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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
When the buyer of the goods is or becomes insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in transitu, that is to say, he may resume possession of the goods at any time while they are in transit, and he will then become entitled to the same rights in regard to the goods as he would have had if he had never parted with the possession. (Article 1530, Civil Code)
What is the right of stoppage in transitu?
Stoppage in transitu is the act which the unpaid seller of goods stops their progress and constructively resumes possession of the goods while they are in the course of transit from him to the buyer and not yet actually delivered to the latter.
The right of stoppage in transitu is exercised by the seller by stopping the delivery of the goods in case of insolvency of the buyer or consignee, when such goods are already in transit.
The law says:
“[When] the buyer of goods is or becomes insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in transitu, that is to say, he may resume possession of the goods at any time while they are in transit, and he will then become entitled to the same rights in regard to the goods as he would have had if he had never parted with the possession.” (Article 1530, Civil Code)
How can an unpaid seller exercise his right of stoppage in transitu?
The law says:
“The unpaid seller may exercise his right of stoppage in transitu either by obtaining actual possession of the goods or by giving notice of his claim to the carrier or other bailee in whose possession the goods are. Such notice may be given either to the person in actual possession of the goods or to his principal. In the latter case, the notice to be effectual, must be given at such time and under such circumstances that the principal, by the exercise of reasonable diligence, may prevent a delivery to the buyer.
When notice of stoppage in transitu is given by the seller to the carrier, or other bailee in possession of the goods, he must redeliver the goods to, or according to the directions of, the seller. The expenses of such delivery must be borne by the seller. If, however, a negotiable document of title representing the goods has been issued by the carrier or other bailee, he shall not be obliged to deliver or justified in delivering the goods to the seller unless such document is first surrendered for cancellation.” (Article 1532, Civil Code)
What if the buyer has already sold the goods to a third party, what will happen to the right of the unpaid seller to stoppage in transitu?
The law says:
“[The] unpaid seller’s right of lien or stoppage in transitu is not affected by any sale, or other disposition of the goods which the buyer may have made, unless the seller has assented thereto.
If, however, a negotiable document of title has been issued for goods, no seller’s lien or right of stoppage in transitu shall defeat the right of any purchaser for value in good faith to whom such document has been negotiated, whether such negotiation be prior or subsequent to the notification to the carrier, or other bailee who issued such document, of the seller’s claim to a lien or right of stoppage in transitu.” (Article 1737, Civil Code)
How does the duty to observe extraordinary diligence over the goods apply to the right of an unpaid seller to stoppage in transitu?
The law says:
“The common carrier’s duty to observe extraordinary diligence over the goods remain in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu.” (Article 1737, Civil Code)
Related Article/s:
Land Transportation Safety – ALBURO ALBURO AND ASSOCIATES LAW OFFICES (alburolaw.com)
Diligence Required of Common Carriers – ALBURO ALBURO AND ASSOCIATES LAW OFFICES (alburolaw.com)
DEFENSES AVAILABLE FOR A COMMON CARRIER – ALBURO ALBURO AND ASSOCIATES LAW OFFICES (alburolaw.com)
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
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