Northeastern College

COLLEGE OF LAW
Santiago City
SALES
FINAL EXAMINATION
Atty. Christina A. Parubrub-Yere
December 2019

INSTRUCTIONS: Read each question carefully. Understand what is asked for.

Answer concisely and write legibly. A mere “yes” or “no” answer will not suffice.
GOODLUCK!

a. Discuss briefly the different obligations of the vendor. (7 points)

b. Discuss briefly the different obligations of the vendee. (4 points)
c. Differentiate the following:
d.1. conventional redemption and legal redemption (3 points)
d.3. pre-emption and redemption (3 points)
d.4. rural land and urban land (3 points)

II

a.

Enumerate the different remedies available to an unpaid seller and its requisites.
(10 points)
b.

A sold to B on credit 50 sacks of sugar. A consigned the goods to XYZ trucking for
delivery from Negros to Isabela. At the time of the perfection of the contract A did
not know that B is insolvent. While the goods are on transit, A exercised his right of
stoppage in transit. Is A’s action valid? (5 points)

c.
Will your answer will still be the same if the fact of insolvency is known to the seller
at the time of the perfection of the contract? (5 points)

III

a.

Buboy entered into a Joint Venture Agreement with Bahay Homes Subdivision Co.,
Inc. for the development of several parcels of land. For reasons of convenience and
in order to facilitate the acquisition of permits and licenses in connection with the

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project, Buboy transferred the titles to the parcels of land in the name of Bahay
Homes.

Then, Bahay Homes entered into a Contract to Sell with Bitoy for the sale of a parcel
of land located at Lot No. 8, Block 3, Bahay Homes Subdivision, covered by Transfer
Certificate of Title (TCT) No. T-12345.

Later, Buboy filed with the RTC a complaint for Collection of Sum of Money, Specific
Performance and Damages with prayer for the issuance of a Writ of Preliminary
Attachment against Bahay Homes for its alleged failure to comply with the terms
of the Joint Venture Agreement.

Unaware of the pending action, Bitoy began constructing their house on the subject
lot and thereafter occupied the same. They were then issued a Certificate of
Occupancy by the Office Building Official. Thereafter, Bahay Homes executed a
Deed of Absolute Sale in favor of Bitoy, who paid Bahay Homes. The title over the
subject property, however, remained with Bahay Homes for its failure to cause the
cancellation of the TCT and the issuance of a new one in favor of Bitoy, who only
received a photocopy of said title.

Subsequently, Bitoy discovered that the subject property was mortgaged as a

security for a loan in the amount of over P4,000,000.00 with BDO Bank as
mortgagee and Bahay Homes as mortgagor. In fact, since the loan remained
unpaid, extrajudicial proceedings were instituted. Meanwhile, without waiting for
trial on the specific performance and sum of money complaint, Buboy and Bahay
Homes entered into a Compromise Agreement, wherein Bahay Homes conveyed
the subject property, as well as several others, to Buboy. By virtue of said
agreement, Buboy was authorized to collect Bahay Homes' account receivables
arising from the conditional sales of several properties, as well as to cancel said
sales, in the event of default in the payment by the subdivision lot buyers. In its
capacity as mortgagee, BDO Bank was included as a party in the Compromise
Agreement.

In the exercise of the power granted to him, Buboy started collecting deficiency
payments from the subdivision lot buyers. Specifically, he sent demand letters to
Bitoy for the payment of outstanding balance of the purchase price. When no
payment was received, Buboy caused the cancellation of the Contract to Sell
previously executed by Bahay Homes in favor of Bitoy. Later, Buboy and Bahay
Homes executed a Deed of Absolute Sale over the subject property, and as a result,
a new title, TCT No. T-67890, was issued in the name of Buboy.

Then, Bitoy filed a complaint for Nullification of Title, Reconveyance and Damages
against Bahay Homes and Buboy praying for the nullification of the second Deed of
Absolute Sale executed in favor of Buboy, as well as the title issued as a
consequence thereof, the declaration of the validity of the first Deed of Absolute
Sale executed in his favor, and the issuance of a new title in his name.

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Who between Buboy and Bitoy should prevail? (5 points)

b.

Gretchen and Claudine Barreto were the registered owners of a parcel of land with
improvements in 168 Divisoria, Manila covered by Transfer Certificate of Title (TCT)
No. 5678.

