CHAPTER IV - OBLIGATIONS OF THE VENDOR Problem:

By Deed of Sale, P sold an unregistered parcel of land to his brother R. R took initial steps to register the land
ownership, the birth of the real right. The delivery under any of the forms provided by Articles 1497 to 1505 of the but failed to complete the registration process.
Civil Code signifies that the transmission of ownership from vendor to vendee has taken place. Here, emphasis is placed On November 26, 1992, P died single and without issue. She was survived by her siblings V, Q, and R.
on Article 1497 of the Civil Code, which contemplates what is known as real or actual delivery, when the thing sold is On November 22, 1995, V executed a public document entitled “Extrajudicial Settlement by Sole Heir and Sale”
placed in the control and possession of the vendee. wherein he adjudicated exclusively unto himself the questioned lot and sold it to C. C subsequently caused the issuance
of Tax Declaration No.002 in her own name.
What is delivery? On February 5, 1996, R, by Deed of Sale of even date, sold the questioned lot spouses H and W.

In Equatorial Realty Development, Inc. v. Mayfair Theater, Inc, the concept of "delivery" was elucidated, to wit: Answer:
When P sold to R by Deed of Absolute Sale the Parcel of land of which the questioned lot formed Part,
Delivery has been described as a composite act, a thing in which both parties must join and the minds of both parties ownership thereof was transferred to the latter in accordance with Article 1496 of the Civil Code reading:
concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires
the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of ART. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in
property or title; it means transfer of possession. In the Law on Sales, delivery may be either actual or constructive, but any of the ways Specified in articles 1497 to 1501, or in any other manner Signifying an agreement that the possession
both forms of delivery contemplate "the absolute giving up of the control and custody of the property on the part of is transferred from the vendor to the vendee.
the vendor, and the assumption of the same by the vendee."
In relation to Article 1498 of the Civil Code reading:
What is actual delivery?
Actual delivery of a thing sold occurs when it is placed under the control and possession of the vendee. ART. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery
of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be
Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in inferred.
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. The Deed of Absolute Sale in favor of R Contains nothing contrary to an intent to transfer ownership.
When P died on November 26, 1992, she no longer owned the questioned lot and, therefore, her brother V could
General Rule: not have inherited it.
Ownership of the thing sold is acquired only upon its delivery, actual or contructive, to the buyer.
SECTION 2. Delivery of the Thing Sold
Exceptions: Art. 1497, The thing sold shall be understood as delivered, when it is placed in the control and possession of the
1. When the seller and the buyer agree that the ownership shall remain with the seller until the full payment of the vendee.
purchase price;
2. Contract to sell; What is real or actual delivery?
3. Sale on approval, trial or satisfaction; and Article 1497 above contemplates what is known as real or actual delivery, when the thing sold is placed in the
4. Implied reservation of ownership. control and possession of the vendee. Article 1498, on the one hand, refers to symbolic delivery by the execution of a
public instrument, It should be noted, however, that Article 1498 does not say that the execution of the deed provides a
Payment is NOT essential to transfer of ownership conclusive presumption of the delivery of possession. It confines itself to providing that the execution thereof is
equivalent to delivery, which means that the presumption therein can be rebutted by means of clear and convincing
The Civil Code states that ownership of the thing sold is transferred to the vendee upon the actual or constructive evidence. Thus, the presumptive delivery by the execution of a public instrument can be negated by the failure of the
delivery of the same. And the thing is understood as delivered when it is placed in the control and possession of the vendee to take actual possession of the land sold.
vendee. Payment of the purchase price is not essential to the transfer of ownership as long as the property sold
has been delivered; and such delivery (traditio) operated to divest the vendor of title to the property which may not be Kinds of Delivery
