1985].) The remedy of the person prejudiced is to bring an action for
damages against those who employed the fraud, within four (4) years after
the discovery of the deception (see Art. 1391.), and if the latter are
insolvent, an action against the Treasurer of the Philippines may be filed for
recovery of damages against the Assurance Fund. (Veloso vs. Court of
Appeals, 73 SCAD 303, 260 SCRA 593 [1996]; Delos Reyes vs. Court of
Appeals, 285 SCRA 81 [1998].)
27. Discuss the rules where the seller of goods has a voidable title.
[Article 1506]
If the seller has only a voidable title to the goods, the buyer acquires a good
title to the goods provided he buys them: (a) before the title of the seller has
been avoided; (b) in good faith for value; and (c) without notice of the
seller’s defect of title. (see Arts. 1385, 1388.)
of title.
namely:
(1) Bill of lading. — It is a contract and a 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.
The shipper and the consignee may be one and the same person. Its
acceptance generally constitutes the contract of carriage even though not
signed. Such instrument may be called a shipping receipt, a forwarder’s
receipt, or receipt for transportation. The designation, however, is
immaterial (Saludo, Inc. vs. Court of Appeals, 207 SCRA 498 [1992].);
Negotiable documents of title are 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, while non-negotiable documents of title are those by the terms of
which the goods covered are deliverable to a specified person.
4) In any other case, the place of delivery is the seller’s residence; and
Rules as to time:
1) If no time is fixed by the contract, then the seller is bound to send the
goods to the buyer within a reasonable time;
3) Where the contract does not specify the time for delivery so that delivery
is to be made within a reasonable time, time is not of the essence.
The demand or tender of delivery to be effectual must be made at a
reasonable hour of the day. (par. 4.)
Rules as to hour:
1) What is a reasonable hour is a question of fact largely dependent upon the
circumstances. Generally, however, where all that is required of the other
party is to receive a payment or performance which can readily be accepted,
it seems probable that any hour when the debtor could find the creditor
would be reasonable for that purpose.
2) In case of goods which are bulky or needed special care, an hour might be
unreasonable which would not be so in an ordinary payment of a small sum
of money.
(3) Where the question is not merely one of tender but also of demand,
reasonableness will depend on the justifiable expectation that the hour is
reasonable for giving as well as receiving.
32.Discuss the rules on delivery of goods (a) less than the quantity contracted,
(b) more than quantity contracted, (c) mixed with others. [Article 1522]