Option Money v.

Earnest Money owner because his purpose is to sell it

to another person.
Necessity of payment of the price:
 Contract of sale – when the sale is
perfected, the buyer has to pay the
price
 Contract of agency to sell – if he was
able to sell it, then he will remit the
price. If not, he will return the goods.
Warranties:
 Contract of sale – two basic parties:
(1) the seller and (2) the buyer. The
Nature of money given: seller warrants the goods.
 If the contract of sale is perfected in  Contract of agency to sell – 3 parties:
an earnest money, how much are you (1) the principal, (2) agent, and (3)
expected to pay? Only the balance buyer. The agent does not warrant
because this will be deducted. because the principal will warrant the
 If the contract of sale is perfected in thing.
an option money, how much are you Possibility of returning the object:
expected to pay? The whole amount  Contract of sale – The buyer cannot
because it is not part, not distinct, and return the thing unless there is defect.
will not be deducted.  Contract of agency to sell – The agent
Effect when given: can return if he was not able to sell it.
 Earnest money – the buyer is bound to If he was able to sell it he will remit.
pay the balance because the sale is What is the most important distinction?
already perfected/created. There is check the obligation.
already a contract of sale in an  Contract of sale – the buyer pays the
earnest money. price.
 Option money – it is called “option  Contract of agency to sell – The agent
money” because the would-be buyer is remits
given the right to choose whether he
intends to buy or not to buy the thing. Sale v. Agency to Sell (1466)
Clear distinction is that earnest money is Case: Quiroga v. Parsons
part of the purchase price while option Facts:
money is separate and distinct. Issue: What contract was perfected between
the parties? sale or agency to sell?
Ruling: in construing a contract containing
provision characteristic of both the contract
of sale and of the contract of agency to sell
the essential causes of the whole instrument
shall be considered.(1466)

A sold several pieces of beds to B.

Now according to the contract in this case,
it’s an agency to sell, and that’s the title of
the contract. Now part of the contract he will
receive a commission, he will receive a
discount, and part of the stipulation are the
clauses there ,and the agent is supposed to
Nature of the person who receives the pay for it whether he sells it or not.
object: Suppose the agent was not able to sell
 Contract of sale – the moment the it, of course he is now returning the beds to
thing is delivered, the buyer becomes the seller. Now of course the seller will not
the owner. accept. Why? because the contention of the
 Contract of agency to sell – if the seller is that it is a contract to sell. On the
agent receives the goods, he is not the
other hand of course the contention of the went to the mall today, I was buying a
buyer is that it is an agency to sell. Look at particular Nike brand shoe and
the title it simply says agency to sell. unfortunately it’s out of stock so the
So again, let’s go back to the issue, lady told me that she will take note of
was the contract perfected between the my order and hopefully within the
parties a sale or an agency to sell? The ruling span of one month the delivery will be
of the Supreme Court in construing a made. So the question is what
contract containing the provisions of both contract was perfected? sale or piece
the contract of sale and agency to sell, the of work? Sale because the mere fact
essential clause of the whole instrument that it’s already in existence but out of
shall be considered. In other words, yes the stock it’s a contract of sale.
title is agency to sell; he will receive a Now suppose I went to the mall,
commission, he will receive a discount, but I was asking for a particular shoe: it
the basic obligation is there: he has to pay has my name embedded on it, it has
for it. The agent does not pay, he remits the different color, it speaks the moment
price. Here part of the stipulation is that the you try to walk on it. Is there a show
agent is supposed to pay, so there is no like it? the answer is there is none. It’s
agency to sell, in fact it is a contract of sale what we call as custom made or
because it’s the obligation of the buyer to custom built. It is not in the ordinary
pay and it’s not the obligation of the agent to course of the market, it’s what we call
pay for it. a specially manufactured, so it
So according to Supreme Court the becomes a piece of work.
title is not controlling, the body stipulation Distinction of the two is that in
therein is the one controlling. the contract of sale, the thing is in the
market even though it’s out of stock
Sale v. Piece of Work (1467) while piece of work is specially
manufactured–meaning it’s not yet in
existence you know.

