Sales&Credit Reviewer
Sales&Credit Reviewer
A contract may be absolute or conditional: 1. Actual Delivery- when the thing sold
is place in the control & possession
Absolute- sale is not subject to any of vendee which involves physical
condition. Transfer of ownership is delivery of things. It shall be done be
passed to buyer upon delivery of a done by passing a moveable thing
determinate thing. from hand to hand.
Conditional- sale contemplates - This is not always essential to
contingency. To be able to transfer passing of title. It may be
the ownership, the vendee must first stipulated that transfer may only
comply with certain conditions of the be done after full payment.
vendor which is usually the full - Delivery is generally evidenced
payment. by written acknowledgement –
delivery receipts.
-delivery transfers the ownership, buyer
- Actual delivery is identified as
agad w/ no question unless may
one (1) when deemed made, (2)
agreement.
not always essential in passing of
Loss of the thing title, and (3) proof of delivery.
- Based on (Article 1497 –
Loss before perfection (deterioration in SECTION 2: DELIVERY OF
quality included) THE THING SOLD) the thing
Complete loss, sale is void cos of absence sold shall be understood as
of object. delivered, when it is placed in
the control and possession of
Partial loss, buyer may choose: withdraw the vendee.
from contract (recission) & demand the - Additional info:
remaining part and paying a proportionate Concept of
price (Art. 1493,1494) traditional/delivery: tradition is a
Loss after perfection but before delivery derivative mode of acquiring
ownership by virtue whine 1 hhas
Seller bears the risk of loss (art.1504), the right and intention to alienate
buyer is not obliged to pay the price corporeal things.
Importance of tradition:
After perfection, goods remains at seller’s
consummation of contract of
risk until ownerhip is transferred to buyer bu
sales occurs when thing is
delivery. However, notwithstanding that the
delivered and paid.
ownership is not transferred to buyer, goods
2. Constructive Delivery- occurs when
are at buyer’s risk:
the thing is transferred through the
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custody and title by the law since considered done. (delivery
actual transfer is not possible. It w/short hand) ex: lease
means that there is a change in legal -2.2. & 2.3 is based on Article
character w/o visible changes in 1499. The delivery of movable
actual/visible custody. property may likewise be made
- (Article 1498)when the sale is by the mere consent or
made through public agreement of the contracting
instrument, the execution parties, if the thing sold cannot
thereof shall be equivalent to be transferred to the possession
the delivery of the things which of the vendee at the time of the
is the object of the contract, if sale, or if the latter already had
from the deed the contrary it in his possession for any
does not appear or cannot other reason.
clearly be inferred.
With regard to movable 2.4 Tradition Constitum
property, its delivery may also Possessorium
be made by the delivery of the - Opposite of tradition brevi
keys of the place or depository manu.
where it is stored or kept. -When vendor continues in
2.1. Tradition Symbolica- possession of property sold in
symbolic when the parties uses a another capacity and not as
token symbol to represent a thing owner.
delivered to effect the delivery. - Constitum Possessorium
- Delivery of thing is same as Agreement- instead of vendor
delivery of key where the thing is delivering the vendee a thing so
stored. that the vendee may deliver it
- Art. 1498 back to vendor.
e.g. delivery of keys of a house - (Article 1500) There may also
be tradition constitum
2.2 Tradition Longa Manu- possessorium.
-when the vendor transfer the e.g. from owner to lessee- si
thing to the vendee. This takes seller binenta niya yung property
place by the mere but need nya po so nilease back
consent/agreement of contracting kay buyer magiging lessor si
parties. (Delivery w/ long hands) buyer.
-note that by agreement if thing
sold can’t be transferred to 2.5. Delivery by Legal
vendee’s possession. Formalities
- applies to real and personal
2.3 Tradition Brevi Manu properties, where the delivery is
- The vendee has the possession made through the execution of a
of the thing sold already by public document.
virtue of another title. Instead of - general rule: there is
the vendee turning over the thing presumption of deliver
to the vendor and the vendor 2.6. Quasi Traditio
delivering it back to vendee is
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-delivery of rights, credits or - Sufficient of subj. matter is
incorporeal real property, made capable of being made
by placing the titles of ownership determinate whereas it does not
in the hands of the vendee or need another or further
lawyer, by execution of a public agreement.
instrument, or by allowing the - Article 1460. A thing is
vendee to use his rights as new determinate when it is
owner with the consent of the particularly designated or
vendor. physical segregated from all
- Art. 2.5 & 2.6 is Based on others of the same class.
Article 1501. With respect to The requisite that a thing be
incorporeal property, the determinate is satisfied if at the
provisions of the first time the contract is entered
paragraph of article 1498 shall into, the thing is capable of
govern. In any other case being made determinate
wherein said provisions are not without the necessity of a new
applicable, the placing of the or further agreement between
titles of ownership in the the parties.
possession of the vendee or the 1.3. Consideration- cause. Refers to
use by the vendee of his rights, price certain in money or its
with the vendor's consent, shall equivalent.
be understood as a delivery. - Absence of price is to be
ELEMENTS OF CONTRACT OF SALE: distinguished from failure to pay
price agreed upon.
1. Essential Elements (essential 2. Natural Elements- elements that are
requisites of a contract of sale) presumed to exist and inherent to the
1.1. Consent- meeting of the minds. contract of sale even if there is no
Refers to the consent given by both stipulation of the parties.
vendor and vendee to transfer and 2.1. Warranty Against Eviction 1548-
deliver as for the former and to pay 1560
as for the latter. -
- Must have a legal capacity to give 2.2. Warranty Against Hidden Defects
consent. & Encumbrances 1561-1581
- When the seller accepts the -
payment, it indicates his consent on 3. Accidental Elements- stipulated
the contract. elements on contract. Add-ons and not
1.2. Subject Matter which should be a necessary to perfection of contract but to
determinate thing- refers to a accessorize.
determinate thing or at least of
CHARACTERISTICS OF A
capable of being one. The reason for
CONTRACT OF SALE:
such is when both parties differ in
regard to the thing sold, there’ll be 1. Consensual- contract is perfected by
no meeting of minds. mere consent. There shall be meeting of the
- Subject must also be licit and minds.
w/in the commerce of man.
Article 1475. The contract of sale
is perfected at the moment there is
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a meeting of minds upon the thing 6. Nominate- because it is given a
which is the object of the contract special name/designation in the civil
and upon the price. code- sale.
From that moment, the parties may
reciprocally demand performance, RULES ON THE OBJECT OF A
subject to the provisions of the law CONTRACT OF SALE:
governing the form of contracts. Requisites:
2. Principal – because it can a. The thing must be within the commerce
independently exist. The reason for such of men- refers that a private ownership of a
is that for the contract to validly exist, person of a thing, meaning it shall be within
there is no necessity for it to depend his control and he has the rights to such.
upon the existence of another valid
contract. Does not depend on another - Example of things outside the commerce of
contract man: public ownership: streets, bridges,
parks & common to everybody: sunlight and
3. Bilateral- both contracting parties are air.
bound to fulfil their obligations with
each other. Reciprocal obligations. b. The thing must not be contrary to laws,
morals, good customs, public orders and
4. Onerous- thing sold is conveyed in public policy- the thing must be licit or
consideration of price and the price is lawful.
conveyed in consideration of the thing
sold. - The thing may not be considered as licit
and rather is an illicit if the thing per se (of
- A contract of sale is onerous its nature) ex: decayed food unit prohibited
because, to acquire the rights, lottery ticket
valuable consideration must be
given. Cause or consideration is a - and per accidens ) cos of some provisions
general requirement for the of law declaring it illegal) ex: prohibited
existence of contract. drugs
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segregated from all others of the same already in existence , & then belonging to
class. the vendor , & the title will vest in the buyer
the moment the thing comes into existence.
The requisite that a thing be determinate is Ex:
satisfied if at the time the contract is entered 1.) Wine is expected to be produced by a
into, the thing is capable of being made vineyard.
determinate without the necessity of a new 2.) The future wool grown on a sheep.
or further agreement between the parties.
b. Emptio Spei – Sale of Hope (e.g. Lottery,
Gacha)
OTHER RULES ON OBJECT: - either the thing nor its quantity & quality
1. The seller must have the right to transfer are certain to exist.
the ownership of the thing at the time that Ex: Sale of sweepstakes or raffle ticket that
is delivered; it is not necessary that the is yet to be drawn.
seller be the owner of the thing at the time 3. The goods which form the subject of a
of sale. contract of sale may either be:
- only one can sell what he owns according a. Existing Goods- owned and possessed by
to Art.1458. vendor must be the owner or at seller
least be authorized by the owner to sell the
things. b. Goods to be Manufactured – Future
Goods to be manufactured, raised, or
2. Things having potential existence may acquired. (Art 1460)
be the object of sale. However, the thing
must come into existence, otherwise the According to Article 1462, The goods
sale will not be effective for not having an which form the subject of a contract of
object. sale may be either existing goods, owned
or possessed by the seller, or goods to be
- According to Article 1461, Things manufactured, raised, or acquired by the
having a potential existence may be the seller after the perfection of the contract
object of the contract of sale. The efficacy of sale, in this Title called "future goods."
of the sale of a mere hope or expectancy is
deemed subject to the condition that the There may be a contract of sale of goods,
thing will come into existence. The sale of whose acquisition by the seller depends
a vain hope or expectancy is void. upon a contingency which may or may
not happen.
- However, sale of hope or expectancy is
valid even if the thing hoped for or expected RULES ON PRICE:
does not come into existence, unless the
hope/expectancy is in vain – sale is void. Concept - The price is the sum that will be
(sweepstakes ticket). paid for the property that is sold.
a. Emptio rei spratae – sale of future thing; 1. Certain- there can be no sale w/o a price
because the contract of sale is settled with a
- maybe the object of the contract of sale. price certain in money or its equivalent. Art.
There may be a valid sale of a thing, which 1469.
though not yet in existence, is reasonably
certain to come into existence as the natural 2. The price is considered certain if:
increment or usual incident of something
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a. It is a fixed amount- agreed upon against the party in fault as are allowed
amount the seller or the buyer, as the case may be.
b. It is certain with reference to another
certain thing- (Art.1472). Applicable only
when no specific amount is stipulated by RULES WHEN A THIRD PERSON OR
parties. PERSONS DETERMINES THE PRICE
OF AN OBJECT
Article 1472. The price of securities,
grain, liquids, and other things shall also General rule: the price fixed by the third
be considered certain, when the price person specified by the parties is binding
fixed is that which the thing sold would upon them. However, there are exceptions
have on a definite day, or in a particular 1. Should such person or persons be
exchange or market, or when an amount unable or unwilling to fix it, the contract
is fixed above or below the price on such shall be inefficacious, unless the parties
day, or in such exchange or market, subsequently agree upon the price. Art.
provided said amount be certain. (1448) 1469.
c. The determination is left to the 2. If the third person or persons acted in
judgment of a specified person or bad faith or by mistake, the courts may fix
persons- Applicable only when no specific the price. But note that mere error in
amount is stipulated by parties. judgment cannot serve as a basis for
3. Fixing of the price cannot be at the sole disregarding the price fixed.
discretion of one party. However if the 3. Where such third person or persons are
price fixed by one of the parties is accepted prevented from fixing the price or terms by
by the other, the sale is perfected. fault of the seller or the buyer, the party
Based on: not in fault may have such remedies
against the party in fault as are allowed the
Article 1469. In order that the price may seller or the buyer, as the case may be.
be considered certain, it shall be sufficient
that it be so with reference to another - may have a choice of rescission or
thing certain, or that the determination fulfilment, with damages in either case. If
thereof be left to the judgment of a special fulfilment is chosen by the innocent party,
person or persons. court shall fix the price.
All parties who are capacitated may enter (1) When a separation of property was
into a contract of sale. agreed upon in the marriage settlements;
or
1. Minors – where necessaries are sold and
delivered to a minor or other person without (2) When there has been a judicial
capacity to act, he must pay a reasonable separation of property under article 191.
price thereafter. In here contract is valid but
has the right to recover any excess above
reasonable value paid by him. (Note that RELATIVE INCAPACITY TO BUY
generally, contracts entered into by minors AND SELL:
and incapacitated persons are voidable).
The following cannot acquire by purchase,
Based on: Article 1489. All persons who even at public or judicial auction sales or in
are authorized in this Code to obligate legal redemption, compromises and
themselves, may enter into a contract of renunciations, either in person or through
sale, saving the modifications contained in mediation of another:
the following articles.
a. The Guardian- the property of the person
Where necessaries are those sold and or persons who may be under his
delivered to a minor or other person without guardianship;
capacity to act, he must pay a reasonable
price therefor. Necessaries are those referred b. Agents- the property whose
to in article 290. administration or sale may have been
intrusted to them, unless the consent of the
2. Sale between spouses are considered principal has been given;
VOID, this also applies to common law
Spouses. c. Executors and Administrators- the
property of the estate under administration;
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d. Public Officers and Employees the a. The Subject of the sale; and
property of the State or any subdivision
thereof or of any GOCC or institution.- b. The Price
the administration of which has been (stages: negotiation, perfection,
intrusted to them; this provision shall apply consummation)
to judges and government experts who, in
any manner whatsoever, take part in the Form of a Contract of Sale
sale; Based on: Article 1483. Subject to the
e. Justices, Judges, and Prosecuting provisions of the Statute of Frauds and of
Attorneys, Clerk of Superior or Inferior any other applicable statute, a contract of
Courts and other Officers and employees sale may be made in writing, or by word
connected with the administration of of mouth, or partly in writing and partly
justice.- the property and rights in litigation by word of mouth, or may be inferred
or levied upon an execution before the court from the conduct of the parties.
within whose jurisdiction or territory they Subject to the provisions of the Statute of
exercise their respective functions; this
prohibition includes the act of acquiring by Frauds and any other applicable Statute, a
assignment and shall apply to lawyers, with
Contract of sale may be in any of the
respect to the property and rights which may
following terms:
be the object of any litigation in which they
may take part by virtue of their profession; a. In writing
Reason for prohibition: b. By word of Mouth
To prevent frauds on the aforementioned c. Partly in writing partly by word of mouth
persons and minimize temptations to the
exertion of undue and improper influence. d. By the conduct of the parties.
Due to the fear of greed might get to the Gen. rule: contract may be entered into any
sentiments. form provided all essential requisites for its
Based on: Article 1491. validity are present.
A contract of sale is perfect at the moment b. The Auctioneer may withdraw the goods
there is meeting of the minds upon: from the sale unless the auction has been
announced to be without reserve.
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Withdraw the goods from sale any time b. His right to bid must not be prohibited by
before hammer falls. law or stipulation;
Rights of the parties after the perfection. c. Notice must be given that the sale is
subject to a right to bid by or on behalf of
a. The winning bidder cannot retroact his the seller.- if no notice, it shall be
bid nor the auctioneer withdraw the goods unlawfulfor the seller to bid directly or
since there is already a perfected contract. indirectly fro the auctioneer to bid on behalf
(Applicable by the time after the hammer of seller’s.
falls). Contract is only perfected by the fall
of hammer. RULES ON PROMISE TO BUY/SELL:
Based on: Article 1476. In the case of a 1. Bilateral Promise – both parties promises
sale by auction: to each other to buy/sell a determinate thing
at an agreed price.
(1) Where goods are put up for sale by
auction in lots, each lot is the subject of a a. This is as good as a perfect sale; for
separate contract of sale. enforceability, the rules in Statue of
Frauds must be observed
(2) A sale by auction is perfected when the
auctioneer announces its perfection by the 2. Unilateral Promise – A promise to
fall of the hammer, or in other customary buy/sell is made by one of the parties.
manner. Until such announcement is made,
any bidder may retract his bid; and the a. If not accepted – No legal effect
auctioneer may withdraw the goods from b. If accepted with consideration – the
the sale unless the auction has been promise is binding upon the promisor.
announced to be without reserve.
c. If accepted without consideration – the
(3) A right to bid may be reserved expressly promise is not binding upon the promisor.
by or on behalf of the seller, unless
otherwise provided by law or by stipulation. Based on: Article 1479. A promise to buy
and sell a determinate thing for a price
(4) Where notice has not been given that a certain is reciprocally demandable.
sale by auction is subject to a right to bid on
behalf of the seller, it shall not be lawful for An accepted unilateral promise to buy or to
the seller to bid himself or to employ or sell a determinate thing for a price certain
induce any person to bid at such sale on his is binding upon the promisor if the promise
behalf or for the auctioneer, to employ or is supported by a consideration distinct
induce any person to bid at such sale on from the price.
behalf of the seller or knowingly to take any EARNEST MONEY AND OPTION
bid from the seller or any person employed MONEY:
by him. Any sale contravening this rule may
be treated as fraudulent by the buyer. 1. Earnest Money – The money is given as
part of the purchase price and as proof of the
Rights of the seller to bid – The seller may perfection of the contract; paid by the buyer
bid at the auction provided the following to show his legitimate interest and earnest
requisites are present: desire to purchase the thing.
a. The right to bid have been reserved
expressly by or on behalf of the seller.
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a.k.a. aras or smthn of value to show that the 5. Sale on approval or on trial or on
buyer is really earnest & given to seller to satisfaction – ownership of the object
bind the bargain. remains with the seller despite delivery, but
shall be transferred to the buyer in the ff.
2. Option Money – Is the consideration paid cases:
for the purpose of holding one to his
promise to buy or sell a determinate thing • When the buyer signifies his approval or
for a certain period of time, which acceptance of the goods.
consideration is separate and distinct from
the purchase price. • When he does an act adopting the
transaction (e.g. makes use or consumes the
Effect: Offeror (seller) can’t withdraw the thing)
offer until after the expiration of option
• If he does not signify his approval or
Binigay to so buyer would have the option acceptance of the goods but retains the
whether to buy the thing or not. 1wrdgoods without giving notice of
rejection within the time fixed in the
Based on: Article 1482. Whenever earnest contract.
money is given in a contract of sale, it shall
be considered as part of the price and as Based on: Article 1481. In the contract of
proof of the perfection of the contract. sale of goods by description or by sample,
the contract may be rescinded if the bulk of
SALE BY SAMPLE, DESCRIPTION, the goods delivered do not correspond with
SALE OR RETURN, SALE ON the description or the sample, and if the
APPROVAL: contract be by sample as well as
1. Sale by Sample – The parties contract description, it is not sufficient that the bulk
solely with reference to the sample. of goods correspond with the sample if they
do not also correspond with the
- it must appear that the exhibition of the description.
sample by the seller was an inducement of
the sale or formed the sole basis thereof. The buyer shall have a reasonable
opportunity of comparing the bulk with the
- shall conform with the kind, character, and description or the sample.
quality.