The Barretos, through their duly appointed attorney-in-fact Marjorie Bareto,

executed a notarized agreement with Atong Ang and Tony Boy Cojuangco which
provided, among others, that –

Kami, sila Atong Ang at Tony Boy Cojuangco ay nakatira sa Bagumbayan,

Pangasinan ay nagsasabing bibilhin namin ang lupa at bahay nila Gretchen at
Claudine sa 168 Divisioria, Manila sa halagang (₱900,000.00) nine hundred
thousand pesos mula sa may Special Power of Attorney na si Marjorie. Sa aming
napagkasunduan kami ay magbibigay ng halagang (₱l00,000.00) one hundred
thousand pesos para sa Reservation Fee.

Ayon sa aming napagkasunduan ililipat lamang ang Titulo ng lupa na may No.
5678 at bahay pag nabayaran na namin ang lahat ng (₱900,000.00) Nine
Hundred Thousand Pesos hanggang Marso ng 2010. Kami ay maghahati sa
Gains Tax at documentary stamps na babayaran sa B.I.R.

Kalakip nito ang xerox title ng titulo ng lupa at bahay.

Atong Ang and Tony Boy Cojuangco paid the ₱100,000.00 reservation fee upon the
execution of the agreement. Thereafter, they also made payments on several
occasions, amounting to ₱160,000.00. However, they failed to tender full payment
of the balance when the March 2010 deadline came. Even then, Marjorie advised
Ang and Cojuangco to continue their payments; thus, they made additional
payments totaling ₱85,000.00. All in all, as of November 2010, petitioners had
made payment in the amount of ₱345,000.00.

All this time, the Barretos remained in possession of the subject property.

In December 2010, Ang and Cojuangco offered to pay the remaining ₱555,000.00
balance, but Marjorie refused to accept payment; instead, he advised petitioners
to await Gretchen and Claudine' s arrival from abroad.

When Gretchen and Claudine arrived, Ang and Cojuangco tendered payment of the
balance, but the former refused to accept it. Instead, they told them that the
property was no longer for sale and they were forfeiting their payments. Soon
thereafter, Ang and Cojuangco discovered that Nicole bought the subject property,
and a new title – TCT No. 1234 – had been issued in her name.

Was there double sale? What are the rules of preference in case of double sale of
personal property and real property? (7 points)

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 IV

Darling, Co. is a duly registered domestic corporation, which is in need of acquiring

real properties in Dipolog City to build on and operate a store to establish its
business presence in the city. After conferring with authorized real estate agents,
Darling found two parcels of land suitable for its purpose.

On 28 November 2009, Darling and Coco Palace, Inc. executed a notarized Deed of
Absolute Sale wherein the latter would sell its parcel of land, with a total area of
1,000 square meters and covered by Transfer Certificate of Title (TCT) No. 22222,
to the former. On the same date, Darling entered into another notarized Deed of
Absolute Sale with Lee Kum Kee for the sale of the latter's land, with a total area of
1,000 square meters and covered by TCT No. 33333.

Coco Palace and Lee Kum Kee 's parcels of land are contiguous and parallel to each
other. Aside from the technical descriptions of the properties in question, both
deeds of sale contained identical provisions, similar terms, conditions, and
warranties.

The following month, Darling engaged the services of Engineer Sirip, a geodetic
engineer, to conduct a resurvey and relocation of the two adjacent lots. As a result
of the resurvey, it was discovered that 131 square meters of the lot purchased from
Coco Palace had been encroached upon by the Department of Public Works and
Highways (DPWH) for its road widening project and construction of a drainage
canal to develop and expand the National Highway. On the other hand, 130 square
meters of the land bought from Lee Kum Kee had been encroached upon by the
same DPWH project. Meanwhile, TCT Nos. T-44444 and T-55555 were issued in
January 2010 in favor of Darling after the deeds of sale were registered and the
titles of the previous owners were cancelled.

Darling informed the representatives of Coco Palace and Lee Kum Kee about the
supposed encroachment on the parcels of land due to the DPWH project. Initially,
Darling offered a compromise agreement in consideration of a refund of 75% of the
value of the encroached portions. Thereafter, Darling sent a final demand letter to
collect the refund of the purchase price corresponding to the area encroached
upon by the road widening project from Coco Palace and Lee Kum Kee. Failing to
recover such, Makro filed separate complaints against Coco Palace and Lee Kum
Kee to collect the refund sought, based on the following relevant provision of the
contract of sale:
Section 2. General Investigation and Relocation

Upon the execution of this Deed, the BUYER shall undertake at its own expense a general
investigation and relocation of their lots which shall be conducted by a surveyor mutually
acceptable to both parties. Should there be any discrepancy between the actual areas of the lots
as resurveyed and the areas as indicated in their Transfer Certificates of Title, the Purchase Price
shall be adjusted correspondingly at the rate of PESOS: EIGHT THOUSAND FIVE HUNDRED

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(Php8,500.000) per square meter. In the event that the actual area of a lot is found to be in excess
of the area specified in the Titles, the Purchase Price shall be increased on the basis of the rate
specified herein. Conversely, in the event that the actual area of a lot is found to be less than the
area specified in the Titles, the BUYER shall deduct a portion of the Purchase Price corresponding
to the deficiency in the area on the basis of the rate specified herein. In any case of discrepancy,
be it more or less than the actual area of the Property as specified in the Titles, the SELLER agrees
to make the necessary correction of the title covering the lots before the same is transferred to
the BUYER.

