1.

Price must be certain or ascertainable at the time of the perfection of the contract of
sale
2. If the third person designated to fix the price is prevented from fixing the price by the
fault of one of the parties, any of the parties may seek redress before the courts.
3. In an auction sale, sale is perfected by the fall of the hammer.
4. Sales of separate lots by auction are separate contracts of sale.
5. If the acceptance is made before withdrawal, it constitutes a binding contract of sale
although the option is given without consideration.
6. If the promise is supported by a consideration distinct and separate from the price, its
acceptance will give rise to a perfected contract.
7. Sale of real property or an interest therein must be in writing in order to give rise to a
perfected contract of sale.
8. Sale of personal property, wherein the price is more than P500, must be in writing to
be enforceable.
9. Where the price is so low as to be shocking to the moral conscience, judicial sale of
personal property will be set aside.
10. Where the low price indicates a vice of consent, sale may be annulled or the
contract is presumed to be an equitable mortgage.
False 11. Inadequacy of the price in a voluntary contract of sale affects the validity of the sale.
12. The validity of the sale is not necessarily affected where the law gives to the owner
the right to redeem, upon the theory that the lesser the price, the easier it is for the owner to
effect redemption.
13. If the term is CIF, it signifies that the price fixed covers not only the cost of the
goods, but the expense of the freight and insurance to be paid by the seller.
False 14. If the term of delivery is FOB shipping point, seller bears the loss until the goods
reach the buyer.
15. The seller is still the owner of the goods despite delivery if it is a sale on trial,
approval or satisfaction.
16. In sale or return, ownership passes to the buyer on delivery and subsequent return
therof reverts ownership in the seller.
17. In a sale of movable, when the quantity is more than agreed upon, the buyer may
accept what has been delivered, at the contract rate.
18. In a sale of movable, when the quantity is less than agreed upon, the buyer may
accept the goods agreed upon and reject the rest.
False 19. In a sale of immovable, if the entire area could not be delivered, the vendor shall still
enforce the contract but with the corresponding decrease in price.
True 20. In a sale for a lump sum, the vendor is obligated to deliver all the land included
within the boundaries, regardless of whether the real area should be greater or smaller.\
21. Rhys and Emman entered into a contract whereby Rhys agreed to sell his Honda Jazz car to
Emaan for P350,000. Upon the perfection of the contract, Emman advanced the entire
purchase price of P350,000 to Rhys. It was, however, stipulated that the Honda Jazz car shall be
delivered to Emman at the end of September 2010, after the bar exams. Unfortunately, before
the arrival of that date, the car was struck by lightning ads was thus, completely destroyed. Can
Emman now recover the P350,000 he had advanced to Rhys?

a. Yes, since the obligation of Rhys to deliver the Honda Jazz car is extinguished, then, the
obligation of Emman to pay the price is also extinguished and in conformity with the
principle of res perit domino.
b. No, because it is Emman who bears the loss since he paid the purchase price even
though the Honda Jazz car is yet to be delivered.
c. Yes, since it involves specific goods, then the loss is imputable to Rhys for his failure to
exercise the diligence of a good father of a family.
d. No, since the Honda Jazz car was lost without any fault on the part of Rhys and
therefore, Rhys must not suffer because of such fortuitous event.

22. RR sold his Sony Bravia Flat Screen TV to Tyntyn for P250,000 to be paid as follows:
P100,000 upon delivery of the flat screen TV and the balance at the rate of P50,000 every 2
months thereafter. Before the payment of the remaining balance of P150,000, the Sony Bravia
Flat Screen TV was burned when there was big fire in a subdivision where Tyntyn’s house was
situated. The said fire was without the fault of Tyntyn or RR. Is Tyntyn obliged to pay the
balance? (3pts)

a. No, because the subject matter was lost without Tyntyn’s fault.
b. Yes, because ownership was already transferred to Tyntyn.
c. No, because there was no agreement between Tynty and RR that Tyntyn will be liable to
pay for the balance in case there is loss before the balance is completely paid.
d. Yes, because even if Tyntyn is not yet the owner of the said TV, failure to pay the
balance will constitute breach of contract on her part