regained or recovered until and unless the contract is resolved or rescinded in accordance with law. 1. Real or Actual
The thing sold is placed in the control and possession of the vendee.
2. Legal or Constructive
It is a delivery by operation of law.
3. Quasi-Tradition NOTARY PUBLIC
Delivery of rights, credits, or incorporeal property, made by: A person authorized by a State to administer oaths, certify documents, attest to the authenticity of signatures,
a. Execution of public instrument; and perform official acts in commercial matters, such as protesting negotiable instruments.
b. Placing of titles of ownership in the hands of buyer; or
c. Allowing buyer to make use of rights. In Philippine Suburban Development Corporation v. The Auditor General, The Supreme Court held:
When the sale of real property Is made in a public Instrument, the execution thereof is equivalent to the delivery
Kinds of Legal or Constructive Delivery of the thing abject of the contract if from the deed the contrary does not appear or cannot clearly be inferred.
a. Legal Formalities
When the sale is made through a public instrument. The delivery by execution of public instrument gives rise to In other words, there is symbolic delivery of the property subject the sale by the execution of the public
prima facie presumption of delivery, which is destroyed when actual delivery is not affected due to legal impediment. instrument, unless from the express, terms of the instrument, or by clear inference therefrom, this was not the intention of
the parties. Such would be the case, for instance, x x x where the vendor has no control over the thing sold at the
b. Symbolical Tradition or Traditio simbolica moment of the sale, and, therefore, its material delivery could not have been made.
The parties use a symbol to represent the thing delivered. Stated differently, as a general rule, the execution of a public, instrument amounts to a constructive delivery
Example: of the thing subject of contract of sale. However, exceptions exist, among which is when mere presumptive and not
With regard to movable property, its delivery may also be made by the delivery of the keys of the place or conclusive delivery is created in cases where the buyer fails to take material possession of the subject of sale. A person
depository where it is stored or kept. who does not have actual possession of the thing sold cannot transfer constructive possession by the
execution and delivery of a public instrument.
c. Traditio Longa Manu
The delivery is by mere consent or agreement of the contracting parties, where the seller points out to the buyer Problem:
the object of sale without the need of actually delivering it. V is the registered owner of a parcel of land who entered into an Agreement with M for the purchase and sale of
said Parcel of land.
d. Traditio Brevi Manu In a letter, M informed V that he was backing out from the sale agreed upon because there are tenants who are
This occurs when the would be buyer had already the possession of the object even before the contract of sale not willing to vacate the land without giving them back the amount that they mortgaged the land.
by virtue of another title which is not ownership (like a lessee in a Contract of Lease), and pursuant to a contract of sale, M demanded refund of his P185,000 down payment; however, it was unheeded.
he would now hold possession in the concept of an owner (like a buyer of a house where he was a former lessee of the On January 28, 2002, M filed a complaint for rescission of contract against V. In the said complaint, M sought the
same house). return of P185,000 which he paid to V.
This is opposite of constitutum possessorium. Is the failure of V to deliver to M both the Physical possession of the subject property and the certificate Of title
constitutes a valid cause to rescind the agreement and deed of sale entered into by the parties?
e. Traditio Constitutum Possessorium ; Answer:
The delivery consists in the owner's continuous possession of the property he had already sold to another Although Articles 1458, 1495 and 1498 of the New Civil Code and case law do not generally require the seller to
person but his present possession is no longer that of an owner but under another capacity, like that of a lessee. deliver to the buyer the physical possession of the Property subject of a contract of sale and the certificate of title
This is opposite of traditio brevi manu. covering the same, the agreement entered into by V and M provides otherwise. However, the terms of the agreement
