actreg2 sales

A contract whereby one party obligates himself to transfer ownership of a determinate thing, and the other party obligates himself to pay a price certain in money or its equivalent is known as:

• A. A contract of sale

• B. A contract of agency

• C. A contract to sell

• D. A contract of barter

a

Which of the following is considered a natural element of a contract of sale?

• A. Consent of the contracting parties

• B. Warranty against hidden defects

• C. Place and time of payment

• D. A determinate subject matter

b

Particular stipulations such as terms, place, and time of payment agreed upon by the parties fall under which category of elements?

• A. Inherent elements

• B. Essential elements

• C. Accidental elements

• D. Natural elements

c

A contract of sale is characterized as "commutative" because:

• A. It is perfected by mere consent of the parties.

• B. Valuable considerations are given by both parties.

• C. It can exist by itself without depending on another contract.

• D. The parties exchange almost equivalent values.

d

Which of the following accurately distinguishes a sale from dacion en pago?

A. In a sale, there is no pre-existing credit, whereas in dacion en pago, there is a pre-existing credit.

B. A sale extinguishes obligations, whereas dacion en pago creates new obligations.

C. In a sale, the cause from the debtor's viewpoint is extinguishment, whereas in dacion en pago it is the price.

D. There is less freedom in fixing the price in a sale compared to dacion en pago.

a

In comparing a sale to payment by cession, what happens to the ownership of the properties involved?

A. In both transactions, ownership is immediately transferred to the creditors.

B. In sale, ownership transfers to the buyer, while in cession, creditors merely get the right to sell.

C. In sale, the seller retains ownership until payment, while in cession, creditors become absolute owners.

D. In both transactions, the original owner retains title until the properties are fully liquidated.

b

A vendor delivers an article to a customer. Under Article 1467, this transaction is legally considered a contract for a piece of work if:

A. The article is manufactured in the ordinary course of business.

B. The article is currently out of stock but usually procured for the general market.

C. The goods are manufactured specially for the customer and upon his special order.

D. The goods are delivered at a specific price point determined solely by the vendor.

c

Puregoods Corporation orders shoes from Avenidas Footwear. Avenidas gives Scottie a pair from a batch of 200 pairs they are currently manufacturing for regular customers. John gets a pair uniquely crafted just for him since Avenidas doesn't stock his unusually large size. Which statement is correct regarding these contracts?

A. Both transactions are considered contracts for a piece of work.

B. Both transactions are considered contracts of sale.

C. The contract for Scottie is a piece of work, while the contract for John is a sale.

D. The contract for Scottie is a sale, while the contract for John is a piece of work.

d

S transfers a ring worth P20,000 to B in exchange for a cellphone worth P12,000 and P8,000 in cash. The written contract explicitly identifies S as the "Seller" and B as the "Buyer." What kind of contract is this?

• A. A contract of sale, because the manifest intention of the parties indicates a sale.

• B. A contract of barter, because the value of the property given exceeds the cash given.

• C. A contract for a piece of work, because it involves a specific combination of goods.

• D. A dacion en pago, because the ring is used to extinguish a pre-existing debt.

a

S transfers a ring worth P20,000 to B in exchange for B's cellphone worth P10,000 and P10,000 in cash. The written contract does not clearly state the intention of the parties. How is this contract classified under Article 1468?

A. It is a barter because property is involved in the consideration.

B. It is a sale because the monetary consideration is equal to the value of the property.

C. It is a barter because the total consideration exceeds the value of the cash.

D. It is void because the intention of the parties cannot be clearly ascertained.

b

In a contract of sale, the non-payment of the price is characterized as:

A. A positive suspensive condition preventing the transfer of title.

B. An event that extinguishes the mutual obligations of the parties.

C. A negative resolutory condition where the vendor may resolve the contract.

D. A positive resolutory condition that immediately voids the agreement.

c

Who bears the risk of loss in a contract to sell?

A. The buyer, from the moment the contract is perfected.

B. The buyer, regardless of when physical delivery occurs.

C. The seller and buyer share the risk equally until full payment.

D. The seller, because ownership has not yet passed to the buyer.

d

What is the primary obligation regarding the price in an agency to sell?

