sale exam questions

7/30/2019 Sale Exam Questions

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TRUE 1. Price must be certain or ascertainable at the time of the perfection of thecontract of sale

FALSE 2. If the third person designated to fix the price is prevented fromfixing the price by the fault of one of the parties, any of the parties may seekredress before the courts.

False 3. In an auction sale, sale is perfected by the fall of the hammer.

True 4. Sales of separate lots by auction are separate contracts of sale.

True 5. If the acceptance is made before withdrawal, it constitutes a bindingcontract of sale although the option is given without consideration.

True 6. If the promise is supported by a consideration distinct and separate fromthe price, its acceptance will give rise to a perfected contract.

False 7. Sale of real property or an interest therein must be in writing in order togive rise to a perfected contract of sale.

False 8. Sale of personal property, wherein the price is more than P500, must be inwriting to be enforceable.

True 9. Where the price is so low as to be shocking to the moral conscience, judicial sale of personal property will be set aside.

True 10. Where the low price indicates a vice of consent, sale may beannulled or the contract is presumed to be an equitable mortgage.

False 11. Inadequacy of the price in a voluntary contract of sale affectsthe validity of the sale.

True 12. The validity of the sale is not necessarily affected where the lawgives to the owner the right to redeem, upon the theory that the lesserthe price, the easier it is for the owner to effect redemption.

True 13. If the term is CIF, it signifies that the price fixed covers not onlythe cost of the goods, but the expense of the freight and insurance to bepaid by the seller.

False 14. If the term of delivery is FOB shipping point, seller bears the lossuntil the goods reach the buyer.

True 15. The seller is still the owner of the goods despite delivery if it is asale on trial, approval or satisfaction.

True 16. In sale or return, ownership passes to the buyer on delivery andsubsequent return therof reverts ownership in the seller.

True 17. In a sale of movable, when the quantity is more than agreedupon, the buyer may accept what has been delivered, at the contract rate.

True 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 correspondingdecrease in price.

True 20. In a sale for a lump sum, the vendor is obligated to deliver all theland included within the boundaries, regardless of whether the real area

should be greater or smaller.

A 21. Rhys and Emman entered into a contract whereby Rhys agreed to sell hisHonda Jazz car to Emaan for P350,000. Upon the perfection of the contract, Emmanadvanced the entire purchase price of P350,000 to Rhys. It was, however, stipulatedthat 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 wasstruck by lightning ads was thus, completely destroyed. Can Emman now recoverthe P350,000 he had advanced to Rhys?

a. Yes, since the obligation of Rhys to deliver the Honda Jazz car isextinguished, then, the obligation of Emman to pay the price is alsoextinguished and in conformity with the principle of res peritdomino.

b. No, because it is Emman who bears the loss since he paid the purchase priceeven 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.

A 22. RR sold his Sony Bravia Flat Screen TV to Tyntyn for P250,000 to be paidas follows: P100,000 upon delivery of the flat screen TV and the balance at the rateof P50,000 every 2 months thereafter. Before the payment of the remaining balanceof P150,000, the Sony Bravia Flat Screen TV was burned when there was big fire ina subdivision where Tyntyn’s house was situated. The said fire was without thefault 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 willbe liable to pay for the balance in case there is loss before the balance iscompletely paid.

d. Yes, because even if Tyntyn is not yet the owner of the said TV, failure to paythe balance will constitute breach of contract on her part

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

a. The main obligation of the seller is to transfer the ownership and deliver adeterminate thinh.

b. the main oligation of the seller is not susceptible to an action forspecific performance since it will result to involuntary servitude, whichis 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 desireto sell the leased premises, the lessee shall have a 30-day exclusive option topurchase the same. However, if it is sold to another, the lessor is bound and obligedto stipulate in the deed of sale that the purchase shall recognize the lease and bebound by all the terms and conditions thereof. What is involved in the said contractof 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.