cannot be considered as violative of law, morals, good customs, Public order, or public policy, hence, valid.
Art. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot Article 1458 of the NCC obliges the seller to transfer the ownership of and to deliver a determinate thing to the
clearly be inferred. buyer, who shall in turn pay therefor a price certain in money or its equivalent. In addition thereto, Article 1495 of the
With regard to movable property, its delivery may also be made by the delivery of the keys of the place NCC binds the seller to warrant the thing which is the object of the sale. On the other hand, Article 1498 of the same
or depository where it is stored or kept. code provides that when the sale is made through a public instrument, the execution thereof shall be equivalent
to the delivery of the thing which is the object of the contract, if from the deed, the contrary does not appear or
The above-stated article speaks about the two kinds of constructive delivery which are legal formalities and cannot clearly be inferred.
tradition simbolica. In the case of Chua v. Court of Appeals, which was cited by V, it was ruled that "when the deed of absolute sale
is signed by the parties and notarized, then delivery of the real property is deemed made by the seller to the buyer." The
What is a public instrument? transfer of the certificate of title in the name of the buyer is not necessary to confer ownership upon him.
A document prepared by a notary public in the presence of the parties who sign it before witnesses.
 As can be gleaned from the agreement of the contending parties, M initially paid V P185,000 for the latter to pay
the loan obtained from C Rural Bank and to cause the release from the said bank of the certificate of title covering the
subject property. After the release of the TCT, a deed of sale shall be executed and transfer shall be immediately On 2 June 1989, B, filed a Complaint for Specific Performance against H and W. Did B acquire ownership?
effected so that the title covering the subject property can be used as a collateral for a loan M will apply for, the proceeds Answer:
of which shall be given to V. B did not acquire ownership by the mere execution of the receipt by W acknowledging receipt of partial payment
While Articles 1458 and 1495 of the NCC and the doctrine enunciated in the case of Chua do not impose upon V for the property. For one, the agreement between B and H and W, though valid, was not embodied in a public
the obligation to physically deliver to M the certificate of title covering the subject property or cause the transfer in the instrument. Hence, no constructive delivery of the lands could have been effected. For another, B had not taken
latter's name of the said title, a stipulation requiring otherwise is not prohibited by law and cannot be regarded as possession of the property at any time after the perfection of the sale in his favor or exercised acts of dominion over it
violative of morals, good customs, public order or public policy. Item no. 3 of the agreement executed by the parties despite his assertions that he was the rightful owner of the lands. Simply stated, there was no delivery to B, whether
expressly states that "transfer shall be immediately effected so that the latter can apply for a loan from any lending actual or constructive, which is essential to transfer ownership of the property.
institution using the corresponding certificate of title as collateral therefore." Item no. 3 is literal enough to mean that
there should be physical delivery of the TCT ‘for how else can muse it as a collateral to obtain a loan if the title remains Art. 1500. There may also be tradition constitutum possessorium.
in V's possession. V failed to prove that she delivered the TCT covering the subject property to M. Under this kind of delivery, the law considers all these formalities to have taken place by agreement of the
parties.
Art. 1499. The delivery of movable property may likewise be made by the mere consent or agreement of the
contracting parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the Art. 1501. With respect to incorporeal property, the provisions of the first paragraph of article 1498 shall govern.
sale, or if the latter already had it in his possession for any other reason. In any other case wherein said provisions are not applicable, the placing of the titles of ownership in the
possession of the vendee or the use by the vendee of his rights, with the vendor's consent, shall be understood
The above- stated article speaks of two kinds of constructive delivery of the traditio longa manu and traditio brevi manu. as a delivery.

