Sales Bar Questions
Sales Bar Questions
(Year 1990-2006)
(Art. 1624; 1475. CC; Rodriguez v. CA, et al, G. R No. 84220,
March 25. 1992 207 SCRA 553).
ALTERNATIVE ANSWER:
Assignment of Credit vs. Subrogation (1993) No, the defense of Peter Co will not prosper. Hadji Butu
Peter Co, a trader from Manila, has dealt business with Allied validly acquired his right by an assignment of credit under
Commodities in Hongkong for five years. All through the Article 1624 of the Civil Code. However, the provisions on the
years, Peter Co accumulated an indebtedness of P500,000.00 contract of sale (Article 1475 Civil Code) will apply, and the
with Allied Commodities. Upon demand by its agent in transaction is covered by the Statute of Frauds. (Art. 1403 par.
Manila, Peter Co paid Allied Commodities by check the (2) Civil Code)
amount owed. Upon deposit in the payee's account in Manila,
the check was dishonored for insufficiency of funds. For and Conditional Sale vs. Absolute Sale (1997)
in consideration of P1.00, Allied Commodities assigned the Distinguish between a conditional sale, on the one hand, and
credit to Hadji Butu who brought suit against Peter Co in the an absolute sale, on the other hand.
RTC of Manila for recovery of the amount owed. Peter Co SUGGESTED ANSWER:
moved to dismiss the complaint against him on the ground A CONDITIONAL SALE is one where the vendor is granted
that Hadji Butu was not a real party in interest and, therefore, the right to unilaterally rescind the contract predicated on the
without legal capacity to sue and that he had not agreed to a fulfillment or non-fulfillment, as the case may be, of the
subrogation of creditor. Will Peter Co's defense of absence of prescribed condition. An ABSOLUTE SALE is one where the
agreement to a subrogation of creditor prosper? title to the property is not reserved to the vendor or if the
vendor is not granted the right to rescind the contract based on
SUGGESTED ANSWER: the fulfillment or nonfulfillment, as the case may be, of the
No, Co's defense will not prosper. This is not a case of prescribed condition.
subrogation, but an assignment of credit. ASSIGNMENT
OF CREDIT is the process of transferring the right of the Contract of Sale vs. Agency to Sell (1999)
assignor to the assignee. The assignment may be done either A granted B the exclusive right to sell his brand of Maong pants
gratuitously or onerously, in which case, the assignment has in Isabela, the price for his merchandise payable within 60 days
an effect similar to that of a sale (Nyco Sales Corp.v.BA from delivery, and promising B a commission of 20% on all
Finance Corp. G.R No.71694. Aug.16, 1991 200 SCRA 637). As a sales. After the delivery of the merchandise to B but before he
result of the assignment, the plaintiff acquired all the rights of could sell any of them, B’s store in Isabela was completely
the assignor including the right to sue in his own name as the burned without his fault, together with all of A's pants. Must B
legal assignee. In assignment, the debtor's consent is not pay A for his lost pants? Why? (5%)
essential for the validity of the assignment
SUGGESTED ANSWER:
The contract between A and B is a sale not an agency to sell
because the price is payable by B upon 60 days from delivery
even if B is unable to resell it. If B were an agent, he is not
bound to pay the price if he is unable to resell it.
Double Sales (2004) Juliet died in January I973 without having repurchased the
JV, owner of a parcel of land, sold it to PP. But the deed of property. Her only surviving heir, her son X, failed to
sale was not registered. One year later, JV sold the parcel repurchase the property on or before 3 June 1973. In 1975,
again to RR, who succeeded to register the deed and to Romeo sold the property to Y for P50,000.00. Upon learning
obtain a transfer certificate of title over the property in his of the sale, X filed an action for the nullification of the sale
own name. Who has a better right over the parcel of land, and for the recovery of the property on the ground that the
RR or PP? Why? Explain the legal basis for your answer. so-called deed of absolute sale executed by his mother was
(5%) merely an equitable mortgage, taking into account the
SUGGESTED ANSWER: inadequacy of the price and the failure of Romeo to take
It depends on whether or not RR is an innocent purchaser possession of the property and to pay the taxes thereon.
for value. Under the Torrens System, a deed or instrument Romeo and Y maintain that there was a valid absolute sale
operated only as a contract between the parties and as and that the document signed by the former on 3 June 1973
evidence of authority to the Register of Deeds to make the was merely a promise to sell. a) If you were the Judge, would
registration. It is the registration of the deed or the you uphold the theory of
instrument that is the operative act that conveys or affects X? b) If you decide in favor of Romeo and Y, would you
the land. (Sec. 51, P.D. No. 1529).
uphold the validity of the promise to sell?