2. Sale by Description – The parties contract
solely with reference to the description. RULES ON DOUBLE SALE:
-If goods aren’t the same as the description, The determination of who has preferred
contract may be rescinded. right (who becomes the owner) in case the
same thin g had been sold to different buyers
3. Sale by sample by Sample and is governed by the following:
Description – The seller warrants that the
bulk of the goods delivered corresponds 1. Movables – ownership shall be
with both the sample and the description. transferred to the person who may have first
taken possession thereof in good faith;
4. Sale or Return – The buyer has the option (possession may either be actual or
to return the thing within the time fixed in constructive)
the contract or within a reasonable time.
2. Immovable property
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a. The buyer who first registered in good 1. Elect fulfilment upon the vendee’s failure
faith; (registry of property) to pay. (for 1 payment missed)
b. Should there be no inscription or 2. Cancel the sale if the vendee has failed to
registration, ownership shall pertain to the pay. (This is only applicable if vendee failed
person who in good faith was first in the to pay 2 or more instalments)
possession; and
3. Foreclose the chattel mortgage on the thing sold, if
c. Oldest Title one has been constituted, should the vendee’s failure
to pay cover two or more installments. In this case he
Based on Article 1544 shall have no further action against the purchaser to
recover any unpaid balance of the price. Any
Applicable when: agreement to the contrary shall be void (1454—a)
1. 2 or more transactions constitutes valid Chattel mortgage- security contract where
sales. buyer uses a personal property as security
2. 2 or more sales transactions must pertain for his obligation and registered with the
exactly to the same subj. matter. chattel mortgage registry.
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It’s a public policy to protect buyers of real estate a. In case of defaults, the buyer has a grace
on instalment payments against onerous and period of one month for every year of
oppressive conditions. instalment payment. The buyer can pay the
The Maceda Law applies to contracts of sale unpaid instalment interest free during this
of real estate on instalment payments grace period.
including residential condominium b. The foregoing right shall be exercised by
apartments. It likewise covers contracts to the buyer only once in every five year of the
sell. life of the contract.
NOTE: Maceda law only covers sale or c. The seller could cancel the sale if the
financing of real estate. buyer still failed to pay within the grace
1. Maceda Law does not apply to: period. The following must be complied
with if the seller wishes to cancel:
a. Sale of industrial lots
i. Give a notarized notice of cancellation or
b. Sale of Commercial Buildings demand for recission of the contrary by a
c. Sale to Agricultural Tenants notarial act;
d. Straight sale or sale not on instalment ii. There must be full payment of the cash
basis. surrender value, if any.
2. Maceda Law cannot be invoked by the iii. The actual cancellation shall take place
following person after 30 days from receipt by the buyer of
the notice of cancellation or the notarial
a. The highest bidder in the foreclosure sale, demand for rescission and upon full
if the seller opted to foreclose the mortgage; payment of the cash surrender value.
b. The developer-seller or his successor. iv. Amount of cash surrender value – 50% of
the total payments made plus after five years
RULES IN MACEDA LAW
of instalments, an addition 5% every year.
1. If the buyer has paid less than two years
v. The amount of CSV should not exceed
instalment:
90% of the total payment made; and down
a. Grace Period – the buyer may pay within payments, deposits and options on the
60 days from the date the instalment become contract shall be include in the computation
due. More time to pay your loan. of the total number of instalment payments
made.
b. Cancellation – in case of non-payment
within the 60-day grace period, the seller
may cancel the sale after 30 days from
OBLIGATIONS OF THE SELLER:
receipt of the buyer of the notice of
cancellation or demand for rescission. 1. To transfer the ownership of the thing
Pwede lang cancel w/in 30 days from notice sold- ownership of the thing is acquired by
by seller thorugh a notarial act. vendee from the moment the thing is
delivered to him. (Art.1496)
2. If the buyer has paid at least two years
instalment: (seller shall give the buyer a 2. To deliver the thing sold- vendor is
grace period of not less than sixty days from bound to deliver the thing sold and its
the date the installment became due.) accessions accessories in the condition in
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which they were upon the perfection of the the buyer acquires no better title to the
contract. All fruits shall pertain to the goods than the seller had, unless the owner
vendee from the day on which the contract is of the goods is by his conduct precluded
perfected. (Art. 1537) from denying the seller's authority to sell.
3. To warrant the thing sold- vendor is Nothing in this Title, however, shall affect:
liable for breach of warranty against eviction
and warranty against hidden defect or (1) The provisions of any factors' act,
encumbrances (Art. 1547) recording laws, or any other provision of
law enabling the apparent owner of goods to
4. To take care of the thing sold with the dispose of them as if he were the true owner
diligence of a good father of a family thereof;
unless the law or the stipulation of the
parties requires another standard of care. (2) The validity of any contract of sale under
statutory power of sale or under the order of
Based on: Article 1495. The vendor is a court of competent jurisdiction;
bound to transfer the ownership of and
deliver, as well as warrant the thing which is (3) Purchases made in a merchant's store, or
the object of the sale. in fairs, or markets, in accordance with the
Code of Commerce and special laws.
SALE BY A PERSON WHO IS NOT
THE OWNER OF THING SOLD
The buyer acquires no better title than the TIME & PLACE OF DELIVERY OF
seller had, except in the following cases: THE THING SOLD:
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deliverable state, unless otherwise • Accept the goods agreed upon and reject
stipulated. the rest;
• Accept the whole of the goods delivered
When is a seller not bound to deliver the and pay them at the contract rate;
thing sold? • Reject the whole of the goods if they are
indivisible. (Art. 1522)
a. If the vendee has not paid him the price;
b. If no period for the payment What if the goods delivered are mixed
of the prices has been fixed in good of different description? The buyer
the contract. may:
a. Accept the goods agreed upon and reject
c. If a period has been fixed the rest, if the sale is divisible;
for the payment of the price,
b. Reject the whole of the goods if the sale is
the seller is bound to deliver
indivisible.
the thing sold. However, the
seller is not bound to deliver if Unpaid Seller
the buyer loses the right to
make use of the period. One who has not been paid or tendered the
whole of the price or who has received a bill
Based on Article 1524, the
of exchange or other negotiable instrument
vendor shall not be bound to
as conditional payment and the condition
deliver the thing sold if
under which it was received has been broken
vendee has not paid the
by reason of the dishonour of the instrument,
price, or if no period for the
the insolvency of the buyer, or otherwise.
payment has been fixed in
the contract. Seller is upaid within the definition whether
title has or has not passed.
What are the rights of the Tender of payment is not same w/
buyer when quantity or performance. Seller is not unpaid after
quality of goods delivered is tender of price
different from that which
the seller contracted to sell? Article 1528-1535: unpaid seller
Reject the goods- cos the creditor can’t be
compelled to accept partial payment.
Accept the goods- buyer must pay for the RIGHTS OF AN UNPAID SELLER:
goods at the contract rat e. If the buyer has
used or disposed of the goods before he Possessory Lien
know that the seller is not going to perform 1. Or a right on the goods or right to retain
his contract in full, buyer shall not be liable them while he is in possession of them.
for more than the fair value to him of the ART.1526, Unpaid seller is allowed a lien
goods received. (Art.1552). and kindred remedies is the inherent
injustice of depriving him of goods w/ which
What if the quantity delivered is MORE he has not finally parted where it’s evident
than that which the parties agreed upon? that he has not been or will not be paid the
The buyer may: price when due.
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J. Delos Santos
2. When Available – This right is available b. When lien is lost – the unpaid seller
to the seller and notwithstanding that he loses his lien on the goods in the following
may be in possession of the goods as agent cases:
or Bailee for the buyer in the following
instances: ART.1527 i. When he delivers the goods to a carrier
or other bailee for the purpose of
a. Where the goods have been sold without transmission to the buyer without
any stipulation or credit- sale w/o reserving the ownership in the goods or
stipulation as to credit means that in a credit the right to the possession thereof.
sale, seller binds himself to give the goods to
buyer w/o receiving the time payment for it. delivery to agent/bailee of buyer- seller may
In the absence of stipulation, seller is entitle stop goods while on way to buyer after
to rhe payment when he transfers ownership. delivery to baille for buyer but it can’t be
said that seller has still any lien on it.
b. Where the goods have been sold on
credit, but the credit term has expired; ii. When the buyer or his agent lawfully
obtains possession of the goods.
expiration of the term credit- even where the
parties agree upon a sale on credit, seller’s Possession by buyer/his agent- if buyer
right of lien may be exercised. already has the possession of goods at time
of bargain, it is clear that seller has not lien
- buyer is entitle to possession even if not once it’s transferred.
yet paid but if term of credit expires and
price becomes due, he loses his right to iii. By waiver thereof- waiver of lien means
such. that when seller may lose his lien by
agreement to surrender it.
c. Where the buyer is insolvent- lien of
seller in possession is revived even the time
of payment has not yet arrived. Based on RIGHT OF STOPPAGE IN TRANSITU:
bilateral contract.
1. This right involves the right of the
3. Lien where there is partial delivery: unpaid seller to resume possession of the
a. Where an unpaid seller has made part goods at any time while they are in transit
delivery of the goods, he may exercise his and he will then become entitled to the
rights of lien on the remainder, unless goods as he would have had if he never
such part delivery has been made under parted with the possession. Art.1530
such circumstances as to show an intent - If the seller already lost his
to waive the lien or right of retention. possession, he may still exercise
ART.1528 the 2nd right of stoppage in
part of goods are delivered- unpaid seller transitu.
has a lien on the remainder of the remaining - He may have the possession
or proportion of price that is due on account again if buyer become insolvent.
of goods retained. 2. When the right available Art.1530- This
Part of goods as symbolic delivery- waiver right is available after the unpaid seller has
of any right of retention, lien is lost. parted with the possession of the goods and
the buyer is or becomes insolvent. –
judicially declared dapat para considred as
insolvent based on Art.1636.
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J. Delos Santos
3. How it is exercised: Art.1530&1532 possession of them, even if the seller has
refused to received them back.
• By obtaining actual possession of the
goods; - goods are rejected by buyer &
carrier/bailee continues in possession.
• By giving notice of his claim to the carrier
or other bailee in whose possession the 6. When the goods are NO LONGER in
goods are. transit. Art.1531
4. Effects of exercise of right of stoppage • If the buyer obtains delivery of the goods
in transit: Art.1531 before arrival at the appointed destination;
• The goods are no longer in transit • If the carrier or other bailee acknowledges
to the buyer or his agent, that he is holding
- Buyer/his agent obtains delivery the goods in his behalf, after arrival of the
of goods before arrival at goods at their appointed destination.
destination.
- After arrival, carrier/other • If the carrier or other bailee wrongfully
bailee acknowledges to the refuses to deliver the goods to buyer or his
buyer/his agent that he holds the agent.
goods on behalf.
- Carrier/other bailee wrongfully
refuses to deliver the goods to RIGHTS OF RESALE (Art.1533):
buyer/his agent
1. The right of Resale becomes available
• The contract of carriage ceases; the carrier when:
shall be liable as depositary or other bailee
• The buyer has defaulted in the payment of
• The carrier must redeliver the goods to, or the price- unpaid in an unreasonable time.
according to the instructions, the seller;
• The seller has the right of lien or has
However, if a negotiable document of the
stopped the goods in transit- then resell the
title has been issued for the goods, the
goods and wouldn’t be liable to orig. buyer
carrier will not be bound to deliver the
but may recover damages from buyer for
goods unless the document of title is first
any loss by breaching of contract.
surrendered to him for cancellation.
• Title to the goods has passed on to the
5. When goods are in transit. Art.1531
buyer-
• From the time are delivered to the carrier
2. Grounds for Resale:
or other bailee for the purpose of
transmission to the buyer, until the buyer or • The goods are of a perishable nature
his agent, takes delivery of them from such
carrier or other bailee; • The seller has expressly reserved the right
to resell the goods in case the buyer should
- After delivery to carrier/bailee & make default
before the buyer/agent takes
delivery of them • The buyer has been in default for an
unreasonable time- buyer delays payment of
• If the goods are rejected by the buyer, and price.
the carrier or other bailee continues in
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J. Delos Santos
3. How resale is made – the seller may give such notice shall be relevant in any
resell the goods in a public or private sale. issue involving the question whether the
He is bound to exercise reasonable care and buyer had been in default for an
judgment in making the resale. He cannot unreasonable time before the resale was
directly and indirectly, buy the goods. made.
4. Effects of Resale: It is not essential to the validity of a resale
that notice of the time and place of such
a. The seller shall not be liable to the resale should be given by the seller to the
original buyer upon the contract of sale or original buyer.
for any profit made by such resale- seller is
not liable for any profit made but if he sells The seller is bound to exercise reasonable
for less than the price, he has the right to sue care and judgment in making a resale,
for balance. and subject to this requirement may
make a resale either by public or private
b. He may recover damages from the buyer sale. He cannot, however, directly or
for any loss occasioned by the breach of indirectly buy the goods. (n)
contract of sale.
c. The new buyer requires a good title
against the original buyer. RIGHT TO RESCIND THE SALE
(Art.1434):
Based on Article 1533. Where the goods
are of perishable nature, or where the 1. The Right to Rescind Sale becomes
seller expressly reserves the right of resale available when:
in case the buyer should make default, or
where the buyer has been in default in the • The buyer has defaulted in the payment of
payment of the price for an unreasonable the price- unreasonable time dapat. Seller
time, an unpaid seller having a right of may rescind the transfer of title and resume
lien or having stopped the goods in ownership. Seller is not liable but may
transitu may resell the goods. He shall not recover damages for any loss briught by
thereafter be liable to the original buyer breaching.
upon the contract of sale or for any profit • The seller has the right of lien or has
made by such resale, but may recover topped the goods in transit;
from the buyer damages for any loss
occasioned by the breach of the contract • Title to the goods has passed on the buyer-
of sale. transfer of title shall not be held to have
been rescinded until he has manifested by
Where a resale is made, as authorized in notice to buyer or by some overt act an
this article, the buyer acquires a good title intention to rescind.
as against the original buyer.
2. Grounds for rescission:
It is not essential to the validity of resale
that notice of an intention to resell the • The seller has expressly reserved the right
goods be given by the seller to the original to rescind the sale in case the buyer should
buyer. But where the right to resell is not make default;
based on the perishable nature of the • The buyer has been in default in the
goods or upon an express provision of the payment of the price for an unreasonable
contract of sale, the giving or failure to time.
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J. Delos Santos
3. How rescission is made: warranted expressly or by implication in
the contract of sale as a condition of the
a. By giving notice to the buyer of the obligation of the buyer to perform his
intention to rescind; promise to accept and pay for the thing.
b. By doing an overt act manifesting the (n)
intention to rescind. Condition- uncertain event/contingency on
4. Effects of rescission: the happening of which obligation of
contract depends.
a. The seller shall not be liable to the buyer
upon the contract of sale; WARRANTIES
b. He may recover from the buyer damages Implied and Express warranties:
for any loss occasioned by the breach of the 1. Warranties may be express/implied-
contract of sale; implied warranties are natural elements of a
c. The seller resumes ownership of the contract of sale.
goods. 2. Express Warranties(Art.1545) of the
seller – an express warranty is an affirmation
of fact or any promise by the seller relating
WHAT HAPPENS TO A CONTRACT to the thing if the natural tendency of such
OF SALE SUBJECT TO A CONDITION affirmation or promise is to induce the buyer
THAT IS NOT FULFILLED? to purchase the same, and if the buyer
The other party may choose to do any of the purchase relying thereon.
following: Rooted from the word itself, seller is
a. Refuse to proceed with the contract – he expressing an affirmation of fact regarding
may also treat the non-performance of the the product to engage the buyer to
condition as a breach of warranty; purchase.
b. Waive the performance of the condition 3. Implied Warranties of the Seller- Unless
and proceed with the contract. a contrary intention appears, the following
are deemed included in a contract of sale
Based on: Art.1545, Where the obligation even without an express stipulation:
of either party to a contract of sale is
subject to any condition which is not Implied warranties is that which law derives
performed, such party may refuse to by implication/inference from nature of
proceed with the contract or he may transaction/relative situation of parties
waive performance of the condition. If the Art.1547.
other party has promised that the a. Warranty against Eviction/Warranty in
condition should happen or be performed, case of eviction- vendee is deprive of the
such first mentioned party may also treat thing in whole/part by virtue of final
the non-performance of the condition as a judgment.
breach of warranty.
Elements: vendee is deprive of the thing,
Where the ownership in the thing has not deprived by virtue of final judgment,
passed, the buyer may treat the judgment is based on a right prior to sale/act
fulfillment by the seller of his obligation imputable to vendor, vendor was summoned
to deliver the same as described and as in suit of eviction, no waiver on vendee’s
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J. Delos Santos
part. If one is missing, breach of warranty b. The eviction was by virtue of final
can’t be declared. judgment; (Art.1557)
Article 1548. Eviction shall take place -2 essential elements: deprivation in
whenever by a final judgment based on a whole/part of thing sold & existence of final
right prior to the sale or an act imputable judgment.
to the vendor, the vendee is deprived of
the whole or of a part of the thing Based on Article 1557. The warranty
purchased. cannot be enforced until a final judgment
has been rendered, whereby the vendee
The vendor shall answer for the eviction loses the thing acquired or a part thereof.
even though nothing has been said in the (1480)
contract on the subject.
c. The eviction was based on the ground on
The contracting parties, however, may right prior to the sale or an act imputable to
increase, diminish, or suppress this legal the vendor and;
obligation of the vendor. (1475a)
d. The seller must be summoned in the suit
• The warranty may be eliminated by for eviction at the instance of the buyer.
stipulation, so long as the stipulation was (Art.1558)
agreed upon in good faith;
- Before a vendee may be legally liable, he
- Art. 1548, warranty is not an should be summoned for a suit of eviction.
essential element in ca contract Object of law gives him the opportunity to
of sale so it may be increased, prove that what is being interposed by
diminished, or suppressed by vendee is unjust.
agreement of parties.
Based on Article 1558. The vendor shall
• Any stipulation exempting the vendor from not be obliged to make good the proper
the obligation to answer for eviction shall be warranty, unless he is summoned in the
void if he acted in bad faith. suit for eviction at the instance of the
vendee. (1481a)
Based on Article 1553. Any stipulation
exempting the vendor from the obligation 5. Waiver of Warranty in case of eviction –
to answer for eviction shall be void, if he may be conciente or intentionada:
acted in bad faith. (1476)
a. The waiver is conciente when the buyer
Effect of vendor’s bad faith- vendor sold a made the waiver without the knowledge of
property and sold it again to another he can’t the risks of eviction – the seller shall only
be exempt from warranty against eviction. pay the value which the thing sold had at the
time of the eviction;
Effect of vendee’s bad faith- If he knew
about the defect of the tile and proceeded b. The waiver is intentionada when the
with the contract, he can’t hold the vendor buyer made the waiver with knowledge of
liable for his legal and peaceful possession. the risks of eviction and assumed its
consequences – seller is NOT liable.