3 Schools of Thought
1. Massachusetts Rule – specifically done
(follow this rule; specially done, specially
manufactured)
2. New York Rule – if thing already exists,
sale
3. English Rule – if material is more
valuable, sale

What then is the rule?

Nature of the object:  If ordered in the ordinary course of
 Contract of sale – existed business- Sale
 Piece of work – not yet existed  If manufactured specially for the
Risk of loss: customer and upon his special order
 Contract of sale – Res perit domino and not for the market- Piece Of
(the thing perishes with the owner) Work
borne by the buyer
 Piece of work - borne by the worker or
by the contractor. Sale v. Barter (1468)
Formalities: Barter (Art. 1468, 1638-1641, 1954)
 Contract of sale – it’s covered by the First rule – Intention of the parties
statute of frauds especially if it falls If intent does not clearly appear –
under personal property worth  If thing is more valuable than money –
Php500 or more or real property BARTER
regardless of the value.  If 50-50 – SALE
 Piece of work - under certain instances  If thing is less valuable than money –
or circumstances. Example: Suppose I SALE
 General rule: Delivery transfers
Example so that we will be able to ownership (Art. 1477). However,
understand the distinction between sale and registration creates real right.
barter. Now suppose A and B entered into a Exception: Pactum Reservati Dominii (a
contract, the consideration for the contract in stipulation reserving ownership).
this case is a land worth 1 million; take note I 1. Express Reservation
did not mention whether it is a contract of a. Art. 1478 – Contract to Sell
sale or barter. The consideration is partly b. Art. 1502 – Sale on Trial
land and partly in cash. The party stipulated c. Art. 1503, 1st par – Express
partly land partly in cash. Now in that Reservation (the parties expressly
situation there is a doubt because you don’t agreed on it)
know whether it’s a sale or barter. 2. Implied Reservation – Art. 1503 (3
 Let us first go back to the general instances)
rule: So suppose wala yang example,
if the party stipulated that the
transaction is a contract of sale
regardless of the amount or the value
of the property or the money, if they
interpreted it or if they agree that it’s
a sale, it’s a sale. If they agree that it’s
a barter, it’s a barter. The problem will
tell you whether it’s a sale or barter.
So let’s go back to the previous example
suppose the parties did not mention a
specific contract, suppose in this case the
value of the land is worth 1 million and When the title passes to the vendee:
money for Php100,000. take note there is NO  Contract of sale – if the seller delivers
mention of the words: sale, barter, seller, or the thing to the buyer, ownership
buyer. [another word for barter is exchange] transfers to the buyer
so if there is no mention, there is a doubt. In  Contract to sell – by agreement,
the example of course the land which is ownership will not pass until full
worth 1 million the money is worth 100,000, payment of the price. So even if the
so in that situation since there is a doubt the seller delivers it to the buyer, the
intention is not clear it’s a barter. seller remains to be the owner
because of the stipulation.
Let’s reverse it, suppose the value of the Effect of non-payment of the price:
land is worth 100 but the money is worth 1  Contract of sale - nonpayment is a
million so it becomes a sale. Suppose it’s 50- resolutory condition because the seller
50 then it’s a sale. is going to cancel the sale because it
If the problem mentions the words: sale, will extinguish the contract of sale
barter, seller, buyer, or exchange, there’s no (resolutory).
need to interpret. If they use sale, it’s a sale.  Contract to sell – full payment is a
if they use the word barter, it’s a barter. But positive suspensive condition because
if the problem did not mention any word on if there is full payment, ownership will
sale, barter, exchange, seller, or buyer, then transfer to the buyer.
you have to go to the rules again if the thing Transmission of ownership:
is more valuable than money (barter), if the  Contract of sale – If it is delivered to
money is bigger than the amount of the the buyer, the buyer bears the loss.
property (sale), if 50-50 (sale).  Contract to sell – seller remains with
If the intention is clear, apply the intention. It the seller, they bear the loss.
would be a sale or a barter.
Sale or Return v. Sale on Trial
Delivery – Actual or (1502)
Constructive
 until certain conditions have been fulfilled.
The right of possession or ownership may be
thus reserved notwithstanding the delivery of
the goods to the buyer or to a carrier or
other bailey for the purpose of transmission
to the buyer(1st par.)