B 25. Tin and Charmee are long time friends. On November 1, 2009, Tinentrusted 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 wasdishonored 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 orreturn”, 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 orreturn”

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)

The following are the distinctions of an option money from an earnest money:

1. Both of them may be paid as considerations for an option contract and acontract of sale respectively; however,

2. Option money is given as separate and distinct consideration, and is not part of the purchase price, earnest money is part of the purchase price;

3. Once the buyer pays the option money to the seller, the former is not bound topay the balance or purchase the property while , when the earnest money ispaid by the buyer, he is obliged to pay the balance of the purchase price;

4. Option money may be a consideration for an option contract, the subject matterof which is the right or privilege to buy the property within a definite time at anagreed period, an earnest money is paid for the purchase of the subject matter othe contract of sale which is the property.

2. Mae offers to buy Xyza’s property under the following terms and conditions: P1million purchase price, 10% option money, the balance payable in cash upon theclearance of the property of all illegal occupants. The option money was promptlypaid 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, Xyzasuddenly had a change of heart, claiming that the deal is disadvantageous to her asshe has found out that the property can fetch P 3 million. Mae seeks specificperformance but Xyza contends that she has merely given Mae an option to buyand nothing more and offers to return the option money which Mae refuses toaccept.

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

Yes. Mae’s action for specific performance against Xyza will prosper. In an optioncontract, there should be a separate and distinct consideration which is not part of the purchase price. In the case at bar, what was entered by the parties is a contract

of sale in which Xyza will deliver the determinate thing and transfer ownership toMae after the latter will give ten percent of the purchase price as downpayment andsubsequently clear the property from illegal occupants. These conditions werefulfilled thus a perfected contract of sale was already made by the parties. Whatwas paid by Mae is earnest money and not option money.

In a perfected contract of sale, the other party may seek compliance by theother because of their reciprocal obligations. Specific performance is a valid remedyin this case.



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

No. Xyza has no valid ground to back-out from the perfected contract of sale if her

contention is that the deal was financially disadvantageous to her.

Article 19 of the New Civil Code on human relations states that every person in theexercise of his rights and in the performance of his duties shall act with equity,

justice, and good faith.

In the case at bar, Xyza cannot whimsically withdraw the contract without theconsent of the buyer since there was already an agreement between them as to thesale of the property.

(No actionable ground. Mere inadequacy not a ground.)

3. Davao Agro-Industrial Coconut Cooperative, Inc., a family corporation

owned by the heirs of deceased spouses Aya and Raymond, purchased theland in question for P10,000 from Percy as evidenced by a deed executedby Percy. Some 20 years later, the seller’s heirs (Percy’s children Gil andGlobel) intruded into the land and harvested the coconuts found therein.They denied knowledge of the same and alleged that the land claimed wasdifferent from that owned and held by Davao Agro-Industrial.

The description of the land sold is 2,000 sqm with the words MORE or LESSafter the figure, but what was occupied by Davao Agro-Industrial wasmore than that. And that when the land was surveyed, it turned out thatits 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)

The contract of sale involves the 6, 870 square meters of land.

In a sale for a lump sum, the vendor is obligated to deliver all theland included within the boundaries regardless of whether the real areashould be greater or smaller.

In the case at bar, although the surveyor has proven that the boundariesreally include a greater area, which is more than 2000, the Davao Agro-Industrial,which is owned by the buyers of Percy’s property, is the party which has the betterright to the property.

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

No. the contract of sale is not subject to rescission. It cannot also be increased.For acontract of sale to be rescissible it must be:

a. A contract entered into in representation by guardians whose wards suffer lesionby more thatn one-fourth of the value of the property; or



b. a contract entered into in representation of absentees when the latter sufferslesion of more than one-fourth of the value of the property.

In this case, it is not shown that there was lesion. The price cannot be increased

because the contract was binding on their successors and they cannot demand foran additional of what had been agreed upon.

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

No. Liezl cannot compel Jane to cancel the sale with Judy and sell the house

to her.

