Sales

[Definition – Rights & Obligations of the Vendor1]

[Follow the Outline]

Part ONE
Modified True or False. Consider the statement true only when it is absolutely true.
Explain ALL your answers.

1. The contract is one of barter if the value of the thing to be delivered by one
party exceeds the value of the thing to be delivered by the other party.
2. A sale of a right binds third persons if it is in a public instrument.
3. The option money may be considered as part of the price.
4. In a conditional sale, ownership passes to the buyer upon delivery.
5. An assignment of credit is a consensual contract.
6. There may be a contract of sale of goods, whose acquisition by the seller depends upon a
contingency which may or may not happen.
7. In order to transfer ownership, the vendor need not be the owner at the time of delivery.
8. When the sale is made through a public instrument, the execution thereof shall be equivalent to
the delivery of the thing which is the object of the contract.
9. The law of sales, whereby property is alienated to the creditor as an accepted mode of
extinguishment of an obligation, shall govern dation in payment.
10. A contract of sale is void when the object is neither particularly designated nor physical
segregated from all others of the same class.
11. When the sale is made through a public instrument, the execution thereof shall be equivalent to
the delivery of the thing which is the object of the contract.
12. The goods remain at the seller's risk until the ownership therein is transferred to the buyer.
13. Where goods are sold by a person who is not the owner thereof, and who does not sell them under
authority or with the consent of the owner, the buyer acquires no title to the goods.
14. Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to
the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose
of transmission to the buyer is deemed to be a delivery of the goods to the buyer.
15. If the same thing should have been sold to different vendees, the ownership shall be transferred to
the person who may have first taken possession thereof in good faith.

Part TWO
Multiple Choice. Choose the best answer.

1. When does the buyer of a thing has the right to the fruits of the thing bought?
a. From the time the fruits are delivered
b. From the time the obligation to deliver the thing bought arises.
c. From the time the sale is consummated.
d. From the time the thing bought is delivered
e. From the perfection of the contract.
2. If a movable property is sold to two persons, ownership shall belong to the person:
a. who paid in good faith the purchase price in full
b. who in good faith first recorded it in the Registry of Property
c. who presents the oldest title
d. who have first taken possession in good faith

3. It is a contract by virtue of the terms of which the parties thereto promise and obligate themselves
to enter into another contract at a future time, upon the happening of certain events, or the
fulfillment of certain conditions.
a. contract of adhesion c. contract of sale
b. contract of option d. auto-contract

4. In a contract of sale, a warranty against eviction is:

a. an essential element c. an accidental element
b. a natural element d. a formal requirement

5. This is a kind of symbolic delivery where the vendor remains in possession of the property sold,
by virtue of the lease agreement with the vendee.
a. tradition longa manu c. tradition constitutum possessorium
b. tradition brevi manu d. delivery to a common carrier

6. The delivery of movable property may be made by the mere consent or agreement of the
contracting parties, if the thing sold cannot be transferred to the possession of the vendee at
the time of the sale. This mode of delivery is known as:
a. actual delivery
b. traditio constitutum possessorium
c. traditio longa manu
d. tradition brevi manu
e. formal delivery

7. In this kind of sale, the ownership passes to the buyer on delivery, but he may revest the
ownership in the seller by returning or tendering the goods within the time fixed in the contract,
or, if no time has been fixed, within a reasonable time.
a. Conditional sale
b. Sale or return.
c. Sale on trial.
d. Contract to sell
e. Absolute sale

8. When a person who is not the owner of a thing sells or alienates and delivers it, and later the
seller or grantor acquires title thereto, such title passes by operation of law to the buyer or
grantee. This is:
a. Estoppel in pais.
b. Estoppel by deed
c. Estoppel by record.
 d. Equitable estoppel
e. None of the above

9. In this mode of delivery, the seller would remain in possession of the thing after the sale:
a. actual delivery
b. traditio constitutum possessorium
c. traditio longa manu
d. tradition brevi manu
e. formal delivery

10. Ownership passes upon delivery in :

a. Conditional sale
b. Sale on trial
c. Contract to sell
d. Absolute sale
e. None of the above

Part THREE
Give direct and concise but complete answers.
Cite authorities, if any.