Actual delivery vs. Constructive delivery Delivery of incorporeal property

Explicitly, the law provides that the ownership of the thing sold is acquired by the vendee from the moment it is 1. Execution of public instrument;
delivered to him in any of the ways specified in Article 1497 to 1501. The word "delivered" should not be taken 2. The placing of the titles of ownership in the possession of the vendee; or
restrictively to mean transfer of actual physical possession of the property. The law recognizes two principal modes of 3. The use by the vendee of his rights, with the vendor's consent.
delivery, to wit: (1) actual delivery; and (2) legal or constructive delivery.
Actual delivery consists in placing the thing sold in the control and possession of the vendee. Legal or Art. 1502. When goods are delivered to the buyer "on sale or return” to give the buyer an option to return the
constructive delivery, on the other hand, may be had through any of the following ways: the execution of a public goods instead of paying the price, the ownership passes to the buyer on delivery, but he may revest the
instrument evidencing the sale; symbolical tradition such as the delivery of the keys of the place where the movable sold ownership in the seller by returning or tendering the goods within the time fixed in the contract, or, if no time
is being kept; traditio longa manu or by mere consent or agreement if the movable sold cannot yet be transferred to the has been fixed, within a
possession of the buyer at time of the sale ; traditio brevi manu if the buyer already had possession of the object even reasonable time.
before the sale; and traditio constitutum possessorium, where the seller remains in possession of the property in a When goods are delivered to the buyer on approval or on trial or on satisfaction, or other similar terms,
different capacity. the ownership therein passes to the buyer:
(1) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction;
Problem: (2) If he does not signify his approval or acceptance to the seller, but retains the goods without giving notice of
On August 20, 1986, Spouses H and W purportedly sold the two parcels of land to B for the price of P15 per rejection, then if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time
square meter, B made a downpayment of P50,000 as evidenced by a memorandum receipt issued by W of the same has been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of fact.
date. Several other payments totaling P200,000 were made by B.
Sometimes in May 1998, B wrote a letter to W to demand the execution of a final deed of sale in his favor so that Sale on approval
he could effect full payment of the purchase price. In the same letter, B notified the spouses bout having received Also called " sale on acceptance," "sale on trial," or "sale on satisfaction", There is no transfer of ownership
information that the spouses sold the same property to another without his knowledge and consent. He demanded that notwithstanding delivery of the goods. Ownership passes to the buyer only in the following instances;
the second sale be canceled and that a final deed of sale be issued in his favor. 1. When the buyer signifies his approval or acceptance to the seller or does
In response, W wrote a letter to B wherein she acknowledged having agreed to sell the Property to him at P15 any other act adopting the transaction;
per square. She, however,reminded B that when the balance of the balance of the purchase price became due, he
requested for the reduction of the price and when she refused, D backed out of sale. W added that she returned the sum Example:
of P50,000 to be through C.
 S and B entered into a contract of Sale on Trial or Approval. The object of sale were 12 tables, Subsequently, S Where goods are shipped, and by the bill of lading the goods are deliverable to the seller or his agent, or
delivered the said tables. In this case, there is yet no transfer of ownership despite delivery until the buyer signifies his to the order of the seller or of his agent, the seller thereby reserves the ownership in the goods. But, if except
approval. What if B did not signify his approval but he sold these tables to C? Then, there is transfer of ownership as B for the form of the bill of lading, the ownership would have passed to the buyer on shipment of the goods, the
did an act adopting the transaction. seller's property in the goods shall be deemed to be only for the purpose of securing performance by the buyer
of his obligations under the contract.
2. If the buyer does not signify his approval or acceptance to the seller, but retains the goods without giving notice of Where goods are shipped, and by the bill of lading the goods are deliverable to order of the buyer or 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 his agent, but possession of the bill of lading is retained by the seller or his agent, the seller thereby reserves a
fixed, on the expiration of a reasonable time. right to the possession of the goods as against the buyer.
Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of
Example: lading together to the buyer to secure acceptance or payment of the bill of exchange, the buyer is bound to
S and B entered into a contract of Sale on June 1, 2017. S simultaneously delivered the 12 tables, the object of return the bill of lading if he does not honor the bill of exchange, and if he wrongfully retains the bill of lading,
sale agreed upon. One of their stipulations is for B to decide until June 30,2017 on whether to accept the tables so that if he acquires no added right thereby. If, however, the bill of lading provides that the goods are deliverable to the
he rejects it, then he shall return the tables not later than June 30, 2017. If B did not yet issue a notice of rejection on buyer or to the order of the buyer, or is indorsed in blank, or to the buyer by the consignee named therein, one
July 1, 2017, then there is transfer of ownership. who purchases in good faith, for value, the bill of lading, or goods from the buyer will obtain the ownership in
What if no date agreed upon for the return of the 12 tables? Then B shall return the 12 tables within a the goods, although the bill of exchange has not been honored, provided that such purchaser has received
reasonable time; otherwise, there is transfer of ownership after the expiration of reasonable time. What is reasonable delivery of the bill of lading indorsed by the consignee named therein, or of the goods, without notice of the
time is a question of fact. facts making the transfer wrongful.