In a right of first refusal, the optionee is merely given the first priority todecide whether to purchase the property or not. It is merely a privilege granted tothe optionee by the optioner to be the first to make the acceptance of the offer tothe optioner in case the latter would decide to sell the property. Once the offer isrejected, the optioner may now offer the property to others.

In case at bar, Liezl has already rejected the offer made by Jane to her.Instead, she made a counter-offer to Judy. Thus, there was no showing that there

was a mutual agreement between the parties. There was no acceptance made toLiezl. Judy may now offer the property to others.

(Atty Sarona’s comment: same terms and conditions)

5. Jed gave Rey Mar an option to purchase his apartment for P3 million. Rey Maroffered to buy it at P2.5 miliion but such counter-offer was not accepted by Jad. Jadsold his apartment to Dennis for P3 million. Can Rey Mar compel Jad to cancel thesale to Dennis and execute a Deed of Sale in his favor? (10pts)

Ans: No. Rey Mar cannot compel Jad to cancel the sale to Dennis and execute a

Deed of Sale in his favor.

For an option contract to be valid, there must be a distinct and separateconsideration which is not part of the purchase price.

In the case at bar, the option to purchase given by Jad to Rey Mar has noseparate consideration. Thus the option to purchase cannot be given effect. Absentany distinct consideration for an option contract, Jad is free to sell the property toDennis or any third person.



6. Jo Anne, who is an engineer, offered her services to manufacture and install aconveyor system which, according to her, would increase production and efficiencyof the business of Norliza. Norliza expressed her conformity to the offer made inwriting 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 planmade part of this agreement.” A few days later, Jo Anne made the demand for thepayment 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 uponthe 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 conveyorsystem did not function to the defendant’s satisfaction. The defects had not beenremedied 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 theconveyor system installed did not serve the purpose for which the same wasmanufactured and installed. Was there delivery of the conveyors by Jo Anne?Explain. (10pts)

Ans: Yes. There was already delivery made by Jo Anne. There was alreadyconstructive delivery made by Jo Anne to Norliza when the conveyors wereplaced under the control of Norliza. In the case at bar, constructivedelivery was effected by Jo Anne when she presented to Norliza theconveyors during the trial runs.

7. Spouses Andrey and Nana were registered owners of a residential land inBukidnon. They decided to donate the eastern half of the property to Sasha (sisterof Nana), who was about to get married. The OCT was delivered to Sasaha. SpousesAndrey and Nana signed a Deed of Absolute Sale prepared by Sasha transferringthe ownership of the entire property in favor of Sasha. In the same deed, Sashaaccepted such transfer of ownership in her name. the document stated thatSpouses Andrey and Nana stated a consideration of P50,000, although they did notactually receive anything of value for such exchange.

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

Ans: Yes. There was a valid contract entered into between the spouses andSasha.



A contract is perfected if there was already meeting of the minds asto the subject matter and the price or consideration. The considerationmust be real. It must not be absolutely simulated such that there wasreally no intention to pay the price to the seller, and no intention totransfer ownership and deliver the determinate thing to the seller.

In the case at bar, although the parties executed a Deed of AbsoluteSale and made it appear that there was a sale that happened, it can beshown that they really intended to convey the property to Sasha. There isa contract which was perfected since it can be shown that the partiesintended in reality, to enter to a donation, or some other act or contract.In this case, the contract may be subject to reformation to indicate thetrue intention of the partner.