SUGGESTED ANSWER:
In cases of double sale of titled land, it is a well-settled A. I will not uphold the theory of X for the nullification of
rule that the buyer who first registers the sale in good faith the sale and for the recovery of the property on the ground
acquires a better right to the land. (Art. 1544, Civil Code). that the so-called sale was only an equitable mortgage. An
equitable mortgage may arise only if, in truth, the sale was
Persons dealing with property covered by Torrens title one with the right of repurchase. The facts of the case state
are not required to go beyond what appears on its face. that the right to repurchase was granted after the absolute
(Orquiola v. CA 386, SCRA 301, [2002]; Domingo v. Races 401 deed of sale was executed. Following the rule in Cruzo vs.
SCRA 197, [2003]). Thus, absent any showing that RR knew Carriaga (174 SCRA 330), a deed of repurchase executed
about, or ought to have known the prior sale of the land to independently of the deed of sale where the two stipulations
PP or that he acted in bad faith, and being first to register are found in two instruments instead of one document, the
the sale, RR acquired a good and a clean title to the property right of repurchase would amount only to one option granted
as against PP. by the buyer to the seller. Since the contract cannot be upheld
as a contract of sale with the right to repurchase, Art. 1602 of
Equitable Mortgage the Civil Code on equitable mortgage will not apply. The rule
(1991)On20 December 1970, Juliet, a widow, borrowed could have been different if both deeds were executed on the
from Romeo P4,000.00 and, as security therefore, she same occasion or date, in which case, under the ruling in
executed a deed of mortgage over one of her two (2) spouses Claravall v. CA (190 SCRA 439), the contract may still
registered lots which has a market value of P15,000.00. The be sustained as an equitable mortgage, given the
document and the certificate of title of the property were circumstances expressed in Art. 1602. The reserved right to
delivered to Romeo. repurchase is then deemed an original intention.
On 2 June 1971, Juliet obtained an additional sum of P3,000
from Romeo. On this date, however, Romeo caused the B. If I were to decide in favor of Romeo and Y, I would not
preparation of a deed of absolute sale of the above property, uphold the validity of the promise to sell, so as to enforce it
to which Juliet affixed her signature without first reading the by an action for specific performance. The promise to sell
document. The consideration indicated is P7,000.00. She would only amount to a mere offer and, therefore, it is not
thought that this document was similar to the first she signed. enforceable unless it was sought to be exercised before a
When she reached home, her son X, after reading the withdrawal or denial thereof.
duplicate copy of the deed, informed her that what she
signed was not a mortgage but a deed of absolute sale. On Even assuming the facts given at the end of the case, there
the following day, 3 June 1971, Juliet, accompanied by X, would have been no separate consideration for such promise
went back to Romeo and demanded the reformation it, to sell. The contract would at most amount to an option
Romeo prepared and signed a document wherein, as vendee which again may not be the basis for an action for specific
in the deed of sale above mentioned, he obligated and bound performance.
himself to resell the land to Juliet or her heirs and successors Equitable Mortgage vs. Sale (2005)
for the same consideration as reflected in the deed of sale On July 14, 2004, Pedro executed in favor of Juan a Deed of
(P7,000) within a period of two Absolute Sale over a parcel of land covered by TCT No.