Sale or return Note: This article applies to the sale of specific goods.
In a ‘sale or return”, the ownership passes to the buyer on delivery. The subsequent return of the goods reverts
ownership in the seller. Delivery or tradition as a mode of acquiring ownership must be in consequence of a contract, Article 1503 is an exception to the first paragraph of Article 1523
e.g. sale. Article 1503 is an exception to the general presumption provided in the first paragraph of Article 1523, which reads:

Express written agreement in Sale or Return or Sale on Approval Article 1523. Where, in pursuance of a contract of sale, the seller is authorized or required to send
The provision in the Uniform Sales and the Uniform Commercial Code from which Article 1502 was taken , the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the
clearly requires an express written agreement to make a sales contract either a "sale or return" or a "sale on purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer, except in the
approval". Parol or extrinsic testimony could not be admitted for the purpose of showing that an invoice or bill of sale cases provided for in Articles 1503, first, second and third paragraphs, or unless a contrary intent
that was complete in every aspect and purporting to embody a sale without condition or restriction constituted a contract appears.
of sale or return. If the purchaser desired to incorporate a stipulation securing to him the right of return, he should have Unless otherwise authorized by the buyer, the seller must make such contract with the carrier
done so at the time the contract was made. On the other hand, the buyer cannot accept part and reject the rest of the on behalf of the buyer as may be reasonable, having regard to the nature of the goods and the other.
goods since this falls outside the normal intent of the parties in the "on approval" situation. (67 Am Jur 2d, pp. 733, 748). circumstances of the case. If the seller omit so to do, and the goods are lost or damaged in the course of
transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself, or may hold the
Sale or Return vs. Sale on Trial seller responsible in damages.

SALE OR RETURN SALE ON TRIAL Unless otherwise agreed, where goods are sent by the seller to the buyer under circumstances

Ownership passes to the buyer on delivery and Ownership remains in the seller until the buyer signifies in which the seller knows or ought to know that it is usual to insure, the seller must give such

subsequent return reverts ownership in the seller his notice to the buyer as may enable him to insure them during their transit, and, if the seller fails to do so,

approval or acceptance to the seller the goods shall be deemed to be at his risk during such transit.

Subject to a resolutory condition Subject to a suspensive condition

Depend s entirely on the will of the buyer Depends on the quality of goods Article 1503, on the other hand, provides:

Risk of loss rests upon the buyer Risk of loss remains with the seller
Article 1503, When there is a contract of sale of specific goods, the seller may, by the terms of the
Art. 1503. When there is a contract of sale of specific goods, the seller may, by the terms of the contract, reserve
contract, reserve the right of Possession or ownership in the goods until certain conditions have been fulfilled.
the right of possession or ownership in the goods until certain conditions have been fulfilled. The right of
The right of possession or ownership may be, thus, reserved notwithstanding the delivery of the goods to the
possession or ownership may be, thus, reserved notwithstanding the delivery of the goods to the buyer or to a
buyer or to a carrier or other bailee for the Purpose of transmission to the buyer.
carrier or other bailee for the purpose of transmission to the buyer.
 Were goods are shipped, and by the bill of lading the goods are deliverable o the seller or his agent, or in favor of X Motor Corp. Meanwhile, X Motor Corp. entered into a contract of assignment of the promissory note
to the order of the seller or his agent, the seller thereby reserves the ownership in the goods. But, if except for and chattel mortgage with Y Finance, Inc. Through S, an agent of X Motor Corp., the parties agreed that H and W
the form of the bill of lading, the ownership would have passed to the buyer on shipment of the goods, the would pay the amount of the promissory note to Y Finance, Inc, the latter being the assignee of X Motor Corp.
seller's property in the goods shall be deemed to be only for the purpose of securing performance by the buyer To effectuate the sale as well as the assignment of the promissory note and chattel mortgage, H and W were
of his obligations under the contract. required to sign a notice of assignment, a deed of assignment, a sales invoice, a registration certificate, an
Where goods are shipped, and by the bill of lading the goods are deliverable to order of the affidavit, and a disclosure statement in order to have their application approved. Upon H and W's tender of the
buyer or of his agent, but possession of the bill of lading is retained by the seller or his agent, the seller down Payment worth P10,037, and X Motor Corp.'s acceptance of the same, the latter approved the sale.
thereby reserves aright to the possession of the goods as against the buyer. Although H and W have not yet Physically possessed the vehicle, S required them to sign the receipt as a
Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of condition for the delivery of the vehicle.
lading together to the buyer to secure acceptance or payment of the bill of exchange, the buyer is bound to H and W continued Paying the agreed installments even if the subject motor vehicle remained undelivered
return the bill of lading if he does not honor the bill of exchange, and if he wrongfully retains the bill of lading, he inasmuch as Y Finance, Inc. Promised to deliver the subject jeepney. H and W have paid a total of P7,507 worth of
acquires no added right thereby. If, however, the bill of lading provides that the goods are deliverable to the installments before they discontinued paying on account of non-delivery of the subject motor vehicle. According H and
buyer or to the order of the buyer, or is indorsed in blank, or to the buyer by the consignee named therein, one W, the reason why the vehicle was not delivered was due to the fact that S allegedly took the subject motor vehicle in his
who purchases in good faith, for value, the bill of lading, or goods from the buyer will obtain the ownership in the personal capacity.
goods, although the bill of exchange has not been honored, provided that such purchaser has received delivery Should H and W bear the loss of the jeepney in accordance with Article 1504 of the New Civil Code which
of the bill of lading indorsed by the consignee named therein, or of the goods, without notice of the facts making provides that when the ownership of goods is transferred to the buyer, the goods are at the buyer’s risks whether actual
the transfer wrongful. delivery has been made or not?