A. The agent must turn over to the principal the price received from the buyer.

B. The agent is required to pay the price out of his own pocket upon delivery.

C. The principal must pay the agent the agreed-upon price of the goods.

D. The buyer pays the agent, who then becomes the absolute owner of the funds.

a

A contract of sale is considered a "nominate" contract because:

A. It requires the consent of named parties to be perfected.

B. It has a special name given to it by law.

C. It binds specific parties to reciprocal obligations.

D. It involves the nomination of a specific determinate thing.

b

In the case of Roque vs. Aguado, an agreement where the seller promises to execute a deed of absolute sale upon completion of payment, even if denominated as a "Deed of Conditional Sale", is legally treated as:

• A. An absolute contract of sale.

• B. An agency to sell.

• C. A contract to sell.

• D. A dacion en pago.

c

Regarding the control of the property, how does a sale differ from an agency to sell?

• A. In both, the recipient must strictly follow the original owner's instructions.

• B. In an agency, the agent may do as he pleases with the property.

• C. In a sale, the principal retains control until the property is fully consumed.

• D. In a sale, the buyer may do as he pleases, while in an agency, the principal retains control.

d

In a contract of sale, the vendor primarily obligates himself to:

• A. Transfer the ownership of and deliver a determinate thing.

• B. Extinguish a pre-existing credit through the delivery of goods.

• C. Retain ownership until the buyer fully pays the price certain.

• D. Procure articles specifically requested for a customer's unique order.

a

Which of the following describes the pricing dynamics in dacion en pago compared to a sale?

A. There is greater freedom in fixing the price in dacion en pago because no money is exchanged.

B. There is less freedom in fixing the price in dacion en pago because of the amount of the pre-existing credit.

C. Both transactions allow the exact same level of freedom in determining the price based on mutual consent.

D. Pricing in dacion en pago is exclusively determined by the fair market value of the object delivered.

b

In a contract to sell, full payment of the purchase price is legally characterized as:

A. A negative resolutory condition.

B. A reciprocal obligation.

C. A positive suspensive condition.

D. An accidental element.

c

What is the primary cause or consideration from the debtor's point of view in payment by cession?

A. The price of the properties assigned to the creditors.

B. The assignment of the things to be sold.

C. The transfer of absolute ownership to multiple creditors.

D. The extinguishment of the obligation.

d

True or False: A contract of sale can exist without natural elements if the parties expressly stipulate to exclude them.

t

True or False: In dacion en pago, from the creditor's point of view, the cause or consideration is the extinguishment of the obligation.

f

True or False: A contract of sale is a bilateral contract because the parties are bound by reciprocal obligations.

t

True or False: If S transfers a property worth P20,000 to B in exchange for a property worth P12,000 and P8,000 cash, and their intention is unclear, the law considers this a contract of sale.

f

True or False: In a contract to sell, the buyer's failure to pay the purchase price is considered a breach of contract that allows the seller to immediately resolve or rescind the agreement.

f

True or False: In payment by cession, the creditors gain the right to sell the assigned properties and apply the proceeds to their claims, but they do not become the owners of those properties.

t

True or False: In an agency to sell, title to the goods is transferred to the agent upon delivery so that the agent can validly transfer ownership to a third-party buyer.

f

True or False: Warranty against eviction is an example of an essential element of a contract of sale, without which the contract would not exist.

f

Which of the following statements concerning the object of a contract of sale and the vendor's ownership is accurate?

• A) The vendor is not required to own the object at the time the contract is perfected, but must have the right to transfer it upon delivery.

• B) The object must be currently existing and physically segregated from all other items of the same class at the exact moment of perfection.

• C) A thing is considered determinate only if a new agreement is established between the parties to specify its physical segregation.

• D) The vendor must possess absolute ownership of the object at the time the contract of sale is formally entered into by the parties.

a

S sells to B a lottery ticket that was already drawn the previous day, which unfortunately did not win. Which legal concept applies to this specific transaction?

• A) It is a valid emptio spei because it deals with a present thing, which is the hope or expectancy itself.

• B) It is a void transaction because it constitutes the sale of a vain hope or expectancy.