4. Requisites for the enforcement of
warranty in case of eviction: (Art.1548) Based on Article 1554. If the vendee has
renounced the right to warranty in case of
a. The vendee has been evicted; eviction, and eviction should take place,
the vendor shall only pay the value which
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J. Delos Santos
the thing sold had at the time of the d. The expense of the contract, if the
eviction. Should the vendee have made vendee has paid them.
the waiver with knowledge of the risks of
eviction and assumed its consequences, If stipulation is not present, execution and
the vendor shall not be liable. (1477). registration of sale is borne by vendor. If
vendor paid for it, he has the right to
demand it.
LIABILITIES OF THE SELLER IN e. The damages and interest ornamental
CASE OF BREACH OF THE SAID expenses if the sale was made in bad Faith.
WARRANTY (ART.1555):
Vendee’s right to demand damages and
When the warranty has been agreed upon or interests and ornamental expenses is
nothing has been stipulated, when eviction qualified by the condition that the sale was
occurs, the buyer shall demand from the made in bad faith.
seller:
If presumed in good faith, vendee is not
a. The return of the value which the thing entitled to recover damages.
sold had at the time of the eviction, be it
greater or less, than the price of the sale; WARRANTY AGAINST HIDDEN
DEFECTS:
Return of value of thing- if the value of the
propeperty is more or less than the value at This is an implied warranty that the thing
the time of sale due to shall be free from any hidden faults or
dtoriation/improvement at the time of defects or any change or encumbrance not
eviction, vendor shall pay the excess/not declared or known to the buyer; (Art.1561)
suffer the damage. Based on Article 1561. The vendor shall
b. The income or fruits if he has been be responsible for warranty against the
ordered to deliver them to the party who hidden defects which the thing sold may
won the suit against him; have, should they render it unfit for the
use for which it is intended, or should
Income/Fruit of thing- vendee is liable to the they diminish its fitness for such use to
party who won the suit against him for such an extent that, had the vendee been
income/fruits received, only if decreed by aware thereof, he would not have
court. Vendee has the right to use and free acquired it or would have given a lower
from liability for usage of such sale. price for it; but said vendor shall not be
answerable for patent defects or those
c. The costs of the suit which caused the which may be visible, or for those which
eviction and in a proper case, those of suit are not visible if the vendee is an expert
brought against the vendor for the who, by reason of his trade or profession,
warranty; should have known them. (1484a)
Cost of suit- vendee shall be entitled to the Requisites: defect is important/serious,
cost of litigation as well as the costs of the hidden, exist at time of sale, vendee must
action brought against the vendor to enforce gives notice of defect to vendor at a
his warranty. However, travelling expense in reasonable time, actions for rescission or
defending himself is not part of this. reduction of price must be brought within
Recovery of damages is possible only when proper period of time- 6mos from delivery
vendor acted in bad faith. or w/in 40 days from date of delivery for
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J. Delos Santos
animals, no waiver of warranty on vendee’s conform to the written warranty and whose
part. expenses;
a. These refer to defects which would e. State what the consumer must do to avail
render the thing unfit for the use for which of the warranty rights;
it is intended or should they diminish its
fitness for such use to such an extend that, f. Stipulate the warranty period.
had the vendee been aware thereof he
would not have acquired it would have
given a price for it.(Art. 1561) PERIOD OF WARRANTY:
- if vendee has been aware of the state of the It is also mandated that all written warranties
thing as it is unfit, he would not have or guarantee issued by a manufacturer,
acquired such thing. producer, or importer shall be operative
from the moment of sale. The period of
b. Remedies (within 6mos. period from warranty shall be:
delivery) (Art. 1567):
a. The parties may stipulate the period
i. Withdrawing from the contract also known within which the express warranty shall be
as accion redhibitoria with damages enforceable. If the implied warranty on
ii. Demanding a proportionate reduction of merchantability accompanies an express
the price also known as recoupment with warranty, both will be of equal durations;
damages- accion quanti minoris b. Any other implied warranty shall endure
Note: same right is given to sale of animals not less than 60 days nor more than one year
w/ redhibitory effect. following the sale of new consumer
products.
WARRANTIES UNDER THE
CONSUMER ACT (RA NO. 7394)
1. Consumer products are goods which are REDHIBITORY DEFECT OF
primarily for personal, family, household, or ANIMALS:
agricultural purposes shall include but not If the hidden defect of animals, even in case
limited to goods, drugs, cosmetics and a professional inspection has been made,
devices; should be of such a nature that expert
2. Any seller or manufacturer who gives an Knowledge is not sufficient to discover it,
express warranty for consumer products is the defect shall be considered as redhibitory
required to do the following: (Art.1576)
a. Set the times of warranty in clear and - redhibitory vice/effect is a defect in the
readily understandable language and clearly article sold against which defect the seller is
identify himself as the warrantor; bound to warrant.
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J. Delos Santos
professional inspection has been made, disclose it, he shall be liable for damages.
should be of such a nature that expert (1495)
knowledge is not sufficient to discover it,
the defect shall be considered as
redhibitory. d. Prescriptive period – the redhibitory
But if the veterinarian, through ignorance action based on the faults or defects of
or bad faith should fail to discover or animals, must be brought within 40 days
disclose it, he shall be liable for damages. from the date of their delivery to the vendee
(1495) - Redhibitory action based on animals’ fault
a. The sale of animals suffering from shall be barred unless brought within 40
contagious diseases shall be void. days from delivery date.
(Art.1575) - If defects are patent, no warranty against
- sale of such animals is void against public such defects but there is a redhibitory vice.
interest & nit merely subject to rescission or Based on Article 1577. The redhibitory
reduction in price. action, based on the faults or defects of
Article 1575. The sale of animals suffering animals, must be brought within forty
from contagious diseases shall be void. days from the date of their delivery to the
vendee.
A contract of sale of animals shall also be
void if the use or service for which they This action can only be exercised with
are acquired has been stated in the respect to faults and defects which are
contract, and they are found to be unfit determined by law or by local customs.
therefor. (1494a) (1496a)
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J. Delos Santos
Protection in the Purchase of Brand New
Motor Vehicles which aims to promote full
protection to the rights of consumers in the OBLIGATIONS OF THE BUYER:
sale of motor vehicles against business and The obligations of the buyer/vendee are as
trade practices which are deceptive, unfair, follows:
or otherwise inimical to consumers and the
public interest. Article 1582. The vendee is bound to
accept delivery and to pay the price of the
The Philippine Lemon Law protects owners thing sold at the time and place stipulated
of brand-new vehicles purchased in the in the contract.
Philippines within a period of twelve (12)
months after the date of the original delivery If the time and place should not have been
of the brand-new motor vehicle or within the stipulated, the payment must be made at
first twenty thousand (20,000) kilometers of the time and place of the delivery of the
operation after delivery of the vehicle, thing sold. (1500a)
whichever comes first. It gives the owner the 1. To accept delivery; when are the goods
right to report any non-conformity with the deemed accepted?
vehicle’s manufacturer or distributor’s
standards or specifications. a. He intimates to the seller that he accepting
them;
The owner/ consumer should notify in
writing the manufacturer, distributor, b. When he does any act in relation to the
authorized dealer, or retailer of the goods which is inconsistent with the
unresolved complaint and his intention to ownership of the seller;
avail of the Lemon
express acceptance- buyer intimates to seller
Law rights. verbally/written that he has accepted after
delivery.
Exclusions:
Implied acceptance- takes place when (1)
a. Noncompliance by the consumer of the buyer after delivery, does any act
obligations under the warranty; inconsistent w/ seller’s ownership, as when
b. Modifications not authorized by the he sell/attempts to sell the goods/uses them
manufacturer, distributor, authorized dealer, or makes alteration that only owner should
or retailer; have had. (2) When after lapse of
reasonable time, buyer retains goods w/o
c. Abuse or neglect of the brand-new motor intimating his rejection
vehicle; and
Article 1585. The buyer is deemed to have
d. Damage to the vehicle due to accident or accepted the goods when he intimates to
force majeure. the seller that he has accepted them, or
After the notification in writing, the when the goods have been delivered to
owner/consumer should bring the vehicle to him, and he does any act in relation to
the manufacturer, distributor, authorized them which is inconsistent with the
dealer, or retailer from where the vehicle ownership of the seller, or when, after the
was purchased for a final attempt to address lapse of a reasonable time, he retains the
the complaint of the consumer to his or her goods without intimating to the seller that
satisfaction. he has rejected them. (n)
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J. Delos Santos
c. When he retains the goods after the lapse security for the return of the price in a
of a reasonable time without intimating to proper case, or it has been stipulated that,
the seller that he has rejected them notwithstanding any such contingency,
(Art.1585). the vendee shall be bound to make the
payment. A mere act of trespass shall not
- Implied acceptance authorize the suspension of the payment
2. To pay price of the thing sold at the time of the price. (1502a)
and place stipulated in the contract.
• When can the vendee suspend payment WHAT ARE THE REMEDIES OF
of the price? EACH PARTY IN CASE THE OTHER
a. Should the vendee be disturbed in the BREACHES HIS OR HER
possession or ownership of the thing OBLIGATION?
acquired or; 1. Specific Performance:
b. Should he have reasonable grounds to a. The ownership of the goods has passed to
fear such disturbance, by a vindicatory the buyer and he wrongfully neglects or
action or a foreclosure of mortgage. refuses to pay for the goods according to the
- provision of Art. 1590: vendee has no terms of the contract of sale (Art. 1595)
cause of action fo rescission before final b. The price is payable on a certain day,
judgment because the vendor might become irrespective of delivery or of transfer of title
the victim of collusion (secret agreement/ and the buyer wrongfully neglects or refuses
cooperation of fraudulent purpose) between to pay such price (Art. 1595)
the vendee & 3rd person.
c. When the buyer refused to receive the
-Remedy of buyer is rescission and not goods upon the seller’s offer to deliver (Art.
suspension of payment. 1595)
c. The suspension is effective until vendor Article 1595. Where, under a contract of
has cause the disturbance or danger to sale, the ownership of the goods has passed
cease, unless the latter gives security for the to the buyer and he wrongfully neglects or
return of the price in a proper case, or it has refuses to pay for the goods according to the
been stipulated that, notwithstanding any terms of the contract of sale, the seller may
such contingency, the vendee shall be bound maintain an action against him for the price
to make the payment. A mere act of trespass of the goods.
shall not authorize the suspension of the
payment of the price. Where, under a contract of sale, the price is
payable on a certain day, irrespective of
Based on Article 1590. Should the vendee delivery or of transfer of title and the buyer
be disturbed in the possession or wrongfully neglects or refuses to pay such
ownership of the thing acquired, or price, the seller may maintain an action for
should he have reasonable grounds to fear the price although the ownership in the
such disturbance, by a vindicatory action goods has not passed. But it shall be a
or a foreclosure of mortgage, he may defense to such an action that the seller at
suspend the payment of the price until the any time before the judgment in such action
vendor has caused the disturbance or has manifested an inability to perform the
danger to cease, unless the latter gives
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J. Delos Santos
contract of sale on his part or an intention seller would have made if the contract or the
not to perform it. sale had been fully performed shall be
considered in awarding the damages. (n)
Although the ownership in the goods has not
passed, if they cannot readily be resold for a 3. Rescission by the seller
reasonable price, and if the provisions of
article 1596, fourth paragraph, are not a. Repudiated the contract of sale;
applicable, the seller may offer to deliver the b. Has manifested his ability to perform his
goods to the buyer, and, if the buyer refuses obligations, or;
to receive them, may notify the buyer that
the goods are thereafter held by the seller as c. Has committed a breach thereof, the seller
bailee for the buyer. may totally rescind the contract of his
election so to do to the buyer.
Thereafter the seller may treat the goods as
the buyer's and may maintain an action for Giving of notice required: the right granted
the price. (n) to seller follows the general rule in
reciprocal obligations that a party to a
2. Action for damages contract injured by nonfulfillment, may
Article 1596. Where the buyer wrongfully rescind the contract and ask for damages
neglects or refuses to accept and pay for the (Art.1191)
goods, the seller may maintain an action Seller should give notice of his election to
against him for damages for nonacceptance. seek rescission. Formal notice is not a
The measure of damages is the estimated requisite and bringing an action immediately
loss directly and naturally resulting in the for restitution is sufficient.
ordinary course of events from the buyer's Based on Article 1597. Where the goods
breach of contract. have not been delivered to the buyer, and
Where there is an available market for the the buyer has repudiated the contract of
goods in question, the measure of damages sale, or has manifested his inability to
is, in the absence of special circumstances perform his obligations thereunder, or
showing proximate damage of a different has committed a breach thereof, the seller
amount, the difference between the contract may totally rescind the contract of sale by
price and the market or current price at the giving notice of his election so to do to the
time or times when the goods ought to have buyer. (n)
been accepted, or, if no time was fixed for
acceptance, then at the time of the refusal to
accept. EXTINGUISHMENT OF SALE:
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J. Delos Santos
Based on Article 1600. Sales are ii. Payment or valid tender of the
extinguished by the same causes as all redemption price. The redemption price
other obligations, by those stated in the consists of the following:
preceding articles of this Title, and by
conventional or legal redemption. (1506) a) The price of the sale;
b) The expenses of the contract
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J. Delos Santos
the parties is that the transaction shall Article 1603. In case of doubt, a contract
secure the payment of a debt or the purporting to be a sale with right to
performance of any other obligation. repurchase shall be construed as an
equitable mortgage. (n)
In any of the foregoing cases, any money,
fruits, or other benefit to be received by
the vendee as rent or otherwise shall be
considered as interest which shall be LEGAL REDEMPTION:
subject to the usury laws. (n) Is the right to be subrogated, upon the same
terms and conditions stipulated in the
contract, in the place of tone who acquires a
EQUITABLE MORTGAGE: thing by purchase or dation in payment or by
any other transaction whereby ownership is
- Shows the intention of parties to transmitted by onerous title. (Art.1619)
make the property subject of the
contract as a security for the - Conventional redemption arises
fulfilment of an obligation. from voluntary agreement, legal
redemption, on the other hand,
A sale with a right to repurchase or even a arises from law.
deed of absolute sale shall be presumed to
- It is the nature of a mere
be an equitable mortgage in any of the
privilege created partly for
following cases:
reason of public policy and
a. When the price of a sale with right to partly for benefit and
repurchase is unusually inadequate; convenience of the redemptioner
to afford him a way out of what
b. When the seller remains in possession as may be inconvenient association
lessee or otherwise; which he has been thrust.
c. When upon or after the expiration of the CONDOMINIUM
right to repurchase another instrument
extending the period of redemption or An interest in real property consisting of a
granting a new period is executed; separate interest in a unit in a residential,
industrial or commercial building and an
d. When the purchaser retains for himself a undivided interest in common, directly or
part of the purchase price; indirectly, in the land on which it is located
e. When the seller binds himself to pay taxes and in other common areas of the building.
on the thing sold;
f. In any other case where it may be fairly
inferred that the real intention of the parties
that the transaction shall secure payment of a
debt or the performance of any other
obligation
i. In case of doubt, a contract purporting to
be a sale with right to repurchase shall be
construed as an equitable mortgage.
Based on ARTICLE 1602 and
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J. Delos Santos
LAW ON CREDIT TRANSACTI
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J. Delos Santos
Art. 2086. The provisions of Article 2052 are applicable
to a pledge or mortgage. (n)
c. That the persons constituting the pledge or
mortgage
Art. have
2087. It is also of thethe free
essence disposal
the
of these contractsof
that when the principal obligation
property, and in the absence thereof,becomes
they due, that
the
things in which the pledge or mortgage consists may
be legally authorized for the purpose.
be alienated for the payment to the creditor. (1858)
- Pledgor/mortgagor has free disposal of the
property or has legal authority.
e. Appropriation of the thing pledged or
- pledger/mortgagor must have the capacity/ Art. 2089. A pledge or mortgage is indivisible, even though the
mortgaged
authority/consent of the owner to pledge or debt may be divided among the successors in interest of the
mortgage cos yung pag pledge & mortgage is right orofof the
debtor creditor
creditor.to appropriate the thing
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J. Delos Santos
the creditor. This rule applies even if the a. Requisites of Conventional or Voluntary
debtors are jointly liable. Pledge:
• Exception: The pledge or mortgage is divisible • The pledge must be constituted to secure the
if several things are given in pledge or mortgage fulfilment of a principal obligation;
and each one of them guarantees only a
• Can a newly incurred obligation be secured by
determinate portion of the credit.
an already existing pledge? Yes, provided such
obligation is accurately described.
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J. Delos Santos
Art. 2102. If the pledge earns or produces fruits,
income, dividends, or interests, the creditor shall
- Limited to personal property and di for compensate what he receives with those which are
real property and dapat w/in the owing him; but if none are owing him, or insofar as the
commerce of man ung thing. amount may exceed that which is due, he shall apply it
to the principal. Unless there is a stipulation to the
- Incorporeal rights evidenced by contrary, the pledge shall extend to the interest and
documents (negotiable or not) may be earnings of the right pledged. In case of a pledge of
pledgeed alsp. If negotiable, yung animals, their offspring shall pertain to the pledgor or
document dapat must be indorsed in owner of animals pledged, but shall be subject to the
pledge, if there is no stipulation to the contrary.
favour to the creditor.
(1868a)
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J. Delos Santos
• The pledgee cannot deposit the thing pledged • The notice must state the date for which the
with a third person, unless there is a stipulation public sale is to be made.
authorizing him to do so;
• If at the first auction sale the thing is not sold,
Art. 2117. Any third person who has any right in or to a second one with the same formalities shall be
the thing pledged may satisfy the principal obligation held; and if at the second auction there is no
as soon as the latter becomes due and demandable.(n) sale either, the creditor may appropriate the
• The creditor-pledgee may bring actions which thing pledged. In this case, the creditor shall be
pertain to the owner of the thing pledged in obliged to give an acquittance for his entire
order to recover it from or defend it against a claim.
third person;
• At the public auction, the pledgor or the
owner may bid. He shall moreover, have a
better rightUnless
Art. 2103. if he should
the thingoffer theissame
pledged terms as
expropriated,
the highest bidder. The pledgee may thereof.
the debtor continues to be the owner also bid
Nevertheless, the creditor may bring the actions which
but his offer shall not be valid if he is the ONLY
pertain to the owner of the thing pledged in order to
bidder.
recover it from, or defend it against a third person.
(1869)
• The pledgor or owner has no right to redeem
• The creditor cannot use the thing pledged the property after the public auction. However,
without the authority of the owner, and if he there is equity of redemption, that is pledgor or
should do so, or should misuse the thing in any owner may satisfy the obligation after it
other way, the owner may ask that it be becomes due and before the public sale.
judicially or extrajudicially deposited.
