MIDTERM EXAM

NAME: GABIASON KEITH JOSHUA G

COURSE: BSA 2B

NOTA BENE: READ THE INSTRUCTIONS CAREFULLY!

TEST I. TRUE OR FALSE. Write the word “TRUE” if the statement is false, and the word “FALSE” if the
statement is true.
1. Warranty against eviction is inherent in a contract of sale; hence it is an essential element
thereof.
Answer: FALSE
2. The purchase by a guardian of the property of the person under his guardianship is valid.
Answer: TRUE
3. The buyer shall be entitled to the fruits of the thing sold from the time of the perfection of the
contract.
Answer: TRUE
4. The delivery of incorporeal property may be made through the exercise by the vendee of his
rights with the consent of the vendor.
Answer: FALSE
5. If goods are sold on “sale or return”, the risk of loss of the thing sold remains with the seller
after its delivery to the buyer.
Answer: TRUE
6. In “sale on approval”, the buyer becomes the owner of the thing upon delivery, but he may
revert such ownership to the seller by returning it.
Answer: TRUE
7. The delivery of the specific goods to a carrier or other bailee for the purpose of transmission to
the buyer generally transfers ownership of the goods to the buyer.
Answer: FALSE
8. When a thing is purchased from a merchant’s store, fair or market, the buyer acquires title of
the thing although the seller may have stolen it or acquired it from a thief.
Answer: FALSE
9. A warehouse receipt is also a contract between the warehouseman and the depositor of the
goods.
Answer: FALSE
10. A bearer document of title becomes an order document of title if it is specially indorsed.
Answer: FALSE
11. The delivery of an order document of title without an indorsement does not constitute
negotiation.
Answer: FALSE
12. A negotiable document of title becomes non-negotiable if it is stamped with the mark “non-
negotiable”.
Answer: FALSE
13. If the goods sold are in the possession of a third person, the seller is deemed to have delivered
the goods to the buyer if the third person acknowledges to the buyer that he holds the goods in
the buyer’s behalf.
Answer: FALSE
 14. An unpaid seller exercising his right to resell the goods may buy the goods either directly or
indirectly.
Answer: FALSE

15. When an unpaid seller exercises his right of stoppage in transitu, the contract of carriage ceases,
the carrier becoming liable as a depositary.
Answer: FALSE
16. If real estate is sold for a lump sum, the vendor is bound to deliver all that is included within the
boundaries stated in the contract although the actual area is greater than that stated in the
contract.
Answer: FALSE

17. If the same immovable is sold to two or more persons who are all in good faith, ownership shall
belong to the buyer who first paid its price.
Answer: FALSE
18. In order that the buyer may enforce the seller’s liability for breach of warranty against eviction,
the judgment depriving the buyer of the thing must first be appealed by the buyer.
Answer: TRUE
19. As a rule, the vendor shall not be liable for a non-apparent easement that is recorded in the
Registry of Property.
Answer: FALSE
20. The vendor’s liability for breach of warranty against eviction may be validly waived by the
vendee. However, the vendor will still be liable if the waiver was made by the vendee without
knowledge of the risks of eviction.
Answer: FALSE

TEST II. MULTIPLE CHOICE. Select the best answer by writing the letter of your choice.
1. These statements concerning the double sale of an immovable are presented to you:
I. The first buyer who was in good faith at the time the sale was made to him, remains in
good faith notwithstanding that he subsequently obtains knowledge of the second sale.
II. In order that the second buyer may be given preference, he must possess good faith
from the time of sale in his favor until the registration of the same.
In your evaluation of the foregoing statements:
a. Both statements are true.
b. Both statements are false.
c. Only statement I is true.
d. Only statement II is true.
Answer: A