Express reservation(1503), when we say

Express again, this is the third one, kasi yung
first, let me just review you
Example: A sells his refrigerator to C. Who is 1. contract to sell full payment of the
now the owner? C (the buyer) because the price,
moment it is delivered, ownership passes to 2. sale on trial the moment he signifies
the buyer. Can C return the thing? Yes his acceptance; there is reservation on
because it is the will of the buyer and if he the right of possession or ownership.
returns it, since it is a resolutory condition, So these are the three ways of Express
he will now not be the owner of the thing. reservation.
Can C return the refrigerator even though
there is nothing wrong with it? Yes. Here, in Implied Reservation
Sale or Return, from the delivery the buyer When goods are shipped and by the bill of
becomes the owner but the buyer can return lading the goods are deliverable to the
it with or without a valid reason. SELLER or his agent, or to the order of the
seller or of his agent, the seller thereby
In sale on trial, it is subject to a suspensive reserves the ownership and the
condition. Suppose there is nothing wrong goods.Xxx(2nd par.)
with the refrigerator, he cannot return it
because it depends on the “quality”. Where goods are shipped, and by the bill of
However, the seller remains the owner, and lading the goods are deliverable to order of
the instances by which the ownership will the buyer or of his agent, but possession
pass to the buyer is that: of the bill of lading is RETAINED by the
 if he retains the thing beyond the seller or his agent, the seller thereby
retention period, reserves a right to the possession of the
 if he expressly signifies his goods as against the buyer. (3rd par)
acceptance, or
 he does an approve an alteration Where the seller of goods draws on the buyer
for the price and transmits the bill of
exchange and bill of lading together to the
buyer to secure acceptance or payment of
Under these three instances, title to the the bill of exchange, the buyer is bound to
property passes to him. return the bill of lading if he DOES NOT
HONOR THE BILL OF EXCHANGE, and if
 Sale or return, who's the owner? he wrongfully retains the bill of lading
buyer. he acquires no added right thereby. If,
 Sale on trial? seller. however, bill of lading provides that the
 Can the buyer return on the sale or goods are deliverable to the buyer or to the
return? Yes, that is option. order of the buyer, or is endorsed in blank, or
 Can the buyer return in sale on trial? to the buyer by the consignee named
No, there must be a defect in the therein, one who purchases in good faith, for
quality of goods. value, the bill of lading, or goods from the
buyer will obtain the ownership in the goods,
although the bill of exchange has not been
Express Reservation honored, provided that such purchaser has
Art.1503. When there is a Contract of sale of
received delivery of the bill of lading
specific goods, the seller may, by the terms
indorsed by the consignee named the rent,
of the contract, reserve the right of
or of the goods, without notice of the fact
possession or ownership in the goods
making the transfer wrongful. (n) 4th par.
Yung implied, ito naman, some delivery or In the second instance, in this case,
carriage of goods in this case. Now even though it's in the name of the
remember, in the carriage of goods, what is buyer, the seller retained, hinawakan
the best evidence of ownership? It's the bill niya, he did not deliver the bill of
of lading. (Map, land transportation, water lading. And what does the bill of lading
transportation or air transportation). signify ownership?

