Page 1 of 119 LAW ON SALES 1. A contract whereby one of the contracting parties obligates himself to transfer the ownership of and to deliver a
... [Show More] determinate thing and the other to pay therefore a price certain in money or its equivalent is a contract of: a. barter b. sale c. dacion en pago d. mortgage Answer: B. sale It is expressly stated in Article 1458 of the Civil Code that by the contract of sale one of the contracting party obligates himself to transfer the ownership of to deliver a determinate thing, and other to pay therefor a price certain in money or its equivalent. 2. The following are the essential elements of a contract of sale, except: a. consent of the contracting parties b. subject matter which should be determinate c. price which is certain money or its equivalent d. warranty against eviction and against hidden defects Answer: D. warranty against eviction and against hidden defects Also, it is expressly stated in the article 1458 of the Civil Code of the Philippines wherein the three are to be found within the first paragraph. Warranty against eviction and hidden defects is not an essential element of a Contract of Sale but merely a natural elements of a contract of sale. 3. The following are the characteristics of a contract of sale, except: a. principal, which means a contract of sale can stand by itself b. real, which requires the delivery of the object of the contract of sale for its perfection c. onerous, where rights are acquired in exchange of a valuable consideration d. bilateral, which means that both parties are bound reciprocally to each other Answer: B. real, which requires the delivery of the object of the contract of sale for its perfection It is because a contract of sale can be perfected even though without the delivery of the object. It is a CONSENSUAL CONTRACT. 4. One of the following characteristics of dacion en pago is also a characteristic of a contract of sale. Which is it? a. There is a pre-existing credit. b. Obligations are extinguished. c. There is less freedom in fixing price. d. Ownership of the object is transferred to the other party. Answer: D. Ownership of the object is transferred to the other party It is because dacion en pago is also known as dation of payment wherein the property of the debtor is alienated by the creditor for the satisfaction of the credit. And from there we can conclude that there is also a transfer of ownership in dacion en pago. 5. The following are characteristics of a contract of sale except for one which refers to payment by cession. Which characteristic refers to payment by cession? a. There is no pre-existing credit. b. The cause or consideration is the price. c. There is more freedom in fixing the price. d. Assignee of the property acquires the right to sell the thing but not the owner thereof. Answer: D. Assignee of the property acquires the right to sell the thing but not the owner thereof. No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. contact: [email protected] Page 2 of 119 In payment of cession, the creditors do not become the owners of the property assigned to them but are merely given the right to sell such property and apply the proceeds to their claims. 6. The following items pertain to either a contract of sale or contract to sell. I. Ownership of the thing sold is transferred upon delivery. II. Ownership of the thing is transferred to the buyer at some future time. III. The risk of loss is on the buyer. IV. The risk of loss in on the seller. Based on the above data, which of the following is correct? a. Items I and III pertain to a contract to sell. b. Items II and III pertain to a contract to sell. c. Items II and IV pertain to a contract of sale. d. Items I and III pertain to a contract of sale. Answer: D. Items I and III pertain to a contract of sale. It is due to the reason that generally speaking the seller bears the loss and the ownership of the object of the contract transfers upon delivery. Statement I pertains to a contract of sale because it is stated in Article 1477 that ownership of thing sold is transferred upon the actual or constructive delivery thereof. 7. One of the following is not a requisite of the object of a contract of sale. Which is it? a. It must be within the commerce of men. b. It must be licit. c. It must be determinate or determinable. d. Vendor must have the right to transfer the ownership of the thing at the time of sale. Answer: D. Vendor must have the right to transfer the ownership of the thing at the time of sale. Because it is not mentioned within the articles concerning the object of a contract of sale which are articles 1459 – 1465. Even if the Vendor is not the owner of the propertyat the time of the perfection, the sale is still valid as long as he is the owner at the time of the delivery. 8. The following items pertain to either emptioreisperati or emptiospei. I. The sale of future thing. II. The sale of hope or expectancy. III. The sale of a present thing. IV. The thing sold must come into existence Based on the above information, which of the following is correct? a. Items I and II pertain to emptioreisperati. b. Items II and III pertain to emptiospei. c. Items II and III pertain to emptioreisperati. d. Items III and IV pertain to emptiospei. Answer: B. Items II and III pertain to emptiospei. Emptiospei is a sale of present thing, or the hope itself or expectancy. 