23. which of the following is not applicable to the main obligation of a seller in a contract of
sale?

a. The main obligation of the seller is to transfer the ownership and deliver a determinate
thinh.
b. the main oligation of the seller is not susceptible to an action for specific performance
since it will result to involuntary servitude, which is unconstitutional.
c. the main obligation of the seller is a real obligation.
d. the main obligation of the seller is an obligation to give.
24. There is a stipulation in a contract of lease that if the lessor should desire to sell the leased
premises, the lessee shall have a 30-day exclusive option to purchase the same. However, if it is
sold to another, the lessor is bound and obliged to stipulate in the deed of sale that the
purchase shall recognize the lease and be bound by all the terms and conditions thereof. What
is involved in the said contract of lease?
a. An option contract.
b. A right of first refusal.
c. Both an option contract and a right of first refusal.
d. Neither an option contract nor a right of first refusal.

25. Tin and Charmee are long time friends. On November 1, 2009, Tin entrusted to Charmee 8
pieces of jewelry. On December 8 of the same year, Charmee decided to buy some items and
issued a postdated check in the amount of P320,000. Tin deposited said check with the bank.
However, said check was dishonored since the Charmee’s account had been closed. Tin
informed Charmee of the dishonored check, then later Charmee started avoiding Tin.
Charmee stressed that the transaction between her and Tin was a “sale or return”,
perfected and consummated on November 1, 2009 when the 8 pieces of jewelry were delivered
to her. Which of the ff statements is appropriate?

a. On November 1, 2009, the contract entered into was a “sale or return”

b. On December 8, 2009, the contract entered into was a “sale or return”
c. On November 1, 2009, the contract entered into was a “sale on approval”
d. On December 8, 2009, the contract entered into was a “sale on approval”

III. ESSAY

1. Distinguish Earnest Money from Option Money. (5pts)

2. Mae offers to buy Xyza’s property under the following terms and conditions: P1 million
purchase price, 10% option money, the balance payable in cash upon the clearance of the
property of all illegal occupants. The option money was promptly paid and Xyza cleared the
property of illegal occupants in no time at all. However, when Mae tendered the balance and
asked Xyza for the Deed of Absolute Sale, Xyza suddenly had a change of heart, claiming that the
deal is disadvantageous to her as she has found out that the property can fetch P 3 million. Mae
seeks specific performance but Xyza contends that she has merely given Mae an option to buy
and nothing more and offers to return the option money which Mae refuses to accept.

a. Will Mae’s action for specific performance prosper? Explain (5pts)

b. May Xyza justify her refusal to proceed with the sale by the fact that the deal was financially
disadvantageous to her? Explain (5pts)

3. Davao Agro-Industrial Coconut Cooperative, Inc., a family corporation owned by the heirs of
deceased spouses Aya and Raymond, purchased the land in question for P10,000 from Percy as
evidenced by a deed executed by Percy. Some 20 years later, the seller’s heirs (Percy’s children
Gil and Globel) intruded into the land and harvested the coconuts found therein. They denied
knowledge of the same and alleged that the land claimed was different from that owned and
held by Davao Agro-Industrial.

The description of the land sold is 2,000 sqm with the words MORE or LESS after the figure, but
what was occupied by Davao Agro-Industrial was more than that. And that when the land was
surveyed, it turned out that its actual area is 6, 870 sqm. The land sold by Percy was one of lump
sum.

a. Did the contract of sale involve the 6,870 sqm or just the 2000 sqm? Explain (5pts)

b. Can the contract of sale be rescinded? Can the price be increased? Explain (5pts)

4. Jane owns a house and lot which was leased to Liezel. Liezel was given the right of first refusal.
When Jane decided to sell the house and lot to Liezel in the amount of P 5 million; Liezel rejected
said purchase price but rather offered to buy the house and lot for P 4.5 million. Jane later on
sold the house and lot to Judy for P 5 million. Can Liezel compel Jane to cancel the sale with Judy
and sell the house to her? Explain (10pts)