So normally, whoever is the owner, or whose So in both instances, first one, name
name appears on the bill of lading, is the of the seller implied reservation.
owner of the thing. You buy or not, not yet the owner. The
second instance, he kept the bill of
So you have two things here to take into lading even though it's in the name of
consideration: the buyer, he remains to be the owner.
1. the possession of the goods. Now the third one, there are two
2. the bill of lading. documents which will have to be
given to the buyer:
Now, which is more important? Of course, 1. the bill of lading.
what is more important is the bill of lading, 2. the bill of exchange.
because, again, the bill of lading signifies
ownership over the goods. So in these Well, the buyer accepted the bill of lading,
instances, we will learn that there is implied but he rejected the bill of exchange. What is
reservation, meaning the seller remains to the bill of exchange? it is the proof that you
be the owner. owe the seller so the buyer does not honor
the bill of exchange, and he wrongfully
So general rule, if the seller delivers the retains the bill of lading. In this particular
goods to the buyer, the buyer’s possession, instance, there is implied reservation. The
and along with it, the bill of lading should seller remains to be the owner. Because, why
contain the name of the buyer on the bill of again? Why is the seller remains to be the
lading. So the buyer's possession and the bill owner because the buyer did not honor the
of lading in his name. bill of exchange. So if he did not honor the
 Possession bill of exchange, he did not honor the credit.
 bill of lading in his name. In this case, he wrongfully retain the bill of
lading.
1. Where goods are shipped by the bill of
lading and the goods are deliverable  it's still in the name of the seller, the
to the seller's agent, the seller bill of lading.
transferred the possession. But in the  even though it's in the name of the
bill of lading, the name of the seller buyer, the seller kept it.
remains. So it means the seller  the buyer dishonors the bill of
reserves his ownership, because it's exchange and wrongfully retains the
not in the name of the buyer. bill of lading.
2. Where the goods are shipped, and by
the bill of lading, the goods are Three instances implied the reservation.
deliverable to the order of buyer's
agent, but the possession of bill of Pactum reservati domini there is a
lading is retained by the seller. stipulation of reserving ownership. It could
be expressed. It could be implied.
Now this is the scenario: The seller Now Express reservation
delivered the goods; in the bill of 1. it could be a contract to sell. What is
lading it's in the name of the buyer, required is full payment the purchase
but the seller retained it. He did not price.
deliver the bill of lading to the buyer. 2. sale on trial, you have to signify your
In the first instance, the bill of lading is accent.
in the name of the seller. Implied the 3. express meaning. It's written in the
reservation. document itself
 Let's reverse it. Sabi ni buyer I promise to
Implied - by the acts of the seller or the buy. Sabi ni seller, I accept your promise to
buyer. buy, but I don't promise sale. Wala paring
1. it is still in the name of the seller, the sale. Kasi dapat may promise to sell, may
bill of lading. promise to buy.
2. the seller retains, he keeps the bill of
lading, even though it's in the name of Okay, in the example, yung una, he did not
the buyer. accept eto naman inaccept pero di naman,
3. on the part of the buyer because he hindi naman inaccept yung promise to buy in
does not honor the bill of exchange, this case, or promise to sell.
and he wrongfully retains the bill of Now, what about this scenario? Sabi ni A, I
bleeding. promise to sell. B did not reply. That's
policitacion, unaccepted, unilateral promise
In these three instances, there is implied to buy or sell the thing. Let's reverse. Sabi ni
reservation, meaning ownership will not buyer, I promise to buy. The seller did not
pass. reply. That's policitacion, unaccepted
unilateral promise to buy or to sell the thing.
Promise to buy or sell
Article 1479. A (mutual)( promise to buy and Policitacion, it is a word which applies in a
sell a determinate thing for a price certain is contract of sale. Unaccepted unilateral
reciprocally demandable. promise to buy or to sell the thing.

