SALE BY NON-OWNER OR BY ONE HAVING VOIDABLE TITLE

1. SALE BY NON-OWNER

Perfection Stage

a. sale by owner – VALID

b. sale by non-owner – VALID;

• because ownership is necessary only at time when transfer title to goods; at perfection stage, no obligation on part of seller to transfer ownership

• 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

• since valid, action to annul is improper; there is already a perfected contract

Consummation Stage

• Contract of sale is valid because it has passed perfected stage, despite:

a. seller not being the owner

b. seller having no authority to sell

• What is void is the transfer of title/ ownership did not pass

• Effect: buyer acquired no better right than transferor

• Legal effect: CAVEAT EMPTOR – BUYER BEWARE

a. co-owner sells whole property prior to partition – sale of property itself is void but valid as to his spiritual share

b. 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.

Exception to (b):

i. Subject matter is indivisible

ii. Sale of definite portion is with consent of other co-owners

iii. co-owner sells 1 of 2 commonly-owned lands & does not turn over ½ of the proceeds, other co-owner, by law & equity, has exclusive claim over remaining land.


• General Rule: Sale by non-owner, buyer acquires no better title than seller had.

• Exception:

a. owner by his conduct is precluded from denying seller’s authority (ESTOPPEL)

b. contrary is provided for in recording laws (PD 1529)

c. sale is made under statutory power of sale or under order of a court of competent jurisdiction

d. sale is made in a merchant’s store in accordance with code of commerce & special laws

2. SALE BY SELLER WITH VOIDABLE TITLE

Perfection Stage

Valid sale – buyer acquires title of goods

Consummation Stage

Valid sale – if title has not yet been avoided, buyer buys goods under following condition:
a. in good faith
b. for value
c. without notice of seller’s defect of title

TITLE AS TO MOVABLE PROPERTIES

Rule: POSSESSION IS EQUIVALENT TO TITLE

• Requisites:

a. Possession of a movable

b. In good faith

• Exception:

a. Owner lost movable – owner can recover w/o reimbursing price

b. Owner is unlawfully deprived – owner can recover w/o reimbursing price

• Exception to Exception:

a. movable is bought at public sale – owner can only recover after reimbursing price

b. acquired in good faith & for value from auction

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