• Art.
EXCEPT:
2113. At If
thethe
publicpreservation of the
auction, the pledgor thing
or owner
pledged
may bid.requires its use ithave
He shall, moreover, musta better
be used
rightby the
if he
should offer the same terms as
creditor but only for that purpose.the highest bidder. The
pledgee may also bid, but his offer shall not be valid if
he is the only bidder. (n)
Art. 2104. The creditor cannot use the thing pledged,
Art. 2114. All bids at the public auction shall offer to without the authority of the owner, and if he should
pay the purchase price at once. If any other bid is do so, or should misuse the thing in any other way, the
accepted, the pledgee is deemed to have been owner may ask that it be judicially or extrajudicially
received the purchase price, as far as the pledgor or deposited. When the preservation of the thing pledged
owner is concerned. (n) requires its use, it must be used by the creditor but
only for that purpose. (1870a)
Art. 2115. The sale of the thing pledged shall
extinguish the principal obligation, whether or not the
d.proceeds
Public of the sale –are
Auction equal
the to the amount
creditor to whom of the
the
principal obligation, interest and expenses in a proper
credit has not been satisfied in due time, may
case. If the price of the sale is more than said amount,
proceed
the debtor before a be
shall not notary
entitledpublic to theunless
to the excess, sale itof
the thing pledged.
is otherwise agreed.This shall
If the be:of the sale is less,
price
neither shall the creditor be entitled to recover the
• deficiency,
Made at anotwithstanding
public auction;any stipulation to the
contrary. (n)
• With notification to the debtor and the owner
ofArt.
the2116.
thingAfter the public
pledged in a auction,
proper the pledgee shall
case;
promptly advise the pledgor or owner of the result
thereof. (n)
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J. Delos Santos
e. Rules on Deficiency and Excess - 1 of the essential requisites is that the
object shall be placed in creditor/3 rd
• Deficiency cannot be recovered – the sale of
person’s possession. Thus, if returned by
the thing pledged shall extinguish the principal
pledgee, extinguished na siya.
obligation, whether or not the proceeds of the
- Presumption: possession of thing
auction sale are equal to the amount of the
pledged by debtor/owner subsequent to
principal obligation, interest and expenses in a
perfection of pledge gives rise to prima
proper case. The creditor is not entitled to
facie – presumption na thing is returned
recover the deficiency even if there is a
na so extinguished na dapat. Pwede
stipulation to the contrary;
mag argue against this na nireturn lang
• Excess belong to the creditor-pledgee - if the for substitution dun sa thing na pledge.
price of the sale is more than the amount of the
Art. 2110. If the thing pledged is returned by the
obligation, the debtor shall not be entitled to
pledgee to the pledgor or owner, the pledge is
the excess. Exceptions: extinguished. Any stipulation to the contrary shall be
void.
• If it otherwise agreed.
If subsequent to the perfection of the pledge, the thing
• In legal pledge or pledge by operation of law, is in the possession of the pledgor or owner, there is a
after payment of the debt and expenses, the prima facie presumption that the same has been
remainder of the price of the sale shall be returned by the pledgee. This same presumption exists
if the thing pledged is in the possession of a third
delivered to the obligor.
person who has received it from the pledgor or owner
Art. 2115. The sale of the thing pledged shall after the constitution of the pledge. (n)
extinguish the principal obligation, whether or not the
proceeds of the sale are equal to the amount of the • A statement in writing by the pledgee that he
principal obligation, interest and expenses in a proper renounces or abandons the pledge is sufficient
case. If the price of the sale is more than said amount,
the debtor shall not be entitled to the excess, unless it
to extinguish the pledge. For this purpose,
is otherwise agreed. If the price of the sale is less, neither the acceptance by the pledgor or owner
neither shall the creditor be entitled to recover the nor the return of the thing pledged is necessary,
deficiency, notwithstanding any stipulation to the the pledgee becoming a depositary.
contrary. (n)
Effect of sale of thing pledged:
- Renunciation/abandonment MUST be in
1. price of sale > amount due = debtor is NOT writing in order to extinguish the
entitled to excess unless there’s a stipulation. pledge. Such renunciation is not
conditioned upon pledgor’s
2. price of sale < amount due = neither is the acceptance.The waiver transforms the
creditor entitled to recover deficiency. pledgee into a depositary w/ rights &
General Rule on right of debtor to excess: not obligations of one.
entitled to excess unless may agreement. III. REAL ESTATE MORTGAGE:
f. Extinguishment of Pledge a. Governing Law
• If the thing pledged is returned by the pledgee • Art. 2124 – 2131 of the Civil Code; and
to the pledgor or owner and any stipulation to
the contrary shall be void. • Act No. 3135
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J. Delos Santos
- real estate mortgage is a contract whereby the • Registration – a real estate mortgage must be
debtor secures to the creditor fulfillment of a registered with the Registry of Deeds where the
principal obligation. subject property is located in order to affect
third persons. However, an unregistered
- it’s a real, accessory, and subsidiary contract.
mortgage is valid between the parties.
- It’s also a unilateral contract cos it creates an
obligation only on the part of the creditor who
must free the property from encumbrance. d. After-acquired property and after-incurred
obligations
b. Subject – only immovable properties or real
rights over such immovable may be the subject • The parties may stipulate that after acquired
of a REM. property are automatically included in the
mortgage;
• Buildings are immovable properties distinct
from the land on which they are built, hence, • After-incurred or future obligations may be
building may be the subject of a separate REM. covered by REM if the same is expressly
provided; In the absence of stipulation, the
• There are instances when certain movables
general rule is that the mortgage must be
are treated as a real property because of
limited to the amount mentioned in the
estoppel – if the parties are aware that the
mortgage;
subject property is a movable and yet then
execute a REM on such property. The parties • Dragnet clause – a stipulation wherein all
are precluded from denying the existence of the debts of the mortgagor will be secured by the
REM in order to protect the interest of third current REM; A mortgage with a dragnet clause
persons; makes available future loans without the need
to execute another set of security documents.
• In case of several mortgages constituted over • When there is any violation of any condition,
the same property, the first registered stipulation or warranty by the mortgagor.
mortgagee has superior right over junior
Kinds of foreclosure:
mortgagees or attaching creditors;
Judicial foreclosure-
Page | 34
J. Delos Santos
by bringing an action for that purpose in the • Where such extra-judicial foreclosure sale is
RTC of the province/city where the real made under a special power of attorney
property/any part thereof lies. If may balance inserted in the contract.
due to mortgagee after applying proceed of sale
ordered by court, entitled pa rin siya to recover
Art. 2131. The form, extent and consequences of a
deficiency.
mortgage, both as to its constitution, modification and
extinguishment, and as to other matters not included
A foreclosure made through the filing of a
in this Chapter, shall be governed by the provisions of
petition in court the Mortgage Law and of the Land Registration Law.
(1880a)
• If the defendant fails to pay the amount due
within the time directed by the court, the
property shall be sold;
• Balance after all of the above shall be - the mortgage owner wil buy again the
paid to the mortgagor or his agent. property w/in certain period.
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J. Delos Santos
• In judicial foreclosure, the mortgagor may • CM must be registered in the Chattel
redeem the property after the sale and before Mortgage Registry of the Registry of Deeds
the confirmation by the court of the sale. where the mortgagor resides or if he resides
outside the Philippines, in the place where the
- Mortgagor can’t exercise his right of
property is situated. An unregistered mortgage
redemption after sale is confirmed.
is binding between the parties but not on third
• In extrajudicial foreclosure, the mortgagor has persons. Under chattel mortgage law, if
one year from the date of registration of the property is located in a province different from
sale to redeem the property. that in which the mortgagor resides,
registration must be in both registers otherwise
- in all cases of extrajudicial sale, chattel mortgage is void.
mortgagor may deem the property w/in
the term of 1yr from and after the date • Affidavit of good faith – a document executed
of registration of sale. by the parties attesting that the loan on which
the personal property secures in entered into in
• Exception: if the owner of the property is a good faith. Absence of affidavit of good faith
juridical person, the right of redemption may be vitiates/impair a mortgage only against 3rd
exercised until the registration of the certificate persons w/o notice like creditors & subsequent
of foreclosure sale with the Registry of Deeds encumbrances.
which in case shall be more than 3 months after
foreclosure, whichever is earlier After incurred obligations and after acquired
properties:
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J. Delos Santos
2. An attaching creditor who redeems shall be - Accessory contract cos it secures the
subrogated to rights of the mortgage & entitled performance of a principal obligation.
to foreclose the mortgage in same manner that
• The property involved is an immovable that is
mortgagee could foreclose.
delivered to the antichretic creditor as a
3. The redemption is made by paying/delivering security – ownership is not transferred. The
to the mortgagee the amount due on such debtor cannot reacquire the enjoyment of the
mortgage & the cost & expenses incurred by immovable until full payment of his obligation.
breach of condition before the sale.
• Antichresis is also indivisible and the rules that
Deficiency after foreclosure – after foreclosure, apply to mortgage and pledge regarding
the mortgagee may generally recover any indivisibility applies to Antichresis
deficiency that may result after applying the
proceeds of the foreclosure sale to the
obligation.
• EXCEPTION: When the transaction secured is Art. 2132. By the contract of antichresis the creditor
sale of personal property on installment basis acquires the right to receive the fruits of an immovable
under the Recto Law of his debtor, with the obligation to apply them to the
payment of the interest, if owing, and thereafter to the
Right of mortgagee to recover deficiency: principal of his credit. (1881)
• If the value of the fruits should exceed the • The creditor in order to exempt himself from
amount of interest allowed by the law against the obligations imposed upon him to pay the
usury, the excess shall be applied to the abovementioned expenses may always compel
principal. the debtor to enter again upon the enjoyment
of the property, except then there is a
Art. 2138. The contracting parties may stipulate that stipulation to the contrary.
the interest upon the debt be compensated with the
fruits of the property which is the object of the • The creditor does not acquire the ownership
antichresis, provided that if the value of the fruits
- Antichretic creditor is under the of the real estate for non-payment of the debt
should exceed the amount of interest allowed by the
obligation
laws against toexcess
usury, the applyshall
the be
fruits of property
applied to the within the period
Art. 2137. agreed upon.
The creditor Everyacquire
does not stipulation
the
principal.in satisfaction, first, or whatever
(1885a) toownership
the contrary
of theshall be void;
real estate for non-payment of the
interest on debt is due and secondly, to debt within the period agreed upon. Every stipulation
• toThe
theremedies of the
contrary shall creditor
be void. in case
But the of may
creditor non-
the payment of principal.
payment of court
petition the debt for
within the period
the payment of theagreed
debt orupon
the
- Fruits must be appraised on basis of
(the fruits are not enough) are as follows: of
sale of the real property. In this case, the Rules
their actual market value at time of Court on the foreclosure of mortgages shall apply.
application. If the value shall exceed the • To abandon the security and file an
(1884a)
amount of interest allowed by Usury action for specific performance; action
law, excess shall be applied to the for specific performance.
principal.
• Petition the court for the payment of
• Obligations of the antichretic creditor the debt or the sale of the real property –
the rule 68 of rules of court on the
• To pay the taxes and charges upon the
foreclosure of mortgages shall apply.
estate, unless there is a stipulation on the
However, parties may agree on an
contrary – to be deducted from the fruits.
extrajudicial foreclosure.
If creditor doesn’t pay he is required to
pay indemnity for damages to debtor. - Creditor does not acquire ownership of
the immovable property in case of non-
Art. 2135. The creditor, unless there is a stipulation to
payment since what was transferred is
the contrary, is obliged to pay the taxes and charges
upon thenot the ownership but the merely the
estate.
right to receive the antichresis.
He is also bound to bear the expenses necessary for its
- A stipulation authorizing the antichretic
preservation and repair.
creditor to appropriate the property in
The sums spent
case of for the purposes is
non-payment stated
void.in this article
shall be deducted from the fruits. (1882)
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J. Delos Santos
LAW ON Credit
Transactions reviewer
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J. Delos Santos
2. The following are the kinds of principal Downloaded by Jessica Micah ([email protected])
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J. Delos Santos
property mortgaged at the time the mortgage is a. F may ask for the extinguishment of the
constituted. mortgage on lot 2.
c. The contract of mortgage is null and void b. The contract of mortgage is extinguished.
because only natural person may enter in a c. The contract of loan is extinguished.
contract of mortgage. d. F cannot ask for the extinguishment of the
d. The contract of mortgage is voidable. mortgage on lot 2.
9. The following are the instances where the 13. Using the same data in preceding number,
thing pledged or mortgaged may be sold or suppose it is C who dies leaving X and Y as heirs.
alienated If D
to pay the principal obligation, except pays X P50,000, which of the following
a. If the pledgor or mortgagor fails to fulfill statements is correct?
certain conditions and such violation would a. X may cancel the mortgage to the prejudice
make of Y.
the debt due and demandable. b. X cannot cancel the mortgage to the
b. If the debtor has lost the right to make use of prejudice of Y.
the period or where there is an acceleration c. The contract of mortgage is extinguished.
clause in the payment of installment. d. The contract of loan is extinguished.
c. Upon default to pay the obligation at 14. D borrowed P10,000 from C and pledged his
maturity. ring and watch with P4,000 and P6,000 value
d. Before maturity of the principal obligation. respectively. They agreed that the ring will
10. What is the nature of a contract of pledge, secure P4,000 of the loan and the watch will
or chattel mortgage, of real estate mortgage or secure
of the balance of the loan. After several days, D
antichresis? pays P4,000 to C. which of the following
a. It is divisible if the principal contract is joint. statements is correct?
b. It is indivisible if the principal contract is a. The contract of pledge on the watch is
solidary. extinguished.
c. It is divisible whether the principal contract is b. The contract of loan is fully extinguished.
joint or solidary. c. D cannot demand the release of his ring
d. It is indivisible whether the principal contract because a contract of pledge is indivisible.
is joint or solidary. d. D may compel C to return the ring because
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contract of pledge on the ring is extinguished.
11. D borrowed P10,000 from C and pledged his 15. A and B jointly borrowed P10,000 from C. In
ring and watch with P4,000 and P6,000 value order to secure their respective obligations, A
respectively. After several days, D pays P4,000 pledge his cellphone while B pledge his laptop.
to C. which of the following statements is At the maturity date of the loan, A paid P5,000
correct? of the loan. Which of the following statement is
a. The contract of pledge is extinguished. correct?
b. The contract of loan is extinguished. a. The contract of pledge on the cellphone is
c. D cannot demand the release of his ring extinguished.
because a contract of pledge is invisible. b. The obligation of B is extinguished.
d. D may compel C to return the ring because c. A cannot demand the release of his cellphone
P4,000 of the loan is already paid. because a contract of pledge is indivisible.
12. D borrowed from C P100,000 secured by a d. The contract of pledge on the laptop is
mortgage on D’s two lots (lot 1 and lot 2). D dies extinguished.
leaving E and F as heirs with E inheriting lot 1 16. A and B jointly borrowed P10,000 from C. In
and F lot 2. F pays P50,000 of the loan. Which of order to secure the obligation, A pledged his
the following statements is correct?
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J. Delos Santos
cellphone while B pledged his laptop. At the 20. The following are the essential requisites of
maturity date of the loan, A paid P5,000 of the conventional pledge or contract of pledge,
loan. Which of the following statements is except.
correct? a. That it be constituted to secure the
a. The contract of pledge on the cellphone is fulfillment of a principal obligation or contract
extinguished. of loan.
b. The obligation of B is extinguished. b. That the pledger be the absolute owner of
c. A cannot demand the release of his cellphone the thing pledged.
because a contract of pledge is indivisible. c. That the person constituting the pledge has
d. The contract of pledge on the laptop is the free disposal of his property, and in the
extinguished. absence thereof, that he be legally authorized
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for the purpose.
17. It is a contract by virtue of which the debtor d. That the thing pledged be placed in the
delivers to the creditor or to a third person a possession of the creditor, or third person by
movable, or instrument evidencing common agreement or there must be delivery
incorporated rights for the purpose of securing of the thing pledged.
the e. That the contract of pledged be constituted
fulfillment of a principal obligation with the in public document.
understanding that when the obligation is 21. What is the nature of a contract to
fulfilled, constitute a pledge?
the thing delivered shall be returned with all its a. Consensual contract.
fruits and accessions. b. Real contract.
a. Contract of pledge c. Formal contract
b. Contract of chattel mortgage d. Solemn contract
c. Contract of real estate mortgage 22. What is the legal effect of a promise or
d. Contract of antichresis. contract to constitute a pledge?
18. In case the cause or consideration of the a. It is perfected by delivery of the thing pledge.
contract of pledge is not stipulated, what is the b. It is perfected through the notarization of the
cause of promise.
consideration of a contract of pledge? c. It is perfected by mere consent and gives rise
a. It has no cause or consideration. only to a personal action between the
b. The cause or consideration of the principal contracting parties.
obligation or contract of loan. d. It gives rise to a real action over the thing
c. The cause or consideration is the liberty of pledged.
the pledger. Downloaded by Jessica Micah ([email protected])
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d. The cause is the service remunerated. 23. The following statements pertaining to a
19. The following are the characteristics of a promise to constitute a pledge or mortgage are
contract of pledge, except correct,
a. Consensual – it is perfected by mere consent. except
b. Accessory – it has no independent existence a. It gives rise only to a personal action between
of its own because there must be contract of the contracting parties.
loan. b. The contract perfected is a real contract.
c. Unilateral – it creates an obligation on the c. It creates no real right in the property but
part of the creditor to return the thing upon the only a right to compel the fulfillment of the
fulfillment of the principal obligation. promise but there is no contract of pledge or
d. Subsidiary – the obligation incurred does not contract of mortgage yet.
arise until the fulfillment of the principal d. The promissor will be criminally liable if he
obligation which is secured. mortgages or pledges as unencumbered things
Page | 42
J. Delos Santos
which he knew were subject to some burden. b. To continue to be the owner of the thing
24. what is the nature of a contract of pledge? pledged unless it is expropriated.
a. Consensual contract c. To become the owner of the offspring of the
b. Real contract animal pledged if there is not stipulation to the
c. Formal contract contrary although such offspring but shall be
d. Solemn contract subject to the pledge.