5. Jed gave Rey Mar an option to purchase his apartment for P3 million. Rey Mar offered to buy
it at P2.5 miliion but such counter-offer was not accepted by Jad. Jad sold his apartment to Dennis
for P3 million. Can Rey Mar compel Jad to cancel the sale to Dennis and execute a Deed of Sale
in his favor? (10pts)
6. Jo Anne, who is an engineer, offered her services to manufacture and install a conveyor system
which, according to her, would increase production and efficiency of the business of Norliza.
Norliza expressed her conformity to the offer made in writing by putting her signature therein.
She caused to be added to this offer a note which reads. “ All specifications shall be in strict
accordance with the approved plan made part of this agreement.” A few days later, Jo Anne made
the demand for the payment of P30,000, which was readily delivered by Norliza in the form of a
check. Deducting this payment, there is a balance of P20,000 to be paid by Norliza upon the
completion of the installation.

The work was completed in August 2010. Trial runs were made in the presence of Norliza and Jo
Anne. As a result of the trial runs, it was discovered that the conveyor system did not function to
the defendant’s satisfaction. The defects had not been remedied so that they came to the parting
of the ways. When Jo Anne billed Norliza for the balance of the contract price, Norliza refused to
pay for the reason that the conveyor system installed did not serve the purpose for which the
same was manufactured and installed. Was there delivery of the conveyors by Jo Anne? Explain.
(10pts)

7. Spouses Andrey and Nana were registered owners of a residential land in Bukidnon. They
decided to donate the eastern half of the property to Sasha (sister of Nana), who was about to
get married. The OCT was delivered to Sasaha. Spouses Andrey and Nana signed a Deed of
Absolute Sale prepared by Sasha transferring the ownership of the entire property in favor of
Sasha. In the same deed, Sasha accepted such transfer of ownership in her name. the document
stated that Spouses Andrey and Nana stated a consideration of P50,000, although they did not
actually receive anything of value for such exchange.

Sasha immediately built a fence of permanent structure covering the entire parcel of land. Sasha
registered the Deed of Absolute Sale in her favor and obtained in her name a TCT over the entire
parcel of land. Was there a valid contract entered into between the Spouses and Sasha? Explain.
(10pts)

MULTIPLE CHOICE

12. Seller may exercise his special right to resell the goods, except
a. if the goods are perishable
b. if such right was stipulated by the parties in case buyer defaults in payment
c. if no notice was sent by seller to buyer to exercise such right
d. if the buyer is in default for unreasonable time

13. With regard to defects on animals, which of the following is applicable?

a. Even in the case of professional inspection but hidden defect is of such nature that
expert knowledge is not sufficient to discover it, defect shall be considered as redhibitory.
b. There is a warranty against hidden defects with regard to sale of animals at fair or public
action.
c. Sale of animals with contagious disease is voidable
d. Prescription of action is within 30 days from date of delivery to buyer

14. Conventional redemption is presumed to be an equitable mortgage under the following

circumstances, except
a. Where the price of sale with right to repurchase is unusually inadequate
b. When the vendor remains in possession as lessee or otherwise
c. When the vendee binds himself to pay the real estate property taxes on the thing sold
d. When there is a doubt as to whether the contract is a contract of sale with right of
repurchase or an equitable mortgage

15. Which of the following is not an instance of legal redemption:

a. Where a credit or other incorporeal right in litigation is sold
b. Sale of adjacent urban not exceeding one hectare
c. Sale of an heir of his hereditary rights to a stranger
d. Sale of a co-owner o his share to a stranger