Page 93 of 119
CIVIL LAW Answers to the BAR as Arranged by Topics (Year 1990-2006)
6245. It appears in the Deed of Sale that Pedro received X sold a parcel of land to Y on 01 January 2002, payment
from Juan P120,000.00 as purchase price. However, Pedro and delivery to be made on 01 February 2002. It was
retained the owner's duplicate of said title. Thereafter, Juan, stipulated that if payment were not to be made by Y on 01
as lessor, and Pedro, as lessee, executed a contract of lease February 2002, the sale between the parties would
over the property for a period of one (1) year with a monthly automatically be rescinded. Y failed to pay on 01 February
rental of Pl,000.00. Pedro, as lessee, was also obligated to pay 2002, but offered to pay three days later, which payment X
the realty taxes on the property during the period of lease. refused to accept, claiming that their contract of sale had
already been rescinded. Is X’s contention correct? Why? 5%
SUGGESTED ANSWER:
Subsequently, Pedro filed a complaint against Juan for the No, X is not correct. In the sale of immovable property, even
reformation of the Deed of Absolute Sale, alleging that the though it may have been stipulated, as in this case, that upon
transaction covered by the deed was an equitable mortgage. failure to pay the price at the time agreed upon the rescission
In his verified answer to the complaint, Juan alleged that the of the contract shall of right take place, the vendee may pay,
property was sold to him under the Deed of Absolute Sale, even after the expiration of the period, as long as no demand
and interposed counterclaims to recover possession of the for rescission of the contract has been made upon him either
property and to compel Pedro to turn over to him the judicially or by a notarial act (Article 1592, New Civil code).
owner's duplicate of title. Resolve the case with reasons. (6%) Since no demand for rescission was made on Y, either
judicially or by a notarial act, X cannot refuse to accept the
SUGGESTED ANSWER: payment offered by Y three (3) days after the expiration of
The complaint of Pedro against Juan should be dismissed. the period.
The instances when a contract — regardless of its ANOTHER SUGGESTED ANSWER:
nomenclature — may be presumed to be an equitable This is a contract to sell and not a contract of absolute sale,
mortgage are enumerated in Article 1602 of the Civil Code: since as there has been no delivery of the land. Article 1592 of
"Art. 1602. The contract shall be presumed to be an equitable the New Civil code is not applicable. Instead, Article 1595 of
mortgage, in any of the following cases: the New Civil Code applies. The seller has two alternative
1 When the price of a sale with right to repurchase is remedies: (1) specific performance, or (2) rescission or
unusually inadequate: resolution under Article 1191 of the New Civil code. In both
2 When the vendor remains in possession as lessee or remedies, damages are due because of default.
otherwise; ALTERNATIVE ANSWER:
3 When upon or after the expiration of the right to Yes, the contract was automatically rescinded upon Y’s failure
to pay on 01 February 2002. By the express terms of the
repurchase another instrument extending the period of redemption
or granting a new period is executed; contract, there is no need for X to make a demand in order
4 When the purchaser retains for himself a part of the for rescission to take place. (Article 1191, New Civil Code, Suria
purchase price; v. IAC 151 SCRA 661 [1987]; U.P. v. de los
5 When the vendor binds himself to pay the taxes on the Angeles 35 SCRA 102 [1970]).
thing sold; Maceda Law (2000)
6 In any other case where it may be fairly inferred that the Priscilla purchased a condominium unit in Makati City from
real intention of the parties is that the transaction shall secure the the Citiland Corporation for a price of P10 Million, payable
payment of a debt or the performance of any other obligation. P3 Million down and the balance with interest thereon at 14%
per annum payable in sixty (60) equal monthly installments of
P198,333.33. They executed a Deed of Conditional Sale in
"In any of the foregoing cases, any money, fruits, or other
which it is stipulated that should the vendee fail to pay three
benefit to be received by the vendee as rent or otherwise shall
(3) successive installments, the sale shall be deemed
be considered as interest which shall be subject to the usury
automatically rescinded without the necessity of judicial action
laws."
