TRUE OR FALSE MCQ

1. Can future inheritance be the subject of a

1. contract of sale?
Purchases made by an administrator of
properties of the estate under his administration A. No, since it will put the predecessor at the
are valid and binding when made with the risk of harm from a tempted buyer, contrary
express consent of the heirs
to public policy

B. Yes, since the death of the decedent is

2. certain to occur

The remedy of rescission under Article 1191 C. No, since the seller owns no inheritance
applies to contracts to sell
while his predecessor lives

D. Yes, but on the condition that the amount of

3. the inheritance can only be ascertained after
Failure to pay the consideration results in a right the obligations of the estate have been paid.

to demand the fulfillment or cancellation of the

obligation under an existing valid contract
2. A sale of a property subject to reserva
troncal is an example of a sale:
4.
In the “obligatory force of contracts” principle, A. with resolutory condition

contracts take effect only between the parties of B. with suspensive condition

their assigns and heirs, except where the rights C. with reservation as to ownership

and obligations arising from the contract are not D. on consignment

transmissible by their nature, by stipulation, or E. on assignment

by provision of law. In the latter case, the

assigns or the heirs are not bound by the 3. In the sale of real property by installment,
contracts.
in case of non-payment of an installment
due, how long is the grace period if at
5.
least two (2) years have already been paid
The prescriptive period for the reconveyance of
fraudulently registered real property based on by the buyer?
void contract is 10 years reckoned from the date A. 30 days for every year of installment
of the issuance of the certificate of title
payments made

B. 1 month for every year of installment

payments made

6. C. 60 days from due date

A sale of real property or of an interest therein D. 2 months from due date

should be notarized to be enforceable

E. none of the above

7. 4. The determination of a subject matter in a

If the real price is not stated in the contract, the
contract of sale may be left to a third
contract of sale is void

person, provided:
A. that the third person is so designated by the
8. contracting parties

In a sale with assumption of mortgage, the B. that the third person is capacitated to act

assumption of mortgage is a condition without C. both a and b

which there will be no perfected contract of sale

D. none of the above

9.
5. Rescissible contracts prescribe in:
A contract with a false consideration is null and
A. 2 years

void

B. 4 years

C. 6 years

10. D. 10 years

Execution of Deed of Sale always produces the E. None of the above

effect of tradition

6. Voidable contracts prescribe in: ESSAY

A. 2 years

B. 4 years
I
C. 6 years
A and B entered into a contract whereby the former
D. 10 years
agreed to sell his automobile to the latter for
E. None of the above
P25,000. Upon the perfection of the contract, B
advanced the entire purchase price of P25,000 to A.
7. When bills of local currency are It was, however, stipulated that the automobile shall
exchanged for coins of the same be delivered to B at the end of March, 1972.
currency, the act is a: Unfortunately, before the arrival of that date, it

A. sale
was completely destroyed without any fault of A- Can
B. barter
B now recover the amount which he had already
C. foreign exchange
advanced to A? Reasons.

D. piece of work

E. service provision
ANS: Actually, the problem can be boiled down to
the following question — who shall bear the risk
of loss after the contract of sale has been
8. A contract of sale is valid even if the
perfected, but before the thing sold has been
consideration or cause is an item other
delivered — the vendor or the vendee? There are
than price because the existence of the three apparently conflicting provisions of the NCC
obligation to pay the price does not play a which we must consider in order to answer this
critical role in defining a contract of sale, question. They are Arts, 1480,1504 and 1538.
provided that:
A. valuable consideration is present
If we apply the provisions of Art. 1504 only, it is
B. the cause or consideration is determinate or clear that the loss is imputable to the vendor;
at least determinable
consequently, A must return to B the P25,000
C. it qualifies as a barter
which the latter had advanced to him. If we apply
D. all of the above
the provisions of Art. 1538 only, then we must
E. none of the above
observe the rules provided for in Art. 1189, and
according to this article, the obligation is
9. Every when can the buyer exercise the extinguished since the object thereof was lost
grace period mentioned in No. 19 above? without any fault of the vendor.
A. once for every month of installment made

B. once for every year of installment made

If we apply the provisions of Art. 1480 only, there
C. once in every five years of the life of the is an implication that the loss is imputable to the
contract
vendee, an implication which is directly in conflict
D. twice in every five years of the life of the with that which is expressly declared in Art. 1504,
contract
although the article declares categorically in the
E. none of the above
first paragraph that the provision ofArt. 1262,
among others, shall govern and according to this
10. The payment in full of the price is a article, the obligation is extinguished since the
positive suspensive condition in a: object thereof was lost without any fault of the
A. contract of sale
vendor. What then is meant by the law when it
B. absolute deed of sale
says that if the object of an obligation is lost or
C. contract for a piece of work
destroyed without any fault of the debtor (vendor),
D. contract of lease
the obligation is extinguished? There are three
views which have been advanced. They are:

