Sales Part 5.2

• 1518 - Negotiation not impaired by fraud, mistake, duress, etc.  

  • suppose in the negotiation, you are the subsequent transferee but in the previous negotiation it was impaired by fraud, by mistake by juris or by some other external force. Will that affect your ownership over the goods?  if you are a buyer in good faith for value then there is no effect, the negotiation will not be impaired because of the fraud mistake because you are a holder for value in good faith  
• 1519-Attachment or levy upon goods covered by negotiable document (unless surrendered / enjoined) 
• 1520 - Creditor's remedies to reach negotiable documents (injunction /attachment)  
• Place of Delivery (1521) 

  • General Rule -  where do we deliver in LAW 1 (1251), if there is a stipulation or agreement follow the agreement. If there is no agreement and the thing is generic, the domicile of the debtor or if it is specific, where the thing was at the time of the perfection of the contract 
  • in corporation, the place is important, where the corporation was incorporated because if is incorporated in the philippines then it is a domestic corporation, if it is incorporated abroad it is a foreign corporation 
• 1.  Agreement / Stipulation  
  2. If none, Usage of trade 
  3. If none, seller's place of business 
  4. If none, seller's residence 
• In case of specific goods, in the absence of agreement or usage of trade to the contrary when the contract or the sale was made were in some place 
• Delivery of Goods (1522)  

  Less than, More than, Mixed  
• Less than (Reject them or Accept / Retain) - only delivered only 600 so 400 are lacking 
• Supposed I(buyer) bought 1000 sacks of rice from the Seller, on the date of delivery Seller only delivered only 600 so 400 are lacking. What are the remedy as the buyer? 

  • Buyer can reject them  
• Buyer can accept them 

  • How much will I pay if the buyer accepts the goods which have been delivered less than agreed by the parties.  
  • If buyer know that there will be no more delivery – Contract rate 
  • if Buyer did not know- fair value in order to punish the creditor 
• Larger (Accept and reject the rest / If he accepts)  

  • 1200, there is an excess, more than what have agreed 
  • Buyer can accept the 1000 then reject the 200  
  • Buyer accept all including the excess 200, how much should Buyer pay – contract rate 
• Mixed (Accept and reject the rest / if he accepts) 

  • mixed 600 A rice, 400 B rice 
  • What to do? 
  • Accept the 600A, reject 400B 
• If indivisible (larger / mixed) - the buyer may reject the whole of the goods 
• Delivery to the carrier is deemed delivery to the buyer (1523) 

  Who pays for expenses of delivery? 

  COD (collect on delivery / cash on delivery) – buyer 

  CIF ( Cost, Insurance, Freight) - seller 

  FOB (Free on Board/ Freight on Board) at the place of shipment - buyer 

  FOB alongside the vessel - buyer 

  FOB at the place of destination – seller 
• Sale is Reciprocal 

  • GR - Delivery is simultaneous with the payment of the price (Reciprocal) 
  • Exception - not reciprocal 
• 1. Buyer has not paid the price 
  2. If no period for payment has been fixed 
  3. If buyer lost the benefit of the period (1536) - under these instances buyer will lost the benefit of the period 
• 1525-Who is the unpaid seller? 

  1. If the complete or full of the price has not been received 
  2. If the negotiable instrument has been issued and it is dishonored 
• 1526-Rights of the unpaid seller – 4 basics of the unpaid seller 

  1. Possessory lien or right to retain – to keep possession of the goods 
  2. Right of stoppage in transitu – the seller already parted physical possession, but the goods have been delivered but it's not yet in the possession of the buyer then he can stop the delivery 
  3. Right of resale – it will be sold to another person 
  4. Right to rescind 
• 1.  Rt. to Retain (3) - under this instances the buyer will keep possession, he will not deliver 
  2. (1) no stipulation as to credit 
  3. 2) term of credit expired 
  4. (3) buyer becomes insolvent 
• 1. Rt. of Stoppage in Transitu (2) - the goods are already in transit not yet in possession of the buyer 

  • The seller can exercise the right of Stoppage if the buyer is insolvent 

  1. Buyer is insolvent (1) 
  2. (2) or becomes insolvent 
• 1. Rt. of Resale (3)- the goods will be sold to another person; it will be resale to satisfy the obligation 
  2. (1) perishable  
  3. (2) expressly reserves  
  4. (3) default in payment of the price 
• 1. Rt. to Rescind (2) 
  2. (1) expressly reserves  
  3. (2) default in payment 
• 1533-Unpaid seller cannot directly or indirectly buy the goods (VOID) 

  • If it is resold to another person, can the seller directly or indirectly buy the goods? NO , VOID by the relation of the property  
• 1535 - Effect of sale of goods subject to lien or stoppage in transitu 
• • 1st par. GR - Seller can exercise 
  • Exception - seller assents 
  • The law provides that the unpaid seller can exercise??? or right of stoppage but if he assented to the sale to another person according to law the unpaid seller cannot exercise since it was already sold can he still exercise? Yes, unless the seller assented it 
  • 2nd par. 
  • Unpaid Seller v. Holder of NDT 
  • There is a conflict between unpaid seller and the holder of the negotiable document title, who will emerge victorious? The holder of the negotiable document title because his right is superior to the unpaid seller 
• 1164-When is the creditor entitled to the fruits? 

  • From the time the obligation to deliver it arises 
• 1187-In suspensive condition 

  • There is a retroactive effect, it goes back to the date when the promise was made 
• 1786/1788-When is the partnership entitled to the fruits? 

  • from the time the thing should have been contributed then the partnership is already entitled to the fruits 
• 1537- When is the buyer entitled to the fruits? 

  • The buyer is entitled to the fruits from the time of perfection 
• 1940- Is the bailee entitled to the fruits? 

  • No, because it is gratuitous 
• 2102-Are the fruits covered in pledge? 

  • Yes, they are included in the pledge, in this case the pledge will continue to be in possession  
• 2132-In Antichresis, are the fruits covered? 

  • Yes, because that’s the basic obligation of the antichresis to apply the fruits. First the interest then after the principal 
• Rules in case of loss, deterioration, or improvement of thing before delivery 

  1480(Buyer) v. 1504(Seller) (after perfection but before delivery) 
• 1537-When is the creditor entitled to the fruits? 

  • The buyer is already entitled to the fruits from the time of perfection, thats the reason why he should suffer the loss 
• 1538 Rules in case of loss, deterioration or improvement of thing before delivery 
• Appropriate provision – 1480 – he gets the fruits, increase, or the improvement, he suffer the loss before delivery 

  1. The fruits belong to the debtor or from the time of perfection, the buyer gets the improvement, get the increase in value pending delivery so it follows that he should suffer also the loss under 1480 
• It could be subject to a suspensive condition if it falls under 1189 or it could fall under 1194 subject to a suspensive period nonetheless the rules are the same
• If the thing was destroyed before the condition was fulfilled by a fortuitous event (1170), the seller is not liable as no person shall be responsible for events that cannot be foreseen or are inevitable
• The obligation is extinguished specifically if the thing was destroyed by a fortuitous event
• If the seller (debtor) destroyed the things, the seller is liable to pay for the damages to the buyer under article 1170