16. Under a lease of Honda Jazz Car, with option to buy, Teen and Bhing agreed that failure
of Bhing, the lessee, to pay for three mos rent would entitle Teen to take back the car and the
option to buy would be loast. Bhing failed to pay for the last three months of the lease. Teen took
back the property and instituted an action to recover the rents corresponding to the three
months. Which of the following statements is correct?
 a. Teen can validly take back the property and recover the rents covering the three
months in which Bhing failed to pay, since such arrangement was previously agreed to by the
parties
b. Teen can validly take back the property and recover the rents covering the three
months in which Bhing faile to pay, even if both parties did not have previously agreed to such
agreement
c. Teen can validly take back the property but she does not have right to recover the rent
for the three months in which Bhing failed to pay
d. Teen cannot validly take back the property and she cannot also recover the rent for the
three months in which Bhing failed to pay

17. Dana sold to Mitos a house and lot for P2.5 million payable 1 month after the execution
of the Deed of Absolute Sale. It was expressly stipulated in the Deed of Absolute Sale that the
sale would ipso facto be of no effect upon the failure of Mitos to pay as agreed. Mitos failed to
pay on maturity and Danna sued to declare the contract without force and effect. If Mitos
tendered payment before the action was filed by Danna, but subsequent to the stipulated date
of payment, which of the following statements is not applicable?
a. The action of Danna will prosper because both parties have expressly agreed that the
contract will be automatically rescinded in case there is failure to pay the price.
b. The action of Danna will prosper, even without the express agreement that the contract
will be automatically rescinded in case there is failure to pay the price, because Mitos is still
entitled to a grace period of 30 days as provided for by law.
c. The action of Danna will not prosper, even with the express agreement that the contract
will be automatically rescinded in case there is failure to pay the price, because Danna should
have made a demand, either through a judicial or notarial act.
d. The action of Dana will not prosper because the express agreement that the contract will
be automatically rescinded in case there is failure to pay the price is contrary to law.

18. On, October 1, 2007, Karla sold to Sahara a real estate property worth P 2 million. They
agreed on the same date that the amount due shall be paid by Sahara in 10 equal annual
installments to be paid beginning on the date the contract of sale was perfected. On 2009, Sahara
was not able to make any payment. Which of the following is not applicable under the said
circumstances?
a. Sahara can pay the balance without interest within the grace period of 1 month
b. Sahara can pay the balance without interest within the grace period of 2 months
c. If Sahara does not pay, the contract of sale is considered cancelled, and Karla gets to keep
the P200,000
d. If Sahara does not pay, the contract of sale is considered cancelled, in which such
cancellation shall take effect 30 days from notice and upon payment of P 200,000

19. Hanniyah, Noche and Vanessa are co-owners of an urban land, having inherited the same
form their wealthy uncle. Jocely owns the adjoining land. Vanessa donated her portion to Aisa
and Noche sold his portion to Tippi. Which of the following statements is applicable under this
scenario?
 a. Hanniyah has a right to redeem the portion of Vanessa, which Vanessa donated to Aisa
b. Jocelyn has a right to redeem the portion of Vanessa, which Vanessa donated to Aisa
c. Hanniyah has a preferred right over Jocelyn to redeem the portion of Vanessa, which
Vanessa donated to Aisa.
d. Both Hanniyah and Jocelyn have no right to redeem the portion of Vanessa, which Vanessa
donated to Aisa.

20. Article 1592 of the New Civil Code provides for a remedy available to the seller in case
there is failure to pay the purchase price. However Article 1592 does not apply to the following,
except:
a. cases covered by RA 6552
b. conditional sale
c. contract to sell
d. contract of sale of a commercial building

PART II. ESSAY

1. Distinguish a contract of sale from a contract to sell (5pts)

2. Anthony sold his parcel of land at Lanang, Davao City to Lyndon on September 15, 2009. But
the Deed of Sale covering the said transaction was not registered with the Registry of Deeds. On
December 8, 2009, Anthony sold the same parcel of land to Allan, who thereafter immediately
succeeded to register the Deed of Sale with the Registry of Deeds. Allan thereafter obtained a
Transfer Certificate of Title oer the property in his own name.
a. What are the requisites for the rule on Double Sale, as provided in Article 1544 of the New
Civil Code, to apply? (5pts)
b. Who has a better right over the parcel of land? Explain. (10pts)