• C) It is a valid emptio rei speratae, but the sale is ineffective since the expected winnings did not come into existence.

• D) It is an inefficacious sale because the object of the contract is no longer within the commerce of men.

b

Seller S intends to sell 500 liters of specialized oil to Buyer B from a specific storage tank. However, upon extraction, the tank actually contains only 450 liters. What is the legal consequence of this transaction?

• A) The sale is void due to the absence of the agreed-upon quantity, as it lacks the essential requisite of a determinate object.

• B) S and B become co-owners of the 450 liters, with B owning a proportionate share relative to the deficiency.

• C) B becomes the owner of the entire 450 liters, and S is obligated to supply the remaining 50 liters from goods of the same kind.

• D) The contract becomes inefficacious, but B must pay a reasonable price if he appropriates the 450 liters.

c

Which of the following is legally accurate regarding a contract of sale that is subject to a resolutory condition?

• A) It renders the contract of sale voidable until the condition is fulfilled or completely expires.

• B) It is strictly prohibited because the object of a contract of sale must be absolute and free from encumbrances.

• C) It forces the buyer to wait until the condition is fulfilled before they can transfer the property to a third party.

• D) It is a valid object of sale, and any subsequent buyer acquires the property subject to that identical condition.

d

S and B enter into a contract of sale for a piece of heavy machinery. They stipulate that S will uniquely determine the price after one week. After a week, S sets the price at P500,000. Which statement is legally correct?

A) The sale is perfected only if B accepts the P500,000 price fixed by S.

B) The sale is automatically perfected because B initially agreed to let S determine the price.

C) The contract is void because fixing the price can never be left to the discretion of one of the contracting parties under any circumstance.

D) The courts must fix the price since the agreement improperly left the determination to the seller.

a

A contract of sale delegates the fixing of the price to a specified third person. What happens if this third person acts in bad faith when setting the equivalent value?

A) The contract immediately becomes inefficacious without any available exception.

B) The courts may intervene and mathematically fix the price for the parties.

C) The party not at fault may seek damages against the third person directly before voiding the sale.

D) The parties must mutually agree upon a new price, or the sale is automatically voided.

b

S sells a parcel of land worth P2,000,000 to B for only P500,000. There was no fraud, mistake, or undue influence, but B simply negotiated a highly favorable deal. What is the status of the sale?

• A) The sale is voidable due to the gross inadequacy of the price, which presumes a defect in consent.

• B) The sale is void because a reasonable man would not agree to dispose of his property at such an extreme loss.

• C) The sale is valid, as gross inadequacy of price does not generally affect a contract of sale.

• D) The sale is reclassified automatically as a partial donation due to the significant difference in economic value.

c

S and B execute a formal deed of sale stating that S sold his condominium to B for P5,000,000. In reality, no money exchanged hands because S intended to transfer the property to B out of pure liberality. What is the legal status of this transaction?

• A) It is a valid contract of sale because a written deed exists demonstrating the intent to transfer ownership.

• B) The contract is entirely void and produces no legal effects, returning the parties to their original status.

• C) It is a voidable sale because the price was simulated, allowing S to annul the contract at any time.

• D) The sale itself is void, but the transaction may be validly interpreted as a donation.

d

S agrees to sell B 100 kilograms of sugar from a specific container in his store. When they measure the contents of the container, it holds exactly 150 kilograms of sugar. What is the consequence of this?

• A) S and B become co-owners of the 150 kilograms of sugar, with B holding a 2/3 share and S holding a 1/3 share.

• B) The sale is invalid because the mass was not specifically determined to be equal to the quantity sold at the time of perfection.

• C) B becomes the absolute owner of the entire 150 kilograms, but must mathematically compensate S for the excess 50 kilograms.

• D) S must physically segregate the 100 kilograms before any transfer of ownership or co-ownership can legally occur.

a

S and B agree on the sale of shares of stock. They stipulate that the price will be 10% below the closing price of the shares on the Philippine Stock Exchange on a specific future date. Is this price considered certain?

A) No, because it relies on a future market event that may or may not happen, making the price contingent.

B) Yes, provided that the amount fixed below the market price is certain and trading actually occurs on that day.

C) No, because the exact mathematical figure was not explicitly stated at the time the contract was perfected.