25. The following may become the object of a d. To ask for the return of the thing pledged
contract of pledge, except after he has paid the debt and its interest, with
a. All movable expense in a proper case.
b. Personal property susceptible of possession. e. To ask that the thing pledged be judicially or
c. Incorporeal rights which are evidenced by extra-judicially deposited if it is used without
negotiable instruments, bill of lading, shares of authority or for a purposes other than for its
stocks, bonds, warehouse receipts and similar preservation.
documents. f. To require that the thing be deposited with a
d. Real or immovable properties and rights third person if it is in danger of being lost or
thereon. impaired through the negligence or willful act of
26. What is the form of contract of pledge to the pledgee.
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J. Delos Santos
A. Yes, because there was actual meeting of
StuDocu is not sponsored or endorsed by any college or university the minds of A’s offer
B. No, for B did not signify his acceptance
Test 2016, questions and of A’s offer
answers C. Yes, because A is already estoppels by
his signed letter
Bachelor of Science in Accountancy D. Yes, because the period of two (2)
(Ateneo de Naga University) months has not expired
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J. Delos Santos
A. Yes, the price stated and named by one B. Given when there is no contract of sale.
of the contracting parties was accepted by C. Given to bid the offer or in a unilateral
the other. promise to sell or to buy.
B. No, at the time of the sale the price was D. Given as a separate consideration from
not fixed. purchase price.
C. No, the price was left to the discretion of 10. In a sale, this is actual delivery.
one of the parties A. Execution and signing of the sale
D. No, at the time of the sale the price is not document.
known. B. When the goods sold are placed in the
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lOMoARcPSD|6672655 control and possession of the buyer.
6. Mr. Sy sold a parcel of land to Mr. Tan C. Delivery by the seller to the buyer of the
for P200,000. Mr. Sy delivered the transfer key where the goods sold are kept.
Certificate D. The buyer is already in actual possession
of Title of the land to Mr. Tan. Later, Mr. of the goods.
Tan wanted to register the land to his name 11. This is a mode to extinguish an agency:
and he A. Death of the principal, but the agency is
needed a Deed of Sale. What can Mr. Tan for the interest of the principal and agent.
do? B. Partial accomplishment of the agency.
A. Mr. Tan can compel Mr. Sy to execute C. Upon withdrawal of the principal.
a Deed of Sale D. Insanity of principal or agent.
B. Mr. Tan cannot compel Mr. Sy to refund 12. D pledged his Singer Sewing Machine to
the P200,000 because the contract is not C for P8,000. D was unable to pay the
enforceable obligation
C. Mr. Tan can sue Mr. Sy enriching himself 60 days after it was due. C sold the machine
at the expense of another. at public auction for P6,000.
D. Mr. Tan can possess and utilize the land A. C cannot recover the deficiency of
as a buyer in good faith. P2,000 even if there is stipulation that he
7. Bonds which are not secured by any can.
specific mortgage lien of pledge or corporate B. C can recover the deficiency of P2,000
property even without stipulation.
but by the general corporation are: C. C cannot recover the deficiency of P2,000
A. Guaranteed bonds D. C can recover the deficiency of P2,000.
B. Debenture bonds Downloaded by Jessica Micah ([email protected])
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C. Income bonds 13. In a sale, the buyer is entitled and has the
D. Redeemable bonds right to the fruit of the thing sold from the
8. The buyer of a thing has the right to the time:
fruits of the thing: A. The obligation to deliver the thing sold
A. From the time the thing bought is arises
delivered B. The sale is perfected
B. From the time the sale is perfected C. The thing sold is delivered
C. From the time the obligation to deliver D. The fruit of the thing sold is delivered.
the thing bought arises. 14. Mr. AB offered in writing to sell his
D. From the time the fruits are delivered. house and lot for P750,000 to Mr. CD on
9. Three (3) of the following are option July 1, 2010.
money. Which is the earnest money? Mr. CD requested Mr. AB to give him 60
A. Given when contract of sale is days within which to raise the P750,000. On
perfected.
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J. Delos Santos
August 15, 2010 Mr. AB informed Mr. CD D. P240,000
that the price is raised and now at 18. B pledged his Rolex to C for P4,000. B
P1,000,000. failed to pay C the P4,000 on due date. C
Can Mr. CD compel Mr. AB to sell his sold the
house and lot at P750,000 which was offered Rolex watch at a public auction to the
in highest bidder at P3,500.
writing by Mr. AB? A. C can recover the deficiency of P500
A. Yes, because Mr. AB is already stopped from B.
by his written offer. B. C can recover the deficiency of P500
B. Yes, because the 60 days offer has not yet even without stipulation.
expired C. C cannot recover the deficiency of P500
C. No, because Mr. CD has not accepted unless there is stipulation.
the offer of Mr AB. D. C cannot recover the deficiency of
D. Yes, there was meeting of the minds. P500 even if there is stipulation.
15. In distinguishing Earnest Money from 19. Which of the following may not be the
Option money, earnest Money is: object of sale?
A. Given when there is no contract of sale, A. Things having potential existence
B. Given only when there is perfected B. The sale of a vain hope or expectancy
contract of sale. C. Future goods
C. Given to bind the offer or in a unilateral D. Answer not given.
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D. Given as a separate consideration from 20. When delivery takes place by the mere
the purchase price. consent or agreement of the contracting
16. Gay appointed May to sell the former’s parties as
car for P200,000. May sold the car to Pam, when the vendor merely points to the thing
Pam sold which shall thereafter be at the control
inspected the car and found hidden defects and
in the car. Can Pam file an action against disposal of the vended if the thing sold
Gay cannot be transferred to the possession of the
even when May acted in her own name? vendee
A. No, under “Caveat Emptor” let the buyer at the time of sale, delivery is effected:
beware. A. By tradition symbolica
B. Yes, because this is contract involving B. By traditio longa manu
property belonging to the principal C. By traditio brevoi manu
C. No, because, May acted in her own name D. Answer not given
not of the principal. 21. The distinction between a chattel
D. No, because the contract of sale is mortgage and a pledge is that in chattel
already perfected. mortgage:
17. Mr. San authorized Mr. Soy to sell his A. The delivery of the personal property is
car for p200,000 with 5% agent’s necessary
commission. Mr. B. The registration of the property in the
Soy sold the car to Mr. Dy for P250,000. For Registry of Property is not necessary
how much is Mr. Soy accountable to Mr. C. The excess over the amount due after
San? foreclosure, goes to the debtor
A. P200,000 D. Answer not given.
B. P190,000 22. Sale is distinguished from dation in
C. P250,000 payment in that in sale
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J. Delos Santos
A. There is a pre-existing obligation or 25. Mr. Rene owns a mango tree bearing
credit fruits, ready for harvest. He sells all the
B. The cause is the price fruits of that
C. It is a mode of extinguishing an tree to Mr. Mar who pays Mr. Rene the sum
obligation in the form of payment. of P5,000. Rene tells Mar that he can just
D. Answer not given. harvest the fruits anytime he likes pointing
23. Mr. Mar orders for his workers 1,000 at the particular tree. For legal purposes,
pieces of T-shirt ranging in size from small Rene has
to large fulfilled his obligation to deliver the mango
from RDG Garments Mfg. Corp. The fruits to Mar by:
specified sizes, although not then available, A. Traditio brevi manu
are B. Traditio longa manu
manufactured by said corporation and C. Traditio simbolica
consigned to its sales outlets regularly. The Downloaded by Jessica Micah ([email protected])
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J. Delos Santos
payment from Maria: D. B may compel A to pay the capital
A. P4,500 (P5,000 less P500 commission) gains tax and secure the certificate of
B. P5,000 (the price without commission) capital
C. P5,400 (P6,000 less P600) gains tax payment
D. Answer not given Downloaded by Jessica Micah ([email protected])
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28. Tony sold a piece of land to Rene 31. A Seller sold to a Buyer a piece of
binding himself not to sell the same to jewelry at a price of P20,000. The contract
another person. On provides that
the following day, Tony sold the land to the Buyer will pay Seller a micro wave oven
Carla who immediately took possession in worth P5,000. What is the nature of the
good contract?
faith. In the case at bar, the proper remedy of A. Sale
Rene is to: B. Partly sale and partly barter
A. Institute an action for the annulment of C. Barter
the sale to Carla D. Commodatum
B. Institute an action for the recovery of the 32. Mr. A. Abad signed a letter addressed
land and delivered to Mr. B. Baje. The terms of
C. Institute an action for damages against the letter
Tony are:
D. Answer not given 1. An offer to sell a 500 sq.m. lot for
29. Ces kidnapped and tortured Ed for P300,000
refusing to sell his (Ed’s) land to Ces. Ed 2. An option time up to October 31, 2010 for
who could no Mr. Baje to raise the P300,000
longer bear the physical pains inflicted upon 3. Upon payment of the P300,000, Mr. Abad
him signed a document of sale in favor of will execute and sign a Deed of Sale
Ces. 4. On October 31, 2010, Mr. A Abad sent a
This sale is: letter to Mr. B. Baje asking for a new price
A. Void of
B. Voidable P350,000 for the 500 sq. m. lot.
C. Valid Can Mr. B. Baje compel Mr. A. Abad to
D. Answer not given accept the P300,000 and make him sign and
30. A sold a residential land to B. B paid the execute
consideration. When B wanted to register a Deed of Sale?
the sale at A. No, Mr.B. Baje did not accept the offer
the Register of Deeds, the latter refused to of Mr. A. Abad
register and requires the presentation of the B. Yes, Mr. A. Abad is already stopped by
certificate of capital gains tax payment. his sighing the letter and offer.
What can B do? C. Yes, there was actual meeting of the
A. B may sue A to refund the consideration minds.
paid by B under the maxim, “no one shall D. Yes, the contract is perfected
enrich 33. Mr. A mortgaged his residential land to
himself at the expenses of another.” Mr. B as a guarantee for the payment of
B. B cannot compel A to return the selling P400,000
price because the contract is not enforceable obligation of Mr. A. They agreed that Mr. A
C. B may possess the residential land as a shall not sell the land while the obligation
buyer in good faith exists. The maturity of the mortgaged, C
offered to buy the land from Mr. A.
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J. Delos Santos
A. A cannot sell the land to Mr. C because D. To bind a third person, it must be
of the agreement not to sell recorded in the office of the Register of
B. A can sell the land to Mr. C only if B Deeds
consents in writing 38. The leviable properties of the debtor are
C. A can sell the land to Mr. C despite the transferred to the creditors to be sold and
agreement not to sell (?) from the
D. A cannot sell the land to Mr. C unless A proceeds, the creditor are paid;
pays the obligation A. Pledge
34. Mr. D. Dy constituted Mr. S. Sim as his B. Cession
authorized agent to sell the former’s Lancer C. Dacion en pago
car for D. Chattel mortgage
P300,000 and to pay him a 5% commission 39. A characteristic of the Contract of Sale
on the selling price. Mr. S. Sim sold the car which involves exchange of value, it is
for A. Commutative
P320,00. Mr. S. Sim shall remit to Mr. D B. Nominate
Dy: C. Bilateral
A. P300,000 D. Consensual
B. P320,000 40. The principal is not liable for expenses
C. P285,000 incurred by the agent:
D. P305,000 A. When it was stipulated that the agent
35. Ownership of the thing sold is would only be allowed a certain sum
transferred / acquired / retained: B. When the agent has complied with his
A. Retained by the seller in “sale of return” obligations by acting according to the
B. Transferred to the buyer upon principal’s
constructive or actual delivery of the instructions
thing sold C. When the agent incurred them with the
C. Acquired by the buyer upon knowledge that an unfavorable result would
D. Transferred to the buyer upon acceptance ensue
of the price. and the principal was aware of it
36. If redemption is made, which of the D. When the expenses were incurred without
following will not be paid by the seller to the the fault of the agent
buyer 41. An assignor of credit warrants:
A. Price paid by the buyer A. Solvency of the debtor
B. Expenses in the execution of the sales B. Existence and legality of credit
contract paid by the buyer C. Collectibility
C. All necessary expenses on the thing sold D. Assurance of payment
and to be redeemed 42. A appoints B to sell his land
D. Interest of the price paid by the buyer Example 1. If the authority of B is oral and
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lOMoARcPSD|6672655 B sells the land in writing. The sale is valid.
37. The following are requisites of Pledge Example 2. If the authority of B is in writing
except: and B sells the land orally. The sale is valid
A. The disposal of the pledge A. Both examples are true
B. The absolute ownership of the property B. Both examples are false
pledged C. First example is true, but the second
C. The thing pledge may be placed in the example is false
possession of a third person D. First example is false but the second
example is true
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J. Delos Santos
43. Which of the following is not a A. Are meant to secure the fulfillment of a
characteristic of Sale? principal obligation.
A. Bilateral B. Cannot exist if the principal obligation is
B. Gratuitous void.
C. Consensual C. Can exist by themselves.
D. Nominate D. Cannot secure fulfillment of rescissible
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obligation.
44. The following are the alternative 48. Mr. A offered to sell his land to Mr. B
remedies, except one available to the buyer for P300,000. Mr. B accepted the offer and
in case of paid Mr. A
breach of warranty by the seller: the purchase price. Mr. A delivered the
A. Keep the goods and ask for damages owner’s certificate of the Transfer certificate
B. Refuse to accept the goods and ask for of Title
damages to the land. Mr. B wants to register the land
C. Rescind the sale and retain the goods in his name but the Register of Deeds asks
D. Keep the goods and set up against the Mr. B
seller by way of recoupment in price. for the Deed of Sale. What can Mr. B do ?
45. Which of the following statements is A. He may occupy the land as a buyer in
true and correct? good faith.
A. In a Contract of Sale, the full payment of B. He cannot compel Mr. A to return the
the price is in the nature of a suspensive payment because the contract is
condition in that the seller is obligated to unenforceable.
transfer ownership of the thing sold. C. He may compel Mr. A to execute the
B. The seller need not be the owner of the Deed of Sale because the contract is valid.
thing sold at the perfection of the sale. D. He may sue Mr. A to return the purchase
C. There may be a transfer of ownership price under the legal principle that no one
over the thing even if the seller has not may
delivered enrich himself at the expense of another.
the thing sold to the buyer. 49. Pacto de retro sale as distinguished from
D. In a Contract of Sale, the buyer becomes mortgage:
the owner of the thing sold upon full A. There is redemption by payment
payment of principally of the debt.
the purchase price. B. There is no transfer of possession of the
46. X, Y and Z were appointed by R as his thing sold
agents to administer his building which was C. There is no foreclosure unless it is
rented by declared as an equitable mortgage.
various tenants while R was abroad for three D. There is no transfer of ownership of the
years. In the course of management, X cause thing sold.
through his fault damage to the building 50. A is authorized by B to sell the latter’s
which was assessed at P30,000. R can claim: books for P100 each. A sells 10 books to C
A. P10,000 from each of X, Y and Z. on credit
B. P30,000 from X but for a price of P120 each. After ratifying
C. P30,000 from Y and Z the sale on credit, B can collect. After
D. P30,000 from either X, Y and Z ratifying
47. Pledge and Mortgage are accessory the sale on credit, B can collect cash
contracts because they: payment from C.
A. P1,000
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J. Delos Santos
A. Yes, there was actual meeting of the
lOMoARcPSD|6672655
B. P1,200
C. P1,080 minds of the parties
D. P 900 B. No, for B did not signify his acceptance
which is the object of the sale. of A’s offer.
II. Payment of price is essential to delivery C. Yes, because A is already stopped by his
of the thing sold. signed letter
A. Both statements are true. D. Yes, because the period of two months
B. Both statements are false has not expired.
C. First statement is true, second 55. A and B are good friends. A sold and
statement is false. delivered his car to B. It was agreed and
D. First statement is false, second statement understood
is true. that on the next Sunday A will name and fix
52. Three of the following are essential the price of the car. Sunday came. A called
requisites of a contract of mortgage. Which B by
one is not? phone and stated and fixed the price at
A. The person instituting the mortgage has P150,000. Is the sale perfected?
the free disposal of his property. A. Yes. The price was stated and fixed on
B. The contract must be in writing. the date agreed upon.
C. The mortgagor is the absolute owner of B. No. The price was left to the discretion of
the thing mortgaged. the seller.
D. The mortgage is constituted to secure the C. No. at the time of the sale, the price is not
fulfillment of a principal obligation. fixed.
53. In real mortgage, the following rules are D. No. The price fixed by the seller was
valid, except one: not accepted by the buyer.
A. A stipulation in the mortgage contract 56. In sale, this is actual delivery:
prohibiting the owner from alienating the A. Execution and signing of the sales
immovable mortgaged is valid. document.
B. The mortgage may alienate the mortgage B. When the goods sold are p0laced in the
credit or assign to a third person in whole or control and possession of the buyer.
in C. Delivery by the seller to the buyer of the
part. key where the goods are kept.
C. Any stipulation allowing the mortgage D. The buyer is already in actual possession
creditor to appropriate the property of the goods.
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J. Delos Santos
A. C cannot recover the deficiency of themselves.
P2,000 even if there is stipulation that he B. In both pledge and mortgage, the creditor
can. is entitled to deficiency judgment.
B. C can recover the deficiency of P2,000 C. Where an obligation is secured by a
even without stipulation. pledge or mortgage and it is not paid when
C. C cannot recover the deficiency of P2,000 due the
D. C can recover the deficiency of P2,000. pledge or mortgagee may dispose of the
59. In a contract wherein a person binds thing pledged or mortgaged if there is an
himself to render special service to do agreement to that effect between the parties.
something in Downloaded by Jessica Micah ([email protected])
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behalf of another with consent of the latter. D. Unless otherwise agreed upon by the
A. Contract of piece of work parties, the sale of the mortgage property
B. Contract of service extinguishes in full the obligation of the
C. Contract of agency mortgagor to the mortgagee.
D. Contract of exchange ------------------------------------------------------
60. Which of the following obligations of ------------------------------------------------------
the vendor cannot be waived: ---------
A. To allow the buyer to examine the goods 64. I. A sales contract is a real contract
sold. because no ownership is transferred unless
B. To transfer ownership to the buyer. there is
C. To pay the expenses of the deed of sale. delivery.
D. To warrant the thing sold. II. A sales contract is a real contract because
61. A appoints B as his agent to sell his land, the seller suffers the risk of loss until the
which of the following is valid: object of the sale has been delivered.
A. The authority of B is in writing and the A. First statement is true, second statement
sale of the land in favor of C is oral. is false.
B. The authority of B from A is by way of B. First statement is false, second statement
letter and B sells the land to C in writing. is true.
C. The authority of B is oral and B sells the C. Both statements are true.
land to C for P50,000 in a written contract of D. Both statements are false
sale. 65. A sells to B for P25,000 all the mango
D. When goods are delivered to an agent to fruits to be harvested from the mango
be sold by him and the agent is not liable to orchard which
the A plans to buy.
manufacturer of the goods. I. The sale is valid because the mango fruits
62. A stipulation whereby the pledge or have potential existence.
mortgagee automatically becomes the owner II. The sale is valid because the object of the
of the thing contract need not exist at the time of the
pledged or mortgaged: contract.