3. Julius purchased from Michael Company a truck, worth P500,000, payable in 10 monthly
installments. Julius constituted a Chattel Mortgage on the truck in favor of Michael Company as
security for the payment of the balance of the purchase price. Julius failed to pay 3 monthly
installments. Thus, the company filed a complaint against Julius to recover the unpaid balance. A
writ of attachment was subsequently issued against the properties to Julius. Thereafter, the same
truck was sold at a public auction in which the company was the only bidder for P50,000. Since
there was still a deficiency of more than P50,000, the court in violation of Article 1484 of the New
Civil Code? Explain. (10pts)

4. Blithe and Felai entered in to a contract of sale of a condominium unit for a total price of P 4
million, 25% thereof will be paid upon execution of the deed on October 20, 2009. The remaining
75 % balance of the purchase price will be paid 3 equal annual installments, to begin one year
after the execution of the deed. On 2010, Felai failed to pay the installment on due date.
a. Can Felai still tender payment despite the lapse of the due date? Explain. (5pts)
b. When can Blithe cancel the contract of sale? (5pts)
2. Dianne, a resident of Cebu City, bought computer merchandise from Christ and requested
Christ to ship the goods from Davao City to Cebu City. Christ immediately shipped the
merchandise but before the goods reached Cebu City, Christ found out that Dianne was
insolvent. Christ goes to you and asks for possible courses of action to take against Dianne.
What is/are the remedy/ies available to Christ, if any? Explain each remedy briefly. (10pts)

NOTEBOOKS

II. ESSAY – FIRST EXAM

1. The following are the distinctions of a contract of sale from dacion en pago:
a. in contact of sale, the payment of the purchase price will give rise to a an obligation to
transfer ownership and delivery of possession, while in dacion en pago will extinguish the
obligation;
b. Sale is perfected by mere consent, while in dacion en pago, there must be delivery of the
object since it is a real contract;
c. In sale, there is no pre-existing obligation, however, in dacion en pago there is a pre-existing
obligation;
d. In sale, the consideration is the price certain or equivalent but in dacion en pago, the
consideration as to the debtor is to extinguish the obligation and as to the auditor is the property
or the object which is the substitute.

2. Yes, the action of Ron will prosper. As provided in the New Civil Code especially after the
effectivity of the Family Code, any of the spouses is prohibited from alienating or disposing a
property which belongs to the conjugal partnership without the consent of the other spouse.
Such sale would be void but it will be a continuing offer as to the consenting spouse and the third
person and shall be binding if the other spouse will consent or the authority of the court is given.

In the case at bar, Hermione cannot alienate the said property to Luna without the consent
of Ron because it is a conjugal property. The forged signature of Ron in the SPA voids the contract
between Luna and Hermione since written consent of Ron was not given. It is proper for Ron to
ask the court to deliver the Deed of Absolute Sale void. Thus, Hermione is prohibited from
alienating their conjugal property without the consent of Ron.

3. No. Luna’s action will not prosper. Under Article 1490 of the New Civil Code, the sale between
spouses is prohibited and is void except only when they agreed to have a separate or complete
separation of property in their marriage settlements or they have obtained a judicial separation
of property. The prohibition also extends to common-law spouses for if it is otherwise, they
would be put in a better position than those legally married.

In the case at bar, Luna is married to Meville so the prohibition under Article 1490 applies to
them. Even if it was found out that their marriage is null and void since they can still be considered
a common law spouse at least in this case. The fact that they were not living together as husband
and wife at the time Luna acquired it, it would not take them away from the prohibition.
 Furthermore, both Luna and Meville are in pari-delicto since both of them are equally guilty
in the selling and buying of the property. The court will leave them as they were. Luna is not the
correct party to annul the sale since the law provides that only the prejudicial heirs, prior
creditors and the state can question the contract.

In sum, the action of Luna will not prosper.

