LAW 2

SALES, AGENCY AND BAILMENTS

PRELIMINARY EXAMINATION
FEBRUARY 28, 2020

INSTRUCTIONS

This examination consists of TWENTY NUMBERS (XX) in SIX (6) PAGES.

Read each question very carefully before answering. Answer
SEQUENTIALLY, clearly and concisely starting each number on a separate
page. Your answer to a sub-question under the same number may,
however, be written continuously in the same page up to the following
page. Do not repeat the question. State the legal bases of your answers.
You will be given credit for your knowledge of legal doctrine and for the
quality of your legal reasoning. A mere “Yes” or “No” answer without any
corresponding discussion will not be given any credit.

I.

A agreed to sell to B a parcel of land for P5,000.00. B was given up to May

6, 2019 within which to raise the necessary funds. It was further agreed
that if B could not produce the money on or before said date, no liability
would attach to him. Before May 6, 2019, A backed out of the agreement.
Is A obliged to sell the property to B? Explain.

II.

X was the owner of an unregistered parcel of land in Cabanatuan City. As

she was abroad, she advised her sister Y via overseas call to sell the land
and sign a contract of sale on her behalf. Y thus sold the land to B1 on
March 31, 2019 and executed a deed of absolute sale on behalf of X. B1
fully paid the purchase price. B2, unaware of the sale of the land to B1,
signified to Y his interest to buy it but asked Y for her authority from X.
Without informing X that she had sold the land to B1, Y sought X for a
written authority to sell.
X e-mailed Y an authority to sell the land. Y thereafter sold the land on May
1, 2001 to B2 on monthly installment basis for two years, the first
installment to be paid at the end of May 2019. Who between B1 and B2
has a better right over the land? Explain.
 III.

C, husband of D, sold paraphernal property in her name without her (D’s)

consent. Was such sale valid, void, voidable, rescissible or unenforceable?
Explain.

IV.

A bought on installment a residential subdivision lot, but after the 5th year,
was unable to make further payments. Can the developer cancel the sale
unilaterally, or must he go to court to obtain rescission? Is A entitled to any
refund?

V.
For only P100,000.00, V sold to C a house and lot valued at P200,000.00.
A month later, C stipulated in writing that V may repurchase in 2 years for
P120,000.00. After 4 years, C refused to reconvey and V sued for
reformation. What legal grounds should be sustained? How should C
resist the suit? Who should prevail and why?

VI.

When do conventional redemptions and legal redemptions take place?

VII.

When may a contract of sale of realty be presumed to be an equitable

mortgage? Cite five (5) instances.

VIII.

A and B sold to C an unregistered lot; the deed was not registered, but C
took possession. Later, D obtained a judgment against A and B and the lot
in C’s possession was levied upon and sold by the Sheriff to D. The
Sheriff’s sale was registered. All the parties acted in good faith. Who has
better rights to the land? Give reasons.
 IX.

In a document dated June 10, 2011 and expressly denominated “Deed of

Sale with Right to Repurchase”, AB sold his land to CD. Substantially, the
document provided among others: “I, AB, being in great need of money,
hereby sell my 10-hectare coconut land to CD for P2,000.00. It is agreed
that I have the right to repurchase this land in 10 years. If I fail to buy back
the property, I shall deliver possession thereof to CD.” Upon failure of AB
to repurchase the property, CD, in 2020, consolidated his title and files an
action to recover possession. AB files an answer offering to return the
P2,000.00 plus interest at the legal rate. Will the action of CD prosper?
Why?

X.

On June 13, 2017, A sold to B in a public instrument a parcel of land for

P50,000. Simultaneously, B granted A an option to buy the same property
for P60,000 within one year. On June 13, 2018, B allowed A an extension
of the option to buy for another year, this time at the price of P 70,000. All
the while, A has remained in possession of the land. In May 2019, A filed
an action for the reformation of the deed of sale into a real estate
mortgage, alleging that the land covered thereby was given only as a
security for the repayment of a loan. Under the circumstances, will the
action prevail? Why?

XI.

A bought a truck from B payable in installment secured by a chattel

mortgage executed by A on the truck. As additional security, A’s brother,
C, executed a real estate mortgage in favor of B. A defaulted in the
payment of several installments. Consequently, B filed an action for
replevin, repossessed the truck, and foreclosed the chattel mortgage. Can
B proceed against the other properties of A and the real estate mortgage
executed by C to recover the deficiency, if any, after the chattel mortgage
foreclosure sale? Explain.

XII.

On September 1, 2019, A sold to B 50 heads of cattle for P150, 000.00 and

60 heads of carabao for the same price, the cattle to loaded in Davao City
on December 1, 2019. On the SS “Argus” and delivered upon her arrival in
Manila 5 days later while the carabao were loaded in the same city and
shipped on December 15 and delivered likewise to B upon her arrival in
Manila 5 days later. Because of the breakdown of his cargo truck, A was
able to ship the cattle and the carabaos only on December 15. On her way
to Manila, the SS “Argus” ran into sea to prevent her from sinking. B, who
paid one half of the price upon the execution of the contract, demanded its
turn while A sought from B the fully payment of the price. Decide the
controversy, giving the reasons for your decision.

XIII.