1. Merle offered to sell her automobile to Violy for P60,000.00. After inspecting the automobile,
Violy offered to buy it for P50,000.00. This offer was accepted by Merle. The next day, Merle
offered to deliver the automobile, but Violy being short of funds, secured postponement of the
delivery, promising to pay the price “upon arrival of the steamer, Helena”. The steamer however
never arrived because it was wrecked by a typhoon and sank somewhere off the Coast of Samar.

1. Is there a perfected contract in this case? Why?

2. Is the promise to pay made by Violy conditional or with a term? Why?
3. Can Merle compel Violy to pay the purchase price and to accept the automobile? Why?

2. Mr. and Mrs. X migrated to the US with all their children. As they had no intention of coming
back, they offered their house and lot for sale to their neighbors, Mr. and Mrs. A (the buyers) who
agreed to buy the property for ₱8 Million. Because Mr. and Mrs. A needed to obtain a loan from a
bank first, and since the sellers were in a hurry to migrate, the latter told the buyers that they
could already occupy the house, renovate it as it was already in a state of disrepair, and pay only
when their loan is approved and released. While waiting for the loan approval, the buyers spent
₱1 Million in repairing the house. A month later, a person carrying an authenticated special
power of attorney from the sellers demanding that the buyers either immediately pay for the
property in full now or vacate it and pay damages for having made improvements on the property
without a sale having been perfected.
 a.) What are the buyers’ options or legal rights with respect to the expenses they incurred in
improving the property under the circumstances? (3%)

b.) Can the buyers be made to immediately vacate on the ground that the sale was not perfected?
Explain briefly. (3%)

3. State the basic difference (only in their legal effects) –

(a) Between a contract to sell, on the one hand, and a contract of sale, on the other;
(b) Between a conditional sale, on the one hand, and an absolute sale, on the other hand.

4. Arthur gave Richard a receipt which states:

“Receipt

Received from Richard as down payment

for my 1995 Toyota Corolla with
plate no. XYZ-123……………………… P50,000.00.
Balance payable: 12/30/01……… P50,000.00

September 15, 2001

(Sgd.) Arturo”

Does this receipt evidence a contract to sell? Why?

5. Nante, a registered owner of a parcel of land in Quezon City, sold the property to Monica under a
deed of sale which reads as follows:

“That for and in consideration of the sum of P500,000.00, value

to be paid and delivered to me, and receipt of which shall be
acknowledged by me to the full satisfaction of Monica, referred to as
Vendee, I hereby sell, transfer, cede, convey, and assign, as by these
presents, I do have sold, transferred, ceded, conveyed and assigned a
parcel of land covered by TCT No. 2468 in favor of the Vendee.”

After delivery of the initial payment of P100,000.00, Monica immediately took possession of the
property. Five (5) months after, Monica failed to pay the remaining balance of the purchase price.
Nante filed an action for the recovery of possession of the property. Nante alleged that the
agreement was one to sell, which was not consummated as the full contract price was not paid. Is
the contention of Nante tenable? Why?

6. A granted B the exclusive right to sell his brand of Maong pants in Isabela, the price for his
merchandise payable 60 days from delivery, and promising B a commission of 20% on all sales.
After the delivery of the merchandise to B but before he could sell any of them, B’s store in
 Isabela was completely burned without his fault, together with all of A’s pants. Must B pay A for
his lost pants? Why?

7. In 1972, Luciano de la Cruz sold to Chua Chung Chun, a Chinese citizen, a parcel of land in
Binondo. Chua died in 1990, leaving behind his wife and three children, one of whom, Julian, is a
naturalized Filipino citizen. Six years after Chua’s death, the heirs executed an extrajudicial
settlement of estate, and the parcel of land was allocated to Julian. In 2007, Luciano filed suit to
recover the land he sold to Chua, alleging that the sale was void because it contravened the
Constitution which prohibits the sale of private lands to aliens. Julian moved to dismiss the suit
on grounds of pari delicto, laches and acquisitive prescription. Decide the case with reasons.