D) Yes, but only if an independent third-party broker verifies the closing price on the specified date.

b

True or False: Goods whose acquisition by the seller depends upon a contingency which may or may not happen are legally classified as existing goods.

f

True or False: The sole owner of a property who sells an undivided interest in that property to another party effectively transforms the ownership structure into a co-ownership.

t

True or False: If the price cannot be determined through any of the statutory rules, the contract is always entirely void and produces no legal effects whatsoever, even if the buyer has consumed the goods.

f

True or False: In a contract of emptio rei speratae, the agreement produces legal effects even if the expected future thing never comes into existence.

f

True or False: For a thing to be considered determinate, the parties must explicitly draft a new agreement at the time of delivery to physically segregate it from all others of the same class.

f

When is a contract of sale perfected?

• A. At the exact moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.

• B. At the exact moment the seller physically or constructively delivers the object of the contract to the buyer.

• C. At the exact moment the buyer pays the earnest money or the agreed purchase price in full.

• D. At the exact moment the contract is put into a written instrument to ensure enforceability.

a

Which of the following describes a valid form for a contract of sale, assuming it is not subject to the Statute of Frauds?

• A. It must always be at least partly in writing to be legally recognized.

• B. It may be entirely inferred from the conduct of the involved parties.

• C. It must be explicitly stated either orally or in a written document.

• D. It requires a private instrument if the value exceeds a nominal threshold.

b

Which of the following contracts of sale must be in writing to be enforceable under the Statute of Frauds?

A. The sale of a movable chattel with a negotiated price of P499.00.

B. The sale of an incorporeal property with an agreed price of P450.00.

C. The sale of any interest in real property, regardless of the purchase price.

D. The sale of a computer where the agreement is inferred from conduct, priced at P499.00.

c

An agent was authorized by his principal to sell a piece of land. The agent's authority is contained in a public instrument. The agent successfully negotiates and enters into the sale orally with a buyer. What is the legal status of this sale?

• A. The sale is completely valid and binding.

• B. The sale is void due to improper execution form.

• C. The sale is voidable at the discretion of the principal.

• D. The sale is valid but unenforceable.

d

For the purpose of recording a sale of a piece of land through an agent in the Register of Deeds, what specific form must the documents take?

• A. Both the authority of the agent and the sale must be executed in a public instrument.

• B. The sale must be in a public instrument, but the authority may be in a private instrument.

• C. Both the authority of the agent and the sale must simply be in writing, whether private or public.

• D. The authority must be in a public instrument, but the sale may be in a private instrument.

a

While mutual agreement on the subject matter and price is sufficient for the validity of a sale, the execution of a written instrument serves other legal purposes. Which of the following is NOT one of those specific purposes mentioned in your notes?

• A. To ensure the enforceability of the contract under the Statute of Frauds.

• B. To prevent the buyer from retracting their bid prior to perfection.

• C. To allow for eventual registration of the sale with the Land Registration Authority.

• D. To provide for the convenience of the parties under Article 1358.

b

In an auction "without reserve," how is the auctioneer's role best described during the bidding process?

• A. The auctioneer acts as the offeree and retains the power to reject any and all bids.

• B. The auctioneer is an agent who can withdraw the goods at any point before the hammer falls.

• C. The auctioneer acts much like an offerer, while bidders compete for the power of acceptance.

• D. The auctioneer functions as an impartial mediator determining the highest bidder's credibility.

c

A seller wishes to bid on their own goods during an auction. Which of the following conditions is NOT required for the seller to validly participate?

• A. Notice must be explicitly given that the sale is subject to a right to bid by or on behalf of the seller.

• B. The right to bid must not be prohibited by any existing law or stipulation.

• C. The right to bid must have been reserved expressly by or on behalf of the seller.

• D. The seller must employ independent "puffers" to bid on their behalf to ensure anonymity.

d

The time when ownership of a thing sold is transferred is crucial for determining which party bears the risk of loss. When is ownership generally transferred to the buyer?

• A. Upon the actual or constructive delivery of the thing sold.

• B. Upon the full payment of the agreed purchase price.

• C. Upon the signing of a written private or public instrument.

