II. Problema de Investigación
2.3 Justificación
TOPICS UNDER THE SYLLABUS H. RISK OF LOSS
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1. GENERAL RULE
Legal consequences from point of perfection are the same in both legal systems: upon perfection of an unconditional contract of sale involving specific or determinate subject matter, the risk of loss deterioration and the benefits of fruits and improvements, were fro the account of the buyer.
If Subject matter is GENERIC, Simply replace item.
WHO BEARS RISK OF LOSS/
DETERIORATION/ FRUITS:
1. BEFORE PERFECTION
Res perit domino
Owner is seller so seller bears risk of loss
2. AT PERFECTION
Res perit domino
Contract is merely inefficacious because loss of the subject matter does not affect the validity of the sale
Seller cannot anymore comply with obligation so buyer cannot anymore be compelled.
3. AFTER PERFECTION BUT BEFORE DELIVERY
Loss – confused state
Paras: BUYER
Tolentino: SELLER
Deterioration and fruits - Buyer bears loss;
4. AFTER DELIVERY
Res perit domino
Delivery extinguishes ownership vis-a-vis the seller and creates a new one in favor of the buyer
END OF DISCUSSION ON TOPIC H. RISK OF LOSS
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I. DOCUMENTS OF TITLE
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TOPICS UNDER THE SYLLABUS I. Documents of Title
1. Definition (Art. 1636)
2. Purpose of documents of title 3. Negotiable documents of title 4. Non-negotiable documents of title
5. Warranties of seller of documents of title (Art. 1516) 6. Rules on levy/garnishment of goods (Arts. 1514, 1519, 1520)
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TOPICS UNDER THE SYLLABUS I. DOCUMENTS OF TITLE
1. Definition
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1. DEFINITION
DOCUMENTS OF TITLE
1. Not creation of law but by merchants to allow them to deal with merchandise without having to physically carry them around
2. Pertains to specific type of movables only:
GOODS
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a. Documents of title serve two (2) functions:
i. Evidence of existence and possession of goods described therein
ii. Medium by which seller is able to transfer possession of goods
3. A document of title which states that the goods referred to therein will be delivered to the bearer, or to the order of any person named in such document
4. Negotiable by delivery or indorsement
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TOPICS UNDER THE SYLLABUS I. DOCUMENTS OF TITLE
2. Purpose of documents of title
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2. PURPOSE OF DOCUMENTS
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TOPICS UNDER THE SYLLABUS I. DOCUMENTS OF TITLE
3. Negotiable documents of title
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3. NEGOTIABLE DOCUMENTS OF TITLE
1. Deliver to bearer
(negotiation by mere delivery)
2. Deliver to specific
person or his order (negotiation by endorsement + delivery)
Even if face of instrument says NON-NEGOTIABLE, it is still NEGOTIABLE;
limiting words does not destroy negotiability.
If order instrument and no endorsement was made – equivalent to assignment
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TOPICS UNDER THE SYLLABUS I. DOCUMENTS OF TITLE
4. Non-negotiable documents of title
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4. NON-NEGOTIABLE DOCUMENTS OF TITLE
Effects of Unauthorized Negotiation The validity of the negotiation of a negotiable document is not impaired by the fact that negotiation was done in breach of duty or that the owner of the document was deprived of the same by loss, theft, accident, fraud, mistake if the person to whom the document is delivered is in good faith and without notice of the said irregularities.
Important Considerations
1. Negotiation gives better right than assignment
2. Assignee takes document with defects of the assignor
3. Obligation of bailee – bailee is immediately bound to the document
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TOPICS UNDER THE SYLLABUS I. DOCUMENTS OF TITLE
5. Warranties of seller of documents of title
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Warranties on Negotiation 1. The document is genuine
2. He has legal right to negotiate or transfer it
3. He has knowledge of no fact which would impair the validity or worth of the document
4. He has right to transfer title to goods and goods are merchantable/fit
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TOPICS UNDER THE SYLLABUS I. DOCUMENTS OF TITLE
6. Rules on Levy or Garnishment of Goods
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6. Rules of Levy/Garnishment of Goods Covered by Documents of Title
NON NEGOTIABLE:
o Notification is operative act to transfer title/possession of goods in favor assignee
o Before notification – can still be garnished
NEGOTIABLE:
o Cannot be levied or garnished when documents are already with purchaser in good faith, unless:
o Document is first surrendered o Document is pounded by court o Negotiation is enjoined
NEGOTIATION ASSIGNMENT Transferor/holder
acquires title to goods
Acquires title to goods against transferor Bailee has direct
obligation to holder as if directly dealt with him
Acquires right to notify bailee so that he acquires obligation of bailee to hold goods for him
A. SALE BY NON-OWNER OR BY ONE HAVINGVOIDABLE TITLE
1. PERFECTION STAGE a. Sale by owner – VALID b. Sale by non-owner – VALID;
c. Reason why both sales are valid:
ownership is necessary only at time when transfer title to goods; at perfection stage, no obligation on part of seller to transfer ownership
d. Law on estoppel further bolsters it:
title passes by operation of law to grantee when person who is not owner of the goods sold delivers it and later on acquires title thereto e. Since valid, action to annul is
improper; there is already a perfected contract
2. CONSUMMATION STAGE
a. Contract of sale is valid because it has passed perfected stage, despite seller not being the owner or seller having no authority to sell
b. What is void is the transfer of title/
ownership did not pass
c. Effect: buyer acquired no better right than transferor
d. Legal effect: CAVEAT EMPTOR – BUYER BEWARE
e. Sale of co-owner of whole property or definite portion
GENERAL RULE:
Co-owner sells whole property prior to partition – sale of property itself is void but valid as to his spiritual share
Co-owner sells definite portion to partition – sale is void as to other co-owner but valid as to his spiritual share if the buyer would have still bought such spiritual share had he known that the definite portion sold would not be acquired by him.
EXCEPTIONS TO THE RULE ON THE EFFECT OF SALE OF A DEFINITE PORTION BY A CO-OWNER
1. Subject matter is indivisible in nature or by intent;
2. Sale of a particular portion of a property is with consent of other co-owners;
3. Co-owner sells 1 of 2 commonly-owned lands and does not turn over ½ of the proceeds, other co-owner, by law and equity, has exclusive claim over remaining land.
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B. SALE BY SELLER WITH VOIDABLE TITLE IN GOOD FAITH and WITHOUT NOTICE OF THE DEFECT
1. PERFECTION STAGE
a. Valid sale – buyer acquires title of goods 2. CONSUMMATION STAGE
o Valid sale – if title has not yet been avoided, buyer buys goods under following condition:
in good faith
for value
without notice of seller’s defect of title