2. In case of eviction, the vendor shall be liable to the vendee only for the value of the thing sold at
the time of eviction in which of the following cases?
a. When there is waiver intencionada
b. When there is waiver consciente
c. When the vendor was in bad faith and there was no stipulation exempting the vendor
from liability in case of eviction.
d. When the vendor was in bad faith and there was stipulation exempting the vendor from
liability in case of eviction.
Answer: B
3. When there is a stipulation exempting the vendor from the obligation to answer for eviction and
the vendee made the waiver with knowledge of the risks of eviction and assumed the
consequences, such waiver is known as:
a. Waiver intencionada
b. Waiver consciente
c. Forfeiture of rights
d. Surrender of rights
Answer: A

4. The non-payment of the price is a negative resolutory condition in:

a. Contract to sell
b. Contract of sale
c. Contract of agency to sell
d. Sale on approval
Answer: B

5. Which of the following statements is common to both sale or return and sale on trial?
a. Ownership of the thing is transferred upon delivery to the buyer.
b. Ownership of the thing is transferred to the buyer at some future time.
c. Ownership of the thing may be reverted to the seller should the buyer return it within
the time agreed upon.
d. In case the thing is lost through a fortuitous event after the lapse of the time to keep or
return it and the buyer was still in possession of it, the risk of loss is with the buyer.
Answer: D

6. S sold his lot to X on April 01, 2010. The deed of sale was duly acknowledged by the parties
before a notary public. However, X did not take physical possession of the lot. On April 10, 2010,
S sold the sale lot to Y under a deed of sale which was still to be notarized. Y immediately took
physical possession of the lot. Y was not aware of the previous sale to X. when X visited the
property, he found Y already building a structure thereon. It was also then that he discovered
that S had sold the same lot to Y.
a. The lot belongs to X.
b. The lot belongs to Y.
c. The lot will be co-owned by X and Y in fairness to both of them since there were in good
faith.
d. The lot still belongs to S until it can be determined who between X and Y is the owner of
the lot.
Answer: A

7. An unpaid seller may avail himself of the following remedies, except the right to:
a. Retain the goods while he is in possession of them.
b. Resume possession of the goods at any time while they are in transit.
c. Buy the goods at any public sale if he decides to resell them.
d. Rescind the sale.
Answer: C
8. The following statements are presented to you:
I. A bearer document of title if it is specially indorsed can be negotiated thereafter only by
indorsement completed by delivery.
II. A bearer negotiable instrument if it is specially indorsed can be negotiated thereafter
only by indorsement completed by delivery.
In your evaluation of the foregoing statements.
a. Both statements are true.
b. Both statements are false.
c. Only I is true.
d. Only II is true.
Answer: C

9. S sold a brand-new electric typewriter to B for Php20,000.00 on a credit term of 30 days. The
agreement between the parties provides that B may return the typewriter within the same
period. Ten days after delivery to B, burglars entered the office of B and carted away various
valuables including the typewriter he bought from S.
a. B must pay the price of the typewriter to S.
b. B is not obliged to pay the price of the typewriter because the loss thereof was without
his fault.
c. S must shoulder the loss because B’s ownership of the typewriter was not absolute since
he had the option to return it within 30 days.
d. The loss must be shared equally by S and B in fairness to both.
Answer: A

10. D, owner of certain goods, deposited the goods with W, a warehouseman, who issued to D a
warehouse receipt which states that “The goods are to be delivered to the order of D”. D may
negotiable the warehouse receipt by any of the following means, except by:
a. Mere delivery
b. Special indorsement completed by delivery
c. Blank indorsement completed by delivery
d. Indorsement to bearer completed by delivery
Answer: B