• D. Upon the exact moment of the meeting of minds regarding the object and price.

a

A party makes a unilateral promise to sell a determinate thing at a certain price. The promisee accepts the promise, but no consideration distinct from the price is given. What is the legal consequence?

• A. The promisor is legally bound to the promise and cannot withdraw the offer.

• B. The promise is not binding upon the promisor, and the promise may be withdrawn.

• C. The promisee has thirty days to provide a valid consideration to bind the promisor.

• D. The agreement automatically converts into a reciprocally demandable bilateral promise.

b

B is given a one-week option to buy S's car for P100,000. B gives S P500 as option money to bind the option period. If B ultimately decides to purchase the car, how much will B need to pay for the car itself upon perfection?

• A. P99,000.00

• B. P99,500.00

• C. P100,000.00

• D. P100,500.00

c

Which of the following statements accurately differentiates earnest money from option money?

• A. Earnest money applies to sales that are yet to be perfected, while option money requires a perfected contract.

• B. Earnest money must always be a monetary consideration, while option money is always an undertaking of value.

• C. Earnest money is distinct from the purchase price, while option money serves as proof of contract perfection.

• D. Earnest money is part of the purchase price, while option money is separate and distinct from the purchase price.

d

In the case of First Optima Realty Corp. vs. Securitron Security Services, Inc., ABC Corporation deposited a check intended as earnest money into XYZ Corporation's bank account before the XYZ board of directors could approve the transaction. What did the Supreme Court hold regarding this transaction?

• A. There was no perfected sale because the prior payment of earnest money without the property owner's consent is irregular and cannot bind the owner.

• B. There was a perfected sale because depositing the check into the daily operations account constituted implied acceptance of the earnest money.

• C. There was a voidable sale because the receptionist issued a provisional receipt without XYZ Corporation's formal clearance.

• D. There was an unenforceable sale because negotiations were carried out with an employee rather than the executive vice-president.

a

Under the Statute of Frauds, if the authority of an agent to sell a piece of land is in a private instrument and the sale is entered into in a private instrument, what is the status of the sale?

A. The sale is void whatever the form.

B. The sale is valid.

C. The sale is unenforceable.

D. The sale is voidable.

b

What happens if a bidder retracts his bid before the auctioneer announces the perfection of the sale?

A. The auctioneer is legally forced to accept the second highest bid.

B. The bidder forfeits their option money and may be sued for fraud.

C. The bidder may validly do so because a bid is merely an offer.

D. The bidder violates the Principle of Mutuality of Contracts.

c

Which of the following is true regarding a unilateral promise to buy or sell that is NOT accepted by the promisee (policitacion)?

• A. It binds the promisor to maintain the offer for a reasonable time.

• B. It requires the promisor to execute a written public instrument.

• C. It becomes an option contract automatically after 30 days.

• D. It does not produce any legal effect.

d

From the moment of perfection, the parties may reciprocally demand performance, completely free from any other provisions of law governing contracts.

f

The sale of an incorporeal property, such as credit or shares of stock, must be in writing to be enforceable if the price is exactly P500.00.

t

If the authority of an agent to sell a piece of land is merely oral, the resulting sale is valid as long as the sale itself is documented in a public instrument.

f

In a sale by auction in lots, all items grouped together within a single lot constitute several distinct contracts of sale.

t

If an auctioneer withdraws goods from a sale in an auction with reserve, this action is legally considered equivalent to a rejection of the offer made by any bidder.

t

If the consideration for an option contract is an undertaking of value rather than monetary, it must be clearly specified as such in the option contract or clause.

t

A bilateral promise to buy and sell a determinate thing at an agreed price is reciprocally demandable because it is considered as good as a perfected contract of sale.

t

Under the general rules of sales, what standard of care must the seller exercise when preserving the thing after perfection but before delivery?

• A) Extraordinary diligence, ensuring the item is entirely shielded from fortuitous events.

• B) The diligence of a good father of a family, unless law or stipulation requires otherwise.

• C) Ordinary diligence, but only if the buyer has already paid the full purchase price.

• D) The diligence explicitly stipulated in the contract, and in its absence, no diligence is required.

b

When does the buyer acquire a real right over the thing and its fruits?