A. Pactum commisorio A. First statement is true, second statement
B. Consolidation of ownership is false.
C. Conventional redemption B. First statement is false, second statement
D. Consignation is true.
63. Which of the following statements is C. Both statements are true.
true and correct: D. Both statements are false
A. Pledge and mortgage are accessory 66. A who plans to buy a piece of land from
contracts because they cannot exist by B, enters into contract of sale respecting the
same
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J. Delos Santos
land with X for the price of P100,000. The A gave B thirty days to raise the amount and
contract is in writing. as soon as B is ready they will sign the deed
I. The sale is not valid because a seller of
cannot sell that which he does not own. sale. On the 25th day, A notified B that he is
II. The sale is not valid because a public no longer willing to sell the property unless
document is required. the
A. First statement is true, second statement price is increased to P550,000.
is false. I. B can compel a to accept the P500,000
B. First statement is false, second statement first offered because there exists a bilateral
is true. offer to
C. Both statements are true. sell and to buy a definite property for a
D. Both statements are false definite price.
67. Husband owes C. Subsequently, husband II. B cannot compel A to accept the
sold his car to his wife. If husband cannot P500,000 because this is merely an
pay C unaccepted unilateral
on due date: promise to sell.
I. C can question the sale because the sale A. First statement is true, second statement
prejudices C, a creditor. is false.
II. C can question the sale because husband B. First statement is false, second
is relatively disqualified to enter into this statement is true.
kind of C. Both statements are true.
sale. D. Both statements are false
A. First statement is true, second statement 70. I. A promise to buy and sell a
is false. determinate thing for a price certain is
B. First statement is false, second statement reciprocally
is true. demandable.
C. Both statements are true. II. An accepted unilateral promise to buy or
D. Both statements are false to sell a determinate thing for a price certain
68. A sells his TV set to B for P50,000 on is
sale or return. Subsequently, the TV set is binding upon the promissor if the promise is
lost by supported by a consideration distinct from
fortuitous event. the price.
I. The risk of loss pertains to the seller A. First statement is true, second statement
because the buyer is not at fault. is false.
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lOMoARcPSD|6672655 B. First statement is false, second statement
II. The risk of loss pertains to the seller until is true.
the buyer signifies to the seller that he C. Both statements are true.
accepts D. Both statements are false
the TV set. 71. A specific boat was sold to B for the
A. First statement is true, second statement price of P1 million on credit. Shortly after
is false. perfection of
B. First statement is false, second statement the sale but before delivery, the boat was
is true. destroyed by a fortuitous event.
C. Both statements are true. I. The seller suffers the loss because at time
D. Both statements are false of loss he was still the owner.
69. A offered to sell for P500,000 his house
and lot to B who was interested in buying
the same.
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J. Delos Santos
II. The buyer suffers the loss because if it C. Both statements are true.
were not for the fortuitous event ownership D. Both statements are false
would 74. A entered into a contract of sale of his
have transferred to him. car to B for a price of P50,000. The terms
A. First statement is true, second statement are: Upon
is false. payment of P20,000 A shall deliver the car
B. First statement is false, second statement and the balance to be paid after one month.
is true. B also
C. Both statements are true. executed a chattel mortgage on the car to
D. Both statements are false secure the payment of the balance. B
72. I. Should fungible things be sold for a defaulted in
price independently and for a single price, the payment of the balance, therefore A
the risk of foreclosed the mortgage. The proceeds
loss before perfection pertains always to the realized in
seller. the foreclosure sale were not sufficient to
II. Should fungible things be sold for a price pay the entire balance.
fixed according to weight, number or I. A can still recover the deficiency.
measure II. A cannot recover the deficiency because
the risk of loss pertains to the buyer after the law prohibits him from doing so.
perfection even before delivery. A. First statement is true, second
A. First statement is true, second statement statement is false.
is false. B. First statement is false, second statement
B. First statement is false, second statement is true.
is true. C. Both statements are true.
C. Both statements are true. D. Both statements are false
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(?)75. Guardian sells the property of the
D. Both statements are false ward to X for a price certain. The property is
73. Maria purchased a quantity of bed sheets rural land,
which were wrapped up in bales. The sale area 1 /2 hectare. X already owns rural land.
was done Guardian is an adjacent owner of 1/ 4 area
in the warehouse of Seller. Some bed sheets and
were pulled out from the bales displayed and the other adjacent owner is C of 1/ 2 hectare.
fount to be all right. Maria then purchased I. Guardian cannot legally redeem because
100 bales and paid the price. After delivery, he is relatively incapacitated.
Maria II. Guardian cannot legally redeem because
discovered that some of the bed sheets he is the owner of a lesser area.
contain holes. 76. S owns 10 sacks of rice for sale in his
I. Maria can return the bed sheets and store. B came into the store and buys the 10
recover the money she paid. sacks at
II. Maria cannot return the bed sheets and the price of P1,200 per sack and promised S
recover the money she paid because the to pay as soon he is paid for the bags of
principle cement
“caviat emptor” applies. which are then being unloaded from a truck
A. First statement is true, second parked opposite the store. Upon request of
statement is false. B, S
B. First statement is false, second statement
is true.
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J. Delos Santos
ordered the loading of the sacks of rice on D. Both statements are false
the truck, continuously watching the 79. I. If the bill of lading covering the goods
loading. sold is by its terms the goods described
After the sacks of rice were loaded on the therein are
truck, B did not appear to pay the price. So S deliverable to the order of the seller, and
again retained by the seller, the seller has reserved
ordered the unloading of the sacks of rice. his
At this moment, the driver of the truck ownership over the goods.
objected to II. If the bill of lading is by its terms the
the unloading of the sacks of rice claiming goods described therein are deliverable to
the he purchased the sacks of rice from B the order
and of the buyer and retained by the seller, the
therefore acquired ownership thereof. seller ha reserved his right of possession of
I. S cannot order the unloading because B the
acquired ownership when the sacks or rice goods as against the buyer.
were A. First statement is true, second statement
loaded on the truck. is false.
II. S cannot order the unloading because B. First statement is false, second statement
ownership was transferred to the driver by B is true.
who C. Both statements are true.
had ownership of the sacks of rice. D. Both statements are false
A. First statement is true, second statement 80. B bought a pair of shoes from shoe store
is false. and repair shop. It was later discovered that
B. First statement is false, second statement the pair
is true. of shoes bought by B belonged to a
C. Both statements are true. customer who left it there for repair.
D. Both statements are false I. B acquired ownership provided he acted in
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lOMoARcPSD|6672655 good faith.
77. I. If seller has ownership he can always II. B did not acquire ownership because a
transfer ownership. seller cannot transfer ownership if he
II. If seller has ownership but no possession himself has
he cannot transfer ownership by constructive no ownership.
delivery. A. First statement is true, second
A. First statement is true, second statement statement is false.
is false. B. First statement is false, second statement
B. First statement is false, second statement is true.
is true. C. Both statements are true.
C. Both statements are true. D. Both statements are false
D. Both statements are false 81. I. An unpaid seller loses his possessory
78. I. A contract of “sale or return” is a sale lien after he has delivered the goods to a
with a resolutory condition. carrier for
II. A contract of “sale on trial or approval” is the purpose of transmission to the buyer
a sale with a suspensive condition. without reserving the ownership in the
A. First statement is true, second statement goods or
is false. the right to the possession thereof.
B. First statement is false, second statement
is true.
C. Both statements are true.
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J. Delos Santos
II. The unpaid seller who loses his 84. S sells his piece of land to B for
possessory lien does not lose his lien for the P100,000. Consequently, another contract
payment of was entered into
the purchase price. between the parties whereby B leases the
A. First statement is true, second statement land to S.
is false. I. This contract shall be construed as an
B. First statement is false, second statement equitable mortgage.
is true. II. This contract is a contract of sale with
C. Both statements are true. leaseback.
D. Both statements are false. A. First statement is true, second statement
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lOMoARcPSD|6672655
is false.
82. I. Once the goods have been accepted by B. First statement is false, second
the buyer, the seller is no longer responsible statement is true.
to C. Both statements are true.
him for any breach of warranty. D. Both statements are false.
II. Acceptance by the buyer does not as a 85. A sold his piece of land to B last
general rule release the seller from liability November 10, 2009.
for I. S shall repurchase the land within 4 years
breach of warranty. from date of sale.
A. First statement is true, second statement II. S shall have within 10 years from date of
is false. sale to repurchase the land so long as the
B. First statement is false, second period
statement is true. of repurchase shall not exceed 10 years.
C. Both statements are true. A. First statement is true, second statement
D. Both statement are false. is false.
83. A enters into a contract of sale with B B. First statement is false, second statement
respecting 2 immovables for P200,000, the is true.
boundaries C. Both statements are true.
are mentioned and the area is 20,000 sq. D. Both statements are false.
meters. 86. A, B and C are co-owners of rural land
I. The seller shall suffer a proportionate with an area of 9 hectares. A sold his
reduction in price if the area delivered is less undivided
than interest to X who does not own rural land.
the area specified in the contract even I. B and C cannot legally redeem because
though the boundaries were followed. the sale was an absolute sale.
II. The seller shall also be entitled to a II. B and C as co-owners can legally redeem
proportionate increase in price if the area for the purpose of reducing the number of
exceeds the coownership.
number specified in the contract. A. First statement is true, second statement
A. First statement is true, second is false.
statement is false. B. First statement is false, second
B. First statement is false, second statement statement is true.
is true. C. Both statements are true.
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J. Delos Santos
II. Legal redemption is a right granted by D. Both statements are false.
law. 91. Agent was authorized by Principal to sell
A. First statement is true, second statement the latter’s TV set for P10,000 on the
is false. installment
B. First statement is false, second statement plan. A was able to sell it for P10,000 cash
is true. basis.
C. Both statements are true. I. The sale is not binding upon the principal
D. Both statements are false. unless the principal ratifies it.
88. A sold his piece of land to B with a right II. The sale is not binding upon the principal
of repurchase when A has sold his car. because the agency was performed in a
I. A can repurchase within 4 years from date manner
of sale. not included in the agency.
II. A can repurchase within 4 years from A. First statement is true, second statement
date of sale of his car. is false.
A. First statement is true, second B. First statement is false, second statement
statement is false. is true.
B. First statement is false, second statement C. Both statements are true.
is true. D. Both statements are false.
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J. Delos Santos
B. First statement is false, second statement 96. I. The pledge extends to the interest and
is true. earnings of the thing pledged unless there is
C. Both statements are true. a
D. Both statements are false. stipulation to the contrary.
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94. On September 1, 2010, P owns a piece lOMoARcPSD|6672655
of land gave a general power of attorney to II. In case of pledge of animals, their
A. On offsprings shall be subject to the pledge if
October 1, 2010, P, without the knowledge there is a
of A executed in favor of C a special power stipulation to that effect.
of A. First statement is true, second
attorney to sell said piece of land. November statement is false.
10, 2010, A as attorney-in-fact of P executed B. First statement is false, second statement
a is true.
deed of sale over the piece of land in favor C. Both statements are true.
of X. On the same date, C under the special D. Both statements are false.
power given by P, sold the same piece of 97. If there are reasonable grounds to fear
land t Y. Both purchasers acted in good the destruction or impairment of the thing
faith. X pledged
registered his sale. Y did not. without the fault of the pledge: First
I. The sale in favor of X must be respected statement is true, second statement is false.
because he registered it in good faith. I. The right of the pledgor to demand the
II. The sale in favor of Y must be respected return of the thing, upon offering another
because C was specially granted with thing in
authority to sell. pledge, provided the latter is of the same
A. First statement is true, second statement kind as the former and not of inferior quality
is false. must always be respected.
B. First statement is false, second II. The right of the pledge to cause the thing
statement is true. pledged to be sold at a public sale is
C. Both statements are true. subordinate
D. Both statements are false. to the above right of the pledgor.
95. A, B and C appointed Z as their agent to A. First statement is true, second statement
sell their separate houses. The appointment is false.
was B. First statement is false, second
made under one special power of authority. statement is true.
I. A, B and C shall be solidarily liable under C. Both statements are true.
the agency to Z D. Both statements are false.
II. A, B and C shall be jointly liable under 98. I. The creditor pledge cannot appropriate
the agency to Z even though the the thing pledged.
appointment was II. But he can dispose of the thing pledged
made in one common instrument because A, with the consent of the pledgor.
B and C are not co-owners. A. First statement is true, second
A. First statement is true, second statement statement is false.
is false. B. First statement is false, second statement
B. First statement is false, second is true.
statement is true. C. Both statements are true.
C. Both statements are true. D. Both statements are false.
D. Both statements are false.
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J. Delos Santos
99. I. A mortgage or pledge is indivisible B. First statement is false, second statement
although the principal obligation is divisible. is true.
II. The principal obligation must be C. Both statements are true.
necessarily indivisible because the mortgage D. Both statements are false.
or pledge 102.I. Future property cannot be the object
securing is indivisible. of a pledge or mortgage unless there is a
A. First statement is true, second stipulation
statement is false. to the contrary.
B. First statement is false, second statement II. Future property cannot be the object of a
is true. pledge or mortgage unless there is a
C. Both statements are true. stipulation
D. Both statements are false. to the contrary.
100. A borrows P10,000 from B, so A A. First statement is true, second statement
delivered his diamond ring to B as a pledge is false.
to secure his B. First statement is false, second
obligation. The contract of pledge was statement is true.
executed in a public document but the C. Both statements are true.
description of D. Both statements are false.
the ring and the date of the pledge did not 103.I. Two things are prohibited in a pledge
appear thereon. A, pledgor alienates the ring or mortgage, which are: (a) the appropriation
in by the
favor of C. pledge or mortgagee of the object of the
I. C has to respect the pledge because the pledge or mortgage and (b) the disposition
contract of pledge is in a public document. of
II. C has to respect the pledge if the the object by the pledgor or mortgagor.
alienation of the pledged was consented to II. Two things are prohibited in a pledge or
by the pledge. mortgage, which are: (a) the disposition of
A. First statement is true, second statement the
is false. object by the pledgee or mortgagee and (b)
B. First statement is false, second statement the return of the pledge or mortgage to the
is true. pledgor or mortgagor before debt is fully
C. Both statements are true. paid.
D. Both statements are false. A. First statement is true, second statement
101.I. A stipulation in a contract of pledge is false.
allowing the pledge to purchase the thing B. First statement is false, second statement
pledged at is true.
the current purchase price if the debt is not C. Both statements are true.
paid on time is valid. D. Both statements are false.
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J. Delos Santos
A. First statement is true, second statement D. Both statements are false.
is false. 108. A, minor borrows money from B. The
B. First statement is false, second statement contract although voidable is secured by a
is true. pledge or
C. Both statements are true. mortgage of A’s property.
D. Both statements are false. I. A can validly constitute a pledge or
105.I. In mortgage and chattel mortgage mortgage of his personal or real property.
there is recovery of deficiency as a general II. The pledge or mortgage constituted by a
rule. minor is valid provided he is the absolute
II. In pledge, absolutely, there is no recovery owner
of deficiency. of the property pledged or mortgaged.
A. First statement is true, second statement A. First statement is true, second statement
is false. is false.
B. First statement is false, second statement B. First statement is false, second statement
is true. is true.
C. Both statements are true. C. Both statements are true.
D. Both statements are false. D. Both statements are false.
106.A and B are co-owners of a piece of 109.A, agent is authorized by Principal to
land. They mortgaged their land in favor of lend money of the principal.
C. While I. A, the agent can borrow the money
the mortgage debt is pending, A and B provided the loan is without interest.
partitioned the land between them. On due II. A, the agent cannot borrow the money if
date, A the loan is with interest.
paid his share of the debt of C. A. First statement is true, second statement
I. The mortgage on A’s share of the land is is false.
extinguished. B. First statement is false, second statement
II. The mortgage on A’s share cannot be is true.
extinguished unless B pays his share of debt. C. Both statements are true.
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D. Both statements are false.
A. First statement is true, second statement 110.I. Agency is a nominate, principal,
is false. unilateral, preparatory, commutative and
B. First statement is false, second generally
statement is true. onerous contract.
C. Both statements are true. II. Agency is a nominate, accessory,
D. Both statements are false. bilateral, preparatory, commutative and
107. I. Unless there is stipulation to the generally
contrary, the debtor mortgagor can alienate onerous contract.
the property A. First statement is true, second statement
mortgage. is false.
II. The debtor mortgagor can alienate the B. First statement is false, second statement
property mortgaged with the consent of the is true.
mortgagee. C. Both statements are true.
A. First statement is true, second statement D. Both statements are false.
is false. 111. I. A general power of authority may
B. First statement is false, second also include a special power.
statement is true. II. A special power of authority does not
C. Both statements are true. include a general power.
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J. Delos Santos
A. First statement is true, second sold the necklace to Y for P20,000. Which
statement is false. of the following statements is correct?