and all payments made by the vendee shall be forfeited in
Article 1604 states that "the provisions of article 1602 shall favor of the vendor by way of rental for the use and
also apply to a contract purporting to be an absolute sale." occupancy of the unit and as liquidated damages. For 46
months, Priscilla paid the monthly installments religiously, but
For Articles 1602 and 1604 to apply, two requisites must on the 47th and 48th months, she failed to pay. On the 49th
concur: 1) the parties entered into a contract denominated as a month, she tried to pay the installments due but the vendor
contract of sale; and 2) their intention was to secure an existing refused to receive the payments tendered by her. The
debt by way of mortgage. (Heirs of Balite v. Lim, following month, the vendor sent her a notice that it was
G.R. No. 152168, December 10, 2004)
rescinding the Deed of Conditional Sale pursuant to the
stipulation for automatic rescission, and demanded that she
In the given case, although Pedro retained possession of the vacate the premises. She replied that the contract cannot be
property as lessee after the execution of the Deed of Sale, there rescinded without judicial demand or notarial act pursuant to
is no showing that the intention of the parties was to secure an Article 1592 of the Civil Code. a) Is Article 1592 applicable?
existing debt by way of mortgage. Hence, the complaint of (3%) b) Can the vendor rescind the contract? (2%)
Pedro should be dismissed.
SUGGESTED ANSWER:
Immovable Property; Rescission of Contract (2003)
Page 94 of 119
CIVIL LAW Answers to the BAR as Arranged by Topics (Year 1990-2006)
a) Article 1592 of the Civil Code does not apply to a
conditional sale. In Valarao v. CA, 304 SCRA 155, the Option Contract (2002)
Supreme Court held that Article 1592 applies only to a Explain the nature of an option contract. (2%)
contract of sale and not to a Deed of Conditional Sale where SUGGESTED ANSWER:
the seller has reserved title to the property until full payment An OPTION CONTRACT is one granting a privilege to buy
of the purchase price. The law applicable is the Maceda Law. or sell within an agreed time and at a determined price. It
must be supported by a consideration distinct from the price.
SUGGESTED ANSWER: (Art. 1479 and 1482, NCC)
b) No, the vendor cannot rescind the contract under the
circumstances. Under the Maceda Law, which is the law Option Contract; Earnest Money (1993)
applicable, the seller on installment may not rescind the LT applied with BPI to purchase a house and lot in Quezon
contract till after the lapse of the mandatory grace period of City, one of its acquired assets. The amount offered was
30 days for every one year of installment payments, and only Pl,000,000.00 payable, as follows: P200,000.00 down payment,
after 30 days from notice of cancellation or demand for the balance of P800,000.00 payable within 90 days from June
rescission by a notarial act. In this case, the refusal of the 1, 1985. BPI accepted the offer, whereupon LT drew a check
seller to accept payment from the buyer on the 49th month for P200,000.00 in favor of BPI which the latter thereafter
was not justified because the buyer was entitled to 60 days deposited in its account. On September 5, 1985, LT wrote
grace period and the payment was tendered within that BPI requesting extension until October 10, 1985 within which
period. Moreover, the notice of rescission served by the seller to pay the balance, to which BPI agreed. On October 5, 1985,
on the buyer was not effective because the notice was not by due to the expected delay in the remittance of the needed
a notarial act. Besides, the seller may still pay within 30 days amount by his financier from the United States, LT wrote BPI
from such notarial notice before rescission may be effected. requesting a last extension until October 30, 1985, within
All these requirements for a valid rescission were not which to pay the balance. BPI denied LTs request because
complied with by the seller. Hence, the rescission is invalid. another had offered to buy the same property for
P1,500,000.00. BPI cancelled its agreement with LT and
offered to return to him the amount of P200,000.00 that LT
Maceda Law; Recto Law (1999) had paid to it. On October 20, 1985, upon receipt of the
What are the so-called "Maceda" and "Recto" laws in amount of P800,000.00 from his US financier, LT offered to
connection with sales on installments? Give the most pay the amount by tendering a cashier's check therefor but
important features of each law. (5%) which BPI refused to accept. LT then filed a complaint against
SUGGESTED ANSWER:
BPI in the RTC for specific performance and deposited in
The MACEDA LAW (R.A. 655) is applicable to sales of
court the amount of P800,000.00. Is BPI legally correct in
immovable property on installments. The most important
canceling its contract with LT?
features are (Rillo v. CA, 247 SCRA 461):
(1) After having paid installments for at least two years, the SUGGESTED ANSWER:
buyer is entitled to a mandatory grace period of one month BPI is not correct in canceling the contract with LT. In Lina
for every year of installment payments made, to pay the Topacio v Court of Appeals and BPI Investment (G. R No.