MULTIPLE CHOICE

C 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 inpayment

c. if no notice was sent by seller to buyer to exercise such right

d. if the buyer is in default for unreasonable time

A 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, defectshall be considered as redhibitory.

b. There is a warranty against hidden defects with regard to sale of animalsat 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

D 14. Conventional redemption is presumed to be an equitable mortgage underthe 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 onthe 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

C 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

C 16. Under a lease of Honda Jazz Car, with option to buy, Teen and Bhing agreedthat failure of Bhing, the lessee, to pay for three mos rent would entitle Teen to takeback the car and the option to buy would be loast. Bhing failed to pay for the lastthree months of the lease. Teen took back the property and instituted an action torecover the rents corresponding to the three months. Which of the followingstatements is correct?

a. Teen can validly take back the property and recover the rents covering thethree months in which Bhing failed to pay, since such arrangement was previouslyagreed to by the parties

b. Teen can validly take back the property and recover the rents covering thethree months in which Bhing faile to pay, even if both parties did not havepreviously agreed to such agreement

c. Teen can validly take back the property but she does not haveright 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 recoverthe rent for the three months in which Bhing failed to pay

C 17. Dana sold to Mitos a house and lot for P2.5 million payable 1 month after theexecution 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 Mitosto pay as agreed. Mitos failed to pay on maturity and Danna sued to declare thecontract without force and effect. If Mitos tendered payment before the action wasfiled by Danna, but subsequent to the stipulated date of payment, which of thefollowing statements is not applicable?



a. The action of Danna will prosper because both parties have expressly agreedthat the contract will be automatically rescinded in case there is failure to pay theprice.

b. The action of Danna will prosper, even without the express agreement thatthe 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 expressagreement that the contract will be automatically rescinded in case thereis 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 thecontract will be automatically rescinded in case there is failure to pay the price iscontrary to law.

B 18. On, October 1, 2007, Karla sold to Sahara a real estate property worth P 2million. They agreed on the same date that the amount due shall be paid by Saharain 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 1month

b. Sahara can pay the balance without interest within the grace periodof 2 months

c. If Sahara does not pay, the contract of sale is considered cancelled, and Karlagets to keep the P200,000

d. If Sahara does not pay, the contract of sale is considered cancelled, in whichsuch cancellation shall take effect 30 days from notice and upon payment of P200,000

D 19. Hanniyah, Noche and Vanessa are co-owners of an urban land, havinginherited 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 Vanessadonated to Aisa

b. Jocelyn has a right to redeem the portion of Vanessa, which Vanessa donatedto 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.

C 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 doesnot 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 September15, 2009. But the Deed of Sale covering the said transaction was not registered withthe Registry of Deeds. On December 8, 2009, Anthony sold the same parcel of landto Allan, who thereafter immediately succeeded to register the Deed of Sale withthe 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 Article1544 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 10monthly 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 subsequentlyissued against the properties to Julius. Thereafter, the same truck was sold at apublic auction in which the company was the only bidder for P50,000. Since therewas 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 totalprice of P 4 million, 25% thereof will be paid upon execution of the deed on October20, 2009. The remaining 75 % balance of the purchase price will be paid 3 equalannual 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)

5. Dianne, a resident of Cebu City, bought computer merchandise from Christ andrequested Christ to ship the goods from Davao City to Cebu City. Christimmediately shipped the merchandise but before the goods reached Cebu City,Christ found out that Dianne was insolvent. Christ goes to you and asks forpossible courses of action to take against Dianne. What is/are the remedy/iesavailable 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 anobligation to transfer ownership and delivery of possession, while in dacion en pagowill extinguish the obligation;

b. Sale is perfected by mere consent, while in dacion en pago, there must bedelivery of the object since it is a real contract;

c. In sale, there is no pre-existing obligation, however, in dacion en pago there isa pre-existing obligation;

d. In sale, the consideration is the price certain or equivalent but in dacion enpago, the consideration as to the debtor is to extinguish the obligation and as to theauditor 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 especiallyafter the effectivity of the Family Code, any of the spouses is prohibited fromalienating or disposing a property which belongs to the conjugal partnership withoutthe consent of the other spouse. Such sale would be void but it will be a continuingoffer as to the consenting spouse and the third person and shall be binding if theother spouse will consent or the authority of the court is given.



In the case at bar, Hermione cannot alienate the said property to Luna withoutthe consent of Ron because it is a conjugal property. The forged signature of Ron inthe 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 conjugalproperty without the consent of Ron.