11. Salvosa shipped FOB Manila goods worth Php20,000.00 to Bordelo who is based in Davao City.
While the carrier was on a stopover in Cebu City, Salvosa was informed by his bank that the
check issued by Bordelo was dishonored by reason of insufficiency of funds. He also learned
from the Credit Bureau that Bordelo had become insolvent. Accordingly, Salvosa notified the
carrier that he was taking possession of the goods. The right availed by Salvosa in the situation is
known as the right of:
a. Stoppage in transit
b. Subrogation
c. Attachment
d. Garnishment
Answer: A
12. Refer to No. 11. After obtaining actual possession of the goods, Salvosa offered them for sale at
public auction. Based on the foregoing facts, which of the following statements is incorrect
pertaining to the sale of the goods?
a. Salvosa may bid at the public auction provided there is notice of his participation.
b. The buyer of the goods at the public auction acquires title of the goods as against
Bordelo.
c. If the goods are sold at Php 19,000.00 net of cost of selling and other expenses, Salvosa
may recover the amount of Php 1,000.00 from Bordelo.
d. If the goods are sold at Php 22,000.00 net of cost of selling and other expenses, the
profit of Php2,000.00 belongs to Salvosa.
Answer: A

13. B visited a store selling lamps, light bulbs and similar items. He informed the seller that he was
buying 2 units of a 50-watt “Phillips” bulb. Though he intended to use the 2 bulbs for the
headlight of his car, he did not inform the seller of his purpose. Thereafter, he installed the 2
units of “Phillips” bulb on his car but they did not function. Based on the foregoing, which of the
following statements is incorrect?
a. The seller is liable for breach of warranty of fitness for a particular purpose.
b. The seller is not liable for breach of warranty of fitness for a particular purpose because
the buyer did not rely on the seller’s skill or judgment.
c. The seller is not liable to B since the seller’s warranty is only for merchantability, or that
the bulb is fit for the general purpose for which it was intended.
d. There is no warranty of fitness for a particular purpose since the bulb was sold to B
under its trade name.
Answer: A

14. S shipped FOB Manila, perishable goods worth Php50,000.00 to B who is based in Cebu. B
remitted a check amounting to Php50,000.00 for the price of the goods. While the carrier was
on its way to Cebu, S was informed by his bank that the check issued by B was dishonored for
insufficient funds. On further inquiry, he learned that B had become insolvent. Accordingly, S
obtained physical possession of the goods from the carrier. After notifying B, S resold the goods.
Case A- If the goods are resold for P52,000.00, the profit of Php2,000.00 belongs to B since title
had already passed to him.
Case B- If the proceeds of sale, net of incidental expenses, amounted to Php47,000.00, S can
recover the loss of Php3,000.00 from B.
a. Both Cases are true.
b. Both Cases are false.
c. Case A is true; Case B is false.
d. Case A is false; Case B is true.
Answer: D
15. On January 03, 2010, D deposited his goods with W, warehouseman, who issued a warehouse
receipt, which states that the goods are to be delivered “to the order of D”. On January 5, 2010,
D indorsed the receipt to A. On January 08, 2010, however, D sold the goods represented by the
receipt to X who informed W immediately of the sale to him of the goods by D. At that time, W
was not aware that D had indorsed the receipt of A.
a. A acquired title to the goods as represented by the receipt at the time such receipt was
indorsed to him.
b. X acquired title to the goods because at the time of the sale to him, W, the
warehouseman was not yet aware that D had indorsed the receipt to A.
c. D retained ownership of the goods because he cannot indorse the receipt to one person
and sell the goods to another.
d. W will be bound to deliver the goods to X.
Answer: A

16. King Gems Company, a jewelry manufacturer, shipped fived dozen necklaces to Queen Jewelry
Store. The shipment was made under the written agreement allowing Queen Jewelry Store to
return the necklaces with a period of one month from delivery. Based on the foregoing facts,
which of the following statements is incorrect?
a. Title to the necklace passed to Queen upon delivery.
b. If Queen does not return the necklaces within one month, the sale to it becomes
absolute.
c. If the necklaces are destroyed by fire without the fault of Queen, Queen need not pay
the price thereof.
d. If the necklaces are destroyed through the fault of Queen, Queen must pay the price
thereof to King Gems Company.
Answer: C