4. The contention of Nick is not correct. As provided by the New Civil Code, sale being a
consensual contract is perfected by mere consent. It is a perfected sale if there has been a
meeting of the minds as to the object which is determinate and the consideration of the price.

In the present case, Hagrid orally offered the land covered by TCT No. 407123 for P3,000,000
to Albus which Albus has accepted. Therefore, sale is already perfected on March 15, 201 since
all the essential elements of the contract which are consent, object and consideration are
present.

Nick is not correct in saying that there was no valid contract of sale entered or executed by
Hagrid and Albus, since sale is consensual and is valid in whatever forms they are entered into.
There is also no need to pay a portion of consideration since this not an option contract but a
perfected contract of sale. Nick in this case cannot anymore purchase the land from Hagrid since
the sale of Hagrid and Albus is valid or perfected. So Nick’s contention is not correct.
5.Harry and Ginny entered into a barter. The New Civil Code provides that when the
consideration is partly in money and partly an object, the intention of the party must be looked
at or ascertain. However, when the intention of the parties cannot be ascertained, then it shall
be considered as sale if the value of the object is equal or lesser than the amount of money given.
When the value of the object is greater than the amount in money, it shall be considered as
barter.

In this case, Ginny is a buyer and she offered her watch worth P12,000 and cash of P8,000 in
exchange of Harry’s cellphone worth P20,000. Since Ginny’s offer consist in money and in object
it shall ascertain their intention. But no intention is indicated or expressed so since the law
provides that if the value of the object as in this case is P12,000 and is higher that the money
given, it is a barter.

3. No. Potter Research Institute is neither liable for income tax and contractor’s tax. As held by
the Supreme Court in the case of CIR vs CA and Ateneo de Manila, Potter Research Institute has
not entered into a contract of sale or a contract for a piece of work so it cannot be liable for any
income tax and contractor’s tax. According to the Supreme Court, in both sale and contract for
piece of work, it necessarily includes a transfer of ownership which is not present in this case.

Potter Research Institute like Ateneo de Manila Research Institute, does not sell the copies
of their researches and even though they accept sponsorships, they only conduct researches for
the benefit of their entities. The copies of their researches do not transfer of are not transferred
to any interested agencies thus ownership is retained by the Potter Research Institute. It cannot
be held liable for income tax or contractor’s tax because Potter Research Institute is not engage
in selling their research. It is neither a contractor or a manufacturer in this case.

4. According to Article 1458, a contract of sale is where one party, the seller, obligates himself
to transfer ownership and deliver possession of a determinate thing, and the other party, the
buyer, obligates himself to pay the price certain in money or its equivalent.

ESSAY – 2ND EXAM

1. The following are the distinctions of option money from earnest money:

2. No, there was no perfected contract of sale. The New Civil Code provides that for a sale to be
valid, the 3 essential requites must concur namely consent, object, and consideration.

In the case at bar, object and consideration are present but consent coming from the buyer
is lackin. The term “noted” does not signify the consent of the buyer or an absolute acceptance
to the offer.

In one of its decided case, the Supreme Court held that the word “Noted” is not an express
and absolute acceptance by the offeree. It could have been different if what was stated was
“approved.” No perfected contract of sale.

3. No, the contention of Draco is not correct. A valid subject matter must be a possible thing, licit
and determinate or at least determinable. A determinate subject matter is physically segrated or
particularly designated. However a determinable subject matter is valid if it is capable of being
made determinate and no further agreement is needed by the parties.
The subject matter in this case is determinable. Marcissa sold to Lucius 3 hectares of land
which is part of the 7.5 hectare parcel of land covered by TCT No. T-10,185. It may bot be
determinate but it is determinable because the subject matter which is the 3 hectares has the
capacity to be made determinate and there is no need for a new or further agreements by the
parties even if no exact location.
Draco is not correct in saying that there was no valid subject so the sale is void.