B. First statement is false, second statement A. X has got a voidable title because at the
is true. time of sale, she is a minor
C. Both statements are true. B. X can ask for rescission of the sale to Y
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because she suffered a lesion of more than ¼
D. Both statements are false. of
112 I. If the third person contracts with the the value of the property.
agent knowing that the agent exceeds the C. If Y is in bad faith, Y becomes the
scope of owner of the necklace upon delivery to
his authority, the contract is void not only as him but
against the principal but also as between his title is voidable.
agent and the third person. D. X can ask for the annulment of the sale to
II. If a third person contracts with the agent Y because at the time of sale she is a minor.
knowing that the agent exceeds the scope of 3. This serves as a proof of the perfection of
his the contract of sale
authority the contract is void as against the A. Dacion en pago
principal but valid between the agent and the B. Option money
third person. C. Delivery
A. First statement is true, second D. Arras
statement is false. 4.A contract of sale is not a(an)
B. First statement is false, second statement A. Onerous contract
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J. Delos Santos
A. Dacion en pago correct?
B. Payment by cession A. DD may compel V to accept the
C. Emptio spei P12,000,000 first offered.
D. Emptio rei-speratae B. V may compel DD to pay P15,000,000
10. One of the following is not correct C. V and DD should shoulder the
A. Things subject to a resolutory condition P3,000,000 difference
may be the object of the contract of sale. D. DD cannot compel V to accept the
B. A thing is generic when it is P12,000,000 first offered
particularly designated or physically 13. If the object of the contract is specially
segregated from made or manufactured at the specific order
all others of the same class. of
C. Things having a potential existence may another, it is a contract for a piece of work.
be the object of the contract of sale. This is
D. The sole owner of a thing may sell an A. English rule
undivided interest therein B. Massachusetts rule
11. X needs a size of 10 of model 101 of C. New York rule
Leather Shoes regularly available to the D. Chicago rule
public for her 14. If the article already exists and
boyfriend Z, but the same is out of stock so subsequently acquired by another, it is a
she placed an order for one. On the other contract of sale, and
hand, Z if the article is still to be manufactured at the
placed an order for size No. 8, colored instance of another, it is a contract for a
violet, (something not ordinarily made by piece
the of work. This is
company) to be given to X. Which is A. English rule
correct? B. Massachusetts rule
A. Both are contracts of sale C. New York rule
B. Both are contracts for a piece of work D. Chicago rule
C. First is a contract of sale second is a 15. If the material used in the manufacturer
contract for a piece of work of the article is more valuable, it is a
D. First is a contract for a piece of work, contract of
second is a contract of sale sale, and if the labor or skill is more
12. V offered to sell for P12,000,000 her valuable than the material used in the
house and lot to DD who was interested in manufacture of
buying the the article, it is a contract for a piece of
same. In her letter to DD, V stated that she is work. This is
giving DD a period of one month within A. English rule
which B. Massachusetts rule
to raise the amount and that as soon as DD is C. New York rule
ready, they will sign the deed of sale. Five D. Chicago rule
days 16. The rule observed in the Philippines is
before the expiration of the one month A. English rule
period. V went to DD and told her that she is B. Massachusetts rule
no C. New York rule
longer willing to sell the property unless the D. Chicago rule
price in increased to P15,000,000. Which is
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J. Delos Santos
17. The Realty Installment Buyer Protection delivery of the goods from the carrier or
Act applies to all transactions involving the bailee.
sale or D. When the carrier or bailee, upon arrival
financing of real estate on installment but it of the goods at destination acknowledges to
excludes the following except: the
A. Sale or financing of industrial lots buyer or his agent that he is holding the
B. Sale or financing of commercial building goods as bailee for the latter.
C. Sale to tenants under the Land Reform 22. Goods are deemed no longer in transit
Code A. If the goods are rejected by the buyer for
D. Sale of residential condominiums a valid reason and the carrier or other bailee
18. Delivery by merely pointing to the continues in possession of them, even if the
object of sale if it cannot be delivered to the seller has refused to receive them back.
vendee at the B. From the time they are delivered to a
time of the sale is carrier by land, water or air for the purpose
A. Traditio longa manu of
B. Traditio brevi manu transmission to the buyer.
C. Traditio constitutum possessorium C. From the time they are delivered to a
D. Traditio symbolica bailee for the purpose of transmission to the
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19. Effected when the object of sale is until the buyer or his agent in that behalf,
already in the possession of the vendee at takes delivery of them from such bailee.
the time of sale D. If the carrier or other bailee
so that delivery need no longer be made is wrongfully refuses to deliver the goods to
A. Traditio longa manu the buyer or
B. Traditio brevi manu his agent in that behalf.
C. Traditio constitutum possessorium 23. X sold to V orally a parcel of land for
D. Traditio symbolica P200,000. X effected the delivery of the
20. When the owner of the thing sells it to land. The
vendee, but continues to have possession or payment of the price was to be made three
occupation of the thing not as owner but as month later. At the end of three month
tenant or lessee period
A. Traditio longa manu A. V may refuse to pay claiming in his
B. Traditio brevi manu defense the Statute of Frauds
C. Traditio constitutum possessorium B. V may return the parcel of land to X
D. Traditio symbolica C. X can collect from V because the
21. Goods are deemed in transit contract has already been executed
A. When the buyer accepts delivery of the D. V may refuse to pay on the ground that
goods upon arrival at destination there is no written contract to support the
B. When the buyer intercepts and lawfully sale.
takes possession of the goods at any point 24. On January 15, 2010, X sold for P2M
before her house and lot to V. It was agreed that
destination. delivery of
C. From the time they are delivered by the house and lot, and the payment therefore,
the seller to a common carrier or other would be made on March 10, 2010.
bailee Unfortunately, Z a stranger negligently set
for transmission to the buyer, up to the the house on fire on February 25, 2010, and
time that the buyer or his agent takes the
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J. Delos Santos
house was completely destroyed. Which is 28. Action to seek a corresponding reduction
correct? in price by reason of some vices or defects
A. V is not required to pay the P2M since in the
the contract had no subject matter. thing purchased
B. X must still deliver the lot but is A. Accion quanti minoris
excused from delivering the house, while B. Accion reinvidicatoria
V must C. Accion pauliana
still pay the P2M D. Redhibilitory action
C. X must deliver the lot while V should pay 29. The redhibitory action based on the
only the amount equivalent to the value of faults or defects of animals must be brought
the within
lot. A. 30 days from delivery to the vendee
D. X need not deliver the lot while V need B. 40 days from delivery to the vendee
not pay the P2M C. 45 days from delivery to the vendee
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lOMoARcPSD|6672655 D. 6 months from delivery to the vendee
25. If immovable property should have been 30. In contract of sale, if the price is
sold to different vendees, the ownership absolutely simulated, the sale is
shall be A. Unenforceable
transferred to the person B. Voidable
A. Who have first taken possession in good C. Void
faith D. Rescissible
B. Who presents the oldest title in good faith 31. In a contract of sale, of personal
C. Who in good faith first recorded it in property, the price of which is payable in
the Registry of Property installments, the
D. Who have paid in good faith the purchase vendor may exercise any of the following
price in full remedies, except
26. Using the preceding number, if movable A. Exact fulfillment of the obligation,
property, it shall belong to the person should the vendee fail to pay any installment
A. Who have paid in good the purchase B. Cancel the sale, should the vendee’s
price in full failure to pay cover two or more installment
B. Who in good faith first recorded it in the C. Foreclose the chattel mortgage on the
Registry of Property thing sold, if one has been constituted
C. Who presents the oldest title in good faith should the
D. Who have first taken possession in vendee’s failure to pay cover two or more
good faith installments
27. Action by the vendee against the vendor D. Rescind the sale should the vendee fail
to nullify the sale due to some vices or to pay any installment.
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which render the object of sale unfit for the 32. The right of the seller to stop goods in
use intended or knowledge of which the transit, upon discovering that the buyer does
vendee not have
should not have bought the thing the funds to pay for the goods
A. Accion quanti minoris A. Pre-emptive right
B. Accion reinvidicatoria B. Appraisal right
C. Accion pauliana C. Voting right
D. Redhibilitory action D. Right of stoppage in transit
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J. Delos Santos
33. A sold to B a parcel of land for P3.8M. 37. A sold to B his car and promised to
The sale is evidenced by a memorandum of deliver ten days later. The next day, after the
agreement of sale written in the Bicolano sale to B,
dialect. One week later, A sold the same A sold the same car to C and immediately
parcel of affected delivery. On the day agreed upon, A
land to C for P4M. This is evidenced by a did
formal deed of sale. Upon buying the not deliver the car to B. Which is correct?
property, C, A. B can cancel the contract between A and
who was aware of the first sale immediately C, because the contract between A and B
took possession of the lot. When informed was
of perfected ahead of the contract between A
the second sale, B subsequently registered and c
an adverse claim to the property. Later, C B. B should make the demand to make A in
registered the deed of sale in her favor. The default
parcel of land shall belong to C. A is liable to B for the value of the car
A. B because he has got an older title plus damages after B makes a demand
B. C because he is the first to register D. A is liable to B for damages and is in
C. C because he is the first to take default without need of any demand
possession 38. X sold to V her Yamaha organ. It was
D. No one as both sales are void agreed that X would fix the price a week
34. Voluntary renunciation made by the later. At the
buyer of his right to warranty against agreed time, X named the price P10,000. V
eviction where in agreed. Was the sale perfected?
case the buyer is evicted, the seller is liable A. No, because the price was left to the
to the value of the thing at the time of discretion of one of the contracting parties
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J. Delos Santos
A. The contract is valid if the value of labeled 220 volts and Vi sold them to the
inheritance is at least equal to P1,000,000 public as such. Later the customer
B. The contract is valid even though the complained that
inheritance to be turned over to B is less the radios have been mislabeled by the
than manufacturer and that they were good only
P1M for 110
C. The contract is void as future inheritance volts. As a consequence
cannot be the object of sale A. Vi is liable to the vendees for any
D. The contract is unenforceable hidden defects even though he is not
41. X stole a fountain pen from P and sold it aware.
to Z Merchandise, a “store for pens”, which B. Vi is not liable because he is in good faith
paid for C. Vi is not liable under the principle of
it in good faith, not knowing it was stolen. “caveat emptor” or let the buyer beware
The “store” then sold it to C, a D. The vendees may hold the manufacturer
student.Which is liable but not Vi because Vi specifically
correct? asked
A. C cannot be considered as the owner for 220 volts
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J. Delos Santos
obligation is extinguished. A. Not certain because the price at Cainta
B. No, because the loss should be borne by Market is not stated
the seller as this an installment sale so until B. Certain because it has got reference to
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the sale, A remains to be the owner. C. Certain because there is a price ceiling for
C. Yes, but A must give another car to B price of land
because of the principle “genus nunquam D. Not certain so court may fix the price
peruit” or 52. X sold his motor vehicle to V who
generic thing never perishes bought it for P200,000. It turned out
D. Yes, because the principle “res perit however, that X has
domino” or the thing perishes with the 2 motor vehicles: Toyota valued at P230,000
owner. and Lancer valued at P220,000. Which is
48. A, B and C are co-owners of an correct?
undivided parcel of land, A sold his 1/ 3 A. There is no contract of sale between X
interest to B and V
absolutely. Which is correct? B. The parties may ask for interpretation or
A. C may exercise his right of redemption of reformation
the interest sold by A to B C. The parties can ask for annulment of the
B. C cannot exercise the right of contract
redemption because the sale was made in D. V may choose between the Toyota or
favor of a Lancer
co-owner 53. X offers to V 100 electric fans for
C. The sale made by A to B is void because P80,000 payable in 60 days with 12 %
it was not made in favor of a stranger interest per annum.
D. C may redeem only 1 /2 of the interest V accepted the offer by telegram provided
sold by A to B that interest is reduced to 6%. If there is no
49. Using the preceding number, suppose, further communication between X and V
instead of selling his interest to B, A sold it relating to the terms
to D, who A. The contract is perfected because of the
can exercise the right of redemption? acceptance by V
A. Both B and C B. There is no contract yet between X and
B. B but not C V because V made a counter offer
C. C but not B C. The contract is perfected under the terms
D. A, B and C of X
50. Which of the following cannot be the D. There is no contract yet unless v gives
object of a contract of sale? earnest money
A. Sale of credit 54. X owns 50 mango trees bearing fruits,
B. Young animal not yet conceived at the ready for harvest. She told all the fruits of all
time of perfection the trees
C. Land which the seller expects to buy to V who paid P100,000. X told V that he
D. Future inheritance can harvest her fruits anytime he likes and
51. A offered for sale to B 20 cavans of pointing at the mango trees. For legal
wagwag rice and fixed the price per cavan at purposes, X has fulfilled her obligation to
P10 over deliver the
the price offered at Z’s store in Cainta mango fruits to V by
Market. The price is A. Traditio longa manu
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J. Delos Santos
B. Traditio brevi manu D. Y should pay additional amount for the
C. Traditio constitutum possessorium baby horse to be entitled to it
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55. X sold her specific car to V for P200,00 58. A contract of sale is in the stage of
payable in 5 equal installments. X delivered conception when
the car A. There is meeting of the minds
to V but a mortgage was constituted on the B. Negotiations are in progress
car to answer for the unpaid installments. V C. The parties come to an agreement
paid D. The contract is perfect
the first 2 installments but failed to pay the 59. A seller sold to a buyer a piece of
last 3 installments. X foreclosed the jewelry at a price of P25,000. The contract
mortgaged provides that
property and sold it at public auction for the buyer will pay the seller cash, P20,000
P100,000. Which is correct? and for the balance, the buyer will give the
A. X can recover from V the balance of seller
P20,000 even if there is no stipulation to that a micro oven worth P5,000. What is the
effect nature of the contract?
B. X can recover from V the balance of A. Sale
P20,000 if there is stipulation to that effect B. Partly sale partly barter
C. X cannot recover the deficiency except if C. Barter
there is stipulation to that effect D. Commodatum
D. X cannot recover the deficiency even if 60. X, the guardian of V, sold V’s house and
there is stipulation to the contrary lot worth P480,0000 for P430,000
56. Ownership of the thing sold is A. The contract can be rescinded because
A. Retained by the seller in “sale or return of inadequacy of price
B. Transferred to the buyer upon B. The contract cannot be rescinded because
constructive or actual delivery of the there is no fraud, mistake or undue influence
thing sold C. The contract cannot be rescinded because
C. Acquired by the buyer upon perfection of all the elements of a contract are present
the contract D. The contract can be rescinded by X.
D. Transferred to the buyer upon acceptance 61. X leased to V a 5 Freezer for two years
of the price at a lease rental fee of P1,000 per month and
57. X sold his horse to Y for P40,000. No signed
payment has yet been made and the sales an option in favor of V to buy the freezers at
document the end of the term of the lease at P50,000.
does not provide the date of delivery. Before All
delivery and payment the horse gave birth to rental fee paid are to be considered as partial
a payment of the sale. After 12 months V was
baby horse, which is correct? able to pay the rental fee for 9 months and
A. Y is entitled to the baby horse which was in arrears for three months. X
was born after the perfection of the terminated the
contract lease contract and repossessed the freezers.
B. X is entitled to the fruit (baby horse) as Y The consequence of the transaction is
has not paid the price yet A. X can collect the rental fees for three
C. X is entitled to the (baby horse) because months which are in arrears.
it was born before his obligation to deliver B. X can collect the rental fees for the
arises unexpired 12 months of the lease contract.
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J. Delos Santos
C. When X took possession of the generator, B. First statement is false, second statement
he has no further action against V is true.
D. X in terminating the lease and C. Both statements are true.
repossessing the generator is obliged to D. Both statements are false
refund the 9 65. I. If the price is grossly inadequate, the
months rental fee, paid by V even if there is sale is void.
a stipulation to the contrary. II. Whenever option money is given in a
62. X sold his car to Z for P60,000. No date contract of sale, it shall be considered as part
was fixed for the performance of the of the
obligation of price and a proof of the perfection of the
the seller and the buyer. The obligation of X contract.
is A. First statement is true, second statement
A. To deliver the car immediately because is false.
the sale is a perfected contract B. First statement is false, second statement
B. To deliver the car only after Z writes to X is true.
demanding the delivery of the car. C. Both statements are true.
C. To deliver the car only after Z pays the D. Both statements are false
P60,000 66. I. Earnest money and option money both
D. To rescind the contract because there is apply to perfected sale.
no time fixed for the delivery II. In a contract of sale of personal property
63. I. The vendor need not be the owner at the price of which is payable in installment,
the time the sale is perfected. It is sufficient the
that he is vendor may cancel the sale should the
the owner at the time the thing sold is vendee fail to pay.
delivered. A. First statement is true, second statement
II. The sale of a vain hope or expectancy is is false.
voidable. B. First statement is false, second statement
A. First statement is true, second is true.
statement is false. C. Both statements are true.
B. First statement is false, second statement D. Both statements are false
is true. 67. I. Should the vendee’s failure to pay,
C. Both statements are true. cover two or more installments, the vendor
D. Both statements are false may
64. I. There may be a contract of sale of foreclose the chattel mortgage on the thing
goods, whose acquisition by the seller sold but he shall have no further action
depends upon a against
contingency which may or may not happen. the purchaser to recover any unpaid balance
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J. Delos Santos
C. Both statements are true. 71. I. Any stipulation exempting the vendor
D. Both statements are false from the obligation to answer for eviction
68. I. The ownership of the thing sold shall shall be
be transferred to the vendee upon perfection void.
of the II. The vendor is responsible to the vendee
contract. for any hidden faults or defects in the thing
II. An unaccepted unilateral promise to buy sold
or to sell a determinate thing for a price only if he was aware thereof.
certain A. First statement is true, second statement
is binding upon the promissory. is false.
A. First statement is true, second statement B. First statement is false, second statement
is false. is true.
B. First statement is false, second statement C. Both statements are true.
is true. D. Both statements are false
C. Both statements are true. 72. I. If the animal sold should die within
D. Both statements are false three (3) days after its purchase, the vendor
69. I. The husband and the wife cannot sell shall be
property to each other, as a rule. liable to the vendee.
II. The sale of a piece of land or interest II. The fixing of the price can never be left
therein when made thru an agent is void to the discretion on one of the contracting
unless the parties.
agent’s authority is in writing even if the However, if the price fixed by one of the
sale itself is in s public instrument and has parties is accepted by the other, the sale is
been perfected.
registered. A. First statement is true, second statement
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lOMoARcPSD|6672655 is false.
A. First statement is true, second statement B. First statement is false, second
is false. statement is true.
B. First statement is false, second statement C. Both statements are true.
is true. D. Both statements are false
C. Both statements are true. 73. I. Option money is considered as part of
D. Both statements are false the purchase price while earnest money is
70. I. The expenses for the execution and not.
registration of the sale shall be borne by the II. The Maceda Law refers to the sale of
vendee, personal property by installments while the
unless there is a stipulation to the contrary. Recto
II. If the same thing should have been sold Law refers to the sale of real property by
to different vendees the ownership shall be installments.
transferred to the person who may have A. First statement is true, second statement
taken possession thereof in good faith. is false.
A. First statement is true, second statement B. First statement is false, second statement
is false. is true.
B. First statement is false, second statement C. Both statements are true.
is true. D. Both statements are false
C. Both statements are true. 74. I. If two or more animals are sold
D. Both statements are false together, whether for lump sum or for a
separate price for
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J. Delos Santos
each of them, the redhibitory defect of one 77. I. Unless otherwise agreed, the buyer of
shall give rise to the redhibition of the goods is not bound to accept delivery thereof
others. by
II. There is no warranty against hidden installment.
defects of animals sold at fairs or at public II. In case of doubt, a contract purporting to
auctions be an equitable mortgage shall be construed
or of livestock sold as condemned. as a
A. First statement is true, second statement sale with a right to repurchase.
is false. A. First statement is true, second
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statement is false.
B. First statement is false, second B. First statement is false, second statement
statement is true. is true.
C. Both statements are true. C. Both statements are true.
D. Both statements are false D. Both statements are false
75. I. The ownership in the thing shall not 78. I. The creditors of the vendor cannot
pass to the purchaser until he has fully paid make use of the right of redemption against
the price. the
II. If at the time the contract of sale is vendee, until they have exhausted the
perfected, the thing which is the object of property of the vendor.
the contract II. Sale is a real contract because delivery is
has been partially lost, the contract shall be necessary to transfer ownership to the buyer.
without effect. A. First statement is true, second
A. First statement is true, second statement statement is false.
is false. B. First statement is false, second statement
B. First statement is false, second statement is true.
is true. C. Both statements are true.