17. S, the proprietor of a rent-a-car enterprise, sold his business and his fleet of 10 cars to B for s
lump sum of Php 3 million. S physically delivered the permits and other papers for the operation
of the business and the vehicles to B at the latter’s office except for one car which the parties
agreed shall be leased by S for one month which he was winding up his affairs in the Philippines
as he was then leaving for abroad. In the meantime, the contract of sale and the contract of
lease, though already signed by the parties, have not been acknowledged before a notary public,
and hence, were still private instruments.
a. The ownership of the car leased by S remained with S.
b. The ownership of the car leased by S has been transferred to B although there was no
physical delivery thereof to B.
c. The execution of the private instrument for the sale of the business and the cars
likewise transferred the ownership to B of the car leased by S.
d. Both the contract of sale and the contract of lease must be acknowledged before a
notary public by the parties before the ownership of the car leased by S is transferred to
B.
Answer: B
18. S and B executed a deed of absolute sale duly acknowledged before a notary public whereby S
conveyed his car to B for Php100,000.00 B, however, informed S that he would be going away
on a business trip and that he would be taking the car from the place of S when he returned
after two weeks. Three days after the sale of the car to B, S sold the same car to X through a
deed of absolute sale which was also acknowledged before a notary public. X then drove the car
away from the place of S and had the sale recorded with the Land Transportation Office which
issued to him a certificate of registration of the car in his name. neither B nor X was aware of the
sale made to the other until B returned from his business trip.
a. Preference shall be given to B since the car was first sold to him.
b. X did not acquire title to the car because S was no longer the owner when the sale was
made to him.
c. X acquired title to the car because S appeared to be the owner in the record of the Land
Transportation Office.
d. S remained the owner of the car because the sale made to one buyer nullified the sale
to the other.
Answer: C

19. The unpaid seller, in addition to his right to retain the goods while he is in possession of them,
has the following rights, except the right:
a. Of stoppage in transit
b. To resell the goods
c. To rescind the sale
d. To bid when the goods are resold.
Answer:D
20. Mother Lilly purchased from Santiago Farms four horses with different colors: a white, a gray, a
black, and a brown, which Mother Lilly intended to use in a movie to be starred in by four movie
actors each one of whom represents one of the colors. Each horse was certified to be fit by the
veterinarian who was hired by the parties to examine them. Mother Lilly paid a separate price
for each of the horses. During the filming of the movie, the brown horse was always sick and
could not function as the three others. It was subsequently discovered that it was suffering from
an incurable heart ailment.
a. Mother Lilly ask for the rescission of the sale of the brown horse only since she paid a
separate price for each of the horses.
b. Mother Lilly may ask for the rescission of the sale of all the horses.
c. Mother Lilly may not ask for rescission of the sale of any horse because she freely
entered into the contract of sale.
d. Mother Lilly is bound by the sale of all the four horses and must honor such contract
because the veterinarian certified that all horses were fit.
Answer: B
21. In which of the following cases is the seller not obliged to make any payment to the buyer for
breach of warranty against eviction?
a. When such warranty has not been agreed upon
b. When there was no stipulation exempting the seller from liability.
c. When there was a stipulation exempting the seller (who was in good faith) from breach
of warranty and the waiver was made by the buyer without knowledge of the risks of
eviction.
d. When there was a stipulation exempting the seller (who was in good faith) from breach
of warranty and the waiver was made by the buyer with knowledge of the risks of
eviction.
Answer: D

22. S sold a specific parcel of land separately to the following persons: on July 01, 2010, to X, in a
public document; on July 05, 2010 in a private document to Y, who took physical possession of
the land; and on July 09, 2010, to Z, who registered the sale with the Register of Deeds. Neither
X, Y nor Z was aware of the sale made to the other buyers. Who is the owner of the parcel of
land?
a. X, because he was the first purchaser
b. Y, because he took physical possession
c. Z, because he registered the sale
d. S, because the multiple sales he made rendered each sale a void contract
Answer: C