Articles 1523 and 1503 do not apply to a contract of carriage Answer:

Articles 1523 and 1503, therefore, refer to a contract of sale between A seller and a buyer. In particular, they According to testimonial evidence adduced by H and W during the trial of the case, the documents were signed
refer to who between the seller and the buyer has the right of possession or ownership over the goods subject of the as a part of the processing and for the approval of their application to buy the subject motor vehicle. Without such signed
sale. Articles 1523 and 1503 do not apply to a contract of carriage between the shipper and the common carrier. documents, no sale, much less delivery, of the subject jeepney could be made. The documents were not therefore an
The third paragraph of Article 1503, does not oblige the common carrier to withhold delivery of the goods in the event acknowledgment by H and W of the physical acquisition of the subject motor vehicle but merely a requirement of X Motor
that the bill of lading is retained by the seller. Rather, it only gives the seller a better right to the possession of the goods Corp. so that the said subject motor vehicle would be delivered to them.
as against the mere inchoate right of the buyer. We have ruled that the issuance of a sales invoice does not prove transfer of ownership of the thing sold to the
A contract of sale is separate and distinct from a contract of carriage. They involve different parties, different buyer; an invoice is nothing more than a detailed statement of the nature, quantity and cost of the thing sold and has
rights, different obligations and liabilities. been considered not a bill of sale.
The registration certificate signed by H and W does not conclusively prove that constructive delivery was made
Art. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is nor that ownership has been transferred to H and W. Like the receipt and the invoice, the signing of the said documents
transferred to the buyer, but when the ownership therein is transferred to the buyer, the goods are at the buyer's was qualified by the fact that it was a requirement of X Motor Corp. for the sale and financing contract to be approved. In
risk whether actual delivery has been made or not, except that: all forms of delivery, it is necessary that the act of delivery, whether constructive or actual, should be coupled
(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of with the intention of delivering the thing. The act, without the intention, is insufficient. The critical factor in the
the contract and the ownership in the goods has been retained by the seller merely to secure performance by different modes of effecting delivery which gives legal effect to the act, is the actual intention of the vendor to
the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery; deliver, and its acceptance by the vendee. Without that intention, there is no tradition. Enlightening is Addison v.
(2) Where actual delivery has been delayed through the fault of either the buyer or seller, the goods are Felix and Tioco wherein we ruled that:
at the risk of the party in fault. The Code imposes upon the vendor the obligation to deliver the thing sold. The thing is
considered to be delivered when it is placed in the hands and possession of the vendee. (Civil Code, Art.
Note: 1462). It is true that the same article declares that the execution of a public instrument is equivalent to
The general rule is that the risk of loss of specific goods is borne by the seller until the ownership therein is the delivery of the thing which is the object of the contract, but, in order that this symbolic delivery may
transferred to the buyer. produce the effect of tradition, it is necessary that the vendor shall have had control over the thing sold
that, at the moment of the sale, its material delivery could have been made. It is not enough to confer
Problem: upon the purchaser the ownership and the right of possession. The thing sold must be placed in his
control. When there is no impediment whatever to prevent the thing sold passing into the tenancy of the
On September 14, 1979, H and W purchased from X Motor Corp. one Cimarron Jeepney for P37,758.60 to purchaser by the sole will of the vendor; symbolic delivery through the execution of a public instrument is
be paid in installments. For this purpose, H and W executed a promissory note and a deed of chattel mortgage sufficient. But if notwithstanding the execution of the instrument, the purchaser cannot have the
 enjoyment and material tenancy of the thing and make use of it himself or through another in his name, Note:
because such tenancy and enjoyment are opposed by the interposition of another will, then fiction yields Before a voidable contract is annulled, it is considered valid.