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

In the case at bar, Luna is married to Meville so the prohibition under Article1490 applies to them. Even if it was found out that their marriage is null and voidsince they can still be considered a common law spouse at least in this case. Thefact that they were not living together as husband and wife at the time Lunaacquired it, it would not take them away from the prohibition.

Furthermore, both Luna and Meville are in pari-delicto since both of them areequally guilty in the selling and buying of the property. The court will leave them asthey 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 thecontract.

In sum, the action of Luna will not prosper.

4. The contention of Nick is not correct. As provided by the New Civil Code, salebeing 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 andthe consideration of the price.

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



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

a. Option money is a separate consideration in an option contract, while earnestmoney is part of the purchase price in a contract of sale;

b. When option money is given, the optionee is not obliged to pay the purchaseprice, however, when an earnest money is given, the buyer is obliged to pay thebalance of the purchase price;

c. Option money is given when the sale is not yet perfected but the optioncontract is then perfected, but earnest money is given when the sale has beenperfected;

d. Both the option money and earnest money are considerations. Option moneyis a consideration in an option contract while earnest money is a consideration in acontract of sale.

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

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

In one of its decided case, the Supreme Court held that the word “Noted” is notan 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 apossible thing, licit and determinate or at least determinable. A determinate subjectmatter is physically segrated or particularly designated. However a determinablesubject matter is valid if it is capable of being made determinate and no furtheragreement is needed by the parties.

The subject matter in this case is determinable. Marcissa sold to Lucius 3hectares 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 subjectmatter which is the 3 hectares has the capacity to be made determinate and thereis 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 perfectedcontract of sale when there is a c concurrence of the 3 essential elements which areconsent, subject matter and price or consideration. The price must be or maybe inmoney or its equivalent and also it must be certain or ascertainable. The price mustalso 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 theP1,000,000. Therefore, since it is essential part of price, there was no perfectedcontract of sale.

5. a.) Simulation of contract is different from gross inadequacy of price. A simulationof contract happens when the parties have no intention to be bound by suchcontract as to the price. The buyer has no intention to pay the price and the sellerhas no intention to receive the same. A simulated contract make it appear that acertain price has been paid when in reality it was not. Gross inadequacy of pricehappens 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 thething sold.

b.) Yes. There was a valid contract of sale between Harry and Ronald. As providedby the New Civil Code, the price or consideration must be in money or itsequivalent, it must be real and it must also certain or ascertainable.

In the present case, all essential elements are present. As to the price, Harrysold the mortgaged property to Ron for P1,000 and the assumption o f mortgage inHogmead. Here, the price or consideration is not just the P1,000 but also for Ron toassume the mortgage of the said property. It was partly in money and partly theassumption of mortgage and this is allowed by law since the price can be in moneyor its equivalent.

6. the contract involves an option contract. An option contract is a privilege givenby the offerror to the offeree the right to buy a certain property in a fixed price at acertain period. Generally, there must be a consideration given separate from the

purchase price. However, if it is accepted prior to its withdrawal it becomes noconsideration.

In the case at bar, Hermione offered to sell her parcel of land to Flew for P37million within 2 years from January 2, 1995. All the elements of an option contract ispresent in this case. In an option contract, the offeree shall not offer the property toothers 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 tosell:

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

3.) in contract of sale, payment of the full purchase price is not an essentialelement that will perfect the sale, but in a contract to sell, the payment of the fullpurchase price is a suspensive condition.

b. the ownership of the subject house and lot should be transferred to spousesGeller. In case of double sale an immovable property, the New Civil Code proviesthat 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 onewho presents the oldest title. The preference is on the said order. Double sale alsorequires that there are two buyers of the same property which is sold by the sameseller 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 actualpossession first but the rule on double sale will not apply to this case becausespouses Tribbiani entered a contract to buy and sell to spouses Bing. Therefore, lawon double sale is not applicable.