23. Which of the following documents of title requires indorsement and delivery for its negotiation?
a. A warehouse receipt which states that the goods are to be delivered to bearer.
b. A bill of lading which states that the goods are to be delivered to the order of a
specified person but such person indorsed it in blank.
c. A warehouse receipt which states that the goods are to be delivered to bearer but the
bearer indorsed it to a specified person.
d. A bill of lading which states that the goods are to be delivered to a specified person.
Answer:C
24. S and B executed a deed of absolute sale involving a parcel of land supposedly containing 2,000
square meters. B paid a lump sum of P2,200,000 for the purchase. Based on the foregoing facts,
which of the following statements is correct?
a. If the parcel of land is actually 2,200 square meters in area, S has to deliver only 2,000
square meters thereof and B must pay P2,200,000 as agreed upon.
b. If the parcel of land is actually 1,800 square meters in area, S must deliver only 1,800
square meters and B has to pay only the price equivalent to 1,800 square meters.
c. If the parcel of land actually contains 2,200 square meters, S must deliver all of 2,200
square meters with B still paying the amount of P2,200,000.
d. If the parcel of land actually contains 2,200 square meters, S must deliver all of 2,200
square meters but B must pay a proportionate amount for the additional 200 square
meters in addition to the price of P2,200,000.
Answer: C
25. S, the owner of a rent-a-car business, leased one of his cars to B for one month. On the day of
the expiration of the lease and while B was still in physical possession of the car, B offered to
buy the car from S for P200,000.00. Believing the price to be a good one, S readily accepted B’s
offer and then and there executed a deed of absolute sale in favor of B who immediately paid
the price in cash. Thereafter, B drove away from place of S.
a. The deliver of the car by S to B is by constitutum possessorium.
b. The deliver of the car by S to B is by tradition longa manu.
c. The delivery of the car by S to B is by traditio brevi manu.
d. There was no delivery because B should have turned over the physical possession of the
car to S upon the expiration of the lease so that S could make the proper delivery to him
upon the execution of the contract of sale.
Answer: C

26. It is an affirmation of fact or any promise by the seller relating to the thing which has a natural
tendency to induce the buyer to purchase the same, relying on such promise or affirmation.
a. Condition
b. False representation
c. Warranty
d. Seller’s talk
Answer: C

27. This refers to the warranty of the seller that he has the right to sell the thing at the time when
ownership is to pass, and which can be enforced if the buyer is deprived of the property sold by
a final judgment in court.
a. Warranty against hidden defects
b. Warranty of merchantability quality
c. Warranty against eviction
d. Warranty of possession
Answer: C

28. Three of the following are the requisites in order that the vendee may enforce the vendor’s
liability in case of eviction. Which one is not?
a. There must be a final judgment depriving the vendee of a part of the whole of the thing
sold.
b. The vendee must have appealed from such judgment rendered against him.
c. The deprivation of the vendee is based on a right prior to the sale or an act imputable to
the vendor.
d. The vendor is notified of the suit at the instance of the vendee.
Answer: B

29. This refers to the implied warranty on the part of the seller that he has the right to sell the thing
at the time when ownership is to pass, and that the buyer from that time shall have and enjoy
legal and peaceful possession of the thing.
a. Warranty against hidden defects.
b. Warranty against eviction.
c. Warranty of ownership.
d. Warranty of possession.
Answer: B
30. On June 01, 2010, Sanchez sold to Borlaza in a private instrument a certain computer. Two days
later, Sanchez orally sold the same computer to Contreras who immediately took possession of
the computer. Neither party was aware of the sale made to the other.
a. The computer belongs to Borlaza.
b. The computer belongs to Contreras.
c. The computer will be co-owned by Borlaza and Contreras to give effect to both sales.
d. Both sales are void. Accordingly, Sison will still be the owner.
Answer: B