An accepted unilateral promise to buy or sell So according to second paragraph,

a determinate thing for a price certain is “unaccepted unit promise to buy or to sell a
binding upon the promisor if the promise is determining thing for a price certain is
supported by a consideration distinct from binding upon the promise, or if the problem
the price.(1451a) is supported by a consideration distinct from
the price” maybe we can have an example
According to the law, a promise to buy and here.
sell, a determining thing for a price certain is
reciprocally demandable. Let me make it A and B. In law 1, A makes an offer and B
simple. Ano ba ibig sabihin nito? this is the makes an acceptance. So is the contract
seller. This is the buyer. There is promise to perfected? Yes. Now here in law on sales,
sell. There is promise to buy. In law 1, there now here you have a, then you have B again.
is offer. There is acceptance. A makes an So there is promise to buy (PB), and here, B
offer, B makes an acceptance. promises to sell. So it could be on the part of
Offer plus acceptance equals consent. the buyer, or it could be part of the sale. So
Dito naman, dalawa, there is promise to sell in both cases, may contract sale. Okay,
and there is promise to buy. Suppose, suppose this is the scenario. So ano sabi ni A
scenario number one, promise to sell, kay B, I promise to sell (PS), but B did not
promise to buy. contract of sale is perfected. accept it, or B tells A, I don't promise to buy.
Ibig sabihin, there is offer, there is So there is no contact of sale, because dapat
acceptance. So again, sa law 1 ang tawag mutual: may promise to sell, may promise to
offer and acceptance. Because generic Siya. buy.
But here we use the word promise to sell,
promise to buy. Suppose, sabi ni seller, I Now dito papasok na yung new option
promise to sell, anong sabi ni buyer? I don't money and earnest money. Okay, so sabi ni A
promise to buy. There is no sale. Let's kay B, I promise to sell to you my land for 1
reverse Sabi ni buyer, I promise to buy. Sabi million. So it must be in writing because
naman ni seller, I don't promise to sell. There covered ito ng statute of fraud. Can A still
is no contract of sale. Now another scenario. sell the land to a third person? Yes, because
Sabi ni seller, I promise to sell Anong sabi ni it wala pang acceptance si B, wala pang
buyer, I accept your promise to sell, but I promise to buy.
don't promise to buy. In accept niya, pero he Scenario number two, suppose A gave B, one
does not promise to buy. Wala pa ring sale. week to decide. One week to decide, before
the lapse of the one week, or during the one
week period, can A still sell it to the third part of the purchase price? Yes. Is the sale
person? yes. Bakit? Wala kasing acceptance, created? Yes. So can A still sell it to the third
wala pang promise to buy. Dapat may offer person? no because the sale was already
may acceptance. Dapat may promise to sell, perfected.
promise to buy, so that the sale will be
perfected. later on, when we discuss 1544 who is the
owner? Kasi, double sale of personal or real
Now in the first scenario, wala pang, one property ang mangyayari doon, the issue in
week, he can sell it. In the second scenario, 1544 is, who is the owner. The issue is, is the
may one week. So this is the time we go to sale already perfected? So don't be
the third example. Now here, sabi ni A kay B, confused.
I promise to sell to you my land, (the offer
must be in writing kasi covered ng statute of So option money, and earnest money, the
fraud) for 1 million. I'm giving you one week issue is whether or not the sale was already
to decide, So question, one week. Sabi, ni B perfected. Sa 1544, of course, the sale was
sige I’m giving you an option money. Here is perfected, but who is the owner? Kasi,
the 1000 pesos option money. So if an option double sale, whether personal or real
money is given, is the sale already property.
perfected? no, it's not yet perfected. It's not
yet created. B has the option to buy it or not There must be offer, there must be
to buy it, right? So ito tanong, before the one acceptance, the sale is created. There must
week period expires, can A still sell it to a be promise to sell, there must be promise to
third person? Now, guys, please take note of buy. The sale is created. If there is no
this before we answer, is the sale already acceptance, if there is no promise to buy,
perfected? not yet kasi option money lang there is no sale. Suppose it was the buyer.
ito, option contract. The seller did not reply. That's policitacion.
Suppose an option man is given, the sale is
So tanong, can A still sell it to the third not yet created. A sale is not yet created. So
person? yes, because there is no contract of if the seller sells it to the third person, is the
sale. But is A liable to pay for damages? yes, sale valid? Yes, but the seller liable to pay
for breaching the option contract and not the the would-be buyer for damages because he
contract sale kasi, wala pang contract of breached the option contract. Can you do
Sale. A breach the option contract, so tanong that in an earnest money? no because the
can A sell it? yes, but he will be liable to pay sale is already perfected. But when we go to
for damages for breaching the option 1544 my answer would be yes, kasi double
contract. sale. So for the meantime, sa option money,
you can still sell it. So earnest money, the
Now suppose, in this case, before the lapse answer is no because the sale was already
of the one week, B tells A, I'm buying it. Can perfected. Option money is not part of the
A still sell it to third person? No, kasi may purchase price. Earnest money is part of the
meeting of the minds. Parang dito rin sa purchase price, and there is already a
kabila, sabi ni A kay B, I'm giving you one perfected contract.
week kahit walang option money. If B say,
I'm buying it, perfected na kasi may offer Promise to buy or sell
may acceptance may promise to buy. General rule – Mutual promise to buy and
promise to sell
it's a question of whether there is
acceptance or no acceptance para malaman Exception – Policitacion – unaccepted
natin ang contract of sale. unilateral promise to buy or sell the property.