9. Santiago sells Bermejo 500 sacks of rice at P1,000 per sack from the stock then stored in the warehouse of Santiago. Unknown to the parties, the warehouse contains only 480 sacks of rice. What is the status of the contract between Santiago and Bermejo? a. The sale is void since the quantity available is less than the quantity sold. b. The sale is valid up to 480 sacks of rice but void as to the deficiency of 20 sacks of rice. c. The entire sale is valid up to 500 sacks of rice. Bermejo becomes the owner of the whole stock available and Santiago must deliver the deficiency of 20 sacks of rice. d. The sale is valid up to 480 sacks of rice but rescissible as to the deficiency of 20 sacks of rice by reason of damage suffered by Bermejo. No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. Page 3 of 119 Answer: C. The entire sale is valid up to 500 sacks of rice. Bermejo becomes the owner of the whole stock available and Santiago must deliver the deficiency of 20 sacks of rice. It is expressly stated in Article 1464 of the Civil Code of the Philippines. In a sale wherein the seller delivers insufficient amount than contracted, the buyer may either reject or accept the sale up to the amount available upon delivery. If accepted, the seller is bound to deliver the deficiency of same kind and quality. 10.Somera sells to Buenviaje at P50 per gallon 300 gallons of gasoline stored in his truck’s tank which unknown to the parties, contains 500 gallons gasoline. What is the status of the contract of sale between Somera and Buenviaje? a. The sale is void because the quantity available is more than the quantity sold. b. The sale is valid up to 500 gallons of gasoline. Buenviaje must pay for the additional 200 gallons of gasoline. c. The sale is valid up to 300 gallons of gasoline. Buenviaje becomes the owner of 3/5 of the whole stock, while Somera becomes the owner of 2/5 of the whole stock. d. The sale is rescissible because Somera will suffer lesion of more than ¼ of the value of the whole stock. Answer: C. The sale is valid up to 300 gallons of gasoline. Buenviaje becomes the owner of 3/5 of the whole stock, while Somera becomes the owner of 2/5 of the whole stock. It is discussed in Article 1464 that there may be sale of undivided share of fungible goods even though the seller sold, or the buyer bought, a definite number weight or measure. In the said case, the buyer becomes a coowner of the such as share in the mass. As such, Buenviaje becomes the co-owner of 3/5 of the stocks which is equivalent to 300 gallons. The co-ownership of the parties will end once they have actually partitioned the stocks. 11.San Miguel Corporation, which maintains a professional basketball team entered into a contract with Armstrong Rubber Company for the latter to provide a pair of rubber shoes to the former’s two imported basketball players, Charles Jordan and Michael Barkley. Armstrong Rubber Company was instructed to make a pair for either both players in case the company did not manufacture shoes of their size. No pair was, however, immediately available for both the players. Charles Jordan, who is 6’5” tall and wears size 12 rubber shoes, was given the following day from the 300 pairs that Armstrong was in the process of manufacturing for its customers at the time the orders were received. Michael Barkley, who is 7’ tall wears a size 16 shoes, was provided was provided three days later, with a pair that was specially made for him since Armstrong does not make shoes of his size. What kinds of contracts were entered into for the shoes provided to the two basketball players? a. The contract for the pair of shoes provided to Charles Jordan is a contract for a piece of work, while that for Michael Barkley is a contract of sale. b. The contract for the pair of shoes provided to Charles Jordan is a contract of sale, while that for Michael Barkley is a contract for a piece of work. c. Both contracts are contracts of sale. d. Both contracts are contracts for a piece of work. Answer: B. The contract for the pair of shoes provided to Charles Jordan is a contract of sale, while that for Michael Barkley is a contract for a piece of work. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of the business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. Page 4 of 119 Since the pair of shoes provided to Barkley is not being usually manufactured in the normal course of business and was specifically made for him, the said transaction is a contract of a piece of work. On the other hand, since the product given to Jordan is being manufactures in the normal course of business, the same is a contract of sale. 12.S and B entered into a contract whereby S transferred to B a specific car for the price of P200,000.00 while B gave to S P90,000.00 in cash and a diamond ring worth P110,000.00. The heading of the written contract signed by the parties reads “Contract of Sale”. a. The contract is void because the intention of the parties is void since the value of the diamond ring is more than the monetary consideration. b. The contract