Section 4. Representations and Warranties

The SELLER hereby represents and warrants to the BUYER that:

i. The Property is and shall continue to be free and clear of all easements, liens and encumbrances
of any nature whatsoever, and is, and shall continue to be, not subject to any claim set-off or
defense which will prevent the BUYER from obtaining full and absolute ownership and possession
over the Property or from developing or using it as a site for its store building.

a. What is warranty? Discuss express warranty and implied warranty. (7 points)

b. Is Darling entitled to collect refund from Coco Palace and Lee Kum Kee? Is the
warranty expressed in Section 4(i) of the deeds of sale similar to the warranty
against eviction set forth under Article 1548 of the Civil Code? (8 points)

Sometime in March 2001, Pauline came across an advertisement placed by

Philippine Islands Bank (PIB) in the Philippine Daily Inquirer. The ad was for the
public auction of certain properties. One of these properties was a condominium
unit, identified as Unit 12-C (the "Unit"), located at Makati City. PIB had acquired
the property through foreclosure proceedings after the developer defaulted in the
payment of its loan.

The Unit was advertised to have an area of 95 square meters. Thinking that it was
sufficient and spacious enough for his residential needs, Pauline decided to register
for the sale and bid on the unit. About a week prior to the auction, Pauline visited
the unit for inspection. She was accompanied by a representative of PIB. The unit
had an irregular shape; it was neither a square nor a rectangle and included a
circular terrace. Pauline did not doubt the unit's area as advertised. However, she
found that the ceiling was in bad condition, that the parquet floor was damaged,
and that the unit was in need of other substantial repairs to be habitable.

On the day of the auction, Pauline inspected the project owner to the condominium
and the Condominium Certificate of Title to verify once again the details as
advertised and the ownership of the unit. Both documents were on display at the
auction venue.

Pauline placed his bid and won the unit for P3,000,000.00. Them, she entered into
a Contract to Sell with PIB. This Contract stipulated that Pauline would pay 10% of
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the purchase price as down payment and that the balance shall be paid over a
period of 15 years in equal monthly instalments, with interest of 15% per annum.

Pauline started occupying the unit. After two years, he was able to fully pay for the
Unit. Then, she decided to construct two (2) additional bedrooms in the Unit. Upon
examining it, he noticed apparent problems in its dimensions. He took rough
measurements of the Unit, which indicated that its floor area was just about 70
square meters, not 95 square meters, as advertised by PIB.

Pauline got in touch with an officer of PIB to raise the matter, but no action was
taken. Then, she wrote to PIB, informing it of the discrepancy. She asked for a
rescission of the Contract to Sell, along with a refund of the amounts she had paid,
in the event that it was conclusively established that the area of the unit was less
than 95 square meters.

PIB informed Pauline that after inquiring with the Housing and Land Use Regulatory
Board (HLURB), the Homeowners' Association of the Condominium, and its
appraisers, the Unit was confirmed to be 95 square meters, inclusive of the terrace
and the common areas surrounding it.

Pauline was not satisfied with PIB's response as the condominium's Certificate of
Title expressly stated that the "boundary of each unit are the interior surfaces of
the perimeter walls, floors, ceilings, windows and doors thereof." Thus, she hired
an independent geodetic engineer, Engr. Buntog, to survey the Unit and measure
its actual floor area. Engr. Buntog issued a certification stating that the total floor
area of the Unit was only 74.4 square meters. Pauline gave PIB a copy of Engr.
Buntog's certification.

PIB explained: The total area of the subject unit based on the ratio allocation
maintenance cost submitted by the developer to HLURB is 98 square meters (60
square meters as unit area and 38 square meters as share on open space). On the
other hand, the actual area thereof based on the measurements made by its
surveyor is 74.18 square meters which was much higher than the unit area of 60
square meters that was approved by HLURB.

Pauline's dissatisfaction with PIB's answer prompted him to file his Complaint for
Rescission of Contract and Damages. Pauline charges PIB with fraud in failing to
disclose to her that the advertised 95 square meters was inclusive of common
areas. With the vitiation of her consent as to the object of the sale, she asserts that
the Contract to Sell may be voided. She insists that PIB is liable for breach of
warranty despite the "as-is-where-is" clause in the Contract to Sell. Finally, she
assails the application of Article 1542 of the Civil Code. Decide. (8 points)

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 VI

a.