Now finally, let's go to the last example. Here Law 1 – offer plus acceptance = consent
we have A and B, same scenario, 1 million
ang land. Sabi ni, A kay B, I promise to sell general rule again, mutual promise to buy
my land to you for 1 million. Nagbigay na si B and promise sell. Anong tawag, natin sa
ng 100,000 earnest money. if an earnest unaccepted, unile promise to buy ourselves?
money is given may contract sale na. Is it Policitation
 it was already perfected, but it was lost after
Res Perit Domino the after the delivery. So lost after perfection
Thing perishes with the owner (1480) and before delivery. In this case, I sold my
4 instances of Loss (3 kinds of loss) house and lot to the buyer. So the sale was
1. Lost before perfection already perfected, but it was destroyed
2. Lost at the time of perfection before delivery. Who bears the loss?
3. Lost after perfection and BEFORE According to 1480 again, it's the buyer, but
delivery according to 1504 it's a seller. My opinion is
4. Lost after perfection and AFTER it's the buyer.
delivery
What is the status of the contract? Loss after perfection and after delivery. In
Who bears the loss? this case, of course, here, it was already
perfected. The thing was also delivered, It's
Res Perit Domino, the thing perishes with the buyer, in this case, who will bear the
the owner. This is discussed in article 1480, loss.
the in law 1, Article 1189 we learned what is
loss. There are three kinds of loss: Reiterate number one, loss before perfection.
1. Physical - when it perishes What happens to the sale void because there
2. Legal - when it goes out of commerce is no object who bears the loss? the seller.
3. Civil - when it disappears in such a
way this existence is unknown. Loss at the time of perfection, who bears the
Law 1 Article 1189 yan. loss? seller. What happens to the sale? Void
kasi walang object.
Now here we have to know this basic
principle, Res Perit Domino. Now there is a Loss after perfection and before delivery.
conflict between 1480, and 1504. So lost Loss bear by the buyer. But there are
before perfection. Two basic questions: instances when the seller will be the one to
1. what is the status of the contract? bear the loss.
2. who bears the loss?
Example: Lost before the perfection. Suppose loss after perfection and after delivery. Loss
I'm selling my yacht to the buyer right now, bear by the buyer because ownership was
unknown to me, my yacht already sunk already transferred to him.
months before. So question, what happens to
the contract of sale? void, because walang 1480 v. 1504
object. So who bears the loss? The seller. After perfection and BEFORE delivery –
Because the seller remains to be the owner. BUYER
Ulitin natin, lost before perfection. The sale is Exception
void. The seller bears the loss. 1. 3rd par, 1480 – should fungible things
be sold for a price fixed according to
Loss at the time of perfection, suppose I'm weight, number, or measure, the risk
selling my yacht right now. Unknown to me, shall not be imputed to the vendee
the yacht is sinking right now. Yung kanina, it until they have been weighed,
sunk months before. Ito naman sinking right counted, or measured and
now. So loss at the time of perfection. delivered, unless the latter has
Question, who bears the loss in this case? It's incurred in delay.
the seller, because he remains to be the 2. Only to secure performance by the
owner. Res Perit Domino, the thing perishes buyer of his obligation (buyer) 1504
with the owner in this case. So question here, (1)
what happens to the sale? The sale is void. 3. Party at fault – 1504 (2)