• A) When the thing and its fruits have been actually or constructively delivered to the buyer.

• B) From the exact moment of the perfection of the contract of sale between both parties.

• C) Upon the full payment of the agreed purchase price by the buyer to the seller.

• D) Upon the execution of a notarized document signifying the transfer of ownership.

a

True or False: In the event of a partial loss of the object before the perfection of the contract, the only remedy available to the buyer is the rescission of the contract.

f

Under the second view regarding the risk of loss (which is considered the weight of authority), who bears the risk of loss after perfection but before delivery?

• A) The buyer bears the risk because the benefits of the thing inure to him during this period.

• B) The buyer bears the risk only if the loss is caused by a completely unforeseeable fortuitous event.

• C) The seller bears the risk, but the buyer remains fully obligated to pay the purchase price.

• D) The seller bears the risk, meaning the buyer is not obliged to pay the agreed upon price.

d

In a sale by description, what does the seller essentially warrant to the buyer?

A) That the goods are completely free from any hidden faults or defects upon delivery.

B) That the buyer will be granted a 30-day grace period to thoroughly inspect the goods.

C) That the bulk of the goods delivered corresponds exactly with a small physical sample.

D) That the bulk of the goods delivered corresponds with the description presented.

d

True or False: In a sale by sample and description, if the bulk of the goods delivered corresponds with the sample but not the description, the buyer is legally barred from asking for the rescission of the sale.

f

Under the Recto Law, if the vendee's failure to pay covers two or more installments, the vendor may avail himself of certain remedies. How are these remedies legally characterized?

A) They are successive, allowing the vendor to use another if the first is insufficient.

B) They are cumulative, meaning the vendor can combine them for maximum recovery.

C) They are alternative, meaning the availment of one remedy bars the use of the others.

D) They are discretionary, but always subject to court approval before execution.

c

S sold a car to B on an installment basis, secured by a chattel mortgage on the car. B defaults on three installments. S forecloses the mortgage, but the auction sale yields less than B's outstanding balance. Which of the following statements is legally accurate?

• A) S can no longer recover the deficiency from B, even if they had an agreement allowing it.

• B) S can recover the deficiency from B only if their contract includes a deficiency clause.

• C) S can file an action for exact fulfillment to cover the remaining balance from the foreclosure.

• D) S can cancel the sale and demand the return of the car while retaining the installments.

a

S sells a ring to B for P50,000, with a P30,000 down payment and the balance payable in full at the end of the month. B executes a chattel mortgage on the ring. B defaults, S forecloses, but the auction yields only P15,000. Can S legally collect the P5,000 deficiency?

• A) No, because the Recto Law strictly prohibits the recovery of deficiencies in chattel mortgages.

• B) Yes, because the Recto Law does not apply to a sale operating on a straight-term basis.

• C) No, because the chattel mortgage was constituted on the actual thing that was sold.

• D) Yes, but only if S secures a favorable judgment from a trial court prior to the foreclosure.

b

True or False: If a seller sues for exact fulfillment, wins a judgment, and attaches the sold property for an execution sale, the seller is prohibited by the Recto Law from recovering any resulting deficiency.

f

The Maceda Law applies to the sale or financing of real estate on installment payments. However, certain properties are expressly excluded. Which of the following properties is fully protected under the Maceda Law?

A) Commercial buildings situated in highly urbanized central business districts.

B) Industrial lots used primarily for heavy manufacturing and warehousing operations.

C) Residential condominium apartments purchased directly from a real estate developer.

D) Sales to tenants under the Land Reform Law where the buyer paid at least two years of installments.

c

Under the Maceda Law, what grace period is automatically granted to a buyer who has paid less than two (2) years of installments at the time of default?

A) Exactly thirty (30) days from the date the installment originally became due.

B) One month grace period for every one year of installments paid by the buyer.

C) Ninety (90) days calculated from the receipt of a notarized notice of cancellation.

D) Not less than sixty (60) days from the date the installment became due to pay.

d

B bought a residential lot and paid installments for exactly 8 years before defaulting. If the contract is cancelled, what percentage of the total payments made is B entitled to receive as the cash surrender value?