is a valid contract of sale as intended by the parties regardless of whether the monetary consideration is more or less than the value of the property consideration. c. The contract is a valid contract of barter since the value of the property given is more than the monetary consideration. The intention of the parties is immaterial. d. The contract is partly a contract of barter and partly a contract of sale. Answer: B. The contract is a valid contract of sale as intended by the parties regardless of whether the monetary consideration is more or less than the value of the property consideration. It is stated in Article 1468 of the civil Code of the Philippines that if the consideration of the contract consists partly in money, and partly in another thing, the transaction shall be characterized by the manifest intention of the parties. If such intention does not clearly appear, it shall be considered a barter if the value exceeds the amount of money or its equivalent; otherwise, it is a sale. If the value nof money is equivalent to the value of the property, the contract is a SALE. However, take note that it is important first to determine the INTENTION of the parties. If the intention of the parties is clear, there is no need to refer to the value of the money nor to the value of the property. 13. The price in a contract of sale is certain, except: a. when the parties have fixed or agreed upon a definite amount. b. if the price is certain with reference to another thing. c. if the fixing of the price is left to the discretion of one of the contracting parties and the price fixed is not accepted by the other party. d. if the price fixed is that which the thing sold would have on a definite day or in a particular exchange or market. Answer: C. if the fixing of the price is left to the discretion of one of the contracting parties and the price fixed is not accepted by the other party. The requisites for a price in a contract of sale to be certain is duly stated in article 1469 of the civil code of the Philippines which states that in order that the price may be considered certain, it shall be sufficient that it be so with reference to another thing certain, or that the determination thereof be left to the judgment of a special person or persons. Should such person or persons be unable or unwilling to fix it, the contract shall be inefficacious, unless the parties subsequently agree upon the price. If the third person or persons acted in bad faith or by mistake, the courts may fix the price. Where such third person or persons are prevented from fixing the price or terms by fault of the seller or the buyer, the party not in fault may have such remedies against the party in fault as are allowed the seller or the buyer, as the case may be. No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. Page 5 of 119 Even if the fixing of the price is left to the discretion of the parties, the sale is still valid IF the other party agreed or accepted the said price fixed. 14.On January 1, S orally sold to B a specific ring for P450.00. The parties agreed upon that S shall deliver the ring to B on January 5, while B shall pay the price on January 7. a. The contract is perfected on January 5, when the ring is delivered by S to B. b. The contract is perfected on January 1, when the parties had a meeting of the minds on the object and the price. c. The contract is perfected on January 7, when the price is paid, since both parties would by then have performed their obligations in the contract. d. There is no perfected contract because the sale was made orally. Answer: B. The contract is perfected on January 1, when the parties had a meeting of the minds on the object and the price. As stated in article 1475 of the civil code of the Philippines, the contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. Article 1475 is applicable in the question because it states the time of the perfection of the contract which is thing asked. The provision follows the general rule that contracts are perfected by mere consent. The contract of sale being consensual, it is perfected without the necessity of ant other circumstances. From the moment there is meeting of minds upon the thing which is the object of the contract and upon the price. The reciprocal obligations of the parties arise. 15.A sum of money paid, or a thing delivered upon the making of a contract for the sale of goods, to bind the bargain, the delivery and acceptance of which makes the final assent of both parties to the contract: a. Option money b. Earnest money c. Reservation money d. Down payment Answer: B. Earnest money Art. 1482 tackles about the question asked. It states that whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. Earnest money is the money given as part of the purchase price and as proof of the perfection of the contract. Ernest money is given only where there is already a sale. 16.S orally offered to sell a certain diamond ring to B for P50,000.00. B accepted the offer and to prove that he was in earnest, he gave S P1,000.00. The parties agreed that the delivery of the ring and the payment of the price would be made 30 days later. On due date: a. S may collect from B P50,000.00. b. S may collect