to reality the delivery has not been effected.
Example:
The act of signing the registration certificate was not intended to transfer the ownership of the subject In Tagatac v. Jimenez, the plaintiff (Tagatac) sold her car to Feist, who sold it to Sanchez, who sold it to
motor vehicle to Hand W in as much as X Motor Corp. still needed the same for the approval of the financing Jimenez. When the payment check issued to Tagatac by Feist was dishonored, the plaintiff sued to recover the vehicle
contract with Y Finance, Inc. The record shows that the registration certificate was submitted to Y Finance, Inc, from Jimenez on the ground that she had been unlawfully deprived of it by reason of Feist's deception. In ruling for
which took possession thereof until S requested the latter to hand over the said document to him. The fact that Jimenez, the Court of Appeals held:
the registration certificate was still kept by Y Finance, Inc, and its unhesitating move to give the same to S just The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has been unlawfully deprived of her car. At first
goes to show that H and W still had no complete control over the subject motor vehicle as they did not even blush, it would seem that she was unlawfully deprived thereof, considering that she was induced to part with it by reason
possess the said certificate of registration nor was their consent sought when Y Finance, Inc. handed over the of the chicanery practiced on her by Warner L. Feist. Certainly, swindling, like robbery, is an illegal method of deprivation
said document to S. of property. In a manner of speaking, plaintiff-appellant was "illegally deprived” of her car, for the way by which Warner L.
Inasmuch as there was neither physical nor constructive delivery of a determinate thing (in this case, the Feist induced her to part with it is illegal and is punished by law. But does this "unlawful deprivation” come within the
subject motor vehicle), the thing sold remained at the seller's risk, X Motor Corp. should therefore bear the loss scope of Article 559 of the New Civil Code?
of the subject motor vehicle after S allegedly stole the same.
XXX XXX XXX
Art. 1505. Subject to the provisions of this Title, where goods are sold by a person who is not the owner thereof,
and who does not sell them under authority or with the consent of the owner, the buyer acquires no better title ... The fraud and deceit practiced by Warner L. Feist earmarks this sale as a voidable contract (Article 1390 N.C.C).
to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the Being a voidable contract, it is susceptible of either ratification or annulment. If the contract is ratified, the action to annul
seller's authority to sell. it is extinguished (Article 1392, N.C.C) and the contract is cleansed from all its defects (Article 1396, N.C.C); if the
contract is annulled, the contracting parties are restored to their respective situations before the contract and mutual
Nothing in this Title, however, shall affect: restitution follows as a consequence (Article 1398, N.C.C.).
(1) The provisions of any factors act, recording laws, or any other Provision of law enabling the apparent owner However, as long as no action is taken by the party entitled, either that of annulment or of ratification, the
of goods to dispose of them as if he were the true owner thereof; contract of sale remains valid and binding. When plaintiff-appellant Trinidad C. Tagatac delivered
(2) The validity of any contract of sale under statutory power of sale or under the order of a court of competent virtue of said voidable contract of sale, the title to the car to Feist by virtue of said voidable contact of sale, the title to the
jurisdiction; car passed to the Feist. Of course, the title that Feist acquired was defective and voidable. Nevertheless, at the time he
(3) Purchases made in a merchant's store, or in fairs, or markets, in accordance with the Code of Commerce and sold the car to Felix Sanchez, his title thereto had not been avoided and he therefore conferred a good title on the latter,
special laws. provided he bought the car in good faith, for value and without notice of the defect in Feist’s title (Article 1506, N.C.C.).
There being no proof on record that Felix Sanchez acted in bad faith, it is safe to assume that he acted in good faith.
General Rule:
Where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or Article 1505 vs. Article 1506
with the consent of the owner, the buyer acquires no better title to the goods than the seller had. Article 1505 refers to sale with void title, while Article 1506 refers to sale with a voidable title.