Spouses Geller is the real owner because when Spouses Bing executed aDeed of Sale, it was a constructive delivery which according to law on sales, is avalid transfer of ownership. Spouses Geller is the owner of the subject propertybecause ownership is transferred upon delivery.

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



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

b. The case for breach of warranty against hidden defects filed against Ross will notprosper. The law provides that hidden defects in case of warranty against hiddendefects shall be present at the time of delivery and that the buyer shall immediatelyinform the seller of such hidden defects. The prescription or prescriptive period tofile such breach of warranty against hidden defect shall be within 6 months after thedelivery.

In the case at bar, delivery was made on July 31, 2009 while Rachel only setup the case for breach of warranty against hidden defects on March 31, 2010. Theperiod to bring the action has already prescribed.

3. Monica has two options available: First, she can still pay the installment for year2010 with 2 month grace period. Second, if she failed to pay within the graceperiod, the sale will be cancelled and 50% of her total payment shall be given backto her.

The Maceda Law provides that in case of sale on installment of a realproperty, if the vendee have paid at least 2 years of the installment, the vendeeshall be given 1 month grace period for every year of installment if she has failed topay the remaining installment. Provided, she exercised this option only once inevery 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 completedpaying the 2 year installment.

As to the second option, the Maceda Law also provides, that if vendee fails topay 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 totalpayment with 5% interest of every year provided she completed paying the 5 yearsinstallment. Since Monica did not reach 5 years of installment, she will just get the50% 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 theRecto Law, in case of a movable property sold in installments, the seller has 3options or remedies if buyer failed to pay installment at least twice. First, to exactfulfillment if vendee failed to pay. Second, rescind the contract if vendee failed topay installment. Third, foreclose the property if there is a mortgage to secure thepayment of the property. In case of foreclosure, the seller cannot demand for thedeficiency to the vendee.



In the case at bar, Joey’s Garage opted to choose the third option which isforeclosure. The law is also clear that the options available are alternative and notcumulative. Since, foreclosure was the option by Joey’s Garage, the can beforeclosed and sold at public auction but Joey’s Garage cannot claim for thedeficiency 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.

FALSE 1. If not all elements are present for Article 1544 of the New Civil Code toapply, the principle of “prior tempore, potior jure” should apply.



FALSE 2. If the first sale occurred when land is not yet registered and the secondsale is done when land is already registered, “appy first in time, priority in right.”

FALSE 3. If sale is made by a non-owner, action to annul is proper.

TRUE 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 acquirestitle thereto.

TRUE 5. Stoppage in transit can be exercised by giving notice of claim tocarrier/bailee in possession of the goods.

FALSE 6. Stoppage in transit can be exercised by giving notice to buyer.

TRUE 7. In applying Article 1484 of the New Civil Code, if the seller choosesforeclosure, no further action against buyer to recover any unpaid balance of theprice.

FALSE 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.

FALSE 9. If an immovable is sold by installment and buyer paid less than 2 yearsinstallment, the first grace period is 60 days from date installment became due.

TRUE 10. If an immovable is sold by installment and buyer paid less than 2 yearsinstallment, the second grace period is 30 days from notice of cancellation/demandfor rescission.

FALSE 11. The implied warranty that seller has a right to sell refers to the perfectionstage of the contract of sale.

FALSE 12. The implied warranty that seller has a right to sell is applicable to sheriff,

auctioneer, mortgagee and pledge.

TRUE 13. Warranty against eviction is applicable even if the buyer is evicted in partfrom the subject matter of sale.

TRUE 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.

TRUE 15. Legal redemption may be exercised if any of the co-heirs sell hishereditary rights to a stranger before partition.

16. legal redemption may be exercised if any of the co-owners sell his shareto a third person

TRUE 17. In the absence of any agreement, the period of redemption shall be 4years from the date of the contract.

FALSE 18. If there is any agreement between the parties that the period of redemption shall be 12 years, such agreement is void.

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