(1) The extinguishment of the obligation due to

the loss of the thing affects both vendor and
vendee since their obligations are reciprocal. If
the obligation of the vendor to deliver is
extinguished, the correlative obligation of the
vendee to pay, which depends upon it, is also
extinguished. Besides, a contract of sale is
onerous in character; the cause, as far as the
vendee is concerned, is the acquisition of the
thing which is the object thereof. Hence, if he
cannot have the thing it would be juridically
illogical and unjust to make him pay its price.
Furthermore, it is well known that if the object of
a contract is lost before delivery, it is the vendor
who is still the owner who bears the loss, and not
the vendee.


(2) When the thing sold is lost without any fault of
the
vendor, he is released from his obligation to
deliver the thing; while the vendee’s obligation to
pay the price subsists. If the vendee had paid the
price in advance, the vendor may retain the same.
The legal effect, therefore, is that the vendee
assumes the risk of loss by fortuitous event from
the time of the perfection of the contract up to the
time of delivery.
(3) Art. 1504 is applicable to specific goods, while
Art. 1480 is applicable only to fungible goods.
Which of these three views is correct?
Undoubtedly, the first two are backed up by
sufficient authorities both Filipino and Spanish in
origin, while the third is backed up by some
authorities American in origin. It is, however,
submitted that the first is more
just and equitable. Besides, it is in conformity with
the principle of res perit domino. The owner of the
thing must bear the risk of loss. Consequently, A
must return the P25,000 to B.
II
Spouses Biong and Linda wanted to sell their house.
They found a prospective buyer, Ray. Linda
negotiated with Ray for the sale of the property. They
agreed on a fair price of P2 Million. Ray sent Linda a
letter confirming his intention to buy the property.
Later, another couple, Ber- nie and Elena, offered a
similar house at a lower price of PI.5 Million. But Ray
insisted on buying the house of Biong and Linda for
sentimental reasons. Ray prepared a deed of sale to
be signed by the couple and a manager is check for
P2Mil- lion. After receiving the P2 Million, Biong
signed the deed of sale. However, Linda was not able
to sign because she was abroad. On her return, she
refused to sign the document say ing she changed
her mind. Linda filed suit for nullification of the deed
of sale and for moral and exemplary damages
against Ray.
Rosy purchased a condominium unit in Makati City
(1) Will the suit prosper? Explain.
Million, payable P3 Million down and the balance
ANS: No, the suit will not prosper. The contract of
sale was perfected when Linda and Ray agreed
on the object of the sale and the price [Art, 1475,
NCC], The consent of Linda has already been
given, as shown by her agreement to the price of
the sale. There is therefore consent on her part as
the consent need not be given in any specific
form. Hence, her consent may be given by
implication, especially since she was aware of,
and participated in the sale of the property.
(Pelayo vs. CA, G.R. No. 141323, June 8,2005.) Her
action for moral and exemplary damages will also
not prosper because the case does not fall under
any of those mentioned in Art. 2219 and 2232 of
the Civil Code.
(2) Does Ray have any cause of action against Biong
and Linda? Can he also recover damages from the
spouses? Explain.
Considering that the contract has already been
perfected and taken out of the operation of the
statute of frauds, Ray can compel Linda and
Biong to observe the form required by law in
order for the property to be registered in the
name of Ray which can be filed together with the
action for the recovery of house [Art. 1357 NCC].
In the alternative, he can recover the amount of
P2 million that he paid. Otherwise, it would result
in solutio indebiti or unjust enrichment.
Ray can recover moral damages on the ground
that the action filed by Linda is clearly an
unfounded civil suit which falls under malicious
prosecution. (Ponce vs. Legaspi, G.R. No. 79184,
May 6, 1992.)
III
A bound herself to sell to B a house and lot which is
currently being rented by C, if B passes the 2012 bar
examinations. Luckily, B passed the said
examinations.
A. Suppose A had sold the same house and lot to
another before B passed the 2012 bar
examinations, is such sale valid?
B. Assuming that it is B who is entitled to buy said
house and lot, is he entitled to the rentals
collected by A before he passed the 2012 bar
examinations? why?
IV
from the Housel and Corporation for a price of P10
with interest thereon at 14% per annum payable in 60
equal monthly installments of P201,000.00. They
executed a Deed of Conditional Sale in which it is
stipulated that should the vendee fail to pay three (3)
successive installments, the sale shall be deemed
automatically rescinded without the necessary
judicial action and all payments made by the vendee