from B P49,000.00. c. S cannot enforce payment because the contract was not reduced to writing. d. S cannot enforce payment because there was no contract of sale yet. Answer: B. S may collect from B P49,000.00. Art. 1482 tackles about the question asked. It states that whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. Earnest money is the money given as part of the purchase price and as proof of the perfection of the contract. Earnest money is given only where there is already a sale. The said contract even if a sale of personal property more than P500.00 is already enforceable and not anymore No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. Page 6 of 119 subject to the Statute of Frauds because of the earnest money that signifies the partial fulfillment of the contract. Statute of Frauds are only applicable to executory contracts and not to fully consummated or partially fulfilled contracts. 17.On June 1, 2010, S sold to B 50 units of machines which were scheduled to arrive from Japan the following day on board the vessel “MT Nippon Maru”. The sale was evidenced by an invoice identifying each machine by serial number. Each machine was priced at P10,000.00. Unknown to the parties, 30 units were damaged beyond repair by seawater on May 31,2010. Based on the foregoing, which of the following statements is incorrect? a. B may rescind the whole contract. b. B may demand delivery of the remaining 20 units and pay the price therefor. c. S may require payment of the whole shipment from B since S was not aware at the time of sale. d. S has no option to rescind the whole contract or require payment of the remaining 20 units. Answer: C. S may require payment of the whole shipment from B since S was not aware at the time of sale. Art. 1493. If at the time the contract of sale is perfected, the thing which is the object of the contract has been entirely lost, the contract shall be without any effect. But if the thing should have been lost in part only, the vendee may choose between withdrawing from the contract and demanding the remaining part, paying its price in proportion to the total sum agreed upon. Article 1493 is applicable to loss prior to the perfection of the contract of sale like the situation stated. There is no stated option in the provision for the vendor to require the payment for the whole object that is subject of the contract. 18.It refers to the delivery of the thing sold from hand to hand in case of movables, or the taking of possession with respect to immovables, in the presence ad with the consent of the vendor. a. Actual or real delivery b. Tradition constitutumpossessorium c. Traditiolongamanu d. Tradiiobrevimanu Answer: A. Actual or real delivery - it is defined by article1497 of the civil code of the Philippines. Art. 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee. Actual or physical delivery is a delivery by physically placing the thing sold in the hands of a vendee (in case of movables) or physically placing it in his possession and controls (in case of immovables. 19.On May 1, 2010, S sold to B through a private instrument 20 sacks of corn stored in the only warehouse of S. on May 10, 2010, S delivered the keys to the warehouse to B. The delivery made by S to B is known as: a. constructive delivery by legal formalities b. symbolic delivery by traditioclavium c. traditiolongamanu d. traditiobrevimanu Answer: B. symbolic delivery by traditioclaviumas defined by article 1498 of the civil code of the Philippines. Art. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository where it is stored or kept. No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. Page 7 of 119 Symbolic delivery is the delivery made in the situation because of the delivery of the keys to B where the sacks of corn is stored or kept. 20.Delivery of incorporeal property may be made through any of the following means, except: a. execution of a public document. b. placing the titles of ownership in the possession of the vendee. c. use by the vendee of his rights, with the debtor’s consent. d. execution of private instrument. Answer: D. execution of private instrument - the deliveries available for incorporeal properties are those stated in article 1498 of the civil code of the Philippines. Art. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository where it is stored or kept. Letters A-C in the choices given are the ways of delivery of an incorporeal property. 21.One of the following statements on the transfer of ownership of the thing in “sale on trial” is incorrect. What is it? a. Ownership of the thing is transferred to the vendee when he signifies his approval or acceptance to the vendor. b. Ownership of the thing is transferred to the vendee when he does an act adopting the transaction. c. Ownership of the thing is transferred to the vendee if the time fixed for the return of the thing has expired and the vendee retains the thing without givng notice of rejection or acceptance to the vendor. d. Ownership of the thing is transferred to the vendee upon delivery. Answer: D. Ownership of the thing is transferred to the vendee upon delivery because according to article 1502 of the civil code of the Philippines that a delivery on a sale on trial