unpaid installments without interest. 102606, July 3. 1993, 211 SCRA 291) the Supreme Court held
that the earnest money is part of the purchase price and is
If the contract is cancelled, the seller shall refund to the proof of the perfection of the contract. Secondly, notarial or
buyer the cash surrender value equivalent to fifty percent judicial rescission under Art. 1592 and 1991 of the Civil Code
(50%) of the total payments made, and after five years of is necessary (Taguba v. de Leon, 132 SCRA 722.)
installments, an additional five percent (5%) every year but ALTERNATIVE ANSWER:
not to exceed ninety percent (90%) of the total payments BPI is correct in canceling its contract with LT but BPI must
made. do so by way of judicial rescission under Article 1191 Civil
Code. The law requires a judicial action, and mere notice of
(2) In case the installments paid were less than 2 years, the rescission is insufficient if it is resisted. The law also provides
seller shall give the buyer a grace period of not less than 60 that slight breach is not a ground for rescission (Song Fo &
days. If the buyer fails to pay the installments due at the Co, vs, Hawaiian Phil Co., 47 Phils. 821), Delay in the
expiration of the grace period, the seller may cancel the fulfillment of the obligation (Art. 1169, Civil Code) is a
contract after 30 days from receipt by the buyer of the notice ground to rescind, only if time is of the essence. Otherwise,
of cancellation or demand for rescission by notarial act. The the court may refuse the rescission if there is a just cause for
RECTO LAW (Art. 1484} refers to sale of movables the fixing of a period.
payable in installments and limiting the right of seller, in case
of default by the buyer, to one of three remedies: a) exact Perfected Sale; Acceptance of Earnest Money (2002)
fulfillment; b) cancel the sale if two or more installments Bert offers to buy Simeon’s property under the following
have not terms and conditions: P1 million purchase price, 10% option
money, the balance payable in cash upon the clearance of the
been paid; property of all illegal occupants. The option money is
c) foreclose the chattel mortgage on the things sold, promptly paid and Simeon clears the property of illegal
also in case of default of two or more installments, with no occupants in no time at all. However, when Bert tenders
further action against the purchaser. payment of the balance and ask Simeon for the deed
CIVIL LAW Answers to the BAR as Arranged by Topics (Year 1990-2006)
for absolute sale, Simeon suddenly has a change of heart, May Adela still exercise her right of redemption? Explain.
claiming that the deal is disadvantageous to him as he has (5%)
found out that the property can fetch three time the agreed SUGGESTED ANSWER:
purchase price. Bert seeks specific performance but Simeon Yes, Adela may still exercise her right of redemption
contends that he has merely given Bert an option to buy and notwithstanding the lapse of more than 30 days from notice
nothing more, and offers to return the option money which of the sale given to her because Article 1623 of the New Civil
Bert refuses to accept. Code requires that the notice in writing of the sale must come
B. Will Bert’s action for specific performance prosper? from the prospective vendor or vendor as the case may be. In
Explain. (4%) this case, the notice of the sale was given by the vendee and
C. May Simeon justify his refusal to proceed with the sale by the Register of Deeds. The period of 30 days never tolled. She
the fact that the deal is financially disadvantageous to him? can still avail of that right.
Explain. (4%) ALTERNATIVE ANSWER:
SUGGESTED ANSWER: Adela can no longer exercise her right of redemption. As
B. Bert’s action for specific performance will prosper because co-owner, she had only 30 days from the time she received
there was a binding agreement of sale, not just an option written notice of the sale which in this case took the form of a
contract. The sale was perfected upon acceptance by Simeon copy of the deed of sale being given to her (Conejero v. CA, 16
of 10% of the agreed price. This amount is in really earnest SCRA 775 [1966]). The law does not prescribe any particular
money which, under Art. 1482, ―shall be considered as part of form of written notice, nor any distinctive method for
the price and as proof of the perfection of the contract.‖ notifying the redemptioner (Etcuban v. CA, 148 SCRA 507
(Topacio v. CA, 211 SCRA 291 [1992]; Villongco Realty v. [1987]). So long as the redemptioner was informed in writing,
Bormaheco, 65 SCRA 352 [1975]). he has no cause to complain (Distrito v. CA, 197 SCRA 606, 609
[1991]). In fact, in Distrito, a written notice was held
C. Simeon cannot justify his refusal to proceed with the sale by unnecessary where the co-owner had actual knowledge of the
the fact that the deal is financially disadvantageous to him. sale, having acted as middleman and being present when the
Having made a bad bargain is not a legal ground for pulling vendor signed the deed of sale.