4. There was no perfected contract of sale. As provided by law, there is a perfected contract of
sale when there is a c concurrence of the 3 essential elements which are consent, subject matter
and price or consideration. The price must be or maybe in money or its equivalent and also it
must be certain or ascertainable. The price must also include the manner of payment for it to be
valid.
In this case, Albus and Hagrid had not agreed as to the manner of payment of th eP1,000,000.
Therefore, since it is essential part of price, there was no perfected contract of sale.
5. a.) Simulation of contract is different from gross inadequacy of price. A simulation of contract
happens when the parties have no intention to be bound by such contract as to the price. The
buyer has no intention to pay the price and the seller has no intention to receive the same. A
simulated contract make it appear that a certain price has been paid when in reality it was not.
Gross inadequacy of price happens when the price paid is inadequately low than the value of the
thing sold as to be shocking to the moral conscience.

In simulation of contract, price is not real or lacking, while in gross inadequacy of price, there
is a price given but grossly inadequate compared to the value of the thing sold.

b.) Yes. There was a valid contract of sale between Harry and Ronald. As provided by the New
Civil Code, the price or consideration must be in money or its equivalent, it must be real and it
must also certain or ascertainable.
In the present case, all essential elements are present. As to the price, Harry sold the
mortgaged property to Ron for P1,000 and the assumption o f mortgage in Hogmead. Here, the
price or consideration is not just the P1,000 but also for Ron to assume the mortgage of the said
property. It was partly in money and partly the assumption of mortgage and this is allowed by
law since the price can be in money or its equivalent.

6. the contract involves an option contract. An option contract is a privilege given by the offerror
to the offeree the right to buy a certain property in a fixed price at a certain period. Generally,
there must be a consideration given separate from the purchase price. However, if it is accepted
prior to its withdrawal it becomes no consideration.
In the case at bar, Hermione offered to sell her parcel of land to Flew for P37 million within 2
years from January 2, 1995. All the elements of an option contract is present in this case. In an
option contract, the offeree shall not offer the property to others until the lapse of the given
period or is not exercised by the offeree.

ESSAY - FINAL EXAM

1. a. The following are the distinctions between a contract of sale from contract to sell:
1.) In contract of sale, delivery of the object transfers ownership to the buyer, however in
a contract to sell, the seller reserves ownership until the full payment of the purchase price.

2.) in contract of sale, it is perfected upon concurrence of cause, object, and

consideration. Consent is an essential element. However, in contract to sell, consent is not yet
present because seller withholds consent not until the receipt of purchase price in whole.

3.) in contract of sale, payment of the full purchase price is not an essential element that
will perfect the sale, but in a contract to sell, the payment of the full purchase price is a suspensive
condition.
b. the ownership of the subject house and lot should be transferred to spouses Geller. In case of
double sale an immovable property, the New Civil Code provies that preference shall be given to
the buyer who first register the same in good faith, or to the buyer who first possess or have
possession on the said property or the one who presents the oldest title. The preference is on
the said order. Double sale also requires that there are two buyers of the same property which
is sold by the same seller and that it is only applicable to contract of sale.
In the case at bar, based on the preference listed in case of double sale, spouses Tribbiani
would seem to be the preferred buyer because she took actual possession first but the rule on
double sale will not apply to this case because spouses Tribbiani entered a contract to buy and
sell to spouses Bing. Therefore, law on double sale is not applicable.
Spouses Geller is the real owner because when Spouses Bing executed a Deed of Sale, it
was a constructive delivery which according to law on sales, is a valid transfer of ownership.
Spouses Geller is the owner of the subject property because ownership is transferred upon
delivery.

2. a. Yes, there was a delivery of the conveyors by Ross to Rachel. As provided in the New Civil
Code, there is delivery of possession is transferred to the vendee either actual or constructive.
Intention to transfer possession is also important in delivery.

In the case at bar, the very fact that there was a trial run of the conveyors made in the
presence that there was delivery. Conveyors are now transferred or is in the possession of Rachel.

b. The case for breach of warranty against hidden defects filed against Ross will not prosper. The
law provides that hidden defects in case of warranty against hidden defects shall be present at
the time of delivery and that the buyer shall immediately inform the seller of such hidden defects.
The prescription or prescriptive period to file such breach of warranty against hidden defect shall
be within 6 months after the delivery.
In the case at bar, delivery was made on July 31, 2009 while Rachel only set up the case
for breach of warranty against hidden defects on March 31, 2010. The period to bring the action
has already prescribed.