By means of a public instrument, Mr. Nagbibili sold his mango plantation to

Abenturero effective immediately. The document stipulated, however, that
delivery would be effected six months from the execution of the deed of
sale. When the said period arrived, Abenturero demanded delivery in
writing but Nagbibili dilly-dallied. It was not until a month afterwards that
Nagbibili finally gave the land to Abenturero. In the three weeks before
delivery, Nagbibili sold and delivered the entire produce of the mango
plantation to Mr. Commerciante for P200,000.00. Commerciante knew
nothing of the contract between Nagbibili and Abenturero. Abenturero now
seeks to recover from Commerciante either the full value of the mangoes or
a similar amount and quality of the mangoes sold. Does Abenturero have
this right against Commerciante? Explain.

XIV.

Fred sold to Juan a parcel of land, belonging to his minor son, Lino, then
under his guardianship, without judicial approval. After the sale, Juan
immediately took possession of the land, built a house and religiously paid
the taxes thereon. Nine years thereafter, Lino no longer minor, rented the
ground floor of the house built by Juan. Lino paid the rent for the first
month, then stopped paying. Two years hereafter, when passed for
payment of the accrued rent, Lino refused, claiming ownership over the
property, alleging that the sale of the property to Juan while he was a minor
without the approval of the guardianship court rendered the sale null and
void. Is the claim of Lino valid and meritorious? Explain.
 XV.

Miguel, Carlos and Lino are neighbors. Miguel owned a piece of registered
land which both Carlos and Lino wanted to buy. Miguel sold the land to
Carlos.The sale was not registered upon the request of Miguel. Later on,
the same property was sold by Miguel to Lino. Miguel told Carlos about the
second sale. Carlos immediately tried to see Lino to discuss the matter
and inform him of the previous sale to him (Carlos) of the same property
but Lino refused to see Carlos. Thereupon Carlos annotated in the registry
of property his adverse claim on the property. A week later, Lino registered
the sale on his favor and had a new transfer certificate of title issued in his
name. However, the adverse claim of Carlos was duly annotated in the
title. Notwithstanding, Lino took possession and built a small bungalow
thereon.
(a) Who is the rightful owner of the property? Explain.
(b) To whom would the bungalow built by Lino on the property
belong? Explain.

XVI.

Fred sold to Juan a parcel of land, belonging to his minor son, Lino, then
under his guardianship, without judicial approval. After the sale, Juan
immediately took possession of the land, built a house and religiously paid
the taxes thereon. Nine years thereafter, Lino no longer minor, rented the
ground floor of the house built by Juan. Lino paid the rent for the first
month, then stopped paying. Two years hereafter, when passed for
payment of the accrued rent, Lino refused, claiming ownership over the
property, alleging that the sale of the property to Juan while he was a minor
without the approval of the guardianship court rendered the sale null and
void. Is the claim of Lino valid and meritorious? Explain.

XVII.

Distinguish between a contract of sale and a contract to sell.

XVIII.

Dux leased his house to Iris for a period of 2 years, at the rate of
P25,000.00 monthly, payable annually in advance. The contract stipulated
that it may be renewed for another 2-year period upon mutual agreement of
the parties. The contract also granted Iris the right of first refusal to
purchase the property at any time during the lease, if Dux decides to sell
the property at the same price that the property is offered for sale to a third
party. Twenty-three months after execution of the lease contract, Dux sold
breach of her right of first refusal. Dux said there was no breach because
the property was sold to his mother who is not a third party. Iris filed an
action to rescind the sale and to compel Dux to sell the property to her at
the same price. Alternatively, she asked the court to extend the lease for
another 2 years on the same terms. Can Iris seek rescission of the sale of
the property to Dux's mother?

XIX.

Spouses Biong and Linda wanted to sell' their house. They found a
prospective buyer, Ray. Linda negotiated with Ray for the sale of the
property. They agreed on a fair price of P2 Million. Ray sent Linda .a letter
confirming his intention to buy the property. Later, another couple, Bernie
and Elena, offered a similar house at a lower price of Pl.5 Million. But Ray
insisted on buying the house of Biong and Linda for sentimental reason.
Ray prepared a deed of sale to be signed by the couple and a manager's
check for P2 Million. After receiving the P2 Million, Biong signed the deed
of sale. However, Linda was not able to sign it because she was abroad.
On her return, she refused to sign the document saying she changed her
mind. Linda filed suit for nullification of the deed of sale and for moral and
exemplary damages against Ray.
1. Will the suit prosper? Explain.
2. Does Ray have any cause of action against Biong and Linda?
Can he also recover damages from the spouses? Explain.

XX.

On July 14, 2004, Pedro executed in favor of Juan a Deed of Absolute Sale
over a parcel of land covered by TCT No. 6245. It appears in the Deed of
Sale that Pedro received from Juan P120,000.00 as purchase price.
However, Pedro retained the owner’s duplicate of said title. Thereafter,
Juan, as lessor, and Pedro, as lessee, executed a contract of lease over
the property for a period of one (1) year with a monthly rental of P1,000.00.
Pedro, as lessee, was also obligated to pay the realty taxes on the property
during the period of lease. Subsequently, Pedro filed a complaint against
Juan for the reformation of the Deed of Absolute Sale, alleging that the
transaction covered by the deed was an equitable mortgage. In his verified
answer to the complaint, Juan alleged that the property was sold to him
under the Deed of Absolute Sale, and interposed counterclaims to recover
possession of the property and to compel Pedro to turn over to him the
owner’s duplicate of title. Resolve the case with reasons.