shall be forfeited in favor of the vendor by way of rent
for the use and occupancy of the unit and as
liquidated damages. For 50 months, Rosy paid the
monthly installments religiously, but on the 51st and
52nd months, she failed to pay. On the 53rd month,
she tried to pay the installments due but the vendor
that he has merely given B an option to buy and
refused to receive the payments tendered by her. The
follow ing month, the vendor sent her a notice that it
was rescind ing the Deed of Conditional Sale
pursuant to the stipulation for automatic rescission,
and demanded that she vacate the premises. She
replied that the contract cannot be rescinded without
judicial demand or notarial act pursuant to Article
1592 of the NCC.
by the fact that the deal is financially
A. Is Art. 1592, NCC applicable?
ANS: Art. 1592 of the NCC does not apply to a
conditional sale. In Valarao v. CA, 304 SCRA 155,
the SC held that Art. 1592 applies only to a
contract of sale and not to a Deed of Conditional
Sale where the seller has reserved title to the
property until full payment of the purchase price.
The law applicable is the Maceda Law.
B. Can the vendor rescind the contract?
X wrote CCC Bank requesting extension until May 1,
ANS: No, the vendor cannot rescind the contract
under the circumstances. Under the Maceda Law,
which is the law applicable, the seller on
installment may not rescind the contract till after
the lapse of the mandatory grace period of 30
days for every one year of installment payments,
and only after 30 days from notice of cancellation
or demand for rescission by a notarial act. In this
case, the refusal of the seller to accept payment
from the buyer on the 53rd month was not
justified because the buyer was entitled to 60
days grace period and the payment was tendered
within that period. Moreover, the notice of
rescission served by the seller on the buyer was
not effective because the notice was not by a
notarial act. Besides, the seller may still pay
within 30 days from such notarial notice before
rescission may be effected. All these
requirements for a valid rescission were not
complied with by the seller. Hence, the rescission
is invalid.
V selling the same to a buyer according to the
A offers to buy B’s property under the following terms
and conditions: 1 million purchase price, 10% option
money, the balance payable in cash upon the
clearance of the property of all illegal occupants. The
option money is promptly paid and B clears the
property of illegal occupants in no time at all.
However, when B tenders payment of the balance
and ask A for the deed of absolute sale, B suddenly
has a change of heart, claiming that the deal is
disadvantageous to him as he has found out that the
property can fetch three time the agreed purchase
price. B seeks specific performance but A contends
nothing more, and offers to return the option money
which B refuses to accept.
A. Will B’s action for specific performance prosper?
Explain. (5%)
B. May A justify his refusal to proceed with the sale
disadvantageous to him? Explain. (5%)
VI
X applied with CCC Bank to purchase a house and
lot in Manila, one of its acquired assets. The amount
offered was 1 million, payable as follows: 200,000
down payment, the balance of 800,000 payable
within 90 days from January 1, 2013. CCC Bank
accepted the offer, whereupon X drew a check for
200,000 in favor of CCC Bank, which the latter
thereafter deposited in its account. On April 1, 2013,
2013 within which to pay the balance, to which CCC
Bank agreed. On April 25, 2013, due to the expected
delay in the remittance of the needed amount by his
financier from the United States, X wrote CCC Bank
requesting a last extension until May 31, 2013, within
which to pay the balance, CCC Bank denied X’s
request because another had offered to buy the
same property for 1.5 million. CCC Bank cancelled its
agreement with X and offered to return to him the
amount of 200,000 that X had paid to it. On May 20,
2013, upon receipt of the amount of 800,000 from his
US financier, X offered to pay the amount by
tendering a cashier’s check therefor but which CCC
Bank refused to accept. X then filed a complaint
against CCC Bank in the Regional Trial Court of
Manila for specific performance and deposited in
court the amount of 800,000. Is CCC Bank legally
correct in canceling its contract with X? Decide.
(10%)
VII
An agent, authorized by a special power of attorney
to sell a land belonging to the principal succeeded in
instruction given in the agent. The agent executed
the deed of absolute sale on behalf of his principal
two days after the principal died, an event that
neither the agent nor the buyer knew at the time of
sale. What is the standing of the sale? Explain. (10%)

VIII
X, who was abroad, phoned his brother, Y,
authorizing him to sell X’s parcel of land in Manila. X
sent the title to Y by courier service. Acting for his
brother, Y executed a notarized deed of absolute sale
of the land to Z after receiving payment. What is the
status of the sale? Explain. (10%)