C. Both statements are true. D. Both statements are false
D. Both statements are false CREDIT TRANSACTIONS (Cpar)
76. I. Where the seller of goods has a PLEDGE AND MORTGAGE
voidable title thereto, but his title has not 1.Which of the following statements is true?
been avoided at A. Any stipulation in a contract of pledge
the time of the sale, the buyer acquires a authorizing the pledge to sell the thing
good title to the goods. pledged if
II. If the vendee has renounced the right to the pledgor cannot pay is void.
warranty in case of eviction, and eviction Downloaded by Jessica Micah ([email protected])
should
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J. Delos Santos
A. Only if with the oral consent of the 7. A mortgaged his residential land to B as a
mortgagee guarantee for the payment of P400,000
B. Only if with the written consent of the obligations
mortgagee to B. They agreed that A should not sell the
C. If not prohibited to sell land while the obligation exists. Before the
D. Even without the consent of the maturity of the mortgage, C offered to buy
mortgagee the land from A. Which is correct?
3. Elements of contracts of pledge and A. A cannot sell the land to C because of the
mortgage, except agreement not to sell
A. Pledgor or mortgagor must be the B. A can sell the land to C only if B
absolute owner consents in writing
B. Pledgor or mortgagor must have the free C. A can sell the land to C despite the
disposal of the thing pledged. agreement not to sell
C. The thing pledged or mortgaged may D. A cannot sell the land to C unless A pays
be appropriated if the debtor cannot pay. the obligation
D. Pledge and mortgage are accessory 8. S, minor of 16 years old, sold her bracelet
contracts to B for P8,000. Later, B, needing money to
4.A borrowed P100,000 from B with A’s pay
ring given to B by way of pledge. It was her daughter’s tuition fee, borrowed P15,000
stipulated that from C and as a security, pledged the
in case of non-payment on due date, the ring bracelet
would belong to B. This for feature is to the latter. B failed to pay C resulting into
A. Caveat emptor auction sale of the bracelet in favor of D for
B. Dacion en pago P10,000 only. Which of the following
C. Pactum comisorio statements is correct?
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5.A borrowed P100,000 from B, and as a A. The title of B over the bracelet is not
security A pledged his ring to B. After the valid, hence the pledge, as well as the sale of
obligation said
falls due, A goes to b relinquishing bracelet is likewise defective. The pledgor
ownership of the ring in favor of B. This is must be the owner of the thing pledged.
A. Caveat emptor B. The deficiency of P5,000 may still be
B. Dacion en pago recovered by C from B if there is a
C. Pactum comisorio stipulation to
D. Pacto de retro this effect.
6.A borrowed P30,000 from B, and as C. C can no longer recover the deficiency
security, he pledged his ring, pair of earrings of P5,000 from B. The pledge together
and with
necklace. On due date, A paid P20,000. As a the sale is valid. The voidable title of B is
result, valid because it is not yet annulled.
A. A can demand the return of one (1) of the D. If D was a purchaser in bad faith as he
things pledged knew of the defective title of B over the
B. A can demand the return of any two (2) bracelet
of the things pledged from S, ownership will not pass to him (D).
C. A can demand the return of the ring 9. In the preceding number, assuming what
D. A cannot demand the return of any of was executed by B in favor of C was valid
the things pledged chattel
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J. Delos Santos
mortgage which was eventually foreclosed II. The indivisibility of a pledge or mortgage
and the bracelet was old to D at the public is affected by the fact that the debtors are
auction for the same amount, which solidarily liable.
statement is correct? A. First statement is true, second statement
A. The title of B over the bracelet is not is false.
valid, hence the chattel mortgage, as well as B. First statement is false, second statement
the sale is true.
of said bracelet is likewise defective. The C. Both statements are true.
mortgagor must be the owner of the thing D. Both statements are false.
mortgaged. 12. I. A pledge or mortgage is indivisible,
B. The deficiency of P5,000 may still be except if the debt may be divided among the
recovered by C from B successors in interest of the debtor or of the
C. C can no longer recover the deficiency of creditor.
P5,000 from B as the mortgage, together II. In case of pledge of animals, their
with offspring shall pertain to the pledge of the
the foreclosure sale, was valid. The title of B animals.
was still valid. A. First statement is true, second statement
D. If D was a purchaser in bad faith as he is false.
knew of the defective title of B over the B. First statement is false, second statement
bracelet, is true.
ownership will not pass to him (D). C. Both statements are true.
10. S sold to b a specific car for P200,000 D. Both statements are false.
payable in four equal installments. S Downloaded by Jessica Micah ([email protected])
delivered the car
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J. Delos Santos
A. First statement is true, second statement A. First statement is true, second statement
is false. is false.
B. First statement is false, second statement B. First statement is false, second statement
is true. is true.
C. Both statements are true. C. Both statements are true.
D. Both statements are false. D. Both statements are false.
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that he renounces or abandons the pledge is 18. I. A pledge shall not take effect against
sufficient to extinguish the pledge only if third person if a description of the thing
accepted by the pledgor or owner and the pledged and
thing the date of the pledge do not appear in a
pledged is returned. public instrument.
II. At the public auction, the pledge may II. If after the auction sale, the thing pledged
also bid and his ofer shall be valid even if he is not sold, the pledge can appropriate the
is the thing
only bidder. pledged.
A. First statement is true, second statement A. First statement is true, second
is false. statement is false.
B. First statement is false, second statement B. First statement is false, second statement
is true. is true.
C. Both statements are true. C. Both statements are true.
D. Both statements are false. D. Both statements are false.
16. I. The sale of the thing pledged shall 19. I. Z pledged his ring to B for P20,000. Z
extinguish the principal obligation provided failed to pay his obligation on time. B sold
the the ring
proceeds of the sale are equal to the amount at a public auction for P16,000. B cannot
of the principal obligation. recover P4,000 from Z even if there is
II. If the price of the sale is more than the stipulation.
amount of the obligation, the debtor shall be II. Using the same facts, if the proceeds of
entitled to the excess, unless it is otherwise sale is P24,000, Z can recover the excess of
agreed. P4,000 if stipulated.
A. First statement is true, second statement A. First statement is true, second statement
is false. is false.
B. First statement is false, second statement B. First statement is false, second statement
is true. is true.
C. Both statements are true. C. Both statements are true.
D. Both statements are false. D. Both statements are false.
17. I. If the price of the sale is less than the 20. I. In sale at public auction, the pledgor or
amount of the obligation the creditor shall owner may be abider and shall have a better
not be right
entitled to recover the deficiency except if if he should offer the same terms as the
there is a stipulation to the contrary. highest bidder.
II. If two or more things are pledged, the II. Pledge is a real contract.
pledgor may choose which he will cause to A. First statement is true, second statement
be sold, is false.
unless there is a stipulation to the contrary. B. First statement is false, second statement
is true.
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J. Delos Santos
C. Both statements are true. auction but the proceeds is less than the
D. Both statements are false. collectible amount, B cannot recover the
MORTGAGE deficiency.
21. I. A stipulation prohibiting the owner A. First statement is true, second
from alienating the immovable mortgaged statement is false.
shall be B. First statement is false, second statement
void. is true.
II. The equity of redemption refers to the C. Both statements are true.
right of the mortgagor to redeem the D. Both statements are false.
mortgaged 24. I. In real estate mortgage the mortgagor
property within a certain period of time after can sell the property mortgage even without
it was sold to third person. the
A. First statement is true, second consent of the mortgagee.
statement is false. II. In chattel mortgage, the mortgagor cannot
B. First statement is false, second statement sell the thing mortgage even with the written
is true. consent of the mortgagee appearing at the
C. Both statements are true. back of the mortgage.
D. Both statements are false. A. First statement is true, second
22. I. The right of redemption refers to the statement is false.
right of the mortgagor to redeem the B. First statement is false, second statement
mortgaged is true.
property after his default in payment but C. Both statements are true.
before the sale. D. Both statements are false.
II. The registration in the Registry of 25. I. Chattel mortgage like pledge is a real
Property is necessary for the validity of a contract.
contract of II. In chattel mortgage like pledge the
real estate mortgage. possession of the thing mortgaged is vested
A. First statement is true, second statement in the
is false. creditor.
B. First statement is false, second statement A. First statement is true, second statement
is true. is false.
C. Both statements are true. B. First statement is false, second statement
D. Both statements are false. is true.
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C. Both statements are true.
23. I. Except in case of sale of personal D. Both statements are false.
property in installments, if the proceeds of LOAN
the sale is 26. D deposits his momey by way of a
less than the principal obligation, the savings account with C Bank. The contract
creditor-mortgagee can recover the between D
deficiency. and C is
II. A borrowed P100,000 from B payable in A. Deposit
10 equal monthly installments. To secure B. Agency
payment of the loan, A executed chattel C. Commodatum
mortgage on his Mercedes Benz car. If A D. Mutuum
violates the condition of the mortgage, and 27. I. In mutuum or loan, one of the parties
the car was foreclosed and sold at a public delivers to another something not
consumable so
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J. Delos Santos
that the latter may use the same for a certain 31. I. A contract whereby one person
time and return it. transfers the ownership of non-fungible
II.Mutuun is essentially gratuitous. things to another
A. First statement is true, second statement with the obligation on the part of the latter to
is false. give things of the same kind, quantity and
B. First statement is false, second statement quality shall be considered a loan.
is true. II. Precarium is a kind of mutuum where the
C. Both statements are true. bailor may demand the thing loaned at will.
D. Both statements are false. A. First statement is true, second statement
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is false.
28. I. In commodatum one of the parties B. First statement is false, second statement
delivers money or consumable thing upon is true.
the C. Both statements are true.
condition that the same amount of the same D. Both statements are false.
kind and quality shall be paid. DEPOSIT
II.In commodatum and mutuum ownership 32. I. An agreement to constitute a deposit is
of the thing loan is transferred to the binding and is perfected from the moment
borrower. there is
A. First statement is true, second statement meeting of minds.
is false. II. Movable and immovable things may be
B. First statement is false, second statement the object of judicial deposit.
is true. A. First statement is true, second statement
C. Both statements are true. is false.
D. Both statements are false. B. First statement is false, second statement
29. I. Commodatum and mutuum involve is true.
real and personal property. C. Both statements are true.
II. The bailee in commodatum acquires the D. Both statements are false.
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II. The depositary can demand that the 2. Dacion en pago partakes of the
depositor prove his ownership of the thing nature of sale; hence, there is more
deposited. freedom in fixing the price of the
A. First statement is true, second thing conveyed.
statement is false. 3. A contract for a piece of work must
B. First statement is false, second statement
comply with the Statute of frauds.
is true.
Accordingly, it must be in writing to
C. Both statements are true.
D. Both statements are false. be enforceable if the price is PhP500
35. I. Unless there is a stipulation to the or more.
contrary, the depositary cannot deposit the 4. A sales contract requires the delivery
thing with a of the thing sold for its perfection.
third person. 5. As a rule, if the consideration
II. When the depositary has permission to received for the thing is another
use the thing deposited, the contract loses thing and a monetary consideration
the and the intention of the parties does
concept of a deposit and becomes a loan or not clearly appear, the contract will
commodatum even when safekeeping is still
be considered a contract of barter if
the principal purpose of the contract.
the value of the property
A. First statement is true, second
statement is false. consideration is greater than the
B. First statement is false, second statement monetary consideration.
is true. 6. In a contract to sell, the full payment
C. Both statements are true. of the price is a suspensive condition
D. Both statements are false. which upon fulfilment will require
36. I. The thing deposited shall be returned the execution of a contract of sale.
with all its products, accessories and 7. It is not necessary that the vendor of
accessions. a thing must be the owner thereof at
II. A contract of deposit is perfected from the time of sale as long as he can
the moment there is meeting of minds. transfer its ownership to the buyer
A. First statement is true, second upon delivery.
statement is false.
8. The sale of hope or expectancy does
B. First statement is false, second statement
is true. not come into existence.
C. Both statements are true. 9. In a sale of a piece of land is made
D. Both statements are false. through an agent, the authority of the
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agent must be in writing for the sale
to be valid.
TRUE OR FALSE. Write the word TRUE if
10. In sale by auction, any bidder may
the statement is true and the word FALSE if
retract his bid before the sale is
the statement is false coupled by an
perfected.
explanation why the same is false.
11. If a by-bidder or puffer is employed
1. Warranty against eviction is inherent by a seller without notice in sale by
in a contract of sale; hence, it is an auction, the sale may be treated as
essential element thereof. fraudulent by the buyer.
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J. Delos Santos
12. The ownership of the thing sold is 22. The delivery of specific goods to a
transferred upon the perfection of the carrier or other bailee for the purpose
contract of sale. of transmission to the buyer
13. A unilateral promise to buy or sell a generally transfers ownership of the
determinate thing at a certain price is goods to the buyer.
binding upon the promissor if the 23. When a thing is purchased from a
promise is supported by a merchant’s store, fair or market, the
consideration distinct from the price. buyer acquires title to the thing
14. Earnest money is part of the although the seller may have stolen it
purchase price of a thing, hence, or acquired it from a thief.
deductible from the total selling 24. A warehouse receipt is also a
price. contract between the warehouseman
15. In sale of personal property payable and the depositor of the goods.
by instalments, the seller may exact 25. A bearer document of title becomes
fulfilment of the buyer’s obligation an order document of title if it is
when the buyer defaults in the specifically endorsed.
payment of one or more instalments. 26. The delivery of an order document of
16. In sale of real property where the title without any endorsement does
buyer has defaulted after paying at not constitute as negotiation.
least 2 years instalments, he shall be 27. A negotiable document of title
entitled to pay without additional becomes negotiable if it stamped
interest the unpaid instalments due with the mark “non-negotiable”
within the grace period earned by 28. If the goods sold are in the
him. possession of a third person, the
17. A guardian may validly acquire by seller is deemed to have delivered
purchase the property of the person the goods to the buyer if the third
under his guardianship. person acknowledges to the buyer
18. The buyer shall be entitled to the that he holds the goods in the buyer’s
fruits of the thing sold from the time behalf.
of the perfection of the contract. 29. If a period has been fixed for the
19. The delivery of incorporeal property payment of the price which has not
may be made through the exercise by yet arrived, the seller in the
the vendee of his rights with the meantime is bound to deliver the
consent of the vendor. thing sold.
20. If goods are sold on “sale or return” 30. An unpaid seller exercising his right
the risk of loss of the thing sold to resell the goods may buy the
remains with the seller after its goods either directly or indirectly.
delivery to the buyer 31. When an unpaid seller exercises his
21. In “sale by approval” the buyer right of stoppage in transit, the
becomes the owner of the thin upon contract of carriage ceases, the
delivery but ay revert such carrier becomes liable is a
ownership to the seller by returning depositary.
it.
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J. Delos Santos
PAR
32. 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.
33. If the same immovable is sold to two QUIZ- Business
Law and
or more persons who are all in good
faith, ownership shall belong to the
buyer who first paid its price.
34. In order that the buyer may enforce
the seller’s liability for breach of
Taxation
warranty against eviction, the CPARQUIZ- Business Law and Taxation
judgment depriving the buyer of the 1. As a rule, this contract of sale involving D
thing must first be appealed by the a piece of land is void,
buyer.
35. The vendor’s liability for breach of A. Between a minor and a capacitated
warranty against eviction may be person.
validly waived by the vendee. B. Between two insane persons who did
However, the vendor will still be not act during lucid interval
C. Between first degree cousins
liable if the waiver was made by the
D. Between husband and wife
vendee without knowledge of the 2. X, 17 years old, sold to Z, of legal age, C
risk of eviction. her necklace worth P20,000 for P15,000.
36. As a rule, the vendor shall not be Later, Z sold the necklace to Y for
liable for a non-apparent easement P20,000. Which of the following
that is recorded in the registry of statements is correct?
property.
37. The vendor shall be liable generally A. X has got a voidable title because at
for any defect on the thing sold even the time of sale, she is a minor
B. X can ask for rescission of the sale to Y
if he was not aware thereof.
because she suffered a lesion of more
38. When animals are sold as a pair, the
than ¼ of the value of the property.
vendee may ask for the rescission of C. If Y is in bad faith, Y becomes the
the sale of both animals although owner of the necklace upon delivery to
only one of them suffers from him but his title is voidable.
redhibitory defect. D. X can ask for the annulment of the sale
39. The sale of animals suffering from to Y because at the time of sale she is a
contagious diseases is voidable. minor
40. There is no warrant against hidden
defects of animals sold at fairs or at 3. This serves as a proof of the D
perfection of the contract of sale
public auctions, or of animals sold as
condemned. A. Dacion en pago
B. Option money
C. Delivery
D. Arras
4.A contract of sale is not a(an) B
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J. Delos Santos
A. Onerous contract
B. Accessory contract
C. Commutative contract
A. Things
D. Bilateral contracT
5.Warranty against hidden defects is B subject to a
A. An essential element
B. A natural element
C. An accidental element
resolutory
D. An artificial element
7. When a sale of a piece of land or any
interest therein is through an agent, the
D condition
authority of the agent shall be in writing,
otherwise the sale is may be the
A. Valid
B. Voidable
C. Unenforceable
object of the
D. Void
8. The sale of an expected thing
A. Dacion en pago
D contract of
B. Payment by cession
C. Emptiospei sale.
9. The sale of the hope itself
A. Dacion en pago
C
B. A thing is
B. Payment by cession
C. Emptio spei
D. Emptio rei-speratae
generic
speratae
B
when it is
10. One of particularly
the designated
following is or
not correct physically
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J. Delos Santos
segregated thing may
from sell an
all others of undivided
the same interest
class. therein
C. Things
10. One of the following is not correct
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J. Delos Santos
one month within which to raise the 20. When the owner of the thing sells it C
amount and that as soon as DD is ready, to vendee, but continues to have
they will sign the deed of sale. Five days possession or occupation of the thing not
before the expiration of the one month as owner but as tenant or lessee
period. V went to DD and told her that A. Traditio longa manu
she is no longer willing to sell the B. Traditio brevi manu
property unless the price in increased to C. Traditio constitutum possessorium
P15,000,000. Which is correct? D. Traditio symbolica
22. Goods
D. Sale of residential condominiums D
8. Delivery by merely pointing to the A
object of sale if it cannot be delivered to
the vendee at the time of the sale is
refuses to
C. X can collect from V because the
contract has already been executed
D. V may refuse to pay on the ground
deliver the
that there is no written contract to
support the sale
goods to the
4. On January 15, 2010, X sold for P2M B
her house and lot to V. It was agreed that
delivery of the house and lot, and the
buyer or
payment therefore, would be made on
March 10, 2010.
Unfortunately, Z a stranger
his agent in
negligently set the house on fire on
February 25, 2010, and the house was
completely destroyed. Which is correct?
A. V is not required to pay the P2M since
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J. Delos Santos
the contract had no subject matter.
B. X must still deliver the lot but is
excused from delivering the house, while
V must
still pay the P2M
C. X must deliver the lot while V should
pay only the amount equivalent to the
value of the lot.
D. X need not deliver the lot while V need
not pay the P2M
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J. Delos Santos