out a biding contract of sale, in the absence of some actionable
wrong by the other party (Vales Right of First Refusal; Lessee; Effect (1996)
v. Villa, 35 Phil 769 [1916]), and no such wrong has been Ubaldo is the owner of a building which has been leased by
committed by Bert. Remigio for the past 20 years. Ubaldo has repeatedly assured
Remigio that if he should decide to sell the building, he will
Redemption; Legal; Formalities (2001) give Remigio the right of first refusal. On June 30, 1994,
Betty and Lydia were co-owners of a parcel of land. Last Ubaldo informed Remigio that he was willing to sell the
January 31, 2001, when she paid her real estate tax, Betty building for P5 Million. The following day, Remigio sent a
discovered that Lydia had sold her share to Emma on letter to Ubaldo offering to buy the building at P4.5 Million.
November 10, 2000. The following day, Betty offered to Ubaldo did not reply. One week later, Remigio received a
redeem her share from Emma, but the latter replied that letter from Santos informing him that the building has been
Betty's right to redeem has already prescribed. Is Emma sold to him by Ubaldo for P5 Million, and that he will not
correct or not? Why? (5%) renew Remigio's lease when it expires. Remigio filed an action
SUGGESTED ANSWER: against Ubaldo and Santos for cancellation of the sale, and to
Emma, the buyer, is not correct. Betty can still enforce her compel Ubaldo to execute a deed of absolute sale in his favor,
right of legal redemption as a co-owner. Article 1623 of the based on his right of first refusal. a) Will the action prosper?
Civil Code gives a co-owner 30 days from written notice of Explain. b) If Ubaldo had given Remigio an option to
the sale by the vendor to exercise his right of legal purchase the
redemption. In the present problem, the 30-day period for the
exercise by Betty of her right of redemption had not even building instead of a right of first refusal, will your
begun to run because no notice in writing of the sale appears answer be the same? Explain.
to have been given to her by Lydia.
SUGGESTED ANSWER:
Redemption; Legal; Formalities (2002) No, the action to compel Ubaldo to execute the deed of
Adela and Beth are co-owners of a parcel of land. Beth sold absolute sale will not prosper. According to Ang Yu v. Court
her undivided share of the property to Xandro, who promptly of Appeals (238 SCRA 602), the right of first refusal is not
notified Adela of the sale and furnished the latter a copy of the based on contract but is predicated on the provisions of
deed of absolute sale. When Xandro presented the deed for human relations and, therefore, its violation is predicated on
registration, the register of deeds also notified Adela of the sale, quasi-delict. Secondly, the right of first refusal implies that
enclosing a copy of the deed with the notice. However, Adela the offer of the person in whose favor that right was given
ignored the notices. A year later, Xandro filed a petition for the must conform with the same terms and conditions as those
partition of the property. Upon receipt of summons, Adela given to the offeree. In this case, however, Remigio was
immediately tendered the requisite amount for the redemption. offering only P4.5 Million instead of P5 Million.
Xandro contends that Adela lost her right of redemption after ALTERNATIVE ANSWER:
the expiration of 30 days from her receipt of the notice of the No, the action will not prosper. The lessee's right of first
sale given by him. refusal does not go so far as to give him the power to dictate
on the lessor the price at which the latter should sell
CIVIL LAW Answers to the BAR as Arranged by Topics (Year 1990-2006)
his property. Upon the facts given, the lessor had sufficiently SUGGESTED ANSWER:
complied with his commitment to give the lessee a right of first 1) A can exercise his right of repurchase within four (4)
refusal when he offered to sell the property to the lessee for P5 years from the date of the contract (Art. 1606, Civil Code).