Oscar Hidalgo and Lily Lim executed a Deed of Sale with Pacto de Retro over a parcel
of land registered under the Heirs of Delfin Hidalgo, represented by Cardo Hidalgo.
For failure of Oscar to repurchase the property from Lily within one year as agreed
upon in the deed, Lily filed a Petition for Consolidation of Ownership pursuant to
Art. 1607 of the Civil Code to the RTC. The petition was granted. Oscar questioned
the trial court’s decision by filing with the Court of Appeals a Petition for Certiorari.
CA dismissed it. He further appealed to the Supreme Court, but it was also denied
and an Entry of Judgment was issued. Lily moved for the issuance of Writ of
Execution and it was granted by the judge.

Was judge correct in issuing the Writ of execution? Discuss briefly the nature of
pacto de retro sale. (5 points)

b.

Differentiate conventional redemption governed by Art. 1601 of the New Civil Code
against right of redemption in execution under Rule 39, Section 29 and 30 of the
Rules of Court. (5 points)
VII

Nelson Banga, as mortgagor, with the consent of his wife Socorro, executed a Deed
of Real Estate Mortgage in favor of Jose V. Bello over their real property as security
for a loan extended by Jose to Nelson. The said mortgage was amended twice
increasing the amount of the loan. It appears that a Deed on Absolute Sale was
subsequently executed involving the same property. Socorro filed a complaint for
the declaration of nullity of the sale for making it appear that she consented to
the absolute sale. Also, Socorro questions the unconscionably low consideration
for the sale of the property.

Bello contends that the sale was personally and voluntarily executed by Spouses
Banga before the notary public and that the consideration of the sale is fair and
reasonable because it is also based on the real estate mortgage and
its amendments. Nelson, on the other hand, claims that the executed Deed was
actually a third amendment to the mortgage and that he had already paid in full
their principal indebtedness.

Do the parties intended the deed of absolute sale to be merely an equitable

mortgage? Enumerate the instances when a contract of sale shall be presumed to
be an equitable mortgage? (5 points)

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 VIII

a.

Nena Recio, mother of Reman Recio leased from the Altamiranos a parcel of land
with improvements. The Altamiranos inherited the subject land from their
deceased parents, the spouses Aguedo Altamirano and Maria Vaduvia. The sale of
the land to Nena Recio did not materialize.

The Altamiranos consolidated the two parcels of land covered by the TCT and
subdivided into 3 parcels of lands. Reman and his family remained in the peaceful
possession of Lot 3.

He renewed Nena’s option to buy the subject property. They conducted

negotiations with Alejandro who introduced himself as representing the other
heirs. After which, the Altamiranos through Alejandro entered into an oral contract
of sale with Recio and made partial payments which Alejandro received.

Then, Recio offered to pay the remaining balance, but Alejandro kept on avoiding
the petitioner. Recio filed a case and while its pending, it was discovered that the
property was sold to Spouses Lajarca.

The RTC ruled that the Absolute Sale between Altamiranos and the Lajarcas was
Null and Void, but the Court of Appeals modified that the sale between Alejandro
and Recio is valid only with respect to the aliquot share of Alejandro. CA held that
Alejandro’s sale of Not. No. 3 did not bind his co-owners because a sale of real
property by one purporting to be an agent of the owner without any written
authority from the latter is null and void. An SPA from co-owners pursuant to Art
1878 of the NCC is necessary.

Can the contract of sale between Alejandro (representing the share of his co-
owners) and Recio be held valid pursuant to Apparent Authority of an Agent based
on Estoppel? (5 points)
b.

Henry Ysaac is one of the co-owners of a parcel of land covered by OCT No. 506
with an area of 5,517 square meters. He leased out a portion of the property to
several lessees including Juan Cabrera who leased a 95-square meter portion of the
land.

In need of money, Henry ofered to sell the 95 sq. meter lot but Juan demurred
because the lot was too small for his needs since there was no parking space for his
vehicle. To deal with Juan’s need, Henry expanded his ofer to include two adjoining
lands which was then leased by two families but warned that the sale could only
proceed if the two families would agree. The deal was almost closed with the

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agreed price of P 250/sq.m but Juan stated that he could only pay the full price
after his retirement. Henry agreed but demanded for an initial payment of P1,
500.00 which Juan paid.

Was there a valid contract of sale between Henry, as one of the co-owners, and
Juan? (5 points)