8. Rica petitioned for the annulment of her ten-year old marriage to Richard. Richard hired Atty.
Cruz to represent him in the proceedings. In payment for Atty. Cruz's acceptance and legal fees,
Richard conveyed to Atty. Cruz a parcel of land in Taguig that he recently purchased with his
lotto winnings. The transfer documents were duly signed and Atty. Cruz immediately took
possession by fencing off the property's entire perimeter.

Desperately needing money to pay for his mounting legal fees and his other needs and despite the
transfer to Atty. Cruz, Richard offered the same parcel of land for sale to the spouses Garcia.
After inspection of the land, the spouses considered it a good investment and purchased it from
Richard. Immediately after the sale, the spouses Garcia commenced the construction of a three-
story building over the land, but they were prevented from doing this by Atty. Cruz who claimed
he has a better right in light of the prior conveyance in his favor.

Is Atty. Cruz’s claim correct?

9. “X” came across an advertisement in the “Manila Daily Bulletin” about the rush sale of three
slightly used TOYOTA cars, Model 1989 for only P200.000 each. Finding the price to be very
cheap and in order to be sure that he gets one unit ahead of the others, “X” immediately phoned
the advertises “Y” and place an order for one car. “Y” accepted the order and promised to deliver
the order unit on July 15, 1989. On the said date, however, “Y” did not deliver the unit. “X”
brings an action to compel “Y” to deliver the unit. Will such action prosper? Give your reasons.

10. May a person sell something that does not belong to him? Explain.

11. Rod, the owner of an FX taxi, found in his vehicle an envelope containing TCT No. 65432 over a
lot registered in Cesar’s name. Posing as Cesar, Rod forged Cesar’s signature on a Deed of Sale
in Rod’s favor. Rod registered the said document with the Register of Deeds, and obtained a new
title in his name. After a year, he sold the lot to Don, a buyer in good faith and for value, who
also registered lot in his name.

a. Did Rod acquire title to the land? Explain.

b. Discuss the rights of Don, if any, over the property.
12. Donna pledged a set of diamond ring and earrings to Jane for ₱200,000.00. She was made
to sign an agreement that if she cannot pay her debt within six months, Jane could
immediately appropriate the jewelry for herself. After six months, Donna failed to pay.
Jane then displayed the earrings and ring set in her jewelry shop located in a mall. A
buyer, Juana, bought the jewelry set for ₱300,000.00.

b.) Can Donna redeem the jewelry set form Juana by paying the amount she owed Jane to
Juana? Explain with legal basis.

13. Mahinhin lost her diamond ring when the bus she was riding on was held up by a band of
brigands who divested the passengers of all their money and valuables. The ring found its way to
the Pasanglaan pawnshop, where one of the robbers had pawned it. The pawnshop, in due time,
foreclosed the pledge and sold the ring at public auction to Mayaman, the highest bidder.

Three years after the loss, Mahinhin was able to trace the ring to Mayaman and demanded that the
latter give the ring back to her. Mayaman refused, saying that he had acquired the ring in good
faith.

Who was the better right to the ring? Explain.

14. D sold a second-hand car to E for P150,000.00. The agreement between D and E was that half of
the purchase price, or P75,000.00, shall be paid upon delivery of the car to E and the balance of
P75,000.00 shall be paid in five equal monthly installments of P15,000.00 each. The car was
delivered to E, and E paid the amount of P75,000.00 to D. Less than one month thereafter, the car
was stolen from E’s garage with no fault on E’s part and was never recovered. Is E legally
bound to pay the said unpaid balance of P75,000.00? Explain your answer.

15. If the same thing should have been sold to different vendees, to whom shall the ownership be
transferred?

16. JV, owner of a parcel of land, sold it to PP. But the deed of sale was not registered. One year
later, JV sold the parcel again to RR, who succeeded to register the deed and to obtain a transfer
certificate of title over the property in his own name.

Who has better right over the parcel of land, RR or PP? Why? Explain the legal basis for your
answer?

17. Knowing that the car had a hidden crack in the engine, X sold it to Y without informing
the latter about it. In any event, the deed of sale expressly stipulated that X was not liable
for hidden defects. Does Y have the right to demand from X a reimbursement of what he
spent to repair the engine plus damages?