Million, which was the same price he got in selling it to Santos.
He certainly had the right to treat the lessee's counter-offer of SUGGESTED ANSWER:
a lesser amount as a rejection of his offer to sell at P5 Million. 2} I would advise B to file an action for consolidation of title
Thus, he was free to find another buyer upon receipt of such and obtain a judicial order of consolidation which must be
unacceptable counter-offer (Art. 1319. NCC). recorded in the Registry of Property (Art. 1607. Civil Code).
In order to secure the financial capital, she Under Art 1602, Civil Code,
“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige
Page 99 of 180
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the contract shall be presumed to be an offering P800,000 in ready cash for the land.
equitable mortgage when it may be fairly When Roberto confirmed that he could pay
inferred that the real intention of the in cash as soon as Sergio could get the
parties is simply to secure the payment of documentation ready, Sergio decided to
a debt or the performance of any other withdraw his offer to Marcelo, hoping to just
obligation. The present transaction was explain matters to his friend. Marcelo,
clearly intended to just secure the however, objected when the withdrawal was
shortage incurred by Eulalia because communicated to him, taking the position
Bandung remained in possession of the that they have a firm and binding agreement
property inspite of the execution of the that Sergio cannot simply walk away from
sale. because he has an option to buy that is duly
supported by a duly accepted valuable
consideration.
“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige
Page 100 of 180
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because any agreement relating to the sale partially executed which takes it outside
evidence in writing and they never reduced applicable only to executory contracts,
The contract at issue in the present case Right of First Refusal; Lessee; Effect
is the option contract, not the contract of (2008)
sale for the real property. Therefore, Art.
1403 does not apply. No.XVI. Dux leased his house to Iris for a
period of 2 years, at the rate of P25,000.00
“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige
Page 101 of 180
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monthly, payable annually in advance. The refusal. This makes the mother a buyer in
contract stipulated that it may be renewed bad faith, hence giving more ground for
for another 2-year period upon mutual rescission of the sale to her (Equatorial
agreement of the parties. The contract also Realty, et al. v. Mayfair Theater, G.R. No.
granted Iris the right of first refusal to 106063, 21 Nov. 1996).
purchase the property at any time during the
lease, if Dux decides to sell the property at ALTERNATIVE ANSWER:
“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige
Page 102 of 180
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In his own written reply, Boboy signified that without altering the form or substance of
he was ready to leave but Anselmo must first the property leased, the lessor upon the
reimburse him the value of the termination of the lease, shall pay the
refused, insisting that Boboy cannot ask for lessor refuse to reimburse said amount,
and leaving the building in its original state. thing may suffer damage thereby.
“Never Let The Odds Keep You From Pursuing What You Know In Your Heart You Were Meant To Do.”-Leroy Satchel Paige
Page 103 of 180
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(IVb) Can Boboy be held liable for damages for removing the improvements over Anselmo's
objection? (4%)
SUGGESTED ANSWER:
The lessor, Anselmo, refused to reimburse one-half of the value of the improvements, so
the lessee, Boboy, may remove the same, even though the principal thing may suffer
damage thereby. If in removing the useful improvements Boboy caused more impairment
in the property leased than is necessary he will be liable for damages (Art. 1678, Civil
Code).
No.VIII. Jude owned a building which he had leased to several tenants. Without informing his
tenants, Jude sold the building to Ildefonso. Thereafter, the latter notified all the tenants that he
is the new owner of the building. Ildefonso ordered the tenants to vacate the premises within
thirty
(d) days from notice because he had other plans for the building. The tenants refused to vacate,
insisting that they will only do so when the term of their lease shall have expired. Is Ildefonso
bound to respect the
lease contracts between Jude and his tenants? Explain your answer. (3%)
SUGGESTED ANSWER:
Yes, Ildefonso must respect the lease contracts between Jude and his tenants. While it is
true that the said lease contracts were not registered and annotated on the title to the
property, Ildefonso is still not an innocent purchaser for value. He ought to know the
existence of the lease because the building was already occupied by the tenants at the
time he bought it. Applying the principle of caveat emptor, he should have checked and
known the status of the occupants of their right to occupy the building before buying it.