Exceptions: Art. 1507. A document of title in which it is stated that the goods referred to therein will be delivered to the
1. The owner of the goods is by his conduct precluded from denying the seller's authority to sell. bearer, or to the order of Any Person named in such document is a negotiable document of title.
2. A provision of law enables the apparent owner of goods to dispose them as if he were the true owner thereof.
3. The validity of any contract of sale under statutory power of sale or under the order of a court of competent Document of title to goods
jurisdiction. It includes any bill of lading, dock warrant, "quedan," or warehouse receipt or order for the delivery of goods, or
4. Purchases made in a merchant's store, or in fairs, or markets, in accordance with the Code of Commerce and any other document used in the ordinary course of business in the sale or transfer of goods, as proof of the
special laws. Possession or control of the goods, or authorizing or purporting to authorize the possessor of the document to
5. Where the seller of goods has a voidable title thereto. transfer or receive, either by endorsement or by delivery, goods represented by such document.

Art. 1506. Where the seller of goods has a voidable tittle thereto, but his title has not been avoided at the time of Goods
the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and It includes all chattels personal but not things in action or money of legal tender in the Philippines, The term
without notice of the seller’s defect of the title. includes growing fruits or crops.
Bill of lading Bailee, meaning
A document acknowledging the receipt of goods by a carrier or by the shipper’s agent and the contract for the Someone who receives personal property from another, and has possession of but not title to the property. A
transportation of those goods; a document that indicates the receipt of goods for shipment and that is issued by a person bailee is responsible for keeping the property safe until it is returned to the owner.
engaged in the business of transporting or forwarding goods. Someone who by warehouse receipt, bill of lading, or other document of title acknowledges possession of goods
A document that serves as evidence of receipt of goods for shipment issued by a common carrier. and contracts to deliver them.

Dock warrant Art. 1509. A negotiable document of title may be negotiated by the endorsement of the person to whose order
An interim document issued by a maritime carrier to evidence the delivery of goods at the dock. the goods are by the terms of the document deliverable. Such endorsement may be in blank, to bearer or to a
A warrant given by dock-owner of merchandise imported and warehoused on the dock. specified person. If indorsed to a specified person, it may be again negotiated by the endorsement of such
person in blank, to bearer or to another specified person. Subsequent negotiations may be made in like manner;
Quedan
A warehouse receipt that covers sugar. Two Kinds of Negotiation
1. Delivery
Warehouse receipt Where by the terms of the document, the one issuing the same undertakes to deliver the goods to the bearer.
A document evidencing title to goods stored with someone else; esp., a receipt issued by a person engaged in 2. By indorsement and delivery
the business of. storing goods for a fee. The endorsement may be in bank, to bearer, or to a specified person.
A warehouse receipt, which is considered a document of title, maybe a negotiable instrument and is often used
for financing with inventory as security. Note:
A receipt received by the bailee to be delivered to the bearer or to the order of any person named in such receipt Article 1509 pertains to negotiation by endorsement and delivery.
or to a specified person.

Negotiable document of title

A document of title that actually stands for the goods it covers, so that any transfer of the goods requires a
surrender of the document.
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, The document is negotiable if:

1. The goods are deliverable to bearer; or

2. The goods are deliverable to the order of a certain person.

Non negotiable Document of Title

A document of title that merely serves as evidence of the goods It covers.

Art. 1508. A negotiable document of title may be negotiated by delivery:

(1) Where by the terms of the document the carrier, warehouseman or other baile issuing the same undertakes
to deliver the goods to the bearer; or
(2) Where by the terms of the document the carrier, warehouseman or other bailee issuing the same undertakes
to deliver the goods to the order of a specified person, and such person or a subsequent endorse of the document has
indorsed it in blank or to the bearer.
Where by the terms of negotiable documents of title the goods are deliverable to bearer or where a negotiable
document of title has been indorsed in bank 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 endorsement of such endorsee.