3. Monica has two options available: First, she can still pay the installment for year 2010 with 2
month grace period. Second, if she failed to pay within the grace period, the sale will be cancelled
and 50% of her total payment shall be given back to her.

The Maceda Law provides that in case of sale on installment of a real property, if the
vendee have paid at least 2 years of the installment, the vendee shall be given 1 month grace
period for every year of installment if she has failed to pay the remaining installment. Provided,
she exercised this option only once in every 5 year in the said installment period. So in the first
option, Monica has 2 months grace period to pay the unpaid installment since she already
completed paying the 2 year installment.

As to the second option, the Maceda Law also provides, that if vendee fails to pay in the
given grace period, the said sale shall be rescinded after 30 days of notarial notice of rescission.
The vendee shall receive back the 50% of total payment with 5% interest of every year provided
she completed paying the 5 years installment. Since Monica did not reach 5 years of installment,
she will just get the 50% of the total payment.

4. No. the court cannot order Chandler to pay Joey’s Garage the deficiency of P30,000 plus
interest. Based on Artilce 1484 of the New Civil code or known as the Recto Law, in case of a
movable property sold in installments, the seller has 3 options or remedies if buyer failed to pay
installment at least twice. First, to exact fulfillment if vendee failed to pay. Second, rescind the
contract if vendee failed to pay installment. Third, foreclose the property if there is a mortgage
to secure the payment of the property. In case of foreclosure, the seller cannot demand for the
deficiency to the vendee.
In the case at bar, Joey’s Garage opted to choose the third option which is foreclosure.
The law is also clear that the options available are alternative and not cumulative. Since,
foreclosure was the option by Joey’s Garage, the can be foreclosed and sold at public auction but
Joey’s Garage cannot claim for the deficiency because the law attaches bar to the said option.
The law does not allow Joey’s Garage to claim for deficiency as well as interest.

True or False
1. If not all elements are present for Article 1544 of the New Civil Code to apply, the
principle of “prior tempore, potior jure” should apply.
2. If the first sale occurred when land is not yet registered and the second sale is done
when land is already registered, “appy first in time, priority in right.”
3. If sale is made by a non-owner, action to annul is proper.
4. If sale is made by a non-owner, 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.
5. Stoppage in transit can be exercised by giving notice of claim to carrier/bailee in
possession of the goods.
6. Stoppage in transit can be exercised by giving notice to buyer.
7. In applying Article 1484 of the New Civil Code, if the seller chooses foreclosure, no
further action against buyer to recover any unpaid balance of the price.
8. In applying Article 1484 of the New Civil Code, if seller chooses specific performance,
seller is forever precluded from pursuing the other two remedies.
9. If an immovable is sold by installment and buyer paid less than 2 years installment, the
first grace period is 60 days from date installment became due.
10. If an immovable is sold by installment and buyer paid less than 2 years installment,
the second grace period is 30 days from notice of cancellation/demand for rescission.
11. The implied warranty that seller has a right to sell refers to the perfection stage of the
contract of sale.
12. The implied warranty that seller has a right to sell is applicable to sheriff, auctioneer,
mortgagee and pledge.
13. Warranty against eviction is applicable even if the buyer is evicted in part from the
subject matter of sale.
14. There is no breach of warranty against eviction if there is yet no final judgment which
requires the buyer to be evicted from the subject matter of sale.
 15. Legal redemption may be exercised if any of the co-heirs sell his hereditary rights to a
stranger before partition.
16. legal redemption may be exercised if any of the co-owners sell his share to a third
person
17. In the absence of any agreement, the period of redemption shall be 4 years from the
date of the contract.
18. If there is any agreement between the parties that the period of redemption shall be
12 years, such agreement is void.