Loss, after perfection and after delivery. If  Exception number one, under Article
you go to article 1480 the rule is, In this 1480 3rd paragraph, should fungible
case, it would be The buyer, but if you look things be sold for a price fixed
at 1504, it's a seller. The problem here in this according to weight, number or
case is, suppose I'm selling my house and measure, the risk shall not be imputed
land on my house and lot to the buyer. Well, to the Vendee until they have been
 weighed, counted, measured and Issue: Can A sell the mortgaged land?
delivered. So in other words, dito, it's Ruling:
the seller who remains, who bears the So we have here the case of Santos versus
loss, pending the weighing, the Macapinlac. A mortgage his land to B but
counting, the measuring and the sold the land to C, can a still sell the
delivery to the buyer. mortgaged land? Yes, because the mortgagor
remains to be the owner. Sa mortgage. You
 If the purpose is only to secure don't transfer ownership. Sa sale you
performance by the buyer. transfer ownership. Can the mortgagor still
sell the mortgage property? Yes, can A sell
 The part at fault Law 1. So it's possible the mortgage land? yes. Can the creditor
it's the seller who is guilty of delay, prohibit the selling? The answer is no, that's
negligence or fraud. So in that pactum de non alienando (where one party
situation, being the party at fault, the agrees not to sell or transfer the property in question to a
third party. This agreement aims to protect the other party
seller will be the one to bear the loss. (usually a lender) by preventing the mortgagor from
alienating the property, thus maintaining the security of the
Now, what about this example? Classic mortgage).
example of #2 is suppose you bought a
motorcycle, payable by installment under Martin v. Reyes
recto law. So what happens here is that the Facts: A sold a land to B which at the time of
seller's name is still on the CR or OR but the sale did not belong to A.
purpose of that is to secure performance, Issue: Is the sale valid?
meaning, if the thing is lost eventually, then Ruling:
the buyer will be the one to bear the loss. So Martin versus Reyes, A sold the land to B
let's go to this one. Is very easy, sale by which at the time of sale did not belong to
sample, sale by description, 1481, okay. the seller. Is the sale valid? yes, because
Sale by Sample/Sale by Description ownership is required only at the time of
Art.1481. In the counter of sale of goods by termination or at the time of delivery.
description or by sample, the contract may
be rescinded if the bulk of the goods
delivered do not correspond with a
description or the sample, and if the contract Roman v. Grimalt
be by sample as well as description, it is not Facts: A person wanted to buy for P1500 a
sufficient that the bulk of goods correspond schooner called “Sta. Maria”. The parties
with the sample if they do not also agreed, but on the condition that the seller’s
correspond with the description. The buyer title papers should be perfected. Before the
shall have a reasonable opportunity of seller’s title could be perfected, the ship was
comparing the ball with description or lost. The would-be seller now sues for the
example.(n) price.
Issue: Is the would-be buyer liable for the
So if the thing the goods, was sold by price?
sample, then it has to conform with the Ruling:
sample. If it is sold by description, then it has Now Roman versus Grimalt, a person wanted
to conform with the description. If it is sold to buy for 1500 pesos, a schooner called
by sale and by sample and by description, it Santa Maria. The parties agreed but on the
has to comply to both the sample and the condition that the seller’s title paper should
description. Now what is the remedy here, if be perfected. Before the seller's title could
it does not comply with the sample by the be perfected, the ship was lost, the would be
description or both the sample and seller now sues for the price. Was the sale
description? Now the remedy in this case is perfected? So issue is the would be buyer
rescission. liable for the price? no, because there was a
condition attached, and the condition is, in
JURISPRUDENCE this case, the seller's status should be
Santos v. Macapinlac proven.
Facts: A mortgaged his land to B but sold the
land to C. Song Fo & Co. v. Orio
Facts: A launch was sold on credit. Shortly
after delivery, it was destroyed by a
fortuitous event.
Issue: Is the buyer still liable for the price?
Ruling:
Now, Song Fo v. Orio, a launch in this case,
was sold on credit. Shortly after delivery it
was destroyed by a fortuitous event. Is the
buyer still liable for the price? Again, sold on
credit, meaning the sale was already
perfected. So is the buyer still liable? Yes,
because it was already perfected and it was
already delivered. So in this case, the buyer
is still liable to pay for the price.