does not vest the ownership to the vendee. Art. 1502. When goods are delivered to the buyer"on sale or return"to give the buyer an option to return the goods instead of paying the price, the ownership passes to the buyer of delivery, but he may revest the ownership in the seller by returning or tendering the goods within the time fixed in the contract, or, if no time has been fixed, within a reasonable time. When goods are delivered to the buyer on approval or on trial or on satisfaction, or other similar terms, the ownership therein passes to the buyer: (1) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction; (2) If he does not signify his approval or acceptance to the seller, but retains the goods without giving notice of rejection, then if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of fact. Letter D. is applicable to sale or return as stated in the article mentioned. 22.On March 1, 2010, S sold and delivered to B a television set for P10,000.00 “on sale or return” giving B up to March 16, 2010 within which to return the television set. On March 10,2010, the television set was burned through no fault of B. Based on the foregoing, which of the following statements is incorrect? a. B must pay the price of the television set. b. S must bear the loss since the time for the return of the television set had not yet expired. c. The ownership of the television set was transferred to B upon delivery to him. d. B must bear the loss of the television set. No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. Page 8 of 119 Answer: B. S must bear the loss since the time for the return of the television set had not yet expired. - as discussed on article 1502, the ownership does not still vest to B not until the expiration of the time that has been fixed. Art. 1502. When goods are delivered to the buyer"on sale or return"to give the buyer an option to return the goods instead of paying the price, the ownership passes to the buyer of delivery, but he may revest the ownership in the seller by returning or tendering the goods within the time fixed in the contract, or, if no time has been fixed, within a reasonable time. When goods are delivered to the buyer on approval or on trial or on satisfaction, or other similar terms, the ownership therein passes to the buyer: (1) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction; (2) If he does not signify his approval or acceptance to the seller, but retains the goods without giving notice of rejection, then if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of fact. Since the situation given is a “sale or return”, the ownership at the time of the burning of the television is on the seller, He must bear the loss since the time for the return of the television set had not yet expired. Under the principle of ‘res perit domino’, the loss of the property falls upon the owner. 23.In one of the following cases, delivery of the goods to a carrier for the purpose of transmission to the buyer transfers ownership to the latter. Which one is it? a. When by the terms of the bill of lading, the goods are to be delivered to the seller or his agent. b. When by the terms of the bill of lading the goods are to be delivered to the order of the buyer or his agent but the seller retains the bill of lading. c. When the seller draws a bill of exchange on the buyer for the price of the goods and transmits such bill of exchange and the bill of lading to the buyer to secure acceptance or payment of the bill of exchange and the buyer dishonors the bill of exchange. d. When the owner does not reserve the right of possession or ownership of the thing sold upon delivery to the carrier. Answer: D. When the owner does not reserve the right of possession or ownership of the thing sold upon delivery to the carrier. - Article 1503 is applied in this question. Art. 1503. When there is a contract of sale of specific goods, the seller may, by the terms of the contract, reserve the right of possession or ownership in the goods until certain conditions have been fulfilled. The right of possession or ownership may be thus reserved notwithstanding the delivery of the goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer. Where goods are shipped, and by the bill of lading the goods are deliverable to the seller or his agent, or to the order of the seller or of his agent, the seller thereby reserves the ownership in the goods. But, if except for the form of the bill of lading, the ownership would have passed to the buyer on shipment of the goods, the seller's property in the goods shall be deemed to be only for the purpose of securing performance by the buyer of his obligations under the contract. Where goods are shipped, and by the bill of lading the goods are deliverable to order of the buyer or of his agent, but possession of the bill of lading is retained by the seller or his agent, the seller thereby reserves a right to the possession of the goods as against the buyer. Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of lading together to the buyer to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if he does not honor the bill of exchange, and if he wrongfully retains the bill of lading No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. Page 9 of 119 he acquires no added right thereby. If, however, the bill of lading provides that the goods are deliverable to the buyer or to the order of the buyer, or is indorsed in blank, or to the buyer by the consignee named therein, one who purchases in good faith, for value, the bill of lading, or goods from the buyer will obtain the ownership in the goods, although the bill of exchange has not been honored, provided that such purchaser has received delivery of the bill of lading indorsed by the consignee named therein, or of the goods, without notice of the facts making the transfer wrongful. Since the seller reserved his right of possession or ownership of the thing sold upon delivery of the carrier, the delivery of the goods to the buyer transfers the ownership to the latter. 24.In a contract of sale of personal property the price which is payable in installments, the vendor may exercise any of the following remedies, except to: a. exact fulfillment of the obligation, should the vendee fail to pay any number of installments. b. cancel the sale, should the vendee’s failure to pay cover two or more installments. c. foreclose the chattel mortgage on the property if the vendee’s failure to pay cover two or more installments and recover any deficiency after the foreclosure sale if they have stipulated it. d. foreclose the chattel mortgage on the property if the vendee’s failure to pay cover two or more installments but he may no longer recover any deficiency after the foreclosure sale. Answer: C. foreclose the chattel mortgage on the property if the vendee’s failure to pay covers two or more installments and recover any deficiency after the foreclosure sale if they have stipulated it. Article 1484 is applied. Art. 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies: (1) Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee's failure to pay cover two or more installments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void. When the seller elects to foreclose the chattel mortgage on the property, he may not go after the buyer to recover any unpaid balance as provided by the stated article. Note: Article 1484 or the Recto Law is only applicable in case the property subject of the chattel mortgage is the SAME PROPERTY which was sold on installment. If the subject of the chattel mortgage is personal property OTHER THAN the personal property sold in installment, the Recto Law is not applicable and the seller can still exercise the 2 other options even if there was already foreclosure of the property. 25. Baldomero bought a residential house and lot from Sta. Ana Realty for P250,000.00 giving a down payment of P10,000.00 and promising to pay the balance of P240,000.00 in 20 years in monthly installments of P1,000.00. After paying 72 installments, Baldomero defaulted in the payment of the 73rd installment and subsequent ones. Despite the grace period he had earned, he was not able to make any further payments. Accordingly, Sta. Ana Realty cancelled the sale. How much cash surrender value is Baldomero entitled to receive? a. P45,100.00 b. P39,600.00 c. P36,000.00 d. P41,000.00 Answer: A. P45,100.00 It is stated in the Maceda Law that upon the cancellation of the contract, the seller must give the buyer a cash surrender value equivalent to 50% of the total payments. No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. Page 10 of 119 The 50% shall increase by 5 percent every 5 years of installment payment but in no case shall the cash surrender value exceed 90%. 26. S stole a ring belonging to O. Subsequently, the ring was offered for sale at a public auction where X, who was not aware that the ring was stolen, bought it. A few weeks later, O saw the ring and recognized it as his. Based on the foregoing information, which of the following statements is correct? a. O may recover the ring from X without reimbursing X since O was unlawfully deprived of the ring. b. O may recover the ring from X but he has to reimburse X since X acquired title to the ring. c. O may no longer recover the ring even if he is willing to reimburse X. d. X did not acquire title to the ring since the auctioneer had no valid title thereto. Answer: B. O may recover the ring from X but he has to reimburse X since X acquired title to the ring. Art. 1505. Subject to the provisions of this Title, where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with consent of the owner, the buyer acquires no title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell. Nothing on this Title, however, shall affect: (1)…… (2)…… (3) Purchases made in merchant’s store, or in fairs, or markets, in accordance with the Code of Commerce and special laws. The ownership of the thing transfers to the vendee only if the thing is sold in a public market or merchant store. If the thing was sold in merchant store or public market, the owner CAN NO LONGER RECOVER THE THING. If the thing was sold in a public auction, the owner of thing CAN RECOVER THE THING ONLY IF HE WILL PAY WHATEVER AMOUNT WHICH THE BUYER PAID DURING THE AUCTION SALE. 27. When the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires title to the goods. Such acquisition of title has the following requisites, except the: a. buyer must have bought the goods in good faith. b. buyer must have bought them for value. c. buyer bought them without notice of the seller’s defect of title. d. party from whom the seller obtained the goods must ratify the sale Answer: D. party from whom the seller obtained the goods must ratify the sale Art. 1506. Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller’s defect of title. 28. An unpaid seller has the following rights, except: a. a lien on the goods or the right to retain them for the price while he is in possession of them. b. in case of insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession of them. c. a right of repurchase. d. a right to rescind. Answer: C. a right of repurchase. Art. 1526. Subject to the provisions of this Title, notwithstanding that the ownership in the goods may have passed to the buyer, the unpaid seller of the goods, as such, has: (1)…… (2)…… (3) A right of resale as limited by this Title; (4)….. No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. Page 11 of 119 29. An unpaid seller losses his lien on the goods in the following cases, except: a. when he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the right of ownership in the goods. b. when the buyer or his agent lawfully obtains possession of the goods. c. when the seller waives his possessory lien. d. when he has obtained judgment for the price of the goods. Answer: D. when he has obtained judgment for the price of the goods. Art. 1529. The unpaid seller of goods loses his lien thereon: (1) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the ownership in the goods or the right to the possession thereof; (2) When the buyer or his agent lawfully obtains possession of the goods: (3) By waiver thereof. - Furthermore, a judgment does not remove the seller’s lien on the goods. 30. Three of the following are the requisites in order that an unpaid seller may exercise his right of stoppage in transitu. Which one is not? a. The seller is unpaid. b. The seller has not parted with the possession of the goods. c. The goods are in transit. d. The buyer is or becomes insolvent. Answer: B. The seller has not parted with the possession of the goods. Art. 1530. Subject to the provisions of this Title, when the buyer of the goods is or becomes insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in transitu, that is to say, he may resume possession of the goods at any time while they are in transit, and he will then become entitled to the same rights in regard to the goods as he would have had if he had never parted with the possession. Note: To be able to exercise the right to stop the goods in transit, the goods must already be in transit. If the seller still has possession of the goods, what he shall exercise is the possessory lien and NOT the right to stop the goods in transit. 31. Goods are still in transit: a. if the buyer or his agent obtains delivery of the goods before their arrival at the appointed destination. b. when the carrier acknowledges possession of the goods as bailee for the buyer after the arrival of the goods at the place of destination. c. if the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent. d. if the goods are rejected by the buyer, and the carrier or other bailee continues in possession of them, even if the seller has refused to received them back. Answer: D. if the goods are rejected by the buyer, and the carrier or other bailee continues in possession of them, even if the seller has refused to received them back. Art. 1531. Goods are in transit within the meaning of the preceding article: (1)….. (2) If the goods are rejected by the buyer, and the carrier or other bailee continues in possession of them, even if the seller has refused to receive them back. Note: The seller can only exercise the right to stop the goods in transit WHILE THE GOODS ARE IN TRANSIT. If the goods are no longer in transit, this right will no longer be available to the seller. 32. An unpaid seller’s right to resell the goods is available in the following cases, except: a. if the goods are of a perishable nature. No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. Page 12 of 119 b. when the seller reserved the right to resell the goods. c. when the buyer has defaulted in the payment of the price for an unreasonable time. d. when the seller has lost his lien on the goods. Answer: D. when the seller has lost his lien on the goods. Art. 1533. Where the goods are of perishable nature, or where the seller expressly reserves the right of resale in case the buyer should make default, or where the buyer has been in default in the payment of the price for an unreasonable time, an unpaid seller having a right of lien or having stopped the goods in transitu may resell the goods……………… - The seller must retain his lien on the goods or must have stopped the goods in transit in order for him to avail the right to resell. This means that all the requisites for the exercise of possessory lien or the requisites for stopping the goods in transit must be present. Note: Once the goods already left the possession of the seller or are already in transit, the right of resale can only be exercised if the buyer becomes insolvent. This is considering that one of the requirement to be able to stop the goods in transit is that the buyer must be insolvent. 