• A) 65% of the total payments made.

• B) 50% of the total payments made.

• C) 90% of the total payments made.

• D) 80% of the total payments made.

a

For a contract to sell to be validly and effectively cancelled under the Maceda Law, the seller must comply with twin mandatory requirements. What are these specific requirements?

• A) A written notice sent via registered mail and a 60-day waiting period from receipt.

• B) A notarized notice of cancellation and the full payment of the cash surrender value.

• C) A court order of rescission and the refund of all installments paid by the buyer.

• D) A verbal demand for payment and the forfeiture of the accumulated cash surrender value.

b

True or False: If a buyer obtains a housing loan from a bank to purchase a house, and later defaults on the bank amortizations, the buyer can successfully invoke the grace period provided by the Maceda Law against the lending bank.

f

Under PD 957 (The Subdivision and Condominium Buyers' Protective Decree), what right does a buyer have if they desist from paying further installments due to the developer's failure to develop the project according to approved plans?

• A) The buyer's payments are automatically forfeited in favor of the developer.

• B) The buyer can only legally demand the developer to finish the project within 30 days.

• C) The buyer may demand reimbursement of the total amount paid, including amortization interests.

• D) The buyer is entitled to a cash surrender value equivalent to 50% of total payments.

c

If the object of a contract of sale is completely lost before the perfection of the contract, what is the legal status of the sale?

• A) The sale is voidable, giving the buyer the option to either annul or ratify the contract.

• B) The sale remains valid, and the seller must find a suitable replacement object.

• C) The sale is rescissible, requiring the seller to pay damages to the buyer for the loss.

• D) The sale is void because of the absence of the object, which is an essential requisite.

d

Under the first view regarding the risk of loss (where the buyer bears the risk and must pay the price if the thing is lost through a fortuitous event), there are specific exceptions where the seller remains liable. Which of the following is NOT one of those exceptions?

• A) When the nature of the seller's obligation requires the assumption of risk.

• B) When the buyer explicitly waives their right to inspect the goods prior to delivery.

• C) When the parties have stipulated that the seller shall be liable even in case of a fortuitous event.

• D) When the seller is in delay regarding the delivery of the thing.

b

True or False: In a sale by sample, the seller warrants that the bulk of the goods delivered corresponds exactly with the description written in the contract, regardless of the physical sample shown.

f

Under the Recto Law, if the seller chooses to cancel the sale due to the buyer's default on two or more installments, what must the seller generally do with the sums already received?

• A) The seller must return the sums received to the vendee minus reasonable rent.

• B) The seller must remit the entire sum to a court escrow account until damages are calculated.

• C) The seller automatically forfeits all sums received to offset the administrative costs of cancellation.

• D) The seller may retain 50% of the sums received and return the rest to the defaulting buyer.

a

S sold his only car to B payable in installments. As security, B executed a chattel mortgage on the car AND another chattel mortgage on his piano. B defaulted on multiple installments. S foreclosed the chattel mortgage on the PIANO, but the auction sale resulted in a deficiency. Can S recover this deficiency from B?

A) No, because the Recto Law prohibits the recovery of deficiencies in all installment sales of personal property.

B) Yes, because the prohibition on recovering deficiencies applies only when the chattel mortgage foreclosed was on the thing sold.

C) No, because S should have foreclosed the mortgage on the car first before foreclosing the piano.

D) Yes, but only if S subsequently forecloses the mortgage on the car to cover the remaining balance.

b

Under the Maceda Law, if a buyer has paid at least two (2) years of installments at the time of default, how is their grace period calculated?

• A) A fixed period of ninety (90) days for every two years of installments paid, exercisable annually.

• B) One (1) month grace period for every one (1) year of installments paid, exercisable once every five (5) years.

• C) A blanket grace period of sixty (60) days, regardless of the number of years paid.

• D) One (1) month grace period for every two (2) years of installments paid, exercisable indefinitely.

b

True or False: When computing the total number of installments paid under the Maceda Law to determine a buyer's cash surrender value or grace period, down payments and option money are strictly excluded.

f

During the grace period before the actual cancellation of the contract under the Maceda Law, the buyer is granted several additional rights. Which of the following is NOT one of those statutory rights?