33. Barameda bought a piece of land from Sarmiento for a lump sum of P120,000.00. Aside from mentioning the boundaries in the contract which is required in the sale of real estate, the contract also states that the piece of land consists of 1,000 square meters. before delivery, Sarmiento discovered that the piece of land actually contains 1,200 square meters. a. Sarmiento must deliver all the 1,200 square meters; Barameda must pay P120,000.00 plus an additional amount for the excess of 200 square meters. b. Sarmiento is required to deliver only 1,000 square meters; Barameda must pay the contract price of P120,000.00. c. Sarmiento must deliver all the 1,200 square meters; Barameda has to pay only P120,000.00. d. Neither party is required to perform the obligation because of mistake. Answer: C. Sarmiento must deliver all the 1,200 square meters; Barameda has to pay only P120,000.00. Art. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum of measure or number, there shall be no increase or decrease of the price, although there be a greater or less area or number than that stated in the contract. …….. - Since, the contract does not have a pricing of per unit then the seller is obliged to deliver the whole area and maintain the monetary consideration as is. 34. Sison sold a registered piece of land to Bautista on May 1, 2010 in a public instrument. On May 3, 2010, Sison sold in a private instrument the same piece of land to Cruz, who took physical possession of the land. Neither of the buyers were aware of the sale made to the other. a. The land belongs to Bautista. b. The land belongs to Cruz. c. The land still belongs to Sison, because both sales are void. d. The land should be divided equally between Bautista and Cruz to give effect to both sides. Answer: A. The land belongs to Bautista Art. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. ……. - Therefore, a sale in public instrument is also equivalent to the delivery of the thing which is the object of the contract. The only exception to this is if the parties agreed that the execution of the public instrument will not work as delivery of the thing. No person has ever succeeded without experiencing failures. They just did not permit their failures to discouraged them in attaining their goals. Page 13 of 119 35. Refer to No. 34. Assume that on May 5, 2010, Sison sold the land in a public instrument to Domingo who was not aware of the two previous sales. Domingo then registered the sale with the Register of Deeds. a. The land belongs to Bautista. b. The land belongs to Cruz. c. The land belongs to Domingo. d. The land will be equally divided among the three buyers. Answer: C. The land belongs to Domingo. Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. ……. - The given case is a double sale of an immovable property, so the ownership shall belong to the person who in good faith first registered the sale in the Registry of Property. 36. On June 1, 2010, Sanchez sold to Borlaza in a private instrument a certain computer. Two days later, Sanchez orally sold the same computer to Contreras who immediately took possession of the computer. Neither party was aware of the sale made to the other. a. The computer belongs to Borlaza. b. The computer belongs to Contreras. c. The computer will be co-owned by Borlaza and Contreras to give effect to both sides. d. Both sales are void. Accordingly, Sison will still be the owner. Answer: B. The computer belongs to Contreras. Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. ……. - The said case is a double sale of a movable property, so the rule that the ownership shall pass to whomever first took physical possession of the thing must apply. Note: The rule on double sale is applicable only of the thing was sold by the SAME owner to two different parties. IF the thing was sold to two different persons by the owner AND by a person who do not have authority from the owner, respectively, the above-mentioned rule is not applicable. IN that case, the sale made by the owner should be upheld even if the other property must have taken possession of the same first. However, in case of a sale of real property covered by a Certificate of Title to a buyer in good faith, the defect of the title of the previous owner will not affect the title of the buyer in good faith. The said buyer will acquire the property free from any defects of the previous title. 37. This refers to the implied warranty on the part of the seller that he has the right to sell the thing at the time when ownership is to pass, and that the buyer from that time shall have and enjoy legal and peaceful possession of the thing. a. Warranty against hidden defects b. Warranty against eviction c. Warranty of ownership d. Warranty of possession Answer: B. Warranty against eviction As defined by article 1547 of the civil code of the Philippines, warranty against eviction refers to the implied warranty on the part of the seller that he has the right to sell the thing at the time when ownership is to pass, and that the buyer shall from that time have and enjoy the legal and peaceful possession of the thing. \ [Show Less]