• A) The right to reinstate the contract by updating the account.

• B) The right to demand a substitution of the property with a similarly priced unit.

• C) The right to pay in advance any installment or the full unpaid balance without interest.

• D) The right to sell or assign his rights to another person by notarial act.

b

Under PD 957 (The Subdivision and Condominium Buyers' Protective Decree), the definition of a "sale" or "sell" is highly expanded. Which of the following activities is considered a "sale" under this decree?

• A) Only the execution of a finalized Deed of Absolute Sale.

• B) A contract to sell, an offer to sell, or even a solicitation of a sale by an agent.

• C) Only transactions involving the exchange of real property for cash.

• D) Any disposition of property strictly excluded by the Maceda Law.

b

X and Y are legally married without any pre-nuptial agreement. Y sells a parcel of land to X. What is the status of this contract of sale?

• A. Void, because the sale does not fall under the recognized legal exceptions for spouses.

• B. Voidable, because the contract involves parties who share private interests.

• C. Valid, provided that a judicial separation of property is filed subsequently.

• D. Unenforceable, as both parties are incapacitated to give consent to each other.

a

A judge purchases a piece of property that is currently the subject of litigation in another court outside of their territorial jurisdiction. What is the status of the sale?

• A. Void, because justices and judges occupy positions of trust and cannot purchase any property in litigation.

• B. Valid, because the property is not in litigation before the court where the judge exercises functions.

• C. Voidable, because the judge is a public officer and the contract involves a private interest.

• D. Rescissible, assuming the purchase prejudices the actual litigants of the property.

b

On March 1, S and B entered into a perfected contract of sale for a specific orchard. They stipulated that S will deliver the orchard on March 15. On March 10, the trees bore fruit. Who owns the fruits gathered on March 10?

• A. S, because the obligation to deliver the orchard has not yet arisen.

• B. S, because delivery of the orchard is required to transfer ownership of the fruits.

• C. B, because in a contract of sale, the fruits pertain to the buyer from the day of perfection.

• D. B, because ownership of the principal thing automatically transfers upon the execution of the contract.

c

S executes a notarized deed of absolute sale over a parcel of land to B. However, at the time of execution, the land is physically occupied by squatters who refuse to leave. Has constructive delivery taken place?

• A. Yes, because the execution of a public instrument is equivalent to the delivery of the thing sold.

• B. Yes, because a notarized deed creates a conclusive presumption of delivery in favor of the vendee.

• C. No, because constructive delivery by public instrument applies strictly to movable property.

• D. No, because the seller does not have actual possession and cannot transfer constructive possession.

d

S sells his laptop to B. At the time of the sale, B is already renting the laptop from S for a month. B continues to possess the laptop, but now as an owner. What kind of delivery took place?

• A. Traditio brevi manu

• B. Traditio constitutum possessorium

• C. Traditio longa manu

• D. Traditio simbolica

a

V sells his house and lot to P. After the sale, V requests to stay in the house for another year as a tenant, paying monthly rent to P. What kind of delivery occurred?

• A. Traditio brevi manu

• B. Traditio constitutum possessorium

• C. Symbolic delivery

• D. Traditio longa manu

b

On Monday, S delivers a coffee machine to B under a "sale on approval" arrangement, giving B until Friday to decide. On Wednesday, the machine is destroyed by a lightning strike while in B's house. Who bears the loss?

• A. B, because risk of loss transferred to the buyer upon physical delivery of the machine.

• B. B, because retaining the machine until Wednesday constituted implied acceptance.

• C. S, because ownership of the goods remained with the seller despite the delivery to the buyer.

• D. S, because "sale on approval" contracts automatically void any obligations upon fortuitous events.

c

Which of the following is an accurate distinction between a "sale or return" and a "sale on approval"?

• A. In "sale or return," the seller retains the risk of loss, while in "sale on approval," the buyer bears it.

• B. In "sale or return," ownership passes upon acceptance, while in "sale on approval," it passes on delivery.

• C. In "sale on approval," the buyer can return the goods even if fully satisfied with their quality.

• D. In "sale or return," the buyer may return the goods even if satisfied, unlike in "sale on approval."

d